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GAO Report: Financial Management: Achieving FFMIA Compliance Continues to Challenge Agencies (NASA Exceprts)

Status Report From: Government Accountability Office
Posted: Wednesday, September 21, 2005

GAO-05-881, September 20.

Full Report

Page 20

At the National Aeronautics and Space Administration (NASA), auditors reported numerous weaknesses in the core financial system, the integrated financial management system first implemented by NASA in fiscal year 2003. We have previously reported on problems NASA faced when implementing this system.31Specifically, the auditors found that the core financial system lacked integration with certain key subsidiary systems, such as the property system, and does not facilitate the preparation of financial statements. Although the auditors recognized that management identified and resolved significant system problems in fiscal year 2004, the auditors identified serious continuing weaknesses in their review of property, plant, and equipment (PP&E)óspecifically contractor-held PP&E. For example, due to a lack of integration with the property system, entries for contractor-held property, totaling $8.5 billion, had to be manually entered into the core financial system. The auditors concluded that the problems will not be fully addressed until NASA implements a single integrated system for reporting property and develops a methodology to identify costs that should be capitalized at the time that transactions are processed. The auditors further noted that certain transactions continue to be posted incorrectly due to improper configurations within the system. Consequently, they concluded that NASA lacks an integrated financial management system that provides effective and efficient interrelationships between software, hardware, personnel, procedures, controls, and data.

Inadequate Reconciliation Procedures

A reconciliation process, whether manual or automated, is a necessary and valuable part of a sound financial management system. The less integrated the financial management system, the greater the need for adequate reconciliations because data are being accumulated from a number of different sources. Reconciliations are needed to ensure that data have been recorded properly between the various systems and manual records. The Comptroller General's Standards for Internal Control in the Federal Government highlights reconciliation as a key control activity.

31GAO, Business Modernization: Improvements Needed in Management of NASA's Integrated Financial Management Program, GAO-03-507 (Washington, D.C.: Apr. 30, 2003); Information Technology: Architecture Needed to Guide NASA's Financial Management Modernization, GAO-04-43 (Washington, D.C.: Nov. 21, 2003); Business Modernization: Disciplined Processes Needed to Better Manage NASA's Integrated Financial Management Program, GAO-04-118 (Washington, D.C.: Nov. 21, 2003); Business Modernization: NASA's Integrated Financial Management Program Does Not Fully Address Agency's External Reporting Issues, GAO-04-151 (Washington, D.C.: Nov. 21, 2003); Business Modernization: NASA's Challenges in Managing Its Integrated Financial Management Program, GAO-04- Washington, D.C.: Nov. 21, 2003); and National Aeronautics and Space Administration: Significant Actions Needed to Address Long-standing Financial Management Problems, GAO-04-754T (Washington, D.C.: May 19, 2004).

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