Interview with Christine Shafik of DOE: “It is a transformational time”

Christine Shafik is director of the Office of Risk Management for the U.S. Department of Energy. In this role, she is responsible for the oversight of the department’s financial resource planning, as well as the management of the department’s Financial Management Oversight Program. She also plays a vital role in the implementation of an effective internal control program and in the management of the department’s audit resolution and follow-up activities. Finally, Shafik is responsible for providing a corporate financial review and analysis to the CFO of the department.

We had the chance to talk to her about the Recovery Act funds because the Department of Energy received around $40 billion to create more clean-energy jobs, as well as make the country less dependent on foreign oil. We learned how the Department of Energy has gone above and beyond OMB requirements, what forward-looking risk management means, and how Shafik manages an extremely large amount of information on a day-to-day basis.

READ MORE...

Academy urges major management reform at Energy

While the Obama administration is counting on the Energy Department to play a key role in addressing a host of national priorities, including energy independence and economic recovery, a new study by the National Academy of Public Administration raises serious questions about the department's ability to manage existing responsibilities.

In a highly critical report released on Tuesday, the expert panel conducting the study found that the department's mission-support functions, including human resources, contracting and financial management, need urgent attention from Energy Secretary Steven Chu.

The panel was especially critical of staff in the Office of the Chief Human Capital Officer, citing poor leadership, inadequate customer support and a lack of strategic vision.

The panel also found significant problems in contracting and financial management, but said the department had made important strides in addressing them over the course of the study, which began in early 2008.

In terms of financial management, the panel noted that the Office of the Chief Financial Officer had developed a more strategic approach to guiding operations than either the human resources or contracting offices. But the department is unique among federal agencies in that it allots appropriated funds to field office managers and field financial officers rather than the assistant secretaries that Congress, the Energy secretary and the public hold accountable for achieving program results.

The panel recommended that Energy change its budget process by distributing appropriated funds to program assistant secretaries and holding those executives responsible for allocating resources to the field.

NAPA conducted the study at the request of the House and Senate Energy and Water Development Appropriations Subcommittees, whose members were concerned about Energy's ability to adequately perform key management functions.

-Katherine McIntire Peters, GovExec.com
READ MORE...

Stocking Federal Government Financial Management Positions

Steve Isakowitz, Chief Financial Officer, U.S. Department of Energy
Max Stier, President and CEO, Partnership for Public Service

Join AGA today at noon EDT (April 7) on WFED AM 1500 to hear from Max Stier, President and CEO, the Partnership for Public Service and Steve Isakowitz, Chief Financial Officer, U.S. Department of Energy, as they offer advice on hiring and retaining government financial managers. Today, more than ever, talented government financial managers are needed to monitor and to distribute the $787 billion in recovery monies.

Listen Here

FSIO Quarterly Newsletter - Summer/Fall 2008

FSIO recently posted its latest Quarterly Newsletter online.

This issue includes:

• An interview with Owen Barewell, FSIO Transformation Team Chairman and DOE DCFO
• SSP Spotlight on GSA's Federal Integrated Solutions Center (FISC)
• FMLOB Procure-to-pay standardization
• Reimbursables Standard Business Process plans

FederalNewsRadio - Federal CFO Insights - DOE

Department of Energy

Steve Isakowitz - Chief Financial Officer
April 16th & 19th, 2008

This program gives future and current financial professionals an insider's insight into Human Capital Talent Management

Listen Here

FederalNewsRadio - Ask the CFO - Michael Kane (NNSA)

National Nuclear Security Administration

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.

Listen Here

Agencies continue to make strides in financial management

All major agencies met financial reporting deadlines for the third year in a row, completing the audit process within 45 days of Sept. 30, the end of fiscal year, the Office of Management and Budget reported Monday. The audit results show continued improvement in financial management and accounting, OMB officials said.

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

READ MORE...

FederalNewsRadio - Ask the CFO - Michael Kane (NNSA)

National Nuclear Security Administration

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.

Listen Here

FederalNewsRadio - Ask the CFO - Steve Isakowitz (DOE)

Department of Energy

Steve Isakowitz - Chief Financial Officer

It may not be the traditional path for a Chief Financial Officer but Isakowitz says his background in aerospace engineering has served him well, allowing him to understand the diverse, technical mission areas supported by the department's budget. He says that practical scientific knowledge also helps up front in evaluating the risks of large, all or nothing projects. Finally, he says being able to understand the financial and scientific aspects of the department's mission pays off in other critical ways, especially since research is something which does not always lend itself to be measured simply or easily.

Listen Here

Today's GAO Publications

The Government Accountability Office (GAO) today released the following reports:

Federal Farm Programs: USDA Needs to Strengthen Controls to Prevent Improper Payments to Estates and Deceased Individuals. GAO-07-818, July 9.
http://www.gao.gov/cgi-bin/getrpt?GAO-07-818
Highlights - http://www.gao.gov/highlights/d07818high.pdf

Federal Real Property: DHS Has Made Progress, but Additional Actions Are Needed to Address Real Property Management and Security Challenges.
GAO-07-658, June 22.
http://www.gao.gov/cgi-bin/getrpt?GAO-07-658
Highlights - http://www.gao.gov/highlights/d07658high.pdf

Hanford Waste Treatment Plant: Department of Energy Needs to Strengthen Controls over Contractor Payments and Project Assets.
GAO-07-888, July 20
http://www.gao.gov/cgi-bin/getrpt?GAO-07-888
Highlights - http://www.gao.gov/highlights/d07888high.pdf

Financial Audit: Significant Internal Control Weaknesses Remain in the Preparation of the Consolidated Financial Statements of the U.S. Government.
GAO-07-805, July 23.
http://www.gao.gov/cgi-bin/getrpt?GAO-07-805
Highlights - http://www.gao.gov/highlights/d07805high.pdf

OMB: Agencies slowly improving financial management

Agencies are still struggling with major financial management problems that make it difficult to produce accurate year-end reports on their programs, but the Office of Management and Budget sees potential for further improvements.

The most significant of these problems are weaknesses in financial reporting, financial systems and security, according to OMB.

Still, individual agencies have made improvements; an increasing numbers of agencies are producing clean audits, meaning data for their financial statements is accurate and timely, said Linda Combs, OMB controller. Agencies have also reduced their improper payments, such as inaccurate benefits payments.

OMB hopes to see further improvement in financial management from a joint effort it has begun with chief financial officers and the inspector general community to determine how to report financial statements in a more cost-effective manner.

The CFO Council and the President’s Council on Integrity and Efficiency will look for best practices that agencies can share, Combs said at a hearing March 1 held by the Senate Homeland Security and Government Affairs Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security.

The two organizations will determine if agencies are sharing the right information, if the data is timely and in the right format to make decisions and if there is an appropriate amount of audit scrutiny.

OMB has directed agencies to reform their financial management as part of the President’s Management Agenda. Agencies are to improve, strengthen and monitor their financial systems, internal controls, payments accuracy, property management, grants management and financial reporting, Combs said.

Even as some agencies have taken steps to improve their financial management, the Government Accountability Office is unable to provide an audit opinion on the federal government’s consolidated financial statement.

This situation is due to longstanding and pervasive financial management problems at the Defense Department, the government’s inability to adequately account for and reconcile accounting between agencies and the government’s ineffective process for preparing its financial statements, said Comptroller General David Walker.

Financial management systems must be modernized to provide the complete range of information needed for accountability, performance reporting and making decisions, he said.

Last year, the financial statements of the Defense, Homeland Security, Energy and Transportation departments and NASA failed their audits because their financial information was unreliable, Walker said.

-Mary Mosquera, FCW.com

READ MORE...

Federal financial report reveals ongoing reliability gaps

Agencies continue to struggle with major weaknesses in financial reporting in the first year that they have had to account for internal controls, the Treasury Department said in its fiscal 2006 Financial Report of the U.S. Government.

All major agencies improved financial management by meeting the accelerated Nov. 15 deadline for their financial reports and complied with new requirements to report on their assessment of internal controls over financial reporting under Office of Management and Budget’s Circular A-123.

Of the major agencies, 18 received clean audit opinions this year, while auditors said the information from five agencies was unreliable. These were the Defense, Energy, Homeland Security and State departments, and NASA. The Transportation Department earned a qualified opinion because it had serious weaknesses.

The next scorecard, rating agency performance under the President’s Management Agenda for the period ending Dec. 31, will reflect findings from the government’s financial report, the report said. For example, several agency audit opinions and internal controls declined during the 2006 fiscal year.

OMB will work with the Chief Financial Officers Council over the coming year to identify potential areas for more guidance and to share best practices that agencies found helpful, the report said. OMB also will continue to incorporate key milestones from agencies’ plans for this year’s assessment into the improved financial performance category of the PMA scorecard to ensure that agencies meet their goals.

“Federal agencies continue to show their resolve to implement rigorous corrective action plans to reduce material process, systems and control weakness,” said the report released Friday.

Improved financial business practices, management systems and reporting tools assist agencies in the timeliness, accuracy and reliability of financial information, which better accounts for their use of federal dollars.

Another agency challenge is implementing certified financial management systems successfully. The Financial Management Line of Business will help agencies meet federal standards through use of shared services. Many FMLOB initiatives are under way, including standardizing financial processes across government, promoting the use of shared-services providers to support many customers and increasing transparency by establishing performance measure to evaluate results.

OMB in the fall issued guidance for agencies to migrate to shared-services providers and a draft of standard governmentwide accounting classifications.

In an accompanying report, the Government Accountability Office said that a significant number of material weaknesses related to financial systems, recordkeeping and financial reporting, and that incomplete documentation continued to prevent it from giving an opinion on the government’s consolidated financial statement, as has been the case since 1997. Major problems include the government’s inability to:

• Determine Defense Department property, equipment and inventories
• Support major portions of operations cost, especially at DOD
• Account for and reconcile transactions between agencies
• Provide adequate systems and personnel to address the magnitude of fiscal 2006 financial reporting challenges, including further development of Treasury’s Governmentwide
• Financial Report System.

-Mary Mosquera, GCN.com

READ MORE...

Most agencies get clean audits, but big problems persist

Eighteen agencies received clean audit opinions for fiscal 2006, and for the second year in a row all 24 major agencies met a deadline to close their books within 45 days of the end of the fiscal year, the Office of Management and Budget announced Thursday.

The 24 agencies named in the 1990 Chief Financial Officers Act had a Nov. 15 deadline to submit the results of their annual financial audits along with annual Performance and Accountability reports. Eighteen of those received unqualified opinions, indicting that auditors were satisfied that the agencies' financial statements were reliable.

Auditors returned disclaimers of opinion, reflecting such major problems in an agency's accounting that its financial statement could not be evaluated, to the Defense, Energy, Homeland Security and State departments, and NASA.

The Transportation Department earned a qualified opinion, meaning auditors identified a particular problem, but were otherwise satisfied with the accounting.

Even among agencies judged well, auditors identified problems to be addressed. Some were in the area of internal controls, the processes that guard against fraud and error, which agencies for the first time were required to test and report on. The requirement is in OMB's Circular A-123.

Rep. Todd Platts, R-Pa., who has pressed agencies to address their financial management problems from his seat as chairman of the House Government Reform Subcommittee on Management, Finance and Accountability, lauded agencies for meeting the demanding 45-day reporting deadline.

"With this focus on internal controls ... I expect to see some of the longstanding financial management issues resolved over time," Platts said. The subcommittee has worked closely with DHS, in particular, over the past year to make progress on recurring financial management problems.

The audit results announced this week are likely to change for some agencies, as chief financial officers work with their auditors to resolve questions in the fiscal 2006 books and arrive at a final result. An October Government Accountability Office report found that 11 agencies restated the results of their fiscal 2003 audits; nine of those agencies initially received unqualified opinions.

In the study, GAO concluded that agencies and OMB were not fully transparent in how they restated financial results. They didn't always indicate which results had changed or the causes or results of those adjustments. It was not immediately clear how many agencies took the 2006 audit as an opportunity to restate past results, because of delays in agencies' release of their reports.

READ MORE...

Agencies improve financial rigor

All major federal agencies beat out the private sector for the second consecutive year by completing their Performance and Accountability Reports and financial statements on the 45-day accelerated schedule. The accelerated deadline for corporate filers is 60 days.

Again, 18 agencies received clean audit opinions this year, while auditors said the information from five agencies was unreliable. These were the Defense, Energy, Homeland Security and State departments, and NASA. The Transportation Department earned a qualified opinion because it had serious weaknesses.

The Housing and Urban Development Department not only received a clean audit, but for the first time since audited financial statements were required reported no material weaknesses. The General Services Administration regained its clean opinion, implemented actions to fix last year’s major weaknesses and completed its PART several days ahead of the accelerated Nov. 15 deadline.

“We are holding agencies accountable with high standards and greater transparency,” said Linda Combs, OMB controller and head of OMB’s Office of Federal Financial Management, in a statement after release of the report.

Combs has said that use of integrated financial systems by agencies provides timely and accurate financial reports that make the year-end statement process smoother.

“Now we are closer to the goal of making financial information more timely and useful in the budget process,” said Rep. Todd Platts (R-Pa.), chairman of the Government Reform Subcommittee on government Management, Finance and Accountability.

Last fiscal year was the first time that agencies evaluated the effectiveness of internal controls over financial reporting under Circular A-123, helping to root out financial management problems that may have gone undiscovered in the past. Agencies included their A-123 reports in their year-end statements.

Even among agencies that earned clean audits, auditors identified financial problems, Platts said, especially weaknesses in safeguards to protect against fraud and error.

“With this focus on internal controls, I expect to see some of the long-standing financial management issues resolved over time,” he said.