Summary: A seemingly unending disclosure of fraud, waste, abuse, and mismanagement in the government during the 1970's has created a serious crisis of confidence in the way federal government programs and agencies are managed. Internal control systems properly conceived, soundly based, and effectively monitored are the frontline defense against fraud, waste, and abuse. The proposed Financial Integrity Act of 1981 was designed to strengthen controls by requiring management to monitor, analyze, and report on the adequacy of their systems of internal control. The act would establish within each executive agency a continuous process of reviewing and assessing internal control systems, developing action plans for corrections, and reporting on the status of the control systems. Costs will be incurred to realize the benefits to be achieved through implementation of this bill. However, GAO believes that the benefits and savings will far outweigh the costs, and the importance of this proposed legislation cannot be overstated. Effective internal controls help ensure that government managers know: (1) what their monetary and physical assets and resources are at all times; (2) how the assets are being used, dispensed, and disposed of and for what purposes; (3) that such purposes are authorized; and (4) that fraud, waste, and abuse are minimized and discouraged. Passage of the Financial Integrity Act of 1981 will serve to bring about the strong commitment and vigilance necessary in the management of government operations.
