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GAO-02-508R 1 (2002-03-20)

handle is hein.gao/gaocrptaose0001 and id is 1 raw text is: G SGAO Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 March 20, 2002 The Honorable Dan Burton Chairman Committee on Government Reform House of Representatives Subject: Bureau of Prisons Contract Payments You asked that we review several agencies to determine whether they had made overpayments to contractors. One of the agencies was the Department of Justice. In consultations with your staff, we agreed to concentrate our work at the department's Bureau of Prisons because it administered large construction contracts. During fiscal year 2001, the Bureau of Prisons had 24 open construction contracts that totaled approximately $1.9 billion. As a first step in determining whether the bureau was likely to have made overpayments to construction contractors, we identified their internal controls. We then tested how well the controls were working by reviewing a sample of construction contract payments. Our work was conducted between August 2001 and December 2001 in accordance with generally accepted government auditing standards. We also provided the Bureau of Prisons an opportunity to comment on a draft of this letter. This letter describes the scope and results of our work. In order to assess the risk of construction contractor overpayments, we asked Bureau of Prisons personnel what types of preventive and detective controls were in place. Based on these inquiries, we determined that general disbursement controls included segregating key disbursement responsibilities; using only original contractor invoices or, in limited circumstances, certified copies as a basis for payment; performing automated input edit and processing checks; and mutilating invoices to prevent reprocessing. In addition, we found that internal controls specific to construction contracts included the following: The project representative and the contracting officer must both approve each monthly progress payment invoice. The contracting officer checks the invoice for completeness, accuracy, and compliance with contract terms. The contracting officer keeps a running record in the contract file of funds available for the contract. GAO-02-508R Bureau of Prisons Contract Payments

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