Summary: GAO conducted an audit of revenue producing water resources development projects of the Bureau of Reclamation Department of the Interior, and the Corps of Engineers (Civil Functions), Department of the Army, in the Central Valley basin, California, for the fiscal year 1960. We reviewed the basic laws authorizing the activities and the pertinent legislative history to ascertain the purposes of the activities and their intended scope. We ascertained the policies and procedures adopted by the Bureau and the Corps and examined into their adequacy and effectiveness. We examined selected transactions to the extent we deemed appropriate and with due regard for the nature and volume of transactions and the effectiveness of- internal control including internal audits. Our audit was conducted at the Sacramento, California, regional office of the Bureau of Reclamation and the Sacramento, California, district office of the Corps of Engineers.
Our review disclosed that major accounting deficiencies of the Bureau of Reclamation and the Corps of Engineers which have existed for several years have not been corrected. Because of these deficiencies, it is our opinion that the financial statements included in this report do not present fairly the financial position of revenue-producing projects at June 30, 1960, and the financial results of operations for the fiscal year then ended. We also found that payments awarded by the Court of Claims in settlement of claims resulting from construction and operation of Bureau of Reclamation projects are not recorded as project costs. In addition, we found that corrective action has been taken an several of the findings and recommendations included in our prior reports, but that some of our prior findings have not been satisfactorily resolved. Settlement claim costs, incurred by the Government in the Court of Claims for judgments against the Bureau of Reclamation because of project construction and operation, are not recorded as a cost of the Central Valley Project. At June 30, 1960, about $688,000 had been paid to satisfy these claims. We believe that these costs should be recorded in the project accounts and be considered reimbursable to the same extent as any other project costs.
