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Friday, May 04, 2007

CFO plans to fix Homeland Security’s financial management by 2009

The Homeland Security Department has a plan for repairing its dysfunctional financial management by 2009.

In a new document, the department said it will hire more staff, adopt common processes and operating standards, clarify roles and responsibilities of financial staffs, and direct the Coast Guard to use a better financial management system that is now in use by the Transportation Security Administration.

The department ranks as one of the worst-managed agencies in the federal government in terms of its accounting and financial practices. It has been repeatedly criticized for being unable to pass audits and properly track and manage funds, property, equipment and accounting.

The plan prepared in March by the office of chief financial officer David Norquist, called “The Internal Controls Over Financial Reporting Playbook,’’ identifies nine problems at Homeland Security and lays out corrective actions for each. The report does not estimate how much the solutions will cost. As part of its plan, the department will develop draft financial statements for the third and fourth quarters of this fiscal year as a “dry test run” of its standardized financial reporting process. The test runs are intended to help Homeland Security adopt internal controls for the year-end financial reporting process, which will begin in September.

The report says the Coast Guard’s financial reporting system is severely flawed and its processes for recording accounting estimates and drafting financial statements are labor intensive and complex. It calls for the Coast Guard to start using TSA’s system.

Homeland Security is still considering whether to combine some of its eight core financial systems or use systems from other agencies, a department spokesman said.

The department had previously tried to consolidate its financial management systems under a project called eMerge2. That effort failed in 2005 after costing $18 million. Norquist halted efforts to combine systems so the Homeland Security could study whether the benefits were worthwhile.

-Stephen Losey, FederalTimes.com

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