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GAO-01-104R 1 (2000-10-16)

handle is hein.gao/gaobaalra0001 and id is 1 raw text is: GAO Accountability ntegrity * eliability United States General Accounting Office Washington, DC 20548 October 16, 2000 The Honorable John R. Kasich Chairman, Committee on the Budget House of Representatives The Honorable Judy Biggert House of Representatives Subject: Department of Education: Status of Financial Management Weaknesses Reported in the Fiscal Year 1999 Financial Statement Audit In response to your request and subsequent discussions with your offices, this letter analyzes the Department of Education's financial management weaknesses, which have been identified through the annual audit of Education's financial statements. You asked that we (1) analyze Education's financial management weaknesses in the context of possible program and budgetary implications based on the results of the audit of its fiscal year 1999 financial statements, (2) identify Education's corrective actions to address reported weaknesses, and (3) explain how Education prepared reliable fiscal year 1997 cost estimates for its loan programs and resolved the related reported material weakness in fiscal year 1998. Education is the primary agency responsible for overseeing the more than $75 billion annual federal investment in support of educational programs for U.S. citizens and eligible noncitizens. Education is also responsible for collecting about $175 billion owed by students. In fiscal year 1999, more than 8.1 million students received over $53 billion in federal student financial aid through programs administered by Education. Results in Brief Education's fiscal year 1999 financial statement audit results disclosed continuing financial management weaknesses that prevented the agency from receiving a clean audit opinion. Four of the eight reported financial management weaknesses were classified as material internal control weaknesses.' These weaknesses existed generally because Education lacked an effective system of internal controls. An effective internal control system provides the framework for the accomplishment of 'A material internal control weakness is a reportable condition in which one or more of the internal controls does not reduce to a relatively low level the risk that errors, fraud, or noncompliance involving significant amounts may occur and not be detected in a timely manner by employees in the normal course of performing their assigned functions. GAO-01-104R Education's FY99 Financial Management Weaknesses

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