FINANCIAL REPORTING
The Department is committed to making financial management a priority and significant efforts are being made to further improve the management of its financial resources. The Department has received unqualified opinions on its consolidated financial statements since 1999. In addition, one bureau subject to individual audit has maintained unqualified opinions on its principal financial statements. The Department met the accelerated financial statement submission deadlines for FY 2007. These achievements resulted from the Department’s commitment to strong management controls and accountability for its resources. One significant deficiency cited relating to deficiencies in general information technology (IT) controls remained from the prior years. The Department has corrective action plans (CAP) in progress to address these deficiencies. In FY 2007, the Department conducted an improper payment sample testing; the results revealed no significant improper payment or internal control deficiencies. Overall, the Department’s assessments demonstrate that the Department has strong internal controls over the disbursement processes, the amounts of improper payment in the Department are immaterial, and the risk of improper payment is low. The Performance and Accountability Report (PAR) section, Improper Payments Information Act of 2002 (IPIA), and the Appendix D on the IPIA reporting details describe the Department’s efforts in complying with this act along with the results of the Department’s reviews.
The Department accomplished the following initiatives that resulted in meeting the aforementioned goals:
- Conducted an assessment of the effectiveness of internal controls over financial reporting in accordance with OMB Circular A-123, Management’s Responsibility for Internal Control, Appendix A, including developing a three-year rotational testing plan based on a risk assessment of the 12 key processes. A Senior Management Council (SMC) and a Senior Assessment Team (SAT) worked together to provide oversight guidance and decision-making for the A-123 implementation process. The final report which reported no material weaknesses was incorporated into management’s overall assurance statement provided under the requirements of the FMFIA.
- Prepared and monitored CAPs for the significant deficiency and management letter comments and monitored progress towards their completion throughout the year.
- Published guidance on the preparation and submission of financial statements, including a calendar of milestone dates. Each quarter, with the participation of all bureaus, guidance was reviewed and updated to reflect lessons learned and to identify best practices among the bureaus. When necessary, task forces were formed to resolve issues that could have impeded the Department’s ability to produce timely and accurate financial statements.
- Held meetings throughout the fiscal year with the Office of Inspector General (OIG) and independent auditors to ensure timely completion of the audit and issuance of the financial statements.
- Held monthly meetings led by the Department’s Deputy CFO with individual bureau CFOs to discuss financial management issues, including financial statements, OMB Circular A-123, and financial performance metrics. These meetings were in addition to the Department’s monthly CFO Council meetings led by the Department’s CFO and the monthly Finance Officer meetings led by the Deputy CFO.
- Monthly financial metrics were compiled, analyzed, and reported in the government-wide consolidated CFO measurement tracking system. Individual bureaus were provided with a monthly status report comparing and analyzing their results with the Department’s goals, and the Department and government-wide results. The results of bureaus metrics and any corrective actions needed were discussed at the bureau CFOs’ individual monthly meetings.
- Facilitated intragovernmental reconciliations using the Department’s Corporate Database application to collect, extract, and report on a quarterly basis its intragovernmental account balances, by trading partner, to the Treasury Department. The Department took a proactive approach of initiating contact with all trading partner agencies to reconcile large differences. Although the Department has seen an improvement in trading partner’s participation, continued improvement is needed in order to reconcile all differences.
Although the Department has accomplished much in the area of financial management, there is still a need to improve upon these accomplishments to ensure that the Department continues to produce and report accurate, reliable, and timely financial information. In FY 2008 and beyond, the Department plans to accomplish the following:
- Continue to enhance OMB Circular A-123, Management’s Responsibility for Internal Controls, process and monitor the implementation of the CAPs for any identified deficiencies as a result of the A-123 and financial statement audit process.
- Continue to identify areas that will facilitate the acceleration of providing accurate and reliable financial information to Department managers and central agencies. This will be achieved through ongoing meetings and workgroups amongst the Department’s financial managers and participation in government-wide financial management committees and workgroups.
- Continue to monitor and perform reviews of the Department’s progress in preventing improper payments.
- Continue to work with OMB, Treasury Department, and the Government-wide Intragovernmental Subcommittee to improve the intragovernmental reconciliation process.
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