Summary

Major weaknesses in the Forest Service's accounting and financial reporting persist. The Forest Service has committed considerable resources, including extensive use of consultants, to resolve its long-standing management deficiencies. Although progress has been made, the Forest Service's financial management problems are deep seated and require significant time and effort to resolve. Also, the Forest Service's ability to produce financial reports has deteriorated because of problems in implementing its new accounting system--the Foundation Financial Information System (FFIS). Until the agency corrects its basic accounting records and successfully implements FFIS, it will not be able to achieve financial accountability. The Forest Service's goal of achieving financial accountability by the end of fiscal year 1999 does not appear feasible.

GAO noted that: (1) major weaknesses in the Forest Service's accounting and financial reporting persist; (2) while the Forest Service has made some progress in addressing financial management deficiencies, its ability to produce financial reports has deteriorated because of problems implementing the Foundation Financial Information System (FFIS); (3) until the agency is able to: (a) correct its basic accounting records; and (b) successfully implement FFIS to account for and report on its activities, it will not be in a position to achieve financial accountability; (4) the Forest Service's current autonomous field structure may further hamper those efforts; (5) the IG's recently completed audit of Forest Service FY 1997 financial statements disclosed continuing major weaknesses in accounting and reporting, particularly for real property, accounts receivable, and accounts payable; the IG therefore issued a disclaimer of opinion; (6) errors were also detected in the Forest Service's failure to reconcile its fund balance with Department of the Treasury; (7) the IG reported that adjustments to accounts receivable totalling about $166 million could not be verified because the automated data files documenting the adjustments had been recorded over and therefore were no longer available; (8) the Forest Service continued to lack a system that provided detailed accounts payable balances, and relied instead on its obligations system to estimate accounts payable at year-end; (9) since January of this year, GAO, the IG, and USDA's outside consultant have identified serious problems with the FFIS implementation process; (10) these problems were caused by: (a) not simplifying the Forest Service's business processes before FFIS was implemented; (b) adding feeder systems to FFIS; (c) implementing the system before it was fully tested; and (d) inadequate oversight and management control over the project; (11) as a result of these problems, the outside consultant recommended that implementation of the system in the rest of the Forest Service not proceed on October 1, 1998, as planned; (12) the Forest Service has decided to defer full implementation of the system until October 1, 1999; (13) although major barriers to financial accountability still remain, the Forest Service has begun or has completed several actions that, if successfully carried through, represent important steps towards achieving financial accountability; and (14) while the Forest Service has committed considerable resources and progressed in addressing some of its long-standing financial management deficiencies, much work remains.