Department of Commerce's Second-Year Efforts To Implement the Federal Managers' Financial Integrity Act

GAO reviewed the Department of Commerce's second-year implementation of the Federal Managers' Financial Integrity Act and assessed: (1) Commerce's progress in implementing actions to correct internal control weaknesses and in improving its internal control evaluation process; (2) Commerce's progress in correcting accounting systems' areas of nonconformance with the Comptroller General's principles and standards and in improving its evaluation of accounting systems; and (3) the reasonableness of the Secretary's annual report on internal controls and accounting systems.

GAO found that, although Commerce is acting to correct internal control problems and its evaluation process for internal controls, it needs to strengthen its process for assessing vulnerabilities and testing. The Secretary's report identified material weaknesses in its economic development business loan program and property management system and outlined plans to correct them. Commerce made progress in establishing processes to evaluate its internal controls by: (1) issuing guidelines for evaluating and reporting on internal control systems; (2) conducting quality assurance reviews; and (3) establishing a tracking system for corrective actions. However, because the forms Commerce used to conduct vulnerability assessments were general and did not always include risks specific to the assessed activity, its vulnerability assessments did not fully identify and describe the significant risks. GAO also found that: (1) some reviews did not completely test accounting systems to determine whether they operated as intended; and (2) quality assurance evaluation reviews were conducted after testing was completed. GAO believes that Commerce is not in a sound position to accurately determine overall system conformance, since most of its systems were not adequately tested in operation.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: John M. Ols Jr Team: General Accounting Office: Resources, Community, and Economic Development Division Phone: (202) 512-7631