Weak Internal Controls Make Some Navy Activities Vulnerable to Fraud, Waste, and Abuse
AFMD-81-30
Published: Apr 03, 1981. Publicly Released: Apr 03, 1981.
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Highlights
GAO reviewed the Naval Sea Systems Command (NAVSEA) including two shipyards and two other activities which provide support services to NAVSEA to determine whether the internal control systems of these activities adequately protect federal funds and assets from fraud, waste, and abuse.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Navy | The Secretary of the Navy should direct the NAVSEA to implement procedures for: (1) expediting the processing of requests for office equipment; (2) performing internal reviews of contract overhead charges to ensure that only authorized items are charged; (3) reviewing the contract and funding documents used in acquiring office equipment to ensure that other charges are proper and are accounted for; and (4) providing specific detailed guidelines on the use of funding documentation. |
According to the Department of the Navy, part 2 of this recommendation is the responsibility of the Defense Contract Audit Agency. The Navy will request audits when appropriate.
|
| Department of the Navy | The Secretary of the Navy should ensure that the NRFC improves its review of payment requests and automated system edits by thoroughly examining documentation supporting expenditures before making payments, and by ensuring that the more sophisticated computer system being designed requires an adequate number of matching invoice elements to preclude duplicate payments. |
The latest response, March 16, 1984, indicates that procedures intended to implement this recommendation are partially implemented because of an incremental phase process. The agency feels that strengthened internal controls will limit vulnerability to fraud, waste, and abuse.
|
| Department of the Navy | The Secretary of the Navy should require the Charleston shipyard to match payments to supporting documentation and to properly classify accounts receivable so that they are collected promptly. |
Passage of Federal Managers Financial Integrity Act of 1982.
|
| Department of the Navy | The Secretary of the Navy should direct all installations to assign an ADP security officer, implement a security training program, and restrict access to computer equipment, computer tapes, and system documentation. |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of the Navy | The Secretary of the Navy should emphasize to all management levels the significance of good internal controls and the need for managers to make sure that tasks and functions for which they are responsible are adequately controlled to prevent, or at least reduce, the risk of intentional or accidental misuse or abuse of federal funds. |
Congress passed the Federal Managers Financial Integrity Act of 1982 which requires the head of an agency to submit an annual report to Congress by December 31 on the agency's systems of internal accounting and administrative controls.
|
| Department of the Navy | The Secretary of the Navy should: (1) establish a central internal control officer to oversee the controls and ensure that each command and major location establish its own officer to see that improvements are made to correct the problems noted during the GAO review and that surveillance is constantly maintained to prevent recurrence of these problems; and (2) require proper segregation of payroll functions at NRFC so that no one person can handle all phases of a transaction. |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of the Navy | The Secretary of the Navy should improve other controls over payroll at NAVSEA headquarters and the shipyards, such as requiring: (1) control totals to be determined when source documents are prepared; (2) personnel offices to be informed by the payroll staff of actions processed to payroll files; and (3) a routine, periodic reconciliation of payroll and personnel files. |
Passage of Federal Managers Financial Integrity Act of 1982.
|
| Department of the Navy | The Secretary of the Navy should improve controls over travel at NAVSEA headquarters by: (1) requiring appropriate officials to approve travel; (2) seeing that travel advances are liquidated promptly and that claims are properly reviewed; and (3) ensuring that managers receive reports containing information needed for controlling and planning travel expenditures. |
Passage of Federal Managers Financial Integrity Act of 1982.
|
| Department of the Navy | The Secretary of the Navy should require the Charleston shipyard to improve its control over travel by addressing the weaknesses that were identified in the travel processes at the Charleston shipyard. |
Passage of Federal Managers Financial Integrity Act of 1982.
|
| Department of the Navy | The Secretary of the Navy should make internal audits more effective by: (1) reassessing staffing priorities at all levels to adequately emphasize internal auditing in light of decreasing size and other factors which make Navy activities more vulnerable to fraud, waste, and abuse; (2) requiring internal audit participation in the design, development, and test phases of a new computer system to ensure that factors to enhance auditability, audit trails for security, and quality output are designed and developed into new systems; and (3) requiring internal auditors to identify underlying causes of problems uncovered so that action can be taken to prevent recurrence. |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
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Topics
Electronic data processingComputer securityFederal agency accounting systemsFederal fundsFraudInternal controlsIrregular procurementNaval facilitiesPayroll recordsMilitary forces