Status, Progress, and Problems in Federal Agency Accounting During Fiscal 1979

As of September 30, 1979, 62 percent of the executive agencies' accounting systems had been approved as required by the Accounting and Auditing Act. The remaining 38 percent have not been approved because they do not meet GAO requirements for approval, or the agencies have not requested approval, or the agencies are developing new systems to take the place of those now in operation. The remaining unapproved systems comprise some of the largest and most important systems. More than half of the Federal budget was accounted for by the unapproved systems of only two departments: Defense and Health, Education and Welfare. GAO's goal is to have all the accounting systems approved by March 1, l981. Congress declared that the Government's accounting should provide full disclosure of the results of financial operations; adequate financial information needed in the management of operations and the formulation and execution of the budget; and effective control over income, expenditures, funds, property, and other assets. Not until GAO has evaluated an accounting system for approval can Congress be assured that its policy has been adhered to. Only by such an evaluation, can GAO determine that the agency is in compliance with the principles, standards and related requirements for accounting which GAO is mandated to prescribe by Congress. GAO approval is the best indication that an agency has accounting systems which will minimize the opportunity for fraud, abuse, and error.

Approval of most of these systems is long overdue. Every year millions of dollars are spent to improve agency accounting systems. GAO tries to persuade the agencies to get approval on their designs and redesigns before they implement them. In most cases, however, the agency installs and commences to operate the system without GAO approval. Frequently, it is found that the system does not meet GAO requirements.

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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