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That's One Colossal Rounding Error: NASA Makes $590 Million Accounting Mistake

Press Release From: House Committee on Science, Space, and Technology
Posted: Thursday, July 6, 2000

Committee on Science
F. James Sensenbrenner, Jr., Chairman
Ralph M. Hall, Texas, Ranking Democrat
www.house.gov/science/welcome.htm

July 6, 2000

Press Contact:
Jeff Lungren (Jeff.Lungren@mail.house.gov)
(202) 225-4275

That's One Colossal Rounding Error: NASA Makes $590 Million Accounting Mistake
Sensenbrenner Requests Complete Explanation for Error

WASHINGTON, D.C. - House Science Committee Chairman F. James Sensenbrenner, Jr., (R-WI) today sent a letter to NASA Administrator Dan Goldin requesting NASA accurately account for its financial resources after NASA was forced to admit a $590 million mistake in its 1999 Financial Accountability Report. The error, detected by the House Science Committee, went unnoticed by auditors at Arthur Andersen LLP, the independent accounting firm hired to examine the space agency's financial books.

Chairman Sensenbrenner commented, "I'm deeply disappointed that the agency that could send a man to the moon now can't even balance its books to the nearest half-billion. Inattention to details such as using English or metric units, or making $590 million accounting errors indicate significant management problems continue to bedevil NASA."

The annual Financial Accountability Report summarizes NASA's stewardship over budget and financial resources. NASA's Chief Financial Officer Arnold G. Holz calls the report, "a culmination of NASA's management process."

Chairman Sensenbrenner's letter requests, "a complete explanation, in writing, for why NASA and its auditors failed to catch the errors made and the actions being taken to ensure that NASA has adequate controls in place to accurately track, manage, and report its financial resources."

Chairman Sensenbrenner's letter is attached.

106-142
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July 6, 2000

The Honorable Daniel S. Goldin
Administrator
National Aeronautics and Space Administration
Washington, DC 20546

Dear Mr. Goldin:

As you know, NASA's budget is the largest of all the independent agencies of the federal government and management of such a large and diverse enterprise is clearly a challenge. Nevertheless, the American taxpayers expect NASA to properly manage and accurately account for the funds entrusted to it.

Unfortunately, it has come to my attention that NASA has erroneously reported the financial status of its program. Specifically, NASA's 1999 Financial Accountability Report contains a $590 million error that went undetected by NASA accountants and its auditors at Arthur Andersen LLP. Further, the amounts reported on the SF133 Budget Execution Report were incorrect. On June 12, NASA provided a written explanation admitting that these error were made. This regrettable circumstance brings into question the overall integrity of NASA's financial management system.

I am not satisfied that the committee has received a full explanation for these mistakes. I would like NASA to provide the committee with a complete explanation, in writing, for why NASA and its auditors failed to catch the errors made and the actions being taken to ensure that NASA has adequate controls in place to accurately track, manage, and report its financial resources. Finally, I would like NASA to provide a complete and accurate accounting of its financial resources for the years FY97, FY98, and FY99.

Sincerely,

F. JAMES SENSENBRENNER, JR.
Chairman

FJS/wba

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