ABBREVIATIONS ADP AID BPR CSC DOD DOT FAA FAS FHWA FSI GAO GSFC HEW HHFA HUD IADS IRS NASA ОЕО OST PAID PPB R. & D. Personnel and accounting integrated data pay subsystem. Research and Development. RFDPC Regional Finance and Data Processing Center, Department of State, Paris, France. SBA Small Business Administration. SLSDC St. Lawrence Seaway Development Corporation. U.S. Department of Agriculture. U.S. Information Agency. Why the review was made DIGEST This is the first annual report by GAO to the Congress summarizing progress being made by Federal agencies in developing and improving their accounting systems in accordance with the overall mandates of the Congress and the related principles, standards, and requirements prescribed by the Comptroller General. This report was prepared in response to the recommendation of the House Committee on Government Operations (H. Rept. 1159, 90th Cong. second sess., Mar. 5, 1968). The General Accounting Office is responsible under the Budget and Accounting Procedures Act of 1950 for cooperating in the development of executive agency accounting systems, for reviewing the systems from time to time, and for approving them when they are considered to be adequate and in conformity with prescribed accounting principles, standards, and related requirements. Observations Federal agencies are showing increased interest and activity in improving their financial management systems, in obtaining approval of their accounting systems, and in developing adequate accounting systems. However, the magnitude of the work yet to be accomplished is indicated by the fact that only 62 systems in the civil departments and agencies had been approved at December 31, 1968, out of a total of 147 subject to approval. The number of currently outstanding approval actions is shown in the following tabulation. Only one complete system (Corps of Engineers-civil works) has been approved in the Department of Defense, although the principles contained in a number of general instructions have been approved. The number of systems subject to approval has not yet been determined by the Department. (See p. 14 and app. I.) The General Accounting Office anticipates applying about 200 man-years of effort during fiscal year 1970 to assist the executive departments and agencies in developing acceptable accounting systems and to the review and approval of these systems. The President's Commission on Budget Concepts was established to study the Federal budget and to recommend how it could be presented to help both the public and Congress to understand it better. The Commission's report issued in October 1967 heartily endorsed the trend toward the use of accrual accounting and recommended that budget expenditures and receipts be reported on an accrual basis. The Commission's recommendations and endorsement of accrual accounting has provided an additional incentive for accounting systems improvements in the Federal agencies. Both President Johnson and President Nixon have supported development of improved systems of financial management including emphasis on the accrual basis of accounting as required by law and as recommended by the President's Commission on Budget Concepts. The concept of accrual accounting a requirement stated in law and in related principles and standards prescribed by the Comptroller General-has been generally accepted in principle throughout the Government. Current problems relate primarily to effectively applying the concept in practice. While Federal agencies have, with some exceptions, adopted the concept of monetary property accounting-proper accountability of Government-owned property in dollar terms serious deficiencies exist in implementing and operating such systems. (See pp. 8-9.) There is a need for better coordination between PPB staffs and the accounting and reporting staffs in most Federal agencies. (See p. 7.) There are too few good cost accounting systems in the Federal Government. (See p. 7.) There is a continuing shortage of qualified accountants in the Federal Government. (See p. 11.) Recommendations or suggestions This report contains no specific recommendations. However, GAO has made numerous recommendations and suggestions concerning financial management and accounting matters in reports to the Congress and to agency officials, and in informal dealings with agencies. Examples of such recommendations and suggestions are cited in chapter 5 as they relate to individual agencies. Agency actions and unresolved issues The more important actions being taken by individual executive agencies in developing their accounting systems and the issues that need to be resolved are described in chapter 5. Matters for consideration by the Congress This report is presented for the information of the Congress in accordance with a recommendation of the House Committee on Government Operations for an annual report on the status and progress by agencies in developing their accounting systems. Future reports are planned to be, as this one is, on a calendar year basis. |