The Labor Department's new $27.6 million (and counting) core financial system prevented the department from producing an auditable financial statement for fiscal 2010. This marks the first time in 13 years that the department has failed to earn a "clean" audit opinion for its financials.
Since January, when Labor turned on the New Core Financial Management System, the department has experienced "significant transaction and reporting errors" in its financial reporting processing primarily caused by NCFMS data migration problems, subsystem interfaces not operating as intended and some processes not functioning well, such as the account for property, plant and equipment, department officials acknowledge in their fiscal 2010 financial report.
KPMG, the department's outside auditors, warned (.pdf) Labor in late 2009 about issues related to the system, but many identified risks were not rectified prior the system's initiation. Labor awarded Reston, Va.-based Global Computer Enterprises a contract in 2008 worth up to $50 million to provide the system, support its implementation and migrate data from the old system.
Among the errors identified by auditors in an initial draft of year-end financial statements is a $4.1 billion discrepancy of liability in $12.1 billion compensation fund for nuclear weapons workers. In order to compensate for NCFMS problems the office of chief financial officer has to hire additional contractors. Bonhert said the additional contractors will cost $10 million and GCE's contract has been raised to $60 million as a result.
-David Perera, FierceGovernmentIT.com
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