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E.D. Management Invites Waste, Fraud, G.A.O. Report Contends

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Washington--Flawed financial-management methods at the Education Department are exposing billions of dollars in federal funds to the potential for waste and fraud, the General Accounting Office contends in a new report.

"Overall, the Department of Education's accounting system does not provide managers with the reliable information they need to protect financial resources from fraud, waste, and mismanagement, and to satisfy internal and external financial reporting requirements," the report says.

But Mary M. Rose, the department's deputy undersecretary for management, said in a written response to the report that some of the gao's findings are inaccurate, and that most of the problems it identifies have been addressed since the audit was conducted in 1985 and 1986.

Among the gao's findings:

The overall department accounting system is not adequately backed up by more detailed data, and is often incompatible with accounting systems for individual programs or functions.

The department does not adequately keep track of government property in its domain, particularly that held by contractors and grantees.

The department's system for keeping track of the grants and contracts it awards contains inaccurate data, and is incapable of providing timely information on topics such as the number of grants awarded for projects in a particular subject area.

Record-keeping for the Pell Grant program and loan programs supporting higher-education facilities are especially inadequate.

Ms. Rose said that the department is working to improve its central accounting system and to establish new systems to track property and grants and new policies for following up audits by the inspector general.--jm

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