The Homeland Security Department’s inspector general found major financial management weaknesses in DHS’ financial systems. The IG attributed them to failure to implement standards for integrated financial systems and financial controls established by the Office of Management and Budget.
DHS intends to reduce those financial management problems as it prepares to consolidate its financial management systems, said David Norquist, DHS’ chief financial officer.
DHS released a request for information May 29 that asked vendors to identify capabilities and certified systems offered by shared-services providers, as directed under OMB’s Financial Management Line of Business.
The department plans to have 42 percent of its agencies using consolidated financial management systems by 2009 as a first step toward operating under a departmentwide integrated system after 2011, Norquist said.
In addition, DHS has initiated several activities to decrease the department’s financial management weaknesses, which include:
Developing an internal-control blueprint to identify risks across the department that are connected to inadequate internal controls.
Mapping corrective actions to root causes of weaknesses and fixing those weaknesses.
Developing an online departmentwide financial management manual by the end of 2008.
Adding an operations component to the department’s assurance statement in this year’s financial audit.
Hiring more people who are well trained in financial management.
— Mary Mosquera
FM LOB has come a long way
May 2006: Release competition framework for FM LOB
migrations.
September 2006: Issue migration planning guidance to help agencies prepare.
February 2007: Release draft of the standard funds control processes.
March 2007: Release Financial Services Assessment Guide, including seven metrics from two mandatory service categories.
May 2007: Issue draft of standard payment management processes.
July 2007: Issue common governmentwide accounting classification structure.
August 2007: Release updated version of the FM LOB due diligence checklist.
Source: Office of Management and Budget
As agencies prepare to clean up their general ledgers and modernize the government’s financial affairs, Bush administration officials said they have made progress in developing standard business and accounting processes to replace variations that agencies have developed.
“Accounting and financial management shouldn’t be different among our various agencies,” said Danny Werfel, acting controller at the Office of Management and Budget.
The various approaches that agencies have used to account for intra-agency transactions have produced major weaknesses in the government’s annual consolidated financial statement, Werfel said. Auditors, including those from the Government Accountability Office, cannot have confidence that agencies’ financial data is reliable, he said.
With standardization, agencies can provide financial data more quickly for leaders to use in making management decisions. Standardization will also ensure more accurate financial data at less cost to the government, Werfel said.
Agencies can implement the standards by moving to government or commercial shared-services providers under OMB’s Financial Management Line of Business (FM LOB). Those providers are equipped to offer financial management systems and services to many agencies.
Such moves will not occur overnight, said Adam Goldberg, chief of the Financial Analysis and Systems Branch at OMB’s Office of Federal Financial Management. They must be thoughtful, risk-based changes, he said.
Agencies must prepare to outsource their financial management systems operations to shared-services providers, although OMB policy does not require them to make the change until they must upgrade their financial management systems.
Officials at OMB and the General Services Administration’s Financial Systems Integration Office (FSIO), which manages the FM LOB, said they are orchestrating the movement of several parts to help standardize financial management.
By the end of the year, they expect to complete development of standard core accounting processes. The next step will be testing financial systems that have incorporated those processes. The final step will be developing standard system interfaces for connecting to feeder systems, such as those used to manage procurement and travel, Goldberg said.
“Whatever other reforms need to be made in this environment will be easier to introduce because of the configuration management that’s going on,” Goldberg said.
In December, FSIO will update core financial system requirements to include the five core accounting processes, said Dianne Copeland, the office’s director. In 2009, FSIO will create test scenarios to demonstrate that shared-services providers have integrated the business standards in their financial software and the software complies with certification provisions. In 2010, providers must get their systems certified, Copeland said.
Digg
De.licio.us
Slashdot
Technorati
