The Department of Homeland Security inherited the financial
management weaknesses of the 22 agency systems that went
into it, including 30 internal control problems identified
in prior audits, 18 of them so severe as to be considered
material, including insufficient internal controls, system
security deficiencies, and incomplete policies and
procedures necessary to complete basic financial information,
the Government Accountability Office has said.
“Of the four inherited component agencies that had previously
been subject to stand-alone audits, all four agencies’
systems were found not to be in substantial compliance with
the requirements of the Federal Financial Management
Improvement Act, an indicator of whether a federal entity
can produce reliable data for management and reporting
purposes,” said GAO.
It said the component agencies took action to resolve nine
of the 30 inherited weaknesses and that 21 were combined
and reported as material weaknesses or reportable conditions
in DHS’s initial performance and accountability report,
or were reclassified by independent auditors as lower-level
observations and recommendations, a practice that does
little to resolve the root causes.
DHS is now acquiring a financial enterprise solution to
consolidate and integrate business functions and expects it
to be fully operational in 2006 and cost $146 million,
according to GAO-04-774.
However, it cautioned that other agencies have failed in
attempting less than that and noted that success depends
on having an effective strategic management framework,
sustained management oversight, and user acceptance of
the efforts.
It’s too early to tell whether its financial enterprise
solution will meet relevant financial management
improvement laws and as of June 2004 DHS was not subject
to the CFO or FFMIA, said GAO. It noted that DHS’s own
auditors had disclosed systems deficiencies that would
have likely resulted in noncompliance issues.
