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Financial Management Plans and Reports


FY 2008 Financial Report
Bureau of Resource Management
December 2008
Report
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Overview

Introduction

The Department of State conducts financial activities in approximately 260 locations in 172 countries. We transact business in over 150 currencies and even more languages and cultures. Hundreds of financial and management professionals around the globe allocate, disburse and account for billions of dollars in annual appropriations, revenues and assets. The Department’s customers include more than 40 U.S. Government agencies in every corner of the world, served twenty-four hours a day, seven days a week.

The Bureau of Resource Management (RM), headed by the Assistant Secretary for Resource Management and Chief Financial Officer, is the Department’s corporate financial manager and strategic planner. There are over 500 people employed by RM around the globe, primarily in Washington, D.C.; Charleston, S.C.; and Bangkok, Thailand. RM has overall responsibility for the preparation and execution of the State Operations budget; management of financial systems, reporting and internal controls; management of global financial operations and services; direction of the Department’s strategic planning and performance reporting efforts; administration of the interagency support cost sharing system related to our overseas missions and interagency resource planning efforts with the intelligence community; and operation of the recently created Global Partnership Center, which promotes the broader use of multi-sector partnerships to achieve Department strategic goals. RM produces a number of essential documents including the Joint State/USAID Strategic Plan, Department Performance Plan, Agency Financial Report, Performance Report, Citizens' Report, Budget-in-Brief, and the Congressional Budget Justification Document.

RM’s services to its customers are critical in order that they can do their job and effectively carry out the Department’s mission. The RM management team and staff have a proven record of outstanding achievement as evidenced by (but not limited to):

  • Successful resourcing of all Secretarial-level priorities while simultaneously resolving a huge funding shortfall for current services;
  • Successful implementation of a new financial management system;
  • Successful implementation of a grading system to measure transparency and quality of budget requests for all interagency activities at post (ICASS);
  • Creation of a Global Partnership Center (GPC) focused on finding and developing areas where the public and private sectors have a mutual interest in order to maximize program funding potential;
  • Growth in requests for and use of the Post Support Unit (PSU) as a centralized financial processing unit for overburdened post financial management staff;
  • Implementation of a Quality Management System under ISO 9001 standards for core financial operations; and
  • Ongoing progress in establishing an outcome focus and culture of performance, as evidenced by “Green” status on the President’s Management Agenda Scorecard for Performance Improvement.
MISSION

To integrate strategic and performance planning with budgeting and provide
world-class financial services to the Department and its overseas posts.

The RM mission statement is incorporated into the Department’s strategic goal for Strengthening Consular and Management Capabilities. The RM Assistant Secretary also serves as the Department’s Chief Financial Officer. Pursuant to the CFO Act of 1990, this designation makes the Assistant Secretary responsible for all financial management activities related to Department programs and operations. This overview relates to the CFO role and financial management responsibilities set forth under the CFO Act.

 

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.

The President’s Management Agenda initiative for Improved Financial Performance provides federal agencies a set of measurable financial management performance goals that gauge whether taxpayer funds are being properly accounted for. 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.

Performance measures include timely financial reporting, elimination of material weaknesses in internal control, the achievement of unqualified (“clean”) audit opinions, elimination of improper payments, and implementing financial systems and processes that meet Federal requirements. In addition to these, RM endeavors to consolidate and standardize financial operations, leverage best business practices and electronic technologies (E-Gov), and build a first-rate finance team.

FY 2008 Results

Timely Reporting. For the fifth consecutive year, the Department met the Government-wide performance target to issue our audited financial statements within 45 days of the close of the fiscal year.

Unqualified (“Clean”) Audit Opinions. The Department submitted its FY 2008 financial report to OMB on time, but received a disclaimer of opinion from the Independent Auditor because of a delay in providing certain evidential matter in a timely manner. Since FY 1996 when the Government Management Reform Act required the preparation and issuance of annual audited agency-wide financial statements, the Department has achieved a number of unqualified opinions on its financial statements. However, since the start of accelerated financial reporting five years ago, given the breadth and complexity of our financial operations, it has been and will continue to be a challenge for the Department to complete its financial statements, obtain an audit opinion and meet OMB’s 45-day deadline. Further, given the tight timeframe for submitting audited statements (45 days versus 60 days in the corporate world), any major program changes jeopardize the ability to complete the audit on-time, and each year will bring new challenges such as accounting for contractor held property in Iraq/Afghanistan and increased spending through allocations to other agencies for programs such as HIV/AIDS.

Elimination of Material Weaknesses in Internal Control. 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 unliquidated obligations and the 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.

Elimination of Improper Payments. Based on a series of internal control review techniques, the Department determined that none of its programs are risk-susceptible for making significant improper payments at or above the threshold levels set by OMB. Although the Department does not have programs determined risk-susceptible for making significant improper payments, the Department performed elective procedures to determine if improper payments were made in association with business class travel. For 2008 there were no instances where the travelers flying business class were found to be ineligible, though there was one error found that stemmed from weaknesses where supporting documentation was not readily available.

Implementing Financial Systems and Processes that Meet Federal Requirements. In FY 2007, the Department implemented the Global Financial Management System (GFMS) as the next step in our multiyear effort to establish a single global financial system. GFMS is already paying for itself with the recovery of millions of dollars from over-billings, while also providing the data platform that will enable RM to prepare in-depth decision support data for senior management. Over the past year we have stabilized GFMS and are moving forward with plans for our final step to establish a virtual, single global financial management system.

Streamlining and Consolidating Global Financial Operations. In FY 2005, State completed a multi-year effort to consolidate and streamline our worldwide financial operations in our Charleston, S.C. and Bangkok, Thailand locations. Building on this success, and leveraging the work and benefits from the single platform for the Department’s overseas financial system, RM created a Post Support Unit (PSU) in Charleston, S.C. to take on more of the burden of repetitive, standardized financial processing from the posts and perform those tasks centrally at a substantially lower cost. The PSU was deployed initially to support missions operating in distressed conditions, such as Baghdad, the first post supported by PSU. This new model demonstrated a cost-effective alternative to and supplement for financial services at posts where security, staffing, costs, and other challenges made it advantageous to relocate some “backroom” transactional financial activities. RM quickly realized that the idea of “distressed” was too restrictive and expanded the concept to accommodate all types of posts. The PSU now services nearly 20 posts, such as Baghdad, Paris, and RPSO Frankfurt, processing about 1,000 vouchers per month.

Leveraging Best Business Practices and Electronic Technologies (E-Government). The President’s Management Agenda includes an aggressive strategy to secure better services at lower cost through electronic government (E-government). In the Department, RM is advancing this E-Government strategy through projects, such as Global eTravel. Global eTravel uses a web-based travel system solution (Carlson Wagonlit’s E2 Solutions) that provides an electronic, paper-less platform for processing temporary-duty (TDY) travel. At the end of FY 2008, Global eTravel is in use by 25 domestic bureaus, and 29% of overseas travel vouchers are being processed through the new system. An important milestone was also achieved in FY 2008 with the implementation of an automated interface between the Global eTravel and the overseas Regional Financial Management System, for the first time eliminating duplicate entry of travel authorization and voucher transactions at our posts using Global eTravel overseas.

A significant goal of the Administration is to modernize grants management through a number of initiatives including the migration of grant-making agencies to the Grants Management Line of Business (GMLoB) consortia. In FY 2008, the Department selected the GrantsSolutions.gov system, operated by the Department of Health and Human Services, as its grants management system service provider under OMB’s GMLoB initiative. GrantSolutions.gov will be the technical solution for the Department’s State Assistance Management System (SAMS) initiative, and will automate the full range of assistance management activities, from solicitation through award, post-award monitoring and closeout. SAMS will also interface with the GFMS.

Building a First-Rate 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 2008, the CFO sponsored a Financial Management Officer (FMO) Workshop, bringing together senior financial management professionals from around the world to jointly develop the tools, standards and best practices that will provide the transparency, flexibility and accountability needed to meet the Department’s pressing challenges and top unfunded priorities. A key focus was on improving the analytic and evaluation capabilities to support more informed decision making. Following the workshop and leveraging the opportunity, the CFO hosted for the first time an Advanced Financial Management Course in which several financial management officers were able to participate and further develop their skills and competencies.

Looking Forward

RM will continue to work to ensure fundamental financial management “compliance” results—on-time, accurate financial statements that achieve an unqualified (“clean”) audit opinion, financial systems and processes that meet Federal requirements, and effective internal controls. In FY 2009, RM will continue to expand PSU services to support additional posts and wholesale systematic consolidation of some financial processes. For Global eTravel, we will complete full deployment domestically. And approximately 66% of our overseas TDY travel voucher volume, network connections permitting, will be supported by Global eTravel as part of a single worldwide TDY travel management process, fully interfaced with the Department’s financial systems. In regards to our grants management, we will pilot the first domestic bureau on GrantsSolutions.gov in January 2009, with full domestic deployment to be completed in FY 2010, followed by deployment overseas.

RM will also undertake activities that support effective strategic decision-making and mission performance. These activities include strengthening the Department’s financial management analytic capabilities. RM will work to expand its analytical capability to provide the Department’s senior management with timely and thorough financial/cost analysis to support funding decisions. At a time when the USG is facing a potential $1 trillion deficit in FY 2009, the new Secretary will undoubtedly be faced with some difficult choices over critical but competing priorities. Having the CFO establish or independently verify the fully loaded costs of a program or an initiative, with affordable cost alternatives and expected results, will be essential in maximizing the effectiveness of the Department’s likely constrained funding. This ability to better quantify costs with results will also bolster the Department’s credibility with Congress and OMB.

 

Financial Management Systems

Implementation of a Global Financial Management System

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).

Through the Joint Financial Management System (JFMS) Program, the Department is integrating its overseas and domestic financial operations onto a common, global financial management software platform in Charleston, S.C. This is dramatically improving operations and reducing costs by eliminating system redundancies and replacing obsolete and unsupported financial systems. It is also providing the infrastructure for integrating other administrative activities within the Department, such as the Integrated Logistics Management System (ILMS) and Global e-Travel.

The diagram below depicts the end state of our global vision for a virtual single global financial management system.

The common platform underlying the Department’s global financial management solution is CGI-Federal’s Momentum financial management system. Momentum is a certified Federal financial system used widely in the Federal market place. This solution uses the same software (CGI Momentum) and technical platform to support the Global Financial Management System (GFMS) domestically, the Regional Financial Management System (RFMS) overseas, and USAID’s Phoenix financial management system. Together with our efforts on Global Direct Connect, this enables 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. The GFMS, RFMS and Global Direct Connect components of State’s solution are further described below.


Diagram depicting the Global Financial Management System (GFMS) vision and concept.D

Global Financial Management System (GFMS)

In FY 2007, the Department implemented the GFMS as the next step in this multiyear effort to establish a single global financial system. With the implementation of GFMS (CGI-Federal’s Momentum), we have now aligned our domestic financial management systems environment with the Department’s enterprise architecture. GFMS replaced the Department’s 20 year old Central Financial Management System (our core accounting system) and centrally accounts for billions of dollars through over 5 million annual transactions by 1,000+ users and over 25 “handshakes” with other internal and external systems. As part of the implementation of GFMS, a data warehouse, fixed asset module and a cost allocation module (for managerial cost accounting) were installed. In addition, we brought on a new customer, the International Boundary and Water Commission, for which we provide a full range of financial management services. And, for the first time, the Department’s acquisition and fixed asset systems have been integrated into a single software application. Upgrading a financial system of this size and complexity is a large and challenging undertaking. During FY 2008, we have stabilized GFMS and are moving forward with plans for our final step in establishing a virtual, single global financial management system.

Regional Financial Management System (RFMS)

RFMS is the global accounting and disbursing system that has been implemented for posts around the world. RFMS is comprised of a commercial-off-the-shelf (CGI-Federal’s Momentum), accounting system for funds management, obligation, and voucher processing, and the RFMS/D disbursing system developed by the Department for disbursing services. The successful 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 GFMS, 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 provides daily updates of overseas financial transactions to GFMS. These daily updates allow headquarters managers to ascertain the worldwide balance of our accounts on a daily basis, something never before possible. In addition, RM continues to enhance its COAST reporting tool, which provides daily updates on all financial transactions to 168 posts overseas and domestic bureaus, allowing them to analyze, and “slice and dice” their financial data for local reporting purposes using modern reporting and query tools on their local workstation.

Global Direct Connect

Our Global Direct Connect initiative moves posts that have operationally practical and reliable network connections (estimated at over 85 percent of our embassies) from their batch processing environment to a real-time, on-line connection. As a result of our efforts to date, there are now over 130 (out of a possible 180) posts using Global Direct Connect. In FY 2008, we converted 25 posts to Global Direct Connect. Moving forward, our plan is to convert another 15 posts to Global Direct Connect during FY 2009 and we will continue to convert remaining posts (with reliable networks) beyond that.

Financial Management Information to Improve Decision Making

With the consolidation and streamlining of our worldwide financial systems operations, the ability to capture and maintain accurate, meaningful financial information, and provide it to decision makers in a timely fashion, has vastly improved. To support overseas financial management officers and post decision makers, RM implemented COAST Reporting in FY2007. In FY 2008, improvements were added to provide information “drill down” and budget and planning versus actual reporting capabilities. Further improvements are planned for FY 2009, including the rollout of a much improved encryption capability which will replace our outdated Electronic Certification System at all of our posts overseas. Domestically, and in support of Department-wide reporting, RM implemented the GFMS Data Warehouse (DW) in FY 2007. Based on a modern, browser-based technology platform, the GFMS DW enables users to access financial information from standard, prepared reports, or customize queries and reports in real time to compile the financial information needed for informed decision making on a day-to-day basis. In addition to adding and improving reports and queries, managerial cost accounting and acquisitions reporting modules were added to the GFMS DW in FY 2008. Plans for FY 2009 include expanding available content and further enhancing management reporting capabilities.

Photo showing the American Embassy in the Schoenborn Palace in Prague.

Secretary’s List of Culturally Significant Properties:

The American Embassy in the Schoenborn Palace in Prague has a long and complex history of adaptations to accommodate a wide range of royal, noble and governmental owners. The United States purchased the property in 1924 for use as an American Legation. Five medieval residences and a malthouse were combined together in the early decades of the seventeenth century to create the original palace, apartments and garden. Department of State/OBO. Richards

 


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