# Presentation: 823572

## DOE Undelivered Orders (UDO) Remediation Progress Update

- Rick Loyd, Director, Office of Finance and Oversight

- Superusers/Financial Statement Workshop
- March 20 – 22, 2007

## KPMG DOE Audit Report stated...

***Accounting for obligations and undelivered orders ***–
- Found significant deficiencies in the Department’s internal controls over the *timely recording* of the obligation and *de-obligation* of funds.
- The identified deficiencies precluded the Department from ensuring the accuracy, validity, and completeness of obligations and undelivered orders.
- The Department should enhance established controls to ensure that:
-  obligations are recorded in a timely manner
-  correct all remaining conversion errors
-  resolve and correct negative undelivered order balances
-  ensure that obligated funds are promptly de-obligated when those funds are no longer needed

## DOE UDO Corrective Action Plan

- Near Term Corrective Actions (Q2)
- Phase 1 UDO Review > $500k
- Negative UDO/Blank CID Correction
- Correction Guide for Legacy UDO Issues
- Automatic De-obligation of Travel and Training Obligations
- Checklist Implementation
- Mid Term Corrective Actions (Q3 – Q4)
- Phase 2 UDO Review < $500K
- Improve UDO Guidance/STARS Reports
- New GL to PO Reconciliation Discoverer Report
- CDR Report Revisions
- Stale Balance Reports
- 2108 Review & Certification Guidance
- Communicate and Partner with Programs and Procurement Officials (Ongoing)

## Solid Progress To Date...

- Near Term Corrective Actions (Q2)
- UDO Review by $ Value > $500k
- 99% complete, 1172 CIDs reviewed, net obligation $3.7 million
- Negative UDO/Blank CID Correction
- 96% complete, 396 CIDs corrected, net obligation $12.9 million
- Automatic De-obligation of Travel Obligations
- Completed Jan 25.  2821 CIDs de-obligated for $1.4 million
- Automatic De-obligation Training Obligations
- Completed Feb 15.  1625 CIDs de-obligated for $800 thousand
- Checklist Implemented
- KPMG Audit review of UDO and Abnormal Balances began Feb. 26
- 8 sites to be reviewed; varying sample sizes
- Audit work completed at 2 sites; no audit findings

## Phase 2 Review Population

-  Phase 2 Review encompasses the 9/30/2006 UDO population not addressed by the Phase 1 review
- Excluding those CIDs subject to the new automated deobligation process (travel and training UDO balances less than $5,000)
- Excludes CIDs for which the UDO balance has been liquidated during FY 2007
- A listing of the current Phase 2 population was e-mailed to each allottee

**Allottees**
**CIDs**

- The Population:

## Phase 2 Review Methodology

- The Phase 2 review will only require a reconciliation of the current cumulative obligation balance, and not the 9/30/2006 balance as was required for Phase 1.
- The Phase 2 review will not include a stale balance review for all CIDs in the review population, as was the case with the Phase 1 review.  Instead, offices will perform the stale balance procedures in this SOP only for those CIDs identified on the Stale Balance Report.

## Phase 2 Review Methodology (Continued)

- Field CFO’s should use a risk-based approach to ensure those CIDs with the most likelihood of having errors impacting the 2108 and financial statements are reviewed and corrected prior to June 30th.
- Differences identified by the GL to PO reconciliation procedures would be one example of identifying those CIDs with a higher risk of data errors.  Another risk-based strategy would be to review the CIDs with the largest balances first, or those that are more likely to lack supporting documentation.
- It is expected that all UDOs identified below will be reconciled to source documents, and corrections made if necessary, by September 30, 2007.
- The Correction Guide for Legacy UDO Issues provides information and tools to assist field offices in identifying and resolving differences most likely to be encountered.
- Reconciliation of the STARS GL undelivered order balance to the office's procurement system may be substituted for actual source document verification if the cumulative obligation balances in both systems for the CID are the same.

## Phase 2 Reporting and Documentation

- Field CFOs will report the summary results of the progress of their Phase 2 reviews on the 5th workday of each month.  The summary information to be provided includes the
- Number and dollar value of UDOs reconciled to source documents
- Number and dollar of UDOs to be reviewed/corrected
- The monthly summary information should be e-mailed to Bill Johnson at _[william.johnson@hq.doe.gov](mailto:william.johnson@hq.doe.gov)_
- Documentation of the Phase 2 reconciliations should be maintained locally to provide audit evidence that the reconciliations were performed.

## Questions/Comments?

- Field CFO comments due next week on Phase 2 requirements, as well as the rest of the revised Obligation Review and 2108 Certification Guide