American Battle Monuments Commission: Improvements Needed in Internal Controls and Accounting Procedures - Fiscal Year 2010

During our fiscal year 2011 audit of the American Battle Monuments Commission's financial statements, we found that the Commission took action to provide an analysis of the agency's overall financial position and results of operations in its fiscal year 2011 Management's Discussion and Analysis. We consider the Commission's actions sufficient to close this recommendation.

During our fiscal year 2012 audit, we found that the Commission did include a disclosure regarding budgetary resource comparisons to the Budget of the United States Government in its May 2, 2013 draft of the notes to the financial statements. However, we also noted material differences that were excluded from the disclosure. We brought this to the Commission's attention and in its May 28, 2013 draft, the disclosure was presented as well as the material differences. Because the Commission did not initially ensure completeness and full disclosure, we determined controls had not been strengthened sufficiently to ensure adequate disclosure. During our fiscal year 2014 follow-up, the Commission informed us that they had implemented a standard operating procedure (SOP) to review the financial statements. We reviewed the SOP for Completing the Financial Reporting Checklist and the related Checklist for Financial Disclosures, and verified that Budgetary Resources Statement Disclosures were required to be addressed as part of this review. We consider these actions to have addressed our recommendation.

In response to our recommendation, in August 2019, the Commission issued procedures requiring monitoring of monthly cash reconciliations with Treasury performed by the Interior Business Center (IBC) on its behalf. The Commission's actions to help ensure that it is monitoring the completeness and accuracy of reports with account balances from transactions recorded in the IBC Oracle Financial System met the intent of our recommendation and should help reduce the risk of misstating cash in the Commission's financial statements.

In response to our recommendation, in February 2018, the Commission implemented the Contract Lifecycle Management (CLM) procurement system, where an electronic, real-time listing of all contracts is now housed. Once an award is digitally approved by the contracting officer, it is updated automatically in the system and an obligation is recorded. Therefore, the information on the Active Contract List is now maintained as part of the CLM procurement system repository and includes information on the status, contact person, and payments of the award. In addition, the CLM, which is a fully integrated procurement module of the Commission's accounting system, Oracle Federal Financials, updates the system with information on the Commission's awards in real time, and requires no separate reconciliation. The Commission's actions to help ensure that it is monitoring the status of its contracts through an automated procurement system met the intent of our recommendation and should help reduce the risk of improper execution of transactions and inaccurate recording of obligated funds.

In response to our recommendation, in February 2018, the Commission implemented the Contract Lifecycle Management (CLM) procurement system, where an electronic, real-time listing of all contracts is now housed. Once an award is digitally approved by the contracting officer, it is updated automatically in the system and an obligation is recorded. Therefore, the information on the Active Contract List is now maintained as part of the CLM procurement system repository and includes information on the status, contact person, and payments of the award. In addition, the CLM, which is a fully integrated procurement module of the Commission's accounting system, Oracle Federal Financials, updates the system with information on the Commission's awards in real time, and requires no separate reconciliation. The Commission's actions to help ensure that it is monitoring the status of its contracts through an automated procurement system met the intent of our recommendation and should help reduce the risk of improper execution of transactions and inaccurate recording of obligated funds.

In response to our recommendation, in February 2018, the Commission implemented the Contract Lifecycle Management (CLM) procurement system, where an electronic, real-time listing of all contracts is now housed. Once an award is digitally approved by the contracting officer, it is updated automatically in the system and an obligation is recorded. Therefore, the information on the Active Contract List is now maintained as part of the CLM procurement system repository and includes information on the status, contact person, and payments of the award. In addition, the CLM, which is a fully integrated procurement module of the Commission's accounting system, Oracle Federal Financials, updates the system with information on the Commission's awards in real time, and requires no separate reconciliation. The Commission's actions to help ensure that it is monitoring the status of its contracts through an automated procurement system met the intent of our recommendation and should help reduce the risk of improper execution of transactions and inaccurate recording of obligated funds.

During our fiscal year 2011 audit of the American Battle Monuments Commission's financial statements, we found that the Commission took action to ensure that timely reconciliations of accounts payable general ledger balances and the Aged Vendor Liability Report were performed. The Commission issued a directive to accounting staff providing additional guidance to ensure staff perform timely reconciliation of the accounts payable ledger balances to the Aged Vendor Liability Report balances. During our fiscal year 2011 testing of the accounts payable balance, we verified that the Commission performed the required timely reconciliation of the accounts payable general ledger balance to the Aged Vendor Liability Report to materially reflect the accounts payable balance at year-end. By taking this corrective action, the Commission helped ensure that the accounts payable general ledger balance was in agreement with supporting documentation and reduced the risk of misstatements in the Commission's financial statements. We consider the Commission's actions sufficient to close this recommendation.

In October 2017, ABMC implemented the Federal Personnel and Payroll System (FPPS), an automated human resource application hosted as a shared service by the Department of the Interior's Interior Business Center. The FPPS application helps ensure that all pay-related personnel actions are properly documented, approved, and retained. ABMC taking this action reduced the risk that support for pay changes will not be maintained as required. ABMC's actions address the intent of our recommendation.

This recommendation no longer applies to the Commission's Rome, Italy office, as the Commission's Garche, Paris office assumed those payroll functions. In addition, foreign payroll functions were subsequently outsourced to a third party service provider (Activepayroll, Ltd.) during fiscal year 2013. We reviewed the scope of services to be provided by the service provider and determined that the payroll controls agreed to in the contract meet the intent of our recommendation. According to the Commission's auditors, the Commission was appropriately relying on the provider's controls. We are closing this recommendation as implemented because the intent of the recommendation was addressed.

During fiscal year 2012, we determined that the Commission's policy is to use two forms for payroll actions. The headquarters office processes SF-50s for General Schedule (GS) employees and the Paris office uses SF-50s for GS employees and ABM-87s for foreign employees. We did not find any exception with this policy as the SF-50 is a required form for processing payroll actions for GS employees and the ABM 87 is a standard form for processing payroll actions for foreign employees. However, this policy is not documented. To clarify the intent of this recommendation, which is for the Commission to be consistent in processing payroll actions, we issued a subsequent recommendation that calls for the Commission to direct appropriate officials to establish written policies and procedures outlining the key tasks, roles, and responsibilities of both the Human Resources Directorate and the Finance Directorate, including a formal mechanism for communicating all decisions and actions related to processing payroll for foreign employees. This would include the processing of payroll actions. During our fiscal year 2017 follow-up, the Commission informed us that training was provided to employees in the proper production of personnel documentation, however, no policy was provided. In addition, in October 2017, ABMC implemented the Electronic Official Personnel Folder System (eOPF), an automated human resource application hosted as a shared service by the Department of the Interior's Interior Business Center. eOPF replaced the paper-based official personnel folder with an electronic folder where employee information is automatically filed to help ensure consistency in ABMC personnel records. ABMC taking this action helps ensure that documentation in employee's official personnel files is current. ABMC's actions address the intent of our recommendation.

During our fiscal year 2012 audit, we found that the Director of Logistics communicates the procedures for receiving goods to the superintendents via email. Approval stamps with respective names have been created for all superintendents and other approving personnel. During our testing of the Commission's operations and maintenance transactions, we did not find instances where the invoices were not signed or approved by appropriate approving personnel when goods/services were received. Therefore, we consider this recommendation implemented and closed.

During our audit of the American Battle Monuments Commission's (the Commission) fiscal year 2010 financial statements, we found that Commission controls were not always effective in ensuring that the receipt and acceptance of goods and services were properly authorized and that invoice dates were accounted for in a consistent manner. The Commission informed us that it implemented a new financial management system in August 2011 that should address this recommendation. According to the Commission, the new financial management system enforces internal controls that allow only individuals with proper access to approve invoices. Further, the Commission stated that within the next fiscal year, the Commission will require all invoices to be stamped and signed prior to payment and a listing of stamps issued will be maintained to verify approving officials. During fiscal year 2014, the Commission documented the list of authorized approving officials to be used by personnel to verify the approval of invoices before payment. We consider the Commission's actions sufficient to meet the recommendation.

During our fiscal year 2017 follow-up, the Commission informed us that the invoice date entered in Oracle is taken directly from the invoice-approval stamp; however, the Commission was not able to provide procedures supporting the actions taken. During fiscal year 2019, the Commission showed us a screenshot from its SharePoint system, which displays explicit guidance to employees to update Oracle with the invoice date on the invoice-approval stamp. The Commission's actions to help ensure that its accounting system provide a consistent invoice date met the intent of our recommendation and should help reduce the risk of recording transactions in the improper period which can lead to misstatements in the Commission's financial statements.

In response to our recommendation, the Commission updated its accounting records to reflect contract files from the Rome office. During our fiscal year 2011 audit, we verified that the Paris Overseas Office maintained engineering and maintenance contract files, including those pertaining to the Rome Office. We consider the Commission's actions sufficient to close this recommendation.

In response to our recommendation, the Commission updated its accounting records to reflect contract files from the Rome office and prepared an accrual report to include engineering contracts from the Rome office. During our fiscal year 2011 audit, we verified that the Paris Overseas Office maintained engineering and maintenance contract files, including those pertaining to the Rome Office, and that it prepared an accrual report on engineering contracts, including the Rome Office. This allowed the Commission to determine and report the proper accrual amounts for work performed but not yet paid at year-end in its fiscal year 2011 financial statements. By taking this corrective action, the Commission helped ensure the Commission's financial statement balances at year-end were complete and accurate. We consider the Commission's actions sufficient to close this recommendation.