NASA's finances in a cosmic mess

As NASA sets course for the moon and Mars, the space agency's finances are being reported to be in serious disarray.

    Glaring inconsistencies have been found in NASA's accounts

    Auditors from accounting firm PriceWaterhouseCoopers say NASA's problems stem from significant errors in its latest financial statements and inadequate documentation for $565 billion posted to its accounts.

    In a scathing report on NASA's financial statement, the audit firm accused the space agency of one of the cardinal sins of the accounting world: failing to record its own costs properly.

    There were hundreds of millions of dollars of "unreconciled" funds and a $2 billion difference between what NASA said it had and what was actually in its accounts, which are held by the Treasury Department, PriceWaterhouseCoopers said in its report.

    "The documentation NASA provided in support of its September 30, 2003, financial statements was not adequate to support $565 billion in adjustments to various financial statement accounts," the auditor said. It also noted "significant errors" in financial statements provided by NASA.

    "They have weak controls and problems with their internal system and that would make them vulnerable to financial fraud, although we don't have that evidence yet," said Gregory Kutz, a director in the General Accounting Office, which is looking into NASA's accounting issues.

    Cultural problem

    With a current annual budget of $16.2 billion, NASA's priorities include an ambitious multi-year mission to the moon and possibly Mars, finishing construction on the International Space Station and returning the grounded shuttle fleet to flight after the 2003 Columbia disaster.

    "They have weak controls and problems with their internal system and that would make them vulnerable
    to financial fraud"

    Gregory Kutz,
    co-director, General
    Accounting Office

    The independent investigation of the Columbia accident, in which seven astronauts died, found NASA's culture at fault.

    The same spirit that fuelled the early boom in space exploration in the 1950s evolved into separate parts of a sprawling agency working independently rather than cooperatively.

    The same independent path extends to NASA's financial accounting, officials say.

    Cinager said he was hopeful that NASA's culture would change, noting a new "willingness of all of the constituencies in the agency to introspectively look at how can they improve the way they are doing their specific duties."

    But Shyam Sundar, a professor in accounting with Yale School of Management, described the event as "a big mess," after seeing the auditor's report.

    "If NASA would have been a public company, the management would have been fired by now," he said.

    SOURCE: Reuters


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