April 22, 1996 in Nation/World

Agency Doesn’t Know How It Spent Billions Bookkeeping Problems Prevent Auditors From Tracking Down Expenditures

By The Spokesman-Review
 

The federal government spends billions of tax dollars each year feeding people who can’t afford to feed themselves.

But the agency in charge of food stamps, the school lunch program and other nutrition programs can’t say exactly how it spent the $13.5 billion it was given in 1994.

The money wasn’t lost or stolen, said Ellen Haas, assistant secretary of agriculture for food and consumer services, which manages those and other nutrition programs.

Technically, the money’s not even unaccounted for, said Tom Burks, a U.S. Department of Agriculture auditor. The number is on the agency’s books, so it’s accounted for, he said.

But the agency doesn’t have valid documentation of the way it spent the money, says a strongly worded audit the USDA inspector general’s office conducted last year.

Eventually, auditors threw up their hands and issued a “disclaimer” about the $13.5 billion and other bookkeeping problems that total another $4 billion. That is nearly half of the agency’s $37.5 billion budget for 1994.

“We can’t say anything happened to it,” Burks said. “You can’t say it was improperly spent. But you can’t say it was properly spent.”

U.S. Rep. George Nethercutt of Spokane calls that bureaucratic double talk. He and other Republicans in Congress want to know where the money went.

“It’s absurd,” Nethercutt said of the agency’s poor record-keeping. “If you told the IRS you spent $100 for a legitimate business expense and you didn’t have the check and you didn’t know how it was spent, as a taxpayer, you’d be in trouble.”

If Haas can’t come up with adequate documentation for how the money was spent, she should resign, Nethercutt said.

He and other Republicans took heat last year when they suggested major changes in food stamps, school lunches and breakfasts, the Women, Infants and Children (WIC) program and other nutrition programs.

Their proposals to turn many federal programs into block grants for states was roundly criticized by the Democratic administration.

In a report last November, the Food and Consumer Service run by Haas contended one advantage of USDA control of food stamps, school lunches and WIC is “federal oversight, which helps ensure their integrity.”

That report was written months after the agency had flunked the audit testing its own fiscal integrity.

“Their actions illustrate we don’t have enough oversight,” said Nethercutt.

The Food and Consumer Service failed to respond to several requests for comment last week. In testimony before a House subcommittee, Haas blamed the problems in part on a new computerized accounting system.

The agency changed accounting systems after a 1993 audit said its old system did not meet federal bookkeeping requirements.

Even though the agency is unable to document billions of dollars of spending for 1994, the new system is better, Burks contended.

“It’s more in conformance with the current requirements imposed by the federal government,” Burks said.

But Nethercutt scoffs at such logic.

“I don’t think it passes the common-sense test,” he said. “They can’t prove to us that all the money they’ve spent on their programs is properly spent.”

The agency should have done what any household or business does when switching accounting systems, the Spokane congressman said: Keep a backup on the old system until it is sure the new system is working.

After examining financial data for 1994, USDA auditors criticized the agency for failing to document how money had been spent, for not properly supervising the people who kept the books and for sloppy accounting practices.

The review “identified undocumented, unauthorized, incorrect and untimely transactions and inaccurate financial reporting,” Inspector General Roger Viadero wrote.

The person in charge of keeping records was not an accountant and did not know how to operate the system, auditors said.

Agency personnel routinely discovered the amount of money they thought had been spent on food stamps was different from the amount reported by the Treasury Department, which redeems the stamps. When differences occurred, agency staffers would change their figures to correspond to the Treasury Department reports.

Burks, an auditor familiar with the review but not involved in it, likened this to a person keeping poor records on checks written during the month, then accepting the bank’s statement of how much had been spent. If the bank was wrong, the check writer would never know it, he said.

The agency also reported some $3.2 billion in “net operating changes,” special charges that federal accounting rules say must be fully disclosed.

“They couldn’t really tell us what went into that figure,” said Burks.

When auditors pressed for documentation, agency staff provided some paperwork. In doing so, the total for net operating changes nearly doubled to $6.1 billion.

“At that point, you’re going, ‘Jeez, how are we supposed to audit this?”’ Burks said.

In the end, auditors issued a “disclaimer”- which means they refused to offer an opinion on whether the financial statements are right or wrong - and listed numerous problems that make such a determination impossible.

In her appearance before the House Agriculture Appropriations Subcommittee, Haas assured Nethercutt and other members of the panel that none of the money had been stolen or misused and that bookkeeping problems are to blame. The staff was receiving training and an administrator with experience in accounting was hired, she said.

“I think when you look at it as a part of the total, it is a very small part of the total,” Haas said.

Nethercutt called Haas “cavalier” for her attempt to minimize the multibillion-dollar discrepancies. “It happens because it’s not their own money,” he said.

“She should resign if she can’t prove where it went,” Nethercutt said of the undocumented billions.

But tracking the money would be difficult, said Burks. “It could possibly take an extra year to come up with the numbers” documenting 1994 spending, he said.

Rather than do that, auditors decided to monitor the agency’s performance in fiscal 1995. That audit is in its final stages.

Although he couldn’t comment on the latest audit, Burks said the agency did devise “an adequate corrective plan.” If it can document its figures for 1995, that would give auditors “reasonable assurance” that the 1994 figures are correct, he added.

The General Accounting Office also is reviewing the agency’s books, and Nethercutt plans to ask all federal departments that come before the Appropriations Committee if they have serious audit problems.

“This happens because there’s a feeling that (the federal government) is one big checkbook that just gets written on,” he said.

, DataTimes ILLUSTRATION: Graphic: Accounting for USDA spending

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