Focus on financial management pays off at DHS unit

Three years after severe financial management problems forced a hiring freeze and spending restrictions that jeopardized its operations, leaders at Immigration and Customs Enforcement can claim significant progress in overcoming weaknesses in the way it manages money, according to an independent audit of the Homeland Security Department's fiscal 2007 financial statements. ICE is part of Homeland Security.

While DHS remains unable to garner an audit opinion, due in large part to continuing finance and accounting problems at the Coast Guard and the Federal Emergency Management Agency, auditing firm KPMG found that ICE had remedied several material weaknesses noted in earlier audits of the bureau's financial statements.

ICE Chief Financial Officer Alexander Keenan attributed much of the bureau's success to support from top management and to his predecessor, Debra Bond, its first CFO. Bond and ICE Director Julie Myers, who appointed Bond to a permanent position (she had been acting CFO prior to Myers' appointment) just days after taking office herself in January 2006, crafted a multiyear plan to improve financial reporting at the $5 billion investigative agency.

"Having financial integrity is important for an agency in terms of garnering the support of Congress," Myers said. Also, because ICE performs financial management services for other agencies within Homeland Security, it had a responsibility to resolve problems. ICE received substantial help from the Office of the Inspector General at Homeland Security, Myers added.

The benefits of addressing material weaknesses have been significant, she said: In 2007, ICE was able to fully spend its appropriation, unlike previous years, when the bureau left some funds untouched because it didn't have enough confidence in the accuracy of its bookkeeping to avoid overspending. "That has really made a tangible difference," Myers said. "It also has given program directors a much higher level of confidence in terms of what the CFO is doing and how they're helping them manage money."

Of eight material weaknesses identified by auditors, Keenan said the most significant was that ICE's fund balance did not match Treasury's fund balance. Fixing that, which the agency was able to do in 2006, had a trickle- down effect and allowed ICE to fix several other weaknesses, he said.

Another related weakness -- budgetary accounting -- will be harder to address on a sustained basis. While fixing the fund balance with Treasury required changing processes at ICE's three finance centers, fixing budgetary accounting weaknesses will require changing processes and behavior at dozens of field offices. For example, if a field office contracts for a service, but that service ends up costing less than originally estimated, then the records must reflect that change in obligation.

ICE reaped substantial benefits this year by doing all invoice processing for the Federal Protective Service at the ICE finance center in Burlington, Vt. Previously, invoices were processed at 11 FPS regional offices. In 2008, ICE expects to consolidate the rest of the agency's invoice processing in Burlington as well.

- Katherine McIntire Peters, GovExec.com

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