VA seeks cure for accounting woes

Facing the nightmare of transferring data from 48 software packages into

its central accounting system, the Department of Veterans Affairs is planning

a drastic move to replace its patchwork system with a single commercial

financial management system.

The challenge of replacing systems with a new commercial product lies

in finding software that meets government requirements with little customization.

Offering help is the Joint Financial Management Improvement Program. JFMIP

is an independent organization responsible for testing and qualifying commercial

vendors to meet government accounting requirements. It is lending its knowledge

to the VA and more than a dozen other agencies interested in abandoning

mainframe-based systems in favor of commercial off-the-shelf solutions.

Edward Powell, assistant secretary for financial management at the VA,

said that with the current system, the VA is like a person who has handed

out 48 automated teller machine cards linked to his checking account that

transmit transaction information in different formats. With so many ATM

cards and so many formats, the person might spend more time trying to sort

out all the data than actually balancing his checkbook, he said.

"That is an oversimplification of the mess of reconciling [the VA's financial]

statements," Powell said.

The VA's core financial system has 48 software packages that flow financial

information from the agency's hospitals, cemeteries, administrative offices

and other facilities into a core ledger, Powell said. To complicate matters

further, the old system is based on Cobol, the second-oldest high-level

programming language. Cobol is labor-intensive and inflexible, and it is

quickly becoming a lost art to programmers.

About 35 percent of staff time at the VA's data processing center is

spent re-entering data and reconciling input errors, Powell said.

To keep an accurate ledger, the VA is creating a set of standards for

financial management and logistics data. Using those standards, the VA will

choose a COTS system to replace its aging financial management system.

The effort, called the Integrated Financial/Logistics Management Standards

(IFMS), began about a year ago and is expected to be complete by the end

of 2003. The VA recently chose KPMG LLP to consult on the capabilities of

commercial products that could meet the VA's requirements. Another contractor

on the project, Booz-Allen & Hamilton Inc., is helping the VA assess

its information technology infrastructure and business processe

"We are

looking for the first time to bring to VA a comprehensive management information

system that is integrated with everything we do," Powell said. At the VA,

IFMS will be used to make sure that in addition to the core financial system,

all other records, such as electronic patient records and human resources

data, can interact.

The new financial management system is expected to cost $75 million

to $150 million. The VA plans to pilot an integrated service network by

September and procure software in early 2001. A test system should be available

by mid-2001.

The VA is not the only agency looking to the commercial IT market for financial

management systems, said Karen Alderman, executive director of JFMIP. While

virtually every agency is looking at some aspect of financial management

systems, 13 federal agencies have indicated to JFMIP that they plan to buy

new core financial systems within five years.

A Coordinated Effort

The Federal Financial Management Improvement Act of 1996 requires each

agency to implement and maintain systems that comply with federal financial

management system requirements, applicable federal accounting standards

and the U.S. Government Standards General Ledger. Office of Management and

Budget Circular A-127 also requires each agency to establish and maintain

a single, integrated financial management system. JFMIP has developed a

framework for the capabilities of those integrated systems.

JFMIP has certified six vendors' software as meeting the government's

requirements for financial management. They are American Management Systems

Inc.'s Momentum, Digital Systems Group's IFMIS, ICF Information Technology's

Federal Financial Assistant, Oracle Corp.'s Public Sector Financials, PeopleSoft

Inc.'s Financials for Education and Government and Rel-Tek Systems &

Design Inc.'s Core Financial System. The VA will buy its system only from

a company certified by JFMIP, Powell sa

"We're hoping to organize a market

for commercial off-the-shelf federal financial management systems," Alderman

said. By creating a standard data set and test criteria for any vendor that

wants to be JFMIP-qualified, the independent group reduces the burden on

agencies to conduct testing individually and reduces the cost of those tests,

she said.

It costs JFMIP about $500,000 to produce the test criteria. The organization

receives about $2.4 million in annual funding from its sponsoring agencies,

which are the General Accounting Office, the Treasury Department, the Office

of Management and Budget, the Office of Personnel Management and the General

Services Administration.

"The type of work JFMIP has done to date is necessary to meet government

requirements but is not sufficient to ensure successful implementation,"

Alderman said. "We test in the vendor- provided environment. Agencies may

have different IT environments."

Every software package tested by JFMIP needed some improvements to meet

the extra government requirements, Alderman said. For example, the government's

budget process and requirements for an audit trail for each transaction

are much more difficult than in the private sector, she said.

And in some cases, COTS software can cause agencies to fall behind in

financial systems integration. At NASA, problems with KPMG's Performance

Series software have put the agency's Integrated Financial Management Program

more than 18 months behind schedule. In mid- January, NASA issued a notice

to KPMG stating that its software does not work and that the company had

10 days to propose a solution.

NASA officials think KPMG "underestimated the size of the job," said

David Howell, NASA's Integrated Financial Management Program director.