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GCN Home > 07/05/04 issue

He got green

By Mary Mosquera, GCN Staff

Why is Education CFO Jack Martin smiling? He and his team earned OMB's top grade for financial reporting. Here’s how.

The sheriff has a new edict: Agencies must get their annual financial reports to the Office of Management and Budget by 45 days after the federal fiscal year ends on Sept. 30, instead of 120 days. The Nov. 15 deadline is forcing managers to scramble.

But only a handful of agencies appear ready to meet this mandate.

So how did eight agencies meet the deadline last year, a full 12 months before the rule takes effect? In part, by integrating their financial systems to improve management and reporting.

Of these eight, the Education Department was the only cabinet department to achieve OMB’s top green rating for financial management on the most recent President’s Management Agenda scorecard.

“First and foremost, it takes better technology,” said Linda Springer, OMB’s controller in the Office of Federal Financial Management.

“We couldn’t have done it without the ability to produce statements monthly,” Education’s chief financial officer Jack Martin said. “That’s what makes getting to green doable. Given the size and complexity of most agencies, it would be extremely difficult, in my view,” without an integrated system.

The department in January 2002 implemented the Oracle Federal Financials 11.0.3 management system, one of several commercial products certified by the Joint Financial Management Improvement Program. Education was able to produce an accurate financial statement when OMB first required quarterly submissions in 2002.

The department conducted its first clean audit in 2002, although auditors found one major weakness. They were not satisfied with the extent to which Education had reconciled cash, receivables and student aid records.

“You can’t get to green with a material weakness, not even to yellow,” Martin said. To eliminate the weakness for the 2003 report, Education set up several teams that met twice a week with Martin and other senior managers to measure progress.

The auditors gave Education a clean bill in 2003, with only one qualification, which is a lesser sin than a weakness: Fine-tune the process for estimating the subsidy needed for student loan programs. That qualification should be eliminated in the 2004 report, Martin said.

To get to green on the PMA scorecard, agencies must go beyond OMB’s requirements for a clean audit and on-time financial statements. Agencies must also demonstrate that they can produce accurate financial information on demand, and that managers are using it to make daily decisions and evaluate performance, Springer said.

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