Forest Service

Financial management problems have continued to plague the Forest Service--as reflected in the adverse opinion of the Agriculture Department's (USDA) Inspector General (IG) on the Forest Service's fiscal year 1995 financial statement. Because of the severity of these problems, the Forest Service did not prepare financial statements for fiscal year 1996 but chose instead to focus on problem resolution. Financial statements were prepared for fiscal year 1997, and the audit of those statements is near completion; as of July 1, 1998, the USDA IG was finalizing its report. These two testimonies focus primarily on the fiscal year 1995 audit results, which disclosed several serious weaknesses, most of which still exist today. GAO also briefly discusses the Forest Service's plans to address these weaknesses.

GAO noted that: (1) in July 1996, USDA IG issued an adverse audit opinion, thereby concluding that the Forest Service's financial statements for FY 1995 were unreliable overall; (2) the IG's findings represented a continuing pattern of unfavorable conclusions about the Forest Service's financial statements; (3) many of the shortcomings in the Forest Service's accounting and financial data and information systems that continue to plague the agency are largely attributable to long-standing problems; (4) the IG's report on the FY 1995 financial statements and the notes to the financial statements identified numerous financial reporting errors; (5) these errors in basic financial records demonstrated that the Forest Service was not always able to determine the amount of funds spent, reimbursements it should have received, or the validity of recorded assets and liabilities; (6) the IG report disclosed that the $7.8 billion in property, plant, and equipment reported by the Forest Service was erroneous because records for these assets were not consistently prepared, regularly updated, or supported by adequate documentation; (7) therefore, the correct quantities and costs of these assets were not determinable; (8) the IG also reported inadequate safeguarding policies and procedures for equipment; (9) the IG also concluded that the Forest Service did not have adequate systems to track revenues and total program and operating costs; (10) Forest Service officials determined that planned corrective actions could not be completed in time to improve the Forest Service's FY 1996 financial data; (11) as a result, the agency did not prepare financial statements for FY 1996; (12) the Forest Service's goal was to correct some of the deficiencies during FY 1997 and to achieve financial accountability by the end of FY 1999; (13) the IG recently concluded its audit of the Forest Service's FY 1997 financial statements and was preparing its report as of July 1, 1998; and (14) GAO understands that, because of the continuing financial accounting and reporting shortcomings, the IG will issue an unfavorable report on FY 1997 statements.