Federal agencies' annual urge to hurry up and spend money at the end of the fiscal year has been curtailed by budget cuts and procurement changes, but assessing actual patterns of spending is difficult because of unreliable data, the General Accounting Office has concluded.
"Our work and that of others indicates that today there are more safeguards against unplanned year-end spending, and in most discretionary programs, fewer resources available for low-priority purchases," according to the report, "Year-End Spending: Reforms Underway but Better Reporting and Oversight Needed" (AIMD-98-185).
In 1980, a Senate subcommittee held hearings on the last-minute spending issue and concluded that the rush to obligate expiring funds before the end of the fiscal year frequently resulted in a lack of competition, poorly defined statements of work, inadequately negotiated contracts and the procurement of low-priority items or services. GAO agreed to monitor the situation.
GAO found that some improper spending still occurs, but not nearly as much as 18 years ago. Cuts in agencies' procurement budgets have reduced the opportunity to spend money quickly at year-end. Funding for operating expenses like personnel and equipment costs continue to decline as a share of total spending, GAO noted. In addition, the study found that federal spending is increasingly made up of direct payments to individuals or grants to states which are not subject to year-end pressures.
The advent of open competition for contracts and improved agency procurement planning has also helped suppress the year-end spending urge. Out of more than 3,200 inspector general reports GAO reviewed for its report, only one identified a relationship between poor contracting practices and the need to spend funds quickly at year-end.
Still, GAO said, incomplete agency reporting of budget data has led to unreliable spending figures. For example, GAO was unable to determine whether agencies obligated funds at a higher rate in the fourth quarter of 1997 than in previous quarters. Of the 1,054 department and agency treasury accounts reviewed by GAO, 332 of them showed no information for the first quarter of 1997.
These reporting problems indicate broader financial management concerns, GAO said.
"Agencies' unreliable reporting and reconciliation of budget data mirrors problems with other financial information found in the first audit of the federal government's consolidated financial statements," the report said.
For example, GAO found that agencies reported hundreds of billions of dollars in assets that were not supported by financial records.
To improve oversight of agencies' spending, GAO recommended that OMB reemphasize compliance with OMB Circular A-34, which requires that agencies provide quarterly data no later than 20 days after the close of a calendar quarter.
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