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Wednesday, October 31, 2007

Today's GAO Publications

The Government Accountability Office (GAO) today released the following publications:

Business Systems Modernization: Air Force Needs to Fully Define Policies and Procedures for Institutionally Managing Investments.
GAO-08-52, October 31.
Highlights - http://www.gao.gov/highlights/d0852high.pdf

Business Systems Modernization: Department of the Navy Needs to Establish Management Structure and Fully Define Policies and Procedures for Institutionally Managing Investments.
GAO-08-53, October 31.
Highlights - http://www.gao.gov/highlights/d0853high.pdf

Inspectors General: Limitations of IG Oversight at the Department of State, by David M. Walker, comptroller general of the United States, before the Subcommittee on International Organizations, Human Rights, and Oversight, House Committee on Foreign Affairs.
GAO-08-135T, October 31.
Highlights - http://www.gao.gov/highlights/d08135thigh.pdf

Tuesday, October 30, 2007

DHS names first deputy undersecretary for management

Elaine Duke has been named the first deputy undersecretary for management at the Homeland Security Department, DHS announced today.

In the new role, she will be responsible for daily oversight of DHS’ budget, appropriations, expenditure of funds, procurement, human resources, information technology systems, and facilities and property management.

Duke had been the agency’s chief procurement officer, managing $14 billion in DHS contracts and $11 billion in financial assistance programs.


Friday, October 26, 2007

Today's GAO Publication

The Government Accountability Office (GAO) today released the following testimony:

Single Audit Quality: Actions Needed to Address Persistent Audit Quality Problems.
GAO-08-213T, October 25
Highlights - http://www.gao.gov/highlights/d08213thigh.pdf

Thursday, October 25, 2007

FederalNewsRadio - Ask the CFO - Carla Burzyk (USGS)

US Geological Survey

Carla Burzyk - Director, Office of Budget and Performance

USGS might not be the first agency to come to mind when you think about the fires ravaging California or the drought plaguing the Southeast but these natural events do have an impact on its budget. Burzyk says events such as these may force USGS scientists to shift gears or go into the field to collect vital data. While those sorts of contingencies are taken into account, she says there is only so much flexibility that can be built into the process and that there is, at times, a need to ask Congress for supplemental appropriations. Burzyk says that makes it all the more important to make sure the financial books are in order.

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Friday, October 19, 2007

GSA to award contract for evaluating financial shared-services providers

The General Services Administration will likely release in early 2008 a request for proposals to test and evaluate the capabilities of commercial shared-services providers, said Mary Mitchell, program manager for the Financial Management LIne of Business and executive director at GSA’s Financial Systems Integration Office.

GSA will use the testing strategies to assure that shared-services providers are capable of implementing financial management systems successfully and that the systems meet core and agency-defined requirements under the FM LOB consolidation initiative. Mitchell anticipates that GSA will publish the RFP during the first three months of next year. GSA has received comments on an information request and is analyzing those now, she said.

The long-term objective of FM LOB is to standardize core financial business processes and financial data. Agencies will adopt standard business processes as they migrate to new financial management systems.

Under FM LOB, agencies will compete their financial management systems among private and federal shared-services providers, which will provide information technology hosting, application management and system implementation services to agencies, according to GSA and Office of Management and Budget policy. Each shared-services provider will provide those services to multiple agencies using a common application to reduce the duplicative approaches currently used.

-Mary Mosquera, FCW.com

Today's GAO Publication

The Government Accountability Office (GAO) today released the following reports:

Department of Homeland Security: Challenges in Implementing the Improper Payments Information Act and Recovering Improper Payments.
GAO-07-913, September 19.
Highlights - http://www.gao.gov/highlights/d07913high.pdf

SES Position in DOT’s Pipeline and Hazardous Materials Safety Administration

The Pipeline and Hazardous Materials Safety Administration (PHMSA), Department of Transportation is currently advertising a senior level position, Associate Administrator for Finance, Budget and Performance Integration/Chief Financial Officer (CFO).


Thursday, October 18, 2007

Defense comptroller: Financial management better than perceived

Defense Comptroller Tina W. Jonas on Wednesday defended her department's progress in improving financial management, despite the fact the Defense Department and military services have never been able to produce the kind of financial reporting statements required by law.

"We know where our money is. We track our money. We send accounting reports to Congress and we tell them by appropriation and line item where the money went and what it went for," Jonas said at a breakfast in Washington sponsored by the Association of Government Accountants.

The ability to produce annual consolidated financial statements, as required by the 1990 Chief Financial Officers Act, has been the holy grail for federal finance and accounting staff, and agencies have in some cases gone to extraordinary lengths to garner clean audit opinions from independent accounting firms. But the Homeland Security and Defense departments have yet to be able to produce the statements.

In the case of Homeland Security, the four-year-old department is still struggling to merge multiple entities with separate finance and accounting systems and procedures.

For Defense, which accounts for more than half of discretionary spending, the problems are far more complex. Every year, Defense disburses $424 billion, processes 145 million pay transactions, 14 million commercial invoices and 57 million general ledger transactions.

Reconciling those activities into a single financial statement has proved impossible, and Jonas, unlike her predecessors, won't predict when that will happen.

Achieving a clean audit is important, Jonas said, but resolving other issues, such as material weaknesses, is even more important. She said that in 2001, auditors identified 71 material weaknesses; today there are 19, which the department expects to eliminate in 2008.

While a clean audit means that an agency has solid internal controls, which are necessary to prevent fraud, a clean opinion is important. But a clean opinion, however, does not mean department managers have the tools or information they need to make better financial decisions.

-Kathrine McIntire Peters, GovExec.com

FederalNewsRadio - Ask the CFO - Ed Dolan (USMS)

US Marshals Service

Ed Dolan - Comptroller and Chief Financial Officer

When Ed Dolan started at the Justice Department his first assignment involved a yellow pad and an adding machine with tape rolling down to the floor. Now, those same processes can be done in a blink of an eye. But finding ways to keep up with technology, from a financial point of view, was not easy. Dolan says there was an understanding early on that the Marshals Service could not go it alone. And he says despite being able to work within the Justice Department framework, the task is not going to get any easier, putting a premium on resource management. He also talks about how the Marshals Service was able to take on and overcome personnel management issues that threatened the agency's financial footing when he first came to the job.

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Wednesday, October 17, 2007

Today's GAO Publication

The Government Accountability Office (GAO) today released the following testimony:

Defense Business Transformation: A Full-time Chief Management Officer with a Term Appointment Is Needed at DOD to Maintain Continuity of Effort and Achieve Sustainable Success, by David M. Walker, comptroller general of the United States, before the Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, Senate Committee on Homeland Security and Governmental Affairs.
GAO-08-132T, October 16.
Highlights - http://www.gao.gov/highlights/d08132thigh.pdf

2007 GCN Award: CMS team develops a centralized accounting system to get a handle on an eighth of the federal budget

WHAT: Healthcare Integrated General Ledger Accounting System at the Centers for Medicare and Medicaid Services in the Health and Human Services Department.

MISSION: Administer Medicare and provide federal oversight of state Medicaid programs.

CHALLENGE: A combination of manual procedures and incompatible computerized accounting systems at several dozen regional Medicare contractors led to nonstandard billing, payments and reporting.

SOLUTION: Planned since the late 1990s, starting in 2005 and through this year, HIGLAS, an Oracle 11i-based accounting system, is online with 10 contractors. More contractors will get the system by the end of 2011.

IMPACT: There are far fewer errors, faster claims processing and reduced interest charges, which helps CMS determine the difference between accounts payable and receivable. COST: $853 million is the projected total; $527 million had been spent through fiscal 2007.


Senators question Defense's attempts to improve management

Defense Department officials Tuesday defended their plans for improving management of their financial and business systems against charges from members of a Senate Homeland Security and Governmental Affairs subcommittee that their efforts are slow and insufficient.

"I am not sure large quantities of change have occurred," said Sen. Tom Coburn, R-Okla., who pressed Pentagon officials to commit to more frequent consultation with the Federal Financial Management Subcommittee and the Government Accountability Office.

At issue is billions of dollars the department spends each year on separate business and financial systems. Defense since 1990 has been attempting to modernize thousands of unique accounting and information systems that limit its ability to track many of its costs.

The department has a large component, the Business Transformation Agency, dedicated to steps such as combining software systems and applying the Lean Six Sigma business improvement methodology across the department.

Defense Comptroller David Patterson testified that by 2009 the Pentagon expects to earn clean audit opinions on 39 percent of its assets, up from almost none in the 1990s. Patterson said that is a significant achievement for what he called "the largest and most complex organization in the world."

Subcommittee members faulted especially Pentagon officials' resistance to congressional pressure to create a full-time, high-level chief management officer to push through changes.

The fiscal 2008 defense authorization bill would require the Pentagon create a full-time chief management officer reporting to Deputy Defense Secretary Gordon England. The official would have a fixed term allowing him or her to stay on beyond the current administration.

The Pentagon has resisted that effort, arguing that England fills a CMO role and adding a position would create unneeded bureaucracy.

-Dan Friedman, GovExec.com

Tuesday, October 16, 2007

Senators seek compromise bill to boost IG independence

As a CIA plan to investigate its inspector general draws congressional fire, a group of senators is working to quickly complete a compromise version of a bill to increase the independence of agency watchdogs.

Senate Homeland Security and Governmental Affairs Chairman Joseph Lieberman, I-Conn., and ranking member Susan Collins, R-Maine, along with Sen. Claire McCaskill, D-Mo., and possibly Sen. Tom Coburn, R-Okla., plan in coming weeks to jointly file an IG bill that responds to White House objections to a bill previously introduced by McCaskill, according to staffers.

The new bill will not include a provision that allows IGs to send their budgets directly to Congress, aides said. That provision was in McCaskill's original bill to address concerns that some agency heads have tried to control IGs through budget cuts.

But in a Statement of Administration Policy that threatened a veto of the House bill, the White House and Office of Management and Budget said the language infringed on executive control of budget requests.

McCaskill aides said the bill will still protect independence by requiring that agency budgets note the difference between IG budget requests and the one granted. It will likely also contain language requiring that IGs inform Congress if a budget cut hampers their ability to function.

Committee members are also working on expanding the reasons for which IGs can be fired, in an effort to address White House concerns that a provision on firing would make it too hard to remove IGs even for good reason. The House bill passed with amendments that make similar changes to those planned for the Senate measure.

The statement of policy also objected to language codifying an IG council that now exists under executive orders. But the House did not address that concern and staffers said the new Senate bill will not.

-Dan Friedman, GovExec.com

Friday, October 12, 2007

CFOs, IGs share best practices for financial reports

Agency chief financial officers and inspectors general have developed a set of best practices to share for coordinating the preparation and audit of annual federal financial statements. A key point is to start early.

The CFO Council and the President’s Council on Integrity and Efficiency produced the guide to promote clear expectations defined early and often, continuous communication and a shared commitment to improve agency financial management.

An agency CFO prepares the financial statement according to federal accounting principles and also evaluates the use of internal controls to assure financial management under the Office of Management and Budget’s Circular A-123. The IG audits the financial statement to give an opinion about its reliability based on the management of risk of its internal controls, states the report, posted Oct. 1.

Agencies must submit their audited financial statements and Performance and Accountability Reports (PARs) by Nov. 15 to OMB, the Treasury Department and the Government Accountability Office.

The CFO and IG organizations recommend that agencies start early with planning discussions in January and field work beginning in March to avoid herculean catch-up near the end of the federal fiscal year. Agencies should develop draft financial statements and PARs by Sept. 30, the groups said.

-Mary Mosquera, FCW.com


FederalNewsRadio - Ask the CFO - Sheila Conley (HHS)

Department of Health and Human Services

Sheila Conley - Deputy Assistant Secretary for Finance and Deputy Chief Financial Officer

In the case of HHS, big might be an understatement. Conley says the department trails only the Department of Defense when it comes to net costs in government. And if you're looking for a fair comparison in the private sector, good luck. Conley says even the biggest of the Fortune 500 pale in comparison. Only, thanks to A-123, she says the department has changed the way everyone stays in touch, going from quarterly meetings to monthly meetings with a Risk Management and Financial Oversight Board, which includes members of the department's most senior leadership. She says, as a result, it has been easier to identify best practices within the various agencies and apply them department-wide. Conley also talks about improvements in the oversight of Medicare and Medicade, and about going from red to yellow on improper payments on the PMA scorecard.

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Wednesday, October 10, 2007

SAP makes a grab for Business Objects

SAP will acquire Business Objects for $6 billion (4.8 billion euros) in a move that will enable it to offer organizations more advanced business intelligence and decision-making solutions. The companies expect to close the deal in the first quarter of 2008.

Walldorf, Germany-based SAP is a leading supplier of business software, such as customer relationship management, enterprise resource planning and supply change management applications, with more than 41,200 customers in some 120 countries.

Business Objects, headquartered in Paris, France, is a provider of business intelligence software with solutions spanning the information discovery and delivery, information management, analysis and performance management categories for more than 44,000 customers worldwide.

The acquisition will allow SAP to significantly increase its revenues from new products, including addressing the growing demands of business users, company officials said.

Both companies count numerous U.S. federal, state and local government agencies as customers. For example, SAP software has been deployed by the Defense Logistics Agency, National Geospatial Intelligence Agency, Naval Supply System Command, North Carolina and Erie County, N.Y.

Meanwhile, Business Objects has provided data warehouse and business intelligence solutions to the Defense Department, performance management software to the Environmental Protection Agency and a data warehouse support system to Wisconsin’s Department of Health Services.

Business Objects will operate as a stand-alone business within the SAP Group. Business Objects customers will continue to benefit from open, broad and integrated business intelligence solutions — independent of databases and applications — while also gaining the advantage of application alignment for business analytics, officials from both companies said.

Tuesday, October 09, 2007

Commentary: CFOs bogged down by unnecessary paperwork

More than 100 federal financial executives and managers took part in the annual survey of federal government chief financial officers, conducted by the Association of Government Accountants and Grant Thornton LLP. The survey looked at balancing competing priorities, barriers to progress and the Office of Management and Budget’s (OMB) Financial Management Line of Business initiative.

This year’s survey also turned the tables and let financial managers evaluate their evaluators — OMB, the Government Accountability Office, inspectors general and congressional committees. The evaluators seem to be taking note. OMB’s Danny Werfel mentioned the results of the CFO survey in a presentation to AGA’s Washington Chapter last month.

Generally, we found that resources are not balanced between meeting compliance requirements and adding value to program decision-making and that more consideration should be given to risk mitigation. Many respondents said the benefits of compliance do not justify the costs. Clearly, according to the survey, CFO resources are stretched too thin.

Complying with outside mandates is not the only strain on CFOs. Transaction processing and stewardship of public funds take up a significant amount of CFO time and nearly half of all resources. By contrast, strategic decision-making takes up only about one-fifth of a CFO’s time, according to the survey. I see a troubling trend.

Perhaps compliance information could be presented more efficiently as part of the Performance and Accountability Report, and the time saved could be put toward reducing risk elsewhere.

Taking a risk-based approach to oversight could ease the burden on the financial community so it can concentrate more on cost management, strategic decision-making, analysis and improving the government’s financial operations. It may be time to push for compliance requirements that support strategic decision-making. A CFO can become a much more valuable member of the team by providing data that program managers can use to improve day-to-day operations.

- RELMOND P. VAN DANIKER, FederalTimes.com


Relmond P. Van Daniker, DBA, CPA, has been executive director of Association of Government Accountants since October 2003. Prior to that, he spent 30 years as the executive director of the National Association of State Auditors, Comptrollers and Treasurers and as a professor of accountancy at the University of Kentucky.

Friday, October 05, 2007

Today's GAO Publications

The Government Accountability Office (GAO) today released the following publications:

Financial Audit Manual, Volume I. (Audit Methodology) (Exposure draft.)
GAO-08-81G, October 2007.

Financial Audit Manual, Volume II. (Audit Tools) (Exposure draft.)
GAO-08-82G, October 2007.

Thursday, October 04, 2007

FederalNewsRadio - Ask the CFO - Steve Isakowitz (DOE)

Department of Energy

Steve Isakowitz - Chief Financial Officer

It may not be the traditional path for a Chief Financial Officer but Isakowitz says his background in aerospace engineering has served him well, allowing him to understand the diverse, technical mission areas supported by the department's budget. He says that practical scientific knowledge also helps up front in evaluating the risks of large, all or nothing projects. Finally, he says being able to understand the financial and scientific aspects of the department's mission pays off in other critical ways, especially since research is something which does not always lend itself to be measured simply or easily.

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Wednesday, October 03, 2007

Today's GAO Publications

The Government Accountability Office (GAO) today released the following reports and presentations:

Premium Class Travel: Internal Control Weaknesses Governmentwide Led to Improper and Abusive Use of Premium Class Travel.
GAO-07-1268, September 28.
Highlights - http://www.gao.gov/highlights/d071268high.pdf

"An Accountability Update from Washington," by David M. Walker, comptroller general of the United States, before AICPA's peer review program conference, in Atlanta, Georgia.
GAO-08-149CG, October 1. [slides]

"Fiscal Stewardship in the 21st Century," by David M. Walker, comptroller general of the United States, before the Commerce Club, in Atlanta, Georgia.
GAO-08-150CG, October 1. [slides]

Contractor tax provision forces agencies to change financial systems

A provision in a tax law passed last year would require agencies to revamp financial management systems unless federal contractors are successful in convincing Congress to repeal the provision.

Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) requires federal, state and local government agencies to begin in 2011 withholding a tax of 3 percent of all payments of $100 million or more to government contractors. The 3 percent withholding would raise an estimated $7 billion between 2011 and 2015.

Congress added the provision to the law to make it more difficult for contractors to avoid paying income taxes, said Chris Braddock, director of procurement policy at the U.S. Chamber of Commerce's economic policy division. The provision has ties back to a 2004 Government Accountability Office report that found, after reviewing Defense Department and Internal Revenue Service records, that more than 27,000 Defense contractors owed about $3 billion in unpaid taxes as of Sept. 30, 2002. Congress acted quickly to find ways to collect the unpaid taxes.

Those opposed to the rule say it will require agencies to dip into already tight IT budgets to reprogram financial management systems to keep track of the 3 percent tax. Rules and contracts will need to be modified to address the withholding requirement, which could cause a number of logistical problems, said Andrea Wuebker, a spokeswoman for the Office of Management and Budget.

The IRS is developing regulations to implement the rule. But individual agencies will be required to comply, which means IT managers must consider what they have to do to revamp financial management systems. How much agencies will have to reprogram their systems will most likely vary, depending on the applications the agencies use and how easily they can be customized.

Sen. Larry Craig, R-Idaho, is leading efforts to repeal the provision. "Section 511 will . . . impose significant administrative costs on the federal, state and local governments," Craig said in a statement in March. "Congress never debated the merits of an expanded withholding requirement -- as a revenue-raiser or as a way to narrow the tax gap -- in a committee or on either chamber's floor. If it had, Congress would have realized that it does neither of these things well."

-Jill Aitoro, GovExec.com


Senator to press for better financial, property management

Few in Congress have as much opportunity as Sen. Tom Carper, D-Del., to fix government inefficiency, mismanagement and waste. That’s because he chairs the Senate panel that oversees government management and efficiency.

Since becoming chairman of the Senate Homeland Security and Governmental Affairs subcommittee on federal financial management, government information, federal services and international security in January, Carper has held many hearings. They’ve examined the 2010 census, government information technology and postal reform.

His subcommittee’s work this year isn’t done, he says. Before the December holiday break, he intends to hold hearings on federal property management, electronic health records for federal employees and the Defense Department’s financial records system.

Carper discussed his plans with Federal Times staff writer Amy Doolittle on Sept. 24.

Read excerpts of the interview here.

-Amy Doolittle, FederalTimes.com

Tuesday, October 02, 2007

Accenture, AF activate new financial system

Accenture Ltd. and Air Force officials have tested and launched a new enterprisewide accounting and fiscal management system for the Air Force.

The new system is the first step in replacing several older financial systems and is intended to help the Air Force manage its operations more efficiently and at a lower cost, Accenture said in a news release.

The first phase of Spiral 1 of the Defense Enterprise Accounting and Management System (DEAMS) replaces the commitment accounting functions currently provided by the Air Force’s Automated Business Services System.

The company expects to finish the second phase of the project, which will complete the Spiral 1 implementation, later this year. Future releases will improve processes for cost accounting, purchase requests, accounts payable and disbursement, financial obligations, collections and customer billing.

DEAMS 1 is based on Oracle e-business commercial software. The 554th Electronic System Group at Wright-Patterson Air Force Base near Dayton, Ohio, is responsible for program development. Scott Air Force Base, near Belleville, Ill., is tasked with the implementation because of its role as headquarters for the Air Mobility Command, U.S. Transportation Command and Air Force Communications Agency.

The new financial management system is an attempt to bring positive lessons learned from private-sector business transformation to the Defense Department, Accenture said.

-William Walsh, Washington Technology.com


White House threatens to veto bill on IG independence

The White House on Monday threatened to veto legislation designed to enhance the independence of inspectors general, saying it treads too far on the president's constitutional prerogatives.

A Statement of Administration Policy said language in the legislation permitting the president to remove inspectors only for cause "raises grave constitutional concerns" by impinging on the president's responsibility to supervise the executive branch officers.

The administration also strongly opposes provisions allowing inspectors general to submit their budget requests directly to Congress. And the administration objects to provisions establishing an independent Council of the Inspectors General on Integrity and Efficiency, saying a similar body exists and codification of such a council "would impede the president's ability to react swiftly and effectively to problems with IGs or with the council itself."


Monday, October 01, 2007

Today's GAO Publication

The Government Accountability Office (GAO) today released the following report:

Social Security Administration: Policies and Procedures Were in Place over MMA Spending, but Some Instances of Noncompliance Occurred.
GAO-07-986, August 31
Highlights - http://www.gao.gov/highlights/d07986high.pdf

FMLOB Quarterly Newsletter

FMLOB wants to keep you informed of our progress on key projects. This is our second quarterly newsletter which highlights the current activity on each of our workstreams. We hope you will find the articles included in our third FMLOB Quarterly Newsletter (PDF) both interesting and informative as we attempt to keep you updated on the recent events and achievements of the Financial Management Line of Business.


Critics not satisfied by naming of Pentagon management chief

As the Senate weighs legislation requiring the Pentagon to create the position of chief management officer, Defense Secretary Robert Gates has added the job to Deputy Defense Secretary Gordon England's portfolio. But the unilateral move has not quieted the department's critics.

Gate's action "does not address the longer term needs that the Government Accountability Office and others have identified," Comptroller General David Walker told CongressDaily Thursday.

In a Sept. 18 directive, Gates expanded England's official role to include "serving as the chief management officer of the Department of Defense." The directive requires England to oversee the Pentagon's push to overhaul its business operations, through steps such as combining hundreds of separate accounting systems and improving the procurement process.

The move came as the Senate resumed consideration of the fiscal 2008 defense authorization bill, which includes language mandating the creation of a CMO.

The language also requires other bureaucratic changes, including the addition of a deputy chief management officer in the department, below England. It also would force the Army, Air Force and Navy to designate their respective undersecretaries as chief management officers.

Outside groups -- including GAO, the Defense Business Board, the Institute for Defense Analysis and the Center for Strategic and International Studies -- have in recent years issued a host of reports arguing the Pentagon needs a full-time, high-level CMO with enough time and power to push through changes in the department's financial systems, supply chain, information technology, weapons acquisition system and other areas.

The congressional auditing agency has repeatedly argued that, under the current structure, senior Pentagon officials are too busy and not on the job long enough to get the department's programs off the high-risk list.

Defense officials, including England, have said adding a management chief beneath him would create an unneeded bureaucratic layer. Although a response from the Pentagon was not available at press time, Gates' directive is consistent with the department's position that England already functions as a CMO.

-Dan Friedman, GovExec.com