The U.S. Merchant Marine Academy (Academy), a component of the Department of Transportation's Maritime Administration (MARAD), is one of five U.S. service academies. The Academy is affiliated with 14 nonappropriated fund instrumentalities (NAFI) and two foundations. The US Government Accountability Office (GAO) was asked to determine whether there (1) were any potentially improper or questionable sources and uses of funds by the Academy, including transactions with its affiliated organizations; (2) was an effective control environment with key controls in place over the Academy's sources and uses of funds; and (3) were any actions taken, under way, or planned to improve controls and accountability. GAO analyzed selected transactions from fiscal years 2006, 2007, and 2008 to identify improper or questionable sources and uses of funds and reviewed documents and interviewed cognizant officials to assess the Academy's internal controls, and identify corrective actions to improve controls. GAO makes a series of recommendations directed at improving internal controls and accountability at the Academy and to address issues surrounding the improper and questionable sources and uses of funds. The Department commented that MARAD will produce a comprehensive strategy and corrective action plan to address GAO's recommendations. Appended are: (1) Objectives, Scope, and Methodology; (2) Department of Transportation, MARAD, Academy, and Affiliated Organization Relationships; (3) Academy Expenses by Category, Fiscal Years 2006 and 2007; (4) The Antideficiency Act; (5) Comments from the Department of Transportation; and (6) GAO Contact and Staff Acknowledgments. (Contains 7 tables and 1 figure.)