FAA Financial Management: Further Actions Needed to Achieve Asset
Accountability (Letter Report, 07/30/1999, GAO/AIMD-99-212).

GAO has included the Federal Aviation Administration (FAA) on its 1999
list of government programs at high risk for waste, fraud, abuse, and
mismanagement. Long-standing accounting and financial reporting
weaknesses have undermined FAA's ability to manage its operations and
have limited the reliability of financial information sent to Congress.
These weaknesses include an inability to determine the accuracy of
certain amounts reported in FAA's financial statements for fiscal year
1998, including nearly $12 billion in major assets and $9 billion in
program costs. This report assesses FAA's property, plant, and equipment
and inventory asset accountability problems, which were major reasons
for including FAA financial management on GAO's high-risk list. GAO
discusses (1) the key issues FAA must resolve to achieve accountability
over its property, plant, and equipment inventory and (2) whether FAA is
taking appropriate actions to resolve these issues promptly.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-99-212
     TITLE:  FAA Financial Management: Further Actions Needed to
	     Achieve Asset Accountability
      DATE:  07/30/1999
   SUBJECT:  Federal agency accounting systems
	     Cost control
	     Information resources management
	     Accounting procedures
	     Spare parts
	     Strategic planning
	     Inventory control systems
	     Internal controls
	     Accountability
IDENTIFIER:  FAA Air Traffic Control Modernization Program
	     FAA Capital Investment Plan
	     FAA Audit Correction Program
	     FAA Clean Audit Program Process Improvement Plan
	     DOT Departmental Accounting and Financial Information
	     System
	     FAA National Airspace System Plan
	     FAA Field Spares Inventory System

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    United States General Accounting Office GAO                Report
    to the Chairman, Committee on the Budget, House of Representatives
    July 1999          FAA FINANCIAL MANAGEMENT Further Actions Needed
    to Achieve Asset Accountability GAO/AIMD-99-212 United States
    General Accounting Office
    Accounting and Information Washington, D.C. 20548
    Management Division B-282977
    Letter July 30, 1999 The Honorable John R. Kasich Chairman,
    Committee on the Budget House of Representatives Dear Mr.
    Chairman: In January 1999, we designated the Federal Aviation
    Administration's (FAA) financial management as a high-risk area
    because of serious and long-standing accounting and financial
    reporting weaknesses.  These weaknesses render FAA vulnerable to
    waste, fraud, and abuse; undermine its ability to manage
    operations; and limit the reliability of financial information
    provided to the Congress.  These weaknesses included an inability
    to determine the accuracy of certain amounts reported in FAA's
    fiscal year 1998 financial statements, including $11.9 billion in
    major assets and $9 billion of program costs. This letter responds
    to your request that we provide an assessment of FAA's property,
    plant and equipment (PP&E) and inventory asset accountability
    problems, which were major factors in our designation of FAA
    financial management as a high-risk area.  Specifically, you asked
    us to determine (1) the key issues FAA must resolve in order to
    achieve accountability over its PP&E and inventory and (2) whether
    FAA is taking appropriate actions to resolve these issues in a
    timely manner. Results in Brief                    FAA's lack of
    accountability for PP&E and inventory generally stems from * an
    historical lack of attention to basic recordkeeping, * the
    continuing use of outdated systems that were not designed for
    financial management, and * poor systems of internal controls to
    prevent and detect errors in accounting for these assets. In order
    to address these issues for PP&E, FAA needs to determine what
    assets it has and then reconstruct its records to establish an
    historical cost baseline for those assets.  Next it needs to
    establish adequate systems and controls to account for the assets
    on an ongoing basis. Letter           Page 1
    GAO/AIMD-99-212  FAA Financial Management B-282977 With regard to
    inventory, FAA has made improvements in its Logistics Center
    (warehouse) inventory accounting, but still needs to strengthen
    its procedures and controls.  It has made less progress with its
    field spares (spare parts) inventory.  An accurate baseline of
    inventory quantities and costs needs to be established for field
    spares, and new procedures and controls implemented in order to
    maintain accountability on an on-going basis. FAA has taken
    several actions that are likely to lead to or already have
    resulted in improved accountability.  However, as discussed below,
    major issues remain unresolved. During fiscal year 1999, FAA
    undertook an extensive effort to identify and record the baseline
    cost of unrecorded PP&E assets and to adjust its detailed records.
    This effort is still in process.  Also, in fiscal year 1999, FAA
    began to comprehensively address its systems needs; however, it
    does not expect full implementation of these new systems until
    2001.  Without systems capable of maintaining PP&E accountability
    on an ongoing basis, accounting for the acquisition of these
    assets will continue to require costly, time-consuming manual
    processes.  Because these manual processes are inherently prone to
    error, strong internal controls are needed to ensure accurate
    accounting.  While some improvements have been made, FAA has not
    implemented such a system of controls.  The accuracy of FAA's
    reported PP&E assets will remain uncertain until FAA establishes
    baseline costs for previously acquired PP&E and establishes
    effective systems and controls to properly account for ongoing
    PP&E activity. As of September 30, 1997, FAA had completed a
    comprehensive physical inventory of its Logistics Center's
    operating materials and supplies, and established a baseline of
    the inventory quantities.  In addition, as of September 30, 1998,
    we had assessed the system used to track Logistics Center
    inventory quantities on an ongoing basis and determined that it
    was generally reliable.  A 1998 test of inventory quantities
    confirmed the results of this assessment. However, an accurate
    baseline of FAA's field spares inventory has not been established
    through a comprehensive physical count that has been verified by
    independent audit testing.  Although procedures to improve
    accountability for field spares inventory have been established,
    they have not been fully implemented.  Until an accurate
    comprehensive physical inventory of field spares is taken and
    verified and effective inventory Letter    Page 2
    GAO/AIMD-99-212  FAA Financial Management B-282977 accountability
    procedures and controls are implemented, the reliability of FAA's
    field spares inventory quantities will be uncertain. Overall,
    FAA's lack of management and accountability over physical assets
    means that these assets continue to be exposed to waste, fraud,
    abuse, and mismanagement.  It also means that the Congress has no
    assurance that it has accurate financial management information to
    help make informed decisions about future funding and oversight of
    FAA activities.  The lack of accountability is of particular
    concern in light of the billions of dollars of taxpayer funds
    being spent to acquire assets in connection with the $42 billion
    air traffic control (ATC) modernization program. We make several
    recommendations regarding FAA's need to * establish accountability
    for billions of dollars expended for PP&E in the past and
    institute upgraded systems, procedures, and controls to ensure
    that accountability is maintained on an ongoing basis and *
    complete improvements over its inventory accountability,
    particularly those related to field spares. FAA officials
    generally concurred with our findings and conclusions.  They did
    not concur with two of our seven recommendations.  As discussed in
    the "Agency Comments and Our Evaluation" section of this report,
    we believe that our recommendations are valid. Background    FAA's
    primary mission is to promote safe, orderly, and efficient air
    travel throughout the United States.  Among other activities, FAA
    is responsible for the operation of the nation's air traffic
    control system.  To fulfill its mission, FAA depends on the
    adequacy and reliability of the ATC system, a vast network of
    computer hardware, software, and communications equipment and
    related inventory. Sustained growth in air traffic and aging
    equipment has strained the ATC system, limiting the efficiency of
    ATC operations.  To combat these trends, in 1981 FAA embarked on
    its multibillion-dollar, mission-critical Capital Investment Plan
    (CIP) aimed at modernizing its aging ATC infrastructure. FAA's
    modernization program currently consists of over 200 separate
    projects estimated to cost over $42 billion during the 23-year
    period through fiscal year 2004.  It includes acquisition of new
    radar and Page 3                                  GAO/AIMD-99-212
    FAA Financial Management B-282977 automated data processing,
    navigation, and communications equipment as well as computer
    software, facilities, and support equipment.1 During fiscal years
    1982 through 1998, FAA reported that it had obligated
    approximately $26 billion on its ATC modernization programs.  As
    of September 30, 1998, the agency had reported less than $12
    billion in gross PP&E in its fiscal year 1998 financial
    statements, including $7.4 billion of property and equipment (such
    as land, buildings, and air traffic control equipment) and $4.5
    billion of work-in-process (which consists of facilities and
    equipment acquired but not commissioned). While some of these
    costs were appropriately expensed, OIG audits have shown that a
    significant amount of costs was improperly excluded from the PP&E
    asset total reported by FAA.  In addition, $820 million of spare
    parts inventory was reported in the financial statements. The
    modernization costs that have gone towards the acquisition of
    significant amounts of PP&E and spare parts inventory are to be
    recorded as assets because of the long-term benefits they are
    expected to provide. FAA is accountable for these assets from the
    time they are acquired until their ultimate disposition.  It is
    important to keep adequate records of assets that are acquired for
    two primary reasons.  First, detailed asset records are necessary
    to help provide for their physical accountability. Second, the
    cost of these assets is charged to operating expenses over the
    time that they provide services- -PP&E through depreciation after
    it is placed in service and inventory when it is consumed.2  The
    matching of costs to the time periods when services are actually
    provided is an important part of measuring the cost of operations
    on an ongoing basis. For example, costs incurred this year for a
    new radar system that will be in use for 10 years should not be
    charged to a current year expense account. That would distort
    current year information about the cost of FAA operations.
    Rather, the cost should be charged to an asset account and, when
    the asset is placed in service, its cost would then be spread over
    the future periods that it provides service benefits.  Conversely,
    costs incurred in the current year that only have a benefit to the
    current year should be charged to a current year expense account.
    For example, administrative salary costs are charged to operating
    expense when incurred. 1See Air Traffic Control: Status of FAA's
    Modernization Program (GAO/RCED-99-25, December 3, 1998) for
    details about the program and its status. 2Depreciation is the
    process used to spread the cost of PP&E over the time that the
    asset services are provided. Page 4
    GAO/AIMD-99-212  FAA Financial Management B-282977 Proper asset
    accountability requires that detailed records of the full cost of
    assets acquired be maintained, and that these assets be properly
    reported in the agencies' financial management records and
    financial reports.3  The full cost of assets includes all direct
    and indirect costs required to acquire the asset and to place it
    in service.  In the case of FAA, the full cost of many projects
    includes such direct costs as contractor hardware and software,
    installation costs, FAA direct labor costs, as well as FAA
    indirect labor and related overhead.  Since many FAA expenditures
    for modernization project assets are incurred before the assets
    are placed in service, these costs should be "captured" in
    temporary accounts, called "work-in-process" (WIP) accounts.  When
    assets are placed in service, a process that FAA calls
    "commissioning," the related costs should be removed from the WIP
    accounts and placed either in a PP&E account (such as personal
    property), or in an inventory account. The flow of costs in such
    circumstances is depicted in figure 1. Figure 1:  Flow of Project
    Costs Assets placed                Expense Costs incurred
    Costs accumulated                               in service
    accounts PP&E                 Depreciation Contract costs
    detailed records             expense For asset          Work in
    When FAA labor        acquisition       processa
    commissioned FAA overhead
    Inventory Other costs
    Inventory detailed records          consumed Not for
    Operating asset acquisition
    expense aSome acquired assets that are immediately placed in
    service do not need to flow through WIP. 3These requirements
    permit assets that have a cost below a defined materiality
    threshold to be charged to expense accounts and not be recorded as
    an asset.  This reduces the costs of recordkeeping. Page 5
    GAO/AIMD-99-212  FAA Financial Management B-282977 Objectives,
    Scope, and  Our objectives were to determine (1) the key issues
    FAA must resolve in Methodology                      order to
    achieve accountability over its PP&E and inventory and (2) whether
    FAA is taking appropriate actions to resolve these issues in a
    timely manner. To fulfill our objectives, we interviewed relevant
    FAA staff and reviewed and analyzed FAA reports and records
    concerning PP&E and inventory.  We attended monthly meetings to
    monitor the status of FAA's efforts to correct identified PP&E
    financial management deficiencies. We also obtained and reviewed
    information from the FAA Office of the Chief Financial Officer
    (OCFO) about the current status of corrective actions on PP&E and
    inventory. We reviewed OIG program reports on PP&E and inventory,
    as well as financial statement audit reports for fiscal years 1992
    through 1998. We also reviewed selected OIG workpapers related to
    the fiscal year 1998 audit, including the results of various test
    counts.  In order to help facilitate the fiscal year 1998 FAA
    financial statement audit, we conducted, with OIG assistance, an
    audit of inventory quantities at the Logistics Center in Oklahoma
    City, Oklahoma. To accomplish this, we selected a statistical
    sample of items recorded in the inventory database and performed
    test counts at the Logistics Center.4   However, we did not
    address valuation of inventory.  We also visited FAA field sites
    in connection with the OIG's audit work for PP&E and inventory to
    better understand the OIG's audit procedures and their results. We
    conducted our work primarily in Washington, D.C., and at the OIG
    office in Baltimore, Maryland, and also obtained information
    through field visits to Chicago, Atlanta, New York, Atlantic City,
    and Oklahoma City.  We performed our work from July 1998 through
    June 1999 in accordance with generally accepted government
    auditing standards. We requested comments on a draft of this
    report from the Secretary of Transportation, or his designee.  On
    July 6, 1999, FAA officials provided us with oral comments, which
    are summarized in the "Agency Comments and Our Evaluation" section
    of this report. 4Physical counts and evaluation of count results
    of inventory and related assets were performed from August 1998
    through January 1999 at FAA's Mike Monroney Aeronautical Center in
    Oklahoma City, Oklahoma. Page 6
    GAO/AIMD-99-212  FAA Financial Management B-282977 FAA Lacks
    Starting with the first audit of FAA's financial statements for
    fiscal year Accountability for      1992 and continuing through
    the fiscal year 1998 audit, the OIG has reported that FAA has not
    been able to provide the basic records necessary Billions of
    Dollars     to demonstrate accountability for assets totaling
    billions of dollars that it Invested in PP&E        has acquired.5
    During these audits, the OIG found that FAA had improperly charged
    billions of dollars of capitalizable costs to expense accounts
    instead of to asset accounts.  Under the system that FAA had in
    place, this meant that there were no detailed records of these
    assets, which resulted in incomplete asset accountability.  In
    many cases, FAA was also unable to provide the OIG supporting
    documents necessary to verify the valuation of assets that were
    recorded.6  Finally, the OIG reported that FAA continued to
    include assets that had been placed in service as work-in-process.
    From a financial accounting and reporting perspective, these
    problems in aggregate would have understated assets on the balance
    sheet and overstated expenses, thus distorting FAA's reported
    operating results. Early in fiscal year 1999, FAA started an
    extensive effort to reconstruct the detailed records necessary to
    support prior PP&E costs that should have been reported as assets
    on its financial statements.  With a significant effort and
    commitment of resources, real progress has been made for the first
    time.  However, FAA lacks the necessary systems, procedures, and
    controls to properly account for the full cost of additional
    assets as they are acquired on an ongoing basis.  FAA began to
    comprehensively address its systems needs in early 1999; however,
    complete systems improvements are not expected until 2001.  Thus,
    absent strong controls over manual efforts to maintain these
    records on a current basis, these PP&E accountability deficiencies
    limit FAA's ability to prepare reliable, auditable financial
    statements; expose it to waste, fraud, and abuse; and may prevent
    it from being able to accurately determine the cost of its
    operations. 5The OIG undertook audits of FAA's financial
    statements starting in 1992.  As required by the Chief Financial
    Officers Act of 1990, the initial financial statements audited by
    the OIG were limited to certain trust and revolving funds.  In
    subsequent years, as the financial activities subject to audit
    became more comprehensive, the scope of the OIG's audits
    increased.  By 1994, the financial statements subject to audit
    covered all FAA's activities. 6According to FAA officials, in the
    past the Department of Transportation did not have a centralized
    policy for retaining asset documentation.  In December 1998, FAA
    established a policy to retain asset documentation as long as the
    asset is in service. Page 7
    GAO/AIMD-99-212  FAA Financial Management B-282977 Basic
    Accountability        The OIG has reported that billions of
    dollars of FAA's modernization Records for PP&E Costs      program
    capital costs have been improperly charged to expense accounts
    Have Not Been Maintained    instead of being recorded as assets
    and that FAA's historical records necessary to support and permit
    the verification of PP&E balances have been incomplete and
    inaccurate.  Some examples of these problems follow: * In its
    report on FAA's fiscal year 1998 financial statements, the OIG
    stated that FAA's personal property reported at $4.1 billion was
    understated by at least $1 billion due to FAA's long-standing
    practice of expensing rather than capitalizing material portions
    of major equipment systems.  For example, voice switching control
    systems installed at 23 locations were recorded at a total cost of
    $234 million, instead of the actual cost of $1.1 billion. * During
    its test of FAA's fiscal year 1998 work-in-process account
    reported at $2.1 billion, the OIG stated that it was unable to
    trace recorded amounts to invoices or other supporting
    documentation on 34 percent of the 185 projects selected for
    testing because it was unable to obtain transaction summaries for
    those projects.  Transaction summaries provide the link between
    amounts recorded in FAA's records and underlying supporting
    documentation.  For example, FAA recorded costs of $1.2 million
    for a flight service station during fiscal year 1998, but could
    only provide transaction summaries for costs of $123,000, leaving
    $1.1 million unsupported. * During its test of FAA's fiscal year
    1998 real property reported at $2.5 billion, the OIG tested a
    sample of 117 items with a recorded value of $790 million and
    determined that the cost for 34 of the sample items, recorded at
    $141 million, could not be supported.  For example, for a power
    system installed in 1992, FAA was able to provide contracts,
    purchase orders, payment records, and other support for only $3.6
    million of the recorded $20 million cost. * During its fiscal year
    1998 test of real property, the OIG concluded that four items
    valued at $50 million should be removed from the property records
    because they no longer existed.  For example, the property records
    continued to include a building recorded at $1 million that had
    been demolished over 10 years earlier. In addition to these
    weaknesses, FAA does not move project costs from its work-in-
    process account to appropriate asset accounts in a timely manner.
    The OIG identified and reported that costs were not being
    transferred from the WIP account to other appropriate accounts in
    its report on FAA's fiscal year 1993 financial statements.  In its
    report on FAA's fiscal year 1998 financial statements, the OIG
    reported that FAA had estimated that Page 8
    GAO/AIMD-99-212  FAA Financial Management B-282977 approximately
    $1.3 billion in completed projects were improperly retained in the
    WIP account rather than being transferred to the appropriate real
    or personal property accounts.  For example, FAA completed
    construction of an air navigation facility in 1995 at a cost of
    $746,000.  As of December 31, 1998, the facility remained in the
    WIP account.  In addition, since these assets were not moved to
    the appropriate accounts, depreciation expense was not calculated.
    The OIG estimated that unrecorded depreciation expense related to
    these projects amounted to at least $62 million. FAA's lack of
    basic accountability over PP&E is the result of numerous factors,
    including the lack of financial accounting oriented systems,
    inadequate or outdated policies and procedures, inconsistent
    implementation of existing policies and procedures, and the low
    priority placed on maintaining adequate records. The lack of
    accurate PP&E information: * Limits FAA's ability to accurately
    determine its costs, an essential requirement if FAA moves to
    funding its operations through the use of cost-based user fees.
    For example, when PP&E costs are improperly charged to expense
    accounts, operating costs for that year and future years are
    distorted. * Impedes proper management of these assets and gives
    rise to possible operational inefficiencies.  For example, the
    ability to plan for long-range facilities needs may be impaired. *
    May impair the ability of managers to provide appropriate
    stewardship over FAA assets.  For example, asset theft could go
    undetected and funds could be spent unnecessarily to acquire
    equipment that is already on hand. * Impairs FAA's ability to
    properly maintain these assets, including estimating future
    maintenance and deferred maintenance funding needs. FAA Lacks
    Systems and       While FAA is making a concerted effort to
    properly account for prior PP&E Controls to Account for     costs,
    existing FAA systems and controls are not adequate to account for
    PP&E on an Ongoing Basis    PP&E in an efficient and effective
    manner on an ongoing basis.  As a result, FAA faces the prospect
    of a continuing need to manually adjust its records for ongoing
    costs until its systems and controls are upgraded to account for
    PP&E automatically.  Among other capabilities, effective and
    efficient PP&E systems provide an automated means to capture the
    full cost of PP&E when incurred, transfer data among integrated
    systems components Page 9                                GAO/AIMD-
    99-212  FAA Financial Management B-282977 with minimal manual
    processes, record complete PP&E information, and calculate
    depreciation.  FAA's current systems and controls do not meet
    these needs in a number of respects. FAA's practices and
    identified weaknesses in those practices are depicted in figure 2.
    Figure 2:  Weaknesses in FAA's PP&E Systems Systems placed Costs
    incurred                Costs recorded
    in service PP&E costs improperly expensed Expenses identified
    Expenses Contract costs                      DAFISa
    PP&E Cost              FAA labor
    Records flows          FAA overhead                   WIP Module
    Other costs Weak-            * Full costs not captured    * WIP
    lacks adequate            * Manual processes             *
    Includes PP&E nesses           * Some PP&E expensed         detail
    required to sort out           costs improperly * WIP includes
    some             PP&E                           expensed expenses
* Significant PP&E cost  omitted aDepartment Accounting and
    Financial Information System. First, FAA's systems do not capture
    the full cost of PP&E.  Full costs means all costs, including
    internal labor and overhead, necessary to acquire and place
    property in service.  Such costs are typically identified and
    recorded through a cost accounting system. We have reported the
    lack of an adequate FAA cost accounting system as a weakness that
    prevents FAA from reliably determining full project and other
    costs.7 This can result in a 7Air Traffic Control: Improved Cost
    Information Needed to Make Billion Dollar Modernization Investment
    Decisions (GAO/AIMD-97-20, January 22, 1997). Page 10
    GAO/AIMD-99-212  FAA Financial Management B-282977 lack of
    reliable project cost information, which is needed to accurately
    estimate future project costs and to make sound investment
    decisions.  In addition, this can result in the misstatement of
    PP&E assets and related depreciation expense, as well as the
    misstatement of overall expenses. Another issue is that FAA's PP&E
    systems do not capture identifiable PP&E costs as they are
    incurred.  For example, when contractor CIP invoices are paid, the
    invoice amounts are recorded in a subsidiary module of FAA's
    Department Accounting and Financial Information System (DAFIS)
    general ledger accounting system. This subsidiary module
    constitutes the details for the WIP account.  In some cases,
    individual decisions are necessary to determine which costs should
    be recorded in the subsidiary module, and to what specific job
    order number.  Job order numbers are used to differentiate
    individual systems projects in the WIP account.  This manual
    process is imprecise, resulting in some valid CIP costs being
    omitted, some invalid CIP costs being included, and costs being
    assigned to incorrect job orders. In addition, at the time costs
    are initially recorded, they are not identified or identifiable as
    PP&E costs.  Rather, they are identified as CIP costs related to a
    specific CIP project.  However, contractor CIP costs may include
    PP&E costs, spare parts inventory costs, or costs that are
    appropriately classified as expenses.  Later, when the specific
    project is completed and commissioned, FAA must perform a tedious
    manual analysis of documentation related to each of the costs
    included in the details of the WIP job orders to determine how
    much should be recorded in the PP&E, spare parts inventory, and
    expense accounts. A third systems issue is that FAA is unable to
    transfer cost and other information to and among systems
    components in an efficient manner.  For example, when the manual
    review and classification of costs charged to WIP job orders is
    complete, accounting entries must be manually prepared to remove
    the costs from the WIP account and to record them in other
    appropriate accounts.  In addition, manual entries must be
    prepared and input to the property system to add individual PP&E
    items to the detailed property records.  Each of these manual
    entries and processes is time-consuming and, if adequate controls
    are not in place, may introduce errors into the detailed records.
    Furthermore, FAA property systems are unable to calculate
    depreciation for property because the detailed property record
    systems do not have this capability.  Rather, in order to
    calculate depreciation, information about the Page 11
    GAO/AIMD-99-212  FAA Financial Management B-282977 cost and
    acquisition date of individual property records must be downloaded
    into a spreadsheet database to perform the depreciation
    calculation.  The results of the calculation must then be manually
    input to the DAFIS general ledger system in order to record the
    amount of depreciation expense for the year. The lack of adequate
    integrated systems to account for PP&E costs has resulted in the
    need for FAA to undertake a time-consuming reconstruction of its
    PP&E accounting records, as discussed below.  The chronic lack of
    effective systems capabilities results in a continuing need to
    perform manual processes to provide sufficient accountability.
    Due to the number of manual processes and decisions required, such
    accountability can be achieved only if strong controls are in
    place to prevent and detect errors. Based on the poor condition of
    FAA's PP&E records, it is evident that such controls have not
    existed in the past. The conditions described above result from
    the adaptation of systems, which were acquired for a specific
    purpose, to satisfy other purposes for which they were not
    designed.  For example, the DAFIS general ledger system, which was
    created for the Department of Transportation (DOT) in 1976, was
    designed to account for FAA financial activities from a budgetary
    perspective.  As a result, many of the accounting needs of a
    financial statement accounting system were not and continue not to
    be available in the system that FAA uses. Until FAA acquires
    adequate and integrated accounting systems' capabilities, its
    ability to account for PP&E as well as other costs on an on-going
    basis will be severely limited.  The lack of systems integration
    and the ability to appropriately accumulate and transfer data
    among systems components will continue to require time-consuming
    and error-prone manual processes.  If these manual processes do
    not have the proper controls to prevent and detect errors, FAA
    will continue to lack assurance that it has accountability over
    PP&E. FAA Has Initiated an          On September 30, 1998, the
    Secretary of Transportation submitted a plan to Extensive Effort
    to           the Office of Management and Budget for resolving
    major material findings Establish Historical PP&E     and
    management deficiencies in the FAA financial statement audits.  In
    Costs                         December 1998, the FAA Administrator
    approved the formation of an Audit Correction Program to resolve
    audit concerns identified by the OIG and to put in place improved
    systems and processes to prevent these issues from recurring.  The
    Audit Correction Program included the formation of three Page 12
    GAO/AIMD-99-212  FAA Financial Management B-282977 teams to
    address WIP, real property, and personal property issues.  As
    described by FAA, these teams are primarily focused on regaining
    accountability over PP&E by establishing baseline costs for
    existing assets. FAA expects that the work of the three teams will
    conclude in fiscal year 1999, and described the effort as "pivotal
    to accomplishing an unqualified audit opinion for FY 1999." FAA's
    strategy for implementing the secretary's plan is to perform a
    top-down analysis of the $25.7 billion of CIP appropriations for
    fiscal years 1982 through 1998 to determine what costs FAA should
    record in its asset accounts and in what asset categories as
    compared to the approximately $12 billion currently reflected on
    the books.  As FAA completes segments of its work, an OIG audit
    verification of the results is performed.  Initially FAA
    classified the $25.7 billion of appropriated CIP costs into major
    categories by project type as shown in table 1. Table 1:  FAA
    Classification of Appropriated CIP Costs Dollars in billions
    Capital systems projects
    $11.4 Terminated projects
    2.5 Real property
    5.0 Other
    6.8 Total
    $25.7 Note: Other includes projects that have not been placed in
    service ($2.1 billion); expensed projects ($3.7 billion); and
    fully depreciated projects ($0.9 billion). The FAA cost
    classification process results are also subject to OIG
    verification. FAA initially selected 44 systems from the capital
    systems projects category with reported costs totaling $10.31
    billion as of June 30, 1999, for which detailed supporting
    documentation packages will be prepared to establish baseline
    costs.  Generally, these 44 systems were chosen because they
    represent the higher cost systems.  This initial selection came
    from a population of 123 systems for which $11.4 billion was
    appropriated. As of June 30, 1999, FAA had completed detailed
    documentation packages for the 44 systems initially identified for
    review.  The OIG reviewed and analyzed 32 of these packages and,
    in the process, identified at least Page 13
    GAO/AIMD-99-212  FAA Financial Management B-282977 $4.5 billion of
    additional costs, the majority of which should be included in the
    PP&E accounts.8  This amount may increase depending upon the
    outcome of a number of unresolved questions related to those 32
    packages. As the verification of the initial 44 systems is
    completed, and as unresolved questions are answered, FAA will
    determine, in consultation with the OIG, the nature and extent of
    additional work that may be required to identify additional
    unrecorded assets.  Once FAA has successfully completed its
    reviews and the OIG has validated them, FAA will have a reasonable
    beginning baseline for its PP&E costs. Starting in June 1999, the
    OIG began visiting selected field sites to verify real property,
    using a variety of means, including cost per square foot models.
    FAA Has Only Just Begun to  As previously discussed, FAA's ability
    to maintain accountability over its Comprehensively Address
    PP&E on an ongoing basis hinges on implementing systems that can
    its Systems Issues                 efficiently and effectively
    account for these assets.  However, FAA has only recently
    developed a plan to address this issue comprehensively. As a part
    of the Audit Correction Program described above, on May 20, 1999,
    FAA issued its Clean Audit Program Process Improvement Plan.  The
    plan responded to a request from FAA senior management to begin
    working on modifying FAA's practices to ensure that progress
    achieved by the Audit Correction Program can be sustained over the
    long term. Basically, the plan is divided into three separate sets
    of activities termed "tiers" by FAA. Tier 1 includes making minor
    systems enhancements during fiscal year 1999 to help achieve
    immediate improvements in FAA's recordkeeping.  Tier 2 consists of
    revisions during fiscal year 2000 in organizational
    responsibilities related to work-in-process and the implementation
    of additional minor systems enhancements.  Both tiers 1 and 2 are
    interim actions to strengthen FAA's systems and processes until
    existing systems are replaced.  However, FAA has not yet
    comprehensively reviewed 8According to FAA officials, based on
    their analysis, eventual adjustments to the PP&E amount reported
    in the FAA financial statements will be significantly less than
    the $4.5 billion because some of these costs have already been
    recorded as assets. Page 14
    GAO/AIMD-99-212  FAA Financial Management B-282977 internal
    controls to ensure that all existing systems weaknesses are
    identified and corrected.9 Tier 3 includes longer-term systems
    changes related to the following two systems initiatives: * DOT is
    replacing its DAFIS general ledger system with a commercial based
    system, which it has enhanced and refers to as DELPHI. * FAA is
    defining its needs for a system that will account for PP&E once it
    has been placed in service.10  FAA describes this system as an "in
    service" system. FAA describes the planned DOT-wide DELPHI system
    as an integrated suite of financial software.  FAA has stated that
    the implementation of this system will, if properly configured and
    utilized, eliminate many of the processing issues presently
    constraining the identification, classification, processing, and
    accumulation of FAA's PP&E costs.  DELPHI has a June 2001 target
    date for implementation at FAA. According to FAA, the planned in-
    service system provides for all financial accounting requirements
    for PP&E that has been placed in service and includes interfaces
    to the DELPHI system for tracking the costs of projects under
    development.  This system has a planned implementation date of
    September 30, 2001. An overview of FAA's planned systems functions
    is shown in figure 3. 9According to FAA officials, in the last 2
    years, significant improvements have been made to the internal
    controls over recording of PP&E .  For instance, a system for
    monitoring the WIP backlog has been instituted to prevent backlogs
    from occurring.  This is accomplished through matching
    commissioning dates from a separate system with the WIP report and
    identifying the backlog at 6 months past commissioning.  While
    these improvements are positive steps, they are not comprehensive
    and neither we nor the OIG have verified them. 10 In this regard,
    the Institute of Electrical and Electronic Engineers (IEEE) has
    developed a nine step process for acquiring software as described
    in its IEEE Recommended Practices for Software Acquisition, IEEE
    Std 1062, 1998.  The nine steps start with planning an
    organizational strategy to define organizational objectives and a
    software strategy in step 1, through conducting a follow-up
    analysis of the process used to acquire the software and lessons
    learned in step nine. Page 15
    GAO/AIMD-99-212  FAA Financial Management B-282977 Figure 3:  FAA
    Planned Systems Functions DELPHI Contract costs
    Work in                 In service FAA labor
    process                   PP&E FAA overhead
    (WIP) Cost Other costs                    accounting Cost
* Costs classified,                      * Costs recorded in
* Detailed flows                      assigned, and
    WIP                         property records processed In addition
    to these recent initiatives, FAA is developing a cost accounting
    system.  The inadequacy of FAA's cost accounting system has been
    identified by GAO,11 the OIG, and others as a weakness that
    prevents the agency from having reliable and timely information
    about the full cost of projects and program activities.  The
    objective of a cost accounting system is to accurately assign
    basic financial cost data, such as contractor costs and agency
    direct labor and overhead costs, to individual project and program
    activities.  Although FAA originally expected a cost accounting
    system to be fully implemented by October 1, 1998, this objective
    was not met.  It subsequently revised this goal to implementation
    of a partially operational system by December 31, 1998, and a
    fully operational system by March 31, 1999.  FAA now projects full
    implementation of its cost accounting system by March 31, 2001.12
    11Air Traffic Control: Improved Cost Information Needed to Make
    Billion Dollar Modernization Investment Decisions (GAO/AIMD-97-20,
    January 22, 1997). 12Statement of Federal Financial Accounting
    Standards No. 4, Managerial Cost Accounting Standards (SFFAS No.
    4), effective in fiscal year 1998, requires agencies to accumulate
    and report the full costs of their activities.  FAA officials told
    us that the cost accounting system they are implementing goes well
    beyond the requirements of SFFAS No. 4 and that they believe they
    will be in compliance with SFFAS No. 4 for fiscal year 1999. Page
    16                                                GAO/AIMD-99-212
    FAA Financial Management B-282977 Inventory               FAA
    maintains its inventory at its Logistics Center, the central
    warehouse Accountability Has      for operating materials and
    supplies, and at approximately 34,000 field spares locations.13
    Inventory accountability has improved at the Logistics Improved,
    but Field     Center, and, as of September 30, 1998, inventory
    quantities were reasonably Spares Accuracy         stated in the
    accounting records.14  Also, Logistics Center inventory system
    Remains Uncertain       controls provide a reasonable basis for
    the ongoing tracking and controlling of inventory.15  Although we
    found some weaknesses in data entry, receipts and issuances, and
    other processing-type procedures at the Logistics Center, these
    weaknesses did not significantly impact overall accountability.
    The accuracy of FAA's accounting for field spares quantities,
    however, remains uncertain because an accurate baseline has not
    been established. Field spares are mission-critical parts that
    support the National Airspace System (NAS)16 and are maintained at
    locations near the facilities they support.  Although FAA is
    acting to improve field spares inventory accountability, until
    these action plans are fully implemented, FAA has no assurance
    that it is accurately accounting for field spares. Logistics
    Center        Beginning with the OIG's audit of FAA's financial
    statements for fiscal year Accountability Has      1992, the OIG
    could not validate the Logistics Center inventory quantity
    Improved                balances because of the lack of accurate
    records and documentation.  This problem continued through fiscal
    year 1996 because of limited Logistics Center inventory counts by
    FAA.  In fiscal year 1996, the OIG could not verify the FAA
    inventory balance because of numerous errors and omissions in the
    inventory records.  In fiscal year 1997, FAA conducted, and the
    OIG tested, a comprehensive wall-to-wall count of Logistics Center
    inventory and made necessary adjustments to correct its inventory
    records. 13Some of the 34,000 locations may be in the same
    geographic location and even in the same building. 14The OIG
    tested inventory values as of March 31, 1998, and needed
    adjustments were made as identified.  Neither the OIG nor we
    validated the reported inventory values as of September 30, 1998.
    15 The Logistics Center inventory system is designed to operate as
    a perpetual inventory system and updates inventory quantities at
    various points in time.  Among other capabilities, it tracks
    receipts, issuances, adjustments, and locations of inventory. 16
    The National Airspace System is the FAA system that provides for
    the safe, orderly, and expeditious flow of air traffic in the
    United States.  NAS's principal component is the nation's air
    traffic control system. Page 17
    GAO/AIMD-99-212  FAA Financial Management B-282977 In fiscal year
    1998, GAO, with OIG assistance, performed test counts of inventory
    quantities at the Logistics Center.  Based on the results of our
    tests, we concluded that the Logistics Center inventory quantities
    were materially correct as of September 30, 1998, and the system
    for tracking quantities was generally reliable.  However, we
    identified minor differences in quantities caused by factors such
    as data entry errors, untimely processing of recording receipts
    and issuances, commingling of similar items, and prior erroneous
    inventory adjustments.  Cumulatively, these differences, when
    statistically projected, did not result in material variances in
    recorded inventory quantity balances.  While these differences
    were not material to inventory balances at the time of our review,
    the weaknesses that caused these differences could lead to
    significant problems in inventory balances in the future if not
    addressed by FAA management. Accurate Baseline for Field  Until
    fiscal year 1997, FAA recorded the cost of field spares as
    expenses in Spares Has Not Been                 its financial
    statements regardless of whether they had been used or Established
    remained available in inventory  for use in future years.  In
    fiscal year 1997, FAA first reported field spares inventory as an
    asset.  However, the amount was estimated because a comprehensive
    physical inventory count had not been performed, even though FAA's
    policy, contained in order 4250.9B, "Field Material Management and
    Control," dated January 24, 1992, mandates a 100-percent annual
    count of field spares.  According to FAA, it completed a full
    field spares physical inventory in fiscal year 1998; however, as
    discussed below, our review of the results of the OIG tests shows
    that the accuracy of field spares records remains in question. As
    of September 30, 1998, the reported value of field spares
    inventory was $338 million.  Figure 4 shows the reported amount of
    field spares in each FAA region and center. Page 18
    GAO/AIMD-99-212  FAA Financial Management B-282977 Figure 4:
    Reported Value of Field Spares in FAA Regions and Centers
    Northwest Mountain Region
    Eastern $34 million                          Great Lakes
    Region               New England Region
    $44 million          Region $46 million
    $19 million William J. Hughes Technical Center Western
    $7 million Central Pacific
    Region Region
    $23 million $38 million FAA Aeronautical Center $9 million
    Southern Region $62 million Southwest Region $49 million Alaska
    Region $7 million * 9  regions and 2 centers * Over 800 sites *
    Over 34,000 storage locations * 185,000 units totalling $338
    million Source: FAA FAA tracks field spares through an automated
    Field Spares Inventory system (FSI).  This system is maintained by
    about 1,000 FAA personnel who are individually responsible for
    managing field spares at each of 34,000 different locations, but
    whose primary responsibility is to keep the NAS systems
    operational. Based on our analysis of the OIG's workpapers related
    to its testing of FAA's fiscal year 1998 field spares inventory
    count, we were unable to satisfy ourselves about the accuracy of
    the field spares inventory Page 19
    GAO/AIMD-99-212  FAA Financial Management B-282977 quantities.  In
    its review of the fiscal year 1998 field spares physical
    inventory, the OIG tested data for 14 sites with a recorded value
    of $14 million.  The sites were judgmentally selected based in
    part on locations where the OIG expected there might be problems.
    The OIG found numerous errors in inventory recordkeeping and a
    lack of physical controls over inventory on hand for 9 of the 14
    sites.  Some examples follow: * At one site, FAA had not recorded
    $106,000 of communication equipment spares for newly commissioned
    systems. * At another site, 11 items valued at over $39,000 that
    support new systems were not included in the records, while 21
    items valued at about $67,000 could not be located. * At a third
    site, numerous errors resulting from inaccurate or incomplete
    record keeping totaled $380,000.  These included items related to
    newly commissioned systems, decommissioned systems, and other
    items that had not been recorded. OIG workpapers stated that the
    field spares quantity errors identified by the OIG staff were
    subsequently corrected in the FSI.  However, these errors were
    identified in a test of only 14 of 834 sites.  In addition, while
    the OIG report referred to internal FAA analyses that suggested
    accountability issues for a number of other sites, quantifiable
    information does not exist to determine the extent or severity of
    the problems for the other 820 sites. According to an FAA
    commissioned fiscal year 1998 study of NAS Field Spares
    Inventory,17 several factors could have affected the accuracy of
    field spares records.  First, prior to 1998, the field spares
    program lacked procedures for * updating the field spares
    inventory system for adding field spares to the inventory records
    when systems are commissioned, * deleting field spares from
    inventory records when systems are decommissioned, and * taking
    field spares physical inventories. 17"Federal Aviation
    Administration FY 98 Study of NAS Field Spares Inventory, Report
    of the Field Spares Environment" prepared by DOT Research &
    Special Programs Administration, Volpe National Transportation
    Systems Center and Coopers & Lybrand L.L.P., dated June 5, 1998.
    Page 20                                           GAO/AIMD-99-212
    FAA Financial Management B-282977 The FAA study provided
    procedures to perform the above functions. However, according to
    OIG workpapers, when these procedures were issued in 1998, they
    were not provided to all FAA staff responsible for accounting for
    inventory transactions and physical inventories.  As a result,
    field spares records were not maintained consistently. Second, the
    FAA study stated that FAA order 4250.9B stipulates that the System
    Management Office (SMO) managers have property accountability for
    field spares in a geographical area within a specific FAA region.
    The order also provides that this responsibility can be delegated.
    However, different interpretations of this responsibility by field
    personnel have caused them to be uncertain as to who has ultimate
    responsibility for field spares, including ensuring that inventory
    counts are complete, accurate, and timely. Third, the FAA study
    states that although limited training was provided, additional
    training is needed on how to take physical inventory and how to
    use the FSI module, which contains field spares quantity and
    location information. OIG workpapers stated that testing of the
    fiscal year 1998 physical inventory process showed that lack of
    training continued to be a problem contributing to field spares
    record errors. The errors and lack of procedures noted above imply
    serious weaknesses in physical controls and accountability over
    inventory and field spares. These conditions increase the risk
    that theft18or loss could go undetected. Also, inaccurate field
    spares information could result in unexpected shortages of
    critical parts, or unnecessary ordering of parts already on hand,
    thus requiring the use of additional funds to purchase unneeded
    spares.   The latter situation may lead to excess or obsolete
    stock requiring storage, control, and other activities that
    consume operating resources. Procedures Established to     FAA
    senior management has indicated that it recognizes the urgency of
    Improve Inventory             correcting inventory accountability
    deficiencies.  To address these Accountability, but Full
    deficiencies, FAA has established procedures in its Inventory
    Integrity Implementation Needed         Guide and is in the
    process of implementing the procedures at the Logistics Center.
    These procedures include performing  periodic inventory counts to
    18 According to FAA, in early 1998, a theft of aircraft parts was
    detected at the Logistics Center and is currently under
    investigation.  The value and extent of the missing inventory
    parts have not been conclusively determined. Page 21
    GAO/AIMD-99-212  FAA Financial Management B-282977 substantiate
    inventory balances on an ongoing basis.  The Guide should also
    provide useful guidance to FAA staff in correcting the control
    weaknesses identified at the Logistics Center and improving
    accountability over operating materials and supplies.  In
    addition, FAA personnel are developing a bar coding system to
    improve tracking of inventory from the time it arrives at the
    Logistics Center warehouse until it is issued.  When implemented,
    this system should help improve controls over the inventory in the
    warehouse. For field spares, FAA has recently distributed new
    procedures for managing them.  Among other topics, these
    procedures include guidance on * adding field spares to the
    automated inventory system when NAS systems are commissioned, *
    deleting field spares from the automated inventory system when NAS
    systems are decommissioned, and * taking and recording physical
    inventory. When fully implemented, these procedures should help
    improve the accountability and control over field spares by
    requiring verification of both physical counts and also data
    entered into the FSI.  These procedures should also help to
    effectively utilize FAA's perpetual inventory system, thus
    providing up-to-date and accurate information on field spare
    quantities and locations.  In addition, FAA advised us that it is
    conducting a 100-percent count of field spares inventory for
    fiscal year 1999. FAA is also separately developing a bar coding
    system for field spares that is expected to provide more accurate
    and reliable identification of and physical control over these
    items.  Under the system, the manufacturer and FAA would install
    bar codes on field spares.  According to FAA officials, this
    system is expected to be implemented as funds are budgeted,
    possibly by installing bar coding on a NAS system-by-system basis.
    This would be done by providing bar coding for one specific system
    and its related field spares at all FAA locations.  Once fully
    developed and implemented, the use of this bar coding system
    should help provide more accurate identification and control over
    inventory. Conclusions    While FAA has taken steps that are
    likely to lead to or already have resulted in improved
    accountability for PP&E and inventory, much still remains to be
    done.  Until such time as full accountability is achieved, these
    assets will Page 22                                GAO/AIMD-99-212
    FAA Financial Management B-282977 continue to be exposed to waste,
    fraud, abuse, and mismanagement.  In addition, the Congress will
    have no assurance of receiving accurate financial management
    information to help make informed decisions about future funding
    and oversight of FAA activities.  The continued lack of
    accountability is of particular concern in light of the billions
    of dollars of taxpayer funds being spent to acquire assets in
    connection with the $42 billion Air Traffic Control modernization
    program. Recommendations    We recommend that the Secretary of
    Transportation direct the FAA Administrator to take the following
    actions: * Ensure timely completion of current efforts to
    identify, record, and provide support for all PP&E owned by FAA in
    order to establish a baseline of PP&E costs. * Perform a
    comprehensive internal control assessment of current PP&E
    accounting practices and identify and implement new PP&E controls
    where necessary to ensure ongoing accountability. * Prioritize the
    acquisition of systems that are capable of accurately accounting
    for PP&E efficiently and effectively on an ongoing basis. * Ensure
    timely implementation of planned procedures to improve inventory
    accountability, including * performing periodic cycle counts at
    the Logistics Center to substantiate inventory quantities on an
    ongoing basis; * conducting a comprehensive field spares inventory
    by September 30, 1999, resolving count differences, and making
    appropriate adjustments to establish a field spares inventory
    baseline; and * implementing the planned bar coding system for the
    Logistics Center and for field spares to capture inventory
    information from the time of receipt and through subsequent
    movements and ultimate disposition. * Perform an internal control
    assessment of field spares accountability practices and implement
    new field spares controls where necessary to ensure ongoing
    accountability. * Implement a program of periodic field spares
    cycle counts to substantiate inventory quantities on an ongoing
    basis. * Revise FAA order 4250.9B, "Field Material Management and
    Control," to clearly indicate the official who has ultimate
    responsibility for the accountability of field spares and the
    procedures required to carry out this responsibility. Page 23
    GAO/AIMD-99-212  FAA Financial Management B-282977 Agency Comments
    and  FAA officials consisting of the Acting Director of the Office
    of  Financial Our Evaluation                   Management, and the
    Program Director of the Resource Management Program and their
    staffs, provided oral comments on a draft of this report. The
    officials generally concurred with our findings and conclusions.
    They did not concur with two of our seven recommendations.  As
    discussed below, we believe that our recommendations are still
    valid. In regard to our recommendation that FAA perform a
    comprehensive internal control review of current PP&E accounting
    practices, FAA officials stated that a study of PP&E controls has
    already been performed and a report has been issued by an
    independent Certified Public Accounting firm and the DOT VOLPE
    National Transportation System Center.  The scope of the study was
    limited, focusing on fixed asset capitalization processes, which
    represents only one of the activities related to PP&E
    accountability. A comprehensive internal control assessment would
    include other significant activities such as determining what
    controls are needed to ensure that all owned property is recorded,
    all recorded property actually exists, all property is properly
    valued, and all recorded property balances are substantiated.
    Therefore, we continue to recommend that FAA perform a
    comprehensive PP&E internal control assessment. In regard to our
    recommendation that FAA revise its order 4250.9B, "Field Material
    Management and Control," to clearly indicate who has ultimate
    responsibility and is accountable for field spares, FAA officials
    stated that such a change had been issued. Subsequently, FAA
    personnel provided us a draft change order, which has not yet been
    issued, and which continues to give primary responsibility for the
    accountability for field spares to Systems Management Office
    managers, while also allowing the responsibility to be delegated.
    Therefore, we continue to affirm our recommendation that FAA order
    4250.9B be revised to clearly state which official has ultimate
    responsibility for field spares accountability. While FAA
    officials did not disagree with our recommendation that FAA
    implement procedures to conduct a comprehensive field spares
    inventory count during fiscal year 1999 and establish a field
    spares inventory baseline by September 30, 1999, they stated that
    they had previously established a field spares inventory baseline.
    They added that the baseline was established in fiscal year 1998
    through a 100-percent wall-to-wall inventory. As discussed in our
    report, the OIG performed limited tests of the fiscal year 1998
    field spares inventory and found numerous errors in FAA's
    inventory records, thus indicating that an accurate baseline for
    field spares Page 24                                GAO/AIMD-99-
    212  FAA Financial Management B-282977 has not been established.
    FAA officials further stated that they plan to perform a complete
    field spares inventory by September 30, 1999. In addition, FAA
    provided us a number of suggested technical changes to our report.
    We have reviewed these proposed changes and incorporated them
    where appropriate. We are sending copies of this letter to
    Representative John M. Spratt, the Ranking Minority Member of your
    committee; the Honorable Rodney E. Slater, Secretary of
    Transportation; the Honorable Carl B. Schellenberg, Chief
    Financial Officer of the Federal Aviation Administration; the
    Honorable Jane F. Garvey, Administrator of the Federal Aviation
    Administration; the Honorable Jacob Lew, Director of the Office of
    Management and Budget; the Honorable Kenneth M. Mead, Department
    of Transportation Inspector General; and other interested parties.
    Copies will also be made available to others on request. If you
    have any questions concerning this letter, please call me at (202)
    512-9508 or John C. Fretwell at (202) 512-9382.  Key contributors
    to this letter are included in appendix I. Sincerely yours, Linda
    M. Calbom Director, Resources, Community, and Economic
    Development, Accounting and Financial Management Issues Page 25
    GAO/AIMD-99-212  FAA Financial Management Appendix I GAO Staff
    Acknowledgements
    Appendix I Acknowledgments         Leo Blas, Donald Campbell, Rick
    Kusman, Mary Merrill, Meg Mills, Charles Norfleet, and Frank
    Synowiec, Jr., made key contributions to this report. (913848)
    Letter    Page 26                              GAO/AIMD-99-212
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