Page images
PDF
EPUB

E. Financial Reporting

Pages xii and 220

Recommendation:

Financial system reporting capabilities should be revised and expanded to effectively support management decision making and control processes. This encompasses development of the following types of reports and reporting capabilities:

Operating reports which reflect operating costs and revenues in comparison with operating budgets, with reporting and analysis of variances for all operating and program managers.

Operating reports which relate actual costs to standards and work measurements used in management systems.

Financial reports which provide information on unit costs.

Data reporting systems capable of producing reports needed for financial analysis, evaluation and management of receivables, inventories, revenues, costs, rates, etc.

Data reporting systems capable of integration with GPO management information and control system(s).

Financial reports for the various segments of GPO which are incomeproducing activities. Such reports to include all elements of revenue and cost, and net operating results for each segment or unit, with consolidations for like type activites such as bookstores, RPPO, etc.

Reporting systems capable of producing reports on a more timely basis.

Response:

The recommendation implies that GPO reporting capabilities do not provide the enumerated data and do not support management decision making and control processes. This is not so. The lead-in to this recommendation states that reports are prepared manually and that improvements are desirable. Elsewhere in the report, the contractor recognizes that the reporting system does support GPO's top managers. The primary point appears to be that the reporting system should be further automated to expand the availability of information on a more timely basis.

Currently, fully coordinated financial briefings are provided to top
managers on a regular monthly basis and to other managers on an as
needed basis. These briefings fully coordinate data contained in Budget,
Productivity, MBO, Financial Operations, and Modernization activities.

Also, as commented on previously, the printing cost investigating techniques and related reporting is providing managerial feedback to operational managers on a day-to-day basis.

F. Accounting Systems

Pages xii and 221

Recommendation:

A fully integrated accounting system should be designed and implemented. Alternatives for improving and updating GPO accounting systems are to:

Continue to make improvements to individual accounting systems and components.

Design a new accounting system.

Recent system development efforts have been directed toward improving
existing system automated components and processes, and toward auto-
mating manual processes. Continuation of this approach will provide
some improvements in processing and control of accounting operations.
However, such improvements will do relatively little toward making
the system more responsive to users' needs for:

Management information.

Support of accounting operations.

An alternative approach for consideration is to design a new accounting system. This approach gives recognition to the fact that:

Current systems have only limited capability of meeting the needs of GPO for management information.

Modification of existing systems have a ripple effect on interface systems and will require continued maintenance.

Objectives appropriate for a new accounting system include:

Optimization of the extent to which accounting operations are supported by a computer-based system encompassing data entry direct from source documents with on-line transaction data edit/validation; single transaction entry for update of all system files; system generation of related transactions, adjustments and of management notices for followup decisions or actions; interaction or effective interface with other systems; production of automatic payment listings and of checks, etc.

Satisfaction of the financial information needs of GPO for its operating and decision-making functions, through timely reporting and an on-call inquiry capability.

The design of a new fully integrated accounting system is strongly recommended.

Response

The lead-in to the recommendation states that the current system is obsolete by present day automation standards. The recommendation then says that rather than follow the current practice of making improvements to the existing system, the alternative of designing a new system would be the best approach. We do not agree with this recommended alternative.

The current accounting system is a fully integrated accounting system and enables us to provide information to top management on a timely basis. We recognize that the current system has manual routines and needs the benefits of further automation. We have been in the process of automating and improving individual subsystems and components of the overall system. Our approach, as set forth in the Data Automation Plan, has been to constantly make improvements on existing systems while working toward the automation of the entire system. We believe this approach is more appropriate since it will provide, on a comparable time basis, a system that is as fully effective as any alternate system without the inevitable chaos attendant with the design and implementation of a totally new system.

[blocks in formation]

The policy stipulated by GAO Manual for Guidance of Federal Agencies, Title 2--Accounting, should be adopted by GPO for accounting for purchase discounts taken, and discounts lost should be recorded in a separate account to make management aware of this cost. This is considered the preferred accounting treatment for all Federal Government activities.

Response:

The present practice will be revised and discounts will be treated as a reduction of cost. The establishment of a separate account for discounts lost will be considered. However, in light of the Department of Treasury regulations on cash management which state that certain discounts should not be taken, further study will be required before any final resolution of this matter.

Pages xiii and 223

Recommendation:

An alternative approach should be developed for recording purchased printing accruals/payables to reflect actual performance, and to serve as a basis for automatically generating customer billing.

Response:

The recommendation states that the accounting system should be used to monitor contractor performances. This is not the primary purpose of the accounting system. Contractor performance is evaluated and monitored by the Contracting Officer and his representatives. Also, as stated in a previous recommendation, it is not practical to bill from the accrual. Many other factors affect the billing price such as, significant discounts, transportation charges, and inspections at contractors' plants by GPO.

Page 224

Recommendation:

Accounting processes for billing customers for procured printing should be streamlined, with the billing based on the purchase printing accrual as recommended in the preceding paragraph.

Response:

The recommendation implies that the accrual is a firm price and the actual bill to the customer agency will be the same. This is not so.

This recommendation is identical to the last part of the previous recommendation under this caption where it was suggested that billings be made on the basis of the accrued payable estimate. As was pointed out in response to that recommendation, many other factors affect the billings that may not be included in the estimates. If billings were made from the estimate, additional billings would be necessary for subsequent adjustments, thereby creating additional workload for both GPO and the agencies.

Pages xiv and 224

Recommendation:

The accounting treatment for general sales publications received for inventory without charge should be revised to reflect the value of assets received without charge from agencies as an increase to the investment of the U.S. Government (2 GAO 14.4).

Response:

The recommendation implies that the accounting for donated publications to be sold to the public should be entirely different than for other publications offered for sale. We do not agree with the recommended accounting treatment. The cited GAO reference is applicable to the receipt of capital type assets, i.e., machinery and equipment. The receipts of publications for resale, whether purchased or donated, are placed in inventory, hopefully for a short duration, and sold. To account for these very low valued publications in the same manner as a high priced piece of capital equipment is not practical. It would be similar to capitalizing office supplies.

Moreover, treating them as an investment item would necessitate entirely separate and duplicative inventory and sales systems. When donations of publications identical to those already in inventory were received, it would require the segregation of stock and additional recordkeeping. Furthermore, multiple entries to the investment account for small amounts, adjustments for returns, etc., would create an unnecessarily complex accounting system that would be useless as a management tool.

Page 225

Recommendation:

This process should be simplified by distribution of charges and payments to the applicable fund account at the time the initial transaction is recorded, and a clearing account should be used in the S&E appropriation to record those transactions for which charges are to be distributed to two or more activities.

Response:

The contractor has missed the entire concept of the GPO revolving fund. The revolving fund is, in effect, a clearing account whereby the cost of performing work for our customers is accummulated and in turn such cost is passed on to the customer. For example, when departments and agencies request us to perform work, all transactions are initially paid for by the revolving fund with subsequent billing and reimbursement. The financing of S&E expenses is no different from financing work for other customer agencies. The initial expenditures will continue to be paid from the GPO revolving fund account with appropriate distributions identified by program, to the applicable appropriation accounts.

Page 225

Recommendation:

Other cash management actions recommended by the Comptroller General for improvement of Federal payment practices, which are considered appropriate for GPO adoption, include:

Establishment of procedures requiring bills to be scheduled for payment in accordance with the due dates, or the discount date.

Inclusion of payment terms, when practical, in each contract and purchase order. Payment terms would include both the starting point for computing the due date (for example, date of invoice) and the number of days allowed for payment.

Cash management actions should be expanded to include those recommended by the Comptroller General as enumerated above.

Response:

With regard to cash management and discounts, GPO is in full compliance with the regulations of the Comptroller General and the Department of Treasury Regulations transmitted to agencies on March 31, 1978.

« PreviousContinue »