Financial Management

Overall Plan Needed To Guide System Improvements at Education Gao ID: AFMD-88-15 December 31, 1987

GAO reviewed the Department of Education's financial management system to: (1) assess the reliability and effectiveness of the system to account for and control Education's funds and resources; (2) identify any major system weaknesses; and (3) examine the actions Education took to correct those weaknesses.

GAO found that: (1) Education's loan records for its Higher Education Facilities and College Housing loans were inadequate; (2) a private financial consultant estimated that it could cost $75 million to bring loan files up to commercial standards in order to sell them to the public; (3) because of its inadequate accounting system, Education cannot properly oversee its property or protect it from fraud and mismanagement; (4) schools receiving Pell Grant funds had serious accounting and internal control weaknesses, resulting in an estimated $600 million in overpayments over a 2-year period; (5) Education's computer system, which supports its general ledger and subsidiary accounting system, is inadequate and contains unreliable data; and (6) because its system could not correctly transfer information, Education had to estimate the value of its assets when reporting its financial condition.

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.

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