oversight

Settlement of Bureau of Reclamation Accountable Officer's Accounts

Published by the Government Accountability Office on 1971-04-21.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

CIVIL   DIV!SION                                                                                                  APR 2 1 1971            t


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                                                                                                                               LM093017
                   Dear    Mr.   Armstrong:

                          We have made            a review     for the settlement                    of accountable     officers'
                   accounts    in which           special     emphasis    was placed                 on the Bureau-wide         sys-
                   tem of administrative                procedures     and internal                  controls0

                           Our review         was conducted         primarily    at the Bureau         of Reclamation,
                   Region      7, Denver,        Colorado,       and included      an examination         of financial
                   transactions          for fiscal        years    1969 and 1970.        We reviewed         selected
                   accounting        and internal          controls      and made such tests         of receipt        and
                   disbursement          transactions         as we deemed appropriate,              In addition,         we
                   made a limited           review     of administrative         procedures       and internal         con-
                   trols     at the Engineering              and Research     Center,     Denver,      Colorado,       and at
                   Region      6, Billings,         Montana.        We reviewed      also pertinent         reports     and
                   related       workpapers        of the Department's          Office    of Survey and Review,
                   Audit     Operations,

                          Our review    was made pursuant                         to 31 LJ,S.C.     71 with particular         em-
                   phasis    on the criteria    set forth                    in      the Com~?.rcllcr     S~;lrr~J~ti  let~k~,
                   B-161457,    dated August    1, 1969,

                            In that     letter,     the Comptroller               General       pointed        out that       sec-
                   tion     113 of the Accounting               and Auditing          Act of 1950 (31 U.S,C,                   66,)
                   requires       the head of each executive                   agency        to establish           and maintain
                   systems      of accounting         and internal            controls,          including        appropriate
                   internal      audit,       to provide,         among other          things,        effective        control      over
                   and accountability            for all        funds,      property,          and other         assets     for which
                   the agency        is responsible.              He further         stated        that    relative       to func-
                   tions      of accountable        officers,          this     responsibility             includes       providing
                   assurance        of the legality,            propriety,         and correctness               of disbursement
                   and collections            of public       funds,       and that:

                                            "In recognition              that     the basic           responsibility
                                    for proper        accounting           and internal             control       is that
                                    of each agency,            the GAO audit              of accountable               offi-
                                    cers% functions            will      place      its major           emphasis        on
                                    the adequacy         and effectiveness                  of the accounting
                                    and internal          controls,         including           internal       audit,
                                    of the departments                and agencies           in assuring             that
                                    the accountable            officers'          functions           are discharged
                                    correctly       and in accordance                  with the requirements
                                    of all     applicable           laws and regulations."
                                                                                             _‘



                                                     5OTH      ANNIVERSARY               1921-    1971
.




             With the exception         of a need for better           instructions          on the
    separation        of duties,     as discussed       in the following            section      of this
    report,      we found the Bureau's           system of administrative                procedures      and'
    internal      controls       to be generally       satisfactory        in assuring         that   the
    accountable        officers'     functions      at the locations          we visited         were dis-
    charged      correctly       and in accordance        with     the requirements          of all
    applicable        laws and regulations.

    NEED FOR BETTER INSTRUCTIONS
    ON THE SEPARATION  OF DUTIES

             The General         Accounting       Office       Policy   and Procedures           Manual  for
    Guidance       of Federal        Agencies        states      that responsibility           for assigned
    duties      and functions         should      be appropriately           segregated        between   author-
    ization,       performance,         keeping       of records,       custody      of resources,       and
    review,       so as to provide            proper      internal    checks       on performance       and to
    minimize       opportunities           for carrying          out unauthorized,         fraudulent,       or
    otherwise        irregular       acts,

             Reclamation         Instructions       in many instances      did not contain        specific
    guidelines          for the segregation           of duties   to provide     for proper     internal
    control.          In most of these instances              the offices    we visited      had estab-
    lished      local      procedures        or made duty assignments        which provided       adequate
    control;       however,        we noted     some cases of inadequate         segregation      of
    duties      as indicated          below.

             1. The coilection               officer         at Region         7 received         over-the-counter
    collections,          issued       the receipt,               and then had the mail                 clerk       record
    the collection           on the daily              listing        of mail        room receipts            (Daily       Ab-
    stract       of Remittances).                We were informed                the collection             officer        pre-
    pared all       collections            (those        received         over-the-counter              and by mail)
    for deposit,          made the deposits,                    received       the authenticated                certificates
    of deposit,         received         and followed              up on any returned               dishonored            custo-
    mer checks,         had access to contracts,                        issued       bills    for collections,
    prepared       documents         to record            accounts        receivable        transactions              in the
    mechanized        accounting           system,          and verified           recorded       transactions              to
    the collection           documents,              Also,        as an alternate           certifying            officer,
    the collection           officer         could        certify       documents,

             We were informed         that     cash collections        were not numerous,         that   a
    copy of the Daily          Abstract        of Remittances       prepared   by the mail        room
    clerk     was independently          verified    with authenticated          certificates         of                           '
    deposit,      and that     certain      other   activities        of the collection       officer
    were reviewed        by others.          In our opinion,        however,   the collection
    officer     is still    involved        with duties        that   should be segregated          among
    a number of employees,




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         Also,      we noted that       while part    484.318   of the Reclamation
Instructions            provides  that a copy of the "Daily            Abstract     of Remit-             )
tances"        (Form 7-487)      be sent to the Finance         Office,       we could     locate
no Bureau         instructions      requiring    that    the Finance       Office   verify      the
Form 7-487 by comparing               it to the applicable        Certificate       of Deposits.

        In both Regions          6 and 7, we noted       that the mail        clerks     prepared
and forwarded       copies      of Form 7-487 to the Finance             Office,       We were
advised    that   once a month the Region           7 Finance      Office       makes the verifi-
cation;    however,      in Region     6, we were advised        that      the verification           is
not made,       In our opinion,        internal    controls     over cash would be improved
if Reclamation        Instructions       required    the finance       office      to verify      the
Forms 7-487 by comparison             with    the applicable     Certificate         of Deposits,

         2. At the Engineering               and Research        Center,     we noted that       an account-
ant     who recorded      entries         in the accounting          records      was also designated
as     a Certifying      Officer,           We were informed         that    normally     he certified
only      the Voucher     and Schedule           of Withdrawals          and Credits       (SF 10811,    but
that     he was authorized           to certify         all   vouchers,      other    than payroll,      in
the     absence     of other      certifying        officers,        In our opinion,          the account-
ing     and certifying        functions         should      be segregated,

Recommendation

        To provide       better       assurance       that all   field   offices      have considered
and established          a system of separation               of duties   and functions       that
provide     appropriate         internal       control,     we recommend       that   the Bureau    amend
Reclamation       Instructions           to provide       more specific      requirements     concerning
the separation          of duties        and functions,

                                               ---a




          We wish to acknowledge      the cooperation        shown our representatives
during      the review.      We would appreciate      receiving     your comments      as to
actions       taken  or planned   on the recommendation          in this report.,

        In accordance      with the General      Accounting      Office      Policy,and        Pro-
cedures    Manual    for Guidance     of Federal       Agencies,     Chapter      3 of Title        8,
the records      of B**-
                       uLeaau of Reclamation       financial     transactions          through
fiscal    year 1970 may be transferred           to the Federal         Records       Center,




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a,         A copy of this     report   is   being    sent       to   the   Director,   Office   of

     Survey and Review,

                                                    Sincerely         yours,




                                                    Assistant         Director


     Mr. Ellis     L, Armstrong
     Commissioner,      Bureau of Reclamation
     Department      of the Interior




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