GAO-07-764, Federal Timber Sales: Forest Service Could Improve Efficiency of Field-Level Timber Sales Management by Maintaining More Detailed Data


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of Field-Level Timber Sales Management by Maintaining More Detailed 
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Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

June 2007: 

Federal Timber Sales: 

Forest Service Could Improve Efficiency of Field-Level Timber Sales 
Management by Maintaining More Detailed Data: 

GAO-07-764: 

GAO Highlights: 

Highlights of GAO-07-764, a report to congressional requesters 

Why GAO Did This Study: 

For years, GAO has raised concerns about the ability of the Department 
of Agriculture’s Forest Service (Service) to track the amounts it 
obligates for and spends on timber sales and to use this information in 
managing the sales. Timber sales are generally carried out by ranger 
districts (the lowest level of the Service’s decentralized 
organizational structure), which are overseen by national forest 
offices. The Bureau of Land Management (BLM) within the Department of 
the Interior also conducts timber sales. This report examines the 
extent to which (1) the Forest Service tracks timber sales-related 
obligations and expenditures, including the extent to which the Service 
uses this information in making management decisions; (2) BLM tracks 
timber sales-related obligations and expenditures; and (3) both 
agencies track their timber sales-related revenue. 

What GAO Found: 

The Forest Service tracks the funds it spends to conduct timber 
sales—such as funds for personnel and equipment—in a way that does not 
provide the detailed data many field managers, such as district rangers 
and forest supervisors, told us they need in order to properly manage 
these sales. The Service’s accounting system aggregates obligation and 
expenditure data by the programs that fund the sales—such as the Forest 
Products Program and the Salvage Sale Program—and by national forest, 
rather than by individual timber sale or by ranger district. Forest 
Service headquarters officials told us that field managers do not need 
sale-by-sale or district-level data. However, many field managers told 
us that such data are crucial to their management of timber sales. For 
example, without such data to monitor the progress and cost of 
individual sales, field managers have difficulty both knowing when to 
redirect resources among sales and assessing the cost-effectiveness of 
individual sales. Without detailed data in the Service’s accounting 
system, many field managers have developed manual “cuff records,” such 
as spreadsheets, to maintain obligation and expenditure data at the 
individual sale or ranger district level. However, maintaining these 
cuff records can be time consuming, according to field managers, and 
can thus take time away from conducting “on the ground” activities such 
as overseeing timber harvests. Although headquarters officials said 
that aggregating data has reduced the cost of managing the accounting 
system data, the resources field managers are expending to compensate 
for the lack of detailed system data may partially offset those 
savings. However, the Service does not know the cost of maintaining 
cuff records, and it has not systematically identified field managers’ 
information needs. 

BLM, in contrast to the Forest Service, tracks many timber sales 
obligations and expenditures by individual sale. BLM has chosen to 
maintain detailed data in order to allow its field managers to use 
these data in managing timber sales—by, for example, monitoring the 
progress and cost of sales. As a result of BLM’s approach, field 
managers have access to detailed data without relying on cuff records. 

Overall, the Forest Service and BLM have systems that track revenue 
data by timber sale. These systems track the volume, type, and value of 
timber harvested; generate bills to timber purchasers; and track 
payments against those bills. Both agencies have struggled with, but 
are resolving, the challenge of tracking revenue from sales conducted 
under their stewardship contracting authority. Stewardship contracts 
generally involve the exchange of goods, such as timber, for contract 
services, such as thinning of brush. The Forest Service recently added 
a module to its accounting system to track revenue from stewardship 
contracting projects, while BLM has developed a database for this 
purpose. 

What GAO Recommends: 

GAO recommends actions the Forest Service can take to ensure that its 
field managers have the obligation and expenditure data they need to 
manage effectively. In commenting on a draft of this report, the Forest 
Service generally agreed with its findings and recommendations. 
Similarly, the Department of the Interior agreed with the report’s 
contents. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-764]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Robin M. Nazzaro at (202) 
512-3841 or nazzaror@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

The Forest Service's Aggregation of Obligation and Expenditure Data 
Hinders Field-Level Project Management: 

The Bureau of Land Management's Detailed Data Help Managers Monitor 
Projects: 

Both Agencies Have Systems That Track Revenue by Timber Sale: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Forest Service: 

Appendix III: Comments from the Department of the Interior: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Figures: 

Figure 1: Forest Service Regions: 

Figure 2: BLM-Administered Lands and State Jurisdictions: 

Abbreviations: 

BLM: Bureau of Land Management: 

CBS: Collections and Billing System: 

FFIS: Foundation Financial Information System: 

FFS: Federal Financial System: 

K-V: Knutson-Vandenberg: 

MIS: Management Information System: 

SCID: Stewardship Contracting Information Database: 

TIM: Timber Information Management system: 

TSA: Timber Sale Accounting system: 

TSIS: Timber Sale Information System: 

United States Government Accountability Office: 
Washington, DC 20548: 

June 27, 2007: 

The Honorable Tom Harkin: 
Chairman: 
Committee on Agriculture, Nutrition, and Forestry: 
United States Senate: 

The Honorable Jeff Bingaman: 
Chairman: 
Committee on Energy and Natural Resources: 
United States Senate: 

As the steward for more than 190 million acres of federal land, the 
Department of Agriculture's Forest Service (Service) undertakes a 
myriad of land management projects to sustain the land's health, 
diversity, and productivity. Such projects may involve harvesting 
marketable timber, such as fuel reduction projects designed to thin 
heavy undergrowth and dense stands of trees, and salvaging (i.e., 
removing) dead and dying trees. In fiscal year 2006, the sale of timber 
generated revenue of over $221 million for the Service. 

The Service has a decentralized structure consisting of the Washington 
Office and the field. The field consists of nine regions that oversee 
155 national forests; the forests, in turn, oversee hundreds of ranger 
districts. Timber harvests, like other land management projects, are 
generally conducted by the Service's ranger districts and national 
forests, and the Service places considerable decision-making authority 
in managers at these field offices. The Service funds its land 
management projects through various programs.[Footnote 1] These 
programs include wildlife and fish management, forest products, grazing 
management, and so forth. Timber sales involving the harvest of live 
trees are generally conducted under the Forest Products Program, while 
sales involving the salvage of dead or dying trees are generally 
conducted under the Salvage Sale Program. 

Forest Service timber sales activities have long been controversial, in 
part because of concerns over the ecological and financial costs 
associated with harvesting timber. For years, we, along with other 
organizations, have questioned the Service's ability to track the 
amount it spends on timber sales, as well as the Service's ability to 
use these data to make management decisions about its operations. For 
example, for fiscal years 1992 through 1997, the Department of 
Agriculture's Office of Inspector General reported that the Forest 
Service's accounting data--including data associated with timber sales-
-were not reliable. We reported a similar finding in 2001. Further, in 
2003 and again in 2006, we reported that the Service does not maintain 
data on the actual cost of individual work activities, including timber 
sales, and as a result cannot assess the extent to which these 
activities yielded accomplishments commensurate with the dollars spent 
on them. 

In this context, you asked us to examine the Service's current 
mechanisms for tracking timber sales-related obligations and 
expenditures,[Footnote 2] as well as timber sales-related revenue. In 
addition, given that the Bureau of Land Management (BLM) within the 
Department of the Interior also conducts timber sales, you asked us to 
include that agency in our review as well. Specifically, we agreed to 
determine the extent to which (1) the Forest Service tracks timber 
sales-related obligations and expenditures, including the extent to 
which the Service uses this information in making management decisions; 
(2) BLM tracks timber sales-related obligations and expenditures, and 
how BLM's methods for doing so compare with those of the Forest 
Service; and (3) the Forest Service and BLM track their timber sales- 
related revenue. 

In conducting our work, we reviewed Forest Service timber sales 
accounting policies and procedures; financial system manuals and 
documentation; reports from systems in place to track obligations, 
expenditures, and revenue; and databases and spreadsheets devised by 
field offices to track this information. We visited numerous field 
locations because the Forest Service is a decentralized agency. Our 
work included visiting six of the nine Forest Service regional offices 
and at least one national forest office in each of six regions. We also 
interviewed officials of five ranger districts. We also visited the 
Service's Washington Office and the Albuquerque Service Center, which 
performs many Forest Service accounting functions. Our BLM work 
included reviewing BLM timber sales accounting policies and procedures, 
financial system manuals and documentation, and reports from systems in 
place to track obligations, expenditures, and revenue. In addition, we 
visited the National Business Center in Denver, Colorado; two state 
offices; one district office; and one field office. At each of these 
Forest Service and BLM locations, we interviewed officials responsible 
for tracking timber sales and managing related obligations, 
expenditures, and revenue, and we reviewed related policies, 
procedures, and records. We conducted our review from April 2006 
through April 2007 in accordance with generally accepted government 
auditing standards, which included an assessment of data reliability 
and internal controls. Additional information on our scope and 
methodology appears in appendix I. 

Results in Brief: 

The Forest Service tracks the funds it spends on timber sales, 
including obligations and expenditures for personnel and equipment, in 
a way that does not provide the detail that many field managers, such 
as district rangers and national forest supervisors, said they need in 
order to make management decisions--for example, in deciding how to 
allocate or redirect resources among sales. The Service does not track 
timber sales-related obligation or expenditure data by individual sale 
but rather aggregates these data by the programs that fund the sales-- 
such as the Forest Products Program or the Salvage Sale Program. Also, 
within these programs, the Service recently stopped tracking 
obligations and expenditures at the ranger district level, where timber 
sales are generally carried out, and now tracks them instead at the 
national forest level. Forest Service headquarters officials said that 
the aggregation of obligation and expenditure data at the forest level 
was part of an effort to reduce the proliferation of job codes in the 
accounting system and the associated data management costs. These 
officials said that the aggregate data are "good enough" and that field 
managers do not need more detailed data. However, many field managers 
we talked with said that detailed data are crucial to their timber 
sales management efforts. Without obligation and expenditure data on 
individual sales, for example, field managers said they cannot compare 
actual expenditures on sales with planned expenditures, identify 
potential inefficiencies across sales, or identify resources available 
for redirection to another sale if needed. Further, without data on 
program obligations and expenditures at the ranger district level, 
field managers said they cannot efficiently compare actual and planned 
program obligations and expenditures across districts to ensure that 
spending is occurring as planned. To compensate for the lack of 
detailed data, many field managers have independently developed a 
variety of so-called "cuff records," such as spreadsheets, containing 
information they deem essential for managing their timber sales. Field 
managers we spoke with said that maintaining these cuff records is time 
consuming--for example, one forest official said he spends about 20 
percent of his time gathering and analyzing the data he needs to manage 
timber sales. As a result, although the aggregation of data has 
decreased the Service's recognized data management costs, it has 
increased the time spent by some field managers on tracking this 
information through cuff records, thus raising questions about the 
actual cost savings resulting from the aggregation of data. Moreover, 
the Service has not systematically determined the information needs of 
its field managers or the extent to which actual cost savings may be 
offset by the cost of maintaining cuff records. We are recommending 
actions the Service can take to improve its managers' ability to use 
obligation and expenditure data to understand the actual cost of work 
activities and make management decisions accordingly. 

In contrast to the Forest Service, BLM can track timber sales data by 
individual sale, thereby allowing field managers to use these data in 
managing the sales--including comparing planned and actual 
expenditures, identifying potential inefficiencies across sales, and 
redirecting resources among sales when needed. For example, using the 
unique job code assigned to each timber sale conducted under the Forest 
Ecosystem Health and Recovery Fund, managers can track all obligations 
and expenditures on each sale--from those incurred during the planning 
phase (e.g., on environmental assessments) to the final administrative 
expenditures involved in closing the sale. BLM chose to maintain 
detailed data because its managers find them necessary in making 
decisions about, for example, how to allocate resources or reduce 
expenditures. At the project level, for example, managers can track 
actual expenditures and compare them with planning estimates. More 
broadly, managers can analyze several years of data to identify trends 
in expenditures across offices. These data can then reveal how 
efficient offices are in accomplishing projects and inform decisions 
about reallocating resources among offices or programs. 

Both the Forest Service and BLM have systems that track and report 
revenue data by timber sale. Both agencies' systems track the volume, 
type, and value of timber harvested by individual timber sale; 
automatically generate bills to timber purchasers; and track payments 
against those bills. Over the past few years, both agencies have 
struggled with, but are now resolving, the challenge of tracking 
revenue from timber sales conducted under their stewardship contracting 
authority. Stewardship contracts generally involve the exchange of 
goods, such as timber, for contract services, such as thinning of small 
trees and brush. Such exchanges can be difficult to account for with 
traditional accounting systems. The Forest Service has recently added a 
module to its accounting system to track stewardship contracting 
revenue, and BLM has developed an agencywide database for stewardship 
contracting information. 

We provided a draft of this report to the Secretaries of Agriculture 
and the Interior for review and comment. The Forest Service and the 
Department of the Interior generally agreed with our report; their 
comment letters are presented in appendixes II and III, respectively. 

Background: 

Both the Forest Service and BLM conduct timber sales as part of their 
management of public land. However, the agencies differ in their 
organizational structure and in the sources of funding they use for 
carrying out timber sales. Timber sales activities involve staff time 
and, in some cases, equipment and supplies, to identify the sale area, 
conduct the required environmental analyses, solicit bids, prepare the 
timber sale contract, mark the sale boundary and the trees to be cut or 
left, and monitor the harvest operations and reforestation activities. 

Forest Service Organization: 

The Forest Service manages 193 million acres of national forests and 
grasslands. The Service has nine regions that oversee 155 national 
forests; the forests, in turn, oversee more than 600 ranger districts. 
Each region (see fig. 1) encompasses a broad geographic area, headed by 
a regional forester who reports directly to the Chief of the Forest 
Service and provides leadership for, and coordinates the activities of, 
the various forests within the region. Each forest, headed by a 
supervisor, allocates the budget and coordinates activities among the 
various ranger districts within the forest. Each ranger district, 
headed by a district ranger, conducts or oversees "on the ground" 
activities such as construction and maintenance of trails; operation of 
campgrounds; management of wildlife habitat; and the sale and harvest 
of forest products, including timber. The districts vary in size from 
50,000 acres to more than 1 million acres. 

Figure 1: Forest Service Regions: 

[See PDF for image] 

Source: Forest Service. 

Note: The Forest Service has no Region 7. 

[End of figure] 

Forest Service Timber Sales-Related Funding: 

The Forest Service's timber sales-related activities are funded by a 
variety of appropriations. Within the Service's appropriations, there 
are several programs (or "budget line items") directly or indirectly 
related to timber sales. For the Forest Products Program, which is 
responsible for most timber sales-related activity, the Forest Service 
received about $277.6 million of its $1.5 billion national forest 
system appropriation in fiscal year 2006. However, the Forest Products 
Program is not limited to timber sales; some expenditures within the 
program are associated with other products, such as mushrooms and 
decorative grasses and foliage. The Service issues permits that allow 
individuals to gather such products from the forests, whether for 
personal use or for sale. Conversely, not all timber sales-related 
expenditures are included in the Forest Products Program. Certain 
timber sales' planning expenses, for example, might be borne by other 
programs--including vegetation and watershed management or wildlife and 
fish management--if the primary purpose of the sale is to improve 
vegetative conditions or wildlife habitat rather than to provide 
commercial timber. 

The Forest Service also uses various other funds to pay for timber 
sales-related activities, including (1) the Knutson-Vandenberg Trust 
Fund, (2) the Salvage Sale Fund, (3) the Brush Disposal Fund, (4) the 
Timber Sales Pipeline Restoration Fund, and (5) stewardship contracting 
revenue. 

* The Knutson-Vandenberg (K-V) Trust Fund, established by the Knutson- 
Vandenberg Act of 1930 (16 U.S.C. §§ 576-576b),[Footnote 3] was created 
to collect a portion of timber sales revenue to pay for the 
reforestation of areas from which timber is cut. The reforestation 
projects eligible for such funding include growing trees for planting, 
planting trees, sowing seeds, removing weeds and other competing 
vegetation, and preventing animals from damaging new trees. The act was 
amended in 1976 to allow the Forest Service to use these funds for 
other timber sales area improvement activities, such as creating 
wildlife habitat. It was amended again in 2005 to authorize 
expenditures within the entire Forest Service region in which the 
timber sales occurred. In fiscal year 2006, the Forest Service 
allocated $40 million of K-V funds for forest product sales under the 
expanded authority, and another $77.6 million of K-V funds for 
activities conducted under the original K-V authority. 

* The Salvage Sale Fund, derived from salvage sale revenue, is used to 
pay for preparing and administering future salvage sales.[Footnote 4] 
The fund may also be used to pay for the design, engineering, and 
supervision of construction of roads associated with such sales. The 
Salvage Sale Fund was created by the National Forest Management Act of 
1976 (16 U.S.C. 472a(h)).[Footnote 5] Individual salvage sale timber 
contracts designate the amount of receipts to be collected and 
transferred to the Salvage Sale Fund. For fiscal year 2006, the Forest 
Service allocated $75.8 million for salvage sales. 

* The Brush Disposal Fund, derived from payments made by timber 
purchasers, is used to pay for the removal of brush and debris that 
result from logging.[Footnote 6] For fiscal year 2006, the Forest 
Service allocated $11.6 million from the Brush Disposal Fund for this 
purpose. The Brush Disposal Fund is a permanent fund created to allow 
the deposit of funds to pay for certain brush disposal work on all 
timber sales, including salvage sales. Forest Service staff complete 
brush disposal work using funds collected as an additional charge to 
the purchaser, based on the amounts paid for the trees harvested. The 
funds are deposited in the Brush Disposal Fund, and the Service 
generally seeks to spend them within 3 years of the completion of the 
sale. Brush disposal usually entails chipping or burning vegetative 
debris from the sale, such as stumps, broken treetops, tree limbs and 
branches, or damaged brush resulting from logging operations. Brush 
disposal is also referred to as slash disposal. 

* The Timber Sales Pipeline Restoration Fund, authorized by the Omnibus 
Consolidated Rescissions and Appropriations Act of 1996 (Pub. L. No. 
104-134), is used to pay for certain eligible timber sales. For fiscal 
year 2006, the Forest Service had $2.5 million in the pipeline fund. 
The act created this fund to receive a portion of the receipts from 
certain timber sales released under the fiscal year 1995 Supplemental 
Appropriations for Disaster Assistance and Rescissions Act. The revenue 
deposited in the fund is to be used for the preparation of timber sales 
not funded by annual appropriations and to fund certain recreation 
projects. Specifically, 75 percent of the revenue is to be used for the 
preparation of green timber sales on national forest and certain BLM 
lands, and 25 percent is to be used for recreation projects. 

* Stewardship contracting revenue, derived from stewardship projects 
involving the sale of timber, is used to pay for future stewardship 
projects.[Footnote 7] For fiscal year 2006, the Forest Service had $1.7 
million in such revenue available. Stewardship contracting involves the 
use of any of several contracting authorities that were first 
authorized for use by the Forest Service on a pilot basis in October 
1998. The Omnibus Consolidated and Emergency Supplemental 
Appropriations Act for 1999 established stewardship contracting 
authority to achieve national forest land management goals that meet 
local and rural community needs.[Footnote 8] Prominent among the 
stewardship contracting authorities is the ability to (1) trade goods-
-timber, for example--for contract services, such as thinning of small 
trees and brush, and (2) retain for use in future stewardship projects 
any revenue generated through selling forest products such as timber, 
rather than returning the revenue to the Department of the Treasury, as 
is required for traditional timber sales. Although stewardship 
contracting was initially established as a demonstration project that 
involved a limited number of individual projects within the Forest 
Service and was to end in 2002, the Consolidated Appropriations 
Resolution of 2003, among other things, extended the use of stewardship 
contracting authority to 2013, eliminated the limit on the number of 
projects, authorized commercial tree removal for forest health purposes 
as a project purpose, and extended the authority to BLM.[Footnote 9] 

The Forest Service's tracking of its timber sales-related expenditures 
has been the subject of several of our previous reports. For example, 
in 2001 we reported that serious accounting and financial reporting 
deficiencies precluded an accurate determination of the total costs 
associated with the timber sales program and, in fact, rendered the 
Service's cost information unreliable.[Footnote 10] In 2003, we noted 
that the Service could not accurately report on the actual costs of 
individual work activities.[Footnote 11] And in 2006, we reported that 
the Forest Service did not have a system that allowed it to determine 
the cost of its activities below the program level, resulting in a 
continuing focus on budget management without a corresponding focus on 
cost management.[Footnote 12] 

BLM Organization: 

BLM administers more land than any other federal agency--about 261 
million acres. Of that amount--most of which is located in the western 
states, including Alaska--roughly 69 million acres (about 26 percent) 
are commercial forests and woodlands. BLM's organizational structure 
includes national, state, and field-level units. National units include 
BLM's headquarters office as well as national centers with specific 
service and support responsibilities, such as the National Business 
Center in Denver, Colorado. State-level units consist of 12 state 
offices that implement BLM's activities in one or more states. Field- 
level units include 144 district and field offices that carry out the 
"on the ground" activities, including timber sales, under the 
supervision of the BLM state offices. Figure 2 shows BLM-administered 
lands and the boundaries of BLM state jurisdictions. 

Figure 2: BLM-Administered Lands and State Jurisdictions: 

[See PDF for image] 

Source: BLM. 

[End of figure] 

BLM Timber Sales-Related Funding: 

BLM's timber sales-related activities are funded through various 
appropriations. BLM conducts timber sales under two separate forestry 
programs. Most of BLM's timber program is associated with the agency's 
lands in western Oregon, which are managed expressly for the purpose of 
providing a permanent source of timber supply, protecting watersheds, 
regulating stream flow, contributing to the economic stability of local 
communities and industries, and providing recreational facilities under 
the provisions of the Oregon and California Sustained Yield Act of 
1937.[Footnote 13] These lands, heavily forested with Douglas fir and 
western hemlock species, are responsible for the majority of BLM's 
timber production. BLM timber sales undertaken in western Oregon are 
funded by the Oregon and California Grant Lands appropriation; in 
fiscal year 2006, BLM allocated $27.1 million for the sale of this 
timber. The remainder of BLM's timber sales occur on other lands, which 
are managed for multiple uses, including the sale of timber. These 
timber sales are funded by the Management of Lands and Resources 
appropriation, which was $10.4 million in fiscal year 2006. 

In addition to these appropriations, BLM's timber sales-related 
activities rely on the Forest Ecosystem Health and Recovery Fund, the 
Timber Sales Pipeline Restoration Fund, and funds from stewardship 
contracting activities. The Forest Ecosystem Health and Recovery Fund, 
which funds timber salvage sales, is derived from the federal share of 
revenue from BLM salvage sales and forest health restoration 
treatments.[Footnote 14] This revenue is made available to BLM for 
planning and preparing salvage timber for disposal, the administration 
of salvage timber sales, and subsequent site preparation and 
reforestation. Since fiscal year 1998, the fund has also been available 
for forest health restoration treatments, including timber sales 
designed to release trees from competing vegetation, control tree 
densities, or treat hazardous fuels. BLM's Timber Sales Pipeline 
Restoration Fund operates under the same legislation pertaining to the 
Forest Service's pipeline fund. Finally, authority for stewardship 
contracting was originally limited to the Forest Service but was 
extended to BLM in fiscal year 2003. When BLM was first granted 
stewardship contracting authority, the Assistant Secretary of the 
Interior for Land and Minerals Management had to approve each 
stewardship contracting project. That approval has since been delegated 
to the state directors. Generally, stewardship contracts valued at 
$100,000 or more are handled by BLM's National Business Center or by 
the Oregon State Office, while those valued at less than $100,000 are 
handled by the state office that originated them. 

The Forest Service's Aggregation of Obligation and Expenditure Data 
Hinders Field-Level Project Management: 

The Forest Service tracks obligation and expenditure data at the 
program and forest levels through its accounting system--the Department 
of Agriculture's Foundation Financial Information System (FFIS). In 
fiscal year 2000, when it transitioned to FFIS, the Service lost the 
ability to track information--such as employees' actual time charges 
and supply purchases--at the project level (i.e., individual timber 
sale level). Instead, FFIS aggregates data at the program level. 
Currently, neither FFIS nor any other automated system tracks 
obligations and actual expenditures at the project level. Beginning in 
fiscal year 2006, as a cost-saving measure, the Service removed from 
FFIS the codes that had previously associated program obligations and 
expenditures with individual ranger districts. To compensate for the 
lack of detailed information, field managers have spent considerable 
time and effort to develop and maintain a variety of "cuff records," 
such as spreadsheets, that contain the data they need to manage their 
projects, including timber sales. 

The Forest Service Tracks Obligations at the Program and Forest Levels: 

Through FFIS, the Forest Service tracks, at the program and forest 
levels, timber sales-related obligations from the National Forest Fund 
as well as from the K-V, brush disposal, salvage sale, pipeline, and 
stewardship funds. These obligations include costs for personnel, 
vehicles, and supplies and equipment. Personnel costs related to timber 
sales include time spent preparing for a sale (e.g., identifying the 
sale area and completing related environmental analyses), administering 
the sale contract, monitoring the harvest, and conducting or overseeing 
the postharvest reforestation and restoration activities. 

Since its transition to FFIS, the Service has aggregated data on 
obligations at the program level rather than at the project level. 
Staff charge their time to a job code that represents the program most 
applicable to the activities they conducted--for example, to the job 
code associated with the Forest Products Program or the Vegetation and 
Watershed Management Program. Overall, according to Forest Service 
officials, staff time is by far the Service's biggest expenditure-- 
about 75 percent or 80 percent of the total. Other expenditures include 
vehicles and supplies, such as paint for marking sale boundaries and 
marking trees to be cut or left. 

In addition to grouping data by program, FFIS also aggregates the 
program data at the forest level. For example, when staff at the ranger 
district level, where projects are carried out, complete their 
timesheets, the program job code to which they charge time indicates 
the national forest with which their district is associated. The code 
does not, however, indicate the district or the specific project with 
which the transaction is associated. Obligations for supplies and 
equipment are also tracked at the forest level. Previously, FFIS 
contained "subunit" job codes that tied this information to ranger 
districts.[Footnote 15] Beginning in fiscal year 2006, as a cost-saving 
measure, the Forest Service removed these subunit job codes for timber 
sales-related activities. 

For stewardship contracting activities, on the other hand, no separate 
job code exists in FFIS by which to identify staff time and other 
obligations related to these activities. FFIS has no code for 
stewardship contracting activities because the Forest Service does not 
have a budget line item for these activities. Rather, stewardship 
contracting is considered a tool for accomplishing various forest 
management objectives. Accordingly, staff time and other obligations 
for stewardship contracting activities are charged to the one or more 
programs that benefit from the stewardship project and are thus 
included in these programs' obligations. For example, if the wildlife 
program were expected to derive a benefit from a stewardship thinning 
project (e.g., because the project would result in more open space for 
elk), then the wildlife program would fund part of the cost of that 
project. Field offices maintain spreadsheets to track the monthly 
progress of individual stewardship contracting projects and the payment 
mechanisms involved in each one (e.g., nonmonetary credits earned for 
service work, payments from appropriated funds or trust funds, and 
payments from revenue retained from stewardship projects). 

Cost Issues Prompted the Forest Service to Further Aggregate Data: 

The Forest Service's decision to further aggregate data at the forest 
level beginning in fiscal year 2006--that is, to reduce reporting to a 
single job code per program per forest--was intended as a cost-saving 
measure. By reducing the number of job codes in use, the Service would 
in turn reduce the associated number of records that are maintained in 
FFIS, thereby reducing its data management costs. The Forest Service 
determined that a significant portion of the records was associated 
with job codes used to track information associated with ranger 
districts. According to officials of the Forest Service's Office of the 
Chief Financial Officer, removing these job codes was part of a 
continuing effort, begun in fiscal year 2004, to reduce the 
"proliferation" of job codes that was leading to increased data 
management costs, and doing so resulted in savings of about $8.9 
million in 2006 dollars from fiscal year 2004 through fiscal year 2006. 

Forest Service headquarters officials, and some regional officials, 
told us that detailed tracking of data is not needed at the ranger 
district or project level and, consequently, that it was not an 
efficient use of Service funds to pay the costs associated with this 
unnecessary level of detail. According to one regional official, for 
example, district or project information is not needed to manage at the 
forest level; the forest supervisor just needs to know how close the 
forest is to achieving its objectives and how much of its allocation is 
still available for obligation. Tracking at the program level frees up 
time to do actual work, he said, rather than tracking multiple job 
codes. Other officials also said they were not convinced that forest 
and district managers needed to track all of the information they had 
historically maintained. Agency records, said one official, were not 
designed to be a "personal diary" for managers. 

Several headquarters officials, including Albuquerque Service Center 
officials, told us that field managers could use the Service's planning 
and budgeting system, known as WorkPlan, to monitor their projects. 
WorkPlan is an automated system in which project managers estimate how 
much they will spend on one or more work activities, such as preparing 
or administering timber sales. Managers prepare their WorkPlans at the 
beginning of the fiscal year--entering into each plan the personnel, 
vehicles, and other equipment they anticipate they will need to carry 
out the planned activities. Managers are free to choose the level of 
specificity associated with their WorkPlans. For example, one manager 
might create a single WorkPlan to encompass a district's entire timber 
sales program, while another might create an individual WorkPlan for 
each planned timber sale or for each phase of a timber sale. 

However, field managers we talked to said that, while they find the 
WorkPlan system a valuable planning tool, it does not meet their need 
for detailed information on what they have obligated or actually 
expended. That is, the WorkPlan system obtains data on obligations and 
actual expenditures from FFIS--which, as noted earlier, aggregates 
these data by program and national forest, not by ranger district, 
project, or individual WorkPlan. Similarly, while other Service 
systems, such as the Forest Service Activity Tracking System, contain 
project-level information, that information does not include obligation 
or actual expenditure data. The headquarters official responsible for 
overseeing program activities in the national forest system agreed that 
the WorkPlan system cannot provide field managers with such data at the 
district or project level. This official, and other headquarters 
officials, said that field managers who felt that this detailed 
information was necessary must develop their own tracking mechanisms. 

Lacking the System Data They Need, Many Field Managers Rely on Cuff 
Records: 

Although several Forest Service officials contend that information on 
district-and project-level obligations and expenditures is not needed, 
managers we talked to at various levels of the Service's field 
organization said they rely on cuff records, such as spreadsheets, to 
track this information and help manage their projects. For example, 
these managers told us that by using cuff records to track project 
obligations and expenditures, they can more easily determine whether 
obligations and expenditures are charged to the appropriate programs, 
manage forest or regional allocations, and respond to outside requests 
for information about agency timber sales. The amount of time and 
effort required to develop and maintain such cuff records is 
necessitated by the lack of a system that maintains data on obligations 
and actual expenditures at the district or project level. 

Field managers we interviewed said they rely on cuff records to 
accumulate the detail they find necessary to track projects' progress 
and ensure that obligations and expenditures are being charged to the 
appropriate programs, as well as to ensure that their projects' on-the- 
ground progress keeps pace with the obligations and expenditures 
associated with the projects. One forest official said, for example, 
that the subunit codes (the ones that were eliminated through the move 
to aggregated data) are necessary to keep track of districts' 
obligations and expenditures. Accordingly, he continues to use these 
codes in his cuff records. Additionally, he requires each district to 
account for its obligations and expenditures on a project-by-project 
basis (in addition to using WorkPlan) and to provide those data to him 
so that he can track this information against the overall allocation 
for the forest. By comparing obligations and expenditures with the on- 
the-ground progress of individual projects, this manager can determine 
whether project spending is on schedule and whether funds need to be 
reallocated toward (or away from) individual projects to ensure that 
forest priorities are accomplished. 

Such tracking of project spending is important because a project might 
encounter unexpected costs--for example, unanticipated steps might need 
to be taken in order to remedy damage caused by a mudslide. If the 
project is of high priority, according to Forest Service officials we 
interviewed, the project manager will need to shift funds from other, 
lower priority projects in order to provide the additional funds needed 
to complete the high-priority project. However, without district-or 
project-level data on obligations, it is difficult--if not impossible-
-to know which other projects have funds available to shift to the 
priority project, as well as to understand the potential effects on the 
projects from which funds were moved. 

At another forest, an official noted that it is now "almost 
impossible," without the subunit job codes, to track obligations and 
expenditures at the district level. Regarding the forest's K-V fund, 
for example, this official used to be able to maintain K-V fund 
balances by district; to do that now, he counts on district managers to 
keep cuff records. Further, the forest developed a K-V tracking 
spreadsheet, which is now the only tool available to officials at that 
forest for tracking the K-V funds and needs among projects. 

With the removal of the subunit codes from FFIS, several field managers 
told us they must depend on their cuff records to detect and correct 
erroneous transactions to ensure that their limited funds are spent as 
intended. In one region, for example, an official said she routinely 
scours the FFIS transaction register--which shows, for an individual 
program or forest, a record of each obligation--looking for erroneous 
charges. Because the list of transactions for a single program or 
forest can be hundreds of pages long, she checks only transactions over 
$1,000. When she finds a charge that seems potentially erroneous (e.g., 
a name she does not recognize or a credit card purchase that is 
questionable for a given program), she queries the managers of the 
staff areas. These managers then must investigate the potentially 
incorrect charges and correct them, if appropriate. This official said 
she spent 15 percent to 20 percent of her time in fiscal year 2006 
using her cuff records to track down potentially erroneous charges and 
correct them. She found, for example, that numerous time charges had 
been miscoded, resulting in a total of about $60,000 being erroneously 
charged to the timber program; she followed up and had those charges 
removed. This inefficient verification and correction process is used 
because the Forest Service does not have a system that links each 
charge with an individual district, by project, to enable officials to 
more easily detect erroneous charges. 

Other managers we spoke with expressed similar concerns about their 
diminished ability--since the shift to aggregated data--to identify 
costs for particular activities and to monitor obligations against 
their forests' allocation. When multiple districts charge the same 
code, managers cannot tell--without keeping detailed cuff records--who 
might be charging more time or obligating more money than planned to a 
code or charging the wrong code. If more time or money is spent on a 
project than was planned, a manager must be prepared to either delay 
further work on the project or redirect funds from other projects to 
compensate. However, in order to take either of these steps in time to 
avert overspending, the manager must have timely information on each 
project's expenditures. The effects of exceeding allocations can go 
beyond the project in which it occurs, or even beyond the forest. For 
example, officials in one region told us that a forest within the 
region had exceeded its allocation for planning so substantially that 
planning activities throughout the region had to be curtailed in order 
to compensate for the forest's error.[Footnote 16] As a result, these 
managers have created cuff records to monitor projects as they proceed. 

Finally, many Forest Service staff we spoke with said they keep cuff 
records so that they can respond to the many requests they receive for 
information. For example, according to officials in different regions, 
timber industry groups, congressional staff, and others frequently ask 
for information on individual timber sales, including information on 
the volume of timber offered and associated costs, particularly unit 
rates to produce timber (in dollars per thousand board feet).[Footnote 
17] Responding to these requests is difficult, according to Service 
officials we interviewed, because the Service does not maintain 
information at the timber sales level; rather, managers must resort to 
cuff records in order to furnish the information. 

Given the labor-intensive and time-consuming nature of maintaining the 
various cuff records in existence throughout the Forest Service, the 
actual cost savings resulting from the Service's decision to aggregate 
data are not clear because substantial field resources are being 
expended to compensate for the unintended effects of this decision. 
That is, while the reduction in job codes maintained in FFIS has helped 
the Service decrease its recognized data management costs, it has at 
the same time resulted in additional, uncalculated costs in staff time 
devoted to tracking obligation and expenditure data at the district 
level. In fact, the information we gathered from managers in the field 
seems to contradict the assertion of a Forest Service official, noted 
earlier, that tracking obligations and expenditures at the forest level 
frees up time to do actual work rather than tracking multiple job 
codes. Instead, field managers told us that the time they need to spend 
tracking has actually increased because the system no longer provides 
this information at the district level. In addition, neither FFIS nor 
WorkPlan tracks obligations and actual expenditures at the project 
level. Consequently, field managers who wish to track district-or 
project-level data must do so manually. Forest Service headquarters 
officials told us that the agency has not attempted to determine the 
amount of time currently spent by field managers tracking this 
information or the associated costs of doing so. 

The Bureau of Land Management's Detailed Data Help Managers Monitor 
Projects: 

In contrast to the Forest Service, BLM uses its Management Information 
System (MIS) to track timber sales-related obligations and expenditures 
at a level of detail useful to managers throughout the organization. 
Drawing from the Department of the Interior's Federal Financial System 
(FFS), MIS tracks timber sales obligations--such as employee time 
charges, supplies, and equipment--at various levels. For example, MIS 
tracks obligations by funding source and activity type, then by office 
and, in many cases, individual timber sale. The two funding sources 
most closely associated with timber sales are the Oregon and California 
Grant Lands appropriation and the Forest Ecosystem Health and Recovery 
Fund. As for activity types, those related to timber sales include (1) 
managing commercial timber sales and (2) restoring forests and 
woodlands through timber sales (e.g., managing salvage sales). MIS also 
tracks obligations by office, at both the state office level and the 
field organization level (e.g., district offices and field offices). 
Lastly, MIS tracks obligations by specific project, such as a specific 
timber sale or stewardship project, when a project code is assigned. 
Project codes are required for all sales conducted through the Forest 
Ecosystem Health and Recovery Fund, including salvage sales, but are 
optional for sales conducted with other funds, including commercial 
sales. For commercial sales, for example, managers are free to assign 
codes to individual projects but are not required to do so if they do 
not believe it is necessary. In some locations, according to a BLM 
official, an office may conduct only one or two timber sales a year 
and, thus, may not find project codes necessary to identify individual 
sales. In one location, BLM officials said they assign project codes 
after the general planning work has been completed; in another 
location, officials said they assign project codes once funding 
approval has been received. Staff working on a specific timber sale 
would charge their time to the relevant funding code, activity code, 
office code, and project code. 

Using MIS has allowed BLM to maintain and monitor obligations and 
expenditures at various levels of detail without relying on complicated 
cuff records, as the Forest Service does. For example, an official from 
BLM's National Business Center said that the job codes assigned to 
timber sales conducted under the Forest Ecosystem Health and Recovery 
Fund allow managers to track all data on an individual sale--from the 
planning phase (e.g., on environmental assessments) to the final 
administrative activities involved in closing the sale. In other cases, 
a state office official said, individual project codes are not assigned 
(e.g., for sales conducted through the Timber Sales Restoration 
Pipeline Fund), but those sales can be identified by activity code and 
location, allowing managers to track information at those levels. This 
official said he also uses MIS to generally monitor district offices' 
obligations and expenditures. For example, MIS data allow him to 
compare the vehicle and labor obligations and expenditures one office 
charged to the timber program with the same type of obligations and 
expenditures charged by other offices. 

The level of detail available in BLM's system is a function of the 
agency's experience in the 1990s, according to a BLM official, when the 
agency began losing money on timber sales and officials struggled with 
how to handle the reporting of these losses. One of the alternatives 
discussed was not calculating timber sales expenditures at all, so that 
they would not potentially embarrass the agency politically--an option 
that this official referred to as "contrived obfuscation." Instead, 
with an eye toward providing full transparency and performance 
accountability, BLM took the opposite tack, according to this official; 
it decided to track data at an even more detailed level. 

Detailed expenditure data--captured in a cost accounting system--help 
managers understand how expenditures can be controlled without 
sacrificing service to the public. For example, managers of BLM's Wild 
Horse and Burro Program in Utah were able to use MIS to track 
expenditures on each work activity associated with the 
program.[Footnote 18] Program managers identified expenditures for each 
activity and determined that the largest expenditures were for labor, 
particularly in conducting the adoption process and doing postadoption 
inspections, and for feed expenditures during the preadoption holding 
period. Armed with this information, BLM was able to reduce its labor 
expenditures by making greater use of volunteers and reduce its feed 
expenditures by capturing animals just prior to scheduled adoptions. In 
1998, BLM collected slightly more than 5,700 animals. After changing 
the process in 1999, based on expenditure data, the program collected 
more than 7,700 animals and reduced the expense of holding and feeding 
them by $600,000 (about $710,000 in 2006 dollars). 

MIS has also proven useful in allowing BLM managers to make expenditure-
based decisions with regard to timber sales. For example, expenditure 
data were used to determine the efficiency and effectiveness of 
individual BLM state timber programs. Trend data were generated for 
several years to compare how effectively the individual BLM state 
offices were accomplishing their projects relative to their 
expenditures. This information was used to move funding and resources 
among state offices to more effectively meet program goals and bureau 
priorities. 

Both Agencies Have Systems That Track Revenue by Timber Sale: 

The Timber Sale Accounting system maintains the Forest Service's timber 
sales revenue data, while two systems--the Timber Sale Information 
System and the Collections and Billing System--maintain BLM's timber 
sales revenue data. Both agencies' systems track sale and harvest 
information by individual timber sale; they also automatically bill 
purchasers and track payments. Both agencies also have systems for 
tracking revenue generated under their stewardship contracting 
authority, after initially struggling with how to implement the 
systems. 

Forest Service's Timber Sale Accounting System Maintains Revenue Data: 

The Forest Service's Timber Sale Accounting (TSA) system maintains data 
on all timber-related revenue. The system tracks the volume, type, and 
value of timber harvested by individual timber sale; automatically 
generates bills to timber purchasers; and tracks payments against these 
bills. TSA tracks revenue from sales conducted with appropriated monies 
as well as those conducted with monies from the salvage sale and 
pipeline funds. TSA also tracks payments made by purchasers to fund 
reforestation and brush disposal activities. Recently, the Forest 
Service added a module to TSA to track revenue stemming from activities 
conducted under its stewardship contracting authority. These activities 
often involve the exchange of timber for services and thus can be 
difficult to account for with traditional systems. 

TSA maintains timber sales revenue data by individual timber sale 
contract or permit. Each contract or permit is given a unique 
identifying number in TSA, which provides a standardized process for 
managing the financial aspects of timber sales contracts and permits. 
(Permits involve the sale of forest products other than timber, such as 
firewood, mushrooms, Christmas trees, and decorative grasses and 
foliage.) TSA produces a monthly statement of account for each contract 
and permit; this statement contains a detailed breakdown of activities 
under that contract or permit and ensures accurate computation of 
revenue due the government. 

The revenue comes to the government in the form of cash or credits. 
Cash comes from timber purchasers' payments of bills for timber volume 
removed, or stumpage. A Forest Service sale inspector inspects the 
sales units at least once a month and reports the volume of timber 
harvested. TSA then automatically calculates the amount due, based on 
the amount harvested and the product rate, and generates a bill to the 
purchaser. Once payment is received, TSA distributes the cash to the 
appropriate revenue accounts, such as the National Forest System Fund, 
the K-V fund, and the Salvage Sale Fund. TSA also supplies this 
information to FFIS, where it is recognized as earned income.[Footnote 
19] 

TSA also tracks "purchaser credits" and "cost share credits." Purchaser 
credits represent the value of road construction or reconstruction the 
timber purchaser performed. The purchaser receives credit for the work, 
which is deducted from the appraised value of stumpage.[Footnote 20] 
TSA tracks the purchaser credits used to pay for (or offset) stumpage 
from year to year, as well as the balance of outstanding (unused) 
credits. TSA also tracks cost share credits, which represent the value 
of construction or reconstruction costs shared between the Forest 
Service and the purchaser. For example, if the Forest Service 
contributed materials, such as rock for a road surface, and the 
purchaser did the work, the value of the purchaser's share would appear 
in TSA. Purchaser and cost share credits can be used to pay for timber 
removed by the purchaser. 

Stewardship contracting has posed challenges for the Forest Service 
because the barterlike aspect of stewardship contracting can make it 
difficult to account for using traditional accounting systems. As a 
result, the Forest Service has struggled to incorporate into TSA a way 
to track the collection and distribution of revenue stemming from 
stewardship contracts. The accounting theory governing what are 
essentially barter transactions (although the value of both the timber 
and the services is appraised) is demanding, according to a regional 
official, and TSA programmers have devoted much time to this area. 

Until recently, the Forest Service had not automated the accounting for 
all activities conducted through stewardship contracts. Staff had to 
use manual spreadsheets to track, outside of TSA, the value of timber 
removed and the value of service work completed, thereby allowing them 
to compute the amount the purchaser owed for timber volume removed, if 
any. Accordingly, data on stewardship contracting activities have been 
entered into TSA for only the past few years, and the data were 
incomplete, according to the system administrator. In October 2006, 
during our review, the Forest Service implemented a TSA module that 
tracks most of the stewardship contracting data. 

Within TSA, the monetary activity associated with stewardship contracts 
is now tracked using two unique revenue codes. The first code 
represents a suspense account that contains monies collected from 
timber purchasers as advance payments--that is, money to pay for timber 
that is removed before the service work has been completed. In these 
cases, the advance monies are used to pay for the timber volume 
removed. Then, as the service work is performed, those monies are 
automatically refunded to the purchaser, and the stewardship credits 
are applied as payment for the volume removed to date. When all the 
service work has been completed and there is expected to be additional 
timber volume to be paid for with cash (i.e., when the value of the 
timber exceeds the value of the service work), then the remaining 
suspense fund money is transferred to the retained receipts account. 
This account, represented by the second revenue code, is a region-and 
forest-specific revenue account that contains cash collected for timber 
when the value of the timber exceeded the value of the service work. In 
other words, a contractor has to pay the Forest Service only if the 
total timber value exceeds the total cost of services. The retained 
receipts account may be used to fund additional stewardship sales that 
have been approved by the regional forester. 

With the October 2006 addition of the stewardship accounting module, 
TSA now tracks the amount of stewardship work to be performed, the 
amount performed to date, the volume and value of timber removed, and 
any cash paid the contractor for service work performed (when the value 
of the service work exceeded the value of the timber). TSA 
automatically applies the available stewardship credits to pay for 
timber volume removed to date. 

Although TSA now has a module designed to capture monetary transactions 
related to stewardship contracts, regions and forests said they will 
continue maintaining spreadsheets to track the monthly progress of 
individual stewardship contracting projects and the payment mechanisms 
involved in each one. For example, the spreadsheets track nonmonetary 
"accrual" transactions, which represent the accrued value of credits 
earned by contractors for service work completed. These earned 
stewardship credits (nonmonetary) are used to "pay" for timber 
harvested and are important because the Forest Service has to know how 
much credit to extend when the purchaser wants to cut timber. Without 
this credit, the Service would demand a cash payment before the timber 
could be cut. Accordingly, stewardship work paid for with credits must 
be tracked separately from work paid for with cash. Every month, the 
field offices send their completed spreadsheets to the Albuquerque 
Service Center, which enters into FFIS the nonmonetary accrual 
information. At the end of April 2007, the service center was working 
on automating this process as well. 

BLM Uses Two Systems to Track Timber Sales Revenue: 

In tracking timber sales revenue, BLM uses the Timber Sale Information 
System (TSIS) and the Collections and Billing System (CBS). TSIS 
maintains specific contract data for individual timber sales, including 
the volume, type, and value of timber harvested. Amounts owed by 
purchasers are calculated in TSIS and then entered into CBS, which is 
BLM's official revenue accounting system. CBS generates bills sent to 
purchasers and records collections received for contracts. TSIS and CBS 
track revenue from sales conducted with appropriated monies in addition 
to those conducted with monies from the Forest Ecosystem Health and 
Recovery Fund and the Timber Sales Restoration Pipeline Fund. 

TSIS and CBS maintain timber sales revenue data by individual timber 
sale contract through a unique sale number. This alphanumeric sale 
number identifies the state where the sale takes place, the field 
office administering it, the year, and the sequential sale number for 
that office in that year. 

Throughout the month, information from TSIS on timber harvest activity 
is entered into CBS, which generates bills sent to purchasers. These 
bills are based on the quantity and value of the timber harvested but 
may also include things such as road maintenance fees. At the end of 
each month, data in CBS and TSIS are reconciled. 

Collections are received either in the form of a check sent from the 
purchaser directly to the sale office or as an electronic funds 
transfer sent directly to the bank. All collections are posted to CBS, 
and a unique transaction number is included in the posting. This 
transaction number is generated either by CBS (for collections sent to 
the sale office) or by the bank (for collections electronically 
transferred there). When collection posting is complete, CBS 
automatically produces a statement that is then used to update TSIS. 
Data in the two systems are again reconciled. The reporting system in 
CBS allows staff to track revenue in various ways, such as by sale, 
purchaser, type of timber, or fund. 

BLM developed a separate system for recording revenue from timber sales 
conducted under stewardship contracting authority, the Stewardship 
Contracting Information Database (SCID). For revenue from stewardship 
contracts, BLM uses CBS to track monetary collections and SCID to track 
credits. Upon approval of a new stewardship contracting project, 
initial project information is entered into SCID, and each project is 
assigned a special project code that is used in both SCID and 
CBS.[Footnote 21] Financial and project progress information is 
reported monthly in both systems. Because of the special circumstances 
created by the unique nature of stewardship contracting, BLM has 
devised collections solutions for the different types of contracts. One 
requirement common to both regular timber sales and stewardship 
contracting is that, prior to cutting or removing any forest products 
from BLM-administered lands, a contractor must either pay in advance 
for the product or provide some form of security as a payment bond. For 
stewardship contracts, the contractor has the additional option of 
using earned conservation credits (similar to the Forest Service's 
stewardship credits) in lieu of an advance payment or a payment bond. 
Contractors' advance payments are recorded in CBS and directed to a 
deposit suspense account. When the value of the product removed exceeds 
the amount deposited, the contractor makes additional payments, which 
are entered into CBS and directed to the regular stewardship contract 
product sales fund. 

Conservation credits are also tracked in SCID. When the value of the 
product removed is equal to or lesser than the value of the 
contractor's conservation credits, transactions are recorded in SCID. 
Once a contractor's conservation credits have been exhausted, payments 
for further product removed are recorded in CBS. 

Conclusions: 

The Forest Service, like other federal agencies, is faced with limited 
resources with which to carry out multiple activities, such as 
maintaining campgrounds and trails, protecting wildlife habitat, and 
providing a supply of forest products to society. Given this multitude 
of pressing needs, the Service's efforts to reduce its data management 
costs--and thus allow more dollars to be directed to on-the-ground 
activities through which the Service carries out its mission--would 
appear laudable. As an unintended consequence, however, the agency has 
made it more difficult and resource intensive for field managers to 
manage the very activities that the Service seeks to emphasize. And 
because many field officials are maintaining cuff records to compensate 
for the lack of detailed data available from the Service's system, the 
Service cannot ensure that the hoped-for level of cost savings will 
materialize. That is, reductions in the Service's recognized data 
management costs may be offset by increases in the use of field 
resources to fill in the data gaps. More broadly, maintaining detailed 
data on the cost of the Service's various activities would not only 
assist field managers as they carry out the Service's mission but also 
allow the Service to better assess and improve the efficiency and cost- 
effectiveness of these activities and thereby improve its fiscal 
accountability. 

Recommendation for Executive Action: 

To ensure that field managers responsible for carrying out Forest 
Service operations have the data they need to manage effectively, and 
to provide the Congress and the public with useful cost data to assess 
the fiscal accountability of Service operations, we recommend that the 
Secretary of Agriculture direct the Chief of the Forest Service to 
systematically determine the information needs of the field managers on 
whom the Service relies to carry out its operations, and, based on the 
results of this analysis, take appropriate action to provide data that 
meet those information needs. The Service might consider, for example, 
creating a subsidiary system to track obligations and expenditures at a 
detailed level without further burdening the Department of 
Agriculture's primary system, FFIS. 

Agency Comments: 

We provided the Departments of Agriculture and the Interior with a 
draft of this report for review and comment. The Forest Service 
generally agreed with the findings and recommendations in the report. 
Similarly, the Department of the Interior generally agreed with the 
report's contents. The Forest Service's and Interior's written comments 
are reproduced in appendixes II and III, respectively. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies to interested 
congressional committees, the Secretaries of Agriculture and the 
Interior, the Chief of the Forest Service, the Director of the Bureau 
of Land Management, and other interested parties. We will also make 
copies available to others upon request. In addition, the report will 
be available at no charge on the GAO Web site at http://www.gao.gov. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-3841 or nazzaror@gao.gov. Contact points for 
our Offices of Public Affairs and Congressional Relations may be found 
on the last page of this report. GAO staff who made major contributions 
to this report are listed in appendix IV. 

Signed by: 

Robin M. Nazzaro Director, 
Natural Resources and Environment: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

Our overall objective was to examine the current mechanisms used by the 
Department of Agriculture's Forest Service (Service) for tracking 
timber sales-related obligations, expenditures, and revenue. In 
addition, given that the Department of the Interior's Bureau of Land 
Management (BLM) also conducts timber sales, we included that agency in 
our review. Specifically, our objectives were to determine the extent 
to which (1) the Forest Service tracks timber sales-related obligations 
and expenditures, including the extent to which the Service uses this 
information in making management decisions; (2) BLM tracks timber sales-
related obligations and expenditures, and how BLM's methods for doing 
so compare to those of the Forest Service; and (3) the Forest Service 
and BLM account for their timber sales-related revenue. 

To determine how the Forest Service tracks timber sales-related 
obligations and expenditures and the extent to which Service managers 
use this information to make decisions about their programs, we 
reviewed agency documents and interviewed officials in headquarters and 
in six of the nine Forest Service regional offices about their timber 
sales accounting policies and procedures. Because the Forest Service 
has no agencywide system to track obligations and expenditures at the 
project level, we visited Forest Service regional offices in Alaska, 
Georgia, Montana, Oregon, Utah, and Wisconsin to interview officials 
responsible for tracking timber sales projects and their related 
obligations and expenditures.[Footnote 22] At each of these regional 
offices, we interviewed officials responsible for tracking timber sales-
related obligations, expenditures, and revenue, and officials 
responsible for planning and conducting timber sales-related 
activities. We also met with officials of one or more forest offices in 
each of six regions, as well as officials of five ranger districts, to 
discuss what information they need, the methods they use to capture it, 
and how they use it in managing their day-to-day operations.[Footnote 
23] During our site visits, we collected and reviewed records used to 
identify and track timber-related data. These included "cuff records," 
such as individually maintained computer spreadsheets and databases, 
along with manual modifications made to reports generated by the 
WorkPlan system. During one visit, we also accompanied an "activity 
review team" from the regional office on its site visits to evaluate 
field activities. We also reviewed documents and reports related to the 
Department of Agriculture's existing financial system, the Foundation 
Financial Information System (FFIS). We also reviewed previous work by 
GAO and the Department of Agriculture's Office of Inspector General. 

Because BLM was not the primary focus of our review, our study of the 
extent to which it tracks timber sales-related obligations and 
expenditures was more limited than our work at the Forest Service. 
Additionally, unlike the Forest Service, BLM employs standardized 
agencywide guidance and systems to track this information at the 
project level; therefore, significant variation across different 
geographic locations was unlikely. Nevertheless, in order to interview 
officials responsible for tracking timber sales projects and their 
related obligations and expenditures, we visited several BLM locations, 
including the BLM state office in western Oregon that manages the 
majority of the agency's timber program, as well as a district office 
in Oregon; the BLM state office in Idaho, where we spoke with officials 
from the state office, one district office, and two field offices; and 
one field office in Montana. In addition, we visited BLM headquarters 
in Washington, D.C., and the National Business Center in Denver, 
Colorado, and we conducted telephone interviews with BLM officials 
knowledgeable about the agency's cost accounting practices and systems. 
We obtained and reviewed documents on BLM's policies, procedures, and 
practices for tracking timber sales obligations and expenditures, 
including system manuals and other documentation for BLM's Timber Sale 
Information System (TSIS), Management Information System (MIS), and the 
Department of the Interior's Federal Financial System (FFS). Finally, 
we relied, in part, on GAO's previous work on accounting practices 
within the Department of the Interior.[Footnote 24] 

During our visits to Forest Service and BLM offices, including their 
respective budget and finance centers, we learned how both agencies 
account for timber sales-related revenue. We reviewed relevant portions 
of agency manuals and handbooks and documents detailing procedures to 
identify and report revenue, including revenue that the agencies manage 
through participation in an interagency agreement governing timber 
sales financed by the Timber Sales Pipeline Restoration Fund. We 
reviewed detailed descriptions of the Forest Service's revenue process, 
systems, and its internal controls prepared by the independent auditor, 
KPMG, during KPMG's annual audit of the Forest Service's financial 
statements, and we read the fiscal year 2006 audit report. We reviewed 
KPMG's overall approach and sampling methodology and determined that 
KPMG's relevant findings were sufficiently reliable for understanding 
sales-related revenue in the Forest Service. We also obtained 
information about the Forest Service's Timber Information Management 
(TIM) system, which contains detailed information on timber sales 
contracts. We also obtained information about the Timber Sale 
Accounting (TSA) system, which maintains timber sales revenue data, and 
interviewed the system administrator. To gain an understanding of how 
TIM and TSA maintain data, we held discussions with cognizant officials 
on internal controls over timber sales contracts, data entry practices, 
and revenue collection procedures. For BLM, we followed the same 
general procedures with respect to the following revenue tracking 
systems: the Collections and Billing System (CBS), FFS, and TSIS. 
Finally, in addition to reviewing both agencies' standard systems for 
timber revenue collection, we interviewed Forest Service and BLM 
officials about the progress they are making in designing or modifying 
systems to track revenue associated with stewardship contracting 
projects. Based on the collective information and findings from our 
discussions and interviews, we believe these data are sufficiently 
reliable for (separately and comparatively) reporting on systems for 
tracking timber sales-related revenue in the Forest Service and BLM. 

We conducted our review from April 2006 through April 2007 in 
accordance with generally accepted government auditing standards, which 
included an assessment of data reliability and internal controls. 

[End of section] 

Appendix II: Comments from the Forest Service: 

USDA: 
United States Department of Agriculture: 
Forest Service: 
Washington Office: 
1400 Independence Avenue, SW: 
Washington, DC 20250 

File Code: 1420/2400: 

Date: Jun 15 2007: 

Robin M. Nazzaro: 
Director, Natural Resources and Environment: 
Government Accountability Office: 
441 G. Street, NW: 
Washington, DC 20548: 

Dear Ms. Nazzaro: 

Thank you for the opportunity to review and comment on the draft 
Government Accountability Office report GAO-07-764, "Federal Timber 
Sales: Forest Service Could Improve Efficiency of Field-Level Timber 
Sale Management by Maintaining More Detailed Data." The Forest Service 
generally agrees with the GAO findings and recommendations and has no 
additional comments on the report. Implementation of the 
recommendations will require careful examination of the processes and 
reporting requirements across the agency's program areas. We would be 
happy to work with GAO in such an examination. If you have any 
questions, please contact Sandy T. Coleman, Assistant Director for 
GAO/OIG Audit Liaison Staff, at 703-605-4699. 

Sincerely, 

Signed by: 

Abigail R. Kimbell: 
Chief: 

cc: Richard Fitzgerald, Corbin Newman, Clarice Wesley, Jesse L King: 

[End of section] 

Appendix III: Comments from the Department of the Interior: 

United States Department of the Interior: 
Office Of The Secretary: 
Washington, D.C. 20240: 

Jun 18 2007: 

Ms. Robin M. Nazzaro: 
Director, Natural Resources and Environment: 
Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Ms. Nazzaro: 

Thank you for the opportunity to review and comment on the Government 
Accountability Office (GAO) draft report entitled "Federal Timber 
Sales: Forest Service Could Improve Efficiency of Field-Level Timber 
Sale Management by Maintaining More Detailed Data" (GAO-07-764). The 
Department of the Interior (DOI) offers the following comments: 

The DOI agrees with your findings and conclusions relative to the 
Bureau of Land Management (BLM). Your report makes no specific 
recommendations to the BLM. 

The BLM places great emphasis on accountability at all levels of the 
organization. Inherent in this expectation is financial performance. As 
you note, our Management Information System and associated data 
management systems allow the BLM managers to track performance down to 
the Field Office level. Field Office managers are, thus, able to track 
project progress, costs, and revenues to adjust resource allocations 
and assess the cost effectiveness of specific management activities. 

If you have any questions, please call Andrea Nygren, BLM Audit Liaison 
Officer, Division of Evaluations and Management Services, 202-452-5153, 
Mark Buckbee, Acting Chi", Division of Forests and Woodlands, at 202- 
452-5029, or Scott Lieurance, Senior Forester, Division of Forests and 
Woodlands, at 202-452-0316. 

Sincerely, 

Signed by: 

C. Stephen Allred: 
Assistant Secretary: 
Land and Minerals Management: 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Robin M. Nazzaro, (202) 512-3841 or nazzaror@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Stephen Gaty, Assistant 
Director; Lisa Brownson; Sandra Davis; Barry Grinnell; Angela 
Pleasants; and Pam Tumler made key contributions to this report. Nancy 
Crothers, Denise Fantone, Tim Guinane, Kevin Jackson, Rich Johnson, 
Phil McIntyre, and Jack Warner also made important contributions to 
this report. 

FOOTNOTES 

[1] The Service allocates funds by budget line item; these items 
generally correspond to programs. For the purposes of this report, we 
will refer to the budget line items as programs. 

[2] An agency incurs an obligation when it places an order, signs a 
contract, purchases a service, or takes other actions that require the 
government to make payments immediately or in the future. An 
expenditure occurs when the payment is actually made (i.e., when funds 
are actually transferred). The U.S. budget uses obligational accounting 
to control the use of funds and ensure that agencies comply with 
appropriations law. 

[3] Act of June 9, 1930, Ch. 416, 46 Stat. 527; Pub. L. No. 94-588, § 
18, 90 Stat. 2962 (1976); Pub. L. No. 109-54, § 412, 119 Stat. 551 
(2005). 

[4] Timber sales are generally referred to either as green sales, which 
involve the harvest of live trees, or as salvage sales, which involve 
the harvest of trees that are dead, dying, or damaged by wind, fire, 
disease, or insects. 

[5] Pub. L. No. 94-588, § 14, 90 Stat. 2958 (1976), as amended. 

[6] Act of Aug. 11, 1916, ch. 313, 39 Stat. 462, as amended. 

[7] The law stated that the land management goals of stewardship 
contracts include road and trail maintenance, watershed restoration, 
and prescribed burning and noncommercial tree removal to improve forest 
health. 

[8] Pub. L. No. 105-277, § 347, 112 Stat. 2681-298 (1998). The Forest 
Service is authorized to use either contracts or agreements in 
implementing stewardship projects. In this report, we refer to all such 
arrangements as contracts. 

[9] Pub. L. No. 108-7, § 323, 117 Stat. 275 (2003). For further 
information about the Forest Service's use of stewardship contracting 
authority, see our report Federal Land Management: Additional Guidance 
on Community Involvement Could Enhance Effectiveness of Stewardship 
Contracting, GAO-04-652 (Washington, D.C.: June 14, 2004). 

[10] GAO, Financial Management: Annual Costs of Forest Service's Timber 
Sales Program Are Not Determinable, GAO-01-1101R (Washington, D.C.: 
Sept. 21, 2001). 

[11] GAO, Forest Service: Little Progress on Performance Accountability 
Likely Unless Management Addresses Key Challenges, GAO-03-503 
(Washington, D.C.: May 1, 2003). 

[12] GAO, Managerial Cost Accounting Practices: Department of 
Agriculture and the Department of Housing and Urban Development, GAO-06-
1002R (Washington, D.C.: Sept. 21, 2006). 

[13] 43 U.S.C. 1181a et seq. 

[14] The federal share of revenue is that portion of revenue not paid 
to the counties in accordance with the requirements of 43 U.S.C. 1181f 
and 43 U.S.C. 1181-1 et seq., and Pub. L. No. 106-393. 

[15] The Forest Service refers to national forests as "units"; thus, a 
ranger district is a "subunit." 

[16] Responsibility for fund control, by program, is at the regional 
level. 

[17] A thousand board feet is a common measure of timber volume. One 
board foot equals 12 inches by 12 inches by 1 inch. 

[18] These work activities are planning and completing adoptions; 
gathering, holding, monitoring, and taking censuses of animals; and 
conducting compliance inspections. 

[19] In its audit report on the Forest Service's fiscal year 2006 
financial statements, KPMG, the Service's independent auditor, noted 
that 7 of the 208 timber sales revenue transactions tested were not 
recognized in the correct year. The report said that, although the 
Forest Service continues to improve its accounting operations, such 
deficiencies result in additional time and effort on the part of 
Service staff to research and resolve. 

[20] For contracts awarded prior to April 1, 1999, however, credits 
owed the purchaser for roadwork were not subtracted from the appraisal 
value (as is done for contracts awarded since April 1, 1999) but, 
rather, offset the stumpage value when the timber was removed. 

[21] Stewardship contracts involving projects funded by the Forest 
Ecosystem Health and Recovery Fund retain the project code already 
assigned them. 

[22] These states contain, respectively, the Forest Service's Alaska, 
Southern, Northern, Pacific Northwest, Intermountain, and Eastern 
regional offices. 

[23] The information we gathered from field managers was not intended 
to be representative of all field managers. Instead, our interest was 
in gaining a perspective from these managers about the data they need 
and use in managing their projects. Our interviews ultimately revealed 
some recurring common themes across the locations we visited. 

[24] GAO, Managerial Cost Accounting Practices at the Department of the 
Interior, GAO-07-298R (Washington, D.C.: May 24, 2007). 

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