Financial Management: Misstatements of NASA's Statement of	 
Budgetary Resources (30-MAR-01, GAO-01-438).			 
								 
In June 2000, the House Committee on Science identified a	 
significant discrepancy between an amount reported in the	 
National Aeronautic and Space Administration's (NASA) audited	 
financial statements for fiscal year 1999 and its submission in  
the President's Budget for fiscal year 2001. NASA's 1999	 
financial statement was misstated by a reported $644 million. The
misstatement was in the "Recoveries of Prior Year Obligations"	 
line of the statement. NASA had to rely on an ad hoc process that
included a data call from the reporting units' (nine centers and 
headquarters) separate systems and a compilation of reported	 
amounts using a spreadsheet. In addition, when compiling these	 
data, NASA headquarters mistakenly added amounts that were not	 
relevant to the Recoveries line. Headquarters officials stated	 
that the error resulted from their misinterpretation of the	 
Office of Management and Budget (OMB) guidance on what to include
in the Recoveries line. NASA is currently acquiring and 	 
implementing a single, commercial-off-the-shelf core accounting  
system that it believes will ameliorate the system problems	 
identified. In conducting an independent audit of NASA's	 
financial statements for fiscal year 1999, Arthur Andersen did	 
not detect the error in NASA's Statement of Budgetary Resources  
(SBR). Evidence in Arthur Andersen's working papers was not	 
adequate to support unqualified opinions on NASA's SBR and	 
Statement of Financing in accordance with generally accepted	 
government auditing standards (GAGAS). Arthur Andersen's working 
papers did not adequately document the evaluation of the internal
controls related to the two budgetary statements or the 	 
independent validation of key amounts in the statements for	 
fiscal year 1999. The NASA Inspector General (IG) performed a	 
quality control review of the audit by Arthur Andersen using a	 
detailed checklist based on GAGAS. According to the checklist,	 
the objectives of the NASA IG quality control review were to (1) 
ensure that the independent public accountant conducted the audit
in accordance with applicable auditing standards and OMB bulletin
requirements, (2) identify any follow-up work that needs to be	 
done by the independent public accountant, and (3) identify	 
issues that may require management attention.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-438 					        
    ACCNO:   A00722						        
    TITLE:   Financial Management: Misstatements of NASA's Statement  
             of Budgetary Resources                                           
     DATE:   03/30/2001 
  SUBJECT:   Accountability					 
	     Audit oversight					 
	     Auditing procedures				 
	     Auditing standards 				 
	     Financial management				 
	     Financial statement audits 			 
	     Air Force Working Capital Fund