Department of the Interior: Observations on Performance Plan and Other
Management Issues (Testimony, 04/22/98, GAO/T-RCED/AIMD-98-173).

GAO discussed its views on several important management issues facing
the Department of the Interior, focusing on: (1) Interior's plans for
measuring its performance as required by the Government Performance and
Results Act of 1993; (2) whether major management problems GAO has
reported on are being addressed in the agency's performance plan; and
(3) financial management issues at Interior.

GAO noted that: (1) Interior's performance plan is not user-friendly;
(2) it consists of nine-components--a departmental overview and eight
subagency plans which have to be reviewed in conjunction with the budget
justifications; (3) understanding the totality of what the plans contain
is an overwhelming and time-consuming task involving a review of about
3,500 pages of material; (4) on a more substantive level, the plan does
not adequately provide a clear picture of intended performance across
the Department, sufficiently discuss the strategies and resources that
it will use to achieve its performance goals, or provide sufficient
confidence that its performance information will be credible; (5) GAO's
past work at Interior has identified a number of major management
problems; (6) among these are Interior's need to: (a) more effectively
manage Indian trust funds and assets; (b) better coordinate crosscutting
activities to avoid duplication and overlap; (c) adequately assess the
National Park Service's (NPS) employee housing needs; (d) provide
adequate oversight and accountability over its field offices; and (e)
have better information available for managing the nation's natural
resources; (7) the Results Act provides Interior with an opportunity to
address these concerns through the development and implementation of its
performance plan; (8) GAO found, however, that while Interior has
addressed some of GAO's concerns, it has not addressed all of them; (9)
over the past five years, Interior's subagencies have made steady
progress in preparing reliable financial statements; (10) however, even
though most subagencies received clean audit opinions, accounting and
internal control weaknesses persist at several subagencies; (11) these
weaknesses relate to accounting and internal controls over accounts
receivable, revenue, real and personal property, and controls over
computer systems; and (12) Interior has efforts under way to address
many of these problem areas.

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

 REPORTNUM:  T-RCED/AIMD-98-173
     TITLE:  Department of the Interior: Observations on Performance 
             Plan and Other Management Issues
      DATE:  04/22/98
   SUBJECT:  Trust funds
             Native Americans
             Financial statement audits
             Internal controls
             Interagency relations
             Agency missions
             Federal agency accounting systems
             Financial management
             Strategic planning
             Accountability
IDENTIFIER:  GPRA
             Government Performance and Results Act
             
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Cover
================================================================ COVER


Before the Committee on Resources, House of Representatives

For Release
on Delivery
Expected at
11 a.m.  EDT
Wednesday
April 22, 1998

DEPARTMENT OF THE INTERIOR -
OBSERVATIONS ON PERFORMANCE PLAN
AND OTHER MANAGEMENT ISSUES

Statement of Barry T.  Hill,
Associate Director,
Energy, Resources, and Science Issues,
Resources, Community, and Economic
Development Division

GAO/T-RCED/AIMD-98-173

GAO/RCED/AIMD-98-173T


(141187)


Abbreviations
=============================================================== ABBREV

  BIA -
  BLM -
  BOR -
  FWS -
  MMS
  NPS -
  OMB -
  OSM -
  USGS -

============================================================ Chapter 0

Mr.  Chairman and Members of the Committee: 

We are pleased to be here today to discuss our views on several
important management issues facing the Department of the Interior. 
Specifically, you asked us to provide our observations on (1)
Interior's plan for measuring its performance as required by the
Results Act of 1993; (2) whether major management problems we have
reported on are being addressed in the agency's performance plan; and
(3) financial management issues at Interior. 

Mr.  Chairman, before providing any specific comments on Interior's
performance planning efforts, I want to first provide some context to
my remarks.  It should be recognized that with sustained attention
from the Congress and executive agencies, annual performance plans
can be an invaluable tool for making policy decisions, improving
program management, enhancing accountability, and helping to increase
American citizens' confidence in their government.  Interior, like
other agencies, is in the early stages of implementing the
requirements of the Results Act.  Because it is an important and
demanding process, meeting the requirements and expectations of the
Results Act and its associated guidance poses many challenges. 
Developing such plans to meet these challenges will be an iterative
process.  The observations I will be providing today identify a
number of areas that need to be strengthened in Interior's
performance plan as it is further refined and developed. 

In brief, Mr Chairman, our work has shown that: 

  -- Overall, the Department's performance plan is not user friendly. 
     It consists of nine components--a Departmental Overview and
     eight subagency plans which have to be reviewed in conjunction
     with the budget justifications.\1 Understanding the totality of
     what the plans contain is an overwhelming and time-consuming
     task involving a review of about 3,500 pages of material.  Also,
     the information in the plans needs to be presented in a more
     coherent and consistent format to better facilitate the use,
     readability, and understanding of this document.  On a more
     substantive level, the plan does not adequately provide a clear
     picture of intended performance across the Department,
     sufficiently discuss the strategies and resources that it will
     use to achieve its performance goals, or provide sufficient
     confidence that its performance information will be credible. 

  -- Our past work at Interior has identified a number of major
     management problems.  Among these are Interior's need to (1)
     more effectively manage Indian trust funds and assets; (2)
     better coordinate crosscutting activities to avoid duplication
     and overlap; (3) adequately assess NPS' employee housing needs;
     (4) provide adequate oversight and accountability over its field
     offices; and (5) have better information available for managing
     the nation's natural resources.  The Results Act provides
     Interior with an opportunity to address these concerns through
     the development and implementation of its performance plan.  We
     found, however, that while Interior has addressed some of our
     concerns, it has not addressed all of them.  For example, the
     plans do not adequately address how the land management agencies
     are coordinating to avoid duplication and overlap of similar
     programs and activities. 

  -- Over the past 5 years, Interior's subagencies have made steady
     progress in preparing reliable financial statements.  However,
     even though most subagencies received clean audit opinions,
     accounting and internal control weaknesses persist at several
     subagencies.  These weaknesses relate to accounting and internal
     controls over accounts receivable, revenue, real and personal
     property, and controls over computer systems.  Interior has
     efforts under way to address many of these problem areas. 


--------------------
\1 The nine components include a Departmental Overview plan and eight
subagency plans.  The eight subagencies are the Bureau of Indian
Affairs (BIA), Bureau of Land Management (BLM), Bureau of Reclamation
(BOR), U.  S.  Fish and Wildlife Service (FWS), Minerals Management
Service (MMS), National Park Service (NPS), Office of Surface Mining
Reclamation and Enforcement (OSM), and U.  S.  Geological Survey
(USGS). 


   INTERIOR'S PERFORMANCE PLAN
   NEEDS TO BE STRENGTHENED IN
   SEVERAL AREAS
---------------------------------------------------------- Chapter 0:1

Interior's performance plan is not user friendly.  It consists of
nine components--a Departmental Overview and eight individual plans
for each of Interior's major agencies.  These nine plans are not
stand-alone documents but have to be reviewed in conjunction with
their respective subagencies' budget justifications.  The nine
component performance plans and their respective subagency budget
justifications account for about 3,500 pages of material. 
Accordingly, tracking the information from the performance plans to
the budget justification is an extremely time-consuming process. 
Furthermore, the plan did not contain any easy cross-reference as to
where to locate some essential information in the budget
justification that is associated with each performance goal. 
Overall, the amount of information presented was overwhelming. 

Also, the format of many component plans is not consistent and does
not provide the users with sufficient information to readily assess
whether the plans contain all of the information required by either
the Results Act, the Office of Management and Budget (OMB), or other
guidance.  For example, while a few performance plans provide a
discussion of the strategies, resources, verification and validation
procedures, and other important aspects of each performance goal,
many of the plans do not contain such discussions.  We believe that
Interior needs to use a consistent format in preparing all of the
Department's component performance plans.  This would ensure that all
elements are addressed and would facilitate linkages and comparisons
among the plans. 

On a more substantive level, we reviewed Interior's performance plan
to determine whether it met the requirements of the Results Act and
its related guidance.  To do this, we collapsed the requirements for
annual performance plans in the Results Act and related guidance into
three core questions:  (1) To what extent does the agency's
performance plan provide a clear picture of intended performance
across the agency?  (2) How well does the performance plan discuss
the strategies and resources the agency will use to achieve its
performance goals?  (3) To what extent does the agency's performance
plan provide confidence that its performance information will be
credible?  We found that Interior's plan does not adequately address
the requirements associated with these questions. 


      PERFORMANCE PLAN DOES NOT
      PROVIDE A CLEAR PICTURE OF
      INTENDED PERFORMANCE
-------------------------------------------------------- Chapter 0:1.1

Most of Interior's nine component performance plans do not provide a
clear picture of intended performance across their respective
subagencies.  To address this issue, performance plans should, among
other things, provide a succinct and concrete statement of expected
performance for subsequent comparison with actual performance; and
contain goals that are linked to the agency's mission, strategic
goals, and program activities in the budget.  Interior's plan had
limitations in these areas. 

For example, we found that most of the component performance plans
did not provide a succinct and concrete statement of expected
performance for subsequent comparison with actual performance.  One
of the elements important to addressing this issue is that the goals
and measures are to be objective, measurable, and quantifiable.  In
our view, five of the nine component plans did not adequately provide
goals and measures that were objective, measurable, and quantifiable. 
For goals and measures to be considered objective, they should be
reasonably free of any significant bias or manipulation that would
distort the accurate assessment of performance, and to the greatest
extent possible, they should not require subjective considerations or
judgments to dominate the measurement.  For example, one of NPS'
goals is to ensure that 50 percent of the cultural landscapes on its
Cultural Landscapes Inventory are in good condition.  However, the
criteria for determining what constitutes "good condition" is not
defined in the performance plan, nor does NPS make reference to where
such a definition can be found.  Without a clear definition, it would
be difficult to assess if the performance is being measured
consistently from year to year or to understand how a change in
definition could affect the end result desired from the expected
performance. 

Furthermore, five of the component plans have goals that are not
clearly linked to the subagencies' missions, strategic goals, and
program activities in the budget request.  For example, we found that
BIA's plan did not always show that its annual goals reflect the
strategic goals and mission.  BIA's performance plan contained
strategies for achieving its strategic goals that in some cases were
very different from those identified in its strategic plan.  BIA's
strategic plan discusses four major initiatives or strategies toward
the achievement of its self-determination goal of allowing the tribes
to provide their own services rather than having these services
provided by BIA and other federal agencies.  However, these four
initiatives are not discussed in BIA's performance plan, nor are they
reflected in the performance goals. 


      PERFORMANCE PLAN IS NOT
      CLEAR ABOUT HOW GOALS WILL
      BE ACHIEVED
-------------------------------------------------------- Chapter 0:1.2

Generally, Interior's component performance plans do not adequately
discuss how the strategies and resources will help achieve their
goals.  To address this issue, the plan should present clear and
reasonable strategies for achieving its intended performance goals
and discuss the resources it will use to achieve the performance. 
However, we found that the majority of Interior's component plans do
not adequately describe the agency's strategies to accomplish its
performance goals.  For example, both USGS' and NPS' plans discuss
the strategies only in general terms, and they are not linked to
specific performance goals.  There is also no discussion in these two
plans of how the strategies relate to achieving the goals. 
Furthermore, strategy discussions in the annual plans will be most
useful to congressional and other decisionmakers if they address how
any external factors could affect the subagencies' achievement of
their goals.  However, most of the plans do not sufficiently discuss
this point.  Most of the performance plans do not discuss the
respective subagency's actions to address external factors that are
likely to affect its performance.  For example, the plans for BOR and
NPS have performance goals whose achievement depends on partnerships
with various entities, such as state, local, and other federal
agencies, as well as local water districts and Native American
tribes.  Yet, there is no, or insufficient, discussion of how these
partnerships affect the achievement of the goals or what actions are
needed to mitigate concerns that may arise from non-performance. 

In addition, Interior's performance plan did not always discuss the
resources it will use to achieve a specific level of performance. 
Most of the component plans do not adequately identify the capital,
human, financial, or other resources that the subagencies will use to
achieve their performance goals.  As a result, Interior's plan is not
as useful as it could be in identifying the level of budgetary
resources needed to achieve performance goals.  Also, most of the
component plans do not discuss how the resources will contribute to
improving performance. 


      PLAN PROVIDES LIMITED
      CONFIDENCE THAT PERFORMANCE
      INFORMATION WILL BE CREDIBLE
-------------------------------------------------------- Chapter 0:1.3

Generally, Interior's performance plan provides only limited
confidence that its performance information will be credible.  To
address this issue, the plan should (1) discuss how the agency will
verify and validate its data to ensure that its performance
information is sufficiently complete, accurate, and consistent and
(2) identify significant data limitations and their implications for
addressing the achievement of performance goals.  We found that most
of Interior's component performance plans only partially discussed
how the agency will ensure that its performance information will be
verified and validated.  Specifically, we found that the Departmental
Overview plan discusses performance data verification and validation
in general terms and assigns responsibilities to program managers. 
Neither the Departmental Overview plan nor the specific subagency
plans provide specific information on the data verification and
validation processes and management controls over data that would be
used.  Thus, users are provided with little assurance that the
performance data will be reliable and that the Interior and subagency
systems are secure from risks, such as tampering, that could affect
the reliability and availability of performance data. 

Furthermore, most of Interior's component performance plans do not
sufficiently identify significant data limitations or adequately
discuss or make reference to any significant new or modified
information systems to make more credible data available for
performance measures.  For example, we have questioned the accuracy
and reliability of the data that NPS uses to develop information on
its maintenance backlog.  Nonetheless, the plan does not discuss the
actions NPS plans to take to address these data limitations.  In
another example, MMS receives data critical to its mission from BLM
and oil and gas companies.  We have previously reported problems with
verifying the data on gas production provided by oil and gas
companies.  However, MMS' performance plan does not discuss this
concern nor identify what actions MMS has taken or plans to take to
mitigate the concern raised. 


   SOME MAJOR MANAGEMENT PROBLEMS
   ARE NOT ADEQUATELY DISCUSSED IN
   INTERIOR'S PERFORMANCE PLAN
---------------------------------------------------------- Chapter 0:2

Our past work at Interior has identified a number of major management
problems.  Among these are Interior's need to (1) more effectively
manage Indian trust funds and assets; (2) better coordinate
crosscutting activities to avoid duplication and overlap; (3)
adequately assess NPS' employee housing needs; (4) provide adequate
oversight and accountability over its field offices; and (5) have
better information available for making decisions about the resources
that Interior manages.  The Results Act provides Interior with an
opportunity to address these concerns through the development and
implementation of its performance plan.  We found, however, that
while Interior has addressed some of these major management problems,
it has not addressed all of them.  I will briefly recap the
performance plans' coverage of each of these problem areas. 


      MANAGEMENT OF INDIAN TRUST
      FUNDS AND ASSETS NOT
      ADDRESSED
-------------------------------------------------------- Chapter 0:2.1

The Secretary of Interior is responsible for administering the
government's trust responsibilities to tribes and Indians, including
managing about $3 billion in Indian trust funds and administering
about 54 million acres of Indian land.  Our work has shown that
management of the Indian trust funds and assets has long been
characterized by inadequate accounting and information management
systems; untrained and inexperienced staff; backlogs in appraisals,
ownership determination and recordkeeping; lack of a master lease
file and an accounts receivable system; inadequate written policies
and procedures; and poor internal controls.  Because of these overall
weaknesses, tribes and Indians do not have assurance that their trust
fund account balances are accurate and assets are being prudently
managed. 

To address Interior's long-standing Indian trust fund accounting and
asset management problems, the Office of Special Trustee for American
Indians was established in 1996.  It required that the Special
Trustee develop a comprehensive strategic plan to cover all phases of
trust fund management.  In April 1997, the Special Trustee submitted
a strategic plan to the Congress, but it was not fully supported by
the Department.  However, the Department and Special Trustee are
currently working on an implementation plan for several key
components of the strategic plan.  In August 1997, the Secretary of
the Interior issued a memorandum that indicated that he and the
Special Trustee had reached agreement on some of the initiatives
proposed in the strategic plan. 

Interior's performance plan does not contain a section for Indian
trust funds management.  Instead, it cites the Special Trustee's
April 1997 strategic plan as having identified a mission and goals
for the improvement and operation of an Indian trust fund management
system.  It also states that notwithstanding the Secretary of
Interior's reservations on certain aspects of the strategic plan,
strategic and annual performance plans are being developed for
selected trust systems improvements and data cleanup where there is
agreement.  This information should be available later in 1998. 


      COORDINATION OF CROSSCUTTING
      ISSUES IS NOT ADEQUATELY
      ADDRESSED
-------------------------------------------------------- Chapter 0:2.2

Historically, Interior has been a highly decentralized agency.  As a
result, Interior has, for the most part, allowed its component
agencies to develop their own systems and processes for managing
their programs.  On the basis of our prior work at Interior, we
identified several areas in which improved coordination should have
occurred to address the issues of duplication and overlap.\2 For
example, four land management agencies--BLM, FWS, and NPS in Interior
and the Forest Service in the Department of Agriculture--manage about
95 percent of the land owned by the federal government for a variety
of commodity uses, such as hardrock mining, timber harvesting, and
oil and gas exploration and development.  These four agencies also
manage the land for noncommodity uses, including fish and wildlife;
natural, scenic, cultural, and historic resources; recreation; water;
and wilderness.  Our work has shown that the responsibilities of
these four agencies have become more similar over time.  However,
neither the Department's strategic plan or its performance plan
addressed this issue. 

Furthermore, on the basis of our review of Interior's performance
plan, we found that most of its component performance plans did not
fully indicate how the subagencies are coordinating programs with
other agencies or subagencies having related strategic or performance
goals.  For example, BLM manages the oil and gas leases for which MMS
collects the revenue, and BLM provides significant information to MMS
that it needs to fulfill its mission to timely collect, verify, and
distribute mineral revenues from federal and Indian lands.  This
issue is not addressed in either BLM's or MMS' performance plans. 
The Departmental Overview plan has some discussion of crosscutting
issues and has developed some goals; however, they are not completed
for all issues.  For example, in discussing several crosscutting
"partnership" issues, there is some discussion of how subagencies'
goals that are related to other federal agencies goals are
coordinated and what they are to accomplish.  However, for issues
identified in the plan as crosscutting departmental "commitments,"
there is little information on how the commitments will be achieved
and how they are to be implemented by the affected subagencies
throughout Interior. 


--------------------
\2 Results Act:  Observations on the Department of the Interior's
Draft Strategic Plan (GAO/RCED-97-207R, July 18, 1997) and Managing
for Results:  Agencies' Annual Performance Plans Can Help Address
Strategic Planning Challenges (GAO/GGD-98-44, Jan.  30, 1998, pp. 
62-65). 


      ISSUES REGARDING NPS'
      EMPLOYEE HOUSING NEED
      FURTHER CLARIFICATION
-------------------------------------------------------- Chapter 0:2.3

NPS has about 5,200 housing units located throughout the national
park system.  Recently, NPS estimated the cost of its maintenance
backlog for housing units to be about $300 million.  However, the
agency acknowledges that this is not a precise estimate.  Our work
has shown that NPS has not clearly justified the need for all of
these housing units.  While the agency requires park management to
perform needs assessments to justify the park's housing, these
assessments may not be in-depth, objective, or performed consistently
from park to park.  After years of urging by us and others, NPS is
just beginning the process to assess the need for its housing units. 
However, the process is not scheduled to be completed until 2002--9
years after we recommended such assessments.  Reducing the inventory
of employee housing could substantially stretch the limited funding
that is available for maintaining the infrastructure of the national
park system. 

NPS' annual performance plan addresses this issue.  The plan has a
goal that 10 percent of its employee housing units, classified as
being in "poor or fair" condition in 1997, be either removed,
replaced, or upgraded to "good" condition in fiscal year 1999.  Its
long-term goal is to accomplish this for 35 percent of the employee
housing units.  These goals are very important in either reducing the
inventory or upgrading the condition of NPS' employee housing. 
However, NPS is now assessing the need for its housing units.  This
review will not be completed until 2002.  It is important that NPS
coordinate its decisions about whether to upgrade or replace housing
units with its on-going needs assessment to ensure that funds are not
expended on units that will no longer be needed. 


      PROPER IMPLEMENTATION OF THE
      RESULTS ACT COULD PROVIDE
      ADEQUATE OVERSIGHT AND
      ACCOUNTABILITY
-------------------------------------------------------- Chapter 0:2.4

Over the years, we have found that decentralization of
responsibility, coupled with inadequate oversight, has resulted in
accountability problems within the Department.  For example, NPS, for
the most part, delegates decisions about spending and operating
priorities to the individual park managers.  As a result, park
managers have broad discretion in deciding how to spend the parks'
operating funds.  Prior work showed that regional or headquarters
staff rarely, if ever, discussed what was being accomplished with the
operating funds provided to the parks, and that key management
controls needed to hold park managers accountable, such as a process
for setting results-oriented expectations or monitoring outcomes,
were missing. 

With the implementation of the Results Act and the performance plans
that go with it, the NPS has an opportunity to address these kinds of
accountability problems.  By developing these plans, laying out what
is to be accomplished over prescribed periods of time, NPS'
performance can be measured against these expectations.  If plans are
implemented properly, both the Congress and the agency can then use
this information for improving accountability and to assess the
adequacy of the progress being made against established expectations. 
For the same reasons, the implementation of the Results Act and its
associated requirements should also go far toward helping the other
decentralized agencies within Interior become more accountable.  Of
course, the key will be assuring that the provisions of the Results
Act are properly implemented. 


      PERFORMANCE PLAN ADDRESSES
      NEED FOR BETTER INFORMATION
-------------------------------------------------------- Chapter 0:2.5

In the absence of objective data to make informed decisions, Interior
must frequently rely on subjective judgments in assessing how
effectively and efficiently its resources are used to address
problems with the resources it manages.  Our work has shown that
Interior does not have the information it needs to (1) shift existing
resources among competing priorities to accomplish the goals and
objectives envisioned by the Congress; (2) rank priorities so that
the most pressing issues receive the most attention; (3) link the
planning process directly to budget decisions to have a greater
impact on the allocation of new resources; and (4) measure program
results.  We have reported, for example, that Interior's information
systems do not provide management with the data needed to determine
the extent of unauthorized activities on hardrock mining claims, the
number of suspected crimes against wildlife that are not investigated
because of insufficient staff and/or funds, or the overall impact of
harmful secondary uses on wildlife refuges.  In addition, the systems
do not identify the environmental impacts of oil and gas leasing
activities. 

The development of a sound performance plan that meets statutory
requirements and is useful to the Congress and other decision makers
will help Interior obtain the information it needs to improve its
decision-making.  For example, many of Interior's component plans
have goals to establish baseline data or to improve on the accuracy
of existing data so that critical decisions can be made, such as NPS'
management of historical and cultural natural resources.  Much of
these data are associated with many of the problem areas we have
identified.  Having such data should enhance Interior's capacity to
establish priorities and shift resources to where they are most
needed.  Also, while some refinements can be made in Interior's
component performance plans, they, for the most part, contain goals
that are linked to the subagency's budget and focus on program
results, whether they be output or outcome oriented.  We believe that
strengthening those areas of Interior's performance plans that we
discussed earlier will improve the Department's decision making
capability. 


   FINANCIAL MANAGEMENT ISSUES
   NEED TO BE RESOLVED
---------------------------------------------------------- Chapter 0:3

Since the passage of the Chief Financial Officers Act, Interior's
Office of Inspector General (OIG) has performed all of Interior's
financial audits, except for the audits of the Indian trust funds. 
Over the past 5 years, Interior's subagencies have made steady
progress in preparing reliable financial statements.  However, even
though most subagencies received clean audit opinions in fiscal year
1997, accounting and internal control weaknesses persist at several
subagencies.  These weaknesses include (1) accounting and internal
controls over accounts receivable (BIA and USGS), revenue (BIA), and
real and personal property (BIA and NPS), and (2) controls over
computer systems for BIA, BOR, BLM, FWS, and MMS.  Additionally,
Interior and its subagencies need to be able to produce their
financial statements in a more timely fashion in order to meet the
March 1 reporting requirement of the Government Management Reform Act
of 1994.  Timely produced financial statements are a useful tool for
financial management and oversight of the agency. 


      ACCOUNTING AND INTERNAL
      CONTROL WEAKNESSES
-------------------------------------------------------- Chapter 0:3.1

The OIG gave BIA a qualified opinion on its fiscal year 1997
financial statements in part because it found evidence indicating
that revenues and receivables related to power and irrigation
facilities were not reported accurately.  In auditing BIA's accounts
receivable, the OIG determined that receivables totalling about $6.7
million were either invalid, lacked adequate documentation, or had
not been entered into the accounting records in a timely manner.  The
OIG's working papers indicated that (1) numerous accounts were listed
without customers' addresses, which meant that bills were not issued;
(2) there was no process in place to track collections; and (3)
collections were not promptly processed (for example, at one office,
72 checks totaling $36,400 had not been deposited).  These weaknesses
indicate that BIA's accounting and control process is not adequate to
ensure that amounts owed to the government, primarily for the
construction and use of power and irrigation facilities, will be
recorded and collected. 

The OIG also found that the USGS has problems with debt collection
and properly accounting for payments received from customers. 
According to the OIG, as of September 30, 1997, 36 percent of USGS'
approximately $16 million in billed accounts receivable had been
outstanding for at least 6 months.  Furthermore, payments that USGS
receives from customers are often recorded erroneously.  For example,
instead of recording amounts received as a prepayment or deposit for
services that USGS will provide to the customer at a future date,
USGS erroneously recorded the funds as a payment for services as
though they had already been rendered.  Consequently, at points
during the year, USGS did not have an accurate record of the amounts
owed by its customers and did not know the total amount of
prepayments that were available to fund future work.  The OIG's
discovery of these errors in fiscal year 1997 required an adjustment
to correct the financial records. 

In addition, the OIG was not able to determine whether portions of
BIA's property, plant, and equipment inventory were fairly stated
because BIA did not provide adequate documentation or reliable
accounting information to support these balances.  The OIG reported
that corrective actions identified in a BIA Memorandum of Agreement
had not been completed.  Because these corrective actions have not
yet been fully implemented, BIA's internal controls are not
sufficient to ensure that past and future property transactions are
properly recorded and adequately supported. 

Internal control weaknesses related to plant, property, and equipment
are also present at NPS.  The OIG reported that NPS' internal
controls did not provide reasonable assurance that (1) property and
equipment detailed listings would be reconciled to the general ledger
balances and (2) completed projects in the construction-in-progress
account would be appropriately transferred to the buildings and other
structures accounts in a timely manner. 

These noted weaknesses at both BIA and NPS can adversely affect these
subagencies' ability to properly manage and safeguard their plant,
property, and equipment assets.  For example, if detailed property
and equipment listings are not reliable, management's ability to make
appropriate acquisition and disposal decisions could be affected. 
Additionally, poor controls over property and equipment make them
more susceptible to theft or misuse. 


      WEAKNESSES IN CONTROLS OVER
      COMPUTER SYSTEMS
-------------------------------------------------------- Chapter 0:3.2

The OIG's reviews of general computer controls found serious computer
security weaknesses at MMS, BIA's Operations Service Center, and
BOR's Administrative Service Center--which processes financial
information for BOR as well as BLM and FWS.  These weaknesses
represent substantial noncompliance with the federal financial
management systems requirements under the Federal Managers' Financial
Integrity Act of 1982.  Additionally, the OIG reported in the case of
MMS and BIA that their testing disclosed instances of noncompliance
with the Federal Financial Management Improvement Act of 1996.  For
example, the OIG reported that BIA's Operations Service Center did
not have (1) an effective system security program and had not
enforced personnel policies and procedures to ensure adequate system
security, (2) controls over system software to effectively detect and
deter inappropriate use, (3) an effective means of recovering or of
continuing computer operations in the event of a system failure, and
(4) a system for monitoring visitor activities and for performing
adequate housekeeping to safeguard computer hardware.  Similar
weaknesses were found at MMS and the BOR Administrative Service
Center. 


      ACTIONS UNDER WAY TO ADDRESS
      FINANCIAL MANAGEMENT
      PROBLEMS
-------------------------------------------------------- Chapter 0:3.3

Interior has efforts under way to address many of these problem
areas.  BIA has established a team to survey its power and irrigation
projects and determine the correct outstanding obligations and
develop corrective actions in accounting for construction repayments
and accounts receivable.  This team is expected to complete its
assessment and recommendations by 2002.  BIA has also taken steps
toward developing and implementing a plan to correct BIA's property
records and establish ongoing property accounting and reconciliation
procedures.  Portions of this plan, such as inventorying most of
BIA's plant, property, and equipment, have been completed.  However,
completion of the remaining steps is critical to resolving BIA's
property weaknesses.  USGS has issued new procedures to improve on
debt collection and has reissued instructions concerning the
appropriate accounting for collections on reimbursable agreements. 
Finally, the BOR has an action plan to correct its computer control
weaknesses.  Resolution of these financial management issues is key
to ensuring financial accountability throughout the Department of the
Interior. 


-------------------------------------------------------- Chapter 0:3.4

This concludes my statement, Mr.  Chairman.  I would be happy to
respond to any questions you or other Members of the Committee may
have. 


*** End of document. ***