GAO: DHS lacks strategy to consolidate financial systems

The Homeland Security Department plans to consolidate several duplicative financial management systems although it does not have a detailed strategy to integrate its systems, standardize business processes and put in place effective workforce practices, the Government Accountability Office said. “We are concerned that DHS still lacks a clearly defined financial management strategy or financial management system implementation effort to even begin to address the integration and transformation issues,” McCoy Williams, director of GAO’s financial management and assurance, told lawmakers. Williams testified June 28 before Senate Homeland Security and Governmental Affairs Committee’s Federal Financial Management, Government Information, Federal Services and International Security Subcommittee. GAO today released its detailed report on DHS’ integrated financial management systems challenges. The department will migrate its small agencies to one of two financial management systems in the next phase of its financial management consolidation. It anticipates that by fiscal 2009 one half of its agencies will be using the consolidated systems, said David Norquist, DHS’ chief financial officer. The department will begin moving its larger components, such as the Federal Emergency Management Agency, in 2009. Consolidating financial management systems is the first step toward a departmentwide integrated system. “The goal is to repeat, refine and build upon each successful migration,” Norquist said. The 22 agencies that make up DHS each brought their own financial systems. DHS decided its component agencies will choose to move to one of two model systems now in use at the Transportation Security Administration and Customs and Border Protection to standardize financial systems platforms and better share data. DHS pulled the plug in December 2005 on its contract with BearingPoint to develop a new financial management system, the Electronically Managing Enterprise Resources for Government Effectiveness and Efficiency, or Emerge 2, which failed under the weight of trying to meet 8,000 requirements. DHS had spent $52 million on the project. However, the Transformation and Systems Consolidation program falls short as a detailed strategy for what DHS needs to transform its financial management environment, including standardizing business processes and putting in place effective workforce practices, Williams said. TSA and CBP have numerous financial management weaknesses in internal controls and financial reporting that have continued into the 2006 annual audit, “and consequently do not appear to be good candidates to be the models,” he said. DHS needs to adopt best practices to reduce these risks, especially in light of the department’s complex makeup, and Williams urged developing a detailed concept of operations and defining standard business processes. The department approach is consistent with GAO recommendations for strengthening financial management, Norquist said. DHS recently updated its concept of operations to describe current business processes and technical specializations of the system. As each component migrates, the concept of operations will explain how the agency will use the system to support its business processes, he said. DHS has efforts under way to re-engineer and standardize key business processes. Earlier this year, it produced an internal controls playbook to establish a management control program that measures performance and provides accountability for improvement.