Internal Controls

Issues Regarding Disbursements Gao ID: AIMD-98-144R April 30, 1998

GAO provided information on the Financial Management Service's (FMS) internal controls over federal disbursements.

GAO noted that: (1) in its sample of 45 certifying officers, who were designated by 36 different officials, GAO found inadequate documentation for 10 of the 36 related self-delegations of authority; (2) for the forms used to delegate authority and designate specific individuals as certifying officers that GAO tested, all of the authorizing officials' signatures were validated by FMS personnel; (3) however, supervisory review and approval of these validations had not been carried out because there was no requirement to do so; (4) GAO's sample of 132 check and electronic funds transfer disbursements included three vouchers; (5) there was no documentation to support the verification of the agency certifying officer's signature for the Birmingham Center voucher; (6) without proper supervisory controls over the verification of the certifying officer's signature, FMS lacks adequate assurance of the validity of the disbursement; (7) GAO found 23 of the 264 progress sheets used to control and track the processing of requested disbursements were incomplete; (8) without a fully completed progress sheet, the risk of an invalid disbursement increases because FMS has no assurance that the requested disbursement has been processed; (9) at all the centers but one, GAO observed that generally undeliverable checks were promptly marked nonnegotiable, processed under joint control, and adequately safeguarded; (10) however, GAO observed inadequate handling of returned undeliverable checks at the Kansas City Center; (11) without adherence to the Field Operations Manual (FOM) requirements for handling returned undeliverable checks, FMS cannot be assured that the more than 166,000 checks returned to the Kansas City Center during fiscal year 1997 were adequately safeguarded; (12) GAO found that the Birmingham, Chicago, Kansas City, and Philadelphia Centers did not fully reconcile the results of the returned check cancellation process; (13) if the cCenters do not fully perform and document their reconciliation of returned check cancellations, FMS has inadequate assurance that all such returned checks have been properly cancelled; (14) GAO found that the Kansas City Center was not following FOM guidance to record cancellation activities in the receipts/deposits register and the general ledger; and (15) since these postings were not made in accordance with FMS procedures, FMS had no assurance that postings were correct.

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