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Commodity Certificates: Backlog of 200,000 Unreconciled Certificates Affects Financial Reporting

RCED-89-14 Published: Oct 25, 1988. Publicly Released: Oct 25, 1988.
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Highlights

Pursuant to a congressional request, GAO investigated: (1) the size of the backlog in redeemed commodity certificates that the Agricultural Stabilization and Conservation Service (ASCS) has not reconciled to issuance records; (2) ASCS plans for resolving the backlog; and (3) the extent to which the Department of Agriculture (USDA) has achieved a mandated $230-million reduction in storage, transportation, and handling expenditures for fiscal years 1988 and 1989.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture The Secretary of Agriculture should direct the Administrator, ASCS, to develop a plan to address the remaining backlog of certificates with unresolved exceptions that ensures the accountability for commodity certificates and reduces the potential that undetected fraud could be occurring. This plan should: (1) clearly establish priorities so that high-dollar-value certificates are researched and corrected first regardless of the exception category; (2) be as specific as possible with regard to the methods that will be used, the resources to be allocated, and a schedule for completion; and (3) include steps to identify and correct the root causes of the exceptions, to minimize the number of exceptions that may occur in the future.
Closed – Implemented
Training was held in January 1989 for all state offices. Listings of exceptions were sent to counties and a 95-percent response was received. The Kansas City Management Office is evaluating the response to close out certificates. To date, USDA has reduced its backlog from 200,000 certificates to 12,000. It processed claims over $1.1 million and received actual collections of $769,000.
Department of Agriculture The Secretary of Agriculture should direct the Administrator, ASCS, to report in its Financial Integrity Act statement that a material weakness exists and provide an assessment detailing: (1) the impact of the backlog of certificates with unresolved exceptions on its financial statement; and (2) management's plans to correct the problem.
Closed – Implemented
As recommended, the unreconciled certificates were included in the Federal Managers' Financial Integrity Act report issued in December 1989. An accomplishment report will be prepared in July 1990.

Full Report

Full Report (18 pages)

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Topics

Auditing and Financial Management
Accounting systemsCommodity salesCost controlFarm creditFederal property managementFederal records managementGrain and grain productsNoncomplianceReconciliation processReporting requirements