Federal Reports

One of the Postal Service’s key initiatives of its Delivering for America 10-year plan is to revitalize nearly 19,000 delivery units by targeting markets where it can aggregate delivery units into fewer, larger, centrally located sorting and delivery centers (S&DC). According to the Postal Service, S&DCs will have package sortation equipment, standardize operations, and reduce mail handling costs. The first S&DC was opened in November 2022, and a total of 29 were implemented by the end of September 2023.

We Looked At  The Department of Transportation (DOT) reported $12.9 billion in general Property, Plant, and Equipment (PP&E) in its fiscal year 2022 Agency Financial Report (AFR), including $4.2 billion in capitalized equipment. Federal agencies are required to prepare accurate annual financial statements that adhere to accounting principles, as well as to establish internal controls to reduce risk and promote efficient use of property. This requirement exists to provide reliable, accurate descriptions of an agency’s financial position, which includes property. Given DOT’s significant investment in capitalized equipment and the importance of its management, we initiated this audit to assess DOT’s internal controls for managing capitalized equipment, specifically (1) policies for managing capitalized equipment; (2) oversight controls; and (3) guidance regarding capitalization thresholds.  What We Found DOT’s policies and procedures for managing capitalized equipment are out-of-date and noncompliant with Federal law. For example, DOT Orders about managing capitalized equipment are dated as far back as 1992, and do not require Operating Administrations to conduct inventories in accordance with the Federal Personal Property Management Act of 2018. In addition, several Operating Administrations’ policies and procedures do not comply with these laws. The Department also lacks proper oversight controls, including an adequate reconciliation process, to ensure that Operating Administrations are maintaining accurate inventories of their equipment. This resulted in the Maritime Administration failing to correct misclassifications of nearly 70 percent of the Department’s total net value of capitalized equipment for fiscal year 2022. Further, we estimated that FRA did not capitalize up to $53 million of eligible equipment. Lastly, DOT also lacks clear guidance on deviating from standard capitalization thresholds, limiting its ability to establish effective internal controls for capitalized asset management.  Our Recommendations We made seven recommendations to improve DOT’s internal controls to effectively manage capitalized equipment. 

What We Looked At
The Office of National Drug Control Policy (ONDCP) advises the President on drug control issues and is responsible for developing and implementing the National Drug Control Strategy (the Strategy), a comprehensive plan with long-range goals for reducing drug abuse and its consequences in the United States. To carry out the Strategy's goals, ONDCP works with more than a dozen Federal agencies-including the National Highway Traffic Safety Administration (NHTSA)-through the National Drug Control Program (NDCP). We most recently reviewed NHTSA's NDCP activities for fiscal year 2019, identifying errors and omissions in the Agency's reports. Given the length of time since our last review and issues it identified, we self-initiated this performance audit. Our objective was to assess NHTSA's internal controls over its NDCP activity. Specifically, we looked at NHTSA's (1) controls for tracking drug control obligations and consistently reporting to ONDCP and (2) documentation to show compliance with drug control budget formulation requirements.

What We Found
NHTSA lacks controls for tracking and consistently reporting drug control-related obligations as required. Instead, the Agency relies on the expertise of its staff to estimate drug control-related obligations; however, staff used varying methodologies when contracts addressed multiple areas and inconsistently reported contract obligation amounts. As a result, ONDCP cannot rely on the accuracy of NHTSA's reported drug control-related obligations, inhibiting ONDCP's ability to accurately inform Congress and the public about the funds NHTSA spent on drug control activities. In addition, NHTSA lacks documentation to show it complies with drug control budget formulation requirements. NHTSA does not have formal written approval for its methodology from ONDCP and could not provide documentation to support how it calculated the budget estimates reported to ONDCP. As a result, NHTSA cannot ensure its budget estimates reasonably and fairly quantify funding that the Agency will use for drug control activities.

Our Recommendations
We made four recommendations to improve NHTSA's internal controls of drug control-related reporting. The Agency concurred with all four of our recommendations. We consider recommendations 1, 2, and 4 resolved but open pending completion of the planned actions and recommendation 3 resolved and closed.

We determined that the EPA awarded WIIN Act funds consistent with nearly all guidance and improved Agency processes to increase the transparency of funding decisions. We identified two documentation issues that the EPA experienced before it awarded funds. Agency staff reported to us that they had addressed one of these issues with additional controls and a new oversight structure within the Office of Water, or the OW, and the other through a new standard operating procedure within the Office of Grants and Debarment.

To see our report, click on the link below