Study: FAA Mismanages Money

THE DAILY FED

Study: FAA Mismanages Money

The Federal Aviation Administration must substantially reduce its personnel costs and improve its cost-accounting system, an independent audit of the agency has concluded.

Coopers & Lybrand L.L.P., an accounting firm directed by Congress to analyze the FAA's financial management, found that "the lack of detailed cost-accounting information . . . makes it all but impossible to analyze detailed information regarding which projects, which operations or which investments make the most sense," according to a report in The Washington Post. "The FAA's core program managers have not demonstrated an understanding of financial management."

The study emphasized the need to reduce the FAA's personnel costs, which are on the rise, calling pay and benefits "the FAA's most significant cost element."

The study also criticized the FAA's five-year budget plan, which the accounting firm said projected no improvements to the agency's financial status. The firm recommended giving the agency greater flexibility to pursue reform, which has been stunted by yearly budget battles with Congress, the study said.

The FAA applauded that recommendation, saying it would use such flexibility "operate in more businesslike and efficient way."

While Coopers & Lybrand credited FAA managers with attempting reform, their audit found no evidence that personnel, financial management, procurement and travel reforms produced any results.