Department of Homeland Security: Challenges and Steps in Establishing Sound Financial Management

Published by the Government Accountability Office on 2003-09-10.

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

                                United States General Accounting Office

GAO                             Testimony
                                Before the Subcommittee on Government Efficiency and
                                Financial Management, Committee on Government
                                Reform, House of Representatives

For Release on Delivery
Expected at 2:00 p.m. EST
Wednesday, September 10, 2003
                                DEPARTMENT OF
                                HOMELAND SECURITY
                                Challenges and Steps in
                                Establishing Sound
                                Financial Management
                                Statement of McCoy Williams, Director
                                Financial Management and Assurance

                                                September 10, 2003

                                                FINANCIAL MANAGEMENT

                                                Department of Homeland Security:
Highlights of GAO-03-1134T, a testimony         Challenges and Steps in Establishing Sound
before the Subcommittee on Government
Efficiency and Financial Management,            Financial Management
House Committee on Government
Reform, House of Representatives

Based on its budget, the                        The Homeland Security Act of 2002 brought together 22 agencies to create a
Department of Homeland Security                 new cabinet-level department focusing on reducing U.S. vulnerability to
(DHS) is the largest entity in the              terrorist attacks, and minimizing damages and assisting in recovery from
federal government that is not                  attacks that do occur. Meeting this mission will require a results-oriented
subject to the Chief Financial                  environment with a strong financial management infrastructure.
Officers (CFO) Act of 1990. The
department, with an estimated $39
billion in assets, an almost $40                Creating strong financial management at DHS is particularly challenging
billion fiscal year 2004 budget                 because most of the entities brought together to form the department have
request, and more than 170,000                  their own financial management systems, processes, and in some cases,
employees, does not have a                      deficiencies. Four of the seven major agencies that transferred to DHS
presidentially appointed CFO                    reported 18 material weaknesses in internal control for fiscal year 2002 and
subject to Senate confirmation and              five of the seven major agencies had financial management systems that
is not required to comply with the              were not in substantial compliance with FFMIA. For DHS to develop a
Federal Financial Management                    strong financial management infrastructure, it will need to address these and
Improvement Act (FFMIA) of 1996.                many other financial management issues.
In addition, we designated
implementation and transformation
of DHS as high risk based on three
                                                Through the study of several leading private and public sector finance
factors: (1) the implementation and             organizations (Creating Value Through World-class Financial
transformation of DHS is an                     Management, GAO/AIMD-00-134), GAO has identified success factors,
enormous undertaking that will                  practices, and outcomes associated with world-class financial management.
take time to achieve in an effective            Four steps DHS can take to begin developing sound financial management
and efficient manner, (2)                       and business processes are to: (1) make financial management an entitywide
components to be merged into DHS                priority, (2) redefine the role of the finance organization, (3) provide
already face a wide array of                    meaningful information to decision makers; and (4) build a team that
existing challenges, and (3) failure            delivers results.
to effectively carry out its mission
would expose the nation to                      H.R. 2886 can help facilitate the creation of a first-rate financial management
potentially very serious
                                                architecture at DHS by providing the necessary tools and setting high
                                                expectations. The bill would (1) make DHS a CFO Act agency, (2) require
In light of these conditions, the               DHS to obtain an opinion on its internal controls, and (3) require DHS to
Subcommittee asked GAO to testify               include program performance information in its performance and
on the financial management                     accountability reports. GAO fully supports the objectives of the CFO Act to
challenges facing DHS, steps for                provide reliable financial information and improve financial management
establishing sound financial                    systems and controls and believes DHS should be included under the act and
management and business                         therefore also subject to FFMIA. Further, GAO strongly believes that auditor
processes at DHS, and GAO’s                     reporting on internal control can be a critical component of monitoring the
comments on H.R. 2886, The                      effectiveness and accountability of an organization and supports DHS, as
Department of Homeland Security                 well as other CFO Act agencies, obtaining such opinions. In addition, GAO
Financial Accountability Act.
                                                supports agencies including program performance information in their
                                                performance and accountability reports and strongly encourages DHS to
                                                report this information voluntarily. Finally, as introduced, H.R. 2886
                                                provided a waiver allowing DHS to forego a financial statement audit for
www.gao.gov/cgi-bin/getrpt?GAO-03-1134T.        fiscal year 2003. We understand an agreement has been reached to remove
To view the full product, including the scope   this waiver from the proposed legislation. DHS has committed to a 2003
and methodology, click on the link above.       financial statement audit, which is already underway. GAO supports
For more information, contact McCoy
Williams at 202-512-6906 or
                                                dropping this provision from H.R. 2886.
This is a work of the U.S. government and is not subject to copyright protection in the
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United States General Accounting Office
Washington, D.C. 20548

                                    Mr. Chairman and Members of the Subcommittee:

                                    I am pleased to be here today to discuss the major financial management
                                    challenges facing the Department of Homeland Security (DHS), steps for
                                    establishing sound financial management and business processes, and our
                                    comments on H.R. 2886, The Department of Homeland Security Financial
                                    Accountability Act. The perspective we offer in this testimony is derived
                                    from an extensive body of work on these topics completed by inspector
                                    generals, independent auditors, as well as from GAO reports; executive
                                    guidance; and testimony related to financial management and DHS.

                                    The Homeland Security Act of 2002 brought together 22 diverse agencies
                                    and created a new cabinet-level department to help prevent terrorist
                                    attacks in the United States, reduce the vulnerability of the United States to
                                    terrorist attacks, and minimize the damage and assist in recovery from
                                    attacks that do occur. Efforts to improve homeland security will require a
                                    results-oriented approach to ensure mission accountability and
                                    sustainability over time, and DHS must have a strong financial management
                                    infrastructure to support these goals. As stated in the President’s
                                    Management Agenda, accurate and timely financial information is needed
                                    to secure the best performance and highest measure of accountability for
                                    the American people.

                                    DHS has stated its commitment to becoming a model of efficiency and
                                    effectiveness for the federal government. To achieve this goal, it must first
                                    overcome significant challenges in integrating 22 separate agencies and
                                    their systems into a single, effective department, as well as correct the wide
                                    array of existing management challenges in the inherited components.
                                    Developing a financial management architecture with integrated systems
                                    and business processes is one of the many difficult challenges the new
                                    department faces. We designated implementation and transformation of
                                    DHS as high risk based on three factors: (1) the implementation and
                                    transformation of DHS is an enormous undertaking that will take time to
                                    achieve in an effective and efficient manner, (2) components to be merged
                                    into DHS already face a wide array of existing challenges, and (3) failure to
                                    effectively carry out its mission would expose the nation to potentially very
                                    serious consequences.1 Our high-risk program has helped the executive
                                    branch and the Congress to galvanize efforts to seek lasting solutions to
                                    high-risk problems and challenges.

                                     High-Risk Series: An Update, GAO-03-119 (Washington, D.C.: January 2003).

                                    Page 1                                                                   GAO-03-1134T
Complicating DHS’s efforts to develop a strong financial management
infrastructure are the many known financial management weaknesses and
vulnerabilities in the agencies DHS inherited. For example, for four of the
seven major agencies2 that transferred to DHS on March 1, 2003—the
Immigration and Naturalization Service (INS), the Transportation Security
Administration (TSA), the Customs Service, and the Federal Emergency
Management Agency (FEMA)—auditors reported 18 material weaknesses3
in internal control for fiscal year 2002. Further, for five of the seven major
agencies, auditors reported that the agencies’ financial management
systems were not in substantial compliance with the Federal Financial
Management Improvement Act (FFMIA) of 1996.4

Building an effective financial management infrastructure will require
sustained leadership from top management. Currently, based on its budget,
DHS is the largest entity in the federal government that is not subject to the
Chief Financial Officers (CFO) Act of 1990.5 As such, this department, with
a fiscal year 2004 budget request of nearly $40 billion and currently more
than 170,000 employees, does not have a presidentially appointed CFO
subject to Senate confirmation and is not required to comply with FFMIA.
The goals of the CFO Act and related financial reform legislation, such as
FFMIA, are to provide the Congress and agency management with reliable
financial information for managing and making day-to-day decisions and to
improve financial management systems and controls to properly safeguard
the government’s assets. DHS should not be the only cabinet-level
department not covered by what is the cornerstone for pursuing and
achieving the requisite financial management systems and capabilities in
the federal government.

 The seven major agencies that were transferred to DHS are: Immigration and Naturalization
Service, Federal Emergency Management Agency, Customs Service, Transportation Security
Administration, the Office of Domestic Preparedness, the U.S. Coast Guard, and the Secret
  A material weakness is a condition that precludes the entity’s internal control from
providing reasonable assurance that misstatements, losses, or noncompliance, which are
material in relation to the financial statements or to stewardship information, would be
prevented or detected on a timely basis.
 FFMIA requires auditors, as part of CFO Act agencies’ financial statements, to report
whether agencies’ financial management systems substantially comply with (1) federal
financial management systems requirements, (2) applicable federal accounting standards,
and (3) the federal government’s standard general ledger at the transaction level.
 Pub. L. No. 101-576, 104 Stat. 2838 (1990).

Page 2                                                                      GAO-03-1134T
                        The creation of DHS presents an opportunity for the federal government to
                        ensure that it designs and implements a world-class organization with a
                        first-rate financial management systems architecture. Providing DHS with
                        the necessary tools, which would be facilitated by the passage of H.R. 2886,
                        and setting high expectations are of paramount importance to its success.
                        First, however, DHS must overcome many financial management
                        challenges, which I will now discuss.

DHS Faces Significant   Although many of the larger agencies that transferred to DHS have been
                        able to obtain unqualified or “clean” audit opinions on their annual
Financial Management    financial statements, most employed significant effort and manual work-
Challenges              arounds to do so in order to overcome a history of poor financial
                        management systems and significant internal control weaknesses.
                        Furthermore, some of the entities that transferred may also have
                        weaknesses not yet identified or reported on merely because the problems
                        were considered small or immaterial in relation to their large parent
                        departments, such as the Department of Defense or the U.S. Department of
                        Agriculture. Such weaknesses may become evident now that these smaller
                        agencies are proportionately larger as a part of DHS, add to the known
                        extensive existing challenges, and may therefore be subjected to increased
                        levels of audit scrutiny. Cumulatively, these weaknesses and the efforts
                        needed to resolve them to achieve sound financial management and
                        business processes are an important reason for amending the CFO Act to
                        include DHS and measuring DHS’s financial management systems and
                        internal control against the same important financial reform legislation and
                        performance expectations as other federal departments and agencies.

                        DHS, like other federal agencies, has a stewardship obligation to prevent
                        fraud, waste, and abuse, to use tax dollars appropriately, and to ensure
                        financial accountability to the President, the Congress, and the American
                        people. For the most part, DHS’s component entities are using legacy
                        financial management systems that have a myriad of problems, such as
                        disparate, nonintegrated, outdated, and inefficient systems and processes.
                        DHS will need to focus on building future systems as part of its enterprise
                        architecture approach to ensure an overarching framework for the agency’s
                        integrated financial management processes. Plans and standard accounting
                        policies and procedures must be developed and implemented to bridge the
                        many financial environments in which inherited agencies currently operate
                        to an integrated DHS system.

                        Page 3                                                          GAO-03-1134T
                         Another significant challenge for DHS is fixing the previously identified
                         weaknesses that the agencies bring with them to DHS, a number of which I
                         will now discuss.

Immigration and          While receiving unqualified audit opinions on its fiscal year 2001 and 2002
Naturalization Service   financial statements,6 the former INS under the Department of Justice
                         (DOJ) faces numerous challenges in achieving a sound financial
                         management environment. Although INS was abolished and split into
                         multiple bureaus within DHS, its prior financial management weaknesses
                         will still need to be addressed and could be further complicated by this

                         For fiscal year 2002, INS’s financial statement auditors reported three
                         material internal control weaknesses and that its systems were not in
                         substantial compliance with FFMIA. Specifically, auditors noted limitations
                         in the design and operation of INS’s financial accounting system, thereby
                         requiring it to use stand-alone systems or obtain the required financial
                         information via manual processes and nonroutine adjustments as part of
                         the financial statement preparation process. Having systems that can
                         routinely produce information for financial reporting on demand for day-to-
                         day decision making is one of the expected results of the President’s
                         Management Agenda, as well as one of the goals of FFMIA.

                         In addition, for both fiscal years 2001 and 2002, auditors reported that INS
                         did not have a reliable system for providing regular, timely data on the
                         numbers of completed and pending immigration applications, and the
                         associated collections of fees valued at nearly $1 billion for fiscal year 2002.
                         Accordingly, INS was not able to accurately and regularly determine fees it
                         earns without relying on an extensive servicewide, year-end physical count
                         of over 5.4 million pending applications, as was the case in fiscal year 2002.
                         INS has been developing a new tracking system to facilitate its inventory
                         process. However, until the new system is implemented, INS must rely on
                         inefficient manual processes that significantly disrupt its operations. These
                         and other inherent weaknesses in INS’s financial management process limit
                         its ability to produce useful, accurate, and timely financial information.

                           U.S. Department of Justice, Office of Inspector General, Immigration and Naturalization
                         Service Financial Statements, Fiscal Year 2002, Audit Report No. 03-22 (Washington, D.C.:
                         May 2003).

                         Page 4                                                                     GAO-03-1134T
                    Despite the importance and prevalence of information technology (IT)
                    systems in accomplishing its core missions, INS has not yet established and
                    implemented effective controls for managing its IT resources.7 The root
                    cause of INS’s systems problems has been an absence of effective
                    enterprise architecture management and an IT investment management
                    process. To address such weaknesses, INS has been developing an
                    enterprise architecture, including a current and target architecture, as well
                    as a transition plan. Similarly, INS has taken steps to implement rigorous
                    and disciplined investment management controls. However, with the
                    transfer to DHS and the splitting of INS, these plans will have to be
                    reanalyzed, further delaying implementation of effective systems and
                    complicating DHS’s ability to produce reliable, timely, and accurate
                    financial statements and information.

Federal Emergency   FEMA, the only CFO Act agency to transfer in its entirety to DHS, faces
Management Agency   several major financial management challenges, in spite of receiving an
                    unqualified opinion on its fiscal year 2002 financial statements.8 In fiscal
                    year 2002 FEMA’s auditors reported six material internal control
                    weaknesses and that FEMA’s financial management systems were not in
                    substantial compliance with the requirements of FFMIA. One major
                    weakness was FEMA’s inability to efficiently prepare accurate financial
                    statements as called for in the President’s Management Agenda. For
                    example, auditors reported that for fiscal year 2002, FEMA did not have an
                    integrated financial reporting process that could generate financial
                    statements as a byproduct of already existing processes, and that its
                    financial statements were prepared late and required significant revisions.

                    In addition, auditors reported in fiscal year 2001 and again in fiscal year
                    2002 that FEMA did not have adequate accounting systems and processes
                    to ensure that all property, plant, and equipment were properly recorded,
                    accurately depreciated, and tracked in accordance with its polices and
                    applicable federal accounting standards. As a result, FEMA’s property
                    management system cannot track items to supporting documentation or to
                    a current location. Furthermore, FEMA lacks procedures to ensure that

                    U.S. General Accounting Office, Major Management Challenges and Program Risks:
                    Department of Justice, GAO-03-105 (Washington, D.C.: January 2003).
                    Federal Emergency Management Agency, Annual Performance and Accountability Report
                    Fiscal Year 2002 (Washington, D.C.: Jan. 24, 2003).

                    Page 5                                                                GAO-03-1134T
                       (1) equipment is consistently recorded on either a system or a component
                       basis, (2) procedures are in place to ensure that property inventories are
                       performed properly, and (3) all equipment is entered into its personal
                       property management system. As a result, there is an increased risk that
                       equipment and other property could be lost, stolen, or improperly recorded
                       in its accounting records.

                       Since FEMA was the only agency to transfer to DHS in its entirety, it, unlike
                       all of the other agencies, is left without a legacy department to prepare
                       financial statements for the first 5 months of activity for fiscal year 2003 or
                       an Office of Inspector General (OIG) to audit them, leaving FEMA’s
                       financial management information for the first 5 months of this fiscal year
                       vulnerable to omissions, errors, and ultimately material misstatements.
                       Given the weaknesses in, among other things, FEMA’s property controls,
                       we are initiating a review of FEMA’s disbursement activity and property
                       management controls covering this 5-month period. We will keep this
                       Subcommittee informed of our progress in this review. Until corrective
                       actions are implemented to address weaknesses, FEMA will not be able to
                       achieve effective financial accountability or ensure that property is
                       properly accounted for.

U.S. Customs Service   In fiscal year 2002, Customs under Treasury received a qualified opinion on
                       a limited scope review9 of its internal controls. This qualified opinion was
                       due to the identification of four material weaknesses in Customs’ internal
                       controls by its independent auditors.10 For example, auditors reported that
                       Customs’ financial systems did not capture all transactions as they
                       occurred during the year; did not record all transactions properly; were not
                       fully integrated; and did not always provide for essential controls with
                       respect to override capabilities. As a result, extensive manual procedures
                       and analysis were required to process certain routine transactions and
                       prepare year-end financial statements.

                        A limited scope review was performed in lieu of a financial statement audit due to security
                       clearance procedures and other matters related to the access and handling of sensitive
                       information, which delayed the start of the IT evaluation and thus prevented the auditors
                       from completing test work on IT general and application controls.
                        U.S. Department of the Treasury, Office of Inspector General, Financial Management:
                       Report on Internal Control Over Financial Reporting of the U.S. Customs Service for
                       Fiscal Year 2002, OIG-03-033 (Washington, D.C.: Dec. 16, 2002).

                       Page 6                                                                        GAO-03-1134T
                          Customs, which typically collects and processes over $23 billion in fees
                          annually, was found to have poor collection procedures throughout the
                          agency. Ongoing weaknesses in the design and operation of Customs’
                          controls over trade activities and financial management and information
                          systems continue to inhibit the effective management of these activities
                          and protection of trade revenue. For example, auditors reported that
                          Customs’ Automated Commercial System could not provide summary
                          information on the total unpaid assessments for duties, taxes, and fees by
                          individual importer. The system also could not generate periodic
                          management information on outstanding receivables, the age of
                          receivables, or other data necessary for managers to effectively monitor
                          collection procedures. Such a capability would allow Customs to give
                          managers timely access to program revenue information and more
                          effectively present performance measures, which is critical for
                          implementation of the President’s Management Agenda.

                          Despite Customs’ progress in implementing recommendations GAO and
                          others have made over the years, numerous weaknesses continue to hinder
                          progress toward developing Customs’ planned import system, the
                          Automated Commercial Environment (ACE).11 ACE is intended to replace
                          the current system used for collecting import-related data and ensuring,
                          among other things, that trade-related revenue is properly collected and
                          allocated. To ensure proper implementation of these initiatives, DHS’s
                          management must continue to provide a sustained level of commitment to
                          its successful implementation. Until this system is fully implemented,
                          billions in trade-related revenue will continue to be tracked by systems
                          with inadequate controls. In addition, like INS, Customs faces additional
                          financial management challenges because it was split into various

Transportation Security   TSA was created by the Aviation and Transportation Security Act12 under
Administration            the Department of Transportation (DOT) in November 2001, to develop
                          transportation security policies and programs that contribute to providing
                          secure transportation for the American public. Despite its short history, the

                           U.S. General Accounting Office, Customs Service Modernization: Automated
                          Commercial Environment Progressing, but Further Acquisition Management
                          Improvements Needed, GAO-03-406 (Washington, D.C.: February 2003).
                               Pub. L. No. 107-71, 115 Stat. 597 (2001).

                          Page 7                                                                GAO-03-1134T
                     former TSA brings to DHS numerous financial management issues. In fiscal
                     year 2002, auditors reported five material weaknesses and that TSA’s
                     systems were not in substantial compliance with FFMIA.13 Specifically,
                     auditors found that TSA management had not established written
                     accounting policies and procedures to properly perform TSA’s financial
                     management and budgeting functions during fiscal year 2002. This is an
                     example of what can happen when a newly created entity does not
                     thoroughly develop and implement standard accounting policies and
                     procedures. DHS should carefully review TSA’s weaknesses to avoid
                     experiencing them on a departmentwide basis.

                     Auditors also reported that TSA did not maintain complete and accurate
                     records of its passenger and baggage screening equipment, most notably its
                     Explosive Detection System (EDS) equipment. For example, a significant
                     amount of fixed assets were found to not be recorded in the financial
                     statements and an adjustment of approximately $149 million was made
                     after year-end to properly record construction in progress for the
                     manufacture of EDS equipment. Until such weaknesses are resolved,
                     millions of dollars spent on new equipment and other fixed assets could go
                     unaccounted for or be improperly recorded, leaving TSA and DHS
                     vulnerable to fraud, waste, and abuse.

                     Another weakness reported by DOT’s OIG was TSA’s inadequate controls
                     over security screener contracts. Policies and procedures were not
                     established to provide an effective span of control to monitor contractor
                     costs and performance. This lack of oversight enabled contractors to
                     charge TSA up to 97 percent more than the contractors charged air carriers
                     prior to the federalization of the screener workforce. This weakness
                     provides further evidence of the importance of carefully documenting
                     policies and procedures early in the implementation of a new organization.

Office of Domestic   Established in 1998, the former Office of Domestic Preparedness (ODP)
Preparedness         under DOJ’s Office of Justice Programs provides grant funds and direct
                     support to, among other things, help address the equipment, training, and
                     technical assistance needs of state and local jurisdictions for responding to
                     terrorism and terrorist-related activities.

                        U.S. Department of Transportation, Office of Inspector General, Quality Control Review of
                     Audited Financial Statements for Fiscal Year 2002, TSA, QC-2003-016 (Washington, D.C.:
                     Jan. 27, 2003).

                     Page 8                                                                       GAO-03-1134T
              Since its inception, auditors have reported deficiencies in ODP’s ability to
              administer grant funds.14 In fiscal year 2002, we reported grant
              management as one of DOJ’s major performance and accountability
              challenges.15 DOJ’s OIG has found that while millions of dollars had been
              awarded, the funds were not awarded expeditiously, and grantees were
              very slow to spend the requested monies.16 According to the OIG, more
              than half of the monies requested and granted over the past few years
              remained unspent and some of the equipment purchased by state and local
              jurisdictions was unavailable for use because grantees did not properly
              distribute the equipment, could not locate it, or were inadequately trained
              to use it.

              Since the DOJ OIG reported on this issue in fiscal year 2002, DHS has
              released more than $4.4 billion in grants to state and local governments and
              private sector organizations. This increased level of grants will only
              exacerbate these problems unless DHS works with grantees to improve the
              accountability over these funds.

Coast Guard   Unlike many of the larger agencies that transferred to DHS, the Coast
              Guard did not have a stand-alone financial statement audit, but was audited
              as part of DOT’s consolidated audit. Although the auditors for DOT have
              not reported significant financial management weaknesses at the Coast
              Guard in recent years, the Coast Guard still uses DOT’s Departmental
              Accounting and Financial Information System, which, among other things,
              was unable to produce auditable financial statements based on the
              information within the system. In addition, we have listed the Coast Guard
              as part of DHS’s major management challenges due to its dual missions of
              maritime safety and homeland security.17

               U.S. Department of Justice, Office of Inspector General, Office of Justice Programs: State
              and Local Domestic Preparedness Grant Programs, 02-15 (Washington, D.C.: March 2002).
               U.S. General Accounting Office, Major Management Challenges and Program Risks:
              Department of Justice, GAO-03-105 (Washington, D.C.: January 2003).
               U.S. Department of Justice, Fiscal Year 2002 Performance and Accountability Report
              (Washington, D.C.: Jan. 31, 2003).
               U.S. General Accounting Office, Major Management Challenges and Program Risks:
              Department of Homeland Security, GAO-03-102 (Washington, D.C.: January 2003).

              Page 9                                                                       GAO-03-1134T
                      Concerns have also been reported regarding the Coast Guard’s Deepwater
                      Procurement Project, which currently has an estimated cost of $17 billion
                      over 20 years. It is intended to replace or modernize by 2022 all assets used
                      in missions that generally occur offshore. However, due to the events of
                      September 11th and the Coast Guard’s expanded role in homeland security,
                      additional project requirements have been identified, including
                      accelerating the project to be completed in 10 years. These changes may
                      result in increased annual funding needs for the project, thus increasing the
                      vulnerability to ineffective and inefficient use of funds.

Secret Service        The Secret Service, formerly under the Department of the Treasury
                      (Treasury), has also not had a stand-alone financial statement audit, but
                      was audited as part of Treasury’s consolidated audit. Although from an
                      audit perspective the Secret Service was relatively small in relation to the
                      Internal Revenue Service and Bureau of the Public Debt at Treasury, its
                      missions of protecting the President and investigating financial crimes are
                      sensitive. Auditors for Secret Service may identify internal control
                      weaknesses that were not previously known, but may now be identified
                      since the Secret Service is proportionately a larger component of DHS than
                      it was under Treasury, and may therefore be subjected to increased levels
                      of audit scrutiny.

Other Entities        Aside from the known weaknesses at the 7 larger component agencies
                      comprising DHS, some of the 15 smaller entities that transferred to DHS
                      may also have weaknesses not previously identified. As with the Secret
                      Service, these entities may be proportionately more significant at DHS than
                      they were at their legacy departments. In addition, once combined, certain
                      areas may be cumulatively subject to more audit scrutiny than when they
                      were dispersed throughout other departments. Any such weaknesses will
                      only exacerbate the extensive existing challenges.

Financial Reporting   DHS plans to prepare financial statements for the 7 months ending
Challenges            September 30, 2003. We support DHS’s decision to do so, but recognize that
                      it will be very challenging given the problems DHS inherited, compounded
                      by the additional complexity of merging a number of diverse entities, which
                      literally has had to hit the ground running from day one. Obtaining a
                      consolidated DHS financial statement audit for that same period will be
                      equally challenging, but also worthwhile.

                      Page 10                                                          GAO-03-1134T
Since DHS is a new entity, its auditors have already begun performing audit
procedures on beginning balances (i.e., transferred balances) as of March
1, 2003, the activity for the 7 months ending September 30, 2003, and ending
balances. The transfer date of March 1 represents a unique challenge
because it does not fall on the end of a typical accounting period, such as
the end of the fiscal year or reporting quarter. In addition, legacy
departments’ goals of reaching accelerated reporting dates18 for fiscal year
2003 may be impaired if DHS cannot provide intragovernmental
information needed by these departments on time. OMB and Treasury
require agencies to reconcile selected intragovernmental activity and
balances with their “trading partners” (i.e., other agencies) and to report on
the extent and results of intragovernmental activity and balance
reconciliation efforts. This information is necessary, not only for the
agencies’ financial statements and reports, but also for the U.S.
Consolidated Financial Statements.

These are unique challenges that must be addressed to ensure that
accounts and amounts transferred to DHS are complete and accurate and
that legacy departments’ reporting is not negatively impacted. Any
significant problems encountered could also negatively impact the
preparation and audit of the U.S. government’s fiscal year 2003 financial

In the longer term, DHS can only overcome its many challenges if it
establishes systems, processes, and controls that help to ensure effective
financial management and insists on the adherence to strong financial
practices. In addition to addressing the many ongoing challenges existing
in the programs of incoming agencies, DHS will need to focus on building
future systems as part of its enterprise architecture approach to ensure an
overarching framework for the agency’s integrated financial management
processes. Plans and standard accounting policies and procedures must be
developed and implemented to bridge these financial environments into an
integrated DHS system.

 The Office of Management and Budget (OMB) has issued accelerated reporting
requirements that require agencies to prepare financial statements close to the end of the
reporting period. Under these requirements, agency performance and accountability reports
for fiscal year 2002 were due to OMB by February 1, 2003, and by fiscal year 2004 agencies
will be required to submit these reports by November 15, 2004. In addition, in fiscal year
2003, agencies are required to prepare and submit quarterly financial statements no later
than 45 days after the end of the reporting period.

Page 11                                                                     GAO-03-1134T
                         Mr. Chairman, I would now like to discuss steps DHS should take to
                         establish sound financial management and business processes.

Steps for Establishing   Successful financial management of DHS will depend on the department
                         producing financial information that provides useful information for
Sound Financial          executive decision making. In April 2000, we issued an executive guide that
Management and           provided guidance in creating value through financial management.19 After
                         studying the financial management practices and improvement efforts of
Business Processes       nine leading private and public sector finance organizations, we identified
                         several success factors, practices, and outcomes associated with world-
                         class financial management. The organizations we studied include The
                         Boeing Company, Chase Manhattan Bank, General Electric Company,
                         Hewlett-Packard, Owens Corning, Pfizer Inc., and the states of
                         Massachusetts, Texas, and Virginia.

                         First and foremost, establishing the following goals is key to developing a
                         world-class finance organization with sound financial management and
                         business processes: (1) make financial management an entitywide priority,
                         (2) redefine the role of the finance organization, (3) provide meaningful
                         information to decision makers, and (4) build a team that delivers results. I
                         will discuss each of these goals in more detail below, including several best
                         practices that are critical in meeting these goals. These practices lead to
                         finance organizations that provide timely information that is relevant to
                         management, useful in the decision-making process, and adds value to the
                         organization. Since it is a newly created entity, DHS has a unique
                         opportunity to implement the identified practices when developing
                         financial policies and activities to establish sound financial management
                         and business processes.

Establish Financial      Based on our study of world-class financial organizations, making financial
Management as an         management an entitywide priority is encouraged through the following
                         best practices: (1) providing clear, strong, executive leadership, (2)
Entitywide Priority
                         building a foundation of control and accountability, and (3) using training
                         to change the culture and engage line managers.

                          U.S. General Accounting Office, Executive Guide: Creating Value Through World-class
                         Financial Management, GAO/AIMD-00-134 (Washington, D.C.: April 2000).

                         Page 12                                                                  GAO-03-1134T
                           Top leadership involvement is essential for a successful realignment of this
                           magnitude. Top leadership is responsible for allocating the resources
                           needed to improve financial management and for building and maintaining
                           the organization’s commitment to doing business in a new way. The CFO
                           Act established the position of CFO in 24 agencies (app. I lists the original
                           24 CFO Act agencies—FEMA has transferred to DHS since the act was
                           enacted) in the federal government. These CFOs are given oversight
                           authority regarding financial management matters and are responsible for
                           ensuring that sound financial management is in place. As you know, DHS is
                           not currently subject to the provisions of the CFO Act, and thus has no
                           legal requirement to comply with its provisions. Although Secretary Ridge
                           pledged financial management as a priority in his May 1, 2003, testimony,
                           passage of H.R. 2886, which would amend the CFO Act to include DHS, is
                           important to ensure the department’s long-term commitment to
                           establishing sound financial management and business processes.

                           Further, as DHS continues to integrate its 22 entities, it must build a strong
                           overall foundation of control and accountability. Management should begin
                           by considering any significant control issues with agencies that are being
                           integrated to form DHS, many of which I have already highlighted. These
                           issues must be addressed within the specific agencies, as well as
                           departmentwide to ensure they do not continue to be control issues within
                           the newly formed department. Additionally, increases in accountability
                           should be encouraged through the production of financial and performance
                           reports for major programs on a regular and frequent basis to help in the
                           decision-making process and strategic planning. Ultimately, the foundation
                           for regular and frequent reporting will be through development of an
                           integrated financial management system—one capable of capturing data at
                           an appropriate level of detail and producing relevant and reliable
                           information for users based on their needs. In the case of DHS, the
                           challenge of combining, integrating, modernizing, and in some cases
                           replacing the systems of many disparate agencies will require careful
                           planning if the conversion is to be successful.

Redefine the Role of the   As discussed earlier, many of the larger agencies that transferred to DHS
Finance Organization       have a history of poor systems and inadequate financial management. In
                           order to establish sound financial management and business processes, we
                           found that world-class finance organizations redefined the role of the
                           finance organization and implemented an integrated financial management
                           structure that: (1) assessed the finance organization’s role in meeting the
                           department’s mission, (2) maximized the efficiency of day-to-day

                           Page 13                                                           GAO-03-1134T
                           accounting activities, and (3) organized the finance organization to add

                           The ever-increasing competition for resources requires careful allocation of
                           funds. Without the support of an effective finance organization, program
                           managers may not be able to determine costs associated with government
                           activities, defend those costs, or identify the benefits derived from them.
                           The finance organization must understand the department’s mission and be
                           able to provide information in support of that mission. Of key importance is
                           the ability of the finance organization to efficiently complete routine
                           accounting activities, thus freeing resources to focus on other finance-
                           related priorities that are in support of the department’s mission. As I
                           previously discussed, many of the larger agencies that transferred into DHS
                           spend significant time preparing financial statements using manual work-
                           arounds and have a history of poor financial management systems and
                           significant internal control weaknesses. Such a time-consuming method of
                           routine financial statement preparation does not allow for efficient use of
                           finance staff. As DHS develops its financial management and businesses
                           processes, it should focus on developing the abilities to (1) efficiently and
                           effectively complete routine processing activities and (2) compile the data
                           needed to measure performance so that information is available to
                           management on a day-to-day basis.

Provide Meaningful         The overarching goal of the President’s Management Agenda is the
Information for Decision   improvement of government performance. The finance organization must
                           play a pivotal role in providing decision makers with the information they
                           need to measure performance. To efficiently and effectively provide
                           reliable information to decision makers, we identified three best practices
                           in our study of world-class finance organizations: (1) develop systems that
                           support the partnership between finance and operations, (2) reengineer
                           processes in conjunction with new technology, and (3) translate financial
                           data into meaningful information.

                           To help agencies set goals and measure performance, the Congress enacted
                           the Government Performance and Results Act (GPRA) in 1993. As part of
                           GPRA, agencies, including DHS, are required to prepare a 5-year
                           performance plan and annual performance reports. These required reports
                           provide a strategic planning and management framework intended to
                           improve federal performance and hold agencies accountable for achieving
                           results. GPRA was intended, in part, to improve congressional decision
                           making by giving the Congress comprehensive and reliable information on

                           Page 14                                                          GAO-03-1134T
                             the extent to which federal programs are fulfilling their statutory intent.
                             Additionally, the President’s Management Agenda includes improved
                             financial management performance as one of the five governmentwide
                             management goals. This initiative is aimed at ensuring that federal financial
                             systems produce accurate and timely information to support operating,
                             budget, and policy decisions. The finance organization is a key component
                             of a department’s ability to meet its requirements under GPRA and the
                             objectives of the President’s Management Agenda.

Build an Effective Finance   Over the years, the federal government has had difficulty attracting and
Team                         retaining talented financial management officials. Improving financial
                             performance is difficult without experienced leadership and staff who are
                             committed to success. Our study of several world-class finance
                             organizations indicated the following as best practices to build a team that
                             can deliver results: (1) develop a finance team with the right mix of skills
                             and competencies, and (2) attract and retain talent.

                             Given the current demand on resources and the competition for qualified
                             employees, developing and retaining a talented finance team that is capable
                             of meeting the changing demands of the federal financial workplace is an
                             important goal. The lack of highly qualified financial management
                             professionals can hamper effective federal financial management
                             operations. The CFO Act requires OMB’s Deputy Director for Management
                             to develop and maintain qualification standards for agency CFOs and their
                             deputies; provide advice to agencies on the qualification, recruitment,
                             performance, and retention of financial management personnel; and assess
                             the adequacy of financial management staffs throughout the government.
                             Additionally, the CFO Act places responsibility with the CFO to recruit,
                             select, and train finance personnel.

                             To help department leaders manage their people and integrate human
                             capital considerations into daily decision making and the program results
                             they seek to achieve, we developed a strategic human capital model.20 This
                             model is applicable to department leadership as a whole but is also
                             applicable to finance organization leadership as they seek to attract,
                             develop, and retain talent. The two critical success factors identified in our
                             model to assist organizations in creating results-oriented cultures are

                              U.S. General Accounting Office, A Model of Strategic Human Capital Management, GAO-
                             02-373SP (Washington, D.C.: Mar. 15, 2002).

                             Page 15                                                               GAO-03-1134T
                   (1) linking unit and individual performance to organizational goals and (2)
                   involving employees in the decision-making process. Agency leaders have
                   other opportunities for displaying their commitment to human capital.
                   Continuous learning efforts, employee-friendly workplace policies,
                   competency-based performance appraisal systems, and retention and
                   reward programs are all ways in which agencies can value and invest in
                   their human capital. The sustained provision of resources for such
                   programs can show employees and potential employees the commitment
                   agency leaders have to strategic human capital management. DHS should
                   adopt these success factors in building a financial management team that
                   delivers results.

                   It is well recognized that mergers of the magnitude of DHS carry significant
                   risks, including lost productivity and inefficiencies. Successful
                   transformations of large organizations generally can take from 5 to 7 years
                   to achieve. Necessary management capacity, communication and
                   information systems, as well as sound financial management and business
                   processes must be established. Though creating and maintaining these
                   structures will be demanding and time consuming, it is necessary to
                   effectively implement the national homeland security strategy.21

                   Over the past several months, we have met with DHS’s CFO, Acting
                   Inspector General and Assistant Inspector General for Audits, and its
                   independent auditors performing its financial statement audit for 2003. We
                   are committed to working in a coordinated effort with the Congress, DHS,
                   and its auditors to provide advice to DHS on developing a sound financial
                   management structure that will facilitate, and not hamper, its mission of
                   securing the homeland. We believe that passage of H.R. 2886 will further
                   assist DHS in meeting this goal.

Comments on H.R.   Mr. Chairman, as you know, H.R. 2886 as introduced on July 24, 2003 would
                   amend the CFO Act to (1) add DHS as a CFO Act agency and remove FEMA
2886               as a CFO Act agency, (2) require DHS to obtain an audit opinion on its
                   internal controls, and (3) require DHS to include program performance

                     GAO convened a forum on September 24, 2002, to identify and discuss useful practices and
                   lessons learned from major private and public sector organizational mergers, acquisitions,
                   and transformations. U.S. General Accounting Office, Highlights of a GAO Forum: Mergers
                   and Transformation: Lessons Learned for a Department of Homeland Security and Other
                   Federal Agencies, GAO-03-293SP (Washington, D.C.: November 2002).

                   Page 16                                                                     GAO-03-1134T
                            information in its performance and accountability reports. In addition, H.R.
                            2886 as introduced would have provided a waiver allowing DHS to forego a
                            financial statement audit for fiscal year 2003. We understand an agreement
                            has been reached to remove this waiver from the proposed legislation.
                            DHS’s 2003 audit is already underway and the department has stated it is
                            committed to obtaining this audit. The waiver option is, therefore, no
                            longer needed, and we support dropping the provision from H.R. 2886.

Inclusion of DHS as a CFO   We supported passage of the CFO Act in 1990 and continue to strongly
Act Agency                  support its objectives of (1) giving the Congress and agency decision
                            makers reliable financial, cost, and performance information both annually
                            and, most important, as needed throughout the year to assist in managing
                            programs and making difficult spending decisions, (2) dramatically
                            improving financial management systems, controls, and operations to
                            eliminate fraud, waste, abuse, and mismanagement and properly safeguard
                            and manage the government’s assets, and (3) establishing effective
                            financial organizational structures to provide strong leadership. Achieving
                            these goals is critical for establishing effective financial management, and
                            we fully support amending the CFO Act to include DHS.

                            In developing the CFO Act, the Congress viewed the CFO as being a critical
                            player in the management of an agency. At the time, financial management
                            was not a priority in most federal agencies and was all too often an
                            afterthought. All too often, the top financial management official wore
                            many hats, which left little time for financial management; did not
                            necessarily have any background in financial management; and focused
                            primarily on the budget. By establishing statutorily the position of CFO,
                            requiring that the person in the position have strong qualifications and a
                            proven track record in financial management, and giving this person status
                            as a presidential appointee, the Congress sought to change the then
                            existing paradigm. Of the 24 agencies named in the 1990 CFO Act, 16 were
                            designated as Level IV, Presidential appointee Senate confirmation
                            positions and eight were career positions. Today, CFOs have become
                            influential across government and the quality of the appointees has borne
                            out the wisdom of the Congress’s insistence that this position be elevated
                            (meaning it reported to the top and had standing with other top officials).
                            We have seen an evolution of the CFO position and a quantum change in
                            the expertise and abilities of CFOs and the attractiveness of this position to
                            someone having the type of proven track record in financial management
                            that is needed in the federal government. In the end, the key attribute is the
                            quality of the person in the position to affect change and carry out the role

                            Page 17                                                           GAO-03-1134T
                      of CFO and whether the head of the agency supports the CFO and
                      empowers that person to do the job needed. Appointment of the CFO by
                      the President, subject to Senate confirmation, is one way to help ensure
                      that the goals of the CFO Act are met and that has proven itself over time.

                      The CFO Act, as expanded by the Government Management Reform Act of
                      1994, also requires agencies to prepare and have audited financial
                      statements. The Congress added further emphasis to the importance of
                      sound financial management when it enacted FFMIA. Under the
                      Accountability of Tax Dollars Act of 2002,22 DHS, as an executive branch
                      agency with budget authority greater than $25 million, would be required to
                      obtain annual financial statement audits; however, its auditors would not
                      have to report on compliance with FFMIA. Although DHS has appropriately
                      contracted with independent auditors to report on its systems compliance
                      with FFMIA for fiscal year 2003, it is not legally required to do so. FFMIA
                      requires that agencies implement and maintain financial management
                      systems that substantially comply with (1) federal systems requirements,
                      (2) federal accounting standards, and (3) the U.S. Government Standard
                      General Ledger. The ability to produce the data needed to efficiently and
                      effectively manage the day-to-day operations of the federal government and
                      provide accountability to taxpayers has been a long-standing challenge at
                      most federal agencies. As we discussed earlier, auditors reported that many
                      of the larger agencies that transferred to DHS were not in substantial
                      compliance with FFMIA prior to their transfer to DHS. Given these
                      preexisting compliance issues, in addition to issues that may arise with
                      system integration initiatives, it is critical that DHS be legally required to
                      comply with these important financial management reforms.

Opinion on Internal   Current OMB guidance for audits of government agencies and programs23
Controls              requires auditor reporting on internal control, but not at the level of
                      providing an opinion on internal control effectiveness. However, we have
                      long believed and the Comptroller General has gone on record in

                           Pub. L. No. 107-289, 116 Stat. 2049 (2002).
                       Office of Management and Budget, Audit Requirements for Federal Financial
                      Statements, Bulletin 01-02 (Washington, D.C.: Oct. 16, 2000).

                      Page 18                                                                GAO-03-1134T
congressional testimony24 that auditors have an important role in providing
an opinion on the effectiveness of internal control over financial reporting
and compliance with laws and regulations in connection with major federal
departments and agencies. For a number of years, we have provided
separate opinions on internal control effectiveness for the federal entities
that we audit because of the importance of internal control to protecting
the public’s interest. Specifically, we provide separate opinions on internal
controls and compliance with laws and regulations for our audits of the
U.S. government’s consolidated financial statements, the financial
statements of the Internal Revenue Service and Federal Deposit Insurance
Corporation, the Schedules of Federal Debt managed by the Bureau of the
Public Debt, and numerous small entities’ operations and funds. Our
reports and related efforts have engendered major improvements in
internal control.

As part of the annual audit of our own financial statements, we practice
what we recommend to others and contract with an independent public
accounting firm for both an opinion on our financial statements and an
opinion on the effectiveness of our internal control over financial reporting
and compliance with laws and regulations. Our goal is to lead the way in
establishing the appropriate level of auditor reporting on internal control
for federal agencies, programs, and entities receiving significant amounts
of federal funding. Additionally, three agencies, Social Security
Administration (SSA), General Services Administration (GSA), and the
Nuclear Regulatory Commission (NRC) voluntarily obtain separate
opinions on internal control effectiveness from their auditors, which is

Another consideration as the Congress decides whether to enact new
requirements is that an opinion on internal controls is what has been
prescribed by the Congress for publicly traded corporations. A final rule
issued by the Securities and Exchange Commission in June 2003 and
effective in August 2003 provides guidance for implementation of Section
404 of the Sarbanes-Oxley Act of 2002,25 which requires publicly traded
companies to establish and maintain an adequate internal control structure
and procedures for financial reporting and include in its annual report a

 U.S. General Accounting Office, Fiscal Year 2002 U.S. Government Financial
Statements: Sustained Leadership and Oversight Needed for Effective Implementation of
Financial Management Reforms, GAO-03-572T.
     Pub. L. No. 107-204, 116 Stat. 745 (2002).

Page 19                                                                 GAO-03-1134T
statement of management’s responsibility for and management’s
assessment of the effectiveness of those controls and procedures in
accordance with standards adopted by the Securities and Exchange
Commission. The final rule defines this requirement and requires
applicable companies to obtain a report in which a registered public
accounting firm expresses an opinion, or states that an opinion cannot be
expressed, concerning management’s assessment of the effectiveness of
internal controls over financial reporting.

Auditor reporting on internal control is a critical component of monitoring
the effectiveness of an organization’s accountability. GAO strongly believes
that this is especially important for very large, complex, or challenged
entities. By giving assurance about internal control, auditors can better
serve their clients and other financial statement users and better protect
the public interest by having a greater role in providing assurances of the
effectiveness of internal control in deterring fraudulent financial reporting,
protecting assets, and providing an early warning of internal control
weaknesses. We believe auditor reporting on internal control is appropriate
and necessary for publicly traded companies and major public entities
alike. We also believe that such reporting is appropriate in other cases
where management assessment and auditor examination and reporting on
the effectiveness of internal control add value and mitigate risk in a cost-
beneficial manner.

We know that some will point to increased costs as a reason to remove this
provision from the legislation. We believe that auditors who follow the
Financial Audit Manual—which was jointly developed by GAO and the
President’s Council on Integrity and Efficiency (PCIE)26—should ordinarily
have little to no incremental costs associated with such reporting.

We fully support having DHS, as well as all CFO Act agencies, obtain an
opinion on its internal control. If DHS is truly committed to becoming a
model federal agency, it should begin obtaining opinions on internal
control as soon as practical and set an example for other agencies to follow
and in keeping with the actions already taken by SSA, GSA, NRC, and GAO.

     Generally referred to as the GAO/PCIE Financial Audit Manual.

Page 20                                                              GAO-03-1134T
Inclusion of             We also support agencies including program performance information in
                         agency performance and accountability reports, so that relevant
Performance              performance and financial information is presented in a consolidated and
Information in           useful manner. Agencies currently have the discretion to include this
                         information in a consolidated format. We strongly encourage DHS to
Accountability Reports   consolidate this information in its accountability report beginning with
                         fiscal year 2003.

                         In closing, the American people have increasingly demanded accountability
                         from government and the private sector. The Congress has recognized,
                         through legislation such as the CFO Act, that the federal government must
                         be held to the highest standards. We already know that many of the larger
                         agencies transferred to DHS have a history of poor financial management
                         systems and significant internal control weaknesses. These known
                         weaknesses provide further evidence that DHS’s systems and financial
                         controls should be subject to provisions of the CFO Act and thus FFMIA.
                         We also strongly encourage DHS to become a model agency and, as soon as
                         practical, obtain an opinion on its internal controls and report performance
                         information in its accountability reports.

                         Mr. Chairman, this concludes my statement. I would be happy to answer
                         any questions you or other Members of the Subcommittee may have at this

Contacts and             For information about this statement, please contact McCoy Williams,
                         Director, Financial Management and Assurance, at (202) 512-6906, or Casey
Acknowledgments          Keplinger, Assistant Director, at (202) 512-9323. You may also reach them
                         by e-mail at williamsm1@gao.gov or keplingerc@gao.gov. Individuals who
                         made key contributions to this testimony include Cary Chappell and
                         Heather Dunahoo.

                         Page 21                                                         GAO-03-1134T
Appendix I

CFO Act Agencies                                                                                             Append

24 CFO Act Agencies   The Department of Agriculture
                      The Department of Commerce
                      The Department of Defense
                      The Department of Education
                      The Department of Energy
                      The Department of Health and Human Services
                      The Department of Housing and Urban Development
                      The Department of Interior
                      The Department of Justice
                      The Department of Labor
                      The Department of State
                      The Department of Transportation
                      The Department of the Treasury
                      The Department of Veterans Affairs
                      The Environmental Protection Agency
                      The National Aeronautics and Space Administration
                      The Agency for International Development
                      The Federal Emergency Management Agency1
                      The General Services Administration
                      The National Science Foundation
                      The Nuclear Regulatory Commission
                      The Office of Personnel Management
                      The Small Business Administration
                      The Social Security Administration

                      Under the Homeland Security Act of 2002, FEMA transferred to DHS and under H.R. 2886
                      would no longer be considered a CFO Act agency.

                      Page 22                                                                 GAO-03-1134T
Related GAO Products

             Fiscal Year 2002 U.S. Government Financial Statements: Sustained
             Leadership and Oversight Needed for Effective Implementation of
             Financial Management Reform. GAO-03-572T. Washington, D.C.: April 8,

             Transportation Security Administration: Actions and Plans to Build a
             Results-Oriented Culture. GAO-03-190. Washington, D.C.: January 2003.

             High-Risk Series: An Update. GAO-03-119. Washington, D.C.: January

             Major Management Challenges and Program Risks: Federal Emergency
             Management Agency. GAO-03-113. Washington, D.C.: January 2003.

             Major Management Challenges and Program Risks: Department of the
             Treasury. GAO-03-109. Washington, D.C.: January 2003.

             Major Management Challenges and Program Risks: Department of
             Justice. GAO-03-105. Washington, D.C.: January 2003.

             Major Management Challenges and Program Risks: Department of
             Homeland Security. GAO-03-102. Washington, D.C.: January 2003.

             Financial Management: FFMIA Implementation Necessary to Achieve
             Accountability. GAO-03-31. Washington, D.C.: October 1, 2002.

             Homeland Security: Critical Design and Implementation Issues. GAO-02-
             957T. Washington, D.C.: July 17, 2002.

             A Model of Strategic Human Capital Management. GAO-02-373SP.
             Washington, D.C.: March 2002.

             Executive Guide: Creating Value Through World-class Financial
             Management. GAO/AMID-00-134. Washington, D.C.: April 2000.

(195024)     Page 23                                                     GAO-03-1134T
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