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Financial Management Plans and Reports


FY 2004 Performance and Accountability Report
Bureau of Resource Management
November 2004
Report
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OVERVIEW

 

Introduction

 

The Department's Bureau of Resource Management (RM), headed by the Assistant Secretary for Resource Management and Chief Financial Officer (CFO), employs over 500 people around the globe--in Washington, Charleston, South Carolina, and Bangkok, Thailand. With five major operating units, the CFO oversees all strategic and performance planning, state operations and foreign assistance budgeting and resource management, global accounting, disbursing and payroll, financial systems, and issuance of the financial statements and "annual report" of the Department. The CFO also coordinates and leads the remediation of vulnerabilities within the Department's global critical infrastructure. RM produces a number of essential documents including the Department's Strategic Plan, Joint Performance Plan with USAID, Performance and Accountability Report, Budget-in-Brief, and the Congressional Budget Justification Document.

RM's customers are all embassies, consulates, and missions overseas, nearly 40 other U.S. Government agencies overseas, all domestic bureaus and employees of the State Department, and the Broadcasting Board of Governors. RM's services to its customers are critical in order that they can do their job to create a more secure, democratic, and prosperous world.

 

MISSION

"To integrate strategy, budgeting, and performance management, and secure and
manage the resources necessary to accomplish the Department of State's mission."

 

The CFO's mission statement is incorporated into the Department's strategic goal for Management and Organizational Excellence as Performance Goal 5 (see page 277). This Performance Goal has two initiatives, one each for the President's Management Agenda's initiatives for Improved Financial Performance and Budget and Performance Integration.

 

IMPROVED FINANCIAL PERFORMANCE

 

Goals and Strategies

 

INITIATIVE GOAL STATEMENT

Provide world-class financial services that support strategic decision-making, mission performance,
the President's Management Agenda, and improved accountability to the American people.

 

Improving financial performance means that the Department knows where every dollar comes from and where every dollar goes in a timely and accurate manner. Accurate and timely information is critical to managing our programs on a day-to-day basis, obtaining the best performance, and ensuring accountability to the American public. It is also a core competency of world-class organizations.

To do this, RM will:

  • Produce on-time, accurate and useful financial statements on a routine basis.
  • Obtain an unqualified ("clean") opinion on annual Departmentwide financial statements.
  • Produce award winning Performance and Accountability Reports.
  • Implement seamless financial systems and processes that meet Federal and Department requirements.
  • Ensure effective internal controls are in place and functioning.
  • Consolidate and standardize financial operations.
  • Leverage best business practices and electronic technologies (E-Gov).
  • Build a top-notch finance team.
  • Undertake other value-added activities that support strategic decision-making and mission performance.

Key measures of our success in this area are aligned with how OMB scores financial management related to achieving a "green" status rating on the President's Management Agenda. Other measures of success include:

  • Are we on target in our consolidation of financial services to the Charleston Financial Services Center?
  • Are we implementing the President's mandate to effectively adopt E-Gov solutions, especially in the areas of payroll, travel and grants?
  • Are we adequately investing in our greatest asset - our people?

 

Performance

 

President's Management Agenda

To date, as indicated in the table below, the Department has met seven of the nine OMB-established criteria and achieved a "Yellow" for status. We have on-time financial statements that receive unqualified opinions, award winning Performance and Accountability Reports, financial systems and processes that substantially meet Federal requirements and allow for effective budget execution, and sound internal controls. The Department continues to work with OMB to achieve the final criteria -- "financial data integration." Under this criteria, agencies must demonstrate (1) how their financial systems achieve better results through lower costs or improved outcomes, and (2) that they are implementing a plan to continuously expand the scope of this ability. We plan to achieve "Green" status in the first quarter of FY 2005.

OMB-established Criteria

Criteria Status
Receives an unqualified audit opinion on its annual financial statements.
Met
Meets financial statement reporting deadlines.
Met
Reports in its audited annual financial statements that its systems are in compliance with the Federal Financial Management Improvement Act.
Met
Has no chronic or significant Anti- Deficiency Act Violations.
Met
Has no material auditor-reported internal control weaknesses.
Met
Has no material non-compliance with laws or regulations.
Met
Has no material weaknesses or non-conformances reported under Section 2 and Section 4 of the Federal Managers' Financial Integrity Act that impact the agency's internal control over financial reporting or financial systems.
Met
Currently produces accurate and timely financial information that is used by management to inform decision-making and drive results in key areas of operations.
Not Met

Is implementing a plan to continuously expand the scope of its routine data use to inform management decision-making in additional areas of operations.

Not Met

 

Consolidating and Standardizing our Worldwide Financial Operations

While we modernize our major corporate financial management systems, we are also consolidating our worldwide financial operations to our Charleston and Bangkok Financial Service Centers (FSC) to provide world-class financial services. The recent highlights of RM consolidation efforts are:

  • Relocated the American Payroll and Foreign Service Pension activities from Washington DC to Charleston FSC in 2003.
  • Relocated servicing of posts from Paris FSC to Charleston and Bangkok FSCs in 2002 and 2003.
  • Relocated significant portions of the Department's Washington DC-based financial operations to Charleston FSC in 2004.

Customer Service

Customer service is the hallmark of the Bureau of Resource Management. As the Department moves to a single world-class financial system, RM has redoubled its emphasis on customer service and support. The Overseas Post Support Desk, in addition to helping posts with implementation of new financial systems and changes, has been expanded to become a state-of-the-art help desk for financial management professionals in the Department and in other agencies we service. As part of this effort, RM is moving the customer support function towards a 24/7 operation, leveraging our presences in time zones roughly equidistant around the globe (Charleston, Bangkok and Paris), and integrating former Washington-based operations into our customer support regime. For example, the former American Payroll Resolution Center is now operational in Charleston.

Building a Top-Notch Finance Team

Establishing a worldwide cadre of qualified financial managers presents a difficult challenge to the CFO. Unlike most other Government agencies, the CFO must manage the dynamics of three personnel systems that include financial management personnel: Foreign Service, Civil Service and Foreign Service Nationals (FSNs). Our primary strategy is to maintain a vigorous and active training program for financial management practitioners. We view the training program as critical — in implementing new systems, establishing RM as the lead bureau within the Department on financial management issues, and also in ensuring that information in the field is current and authoritative. In 2004, the training program was strengthened to provide overseas customers a full line-up of training opportunities — offering 107 separate courses, for a total of 1,605 training seats available in 14 different locations around the globe. Our training program enjoys customer approval ratings in excess of 90 percent.

 

The Road Ahead

 

Looking ahead, State will continue to achieve fundamental "compliance" results -- on-time financial statements that receive an unqualified ("clean") audit opinion, award winning Performance and Accountability Reports (PAR), and effective financial management and internal control systems. Moving beyond compliance-based results, State management will be able to make decisions based on meaningful financial information to achieve better performance results in the form of lower costs, improved efficiencies and/or improved outcomes for agency mission.

State will also undertake other value added activities that support effective strategic decision-making and mission performance. These activities include:

  • Enhancing management and internal controls. The Department maintains a robust system of management controls overseen by senior leadership and administered by RM. The Department's strong commitment to management controls has served as a positive catalyst for change and there are no material weaknesses reported under FMFIA or by the independent auditors. Recent events in the private sector have increased concerns related to financial management, and in particular on internal controls. To address these concerns, the Sarbanes-Oxley Act of 2002 establishes new demands for corporate accountability and includes several important sections related to internal controls for public companies. While changes called for by Sarbanes-Oxley are not required for Federal agencies, RM will strengthen the Department's management control program to meet the spirit of the Act -- to improve the completeness, accuracy and transparency of financial reporting and to foster compliance with laws and regulations.
  • Streamlining and consolidating global financial operations. In FY 2005, State will complete a multi-year effort to consolidate and streamline our worldwide financial operations in our Charleston, South Carolina and Bangkok, Thailand locations.
  • Leveraging best business practices and electronic technologies (E-Gov). The Department will select and begin implementation of an electronic Travel (eTS) program, beginning with our overseas locations. The program will be piloted at several overseas locations by July 2005. In addition, working with the Department of Agriculture's National Finance Center, State will reach a decision for migrating its current Consolidated American Payroll Processing System (that pays both civil service and foreign service employees).
  • Partnering with other Federal agencies. The Joint Financial Management System (JFMS) investment is a cooperative effort by the State and the U.S Agency for International Development (USAID) to improve service and save money through collaboration on financial systems and functions. USAID and State are working together to migrate from two separate financial systems operations that use commercial off-the-shelf (COTS) software and different technical architectures to a common technical environment. The end goal of the JFMS is to create a common financial systems platform for State and USAID to manage all domestic and overseas financial management activities starting in FY 2006.

 

FINANCIAL MANAGEMENT SYSTEMS

 

Implement a Global Financial Management System (GFMS)

 

For the past two decades, the Department accounted for its resources through multiple outdated and disjointed legacy financial systems. Some Posts effectively conducted operations through the integration of little more than a collection of Excel spreadsheets. Often, it could take up to 45 days after a financial event occurred for overseas financial data to update the Department's Central Financial Management System (CFMS).

The Global Financial Management System (GFMS) project integrates the Department's overseas and domestic financial operations onto common financial management software platform in Charleston. The GFMS program replaces the Department's 20-year-old overseas systems and legacy mainframe systems with modern open systems technology and COTS software certified by JFMIP. The platform will provide a single integrated view of financial data through data standardization, common business processes, and the seamless exchange of information through the Department's financial and administrative sectors. This will dramatically improve operations and reduce costs by eliminating system redundancies and replacing obsolete and unsupported financial systems. It will also provide the infrastructure for integrating other administrative activities within the Department, such as the Integrated Logistics Management System (ILMS).

The diagram below depicts the state of our financial systems at the beginning of FY 2003 and the end state of our global vision for the beginning of FY 2007.

Diagram depicting the State Department Financial System Transition from the beginning of fiscal year 2003 to the beginning of fiscal year 2007.D

 

The following implementations will become the Department's Global Financial Management System.

Regional Financial Management System (RFMS)

RFMS is the new global accounting and disbursing system that has been implemented for posts around the world, and the building stone of GFMS. RFMS is comprised of a commercial-off-the-shelf, accounting system for funds management, obligation, and voucher processing, and the RFMS/D disbursing system developed by the Department. The worldwide implementation of RFMS replaced the obsolete Paris Accounting and Disbursing system (mainframe-based) used at FSC Paris and the Overseas Financial Management System (Wang-based) used at FSCs Charleston and Bangkok. RFMS incorporates State's standard account structure and improves transaction standardization and timeliness between RFMS and CFMS, which results in the consistent, timely processing and recording of financial data on a worldwide basis. In addition, the overseas interface was reengineered for RFMS and now provides daily updates of overseas financial transactions to CFMS. These daily updates allow headquarters managers to ascertain the worldwide balance of our accounts on a daily basis, something never before possible.

Merge Overseas Databases

RFMS was implemented with the overseas accounting data recorded into two databases - one located at FSC Charleston and one located at FSC Bangkok. This was a dramatic improvement over the previous situation - six databases in three locations - but it still was time-consuming and inefficient to reconcile data, report on worldwide activities that crossed FSC service regions and provide managers within State as well as our serviced agencies with consolidated financial information. In May 2004, RM successfully merged the two databases into one overseas accounting database residing at FSC Charleston. Now all overseas accounting transactions for both the Department and our serviced agencies are recorded in a single database, and many operational/system activities (e.g. software upgrades, annual close outs, etc.) are performed in one place instead of two. Completion of this effort is also another key step in RM's efforts to integrate and consolidate worldwide financial operations.

Central Financial Management System (CFMS)

CFMS is the Department's primary and central accounting system in Washington. It is a mainframe-based COTS product that will be upgraded to the RFMS-based software for the beginning of FY 2006. Upon completion of this conversion, the Department will have in place a common worldwide core financial management system software platform.

Global Direct Connect

Global Direct Connect will move posts that have operationally practical and reliable network connections (estimated at over 85% of our embassies) from their current batch processing environment to a real time, on line connection with GFMS. Currently, there are 19 posts using Global Direct Connect. Our plan is to complete the movement of posts to Global Direct Connect by no later than the end of FY 2007.

Joint Financial Management System (JFMS) with USAID

The Joint Financial Management System (JFMS) investment is a cooperative effort by the Department of State and the U.S Agency for International Development (USAID) to improve service and save money through collaboration on financial systems and functions. At issue was the pursuit of separate implementations of the same financial system software (AMS' Momentum) when a joint effort would improve efficiency based on economies of scale.

The goal of the JFMS is to create a common financial systems platform for State and USAID to manage all domestic and overseas financial management activities starting in FY 2006. The JFMS investment combines the Department's Global Financial Management System (GFMS) and USAID Phoenix investments onto a common financial management platform.

Diagram depicting the Joint Financial Management System (JFMS) with USAID.D

 


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