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)

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
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
              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
                        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.
                                 Sincerely   yours,

                                 A. M, Clavelli
                                 Regianal EAa?nager