Summary: Since 1995, auditors at the Department of Education have reported the same serious internal control weaknesses each year. These problems have undermined the agency's ability to provide reliable financial information to decision makers inside and outside the agency. Because of its financial management weaknesses, Education's accounting system was unable to perform a year-end closing process or produce automated consolidated financial statements. Staff turnover also contributed to this weakness. Furthermore, the agency was unable to provide adequate support for about $800 million in its net position balance, and it processed many transactions from prior fiscal years as fiscal year 1999 transactions. In addition, auditors were unable to determine whether beginning balances for accounts payable and related accruals were accurate. Independent auditors for 1999 cited weaknesses in the financial reporting process, inadequate reconciliations of financial accounting records, and inadequate controls over information systems. The auditors also reported that Education did not fully comply with three laws. The internal control weaknesses must also be addressed to reduce the potential for fraud, waste, and abuse. Areas of concern include student financial assistance programs and computer security.
