Department of Homeland Security: Financial Management Challenges Page: 4 of 16
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part of its enterprise architecture approach to ensure an overarching framework for the
agency's integrated financial management processes. Plans and standard accounting
policies and procedures must be developed and implemented to integrate the various
financial management environments under which inherited agencies operate so that DHS
can produce useful and timely financial information.
Currently, DHS is the only cabinet-level department in the federal government that is not
subject to the Chief Financial Officers (CFO) Act of 1990.3 As such, this department, with
a fiscal year 2004 budget of nearly $40 billion and more than 180,000 employees, does not
have a presidentially appointed CFO subject to Senate confirmation and is not required
to comply with the requirements of the Federal Financial Management Improvement Act
of 1996 (FFMIA).4 The goals of the CFO Act and related financial reform legislation, such
as FFMIA, are to provide the Congress and agency management with reliable financial
information for managing and making day-to-day decisions and to improve financial
management systems and controls to properly safeguard the government's assets.
S. 1567, as passed by the Senate on November 21, 2003, would, among other things,
amend the CFO Act to (1) add DHS as a CFO Act agency, and (2) require DHS to obtain
an audit opinion on its internal controls. While DHS's CFO has testified that the
department complies with the audit provisions of the CFO Act and will continue to do so,
we believe DHS should not be the only cabinet-level department not covered by what is
the cornerstone for pursuing and achieving the requisite financial management systems
and capabilities in the federal government. While this administration has voluntarily
complied with some provisions of the CFO Act, making DHS subject to the CFO Act
through enactment of S. 1567 would assist the department in facing and overcoming the
financial management challenges it faces and legislate future compliance with the
important provisions of the CFO Act and related legislation.
The perspectives we offer in this testimony are derived from work completed by us,
inspectors general, independent auditors, as well as from executive guidance and
testimony related to financial management and DHS.
Addressing Internal Control Weaknesses
DHS faces the challenge of correcting the previously identified material weaknesses that
the agencies brought with them to DHS, as well as addressing newly identified
weaknesses from DHS's first financial statement audit and obtaining an unqualified or
"clean" audit opinion. I will first highlight the results of DHS's first financial statement
3Pub. L. No. 101-576, 104 Stat. 2838 (Nov. 15, 1990).
4FFMIA, Pub. L. No. 104-208, div. A, 101(f), title VIII, 110 stat. 3009, 3009-389 (Sept. 30, 1996). FFMIA
requires the major departments and agencies covered by the CFO Act to implement and maintain financial
management systems that comply substantially with (1) federal financial management systems
requirements, (2) applicable federal accounting standards, and (3) the federal government's standard
general ledger at the transaction level.
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United States. Government Accountability Office. Department of Homeland Security: Financial Management Challenges, text, July 8, 2004; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc293340/m1/4/: accessed February 23, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.