oversight

Major Management Challenges and Program Risks: Department of Agriculture

Published by the Government Accountability Office on 2003-01-01.

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

               United States General Accounting Office

GAO            Performance and Accountability Series




January 2003
               Major Management
               Challenges and
               Program Risks
               Department of
               Agriculture




GAO-03-96
               a
A Glance at the Agency Covered in This Report
The U.S. Department of Agriculture is one of the federal government’s largest
entities. The department’s overall mission is complex and covers a wide range of
areas, including
●   enhancing the quality of life for the American people by directly supporting the
    agricultural sector;
●   ensuring a safe, affordable, nutritious, and accessible food supply;
●   caring for agricultural land, forests, and rangelands;
●   supporting sound development of rural communities;
●   providing economic opportunities for farm and rural residents;
●   expanding global markets for U.S. agricultural and forest products and
    services; and
●   working to reduce hunger in America and throughout the world.

The U.S. Department of Agriculture’s Budgetary and Staff Resources

Budgetary Resources a,b                                              Staff Resources b
Dollars in billions                                                  FTEs in thousands

                                                                             96                           97          99
120                                                                  100               95        95
                             105       106        107
                    93
    90    83                                                          75



    60                                                                50



    30                                                                25


    0                                                                  0
         1998     1999      2000      2001        2002                      1998      1999      2000     2001         2002
         Fiscal year                                                        Fiscal year
Source: Budget of the United States Government.

a Budgetary resources include new budget authority (BA) and unobligated balances of previous BA.

b Budget and staff resources are actuals for FY 1998-2001. FY 2002 are estimates from the FY 2003 budget, which
    are the latest publicly available figures on a consistent basis as of January 2003. Actuals for FY 2002 will be
    contained in the President’s FY 2004 budget to be released in February 2003.




This Series
This report is part of a special GAO series, first issued in 1999 and updated in
2001, entitled the Performance and Accountability Series: Major Management
Challenges and Program Risks. The 2003 Performance and Accountability Series
contains separate reports covering each cabinet department, most major
independent agencies, and the U.S. Postal Service. The series also includes a
governmentwide perspective on transforming the way the government does
business in order to meet 21st century challenges and address long-term fiscal
needs. The companion 2003 High-Risk Series: An Update identifies areas at high risk
due to either their greater vulnerabilities to waste, fraud, abuse, and
mismanagement or major challenges associated with their economy, efficiency, or
effectiveness. A list of all of the reports in this series is included at the end of
this report.
                                                    January 2003


                                                    PERFORMANCE AND ACCOUNTABILITY SERIES

                                                    Department of Agriculture
Highlights of GAO-03-96, a report to
Congress included as part of GAO’s
Performance and Accountability Series




In its 2001 performance and                         USDA has taken steps to address some of the specific performance and
accountability report on the U.S.                   management challenges that GAO previously identified. However, a variety
Department of Agriculture (USDA),                   of challenges continue, including a significant expansion of the one involving
GAO identified important security,                  security.
modernization, food safety, food
assistance, and other issues facing
the department. The information                     •   Ensuring adequate security. USDA has taken actions when security
GAO presents in this report is                          problems are brought to its attention. However, it needs to be proactive
intended to help to sustain                             in identifying and correcting an expanding array of weaknesses, such as
congressional attention and a                           a recently identified one involving biological agents at its laboratories as
departmental focus on continuing                        well as in correcting a long-standing one involving information security.
to make progress in addressing
these challenges and ultimately                     •   Improving the delivery of services to farmers. USDA is progressing
overcoming them. This report is                         with its field office modernization effort to improve efficiency and
part of a special series of reports                     customer service. However, it needs to complete this task on a number
on governmentwide and agency-                           of fronts, including the automation of its application processes and the
specific issues.
                                                        integration of field operations across its various agencies.

                                                    •   Enhancing the safety of the nation’s food supply. USDA and other
GAO believes that USDA should                           federal agencies responsible for food safety have implemented an
                                                        inspection program intended to enhance food safety. However, because
•    conduct reviews of its                             of the millions of instances of foodborne illnesses and 5,000 related
     infrastructure, equipment, and                     deaths that occur annually, we believe the responsibilities of USDA and
     programs to identify and                           other agencies for ensuring the safety of the nation’s food supply need to
     correct security weaknesses                        be brought together in a single food safety agency.
     and
                                                    •   Providing food assistance and improving program integrity. USDA
•    continue to work on                                has actions underway to minimize fraud, waste, and abuse in its food
     completing its modernization
     and on other challenges
                                                        assistance programs. However, it needs to reduce further the errors that
     involving food assistance,                         occur in these programs, which, among other things, lead to significant
     financial management, the                          overpayments and underpayments to benefit recipients.
     performance and
     accountability of the Forest                   •   Enhancing financial management. USDA has achieved an unqualified
     Service, and the resolution of                     opinion on its financial statements for the first time in 9 years. However,
     discrimination complaints.                         more needs to be done, especially in the Forest Service, which continues
                                                        to be "high risk" due to serious financial and accounting weaknesses.
GAO also believes food safety
should be regulated by a single                     •   Improving performance accountability at the Forest Service. The
federal agency.
                                                        Forest Service has initiated or planned actions to address how it
                                                        accounts for and reports on its operations, accomplishments, and
                                                        expenditures. However, the agency has a continuing need to make
                                                        significant improvements in its performance accountability.
www.gao.gov/cgi-bin/getrpt?GAO-03-96.
                                                    •   Resolving discrimination complaints. USDA has made modest
To view the full report, click on the link above.
For more information, contact Robert A.                 progress in processing discrimination complaints. However, it has a
Robinson at 202-512-3841 or at                          continuing need to resolve complaints in a more timely manner.
robinsonr@gao.gov.
Contents



Transmittal Letter                                                                                                1


Major Performance                                                                                                  2

and Accountability
Challenges

GAO Contacts                                                                                                      28


Related GAO Products                                                                                              29


Performance and                                                                                                   34
Accountability and
High-Risk Series




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                        Permission from the copyright holder may be necessary should you wish to reproduce
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                       Page i                                                        GAO-03-96 USDA Challenges
A
United States General Accounting Office
Washington, D.C. 20548
                                                                                           Comptroller General
                                                                                           of the United States




           January 2003                                                                                          T
                                                                                                                 ransmL
                                                                                                                      ta
                                                                                                                       ileter




           The President of the Senate
           The Speaker of the House of Representatives

           This report addresses the major management challenges and program risks facing the U.S.
           Department of Agriculture (USDA) as it works to carry out its multiple and highly diverse missions.
           The report discusses the actions that USDA has taken and that are under way to address the
           challenges GAO identified in its Performance and Accountability Series 2 years ago and major events
           that have occurred that significantly influence the environment in which the department carries out
           its mission. Also, GAO summarizes the challenges that remain and further actions that GAO believes
           are needed.

           This analysis should help the new Congress and the administration carry out their responsibilities and
           improve government for the benefit of the American people. For additional information about this
           report, please contact Robert A. Robinson, Managing Director, Natural Resources and Environment,
           at (202) 512-3841 or at robinsonr@gao.gov.




           David M. Walker
           Comptroller General
           of the United States




                                     Page 1                                              GAO-03-96 USDA Challenges
Major Performance and Accountability
Challenges

              In our January 2001 report,1 we identified the following specific
              performance and accountability challenges that the U.S. Department of
              Agriculture (USDA) faced: (1) it needed to strengthen departmentwide
              information security; (2) the delivery of services to farmers had improved,
              but challenges remain; (3) fundamental changes were needed to minimize
              foodborne illnesses; (4) USDA needed to effectively and efficiently provide
              food assistance benefits to eligible individuals while maintaining program
              integrity; (5) USDA continued to lack financial accountability over billions
              of dollars in assets; (6) the Forest Service must provide the Congress and
              the public with a better understanding of what it accomplishes with
              appropriated funds; and (7) problems persisted in processing
              discrimination complaints. In addition, we reported that while USDA’s
              farm loan programs remained vulnerable to loss, we were removing this
              issue from our “high-risk” listing because the Congress and USDA had
              taken actions to address the underlying causes of the programs’ past
              weaknesses and because the financial condition of the loan portfolio had
              improved significantly.

              Since our January 2001 report, two major events have occurred that greatly
              influence USDA’s contemporary overall mission and present challenges to
              effectively address its multiple functions and activities. First, the
              September 11, 2001, attacks have raised concerns over the devastating
              impacts that terrorist actions and threats could have on the overall
              infrastructure of production agriculture and food safety and on USDA’s
              facilities, equipment, and employees. Second, the enactment of the Farm
              Security and Rural Investment Act of 2002 (the 2002 Farm Bill)2 provides
              for, among other things, significant changes in the federal government’s
              support of production agriculture and requires USDA to implement
              numerous provisions that change existing programs and establish new
              programs. Specifically, the 2002 Farm Bill has requirements for USDA
              involving programs that cover commodities, conservation, trade, nutrition,
              credit, rural development, research, forestry, energy, and a variety of
              miscellaneous provisions, such as those for crop insurance, disaster
              assistance, and livestock.




              1
                U.S. General Accounting Office, Major Management Challenges and Program Risks:
              Department of Agriculture, GAO-01-242 (Washington, D.C.: Jan. 2001).
              2
                  Public Law 107-171, May 13, 2002.




              Page 2                                                    GAO-03-96 USDA Challenges
Major Performance and Accountability
Challenges




USDA’s management recognized the difficulty that implementing the 2002
Farm Bill placed on the department and, as such, took early steps to
address the act’s requirements. For example, on the day after it was
enacted, USDA launched a Web site providing detailed information on the
requirements of the act, including program details, application and sign-up
forms, and information and materials on implementation.3 The next day,
the Secretary of Agriculture announced the establishment of its Farm Bill
Working Group, consisting of top and lower-level USDA officials, to
oversee the planning, coordination, and implementation of the act. The
following week, USDA announced a pilot program to allow producers in
selected counties in 21 states to apply for and receive loan deficiency
payments via the Internet. In early June 2002, the Secretary announced
that 1,000 temporary employees would be hired to aid field offices around
the country to implement the act.

Furthermore, since our January 2001 report, USDA has taken steps to
address some of the specific performance and accountability challenges
that we previously reported. For example, USDA continues to work on
implementing a departmentwide action plan to improve information
security and on its field office reorganization and modernization effort,
which is aimed at achieving greater economy and efficiency and better
customer service. The department has actions underway to minimize
fraud, waste, and abuse in the food assistance programs of the Food and
Nutrition Service and has initiated or planned actions to address the
performance accountability of the Forest Service. Also, USDA’s Office of
Inspector General (OIG) issued an unqualified opinion on USDA’s financial
statements for the first time in nine years.

Although this report does not include new management challenges, it does
address important remaining issues with the challenges we previously
identified, including a significant expansion of the challenge involving




3
    http://www.usda.gov/farmbill.




Page 3                                              GAO-03-96 USDA Challenges
                    Major Performance and Accountability
                    Challenges




                    security. The major performance and accountability challenges USDA
                    continues to face are as follows:




                       Performance and
                       Accountability Challenges
                         Identify proactively and correct an expanding array of security weaknesses

                         Complete the modernization of operations for delivering services to farmers

                         Together with other federal agencies, ensure the safety of the nation’s food
                         supply

                         Reduce the errors that occur in the delivery of the nutrition assistance programs

                         Continue to improve financial management and accountability, especially
                         within the Forest Service

                         At the Forest Service, continue to significantly improve the accounting for and
                         reporting of operations, accomplishments, and expenditures

                         Continue to improve the processing of discrimination complaints




Ensuring Adequate   In a period of heightened concerns about terrorist actions and threats,
                    USDA’s managers need to conduct reviews of the infrastructure,
Security            equipment, and programs they manage and operate so as to identify
                    potential security weaknesses and, when and where necessary, take
                    corrective actions aimed at avoiding serious consequences, rather than
                    waiting for others to bring highly serious problems to their attention.
                    Specifically, USDA’s managers are often unaware of highly serious security
                    problems that exist within the department until these problems are brought
                    to their attention by others. Also, USDA’s managers do not always take the
                    necessary first steps to prevent serious problems from occurring. Recent
                    studies have identified significant problems and weaknesses involving the
                    security of biological agents at USDA laboratories throughout the country,



                    Page 4                                                        GAO-03-96 USDA Challenges
Major Performance and Accountability
Challenges




the security of aircraft used by the Forest Service in firefighting operations,
and the timeliness of providing guidance to protect against the possible
introduction of foot and mouth disease into the United States. In addition,
the security of automated information throughout the department
continues to be a significant problem area.

Security of biological agents. A March 2002 report by the department’s
OIG disclosed that security of biological agents—living organisms in their
microbial form that are used in research and diagnostics and that are
generally pathogenic, or disease-producing—at USDA laboratories
generally needed improvement.4 Specifically, the OIG found that, among
other things, USDA had no policies or procedures for agencies to follow to
manage security at laboratories; the department lacked a consolidated
database to identify the location and risk levels of the biological agents at
laboratories; and some laboratories failed to follow requirements to
maintain an inventory of their biological agents and other laboratories had
inaccurate inventories. Also, many of the laboratories reviewed lacked
alarm systems, security fences, and surveillance cameras. Furthermore,
USDA did not adequately control access to biological agents by
unauthorized personnel and did not have procedures for reporting
incidences of unauthorized access.

Recognizing the need for greater biosecurity following the September 11,
2001, terrorist attacks, USDA developed policies and procedures for
biosecurity issues, which were in process of being implemented when the
OIG issued its report in March 2002. However, the OIG also reported that
more needs to be done in several key areas, such as developing a
centralized database to ensure department-level management of biological
agents and consolidating inventories of biological agents at the agency and
the department level. Furthermore, the OIG’s report contained 10 specific
recommendations for management action in areas such as controlling
access to biological agents and requiring a report of any break-in or
vandalism. Agreements between the department’s managers and the OIG
on actions to address 9 of those recommendations had not been reached as
of early October 2002.




4
 U.S. Department of Agriculture, Office of Inspector General, Oversight and Security of
Biological Agents at Laboratories Operated by the U.S. Department of Agriculture:
Policies and Inventories Are Needed To Manage Biosecurity, Report No. 50099-13-At
(Washington, D.C.: Mar. 29, 2002).




Page 5                                                        GAO-03-96 USDA Challenges
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Challenges




Security of aircraft. A March 2002 OIG report disclosed security problems
involving aircraft that are owned or operated under contract by the Forest
Service and used in firefighting operations, including air tankers with a
3,000-gallon liquid capacity, and with air bases used by the Forest Service.5
Specifically, the OIG reported that the aircraft are vulnerable to theft and
that the Forest Service had not assessed the risks of theft and misuse by
terrorists because the agency did not consider the risk to be significant.
Furthermore, the agency had not provided guidance to air tanker
contractors about potential threats against aircraft. The agency also lacked
standards for securing the bases used by its aircraft and by air tankers and
had not assessed the measures needed to secure the facilities.

The OIG concluded that the Forest Service needed to immediately conduct
a risk analysis to identify significant threats and potential actions to
mitigate the threats. The agency also needed to develop security standards
for the facilities where the aircraft are based and to determine the
measures needed to meet those standards. In commenting on a draft of the
OIG’s report, the Forest Service stated that it agreed with the OIG’s
assessment and was taking steps to improve the security of the aircraft and
facilities. The OIG, in turn, agreed with the agency’s plans to implement the
eight recommendations contained in the report, which were directed at
securing the aircraft from use by terrorists or others engaging in criminal
activity and at securing the air bases.

Protecting against importing animal diseases. Concerning the security
of the agricultural sector, we recently reported on problems involving the
timeliness of providing guidance to protect against the possible
introduction of foot and mouth disease into the United States. Specifically,
we reported in July 2002 that after foot and mouth disease struck the
United Kingdom in 2001, USDA’s Animal and Plant Health Inspection
Service (APHIS) did not provide the U.S. Customs Service (Customs) with
guidance on restricting or prohibiting certain products from entering the
country or on screening arriving international passengers until after
Customs had requested inspection guidance.6 The lack of proactive action


5
 U.S. Department of Agriculture, Office of Inspector General, Review of Forest Service
Security Over Aircraft and Aircraft Facilities, Report No. 08001-2-HQ (Washington, D.C.:
Mar. 29, 2002).
6
  U.S. General Accounting Office, Foot and Mouth Disease: To Protect U.S. Livestock, USDA
Must Remain Vigilant and Resolve Outstanding Issues, GAO-02-808 (Washington, D.C.:
July 26, 2002).




Page 6                                                       GAO-03-96 USDA Challenges
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Challenges




by APHIS occurred because the agency incorrectly assumed that Customs
inspectors knew how to address this very serious disease outbreak.

Specifically, APHIS is responsible for preventing animal diseases from
entering the country and has inspectors stationed at 144 ports of entry.
Customs, which has inspectors stationed at all 301 ports of entry, is to
perform inspections where APHIS does not have a presence. The duties
performed by APHIS and Customs inspectors include checking commercial
cargo shipments as well as passengers and their luggage to prevent the
introduction of, among other things, animal diseases that could adversely
affect U.S. livestock. The effectiveness of the inspections performed by
Customs depends, in part, on timely and adequate guidance from APHIS on
how to check for specific animal diseases.

As we reported in July 2002, APHIS received notice from the United
Kingdom in February 2001 of the outbreak of foot and mouth disease. In
mid-March 2001, Customs asked APHIS for guidance on inspecting cargo
and passengers to detect and prevent the disease from being introduced
into the United States. APHIS responded in late March 2001 by providing
guidance on inspecting products and passengers and then in early April by
providing guidance on detaining specific at-risk products at entry ports. As
a result of these delays, many Customs inspectors, who are not specialists
in animal diseases, were ill equipped to adequately process cargo and
passengers at ports of entry during the initial stages of the outbreak.
According to APHIS, in May 2002, it added a Customs official to its
notification list for any future foreign outbreaks of the disease. While this
action should be beneficial, we reported that it does not go far enough and
recommended that APHIS develop a formal agreement with Customs. This
agreement should clearly delineate the communication process for
notifications of future foreign outbreaks of foot and mouth disease. We
further recommended that APHIS develop uniform, nontechnical
procedures that Customs inspectors can use to process cargo and
passengers arriving from countries affected by the foot and mouth virus.




Page 7                                               GAO-03-96 USDA Challenges
Major Performance and Accountability
Challenges




Security of information. USDA continues to face security challenges in
protecting its computer systems from serious threats and cyber attacks. To
protect these systems, which process sensitive data and support billions of
dollars in benefits, we recommended in August 2000 that USDA strengthen
its information security.7 USDA is taking steps to implement a
departmentwide action plan to improve information security, but work on
these improvements is not complete, and security vulnerabilities and
weaknesses continue to place USDA’s computer systems at significant risk.

In August 2000, we reported that USDA had developed an action plan in
August 1999 to strengthen its information security, but had made little
progress in implementing the planned improvements. Since our 2000
report, USDA has taken more actions to implement improvements called
for in its 1999 action plan. For example, under the leadership of USDA’s
Associate Chief Information Officer for Cyber Security, the department has
expanded its in-house cyber-security staff, performed security reviews at
key agency computer facilities, started to develop standardized risk
assessment tools, revised a number of security-related policies, and
developed plans to implement departmentwide security awareness and
certification/accreditation programs. However, in USDA’s fiscal year 2001
Federal Managers’ Financial Integrity Act report, the department identified
its information security weaknesses and lack of an information security
management program as a material internal control weakness, and it listed
actions planned or being taken to address this weakness.

USDA’s actions to strengthen information security are encouraging, but
more needs to be done. In recognition of this, the department is developing
revised time frames and milestones for completing all its departmentwide
security improvements. Until it completes these improvements, however,
computer systems and networks across USDA remain vulnerable to
unlawful and destructive penetration and disruption. For example, since
we included the need for USDA to strengthen information security in our
January 2001 report, USDA’s OIG has identified thousands of additional
security vulnerabilities throughout the department’s agencies and offices.
Among others, the OIG found that agencies’ networks and systems were
vulnerable to internal and external intrusion, mission assets and sensitive
computer data were not properly protected, security training was not


7
  U.S. General Accounting Office, Information Security: USDA Needs to Implement Its
Departmentwide Information Security Plan, GAO/AIMD-00-217 (Washington, D.C.:
Aug. 10, 2000).




Page 8                                                      GAO-03-96 USDA Challenges
                         Major Performance and Accountability
                         Challenges




                         adequate, and plans were not prepared and tested for minimizing the
                         impact of potential disruptions on the continuity of critical agency
                         operations. In addition, assessments in 2001 conducted by the OIG and
                         USDA’s Office of the Chief Information Officer identified material
                         weaknesses in general areas, such as the physical security of facilities,
                         configuration management, and contingency planning.



Improving the Delivery   USDA has achieved some success in implementing its reorganization and
                         modernization efforts but more needs to be done. Specifically, since 1995,
of Services to Farmers   USDA has been engaged in a reorganization and modernization effort
                         targeted at achieving greater economy and efficiency and better customer
                         service by its service-center agencies—the Farm Service Agency, the
                         Natural Resources Conservation Service, and the Rural Development
                         mission area’s Rural Housing Service. Service center agency staff total
                         about 36,000 employees and account for nearly one-third of the entire
                         USDA workforce. USDA’s efforts consist of five interrelated initiatives:
                         (1) collocation—locating the agencies’ county offices at one site within
                         each county and their state offices at one location in each state;
                         (2) administrative convergence—merging the agencies’ administrative
                         functions at the state and headquarters levels under a single support
                         organization; (3) business-process reengineering—redesigning how the
                         agencies perform their work; (4) information technology modernization—
                         providing an updated communications network and a common computing
                         environment in order that the employees of all the agencies can use
                         compatible computer hardware and software to share information; and
                         (5) cultural change—improving customer service by implementing a
                         seamless interagency approach to delivering services, increasing outreach
                         efforts to customers, and working cooperatively with other service
                         providers, such as state and local governments and private organizations.

                         USDA has made some progress in its efforts. For example, it has closed
                         over 1,000 of its 3,726 county office locations and established collocated
                         service centers throughout the nation. It has also made substantial
                         progress in deploying personal computers and a telecommunications
                         network to link its service centers and recently deployed a shared network
                         server, which supports shared data. However, the full range of service
                         delivery efficiencies has not yet been realized because the agencies’
                         program applications are not fully integrated—the Farm Service Agency
                         and the Natural Resources Conservation Service, for example, are only
                         beginning to electronically share key farm information—and some staff are
                         still being trained on a number of the software packages that are used to



                         Page 9                                              GAO-03-96 USDA Challenges
Major Performance and Accountability
Challenges




record and monitor farm information. USDA currently estimates that by
June 2003, all common technology equipment and software will be
operable in its service centers and that all service center employees will be
trained on the systems’ use.

In addition, it is unclear whether USDA will achieve the seamless approach
to service delivery that it has sought because each of its agencies
emphasizes a different client base and the delivery of different programs.
Consequently, little has changed in how the three agencies work together
to serve their customers, particularly in terms of cross-servicing and
sharing of information. Each agency has only limited knowledge of the
others’ programs and program requirements. Also, the very nature of the
service provided by each is different. For example, the Farm Service
Agency provides largely administrative and financial services to
agricultural producers; the Natural Resources Conservation Service
provides largely technical services to producers and others in the
community; and the Rural Housing Service provides largely financial
services to rural homeowners.

Furthermore, although the service centers’ client base continues to change,
USDA’s basic approach to delivering services to farmers has been the same
for 70 years. In 2001, the National Agricultural Statistics Service reported
that there were 2,157,780 farms in America. Of this total, about 16 percent
of the farms accounted for about 58 percent of the land farmed and
reported annual sales in excess of $100,000. More than half of the farms in
existence in 2001—1.2 million—reported sales of less than $10,000. In
terms of the delivery of programs to farmers, USDA processes and
requirements are generally the same regardless of farm size. In some cases,
this can lead to service delivery costs exceeding the price of the service
delivered.

As required by legislation enacted in 2000—the Freedom to E-File Act—
USDA made a new electronic filing system available to the clients of its
service centers on June 17, 2002. Specifically, the act required the USDA
service center agencies to establish by June 20, 2002, a system that would
allow farmers, ranchers, and other customers to electronically retrieve and
file through the Internet the forms required to participate in the programs
operated by the centers. At this time, it is unclear how many clients of the
service centers have the equipment and know-how to take advantage of
this new online resource, and it is unclear how this new technology will
affect service delivery and resource needs at USDA’s service centers.




Page 10                                              GAO-03-96 USDA Challenges
                       Major Performance and Accountability
                       Challenges




                       Concerns also continue about the adequacy of staffing at the service
                       centers to meet farmers’ needs, as directed in the 2002 Farm Bill. Among
                       other things, this act makes a number of changes affecting current record
                       keeping and establishes new program requirements for the Farm Service
                       Agency and the Natural Resources Conservation Service. USDA
                       announced in June 2002 that 1,000 temporary employees would be hired to
                       assist in implementing the act. However, there is a sense at the service
                       centers that more resources will be needed to meet the act’s requirements.
                       In addition, the 2002 Farm Bill requires the Natural Resources
                       Conservation Service to undertake a major change in its operations as it
                       begins to facilitate the use of third party vendors to carry out a number of
                       conservation planning and program technical requirements. It is unclear
                       what impact the implementation of this requirement will have on service
                       center operations and the delivery of these services.

                       Finally, because of the overall value of USDA’s farm programs—more than
                       $55 billion annually—and the number of resources that have been
                       committed to these programs—about one-third of its total workforce—the
                       department has to continually evaluate its processes for delivering
                       services. As its client base changes, USDA needs to consider alternative
                       delivery approaches. In this regard, the service center agencies need to
                       reassess the types of services they now provide and how they can work
                       more efficiently to deliver these services in the future.



Enhancing the Safety   USDA is one of several Executive Branch departments and agencies that
                       have a key role in ensuring the safety of the nation’s food supply. The level
of the Nation’s Food   of foodborne illnesses, however, continues to raise concerns about the
Supply                 federal government’s effectiveness in ensuring the safety of both domestic
                       and imported foods. And now, the risk of bioterrorism intensifies concerns
                       about the ability of our system to protect the food supply against deliberate
                       contamination. As we stated in numerous reports and testimonies, the
                       food safety system contains key weaknesses, including the fragmented
                       nature of the regulatory system; differences in the federal agencies’
                       authorities to enforce food safety requirements; inconsistencies in, and the
                       unreliability of, federal efforts to ensure imported food safety; and
                       significant problems with the effective implementation of a relatively new
                       science-based inspection system—the Hazard Analysis and Critical Control
                       Point system (HACCP)—that was intended to enhance food safety. These
                       continuing weaknesses could also affect the government’s ability to detect
                       and respond quickly to deliberate contamination of the food supply.
                       Therefore, we continue to maintain, as we have since 1992, that the federal



                       Page 11                                              GAO-03-96 USDA Challenges
Major Performance and Accountability
Challenges




food safety system needs to be replaced with an effective risk-based
inspection system under a single food safety agency. Otherwise, the food
supply will continue to be subject to inconsistent oversight, poor
coordination, and inefficient allocation of resources. With the now-
recognized vulnerability of the food supply to potential terrorist attacks,
there exists an even stronger need to consolidate federal food safety and
security activities and resources.

Specifically, although the American food supply is regarded as one of the
safest in the world, foodborne illnesses in the United States continue to be
an extensive and costly problem. The Centers for Disease Control and
Prevention, an agency of the Department of Health and Human Services
(HHS), estimates that there are as many as 76 million food-related illnesses,
325,000 hospitalizations, and 5,000 deaths in the United States annually
from the consumption of foods contaminated with harmful bacteria, toxins,
and/or chemicals. USDA estimates that the costs associated with
foodborne illnesses range from $7 billion to $37 billion annually.

In January 2001, we reported that a number of factors heightened concerns
about the federal government’s effectiveness in ensuring the safety of the
nation’s food supply. These include the emergence of new foodborne
pathogens, the recognition of the long-term health effects of foodborne
illness, the globalization of the food industry, and the growing segment of
the U.S. population at increased risk of disease. In addition, we reported
on our concerns about the differences in agencies’ authorities to enforce
food safety requirements and the resulting uneven enforcement of food
regulations. We noted that, for example, USDA has the authority to require
food firms to register so that they can be inspected and that it can
temporarily detain any suspect foods, but that the Food and Drug
Administration (FDA), an agency of HHS, had no comparable authorities.
Since our January 2001 report, the Congress has addressed some of these
differences by strengthening FDA’s regulatory and enforcement authorities.
For example, legislation enacted in June 2002—the Public Health Security
and Bioterrorism Preparedness and Response Act of 2002—provides HHS
with the authority to require food facilities to register with it and FDA with
the authority to detain products suspected of contamination.

To address heightened concerns about the federal government’s
effectiveness in ensuring the safety of the domestic food supply, and in line
with our prior recommendations, the federal agencies responsible for food
safety implemented a science-based program intended to enhance food
safety and reduce foodborne illnesses. Specifically, the HACCP system



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regulations adopted by USDA and FDA require that meat, poultry, and
seafood plants use this system to better ensure the safety of their products.
In addition, the HACCP regulations require that USDA and federally
inspected meat and poultry processing plants test for the presence of
dangerous pathogens, such as E. coli 0157:H7, salmonella, and Listeria
monocytogenes. These actions were important steps to improve the safety
of our food supply.

However, some of our recent work identified weaknesses in HACCP
implementation and enforcement that, if left uncorrected, could undermine
a primary goal of the HACCP system—that is, controlling hazards in the
production process before the product reaches the market. As a result,
U.S. consumers may continue to be placed at risk of contracting foodborne
illness from contaminated foods. For example, our January 2001 report on
FDA’s seafood safety program showed that, although seafood processing
firms had made some progress in implementing the HACCP system, many
firms had still not implemented the HACCP system and that in many cases
FDA had not issued warning letters even though there were serious safety
violations.8 Similarly, our July 2001 report on FDA’s shellfish safety
program showed that the agency lacks a risk-based approach to overseeing
shellfish safety.9 More recently, USDA began testing modifications to its
slaughter plant inspection system to make the transition from traditional
federal inspections of every carcass to a risk-based approach that is more
consistent with the HACCP concepts. While we have supported a risk-
based approach to food inspections, we recommended in December 2001
that USDA proceed cautiously with modified inspections to ensure that,
among other things, industry personnel are adequately trained.10




8
  U.S. General Accounting Office, Food Safety: Federal Oversight of Seafood Does Not
Sufficiently Protect Consumers, GAO-01-204 (Washington, D.C.: Jan. 31, 2001).
9
  U.S. General Accounting Office, Food Safety: Federal Oversight of Shellfish Safety Needs
Improvement, GAO-01-702 (Washington, D.C.: July 9, 2001).
10
  U.S. General Accounting Office, Food Safety: Weaknesses in Meat and Poultry Inspection
Pilot Should Be Addressed Before Implementation, GAO-02-59 (Washington, D.C.: Dec. 17,
2001).




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Furthermore, in August 2002, we reported that there were continuing
problems with HACCP implementation in meat and poultry plants.11 For
example, we reported that USDA inspectors were not consistently
identifying problems and were allowing plants to remain out of compliance
for protracted periods of time. We also noted that the longer plants are
allowed to remain out of compliance with HACCP, the greater the risk that
unsafe food would be produced and marketed. Our report contained a
series of recommendations that were aimed at strengthening USDA’s
oversight of HACCP and ensuring that plants promptly and effectively
correct violations. USDA agreed with our recommendations and has
initiated or planned implementation actions.

The safety of imported foods continues to pose serious risks. Both USDA
and FDA have primary responsibility for ensuring the safety of imported
foods, but as we have previously reported, their approaches differ
significantly. While USDA relies on exporting countries’ assurances that
their systems are equivalent to the U.S. system, FDA physically inspects
and tests only about 1 percent of all imported foods through a resource-
intensive system of inspections at ports of entry. It is imperative that a risk-
based approach be implemented to strengthen the safety of imported
animals or products that could be infected with dangerous disease agents
such as bovine spongiform encephalopathy (BSE), commonly known as
mad cow disease. As we reported in January 2002, Customs has disclosed
significant error rates in importer-provided information for shipments at
risk for BSE, import controls over bulk mail are weak, and inspection
capacity has not kept pace with the growth in imports.12 However, some of
the weaknesses that we identified should be corrected by Congress’s
actions to enhance FDA’s authorities. For example, we previously reported
that FDA could not control imported foods or require that they be kept in a
registered warehouse prior to FDA approval for release into U.S.
commerce; as a result, adulterated imports were released into U.S.
commerce.13 FDA now has the authority to temporarily hold products at


11
  U.S. General Accounting Office, Meat and Poultry: Better USDA Oversight and
Enforcement of Safety Rules Needed to Reduce Risk of Foodborne Illnesses, GAO-02-902
(Washington, D.C.: Aug. 30, 2002).
12
  U.S. General Accounting Office, Mad Cow Disease: Improvements in the Animal Feed
Ban and Other Regulatory Areas Would Strengthen U.S. Prevention Efforts, GAO-02-183
(Washington, D.C.: Jan. 25, 2002).
13
 U.S. General Accounting Office, Food Safety and Security: Fundamental Changes
Needed to Ensure Safe Food, GAO-02-47T (Washington, D.C.: Oct. 10, 2001).




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                          ports of entry if they present a threat of serious adverse health
                          consequences. Furthermore, the June 2002 bioterrorism act protects
                          against the importation of adulterated food products by generally
                          prohibiting a product from entering the country at a port of entry if the
                          product had already been refused admission at another port of entry.



Improving the Integrity   USDA continues to face serious challenges in ensuring that eligible
                          individuals receive the proper benefits from the food assistance programs
of Food Assistance        administered by its Food and Nutrition Service. Each day, 1 in every 6
Programs                  Americans receives nutrition assistance through 1 or more of the 15
                          programs administered by this agency. These programs, which accounted
                          for slightly more than half of USDA’s budget authority for fiscal year 2002,
                          provide children and low-income adults with access to food, a healthful
                          diet, and nutrition education. Specifically, for fiscal year 2002, the
                          Congress appropriated about $38.8 billion to operate these programs,
                          including the Food Stamp Program and child nutrition programs, such as
                          the school-breakfast and school-lunch programs. This high level of support
                          dictates that USDA must continually address and minimize the amount of
                          fraud and abuse occurring in these programs in order to ensure their
                          integrity.

                          USDA’s challenges are clearly evident in the operation of the Food Stamp
                          Program—the cornerstone of its nutrition assistance programs. In fiscal
                          year 2001, this program provided 17.3 million individuals with more than
                          $15.5 billion in benefits. As noted in the President’s Management Agenda,
                          USDA must continue to address the challenge of accurately issuing food
                          stamp benefits to those who are eligible. Specifically, USDA estimated that
                          about $1.4 billion in erroneous payments were made to food stamp
                          recipients in fiscal year 2001—about $1 billion of the benefits issued were
                          estimated to be overpayments and more than $370 million were estimated
                          to be underpayments—an error rate of approximately 9 percent. To deal
                          with the complexity of the Food Stamp Program and the high error rate, the
                          2002 Farm Bill contained a number of administrative and simplification
                          reforms, such as allowing states to use greater flexibility in considering the
                          income of recipients for eligibility purposes and to extend simplified
                          reporting procedures for all program recipients.




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In addition to ensuring that eligible individuals receive proper benefits,
USDA faces the formidable challenge of minimizing the fraud and abuse
associated with the misuse of the billions of dollars in food stamp benefits,
which are accepted by about 149,000 authorized retail food stores.
Specifically, individuals sometimes illegally sell their benefits for cash—a
practice known as trafficking. The most recent report on the level of
trafficking, which USDA issued in March 2000, estimated that stores
trafficked about $660 million, or about 3.5 cents of every dollar of food
stamp benefits issued per year from 1996 through 1998. In addition,
storeowners generally do not pay the financial penalties assessed for
trafficking. To illustrate this condition, we reported in May 1999 that USDA
and the courts collected only $11.5 million, or about 13 percent, of the
$78 million in total penalties assessed against storeowners for violating
food stamp regulations from 1993 through 1998.14 USDA reduced the
remaining amount owed by storeowners by about $49 million, or about
55 percent, through waivers, adjustments, and write-offs. While
weaknesses in debt collection practices contribute to low collection rates,
USDA officials noted that these rates also reflect the difficulties involved in
collecting this type of debt, including problems in locating storeowners
who have been removed from the Food Stamp Program and the refusal of
some storeowners to pay their debts.

Better use of information technology has the potential to help USDA
minimize fraud, waste, and abuse in the Food Stamp Program. For
example, in our May 1999 report we recommended that the Food and
Nutrition Service make better use of data from electronic benefit transfers
(EBT) to identify and assess penalties against storeowners who violate the
Food Stamp Program’s regulations. Also, we recommended in March 2000
that the Food and Nutrition Service work with the states to implement best
practices for using EBT data to identify and take action against recipients
engaged in trafficking of food stamp benefits.15 The Food and Nutrition
Service has taken some actions to implement our recommendations, such
as assisting states in the use of EBT data to identify traffickers and has
other actions under way.


14
  U.S. General Accounting Office, Food Stamp Program: Storeowners Seldom Pay
Financial Penalties Owed for Program Violations, GAO/RCED-99-91 (Washington, D.C.:
May 11, 1999).
15
  U.S. General Accounting Office, Food Stamp Program: Better Use of Electronic Data
Could Result in Disqualifying More Recipients Who Traffic Benefits, GAO/RCED-00-61
(Washington, D.C.: Mar. 7, 2000).




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USDA also faces serious fraud and abuse challenges in other nutrition
programs, including the Child and Adult Care Food Program (CACFP),
which for fiscal year 2002 was funded at $1.8 billion, and the National
School Lunch and School Breakfast Programs, which for that year were
funded at $7.4 billion. In fiscal year 2001, CACFP provided subsidized
meals for a daily average of 2.6 million participants in the care of about
215,000 day care providers. Over the years, USDA’s OIG has identified case
after case of the intentional misuse of CACFP funds, including cases in
which program sponsors created fictitious day care providers and inflated
the number of meals served. In response to our November 1999
recommendation16 and reports by the OIG, legislation was enacted in June
2000 to strengthen CACFP management controls and to reduce its
vulnerability to fraud and abuse. As a result, the Food and Nutrition
Service has intensified its management evaluations at the state and local
levels and has trained its regional and state agency staff on revised
management procedures.

Furthermore, in its strategic plan for fiscal years 2000 through 2005, USDA
specifically identified the challenge it faces in ensuring that only eligible
participants are provided benefits in the National School Lunch Program.
In fiscal year 2001, this program provided nutritionally balanced, low-cost
or free lunches for over 27 million children each school day in more than
98,000 public and nonprofit private schools and residential child care
institutions. Past reports have disclosed that the number of children
certified as eligible to receive free lunches in this program was 18 percent
greater than the estimated number of children eligible for this benefit.
USDA has taken some initial steps to develop a cost-effective strategy to
address this integrity issue, such as pilot-testing potential policy changes to
improve the certification process.




16
  U.S. General Accounting Office, Food Assistance: Efforts to Control Fraud and Abuse in
the Child and Adult Care Food Program Should Be Strengthened, GAO/RCED-00-12
(Washington, D.C.: Nov. 29, 1999).




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Enhancing USDA’s           For many years, USDA struggled to improve its financial management
                           activities, but inadequate accounting systems and related procedures and
Ability to Account for     controls hampered its ability to get a clean opinion on its financial
Its Financial Activities   statements. After 8 consecutive disclaimers of opinion,17 USDA’s OIG
                           issued an unqualified opinion on USDA’s fiscal year 2002 financial
                           statements and reported that significant progress had been made in
                           improving overall financial management. On an agency-by-agency basis,
                           completed audits of fiscal year 2002 financial statements were also
                           positive. Specifically, unqualified audit opinions were issued on the
                           financial statements of the Forest Service, Commodity Credit Corporation,
                           Risk Management Agency/Federal Crop Insurance Corporation, the Rural
                           Development mission area, and the Rural Telephone Bank. While we
                           commend the department and its component agencies on their unqualified
                           opinions, some of these could not have occurred without extraordinary
                           efforts by the department and its auditors. Before USDA can achieve
                           sustainable financial accountability, it and its component agencies,
                           particularly the Forest Service, must address a number of serious problems
                           that USDA’s OIG or we have reported.

                           In order to achieve its unqualified opinion, USDA overcame some major
                           obstacles over a period of years. For example, in fiscal year 2001, the first
                           time since 1994, USDA’s lending agencies were able to estimate and
                           reestimate loan subsidy costs for the department’s net credit program
                           receivables, which totaled about $74 billion as of September 30, 2001.
                           Because of USDA’s achievement in this area, along with that of other key
                           lending agencies, this item was no longer a factor contributing to our
                           disclaimer of opinion on the fiscal year 2001 consolidated financial
                           statements of the U.S. government.18

                           In its fiscal year 2002 audit report, the OIG stated that USDA made
                           significant improvements in its overall financial management, such as
                           implementation of a departmentwide standard accounting system.
                           However, if USDA is to achieve and sustain financial accountability, it must


                           17
                             A disclaimer of opinion means that the auditor is unable to form an opinion on the
                           financial statements. A disclaimer results when a pervasive material uncertainty exists or
                           there is a significant restriction on the scope of the audit.
                           18
                            U.S. General Accounting Office, U.S. Government Financial Statements: FY2001 Results
                           Highlight the Continuing Need to Accelerate Federal Financial Management Reform,
                           GAO-02-599T (Washington, D.C.: Apr. 9, 2002).




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fundamentally improve its underlying internal controls, financial
management systems, and operations to allow for the routine production of
accurate, relevant, and timely data to support program management and
accountability. For example, among other things, USDA needs to address
the problems with its legacy systems to improve integration of the financial
management architecture, reconcile its property system with the general
ledger in a timely manner, and correct inconsistencies in its accounting
processes.

The OIG also noted that USDA made significant progress during fiscal year
2002 in reconciling its fund balance19 accounts with the Department of the
Treasury (Treasury) and that the OIG was able to validate this line item on
USDA’s fiscal year 2002 financial statements. However, the OIG continues
to report this area as a material internal control weakness due to
continuing deficiencies in its reconciliation processes.

The OIG, in reporting on USDA’s compliance with laws and regulations
during fiscal year 2002, stated that USDA does not substantially comply
with the 3 requirements of the Federal Financial Management
Improvement Act of 1996 (FFMIA), including federal financial systems
requirements, applicable federal accounting standards, and the U.S.
Standard General Ledger at the transaction level. Lack of compliance
stems from USDA’s many disparate accounting systems that are not
integrated; material internal control weaknesses; and the inability to
prepare auditable financial statements on a routine basis. USDA’s
September 30, 2002, FFMIA Remediation Plan discussed a number of
remedial actions that the department expects to complete in fiscal year
2006. Additionally, the OIG reported that USDA’s systems are not designed
to provide the reliable and timely cost information required to comply with
the Statement of Federal Financial Accounting Standards No. 4,
Managerial Cost Accounting Concepts and Standards. Specifically, the
OIG’s review of user fees disclosed that two USDA agencies were not
including the full costs of their user fee programs when determining fees
and were not recovering the full costs of performing services for their
individual programs.

Another financial management challenge for USDA is federal nontax
delinquent debt collection. USDA reported holding $6.2 billion of federal


19
   USDA records its budget authority in asset accounts called Fund Balance with Treasury
and increases or decreases these accounts as it collects or disburses funds.




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nontax debt that was delinquent more than 180 days as of September 30,
2001. The Debt Collection Improvement Act of 1996 gave federal agencies
a full array of tools to collect such delinquent debt. Among other things,
the Debt Collection Improvement Act provides (1) a requirement for
federal agencies to refer eligible debts delinquent more than 180 days to the
Department of the Treasury for collection action and (2) authorization for
agencies to administratively garnish the wages of delinquent debtors.

In December 2001, we reported that two USDA agencies, Rural
Development’s Rural Housing Service and the Farm Service Agency, had
failed to make the Debt Collection Improvement Act a priority since its
enactment in 1996.20 Specifically, the Rural Housing Service had not
implemented an effective and complete process to refer debts to Treasury
mainly because of systems limitations, debt reporting problems, and lack of
regulations needed to refer losses resulting from claims paid under its
guaranteed single family housing loan program. The Farm Service Agency
lacked effective procedures and controls to identify and promptly refer
eligible delinquent debts to Treasury. Moreover, USDA had not utilized
administrative wage garnishment to collect delinquent nontax debts.
Consequently, opportunities for collecting delinquent nontax debts as
contemplated by the Debt Collection Improvement Act were severely
reduced.

USDA officials made a commitment in December 2001 to substantially
improve the department’s implementation of the Debt Collection
Improvement Act by December 2002, and progress has been made.
However, challenges remain that will require sustained commitment and
priority from top management. For example, the Rural Housing Service
still must complete regulations to refer losses related to its guaranteed
single family housing loans to Treasury and an automated process for such
referrals, and the Farm Service Agency must complete actions needed to
ensure that all of its eligible debt is promptly referred to Treasury. In
addition, USDA must complete regulations that are required to implement
administrative wage garnishment departmentwide and get all of its
component agencies to begin using this debt collection tool to the fullest
extent practicable. The OIG reported material noncompliance with the
Debt Collection Improvement Act in its fiscal year 2002 audit report,


20
 U.S. General Accounting Office, Debt Collection Improvement Act of 1996: Department of
Agriculture Faces Challenges Implementing Certain Key Provisions, GAO-02-277T
(Washington, D.C.: Dec. 5, 2001).




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reiterating the need for sustained commitment and priority by top
management.

An area of particular concern within USDA continues to be the Forest
Service. In 1999, we designated financial management at the Forest Service
to be "high risk" on the basis of serious financial and accounting
weaknesses that had been identified, but not corrected, in the agency’s
financial statements for a number of years. The Forest Service received its
first ever unqualified opinion on its fiscal year 2002 financial statements,
which represents progress from prior years when the OIG was unable to
express an opinion. But it took heroic efforts to achieve an unqualified
opinion. For example, the Forest Service still lacks an adequate system to
account for its property. Further, to derive its fund balance with Treasury
accounts, the Forest Service made millions of dollars in adjustments. While
the Forest Service has reached an important milestone by attaining a clean
audit opinion on its financial statements, it has not yet proven it can sustain
this outcome, and it has not reached the end goal of routinely having timely,
accurate, and useful financial information. The Forest Service continues to
commit considerable resources to correcting its financial management
weaknesses; however, much work remains. We continue to designate
financial management at the Forest Service as "high risk" on the basis of its
serious internal control weaknesses.

While the Forest Service made significant progress in fiscal year 2002 to
reconcile its fund balance with Treasury accounts, the financial statement
auditor (auditor) noted significant control deficiencies in its reconciliation
processes. For example, the Forest Service needs to research a large
backlog of unreconciled items and take corrective actions. In order to
bring the Forest Service’s fund balance with Treasury accounts into
balance with Treasury records as of September 30, 2002, the Forest Service
recorded an adjustment of $107 million. The auditor recommended that
the Forest Service document its reconciliation processes, establish a point
of contact at the National Finance Center to assist in the reconciliation
process, analyze and determine the proper disposition of its budget and
clearing accounts, and allocate the necessary resources to complete
monthly reconciliations in a timely manner.




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The auditor also reported material deficiencies in the Forest Service’s
general controls environment and software application controls. General
controls involve the overall computer operation. For example, the auditor
noted operation controls for determining the trustworthiness of personnel
and limiting access to information systems need improvement. The
internal control weaknesses involving the software application controls21
related to its procurement, real and personal property systems.
Application controls play a crucial role in the accuracy, completeness,
security, and auditability of these feeder systems. Without adequate
general and application controls the Forest Service is exposed to the risk of
its property records being corrupted, lost or altered, and errors and
omissions not being prevented, detected, and corrected. The auditors
recommended several actions for improving controls over user access,
system interfaces, system edits, separation of duties, and data accuracy
and completeness.

Further, the auditor reported that internal controls related to the accurate
recording of property transactions need improvement. For example, the
auditor noted that the recorded amount of certain transactions did not
agree with the supporting documentation; labor costs and other costs were
improperly capitalized; and critical information in the initial recording of
acquisition cost, in-service date, and useful life were not reviewed. Internal
controls over the recording of assets are essential to avoid overstating and
understating assets. The auditors made several recommendations to
improve internal controls over its property, plant, and equipment.

The auditor also noted that the Forest Service’s proposed methodology for
estimating certain liabilities, such as grants, was not accurate and did not
substantially support the unpaid amount of goods that had been delivered
as of the end of the fiscal year. In addition, the proposed methodology did
not consider payments to states, which are recorded as liabilities as of
September 30. If the Forest Service had used its proposed methodology,
both its accrued liabilities and associated expenses would have been
understated for fiscal year 2002. As a result, sampling methodologies were
utilized to project the September 30 accrued liability balance. The OIG
recommended that the Forest Service develop a new methodology for



21
 Application controls are methods and procedures designed to provide reasonable
assurance that data are valid, properly authorized, and completely and accurately
processed.




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                        estimating liabilities and maintain the supporting documentation used to
                        determine the estimate.

                        Further, the auditor noted serious automated control deficiencies with the
                        Forest Service’s timecard entry system. For example, it allowed the Forest
                        Service users to submit their time sheets for approval to an employee who
                        was not the designated supervisor. In some locations the employee could
                        send the time sheet to him/herself for approval. In addition, the auditor
                        reported deficiencies in manual controls over the payroll process, such as
                        missing employee and/or supervisor signatures. The auditor recommended
                        that the Forest Service implement controls to ensure that employees’
                        supervisors appropriately review and approve their subordinates time
                        sheets, reinforce the requirement for time sheets to be signed by both the
                        employee and supervisor, and reconcile and bi-weekly certify its payroll
                        registers to its personnel listing.



Improving               The Forest Service continues to face challenges involving the controversial
                        refocusing of its mission from producing goods and services towards a
Performance             greater emphasis on restoring and protecting the health of the forests and
Accountability at the   rangelands that it is responsible for managing. The agency also needs to
                        make clear to the Congress and the public its accomplishments with the
Forest Service          funds it expends. Since our January 2001 report, the agency has taken
                        some steps to address the challenges that it faces in improving
                        performance accountability. However, the agency may be years away from
                        fully attaining accountability for its performance, and its recently initiated
                        actions will require close monitoring by USDA and the Congress.
                        Accountability is critical to the Forest Service as it undergoes this change
                        in its mission emphasis, which it believes is necessary because some of the
                        natural resources under its control are deteriorating. Key to successfully
                        implementing this new emphasis is determining where or under what
                        circumstances the agency should actively manage lands to restore them or
                        when it can rely more on natural ecological processes for restoration.
                        These choices are technically challenging and controversial and have
                        substantial consequences for agency funding priorities. Also, this shift in
                        the Forest Service’s mission emphasis required new, more ecologically
                        based, strategic goals and performance measures. As a result, the agency
                        has had difficulty accounting for its performance both in providing goods
                        and services and in ensuring the health of the natural resources under its
                        control.




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In our January 2001 report, we noted that the agency’s lack of
accountability in recent years occurred, at least in part, because it had not
linked its budget and organizational structures, planning processes, and
resource allocations with its strategic goals, objectives, and performance
measures. We also reported that the agency had difficulty in developing
good performance measures and monitoring progress critical to ensuring
accountability as well as in working with other agencies on common issues
where joint action is needed to achieve goals. In addition, we reported that
while the agency had made numerous promises in recent years to provide
the Congress and the public with a better understanding of what it
accomplishes with appropriated funds, it did not appear to be fully
committed to establishing the key linkages, measures, monitoring, and
coordination needed for accountability.

In fiscal year 2002, the Forest Service announced a series of actions,
collectively termed the Performance Accountability System, that it had
initiated or planned to address its accountability problems more
comprehensively. These actions were undertaken in response to
information in our prior reports and in conjunction with the initiatives
contained in the President’s Management Agenda and the Office of
Management and Budget’s call for greater linkage between budgets and
performance within agencies and across agencies dealing with common
issues. For example, the agency said it would establish common
performance measures with other agencies for reducing catastrophic
wildfires in areas where the threats of such wildfires transcend their
individual administrative boundaries. Also, the Forest Service told us that
it had started and planned several activities that it believed reflect a fuller
commitment to providing the Congress and the public with a better
understanding of what it achieves with the funds it expends. These actions
included (1) developing an annual performance plan before formulating
budgets; (2) using the plan to set priorities and sequence milestones and
goals; and (3) developing clear links among the budget structure, program
activities, outputs, annual goals and measures, and long-term strategic
outcomes and measures. In addition, to better ensure linkage between
resource allocations and accomplishments, agency officials told us that
they are considering developing a monitoring system to track activities and
funds.

The Forest Service has acknowledged that, despite efforts underway to
adopt what it regards as a strategy for improving organizational efficiency,
it needs to do much more to become fully accountable. Agency officials
estimate that the first stage of their improvement efforts will not be



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                 completed before fiscal year 2005 and may take much longer. We agree.
                 For instance, even though the agency has pledged to work with other
                 agencies and adopt common performance measures for reducing wildfire
                 threats, the Forest Service officials told us they did not know if the agency’s
                 current information systems are able to generate the data needed to
                 support those measures. If so, it will be difficult for the Forest Service to
                 develop meaningful links between these measures and its budget structure,
                 program activities, outputs, annual goals, and long-term strategic
                 outcomes.

                 The Forest Service’s recently initiated and planned actions have not been
                 evaluated and many obstacles remain to improving its performance
                 accountability. Until the agency resolves these concerns, some
                 accountability problems will likely remain in varying degrees. For this
                 reason, the actions recently taken by the agency to increase performance
                 accountability will need continued close monitoring by USDA and the
                 Congress.



Resolving        USDA’s Office of Civil Rights continues to experience significant problems
                 in processing discrimination complaints in a timely manner. Despite
Discrimination   having implemented many recommendations that we and others have made
Complaints       to improve the resolution of discrimination complaints, the processing of
                 complaints involving the delivery of program benefits and services by the
                 Office of Civil Rights continues to exceed the department’s time
                 requirement. Key contributing factors to this problem include high staff
                 turnover and low employee morale. In addition, USDA’s processing-time
                 requirement does not address all stages of complaint resolution. As a
                 result, even if the time requirement were met, total complaint processing
                 times could stretch out indefinitely. As such, the resolution of
                 discrimination complaints continues to be a serious management challenge
                 at USDA.




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For many years, USDA’s Office of Civil Rights has been the subject of
numerous critical reports issued by us, the OIG, and internal task forces.
These reports have a reoccurring theme: the office’s untimely processing
of discrimination complaints. In January 1999, we reported that despite
USDA efforts to improve processing times, the office did not meet
requirements. In September 2002, we reported that while the office had
made modest progress in the length of time it takes to process program
discrimination complaints, it was still failing to comply with existing
requirements.22 For example, although the average processing time to
complete investigative reports improved from 365 days to 315 days for
complaints resolved in fiscal years 2000 and 2001, respectively, the time
frame continues to exceed the requirement that the reports be completed
within 180 days after accepting a discrimination complaint. Furthermore,
because the 180-day requirement only covers the investigation of a
complaint, the total processing time of complaints was significantly higher.
For example, the requirement does not cover the adjudication phase.
When all stages of complaint resolution are accounted for, average
processing times reached 772 and 676 days for program discrimination
complaints resolved in fiscal years 2000 and 2001, respectively.

The Office of Civil Rights has made only modest progress in improving its
timely processing of complaints because it has yet to address severe,
underlying human capital problems. Specifically, the office has had long-
standing problems in obtaining and retaining staff with the right mix of
skills. The retention problem is evidenced by the fact that only about
two-thirds of the staff engaged in processing program complaints in fiscal
year 2000 was still on board 2 years later. Also, severe morale problems
have exacerbated staff retention problems and have adversely affected the
productivity of the remaining staff. During fiscal years 2000 and 2001, the
office had one of the highest rates within USDA of discrimination
complaints filed by employees. In addition, office officials told us that
some staff have threatened fellow employees or sabotaged their work. As
we reported in September 2002, although the Director of the Office of Civil
Rights believes that the situation has improved over the past few years, he
said that some of the more serious morale problems have not been
resolved.



22
 U.S. General Accounting Office, Department of Agriculture: Improvements in the
Operations of the Civil Rights Program Would Benefit Hispanic and Other Minority
Farmers, GAO-02-942 (Washington, D.C.: Sept. 20, 2002).




Page 26                                                   GAO-03-96 USDA Challenges
Major Performance and Accountability
Challenges




In light of these problems, we recommended actions to help ensure USDA’s
timely processing of discrimination complaints. Specifically, in September
2002 we recommended that, among other things, USDA establish time
frame goals for all stages of the complaint process and develop an action
plan to address ongoing staff turnover and morale problems in its Office of
Civil Rights. The department generally agreed with our recommendations.
In addition, the Congress has taken action to improve USDA’s long-standing
problems with civil rights. Key among these was a provision in the 2002
Farm Bill that authorizes the position of Assistant Secretary for Civil Rights
within USDA. As a result of this action, civil rights issues and problems
within USDA should receive greater attention.




Page 27                                               GAO-03-96 USDA Challenges
GAO Contacts




               Subject(s) covered in this report                  Contact person
               Security of biological agents                      Lawrence J. Dyckman, Director
               Protecting against importing animal diseases       Natural Resources and Environment
               Improving the delivery of services to farmers      (202) 512-3841
               Enhancing the safety of the nation’s food supply   dyckmanl@gao.gov
               Resolving discrimination complaints
               Security of aircraft                               Barry T. Hill, Director
               Improving performance accountability at the        Natural Resources and Environment
               Forest Service                                     (202) 512-3841
                                                                  hillb@gao.gov
               Security of information                            Bob Dacey, Director
                                                                  Information Technology
                                                                  (202) 512-3317
                                                                  daceyb@gao.gov
               Providing food assistance and improving            Sigurd R. Nilsen, Director
               program integrity                                  Education, Workforce and Income
                                                                   Security
                                                                  (202) 512-7215
                                                                  nilsens@gao.gov
               Enhancing financial management                     McCoy Williams, Director
                                                                  Financial Management and Assurance
                                                                  (202) 512-6906
                                                                  williamsm1@gao.gov




               Page 28                                                        GAO-03-96 USDA Challenges
Related GAO Products



Performance and                Major Management Challenges and Program Risks: A Governmentwide
Accountability Series          Perspective. GAO-01-241. Washington, D.C.: January 2001.

                               Major Management Challenges and Program Risks: Department of
                               Agriculture. GAO-01-242. Washington, D.C.: January 2001.



Ensuring Adequate Security

Protecting Against Importing   Foot and Mouth Disease: To Protect U.S. Livestock, USDA Must Remain
Animal Diseases                Vigilant and Resolve Outstanding Issues. GAO-02-808. Washington, D.C.:
                               July 26, 2002.

Security of Information        USDA Electronic Filing: Progress Made, But Central Leadership and
                               Comprehensive Implementation Plan Needed. GAO-01-324. Washington,
                               D.C.: February 28, 2001.

                               Information Security: USDA Needs to Implement Its Departmentwide
                               Information Security Plan. GAO/AIMD-00-217. Washington, D.C.:
                               August 10, 2000.



Improving the Delivery of      Supporting Congressional Oversight: Budgetary Implications of Selected
Services to Farmers            GAO Work for Fiscal Year 2003. GAO-02-576. Washington, D.C.: April. 26,
                               2002.

                               U.S. Department of Agriculture: State Office Collocation.
                               GAO/RCED-00-208R. Washington, D.C.: June 30, 2000.

                               USDA Reorganization: Progress Mixed in Modernizing the Delivery of
                               Services. GAO/RCED-00-43. Washington, D.C.: February 3, 2000.



Enhancing the Safety of the    Meat and Poultry: Better USDA Oversight and Enforcement of Safety
Nation’s Food Supply           Rules Needed to Reduce Risk of Foodborne Illnesses. GAO-02-902.
                               Washington, D.C.: August 30, 2002.

                               Genetically Modified Foods: Experts View Regimen of Safety Tests as
                               Adequate, but FDA’s Evaluation Process Could Be Enhanced. GAO-02-566.
                               Washington, D.C.: May 23, 2002.



                               Page 29                                           GAO-03-96 USDA Challenges
                            Related GAO Products




                            Food Safety: Continued Vigilance Needed to Ensure Safety of School
                            Meals. GAO-02-669T. Washington, D.C.: April 30, 2002.

                            Mad Cow Disease: Improvements in the Animal Feed Ban and Other
                            Regulatory Areas Would Strengthen U.S. Prevention Efforts. GAO-02-183.
                            Washington, D.C.: January 25, 2002.

                            Food Safety: Weaknesses in Meat and Poultry Inspection Pilot Should Be
                            Addressed Before Implementation. GAO-02-59. Washington, D.C.:
                            December 17, 2001.

                            Food Safety and Security: Fundamental Changes Needed to Ensure Safe
                            Food. GAO-02-47T. Washington, D.C.: October 10, 2001.

                            Food Safety: CDC Is Working to Address Limitations in Several of Its
                            Foodborne Disease Surveillance Systems. GAO-01-973. Washington, D.C.:
                            September 7, 2001.

                            Food Safety: Federal Oversight of Shellfish Safety Needs Improvement.
                            GAO-01-702. Washington, D.C.: July 9, 2001.

                            Food Safety: Overview of Federal and State Expenditures. GAO-01-177.
                            Washington, D.C.: February 20, 2001.

                            Food Safety: Federal Oversight of Seafood Does Not Sufficiently Protect
                            Consumers. GAO-01-204. Washington, D.C.: January 31, 2001.

                            Food Safety: U.S. Needs a Single Agency to Administer a Unified, Risk-
                            Based Inspection System. GAO/T-RCED-99-256. Washington, D.C.:
                            August 4, 1999.



Providing Food Assistance   Food Stamp Program: States’ Use of Options and Waivers to Improve
and Improving Program       Program Administration and Promote Access. GAO-02-409. Washington,
                            D.C.: February 22, 2002.
Integrity
                            Food Stamp Program: Implementation of Electronic Benefit Transfer
                            Systems. GAO-02-332. Washington, D.C.: January 16, 2002.

                            Food Assistance: WIC Faces Challenges in Providing Nutrition Services.
                            GAO-02-142. Washington, D.C.: December 7, 2001.




                            Page 30                                           GAO-03-96 USDA Challenges
                      Related GAO Products




                      Food Stamp Program: Program Integrity and Participation Challenges.
                      GAO-01-881T. Washington, D.C.: June 27, 2001.

                      Food Assistance: Reducing the Trafficking of Food Stamp Benefits.
                      GAO/RCED-00-250. Washington, D.C.: July 19, 2000.

                      Food Stamp Program: Better Use of Electronic Data Could Result in
                      Disqualifying More Recipients Who Traffic Benefits. GAO/RCED-00-61.
                      Washington, D.C.: March 7, 2000.

                      Food Assistance: Efforts to Control Fraud and Abuse in the Child and
                      Adult Care Food Program Should Be Strengthened. GAO/RCED-00-12.
                      Washington, D.C.: November 29, 1999.

                      Food Stamp Program: Storeowners Seldom Pay Financial Penalties
                      Owed for Program Violations. GAO/RCED-99-91. Washington, D.C.:
                      May 11, 1999.



Enhancing Financial   Financial Management: Effective Implementation of FFMIA Is Key to
Management            Providing Reliable, Useful, and Timely Data. GAO-02-791T. Washington,
                      D.C.: June 6, 2002.

                      U.S. Government Financial Statements: FY 2001 Results Highlight the
                      Continuing Need to Accelerate Federal Financial Management Reform.
                      GAO-02-599T. Washington, D.C.: April 9, 2002.

                      Financial Management: FFMIA Implementation Critical for Federal
                      Accountability. GAO-02-29. Washington, D.C.: October 1, 2001.

                      Financial Management: Annual Costs of Forest Service’s Timber Sales
                      Program Are Not Determinable. GAO-01-1101R. Washington, D.C.:
                      September 21, 2001.

                      U.S. Government Financial Statements: FY 2000 Reporting Underscores
                      the Need to Accelerate Federal Financial Management Reform.
                      GAO-01-570T. Washington, D.C.: March 30, 2001.

                      High-Risk Series: An Update. GAO-01-263. Washington, D.C.: January
                      2001.




                      Page 31                                          GAO-03-96 USDA Challenges
                               Related GAO Products




                               Financial Management: USDA Continues to Face Major Financial
                               Management Challenges. GAO/T-AIMD-00-334. Washington, D.C.:
                               September 27, 2000.

                               Financial Management: USDA Faces Major Financial Management
                               Challenges. GAO/T-AIMD-00-115. Washington, D.C.: March 21, 2000.



Improving Performance          Wildland Fire Management: Reducing the Threat of Wildland Fires
Accountability at the Forest   Requires Sustained and Coordinated Effort. GAO-02-843T. Washington,
                               D.C.: June 13, 2002.
Service
                               Wildland Fire Management: Improved Planning Will Help Agencies
                               Better Identify Fire-Fighting Preparedness Needs. GAO-02-158.
                               Washington, D.C.: March 29, 2002.

                               Severe Wildland Fires: Leadership and Accountability Needed to Reduce
                               Risks to Communities and Resources. GAO-02-259. Washington, D.C.:
                               January 31, 2002.

                               The National Fire Plan: Federal Agencies Are Not Organized to
                               Effectively and Efficiently Implement the Plan. GAO-01-1022T.
                               Washington, D.C.: July 31, 2001.

                               Forest Service: Actions Needed for the Agency to Become More
                               Accountable for Its Performance. GAO/T-RCED-00-236. Washington, D.C.:
                               June 29, 2000.

                               Forest Service: Status of Efforts to Improve Accountability.
                               GAO/T-RCED/AIMD-00-93. Washington, D.C.: February 16, 2000.

                               Forest Service: A Framework for Improving Accountability.
                               GAO/RCED/AIMD-00-2. Washington, D.C.: October 13, 1999.

                               Western National Forests: A Cohesive Strategy is Needed to Address
                               Catastrophic Wildfire Threats. GAO/RCED-99-65. Washington, D.C.:
                               April 2, 1999.

                               Forest Service Decision-Making: A Framework for Improving
                               Performance. GAO/RCED-97-71. Washington, D.C.: April 29, 1997.




                               Page 32                                          GAO-03-96 USDA Challenges
                           Related GAO Products




Resolving Discrimination   Department of Agriculture: Hispanic and Other Minority Farmers Would
Complaints                 Benefit from Improvements in the Operations of the Civil Rights
                           Program. GAO-02-1124T. Washington, D.C.: September 25, 2002.

                           Department of Agriculture: Improvements in the Operations of the Civil
                           Rights Program Would Benefit Hispanic and Other Minority Farmers.
                           GAO-02-942. Washington, D.C.: September 20, 2002.

                           U.S. Department of Agriculture: Resolution of Discrimination
                           Complaints Involving Farm Credit and Payment Programs.
                           GAO-01-521R. Washington, D.C.: April 12, 2001.

                           U.S. Department of Agriculture: Problems in Processing Discrimination
                           Complaints. GAO/T-RCED-00-286. Washington, D.C.: September 12, 2000.

                           U.S. Department of Agriculture: Problems Continue to Hinder the Timely
                           Processing of Discrimination Complaints. GAO/RCED-99-38.
                           Washington, D.C.: January 29, 1999.




                           Page 33                                         GAO-03-96 USDA Challenges
Performance and Accountability and
High-Risk Series

              Major Management Challenges and Program Risks: A Governmentwide
              Perspective. GAO-03-95.

              Major Management Challenges and Program Risks: Department of
              Agriculture. GAO-03-96.

              Major Management Challenges and Program Risks: Department of
              Commerce. GAO-03-97.

              Major Management Challenges and Program Risks: Department of
              Defense. GAO-03-98.

              Major Management Challenges and Program Risks: Department of
              Education. GAO-03-99.

              Major Management Challenges and Program Risks: Department of
              Energy. GAO-03-100.

              Major Management Challenges and Program Risks: Department of Health
              and Human Services. GAO-03-101.

              Major Management Challenges and Program Risks: Department of
              Homeland Security. GAO-03-102.

              Major Management Challenges and Program Risks: Department of
              Housing and Urban Development. GAO-03-103.

              Major Management Challenges and Program Risks: Department of the
              Interior. GAO-03-104.

              Major Management Challenges and Program Risks: Department of
              Justice. GAO-03-105.

              Major Management Challenges and Program Risks: Department of Labor.
              GAO-03-106.

              Major Management Challenges and Program Risks: Department of State.
              GAO-03-107.

              Major Management Challenges and Program Risks: Department of
              Transportation. GAO-03-108.




              Page 34                                       GAO-03-96 USDA Challenges
Performance and Accountability and High-
Risk Series




Major Management Challenges and Program Risks: Department of the
Treasury. GAO-03-109.

Major Management Challenges and Program Risks: Department of
Veterans Affairs. GAO-03-110.

Major Management Challenges and Program Risks: U.S. Agency for
International Development. GAO-03-111.

Major Management Challenges and Program Risks: Environmental
Protection Agency. GAO-03-112.

Major Management Challenges and Program Risks: Federal Emergency
Management Agency. GAO-03-113.

Major Management Challenges and Program Risks: National Aeronautics
and Space Administration. GAO-03-114.

Major Management Challenges and Program Risks: Office of Personnel
Management. GAO-03-115.

Major Management Challenges and Program Risks: Small Business
Administration. GAO-03-116.

Major Management Challenges and Program Risks: Social Security
Administration. GAO-03-117.

Major Management Challenges and Program Risks: U.S. Postal Service.
GAO-03-118.

High-Risk Series: An Update. GAO-03-119.

High-Risk Series: Strategic Human Capital Management. GAO-03-120.

High-Risk Series: Protecting Information Systems Supporting the
Federal Government and the Nation’s Critical Infrastructures.
GAO-03-121.

High-Risk Series: Federal Real Property. GAO-03-122.




Page 35                                          GAO-03-96 USDA Challenges
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