Summary
Since the Department of Homeland Security (DHS) began operations in March 2003, it has faced the daunting task of bringing together 22 diverse agencies and developing an integrated financial management system to provide timely, reliable, and useful financial information. GAO was asked to determine (1) whether DHS has fully developed plans for implementing and/or migrating to an integrated departmentwide financial management system, (2) the potential usefulness of the work products received for the funds spent on the financial modernization effort, and (3) going forward, how DHS can incorporate best practices into its plans for migrating to an integrated departmentwide financial management system. GAO interviewed key DHS officials, reviewed relevant DHS policy and procedure documents, and analyzed work products related to the financial modernization effort.
DHS has not yet developed a financial management strategy and plan to move forward with its financial management system integration efforts. In early March 2007, DHS officials issued a plan to address existing internal control weaknesses, but this plan is at a high level and more detailed implementation strategies will be necessary to fully address the financial management systems challenges. With Office of Management and Budget (OMB) approval, DHS indicated that it has decided to migrate components to internal service providers using selected financial management systems models currently in place at two components. However, the components that DHS is considering have material financial management weaknesses. The Electronically Managing Enterprise Resources for Government Effectiveness and Efficiency (eMerge2) program that was expected to integrate financial management systems across the entire department and address financial management weaknesses was halted in December 2005. DHS has stated that it had spent about $52 million in total for the eMerge2 project, including approximately $18 million of contractor costs, but the department did not provide support for these amounts. According to DHS officials, several of the work products developed for eMerge2 will be useful as they move forward with their financial management modernization efforts, regardless of the strategic financial management direction ultimately selected by DHS. GAO's review indicated that key work products are of limited value. The concept of operations did not contain an adequate description of the legacy systems and a clear articulation of the vision that should guide the department's improvement efforts, and key requirements developed for the project are unclear and incomplete. Consolidation of an entity as large and diverse as DHS poses significant management challenges, including integrating a myriad of redundant financial management systems and addressing existing and newly identified weaknesses in the inherited components. In order for DHS to avoid long-standing problems that have plagued financial management system improvement efforts at other agencies and not repeat the failure of eMerge2, it must adopt solutions that reduce the risks associated with these efforts to acceptable levels. Based on best practices, there are four key building blocks that will be critical to DHS's ability to successfully complete its financial transformation: (1) developing a concept of operations, (2) defining standard business processes, (3) developing a migration and/or implementation strategy for DHS components, and (4) defining and effectively implementing disciplined processes necessary to properly manage the specific projects. Moreover, effective human capital management is critical to the success of systems implementations. Having staff with the appropriate skills is key to achieving financial management improvements, and managing an organization's employees is essential to achieving results.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
McCoy Williams
Government Accountability Office: Financial Management and Assurance
(202) 516-6906
Recommendations for Executive Action
Recommendation: To help reduce the risks associated with a departmentwide financial management system implementation effort, the Secretary of DHS should demonstrate commitment to integrating DHS's financial management systems and direct the Undersecretary for Management and Chief Financial Officer to clearly define and document a departmentwide financial management strategy and plan to move forward with its financial management system integration efforts.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help reduce the risks associated with a departmentwide financial management system implementation effort, the Secretary of DHS should demonstrate commitment to integrating DHS's financial management systems and direct the Undersecretary for Management and Chief Financial Officer to fully embrace the four building blocks and best practices when developing and documenting the strategy and plan to foster the development of an integrated financial management system that meets expected performance and functionality targets. This would include developing a comprehensive concept of operations document.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help reduce the risks associated with a departmentwide financial management system implementation effort, the Secretary of DHS should demonstrate commitment to integrating DHS's financial management systems and direct the Undersecretary for Management and Chief Financial Officer to fully embrace the four building blocks and best practices when developing and documenting the strategy and plan to foster the development of an integrated financial management system that meets expected performance and functionality targets. This would include reengineering business processes and standardizing them across the department, including applicable internal control.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help reduce the risks associated with a departmentwide financial management system implementation effort, the Secretary of DHS should demonstrate commitment to integrating DHS's financial management systems and direct the Undersecretary for Management and Chief Financial Officer to develop a detailed plan for consolidating and migrating various DHS components to an internal shared services approach if this approach is sustained.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help reduce the risks associated with a departmentwide financial management system implementation effort, the Secretary of DHS should demonstrate commitment to integrating DHS's financial management systems and direct the Undersecretary for Management and Chief Financial Officer to utilize and implement the following specific disciplined processes to minimize project risk: (1) Requirements management, (2) Testing, (3) Data conversion and system interfaces, (4) Risk management, (5) Configuration management, (6) Project management, and (7) Quality assurance.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To help reduce the risks associated with a departmentwide financial management system implementation effort, the Secretary of DHS should demonstrate commitment to integrating DHS's financial management systems and direct the Undersecretary for Management and Chief Financial Officer to carefully consider key human capital practices as DHS moves forward with its financial management transformation efforts so that the right people with the right skills are in place at the right time.
Agency Affected: Department of Homeland Security
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
