Tuesday, July 31, 2007
Through the Improved Credit Management Initiative, agencies will strengthen how they award and service Federal loans, manage their portfolios, and collect debt. The Federal Government is one of the world’s largest lenders. It had $251 billion in direct loans outstanding and over $1.1 trillion in loan guarantees as of the end of fiscal year 2006. This initiative is supported by the Federal Credit Council, consisting of representatives from the Departments of Agriculture, Education, Housing and Urban Development, Treasury, and Veterans Affairs, and the Small Business Administration.
Overall, agencies’ performance in implementing the President’s Management Agenda this quarter was uneven with 13 downgrades and 9 upgrades in status.
The latest scorecard can be found at: http://www.whitehouse.gov/results/agenda/fy07q3_scorecard.pdf.
Friday, July 27, 2007
The July 2007 revision of Government Auditing Standards supersedes the 2003 revision and updates the January 2007 revision. This revision contains the January 2007 revision plus updated quality control and peer review sections in chapter 3 which were exposed in January 2007. The July 2007 revision represents the completed 2007 revision of Government Auditing Standards, and is the version that should be used by government auditors until further updates and revisions are made.
An electronic version of this document can be accessed on GAO’s Yellow Book Web
page at http://www.gao.gov/govaud/ybk01.htm .
Thursday, July 26, 2007
Leonard Olijar - Associate Director and Chief Financial Officer
Four cents to make a one dollar bill. Seven cents to make a note of a higher denomination. But that's just the start of the money trail at the Bureau of Engraving and Printing. Associate Director and Chief Financial Officer Leonard Olijar says every year the bureau's budget is expanding as more technology comes into play and additional safeguards are added to the nation's paper currency. As part of the effort to make sure the agency that prints the money is getting taxpayers the most bang for their buck, Olijar says the Bureau recently undertook a reorganization to streamline operations and that the effort has now led to a focus on internal controls. Olijar says while the current controls do work, watching the current process is like watching Frankenstein dance.
Wednesday, July 25, 2007
Property Management: Lack of Accountability and Weak Internal Controls Leave NASA Equipment Vulnerable to Loss, Theft, and Misuse.
GAO-07-432, June 25.
Highlights - http://www.gao.gov/highlights/d07432high.pdf
Food and Drug Administration: Methodologies for Identifying and Allocating Costs of Reviewing Medical Device Applications Are Consistent with Federal Cost Accounting Standards, and Staffing Levels for Reviews Have Generally Increased in Recent Years.
GAO-07-882R, June 25.
Long-Term Fiscal Challenge: Additional Transparency and Controls Are Needed, by David M. Walker, comptroller general of the United States, before the House Committee on the Budget.
GAO-07-1144T, July 25.
Inspectors General: Opportunities to Enhance Independence and Accountability, statement for the record by David M. Walker, comptroller general of the United States, before the Senate Committee on Homeland Security and Governmental Affairs.
GAO-07-1089T, July 11.
Highlights - http://www.gao.gov/highlights/d071089thigh.pdf
Nussle, a former House Budget Committee chairman from Iowa slated to replace outgoing OMB chief Rob Portman, said the next budget director must do a better job tackling the “M” in “OMB” by working with Congress on those three issues.
Nussle said he would first focus on replacing more than 50 percent of the federal work force eligible for retirement in the next 10 years. Second, he said he would work to put better controls on financial management to ensure that wasteful spending is kept to a minimum. Third, he will work to keep up with technology advances and how they relate to government.
-Amy Doolittle, FederalTimes.com
GovWorks, a Department of the Interior franchise fund, entered into four contracts on behalf of the Department of Defense (DOD). With one exception, the Military Interdepartmental Purchase Requests (MIPRs) used to finance these contracts did not identify the specific items or services that DOD wanted GovWorks to acquire on its behalf. Lacking the necessary specificity as to the items or services ordered, these MIPRs did not properly obligate DOD's appropriation. Accordingly, in fiscal year 2005, when GovWorks used these funds for three of the four contracts, GovWorks improperly used prior year funds.
One MIPR, for laser printers, described the goods DOD sought with enough specificity to create a valid interagency agreement and to properly obligate DOD's appropriation. Although the laser printers ordered are a readily available commercial item, GovWorks did not use the funds to execute a contract on DOD's behalf until 17 months after the date of the MIPR, and 11 months after the funds expired.
Because GovWorks did not use the funds within a reasonable time of their receipt, the contract did not fulfill a bona fide need arising during the funds' period of availability.
DOD and GovWorks share responsibility for ensuring the proper use of DOD funds transferred to and "parked" at GovWorks. DOD must adjust its appropriations accounts to record obligations for these four contracts against fiscal year 2005 appropriations. If DOD has insufficient unobligated balances in these appropriations, DOD must report violations of the Antideficiency Act.
To prevent future occurrences of the problems associated with the four contracts, GovWorks should examine its accounts to identify interagency agreements that lack the requisite specificity under the recording statute. For those agreements that do not meet the requirements, GovWorks should return the funds advanced by the ordering agency. GovWorks also should develop internal controls to ensure that it does not accept nonspecific, indefinite orders nor use expired funds to enter into contracts on behalf of the ordering agency.
"We have tried to re-establish the 'M' in OMB," said Sen. George Voinovich, R-Ohio, during a hearing to consider Nussle's nomination. "When I think about that, I think about working harder and smarter and doing more with less, about having the right people with the right skills in the right place, and also [about] being able to recruit, retain and reward."
In his opening statement, Voinovich said he believes he and Nussle are in agreement that "the 'M' in OMB has been forgotten." Nussle, who has extensive but somewhat controversial experience in the budget arena, having served as chairman of the House Budget Committee, made his commitment to the management side of the job clear.
He said that, if confirmed, he would focus on three specific areas of management. The first would be replacing the 60 percent of the federal workforce eligible for retirement in the next 10 years. The second would be keeping up with technology through OMB's e-government office, and the last, focusing on financial management within the agencies.
-Elizabeth Newell, GovExec.com
Tuesday, July 24, 2007
The 154-page Information Technology Management Letter for the fiscal 2006 DHS Financial Statement Audit is a redacted version of an audit of IT control systems in the financial processing environment at DHS.
The weaknesses include “excessive access” to key DHS financial applications, incorrect configurations for security controls for key DHS financial applications and support systems and problems with processes in place for making changes to financial applications. Those change control processes were judged to be inappropriate, ineffective, not fully defined or not followed.
The audit also found numerous other problems, including instances of missing and weak passwords, background checks for contractors not being conducted at three DHS components and work stations configured without security patches.
Still other problems were a lack of IT system security certifications and accreditations, informal procedures and lack of documentation for changes made to financial systems and instances of incompatible functions that led to overrides of IT systems.
DHS Chief Information Officer Scott Charbo and Chief Financial Officer David Norquist agreed with the findings and recommendations, the report states.
- Alice Lipowicz, WashingtonTechnology.com
Monday, July 23, 2007
Federal Farm Programs: USDA Needs to Strengthen Controls to Prevent Improper Payments to Estates and Deceased Individuals. GAO-07-818, July 9.
Highlights - http://www.gao.gov/highlights/d07818high.pdf
Federal Real Property: DHS Has Made Progress, but Additional Actions Are Needed to Address Real Property Management and Security Challenges.
GAO-07-658, June 22.
Highlights - http://www.gao.gov/highlights/d07658high.pdf
Hanford Waste Treatment Plant: Department of Energy Needs to Strengthen Controls over Contractor Payments and Project Assets.
GAO-07-888, July 20
Highlights - http://www.gao.gov/highlights/d07888high.pdf
Financial Audit: Significant Internal Control Weaknesses Remain in the Preparation of the Consolidated Financial Statements of the U.S. Government.
GAO-07-805, July 23.
Highlights - http://www.gao.gov/highlights/d07805high.pdf
Washington, July 18, 2007 – Agriculture Secretary Mike Johanns today announced the appointment of Charles R. Christopherson, Jr. as the USDA Chief Information Officer (CIO). Christopherson currently serves as the Chief Financial Officer (CFO) for the Department of Agriculture, a role which he will retain. As CIO, Christopherson will be responsible for the effective implementation and management of technology solutions to support USDA's programs in a cost-effective and citizen-centered manner.
Christopherson was confirmed as the USDA Chief Financial Officer by the Senate on November 10, 2005. The CIO role does not require Senate confirmation. He is responsible for overseeing financial management activities and systems within the department. Christopherson has successfully led several joint initiatives between the Offices of the CFO and CIO. Christopherson will be supported by Patricia Healy, the Deputy CFO, and Jerry E. Williams, the Deputy CIO.
The reports summarize program, management and financial performance information, and basically show taxpayers what they are getting for their bucks. The Nov. 15 deadline is 45 days after the close of the fiscal year.
But those annual sessions are coming to an end for Combs, one of the key players in the government's efforts to improve its financial management and help federal agencies obtain clean audit opinions. She is retiring Aug. 10 and returning to her home state, North Carolina.
Combs has served in three Republican administrations (Reagan and both Bushes) and held five Senate-confirmed appointments, stringing together a career in federal management that has spanned more than 25 years.
Since 2001, she has worked in the current administration as chief financial officer at the Environmental Protection Agency, chief financial officer at the Transportation Department and controller at the OMB, in charge of government-wide financial management policies.
On her watch as controller, Combs has worked with agencies to reduce improper payments by more than $8 billion, produced the first complete government-wide real property inventory in modern times, and issued new financial-control guidelines so that federal agencies can meet the equivalent of the Sarbanes-Oxley rules for the private sector.
At the OMB, Combs cut the time for agencies to submit their annual audit reports from five months to 45 days. She also has seen the number of federal agencies receiving clean audit opinions increase from six in 1996 to 19 in 2006.
Managerial Cost Accounting Practices: Implementation and Use Vary Widely across 10 Federal Agencies.
GAO-07-679, July 20
Highlights - http://www.gao.gov/highlights/d07679high.pdf
Friday, July 20, 2007
Paul Brinkley - Deputy Under Secretary of Defense for Business Transformation
Building and maintaining the most efficient fighting force possible goes beyond weaponry and strategy. Deputy Under Secretary Brinkley says it also requires smart, transparent business processes. As part of this effort, Brinkley has been assigned to lead the Task Force for Business and Stability Operations in Iraq. His primary focus has been on the Pentagon's efforts to help reinvigorate the Iraqi industrial sector, making sure the financing in place is getting results. Brinkley says that's no small job when you consider that almost every time an industrial facility is restarted and Iraqis start going back to work, the level of violence goes down. Another challenge facing the task force has been to find markets for Iraqi products.
Monday, July 16, 2007
We know the alphabet soup of efforts that have come our way over the past 25 years related to financial management reform, from 1982’s Federal Managers Financial Integrity Act (FMFIA) to 2002’s Improper Payments Act, and a host of others in between. OMB’s most recent revision to A-123 adds a requirement that agency heads provide a separate assurance on the effectiveness of the agency’s internal control over financial reporting — the so-called Appendix A.
Like many federal agencies, the National Science Foundation had in place a “bottoms-up” internal control review process and a Management Controls Committee to comply with FMFIA. Over time, the weaknesses of a bottoms-up approach became apparent: If scrupulously followed, virtually all internal controls will be identified, tested and evaluated regardless of their importance; and if not scrupulously followed, key internal controls can be overlooked or incorrectly assessed, leaving potentially serious risks unidentified or unmitigated. The bottoms-up approach resulted in reduced efficiency and the risk of diminished effectiveness.
Appendix A prescribes a “top-down” approach, starting with financial statements, for the evaluation of internal controls over financial reporting. The top-down approach allows an agency to focus only on those internal controls that satisfy the financial reporting assertions and to assure reliable financial reporting.
[In FY2006] NSF set a three-year course to identify and document business processes and the controls over those processes, assess their risk and test the key controls in those processes.
In fiscal 2008, NSF expects to have an internal control system that meets all the requirements of the revised A-123 guidance. But the task doesn’t end there. Agencies must continually examine their internal control structure to ensure they stay updated with changing conditions. So, in the end, while A-123 may have a familiar ring, we all need to see it as a wake-up call.
-Thomas N. Cooley, FederalTimes.com
Thomas N. Cooley is director of the Office of Budget, Finance and Award Management and the chief financial officer at the National Science Foundation. In March, he was awarded the Donald L. Scantlebury Memorial Award for distinguished leadership in federal financial management.
If failure brings an organization one step closer to success, the Office of Personnel Management is nearer to achieving its goal of outsourcing the agency’s financial management operations. OPM signed an outsourcing agreement with a government service provider in 2005 that it later canceled after both parties realized the arrangement was not going to work.
Now OPM is preparing to issue a new solicitation for financial management services. Later this month, it will ask government and commercial financial services providers for information about their capabilities before soliciting bids in the fall.
OPM officials said lessons they learned from their initial outsourcing attempt could be helpful to other agencies. All federal agencies are required to move to a public or private shared services provider under the Office of Management and Budget’s Financial Management Line of Business consolidation initiative. Its purpose is to enable agencies to more efficiently and uniformly account for taxpayers’ money.
- Mary Mosquera, FCW.com
AAPC has also issued an exposure draft of a new Federal Financial Accounting Technical Release titled, Clarification of Standards Relating to Inter-Entity Cost. Full implementation of the inter-entity cost provisions of Statement of Federal Financial Accounting Standards (SFFAS) 4 is required by SFFAS 30, Inter-Entity Cost Implementation Amending SFFAS 4, Managerial Cost Accounting Standards and Concepts, which becomes effective Sept. 30, 2008. Responses to the exposure draft are requested by Aug. 6, 2007.
Human Capital: DOD Needs Better Internal Controls and Visibility over Costs for Implementing Its National Security Personnel System.
GAO-07-851, July 16.
Highlights - http://www.gao.gov/highlights/d07851high.pdf
Thursday, July 12, 2007
Combs is planning to leave Aug. 10. Her announcement comes a month after her husband, David, said he would leave his position as chief information officer of the Agriculture Department to return to North Carolina.
An OMB spokeswoman said Danny Werfel, the deputy controller, will take over as acting controller until a permanent replacement is named.
As controller, Combs helped establish governmentwide principles for fiscal accountability.
Combs worked to get agencies to shed unneeded real estate, helping to complete the first governmentwide inventory of excess federal property in recent years. She also oversaw the financial management portion of President Bush's agenda for making government more effective and was involved in efforts to consolidate its financial systems.
-Daniel Pulliam, GovExec.com
Danny Werfel, OMB’s deputy controller, will be acting controller, an OMB spokeswoman said.
Under Combs’ guidance, agencies reduced their improper payments by $8 billion, increased the number of clean audits and shortened the reporting time from five months to 45 days to produce their annual financial statements. OMB also produced the first governmentwide inventory of real property, he said.
Agencies also must follow guidance to certify that they have put in place internal controls for financial reporting under OMB’s Circular A-123, which is similar to the requirement in the private sector mandated by the Sarbanes-Oxley law.
Linda Combs’ experience in government spans three presidential administrations. She previously was chief financial offer at the Transportation Department and the Environmental Protection Agency. She also had various oversight and executive-level management positions at the departments of Education, Veterans Affairs and Treasury during the Reagan and Bush administrations.
-Mary Mosquera, FCW.com
To listen live, tune your radio to AM 1050 (in Washington, DC), or log on to www.FederalNewsRadio.com. The interview will also be recorded and replayed throughout the day and available on the website following the live airing.
Glen Walker - Chief Financial Officer and Executive Vice President
The Postal Service as you knew it is on the way out and the biggest change isn't the latest round of rate hikes, but the Postal Accountability and Enhancement Act which will allow USPS to go after profits. Mr. Walker says part of his challenge is to make sure the financial systems, and even the financial culture, are ready for this new era. He is also taking a close look at the ratio between the Postal Service's two product lines, which is currently 90-percent for market dominant products like the mail and compared to 10-percent for competitive products like packaging. Then, there are also concerns about keeping debt under control and the impact of rising fuel prices on the cost of delivering the mail.
“To be an effective inspector general, it is important to develop a professional working relationship with agency leadership,” Glenn Fine, Justice Department IG, told the Senate Homeland Security and Governmental Affairs Committee. “Our role is to be independent, to objectively identify any problems and provide effective recommendations to correct deficiencies and not to worry about our popularity.”
Committee Chairman Sen. Joseph Lieberman, I-Conn., said he is concerned the relationship between IGs and agency heads is too close.
Sen. Claire McCaskill, D-Mo., a former Missouri state auditor, said there is a fine line between maintaining a good working relationship with leadership and keeping sufficient distance.
But IGs disagree. They must have good relationships with leaders in order to effectively oversee the agency, they say.
-Amy Doolittle, FederalTimes.com
Tuesday, July 10, 2007
When: Tuesday, July 24th 8:30 am - 11:30 am EDT
Where: JW Marriott - 1331 Pennsylvania Avenue Washington, DC
Federal agencies are under mounting pressure to improve financial management and integrated budget and performance. The President’s Management Agenda and other mandates have transformed the federal financial manager’s role from controller and scorekeeper to strategic business partner. More now than ever it is critical to link budgets and resources to results.
Join Dennis Taitano, CFO Farm Services Agency, USDA, as well as experts from IBM, Grant Thornton and Business Objects to discuss:
- Steps for successful performance based budgeting
- Centralized budget formulation, execution and publication
- Costing and measurement of performance goals and metrics
- Creations and sharing of dashboards and scorecards
Thursday, July 05, 2007
Financial executives and managers, interviewed by Grant Thornton and the Association of Government Accountants for their annual “CFO Survey,” estimated they spend a quarter of their time and money on financial statements and various accounting mandates.
Many of the survey’s 132 respondents said those activities crowded out more important jobs, such as strategic program and decision making, on which they estimated spending 19 percent of their time and staff resources. Participants ranked achieving a clean financial statement as their top priority, but many said they would prefer to prioritize work related to their agencies’ missions.
The 1990 Chief Financial Officers Act requires agencies to produce an annual financial report accompanied by an independent auditor’s opinion on the report’s reliability. But Congress and the Office of Management and Budget have steadily added new mandates, such as OMB’s Circular A-123, which requires internal accounting controls.
Survey respondents said the requirements have helped discipline financial statements and improve accounting. But many said a push for constant improvement yields diminishing returns.
-Daniel Friedman, FederalTimes.com
The revisions were made in cooperation with the Chief Financial Officers Council and take effect in September at the end of the 2007 fiscal year, OMB Director Rob Portman said.
The OMB document (Circular A-136 revised) updates requirements and spells out changes in how agencies should prepare their financial statements to improve their fiscal accountability.
In addition to agency reports, OMB also provided key dates for submitting data to support the Treasury Department in producing the 2007 governmentwide financial report, which is due to be released Dec. 15.
-Mary Mosquera, FCW.com
Mark Reger - Chief Financial Officer
Changes are coming to OPM, at least when it comes to its Financial Management Line of Business program. After initially looking at a system replacement back in 2004 and 2005 with a shared system service provider, CFO Mark Reger says OPM is ready to go ahead and issue an RFQ for a financial system procurement. Reger says OPM had been following OMB's Financial Line of Business process but that everything is in place for OPM to move forward alone with what will be a two step process. Adding to the motivation, the accounting system now in use has software that's no longer supported by the manufacturer and that some processes still require OPM to turn to accountants armed with pencils and spreadsheets.
Tuesday, July 03, 2007
When: October 21 - 23, 2007
Where: Williamsburg Conference Center, Colonial Williamsburg, VA
The phrase “perfect storm” refers to a concurrence of events which, if taken individually, would be less disruptive than the result of their chance combination. Though this term is most often used to describe a meteorological event, those involved in the government IT community find ourselves at the vortex of our own perfect storm. Unprecedented change in acquisition, security, the government workforce and breakthrough technologies presents us with mission critical challenges – and extraordinary opportunities.
ELC 2007 Conference Plenary Session & Track planning will incorporate this theme through:
The need for rapid implementation of innovative and creative IT solutions often conflicts with a relatively inflexible acquisition process. Acquisition continues to be buffeted by forces that are often at odds; come join the discussion of the most critical acquisition topics of the day.
Today there is intense debate occurring around all aspects of security. Emerging IT security threats require agencies (and the industry partners that support them) to be one step ahead. How do we maximize our ability to protect critical assets and ensure that citizens remain confident in how the government safeguards their data?
The government workforce is the human lever on which every other element of the mission depends. Public expectations, technology, and the federal workforce itself are all changing rapidly. What are the implications for government and industry?
Discover the disruptive forces –new technologies and new ways of doing business- that will shape the work of government in the next decade. How will we measure results and stay ahead of the next wave so that government and our citizens may reap the benefits of innovation?
Government registration for ELC 2007 is now open! Click here to register.
Help the Publisher obtain a registration slot at the ELC. If you are a first time government attendee, please check the first time attendee box on the registration form and include "Doug Davidson / Grant Thornton Global Public Sector" as the name of the colleague that referred you. Three first time referrals will secure a slot for me to attend this valuable conference event. ***********************************************
Monday, July 02, 2007
When: July 31 - August 1, 2007 (Optional Workshops July 30)
Where: Hilton Alexandria Mark Centre, Alexandria Virginia
- Lean and Six Sigma
- Cost Management
- Change Management
- Performance Based Budgeting
- Risk Management
- Process Management
- Over 14 speakers
- Panel of experts
- Principles of Performance Improvement and Management including scorecards
- Management of resources in challenging times
- Targeted workshops in the area of Lean, Six Sigma, Cost Management and Performance Management
The conference program is located here.
CAM-I is a not-for-profit Industry-led collaborative research consortium producing the “best-of-the industry” solutions, techniques, methods and tools for over 30 years, internationally recognized for Cost, Process and Performance Management.
Visit their website to register at: http://www.cam-i.org/
Sunday, July 01, 2007
The bill created a dozen presidentially appointed IGs - two already had been established at the Energy and Health, Education and Welfare departments - who would serve as internal agency auditors and investigators. In a virtually unprecedented move, the measure directed that IGs would report both to Congress and the president, a duty that former State Department IG Sherman Funk once compared to "straddling a barbed wire fence."
Early on, Congress had a difficult time defining the role of the would-be watchdogs, according to Monitoring Government, Inspectors General and the Search for Accountability (Brookings Institution Press, 1993).
Eventually, two competing models developed: the IG as a tough-as-nails lone wolf, with substantial oversight responsibilities, and the IG as strong right arm of the agency who uncovers dirt but keeps it within the family.
The models continue to compete as IGs struggle to find the right balance between investigator and departmental cheerleader. Opinions differ on how to best to walk that tightrope, but most agree that either extreme is fraught with peril.
The relationship between an agency's inspector general and top administrator might be the most complex in all government. While both are political appointees who manage career employees, the similarities end there. Agency heads earn a long life span in public service by keeping their noses clean and staying out of congressional crosshairs. IGs, on the other hand, build their reputations by shining a spotlight on the waste, fraud and mismanagement that by virtue of size and happenstance inhabits virtually all federal agencies. According to the integrity and efficiency council, IG audits resulted in $9.9 billion in potential savings last year while criminal, civil and personnel investigations saved the government another $6.8 billion.
-Robert Brodsky, GovExec.com
Deputy Secretary of Defense Gordon England contends that "the department already has a lot of structure." If anything, he told a House panel last week, "we have too much structure, and we have a lot of rules and regulations that we go by."
England, who is responsible for day-to-day financial management of the Defense Department, insisted that he already has sufficient authority and personnel, and that he doesn't require congressional intervention.
Some members of Congress think otherwise.
A Senate proposal would add another bureaucratic layer beneath England, creating the post of undersecretary of defense for management. The House has passed a similar proposal.
Congressional advocates of the new chief management position point out that the department frequently has been criticized by the Government Accountability Office and the Pentagon's inspector-general for poor management, faulty accounting systems that make it difficult, if not impossible, to track taxpayer money, and routine billion-dollar cost overruns on weapons.
In November 2006, David Walker, the U.S. comptroller general, issued a devastating assessment of the Defense Department's financial problems, saying they "are pervasive, complex, long-standing, and deeply rooted in virtually all business operations throughout."
The financial management problems limit the ability of Pentagon managers "to receive the full range of information needed to effectively manage day-to-day operations," Walker wrote. These weaknesses hurt the ability of the department "to control costs, ensure basic accountability, anticipate future costs and claims on the budget, measure performance, maintain funds control, prevent fraud, and address pressing management issues," among other crucial measures, Walker said.
The Defense Department acknowledges the accounting failures and that it has failed since 1990 to pass an independent audit, something required of federal agencies under a law passed by Congress that year. England told the House panel last week that the department will require as much as 10 years of further tweaks to accounting systems before auditors can certify the accuracy of its financial statements.