NTSB’s principal responsibility is to promote safety in various modes of transportation through accident investigation, special studies, and recommendations intended to prevent accidents. In September 1999, NTSB stopped using Rapidrafts. For the three payment types we examined, the nature and extent of these weaknesses were indicative of insufficient and/or ineffective management attention paid to ensuring that, during the period reviewed, (1) key internal controls were effectively designed into NTSB administrative policies and procedures and (2) employees and management effectively implemented their respective internal control responsibilities when initiating and approving payment transactions. We also found that certain aspects of NTSB policies reduced the opportunity for effective internal controls over payment transactions. By its nature, managerial review and approval represents the last and best opportunity to detect and address inadequate supporting documentation and other control deficiencies. Specifically, PwC identified weaknesses related to the completeness and clarity of financial policies, recording and reviewing transactions, segregation of duties, and reporting on budget execution. Proper Review of Transactions. Specifically, the act provides for   a statutory Chief Financial Officer reporting directly to the Chairman on matters of financial management and budget execution,   a Board-approved budget for non-accident-related travel expenditures of Board members, the submission of the budget to congressional oversight committees, and an annual report detailing the non-accident-related travel and expenses by Board members,   establishment of comprehensive internal controls for its financial programs based on findings and recommendations resulting from a review of NTSB’s internal controls conducted by PwC, and the Inspector General of the Department of Transportation to review the financial and property management and business operations of NTSB, including internal accounting and administrative controls systems, to determine whether they comply with applicable laws, rules, and regulations.
What GAO Found

The National Transportation Safety Board (NTSB) promotes transportation safety through accident investigations, special studies, and recommendations intended to prevent accidents. Separate reviews at NTSB by PricewaterhouseCoopers, LLP (PwC) and GAO found significant shortcomings in the design and operation of NTSB's internal controls during 1999 and 2000. These deficiencies indicated insufficient or ineffective management attention to establishing and maintaining an effective system of internal control over financial management operations. The resulting weaknesses exposed the agency to waste, fraud, and mismanagement. Some basic controls were not always clearly and consistently incorporated into NTSB policies and procedures, and, in some cases, the written policies were ambiguous and contributed to possible improper transactions. Furthermore, NTSB's payment review and approval process--the last and best opportunity to detect and address inadequate documentation and other policy violations prior to payment--was often ineffective. Separate reviews of different aspects of NTSB's 1999 and 2000 financial activities and related internal controls, done by PwC at NTSB's request, documented various internal control weaknesses, including problems with the completeness and clarity of policies, the recording and review of transactions, and the tracking and reporting its use of funds.