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View PPT file - NASA - Home

  1. 1. NASA Advisory Council Meeting Report of Audit and Finance Committee July 10, 2008 Members: NASA: Mr. Robert Hanisee, Chairman Mr. Terry Bowie Hon. Ted McPherson Hon. Michael Montelongo Mr. Howard Stanislawski
  2. 2. <ul><li>Audit & Finance Committee </li></ul><ul><li>Glenn Research Center Fact-Finding Meeting </li></ul><ul><li>Ohio Aerospace Institute, 1st Floor, Room 1E </li></ul><ul><li>July 9, 2008 </li></ul><ul><li>8:15 – 9:15 Presentation # 1 </li></ul><ul><li>Presentation from GRC CFO Debra Watson </li></ul><ul><li>9:15 – 9:45 Presentation # 2 </li></ul><ul><li>Update from Deputy CFO Terry Bowie </li></ul><ul><li>Property Update </li></ul><ul><li>9:45 – 10:00 Break </li></ul><ul><li>10:00 – 11:15 Presentation # 3 </li></ul><ul><li>Continuous Monitoring Program - </li></ul><ul><li>May 2008 Results Leslie Hyland </li></ul><ul><li>11:15 – 12:00 Presentation # 4 </li></ul><ul><li>Financial Statement Audit Status Thomas Green </li></ul><ul><li>12:00 - 12:45 Lunch Break </li></ul><ul><li>12:45 – 1:30 Presentation # 5 NSSC Transition Update Joyce Short </li></ul><ul><li>2:30 – 5:30 Administrative Session A&F Members </li></ul><ul><li>5:30 Adjourn and Meet Bus </li></ul>
  3. 3. Glenn Research Center Briefing to NASA Advisory Council (Audit & Finance Committee) Debra Watson Chief Financial Officer July 9, 2008
  4. 4. Glenn Research Center (Cont.) <ul><li>Other Members of Glenn Chief Financial Office in Attendance </li></ul><ul><li>Lawrence Sivic – Deputy CFO </li></ul><ul><li>Karen McLaughlin – Accounting & Financial Analysis </li></ul><ul><li>Robert Sefcik – Cost & Economic Analysis </li></ul>
  5. 5. GRC CFO Organization <ul><li>Responsible for the Center leadership and management of: </li></ul><ul><li>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 </li></ul><ul><li>Budget —resources management (dollars and workforce)—formulation, execution, analysis, verification, expenditure status/variances/metrics, phasing plans, reimbursables, workforce planning/pricing/analysis (civil service & contractors) </li></ul><ul><li>All Business Systems —system operations & integration, processes, reporting, IEMP/SAP, PMT, N2 Budget, procurement support, Center Business Process Lead – Core Finance/Travel/WebTADS </li></ul>
  6. 6. GRC CFO Organization <ul><li>Responsible for the Center leadership and management of: </li></ul><ul><li>Financial Audits & Internal Controls —audits, policy compliance, efficient operating procedures </li></ul><ul><li>Cost Estimating & Economic Analysis —independent analysis, cost estimating and program support to entire center, cost modeling, Earned Value Management (EVM) procedure development/implementation </li></ul>
  7. 7. GRC (Continued) <ul><li>Many significant changes at GRC since 2006 </li></ul><ul><li>Center focus has been moved from principally Aeronautics to roughly equal split between Aero and Exploration </li></ul><ul><li>Center CFO office staffing: 89 FTE’s: 71 civil servants, 18 contractors </li></ul><ul><li>GRC support for NSSC implementation – transferred accounts payable to NSSC in May - reduced staff by 8 FTE’s </li></ul><ul><li>Positive Budget Outlook – Stable </li></ul><ul><li>Financial Statement Audit </li></ul><ul><li>- May/June Week long E&Y review conducted – </li></ul><ul><li>Minimum concerns expressed </li></ul>
  8. 8. NASA Comprehensive Compliance Strategy <ul><li>Includes: Internal Control procedures, external audit, corrective action plan, etc. </li></ul><ul><li>and importantly NASA’s…. </li></ul><ul><li>Continuous Monitoring Program which is the overall framework , implemented in February 2008 to assess and evaluate…. </li></ul><ul><ul><li>Internal controls for accounting, financial management and stewardship </li></ul></ul><ul><ul><li>Compliance with Generally Accepted Accounting Principles </li></ul></ul>
  9. 9. NASA Comprehensive Compliance Strategy <ul><li>Evidence that account balances support the auditable Financial Statement </li></ul><ul><li>Consistency in Federal Management Practices across NASA projects, programs, missions and centers. </li></ul><ul><li>(Based on presentation delivered to the NAC Audit and Finance Committee by Leslie Hyland, Director, Financial Management Division, Office of the Chief Financial Officer) </li></ul>
  10. 10. Continuous Monitoring Program <ul><li>Assesses accounting and control activities for transactions such as: </li></ul><ul><ul><li>Fund Balance wit Treasury, Cash Outlays/Investments </li></ul></ul><ul><ul><li>Accounts Receivable </li></ul></ul><ul><ul><li>Inventory of Materials and Supplies, Property </li></ul></ul><ul><ul><li>Accounts Payable </li></ul></ul><ul><ul><li>Purchase Orders </li></ul></ul><ul><ul><li>Status of Funds </li></ul></ul><ul><ul><li>Etc. </li></ul></ul><ul><ul><li>And Reports Exceptions in these activities for each Center </li></ul></ul>
  11. 11. Continuous Monitoring Program <ul><li>And reports Exceptions in these Activities for each Center </li></ul><ul><li>Total Percent of Exceptions for all of NASA </li></ul><ul><ul><li> 2008 </li></ul></ul><ul><ul><li>February March April May </li></ul></ul><ul><ul><li>24% 24% 15% 17% </li></ul></ul>
  12. 12. Continuous Monitoring Program <ul><li>Accounting activities in need of attention: </li></ul><ul><ul><li>Prepaid Expenses/Advances/Intra-NASA Transactions </li></ul></ul><ul><ul><li>Monthly Variance Analysis </li></ul></ul><ul><ul><li>Other: </li></ul></ul><ul><ul><ul><li>Annual calculation of Unfunded Environmental Liability </li></ul></ul></ul><ul><ul><ul><li>Intra-Governmental transactions </li></ul></ul></ul><ul><ul><li>Business Benefits of Continuous Monitoring Program are REAL </li></ul></ul><ul><ul><ul><li>Provides a System of Internal Control </li></ul></ul></ul><ul><ul><ul><li>Transactions are properly recorded to assure data integrity </li></ul></ul></ul><ul><ul><ul><li>Foundation for auditable financial statements and management reporting such as “phasing” reports provided by NASA CFO </li></ul></ul></ul><ul><ul><ul><li>Next Steps </li></ul></ul></ul><ul><ul><ul><li>Encourage transactions “clean-up” during each month </li></ul></ul></ul><ul><ul><ul><li>Increased investment in Training so as to imbed, refine and sustain Continuous Monitoring Program </li></ul></ul></ul><ul><ul><ul><li>Continue to implement front-end edits and reduce rework </li></ul></ul></ul>
  13. 13. FY2008 Financial Statement Audit Update <ul><ul><ul><li>Audit Milestones/Schedule </li></ul></ul></ul><ul><ul><ul><li>FY07 Lessons Learned w/OIG & E&Y Jan. 29, 2008 </li></ul></ul></ul><ul><ul><ul><li>FY08 Agency-wide Kick-Off Meeting Mar. 13, 2008 </li></ul></ul></ul><ul><ul><ul><li>FY08 Walkthrough (Center) </li></ul></ul></ul><ul><ul><ul><li>LaRC Mar. 31 – Apr. 4, 2008 </li></ul></ul></ul><ul><ul><ul><li>GSFC Apr. 14 – 25, 2008 </li></ul></ul></ul><ul><ul><ul><li>HQ Walkthrough Meetings Mar. 10 – Apr. 11, 2008 </li></ul></ul></ul><ul><ul><ul><li>FY08 Internal Control Testing </li></ul></ul></ul><ul><ul><ul><li>at Centers Jun. 2, 2008 – Jul. 18, 2008 </li></ul></ul></ul><ul><ul><ul><ul><li>General Audit </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Information Technology </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Environmental </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Property, Plant and Equipment </li></ul></ul></ul></ul><ul><ul><ul><li>FY08 Substantive Testing – New Milestone Aug – Sept 2008 </li></ul></ul></ul><ul><ul><ul><li>FY08 Field Work Completed Oct. 2008 </li></ul></ul></ul><ul><ul><ul><li>FY08 Opinion Rendered - Agency Financial </li></ul></ul></ul><ul><ul><ul><li>Report Completed Nov. 14, 2008 </li></ul></ul></ul>
  14. 14. FY2008 Financial Statement Audit Update <ul><ul><ul><li>Audit Status Summary </li></ul></ul></ul><ul><ul><ul><li>FY08 audit approx 50% complete </li></ul></ul></ul><ul><ul><ul><li>All Data Requested by E&Y, to date, has been delivered ON TIME </li></ul></ul></ul><ul><ul><ul><li>Quality of Internal Control Testing has significantly improved due to process improvements thereby enhancing auditors ability to rely on financial data </li></ul></ul></ul><ul><ul><ul><li>NO significant show stoppers identified to date </li></ul></ul></ul>
  15. 15. NSSC Update <ul><ul><ul><li>Transition Schedule </li></ul></ul></ul><ul><ul><ul><li>To Date: </li></ul></ul></ul><ul><ul><ul><li>Accts Payable/Accts Receivable/Fund Balance With Treasury </li></ul></ul></ul><ul><ul><ul><li>- Wave 1 (DFRC, MSFC, SSC) Feb. 2008 </li></ul></ul></ul><ul><ul><ul><li>- Wave II (GRC, KSC, LaRC) Apr. 2008 </li></ul></ul></ul><ul><ul><ul><li>- Wave III (ARC, JSC) Jul. 2008 </li></ul></ul></ul><ul><ul><ul><li>To Come: </li></ul></ul></ul><ul><ul><ul><li>- Wave IV (GSFC, NMO, HQ) Aug. 2008 </li></ul></ul></ul><ul><ul><ul><li>Finance Only Invoices </li></ul></ul></ul><ul><ul><ul><li>- ALL Centers Aug. 2008 </li></ul></ul></ul><ul><ul><ul><li>Grant Payments </li></ul></ul></ul><ul><ul><ul><li>- All Centers (dependent on SAP release) Jan. 2009 </li></ul></ul></ul>
  16. 16. NSSC Accounts Payable Key Indicators February – June 2008
  17. 17. NSSC Failure Analysis Note: 30% of late payments are w/in 2 days
  18. 18. NSSC Update (Cont.) <ul><li>Wave I transition went well, but not without problems </li></ul><ul><li>Wave II transition was much smoother; key indicators have improved </li></ul><ul><ul><li>Much improved performance </li></ul></ul><ul><ul><ul><li>Evidence of learning from Wave I transition </li></ul></ul></ul><ul><ul><ul><li>Proactive communication with Centers </li></ul></ul></ul><ul><ul><ul><li>Significant effort/support from Centers </li></ul></ul></ul>
  19. 19. NSSC Update (Cont.) <ul><li>Successful Wave 3 Operational Readiness Review on June 26 </li></ul><ul><li>Go Live July 1 </li></ul>
  20. 20. Property, Plant and Equipment Update <ul><li>In GFY 07 wrote-off $13.3B of legacy assets – reclassification as R&D </li></ul><ul><li>Remaining Problem Assets: </li></ul><ul><li>Space Station $13.2B </li></ul><ul><li>Space Shuttle 1.0B </li></ul><ul><li>E&Y Position – No chance for a Clean Opinion until issue resolved </li></ul><ul><li>OIG opined that cost to re-create auditable trail is to high to justify </li></ul><ul><li>OCFO approach – Appeal to FASAB to permit reclassification as R&D </li></ul><ul><li>- Met with OIG & E&Y in April to push </li></ul>
  21. 21. Property, Plant and Equipment Update (cont.) <ul><li>New Strategy: Terry Bowie writing white paper addressed to FASAB, OMB and GAO outlining options: </li></ul><ul><li>1. Re-create data from manifests – OIG says No </li></ul><ul><li>2. Identify Comps </li></ul><ul><li>3. Reclassify as R&D </li></ul><ul><li>Will recommend Option 3. </li></ul><ul><li>Meanwhile the new Integrated Asset Management (IAM) tool was implemented in May. </li></ul>
  22. 22. Other Old Business <ul><li>Financial Staff Personnel </li></ul><ul><li>Authorized FTE – 103 (Same as April) </li></ul><ul><li>Current FTE 92 </li></ul><ul><li>New hires but not o n-board 6 </li></ul><ul><li>FTE’s with New Hires 98 </li></ul><ul><li>(an improvement of 5 FTE’s since April) </li></ul>
  23. 23. Other Old Business <ul><li>Grant Accounting: October Rollout – On Schedule: Will permit Grant by Grant Accounting </li></ul><ul><li>GFY 07 Audit – Noted Deficiencies </li></ul><ul><li> - Environmental Liabilities – E&Y wanted estimates of environmental liability </li></ul><ul><li>at Program Start </li></ul><ul><li>OCFO response – Put together an environmental Group which </li></ul><ul><li>expects to have estimates completed by Year End </li></ul><ul><li>- Open Contracts – E&Y noted a number of travel, grants and contracts still </li></ul><ul><li>open </li></ul><ul><li>OCFO response: </li></ul><ul><li> Travel – Dollars not material but effort underway </li></ul><ul><li>Contracts – Progress Noted </li></ul><ul><li>Grants – Will be resolved by new Grant Accounting </li></ul><ul><li>Software </li></ul>