Bradford R. Higgins
The scale and complexity of the Department’s mission has grown exponentially since 9/11. Operating in this environment of expanding mission requirements and budget deficits, the pressure to operate efficiently and reduce costs has never been greater. As a result, the demand for effective financial management and internal controls has never been greater. The hallmark of top financial operations is their ability to not only provide accurate and timely financial data but also to use that data and expertise to provide high-value financial advice to the key decision-makers.
The Agency Financial Report (AFR) for FY 2008 is a cornerstone of our efforts to disclose the Department’s financial status, successes, and shortcomings. It is a comprehensive review of the Department’s activities against the backdrop of the global challenges presented by a complex world. In the FY 2008 AFR, as in past years, what is apparent and should be inspirational to all Americans is the inextricable link between the Department’s accomplishments and the unwavering commitment of our employees serving around the world, in challenging as well as tranquil situations, dedicated to our mission and our nation.
As we transition to a new administration, I would like to thank the Bureau of Resource Management (RM) staff for the work they contribute to help the entire Department. Their steadfast efforts have allowed us to plan for and garner vitally needed resources; budget, steward and account for our funds on behalf of America’s taxpayers; and assist posts in the field as they conduct our nation’s diplomatic affairs.
In addition, their efforts have led to the achievement of many financial management successes. These include: the streamlining and consolidation of our global financial systems and operations; the installation of Direct Connect at every post that has the necessary connectivity; the improvement in managerial cost accounting information; Interagency Cooperative Administrative Support System (ICASS) support to Posts by simplifying and standardizing of ICASS mechanisms; the establishment of a robust Global Partnership Center in RM, fully supporting the Department’s Transformational Diplomacy agenda; a more complete integration of strategic and performance planning with budgeting, that better and more comprehensively links funding to the Department’s strategic goals and results; and the standardization of the budget process. Our financial management staff continues to strive for perfection in its pursuit of world-class financial management support for this Department. In addition, the Department has demonstrated innovation and leadership in performance management by improving performance systems and coordinating strategic planning with other foreign affairs agencies.
Few agencies or corporations have the level of complexity and challenges that the Department faces daily as we operate in over 260 locations in 172 countries, often in hostile environments, while conducting business in 150 currencies where an even larger number of languages are spoken. Regardless, the Department makes every effort to achieve the highest standard of financial reporting as required by OMB (45 days versus 60 days in the corporate world). Unfortunately, since the start of accelerated reporting five years ago, given the extensiveness and complexity of our financial operations, it has been a challenge for the Department to complete its audit and meet OMB’s 45-day filing deadline. It will continue to be a challenge as each year brings new challenges such as accounting for contractor-held property in Iraq and Afghanistan and allocations to other agencies for programs such as HIV/AIDS. While I am pleased that we were able to submit our FY 2008 financial report to OMB on time, I am disappointed that we were unable to provide sufficient evidential matter for the Independent Auditor to complete the audit and express an opinion by the November 17, 2008 deadline. Since then, with the cooperation of the Independent Auditor and OIG, our efforts continued, and the Department satisfied the Independent Auditor about the amounts presented in the financial statements and footnotes. Therefore, on December 12, 2008, we have received an unqualified (“clean”) opinion on the financial statements, as of and for the year ended September 30, 2008.
I am pleased to report the Department maintains a robust system of internal controls overseen by senior leadership and administered by RM. During the past year, the Department worked closely with the Independent Auditor to address the material weaknesses reported for FY 2007 related to the management of undelivered orders and accounting for personal property. As a result of improvements made, these areas were downgraded and the Department ended the year with no material weaknesses in internal control. Accordingly, for FY 2008, the Secretary was able to provide an overall unqualified statement of assurance for FMFIA, and an unqualified statement of assurance for internal controls over financial reporting.
I have had the honor and privilege to be able to serve our Country, President, and the Secretary as Assistant Secretary and during my assignment in Iraq. In closing, I would like to also express my sincere appreciation to the thousands of Department financial professionals around the globe who plan, budget, allocate, obligate, disburse, and account for billions of dollars in annual resources. Despite our worldwide geographic dispersion, the Department operates as one team distinguished by its dedication to strong ethics and corporate governance. These men and women have built a foundation of solid financial management and reporting; our mission going forward will be to provide a high level of financial advisory expertise to the Secretary and the Bureaus, and to ensure that the Department obtains maximum results from its funding. Accountability to the citizens of the United States, the President, Congress, and our employees, as well as other customers and constituents remains our paramount priority.
Bradford R. Higgins
Assistant Secretary for Resource Management and Chief Financial Officer
December 12, 2008