Summary

GAO reviewed the Department of State's compliance with the Federal Managers' Financial Integrity Act of 1982 (FMFIA) to assess: (1) whether actions taken as a result of the act are improving internal control and accounting systems; (2) its progress in implementing a program for evaluating systems of internal control; and (3) the reasonableness of State FMFIA reports.

GAO noted that State is making progress toward correcting reported internal control weaknesses; however, it has not made adequate progress in correcting long known weaknesses and accounting deficiencies related to personal property management. GAO found that: (1) the 1984 report on accounting systems stated that the systems were not in conformance with the Comptroller General's requirements; (2) areas excepted from the report on internal controls were of major importance to State operations; (3) the FMFIA implementation program has not resulted in detailed evaluations and tests of all systems of internal control; (4) effective action has not been taken to correct accounting and internal control weaknesses in personal property management; and (5) specific problems were not listed in the FMFIA report, but the report made reference to the problems and characterized them as minor accounting deficiencies. GAO also found that: (1) controls over personal property management were not adequate because of the lack of a departmentwide system for managing and accounting for property; (2) State failed to perform physical inventories at all locations and reconcile the inventories to financial records; (3) some vulnerability assessments and internal control reviews were not completed and analyzed by the year's end; and (4) no formal requirements exist to review the reasonableness of proposed corrective actions or to test and evaluate their effectiveness after implementation.