Correspondence issued by the Government Accountability Office with an abstract that begins "We are reviewing the processes the Department of Defense (DOD) is using to conduct its Mobility Capabilities Study (MCS). The MCS is to address changes in DOD's transportation force structure and mobility requirements due to changes in threats and certain national security and military strategies. The study results may underpin decisions on future strategic airlift, aerial refueling aircraft, and sealift procurements. The study relies on the use of various models and data inputs to develop and evaluate transportation alternatives, including variations in alternative transportation modes (air, land, sea) and sources (military, civilian, foreign), as well as factors that affect transportation mode and source decisions. The Senate Armed Services Committee directed us to monitor the conduct of the MCS and report on the adequacy and completeness of the report no later than 30 days after DOD completes the study. DOD plans to issue the MCS report during 2005. This letter is intended to bring to the Secretary of Defense's attention preliminary observations on certain aspects of the MCS methodology to permit you to ensure the credibility of this and future studies. In our letter, we address the adequacy of …

Correspondence issued by the Government Accountability Office with an abstract that begins "GAO reviewed the audit reports covering the financial statements of the Reserve Officers Association of the United States for Fiscal Years 2003 and 2004. GAO found no reportable instances of noncompliance. The audit reports included the auditors' opinions that the financial statements of the corporation were presented fairly in accordance with U.S. generally accepted accounting principles."

Correspondence issued by the Government Accountability Office with an abstract that begins "In a recently completed report for Congress, we evaluated how the U.S. Department of Agriculture's (USDA) Rural Housing Service (RHS) makes eligibility determinations for its rural housing programs. As part of that review, we used 2000 census data to determine the populations of the rural areas that received RHS housing program loans and grants. We obtained information on the RHS loans and grants provided to communities, from October 1998 through April 2004, from databases maintained by USDA's Information Resource Management (IRM) in St. Louis, Missouri. As with any system, the accuracy of the data and the process used for entry affects reliability and usefulness for management and reporting purposes. During our review, we identified several issues that raised concerns about the accuracy of the information in the IRM databases. For example, while we originally intended to geocode (that is, match) 5 years of the national RHS housing loan and grant portfolio to specific communities, the time needed to ensure the reliability of the data required us to limit much of our analysis to five states (Arizona, California, Maryland, Massachusetts, and Ohio). This report is a follow-up on our …

Correspondence issued by the Government Accountability Office with an abstract that begins "The federal government assumes insurance risk for a wide range of activities that are funded through numerous federal budget accounts and administered by a variety of federal organizations. For some activities, such as those funded through the National Flood Insurance account, the federal government assumes the entire insurance risk. The federal government also assumes part of the risk for insurance activities that are administered by state and local governments--for example, those funded through the Unemployment Trust Fund or that are partly underwritten by private insurers, such as those funded through the Special Workers' Compensation Expenses account. These insurance risks, whether fully or partially assumed by the federal government, are in lines of insurance that private insurers also recognize: health, life, disability, and property/casualty insurance. The federal government has generally assumed insurance risks for at least two reasons. First, the government may step in when insurance is not widely available because private insurers cannot collectively absorb or affordably price the insurance risk. For example, when private insurers were unable to offer affordable terrorism insurance in the aftermath of September 11, 2001, the federal government created a terrorism insurance program. …

Correspondence issued by the Government Accountability Office with an abstract that begins "This letter responds to a Department of the Army request for our views on whether certain payment procedures included in the Defense Department's (DOD) proposed Families First Personal Property Program conform with relevant criteria in GAO's Policy and Procedures Manual for Guidance of Federal Agencies. Families First is a DOD initiative to reengineer its processes for transporting household goods and personal property for its service members and civilians. Army's request is in response to a Defense Finance and Accounting Service (DFAS) recommendation that DOD seek our views specifically on whether the proposed procedures for electronic billing and payment meet the supporting documentation requirements in Title VII of GAO's Policy and Procedures Manual for Guidance of Federal Agencies. While the General Services Administration (GSA) is responsible for issuing federal regulations for transportation, including moves of household goods and personal property as well as agency prepayment and postpayment audit requirements for transportation payments, we are responsible for issuing fiscal guidance based on authorities in the U.S. Code. We considered DOD's proposed process of electronic billing and payment in light of our requirements established in Title VII for disbursements and related …

Correspondence issued by the Government Accountability Office with an abstract that begins "Medicare--the federal health insurance program that covers the nation's elderly and disabled--annually processes over 1 billion medical claims for services provided to beneficiaries. The Centers for Medicare & Medicaid Services (CMS), an agency within the Department of Health and Human Services (HHS), administers the Medicare program with the assistance of its claims administration contractors. These contractors are charged with processing and paying claims that are properly submitted and that are for medically necessary and covered services. The contractors also deny payment for claims considered invalid, incomplete, or otherwise improper. Medicare beneficiaries and providers have the right to appeal denied claims through a multilevel administrative process that includes a decision by an administrative law judge (ALJ). In fiscal year 2004, CMS's contractors denied over 158 million Medicare claims, about 5 million of which resulted in the initiation of appeals. In the same year, about 113,000 denied claims were appealed to ALJs. Two federal agencies--HHS and the Social Security Administration (SSA)--play a role in resolving Medicare appeals, but neither agency manages the entire process. In recent years, the Medicare appeals process has been the subject of widespread concern because of …

Guidance issued by the Government Accountability Office with an abstract that begins "This publication supersedes AFMD-2.1.1, A Glossary of Terms Used in the Federal Budget Process (Exposure Draft), January 1993. It fulfills part of GAO's responsibility to publish standard terms, definitions, and classifications for the government's fiscal, budget, and program information. It was developed in cooperation with the Secretary of the Treasury and the Directors of the Office of Management and Budget and the Congressional Budget Office. This glossary is a basic reference document for the Congress, federal agencies, and others interested in the federal budget-making process. Like previous editions, this revision emphasizes budget terms, but relevant economic and accounting terms are also defined to help the user appreciate the dynamics of the budget process and its relationship to other key activities (e.g., financial reporting). It also distinguishes between any differences in budgetary and nonbudgetary meanings of terms."

Correspondence issued by the Government Accountability Office with an abstract that begins "Medicare pays hospitals for drugs that beneficiaries receive as part of their treatment in hospital outpatient departments. Specifically, the Centers for Medicare & Medicaid Services (CMS) in the Department of Health and Human Services (HHS) uses an outpatient prospective payment system (OPPS) to pay hospitals fixed, predetermined rates for services. These services include drugs given to beneficiaries in outpatient settings. When OPPS was first developed as directed by the Balanced Budget Act of 1997, the rates for hospital outpatient services and drugs were based on hospitals' 1996 median costs. However, these rates prompted concerns that payments to hospitals would not reflect the cost of newly introduced pharmaceutical products--drugs, biologicals, and radiopharmaceuticals--used to treat, for example, cancer, rare blood disorders, and other serious conditions. In turn, congressional concerns were raised that beneficiaries might lose access to some of these products if hospitals avoided providing them because of a perceived shortfall in payments. In response to these concerns, the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 authorized pass-through payments, which are a way to augment, on a temporary basis, the OPPS payments for newly introduced pharmaceutical products …

Correspondence issued by the Government Accountability Office with an abstract that begins "In a prior report we suggested that the consolidation of certain offices of inspectors general (IG) could strengthen the independence, efficiency, and effectiveness of the IGs in the federal government. Based on the potential for benefits and the similarities in their basic missions, we identified the Amtrak Office of Inspector General and the Department of Transportation (DOT) Office of Inspector General as among those Congress might consider for consolidation. We reported that by consolidating the office of the Amtrak IG with the larger DOT IG office, the resulting office would have a larger budget and more staff with which to achieve its mission. Potential benefits include an increased ability to improve the allocation of human and financial resources and to attract and retain an adequate and skilled workforce. We concluded that consolidation of smaller IG offices, if implemented properly with specific plans to mitigate potential weaknesses, is a means of achieving economies of scale and greater independence and of providing critical mass and range of skills, particularly given the ever increasing need for technical staff with specialized skills. This report responds to a Congressional request that, building on …

Correspondence issued by the Government Accountability Office with an abstract that begins "On June 9, 2005, GAO testified before the Subcommittee on Railroads, House Committee on Transportation and Infrastructure at a hearing on "Amtrak Food and Beverage Operations." This letter responds to a Congressional request that we provide answers to questions for the record."

Correspondence issued by the Government Accountability Office with an abstract that begins "The United States Commission on Civil Rights (Commission) was first established in 1957 as the Commission on Civil Rights. The Commission's life was extended in 1983 and reestablished again in 1994 with its current name. The Commission's purpose is to collect and study information on discrimination or denials of equal protection of the laws because of race, color, religion, sex, age, disability, or national origin, or in the administration of justice in such areas as voting rights, enforcement of federal civil rights laws, and equal opportunity in education, employment, and housing. The Commission has been subject to long-standing congressional concerns over the adequacy of its management practices and procedures, concerns that were reinforced by several GAO reports. In July 1997, we issued a report in which we found broad management problems at the Commission, including limited awareness of how its resources were used. In more recent studies, we found that the Commission lacked good project management and transparency in its contracting procedures and needed improved strategic planning. As a result of these reports and other concerns, we conducted additional work at the Commission. Specifically, Congress asked us to …

Correspondence issued by the Government Accountability Office with an abstract that begins "In February 2005, we issued our opinions on the calendar year 2004 financial statements of the Bank Insurance Fund (BIF), the Savings Association Insurance Fund (SAIF), and the FSLIC Resolution Fund (FRF). We also issued our opinion on the effectiveness of the Federal Deposit Insurance Corporation's (FDIC) internal controls as of December 31, 2004, and our evaluation of FDIC's compliance with significant provisions of selected laws and regulations for the three funds for the year ended December 31, 2004. The purpose of this report is to discuss issues identified during our audits of the 2004 financial statements regarding accounting procedures and internal controls that could be improved, and to recommend improvements to address these issues. Although these issues were not material in relation to the financial statements, we believe they warrant management's attention."

Correspondence issued by the Government Accountability Office with an abstract that begins "The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget (OMB), is required to annually prepare and submit audited financial statements of the U.S. government to the President and the Congress. We are required to audit these consolidated financial statements (CFS) and report on the results of our work. In connection with fulfilling our requirement to audit the fiscal year 2004 CFS, we evaluated the Department of the Treasury's (Treasury) financial reporting procedures and related internal control over the process for compiling the CFS, including the management representation letter provided us by Treasury and OMB. Written representation letters from management, required by U.S. generally accepted government auditing standards, ordinarily confirm oral representations given to the auditor, indicate and document the continuing appropriateness of those representations, and reduce the possibility of a misunderstanding between management and the auditor. The purpose of this report is to communicate our observations on the Department of Veterans Affairs' (VA) fiscal year 2004 management representation letter. Our objective is to help ensure that future management representation letters submitted by VA are sufficient to help support Treasury and …

Correspondence issued by the Government Accountability Office with an abstract that begins "GAO reviewed the audit reports covering the financial statements of the Congressional Medal of Honor Society of the United States of America, for fiscal year 2003. GAO found no reportable instances of noncompliance. The audit reports included the auditors' opinions that the financial statements of the corporation were presented fairly in accordance with generally accepted accounting principles."

Correspondence issued by the Government Accountability Office with an abstract that begins "As we and others have reported in the past, the National Aeronautics and Space Administration (NASA) has fundamental problems with its financial management operations that undermine its external financial reporting ability and thwart its efforts to effectively manage and oversee its major programs. In April 2000, NASA began addressing many of its financial and management challenges through its effort to implement a new integrated financial management system, known as the Integrated Financial Management Program (IFMP), which NASA expects to complete in fiscal year 2008. However, in April and November 2003--3 years into the IFMP implementation effort and with significant investment already made in the program--we issued a series of four reports that detailed weaknesses in NASA's acquisition and implementation strategy for IFMP. Specifically, we reported that NASA had not followed key best practices for acquiring and implementing IFMP and, therefore, was at risk of making a substantial investment in a financial management system that would fall far short of its stated goal of providing meaningful, reliable, and timely information to support effective day-to-day program management and external financial reporting. As part of the four reports we issued on …

Correspondence issued by the Government Accountability Office with an abstract that begins "GAO reviewed the audit reports covering the financial statements of the Air Force Sergeants Association for fiscal years 2004 and 2003. GAO found no reportable instances of noncompliance. The audit reports included the auditors' opinion that the financial statements of the corporation were presented fairly in accordance with generally accepted accounting principles."

Correspondence issued by the Government Accountability Office with an abstract that begins "The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget (OMB), is required to annually prepare and submit audited financial statements of the U.S. government to the President and Congress. We are required to audit these consolidated financial statements (CFS) and report on the results of our work. An issue meriting concern and close scrutiny that emerged during our fiscal year 2004 CFS audit was the growing number of Chief Financial Officers (CFO) Act agencies that restated certain of their financial statements for fiscal year 2003 to correct errors. Errors in financial statements can result from mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared. Frequent restatements to correct errors can undermine public trust and confidence in both the entity and all responsible parties. Further, when restatements do occur, it is important that financial statements clearly communicate, and readers of the restated financial statements understand, that the financial statements originally issued by management in the previous year and the opinion thereon should no longer be …

Correspondence issued by the Government Accountability Office with an abstract that begins "The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget (OMB), is required to annually prepare and submit audited financial statements of the U.S. government to the President and the Congress. We are required to audit these consolidated financial statements (CFS) and report on the results of our work. In connection with fulfilling our requirement to audit the fiscal year 2004 CFS, we evaluated the Department of the Treasury's (Treasury) financial reporting procedures and related internal control over the process for compiling the CFS, including the management representation letter provided us by Treasury and OMB. Written representation letters from management, required by U.S. generally accepted government auditing standards, ordinarily confirm oral representations given to the auditor, indicate and document the continuing appropriateness of those representations, and reduce the possibility of a misunderstanding between management and the auditor. The purpose of this report is to communicate our observations on the Department of State's (DOS) fiscal year 2004 management representation letter. Our objective is to help ensure that future management representation letters submitted by DOS are sufficient to help support Treasury and OMB's …

Correspondence issued by the Government Accountability Office with an abstract that begins "To address homeland defense needs and comply with government direction that agencies use the electromagnetic spectrum more efficiently, the Department of Defense (DOD) is deploying new Land Mobile Radios to military installations across the country. The new Land Mobile Radios operate in the same frequency range--380 Megahertz (MHz) to 399.9 MHz--as many unlicensed low-powered garage door openers, which have operated in this range for years. While DOD has been the authorized user of this spectrum range for several decades, their use of Land Mobile Radios between 380 MHz and 399.9 MHz is relatively new. With DOD's deployment of the new radios and increased use of the 380 MHz-399.9 MHz range of spectrum, some users of garage door openers have experienced varying levels of inoperability that has been attributed to interference caused by the new radios. Nevertheless, because garage door openers operate as unlicensed devices, they must accept any interference from authorized spectrum users. This requirement stems from Part 15 of the Federal Communications Commission (FCC) regulations. Garage door openers and other unlicensed devices are often referred to as "Part 15 devices." Congress requested that GAO review the potential …

Correspondence issued by the Government Accountability Office with an abstract that begins "Since the September 11, 2001, terrorist attacks, the Department of Defense (DOD) has increased its reliance on its National Guard and reserve forces to support the Global War on Terrorism, and particularly Operation Iraqi Freedom. Congress has been interested in making improvements and enhancements to compensation and benefit programs for reserve component members. When reserve component members are activated for more than 30 days under federal authorities, they are covered under TRICARE, DOD's health care system. While reserve component members are automatically covered by TRICARE when activated, their spouses and other dependents have the option of using either TRICARE or their private health insurance. However, our prior work found that dependents of reserve component members who had dropped their private health insurance reported problems accessing the TRICARE system--such as difficulty finding a health care provider, establishing eligibility, understanding TRICARE benefits, and knowing where to go when questions and problems arise. In addition, maintaining continuity of care with the same health care providers, especially for dependents with chronic medical conditions, may be problematic after switching to TRICARE. To address these concerns, some legislative proposals would give reserve component members …

Correspondence issued by the Government Accountability Office with an abstract that begins "The Secretary of Treasury, in coordination with the Director of the Office of Management and Budget (OMB), is required to annually prepare and submit audited financial statements of the U.S. government to the President and Congress. We are required to audit these consolidated financial statements (CFS) and report on the results of our work. An issue meriting concern and close scrutiny that emerged during our fiscal year 2004 CFS audit was the growing number of Chief Financial Officers (CFO) Act agencies that restated certain of their financial statements for fiscal year 2003 to correct errors. Errors in financial statements can result from mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared. Frequent restatements to correct errors can undermine public trust and confidence in both the entity and all responsible parties. Further, when restatements do occur, it is important that financial statements clearly communicate, and readers of the restated financial statements understand, that the financial statements originally issued by management in the previous year and the opinion thereon should no longer be relied …

Correspondence issued by the Government Accountability Office with an abstract that begins "GAO reviewed the audit reports covering the financial statements of the National Federation of Music Clubs for Fiscal Year 2003. GAO found no reportable instances of noncompliance. The audit reports included the auditors' opinions that the financial statements of the corporation were presented fairly on a modified cash basis of accounting."

Correspondence issued by the Government Accountability Office with an abstract that begins "Among the Internal Revenue Service's (IRS) many tools to collect outstanding taxes is its ability to use the property of a taxpayer as security for an outstanding tax debt. IRS exercises this power when it files a federal tax lien against the property of a taxpayer. As part of its tax collection activities, IRS reported filing more than 548,000 tax liens against taxpayer property in fiscal year 2003. Since a lien encumbers taxpayer property, IRS's ability to file a lien is a powerful tool in enforcing the tax laws. With this power, however, comes the responsibility to ensure that liens are released timely once taxpayers satisfy their tax debt. The Internal Revenue Code (IRC) addresses timeliness by requiring IRS to release liens within 30 days of the tax debt's satisfaction. If IRS fails to timely release federal tax liens, taxpayers can suffer undue hardship and burden. Because federal tax liens appear on commercial credit reports, (1) businesses may be unable to obtain necessary credit because lenders may assume they are bad credit risks, (2) individuals may miss an opportunity to buy a home or an automobile because they …

Correspondence issued by the Government Accountability Office with an abstract that begins "The Joint Strike Fighter (JSF) acquisition program is estimated to cost $245 billion to develop and produce three variants of stealthy fighter aircraft--a conventional takeoff and landing variant for the Air Force, an aircraft carrier variant for the Navy, and a short take-off and vertical landing variant for the Marine Corps and Air Force. A major goal of the JSF program is to reduce costs by maximizing commonality among variants. However, the Air Force conventional variant is being designed with a different aerial refueling method than those used by the two other JSF variants. U.S. fighters use two different methods for aerial refueling. Air Force fixed-wing aircraft are all currently fueled by a boom that extends from a tanker aircraft and is guided into a receptacle. The Navy and Marine Corps fighters use a probe that extends from the fighter to receive fuel when inserted into a drogue, which is a basket-like device on the end of a hose that extends from the tanker. The Senate Armed Services Committee directed that we (1) examine the rationale behind the Air Force refueling decision for its JSF version, (2) determine …