Financial Integrity Act

Inadequate Controls Result in Ineffective Federal Programs and Billions in Losses Gao ID: AFMD-90-10 November 28, 1989

As part of its fourth governmentwide report on federal efforts to strengthen internal controls and accounting systems under the Federal Managers' Financial Integrity Act (FMFIA), GAO reviewed the types and severity of the internal control and accounting system problems that exist throughout the government and the need for a vigorous program to correct these problems.

GAO found that: (1) the federal government continued to experience management deficiencies, program abuses, and illegal activities that cost the taxpayers billions of dollars, which was serious given the overwhelming budget deficit; (2) major agencies reported such material weaknesses as delinquent debts and taxes, design flaws in expensive automated systems, inventory management problems, and antiquated, costly, and unreliable accounting systems; (3) agency executives and managers responsible for day-to-day operations perceived improved internal controls due to FMFIA, but identified a number of areas that needed greater emphasis; (4) almost one-half of the managers responsible for implementing FMFIA had received no training concerning the conduct of risk assessments and internal control evaluations; (5) managers reported that a significant number of agency activities had received no evaluation of their controls since 1982; (6) agencies have known about most problems and weaknesses for years, but the problems remain uncorrected; and (7) the Office of Management and Budget (OMB) issued to the 16 largest agencies a critique of agency reporting under FMFIA, a list of the highest-risk areas, and a list of key elements necessary to more timely identify and correct problems in response to recommendations from the Internal Control Interagency Coordination Council, but did not address a number of other important recommendations.

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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