Status, Progress, and Problems in Federal Agency Accounting During Fiscal Year 1978

The head of each executive agency is responsible for establishing and maintaining accounting systems that conform to principles and standards prescribed by the Comptroller General. This report covers fiscal year 1978. The accounting principles and standards established by each agency as the basis for its accounting system are examined, and an effort is also made to determine whether the procedures and practices used in the agency's accounting system also will conform to the approved principles and standards prescribed by the Comptroller General. After the design of a system is implemented, GAO reviews the accounting system in operation from time to time to see that it is being operated in accordance with the approved design and is serving management's needs.

As of September 30, 1978, GAO had approved principles and standards for all but three of the executive agencies' 326 accounting systems and had approved 60 percent of the accounting system designs. The 40 percent unapproved comprise 131 accounting systems in 13 departments and 13 independent agencies and the District of Columbia government. The Departments of Defense (DOD) and of Health, Education, and Welfare (HEW) account for 95 of the unapproved systems, or 72 percent. Of the 70 DOD systems that are unapproved, work has been completed on 15, which were found acceptable except for two major problems: (1) the account controls over such assets as equipment, weapons, and furniture were not adequate, and (2) the systems used to account for major appropriations do not have a system of subsidiary accounts that can be used to record and systematically accumulate the cost of specific items purchased and expenses incurred in carrying out specific operations. No accounting systems were qualified for approval by HEW in fiscal year 1978. This agency has concentrated on recording accounting information to show expenditures in relation to appropriations, but the information did not provide the necessary cost data to allow agency managers to base decisions on lowest cost alternatives. The following three requirements have been ignored by many agencies in designing their accounting systems: effective control over and accountability for property; maintenance of agency accounts on an accrual basis to show the resources, liabilities, and costs of operations; and use of cost-based budgets.

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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