DL Hans Nmk, Director ,'"""i$;"liG\ dmes Research Center National Aeronautics and Space Administration ,~ [) $J lvlclffett Field, California 94035 _- p,;JL.,/ Dear Dr, Mark: We h&m? completed our audit ~~~~~‘e~~,,~~~~~~~~~~~‘““~~f accounts 1. of accountable officers at 'ties Research CenterJ !M.s examina- tion was made in accordance with the Budget anh Accounting Act 0f 1.922. (31 W.S.C. 53) and the Accounting and Auditing Act of 1.950 (31. us.c. 65(a.) and 67(a)). Our audit included a review of accounting procedures and related internal controls over the accounting and for receipts disbursements as related to the responsibilities of the certi- @zing officers. CorrrpLimce with'procedures was determined by making such tests of disburselnents and collections of public funds as were considered necessary.for various types of transac- tions S I)uring our audit we noted the fqllowing items which we believe are within your area of responsibility for corrective action : On July 1, 1967, lhnes Research Center renewed its agreement with IBM (through GSA contract GS-00%.67189) to lease certain AIDP eqwipment worth $1,47g,250. This contract was written as a leasc- purchase agreement, whereby a certain percentage of all rental payments was to be applied to the price of the equipment when and if the purchase option was exercised. Ames exercised its option md purchased most of the equip- ment Y?ffecc.ve July 2, 1969. Our review of the contract files and mxmunting records showed however, that the m-mnt capitalized in account 1-563 (eqwkpment) was the cash puxchase price only ($763,865), and excluded credits of $715,385 from prior rental payP1ents* Dr,H.h&wk -2- We reviewed NASA Financial Management Manuals and found that FM4 9250-36 &x&es in part that: ‘“The invoice cost of capital equipment acquired by purchase s-m be recorded in i;%e financial records when the equipment is received.” (undersccking 8supp1ied) We were informed that IGLSA financial manuals did not contain any additional policies, directives or instructiocs which would specific&ly define the cost at wh4c3.- leased coquter equipment, or my other personal property, would be recorded when a percentage of lease costs could be applied toward the purchase price. In our opinion good r?ceounting principles require that the aceu~~~LLat@d purchase credits from prior lease Fayments should be included in the capit;nl.i.zPbtion of equipment when the asset is subsequently purchased. As stated in the American Institute lof Certified PubLie AccounC;ll;nt’s Accounting liesearch Study No. 4: %- ++ *- To the extent then that leases give rise -- to property rights, those rights and rGlated liabilities should be measured and incorporated in the balmce sheset. ‘I Officials from Ames and ROSA Keadquzrters concurred with zllz;~ opinion, and we understan d that steps are now being taken to review present NASA directives and possibly revise them to clarify the cost at which kased eq?Lpment 6hckLd be recorded when purchased. On Febrwwy 12, 1979, Ames prepared a journal. voucher to increase the equipment account by $715,385, thereby reflecting the actual cost of the elquipment, Iluring our review of pay and travel, we noted $everal rela- tively minor administrative errors. Two errors which were of a rare significant nature were: . 1. use of m lncorre~ct waiting period for within-grade increases leading to m overpayment to me employee II of @,172, and 2. lack of control over outstanding travel adwmces which allcwed sizeable mounts to remain uncollected for ii II sever al mm ths w The above observations were discussed in detail with Mr. Shawl@e and other personnel in your Fiscal Division, At the completion of 'our review, corrective action had been taken or was in process. 1Cnaccordance tith GenereJ. Accounting Office Policy and Proce- dures l&mm1 for Guidance of Federal Agencies Title 8, Chapter 3, the records of financial transactions through June 3Q, 1970, may be transferred to the Federal Records CegCer for sLorage ir, accord- ance with your agency"s records management program. We wish to thank you for the cooperation of your staff during, cm audit. If you have any questions regarding this review, please contact US. D Sincerely yours, . A. M, Clavelli Regianal EAa?nager
Audit of Accounts of Accountable Officers at Ames Research Center
Published by the Government Accountability Office on 1971-04-02.
Below is a raw (and likely hideous) rendition of the original report. (PDF)