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Friday, September 30, 2011

As BTA closes Friday, DoD continues to foster strategic goals

As the Defense Department starts the new fiscal year Saturday, it will be pursuing some new business goals. And they'll be accompanied by a new level of accountability for meeting the seven objectives for fiscal 2012.

The Pentagon's Strategic Management Plan is an annual document designed to align DoD's business practices with the overarching goals laid out in the Quadrennial Defense Review, the Pentagon's regular study on military strategy.

One is to increase the department's energy efficiency, both on its bases and among its deployed forces. That follows the recent creation of a new director of operational energy for DoD, and the department's first-ever report on operational energyearlier this year.

Also new on the list is the goal of rebuilding and using end-to-end business processes, a topic the office of the Deputy Chief Management Officer has championed.

And one of last year's workforce goals has been stated differently this year. Last year's plan called for enhancing the civilian workforce. This year's version aims at "rightsizing" the mix between military, civilian and contractor personnel during a time of constrained resources.

Other goals include:

•Strengthening financial management,

•Building secure and agile information technology capabilities,

•Increasing the buying power of the department and

•Creating agile business operations that support contingency missions

Some of the areas are updates to goals in previous years' plans, but there are also some new priorities on this year's list.

Also this week, DoD will officially dismantle the agency that was in some ways the forerunner to the Deputy Chief Management Officer. Former Defense Secretary Robert Gates identified the closure of the Business Transformation Agency as part of the efficiency initiatives introduced last year.

-Jared Serbu, FederalNewsRadio.com

Monday, September 26, 2011

AGA to Conduct Research on the Consolidated Financial Statements of the U.S. Government

Research will identify potential solutions and develop plans of action to facilitate the reconciliation of the Government’s budgetary and financial information, and consequently mitigate long-standing material weaknesses contributing to the disclaimer of audit opinion on the Federal Government’s Consolidated Financial Statements (CFS) .

Alexandria, VA – As part of its ongoing efforts to conduct timely and relevant research to benefit governmental accounting, auditing, and financial management, the Association of Government Accountants (AGA) will be researching long-standing financial management weaknesses in the processes used to compile the federal government's financial statements.

AGA's research is expected to produce recommendations and a suggested plan of action to address some of the key material audit weaknesses contributing to the disclaimer of opinion on Consolidated Financial Statements (CFS) of the U.S. Government. The project will also outline optimal preparation and compilation architecture for the government-wide entity. In so doing, AGA hopes that its research will benefit the Federal financial management community as a whole and facilitate Treasury's responsibilities as preparer of the CFS.


Better oversight of contracts called key to repairing Pentagon ledgers

Improving oversight and administration of defense contracts is the key to victory in Pentagon financial managers' struggle to meet a 2017 deadline for auditable books, a Defense Department deputy inspector general official said Friday.

"From the contract officer level to the contract officer on the ground, the more improvement in regulation and oversight of contracts, the more we will know about how we are spending the taxpayers' money," Daniel Blair, deputy inspector general for auditing at Defense, told lawmakers.

Members of the House Oversight and Government Reform Subcommittee on Government Organization, Efficiency and Financial Management heard testimony from three financial management specialists discussing the 14-year-plus effort to integrate some 2,200 separate Pentagon business systems -- handling $2 billion to $3 billion in transactions daily -- to achieve auditability and to get Defense accounting systems off the Government Accountability Office's high-risk list.

Defense Secretary Leon Panetta on Thursday reiterated his position that book-keeping problems must be solved quickly.

Of the 14 Defense entities that are required to prepare annual financial statements, only two have achieved an unqualified opinion, said Blair, the two being the Military Retirement Fund and the Army Corps of Engineers Civil Works. In the push to meet the 2017 deadline, which involves standing up new systems that cost $9 billion, some milestones have already begun to slip, he said.

-Charles S. Clark, GovExec.com

Programmer, procurement staff failings contribute to software attacks

When hackers take advantage of a software flaw in a federal financial system to steal credit card numbers, procurement officers and program developers are both to blame for the intrusion, some information security specialists say.

Vulnerabilities stem from the inadequate training of software engineers, as well as inadequate requirements from acquisition officers. In the old days, when software operated in an isolated system, developers thought threats would be limited to that computer's physical area. In today's networked world, however, software is operating in environments that the developer may not have had in mind when building a program.

-Aliya Sternstein, NextGov.com

Wednesday, September 21, 2011

20 years later, CFO Act needs some freshening up

Congress must standardize the role of the federal chief financial officer and give deputy CFOs more clout to make up for time between political appointments of CFOs.

These are two of the recommendations from a multi-agency review of the impact and shortcomings of the CFO Act of 1990. Congress required the analysis as part of the Improper Payments Elimination and Recovery Act of 2010.

"Over the past 20 years, the CFO Act has played a pivotal role in improving financial accountability and transparency across the federal government," wrote Danny Werfel, the Office of Management and Budget controller in a blog post. "The report highlights several benefits of the CFO Act, including the increased transparency, greater accountability and significant improvements in financial management and internal controls achieved in recent years. Last year, these strides contributed to 21 out of the 24 CFO Act agencies obtaining unqualified 'Clean' opinions on their financial statement audits--only the second time in the last decade that the government reached that milestone."

The CFO Act helped agencies strengthen financial controls and processes over the last 20 years. Previously, the report stated financial operations were ineffective and inefficient, weak internal controls left resources at risk, personnel were not adequately trained and financial systems could not communicate with each other and were often redundant. The report said fund balances with the Department of the Treasury were reconciled inconsistently, and the government had difficulty managing its assets and costs. The lack of a full-time centralized senior official overseeing agency funding also caused agencies problems prior to the act.

But one of the big holes the review group found was the lack of continuity among agency financial leaders since most CFOs are political appointees.

The review group recommended to Congress to give deputy CFOs the same breadth of responsibilities as the CFOs.

-Jason Miller, FederalNewsRadio.com

Living With Continuing Resolutions

Continuing resolutions (CRs) are here to stay. Although administrators fear CRs might wreak havoc with agency programs and budget plans, administrators can prepare for CRs to minimize disruption and normalize operations.

The U.S. Constitution requires Congress to pass appropriations bills before federal agencies can spend government monies. The congressional budget process aims to pass these bills before the start of each fiscal year. However,

Congress has not always been able to pass regular appropriations bills on time, and thus developed a temporary appropriation, called a continuing resolution (CR), to fund agencies until their regular appropriations bills are passed.

Congress attempted to address its inability to pass annual appropriations bills on time by changing the start of the federal fiscal year, from July 1 to October 1, in the 1974 Congressional Budget and Impoundment Control Act.

The plan worked—for one year. Congress has passed all appropriations bills before October 1 only three times in the 34 years from 1978 to 2011.
-Thad Juszak, ThePublicManager.org

Lawmakers press DoD for better bookkeeping

Every month, troops get their paychecks, military commands buy billions of dollars in gear, and operations roll on worldwide.

Yet the Defense Department has never been able to account for where all that money and equipment goes.

That failure is a growing concern for lawmakers in Washington who are debating whether to slash the Pentagon's $553 billion annual budget.

"During these times of resource constraints and budget cuts, it's imperative that the Department of Defense have reliable, useful and timely information for decision making," Rep. Michael Conaway, R-Texas, told a panel of Pentagon brass on Capitol Hill on Thursday.

Conaway and other lawmakers are pressing the Defense Department to step up oversight of its money and equipment with the goal of conducting a formal audit by 2017.

-Andrew Tilghman, FederalTimes.com

W. Todd Grams: Changing outmoded VA management practices

The Department of Veterans Affairs (VA) has long functioned as if it were three distinct business entities—health care, benefits and cemeteries—and never fully integrated its financial management, acquisition, human resources, capital investment and technology functions across the organization.

With a mandate for change from the VA’s top leadership, W. Todd Grams led two major transformational initiatives designed to create a coherent and unified department, streamline access points for VA beneficiaries, reduce costs per beneficiary, and ultimately deliver better care to more veterans.

During fiscal 2010, Grams, the VA’s executive in charge of management and chief financial officer, established a new integrated management governance structure for the VA’s business key functions. This involved the updating 140 policies, streamlining hiring processes for acquisition personnel, implementing a self-service employee benefit portal and training 2,375 employees in financial management.

Grams and his leadership team also successfully led the effort for the first time to combine all of the department’s investment planning efforts involving construction, leasing and non-recurring maintenance—a portfolio accounting for nearly $100 billion. For decades, planning and investment decisions for VA capital infrastructure took place in stovepipes, at times resulting in duplicative efforts and poor use of taxpayer dollars.

Additionally, Grams led his team through an in-depth analysis of VA’s financial management priorities. This review stopped a $500 million financial systems overhaul in its initial stages and redirected funding from this high-risk venture into new programs that will generate greater benefit at significantly lower cost. The changes have dramatically improved controls over a $14 billion purchasing program.

- The Partnership for Public Service, Published: September 16

DOD correcting mismanagement of financial records

The Defense Department is making progress in rectifying its mismanagement of financial records and improving its accountability, including by implementing new IT strategies, but problems remain in carrying out enterprisewide reform, officials have told a Senate panel.

“We continue to make important progress but also face significant challenges in transforming all elements of the DOD business environment in order to produce high quality, timely and reliable financial information,” DOD Comptroller Robert Hale said in a Sept. 15 statement submitted to a subcommittee of the Senate Homeland Security and Governmental Affairs Committee.

Another hearing examining DOD financial management is scheduled for Sept. 23 before the House Oversight and Government Reform Committee.

Hale and Elizabeth McGrath, DOD's deputy chief management officer, outlined their goals and some of their successes so far before the Federal Financial Management, Government Information, Federal Services and International Security Subcommittee.

They also testified about the importance of new IT systems to help bring financial management up to date.

-Amber Corrin, FCW.com

Thursday, September 15, 2011

Cabinet Accountability for Cutting Waste

When he launched the Campaign to Cut Waste in June, President Obama asked the Vice President to take on a new role holding the Cabinet accountable for cutting waste in their agencies to help make government more efficient and responsive to the American people. As a part of that effort, the Vice President today convened the first Cabinet waste reduction meeting and announced over $2 billion in anti-waste measures.

Joined by agency leaders from across the government, the Vice President announced a new initiative to fight waste in health care, unveiled efforts to track state progress in reducing improper Unemployment Insurance payments, and directed Cabinet Secretaries to undertake waste and efficiency reviews that will target unnecessary, wasteful, and inefficient federal spending.

-Jack Lew, OMB

DoD failed to report misspent funds, lawmakers claim

The Defense Department has failed to properly notify Congress of hundreds of millions of dollars in misspent funds, several lawmakers wrote Tuesday in a letter to the Pentagon's chief financial officer and comptroller.

The letter to undersecretary of Defense Robert Hale, written by Sen. Tom Carper (D-Del.) and co-signed by 12 other senators and representatives cites violations of the Antideficiency Act totaling $817 million. The violations were identified by DoD but were never reported to Congress, the lawmakers wrote, citing reports by the DoD Inspector General and the Government Accountability Office.

The violations were related to budgets in 2005 and 2008, according to a statement from Carper's office.

The Antideficiency Act prohibits agencies from spending or obligating more money than Congress has authorized from a particular fund or for a particular purpose. In the event an agency determines it has violated the act, it is required to report "immediately to the President and Congress all relevant facts and a statement of actions taken."

The act carries both administrative and criminal penalties; knowing and willful violations can bring up to five years in prison.

-Jared Serbu, FederalNewsRadio.com

No big budget deal before 2012 election, says former comptroller general

Addressing the nation's budget crisis requires a "grand bargain" -- even double the $1.5 trillion Congress aims to save by Thanksgiving -- and such a deal is politically unlikely until after the 2012 elections, former Comptroller General David Walker said on Wednesday.

-Charles S. Clark, FederalNewsRadio.com

Wednesday, September 14, 2011

Cracks in security leave DHS financial systems vulnerable to abuse

Security weaknesses in the computers that track money for the Homeland Security Department could lead to a substantial mistake in the agency's financial statements, according to a federal audit.

KPMG analysts hired by the DHS inspector general to assess the department's various financial systems for the fiscal year ending Sept. 30, 2010, found about 160 deficiencies, or inadequate controls, most of which -- 65 percent -- were repeats of the previous year's problems. The IG office released a redacted version of the April 26 report on Monday.

Among the information technology inadequacies highlighted: ex-employees were still able to logon to their accounts and unauthorized outsiders successfully acquired user passwords from DHS personnel.

-Alicia Sternstein, NextGov.com

Friday, September 09, 2011

Air Force at risk of missing financial audit deadline

The Air Force may not meet the 2017 deadline to have a clean financial audit.

Air Force comptroller Jamie Morin told House lawmakers Thursday the state of information technologies plays into service readiness.

Morin said the Air Force has made "real progress," but "the 2017 deadline will be challenging for the Air Force. We do see moderate risk but with a high level of leadership commitment we feel we are on track to make the deadline. IT systems modernization is an inescapable part of the Air Force effort."

Congress put the Defense Department on notice in the National Defense Authorization Act for fiscal year 2010 when it required the Pentagon to validate its financial statements as ready for audit not later than Sept. 30, 2017.

Other Defense services told the House Armed Services Committee's Panel on Defense Financial Management and Auditability Reform they are on track to meet the deadline, or already have a clean audit opinion.

The Army Corps of Engineers, for instance, already has earned clean audit opinion by independent examiners. The Marine Corps is currently undergoing an audit of its statement of budgetary resources.

Offices from the departments of the Army and Navy expressed confidence that they will meet the 2017 deadline.

-Peter Buxbaum, FederalNewsRadio.com

Tuesday, September 06, 2011

Agencies Fall Short on Financial Management, House Panel Says

U.S. government agencies aren’t doing enough to share spending information with the public and still rely on manual processes to manage financial data, according to a House committee.

Federal agencies use “a tangled web” of systems to handle accounting of contracts, grants and other financial information, according to a report today from the House Oversight and Government Reform Committee summarizing the results of a survey of 26 agencies.

“Our analysis shows these systems are not serving taxpayers well,” Representative Darrell Issa, a California Republican and chairman of the panel, said in a news release.

Lawmakers on the panel had asked 26 agencies in March about their financial management practices, including accounting and grants management, and contracts management systems. The agencies also were asked to report on the interaction of their financial systems and the extent of their public reporting of financial data, according to the statement.

Issa introduced the Digital Accountability and Transparency Act of 2011 in June to encourage a governmentwide examination of federal spending by making such information publicly available, according to the release.

-Juliann Francis, Bloomberg.com