GAO: Sloppy oversight lessens accuracy of spending data

on agencies’ procurement habits is still unreliable despite improved financial
systems, GAO said.

Procurement reform and budget cuts have slowed agencies in their end-of-the-year race
to spend, but bad data makes tracking the trend difficult, the General Accounting Office
said in a recent report.

“Substantial reforms in procurement planning and competition requirements have
changed the environment,” the report said. “Agencies may still be tempted to
quickly spend funds that will expire, but year-end spending is unlikely to present the
same magnitude of problems and issues as before.”

The Office of Management and Budget, however, cannot adequately monitor spending
because it doesn’t have necessary data, the report said.

“Although agencies have the primary responsibility for ensuring that their budgets
are executed and accounted for properly … the ability of Congress and the OMB to
oversee the rate and timing of federal spending across agencies is limited in the absence
of complete and accurate reporting,” GAO said in Year-End Spending: Reforms Underway
But Better Reporting and Oversight Needed.

The Senate Governmental Affairs Subcommittee on Oversight of Government Management in
1980 found that the rush sometimes led to questionable contracts.

The subcommittee found that agencies, caught in the spend-it-or-lose-it phenomenon,
paid inflated prices, incurred higher administrative fees and awarded contracts that were
not in the government’s best financial interest.

Since then, OMB and GAO have tracked seasonal spending.

Officials at OMB and at nine inspector general offices recently told GAO that the
year-end spending spree is losing steam. But because reforms are so new, “it is too
early to assess their full impact or to determine what further refinements may be
needed,” the report said.

“Tight fiscal controls coupled with requirements for full-and-open competition and
advance planning make it less likely that year-end spending will lead to sole-source or
unplanned procurements,” GAO said.

New funding formulas have also slowed year-end spending, such as open-ended contracts
and contracts that end in the middle of a fiscal year.

Despite improvements to financial management systems, data for spending habits is still
unreliable. For instance, GAO said, few agencies report spending within 20 days after the
close of the quarter, which is required. OMB should re-emphasize its Circular A-34
requirement and step-up its monitoring of the timeliness of the reports, GAO said.

New data collections systems are pointless unless agencies report their spending data,
GAO said.

In addition, hundreds of millions of dollars of assets were not adequately supported by
financial records, and several agencies are still not reconciling their fund balances with
Treasury Department accounts, GAO said.  

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