[Final Audit Report on Property Management, U.S. Geological Survey]
[From the U.S. Government Printing Office, www.gpo.gov]
Report No. 96-I-607
Title: Final Audit Report on Property Management, U.S. Geological
Survey
Date: March 29, 1996
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MEMORANDUM
TO: The Secretary
FROM: Wilma A. Lewis
Inspector General
SUBJECT SUMMARY: Final Audit Report for Your Information - "Property
Management, U.S. Geological Survey" (No. 96-I-607)
Attached for your information is a copy of the subject final audit report.
The U.S. Geological Survey has made substantial improvements in the physical
management of its capitalized property since our last audit in 1991. However,
deficiencies still remained in the controls for recording acquisition costs in the
property system. As a result, we estimated that the $335 million property and
equipment balance as of September 30, 1994, was overstated by at least $5.9 million
and that the recorded acquisition costs for equipment totaling about $1.9 million
were not adequately supported by the accounting records. The Geological Survey
concurred with all four of our recommendations.
If you have any questions concerning this matter, please contact me or Ms. Judy
Harrison, Assistant Inspector General for Audits, at (202) 208-5745.
Attachment
E-IN-GSV-O05-95
United States Department of the Interior
OFFICE OF THE INSPECTOR GENERAL
Washington, D.C. 20240
To: Assistant Secretary - Water and Science
From: Assistant Inspector General for Audits
Subject: Final Audit Report on Property Management, U.S. Geological Survey (No. 96-I-607)
INTRODUCTION
This report presents the results of our audit of the U.S. Geological Survey's property
management activities. The objective of the audit was to determine whether: (1) the
Geological Survey has fully implemented the recommendations contained in our July
1991 audit report "Property Management, U.S. Geological Survey" (No. 91-I-1028);
and (2) the property and equipment balance reported in the Geological Survey's
financial statements for fiscal year 1994 was accurate.
BACKGROUND
Policies and procedures for the management of personal property are contained in
the Departmental Manual section entitled "Interior Property Management
Regulations" (410 DM). These regulations require each bureau head to implement
the provisions of the Federal Property Management Regulations established by the
General Services Administration and to issue instructions governing the actions of
all officials to whom authority has been delegated for the acquisition, use,
management, and disposition of property. The Geological Survey's property
management guidance is contained in the Survey Manual and the Property
Management Handbook.
The Branch of Property Management is responsible for administering and accounting
for the Geological Survey's controlled property. The Geological Survey assigns
control of individual property items to property custodians, who are generally the
individuals under whose daily control and supervision the property is used. The
Branch reports its fiscal year-end capitalized propertyl balance to the Office of
Financial Management for inclusion in the Geological Survey's financial statements.
In its fiscal year 1994 financial statements, the Geological Survey reported property
and equipment with a value of $335.2 million, which consisted of $297.8 million for
equipment $18.7 million for structures, facilities, and leasehold improvements;
$18.6 million for automated data processing software; and $75,000 for land.
SCOPE OF AUDIT
Our audit was made, as applicable, in accordance with the "Government Auditing
Standards," issued by the Comptroller General of the United States. Accordingly,
we included such tests of records and other auditing procedures that were considered
necessary under the circumstances. The Geological Survey offices visited or
contacted are listed in Appendix 1.
To accomplish our objective, we selected a statistical sample of 166 capitalized
equipment items, totaling $43.5 million, from a March 1995 Geological Survey
property management system report (as adjusted to approximate the September 30,
1994, property balance) to determine whether the items were at their designated
locations and the recorded acquisition costs were accurate. This sample was drawn
from two audit universes: property items acquired before fiscal year 1989 and
property items acquired during and after fiscal year 1989. Separate audit universes
were used because the Geological Survey, in accordance with procedures set forth
by its General Records Disposition Schedule, had disposed of most of the acquisition
documents for property items that were at least 6 years old. In July 1995, the
Geological Survey implemented a new property management system under which it
began to record depreciation of its capitalized property. As a result of this
accounting change, the net book value of older property items will be significantly
reduced or eliminated. Accordingly, our tests of the older property were limited to
determining whether the items were at their designated locations. Our sampling
methodology is detailed in Appendix 2. We also selected two separate judgmental
samples to determine whether any additional property items should be included in
the Geological Survey's property records (60 items) and whether equipment items
were capitalized in the proper fiscal year (90 items).
In order to verify the acquisition costs recorded in the Property Management System,
we reviewed purchase orders, payment records, contracts, and other cost
documentation. Additionally, we confirmed the physical existence of the items by
conducting on-site inspections or by obtaining written confirmations from cognizant
property custodians.
lCapitalized property consists of property and equipment with an original acquisition cost of
$5,000 or more and an estimated service life of 2 years or more.
2
As part of our review, we examined the Geological Survey's internal controls over
its capitalized property and equipment. We determined that weaknesses existed in
the areas of documenting acquisition costs and recording acquisitions in the proper
fiscal year. These weaknesses are discussed in the Results of Audit section of this
report. Our recommendations, if implemented, should improve controls in these
areas.
We also reviewed the Secretary's Annual Statement and Report to the President and
the Congress, required by the Federal Managers' Financial Integrity Act of 1982, for
fiscal year 1994 to determine whether any reported weaknesses were within the
objective and scope of our audit. We determined that none of the reported
weaknesses were within the objective and scope of our audit.
PRIOR AUDIT COVERAGE
During the past 5 years, the Office of Inspector General has issued three audit
reports that included property-related issues as follows:
- The February 1995 report "U.S. Geological Survey Principal Financial
Statements for Fiscal Years 1993 and 1994" (No. 95-I-582) stated that the audit could
not be completed and that we could not express an opinion on the reliability of the
statements because the Geological Survey did not have adequate supporting
documentation to substantiate the amounts reported for several material accounts,
including property and equipment.
- The June 1993 report "U.S. Geological Survey Statement of Financial Position
as of September 30, 1992" (No. 93-I-1214) stated that personal property assets valued
at $350 million were not adequately controlled or managed. This condition occurred
because the Geological Survey had not: (1) designated officials to oversee its
property management program; (2) followed Departmental property control
procedures, such as conducting annual inventories; or (3) established controls to
ensure that property records were accurate. In addition, significant differences
existed between the value of property reported in the Property Management System
and the value reported in the general ledger. The Geological Survey revised its
accountability structure during fiscal year 1992, conducted a physical inventory of its
personal property, and corrected valuation errors in its property records.
- The July 1991 report "Property Management, U.S. Geological Survey"
(No. 91-1-1028) stated that $12 million of personal property could not be located and
was presumed lost; about $26 million of property had been improperly transferred
or removed; $42 million of property was not properly marked with identification
numbers; and a $23.7 million difference existed between the property records and the
general ledger. In addition, the Geological Survey did not have controls to prevent
or detect conveyance of property to non-Geological Survey organizations, and
3
$520,000 of Federal property was given to non-Geological Survey organizations
without proper authorization or documentation. Our current review determined that
the Geological Survey had effectively implemented all 10 of the recommendations
to correct these deficiencies (see Appendix 3).
RESULTS OF AUDIT
The Geological Survey has made substantial improvements regarding the physical
management of its capitalized property. For example, all of the 166 capitalized
equipment items we reviewed in our current audit were at their designated locations.
Overall, the 10 recommendations from our July 1991 audit report have been
implemented effectively (see Appendix 3), and most of the deficiencies identified
during the prior audit have been corrected. However, deficiencies still remain in the
controls for recording acquisition costs in the Property Management System. As a
result, we estimated that the $335 million property and equipment balance as of
September 30, 1994, was overstated by at least $5.9 million and that the recorded
acquisition costs for equipment totaling about $1.9 million were not adequately `
supported by the accounting records.
Recording Acquisition Costs
We found that the property management system contained inaccurate and
unsupported cost data for 32 of the 87 statistically selected capitalized property items
we examined for cost support. The Departmental Manual (410 DM 114-60.202(b))
requires that property accountability records accurately reflect the cost of an item
and that cost data be verified to ensure that data entered at the time of purchase are
correct. We determined that property costs were not properly recorded because
duplicate cost entries were made into the Property Management System and
acquisition costs were not posted accurately. We also determined that property costs
were not adequately supported because payment records were not in the files to
substantiate the cost of property items or enhancements to equipment. For property
items reported to have been acquired from fiscal years 1989 through 1994 at a cost
of $103 million, we found, based on our statistical sample, that this amount was
overstated by about $5.3 million and unsupported by about $1.9 million. In addition,
we found that 58 of the 90 fiscal year-end property purchases were not recorded in
the appropriate fiscal year, resulting in the property balance being overstated by an
additional $559,000.
Duplicate Costs. Our review of 87 property items identified 8 items for which
the acquisition costs were entered twice into the Property Management System. As
a result, the acquisition costs for those items were overstated by a total of $390,342.
4
The Office of Systems Management, Administrative Division, generated a monthly
accounting report that included a listing of all payments for property items. These
payments were then posted to the Property Management System, which automatically
updated the cost data for individual property items. We found, however, that for
some property items, property management specialists were entering the same data
into the System manually before the data were automatically posted and the
Geological Survey had not implemented adequate controls to identify and correct
these duplicate entries. In addition, Geological Survey officials informed us that
because of processing problems, payments for property items were sometimes
automatically posted into the property system more than once, resulting in the
recording of double or triple payments for some property items.
Posting Errors. We found that the recorded acquisition costs for 10 of the 87
items we reviewed were not accurately posted from the payment records. As a
result, the acquisition costs were overstated by $409,315 for seven of the items and
understated by $40,191 for three of the items. Five of the posting errors related to
property acquired by the Geological Survey through contracts issued by the Defense
Mapping Agency. The costs of these five items were posted to the property system
from cost estimates provided by the National Mapping Division. These items were
subject to extensive security requirements, including a requirement that the
acquisition documents (requisitions, invoices, functional descriptions, and receiving
reports) should be maintained in a secure area. As a result, these documents were
not provided to property management officials, and amounts posted to the system
were based on estimates. Based on a certification of the cost of these items we
received from an official of the Advanced Systems Branch, within the National
Mapping Division, we found that the recorded costs were understated by $37,314 for
one item and overstated by $408,304 for four items. For example, the property
system showed that the National Mapping Division acquired the item "SIP Base" and
had a recorded cost of $200,000. We confirmed that this item's actual acquisition
cost was $27,974, resulting in an overstatement of $172,026,
The errors for the other five items also resulted from posting estimated rather than
actual costs. For example, in fiscal year 1989, the Geological Survey purchased a
pickup truck for $11,124. The truck's $12,000 recorded cost was based on an
estimate. No adjustment was made to the System when the payment was processed.
As a result, the recorded cost was overstated by $876.
Undocumented Payments or Adjustments to Property Costs. The Geological
Survey could not provide payment records to fully substantiate the recorded costs for
14 of the 87 items in our sample. As a result, equipment costs totaling $384,223
could not be substantiated.
Year-End Acquisitions. To determine whether the Geological Survey recorded
year-end property acquisitions in the proper fiscal year, we judgmentally selected 90
5
year-end transactions for fiscal year 1994, valued at $874,000. Under the accrual
method of accounting, assets should be capitalized when received, regardless of when
the disbursements are actually made. However, we identified 58 items, valued at
$559,000, that were reported as assets on the Geological Survey's fiscal year 1994
financial records, even though the items were received in fiscal year 1995.2 This
occurred because the Geological Survey capitalized property in the year in which
funds had been made available for the procurement. As a result, property and
equipment were overstated by $559,000 in the Geological Survey's fiscal year 1994
financial records.
Impact on Fiscal Year 1995 Financial Statements
The Geological Survey's new property management system (the Fixed Asset Module
of the Federal Financial System) was implemented in July 1995, which was near the
completion of our audit. A significant change in accounting practices resulting from
implementation of this system was the depreciation of all capitalized property and
equipment. This change will have a material effect on the Geological Survey's fiscal
year 1995 financial statements because it will decrease the net property and
equipment account balance by $184 million (62 percent).
As part of our audit of the Geological Survey's fiscal year 1995 financial statements,
we are reviewing the reliability of data in the new property system. Because the
Geological Survey's new fixed asset subsystem will record the date property is
received, future capitalized equipment purchases should be reported in the
appropriate accounting period. We will assist the Geological Survey in resolving the
deficiencies that contributed to the $5.3 million property account overstatement
identified in this report.
Recommendations
We recommend that the Director, U.S. Geological Survey:
1. Establish adequate data entry controls to identify and prevent duplicate
entries into the Federal Financial System's fixed asset subsystem, particularly with
respect to manually entered excess and donated property items.
2. Establish controls to ensure that files contain adequate documentation to
support recorded acquisition costs, including the cost of enhancements to existing
equipment.
2These items were not included in our statistical sample; therefore, the $559,000 overstatement is
not reflected in our $5.3 million projection for duplicate entries and posting errors,
6
3. Establish procedures to ensure that when property is acquired under
contracts, the acquisition is recorded accurately in the Property System.
4. Ensure that equipment is capitalized based on the date of receipt rather than
on the year of funding.
U.S. Geological Survey Response and Office of Inspector General Reply
The February 20, 1996, response (Appendix 4) to the draft report from the Director,
U.S. Geological Survey, generally concurred with the recommendations.
Recommendations 1 and 3. The Geological Survey stated that implementation
of the Fixed Asset Subsystem eliminated the need to update the property records
more than once for a particular month's transactions and that the Subsystem ensures
that the actual payment amount rather than an estimated value is recorded in the
property system.
Recommendation 2. The Geological Survey stated that the Office of Financial
Management will conduct periodic management control reviews to ensure that its
established archival procedures are adequately executed.
Recommendation 4. The Geological Survey stated that the Fixed Assets
Subsystem is being enhanced to ensure that the capitalized asset's value is recorded
in the correct fiscal year.
Based on the Geological Survey's response, we consider Recommendations 1, 2, and
3 resolved and implemented and Recommendation 4 resolved but not implemented.
Accordingly, Recommendation 4 will be referred to the Assistant Secretary for
Policy, Management and Budget for tracking of implementation.
The Geological Survey disagreed with our statement in the draft report that only 8
of the 10 recommendations in our July 1991 report had been implemented
effectively, stating that the deficiencies related to the two recommendations were
corrected with implementation of the Fixed Asset Subsystem.
The two recommendations were not fully implemented at the completion of our
review for this audit. However, we reviewed implementation of the Subsystem as
part of our audit of the Geological Survey's fiscal year 1995 financial statements,
which was completed subsequent to this property management audit. Based on that
subsequent review, we confirmed that the new Subsystem had corrected the
deficiencies related to the two recommendations. Therefore, we have revised our
report to indicate that all 10 recommendations from the July 1991 report have been
implemented.
7
Since the report's recommendations are considered resolved, no further response to
the Office of Inspector General is required (see Appendix 5).
The legislation, as amended, creating the Office of Inspector General requires
semiannual reporting to the Congress on all audit reports issued, actions taken to
implement audit recommendations, and identification of each significant
recommendation on which corrective action has not been taken.
cc: Director, U.S. Geological Survey
Audit Liaison Officer, Water and Science
Audit Liaison Officer, U.S. Geological Survey
APPENDIX 1
SITES VISITED OR CONTACTED
Water Resources Division
Sites Visited
Palo Alto, California
Arvada, Colorado
Denver, Colorado
Lakewood, Colorado
Reston, Virginia
Sacramento, California
Sites Contacted*
Little Rock, Arkansas
San Diego, California
Grand Junction, Colorado
Altamonte Springs, Florida
Ocala, Florida
Norcross, Georgia
Idaho Falls, Idaho
Baton Rouge, Louisiana
Columbus, Ohio
San Juan, Puerto Rico
Huron, South Dakota
Richmond, Virginia
Tacoma, Washington
Madison, Wisconsin
Tuscaloosa, Alabama
Information Systems Division
Site Visited
Reston, Virginia
National Mapping Division
Sites Visited
Menlo Park, California
Lakewood, Colorado
Reston, Virginia
Sites Contacted*
Anchorage, Alaska
Rolls, Missouri
Sioux Falls, South Dakota
Geologic Division
Sites Visited
Menlo Park, California
Palo Alto, California
Golden, Colorado
Lakewood, Colorado
Albuquerque, New Mexico
Reston, Virginia
Redwood City, California
Sites Contacted*
Flagstaff, Arizona
Hawaii National Park, Hawaii
Woods Hole, Massachusetts
Memphis, Tennessee
Fairbanks, Alaska
* In conjunction with Geological Survey property management personnel, we requested that property
custodians at these locations certify the existence and condition of the property items included in our
sample.
9
APPENDIX 2
Page 1 of 2
SAMPLING METHODOLOGY
Our sampling plan was designed to determine whether the property and equipment
were in the custody of designated Geological Survey employees and whether the
recorded values of the items were correct.
We selected a statistical sample using the master file of the Geological Survey's
Property Management System as of March 23, 1995, which included 15,948
equipment items, with a recorded cost of $295.2 million. Our sampling universe did
not include computer software; structures, facilities, and leaseholds; or land. Since
the primary purpose of our tests was to determine the reasonableness of the year-end
balance for fiscal year 1994, we excluded all items acquired and/or received in fiscal
year 1995 and limited our sample to items with a recorded cost of $10,000 or more
to provide greater assurance that material errors would be identified by our testing.
We also used a stratified random sample to ensure that high-dollar value items were
represented in our sample. The resulting sampling universe consisted of 6,676 items,
with a recorded value of $238 million, which represented 42 percent of the property
items and 81 percent of the recorded costs.
We further divided this universe into two separate universes: items acquired prior
to fiscal year 1989 (3,326 items costing $134 million) and items acquired from fiscal
years 1989 through 1994 (3,350 items costing $103 million), This was necessary
because, in accordance with the Geological Survey's General Records Disposition
Schedule, the Geological Survey did not retain acquisition documentation for items
that were at least 6 years old. Accordingly, we limited our testing of items acquired
prior to fiscal year 1989 to verifying their existence.
Our statistical sample consisted of 166 items, with a recorded cost of $43,549,340 (79
items acquired prior to 1989 and 87 items acquired from 1989 through 1994). Our
sample included all 16 items that had a recorded cost of $500,000 or more and
totaled $30.5 million, including 7 items ($23.8 million) acquired prior to 1989 and 9
items ($6.7 million) acquired after that period.
We projected the results of our finding that 32 of the 87 sampled property items
acquired after 1989 contained inaccurate and unsupported cost data.* As a result
*We determined that 5 of the 9 property items with recorded costs in excess of $500,000 and 27 of
the 78 property items with recorded costs between $10,000 and $499,000 contained inaccurate and
unsupported cost data. By projecting these results using a 90 percent confidence level, we estimated
that the Geological Survey's property and equipment balance was overstated by between $2.7 million
and $8.0 million, with a midpoint projection of $5.3 million. In addition, the projected result for
unsupported payments for property items or enhancements to property items was between $526,000
and $3.2 million, with a midpoint projection of $1.9 million.
10
APPENDIX 2
Page 2 of 2
of this projection and our finding that 58 of the 90 items in our judgmental sample
of year-end property acquisitions were recorded in the wrong fiscal year, we
estimated that the Geological Survey's reported property and equipment account was
overstated by about $5.9 million ($5.3 million projected for 87 statistically selected
items plus $559,000 for the 58 items in our judgmental sample). In addition, we
estimated that the reported balance for property and equipment contained
unsupported payments or adjustments of approximately $1.9 million.
11
APPENDIX 3
Page 1 of 3
FOLLOWUP OF AUDIT REPORT "PROPERTY MANAGEMENT,
U.S. GEOLOGICAL SURVEY"
(No. 91-I-1028), DATED JULY 1991
In July 1991, the Office of Inspector General issued the audit report entitled
"Property Management, U.S. Geological Survey" (No. 91-I-1028). Our current review
found that the 10 recommendations in the report were adequately implemented as
follows:
- RECOMMENDATION A.l. Implement the accountability structure prescribed
in the Departmental Manual (410 DM 114-60) by designating a Property
Management Officer and ensuring that the Officer appoints property administrators
who, in turn, appoint accountable officers to each office with the authority to ensure
that (a) physical inventories are conducted when custodians transfer to another
location, (b) custodians check property items on a periodic basis to identify lost or
stolen items, (c) annual physical inventories are accurately and comprehensively
conducted, (d) custodians are aware of the property procedures, (e) property passes
are used when property is removed from a Federal Government facility, (f) the
Survey identification number is attached to or engraved on all property items, and
(g) property is properly reported to Property Management when received.
STATUS: The new accountability structure was implemented on September 8,
1992, and new guidance was distributed to all employees. We
determined that the accountability structure was in compliance with
the Departmental Manual and provided the necessary authority and
direction to the officials responsible for property accountability.
- RECOMMENDATION A.2. Conduct annual physical inventories, reconcile
actual property items with Property Management System data, identify missing
property, and take action to recover costs in cases in which reasonable care of
personal property has not been exercised by custodians.
STATUS: All inventories were completed and reconciled and adjustments
were made by December 1993. Our review disclosed that physical
inventories were taken annually and reconciled with the data in the
Property Management System.
- RECOMMENDATION A.3. Correct the data in the Property Management
System based on the results of inventories and a review of reports issued by the
Property Management System that list inaccurate data entries.
12
APPENDIX 3
Page 2 of 3
STATUS: The Geological Survey completed a "special data call" in February
1994 to obtain and enter missing data in the Property Management
System. The data were obtained and provided to the custodial
property officers to adjust their records in the System.
- RECOMMENDATION A.4. Provide guidance to ensure that purchase or
delivery orders contain accurate descriptions of the items so that
controlled/accountable property can be identified for property management purposes.
STATUS: An instructional memorandum providing guidance concerning
descriptions on requisitions was issued by the Chief, Office of
Procurement and Contracts, on December 3, 1991. This
memorandum contained procedures to ensure that item descriptions
on requisitions and purchase orders clearly identified the property
to be acquired. Our sample of 87 property items acquired since
fiscal year 1989 did not identify any deficiencies regarding item
descriptions on acquisition documents.
- RECOMMENDATION A.5. Establish data entry controls to ensure that the
actual acquisition cost of property is entered in the Property Management System
and that the actual cost of capitalized property that is entered by the Office of
Financial Management is matched with the correct property item.
- RECOMMENDATION A.7. Reconcile the financial general ledger with the
records in the Property Management System and, based on the results of inventory
and implementation of the above-listed property control procedures, eliminate the
variance between the two records.
STATUS: Recommendations A.5 and A.7 were not fully implemented at the
completion of our review. Our review disclosed deficiencies
regarding the acquisition costs recorded in the Property
Management System and the use of receiving dates for capitalizing
property items. Geological Survey officials informed us that these
deficiencies would be eliminated upon the installation of the new
Fixed Asset Module of the Federal Financial System. Subsequent
to the completion of our review, we verified, as part of our audit of
the Geological Survey's fiscal year 1995 financial statements, that
the Fixed Asset Subsystem had been implemented and adequately
addressed these deficiencies.
- RECOMMENDATION A.6. Establish followup controls to ensure that all
Forms 9-065 distributed to custodians are updated, accurate, and complete.
13
APPENDIX 3
Page 3 of 3
STATUS: The Property Management Handbook was revised and distributed
to all Geological Survey employees in December 1991. Chapter 3
of the Handbook requires that Form 9-065 ("Property Receipt and
Accountability Record") be completed and returned to the Property
Management Branch within 30 days of receipt of a new item.
According to Geological Survey officials, these forms were
distributed, utilized, and returned to the Branch when new items
were acquired and received.
- RECOMMENDATION B.1. Identify all property provided to non-Geological
Survey personnel without authorization and, where appropriate, obtain
reimbursement for the property either from Geological Survey personnel or from
those who retain the property. Those employees who improperly conveyed
Government property should be disciplined or referred for legal action.
STATUS: All specific cases cited by the audit were satisfactorily resolved by
June 1992. Additional guidance on this matter was provided in the
"Administrative Digest" dated November 7, 1991, and in the
Director's memoranda to all employees dated September 1991 and
August 1992. The Property Management Handbook, Chapter 3,
Paragraph 2.f, also provided instructions on transfers of property to
non-Geological Survey entities, Our audit found no exceptions to
compliance with the guidance regarding the use of Geological
Survey property by non-Geological Survey personnel,
- RECOMMENDATION B.2. Issue guidance to all custodial personnel directing
them to inform the contracting officers to specify in the written agreements with
outside organizations the property items (including their function and destination)
that are provided to non-Survey personnel.
- RECOMMENDATION B.3. Issue guidance to all custodial personnel directing
them to inform the contracting officers to specify in the written agreements with
outside organizations the cost of the property items that are provided to non-Survey
personnel.
STATUS:
The Chief, Office of Procurement and Contracts, issued Policy and
Procedures Memorandum Number 91-17, dated December 3, 1991,
which included guidance on administration of property used by
contractors, grant recipients, and other non-Geological Survey
personnel. In addition, the form entitled "Loan of Property Grant"
was implemented on October 8, 1993, which simplified the process
for loaning property to non-Geological Survey domestic entities with
which the Geological Survey is working on general research projects.
14
In Reply Refer
Mail Stop 210
APPENDiX 4
United States Department of the Interior Page 1 of 3
To:
MEMORANDUM
To: Acting Assistant Inspector General for Audits
Subject: Draft Audi t Report, "Property Management, U.S.
January 1996" (Assignment No. E-IN-GSV-O05-95)
Geological Survey,
We have carefully reviewed the draft audit report presenting the results of
your review of the U.S. Geological Survey's property management activities.
We are in general agreement with the findings: however, we are pleased to
report that three of the recommendations have been satisfied with the
implementation of the Fixed Assets Subsystem (FAS), a new mainframe property
management system, which is fully integrated with the Federal Financial
System. The one remaining recommendation will be satisfied when an
enhancement to FAS is implemented in June 1996. Our comments on the draft
report and specific detailed response to each of the recommendations are
presented in the accompanying attachment.
Thank you for the opportunity to review and comment on the draft report. Our
Property Management staff is available to discuss our response or to provide
any additional information that you may need.
Attachment
Copy to:
Assistant Secretary--Water and Science
15
Property Management Branch
February 14, 1996
COMMENTS ON DRAFT AUDIT REPORT
PROPERTY MANAGEMENT
U.S. GEOLOGICAL SURVEY
Page 6, last sentence: "Our current review determined that the Geological
Survey had effectively implemented 8 of the 10 recommendations to correct
these deficiencies."
Response: All 10 recommendations are complete. The Fixed Assets
Subsystem, a new mainframe property management system that is fully
integrated with the Federal Financial System, was implemented in July
1995. The new property management system will ensure constant and
continued reconciliation of the property and general ledger accounts.
Additionally, a full physical inventory of accountable property was
completed and reconciled during fiscal year 1995.
Page 8, third paragraph, first sentence: "Information Systems Division"
should be changed to "Office of Systems Management, Administrative Division. "
RECOMMENDATIONS:
1. Establish adequate data entry controls to identify and prevent duplicate
entries into the Federal Financial System's fixed asset subsystem,
particulary with respect to manually entered excess and donated property
.
Response: The Fixed Assets Subsystem updates the property record
acquisition cost through the payment process, eliminating the previous
automated batch process that was occasionally updated more than once for
a particular month's transactions.
2. Establish controls to ensure that files contain adequate documentation to
support recorded acquisition costs, including the cost of enhancements to
existing equipment.
Response: The Office of Financial Management will conduct periodic
management control reviews to ensure that its established archival
procedures are adequately executed.
16
APPENDIX 4
Page 3 of 3
3. Establish procedures to ensure that when property is acquired under
contracts, the acquisition is recorded accurately in the Property System.
Response: The Fixed Assets Subsystem (FAS) requires that payments made
for capitalized equipment purchased under contracts (including those
with other Federal agencies) reference the Fixed Asset number of the
equipment. This requirement ensures that the actual payment amount,
rather than an estimated value, is recorded in the Property records in
the FAS.
4. Ensure that equipment is capitalized based on the date of receipt rather
than on the year of funding.
Response: The Fixed Assets Subsystem is being enhanced (implementation
scheduled for June 1996) to accommodate accrual of a caitalized asset's
value through the receiving document process. This will ensure that the
asset's value is recorded in the correct fiscal year.
17
APPENDIX 5
STATUS OF AUDIT REPORT RECOMMENDATIONS
Finding/Recommendation
Reference Status Action Required
1, 2, and 3 Implemented. No further action is required.
4 Resolved; not No further response to the Office
implemented. of Inspector General is required.
The recommendation will be
referred to the Assistant
Secretary for Policy,
Management and Budget for
tracking of implementation.
ILLEGAL OR WASTEFUL ACTIVITIES
SHOULD BE REPORTED TO
THE OFFICE OF INSPECTOR GENERAL BY:
Sending written documents to: calling:
Within the Continental United States
U.S. Department of the Interior Our 24-hour
Office of Inspector General Telephone HOTLINE
1550 Wilson Boulevard 1-800-424-5081 or
Suite 402 (703) 235-9399
Arlington, Virginia 22210
TDD for hearing impaired
(703) 235-9403 or
1-800-354-0996
Outside the Continental United States
Caribbean Region
U.S. Deparment of the Interior (703) 235-9221
Office of Inspector General
Eastern Division - Investigations
1550 Wilson Boulevard
Suite 410
Arlington, Virginia 22209
North Pacific Region
U.S. Department of the Interior
Office of Inspector General
North Pacific Region
238 Archbishop F.C. Flores Street
Suite 807, PDN Building
Agana Guam 96910
(700) 550-7279 or
COMM 9-011-671-472-7279