Report to Congressional Requesters

United States General Accounting Office

GAO

December 2001 2000 CENSUS

Analysis of Fiscal Year

2000 Budget and

Internal Control

Weaknesses at the

U.S. Census Bureau

GAO-02-30
Page i GAO-02-30 Census Budget and Controls

Letter 1

Results in Brief 2

Background 5

Budget Variances Were at Least $415 Million 9

Lower Workload and Costs Generated Budget Variances 11

Weaknesses in Key Internal Controls 17

Review of Other Selected Areas 27

Recommendations for Executive Action 28

Agency Comments and Our Evaluation 29

Appendix I Objectives, Scope, and Methodology 34

Appendix II Explanations for Fiscal Year 2000 Project Variances

of $5 Million or More 37

Appendix III Review of Other Selected Areas 44

Review of Personnel and Benefits Expenditures 44

Review of Fund Balance With Treasury 44

Review of Property and Equipment 45

Review of Government Credit Cards 45

Appendix IV Comments From the Department of Commerce, U.S.

Census Bureau 47

GAO Comments 59

Appendix V GAO Contact and Staff Acknowledgments 61

GAO Contact 61

Acknowledgments 61

Tables

Table 1: September 30, 2000, Undelivered Orders Available for

Potential Deobligation 10

Table 2: Fiscal Year 2000 Budget Variances by Framework 12

Table 3: Enumeration Effort and Costs for Fiscal Year 2000 15

Table 4: Fiscal Year 2000 Project Variances of $5 Million or More 37

Contents
Page ii GAO-02-30 Census Budget and Controls

Abbreviations

ACE Accuracy and Coverage Evaluation

APMS Accountable Property Management System

CAMS Commerce Administrative Management System

FASAB Federal Accounting Standards Advisory Board

FFMIA Federal Financial Management Improvement Act

 of 1996

FMFIA Federal Managers’ Financial Integrity Act of 1982

FTE full-time equivalent

GAAP generally accepted accounting principles

GAGAS generally accepted government auditing standards

GSA General Services Administration

IG inspector general

JFMIP Joint Federal Management Improvement Program

NPC National Processing Center

OMB Office of Management and Budget

PAMS/ADAMS Pre-Appointment Management System and

 Automated Decennial Administrative Management

 System

SGL U.S. Standard General Ledger
Page 1 GAO-02-30 Census Budget and Controls

December 28, 2001

The Honorable Dan Miller

Chairman

The Honorable William Lacy Clay, Jr.

Ranking Minority Member

Subcommittee on the Census

Committee on Government Reform

House of Representatives

The Honorable Carolyn B. Maloney

House of Representatives

The decennial census is the nation’s most comprehensive and expensive

data-gathering program. The Constitution requires a decennial census of

the population in order to apportion seats in the House of Representatives.

Public and private decisionmakers also use census data on population

counts and social and economic characteristics for a variety of purposes.

The 2000 decennial census covers a 13-year period of effort from fiscal

years 1991 through 2003 at an estimated cost of $6.5 billion. During fiscal

year 2000, the U.S. Census Bureau mailed census forms (questionnaires) to

almost 119 million American households asking the occupants to complete

the forms as of April 1, 2000, and mail them back. The bureau reported

that for some 42 million nonresponding households, it hired over 500,000

temporary workers, known as enumerators, to visit households that had

not responded by April 18, 2000. 1

 Enumerators gathered the requested

information in slightly less than the planned 10-week period that ended

July 2, 2000.

On September 27, 2000, the bureau reported to the Congress that it had at

least $305 million of budget savings2

 out of its $4.5 billion fiscal year 2000

no-year appropriation3

 for the 2000 decennial census. As agreed with your

 1

The bureau refers to this activity as “nonresponse follow-up.”

2

As used by the bureau, “budget savings” describes those budgetary resources that were

not needed in fiscal year 2000 and are available to offset the bureau’s fiscal year 2001

budget request. More broadly used, the term “budget savings” is used in the federal budget

process to describe a downward change from either the Office of Management and Budget

or Congressional Budget Office budget baselines.

3

No-year funds are available for their original purpose until they are either expended,

rescinded, transferred, or reprogrammed or the account is closed.

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-02-30 Census Budget and Controls

offices, this report responds to your joint request to review the accuracy of

this reported amount and to identify budget variances for the 2000

decennial census, including the reasons for these variances.4 To fulfill this

first objective, we examined planning and financial documents, conducted

interviews with bureau personnel, audited all undelivered order5

 balances

of $1 million or more, reviewed accounts payable and accrued liability

accounts, and examined subsequent disbursements.6

 However, we did not

review the efficiency of expenditures and obligations against planned

budget appropriations.

You also asked us to review key internal controls of the U.S. Census

Bureau and to report on any significant weaknesses and how they might

be corrected. To fulfill this second objective, we reviewed recent

Department of Commerce financial reports that included bureau activities

as well as separate financial reports of the bureau that have reported a

number of weaknesses in internal controls, and examined internal

controls over bureau undelivered orders and accounts payable. We also

obtained financial system information and reviewed financial policies in

other selected areas that are presented in appendix III.

Our work was performed from December 2000 through June 2001 in

accordance with U.S. generally accepted government auditing standards.

Further details on our scope and methodology are presented in appendix I.

This report is one of several we will issue in the coming months on lessons

learned from the 2000 census that can help improve the planning effort for

the 2010 census.

Of the $4.5 billion appropriated to the U.S. Census Bureau for periodic

censuses and programs in fiscal year 2000, lower expenditures and

obligations than planned resulted in available balances of at least

$415 million. Since these no-year funds remain available until expended,

 4

Budget variances represent the difference between estimated amounts from all available

appropriations and actual obligations for fiscal year 2000.

5

Undelivered orders represent the value of goods and services that have been obligated but

that have not been received. If all deliveries have been made and accepted, any unused

amounts should be deobligated.

6

Subsequent disbursements are examined to search for goods or services that have been

delivered prior to year-end that should also be recorded as accounts payable or other

accrued liabilities as of year-end.

Results in Brief
Page 3 GAO-02-30 Census Budget and Controls

and the Department of Commerce has the authority to transfer amounts to

other programs, $360 million of this amount was carried over and made

available for fiscal year 2001 bureau programs. The remaining $55 million

represented amounts obligated for contracts for which activity had been

completed. These funds potentially can be deobligated and made available

for other programs. Additional amounts may be identified for deobligation

as the bureau closes out about $90 million of undelivered order balances

under $1 million that we did not review.

The primary reason for the available balances was a lower support staff

workload than planned. This resulted in about $348 million of lower salary

and benefit costs for over 11,000 fewer support staff than planned. The

lower support workload also reduced infrastructure costs for temporary

office space rental, equipment and supply costs, and contractual services

that resulted in further available balances of $167 million. This included

lower local travel reimbursement because fewer households were visited

than planned.

Enumerator workload is largely determined by the initial mail response

rate for returned census questionnaires. The initial mail response of 64

percent, 3 percent higher than the 61 percent estimated by the bureau,

resulted in over 3 million American households less than planned that did

not require visits by census enumerators. However, the available balances

from the higher mail response rate and the lower support staff workload

were partially offset by about $100 million of higher salary and benefit

costs for enumerators, including a higher workload for unanticipated

recounts. The bureau was concerned about high staff turnover and having

a sufficient number of enumerators for nonresponse follow-up in a tight

labor market. As a result, the bureau hired almost 3,300 more full-time

equivalent enumerators and paid them almost $1 an hour more than the

average $11.77 an hour that was planned. In addition, enumerator

workload was increased due to unanticipated recounts of almost 800,000

incomplete, lost, or inaccurate questionnaires.

According to bureau data, enumerator productivity did not have a

significant impact on budget variances for the 2000 decennial census. The

bureau reported the national average time to visit a household and

complete a census questionnaire was about the 1 hour estimated.

With regard to our second objective, the bureau had significant internal

control weaknesses for fiscal year 2000 that resulted in an inability to

develop and report complete, accurate, and timely information for

management decision-making. This was due to specific internal control
Page 4 GAO-02-30 Census Budget and Controls

weaknesses as well as a weak overall internal control environment at the

bureau. The bureau’s control environment was characterized by human

capital weaknesses, including the lack of experienced accounting staff,

which contributed to heavy reliance upon contractors. In addition,

management oversight was not sufficient to ensure adherence to

established policies and procedures, which created opportunities for

inconsistencies and errors, particularly in year-end closing procedures and

financial statement preparation.

Specific control weaknesses for fiscal year 2000 were related to the lack of

controls over financial reporting and financial management systems.

Financial reporting issues included (1) the inability to produce accurate

and timely financial statements and other financial management reports

needed for oversight and day-to-day management, (2) the lack of timely

and complete reconciliations needed to validate the balances of key

accounts, and (3) unsupported and inaccurate reported balances for

accounts payable and undelivered orders, two key accounts needed to

manage and report on unliquidated obligations. These findings were in

large part due to serious weaknesses in the bureau’s financial management

systems, which encompass the software, hardware, personnel, manual and

automated processes, procedures, controls, and data necessary to carry

out financial management functions, manage financial operations, and

report financial status.

The bureau has experienced persistent financial management systems

problems for many years and has candidly acknowledged the material

nonconformance of its financial systems in recent annual reports required

by the Federal Managers’ Financial Integrity Act of 1982 (FMFIA).7

 Despite

these reports, the bureau has asserted in its fiscal years 1999 and 2000

financial statement reports that its financial management systems were in

substantial compliance with the provisions of Federal Financial

Management Improvement Act of 1996 (FFMIA).8

 In our view, the bureau’s

 7

31 U.S.C. 3512 (c), (d), commonly referred to as FMFIA, requires federal agencies to

annually self assess their management controls and disclose any material weaknesses and

assess their financial systems and disclose any noncompliance with standards prescribed

by the Comptroller General. The U.S. Census Bureau reports its FMFIA information to the

Department of Commerce, which discloses all weaknesses departmentwide in its annual

accountability report.

8

FFMIA was intended to advance federal financial management by ensuring that federal

financial management systems can and do provide reliable, timely, and consistent

disclosure of financial data across the federal government.
Page 5 GAO-02-30 Census Budget and Controls

financial management systems did not substantially comply with the

requirements of FFMIA as of September 30, 2000.

We are recommending a number of actions to improve U.S. Census Bureau

policies, procedures, internal controls, and preparation of its financial

statements. In commenting on a draft of this report, the Department of

Commerce, U.S. Census Bureau, agreed with five of our seven

recommendations and made a number of specific comments on our

findings. The most significant disagreement related to our assessment that

the bureau’s financial management systems did not substantially comply

with the requirements of FFMIA as of September 30, 2000. We believe that

our findings, as well as those of the bureau’s independent auditor, provide

ample evidence that the systems did not substantially comply with the

act’s three primary requirements. These issues are addressed in the

“Agency Comments and Our Evaluation” section of this report. The full

text of the bureau’s letter is reprinted in appendix IV, which also includes

our evaluation of the bureau’s specific comments.

The U.S. Census Bureau performs large surveys and censuses that provide

statistics about the American people and the U.S. economy. The business

activities of the bureau can be divided into four categories: decennial and

other periodic census programs, demographic programs, economic

programs, and reimbursable work programs that are conducted mainly for

other federal agencies. During fiscal year 2000, the bureau conducted the

actual decennial count of U.S. population and housing as of April 1, 2000,

which is its largest and most complex activity. The results of the 2000

decennial census are used to apportion seats in the U.S. House of

Representatives, draw congressional and state legislative districts, and

form the basis for the distribution of an estimated $200 billion annually of

federal program funds over the next decade to state and local

governments.

The bureau receives two appropriations from the Congress: (1) salaries

and expenses and (2) periodic censuses and programs. The salaries and

expenses appropriation provides 1-year funding for a broad range of

economic, demographic, and social statistics. The periodic censuses and

programs appropriation provides no-year funding to plan, conduct, and

analyze the decennial censuses every decade and other authorized

periodic activities. The 2000 decennial census covers a 13-year period of

effort from fiscal years 1991 through 2003 at an estimated cost of

$6.5 billion. The bureau prepared its fiscal year 2000 budget request for the

Background

Census Appropriations
Page 6 GAO-02-30 Census Budget and Controls

2000 decennial census in eight broad “frameworks” of effort that were

submitted to the Office of Management and Budget (OMB) and the

Congress. As part of the Department of Commerce and Related Agencies

Appropriation Act, 2000, the appropriation for Periodic Censuses and

Programs earmarked $4.476 billion by framework for the bureau and the

Census Monitoring Board to remain available until expended.9

 While these

amounts were earmarked for the frameworks, section 205 of the act

authorized the Department of Commerce to transfer amounts not to

exceed 5 percent of any appropriation to another appropriation, but no

appropriation could be increased by more than 10 percent. Section 205

also required the Department of Commerce to comply with the procedures

set forth for reprogramming under section 605 of the act.10 For

management, program, financial, staffing, and performance purposes, the

8 frameworks were further divided by the bureau into 23 activities and

within these activities, further divided into 119 projects. Bureau financial

management reports provided appropriated amounts, expended and

obligated amounts, and variances to a project level.

The President’s fiscal year 2000 budget, which was submitted by OMB to

the Congress on February 1, 1999, included nearly $2.8 billion for the

bureau to perform the 2000 decennial census. This original budget request

reflected the bureau’s plan to gather information based in part on

statistical estimation for nonresponding households and to adjust

undercounting and other coverage errors. However, only a few days

earlier on January 25, 1999, the Supreme Court, in Department of

Commerce v. U.S. House of Representatives (525 U.S. 316), held that the

Census Act prohibited the bureau from using statistical sampling for

purposes of congressional apportionment. Because the original budget

 9

The Department of Commerce and Related Agencies Appropriations Act, 2000, is Title II of

Appendix A of the Consolidated Appropriations Act for Fiscal Year 2000, P.L. 106-113, 113

Stat. 1501, 1501A-26 (1999). Amounts earmarked for the eight frameworks were: $20 million

for Program Development and Management (framework 1); $195 million for Data Content

and Products (framework 2); $3.450 billion for Field Data Collection and Support Systems

(framework 3); $44 million for Address List Development (framework 4); $477 million for

Automated Data Processing and Telecommunication (framework 5); $16 million for Testing

and Evaluation (framework 6); $71 million for activities related to Puerto Rico, the Virgin

Islands, and Pacific Areas (framework 7); $199 million for Marketing, Communications and

Partnerships activities (framework 8); and $4 million for the Census Monitoring Board.

10Section 605 procedures for reprogramming funds require the Department of Commerce to

notify the Appropriations Committees of both Houses of Congress 15 days in advance of

reprogramming. However, the appropriation for Periodic Censuses and Programs

established a 3-day notification period for reprogramming funds provided by the

appropriation.
Page 7 GAO-02-30 Census Budget and Controls

request was submitted with the plans for statistical sampling, the bureau

had to amend its plans in accordance with the Supreme Court’s decision.

According to the bureau, the effect of this decision was that an estimated

12 million additional nonresponding households would require visits by

enumerators. In addition, various programs designed to address

undercounting and other coverage errors would have to be expanded. The

bureau also planned to visit about 4 million additional addresses for which

the Postal Service had returned the questionnaires because it believed the

housing units to be vacant or nonexistent.

In light of the need for additional enumeration and other programs to

ensure accuracy, OMB requested and the Congress approved additional

funding of $1.7 billion to the bureau’s original budget request of

$2.8 billion. The bureau’s total fiscal year 2000 appropriation of about

$4.5 billion for the 2000 decennial census was within the periodic censuses

and programs account.

The preparation of annual financial statements by federal agencies and

their subsequent audit is intended to provide for complete, reliable, timely,

and consistent financial information for use by agency management and

the Congress in the financing, management, and evaluation of federal

programs. The Department of Commerce is required to prepare annual

consolidated financial statements and have them audited under the

mandate of the Chief Financial Officers Act of 1990, as expanded by the

Government Management Reform Act of 1994. The Commerce IG is

responsible for the financial audit but may use its contract authority to

hire an independent accounting firm to perform the audit. Commerce

consists of 13 bureaus, including the U.S. Census Bureau. The Commerce

IG contracted with several certified public accounting firms to conduct

financial audits of the various bureaus for fiscal year 2000.

OMB provides implementing guidance for agencies, including guidance on

preparing and auditing financial statements.11 This guidance requires that

financial statements be prepared in accordance with U.S. generally

accepted accounting principles (GAAP)12 and the audit of such financial

 11OMB Bulletin No. 97-01, Form and Content of Agency Financial Statements, as

amended, and OMB Bulletin No. 01-02, Audit Requirements for Federal Financial

Statements.

12The Federal Accounting Standards Advisory Board promulgates GAAP for federal

government entities.

Annual Financial

Statement Audit
Page 8 GAO-02-30 Census Budget and Controls

statements must be in accordance with generally accepted government

auditing standards (GAGAS).13 GAGAS require the auditor to obtain an

understanding of internal controls to plan the audit and determine the

nature, timing, and extent of tests to be performed and to report

deficiencies considered to be reportable conditions as defined in the

auditing standards.14 Some reportable conditions are material weaknesses15

and all reportable conditions are presented in a report on internal

controls. Lesser internal control or operational matters are usually

reported in separate management letters. Criteria for internal controls are

contained in GAO’s Standards for Internal Control in the Federal

Government.

16

The Federal Financial Management Improvement Act of 1996 (FFMIA)

requires that agencies implement and maintain financial management

systems17 that substantially comply with federal financial management

systems requirements, applicable GAAP, and the U.S. Standard General

Ledger (SGL) at the transaction level. As part of the annual financial

statement audit, FFMIA requires the auditors to report any instances in

which they noted that the agency’s financial management systems did not

substantially comply with FFMIA requirements.

 13GAO promulgates GAGAS that incorporate American Institute of Certified Public

Accountants fieldwork and reporting standards for financial audits by reference.

14A reportable condition includes matters coming to the auditor’s attention, that, in the

auditor’s judgment, should be communicated because they represent significant

deficiencies in the design or operation of internal controls, which could adversely affect

the entity’s ability to meet the internal control objectives described in the report.

15A material weakness is a reportable condition in which the design or operation of the

internal controls does not reduce to a relatively low level the risk that losses,

noncompliance, or misstatements in amounts that would be material in relation to the

financial statements may occur and not be detected within a timely period by employees in

the normal course of their assigned duties.

16GAO/AIMD-00-21.3.1, November 1999.

17Under OMB Circular A-127, Financial Management Systems, revised July 23, 1993, each

agency must establish and maintain a single, integrated financial management system that

is a unified set of financial systems that are planned for and managed together. They are

operated in an integrated fashion and are linked together electronically in an efficient and

effective manner to provide agencywide system support necessary to carry out an agency’s

mission and support its financial management needs.
Page 9 GAO-02-30 Census Budget and Controls

Of the $4.5 billion appropriated to the U.S. Census Bureau for fiscal year

2000, lower expenditures and obligations than planned resulted in

available balances of at least $415 million. These no-year funds remain

available until expended, and the Department of Commerce has the

authority to transfer amounts to other programs. By April 2001,

$360 million of this amount was made available for fiscal year 2001 bureau

programs. We identified the remaining $55 million that represented

amounts obligated for contracts for which activity had been completed.

These funds potentially can be deobligated and made available for other

programs. Additional amounts may be identified for potential deobligation

as the bureau examines about $90 million of undelivered order balances

under $1 million.

On September 27, 2000, the bureau reported to the Congress that it had “at

least $305 million of budget savings” out of its $4.5 billion fiscal year 2000

appropriation for the 2000 decennial census. Based in part upon our

discussions with the Chairman and staff of the Subcommittee on the

Census, House Committee on Government Reform, and staff of the Senate

and House Committees on Appropriations, and as authorized by law,

unobligated fiscal year 2000 appropriations were made available for other

census programs. By April 2001, $360 million of unobligated fiscal year

2000 appropriations were made available for fiscal year 2001 bureau

programs in two phases.

• In December 2000, based upon information the bureau provided to the

House Committee on Appropriations, $300 million of unobligated balances

from prior years were used to offset the amount needed for the bureau’s

fiscal year 2001 appropriation. From this amount, $260 million was used to

fund the decennial census program and $40 million was used to fund other

periodic census programs for fiscal year 2001.

• On March 27, 2001, the bureau identified an additional $60 million of

unobligated balances from fiscal year 2000 funds. On April 11, 2001,

$56 million was used to fund the decennial census program and $4 million

was used to fund other periodic census programs for fiscal year 2001.

From our test of all bureau undelivered order balances over $1 million,

which totaled $367 million as of September 30, 2000, we identified

potential deobligations of $55 million. This resulted from contracts for

which activity had been completed and obligated balances were not

needed to close out the contracts. Thus, amounts can be made available

for other purposes. An agency should identify and deobligate funds no

Budget Variances

Were at Least

$415 Million

Fiscal Year 2000 Funds

Available for Fiscal Year

2001 Were $360 Million

Potential Deobligation of

$55 Million From

Undelivered Orders
Page 10 GAO-02-30 Census Budget and Controls

longer needed after the agency is certain no related costs remain. Table 1

shows the contractor, the applicable framework number within the

bureau’s eight frameworks of effort, and the potential amount available for

deobligation.

Table 1: September 30, 2000, Undelivered Orders Available for Potential

Deobligation

Dollars in millions

Contractor Framework Amount

Lockheed Martin 5 $16

TRW Incorporated 5 13

General Services Administration 3 12

Young & Rubicam 8 7

Electronic Data Systems Corporation 3 6

UNISYS Corporation 3 1

Total $55

Source: GAO analysis of U.S. Census Bureau undelivered orders files.

The contracts we identified as of September 30, 2000, were multiple phase

or task contracts with future completion dates stretching to December 31,

2003. Bureau officials stated that its Finance Division conducted a

quarterly review of contracts for deobligation. We found these reviews to

be ineffective because we noted several contracts for which the bureau

was not promptly deobligating amounts associated with completed

contracts. In our view, some contracts should have been deobligated as of

September 30, 2000, while other contracts were completed and amounts

were available for potential deobligation by the time we completed our

review in June 2001. Specifically, we found the following.

• Lockheed Martin provided services in three phases that included (1) the

architectural design, testing, and implementation of a data capture system,

(2) deployment of this system to data capture centers, and (3) preparation

of images for transfer to long-term storage. Services for phase one were

completed on September 30, 1998, phase two by February 28, 2001, and

phase three is to be completed by December 31, 2003. Most of the

remaining funding of $16 million related to phase two was no longer

needed and was available for potential deobligation by the time we

completed our review in June 2001.

• TRW Incorporated provided services to design and staff the data capture

centers. The last of these services were completed in June 2001, and

sufficient amounts were obligated to close out the contract. Remaining
Page 11 GAO-02-30 Census Budget and Controls

obligated amounts of $13 million were no longer needed and were

available for potential deobligation by June 30, 2001.

• The General Services Administration (GSA) rented building space and

provided other services. One GSA communication service agreement for

over $1 million for fiscal year 2000 was never performed under the

planned project. Also, about $5 million obligated for rent and another

$6 million obligated for services were not needed after the contract’s

period of performance ended on December 31, 1999. This resulted in total

funding of $12 million that was no longer needed for the purpose intended.

Since the period of performance had ended and there was no further

billing on these contracts after September 30, 2000, we believe that this

$12 million should have been deobligated as of September 30, 2000.

• Young & Rubicam provided advertising to promote the 2000 census and

encourage people to complete and return the census forms and cooperate

with enumerator follow-up. The contract also required a follow-up study

on the effect of the advertising that was completed by February 2001.

About $7 million remained obligated for the advertising campaign that was

no longer needed after May 31, 2000. We believe that this amount should

have been deobligated as of September 30, 2000.

• Electronic Data Systems Corporation staffed the telephone questionnaire

assistance center and provided other services with a contract through

May 31, 2001. The assistance center was shut down on August 13, 2000.

Other services were completed by May 31, 2001, and sufficient amounts

remained obligated to close out the contract. The remaining $6 million was

available for potential deobligation as of May 31, 2001.

• UNISYS Corporation provided telecommunications equipment and other

services for the local census offices with a contract through October 31,

2000. The last of these offices was closed down in early November 2000,

and sufficient amounts remained obligated to close out the contracts. We

believe that the remaining unused contract funding of $1 million could

have been deobligated as of September 30, 2000, during the subsequent

year-end closing process.

Additional amounts may be identified for deobligation as the bureau

closes out about $90 million of undelivered order balances under $1

million that we did not review.

Historically, workload and enumerator productivity have been two of the

largest drivers of census costs, and the bureau developed its budget for the

2000 decennial census using a model that contained key assumptions

about these two variables. The largest cause of the fiscal year 2000

available balances was a lower support staff workload than planned. This

Lower Workload and

Costs Generated

Budget Variances
Page 12 GAO-02-30 Census Budget and Controls

resulted in about $348 million of lower salary and benefit costs for over

11,000 fewer support staff than planned. The lower support workload also

reduced infrastructure costs for temporary office space rental, equipment

and supply costs, and contractual services that resulted in further

available balances of $167 million. However, these available balances were

partially offset by about $100 million of higher salary and benefit costs

than planned for enumerators, including a higher workload for

unanticipated recounts.

The U.S. Census Bureau prepared its fiscal year 2000 plan for the 2000

decennial census in eight frameworks of effort as shown in table 2.

Table 2: Fiscal Year 2000 Budget Variances by Framework

Dollars in millions

Framework number and title AppropriationaObligated

Budget

variances

1. Program Development and

Management

$22 $22 $0

2. Data Content and Products 222 222 0

3. Field Data Collection and Support

Systems

3,385 3,043 342

4. Address List Compilation 50 45 5

5. Automated Data Processing and

Telecommunications Support

512 464 48

6. Testing, Evaluation, and Dress

Rehearsal

16 13 3

7. Puerto Rico, Virgin Islands, and

Pacific Areas

65 57 8

8. Census Marketing,

Communication, and Partnerships

200 191 9

Census Monitoring Board 4 4 0

Total $4,476 $4,061b$415

a

These amounts are after transfers between earmarked funds described in footnote 9.

b

The bureau amount is $4,116 million before potential deobligation of $55 million from table 1.

Source: GAO analysis of U.S. Census Bureau data.

As indicated above, framework 3, Field Data Collection and Support

Systems, was the largest effort of the 2000 census, amounting to about 75

percent of both appropriated funds and expended and obligated funds and

accounting for 82 percent of total budget variances. Significant reasons for

the larger budget variances are discussed in the following sections.

Budget Variances by

Framework
Page 13 GAO-02-30 Census Budget and Controls

A lower support staff workload than planned in framework 3 resulted in a

significant budget variance of about $348 million in salary and benefit

costs as follows.

The bureau recognized $309 million for lower local and regional census

office support staff salaries and benefits. The bureau planned about 30,167

full-time equivalent (FTE) support staff for 520 local and 12 regional

census offices. However, according to bureau records, only 18,787 FTEs or

about 62 percent were actually employed, resulting in over 11,000 fewer

FTEs than planned.

The bureau recognized $39 million primarily for lower staff salaries and

benefit costs from an activity known as Accuracy and Coverage

Evaluation (ACE). ACE interviewed more people than planned by

telephone, thus reducing the need for household visits by enumerators.

Another $167 million of budget variances were primarily due to lower

infrastructure costs and other costs. This included temporary office space

rental, local travel reimbursement, equipment and supply costs, and

contractual services that were contained mostly in frameworks 3 and 5.

Projects with significant budget variances—over $10 million—included the

following.

• The variance for data capture systems, building rent, advertising,

telecommunications, and other contractual services was about $55 million.

This amount in table 1 was previously discussed as undelivered orders

available for potential deobligation.

• The variance for regional and local census offices in framework 3 was

about $36 million. This was the result of lower support staffing levels and

resulted in lower temporary office space and equipment costs than

planned.

• The variance for telecommunications in framework 3 was about

$31 million. This was due to renegotiations of a 90-percent reduction in

long-distance phone costs from a planned 10 cents a minute to an actual 1

cent a minute.

• The variance for National Processing Center (NPC) data capture

operations in framework 5 was about $22 million. This was because there

were fewer forms to process than planned for, and there was higher

productivity for data entry. About 5 million fewer mail back, enumerator,

and group quarters forms were processed, and data entry productivity of

6,500 keystrokes per hour was higher than 5,200 keystrokes per hour

planned.

Budget Variances in

Support Staff Salary and

Benefit Costs

Further Budget Variances

in Infrastructure and Other

Costs
Page 14 GAO-02-30 Census Budget and Controls

• The variance for telephone questionnaire assistance in framework 3 was

about $14 million. This was due to lower contract costs in running the

program because inbound calls of 6 million were 45 percent lower than the

11 million calls planned.

Enumerator workload is largely determined by the initial mail response

rate for returned census questionnaires. By April 27, 2000, when the

bureau prepared its assignment lists for the start of follow-up operations,

the response rate was 64 percent—3 percent higher than the 61-percent

rate estimated by the bureau.18 Considering that a 1-percent change in the

response rate represents about 1.2 million households, the 3-percent

difference was significant since over 3 million households would not

require follow-up visits by enumerators. Although the additional forms

were received after the start of nonresponse follow-up, they served as a

cross-check to information gathered by enumerators. The bureau

attributed the higher response rate, in part, to a professional advertising

campaign that it conducted under framework 8, which urged people to

return the questionnaires and cooperate with census enumerators.

However, budget variances from the higher mail response rate and the

lower support staff workload were partially offset by over $100 million of

higher salary and benefit costs than planned for enumerators in

framework 3, including a higher workload for unanticipated recounts.

Enumerator efforts and costs for fiscal year 2000 are presented in table 3.

 18Initial bureau data on the postcensus mail return rate—which is a more precise indicator

of public cooperation—was 72 percent, a decline of 2 percentage points from the 74-

percent mail return rate the bureau achieved in 1990. (The bureau’s figures are preliminary

and subject to verification upon receipt of final data.) See 2000 Census: Better

Productivity Data Needed for Future Planning and Budgeting (GAO-02-4, October 4,

2001).

Higher Enumerator Costs

Partially Offset Budget

Variances
Page 15 GAO-02-30 Census Budget and Controls

Table 3: Enumeration Effort and Costs for Fiscal Year 2000

Dollars in millions

Framework 3: Enumerator effort Appropriation Obligated

Over (under)

appropriation

Nonresponse follow-up: household

visits

$1,092 $1,179 $87

Nonresponse follow-up: assignment,

control, and coverage improvement

154 253 99

Other enumerator workload 175 89 (86)

Total $1,421 $1,521 $100

Source: GAO analysis of U.S. Census Bureau data.

Enumerator Visits. Enumerators visited almost 42 million American

households during the 10-week nonresponse follow-up period that ended

July 2, 2000. This effort resulted in about $87 million of higher enumerator

salaries and benefits in framework 3 than planned. This occurred because

the bureau was concerned about high staff turnover and having a

sufficient number of enumerators in a tight labor market to complete

nonresponse follow-up in a shortened 10-week period compared to the 14-

week period for the 1990 census. To address this issue, the bureau

adopted a front-loaded staffing strategy, which resulted in the bureau

hiring and training more temporary personnel up front to reduce the 150-

percent staff turnover estimated for the 2000 census.19 This staffing

strategy increased salary and benefit costs of temporary personnel, as well

as training, quality assurance, and supervisory staffing costs. Also, the

bureau hired almost 3,300 more FTE enumerators and paid them almost $1

an hour more than the average $11.77 an hour that was planned. In

addition, enumerator workload increased due to unanticipated recounts of

almost 800,000 incomplete, lost, or inaccurate questionnaires as follows.

• Over 600,000 returned questionnaires were incomplete because they did

not indicate the number of persons living in the household, and the

households had to be visited.

• About 122,000 questionnaires were lost between completion by local

census offices and processing by the data capture centers, and

enumerators had to revisit each household and complete another

questionnaire.

 19The bureau is currently evaluating staffing issues, including determination of staff

turnover for the 2000 census.
Page 16 GAO-02-30 Census Budget and Controls

• About 68,000 questionnaires were recounted in three Florida local census

offices because serious errors and irregularities were detected, including

enumerator falsification of census data. In September 2000, the Commerce

IG conducted an investigation and issued a report indicating that the

offices had not followed proper procedures and quality controls, and

concurred with the bureau’s response to recount the areas in question.20

Enumerator Assignment, Control, and Coverage Improvement. This

effort resulted in about $99 million of higher salary and benefit costs in

framework 3 for nonresponse follow-up than planned. This included

assigning and scheduling enumerators, preparing information packages for

household visits, and verifying addresses. These higher costs included the

reprocessing of the almost 800,000 incomplete, lost, and inaccurate

questionnaires that were recounted by enumerators, as well as an

unanticipated effort to verify 1.5 million new addresses as vacant.

Other Enumerator Workload. This effort offset the above budget

variances by about $86 million in framework 3 due primarily to the

following.

• Service-based enumeration was conducted in soup kitchens, homeless

shelters, and areas frequented by persons with no fixed addresses. This

effort resulted in about $32 million of budget variances. According to the

bureau, about 69,000 sites were estimated for this project based upon

national and local data. However, only about 14,000 actual sites, or about

20 percent of the planned workload, were actually identified and counted.

According to the bureau, this occurred because the majority of sites

estimated did not exist based upon enumerator visits.

• Group quarters enumeration was conducted in places like prisons, nursing

homes, military barracks, and school dormitories. This effort resulted in

about $31 million of budget variances. According to the bureau, about

519,000 units were estimated for this project. However, only about 172,000

actual units, or one-third of the expected amount, were actually identified

and counted. According to the bureau, this occurred because addresses

for estimated sites erroneously included businesses, commercial

establishments, and duplications, or simply did not exist.

• List enumeration was conducted in areas where households do not receive

direct mail delivery, such as rural areas where mail is sent to a local post

office box. This effort resulted in about $8 million of budget variances.

 20 Final Audit Report ESD-13215-0-0001, September 2000.
Page 17 GAO-02-30 Census Budget and Controls

According to the bureau, about 500,000 housing units were estimated for

this project. However, only about 372,000 actual units, or about 75 percent

of the planned workload, were actually identified and counted. According

to the bureau, this occurred due to inaccurate address lists.

Further details and explanations for 27 project budget variances with a

minimum threshold of $5 million or more are presented in appendix II.

These 27 variances represented over 90 percent of the budget variance of

$415 million for fiscal year 2000.

Historically, enumerator productivity has been a factor affecting decennial

census costs. Although the bureau has been trying to improve

productivity, data from past decennial censuses has been largely

unavailable, incomplete, or not comparable.21 According to recent bureau

data, enumerator productivity did not have a significant impact on budget

variances for the 2000 decennial census because the actual national

average time to visit a household and complete a census questionnaire was

about the 1 hour estimated by the bureau. Information on enumerator

productivity rates by type of local census office, the bureau’s methodology

for refining the productivity data, and lessons learned to assist the

planning effort for the 2010 census is presented in a recent GAO report.22

For fiscal year 2000, the U.S. Census Bureau had significant internal

control weaknesses that resulted in an inability to develop and report

complete, accurate, and timely information for management decisionmaking. This was due to specific internal control weaknesses as well as

the bureau’s overall internal control environment being assessed as high

risk by its independent auditor. The bureau’s control environment was

characterized by human capital weaknesses, including the lack of

experienced accounting staff, which contributed to heavy reliance upon

contractors. In addition, management oversight was not sufficient to

ensure adherence to established policies and procedures, which created

opportunities for inconsistencies and errors, particularly in year-end

closing procedures and financial statement preparation.

 21Decennial Census: Historical Data on Enumerator Productivity Are Limited

(GAO-01-208R, January 5, 2001).

222000 Census: Better Productivity Data Needed for Future Planning and Budgeting

(GAO-02-4, October 4, 2001).

Enumerator Productivity

Did Not Affect Budget

Variances

Weaknesses in Key

Internal Controls
Page 18 GAO-02-30 Census Budget and Controls

The specific control weaknesses for fiscal year 2000 were related to the

lack of controls over financial reporting and financial management

systems. Financial reporting issues included (1) the inability to produce

accurate and timely financial statements and other financial management

reports needed for oversight and day-to-day management, (2) the lack of

timely and complete reconciliations needed to validate the balances of key

accounts, and (3) unsupported and inaccurate reported balances for

accounts payable and undelivered orders, two key accounts needed to

manage and report on unliquidated obligations. For financial management

systems, the bureau has experienced persistent financial management

systems problems for many years and has candidly acknowledged the

material nonconformance of its financial systems in annual reports

required by FMFIA. Despite these reports, the bureau has asserted in its

fiscal years 1999 and 2000 financial statement reports that its financial

management systems were in substantial compliance with the provisions

of FFMIA. In our view, the bureau’s financial management systems did not

substantially comply with the requirements of FFMIA as of September 30,

2000.

Internal controls are a major part of managing an organization to meet

mission goals, support performance measures, and safeguard assets.

GAO’s Standards for Internal Control in the Federal Government

emphasize that a positive internal control environment provides discipline,

structure, and a climate that forms a foundation for effective internal

controls. We concurred with an assessment of the bureau’s overall internal

control environment by its auditor as high risk for fiscal year 2000.23 This

assessment was contained in the auditor’s work papers, which cited a

human capital issue in the bureau’s lack of experienced accounting staff,

heavy reliance upon contractors, and insufficient management oversight

and review. The auditor reported and we observed during our work that

the bureau

• did not have a sufficient number of experienced accountants familiar with

the financial statement process;

 23The control environment incorporates bureau management’s attitude, awareness, and

actions concerning its internal controls. The auditor’s assessment of risk affects the nature,

timing, and extent of audit testing to be performed.

The Bureau’s High-Risk

Internal Control

Environment
Page 19 GAO-02-30 Census Budget and Controls

• relied extensively on contractors to reconcile its accounts, close its books

after millions of dollars of year-end adjustments, and prepare its annual

financial statements and related disclosures; and

• did not ensure that account reconciliations were properly reviewed by

bureau management.

Further, the auditor noted that the bureau’s policies and procedures were

not consistently adhered to, which created opportunities for

inconsistencies and errors, particularly in year-end closing procedures and

financial statement preparation. During our work, we concurred with the

auditor’s observations and noted that the overall control environment was

impaired by the lack of management oversight to ensure that policies and

procedures were followed. We also found that the bureau did not have an

internal review function designed to assist management in identifying

areas where adherence to policies and procedures could be improved.

For example, the bureau established a written policy for determining

proper cutoff at year-end to identify accounts payable and other liabilities

when goods or services had been delivered but not yet paid. This is

necessary to fairly present account balances in accordance with GAAP.

However, we found that bureau accounting personnel frequently did not

adhere to the policy and used the date of the invoice to determine the

appropriate accounting period rather than the date that goods, and

particularly services, were delivered. Accounting personnel used the

wrong date even though most invoices we examined for services clearly

indicated the date that services were actually received.

Given the overall weaknesses in the bureau’s control environment, it is not

surprising that the independent auditors and we identified significant

control weaknesses in two broad categories: (1) financial reporting and

(2) financial management systems.

Weaknesses in the bureau’s financial reporting affect the internal and

external reports produced by the bureau for both oversight and day-to-day

management. These problems relate to the bureau’s ability to produce

timely and accurate financial statements and other financial reports,

perform reconciliations to validate accounts, and report accurate amounts

for key accounts including accounts payable and undelivered orders.

Difficulties in Preparing Financial Statements and Other Reports.

The bureau stated in its 1999 and 2000 FMFIA reports that it did not have

adequate procedures in place to produce timely or accurate financial

Weaknesses in Financial

Reporting
Page 20 GAO-02-30 Census Budget and Controls

statements and related performance data. This weakness seriously

affected the bureau’s ability to conform with GAAP. In these reports, the

bureau also acknowledged a need for a proper analysis of its financial

reports to ensure the completeness of disclosures and the adequacy of the

presentation of financial information. A contributing factor to this

weakness is the human capital issue previously discussed as part of the

control environment coupled with systems weaknesses as presented in the

next section. The bureau’s auditor noted the following conditions with

which we concur.

• The bureau continues to experience significant difficulties and delays in

producing complete and accurate financial statements. The auditor

reported this condition as a material weakness in its internal control

reports on the bureau for fiscal years 1999 and 2000.

• Numerous technical and clerical errors were found, including

inconsistencies in the form and content of the financial statements and

related notes. Because of these difficulties, the bureau’s financial

statements were manually compiled instead of being generated directly

from its financial management systems.

• Compounding the potential for error, adjustments to the financial

statements must be posted manually and each adjustment must be

crosswalked to the financial statements instead of being posted directly by

the financial management systems. For example, the bureau did not post a

fourth quarter 2000 entry to deferred revenue and accounts receivable

balances, which resulted in a material overstatement of these accounts in

its draft financial statements.

Further, the bureau was unable to use its financial management system to

produce required Treasury reports such as the Statement of Transactions

(SF-224) and Report on Budget Execution and Budgetary Resources (SF133). The bureau prepared these reports manually, which required

additional time and effort to meet due dates and increased opportunities

for error.

Ineffective Reconciliations. The lack of adequate account reconciliation

seriously affected the ability of the bureau to prepare timely and accurate

financial statements at year-end. The bureau stated in its 1999 and 2000

FMFIA reports that it did not promptly reconcile its financial information

system with its subsidiary records. The bureau also reported that when

reconciliations were performed, it did not sufficiently document and

account for all reconciling items. According to the bureau, critical reports

required to prepare the financial statements from the financial

management systems were not fully developed as part of the standard
Page 21 GAO-02-30 Census Budget and Controls

reporting package. In addition, the bureau’s auditor reported and we

concur with the following findings.

• Many key financial statement balances in the general ledger were not

reconciled by the bureau to supporting subsidiary records in a timely

manner through the first 6 months of fiscal year 2000. The auditor reported

this condition as a material weakness in its internal control reports on the

bureau for fiscal years 1999 and 2000.

• Bureau accountants who performed reconciliations were unfamiliar with

the nature and details of the accounts they were reconciling and the

reconciliations were not adequately supported. The auditor noted that for

the last half of fiscal year 2000, the bureau resorted to hiring contractors to

perform many of the monthly reconciliations. This resulted in most

balances being adequately supported and reviewed by year-end.

• Deferred revenue and accounts receivable, however, were not properly

reconciled throughout the year. The bureau’s Division of Finance did not

reconcile financial transactions with information from program offices,

and folders by reimbursable project did not contain adequate information

on amounts collected from customers or accumulation of costs for

projects. Without proper and timely accounting, collections are subject to

increased risk of loss or theft. The bureau did not update cash balance

reports throughout the fiscal year and did not bill a large amount of work

to customers in a timely manner, impeding timely collection efforts.

Additionally, accounts receivable from the public for economic and

demographic data were not aged properly and the bureau did not establish

an allowance for uncollectable accounts until after year-end in order to

fairly present statements in accordance with GAAP.

• The bureau also did not reconcile its intragovernmental balances with its

trading partner agencies other than the Department of Commerce, at least

annually, to comply with the provisions of OMB Bulletin 97-01. The bureau

experienced difficulties in producing intragovernmental account

information and, as a result, reports had to be prepared manually, were

incomplete, contained errors, and were submitted late. In addition, the

bureau’s core financial management system was not designed to identify

separately amounts that should be eliminated for intragovernmental

purposes in accordance with GAAP.

Accounts Payable and Undelivered Order Weaknesses and Errors.

As part of analysis of bureau budget variances discussed earlier in this

report, we focused on the timely and accurate reporting of these two

accounts. Controls over unliquidated obligations, which include accounts

payable and undelivered orders, are an important part of the structured

process needed to reconcile and deobligate funds in a timely manner. The
Page 22 GAO-02-30 Census Budget and Controls

bureau disclosed in its 1999 and 2000 FMFIA reports that it lacked

adequate support for its accounts payable and undelivered orders

balances. Further, both the bureau and its auditor have reported

significant weaknesses in account reconciliation, as previously discussed,

including accounts payable and undelivered orders. For example, we

noted that the bureau had not promptly reconciled its subsidiary records

with its general ledger control account for undelivered orders as of

September 30, 2000. Adjustments for this reconciliation were not recorded

until almost 7 months later on April 28, 2001. Further, subsidiary records

of accounts payable and undelivered orders by vendor were not included

as part of the standard system reports, hampering efforts to appropriately

manage these accounts.

Our review and testing of key internal controls for these accounts found

conditions to be much worse than reported by the bureau or its auditor.

The weaknesses we identified included (1) erroneous information that had

not been promptly corrected and (2) ineffective controls to accrue

liabilities when goods or services have been delivered but not paid. These

weaknesses contributed to additional errors in accounts payable and

undelivered order balances as of September 30, 2000. Specifically, the

effect of the errors we identified as of September 30, 2000, was a 10-

percent overstatement of the audited $457 million undelivered order

balance and a 20-percent understatement of the audited $134 million

accounts payable balance. While these errors were evidence of weak

internal controls and were significant to the undelivered orders and

accounts payable line items, these errors alone were not material24 to the

U.S. Census Bureau’s $1.2 billion fiscal year 2000 balance sheet and other

financial statements.

The primary cause of these problems was erroneous information in

subsidiary records for undelivered orders that was not corrected in a

timely manner as noted in the following examples.

• Year-end adjustments of $65 million had to be manually posted, which did

not occur until 7 months later on April 28, 2001.

• Undelivered orders subsidiary records as of September 30, 2000, contained

$46 million for a contract that had been liquidated in February 1999. This

 24Materiality is a measurement of the magnitude of an omission or misstatement of an item

in a financial report over which a change would be made.
Page 23 GAO-02-30 Census Budget and Controls

error was finally corrected as part of the above $65 million of year-end

adjustments to reconcile a subsidiary report to the general ledger.

• Subsidiary records for three undelivered orders balances totaling

$5 million were duplicated. This duplication occurred because the bureau

changed the document type code of these undelivered orders but did not

remove the old document type code from the subsidiary records.

• Undelivered orders for services for three contracts totaling $20 million

(previously discussed as part of our $55 million of proposed deobligations)

had been completed as of September 30, 2000, and could have been

deobligated.

• Undelivered orders also included $27 million of goods and services that

had been delivered prior to September 30, 2000. The effect of these

deliveries is a decrease in undelivered order balances and a corresponding

increase in accounts payable balances as of September 30, 2000. We

identified about $26 million by reviewing 95 subsequent disbursements

over $500,000 from October 1, 2000, through January 31, 2001. The

remaining $1 million was identified from a further examination of

contracts, interagency agreements, purchase orders, invoices, and

payments for account balances over $1 million through June 4, 2001.

The U.S. Census Bureau’s financial management systems encompass the

software, hardware, personnel, manual and automated processes,

procedures, internal controls, and data necessary to carry out financial

management functions, manage financial operations, and report financial

status. Weaknesses in the bureau’s financial management systems affect

the completeness, accuracy, and timeliness of data needed for oversight

and informed management decisions. The bureau has experienced

persistent financial management systems problems for many years and has

candidly acknowledged the material nonconformance of its financial

systems in annual FMFIA reports. The bureau’s fiscal years 1999 and 2000

FMFIA reports stated that further work was required to improve routine

bureau reporting and systems controls.

Extensive systems weaknesses and errors were found by the bureau and

its auditors, and by us during our work on certain fiscal year 2000 bureau

account balances. In addition, Commerce officials acknowledged

significant fiscal year 2001 efforts to correct existing weaknesses in the

bureau’s core financial management system. We do not agree with the

bureau’s assertion in its annual financial report for fiscal year 2000 that its

financial management systems substantially comply with FFMIA

requirements. FFMIA was intended to advance federal financial

management by ensuring that federal financial management systems can

Financial Management

Systems Weaknesses
Page 24 GAO-02-30 Census Budget and Controls

and do routinely provide reliable, timely, and consistent disclosure of

financial data. FFMIA requires that agencies implement and maintain

systems that substantially comply with

• federal financial management systems requirements, as contained in OMB

Circular A-127, Financial Management Systems, the Joint Federal

Management Improvement Program’s (JFMIP) Framework for Federal

Financial Management Systems, and JFMIP’s Core Financial System

Requirements;

• applicable federal accounting standards; and

• the U.S. Standard General Ledger (SGL) at the transaction level.

In its fiscal year 1999 and 2000 reports of compliance with laws and

regulations, the bureau’s auditing firm stated that the results of its tests

disclosed no instances in which the bureau’s financial management

systems did not substantially comply with FFMIA. However, in its fiscal

year 1998 report on compliance with laws and regulations, the bureau’s

previous auditing firm stated that the bureau did not substantially comply

with FFMIA, and many of the same weaknesses this firm reported have

continued. In our view, the bureau’s financial management systems did not

substantially comply with the three requirements of FFMIA as of

September 30, 2000, as discussed below.

First, we believe that the bureau’s systems did not substantially comply

with the federal financial management systems requirements. This is

because the systems could not provide reliable and timely financial

information to manage current government operations and prepare

financial reports.25 The systems weaknesses were the result of a number of

factors, including data quality and systems design issues. For example, the

bureau’s auditors reported the following weaknesses in the bureau’s core

 25OMB Circular A-127 states “The agency financial management system shall be able to

provide financial information in a timely and useful fashion to (1) support management’s

fiduciary role; (2) support the legal, regulatory and other special management requirements

of the agency; (3) support budget formulation and execution functions; (4) support fiscal

management of program delivery and program decision making; (5) comply with internal

and external reporting requirements, including, as necessary, the requirements for financial

statements prepared in accordance with the form and content prescribed by OMB and

reporting requirements prescribed by Treasury; and (6) monitor the financial management

system to ensure the integrity of financial data.”
Page 25 GAO-02-30 Census Budget and Controls

financial management system, the Commerce Administrative Management

System (CAMS).26

• For fiscal year 1999, the auditors reported a material weakness in the

ability of CAMS to produce necessary reports routinely and on time to

meet internal and audit requirements. For example, CAMS was unable to

prepare usable undelivered order and accounts payable subsidiary reports.

In addition, the auditors reported a material weakness in certain

information system controls, including the lack of a security plan for

CAMS and needed improvements in the operating system that supported

CAMS.

• For fiscal year 2000, the auditors determined that the bureau had made

some systems improvements in CAMS and concluded that the reporting

and controls were a reportable condition rather than a material internal

control weakness. For example, the auditors reported in fiscal year 2000

that CAMS could not distinguish adjustments that occur between

preliminary and final balances. In addition, reports required by Treasury,

such as the SF-224, Statement of Transactions, and the SF-133, Report on

Budget Execution and Budgetary Resources, were not supported by

CAMS and had to be manually prepared. Further, the auditors continued to

have concerns about weaknesses in bureau security planning,

management, and access controls. A penetration test conducted by the

auditors indicated that bureau systems and data were vulnerable to

unauthorized access, although no actual instances of unauthorized access

were detected. GAO’s Standards for Internal Controls in the Federal

Government highlight the need for adequate control over automated

information systems to ensure protection from inappropriate access and

unauthorized use by hackers and other trespassers or inappropriate use by

agency personnel.

We concurred with these auditor reports and, in conducting our test work

of accounts payable and undelivered orders, identified several other

serious systems deficiencies as follows.

• For fiscal year 2000, CAMS could not produce subsidiary records of

accounts payable and undelivered orders by vendor to support its general

 26CAMS is a financial management system currently being implemented throughout the

Department of Commerce. It consists of three categories of systems: the core financial

system, department functional systems, and bureau-specific feeder systems. The U.S.

Census Bureau was the pilot agency for CAMS, which has been the bureau’s accounting

system of record starting in fiscal year 1998.
Page 26 GAO-02-30 Census Budget and Controls

ledger balances. Bureau officials stated that CAMS is a transaction-based

system that has accumulated about 18 million records since it was initially

installed on October 1, 1997. These records represent transactions for

invoices, payments, and adjustments that would have to be sorted by

vendor codes in order to obtain detail balances by vendor. Even if this

were done, bureau officials expect their efforts to be hampered by

thousands of balances of less than $1 because of small differences created

by estimating and rounding of invoices and payments.

• CAMS had no archive capability to store millions of completed

transactions to reduce volume and processing time and highlight errors,

duplicates, and larger balances. According to Commerce officials

responsible for CAMS, the archiving capability has not been a priority

since new and faster computer hardware in fiscal year 2001 has reduced

processing time for accounts payable and undelivered order subsidiary

transaction reports from 22 hours to 2 hours. However, these subsidiary

reports still remain unusable as a day-to-day reporting and control tool

because they continue to include a large volume of completed transactions

and are not sorted by vendor.

• Because CAMS subsidiary records for payables, receivables, property, and

undelivered orders were not integrated with the general ledger, extensive

manual reconciliation and workarounds were required, which are timeconsuming and error prone. As a result of these deficiencies, the bureau

took 3 months to provide us with an electronic file of undelivered order

transactions that reconciled to the CAMS general ledger before intraagency elimination entries. Even after this lengthy delay in obtaining the

file, we still had to sort the transactions by vendor to obtain the

September 30, 2000, undelivered order balance by vendor in order to

conduct our testing. Further, the bureau was unable to provide a usable

accounts payable listing by vendor as of September 30, 2000.

Second, we believe that the bureau’s financial management systems for

fiscal year 2000 did not produce information that substantially complied

with applicable federal accounting standards. This occurred because

systems weaknesses affected the ability of the bureau to prepare its fiscal

year 2000 financial statements and reports in accordance with GAAP.

According to the January 4, 2001, OMB guidance for determining

compliance with FFMIA, indicators of noncompliance with accounting

standards would include the material weakness reported by the auditors

on the bureau’s difficulties and delays in producing complete and accurate

financial statements and related disclosures. The material adjustments

necessary to fairly present statements at year-end and the significant

errors we found in accounts payable and undelivered order balances are

evidence of serious weaknesses that impede compliance with GAAP.
Page 27 GAO-02-30 Census Budget and Controls

Finally, we believe that the bureau’s financial management systems did not

substantially comply with the last requirement of FFMIA regarding the

SGL at the transaction level. This is because the bureau’s subsidiary feeder

systems do not interface with the CAMS core financial system general

ledger for timely posting to the SGL at the transaction level. We noted that

for fiscal year 2000, CAMS did not support reconciliation of SGL control

accounts to their respective subsidiary records, such as the Undelivered

Orders Report (FM 109) to the CAMS control accounts. Further, CAMS

could not provide a usable accounts payable listing by vendor as of

September 30, 2000, that would indicate the SGL accounts at the

transaction level.

According to Commerce officials, a number of improvements to the CAMS

core financial system were made during fiscal year 2001, including

• improved capability to routinely generate usable detail subsidiary reports

for advances, accounts receivable, accounts payable, undelivered orders,

and unfilled customer orders;

• a new process to test closing entries and run trial balances, enter audit

adjustments, and generate postclosing balances;

• certification tests of software that examined 176 functional areas and

identified 9 exceptions for a compliance rate of 95 percent; and

• cleanup of large volumes of unmatched transactions due to missing or

erroneous vendor, customer, or document numbers from faulty feeder

systems to improve reports needed for the annual audit process.

We did not assess these reported improvements. The fiscal year 2001

financial closing and independent audit of the bureau will help determine

the effectiveness of these actions. Further, Commerce officials stated that

standard interfaces for accounts receivable and payable, which will allow

source feeder system data to be posted at the transaction level to the

CAMS general ledger more timely and accurately, are being built and are

expected to be available by July 2002.

As agreed, we also obtained financial system information and reviewed

financial policies on other selected financial areas at the U.S. Census

Bureau. These areas, presented in appendix III, were personnel and

benefit expenditures, fund balance with Treasury, property and

equipment, and government credit cards. The following are two areas of

concern.

Review of Other

Selected Areas
Page 28 GAO-02-30 Census Budget and Controls

• For personnel expenditures, some salary amounts were charged to the

wrong projects due to errors in time charge coding. This distorted

variances when compared to planned amounts and created inaccurate

measures of performance for selected projects. Projects affected were

remote Alaska enumeration and advance visits for service-based

enumeration. These errors occurred because bureau supervisors and

timekeepers did not closely review project codes used by employees on

timesheets.

• For property and equipment, over $158 million, about 57 percent, of total

undepreciated accountable property in the bureau’s records was not

reported on the bureau’s balance sheet as of September 30, 2000. Federal

accounting standards state that property with a useful life of 2 years or

more be capitalized but allow each agency to establish its own dollar

threshold for capitalization. 27 Any amounts under that limit would be

expensed. However, a limit that is too high understates the reported

amount of property and equipment possessed by the bureau. For fiscal

years 1996 and prior, the bureau capitalized property and equipment with

an acquisition cost of $5,000 or more; it changed to a $25,000 limit for new

property acquired in fiscal year 1997 and subsequent years.

We recommend that the Secretary of Commerce ensure that the U.S.

Census Bureau take the following actions:

• deobligate at least $55 million for contracts we identified for which work

has been completed and amounts are not needed to close out contracts;

• review the remaining $90 million of undelivered order balances as of

September 30, 2000, to identify and deobligate amounts not needed for

those orders;

• instruct accounting personnel to follow the written policy for establishing

accruals and proper cutoff for goods and services received at year-end;

• post accounting adjustments to subsidiary records in a timely manner;

• complete efforts to modify the bureau’s financial systems to produce

usable accounts payable and undelivered order subsidiary reports by

vendor, close out thousands of completed transactions with small

balances, and archive all completed transactions;

 27Statement of Federal Financial Accounting Standard (SFFAS) No. 6, Accounting for

Property, Plant, and Equipment.

Recommendations for

Executive Action
Page 29 GAO-02-30 Census Budget and Controls

• amend policies and procedures to require supervisors to closely review

employee time charges and project codes to more accurately reflect

project costs for salaries and benefits; and

• reconsider the bureau’s property and equipment capitalization threshold,

as the current policy did not recognize about 57 percent of the bureau’s

total gross accountable property and equipment as of September 30, 2000.

In commenting on a draft of this report, the Department of Commerce,

U.S. Census Bureau, agreed with five of our seven recommendations and

made a number of comments on our specific findings. The most significant

of the bureau’s specific comments relates to our finding that the bureau

did not comply with FFMIA requirements for the year ended

September 30, 2000. This section of the report addresses the bureau’s

disagreement with the two recommendations and our conclusion

regarding compliance with FFMIA. The bureau’s remaining specific

comments are addressed in appendix IV.

In general, the bureau stated that it is important to underscore its

overarching success in managing the $4.5 billion budget appropriated for

the 2000 census and that any analysis of the bureau’s financial

management system should acknowledge this significant achievement.

However, the objectives of our budget review did not include assessing the

efficiency of expenditures and obligations against planned budget

appropriations. Rather, the objective of our review was to analyze budget

variances reported by the U.S. Census Bureau and to identify other

potential variances for the 2000 decennial census, including the reasons

for these variances. Further, the bureau is still assessing the efficiency of

the 2000 census in its postenumeration review, which will not be

completed until fiscal year 2003. As stated in the introduction to this

report, this product is one of several we will be issuing in the coming

months on lessons learned from the 2000 census. As was done after the

1990 census, we are currently reviewing key operations of the 2000 census.

With regard to the two recommendations with which the bureau did not

agree, the first related to our call for the bureau to deobligate at least

$55 million for contracts for which the work had been completed and no

further amounts were needed. The bureau stated that the $55 million

should not have been deobligated as of September 30, 2000, because final

closeout, which may include late cost determinations, often occurs well

after the period of performance has expired. However, the bureau

indicated its agreement with the estimated amounts to be deobligated,

stating that it had included an estimated $28 million in its fiscal year 2001

Agency Comments

and Our Evaluation
Page 30 GAO-02-30 Census Budget and Controls

budget for prior-year recoveries and that the remaining $27 million would

be used to partially offset its fiscal year 2002 appropriation. The bureau’s

primary concern was the timing of when these funds would be available.

As indicated in the body of this report, three contracts had amounts

totaling $20 million that should have been deobligated as of September 30,

2000, while three other contracts were completed and had amounts

totaling $35 million that were available for potential deobligation by the

time we completed our review in June 2001. As stated in our report, we

recognize that an agency should identify and deobligate funds no longer

needed after the agency is certain no related costs remain to be paid. Thus,

the report takes into account the bureau’s point that contract closeout

may take some time beyond the end of the fiscal year.

The second recommendation with which the bureau disagreed related to

the bureau’s property and equipment capitalization threshold. The bureau

stated that the Department of Commerce had issued a capitalization

threshold of $25,000 for individual purchases, which Census then adopted.

We did not evaluate the appropriateness of the $25,000 threshold for the

Department of Commerce as a whole and agree that the amount of the

bureau’s net property and equipment appears to be insignificant at that

level. However, we continue to recommend that the threshold be

considered and evaluated separately for the U.S. Census Bureau in light of

the fact that the higher threshold resulted in eliminating 57 percent of the

bureau’s accountable property and equipment from its balance sheet—

which is significant to the bureau.

Finally, the primary finding with which the bureau disagreed in its specific

comments was our assessment that the bureau’s financial management

systems did not substantially comply with the requirements of FFMIA as

of September 30, 2000. The bureau stated that its financial management

system complied with all FFMIA requirements and identified three issues

as key support for its position. We disagree with each of these points and

continue to believe that the bureau’s financial management systems were

not FFMIA compliant.

First, the bureau indicated that its financial systems were able to support a

$4.5 billion budget, and bureau managers used financial management

reports to meet all statutory deadlines and complete the 2000 operations

on time and under budget. As stated previously, the objectives of this

report did not include a qualitative analysis of the bureau’s performance in

conducting the 2000 census. However, our report does describe several

instances of noncompliance with FFMIA requirements. For example, as
Page 31 GAO-02-30 Census Budget and Controls

stated in the body of this report, the bureau’s auditors reported as a

material internal control weakness that reports required by Treasury such

as the SF-224, Statement of Transactions, and the SF-133, Report on

Budget Execution and Budgetary Resources, were not supported by the

bureau’s financial management systems and had to be manually prepared.

While the bureau’s response cited OMB’s January 4, 2001, guidance on

FFMIA implementation in support of its position, the bureau did not

include a key sentence from the guidance, which states, “Auditors then

need to use judgement in assessing whether the adverse impacts caused

by identified deficiencies are instances of substantial noncompliance with

FFMIA.” In our view, the above material weakness was clearly evidence of

substantial noncompliance as of September 30, 2000.

Second, the bureau stated that CAMS met 95 percent of JFMIP core

requirements and used standard general ledger accounts as required. Also,

although the bureau agreed that manual processes are required, it cited

OMB guidance that states systems need not be entirely automated to be

FFMIA compliant. Our report acknowledges that, according to bureau

officials, a number of improvements were made to the CAMS core

financial system subsequent to September 30, 2000. Although we did not

assess these reported subsequent improvements, their description,

number, and significance supports our belief that CAMS did not comply

with FFMIA as of September 30, 2000. Further, Commerce officials cited

additional work to be done such as building standard interfaces for

accounts receivable and payable, which are not expected to be available

until July 2002. In addition, we agree that the use of manual processes

does not necessarily indicate FFMIA noncompliance. However, the

deficiency we pointed out was the CAMS lack of integrated subsidiary

records with the general ledger, requiring extensive manual reconciliation

and workarounds, which are time consuming and error prone. At the

transaction level, we reported problems with timely posting to the SGL

and the reconciliation of SGL control accounts to their respective

subsidiary records, as well as the inability to provide a usable accounts

payable listing by vendor.

Third, according to the bureau, its financial management systems

substantially comply with federal accounting standards because the errors

and year-end adjustments we identified in accounts payable and

undelivered orders were not “material enough” to warrant a finding of

noncompliance. Our report contains several indicators of noncompliance

with accounting standards, which are consistent with OMB guidance on

this issue. Specifically, evidence of serious weaknesses that impede

compliance with accounting standards includes (1) the material weakness
Page 32 GAO-02-30 Census Budget and Controls

reported by its auditor on the bureau’s difficulties and delays in producing

complete and accurate financial statements and related disclosures,

(2) the material adjustments necessary to fairly present statements at yearend, and (3) the significant errors we found in accounts payable and

undelivered order balances.

We are sending copies of this report to the Chairman and Ranking

Minority Member, Senate Committee on Governmental Affairs, and the

Chairman and Ranking Minority Member, Committee on Government

Reform. We are also sending copies to the Acting Director, U.S. Census

Bureau; the Secretary and Inspector General of the Department of

Commerce; the Director of the Office of Management and Budget; and the

Secretary of the Department of the Treasury, and other interested parties.

This report will also be available on GAO’s home page at

http://www.gao.gov.
Page 33 GAO-02-30 Census Budget and Controls

If you or your staffs have any questions on this report, please contact me

at (202) 512-9095 or by e-mail at kutzg@gao.gov or Roger R. Stoltz,

Assistant Director, at (202) 512-9408 or by e-mail at stoltzr@gao.gov. Key

contributors to this report are listed in appendix V.

Gregory D. Kutz

Director

Financial Management and Assurance
Appendix I: Objectives, Scope, and

Methodology

Page 34 GAO-02-30 Census Budget and Controls

The objectives of our work were to (1) analyze budget variances reported

by the U.S. Census Bureau and to identify other potential variances for the

2000 decennial census, including the reasons for these variances, and

(2) review key financial internal controls of the bureau and report on any

weaknesses noted in selected financial areas. We did not assess the

efficiency of expenditures and obligations against planned budget

appropriations.

To fulfill the objective on budget variances, we obtained and reviewed

bureau documents to support the reported savings, analyzed financial

variances, and interviewed bureau personnel for explanations on

variances down to the project level. We reconciled supporting balances of

undelivered orders by vendor subsidiary accounts to the general ledger

balance and examined supporting contracts, interagency agreements,

purchase orders, invoices, and subsequent payments on all vendor

balances of $1 million or more as of September 30, 2000, through June 4,

2001.

To determine the validity of undelivered orders we examined supporting

documentation and discussed their status with bureau officials. The 70

vendor balances of $1 million or more that we tested constituted about 73

percent of the total bureau undelivered orders of $504 million as of

September 30, 2000. Interagency adjustments for the bureau’s working

capital fund of $33 million and year-end closing adjustments of $14 million

reduced undelivered orders to $457 million in the bureau’s financial

statements as of September 30, 2000. We did not test about $90 million

representing over 7,300 balances summarized by vendor and over 43,000

individual transactions under $1 million of undelivered orders as of

September 30, 2000. Additionally, the scope of our work did not include

determining whether the use of contractors was appropriate for the

involved activities.

We also tested for unrecorded liabilities as of September 30, 2000, by

examining bureau disbursements over $500,000 from October 1, 2000,

through January 31, 2001, to determine when goods or services had been

received and to identify potential unrecorded liabilities for the 2000

decennial census.

We did not audit the bureau’s fiscal year 2000 financial statements and

therefore we do not express an opinion on them. We also obtained but did

Appendix I: Objectives, Scope, and

Methodology
Appendix I: Objectives, Scope, and

Methodology

Page 35 GAO-02-30 Census Budget and Controls

not audit preliminary enumerator productivity data provided by the

bureau. Productivity issues were recently addressed in a separate GAO

report.1

To fulfill the objective on key financial internal controls, we read bureau

reports, performed undelivered order balance and unrecorded liability

tests discussed above, and interviewed bureau officials. For selected

financial areas, we also obtained bureau system information and read

policies and procedures. For fiscal year 1999 and 2000, we reviewed

FMFIA weaknesses reported by the bureau to the Department of

Commerce for inclusion in the Department’s annual accountability

reports. We also reviewed the bureau’s fiscal year 1998, 1999, and 2000

audited financial statement reports, and two fiscal year 2000 management

letters and noted internal control weaknesses reported by the bureau’s

independent auditors. We also identified internal control weaknesses as a

result of our testing and observations at the bureau. In addition, we

reviewed financial system information and financial polices and

interviewed bureau officials on fund balance with Treasury, property and

equipment, salaries and benefits, and government small purchase and

travel credit cards, but did not audit this information.

We also met with Commerce IG officials and representatives of the

independent auditing firm to discuss the fiscal year 2000 audit of the

bureau’s financial statements. We reviewed the auditing firm’s working

papers in selected areas of accounts payable, other liabilities, undelivered

orders, fund balance with Treasury, and property and equipment as of

September 30, 2000, and personnel salaries and benefits for fiscal year

2000. We also reviewed the auditor’s audit approach, interim work, and

compliance work on FFMIA.

We performed our work at bureau headquarters in Suitland, Maryland, and

in the office of the bureau’s fiscal year 2000 auditing firm in Washington,

D.C. Our work was performed from December 2000 to June 2001 in

accordance with U.S. generally accepted government auditing standards.

 1

2000 Census: Better Productivity Data Needed for Future Planning and Budgeting

(GAO-02-4, Oct. 4, 2001).
Appendix I: Objectives, Scope, and

Methodology

Page 36 GAO-02-30 Census Budget and Controls

On December 7, 2001, we received comments on a draft of this report from

the Department of Commerce, U.S. Census Bureau. These comments are

presented in the “Agency Comments and Our Evaluation” section of this

report and are reprinted in appendix IV.
Appendix II: Explanations for Fiscal Year

2000 Project Variances of $5 Million or More

Page 37 GAO-02-30 Census Budget and Controls

Table 4: Fiscal Year 2000 Project Variances of $5 Million or More

Dollars in millions

Reference number

Framework and

project number Project title Appropriationa

Obligated

Positive

(negative)

variance

1 3-6301 Definition of Geographic Area $14 $8 $6

2 3-6331 Assignment Control—Nonresponse Followup2 22 (20)

3 3-6333 Assignment Preparation—Nonresponse

Follow-up

2 28 (26)

4 3-6335 Be Counted 25 17 8

5 3-6336 Coverage Improvement Follow-up 150 203 (53)

6 3-6337 Group Quarters Enumeration 74 43 31

7 3-6338 List Enumeration 28 20 8

8 3-6339 Enumerate-Nonresponse Follow-up 1,092 1,179 (87)

9 3-6341 Remote Alaska 7 - 7

10 3-6342 Service Based Enumeration 41 9 32

11 3-6447 Data Collection A 217 122 95

12 3-6448 Data Collection B 109 54 55

13 3-6449 Data Collection C 425 291 134

14 3-6450 Data Collection D 59 45 14

15 3-6455 Kit Preparation 22 29 (7)

16 3-6470 Regional Direction and Control 80 69 11

17 3-6480 ACE Collection Activity 132 93 39

18 3-6510 Regional and Local Census Office Support 276 240 36

19 3-6516 Enumerating Special Populations 2 20 (18)

20 3-6540 Telecommunications 54 23 31

21 3-6910 Automated Acquisitions 38 32 6

22 3-6912 Telephone Questionnaire Assistance 102 88 14

23 4-6406 Address List Capture 7 12 (5)

24 4-6408 Non-ID Processing 10 3 7

25 5-6918 DCS 2000 Contract 94 103 (9)

26 5-6922 NPC Data Capture Operations 43 21 22

Total for 26 projects with variances of

$5 million or more

3,105 2,774 331

Total projects with variances less than

$5 million

1,371 1,342 29

Subtotal 4,476 4,116 360

27 Undelivered order deobligations - (55) 55

Total $4,476 $4,061 $415

a

These amounts are after transfers between earmarked funds described in footnote 9.

Source: GAO analysis of U.S. Census Bureau financial management reports.

Appendix II: Explanations for Fiscal Year

2000 Project Variances of $5 Million or More
Appendix II: Explanations for Fiscal Year

2000 Project Variances of $5 Million or More

Page 38 GAO-02-30 Census Budget and Controls

Based on analysis and interviews with U.S. Census Bureau officials, the

following are bureau explanations for fiscal year 2000 project variances

over $5 million (by reference number noted in table 4).

1. According to the bureau, half of the positive variance of $6 million for

project 6301 for definition of geographic area was caused by

overestimating the number of geographic staff required to carry out

the participant statistical area program. The remaining half of the

positive variance is attributed by the bureau to fewer geographic

clerks in the National Processing Center (NPC) for the Boundary and

Annexation Survey mailing and response processing. This resulted in

lower salary and benefit costs for about 224 FTEs.

2. The negative variance of $20 million for project 6331 for nonresponse

follow-up assignment control was caused by an underestimate of funds

for salary, travel, and other costs. According to the bureau, the

underestimate was caused by an unanticipated activity of rescheduling

and assigning enumerators to recount about 122,000 questionnaires

that were lost between the local census offices and the data capture

centers.

3. The negative variance of $26 million for project 6333 for nonresponse

follow-up assignment preparation was because of an underestimate of

funds for salary, travel, and other costs. According to the bureau, this

underestimate was caused by unplanned activity of preparing

information packages for enumerator to recount over 600,000 cases in

which questionnaires did not indicate the number of persons living in

the household.

4. The positive variance of $8 million for project 6335 for the Be Counted

and Questionnaire Assistance Center programs was caused by the

lower workload that resulted in salary, travel, and other cost savings.

According to the bureau, the 886,000 actual addresses processed were

10 percent less than the 980,000 addresses planned for the program.

The bureau believed this occurred because it had a better address list

than originally anticipated so people did not need to rely on the Be

Counted forms available at walk-in centers, such as community

centers, churches, libraries, post offices, and other public facilities.

Also, many of the Be Counted forms received were not used as
Appendix II: Explanations for Fiscal Year

2000 Project Variances of $5 Million or More

Page 39 GAO-02-30 Census Budget and Controls

households were already counted as a part of the regular mail out and

mail back process.1

5. A negative variance of $53 million occurred for project 6336 for

coverage improvement follow-up that resulted in higher salary, travel,

and other costs. According to the bureau, the variance was because of

the unanticipated need to verify 1.5 million new addresses as vacant

and to identify about 68,000 households to be recounted by

enumerators for one area because the accuracy of the enumeration

was in question.

6. A positive variance of $31 million occurred for project 6337 for group

quarters enumeration in places like prisons, nursing homes, and school

dormitories. According to the bureau, the variance was because of a

two-thirds lower workload of 172,000 actual units rather than the

519,000 units planned, which resulted in salary, travel, and other cost

savings. The bureau believes this occurred because some of the

addresses it planned for group quarters enumeration were actually

businesses, commercial establishments, duplicates, or nonexistent.

7. A positive variance of $8 million occurred for project 6338 for list

enumeration in areas where residences do not receive mail delivery,

such as rural areas where mail is sent to post office boxes. According

to the bureau, the variance occurred because of a 25-percent lower

workload of 372,000 actual units rather than the 500,000 units planned,

which resulted in salary, travel, and other cost savings. The bureau

believes this occurred because of inaccurate address lists that

determined planned amounts.

8. The negative variance of $87 million for project 6339 for nonresponse

follow-up enumeration was caused by higher costs than planned for

enumerator salary and benefit costs and a higher workload for

unanticipated recounts. According to bureau data, enumerators were

paid almost $1 an hour more than the average $11.77 an hour planned

in order to recruit a sufficient number of quality temporary workers in

a tight labor market. In addition, almost 3,300 more FTE enumerators

were hired than planned. This occurred because of the bureau’s frontloaded staffing strategy that anticipated a 150-percent turnover of

 1

For further information, see 2000 CENSUS: Actions Taken to Improve the Be Counted

and Questionnaire Assistance Center Programs (GAO/GGD-00-47, February 25, 2000).
Appendix II: Explanations for Fiscal Year

2000 Project Variances of $5 Million or More

Page 40 GAO-02-30 Census Budget and Controls

enumerators coupled with a higher workload for unexpected

household visits to recount almost 800,000 incomplete, lost, or

inaccurate questionnaires for

• over 600,000 cases in which returned questionnaires did not indicate

the number of persons living in the household (preparation costs are

item #3),

• 122,000 questionnaires that were lost between completion by local

census offices and processing by the data capture centers (assignment

costs are item #2), and

• 68,000 questionnaires that were recounted because the accuracy of the

enumeration was in question. (Identification costs are item #5.)

9. The positive variance of $7 million for project 6341 for remote Alaska

enumeration was because, according to the bureau, salary and other

costs were erroneously charged to project 6516 for enumerating

special populations. (See #19.)

10. A positive variance of $32 million occurred in project 6342 for service

based enumeration in places like soup kitchens, homeless shelters, and

areas frequented by persons with no fixed addresses. According to the

bureau, the variance was caused by an 80-percent lower workload of

14,000 actual sites verses the 69,000 sites planned, which resulted in

salary, travel, and other cost savings. The bureau believes that the

majority of the planned sites did not exist and were added to address

lists because of inaccurate national and local data. Also, bureau

officials stated that some costs of advance visits were erroneously

charged to project 6516 for enumerating special populations. (See #19.)

11. The positive variance of $95 million for project 6447 for data collection

A (intercity support staff in 102 local census offices) was caused by

lower support workloads than planned, and the higher than expected

mail response rate was a contributing factor. According to the bureau,

this resulted in cost efficiencies in logistical support salaries of 3,578

FTEs compared to the 6,416 FTEs planned, for savings of 44 percent.

12. The positive variance of $55 million for project 6448 for data collection

B (suburb support staff in 51 local census offices) was caused by lower

support workloads than planned, and the higher than expected mail

response rate was a contributing factor. According to the bureau, this

resulted in cost efficiencies in logistical support salaries of 1,692 FTEs

compared to the 3,221 FTEs planned, for savings of 47 percent.
Appendix II: Explanations for Fiscal Year

2000 Project Variances of $5 Million or More

Page 41 GAO-02-30 Census Budget and Controls

13. The positive variance of $134 million for project 6449 for data

collection C (small town support staff in 316 local census offices) was

caused by lower support workloads than planned, and the higher than

expected mail response rate was a contributing factor. According to

the bureau, this resulted in cost efficiencies in logistical support

salaries of 10,723 FTEs compared to 16,480 FTEs planned, for savings

of 35 percent.

14. The positive variance of $14 million for project 6450 for data collection

D (rural support staff in 42 local census offices) was caused by lower

support workloads than planned, and the higher than expected mail

response rate was a contributing factor. According to the bureau, this

resulted in cost efficiencies in logistical support salaries of 1,633 FTEs

compared to the 2,532 FTEs planned for savings of 35 percent.

15. According to the bureau, the negative variance of $7 million for project

6455 for kit preparation was caused by higher than planned staff

overtime and priority shipping costs to ensure delivery of materials

and supplies to the 520 temporary local census offices to begin

enumeration.

16. The positive variance of $11 million for project 6470 for regional

direction and control was caused by lower support staff workloads

than planned in 12 regional census offices, and the higher than

expected mail response rate was a contributing factor. According to

the bureau, this resulted in cost efficiencies in logistical support

salaries of 1,161 FTEs compared to the 1,518 FTEs planned, for savings

of 24 percent.

17. The positive variance of $39 million for project 6480 for ACE collection

activity was caused by a lower than planned workload of cases

requiring personal visits. According to the bureau, this resulted in

lower data collection costs for staff salaries and benefits of

$33 million, lower equipment costs of $4 million, and lower office

rental costs of $2 million. The purpose of ACE was to estimate the

population for purposes such as redistricting by sampling households

from an address list developed independently of the address list used

to enumerate the census. The results of ACE (formerly Integrated

Coverage Management) were to have been statistically combined with

the results of enumeration to form a single, integrated set of

population counts.
Appendix II: Explanations for Fiscal Year

2000 Project Variances of $5 Million or More

Page 42 GAO-02-30 Census Budget and Controls

18. According to the bureau, the positive variance of $36 million for

project 6510 for regional and local census office support was caused

by lower support workloads, which resulted in lower office space and

equipment costs than planned. The mail response rate was a

contributing factor to the lower support workloads.

19. According to the bureau, the negative variance of $18 million for

project 6516 for enumerating special populations was caused by

charging salary and other costs erroneously charged from Remote

Alaska (see #9) and some costs of advance visits for service-based

enumeration (see #10).

20. According to the bureau, the positive variance of $31 million for

project 6540 for telecommunications was the result of renegotiating a

90-percent reduction in FTS 2000 long distance phone costs from a

planned 10 cents a minute to an actual 1 cent a minute.

21. According to the bureau, the positive variance of $6 million for project

6910 for automated acquisitions was primarily the result of lower

computer equipment costs and lower headquarters telephone support

costs than planned.

22. According to the bureau, the positive variance of $14 million for

project 6912 for telephone questionnaire assistance was caused by

lower contractor costs in running the program since the number of

inbound calls of 6 million was 45 percent lower than the 11 million

calls planned.

23. The negative variance of $5 million for project 6406 for address list

capture was caused by the higher than planned workload for support

staff updating enumerator maps and the address database. According

to the bureau, planned workload was 2.4 million map sheets while the

actual workload was over 150 percent higher at 6.1 million map sheets

because the number of new and corrected locations was higher than

anticipated.

24. The positive variance of $7 million for project 6408 non-ID processing

was caused by the lower than planned workload for support staff to

match and code questionnaires for the Be Counted and Telephone

Assistance programs. According to the bureau, planned workload was

2.5 million addresses and actual workload was 52 percent lower at 1.2

million addresses because more information was already contained in

mailed questionnaires than anticipated.
Appendix II: Explanations for Fiscal Year

2000 Project Variances of $5 Million or More

Page 43 GAO-02-30 Census Budget and Controls

25. According to the bureau, the negative variance of $9 million for project

6918 for the DCS 2000 contract was caused by higher contractor costs

than planned to scan census questionnaires in two passes. The first

pass scanned six basic questions on both the short and long forms, and

the second scanned the balance of long form responses. The bureau

refers to this as the two-pass approach to data capture.

26. The positive variance of $22 million for project 6922 for NPC data

capture operations was caused by a lower workload than planned for

forms to process and higher productivity for data entry. According to

the bureau, 5 million fewer mail back, enumerator, and group quarters

forms were processed, and data entry productivity of 6,500 keystrokes

per hour was higher than the 5,200 keystrokes per hour planned.

27. The positive variance of $55 million for undelivered order deobligation

is discussed in the body of this report. The six contracts concerned can

be identified by framework but could not be identified to the project

level as contracts may involve multiple projects.
Appendix III: Review of Other Selected Areas

Page 44 GAO-02-30 Census Budget and Controls

As agreed with our requesters, we also reviewed financial system

information and financial policies and interviewed officials on other

selected financial areas at the U.S. Census Bureau, but did not audit this

information. These selected areas were bureau personnel and benefits

expenditures, fund balance with Treasury, property and equipment, and

government small purchase and travel credit cards. No significant

weaknesses or areas for improvement were noted during our work in

these areas, except for the two areas noted in the body of this report

related to personnel expenditures and property and equipment

capitalization thresholds.

For the bureau’s personnel and benefit expenditures, we noted the

following.

• This area was the largest fiscal year 2000 expenditure consisting of

$2,475 million, or 58 percent, of total expenditures of $4,259 million for

periodic census and programs, including decennial census.

• Policies and procedures existed to provide guidance and internal controls.

• A contractor tested the Pre-Appointment Management System (PAMS) and

Automated Decennial Administrative Management System (ADAMS)

temporary employee payroll system with no material exceptions noted.

• In March 2000, the Commerce IG conducted an evaluation of

PAMS/ADAMS and found areas where software practices needed

improvement but concluded that the systems should provide adequate

support for the 2000 decennial census.1

• As discussed in appendix II, coding errors caused some salary amounts to

be erroneously charged to other projects.

• The bureau’s independent auditor review of internal controls and

substantive tests noted no significant issues with personnel and benefits

for fiscal year 2000.

For the bureau’s fund balance with Treasury, we noted the following.

• The bureau’s balance sheet showed $1.1 billion as of September 30, 2000.

• Policies and procedures existed to provide guidance and internal controls.

• One central disbursing function at the bureau’s headquarters in Suitland,

Maryland controls payments to vendors and employees.

 1

Final Inspection Report OSE-11684, March 2000.

Appendix III: Review of Other Selected Areas

Review of Personnel

and Benefits

Expenditures

Review of Fund

Balance With

Treasury
Appendix III: Review of Other Selected Areas

Page 45 GAO-02-30 Census Budget and Controls

• A contractor performs monthly reconciliation of fund balances, and

differences are investigated promptly by bureau financial accounting staff.

• The bureau’s independent auditor review of internal controls and

substantive tests noted no significant issues with fund balance with

Treasury for fiscal year 2000.

For the bureau’s property and equipment, we noted the following.

• The bureau’s balance sheet showed $121 million at an acquisition cost of

$25,000 and over as of September 30, 2000. As discussed in the body of this

report, this amount represented only 43 percent of total bureau gross

accountable property. After accumulated depreciation, net property and

equipment was valued at $47 million.

• Policies and procedures existed to provide guidance and internal controls.

• The bureau can provide detailed lists of its accountable property,

including capitalized, noncapitalized, and sensitive property.

• The bureau conducted physical wall-to-wall inventories of all its

accountable property during fiscal year 2000 that were observed by the

independent auditors and the Commerce IG’s staff.

• A contractor performs a monthly reconciliation of the equipment included

in the subsidiary property record system, the Accountable Property

Management System (APMS), to the bureau’s general ledger function

contained in CAMS.

• In March 2000, the Commerce IG conducted a review of accountable

property at the 12 regional data census centers and found areas where

internal controls could be improved in the recording of property in APMS,

the observation of annual physical inventories, and the documentation of

transfers of property.2

• The bureau’s independent auditor review of internal controls and

substantive tests noted no significant issues with property and equipment

for fiscal year 2000.

For the bureau’s government credit card program for small purchase cards

and employee travel cards, we noted the following.

• The bureau uses Citibank Visa credit cards for expenses for official

government travel and for small purchases, such as supplies and services.

 2

Final Audit Report ESD-11781-0-0001, March 2000.

Review of Property

and Equipment

Review of

Government Credit

Cards
Appendix III: Review of Other Selected Areas

Page 46 GAO-02-30 Census Budget and Controls

As of June 12, 2001, the bureau had 3,950 travel credit cards outstanding.

As of June 22, 2001, the bureau had 316 purchase cards outstanding.

• The bureau has policies and procedures regarding issuance and use of

credit cards to provide guidance and internal controls and appears to be

following them.

• Small purchase cards were issued to 79 temporary employees and were

subject to the same policies and procedures regarding issuance, use, and

separation as for permanent employees.

• The bureau had a policy not to issue government travel cards to temporary

employees.

• Small purchase cards have 30-day spending limits ranging from $5,000 to

$200,000, and travel cards have a $5,000 credit limit, but increases can be

obtained as needed.

• The bureau has a program to monitor credit card use and delinquent

payments; however, we did not assess the adequacy of this program.

• The bureau pays all small purchase card bills monthly so there are no

delinquent accounts.

• Bureau employees must pay their travel card bills promptly and are

reported to the bureau if over 60 days delinquent. As of June 15, 2001,

Citibank reported only about $13,400 in travel card bills over 60 days

delinquent, including one account for about $4,000.

• In March 2000, the Commerce IG conducted a review of small purchase

credit cards and concluded that the bankcard program was well managed.3

 3

Final Audit Report ESD-11781-0-0001, March 2000.
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 47 GAO-02-30 Census Budget and Controls

Appendix IV: Comments From the

Department of Commerce, U.S. Census

Bureau
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 48 GAO-02-30 Census Budget and Controls

See comment 1.
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 49 GAO-02-30 Census Budget and Controls

See comment 2.
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 50 GAO-02-30 Census Budget and Controls

See comment 2.

See comment 1.
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 51 GAO-02-30 Census Budget and Controls

See comment 4.

See comment 1.

See comment 3.

See comment 1.
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 52 GAO-02-30 Census Budget and Controls

See comment 1.

See comment 6.

See comment 5.

See comment 4.
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 53 GAO-02-30 Census Budget and Controls

See comment 7.

See comment 1.

See comment 1.
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 54 GAO-02-30 Census Budget and Controls

See comment 1.

See comment 1.

See comment 1.
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 55 GAO-02-30 Census Budget and Controls

See comment 1.
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 56 GAO-02-30 Census Budget and Controls

See comment 6.
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 57 GAO-02-30 Census Budget and Controls

See comment 1.
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 58 GAO-02-30 Census Budget and Controls
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 59 GAO-02-30 Census Budget and Controls

The following are GAO’s comments on the letter dated December 7, 2001,

from the Department of Commerce, U.S. Census Bureau.

1. See the “Agency Comments and Our Evaluation” section of this report.

2. Our report clearly lays out the source and status of the budget

variances we identified. We note that the bureau’s restatement of our

findings still concludes with the same dollar amounts we reported.

3. We have modified footnote 10 to add that the appropriation for

Periodic Censuses and Programs established a 3-day notification

period for reprogramming funds provided by the appropriation.

4. The bureau’s increased reliance on private contractors was stated

factually, and the scope of our work did not include determining

whether the use of contractors was appropriate for the involved

activities. The human capital issue described in the body of this report

reflects a concern that the bureau did not have a sufficient number of

experienced accountants familiar with the financial statement process

and able to effectively monitor year-end reconciliations or provide

needed accounting support on a day-to-day basis. While not

specifically disclosed as part of an independent auditor’s report on

internal control, the assessment of the bureau’s internal control

environment as high risk by its independent auditor was supported by

the auditor’s working papers, which were within the scope of our work

as stated in appendix I, “Objectives, Scope, and Methodology.”

5. We have modified the report to indicate that the FMFIA weakness

reported by the bureau seriously affected the bureau’s ability to

conform with generally accepted accounting principles.

6. The bureau’s response presented new information on system testing

that was not mentioned throughout our discussions with key bureau

officials, up to and including our exit conference on June 15, 2001.

However, in our experience, system testing is usually done on

downloaded offline systems data so that online data needed for

management are not altered, disrupted, or lost. To delay posting

$65 million of year-end adjustments for 7 months due to systems

testing would, in our view, seriously hamper financial management

activities. This is because, during this period, system personnel would

be using automated screen inquiries for individual contracts that

contain incorrect and misleading data and would have to refer to a

GAO Comments
Appendix IV: Comments From the Department

of Commerce, U.S. Census Bureau

Page 60 GAO-02-30 Census Budget and Controls

manual tracking list of adjustments, a cumbersome and error-prone

process.

7. Bureau officials told us, in the context of accounts payable and

undelivered order transactions, that about 18 million records

accumulated since the installation of CAMS on October 1, 1997. The

bureau’s response that 100 million transaction records have

accumulated since CAMS’ inception provides further evidence that the

bureau should develop archive capability to store millions of

completed transactions in order to reduce volume and processing time

and to highlight errors, duplicates, and larger balances.
Appendix V: GAO Contact and Staff

Acknowledgments

Page 61 GAO-02-30 Census Budget and Controls

Roger R. Stoltz, (202) 512-9408

Staff members who made key contributions to this report were Cindy

Barnes, Linda Brigham, Amy Chang, and Peggy Smith.

Appendix V: GAO Contact and Staff

Acknowledgments

GAO Contact

Acknowledgments

(192002)

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