# Presentation: 278843

## NASA Advisory Council Meeting

**	****Report of Audit and Finance Committee **
***July 10, 2008***** **
**Members:****	****	****	****	****NASA:**
*Mr. Robert Hanisee, Chairman **	** **	**Mr. Terry Bowie **	**	*
*Hon. Ted McPherson**	**	*
*Hon. Michael Montelongo*
*Mr. Howard Stanislawski **	*

**Audit & Finance Committee**
**Glenn Research Center Fact-Finding Meeting**
** ****Ohio Aerospace Institute, 1st Floor, Room 1E **
**July 9, 2008**
-  8:15 – 9:15		**Presentation # 1**
**	****	****	**Presentation from GRC CFO		Debra Watson
- 9:15 – 9:45	   	**Presentation # 2**
- 			Update from Deputy CFO		Terry Bowie
- 			Property Update
-  9:45 – 10:00	Break
- 			Continuous Monitoring Program -
- 			May 2008 Results 			Leslie Hyland
- 			Financial Statement Audit Status		Thomas Green
- 12:00 - 12:45 	Lunch Break
- 12:45 – 1:30	**Presentation # 5**	**	****	****	****	****	**NSSC Transition Update		 	Joyce Short
- 2:30 – 5:30		Administrative Session			A&F Members
- 5:30 		Adjourn and Meet Bus

## Glenn Research Center

- Briefing to NASA Advisory Council
- (Audit & Finance Committee)
- Debra Watson
- Chief Financial Officer
- July 9, 2008

## 	Glenn Research Center (Cont.)

- Other Members of Glenn Chief Financial Office in Attendance
- 		Lawrence Sivic – Deputy CFO
- 		Karen McLaughlin – Accounting & Financial Analysis
- 		Robert Sefcik – Cost & Economic Analysis

## 		GRC CFO Organization

- Responsible for the _**Center leadership and management**_ of:
_**Accounting**_—financial analysis/accounting transactions—Standard General Ledger, funds distribution, payroll, obligations, cost accounting, payment oversight, property accounting, reporting, travel, labor analysis, Continuous Monitoring Program/Error Tracking, financial policy, bank card monitoring
_**Budget**_—resources management (dollars and workforce)—formulation, execution, analysis, verification, expenditure status/variances/metrics, phasing plans, reimbursables, workforce planning/pricing/analysis (civil service & contractors)
_**All Business Systems**_ —system operations & integration, processes, reporting, IEMP/SAP, PMT, N2 Budget, procurement support, Center Business Process Lead – Core Finance/Travel/WebTADS

## 		GRC CFO Organization

- Responsible for the _**Center leadership and management**_ of:
_**Financial Audits & Internal Controls**_ —audits, policy compliance, efficient operating procedures
_**Cost Estimating & Economic Analysis**_ —independent analysis, cost estimating and program support to entire center, cost modeling, Earned Value Management (EVM) procedure development/implementation

## GRC (Continued)

- Many significant changes at GRC since 2006
- Center focus has been moved from principally Aeronautics to roughly equal split between Aero and Exploration
- Center CFO office staffing:  89 FTE’s:  71 civil servants, 18 contractors
- GRC support for NSSC implementation – transferred accounts payable to NSSC in May - reduced staff by 8 FTE’s
- Positive Budget Outlook – Stable
- Financial Statement Audit
-       - May/June  Week long E&Y review conducted –
-         Minimum concerns expressed

## NASA Comprehensive Compliance Strategy

- Includes:   Internal Control procedures, external audit, corrective action plan, etc.
- 			and importantly NASA’s....
- Continuous Monitoring Program which is the overall framework , implemented in February 2008 to assess and evaluate....
- Internal controls for accounting, financial management and stewardship
- Compliance with Generally Accepted Accounting Principles

## NASA Comprehensive Compliance Strategy

- Evidence that account balances support the auditable Financial Statement
- Consistency in Federal Management Practices across NASA projects, programs, missions and centers.
- (Based on presentation delivered to the NAC Audit and Finance Committee by Leslie Hyland, Director, Financial Management Division, Office of the Chief Financial Officer)

## Continuous Monitoring Program

- Assesses accounting and control activities for transactions such as:
- Fund Balance wit Treasury, Cash Outlays/Investments
- Accounts Receivable
- Inventory of Materials and Supplies, Property
- Accounts Payable
- Purchase Orders
- Status of Funds
- _Etc._
- And Reports Exceptions in these activities for each Center

## Continuous Monitoring Program

- And reports Exceptions in these Activities for each Center
- Total Percent of Exceptions for all of NASA
- 			                 _2008_
- _February_		_March_		_April_		_May_
-     24%	    	  24%	  	15%		17%

## Continuous Monitoring Program

- Accounting activities in need of attention:
- Prepaid Expenses/Advances/Intra-NASA Transactions
- Monthly Variance Analysis
- _Other:_
- _Annual_ calculation of Unfunded Environmental Liability
- Intra-Governmental transactions
- Business Benefits of Continuous Monitoring Program are REAL
- Provides a System of Internal Control
- Transactions are properly recorded to assure data integrity
- Foundation for auditable financial statements and management reporting such as “phasing” reports provided by NASA CFO
- Next Steps
- Encourage transactions “clean-up” during each month
- Increased investment in Training so as to imbed, refine and sustain Continuous Monitoring Program
- Continue to implement front-end edits and reduce rework

## FY2008 Financial Statement Audit Update 

- _Audit Milestones/Schedule_
- FY07 Lessons Learned w/OIG & E&Y 	         	      Jan. 29, 2008
- FY08 Agency-wide Kick-Off Meeting 		      Mar. 13, 2008
- FY08 Walkthrough (Center)
- 		LaRC			        Mar. 31 – Apr. 4, 2008
- 		GSFC	               	                              Apr. 14 – 25, 2008
- HQ Walkthrough Meetings		      Mar. 10 – Apr. 11, 2008
- FY08 Internal Control Testing
-     at Centers			Jun. 2, 2008 – Jul. 18, 2008
- General Audit
- Information Technology
- Environmental
- Property, Plant and Equipment
- FY08 Substantive Testing – New Milestone	 Aug – Sept 2008
- FY08 Field Work Completed	                                            Oct. 2008
- FY08 Opinion Rendered - Agency Financial
-   Report Completed	                                                      Nov. 14, 2008

## FY2008 Financial Statement Audit Update 

- _Audit Status Summary_
- FY08 audit approx 50% complete
- All Data Requested by E&Y, to date, has been delivered ON TIME
- Quality of Internal Control Testing has significantly improved due to process improvements thereby enhancing auditors ability to rely on financial data
- NO significant show stoppers identified to date

## NSSC Update 

- _Transition Schedule_
- To Date:
- 	Accts Payable/Accts Receivable/Fund Balance With Treasury
- 		- Wave 1 (DFRC, MSFC, SSC)		Feb. 2008
- 		- Wave II (GRC, KSC, LaRC)		Apr. 2008
- 		- Wave III (ARC, JSC)			Jul. 2008
- To Come:
- 		- Wave IV (GSFC, NMO, HQ)		Aug. 2008
- Finance Only Invoices
- 		- ALL Centers				Aug. 2008
- Grant Payments
- 		- All Centers (dependent on SAP release)	Jan. 2009

## NSSC Accounts Payable Key Indicators            February – June 2008

- NSSC Accounts Payable Key Indicators            February – June 2008

##        NSSC Failure Analysis         Note: 30% of late payments are w/in 2 days

## NSSC Update (Cont.)

- Wave I transition went well, but not without problems
- Wave II transition was much smoother; key indicators have improved
- Much improved performance
- Evidence of learning from Wave I transition
- Proactive communication with Centers
- Significant effort/support from Centers

## NSSC Update (Cont.)

- Successful Wave 3 Operational Readiness Review on June 26
- Go Live July 1

## Property, Plant and Equipment Update 

- In GFY 07 wrote-off $13.3B of legacy assets – reclassification as R&D
- Remaining Problem Assets:
- 		Space Station	$13.2B
- 		Space Shuttle	    1.0B
- E&Y Position – No chance for a Clean Opinion until issue resolved
- OIG opined that cost to re-create auditable trail is to high to justify
- OCFO approach – Appeal to FASAB to permit reclassification as R&D
- 			- Met with OIG & E&Y in April to push

## Property, Plant and Equipment Update (cont.) 

- New Strategy:  Terry Bowie writing white paper addressed to FASAB, OMB and GAO outlining options:
- 		1.  Re-create data from manifests – OIG says No
- 		2.  Identify Comps
- 		3.  Reclassify as R&D
- Will recommend Option 3.
- Meanwhile the new Integrated Asset Management (IAM) tool was implemented in May.

## Other Old Business 

- _Financial Staff Personnel_
- 	Authorized FTE – 103 (Same as April)
- 	Current FTE 			           92
- 	New hires but not o	n-board        _ 6_
- 	FTE’s with New Hires                98
- (an improvement of 5 FTE’s since April)

## Other Old Business 

- Grant Accounting:  October Rollout – On Schedule:  Will permit Grant by Grant Accounting
- GFY 07 Audit – Noted Deficiencies
- 	 - Environmental Liabilities – E&Y wanted estimates of environmental liability
-           at Program Start
- 		OCFO response – Put together an environmental Group which
-                                                 expects to have estimates completed by Year End
-          - Open Contracts – E&Y noted a number of travel, grants and contracts still
-             open
- 		OCFO response:
- 		    Travel – Dollars not material but effort underway
-                      Contracts – Progress Noted
-                      Grants – Will be resolved by new Grant Accounting
-                                    Software