We reviewed the supporting documentation of the fee reviews to determine whether the reviews (1) indicated that direct and indirect costs were determined (if the fee was based on cost recovery) or current market value was determined (if the fee was based on market value) and (2) included an assessment of other programs within the agency to identify potential new user fees. We requested comments on a draft of this report from the Director of the Office of Management and Budget and asked the Chief Financial Officers of the 24 agencies included in the review to verify the accuracy of their agencies’ data used in the report. Agencies reported that 397 of their fees were based on cost recovery, 35 were based on market value, and 114 were set by legislation. Of the 24 CFO agencies with 546 reported user fees, 6 agencies reviewed all of their reported fees at least biennially as required by Circular A-25 during fiscal years 1993 through 1997, 3 reviewed all of their reported fees at least once, 11 reviewed some of their reported fees, and 4 did not review any of their reported fees during this period. Fifteen of the 24 CFO agencies had not reviewed 94 user fees at all during the 5-year period. The agencies provided various reasons for not conducting the reviews. Documentation Indicated That Generally Both Direct and Indirect Costs or Current Market Value Was Considered

OMB Circular A-25 provides that the user fee review include assurance that existing charges reflect costs or current market value. Of the 20 agencies that conducted user fee reviews, documentation indicated that seven agencies considered new fees, five agencies did not consider new fee opportunities because they did not provide a service for which a fee was not already charged, and eight agencies where the potential for new fees existed did not consider new fee opportunities. Many Agencies Did Not Report User Fee Review Results in CFO Reports

OMB Circular A-25 provides that agencies should discuss the results of the user fee reviews and any resultant proposals in the CFO annual reports required by the CFO Act. The other 11 agencies reported that they had not reported the results of their biennial reviews, or lack thereof, in any of the CFO annual reports for fiscal years 1993 through 1997. As shown in table 3, eight agencies said they did not report the review results because either the total amount of fees was considered to be minimal and not material or the reporting requirements were confusing and not consistent with OMB guidance for the form and content of annual financial statements. OMB agreed that Circular A-25 user fee reporting instructions need to be clarified and plans to address this during 1998, by updating Circular A-11, Preparation and Submission of Budget Estimates. Fees Authorized to Cover Agency Expenses Generally Were Not More Likely to Be Reviewed Than Fees That Were Not

It did not appear that agencies placed significantly less emphasis on reviewing fees that went to Treasury’s general fund than on fees of which all or a portion were authorized to cover agency expenses.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed agencies' adherence to the user fee review and reporting requirements in the Chief Financial Officers (CFO) Act of 1990 and Office of Management and Budget (OMB) Circular A-25, focusing on whether the agencies: (1) reviewed their user fee rates biennially during fiscal years (FY) 1993 through 1997; (2) determined both direct and indirect costs when reviewing fees based on costs or current market value for fees based on market value; (3) reviewed other programs within the agency to identify potential new user fees; and (4) reported the results of the user fee reviews in their CFO annual reports.

What GAO Found

GAO noted that: (1) six of the 24 CFO agencies reviewed all of their reported user fees at least every 2 years as required by OMB Circular A-25 during FY 1993 through FY 1997, 3 reviewed all of their reported fees at least once, 11 reviewed some of their reported fees, and 4 did not review any of their reported fees during this period; (2) the 24 agencies reported 546 user fees, of which 418 were reviewed either annually or biennially; (3) the agencies provided various reasons for not reviewing fees, including insufficient cost data and because some of the fees set by legislation could not be changed without new legislation; (4) it appeared that agencies did not place significantly less emphasis on reviewing fees that went to the Department of the Treasury's general fund than on fees authorized to cover agency expenses; (5) documentation provided by the agencies indicated that of the reviewed fees that were based on cost recovery, 99 percent included both direct and indirect costs; (6) fee review documentation indicated that of the 23 reviewed fees that were based on market value, 14 reviews included a determination of current market value; (7) GAO did not verify these cost data or market evaluations; (8) agency documentation also indicated that of the 20 agencies that conducted user fee reviews, 8 agencies that had the potential for new fees did not consider new fee opportunities in their reviews; (9) twelve of the 20 agencies either looked for potential new fees or reported that they did not provide a service for which a fee was not already charged; (10) eleven of the 24 agencies had not reported the results of their biennial reviews, or lack thereof, in their CFO annual reports for FY 1993 through FY 1997; (11) only six agencies reported the review results two or more times during the 5-year period; (12) most of the agencies not reporting their user fee reviews said they did not do so either because the total amount of the fees was considered to be minimal and not considered material or because they found the reporting requirements confusing; and (13) OMB agreed that reporting instructions for the user fee review need to be clarified and plans to address this matter during 1998, as it revises its instructions.