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GAO: Kings Point academy needs more controls

The U.S. Merchant Marine Academy in Kings Point

The U.S. Merchant Marine Academy in Kings Point celebrates its Seventy-sixth Commencement Exercises. (June 18, 2012) Credit: Alejandra Villa

The U.S. Merchant Marine Academy in Kings Point has taken steps to correct financial improprieties discovered in a 2009 audit, but still must establish a system to detect fraud and misuse of funds, a U.S. Government Accountability Office report said.

Released Friday, the GAO report is a follow-up to a 2009 probe that discovered the school had overcharged students on fees, had inadequate financial reporting measures and handled money in violation of federal standards.

The 2009 report made 47 recommendations, such as establishing the fees that can be collected from students. The academy has resolved 32 of the recommendations.

The Department of Transportation, whose Maritime Administration oversees the academy, said the school has refunded 99 percent of the $8.1 million in overcharged midshipmen fees, is installing a new management team -- including a new superintendent -- and plans to fulfill the remaining recommendations by the end of the year, spokeswoman Lori Irving said.

But the most complex recommendation -- establishing and monitoring an internal system to detect errors -- has not been resolved.

"Once the people, policies, and processes are all in place, we will ensure that a comprehensive system of internal controls has been established," Brodi Fontenot, the Transportation Department's deputy assistant secretary for administration, wrote in response to Friday's report.

The latest report makes one more recommendation, calling on the academy to create a capital-improvement plan detailing construction projects, long-term costs and a phased plan to address needs. Irving said such a plan has been established.

"The Maritime Administration completely supports the recommendations provided by the GAO team," she said.

In May, Department of Transportation's inspector general released an audit of the academy saying network security lacked proper controls, didn't conform with agency policy and that "USMMA data, including [personally identifiable information], is at high risk of exposure to hackers."

The academy made several improvements, though not all recommendations made in the report have been satisfied.

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