oversight

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)

                          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