Financial Management

GAO reviewed the Department of Health and Human Service's (HHS) financial management environment and its effectiveness in accounting for and controlling funds and other resources and reporting on its operations.

GAO found that the current HHS accounting systems did not effectively account for and control its resources, since: (1) there were unexpended fund balance differences of over $3 billion between the HHS accounting records and its financial reports; (2) HHS did not know the amount of funds it had available, advances made to grant recipients, and property it was responsible for controlling; and (3) HHS did not adequately identify all material accounting system weaknesses in its 1987 Financial Integrity Act (FMFIA) report. GAO also found that HHS did not aggressively pursue the collection of about $31 million in audit allowances because of: (1) inadequate documentation of the audit disallowance; (2) untimely recording of accounts receivable; and (3) the lack of written debt collection procedures. In addition, GAO found that: (1) since 1978, HHS has initiated two major departmentwide accounting system enhancement efforts, but neither was successful, partially because HHS operating divisions were not supportive; (2) HHS has developed a financial management plan, called the Phoenix Project Plan, which should improve the efficiency of its accounting systems and which has the support of the operating divisions; and (3) the Phoenix Project Plan did not clearly delineate how or if HHS will integrate its accounting system enhancement efforts with its efforts to improve its programmatic systems.

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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