IMPROVING FINANCIAL PERFORMANCE UPDATE
Improved Progress Ratings
Producing More Timely Financial Information
In April we began meeting with the CFOs and Inspectors General of the CFO Act agencies to discuss their plans to meet the accelerated year-end financial reporting deadline for FY 2004 and to resolve material weaknesses. We are pleased to report that agencies have plans in place to achieve earlier reporting dates for FY 2003 as well as for FY 2004.
These meetings are providing an opportunity to give the agencies feedback on their plans and to encourage contact with agencies who reported early in 2002. The Department of the Treasury and the Social Security Administration met the November 15th deadline two years ahead of schedule in 2002 and the Veterans Administration was not far behind, having accelerated its audit to mid-December. Agencies like GSA are also seeking best practices from private sector corporations to evaluate and streamline reporting processes.
Executive Branch Management Scorecard
We've just updated the Executive Branch Management Scorecard and it reflects some of the progress we're making on the financial performance initiative. Improvement was noted in the progress scores of HHS, USAID, and SBA.
The March 31, 2003 scorecard does not reflect any changes in current status, but it is important to highlight the progress that agencies are making in order to move closer to green.
- The Department of Education received its first unqualified audit opinion since 1997 and resolved three FMFIA weaknesses and one audit reportable condition.
- EPA, in addition to resolving its material weaknesses, has done substantial systems integration work. This positions the agency to meet the requirement for systems-produced performance and financial information to manage day-to-day operations.
- The Department of Labor has launched a new CFO-led strategic initiative to integrate financial and performance information for day-to-day operations. This system will provide data to managers routinely and promptly so that they can use it to make decisions and demonstrate program effectiveness.
- SSA plans to have its new accounting system operating by October 2003.
- GSA has resolved all its FMFIA material weaknesses during the quarter and substantially remediated two weaknesses transferred to DHS.
- The Department of Commerce is progressing well with its implementation of a new financial management system (CAMS).
Erroneous Payments An area that is not specifically reflected on the scorecard is erroneous payments. Many agencies are working hard to measure and reduce their erroneous payments. Weve assessed the level of erroneous payments in programs that make almost $900 billion in payments each year, and to be in excess of $35 billion annually.
Last year, Congress passed the Improper Payments Information Act. This will expand to every program in government the requirement to estimate the extent of erroneous payments and require plans to reduce them. OMB will soon issue guidance implementing the act; but agencies should begin now to assess the risk of erroneous payments in all the programs they administer and think about what they will need to do to prevent erroneous payments from being made in the first place.
Financial Management Performance Indicators
As agencies are making progress in meeting the criteria outlined in the scorecard, its a good time to expand our ability to monitor financial management performance. An internet based system is being developed to report indicators that will be used to evaluate agencies financial management performance more effectively. The report will be prepared monthly and will include metrics for such items as cash balance reconciliation, suspense clearing, accounts receivable and payable, travel and purchase card delinquencies and electronic payments. For example, uncleared amounts in suspense that are over 60 days in age will be tracked both numerically and graphically. Performance goals will be developed for each measure to make the report an effective tool for promoting and communicating improved financial management. The first report will be issued in the third quarter of FY2003.
As agencies continue to move from planning to implementation, sharing of challenges and solutions will be key to sustaining progress. The CFO Council is committed to providing informational forums, such as the upcoming Financial Acceleration Committee Issues and Best Practices Roundtable session to be held in May. On an individual level, the agency leaders mentioned above are also available to share their success drivers. With the benefit of these sources of support, we look forward to communicating continued progress in future reports.
The Five Initatives: