DHS starts down new financial path

Auditors and lawmakers have prodded the Homeland Security Department for the past four years to consolidate its financial management systems, and they have criticized DHS for doing little to act on recommendations that would reduce its financial risk. Now, however, the department says it has a plan for consolidating its agencies’ finances under two certified financial systems.DHS’ small agencies will use a version of Oracle Federal Financials software that the Coast Guard hosts and the Transportation Security Administration uses or a version of SAP Financials that the Customs and Border Protection agency hosts.By fiscal 2009, half of DHS’ agencies will be using consolidated financial management systems as a first step toward operating under a departmentwide integrated system, said David Norquist, DHS’ chief financial officer.“The goal is to repeat, refine and build upon each successful migration,” Norquist said.The 22 agencies that comprise DHS each brought legacy financial systems and reporting weaknesses. Agencies must start to use similar systems if they’re ever going to produce financial data that is complete, accurate and able to be shared, the Government Accountability Office said in a June report on DHS’ financial management systems.McCoy Williams, GAO’s director of financial management and assurance, began reporting on DHS’ financial management operations soon after the department was created. He recently told lawmakers he is uncertain whether DHS has turned a corner. “When I issued my report four years ago, I concluded that it was too soon to tell if its plan would be successful or not. I think we’re back in the starting gate again,” he said after a June 28 hearing on financial management at DHS. DHS still must produce a detailed financial strategy and comprehensive concept of operations, set up effective internal controls, standardize business processes and hire managers with the right skills, Williams told lawmakers. “If DHS is disciplined, uses the results of its process for implementing internal controls under the Office of Management and Budget Circular A-123 and all the tools at hand, you’ve got a framework for making progress,” he said. Lawmakers said sound financial management is critical to DHS’ success. “Anything that weakens the department weakens its ability to respond quickly and effectively to meet the real threats this country continues to face,” said Sen. Thomas Carper (D-Del.), chairman of the Homeland Security and Governmental Affairs Committee’s Federal Financial Management, Government Information, Federal Services and International Security Subcommittee.Congressional auditors and lawmakers praised DHS for cutting its losses after spending more than $52 million of its $200 million budget for modernizing its financial systems. It showed discipline, said Keith Rhodes, GAO’s chief technologist. In December 2005, DHS canceled a contract it had with BearingPoint to develop a departmentwide financial management system, the Electronically Managing Enterprise Resources for Government Effectiveness and Efficiency. The system failed under the weight of trying to meet 8,000 requirements. DHS ended the program in September 2006.  “If you don’t apply discipline to requirements, it’s a vendor’s dream but oversight’s nightmare,” Rhodes said. “Public pain is what gets the message across. I think they’ve gotten part of the message.”