Forest Service: Improvements Needed in Internal Controls over Budget Execution Processes

The Forest Service, an agency within USDA, performs a variety of tasks as steward of 193 million acres of public forests and grasslands. Its budget execution process for carrying out its mission includes (1) allotments, which are authorizations by an agency to incur obligations within a specified amount, and (2) unliquidated obligations, which represent budgetary resources that have been committed but not yet paid. Deobligation refers to an agency's cancellation or downward adjustments of previously incurred obligations, which may result in funds that may be available for reobligation.

GAO was asked to review the Forest Service's internal controls over its budget execution processes. This report examines the extent to which the Forest Service properly designed control activities over (1) allotments of budgetary resources, its system for administrative control of funds, and any fund transfers between Forest Service appropriations; (2) reimbursables and related collections; and (3) review and certification of unliquidated obligations.

GAO reviewed the Forest Service's policies, procedures, and other documentation and interviewed agency officials.

In fiscal years 2015 and 2016, the Forest Service received discretionary no-year appropriations of $5.1 billion and $5.7 billion, respectively. It is critical for the Forest Service to manage its budgetary resources efficiently and effectively. While the Forest Service had processes over certain of its budget execution activities, GAO found the following internal control deficiencies:

Budgetary resources . The purpose statute requires that amounts designated in appropriations acts for specific purposes are used as designated. The Forest Service did not have an adequate process and related control activities to reasonably assure that amounts were used as designated. In fiscal year 2017, GAO issued a legal opinion that the Forest Service had failed to comply with the purpose statute with regard to a $65 million line-item appropriation specifically provided for the purpose of acquiring aircraft for the next-generation airtanker fleet. Further, the Forest Service lacked a process and related control activities to reasonably assure that unobligated no-year appropriation balances from prior years were reviewed for their continuing need; did not have a properly designed system for administrative control of funds, which keeps obligations and expenditures from exceeding limits authorized by law; and had not properly designed control activities for fund transfers to its Wildland Fire Management program. These deficiencies increase the risk that the Forest Service may make budget requests in excess of its needs.

Reimbursable agreements . To carry out its mission, the Forest Service enters into reimbursable agreements with agencies within the U.S. Department of Agriculture (USDA), other federal agencies, state and local government agencies, and nongovernment entities. The Forest Service (1) did not have adequately described processes and related control activities in manuals and handbooks for its reimbursable agreement processes and (2) lacked control activities related to segregating incompatible duties performed by line officers and program managers. For example, line officers may be responsible for initiating cost sharing agreements, modifying cost settlement packages, and changing or canceling the related receivable, which represent incompatible duties. As a result, programs and resources may not be protected from waste, fraud, and mismanagement.

Unliquidated obligations . The Forest Service's processes and control activities over the review and certification of unliquidated obligations were not properly designed to reasonably assure the best use of funds and that unliquidated obligations would be efficiently and effectively deobligated and made available for other program needs. Further, the current process, as designed, was inconsistent with USDA and Forest Service policy.

In addition, the Forest Service's manuals and handbooks, which provide directives for the areas that GAO reviewed, had not been reviewed by management in accordance with the Forest Service's 5-year review policy. Further, standard operating procedures and desk guides prepared by staff to supplement the manuals and handbooks were not issued as directives and therefore were not considered official policy. This increases the risk that control activities may not be consistently performed across the agency.

GAO is making 11 recommendations to improve processes and related internal control activities over the management of the Forest Service's budgetary resources, reimbursable receivables and collections, and its process for reviewing unliquidated obligations. The Forest Service generally agreed with the report and stated that it has made significant progress to address the report findings.

As steward of a reported 193 million acres of public forests and  grasslands, the Forest Service, an agency within the U.S. Department of  Agriculture (USDA), performs a variety of tasks, such as fighting wildland  fires, restoring forest landscapes and rivers, and patrolling and  maintaining the national forests’ remote recreational trails. In fiscal years  2015 and 2016, the Forest Service received discretionary appropriations  of $5.1 billion and $5.7 billion, respectively, to carry out its mission at  national forests, national grasslands, and research stations across the  country. For fiscal year 2016, the Forest Service’s largest program, the  Wildland Fire Management program, received $2.4 billion or 42 percent of  the fiscal year’s discretionary appropriated funds, of which about   $1.9 billion was for preparedness and fire suppression subprograms.

With geographically widespread operations and a diverse portfolio of  work, it is critical for the Forest Service to manage its budgetary  resources efficiently and effectively. Specifically, this includes (1) making  budgetary resources available to program activities timely, (2) allotting  resources to programs for the purposes provided in applicable  appropriations acts, (3) timely deobligating funds from unliquidated  obligations that the agency determined are no longer needed, and   (4) efficiently and effectively managing unobligated balances.

You asked us to review the Forest Service’s internal control practices  over its budget execution processes. This report examines the extent to  which the Forest Service properly designed control activities over   (1) allotments of budgetary resources, its system for administrative  control of funds, and any fund transfers between Forest Service  appropriations; (2) reimbursables and related collections; and (3) reviews  and certification of unliquidated obligations.

To assess the design of the Forest Service’s control activities over its  budget execution processes, we obtained an understanding of entity-level  controls at the Forest Service related to its (1) allotments of budgetary  resources, its system for administrative control of funds, and any related  fund transfers between Forest Service appropriations; (2) reimbursables  and related collections; and (3) reviews and certification of unliquidated  obligations. We interviewed agency officials to gain an understanding of  the Forest Service’s business processes. We reviewed Forest Service  documents, which included a list of control objectives with applicable  control activities and policies and procedures related to its budget  execution processes. We reviewed these documents to determine  whether the control activities were clearly described and whether the roles and responsibilities associated with the ownership and operation of  the controls were clearly defined to help ensure that the control activities  would achieve the applicable control objective(s). Appendix I provides a  more detailed description of our scope and methodology, and appendix II  provides additional details on standards for internal control in the federal  government.

While our audit focused on control activities over the three areas of the  Forest Service’s budget execution processes discussed, we did not  evaluate the control environment, risk assessment, information and  communications, and monitoring components of internal control. Had we  done so, additional deficiencies may or may not have been identified as  part of our audit.

We conducted this performance audit from August 2016 to January 2018  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

The Forest Service’s mission includes sustaining the nation’s forests and  grasslands; managing the productivity of those lands for the benefit of  citizens; conserving open space; enhancing outdoor recreation  opportunities; and conducting research and development in the biological,  physical, and social sciences. The agency carries out its responsibilities  in three main program areas: (1) managing public lands, known  collectively as the National Forest System, through nine regional offices,  154 national forests, 20 national grasslands, and over 600 ranger  districts; (2) conducting research through its network of seven research  stations, multiple associated research laboratories, and 81 experimental  forests and ranges; and (3) working with state and local governments,  forest industries, and private landowners and forest users in the  management, protection, and development of forest land in nonfederal  ownership, largely through its nine regional offices. According to the  Forest Service, it employs a workforce of over 30,000 employees across  the country. However, this number grows by thousands in the summer  months, when the agency hires seasonal employees to conduct fieldwork,  respond to wildland fires, and meet the visiting public’s needs.

The Office of the Chief of the Forest Service is located in Washington,  D.C., with 27 offices reporting directly to the Office of the Chief, as  illustrated in figure 1.

The nine national forest regions, each led by a regional forester, oversee  the national forests and grasslands located in their respective regions.  Each national forest or grassland is headed by a supervisor, the seven  research stations are each led by a station director, and a state and  private forestry area is headed by an area director. The Forest Service  collectively refers to its forest regions, research stations, and area as  RSAs. The RSAs are organized differently according to their operations,  and comparable operations within the RSAs, such as collections from  reimbursable agreements, may be processed differently in the various  regions and stations, resulting in highly decentralized operations. In  addition, the offices of the Chief Financial Officer (CFO); Deputy Chief of  Business Operations (includes the budget office); and eight other offices  located in the Washington, D.C., headquarters also report directly to the  Office of the Chief of the Forest Service.

Forest Service Budget and Control Activities

The Forest Service receives appropriations for its various programs and  for specific purposes to meet its mission goals. Prior to fiscal year 2017,  the Forest Service’s budgetary resources consisted primarily of no-year  funds. Its budget office in Washington, D.C., initiates apportionment  requests and monitors the receipt of Department of the Treasury  (Treasury) warrants. Upon receipt of the warrant, the apportionment is  recorded in the financial system and then the budget office develops an  allocation summary detailing the allocation of its budget authority by fund,  programs within the funds, and distribution of funds at the regional,  station, and area levels. The Forest Service may also transfer funds from  other appropriations to the appropriations account that funds its fire  suppression activities when available funds appropriated for fire  suppression and the Federal Land Assistance, Management, and  Enhancement (FLAME) fund will be exhausted within 30 days.

The Forest Service’s administrative policies, practices, and procedures  are issued in its Directive System, which provides a unified system for  issuing, storing, and retrieving internal direction that governs Forest  Service programs and activities. The Directive System consists of the  Forest Service’s manuals and handbooks. The manuals contain  management objectives, policies, and responsibilities and provide general  direction to Forest Service line officers and staff directors for planning and  executing their assigned programs and activities. The handbooks provide  detailed direction to employees and are the principal source of  specialized guidance and instruction for carrying out directions issued in  the manuals. Line officers at the national and RSA levels have authority  to issue directives in the manuals and handbooks under their respective  jurisdictions. The Forest Service’s policy states that the Directive System  is the only place where Forest Service policy and procedures are  issued. In addition to the Directive System, Forest Service staff have  also developed standard operating procedures (SOP) and desk guides to  supplement guidance provided in directives. However, the SOPs and  desk guides are not part of the Forest Service Directive System and  therefore are not official policy and procedures.

Forest Service Did Not Properly Design Control Activities for Its Allotments Process, Administrative Control of Funds, and Fund Transfers

While the Forest Service had documented processes for allotting its  budgetary resources, it did not have an adequate process and related  control activities for reasonably assuring that (1) amounts designated in  appropriations acts for specific purposes are used as designated and   (2) unobligated no-year appropriation balances from prior years were  reviewed for their continuing need. In addition, the Forest Service did not  have a properly designed and documented system for administrative  control of funds. Finally, the Forest Service had not properly designed  control activities for fund transfers for fire suppression activities under its  Wildland Fire Management program.

Forest Service Does Not Have an Adequate Process and Related Control Activities for Reasonably Assuring That Appropriated Amounts Are Used for the Purposes Designated

While the Forest Service had documented processes for allotting its  budgetary resources, it did not have an adequate process and related  control activities to reasonably assure that amounts designated in  appropriations acts for specific purposes are used as designated—as  required by the purpose statute, which states that “appropriations shall be  applied only to the objects for which the appropriations were made except  as otherwise provided by law.” We reviewed Forest Service documents  about its budget authority processes, which included control objectives,  related control activities, and processes over the allotment of its  budgetary resources. We found that these documents, including  manuals and handbooks, did not include an adequate process and  related control activities for assuring that appropriated amounts are used  for the purposes designated. For example, such a process would include  the Forest Service allotting appropriated funds for specific programs or  objects as provided in the applicable appropriation act, by either using specific budget line items already defined in the Forest Service’s financial  system or creating new budget line items, as needed.

Standards for Internal Control in the Federal Government states that  management should define objectives clearly to enable the identification  of risks and design appropriate control activities to achieve objectives and  respond to the risks identified.

As a result of the Forest Service not having an adequate process and  related control activities for assuring that appropriated amounts are used  for the purposes designated, the Forest Service did not properly allocate  certain funds for specific purposes detailed in the appropriations acts for  fiscal years 2015 and 2016. For example, in fiscal year 2015, the Forest  Service did not set aside in its financial system the $65 million specified in  the fiscal year 2015 appropriations act for acquiring aircraft for the next- generation airtanker fleet. According to Forest Service documents, as of  January 6, 2016, $35 million of the designated funds was used for other  purposes. In February 2017, we issued a legal opinion, related to the  Forest Service’s use of the $65 million, which concluded that the Forest  Service had failed to comply with the purpose statute. According to  USDA’s Office of General Counsel, “this lack of any separate  apportionment or account for the next-generation airtanker fleet was due to the fact that it was a new item, not included in the agency’s budget  request, and added late in the appropriations process.” Similarly, in fiscal  year 2016, the Forest Service did not create new budget line items to  reserve in its financial system $75 million for the Forest Inventory and  Analysis Program specified in the fiscal year 2016 appropriations act.  Rather than creating a new budget line item for the program specified in  the appropriations act, the funds were combined with an existing budget  line item, making it difficult to track related budget amounts and actual  expenditures. The lack of an adequate process and related control  activities to reasonably assure that appropriated amounts are used for the  purpose designated also increases the risk that the Forest Service may  violate the Antideficiency Act.

Forest Service Lacked a Process and Related Control Activities over the Review of Unobligated No- Year Funds from Prior Years

The Forest Service did not have a process and related control activities to  reasonably assure that unobligated, no-year funds from prior years were  reviewed for continuing need. We reviewed the Forest Service’s budget  authority process document and related manuals and handbooks, which  documented control objectives and procedures over its budgetary  resources and the guidance for administrative control of funds. We found  that these documents did not include a process for reviewing the Forest  Service’s unobligated, no-year funds from prior years and related control  activities to reasonably assure that such funds were reviewed for  continuing need. Such reviews, if performed, may identify unneeded  funds that could be reallocated to other programs needing additional  budgetary resources, if consistent with the purposes designated in  appropriations acts.

The USDA Budget Manual states as a department policy that “agencies  of the Department have a responsibility to review their programs  continually and recommend, when appropriate, deferrals or rescissions.”  The USDA Budget Manual further states the following:  “Agency officials should remain alert to this responsibility since the  establishment of reserves is an important phase of budgetary  administration. If it becomes evident during the fiscal year that any  amount of funds available will not be needed to carry out foreseeable  program requirements, it is in the interest of good management to  recommend appropriate actions, thereby maintaining a realistic  relationship between apportionments, allotments, and obligations.”

However, the Forest Service did not develop a directive addressing the  control objectives, related risks, and control activities for implementing  this USDA policy.

Up until fiscal year 2017, Forest Service budgetary resources consisted  primarily of no-year funds. At the beginning of each fiscal year,  unobligated balances of no-year funds are carried forward and  reapportioned to become part of budget authority available for obligation  in the new fiscal year. Unobligated balances can increase during the  fiscal year due to deobligation of prior years’ unliquidated obligations that  the Forest Service determines it no longer needs. These resources are  immediately available to the Forest Service to the extent authorized by  law without further legislation or action from Office of Management and  Budget (OMB) unless the apportionment states otherwise. According to Forest Service officials, unobligated funds reported in the Forest Service’s  September 30, 2016, Statement of Budgetary Resources included   $351 million in discretionary unobligated no-year funds, appropriated as  far back as fiscal year 1999.

The Forest Service did not identify and define a process and control  objectives related to its review of unobligated no-year funds from prior  years for continuing need. As a result, the Forest Service did not have  reasonable assurance that prior no-year unobligated balances were  properly managed and considered in its annual budget requests. This  increased the risk that the Forest Service may make budget requests in  excess of its needs. Additionally, the Forest Service could miss  opportunities to use its prior year unobligated no-year funds more timely  and effectively, for example, using these funds for other Forest Service  program needs, if consistent with the purposes designated in  appropriations acts. During our work, we brought this issue to  management’s attention, and in response, Forest Service officials stated  that the Forest Service is planning to develop a quarterly process to  review available balances and, as needed, redirect funds to agency  priorities. However, as of July 2017, the Forest Service had not yet  developed this review process. Further, Congress rescinded about   $18 million of the Forest Service’s prior year unobligated balances and  required it to report unobligated balances quarterly within 30 days after  the close of each quarter and appropriated multi-year funds instead of no- year funds to the Forest Service for fiscal year 2017.

Forest Service Did Not Have a Properly Designed Comprehensive System for Administrative Control of Funds

The Forest Service issued guidance related to administrative control of  funds in manuals and handbooks, which USDA did not review and  approve prior to their issuance. Based on our review of these documents,  we found that the processes and related control activities over the  administrative control of funds were dispersed in numerous manuals and  handbooks, which may hamper a clear understanding of the overall  system. Further, the system lacked key elements that would allow it to  serve as an adequate system of administrative control of funds. For  example, in its manuals and handbooks the Forest Service did not  identify, by title or office, those officials with the authority and  responsibility for obligating the service’s appropriated funds, such as  funds for contracts, travel, and training. As a result, the responsibility for  obligating funds was not clearly described and properly assigned in  Forest Service policy as required by the USDA Budget Manual and OMB  Circular No. A-11.

OMB Circular No. A-11 states that the Antideficiency Act requires that the  agency head prescribe, by regulation, a system of administrative control  of funds, and OMB provided a checklist in appendix H to the circular that  agencies can use for drafting their fund control regulations. This  requirement is consistent with those in the USDA Budget Manual, which  prescribes budgetary administration through a system of administrative  controls for its component agencies, including the Forest Service. The  USDA Budget Manual states that to the extent necessary for effective  administration, (1) the heads of USDA component agencies may delegate  to subordinate officials responsibilities in connection with the  administrative distribution of funds within apportionments and allotments  and the monitoring, control, and reporting of the occurrence of obligations  and expenditures under apportionments and allotments and (2) the chain  of such responsibility shall be clearly defined. In addition, USDA requires  its component agencies to promulgate and maintain administrative control  of funds regulation and to send such regulation to USDA’s Office of  Program and Budget Analysis for review and approval prior to issuance.

Because the Forest Service has not developed and issued a  comprehensive system for administrative control of funds that considers  all aspects of the budget execution processes, it cannot reasonably  assure that (1) programs will achieve their intended results; (2) the use of  resources is consistent with the agency’s mission; (3) programs and  resources are protected from waste, fraud, and mismanagement; and   (4) laws and regulations are followed.

We also found that the Forest Service had not reviewed and updated  most of its administrative control of funds guidance in the manuals and  handbooks for over 5 years. The USDA Budget Manual requires each  component to periodically review its funds control system for overall  effectiveness and to assure that it is consistent with its agency programs  and organizational structures. Further, Forest Service policy also requires  routine review, every 5 years, of policies and procedures in its Directive  System. According to Forest Service officials, when directives are up for  review and update, a staff from the Office of Regulatory and Management  Services (ORMS) sends an e-mail reminder to notify responsible  personnel that updates to applicable directives are needed. However, we  found that the Forest Service does not have adequate controls in place to  monitor the reviews and any updates of the manuals and handbooks in its  Directive System to reasonably assure that their efforts resulted in timely  updates. As a result, the Forest Service is at risk that guidance for its  system for administrative control of funds may lose relevance as  processes change over time and control activities may become  inadequate.

Forest Service Control Activities for Wildland Fire Suppression Related Fund Transfers Were Not Properly Designed

The Forest Service did not have properly designed control activities over  its process for fund transfers related to wildland fire suppression activities.  The Forest Service receives appropriations for necessary expenses for  (1) fire suppression activities on National Forest System lands,   (2) emergency fire suppression on or adjacent to such lands or other  lands under fire protection agreement, (3) hazardous fuels management  on or adjacent to such lands, and (4) state and volunteer fire assistance.  Transfer of funds from other Forest Service programs to its fire  suppression activities occurs when the Forest Service has exhausted all  available funds appropriated for the purpose of fire suppression and the  FLAME fund. A key aspect of this process is assessing the FLAME  forecast, which the Forest Service uses to predict the costs of fighting  wildland fires for a given season, and developing a strategy to identify  specific programs and the amounts that may be transferred to pay for fire  suppression activities when needed. The process for reviewing the  FLAME forecast and strategizing the fund transfers was documented in  the Basic Budget Desk Guide created by staff in the Forest Service’s  Strategic Planning and Budget Analysis Office. However, the desk guide  did not contain evidence of review by responsible officials. As a result, the  Forest Service lacked reasonable assurance that the desk guide was  complete and appropriate for its use.

The Basic Budget Desk Guide included a listing of actions to be  performed by the analyst for reviewing the FLAME forecast report and  developing a strategy for fund transfer from other programs. However, the  desk guide did not specify the factors to be considered when developing  the strategy. For example, it did not call for documentation addressing the  rationale for the strategy or an assessment of the risk that the fund  transfer could have on the programs from which the funds would be  transferred. The desk guide also did not describe the review and approval  of the strategy by a responsible official(s) prior to the fund transfer  request sent to the Chief of the Forest Service.

According to Standards for Internal Control in the Federal Government,  management should design control activities to achieve objectives and  respond to risks and that such control activities should be designed at the  appropriate levels in the organizational structure. Further, management  may design a variety of transaction control activities for operational  processes, which may include verifications, authorizations and approvals,  and supervisory control activities.

The lack of properly designed control activities for supervisory review of  the desk guide and strategy to identify the amounts for fund transfers  does not provide the Forest Service reasonable assurance that the  objectives of the fund transfers—including mitigating the risk of a shortfall  of funding for other critical Forest Service program activities, such as  payroll or other day-to-day operating costs—will be efficiently and  effectively achieved.

Forest Service Did Not Have Properly Designed Processes and Related Control Activities for Reimbursable Receivables and Collections

The Forest Service enters into various reimbursable agreements with  agencies within USDA, other federal agencies, state and local  government agencies, and nongovernment entities to carry out its mission  for public benefit. The reimbursable agreements may be for the Forest  Service to provide goods and services to a third party or to receive goods  and services from a third party, or may be a partnership agreement with a  third party for a common goal. According to Forest Service officials, the  two distinct types of Forest Service reimbursable agreements are (1) fire  incident cooperative agreements and (2) reimbursable and advanced  collection agreements (RACA).

The Forest Service did not have documented processes and related  control activities for its fire incident cooperative agreements to reasonably  assure the effectiveness and efficiency of its related fire incident  operations. In addition, processes and related control activities applicable  to RACAs were not adequately described in applicable manuals and  handbooks in the Directive System, to reasonably assure that control  activities could be performed consistently and effectively. Further, certain  RACA processes in the Directive System had not been timely reviewed  by management and did not reflect current processes. Moreover, as  previously discussed, SOPs and desk guides developed in field offices  related to RACA processes were not in the Forest Service’s Directive  System. Finally, the Forest Service lacked control activities segregating  incompatible duties performed by line officers and program managers in  creating reimbursable agreements and the final disposition of related  receivables.

Forest Service Did Not Have Documented Processes and Related Control Activities for Fire Incident Cooperative Agreements

The Forest Service did not have documented processes and related  control activities for its fire incident cooperative agreements to reasonably  assure the effectiveness and efficiency of its related fire incident  operations and reliable reporting internally and externally.

As part of the service’s mission objective to suppress wildland fires,  Forest Service officials stated that they enter into 5-year agreements  referred to as master cooperative agreements with federal, state, and  other entities. These agreements document the framework for commitment and support efficient and effective coordination and  cooperation among the parties in suppressing fires, when they occur. The  master cooperative agreements do not require specific funding  commitments as amounts are not yet known. These agreements vary  from region to region because of the differing laws and regulations  pertaining to the participating states and other entities. These variations  can also result in different billing and collection processes between  regions. When a fire occurs, supplemental agreements, which are based  on the framework established in the applicable master cooperative  agreements, are signed by relevant parties for each fire incident. These  agreements establish the share of fire suppression costs incurred by the  Forest Service and amounts related to entities that benefitted from those  fire suppression efforts. These supplemental agreements require  commitment and obligation of funds. As indicated in figure 2, the Forest  Service’s obligations for fire suppression activities ranged from   $412 million to $1.4 billion over the 10-year period from fiscal years 2007  through 2016.

In response to our request for documentation of processes and related  control activities over its fire incident cooperative agreements, Forest  Service officials stated that processes and related control activities over  reimbursable agreements were applicable to both fire incident  cooperative agreements and RACAs. However, based on our review of  the Forest Service’s processes and related control activities over its  reimbursable agreements, we found that the unique features of fire  incident cooperative agreements (as compared to features of RACAs)  were not addressed in the processes and related controls for  reimbursable agreements. For example, there was no process and  related control activities over the negotiation and review of (1) a fire  incident master cooperative agreement, which is developed before a fire  occurs, and (2) supplemental agreements, which are signed by all  relevant parties after the start of a fire incident. These supplemental  agreements detail, among other things, the terms for (1) fire department  resource use, (2) financial arrangements, and (3) specific cost-sharing  agreements.

Another unique feature of fire incident cooperative agreements, which  was not covered in process documents for its reimbursable agreements,  was the preparation of the Cost Settlement Package. The preparation of  this package does not start until after the fire has ended and the Forest  Service has received and paid all bills. According to Forest Service  officials, a fire incident is deemed to have ended when there are no more  resources (firefighters and equipment) on the ground putting out the fire.  However, this definition was not documented in the Forest Service’s  manuals and handbooks in the Directive System. Based on our review of  documentation that the Forest Service provided for four fire incidents, we  found that for these incidents the Cost Settlement Packages and the  billings took several months to years to complete after the fire incident.  According to Forest Service officials, delays in preparing the Cost  Settlement Package in many cases were due to parties involved in  suppressing the fires taking a long time to submit their invoices to the  Forest Service for payment. Because the preparation of Cost Settlement Packages was not included in the process documents, the Forest Service  did not have a defined time frame for when, in relation to the end of the  fire, the Cost Settlement Package must be completed. For example, in  one case we reviewed, the bill for a cost settlement was sent 9 months  after the fire occurred, and in another case, settlement occurred  approximately 2 years after the fire occurred. For both fire incidents,  based on the reports we reviewed, the fires were contained within a week  or two, but the Forest Service does not have a policy for documenting the  date when the fire incident is deemed to have ended.

Because of the complexity of the process for negotiating and determining  the reimbursable amounts from all the costs that the Forest Service pays  for a fire incident, the reimbursable amounts may take time to negotiate,  and subsequent billing to and collection from parties may take much  longer. Forest Service officials stated that some receivables that were  not going to be collected until after its financial system’s aging process for  receivables deemed such receivables uncollectible and a bad debt are  tracked in a spreadsheet outside its financial system. We found that the  Forest Service did not have a documented process and related control  activities to reasonably assure that its Budget Office was informed of  these older receivables being tracked in a spreadsheet and the related  progress of collection activities that local program managers and line  officers perform, which could affect the reliability of the reported  reimbursable receivable amounts.

According to Standards for Internal Control in the Federal Government,  management should internally communicate the necessary quality  information to achieve the entity’s objectives. Without proper  communication, important information, such as amounts that the Forest  Service will receive from fire incident cost settlement negotiations, may  not be considered in the Forest Service’s strategy for the effective and  efficient management of fund transfers for fire suppression activities.

Forest Service Manuals and Handbooks for RACAs Did Not Adequately Describe the Processes and Related Control Activities and Were Not Timely Reviewed

Processes and related control activities applicable to RACAs were not  adequately described in Forest Service manuals and handbooks in its  Directive System. RACAs, which may be for research or other  nonemergency purposes, are billed and collected based on previously  agreed upon billing and collection terms. In accordance with the Forest  Service’s Directive System, policies related to business processes, such  as RACAs, are documented in its manuals while procedures for  performing specialized activities are documented in its handbooks. We  found that the manuals and handbooks in the Directive System did not  adequately describe the processes and related control activities over the  RACA processes to enable efficient and effective performance of the  work by appropriate and responsible personnel. The manuals and  handbooks related to RACAs state that a manager review the  documentation to ensure that the funding supports the objective of the  agreement, the agreement is the correct instrument for funding the  project, all relevant terms and conditions have been included in the  agreement, the entity’s financial strength and capability are acceptable,  and all applicable regulations and OMB circulars have been addressed.  However, there was no discussion in the manuals and handbooks about  when the manager needs to perform the reviews and how these reviews  were to be documented. Further, in response to our inquiry regarding  procedures performed to assess the entity’s financial strength and  capability are acceptable before a RACA is signed, Forest Service  officials stated that there is currently no formal process for determining  financial capability for RACAs. For reimbursable agreements, the Forest  Service’s process documented in its handbook consisted of completing a  creditworthiness checklist. However, the handbook did not describe  procedures for (1) completing the checklist and (2) documenting  responsible personnel’s review and approval of an entity’s acceptable  financial capability.

Standards for Internal Control in the Federal Government states that  management should design control activities to achieve objectives and  respond to risks. Management’s design of internal control establishes  and communicates the who, what, when, where, and why of internal  control execution to personnel. Documentation also provides a means to  retain organizational knowledge and mitigate the risk of having that  knowledge limited to a few personnel. Further, the standards also explain  that management clearly document internal control in a manner that  allows the documentation to be readily available and properly managed  and maintained.

In addition, the manuals and handbooks applicable to the RACAs have  not been timely reviewed by management, and had not been updated to  reflect current processes. For example, the document that serves as  direction for Forest Service personnel on how to enter into RACAs  referred to an outdated financial system that was replaced in fiscal year  2013. Further, the manuals and handbooks for the RACA processes had  no indication that they had been reviewed within the past 5 years. Forest  Service policy requires routine review, every 5 years, of policies and  procedures in its Directive System. According to Forest Service officials,  a staff member from ORMS sends an e-mail to officials responsible for  updating these policies and procedures. However, appropriate control  activities have not been designed to reasonably assure that updates were  made, reviewed, approved, and issued as needed for continued  relevance and effectiveness.

Without adequate descriptions of processes and related control activities  in its manuals and handbooks over RACAs, the Forest Service is at risk  that processes and related control activities may not be properly,  consistently, and timely performed. Further, because it lacks a process  and related controls for monitoring and reviewing the updates of the  guidance and various process documents in the Directive System, the  Forest Service is at risk that its policies and procedures may not provide  appropriate agency-wide direction in achieving control objectives,  particularly when financial systems change and old processes may no  longer be applicable.

Forest Service Standard Operating Procedures and Desk Guides for RACA Processes Were Not in the Directive System and Lacked Sufficient Details

SOPs and desk guides related to RACA processes were not in the  Directive System and are not considered official Forest Service policy and  procedures. Forest Service field staff responsible for various processes  generally developed SOPs and desk guides to document day-to-day  procedures for employees in carrying out RACA processes to supplement  the manuals and handbooks. However, the SOPs and desk guides did  not reference the applicable manuals and handbooks they supplemented.  Further, the SOPs and desk guides did not provide descriptions of   (1) review procedures for authorization, completeness, and validity of  RACAs and related receivables; (2) detailed review procedures to be  performed and by whom; (3) timing of review procedures; and (4) how to  document the completion of the review procedures. Finally, SOPs and  desk guides did not have evidence that responsible officials reviewed and  approved them to authorize their use. These SOPs and desk guides are  only available in the field office where these were developed, and if  similar SOPs and desk guides were developed in other field offices,  control activities and how they are performed could vary. We also noted  that these SOPs and desk guides were not timely updated to reflect  processes and systems currently in use. For example, there were many  instances where the SOPs and desk guides referred to systems that the  Forest Service no longer used.

Standards for Internal Control in the Federal Government states that  management should establish an organizational structure, assign  responsibility, and delegate authority to achieve the entity’s objectives.  Effective documentation assists in management’s design of internal  control by establishing and communicating the who, what, when, where,  and why of internal control execution to personnel. Documentation also  provides a means to retain organizational knowledge and mitigate the risk  of having that knowledge limited to a few personnel and to achieve the  entity’s objectives. Management assigns responsibility and delegates  authority to key roles throughout the entity.

As a result of the issues discussed above, the Forest Service is at risk  that control activities may not be properly and consistently performed and  its related control objectives may not be achieved efficiently and  effectively. In addition, the Forest Service is at risk that knowledge for  performing the control activities may be limited to a few personnel or lost  altogether in the event of employee turnover.

Forest Service Lacked Adequate Segregation of Duties over Reimbursable Agreements

The Forest Service lacked control activities over the segregation of  incompatible duties performed by line officers and program managers for  reimbursable agreements and any adjustments affecting the final  disposition of related receivables. Field offices manage the majority of  Forest Service projects, including authorizing the agreements and  monitoring related collection. The Forest Service line officer for fire  incident cooperative agreements and program managers for RACA at the  RSA, unit, or field levels initiate and develop the terms of the agreements  and are also responsible for any subsequent negotiation of the  agreements. In the process of negotiating and settling costs, the line  officer or program manager has the authority to cancel or change related  receivables that they deemed uncollectible. For example, in a fire  incident, the line officer at the region or field level is involved in both  developing a Cost Share Agreement and after the fire incident has ended,  negotiating the Cost Settlement Package with parties involved in the  agreement to determine the final settlement amount that the Forest  Service will be reimbursed for expenses paid in suppressing the fire  incident. Therefore, the line officer is responsible for initiating the Cost  Share Agreement, modifying the Cost Settlement Package, and changing  or canceling the related receivable, which represent conflicting duties. We  also found that the Forest Service did not have any mitigating controls,  such as independent approval of any adjustments affecting the final  disposition of receivables, to mitigate the risk of these incompatible  duties.

Standards for Internal Control in the Federal Government states that  management should design control activities to achieve objectives and  respond to risks. Segregation of duties contributes to the design,  implementation, and operating effectiveness of control activities. To  achieve segregation of key functions, management can divide  responsibilities among different people to reduce the risk of error, misuse,  or fraud. This may include separating the responsibilities for authorizing  or approving transactions, processing and recording them, and reviewing  the transactions so that no one individual controls all key aspects of a  transaction or event.

Forest Service officials stated they did not consider segregating the  conflicting duties related to reimbursable agreements because these line  officers and program managers were most familiar with the terms of the  agreement and the activities performed. However, a lack of adequate  segregation of conflicting duties or proper monitoring and review of  conflicting duties for receivables from reimbursable agreements could  result in receivables not being collected, and an increased risk of fraud.

Forest Service Did Not Have Properly Designed Processes and Related Control Activities for Reviewing Unliquidated Obligations

The Forest Service’s processes and related control activities over review  of unliquidated obligations were not properly designed to reasonably  assure optimum utilization of funds and were inconsistent with USDA and  Forest Service policy. Further, Forest Service manuals and handbooks  related to the review of unliquidated obligations did not clearly describe  control activities and were not timely reviewed by management. The  Forest Service reported unliquidated obligations of approximately   $2.6 billion and $2.5 billion in its financial statements as of September 30,  2015, and 2016, respectively. In fiscal year 2016, the Forest Service  deobligated about $319 million of its unliquidated obligations from prior  years.

Forest Service Processes and Control Activities for Review and Certification of Unliquidated Obligations Were Not Properly Designed

The Forest Service’s procedures related to the review of unliquidated  obligations were not properly designed and were inconsistent with USDA  and Forest Service policy. In accordance with USDA Departmental  Regulation (Regulation 2230-001) and related Forest Service policy, the  Forest Service identifies and reviews unliquidated obligations that have  been inactive for at least 12 months to determine whether delivery or  performance of goods or services is still expected to occur. Once a  determination has been made that an unliquidated obligation can be  deobligated, program or procurement personnel are to notify finance  personnel, in writing, within 5 days of the determination to process the  deobligation. Within 15 days of receipt of the written notification, the  unliquidated obligations are to be adjusted in the financial management  system. The Forest Service CFO is then to be notified in writing that the  deobligation was processed. Within 1 month of the close of each quarter,  the Forest Service CFO is to submit to USDA’s Associate CFO for  Financial Operations a certification stating that the Forest Service has  performed reviews of its unliquidated obligations and taken appropriate  actions, such as promptly deobligating an unliquidated obligation that is  no longer needed. However, the Forest Service’s quarterly certifications  are inconsistent with USDA and Forest Service policy because the  months included in each quarterly review do not line up with the months  outlined in policy. For example, as shown in table 1, based on policy the  certification due on October 31, covers the months July through  September. However in practice, the certification that the Forest Service  prepared for October 31 covers May through July. As a result, the review  and certification for August and September would be delayed an entire  quarter.

According to Forest Service officials, it takes considerable time to  produce accurate unliquidated obligations reports from USDA’s financial  system and then distribute them to field offices. Therefore, there is not  sufficient time for the field offices to review and deobligate amounts not  needed from the unliquidated obligations balances to meet USDA’s  certification timing and requirements. However, the Forest Service has  not developed other processes and control activities that could help meet  USDA and Forest Service policy and reasonably assure that unliquidated  obligations are reviewed timely and appropriate actions are taken. As a  result, there is an increased risk that the Forest Service may not achieve  its control objectives of optimum utilization of funds and timely  adjustments of obligated balances.

Forest Service Processes and Control Activities for Reviewing Unliquidated Obligations in Manuals and Handbooks Were Not Adequately Described and Timely Reviewed

The Forest Service’s process and related control activities over its review  of unliquidated obligations and resulting certifications were not adequately  described in manuals and handbooks in its Directive System. Further, the  manuals and handbooks were not timely reviewed and updated to reflect  processes and systems currently in use.

In accordance with the Forest Service’s Directive System, policies are  documented in its manuals while procedures for performing specialized  activities are documented in its handbooks. However, we found that the  Forest Service’s processes and related control activities for reviewing  unliquidated obligations were not adequately described and documented  in such manuals and handbooks. Although parts of the applicable  section of the handbook referred to procedures, there were no detailed  descriptions of the processes, and only references to objectives of the  procedures for reviewing unliquidated obligations were listed. For  example, in identifying unliquidated obligations for review, the narrative  description of the procedures in the handbook states that the responsible  obligating official must review each selected unliquidated obligation to  determine whether (1) delivery or performance of goods or services has  occurred or is expected to occur and (2) accounting corrections to the  obligation data in the accounting system are necessary. The handbook  also refers to an unliquidated obligations report listing the unliquidated  obligations that must be reviewed. The narrative does not provide any  detailed procedures that obligating officials or responsible personnel need  to perform, how to perform those procedures, and how those control  activities are to be documented. The guidance in the handbook was  supplemented by two desk guides. However, the desk guides are outside  the Forest Service’s Directive System and, as previously noted, the Directive System is the only place where the Forest Service’s policy and  procedures are issued. In addition, these desk guides did not reference  the applicable guidance in the Directive System that they were  supplementing. Further, the process and related control activities for  adjusting unliquidated obligations within 15 days of receipt of written  notification, as stated in USDA’s policy, were not described in either the  handbooks or the desk guides.

Standards for Internal Control in the Federal Government states that  management should design control activities to achieve objectives and  respond to risks to achieve an effective internal control system.  Management’s design of internal control establishes and communicates  the who, what, when, where, and why of internal control execution to  personnel. Documentation also provides a means to retain organizational  knowledge and mitigate the risk of having that knowledge limited to a few  personnel. Further, the standards also explain that management clearly  document internal control in a manner that allows documentation to be  readily available and that documentation be properly managed and  maintained.

In addition, manuals and handbooks for processes related to review and  certification of unliquidated obligations had no evidence that they had  been reviewed within the past 5 years for ongoing relevance and  effectiveness. According to a Forest Service manual, all service-wide  directives, except interim directives, shall be reviewed at least once every  5 years. The Forest Service does not have an effective process in place  to monitor the reviews and any updates of the manuals and handbooks in  its Directive System. As previously discussed, while ORMS sends an e- mail requesting that the applicable officials review and update the  guidance in the manuals and handbooks, there is no follow-up process to  help ensure that documents were reviewed and updated as needed.

Because the Forest Service’s process and related control activities over  its review and certification of unliquidated obligations were not adequately  described in its manuals and handbooks, the Forest Service is at risk that  its control activities may not reasonably assure that control objectives  provide (1) optimum utilization of funds and (2) for unliquidated  obligations that are no longer needed to be efficiently and effectively  deobligated and made available for other program needs.

Adequate processes and related control activities over the Forest  Service’s budgetary resources are critical in reasonably assuring that  these resources are timely and effectively available for its mission  operations, including fire suppression. However, we identified deficiencies  in the Forest Service’s processes and related controls over allotments,  unobligated no-year funds from prior years, administrative control of  funds, fund transfers, reimbursable agreements, and available funds from  deobligation of unliquidated obligations. Deficiencies ranged from a lack  of processes to control activities that were not properly designed,  resulting in an increased risk that Forest Service funds may not be  effectively and efficiently monitored and used. In addition, the Forest  Service’s manuals and handbooks, which provide the directives for the  areas we reviewed, had not been reviewed by management in  accordance with the Forest Service’s 5-year review policy. Further, Forest  Service staff prepared SOPs and desk guides that documented control  activities, but they were not issued as official policy and had not been  reviewed and approved by responsible officials. As a result, the Forest  Service is at increased risk that the control activities may not be  consistently performed across the agency and that the guidance in the  SOPs and desk guides may not comply with agency policy in the  Directive System.

To improve internal controls over the Forest Service’s budget execution  processes, we are making the following 11 recommendations:  The Chief of the Forest Service should (1) revise its process and   (2) design, document, and implement related control activities to  reasonably assure that amounts designated in appropriations acts for  specific purposes are properly used for the purposes specifically  designated. (Recommendation 1)

The Chief of the Forest Service should (1) develop a process and   (2) design, document, and implement related control activities to  reasonably assure that unobligated no-year funds from prior years are  reviewed for continuing need. (Recommendation 2)

The Chief of the Forest Service should (1) design, document, and  implement a comprehensive system for administrative control of funds  and (2) submit it for review and approval by USDA before issuance, as  required by the USDA Budget Manual. (Recommendation 3)

The Chief of the Forest Service should design, document, and implement  control activities over the preparation and approval of a fire suppression  fund transfers strategy, to specify all appropriate factors to be considered  in developing and documenting the strategy, and incorporate these  control activities into the Directive System. (Recommendation 4)

The Chief of the Forest Service should design, document, and implement  processes and related control activities for its fire incident cooperative  agreements to reasonably assure efficient and effective operations and  timely and reliable reporting of reimbursable receivables related to fire  incident cooperative agreements, and incorporate them in the Directive  System. (Recommendation 5)

The Chief of the Forest Service should update the RACA manuals and  handbooks to adequately describe the processes and related control  activities applicable to RACAs to reasonably assure that staff will know  (1) how and when to perform processes and control activities and (2) how  to document their performance. (Recommendation 6)

The Chief of the Forest Service should design, document, and implement  segregation of duties or mitigating control activities over reimbursable  agreements and any adjustments affecting the final disposition of related  receivables. (Recommendation 7)

The Chief of the Forest Service should modify, document, and implement  control activities consistent with USDA and Forest Service policy to  reasonably assure that unliquidated obligations are reviewed timely and  appropriate actions are taken. (Recommendation 8)

The Chief of the Forest Service should adequately describe the  processes and related control activities for unliquidated obligations review  and certification processes in manuals and handbooks within the  Directive System. (Recommendation 9)

The Chief of the Forest Service should develop, document, and  implement a process and related control activities to reasonably assure  that manuals and handbooks for allotments, reimbursable agreements,  and review of unliquidated obligations are reviewed and updated every 5  years, consistent with Forest Service policy. (Recommendation 10)

The Chief of the Forest Service should develop, document, and  implement a process and related control activities to reasonably assure  that SOPs and desk guides (1) clearly refer to guidance in the Directive  System for allotments, reimbursable agreements, and review of  unliquidated obligations and (2) are reviewed and approved by  responsible officials prior to use. (Recommendation 11)

We provided a draft of this report to USDA for comment. In its comments,  reproduced in appendix III, the Forest Service stated that it generally  agreed with the report and that it has made significant progress to  address the report’s findings. Specifically, the Forest Service stated that  its financial policies concerning budget execution have been revised to  address our concerns with allotments, unliquidated obligations,  commitments, and administrative control of funds as prescribed by OMB  Circular No. A-11. Further, the Forest Service stated that it has  undertaken an in-depth review of its unliquidated obligations and modified  the certification process to comply with the USDA requirement.

We are sending copies of this report to the appropriate congressional  committees and to the Secretary of Agriculture and the Chief of the Forest  Service. In addition, this report is available at no charge on the GAO  website at http://www.gao.gov.

If you or your staff members have any questions about this report, please  contact me at (202) 512-9869 or khana@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff members who made key  contributions to this report are listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

Our objectives were to determine the extent to which the Forest Service  properly designed control activities over (1) allotments of budgetary  resources, its system for administrative control of funds, and any fund  transfers between Forest Service appropriations; (2) reimbursables and  related collections; and (3) unliquidated obligations.

We reviewed the Forest Service’s process documents and control  activities, policies and procedures from its manual and handbooks in its  Directive System, and other guidance in the form of standard operating  procedures (SOP) and desk guides to obtain an understanding of internal  controls at the Forest Service related to our three objectives. We  reviewed the control activities that the Forest Service identified to  determine whether the activities would achieve the control objectives that  the service identified and whether the activities were consistent with  Standards for Internal Control in the Federal Government. We also  reviewed recent relevant GAO and U.S. Department of Agriculture  (USDA) Office of Inspector General reports to obtain background  information related to the Forest Service’s budget execution processes.  We evaluated the design of the Forest Service’s control activities based  on data for fiscal year 2016.

To address our first objective, we reviewed Forest Service process  documents related to allotments and budget authority to obtain an  understanding of control activities over the allotments of budgetary  resources, its system for administrative control of funds, and any related  fund transfers between Forest Service appropriations. The process  documents included a list of control objectives and related control  activities that the Forest Service had used to assess its internal controls.  We also reviewed the related guidance in appendix H to Office of  Management and Budget Circular No. A-11, Preparation, Submission,  and Execution of the Budget for Administrative Control of Funds, to  identify requirements that agencies must meet to ascertain whether their  controls over funds management are properly designed. We interviewed  key officials from the Forest Service’s Strategic Planning, Budget and  Accountability Office to gain an understanding of their processes for  allotments of budgetary resources, its system for administrative control of  funds, and fund transfers between Forest Service appropriations for  wildland fire suppression activities, including how each of their risk  assessments were performed and their plans to mitigate the risks. We  reviewed and analyzed the processes documented in the manuals and  handbooks collectively referred to as directives to determine whether the  processes and control activities were designed to achieve the Forest  Service’s stated objectives. Specifically, we examined the Forest  Service’s control activities to determine whether these sufficiently  communicated the procedures to be performed and the documentation to  be prepared. We also reviewed USDA Budget Manual to determine  whether Forest Service guidance was consistent with USDA’s  requirements for all of its component agencies, specifically requirements  related to the administrative control of funds.

To address our second objective, we reviewed the Forest Service’s  policies, procedures, and other documentation and interviewed agency  officials to develop an understanding of its processes related to  reimbursable agreements and related collection activities. We first  identified, through interviews with Forest Service officials, the different  kinds of reimbursable agreements that the Forest Service enters into with  other USDA components, other federal agencies, state and local  government agencies, and nongovernment entities to carry out its mission  for the benefit of the public. Two distinct types of reimbursable  agreements include (1) fire incident cooperative agreements and   (2) reimbursable and advanced collection agreements. We reviewed  Forest Service process documents and templates related to these two  types of reimbursable agreements provided to obtain an understanding of  control activities over reimbursable processes. We reviewed the list of  control objectives and related control activities that the Forest Service  identified to determine whether the control activities were designed to  achieve the applicable control objectives.

To address our third objective, we reviewed the Forest Service’s policies,  procedures, and other documentation related to and interviewed agency  officials about unliquidated obligations to develop an understanding of the  Forest Service’s review and certification processes for unliquidated  obligations balances. We reviewed the Forest Service’s control activities  related to its process for reviewing unliquidated obligations to obtain an  understanding of control activities around its process and to determine  whether the control activities were designed to achieve the applicable  control objectives.

Based on the results of our evaluation of the Forest Service’s design of  internal control activities over the budget execution processes, we did not  evaluate the implementation of the control activities or whether they were  operating as designed.

While our audit objectives focused on certain control activities related to  (1) allotments of budgetary resources, the Forest Service’s system for  administrative control of funds, and related fund transfers;   (2) reimbursables and related collections for reimbursable agreements;  and (3) unliquidated obligations, we did not evaluate all control activities  and other components of internal control. If we had done so, additional  deficiencies may or may not have been identified that could impair the  effectiveness of the control activities evaluated as part of this audit.

Appendix II: Standards for Internal Control in the Federal Government

Standards for Internal Control in the Federal Government provides the  overall framework for establishing and maintaining internal control.  Internal control represents an agency’s plans, methods, policies, and  procedures used to fulfill its mission, strategic plan, goals, and objectives.  Internal control is a process by an entity’s oversight body, management,  and other personnel to provide reasonable assurance that the objectives  of the entity will be achieved. When properly designed, implemented,  and operating effectively, it provides reasonable assurance that the  following objectives are achieved: (1) effectiveness and efficiency of  operations, (2) reliability of internal and external reporting, and   (3) compliance with applicable laws and regulations. Internal control is not  one event, but a series of actions that occur throughout an entity’s  operations. The five components of internal control are as follows:

Control Environment - The foundation for an internal control system  that provides the discipline and structure to help an entity achieve its  objectives.

Risk Assessment - Assesses the risks facing the entity as it seeks to  achieve its objectives and provides the basis for developing  appropriate risk responses.

Control Activities - The actions management establishes through  policies and procedures to achieve objectives and respond to risks in  the internal control system, which includes the entity’s information  system.

Information and Communication - The quality information  management and personnel communicate and use to support the  internal control system.

Monitoring - Activities management establishes and operates to  assess the quality of performance over time and promptly resolve the  findings of audits and other reviews.

An effective internal control system has each of the five components of  internal control effectively designed, implemented, and operating with the  components operating together in an integrated manner. In this audit, we  assessed the design of control activities at the Forest Service related to its (1) allotments of budgetary resources and any related fund transfers  between Forest Service appropriations, (2) reimbursables and related  collections, and (3) review of unliquidated obligations.

Appendix III: Comments from the U.S. Department of Agriculture

Appendix IV: GAO Contact and Staff Acknowledgments

In addition to the contact named above, the following individuals made  key contributions to this report: Roger Stoltz (Assistant Director),   Meafelia P. Gusukuma (Auditor-in-Charge), Tulsi Bhojwani, Cory Mazer,  Sabrina Rivera, and Randy Voorhees.