Message from the Chief Financial Officer

The USPTO continued its high standard of financial management and accountability reporting during FY 2006. As a result of the dedicated efforts of the financial management staff throughout the USPTO we have received an unqualified opinion on our financial statements for the 14th consecutive year. Along with the unqualified opinion, the auditors reported no material weaknesses or reportable conditions in the design and operation of the USPTO’s system of internal control over financial reporting and our financial system complies with federal financial systems requirements. For the fourth consecutive year, the Association of Government Accountants awarded the USPTO the Certificate of Excellence in Accountability Reporting for our FY 2005 Performance and Accountability Report.

The most significant change in financial management this fiscal year was the new requirement for an annual assurance statement on the effectiveness of internal control over financial reporting, in accordance with the Office of Management and Budget’s revised Circular A-123, Management’s Responsibility for Internal Control. We enhanced our existing internal control review program and established a Senior Assessment Team and Senior Management Council comprised of managers and executives across the organization. Internal control evaluation permeated throughout the agency, which heightened awareness and continued to advance financial management at the USPTO. The evaluation included assessing internal controls at the process level for the material financial processes, as well as for the associated IT controls over financial management processes. Tests of these controls proved yet again that the USPTO should be proud of the internal control culture it has created.

Sound financial management continued to guide the USPTO in the analysis and review of major strategic initiatives during the past fiscal year. In conjunction with the overall USPTO goal of optimizing pendency, competitive sourcing efforts were focused in the areas of Patent Cooperation Treaty prior art searches, classification of patent documents, and patent reclassification functions. Competitive sourcing work in these areas will free our internal resources to focus on key government functions for more efficient management of our goals.

We will propose a new five-year Strategic Plan designed to foster American innovation and competitiveness at home and around the globe. This new Plan was drafted with input from the public and employees. We hope to publish the final Plan early in calendar year 2007, at which time it will be made available on our website. Full details on how the USPTO will implement the Strategic Plan, including funding and performance metrics, will be included in the USPTO’s FY 2008 President’s Budget.

We pride ourselves in providing our senior leadership and business units with high quality and timely financial reporting and program performance information to facilitate better decision-making. We continue to review financial management and related processes to identify areas for improvement in efficiency, financial and performance data integration, and internal controls to ensure unmatched reliability in financial activities.

Identified improvements will enhance capabilities to serve the public and USPTO’s business units better and provide for timelier, more useful, and more accurate data for decision-making.

Barry K. Hudson
Chief Financial Officer
November 6, 2006

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