Forest Service

This is GAO's third report on the Forest Service's financial problems, which were first identified in an Inspector General audit report on the Forest Service's fiscal year 1995 financial statements. Because of the severity of the problems cited, GAO was asked to continue to monitor, and periodically report on, the Forest Service's efforts to correct its accounting and financial reporting deficiencies. This report discusses the Forest Service's (1) implementation of a new financial accounting system, (2) correction of accounting deficiencies, (3) resolution of key staffing and financial management organizational issues, and (4) commitment to achieving financial accountability.

GAO noted that: (1) the Forest Service has taken some positive steps to address the accounting deficiencies cited in the IG's FY 1995 audit report; (2) however, serious problems have been encountered in the initial implementation of the new financial accounting system; (3) while the Office of the Chief Financial Officer (OCFO) and the Forest Service piloted the Foundation Financial Information System (FFIS) in three units as scheduled on October 1, 1997, problems with FFIS processing data and transferring data between FFIS and other feeder systems have hampered the implementation efforts; (4) also, the pilot units have not been able to use FFIS to produce certain critical budgetary and accounting reports that track the Forest Service's obligations, assets, liabilities, revenues, and costs; (5) these problems occurred because: (a) while most individual components of the system were tested, a complete integrated test was not accomplished prior to implementation; (b) the FFIS reporting mechanism, which was not fully tested prior to implementation, was not functioning properly; (c) certain report specifications and calculations were incorrect; and (d) budget balances had not yet been brought forward from the old accounting system, which is no longer functional for the pilot units; (6) failure to correct these problems will jeopardize successful implementation of FFIS in the remaining Forest Service units; (7) the Forest Service's ability to produce reliable financial reports hinges on successful operation of the new system; (8) the version of FFIS purchased by the UDSA OCFO in December 1994 is not year 2000 compliant; (9) the Forest Service has corrected some of the accounting deficiencies cited in the IG's 1995 audit report, it continues to have certain accounting problems, in addition to those related to the FFIS system, that will hamper its ability to produce reliable financial information and could expose the agency to mismanagement and misuse of its assets; (10) the Forest Service still lacks supporting records to substantiate, at a detailed level, amounts the agency either owes or is owed by others; (11) the Forest Service has not yet completed an evaluation of its financial management structure and workload requirements at all levels; (12) the Forest Service's top management has taken some steps to correct the financial problems reported by the IG in the FY 1995 audit report; and (13) however, the Forest Service's autonomous organizational structure may hinder top management from making needed improvements by FY 1999.