That’s One Colossal Rounding Error: NASA Makes $590 Million Accounting Mistake

Committee on Science

F. James Sensenbrenner, Jr., Chairman

Ralph M. Hall, Texas, Ranking Democrat

www.house.gov/science/welcome.htm

July 6, 2000

Press Contact:

Jeff Lungren (Jeff.Lungren@mail.house.gov)

(202) 225-4275

That’s One Colossal Rounding Error: NASA Makes $590 Million Accounting Mistake
Sensenbrenner Requests Complete Explanation for Error

WASHINGTON, D.C. – House Science Committee Chairman F. James Sensenbrenner,
Jr., (R-WI) today sent a letter to NASA Administrator Dan Goldin requesting
NASA accurately account for its financial resources after NASA was forced to
admit a $590 million mistake in its 1999 Financial Accountability Report.
The error, detected by the House Science Committee, went unnoticed by
auditors at Arthur Andersen LLP, the independent accounting firm hired to
examine the space agency’s financial books.

Chairman Sensenbrenner commented, “I’m deeply disappointed that the agency
that could send a man to the moon now can’t even balance its books to the
nearest half-billion. Inattention to details such as using English or
metric units, or making $590 million accounting errors indicate significant
management problems continue to bedevil NASA.”

The annual Financial Accountability Report summarizes NASA’s stewardship
over budget and financial resources. NASA’s Chief Financial Officer Arnold
G. Holz calls the report, “a culmination of NASA’s management process.”

Chairman Sensenbrenner’s letter requests, “a complete explanation, in
writing, for why NASA and its auditors failed to catch the errors made and
the actions being taken to ensure that NASA has adequate controls in place
to accurately track, manage, and report its financial resources.”

Chairman Sensenbrenner’s letter is attached.

106-142

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July 6, 2000

The Honorable Daniel S. Goldin

Administrator

National Aeronautics and Space Administration

Washington, DC 20546

Dear Mr. Goldin:

As you know, NASA’s budget is the largest of all the independent agencies of
the federal government and management of such a large and diverse enterprise
is clearly a challenge. Nevertheless, the American taxpayers expect NASA to
properly manage and accurately account for the funds entrusted to it.

Unfortunately, it has come to my attention that NASA has erroneously
reported the financial status of its program. Specifically, NASA’s 1999
Financial Accountability Report contains a $590 million error that went
undetected by NASA accountants and its auditors at Arthur Andersen LLP.
Further, the amounts reported on the SF133 Budget Execution Report were
incorrect. On June 12, NASA provided a written explanation admitting that
these error were made. This regrettable circumstance brings into question
the overall integrity of NASA’s financial management system.

I am not satisfied that the committee has received a full explanation for
these mistakes. I would like NASA to provide the committee with a complete
explanation, in writing, for why NASA and its auditors failed to catch the
errors made and the actions being taken to ensure that NASA has adequate
controls in place to accurately track, manage, and report its financial
resources. Finally, I would like NASA to provide a complete and accurate
accounting of its financial resources for the years FY97, FY98, and FY99.

Sincerely,

F. JAMES SENSENBRENNER, JR.

Chairman

FJS/wba