GSA cleans up processes that led to $900m accounting problems

The General Services Administration has changed policies and standardized processes so it can achieve a clean audit this year after statements about its accounting of $900 million in budgetary resources sank last year’s audit.For eight years GSA’s Federal Technology Service had misapplied and miscounted a total of $900 million in fund obligations transferred to it from other agencies for services.“GSA in its 2005 audit captured the sins of eight years of misapplying funds. I think the agency is righting the ship now,” Eugene Waszily, GSA acting deputy inspector general, told the House Government Reform Subcommittee on Government Management, Finance and Accountability yesterday.The inaccurate accounting practices included neglecting to close out project accounts after project completion, placing funding that had a one-year life span into an IT revolving fund and awarding contracts using expired funds, Waszily said. He added that GSA has put in place policies to avoid this in the future and cleaned up residual problems of the past. GSA can’t really account for each individual antideficiency violation.“So this is a global mea culpa for the tremendous misaccounting of funds, “ Waszily said.Newly confirmed GSA Administrator Lurita Doan, who attended the hearing, said later that GSA will look at its issues and come up with honest solutions.“Transparency and accountability—they’re twin pillars for a high performance organization,” she said.Striving for a clean audit is important for agencies that are shared-services providers, said subcommittee chairman Rep. Todd Platts (R-Pa.).“GSA wouldn’t want the audit disclaimer and anti-deficiency violations to get in the way of attracting customers to GSA as a Center of Excellence for the Financial Management Line of Business,” he said.The accounting problems did not stem from GSA’s financial systems but the actions of the procurement staff, said Kathleen Turco, GSA chief financial officer. Only the budgetary accounts in two GSA funds received audit disclaimers. The proprietary accounts—such as for revenues, expenses, assets and liabilities—received a clean opinion.Turco has been meeting with agency clients to mend fences. “We had to return money to client agencies, and some of that was no longer available for client use. We can only do business with them now with new resources,” she said.Several agencies still have discussed migrating to GSA as a shared-services provider, Turco said.GSA has substantially revised its financial and management internal control program this year, she said. The agency will be ready to sign the required statement of assurance by June 30 under the Office of Management and Budget’s Circular A-123 on internal controls for financial reporting.Platts said that GSA’s situation highlights a pair of issues that need to be addressed: