ES, IG-99-021, Obligations Management -- Recording Obligations and Adjustments

OBLIGATIONS MANAGEMENT -- RECORDING
OBLIGATIONS AND ADJUSTMENTS
IG-99-021

Executive Summary

Background
NASA is responsible for ensuring that appropriated funds are used within specified time periods and only for the purposes and amounts authorized by Congress. The NASA accounting procedures are designed to record and control documents and transactions to provide NASA officials with reliable, accurate, timely, and complete financial data. Effective obligation management is one of the fundamental, internal controls designed to produce the data with which to control funds. An integral part of managing obligations is ensuring that obligations are recorded accurately.
Unrecorded or inaccurate obligation record keeping can distort the accuracy of available appropriation balances. Failure to record obligations and adjustments in a timely manner increases the risk of overobligation and the risk that program officials will not have accurate information to use in decisionmaking.

Objective
The audit objective was to determine whether obligations and adjustments to obligations were promptly and accurately recorded. We performed audit fieldwork at four NASA Centers: Glenn Research Center (Glenn), Goddard Space Flight Center (Goddard), Johnson Space Center (Johnson), and Marshall Space Flight Center (Marshall) (see Appendix A).

Results of Audit
Results of Audit. The four Centers we reviewed accurately recorded their obligations and adjustments. However, the Centers sometimes took more than 15 working days to record obligations, and in some cases, had limited or no documentation to support the posted obligation. Also, the Centers did not always promptly record adjustments to obligations. In cases in which costs and disbursements were reported in excess of obligations, adjustments totaling $42 million remained uncorrected for 6 months or longer. As a result, NASA financial records were not completely current for purposes of preventing overobligation and ensuring fund availability for expenditures.

Revised Recommendations
In response to discussions with management and its comments on a draft of this report, we revised the recommendations to more clearly state our audit results and to reflect the extent of the problems identified. Management initially nonconcurred with the draft report recommendations, but provided an acceptable alternative action.

Recommendations
We recommended that the NASA Chief Financial Officer implement and refine processes to ensure obligations and adjustments to obligations are promptly recorded.

Management's Response
Concur. Management recognized the importance of the timely recording of obligations and correction of errors and, therefore, plans to include metrics to address those factors in its Quality Assurance Evaluation process.

Evaluation of Management's Response
Management's planned actions are responsive to the recommendations.

Background	NASA is responsible for ensuring that appropriated funds are used within specified time periods and only for the purposes and amounts authorized by Congress. The NASA accounting procedures are designed to record and control documents and transactions to provide NASA officials with reliable, accurate, timely, and complete financial data. Effective obligation management is one of the fundamental, internal controls designed to produce the data with which to control funds. An integral part of managing obligations is ensuring that obligations are recorded accurately. Unrecorded or inaccurate obligation record keeping can distort the accuracy of available appropriation balances. Failure to record obligations and adjustments in a timely manner increases the risk of overobligation and the risk that program officials will not have accurate information to use in decisionmaking.
Objective	The audit objective was to determine whether obligations and adjustments to obligations were promptly and accurately recorded. We performed audit fieldwork at four NASA Centers: Glenn Research Center (Glenn), Goddard Space Flight Center (Goddard), Johnson Space Center (Johnson), and Marshall Space Flight Center (Marshall) (see Appendix A).
Results of Audit	Results of Audit. The four Centers we reviewed accurately recorded their obligations and adjustments. However, the Centers sometimes took more than 15 working days to record obligations, and in some cases, had limited or no documentation to support the posted obligation. Also, the Centers did not always promptly record adjustments to obligations. In cases in which costs and disbursements were reported in excess of obligations, adjustments totaling $42 million remained uncorrected for 6 months or longer. As a result, NASA financial records were not completely current for purposes of preventing overobligation and ensuring fund availability for expenditures.
Revised Recommendations	In response to discussions with management and its comments on a draft of this report, we revised the recommendations to more clearly state our audit results and to reflect the extent of the problems identified. Management initially nonconcurred with the draft report recommendations, but provided an acceptable alternative action.
Recommendations	We recommended that the NASA Chief Financial Officer implement and refine processes to ensure obligations and adjustments to obligations are promptly recorded.
Management's Response	Concur. Management recognized the importance of the timely recording of obligations and correction of errors and, therefore, plans to include metrics to address those factors in its Quality Assurance Evaluation process.
Evaluation of Management's Response	Management's planned actions are responsive to the recommendations.