The Bureau Lacks Full Cost Information to Support Managerial Decisions

The Bureau does not distribute all the costs it incurs to its specific projects  and activities. Policy and Administration costs are not distributed to project purposes  because the Bureau’s focus is on cost recovery and legislation specifically  designates these costs to be nonreimbursable as provided by 43 U.S.C. Therefore, complete information on the costs of the Bureau’s activities is  not available to aid managerial decision making. Reclamation law provides that the Bureau  recover the costs of certain reimbursable activities, including irrigation,  M&I water supply, and power generation. However, it  does not distribute all of the Policy and Administration costs to its  responsibility segments. Objectives, Scope, and Methodology

In previous work at the Department of the Interior’s Bureau of  Reclamation, we identified certain reimbursable project costs that were  not being recovered by the Bureau. Determining Whether the Bureau Allocates All Costs to Projects and Programs

We reviewed relevant legislation, accounting standards, and documents,  including financial management laws such as the Chief Financial Officers  Act of 1990 and the Federal Financial Management Improvement Act of  1996; reclamation law; Federal Financial Accounting Standards; a 1998  Bureau report to the Congress on operations and maintenance activities  and overhead; a 1999 Bureau cost accounting report; and Department of  the Interior and Bureau of Reclamation policies, accounting manuals, and  other cost accounting guidance.
What GAO Found

In a previous report (GAO/AIMD-00-127, May 2000), GAO identified reimbursable project costs that were not being recovered by the Department of the Interior's Bureau of Reclamation. In this report, GAO reviewed the Bureau of Reclamation's managerial cost accounting and cost recovery practices. The Bureau does not currently identify and distribute all of the costs it incurs to its specific projects and activities. These costs are not distributed because the Bureau considers them nonreimbursable and because its cost accounting system is used to capture costs related to reimbursable purposes such as irrigation, municipal and industrial (M&I) water supply, and power generation. While GAO recognizes that the Bureau does not have the authority to recover certain costs, such as those funded through the Policy and Administration appropriation, all of the costs should nevertheless be distributed to the relevant activities to provide information useful in managerial decision making. Because not all costs are distributed, information on the full cost of projects and activities is not readily available to the Congress, program managers, and others to facilitate decision making and the allocation of the federal government's resources.