Federal Timber Sales: Forest Service Could Improve Efficiency of
Field-Level Timber Sales Management by Maintaining More Detailed
Data (27-JUN-07, GAO-07-764).
For years, GAO has raised concerns about the ability of the
Department of Agriculture's Forest Service (Service) to track the
amounts it obligates for and spends on timber sales and to use
this information in managing the sales. Timber sales are
generally carried out by ranger districts (the lowest level of
the Service's decentralized organizational structure), which are
overseen by national forest offices. The Bureau of Land
Management (BLM) within the Department of the Interior also
conducts timber sales. This report examines the extent to which
(1) the Forest Service tracks timber sales-related obligations
and expenditures, including the extent to which the Service uses
this information in making management decisions; (2) BLM tracks
timber sales-related obligations and expenditures; and (3) both
agencies track their timber sales-related revenue.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-764
ACCNO: A71527
TITLE: Federal Timber Sales: Forest Service Could Improve
Efficiency of Field-Level Timber Sales Management by Maintaining
More Detailed Data
DATE: 06/27/2007
SUBJECT: Budget obligations
Data collection
Forest management
Funds management
Land management
Management information systems
National forests
Records
Sales
Timber sales
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GAO-07-764
* [1]Results in Brief
* [2]Background
* [3]Forest Service Organization
* [4]Forest Service Timber Sales-Related Funding
* [5]BLM Organization
* [6]BLM Timber Sales-Related Funding
* [7]The Forest Service's Aggregation of Obligation and Expenditu
* [8]The Forest Service Tracks Obligations at the Program and For
* [9]Cost Issues Prompted the Forest Service to Further Aggregate
* [10]Lacking the System Data They Need, Many Field Managers Rely
* [11]The Bureau of Land Management's Detailed Data Help Managers
* [12]Both Agencies Have Systems That Track Revenue by Timber Sale
* [13]Forest Service's Timber Sale Accounting System Maintains Rev
* [14]BLM Uses Two Systems to Track Timber Sales Revenue
* [15]Conclusions
* [16]Recommendation for Executive Action
* [17]Agency Comments
* [18]Appendix I: Objectives, Scope, and Methodology
* [19]Appendix II: Comments from the Forest Service
* [20]Appendix III: Comments from the Department of the Interior
* [21]Appendix IV: GAO Contact and Staff Acknowledgments
* [22]GAO Contact
* [23]Staff Acknowledgments
* [24]Order by Mail or Phone
Report to Congressional Requesters
United States Government Accountability Office
GAO
June 2007
FEDERAL TIMBER SALES
Forest Service Could Improve Efficiency of Field-Level Timber Sales
Management by Maintaining More Detailed Data
GAO-07-764
Contents
Letter 1
Results in Brief 3
Background 5
The Forest Service's Aggregation of Obligation and Expenditure Data
Hinders Field-Level Project Management 14
The Bureau of Land Management's Detailed Data Help Managers Monitor
Projects 20
Both Agencies Have Systems That Track Revenue by Timber Sale 22
Conclusions 26
Recommendation for Executive Action 27
Agency Comments 27
Appendix I Objectives, Scope, and Methodology 29
Appendix II Comments from the Forest Service 32
Appendix III Comments from the Department of the Interior 33
Appendix IV GAO Contact and Staff Acknowledgments 34
Figures
Figure 1: Forest Service Regions 7
Figure 2: BLM-Administered Lands and State Jurisdictions 12
Abbreviations
BLM Bureau of Land Management
CBS Collections and Billing System
FFIS Foundation Financial Information System
FFS Federal Financial System
K-V Knutson-Vandenberg
MIS Management Information System
SCID Stewardship Contracting Information Database
TIM Timber Information Management system
TSA Timber Sale Accounting system
TSIS Timber Sale Information System
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separately.
United States Government Accountability Office
Washington, DC 20548
June 27, 2007
The Honorable Tom Harkin
Chairman
Committee on Agriculture, Nutrition, and Forestry
United States Senate
The Honorable Jeff Bingaman
Chairman
Committee on Energy and Natural Resources
United States Senate
As the steward for more than 190 million acres of federal land, the
Department of Agriculture's Forest Service (Service) undertakes a myriad
of land management projects to sustain the land's health, diversity, and
productivity. Such projects may involve harvesting marketable timber, such
as fuel reduction projects designed to thin heavy undergrowth and dense
stands of trees, and salvaging (i.e., removing) dead and dying trees. In
fiscal year 2006, the sale of timber generated revenue of over $221
million for the Service.
The Service has a decentralized structure consisting of the Washington
Office and the field. The field consists of nine regions that oversee 155
national forests; the forests, in turn, oversee hundreds of ranger
districts. Timber harvests, like other land management projects, are
generally conducted by the Service's ranger districts and national
forests, and the Service places considerable decision-making authority in
managers at these field offices. The Service funds its land management
projects through various programs.^1 These programs include wildlife and
fish management, forest products, grazing management, and so forth. Timber
sales involving the harvest of live trees are generally conducted under
the Forest Products Program, while sales involving the salvage of dead or
dying trees are generally conducted under the Salvage Sale Program.
^1The Service allocates funds by budget line item; these items generally
correspond to programs. For the purposes of this report, we will refer to
the budget line items as programs.
Forest Service timber sales activities have long been controversial, in
part because of concerns over the ecological and financial costs
associated with harvesting timber. For years, we, along with other
organizations, have questioned the Service's ability to track the amount
it spends on timber sales, as well as the Service's ability to use these
data to make management decisions about its operations. For example, for
fiscal years 1992 through 1997, the Department of Agriculture's Office of
Inspector General reported that the Forest Service's accounting
data--including data associated with timber sales--were not reliable. We
reported a similar finding in 2001. Further, in 2003 and again in 2006, we
reported that the Service does not maintain data on the actual cost of
individual work activities, including timber sales, and as a result cannot
assess the extent to which these activities yielded accomplishments
commensurate with the dollars spent on them.
In this context, you asked us to examine the Service's current mechanisms
for tracking timber sales-related obligations and expenditures,^2 as well
as timber sales-related revenue. In addition, given that the Bureau of
Land Management (BLM) within the Department of the Interior also conducts
timber sales, you asked us to include that agency in our review as well.
Specifically, we agreed to determine the extent to which (1) the Forest
Service tracks timber sales-related obligations and expenditures,
including the extent to which the Service uses this information in making
management decisions; (2) BLM tracks timber sales-related obligations and
expenditures, and how BLM's methods for doing so compare with those of the
Forest Service; and (3) the Forest Service and BLM track their timber
sales-related revenue.
In conducting our work, we reviewed Forest Service timber sales accounting
policies and procedures; financial system manuals and documentation;
reports from systems in place to track obligations, expenditures, and
revenue; and databases and spreadsheets devised by field offices to track
this information. We visited numerous field locations because the Forest
Service is a decentralized agency. Our work included visiting six of the
nine Forest Service regional offices and at least one national forest
office in each of six regions. We also interviewed officials of five
ranger districts. We also visited the Service's Washington Office and the
Albuquerque Service Center, which performs many Forest Service accounting
functions. Our BLM work included reviewing BLM timber sales accounting
policies and procedures, financial system manuals and documentation, and
reports from systems in place to track obligations, expenditures, and
revenue. In addition, we visited the National Business Center in Denver,
Colorado; two state offices; one district office; and one field office. At
each of these Forest Service and BLM locations, we interviewed officials
responsible for tracking timber sales and managing related obligations,
expenditures, and revenue, and we reviewed related policies, procedures,
and records. We conducted our review from April 2006 through April 2007 in
accordance with generally accepted government auditing standards, which
included an assessment of data reliability and internal controls.
Additional information on our scope and methodology appears in appendix I.
^2An agency incurs an obligation when it places an order, signs a
contract, purchases a service, or takes other actions that require the
government to make payments immediately or in the future. An expenditure
occurs when the payment is actually made (i.e., when funds are actually
transferred). The U.S. budget uses obligational accounting to control the
use of funds and ensure that agencies comply with appropriations law.
Results in Brief
The Forest Service tracks the funds it spends on timber sales, including
obligations and expenditures for personnel and equipment, in a way that
does not provide the detail that many field managers, such as district
rangers and national forest supervisors, said they need in order to make
management decisions--for example, in deciding how to allocate or redirect
resources among sales. The Service does not track timber sales-related
obligation or expenditure data by individual sale but rather aggregates
these data by the programs that fund the sales--such as the Forest
Products Program or the Salvage Sale Program. Also, within these programs,
the Service recently stopped tracking obligations and expenditures at the
ranger district level, where timber sales are generally carried out, and
now tracks them instead at the national forest level. Forest Service
headquarters officials said that the aggregation of obligation and
expenditure data at the forest level was part of an effort to reduce the
proliferation of job codes in the accounting system and the associated
data management costs. These officials said that the aggregate data are
"good enough" and that field managers do not need more detailed data.
However, many field managers we talked with said that detailed data are
crucial to their timber sales management efforts. Without obligation and
expenditure data on individual sales, for example, field managers said
they cannot compare actual expenditures on sales with planned
expenditures, identify potential inefficiencies across sales, or identify
resources available for redirection to another sale if needed. Further,
without data on program obligations and expenditures at the ranger
district level, field managers said they cannot efficiently compare actual
and planned program obligations and expenditures across districts to
ensure that spending is occurring as planned. To compensate for the lack
of detailed data, many field managers have independently developed a
variety of so-called "cuff records," such as spreadsheets, containing
information they deem essential for managing their timber sales. Field
managers we spoke with said that maintaining these cuff records is time
consuming--for example, one forest official said he spends about 20
percent of his time gathering and analyzing the data he needs to manage
timber sales. As a result, although the aggregation of data has decreased
the Service's recognized data management costs, it has increased the time
spent by some field managers on tracking this information through cuff
records, thus raising questions about the actual cost savings resulting
from the aggregation of data. Moreover, the Service has not systematically
determined the information needs of its field managers or the extent to
which actual cost savings may be offset by the cost of maintaining cuff
records. We are recommending actions the Service can take to improve its
managers' ability to use obligation and expenditure data to understand the
actual cost of work activities and make management decisions accordingly.
In contrast to the Forest Service, BLM can track timber sales data by
individual sale, thereby allowing field managers to use these data in
managing the sales--including comparing planned and actual expenditures,
identifying potential inefficiencies across sales, and redirecting
resources among sales when needed. For example, using the unique job code
assigned to each timber sale conducted under the Forest Ecosystem Health
and Recovery Fund, managers can track all obligations and expenditures on
each sale--from those incurred during the planning phase (e.g., on
environmental assessments) to the final administrative expenditures
involved in closing the sale. BLM chose to maintain detailed data because
its managers find them necessary in making decisions about, for example,
how to allocate resources or reduce expenditures. At the project level,
for example, managers can track actual expenditures and compare them with
planning estimates. More broadly, managers can analyze several years of
data to identify trends in expenditures across offices. These data can
then reveal how efficient offices are in accomplishing projects and inform
decisions about reallocating resources among offices or programs.
Both the Forest Service and BLM have systems that track and report revenue
data by timber sale. Both agencies' systems track the volume, type, and
value of timber harvested by individual timber sale; automatically
generate bills to timber purchasers; and track payments against those
bills. Over the past few years, both agencies have struggled with, but are
now resolving, the challenge of tracking revenue from timber sales
conducted under their stewardship contracting authority. Stewardship
contracts generally involve the exchange of goods, such as timber, for
contract services, such as thinning of small trees and brush. Such
exchanges can be difficult to account for with traditional accounting
systems. The Forest Service has recently added a module to its accounting
system to track stewardship contracting revenue, and BLM has developed an
agencywide database for stewardship contracting information.
We provided a draft of this report to the Secretaries of Agriculture and
the Interior for review and comment. The Forest Service and the Department
of the Interior generally agreed with our report; their comment letters
are presented in appendixes II and III, respectively.
Background
Both the Forest Service and BLM conduct timber sales as part of their
management of public land. However, the agencies differ in their
organizational structure and in the sources of funding they use for
carrying out timber sales. Timber sales activities involve staff time and,
in some cases, equipment and supplies, to identify the sale area, conduct
the required environmental analyses, solicit bids, prepare the timber sale
contract, mark the sale boundary and the trees to be cut or left, and
monitor the harvest operations and reforestation activities.
Forest Service Organization
The Forest Service manages 193 million acres of national forests and
grasslands. The Service has nine regions that oversee 155 national
forests; the forests, in turn, oversee more than 600 ranger districts.
Each region (see fig. 1) encompasses a broad geographic area, headed by a
regional forester who reports directly to the Chief of the Forest Service
and provides leadership for, and coordinates the activities of, the
various forests within the region. Each forest, headed by a supervisor,
allocates the budget and coordinates activities among the various ranger
districts within the forest. Each ranger district, headed by a district
ranger, conducts or oversees "on the ground" activities such as
construction and maintenance of trails; operation of campgrounds;
management of wildlife habitat; and the sale and harvest of forest
products, including timber. The districts vary in size from 50,000 acres
to more than 1 million acres.
Figure 1: Forest Service Regions
Note: The Forest Service has no Region 7.
Forest Service Timber Sales-Related Funding
The Forest Service's timber sales-related activities are funded by a
variety of appropriations. Within the Service's appropriations, there are
several programs (or "budget line items") directly or indirectly related
to timber sales. For the Forest Products Program, which is responsible for
most timber sales-related activity, the Forest Service received about
$277.6 million of its $1.5 billion national forest system appropriation in
fiscal year 2006. However, the Forest Products Program is not limited to
timber sales; some expenditures within the program are associated with
other products, such as mushrooms and decorative grasses and foliage. The
Service issues permits that allow individuals to gather such products from
the forests, whether for personal use or for sale. Conversely, not all
timber sales-related expenditures are included in the Forest Products
Program. Certain timber sales' planning expenses, for example, might be
borne by other programs--including vegetation and watershed management or
wildlife and fish management--if the primary purpose of the sale is to
improve vegetative conditions or wildlife habitat rather than to provide
commercial timber.
The Forest Service also uses various other funds to pay for timber
sales-related activities, including (1) the Knutson-Vandenberg Trust Fund,
(2) the Salvage Sale Fund, (3) the Brush Disposal Fund, (4) the Timber
Sales Pipeline Restoration Fund, and (5) stewardship contracting revenue.
o The Knutson-Vandenberg (K-V) Trust Fund, established by the
Knutson-Vandenberg Act of 1930 (16 U.S.C. SS 576-576b),^3 was
created to collect a portion of timber sales revenue to pay for
the reforestation of areas from which timber is cut. The
reforestation projects eligible for such funding include growing
trees for planting, planting trees, sowing seeds, removing weeds
and other competing vegetation, and preventing animals from
damaging new trees. The act was amended in 1976 to allow the
Forest Service to use these funds for other timber sales area
improvement activities, such as creating wildlife habitat. It was
amended again in 2005 to authorize expenditures within the entire
Forest Service region in which the timber sales occurred. In
fiscal year 2006, the Forest Service allocated $40 million of K-V
funds for forest product sales under the expanded authority, and
another $77.6 million of K-V funds for activities conducted under
the original K-V authority.
o The Salvage Sale Fund, derived from salvage sale revenue, is
used to pay for preparing and administering future salvage
sales.^4 The fund may also be used to pay for the design,
engineering, and supervision of construction of roads associated
with such sales. The Salvage Sale Fund was created by the National
Forest Management Act of 1976 (16 U.S.C. 472a(h)).^5 Individual
salvage sale timber contracts designate the amount of receipts to
be collected and transferred to the Salvage Sale Fund. For fiscal
year 2006, the Forest Service allocated $75.8 million for salvage
sales.
o The Brush Disposal Fund, derived from payments made by timber
purchasers, is used to pay for the removal of brush and debris
that result from logging.^6 For fiscal year 2006, the Forest
Service allocated $11.6 million from the Brush Disposal Fund for
this purpose. The Brush Disposal Fund is a permanent fund created
to allow the deposit of funds to pay for certain brush disposal
work on all timber sales, including salvage sales. Forest Service
staff complete brush disposal work using funds collected as an
additional charge to the purchaser, based on the amounts paid for
the trees harvested. The funds are deposited in the Brush Disposal
Fund, and the Service generally seeks to spend them within 3 years
of the completion of the sale. Brush disposal usually entails
chipping or burning vegetative debris from the sale, such as
stumps, broken treetops, tree limbs and branches, or damaged brush
resulting from logging operations. Brush disposal is also referred
to as slash disposal.
o The Timber Sales Pipeline Restoration Fund, authorized by the
Omnibus Consolidated Rescissions and Appropriations Act of 1996
(Pub. L. No. 104-134), is used to pay for certain eligible timber
sales. For fiscal year 2006, the Forest Service had $2.5 million
in the pipeline fund. The act created this fund to receive a
portion of the receipts from certain timber sales released under
the fiscal year 1995 Supplemental Appropriations for Disaster
Assistance and Rescissions Act. The revenue deposited in the fund
is to be used for the preparation of timber sales not funded by
annual appropriations and to fund certain recreation projects.
Specifically, 75 percent of the revenue is to be used for the
preparation of green timber sales on national forest and certain
BLM lands, and 25 percent is to be used for recreation projects.
o Stewardship contracting revenue, derived from stewardship
projects involving the sale of timber, is used to pay for future
stewardship projects.^7 For fiscal year 2006, the Forest Service
had $1.7 million in such revenue available. Stewardship
contracting involves the use of any of several contracting
authorities that were first authorized for use by the Forest
Service on a pilot basis in October 1998. The Omnibus Consolidated
and Emergency Supplemental Appropriations Act for 1999 established
stewardship contracting authority to achieve national forest land
management goals that meet local and rural community needs.^8
Prominent among the stewardship contracting authorities is the
ability to (1) trade goods--timber, for example--for contract
services, such as thinning of small trees and brush, and (2)
retain for use in future stewardship projects any revenue
generated through selling forest products such as timber, rather
than returning the revenue to the Department of the Treasury, as
is required for traditional timber sales. Although stewardship
contracting was initially established as a demonstration project
that involved a limited number of individual projects within the
Forest Service and was to end in 2002, the Consolidated
Appropriations Resolution of 2003, among other things, extended
the use of stewardship contracting authority to 2013, eliminated
the limit on the number of projects, authorized commercial tree
removal for forest health purposes as a project purpose, and
extended the authority to BLM.^9
^3Act of June 9, 1930, Ch. 416, 46 Stat. 527; Pub. L. No. 94-588, S 18, 90
Stat. 2962 (1976); Pub. L. No. 109-54, S 412, 119 Stat. 551 (2005).
^4Timber sales are generally referred to either as green sales, which
involve the harvest of live trees, or as salvage sales, which involve the
harvest of trees that are dead, dying, or damaged by wind, fire, disease,
or insects.
^5Pub. L. No. 94-588, S 14, 90 Stat. 2958 (1976), as amended.
^6Act of Aug. 11, 1916, ch. 313, 39 Stat. 462, as amended.
^7The law stated that the land management goals of stewardship contracts
include road and trail maintenance, watershed restoration, and prescribed
burning and noncommercial tree removal to improve forest health.
The Forest Service's tracking of its timber sales-related expenditures has
been the subject of several of our previous reports. For example, in 2001
we reported that serious accounting and financial reporting deficiencies
precluded an accurate determination of the total costs associated with the
timber sales program and, in fact, rendered the Service's cost information
unreliable.^10 In 2003, we noted that the Service could not accurately
report on the actual costs of individual work activities.^11 And in 2006,
we reported that the Forest Service did not have a system that allowed it
to determine the cost of its activities below the program level, resulting
in a continuing focus on budget management without a corresponding focus
on cost management.^12
^8Pub. L. No. 105-277, S 347, 112 Stat. 2681-298 (1998). The Forest Service
is authorized to use either contracts or agreements in implementing
stewardship projects. In this report, we refer to all such arrangements as
contracts.
^9Pub. L. No. 108-7, S 323, 117 Stat. 275 (2003). For further information
about the Forest Service's use of stewardship contracting authority, see
our report Federal Land Management: Additional Guidance on Community
Involvement Could Enhance Effectiveness of Stewardship Contracting,
[25]GAO-04-652 (Washington, D.C.: June 14, 2004).
^10GAO, Financial Management: Annual Costs of Forest Service's Timber
Sales Program Are Not Determinable, [26]GAO-01-1101R (Washington, D.C.:
Sept. 21, 2001).
^11GAO, Forest Service: Little Progress on Performance Accountability
Likely Unless Management Addresses Key Challenges, [27]GAO-03-503
(Washington, D.C.: May 1, 2003).
BLM Organization
BLM administers more land than any other federal agency--about 261 million
acres. Of that amount--most of which is located in the western states,
including Alaska--roughly 69 million acres (about 26 percent) are
commercial forests and woodlands. BLM's organizational structure includes
national, state, and field-level units. National units include BLM's
headquarters office as well as national centers with specific service and
support responsibilities, such as the National Business Center in Denver,
Colorado. State-level units consist of 12 state offices that implement
BLM's activities in one or more states. Field-level units include 144
district and field offices that carry out the "on the ground" activities,
including timber sales, under the supervision of the BLM state offices.
Figure 2 shows BLM-administered lands and the boundaries of BLM state
jurisdictions.
^12GAO, Managerial Cost Accounting Practices: Department of Agriculture
and the Department of Housing and Urban Development, [28]GAO-06-1002R
(Washington, D.C.: Sept. 21, 2006).
Figure 2: BLM-Administered Lands and State Jurisdictions
BLM Timber Sales-Related Funding
BLM's timber sales-related activities are funded through various
appropriations. BLM conducts timber sales under two separate forestry
programs. Most of BLM's timber program is associated with the agency's
lands in western Oregon, which are managed expressly for the purpose of
providing a permanent source of timber supply, protecting watersheds,
regulating stream flow, contributing to the economic stability of local
communities and industries, and providing recreational facilities under
the provisions of the Oregon and California Sustained Yield Act of
1937.^13 These lands, heavily forested with Douglas fir and western
hemlock species, are responsible for the majority of BLM's timber
production. BLM timber sales undertaken in western Oregon are funded by
the Oregon and California Grant Lands appropriation; in fiscal year 2006,
BLM allocated $27.1 million for the sale of this timber. The remainder of
BLM's timber sales occur on other lands, which are managed for multiple
uses, including the sale of timber. These timber sales are funded by the
Management of Lands and Resources appropriation, which was $10.4 million
in fiscal year 2006.
In addition to these appropriations, BLM's timber sales-related activities
rely on the Forest Ecosystem Health and Recovery Fund, the Timber Sales
Pipeline Restoration Fund, and funds from stewardship contracting
activities. The Forest Ecosystem Health and Recovery Fund, which funds
timber salvage sales, is derived from the federal share of revenue from
BLM salvage sales and forest health restoration treatments.^14 This
revenue is made available to BLM for planning and preparing salvage timber
for disposal, the administration of salvage timber sales, and subsequent
site preparation and reforestation. Since fiscal year 1998, the fund has
also been available for forest health restoration treatments, including
timber sales designed to release trees from competing vegetation, control
tree densities, or treat hazardous fuels. BLM's Timber Sales Pipeline
Restoration Fund operates under the same legislation pertaining to the
Forest Service's pipeline fund. Finally, authority for stewardship
contracting was originally limited to the Forest Service but was extended
to BLM in fiscal year 2003. When BLM was first granted stewardship
contracting authority, the Assistant Secretary of the Interior for Land
and Minerals Management had to approve each stewardship contracting
project. That approval has since been delegated to the state directors.
Generally, stewardship contracts valued at $100,000 or more are handled by
BLM's National Business Center or by the Oregon State Office, while those
valued at less than $100,000 are handled by the state office that
originated them.
^1343 U.S.C. 1181a et seq.
^14The federal share of revenue is that portion of revenue not paid to the
counties in accordance with the requirements of 43 U.S.C. 1181f and 43
U.S.C. 1181-1 et seq., and Pub. L. No. 106-393.
The Forest Service's Aggregation of Obligation and Expenditure Data Hinders
Field-Level Project Management
The Forest Service tracks obligation and expenditure data at the program
and forest levels through its accounting system--the Department of
Agriculture's Foundation Financial Information System (FFIS). In fiscal
year 2000, when it transitioned to FFIS, the Service lost the ability to
track information--such as employees' actual time charges and supply
purchases--at the project level (i.e., individual timber sale level).
Instead, FFIS aggregates data at the program level. Currently, neither
FFIS nor any other automated system tracks obligations and actual
expenditures at the project level. Beginning in fiscal year 2006, as a
cost-saving measure, the Service removed from FFIS the codes that had
previously associated program obligations and expenditures with individual
ranger districts. To compensate for the lack of detailed information,
field managers have spent considerable time and effort to develop and
maintain a variety of "cuff records," such as spreadsheets, that contain
the data they need to manage their projects, including timber sales.
The Forest Service Tracks Obligations at the Program and Forest Levels
Through FFIS, the Forest Service tracks, at the program and forest levels,
timber sales-related obligations from the National Forest Fund as well as
from the K-V, brush disposal, salvage sale, pipeline, and stewardship
funds. These obligations include costs for personnel, vehicles, and
supplies and equipment. Personnel costs related to timber sales include
time spent preparing for a sale (e.g., identifying the sale area and
completing related environmental analyses), administering the sale
contract, monitoring the harvest, and conducting or overseeing the
postharvest reforestation and restoration activities.
Since its transition to FFIS, the Service has aggregated data on
obligations at the program level rather than at the project level. Staff
charge their time to a job code that represents the program most
applicable to the activities they conducted--for example, to the job code
associated with the Forest Products Program or the Vegetation and
Watershed Management Program. Overall, according to Forest Service
officials, staff time is by far the Service's biggest expenditure--about
75 percent or 80 percent of the total. Other expenditures include vehicles
and supplies, such as paint for marking sale boundaries and marking trees
to be cut or left.
In addition to grouping data by program, FFIS also aggregates the program
data at the forest level. For example, when staff at the ranger district
level, where projects are carried out, complete their timesheets, the
program job code to which they charge time indicates the national forest
with which their district is associated. The code does not, however,
indicate the district or the specific project with which the transaction
is associated. Obligations for supplies and equipment are also tracked at
the forest level. Previously, FFIS contained "subunit" job codes that tied
this information to ranger districts.^15 Beginning in fiscal year 2006, as
a cost-saving measure, the Forest Service removed these subunit job codes
for timber sales-related activities.
For stewardship contracting activities, on the other hand, no separate job
code exists in FFIS by which to identify staff time and other obligations
related to these activities. FFIS has no code for stewardship contracting
activities because the Forest Service does not have a budget line item for
these activities. Rather, stewardship contracting is considered a tool for
accomplishing various forest management objectives. Accordingly, staff
time and other obligations for stewardship contracting activities are
charged to the one or more programs that benefit from the stewardship
project and are thus included in these programs' obligations. For example,
if the wildlife program were expected to derive a benefit from a
stewardship thinning project (e.g., because the project would result in
more open space for elk), then the wildlife program would fund part of the
cost of that project. Field offices maintain spreadsheets to track the
monthly progress of individual stewardship contracting projects and the
payment mechanisms involved in each one (e.g., nonmonetary credits earned
for service work, payments from appropriated funds or trust funds, and
payments from revenue retained from stewardship projects).
Cost Issues Prompted the Forest Service to Further Aggregate Data
The Forest Service's decision to further aggregate data at the forest
level beginning in fiscal year 2006--that is, to reduce reporting to a
single job code per program per forest--was intended as a cost-saving
measure. By reducing the number of job codes in use, the Service would in
turn reduce the associated number of records that are maintained in FFIS,
thereby reducing its data management costs. The Forest Service determined
that a significant portion of the records was associated with job codes
used to track information associated with ranger districts. According to
officials of the Forest Service's Office of the Chief Financial Officer,
removing these job codes was part of a continuing effort, begun in fiscal
year 2004, to reduce the "proliferation" of job codes that was leading to
increased data management costs, and doing so resulted in savings of about
$8.9 million in 2006 dollars from fiscal year 2004 through fiscal year
2006.
^15The Forest Service refers to national forests as "units"; thus, a
ranger district is a "subunit."
Forest Service headquarters officials, and some regional officials, told
us that detailed tracking of data is not needed at the ranger district or
project level and, consequently, that it was not an efficient use of
Service funds to pay the costs associated with this unnecessary level of
detail. According to one regional official, for example, district or
project information is not needed to manage at the forest level; the
forest supervisor just needs to know how close the forest is to achieving
its objectives and how much of its allocation is still available for
obligation. Tracking at the program level frees up time to do actual work,
he said, rather than tracking multiple job codes. Other officials also
said they were not convinced that forest and district managers needed to
track all of the information they had historically maintained. Agency
records, said one official, were not designed to be a "personal diary" for
managers.
Several headquarters officials, including Albuquerque Service Center
officials, told us that field managers could use the Service's planning
and budgeting system, known as WorkPlan, to monitor their projects.
WorkPlan is an automated system in which project managers estimate how
much they will spend on one or more work activities, such as preparing or
administering timber sales. Managers prepare their WorkPlans at the
beginning of the fiscal year--entering into each plan the personnel,
vehicles, and other equipment they anticipate they will need to carry out
the planned activities. Managers are free to choose the level of
specificity associated with their WorkPlans. For example, one manager
might create a single WorkPlan to encompass a district's entire timber
sales program, while another might create an individual WorkPlan for each
planned timber sale or for each phase of a timber sale.
However, field managers we talked to said that, while they find the
WorkPlan system a valuable planning tool, it does not meet their need for
detailed information on what they have obligated or actually expended.
That is, the WorkPlan system obtains data on obligations and actual
expenditures from FFIS--which, as noted earlier, aggregates these data by
program and national forest, not by ranger district, project, or
individual WorkPlan. Similarly, while other Service systems, such as the
Forest Service Activity Tracking System, contain project-level
information, that information does not include obligation or actual
expenditure data. The headquarters official responsible for overseeing
program activities in the national forest system agreed that the WorkPlan
system cannot provide field managers with such data at the district or
project level. This official, and other headquarters officials, said that
field managers who felt that this detailed information was necessary must
develop their own tracking mechanisms.
Lacking the System Data They Need, Many Field Managers Rely on Cuff Records
Although several Forest Service officials contend that information on
district- and project-level obligations and expenditures is not needed,
managers we talked to at various levels of the Service's field
organization said they rely on cuff records, such as spreadsheets, to
track this information and help manage their projects. For example, these
managers told us that by using cuff records to track project obligations
and expenditures, they can more easily determine whether obligations and
expenditures are charged to the appropriate programs, manage forest or
regional allocations, and respond to outside requests for information
about agency timber sales. The amount of time and effort required to
develop and maintain such cuff records is necessitated by the lack of a
system that maintains data on obligations and actual expenditures at the
district or project level.
Field managers we interviewed said they rely on cuff records to accumulate
the detail they find necessary to track projects' progress and ensure that
obligations and expenditures are being charged to the appropriate
programs, as well as to ensure that their projects' on-the-ground progress
keeps pace with the obligations and expenditures associated with the
projects. One forest official said, for example, that the subunit codes
(the ones that were eliminated through the move to aggregated data) are
necessary to keep track of districts' obligations and expenditures.
Accordingly, he continues to use these codes in his cuff records.
Additionally, he requires each district to account for its obligations and
expenditures on a project-by-project basis (in addition to using WorkPlan)
and to provide those data to him so that he can track this information
against the overall allocation for the forest. By comparing obligations
and expenditures with the on-the-ground progress of individual projects,
this manager can determine whether project spending is on schedule and
whether funds need to be reallocated toward (or away from) individual
projects to ensure that forest priorities are accomplished.
Such tracking of project spending is important because a project might
encounter unexpected costs--for example, unanticipated steps might need to
be taken in order to remedy damage caused by a mudslide. If the project is
of high priority, according to Forest Service officials we interviewed,
the project manager will need to shift funds from other, lower priority
projects in order to provide the additional funds needed to complete the
high-priority project. However, without district- or project-level data on
obligations, it is difficult--if not impossible--to know which other
projects have funds available to shift to the priority project, as well as
to understand the potential effects on the projects from which funds were
moved.
At another forest, an official noted that it is now "almost impossible,"
without the subunit job codes, to track obligations and expenditures at
the district level. Regarding the forest's K-V fund, for example, this
official used to be able to maintain K-V fund balances by district; to do
that now, he counts on district managers to keep cuff records. Further,
the forest developed a K-V tracking spreadsheet, which is now the only
tool available to officials at that forest for tracking the K-V funds and
needs among projects.
With the removal of the subunit codes from FFIS, several field managers
told us they must depend on their cuff records to detect and correct
erroneous transactions to ensure that their limited funds are spent as
intended. In one region, for example, an official said she routinely
scours the FFIS transaction register--which shows, for an individual
program or forest, a record of each obligation--looking for erroneous
charges. Because the list of transactions for a single program or forest
can be hundreds of pages long, she checks only transactions over $1,000.
When she finds a charge that seems potentially erroneous (e.g., a name she
does not recognize or a credit card purchase that is questionable for a
given program), she queries the managers of the staff areas. These
managers then must investigate the potentially incorrect charges and
correct them, if appropriate. This official said she spent 15 percent to
20 percent of her time in fiscal year 2006 using her cuff records to track
down potentially erroneous charges and correct them. She found, for
example, that numerous time charges had been miscoded, resulting in a
total of about $60,000 being erroneously charged to the timber program;
she followed up and had those charges removed. This inefficient
verification and correction process is used because the Forest Service
does not have a system that links each charge with an individual district,
by project, to enable officials to more easily detect erroneous charges.
Other managers we spoke with expressed similar concerns about their
diminished ability--since the shift to aggregated data--to identify costs
for particular activities and to monitor obligations against their
forests' allocation. When multiple districts charge the same code,
managers cannot tell--without keeping detailed cuff records--who might be
charging more time or obligating more money than planned to a code or
charging the wrong code. If more time or money is spent on a project than
was planned, a manager must be prepared to either delay further work on
the project or redirect funds from other projects to compensate. However,
in order to take either of these steps in time to avert overspending, the
manager must have timely information on each project's expenditures. The
effects of exceeding allocations can go beyond the project in which it
occurs, or even beyond the forest. For example, officials in one region
told us that a forest within the region had exceeded its allocation for
planning so substantially that planning activities throughout the region
had to be curtailed in order to compensate for the forest's error.^16 As a
result, these managers have created cuff records to monitor projects as
they proceed.
Finally, many Forest Service staff we spoke with said they keep cuff
records so that they can respond to the many requests they receive for
information. For example, according to officials in different regions,
timber industry groups, congressional staff, and others frequently ask for
information on individual timber sales, including information on the
volume of timber offered and associated costs, particularly unit rates to
produce timber (in dollars per thousand board feet).^17 Responding to
these requests is difficult, according to Service officials we
interviewed, because the Service does not maintain information at the
timber sales level; rather, managers must resort to cuff records in order
to furnish the information.
Given the labor-intensive and time-consuming nature of maintaining the
various cuff records in existence throughout the Forest Service, the
actual cost savings resulting from the Service's decision to aggregate
data are not clear because substantial field resources are being expended
to compensate for the unintended effects of this decision. That is, while
the reduction in job codes maintained in FFIS has helped the Service
decrease its recognized data management costs, it has at the same time
resulted in additional, uncalculated costs in staff time devoted to
tracking obligation and expenditure data at the district level. In fact,
the information we gathered from managers in the field seems to contradict
the assertion of a Forest Service official, noted earlier, that tracking
obligations and expenditures at the forest level frees up time to do
actual work rather than tracking multiple job codes. Instead, field
managers told us that the time they need to spend tracking has actually
increased because the system no longer provides this information at the
district level. In addition, neither FFIS nor WorkPlan tracks obligations
and actual expenditures at the project level. Consequently, field managers
who wish to track district- or project-level data must do so manually.
Forest Service headquarters officials told us that the agency has not
attempted to determine the amount of time currently spent by field
managers tracking this information or the associated costs of doing so.
^16Responsibility for fund control, by program, is at the regional level.
^17A thousand board feet is a common measure of timber volume. One board
foot equals 12 inches by 12 inches by 1 inch.
The Bureau of Land Management's Detailed Data Help Managers Monitor Projects
In contrast to the Forest Service, BLM uses its Management Information
System (MIS) to track timber sales-related obligations and expenditures at
a level of detail useful to managers throughout the organization. Drawing
from the Department of the Interior's Federal Financial System (FFS), MIS
tracks timber sales obligations--such as employee time charges, supplies,
and equipment--at various levels. For example, MIS tracks obligations by
funding source and activity type, then by office and, in many cases,
individual timber sale. The two funding sources most closely associated
with timber sales are the Oregon and California Grant Lands appropriation
and the Forest Ecosystem Health and Recovery Fund. As for activity types,
those related to timber sales include (1) managing commercial timber sales
and (2) restoring forests and woodlands through timber sales (e.g.,
managing salvage sales). MIS also tracks obligations by office, at both
the state office level and the field organization level (e.g., district
offices and field offices). Lastly, MIS tracks obligations by specific
project, such as a specific timber sale or stewardship project, when a
project code is assigned. Project codes are required for all sales
conducted through the Forest Ecosystem Health and Recovery Fund, including
salvage sales, but are optional for sales conducted with other funds,
including commercial sales. For commercial sales, for example, managers
are free to assign codes to individual projects but are not required to do
so if they do not believe it is necessary. In some locations, according to
a BLM official, an office may conduct only one or two timber sales a year
and, thus, may not find project codes necessary to identify individual
sales. In one location, BLM officials said they assign project codes after
the general planning work has been completed; in another location,
officials said they assign project codes once funding approval has been
received. Staff working on a specific timber sale would charge their time
to the relevant funding code, activity code, office code, and project
code.
Using MIS has allowed BLM to maintain and monitor obligations and
expenditures at various levels of detail without relying on complicated
cuff records, as the Forest Service does. For example, an official from
BLM's National Business Center said that the job codes assigned to timber
sales conducted under the Forest Ecosystem Health and Recovery Fund allow
managers to track all data on an individual sale--from the planning phase
(e.g., on environmental assessments) to the final administrative
activities involved in closing the sale. In other cases, a state office
official said, individual project codes are not assigned (e.g., for sales
conducted through the Timber Sales Restoration Pipeline Fund), but those
sales can be identified by activity code and location, allowing managers
to track information at those levels. This official said he also uses MIS
to generally monitor district offices' obligations and expenditures. For
example, MIS data allow him to compare the vehicle and labor obligations
and expenditures one office charged to the timber program with the same
type of obligations and expenditures charged by other offices.
The level of detail available in BLM's system is a function of the
agency's experience in the 1990s, according to a BLM official, when the
agency began losing money on timber sales and officials struggled with how
to handle the reporting of these losses. One of the alternatives discussed
was not calculating timber sales expenditures at all, so that they would
not potentially embarrass the agency politically--an option that this
official referred to as "contrived obfuscation." Instead, with an eye
toward providing full transparency and performance accountability, BLM
took the opposite tack, according to this official; it decided to track
data at an even more detailed level.
Detailed expenditure data--captured in a cost accounting system--help
managers understand how expenditures can be controlled without sacrificing
service to the public. For example, managers of BLM's Wild Horse and Burro
Program in Utah were able to use MIS to track expenditures on each work
activity associated with the program.^18 Program managers identified
expenditures for each activity and determined that the largest
expenditures were for labor, particularly in conducting the adoption
process and doing postadoption inspections, and for feed expenditures
during the preadoption holding period. Armed with this information, BLM
was able to reduce its labor expenditures by making greater use of
volunteers and reduce its feed expenditures by capturing animals just
prior to scheduled adoptions. In 1998, BLM collected slightly more than
5,700 animals. After changing the process in 1999, based on expenditure
data, the program collected more than 7,700 animals and reduced the
expense of holding and feeding them by $600,000 (about $710,000 in 2006
dollars).
MIS has also proven useful in allowing BLM managers to make
expenditure-based decisions with regard to timber sales. For example,
expenditure data were used to determine the efficiency and effectiveness
of individual BLM state timber programs. Trend data were generated for
several years to compare how effectively the individual BLM state offices
were accomplishing their projects relative to their expenditures. This
information was used to move funding and resources among state offices to
more effectively meet program goals and bureau priorities.
^18These work activities are planning and completing adoptions; gathering,
holding, monitoring, and taking censuses of animals; and conducting
compliance inspections.
Both Agencies Have Systems That Track Revenue by Timber Sale
The Timber Sale Accounting system maintains the Forest Service's timber
sales revenue data, while two systems--the Timber Sale Information System
and the Collections and Billing System--maintain BLM's timber sales
revenue data. Both agencies' systems track sale and harvest information by
individual timber sale; they also automatically bill purchasers and track
payments. Both agencies also have systems for tracking revenue generated
under their stewardship contracting authority, after initially struggling
with how to implement the systems.
Forest Service's Timber Sale Accounting System Maintains Revenue Data
The Forest Service's Timber Sale Accounting (TSA) system maintains data on
all timber-related revenue. The system tracks the volume, type, and value
of timber harvested by individual timber sale; automatically generates
bills to timber purchasers; and tracks payments against these bills. TSA
tracks revenue from sales conducted with appropriated monies as well as
those conducted with monies from the salvage sale and pipeline funds. TSA
also tracks payments made by purchasers to fund reforestation and brush
disposal activities. Recently, the Forest Service added a module to TSA to
track revenue stemming from activities conducted under its stewardship
contracting authority. These activities often involve the exchange of
timber for services and thus can be difficult to account for with
traditional systems.
TSA maintains timber sales revenue data by individual timber sale contract
or permit. Each contract or permit is given a unique identifying number in
TSA, which provides a standardized process for managing the financial
aspects of timber sales contracts and permits. (Permits involve the sale
of forest products other than timber, such as firewood, mushrooms,
Christmas trees, and decorative grasses and foliage.) TSA produces a
monthly statement of account for each contract and permit; this statement
contains a detailed breakdown of activities under that contract or permit
and ensures accurate computation of revenue due the government.
The revenue comes to the government in the form of cash or credits. Cash
comes from timber purchasers' payments of bills for timber volume removed,
or stumpage. A Forest Service sale inspector inspects the sales units at
least once a month and reports the volume of timber harvested. TSA then
automatically calculates the amount due, based on the amount harvested and
the product rate, and generates a bill to the purchaser. Once payment is
received, TSA distributes the cash to the appropriate revenue accounts,
such as the National Forest System Fund, the K-V fund, and the Salvage
Sale Fund. TSA also supplies this information to FFIS, where it is
recognized as earned income.^19
TSA also tracks "purchaser credits" and "cost share credits." Purchaser
credits represent the value of road construction or reconstruction the
timber purchaser performed. The purchaser receives credit for the work,
which is deducted from the appraised value of stumpage.^20 TSA tracks the
purchaser credits used to pay for (or offset) stumpage from year to year,
as well as the balance of outstanding (unused) credits. TSA also tracks
cost share credits, which represent the value of construction or
reconstruction costs shared between the Forest Service and the purchaser.
For example, if the Forest Service contributed materials, such as rock for
a road surface, and the purchaser did the work, the value of the
purchaser's share would appear in TSA. Purchaser and cost share credits
can be used to pay for timber removed by the purchaser.
Stewardship contracting has posed challenges for the Forest Service
because the barterlike aspect of stewardship contracting can make it
difficult to account for using traditional accounting systems. As a
result, the Forest Service has struggled to incorporate into TSA a way to
track the collection and distribution of revenue stemming from stewardship
contracts. The accounting theory governing what are essentially barter
transactions (although the value of both the timber and the services is
appraised) is demanding, according to a regional official, and TSA
programmers have devoted much time to this area.
^19In its audit report on the Forest Service's fiscal year 2006 financial
statements, KPMG, the Service's independent auditor, noted that 7 of the
208 timber sales revenue transactions tested were not recognized in the
correct year. The report said that, although the Forest Service continues
to improve its accounting operations, such deficiencies result in
additional time and effort on the part of Service staff to research and
resolve.
^20For contracts awarded prior to April 1, 1999, however, credits owed the
purchaser for roadwork were not subtracted from the appraisal value (as is
done for contracts awarded since April 1, 1999) but, rather, offset the
stumpage value when the timber was removed.
Until recently, the Forest Service had not automated the accounting for
all activities conducted through stewardship contracts. Staff had to use
manual spreadsheets to track, outside of TSA, the value of timber removed
and the value of service work completed, thereby allowing them to compute
the amount the purchaser owed for timber volume removed, if any.
Accordingly, data on stewardship contracting activities have been entered
into TSA for only the past few years, and the data were incomplete,
according to the system administrator. In October 2006, during our review,
the Forest Service implemented a TSA module that tracks most of the
stewardship contracting data.
Within TSA, the monetary activity associated with stewardship contracts is
now tracked using two unique revenue codes. The first code represents a
suspense account that contains monies collected from timber purchasers as
advance payments--that is, money to pay for timber that is removed before
the service work has been completed. In these cases, the advance monies
are used to pay for the timber volume removed. Then, as the service work
is performed, those monies are automatically refunded to the purchaser,
and the stewardship credits are applied as payment for the volume removed
to date. When all the service work has been completed and there is
expected to be additional timber volume to be paid for with cash (i.e.,
when the value of the timber exceeds the value of the service work), then
the remaining suspense fund money is transferred to the retained receipts
account. This account, represented by the second revenue code, is a
region- and forest-specific revenue account that contains cash collected
for timber when the value of the timber exceeded the value of the service
work. In other words, a contractor has to pay the Forest Service only if
the total timber value exceeds the total cost of services. The retained
receipts account may be used to fund additional stewardship sales that
have been approved by the regional forester.
With the October 2006 addition of the stewardship accounting module, TSA
now tracks the amount of stewardship work to be performed, the amount
performed to date, the volume and value of timber removed, and any cash
paid the contractor for service work performed (when the value of the
service work exceeded the value of the timber). TSA automatically applies
the available stewardship credits to pay for timber volume removed to
date.
Although TSA now has a module designed to capture monetary transactions
related to stewardship contracts, regions and forests said they will
continue maintaining spreadsheets to track the monthly progress of
individual stewardship contracting projects and the payment mechanisms
involved in each one. For example, the spreadsheets track nonmonetary
"accrual" transactions, which represent the accrued value of credits
earned by contractors for service work completed. These earned stewardship
credits (nonmonetary) are used to "pay" for timber harvested and are
important because the Forest Service has to know how much credit to extend
when the purchaser wants to cut timber. Without this credit, the Service
would demand a cash payment before the timber could be cut. Accordingly,
stewardship work paid for with credits must be tracked separately from
work paid for with cash. Every month, the field offices send their
completed spreadsheets to the Albuquerque Service Center, which enters
into FFIS the nonmonetary accrual information. At the end of April 2007,
the service center was working on automating this process as well.
BLM Uses Two Systems to Track Timber Sales Revenue
In tracking timber sales revenue, BLM uses the Timber Sale Information
System (TSIS) and the Collections and Billing System (CBS). TSIS maintains
specific contract data for individual timber sales, including the volume,
type, and value of timber harvested. Amounts owed by purchasers are
calculated in TSIS and then entered into CBS, which is BLM's official
revenue accounting system. CBS generates bills sent to purchasers and
records collections received for contracts. TSIS and CBS track revenue
from sales conducted with appropriated monies in addition to those
conducted with monies from the Forest Ecosystem Health and Recovery Fund
and the Timber Sales Restoration Pipeline Fund.
TSIS and CBS maintain timber sales revenue data by individual timber sale
contract through a unique sale number. This alphanumeric sale number
identifies the state where the sale takes place, the field office
administering it, the year, and the sequential sale number for that office
in that year.
Throughout the month, information from TSIS on timber harvest activity is
entered into CBS, which generates bills sent to purchasers. These bills
are based on the quantity and value of the timber harvested but may also
include things such as road maintenance fees. At the end of each month,
data in CBS and TSIS are reconciled.
Collections are received either in the form of a check sent from the
purchaser directly to the sale office or as an electronic funds transfer
sent directly to the bank. All collections are posted to CBS, and a unique
transaction number is included in the posting. This transaction number is
generated either by CBS (for collections sent to the sale office) or by
the bank (for collections electronically transferred there). When
collection posting is complete, CBS automatically produces a statement
that is then used to update TSIS. Data in the two systems are again
reconciled. The reporting system in CBS allows staff to track revenue in
various ways, such as by sale, purchaser, type of timber, or fund.
BLM developed a separate system for recording revenue from timber sales
conducted under stewardship contracting authority, the Stewardship
Contracting Information Database (SCID). For revenue from stewardship
contracts, BLM uses CBS to track monetary collections and SCID to track
credits. Upon approval of a new stewardship contracting project, initial
project information is entered into SCID, and each project is assigned a
special project code that is used in both SCID and CBS.^21 Financial and
project progress information is reported monthly in both systems. Because
of the special circumstances created by the unique nature of stewardship
contracting, BLM has devised collections solutions for the different types
of contracts. One requirement common to both regular timber sales and
stewardship contracting is that, prior to cutting or removing any forest
products from BLM-administered lands, a contractor must either pay in
advance for the product or provide some form of security as a payment
bond. For stewardship contracts, the contractor has the additional option
of using earned conservation credits (similar to the Forest Service's
stewardship credits) in lieu of an advance payment or a payment bond.
Contractors' advance payments are recorded in CBS and directed to a
deposit suspense account. When the value of the product removed exceeds
the amount deposited, the contractor makes additional payments, which are
entered into CBS and directed to the regular stewardship contract product
sales fund.
Conservation credits are also tracked in SCID. When the value of the
product removed is equal to or lesser than the value of the contractor's
conservation credits, transactions are recorded in SCID. Once a
contractor's conservation credits have been exhausted, payments for
further product removed are recorded in CBS.
Conclusions
The Forest Service, like other federal agencies, is faced with limited
resources with which to carry out multiple activities, such as maintaining
campgrounds and trails, protecting wildlife habitat, and providing a
supply of forest products to society. Given this multitude of pressing
needs, the Service's efforts to reduce its data management costs--and thus
allow more dollars to be directed to on-the-ground activities through
which the Service carries out its mission--would appear laudable. As an
unintended consequence, however, the agency has made it more difficult and
resource intensive for field managers to manage the very activities that
the Service seeks to emphasize. And because many field officials are
maintaining cuff records to compensate for the lack of detailed data
available from the Service's system, the Service cannot ensure that the
hoped-for level of cost savings will materialize. That is, reductions in
the Service's recognized data management costs may be offset by increases
in the use of field resources to fill in the data gaps. More broadly,
maintaining detailed data on the cost of the Service's various activities
would not only assist field managers as they carry out the Service's
mission but also allow the Service to better assess and improve the
efficiency and cost-effectiveness of these activities and thereby improve
its fiscal accountability.
^21Stewardship contracts involving projects funded by the Forest Ecosystem
Health and Recovery Fund retain the project code already assigned them.
Recommendation for Executive Action
To ensure that field managers responsible for carrying out Forest Service
operations have the data they need to manage effectively, and to provide
the Congress and the public with useful cost data to assess the fiscal
accountability of Service operations, we recommend that the Secretary of
Agriculture direct the Chief of the Forest Service to systematically
determine the information needs of the field managers on whom the Service
relies to carry out its operations, and, based on the results of this
analysis, take appropriate action to provide data that meet those
information needs. The Service might consider, for example, creating a
subsidiary system to track obligations and expenditures at a detailed
level without further burdening the Department of Agriculture's primary
system, FFIS.
Agency Comments
We provided the Departments of Agriculture and the Interior with a draft
of this report for review and comment. The Forest Service generally agreed
with the findings and recommendations in the report. Similarly, the
Department of the Interior generally agreed with the report's contents.
The Forest Service's and Interior's written comments are reproduced in
appendixes II and III, respectively.
As agreed with your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from
the report date. At that time, we will send copies to interested
congressional committees, the Secretaries of Agriculture and the Interior,
the Chief of the Forest Service, the Director of the Bureau of Land
Management, and other interested parties. We will also make copies
available to others upon request. In addition, the report will be
available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact
me at (202) 512-3841 or [email protected]. Contact points for our Offices
of Public Affairs and Congressional Relations may be found on the last
page of this report. GAO staff who made major contributions to this report
are listed in appendix IV.
Robin M. Nazzaro
Director, Natural Resources and Environment
Appendix I: Objectives, Scope, and Methodology
Our overall objective was to examine the current mechanisms used by the
Department of Agriculture's Forest Service (Service) for tracking timber
sales-related obligations, expenditures, and revenue. In addition, given
that the Department of the Interior's Bureau of Land Management (BLM) also
conducts timber sales, we included that agency in our review.
Specifically, our objectives were to determine the extent to which (1) the
Forest Service tracks timber sales-related obligations and expenditures,
including the extent to which the Service uses this information in making
management decisions; (2) BLM tracks timber sales-related obligations and
expenditures, and how BLM's methods for doing so compare to those of the
Forest Service; and (3) the Forest Service and BLM account for their
timber sales-related revenue.
To determine how the Forest Service tracks timber sales-related
obligations and expenditures and the extent to which Service managers use
this information to make decisions about their programs, we reviewed
agency documents and interviewed officials in headquarters and in six of
the nine Forest Service regional offices about their timber sales
accounting policies and procedures. Because the Forest Service has no
agencywide system to track obligations and expenditures at the project
level, we visited Forest Service regional offices in Alaska, Georgia,
Montana, Oregon, Utah, and Wisconsin to interview officials responsible
for tracking timber sales projects and their related obligations and
expenditures.^1 At each of these regional offices, we interviewed
officials responsible for tracking timber sales-related obligations,
expenditures, and revenue, and officials responsible for planning and
conducting timber sales-related activities. We also met with officials of
one or more forest offices in each of six regions, as well as officials of
five ranger districts, to discuss what information they need, the methods
they use to capture it, and how they use it in managing their day-to-day
operations.^2 During our site visits, we collected and reviewed records
used to identify and track timber-related data. These included "cuff
records," such as individually maintained computer spreadsheets and
databases, along with manual modifications made to reports generated by
the WorkPlan system. During one visit, we also accompanied an "activity
review team" from the regional office on its site visits to evaluate field
activities. We also reviewed documents and reports related to the
Department of Agriculture's existing financial system, the Foundation
Financial Information System (FFIS). We also reviewed previous work by GAO
and the Department of Agriculture's Office of Inspector General.
^1These states contain, respectively, the Forest Service's Alaska,
Southern, Northern, Pacific Northwest, Intermountain, and Eastern regional
offices.
^2The information we gathered from field managers was not intended to be
representative of all field managers. Instead, our interest was in gaining
a perspective from these managers about the data they need and use in
managing their projects. Our interviews ultimately revealed some recurring
common themes across the locations we visited.
Because BLM was not the primary focus of our review, our study of the
extent to which it tracks timber sales-related obligations and
expenditures was more limited than our work at the Forest Service.
Additionally, unlike the Forest Service, BLM employs standardized
agencywide guidance and systems to track this information at the project
level; therefore, significant variation across different geographic
locations was unlikely. Nevertheless, in order to interview officials
responsible for tracking timber sales projects and their related
obligations and expenditures, we visited several BLM locations, including
the BLM state office in western Oregon that manages the majority of the
agency's timber program, as well as a district office in Oregon; the BLM
state office in Idaho, where we spoke with officials from the state
office, one district office, and two field offices; and one field office
in Montana. In addition, we visited BLM headquarters in Washington, D.C.,
and the National Business Center in Denver, Colorado, and we conducted
telephone interviews with BLM officials knowledgeable about the agency's
cost accounting practices and systems. We obtained and reviewed documents
on BLM's policies, procedures, and practices for tracking timber sales
obligations and expenditures, including system manuals and other
documentation for BLM's Timber Sale Information System (TSIS), Management
Information System (MIS), and the Department of the Interior's Federal
Financial System (FFS). Finally, we relied, in part, on GAO's previous
work on accounting practices within the Department of the Interior.^3
During our visits to Forest Service and BLM offices, including their
respective budget and finance centers, we learned how both agencies
account for timber sales-related revenue. We reviewed relevant portions of
agency manuals and handbooks and documents detailing procedures to
identify and report revenue, including revenue that the agencies manage
through participation in an interagency agreement governing timber sales
financed by the Timber Sales Pipeline Restoration Fund. We reviewed
detailed descriptions of the Forest Service's revenue process, systems,
and its internal controls prepared by the independent auditor, KPMG,
during KPMG's annual audit of the Forest Service's financial statements,
and we read the fiscal year 2006 audit report. We reviewed KPMG's overall
approach and sampling methodology and determined that KPMG's relevant
findings were sufficiently reliable for understanding sales-related
revenue in the Forest Service. We also obtained information about the
Forest Service's Timber Information Management (TIM) system, which
contains detailed information on timber sales contracts. We also obtained
information about the Timber Sale Accounting (TSA) system, which maintains
timber sales revenue data, and interviewed the system administrator. To
gain an understanding of how TIM and TSA maintain data, we held
discussions with cognizant officials on internal controls over timber
sales contracts, data entry practices, and revenue collection procedures.
For BLM, we followed the same general procedures with respect to the
following revenue tracking systems: the Collections and Billing System
(CBS), FFS, and TSIS. Finally, in addition to reviewing both agencies'
standard systems for timber revenue collection, we interviewed Forest
Service and BLM officials about the progress they are making in designing
or modifying systems to track revenue associated with stewardship
contracting projects. Based on the collective information and findings
from our discussions and interviews, we believe these data are
sufficiently reliable for (separately and comparatively) reporting on
systems for tracking timber sales-related revenue in the Forest Service
and BLM.
^3GAO, Managerial Cost Accounting Practices at the Department of the
Interior, [29]GAO-07-298R (Washington, D.C.: May 24, 2007).
We conducted our review from April 2006 through April 2007 in accordance
with generally accepted government auditing standards, which included an
assessment of data reliability and internal controls.
Appendix II: Comments from the Forest Service
Appendix III: Comments from the Department of the Interior
Appendix IV: GAO Contact and Staff Acknowledgments
GAO Contact
Robin M. Nazzaro, (202) 512-3841 or [email protected]
Staff Acknowledgments
In addition to the individual named above, Stephen Gaty, Assistant
Director; Lisa Brownson; Sandra Davis; Barry Grinnell; Angela Pleasants;
and Pam Tumler made key contributions to this report. Nancy Crothers,
Denise Fantone, Tim Guinane, Kevin Jackson, Rich Johnson, Phil McIntyre,
and Jack Warner also made important contributions to this report.
(360702)
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Highlights of [37]GAO-07-764 , a report to congressional requesters
June 2007
FEDERAL TIMBER SALES
Forest Service Could Improve Efficiency of Field-Level Timber Sales
Management by Maintaining More Detailed Data
For years, GAO has raised concerns about the ability of the Department of
Agriculture's Forest Service (Service) to track the amounts it obligates
for and spends on timber sales and to use this information in managing the
sales. Timber sales are generally carried out by ranger districts (the
lowest level of the Service's decentralized organizational structure),
which are overseen by national forest offices. The Bureau of Land
Management (BLM) within the Department of the Interior also conducts
timber sales. This report examines the extent to which (1) the Forest
Service tracks timber sales-related obligations and expenditures,
including the extent to which the Service uses this information in making
management decisions; (2) BLM tracks timber sales-related obligations and
expenditures; and (3) both agencies track their timber sales-related
revenue.
[38]What GAO Recommends
GAO recommends actions the Forest Service can take to ensure that its
field managers have the obligation and expenditure data they need to
manage effectively. In commenting on a draft of this report, the Forest
Service generally agreed with its findings and recommendations. Similarly,
the Department of the Interior agreed with the report's contents.
The Forest Service tracks the funds it spends to conduct timber
sales--such as funds for personnel and equipment--in a way that does not
provide the detailed data many field managers, such as district rangers
and forest supervisors, told us they need in order to properly manage
these sales. The Service's accounting system aggregates obligation and
expenditure data by the programs that fund the sales--such as the Forest
Products Program and the Salvage Sale Program--and by national forest,
rather than by individual timber sale or by ranger district. Forest
Service headquarters officials told us that field managers do not need
sale-by-sale or district-level data. However, many field managers told us
that such data are crucial to their management of timber sales. For
example, without such data to monitor the progress and cost of individual
sales, field managers have difficulty both knowing when to redirect
resources among sales and assessing the cost-effectiveness of individual
sales. Without detailed data in the Service's accounting system, many
field managers have developed manual "cuff records," such as spreadsheets,
to maintain obligation and expenditure data at the individual sale or
ranger district level. However, maintaining these cuff records can be time
consuming, according to field managers, and can thus take time away from
conducting "on the ground" activities such as overseeing timber harvests.
Although headquarters officials said that aggregating data has reduced the
cost of managing the accounting system data, the resources field managers
are expending to compensate for the lack of detailed system data may
partially offset those savings. However, the Service does not know the
cost of maintaining cuff records, and it has not systematically identified
field managers' information needs.
BLM, in contrast to the Forest Service, tracks many timber sales
obligations and expenditures by individual sale. BLM has chosen to
maintain detailed data in order to allow its field managers to use these
data in managing timber sales--by, for example, monitoring the progress
and cost of sales. As a result of BLM's approach, field managers have
access to detailed data without relying on cuff records.
Overall, the Forest Service and BLM have systems that track revenue data
by timber sale. These systems track the volume, type, and value of timber
harvested; generate bills to timber purchasers; and track payments against
those bills. Both agencies have struggled with, but are resolving, the
challenge of tracking revenue from sales conducted under their stewardship
contracting authority. Stewardship contracts generally involve the
exchange of goods, such as timber, for contract services, such as thinning
of brush. The Forest Service recently added a module to its accounting
system to track revenue from stewardship contracting projects, while BLM
has developed a database for this purpose.
References
Visible links
25. http://www.gao.gov/cgi-bin/getrpt?GAO-04-652
26. http://www.gao.gov/cgi-bin/getrpt?GAO-01-1101R
27. http://www.gao.gov/cgi-bin/getrpt?GAO-03-503
28. http://www.gao.gov/cgi-bin/getrpt?GAO-06-1002R
29. http://www.gao.gov/cgi-bin/getrpt?GAO-07-298R
30. http://www.gao.gov/
31. http://www.gao.gov/
32. http://www.gao.gov/fraudnet/fraudnet.htm
33. mailto:[email protected]
34. mailto:[email protected]
35. mailto:[email protected]
36. http://www.gao.gov/cgi-bin/getrpt?GAO-07-764
37. http://www.gao.gov/cgi-bin/getrpt?GAO-07-764
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