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, the USDA IG issued an adverse audit opinion, thereby concluding that the Forest Service's financial statements for fiscal year (FY) 1995 were unreliable overall; (2) among the more serious shortcomings cited by the IG in its report on FY 1995 financial statements were that the Forest Service: (a) had significant reporting errors in its financial statements and the records that support those statements; (b) could not demonstrate that its policies and procedures adequately safeguarded assets against unauthorized acquisition, use, or disposition; and (c) lacked financial systems that could accurately track revenues and costs; (3) 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; (4) also, the Forest Service's inability to identify certain equipment it owned and its location could have hampered activities of the Forest Service that utilized that equipment; (5) IG concluded that the Forest Service did not have adequate systems to track revenues and total program and operating costs agencywide; (6) additionally, GAO's prior work disclosed the Forest Service's inability to capture the revenues and related costs of various programs and activities; (7) this capability is especially important because the Forest Service should have accurate historical revenue and cost data that can be used as the basis for determining the amount of money to request from Congress to fund future projects and operations; (8) Forest Service officials determined that planned corrective actions could not be completed in time to improve the Forest Service's FY 1996 financial data; (9) instead, the Forest Service, USDA's Chief Financial Officer, and the IG agreed to work together to address the problems identified in the FY 1995 IG audit report; (10) in August 1997, GAO reported that it was doubtful that the Forest Service could achieve financial accountability by the end of FY 1999 if management and staff commitment wavered, planned tasks were not accomplished, and sufficient resources were not provided; (11) GAO's most recent report in February 1998 concluded that while corrective measures were under way, few of the problems reported by the IG in the FY 1995 audit report had been fully resolved; and (12) thus, it was not yet clear whether the Forest Service would be successful in its efforts to resolve these problems by the end of FY 1999.