Message from the Assistant Secretary and Chief Financial Officer
The Performance and Accountability Report for Fiscal Year 2006 (Report) provides meaningful stewardship, program and financial information about the Department of State. Publication of the Report is an integral part of our efforts to improve our accountability to our customers, constituents, and the public. As you read the Report, you will learn of the exceptional accomplishments of the Department's highly dedicated staff as they seek to meet to the Department's mission to "create a more secure, democratic and prosperous world for the benefit of the American people and the international community".
For the past six years, the President has challenged us to meet rigorous performance standards through the President's Management Agenda (PMA). The Department of State is committed to achieving the goals of the PMA, as evidenced by "green" status scores on the scorecard for all five USG-wide Presidential initiatives at the end of FY 2006. This is a significant accomplishment considering the challenging nature of conducting business in our global, foreign affairs environment.
Very few agencies or corporations have the level of complexity and variety of challenges that the men and women of the Department face daily. The Department operates in over 260 locations in 188 countries, frequently in hostile environments, while conducting business in 150 currencies and an even larger number of languages. Thousands of financial professionals around the globe plan, budget, allocate, obligate, disburse, and account for billions of dollars in annual resources.
Our strong commitment to corporate governance is evidenced by the priority we place on improving our internal controls. To that end, we made considerable progress in 2006, working closely with the Independent Auditor to address the material weaknesses in accounting for personal property and information systems security reported in their FY 2005 Independent Auditor's Report. As a result, the Independent Auditor downgraded these items to a reportable condition, and reported no material weaknesses in internal controls in their FY 2006 Independent Auditor's Report. In addition, the Department committed to, and fully implemented, the requirements of Appendix A, Internal Control over Financial Reporting, of OMB Circular A-123. During the implementation of Appendix A, we identified a material weakness related to accounting for real property, and took actions to resolve the deficiencies by September 30, 2006.
Unfortunately, due to the complexity of the matters involved in addressing the real property deficiencies, the accelerated financial reporting requirements, and our commitment and focus to successfully resolve the material weaknesses noted above, we were unable to provide timely financial statements or documentation on the appropriateness of the associated restatement to satisfy the Independent Auditor with regard to the presentation of real property in time to meet the November 15, 2006 deadline required by OMB. As a result and as more fully explained in the Independent Auditor's Report in the FY 2006 PAR, the Independent Auditor issued a disclaimer of opinion on our FY 2006 and restated FY 2005 financial statements. 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 and have therefore received an unqualified ("clean") opinion thereon, dated December 12, 2006.
The scale and complexity of the Department's missions that demand effective financial management and control have grown exponentially since 9/11, making the need for more effective financial management even more pronounced. The hallmark of top financial operations is their ability to provide accurate and timely financial data to use that data and expertise to provide high-value financial advice to the decision-makers. The Bureau of Resource Management has built the foundation of solid budgeting and reporting; our mission going forward will be to combine this strong financial information base with a high level of financial advisory expertise as a strategic partner to the Secretary and the Bureaus, to ensure that the Department obtains maximum results from its funding.