Instead, the Forest Service agreed to a three-party effort (the Forest Service, USDA’s Office of the Chief Financial Officer (OCFO), and the IG) to correct the problems identified in the fiscal year 1995 IG audit report. On December 23, 1994, the Office of the Chief Financial Officer purchased a new accounting system, the Foundation Financial Information System (FFIS), to implement USDA-wide. Objectives, Scope, and Methodology

Our objectives were to monitor and report on the Forest Service’s (1) implementation of a new financial accounting system, (2) correction of certain accounting deficiencies, (3) resolution of key staffing and financial management organizational issues, and (4) commitment to achieving financial accountability. To assess the status of the Forest Service’s (1) effort to improve the reliability of its accounting and financial data and (2) its commitment to improvement, we reviewed the Forest Service’s financial health monitoring reports, the Forest Service’s Financial Management Strategy and Action Plan, project management plans, and other documents outlining improvement initiatives and their status. However, the pilot units experienced many problems, primarily related to transferring data from other feeder systems to the new FFIS system. Unforeseen problems also have precluded the pilot units from using FFIS to produce other critical budgetary and financial reports that the Congress and the agency need to track obligations, assets, liabilities, revenues, and costs. These problems occurred, in part, because budgetary information had not yet been brought forward from the old accounting system, which is no longer functional in the pilot units. The overall problems with the system implementation are reflective of the lack of complete integrated testing of the system, including its reporting capability, prior to implementation in the pilot units. If these problems are not resolved, FFIS cannot be successfully implemented in the remaining units as scheduled on October 1, 1998. The version of FFIS purchased in 1994 and piloted in October 1997 is not Year 2000 compliant. Some Accounting Deficiencies Corrected but Others Remain

The Forest Service has corrected some of the accounting deficiencies identified in the IG’s fiscal year 1995 audit report, but many of the serious shortcomings that we reported on in December 1996 still remain. Therefore, as we reported in December 1996, the Forest Service continues to be exposed to mismanagement and misuse of these assets. In addition, the Forest Service still lacks supporting records (a subsidiary ledger system) to substantiate, at a detailed level, amounts the agency owes to others (accounts payable) or is owed by others (accounts receivable). The Forest Service still has not concluded its evaluation of the agency’s overall financial management structure and workload requirements at all levels. The Forest Service’s autonomous structure may hinder top management’s ability to get all Regional Fiscal Directors to participate. Conclusions

While corrective measures are underway, few of the problems reported by the IG in the fiscal year 1995 audit report and that we analyzed in our initial report to you have been fully resolved.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Forest Service's efforts to correct the financial problems identified in the Department of Agriculture (USDA) Inspector General's (IG) audit report on its fiscal year (FY) 1995 financial statements, focusing on the Forest Service's: (1) implementation of a new financial accounting system; (2) correction of certain accounting deficiencies; (3) resolution of key staffing and financial management organizational issues; and (4) commitment to achieving financial accountability.

What GAO Found

GAO noted that: (1) the Forest Service has taken some positive steps to address the accounting deficiencies cited in the IG's FY 1995 audit report; (2) however, serious problems have been encountered in the initial implementation of the new financial accounting system; (3) while the Office of the Chief Financial Officer (OCFO) and the Forest Service piloted the Foundation Financial Information System (FFIS) in three units as scheduled on October 1, 1997, problems with FFIS processing data and transferring data between FFIS and other feeder systems have hampered the implementation efforts; (4) also, the pilot units have not been able to use FFIS to produce certain critical budgetary and accounting reports that track the Forest Service's obligations, assets, liabilities, revenues, and costs; (5) these problems occurred because: (a) while most individual components of the system were tested, a complete integrated test was not accomplished prior to implementation; (b) the FFIS reporting mechanism, which was not fully tested prior to implementation, was not functioning properly; (c) certain report specifications and calculations were incorrect; and (d) budget balances had not yet been brought forward from the old accounting system, which is no longer functional for the pilot units; (6) failure to correct these problems will jeopardize successful implementation of FFIS in the remaining Forest Service units; (7) the Forest Service's ability to produce reliable financial reports hinges on successful operation of the new system; (8) the version of FFIS purchased by the UDSA OCFO in December 1994 is not year 2000 compliant; (9) the Forest Service has corrected some of the accounting deficiencies cited in the IG's 1995 audit report, it continues to have certain accounting problems, in addition to those related to the FFIS system, that will hamper its ability to produce reliable financial information and could expose the agency to mismanagement and misuse of its assets; (10) the Forest Service still lacks supporting records to substantiate, at a detailed level, amounts the agency either owes or is owed by others; (11) the Forest Service has not yet completed an evaluation of its financial management structure and workload requirements at all levels; (12) the Forest Service's top management has taken some steps to correct the financial problems reported by the IG in the FY 1995 audit report; and (13) however, the Forest Service's autonomous organizational structure may hinder top management from making needed improvements by FY 1999.