Summary

GAO evaluated the Department of Energy's (DOE) implementation of the Federal Managers' Financial Integrity Act (FMFIA), including: (1) improvements in internal controls and the process DOE uses to evaluate and correct control weaknesses; (2) the status of the DOE major accounting systems and evaluations made to determine if they conform to GAO requirements; and (3) the accuracy and completeness of the Secretary's annual report.

GAO found that DOE is making reasonable progress in implementing an internal control evaluation process that complies with Office of Management and Budget (OMB) guidelines. DOE has improved controls in four of the five areas of material weakness that it had identified. While GAO did not identify any material weaknesses not reported by DOE, it concluded that DOE needs to increase its internal control testing. In addition, GAO found that, in some instances: (1) vulnerability assessments and internal control reviews (ICR) were not performed according to DOE guidelines; and (2) although DOE has developed a comprehensive plan for reviewing its accounting systems for conformance with GAO standards, it did not adequately describe the scope of accounting system evaluations performed, did not adequately document evaluation results, and did not sufficiently test the systems. Finally, although its 1984 annual report stated that DOE had reasonable assurance that its systems of internal controls met FMFIA objectives and that its accounting systems conform to the Comptroller General's principles and standards, GAO concluded that DOE does not have an adequate basis for these assurances without better evidence based on sound ICR and checks to determine that its systems are working as intended.