Agencies can improve their efficiency through the use of shared services, which are often financed through intragovernmental revolving funds (IRF). GAO was asked to (1) identify key operating principles the Commerce Departmental and Census Bureau Working Capital Funds (WCF), which are one type of IRF, should follow to ensure appropriate tracking and use of federal funds and (2) evaluate how departmental and Census policies and procedures for managing these WCFs reflect these principles. GAO identified four key operating principles based on a review of governmentwide guidance on business principles, internal controls, managerial cost accounting, and performance management. GAO also discussed the reasonableness of the principles with staff of the two WCFs and the Office of Management and Budget; these staff generally found the principles to be reasonable. GAO reviewed WCF authorizing legislation and statutory authorities, analyzed agency policies and data, and interviewed agency officials.

Four key operating principles offer a framework for effective WCF management: (1) Clearly delineate roles and responsibilities; (2) Ensure self-sufficiency by recovering the agency's actual costs; (3) Measure performance; (4) Build in flexibility to obtain customer input and meet customer needs Commerce and Census guidance do not identify the roles and responsibilities of all key WCF personnel. While all involved had a clear informal understanding of who is responsible for managing the Departmental WCF, Commerce's guidance does not discuss its CFO Council--an entity with an important role related to WCF increases and changes. Census lacks a process to coordinate and consolidate information managed by disparate divisions and ensure appropriate tracking of funds. There are also opportunities for the agencies to achieve greater management efficiencies by consolidating certain WCF services. Commerce has a transparent process to ensure recovery of actual costs. However, Census' process could be more transparent. The Commerce Departmental WCF's rate setting and review processes are clearly described, coordinated, and designed to recover actual annual costs. Entities such as the Commerce CFO Council and algorithm review group help to facilitate shared understanding among fund managers, customers, and service providers. Census has a fragmented and limited description of its processes and lacks a formal process to communicate with customers. Census customers GAO spoke with had a mixed understanding about how certain WCF costs are determined, limiting their ability to make appeals and suggest improvements. Both WCFs could benefit from performance measures that assess operational effectiveness. Commerce and Census have identified performance measures related to organizational strategic goals. However, neither has established WCF operational performance measures such as responsiveness to customer inquiries and billing error rates. Moreover, both WCFs support similar management and administrative services that could potentially be consolidated. Both WCFs obtain customer input and have flexibility to adjust to customer needs, but challenges exist. In general, customers GAO interviewed said they had regular and ongoing discussions with fund managers or service providers. At Commerce, its CFO Council and WCF managers periodically assess and shift resources to address changes in customer needs and prioritize requests for services. However, the statutory cap on one bureau's payments into the WCF limits the level of services that can be provided to all Commerce bureaus. To provide services beyond the capacity of the WCF, Commerce enters into a memorandum of understanding with specific customers. The Census WCF's ability to build and maintain an operating reserve helps to provide price stability for customers throughout the decennial census cycle when the costs of management and administrative services supported through the WCF fluctuate dramatically. Similar to Commerce, Census has the flexibility to provide additional services by billing customers directly. GAO is making seven recommendations to improve the management of the two WCFs, including updating and consolidating WCF guidance, establishing a process to measure WCF performance, and examining opportunities to consolidate certain WCF services. The Commerce Secretary agreed with all of our findings and recommendations and has directed managers of both the departmental WCF and the Census WCF to begin implementing GAO's recommendations.

Status Legend:

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: To improve the management of the Census Bureau Working Capital Fund, the Secretary of Commerce should require the Under Secretary for Economic Affairs as well as the Census Director to include a more detailed explanation in WCF guidance on the rate-setting process for all components of the fund, such as an explanation of how rates are determined and costs distributed, and establish a formal process similar to the Departmental WCF's process to communicate with customers.

Agency Affected: Department of Commerce

Status: Review Pending

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve the management of the Census Bureau Working Capital Fund, the Secretary of Commerce should require the Under Secretary for Economic Affairs as well as the Census Director to develop guidance that clarifies and consolidates existing WCF policies to include: a. roles and responsibilities of key personnel responsible for WCF management, and b. a process to coordinate information managed by disparate divisions to provide an overarching view of the WCF and ensure the appropriate tracking of funds.

Agency Affected: Department of Commerce

Status: Review Pending

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve the management of the Commerce Departmental Working Capital Fund, the Secretary of Commerce should coordinate with the Census Bureau to examine the management and administrative (M&A) services provided through both WCFs to determine what services might be consolidated.

Agency Affected: Department of Commerce

Status: Review Pending

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve the management of the Commerce Departmental Working Capital Fund, the Secretary of Commerce should establish performance measures to assess performance of WCF operations, such as billing error rates, and determine what additional measures would be helpful to improve WCF management.

Agency Affected: Department of Commerce

Status: Review Pending

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve the management of the Commerce Departmental Working Capital Fund, and to meet its responsibilities in ensuring the proper use of federal funds and to help guard against the use of canceled appropriations, the Secretary of Commerce should revise its financial systems to electronically record and monitor the period of availability of appropriations advanced to Commerce and its bureaus from client agencies.

Agency Affected: Department of Commerce

Status: Review Pending

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve the management of the Commerce Departmental Working Capital Fund, the Secretary of Commerce should update the Commerce Departmental WCF handbook to include a description of the Commerce CFO Council and its roles and responsibilities.

Agency Affected: Department of Commerce

Status: Review Pending

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve the management of the Census Bureau Working Capital Fund, the Secretary of Commerce should require the Under Secretary for Economic Affairs as well as the Census Director to establish performance measures to assess performance of WCF operations and determine what would be helpful to improve WCF management.

Agency Affected: Department of Commerce

Status: Review Pending

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.