nasa advisory council meeting report of audit and finance committee july 10, 2008 members:nasa: mr....
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NASA Advisory Council Meeting
Report of Audit and Finance Committee
July 10, 2008
Members: NASA:Mr. Robert Hanisee, Chairman Mr. Terry Bowie Hon. Ted McPhersonHon. Michael MontelongoMr. Howard Stanislawski
Audit & Finance CommitteeGlenn Research Center Fact-Finding Meeting
Ohio Aerospace Institute, 1st Floor, Room 1E July 9, 2008
8:15 – 9:15 Presentation # 1Presentation from GRC CFO Debra
Watson
9:15 – 9:45 Presentation # 2Update from Deputy CFO Terry BowieProperty Update
9:45 – 10:00 Break
10:00 – 11:15 Presentation # 3 Continuous Monitoring Program -May 2008 Results Leslie Hyland
11:15 – 12:00 Presentation # 4 Financial Statement Audit Status Thomas
Green 12:00 - 12:45 Lunch Break
12:45 – 1:30 Presentation # 5NSSC Transition Update Joyce Short
2:30 – 5:30 Administrative Session A&F Members
5:30 Adjourn and Meet Bus
Glenn Research Center
Briefing to NASA Advisory Council(Audit & Finance Committee)Debra WatsonChief Financial OfficerJuly 9, 2008
Glenn Research Center (Cont.)
Other Members of Glenn Chief Financial Office in Attendance
Lawrence Sivic – Deputy CFO
Karen McLaughlin – Accounting & Financial Analysis
Robert Sefcik – Cost & Economic Analysis
GRC CFO Organization
Responsible for the Center leadership and management of:
Accounting—financial analysis/accounting transactions—Standard General Ledger, funds distribution, payroll, obligations, cost accounting, payment oversight, property accounting, reporting, travel, labor analysis, Continuous Monitoring Program/Error Tracking, financial policy, bank card monitoring
Budget—resources management (dollars and workforce)—formulation, execution, analysis, verification, expenditure status/variances/metrics, phasing plans, reimbursables, workforce planning/pricing/analysis (civil service & contractors)
All Business Systems —system operations & integration, processes, reporting, IEMP/SAP, PMT, N2 Budget, procurement support, Center Business Process Lead – Core Finance/Travel/WebTADS
GRC CFO Organization
Responsible for the Center leadership and management of:
Financial Audits & Internal Controls —audits, policy compliance, efficient operating procedures
Cost Estimating & Economic Analysis —independent analysis, cost estimating and program support to entire center, cost modeling, Earned Value Management (EVM) procedure development/implementation
GRC (Continued)
Many significant changes at GRC since 2006 Center focus has been moved from principally
Aeronautics to roughly equal split between Aero and Exploration
Center CFO office staffing: 89 FTE’s: 71 civil servants, 18 contractors
GRC support for NSSC implementation – transferred accounts payable to NSSC in May - reduced staff by 8 FTE’s
Positive Budget Outlook – Stable Financial Statement Audit - May/June Week long E&Y review conducted – Minimum concerns expressed
NASA Comprehensive Compliance Strategy
Includes: Internal Control procedures, external audit, corrective action plan, etc.
and importantly NASA’s….
Continuous Monitoring Program which is the overall framework , implemented in February 2008 to assess and evaluate…. Internal controls for accounting, financial
management and stewardship Compliance with Generally Accepted
Accounting Principles
NASA Comprehensive Compliance Strategy
Evidence that account balances support the auditable Financial Statement
Consistency in Federal Management Practices across NASA projects, programs, missions and centers.
(Based on presentation delivered to the NAC Audit and Finance Committee by Leslie Hyland, Director, Financial Management Division, Office of the Chief Financial Officer)
Continuous Monitoring Program
Assesses accounting and control activities for transactions such as:
Fund Balance wit Treasury, Cash Outlays/Investments Accounts Receivable Inventory of Materials and Supplies, Property Accounts Payable Purchase Orders Status of Funds Etc.
And Reports Exceptions in these activities for each Center
Continuous Monitoring Program
And reports Exceptions in these Activities for each Center
Total Percent of Exceptions for all of NASA
2008
February March AprilMay
24% 24% 15% 17%
Continuous Monitoring Program
Accounting activities in need of attention: Prepaid Expenses/Advances/Intra-NASA Transactions Monthly Variance Analysis
Other:• Annual calculation of Unfunded Environmental Liability• Intra-Governmental transactions
Business Benefits of Continuous Monitoring Program are REAL• Provides a System of Internal Control• Transactions are properly recorded to assure data integrity• Foundation for auditable financial statements and management reporting such as
“phasing” reports provided by NASA CFO
Next Steps• Encourage transactions “clean-up” during each month • Increased investment in Training so as to imbed, refine and sustain Continuous
Monitoring Program• Continue to implement front-end edits and reduce rework
FY2008 Financial Statement Audit Update
Audit Milestones/ScheduleFY07 Lessons Learned w/OIG & E&Y Jan. 29, 2008FY08 Agency-wide Kick-Off Meeting Mar. 13, 2008FY08 Walkthrough (Center)
LaRC Mar. 31 – Apr. 4, 2008
GSFC Apr. 14 – 25, 2008
HQ Walkthrough Meetings Mar. 10 – Apr. 11, 2008FY08 Internal Control Testing at Centers Jun. 2, 2008 – Jul. 18, 2008
• General Audit• Information Technology• Environmental• Property, Plant and Equipment
FY08 Substantive Testing – New Milestone Aug – Sept 2008FY08 Field Work Completed Oct. 2008FY08 Opinion Rendered - Agency Financial Report Completed Nov. 14, 2008
FY2008 Financial Statement Audit Update
Audit Status Summary• FY08 audit approx 50% complete
• All Data Requested by E&Y, to date, has been delivered ON TIME
• Quality of Internal Control Testing has significantly improved due to process improvements thereby enhancing auditors ability to rely on financial data
• NO significant show stoppers identified to date
NSSC Update
Transition ScheduleTo Date:
Accts Payable/Accts Receivable/Fund Balance With Treasury- Wave 1 (DFRC, MSFC, SSC) Feb. 2008- Wave II (GRC, KSC, LaRC) Apr. 2008- Wave III (ARC, JSC) Jul. 2008
To Come:- Wave IV (GSFC, NMO, HQ) Aug. 2008
Finance Only Invoices- ALL Centers Aug. 2008
Grant Payments- All Centers (dependent on SAP release) Jan. 2009
90
82
9296 97
70
75
80
85
90
95
100
Feb Mar Apr May June
On Time Payments as a Percentage of All Payments
163
140146
79
270
50
100
150
200
Feb Mar Apr May June
Interest Payments per $1M Payments
NSSC Accounts Payable Key Indicators February – June 2008
NSSC Failure Analysis
Note: 30% of late payments are w/in 2 days
Distribution of Late Payments by Days Late(4/1/08 - 6/23/08)
1 Day24%
2 Days6%
3 Days5%4 Days
6%5 Days
3%6-10 Days
16%
11-15 Days11%
16-30 Days15%
31-60 Days10%
>61 Days4%
NSSC Update (Cont.)
Wave I transition went well, but not without problems
Wave II transition was much smoother; key indicators have improved Much improved performance
• Evidence of learning from Wave I transition• Proactive communication with Centers• Significant effort/support from Centers
NSSC Update (Cont.)
Successful Wave 3 Operational Readiness Review on June 26
Go Live July 1
Property, Plant and Equipment
Update
In GFY 07 wrote-off $13.3B of legacy assets – reclassification as R&D
Remaining Problem Assets: Space Station $13.2BSpace Shuttle 1.0B
E&Y Position – No chance for a Clean Opinion until issue resolved
OIG opined that cost to re-create auditable trail is to high to justify
OCFO approach – Appeal to FASAB to permit reclassification as R&D
- Met with OIG & E&Y in April to push
Property, Plant and Equipment
Update (cont.)
New Strategy: Terry Bowie writing white paper addressed to FASAB, OMB and GAO outlining options:
1. Re-create data from manifests – OIG says No
2. Identify Comps3. Reclassify as R&D
Will recommend Option 3.
Meanwhile the new Integrated Asset Management (IAM) tool was implemented in May.
Other Old Business
Financial Staff PersonnelAuthorized FTE – 103 (Same as April)
Current FTE 92New hires but not o n-board 6FTE’s with New Hires 98
(an improvement of 5 FTE’s since April)
Other Old Business
Grant Accounting: October Rollout – On Schedule: Will permit Grant by Grant Accounting
GFY 07 Audit – Noted Deficiencies - Environmental Liabilities – E&Y wanted estimates of environmental liability
at Program Start
OCFO response – Put together an environmental Group which expects to have estimates completed by Year End - Open Contracts – E&Y noted a number of travel, grants and contracts still open
OCFO response: Travel – Dollars not material but effort underway
Contracts – Progress Noted Grants – Will be resolved by new Grant Accounting Software