The Bureau of Public Debt Should Better Control Savings Bond Sales and Redemptions

GAO reviewed the U.S. Savings Bond Program to determine the adequacy of accounting procedures and internal controls and to identify any losses resulting from irregularities or abuses.

Savings bonds are sold by agents, to whom blank savings bond stock is provided on consignment by the Bureau of the Public Debt. Fraudulent or unauthorized bond issues cannot be detected until after they are redeemed to the Bureau. GAO believes that the blank stocks should be controlled in the same manner as currency, with one Bureau office maintaining accounting control over stock inventories and sales. Under the current decentralized approach, the Bureau and the Federal Reserve Banks have not followed recognized controls and accounting procedures for stock distribution, and losses and thefts of stock with a face value totalling $8.8 million have been reported. Certain Bureau management actions have contributed to abuses and practices leading to stock and monetary losses. These actions include: (1) delaying a program to assess penalty interest on unremitted bond sales proceeds; (2) relieving agents from liability for stock shortages under questionable circumstances; (3) ineffectively controlling debt collection; and (4) paying sales agents on the basis of the number of transactions handled without regard to work quality. Also, several Bureau accounting practices were inconsistent with laws and recognized procedures, preventing full disclosure of losses and problems.

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 F. Simonette Team: General Accounting Office: Accounting and Financial Management Division Phone: (202) 275-9490