JOINT FINANCIAL MANAGEMENT IMPROVEMENT PROGRAM ANNUAL REPORT 1983

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85B01152R000400510027-1
• Release Decision: RIFPUB
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• Document Page Count: 66
• Document Creation Date: December 20, 2016
• Document Release Date: October 18, 2007
• Sequence Number: 27
• Publication Date: January 1, 1983
• Content Type: REPORT

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I
IFINANCIAL MANAGEMENT IMPRC
MENT PROGRAM JOINT FINANCIAL M AGEM ENT IMPROVEMENT PROGRAM JC
JT FINANCIAL MANAGEMENT MPROVE NT PROGRAM JOINT FINANCIAL MANA(
MENT IMPROVEMENT PROGRAM JOINT
AN'IUAL REPORT
1983
JOINT FINANCIAL MANAGEMENT IMPROVEMENT PROGRAM
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 Approved For Release 2007/10/19: CIA-RDP85B01152R000400510027-1
The Joint Financial Management Improvement Program
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FOREWORD
This report describes financial management initiatives
undertaken in 1983 by the Joint Financial Management Improvement
Program and. its principal agencies, which are the Office of
Management and Budget, the General Accounting Office, the
Department of the Treasury and the Office of Personnel Management.
In addition, the report highlights some of the major financial
management improvements accomplished and currently underway in
operating agencies throughout the Federal Government.
The central agencies -- the Office of Management and Budget,
the Department of the Treasury, and the General Accounting Office
-- are providing a tremendous impetus to upgrading, refining, and
improving financial management systems. Also, Congressional
interest -- passage of the Federal Managers' Financial Integrity
Act, Inspector General Act, Prompt Pay Act and the like --
continues to have a significant impact on financial management
improvement efforts. If there is one phrase that best describes
the general trend in financial management improvement, it is
"modernizing through technology." This past year, more than ever,
we have seen-- agencies implementing and planning financial
management changes by using minicomputers, microcomputers and
communication technology.
We are publishing this report to fulfill one of our objec-
tives of sharing and disseminating information among managers so
that an exchange of ideas and some lessons learned on system
development can be made. Each write-up is followed by the name
of the responsible official and his or her telephone number to
encourage direct contact and exchange of more detailed
information.
We take this opportunity to express our appreciation to all
of the agency officials who contributed to this report. We wish
success to all agency initiatives to make financial management
improvements, and we look forward to nearing of new and
significant accomplishments in the near future.
Susumu Uyeda
Executive Director
June 1984
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CONTENTS
Foreword
CHAPTER
I JOINT FINANCIAL MANAGEMENT
IMPROVEMENT PROGRAM
A. Background . . . . . . . . . . . . . . . . . . . . 1
B. Joint Financial Management
Improvement Program . . . . . . . . . . . . . . 2
C. Office of Management and Budget . . . . . . . . . 9
D. General Accounting Office . . . . . . . . . . . . 16
E. Department of the Treasury . . . . . . . . . . . 22
II AGENCY INITIATIVES TO IMPROVE
FINANCIAL MANAGEMENT
A. Accounting Procedures and Systems . . . . . . . . 26
B. Auditing . . . . . . . . . . . . . . . . . . . . 38
C. Budgeting . . . . . . . . . . . . . . . . . . . 41
D. Cash Management . . . . . . . . . . . . . . . . . 45
E. Payroll and Personnel Systems . . . . . . . . . . 52
F. Productivity and Other Improvements . . . . . . . 54
A. Key Officials of JFMIP During 1983 . . . . . . . . . . 59
B. JFMIP Staff . . . . . . . . . . . . . . . . . . . . . . 60
C. JFMIP Publications . . . . . . . . . . . . . . . . . . 61
NOTE: The area code for the telephone numbers listed in this
report is (202) unless otherwise designated.
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JOINT FINANCIAL MANAGEMENT IMPROVEMENT PROGRAM
A. BACKGROUND
The Joint Financial Management Improvement Program (JFMIP)
is a joint and cooperative undertaking of the Office of Management
and Budget, the General Accounting Office, the Departmerif of the
Treasury and the Office of Personnel Management, working in
cooperation with each other and with operating agencies to'improve
financial management practices. The Program was initiated in 1948
by the Secretary of the Treasury, the Director of the Bureau of
the Budget, and the Comptroller General of the United States and
was given statutory authorization in the Budget and Accounting
Procedures Act of 1950.
The overall objective of JFMIP is to improve and coordinate
financial management policies and practices throughout the Govern-
ment so that they will contribute significantly to the efficient
and effective planning and operation of governmental programs.
Leadership and guidance are provided by the four Principals of the
Program -- the Director of the Office of Management and Budget,
the Comptroller General of the United States, the Secretary of the
Treasury, and the Director of the Office of Personnel Management.
The Program is administered by a Steering Committee, which is
composed of representatives of the Principals and the Executive
Director of the JFMIP. Under the guidance of the Steering
Committee, the Executive Director and his staff develop, direct
and undertake programs and projects for JFMIP on a day-to-day
basis. Appendix A is a listing of key officials and Appendix B
lists the JFMIP staff members during 1983.
Achievement of financial management improvements depends
heavily on the interest and active participation of personnel from
the principal and operating agencies. The JFMIP plays a key role
in mobilizing resources and coordinating cooperative efforts in
the improvement of financial management practices. To fully
achieve the necessary coordination and cooperation, the head of
each Federal agency has designated a liaison official to serve
as a point of contact on matters relating to the JFMIP. Agency
liaison representatives are identified in our annual Financial
Management Directory.
The JFMIP and its staff perform a variety of activities aimed
at achieving its objective of financial management improvement.
JFMIP reviews and coordinates central agencies' activities and
policy promulgations to preclude possible conflict, inconsistency,
duplication and confusion. It acts as a clearinghouse for sharing
and disseminating information about good financial management
techniques and technologies. In this respect, JFMIP sponsors
conferences and workshops, publishes a quarterly news bulletin,
and prepares informative documents on good financial management
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practices. Working closely with agency liaison representatives,
JFMIP reviews the financial management efforts of the operating
agencies and serves as a catalyst for further improvements.
In addition, JF[vIIP undertakes special studies and research
projects of a Government-wide nature to resolve specific problems.
Such projects are carried out through interagency project teams
from both Principal and operating agencies. Sometimes, project
teams include representatives of State and local governments,
depending on the nature of the projects. JFMIP also provides
advisory services in dealing with specific financial management
problems. These problems may be dealt with by referral to a
source of expertise, by assignment to the principal agencies,
or by informal consultation.
During the past year, the JFMIP staff and the principal
agencies have undertaken many activities to improve financial
management. In the balance of this chapter, some of their major
accomplishments and initiatives are highlighted.
B. JOINT FINA14CIAL MANAGEMENT IMPROVEMENT PROGRAM (JFMIP)
1. Special Projects Completed in 1983
a. Review of Grant Cash Management. The Joint Financial
Management Improvement Program completed studies of cash
management practices for selected federally assisted programs in
four States. The studies were made at the request of the States
and Federal agencies to determine if there was a shortage or
excess of Federal cash on hand at the State level.
The studies disclosed that many improvements were needed
in cash management and there was a need for a close working
relationship between Federal and State officials to improve cash
management. A joint State/Federal Cash Management Reform Task
Force was subsequently established. The Task Force developed a
"Memorandum of understanding" for financing Federal assistance
programs. The Memorandum, endorsed by the major associations of
State officials, was to achieve an equitable system of inter-
governmental cash management. As a result of these agreements,
alternative methods for drawing Federal cash are being studied
in pilot tests conducted in several States.
The studies specifically disclosed that the four States in
aggregate had a daily average balance of $279 million of Federal
cash on hand. Offsetting this amount was $53 million of State
funds which were used prior to the receipt of Federal cash for
two Federal assistance programs. The balance of $226 million
represented eight calendar days' cash requirement for the States.
About $126 million of the $226 million represented the amount
of cash on hand from the time a check or warrant was issued until
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it cleared the State bank account. This is commonly referred to
as float. About $100 million of the $226 million cash on hand was
due to the States drawing Federal cash before checks or warrants
were issued by the States.
Several problems were observed both at the State and
Federal levels of government which contributed to these large
cash balances on hand. Observations of where States may improve
their cash management are summarized below:
--State departmental systems, in a number of instances, were
not in place to effectively account for, monitor and draw
Federal cash.
--Uniform central policies or procedures for Federal cash
drawdowns were not established in the States we studied.
--The States, in some instances, were advancing as much as
6 months' Federal cash to subgrantees at one time.
--States, in some instances, were not properly considering
millions of dollars in refunds to Federal assistance
programs in their cash draws.
Observations of where Federal agencies may improve cash
management are as follows:
-Not all Federal agencies were effectively monitoring
Federal cash in the States.
--Some Federal agencies and States interpreted Feueral
regulations to mean that a three-day cash balance on nand
is allowed.
--Instances were found where Federal program agencies delayed
granting award authority after Federal funding authoriza-
tions were available.
--Some St-%te departments wanted to return excess cash because
of erroneous draws or other reasons, but Federal procedures
did not provide for timely return of these funds.
--In one major Federal assistance program, State expenditures
questioned and suspended by the Federal agency ran into
millions. Delays in resolving these questioned expendi-
tures were due to Federal program agencies not reviewing
them on a timely basis and the State not providing adequate
and timely support for the claims in question.
b. Review of Treasury Fiscal Regulations. As part of the
Reform '88 efforts to reduce intragovernmental paperwork, JFMIP
reviewed Volume I of the Treasury Fiscal Requirements manual,
which contain regulations for Federal organizations. A survey of
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agency views was conducted to identify areas for improvements in
the manual. The overall observations are summarized below.
(1) Agency officials, in general, thought that Treasury
regulations were generally well written and under-
standable and cover adequately the subject matters
requiring central guidance.
(2) Agency officials, in most instances, expressed a desire
to participate in the process in which Treasury makes
major changes in existing regulations or establishes new
ones. Advance coordination between Treasury and agencies
is essential for facilitating and speeding up the
implementation of new regulations.
(3) Agency officials made two basic suggestions concerning
the timing of issuance of Treasury regulations. The
first was a suggestion that Treasury regulations be
better synchronized with related directives of the Office
of Management and Budget. The second suggestion was that
regulations be issued in sufficient time for agencies to
implement them.
(4) Agency officials, in some instances, suggested that
Treasury should spend time looking into a better
automated system for providing information directly to
central agencies from the automated financial systems
in the operating agencies.
The report contained a series of specific and detailed recommenda-
tions on how to improve each part of the manual and was issued to
the office of Management and Budget in January 1983. Treasury's
Bureau of Government Financial Operations has agreed to implement
the recommendations.
c. Accounting Systems Packages. JFMIP completed a survey of
transferable accounting system software packages that are used by
small Federal agencies. Fourteen systems are briefly described in
the publication, Managers--Reduce Your Systems Development Costs
by Adopting An Available Accounting System. The booklet was
designed to provide assistance to small agencies in the Federal
Government who are looking for comprehensive accounting systems
and related software packages that are easily transferable. The
booklet was organized in three categories with descriptions of the
following agencies:
--Data-Base Management Systems
Health Care Financing Administration,
Department of Health and Human Services
National Transportation Safety Board
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--Financial Accounting and Reporting Systems
Executive Office of the President
Federal
Emergency Management Agency
Federal
Trade Commission
National
Credit
Union Administration
National
Science
Foundation
National
Highway
Traffic Safety Administration,
Department of Transportation
Bureau of Government Financial Operations,
Department of the Treasury
U.S. Customs Service,
Department of the Treasury
--General Ledger Accounting Systems
Consumer Product Safety Commission
Federal Labor Relations Authority
Government Printing Office
National Aeronautics and Space Administration
2. Special Projects Underway in 1983
a. Microcomputers in Financial Management. A study of how
Federal agencies are using microcomputers in financial management
areas was initiated in 1983. The study found that microcomputers,
especially electronic spreadsheet programs are being widely used
in the audit and budget communities. The President's Council on
Integrity and Efficiency, through its Computer Audit Committee,
has taken a lead role in promoting the use of microcomputers in
auditing. The Offices of Inspector General in the Department of
Transportation and the National Aeronautics and Space Administra-
tion are using the microcomputers extensively.
The survey concentrated on the use of microcomputers in the
budget and accounting areas. Many agencies were contacted and
meetings were held at Defense's Washington Headquarters Service,
the Air Force, Internal Revenue Service, General Services
Administration, Agriculture Department, Securities and Exchange
Commission, Federal Reserve Board, the World Bank, and Veterans
Administration.
b. Centralized Management Information System. A review
was made of the Department of Commerce's Centralized Management
Information System with the objective of producing a case study
on the methodology used by the Department to develop this system.
The existing information environment at the Department of
Commerce was characterized as a collection of diverse financial
and administrative systems. Over time the Bureaus in the
Department have developed decentralized, nonstandard systems to
support their specific needs. As a result, it was very difficult
to obtain Department-level information without going through a
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cumbersome and potentially inaccurate manual process. Also,
the needed information could not be obtained on a timely basis,
because there was a mix of manual and automated systems, and hard-
ware and software were not compatible. The Department concluded
that the most realistic approach to improving information at the
Secretarial level was to develop mechanisms for systematic use of
existing data.
The Department's solution called for the development of a
series of automated "bridges" linking Bureau systems witn the
Office of the Secretary. The "bridges" were designed to extract,
standardize, edit and store information in a Departmental finan-
cial data base to be used within the Office of the Secretary to
prepare management reports, answer ad hoc queries, and perform
special analyses. In developing the bridges, the Department was
determined not to change existing systems in the various Bureaus.
The initial version of the financial management data base
enabled the Department to meet baseline requirements for budget
execution and debt management identified by the Office of
Management and Budget for the Reform '88 Interim Financial and
Administrative Management System. Expansion efforts planned
during fiscal year 1984 will enable the Department to meet all
baseline requirements for the Reform '88 project by October 1984.
3. Annual Financial Management Conference
J. P. BOLDUC
Chief Operating Officer
Grace Commission
JOSEPH WRIGHT, JR.
Deputy Director
Office of Management and Budget
Each year, the JFMIP sponsors a financial management
conference to share and disseminate information on financial
management developments and improvements. The Marcia 30, 1983
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conference, with over 850 people attending, was held in
Washington, D.C. The theme of the conference was "Financial
Management Reform." The two keynote speakers emphasized the
need to restructure the Government's administrative systems to
improve financial management. Mr. J. P. Bolduc, Chief Operating
Officer, President's Private Sector Survey on Cost Control,
summarized the background and objectives of this study group.
His two basic recommendations for enhancing financial manage-
ment are to restructure finance and accounting systems and
to establish adequate credentials for financial managers.
Mr. Joseph R. Wright, Deputy Director, Office of Management and
Budget, outlined the Administration's Reform '88 program for
improving the management of the Federal Government and emphasized
the need for good management information systems.
HAROLD L. STUGART
Auditor General
Department of the Army
ROLAND W. BURRIS
Comptroller
State of Illinois
The highlight of the conference was the presentation of
the 1982 Donald L. Scantlebury Memorial Awards for exceptional
financial management improvement to Harold L. Stugart, Auditor
General of the U.S. Army, and Roland W. Burris, Comptroller of
the State of Illinois.
Four workshops were held on reforms on various aspects of
financial management. One workshop addressed the major reforms in
accounting by Treasury, GAO, OMB and the Department of the Army.
The second workshop discussed how the Congressional Budget Act of
1974 is working in today's environment, how budgeting for capital
investments should be improved, and how other improvements in the
overall Federal budget process should be made. The third workshop
focused on issues in auditing reforms including the prevention of
fraud, waste and abuse, single audit concept and computer audit
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training. The fourth workshop covered subjects on the selection
of microcomputers, the use of electronic work stations, and the
application of bar-coding technology for automated input of
property records.
4. JFMIP Workshops
The JFMIP periodically sponsors workshops on current
technical issues. In July 1983, the JFMIP and the Association
of Government Accountants sponsored a workshop on "Using Micro-
computers for Financial Managers." This workshop provided
financial managers with a basic understanding of microcomputers
and their applications in Government financial management
operations. The workshop was attended by 4.U persons.
A workshop on "Financial Management Reforms" was jointly
sponsored by the JFMIP and the San Francisco Federal Executive
Board in September 1983. This one-day workshop highlighted
Reform '88 initiatives, Grace Commission study recommendations
impacting financial management, internal controls, and the use
of microcomputers in financial applications.
JFMIP has actively participated in conferences and symposiums
sponsored by other Federal agencies and professional organiza-
tions. Presentations on subjects such as JFMIP, internal
controls, Reform '88 initiatives, microcomputers, Grace Commission
recommendations and other financial management initiatives were
made. JFMIP also participates, with observer status, in the
meetings of the National Intergovernmental Audit Forum.
5. Agency Meetings
Throughout the year, JFMIP meets with top financial manage-
ment personnel from major departments and agencies to learn about
agency concerns, problems and initiatives in financial management.
These visitations enable JFMIP to bring together agencies that are
working, or have worked, on similar projects for the purpose of
sharing and exchanging experiences and knowledge. Through this
cross-fertilization effort, JFMIP hopes to minimize systems
developmental costs and to elevate the quality of the financial
management systems. Meetings were held with the following
organizations in 1983.
--Department
of
Agriculture
--Department
of
Commerce
--Department
of
Education
--Department
of
Transportation
--Department
of
the Treasury
--Environmental Protection Agency
--Federal Mediation and Conciliation Service
--Federal Reserve Board
--Federal Trade Commission
--Geological Survey (Interior)
--Securities and Exchange Commission
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We also met and briefed the visitors from the Republic of
Cyprus and Australia on financial management, matters in the United
States.
The JFMIP provides advisory and referral services to answer
specific financial management problems. In 1983, we provided 58
advisory services on specific accounting, auditing and general
financial management subjects and rendered 534 referral services.
C. OFFICE OF MANAGEMENT AND BUDGET (OMB)
1. Reform '88
The Office of Management and Budget, under the direction of
the White House, implemented several Reform '88 initiatives at
departments and agencies. Reform '88 is the President's program
to improve management and administration in the Federal Government
to enhance ongoing initiatives and to implement new management
processes and systems for more efficient and effective operations.
Reform '88 has the following four specific objectives:
--Reduce fraud, waste, abuse and mismanagement within
existing budget levels,
--Improve internal agency operations by consolidating func-
tions, applying productivity standards to administrative
operations, and contracting out under OMB Circular A-76
wherever cost-effective,
--Develop Government-wide management processes in accounting,
payroll and personnel, and automatic data processing, and
--Streamline delivery systems such as the Federal field
structure.
Some of the Reform '88 initiatives in financial management
include: (a) consolidating common administrative support
servicing operations, (b) reducing fraud, waste and abuse by
improving controls over Federal fund expenditures and adopting
better management and internal control procedures, (c) promoting
and sharing of good agency management systems, and (d) enhancing,
improving and sustaining existing projects such as cash manage-
ment, debt collection, excess property sales, procurement
practices, unliquidated obligations and excess paperwork.
The specific accomplishments reported by OMB include the
following:
a. Prompt Payments. In accordance with the requirements
of the Prompt Payment Act and its implementing directive, OMB
Circular A-125, 38 departments and agencies reported to 0MB on
interest penalty payments made during fiscal year 1983. The
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reports show 99 percent of the Government's bills were being paid
on time. Agencies reported making 180,000 late payments with
interest payments amounting to about $2.9 million.
Circular A-125 requires Federal agencies to pay their bills
on time -- not early and not late. OMB is currently reviewing the
Circular as it applies to progress payments on large contracts.
Progress payments are made to contractors for work performed but
before goods or services are received. In September 1983, a pro-
posed revision to the Circular was released for comment. OMB will
publish a final revision as soon as comments have been analyzed.
(Dave Gribble, 395-4773.) 1/
b. Cash Management Project. The purpose of the Cash
Management Project is to improve oversight of the Government's
cash balances and the flow of Government funds. The Government
collects and spends over $1.7 trillion, annually. Cash could be
better managed and millions in interest costs could be saved
by using the best contemporary cash management techniques such as
electronic fund transfers, delayed drawdowns and lock boxes. The
Project has been under the joint leadership of the Department of
the Treasury and the Office of Management and Budget. So far,
cash management action plans have been developed in 20 agencies,
and 316 initiatives are being monitored. (,John Lordan, 395-b823.)
c. Debt Collection. An amendment to the Debt Collection Act,
signed by the President on November 29, 1983, facilitates the use
of private collection firms to recover debts owed the Government.
Before, the Debt Collection Act provided that contracts with
private collection agencies could not exceed the limitations set
in appropriation acts. The law now allows agencies to contract
with private collection firms on a contingent fee basis before
their appropriation act is passed. However, the new law does not
remove the requirement for advance appropriations in cases where
the contractor is paid a flat fee.
The original Debt Collection Act was signed into law on
October 25, 1982. Since then, OMB's Debt Collection staff has
been working with 16 major agencies to improve credit and debt
management in the following areas:
--Automating debt information to improve the reliability and
timeliness of accounts receivable reports,
--Applying uniform delinquency rules to ensure proper
management of debt portfolios,
--Establishing and enforcing uniform standards for writing
off uncollectable debts,
1/ The area code for the telephone numbers listed in this report
is (202) unless otherwise designated.
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--Requiring agencies to prepare detailed plans that outline
specific steps to be taken for implementing the Debt
Collection Act of 1982,
--Automating debt servicing and collection functions using
the latest computer and telecommunications technology,
--Using risk analysis and credit scoring procedures to ensure
the integrity of the process for extending credit,
--Establishing a dictionary of credit terms with common
definitions to be used throughout the Government, and
--Requiring prescreening procedures including the reporting
of credit information to credit bureaus and consistent use
of credit reports in determining the credit worthiness and
financial reliability of applicants for financial assis-
tance.
(Jack Donahue, 395-3066.)
d. Internal Control. The Federal Managers' Financial
Integrity Act of 1982 requires agency heads to report each year,
beginning with December 31, 1983, on the status of their systems
of internal control and whether their accounting systems conform
to the Comptroller General's principles and standards.
Sixty-eight departments and agencies have submitted their
first year internal control reports. In addition to the overall
conclusion on the system of internal control most agencies:
--Provided a detailed description of their evaluation
process,
--Identified material internal control weaknesses, and
--Provided plans with a time schedule for correcting
weaknesses reported.
Sixty-one departments and agencies reported that their
system of internal control, taken as a whole, provides reasonable
assurance that the internal control objectives were achieved. The
remaining seven reported that either they did not nave enough
information to determine whether their system provides reasonable
assurance or that their system does not fully meet the internal
control objectives.
A review of the reports issued by the departments and largest
agencies revealed that most accounting systems conform to the
Comptroller General's principles, standards and related require-
ments. A few, however, did report that their systems either do
not conform or do not fully conform to the prescribed principles
and standards. In total, agencies reported major deficiencies
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in about 40 percent of the accounting systems in the Federal
Government. Emphasis from the Integrity Act and Reform '88 now
being placed on strengthening, streamlining, standardizing and
reporting on the systems, along with top management support, can
change this situation.
This is the first time that the management of all Executive
departments and agencies have taken a good hard look at their
internal control and accounting systems and reported their
findings. The analyses of these reports have facilitated the
identification of Government-wide issues. Agencies have evaluated
weaknesses reported and are developing long-term plans or are
taking immediate action to correct these weaknesses. In addition,
OMB has drafted a Circular on "Financial Management Systems," and
guidelines for evaluating, improving and reporting on accounting
systems to meet the Reform '88 objectives and reporting require-
ments of the Act. Both documents are expected to be issued in the
summer of 1984. (Fred Heim, 395-3122.)
e. Financial Management and Accounting Guidelines. In August
1983, OMB issued its second draft of the Guidelines to serve as a
summary of the standards with which agencies' financial management
and accounting systems must conform. These standards did not
change existing requirements. Instead, they are to be used to
ensure in the long term that the departments and agencies operate
comprehensive, useful, reliable and efficient financial management
and accounting systems. The Guidelines are to be used by depart-
ments and agencies to evaluate their existing financial management
and accounting systems to identify needed modifications, and to
design and implement system improvements or new systems. The
Guidelines address the basic requirements for the following areas:
--Characteristics of operating systems,
--Controls to help prevent and detect fraud, waste, abuse and
mismanagement and to ensure that recorded and reported
information is reliable,
--Budget execution including fund control,
--Requirements for timely, reliable and useful financial
information, and
--Internal and external reporting of financial information.
(Dave Gribble, 395-4773.)
f. Financial Management Information System Project. OMB has
required Federal departments and agencies to maintain 77 common
accounting data elements so Government-wide information will be
available on a more comparable basis. Adoption of these data
elements will help to improve management planning and control
and lead to more effective oversight at the departmental ana OMB
levels.
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A working group led by OMB with participants from four
departments was formed to identify common reporting requirements
and information for department and agency heads and OMB. The
identification and definition of 77 common data elements resulted
from this effort. The data elements are composed of the following
categories: budget authority, budget execution, collections,
receivables, procurement management, grants management, accounts
receivable-audit, cash management, travel management and employ-
ment.
The Assistant Secretaries for Management are now providing
OMB with plans that describe how the departments plan to obtain
the data from their bureaus and agencies and aggregate them so
they will be available for departmental and OMB use. (Bill
Holcombe, 395-6107.)
g. Revised OMB Circular A-76. The Office of Management and
Budget extensively revised OMB Circular A-76, "Performance of
Commercial Activities." The revised Circular restates that it is
the general policy of the Government to rely on commercial sources
for the supply of necessary products and services when they are
cost-effective and feasible. The major changes are as follows:
--When the Government is performing an activity in-house that
could possibly be done by an outside contractor, a cost
study should be performed to determine who can perform the
activity by the most cost-effective means, the Government
or commercial enterprises. A cost study must be performed,
if the activity involves more than 10 full-time equiva-
lents. A full-time equivalent is 2,087 employee hours
in a fiscal year. Previously, cost studies had to be
performed for activities costing over $100,000, annually.
By September 30, 1987, all departments and agencies are
required to have completed cost studies on all applicable
activities. New cost studies for those activities should
be performed at least once every 5 years. OMB will be
monitoring department and agency progress concerning cost
studies.
--New activities should be performed by an outside contractor
unless any of four following exception criteria are met.
-There is no satisfactory commercial source available,
-The activity is vital to national defense,
-The.-function is for direct patient care in Government
hospitals, or
-Commercial costs are unreasonable and a cost study
shows in-house performance is less costly.
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--Cost studies are required if an activity is to be expanded
or upgraded at a cost that exceeds 30 percent of the total
capital investment or 30 percent of the annual operating
costs. (Curt Holland, 395-6810.)
h. Management Reviews as Part of the Budget Process. To
ensure the success of the Administration's management improvement
efforts, a management improvement program with significant
involvement and support from the Executive Office of the President
was initiated. The program links management initiatives with the
annual budget process. During the 1985 budget review process,
departmental and agency progress and plans in implementing the
Administration's management initiatives were reviewed. These
included such management initiatives as debt collection, cash
management, and consolidation of administrative support systems.
Never before has so much emphasis been place on the review of
management initiatives in the budget process. (Jim Kelly,
395-3774.)
2. Budgeting
a. New Budget Information. The OMB has continued to make
budget information more useful by adding selected information to
the 1985 budget. Some of these changes include the following:
--Two summary tables provide comparisons, and in some cases
in greater detail, of the President's 1985 Budget with the
current services budget authority and outlay estimates.
--A summary of budget authority and outlays was included
in the 1985 Budget Appendix for accounts that provided
(1) separate Program and Financing Schedules for supple-
mental requests, (2) items proposed for later transmittal,
and (3) rescission proposals.
--More discussion of credit subsidies, defaults, and the
activities of Government-sponsored enterprises has been
added to the 1985 Special Analyses.
--Additional information on historical trends in Federal
investment was provided in the 1985 Special Analyses in
response to a growing interest for information on capital
expenditures.
b. Streamlined Presentation of Budget Data. The improvements
in presentation of budget data involve four major changes:
--Procedures for reporting both actual and estimated off-
setting receipts were revised to reduce the procedural
burden of maintaining and reporting detailed receipt data
and to eliminate the confusion caused by the previous
system. Most general fund proprietary receipts that
involve annual amounts of $10 million or less are now
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credited to one of three Treasury accounts: (1) pro-
prietary interest, (2) suspense accounts, or (3) all
other collections. This change resulted in relatively
insignificant increases of the recorded budget authority
and outlay totals for many agencies and permitted data for
about 800 small receipt accounts to be consolidated into
the three accounts.
--In the personnel summary schedules that are included in
the 1985 Budget Appendix, only data on full-time equivalent
employment, and full-time equivalent of overtime and
holiday hours are printed. Data on average grades and
salaries are no longer presented, because generally this
information was not found useful.
--Because control of personnel based on the number of
positions was changed to control of personnel based on
full-time equivalents, schedules of permanent positions are
no longer included in the Budget Appendix. However, the
information is available in the agencies.
--Many of the appropriation accounts that include reim-
bursable programs now combine reimbursable activities
in a single line without further identification in the
program-by-activities section of the Program and Financing
Schedules or in the object classification schedules. For
revolving funds, all obligations are distributed by
activity and by object class.
c. Improvements Due To Automation. OMB uses computers,
including those that support electronic word processing,
extensively to support formulation of the budget materials and
preparation of the budget documents. Some of the most significant
computer applications are:
--Twenty-two chapters of the 1985 Budget Appendix were
printed by transferring electronically the information from
the Budget Preparation System data base to the Government
Printing Office's photocomposition system data base. Next
year, expanded application of this process will be explored
to further streamline the printing of the Budget documents.
This and subsequent increases in automation will eliminate
time-consuming manual print corrections, which in turn will
reduce printing costs and provide additional time before
Congressional deadlines.
--The Central Budget Management System, an automated data
base management, reporting and analysis system, was used
extensively to support the Federal budget formulation
process. OMB is now better able to respond to Congres-
sional data requests by producing information in formats
consistent with various aspects of the Congressional budget
process. Also, automated techniques have been incorporated
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into this system to provide for central reporting and
analysis of receipts and to calculate the interest on the
debt associated with budget alternatives.
--Improvements in OMB's model to project interest on the
public debt have increased both the accuracy of the
estimates and the speed with which new estimates can be
made.
--Revisions and expansions in OMB's economic sensitivity
system have improved the ability to support the budget
formulation process in a more timely and broader framework.
--The planned expansion of the linkage between the Budget
Preparation System (report generator) and the Government
Printing Office's photocomposition system should allow for
automated printing of the bulk of the tabular material in
the Budget, the Budget in Brief and several of the special
analyses for the 1986 budget documents.
(Betty Bradshaw, 395-3144.)
D. GENERAL ACCOUNTING OFFICE (GAO)
1. Review of Federal Government Program Management
In fiscal year 1983, GAO issued 755 audit reports and special
studies. About 68 percent of these reports were submitted to the
Congress, its committees and members. The remaining 32 percent of
the reports were addressed to Federal agency officials but were
also provided to interested Congressional committees and members.
GAO's audit work is performed under the authority in its basic
statutes, as a result of specific legislative mandates, or in
response to specific requests by committees or members of the
Congress. Table 1 (page 17) shows the number of audit reports
issued during fiscal year 1983, categorized by major audit area.
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TABLE 1
AUDIT REPORTS ISSUED DURING FISCAL YEAR 1983 1/
Number of Reports
Administration of Justice 29
Agriculture 14
Allowances 2
Automatic Data Processing 16
Commerce and Housing Credit 17
Community and Regional Development 22
Congressional Information Services 20
Education, Training, Employment and Social Services 19
Energy 78
Financial Management and Information Systems 51
General Government 87
General Purpose Fiscal Assistance 9
General Science, Space and Technology 6
Health 28
Impoundment Control Act of 1974 16
Income Security 27
Interest 1
International Affairs 59
Multiple Functions 3
National Defense 166
National Resources and Environment 38
Nondiscrimination and Equal Opportunity 2
Procurement Other Than Defense 6
Transportation 30
Veterans Benefits and Services 9
Total 755
During the year, GAO identified measureable accomplishments
-- cost savings and cost avoidance -- of nearly $4.5 billion which
were directly related to its work. Many of these accomplishments
involved changes advocated also by others. About $3.3 billion of
GAO's accomplishments involved actions taken by the Congress, and
the remaining $1.2 billion involved actions taken by agencies.
GAO dollar accomplishments fall into two general categories
-- budgetary savings and better use of funds. The first category,
budgetary savings, occur when actions taken in response to GAO's
work result in actual decreases in Federal spending or increases
in Federal revenues. In fiscal year 1983, over $1.7 billion in
budgetary savings resulted from GAO's work.
1/ This listing excludes certain reports classified for national
security reasons for which unclassified digests have not been
prepared.
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Many GAO accomplishments fall into the second category --
better use of funds. These are usually estimates of costs that
were or will be avoided, because the Congress or agencies imple-
mented the changes identified during GAO's audit activities.
Better fund use does not necessarily reduce budgetary outlays,
since the dollar amounts of the accomplishments relate to future
years or may be made available for other more effective and
efficient use by agency management. Over $2.7 billion in funds
were made available for better use as a result of GAO's efforts
in fiscal year 1983.
In many cases the results of GAO's work cannot be expressed
in terms of dollars saved by the Federal Government. Frequently,
GAO's work leads to increased efficiency, improved day-to-day
operations, or enhanced well being of individual citizens.
Further details on the results of GAO's work are included
in the United States General Accounting Office Annual Report for
1983.
2. Approval of Accounting Systems
In April 1983, GAO revised its methodology for approving
agency accounting systems. The approval is now limited to one
stage -- operating accounting systems. Agency statements of
accounting principles and standards and designs of accounting
systems are no longer subject to approval. GAO will now review
operating systems to determine if the system is in accordance
with GAO accounting principles and standards by testing selected
critical elements. If the system under review meets the documen-
tation and test requirements, it will be approved at that time.
Otherwise, it will not be approved, or if previously approved,
approval will be withdrawn.
The change in the approval function was made to streamline
the process and to make it compatible with the emphasis placed on
agencies' operating systems by the Federal Managers' Financial
Integrity Act. GAO is now evaluating accounting systems in
accordance with the revised procedures. (Virginia Robinson,
275-5071.)
3. Accounting, Financial Reporting and Internal Control Standards
In accordance with the requirements of the Federal Managers'
Financial Integrity Act of 1982, GAO issued Standards for Internal
Controls in the Federal Government on June 1, 1983. The standards
set the minimum requirements for an agency's internal control
systems. Federal agencies are now using the standards to aid them
in assessing the status of their administrative and accounting
controls. As necessary, GAO will provide guidance in interpreting
and applying the standards.
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Also, the Federal Managers' Financial Integrity Act requires
agencies to report annually on whether their accounting systems
comply with the GAO accounting principles and standards. In
response to the Act, GAO also issued on April 18, 1983, a memor-
andum to the heads of departments and agencies providing a summary
of the significant accounting principles and standards in the
current Title 2 of the Policy and Procedures Manual for Guidance
of Federal Agencies. The attachment to the memorandum was to be
used by agencies in assessing and reporting on their accounting
systems.
GAO is also revising and updating Title 2. A draft of the
revised standards was issued for comment on October 27, 1983.
The comments will be evaluated during fiscal year 1984, and a
new Title 2 will be issued. (Bruce Michelson, 275-5410.)
4. Auditing Standards and Guidelines
"Standards for Audit of Governmental Organizations, Programs,
Activities, and Functions," better known as the "Yellow Book" is
being used more extensively by all levels of government auditors
and public accountants. These generally accepted government audit
standards have been cited in revenue sharing and single audit
legislation as required audit criteria.
The Congress, in extending the Local Government Fiscal
Assistance Revenue Sharing Program in 1983, amended the audit
requirements and required that the audits be made in accordance
with the above standards. Those local governments receiving less
than $25,000 in revenue sharing funds for a fiscal year are exempt
from audits. A government which receives at least $25,000, but
not more than $100,000 for a fiscal year, is required to have a
financial and compliance audit made at least once every 3 years.
A government which receives more than $100,000 for a fiscal year
is required to have a financial and compliance audit annually
except that, if the government operates on a biennial fiscal
period, such audit may be made biennially covering both years.
During 1983, the Senate passed a "Uniform Single Audit Act"
to establish uniform single audit requirements for State and local
governments who receive Federal assistance. These audits must
also be made in accordance with the standards. The House passed
similar legislation in 1984.
These generally accepted government audit standards must be
followed in performing audits of Federal organizations, programs,
activities, and functions. The standards have received wide
acceptance by State and local government auditors and public
accountants. Several State and local audit organizations, as well
as several foreign nations, have officially adopted the standards.
The American Institute of Certified Public Accountants has gener-
ally adopted the standards and has issued auditing interpretations
concerning the standards. (William Broadus, 275-6073.)
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5. Review of Operating Systems
a. Federal Managers' Financial Integrity Act. During fiscal
year 1983, GAO initiated a major review of the efforts made by
20 Federal agencies to implement the Federal Managers' Financial
Integrity Act. This review included 16 cabinet-level departments,
the National Aeronautics and Space Administration, General
Services Administration, Veterans Administration and the Small
Business Administration. The purpose of the review was to gain
a comprehensive picture of the progress made and problems
encountered in implementing the Act during the first year.
During fiscal year 1984, GAO plans to report the results
of these efforts by the major agencies to the Congress and the
agencies included in the review.
The report to the Congress will include:
--Progress made and problems encountered by all 20 Federal
agencies in implementing the Act, with particular attention
directed to the agencies' annual reports submitted on
December 31, 1983;
--An assessment of additional guidance needed for subsequent
years;
--An overall perspective of the status of internal controls
in the Federal Government; and
--Future efforts required to improve financial management of
the Federal Government's operations.
The 20 reports issued to the agencies will provide GAO's assess-
ment on an individual agency basis of progress made and identify
areas needing improvement in the future. GAO plans to continue
to monitor and report on the efforts made by Federal agencies to
implement the Act. (John Simonette, 275-1581.)
b. Debt Collection. GAO reviews of six Federal agencies'
debt collection programs showed that the increased focus on debt
collection by the Office of Management and Budget and the agencies
has resulted in strengthened collection practices and increased
collections. GAO concluded that continued oversight by the
Congress and OMB, as well as sustained effort by Federal agencies,
can result in further improvements in debt collection. Debt
collection problems did not develop overnight, and the resolution
of many long-standing and still existing problems, such as
accounting systems which do not report reliable information on
receivables, will take time. A great deal remains to be done to
assure the ultimate success of the Government's endeavors to
improve debt collection efforts and practices. (John Simonette,
275-1581.)
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c. Departmentwide Management Review. During fiscal year
1983, GAO performed the first in a series of GAO audits evaluating
management effectiveness at major Federal departments. The agency
selected for this first review was the Department of Housing and
Urban Development (HUD). The review disclosed that HUD is striv-
ing to make improvements and suggested further ways to increase
program effectiveness through management efficiency. To improve
general management, GAO's report 2/ recommended that HUD:
--Place more emphasis on and improve coordination of general
management functions such as planning, staff training and
development, and financial management;
--Strengthen accountability for general management functions
(for example, delegating to one person the responsibility
to oversee daily operations as they relate to general
management functions);
--Build an organization with greater stability by minimizing
the impact of high turnover of key officials; and
--Establish continuity within HUD's top management team by
appointing a nonpartisan official responsible for general
management functions.
To improve financial management systems, the report recommended
that the Secretary of Housing and Urban Development:
--Create the position of Chief Financial Officer with clear
responsibility and accountability to set financial policy
and provide a central focus for development of improved
financial management systems;
--Correct internal control weaknesses;
--Assure that accounting systems comply with the principles
and standards established by the Comptroller General; and
--Establish a long-range automatic data processing planning
and control process.
(James New, 426-1780.)
2/ Increasing the Department of Housing and Urban Development's
Effectiveness Through Improved Management (GAO/RCED-84-9,
January 10, 1984).
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E. DEPARTMENT OF THE TREASURY
1. Cash Management
a. Lead Agency Responsibility. During fiscal year 1983,
Treasury assumed responsibility for the cash management portion
of Reform '88 initiatives. To meet this responsibility, the
cash management program staff was established and tasked with
(1) negotiating agreements and working on the cash management
commitments of 20 Federal departments and agencies and (2) iden-
tifying, studying and overseeing the resolution of Governmentwide
cash management issues and problems. Both Treasury and the Office
of Management and Budget reviewed and approved the agencies' cash
management plans and established dollar goals for each agency. As
a result, in fiscal year 1983, the Government's interest savings
totalled $144 million. In addition, a management information
system, "CastMan," was developed and implemented to inform senior
Treasury and OMB officials on the progress of agencies in meeting
their cash management objectives. (Russell Morris 634-5685.)
b. Cashier Draft Payment System. The Bureau of Government
Financial Operations (BGFO) is testing a commercial payment system
for use by Government imprest fund cashiers to replace the present
cash payment procedures for selected purchases of goods and
services. The system uses a draft drawn on a third party rather
than being drawn on a Treasury account. When the draft is
presented for payment, the third party notifies Treasury to wire
the necessary funds. The system also allows for third-party
produced reports to fit user needs. The system is being tested
in two phases, each to run approximately three months. The first,
began in December, tested 1,000 transactions from one agency. The
second phase will test 1,000 transactions each at 30 agencies.
If the pilot tests are successful, the system will be offered
Governmentwide.
The benefits of the system are significant reduction of cash
handling, improved internal controls and audit trails, third-party
payment protection, improved financial and management reports, and
reduced agency cash requirements. By using the draft payment
system, BGFO estimates that 75 to 80 percent of the approximately
$70 million held by 7,200 cashiers could be eliminated. (Bob
Lane, 566-9634.)
c. Conversion to Paper Checks. The BGFO is in the process
of converting the current U.S. Treasury green, punched-card check
to a paper check. Conversion will be made in two phases: first,
a Treasury disbursing operation test in BGFO's Philadelphia
Disbursing Center is scheduled for March 1985. Second, phased-in
implementation of paper check issuance is planned in Treasury
Disbursing Centers and smaller non-Treasury disbursing operations
during 1985 and 1986. BGFO issues over 600 million checks per
year. Another 150 million checks are issued by 29 non-Treasury
organizations (Army, Navy, Postal Service, etc.) through 1,300
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disbursing points. When all of these organizations have converted
to paper checks, productivity will be enhanced, security over
Treasury checks will be improved, and the cost of checks will be
reduced by more than $5 million, annually. In addition, the
conversion to paper checks will have a favorable impact on the
commercial banking system, Federal Reserve System, Postal Service,
and the Federal Records Centers. (Marcus Page, 376-0900.)
d. Plastic Technology -- Army/Treasury Automated Teller
Machines (ATMs) Test. The Department of the Army and BGFO are
jointly testing the feasibility of disbursing payroll funds to
Army personnel, who do not maintain accounts in commercial banks,
through the use of Automated Teller Machines linked to a biometric
recognition device. This device will provide increased security
for cash disbursements through positive personal identification.
Some types of biometric recognition involve hand geometry, retinal
scan and fingerprint recognition. The objectives of the test are
to measure soldier acceptance of the biometric recognition device
and the automated teller machines, to measure cost and workload
impacts, to identify impacts on Government systems and financial
institutions within the test area, and to determine cost benefits
of a total Army system for "unbanked" members. The test will
also allow a limited assessment of the feasibility of utilizing
such a system for nonmilitary "unbanked" individuals. The test
is limited to a small group of Army personnel at one military
installation. (John McMakin, 376-0430.)
2. Accounting Procedures and Systems
a. Administrative Offset. The BGFO has implemented an
administrative offset system to collect delinquent accounts
receivable owed to the Treasury by financial institutions. These
institutions owe money to the Government when Treasury checks
cashed or processed by Federal Reserve Banks are subsequently
determined to have forged or unauthorized endorsements. The
official Treasury request for reimbursement is known as a "recla-
mation." Reclamations that are outstanding more than 120 days
can be offset against amounts owed by Federal agencies to the
financial institutions under the Federal Claims Collection Act
of 1966 and the Debt Collection Act of 1982.
The specifics of administrative offset policies and proce-
dures, such as determining time frames for offset and how to
notify institutions, were published in the Federal Register on
October 24, 1983. The first agency to use offset procedures was
the Department of Education. It has a large number of recurring
payments to financial institutions under the Guaranteed Student
Loan Program. Between May and December 1983, this Department was
able to offset over $820,000. Since then, the Department of
Commerce, the Department of Housing and.Urban Development, the
Small Business Administration, the Social Security Administration,
and the Agricultural Stabilization and Conservation Service have
been requested to take offset action. (Fred Smith, 376-0937 or
Larry Shriner, 376-0947.)
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b. Automated SF 224 Development. The Automated SF 224 System
is the process by which the SF 224, "Statement of Transactions,"
are submitted by the agencies to Treasury through telecommunica-
tions. Agencies interface with Treasury by a standard dial-up
terminal. Edits are interactively performed by Treasury on the
agency location code, account symbols, and the opening balance in
Section III of the SF 224. A hard copy of the report is generated
for the agency's internal use. Also, pilot testing has begun for
agencies interested in direct computer-to-computer links (bulk
transfers). Under the new automated system, agencies have until
the fifth workday of each month to submit their SF 224 report;
data are reported more accurately and timely; and the amount of
paper generated is reduced. Presently 324 agency reporting
locations or 40 percent of all locations are on the system.
Other locations will implement the system as they are contacted
by Treasury. Government-wide implementation is mandatory by
October 1, 1984. Requirements are provided in Treasury Financial
Manual, Bulletin No. 83-32, dated August 19, 1983. (Nancy Coto,
376-0929.)
c. Accounting Regulations Data-Base System. Treasury is
developing the Accounting Regulations Data Base to provide the
most current version of accounting regulations issued by Treasury
and other Government agencies to users as promptly as possible.
This data-base system, currently has Treasury Financial Manual
(TFM) Volumes I, IV, V, and VI; TFM Volume II will be available
shortly. Eventually the system will be expanded to include the
entire TFM, OMB Circulars relating to accounting and financial
policy, GAO Titles 2-s, and OPM Payroll Regulations which relate
to accounting. Some benefits to users will be reduction in user
research time, availability of an electronic mail link that allows
two-way communication among all participants, use of a bulletin
board of anticipated regulatory revisions, reduction in paper flow
and faster dissemination of accounting regulations to agencies,
and assurance that users have the most up-to-date accounting
regulations. Presentations of the system have been given in
Washington, DC, and in other cities. Agencies may access the data
base by establishing a contract with Treasury's current data-base
time-sharing vendor. (William Edwards, 376-0770.)
d. The Simplified lntra overnmental Billing and Collection
System (SIBAC). SIBAC is considered the most effective means to
accomplish intragovernmental transfers between agencies for which
Treasury collects and disburses. As such, the Treasury Department
began a concerted effort to convert agencies who meet the minimum
qualifications (100 billing transactions or $1 million in billings
per month) in 1983-84. Through the SIBAC System, billing agencies
immediately collect receivables, and customers are immediately
paid. For many years, the General Services Administration has
been using the system to bill and collect from its customers. In
1983, the Public Health Service, the Bureau of the Census, the
Bonneville Power Administration, the Office of Aircraft Services
(Interior), and the Employment Standards Administration (Labor)
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were added to the list. In 1984, the Geological Survey, the
Federal Prison Industries, the Department of Energy, the National
Oceanic and Atmospheric Administration, the Office of the Secre-
tary (Interior), and the remaining parts of the General Services
Administration that are not on SIBAC are scheduled to convert to
the system. (Della Gottesman, 376-0764.)
e. Conversion of Nontape Disbursing Office Checks-Issued
Reporting to Magnetic Tape Reporting. This project will speed
Treasury's reconciliation of checks issued to checks paid. This
change will increase the automation of reconciling checks from
block control total levels to an item-for-item basis. Agencies
and disbursing offices responsible for issuing U.S. Treasury
checks are required to submit check-issue data on magnetic tape
or on documents with an optical character recognition machine-
readable format. Conversions to magnetic tape have been completed
for one-third of the disbursing offices and have been scheduled
for the remainder. Conversion to machine readable format
reporting will begin July 1984. There should be no appreciable
workload increase in disbursing offices which convert to magnetic
tape reporting. Disbursing offices must undertake a one-time
programming change to produce magnetic tapes in accordance with
the Treasury Financial Manual. Disbursing offices, the banking
community, and Treasury will benefit from the improved timeliness
and efficiency afforded by item-for-item reconciliation of checks
issued and checks paid. (Stanley Ginsberg, 376-0996.)
f. Interagency Payment-Collection Transactions. The "Journal
Voucher System" that uses the SF 1081, "Voucher and Schedule of
Withdrawals and Credits," was revised in January 1983. The new
procedures require that all transactions between agencies serviced
by a Treasury Disbursing Center be accomplished without sending
a document through the Treasury Disbursing Center. The paying
agency will complete the accounting transfer by reporting the
entire transaction and identifying the agency to be paid on
SF 224, Statement of Transactions. Agencies will be responsible
for reconciling and monitoring transactions flowing through
account symbols. No checks will be issued to settle interagency
transactions between reporting agencies where the transfer can be
accomplished by journal entries from information contained on the
SF 224. These revised procedures were implemented on February 1,
1983. (Michael Merson, 376-0924.)
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AGENCY INITIATIVES TO IMPROVE
FINANCIAL MANAGEMENT
INTRODUCTION
Agency submissions of information on improvements to agency
financial management practices and systems reflect significant
achievements and major undertakings. Overall, the agency reports
reflect a strong commitment to make improvements in financial
management, especially through the use of new technology.
Descriptions of the more significant or unique management
actions in areas of accounting procedures and systems, auditing,
budgeting, cash management, payroll and personnel, productivity
and other systems are presented in the following sections. Publi-
cation of all reported improvements was impractical. However, the
JFMIP staff, upon request, will provide assistance to agencies
when requested in identifying additional financial management
improvement activities.
Agency contact persons and their telephone numbers are
provided in parentheses following the project descriptions so
that the readers can obtain additional information about any of
the improvement activities. The area code for the telephone
numbers is "202" unless otherwise designated.
A. ACCOUNTING PROCEDURES AND SYSTEMS
Activities in this area cover agencies' interest in providing
more accurate, useful and timely accounting information to manage-
ment for increasing program economy and efficiency. Generally,
procedures and systems are being reinforced and upgraded with
improved data collection and data integration. A sampling of
improvement activities accomplished and underway are presented
in the following paragraphs.
1. Accounting Improvements Accomplished
The DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT implemented
its Maturity Register System, an online financial control system
that will track and record over $12 billion of short-term
securities that are sold in the private market to finance the
Department's Public and Indian Housing projects. This system
interfaces with two existing systems: the Security Ledger Trial
Balance (loans receivable report) and the Project Financing
Journal (cumulative financing record). In addition, the system
automatically calculates the accrued interest on the notes sold
and retains the calculated amounts in the data base for future
note sales. It is estimated that this system will save the
Department approximately $500,000, annually, due to system
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interfaces and elimination of the time consuming manual processes
previously associated with the monthly note sales. After the
system was implemented in October 1983, it was gradually decen-
tralized to all the regional offices with the last regions going
online in January 1984. With this online capability, the regions
are able to initiate an inquiry of the project Financing Journal
relative to the financing of a specific Public Housing Agency
project. (Don Haines, 755-5064.)
The NATIONAL INSTITUTES OF HEALTH, Department of Health
and Human Services, improved its accounts payable system by
incorporating several new features. These include:
--Scheduling of payments for invoices on due dates
automatically,
--Aging and monitoring accounts payable to prevent
delinquencies,
--Identifying delinquencies automatically and computing and
recording interest, and
--Microfilming paid vouchers for future reference.
In addition, the Material and Supply Inventory System was
designed in 1983. This system will process and maintain all
types of transactions that are involved in the stock inventories
for central stores, plant engineering, biomedical engineering,
pharmacy and self-service stores. The system was designed in a
data-bas.e environment and provides entry and query in an online,
interactive mode. It includes financial management and materiel
management controls, edits data entering the system, and provides
for:
--Automatic reconciliation between subsidiary and general
ledger accounts,
--Line-item perpetual inventory,
--Automatic reorder mechanism,
--Maintenance of economic reorder file by line item,
--Provision for the periodic physical inventories,
--Computation for billings to customer,
--Automatic generation of accounting transactions,
--Generation of management and financial reports, and
--Automatic ties to the procurement system.
(Sam George, 496-3368.)
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The ENVIRONMENTAL PROTECTION AGENCY semi-annual review of
unliquidated obligations during the fourth quarter of the year
produced recoveries of about $27.7 million in prior year obliga-
tions. This recovery, plus a second quarter recovery of $15.9
million, produced a total of $43.6 million in recoveries for
fiscal year 1983. A related review of the unexpended excess
foreign currency reservation accounts for Poland and Yugoslavia
indicated no further requirement for these funds. Funds amounting
to $57,620 were returned to Treasury, thereby effectively closing
out these two long-standing programs. (Robert Dodson, 382-5131.)
The DEPARTMENT OF EDUCATION decentralized the responsibility
for fund control to allowance holders. Computer terminals were
provided to each allowance holder for direct input of obligations
and online inquiry of current fund balances. Previously, all
administrative obligating documents, including small imprest fund
transactions, were routed to the central finance office for
certification of fund availability before further processing.
This resulted in insufficient processing of small dollar transac-
tions and frequently delayed service. Also, each allowance holder
was maintaining its own cuff records on the status of funds rather
than relying on the central system records.
By allowing the officials responsible for approving obliga-
tions to certify fund availability and enter obligations directly
into the accounting system, responsibility for overobligations can
be readily fixed. Also, users will have direct access to
information on fund balances and take greater interest in the
accuracy of the system.
The first phase of fund control decentralization was
applicable only to administrative funds and became effective on
October 1, 1983. Additional enhancements are planned to make the
system more responsive to user needs. For example, plans are
underway to decentralize fund control responsibilities for program
offices making grant and contract awards and to allow the budget
offices to enter apportionments, allotments and allowances
directly into the accounting system. (Molly Hockman, 245-2964.)
The 14ATIONAL AERONAUTICS AND SPACE ADMINISTRATION implemented
several accounting changes by automating some manual processes and
improving data entry. The specific accomplishments are:
--The AMES RESEARCH CENTER developed, in June 1983, an
automated system for preparing payment tapes to the
Treasury Department using the IBM 3279 terminal to replace
the manual preparation of vouchers. After data are entered
in the terminal, the system produces the Treasury disburse-
ment tape in proper format. The system provides printouts
sorted by certifier which reduces the time needed to
reconcile vouchers to invoices. Also, the system includes
control totals to insure that all payments are processed.
(Bennie Addison, Jr., FTS 448-5310.)
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--The GODDARD SPACE FLIGHT CENTER implemented, in July 1983,
an automated Subsidiary Accounts Receivable system to
replace manual logs previously maintained to record sub-
sidiary information and to age delinquent accounts. In
this system, online data entry is accomplished in a user
friendly environment through the use of terminals located
in the Accounting Branch. The system generates, in a very
flexible manner, various detail and summary reports for
reconciliation to the general ledger control account, for
aging delinquent accounts receivables, and for reporting
year-to-date information required for debt collection
reporting on non-Government accounts receivable. The user
initiates the reports through the terminal specifying any
one or all of seven different reports that are available.
The system provides more accurate and timely data,
simplifies the reconciliation process, and adds automatic
counting capabilities allowing for ease in meeting changing
reporting requirements on debt collection. (Connie Pike,
(301) 344-8274 or Gregory Barker, (301) 344-5704.)
The OFFICE OF PERSONNEL MANAGEMENT improved its system of
controlling employee withholdings and agency contributions for
the Government-wide retirement, life insurance and health benefits
programs with the design of a new automated system. The former
batch-processing system was replaced by a more flexible system
with an online inquiry capability. Immediate access to updated
data files on withholdings and contributions is now possible. The
new system has increased productivity and has made possible other
system enhancements. For example, the redesign allowed the
automation of the retirement subledger -- the accounting record
which helps monitor Federal agencies' transfer of retirement
monies to OPM. The automation of the subledger has increased the
reliability of data and improved annual agency reconciliations.
(John Webster, 632-7450.)
The U.S. POSTAL SERVICE automated its summary financial
statements. This new system uses the Postal Service's national
consolidated trial balances for the current period, trial balances
for the same period of the prior year, and a budget file. The
statements that can be produced using an account master file are
as follows:
--Statement of Operating Results containing current
period accounting data, percentage deviations from plan,
percentage deviation from the same period last year, and
cumulative totals for year-to-date.
--Equity Statement containing year-to-date data as of the
close of each accounting period.
--Balance Sheet Statement containing opening balances and
closing balances for assets, liabilities and equity.
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This system was implemented in March 1983. By coding the account
master file similarly to the standard object class coding, the
Postal Service produces these statements automatically upon
completion of the national consolidated trial balance. Future
enhancements will provide online updating for reclassification
entries. (Terry Vander Leest, 245-4454.)
The ENVIRONMENTAL PROTECTION AGENCY took several steps to
strengthen controls and accountability over funds expended in
support of the agency's Superfund Program that pays for hazardous
waste cleanup. First, accounting procedures and systems were
revised to provide better controls over charges to the Superfund
appropriation. Second, accounting offices were monitored to
ensure that these revised procedures were correctly implemented.
Third, an action plan was developed for addressing and monitoring
the status of actions taken to resolve audit findings of a recent
Inspector General Report on Superfund. Finally, on March 31,
1983, a Superfund Cost Recovery Tracking System was established
to track total cost recorded for each hazardous waste site, the
amount of consent decree and settlement, the amount billed, and
the amount collected. (Joseph Dillon, 382-5113.)
The BUREAU OF LAND MANAGEMENT, Department of the Interior,
designed and implemented an automated deposit-in-transit
reconciliation system. A monthly tape is received from Treasury
with deposit data credited to the Bureau agency location code
through the banking system. The automated reconciliation system
performs a detailed comparison of the deposit data on the tape
from Treasury and the monthly deposit transaction processed by the
Bureau into its finance system. Records that do not match based
on (a) accounting data, (b) deposit ticket number, and (c) amount
are recorded in a differences master file. Subsequently, a
reconciliation report of differences is generated for review and
correction. The greatest advantage to the Bureau is the savings
in personnel costs (at least three days per month) the automated
reconciliation program provides. (Jerry Yarborough, FTS
234-2094.)
2. Accounting Improvements Underway
The DEPARTMENT OF THE ARMY has a major development program
underway to redesign its accounting system. The goal is to
achieve a GAO approved financial management system to maintain
adequate internal controls and to serve the Army's needs better.
Major projects include new department and installation level
accounting systems as well as pay systems for military and
civilian personnel. Using structured analyses and design method-
ologies, as well as standardized data elements and data-base
design, the new systems will be highly automated and flexible.
Also being developed is a new Army Management Structure with a
common management language for interrelating all apsects of
financial management to include planning, programing, budgeting,
and accounting. Estimated target dates when four new major
components will become operational on a phased-in basis are:
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--Department-level accounting
Early 1984
--Installation-level accounting
Early 1986
--Military pay
mid-1985
--Civilian pay
Mid-1986
Another component, called minicomputer-assisted, source-data
conversion, is presently used to input changes to military pay
data by field finance offices. In addition, a system is being
developed to improve military pay and management information for
the U.S. Army Reserve.
After the full implementation of all five new system
components, the Army estimates that it will realize a peak annual
gross savings of at least $34 million or 1,980 equivalent staff-
years. Also, an Army-wide, automated network for programming,
budgeting and execution is under development. (Jim Taras, (317)
542-3576.)
The ARMY is also buying new computers that will provide
interactive processing capability. The project called Vertical
Installation Automation Base Line (VIABLE) is an Army-wide effort
to obtain modern and efficient computer technology. In April
1982, the Army awarded a $16.6 million contract for the first year
of a ten-year project that will revolutionize the Army's automatic
data processing capabilities by replacing the existing Base
Operating Information System computers.
Under the program, 5 contractor-operated Regional Data
Centers will support 44 local Army data processing centers.
Local terminal users will have access to their data maintained
in the large scale computer at a Regional Data Center. As of
September 30, 1983, 2 Regional Data Centers and 11 local sites
were operational.
The project provides the capability for interactive
processing which allows a terminal user to communicate directly
with the computer. Four standard Army financial management
accounting systems, i.e., Standard Finance System, Standard Army
Financial Inventory Accounting and Reporting System, Standard Army
Civilian Payroll System, and Nonappropriated Funds Information
Standard System are taking advantage of this capability as it
becomes available. Terminals are being installed in finance and
accounting offices for input and editing of transactions as well
as for the query of files. (Martin Robinson, (317) 542-3579.)
The DEPARTMENT OF ENERGY is developing a standarized account-
ing processing system for use throughout the Department's'nine
operations offices. The San Francisco Field Office's Reporting
System was selected to serve as the core for the standardized
system. Energy is presently making modifications to accommodate
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additional accounting requirements common to a significant number
of operations offices. System implementation will occur on a
phased schedule with a final target implementation date of
September 30, 1985, for the last operations office.
The standardized system utilizes a network data-base
management system allowing for the maintenance of a single copy of
data. Changes to the standard system software will be controlled
centrally through Energy Headquarters. The individual operations
offices will operate the system will report monthly summary level
financial information to the Headquarters Financial Information
System for consolidation and reporting to Treasury and the Office
of Management and Budget.
Advantages and benefits include the capability to make
systems enhancements, modernizations, and replacements in a
controlled, economical environment; greater opportunity to focus
on and deal with internal control problems; and enhancement of the
GAO system approval process. (Anthony B. Queern, (301) 353-4051.)
The BUREAU OF ENGRAVING AND PRINTING, Department of the
Treasury, is developing a new Financial Management Information
System. This system with an integrated data base will use and
link existing systems and subsystems wherever possible. The
system will capture the same data only once at the earliest point
in the process for time and attendance, labor distribution and
production information. The objectives of the system are to
fulfill the Bureau's:
--External reporting requirements,
--Internal financial management requirements,
--Operational management requirements, and
--Data processing requirements.
The requirements analysis and conceptual design nave been
completed. The general and detailed system design, hardware and
software selection, custom programing, implementation and testing
began in November 1982 and are expected to continue through fiscal
year 1985. The general system design, now completed, is being
used as the basis for developing specifications for the acquisi-
tion of off-the-shelf software. Hardware specifications for
terminals are under review. After implementation of the new
system, the Bureau is expected to realize annual savings in excess
of $1.4 million. In addition, significant nontangib:ie savings
resulting from more timely and improved financial reporting are
expected. (Gregory E. Boutin, 447-9434.)
The FEDERAL AVIATION ADMINISTRATION, Department of Trans-
portation, is completing the implementation of a new uniform
accounting system. It is designed as an online system with a
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single data base that is centrally managed. Accounting data are
to be entered into the system by cathode ray tube terminals at 11
locations in the mainland United States and Alaska. Key features
of the system include transaction codes and single-line entry
which updates 11 relevant files simultaneously; a netting process
that automatically adjusts for differences in final payments and
accrued expenditures or undelivered orders; a centralized dis-
bursement function; an inquiry capability that provides immediate
access to information contained in all the files and document
histories; and reports that are available online and on a fixed
recurring basis.
The system is being implemented on a phased-in basis by
location. The system has been implemented at 10 of the 11 loca-
tions with only the Metropolitan Washington Airports operating
accounting office remaining, which is scheduled for March 1984.
The post-implementation review and system optimization phase will
involve examining, prioritizing and installing change proposals
and external requirements such as those of the Treasury Financial
Communications System. (Stephen I. Newborn, 426-8154.)
The DEPARTMENT OF HEALTH AND HUMAN SERVICES established a
project office to develop and implement a Uniform Financial and
Administrative Integrated Management System for all agencies with-
in the department. A major objective of the project is to provide
uniformity in systems design in an integrated data-base environ-
ment with distributive processing and a communication technology
capability to provide top management staff with quality data and
information required to exercise oversite responsibilities.
The system being developed will meet the requirements of all
user agencies including such financial management components as
general ledger, fund control and budget execution, accounts
receivable and debt management, accounts payable, material and
supply inventories, and fixed assets. The system will also meet
the needs of the materiel components for procurement and supply,
property and buildings and facilities inventory management.
The system will oe evaluated on the basis of the life cycle
costs of developing, processing and maintaining the system and the
cost impact on the functional areas that the system supports. The
system selected must satisfy the common functional requirements of
all user agencies. The effectiveness of the system to be selected
will also be measured against how well the functions are performed
from the standpoint of accessibility, response time, and reduction
of labor-intensive processes. To achieve maximum flexibility, the
applications software configuration is required to be modularly
constructed so that only those functional applications required
by a specific agency will be obtained and installed. The archi-
tecture of the data base selected must provide for distributive
data-base network and optimum data accessibility. Although the
system is to be operated on a decentralized basis, it will be a
single set of standard software used by all agencies and centrally
maintained. (Sam George, 245-7431.)
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The DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT is developing
a comprehensive automated accounting system primarily for the
Department's assisted housing programs (Section 8 and Public
Housing) which will interface with the overall general and program
accounting systems. It will bring the many manual and automated
accounting processes into one integrated system.
Current plans are to award a contract in May 1984 and have the
system for the assisted housing programs implemented by December
1985. Benefits to be derived are improved accounting operations,
the elimination of many manual processes and availability of an
automated system which is responsive to the needs of management.
(Dan Perkuchin, 755-6328.)
The OFFICE OF TERRITORIAL AND INTERNATIONAL AFFAIRS, Depart-
ment of the Interior, is in the process of installing automated
financial management systems in seven locations throughout the
Micronesian territories. The systems include the purchasing and
installing of computer hardware and software, the hiring and
placing of financial advisors in each location for a period of two
years, and the training of local staff in operating the systems.
The installation of the automated financial management systems
is a major step toward autonomy for the Micronesian Governments.
It marks the acceptance by the Governments of responsibility and
authority previously delegated to the Headquarters of the Trust
Territory of the Pacific Islands located on Saipan in the Common-
wealth of the Northern Mariana Islands. Release of its oversight
responsibilities further paves the way for the elimination of the
Headquarters operation. (Frank Solomon, 343-6816.)
The INTERNAL REVENUE SERVICE is modernizing its financial
management systems by incorporating state-of-the-art data
processing and office automation technology to improve the
timeliness and quality of financial information in four phases.
Phase one includes the transfer of the Service-wide data bases
and summary accounting and budget execution processing from the
National Office to the IRS Detroit Data Center. Enhancement of
these data bases is scheduled for implementation in February 1984
and will include a data-base management system with online query
capability for regional fiscal management offices and certain
offices in the National Office.
Phase two involves the installation of microcomputer systems
in fiscal management offices Service-wide. This system will
allow the Service to automate certain desk procedures currently
performed manually and to perform financial analyses, graphics and
other routines not currently possible. The Finance Division and
several regional offices have already acquired microcomputers and
some financial analysis software for testing and developmental
purposes. This system is now scheduled for completion in November
1984.
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Phase three provides for replacing the hardware used in
the present financial planning, accounting and budget execution
systems Service-wide. The Service expects to install new, state-
of-the-art equipment. The expected date of installation is July
1986. The final phase will include the redesign and integration
of several systems that make up the Service's financial management
system. The expected date of implementation is October 1986.
(Mike Noble, 566-3599.)
The EMPLOYMENT STANDARDS ADMINISTRATION, Department of Labor,
is presently developing an automated travel system designed to
provide cash management of travel advances, automated auditing
of travel vouchers, and comprehensive travel reporting to all
levels of the agency management. The system will be online and
interactive with a travel management data base. Front-end edits
and interactive data-base processing allow for the system to
automatically produce travel authorizations and store travel data.
Vouchered information will be keyed into the system for auditing
and updating of employees' travel records. Travel advances will
be monitored by the system and will warn that previous advances
have not been repaid and that appropriate action should be taken.
The travel system is being developed presently with implementation
scheduled in fiscal year 1984. (Joe Hammonds, 523-7040.)
The MARITIME ADMINISTRATION, Department of Transportation, is
adapting the accounting system of the Health Care Financing Admin-
istration as its new system. By the end of 1983, this accounting
system, called the Budget Accounting Cost Information System, was
tested and documented but the agency was still converting and
reconciling data from the old system and waiting for delivery of
hardware and peripherals. The 'system is designed to:
--Provide automated linkages between accounting ledgers to
eliminate unnecessary manual intervention and to ensure
that the general and subsidiary ledgers are kept in
balance;
--Integrate ledger posting so that each financial event will
update all of the relevant ledgers;
--Improve validation at the point of entry such as incorpo-
rating a feature that would alert a user entering a
procurement request or other type of requisition document
that a project or user is exceeding budget allotment or
allowance for a particular type of service or equipment;
--Provide cost accounting controls and reporting at the
program, project and organization levels;
--Integrate with the agency's subsystems and payroll system,
and provide Agencywide access to financial data; and
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--Prepare automated financial reports for the Treasury,
the Office of Management and Budget, the Department of
Transportation, division directors, region managers, budget
object class managers, and the field offices.
The system employs the single entry concept from which the
debit and credit general ledger entries are derived. This method
of posting single entries by computer programs reduces the amount
of clerical work that is required in double entry systems and
ensures accurate posting and balancing of accounts. (Jean Kerr,
426-5858.)
The NUCLEAR REGULATORY COMMISSION is developing an integrated
financial management system to be operated on a minicomputer.
All accounting and budget execution data will be entered over
terminals, and capabilities will be provided for online inquiry
and report generation including internal and external reports.
The system development effort is currently nearing completion of
the systems test phase. It is anticipated that the implementation
phase will begin in the spring of 1984.
The new system will significantly reduce redundancy in data
collection and replace a system with a mix of manual and semi-
automated systems. The system will also replace three automated
systems that require data that are used at several points in the
financial process to be entered for each system. The new system
will receive these data only once resulting in improved time-
liness, control over data input and accuracy. In addition, data
will be entered by terminals connected to the Commission's
internally operated minicomputer. Monthly reports will be more
timely, and similar reports will be available on an ad hoc basis
as well.
The cost savings accruing from the new system should exceed
$70,000 per year by reducing overtime currently worked in the
accounting function and by providing a capability to process a
higher volume of transactions without an increase in staff.
(Angelo Pugliese, 492-7535.)
The POSTAL SERVICE is redesigning its accounting system for
settlement of international postal accounts with foreign postal
administrations. The redesign effort will automate the existing
manual systems into an online accounting and management informa-
tion system. This redesigned system will facilitate international
postal account settlement by providing improved document control
which will enhance the Service's revenue protection. The manage-
ment information provided by the new system will be more timely
and will facilitate management decisionmaking in all functional
areas of the Service's international mail program: finance,
logistics, rates, marketing and international affairs. Annual
cost savings are estimated to be $10 million. (William 'l'ayman,
Jr., 245-4440.)
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The BUREAU OF THE PUBLIC DEBT, Department of the Treasury, is
redesigning its administrative accounting system. An existing
Federal administrative accounting system operated by the Federal
Home Loan Bank Board has been targeted as the basis for the new
Bureau's Administrative Accounting System. Installation and
modification of this system for the Bureau are planned for fiscal
year 1984, and the new system should be operational by October 1,
1984.
The new system will provide online full allotment accounting
by tracking commitments, obligations and disbursements against
budgeted targets. It will provide full receivable and payable
accounting, cost accounting, meaningful and timely workload and
productivity information, and improved cash management practices.
It will interface with Treasury's uniform management system and
the Bureau's personal property system. The new system will
correct the existing weaknesses in the present accounting system.
(Taylor E. Jones, 634-5228.)
The DEPARTMENT OF STATE is continuing its development of a
worldwide financial management system. The system will consist of
financial management centers at 20 posts and 3 regional adminis-
trative management centers to serve all remaining posts. The
financial management system will support financial management
functions at posts and at Washington. It is envisioned that
detailed accounting and budgeting transactions will be processed
at posts or regional centers and that all reports needed at the
post level will be prepared at posts or the regional centers.
Summarized transactions will be transmitted to Washington and
consolidated for reporting to bureaus and Department-level
organizations.
To support the processing requirements of the financial
management system, a worldwide network will be connected to
Washington by the Department's Diplomatic Telecommunications
System. The system will use an integrated data-base structure
that will enable the Department to obtain reports that combine
accounting and budgeting information as well as information from
other systems and subsystems. This will help avoid unnecessary
rekeying of data and ensure consistency. The system will also
include a payroll interface to provide users the same benefits
regarding payroll information. (James Marable, 524-1188.)
The VETERANS ADMINISTRATION's Department of Medicine and
Surgery is implementing improvements to its cost distribution
report for medical care activities. The chart of accounts has
been revised to interface with the Department's resource
allocation methodology and to define the accounts used in the
report. Input procedures were revised to allow distribution of
personal service time and cost on different basis when there is
a wide range of salaries in a cost center. This change more
accurately reflects the differences between time and dollars for
cost distributions. Expected benefits from these changes are
improved cost accounting procedures.
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The ADP program formerly used for preparing the cost
distribution report was written to compute and print each item
of each report. With 172 facilities reporting on several formats,
the previous program was time consuming to run and difficult to
amend. The new program specifications require all initial
computations to be stored in a matrix file from which the various
formats, summaries and extracts are compiled. Processing time is
decreased, reliability of data is improved, and modification of
the report is greatly simplified. The implementation data for
these improvements is January 1, 1984. (Larry Bettes, 389-5478.)
Agencies reported initiatives to expand the use of computers
for improving auditing procedures and practices and for providing
better internal management and control. A sample of these
accomplishments are highlighted below.
Audit Improvements Accomplished
The PRESIDENT'S COUNCIL ON INTEGRITY AND EFFICIENCY
(PCIE) was established by Executive Order on March 26, 1981,
to strengthen the Inspector General program and to oversee the
administrative efforts to reduce fraud, waste and abuse in Federal
programs and operations. The PCIE semi-annual report issued in
January 1984 showed that the Inspectors General collectively were
responsible for billions of dollars in direct savings and improved
use of funds during the past two and one-half years. Most of
these savings were attributed to audit recommendations for
reducing negotiated prices of major purchases and improving debt
collection.
During the last fiscal year, the PCIE placed increased
attention to prevention rather than on detecting individual cases
of fraud, waste or mismanagement. This approach is consistent
with the Inspector General Act of 1978 which provides that the
Inspectors General "promote economy, efficiency and effectiveness
in the administration of Federal programs and operations."
The PCIE's Prevention Committee, established in the fall of
1982, develops and recommends Council policies and procedures to
foster activities to prevent waste, abuse and mismanagement.
This Committee's recent survey of prevention activities in the
Inspector General community showed that there was a wide array of
individual prevention actions already underway. However, the
Committee concluded that the Inspector General effectiveness in
this area could be significantly increased and focused on three
elements of prevention:
--Model prevention plans for departments and agencies;
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--Upgrading traditional audit and investigation techniques to
ensure prevention of future program abuses; and
--Undertaking future efforts focused on specific issues.
Complementing the work of the Prevention Committee, the PCIE
has encouraged the use of the state-of-the-art technology to
combat fraud, waste and abuse. The major focus of this effort has
been--in computer matching and screening techniques used to perform
such basic tasks as detecting unreported income of beneficiaries
receiving Federal welfare or other transfer payments and verifying
applicants' eligibility. The Inspectors General have found that
computer matching is an effective tool for detecting fraud. By
comparing Federal and State computer lists, the Inspector General
can determine if program recipients are under-reporting income,
improperly receiving benefits from more than one program, or
defrauding the Government in other ways. Facilitating and improv-
ing the use of computer matching and related computer applications
are long-term objectives of the PCIE Computer Match Project.
In addition to the Prevention Committee and computer match-
ing initiatives, the PCIE strategy to prevent fraud and waste
depends on other interagency projects which address problems
outside the jurisdiction of an individual agency. These projects
are targeted at specific issues identified by PCIE members such
as property, financial- controls, and Federal assistance. Also
targeted for improvements in the Inspector General community
are auditing procedures, training and performance evaluation.
(Melissa Allen, 395-4960.)
The-TENNESSEE VALLEY AUTHORITY (TVA), Office of Audit and
-_Evaluation has used computer matching techniques to detect
irregularities with workmen's compensation payments. One match-
ing effort was conducted in cooperation with the Tennessee State
Department of Employment to determine if any former TVA employees
were receiving workmen's compensation payments while employed
elsewhere in Tennessee. Last year, the matching disclosed 24
former TVA employees who were receiving both wages and compensa-
tion payments. These were referred to the Office of the Inspector
General in the Department of Labor for further investigation.
Although TVA has not received complete results from its referrals,
this type of computer matching may be expanded to include the
States of Georgia, Mississippi, Alabama, and Kentucky on a
continuing annual audit basis.
Computer matching was also used to verify the accuracy of
annual workmen's compensation billings from the Department of
Labor. TVA personnel history files were matched to billing data
and disclosed questionable billings of almost $2.2 million for
fiscal years 1978 through 1982. This audit test has been incor-
porated into TVA's annual examination of workmen's compensation
billings. (Douglas Hulme, FTS 856-7720.)
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The RAILROAD RETIREMENT BOARD has taken several actions to
ensure that an adequate level of security is provided in its ADP
and telecommunications services. The Board formalized its
computer security program and clarified security responsibilities
throughout the agency by issuing internal directives covering
those matters. These directives define the policies and respon-
sibilities for establishing and maintaining a program and laying
out the objective of the program. They also identify and discuss
the elements necessary to ensure the integrity of data.
The Board identified and ranked computer applications that
meet the Federal criteria as sensitive applications. This
information, along with the methodology used to identify and rank
the applications, was presented in an audit report issued by the
Board's Bureau of Audit and Investigation in September 1983. The
identification and sensitivity ranking of computer applications
will enable the Board to establish a certification process that
results in a technical judgement concerning the extent to which
safeguards meet security requirements.
In the future, the Board plans further implementation of a
certification process. It will (a) designate managers to have
certification authority, (b) define the security requirements for
each of the sensitive applications and '(c) carry out needed
security evaluations for accreditation purposes. (Horst Rahden,
387-4553.)
The OFFICE OF PERSONNEL MANAGEMENT's (OPM) Compensation Group
has prepared an enhanced payroll audit guide to supplement agen-
cies' internal audits of civilian payroll operations. The guide
focuses on evaluating how well Federal agencies discharge their
delegated responsibilities for the employee retirement, health
benefits and life insurance programs. These responsibilities
include the determination of employee eligibility for program
coverage, the maintenance of records, and the remittance of
employee withholdings and agency contributions to OPM. OPi1
generally relies on the adequacy of agency internal controls to
ensure that these responsibilities are effectively and efficiently
discharged. Accordingly, the purpose of the OPM payroll audit
guide is to help agencies review their internal controls with
respect to the employee benefit programs and to assist them in
meeting their responsibilities more effectively. The audit guide
is being distributed to Inspectors General, Assistant Secretaries
for Administration and other chief administrative officers
throughout the Federal Government. (John Webster, 632-7450.)
The OFFICE OF INSPECTOR GENERAL, Department of Labor,
implemented an automated audit assignment tracking, reporting
and followup system. The system is designed to track the status
of audit assignments from inception through completion and
implementation of planned corrective actions resulting from audit
recommendations. The system is critical to the mission of the
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Inspector General in that it meets the Office of Management and
Budget's requirements for audit followup systems and provides a
long-term base of information on audit accomplishments.
The system, which was originally designed by the Office of
the Inspector General, Department of Agriculture, was modified and
converted for use through a joint Labor-Agriculture team effort.
Data from the new system enabled audit statistics to be assembled
for the September semiannual report with a minimum of effort.
Substantial cost and time savings were achieved by converting an
existing system as opposed to designing a new system. Estimated
savings are in excess of six months' developmental time and
$200,000 in salary and computer costs. (Roger Langsdale,
523-8385.)
The OFFICE OF INSPECTOR GENERAL, Department of Health and
Human Services, developed an automated budget spreadsheet capa-
bility which provides up-to-date reports on resource expenditures
by its components. These reports are generated on a biweekly
basis and are used in making management and budget decisions.
Before this automation, reports were manually prepared -- a time-
consuming and labor-intensive task. Automation has resulted in
quicker, more accurate reports and a recurring annual savings of
one-third staff year. (John Simborski, 472-6736.)
The OFFICE OF INSPECTOR GENERAL, Department of Housing and
Urban Development, implemented its three automated management
systems in all its regions. The first system tracks the status of
all on-going investigations and provides data for management and
control. This system provides data on investigative patterns and
trends and data needed for summary management reports. The second
system automated the annual audit plan and tracks the progress of
audits by providing comparisons between (a) planned audits and
actual audits performed and (b) estimated staff days and actual
staff days used. It also provides audit performance summaries for
developing future audit plans. The third automated system tracks
open audit findings and provides data for summary management
reports on audit followup. (Steven Switzer, 755-6342.)
C. BUDGETING
Examples of agency efforts to improve budgeting showed that
automation is being used more extensively to improve the quality
and timeliness of budget data.
1. Budget Improvements Accomplished
Microcomputers have become a highly adaptable tool for budget
offices throughout the Government. The ability of a microcomputer
to store large amounts of numerical information and the appli-
cability of off-the-shelf software to quickly manipulate and
reformat those data create an opportunity for creative budget
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analyses. Microcomputers are increasingly used to conduct
"what-if" analyses. In addition to off-the-shelf software, some
budget professionals are now writing tailored programs for use in
their agency's budget process. These developments represent major
changes in preparing and managing budget data. The following
paragraphs demonstrate the involvement of microcomputers in the
budget process by agencies.
The NATIONAL SECURITY AGENCY is using a microcomputer to
track and report the Five-Year-Defense-Program dollars and
manpower. Spreadsheets provide an audit trail from the Program
Objective Memorandum to the President's Budget submission. A
variety of summaries of Five-Year-Defense-Program information can
be extracted from these spreadsheets. For example, schedules can
be produced that show appropriation totals, program element
totals, variations from one submission to the next and comparative
analyses. The net change from one submission to the next can also
be printed to update the Five-Year-Defense-Program data base.
(Oliver F. Haslup, Jr., 688-6926.)
The TENNESSEE VALLEY AUTHORITY is using personal computers to
provide a cost-effective means of maintaining and disseminating
timely budget information. The financial spreadsheet package is
used to calculate and distribute overhead expenses, to maintain
the control budget, to produce status reports of selected activi-
ties and organizations, and to project personnel costs. The
microcomputers are used to incorporate budget information into
program summaries, budget justifications, and general budget
instructions.
Another application is the use of TVA's mainframe computer
to integrate substantial amounts of accounting and budget data
into meaningful reports. The reports are produced monthly and
are valuable tools in monitoring expenditures against budget
estimates and identifying potential problems. (David B. Collins,
(615) 751-3726 or FTS 858-3726.)
The NATIONAL BUREAU OF STANDARDS, Department of Commerce,
now uses microcomputers as commonplace tools to plan, monitor
and control budgets. An electronic spreadsheet package is very
effective and easy to use in creating budget exhibits and reports.
The ability to make changes quickly, answer "what-if" questions,
and provide a finished budget document has resulted in a substan-
tial increase in productivity. Budget Office savings resulting
from the use of microcomputers, including savings in both analyst
and typing time, have totaled nearly 3 staff years or $75,000.
Additionally, both the timeliness and the reliability of budget
data have been significantly enhanced.
Stand alone computer programs are also used to provide
tabular and graphic management reports. Budget and staffing
plans for organizational units are compared with actual data and
presented to management on a recurring basis. These reports are
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used to communicate to management the financial condition of
the Bureau's programs as well as the financial control respon-
sibilities carried out by the Budget Office. (Don Drinkwater,
921-2637.)
The INTERNAL REVENUE SERVICE, Department of the Treasury,
implemented a new long-range planning and budgeting system aimed
at portraying workload and staffing requirements for the budget
year and the four succeeding fiscal years. The usual budget
data are provided, by program initiatives, but are geared towards
encouraging and realizing productivity gains so that future
staffing increases for the growing tax administration workload
will be minimal. Information produced by the new system was
the basis for the fiscal year 1985 budget request. That budget
request was transmitted to the Treasury Department with a compre-
hensive overview package which outlined the future direction of
Internal Revenue Service program areas through fiscal year 19 9.
(John Blank, 566-4793.)
2. Budget Improvements Underway
The DEPARTMENT OF ENERGY's Office of Budget initiated an
experiment to determine.the feasibility of developing, imple-
menting, and maintaining financial management systems on
microcomputers. The experiment demonstrated the strengths as
well as some weaknesses of using microcomputers and software
packages. The result is that budget outlays are now projected
and tracked on microcomputers rather than on a centrally located
mainframe computer. An off-the-shelf software package generates
outlay values on graphs to visually display estimates and historic
data as well as protected data. The Office of Budget is continu-
ing to search for other microcomputer applications. (Don Alton,
353-4791.)
The WASHINGTON HEADQUARTERS SERVICES, Department of Defense,
automated budget support system has been installed at the American
Forces Information Service Headquarters. Plans call for extending
the system to five other Secretary of Defense field office activi-
ties. The Washington Headquarters Services is responsible for
monitoring the Office of the Secretary field activities' budgets
and for preparing a consolidated Office'of the Secretary budget
submission. The automated budget support system is being enhanced
to provide an automated interface with the Washington Headquarters
Services accounting system and to produce .a set of graphical
displays. These displays, for example, will depict actual
obligations versus planned,. and a statistical forecast of /future
obligations with expected variances. (G. A. Cratch, 697-6760.)
The TENNESSEE VALLEY AUTHORITY decided that capital invest-
ments would be authorized as a part.of a capital budgeting process
rather than sequential approval through the'traditional project
authorization process. The purpose of this.process is to better
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determine appropriate overall levels of capital spending and to
efficiently allocate capital funds. A corporate capital budget
development and approval process was recently completed for fiscal
year 1984. This process is continually being improved while
capital plans and a cost reporting system for capital expenditures
on a project basis is being developed. (Bruce 1). Long, FTS
856-2374).)
The MERIT SYSTEMS PROTLCTiON BOARD developed a budget
allocation system for fiscal year 1984 which allocates budgetary
responsibility for selected object classes down to the division
and regional operations managers. A feedback information system
for the managers on their individual effectiveness is in the
process of development. All costs and outlays for the remaining
nona.llocated object classes are being centralized within one
office in order to build a history of experience so that these
remaining object classes may eventually be allocated to the
division and regional operations managers. A feedbacx informa-
tion system on the performance of the individual managers is
being developed, and in fiscal year 1985, manager's appraisals
may incorporate budget efficiency responsibilities as part of
their performance elements. (Frank Hagen, 653-7054.)
The INTERNAL REVENUE SERVICE, Department of the Treasury, is
implementing a new process for developing its budget submissions
for ADP initiatives and projects. This process was initiated
after the submission of the fiscal year 1985 budget and will be
fully operational for the fiscal year 1986 budget submission. As
part of the new process, an ADP Strategic Plan will be developed.
A part of this plan will be a comprehensive and detailed listing
and description of all ADP initiatives and projects with five-year
projection of costs and benefits. This listing will be continu-
ally updated by the addition of new initiatives, and changing
costs and benefits of continuing initiatives and projects. This
process is expected to provide better planning and control of ADP
projects rather than responding merely to a yearly "call" at
budget time. (John Blank, 566-4793.)
The DEPARTMENT OF STATE is developing a new budgetary
system in conjunction with its new Financial Management System.
Standardization and automation of key budgeting activities is an
integral part of the financial management system. These activi-
ties are in a large part now performed manually. New capabilities
will establish operating plans and report actual fiscal results
against these plans. Automated capabilities outside the financial
management system are currently available to support financial
planning and budget preparation. The financial management system
will interface with these existing capabilities and eventually
replace them. It is planned that budget preparation, financial
planning, reimbursements, and reporting of planned versus actual
will all be linked. Budgets, financial plans and operating plans
will all be prepared in a consistent fashion. Users will be able
to enter planned amounts and changes. Accounting data will be
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accumulated at the same level of detail as the plan and at the
operating allowance level. Actual amounts will be compared to the
appropriate operating plan amounts for reporting purposes. (James
Marable, 524-1188.)
The BUREAU OF RECLAMATION, Department of the Interior, auto-
mated its process for preparing its SF 132, "Apportionment and
Reapportionment Schedule." The Bureau distributes funds among
calendar quarters and allots these funds to various projects. Two
years ago, the Bureau had a centrally-located mainframe computer
with nationwide terminal network and an existing fund control data
base which represented the official, approved project totals for
each fiscal year. This data, base was expanded to include the
additional information necessary to produce the SF 132 forms, and
the input of data at the regional level was tested. At the same
time, the form itself was designed to be printed out by computer,
and approval by the Department of the Interior and OMB was sought.
The Bureau uses the new system to distribute funds by quarter
to allot to geographical regions and to individual projects, and
to control the transfer of funds all year long. (Tom Bennett,
343-8411.)
D. CASH MANAGEMENT
Agency improvement reports show continued and expanded use of
automated systems such as the Electronic Funds Transfer and the
Treasury Financial Communications System. Many agencies have also
taken steps to automate their payment and collection systems.
Increased emphasis is being placed upon reducing cash advances
through automation and use of credit cards. Samples of agency
improvements are presented below.
1. Cash Management Improvements Accomplished
The DEPARTMENT OF THE TREASURY continues to encourage
agencies to expand the use of the Treasury Financial Communica-
tions System (TFCS). Using TFCS for standard payments allows
disbursements to be scheduled so recipients are paid on the due
date. This eliminates interest lost due to early payments and
interest penalties due to late payments. Using TFCS for deposits
also allows availability of funds received on the same day. Under
this process, checks need not be cleared before the funds are
available for use. Treasury's payments for commercial bank
services are reduced, because check processing services are
eliminated. In addition, using TFCS provides Treasury with more
accurate and timely information which enhances their cash
forecasting.
The following examples show how TFCS is being used by Federal
agencies:
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a. The Urban Mass Transportation Administration, Department
of Transportation, makes payments to grantees and vendors
by using TFCS. The Administration currently manages
about 7,000 grants with payments to about 300 grantees
using letters of credit. (Donald J. Mills, 426-4869.)
b. The NATIONAL SCIENCE FOUNDATION began using the Treasury
Financial Communications System for the purpose of
issuing cash advances to grantees, research centers
and contractors. (Albert Muhlbauer, 357-7757.)
c. The DEPARTMENT OF THE INTERIOR has several applications
of wire transfers which resulted in an estimated $2
million in savings for fiscal year 1984 as described
below:
--The MINERALS MANAGEMENT SERVICE is using wire
transfers for receipts from rents, bonus bids,
and royalties over $50,000.
--The OFFICE OF SURFACE MINING is using wire
transfers for all receipts for Abandoned Mines
Reclamation Land Act fees over $100,000.
--The NATIONAL PARK SERVICE obtained Treasury
approval for use of wire transfers for receipts
over $10,000.
--The OFFICE OF SURFACE MINING and the BUREAU OF
INDIAN AFFAIRS now use letter-of-credit wire
transfers for disbursements.
(Lee Hiller, 343-5223.)
d. The GENERAL SERVICES ADMINISTRATION, in 1983, used
the Treasury Financial Communications System to acceler-
ate $37 million in collections from real property and
stockpile sales receipts. All real property, sales
collections over $600 (except cash sales) are required
to be made by wire transfer. A similar requirement for
high-dollar stockpile disposal collections is planned for
1984. (Linda Vandenberg, 566-1942.)
e. The ENVIRONMENTAL PROTECTION AGENCY uses TFCS to pay
commercial invoices over $25,000 and to make advances
to grantees and contractors with letters of credit.
(Robert Dodson, 382-5131.)
f. The DRUG ENFORCEMENT ADMINISTRATION, Department of
Justice, is now making deposits of seized and recovered
;ponies directly to the Treasury through the Treasury
Financial Communications System. (Edgar Barnett,
633-1373.)
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The TENNESSEE VALLEY AUTHORITY (TVA) now offers purchases
of wholesale power (distributors) an early payment incentive.
Formerly, terms in contracts with distributors provided for a one
percent late charge on amounts unpaid 15 days after the due date.
Contract terms were modified to provide for a $150 administrative
charge for each day a bill is unpaid 15 days after the due date.
To complement these two late payment penalties, an early payment
incentive based upon TVA's short-term cost of money was also
implemented. Since implementation of these contract changes,
several of the distributors have taken advantage of the early
payment incentive. The number of distributors using the Treasury
Financial Communications System has tripled, and further use by
distributors is expected. (Terrell M. Burkhart, FTS 856-6840.)
The DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT is closely
monitoring mortgage insurance premium payments from lending
institutions. The National Housing Act requires lending
institutions which have Federal Housing Administration insured
mortgages to send collected premiums monthly. Previously, the
lending institutions had remitted single family premiums on the
yearly anniversary date of the commencement of the mortgage. In
September 1982, a one-time gain of $230 million was accomplished
when lenders began sending premiums each month. In 1983, close
monitoring of mortgage insurance premium payments began when
premiums paid were compared to premiums expected. Deviation
tolerances are allowed to account for activity in progress such
as transfer in mortgage servicing, foreclosures, and terminations
of insurance. Through strict enforcement of late charges and
interest penalties for lateness, the Department has collected an
additional $843,000 during fiscal year 1983 and improved timely
compliance from participating institutions. (Neil Haynes,
426-8980.)
The DEPARTMENT OF EDUCATION established a new organizational
unit, the Credit Management Improvement Staff, to serve as the
focal point for debt collection and credit management related
programs. This staff is responsible for planning, coordinating
and monitoring debt collection and credit management initiatives.
The staff reports directly to the Comptroller and serves as the
executive staff to the Education Credit Management Board, which is
chartered by the Secretary to oversee Departmental debt collection
and credit management policies. Under the leadership of the
staff, significant progress was made in the following areas:
--Audit recommendations over six months old were reduced to
zero.
--Student loan default files were matched to about 10 million
Federal and military employees. Over 46,500 current and
retired Federal employees were identified who were in
default on student loans valued at $68 million. With the
assistance of other Federal agencies, the Department sent
initial contact letters to these employees resulting in
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collection of $3.4 million on 8,417 loans. Almost 2,000
accounts have been paid in full. During fiscal year 1984,
the department will initiate salary offset procedures
against the remaining identified employees.
--A pilot project was initiated for referral of information
on delinquent borrowers to credit agencies.
--Legislation was developed in conjunction with the Office
of Management and Budget and the Department of Justice,
to allow the latter to contract with private attorneys to
litigate against student loan defaulters. This is expected
to substantially increase judgments on defaulted loans
referred to Justice for litigation. (Tom Stack, 472-6032.)
The DEFENSE SECURITY ASSISTANCE AGENCY, Department of
Defense, improved its procedures for processing deposits of
about $200 million collected annually from foreign governments
on their Foreign Military Sales loan accounts. Previously, the
process for depositing cash and checks was slow. Collections
were forwarded to the Bolling Air Force Base for deposit and
usually took several days of transit and processing time before
being deposited into a U.S. Treasury account. To expedite the
process, a U.S. Treasury deposit account was opened at the Riggs
National Bank of Washington, DC, where all Agency collections are
deposited daily. It is estimated that about $700,000 in interest
cost will be saved each year. (John DeSoto, 694-7097.)
The BUREAU OF PUBLIC DEBT, Department of the Treasury,
reduced its Division of Investor Accounts' outstanding receivables
by 95 percent from $2,100,000 to $114,000. This improvement
resulted from new aggressive debt collection practices and
improved procedures in implementing the Debt Collection Act of
1982. The Division of Investor Acccounts establishes accounts
for holders of Treasury securities and distributes principal and
interest to them. Efforts to collect these receivables includes
establishing accounting procedures to assess and record interest,
penalty and administrative charges, providing training to staff on
debt collection matters, and developing waiver and offset regula-
tions to comply with the Act. In addition, all debtors were
contacted at 30 day intervals with a series of collection letters.
(Sandy Weisman, 287-4040.)
The DEPARTMENT OF THE INTERIOR has reduced its outstanding
travel advances by over $2 million in two years. The Office of
Financial Management set goals for each bureau and service to
reduce travel advances. At the same time, a coordinated effort
was made to see that departmental travel advance policies were
being followed and that advances were being liquidated as
required. This travel advance reduction project will continue
until departmentwide goals have been met. (Lee Hiller, 343-5223.
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The GENERAL SERVICES ADMINISTATION changed its policy
regarding accepting personal checks. An internal survey on bad
checks received for the sale of personal property in fiscal year
1982 showed that uncollected funds totaled about $200,000 out of
$49.8 million in sales. To eliminate bad checks, certified forms
of payment are required on all sealed bid sales beginning January
6, 1983, and for all personal property sales, beginning August 1,
1983. (Linda Vandenberg, 566-1942.)
2. Cash Management Improvements Underway
The DEPARTMENT OF ENERGY is in the process of increasing its
use of the Treasury Financial Communications System (TFCS) for
letter-of-credit disbursements, standard payment disbursements and
receipts. Using TFCS for these three types of transactions allows
for the following activities:
--Pre-editing of drawdown requests by Treasury on the same
day to ensure correct format and content,
--Making standard payments on the exact due date,
--Allowing for immediate availability of funds received, and
--Pre-auditing of disbursements on the same day to ensure
recipient organizations are entitled to the amount
requested.
The use of TFCS permits improved control of Federal funds, mini-
mizing interest lost due to early payments and interest penalties
due to late payments. Expected interest related savings resulting
from use of TFCS for standard payments, receipts and letter-of-
credit disbursements, is about $2 million, $200,000 and $32,600,
respectively. (Mark Loop, FTS 233-4832.)
The EMPLOYMENT STANDARDS ADMINISTRATION, Department. of Labor,
is presently working with the Department of the Treasury to
implement, in fiscal year 1984, the use of "lock boxes" and wire
transfer for cash receipts and direct deposit/electronic funds
transfer for benefit disbursements within three major programs.
The use of "lock boxes" will ensure timely deposit of receipts,
reduce the cost of handling cash receipts and reduce the vulner-
ability to loss in handling cash receipts. All three programs
are expected to have operational "lock boxes" by early 1984.
Two of the three programs will make wire transfer available
to remittors. All three programs are working with Treasury to
make a direct deposit/electronic funds transfer process available
to beneficiaries. Savings would be realized by the Agency in that
the occurence of lost checks is greatly reduced while goodwill is
established through better service to beneficiaries. Implementa-
tion is scheduled by end of fiscal year 1984. (Joe Hammonds,
523-7040.)
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The ENVIRONMENTAL PROTECTION AGENCY is looking into the
feasibility of implementing a Nationwide Lockbox System for cash
receipts. Under this process, incoming receipts will be forwarded
directly to a commercial bank by the debtor for immediate deposit
to the Treasury Department. This is in lieu of sending receipts
to the Agency first which, in turn, would then make a deposit
through a commercial bank. This system accelerates the actual
credit of cash receipts into the Treasury Department thus reducing
Federal borrowing. (Robert C. Dodson, 382-5131.)
The SMITHSONIAN INSTITUTION will be using a microcomputer
and some software packages to track and provide information on
its banking accounts and short-term cash investments. Because
of the ever-changing status of investment opportunities and cash
balances, it is critical that they be monitored and reported
on a daily basis. Presently this requires the compilation,
summarization, manipulation and analysis of data generated by the
accounting office's minicomputer, the Institution's mainframe and
the automated systems in financial institutions which service the
Institution's cash management and investment needs. The software
that will be developed or purchased will permit consolidation
of the numerous reporting functions now performed on several
different computer systems and reduction of the high level of
manual recordkeeping now required. (Alan Goff, 287-3353.)
The GOVERNMENT PRINTING OFFICE is implementing a new Voucner
Processing and Payment System. At present, the system is process-
ing vouchers from commercial printing contractors. Using data
base information originally entered into the system, a contract
claim is moved through a succession of obligation arid pending
payment files until payment is scheduled and a check generated.
The system is programmed automatically to schedule payment for
receipt 30 days after voucher receipt or within the offered
discount period, if the system determines the discount terms are
advantageous to the Government under the cash management guide-
lines established by the Treasury Department. It is expected
that this system will eventually be extended to all GPO contracts.
(Gerald Sebold, 275-2073.)
The FEDERAL AVIATION ADMINISTRATION, Department of Transport-
ation, is currently upgrading its credit management and debt
collection practices to comply with the Debt Collection Act of
1982 and other cash management reforms. The agency's updated Debt
Collection Action Plan was approved by the office of Management
and Budget and the Secretary of Transportation. The following
actions have been completed to date:
--Delinquent debtors were notified individually of their
indebtedness and of their rights of due process prior to
disclosure of the debts to consumer reporting agencies.
--The draft accounting order was updated with revised
reporting requirements for the accounts receivable aging
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analysis including data on the number of claims that are 30
days past due, the number of claims collected, and the rate
.of interest charged.
--Employee clearance procedures were revised to ensure that
all known outstanding debts to the U.S. Government are
.settled prior to payment of the final salary check.
--A penalty charge was developed for unpaid basic charges and
overhead that are more than 90 days past due.
--A standard administrative charge was established for
delinquent debts to recover the costs to carry and collect
delinquent debts.
(Deborah Daniels, 426-8154.)
The SECRET SERVICE, Department of the Treasury, is automating
its debt collection process. The accounts receivable segment is
being automated to identify delinquencies more quickly, avoid
future delinquencies, reduce existing delinquent receivables
through the generation of automated aging schedules, and prepare
dunning notices. (Frank Palmer 535-5619.)
The DEPARTMENT OF THE ARMY is testing the use of travelers
checks in its finance and accounting offices. The six-month test
began on November 1, 1983, at 18 finance offices and involves
travelers checks from four companies. Some specific objectives
include determining workload requirements, measuring the amount of
reduced cash holdings in the finance offices, evaluating the
workload and profit impact on financial institutions that service
military installations, and evaluating each company's performance
and the negotiability of its travelers checks. Travelers checks
will be used primarily for travel advance, advance pay, accrued
per diem, and separation payments. If successful, the use of
travelers checks will be implemented Army-wide by October 1, 19b4.
The Army-wide travelers check program will have the finance
offices issue approximately $500 million in travelers checks each
year. Direct savings will be realized by local commands, since
cash acquisition and security costs will be reduced. The Treasury
Department is expected also to gain over $4 million annually from
reduced interest, costs, delayed disbursements and participation in
contractor income. (CPT John R. Herko, (317) 542-3280.)
The FEDERAL BUREAU OF INVESTIGATION, Department of Justice,
plans to issue credit cards to employees who travel frequently and
hold cash travel advances. On September 22, 1983, the General
Services Administration announced a contract award to Diners Club,
Inc., for the issuance and maintenance of charge cards to be used
by Federal employees to cover transportation, subsistence and
other allowable travel expenses incurred during official travel.
Once the credit card program is fully operational, the total out-
standing cash advances will be substantially reduced. (Joan H.
Skaggs, 324-2865.)
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E. PAYROLL AND PERSONNEL SYSTEMS
Agencies efforts to improve payroll and personnel systems
included greater use of automation for data entry and centraliza-
tion of the payroll functions. Emphasis is being placed on
systems that process data accurately, produce timely information,
and provide good service to employees.
1. Payroll and Personnel Improvements Accomplished
At the DEPARTMENT OF COMMERCE four regional administrative
support centers were established and are now entering and editing
time and attendance and labor cost data. Each regional center has
its own minicomputer and dedicated lease lines for an administra-
tive payments systems. The data are electronically transmitted to
its centralized payroll and administrative system at its Manage-
ment Service Center in Gaithersburg, Maryland. With this process,
errors as well as overtime associated with error correction
procedures have been reduced dramatically. (Dennis Holoviak,
921-2171.)
The DEPARTMENT OF AGRICULTURE implemented a redesigned,
integrated payroll and personnel system with a data-base design
and modular construction. The new system uses optical character
recognition equipment with online video correction capability for
time and attendance data and microfilms source documents. Person-
nel information is input via cathode ray tube terminals with
numerous front-end edits. The new system contains a multitude of
personnel information, equal employment opportunity statistics,
training data, and accident information. Access to these data can
be obtained online and ad hoc reports can be produced.
In 1983, other major enhancements were added to the payroll
and personnel system. A new comprehensive earnings and leave
statement was developed and produced that furnishes Agriculture
employees a biweekly statement of current and cumulative totals of
leave, earnings and deductions. Also, electronic fund transfer
procedures were implemented to send payroll directly to Agri-
culture employees' banks throughout the United States. The new
system can make retroactive salary adjustments for up to 13 prior
pay periods. This new state-of-the-art system substantially
reduced the payroll processing costs. For example, an annual
employee benefits statement showing cumulative health and retire-
ment information was developed and implemented to replace the
one formerly furnished by a contractor. This enhancement alone
has saved $125,000 in contract costs per year. (Larry Wilson,
447-8748.)
The DEPARTMENT OF THE ARMY converted its Joint Uniform
Military Pay System (JUMPS) to use electronic funds transfers.
In March 1983, the JUMPS-Active Army pay system interfaced with
the Federal Reserve Bank data distribution network and can now
make direct deposit of military pay by electronic funds transfer
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within the continental United States. Military personnel, who
elect the option, have their pay deposited in their designated
financial institution automatically on payday. Over 50 percent
of all military are paid by this method. This enhancement
replaces the old system which required mailing of checks and
composite listings to nearly 10,000 financial organizations
monthly. (Mrs. F. Monforte, (317) 542-3203.)
2. Payroll and Personnel Improvements Underway
The DEPARTMENT OF STATE is centralizing its American payroll
procedures by implementing a new system called the Consolidated
American Payroll Processing System (CAPPS). A single Washington
payroll office will be linked to overseas centers by high-speed
communications lines. All American pay will be calculated in
Washington. Systems and personnel status changes will be entered
in Washington to a combined personnel and payroll data base.
Changes resulting from an individual's assignment to a particular
post will be entered into the system overseas. Most salary
payments will be made through electronic transfer of funds to
employee bank accounts.
The first phase of the CAPPS project, completed in January
1983, was to replace the Department's antiquated online programs
which were used in updating personnel and payroll master files.
These programs were not only out of date but were poorly docu-
mented, slow, and not adequately protected. In addition, these
programs needed to be replaced if the overseas payroll centers
are to tie into the online update process in Washington.
A contractor is currently working on the second phase of
the CAPPS project, which includes analyzing the existing payroll
systems in Washington and at the Regional Administrative Centers
to determine the system and software modifications which must be
made; to prepare formal specifications for the modification of
the existing payroll system; to write and test modifications to
existing payroll programs and new programs; to conduct training;
and to implement the CAPPS system. So far, the requirements for
the second phase of the project have been defined and the con-
tractor has begun detailed design and programming. Completion of
this phase is now scheduled for December 1984. (James Marable,
524-1188.)
The TENNESSEE VALLEY AUTHORITY is converting all its payroll
registers and certain reports to microfiche. Microfiche will
allow the payroll section to retain more prior years' records in
the office for retrieval of data for tax, court and social
security inquiries and for back pay awards. Having more records
readily accessible eliminates time-consuming trips to the Records
Storage Unit. This conversion will not eliminate the need for
printing the registers and reports for current work copies. How-
ever, it will reduce the space required for storage in the Central
Payroll Section as well as in the Records Storage Unit. (S.C.
Wilson, FTS 856-2981.)
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The DEPARTMENT OF LABOR is adopting the Air Force Civilian
Personnel Data System to update and provide for greater flex-
ibility in its personnel and payroll system. To minimize the
developmental and maintenance costs of agency personnel and
payroll systems, other_ public and private personnel and payroll
systems were studied. It was concluded that an interactive
personnel system could be obtained with less development and
maintenance cost by adopting the Air Force Civilian Personnel Data
System. The Department's current integrated personnel and payroll
system will be modified to function as a payroll system with
interfaced data from the adopted personnel system. Additionally,
the routines for updating the payroll system will be modified to
function interactively to improve the timeliness of data. Since
other agencies have already adopted or are in the process of
adopting this system, the Labor Department is benefiting from
these previous experiences as well as sharing their products.
User manuals and training materials from other agencies
planning to use the Air Force Civilian Personnel System (General
Services Administration, Navy Department and Department of the
Treasury) will be considered in developing Labor Department
materials. Also, these agencies are benefiting from exchange of
ideas in the analysis and design of the payroll interface. Labor
is also working with the Navy Department to avoid unnecessary
duplication of analysis and costs in the implementation of the
system. (Kathy Knittel, 523-8184.)
F. PRODUCTIVITY AND OTHER IMPROVEMENTS
Agencies reported that progress was made in productivity in
finance and accounting. Methods used to increase productivity
include processing information at more effective locations,
increasing use of telecommunications to move information, and
implementing more effective accounting policies. Some examples
of the significant improvements are highlighted in the following
paragraphs. Improvements resulting from other techniques and
automated efforts not clearly or directly related to the previous
financial management categories are also summarized in this
section.
1. Productivity and Other Improvements Accomplished
The DEPARTMENT OF EDUCATION expects to realize substantial
gains in productivity and cost savings as a result of an agree-
ment with the Department of Agriculture to process Education's
administrative vouchers and invoices at Agriculture's National
Finance Center in New Orleans, Louisiana.
This agreement, which became effective November 1, 1983,
provides for all administrative invoices and vouchers, of
the Education Department, except payroll, to be sent directly
to the Finance Center for payment. The Finance Center will
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perform all necessary voucher examining, payment scheduling,
certifying and Treasury reporting functions associated with these
invoices. Information for updating Education's central accounting
system will be produced by the Finance Center on a weekly basis
and transmitted to Education by magnetic tape.
The transfer of invoices and vouchers to the Finance Center
is being phased in gradually beginning with employee travel
advances and reimbursements, imprest fund replenishments, and
miscellaneous transactions. Small purchases and contract invoices
will be transferred beginning in January 1984. Invoices from
regional offices within Education, which are currently processed
by the Department of Health and Human Services under an inter-
agency agreement, are expected to be transferred to the Finance
Center by October 1, 1984.
Education's prior payment process was primarily a manual
operation with few automated features. The approximate cost
per voucher under Education's system was between $10 and $12.
Because of high volume and a high degree of automation, the
Finance Center's processing cost per document is about $3.40 --
substantially less than Education's cost. After full implementa-
tion, Education expects to realize annual cost savings of between
$360,000 and $470,000 on an estimated annual volume of 54,000
transactions. Personnel previously assigned to the administrative
payment operation are being reassigned to other higher priority
activities. (Larry Miller, 245-8147.)
The TENNESSEE VALLEY AUTHORITY transferred the data entry
function for storeroom receipt information from the Power Accounts
Payable Section to the field location receiving the materials.
Instead of having storeroom receipt information sent to the Power
Accounts Payable Section for input to the accounting system, each
generating plant and area office now keys in the data on-site.
This procedure has resulted in more timely posting of receipt
information and easier resolution of problems concerning the
receipt. This change has eliminated one full-time position and
prevented the possible hiring of another person for a minimum
savings of $30,000. (Jack R. Kinser, FTS 858-2564.)
The JOHNSON SPACE CENTER, National Aeronautics and Space
Administration, transmits computer magnetic tapes through an
automated communication line to the Treasury which issues payroll
checks to financial institutions and employees. Previously,
these tapes were specially packed and forwarded to the Treasury
Disbursing Office by a contracted express mail service to meet the
scheduled deadlines. When necessary, a person was dispatched as a
courier to assure delivery of the tapes on time. To realize this
improvement, acquisition of equipment and a communication line
compatible with those of the Treasury Disbursing office was
necessary. This project was implemented in July 1983. The
tangible cost saving is $1,000, annually. (Curley Dartez, FTS
525-3026.)
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The NATIONAL SECURITY AGENCY prepared a handbook entitled
"Know Before You Go! - A Guide for Temporary Duty Travel" to be
distributed by travel coordinators to each employee scheduled for
temporary duty (TDY) travel. It is designed to provide informa-
tion on those aspects of TDY travel with which travelers have had
the most problems. By anticipating their difficulties before they
file their travel claims, error rates have declined and processing
has speeded up. The Central Intelligence Agency has used the
handbook as a basis for issuing its own handbook to TDY travelers.
(Robert Williams, 859-6713.)
The DEPARTMENT OF COMMERCE established the initial version
of its Departmentwide financial management data base for use by
management officials and staff within the Office of the Secretary.
Automated interfaces with its several bureaus' accounting and
related systems were developed to extract data for entry to the
Department's financial management data base. Studies beginning
in April 1982 suggested that a significant portion of the
requirements for improved information as identified by top
managers could be satisfied through improved reporting of
existing financial data. An analysis of the general information
and system requirements of management officials of the Office
of the Secretary was made, and the necessary functional and data
requirements documentation for the financial management data base
was prepared. Detailed design specifications began in March 1983.
Programming and testing began in the fourth quarter of fiscal year
1983.
Me Department's approach called for the development of a
series of automated "bridges" linking bureau systems with the
Office of the Secretary. The "bridges" were designed to extract,
standardize, edit and store information in a Departmental finan-
cial data base to be used within the Office of the Secretary
to prepare management reports, answer ad hoc queries, and
perform special analyses. The general design of the Departmental
financial management data base consists of two major parts: (a)
conversion "bridges" to translate bureau specific data structures
and codes to a standard data base and (b) generalized reporting
modules to support both standard reporting on any subset of the
data base and ad-hoc creation of analytical reports. (Leonard
Sweeney, 377-1294.)
The VETERANS ADMINISTRATION fully implemented economic order
quantity procedures at its depots to balance the net cost of
ordering and storing supplies to the lowest practicable amount.
Higher inventory turnover rate and a lower capital investment in
inventory have resulted. In fiscal year 1983, the dollar amount
of inventory at the three supply fund depots fell from $63
million on March 31 to $45.8 million on September 30. These
economic order quantity practices were largely responsible of
this reduction. (Joe Kime, 389-3201.)
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The BUREAU OF PRISONS, Department of Justice, published its
"Accountable Property Officer Handbook" to tell its employees
about their property management responsibilities and how to use
the Bureau's recently implemented automated property management
system. This system provides data on about 60,000 items of
controlled property, both capitalized and noncapitalized, owned by
the Bureau. The handbook summarizes policies and procedures for
the management of personal property. It also describes employee
responsibilities and procedures to acquire and dispose of personal
property. (Jimmy Powell, 724-3067.)
The TENNESSEE VALLEY AUTHORITY'S Office of Power--Operations
Support accomplished several improvements in material management
during fiscal year 1983. These accomplishments generated
economies from lower stock levels and increased efficiencies
in procurement and material related activities. Some of these
improvements are:
--Control of Obsolete Materials. As part of a regular
review to identify potentially obsolete materials, computer
reports of slow moving inventory items are prepared and
distributed for review. These reports contain about 1,300
items valued at $6.3 million that have not been issued in
more than five years. This is material which probably
could be scrapped or sold, thus reducing inventory levels,
if the analysis indicates it is no longer needed.
--Consolidation of Requisitions. Inventory replenisnment
orders from Power Stores are reviewed with the objective
of using multiple line item requisitions. This reduces
procurement-related costs. In fiscal year 1983, more than
28,000 individual line item orders were consolidated into
about 15,000 automated requisitions.
--Control of Reorder Point and Quantity. Inventory
replenishment orders are triggered when the amount of
stock on hand drops to a level called the reorder point.
When this happens a replenishment amount, called the
reorder quantity is placed on order. Inventory costs are
controlled in part by carefully adjusting these reorder
points and quantity parameters considering both economic
principles and the necessity of having items on hand when
they are needed. In fiscal year 1983, 11,000 reorder
points and 12,000 reorder quantity parameters were lowered
while about 2,000 reorder points and 2,000 reorder quantity
parameters were raised. The result will be more than a
$4 million reduction in the average level of inventory,
because the amount of stock kept on hand will be reduced.
This will also lead to recurring savings in overhead costs
such as interest expense and storage space.
--Control of Outside Purchase Orders. Inventory replenish-
ment orders are routinely screened with the objective of
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avoiding outside purchase orders when materials are
available within the Tennessee Valley Authority. The
fiscal year 1983 central screening cost savings amounted
to approximately $2.4 million which was more than twice
the amount of savings in fiscal year 1982. (David
Nowading, 751-6484.)
2. Other Improvements Underway
The FEDERAL EMERGENCY MANAGEMENT AGENCY is currently
developing and testing an automated system capable of compiling
detailed full-time equivalent staff year usage information. The
system will track on a pay-period basis the number of staff years
devoted to each of the agency's programs and generate related
statistical information for such activities as budget formulation
and justification, determination of program goals, and other
management decisions. (Dennis Boyd, 287-0630.)
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KEY OFFICIALS OF JFMIP DURING 1983
PRINCIPALS
David A. Stockman Director
Chairman Office of Management and Budget
Charles A. Bowsher Comptroller General of the
United States
Donald T. Regan Secretary of the Treasury
Donald J. Devine Director
Office of Personnel Management
STEERING COMMITTEE
John J. Lordan Deputy Associate Director for
Chairman Financial Management
Office of Management and Budget
Wilbur Campbell Acting Director, Accounting and
Financial Management Division
U. S. General Accounting Office
Gerald Murphy Deputy Fiscal Assistant Secretary
'
Terry Culler
Susumu Uyeda
treasury
U. S. Department of the
Assistant Director for Planning
and Evaluation
Office of Personnel Management
Executive Director
Joint Financial Management
Improvement Program
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JFMIP STAFF
The day-to-day operations are carried out by the Executive
Director and a small staff. The project directors provided by
the principal agencies serve on the staff for a period of 12 to
18 months.
Executive Director Susumu Uyeda
Assistant Executive Director Doris Chew
Senior Project Director Kenneth Winne
Secretary Sandra Mcioriald
Project Directors Detailed From Principal Agencies
Linda DeBerry
(6/82 - 5/83)
Roberta Huber
(6/83 - Present)
Department of the Treasury
Department of the Treasury
James Rothwell General Accounting Office
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AVAILABLE JFMIP PUBLICATIONS
1976 -- Money Management Study.
1977 -- Implementing a Productivity Program: Points To Consider.
1979
Report on Audit of Federally Assisted Programs: A New Emphasis.
Financial Management Functions in the Federal Government.
1980 -- Proceedings of Workshop on Debt Collection.
1981
Financial Handbook for Nonfinancial Executives in the Federal
Government (Limited supply).
Do It Yourself--Compare and Improve Your Payroll System.
Measuring Productivity in Accounting and Finance Offices.
What is JFMIP?
1982
JFMIP Quarterly News Bulletin (All issues not available).
Do It Yourself--Compare and Improve Your Property System.
Property Management Evaluation Guide for Federal Agencies.
Proceedings of the 11th Annual Financial Management Conference.
Bar Code Technology--A Means to Improve Operational Efficiency
and Internal Control.
Using Statistical Sampling to Improve Productivity in Federal
Government.
1983
Managers--Reduce Your Systems Development Costs by Adopting An
Available Accounting System.
Proceedings of the 12th Annual Financial Management Conference.
Annual Report--1982.
Proceedings of Workshop--Using Microcomputers for Financial
Managers.
JFMIP Quarterly News Bulletin (All issues not available).
Financial Management Directory - 1984.
JFMIP Quarterly News Bulletin.
JFMIP "Special Edition" News Bulletin--Micros Emerging as
Managers' New Tool (Limited supply).
Proceedings of 13th Annual Financial Management Conference.
NOTE: To obtain the above publications, contact JFMIP on 37b-5439.
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