oversight

Joint Financial Management Improvement Program 1989 Report on Financial Management Improvements

Published by the Government Accountability Office on 1990-07-20.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

JOINT FINANCIAL MANAGEMENT
   IMPROVEMENT PROGRAM
                             1989Reporton
                             Financial Management Impr01Jements
   (JFMIP)
    Joint Financial Management Improvement Program's (]FM.JP)
Annual Report highlights the progress that agencies have made in
modernizing their financial systems and operations. One of the
primary roles of the ]FM.IP is to act as a catalyst and coordinator for
rmproving the financial management policies and practices for federal
goverrunent operations.

I would like to commend the agencies for their accomplishments
during 1989. Represented in this report are summaries of only a few
of the many financial management improvements initiated by federal
agencies. We believe that by exchanging information, agencies' efforts
in improving their operations and systems are greatly enhanced and
facilitated. We welcome and encourage requests for additional infor-
mation concerning reported accomplishments, either through the
JI_-·- staff or the agency liaison representatives.
                             like to thank all of the agency officials who contributed to
                              and congratulate you for making significant financial
mana.J~erner1t improvements. We hope that you are successful in your
                             as you face the challenges for modernizing financial sys-
                 v .. "''""""'"'""""' and operations for the new decade. We look forward

   .......................,~ about your new and significant accomplishments in the fu-
                          appreciate your continuing support.




~Gf3Y?~
Virginia B. Robinson
Executive Director

July 20, 1990
 Contents




Chapter 1
Joint Financial Management Improvement Program
      Background ......................................... 1
      JFMIP Projects Accomplished and Underway ................2
      Information Exchange .................................4


Chapter 2
Governmentwide Initiatives to Improve Financial Management
      Office of Management and Budget ........................ 7
      Department of the Treasury ............................ 16
      Office of Personnel Management ........................24
      General Accounting Office ............................. 31
      Interagency Councils .................................. 38


Chapter 3
Agencies' Initiatives to Improve Financial Management
      Introduction ........................................41
      Modernization of Financial Systems ..................... .42
      Cross Servicing ...................................... 53
      Accounting Policies and Procedures ...................... 55
      Financial Reporting .................................. 57
      Automated Applications ............................... 59
      Cash and Credit Management ........................... 63
      Productivity ........................................ 75
      Budget Development and Execution ...................... 79
      Other Improvements ................................. 80
      Auditing ........................................... 83


Appendices
       Appendix A: 1989 Officials and Staff of ]FMIP
       Appendix B: JFMIP Liaison Representatives
       Appendix C: Available JFMIP Publications
                                       Chapter 1
                                      ]oi.nt Financial Management Improvement
                                      Pr09ram




Background
The Joint Financial Management
Improvement Program (JFMIP)
was initiated in 1948 by the
Secretary of the Treasury; the
Director of the Bureau of the
Budget, which is now the Office
of Management and Budget; and
the Comptroller General of the
United States and was given
statutory authorization in the
Budget and Accounting Proce-
dures Act of 1950. The Civil Ser-
vice Commission, now the Of-
                                                Rkh11rdB. Darma.n                   Nicholas F. Brady
fice of Personnel Management,                   IJi.reaor, Offee of              Secretary ofthe Treasury
became a part of the Joint Pro-               Management liiuJ, Bidget
gram in 1966.
The primary function of the
JFMIP is to improve and coor-
dinate financial management
policies and practices
throughout the government so
that they will contribute sig-
nificantly to the efficient and ef-
fective planning and operation
of governmental programs.
Leadership and guidance are
provided by the four Principals
of the Program: the Director of
the Office of Management and
Budget, the Secretary of the
Treasury, the Director of the Of-              Constance B. Newman                 Charles.A. Bowsher
                                                 IJi.reaor, Office of            Comptro/kr GenerlJI. of
fice of Personnel Management,                  Penonnel.Maiiagemmt                  me United States
and the Comptroller General of
the United States. The program         from a program agency. In         mittee, the JFMIP staff develops,
is administered by a Steering          1989, the Department of Health    directs, and undertakes improve-
Committee, which is composed           and Human Services represented    ment programs and projects in
of representatives of the Prin-        the program agencies on the       cooperation with the central
cipals, the Executive Director of      Steering Committee. Under the     management agencies and the
the JFMIP, and a representative        guidance of the Steering Com-     operating agencies. Appendix A



                                       1
                                                                   Chapter 1
                                                                   Joint Financial Management Improvement Program




presents a list of names of                                        Under the direction of the Steer-                                         disseminating information about
JFMIP Principals, Steering Com-                                    ing Committee, the JFMIP staff                                            good financial management tech-
mittee members, project teams                                      undertakes special studies and re-                                        niques and technologies. The
and staff.                                                         search projects to resolve specific                                       JFMIP staff provides advisory
                                                                   problems having government-                                               services in dealing with specific
Achievement of financial                                           wide application. Such projects                                           financial management problems.
management improvements                                            are often carried out through in-                                         These problems may be dealt
depends heavily on the interest                                    teragency project teams consist-                                          with by referral to a source of ex-
and active participation of per-                                   ing of individuals from both the                                          pertise, by referral to the central
sonnel from the central and                                        central and operating agencies.                                           agencies, or by informal consult-
operating agencies. To fully                                                                                                                 ation. The JFMlP sponsors con-
achieve the necessary coordina-                                    The ]FM.IP staff and federal                                              ferences and workshops, publish-
tion and cooperation, liaison rep-                                 agencies perform a variety of                                             es a quarterly news bulletin, and
resentatives are designated from                                   continuing activities to improve                                          prepares informative documents
each federal agency. Appendix B                                    financial management. More                                                on good :financial management
has a listing of agency liaison rep-                               specifically, ]FM.IP acts as a                                            practices. These special projects
resentatives.                                                      clearinghouse for sharing and                                             and activities are described
                                                                                                                                             below.


                                                                                                                                             ]FMIP Projects
                               JFMIP ORGAN/ZA TION CHART                                                                                     Accomplished and
     •cw           .                    <   ..                                     "7•    .                    ·<•              ·.··
                                                                                                                                             Underway

                                                 Principals                                                                                  Personnel/Payroll Systems
                                                   OMB
                                                 TREASURY
                                                                                         1·.
                                                                                                                                             Standards
                                                    OPM
                                                    GAO                                   ~
                                                                                                                                             The JFMIP is continuing to
                                                          1:1i
                                                          l•IA
                                                                                                                                             develop and issue functional re-
                                                                                                                                             quirements for subsidiary finan-
                                                  Steering                   :<                                                              cial systems that will build upon
                                                 Committee                  I.:.
                                                                            'J                                                               and extend the Core financial sys-
                                                     ..
                                                          l!I'•                                                                              tem requirements. JFMIP has al-
                                                                                                                                             most completed work on person-
                                                 Executive                                                                                   nel/payroll systems standards by
                                                  Director
                                                                            l,1
                                                                                                                                       I•    using the President's Council on
                                                                                                                                       I:•
                                                                                                                                         :
                                                                                                                                             Management Improvement
                         In                                       •II II• II II 1111111111111111
                                                                                                                                             study on "Evaluation of Federal
               ,,__J_JI          c::-
                                                 ~~               "---71                       /       .-1•n :.      <,/I
                                                                                                                                       12
                                                                                                                                             Personnel/Payroll Systems." The
                                                                                                                     ~J
               I       Project                        JFMIP                                           Agency
               I
                       Teams                           Staff                                       Liaison Reps
                                                                                                                                       H
                                                                                                                                             study model was adapted to fully
           I               I                     I                      I                                 I                 I
                                                                                                                                       ~
                                                                                                                                       ')
                                                                                                                                             comply with the recently issued
                                                                                                                                             Core system requirements and
                                                                                                                                             the draft standards are being



                                                                    2
                                     Chapter 1
                                     Joint Financial Management Improvement Program




distributed for formal comment.      main objectives of the task force       be used for the future design of a
Following approval by the Steer-     were to make recommendations            data base system for a central
ing Committee, the model will        concerning ( 1) standard terms          data bank through which operat-
be issued as a companion docu-       and definitions for financial in-       ing agencies will make uniform
ment to the recent ]FM.IP Core       formation and (2) minimum               input to the central agencies.
Financial System Requirements.       uniform financial information re-       The task force's overall approach
[Edward Wadding, (202) 443-          quirements needed by the                is illustrated in the exhibit.
1559]                                central agencies. This work is to

Travel M~ement Sys-
tems Standaras                                                    Overall Approach
                                                                                              President's Budget
]FM.IP has begun work on travel                                                                 Budget Tables
                                          The Vision:
management systems require-                                                                     Budget Analyses
                                                                                              Budget Execution Review
ments. The initial draft of the
document has been prepared                                                                    Annual Report
                                                                                              Monthly Treasury Report
after several visits with agencies
                                                                                              Quarterly Bulletins
and interviews with experts in
the federal travel management
area. The draft will be sent out
to a technical review group and
will be finalized as a companion
document to the ]FM.IP Core
Financial Systems Requirements.
[Edward Wadding, (202) 443-
1559].
                                           Budget Preparation:                                President's Budget
                                            P&F
                                                                                               Budget Tables
Standardization of Finan-                    BPS-A -
                                             BPS-B  -=====t:==~~~~                             Budget Analyses
cial Information                             BPS-C                                           Budget Execution Review
                                             BPS-0
The ]FM.IP assembled an inter-               BPS-A
                                             BPS-G
agency task force in 1988 to                 ETC.

study the standardization of
                                                                                     Sharing and
financial information. In 1989,                                                      Reconciliation

the task force completed its re-
search and is in the process of            Operating Agencies:
                                             SF220 - - -
writing the report. The study                 Schedule 1
                                              Schedule 8
was conducted to support the                  Schedule 9                                     Annual Report
Administration's financial sys-              SF 222
                                             SF 221     -   ---===t===~~~~                   Monthly Treasury Report
tems improvement program by                  SF 224                                           Quarterly Bulletin
                                             SF 225
making an in-depth analysis of               SF 1151
                                             SF 2108
the central agencies' policies and           SF 7304
                                             ETC.
reporting requirements relating
to financial information. The




                                     3
                                     Chapter 1
                                     Joint Financial Management Improvement Program




Treasury, OMB, and other users       skills, and abilities that account-   Safety Board, Environmental
will be able to use this financial   ants must apply to carry out          Protection Agency, Internal
information for their respective     their primary functions: (1) tech-    Revenue Service, Federal Energy
needs. The data base will contain    nical guidance, (2) internal con-     Regulatory Commission, Nation-
both accounting and budgetary        trol, (3) financial analysis and      al Aeronautics and Space
information. The task force will     reporting, (4) financial system       Administration's Ames Research
disclose duplication and overlap,    development and maintenance,          Center, the Supreme Court, and
inconsistencies in terms and         and (5) supervision, leadership,      Federal Deposit Insurance Cor-
definitions, and deviations from     and communication. In addition        poration.
GAO Title 2 requirements. Also,      to acquiring an accounting un-
certain improvements to the          dergraduate degree, the continu-      The JFMIP also participated in
Standard Genera/, Ledger and the     ing education section of the          meetings with the Federal Finan-
Core Financial System Require-       model presents explicit reference     cial Managers Council, which
ments documents should result.       to federal accounting standards,      consists of senior financial
                                     regulations, and reporting re-        managers from large federal
The project team members were        quirements. The training report       departments and agencies; the
from OMB, Treasury, GAO,             will be finalized to assist agen-     Independent Agency Financial
JFMIP, Department of Health          cies in establishing training plans   Managers Council, which repre-
and Human Services, Depart-          for their accountants. [Judi          sents top financial officials from
ment of Defense, Department of       Fuerstenberg, (202) 586-1951]         small federal agencies; and the
Energy, Department of Agricul-                                             Chief Financial Officers (CFO)
ture, and Federal Energy                                                   Council. Activities of these inter-
Regulatory Commission. [Ken-         Information Exchange                  agency councils are summarized
neth Winne, (202) 376-5415]                                                in Chapter 2.
                                     Briefings and Presentations
Government Accowitants               To disseminate information on         JFMIP News Bulletin
Training                             current financial management is-      To help keep Federal managers
In 1989, the staff continued a       sues, the JFMIP staff has par-        up-to-date on the latest develop-
study on federal accountants'        ticipated in workshops, semi-         ments in financial management,
training needs, which resulted in    nars, and forums throughout the       the JFMIP publishes a quarterly
a written report with a training     year.                                 news bulletin. The articles cover
model and functions statement                                              a wide variety of topics such as
for federal accountants. Par-        The Executive Director and staff      central agency initiatives, finan-
ticipants in the project included    have met with agency financial        cial systems, auditing, budget-
70 agency financial managers         managers to share ideas for cur-      ing, cash management, and
and 30 academicians and prac-        rent, and future JFMIP projects.      other technical subjects affecting
titioners. The training model        The organizations visited during      financial managers. The JFMIP
presents the basic educational       1989 include the Departments          has been publishing this news
coverage that agencies should re-    of Defense, Energy, Labor,            bulletin since 1970.
quire of their entry and career      State, and Transportation; and
level accountants. The training      the Federal Aviation Administra-
topics cover the knowledge,          tion, National Transportation



                                     4
                                       Chapter 1
                                       Joint Financial Management Improvement Program




Annual Report                          the Chief Financial Officer of the   • forming a single,
                                       U.S., gave keynote addresses.          governmentwide, financial
JFMIP began issuing the annual
                                       Both speakers emphasized the           management system; and
report in January 1950. The~­
nual report not only summarizes        need for more improvements in
                                       the financial management arena       • developing a standard
the activities of JFMIP, but also                                             automated grants manage-
the financial management ac-           to prepare us for the 1990s. Mr.
                                       Bowsher described how far              ment system.
complishments of the c~ntral
agencies and the operating agen-       government accounting has            A panel session on "Resolving
cies.                                  come since the Budget and Ac.-       Human Resources Problems"
                                       counting Act of 1921. He high-       stressed the importance of .
Financial Management                   lighted some significant financial   recruiting, training and retention
Directory                              crises in our history-the stock      of federal personnel. The par-
                                       market crash of 1929,                ticipants included Elizabeth
 First published by JFMIP in           bankruptcy of Penn Central and
 1973, the directory facilitates the                                        Smedley, Controller, Depart-
                                       the New York City fiscal crisis in   ment of Energy; Curtis Smith,
 interchange of financial manage-      1975-to compare and illustrate
 ment information among agency                                              Associate Director, Office of Per-
                                       financial problems we face           sonnel Management; and Roger
 officials in the federal govern-      today. He discussed the savings
 ment. The most recent issue of                                             Sperry, Director of Academy
                                       and loan crisis, the Third World     Studies, National Academy of
 the Direct<»yfor Financial            debt and the U.S. budget deficit.
.Managers was published in fall                                             Public Administration.
                                       Emphasizing the necessity of
 of 1989.                              financial information, he pointed
                                       out that this could have             The primary topics of discussion
Annual Conference                      prevented many financial crises.     for the session on "Current
The JFMIP annually sponsors a          He concluded by stressing the        Financial Management Issues"
financial management con-              need to modernize budget and         focused on Chief Financial Of-
ference to disseminate informa-        financial systems in the federal     ficers for the government,
tion on current financial manage-      government and to report on          upgrading the quality o~ finan-
ment issues and improvements.          budget and off-budget items to       cial managers, and credit and
More than 550 people from the          arrive at the true deficit.          cash management issues. Gerald
federal and private communities                                             Murphy, Fiscal Assistant
attended the JFMIP's 18th An-                                               Secretary, Department of the
                                       Frank Hodsoll summarized             Treasury; Tom Stack, Chief of
nual Conference held on March          some financial management im-
27, 1989, in Washington, D.C.                                               the Credit and Cash Manage-
                                       provements made during the           ment Branch, Office of Manage-
The theme of the conference was        past few years and described
"Financial Management and Ac-                                               ment and Budget; and Frederick
                                       some new directions that the         Wolf Assistant Comptroller
countability in the 1990s."            new Administration is exploring            ' Accounting and Fman-
                                                                            General,                    .
                                       for the 1990s.                       cial Management, General Ac-
Charles Bowsher, Comptroller                                                counting Office were the
General of the U.S., and Frank         These improvements include
                                                                            panelists.
Hodsoll, the Executive Associate       • focusing more attention on
Director of the Office of                strategic planning and pro-
Management and Budget and                gram evaluation;


                                       5
                                      Chapter 1
                                      Joint Financial Management Improvement Program




One of the highlights of the con-
ference was the presentation of
the Donald L. Scantlebury
Memorial Awards for distin-
guished leadership in financial
management. The purpose of
the award is to recognize senior
financial management executives
who, through outstanding and
continuous leadership in finan-
cial management, have been prin-
cipally responsible for significant
economies, efficiencies, and im-
provements in the public sector.
Frank Hodsoll, Executive As-
sociate Director, Office of                             Presmtat'Wn efthe Scantlebury Awards. (Left to right)
                                                 Frank Hodsoll, Louis Goldstein, Blkabeth Smedley amt Kmneth Boehm.
Management and Budget,
presented the awards to
Elizabeth Smedley, Deputy Assis-
tant Secretary for Financial
Management and Controller in
the U.S. Department of Energy;
Kenneth P. Boehne, Chief Ex-
ecutive Office of the U.S. Rail-
road Retirement Board; and
Louis L. Goldstein, Comptroller
of the Treasury of the State of
Maryland.

A special award was presented to
Gerald Riso, the first Chief
Financial Officer of the U.S., for
his outstanding dedicated leader-
ship in promoting financial
management improvements                                     Presmtat'Wn ofthe SpecialAward to.Mr. Riso with
                                                           ]FMIP Steering Committee Members <¥.ft to right)
throughout the federal govern-               Virginia Robinson, Mmlt Barnes, Gerald Riso, Jimmie Brown amt Gerald Murpby.
ment.




                                      6
                                    Chapter 2
                                    Governmentwide Initiatives to Improve
                                    Financial Management




OFFICE OF                           OMB emphasizes a variety of            A-123, Internal. Control Sys-
MANAGEMENTAND                       strategies for meeting the objec-      tems.
BUDGET                              tives of the President's financial
                                                                         There are a number of sig-
                                    management MBO, including:
                                                                         nificant accomplishments under
The Office of Management and        • A "cross-servicing" program        the program for financial
Budget (OMB) continued to             to eliminate redundant, ob-        management improvements. Sig-
lead a broad range of                 solete systems by having agen-     nificant progress has been made
governmentwide initiatives to         cies with modem systems sell       in developing governmentwide
improve financial management          financial services to others.      standards. The governmentwide
policy, systems and operations.       The Departments of Agricul-        Standard General Ledger and the
On July 26, 1989, the President       ture and Treasury and the          Core Financial Systems Require-
established a Management by           General Services Administra-
                                      tion (GSA) are prominent in
                                                                         men'ts have been issued and data
Objectives (MBO) system for                                              standards are currently being
                                      ~e provision of financial ser-
the federal government. Im-           vices.                             developed.
proved financial management
was cited as a cross-cutting        • An "off-the-shelf' program to      Systems upgrades are underway
MBO priority applicable to all          allow agencies to build new      in every major agency in the
agencies aimed ''to guarantee the       financial systems without the    federal government. Several
effectiveness and integrity of          time, expense, and uncertain     agencies have recently converted
programs and services for the           results of custom develop-       to new systems, while many
                                        ment. GSA has awarded multi-     agencies, using a phased im-
public and the proper
                                        ple-award schedule contracts,    plementation approach, have im-
stewardship of public resources."       available to all agencies, for   plemented new systems within
OMB is working to implement             off-the-shelf systems. Awards
                                                                         bureaus. These departments and
                                        have been made to three
four major milestones under the                                          agencies include the Depart-
                                        software vendors. Systems
financial management MBO:               from these vendors are being     ments of Energy, Interior,
                                        implemented in a number of       Health and Human Services,
• A governmentwide network                                               Labor, and Transportation and
  of financial management sys-          agencies. GSA is negotiating
  tems                                  with additional vendors to ex-   the Environmental Protection
                                        pand the schedule.               Agency.
• A quality data base that in-
  tegrates program results,         • A requirement (OMB Cir-            Agencies are using cross-servic-
  budget and accounting data          cular No. A-127,Financia/,         ing and off-the-shelf software to
                                      Management Syste-ms) that          obtain better financial services
• Improved management and a           agencies develop 5-year finan-     on a more timely and less costly
  reduction in the risk of fraud      cial systems improvement
                                      plans with OMB and Treasury        basis. The policy of promoting
  and abuse by strengthening                                             the use of off-the-shelf software
  management internal control         assistance.
                                                                         for financial systems has trig-
  programs
                                    • A strengthened oversight pro-      gered improvements made by
• Use of audit as a key manage-       gram over the annual review        commercial vendors to meet
  ment tool and resolution of         of agency financial systems in     federal agencies' needs. Federal
  identified deficiencies.            accordance with the require-       user groups have been estab-
                                      ments of OMB Circular No.          lished and actively meeting with



                                    7
                                     Chapter2
                                     Governmentwide Initiatives to Improve Financial Management




vendors to address various issues    will be supplemented by                 tions underway to assist agencies
on the implementation and            uniform financial management            to maintain and improve
refinement of the software pack-     data standards, which are being         management control systems ef-
ages. [David Gribble, (202) 395-     developed by a ]FM.IP project           fectively and economically as re-
3993]                                team. In addition, the ]FM.IP is        quired by law and OMB Cir-
                                     working on the development of           cular No. A-123, Interna/. Con-
Financial Information and            functional requirements for per-        trol Systems:
Systems Improvements                 sonnel/payroll systems and travel       • Increase oversight of each
The governmentwide network of        management systems. More                   Cabinet agency and major in-
financial management systems         details of these projects can be           dependent agency. Manage-
called for by the President is       found in Chapter 1. [David Grib-           ment examiners have been as-
based on the installation of a       ble, (202) 395-3993]                       signed to each of these agen-
                                                                                cies to coordinate efforts to
single primary financial system                                                 identify problems in the agen-
in each major department and         Management Integrity
                                                                                cy, build an improved in-
agency linked to upgraded sys-       In striving to meet the needs of           tegrity infrastructure, and im-
tems at the Department of the        the public, government's ability           plement and track corrective
Treasury and at OMB. These sys-      to manage the delivery of those            actions.
tems are being developed in ac-      services must not be eroded by
cordance with a strategic plan       mismanagement as the result of          • Assure adequate resources for
being developed by OMB in            undetected fraud, waste, and              offices of the Inspectors
cooperation with the Chief           abuse. OMB has renewed em-                General and for oversight of-
Financial Officer Council.                                                     fices in several agencies. OMB
                                     phasis on improving the manag-            will provide the resources
                                     ing of government agencies and            necessary for agencies to un-
Agency primary financial sys-        programs by establishing a                dertake the coordination and
tems will have the capability to     Management Integrity Branch               direction of the Federal
aggregate information to an          within the Financial Manage-              Managers' Financial Integrity
agencywide level in addition to      ment Division. Its primary roles          Act (FMFIA) and related
serving field program managers.      are to:                                   management control and
Agency subsidiary systems (such      • formulate a sound public                audit followup programs.
as planning, budget formulation,        policy on management con-
                                        trols and oversee its implemen-      • Link management integrity ac-
payroll, personnel, grant and                                                  tivity to the budget process
contract management, and                tation;
                                                                               for the fiscal year 1992
property) and unique agency          • focus attention on material             budget submission. OMB Cir-
program financial systems will         and systems weaknesses that             cular A-11, Preparation and
use standard data and be               are high risk areas for fraud,          Submissi-On ofBudget Estimates,
electronically linked to the agen-     waste, or abuse; and                    has been revised to require
cy primary system.                                                             agencies to reflect require-
                                     • ensure that federal managers            ments for funding corrective
                                       have the incentives and train-          action for material weakness
Federal financial management in-       ing to protect the integrity of         and high risk areas.
formation and systems opera-           government programs.
tions standards are being                                                    • Identify as high risk areas the
                                     The Management Integrity                  most serious management
upgraded. The Standard General
                                     Branch has a specific set of ac-          control problems with the
Ledger issued by OMB in 1986


                                     8
                                    Chapter2
                                    Govemmentwide Initiatives to Improve Financial Management




  greatest potential for fraud,         man~ement control respon-             and to reflect the Inspectors
  waste, and abuse. The finan-          sibilittes through improved           General Act Amendment of
  cial losses at HUD and                training.                             1988 requiring management
  among the savings and loan in-                                              to report on final actions
  stitutions focused attention on   • Validate the accomplishments            taken on audit report recom-
  the need to identify and take       and effectiveness of corrective         mendations.
  steps to correct the major          action. OMB will work with           [Jack Donahue, (202) 395-3066]
  problems at other agencies          agencies to validate that cor-
  before they escalate out of         rective actions are undertaken
  control. OMB, after review of       to achieve the intended              Cash Management
  FMFIA, IG, GAO, and OMB             results. The focus will be on        During 1989, OMB completely
  reports on management per-          identifying specific accom-          revised Circular A-125, Pr<»npt
  formance, identified more           plishments and developing            Payment, to implement 1988
  than 100 high risk areas. Each      performance indicators that          Prompt Payment legislation.
  agency must develop a correc-       document risk reduction, cost        The most significant change
  tive action plan for each high      savings or avoidance, and            eliminated the grace period.
  risk area and report semian-        demonstrated improvements
                                      in program delivery.                 Agencies reported that in 1989
  nually on progress.                                                      the number of payments subject
• Anticipate serious problems at    • Update OMB policy to sup-            to the Act increased by 40 per-
  agencies through an early           port renewed emphasis on             cent while timely payments in-
  warning system. OMB will            management control in the            creased from 87.4 percent in
  work with agencies to estab-        federal government. OMB              1988 to 90.l percent in 1989.
  lish the capacity to mobilize       will issue several related           While agencies made progress in
  resources and take immediate        management control guidance          fiscal year 1989 in implementing
  action when especially sensi-       documents in 1990-91:                the Act, much remains to be
  tive issues are raised by            (1) agencies will be required       done to achieve the full potential
  employees and/or managers           to submit corrective action
                                      plans for high risk areas;           of the legislation and reach the
  within the agencies or exter-                                            Administration's goal of substan-
  nally by an IG or GAO audit          (2) OMB Circular A-123,In-
  or public inquiry.                  terna/, Control Systems, will be     tially eliminating late and early
                                      retitled.Management Controls:        payments.
• Promote senior level manage-        Implemen"ting Integrity andAc-
  ment participation in manage-       countalnlity and significantly       Between 1988 and 1989 the
  ment control review. OMB            rewritten to emphasize that          number of payments subject to
  seeks the involvement of            agencies must take a broader
                                      perspective in instituting           the Prompt Payment Act in-
  senior level management by
  promoting the formation of          management controls over             creased significantly, from 40.1
  agency senior level manage-         program administration as            million to 56. 7 million due to
  ment policy committees to           well as the traditional finance      the new inclusion of construc-
  provide strong and consistent       and accounting controls; and         tion subcontractor payments
  direction and accountability         (3) OMB Circular No. A-50,          under the Department of
  by agency personnel. In addi-       AuditFollowup, will be               Agriculture's Commodity Credit
  tion, OMB, with the assis-           renamed.ManagitW Audit Fol-         Corporation (CCC). Between
  tance of the Office of Person-      lowup Programs to reflect cur-       1983and1989, agencies report
  nel Management, seeks to en-         rent policy of integrating the      that interest penalties paid
  hance program managers'              audit followup program into         doubled as a percent of total
  awareness and acceptance of          day-to-day agency operations


                                    9
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




payments; th.at increase is due to   benefit recipients with.out bank       deliver public assistance benefits
improved agency compliance           accounts. In large cities across       and food stamps via plastic card.
with the Act and more accurate       the country, armed guards must         Statewide expansion is planned
reporting. Late payments in-         accompany postal carriers on the       following the pilot. [Tom Stack,
creased from 2.S percent of all      days when benefit checks are           (202) 39S-3066]
payments in 1988 to 3.3 percent      delivered due to high volumes of
in 1989. Grace period payments       crime. Large cities, such as Los       Credit Management
declined from 8.4 percent in         Angeles, Houston, and Miami            The federal government is the
1988 to S.l percent in 1989.         file disproportionately large num-     Nation's largest source of credit.
Early payments decreased slight-     bers of check claims for non-          In fiscal year 1989, the govern-
ly from 1.6 percent to LS per-       receipt and theft.                     ment made $16 billion in new
cent.                                                                       direct loans and guaranteed
                                     To address these problems, the         $1 OS billion in new loans made
During 1989 a number of agen-        Administration's goal is to util-      by private lenders for housing,
cies reported making improve-        ize the existing electronic pay-       education, agriculture, and other
ments in the Quality Control         ment infrastructure such as            purposes.
 (QC) systems which assure ac-       automated teller machines
curate reporting on payment per-     (ATMs) and point-of-sale (POS)         At the end of the fiscal year the
formance. The General Services       terminals. A governmentwide            government had $211 billion in
Administration and the Depart-       Electronic Benefit Transfer            loans receivable, the majority of
ment of Transportation QC sys-       (EBT) program has been in-             which-$177 billion or 84 per-
tems continue to provide reliable    itiated by OMB, with lead agen-        cent-are direct loans. The
data. In addition, the Office of     cy responsibility delegated to the     remainder-$34 billion-repre-
Personnel Management, Depart-        Treasury's Financial Manage-           sents claims paid on defaulted
ments of Justice, Veteran Af-        ment Service (FMS) to coor-            guaranteed loans.
fairs, and Interior are making       dinate the development of these
progress in implementing QC.         individual efforts allowing un-
The President's new Manage-          banked benefit recipients to ac-       The government also has over
ment by Objectives system in-        cess all funds securely th.rough a     $33 billion in non-tax accounts
cludes a commitment to ensure        single, efficient, plastic card.       receivable, which includes
th.at federal agencies pay bills     Seven electronic benefit delivery      benefit overpayments (e.g., So-
promptly by aggressive im-           tests are in operation at the time     cial Security overpayments),
plementation of the Prompt Pay-      of this publication, and many          audit disallowances, and fees and
ment Act Amendments of 1988          others are in the planning stage.      fines. The accounts receivable
and th.rough development of ef-      For example, in 1989, the Social       total also includes $14 billion in
fective QC measures. [Tom            Security Administration began          scheduled interest payments on
Stack, (202) 39S-3066]               in Baltimore the first program         loans and accrued interest on
                                     using plastic cards and automatic      delinquent loans.
Electronic Benefit Transfer          teller machines to distribute
(EBT)                                direct federal benefits (Sup-          At the end of fiscal year 1989,
There are an estimated 8 million     plemental Security Income) on a        delinquent debt due from the
federal benefit recipients and 20    voluntary basis. The State of          public totalled just under $100
million state-administered           Maryland began its electronic          billion. This amount included
                                     benefit program in 1989 to             $S9 billion in delinquent tax


                                     10
                                     Chapter2
                                     Governmentwide Initiatives to Improve Financial Management




receivables and $40 billion in       been brought back into repay-          OMB has for several years en-
delinquent non-tax receivables,      ment, is found in five agencies:       couraged complete implementa-
mainly delinquent loan repay-        Education, Housing and Urban           tion of the Administration's
ments due from the public.           Development, Export-Import             Nine Point Credit Management
                                     Bank, Veterans Affairs, and            Program. Each year, perfor-
From 1986 to 1989, total non-        Small Business Administration.         mance goals are developed to en-
tax delinquencies increased $12      Because these are defaulted            sure compliance by the major
billion, from $28 billion to $40     guaranteed loans, the delinquen-       credit agencies. Progress against
billion, mainly due to defaulted     cy rate runs much higher than          these goals is monitored by the
guaranteed loans not brought         direct loans (41.5 vs. 7.4 per-        Financial Management Service
back into repayment status. An       cent).                                 (FMS), Department of the
accounting change by the                                                    Treasury, and reported on a
Farmers Home Administration          Management reforms can be a            regular basis. Semi-annual
(FmHA) in the Department of          cost-effective way of ensuring         reviews are held with the major
Agriculture resulted in an adjust-   that a larger percentage of            credit agencies to review
ment of $8 billion in the delin-     federal credit (including loans)       progress against goals.
quent debt level, bringing the       are repaid in full and on time.
total to $40 billion at the end of                                          Even with the advances dis-
fiscal year 1989. Prior to 1989,     The Administration's efforts to        cussed above, progress in certain
the Farmers Home Administra-         protect the value and improve          areas remains unsatisfactory. Use
tion had been reporting only the     the financial condition of the         of the available techniques by
amount of missed payments as         federal credit portfolio are           the agencies is uneven and in-
delinquent. Reporting of the full    focused on three areas:                complete, even allowing for
amount of the loan is required       • more accurate accounting and         statutory prohibitions against
when a payment is over 180             timely reporting of credit in-       the use of certain techniques in
days past due because the loan is      formation;                           some programs and other dif-
in default. When a payment is                                               ferences in program mandates.
delinquent more than 180 days,       • cost-effective credit manage-        The General Accounting Office
FmHA is now properly report-           ment policies; and                   (GAO), in its report Credit
ing the entire amount of the         • aggressive collection of delin-      Management: Deteriorating
loan as delinquent, rather than        quent and defaulted debt.            Credit Picture Emphasizes Impor-
only the missed payments.                                                   tance ofO.MB)s Nine Point Pro-
                                     The President's 1991 Budget            gram, identified many areas of
Exclusive of the accounting          proposes major investments in          needed improvement. OMB and
change by FmHA, delinquent           the management of tax receiv-          FMS, working with the agen-
direct loan receivables declined     ables and the administration of        cies, are preparing an evaluation
from $6.5billionin1986 to            federal loan programs. These           of agency implementation of the
$5.8billionin1989.                   proposals include $55 million          program. Agencies will be re-
                                     for tax debt collection initiatives    quired to submit a progress
Guaranteed loan delinquencies
                                     and $58 million for additional         report and future plans for im-
present a much different picture.
                                     staff for the major credit agen-       plementation of the Nine Point
The majority of the $34 billion
                                     cies and to strengthen the             Program with their annual credit
in defaulted guaranteed loans,       Treasury Department's oversight
$14 billion of which has not                                                managem'!nt plans in 1990.
                                     of credit management.


                                     11
                                      Chapter2
                                      Govemmentwide Initiatives to Improve Financial Management




In August of 1989, the Federal             that there are early warning       Security and Integrity of
Credit Policy Working Group                systems for emerging               Automated Systems
(FCPWG) was reconstituted as               problems;
                                                                              The Computer Security Act of
an arm of the President's                                                     1987 requires federal agencies to
                                      • Use of private sector attorneys
Economic Policy Council. The                                                  identify and plan for the security
                                        to support litigation of delin-
Working Group, which is                 quent debt; and                       and integrity of federal com-
chaired by OMB, is responsible                                                puter systems that contain sensi-
for reviewing major federal           • Improved Management of                tive information. Approximately
credit policy issues, including as-     Guaranteed Loans. In 1989,            2700 plans for the security and
sessing implementation of credit        the Financial Management              integrity of sensitive systems
management policy, reviewing            Service led an interagency task
                                                                              were sent to the National In-
activities of Government Spon-          force to review loan policies
                                        and practices for the manage-         stitute of Standards and Technol-
sored Enterprises, reviewing the                                              ogy (NIST) and the National
evolution of secondary markets,         ment of guaranteed loans. A
                                        preliminary report of the task        Security Agency (NSA) for ad-
and reviewing proposed loan             force was presented to the            vice and comment last year.
asset sales. Because all major          Federal Credit Policy Work-           They included 466 from civil
credit agencies are represented,        ing Group at its January 1990         agencies that primarily con-
the Working Group provides an           meeting. The task force iden-         cerned :financial systems. By
excellent forum for identifying         tified four keys to the effective     December 1988, NIST and
and resolving credit issues.            management of guaranteed              NSA had provided advice and
                                        loan programs:                        comment on all of the plans sub-
During 1989-and continuing              (1) Only qualified and finan-         mitted. It is anticipated that after
into 1990-the Administration's          cially sound lenders should           full implementation of the plans
credit management priority was          participate in guaranteed loan        the security of the systems will
to prevent future defaults and          programs;                             be improved. [Franklin Reeder,
delinquencies through improved             (2) There should be incentives     (202) 395-3785]
application of the Nine Point              to encourage lender participa-
Credit Management Program.                 tion while having the neces-       Total Quality Management
Special emphasis has been and              sary penalties and controls to     Federal agencies are undertaking
will be placed on:                         protect the government's           a comprehensive, sustained ef-
• More effective origination and           financial interests;               fort to implement Total Quality
   servicing of direct loans;                                                 Management (TQM) with the
                                           (3) Program standards should
                                           ensure that lenders properly       support of the Administration.
• Clearer and stronger stand-
  ards and policies for guaran-            originate, service, collect, and   TQM is an effective, but com-
  teed loan programs, with a               liquidate loans; and               plex, long-term management
  particular focus on lender cer-                                             strategy for improving the per-
                                           (4) Lenders should be              formance of an organization.
  tification and monitoring;
                                           monitored for compliance           Successful implementation re-
• Enhanced financial reporting             with agency program stand-
                                                                              quires top leadership commit-
  and information that will en-            ards and to identify emerging
                                           problems.                          ment and far-reaching changes
  sure that the President and                                                 in outlook, culture, and opera-
  Congress know the true value                                                tions throughout an organiza-
  and condition of the                [Tom Stack, (202) 395-3066]
                                                                              tion, all pointing to assuring
  government's portfolio, and


                                      12
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




delivery of products and services    quick corrective action, and           • im~roved design and manufac-
that are responsive to customer      another provided over $3.5 mil-          tunng methods for the F/A-
requirements, achieve their in-      lion in savings since 1987. The          18 aircraft, resulting in an
tended purpose, and make effec-      Lewis Research Center within             aircraft capable of more than
tive use of taxpayer dollars.        the National Aeronautics and             twice as many flight hours be-
                                     Space Administration                     tween repairs; and
One of the most significant ac-      demonstrated how the number
                                                                            • increased competition and
complishments in the quality im-     of patents submitted by its               streamlined acquisition proce-
provement area in 1989 was           employees increased by 50 per-            dures, which reduced unit
developing quality awareness in      cent over a 3-year period. The            costs for producing naval
every agency. Program managers       Department of Veterans Affairs'           aircraft by 24 percent since
are now identifying their cus-       Kansas City Medical Center                1982.
tomers, determining their re-        described its efforts which            The Second Annual Conference
quirements, developing quality       decreased the mortality rate by        on Quality and Productivity Im-
measures and systems for track-      20 percent since 1986.                 provement was held in June,
ing them, and forming employee                                              1989, and attracted over 1,000
teams to solve problems and          The Administration also in-            federal managers. A series of
take corrective action.              stituted the President's Award         presentations was provided by
                                     for Quality, similar to the Mal-       public and private sector experts
Agencies which have                  colm Baldridge National Quality        who have successfully imple-
demonstrated exemplary               Award for the private sector, to       mented quality improvements in
progress are identified as quality   recognire a major agency which         their organizations. The con-
improvement prototypes (QIPs)        has implemented quality manage-        ference recognized and
or models of quality improve-        ment. The Naval Air Systems            publicized successful federal
ment in the federal government.      Command (NAVAIR) was the               quality improvement initiatives
To date, 13 federal organizations    first recipient of the award in        such as those cited above and en-
have been identified as quality      1989. Improved management              couraged the exchange of ideas
prototypes. In 1989, 11              enabled NAVAIR to save an es-          on ways to promote quality im-
workshops were provided by the       timated $1.8 billion through ac-       provement in the federal govern-
1989 QIP agencies. These             quisition streamlining in fiscal       ment.
workshops were attended by           year 1988. This built on an ear-
more than 2,000 federal              lier, combined savings of $1. l        The Federal Quality Institute, es-
managers. Successful strategies      billion for fiscal years 1985 and      tablished in 1988 as the primary
for implementing total quality       1986 and a savings of $704 mil-        source of information, training,
management were presented at         lion for fiscal year 1987. Among       and consulting services on
the workshops, and detailed case     the specific management reforms        TQM, has provided quality
studies were provided to             adopted by NAVAIR were:                awareness seminars to ap-
workshop participants. For in-       • use of more reliable equip-          proximately 2,000 senior execu-
stance, the Fresno and Ogden            ment, an improved spares in-        tives across government.
Service Centers of the Internal         ventory, and increased train-
Revenue Service detailed how            ing for maintenance person-
                                        ne~ which increased the num-        In 1990, OMB, together with
one center prevented 60,000 er-                                             the President's Council on
                                        ber of mission-capable naval
roneous taxpayer notices by             aircraft by 26 percent;             Management Improvement



                                     13
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




(PCM!), and the National             shown in Part VI.B of Section          Subsidies in 1991 add up to
Academy of Public Administra-        One.                                   $1.8 billion for direct loan
tion (NAPA), will begin a series                                            obligations, and $9.5 billion for
of experimental projects in three    Under credit reform, agencies          guaranteed loan commitments.
or four agencies aimed at remov-     would be required to seek              The degree of subsidy varies
ing bureaucratic obstacles to im-    general fund appropriations for        widely from program to pro-
proved service. Numerous             the subsidy value of all new           gram, ranging from virtually
regulations and restrictions in      direct loan obligations and            nothing up to 37 percent of face
budgeting, personnel, procure-       guaranteed loan commitments            value of loan guarantees and up
ment and other administrative        for each federal credit program        to 73 percent for direct loans.
areas will be placed on achieve-     included in the initiative. The        On average, the subsidy is 4.5
ment of results.                     subsidy value is defined as the        percent for guarantees and 31.8
                                     discounted or present value of         percent for direct loans. This
Budgeting Initiatives                the additional payments that the       wide variation underscores the
                                     federally assisted borrower            need for the upfront budget
A number of initiatives, with        would have to make for a purely
both substantive and presenta-                                              recognition of subsidy costs that
                                     private loan. Amounts appro-           credit reform would provide.
tional impact, were included in      priated for the subsidy value
the 1991 budget. Most obvious        would be paid by the agency to
was the consolidation of the                                                Deficit Reduction
                                     two central funds in the
budget into a single document,       Treasury-one for direct loans          The Balanced Budget and Emer-
consisting of two sections. The      and one for loan guarantees. The       gency Deficit Control Act of
first section, "Overview," con-      direct loan fund would finance         1985, as amended in 1987, calls
tains the President's budget mes-    the market value of direct loans,      for a balanced federal budget by
sage and discusses selected          and the loan guarantee fund            fiscal year 199 3 and specified a ·
topics. The second, "Notes and       would serve as a reserve for           procedure designed to achieve
Appendices," contains technical      guaranteed loan defaults.              these targets. Following proce-
data and explanations, including,                                           dures prescribed by the law, the
in Part V, material formerly in-     The subsidy would be included          Director of the Office of
cluded in the Appendix volume.       in the outlays of the program,         Management and Budget sub-
                                     the agency, and the function that      mitted reports to the President
Federal Credit Programs              conduct the credit program. The        and the Congress estimating the
Treatment in the Budget              remaining cash flows of the            projected deficit for fiscal year
The 1991 budget is again             credit transaction would be            1990 and the amount of deficit
proposing reform of the way          reported in a separate budget          reduction that resulted from
federal credit programs are          function created for this pur-         laws enacted and regulations
treated in the budget. The credit    pose. Agencies would continue          promulgated.
reform proposal is essentially the   to operate credit programs as
same as in the last two budgets.     they do now. The Adminis-              Reform of the Budget
While the effects of credit          tration's proposal would not af-       Process
reform are not reflected in in-      fect the definition of the budget
                                                                            Reform of the budget process
dividual accounts and programs       deficit, unlike alternative
                                                                            continues to be a high priority.
in this budget, the subsidy values   proposals that would exclude the
                                                                            The President's fiscal year 1991
for each affected account are        non-subsidy cash flows from
                                                                            Budget calls for a constitutional
                                     that calculation.


                                     14
                                      Chapter2
                                      Governmentwide Initiatives to Improve Financial Management




amendment to balance the              ing Office's Glossary of Terms          analyses and decision making,
budget, line item veto, enhanced      Used in the Federal. Budget             OMB continues to support the
rescission authority, biennial        Process, OMB has reviewed the           JFMlP project to standardize
budgeting, a joint budget resolu-     first and second drafts of the          financial information require-
tion with stricter enforcement,       revised glossary and has                ments. As a participant in the
and the closing of loopholes in       provided extensive comments.            project, OMB provided clarifica-
the Gramm-Rudman-Hollings             OMB will continue to work               tion of budget concepts and of
process.                              with GAO throughout the edit-           the relationship of various
                                      ing phase of the project.               budget requirements to one
Other areas of reform that have                                               another and to the financial
received increased attention in-      Recognizing the need for a long-        terms and definitions of
clude agreements on principles        term study of budget informa-           Treasury and GAO. OMB has
for scoring the budgetary impact      tion requirements and presenta-         also assisted in design of the
of various actions, development       tion, OMB is in the midst of a          work plan and has taken the lead
of ways to highlight capital in-      process to develop, study, and          in organizing and administering
vestment, and anticipation of         implement proposals to enhance          a subgroup studying the relation-
long-term problems and oppor-         data collection and analysis and        ship of various budget require-
tunities with budgetary impacts.      to improve budget presentation.         ments to one another and to the
Consistent with the latter, the       Emphasis is on proposals that           financial requirements, terms,
budget proposes creation of a So-     make data collection and process-       and definitions of GAO and
cial Security Integrity and Debt      ing in OMB's budget informa-            Treasury.
Reduction Fund that, while con-       tion systems (budget prepara-
tinuing the requirement for           tion system and central budget          Improvements in Budget In-
balanced budgets beyond 1993,         management system) more effi-           formation Systems
would protect the reserve balan-      cient, improve the printed
ces of the social security trust      presentation of budget data, and        OMB uses multiple aging com-
funds and retain social security      reevaluate current budget con-          puter systems in support of the
receipts and outlays in the deficit   cepts and basic data elements.          budget process. Because these
calculation.                          The process is now focusing on          systems need to be integrated
                                      several of the higher priority          and modernized to achieve
Review of Budget Terminol-            items, including redesign of the        greater levels of flexibility and ac-
ogy and Information Re-               program and financing schedule          cessibility, OMB is in the midst
qwrements                             to emphasize budgetary resour-          of an effort, known as the MAX
                                      ces. Implementation of some             project, to develop the next
OMB is participating in several
                                      items will begin in the fiscal year     generation budget support sys-
efforts to ensure that the federal
                                      1992 budget formulation                 tem incrementally. Effort in
government can communicate ef-
                                      process.                                1990 will focus on the building
fectively on the myriad of com-
                                                                              of a new budget data base struc-
plex budget issues and proposals
                                      Acknowledging the importance            ture to eventually replace the ex-
that are addressed in Congres-        of central agency review of the         isting production and analytical
sional, Executive Branch, and
                                      varying financial requirements,         data bases. OMB is involved in
public forums every day.              terms, and definitions, better          the data element standardization
                                      linkage between budget and ac-          efforts of JFMJP which will be
In connection with the periodic       counting data, and the need for         the basis for the future integra-
update of the General Account-        better data for governmentwide          tion of financial management


                                      15
                                       Chapter2
                                       Govemmentwide Initiatives to Improve Financial Management




and budget past year data bases.       ments, to lower the level of the       standards outlined in the
[Edward Rea, (202) 395-3172]           government's financial risk by         Treasury Financial, Manual. The
                                       reducing delinquencies and             review process has focused the at-
                                       defaults, and to decrease              tention of agencies toward im-
DEPARTMENT OF THE                      administrative cost associated         proving their cash management
TREASURY                               with managing credit.                  practices in two tangible ways.
                                                                              First, agencies have institutional-
Asset Management                       Since its designation in Decem-        ~ g~ cash i:ianagement by
                                       ber 1985 as lead agency for            mcluding them m published
Since 1983, the Department of                                                 agency procedures. Second,
                                       credit management and debt col-
~e Treasury,   through its Finan-                                             more agencies are making cash
                                       lection, the Financial Manage-
cial Mai:agement Service (FMS),                                               management progress a measure
                                       ment Service has focused on im-
has put m place the state-of-the-                                             of management success. FMS
art, modem technology for              proving all aspects of the credit
                                       cycle including credit extension,      began mailing the second set of
processing the government's                                                   yearly updates in December
funds. FMS and OMB are work-           account servicing, debt collec-
                                       tion, and write-off. FMS has           1989. [Michael G. Dressler,
ing with agencies to encourage                                                (202) 287-0745]
                                       worked with OMB in the
use of electronic funds trans-
                                       development of credit manage-
fer/direct deposit, lockboxes                                                 Inventory Management
credit cards, pre-authorized '         ment policy and procedures and
debits, and electronic benefit         has worked with the agencies to        The Financial Management Ser-
                                       ~plement credit management             vice has begun a program for im-
transfer (EBT). Currently, it is
                                       rmprovements.                          proved management of inven-
estimated that 45 percent of
                                                                              tories (i.e. operating con-
federal disbursements and 8 per-
                                       Cash Management Reviews                ~umables, work in progress, and
cent of collections are made
                                       The comprehensive cash manage-         items for resale) in federal agen-
electronically; the 1991 goal is
                                       ment reviews submitted by 70           c~es. The program seeks to pro-
~7 percent and 9 percent, respec-
                                       executive departments and agen-        vtde federal managers with tools
ttvely.
                                       cies in 1986 defined agency cash       and incentives to improve inven-
                                       flows and recommended various          tory management. Such tools in-
In addition, major changes to                                                 clude accounting guidance, core
                                       cash management improve-
the Prompt Payment Act have                                                   requirements for inventory
                                       ments. In order to track agency
imposed more rigorous limits on                                               management systems, guidelines
                                       progress on review recommenda-
agency payment practices; i.e.,                                               f?r improved management prac-
                                       tions, FMS instituted annual
grace periods have been                                                       ttces, and a system for measuring
eliminated and additional penal-       agency status updates in 1989.
                                       These yearly progress reports          the impact of improvements.
ties imposed upon agencies for                                                The program will include an in-
failure to pay interest on late pay-
                                       will be the method used to track
                                       ~ until the next comprehen-            depth review of the inventory
ments.                                                                        management practices of private
                                       sive cash management review
                                       scheduled for 1992. In the up-         businesses to learn about off-the-
The objectives of improved             dates, agency officials certify        shelf software tools, standards of
credit management are to ensure        cash management practices by           practice, performance measures,
that credit is allocated in accord-    verifying whether each cash flow       and other management tools,
ance with statutory require-           meets the cash management



                                       16
                                     Chapter2
                                     Governmentwide Initiatives to Improve Financial Management




such as Electronic Data Inter-       savings of $20 million per year         to those without bank accounts.
change (EDI).                        to the taxpayers. [Susan Vein-          The next test is in development
                                     temillas, (202) 287-0455]               stages and will involve the
Inventory accounts for ap-                                                   delivery of multiple direct
proximately 15 percent of the as-    Automated Clearing House                federal benefits (SSI, SSA, and
sets that are held by the federal                                            ".A) ~Houston, Texas, begin-
                                     Effective September 5, 1989, the
government. Because inventories                                              mng m October 1990 with an ex-
                                     Financial Management Service
are turned over rather than held                                             isting A1M and POS infrastruc-
                                     implemented the currently avail-
indefinitely, the dollar value of                                            ture. The electronic benefit trans-
                                     able commercial Automated
these accounts is a continuing                                               fer (EBT) program is beginning
                                     ~!earing House (ACH) process-
flow of funds. A 1 percent reduc-                                            to prove that benefits can be
tion in that flow, brought about
                                     mg schedule for specific govern-
                                     ment payments. Under this               delivered to the unbanked more
by improved practices, would                                                 efficiently and at a reasonable
                                     schedule, vendor, miscellaneous
free ~bout ~2 billion annually in                                            cost with potential conversion
                                     and daily adjustment ACH pay-'
momes which are now diverted                                                 from paper to electronics in the
                                     ments files will be processed by
from agency programs. [Stephen                                               billions of dollars. This alterna-
                                     FMS Regional Financial Centers
M. Vajs, (202) 287-0751]                                                     tive could ultimately be offered
                                     (RFCs) for next-day settlement.
                                     Implementation of next-day              to unbanked recipients in all
Vendor Express Electronic                                                    federal programs that distribute
Payment System                       processing for Vendor Express
                                     payments allows agencies to             benefits to individuals. [Lyndy
Financial Management Service's       more readily convert check pay-         Layman, (202) 287-0751]
strategic direction is to make all   ments to ACH, while still meet-
government disbursements             ing Prompt Payment Act require-         Automated Direct Deposit
electronically. In support of this   ments. Each RFC has estab-              Paper-based Direct Deposit en-
objective, FMS implemented an        lished a cutoff time for accep-         rollment processes (using the SF-
electronic payment system for        tance of ACH payment files              1199A form) have proven a
making vendor and miscel-            based on current processing             strong disincentive to enroll-
laneous payments in July 1987.       capabilities. [Susan Veintemillas,      ment by recipients and to
This system, termed Vendor Ex-       (202) 287-0455]                         marketing Direct Deposit by
press, permits federal agencies to                                           financial institutions and federal
make such payments using the         Electronic Benefit Transfer             agencies. Use of the form re-
Automated Clearing House             (EBT)                                   q~es the reci~iei:t to physically
(ACH). The Vendor Express sys-                                               visit the financial tnstitution.
                                     FMS has taken the lead in
tem has the capability to carry                                              FMS has undertaken a variety of
                                     developing a governmentwide
electronic invoice information                                               steps to simplify this process.
                                     program to test the delivery of
with the payment that is                                                     Several of these simplified enroll-
                                     ~nefits to the unbanked via plas-
machine processable by cor-                                                  ment processes have been in-
                                     tic access cards, automated teller
porate accounts receivable sys-                                              stalled successfully by the Social
                                     machines (ATMs), and point-of-
tems. Federal agencies are cur-                                              Security Administration, the In-
                                     sale (POS) terminals. The first
rently paying more than 183                                                  ternal Revenue Service, and
                                     such test, in Baltimore,
thousand payments per month                                                  other agencies. Another
                                     Maryland, began in November
through this system. When fully                                              simplified enrollment process,
                                     1989 to deliver Supplemental
converted, there is a potential                                              automating enrollment data at
                                     Security Income (SSI) benefits


                                     17
                                        Chapter2
                                        Govemmentwide Initiatives to Improve Financial Management




financial institutions, is slated for   to resolve problems associated         Fedwire Deposit System
feasibility testing this year.          with using bank routing informa-       The Fedwire Deposit System
                                        tion printed on checks and share       continues to provide for the
FMS modified its regulations to         drafts. [James R. Finegan, (202)       processing of collections by wire
encourage simplified sign-up            287-0347]                              transfer. Over $100 billion are
processes. In conjunction with                                                 collected annually for ap-
FMS, the Social Security Ad-            CA$H-LINK                              proximately 200 agency loca-
ministration installed a fully          The Financial Management Ser-          tions. Wire transfer permits im-
paperless enrollment process.           vice is implementing a new             mediate availability of funds
Recipients can now call SSA's "1-       worldwide banking and cash con-        processed to Treasury's account
800" number and complete a              centration system, known as a          at the Federal Reserve. The sys-
Direct Deposit sign-up based on         CA$H-LINK. Implementation              tem provides user agencies the
the information on their checks         of this new system, planned            capability to access wire transfer
and share drafts. Social Security       during fiscal year 1990, will          collection information immedi-
now also collects enrollment            dramatically change and stream-        ately as it is processed. [Cindy
data as part of the adjudication        line FMS and agency deposit-           Johnson, (202) 287-0751]
to receive benefits process,            and banking-related functions.
which is successfully getting           CA$H-LINK will provide for             Limited Negotiability of
more than 40 percent of new             concentration of agency deposits       Government Checks
beneficiaries to enroll before the      processed at over 3,500 domes-         Public Law 100-86 (the Com-
first payment is made. This has         tic and international financial in-    petitive Equality Banking Act of
the effect of dramatically increas-     stitutions, including the Federal      1987), which limits the nego-
ing the savings from the Direct         Reserve, for an annual dollar          tiability, claimability, and
Deposit enrollment over the full        flow of over $387 billion. The         reclaimability of all government
16. 78-year Social Security ac-         system will further enhance col-       checks was implemented on Oc-
count life. Automating Direct           lection and depositary services        tober 1, 1989. The law requires
Deposit enrollments at the finan-       for agencies in several ways.          additional recordkeeping and sys-
cial institution for transmission       Primarily, it improves financial       tems modifications by agencies
to Social Security Administra-          integrity by providing the ability     so that they can receive and
tion via the Automated Clearing         for agencies to electronically         process the cancellation credits
House network is scheduled for          monitor deposits made to and           that FMS will provide them for
a feasibility test. This process        reported by financial institu-         checks outstanding after 12
will employ the financial               tions; accelerates the deposit         months from issuance. Ongoing
institution's existing payment          reconciliation process between         implementation activities will be
origination software to provide a       agencies and FMS (agencies will        coordinated with agencies, the
low-cost method of formatting           have on-line access to deposit in-     Federal Reserve, financial institu-
and transmitting the sign-up            formation); and reduces the            tions, and the private sector
data.                                   volume of paper transactions as-       through fiscal year 1991. [Joan
                                        sociated with the processing of        Pesata and Maurice Galloway,
Other initiatives to simplify           deposit adjustments. [Cindy             (301) 436-6349]
processing for salary and benefit       Johnson, (202) 287-0751]
programs are slated, including
one within the banking industry



                                        18
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




Imprest Fund Debit Cards             Los Angeles; other offices to          litigation tracking. [Linda Bres-
The Financial Management Ser-        use the cards include three addi-      lau, (202) 287-0642]
vice has undertaken a test pro-      tional FAA offices and the
gram whereby imprest fund            Department of Commerce and             Tax Refund Offset Program
cashiers at FMS's Regional           the Treasury's Financial Manage-       The Deficit Reduction Act of
Financial Centers and selected       ment Service. Upon implementa-         1984 authorized the collection
sites within the Departments of      tion of these sites, a 6 to 12         of delinquent debts owed federal
Transportation and Commerce          month evaluation is planned for        agencies by offsetting federal tax
will be issued magnetic striped      measuring the success of the pro-      refunds due the delinquent debt-
debit cards to make cash             gram. [Michael Chew, (202)             or. Agencies compile informa-
withdrawals through a nation-        287-0336]                              tion on delinquent debtors after
wide automated teller machine                                               other agency collection efforts
(ATM) network. The purpose of        The Account Servicing Modern-          fail to collect the debt. Sixty-day
the program is to modernize the      ization (ASM) project was un-          notices of intent to offset are
replenishment of the imprest         dertaken to identify systems that      sent to delinquent debtors, and
funds through the use of             would improve the effectiveness        debts that are not repaid,
electronic means (debit cards).      of the government's credit             renegotiated, or otherwise
• By using debit cards to            management/debt collection             revolved are sent to the IRS for
   replenish the imprest funds,      functions. The project involved        matching against tax returns and
   the following benefits are ex-    six major agencies: the Depart-        refunds due. The Financial
   pected:                           ments of Education, Agriculture,       Management Service has overall
                                     Housing and Urban Develop-             responsibility for policy direc-
• Streamlining and reducing the      ment, Veterans Affairs, and            tion and coordination of all
  processing of payment              Health and Human Services;             phases of project activities. In
  vouchers,                          and the Small Business Ad-             calendar year 1989, $348 mil-
• Reducing postage costs as-         ministration. The methodology          lion was collected. Of this
  sociated with vouchers and         involved analyzing all com-            amount, $82 million was volun-
  check mailings,                    ponents of the federal credit          tarily repaid by debtors upon
                                     cycle, evaluating existing systems     receipt of notices of intent, and
• Reducing the amount of             of these six major agencies, com-      $266 million was collected
  replenishment checks, and          paring federal and private sector      through offset. Twelve agencies
• Improving cash management          credit practices, and creating a       participated in the program
   by reducing the amount of         conceptual model showing how           during the past year. [Don
   funds held outside the            an "ideal" credit management           Rouse, (202) 287-0646]
   Treasury by replenishing the      system should operate. The
   funds more often for smaller      project provided a comprehen-          The Financial Management Ser-
   amounts.                          sive description of essential          vice implemented the Federal
The initial test program installa-   processing, data, and reporting        Salary Offset Program. Current-
tion was in September 1989           standards; and it recommended          ly, six major agencies are par-
with the Department of               the implementation of                  ticipating in the program: the
Transportation's Federal Avia-       automated systems in the areas         Departments of Agriculture,
tion Administration imprest          of loan origination, loan servic-      Education, Health and Human
fund offices in Kansas City and      ing, collection processing, and



                                     19
                                     Chapter2
                                     Governmentwide Initiatives to Improve Financial Management




Services, Housing and Urban          availability. [Cathryn Donchatz,        ing on the Supplement in 6
Development, and Veterans Af-        (202) 287-0580]                         cities for over 600 people in
fairs; and the Small Business Ad-                                            February 1989.
ministration. The Federal Salary     Debt Collection Services
Offset Program is designed to        FMS is the lead agency and              Additional documents now
identify, through computer           facilitator for the General Ser-        under development include:
matching processes, federal          vices Administration's contract         • Guidelines for the Federal,
employees who are delinquent         for procuring private sector debt         Employee Salary Offiet Pro-
on their debts to the govern-        collection services which became          gram, which assists federal
ment and bring the deb-              effective in December 1987. To            agencies with salary offset
tors/employees back into a cur-      date, more than 40 federal agen-          regulations and .Procedures.
rent status on their indebtedness.   cies and the District of Colum-           First published m May 1988,
In situations where the debt-        bia have placed 248,000 ac-               the salary offset guidelines are
or/employee refuses to voluntari-    counts valued at over $2.9 bil-           being reviewed for possible
ly repay the amount owed,                                                      revision and will be
                                     lion with six private collection
federal creditor agencies may re-                                              republished in August 1990.
                                     contractors. Almost $27 million
quest the employing agency to        has been collected, and 154,000         • Guide "to Conducting Portfolio
collect the debt by withholding      accounts valued at $1.8 billion           Sales. The Guide recommends
up to 15 percent of the              have been returned to the agen-             procedures for sale of agency
employee's disposable pay.           cies because the debtor cannot              loan portfolios to private sec-
                                     be located, is unable to pay, or is         tor investors.
For calendar year 1989, $45.7        disabled, deceased or bankrupt,         Other subjects under considera-
million was collected, for a total   or the debt has been forgiven or        tion for publication include
of $95.4 million since 1987          referred to litigation by the agen-     litigation and credit bureau
when the program was imple-          cy. [Margaret Fitzgerald, (202)         reporting. [Kathleen Downs,
mented. [Joel Hoffman, (202)         287-0646]                               (202) 287-0642]
287-0646]
                                     The Financial Management Ser-           Improved Financial
Lockbox Collection                   vice is publishing a series of          Management and Reporting
The IRS Estimated Tax Lockbox        documents to provide guidance           The revised SF 220-9, Report
Collection Program was imple-        to agencies on implementing ef-         on Accounts and Loans Receiv-
mented by FMS in April 1989.         fective credit management/debt          able Due From the Public, was
This initiative expanded the use     collection policies, procedures         implemented by federal agencies
of lockboxes to all l 0 Internal     and standards. The Treasury             effective third quarter of 1989.
Revenue Service Centers for the      Financial Manual Credit Supple-         The new report provides a better
collection of estimated tax pay-     ment, Managing Government               synopsis of the condition and
ments. In fiscal year 1989, $56.2    Credit, published in January            status of agencies' receivables,
billion dollars were collected       1989, was the first in the series.      and meets the information needs
through these lockboxes, result-     The Supplement provided stand-          of both the Office of Manage-
ing in an interest savings to the    ards, guidelines, and procedures        ment and Budget and Financial
federal government of $47. 7 mil-    for the successful management           Management Services. It con-
lion dollars due to improved         of all credit and debt activities.      solidates into one form both the
                                     FMS conducted extensive train-



                                     20
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




financial/accounting information     Human Services, and Veterans            titles with potential problems
captured in the earlier SF 220-9     Affairs; and the Small Business         were followed up by staff visits
and the management informa-          Administration, existing policies       for further discussion of un-
tion captured in the previous        and procedures were reviewed,           covered reporting problems.
Credit Management Report.            systemic problems and needs             Follow-up letters were also sent
[Tom Lusk, (202) 287-0646]           identified, and preliminary             to these reporting entities for
                                     recommendations for improve-            their concurrence with the
To date, credit management im-       ments developed.                        recommendations. Next year in-
provement efforts have focused                                               house programming enhance-
primarily on direct loan             The final report now under              ments, in planning, could in-
programs. Since 1984, and par-       development will include these          crease review timeliness and ef-
ticularly in the past 2 years, in-   recommendations, augmented              fectiveness.
creased emphasis has been            with others developed through
placed on using guaranteed           the findings and conclusions of         For fiscal year 1989, the number
loans to accomplish program          earlier GAO and President's             of FAFR reports received over
goals. Between 1984and1989,          Council on Integrity and Ef-            the Government On-Line Ac-
direct loans outstanding             ficiency reports. It will also in-      counting Link System (GOALS)
decreased 1 percent, while           clude an overview of the guaran-        increased 33 percent over the
guaranteed loans outstanding in-     teed loan management process,           previous year. FMS provided in-
creased 52 percent. Within the       governmentwide guaranteed               dividualized training to enhance
1984-1989 time period, guaran-       loan management standards               submitters' capabilities and spon-
teed loan terminations due to        developed from the recommen-            sored testing and utilization of
default have more than doubled       dations, and a plan for im-             the host-to-host (bisynchronous)
to $11 billion.                      plementing the proposed stand-          mainframe submission process.
                                     ards and recommendations. The           Ongoing assistance was also
In response to the need to ad-       report will be presented to the         provided to the agencies for solv-
dress how the government is          Working Group on Federal                ing system problems and techni-
managing its guaranteed loan         Credit Policy for review and            cal reporting requirement ques-
programs, the Financial Manage-      comment prior to its formal pub-        tions, which increased the timeli-
ment Service (FMS), in consult-      lication. [Kathleen Downs,              ness and efficiency of submis-
ation with the Office of Manage-     (202) 287-0642]                         sions for the FAFR reports. Due
ment and Budget (OMB), under-                                                to better understood require-
took an initiative to develop and    The Financial Management Ser-           ments, more timely reporting en-
implement governmentwide             vice conducted an extensive             hanced by the Accounting
guaranteed loan management           analysis of the Federal Agency          Database for Evaluating Perfor-
procedures and standards. Using      Financial Reports (FAFR) filed          mance Trends (ADEPT) was ac-
a task force and work groups         for fiscal year 1988 as part of its     complished. FMS expects to ex-
composed of FMS, OMB, the            ongoing financial management            pand and complete its integrity
General Accounting Office            integrity efforts. This analysis iso-   of fiscal year 1989 agency
(GAO); the Departments of            lated numerous material clas-           reports earlier than ever this year
Agriculture, Commerce, Educa-        sification problems, amounting          as a result of the attained perfor-
tion, Housing and Urban              to approximately $900 billion.          mance increases. [David B.
Development, Health and              Phone contacts to reporting en-         Strobel or Jose V. Placer, (202)
                                                                             208-1863]


                                     21
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




The Federal Reserve Banlc            financial data reported to             Treasury Bulletin. [Jean Hol-
Direct Dial Reporting System         Treasury. These reports include        combe, (202) 208-1467]
provides an automated                the Report on Financial Posi-
mechanism for transmitting and       tion, Additional Financial Infor-      The Standard General Ledger
assimilating critical cash and       mation, Direct and Guaranteed          (SGL) Advisory Work Group
debt management data con-            Loans Reported by Agency and           has been tracking and document-
tained on daily balance wires        Program Due from the Public,           ing various issues and problems
(DBW) from the Federal               Report on Operations, Report           from agencies as their operating
Reserve Banks. The DBWs,             on Cash Flow, and Report on            systems begin to implement and
which contain Treasury's operat-     Reconciliation. Additional finan-      fully embrace the SGL. The SGL
ing and tax and loan balances,       cial and budgetary information         Advisory Work Group has suc-
receipt and expenditure data,        is being added to ADEPT in             cessfully completed and issued
Public Debt security transactions    1990.                                  revisions to the SGL crosswalks
and federal tax deposits, are used                                          section this year. The Treasury
by Treasury to forecast and          Through ADEPT, agencies are            Financial Manual (TFM) Trans-
manage the daily cash and debt       provided with a means to com-          mittal Letter S2-01 was released
position of the Treasury and to      pare their financial status to         on June 30, 1989. The Group
prepare the Daily Treasury State-    other programs in the federal          has prioritized those outstanding
ment. Under the Direct Dial Sys-     government. Users can obtain in-       issues and has developed two
tem, the FRBs transmit their         formation through standard             subgroups, the Issues Resolu-
daily balance wire data directly     reports, queries and downloads         tion Group and the Test Group,
to the Financial Management          to personal computers. Standard        to discuss and test final resolu-
Service's mainframe Funds Con-       reports include single year detail,    tions before incorporating them
trol System using a personal         comparison by years, combined          into the SGL. In addition, an
computer with telecommunica-         agency, special programs and           issue summary form was
tions software. The Direct Dial      trend analysis. Queries provide        developed to serve as an input
Reporting System dramatically        data for selected line items of        mechanism for agencies' issues
improves the timeliness and ac-      reports in a user designed report      related to the SGL. [Holden
curacy of the FRB data resulting     format. Downloads of data from         Hogue, (202) 208-1751]
in more effective cash manage-       ADEPT to a PC enable the user
ment by Treasury. The system         to perform further financial           System Modernization
also eliminates duplicate key        analysis through PC-based pack-
entry processes and provides the                                            The evaluation of proposals
                                     ages such as LOTUS or dBASE.           received in response to the Re-
FRBs with an automated prin-
tout of their daily balance wire.                                           quest for Proposal which was
Estimated completion date for        Currently, ADEPT is providing          released on March 15, 1989, is
this initiative is calendar year     Treasury's Financial Manage-           in progress. Vendor selection is
1990. [Laura Carrico, (202)          ment Service and OMB with              expected to be made in fiscal
208-1771]                            management information for             year 1990. The System 90
                                     monitoring credit programs.            project will modernize and im-
                                     ADEPT information is also used         prove the agency payments sys-
Accounting Database for the          for reconciliation of reports and      tem by replacing old hardware
Evaluation of Performance            publication of portions of the         and software with an integrated
Trends (ADEPT), is a relational                                             system. A secure nationwide
database which contains the


                                     22
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




telecommunication network will       ing systems by consolidating           modular fashion using a data
link the Regional Financial          three systems, Financial Account-      base management system. The
Centers to the Federal Reserve       ing and Reporting System               final STAR modules are
System, FMS headquarters, and        (FARS), Interest Billing System        scheduled for implementation by
the central agencies. Modern-        (IBS), and On-line Automated           early 1992. [Charles Barackman,
izing the payments and the           Reclamation System (OARS),             (202) 208-1555]
claims operations will generate      into one system, the Treasury
operational and cash manage-         Receivable Accounting Collec-          During the past year, the Finan-
ment savings and enable FMS to       tion System (TRACS). This new          cial Management Service has ex-
improve delivery services. [Bill     system, TRACS, will reduce the         panded its role in providing ad-
Andersen, (202) 287-0314]            time for transferring unavailable      ministrative accounting cross-ser-
                                     check cancellation credits to          vicing to federal agencies and
FMS is currently working with        agencies and issuing replacement       commissions. An additional off-
the Federal Reserve Bank (FRB)       checks to Federal Reserve              the-shelf accounting package has
of Boston on a prototype project     Banks; improve the efficiency of       been tested and installed at the
to develop and test the use of       the accounting and reporting           mainframe facilities and is now
digital check imaging in the real    functions, especially as related to    being offered to clients. On Oc-
time production environment of       the Debt Collection Act; and im-       tober 1, 1989, two agencies, the
the government check sorting         prove overall accounting and           National Mediation Board and
and processing operation. This       reporting practices in Head-           the Board for International
environment requires very high-      quarters Operations. [Lavon            Broadcasting, began live account-
speed image capture, pre-process-    Warren, (202) 436-6277]                ing operations using this system
ing, compression, storage on                                                on a reimbursable, time-sharing
high-density media, and sub-         The Financial Management Ser-          basis. Additional agencies, in-
sequent retrieval and decompres-     vice is upgrading all automated        cluding the Office of the
sion. The objective of the on-       processes that support the             Secretary, Department of
going Digital Image Project is to    governmenfsbudgetexecution             Treasury; the Small Business Ad-
plan how FMS can best take ad-       system. This system integrates         ministration; and the Inter-
vantage of digital imaging tech-     the fiscal activities of all agen-     American Foundation, have also
nology for modernizing its check     cies, disbursing offices, and          signed agreements to be cross-
claims function. It will increase    banks authorired to handle             serviced, and are currently work-
efficiency by replacing the docu-    government funds, and is the           ing with staff members in
ment-ladened microfilm system        only source of such fundamental        various stages of system conver-
with workstations capable of         information as the govemmenfs          sion. Other agencies have also ex-
retrieving, displaying, and print-   surplus or deficit. The upgrade,       pressed interest in cross-servic-
ing check images. The project is     known as the STAR Project, will        ing, which eliminates costs of
targeted for completion in 1994;     improve the overall accuracy,          developing and implementing ac-
two prototypes and two pilots        timeliness, and integrity of the       counting systems and reduces
will precede full implementation.    governmenfs budget execution           costs of operating
[Thomas E. Hundley, (202)            financial information, and will        govemmentwide systems at in-
436-6368]                            eventually support on-line infor-      dividual agencies. [Broce
                                     mation access by agencies.             Turner, (202) 287-0344]
FMS is currently working on a        STAR is being developed in a
project to improve its account-


                                     23
                                      Chapter2
                                      Govemmentwide Initiatives to Improve Financial Management




Review of Agency Financial            OFFICE OF                              Job Information
Management Systems                    PERSONNEL
The Financial Management Ser-                                                The Fetkral ]ob Oppwtunities
                                      MANAGEMENT                             List(F]OL)
vice, in its lead agency role for
financial systems improvement,        Updated Classification                 T?e ~ederal Job Opportunities
continued its review of agency        Standards                              List is a consolidated listing of
fiv_e-year financial systems plans.                                          federal job vacancies. The FJOL
                                      The ~~e of Personnel Manage-
Jomt FMS/OMB reviews of the           ment rmtlated three studies to         system has recently been en-
cabinet level and major inde-                                                hanced to make the system a
                                      update and improve the position
pendent agencies determined                                                  much more valuable tool for
                                      classification standards for three
that agencies are making                                                     providing job information.
                                      areas of financial management in
progress in developing primary                                               These enhancements will make
                                      the federal government. The
financial management systems                                                 the FJOL more flexible, require
                                      ne': standard for the Accounting
and adopting the U.S. Standard                                               fewer keystrokes to be used for
                                      Senes (GS-510) was published
Ge~eral Ledger, although not as                                              the entry of information, and
                                      in December 1989; the stand-
qwckl~ as had been anticipated.                                              allow examining offices to
                                      ards for the Civilian Payroll
To assist agencies in their finan-                                           download the FJOL data to per-
                                      Series (GS-544) and for the
cial systems improvement efforts                                             sonal computers.
                                      Military Pay Series (GS-545)
and to give focus, FMS is work-
                                      will be available in 1990.
ing with OMB, under the
                                      [George Steinhauer, (202) 606-         Currently, some agencies with
auspices of the Chief Financial
                                      2950]                                  delegat~d ex~g authority
Officers Council, to develop a
                                                                             do not list their vacancies on the
governmentwide strategic plan
for financial information systems.
                                      Automated Systems Enhan-               FJOL, yet still meet legal require-
                                      cements                                mei:~ on advertising oppor-
                                      The Office of Personnel Manage-        turutJ.es to the general public.
FMS utilized conferences              ment (OPM) has initiated a             OPM intends to move further
workshops, and print media' to
                                      number of automated systems            toward the concept of a unified
communicate to agencies what is       enhancements in support of             job bank, as recommended by
being required of them in the
systems improvement area. FMS
                                      federal recruiting programs to in-         y
                                                                             th~ olcker Commission, by re-
                                      crease agencies' abilities to at-      qwrmg agencies with delegated
also continued to work with           tract qualified candidates, im-        authority to list their open vacan-
federal user groups of commer-                                               cies on the FJOL. This would
                                      pr~ve. the timeliness of the ap-
~ial software packages, encourag-                                            provide a consistent and predict-
                                      plicattons process, and provide
mg them to work closely with          better job information to the          able way for the public to learn
software vendors toward improv-       general public. These are ex-          about available job oppor-
ing the packages to meet the          amples of these accomplish-            tunities. It will also eliminate
needs of the federal government.      ments:                                 du~licate mailings of job oppor-
[Mary Lee Mason, (202) 208-                                                  turuty announcements from
1393]                                                                        agen~ies to State Employment
                                                                             SerVJ.ce offices and other recruit-
                                                                             ment sources. [Donald Holum,
                                                                              (202) 606-0940]




                                      24
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




Transmittal of Job Information       Federal Job Information                   recruiting efforts with its
to State Employment Service Of-      Touch.screen Computer System              automated telephone job in-
fices                                OPM has enhanced the                      formation system, the "Career
OPM has been working with the        availability of federal job infor-        America College Hotline."
United States Employment Ser-        mation by combining personal              Since August 1989, the "Col-
vice (Department of Labor) to                                                  lege Hotline" has offered
                                     computer, touchscreen, and syn-
                                                                               callers information about jobs
provide for dissemination of the     thetic voice technologies to cre-         for college graduates and
nationwide portion of the            ate the Federal Job Information           those with equivalent ex-
Federal Job Opportunities List       Touchscreen Computer System.              perience. Callers use their
(FJOL) to all State Job Service      Prospects merely touch color              touchtone telephone number
offices in the country via the       blocks on the computer screen             pad, or their voice in the case
Nationwide Job Bank system           to have requested information             of rotary dial telephones, to in-
used by the Department of            from numerous categories dis-             teractively choose messages
Labor to obtain nationwide           played and their key points ver-          regarding jobs for which they
publicity for hard-to-fill posi-     balized by the voice synthesizer.         might be qualified, federal
tions. This has been ongoing         The Federal Job Information               hiring procedures, and how to
since April 1989.                                                              quickly obtain application
                                     Touchscreen Computer System               materials. [Paul Carr, (912)
                                     was developed to augment dis-             744-2168]
For local vacancies, OPM has         semination of the Federal Job
been working with the New            Opportunities Listing, but con-         • General Jobline-This is an
York State Department of Labor       tains a module to accommodate             automated telephone system
to explore the feasibility of        agencies' internal vacancy an-            that provides recorded mes-
electronically disseminating the     nouncements. [Rhonda Wood,                sages for applicants interested
local FJOLs of OPM's New             (912) 744-2057]                           in general job listings. It is a
York and Syracuse Area Offices.                                                voice response system similar
This should serve as a good pilot    Job Information 2000 Telephone            to the college hotline
project for FJOL distribution to     System .                                  described above. [Donald
State Job Service Offices                                                      Holum, (202) 606-0940]
                                     Job Information 2000 is
through the Nationwide Job           designed to provide job and ap-         • Career America Recruiting
Bank, while maintaining distinct     plication information through             Line-This module is
publicity areas. Currently, the      automated telephone systems ac-           designed to forward the
status of the project is dependent   cessible through a 900 telephone          telephone calls of applicants
upon other work projects of the      number. The system will per-              interested in shortage
New York State DOL.                  form a job that the federal               category occupations directly
                                     government could not normally             to agency recruiters. [Donald
Successful implementation of                                                   Holum, (202) 606-0940]
                                     afford using traditional methods
these initiatives will eliminate
                                     that would require hundreds of          Computer Bulletin Boards
current expenditures in resources
                                     experienced job information             The use of computer bulletin
used to print and disseminate        specialists. It will contain the fol-
the FJOL to State Employment                                                 boards is a means through which
                                     lowing modules:                         applicants and other parties,
Service offices and other recruit-
ment sources. [Donald Holum,                                                 such as college placement of-
                                     • Career America College Hot-
(202) 606-0940]                        line-OPM has enhanced the             fices, can access information on
                                       federal government's college          federal employment and oppor-



                                     25
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




tunities via personal computers      Automated Case Examining Sys-           competitors of examination
and modems. A few OPM Area           tem (ACES)                              results. During fiscal year 1990,
Offices have already imple-          OPM has developed and pilot-            all OPM examining offices will
mented electronic bulletin           tested ACES, a personal com-            have the opportunity to use this
boards that contain information      puter-based program which               system. This system will also be
from their Federal Job Oppor-        automates competitive case ex-          made available to federal agency
tunities Lists and general           amining. OPM uses case examin-          delegated examining units. [Alan
employment information. A            ing for most jobs at GS-9 and           L. West, (202) 606-0980]
centralized college bulletin board   above. ACES minimizes manual
is part of the plans for the fu-                                             Automated Examining of
                                     processing, makes processing
                                                                             Seasonal Applicants
ture. This would use informa-        more efficient, and reduces the
tion fed to it from the FJOL sys-    time needed to prepare certifi-         During fiscal year 1989, OPM
tem about jobs of interest to        cates of eligibles. It provides         developed and implemented
recent college graduates. Other      agencies with fresh lists of avail-     with the Internal Revenue Ser-
bulletin boards for different        able competitors for occupations        vice (IRS) an automated examin-
audiences are also possible.         that are difficult to fill. This sys-   ing system to expedite the
[Donald Holum, (202) 606-            tem will be made available to the       processing of seasonal applicants
0940]                                OPM area offices and federal            at the IRS Service Centers. This
                                     agency delegated examining              system reduces the overall resour-
Simplified Hiri.ng Process           units in fiscal year 1990. [Alan        ces required to process
                                     L. West, (202) 606-0980]                thousands of applicant docu-
Automated Applicant Referral                                                 ments for Clerk, Data
System (AARS)                        Alternative Scanning Application        Transcriber, and Tax Examiner
Since mid-1989, OPM's                Process (ASAP)                          positions. It automates many of
Automated Applicant Referral         OPM has developed and pilot-            the manual functions that IRS
System (AARS) has been in            tested the ASAP system. The sys-        offices previously performed.
place to expedite and simplify       tem allows examining offices to
federal hiring. The AARS allows      use table top scanners and per-         OPM also piloted local table top
agencies to use their touchtone      sonal computers to locally              scanning in two IRS Service
telephones to request referral       process competitor applications.        Centers which further improved
lists and certificates of eligible   ASAP is an alternative to key           the processing efficiencies and
candidates from OPM computer         entry or mailing documents to           made it possible for IRS to
inventories. Requested docu-         OPM's central processing center         begin same day employment
ments are then delivered in an       in Macon, Georgia. ASAP                 processing of the eligible com-
average of 13 minutes via the re-    enables the offices to process          petitors. This local scanning
questing agency's facsimile          during the day, to transfer files       capability will be expanded to all
machine. Currently it is opera-      electronically for overnight load-      IRS Service Centers and addi-
tional for only the Engineering,     ing to competitor inventories,          tional enhancements added in fis-
Scientist, and Mathematician job     and to prepare certificates the         cal year 1990. [Alan L. West,
groups, but plans include expan-     next day. This system significant-      (202) 606-0980]
sion of the Automated Applicant      ly reduces the time it takes to
Referral System to other job         process applications and notify
groups. [Glenn Sutton, (912)
744-2051]



                                     26
                                      Chapter2
                                      Governmentwide Initiatives to Improve Financial Management




Electronic Certification Pilot        provide OPM's Retirement and            design envisions the use of
OPM is working with the               Insurance Group with an                 modern, but proven technology
Department of the Navy in Bal-        automated mechanism to cap-             to provide ( 1) automated
timore to develop and pilot test      ture Federal Employee Benefit           record.keeping via a central data
electronic certification using per-   Program monies and both finan-          base of member salary and ser-
sonal computers (PQ). This pro-       cial and management informa-            vice history; (2) a sound finan-
gram will allow agency person-        tion from agency payroll offices.       cial framework to support the
nel offices to use PCs to             RITS will enable payroll offices        Group's financial stewardship
electronically transmit requests      to enter data either on-line or via     over the retirement systems; and
for certification to OPM examin-      bulk transfer and will incor-           (3) efficient and flexible support
ing offices. OPM will process         porate edits to ensure that only        systems for FERS processing.
these certification requests over-    pure data reaches the Group's           FAPS is structured to provide
night, and the agency will            systems. Once implemented,              timely, accurate, and consistent
retrieve these certificates via       RITS will supersede the present         claims adjudication and payment
their PCs. These certificates will    paper-dependent SF-2812                 and to facilitate communications
contain applicant names, addres-      process and materially enhance          about benefits with active and
ses, and telephone numbers. The       the Group's financial                   retired employees. [George
agency will then use this             stewardship over the Federal            Hyder, (202) 606-0606]
electronic file to prepare ap-        Employee Benefit Programs
plicant contacts for appointment      while realizing significant opera-      Improved Hiring Processes
consideration, official offers of     tional efficiencies. RITS is being      The Office of Personnel Manage-
employment, preparing of SF-          developed under the aegis of the        ment (OPM), in cooperation
50s, etc. This method of process-     FERS Automated Processing               with the Department of the
ing competitive certification will    System (FAPS) project and im-           Navy, is leading an interagency
significantly reduce the time it      plementation will be phased-in          effort to improve the processes
talces to provide agencies with       during fiscal year 1990. [Bob           used to induct new employees.
names so that they can begin to       Yuran, (202) 606-0660]                  OPM expects to validate the
fill vacancies. If this approach is   FERS Automated Processing Sys-          need for various forms, to con-
successful, OPM will expand the       tem (FAPS)                              firm the feasibility of electronic
use of this system in fiscal year                                             forms processing, and to
19991, and other agencies will        The Retirement and Insurance
                                                                              produce software which links in-
have the opportunity to par-          Group is in the process of
                                                                              duction information to person-
ticipate. [Alan L. West, (202)        developing a state-of-the-art
                                                                              nel transactions. The benefits are
606-0980]                             record.keeping and processing
                                                                              more efficient processing and a
                                      system for the Federal
                                                                              more professional approach to
                                      Employees Retirement System
Retirement                                                                    new employees. [James P. Hell-
                                      (FERS). The FERS Automated
                                                                              ings, (202) 606-2810]
Retirement and Insurance Trans-       Processing System (FAP S)
fer System (RITS)                     project involves the design,
                                      development, and implementa-
                                                                              Temporary Employment
OPM is in the process of
developing the Retirement and         tion of application software and        The Office of Personnel Manage-
Insurance Transfer System             the installation of hardware to         ment prepared a complete
(RITS). As a subsystem of             support the basic benefit tier of       revision of its policies on nonper-
Treasury's GOALS, RITS will           FERS. The FAPS conceptual               manent employment which



                                      27
                                       Chapter2
                                       Governmentwide Initiatives to Improve Financial Management




represents the first total rewrite     studied each year. A study of ac-       Preemployment Interview
of these policies in many years.       countant-auditor occupations is         Expenses
The use of nonpermanent                scheduled. These studies will           The Office of Personnel Manage-
employment, particularly tem-          focus on the quality of the skills      ment broadened agency
poraries, is often a critical factor   which individuals bring to their        authority to pay preemployment
in agencies' staffing plans, ena-      jobs, their job performance, and        interview expenses of candidates
bling them to maintain effective       the capability of the federal           for competitive service jobs. An
operations when an increase in         workforce to meet service               agency may pay these expenses
the permanent workforce is not         delivery needs and contribute to        when it determines that an inter-
needed. The new streamlined in-        organizational effectiveness.           view would be cost effective and
structions provide clearly written     [Sandra S. Payne, (202) 606-            is essential to assess qualifica-
guidance, reduce agency paper-         1366]                                   tions or to attract candidates for
work, and provide new                                                          shortage category jobs. This ex-
flexibility in certain critical need   Staffing Digest                         panded flexibility will enable
situations. [Donald Holum,             The Federal, Staffing Digest is a       agencies to be more competitive
(202) 606-0940]                        new, quarterly newsletter used          in tight labor markets. [Donald
                                       to communicate guidance and in-         L. Holum, (202) 606-0940]
Quality Assessment Pro-                formation on workforce plan-
gram                                   ning, workforce quality, recruit-       Computer Matching
A competent workforce is essen-        ing, and staffing. The Digest,          During 1989, the Office of Per-
tial to cost-effective operations      prepared by the Office of Person-       sonnel Management (OPM)
throughout the federal govern-         nel Management's Career Entry           provided two data bases, the
ment to monitor how well we            and Employee Development                Central Personnel Data File and
are doing at attracting and retain-    Group, is targeted at the federal       the Civil Service Retirement and
ing a quality workforce. In            staffing community. The goal is         Insurance File, for computer
1989, the Office of Personnel          to highlight the kinds of informa-      matching with both state and
Management initiated a broad-          tion that will help personnel of-       federal agencies. These matches
based program of data collection       fices make better staffing plans        were designed to help eliminate
and special occupational studies.      and carry them out more success-        waste, fraud, and abuse in
This Quality Assessment Pro-           fully-market trends, how to's,          various governmental benefit
gram was selected as one of            successful efforts of others, etc.      programs and for recovery of
OPM's milestones in the                For example, the first issue in         debts owed to the government.
President's Management by Ob-          Spring 1989 addressed                   The matches were accomplished
jectives (MBO) system for agen-        workforce planning. Each issue          in accordance with the require-
cies. Data will be collected on        also concentrates on a different        ments of the Privacy Act of
the quality of applicants, new         career field. The second issue          1975 (5 U.S.C. 552a) and
hires, and retained employees          covered computer careers and            the Office of Management and
from multiple sources using            the third issue, clerical fields.       Budget's guidelines relating
automated procedures and exist-        [Donald L. Holum, (202) 606-            to computer matching.
ing systems of information when-       0940]                                   Recoveries resulting from these
ever possible. Incumbent quality                                               matches are substantial. For ex-
in two occupations will be                                                     ample, the Department of
                                                                               Health and Human Services



                                       28
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




identified 65,152 absent parents     Training                               quality management, work meas-
who work for the federal govern-                                            urement, internal control sys-
                                     Computer Security Training
ment and who owe as much as                                                 tems, and cash and debt manage-
$284 million in past-due child       Under the Computer Securi-ey .A&t      ment. OPM continued to pro-
support-about $187 million           of1987, the Office of Personnel        vide computer security aware-
pertaining to children receiving     Management was responsible for         ness training assistance to agen-
Aid to Families with Dependent       the development of guidelines          cies and trained over 32,000
Children. OPM plans to con-          making agency personnel aware          employees through its interagen-
tinue to offer its data bases for    of the possible threats and vul-       cy training program in a wide
projects of this type, consistent    nerabilities to systems and the ap-    range of information resources
with the protections required by     propriate countermeasures to           management subjects. OPM ac-
the Computer Matching and            take to protect sensitive informa-     celerated its high priority
Privacy Protection Act of 1988.      tion. After the guidelines and         management and executive
[John Sanet, (202) 606-1955]         materials were developed, the          development training program
                                     Washington Area Service Center         by training almost 16,500
Manage to Budget                      (WASC) assumed the lead role          managers and members of the
                                     in delivering the training. Brief-     Senior Executive Service in
In August 1989, the Office of
                                     ings were conducted for execu-         1989. [Thomas Loftis, (202)
Personnel Management publish-
                                     tives, managers and supervisors;       632-0255]
ed a report entitled, Manage-
                                     a half-day training course was
ment to Budget Programs -            presented for end-users. WASC          Training Assistant Services Cadre
Guidelinesfor Success, which was     estimates that over 2,000 federal      (TASC)
prepared under contract.
                                     employees were trained in over a       Early in fiscal year 1989, the
Manage to Budget is a manage-
                                     dozen single-agency sessions,          Washington Area Service Center
ment approach centered around
                                     and nearly 200 federal                 (WASC) asked several agencies
the delegation of personnel,
                                     employees were trained in 10 in-       if they would be interested in
budget, and administrative
                                     teragency sessions. [Deborah           utilizing training assistance ser-
authorities to lower levels of
                                     Smith, (202) 632-0338]                 vices in instructional systems
management within an organiza-
                                                                            design beyond traditional class-
tion, i.e., moving decision          Financial Management Training          room delivery activities. A team
making as close to the point of      In 1989, the Office of Personnel       of managers and senior staff
service delivery as possible. This   Management provided interagen-         specialists from W ASC's Office
strategy is currently being tested   cy financial management class-         of Washington Training and
in several government agencies       room training for nearly 15,000        Development Services
to improve quality and produc-       federal employees in                   (OWIDS) developed publicity
tivity. The report provides          Washington, D. C., and at field        materials, roles and respon-
federal officials with a general     locations throughout the United        sibilities guidance, sample inter-
overview of what constitutes         States and the world. This train-      agency agreement letters and
Manage to Budget programs            ing included a full range of cour-     procurement documents, and a
and the status of current efforts    ses for federal employees in           pricing model to prepare the or-
in a number of agencies. [Fred       financial management careers.          ganization for a smooth integra-
Wildes, (202) 606-2308]              OPM also conducted training in         tion of the expanded services
                                     other high priority areas includ-      into the owrns mission. In fis-
                                     ing federal budgeting, total           cal year 1990, the OWfDS



                                     29
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




senior staff, augmented by a         consists of six: workstations with     health benefits coverage for cer-
group of competitively selected      five info-window systems and           tain individuals not currently
contract training professionals,     one video system. The info-win-        eligible, will expand the number
will be able to provide training     dow systems are designed to            of direct premium remittance ac-
assistance services to the agen-     make use of the keyboard or            counts many-fold.
cies. These services include con-    touch-screen monitors and are
ducting needs analyses, identify-    used in conjunction with video         To cope with P .L. 100-654, it
ing and developing learning ob-      disc players. The systems pro-         would have been necessary for
jectives, selecting instructional    vide the capabilities of teaching      each agency to implement sys-
strategies, modifying existing       new skills and providing               tems and procedures by
training materials, identifying      remedial training in math, read-       January 1, 1990. Believing that a
training resources, and perform-     ing, writing, and telephone tech-      requirement for the estab-
ing training evaluations. Efforts    niques. They enable trainees to        lishment of over 600 virtually
will initially concentrate on        attain computer literacy through       identical systems is extremely
short-term, relatively low-cost      text, graphics, audio and video.       wasteful, OPM evaluated the es-
projects (under $25,000) to help     [Deborah Smith, (202) 632-             tablishment of a centra.Iraed solu-
agency training shops with           0338]                                  tion to the workload associated
limited resources. [Robert J.                                               with P .L. 100-654. As a conse-
Agresta, (202) 632-4410]             Federal Employee Health                quence, the Department of
                                     Benefits Program (FEHBP)               Agriculture's National Finance
Interactive Learning Center
                                     Health Benefits Provisions of          Center (NFC) will make avail-
As a major Civil Service 2000 in-
                                     Spouse Equity Act                      able to agencies a full-range of
itiative, the Washington Area
                                                                            direct premium remittance func-
Service Center (WASC) estab-         Historically, individuals covered
                                                                            tions .. [Maurice Duckett, (202)
lished an Interactive Learning       by the Federal Employees
                                                                            606-0666]
Center employing the cutting         Health Benefits Program
edge of learning technology and      (FEHBP) pay for that coverage          Letter of Credit for FEHBP Car-
training methodology. Interac-       by deductions from their salaries      riers
tive video training has been         or annuities. The enactment of         In February 1989, the Retire-
proven to increase retention of      the Spouse Equity Act (P .L. 98-       ment and Insurance Group im-
subject material by as much as       615) in 1984 altered this              plemented a letter of credit
45 percent over the level of         process. As these former spouses       (LOC) arrangement for the
retention of instructor-led train-   are not on a federal payroll sys-      largest carriers of Federal
ing. The technology combined         tem or annuity roll, they must         Employees Health Benefits Pro-
with the lower cost per student      remit their FEHBP premiums             gram (FEHBP). Rather than dis-
training hour makes it an ideal      directly to the agency for which       bursing approximately $10 bil-
training medium. The systems         their ex-spouse is or was              lion in annual premiums pay-
provide individualized training,     employed. The Federal                  ments, these funds will remain in
giving the student the option of     Employees Health Benefits              the Fund until actually required
proceeding as slowly or as quick-    AmendmentActofl988 (P.L.               by the carriers to pay for
ly as desired. The Center            100-654), which provides for           authorized program expenses.
                                     the temporary continuation of




                                     30
                                       Chapter2
                                       Governmentwide Initiatives to Improve Financial Management




The move to LOC has reduced            GENERAL                                 the real size of the deficit each
the government's cash outlays by       ACCOUNTING OFFICE                       year.
approximately $1.4 billion in fis-
cal year 1989 alone. FEHBP-            During fiscal year 1989, the            Federal Managers' Financial
LOC has required significant           General Accounting Office               Integrity Act
modifications to the Group's           (GAO) issued nearly 900                 In November 1989, GAO issued
automated accounting systems           audit/evaluation reports, testified     its fourth summary report on
and the development and is-            over 200 times before congres-          federal agency efforts to imple-
suance of regulations and com-         sional committees, and issued           ment the Federal Managers'
prehensive recipient organiza-         more than 3,800 legal decisions         Financial Integrity Act (FMFIA)
tion guidelines. [Bob Yuran,           and opinions. A significant por-        (GAO/AFMD-90-10). The
(202) 606-0660]                        tion of the assignments-SO per-         report concludes that the govern-
Insurance Audits Receivable            cent-resulted from congres-             ment still does not have ade-
Tracking System (IAR.TS)               sional requests. From an ac-            quate internal control and ac-
The Retirement and Insurance           complishments standpoin~                counting systems and that this
                                       GAO's work contributed to legis-        condition has resulted in billions
Group implemented an In-
                                       lative and executive actions that       of dollars of losses and wasteful
surance Audits Receivable Traclc-
                                       resulted in about $8 billion in         spending. Greater leadership by
ing System (IARTS). As part of
                                       measurable financial benefits.          top-level government officials is
the management of the Federal
                                       Another 150 instances of non-           needed if this situation is to ever
Employees Health Benefits Pro-
                                       monetary accomplishments in             change.
gram, OPM conducts periodic
                                       service to the public were docu-
financial audits of the carriers of
                                       mented.                                 GAO recommends intensified ac-
participating plans. These audits
may disclose that carriers, for a                                              tions by the Office of Manage-
variety of reasons, owe monies         GAO highlighted needed actions          ment and Budget (OMB) and an-
to the Program. The LAN-based          in credit and insurance                 nual hearings by congressional
IARTS affords the Group the            programs, which represent over-         authorizing, appropriations, and
capability to track the status of      all risk exposure of $5 trillion,       oversight committees designed
audit findings; control the actual     such as improving accounting            to review agency actions to im-
receivables stemming from find-        and financial reporting and con-        prove the economy and efficien-
ings; and bill the carriers for out-   ducting financial statement             cy of their programs.
standing receivables, assessing in-    audits. GAO urged that decisive
terest and penalty charges in ac-      action be taken to address the          The report stresses the need for a
cordance with OMB Circular A-          failing savings and loan industry       new approach to federal financial
50,Audit Followup. [Doug               and played a major role in              management and recommends
Groft, (202) 606-0650]                 developing solutions to the thrift      legislation to establish a chief
                                       crisis which were incorporated          financial officer for the federal
                                       into legislation. Additionally,         governmen~ with counterpart
                                       GAO pointed out that Social             chief financial officers in each of
                                       Security and other trust fund           the major agencies, and require
                                       surpluses, along with budgetary         the annual preparation and audit
                                       and accounting gimmicks, mask           of agency financial statements.




                                       31
                                       Chapter2
                                       Govemmentwide Initiatives to Improve Financial Management




Finally, GAO urges OMB to en-          The framework calls for a new          and fund account transactions;
sure that agencies implement the       Federal Government Acconnting          interagency agreements; obliga-
actions recommended by the In-         Standards Advisory Board to be         tions; year-end closing and ad-
ternal Control lnteragency Coor-       established as a standing board        justing of acconnt balances, in-
dination Conncil in its July 1989      to advise and make recommenda-         cluding expired accounts; and
report. These recommendations          tions to the Comptroller General       settlement of acconntable
include linking the Financial In-      on all matters relating to federal     oflicers'acconnts.
tegrity Act internal control           acconnting standards issuances.
review and reporting process to        GAO is finalizing the framework        Also, special attention is given to
the budget, and providing for          to be included in a final docu-        the responsibilities of acconnt-
and promoting senior manage-           ment, establishing the new             able officers. For example, agen-
ment involvement in the internal       Board, and identifying agenda          cies are encouraged to make use
control process.                       items for the Board to consider.       of modern data processing and
                                                                              communications technology in
GAO and OMB have each iden-            GAO revised Title 6 and Title 7        their payment operations, but
tified programs in federal agen-       of the GAO Policy and Procedures       are cautioned that the use of
cies that are at high risk to fraud,   Manual for Guidance ofFederal,         such technology does not relieve
waste, abuse, and mismanage-           Agencies. The complete revision        certifying officials from legal
ment. They will review and             of Title 6, "Pay, Leave, and Al-       responsibility for the payments
evaluate agency efforts to             lowances," includes enhanced           that they certify. Officials who
strengthen these programs and          guidance on time and attendance        rely on such systems when they
ensure that they run in an effi-       matters, an updated order of           certify or approve payments
cient and economical manner.           precedence for deductions, and         need to have a reasonable basis
[Jeffrey C. Steinhoff, (202) 275-      expanded internal control objec-       for that reliance. [Ronald S.
9454]                                  tives.                                 Young, (202) 275-9487]

Accoun~ Principles           and       The revised Title 7, "Fiscal           Auditing
Standards                              Guidance," reflects changes in
                                       legal requirements and inter-          In preparing the 1988 revision
GAO issued an exposure draft                                                  of the Government Auditing
                                       pretations and facilitates the use
entitled "Proposed Framework                                                  Standards, the Comptroller
                                       of modern technology in fiscal
for Establishing Federal Govern-                                              General convened an Advisory
                                       operations. An exposure draft of
ment Acconnting Standards"                                                    Conncil that provided advice
                                       the new title was released for
which describes a proposed new                                                and assistance throughout the
                                       comment during the revision
process and structure for issuing                                             process. This helped ensure that
                                       process.
accounting principles and stand-                                              the standards were generally ac-
ards. The framework is designed        The new Title 7 provides fre-          cepted by those to whom they
to ensure that all interested par-     quent citations to applicable          applied.
ties have an opportunity to com-       laws and regulations and cross
ment, that their views are fully                                              The Comptroller General has
                                       references other guidance issued
considered, and that all decisions                                            determined that a permanent Ad-
                                       by the central agencies. Legal
are rational and well docu-                                                   visory Connell should be estab-
                                       and accounting guidance is
mented.                                                                       lished. The Connell will advise
                                       provided on a number of topics
                                                                              the Comptroller General on
                                       including appropriation, receipt,



                                       32
                                      Chapter2
                                      Govemmentwide Initiatives to Improve Financial Management




auditing standard issues              1989. At the Direction ofIN-           in terms of accessibility, advertis-
throughout the standard-setting       TOSAI, a committee of 10               ing, and staffing, GAO recom-
process. It will be involved in       countries was established to           mended improvements that
the identification, development,      draft the standards. The five lead     could make the hotlines even
and issuance of revisions to, in-     countries consisted of Australia,      more accessible. [Jeffrey C. Stein-
terpretations of, and guidance        Saudi Arabia, Sweden, United           hoff, (202) 275-9454].
on the Government Auditing            Kingdom, and the United
Standards. Throughout the             States. The Chairman of the            Budget Development and
process GAO staff will work           Governing Board of INTOSAI             Execution
with the Council and provide          stated upon adoption of the            More than 15 years have elapsed
necessary staff support.              standards that this was a notable      since the last reforms created the
                                      event in the history of INTOSAI.       current congressional budget
The 1988 revision of the Govern-
                                                                             process and the unified budget.
ment Auditing Standards, with         Comptroller General Charles A.
                                                                             New policy issues and informa-
three exceptions, became effec-       Bowsher is a member of IN-
                                                                             tion needs require new ap-
tive for audits starting January 1,   TOSAI and is on the Governing
                                                                             proaches. GAO made several
1989. The requirementfor con-         Board. W.A. Broadus served as
                                                                             proposals for reforming federal
tinuing education and training is     GAO's representative on the
                                                                             budgeting practices to give
phased in over 2 years and the re-    Auditing Standards Committee
                                                                             policymakers better information
quirement for an external quality     which prepared the standards.
control review is phased in over                                             for decisionmak:ing and to help
                                      [Ronald S. Young, (202) 275-
                                                                             taxpayers better understand the
3 years. The American Institute       9487]
                                                                             true status of the nation's finan-
of Certified Public Accountants
                                                                             ces.
(AICPA) auditing standards for
field work and reporting are in-      GAO continued its program of
corporated for financial audits       reviewing the effectiveness of In-      Budget Issues: Restructuring the
and are effective on the dates es-    spectors General and other audit       Federal, Budget-The Capita/,
tablished by the AICPA in each        organizations with reports on          Component (GAO/AFMD-89-
standard.                             the Veterans Administration            52), GAO recommends restruc-
                                      (GAO/AFMD-89-76), the Army             turing the current unified
                                      AuditAgency (GAO/AFMD-89-              budget into three major parts
The 1988 revision of the Govern-      1), the Air Force Audit Agency         (general, trust, and enterprise
ment Auditing Standards is for        (GAO/AFMD-90-16), and the              funds) with each component
sale by the Superintendent of         Tennessee Valley Authority             divided into operating and capi-
Documents, U.S. Government            (GAO/AFMD-89-68). These                tal budgets. This approach
Printing Office, Washington,          reviews focused on audit               would provide a clearer picture
DC 20401, stock number 020-           coverage, impact, and com-             of the composition of federal ex-
000-00243.                            pliance with professional stand-       penditures and would correct a
                                      ards.                                  budget bias against physical capi-
The members of the Internation-
                                                                             tal investments, more accurately
al Organization of Supreme            GAO also reported on the In-
                                                                             report the costs of the federal
Audit Institutions (INTOSAI)          spector General fraud hotline
                                                                             government's credit programs,
adopted the INTOSAI Auditing          operations (GAO/AFMD-90-
                                                                             help focus public attention on
Standards at the 13th Congress        26BR). While GAO found the
                                                                             the nation's physical infrastruc-
held in West Berlin in June           hotlines generally operating well



                                      33
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




ture needs, and provide a direct     years they can use authority to        part of the government's rescue
link with agency and                 borrow and the amount of debt          of the savings and loan deposit
governmentwide financial state-      they can accumulate be limited.        insurance system. This off-
ments.                                                                      budget treatment holds down
                                     In an April 1989 report, Budget        the reported fiscal year 1990
InManaging the Cost of Govern-       Issues: Budgetary Treatment of         deficit; however, in the long-
ment: Proposals for Reforming        Federal, Credit Programs               run, the interest cost to the
Federal, Budgeting Practices         (GAO/AFMD-89-42), GAO dis-             government will be at least $2
(GAO/AFMD-90-1), GAO                 cusses and illustrates the "cost-to-   billion higher than the cost
recommends reporting costs not       the government" measurement            would have been had the rescue
now included in budget docu-         of subsidy costs for federal credit    remained on-budget and used
ments, such as pension liabilities   programs-direct loans and loan         funds borrowed from Treasury.
and the use of non-cash assets,      guarantees. It also discusses how      Also, the Act is not correcting
negotiating politically binding      appropriated credit subsidies          the basic problem-the im-
multi.year agreements on the         could be reported without alter-       balance between receipts and
broad shape of the budget, and       ing the overall budget deficit         outlays in the nontrust fund part
streamlining the budget process      amounts either in the current          of the budget. The nontrust
to avoid fragmentation and           unified format or in a restruc-        fund deficit increased from $266
duplication.                         tured unified budget.                  billion to $276 billion during fis-
GAO discusses how agencies           In its November 1989 report,           cal years 1986 through 1989, a
with authority to borrow are         Deficit Reductions for Fiscal, Year    fact masked in the unified
financing a large portion of their   1990: Compliance With the              budget totals by the large Social
programs with debt, in a Septem-     Balanced Budget and Emergency          Security surpluses.
ber 1989 report, Budget Issues:      Deficit Control Act of1985
Agency Authori:ty to Borrow          (GAO/AFMD-90-40), GAO                  Cash and Credit Manage-
Should be Granted Selectively        reported that OMB and the
                                                                            ment/Debt Collection
(GAO/AFMD-89-4). From fis-           President substantially complied       The nation's experience with the
cal years 1978 through 1987,         with the Act's requirements for        savings and loan crisis raises,
agencies used $353 billion in        projecting the size of the deficit     another, potentially larger, ques-
authority to borrow to obtain        and calculating the amount of a        tion: that of the government's ex-
funds, and they are repaying this    sequester. However, as GAO             posure to risk under the
debt with appropriations or new      reported last year, compliance         programs that may not be
borrowing rather than with col-      with the Act has not resulted in       operating under the rigorous
lections. GAO recommends that        meaningful deficit reduction be-       controls they warrant. In
only those accounts that will, in    cause budget gimmicks have             November 1989, GAO issued
all likelihood, be able to repay     been used to add billions of dol-      Federal, Credit and Insurance:
their borrowings entirely with       lars in budget costs over the          Programs .Ma;y Require Increased
collections be granted authority     long run.                              Federal, Assistance in the Future
to borrow. GAO also recom-                                                  (GAO/AFMD-90-11) which
mends that accounts with             A prime example is the recent es-      said that insurance and credit as-
authority to borrow be required      tablishment of an off-budget,          sistance programs backed ex-
to repay their debt with collec-     government-sponsored entity to         plicitly or implicitly by the
tions and that the number of         borrow $30 billion to finance          federal government totaled over



                                     34
                                      Chapter2
                                      Govemmentwide Initiatives to Improve Financial Management




$5 trillion, or about a year's        GAO issuedBorrower Loan                Financial Management Systems
Gross National Product.               Prepayments-OMB Guidelines             In 1989, GAO completed audits
                                      need w be Strengthened                 at several agencies and recom-
The programs include direct           (GAO/AFMD-89-19), which                mended improvements in the
federal loans ($222 billion);         said that in programs reviewed         areas of accounting, reporting,
privately held, federally guaran-     loan prepayment costs generally        and internal control. As a result,
teed loans (550 billion); loans       exceeded benefits and that non-        these agencies have initiated a
by government-sponsored               monetary credit reform objec-          number of actions to improve in-
enterprises (GSEs) such as the        tives were better achieved             ternal controls, accounting proce-
Federal National Mortgage As-         through loan asset sales than          dures, and financial management
sociation (Fannie Mae) and the        through borrower prepayment            systems. They include improved
Student Loan Marketing Associa-       programs. The report also con-         inventory control, more accurate
tion (Sallie Mae) ($666 billion);     cluded that loan prepayments           and timely reporting of inven-
and insurance commitments,            will not reduce the structural         tory status information, and im-
such as those covering bank           budget deficit.                        provements in oversight of in-
deposits and pension benefits                                                ventory processes.
($3.6 trillion). GAO concluded        OMB implemented the recom-
that the government will face the     mendations that called for agen-       GAO also recommended that
obligation of making good on          cies to complete cost/benefit          the Congress consider estab-
credit defaults or insurance          analyses in ( 1) considering bor-      lishing a public enterprise fund
guarantees in only a small per-       rower loan prepayment                  to account for and report in-
centage of this $5 trillion ex-       programs and (2) selecting be-         come and expenses associated
posure, but the risk for very sub-    tween loan asset sales and bor-        with one agency's profit-making
stantial loss is real.                rower prepayment programs as           programs. A legislative proposal
                                      the most appropriate tool to           was submitted by that agency to
Also troubling is the fact that the   achieve credit management              establish such a fund, which will
government does not know the          reform goals. The revised cir-         result in more accurate budget
full magnitude of the losses al-      cular A-129,Managing Federal,          reporting and simplified account-
ready incurred. Resolution of ac-     Credit Programs, provides agen-        ing and reporting for these
counting and financial reporting      cies with detailed guidance on         programs.
problems associated with these        how to conduct loan asset sales
programs and requiring financial      and borrower prepayment                Acting on another GAO report,
audits of each of them would          programs. The circular also in-        the Appropriations Conference
help ensure that losses are           cludes requirements for and            Committee lowered a program
revealed as they occur. Also,         guidance on ( 1) evaluating the        agency's budget requests by
such actions could lead to im-        performance of loan portfolios         $707 million, with no an-
provements that might reduce or       prior to offering them for sale or
                                                                             ticipated adverse impact on the
avoid future losses. The GAO          prepayment and (2) completing          customer.
report also urged that estimated      cost/benefit analyses for
costs of these programs be            proposed loan asset sales and
                                                                             GAO reviewed agencies' im-
reflected in the federal budget in    borrower prepayment programs.
                                                                             plementation of OMB's Nine
the year the Congress makes           [Jeffrey C. Steinhoff, (202) 275-
                                                                             Point credit program. In some
commitments that will result in       9454]
                                                                             instances, agencies GAO
future outlays.


                                      35
                                        Chapter2
                                        Govemmentwide Initiatives to Improve Financial Management




reviewed had not fully imple-           subsidiary and external records.       nesses in processing interest
mented several loan origination,        The agency implemented a               receivable, interest payable, and
accowit servicing, collection,          major, long-term effort to im-         administrative expense accruals.
and write-off initiatives as            prove its accowiting for and con-      The interest receivable and inter-
specified in OMB's Nine Point           trol over property and, in its         est expense accruals for 1988
Program and as generally al-            Federal Managers' Financial In-        were $4.3 billion and $4. 7 bil-
lowed by the Debt Collection            tegrity Act report, for the first      lion, respectively. [Robert W.
Act of 1982. For example, agen-         time reported property as a            Gramling, (202) 275-9406]
cies are not adequately screening       material internal control weak-
applicants for delinquent federal       ness. The agency implemented           Savings and Loan Industry
debt, and, in some instances,           improvements in its reconcilia-        As early as May 20, 1988, GAO
they are not using private collec-      tion procedure. GAO's review of        recommended that a limitation
tion firms in the normal collec-        the agency's fiscal year 1988          be placed on the amowit of
tion process. GAO provided the          reports to Treasury and OMB            obligations the Federal Savings
Congress with audited financial         fowid them to be free of the           and Loan Insurance Corporation
information on receivables and          type of reconciliation problems        (FSLIC) could incur. No limita-
delinquencies and reported that         GAO had previously reported.           tion was put in place at the time.
credit management programs for                                                 Throughout the rest of 1988,
the agencies GAO reviewed               As a result of an audit of another     FSLIC issued notes and guaran-
would be improved if the Con-           agency's financial statements,         tees far in excess of the funds it
gress legislatively required the        GAO recommended improve-               expected to be available to repay
use of many of the Nine Point           ments of the agency's accowiting       those obligations. In total, it
Program initiatives [Jeffrey C.         and reporting procedures. The          entered into agreements obligat-
Steinhoff, (202) 275-9454]              agency established procedures          ing over $55 billion, most of
                                        for performing quarterly recon-        which must now be paid by the
Financial Reporting                     ciliations of the net claims           taxpayers. To preclude this situa-
GAO's audits of several agencies'       liability which differed by over       tion from recurring and to en-
financial statements identified in-     $10 million in fiscal year 1987.       sure that the deposit insurance
ternal control weaknesses in ac-                                               funds do not issue notes, guaran-
cowiting and financial reporting.       Another agency's assets totalled       tees, and other similar obliga-
GAO made recommendations to             about $152 billion, which ranks        tions that they may be wiable to
reduce the probability of               the corporation among the              repay, the Congress included in
material errors or irregularities       nation's largest entities. As a        the Financial Institutions
not being detected in a timely          result of recommendations from         Reform, Recovery, and Enforce-
manner and to improve the               GAO's audit of the agency's            ment Act of 1989 (FIRREA)
reliability of its financial reports.   1985 financial statements, the          (P.L. 101-73, section 219) a
                                        agency improved its internal ac-       limitation on the amowit of
For example, at one agency,             cowiting controls. It developed a      obligations that the funds could
GAO identified internal control         formal accowiting policies and         incur. GAO worked with Bank-
weaknesses in controlling more          procedures manual and began            ing Committee staff to draft the
than $300 million in property as-       recording transactions at their        legislative language to ensure
sets and in procedures for recon-       gross amowits, rather than net-         that the limitation accomplished
ciling general ledger balances to       ting some transactions. In addi-       its objective without widuly
                                        tion, the agency corrected weak-        restricting the insurer's ability to


                                        36
                                      Chapter 2                             .    'al M       ent
                                      Govemmentwide Initiatives to Improve Fmanc1     anagem




promptly act on troubl~d institu-     Depository Institutions                 Based on questionnaire results
tions in the most effecttve man-      As early as May 20, 1988, GAO           and visits to 12 states, GAO
ner.                                  recommended that a limitation           determined that states generally
                                      be placed on the amount o~              used the same payment criteria
Thrifts hold deposits of almost       obligations the Federal SaVlll~         regardless of whether their out-
$1 trillion, most of which are in-    and Loan Insurance Corporanon           lays included federal funds.
sured by the federal government.      (FSLIC) could incur.                    GAO also tested payment-
Current estimates put the                                                     timing performance in 12 states,
amount of rescuing the industry                                               finding that about 75 percent of
                                      GAO identified the need for fun-
at $25 7 billion. GAO's work                                                  the federally-financed state pay-
                                      damental changes in thrift
showed that the thrift crisis was                                             ments examined were paid by
                                      institutions' management of the
partly attributable to the ~ack of                                            their due dates. States had not
                                      risks FSLIC underwrites.
independence and authonty for                                                 paid any interest penalties on the
                                      Recommendations called for
the insurer. Therefore, GAO                                                   late payments. A primary ~eason
                                      decisive and immediate actions
recommended that the insurer                                                  was that many states reqwred
                                      to resolve thrift problems and en-
be provided examination and                                                   vendors to request interest, and
                                      sure that they are not repeated.
regulatory authority to ensure it                                             they had not done so. Also,
                                      In addition, GAO recommended
could protect the integrity of the                                            many state payments were made
                                      modernization of banking laws
deposit insurance fund. FDIC's                                                too early, contrary to good cash
                                      to keep pace with the changing
examination and regulatory                                                    management practices.
                                      financial services industry.
authority was expanded as a
result of GAO's findings and          Prompt Payment                          This information is presented in
recommendations.                                                              two reports. The first, Prompt
                                      At the request of the Chairman,        Payment: State Laws Are Similar
                                      House Committee on Govern-             to the Federal, Act but Less Com-
Section 210 of FIRREA in-
                                      ment Operations, GAO . .               prehensive (GAO/AFMD-89-
cludes provisions allowing the
                                      evaluated states' payment-t1mmg         33BR), contains numerous sum-
Federal Deposit Insuranc~ Cor-
                                      legislation and practices for
poration (FDIC) t? examine (1)                                                mary tables on states' criteria
                                      paying commercial firms when            and legal citations for state laws,
any thrift filing an msurance ap-
                                      federal funds are involved. Forty-      thereby serving as a useful refer-
plication or in default, and (2)
                                      seven states and the District of        ence tool. The second, Prompt
any thrift whene~er the Boa;d of
                                      Columbia have payment due              Payment: State and Federal, Pay-
Directors deternunes a special ex-
                                      date laws that often parallel the      ment-Timing Practices Are
amination is necessary to deter-
                                      federal statute. Most require pay-     Similar (GAO/AFMD-89-91),
mine its condition. Although
                                      ment within 30 to 45 days and
FIRREA provides ~~t the     ?f-       provide for interest penalties on
                                                                              discusses what states actually do.
                                                                              [Jeffrey C. Steinhoff, (202) 275-
fice of Thrift Supervision will be
                                      late payments. The major dif-           9454]
the primary regulator of~,
                                      ference was that state laws and
section 221 provides FDIC with
                                      administrative policies did not
regulatory authority over in- .
                                      address as many types of pay-
sured thrifts to ensure that thrift
                                      ments, payment situations, or
activities do not pose a serious
                                      timing issues as the federal re-
threat to the thrifts' insurance
                                      quirements.
fund. [Robert W. Gramling,
(202) 275-9406]


                                      37
                                      Chapter2
                                      Govemmentwide Initiatives to Improve Financial Management




INTERA.GENCT                          The CFO Council meets month-           sons learned in the first year of
COUNCILS                              ly to discuss salient financial        reporting; review of legislation
                                      management issues. The Council         for a CFO program; advice on
There are several interagency         activities are completed by the        priorities within the OMB High
councils to facilitate the improve-   various committees of the CFO          Risk List; development of alter-
ment of government operations,        Council, which are:                    natives for a permanent federal
processes and systems. Many of        • Executive Committee, com-            management organization struc-
these councils have significantly        posed of the chair, vice chair      ture; and a compendium of ,
contributed to financial manage-         and a chairperson from each         projects supporting the long-
                                         of the committees listed            range financial management
ment improvements during the
                                         below.                              strategy. [David Gribble, (202)
past few years. We have high-
lighted the objectives, structure,                                           395-3993].
                                      • Human Resources Committee
and accomplishments of these
councils in the following section.    • Financial Systems and Infor-         President's Cowicil on In-
                                        mation Committee                     tegrity and Efficiency
Chief Financial Officer                                                      The President's Council on In-
Cowicil                               • Central Agency Requirements          tegrity and Efficiency (PCIE)
                                        Committee
The Chief Financial Officer of                                               was established by Executive
the United States was first estab-    • Organization and Structure           Order in 1981 to coordinate and
lished in 1987 and placed or-            Committee.                          implement governmentwide ac-
ganizationally within the Office      The primary issues addressed by        tivities to combat fraud and
of Management and Budget. In          the CFO committees during the          waste in federal programs and
November of 1987, major               past year concerned the long           operations.
departments and agencies were         range strategy for financial
requested to designate a Chief        management systems in the              The PCIE is chaired by the
Financial Officer (CFO) for each      federal governmen~ the develop-        Deputy Director of the Office of
entity. Subsequently, in Decem-       ment of agency financial state-        Management and Budget
ber 1987, a CFO Council was es-       ments, management reporting of         (OMB). The Council's member-
tablished with representatives        recommendations made by audit          ship during fiscal year 1989 in-
from major departments and            reports under the amendments           cluded the 24 Presidentially-ap-
agencies, the General Account-        to the Inspector General A~            pointed Inspectors General, the
ing Office, JFMIP, Independent        development of the                     Executive Associate Director for
Agency Financial Managers             governmentwide electronic              Investigations of the Federal
Council, and the Private Sector       benefit transfer (EBT) program,        Bureau of Investigation, the
Council. Frank Hodsoll, the cur-      and human resource issues.             Director of the Office of Govern-
rent governmentwide CFO and                                                  ment Ethics, the Associate
the Executive Associate Director      The CFO Council completed the          Deputy Attorney General of the
for Management at OMB, chairs         following projects: requirements       Department of Justice, the
this Council, while Gerald Mur-       for agency CFOs; criteria for          Deputy Director of the Office of
phy, Fiscal Assistant Secretary,      publication and audit of federal       Personnel Managemen~ and the
Department of the Treasury, is        financial statements; guidelines       Special Counsel of the Office of
the vice chair.                       for implementation of Inspector        Special Counsel.
                                      General Act amendments and les-



                                      38
                                     Chapter2
                                     Govemmentwide Initiatives to Improve Financial Management




The Council coordinated inter-       General recommended recovery           and Budget, is the chair of this
agency efforts through standing      or restitution of $4. 9 billion in     Council. The Council includes
committees and projects chaired      federal funds and better or more       the Assistant Secretaries for
by its members. By sharing past      efficient use of $37.2 billion. In     Management, or equivalent, of
experiences and applying new         response to Inspectors General         20 departments and agencies,
ideas, PCIE committees have          recommendations made in this           the Chair of the Small Agency
developed useful guidance for ap-    or prior periods, federal              Council, and the Assistants to
plication throughout the govern-     managers issued final decisions        the President for Policy Develop-
ment. Standing PCIE commit-          to recover funds or call loans in-     ment and Presidential Personnel.
tees for fiscal year 1989 included   volving $2.9 billion and to put
the Audit Committee, Com-            $17.3 billion to better or more        The PCMI and its committees
munications Committee, Execu-        efficient use.                         meet monthly to address the
tive Development Committee,                                                 status of projects, identify new
Inspections and Special Reviews      Members of the PCIE and their          opportunities for management
Committee, Integrity and Law         respective agencies have               improvement, and develop
Enforcement Committee, Inter-        developed a number of ethics           strategies to implement these in-
nal Operations Committee,            and preventative initiatives.          itiatives on a governmentwide
Legislation Committee, and           These efforts are designed to          scale. Since its inception, the
Technology Committee.                educate federal employees and          Council has initiated over 80
                                     the public on how to detect            projects through its committees.
The significant achievements         fraud. PCIE has developed an           Management improvement
during 1989 are presented in         early-warning system which will        priorities have encompassed six
two President's Council On In-       enable program managers and            broad themes: credit manage-
tegrity and Efficiency annual        federal officials to act prudently     ment, financial management,
reports: Report ofAuditAnd In-       to eliminate the opportunities         quality and productivity im-
spection Accomplishments and         for fraud and abuse.                   provement, improved services
Report ofinvesti-gatiPeAccomplish-                                          through technology, procure-
ments. The Report ofInves#gatiPe     Inspectors General have coor-          ment management, and manage-
Accomplishments notes that In-       dinated their efforts through          ment of government operations.
spectors General reported 5,639      PCIE to accomplish more                The Council has been particular-
successful prosecutions, $72 7       together than they could other-        ly active in government efforts
million in investigative             wise accomplish individually.          to recognize the contributions of
recoveries, and 2,851 debarment      [Dick Feezle, (202) 395-5670]          federal employees through
or suspension actions against per-                                          events like Public Service Recog-
sons or firms doing business .       President's Council on                 nition Week and individual con-
with the government.
                                     Management Improvement                 tributions to improved manage-
                                     The President's Council on             ment through the PCMI-spon-
In addition, the Report ofAudit      Management Improvement                 sored Quality and Productivity
and Inspection Accomplishments       (PCMI) was established in 1984         Conference. Working through
highlights the savings or            to assist in making the federal        the Council, federal agencies
recovery of funds made by In-        government more efficient and          have established a strong partner-
spectors General as a result of      responsive to the public. William      ship directed at mutual assis-
audit and inspection activities.     Diefenderfer, the Deputy Direc-        tance and support in bringing
During 1989, Inspectors              tor of the Office of Management


                                     39
                                    Chapter2
                                    Govemmentwide Initiatives to Improve Financial Management




about comprehensive manage-         resulted in strong ties between        ate positive incentives for better
ment reform in the federal          JFMIP and the Council.                 financial management. The
government. [Steve Martens,                                                Council meets monthly, except
(202) 395-6911]                     The Council has established its        for the summer months, to dis-
                                    own Financial Policies Commit-         cuss unique needs, problems and
Federal Financial Managers          tee. Now in its fourth year, the       capabilities of small independent
Council                             Committee has continued to sup-        federal agencies. The Council is
                                    port the efforts of the Council        currently chaired by Dwight
The Federal Financial Managers
                                    by establishing a viable program       Foster, Comptroller, National
Council (FFMC) is comprised of
                                    agency network and maintaining         Transportation Safety Board.
senior financial managers from
                                    a good communication avenue            The Committees under this
major federal departments and
                                    for the JFMIP and the central          Council include Communica-
agencies and serves as a forum
                                    agencies to present and discuss        tion/Coordination, Personnel,
for financial managers in these
                                    current or proposed initiatives.       and Education/Programs for
operating agencies to discuss in-
formation, share experiences,       The Council has placed great em-       Meetings. [Dwight Foster,
and develop appropriate             phasis on promoting and sup-           (202) 382-6704]
strategies for implementing         porting new and existing
financial management improve-       Regional Federal Financial
ments. Its broad purpose is to      Managers Councils (RFFMCs).
further the goals of financial      This is done by promoting in-
management governmentwide           creased involvement of Council
and to promote improvements         members' organizations in the
in federal financial management.    regional councils, by improving
The Council members meet            communication between the
monthly in Washington, D.C.         Washington, D.C., Council and
Sessions typically include guest    the regions, and by encouraging
representatives from the central    the formation of additional
agencies and from Regional          regional councils. There are cur-
Federal Financial Managers          rently 13 regional councils with
Councils (RFFMCs).                  active membership and
                                    programs. [Joyce Shelton, (202)
The Council has contributed to
                                    366-1306]
governmentwide financial policy
formulation and implementation
                                    Independent Ae;ency Finan-
on such issues as the pending       cial Managers Cowicil
legislation for a Chief Financial
Officer and other financial         The Independent Agency Finan-
management initiatives and          cial Managers Council (IAFMC)
programs. The Executive Direc-      provides a forum for discussing
tor of the Joint Financial          common financial management
Management Improvement Pro-         issues among independent agen-
gram (JFMIP) is also a Council      cies in the federal government.
member and this affiliation has     This Council also works with the
                                    central financial agencies to ere-


                                    40
                                         Chapter 3
                                        .Agencies' Initiatives to Improve Financial
                                        Management




INTRODUCTION                            descriptions of the more sig-       •   bud~et    development and ex-
                                        nifi.cant or unique management          ecution
The 1989 agency submissions             actions in the areas of
                                                                            • other improvements
on improvements in financial
management reflect a continued          • modernization of financial sys-   • auditing.
                                          tems
effort to modernize and con-                                                The graph below depicts the
solidate systems, provide and/or        • cross servicing                   total number of agencies that
use cross-servicing, and use            • accounting policies and proce-    reported financial management
modem technology to save time             dures                             improvements to JFMIP for
and dollars. Also, many initia-                                             1989. The initiatives described
                                        • financial reporting
tives were reported where agen-                                             on the following pages are a rep-
cies implemented off-the-shelf          • automated applications            resentative sample of the finan-
software or are in the process of       • cash and credit management        cial management improvements
acquiring a system. Presented in                                            reported.
the following sections are              • productivity


                    1989 FINANCIAL MANAGEMENT IMPROVEMENTS
                              BYAGENCYINITIATIVES
      80
      70
      60
      50
      40
      30
      20
       10
        01-t'-'------'-~
                                             =6c:
                                             Cl> Cl>
                                                                                           OJ
                                                                                           c:
                                             .._ E                                        E
                                             OCl>                                          'O
                                             o(j OJ
                                             .c C\l                                       ~
                                             (/) c:
                                             C\l C\l
                                             o~




                           D No. Agencies Reporting D No. Initiatives Accomplished
                           D No. Initiatives Reported D No. Initiatives in Process

                                        41
                                       Chapter 3
                                       Agencies' Initiatives to Improve Financial Management




Agency contact persons and             to meet the accounting require-        ment capabilities for all facets of
their telephone munbers are            ments of the federal judiciary.        District Court operations.
provided in brackets following         The Central Accounting System          Automated fimctions include
the project descriptions so that       (CAS) accepts accounting trans-        case management, jury atten-
readers can obtain additional in-      actions input manually at the Ad-      dance and payment,
formation about any of the im-         ministrative Office and through        budget/obligation planning
provement activities.                  an interface and accepts account-      tools, fiscal management, finan-
                                       ing transactions from the mini-        cial reports, receipt processing,
                                       computer based Courts' Finan-          and record archiving. It allows
MODERNIZATION OF                       cial System (CFS). CAS features        procurement staffs to plan pur-
FINANCIAL SYSTEMS                      single entry transaction process-      chases and then automatically up-
                                       ing; on-line data entry, process-      date the accounting system with
The Office of Management and           ing, and inquiry for all fimc-         purchase order obligations. The
Budget (OMB) Circular A-127,           tions; table-driven processing;        application assists personnel in
Financial. Management Systems,         and an audit trail and documen-        43 courts in doing their jobs
requires federal agencies to estab-    tation. A major benefit is the on-     while capturing the data needed
lish and maintain a modern,            line inquiry for status of funds.      for the accounting system locally
single, integrated financial           CAS performs integrated fimds          (at the courts) and judiciary-
management system. OMB Cir-            control; incorporates the U.S.         wide. Month-end transactions
cular A-130,Managementof               Government Standard General            are transmitted electronically to
Federal. Information Resources, re-    Ledger; includes purchasing,           the central system for process-
quires agencies to acquire off-        travel, and budget execution sub-      ing. [Stuart Kurlancheek, (202)
the-shelf software from commer-        systems; provides document             633-6017]
cial sources, unless the cost-effec-   tracking; performs the accounts
tiveness of developing custom          payable and disbursement               In 1989, the Administrative Of-
software is clear and docu-            process including prompt pay           fice of the U.S. Courts began
mented. OMB is also encourag-          computation; and incorporates          designing and programming a
ing agencies to adopt the use of       an accounts receivables/collec-        personal computer-based system
other agencies' systems. Some of       tions process. [Stuart Kur-            to provide transaction data from
the financial systems improve-         lancheek, (202) 633-6017]              Federal District and Bankruptcy
ments that agencies initiated                                                 Courts which will interface with
during 1989 are discussed below.       The Administrative Office of           the Central Accounting System.
                                       the U.S. Courts redesigned and         The system will provide
Financial Management/Ac-               reprogrammed the 5-year old            automated input for individual
counting Systems                       Courts' Financial System (CFS)         courts, automated reports, and
                                       to use the U.S. Government             financial management tools for
The Administrative Office of           Standard General Ledger and to         the individual courts. The sys-
the U.S. Courts implemented            interface with the Judiciary's         tem, patterned after the Courts'
an off-the-shelf financial             Central Accounting System              mini-computer based financial
software package at the begin-         (CAS). CFS, a UNIX-based               system, will be implemented in
ning of fiscal year 1990. The          mini-computer system, provides         courts with lighter case loads
software package was modified          automated financial manage




                                       42
                                    Chapter3
                                    Agencies' Initiatives to Improve Financial Management




which do not require a mini-        active Foreign Military Sales          civilian payroll system. [Steve
computer based system. [Stuart      cases.                                 Trimble, (202) 274-9238]
Kurlancheek, (202) 633-6017]
                                    Enhancements continue to be            During the past five years, use of
The Department of the Army          made to improve the system.            merchandise coupons in Army
initiated a major project to en-    For example, during the year ad-       commissaries has grown over
hance and standardize finance       ditional automated controls were       300 percent. A new automated
and accounting support for the      added for reimbursable orders,         accounting and control system
Army's posts, camps, and sta-       distribution of construction and       has been installed to provide bet-
tions. Subsystem II is comprised    procurement appropriations,            ter control over this process. The
of four major functions: general    and financial management of            commissaries submit coupons to
accounting, cost accounting,        foreign military sales. A current      a redemption contractor for sort-
cost accounting standards, and      effort involves expanding the          ing, summarization, and submis-
budget execution. The function-     centralized control and distribu-      sion to manufacturers for
al system design has been com-      tion process to include Air Force      redemption. The contractor
pleted. Physical design and         and Civil Works appropriations         provides the Army reports on
programming are nearing com-        managed by the Army Corps of           remits due by manufacturer. The
pletion. The system is being        Engineers. [Jim Willaford, (317)       Army receives payment directly
programmed in Ada and is ex-        542-3092]                              from the manufacturer via a lock-
pected to require about 1.8 mil-                                           box depository. The new system
lion lines of code. Field testing   A new automated general and            reconciles the information
of the system is in three phases;   cost accounting system has been        received from the contractor and
the first two phases have been      developed and is being installed       the manufacturer; posts transac-
completed and the last is           at U.S. Army field finance and         tions to the coupon general
scheduled for August 1990. [Bill    accounting offices. The system         ledger; and provides a balance
Cannon, (317) 542-3153]             known as SOMARDS (HQ                   sheet, income statement, and
                                    AMC Standard Operation and             various management reports.
The Army's fund distribution        Maintenance, Army Research             The system also calculates the
and order control process is an     and Development System) is             amount of payment due to the
Army-wide database system ser-      designed to perform accounting         coupon redemption contractor
vicing some 25 appropriation        and reporting functions for the        based on work processed.
managers, 3 7 major commands,       Army's operation and main-             Coupons annually produce
and 210 other activities. Using a   tenance, research. and develop-        about $47 million in face value
central data store with remote      ment, and miscellaneous ap-            and $6 million in handling fees.
terminals, the system controls      propriations. Major functions in-      [Christine Clark, (804) 734-
the issuance of program and         clude fund control, budget execu-      4552]
fund authorizations of more         tion, cost accounting, and finan-
than $100 billion in about 40 ap-   cial reporting. The double-entry       During 1989, the Environmen-
propriations. The distributions     accounting system uses the stand-      tal Protection Agency (EPA)
result in about 4,000 allocation    ard general ledger. Transactions       continued to enhance financial
actions and 40,000 allotment ac-    are entered into the system via        management of the agency's
tions annually. The system also     remote terminals. Also, a direct       resources by implementing the
controls obligation and expendi-    interface exists with the standard     first phase of its new accounting
ture authority for about 8,000                                             system, developing a current


                                    43
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




technology Superfund document        procedures and guidelines. The         be fully operational in calendar
management system, and               agency issued state financial          year 1990.
publishing new procedures for        management handbooks,
the Leaking Underground              developed a fiscal review guide,       The systems support the account-
Storage Tanks (LUST) Trust           and published a new directi.ve         ing, fiscal, and debt management
Fund program. Also, the agency       covering LUST cost recovery            services that the Division of Fis-
continued to operate and sup-        provisions and documentation.          cal Services provides for various
port a model financial manage-                                              customer agencies including In-
ment quality assurance program.      The EPA's financial manage-            dian Health Service; Alcohol,
                                     ment quality assurance program         Drug Abuse and Mental Health
EPA implemented Phase One of         continued an aggressive schedule       Administration; Office of the As-
its Integrated Financial Manage-     of internal and external reviews       sistant Secretary for Health; and
ment System (IFMS). During           to ensure consistently reliable        Family Support Administration.
1989, several financial manage-      operations at the agency's Finan-      The procurement has conformed
ment functions were converted        cial Management Division and           to all requirements mandated by
to IFMS, including travel, ac-       14 finance offices. Other initia-      the department in relation to sys-
counts payable, and budget ex-       tives during the year included         tems centralization under the
ecution. The agency is in the        successful completion of a pilot       Phoenix Project.
process of fully implementing        test to directly pay contractor in-
the IFMS financial reporting,        voices for work performed under        The debt management and col-
general ledger, and accounts         agreements with other agencies,        lecti.on system brings together all
receivable functi.ons.               development of a process to capi-      information related to debtors.
                                     talize fixed assets, initiation of     This system enables program of-
To strengthen financial manage-      procedures to use private debt         fices and finance offices to access
ment of the Superfund Trust          collection agencies, and refine-       identical information. It is not
Fund program, the EPA con-           ment of plans for EPA to pro-          necessary to maintain separate
tinued development and testing       vide payroll services to other         systems and many manual
of its Superfund Transactions        agencies. [Sallyanne Harper,           processes have been replaced.
Automated Retrieval System           (202) 382-5097]                        [Don Pooton, (301) 433-2480]
(STARS), which uses optical
disk storage technology to main-     In calendar year 1989, the             The Department of Housing
tain financial records required to   Department of Health and               and Urban Development
support claims for recovery of       Human Services' Division of            (HUD) redesigned the account-
costs incurred to clean-up Super-    Fiscal Services implemented an         ing systems for the Section 202
fund sites. The STARS technol-       automated off-the-shelf accounts       program to provide automated
ogy will result in quicker and       payable system and automated           interface with one-ti.me data
more accurate documentation to       debt management collection sys-        entry. This will completely
support cost-recovery negotia-       tem. Currently, the accounts pay-      automate the accounting proces-
tions and litigation.                able system is being modified to       ses for the Housing for the
                                     accommodate the procurement            Elderly and Handicapped Pro-
Financial management of the          needs of the Public Health Ser-        gram, eliminate manual process-
LUST Trust Fund program was          vice; the accounts payable/pur-        ing and duplicate entries, and im-
strengthened by the develop-         chase order system is expected to      prove reporting. [Gail B. Dise,
ment and publication of new                                                  (202) 755-1757]



                                     44
                                    Chapter 3
                                    Agencies' Initiatives to Improve Financial Management




The Department of Housing           The Department of Justice, Jus-        received from 10 regional and 5
and Urban Development               tice Management Division, is           area offices. Approximately 250
(HUD) is continuing in its ef-      developing an enhanced ac-             invoices are paid daily by mag-
forts to implement the Standard     COWlts payable module. 1his            netic tapes that are submitted to
General Ledger. During fiscal       module will support tracking of        Treasury. For invoice payments,
year 1989, the general ledger ac-   invoices from receipt through          the CPS generates a magnetic
coWlts of its three major           payment. It provides enhanced          tape for paper checks whenever
automated accoWlting systems        invoice control, document              the number of invoices exceeds
were crosswalked to the ac-         retrieval, and workload statistics;    100; for direct deposit pay-
coWlts in the Standard General      and it virtually assures payment       ments, regardless of the number
Ledger. The reports produced as     of late payment penalties in com-      of invoices, a magnetic tape is
a result of this effort are being   pliance with the Prompt Pay-           generated each day. [James
compared to the reports             ment Act. The enhanced ac-             Smoot, (202) 523-8184]
produced in the traditional man-    COWlts payable module will be
ner. The crosswalks will be         implemented in January 1991.           The National Aeronautics and
changed as needed. In addition      [Lee Lofthus, (202) 272-4468]          Space Administration (NASA)
to revising the crosswalks, the                                            is in the process of upgrading its
department is incorporating the     The Department ofLabor in-             accoWlting systems to meet inter-
Standard General Ledger ac-         stalled an off-the-shelf package       nal needs, the requirements of
coWlting structure into one of      for its financial management sys-      OMB Circular A-127, Financial
its three major automated ac-       tem. 1his system serves as the         M.anagement Systems, and to fully
coWlting systems. [Russell Bee,     core accoWlting software for all       implement the Standard General
(202) 755-6904]                     of the department's programs.          Ledger. The effort will result in
                                    Within the department, the new         the development of a single
The Department of the Inte-         system has been named the              standard system which will
rior is implementing a single       Department of Labor AccoWlt-           replace the nine installation-level
standardized accoWlting system      ing and Related Systems                systems currently in use. In addi-
for all bureaus using an off-the-   (DOLAR$) and will provide              tion, the six agencywide systems
shelf package. Geological Survey    DOL with enhanced accoWlting           used at the headquarters level
and Bureau of Reclamation in-       functionality. The core of that        will be upgraded.
stalled the system in October       new system has become the sys-
1988. Bureau of Mines and Fish      tem of record for fiscal year          During fiscal year 1988, a pre-
and Wildlife Service commenced      1990. Other departmental               definition study was completed
operating Wlder the new system      operating subsystems such as           which recommended the use of
in October 1989. National Park      procurement, accoWlts payable,         existing NASA software as the
Service and Bureau of Land          travel management, grant ac-           foWldation for developing the
Management are scheduled to in-     coWlting, and payroll time dis-        standard system for the installa-
stall the system during October     tribution will become operation-       tion level. The software will be
1990, while the remaining           al in the future. [Bill Furman,        implemented on a decentralized
bureaus will implement it at a      (202) 523-6891]                        basis. During fiscal year 1989, a
later date. [Wayne D. Howard,                                              detailed project plan was
(202) 208-4701]                     The Department of Labor's              developed and the functional re-
                                    Central Payment System (CPS)           quirements definitions were
                                    consolidates invoices that are         started. The initial benefit/cost


                                    45
                                     Chapter3
                                     Agencies' Initiatives to Improve Financial Management




analysis indicates that ap-          e.g., travel, accounts receivable,     are a considerable part of the
proximately $73 million can be       and purchasing. The vendor             budget of the Institution and im-
saved over a 15-year life cycle by   maintains the core system by is-       plementation of the labor ac-
reducing the number of separate      suance of annual updates, which        counting system represents the
systems. The timeliness and ac-      can require reprogramming to           first major step in the develop-
cessibility of data will be im-      accommodate agency-unique in-          ment of a new accounting sys-
proved, manual effort will be        terfaces.                              tem. It is expected that the LAS
reduced, capability will be                                                 will be completed in fiscal year
developed which will lead            The new system provides the            1990. [John Oarke, (202) 287-
towards a paperless environ-         SEC significant automation im-         3156]
ment, single entry of data will be   provements over the 17-year-old
facilitated, and current ADP         system it replaced. With the new        The Department of State has
technology will be maximized.        system, voucher and payment             developed a new Overseas Finan-
[Arthur W. Frater, (202) 453-        data is entered real time through       cial Management System (Over-
2288]                                personal computers and batch-           seas FMS) to automate local
                                     updated overnight. Data input           processing performed at posts,
The National Endowment for           of travel authorization and             replacing or incorporating multi-
the Arts is currently modifying      procurement documents is being          ple, nonstandard, antiquated ex-
the Department of Education,s        decentralired throughout the            isting systems. Implementation
MIDAS system to provide an in-       SEGs headquarter offices and           ·of the Overseas FMS automates
tegrated financial management        will be provided to regional of-        :financial management proce-
information system (FMIS). The       fice locations within two years.        dures performed at posts over-
JFMlP Core Financial Systems         Also, voucher processing is ac-         seas, modernizes labor intensive
Requirements were incorporated       complished on-line, thereby             existing systems, and establishes
in the request for proposals         reducing the staff time required        a system with appropriate con-
(RFP) for these modifications.       for data search and retrieval, and      trols and in accordance with ac-
The Endowment's system will          management data is more readily         counting principles and stand-
provide a standard general           available. [Darrell Dockery,            ards prescribed by the Comp-
ledger with accounts payable and     (202) 272-2049]                         troller General. The Overseas
budget execution modules, inter-                                             FMS provides :financial process-
face with payroll (cross-serviced    The Smithsonian Institution is          ing for the department and over
through the National Finance         using a commercially available          30 foreign affairs agencies
Center/Department of Agricul-        general ledger and budgeting            operating overseas that require
ture), and the Endowment's           package to implement a labor ac-        such services as disbursing,
grants management system.            counting system (LAS). The              vouchering, allotment account-
[Marvin A. Marks, (202) 682-         LAS integrates personnel data           ing, and budget preparation.
5407]                                with payroll data and accounting
                                     accruals/adjustments to form an        The Overseas FMS has been in-
In 1989, the Securities and Ex-      integrated database. The LAS           stalled at 21 Financial Manage-
change Commission (SEC)              operates as a subsidiary ledger to     ment Centers (FMCs) located at
completed one year of operation      the existing accounting system         major embassies worldwide.
on its new off-the-shelf account-    and serves as the source of data       Each FMC provides a full range
ing system. It consists of a core    for a personnel cost projection        of financial management services
system and optional modules,         system (PCP S). Personnel costs        to the embassy at which it is lo-



                                     46
                                      Chapter3
                                      Agencies' Initiatives to Improve Financial Management




cated and in most cases to neigh-     actions. Plans call for                 The Department of Transpor-
boring posts as well. The Over-       departmentwide system im-               tation (DOT) developed the
seas FMS is also operational at       plementation for current year           Departmental Accounting and
two of three Regional Ad-             transactions by October 1, 1990.        Financial Information System
ministrative Management                                                       (DAFIS) using the Federal Avia-
Centers (RAMCs) overseas.             In the final phase of implementa-       tion Administration's (FAA)
More th.an one-half of all over-      tion, all prior year financial infor-   Uniform Accounting System
seas financial transactions are       mation will be converted to the         (UAS) as the baseline system.
now being processing using the        new accounting system with full         DAFIS will eventually replace
Overseas FMS.                         operating capability. This in-          the primary accounting systems
                                      cludes refinement of reports, pro-      for all DOT Operating Ad-
An interface with the new             gram, and activity structures and       ministrations and the Office of
primary accounting system, the        reporting of accounting informa-        the Secretary. Prior to 1989,
Central Financial Management          tion derived from the                   DAFIS was implemented by the
System, is now functioning for        department's payroll systems.           FAA, National Highway Traffic
those posts using the Overseas        The full operating capability for       Safety Administration
FMS. Full system implementa-          fiscal year 1992 transactions is        (NHfSA), and a Coast Guard
tion is expected to be achieved in    scheduled for October 1, 1991.          pilot site in Boston, Mas-
the next 2 years with the conver-     Financial management benefits           sachusetts. During 1989, Coast
sion of all posts now currently       that will accrue with full im-          Guard implemented DAFIS in
receiving financial processing ser-   plementation of the CFMS in-            conjunction with the opening of
vices from the RAMCs.                 clude enhanced financial manage-        their new Finance Center in
[Howard A. Renman, (703)              ment reporting for decision             Chesapeake, Virginia. The im-
875-6906]                             making, availability of more            plementation permitted con-
                                      timely financial management in-         solidation of current year (fiscal
The Department of State is            formation, enhanced external            year 1990) accounting for seven
presently implementing a new          reporting capabilities, and im-         district offices. Conversion of
primary accounting system that        proved financial controls.              prior year accounting, shut-
will meet governmentwide inter-       [Howard A. Renman, (703)                down of the seven district ac-
nal controls and financial            875-6906]                               counting operations, and con-
management system require-                                                    solidation of the Boston site will
ments, including the Core Finan-      The Tennessee Valley                    be accomplished during the up-
cial System Requirements, comp-       Authority (TVA) is adding addi-         coming year. A similar DAFIS
ly with Section 4 of the Federal      tional formats for Corporate            implementation/consolidation
Managers Financial Integrity          Trade Exchange (CTX) and                approach for West coast opera-
Act, and provide for using the        Cash Concentration and Disbur-          tions will begin in October 1990
Standard General Ledger. State        sement (CCD) to its Accounts            (fiscal year 1991). Once the
has procured application              Payable System, which will ex-          Coast Guard's implementation is
software as a basis for the           pand the universe of vendors            completed, 90 percent of all of
Central Financial Management          able to receive electronic pay-         the department's accounting
System (CFMS). One half of the        ments. [Wilson Taylor Ill, (615)        transactions will be processed by
department's 30 operating             751-8133]                               the DAFIS. The balance of the
bureaus are presently using                                                   department is scheduled for
CFMS for fiscal year 1990 trans-


                                      47
                                         Chapter 3
                                         Agencies' Initiatives to Improve Financial Management




implementation in the 1991-              implemented in March 1989,             Eight of VA's existing systems
1992 time frame.                         was user-modifi.ed to handle the       will be totally replaced. The sys-
                                         requirements for governmental          tem will be accessed by an es-
The DAFIS incorporates a stand-          trust and deposit fund account-        timated 5,000 users at some 225
ard departmental accounting clas-        ing using the Standard General         VA facilities nationwide. Process-
sifi.cation code, the U.S. Stand-        Ledger Accounting System.              ing an average of 50,000 to
ard General Ledger (SGL) ac-             [Ronald Iroff, (202) 287-0789]         60,000 transactions per day, the
counting structure at the transac-                                              system will collect general ledger
tion entry level, debt collection        Treasury's Bureau of the Public        data on all of VA's appropria-
and cash management, and the             Debt initiated a United States         tions and funds and it will con-
Prompt Payment Act. DAFIS                Savings Bond (USSB) Account-           trol and disburse $4 to $5 bil-
has several operational and              ing System to provide summary          lion annually. [Robert Bevilac-
planned interfaces with sub-             accounting control from the            qua, (202) 233-8030]
sidiary systems to reduce duplica-       time bonds are printed until they
tion of data input. [Doug Sawin,         are redeemed and destroyed.            Accounts Receivable Sys-
(202) 366-5625]                          The system performs zero balanc-       tems
                                         ing; prepares journals, ledgers,       The General Services Ad-
The U.S. Secret Service, Depart-         and interest accrual reports; sup-     ministration (GSA) has
ment of the Treasury, com-               plies statistical data for             developed a new on-line query
pleted its first fiscal year of opera-   budgetary and managerial re-           system for accounts receivable
tion using the core accounting           quirements; and generates infor-       called the Accounts Receivable
module, including the U.S.               mation for USSB Redemption             Information and Evaluation Sys-
Government Standard General              Tables, the Monthly Statement          tem (ARIES). ARIES is written
Ledger, the accounts payable             of the Public Debt, and the            in a relational database using
module, and an off-the-shelf             Daily Treasury Statement.              data from the current financial
budget execution software pack-          [Debra Hines, (202) 447-1284]          system. Implemented on a
age as its Financial Management                                                 mainframe, ARIES can be ac-
and Accounting System. Enhan-            During 1989, the Department            cessed using PCs and display ter-
cements for the systems, includ-         of V etc.rans Affairs (VA)             minals. The programming, test-
ing enhanced travel accounting           achieved a major milestone in its      ing, and implementation phases
capabilities and interfaces with         project to implement a single in-      were completed in January,
the Service's procurement track-         tegrated financial management          1990.
ing and property accounting sys-         system. Although much remains
tems, are to be completed                to be done before the system           ARIES is menu-driven and will
during 1990. [Dale Burkett,              goes into production (scheduled        provide the most current data
(202) 535-6009]                          for September 1992), the               available. As an administrative
                                         baseline systemhasbeen installed       tool, ARIES will minimize delin-
The accounting system for the            and is operating at the V~s data       quency by directing administra-
Department of the Treasury               center in Austin, Texas. Cus-          tive and management attention
Financial Management Service's           tomization for VA's unique re-         to those overdue accounts ac-
trust and deposit funds was              quirements and the development         cording to either chronological
replaced by an off-the-shelf             of interfaces with over 30 exist-      or dollar amount criteria.
software package. The system,            ing systems has necessitated the       ARIES has on-line support for
                                         3-year implementation schedule.


                                         48
                                        Chapter 3
                                        Agencies' Initiatives to Improve Financial Management




contacts, notes, status codes, and      ber to receive information on a        debits and credits :n..............
                                                                                                   A. ....    .L{;.



suspend dates; the system will          debt. [Peter A. Larson, (312)          stop-payment actions.
ensure proper followup and as-          751-4590]                              tion, the system maintains this
sist in the collection of overdue                                              information for a specific period
funds. [Dennis F. Schroff, (202)        The Social Security Administra-        of time for use in the regular ac-
501-1056]                               tion (SSA),                 of         counting process. These controls
                                        Health and Human Services,             include all Title                XVI,
On November 1, 1989, the Rail-          implemented a new Accounts             and black lung stop-payment ac-
road Retirement Board (RRB)             Receivable System (ARS) in             tions. [Joe Maran, (301) 965-
implemented an automated sys-           1989 for the Title II and Title        935 l]
tem to administer accounts              XVI benefit payment processes.
receivable which originate from         The agency will have effective
overpayments of benefits under          controls over receivables from
the Railroad Retirement and the         the Department of the Treasury,        The Defense Contract Audit
Railroad Unemployment In-               which will also facilitate dis-        Agency (DCAA),         u............
                                                                                                   .LP ....    .JUUI. ..., ........

surance Acts. The new system            closure of their value for finan-      of Defense, is using an
uses off-the-shelf software which       cial reporting. Until this system      automated property system
meets many of the agency's re-          was implemented, SSA did not           known as "DAISY" that
quirements; the remaining re-           have a true accounting system          provides for the identification,
quirements were installed under         for incorrect payments. Except         inventory, and overall manage-
a contract with the software ven-       for some situations, no actual         ment of DCAA property. The
dor and will be fully integrated        control system existed for all         software provided by the vendor
into the RRB's current                  reclamation and debit actions          includes 24 pre-established fields
automated financial manage-             received from the Treasury.            of information commonly used
ment system.                                                                   in most property systems. How-
                                        The goal of the accounts receiv-       ever, the major advantage of this
The Program Accounts Receiv-            able system is to control and          software is that the information
able (PAR) system maintains a           monitor all requests to Treasury       fields can be customized by the
history of accounts receivable          resulting from an allegation of        user to meet any unique require-
data; automatically generates pe-       nonreceipt or SF-1184 stop pay-        ments of the user's organization.
riodic billing notices and assesses     ment nonentitlement action. The        It comes equipped with on-line
administrative, penalty, and in-        new system not only creates an         instructions, help screens, and a
terest charges; and applies adjust-     automated control system for           comprehensive user's manual.
ments for administrative offsets,       these Treasury reclamation and         The system also produces up to
waivers, writeoffs, and actuarial       debit transactions, but also           25 printed reports           are
adjustments of annuity pay-             produces reports reflecting            defined by the user.
ments. In addition, current infor-      money amounts requested from
mation on debts owed the RRB            Treasury, money amounts                Among the major information
is available on-line to the field of-   received, and the outstanding          fields to be used in the DAISY
fices to respond to inquiries           balance on a regular basis. The        are the property description, ac-
from the railroad public. In-           ARS controls the certification of      quisition information, physical
quirers need only to provide            additional funds to Treasury and       location of the property, disposal
their railroad retirement claim         the return on nonused funds.           data, organizations and
number or social security num-          Therefore, it keeps track of all


                                        49
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




individuals responsible for          audit trail for items that have        A blanket purchase agreement
property items, and cost and ap-     been disposed of and changes           permits individuals to place or-
propriations data. Several other     made to sensitive data fields, cal-    ders for items or classes of items
unique information fields are        culates depreciation expense of        by telephone, over-the-counter,
also included. In the second         capitalized property, and accepts      or by letter directly to the ven-
phase of implementing the sys-       inventory data from bar code           dor in lieu of a written purchase
tem, DC.AA has integrated the        scanning equipment and recon-          order. It also permits con-
software with barcode technol-       ciles data with inventory records.     solidated invoicing for all pur-
ogy. A barcode label has been af-                                           chases made during its previous
fixed to each piece of account-      NEPA is being used in all              billing period. It is a convenient
able property; for physical inven-   departmental offices, except the       arrangement for both DOS pro-
tories, a barcode reader uses a      Executive Secretariat, and at 132      gram offices and vendors. A
laser gun to access the code; this   posts overseas. [James L. Mur-         recurring service order is an ar-
significantly reduces the time re-   phy, (703) 875-6092]                   rangement whereby services are
quired to take physical inven-                                              procured on a continuing basis,
tories. The software and the bar-    The Office of Acquisition, as the      with a set price or rate of pay-
code hardware supply a state-of-     principal Department of State          ment determined in advance,
the-art property system which        (DOS) procuring activity, has in-      e.g., rentals, leases, and preven-
provides a significant produc-       itiated an efficient and con-          tive maintenance agreements.
tivity savings with a very mini-     venient ordering system using          [Jeanne Ely, (703) 875-6040]
mal investment. [Edward              blanket purchase agreements and
Migliore or Paul Earley, (703)       recurring service orders. The          Treasury's Financial Manage-
274-5151]                            new system provides a fast and         ment Service (FMS) is currently
                                     cost effective method of order-        developing a requisition and
The Department of State's Of-        ing commonly used goods and            procurement tracking system for
fice of Supply and Transporta-       services. The program offices          the creation, transmittal, and
tion has developed the Non-Ex-       with.in the department now have        processing of electronic docu-
pendable Property and Account-       more responsibility for control-       ments. The system, called
ing System (NEPA), an                ling the use of blanket purchase       "COMET,"will be supported by
automated inventory application      agreements and managing their          the FMS's minicomputer, con-
used both domestically and at        own funds.                             nected to personal computers at
posts overseas to account for                                               locations throughout FMS. The
non-expendable property items.       Using its automated systems and        system will eventually be tied
NEPA replaces several anti-          facilities and the technical exper-    into the administrative account-
quated, nonstandard existing in-     tise of its staff, the Office of Ac-   ing system, and a property sys-
ventory systems. For non-ex-         quisition has developed the            tem will be added. The entire sys-
pendable property, the NEPA          methodology, standard lan-             tem will provide FMS with a
system records basic informa-        guage, and internal processing         single integrated financial
tion, tracks locations, keeps        procedures for this                    management system. [Sherman
maintenance records, provides        departmentwide system which            B. Eisner, (202) 287-3897]
management reports on items          will manage the processing of
due for replacement, provides an     several thousand procurement ac-
                                     tions.



                                     50
                                      Chapter 3
                                      Agencies' Initiatives to Improve Financial Management




Personnel/Payroll Systems             modifications, and adjustments         vantages were identified in
                                      in a timely manner; elimination        adopting the Air Force systems,
The Air Force is working on           of labor intensive applications;       such as improved service, lower
centralizing all civilian payroll     and improved fraud prevention          operational costs, and a huge
processing at the USAF Account-       and error detection capabilities.      cost saving in developmental
ing and Finance Center                The elimination of labor-inten-        tests, the Army decided in Sep-
(AFAFC) in Denver, Colorado.          sive applications and estab-           tember 1988 to transition to Air
This will reduce base-level man-      lishment of automated interfaces       Force pay systems.
power requirements with a new         with personnel and general ac-
overall savings in manpower           counting systems should result         In January 1989, the Under
resources. In addition, the           in significant manpower savings.       Secretaries of the Army and Air
centralized system allows better      The new system will replace mul-       Force signed a memorandum of
management of information to          tiple payroll systems in use and       agreement for the Army to use
respond to inquiries since there      will commence implementation           the Air Force systems. As a
will be 1 database instead of         at Army payroll offices following      result, the Air Force systems be-
191. It will also respond to legis-   completion of field testing.           came the Joint Service Software
lative changes faster and save        [Jerry Griffin, (317) 542-3216]        (JSS) (active and Reserve com-
resources since duplicate systems                                            ponents) and changes to the sys-
are eliminated. [Gary Raisio,         In the Department of Defense,          tem will now be considered in
(303) 370-5282]                       the Army and the Air Force             light of their impact on both ser-
                                      agreed to use standard software        vices.
The Army has completed                to pay both active and Reserve
development of a single               component members. Today,              Standard software will be jointly
automated payroll system to pay       the Army and Air Force use             maintained by Army and Air
all appropriated funded U.S.          similar computerized military          Force personnel at the Air Force
civilian employees. Final field       pay systems to compute military        Accounting and Finance Center
testing of the system is nearing      pay and entitlements for each in-      (AFAFC) in Denver. Interfaces
completion. Software programs         dividual member. Each service is       unique to the Army will con-
are in COBOL and comprise 1.2         responsible for maintenance of         tinue to be maintained at the
million lines of code. The sys-       their respective military pay sys-     U.S. Army Finance and Account-
tem, designed as an integral part     tems. In June 1988, the Under          ing Center (USAFAC) in In-
of the Army's accounting sys-         Secretary of the Army ordered a        dianapolis. The Army will
tem, uses single-source entry for     comparison study be made of            operate (atUSAFAC) ADP
time and attendance, labor costs,     Army and Air Force military pay        hardware compatible with the
and performance data. A               systems to determine if they           Air Force system. Army will
modular design facilitates chan-      could use the Air Force software       change its military pay input pro-
ges necessary by revisions in         to pay Army personnel. Army            cedures to interface with Air
legislation and regulations. Addi-    conducted an in-depth study            Force software. During the ini-
tional benefits of implementing       starting in June 1988 to deter-        tial operation, Army finance and
a new payroll system Army-wide        mine the feasibility of using the      accounting offices will input per-
include standardization of            Air Force military pay systems         sonnel transactions. Sub-
payroll operations through use        to pay active duty and Reserve         sequently, the Army personnel
of standard software; facilitation    Forces. Because several ad             system will be modified to pro-
of technological changes, system                                             vide direct input as is currently



                                      51
                                                                       Chapter 3
                                                                       Agencies' Initiatives to Improve Financial Management




                                                                       Since Congress enacted the Com-        Labor's Employment Standards
                                                                       bined Annual Wage Reporting            Administration completed an
                                                                       (CAWR) Act, which requires             automated fiscal system for the
                                                                       employers to provide an annual         management of back wage collec-
                                                                       wage report (AWR) to SSA and           tions and disbursements. This
                                                                       a quarterly report with only ag-       automation, known as the Back:
                                                                       gregate wage data to the Internal      Wage Collection and Disburse-
teams, ,.,V'...     ,,Uf.AU>lb-LI..Ll'O.                               Revenue Service (IRS), dis-            ment System (BCDS), provides
Air Force i-,,.,..,"" .... ,_," .... "'                                crepancies have occurred be-           accounting, internal control, and
complish               conversion                                      tween the amounts reported to          monitoring and reporting of
at its 86             accounting                                       SSA and the IRS.                       regional back wage payments.
offices. Joint        Software,                                                                               [Alice A. Niner, (202) 523-
scheduled      implementation in                                       To assist the private sector,          7060]
                significant                                            reduce SSA resource expendi-
benefits to     Department of                                          tures, and improve the integrity       In November 1989, theNavy
Defense. Centralization of im-                                         of the CAWR process, SSA is            implemented the Navy Standard
proved efficiency and effective-                                       developing software standards          Civilian Payroll System
ness is important for the con-                                         and edit criteria for both paper       (NAVSCIP S) at a second site,
tinued success of financial                                            filers and magnetic media              the Naval Supply Center, Char-
management systems. [Col                                               reporters. When completed, the         leston, S.C. NAVSCIPS is cur-
Ronald A. Swenka, ( 303) 3 70-                                         software standards and edit            rently paying 12,000 Navy
7112]                                                                  criteria will improve the timeli-      civilian employees at more than
                                                                       ness and accuracy of posting to        128 Navy installations.
                                                                       SSNs system of records, thereby        NAVSCIP S is a technically and
                                                                       enhancing benefit computations         functionally sound system and
                                                                       and other programmatic opera-          sufficiently flexible to run in
establishes                                                            tions. The standards should sub-       other IBM compatible environ-
mgs                                                                    stantially reduce the number of        ments.
employees                       earnings of self-                      electronic manipulations of
employed individuals. The earn-                                        reported data needed to effect         NAVSCIPS will replace 10 non-
ings                                                basis for          verification.                          standard Navy civilian payroll
SSNs (1) . . . . . . ,. ....................,. . . . .
                                           -4d.
                                                                                                              systems with one single payroll
amount                                                      taxes      To solicit feedback on the stand-      system, which will be main-
the trust funds should receive;                                        ards, SSA has disseminated             tained by one central design
(2)                                  whether in-                       copies of the edit criteria and        agency (CDA). The objectives of
dividuals are                                          to benefits     standards to payroll processors,       the system are to achieve cost
and, if so; (3) calculating benefit                                    service bureaus and professional       savings through increased
                                                       claims, earn-   associations. Final software           productivity and elimination of
     ent1orc1emc:nt, personal earn-                                    standards based upon feedback          redundancies; establish unifor-
          hPft"*1ir estimate state-
                                                                       dialogue should be available later     mity in payroll policies and pro-
                                         programmatic                  this year. [Lois Sheppard, (301)       cedures through the stand-
operations.                                                            625-0386]                              ardization of hardware, software,
                                                                                                              system documentation, and
                                                                                                              input/output documents;



                                                                       52
                                      Chapter 3
                                      Agencies' Initiatives to Improve Financial Management




generate correct and consistent       cal year and future fiscal years.      system easily accessible through
payments; provide proper dis-         The system will allow some 80          theFMS.
position of deductions; combine       authorized SI ftmd managers to
duplicative Time and Attendance       track both the SI federal and          Another modification to the
(T&A) and labor data entry into       trust ftmd personnel costs for         PAID system was the elimina-
one input; increase space; and        comparison to budget. [Nancy           tion of keypunch equipment and
automate controls over pay and        Suttenfield, (202) 357-2917]           card readers as the means of
leave records.                                                               entering data to the PAID
                                      The Department ofVeterans              central system. During the calen-
NAVSCIPS is being imple-              Affairs (VA) developed a re-           dar year ending on December
mented under a phased approach        quirements document that will          31, 1989, a total of 241
to be completed by December           provide payroll accounting data        Veterans Health Services and Re-
1992. It will pay 310,000 Navy        to the Financial Management            search Administration
civilian employees at 34 payroll      System (FMS) through a labor           (VHS&RA) and all 53 Veterans
offices, and will save the Navy       distribution interface. The pur-       Benefits Administration (VBA)
$46 million through 1999.             pose of the labor distribution         sites were successfully converted.
[LCDR Chris Pratt, (202) 695-         subsystem of the Personnel Ac-         Plans are to convert the remain-
7906]                                 counting and Integrated Data           ing four VHS&RA sites also.
                                      (PAID) system is to capture, cal-      This initiative has eliminated the
The Smithsonian Instltutlon           culate, and distribute payroll         cost of punching over 200,000
(SI) is developing a personnel        hours and costs at a required          cards and mailing them to over
cost projection system (PCPS).        level of detail to satisfy the re-     200 locations each pay period.
With PCPS, Smithsonian                quirements of all VA organiza-         VA facilities will be able to
bureaus and offices will be able      tions. The requirements docu-          reduce the utilization of out-
to accurately monitor personnel       ment was completed in Novem-           dated equipment (punch card
costs, and also use it as a plan-     ber 1989, and will be modified         readers used to transmit payroll
ning tool. The development of         as needed to adjust to the             data); data input into the central
PCPS is divided into two phases.      redesigned system in order to          payroll system will be pre-edited
The first phase, which is already     capture and deliver data for the       and therefore reduce the amount
completed, provides up-to-date        FMS. Costs of furnishing re-           of rejects during central process-
actual personnel/payroll cost         quired data will be kept at a min-     ing; and turnaround time for
data. The second phase, which         imum due to the standardization        error corrections will be greatly
encompasses cost projection and       of accounting codes. The major         reduced. [Vidal Falcon, (202)
reporting capabilities, is under      benefits from the requirements         254-5290]
development and is expected to        document are that each
be implemented before the end         employees' master record will
of fiscal year 1990.                  contain one set of standard FMS        CROSS-SERVICING
                                      accounting codes; the standard
PCPS encompasses the ftmction         uniform codes eliminate the            The Department of Commerce
of tracking actual-year-to-date       need for each organization             is automating its personal
personnel costs in the present fis-   within the VA to maintain its          property management
cal year and projecting these         own accounting system and              departmentwide through im-
costs for the remainder of the fis-   provides a standard accounting         plementing the Department of



                                      53
                                     Chapter3
                                     Agencies' Initiatives to Improve Financial Management




Agriculture's Personal Property      An interagency agreement was           to support the information
System (PPS). Conversion of          signed by the Small Business           needs of procurement officials
Commerce components to the           Administration (SBA) in                and program managers; and 4)
PPS began in October 1988.           March 1989 with the U.S.               the quarterly generation of
This initiative will be completed    Department of Agriculture, Na-         departm.entwide input to the
in September 1990 with the           tional Finance Center (NFC), to        Federal Procurement Data Sys-
planned transfer of the National     cross-service the SBA using the        tem. Treasury began using the
Institute of Standards and           USDA Personnel/Payroll Sys-            CPDS in October 1989, thereby
Technology's property records        tem. This cross-servicing agree-       avoiding both a further delay in
and financial data to USDA's Na-     ment benefits the SBA in terms         its procurement information sup-
tional Finance Center. By using      of its being an integrated person-     port needs and significant sys-
Agriculture's PPS, Commerce          nel and payroll system which is        tems development costs.
has avoided a costly and time        cost effective and which may pro-      [Ronald P. Hack, (202) 377-
consuming personal property sys-     vide future systems improve-           0120]
tem development process and          ments implemented by NFC.
will provide its bureau com-         [Matthew A. McCroddan, (202)           Under a cross-servicing agree-
ponents with a facility for the      653-6225]                              ment with the U.S. Department
timely and accurate management                                              of Agriculture (USDA),
of its personal property assets      The Department of the                  Treasury's Bureau of Alcohol,
and related financial accounting.    Treasury Office of Thrift Super-       Tobacco and Firearms (ATF)
[Hugh Brennan, 377-1200]             vision (OTS) began providing           has arranged for person-
                                     accounting, travel, and payroll        nel/payroll processing to be per-
The Securities and Exchange          services to the Federal Housing        formed by the USDA's National
Commission (SEC) is provid-          Finance Board (FHFB) com-              Finance Center (NFC) in New
ing payroll and personnel system     mencing October 8, 1989. This          Orleans, Louisiana. The new
services to small regulatory agen-   generated $215,500 income in           electronic time and attendance
cies. Personnel data is main-        1989 and is estimated to               process eliminates the manually-
tained by user input, payroll data   generate approximately                 prepared hard-copy timecards.
through the electronic update of     $800,000 in 1990. [Paul Nagao,         All time and attendance transac-
"effective" personnel data and       (202) 906-7954]                        tions are entered directly by the
user input of time and atten-                                               timekeepers. Also, the NFC sys-
dance data. User input can be        Commerce is providing cross-ser-       tem cross-checks and integrates
decentralized and is entered into    vicing to the Department of the        payroll information with the per-
the system real-time. Calcula-       Treasury to use the Commerce           sonnel database, thereby ensur-
tions, reporting, and electronic     Procurement Data System                ing greater internal controls and
updates are performed in batch.      (CPDS). The CPDS features              reliability. [William Wright,
Orientation and training sessions    1) the on-line entry and editing       (202) 566-7521]
are initially provided by SEC        of status reports for federal con-
staff through formal instruction     tracts and other major procure-
and subsequently through staff       ment actions; 2) a database
interaction. User manuals and        management system environ-
system documentation are avail-      ment to facilitate rapid informa-
able. [Henry Hoflinan, (202)         tion retrieval; 3) a variety of
272-2639]                            comprehensive reports designed


                                     54
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




ACCOUNTING                           Three classes of 25 interns have       tween General Motors and the
POLICIES AND                         graduated so far.                      Army, which resulted in a 43-
PROCEDURES                                                                  page report. The second phase
                                     Work is being done to develop          provided a broader analysis com-
                                     model job sheets for the GS-525        paring Army financial functions
The Department of the Army           Accounting Technician positions        with those of the private sector.
has developed a Standard Instal-     and to update the Army regula-
lation Accounting Office                                                    A 20-page report highlighted
                                     tion that deals with finance and       the previous GM comparison
(SIAO) structure in order to bet-    accountingoffices.Standard             and similar exchanges with
ter align professional staffing at   operating procedures have been
field accounting offices with the                                           Boeing. The research concluded
                                     developed to take advantage of         that while, on the whole, the
skills required to sustain           personal computers and increase
prescribed accounting standards                                             Army could not adopt a private-
                                     automated analysis products.           sector accounting system for ap-
and implement the new standard       Developmental efforts are
Army accounting systems. The                                                propriation accounting, certain
                                     directed at task restructuring and     financial applications could pos-
structure fosters a stronger         assessment of regionalization
relationship between accounting                                             sibly be used (such as GM's
                                     benefits. [Greg Bitz, (317) 543-       freight transportation payment
and budgeting. Fourteen ac-          6564]
counting offices have fully reor-                                           system).
ganized into the SIAO structure;     During the past two years, the         The comparative analysis
18 other sites are in various        Department of the Army con-            provided insights helpful to both
stages of transition. Standard job   ducted a research project com-         the government and the private
descriptions for all professional    paring its accounting systems          sector. The GM comparison has
accounting positions, model per-     and financial management prac-         been used as an educational tool
formance plans, and various          tices with two major corpora-          to brief accountant interns and
standard operating procedures        tions. The purpose of the project      senior-level officials on
have been provided to these sites.   was to determine whether the           similarities and differences be-
                                     Army could adopt a private-sec-        tween corporate and govern-
To facilitate SIAO staffing and      tor accounting system. The re-
transitioning to the new stand-                                             ment accounting. [Cliff Terry,
                                     search involved analyzing the ac-      (317) 542-3031]
ard accounting systems, a central-   counting systems, reporting
ized GS-510 Accountant intern        process, payroll, and system           The Army has reviewed its pro-
training program was established     development efforts of General         cedures for royalty payment to
at the U.S. Army Finance and         Motors and Boeing. Briefings           patent holders. The Federal
Accounting Center. The inten-        were provided and discussions          Technology Transfer Act (PL 99-
sive 120 days of training com-       held with top financial managers       502) allows federal government
prises both classroom theory and     in both corporations and the           employees who are patent
practical exercise. As part of the   Army. This was supplemented            holders to receive income from a
training curriculum, an Army         by a review of organization            patent when it is licensed
Management Accounting and            literature, system documenta-          through a cooperative research
Analysis Course was developed.       tion, and financial reports .. Re-     agreement with a private con-
This course focuses on ap-           search was conducted in two            cern. Prior to the Act, royalty in-
propriated fund accounting and       phases. In phase one, a one-on-        come derived from patent agree-
stresses accounting analysis.        one comparison was made be-


                                     55
                                      Chapter 3
                                      Agencies' Initiatives to Improve Financial Management




ments was deposited to the            al costs will improve the quality      Cashbook, Daily Balance Sheet,
general fund of the Treasury.         ofplanning,budgeting,and               Statement of Accountability,
                                      management decision making.            daily and monthly disbursing
The royalty monies are paid in        The procedure, which utilizes          returns, and other schedules and
part to the patent holders;           built-in features of a new             management reports. [Karen
residual monies, however, are         regional data processing system,       Davis, (202) 697-0581]
usable for administration and         is expected to require minimal
licensing of inventions, reward-      cost and effort. [Robert L.            The Customs Service, Depart-
ing of scientific/technical and en-   Hodges, (202) 523-6448]                ment of the Treasury, has
gineering employees, scientific                                              developed internal budget and
exchange among the govern-            The Navy's Automated Cash-             accounting manuals for use by
ment-operated laboratories, and       book System (ACS) has been             Budget Division, National
education and training of             designed and developed by the          Finance Center, field, and head-
employees consistent with agen-       Cash Accountability Reporting          quarters personnel. The manuals
cy research and development mis-      Enhancements (CARE) branch             were written and developed to
sions. The thrust of this program     of the Navy Accounting and             meet the internal operating
is to increase the licensing poten-   Finance Center. The ACS sys-           needs of the Customs Service,
tial for transfer of technology       tem is an outgrowth of the             but also provide information
from the government to the            CARE initiative, which is a coor-      that can be of use to any federal
private sector. For the Depart-       dinated Navy effort to provide         agency.
ment of the Anny, the royalty         more accurate and timely expen-
monies are managed centrally;         diture and collection data to the      The Budget Manual was
patent holders are paid and           Navy's Financial Reporting Sys-        designed to provide guidance to
residual funds are distributed to     tems (FRS) and authorization ac-       budget analysts working in the
the various laboratories in the re-   counting activities. The system        Budget Division on various pro-
search and development com-           provides front-end, automated,         cedural requirements and
munity for use in the program.        and edited expenditure, collec-        specific directions for program
[RonAshdown, (317) 542-               tion, and accountability data          officials and field budget person-
3067]                                 into the FRS for all shore Navy        nel that participate in the Cus-
                                      disbursing officers. ACS users         toms budget and resource alloca-
The Department of Labor,              are able to key-enter voucher          tion process. It covers many
Employment Standards Ad-              data at the source and are             topics and is designed so that it
ministration (BSA), is im-            provided instant validation of         can be updated easily when pro-
 plementing a cost accounting         critical accounting data elements      cedures and policies change.
 and cost allocation system for       against the Navy's Centralized
 data processing services which                                              The Accounting Manual was
                                      Master Edit Table and other edit-      designed to provide standard
 complies with OMB Circular A-        ing criteria. The ACS also
 130, Management ofFederal, In-                                              operating procedures for ac-
                                      automates current labor-inten-         counting technicians and ac-
formatWn Resources, and related       sive and error-prone cash ac-
 requirements. This initiative will                                          countants at Customs' central-
                                      counting processes for deputy,         ired National Finance Center
 significantly improve data on the    associate, and central disbursing
 costs of operation of the BSA                                               and an adequate training tool for
                                      offices. The ACS can automat-          the National Finance Center for
 programs using the system. Ac-       ically generate a mechanized
 curate information on operation-                                            assuring that there is little if any



                                      56
                                      Chapter 3
                                      Agencies' Initiatives to Improve Financial Management




disruption in workload as staff       FINANCIAL                              plementation is underway on a
comes and goes. It is designed to     REPORTING                              site-by-site basis and is expected
meet the needs of the National                                               to be completed during 1990.
Finance Center and does not in-       The Army's monthly Statement           [Scott Tinsely, (317) 542-4963]
clude overall accounting and          of Transactions submitted to
financial management proce-           Treasury averages about $10 bil-       Currently, 131 customer
dures for Customs. [Tom Disfor-       lion with specific identification      countries and international or-
li and Christine Gaugler, (202)       of appropriations with disburse-       ganizations have open purchase
535-9035]                             ment/collection activities. The        contracts with the Department
                                      departmental reports comprise a        of Defense (DOD) valued in ex-
Through the efforts of the            consolidation of feeder reports        cess of $156 billion. The central-
Bureau of the Public Debt,            from field finance offices             ized accounting and billing is
Department of the Treasury            worldwide. In the past, the con-       performed by the Air Force Ac-
Circular Number 3-80, the             solidation process lacked ade-         counting and Finance Center,
regulations governing United          quate time for appropriate             Denver, Colorado. Over 100
States Bonds, Series EE and           review and editing to ensure           procurement, logistical, transpor-
~was amended on Septem-               data accuracy. To minimize this        tation, and financial systems
ber 29, 1989, to require that in-     problem, the departmental sys-         within DOD interact to provide
terest payments on Series Iffi        tem has been enhanced. Im-             data to perform the accounting
bonds issued on or after October      provements include estab-              and billing mission.
1, 1989, whether issued in ex-        lishment of a message-driven sys-
change for Series E/EE bonds or       tem to advise field offices of         Military departments have imple-
upon reinvestment of matured          missing reports, use of file trans-    mented the Foreign Military
Series H bonds, be made               fer capabilities to receive incom-     Sales Integrated Control System
electronically via the Automated      ing reports, and application of        (FICS) which standardizes and
Clearing House (ACH) method.          automated error correction             controls input to the central ac-
The electronic payment of inter-      routines. [Dave Stegman, (317)         counting system. Input sources
est eliminates difficulties en-       542-2537]                              to the central system have
countered by bondowners                                                      decreased ten-fold from ap-
caused by late or missing checks,     The Army is developing an              proximately 70 to 7. In October
reduces operating costs for finan-    automated input system to              1988, Positive Transaction Con-
cial institutions, and benefits the   receive finance and accounting         trol software was implemented
Bureau by reducing the paper-         performance reports for field of-      at the central site to ensure edit,
work associated with handling         fices located worldwide. The           suspensing, and feedback of data
claims for missing checks and         report provides indicators of an       as input occurs. In March 1989,
responding to inquiries concern-      office's overall efficiency and        the central accounting system
ing late check payments. The in-      problem areas. By using a              was modified to establish cash ac-
troduction of this program has        telecommunications network,            counting records for over
also provided the Bureau the op-      the performance information            17,000 sales agreements. This
portunity to convert many exist-      will be received more timely and       provides compatibility between
ing owner accounts from check         the manual process of entering         accounting and billing records.
payments to electronic pay-           the information into the central
ments. [Arthur A. Klass, (304)        database will be eliminated. Im-
420-6515]



                                      57
                                    Chapter 3
                                    Agencies' Initiatives to Improve Financial Management




As of September 1989, out-of-       from DOE's primary accounting          record and track prompt pay-
balance conditions have been        system. Additionally, FIS was          ment activity. The system was
reduced from approximately          revised to include a direct link to    used successfully in fiscal year
$600 million to $67 million         Treasury's mainframe system for        1989 for reporting purposes
through the use of new data         the purposes of providing the          only. The agency is currently
analysis techniques and a dedi-     Federal Agency Financial               working on the policy changes
cated staff of reconcilers within   Reports (FAFR) and some of             needed to comply with the fiscal
the military departments and the    the supporting schedules. This         year 1990 regulations .. [Marvin
central accounting site. Design     link eliminated the requirement        A. Marks, (202) 682-5407]
and development is also under-      to access the GOALS (Govern-
way to replace the current          ment On-line Accounting Sys-           The Urban Mass Transportation
central accounting and billing      tem) for report submission, or         Administration, Department of
system which is non-compliant       the requirement to download            Transportation, automated the
with GAO internal control re-       data from our mainframe system         production of the TFS-2108
quirements.                         to a personal computer prior to        Year-End Closing Statement and
                                    submission to Treasury through         the SF-220 Statement of Finan-
The necessary structure and         GOALS. With this link,                 cial Condition and accompany-
standardization to ensure a total   Treasury is receiving the year-        ing schedules during calendar
fiscally responsible accounting     end financial statements directly      year 1989. The reports are
system for the Foreign Military     from DOE's primary accounting          produced directly from the
Sales program is in place and       system.                                general ledger. The SF-133
working. [Larry D. Crocker,                                                Report on Budget Execution,
(303) 926-7384]                     In addition to these systems           SF-225 Report on Obligations,
                                    changes, DOE has increased its         and SF-224 Statement of Trans-
As part of a continuing program     financial reporting and analysis       actions were previously
to review and improve its finan-    capabilities by undertaking a          automated. [Jim Bradley, (202)
cial system, the Department of      comprehensive program to               366-9748]
Energy has enhanced the finan-      produce, review, and analyze
cial reporting module of the        financial information utilizing a      The Department of
Financial Information System        traditional comparative financial      Transportation's Status of
(FIS) to facilitate Treasury        statement approach. The depart-        Federal Funds Report used to
report submissions. The FIS was     ment produced a set of draft           monitor cash drawdowns on
revised to produce the TFS-         financial statements for fiscal        Urban Mass Transportation Ad-
2108, Year-End Oosing State-        year 1988, based on the FAFR           ministration letters of credit
ment, directly from the             reports provided to Treasury;          (LOC) was automated during
mainframe application. The          and for fiscal year 1989, DOE          the calendar year. It is now
report is produced in accordance    developed pro forma con-               being produced directly from an
with Treasury specifications and    solidated financial statements.        automated LOC subsystem for
eliminates an error-prone and       [Jean Morgan, (301) 353-4521]          submission to the LOC
resource-intensive process pre-                                            recipient. The report shows, for
viously required to produce the     The National Endowment for             a given month and day, the
report. The current process al-     the Arts is using a database pack-     amount of funds disbursed to
lows report production directly     age to implement a system to           the LOC recipient. The recipient



                                    58
                                     Chapter3
                                     Agencies' Initiatives to Improve Financial Management




completes the form showing the       system will be expanded to in-         lack acceptable main-frame com-
day the funds were actually dis-     clude the new production plant         puter capabilities. User training
bursed and returns it for ex-        in Fort Worth, Texas, during fis-      is provided along with installa-
amination. [Bill Eargle, (202)       cal years 1990and1991. [Joel           tion. Efforts also continued to
366-9748]                            C. Taub, (202) 447-9845]               improve the systems to better
                                                                            meet the needs of the field of-
In fiscal year 1989, U.S. Cus-                                              fices. To date, applications are
toms Service, Department of          AUTOMATED                              operational as follows:
the Treasury, developed a sys-       APPLICATIONS
tem that enhanced internal con-                                              Application
trols over the reconciliation of     The Department of the Army
collections and deposits. Each                                              Travel                       208
                                     is implementing a new accounts
collection document processed        payable system for subsistence
through Customs Automated                                                   Accounts payable             136
                                     operations. The system, operat-
Collection System is related to a    ing on a minicomputer, was in-         Disbursing                    58
specific deposit. This enables       stalled at the Midwest C.Ommis-
Customs to reconcile collections     sary Region in June 1988 and at        [Steve Young, (317) 542-3160]
and deposits daily and identify      the Northwest Commissary
any shortcomings in collections      Region in June 1989. The sys-          New Department of Com-
or deposits that were not            tem matches contract data to           merce time and attendance
processed correctly through the      receiving reports and, using           software is programmed to cap-
system. As a result of these sys-    prompt pay and debt manage-            ture leave share data and allows
tem enhancements, since Decem-       ment criteria, computes payment        payment of Commerce
ber 1989, the Customs State-         amount, payment due date, and          employees overseas. Financial in-
ment of Accountability Report        workload statistics. Interfaces are    formation concerning these new
to the Financial Management          provided with the subsistence in-      programs, captured within the
Service (FMS) reconciles daily       ventory system and the general         National Finance Center system,
collections and deposit data with    accounting system. The Stand-          can be fed into the department's
the summary deposit data             ard Automated Voucher Ex-              seven accounting systems; this
reported to FMS. [Robert B.          amination System (SAVES) has           creates a more complete picture
Hamilton, Jr., (202) 335-1308]       improved the accounts payable          of department financial obliga-
                                     process at the offices that have in-   tions. This new software is now
The Treasury's Bureau of             stalled the system. [JoAnne            in the test phase, but should be
Engraving and Printing is con-       Boutelle, (804) 734-4552]              operational throughout the
tinuing to enhance its Manage-                                              department in the third quarter
ment Information System (BEP-        Microcomputer software con-            of FY 1990. [Sheila Fleishell,
MIS) with additional manage-         tinued to be installed in Depart-      (202) 377-1141]
ment reports with both on-line       ment of the Army field finance
and hard-copy reporting              and accounting offices to sup-         The National Institutes of
capabilities. The on-line improve-   port the functions of travel entit-    Health, Department of Health
ments will provide managers          lements, accounts payable, and         and Human Services, has imple-
with immediate manufacturing         disbursing. The software is for        mented an automated Travel
and financial data to make in-       small operations or those which        Management System (TMS).
formed decisions. The BEPMIS


                                     59
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




Phase One, Domestic Travel           The Department of the Inte-            plement a pilot Electronic Data
Order, of the TMS has been           rior's Office of the Secretary         Interchange (EDI) project.
completed. This phase enables        moved several administrative           Under the General Services Ad-
users to enter travel orders.        processes from personal com-           ministration teleservicing
These orders must be electroni-      puter-based electronic spread-         process (TSP) contract, services
cally approved by an approving       sheets to stand-alone database         are provided at no cost to federal
official. This approval generates    management systems to mini-            agencies and will be used for
the obligation accounting trans-     mize data entry and transfer           sending and receiving the EDI
action(s) and calculates and         costs. The General Services            docwnents. Following a pilot
schedules a travel advance. An       Administration's Simplified In-        project, other vendors will be
approving official can elect to      tragovernment Billing and Col-         asked to transmit and receive
override the calculation of the      lection (SIBAC) charges for sup-       business documents using EDI.
travel advance and either lower      plies and telephones are now dis-      The potential benefits of EDI
or not issue the advance. While      tributed and transportation ex-        are increased accuracy of data
accounting transactions to           penses are tracked, more ac-           (eliminates re-keying data),
record advances are generated by     curately, in one-fifth the time        reduction of paper, improved
the TMS for advances issued          previously required by macro-          customer-vendor relationships,
through Treasury, accounting         driven electronic spreadsheets.        and improved cash management.
transactions for the advances        Both current and historical data       Interior estimates that convert-
picked up from the cashier are       is maintained in electronic form       ing 10% of the procurement
processed through the Cashier        for reporting purposes and it is       transaction workload to EDI
Draft System (CDS). A more           readily transferrable to other         will result in an annual cost
direct interphase of the CDS and     software for analysis, e.g,            avoidance of $26,000. [Karen
TMS is currently under develop-      electronic spreadsheets.               Baker, (202) 208-5773]
ment.
                                     Government bills of lading are         In calendar year 1989, the
Phase Two, Domestic Travel           tracked from the time that they        Department of the Interior im-
Voucher, will allow clerical staff   are received through completion        plemented the Department of
to enter nominal information to      of all services obtained in about      the Treasury's micro-computer-
complete the travel voucher. It is   one fourth of the time pre-            based Electronic Certification
not a very complex procedure as      viously required. Both programs        System that allows federal pro-
long as the traveler provides        archive data electronically and        gram agencies to certify and
receipts. All calculations will be   are 100% compatible with the           transmit small volume payments
performed by the system; thus        leading commercial spreadsheet         to a mainframe host computer at
knowledge of travel regulations      and word processing programs.          the Washington Financial Cen-
would not be required to             This transportability assures a        ter. The microprocessor is
prepare travel vouchers. When        capability for meaningful trend,       equipped with a special security
fully operational, the TMS will      series, and program analysis.          module and software which ap-
save data entry time and             [Dennis Qark, (202) 208-5768]          plies an electronic signature to
facilitate submission and pay-                                              each payment and schedule. Cer-
ment of travel advances and          In calendar year 1989, the             tifying officers have a unique key
vouchers. [Sandra R. Walters,        Department of Interior com-            contained in a token which is
(301) 496-6871]                      pleted a large portion of the          used in generating the electronic
                                     preliminary work required to im-       signatures. Signature verification


                                     60
                                      Chapter 3
                                      Agencies' Initiatives to Improve Financial Management




and payment processing are per-       ment Data Statistics system.           sential in avoiding the possibility
formed automatically by the host      [David Nelson, (202) 724-              of duplicate payments. This en-
system. It is estimated that using    3069]                                  hancement replaced the need for
this system will result in a cost                                            most manual payments which re-
avoidance of $8,000 on an an-         The Department of Labor,               quired labor-intensive individual
nual basis in the Division of Fis-    Division of Coal Mine Worker's         typing,handling,andrecord-
cal Services. The benefits include    Compensation (DCMWC),                  keeping. [Joe W. Hammonds,
the elimination of manual             during 1989 enhanced its               (202) 523-6737]
voucher typing and the loss or        automated accounting system to
delay of vouchers in the mail.        permit the accounting section          The Department of Labor's
The system also provides posi-        staff using on-line data to issue      time and attendance reporting
tive control over payment dates       certain checks to beneficiaries,       system was moderniz.ed to
and protects against forged cer-      responsible mine operators,            eliminate the use of punch cards
tifications and altered vouchers.     medical providers, or other par-       as the reporting vehicle. The
[Teresa Ogburn-Evans, (202)           ties. The enhancement permits          new system uses locally-
208-3399]                             reissuance of checks previously is-    produced plain paper forms that
                                      sued but returned uncashed to          are then key-entered in the local
Justice's Federal Bureau of Inves-    the Department of the Treasury;        payroll offices to provide the
tigation is extending its Financial   it also permits issuance of checks     hours worked data necessary to
Management System to 58               to parties who paid DCMWC in           produce a paycheck. This was
major field offices. The first        error, who are entitled to reim-       the first of four phases planned
phase is the extension of the         bursement for overpayments, or         for time and attendance modern-
Budgetary Control System for          who otherwise are entitled to          ization; the next phases will con-
remote inquiry. This provides         special payment from DCMWC.            solidate all time and leave report-
on-line status of an office's dis-    Issuance of these checks can be        ing forms, decentralize editing
cretionary funds. The near-fu-        accomplished using on-line data        for time and attendance data to
ture plans are to provide the         relating to the check amount,          the local payroll offices, and
field offices with the capability     payee name, address, and iden-         eliminate reliance on forms with
for remote entry of requisitions,     tifier. Use of on-line data per-       direct timekeeper input of data.
inventory adjustments, vouchers,      mits reissuance of a check with a      [Ted Kontek, (202) 523-8184]
invoices, and other documents.        minimum of data-entry
[KevinP. Kaporch, (202) 324-          keystrokes, while allowing cor-        The National Science
5974]                                 rection of system data where           Foundation's (NSF) Division of
                                      necessary. Data to create pay-         Financial Management electroni-
In October 1988, the Bureau of        ments are processed onto a mag-        cally notifies travelers of past-
Prisons, Department of Justice,       netic tape which is routinely for-     due travel advance balances via
installed an automated small-pur-     warded to the Department of            E-Mail, thereby enabling
chase system in the central office    Treasury and processed for             prompt resolution of outstand-
on a trial basis. This system was     check issuance. Use of the spe-        ing advance balances. Conse-
designed to accommodate the           cial check function also permits       quently, the amount outstanding
purchase order format used by         all authorized users access to in-     has been significantly reduced.
the Bureau of Prisons and to pro-     formation on checks issued
vide procurement reports re-                                                 NSF has made operable the
                                      under this process, which is es-       ability for procurement staff to
quired by the Federal Procure-


                                      61
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




electronically update the account-   returned to disbursing through         perience rating. [Peter A. Lar-
ing system with purchase order       the ship's store and post office),     son, (312) 751-4590]
obligations. This enhancement        safekeeping and nearly 24-hour
enables the purchase orders to       access to personal funds. Ul-          The Tennessee Valley
update the financial database at     timately, any pay entitlement          .Authority(TVA)converted
the time of issuance, thereby        entered into the member's pay          from a manual to an automated
providing more timely and com-       account (travel, promotions,           process the maintenance of out-
plete financial information.         claims) can be downloaded to           standing checks for its Retire-
                                     the ATM system. Twenty-five            ment General Account. During a
NSF is distributing ADP main-        systems have been installed with       4-month period when there was
tenance charges to the NSF or-       an additional 23 scheduled by          an unusually large number of
ganizations for which the repairs    1990. Installations on as many         checks issued as early-retirement
were made. The information sys-      as 118 Navy ships are planned          incentives, internal processing
tems staff inputs individual char-   through 1992. [Sue Minnis,             costs were reduced by ap-
ges by benefiting organizations;     (202) 697-493 7]                       proximately $2,000. With a nor-
charges are recorded and the                                                mal level of outstanding checks,
result of this charge is trans-      The Railroad Retirement                the internal processing costs will
ferred to information systems as     Board's collection of contribu-        be reduced by approximately
a reimbursement of total ADP         tions from hundreds of railroad        $1,000 annually. [John F.
maintenance charges recorded,        employers to fund the unemploy-        Rymer, (615) 632-8144]
thereby resulting in real-time       ment insurance program has
recording of said charges and        been extensively automated             The Tennessee Valley
reimbursements. [Martin T.           using a database DOS package           .Authority has contracted with
Engle, (202) 357-7757]               operating on microcomputers.           the Federal Reserve Bank of
                                     The system maintains informa-          New York (FED) to act as fiscal
The Department of the Navy is        tion reported by employers,            agent for issuance of book-entry
currently installing automatic       verifies their computations of         securities. A condition of the
teller machines (ATMs) on ships      contributions due, generates           agreement required that TVA be
as part of a new Navy pay            management reports (including          a participant in ''FEDLINE II,"
delivery system. Not tied to a       key reports identifying                a personal computer-based
banking institution, the ATM         employers who have not filed,          electronic delivery system that
system aboard ship downloads         filed late, or underpaid or over-      provides access to the Federal
pay entitlement for each member      paid contributions), and               Reserve System services and in-
with an ATM account from the         generates follow-up letters to         formation. Subsequent to the
existing pay system. The             these employers. The system will       signing of the agreement, TVA
member's funds are then avail-       also generate contribution infor-      has issued power bonds totaling
able on demand without the nor-      mation for uploading to a              $8 billion in the FED's book
mal payday process of issuing        mainframe system being                 entry system. Payments to the
and cashing checks. Proven           developed to implement recent          underwriters of the power bonds
benefits to date include the         legislation converting railroad        were also transacted via FED-
elimination of pay lines and         unemployment insurance con-            LINE Il. The system is of par-
check processing, unnecessary        tributions from a flat rate to ex-     ticular significance in providing
cash movement (40 percent of                                                payees with immediate collected
funds disbursed on payday are                                               funds. Prior to the availability of



                                     62
                                      Chapter3
                                      Agencies' Initiatives to Improve Financial Management




FEDLINE II, TVA was re-               with delinquent advances. The          tern in which data is entered into
quired to deliver Treasury checks     TAS has a remote access                the CAIM system via terminals
to the local Federal Reserve          capability via local personal com-     instead of completing paper
Banlc, some 200 miles from            puters with appropriate telecom-       code sheets. This project was im-
TVA's headquarters, in order to       munications software to inquire        plemented in September 1987
provide immediate collected           about the status of a particular       and has been phased in on a sta-
funds to the payees. FEDLINE          account. Savings resulting from        tion-by-station basis. The com-
II has reduced the risks involved     the TAS are reduced research           pletion date was March 1990
with delivery of Treasury checks      and manual record-keeping              and the cost savings are an-
and provided a more reliable and      processing time. Managers and          ticipated to be $4.3 million. This
efficient operation. [Wilson          travelers benefit from remote ac-      project, which eliminates the use
Taylor ill, (615) 632-8133]           cess to the status of individual       of code sheets by providing on-
                                      travel accounts and the                line data entry capability, has
The Travel Accountability Sys-        simplified advance reports. [Mar-      demonstrated that the
tem (TAS), developed by the           tin Finkelstein, (202) 267-8954]       automated method reduces both
Department of Transporta-                                                    the processing time and the
tion, Federal Aviation Ad-            The Internal Revenue Service           transaction reject rate. [Paul Mul-
ministration (FAA), Eastern           (IRS), Department of the               ligan, (202) 233-5899]
Region accounting office, will        Treasury, is developing the Con-
be implemented FAA-wide               tracts Office Information System
during fiscal year 1990. The sys-     (COINS), which is a requisition        CASH AND CREDIT
tem resides on a Data General         tracking system operating in a
(DG) computer and interfaces          UNIX environment on a mini-            MANAGEMENT
with the Departmental Account-        computer. COINS produces pur-
ing and Financial Information         chase orders, delivery orders,         Credit Cards for Small Pur-
                                      and modifications; provides
                                                                             chases
System (DAFIS). Travel
vouchers are logged in to the         financial data for all completed       The Department of Commerce
TAS and automatically updated         actions in the Division of Con-        initiated a pilot program using a
by DAFIS when they are                tracts and Acquisition; and            commercial credit card for small
processed.                            generates management reports.          purchases. The bank card
                                      An automated document genera-          eliminates use of the Imprest
The TAS provides document             tion system (DGS) was ac-              Fund and SF 44 for making
tracking of travel vouchers in-       quired, which enables a contract       small purchases. The administra-
cluding statistical reports, inven-   specialist to rapidly produce          tive cost of using the bank card
tories of outstanding vouchers,       various types of contracts includ-     is much. less than the former
and average processing times for      ing all appropriate clauses; use       costs of preparing a purchase
both temporary duty and per-          of this system will be extended        order; controls in the program
manent change of station              to IRS regions. [Sidelle Wer-          make it less susceptible to fraud
vouchers. The system also             theimer, (202) 343-0538]               and abuse than Imprest Fund
provides a variety of travel ad-                                             and SF 44 actions. The pilot pro-
vance outstanding reports, a          The Department ofVeterans              gram was expanded to other
delinquency report with an            Affairs' Centralized Accounts          agencies and very successfully
automated analysis, and a system-     for Local Management (CAIM)            completed; in September 1989,
generated letter to employees         Code Sheet Elimination is a sys-       GSA took over the program and


                                      63
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




offered credit card services under   ducted a test at Fort Stewart,         small purchases through the es-
a Federal Supply Schedule.           GA, inMarch 1989. Test results         tablishment of a centralized, con.:.
                                     were positive, and the program         solidated system that will pro-
To encourage use of the bank         was rolled out to other installa-      vide the means to reconcile and
card, the Department of Com-         tions in October 1989. As of           acknowledge the receipt of all
merce established management         March 1990, 505 cards had been         goods and services purchased
by objectives goals for all Com-     issued to purchase goods and ser-      under the plan. [Norman Hall,
merce bureaus to reduce the          vices valued at $372,000. For-         (202) 732-5564]
number of purchase orders and        mally, payments for these pur-
SF 44 actions by 5 percent           chases were made by an imprest         The Department of Interior,
during fiscal year 1989. The goal    fund cashier or a contracting of-      Bureau of Reclamation (BOR),
was exceeded by a 9 percent          ficer who issued a contractual         participated with the Depart-
reduction in purchase orders and     document which was processed           ment of Commerce in the bank
a 32 percent reduction in SF 44      through commercial accounts.           card pilot program beginning
actions. During fiscal year 1989,    The new process decreases the          October 1987. The Acquisition
bank cards were used to make         document flow through commer-          and Assistance Division recently
66,3 75 purchases totaling ap-       cial accounts sections and saves       implemented this program on a
proximately $10.4 million.           state and local taxes. [Joan Sim-      bureauwide basis on October 1,
Through the use of the bank          mons, (317) 5 72-2647]                 1989. Currently, four regions in
card, cost avoidance savings for                                            the BOR are participating with
last year have been calculated at    The Federal Maritime Commis-           the rest to follow. The bank card
$995,000. [Sonya G. Stewart,         sion has initiated an effort to        system authorizes individuals to
(202) 377-4299]                      limit travel advances to manage        use "government specific" credit
                                     cash more effectively. Also, per-      cards to make purchases for
The Department of Defense's          manent travel advances have            items and services that meet
Defense Logistics Agency             been recalled from individuals is-     specified dollar amount restric-
(DLA) tested the IMPAC credit        sued government charge cards.          tions. The use of bank cards is a
card at the Defense Contract Ad-     [Karon E. Douglass, (202) 523-         cost-effective substitute for Im-
ministration Services Region         5770]                                  prest Funds, Blanket Purchase
(DCASR) Atlanta in November                                                 Agreements, and Standard Form
1988. In May 1989, the pro-          In January 1989, the General           44s. While the cost savings for
gram was expanded agencywide.        Services Administration                the Bureau are not yet available,
The card allows DLA personnel        awarded a contract for                 use of the bank card has im-
to make purchases, reduces lead      governmentwide commercial              proved cash management and
time for those purchases, and        credit card services. These credit     funds control, shortened acquisi-
maintains a strong level of inter-   cards will be used for the             tion lead-time for small pur-
nal control. [George Keilk:opf,      authorized purchase of expend-         chases, provided immediate pay-
(703) 274-6222]                      able goods and services costing        ments to vendors, and required
                                     $1,000 or less. The policies and       only one monthly payment
In October 1989, the Depart-         procedures manual relating to          rather than a payment for each
ment of the Army began using         the card has been developed for        purchase. The use of bank cards
credit cards to make purchases       departmental implementation.           has proven successful in simplify-
of less than $25,000. It con-        The use of credit cards will im-       ing the acquisition and payment
                                     prove the agency's control over        process in addition to providing


                                     64
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




adequate controls and review to      quarterly reviews on compliance        receipt of monthly statements
assure that individual actions are   with the Act by using statistical      and detailed accounting transac-
in compliance with acquisition       sampling methods, and imple-           tions. In addition to earning a
regulations. [John Cunningham,       mented a prompt payment incen-         discount on administrative Inter-
(202) 236-3757]                      tive awards program for pay-           national Merchant Purchase
                                     ment clerk personnel. [Edward          Authorization Card
The Justice Management               Dolan, (202) 272-5700]                 (I.M.P .AC.) charges, the im-
Division, Department of Jus-                                                plementation of the interface
tice, was the first federal par-     The National Endowment for             saves accounting document
ticipant in the new General Ser-     the Arts has been very active in       review and coding time while
vices Administration,                setting up procedures to process       providing an automated audit
governmentwide credit card pro-      payments relating to the use of        trail of all credit card transac-
gram. This program allows            the credit card for small pur-         tions. [John W. Roberts, (202)
employees with delegated             chases. The Endowment took             366-0318]
procurement authority to make        part in the Department of Com-
small purchases of supplies and      merce pilot program and ar-            Credit Cards for Collection
services with a credit card. Use     ranged for Endowment offices
of the credit card reduces the       to be trained in the use of the        The Department of Commerce
number of procurement actions,       credit card program. Currently,        expanded its acceptance of per-
permits consolidation of multi-      the Endowment is part of the           sonal credit cards when collect-
ple vendor invoices into a single    GSA contract and advises other         ing funds owed from the public
payment, and expedites vendor        small agencies on the program.         to the federal government.
payments. The pilot program          [Marvin A. Marks, (202) 682-           During fiscal year 1989, four ad-
was implemented in March             5407]                                  ditional Commerce bureaus
1989. The number of credit card                                             began accepting credit cards
holders is expected to increase      The Department of Transpor-            from the public which con-
substantially in the future. [Ed-    tation began making small pur-         tributed to the department's
ward Dolan, (202) 272-5700]          chases using credit cards in           $3 .2 million in collections by
                                     August 1989. Under the GSA             credit cards. [Sonya G. Stewart,
During the past year, the            contract, federal agencies are         (202) 377-4299]
Department of Justice, Justice       authorized to acquire goods and
Management Division, has             services under $25,000 with the        In October 1986, Treasury's
achieved several milestones in       credit card. The department has        U.S. Customs Service expanded
regard to enhancing compliance       implemented the credit card pro-       its credit card program to in-
with the Prompt Payment Act.         gram in several field offices of       clude acceptance of another
The Division has issued detailed     the Federal Aviation Administra-       credit card at major airports for
written guidance and provided        tion and the United States Coast       payments made by travelers
training to administrative and       Guard.                                 returning to the United States.
payment personnel. It has also                                              The program has been expanded
revised the payment audit proce-     The Office of the Secretary,           under the Financial Management
dures and input documents to in-     Department of Transporta-              Services' (FMS) credit card ser-
clude critical additional informa-   tion, implemented in February          vices master agreement as of Oc-
tion relative to Prompt Payment      1989 an electronic interface with      tober 1987. Customs has imple-
Act compliance, conducted            the bank for the electronic            mented a cash register network



                                     65
                                    Chapter3
                                    Agencies' Initiatives to Improve Financial Management




which includes automatic credit     check production and reduce            ture further reduces cash holding
card authorization and report-      shipboard cash requirements.           and handling requirements on-
ing. As of January 1990, 70 loca-   The first system was installed on      board ship. [LCDR Thomas
tions comprised the cash register   the USS Hunley in August               Snyder, (202) 695-2883]
network for the automatic credit    1988. By the end of September
card authorization and reporting    1990, 52 ships will have ATM           In September 1989, the Federal
system and 20 more locations        systems onboard. These ships           Aviation Administration,
are planned to join the network     will generate over $6 million in       Department of Transporta-
by the end of fiscal year 1990.     annual savings in labor cost by        tion, became the first federal
[Richard Trent, (202) 566-          reducing paylines, avoiding inter-     agency to use a debit card for
8256]                               est on Treasury borrowings, and        replenishing cash at several im-
                                    eliminating Treasury check             prest fund sites under a pilot pro-
Debit Cards                         processing costs. Installations for    gram funded by the Financial
                                    118 ships are scheduled through        Management Service (FMS).
The Department of Com-                                                     The United States Coast Guard,
merce, in conjunction with the      1992.
                                                                           also a participant in the pilot pro-
Department of the Treasury, has     The system features an                 gram, began making imprest
developed a pilot program to        automated interface with the           fund cash replenishment by
issue debit cards to imprest fund   shipboard pay systems. This in-        debit card during the first
~ashiers. By using debit cards,
                                    terface downloads net pay data         quarter of 1990. The pilot pro-
rmprest fund cashiers can obtain    into a customer's ATM account,         gram enables imprest fund
cash from bank automated teller     releasing the member's net pay         cashiers to withdraw cash at
machines to replenish their fund    into his/her account at midnight       automated teller machines
balances rather than by the check   on payday. The ATM system of-          (ATM) connected to a bank net-
processing method currently         fers many of the same features         work to replenish their imprest
used. If successful, the program    found in a commercial bank's           funds. The network services over
will reduce the cash needed by      ATM system except, in this case        26,000 ATM locations in over
cashiers for financial transac-     . accesses the member's pay ac- '
                                    1t                                     5,000 cities throughout the
tions. The pilot began in January   count instead of his bank ac-          United States and Canada.
1990 with six cashiers from the     count. A member may withdraw
National Oceanic and Atmos-         funds or make an account               Under the pilot program, im-
pheric Administration participat-   balance inquiry 24 hours a day         prest fund cashiers are issued
ing. [Sonya G. Stewart, (202)       at any of the ATM locations on         debit cards from a contractor.
377-4299]                           the ship (between two and eight,       Each cardholder is issued a uni-
                                    depending on ship size). An            que personal identification num-
The Department of the Navy is                                              ber (PIN) and is limited to cash
pioneering the use of debit cards   added feature of this program
                                    utilizes point-of-sale terminals in    withdrawals of $1,000 each busi-
with automated teller machines                                             ness day. When a cash with-
(ATM) on ships at sea. The          the ship's retail outlets and the
                                    ship's post office. The same           drawal is made by a cardholder
automated teller machines at sea                                           at an ATM connected to the net-
program is an automated pay         debit cards are accepted in these
                                    facilities, thus adding more           work, the contracting bank's ac-
delivery and safekeeping system.                                           count is charged for the amount
As a subset of the Navy's direct    utility and savings to the ATMs
                                    at sea program. This added fea-        of cash withdrawn. The bank is
deposit system, ATMs eliminate                                             then reimbursed daily by agen-


                                    66
                                    Chapter 3
                                    Agencies' Initiatives to Improve Financial Management




cies through the Letter-of-Credit   The Department of Transpor-            major project components of
FEDLINE System for the total        tation has contracted for              CMS are the Check Handling
amount of funds withdrawn by        monitoring and review of un-           Enhancement and Expert Sys-
its imprest fund cashiers. The      employment compensation                tem (CHEXS), the District
debit card eliminates imprest       benefit compliance. Key services       Remittance Processing System
fund replenishment by Treasury      provided by the contractor in-         (DRPS), and the Electronic
check, which accelerates imprest    clude verifications of claimants'      Deposit Processing System
fund replenishment by 2 to 5        employment, processing of              (EDPS).
business days. [Rick Polhamus,      protests and appeals, and verifica-
(202) 366-5626]                     tion of detailed state benefit         CHEXS will be installed at the
                                    data. Once an unemployment             ten IRS service centers and will
Other Cash Management               claim is submitted by a state, the     employ Optical Character Recog-
Efforts                             department has only 10 calendar        nition (OCR) and image process-
                                    days to review and submit an ap-       ing technologies. The system
Inmates of the Department of
                                    peal for claims which the depart-      will reduce paper check process-
Justice's Bureau of Prison
                                    ment contests are ineligible for       ing burdens enabling a timely
(BOP) institutions who owe
                                    unemployment compensation.             deposit of remittances. Labor
fines or special assessments or
                                    During this 10-day review              costs will be reduced and deposit
who are required to make restitu-
                                    period, the contractor verifies        remittance time frames will im-
tion are responsible for making
                                    that the claimant has been pre-        prove. Installation is scheduled
payments while incarcerated. A
                                    viously employed by the depart-        for October 1991, to be opera-
mechanism has been imple-
                                    ment, reviews the reason for           tional by 1993.
mented which electronically
transfers funds to the Depart-      separation, and submit appeals         DRPS will be installed at 46
ment of Treasury from inmate        for contested claims. In the first     IRS district offices and will in-
accounts at federal institutions.   9 months of calendar year 1989,        clude the addition of program-
The mechanism also electronical-    the contractor reduced the             mable check encoder/endorsers
ly transmits payment informa-       department's unemployment              and software interfaces to cor-
tion to the Justice Management      liability costs by approximately       rect IRS systems. In addition to
Division which credits funds to     $830,000. [Rosie Roberson,             improving paper check process-
appropriate agencies and notifies   (202) 366-0318]                        ing time frames, the system will
United States Attorney Offices                                             reduce labor and bank process-
                                    Treasury's Internal Revenue Ser-
of payments for posting to debt-                                           ing costs. The initial installation
                                    vice has developed the Cash
or accounts. Benefits of the en-                                           of DRPS will be November
                                    Management System (CMS) to
hancement are that fewer checks                                            1990, the system will be opera-
                                    provide for the integration and
are scheduled by BOP institu-                                              tional by 1991.
                                    modernization of its remittance
tions and issued by the Treasury,
                                    processing activities. The CMS         EDPS will employ Electronic
United States Attorney Offices
                                    project bundles several remit-         Funds Transfer (EFT) technol-
no longer process and deposit
                                    tance initiatives under one            ogy to facilitate the receipt and
checks as done formerly, and
                                    umbrella to provide a logical, in-     processing of all remittance trans-
cash management is improved.
                                    tegrated approach for receiving,       actions in a paperless environ-
This program was fully imple-
                                    validating, balancing, and post-       ment. The system will enable
mented in October 1989.
                                    ing remittance transactions. The       direct taxpayer input of remit-
[Steven Benda, (202) 272-6326]



                                    67
                                      Chapter 3
                                      Agencies' Initiatives to Improve Financial Management




tance transaction data via various    payroll system's electronic funds      ment of filing fees and the begin-
electronic mechanisms. EDPS           transfer information to the            ning design of an automated fee
will improve efficiency in remit-     Federal Reserve Bank. This sys-        tracking, reporting, and accounts
tance transaction processing          tem, called FEDLINE, elimi-            receivable system. The SEC's fee
while also improving federal          nates the need for overnight mail      volume consists of 43,000 an-
government financial operations       of a magnetic tape to the Federal      nual payments of differing
by accelerating the credit of         Bank and provides better service       amounts for required and elec-
funds to the Treasury General         to participants. [Judy Beal,           tive reports from about 15,000
Account. The EDPS prototype           (301) 878-5302]                        companies. Filings are received
will be operational in April,                                                by mail, over-the-counter at the
1991. [Kathy Jantzen, (202)           On November 14, 1989, the              SEC home office, or electronical-·
723-3514]                             Government Printing Office             ly through the agency's paperless
                                      (GPO) implemented Electronic           electronic filing "EDGAR" sys-
Electronic Payments                   Funds Transfer-Direct Deposit          tem. Fees (and fee data) are
                                      (EFT) for employees' pay and           received over-the-counter, by
Electronic Funds Transfer (EFT)       saving allotments. Employees           mail, and, in growing numbers,
During 1988, the U.S. Army's          were given the option of par-          electronically through a lock-box
Finance and Accounting Center         ticipating in EFT or continuing        depository. Future fee deposits
modified its Standard Civilian        to receive their paychecks at          will also be collected by credit
Payroll System to provide users       their work stations. Over 2,000        card through the "EDGAR" sys-
the capability to use electronic      of GPO's more than 5,000               tem. Now in design, the
funds transfer (EFT) to make          employees elected the option of        automated fee tracking, report-
direct deposits to financial in-      having their pay go directly to        ing, and accounts receivable sys-
stitutions. Previously, system        their financial institutions.          tem will interface with the
users had to rely on composite        Saving allotments, which num-          agency's accounting system to
checks to make direct deposits.       bered over 4,000, were also con-       generate daily deposit tickets,
Accelerated efforts were made by      verted to EFT, bringing the total      electronically record and match
civilian payroll offices during       payments that are made                 filings and fees within "cor-
1989 to implement EFT. To             electronically to financial institu-   porate accounts," maintain ac-
date, EFT is operational at 53 of     tions to over 6,400 biweekly.          counts receivable records,
the Army's 70 payroll offices         [DuWayne Brown, (202) 275-             produce required billing notices,
which use the standard system.        2796]                                  and perform periodic reconcilia-
Use of EFT reduces the costs as-                                             tion. [Henry Hoffinan, (202)
sociated with producing com-          In 1989, the Securities and Ex-        272-2639]
posite checks and eliminates the      change Commission (SEC) con-
risks involved in mailing checks.     tinued to improve its collection       Since fiscal year 1986, the
[Bob Cash, (317) 542-3213]            of more than $200 million in an-       Department of Transportation
                                      nual fee revenue through               (DOT) has had an active cam-
The U.S. Army Information             electronic funds transfer (EFT)        paign to increase participation in
Systems Command has installed         and a Treasury sponsored lock-         the direct deposit/electronic
a data transfer system utilizing a    box depository. Accomplish-            funds transfer (DD/EFT) pro-
microcomputer, modem, and             ments included a favorable             gram. Within the past 3 years,
                                      review of the acceptance of filer      the department has added ap-
data lines to transfer the civilian
                                      credit card charges for the pay-


                                      68
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




proximately 38,000 military and      The Department ofVeterans              mechanism. to an ACH
civilian personnel onto              Affairs' DD/EFf direct pay in-         Sm.artlink payment mechanism.
DD/EFf. During this period the       itiative was installed in May          operated by HHS' payment
DOT's DD/EFf participation           1989. This system. provides            m.anagem.ent system.. This new
rate has increased from. 45 to 84    Treasury with a monthly                process requires the contractors
percent, regarded as one of the      DD/EFf payment tape in lieu of         to request and obtain approval
best in the federal governm.ent.     cyclical payment changes. By           for the desired amount of funds
[Rick Polhamus, (202) 366-           providing a direct payment tape,       needed to pay administrative
5626]                                the issuance of over $20 million       costs. The letter-of-credit pay-
                                     in erroneous payments will be          ment mechanism. allowed these
Treasury's Office of Thrift Su-      prevented annually. The major          contractors to draw funds at will
pervision (OTS) is currently         benefits are reduction of overpay-     without obtaining any prior ap-
working on incorporating the         ments and their associated collec-     proval, permitting, at rim.es,
Treasury Vendor Express and          tion efforts, and improvements         som.e m.edicare contractors to
Personnel Express electronic         in system. efficiency. In addition,    draw down funds in excess of
transfer programs into its           the Department of the Treasury         their approved administrative
automated system.. This incor-       will realize savings since they no     cost budgets.
poration should be im.plem.ented     longer have to maintain the
by the sum.m.er of 1990. The         VNs DD/EFf payment master              On April 1, HCFA began a pilot
headquarters alone potentially       file and its related program. ap-      to demonstrate that the con-
could save over $3,000 per year      plications. Phase II will increase     tractors' cash needs could be m.et
with the cooperation of vendors      the DD/EFf participation rate,         via the Sm.artlink process. The
and OTS travelers, with further      thus increasing the benefits           use of Sm.artlink improved cash
savings provided in OTS dis-         derived from. the system. im-          m.anagem.ent by insuring that
tricts. This savings amount will     provements in Phase I. Som.e in-       cash outlays do not exceed a pre-
increase to approximately            itiatives under consideration for      established outlay plan. The con-
$13,000 annually when the field      Phase II are Electronic Benefit        tractors use a personal computer
offices are added to the system.     Services, Simplified DD/EFf            to telecom.m.unicate requests for
this January. [Alvin Shelton,        Enrollm.ent, and International         funds. Approval is norm.ally ob-
(202) 906-6236]                      DD/EFf. The VA hopes to                tained automatically by the pay-
                                     begin this phase som.etim.e in         ment m.anagem.ent system. if all
In February 1989, Treasury's                                                the cash m.anagem.ent and pay-
                                     1990. [Paul Mulligan, (202)
Office of Thrift Supervision         233-5899]                              ment authorization checks are
(OTS) elim.inated paycheck                                                  m.et. Payment is credited to the
delivery to the worksite which in-   .Automated Cleanng H<>USe              contractor's bank account the fol-
creased the average 1988                                                    lowing work day.
                                      (ACH)
Electronic Funds Transfer
(EFf) usage by 16%. This             The Health Care Financing Ad-          All of the m.edicare contractors
directly increased the cash flow     ministration (HCFA) of the             were converted to the Sm.artlink
savings by approximately             Department of Health and               payment mechanism. by the end
$5,000, as well as reducing the      HumanServices(HHS)has                  of fiscal year 1989. HCFAex-
administrative work associated       switched m.edicare contractors         pects over $1.4 billion to be paid
with manual check distribution.      from. the Federal Reserve Bank         to contractors through this
[Michael Bajos, (202) 906-7074]      letter-of-credit payment               new process during fiscal



                                     69
                                     Chapter3
                                     Agencies' Initiatives to Improve Financial Management




year 1990. [Gerald Hankin,           ing account when the pilot ends.       grantees (for those not on letter
(202) 646-5774]                      The bank has agreed to waive           of credit), employee travel pay-
                                     for an additional 12 months its        ments, and vendors. UMTA's
Social Security Administration       normal fees and the minim.um           goal is to become a check:less of-
(SSA), Department of Health          balance requirements for check-        fice. All grantee and employee
and Human Services, imple-           ing accounts. The SecureCard           travel payments, previously paid
mented the SecureCard pilot on       pilot is voluntary and provision       by check, and the majority of
November 1, 1989. For the first      was made for a maximum of              vendors are being paid by ACH.
time, a federally-administered       1,000 participants. Approximate-       UMTA was successful in achiev-
monthly benefit was paid             ly 100 SSI recipients have             ing its goal of having the remain-
through a commercial bank card       elected to participate thus far        ing vendors converted by March
system. Targeted at individuals      and a second mailing to en-            31, 1990. Also, an effort to in-
previously paid by check, par-       courage enrollment for those           crease participation in electronic
ticipating Social Security In-       eligible was completed in              funds transfer (EFT) for
surance (SSI) recipients were        January. [William Farrell, (301)       employee salary payments from
able to withdraw their monthly       965-2411]                              87 percent to 100 percent was
benefits from automated teller                                              accomplished. [Charles Fer-
machines and point-of-sale ter-      The Department of Housing              guson, (202) 366-9748]
minals using the SecureCard.         and Urban Development
                                     (HUD) continues its on-going           The U.S. Customs Service,
SecureCard is being funded by        pursuit and support to the             Department of the Treasury,
Treasury's Financial Manage-         Treasury's Automated Clearing          has implemented an Automated
ment Service because of its          House (ACH) Direct                     Commercial System (ACS).
desire to save resources by shift-   Deposit/Electronic Funds Pro-          Through it, brokers and im-
ing payments to individuals          gram. In fiscal year 1989, HUD         porters can file merchandise
from checks to electronic proces-    extended its previous efforts of       entries using the Automated
ses. SSA agreed to jointly           mass conversions from paper            Broker Interface (ABI). TheABI
develop and test the alternative     check to direct deposit by con-        Daily Statement process enables
payment delivery method be-          verting another block of annual        users to make a single payment
cause of the potential to improve    repetitive payments amounting          for estimated duties covering
services to SSI recipients who do    to $1.7 billion. The estimated         multiple entries. ACS has been
not have bank accounts and can-      yearly savings on the conversions      enhanced to enable ABI daily
not take advantage of the safety     amount to $3.4 million. New            statement users to make
and convenience of direct            programs will be added to this ef-     Automated Clearing House
deposit. Individuals who are         fort in fiscal year 1990. [Gail B.     (ACH) payments which are
paid electronically are 16 times     Dise, (202) 755-1757]                  processed by a bank. The ACH
less likely to experience a prob-                                           reduces costs associated with
lem with their payment being         During the past calendar year          both Customs and Treasury
lost, stolen, or not received.       the Department of                      General Account (TGA) check
SecureCard participants also         Transportation's Urban Mass            processing.
benefit because they will not be     Transportation Administration
paying check cashing fees during     (UMTA) mandated the use of             Effective January 2, 1990, the
the 12 months covered by the         the Automated Clearing House           ACH process was expanded to
pilot and may open a new check-      (ACH) method of payment for            include quota merchandise



                                     70
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




entries. ACH is now mandatory        renew a subscription to 1 week.        passport application is for-
for ABI daily statement quota        [DuWayne Brown, (202) 275-             warded to the appropriate agen-
entries. The process was also        2796]                                  cy for citizenship adjudication
modified to eliminate the need                                              and passport issuance. As a cash
for a separate interface between     The Department of Justice es-          management technique, this pro-
the ABI user and the bank. To        tablished a lockbox facility to        cedure provides for speedier
date, a total of 90 companies        receive remittances for applica-       deposit of interest earning
have applied for ACH. Current-       tions and petitions, Freedom of        monies to the federal account
ly, there are 30 core companies      Information Act and Privacy Act        and enhanced internal controls.
using ACH with approximately         requests, cash bonds, and miscel-      [Charles Koeneman, (202) 875-
$2.5 million in daily ACH trans-     laneous collection. Use of the         5610]
actions. During January 1990,        lockbox will expedite deposits
the ACH total cash flow was          with the Department of the             A lockbox arrangement has been
$12 million. The ACH process         Treasury, permit deposit data          established by the Tennessee
will be expanded in the future to    keyed by the bank to be entered        Valley Authority (TVA) with a
add bill and excise tax payments.    into the accounting system on a        commercial bank to facilitate
[Ed Matthews, (202) 535-5066]        daily basis, ensure agreement of       timely deposit of receipts from
                                     accounting system and Treasury         power sales. Once the system
Lockbox                              deposit data, and assure the           has been proven effective with
                                     crediting of remittances to the        the power sales, all receipts cur-
The Superintendent of Docu-          proper accounts. The lockbox           rently mailed to TVA will be
ments, Government Printing           was implemented on July 1,             directed to lockbox addresses in
Office (GPO), began using lock-      1989. The anticipated savings          Chattanooga, Johnson City,
box systems in 1989 to improve
                                     for fiscal year 1990 is $83,000.       Knoxville, Memphis, or Nash-
their collection and processing
                                     [Edwin Fost, (202) 514-302 7]          ville. Nashville and Johnson City
of customer orders. Riding the
                                                                            have been added as collection
Treasury Department's contract,      The Office of Passport Services,       sites with a potential savings to
the first lockbox application was    Bureau of Consular Affairs,            TVA of $116,000 annually. In-
implemented in April 1989 with       within the Department of State         ternal processing costs will be
a large volume of book orders re-    has successfully tested a lockbox      reduced by approximately
quired to be processed for a few     project designed to improve cash       $10,000 annually. [John F.
months. The sale of IRS tax          management. The lockbox                Rymer, (615) 632-8144]
forms and subscription renewals      project has been successful at
were placed on a lockbox sys-        passport agencies in Chicago,          The Department of the
tem. Renewal forms were              San Francisco, and Washington,         Treasury, Office of the Comp-
redesigned for the lockbox sys-      D. C. Passport applications and        troller of the Currency (OCC),
tem and not only does this ex-       accompanying fees taken by ac-         expanded its use of the lockbox
pedite collection of the monies,     ceptance agents in the three           system to include collection of
but the renewal data is electroni-   regions serviced by these office       payment for unused airline tick-
cally captured by the lockbox        are being mailed to the bank           ets. Approximately 400 of these
bank who submits this informa-       lockbox depository in Pitts-           transactions are processed each
tion electronically to GPO's com-    burgh, Pennsylvania. The money         month. Use of the lockbox sys-
puter for fulfillment. This has      is deposited to a federal account      tem increased the availability of
cut the average time required to     within 24 hours, and then the          funds and decreased OCC's



                                     71
                                      Chapter3
                                      Agencies' Initiatives to Improve Financial Management




work load by automating the           Thi-rd Party Drafts                    used to manage and control
recording of individual transac-                                             drafts issued and cleared within
                                      The Social Security Administra-
tions. [Robert L. Teets, (202)                                               the system. The system is cur-
                                      tion (SSA), Department of
447-1721]                                                                    rently operational at IffiS head-
                                      Health and Human Services
                                      conducted a pilot to test the ~e
                                                                             quarters and regional offices.
During calendar year 1989,                                                   [William Shelton, (202) 245-
                                      of Third Party Drafts in lieu of
Treasury's Internal Revenue Ser-                                             8085]
                                      imprest funds. The pilot was a
vice .converted the remaining 6       complete success and the results
service centers to the lockbox,       are currently being used to            The Department of Interior's
processing Forms 1040ES. In           develop and implement a plan           Finance Division is evaluating a
1989 the commercial lockbox           for SSA-wide use of drafts. The        pilot test by the Bureau of
operations processed over 29          drafts are used to pay for small       Reclamation of the Treasury
million payment documents             purchase, medical and financial        Department's Third Party Draft
(Forms 1040ES) and deposited          evidence, local travel, monthly        (Il>D) cash management initia-
over $5 7 billion in revenue          telephone service, emergency           ttve as an alternative to the tradi-
receipts. Beginning on April 1,       salary payments, travel advances       tional cash mechanism for im-
1990, a bank began receiving          and emergency beneficiary pay- '       prest fund transactions. Informal
and processing Forms 1041ES           ments. Use of drafts improves          feedback supports Treasury's
for all taxpayers who make es-        ~ash management, security, and
                                                                             predicted ease of use by the
timated fiduciary tax payments        mternal controls; they offer           cashiers, with elimination of
(except magnetic page filers).        greater administrative con-            cash shortages/outages and the
The Austin Service Center will        venience and flexibility. Current-     potential for a significant reduc-
be resp~nsible for. processing the    ly, 7~ offices are participating in    tion in the balance of cash out-
magn~ttc transaction tapes and                                               standing. [Marilyn Barclay (303)
                                      the pilot. In early 1990, imprest
r~olvmg any account/deposit           funds totaling $2 million in           776-8846]
discrepancies. It is estimated that   1,400 SSA offices will be con-
the bank will receive approxi-        verted to Third Party Drafts.          Expansion of the Generic Third
mately 165,000 payment                [Gerry Glaser, (301) 965-0533]         Party Draft system will continue
vouchers each quarter. The lock-                                             throughout the Department of
box operation is a process                                                   Justice. Use of drafts reduces
                                      During 1989, the Department
whereby an agreement is made                                                 the need for imprest funds or
                                      ofHealth and Human Services
between a commercial bank and                                                cash held outside of the Depart-
                                      (IIBS) developed and imple-
a government agency to have the                                              ment of the Treasury (Treasury).
                                      mented a personal computer-
bank process certain payments.                                               The Treasury cited the Depart-
                                      based third party draft system to
The bank receives payments                                                   ment of Justice as having a
                                      be used in lieu of cash for im-
directly from the taxpayers,                                                 model draft system. It particular-
                                      prest fund transactions. As a
processes the payment docu-                                                  ly applauded the automated sys-
                                      menu-driven payment system
ment, and deposits the funds                                                 tem, on-line funds control, draft
                                      third party drafts enable the '
directly into the Treasury's                                                 policy manual, and ongoing
                                      agency to write checks and
General Account. The use of a                                                compliance reviews. The volume
                                      generate standard general ledger
~ockbox reduces mail, process-                                               in the Generic Third Party Draft
                                      transactions in a single process.
mg, and availability "float."                                                system has nearly doubled in the
                                      The system provides a number
[Tom Kelleher, (202) 233-1143]                                               first two years. In 1988, 66,042
                                      of query and hard copy reports
                                                                             drafts were issued for the


                                      72
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




amount of $14,266,713. In            card for travel. All CONUS loca-       elude reduced financial burden
1989, 120,000 drafts were is-        tions were participating at the        to the employee (airline tickets
sued for the amount of               close of 1989. Cards are used for      are no longer charged to per-
$26,200,000. [Lee Lofthus,           permanent change of station            sonal credit cards) and reduced
(202) 501-7868]                      costs. Annual savings ap-              administrative processing costs
                                     proximate $800,000. The Army           associated with processing and
In July 1989, the Department         is implementing a centrally-           payment of government travel.
of State implemented the             billed charge account for the pur-     [Tim Hamilton, ( 303) 236-
Treasury initiative of Third Party   chase of airline tickets. All          0404]
Drafts for this service for its      schedule airline ticket offices and
Foreign Service Institute. The       the 5th Army are now operation-        The Justice Management
Institute's transaction volumes in   al; all CONUS installations are        Division, Department of Jus-
fiscal year 1989 and the forecast    scheduled to be operational by         tice, is implementing a travel ac-
for fiscal year 1990 are as fol-     January 1991. [Joan Simmons,           counts payable module. This en-
lows:                                (317) 572-2647]                        hancement will provide im-
      Third Party Drafts,                                                   proved tracking of employee
    Foreign Service Institute        The Department of the Navy             travel vouchers throughout the
              Number                 has reviewed its travel proce-         payment process and provide
                   of                dures and updated travel policy        quickerreimbursement.Itwill
               Drafts      Dollar    for claims processing, claimant        permit on-line data entry and
               Ismtd        YahK     actions, and outstanding advan-        query of voucher processing
July 1989        104     $18,473     ces. As a result of this action, the   status from remote sites. The
                                     Navy discovered that five per-         modules will have the capability
August 1989       255      51,416    cent of travel advances were over-     of being used for centralized or
                                     advanced. Cash management              decentralized travel processing.
Sept. 1989        177      32,622    savings approximate $1 million         Implementation is expected on a
                                     annually. The Navy also imple-         pilot basis in June 1990. [Ed-
FY 1989,                             mented the use of the gover-           ward Dolan, (202) 501-6600]
4thqtr.           536     102,511    ment-supported travel card in
                                     August 1989. Approximately             The National Endowment for
                                     $820,000 in annual savings is          the Arts is working on the im-
FY 1990,
estimate         3000   $600,000     achieved through the use of the        plementation of a DATABASE
                                     cards. [Brian White, (202) 697-        database tracking system for
In fiscal year 1990, the depart-     4422]                                  travel. Policy and procedures are
ment will contract for Third                                                being developed before full im-
Party Drafts in other domestic       The Bureau of Mines, Depart-           plementation occurs. Testing has
locations. [Charles Koeneman,        ment of the Interior, has in-          been very successful in helping
(202) 875-5610]                      itiated a program to implement         employees realize the need to
                                     a credit card program for the          clear advances on a timely basis.
Travel                               Government Transportation Sys-         The DATABASE database sys-
                                     tem bureauwide. This program           tem tracks the authorization, ad-
The Department of the Army           provides for airline tickets to be     vance, and vouchers. It calculates
has implemented the use of the       charged to a Bureau credit card.       any outstanding advances or
government-supported credit          The benefits of this program in-       open authorization amounts;


                                     73
                                     Chapter3
                                     Agencies' Initiatives to Improve Financial Management




provides reports for monitoring      The Army has undertaken two            database debts from individuals
status; and creates first, second,   projects named Contract Financ-        who have defaulted under
and third "dunning" letters and      ing I and II. These projects were      various programs. It will accept
individual status reports. [Mar-     started to ensure that the Army        new debt listings from guarantee
vin A. Marks, (202) 682-5407]        contract financing office took ap-     agencies; update the database;
                                     propriate action to effect the col-    and perform proper accounting
                                     lection of contract debts, includ-     with audit trails, security, and
Credit Management                    ing the referral of debt cases to      balancing fimctions. One feature
                                     the Department of Justice. The         of the system allows collection
The Department of the Army           entire process of collecting the       personnel to use the system
has developed a debt manage-         contract debt was reviewed and         directly on-line. The system is
ment report card which rates the     the procedures and systems were        generalized to handle all pro-
Communications Electronics           revised and improved. Total con-       gram types. When processing a
Command in two categories of         tract debt collections in the 12       new debt, the system will search
performance: (1) debt reduction      months ended May 31, 1989,             for an existing account (even if
targets and (2) aging trends. The    were $8.7 million, compared to         dosed and archived) with which
statistical performance report as-   $380,000 for the previous 12           it may attach the incoming debt.
signs weighted values and poten-     months. [J. E. Simmons, (317)          Titls new system will improve
tial points to these two critical    542-2642]                              controls over debt management
areas. For debt reduction, perfor-                                          and result in more efficient col-
                                     The Department of the Navy             lection effort. [Tom Pestka,
mance is measured by how well
a (predetermined) pro rata share     implemented in January 1989            (202) 732-4464]
                                     the use of a direct debit to col-
of the reduction target is met for
                                     lect out-of-service debt. The          The Department of Housing
a given quarter; each quarterly
rating provides management im-       direct debit allows the Navy to        and Urban Development's
mediate feedback on whether the      deduct automatically a payment         Financial Control and Account-
                                     each month from the debtor's           ing Division has taken several ac-
annual target will be met. For
aging trends, performance is         checking account. Initially, the       tions to improve collection of
                                     pilot was tested for accounts          department debts. HUD has
measured by the degree to which
outstanding debt is current.         aged 180 days and older. The           referred 110 cases totaling
Management is provided a com-
                                     Navy has expanded this program         $466,568 to an outside collec-
                                     to all out-of-service debt. [Brian     tion agency for recovery; these
posite rating which results from
                                     White, (202) 697-4422]                 cases represented individuals
a combination of the two ele-
ments. The report card has                                                  who fraudulently obtained Sec-
                                     The Department of                      tion 8 funds. Further, HUD has
worked well, as it provides feed-    Education's guaranteed student
back, promotes awareness, and                                               reported outstanding debts to
                                     loan debt management and col-          credit reporting agencies,
motivates managers to improve        lection system is being
performance. As a result, public                                            referred delinquent debts to IRS
                                     developed with advanced                for tax refund offset, referred
debt reduction targets have been     processing features and offers
exceeded. [Ron Vadala, (201)                                                delinquent debts to the Depart-
                                     great potential for cross-servic-      ment of Justice for write-off ap-
532-1292)]                           ing other federal loan-making          proval, written off delinquent
                                     agencies. The system is designed       debts that did not require
                                     to link and consolidate into one



                                     74
                                       Chapter 3
                                       Agencies' Initiatives to Improve Financial Management




Justice's approval, initiated salary   enhanced as a result of an exist-      normal classified mail time. The
and administrative offsets, and        ing agreement with the Depart-         resulting savings is at least 2
referred delinquent debts to Jus-      ment of Defense for debt collec-       weeks' transfer time for each clas-
tice for litigation. [Thomas J.        tion computer matching. Collec-        sified document sent by regular
Stewart, (202) 755-5154]               tions by salary offset for 1989        mail; the avoidance of express
                                       were $5,855.98. The Bureau             mail and/or a savings associated
In the summer of 1989, four of         secured its debt collection pro-       with the use of courier. As one
the Department of                      gram by extending its agreement        example, the cost of express mail
Transportation's (DOT)                 with the Internal Revenue Ser-         is about $10 per time (average
Operating Administrations              vice (IRS) for the 1989 Tax            of 3 or 4 per week) versus $.17
began participating in the In-         Refund Offset Program. Collec-         per minute (maximum ofl0-15
come Tax Offset Program. The           tions by tax refund offset for         minutes per time) for use of the
four DOT participants in the In-       1989 were $31,516.62. The              communications network In ad-
come Tax Offset Program are            agreements with the Department         dition, contract documentation,
the Office of the Secretary,           of Defense and the IRS have            computer files, and other techni-
Federal Aviation Administra-           reinforced the activities of the       cal information have been trans-
tion, Federal Highway Ad-              Bureau's Debt Collection Pro-          mitted via this communication
ministration, and the United           gram. [Eugene Schulman, (202)          link. [Dave Lacy, (205) 722-
States Coast Guard.                    447-9829]                              1630]

In the fall of 1989, DOT's par-                                               The Department of Commerce
ticipants sent 60-day notification     PRODUCTIVTIT                           has established a Quick Reaction
letters to their delinquent in-                                               Task Order (QRTO) system
dividual debtors advising them         The Department of the Army             which provides a contractual
that, unless arrangements were         has established a secure com-          vehicle to acquire professional
made to repay their debts, DOT         munications system. The                services rapidly and competitive-
would refer their accounts to the      Ground-Based Surveillance and          ly. Under this system, multiple
Internal Revenue Service for           Tracking System (GSTS) Project         master contracts are initially
offset against any income tax          Office and its prime contractor        competitively awarded, and, as
refund due to them. In January         have established a real time and       work is needed, tasks are further
1990, approximately 600 delin-         secure data transmission system        competed among QRTO con-
quent accounts totalling an es-        between the project office in          tractors before an award is
timated $600,000 were referred         Huntsville, AL and the                 made. This system provides bet-
to the Internal Revenue Service        contractor's facilities in Hun-        ter management control for ac-
for offset. [Steve Swanson,            tington Beach, CA. The personal        quiring advisory and assistance
(202) 366-5643]                        computer system was established        services and does so in a competi-
                                       in April 1989, and has been used       tive and more timely manner.
During 1989, the Department            extensively to transmit classified     The system was first imple-
of Treasury, Bureau of the             data between the two offices.          mented in 1986 within one of
Public Debt, continued its par-        The system is configured with a        the agency bureaus. While it is
ticipation in the Federal Salary       FAX machine, laser printer, opti-      difficult to determine the actual
Offset Program. The collection         cal scanner, and STU ill               savings from using the QRTO
of delinquent debts was greatly        telephone. Results have been a         system, clearly there are in-
                                       significant reduction from the         creases in productivity due to


                                       75
                                    Chapter3
                                    Agencies' Initiatives to Improve Financial Management




reductions in the time and effort   • reduction in patent applica-         its inception in 1987, the Fund
needed to award individual            tion processing time from 36         has awarded over $1.9 million in
tasks. The typical procurement        months to 18 months,                 seed money for 54 projects that
lead time for an award is 3 to 4                                           are making a difference in EPA's
weeks versus several months         • reduction in trademark ap-           activities with ADP, work
using other procurement proce-        plication processing time            processes improvement,
dures. One bureau estimates a         from 24. 9 months to 13
                                      months, and                          laboratory enhancement, human
time saving of over 5 months                                               resources development, and tech-
and a cost avoidance of $20,000     • reduction in export licensing        nology transfer. The FY 1991
per task. [Greg Crider, (202)          application processing time         Superfund allocation will enable
377-4248]                              from 60 days to 11 days.            EPA, by extending the fund to
                                    More recently the key elements         include Superfund activities, to
The Department of Commerce          of the program have included es-       provide the same incentives for
Quality and Productivity Im-        tablishment of a Secretary of          quality and productivity im-
provement Program was in-           Commerce Quality Award for             provement to a broader
itiated in 1985. Its underlying     Commerce organizations,                spectrum of employees.
theme is that quality and produc-   development of quality and
tivity improvement must be ad-      productivity management plans          Working in an era where con-
dressed systematically to           by each bureau to be monitored         cern for the environment and
produce continuing and sig-         through the management by ob-          the way EPA is managed is at
nifi.cant results. The program      jectives (MBO) process; and the        the highest level in history, the
highlights the fact that produc-    formation of a Commerce                need for innovations in service
tivity improvement must go          Quality Council. [Stephen C.           delivery, cost effective solutions,
hand-in-hand with quality,          Browning, (202) 377-3707]              and promotion of best manage-
reliability of product, depend-                                            ment practices in the federal
ability of service, and commit-     The Environmental Protection           government have never been
ment to excellence.                 Agency's Productivity Improve-         greater. At EPA, the Produc-
                                    ment Investment Fund serves as         tivity Improvement Fund is an
The improvement initiatives offi-   a catalyst to promote innova-          ideal mechanism to foster high
cially began in September, 1986,    tions in service delivery, en-         priority management improve-
and have grown to currently         courage more efficient use of          ment efforts. [Sallyanne Harper,
cover 55 % of the eligible          limited resources, and improve         (202) 382-5097]
workforce. The 21 major quality     management throughout the
and productivity improvement        agency. The Fund has generated         The General Services Ad-
projects represent a range of       enthusiastic support and en-           ministration designed special
management improvement tech-        couraged employees to be crea-         programs which allow regions to
niques such as automation, work     tive and more actively involved        interactively inquire against live
simplification, quality circles,    in their work. In 1989, 112            vendor files instead of having to
and reorganizations.                project proposals were sub-            review massive microfiche
                                    mitted by EPA laboratories,            reports. This has saved a sig-
Examples of quality and produc-     regions, and headquarters of-          nifi.cant amount of research time
tivity improvements include the     fices; the Fund was able to fund       and reduced the number of
following:                          16 of the best proposals. Since        duplicate vendors on file. In



                                    76
                                    Chapter 3
                                    Agencies' Initiatives to Improve Financial Management




order to make a payment, an ac-     HHS Office of Finance and the-            Performance Comparison
counting technician must code       Offi.ce of Management and                                 1988,     1989
the vendor number on the pur-       Budget to initiate payments                             1st Half   Actuals
chase order. Research must be       without receiving reports imme-
done to determine if the vendor     diately for commercial invoices
                                                                           Late
has an existing number or must      of $750 or less, excluding pay-        payments            30%         7%
be assigned a new one. When         ments both for training and for
the technicians are trying to re-   personal service contracts, and
search different vendor names       subject to quarterly post-pay-         Payments
                                                                           with interest        8%         2%
on various purchase orders, they    ment statistical sampling. The
can now type the vendor name        results ofFDA's statistical
and zip code at the terminal and    sample for its first quarter operat-   Interest     $49,800        $35,100
have instant access to the vendor   ing under this new procedure           paid        annualized
number. Before, when using the      are now complete. During the
reports, they would have to scan    period FDA paid 8,843 invoices
many pages of microfiche to         of $750 or less without receiving       Savings Projected and Actual
identify the vendor numbers.        reports for a total of                                        Actual
The programs were imple-            $1,873,427. A randomized                                             1989
mented in January 1989 and          statistical sample of these pay-                        Savings    Savings
cost savings of2 work years an-     ments was selected by a com-
nually are anticipated. [Jolene     puter program, with the sample         Overtime        $23,000     $19,780
Romanyshyn, (202) 501-1084]         size and distribution determined
                                    by criteria set out in this HHS        Interest
                                    Voucher Audit Manual. The 265          payments          29,000     14,090
In June, 1988, based on the suc-
cess of a carefully conducted       payments selected, totaling
pilot project and a well            $58,709, were subject to 100           FTE savings
                                    percent post-audit. When the           estimate          44, 000    36,220
developed system of existing in-
ternal controls, the Food and       post-audit was done, only one
Drug Administration (FDA),          payment was identified which           Discounts
Department of Health and            might have been a problem and          saved              5,000
Human Services (HHS), in-           which was not corrected as a
itiated payment of most commer-     result of internal controls in         Totals          $101,000    $70,090
cial invoices for $750 or less      place.
without receiving reports. This
has resulted in substantially im-   The FDA continued this process
proved performance under the        throughout 1989 with results           As a result of this experience, the
Prompt Pay Act and significant      showing improvements over              FDAhas decided to raise the
cost savings. After the pilot       traditional payment operations         limit from $750 to $1,000.
project in 1988, the FDA staff      (see exhibit):                         [Frank P. Claunts, (202) 443-
received permission from the                                               3260]




                                    77
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




The National Park Service,           reduction was initially ac-            tions. Future plans include the
Department of the Interior,          complished. Implementation of          use of Automated Clearing
has consolidated its administra-     additional improvements in             House (ACH) payments to
tive accounting and payment          work methods and increased             travelers so their bank accounts
functions. The consolidation of      utilization of automated process-      can be immediately credited.
work previously performed in         ing methods are anticipated by         Overall, the walk-up window
the Regional Offices permits the     fiscal year 1992 to provide fur-       has increased the level of service
Service to standardize these func-   ther efficiencies and reduce staff-    delivered to customers and
tions and allows the opportunity     ing requirements by an addition-       provided more efficient use of
to use techniques that enhance       al 20 percent. Consolidation of        resources within the accounting
the Service's capability to          the accounts payable function          office. [Rosie Roberson, (202)
process payment vouchers. [Jon       has provided a more orderly and        366-0310]
Shrun, (703) 487-9177]               uniform processing of invoices
                                     and has provided more flexibility      The EZ CLEAR system, imple-
The Tennessee Valley                 among the staff to address shift-      mented by Treasury nationwide
Authority (TVA) consolidated         ing workloads~ Vendors now             in October 1988, streamlines the
its fixed assets accounting func-    send all invoices to one location      processing of U.S. Savings Bond
tion under the Controller. The       rather than having to deal with        redemptions by eliminating spe-
consolidation provided the           six separate locations. [Linda M.      cial batching requirements that
framework to more efficiently ac-    Delozier, (615) 632-4422]              have been in place for over forty
count for TVA's fixed assets.                                               years. Authorized paying agents
Streamlined work methods,            The Department of                      who are participating in the EZ
elimination of duplication, and      Transportation's Office of             CLEAR program can process
computerization have already         Financial Management has imple-        paid bonds along with other
reduced staffing requirements.       mented an on-the-spot travel           cash items and submit them for
Additional improvements, par-        voucher processing service for its     credit through the existing check
ticularly in record-keeping and      customers. Travel vouchers that        collection system. The final
reporting, are planned which         are $250 or less can be sub-           deliverable for the EZ CLEAR
will provide further efficiencies.   mitted directly to a walk-up win-      initiative-truncation of paid
Consolidation of fixed assets ac-    dow for immediate voucher ex-          savings bonds at the Federal
counting has enabled the avail-      amination and payment through          Reserve Bank (FRB) Pittsburgh
able staff to focus on the job to    the Imprest Fund. In what is           Branch Central Site-was imple-
be done and has provided more        normally 10 minutes or less, the       mented on October 2, 1989. In
flexibility among the staff to ad-   traveler can complete voucher          December ofl989, the Federal
dress shifting workloads. [Billy     processing and receive                 Reserve Banks and Branches
R. Turner, (615) 751-5536]           authorized reimbursement upon          were notified that EZ CLEAR
                                     completion. The implementation         will be made mandatory for all
In August, 1989, the Tennessee       of the walk-up service has en-         paying agents effective February
Valley Authority's (TVA) ac-         couraged travelers to submit           1, 1991. EZ CLEAR reduces
counts payable function was con-     their vouchers promptly while al-      both operating and agent fee
solidated under the Controller.      lowing the accounting office to        costs, improves funds
By eliminating duplication of ef-    dedicate voucher examination           availability, and simplifies inter-
fort and improving work              time to more complex examina-
methods, a 20 percent staffing



                                     78
                                      Chapter 3
                                      Agencies' Initiatives to Improve Financial Management




nal accounting procedures. [Ar-       current cost accounting data           other offices. [Bob Henry, (202)
thur A Klass, (304) 420-6515]         from the accounting system to          208-8571]
                                      personal computer applications.
Upon successful completion of a       Phase II will involve additional       The Office of the Comptroller of
pilot test in the State of Ohio, in   modules for projected revenue,         the Currency, Department of
January 1989, the Department          orders received, net operating         the Treasury, designed a
of the Treasury announced the         results, pay and benefits, produc-     Budget Execution Workshop for
expansion of the Regional             tivity, and inflation factors. 1bis    district and Washington staff in-
Delivery System (RDS),                phase is expected to be com-           volved in any portion of the
wherein Series EE savings bonds       pleted in 2 years. [Susan Linn,        financial process, including
sold over-the-counter by local        (717) 267-9176]                        payroll, relocation, time and
financial institution are inscribed                                          travel reporting, accounts pay-
and delivered by Federal Reserve      The Department of the Inte-            able, and budget. The goal of
Banks designated as regional          rior's Bureau of Land Manage-          this program was to assist
processing sites. Nationwide im-      ment is working on the Program         people in knowing what to do
plementation began in June            Management System (PRMS)               after their budget is approved.
1989 and is scheduled to be com-      which is designed to provide           This program has resulted in bet-
pleted in Fiscal Year 1993.           management information on              ter financial and resource
When fully implemented, RDS           budget and program plans and           management initiatives. [Roy C.
is expected to reduce ap-             status. It provides for developing     Madsen, (202) 447-0956]
propriated costs of administer-       and justifying budgets; planning
ing the Savings Bond Program          and allocating the levels of funds     The Department of the
and to create significant cash        and personnel for use in complet-      Treasury Office of Thrift
management benefits from the          ing planned accomplishments            Supervision's budget develop-
accelerated remittance of bond        (i.e., number of recreation plans      ment process has been complete-
sales proceeds. [Arthur A. Klass,     completed, acres of timber im-         ly automated with individual of-
(304) 420-6515]                       proved, etc.); reporting and           fices entering their own ap-
                                      monitoring use of funds and            proved budgets onto an
                                      staff and comparing usage to ac-       automated spreadsheet. This was
BUDGET                                tual accomplishment; and adjust-       instituted in the Fall of 1989.
                                      ing planned levels of funds, staff,    The automation process reduces
DEVELOPMENTAND                                                               potential errors and the amount
EXJiCUTION                            and accomplishment, as re-
                                      quired. PRMS enhances manage-          of time previously required to
                                      ment accountability by using           compile the budget. Further, it
The U. S. Army Depot Systems                                                 increases the budget officer's
Command is developing a fully         financial data, personnel use data
                                      from the departmental payroll          ability to respond to ad hoc
integrated planning, program-                                                reporting requests. [John S.
ming, budgeting, and execution        system, and accomplishment
                                      data to create management              Kinyon, (202) 906-6149]
system for the depot level In-
dustrial Fund budgeting process.      reports necessary to monitor pro-      The Internal Revenue Service,
Phase I is operational. It involves   gram progress in an environ-           Department of the Treasury,
staflhour, workyear, and cost         ment of complex multiple fund          develops and prepares its budget
projections. This is accomplished     sources and decentralized pro-         utilizing contracted time-sharing
by downloading historical and         gram execution by 148 field or         services. The system is linked by



                                      79
                                      Chapter 3
                                      Agencies' Initiatives to Improve Financial Management




telecommunications to IRS             Treasury are identical, to im-         $6 million in savings since its es-
microcomputers. The Budget            prove the quality of pricing data      tablishment. [Stephen C. Brown-
Preparation System (BPS),             to ensure full recovery of costs,      ing, (202) 377-3707]
developed in-house, is com-           to match physical deliveries with
patible with the Automated Ac-        disbursements to improve the           To improve the reliability of
counting and Budget Execution         progress billing schedule, and         financial data in the Depart-
System (AABES) and accepts            finally, to increase the responsive-   ment of Education's primary ac-
AABES-generated tapes. The            ness to Air Force managers as          counting system, the Offices of
Budget Preparation System will        well as FMS customers. [Lt. Col        Management and Inspector
be interfaced and fully integrated    Curtis, (303) 370-7581]                General joined forces to survey
into the Automated Financial                                                 the adequacy of internal controls
System, including the automatic       The Department of                      over financial data originating
transfer of information for           Commerce's Advisory and Assis-         within subsidiary "feeder" sys-
generating obligations and cal-       tance Services Review System           tems throughout the depart-
culating estimates. [Robert           was established on March 1,            ment. The survey results
Eisenhower, (202) 566-4225]           1985, by the Deputy Secretary          demonstrated numerous
                                      to provide high-level review of        problems which are being ad-
                                      proposed contracts for advisory        dressed in an on-going, long-
OTHER                                 and assistance services. The           term project expected to be com-
                                      Deputy Secretary is responsible        pleted in fiscal year 1994. Cor-
IMPROVEMENTS                          for overall control of the system.     rective actions taken during
                                      The Associate Deputy Secretary         calendar year 1989, included:
The Air Force's Case Manage-
                                      has been designated to oversee
ment Control System (CMCS)                                                   • better control of receivables
                                      the ongoing operations of the
is a large computer system                                                     resulting from unallowable or
                                      system and approve or disap-
designed to manage, control,                                                   excess costs discovered on site
                                      prove proposed contracts. The
and support the Foreign Military                                               visits,
                                      Associate Deputy Secretary is as-
Sales (FMS) program and inter-
                                      sisted by a review panel that          • establishment of written pro-
national cooperative agreements.                                               cedures to improve follow-up
                                      meets weekly to consider
It is comprised of integrated sys-                                             action on delinquent accounts,
                                      proposals and make recommen-
tems and numerous external in-
                                      dations to the Associate Deputy
terfaces. The component parts of                                             • improvements which provide
                                      Secretary.                               for the processing and ac-
the system are categorized into
systems groups including plan-        During the last year, action was         counting for collection data
ning, management support,                                                      among multiple fiscal years,
                                      completed on 100 proposals
                                                                               and
logistics, interface, and financial   totalling $63 million. Of these,
systems. The high-level objec-        six requests totalling $1 million      • institution of controls to
tives of the system are to con-       were disapproved or withdrawn,           eliminate duplicate posting of
solidate all Air Force FMS trans-     and 36 others totalling $40 mil-         collections from grant
actions into a single interface       lion were revised, returned for          recipients.
with the Security Assistance Ac-      additional justification, or ap-       [Greg Ulans, (202) 732-5561]
counting Center (SAAC) to en-         proved subject to conditions.
sure that cash transactions           The recommendations of the
reported to SAAC and the U.S.         Review Panel have resulted in



                                      80
                                       Chapter 3
                                       Agencies' Initiatives to Improve Financial Management




The Environmental Protection                mental infrastructure using       munication is facilitated because
Agency (EPA) initiated its                  public-private partnerships. In   recipients are provided software
Public-Private Partnership pro-             addition to a federal contribu-   with parameters set to communi-
gram in fiscal year 1988 to help            tion, the agency will solicit     cate to the NIH computer. Once
meet the growing environmental              resources from private busi-      connected, the proper data entry
challenges facing this country in           nesses, foundations, and as-      screen is provided depending
                                            sociations.
the 1990s and beyond. Its intent                                              upon the account information
is to increase private sector invol-   • Conferences: Assistance will         that is requested during the
vement in meeting environmen-            be given to states to support        security validation. The neces-
tal goals. EPA is pursuing the           workshops on partnerships in         sary funds amount is entered;
following activities and products        fiscal year 1991. Two national       funds may be allocated to
to meet that objective:                  and six regional conferences         various programs or projects.
• Demonstration Projects: Selec-         have been conducted to pro-          The request is then processed
    tion of 10 demonstration             vide forums for business,            through pre-programmed proce-
   r.rojects in fiscal year 1990 to      financial, federal, state, and       dures that validate funds
   illustrate, in a hands-on             local officials to exchange in-      availability and update account
   fashion, how local com-               formation and relay ex-
                                                                              balances. A properly formatted
   munities can successfully in-         perience concerning partner-
                                         ships.                               Automated Clearing House
   itiate public-private partner-                                             (ACH) payment message is sub-
    ships. These projects will in-                                            sequently created and trans-
                                       • Self-Help Guide: Distribution
   volve the private sector with
                                         of a "how-to" guide designed         mitted electronically to the
   drinking water, wastewater            for local governments to small
    treatment, and solid waste dis-                                           Federal Reserve Bank in Rich-
                                         and high-risk communities to         mond for transfer to the
   posal.
                                         assist them in financing en-         recipient's bank. The new sys-
• Environmental Financial Ad-            vironmental infrastructure.          tem, an evolution of earlier suc-
  visory Board: Senior execu-          [Sallyanne Harper, (202) 382-          cessful processes, uses a full
  tives from business, industry,       5097]                                  screen for data input with entry
  finance, banking, and govern-                                               fields formatted according to the
  ment have been selected to           The Department of Health &:            type of account a recipient has
  serve on the board which was                                                with IDIS. Security features
                                       Human Services (IDIS),
  established in fiscal year 1990
                                       Division of Federal Assistance         allow user control over access.
  to provide authoritative ad-
  vice and opinions to EPA             Financing, recently implemented        The system, with the supporting
  managers on tax policy, financ-      a procedure whereby grant              fund control processes and rapid
  ing strategies for small com-        recipients can easily and quickly      next-day payment, services
  munities, incentives to in-          request funds for next-day pay-        HHS, and also the Department
  crease private participation in      ment. The process, called Smart-       of the Interior's Fish and
  environmental services, and          Link II, operates at the National      Wildlife Service. [Thomas F.
  public sector environmental          Institutes of Health using a           Greene, (301) 443-1660]
  financing options.                   mainframe computer. The grant
                                       recipient, with a personal com-        On October 24, 1989, the Social
• Venture Fund: Establishment
  of a fund consisting of both         puter or a terminal connected to       Security Administration (SSA),
  public and private resources         a modem, accesses the                  Department of Health and
  to support innovative ap-            mainframe software through ap-         Human Services, was presented
  proaches to financing environ-       propriate security paths; com-


                                       81
                                     Chapter3
                                     Agencies' Initiatives to Improve Financial Management




an achievement award in connec-      disbursement and accounting            sistant Secretaries to monitor
tion with the 1989 Awards Pro-       functions by systems which will        material weakness corrective ac-
gram of the Employee Reloca-         integrate more effectively with        tion progress and the status of
tion Council, a national organiza-   Treasury's disbursement system.        the current year's management
tion of corporations involved in     In order to accomplish this, the       control process. To provide for
employee transfer. This award,       Letter of Credit Control System        the early warning of control
announced and presented at the       (LOCCS) will be modified to            weaknesses a "FLASH Report"
Fall Relocation Workshop in          make all disbursements. Phase          was implemented to alert senior
Hilton Head, South Carolina,         one was completed and phase            management of potential mis-
was made to honor SSA's excep-       two began in fiscal year 1989.         sion-critical control weaknesses.
tional relocation communication      Phase two will be completed the        The department held a two-day
program for transferring             second quarter of fiscal year          Management Control Con-
employees and their families.        1990, at which time two of             ference for 45 of its top execu-
SSA's relocation booklet is titled   HUD's six payment systems will         tives at Quantico, Virginia. The
Reloca"tion Services: Employee       be eliminated. Plans are in place      purpose of the Conference was
Handbook.                            to have payments for loan              to heighten management's aware-
                                     programs to be disbursed from          ness about management controls
Of the nearly 1,000 members of       LOCCS in fiscal year 1991              and audit follow-up respon-
the Employee Relocation Coun-        (phase three). HUD anticipates         sibilities and gain a firm commit-
cil, only ten were selected to       having only one payment system         ment to improving the process.
receive this award; SSA was the      by fiscal year 1992. [Gail B.          Finally, the department imple-
only government agency. The          Dise, (202) 755-1757]                  mented procedures to better link
chairperson of the 1989 awards                                              corrective action funding with
committee stated that the quality    During fiscal year 1989, the           the budget process to ensure
of the materials submitted this      Department of the Interior im-         that funding is provided to cor-
year for competition was un-         plemented several initiatives          rect reported material weak-
paralleled in the 12-year history    aimed at strengthening its             nesses. [W'illiam L. Kendig,
of the achievement awards pro-       management controls in                 (202) 208-4701]
gram. Contracted relocation ser-     response to the recommenda-
vices are administered by SSA        tions in the President's Council       The Department of Transpor-
Headquarters Travel Policy Staff     on Management Improvements             tation (DOT) completed a fresh
and coordinated through 10           (PCMI) report titled Impr<JPi,ng       assessment of its FMFIA process
relocation coordinators in the       the Management Control Process.        including:
Regional Administrative Sup-         A Management Control and               • improvements to the DOT
port Centers. [Kevin Lanagan,        Audit Follow-up Council was es-           FMFIA process by estab-
(301) 625-0544]                      tablished to monitor and direct           lishing the Program Integrity
                                     the department's management               and Management Improve-
The Department of Housing            control process and FMFIA                 ment Council (PIMIC) to pro-
and Urban Development is cur-        reporting process. The Council            vide the senior DOT officials
                                     is comprised of the Under                 a forum for their involvement
rently involved in an effort to
                                     Secretary, Inspector General,             in the departmental manage-
eliminate manual payments and                                                  ment control process;
manual reporting, minimize the       and Assistant Secretary-Policy,
number of disbursement               Budget and Administration. The
systems, and perform the             Council meets quarterly with As-


                                     82
                                      Chapter 3
                                      Agencies' Initiatives to Improve Financial Management




• meetings with the Office of In-     it will save considerable prepara-     directives authorize the depart-
  spector General, General Ac-        tion and processing time for           ments to establish and collect
  counting Office repre-              travelers. [Spencer Sakai, (202)       user charges, except when
  sentatives, and each of the         287-3909]                              prohibited by statute, for ser-
  modal administration's top                                                 vices and special benefits
  management to discuss past          The Internal Revenue Service,          provided by federal departments
  and ongoing audit work as                                                  to such recipients. The Office of
                                      Department of the Treasury,
  well as their management con-                                              Inspector General, Department
  trol environment and vul-           in fiscal year 1989 conducted a
  nerabilities; and                   pilot of its Facilities Integrated     of the Interior, was the lead or-
                                      Management System's (FIMS)             ganization for the audit, with the
• linking the FMFIA process           requisition tracking and small         Inspectors General of four other
    with the budget process.          purchases applications in the At-      departments participating in the
    Operating administrations re-     lanta district, service center, and    review: the Departments of
    quested additional resources,     regional office; trained about         Defense, Transportation, Hous-
    where needed, to correct          300 users; and concluded with          ing and Urban Development,
    material weaknesses and were      deciding to redirect FIMS              and Health and Human Ser-
    successful in obtaining the Of-                                          vices.
                                      resources to higher priority ap-
    fice of Management and
    Budget's approval in the fiscal   plications. Subsequently, resour-
    year 1991 budget.                 ces have been redirected to the        Specifically, the audit was made
                                      IR.S's capitalized assets inventory    to determine whether (1) ap-
One benefit to increased FMFIA
                                      management (Property/Assets            propriate methods were used to
awareness is that DOT managers
                                      Tracking System) and minimum           establish user charge rates, (2)
are taking a more active role in
                                      requirements for space (Space          current user charge rate calcula-
identifying and correcting
                                      Management and Rent Tracking           tions included all applicable
material weaknesses. In prior
                                      System). Further logistics sys-        costs, (3) user charges were
years, almost all material weak-
                                      tems for requisitioning, purchas-      being established for all
nesses reported (99.5 percent)
                                      ing, and support funds manage-         reasonable qualifying sources,
were based upon audit reports.
                                      ment are planned. [Steve Hales,        and (4) any statutory and/or
In 1989, over 30 percent of the
                                      (202) 535-4043]                        regulatory impediments existed
weaknesses reported were iden-
                                                                             that affected implementation of
tified by departmental managers.
                                                                             user charges.
[RolfWold, (202) 366-9874]
                                      AUDITING
                                                                             The PCIE findings indicated
The Department of the
                                      TheAuditCommitteeofthe                 that the six departments in-
Treasury Financial Management
                                      President's Council on In-             cluded in this audit have not
Service is developing a prototype
                                      tegrity and Efficiency (PCIE)          maximized the opportunity to es-
travel manager system to im-          evaluated the effectiveness of the     tablish and collect user charges
prove the processing of travel                                               as a method of recovering costs
                                      policies and procedures relating
documents. This system allows         to establishing and collecting         incurred in providing benefits to
employees to initiate and process                                            identifiable recipients. Also, the
                                      user charges. The User Charge
travel authorizations and travel
                                      Statute; Office of Management          departments did not place ade-
vouchers through a personal                                                  quate emphasis on user charges
                                      and Budget Circular A-25, User
computer. The system is being                                                as a means to recover the
                                      Chat;!fes; and implementing
tested and all indications are that                                          government's costs of providing


                                      83
                                     Chapter 3
                                     Agencies' Initiatives to Improve Financial Management




services and special benefits and         departments to report the         The CRAG sets control objec-
did not maintain adequate con-            status of their user charges      tives in five areas of financial
trol over their respective user           program and follow up on          management: indirect cost sub-
charge programs. The PCIE                 reports where the data sup-       missions, labor charging,
report also suggested that the Of-        plied is incomplete or inac-      material management and ac-
fice of Management ~d Budget              curate.                           counting systems, estimating sys-
could provide more oversight of      • Require that all exemptions          tems, and purchasing. Under the
the departments' user charge           be approved by the central of-       CRAG program, auditors would
programs to ensure full im-            ficial appointed and maintain        have access to contractor tests of
plementation of existing criteria.     these exemptions. Also, pro-         internal control systems for
Consequently, the audit of the         vide for a periodic review of        those areas. When the tests pro-
six departments showed that            the exemptions to ensure their       vide that the systems are reliable,
new or increased user charges          propriety.                           auditors would be able to reduce
amounting to about $476 mil-                                                audit oversight accordingly.
                                     • Revise Office of Management
lion could be collected on exist-                                           [Guillermo Mata, (202) 695-
                                       and Budget Circular A-25,
ing programs. The PCIE report          User Charges, to include a           9599]
concluded that user charges can        more precise definition and ex-
be an alternative means to obtain      planation of the terms               The Department of Education
funds necessary to carry out re-       "beneficiary of service," "spe-      (Education) prepared a compila-
quired programs. The audit of          cial benefits," and "full cost       tion report listing all financial
the six departments showed that        recovery."                           audits, contracted studies, and in-
about $476 million in program        [Dick Feezle, (202) 395-5670]          house reviews performed from
costs could be recovered in new                                             1981to1989. The purpose of
or increased user charges if the     The Department of Defense's            this compilation report was to
departments sufficiently em-         Office of Inspector General            help to more effectively plan fu-
phasize the program and imple-       developed the Contractor Risk          ture audits and to more efficient-
ment user charge criteria.           Assessment Guide (CRAG), a             ly follow up on key deficiencies
                                     year-old initiative designed to en-    identified in Financial Manage-
The PCIB report recommended          courage contractors to                 ment Accounting System
that the Office of Management        demonstrate that the govern-           Reviews. The compilation
and Budget provide guidance          ment can rely on their internal        report is divided into the six sec-
and oversight to ensure that all     controls. To the extent it is          tions listed below:
the departments:                     demonstrated that contractors          • a flowchart of the accounting
• Emphasm user charge                are doing a better job of"self-           system and subsystems,
  programs by appointing a           governance," government over-
   "high level" official at the                                             • a brief description of each
                                     sight can be more effectively            component of the system,
   departmental level to become      used on other priorities or at
   the central manager respon-       other locations. The underlying
   sible for achieving maximum                                              • a list of reviews completed by
                                     principle involved with this ap-         the Education, the General Ac-
   compliance with existing
   criteria in the establishment     proach is to place the primary           counting Office, and private
   and collection of user fees.      responsibility for adherence with        contractors,
                                     federal laws and regulations on
• Reestablish the annual data        the contractor.
  reporting requirement for the


                                     84
                                    Chapter 3
                                    Agencies' Initiatives to Improve Financial Management




• a list of key deficiencies and    expenditures had not been ad-             closed that both the manual
  appropriate recommendations       hered to. The untimely receipt            and automated accounting sys-
  identified in the reviews,        and recording of expenses in-             tems did not adequately ac-
                                    creases the potential risk of loss        count for and control equip-
• a list of key deficiencies and    since unliquidated balances may           ment; a redesigned system is
  appropriate recommendations       remain available even after some          scheduled for nationwide im-
  that are still outstanding, and                                             plementation by the end of fis-
                                    grantees or contractors have
                                                                              cal year 1990.
• a list of reviews planned or in   gone out of business. Depart-
   progress.                        ment officials concurred with          • Revised accounting proce-
The compilation report was com-     this recommendation. A contrac-          dures that recognize the ap-
pleted in October, 1989. The        tor has been hired to close out          propriate amount of receiv-
                                    old contracts, and a plan has            ables as a budgetary resource:
compilation review provided a
                                    been developed whereby the ac-           The audit disclosed that the
better understanding of the ac-                                              department's accounting pro-
counting system and allowed bet-    counting section will close out
                                    old grants. [Jack Ferris, (202)          cedures recognized uncol-
ter targeting of future audit                                                lected receivables as a
areas. [Mitchell L. Laine, (202)    472-3175]
                                                                             budgetary resource, although
732-5600]                                                                    OMB Circular A-34, Instruc-
                                    The Department of Health and             tions on Budget Execution, only
The Department of Health and        Human Services audited the So-           permits the restoration of
Human Services had two sig-         cial Security Administration's           budget authority up to the
nificant areas which were           combined financial statements            amount of the receivables col-
                                    for fiscal year 1988. This audit il-     lected in the fiscal year the
reported in the operations of the
                                    lustrated the value of preparing         budgetary resource is used. Ef-
"M" appropriation accounts.                                                  fective with the final financial
The first of these disclosed that   and auditing agency financial
                                    statements. In this case, the            reports of fiscal year 1989, the
timely closing of grants and con-                                            department revised its ac-
tracts is needed. Significant       audit discipline imposed on the
                                                                             counting policy for receivables
delays in closing out completed     financial management process
                                                                             to bring the policy in line
grants and contracts by two         used in the day-to-day manage-           with OMB Circular A-34. In
                                    ment of the Social Security              September, 1989, the
HHS components precluded the
Division of Accounting Opera-       programs resulted in three major         Treasury issued a warrant for
tions from maintaining an ac-       administrative management im-            $700 million using the in-
curate balance of unliquidated      provements.                              definite authority in the Sup-
obligations. Untimely closing of    • Improved accounting controls           plemental Security Income
                                       over administrative obliga-           program to correct the effect
contracts and grants resulted in
                                       tions-the audit disclosed and         of the incorrect accounting
reporting inaccurate balances to                                             procedures. [Jim A. Nycum,
                                       reported weaknesses in the in-
Treasury.                              ternal controls over ( 1) recon-       (202) 625-9710]
                                       ciling estimated with actual
It was reported that documenta-        obligations, (2) recording
tion to support amounts main-          obligation estimates consis-
                                                                           The Department of Health and
tained and expended from the           tently, and (3) documenting
                                       obligation transactions             Human Services (HHS)
"M" account was inadequate.
                                                                           developed a guide for public ac-
Department policy requiring
                                    • Redesigned property account-         counting firms to use in perform-
timely receipt and recording of
                                      ability system: The audit dis-       ing organizationwide audits of


                                    85
                                       Chapter 3
                                       Agencies' Initiatives to Improve Financial Management




nonprofit grantees. The guide          organization clients to have           The Department of Labor
provided the impetus necessary         audits performed in accordance         prepares and audits consolidated
for widespread implementation          with the guide. [Richard               financial statements. These
of the organizationwide audit,         Calahan, (202) 245-3072]               audited financial statements have
also referred to as the single                                                shown, in supplemental
audit concept, for the                 An audit was performed by the          schedules, that there are major
government's nonprofit gran-           Office of the Inspector General,       discrepancies between the
tees. The single audit concept         Department ofJustice, of the           audited financial statements and
was established for state and          payment and obligation modules         the final reports sent to
local governments by the Con-          of the Financial Management In-        Treasury. To remedy this situa-
gress through the Single Audit         formation System (FMIS) to as-         tion, the OIG provided technical
Act of 1984. However, the same         certain the effectiveness of the in-   assistance and training to the
problems which made the single         ternal accounting controls for         departmental management and
audit concept useful for govern-       processing payments and record-        agency accounting personnel
ment entities were also ap-            ing expenditures, and to evaluate      compiling the Treasury's finan-
plicable to nonprofit entities.        the automatic data processing          cial reports to minimize or
These problems included duplica-       general and application controls       eliminate the discrepancies. As a
tive audits, a plethora of inconsis-   in place. General control weak-        result, the Department of the
tent audit requirements for dif-       nesses were noted in the areas of      Treasury was provided more ac-
ferent programs, outdated audit        segregation of functions, com-         curate financial reports for in-
guides, and overlapping federal        puter security, program change         clusion in the U.S. Governmen"t's
audit oversight. These problems        and modification procedures,            Consolidated Financial, Statements
were a major reason that the           and documentation. Because of          for Fiscal Year 1989. This was a
quality of audits for nonprofit        the pervasive effects of the           first-time accomplishment for
entities was worse than for other      general control weaknesses, the        both the Department of Labor
types of organizations receiving       FMIS application controls did          and the Inspector General. This
federal funds. The Office of the       not provide reasonable assurance       project is planned to continue
Inspector General developed this       that payment and obligation            with the routine annual financial
audit guide to overcome these          data were accurate, timely, and        statement preparation. [Bob Mc-
problems.                              complete. OIG auditors recom-          Gregor, (202) 523-5906]
                                       mended that the FMIS be im-
The OIG's issuance of the guide        proved by enhancing documenta-         The technical support staff estab-
has been met with widespread ac-       tion and procedures for program        lished computer-to-computer
claim. The President's Council         changes and modifications and          connections between the Depart-
on Integrity and Efficiency            segregating functions within           ment of Transportation's Of-
(PCIE) adopted the audit guide         FMIS to properly safeguard as-         fice of Inspector General (OIG)
for governmentwide use in its          sets from waste, fraud, and            super minicomputer ai.J.d the
Position Statement No. 5. The          abuse. The timely completion of        mainframe systems at the
guide is now used by several of        these recommendations will help        Transportation Computer Cen-
the Inspectors General, many           the department more accurately         ter (TCC) in Washington, D.C.,
state governments, and other           account for obligations and pay-       and the Federal Aviation
types of grantees. Also, most of       ments and ensure valid account-        Administration's Mike Mon-
the large public accounting firms      ing data. [Guy K. Zimmerman,           roney Data Center in Oklahoma
now encourage their nonprofit           (202) 756-6121]                       City, Oklahoma. The TCC


                                       86
                                      Chapter 3                  .
                                      Agencies' Initiatives to Improve Financial Management




connection, completed in              The Department of                      In January 1989, the Internal
January 1989, allows OIG              Transportation's technical sup-        Revenue Service (IRS), Depart·
users-auditors, investigators,        port staff, working with the Of-       ment of the Treasury, estab-
and support personnel-to ac-          fice of the Secretary's                lished Internal Revenue Manual
cess data resident in TCC's           Departmental Accounting and            guidelines requiring regional and
automated files without incur-        Financial Information System           national office executives to use
ring TCC on-line charges. It has      (DAFIS) accounting manager             internal audit abstracts to assess
also enabled OIG users to access      and operations personnel at the        the vulnerability of their opera-
TCC data using time-saving,           Federal Aviation                       tions and ensure that conditions
user-friendly software tools avail-   Administration's Mike Mon-             identified in the abstracts are cor-
able only on the OIG super mini-      roney Aeronautical Center in Ok-       rected or prevented. Internal
computer. The Monroney con-           lahoma City, Oklahoma,                 audit prepares an abstract of
nection, completed in June            developed and implemented a            each audit finding requiring
1989, supports direct log-on          methodology by which the OIG           management action. It transmits
capability with that facility for     receives monthly updates of            these abstracts each month to of-
any interactive work being con-       automated DAFIS transaction            ficials throughout IRS who now
ducted by the technical support       data. DAFIS contains data on a         must assess their own operations
staff. This link, along with the      wide range of departmental             for similar problems. In addi-
Network Job Entry link already        financial transactions including       tion, when a serious control
in place, enables OIG auditors        appropriations, accounts receiv-       breakdown is identified during
and investigators to ac-              able, accounts payable, trave~         an audit and an immediate need
cess/process information resi-        contracts, grants, interagency         exists for sharing this informa-
dent on Monroney's mainframe          agreements, purchase orders,           tion, the Assistant Commis-
and have the output returned to       utility costs, and summary             sioner (Inspection) issues a
the OIG super minicomputer,           payroll information. The ac-           memorandum to all Regional
without incurring the time and        counting office maintains the          Commissioners and District
money expenditures normally as-       files for about 6 months. The          Directors alerting them to the
sociated with traveling to Ok-        OIG office, however, retains the       conditions found. Alerts are also
lahoma City. The Monroney link        files of monthly database up-          sent internally to notify internal
was successfully used in two          dates of all DAFIS transactions,       audit managers and staff of sig-
recent audits to develop (1) disk     enabling them to maintain a his-       nificant changes to IRS
storage utilization data for the      torically complete transaction         programs. [Stewart Silhol, (202)
Monroney Center and (2)               record. This comprehensive             343-6288]
payroll statistics to respond to a    transaction information will be-
hotline complaint. In addition,       come increasingly valuable for
the communication links will          audit purposes as the automated
enable data transfers between the     accounting systems of each of
OIG, the Transportation Com-          the nine Operating Administra-
puter Center, and the Monroney        tions within the department are
Data Center. [Edward M.               converted to DAFIS. [Edward
Glagola, Jr., (202) 366-1496]         M. Glagola, Jr., (202) 366-1496]




                                      87
Appendix A
1989 Officials and Sta.ffof]FMIP




Principals
Secretary of the Treasury                   Nicholas Brady
Comptroller General of the U.S.             Charles A. Bowsher
Director, Office of Management and Budget   Richard Darman
Director, Office of Personnel Management    Constance B. Newman


St:eeri-ng Committee
Fiscal Assistant Secretary,
Department of the Treasury                  Gerald Murphy
Assistant Comptroller General
for Accounting and Financial
Management, General Accounting Office       Donald Chapin
Chief, Financial Systems and Policy
Branch, Office of Management and Budget     Jimmie Brown
Associate Director for Administration,
Office of Personnel Management              James B. Lancaster, Jr.
Deputy Assistant Secretary for Finance,
Department of Health and Human Services     Dennis Fischer
Executive Director, Joint Financial
Management Improvement Program              Virginia Robinson


]FMIPStaff
Executive Director                          Virginia Robinson
Assistant Executive Director                Doris A. Chew
Senior Project Director                     Kenneth Winne
Executive Secretary                         Donna Tebeau
Publication Assistant                       Frank Kramer


Detailed Project JJi,reaors and Project Team Members
General Accounting Office                   Judith Fuerstenberg
Department of Health and Human Services     Edward Wadding
Department of the Treasury (Until 8/89)     Darlene Schongalla
Department of the Treasury (from 8/89)      Geraldine Beard




 88
Appendix A
1989 Officials and Staff of JFMIP




Standardization of Financial Data Team
Project Director                          Susumu Uyeda
Department of Agriculture                 George Williams
Department of Defense                     Tom Short
Department of Energy                      EdDeNeane
Federal Energy Regulatory Commission      Steve Forman
General Accounting Office                 Janett Smith
General Accounting Office                 Vandana Talwar
Department of Health and Human Services   Ed Martin
JFMIP                                     Kenneth Winne
Office of Management and Budget           Frank Stidman
Office of Management and Budget           Beverly Thierwechter
Department of the Treasury                Allan Lund
Department of the Treasury                Brian Shaboski




 89
Appendix:B
]FMIP Liaison Representatives




ACTION                                       Kenneth George
Administrative Conference of the U.S.        Daniel F. Mann
Administrative Office of the U.S. Courts     Dewey R. Heising
African Development Foundation               Thomas Wilson
Agency for International Development         Michael Usnick
Agriculture, Department of                   Larry Wilson
Air Force, Department of the                 GaryAmlin
Appalachian Regional Commission              David Meuser
Arms Control and Disarmament Agency          William Amoroso
Army, Department of the                      JohnNabil
Board for International Broadcasting         Patricia Schlueter
Central Intelligence Agency                  Leo Hazelwood
Commerce, Department of                      Sonya Stewart
Commission of Fine Art                       Charles Atherton
Commission on Civil Rights                   George Harbison
Commodity Futures Trading Commission         Madge Bollinger
Congressional Budget Office                  Reta Broadnex
Consumer Product Safety Commission           Thomas W. Murr, Jr.
Defense, Department of                       Alvin Tucker
Education, Department of                     J. Bruce Holmberg
Energy, Department of                        James E. Reid
Environmental Protection Agency              Sally Ann Harper
Equal Employment Opportunity
Commission                                   Kassie Billingsley
Executive Office of the President            Ronnie Rasmussen
Export-Import Banlc of the U.S.              James K. Hess
Farm Credit Administration                   Michael A. Bronson
Federal Communications Commission            Thomas Holleran
Federal Deposit Insurance Corporation        Robert D. Hoffman
Federal Election Commission                  Richard C. Pullen
Federal Emergency Management Agency          Jon Wolz
Federal Energy Regulatory Commission         Anthony F. Toronto
Federal Labor Relations Authority            Clyde Blanford
Federal Maritime Commission                  Frederick Trutkoff
Federal Mediation and Conciliation Service   Richard A. Nelson
Federal Reserve System                       George E. Livingston



 90
AppendixB
JFMIP Liaison Representatives




Federal Trade Commission                   Richard Arnold
Financial Management Service               MichaelSmokovich
Forei~ Claims Settlement Commission
of the U.S.                                Judith H. Lock
General Accounting Office                  Jeffrey Steinhoff
General Services Administration            Leroy P. Boucher
Government Printing Office                 Thomas Muldon
Health and Human Services, Department of   Dennis J. Fischer
Housing and Urban Development,
Department of                              Thomas Sholedice
Information Agency, U.S.                   StanleyM.Silverman
Inter-American Foundation                  Dorothy Burruss
Interior, Department of                    TedWoronka
International Trade Commission             Philip Katz
Interstate Commerce Commission             Tony Jacobi.le
Justice, Department of                     James E. Williams
Labor, Department of                       Michael N. Griffin
Library of Congress                        John Webster
Merit Systems Protection Board             Robert Lawshe
National Academy of Sciences               David Williams
National Aeronautics and Space
Adminis~ation                              Richard J. Powell
National Archives and Records
Administration                             Patricia Denny Dews
National Capital Planning Commission       Connie Harshaw
National Credit Union Administration       Herbert S. Yolles
National Endowment for the Arts            Marvin A. Marks
National Endowment for the Humanities      Ray Gleason
National Gallery of Art                    William H. Roache
National Labor Relations Board             Lee D. Vincent
National Mediation Board                   Charles R. Barnes
National Railroad Passenger Corporation    Charles W. Hayward
National Science Foundation                Kenneth B. Foster
National Security Council                  Janis K. Whitley
National Transportation Safety Board       Dwight Foster
Navy, Department of the                    Bill Daeschner
Nuclear Regulatory Commission              Graham D. Johnson




 91
AppendixB
]FMIP Liaison Representatives




Occupational Safety and
Healtb Review Commission                  Larry A. Hoss
Office of Management and Budget           David Gribble
Office of Personnel Management            Brenda Benadom
Office of Science and Technology Policy   Barbara Diering
Office of Technology Assessment           Catherine Singleton
Office of Thrift Supervision              James Deemer
Overseas Private Investment Corporation   Ann Predieri
Panama Canal Commission                   Michael Rhode, Jr.
Peace Corps                               Ronald Passero
Pennsylvania Avenue Development
Corporation                               Alexander K. Milin
Pension Benefit Guaranty Corporation      Lawrence Maslan
Postal Rate Commission                    Charles Clapp
Postal Service, U.S.                      M. Richard Porras
Railroad Retirement Board                 Kenneth P. Boehne
Securities and Exchange Commission        Lawrence H. Haynes
Selective Service System                  Huntington Banister
Small Business Administration             Lawrence Rosenbaum
Smithsonian Institution                   AnnR.Leven
Soldiers' and Airmen's Home, U.S.         Elizabeth Walker
State, Department of                      Elizabeth Gibbons
Tax Court, United States                  Washington B. Bowie
Tennessee Valley Authority                Larry H. Edwards
Transporation, Department of              Joyce D. Shelton
Treasury, Department of                   Samuel T. Mok
Veterans Affairs, Department of           Chris Sale




 92
 AppendixC
 Available]FMIP Publications




1984
Proceedings ofthe 13th Annual Financial Management Conference
Annual Rcport-1983
Financial- Handbook for Fedmd :Executives and Managers

1985
Proceedings ofthe 14th Annual Financial.Management Conference
Annual Rcport-1984

1986
Proceedings ofthe 15th Annual Financial Management Conference
Annual Rcport-1985
Meeting the Challenge ofModernizing the Gwernmen~s Financial Systems 1'j
Using Off-the-ShelfSoftWare and Systems

1987
Proceedings ofthe 16th Annual Financial.Management Conference
Annual Rcport-1986
Forum on Implementing Off-the-ShelfFinancial- Systems
Proceedings ofWorkshops on Implementing Off-the-ShelfFinancial- Systems

1988
Proceedings ofthe 17th Annual Financial.Management Conference
AnnualRcport-1987
Core Financial Systems Requirements

1989
Proceedings ofthe 18th Annual Financial Management Conference
Annual Rcport-1988
]FMIP Fortieth Anniversary Report
lJi,rect<Jry for Financial Managers

1990
Proceedings ofthe 19th Annual Financial Management Conference
Federal Financial.Management Systems Personnel/P~ll System Requirements

Note: To obtain the above publications, contact JFMIP,
(202) 376-5439.




 93