Subcommittees Hold Oversight Hearing To Examine Audit Of NASA's Financial Operations

Press Release

The House Committee on Science and Technology's Subcommittee on Investigations and Oversight and Subcommittee on Space and Aeronautics held a joint hearing to examine the recent results of the independent Fiscal Year 2009 audit of financial operations at the National Aeronautics and Space Administration.

"It only took about half as long to get to the moon as it has taken to clean up NASA's financial performance, but three tries, hundreds of millions of dollars and the hard work of many NASA employees later they have shown definite improvement," said Subcommittee Chairman Brad Miller (D-NC).

"I feel the responsibility of ensuring that NASA is a good steward of the resources they are given--resources which ultimately come from the American taxpayers," said Subcommittee Chairwoman Gabrielle Giffords (D-AZ).

All federal agencies are required to obtain a yearly audit of their consolidated financial statements from independent auditing firms. NASA received the report of Ernst & Young evaluating the Fiscal Year 2009 (FY09) financial statements on November 13, 2009 constituting a "disclaimed opinion," which means that the auditing firm finds a material weakness in the accounting processes of the agency so severe that they cannot reliably verify the agency's financial accounts. This is the seventh disclaimed opinion the agency has received in a row, there was only one material weakness with FY09 audit, compared to multiple in years passed. The material weakness in FY09 audit were due to NASA's inability to meet accounting requirements by setting an asset value on the Shuttle and Space Station programs.

"While any material weakness is disappointing, we have come a long way from the days when NASA could not say with confidence who had spent money on what, when," said Miller. "We are no longer talking about NASA accountants fixing records by arbitrarily making adjustments to accounts on the order of billions of dollars. In short, this is the best disclaimed opinion an agency could hope for."

"We need to know why NASA got a disclaimed opinion, how NASA can get a clean opinion, and what NASA intends to do to ensure that it won't get another disclaimer next year, and that's why we held this hearing," said Giffords.

Members and witnesses discussed a path forward for NASA to continue to improve its financial control and accounting system. NASA received guidance in October from the Federal Accounting Standards Advisory Board on how to value the Shuttle and Station using estimates of value, which could help the agency resolve the material weakness by producing an asset value on the shuttle and Space Station for the next audit.

The FY09 audit report also cited significant deficiencies in two areas: the agency's method for estimating its liabilities for environmental cleanup; and the financial management system is not in substantial compliance with the Federal Financial Managers Integrity Act (FFMIA).

Members expressed their hope that the agency would receive a clean opinion next year and resolve the deficiencies before the next audit.

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