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Friday, November 30, 2007
The administration gives its efforts, or those of the agencies, better marks. Agencies have improved from predominantly red marks at the score card's inception in August 2001 to a slight majority of green on the last quarterly ratings for fiscal 2007. "While agencies have shown great progress in implementing these requirements, there remains a lot of work to be done," said Clay Johnson, Office of Management and Budget deputy director for management, upon release of the latest score card on Nov. 5. Eight days later, Bush issued an executive order lending additional structure to his effort to improve agencies' performance. The order requires agency heads to set clear annual goals, lay out plans for achieving them, and designate "performance improvement officers" to assess and report publicly on progress. A Performance Improvement Council will be established within OMB.
To support our assessments, we provide greater detail than do the administration's quarterly evaluations. We base our human capital yellow ranking, for example, on subratings for key Bush efforts such as pay for performance, recruitment and retention, and technology, as well as a score for labor relations.
We assess broad indicators of financial performance and also evaluate the administration's lines of business initiative, in which financial management figures prominently. We treat the famous, or infamous, depending on your vantage point, Program Assessment Rating Tool within a broader examination of performance improvement and its effect on budgeting.
We judge the ratings that follow to be tough but fair. And we invite you to make your own appraisal of the President's Management Agenda online here.
- Brittany Ballenstedt, Robert Brodsky, Gautham Nagesh, Elizabeth Newell and Alyssa Rosenberg, GovExec.com
"DOD Transformation Challenges and Opportunities," by David M. Walker, comptroller general of the United States, before the Department of Defense FY 2008 Managers' Internal Control Program Conference, in Washington, DC.
GAO-08-323CG, November 29.
Thursday, November 29, 2007
John Vonglis - Principal Deputy Assistant Secretary, Financial Management and Comptroller
To be successful, the modern air force needs its planes to be nimble in the air and its financial officers to be nimble on the ground. Vonglis says that need, emphasized by operations in Bosnia, Afghanistan and Iraq, has been one of the driving forces behind what he calls perhaps the biggest change in financial management at the Air Force since the move from cash to checks - the move to the new Financial Services Center at Ellsworth AFB. But Vonglis says that endeavor was more than consolidation from work being done at 93 locations to one. Rather, he says it is part of the bigger push behind Air Force Smart Operations for the 21st Century.
Monday, November 26, 2007
NASA Inspector General: Audit of the National Aeronautics and Space Administration's Fiscal Year 2007 Financial Statements
Source: NASA Office of Inspector General
15 Nov 2007
TO: AdministratorChief Financial Officer
FROM: Inspector General
SUBJECT: Audit of the National Aeronautics and Space Administration's Fiscal Year 2007 Financial Statements (Report No. IG-08-001)
Under the Chief Financial Officers Act of 1990, NASA's financial statements are to be audited in accordance with generally accepted government auditing standards. The Office of Inspector General contracted with the independent certified public accounting firm Ernst & Young LLP (E&Y) to audit NASA's financial statements in accordance with Government Auditing Standards and Office of Management and Budget's Bulletin No. 07-04, Audit Requirements for Federal Financial Statements.
In the Report of Independent Auditors (Enclosure 1), E&Y disclaimed an opinion on NASA's financial statements for the fiscal years ended September 30, 2007 and 2006. The disclaimer resulted from NASA's inability to provide E&Y auditable financial statements and sufficient evidence to support the financial statements throughout the fiscal year and at year-end.
The E&Y Report on Internal Control (Enclosure 2) includes two significant deficiencies, which are considered to be material weaknesses. Material weaknesses were found in NASA's controls for (1) financial systems, analyses, and oversight used to prepare the financial statements, and (2) assuring that property, plant, and equipment and materials are presented fairly in the financial statements. These material weaknesses have been reported for several years.
The E&Y Report on Compliance with Laws and Regulations (Enclosure 3) identifies several instances in which NASA's financial management systems did not substantially comply with the requirements of the Federal Financial Management Improvement Act of 1996 (FFMIA). For example, the report notes that certain subsidiary systems, including property, are not integrated with the Core Financial module and are not complemented by sufficient manual preventative and detect type controls.
Thursday, November 22, 2007
George Schutter - Chief Financial Officer
Keeping the books can be a challenge when you are in 73 countries at once. Schutter says having an integrated planning and budgeting system in place makes all the difference in the world. He says the Peace Corps system has matured to the point where financial information can be seen almost in real-time, making it easier to adjust on the fly. An added benefit is that the system has allowed the Peace Corps to make financial accountability part of the mission, from IT folks at headquarters to posts half a world away. As a result, Schutter says after years of audit disclaimers and a qualified audit opinion last year, the Peace Corps is set to go after its first unqualified audit opinion. Another key challenge at the Peace Corps -- finding the best way to measure results. It's one thing to measure "output" from the efforts of the Peace Corps and its volunteers. It's another to measure the impact on the communities that have been helped.
Tuesday, November 20, 2007
The deadline for submitting complete financial reports was shortened to 45 days from 150 days in 2001. Clay Johnson, deputy director for management at OMB, said Monday that revising the deadline forced agencies to improve their financial management year-round.
In addition, agencies are gradually improving their overall financial management. Nineteen of the 24 major federal agencies received clean audits for fiscal year 2007, one more than last year. And the number of governmentwide material weaknesses dropped to 39 from 41 last year, for a 35 percent decrease in material weaknesses since 2001.
Material weaknesses are management or accounting deficiencies deemed by auditors to be significant enough to note in the final report. Danny Werfel, acting controller for OMB's Office of Federal Financial Management, said the decline in material weaknesses was particularly noteworthy in light of recent changes to government audit guidelines.
Thirteen agencies received clean audits with no material weaknesses noted. Five of them -- the Justice, Interior, and Energy departments, the Small Business Administration and the U.S. Agency for International Development -- did not meet that mark last year.
Werfel said agencies also are working hard to report on and eliminate improper payments, which can mean anything from an incorrect amount or recipient to a payment for an unallowable service to insufficient documentation to prove a payment was proper. This year, 13 more programs took part in improper payment reporting; almost 86 percent of high-risk programs reported on improper payments this year, up from 81 percent last year. Werfel said publication of improper payments not only identifies problem areas but motivates agencies to address themquickly.
The government's largest spender by far, the Defense Department, continued to come up short in the area of financial management. Johnson said the department did not receive a clean audit, and likely won't for years to come, because it has chosen to make thorough reform a higher priority than a clean audit.
-Elizabeth Newell, GovExec.com
Monday, November 19, 2007
Of 24 major agencies, 19 received a clean opinion for their fiscal 2007 report, one more than last year, said Danny Werfel, OMB’s acting controller. Agencies must file their Performance and Accountability reports and financial statements by Nov. 15.
Five more agencies joined the ranks of those having not only a clean audit, meaning the agency’s data is valid and trustworthy, but also no major weaknesses. They were the Energy, Interior and Justice departments; the Small Business Administration; and the U.S. Agency for International Development. A total of 13 agencies have accomplished this since 2001, he said.
Agencies reduced the overall number of major weaknesses by two to 39, a 35 percent decrease since 2001. Agencies have continued to fix flaws even as accounting standards organizations have lowered the threshold for what constitutes a material weakness, Werfel said.
For the third consecutive year, all agencies met the accelerated deadline to submit their financial audits 45 days after the end of the fiscal year, Sept. 30. The federal government has a quicker turnaround for its annual report than the private sector. Corporate filers have 60 days to do so. It used to take agencies five months, but OMB accelerated the process in 2001. “When you have a short turnaround to take all the transactions you participated in and all the money that’s moved in and out of the agency in the year and put it in a set of financial statements that’s going to pass scrutiny, answer all the questions and tie up loose ends within 45 days, it drives you to be very diligent with your finances and your accounting every day of the fiscal year rather than thinking you’ll have time at the end of the year to do that,” Werfel said.
Agencies also reduced improper payments even in existing programs under scrutiny, and added 13 more programs to be evaluated for risk of error rates for incorrect benefits and grants, he said. Agencies now report improper-payment measurements for 86 percent of all high-risk outlays, up from 81 percent last year. The error rate for the first programs to be measured for errors in 2004 has declined to 3.1 percent from 3.9 percent, a $7.9 billion reduction in improper payments. The 13 programs added this year, including the Medicaid Fee-for-Service program, pushed the error rate up to 3.5 percent with $54.9 billion in outlays under scrutiny for errors, he said.
Financial Audit: Securities and Exchange Commission's Financial Statements for Fiscal Years 2007 and 2006.
GAO-08-167, November 16
Highlights - http://www.gao.gov/highlights/d08167high.pdf
Friday, November 16, 2007
Mitchell announced earlier this week that she will retire Jan. 3 after 32 years as a federal employee.
She said she stayed the extra time because she wanted to ensure that the foundation for the Financial Management Line of Business (FM LOB) initiative was in place.
Mitchell has been a leader in the e-government and federal financial management arena. She is FM LOB’s program manager and the Financial Systems Integration Office’s executive. She is also deputy associate administrator of the Office of Technology Strategy in GSA’s Office of Governmentwide Policy.
In her last six weeks, Mitchell said she will focus on ensuring that the FM LOB initiative will continue to move forward after she leaves.
-Jason Miller, FCW.com
With the order, issued Tuesday and detailed at a press briefing today, the Bush administration hopes to establish a lasting legacy for its management improvement agenda.
The performance improvement officers will be required to oversee agencies' "strategic plans, annual performance plans and annual performance reports as required by law," the order states. The officers also will review the goals of agency programs to determine if they are "sufficiently aggressive toward full achievement of the purposes of the program," and "realistic in light of authority and resources assigned to the specified agency personnel."
Robert Shea, OMB's associate director for management, said the position of performance improvement officer could be assigned to a career employee in order to establish continuity through the next administration, although a final decision has not been made. If a political appointee is named to the role, Shea said, there must be a career official in place that is capable of carrying on the initiative during the next administration.
The order stipulates only that the officer should be a "member of the Senior Executive Service or equivalent service."
The order, which OMB hopes to fully implement by the end of 2008, also mandates the creation of a Performance Improvement Council, chaired by Johnson and including all performance improvement officers and other relevant agency officials.
The impetus for the executive order, Johnson said, was a meeting last year in which President Bush explained that his goal was not only for agencies to earn high grades on his administration's management score card -- which uses a stoplight system of green, yellow or red ratings to assess performance -- but for federal officials to use these tools to "make sure agencies are working better."
The order would formalize many of the administration's performance improvement efforts, some of which have been carried out informally for the past several years, and would build upon initiatives such as the Program Assessment Rating Tool.
-Robert Brodsky, GovExec.com
Thursday, November 15, 2007
U.S. Government Accountability Office: Performance and Accountability Report, Fiscal Year 2007.
GAO-08-1SP, November 15.
Dave Nicholson - Assistant Administrator for Finance and Administration and Chief Financial Officer
It has been a bit of a bumpy flight for the TSA, going from 16 employees to more than 60,000 in a matter of months. Nicholson says that type of quick growth combined with the high profile responsibilities of keeping the skies safe makes it imperative to keep track of the details, something TSA did not do well at its inception. However, he says like many start-ups in the private sector, the maturation process at TSA has resulted in better systems, procedures and flexibility to take on and support the mission. Still, Nicholson says the crux of his job is to keep up with the operational planners and know what they are thinking so he and his staff can best advise them on making the most of the funds at hand.
Wednesday, November 14, 2007
WASHINGTON, Nov. 14 /PRNewswire-USNewswire/ -- The U.S. GeneralServices Administration has earned an unqualified "clean" opinion on its FY2007 Performance and Accountability Report (PAR), GSA Administrator LuritaDoan announced today.
"The clean opinion and performance report is important on many levels,"Doan said. "It reflects GSA's dedication to financial managementexcellence. It is also a credit to our employees and openly demonstrates toour agency customers and the American taxpayer that accountability andtransparency are integral to all GSA business and financial transactions."
Kathleen Turco, GSA's Chief Financial Officer, said the clean opinion"means that our Federal customers can trust that GSA has the financialintegrity and appropriate controls in place to properly manage theirfunds."
Moreover, Turco said, "The clean opinion directly supports GSA's newcommitment to excellence in the business of government and affirms theagency's mission to offer and deliver services and commodities as neededand at the best price to its customers."
GSA's business activities during 2007 show an overall improvedfinancial position, demonstrating that a major internal reorganization, arenewed focus on superior customer service and several new businessinitiatives are beginning to pay important dividends. Highlights of GSA's2007 financial success include: breaking even on financial operations,GSA's commercial schedules program is showing an all time high growth of2.2 percent, and Global Supply increasing 5.5 percent mainly from businesswith the Department of Defense.READ MORE...
Friday, November 09, 2007
Financial Audit: IRS's Fiscal Years 2007 and 2006 Financial Statement Audits.
GAO-08-166, November 9
Highlights - http://www.gao.gov/highlights/d08166high.pdf
Thursday, November 08, 2007
David Fisher - Director
The old saying goes, an army travels on its stomach. That may still be true, but at the Department of Defense, the belief is that to be successful, the military must be supported by a streamlined and transparent business process. Breaking down cultural barriers and putting that enterprise architecture into place is where David Fisher and the Business Transformation Agency comes in. Fisher says over the past two years, the BTA has been working to find the right balance between centralization and decentralization for its business practices. The effort has resulted in a small set of critical and standardized data elements. As a result, the Defense Department now has access to more financial information in a timely and automated fashion. Once the process is completed, Fisher says it will give key decision makers access to critical information that will contribute to the warfighting effort. Fisher says the immediate challenge is to come up with the right sort of performance metrics to help determine how well the process is proceeding.
What do you call it when eight federal officials and eight state and local leaders convene voluntarily to discuss intergovernmental fiscal affairs? Well, if you’ve watched the downward trajectory that has characterized intergovernmentalism in Washington over the past decade or so, you might call it a minor miracle.
But last month, that’s just what happened. A 16-member panel whose leaders included Danny Werfel, acting director of the U.S. Office of Management and Budget, and Martin Benison, the Massachusetts state controller, sat down to develop plans for a new standing group that will focus on how the three levels of government might work more rationally through the broad range of intergovernmental fiscal issues that leave state and local officials alternatively exasperated, confused and, on some days, entertaining notions of open rebellion.
The effort, which is being called the “Partnership for Intergovernmental Management and Accountability,” is being jointly sponsored by the Association of Government Accountants and the Chief Financial Officers Council, a group made up of the top fiscal officials from the 24 largest federal agencies.
The partnership has a wide range of issues and activities it might tackle, from serving as a forum for sharing best practices in fiscal management to working through proposed rules and regulations for specific federal grants and transfer programs.
The partnership emerged out of what might seem an unlikely issue: the Bush administration’s concern about “improper payments” that the feds might have made to states and localities. Relmond Van Daniker, the executive director of the Association of Government Accountants, didn’t think the prospect of federal liens against states and localities due to perceived overpayments was a very practical investment of federal time or energy. “That just wasn’t going to work,” says Van Daniker. “What we really need is to get states, locals and feds talking to one another again.”
The partnership does have one important thing going for it: Those who are represented by AGA and the CFO Council clearly are getting tired of all the confusion and conflict when it comes to intergovernmental fiscal affairs. This potentially powerful source of grassroots and high-level discontent just might hold the new partnership together.
-Jonathan Walters, Governing.com
Wednesday, November 07, 2007
Financial Audit: Bureau of the Public Debt's Fiscal Years 2007 and 2006 Schedules of Federal Debt.
GAO-08-168, November 7
Highlights - http://www.gao.gov/highlights/d08168high.pdf
Tuesday, November 06, 2007
A May 22 Office of Management and Budget directive ordered agencies to develop and implement data breach notification policies for personal information in the government's possession within 120 days. The agencies were instructed to meet privacy and security requirements, such as reducing the use of Social Security numbers and beefing up encryption.
Agencies that did not complete all the requirements identified in the memo received a downgrade in their e-government progress on the fourth-quarter PMA score card, released Monday. Twenty-one of the 25 agencies rated received downgrades in e-gov progress.
The other four PMA initiatives -- performance management, competitive sourcing, human capital and financial performance -- showed significantly less movement in grades for both current status and progress. No agency changed its status in the financial performance or performance management categories and only the General Services Administration changed its human capital status, improving from yellow to green.
-Elizabeth Newell, GovExec.com
Monday, November 05, 2007
The act’s first objective was to instill financial management disciplines in all federal agencies — sound accounting of assets and liabilities, accurate tracking of receipts and payments, and strong controls to reduce government error and waste.
To meet this objective, the act required agencies to annually publish audited financial statements and established the position of agency CFO to lead these efforts.
Reliable and timely financial statements are not easy to produce in the federal environment.
Agency assets and expenditures are enormous in scale. Financial activity can take place in thousands of localities in the U.S. and internationally. Unique program requirements often result in diverse and complex financial transactions.
Thus, as the act envisioned, an agency must have rigorous financial management disciplines in place in order to timely and reliably report on financial activities.
The federal CFO has come a long way in meeting this objective. Before the act, financial statement reporting in the government was nonexistent. By the mid-1990s, only a few agencies were able to produce financial statements that achieved a passing score or “clean opinion” from independent auditors. And up until a few years ago, most agencies took as long as five months after the end of the fiscal year to publish their financial statements.
Today, all major agencies issue their financial statements within 45 days of fiscal year end and a majority of agencies, representing more than 75 percent of all federal expenditures, achieve a “clean opinion.”
But the CFO Act has loftier objectives than the production of clean financial statements. They are:
- Transparency — effective reporting of agency finances to the public, including information on the sustainability of government operations and a user-friendly presentation of the cost effectiveness of government programs.
- Targeted internal controls — policies and procedures that mitigate the most significant areas of financial risk in the organization.
- Decision support — personnel at all levels in the organization with financial information to manage risk and drive better program results.
The role of the federal CFO must evolve and expand beyond being the “preparer” of financial statements to meet these objectives.
The CFO must be positioned to identify critical financial risks and business goals for the organizations. The CFO must be empowered to implement data strategies that inform on those risks and goals. And the CFO must lead efforts within the agency to improve the relevance and readability of public accountability reports.
What steps are necessary to ensure that the CFO’s role evolves as the act envisioned? How do we maintain focus on financial statement reporting while dedicating CFO energies in new areas?How can CFOs improve the return on investment of current financial management activities?
Representatives from the federal CFO and audit communities have come together under a project called “Smarter Accountability” to sort through these issues and define a clear path forward for the federal CFO.
In doing so, the Smarter Accountability group will not take our eyes off the ball of timely and reliable financial statement reporting. It is the foundation for every possible achievement that lies ahead and significant work in this area remains.
However, 17 years after the CFO Act was signed into law, the time is right to determine how the federal CFO can meet the broader objectives of the act.
We look forward to working with the entire federal financial community to achieve this important goal.
-Danny Werfel, OMB, Published on FederalTimes.com
Danny Werfel is acting controller at the Office of Management and Budget.
Thursday, November 01, 2007
Since its inception in January 2005, FedCFO.com has become an important aggregator of information from the public domain pertaining to Federal financial management from sources such as: Government Accountability Office (GAO), Office of Management and Budget (OMB), Financial Systems Integration Office (FSIO), U.S. Chief Financial Officer's Council (CFOC), U.S. Treasury, Association of Government Accountants (AGA), American Society of Military Comptrollers (ASMC), Federal Financial Managers Council (FFMC), Federal Accounting Standards Advisory Board (FASAB), Governmental Accounting Standards Board (GASB), American Association for Budget and Program Analysis (AABPA), Federal Computer Week, Federal News Radio, Government Computer News, Federal Times, Government Executive, Washington Technology, CFO Magazine, Washington Post, and many more.
In addition, FedCFO.com provides a custom Google search engine for Federal financial management topics to help its users find specific topical information while excluding the extraneous data that is included with standard web searches.
Michael Kane - Associate Administrator for Management and Administration
Breaking down barriers. That type of talk is all the rage among tech-savvy government officials. Only Kane, winner of a Meritorious Presidential Rank award, says now financial officers are getting into the act, using increased transparency to eliminate redundancy across agency lines. Kane says while this save money it also means putting a greater burden on financial officers to adopt business manager-type skills to ensure there are no hiccups along the way, something which could have far-ranging implications for the way we look at careers in government. He also talks about NNSA's recruiting efforts and the impact merging NNSA's physical and IT security functions will have on the agency's finances.