DCCUMENT FESU.E 0372'; - B2994245] fThe National Aeronautics and Space Administration's System of Accounting for Accounts Receivable]. FGHSD-77-89; B-159687. October 21, 1977. 4 pp. Report to Robert A. rosch, Administrator, National Aeronautics and Space Administration; by D. L. Scantlebury, Director, Financial and General Management Studies Div. Issue Area: Accounting and Financial Reporting (2800). Contact: Financial and General Management Studies Div. Budget Function: Miscellaneous: Financial anagement and Information Systems (1002); General Science, Space, and Technology: Space Science, Applications, and Technology (254). Congressional Relevance: Hcuse Committee on Science and Technology; Senate Committee on Commerce, Science, and Transportation. A review of the National Aeronautics and Space Administration's (NASA) system of accounting for accounts receivable, including related billing and collection procedures, indicated that NASA was prcmptly ccllecting aounts due from other Federal agencies and the public under an accounting system approved h the Ccmptroller General in June 1969. Findings/Conclusions: nternal accounting procedures did not assure, however, that accounts receivable were accurately recorded and reported. Specifically, the S267.2 million balance of accounts receivable reported to the Department of the Treasury on September 30, 1976, was incorrect because: NASA had already collected about $200.6million of the recorded and reported accounts receivable; about $13.3 million of accounts receivable from the public was improperly classified as accounts receivable from Federal agencies; and about $14.7 iiion of accounts receivable a neither recorded nor reporte. The $200.6 million overstatement occurred because, although collections were timely, internal billings were not prepared processed promptly. The ateriality cf the amount of deposit and funds and accounts receivable involved precluded a fair presentation of NASA's financial condition. Recommendations: The Administrator of NASA should direct te Comptroller to assure that interna' billings are romptly prepared and processed to show accurate receivable balances in accounting system records and reports. (Author/SW) UNITD STATES GE;ERAL ACCOUNTING OFFIC% WASHINGTON, D.C. 2to OWVION ot PVN&%4AL&'v 2 1 orf nd UtdAL "MAGNrA"MW RUO B-159687 by\ The Honorable Robert A. Frosch 0)' Administrator, National Aeronautics and Space Administration Dear Dr. Frosch: _ This report reviews the National Aeronautics Administrations (NASA's) system of accounting for and-Space receivable, including related billing and collectionaccounts pro- cedures. This -report discusses NASA's need to more accu- rately record and report accounts receivable. Our review sowed that NASA was promptly collecting amounts due from other Federal agencies and the public under an accounting system approved by the Comptroller General in June 1969. However, internal accounting pro- cedures did not assure that accounts receivable were accurately recorded and reported. Specifically, the $267.2 million balance of accounts receivable reported to the Department of the Treasury on September 30, 1976, was incorrect because: -- NASA had already collected about $200.6 million of the recorded and reported accounts receivable. -- About $13.3 million of accrunts receivable from the public was improperly classified as accounts receivable from Federal agencies. -- About $14.7 million of accounts receivable was neither recorded nor reported. Officials at NASA headquarters agreed with our findings and stated that procedures were being revised to improve the accuracy of reported accounts receivable. SCOPE OF RLVIEW As of September 30, 1976, NASA reported accounts re- ceivhble of $267 million--$76 million from Federal agencieu and $191 million from the public. We examined the billing, FuMSI-77-89 ('JI117) B-159687 collecting, accounting, and reporting of accounts receivable from the public at NASA headquarters in Washington, D.C., and the Goddard Space Flight Center in Greenbelt, Maryland. This report is part of a multiagency review on which we plan to issue an overall report to the Congress. We did not obtain written confirmation of he accounts receivable balance from NASA's customers, but we did test the accuracy of the receivables by examining (1) the data supporting account balances, (2) the reconciliation of head- quarters and field office accounts, and (3) the accounting procedures used. ACCOUNTS RECEIVABLE NOT ACCURATELY REPORTED NASA had already collected about $200.6 million which was included in the balance of accounts; receivable . ported to the Department of the Treasury as of September 30, 1976. NASA acquires and launches missiles on a reimbursable basis for other Federal agencies and for public organi- zations such as domestic public corporations, foreign governments, and international organizations. About 90 percent of this reimbursable missile acquisition and launch- ing work during fiscal year 1977 was controlled by two NASA field offices, of which the largest was the Goddard Space Flight Center. The public organizations are required to pay NASA head- quarters for the reimbursable work as the field offices incur related costs. The remaining chain of events is sum- marized as follows. -- Headquarters places these payments in deposit fund accounts. -- The field offices record acccounts receivable as they ncur costs. -- The field offices submit bills to headquarters for reimbursement. -- Eeadquarters processes the bills which decrease its deposit fund accounts and increase its ac- counts for funds available to the field offices. 2 B-159687 -- After IheadquaLtees' processing, the field offices reduce accounts receivable and increase funds available for their operations. The net effect is an internal transfer of funds whereby the field offices are reimbursed from the deposit funds for the costs incurred. We realize that scme balance will remain in the field office accounts receivable during the period the field office is waiting for reimbursement. However, if all field office billings are prepared and processed promptly, accounts receivable will primarily consist of those reimbursable costs incurred by field offices foz which funds have not yet been deposited with NASA headquarters. The $200.6 million overstatement of NASA's accounts receivable occurred because, although collections were timely, internal billings were not prepared and processed promptly. As of September 30, 1976, field offices incurred costs and recorded accounts receivable but had not billed headquarters for about $118.5 million of the total, which was due as reim- bursements for missile launches for public organizations. Although we did not determine the length of time all these accounts receivable had remained unbilled, some of the costs were incurred several months previously. In addition to the field offices' delays in preparing billings, headquarters' delays in processing them resulted in $81.1 million in overstated accounts receivable. For xajmile, of the $42 million headquarters owed Goddard Space Flight Center on September 30, 1976, over $40 million had been billed for over 60 days and two of' the billings included in this total had been outstanding for ovef i5 months. These delays resulted in a $200.6 million overstatement of both field office accounts receivable and fund on deposit with eadquarters on September 30, 1976. Other accounting and reporting errors at that date were (1) ab-out $13.3 million in bccounts receivable from the public was improperly classified and reported as accounts receivable from Federal agencies and (2) about $14.7 million of accounts receivable was either recorded nor reported because of prob- lems encountered in mechanizing the accounting system. Those problems have since been corrected. 3 B-159687 CONCLUSION NASA's delays in preparing and processing internal financial billings resulted in incorrect accounting and deposit the amount of funds reporting. The materiality of and accounts receivable involved precluded a fair presenta- tion of NASA's financial condition. RECOMMENDATION We recommend that you direct the Comptroller to assure that internal billings are promptly prepared and processed system to show accurate receivable balances in accounting records and reports. As you know, section 236 of the Legislative Reorgani- zation Act of 1970 requires the head of a Federal agency on actions taken on our to submit a written statement Committee recommendations to the House on Government Opera- Governmental Affairs tions and the Senate Committee on date not later than 60 days after the of the report and to the House and Senate Committees on Appropriatiors with the agency's first request for appropriations made more than 60 days after the date of the report. We would ap- preciate receiving copies of these statements. We are sending copies of this repcrt to the Chairmen, House Committees on Government Opeations, Appropriations, on and Science bnd Technology; and the Senate Committees Governmental Affairs and on Commerce, Science and Trans- portation. Because of their expressed interest, we are Robert Packwood and' ongress- also sending copies to Senator to the man N2wton I. Steers. Copies are also being sent Director, Office of Management and Budget, and the Secretary of the Treasury. We appreciate the courtesies and cooperation shown to us by your representatives during this review. Sincerely yours, D. L. Scantlebury Director 4
The National Aeronautics and Space Administration's System of Accounting for Accounts Receivable
Published by the Government Accountability Office on 1977-10-21.
Below is a raw (and likely hideous) rendition of the original report. (PDF)