January 2001 Major Managem

Challenges and 

Program Risks

Department of Agricult

GAO-01-242

Page 1 GAO-01-242 U

Letter 

Overview 

Major 

Performance 

and 

Accountability 

Challenges

Related GAO 

Products

Performance 

and 

Accountability 

Series
Page 2 GAO-01-242 USD
of th

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United States General Accounting Office

Washington, D.C. 20548

January 2001

The President of the Senate

The Speaker of the House of Representati

This report addresses the major performa

accountability challenges facing the Depa

Agriculture (USDA) as it seeks to carry ou

missions, including ensuring the safety of 

food supply, providing food assistance for 

supporting the agricultural sector, and ma

national forests. It includes a summary of 

USDA has taken and that are under way to 

challenges. It also outlines further actions 

believes are needed. This analysis should 

Congress and administration carry out the

responsibilities and improve government 

of the American people.

This report is part of a special series, first 

January 1999, entitled the Performance an

Accountability Series: Major Management 

and Program Risks. In that series, GAO ad

Congress that it planned to reassess the m

and criteria used to determine which fede

government operations and functions sho

highlighted and which should be designat

risk.” GAO completed the assessment, con

comments provided on a publicly availabl

draft, and published its guidance docume

Determining Performance and Accountab

Challenges and High Risks (GAO-01-159SP

November 2000.

This 2001 Performance and Accountabilit

contains separate reports on 21 agencies—

each cabinet department, most major inde
Page 4 GAO-01-242 USD

agencies, and the U.S. Postal Service. The se

includes a governmentwide perspective on p

and management challenges across the fede

government. As a companion volume to this 

is issuing an update on those government op

and programs that its work identified as “hig

because of either their greater vulnerabilitie

fraud, abuse, and mismanagement or major c

associated with their economy, efficiency, or 

effectiveness.

David M. Walker

Comptroller General 

of the United States
Page 5 GAO-01-242 U
Page 6 GAO-01-242 U

The U.S. Department of Agriculture (USDA

nation’s largest federal agencies, employin

people and managing a budget of over $75 

agencies and offices are responsible for o

than 200 programs that, among other thing

profitability and productivity of farming, p

environment, ensure food safety, improve 

of rural America, promote domestic mark

export of food and farm products, conduc

biotechnological and other agricultural re

provide food assistance to Americans who 

Managing the breadth and diversity of the

responsibilities is a daunting task, but an i

U.S. agriculture remains a vital componen

national economy, accounting for about 1

the nation’s gross domestic product, and is 

heart of many rural communities. Since 19

been engaged in a reorganization and mod

effort targeted at achieving greater econo

efficiency and better customer service in t

and rural areas. However, USDA still face

specific performance and management ch

Congress also has a key role in ensuring t

effectively addresses these challenges. 
Page 7 GAO-01-242 U

Improving USDA’s 

Farm Loan Programs

Since our previous report in January 1999

condition of USDA’s farm loan programs h

dramatically. The unpaid principal of USD

portfolio held by delinquent borrowers wa

about $2.8 billion between September 199

September 2000. As such, we are removin

programs’ high-risk designation. The decl

amount of the loan portfolio held by delin

borrowers in part reflects the positive act

Congress and USDA have taken to addres

• USDA's farm loan programs remain vulne

loss, but high-risk areas have been addre

• Delivery of services to farmers has impro

challenges remain

• USDA needs to effectively and efficiently 

food assistance benefits to eligible individ

while maintaining program integrity

• Fundamental changes are needed to min

foodborne illnesses

• USDA needs to strengthen Department-w

information security

• USDA continues to lack financial account

over billions of dollars in assets

• The Forest Service must provide the Con

and the public with a clear understanding 

it accomplishes with appropriated funds

• Problems persist in processing discrimina

complaints
Page 8 GAO-01-242 USD

underlying causes of the programs’ past wea

Specifically, the Federal Agriculture Improve

Reform Act of 1996 (the 1996 farm bill) cont

numerous provisions, based in part on 

recommendations we previously made, aime

improving the solvency of USDA’s farm loan 

including prohibiting certain high-risk loans. 

example, provisions in the bill generally proh

borrowers who caused losses on past USDA 

from obtaining new loans and specifically pr

borrowers who are behind on payments on e

loans from obtaining new direct operating loa

these important improvements, because of a

principal of more than $16.6 billion in direct 

guaranteed farm loans, USDA and the Congr

continue to monitor the effects of the positiv

already taken to ensure that improvements i

financial integrity of the farm loan programs 

Improving the 

Delivery of Services 

to Farmers

While the 1996 farm bill was aimed at reduci

government involvement in maintaining the 

the farm economy, USDA continues to have 

important role in providing an effective mea

distributing benefits and addressing farmers

Since 1995, USDA has been engaged in a reo

and modernization effort targeted at achievin

economy and efficiency and better customer 

of March 2000, USDA’s effort to collocate its 

centers was almost complete. While USDA co

county field offices, little has changed in how 

offices serve their customers, and many mod

and reengineering projects have encountered 

August 1998, we reported that USDA lacked 

comprehensive plan to guide the modernizat

and a management structure with the accoun

authority to resolve differences among the a

USDA is still working to address these challe

addition, in February 2000, we reported that t

a change in the existing organizational cultu
Page 9 GAO-01-242 U

even more basic challenge that USDA nee

before further progress could be made on 

other modernization and reorganization in

December 2000, USDA officials told us th

progress in changing the Department’s org

culture. 

Maintaining Food 

Assistance Program 

Integrity

Since one in six Americans receives some 

assistance, USDA is challenged to ensure 

individuals receive the proper benefits fro

programs administered by its Food and N

Service. In 2001, the Congress appropriate

to operate these programs. This financial 

dictates that USDA continually address an

the amount of fraud and abuse occurring 

programs in order to ensure their integrity

over $1 billion in overpayments were mad

Food Stamp Program in 1999, and less tha

was recovered. In addition, the trafficking 

stamps continues to be a problem. Estima

hundreds of millions of dollars in benefits 

cash annually by recipients at retail food s

a very small percentage of the financial pe

assessed to storeowners for trafficking is 

collected, in part because of difficulties in 

type of debt, including problems in locatin

their refusal to pay. In recent reports, we 

recommended various ways that USDA ca

debt collection activities and better use el

to identify suspected storeowner and reci

traffickers. USDA must also take steps to 

effective strategy for the school lunch pro

address the large percentage of ineligible 

are certified as eligible to receive free lun

these and other food assistance programs 

almost 45 percent of USDA’s fiscal year 20

critical that the Department implement an 

strategy to ensure that eligible individuals 

proper benefits while minimizing the occu
Page 10 GAO-01-242 USD

fraud and abuse before the programs’ integri

diminished. 

Minimizing 

Foodborne Illnesses

The level of foodborne illnesses has heighten

concerns about the federal government’s eff

in ensuring the safety of both the nation’s do

supply and the food products imported into 

marketplace. In response to a recommendati

in an October 1997 report, USDA is impleme

scientific system, called Hazard Analysis and 

Control Point, to better ensure the safety of 

poultry. USDA must also determine if foreign 

have implemented equivalent food safety and 

systems before those countries can export pr

the United States. However, as we have state

numerous reports and testimonies, these req

do not address the continuing fundamental p

facing USDA, namely, that the current food s

system is highly fragmented with as many as 

federal agencies administering over 35 laws 

food safety. As we have maintained since 199

fragmented system is replaced with a risk-ba

inspection system under a single food agenc

food safety system will continue to suffer fro

inconsistent oversight, poor coordination, an

inefficient allocation of resources.

Strengthening USDA’s 

Information Security

Significant weaknesses in USDA’s informatio

program and its two major data centers plac

Department’s computer systems, which supp

of dollars in benefits, at significant risk. USD

positive steps to improve its information sec

developing its August 1999 action plan to ad

specific vulnerabilities and potential threats

little progress has been made to implement m

components of the action plan that are critic

strengthening Department-wide information 

For example, as we reported in August 2000, 
Page 11 GAO-01-242 U

of our review USDA had not established a 

comprehensive list of sensitive computer 

required by the Computer Security Act of 

also needed to develop and document a de

with time frames and milestones to fully i

action plan and demonstrate that informat

USDA is a departmental priority.

Enhancing USDA’s 

Ability to Account for 

Its Financial 

Activities

At headquarters, USDA continues to face 

challenges in correcting severe and long-s

financial management problems and achie

accountability over the billions of dollars 

required to carry out its diverse missions. 

USDA’s Office of Inspector General has iss

unfavorable financial audit reports on US

consolidated financial statements. The Ins

General also reported that USDA’s persist

control weaknesses and noncompliance w

and regulations have contributed to the D

inability to achieve financial accountabilit

we reported in September 2000 that USDA 

have significant problems with its electric

portfolio and that increased competition i

electricity industry has increased the risk 

federal government will incur future losse

Improving 

Performance 

Accountability at the 

Forest Service

USDA’s Forest Service is at a critical junct

evolution. The agency is refocusing the m

activities and attempting to identify where 

what circumstances it should restore degr

through active management. These issues 

controversial and represent significant ch

Forest Service’s mission and funding prio

therefore, important for the agency to pro

Congress and the public with a better und

what is achieved with the funds that are b
Page 12 GAO-01-242 USD

While the Forest Service has, in recent mont

completed several actions and begun others 

performance accountability, it does not appe

fully committed to making performance acco

one of its top priorities, and major hurdles to 

performance accountability remain. For inst

agency has no plan to replace its existing org

structure with one that is better linked to its 

goals and objectives or to the way that work 

accomplished on the national forests. 

Improving the 

Efficiency of USDA’s 

Civil Rights Office

Finally, USDA’s Civil Rights Office continues 

experience problems in the timely processin

discrimination complaints. While some prog

been made to address identified weaknesses

not implemented a number of recommendat

by us and the Inspector General to improve i

processing timeliness. Problems continue w

(1) management turnover, (2) continued reor

within the Civil Rights Office, (3) inadequate 

managerial expertise, (4) a lack of clear and 

guidance and procedures, and (5) poor work

relationships and communication within the 

Office and between the office and other USD

As we reported in January 1999, delays in pr

discrimination complaints result in USDA’s f

comply with federal regulations that affect th

livelihood and well-being of individuals who 

have been discriminated against. The Secret

Agriculture has recently taken steps to addre

Department’s chronic problems in addressin

discrimination complaints. However, these e

require sustained implementation, including 

funding for hiring and training personnel and

long-term monitoring.
Page 13 GAO-01-242 U

y g

Over the years, we, USDA’s Inspector Gen

others have documented problems with U

performance and management and have r

reforms. This report summarizes findings 

previously issued reports on the effectiven

efforts in (1) further reducing farm loan d

(2) improving the delivery of services to f

(3) providing food assistance benefits to e

individuals while maintaining the food ass

programs’ integrity, (4) minimizing foodbo

in our nation’s food supply, (5) strengthen

information security, (6) effectively accou

billions of dollars in assets and expenditu

(7) improving performance accountability 

Service, and (8) addressing problems in p

rights complaints. We have also indicated

applicable, actions that USDA has taken t

these management and performance prob

including actions taken that support remo

loan programs’ high-risk designation, and 

the Congress has a key role in ensuring th

effectively addresses its performance and 

challenges. 

Farm Loan 

Programs Remain 

Vulnerable to Loss, 

but High-Risk 

Issues Have Been 

Addressed

USDA’s farm loan programs are intended t

temporary financial assistance to farmers 

who are unable to obtain commercial cred

reasonable rates and terms. In operating t

programs, USDA faces the conflicting task

providing high-risk borrowers with tempo

they can stay in farming until they are abl

commercial credit and (2) ensuring that th

investment is protected. The unpaid princ

farm loan portfolio totaled more than $16

September 30, 2000—about $8.7 billion in 

and almost $8 billion in guaranteed loans. 
Page 14 GAO-01-242 USD

USDA’s farm loan programs have been identif

risk since 1990 because of significant proble

primarily with the direct loans. As we have p

reported, the farm loan programs had experi

high rate of defaults on repayments; billions 

losses had occurred and were likely to occur

Department had evolved into a continuous s

subsidized credit for thousands of borrower

problems occurred because of (1) program p

some of which were congressionally directe

contributed to financial risks and (2) the fail

Department’s field office officials to comply 

existing loan and property management stan

example, program policies allowed borrowe

defaulted and caused losses on past USDA fa

obtain new loans and allowed borrowers to 

direct loans for operating expenses without 

demonstrating their ability to pay their exist

debt. Also, field office lending officials appro

on the basis of unrealistic estimates of produ

income, and expenses and often failed to ver

borrowers’ existing debts. 

We are now removing the programs’ high-ris

designation. Over the last 2 years the financi

of USDA’s farm loan programs has continued 

The unpaid principal of USDA’s loan portfoli

delinquent borrowers was reduced by about 

between September 1995 and September 200

the early to mid-1990s, GAO made a variety o

recommendations to USDA and the Congres

aimed at improving the financial condition a

operation of the farm loan programs. In addi

various pieces of legislation in recent years h

significant impact on the operation of USDA

programs. Specifically, the 1996 farm bill ma

of changes, based in part on recommendatio

previously made, to the lending and servicing 

USDA that were intended to reduce the risks 

with the farm loan programs. For example, i
Page 15 GAO-01-242 U

provisions that (1) prohibit borrowers wh

delinquent on USDA direct or guaranteed 

from obtaining additional direct farm ope

(2) generally prohibit borrowers whose pa

resulted in loan losses from obtaining new 

guaranteed farm loans, and (3) limit borro

instance of debt forgiveness on direct loan

of these and other initiatives is now being 

As of September 30, 2000, delinquent borr

more than $1.8 billion (about 21 percent) 

outstanding principal on direct loans. Thi

with about $2.1 billion (23.5 percent) in Se

and $2.4 billion (over 26 percent) in Septe

Furthermore, the amount owed by delinqu

was $4.6 billion (about 41 percent) in Sep

As figure 1 shows, the outstanding princip

amounts owed by delinquent borrowers o

loans have declined each year since the en

year 1995 and the enactment of the farm b
Page 16 GAO-01-242 USD

Figure 1: Outstanding Principal and Amount Owed by Borrowers Who Were Delinqu

Farm Loans, End of Fiscal Years 1995 Through 2000

Note: The percentage of outstanding principal owed by 

borrowers was as follows: 40.7 percent in 1995, 34.2 pe

28.2 percent in 1997, 26.4 percent in 1998, 23.5 percen

20.9 percent in 2000.

Source: GAO’s analysis of information in USDA’s farm lo

databases.

In addition, delinquent borrowers held abou

$282 million (3.5 percent) of the outstanding 

on guaranteed farm loans as of September 3

comparison, delinquent borrowers owed abo

$363 million (5 percent) in September 1999 a

$325 million (5 percent) in September 1998. 

Furthermore, the amount owed by delinquen

Dollars in billions

0

2

4

6

8

10

12

1995 1996 1997 1998 1999 

Fiscal year

Outstanding principal

Owed by delinquent borrowers
Page 17 GAO-01-242 U

was $218 million (about 4 percent) in Sep

While the total outstanding principal owe

guaranteed farm loans has risen since 199

owed by borrowers who were delinquent 

farm loans has remained relatively steady 

Figure 2: Outstanding Principal and Amount Owed by Borrowers Who Were Delin

Guaranteed Farm Loans, End of Fiscal Years 1995 Through 2000

Note: The amount and percentage of outstanding p

delinquent borrowers were as follows: $218 million, 

1995; $280 million, or 4.4 percent, in 1996; $300 m

percent, in 1997; $325 million, or 5.0 percent, in 199

5.0 percent, in 1999; and $282 million, or 3.5 perce

Source: GAO’s analysis of information in USDA’s far

databases.

Dollars in billions

0

2

4

6

8

10

1995 1996 1997 1998 1999 

Fiscal year

Outstanding principal

Owed by delinquent borrowers
Page 18 GAO-01-242 USD

We believe that these improvements in part r

actions that the Congress and USDA have ta

address the underlying causes of the program

weaknesses. Although the programs’ high-ris

designation has been removed, USDA and th

need to monitor the effects of the lending an

reforms and any future legislation to ensure 

improvements in the financial integrity of th

programs continue. 

Key Contact Lawrence J. Dyckman, Director

Natural Resources and Environment

(202) 512-3841

dyckmanl@gao.gov
Page 19 GAO-01-242 U

Delivery of Services 

to Farmers Has 

Improved, but 

Challenges Remain

Since 1995, USDA has been engaged in a r

and modernization effort targeted at achie

economy and efficiency and better custom

agricultural and rural areas.1

 USDA’s effor

five interrelated initiatives: (1) locating U

county offices at one site within each cou

offices at one location in each state; (2) m

administrative functions at the state and h

levels under a single support organization

redesigning how the agencies do their wo

providing an updated communications ne

common computing environment so that 

employees can share information; and (5) 

culture within the agencies to implement 

approach to delivering services, reaching 

customers’ needs, and working cooperativ

and local governments and private organi

February 2000, we reported that USDA ha

$380 million on these initiatives and will n

another $544 million through fiscal year 2

complete them. 

USDA’s progress in implementing its initia

mixed. As of March 2000, efforts to colloc

Department’s service centers were about 

complete. USDA had also deployed perso

and a modern telecommunications netwo

its service centers. However, as we report

2000, despite these positive actions, little h

how USDA serves its customers in agricul

areas, and many modernization and reeng

projects have encountered delays. For ex

November 1999, the overall reengineering 

the initiative to modernize information tec

1

USDA provides service in these areas through its Fa

Agency, the Natural Resources Conservation Service

in the rural development mission area.
Page 20 GAO-01-242 USD

both 2 years behind schedule. At that time, U

officials attributed the delays to (1) program 

and funding constraints, (2) limited coopera

the USDA agencies involved in the moderniz

reorganization effort, and (3) some employe

resistance to change. In addition, the Congre

USDA from implementing the administrative 

convergence initiative. 

In addition to these problems, we identified 

related challenges that have impeded USDA’s 

toward completing its overall initiatives. In A

we identified two of these challenges—the la

comprehensive plan to guide the modernizat

and the lack of a management structure with 

accountability and authority to resolve differ

among the agencies. USDA is working to add

challenges. A third challenge we identified in 

February 2000 report—the need to change th

organizational culture—is even more basic a

addressed before further progress can be ma

of the other initiatives. As we reported in Feb

USDA has recognized the importance of this 

making it the focus of one of the five initiativ

December 2000, USDA officials told us they 

progress in changing the Department’s organ

culture; however, USDA has not fully succee

overcoming resistance from affected agencie

employees.

Key Contact Lawrence J. Dyckman, Director

Natural Resources and Environment

(202) 512-3841

dyckmanl@gao.gov
Page 21 GAO-01-242 U

Department Needs 

to Effectively and 

Efficiently Provide 

Food Assistance 

Benefits to Eligible 

Individuals While 

Maintaining 

Program Integrity

Each day, one in every six Americans rece

assistance through 1 or more of the 15 pro

administered by USDA’s Food and Nutritio

These programs account for almost 45 pe

USDA’s fiscal year 2001 budget and provid

low-income adults with access to food, a 

and nutrition education. For fiscal year 20

Congress appropriated $34 billion to oper

programs, including the Food Stamp Prog

nutrition programs, such as the school bre

school lunch programs. To determine the 

millions of children and families and distr

benefits, the Food and Nutrition Service w

private partnerships with over 450,000 org

including state and local governments, no

organizations, and retail grocery stores. U

some serious challenges in ensuring that e

individuals receive the proper benefits wh

the amount of fraud and abuse in its prog

These challenges are clearly evident in th

the Food Stamp Program—the cornerston

nutrition assistance programs. In fiscal ye

program provided 18 million individuals w

billion in benefits. Participation has decre

about 71 percent of eligible individuals in 

1994 to about 62 percent in September 19

previously reported, some state and local 

that went further than the law permits in 

stamp benefits may have caused some of 

In addition, USDA must continue to addre

challenge of accurately issuing food stam

those who are eligible under the program

1999, about 7 percent ($1.1 billion) of the b

were estimated to be overpayments, while 

percent ($0.45 billion) were underpaymen

welfare reform changes have increased th

complex process of determining househo

and benefit levels. 
Page 22 GAO-01-242 USD

In addition to ensuring that eligible individua

proper benefits, USDA faces the formidable c

minimizing the fraud and abuse associated w

misuse of the billions of dollars in food stam

that are accepted by about 185,000 authorized 

stores. For example, individuals sometimes 

their benefits for cash—a practice known as 

A recent USDA study estimated that stores t

about $660 million, or about 3.5 cents of eve

food stamp benefits issued per year from 199

1998. In addition, storeowners generally do n

financial penalties assessed for trafficking. F

from 1993 through 1998, USDA and the cour

or levied about $78 million in financial penal

interest against storeowners for violating foo

regulations. But during this period, USDA an

collected only $11.5 million, or about 13 perc

total penalties. USDA reduced the remaining 

owed by storeowners by about $49 million, o

percent, through waivers, adjustments, and w

While weaknesses in debt collection practice

contribute to low collection rates, USDA off

that these rates also reflect the difficulties in

collecting this type of debt, including proble

locating storeowners who have been remove

Food Stamp Program and the refusal of som

storeowners to pay their debts. 

Better use of information technology has the 

help USDA minimize fraud, waste, and abuse 

Food Stamp Program. As a result of a recom

we made in 1998, the Congress now has a US

on options for a national database to track p

in federal public assistance programs, includ

Food Stamp Program. Such a system could m

payment of food stamp benefits more accura

addition, in March 2000, we recommended th

and Nutrition Service make better use of dat

electronic benefit transfers (EBT) to identify 

penalties against storeowners who violate th
Page 23 GAO-01-242 U

Stamp Program’s regulations. Food and N

Service officials agreed and have initiated 

implement our recommendations. We also 

recommended that the Food and Nutrition 

with the states to implement best practice

EBT data to identify and take action again

engaged in trafficking food stamp benefits

and Nutrition Service officials agreed and 

under way to implement our recommenda

USDA also faces serious fraud and abuse 

other nutrition programs, including the $1

and Adult Care Food Program (CACFP) a

billion School Lunch Program. In fiscal ye

CACFP provided subsidized meals for a d

2.6 million children and 62,500 adults in th

about 220,000 day care providers. In cond

audits and investigations since 1993, USD

General identified case after case of the in

misuse of federal funds, including cases in 

program sponsors created fictitious day c

and inflated the number of meals served. 

1999, we recommended that USDA develo

implement a comprehensive plan for stren

controls for detecting and preventing frau

the program. In response to our recomme

reports of the Department’s Inspector Gen

Congress, in June 2000, passed legislation 

management controls in this program and 

vulnerability to fraud and abuse. 

In its strategic plan for 2000 to 2005, USDA 

program integrity challenge it also faces in 

only eligible participants are provided ben

School Lunch Program. This program pro

nutritionally balanced, low-cost or free lu

nearly 27 million children each school day 

public and nonprofit private schools and r

child care institutions. In 1997, the numbe

certified as eligible to receive free lunche
Page 24 GAO-01-242 USD

program was 18 percent greater than the est

number of children eligible for this benefit. U

taken some initial steps at developing a cost

strategy to address this integrity issue. 

Key Contact Robert E. Robertson, Director

Education Workforce and Income Security

(202) 512-7215

robertsonr@gao.gov

Fundamental 

Changes Are 

Needed to Minimize 

Foodborne 

Illnesses 

Although the American food supply is regard

the safest in the world, foodborne illnesses in 

States are an extensive and expensive proble

magnitude of the problem is uncertain, howe

because these illnesses are underreported an

officials cannot always determine their sour

Centers for Disease Control and Prevention 

that unsafe foods cause as many as 76 millio

325,000 hospitalizations, and 5,000 deaths ea

According to USDA, the costs for medical tre

productivity losses associated with seven ma

foodborne pathogens range from $7 billion to 

annually. The federal government, spending 

billion annually, plays a critical role in reduc

health and economic consequences of foodb

illnesses. 

A number of factors have heightened concern

federal government’s effectiveness in ensurin

of the nation’s food supply. These include the 

of new foodborne pathogens, the finding of o

pathogens in new foods (e.g., fresh produce)

recognition of the long-term health effects o

diseases, the globalization of the nation’s foo

and the growing segment of the U.S. populat

increased risk to foodborne disease (e.g., the 

immune-compromised). These concerns in p
Page 25 GAO-01-242 U

spawn a major new approach to food safe

This approach, in line with our prior reco

requires meat, poultry, and seafood plants 

scientific system called Hazard Analysis a

Control Point (HACCP) to better ensure t

their products. Under these new regulatio

the meat and poultry slaughter plants con

tests for E. Coli 0157:H7, salmonella, and 

monocytogenes. 

As we noted in our last Performance and A

Series report in January 1999, requiring H

microbial testing is without question an im

toward a more scientific approach to ensu

food supply. However, as we have stated i

reports and testimonies, these requiremen

address several other fundamental proble

current food safety system. Most importa

system is highly fragmented: As many as 1

federal agencies, administering over 35 di

oversee food safety. Since 1992, we have a

replacing this fragmented system with a r

inspection system under a single food age

is done, the current food safety system wi

suffer from inconsistent oversight, poor c

and the inefficient allocation of resources

the following examples:

• Subtle differences in food products oft

which agency regulates a product and 

takes. A case in point: USDA is respon

inspecting plants that produce open-fa

sandwiches and pizzas with meat topp

Department conducts these inspection

each operating day. On the other hand

Department of Health and Human Serv

Drug Administration (FDA) is respons

inspecting plants that produce traditio

sandwiches and nonmeat pizzas. FDA 

plants under its jurisdiction once every 
Page 26 GAO-01-242 USD

average. In fiscal year 1999, more than $1

was spent to conduct both agencies’ insp

other cases, different agencies have over

responsibilities for ensuring food safety. 

example, while FDA has primary respons

ensuring the safe use of irradiation on all 

USDA is responsible for the irradiation o

poultry, and some egg products.

• More than one-fourth of the over $1 billio

budget for food safety—about $296 millio

be used more efficiently if the current req

for carcass-by-carcass slaughter inspectio

eliminated. These statutory inspections d

optimize federal resources because they 

detect the most serious health threat asso

meat and poultry—microbial contaminati

the funds currently used for these inspec

be better spent on other food safety activi

such as increasing inspections at nonmea

poultry plants; conducting more laborato

food products; or conducting better surve

imported foods, including making equiva

determinations of foreign countries’ food 

systems. While USDA has tried to shift so

burden for inspections under its carcass-

inspection program to industry personne

court action continues to require USDA t

these expensive and time-consuming insp

using its own resources. 

• Both USDA and FDA have primary respo

ensuring the safety of imported foods and 

these foods to meet the same standards a

foods. However, their approaches to enfo

requirements differ. USDA places the prin

burden for safety on the exporting countr

allowing imports only from those countrie

systems it deems equivalent to the U.S. sy

countries at the present time. FDA, on th

hand, is not required to make equivalency 

determinations and, as such, allows food 
Page 27 GAO-01-242 U

from almost any country and takes on 

ensuring the safety of imported foods 

at U.S. ports of entry. Both of these ap

weaknesses that need to be addressed 

the safety of imported foods. For exam

USDA accepts imports from foreign fo

deemed equivalent, it focuses its inspe

shipments from exporting firms with a 

violations for such things as incorrect 

shipping labels. Since these violations 

relationship to food safety, USDA coul

resources to areas with greater potent

increasing the safety of our imported f

Conversely, FDA depends on resource

inspections at ports of entry that requi

physically inspecting, and testing samp

method has been widely discredited be

individual products tested at ports of e

represent the health risks of the entire 

addition, this labor-intensive effort res

inspection of less than 1 percent of all 

1999.

Key Contact Lawrence J. Dyckman, Director

Natural Resources and Environment

(202) 512-3841

dyckmanl@gao.gov

Department Needs 

to Strengthen Its 

Information 

Security 

USDA faces information security challeng

protecting its computer systems from seri

and cyber attacks. USDA’s Office of Inspe

and we found significant weaknesses in th

Department’s information security progra

Department’s two major data centers. The

placed USDA computer systems that supp

dollars in benefits at significant risk. Such 

leave the Department’s computer systems 

unlawful and destructive penetration and 
Page 28 GAO-01-242 USD

According to USDA, attacks by hackers on it

systems are occurring more frequently every 

month. 

USDA has begun to address its information s

problems, but more needs to be done. In Aug

we reported that USDA had taken positive st

improving its information security by develo

August 1999 action plan with recommendati

strengthen Department-wide information sec

by hiring a new Associate Chief Information 

(CIO) for Cyber-Security to address specific 

vulnerabilities and other potential threats. H

since the plan was issued in August 1999, litt

has been made to implement its other recom

for strengthening Department-wide informat

security. For example, at the time of our revi

had not established a comprehensive list of s

computer systems as required by the Compu

Act of 1987. Moreover, USDA had not develo

documented a strategy for implementing the 

plan’s recommendations with established pr

the detailed steps, time frames, milestones, a

resources needed to fully carry them out. 

To correct these problems, we recommende

2000 that USDA develop a detailed strategy f

implementing the action plan and demonstra

information security at USDA is a departmen

by (1) directing that sufficient resources be a

fund the Department’s information security 

improvement strategy and implementing pla

holding the CIO and Associate CIO for Cyber

accountable for carrying out the strategy and 

(3) requiring quarterly reports to the Secreta

Agriculture that describe the results of these 

also recommended that USDA report its info

security program as a material internal contr

weakness under the Federal Managers’ Finan

Integrity Act. USDA agreed with our recomm
Page 29 GAO-01-242 U

for ensuring that information security is s

the Department and said that dramatic ch

needed to improve cyber security. While U

told us they are working to improve comp

as of the end of December 2000, USDA ha

its written response to our August 2000 re

the actions taken or planned to address o

recommendations.

Key Contact Bob Dacey, Director

Information Technology

(202) 512-3317

daceyb@gao.gov 

Lack of Financial 

Accountability Over 

Billions of Dollars 

in Assets Continues

As evidenced by the Inspector General’s s

consecutive disclaimer of opinion2

 on USD

consolidated financial statements, the De

serious accountability problems over the 

assets and $120 billion in budgetary resou

for fiscal year 1999 to carry out its diverse 

such, USDA does not have meaningful and 

financial information to evaluate its finan

performance. Before USDA can achieve fi

accountability, it or its component agenci

address a number of issues that USDA’s O

Inspector General or we have reported as 

problems. 

2

A disclaimer of opinion means that the auditor is un

opinion on the financial statements. A disclaimer re

pervasive material uncertainty exists or there is a si

restriction on the scope of the audit. 
Page 30 GAO-01-242 USD

Since fiscal year 1994, the Inspector General 

reported material weaknesses in the process

procedures used by USDA’s lending agencies 

and reestimate loan subsidy costs for the De

net credit program receivables, which totale

$70.7 billion as of September 30, 1999. As a re

has been unable to implement the Federal C

Reform Act of 1990 and related accounting s

This problem has contributed to the Inspecto

disclaimer of opinion on the Department’s co

financial statements as well as our disclaime

on the consolidated financial statements of t

government. 

The Inspector General also reported that US

unable to reconcile its Fund Balance accoun

U.S. Treasury’s accounts.4

 As of September 3

these USDA accounts totaled $38 billion. Pri

1999, USDA merely adjusted its records to ag

Treasury’s without determining which, if eith

correct. In addition, USDA did not establish 

the causes of the differences between its and 

records before reporting its ending balance t

Since May 1999, USDA has been disclosing a

differences in its reports to Treasury. While U

great strides during fiscal year 2000 to reconc

Balance accounts with Treasury’s accounts, 

Inspector General testified that the accounts 

unreconciled because of several internal con

3

Accounting of Direct Loans and Loan Guarantees, Stat

Federal Financial Accounting Standards (SFFAS) No. 2

by Amendments to Accounting Standards for Direct Loa

Guarantees, SFFAS No. 18.

4

USDA records its budget authority in asset accounts ca

Balance with the Department of the Treasury and incre

decreases these accounts as it collects or disburses fun
Page 31 GAO-01-242 U

weaknesses related to the accounting sys

addition, the Inspector General stated tha

working aggressively to identify and elimi

unreconciled amounts. 

The Forest Service still faces major hurdle

financial accountability despite corrective 

place to address its accounting and report

deficiencies. For instance, the Forest Serv

disclaimer of opinion on its fiscal year 199

statements—its fourth disclaimer in a row

demonstrates that the Forest Service rem

to reliably track and report on major asse

billions of dollars. The Office of Inspector 

reported that it could not verify the accur

Forest Service’s pooled assets (such as ro

valued at $1.5 billion because the Service 

sufficient documentation to support the p

of these assets, the date acquired, and the 

depreciation costs. Furthermore, the inde

afforded by the Forest Service’s autonomo

structure has hampered efforts to correct 

and financial reporting weaknesses. These 

mean that the Forest Service and the Con

have accurate financial data to track the c

programs and activities and to help make 

decisions about future funding. Therefore

to designate the Forest Service’s financial 

as a high-risk area because of the serious 

standing accounting and financial reportin

plaguing its operations.

USDA has several persistent internal cont

weaknesses that contributed to the Inspe

5

Testimony of Roger C. Viadero, Inspector General, D

Agriculture, before the Senate Committee on Agricu

and Forestry’s Subcommittee on Research, Nutrition

Legislation, September 27, 2000.
Page 32 GAO-01-242 USD

inability to form an opinion on the Departme

year 1999 consolidated financial statements. 

others, the Inspector General has identified 

control weaknesses over USDA’s financial m

systems, food stamp recipient claims, accou

personal property, and security controls for 

technology. For example, the Inspector Gene

reported that USDA’s financial systems do no

process and report Department-wide financi

information accurately and that many of the

are not fully integrated with other USDA sys

Inspector General also noted that document

supporting the purchase price of property w

and that numerous errors in property values 

recorded in the system. For example, the Ins

General found a motor vehicle recorded in th

over $97 million and a microscope recorded 

million. 

The Inspector General also reported that USD

fully comply with certain key laws and regul

example, like most other federal agencies, U

not substantially comply with the three requ

the Federal Financial Management Improvem

federal financial systems requirements, appl

federal accounting standards, and the Standa

Ledger at the transaction level. Furthermore

Department has not fully addressed problem

compliance with the Chief Financial Officers 

(CFO Act). Specifically, USDA has not (1) im

a fully integrated financial information syste

conducted required biennial reviews of the f

royalties, and other charges for services imp

USDA’s agencies; and (3) made recommenda

revising those charges to reflect the costs in

the USDA agencies in providing those servic

required by the CFO Act.

In addition, USDA continues to have signific

problems with its electricity loan portfolio. I
Page 33 GAO-01-242 U

September 2000, we reported that the Dep

incurred several billion dollars in loan los

continues to experience problems with its 

troubled generation and transmission bor

example, from fiscal year 1992 through Ju

Rural Utilities Service wrote off $1.8 billio

related to financially troubled generation 

transmission borrowers and, as directed b

bankruptcy courts, is in the process of wr

additional $3 billion in loans to one borrow

incurred additional losses totaling $7.2 mi

form of forgiveness of interest due to the D

a result of restructuring the loans of anoth

troubled borrower. Furthermore, increase

in the electricity industry has increased th

federal government will incur future losse

the Department’s generation and transmis

borrowers. 

USDA has completed several actions and 

that, if successfully implemented, represe

steps toward first achieving a “clean” opin

financial statements and ultimately obtain

financial accountability. USDA has also re

need to improve its financial systems and

USDA’s Chief Financial Officer, has obtain

funding to address this issue. Also, USDA 

project team to develop the financial syst

standards necessary to implement its new 

system and achieve reforms required by f

management legislation. Currently, USDA’

management goal is to achieve a “clean” o

financial statements for fiscal year 2001. H

correct many of its deeply rooted problem

sustain top management’s commitment an

substantial additional resources devoted t

its accounting and reporting deficiencies. 

USDA is to achieve financial accountabili

fundamentally improve its underlying inte

financial management systems, and opera
Page 34 GAO-01-242 USD

allow for the routine production of accurate

and timely data to support program managem

accountability. 

Key Contact McCoy Williams, Acting Director

Financial Management and Assurance

(202) 512-6906

williamsm1@gao.gov

The Forest Service 

Must Provide the 

Congress and the 

Public With a Clear 

Understanding of 

What It 

Accomplishes With 

Appropriated 

Funds

The Forest Service is at a critical juncture in 

evolution. It is, therefore, important for the a

provide the Congress and the public with a c

understanding of what is being achieved wit

that are being spent. However, we have conc

the Forest Service agrees, that it is still sever

away from attaining this goal.

Accountability is important because the For

is refocusing the mix of its activities, shifting 

producing timber and other goods and servic

restoring and protecting land health and fore

resources. It is also attempting to identify wh

under what circumstances it should restore 

lands through active management rather tha

nature to take its course. These issues are co

and represent significant changes in the agen

mission and funding priorities as well as in it

management approaches. In addition, after t

Service promised to become more accounta

performance, the Congress twice simplified t

budget structure, thus giving the Forest Serv

discretion in deciding where to spend appro

funds. However, in neither instance did the a

its promise.

We have observed that, to provide the Congr

public with a better understanding of what it 
Page 35 GAO-01-242 U

accomplishes with appropriated funds, th

Service will need to link its budget and or

structures as well as its allocation criteria

and performance measures to its strategic 

objectives, and strategies. The agency has

months, completed several actions and be

improve performance accountability. For e

revised its strategic plan, prepared under 

Act, to better focus on outcomes and resu

achieved over time and to better link strat

objectives to long-term measures and 5-ye

The agency also plans to (1) implement a 

process for fiscal year 2003 to better link 

priorities, needs, and capabilities to the st

and (2) base instructions for formulating 

program budgets on the annual performan

required under the Results Act.

Despite these efforts, the Forest Service d

to be fully committed to making performa

accountability one of its top priorities, an

hurdles to achieving performance account

For instance, we have recommended that 

revise its planning regulations to require t

forests to clearly link their plans to the Fo

strategic goals, objectives, and strategies. 

November 9, 2000, the agency promulgate

planning regulations that merely require t

strategic plan be “considered” in managin

forests, not that forest plans be clearly lin

strategic plan. In addition, the agency has 

replace its existing organizational structu

that is better linked to its strategic goals a

or to the way that work is routinely accom

national forests. As a result, the national f

continue to combine projects and activitie

multiple programs to address issues and p

such as reducing the risk of catastrophic w

communities and natural resources—that 

aligned with the Forest Service’s organiza
Page 36 GAO-01-242 USD

structure. Moreover, to date, the agency has 

developed new annual performance measure

improved existing ones to better align them 

strategic goals and objectives and its long-te

measures and activities.

We believe that the Congress could provide a

to the Forest Service to become more accou

its performance by requiring that any further 

to the agency’s budget coincide with actions 

Forest Service to correct remaining performa

deficiencies. The Congress could also help to 

the process by requiring that the agency dev

schedule to implement these actions.

Key Contact Barry T. Hill, Director

Natural Resources and Environment

(202) 512-3841

Hillb@gao.gov

Problems Persist in 

Processing 

Discrimination 

Complaints

USDA’s civil rights program has long been tr

variety of problems and internal discord. Th

of Agriculture has acknowledged that the civ

program is in serious need of repair and has 

rights a top priority. However, while some pr

been made in addressing identified weakness

the problems are intransigent, and civil right

to be a serious management challenge at US

In December 1996, in response to allegations 

discrimination at USDA, the Secretary appoi

Civil Rights Action Team to review civil right

develop recommendations, as appropriate. T

resulting report described serious problems 

rights program and made 92 recommendatio

address the problems. Since then, we and US

of Inspector General have issued reports wit
Page 37 GAO-01-242 U

recommendations concerning ongoing pro

employment and program discrimination. 

January 1999, we reported that despite eff

discrimination complaints more expeditio

was not processing these complaints in a t

As a result, USDA was failing to comply w

regulations that affect the livelihood and w

individuals who believe they have been di

against. We made recommendations aimed 

a number of long-standing problems that w

USDA’s efforts to improve its processing t

These problems included

• continuing human capital issues relati

management turnover and reorganizat

Office of Civil Rights;

• inadequate staff and managerial exper

• a lack of clear, up-to-date guidance and 

and

• poor working relationships and comm

within the Office of Civil Rights and be

office and other USDA entities.

The human capital problems in USDA’s Of

Rights can be seen as part of a broader pat

capital shortcomings that have eroded mi

capabilities across the federal governmen

High-Risk Series: An Update (GAO-01-263, 

for a discussion of human capital as a new

governmentwide high-risk area.

The Inspector General has issued seven e

the Department’s civil rights program sinc

1997. The most recent evaluation, issued i

6

Office of Civil Rights: Management of Employment 

(60801-3-Hq) and Office of Civil Rights: Status of the 

of Recommendations Made in Prior Evaluations of P

Complaints (60801-4-Hq).
Page 38 GAO-01-242 USD

reported that, among other things, many of th

General’s prior recommendations had not be

upon. The Inspector General also reported th

Office of Civil Rights’ employment discrimin

database was unreliable, its case files were c

it continued to be inefficient in processing p

complaints. In testimony before the Senate A

Committee in September 2000, we noted tha

not fully implemented any of our recommen

Subsequent to our testimony, the Secretary s

while USDA had made progress in addressin

problems, more needed to be done. In that r

October 2000, USDA published a long-term 

improvement plan, and the Secretary announ

the Department had hired three firms to go i

USDA field offices with high volumes of disc

complaints to determine why the complaints 

to identify factors that contribute to discrim
Page 39 GAO-01-242 U

Key Contact Lawrence J. Dyckman, Director

Natural Resources and Environment

(202) 512-3841

dyckmanl@gao.gov
Page 40 GAO-01-242 U

Improving USDA’s 

Farm Loan 

Programs 

Farm Service Agency: Updated Status of t

Multibillion-Dollar Farm Loan Program (G

Jan. 10, 2001)

Performance and Accountability Series: M

Management Challenges and Program Ris

(GAO/OCG-99-2, Jan. 1999).

Farm Service Agency: Information on Far

Losses (GAO/RCED-99-18, Nov. 27, 1998).

Farm Service Agency: Status of Farm Loan 

the Use of Three Contracting Provisions f

Servicing (GAO/RCED-98-141, May 5, 1998

High-Risk Series: Quick Reference Guide (

Feb. 1997).

Farm Loans: Information on the Status of 

Portfolio (GAO/T-RCED-97-78, Feb. 21, 19

High-Risk Series: Quick Reference Guide (

Feb. 1995).

High-Risk Series: Farmers Home Adminis

Loan Programs (GAO/HR-93-1, Dec. 1992)

Improving the 

Delivery of 

Services to 

Farmers

U.S. Department of Agriculture: State Offi

(GAO/RCED-00-208R, June 30, 2000).

USDA Reorganization: Progress Mixed in 

the Delivery of Services (GAO/RCED-00-4

2000).

U.S. Department of Agriculture: Administ

Streamlining Is Expected to Continue Thr

(GAO/RCED-99-34, Dec. 11, 1998).
Page 41 GAO-01-242 U

U.S. Department of Agriculture: Status of 

Consolidating County Offices (GAO/T-RC

July 29, 1998).

Farm Programs: Service to Farmers Will L

as Farm Service Agency Continues to Red

Close Offices (GAO/RCED-98-136, May 1, 

Farm Programs: Administrative Requirem

and Further Program Delivery Changes Po

(GAO/RCED-98-98, Apr. 20, 1998).

Farm Programs: Impact of the 1996 Farm 

Office Workload (GAO/RCED-97-214, Aug

Maintaining Food 

Assistance Program 

Integrity

Food Assistance: Reducing the Trafficking 

Stamp Benefits (GAO/RCED-00-250, July 

Food Stamp Program: Better Use of Elect

Could Result in Disqualifying More Recipi

Traffic Benefits (GAO/RCED-00-61, Mar. 7

Food Assistance: Efforts to Control Fraud 

the Child and Adult Care Food Program S

Strengthened (GAO/RCED-00-12, Nov. 29, 

Food Stamp Program: Storeowners Seldo

Financial Penalties Owed for Program Vio

(GAO/RCED-99-91, May 11, 1999).

Minimizing 

Foodborne 

Illnesses 

Food Safety: Overview of Food Safety and 

Service and Food and Drug Administratio

Expenditures (GAO/T-RCED-00-300, Sept. 

Food Irradiation: Available Research Indic

Benefits Outweigh Risks (GAO/RCED-00-

2000).
Page 42 GAO-01-242 USD

Food Safety: Actions Needed by USDA and F

Ensure That Companies Promptly Carry Out 

(GAO/RCED-00-195, Aug. 17, 2000).

Food Safety: U.S. Needs a Single Agency to A

Unified, Risk-Based Inspection System

(GAO/T-RCED-99-256, Aug. 4, 1999).

Food Safety: Opportunities to Redirect Fede

Resources and Funds Can Enhance Effective

(GAO/RCED-98-224, Aug. 6, 1998).

Food Safety: Federal Efforts to Ensure the S

Imported Foods Are Inconsistent and Unreli

(GAO/RCED-98-103, Apr. 30, 1998).

Food Safety: Fundamental Changes Needed 

the Nation’s Food Safety System (GAO/T-RC

Oct. 8, 1997).

Strengthening 

USDA’s Information 

Security 

Information Security: USDA Needs to Implem

Departmentwide Information Security Plan

(GAO/AIMD-00-217, Aug. 10, 2000).

USDA Information Security: Weaknesses at N

Finance Center Increase Risk of Fraud, Misu

Improper Disclosure (GAO/AIMD-99-227, Jul

Enhancing USDA’s 

Ability to Account 

for Its Financial 

Activities

Financial Management: Impact of RUS’ Elec

Restructurings (GAO/AIMD-00-288, Sept. 29, 

Financial Management: USDA Continues to F

Financial Management Challenges (GAO/T-A

Sept. 27, 2000).
Page 43 GAO-01-242 U

Credit Reform: Improving Rural Developm

Program Cost Estimates (GAO/AIMD-00-2

2000).

Financial Management: USDA Faces Majo

Management Challenges (GAO/T-AIMD-00

2000).

Improving 

Performance 

Accountability at 

the Forest Service 

Forest Service: Actions Needed for the Ag

Become More Accountable for Its Perform

(GAO/T-RCED-00-236, June 29, 2000).

Forest Service: Status of Efforts to Impro

Accountability (GAO/T-RCED/AIMD-00-93

2000).

Forest Service: A Framework for Improvi

Accountability (GAO/RCED/AIMD-00-2, O

High-Risk Series: An Update (GAO/HR-99

Improving the 

Efficiency of 

USDA’s Civil Rights 

Office

U.S. Department of Agriculture: Problems 

Discrimination Complaints (GAO/T-RCED

Sept. 12, 2000).

U.S. Department of Agriculture: Problems 

Hinder the Timely Processing of Discrimin

Complaints (GAO/RCED-99-38, Jan. 29, 19
Page 44 GAO-01-242 U

Major Management Challenges and Progr

Governmentwide Perspective (GAO-01-24

Major Management Challenges and Progr

Department of Agriculture (GAO-01-242)

Major Management Challenges and Progr

Department of Commerce (GAO-01-243)

Major Management Challenges and Progr

Department of Defense (GAO-01-244)

Major Management Challenges and Progr

Department of Education (GAO-01-245)

Major Management Challenges and Progr

Department of Energy (GAO-01-246)

Major Management Challenges and Progr

Department of Health and Human Service

(GAO-01-247)

Major Management Challenges and Progr

Department of Housing and Urban Develo

(GAO-01-248)

Major Management Challenges and Progr

Department of the Interior (GAO-01-249)

Major Management Challenges and Progr

Department of Justice (GAO-01-250)

Major Management Challenges and Progr

Department of Labor (GAO-01-251)

Major Management Challenges and Progr

Department of State (GAO-01-252)
Page 45 GAO-01-242 U

Major Management Challenges and Progr

Department of Transportation (GAO-01-25

Major Management Challenges and Progr

Department of the Treasury (GAO-01-254)

Major Management Challenges and Progr

Department of Veterans Affairs (GAO-01-2

Major Management Challenges and Progr

Agency for International Development (G

Major Management Challenges and Progr

Environmental Protection Agency (GAO-0

Major Management Challenges and Progr

National Aeronautics and Space Administ

(GAO-01-258)

Major Management Challenges and Progr

Nuclear Regulatory Commission (GAO-01

Major Management Challenges and Progr

Small Business Administration (GAO-01-2

Major Management Challenges and Progr

Social Security Administration (GAO-01-2

Major Management Challenges and Progr

U.S. Postal Service (GAO-01-262)

High-Risk Series: An Update (GAO-01-263
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