Management Report:

Improvements Needed in American Battle Monuments Commission's Internal Controls and Accounting Procedures

GAO-10-596R: Published: Jul 23, 2010. Publicly Released: Jul 23, 2010.

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On March 1, 2010, we issued our report expressing our opinion on the American Battle Monuments Commission's (the Commission) fiscal years 2009 and 2008 financial statements and our opinion on the Commission's internal control as of September 30, 2009. We also reported on the results of our tests of the Commission's compliance with selected provisions of laws and regulations during fiscal year 2009. We reported that although certain internal controls should be improved, the Commission maintained, in all material respects, effective internal control over financial reporting as of September 30, 2009. However, we also reported on a significant deficiency in the Commission's governance structure related to vacant Commissioner positions and one instance of noncompliance with the Antideficiency Act related to a Commission contract with a commercial employment services firm to provide temporary employees. During our fiscal year 2009 audit, we also identified other internal control deficiencies that, while not material, individually or in the aggregate, to the Commission's financial statements, nevertheless warrant management's attention. The purpose of this report is to present these deficiencies, provide additional detailed information on the significant deficiency and compliance issue identified in our fiscal year 2009 audit report, provide recommendations to address these matters, and provide an update on the status of our prior year recommendations.

During our fiscal year 2009 financial statement audit, we identified a total of 18 control deficiencies in the Commission's internal controls and accounting procedures at Commission headquarters, its European Regional (ER) and Mediterranean Regional (MR) Offices, and at the Manila American Cemetery. At the Commission's headquarters, we identified the following internal control and accounting procedure deficiencies: (1) No written delegation of governance authority from Commissioners. (2) Inadequate controls to prevent Antideficiency Act violations. (3) Internal control reviews were completed, but were not fully validated. (4) Procurements did not follow required procedures. (5) Not all trust fund receipts were reported in the trial balance. (6) No support for calculating and reporting of full-time equivalent employees. (7) Documentation of personnel actions was not current. (8) Guidelines for donated services were not followed. (9) Engineering project lists had inaccuracies. At the Commission's ER Office, we identified the following internal control and accounting procedure deficiencies: (1) Imprest cash counts were not timely and reports had inaccuracies. (2) Miscellaneous receipt activity was not included in budgetary accounts. (3) Not all expenditure transactions were adequately documented. (4) Not all payroll transactions were properly processed. (5) Funds were commingled in the Commission's Aged Vendor Liability Report. (6) Not all year-end liabilities were identified for accrual. (7) Undelivered orders report was not reconciled with the general ledger. At the Commission's MR Office, we identified a control deficiency concerning the calculation of holiday pay and the processing of current pay authorizations. At the Commission's Manila American Cemetery, we identified a control deficiency regarding the lack of support for certain expenditure transactions. To assist Commission management in addressing these findings, this report contains 45 detailed recommendations. In its July 15, 2010, letter, the Commission agreed with the issues raised in our draft report.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Directors of Human Resources and Finance at Commission headquarters should coordinate action to document acceptance and scope of voluntary services, including that services are from a non-prohibited source, in accordance with established Commission guidelines.

    Agency Affected: American Battle Monuments Commission

    Status: Closed - Implemented

    Comments: During our audit of the American Battle Monuments Commission's (the Commission) fiscal year 2009 financial statements, we found that the Commission was not following its own guidelines for accepting, documenting, and accounting for donated services from an individual during fiscal year 2009. Specifically, we found that the Commission did not document its "acceptance" of the donated services, including the scope of services to be provided. Because the Commission did not follow its own guidelines, it did not recognize $57,600 in donated revenue and related service expenditures in its fiscal year 2009 financial statements. To address this issue, we recommended that the Directors of Human Resources and Finance at Commission headquarters coordinate action to document acceptance and scope of voluntary services, including that services are from a non-prohibited source, in accordance with established Commission guidelines. In response to our recommendation, the Commission took steps to address this issue. During our fiscal year 2010 audit, we found acceptance and scope of voluntary services was documented. Specifically, the Commission issued a Policy Letter subject on Acceptance of Voluntary Services at ABMC Cemeteries and other Facilities and we obtained documentation of accepted In-Kind Donation of Service during the fiscal year. As a result of their actions we close this recommendation as implemented.

    Recommendation: The Director of Engineering at Commission headquarters should take action to follow established procedures for periodic review of projects to include coordination with regional offices and cemeteries in reviewing the completeness and accuracy of the Lookforward and Lookback Lists.

    Agency Affected: American Battle Monuments Commission: Engineering and Maintenance Director

    Status: Open

    Comments: During our audit of the American Battle Monuments Commission's (the Commission) fiscal year 2009 financial statements, we reviewed engineering project lists and noted several errors with respect to information contained on the lists. The Commission's largest project on the Lookback List used an incorrect exchange rate as indicated by contract files. This resulted in a change to the project cost. At the Ardennes Cemetery, the cemetery superintendent stated that two renovation projects had been completed during fiscal year 2009. Therefore, these projects should have been on the Lookback List instead of the Lookforward List, with the actual cost disclosed. At the Netherlands Cemetery, the cemetery superintendent stated that a battle maps had been completed during fiscal year 2009. Therefore, this project should have been on the Lookback List, instead of the Lookforward List, with the actual cost disclosed. Additionally, a project was cancelled and should have been deleted from the Lookforward List. An ineffective project review process between Commission headquarters and field operations may adversely impact management decisions regarding budgeting for projects, and amounts in the unaudited RSI in the Commission's financial statements may be incorrectly reported. To address this issue, we recommended that the Director of Engineering at Commission headquarters take action to follow established procedures for periodic review of projects to include coordination with regional offices and cemeteries in reviewing the completeness and accuracy of the Lookforward and Lookback Lists. In response our recommendation, the Commission took steps to address this issue. During our fiscal year 2010 audit, we found informal training was held in June 2010 regarding the Lookforward and Lookback Lists and the numbers reported on the lookforward and lookback list were accurate. However, this recommendation will remain open and we will follow up during our fiscal year 2011 audit to ensure consistent procedures are still being followed.

    Recommendation: The Finance Officer at the Commission's European Regional Office should comply with Treasury requirements in taking action to strengthen review procedures to ensure that personnel record both budgetary and proprietary accounting entries when recognizing miscellaneous receipt activity in Fund 3220.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found that the Commission used Fund 3220 to record miscellaneous receipts that the Commission collects on behalf of the Department of the Treasury (Treasury). The miscellaneous receipts statute [31 U.S.C. 3302(b),(c)] and Treasury regulations (31 C.F.R. 206.5) require agencies to remit miscellaneous receipts from third parties to Treasury. We reviewed the Commission's Paris Office trial balance and found that while receipt activity was correctly reported in proprietary accounts, there were no corresponding entries to the budgetary accounts for this fund. As a result, the Fund 3220 budgetary accounts did not balance with the proprietary accounts at the end of the fiscal year. We recommended that the Finance Officer at the Commission's Paris Office comply with Treasury requirements in taking action to strengthen review procedures to ensure that personnel record both budgetary and proprietary accounting entries when recognizing miscellaneous receipt activity in Fund 3220. In itsr response to Congress, the Commission stated that monthly reviews of the trial balance are currently being performed by the Chief Financial Officer (CFO) to ensure that proper accounting is being performed for all funds. During our fiscal year 2010 audit, we found balancing budgetary entries made for the 3220 fund at the Paris office. In discussion with the CFO, the CFO stated that trial balances are reviewed monthly by her.

    Recommendation: The Finance Officer at the Commission's European Regional Office should comply with Treasury requirements in taking action to review budgetary and proprietary accounting for Fund 3220 monthly to ensure that miscellaneous receipt activity is properly recorded.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found that the Department of the Treasury (Treasury) budgetary accounting requires that the 4000 series of accounts in the U.S. Standard General Ledger be used to record changes to, and current balances of, budgetary resources of the entity. The Commission officials confirmed that no journal entries were made to record this activity in the budgetary accounts. While the Commission has adopted Treasury budgetary accounting policies, review procedures at the Paris Office did not identify these entries as a budgetary resource because of the occasional small amount of miscellaneous receipts remitted by third parties. GAO proposed an audit adjustment of about $51,000 to correctly record Fund 3220 budgetary activity for fiscal year 2009, which the Commission subsequently booked and included in its fiscal year 2009 financial statements. We recommended that the Finance Officer at the Commission's Paris Office comply with Treasury requirements in taking action to review budgetary and proprietary accounting for Fund 3220 monthly to ensure that miscellaneous receipt activity is properly recorded. In its response to Congress, the Commission stated monthly reviews of the trial balance are currently being performed by the Chief Financial Officer (CFO) to ensure that proper accounting is being performed for all funds. During our fiscal year 2010 audit, we found balancing budgetary entries made for the 3220 fund at the Paris Office. In discussion with the CFO, she stated that trial balances are reviewed monthly by her.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to follow established accounting procedures to include an Invoice Approval Sheet in every voucher package.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Open

    Comments: In our fiscal year 2009 audit, we found that the Commission did not always maintain or retain appropriate documentation for some nonpayroll expenditures. Eight of our 75 tested expenditures, did not include an Invoice Approval Sheet. This document, developed during fiscal year 2008 by the Finance Directorate of the Paris Office, was to be included in every voucher package. It documents procurement approval, receipt of goods or services, certification that the item is complete or partially received, review of the voucher package, acceptance of the invoice to be paid, and approval to pay. According to the Paris Office accounting procedures, only after this sheet has been completed is the invoice to be paid. However, this procedure was still relatively new for fiscal year 2009 and was not always followed by the Paris Office, particularly for recurring expenses like pensions and payroll taxes, and for utilities where the bills move quickly to payment to prevent disruption of services. We recommended that the Finance Officer at the Commission's Paris Office take action to follow established accounting procedures to include an Invoice Approval Sheet in every voucher package. In its response to Congress, the Commission stated that it implemented this recommendation. During our fiscal year 2010 audit, we found that not every voucher package included an invoice approval sheet.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to follow established accounting procedures to obtain evidence of director approval for all invoices.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found six of our 75 tested expenditures did not contain evidence of a Director's approval to pay the invoice. In four of these expenditures, a Finance Directorate pay assistant initialed approval to pay a retirement plan disbursement, a quarterly Belgium Social Security payment, and two school tuition payments. However, while we determined that these transactions were valid, this was not an authorized signature for approval to pay. We also tested nine Paris credit transactions and noted that for two transactions, a pension plan refund and an overpayment of travel expenses, the documentation did not contain evidence of a director's review approval or date. The Paris Office accounting procedures provide that transactions are to be approved and dated by a director before processing. However, Paris directors travel frequently and rather than hold up payment, vouchers for "recurring" operating expenditures are generally approved and processed by the Finance Directorate. We recommended that the Finance Officer at the Commission's Paris Office take action to follow established accounting procedures to obtain evidence of director approval for all invoices. In its response to Congress, the Commission stated that it implemented this recommendation. During our fiscal year 2010 audit we verified this as an accurate statement and the Commission has taken action to follow established accounting procedures to obtain evidence of director approval for all invoices. We tested a statistical sample of credit items and all sample items tested had a Director signoff.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to follow established accounting procedures to review voucher packages for completeness before they are processed for payment.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Open

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found one invoice for over $225,000 for storm drainage improvements and the re-asphalting of roads at the Meuse-Argonne Cemetery was not stamped "certified" as received and approved for payment as evidenced by initials or signature and date by the Engineering Director of the Paris Office. While the voucher package documented the cemetery superintendent's signature and certification (but was not dated), this was not sufficient. Although we determined that this transaction was valid, Paris Office accounting procedures require approval of invoices by the Engineering Director to indicate that large project expenditures were reviewed and approved before payment. Standards for Internal Control in the Federal Government provides that transactions should be authorized and executed only by persons acting within the scope of their authority, and all transactions should be clearly documented. Failure to implement these control activities could result in the processing of improper payments. We recommended that the Finance Officer at the Commission's Paris Office take action to follow established accounting procedures to review voucher packages for completeness before they are processed for payment. In its response to Congress, the Commission stated it had implemented this recommendation. During our fiscal year 2010 audit, we found that some of our tested voucher packages were missing an "invoice approval sheet".

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to clarify existing policy for approval of time and attendance records to ensure employees do not approve their own time card.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found that the Paris Human Resources Officer, a USGS employee, approved his own time and attendance record electronically. This action violates standards regarding adequate separation of duties and weakens internal controls. The Paris Office policy requires the Paris Deputy Director to approve time and attendance records for USGS employees. However, The Paris Office policy did not clearly state that employees should not approve their own time and attendance records. We recommended that the Finance Officer at the Commission's Paris Office take action to clarify existing policy for approval of time and attendance records to ensure employees do not approve their own time card. In its response to Congress, the Commission stated that the Paris Office only has two employees who are authorized to electronically approve timecards. Each employee has been instructed to approve the other's time card, and to never approve their own. During our fiscal year 2010 audit we found this to be an accurate statement. We interviewed the Paris Human Resources Officer and verified through statistical payroll testing that employees were not approving their own time and attendance records.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to routinely review the calculation of monthly foreign post allowances for accuracy and timely correct any errors.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found three of the 10 USGS employees in our sample received erroneous amounts for their monthly foreign post allowance because of incorrect factors used to calculate the allowance as provided by the U.S. State Department. This is a variable allowance that encompasses several factors for accurate calculation including gross pay amount, number of dependents, physical location, and a fluctuating foreign exchange rate. As a result, the percentage rate used to calculate this allowance has the potential to vary every biweekly pay period and should be closely reviewed. However, this did not occur. While payroll personnel eventually identified these errors and corrected them in a subsequent pay period, in some cases this took several months. We recommended that the Finance Officer at the Commission's Paris Office take action to routinely review the calculation of monthly foreign post allowances for accuracy and timely correct any errors. In its response to Congress, the Commission stated that the Paris Office Human Resources Directorate would audit the foreign post allowance for all eligible employees once per fiscal qyarter to ensure accuracy. Any errors identified will be corrected no later than one pay period after discovery. During our fiscal year 2010 audit, we found that USGS foreign post allowance was being monitored for acuracy. Our statistical testing of 5 USGS employees revealed that all sample items allowances were correctly calculated and an interview with the Overseas Pay Assistant verified she was reviewing the foreign post allowance for errors.

    Recommendation: The Director of Human Resources at Commission headquarters should take action to follow Office of Personnel Management guidance to ensure that employee payroll data, including SF-50, Notification of Personnel Action, are kept current in official personnel files.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Open

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found that the Commission did not always ensure that employee personnel files were kept up to date. In testing a statistical sample of payroll transactions, we found that for 20 percent of employees' personnel files reviewed, the Commission did not have a current SF-50, Notification of Personnel Action. Commission personnel acknowledged that SF-50s were not always prepared on a timely basis. According to the Office of Personnel Management (OPM), the SF-50 is used to document official personnel actions, such as pay increases and promotions, and a copy is to be placed in each employee's official personnel file. Because the SF-50 is also used to make future employment, pay, and qualification decisions, incomplete personnel files could affect such decisions. We recommended that the Director of Human Resources at Commission headquarters take action to follow OPM guidance to ensure that employee payroll data, including SF-50, Notification of Personnel Action, are kept current in official personnel files. In its response to Congress, the Commission stated it had implemented this recommendation. Guidance issued by the OPM is currently being followed. During our fiscal year 2010 audit, we only tested one headquarters employee and it was Secretary Cleland. At first the Commission stated they did not have an SF-50 for Secretary Cleland. However, a few weeks later one was provided. This does not give us enough confidence to close this recommendation.

    Recommendation: The Director of Human Resources at Commission headquarters should take action to document the monthly submittal of SF 113-A reports to the Office of Personnel Management.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Closed - Implemented

    Comments: During our audit of the American Battle Monuments Commission's (the Commission) fiscal year 2009 financial statements, we identified deficiencies with the Commission's methodology for accounting and reporting of full time equivalent (FTE) employment. Specifically, the Office of Personnel Managment (OPM) relies on information collected monthly in the SF 113-A to provide a timely count of governmentwide employment, payroll, and turnover data that are used by the Congress, the White House, the Office of Management and Budget, and other federal agencies. To gather this information, OPM requires federal agencies to submit to it monthly SF 113-A reports by the 15th of the following month. However, the Commission provided no evidence that it submitted the monthly SF-113A reports to OPM after June 30, 2009, nor could the Commission provide evidence of supporting FTE calculations to document that it had not exceeded its FTE authorization. To address this issue, we recommended that the Director of Human Resources at Commission headquarters take action to document the monthly submittal of SF 113-A reports to OPM. In its response to Congress, the Commission stated it took action to address this issue. During our fiscal year 2010 audit, we found the Commission submitted the quarterly submission of the SF 113-G and SF 113-A to OPM in accordance with guidance.

    Recommendation: The Director of Personnel and Administration responsible for procurement at Commission headquarters should take action to conduct a review of existing contracts to identify any hold-harmless clauses and take necessary actions to resolve any that may violate the Antideficiency Act.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Open

    Comments: During our fiscal year 2009 audit, we identified an Antideficiency Act violation during our tests of the Commission's compliance with selected provisions of laws and regulations. Specifically, we determined that a Commission contract with a commercial employment services firm to provide temporary employees to the Commission violated the Antideficiency Act because it contained an open-ended hold-harmless clause that subjected the Commission to potentially unlimited liability. While the contractor terminated the contract before September 30, 2009, Commission officials agreed with our conclusion that the hold-harmless clause was an Antideficiency Act violation. However, because the Commission was not aware that a hold-harmless clause was a violation of the act, it had no written policies or procedures to prevent contracts from containing such clauses. Additionally, because our testing of contracts during the audit was limited, the Commission may have other contracts that contain hold-harmless clauses. In accordance with the act, once a violation is identified, the Commission is to take various steps to resolve the violation, depending on its nature, including contract modification, deobligation, or adjustment of budget authority. An executive agency that violates the act must provide a report of the violation with relevant facts, circumstances, and actions taken by the entity, to the Congress and the President of the United States, with a copy to the Comptroller General, following the guidance issued by the Office of Management and Budget (OMB). We recommend that the Director of Personnel and Administration responsible for procurement at Commission headquarters take action to conduct a review of existing contracts to identify any hold-harmless clauses and take necessary actions to resolve any that may violate the Antideficiency Act. In their response to Congress, The Commission stated they will conduct a review of all contracts in early FY 2011. During our fiscal year 2010 audit, we found no other Antideficiency Act violations; however, we have not yet received evidence of a review.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to ensure that all imprest cash is counted at least annually in accordance with the Commission's Imprest Fund Handbook.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found that the Commission's Paris Office conducted some imprest cash counts during periodic regional visits to its 17 European cemeteries; however we found that imprest cash was not being counted at least annually as required by the Commission's statement of policy on imprest funds. Of the 18 imprest cash accounts in the region, the Paris Office had only counted cash for 3 of these accounts within 12 months of the previous count, with the most delinquent count taken about 9 months past its scheduled date. This condition existed because the Paris Office had not yet fully implemented all procedures in the policy, which was revised in January 2008. Because cash is vulnerable to theft or loss, adequate internal controls are needed to ensure that cash is properly safeguarded. We recommended that the Finance Officer at the Commission's Paris Office take action to ensure that all imprest cash is counted at least annually in accordance with the Commission's Imprest Fund Handbook. In its response to Congress, the Commission stated it would ensure that all imprest funds are counted at least annually in accordance with the Commission's Imprest Fund Handbook. During out fiscal year 2010 audit, we observed cash counts at the North Africa and Suresnes cemeteries. We also reviewed documentation provided by the Logistics Director listing the most recent cash counts at all the Paris Office cemeteries. All dates for cash counts fell within fiscal year 2010. As a result we close this recommendation as implemented.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to ensure that cash balances reported on the monthly FMS 1219, Statement of Accountability, reconcile to actual cash amounts on hand in accordance with the Treasury Financial Manual.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Open

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we reviewed the Commission-prepared FMS 1219, Statement of Accountability, for September 2009, and found that the "Advances to Agents" line in this monthly report to Treasury was understated by about $6,700. The FMS 1219 is used to report the accountability of funds held outside the U.S. Treasury each month. It is to include the beginning balance for the month, monthly receipts, monthly disbursements, and ending balance for the month. For the Commission, this consists of foreign currency in foreign bank accounts and on hand to pay local foreign vendors converted to U.S. dollars at a standard exchange rate. The "Advances to Agents" line of this report represents the amount of imprest cash advanced to fund custodians at the Paris Office and its 17 European cemeteries. The Treasury Financial Manual provides instructions for accurately reporting amounts on the FMS 1219 from the general ledger with support by underlying documentation. However, these instructions were not followed. Our analysis indicated that the underreported amount occurred because the Paris Office accounting personnel did not adjust the reported amount to Treasury for (1) changes in authorized amounts at several cemeteries because of the Commission's revised imprest fund procedure, and (2) foreign currency fluctuations at the year-end Treasury rate. We recommended that the Finance Officer at the Commission's Paris Office take action to ensure that cash balances reported on the monthly FMS 1219, Statement of Accountability, reconcile to actual cash amounts on hand in accordance with the Treasury Financial Manual. In its response to Congress, the Commission stated they have implemented this recommendation. During our fiscal year 2010 audit we found that the "Advances To Agents" line item on the September FMS 1219 Statement of Accountability remained underreported. The general ledger and cash counts for the imprest fund showed a balance of 32,980.79 as opposed to the 29,796.39 reported on the FMS 1219. In further discussion with the Chief Financial Officer (CFO), the CFO stated that the number could not be corrected until the Commission is able to get rid of the Tunisian dollar and would not be able to do so until Treasury waives petty cash and moves the Tunisian bank account to the Paris Office account.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to write off the pre-1996 receivable amount reported on the monthly FMS 1219, Statement of Accountability as uncollectible.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Open

    Comments: During out fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found that the imprest cash "Receivables and Deferred Voucher Charges" amount per the report had not changed in several years. According to Paris Office accounting personnel, this receivable of about $2,100 had been on the books since 1996. Because of its age and the lack of a record of who it is due from, it is doubtful that this small amount is collectible. If cash counts are not performed timely or the Department of the Treasury (Treasury) reports are not prepared correctly, there is an increased risk that potential fraud could go undetected. In addition, the validity of data presented in U.S. government financial reports published by Treasury depends on the accuracy of the monthly reports from each agency, including the Commission. We recommended that the Finance Officer at the Commission's Paris Office take action to write off the pre-1996 receivable amount reported on the monthly FMS 1219, Statement of Accountability as uncollectible. In its response to Congress, the Commission stated it is currently working with Treasury to implement this recommendation. During our fiscal year 2010 audit, we found that the Commission has yet to write off this amount as uncollectible.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to process authorized pay increases timely.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found two employees experienced delays in receiving an authorized pay increase. We found that while one employee's pay was adjusted in the following biweekly pay period, the other employee did not receive the pay increase for 8 pay periods. This long delay occurred because the former Human Resources Director had not promptly signed off on the pay authorization increase. We recommended that the Finance Officer at the Commission's Paris Office take action to process authorized pay increases timely. In its response to Congress, the Commission stated the Paris Office Human Resources Directorate would ensure that all pay increases are processed no later than one pay period after the change has been received from the approving authority. During our fiscal year 2010 audit, we found that pay increases were being processed timely. All of the sample items tested during our statistical payroll test were being paid the correct amount.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to complete the analysis of undelivered orders and make appropriate adjustments so the detail report of undelivered orders reconciles to and supports the general ledger balance.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Closed - Implemented

    Comments: During our audit of the American Battle Monuments Commission's (the Commission) fiscal year 2009 financial statements, we found that the amounts shown on a detail report of the Commission's undelivered orders, consisting of obligated but unpaid contracts and purchase orders continued to be out-of-balance with the Paris Office's general ledger by about $40,000. This condition has existed since the intial configuration of the accounting system placed into service on October 1, 2001. Because of this recurring difference, a systems accountant initiated a review of the Paris Office purchase order subsystem to identify entries, amounts, and categories causing the out-of-balance condition. While the analysis had not been completed, the findings included adjustments being recorded in the general ledger that were not supported by purchase orders, closed orders that were not closed int he ledger but should have been, and old adjustments prior to 2006 that are large nonreversing entries relating to entries for "erroneous" or "unknown" balances. Standards for Internal Control in the Federal Government state that all transactions need to be clearly documented and completely and accurately recorded. We recommended that the Finance Officer at the Commission's Paris Office take action to complete the analysis of undelivered orders and make appropriate adjustments so the detail report of undelivered orders reconciles to and supports the general ledger balance. In its response to Congress, the Commission stated that they were working to implement this recommendation. The analysis would be completed prior to year-end to ensure the detail report of undelivered orders reconciles to and supports the general ledger balance. During our fiscal year 2010 audit, we found, based upon our audit procedures performed, that ABMC Paris Office undelivered orders as of September 30, 2010, were properly valued in the correct period in accordance with U.S. GAAP, and consistently applied.

    Recommendation: The superintendent of the Commission's Manila American Cemetery should follow established accounting procedures to provide a signature and date in voucher packages when goods and services were received.

    Agency Affected: American Battle Monuments Commission: Manila American Cemetery

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 financial statement audit of the American Battle Monuments Commission (the Commission), we found a control deficiency regarding the lack of support for certain expenditures. Specifically, we found that two of our 12 tested expenditure transactions lacked evidence of receipt of goods or services and four transactions had signatures to indicate receipt of goods or services but no receipt dates. These issues occurred because the Manila Cemetery Superintendent, as the approving official, did not follow established Commission accounting procedures. Further, Standards for Internal Control in the Federal Government state that all transactions need to be clearly documented. Without appropriate evidence of receipt and acceptance of goods and services increases, the risk of improper payments increases. We recommended that the superintendent of the Commission's Manila American Cemetery follow established accounting procedures to provide a signature and date in voucher packages when goods and services were received. In its response to Congress, the Commission stated it implemented this recommendation. A certification is stamped to provide signature and date on all voucher packages as evidence that goods or services were received and proper for payment. During our fiscal year 2010 audit, we found the Superintendent of the Commission's Manila American Cemetery signed and dated when goods/services were received.

    Recommendation: The Director of Personnel and Administration responsible for procurement at Commission headquarters should take action to follow the guidance issued by the Office of Management and Budget to timely resolve and report the Antideficiency Act violation regarding the contract containing a hold-harmless clause to the Congress and the President of the United States, with a copy to the Comptroller General.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit, we identified an Antideficiency Act violation during our tests of the Commission's compliance with selected provisions of laws and regulations. Specifically, we determined that a Commission contract with a commercial employment services firm to provide temporary employees to the Commission violated the Antideficiency Act because it contained an open-ended hold-harmless clause that subjected the Commission to potentially unlimited liability. While the contractor terminated the contract before September 30, 2009, Commission officials agreed with our conclusion that the hold-harmless clause was an Antideficiency Act violation. However, because the Commission was not aware that a hold-harmless clause was a violation of the act, it had no written policies or procedures to prevent contracts from containing such clauses. Additionally, because our testing of contracts during the audit was limited, the Commission may have other contracts that contain hold-harmless clauses. In accordance with the act, once a violation is identified, the Commission is to take various steps to resolve the violation, depending on its nature, including contract modification, deobligation, or adjustment of budget authority. An executive agency that violates the act must provide a report of the violation with relevant facts, circumstances, and actions taken by the entity, to the Congress and the President of the United States, with a copy to the Comptroller General, following the guidance issued by the Office of Management and Budget (OMB). We recommended that the Director of Personnel and Administration responsible for procurement at Commission headquarters take action to follow the guidance issued by the OMB to timely resolve and report the Antideficiency Act violation regarding the contract containing a hold-harmless clause to the Congress and the President of the United States, with a copy to the Comptroller General. In their response to Congress, the Commission stated they reported the Antideficiency Act violation regarding the contract containing a hold-harmless clause to the Congress and the President of the United States, with a copy to the Comptroller General, in accordance with OMB's guidance. During our fiscal year 2010 audit, we found the Secretary sent a letter detailing the prior year's Antideficiency Act violation to Congress and the President, with a copy sent to the Comptroller General, on April 16, 2010. The letter contained the relevant facts, circumstances, and actions (cancellation of the contract, departure of those involved, and plan for action) taken by the Commission regarding the violation.

    Recommendation: The Director of Personnel and Administration responsible for procurement at Commission headquarters should take action to modify written contracting policy and procedures to identify and evaluate hold-harmless clauses in all future contracts for compliance with the Antideficiency Act.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Open

    Comments: During our fiscal year 2009 audit, we identified an Antideficiency Act violation during our tests of the Commission's compliance with selected provisions of laws and regulations. Specifically, we determined that a Commission contract with a commercial employment services firm to provide temporary employees to the Commission violated the Antideficiency Act because it contained an open-ended hold-harmless clause that subjected the Commission to potentially unlimited liability. While the contractor terminated the contract before September 30, 2009, Commission officials agreed with our conclusion that the hold-harmless clause was an Antideficiency Act violation. However, because the Commission was not aware that a hold-harmless clause was a violation of the act, it had no written policies or procedures to prevent contracts from containing such clauses. Additionally, because our testing of ocntracts during the audit was limited, the Commission may have other contracts that contain hold-harmless clauses. In accordance with the act, once a violation is identified, the Commission is to take various steps to resolve the violation, depending on its nature, including contract modification, deobligation, or adjustment of budget authority. An executive agency that violates the act must provide a report of the violation with relevant facts, circumstances, and actions taken by the entity, to the Congress and the President of the United States, with a copy to the Comptroller General, following the guidance issued by the Office of Management and Budget (OMB). We recommended that the Director of Personnel and Administration responsible for procurement at Commission headquarters take action to modify written contracting policy and procedures to identify and evaluate hold-harmless clauses in all future contracts for compliance with the Antideficiency Act. In its response to Congress, the Commission stated that it would plan to modify ABMC policy regarding hold-harmless clauses and the Antideficiency Act. During our fiscal year 2010 audit, we found no hold-harmless clauses in contracts; however, we have not yet received evidence of modified procedures.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to routinely monitor annual and sick leave balances, particularly for negative balances.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Closed - Implemented

    Comments: During our our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found one French foreign service national (FSN) employee accrued a negative 231.5 hours of sick leave as a result of maternity leave. The Paris Office sick leave procedures provide that once an employee has exhausted sick leave hours, any additional time off is to be leave without pay. Both the Paris Finance Officer and the Human Resources Officer agreed that the accrual of this large amount of negative leave would not have happened if proper monitoring had occurred. We recommended that the Finance Officer at the Commission's Paris Office take action to routinely monitor annual and sick leave balances, particularly for negative balances. In its response to Congress, the Commission stated that the Paris Office would instruct the Information Technology (IT) Directorate to generate an annual/sick leave balance report for all FSNs for review by Human Resources each pay period. In our fiscal year 2010 audit, we found that the Paris IT Directorate generated an annual leave/sick leave balance report for easy monitoring. This allowed the Finance office to easily identify if an employee has reached a negative leave balance and make corrections. Also, during our statistical sample testing of payroll we found no instances of a negative leave balance.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to timely review the Aged Vendor Liability Reports for proper fund classification and reconcile balances with the general ledger monthly.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 financial statement audit of the American Battle Monuments Commission (the Commission), we found that the general fund and trust fund accounts payable were commingled on the Commission's Aged Vendor Liability Report as of September 30, 2009. As a result, general fund accounts payable were overstated by about $5,000 and trust fund accounts payable were understated by the same amount. This occurred because two trust fund vouchers were miscoded by the Finance Directorate, which created incorrect postings to the general ledger accounts. The miscoding of the small amount from this one transaction was initially overlooked during supervisory review. Federal accounting and the U.S. Standard General Ledger provide that budgetary and proprietary accounts must balance. The Finance Directorate identified the imbalance during year-end closing; however, the amount was too small to adjust the year-end closing totals. While in consolidation the total accounts payable reported were correct, both general fund and trust fund accounts payable were incorrect by an immaterial amount. We recommended that the Finance Officer at the Commission's Paris Office take action to timely review the Aged Vendor Liability Reports for proper fund classification and reconcile balances with the general ledger monthly. In its response to the Congress, the Commission stated due to the coding limitations of the current accounting system, the Aged Vendor Liability Report contains information for multiple funds. Amounts will be reconciled to the general ledger at year end and monthly, thereafter. The Commission is currently working on implementing a new financial management system which will include an Aged Vendor Liability Report that ensures proper fund classification. During our fiscal year 2010 audit, we found that accounts payable materially reflected the amounts owed for goods and services purchased. The aged vendor liability detailed support agreed with the accounts payable lead schedule and, with other accruals, and tied to the general ledger. We did not identify any material amounts paid after September 30, 2010 for which goods/services were applicable to fiscal year 2010.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to ensure that invoices, undelivered orders, and payroll accounts are reviewed to identify any goods and services received and liabilities incurred before September 30 so amounts are properly accrued in accordance with closing instructions at year-end.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 financial statement audit of the American Battle Monuments Commission (the Commission), we found seven vouchers totaling over $427,000 for which goods and services had been received before September 30, 2009, but were not recorded by the Finance Directorate as liabilities until the next fiscal year. This was contrary to year-end closing instructions issued by Commission headquarters, which emphasized proper cutoff at fiscal year-end. We recommended that the Finance Officer at the Commissions Paris Office take action to ensure that invoices, undelivered orders, and payroll accounts are reviewed to identify any goods and services received and liabilities incurred before September 30 so amounts are properly accrued in accordance with closing instructions at year-end. In its response to Congress, the Commission stated they have implemented this recommendation. Training was held in June 2010 on accrual accounting. In our fiscal year 2010 audit, we verified this as an accurate statement. Based on our cut-off audit procedures and results in the search for unrecorded liabilities, the recorded amounts for the Paris Office accounts payable as of September 30, 2010, are materially correct and in conformity with U.S. GAAP.

    Recommendation: The Director of Personnel and Administration at Commission headquarters should follow established policies and procedures in taking action to verify that contracts are completed and signed before funds are obligated.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Open

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements. we found several areas in the Commission's procurement process that did not follow required procedures. While we did not perform a detailed review of the Commission's contracting policies and procedures, we reviewed selected contracts and purchase orders associated with samples selected for expenditure testing. Three out of nine active contracts had dates that indicated funds were obligated before the contract was signed. While a budget check was made to be sure funds were available, 31 U.S.C. 1501 requires that contracts be completed and signed before funds are obligated. Some contract-related transactions, such as contract modifications, were dated after the original contract had expired, which could lead to the obligation of funds from an incorrect fiscal year. We recommended that the Director of Personnel and Administration at Commission headquarters follow established policies and procedures in taking action to verify that contracts are completed and signed before funds are obligated. In its response to Congress, the Commission stated it will ensure that contracts are completed prior to funds being obligated. During our fiscal year 2010 audit, we found errors in relation to the Commission's contracts. We found 3 sample items out of 20 items tested which were obligated before there was a signed contract. We believe improvements are needed in the oversight of contracts.

    Recommendation: The Director of Personnel and Administration at Commission headquarters should follow established policies and procedures in taking action to coordinate procurement activity with finance personnel to ensure accurate and compliant obligation of funding of procurements, including proper application of multiyear contract terms.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Open

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found several areas in the Commission's procurement process that did not follow required procedures. While we did not perform a detailed review of the Commission's contracting policies and procedures, we reviewed selected contracts and purchase orders associated with samples selected for expenditure testing. One contractual obligation was recorded at an insufficient amount to cover projected expenditures. Some contract modifications contained mathematical errors that could cause expenditures to exceed recorded obligations, which presents the risk of an Antideficiency Act violation. One multiyear contract was funded on an annual basis, but no documentation existed to support the legal authority for this arrangement, which could reflect an Antideficiency Act violation. We recommended that the Director of Personnel and Administration at Commission headquarters follow established policies and procedures in taking action to coordinate procurement activity with finance personnel to ensure accurate and compliant obligation of funding of procurements, including proper application of multiyear contract terms. In its response to Congress, the Commission stated acquisition personnel will ensure coordination with finance personnel to be certain that accurate and compliant obligation of funding of procurements, including proper application of multiyear contract terms. During our fiscal 2010 audit, we found errors in relation to the Commission's contracts. We found that some contracts were originated in prior years and had no payments made in fiscal year 2010, however they were closed out in fiscal year 2010. Payment support was only provided for vouchers paid in fiscal year 2010. We asked the Chief Financial Officer (CFO) for a revised 4801 report with dates showing prior fiscal year payments. We verified that the missing payments were made in a prior year. The CFO stated that she didn't believe they should have to provide support for prior year payments as they have already been audited. We agreed to accept that new report as sufficient evidence that payments occurred in prior year. However, overall we believe improvements are needed in the oversight of contracts.

    Recommendation: The Director of Personnel and Administration at Commission headquarters should follow established policies and procedures in taking action to document compliance with requirements for Central Contractor Registration and competition or authorized exceptions.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found several areas in the Commission's procurement process that did not follow required procedures. While we did not perform a detailed review of the Commission's contracting policies and procedures, we reviewed selected contracts and purchase orders associated with samples selected for expenditure testing. Some contractors were not registered with the Central Contractor Registration (CCR), as required by Federal Acquisition Regulation (FAR). Some contract files did not contain evidence of competition, which may violate the Competition in Contracting Act of 1984 [Pub. L. No. 98-369, 98 Stat. 494, 1175 (July 18, 1984)], and the FAR if certain conditions are not met. If required procedures are not followed the control environment may be weakened. To address this issue, we recommended that the Director of Personnel and Administration at Commission headquarters follow established policies and procedures in taking action to document compliance with requirements for Central Contractor Registration and competition or authorized exceptions. In response to our recommendation, the Commission took steps to address this issue. During our fiscal year 2010 audit, we found that the Commission complied with the CCR by ensuring all of their commercial contractors were registered in CCR. As a result of its actions, the Commission strengthened its control environment.

    Recommendation: The Director of Personnel and Administration at Commission headquarters should follow established policies and procedures in taking action to provide training to personnel assigned to perform procurement activities.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Closed - Implemented

    Comments: During our audit of the American Battle Monuments Commission's (The Commission) fiscal year 2009 financial statements, we found several areas in the Commission's procurement process that did not follow required procedures. While we did not perform a detailed review of the Commission's contracting policies and procedures, we reviewed selected contracts and purchase orders associated with samples selected for expenditure testing. To address this issue, we recommended that the Director of Personnel and Administration at Commission headquarters follow established policies and procedures in taking action to provide training to personnel assigned to perform procurement activities. In response to our recommendation, the Commission took steps to address this issue. Specifically, during our fiscal year 2010 audit, we found the Commission developed a training plan titled "Simplified Acquisition Procedures." The course description was "Simplified Acquisition Procedures is ideal for purchasing agents, contract specialists, or contracting officers who require an understanding of the simplified methods of procurement, as detailed in the Federal Acquisition Regulation (FAR) Part 13 and other related parts. It also provides a knowledge base that may support an increase of single purchases based on criteria established by individual government agencies." The training plan was designed for personnel assigned to procurement activities and several Commission personnel attended the first class listed on the training plan during the week of August 16, 2010.

    Recommendation: The Director of Finance at Commission headquarters should take action to implement a specific data repair to the accounting system to correct the underreporting of fiscal year 2009 trust fund receipts.

    Agency Affected: American Battle Monuments Commission: Finance and Accounting Director

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found that some of the trust fund receipts from third parties for private memorial repair and maintenance entered by the Commission in its accounting system were not reported in the trial balance generated by the system. We found that the Commission's detailed listings of trust fund receipts by program code included about $7,400 in collections that were not reported on its trial balance in the trust fund receipts account. As a result, trust fund receipts and cash balances were underreported by about $7,400. The Commission's Chief Accountant told us that the $7,400 difference was caused bu a long-standing problem in the accounting system. Transactions entered into detail accounts do not always post into the general ledger because the system occasionally does not recognize the posting code to process the transaction. We recommended that the Director of Finance at Commission headquarters take action to implement a specific data repair to the accounting system to correct the underreporting of fiscal year 2009 trust fund receipts. In its response to Congress, the Commission stated this recommendaiton had been implemented. Trust fund receipts are now correctly recorded in the accounting system. During our fiscal year 2010 audit, we found that all trust fund receipts and interest revenue agreed to the detailed GWA Account Statements and were properly reported in the consolidated trial balance.

    Recommendation: The Director of Finance at Commission headquarters should take action to enforce existing reconciliation procedures to ensure the complete and accurate recording and reporting of trust fund receipts in the accounting system.

    Agency Affected: American Battle Monuments Commission: Finance and Accounting Director

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we found that some of the trust fund receipts from third parties for private memorial repair and maintenance entered by the Commission in its accounting system were not reported in the trial balance generated by the system. We found that the Commission's detailed listings of trust fund receipts by program code included about $7,400 in collections that were not reported on its trial balance in its trust fund receipts account. As a result, trust fund receipts and cash balances were underreported by about $7,400. While this amount was not material to the financial statements, it raises concerns about the completeness and accuracy of reporting from the accounting system. Additionally, because trust funds come from the public and originate outside the budgetary control process, they are more susceptible to theft or loss if not properly controlled. We recommend that the Director of Finance at Commission headquarters take action to enforce existing reconciliation procedures to ensure the complete and accurate recording and reporting of trust fund receipts in the accounting system. In its response to Congress, the Commission stated they will enforce existing reconciliation procedures to ensure the complete and accurate recording and reporting of trust fund receipts in the accounting system. During our fiscal year 2010 audit, we found that all trust fund receipts and interest revenue agreed to the detailed GWA Account Statements and were properly reported in the consolidated trial balance.

    Recommendation: The Director of Human Resources at Commission headquarters should take action to issue written Commission policy and procedures regarding its accounting method for calculating full time equivalent employment.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commission) financial statements, we identified deficiencies with the Commission's methodology for accounting and reporting of full time equivalent (FTE) employees. The Commission last reported FTEs to the Office of Personnel Management (OPM) using a position method of accounting in its June 30, 2009, SF 113-A. This method uses the number of full- and part-time positions to calculate FTEs. Beginning July 1, 2009, the Commission changed its method of calculating FTEs to an hourly method whereby the actual number of hours worked was accumulated and divided by 2,087 to calculate an FTE. The Commission adopted this new method because the standard workweek for the Commission's Foreign Service National (FSN) employees varies depending upon host country agreements. For example, French FSN employees work a standard 35-hour week, Belgian FSN employees work a standard 38-hour week, and Tunisian FSN employees work a standard 44-hour week. However, the Commission had not established a written policy for its new accounting method of calculating FTEs. Standards for Internal Control in the Federal Government provide that administrative policies should be clearly documented, properly managed, and maintained. We recommended that the Director of Human Resources at Commission headquarters take action to issue written Commission policy and procedures regarding its accounting method for calculating full time equivalent employment. In its response to Congress, the Commission stated that OPM has issued guidelines for calculating full time equivalent employment in its SF-113 Summary Data Operations Manual. The Commission believes that the detailed guidance issued by OPM is adequate and does not warrant additional policy or procedures to be issued at this time. During out fiscal year 2010 audit, we reviewed OPM's guidelines and concur with the Commission's response to use OPM's guidance instead of drafting their own.

    Recommendation: The Director of Human Resources at Commission headquarters should take action to prepare and document calculations of full time equivalent employment to support the monthly SF 113-A, Report of Federal Civilian Employment.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Open

    Comments: During our audit of the American Battle Monuments Commission's (the Commission) fiscal year 2009 financial statements, we identified deficiencies with the Commission's methodology for accounting and reporting of Full-time Equivalent (FTEs). The Office of Personnel Management (OPM) relies on information collected monthly to provide a timely count of governmentwide employment, payroll, and turnover data. To gather this information, OPM requires federal agencies to submit monthly reports that areaccurately calculated . The Commission provided no evidence of supporting FTE calculations to document that it had not exceeded its FTE authorization. OPM cannot provide accurate data if it does not receive accurate, timely reports from all applicable agencies, including the Commission. To address this issue, we recommended that the Director of Human Resources at Commission headquarters take action to prepare and document calculations of full time equivalent employment to support the monthly reports of Federal Civilian Employment. In response to our recommendation, the Commission took steps to address this issue. The Commission prepared quarterly reports calculating full time equivalent employment based on hours. However, calculation support was not provided and as a result this recommendation will remain open.

    Recommendation: The Directors of Human Resources and Finance at Commission headquarters should coordinate action to document quantities and valuation of voluntary services to support journal entries into the general ledger.

    Agency Affected: American Battle Monuments Commission

    Status: Closed - Implemented

    Comments: During our audit of the American Battle Monuments Commission's (the Commission) fiscal year 2009 financial statements, we found that the Commission was not following its own guidelines for accepting, documenting, and accounting for donated services from an individual during fiscal year 2009. Specifically, we found that the Commission did not assess and document that the voluntary services were not from a prohibited source. Because the Commission did not follow its own guidelines, it did not recognize $57,600 in donated revenue and related service expenditures in its fiscal year 2009 financial statements. To address this issue, we recommended that the Directors of Human Resources and Finance at Commission headquarters coordinate action to document quantities and valuation of voluntary services to support journal entries into the general ledger. In response to our recommendation, the Commission took steps to address this issue. During our fiscal year 2010 audit, we found quantities and valuation of voluntary services are being documented to support journal entries into the general ledger. Specifically, we obtained a print-out from the Commission's financial management system that showed the accepted voluntary services hours and rates used for valuation. This tied to support journal entries. As a result of its actions, we close this recommendation as implemented.

    Recommendation: The Director of Personnel and Administration at Commission headquarters should follow established policies and procedures in taking action to conduct a review of contracts and purchase orders outstanding for completeness, accuracy, and proper dates.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Open

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission's (the Commision) financial statements, we found several areas in the Commission's procurement process that did not follow required procedures. While we did not perform a detailed review of the Commission's contracting policies and procedures, we reviewed selected contracts and purchase orders associated iwth samples selected for expenditure testing. Some contract files were missing or incomplete, thus providing inadequate tdocumentaiton to support expenditures. We recommended that the Director of Personnel and Administration at Commission headquarters follow established policies and procedures in taking action to conduct a review of contracts and purchase orders outstanding for completeness, acuracy, and proper dates. In its response to the Congress, the Commission stated that it completed this review in fiscal year 2009 and made corrections as to how the Commisison issues contracts and purchase orders. The Commission hired a consultant, a retired Federal Government Contracting Officer, to assist with contracting activities and to help draft and implement Commission policies and procedures. During our fiscal year 2010 audit, we found errors in relation to the Commission's contracts. We found that the Commisison's Headquarters Active Contract List for contracts over $100,000 was not up to date. W round that some contracts were originated in prior years and had no payments made in fiscal year 2010; however, they were closed out in fiscal year 2010. We found 3 sample items our of 20 items tested that were obligated before there was a signed contract. We believe improvements are needed in the oversight of contracts.

    Recommendation: The Director of Finance at Commission headquarters should take action to determine who will conduct future annual internal control risk assessments and evaluations and document the planned roles and responsibilities of Commission personnel and any contractors to execute the strategy for monitoring internal controls.

    Agency Affected: American Battle Monuments Commission: Finance and Accounting Director

    Status: Open

    Comments: During our fiscal year 2009 audit of the American Battle Monuments Commission (the Commission), we found no definitive plan was established to continue internal control assessments after fiscal year 2009. The contractor's work for fiscal year 2009 outlined the internal control areas to be reviewed, developed a detail task plan to evaluate and test processes, conducted walk-throughs, and developed cycle memos and flowcharts. However, it did not provide for the roles and responsibilities of Commission personnel and contractors for future annual assessments, nor did the Commission have such a plan. We recommended that the Director of Finance at Commission headquarters take action to determine who will conduct future annual internal control risk assessments and evaluations and document the planned roles and responsibilities of Commission personnel and any contractors to execute the strategy for monitoring internal controls. In its response to Congress, the Commission stated it is reviewing all internal control procedures and guidance as a component of the implementation of a new financial management system. The Commission will complete the review and issue new guidance in fiscal year 2011. During our fiscal year 2010 audit, we found that the Commission is still in the process of completing this review and issuing guidance. The Commission is scheduled to switch over to a new financial management system in July 2011. This new system will change many of the internal controls, therefore the Commission is waiting until this transition is complete before issuing guidance.

    Recommendation: The Director of Finance at Commission headquarters should take action to finalize the strategy for monitoring internal controls for compliance with FMFIA to include documentation of results and an audit trail in accordance with OMB Circular No. A-123, Management's Responsibility for Internal Control.

    Agency Affected: American Battle Monuments Commission: Finance and Accounting Director

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit, we found The Commission had not finalized the documentation of its monitoring of internal controls for fiscal year 2009, which continued for over 4 months after fiscal year-end. While the Commission relied upon a contractor to perform risk assessments and internal control reviews, Commission management remains responsible for monitoring and documenting the contractor's efforts and its overall FMFIA compliance. OMB Circular No. A-123 states that management should have a clear, organized monitoring strategy with well-defined documentation processes that contain an audit trail and verifiable results. We recommended that the Director of Finance at Commission headquarters take action to finalize the strategy for monitoring internal controls for compliance with FMFIA to include documentation of results and an audit trail in accordance with OMB Circular No. A-123, Management's Responsibility for Internal Control. In its response to Congress, The Commission stated it is reviewing all internal control procedures and guidance as a component of the implementation of a new financial management system. The Commission will complete the review and issue new guidance in fiscal year 2011. In January 2011, the Commission completed its internal control review and wrote a guidance memo. Although the Commission is not required to follow OMB A-123, this tool provides an effective benchmark for how an internal control assessment should be conducted. The Commission's memo describes the approach to testing high risk areas and identifying areas to be tested in fiscal year 2010.

    Recommendation: The Finance Officer at the Commission's European Regional Office should take action to coordinate with the Engineering Directorate a review of engineering contracts with unpaid balances to identify projects for which work has been performed and liabilities incurred before September 30 so that amounts are properly accrued in accordance with closing instructions at year-end.

    Agency Affected: American Battle Monuments Commission: European Regional Office

    Status: Open

    Comments: During our audit of the American Battle Monuments Commission's (the Commission) fiscal year 2009 financial statements, we found Engineering projects pose a significant challenge as they generally involve large sums, are done by outside contractors, require an estimate of the amount of work completed but not billed, and are frequently billed late. As a result, project engineers in the Engineering Directorate are tasked with reviewing projects to estimate the amount of work performed but not yet billed and providing the results to the Finance Directorate to accrue engineering project liabilities at year-end. However, we found that this task was not always well-coordinated, resulting in some liabilities not being appropriately accrued at fiscal year-end. To address this issue, we recommended that the Finance Officer at the Commission's Paris Office take action to coordinate with the Engineering Directorate a review of engineering contracts with unpaid balances to identify projects for which work has been performed and liabilities incurred before September 30 so that amounts are properly accrued in accordance with closing instructions at year-end. In response to our recommendation, the Commission took action to address this issue. During our fiscal year 2010 audit, we found informal training was held in June 2010 with the Engineering Directorate on reviewing engineering contracts to prepare proper accruals in accordance with closing instructions at year-end. However, we found errors while reviewing fiscal year 2010 engineering progects.

    Recommendation: The Director of the Commission's Mediterranean Regional Office should take action to revise the existing holiday leave policy to clearly provide that employees can charge no more than 8 hours for a holiday, regardless of their work schedules.

    Agency Affected: American Battle Monuments Commission: Mediterranean Regional Office

    Status: Open

    Comments: During our fiscal year 2009 financial statement audit of the American Battle Monuments Commission (the Commission), we found one FSN employee who worked a 9-hour flexible work schedule charged and was paid for 9 hours of holiday pay. According to the Office of Personnel Management (OPM), full-time employees who have flexible work schedules are allowed only 8 hours of holiday pay even if they would otherwise work more hours on that day. This error was not identified and corrected through supervisor approval and subsequent reviews because of a lack of awareness of the OPM requirement. The Commission's existing policy on public holiday leave states that the employee will be paid at the rate for the hours in the employee's basic workweek. However, this policy was not clear that employees on flexible work schedules are allowed only 8 hours of holiday pay. We recommend that the Director of the Commission's Rome Office take action to revise the existing holiday leave policy to clearly provide that employees can charge no more than 8 hours for a holiday, regardless of their work schedules. In its response to Congress, the Commision stated that it respectfully disagrees with the "...regardless of their work schedules" part of this recommendation. The 8-hour maximum for holiday pay applies only to employees working a regular or Flexible Work Schedule (FWS). Per 5 CFR 610.406 employees working a Compressed Work Schedule (CWS) are permitted to claim the total number of hours of the compressed work scheduled on that day, even when that exceeds 8 hours. However, the regular/FWS restriction only applies to employees who are subject to Civil Service regulation, i.e., ABMC U.S. citizens employed under Title 5. For these employees adequate protections already exist within the GSA payroll system to automatically prevent payment of more than 8 hours holiday pay for a single day. FSN non-citizen employees are employed under 5 CFR 8.3 and as such are not subject to the Civil Service Act, to include 5 CFR 610.405 and 406. The Local Compensation Plan (LCP) issued by the local U.S. Embassy is the guiding document for determining compensation for these employees, and an 8 hour holiday limitation is not present in any of the LCP's of any countries where ABMC operates. No action is required by the Commission at this time. During our fiscal year 2010 audit, we found that the Commission was accurate in their stated response.

    Recommendation: The Director of the Commission's Mediterranean Regional Office should take action to notify employees of the policy clarification prohibiting charging more than 8 hours for a holiday, regardless of their work schedules.

    Agency Affected: American Battle Monuments Commission: Mediterranean Regional Office

    Status: Open

    Comments: During our fiscal year 2009 financial statement audit of the American Battle Monuments Commission (the Commission), we found one foreign service national (FSN) employee who worked a 9-hour flexible work schedule charged and was paid for 9 hours of holiday pay. According to the Office of Personnel Management (OPM), full-time employees who have flexible work schedules are allowed only 8 hours of holiday pay even if they would otherwise work more hours on that day. This error was not identified and corrected through supervisor approval and subsequent reviews because of a lack of awareness of the OPM requirement. The Commission's existing policy on public holiday leave states that the employee will be paid at the rate for the hours in the employee's basic workweek. However, this policy was not clear that employees on flexible work schedules are allowed only 8 hours of holiday pay. We recommended that the Director of the Commission's Rome Office take action to notify employees of the policy clarification prohibiting charging more than 8 hours for a holiday, regardless of their work schedules. In its response to Congress, the Commission stated that it respectfully disagrees with the "...regardless of their work schedules" part of this recommendation. The 8-hour maximum for holiday pay applies only to employees working a regular or Flexible Work Schedule (FWS). Per 5 CFR 610.406 employees working a Compressed Work Schedule (CWS) are permitted to claim the total number of hours of the compressed work scheduled on that day, even when that exceeds 8 hours. However, the regular/FWS restriction only applies to employees who are subject to Civil Service regulation, i.e., ABMC U.S. citizens employed under Title 5. For these employees adequate protections already exist within the GSA payroll system to automatically prevent payment of more than 8 hours holiday pay for a single day. FSN non-citizen employees are employed under 5 CFR 8.3 and as such are not subject to the Civil Service Act, to include 5 CFR 610.405 and 406. The Local Compensation Plan (LCP) issued by the local U.S. Embassy is the guiding document for determining compensation for these employees, and an 8 hour holiday limitation is not present in any of the LCP's of any countries where ABMC operates. No action is required by the Commission at this time. During our fiscal year 2010 audit, we found that the Commission was accurate in their stated response.

    Recommendation: The Director of the Commission's Mediterranean Regional Office should take action to notify supervisors and other payroll reviewers to check that holiday hours charged by employees are correct before processing payroll.

    Agency Affected: American Battle Monuments Commission: Mediterranean Regional Office

    Status: Open

    Comments: During our fiscal year 2009 financial statement audit of the American Battle Monuments Commission (the Commission), we found one foreign service national (FSN) employee who worked a 9-hour flexible work schedule charged and was paid for 9 hours of holiday pay. According to the Office of Personnel Management (OPM), full-time employees who have flexible work schedules are allowed only 8 hours of holiday pay even if they would otherwise work more hours on that day. This error was not identified and corrected through supervisor approval and subsequent reviews because of a lack of awareness of the OPM requirement. The Commission's existing policy on public holiday leave states that the employee will be paid at the rate for the hours in the employee's basic workweek. However, this policy was not clear that employees on flexible work schedules are allowed only 8 hours of holiday pay. We recommend that the Director of the Commission's Rome Office take action to notify supervisors and other payroll reviewers to check that holiday hours charged by employees are correct before processing payroll. In its response to Congress, the Commission stated that it respectfully disagrees with the "...regardless of their work schedules" part of this recommendation. The 8-hour maximum for holiday pay applies only to employees working a regular or Flexible Work Schedule (FWS). Per 5 CFR 610.406 employees working a Compressed Work Schedule (CWS) are permitted to claim the total number of hours of the compressed work scheduled on that day, even when that exceeds 8 hours. However, the regular/FWS restriction only applies to employees who are subject to Civil Service regulation, i.e., ABMC U.S. citizens employed under Title 5. For these employees adequate protections already exist within the GSA payroll system to automatically prevent payment of more than 8 hours holiday pay for a single day. FSN non-citizen employees are employed under 5 CFR 8.3 and as such are not subject to the Civil Service Act, to include 5 CFR 610.405 and 406. The Local Compensation Plan (LCP) issued by the local U.S. Embassy is the guiding document for determining compensation for these employees, and an 8 hour holiday limitation is not present in any of the LCP's of any countries where ABMC operates. No action is required by the Commission at this time. During our fiscal year 2010 audit, we found that the Commission was accurate in their stated response.

    Recommendation: The Director of the Commission's Mediterranean Regional Office should take action to ensure that employee payroll data, including SF-50s, are kept current in official personnel files.

    Agency Affected: American Battle Monuments Commission: Mediterranean Regional Office

    Status: Open

    Comments: During our fiscal year 2009 financial statement audit of the American Battle Monuments Commission (the Commission), we found one foreign service national (FSN) employee's official personnel file did not contain a current SF-50, Notification of Personnel Action. This form is used to document official personnel actions, such as pay increases and promotions, and a copy is to be placed in each employee's official personnel file. The pay rate on the SF-50 provided to us, dated February 5, 2006, did not agree with the pay rate for the sample pay period for which the employee was paid. The Rome Office later provided us with additional documentation to show that the employee's pay was correct based upon an authorized pay increase on March 4, 2007. Because the SF-50 is also used to make future employment, pay, and qualification decisions, incomplete files could affect these decisions. We recommended that the Director of the Commission's Rome Office take action to ensure that employee payroll data, including SF-50s, are kept current in official personnel files. In its response to Congress, the Commission stated the Paris Office would instruct Human Resources staff to ensure that all SF-50s and ABM-87s (the ABMC SF-50 equivalent for FSN employees) are filed immediately following transmission to their respective payroll offices. During our fiscal year 2010 audit we found that all personnel files were not up-to-date. While completing statistical detailed testing on Rome Office payroll one of our sample item's SF 50 was not up-to-date. An across the board increase was not reflected in their SF 50. However, other documentation was provided which we deemed sufficient to reflect the pay increase. It is Commission policy to keep all personnel files up-to-date. As a result, not reflecting an across the board pay increase in an employee's personnel file is a violation of its own policy.

    Recommendation: The superintendent of the Commission's Manila American Cemetery should follow established accounting procedures to ensure that voucher packages include vendor identification numbers.

    Agency Affected: American Battle Monuments Commission: Manila American Cemetery

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 financial statement audit of the American Battle Monuments Commission (the Commission), we found four of 12 tested payment transactions did not have an indication of the vendor identification number on the supporting documentation. A vendor identification number provides evidence to support that a valid vendor provides goods and services. We recommended that the superintendent of the Commission's Manila American Cemetery follow established accounting procedures to ensure that voucher packages include vendor identification numbers. In its response to Congress, the Commission stated it would ensure that voucher packages include vendor identification numbers. During our fiscal year 2010 audit, we found the Superintendent of the Commission's Manila American Cemetery added a "Payment info" note on purchase orders and invoices, listing voucher number, document number, vendor ID, and Momentum vendor code, to ensure that vendor identification numbers are contained in voucher packages.

    Recommendation: The Secretary of the Commission should take action to obtain written delegation of authority and assignment of responsibilities to the Secretary or other designated officials when Commissioners are appointed.

    Agency Affected: American Battle Monuments Commission

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit, we found a significant deficiency in the Commission's governance structure. While all Commissioner positions were vacant through the last 8 months of fiscal year 2009, there was no evidence that the Commissioners delegated their governance authority and responsibilities to other Commission officials before their resignations. The Commissioners are charged with the execution of the Commission's mission, but may delegate any of its authorities to the Commission Chairman, the Secretary, or other Commission officials. Consistent with U.S. generally accepted government auditing standards, the Commissioners, the Secretary, and other designated officials collectively function as the Commission's governance structure. On or about January 20, 2009, all 11 Commissioners and the Secretary resigned. Although the President of the United States appointed a new Commission Secretary on June 3, 2009, no Commissioner appointments were made through February 17, 2010, our fiscal year 2009 audit completion date. Therefore, Commissioners were not available to provide high-level strategic oversight of Commission internal control over operations and financial reporting for over a year. While Commissioner appointments are dependent upon Presidential actions, written delegation of authority and assignment of responsibilities to the Secretary or other designated officials should have been made. However, the Commission did not formally delegate authority and responsibility before the Commissioners resigned. We recommended that the Secretary of the Commission take action to obtain written delegation of authority and assignment of responsibilities to the Secretary or other designated officials when Commissioners are appointed. In their response to Congress, The Commission stated they agree with this recommendation. The Commission understands the necessity of the delegation of authority from the Commissioners and are working to implement in early fiscal year 2011. During our fiscal year 2010 audit, we found that the Secretary of the Commission obtained written delegation of authority and assignment of responsibilities to the Secretary or other designated officials once the Commissioners were appointed. During the 147th Commissioners meeting of the American Battle Monuments Commission held October 27, 2010 Bill Aileo spoke regarding Governance in the absence of a Commissioner. Commissioner Merrill McPeak made a motion to delegate authority to the Secretary in the absence ofthe Commission. Commissioner Constance Morella seconded the motion. Motion was approved by all Commissioners present.

    Recommendation: The Director of Finance at Commission headquarters should take action to finalize management review and issue the Internal Control Handbook or equivalent for use by Commission personnel.

    Agency Affected: American Battle Monuments Commission: Finance and Accounting Director

    Status: Open

    Comments: During our fiscal year 2009 audit, we found that results of reviews monitoring the Commission's effectiveness of internal controls over financial reporting were completed, but were not fully validated by Commission management. In June 2009, the Commission contracted with a firm to provide a baseline internal control and risk assessment to determine if the Commission's internal mechanisms and business processes were designed and functioning in accordance with federal guidelines and best practices. The contractor prepared a draft of an Internal Control Handbook for the Commission dated August 18, 2009, which had not been finalized and issued. This handbook documented walkthroughs as part of the assessment of internal control that provided support for management assertions in the Commission's report on internal control over financial reporting. However, 6 months later we were not provided with evidence that the handbook had been finalized and issued. The Commission's Chief Accountant stated that the handbook was still under management review as part of a Commissionwide review of policies and procedures. We recommended that the Director of Finance at Commission headquarters take action to finalize management review and issue the Internal Control Handbook or equivalent for use by Commission personnel. In their response to Congress, the Commission stated they are reviewing all internal control procedures and guidance as a component of the implementation of a new financial management system. The agency will complete the review and issue new guidance in fiscal year 2011. During our fiscal year 2010 audit, we were informed by the Chief Financial Officer that Internal Control Handbook drafted by Kearney & Associates will not be finalized. The Commission is using the work completed by the contractor as their starting benchmark and will develop their own internal control guidelines. This will not be completed until the new financial management system is operating. This is scheduled to occur in July 2011.

    Recommendation: The Director of Finance at Commission headquarters should take action to complete validation of the evidence, conclusions, and recommendations of the contractor's internal control risk assessment of the Commission for fiscal year 2009.

    Agency Affected: American Battle Monuments Commission: Finance and Accounting Director

    Status: Closed - Implemented

    Comments: During our fiscal year 2009 audit, the American Battle Monuments Commission (the Commission) provided summarized evidence of a contractor-prepared report on an internal control risk assessment of hte Commission for fiscal year 2009 dated October 27, 2009. The contractor concluded that the Commission's management control program was effective in meeting management's expectations for compliance with federal requirements. However, 5 months later Commission management had not yet validated the evide4nce supporting the contractor's conclusion and recommendations. We recommended that the Director of Finance at Commission headquarters take action to complete validation of the evidence, conclusions, and recommendations of the contractor's internal control risk assessment of hte Commission for fiscal year 2009. In its response to the Congress, the Commission stated that they had implemented this recommendation. The Commission concurs with the evidence, conclusions, and recommendaitons of the contractor's internal control risk assessment for fiscal year 2009. During our fiscal year 2010 audit, we found that the Commission used the findings and conclusions recommended by the contractor in fiscal year 2009 for its starting benchmark for internal control evaluation in fiscal year 2010. In the Commission's Internal Control Review Narrative, it clearly laid out the high risk areas as determined by the contractor the previous year. The Commission built its internal control review around these findings.

    Recommendation: The Directors of Human Resources and Finance at Commission headquarters should coordinate action to remind personnel of the existing Commission guidance for accepting funds and in-kind donations and gifts and, as necessary, conduct training.

    Agency Affected: American Battle Monuments Commission: Human Resources and Administration Director

    Status: Open

    Comments: During our audit of the American Battle Monuments Commission's (the Commission) fiscal year 2009 financial statements, we found that the Commission was not following its own guidelines for accepting, documenting, and accounting for donated services from an individual during fiscal year 2009. Specifically, the Commission did not perform complete and proper accounting of donated funds and other in-kind gifts. Based upon information provided by the Commission, a volunteer provided 240 hours of service valued at $240 per hour for a total donation of $57,600. Because the Commission did not follow its own guidelines, it did not recognize $57,600 in donated revenue and related service expenditures in its fiscal year 2009 financial statements. To address this issue, we recommended that the Directors of Human Resources and Finance at Commission headquarters coordinate action to remind personnel of the existing Commission guidance for accepting funds and in-kind donations and gifts and, as necessary, conduct training. In response to our recommendation, the Commission took steps to address this issue however not during fiscal year 2010. During our fiscal year 2010 audit, we found the Commission had not issued a Policy Letter to address this issue. In March 2011 the Commission issued Policy letter 11-08, Subject: Acceptance of Voluntary Services at ABMC Cemetetries and other Facilities. Specifically, this letter defines the Commission's general restrictions and proper acceptance of volunteer services. As a result of its actions, we will be able to close this recommendation as implemented in our fiscal year 2011 audit.

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