Management's Discussion and Analysis

Compliance with Legal and Regulatory Requirements

FY2003 Management Control Assessments

The associate directors of Biology, Geology, Geography and Water; the regional directors of Eastern, Central, and Western Region; the chief of Administrative Policy and Services; and the Geographic Information Officer provided signed assurance statements that their areas of responsibility had assessed the systems of management, administration, and financial controls in accordance with standards, objectives, and guidelines prescribed by the Federal Managers' Financial Integrity Act (FMFIA) and the Office of Management and Budget (OMB) Circular A-123.

The objectives of the assessments ensured that:
  • programs achieved their intended results;
  • resources were used consistent with the Bureau's mission;
  • resources were protected from fraud, waste and mismanagement;
  • laws and regulations were followed; and
  • reliable and timely information was maintained, reported, and used for decision making.
In performing this assessment, the associate directors of Biology, Geology, Geography and Water; the regional directors of Eastern, Central, and Western Region; the chief of Administrative Policy and Services; and the Geographic Information Officer relied on the knowledge and experience gained from the daily operations of their programs and systems of accounting and administrative controls, and information obtained from sources such as management control assessments, Office of the Inspector General and General Accounting Office audits; program evaluations and studies; independent audits of financial statements; performance plans and reports; and other information. Each assurance statement provided documentation on specific management control assessments conducted and audits and or reviews conducted by the OIG and/or GAO. The USGS Director relied on this extensive documentation to support the Bureau assurance statement provided to the Department on September 15, 2003. (see Appendix B for additional information on the program evaluation.) 		  In October 2002, USGS established an ongoing Bureau wide network security project to address security deficiencies. This network security project includes a broad range of tasks from centralizing the management of the USGS wide-area network to reviewing and securing all USGS desktop computers. The USGS is also implementing a security policy monitoring software tool that will routinely assess all USGS mission critical systems to ensure the confidentiality, integrity, and availability of these assets. The tool will help ensure compliance with Department of the Interior, National Information Standards Technology, and industry best practices and will also be installed over time on all mission essential systems.

Based on the preliminary results of the USGS independent financial statement audit for FY 2003, the USGS can conclude that it is in substantial compliance with the U.S. Government Standard General Ledger at the transaction level as required by the Federal Financial Management Improvement Act (FFMIA). However, due to reportable conditions identified in security and applications controls in financial management systems and a material weakness related to USGS' policies, procedures, and internal controls over its accounting for reimbursable agreements, the USGS cannot provide reasonable assurance that it is in substantial compliance with OMB Circular A-130, Management of Federal Information Resources, and OMB Circular A-127, Financial Systems and Federal Accounting Standards. The USGS has developed and will implement a remediation plan to resolve the reportable conditions relating to information system security controls and applications, and accounting and reporting standards during the next fiscal year.

Chip Groat
Director


Resolution of Internal Control Material Weaknesses and Non-Compliance with Laws and Regulations
The following table summarizes actions taken to resolve material weaknesses, reportable conditions, and instances of noncompliance with laws and regulations reported in the Independent Auditors' Report on the USGS Financial Statements for Fiscal Years 2001 and 2000 and in the Independent Auditors' Report Regarding "Observations on U.S. Geological Survey's Internal Control and Compliance with Laws and Regulations for Fiscal Year 2002".

Material Weakness
Description
Corrective
Action
Target
Date
Implemented
(Yes/No)
Inadequate Security and
Controls Over Information
Technology Systems

Develop and implement an entity-wide risk assessment program to fully comply with OMB Circular A-130. Ensure proper segregation of duties and identify and if necessary adopt mitigating controls where segregation of duties cannot be achieved. Improve security management structure by taking immediate steps to correct the network vulnerabilities and access control deficiencies. Document and implement application software development and change controls to prevent unauthorized or untested program modifications. Periodically test continuity of operations plan.

Status as of 9/30/03: USGS has a reportable condition related to IT security to address during Fiscal Year 2004.

9/30/03

 

 

 

6/30/04

 Partially
Organizational Structure and Leadership of Financial Management Ensure that all personnel, including scientists, who perform accounting functions fully comply with OMB Circular No. A-123, Management Accountability and Control. Align all accounting functions and responsibilities under a CFO who can focus directly on the improvement of financial management operations; investigate the critical process weaknesses and perform a reassessment of needs that addresses personnel resources, management responsibilities, process flow, policies and procedures and internal controls; improve and enforce controls to ensure that accounting information processed by regional and district/field offices are complete, accurate, timely and in accordance with policy; clarify APSí authority to administer, manage, and enforce compliance with accounting policies and procedures; develop and provide training programs for all accounting and administrative personnel; assess the structure of the central accounting and finance operations to ensure that all accounting positions and responsibilities are appropriately defined. 09/30/03 Yes
Final Reporting Controls Perform appropriate reviews of the financial statements; establish and implement effective year-end closing procedures to facilitate timely preparation of financial information; implement quarterly or semi-monthly closing procedures; implement procedures to ensure that individual financial statement line items are reconciled on a regular basis; establish and implement procedures to ensure that all required financial statement notes are properly prepared and reported. 09/30/03 Yes
Account Analysis and Adjustments

Develop and implement procedures to ensure that all accounting adjustments are adequately supported; perform timely analysis after month-end of suspense account and related accounts such as accrued liabilities, advances from others and prepayments; implement regular analysis of proprietary and budgetary accounts and determine the causes of any unreconciled differences; establish and implement procedures to address timely reconciliation of intra-Departmental transactions.

Status as of 9/30/03: USGS has a reportable condition to address in FY2004 to improve elimination of intra-departmental transactions

 09/30/03 Partially
Revenue Cycle Controls

Upgrade systems to reduce the extent of manual intervention and improve automatic systems interfaces; reduce the complexity of accounting for individual agreements; establish policies and procedures for retaining support for expenses related to internal transactions; establish procedures to ensure timely review of PCAS information; and establish procedures to ensure compliance with applicable accounting standards for long-term contracts.

Status as of 9/30/03. USGS continues to have a material weakness in accounts receivable and revenue controls.

 09/30/03 No
Property, Plant, and Equipment

Implement policies and procedures to ensure that proper accounting and control of all property, plant and equipment.

Status as of 9/30/03. USGS has a reportable condition to address during FY 2004.

 09/30/03 Partially
Inventory Controls Establish policies and procedures to ensure compliance with SFFAS No. 3. 09/30/03 Yes
Working Capital Fund Accounting Develop and implement a posting model that will properly record investment complements of the working capital fund. 09/30/03 Yes

FFMIA areas:

  • Financial Management Systems
  • Federal Accounting Standards
  • Standard General Ledger (SGL)

Complete corrective actions described for the Inadequate Security and Controls over Information Technology Systems material weakness; complete corrective actions described for all other material weaknesses described in the previous pages; and complete a review of DORRAN and IBIS systems for compliance with the SGL requirements.

Status as of 9/30/03: USGS did not substantially comply with the Federal Financial Management Systems and Federal Accounting Standards requirements. However, USGS is in substantial compliance with the U.S. SGL requirements.

9/30/03

 

 

6/30/04

 Partially


The Debt Collection Improvement Act of 1996 -- Electronic Funds Transfer Compliance
During FY2003, we continued our efforts to maximize the use of payment mechanisms compliant with Electronic Funds Transfer (EFT) as required by the Debt Collection Improvement Act of 1996. DOI's overall EFT performance targets for FY 2003 by payment categories were: salary 98%, vendor 80% and miscellaneous 92%. USGS exceeded DOI's goal in every category, and made progress with a .2% increase in the EFT percentage for salary and miscellaneous payments and a 1.2% increase for vendor payments.

Graph showing electronic funds transfer for FY02 and FY03. Please contact Carla Burzyk of the Office of Accounting and Financial Management at cburzyk@usgs.gov for full information

Prompt Payment Act Compliance
Over 98% of USGS' invoices were paid on time in FY2003 and FY2002. In addition, the late payment interest penalties decreased from $75,005 in FY2002 to $21,308 in FY2003. Our performance remains above DOI's goal of 97 %. We will continue to monitor our payment performance to ensure our timely vendor payment percentage stays on target.

Graph showing prompt payments for FY99 - FY03. Please contact Carla Burzyk of the Office of Accounting and Financial Management at cburzyk@usgs.gov for full information

Bankcards
USGS is dedicated to the use of bankcards as a means of streamlining procurements. The use of bankcards continues to grow as more cards are issued and the bankcard becomes the preferred method of procurement for small purchases. Usage of the card has grown from 8,288 cardholders in FY2000 to 8,592 in FY2003. The value of purchases made using the bankcards has remained relatively constant over the past 4 years. USGS has paid considerable attention to the internal controls surrounding these purchases to ensure that all such purchases are legal and proper.

Graph showing bank card activity: cardholders (top) and purchased (bottom) for FY00 through FY03. Please contact Carla Burzyk of the Office of Accounting and Financial Management at cburzyk@usgs.gov for full information

HHS Payment Management System
USGS uses the Health and Human Services' payment management system to make disbursements for grants and cooperative agreements with States, municipalities and universities. In FY2003, USGS issued payments in excess of $50.6 million dollars through the HHS system, which is an increase of $30.4 million from FY2002. The increase is due to the USGS requirement that all new awards issued after October 1, 2001 are to be set up and paid through the Payment Management System.

Graph showing HHS Payment Management System. Please contact Carla Burzyk of the Office of Accounting and Financial Management at cburzyk@usgs.gov for full information

Debt Management and Receivables Due from the Public
USGS' billed accounts receivable from the public increased from $28.7 million in FY2002 to $30 million in FY2003. The delinquent balance for FY2002 increased from $10.2 million to $11.7 million for FY2003, though the ratio of delinquencies to the billed accounts receivable balance decreased. Delinquent amounts over 1 year past due decreased from $2.8 million in FY2002 to $.3 million, or 88%, at the end of FY2003. Since the implementation of the Debt Collection Improvement Act (DCIA), the USGS'outstanding delinquencies have declined. The DCIA requires that delinquencies older than 180 days be referred to the Department of the Treasury's Financial Management Service, which was established as the Federal government's debt collection center. The USGS reports the status of receivables on quarterly Treasury Report on Receivables (TROR) reports. As of September 30, 2003, USGS reported on the TROR that $1.3 million in delinquencies had been referred to FMS for cross servicing.

Graph showing receivables billed to the public (FY02 -FY03). Please contact Carla Burzyk of the Office of Accounting and Financial Management at cburzyk@usgs.gov for full information

U.S. Department of the Interior, U.S. Geological Survey
URL: http://pubsdata.usgs.gov/pubs/03financial/html/compliance.html
Maintained by Eastern Publications Group
Last modified: 16:28:43 Tue 22 Nov 2016
Privacy statement | General disclaimer | Accessibility