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Performance and Accountability Report
Fiscal Year 2002
MESSAGE FROM THE SECRETARY
For the U.S. Department of Health and Human Services (HHS), just as for the entire Nation, 2002 was a year of transformation. It was a year that began with unprecedented challenges � and ended with a strong record of response, consolidation and building for the future. It was a year when new dangers threatened us, but also a year when we rose to confront those threats and prepared ourselves for a changed world. At the same time, it was a year when we took new steps against our oldest adversaries � disease, poverty, and constricted opportunity.
In 2002, we built new foundations: to protect against terrorism; to advance biomedical science into uncharted realms; to make HHS a more effective instrument on behalf of Americans; and in every HHS activity, to help unleash the power of the individual - from those needing help toward self-sufficiency, to those needing to embrace the power of disease prevention in their own lives.
In these and many other ways, 2002 was indeed a year of new beginnings for our Department. It was likewise a year of progress for the on-going activities in the more than 300 programs administered by HHS agencies. This report presents a Department-wide picture of our performance in FY 2002. It reflects the efforts of some 65,000 dedicated HHS employees in all parts of the United States and around the world. These employees � working with states, counties and cities, and with our thousands of other partners � have delivered service and value to the American people.
For fiscal year 2002, HHS was accountable for more than $466 billion in net outlays. In the area of financial management, we achieved our fourth consecutive unqualified, or "clean" audit opinion on the Department's consolidated financial statements. However, we face significant ongoing challenges to improve the timeliness and reliability of our financial information for decision-making purposes, resolve issues identified by our auditors, and reduce the level of manual intervention needed to prepare financial reports and statements. In response to these challenges, we are developing a Unified Financial Management System (UFMS), a multi-year financial management effort. The new system will not only provide more timely financial information to our managers for decision-making, but will also enable us to meet more frequent and accelerated reporting deadlines now required for Departmental financial statements.
This report also presents the financial health of Medicare's Hospital Insurance and Supplementary Medical Insurance Trust Funds separately, based on Financial Accounting Standards Advisory Board (FASAB) standards in effect at the time of the audit. Going forward, the Administration is developing a more comprehensive measure of Medicare's financial position that will analyze Medicare as a whole.
As required by the Reports Consolidation Act of 2000, it is my assertion that the financial information contained in this report is complete and reliable, based upon data contained in the Department's and contractors' financial information systems, and is reported in conformance with U.S. generally accepted accounting principles. Further, it has been deemed to "fairly represent" the financial condition and results of operations of the Department by our Office of Inspector General. Regarding program performance information, the FY 2002 Annual Performance Report for each HHS component describes the methodology HHS components use to verify and validate program performance data and any related data issues, including the completeness and reliability of the data. Where required, the components have included discussions of any actions planned to improve the completeness and reliability of data.
This report includes information that satisfies the reporting requirements for the Federal Managers' Financial Integrity Act (FMFIA) of 1982. HHS' management controls are in compliance with FMFIA and provide reasonable assurance that the Department's resources are protected from fraud, abuse, and mismanagement, except for the specific management control material weakness cited in this report that is being addressed in accordance with its corrective action plan. Our financial management information systems and reporting processes, as well as our Medicare contractor systems, are not in conformance with FMFIA. Our systems implementation projects discussed in this report - including a new Medicare financial system - provide for long term achievement of compliance with FMFIA. In Appendix C of this report, we present the complete FMFIA report.
HHS is one of the largest departments in the Federal government. We are responsible for almost a quarter of all federal spending, and our programs touch the lives of every American in many ways. We have a special responsibility to be accountable for the funds we manage and for achieving results. We have established long-term strategic goals to help steer our efforts on behalf of Americans. The report is structured in accordance with our strategic goals which will allow our readers to more clearly track our performance.
I welcome your interest in HHS and its programs. On behalf of every HHS employee, I pledge our continued vigilance and dedication to the compassionate goals of this Department.
/s/
Tommy G. Thompson
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