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AFMD-81-96 1 (1981-08-19)

handle is hein.gao/gaobabchu0001 and id is 1 raw text is: UNITED STATES GENERAL .ACCOUNTING OFFICE WASHINGTON, D.C. 20548 I/ ACCOUNTING AND FINANCIAL MANAGEMONT DIVISION B-203960 AUGUST 19, 1981 The Honorable Dwight A. Ink Director, Community Services Administration Dear Mr. Ink: 116168 Subject: [Financial Control System Problems at the Community Services Administration will not be Fully Solved by the Current System Redesign Projectf(AFMD-81-96) Our recent review of the Community Services Administration's automated Financial Control System revealed such a state of dis- array that it is clear managers are not receiving the information they need to adequately control and accurately report grantee use of funds totaling millions of dollars. Managers must have accurate information on the financial status of grants in order to ensure that expenditures are properly accounted for and that grantees do not draw down and hold excessive amounts of Federal cash. For the grants we examined, the amount of unexpended cash ad- vances held by grantees as recorded in the Financial Control Sys- tem was grossly overstated--by over 850 percent. Although the results of our review cannot be statistically projected to all grantees, they indicate a serious lack of reliability of informa- tion in the system. In addition to being inaccurately accounted for, most of the cash held by the grantees we reviewed was in excess of their imme- diate and reasonable needs and should not have been drawn down un- til needed to make payments under the grant. Some grantees had cash on hand in excess of a year's requirements. For the grants we reviewed, representing about one-sixth of the total reported balances, excess cash in the hands of grantees cost the Treasury about $150,000 in interest annually. Agency managers were aware that information in the Financial Control System could not be relied on, and they often kept manual memorandum records to compensate for this weakness. This created additional administrative costs. The cause of unreliable information in the automated system is a combination of system design problems and failure to follow pro- cedures. Specifically, grantees and agency personnel have failed to ensure that expenditures are promptly entered into the system and as a result, the system does not provide agency personnel with 'J /5-,/ (901348)

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