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National Aeronautics and Space Administration Office of Inspector…
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Created: Fri Feb 29 13:21:01 2008
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National Aeronautics and
Space Administration
Office of Inspector General
Washington, DC 20546-0001
February 29, 2008
TO: Chief Financial Officer
FROM: Assistant Inspector General for Auditing
SUBJECT: Transmittal of the Final "Status of Fiscal Year 2006 Management Letter
Findings and Recommendations" Letter, Prepared by Ernst & Young LLP,
in Connection with the Audit of the National Aeronautics and Space
Administration's Fiscal Year 2007 Financial Statements (Report
No. IG-08-011; Assignment No. A-07-008-01)
Under the Chief Financial Officers Act of 1990, NASA's financial statements are to be
audited in accordance with generally accepted government auditing standards. The
Office of Inspector General selected the independent certified public accounting firm
Ernst & Young LLP (E&Y) to audit NASA's financial statements in accordance with
"Government Auditing Standards" and Office of Management and Budget's Bulletin
No. 07-04, "Audit Requirements for Federal Financial Statements."
E&Y separately reported in its "Report on Internal Control," dated November 13, 2007,
certain matters involving internal control and its operation that it considered to be
significant deficiencies and material weaknesses under standards established by the
American Institute of Certified Public Accountants. E&Y also followed up on matters
involving internal control (Enclosure) that were reported in the "Comments on Internal
Control and Other Matters" letter issued February 1, 2007, as part of the fiscal year (FY)
2006 audit.
In summary, E&Y's enclosed letter either identified similar recurring issues, which were
communicated in the FY 2007 "Report on Internal Control," or stated that E&Y did not
note the issue during the FY 2007 audit. Therefore, each recommendation made in the
FY 2006 "Comments on Internal Control and Other Matters" letter is now considered
closed.
During the FY 2007 audit, E&Y identified certain internal control issues that did not
meet the criteria to be reported in the FY 2007 "Report on Internal Control," but rather
were communicated to NASA management throughout the audit process. Therefore,
there will not be a "Comments on Internal Control and Other Matters" letter issued as a
result of the FY 2007 audit.
E&Y is responsible for the enclosed report and the conclusions expressed therein.
Accordingly, we do not express an opinion on NASA's financial statements, internal
controls over financial reporting, or compliance with certain laws and regulations.
We appreciate the courtesies extended during the testing and throughout the financial
statement audit. If you have any questions, or need additional information, please contact
me at 202-358-2572.
signed
Evelyn R. Klemstine
Enclosure
Ernst & Young LLP Phone: (202) 327-6000
1101 New York Avenue NW Fax: (202) 327-6200
Washington, DC 20005 www.ey.com
February 28, 2008
Mr. Mark Jenson
Office of Inspector General
National Aeronautics and Space Administration
Washington, DC 20546
Dear Mr. Jenson:
As part of our audit of the National Aeronautics and Space Administration's (NASA) fiscal year
(FY) 2007 financial statements, we reviewed the status of the FY 2006 comments on internal
control and other matters included in a letter to NASA management dated February 1, 2007.
Based on our discussions with NASA management, as well as system documentation,
walkthroughs, and the results of audit procedures performed, the enclosed table outlines our
assessment of the current status of the management letter comments outlined in the FY 2006
Management Letter.
Regards,
signed
Eleanor L. Crawford
Executive Director
Enclosure
A Member Practice of Ernst & Young Global
Ernst & Young LLP
!@
Page 2
Status of Fiscal Year 2006 Management Letter Findings and Recommendations
Issue Area Summary Control Issue FY 2007 Status
Payroll Ernst & Young noted the following: Ernst & Young noted
· Instances where sufficient significant progress in the
documentation was not available to area of payroll. No issues
support certain deductions or required were noted in our FY 2007
documentation could not be located procedures.
within the Official Personnel Files;
· Instances where required authorizations
could not be located;
· Data elements that were not consistent
between documents of a single sample;
· Gross dollar payroll balances on the
treasury SF 224 and in the general ledger
that could not be substantiated for a
selected pay period;
· Payroll reconciliation differences that
were not reported properly to
headquarters through the monthly
periodic monitoring process; and
· Documentation to support the
monitoring of payroll funds availability
was not consistently available.
Cash Receipts Ernst & Young noted the following: Ernst & Young did not note
· Refunds and unused reimbursable activity these issues in FY 2007.
was not processed timely to the financial
management system;
· Transactions were not billed on a timely
basis;
· Certain receipts were not recorded on a
timely basis; and
· Certain receipts were recorded initially to
suspense and then to miscellaneous
receivable and revenue when specific
receivables could not be identified.
A Member Practice of Ernst & Young Global
Ernst & Young LLP
!@
Page 3
Issue Area Summary Control Issue FY 2007 Status
Cash Disbursements Ernst & Young noted the following: Ernst & Young noted
· Adjustments were not identified and certain instances of
posted in a timely fashion; untimely processing of
· Supporting documentation lacked travel vouchers. This issue
appropriate approval; was included in the
· Certain documentation related to Financial Systems,
employee travel was not readily Analyses, and Oversight
available; Material Weakness in the
· Travel vouchers were not processed in a Report on Internal Control.
timely manner; and
· For one sample item, an invoice was Ernst & Young did not note
paid after 30 days without payment of the other FY 2006 issues in
interest. FY 2007.
Procurement/Contracts Ernst & Young noted the following: Ernst & Young did not
· Certain documentation was not readily identify these issues in FY
available; and 2007.
· Certain required documents lacked
appropriate approval.
Grants Ernst & Young noted the following: Ernst & Young identified
· Certain sample items had no-cost one item at one center
extensions without use of authorized whereby one document
modification form; could not be readily located
· Certain required documentation could in a grant file. Additionally,
not be readily located; and we noted untimely receipt
· Untimely receipt of the SF 272 for of final SF 272 being the
expired grants. cause for many expired
grants not being closed out
timely. In FY 2007, this
issue was included in the
Financial Systems,
Analyses, and Oversight
Material Weakness in the
Report on Internal Control.
Ernst & Young did not note
the other FY 2006 issue
during the FY 2007 audit.
A Member Practice of Ernst & Young Global
Ernst & Young LLP
!@
Page 4
Issue Area Summary Control Issue FY 2007 Status
Accounts Receivable Ernst & Young noted the following: Ernst & Young did not
· For 3 Centers, the total dollars per the identify these issues in FY
Open Item Listing did not agree to the 2007.
corresponding accounts receivable aging
report; Ernst & Young did note one
· IPAC transactions were not recorded instance where a document
timely; and could not be readily located
· Certain interest calculated by SAP lacked to support the collection of a
review or could not be recalculated. delinquent debt. We
communicated that item to
management through a
formal internal
communication.
Accounts Payable Ernst & Young noted the following: Ernst & Young identified
· For 2 sample items, an invoice was paid certain instances where
after 30 days without documentation to travel vouchers were not
support the payment of interest; submitted or recorded into
· We could not obtain documentation to the financial management
support the correct costing or that the unit system on a timely basis.
price was correct; We reported this weakness
· Certain travel transactions were not within the Material
recorded timely within SAP; and Weakness on Financial
· One center had erroneously posted an Systems, Analyses, and
amount into SAP utilizing the incorrect Oversight within the Report
business agency code. on Internal Control.
Ernst & Young did not
identify the remaining
issues in FY 2007.
Undelivered Orders Ernst & Young noted the following: Ernst & Young noted
· We noted inconsistencies between untimely deobligation of
various required documents, SAP, or open items and included this
supporting worksheets; weakness in the Financial
· Certain documentation was not readily Systems, Analyses, and
available; and Oversight Material
· Certain items were not deobligated on a Weakness in the Report on
timely basis. Internal Control.
Ernst & Young did not note
the other FY 2006 issues in
FY 2007.
A Member Practice of Ernst & Young Global
Ernst & Young LLP
!@
Page 5
Issue Area Summary Control Issue FY 2007 Status
Property, Plant, and Ernst & Young noted inconsistencies in the Ernst & Young continued to
Equipment application of policies and procedures developed identify these issues in FY
by the Office of the Chief Financial Officer 2007. These items were
(OCFO) and the lack of timely and clear consolidated into the
communication protocols between center material weakness on
personnel and OCFO. property in the FY 2007
Report on Internal Control.
Environmental Liability Ernst & Young noted weaknesses in NASA's Ernst & Young continued to
ability to generate auditable environmental identify these weaknesses in
liability estimates and to identify disclosure items; FY 2007 and have reported
training of personnel; defined roles and these issues within the
responsibilities of NASA's OCFO and material weakness on
Environmental Management Division (EMD) Financial Systems,
staff. Analysis, and Oversight
within the FY 2007 Report
on Internal Control.
Information Technology Ernst & Young noted the following: Ernst & Young believed
· IEMP security, design and that corrections for these
implementation needed improvement; issues have been
· IEMP security and general information substantially completed.
technology controls need to be Segments related to
strengthened; segregation of duties and
· Oversight functions supporting IEMP other access issues still exist
security programs need improvement; and have been combined in
and the FY 2007 Report on
· Segregation of duties needs Internal Control in the
strengthening. Financial Systems,
Analyses, and Oversight
Material Weakness.
Additionally, we have
issued a separate
management letter on our
audit procedures related to
NASA's financial
management information
system.
A Member Practice of Ernst & Young Global