Financial Management

Pursuant to a congressional request, GAO provided information on constituents' concerns that certain issues were not addressed in GAO's September 1996 letter on allegations of fiscal mismanagement by the Division of Federal and Occupational Health (DFOH). The letter addressed allegations that during fiscal years 1992 and 1993: (1) DFOH violated the Economy Act by including regional office rent allocations from the Health Resources and Services Administration (HRSA) in the costs reimbursed by other federal agencies under interagency agreements; and (2) HRSA augmented its appropriation by allocating these rent costs to DFOH.

GAO noted that: (1) GAO's September 1996 letter concluded that the rent allocations were an allowable cost under the Economy Act and, accordingly, that HRSA's appropriation was not augmented; (2) however, GAO found that DFOH did not have an adequate cost accounting system to track the actual costs incurred under each interagency agreement, as required under the Economy Act; (3) thus, for fiscal years 1992 and 1993, DFOH could not offer any assurance that it had complied with the Economy Act on an individual interagency agreement basis; (4) however as stated in GAO's previous letter, DFOH procured an off-the-shelf cost accounting system to automate its operations and track actual costs; (5) proper implementation of an adequately designed cost accounting system should enable management to fully meet the Economy Act's requirements; (6) GAO reviewed the concerns itemized in the constituent's letters and did not identify any new information that would change the conclusions GAO reached in its previous letter; (7) however, GAO clarified certain issues brought forth in those letters; and (8) GAO's responses are limited to financial matters that relate principally to the Economy Act and augmentation allegations at DFOH that were the subject of GAO's previous letter.