Invoking a Washington Redskins football metaphor, Pentagon Comptroller Robert Hale said the Defense Department is at “midfield” in its effort to meet deadlines for auditability of its financial statements, “but we’ve just got Robert Griffin III, and we’ve got the ball and we’ve got momentum,” he told a House panel Friday.
The department and all the military services are struggling to meet a congressional requirement for clean books by 2017, along with a tighter deadline of 2014 laid down by Defense Secretary Leon Panetta. At a hearing before the House Armed Services Oversight and Investigations Subcommittee, Chairman Rob Wittman, R-Va., asked five top officials for progress reports on the efforts of a department with, he noted, $700 billion in net operating costs and $12 trillion in assets.
Hale said he was “reasonably confident” of meeting the twin goals, but added he could make no guarantees. “We’ve been humbled by what’s coming in the next two years, and we’ve overpromised and underdelivered before,” he said. But Congress, he added pointedly, has “sapped some of the time we have for achieving readiness” with its continuing budget stalemate, which has required Hale and his team to execute “four shutdown drills and plan for things that don’t end up happening.”
Asked whether he favored the Audit the Pentagon Act sponsored by Sen. Tom Coburn, R-Okla., which, among other provisions, would threaten to move Defense auditing functions to the Treasury Department, Hale said he did not. “It would have the opposite effect than intended,” he said, saying Defense employees need such day-to-day operations in-house.
Hale and other witnesses noted that sections of each of the services have achieved audit readinesses, mentioning the Defense Information Systems Agency, the Defense Contract Audit Agency, the Army Corps of Engineers and several specific programs. The Marines are viewed as a model in the effort.
Charles S. Clark, GovExec.com
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Showing posts with label ACoE. Show all posts
Showing posts with label ACoE. Show all posts
Monday, September 17, 2012
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
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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
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Wednesday, August 24, 2011
Pentagon puts 'faith' in achieving clean audit by 2017
It's the law: The Defense Department must know how it spends every cent of its budget by 2017. But the agency said only 14 percent of its budget is now auditable.
Deputy chief financial officer Mark Easton jokingly said he's overseeing a "faith-based initiative."
But with budget cuts on one hand and the continuing costs of war on the other, Easton said he has a lot of faith in preparing the nation's biggest employer for a complete financial audit by 2017.
The Pentagon has been trying to prepare its books for a complete financial audit for more than 20 years. A few departments, including the Army Corps of Engineers, are on track.
"But the picture is different when we look at the Army, the Navy, the Marine Corps and the Air Force," said Asif Khan, the Government Accountability Office's director of financial management and assurance, who joined Easton on the panel.
Khan said one of the biggest problems is DoD hasn't been able to operate what he calls the "building blocks of sound financial management" — the technology known as enterprise resource planning systems (ERPs) that would help them collect, analyze and prepare data.
-Emily Kopp, FederalNewsRadio.com
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Thursday, November 20, 2008
Administration touts continued progress on financial audits
Agencies have achieved the best audit results in recent years, giving the incoming administration a solid foundation for further progress, the Office of Management and Budget announced on Wednesday.
All but four of the 24 agencies required to have annual audits under the 1990 Chief Financial Officers Act received clean opinions for fiscal 2008, and all submitted their paperwork on time, OMB reported. In fact, seven agencies handed in their reports three days early, and every agency left a cushion of at least an hour before the midnight deadline on Monday, according to an OMB official who spoke on condition of anonymity. This was in marked contrast to 2004 -- the first year agencies were required to accelerate reporting to 45 days after the close of the fiscal year -- when agencies were "using every minute" available, the official said.
Of particular note, the Treasury Department achieved a passing mark despite last-minute complications as the government got more involved in stabilizing the economy. The takeover of mortgage giants Fannie Mae and Freddie Mac had to be reflected in the department's financial statements, for instance, since it occurred shortly before the end of the fiscal year on Sept. 30.
Administration officials also praised the Army Corps of Engineers, which earned its first clean audit, providing a glimmer of hope for its parent agency, the Defense Department. The Army Corps is the largest Defense entity to achieve a passing mark thus far, and doing so required a massive concerted effort because of the agency's large property inventory and decentralized structure, the OMB official said.
Agencies also made a dent in material weaknesses -- issues that give auditors pause about the reliability of financial information -- reducing them by 18 percent from 39 in fiscal 2007 to 32 in fiscal 2008. The Transportation Department boasted its first clean audit with no material weaknesses, showing that this combination is "very possible and viable" even for large agencies, the OMB official noted.
Agencies won plaudits for identifying more improper payments, which include over- or underpayments to beneficiaries of federal programs such as housing assistance and food stamps.
OMB estimated that the governmentwide payment error rate in fiscal 2008 was 3.9 percent or $71.7 billion. While this is an increase of $16.7 billion over fiscal 2007, it includes mistaken payments for 12 programs that were reviewed the first time in 2008 and is a much more comprehensive estimate than before, the OMB official said. Agencies have taken steps to eliminate mistakes identified in past years, the budget office noted, reducing the error rate for programs examined in fiscal 2004 from 4.4 percent to 3 percent.
It will fall to President-elect Obama's management team to continue this progress, and address lingering material weakness and bringing the four agencies that failed their audits up to speed. Those agencies -- the Defense, Homeland Security and State departments, and NASA -- share some challenges. Defense and Homeland Security have trouble with property inventories and keeping track of how much cash they have on hand, for instance. But other obstacles, such as Defense's outdated financial systems, are more unique.
Johnson recommended that the incoming administration set clear financial management goals and marshal the energy to achieve them. Motivating employees shouldn't be hard, he said. "The Obama administration is going to be very pleased with how well-prepared the financial management people are in each of the agencies to tackle these issues," Johnson said.
-Amelia Gruber, GovExec.com
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All but four of the 24 agencies required to have annual audits under the 1990 Chief Financial Officers Act received clean opinions for fiscal 2008, and all submitted their paperwork on time, OMB reported. In fact, seven agencies handed in their reports three days early, and every agency left a cushion of at least an hour before the midnight deadline on Monday, according to an OMB official who spoke on condition of anonymity. This was in marked contrast to 2004 -- the first year agencies were required to accelerate reporting to 45 days after the close of the fiscal year -- when agencies were "using every minute" available, the official said.
Of particular note, the Treasury Department achieved a passing mark despite last-minute complications as the government got more involved in stabilizing the economy. The takeover of mortgage giants Fannie Mae and Freddie Mac had to be reflected in the department's financial statements, for instance, since it occurred shortly before the end of the fiscal year on Sept. 30.
Administration officials also praised the Army Corps of Engineers, which earned its first clean audit, providing a glimmer of hope for its parent agency, the Defense Department. The Army Corps is the largest Defense entity to achieve a passing mark thus far, and doing so required a massive concerted effort because of the agency's large property inventory and decentralized structure, the OMB official said.
Agencies also made a dent in material weaknesses -- issues that give auditors pause about the reliability of financial information -- reducing them by 18 percent from 39 in fiscal 2007 to 32 in fiscal 2008. The Transportation Department boasted its first clean audit with no material weaknesses, showing that this combination is "very possible and viable" even for large agencies, the OMB official noted.
Agencies won plaudits for identifying more improper payments, which include over- or underpayments to beneficiaries of federal programs such as housing assistance and food stamps.
OMB estimated that the governmentwide payment error rate in fiscal 2008 was 3.9 percent or $71.7 billion. While this is an increase of $16.7 billion over fiscal 2007, it includes mistaken payments for 12 programs that were reviewed the first time in 2008 and is a much more comprehensive estimate than before, the OMB official said. Agencies have taken steps to eliminate mistakes identified in past years, the budget office noted, reducing the error rate for programs examined in fiscal 2004 from 4.4 percent to 3 percent.
It will fall to President-elect Obama's management team to continue this progress, and address lingering material weakness and bringing the four agencies that failed their audits up to speed. Those agencies -- the Defense, Homeland Security and State departments, and NASA -- share some challenges. Defense and Homeland Security have trouble with property inventories and keeping track of how much cash they have on hand, for instance. But other obstacles, such as Defense's outdated financial systems, are more unique.
Johnson recommended that the incoming administration set clear financial management goals and marshal the energy to achieve them. Motivating employees shouldn't be hard, he said. "The Obama administration is going to be very pleased with how well-prepared the financial management people are in each of the agencies to tackle these issues," Johnson said.
-Amelia Gruber, GovExec.com
READ MORE...
Tuesday, September 25, 2007
Financial chiefs make progress on audits, improper payments
In 1991, a year after Congress passed the Chief Financial Officers Act requiring agencies to exercise better financial controls and provide accurate and timely financial data that could be reviewed by independent auditors, only one of the 24 agencies covered by the law was able to receive a clean bill of financial health -- the General Services Administration. Now, 19 departments and independent agencies have received clean audits for the past two years.
To Linda Combs, that's incredible progress. She should know. Combs served in numerous financial management positions across the federal government, beginning with the Reagan administration and ending last month, when she retired after two years as comptroller at the Office of Management and Budget.
Today, 12 agencies have achieved that standard, according to OMB. "CFOs have taken a lot of responsibility for helping their business units to use financial data in better ways. What I like to say about the CFO Act is that it took CFOs from the backroom to the boardroom. I think [Comptroller General] David Walker first said that, but I've adopted that quote because it's so descriptive of what happened," Combs says.
Progress hasn't come easily. Only in the last two years have most agencies been able to meet the 45-day reporting requirement for providing financial statements at the close of the fiscal year -- and many of those reports were filed only after Herculean manual efforts by employees working overtime to meet the deadline.
Progress has been labor intensive, but it's also been measurable. In an area of particular importance to taxpayers, OMB estimates that improper payments declined to $36.3 billion for programs that reported $45.1 billion in 2004. While that's still a lot of money paid out incorrectly, it's an improvement, relatively speaking.
Timothy Hill, director of the Office of Financial Management and chief financial officer at the Centers for Medicare and Medicaid Services, told the House Budget Committee in July that CMS executes four parallel strategies to reduce error rates: prevention of improper payments, early detection of errors, coordination with outside entities to identify fraud, and enforcement.
This year, CMS estimates that Medicare contractors will process well over 1 billion claims from providers, physicians and suppliers for items and services covered by the program. Last year, Medicare outlays were nearly $382 billion.
Another area of notable progress across federal agencies has been real property management. Two years ago, the government had no centralized inventory of its real property -- no reliable data reflecting the operation and maintenance costs of federal facilities, where facilities were located, what condition they were in, whether they were critical to agencies' missions. In 2005, OMB launched an effort to create such an inventory. In the process, it disposed of $4.5 billion in excess property.
Chief financial officers at every agency share a common purpose. They all are responsible for ensuring that agencies comply with accounting and reporting laws, and they play key roles in strategic planning. But their function can vary significantly from agency to agency. When William M. McCabe was acting chief financial officer at the Education Department, his attention was on the business of making loans and issuing grants.
"The primary focus was an outflow of cash," he says. Now he is chief financial officer at the Nuclear Regulatory Commission, an agency that bills for a lot of the services it performs for its mission of ensuring safety and security at civilian nuclear power plants. "The focus has a more commercial bent -- billing for services, recovering that money," he says.
For many CFOs, including McCabe, improving finance and accounting systems has required greater cooperation with other chief executives, especially chief information officers. "I work very closely with our new CIO, Darren Ash," says McCabe. "We're working on many fronts together, looking at investments as a portfolio other than a single stovepipe, system by system. We want to make sure we're spending money wisely and not redundantly."
The Nuclear Regulatory Commission formed a capital planning and investment control process, chaired by the CIO, to make sure investments in technology are tied to the budget and planning process. "It becomes more and more critical the larger we get. It comes down to managing this growth," McCabe says.
It was a similar level of cooperation between CIO and CFO that led the Homeland Security Department last year to cancel its financial management modernization program known as eMerge, after investing more than $52 million -- but well before spending an estimated $229 million on the system.
Homeland Security, which was formed from the merger of 22 agencies in 2003, inherited dozens of separate financial systems that were unable to share data across the department, creating a host of problems with functions ranging from paying employees accurately to processing travel vouchers. The eMerge program was intended to integrate finance, accounting, procurement and asset management systems, but it ran into technical challenges and the department cut its losses, said David L. Norquist, Homeland Security's chief financial officer, at a Senate hearing in June.
Homeland Security is migrating agencies to one of two finance and accounting systems adopted by the Customs and Border Protection directorate and the Transportation Security Administration. "When you review the different systems the department has, these two agency solutions stand out. They use core accounting applications that are also used by other large federal agencies with unqualified audit opinions," said Norquist.
Rather than buy a new departmentwide system, Homeland Security plans to migrate nearly all agencies to either the TSA system or the CBP system by 2011. At that point, the department plans to choose one of the two to meet all its financial management needs.
When it comes to financial management, the Defense Department remains the elephant in the room. With an operating budget that dwarfs all other agencies combined, finance and accounting systems there are hugely complicated, and most weren't designed to provide data in the way agencies are now required to provide it.
By focusing on material weaknesses that are problems across the department, Defense is making measurable progress, according to a senior official at OMB: "They have very specific action plans associated with strengthening controls around the inventory and valuation of those different items, and they've made measurable progress in improving the readiness of those audit areas."
This year, in a first for any large component of the Defense Department, the Army Corps of Engineers is going through an outside audit. The audit, which was being conducted "off cycle," according OMB, was not yet complete at press time, "but the fact that they were ready to do an audit and have gone through 97 percent of the process at this point -- and things look like they went very well -- is tremendous progress," the OMB official says. Another major entity at Defense -- the Marine Corps -- is nearly ready to face outside auditors as well.
-Katherine McIntire Peters, GovExec.com
READ MORE...
To Linda Combs, that's incredible progress. She should know. Combs served in numerous financial management positions across the federal government, beginning with the Reagan administration and ending last month, when she retired after two years as comptroller at the Office of Management and Budget.
Today, 12 agencies have achieved that standard, according to OMB. "CFOs have taken a lot of responsibility for helping their business units to use financial data in better ways. What I like to say about the CFO Act is that it took CFOs from the backroom to the boardroom. I think [Comptroller General] David Walker first said that, but I've adopted that quote because it's so descriptive of what happened," Combs says.
Progress hasn't come easily. Only in the last two years have most agencies been able to meet the 45-day reporting requirement for providing financial statements at the close of the fiscal year -- and many of those reports were filed only after Herculean manual efforts by employees working overtime to meet the deadline.
Progress has been labor intensive, but it's also been measurable. In an area of particular importance to taxpayers, OMB estimates that improper payments declined to $36.3 billion for programs that reported $45.1 billion in 2004. While that's still a lot of money paid out incorrectly, it's an improvement, relatively speaking.
Timothy Hill, director of the Office of Financial Management and chief financial officer at the Centers for Medicare and Medicaid Services, told the House Budget Committee in July that CMS executes four parallel strategies to reduce error rates: prevention of improper payments, early detection of errors, coordination with outside entities to identify fraud, and enforcement.
This year, CMS estimates that Medicare contractors will process well over 1 billion claims from providers, physicians and suppliers for items and services covered by the program. Last year, Medicare outlays were nearly $382 billion.
Another area of notable progress across federal agencies has been real property management. Two years ago, the government had no centralized inventory of its real property -- no reliable data reflecting the operation and maintenance costs of federal facilities, where facilities were located, what condition they were in, whether they were critical to agencies' missions. In 2005, OMB launched an effort to create such an inventory. In the process, it disposed of $4.5 billion in excess property.
Chief financial officers at every agency share a common purpose. They all are responsible for ensuring that agencies comply with accounting and reporting laws, and they play key roles in strategic planning. But their function can vary significantly from agency to agency. When William M. McCabe was acting chief financial officer at the Education Department, his attention was on the business of making loans and issuing grants.
"The primary focus was an outflow of cash," he says. Now he is chief financial officer at the Nuclear Regulatory Commission, an agency that bills for a lot of the services it performs for its mission of ensuring safety and security at civilian nuclear power plants. "The focus has a more commercial bent -- billing for services, recovering that money," he says.
For many CFOs, including McCabe, improving finance and accounting systems has required greater cooperation with other chief executives, especially chief information officers. "I work very closely with our new CIO, Darren Ash," says McCabe. "We're working on many fronts together, looking at investments as a portfolio other than a single stovepipe, system by system. We want to make sure we're spending money wisely and not redundantly."
The Nuclear Regulatory Commission formed a capital planning and investment control process, chaired by the CIO, to make sure investments in technology are tied to the budget and planning process. "It becomes more and more critical the larger we get. It comes down to managing this growth," McCabe says.
It was a similar level of cooperation between CIO and CFO that led the Homeland Security Department last year to cancel its financial management modernization program known as eMerge, after investing more than $52 million -- but well before spending an estimated $229 million on the system.
Homeland Security, which was formed from the merger of 22 agencies in 2003, inherited dozens of separate financial systems that were unable to share data across the department, creating a host of problems with functions ranging from paying employees accurately to processing travel vouchers. The eMerge program was intended to integrate finance, accounting, procurement and asset management systems, but it ran into technical challenges and the department cut its losses, said David L. Norquist, Homeland Security's chief financial officer, at a Senate hearing in June.
Homeland Security is migrating agencies to one of two finance and accounting systems adopted by the Customs and Border Protection directorate and the Transportation Security Administration. "When you review the different systems the department has, these two agency solutions stand out. They use core accounting applications that are also used by other large federal agencies with unqualified audit opinions," said Norquist.
Rather than buy a new departmentwide system, Homeland Security plans to migrate nearly all agencies to either the TSA system or the CBP system by 2011. At that point, the department plans to choose one of the two to meet all its financial management needs.
When it comes to financial management, the Defense Department remains the elephant in the room. With an operating budget that dwarfs all other agencies combined, finance and accounting systems there are hugely complicated, and most weren't designed to provide data in the way agencies are now required to provide it.
By focusing on material weaknesses that are problems across the department, Defense is making measurable progress, according to a senior official at OMB: "They have very specific action plans associated with strengthening controls around the inventory and valuation of those different items, and they've made measurable progress in improving the readiness of those audit areas."
This year, in a first for any large component of the Defense Department, the Army Corps of Engineers is going through an outside audit. The audit, which was being conducted "off cycle," according OMB, was not yet complete at press time, "but the fact that they were ready to do an audit and have gone through 97 percent of the process at this point -- and things look like they went very well -- is tremendous progress," the OMB official says. Another major entity at Defense -- the Marine Corps -- is nearly ready to face outside auditors as well.
-Katherine McIntire Peters, GovExec.com
READ MORE...
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