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OMB Circular A-123 Lessons Learned: OMB Circular A-123 Lessons Learned: Strategies for Sustained Compliance and Strategies for Sustained Compliance and

Outlook for the FutureOutlook for the Future

Presented by Presented by

Frank Petersen, Director Office of Quality Frank Petersen, Director Office of Quality Assurance, National Aeronautics and Space Assurance, National Aeronautics and Space

AdministrationAdministration

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OMB NASA A-123-A: Multi-Year OMB NASA A-123-A: Multi-Year ApproachApproach

NASA instituted a multi-year approach to NASA instituted a multi-year approach to fully implement the requirements of A-123, fully implement the requirements of A-123, Appendix AAppendix A

Year 1 assessment focused on significant Year 1 assessment focused on significant financial statement line itemsfinancial statement line items

Year 2 focuses on a restructured approach to Year 2 focuses on a restructured approach to cover key cycles and sub processes while cover key cycles and sub processes while continuing to building upon the foundation continuing to building upon the foundation established in year 1established in year 1

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Year 1: Laying the Ground WorkYear 1: Laying the Ground Work Instituted a “Top Down” approach Instituted a “Top Down” approach

Established the Senior Assessment Team to Established the Senior Assessment Team to oversee A-123 implementation across NASAoversee A-123 implementation across NASA

Identified significant financial statement line items Identified significant financial statement line items for documentation and testingfor documentation and testing

Developed a comprehensive methodology for Developed a comprehensive methodology for implementing the A-123 requirements over 3 yearsimplementing the A-123 requirements over 3 years

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Year 1: Lessons LearnedYear 1: Lessons Learned Focus efforts on core requirements to optimize Focus efforts on core requirements to optimize

resourcesresources

Leverage existing documentation and resources to Leverage existing documentation and resources to produce process narratives and flow charts produce process narratives and flow charts (optional)(optional)

Develop “high level” standard processes across Develop “high level” standard processes across financial managementfinancial management

Build “universal ownership” into the process for Build “universal ownership” into the process for implementing a system of “sound” financial implementing a system of “sound” financial controls controls

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Year 2: Building Upon the Year 2: Building Upon the FoundationFoundation

Continue to promote effective Agency-wide internal Continue to promote effective Agency-wide internal control managementcontrol management Senior Assessment Team improving methodology for fully Senior Assessment Team improving methodology for fully

integrated approach to internal controlintegrated approach to internal control

Preparing comprehensive internal control guidance for Preparing comprehensive internal control guidance for programmatic, financial, and institutionalprogrammatic, financial, and institutional

Ensuring a uniform process for gathering supporting Ensuring a uniform process for gathering supporting documentation and evidence for the Annual Statement documentation and evidence for the Annual Statement of Assurance of Assurance

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Year 2: Building Upon the Year 2: Building Upon the FoundationFoundation

Incorporate FY ’06 Key controls into Center CFO’s Incorporate FY ’06 Key controls into Center CFO’s individual development plansindividual development plans

Develop Financial Management Internal Control Develop Financial Management Internal Control Framework (ongoing initiative)Framework (ongoing initiative) Define agency level standard business processesDefine agency level standard business processes Develop standard control objectives and control activities Develop standard control objectives and control activities Establish financial management training program Establish financial management training program

Establish high level generic Key controls modelEstablish high level generic Key controls model

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Strategies for Sustained Strategies for Sustained ComplianceCompliance

Make internal control management common business Make internal control management common business practicepractice

Leverage resources across the AgencyLeverage resources across the Agency

Establish an agency-wide internal control training programEstablish an agency-wide internal control training program

Overcome barriers to sound financial management Overcome barriers to sound financial management practices through:practices through:

Universal buy-in from top to bottomUniversal buy-in from top to bottom Shared responsibilityShared responsibility Comprehensive communicationComprehensive communication Sound monitoring practices Sound monitoring practices Risk based approachRisk based approach

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Embed Effective Internal Control Embed Effective Internal Control Management into the CultureManagement into the Culture

Continue to build synergy and coalitions agency Continue to build synergy and coalitions agency wide – Involve stakeholders in the processwide – Involve stakeholders in the process

Ensure controls are adequate, unobtrusive, Ensure controls are adequate, unobtrusive, withstand scrutiny, safeguard assets, and withstand scrutiny, safeguard assets, and address: address: Quantitative and Qualitative issuesQuantitative and Qualitative issues

Continue growth and development of uniform Continue growth and development of uniform system of internal controlsystem of internal control

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Outlook for the FutureOutlook for the Future Benefits for Today, Tomorrow, and Benefits for Today, Tomorrow, and

Beyond…Beyond… Integrated enterprise system confluence of Integrated enterprise system confluence of

business processes and accounting information business processes and accounting information creates greater:creates greater:• Need for sound internal controlNeed for sound internal control• Understanding of non-financial business process Understanding of non-financial business process

impacts on the general ledgerimpacts on the general ledger• Increased reliance on information obtained to make Increased reliance on information obtained to make

management decisionsmanagement decisions

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Outlook for the Future (cont.)Outlook for the Future (cont.)

Movement toward shared services and Movement toward shared services and standard business processes across the standard business processes across the organization creates need for solid internal organization creates need for solid internal control structurecontrol structure

• Inside and outside of shared service environmentInside and outside of shared service environment• Stakeholder monitoring and risk assessmentStakeholder monitoring and risk assessment• Third party checks and balancesThird party checks and balances• Exception processing controlsException processing controls