Internal Controls

Second-Year Implementation of the Financial Integrity Act in HHS Gao ID: HRD-86-9 November 8, 1985

GAO reviewed the Department of Health and Human Services' (HHS) second-year implementation of the Federal Managers' Financial Integrity Act (FMFIA) and the reasonableness of its 1984 annual report on the status of its internal controls and accounting systems.

GAO noted that: (1) on January 31, 1985, HHS issued an annual report on its accounting and internal control systems which stated that 180 of the 200 material internal control weaknesses identified in 1983 had been corrected; and (2) most of the uncorrected weaknesses and instances of nonconformance were to be resolved in 1985. GAO found that: (1) the 1984 report did not state whether HHS internal controls complied with the required standards and objectives or whether its accounting systems conformed to the Comptroller General's requirements; (2) internal controls for some major HHS programs and activities were not evaluated, including major automatic data processing (ADP) controls; (3) there were many material internal control weaknesses that remained uncorrected; and (4) three major accounting systems did not conform to the Comptroller General's requirements. GAO also found that: (1) internal control reviews focused too narrowly on physical security controls and did not include evaluations of computer application controls; (2) reviews in both the ADP and accounting system areas did not adequately document sufficient testing; (3) the Health Care Financing Administration's (HCFA) internal controls over benefit payments made under Medicare and Medicaid programs were inadequate; (4) the Social Security Administration's (SSA) assessment of its internal controls was not sufficient to determine whether it complied with the act's requirements; and (5) the Public Health Service did not adequately test whether controls were in place and functioning effectively.

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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