The Government Accountability Office said in its report to the Senate and House appropriations committee chairmen that the U.S. Merchant Marine Academy at Kings Point, N.Y., had 'numerous breakdowns in its stewardship responsibilities with respect to maintaining accountability over the receipt and use of funds.'
The academy is a component of the Transportation Department's Maritime Administration and one of five U.S. service academies. The school is affiliated with 14 non-appropriated fund instrumentalities and two foundations.
The GAO specifically identified questionable midshipmen fee transactions related to:
' Fee collections and uses of fees unrelated to goods and services provided to all midshipmen.
' Fee collections that exceeded the actual expense to the academy for the goods and services.
' Use of accumulated excess midshipmen fees for improper and questionable purposes.
The GAO blamed the 'root causes' for the academy's inability to detect the problems on the 'lack of awareness or support for strong internal control and accountability across the academy at all levels and risks.'
The GAO acknowledged that the academy has recently taken actions to improve its internal controls by establishing a permanent assistant chief financial officer in March with direct reporting responsibility to MarAd's CFO.
'This action provides a senior financial official at the academy with authority to conduct needed oversight and monitoring of financial activities on a real time basis,' the GAO said.
However, the GAO said 'much more needs to be done' by MarAd and the academy, 'including determining the amount of midshipmen fees that were used to cover official academy expenses, performing a comprehensive analysis of the risks posed by the academy's organizational structure and its relationships with it affiliated organizations, and establishing and implementing policies, procedures, and internal controls over many academy activities.'
The DOT said MarAd will develop a 'comprehensive strategy and corrective action plan' to address the GAO's recommendations.
