7)

TASK I

FINDINGS AND RECOMMENDATIONS (CONTINUED)

The cash reconciliation between Treasury cash and the general ledger
balance became a very
mechanical process whereby numbers were
reconciled but no effort made to properly reconcile the accounts.
Some adjustments on the reconciliations carried for months at a time
and some numbers showed up as debit/credit entries on the same
reconciliation. Upon our staff's request, however, the final year
end reconciliation was properly justified.

cash balance.

Each monthly cash reconciliation should not merely be a mechanical reconciliation of numbers but, properly reconciled to justify the This means that close attention be given to entries that must be made to adjust either the general ledger cash balance or the Treasury cash balance.

Whelan, Barsky, Matelis & Company, Chartered

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Page 9 of 17

1)

2)

TASK II

Analysis of Internal Financial Controls

PLAN AND APPROACH

Through an interview process we determined what internal controls exist.

While performing Task I we determined if present internal controls are adequate to:

a) Safeguard agency resources;

b) Promote accuracy and reliability in accounting and operating

data;

c) Encourage and measure compliance with agency policy;

d) Restrict obligations and costs and insure receipt of all agency

revenues;

e) Judge and promote efficiency and economy of operations in all

divisions.

TASK II

FINDINGS AND RECOMMENDATIONS

The internal financial controls, subject to the following observations, are accurate, complete and reliable. Our analysis indicates two major areas where further OTA procedures should be developed. These two areas

are:

1)

Adoption of a complete accrual basis of accounting. As defined in Section 9 of Title 2 of the General Accounting Office Policy and Procedures Manual for Guidance of Federal Agencies, "the maintenance of accounts on the accrual basis is a basic requirement for Federal agencies." Further requirements are stated as follows:

Whelan, Barsky, Matelis & Company, Chartered

CERTIFIED PUBLIC ACCOUNTANTS

Page 10 of 17

TASK II

FINDINGS AND RECOMMENDATIONS (CONTINUED)

of

"The proper recording of the obligation and disbursement
public funds is an integral part of accrual accounting. Agency
accounting systems that provide financial information primarily
in terms of obligations and disbursements are incomplete if
they cannot also produce the data needed to properly disclose
information on financial and property resources, liabilities,
revenue and expenditures, and costs of operations by major
areas of responsibility or activity. They do not meet the
objectives of Federal agency accounting prescribed by law."

"The techniques of applying the accrual basis may vary from
agency to agency and between components of an agency. If the
technique employed is that of periodically converting
accounting data recorded on the cash and obligation basis to
the accrual basis, such conversions should be made at least
monthly."

OTA does record payroll and travel accruals, however all other
accruals are not recorded. The most material amounts are object
Class 2500 for contractual services. OTA should establish the
proper accruals for this object class and others and report them to
GAO for their proper recording through the accounting system. The
major factor to consider in converting to an accrual basis is the
time expended by personnel of OTA to effect this conversion.
Accruals could be limited to payroll, travel, contractual services,
rental expenditures and any other item of material importance.
Automatic reversing entries could be provided.

2)

OTA does not properly record obligations as provided by Section 1311 of the Supplemental Appropriations Act of 1955. This law provides that no amount shall be recorded as an obligation unless it meets the specified criteria.

Whelan, Barsky, Matelis & Company, Chartered

CERTIFIED PUBLIC ACCOUNTANTS

Page 11 of 17

TASK II

FINDINGS AND RECOMMENDATIONS (CONTINUED)

Contract documents are processed as obligations after signature by the appropriate division director but before the signature of the contracting party. The specific criteria states that both signatures should be obtained for recording as a valid obligation. OTA should comply with the above Section 1311 of the Supplemental Appropriations Act of 1955.

Whelan, Barsky, Matelis & Company, Chartered

CERTIFIED PUBLIC ACCOUNTANTS

Page 12 of 17

1)

TASK III

Analysis of Internal Procedures Regarding Travel Orders;
Purchase Orders and Miscellaneous Vouchers

PLAN AND APPROACH

Through the interview process we determined the internal procedures in existence.

2)

We used a representative sample of miscellaneous vouchers and travel
orders to determine if established procedures were maintained. All
items over One Thousand Dollars and randomly selected invoices of
amounts between Two Hundred and a Thousand Dollars were vouched.
Excluding petty cash
and the payment to General
services rendered, Over Ninety

Accounting Office for

transactions
financial

Thousand Dollars worth of disbursements, not previously obligated,

previously obligated. For FY 80 a total of 954 miscellaneous

invoices were processed. Material amounts for miscellaneous transactions should have been previously obligated prior to payment. Payments were being made to the same vendors during the year, yet being classified as a miscellaneous voucher with no obligation being established. Except for miscellaneous invoices of under One Hundred Dollars, all amounts should be obligated prior to payment.

Whelan, Barsky, Matelis & Company. Chartered

CERTIFIED PUBLIC ACCOUNTANTS

Page 13 of 17