DOL Annual Report, Fiscal Year 2003
Outcome Goal FM

Enhance Financial Performance through Improved Accountability

The DOL financial community, led by the Office of the Chief Financial Officer, is currently focused on two new areas of improvement in support of the Department's critical mission:

1. Ensure that the Department is accountable to the American people by providing accurate and timely financial information;
2. Conform to all Federal accounting standards, laws, and regulations.

Following are some of the highlights and key results in each of these strategic areas:

Provide Accurate, Timely and Useful Financial Information:

• Received an unqualified audit opinion on FY 2003 consolidated annual financial statements.
• Met and exceeded required timeframes for submission of quarterly and annual consolidated financial statements
• Through leadership of DOL's CFO Advisory Council and regular consultations with Executive Staff and Administrative Officers, provided a critical forum for the identification, discussion and resolution of financial issues and concerns.
• Proposed legislation to improve financial integrity of Unemployment Insurance system.
• Finalized performance measures, baseline, and goals through 2008.
• Reached agreement in principle with the Social Security Administration on state data exchanges.

Conform to all Federal accounting standards, laws, and regulations.

• Enhanced accountability of DOL financial executives through quarterly attestations concerning the effectiveness of internal financial management controls.
• Launched strategic initiatives to integrate financial performance data on day-to-day basis through enhanced managerial cost accounting.
• The Secretary determined that the Department maintained compliance with the Federal Managers' Financial Integrity Act (FMFIA) and substantial compliance with the Federal Financial Management Improvement Act (FFMIA).

New tools link financial and performance information on demand to assist Departmental managers in making day-to-day decisions and providing enhanced program services to the American people. Photo Credit: DOL/OCFO

Maintain the Integrity and Stewardship of the Department's Financial Resources

Performance Goal FM1 (Office of the Chief Financial Officer) – FY 2003

Improve the accuracy and timeliness of financial information.

Indicators

Maintain an unqualified (clean) audit opinion with no material internal control weaknesses.

Meet new requirements and standards in accordance with the Federal Financial Management Improvement Act (FFMIA) and Federal Managers' Financial Integrity Act (FMFIA).

Issue FY 2002 consolidated financial statements one month earlier than the FY 2001 statements - February 1, 2003.

Increase financial statement reporting from semi-annually to quarterly, and deliver by 45 days after the close of the period instead of 60 days.

Determine the nature and extent of erroneous payments within DOL and set baselines and priorities for their reduction.

Results

The goal was achieved. The Department received an unqualified (“clean”) audit opinion on its consolidated annual financial statements from the Department's Office of the Inspector General (OIG). This opinion attests that there are no material weaknesses or non-conformances in the Department's system of internal controls that would materially affect the Department's annual statements. In addition, the Department has determined that all 17 financial management systems substantially comply with the FFMIA standards. DOL issued its annual statements by the statutory deadline, and issued all quarterly statements within 45 days after the close of each quarter. DOL has focused on reducing erroneous payments through work with the Employment and Training Administration's Office of Workforce Security to develop a new payments accuracy performance measure in the Unemployment Insurance (UI) program and has reached agreement in principle with the Social Security Administration (SSA) on data exchange between SSA and State UI agencies. The Department also received the Certificate of Excellence in Accountability Reporting for the third consecutive year.

Program Description

The Office of the Chief Financial Officer (OCFO) provides comprehensive direction to all DOL agencies on financial management policies arising from legislative and regulatory mandates. FFMIA requires agencies to implement and maintain financial management systems that substantially comply with Federal financial management system requirements, applicable Federal accounting standards, and the United States Government Standard General Ledger at the transaction level. The Government Management Reform Act (GMRA) requires each agency to prepare and submit audited financial statements. The financial statements must comply with the Office of Management and Budget's Bulletin No. 01-09, Form and Content of Agency Financial Statements (and amendments).

Analysis of Results

For the seventh consecutive year, DOL received an unqualified (“clean”) audit opinion which states that DOL financial statements are presented fairly in all material respects and in accordance with accounting principles generally accepted in the U.S. Also, no material weaknesses were identified in the Report on Internal Controls.

The Secretary has certified that during FY 2003, all 17 eligible DOL systems substantially complied with the requirements of FFMIA for the third consecutive year.

Strategies

During FY 2004, DOL will accelerate its financial reporting capabilities and continue to meet all deadlines with respect to issuance of interim and annual financial statements. In addition, the Department will continue its efforts to acquire and implement a new core accounting system. Using innovative technology, this project will work toward the goal of streamlining business processes, providing real-time reporting on program performance, and creating an open, flexible financial management architecture that will allow for integration with other emerging financial and E-Government initiatives. This effort is currently in the acquisition and evaluation phase.

Management Issues

External Program Evaluations and Audits: The Office of Inspector General issued two reports in FY 2003 that identified areas for improvement of DOL financial management. The first, Review of Common Problems and Best Practices in Federal Agencies' Travel Card Programs, referred to a problem faced government wide. The OCFO has taken a number of steps to address audit issues cited in this report. For a summary, please refer to study 10 in Appendix 3. The second, Evaluation of the Department of Labor's Purchase Card Program, pertains to activities within the Office of the Assistant Secretary for Administration and Management (OASAM). A summary of this issue and OASAM's response is also included in Appendix 3 (study 9).

Goal Assessment and Future Plans

DOL has consolidated its two goals targeting compliance with financial laws and regulations, and added new performance indicators for FY 2004 to address the financial management challenges posed by the President's Management Agenda. These include better integrating financial and performance information and reducing erroneous payments.

Maintain the Integrity and Stewardship of the Department's Financial Resources

Performance Goal FM2 (Office of the Chief Financial Officer) – FY 2003

Integrate financial and performance information to support day-to-day operations across DOL.

Indicators

Assess program agencies to determine the level of integration of financial and performance information. Prioritize areas for improvement.

Complete documentation with and for agency managers in order for them to access and utilize cost accounting information.

Survey program managers for actual use of cost accounting information in program management decision-making processes.

Results

The goal was achieved. OCFO realized a year of significant results from its Cost Analysis Manager (CAM) initiative to broaden the use of managerial cost accounting in DOL. After providing managerial cost accounting training to over 130 DOL program and financial managers, the OCFO defined significant outputs of major programs for five of DOL's agencies. The ultimate goal is to make integrated financial and performance information available at all management and decision-maker levels in order to provide a better assessment of performance for a given level of resources. Throughout this implementation process, OCFO will continue to focus on developing tools that meet the needs of each individual agency in the Department, rather than taking a “one size fits all” approach.

Program Description

OCFO provides guidance, assistance, and oversight in implementing the new cost accounting initiative in each agency. OCFO specifically provides assistance to measure the costs associated with achieving DOL's strategic goals.

Analysis of Results

In their report on compliance with the FFMIA, the Office of Inspector General concluded that DOL substantially complied with the requirements of the Act except for compliance with the Managerial Cost Accounting Standard. However, the Secretary has certified that during FY 2003, all 17 eligible DOL systems complied with the requirements of FFMIA, including meeting all new accounting standards issued by the Federal Accounting Standards Advisory Board (FASAB). OCFO is on target with respect to the CAM project timeline and is working with agencies to define outputs and link these outputs to costs. With continued progress in this initiative, DOL will be on target to achieve a “green” status score in financial management under the President's Management Agenda scorecard by July of 2004.

Strategies

In FY 2004, the OCFO will continue to work with program agencies to develop and enhance cost accounting capability throughout the Department. The integration of cost and performance information will provide DOL's financial and program managers with financial information to enhance their day-to-day decision making efforts and to achieve DOL's strategic goals.

Goal Assessment and Future Plans

In FY 2004, OCFO will lead the effort to develop and enhance managerial cost accounting data models, improve automated reporting capabilities, further integrate activities with costs, and provide technical support for agency managers.

OCFO plans to complete initial DOL-wide implementation of the cost accounting system by the end of June 2004 to demonstrate integration of financial and performance information. At this point, CAM will also help support the Department's FY 2006 budget process by aligning significant outputs of major programs with the Department's strategic goals and outcomes.