# Presentation: 009869

## Operations Management Council Internal Controls Status Meeting 

**Operations Management Council**** Internal Controls Status Meeting **

**Friday, July 28, 2006**
**1:00 – 3:45 pm**
**NASA Headquarters**
** ****Room 7C61/7D61**

## Status Meeting Agenda for July 28th 

**Status Meeting Agenda for July 28th **

**Opening Remarks****	****	****	****Ms. Dominguez****	****	****  5 min.**
**Status of OCE Action from 4/21 Meeting****	****Mr. Blythe****	****	****	****15 min**
**Results of NASA HQ ISO Audit****	****	****Ms. Cline****	****	****	****10 min.**
**Agency-wide Statements of Assurance****	****Ms. Dominguez****	****	****25 min.**
** ****	****	****	****	****	****	****	****	****	**** ****Target**
_**Corrective Actions/Milestones for Internal Control Deficiencies**_**	****	****             **_**Correction Date**_
**Asset Management (MW)****	****	****	****OCFO****	****	****10 min.****	****09/30/06**
**Financial Management System (MW)****	****	****OCFO****	****	****10 min.****	****11/15/06**
**Financial Management Data Integrity (MW)****	****OCFO****	****	****10 min.****	****09/15/06**
**Financial Mgmt. Policy & Procedures (MC)****	****OCFO****	****	****10 min.****	****07/21/06****	**
**Financial Management Staffing (MC)****	****	****OCFO****	****	****10 min.****	****09/30/06**
**Full Cost Integration (OW)****	****	****	****OCFO****	****	****10 min.****	****12/31/06**
**Space Shuttle (MW)****	****	****	****SOMD****	****	****10 min.****	****07/28/06****	**
**Information Technology Security (OW)****	****	****OCIO****	****	****10 min.****	****Ongoing**
**NASA Declassification Program (MC)****	****	****OSPP****	****	****  5 min.****	****12/31/06**
**Open GAO Audit Recommendations (MC)****	****OIM****	****	****  5 min.****	****Ongoing**
**Mission Management Aircraft (OW)****	****	****OIM****	****	****10 min.****	****10/30/06**
**New Issues/Summary of July 28 New Actions****	****	****Ms. Dominguez****	****10 min.**
**	**

- Key:  Material Weakness (MW); Other Weakness (OW); Management Challenge (MC)

- 2

## Actions from 4/21/06 Internal Controls Meeting

- The OCE will take the lead on coordinating and developing a description for the Contract Management deficiency, root cause, corrective actions, and recommended categorization and present results to the OMC.  The OCE also has the lead for coordinating and presenting these results in response to GAO’s rating of NASA Contract Management on their government-wide high risk list.**  **
**Status:  Recommend closing this action based on the update provided at this meeting**
- The OCE will develop proposed changes to NASA Procedural Requirements (NPR) 7120.5 to incorporate early  program/project cost estimates, and will bring to the Program Management Council for approval by March 31, 2006.  The deadline for this OMC action is extended to July 31, 2006 to coincide with the NPR 7120.5 update schedule.
**Status:  Recommend closing this action and continue to track the progress of the NPR 7120.5 update under the SMC action**
- Internal controls presenters will show the status of their deficiencies against the approved Corrective Action Plan in the Corrective Action Tracking System (CATS), including progress against milestones and explanations of any variances.  (A new milestone chart will be added to the standard presentation template for briefings at the July OMC meeting.)
**Status:  Recommend closing – Updated template distributed July 17**

- 3

## OMC/Internal Controls Action on Contract Management 

- Office of the Chief Engineer
- Mr. Michael Blythe
- July 28, 2006

## Background

- _9 November, 2005 - (OMC Action #3):_  The Assistant Administrator for Procurement will coordinate with the OCFO and OIG to determine if acquisition oversight is a deficiency and, if so, to develop its scope (e.g. what aspects are included, who is responsible, etc.)  The Office of Procurement will present the results to the OMC.
- _14 Feb OMC - Update_:  Tom Luedtke reported that a meeting was held on January 11, 2006 with the OGC, OCE, IEMP and Procurement to discuss the issue raised at the November OMC.  Per Tom, the issues raised by the OIG are similar to those that led the GAO to include Contract Management on its High Risk list.  Therefore, it was agreed that OCE has the lead for response to the GAO, and lead for coordinating this activity as well.  A follow-on OMC Action was given as follows:
- _14 Feb OMC Action #3A (Addendum to 11/9 Action):_  OCE will develop a description of the deficiency, root cause, corrective actions, and recommended categorization and present to the OMC (at the April 21 OMC meeting).
- _21 April OMC/IC_:  The above Action 3A modified/reflected as follows:
- 	CONTRACT MANAGEMENT: The OCE will take the lead on coordinating the Corrective Action Plan for the Contract Management deficiency, including description, root cause, corrective actions, measures for closure, target dates, and recommended categorization.  The OCE will present the results to the Deputy Administrator and Associate Administrator no later than May 26, 2006.  The OCE also has the lead for coordinating and presenting those results in response to GAO’s rating of NASA Contract Management on their government-wide High Risk List.
- _16 May –_  SMC approved Agency strategic acquisition approach that enables informed decisions earlier in the acquisition process
- _18 July –_ Briefing to Deputy Administrator on a recommended approach to OMC/IC Contract Management action that addresses GAO’s rating of NASA Contract Management on the government-wide High Risk List.

- 2

## Issue

- Description of Deficiency
- GAO High-Risk (January, 2005)
- Lack of a modern, fully implemented integrated financial management system
- Undisciplined cost estimating processes in project development
- Inability to obtain information needed to assess contract progress
- Root cause
- GAO High-Risk (May 19, 2004)
- A financial management “culture” that has not fully acknowledged the nature and extent of the financial management difficulties
- Weak link between financial management and program management decision-making

- 3

## Deficiency Milestone Status

| Major Milestones from CAP | Milestone Completion Dates |  |  |  |
| --- | --- | --- | --- | --- |
|  | Original Plan | Revised Plan | Actual Date | Comments (if schedule has changed or milestones are late) |
| Agency Strategic acquisition approach approved
 | May 2006 |  | May 16, 2006
 |  |
| OMC/Internal Control response | July 28, 2006 |  | 
 |  |
| All policy associated with strategy requiring modification identified
 | Sept 2006
 |  |  |  |
| Acquisitions selected for demonstration of approach | Sept 2006
 |  |  |  |
| NPR 7120.5D approved reflecting Agency strategic acquisition
 | Dec 2006 |  |  |  |
| All other associated policy reflecting the new Agency acquisition approach internally approved
 | Dec 2006 |  |  |  |
| IEMP requirements defined, documented, and approved | Dec 2007 |  |  |  |
| IEMP financial, procurement and information delivery functionality refined to support agency strategic acquisition policy
 | Dec 2008 |  |  |  |

- 4

## Planned Actions for Next Quarter

- All offices identify policy requiring modification associated with Agency strategic acquisition approach
- Identify and recommend acquisitions for OMC to monitor as case studies
- Support IEMP in the development of acquisition management requirements

- 5

## Recommendation

- Close OMC “Contract Management” action
- This deficiency should be carried as an Other Weakness

- 6

## Results of NASA Headquarters ISO AuditPresentation to theNASA Operations Management Council

**Lynn F. H. Cline**
**Deputy Associate Administrator, **
**Space Operations Mission Directorate**
**Headquarters Executive Management Representative (EMR)**

**Management Systems Division**
**Office of Infrastructure and Administration**

## HQ Quality Management  System

- The Headquarters (HQ) Quality Management System (QMS) is a process-based management system that controls the quality of HQ customer products and mission requirements
- Implements the HQ quality policy (which is also NASA’s policy) as stated in the *2006 NASA Strategic Plan*
- HQ’s customer products are:
- NASA Strategic Plan,
- Annual Budget and the Annual Performance Plan (as represented in the Integrated Budget and Performance Document), and
- Annual Performance and Accountability Report
- The scope of the HQ QMS is mission and mission support management of the Vision for Space Exploration, aeronautics and science.
- The Deputy Administrator, as the official-in-charge of the HQ QMS, provides the resources to implement, maintain, and improve the QMS
- The scope of the Operations Management Council encompasses all activities conducted by NASA, including the review of the HQ QMS
- The Executive Management Representative has day-to-day responsibility for the HQ QMS
- Supported by the Office of Infrastructure and Administration

- 2

## Critical HQ QMS Documents

- The Strategic Management and Governance Handbook (NPD 1000.0) is NASA’s highest-level requirements document for strategic planning. The external sources of its requirements are public laws and presidential executive orders.  It has two primary aims:
- To set forth the principles by which NASA will strategically manage the Agency and describe the means for doing so; and
- To identify the specific requirements that drive NASA’s strategic planning process, leading to products such as the Strategic Plan and the Annual Performance and Accountability Report.
- The NASA Strategic Plan (NPD 1001.0) is one of the externally-required Agency-level documents that comprise the overall strategic planning framework. The others are the Annual Budget Submission and the Annual Performance and Accountability Report.
- The NASA Organization (NPD 1000.3) is also a key strategic management document, though it is not mandated by federal requirements.
- Documents the NASA organizational structure and assigns roles and responsibilities.
- These documents can be found at http://nodis3.gsfc.nasa.gov/

- 3

## Audits are conducted to determine the level of implementation and compliance to the requirements of ISO 9001:2000
A sampling and review of HQ quality processes and systems to determine if the quality system is in place and adequately functioning
To review and perform corrective action verification of findings from previous activity

Headquarters Management System reissued ISO 9001 certification on July 6, 2005
Reassessment audit conducted May 2005
Valid through May 15, 2008
Two external surveillance audits and two internal audits conducted since the reassessment audit

- A sampling and review of HQ quality processes and systems to determine if the quality system is in place and adequately functioning
- To review and perform corrective action verification of findings from previous activity
- Headquarters Management System reissued ISO 9001 certification on July 6, 2005
- Reassessment audit conducted May 2005
- Valid through May 15, 2008
- Two external surveillance audits and two internal audits conducted since the reassessment audit

- -> Mark, Jr.

**HQ ISO 9001:2000 Audits**

- 4

## Core activities assessed each surveillance audit
Objectives (5.4.1)
Management Review (5.6)
Customer Satisfaction (8.2.1)
Internal Audit (8.2.2)
Continual Improvement (8.5.1)
Corrective Action (8.5.2)
Preventive Action (8.5.3)
Verification of corrective actions from previous activity

Additional activities assessed (on rotational basis)
Top Management Requirements (5.1-5.5)
Measurement & Monitoring of Process (8.2.3)
Measurement & Monitoring of Product (8.2.4)
Competence, Awareness & Training (6.1, 6.2)
Product Realization in Mission Directorates (7.5.1)
Documentation changes

- Objectives (5.4.1)
- Management Review (5.6)
- Customer Satisfaction (8.2.1)
- Internal Audit (8.2.2)
- Continual Improvement (8.5.1)
- Corrective Action (8.5.2)
- Preventive Action (8.5.3)
- Verification of corrective actions from previous activity
**Additional activities assessed (on rotational basis)**
- Top Management Requirements (5.1-5.5)
- Measurement & Monitoring of Process (8.2.3)
- Measurement & Monitoring of Product (8.2.4)
- Competence, Awareness & Training (6.1, 6.2)
- Product Realization in Mission Directorates (7.5.1)
- Documentation changes

- -> Mark, Jr.

**Audit Focus**

- 5

## There are no major findings of nonconformances as a result of surveillance audits

There are several minor nonconformance findings:
The internal audit schedule was not developed  
No evidence of long-term planning that ensured the audit of the entire system over a period of time, typically one year.  We have done much of this in the past, but on a longer term schedule.  Management Systems didn't have the documentation on its planning and due to agency transformation, we did limit several prior audits to areas that were not undergoing change (obviously significantly reducing the scope).
Audited entity not signing report
Internal Audit requirements document will incorporate process changes that better reflects the current HQ environment.  (For example, Exec Sec for the PMC interviewed, but resides at LaRC, not physically at HQ.)
The Quality Systems Manual is still not updated (Carry-over for past three assessments)
This has been in work for some time, and is now at the step where comments received in NODIS have been dispositioned and official signature package in process.  Document must be signed out by Deputy Administrator.  If not approved by next surveillance audit, it will be a significant issue.  

- There are several minor nonconformance findings:
**The internal audit schedule was not developed**
- No evidence of long-term planning that ensured the audit of the entire system over a period of time, typically one year.  We have done much of this in the past, but on a longer term schedule.  Management Systems didn't have the documentation on its planning and due to agency transformation, we did limit several prior audits to areas that were not undergoing change (obviously significantly reducing the scope).
**Audited entity not signing report**
- Internal Audit requirements document will incorporate process changes that better reflects the current HQ environment.  (For example, Exec Sec for the PMC interviewed, but resides at LaRC, not physically at HQ.)
**The Quality Systems Manual is still not updated** (Carry-over for past three assessments)
- This has been in work for some time, and is now at the step where comments received in NODIS have been dispositioned and official signature package in process.  Document must be signed out by Deputy Administrator.  If not approved by next surveillance audit, it will be a significant issue.

**Nonconformances**

- 6

## Good News

- Similar to the outcome of the last internal audit, the external auditor found strong evidence of an action orientation and decisiveness with issues discussed by top management at Council meetings.
- An effective integrated approach to the Councils, especially due to the Executive Secretaries for the three Councils working closely together.
- The governance structure is really working
- Future assessments will focus on measurements of the effectiveness of the Councils and their decisions
- PMC focus of measuring programs against a Program Commitment Agreement demonstrates this
- More work needed for mission support, but the Mission Support Implementation Plan should address this

- 7

## Observations

- External Audit
- We could do a better job of defining how the inputs for management review of the HQ management system are integrated into the various councils.
- Updating the council charters to define the functions and responsibilities would address this issue
- We should look more closely at why it has taken so long to get the HQ Quality Management System Manual updated, i.e., are there other underlying causes that might affect other key documents?
- Internal Audit
- Review the responsible organization for the NASA Policy Directive (NPD) 1000.3, the NASA Organization.
- Like the HQ Quality Management System Manual, this document is regularly out of date and jeopardizes the integrity of the management system

- 8

## Continue to address each nonconformance by identifying and resolving their root causes.
Issue the HQ Quality Management System Manual
Update the charters for the governance councils in NPD 1000.3
Specifically ensure that the collective role of the three councils covers the spectrum of the Agency’s management system and can be reviewed as a whole
Assign responsibility for NPD 1000.3 to the Office of the Administrator
Administrative responsibilities are maintained with the Office of Human Capital Management
Study and make a recommendation on ways to improve accountability for updating NPD 1000.3 and other Agency-level documents in a timely manner
Assign action to Office of Infrastructure and Administration; due October 1st

- Issue the HQ Quality Management System Manual
- Update the charters for the governance councils in NPD 1000.3
- Specifically ensure that the collective role of the three councils covers the spectrum of the Agency’s management system and can be reviewed as a whole
- Assign responsibility for NPD 1000.3 to the Office of the Administrator
- Administrative responsibilities are maintained with the Office of Human Capital Management
- Study and make a recommendation on ways to improve accountability for updating NPD 1000.3 and other Agency-level documents in a timely manner
- Assign action to Office of Infrastructure and Administration; due October 1st

**Recommendations**

- 9

## Future Activities

- Internal Audit – September 18-22, 2006
- Surveillance Audit – November 8-10, 2006?
- Implementation of corrective actions for the above minor nonconformances
- Customer-related processes
- Procurement (Supplier/Contractor controls)
- Corrective Action System

- 10

## Statements of Assurance for the Administrator

**Statements of Assurance ****for the Administrator**

**Olga Dominguez**
**Assistant Administrator**
**Office of Infrastructure & Administration**
**July 28, 2006**

## Topics

**Topics**

**Background on Internal Control (IC)**
**Heightened National Attention to IC**
**Key Laws**
**OMB Circulars**
**FY 2001-2006 NASA IC Implementation**
**Council evolution**
**Statements not required by Centers**
**Qualified Statements submitted**
**Significant Steps in 2006**
**Expanded OMC to include CDs**
**Issued new policy directive**
**Issued data call for NASA Officials- in-Charge (OIC) and Center Directors (CD) Statements of Assurance **
**Requirements for Statements of Assurance**
**Steps**
**Schedule**

- 2

## National Attention to IC 

**National Attention to IC **

**Impact of Enron/Worldcom/MCI/other IC scandals**
**Congressional response – Sarbanes-Oxley Act **
**Established all-encompassing terminology, Internal Control, as theme for reform**
**Engaged immediate attention by private industry **
**Other laws passed pertaining to federal government**
**OMB response – Circular A-123**
**Becomes key government IC implementation directive**
**All agencies, including DOD, respond quickly with initiatives to update & improve internal control policies, plans, councils & teams, assessments, monitoring, & other IC activities**

- 3

## Background on Internal Control Key Laws

**Background on Internal Control**** Key Laws**

**Federal Managers’ Financial Integrity Act (FMFIA) of 1982, servers as IC umbrella of all others**
**Internal control systems required to protect funds, property, & other assets for which agencies are responsible**
**2 requirements for visible accountability:**
**Agency heads report annually to the President & Congress as to whether their internal controls comply with the Integrity Act & GAO’s Standards for Internal Control in the Federal Government**
**Agencies provide internal control reviews on an ongoing basis**
**Government Performance & Results Act (GPRA) of 1993 – Section 5 on Managerial Accountability**
**Chief Financial Officer’s Act of 1990 – financial statements**
**Inspector General Act of 1978, as amended – audits**
**FFMIA of 1996 – financial management systems**
**FISMA of 2002 – information & technology security**
**Improper Payments Information Act of 2002 (IPIA)**
**Single Audit Act, as amended – audits of grant awards**
**Clinger-Cohen Act – information technology reform****	**

- 4

## Background on Internal ControlKey OMB Circulars

**Background on Internal Control****Key OMB Circulars**

**OMB Circular A-123, Management’s Responsibility for Internal Control (12/2004 update)**
**Revised to align government with private industry (Sarbanes-Oxley Act of 2002) in driving home the imperative for organization-wide internal control & implementation of federal standards**
**Includes Appendix A, Internal Control over Financial Reporting, to define tight, extensive requirements for compliance with already existing laws & specify the application of federal IC standards to financial reporting**
**A-123 revised again 8/05/06 to include Appendix B, Improving the Management of Government Charge Card Programs **
**Other important OMB circulars on compliance with the Integrity Act**
**Circular A-127, *****Financial Management Systems***
**Circular A-130, *****Management of Federal Information Resources***

- 5

## FY 2001-2006 NASA IC Implementation

**FY 2001-2006 NASA IC Implementation**

**Senior management council evolution (Internal Control Council (ICC) to Operations Management Council (OMC)**
**Formalized agendas, briefings, & minutes of meetings**
**Met quarterly instead of one annual session**
**Statements of Assurance by Center Directors eliminated from council’s review process in 2002**
** ****Ineffectiveness of reporting IC deficiencies**
** ****Lack of attention from senior management  **
**Annual Statement of Assurance changed from unqualified to qualified with responsible reporting of material weaknesses by HQ in 2001**

- 6

## Significant Steps in FY 2006 to NASA Implementation of IC

**Significant Steps in FY 2006 to NASA Implementation of IC**

**OMC expanded to include Center Directors for providing additional insight, opinions, & evidence to support the Administrator’s Statement (first meeting with inclusion of CDs on Feb. 14, 2006)**
**Administrator signed the substantially rewritten policy on IC as NPD 1200.1D (May 15, 2006)**
**Recommended reading by all employees**
**Easy access by NODIS library containing all Agency directives**
**Associate Administrator will issue data call for new OIC/CD Statements of Assurance (letter in review)**
**OIC’s/CD’s shall conduct an internal review of their organization to help prepare the agency Statement of Assurance **

- 7

## Requirements for Statements of Assurance Steps

**Requirements for Statements of Assurance**** ****Steps**

**Conduct internal control review**
**Collect reports from FY 2006 internal & external audits, assessments, & other types of review activities**
**See data call letter for examples of review types**
**See NPD 1200.1D for examples & IC requirements**
**Decide upon your organization’s top 3-5 goals (may be strategic and/or areas in critical need for new/increased IC)**
**Apply your FY06 review reports & 5 federal internal control standards to achievement of your goals**
**1. ****Control Environment**
**2. Risk Assessment**
**3. Control Activities**
**4. Information & Communications**
**5. Monitoring**
**Use the Internal Control Matrix for summarizing the findings from your internal control review**
**Summarize any material weaknesses identified, using the material weakness template from the data call letter**

- 8

## Requirements for Statements of Assurance Steps

**Requirements for Statements of Assurance**** ****Steps**

**Develop your Statement of Assurance based on evidence from your internal control review**
**Follow the cover memorandum format for writing your Statement**
**Enclose the Internal Control Matrix with your Statement**
**If one or more material weaknesses are identified, enclose your material weakness template(s) with your Statement****	**
**To assist with issues or concerns, contact:**
**John Werner  (202) 358-0398  john.d.werner@nasa.gov**
**Marcie Washington (202) 358-4427  marcietta.washington@nasa.gov**
**Marie Tynan  (202) 358-1371  marie.k.tynan@nasa.gov****	**
**Finalize your review results & submit Statement by Sept. 15****	**

- 9

## Requirements for Statements of AssuranceSchedule 

**Requirements for Statements of Assurance****Schedule **

**Due date of ****Sept. 15**** for submission of Statements to Associate Administrator thru Assistant Administrator for Infrastructure & Administration (I&A) to facilitate analysis of data by I&A internal control team**
**OICs/CDs have 6 weeks to complete their organization’s internal control review & submit their Statement**
**By Oct. 12, I&A internal control team will complete their analysis & report results to their Assistant Administrator ****	**
**I&A Assistant Administrator has 4 business days to conduct briefings with the Associate Administrator & others selected to review results of the data call****	**
**At the Oct. 19 OMC decision meeting on IC, the I&A Asst. Administrator will present results of multiple reviews & recommendations for the council to decide on what, if any, new material weaknesses will be reported in the Administrator’s Statement ****	**

- 10

## Requirements for Statements of AssuranceSchedule 

**Requirements for Statements of Assurance****Schedule **

- 11

**Oct. 21 – Material Weakness owners provide templates with any OMC recommended changes to I&A for final incorporation with the overall Statement**
**Oct. 22 – I&A delivers Statement of Assurance & supporting material weakness templates to Performance and Accountability Report (PAR) team**
**Oct. 23 – Draft PAR released to Mission Directorate AA’s for concurrence**
**Oct. 27 – PAR final concurrence due**
**Nov. 1 – Final review by Administrator & simultaneously by OMB for any last changes **
**Nov. 15 –  Deliver final FY 2006 PAR to OMB, Congress, & the President.**

## Asset Management

- Office of the Chief Financial Officer
- Pamela Cucarola
- July 28, 2006

## Background

- This deficiency was introduced in February 2003 as a “Material Weakness” with planned actions to include monthly reporting by contractors; publication of a Financial Management Requirement (FMR) for Property, Plant, and Equipment; and initiation of contractor and accountant training.
- In October 2003, the deficiency was reduced to an “Other Weakness”  when the OCFO completed the tasks of defining assets in space and issuing revised policy.
- In October 2004, the deficiency was re-designated as a “Material Weakness” when the OIG questioned the accuracy and reliability of property related accounting data.
- During the 2005 Internal Control decision meeting, the Contractor-held Property Material Weakness was renamed Asset Management, which was redefined to include Contractor-held property and NASA-held property, and designated as a Material Weakness.
- Currently, the OCFO is sharing responsibility for this Material Weakness with the Programmatic Internal Control Team (PICT) and the Institutional Internal Control Team (IICT).
- In January 2006, a Corrective Action Plan was developed for the FY 2005 Financial Audit, which defines the goal, objectives, strategies, and actions for improving NASA’s internal controls over Property, Plant, and Equipment.

- 2

## Issue

*NASA needs to improve its management controls for the financial reporting of Property, Plant and Equipment, and materials including Theme Assets (formerly Assets-in-Space), Contractor-held property, spare parts and assets under construction.  Lack of proper management controls can result in inconsistent financial recording practices that can misstate asset values and period expenses.*
-   Root cause
- NASA’s policies and procedures are not fully in conformance with federal requirements.
- There is inconsistent application of existing policies and procedures.
_**Corrective actions taken to date**_
- Met with FASAB board members to discuss NASA’s revised capitalization policy
- Met with Accounting and Auditing Policy Committee (AAPC) to present case as to why the NASA policy should be considered
- Held cross-functional working groups which identified process and system gaps between current and desired business processes resulting in identified solutions
- Drafted the PP&E Implementation Plans for achieving the desired business processes
- Formed Asset Category Teams to oversee Project Plan tasks

- 3

## Deficiency Milestone Status

| Major Milestones from CAP | Milestone Completion Dates |  |  |  |
| --- | --- | --- | --- | --- |
|  | Original Plan | Revised Plan | Actual Date | Comments |
| Provide OMB, GAO, FASAB and OIG NASA’s revised capitalization policy | 2/28/06 |  | 6/1/06 | Met with FASAB (6/1/06) and provided position paper. AAPC accepted our case for review.  |
| Assign cross-Functional teams to participate in Working Groups to re-engineer, as necessary, NASA’s current processes and procedures | 4/3/06 |  | 4/18/06 | Identifying and obtaining working group members took longer than anticipated.   |
| Engage working groups to identify process and systems gaps between current processes and desired processes, as well, as identify solutions | 5/31/06 |  | 5/4/06 |  |
| Develop process implementation plan for changes Agency-wide | 6/16/06 |  | 6/16/06 | Continue to submit 7120.5D changes to Chief Engineer |

- 4

## Planned Actions for Next Quarter

- Work with the AAPC to receive guidance on the accounting treatment of our Agency’s space exploration projects (mission-related projects)
- Continue working on PP&E Project plan tasks to include revising and documenting business process, policy  and procedural changes
- Meet with IEMP Integrated Asset Management (IAM) Project Team members to ensure revised business processes will be addressed in the design and implementation of the asset management system
- Through the SAT, continue to work with the Institutional Internal Control Team (IICT), the Programmatic Internal Control Team (PICT), and the Financial Management Internal Control Team (FMICT) to integrate policy, procedures, and internal controls

- 5

## Recommendation

- Asset Management should continue to be carried as a Material Weakness

- 6

## Financial Management System

- Office of the Chief Financial Officer
- Pamela Cucarola
- July 28, 2006

## Background

- During the 2005 Internal Control decision meeting, approval was granted for the OCFO to close Material Weakness (MW-2004-02) Financial Management and open a new Material Weakness called “Financial Management System” that captures challenges related to:
- Confirming configuration
- Validating the accounting
- Validating construction of the financial reports
- The recommendation was made to separately manage the OCFO deficiencies, ensure traceability to external audits, and show that progress has been made.
- Currently, the OCFO is sharing responsibility for this Material Weakness with the Office of the Chief Information Officer and the Integrated Enterprise Management Program (IEMP) Office.
- A Corrective Action Plan for the FY 2005 Financial Audit was developed to address improvements required for NASA’s financial management system and ensure that processes achieve accurate, reliable, timely financial information.

- 2

## Issue

*Since the completion of the rollout of the new system, challenges in system processing, configuration, and capabilities have surfaced and the current version of the SAP system has some capability limitations which have required the definition and implementation of compensating controls.*
-   Root cause
- Conversion from 10 disparate legacy financial systems supported by over 120 subsidiary systems, along with over a decade of historical data, to a single integrated financial management system highlighted long-standing data and process issues.
_**Corrective actions taken to date**_
- Reviewed latest revision of OMB Circular A-136, *Financial Reporting Requirements*, and incorporated required updates for FY 2006 Performance Accountability Report (PAR)
- Reviewed PAR’s from other Federal Agencies to identify potential areas of improvement for NASA
- Completed the SAP Version Update (SVU) Critical Design Review (CDR)
- Developed and distributed monthly schedule with due dates generated by the Cross-agency task team for data processing, reconciliations, verifications, feedback, and reports
- Produced financial statements 30 days after close of month directly from financial system
- Modified Statement of Net Costs (SoNC) to provide a breakdown of net costs consistent with strategic plan and in the MD&A section by major business line

- 3

## Deficiency Milestone Status

| Major Milestones from CAP | Milestone Completion Dates |  |  |  |
| --- | --- | --- | --- | --- |
|  | Original Plan | Revised Plan | Actual Date | Comments  |
| Review latest revision of OMB Circular A-136, Financial Reporting Requirements, and incorporate required updates for FY 2006 Performance Accountability Report (PAR)
 | 3/31/06 |  | 5/5/06 | Delay in completion was a result of resource constraints |
| Review PAR’s from other Federal Agencies to identify potential areas of improvement for NASA
 | 3/31/06 |  | 5/5/06 | Delay in completion was a result of resource constraints
 |
| Implement consolidated monthly schedules with Centers | 3/3/06 |  | 5/4/06 | Delay in completion was a result of resource constraints
 |

- 4

## Deficiency Milestone Status

| Major Milestones from CAP | Milestone Completion Dates |  |  |  |
| --- | --- | --- | --- | --- |
|  | Original Plan | Revised Plan | Actual Date | Comments |
| Modified Statement of Net Costs (SoNC) to provide a breakdown of net costs consistent with strategic plan and in the MD&A section by major business line
 | 2/21/06 |  | 3/15/06
 | Competency Center completed re-programming |
| Generate monthly financial statements and review prior to interim and year end reporting dates to ensure completeness | Monthly |  | Monthly | All FY06 transmittals to OMB have been completed according to schedule |

- 5

## Planned Actions for Next Quarter

- Attend SVU Project TRR Readiness review (TRR) to determine if the project is on track to continue to the next testing phase
- Continue generation and review of monthly reconciliations
- Work with SVU to ensure year end closing and contingency plans are consistent
- Resolve remaining data anomalies
- Complete compensating procedures to analyze Business Warehouse on a quarterly basis to ensure that liabilities are appropriately recorded
- Improve draft MD&A and detailed performance data for the Performance Accountability Report incorporating feedback from external reviewers (e.g., Association for Government Accountants (AGA))

- 6

## Recommendation

- Financial Management System should continue to be carried as a Material Weakness

- 7

## Financial Management Data Integrity

- Office of the Chief Financial Officer
- Pamela Cucarola
- July 28, 2006

## Background

- During the 2005 Internal Control decision meeting, the Operations Management Council granted the approval for the OCFO to close Material Weakness (MW-2004-02) Financial Management and open a new Material Weakness named “Financial Management Data Integrity” that captures challenges related to:
- Environmental Liabilities
- Fund Balance with Treasury (FBWT)
- Currently, the OCFO is sharing responsibility for this Material Weakness with the Offices of Infrastructure and Administration, Procurement, and the Integrated Enterprise Management Program (IEMP).
- A Corrective Action Plan was developed for the FY 2005 Financial Audit which addresses validating the tools and methodology used to prepare the unfunded environmental liability estimates, reconciling Fund Balance with Treasury, and processing corrections in a timely manner.

- 2

## Issue

*NASA needs to continue to improve its current procedures to ensure that all reconciling items are thoroughly researched, timely resolved, and reviewed by appropriate center and headquarters OCFO personnel.  NASA needs to improve existing environmental liability procedures and implement needed internal controls to assure the improved procedures are adhered to and followed. *
-   Root cause
- Relates to issues from data conversion system processing in the early stages of production operation.
_**Corrective actions taken to date**_
- Continuing to conduct on-going monitoring to ensure monthly reconciliations are performed
- Continuing to conduct on-going review and monitoring of compliance with Fund Balance with Treasury policies, procedures, and practices
- Continuing to reconcile CRCS to SAP differences
- Implemented standard monthly reporting on data integrity ( Center Action Plans)
- Developed a correction process for prior period adjustments
- Delivered to the auditors the 2006 unfunded environmental liability estimates based on second quarter data which will be revised and updated as necessary for the September 30 close.  These estimates are currently being reviewed and audited by the external auditors as well as the OCFO Quality Assurance (QA) team

- 3

## Deficiency Milestone Status

| Major Milestones from CAP | Milestone Completion Dates |  |  |  |
| --- | --- | --- | --- | --- |
|  | Original Plan | Revised Plan | Actual Date | Comments  |
| Status Center CFOs to ensure monthly reconciliations are performed | Monthly |  | Monthly |  |
| Review and monitor compliance with FBWT policies, procedures, and practices | Monthly |  | Monthly |  |
| Perform a CRCS to SAP reconciliation and resolve differences | 6/30/06 | 8/31/06 |  | Extended date to accommodate closing of the 3rd quarter |
| Assess compliance with FBWT policies, procedures, and practices | 3/31/06 | 7/31/06 |  | Assessment was completed on schedule.  Due to staffing turnover in OQA, final report is delayed. |
| Develop and have available for auditor review the EL estimates based on 2nd quarter data | 5/31/06 |  | 5/31/06 |  |

- 4

## Planned Actions for Next Quarter

- Continue to monitor metrics monthly
- Continue to review and monitor compliance with FBWT policies, procedures, and practices
- Continue to monitor Environmental Liability audit process
- Adjust environmental liability estimates as necessary

- 5

## Recommendation

- Financial Management Data Integrity should continue to be carried as a Material Weakness

- 6

## Financial Management Policy and Procedures

- Office of the Chief Financial Officer
- Pamela Cucarola
- July 28, 2006

## Background

- During the 2005 Internal Control decision meeting, the Operations Management Council granted the approval for the OCFO to close Material Weakness (MW-2004-02) Financial Management and open a new Management Challenge called “Financial Management Policies and Procedures” that captures challenges related to:
- Completion of the Financial Management Requirements (FMR)
- Reengineering targeted business processes
- The Corrective Action Plan was developed for the FY 2005 Financial Audit which addresses developing core standard Agency-wide procedures and tools consistent with authoritative guidance issued by FASAB, Treasury, and OMB.

- 2

## Issue

*NASA needs to continue to improve its current policy to ensure improvement of existing procedures and implement needed internal controls to assure the improved procedures are adhered to and followed.*
-   Root cause
- NASA’s policies and procedures are not fully in conformance with federal requirements
- Implementation of the Integrated Enterprise Management Program required revision of policies and procedures
_**Corrective actions taken to date**_
- Met with FASAB and AAPC Board members to discuss NASA’s revised capitalization policy
- Met with Accounting and Auditing Policy Committee (AAPC) to present case as to why the NASA policy should be considered
- Published Financial Management Requirements documents:
- Cash Management (09/30/05)
- Payroll (12/30/05)
- Reimbursable Agreement (6/14/06)
- Planning, Programming, Budgeting and Execution (PPBE)  (7/18/06)
- FMR Overview (7/21/06)
- Financial Information Systems (7/21/06)

- 3

## Planned Actions for Next Quarter

- Work with the AAPC to receive guidance on the accounting treatment of our Agency’s space exploration

- 4

## Recommendation

- Financial Management Policy and Procedures should continue to be carried as a Management Challenge

- 5

## Financial Management Staffing 

- Office of the Chief Financial Officer
- Pamela Cucarola
- July 28, 2006

## Background

- During the 2005 Internal Control decision meeting, approval was granted for the OCFO to close Material Weakness (MW-2004-02) Financial Management and open a new Material Weakness called “Financial Management Staffing” that captures challenges related to:
- Staffing Levels
- Personnel Skill Mix
- Workforce Development
- Currently, the OCFO is sharing responsibility for this Management Challenge with the Office of Institutions and Management/Human Capital Management.
- In January 2006, a Corrective Action Plan for the FY 2005 Financial Audit was developed and includes actions to address workforce development.

- 2

## Issue

*NASA needs to ensure adequate staffing for financial management functions across Headquarters and the Centers and to continually provide additional “hands–on” training for financial personnel to ensure that they understand their roles in financial reporting. *
-   Root cause
- With the implementation of the Integrated Enterprise Management Program (IEMP), additional training was required due to new processes.
- The implementation of the IEMP Core Financial module represented a major transformation of NASA's financial management systems and processes.
_**Corrective actions taken to date**_
- Made significant progress in hiring this quarter
- Vacancy announcements were posted for GS9-14 Accountants, Budget Analysts, and Financial Management Specialists
- Actively interviewing candidates
- Interviews were conducted with all candidates referred
- 12 candidates were extended offers
- Initiated a contract and secured contractor support to assist in developing a workforce assessment and training

- 3

## Deficiency Milestone Status

| Major Milestones from CAP | Milestone Completion Dates |  |  |  |
| --- | --- | --- | --- | --- |
|  | Original Plan | Revised Plan | Actual Date | Comments  |
| Continue to hire as expeditiously as possible up to the allocated ceiling | On-Going |  | On-Going |  |
| Utilize skills assessment and develop a training plan for providing training | 3/31/06 | 10/19/06
 |  | No staff available to conduct assessment.  Contractor now on board. |

- 4

## Planned Actions for Next Quarter

- Continue aggressively hiring at HQ (hire to ceiling)
- Complete OCFO workforce assessment

- 5

## Recommendation

- Financial Management Staffing should continue to be carried as a Management Challenge

- 6

## Full Cost Integration 

- Office of the Chief Financial Officer
- Pamela Cucarola
- July 28, 2006

## Background

- In February 2003 the Associate Administrator for Earth Science recommended that full cost accounting be monitored as a “Management Challenge (MC).”
- In February 2005 the OCFO recommended closing the “Full Cost Accounting” MC based on Full Cost Steering Committee actions.  It was replaced with a new MC named, “Full Cost Accounting.”
- In May 2005, “Full Cost Integration” was elevated from a MC to an “Other Weakness (OW),” due to lack of understanding of full cost policies and procedures.
- In December 2005, a new Full Cost Reform Initiative Team was established to recommend changes to simplify full cost policies and procedures, including developing an implementation plan for the recent Program, Analysis and Evaluation (PA&E) Full Cost Simplification Proposal.

- 2

## Issue

*Full Cost concepts need to be better integrated into NASA operations. Despite implementing a Full Cost accounting system and many Full Cost processes, NASA still lacks the level of cultural change needed to fully transition to Full Cost management.*
-   Root cause
- Insufficient stakeholder training
- Unintended consequences and behaviors realized from initial full cost approaches
- Some policies and planned processes were based on insufficient experience and need to be refined to reflect lessons learned
_**Corrective actions taken to date**_
- Continue to work on incorporating Revised Full Cost policies into FY 2008 Planning, Programming, Budgeting, and Execution (PPBE)  process and FY 2007 execution procedures.
- Initiated development of NASA’s Full Cost Strategic Plan.
- Provided Full Cost Simplification requirements to SAP Version Update Project Team for incorporation in FY 2007 system updates.

- 3

## Planned Actions for Next Quarter

- Develop an overall NASA Full Cost Strategic Plan, including goals to be achieved, how progress will be measured, and milestones by fiscal year.
- Consistent with the Full Cost Strategic Plan, identify additional opportunities/issues to simplify Full cost policies and procedures, while continuing to maintain the value and benefit of good cost management for NASA managers
- Continue to implement recommendations from Full Cost Reform Team for FY 2008 Program Operating Plan (POP) budget cycle and FY 2007 execution to the extent practical
- Participate in FY 2007 Budget Execution Workshop by leading the cost assessment team.

- 4

## Recommendation

- Full Cost Integration should continue to be carried as an Other Weakness.

- 5

## Space Shuttle

- Space Operations Mission Directorate
- Lynn F. H. Cline
- July 28, 2006

## Background

- “Return-To-Flight” (RTF) Planning Team Established following Columbia* *accident
-  Actions conducted through Space Shuttle program management
- RTF actions documented with periodic updates to NASA “Implementation Plan for Space Shuttle Return to Flight and Beyond"

- 2

## Issue

- Root cause:
- Breach in the Thermal Protection System on the leading edge of the wing caused by a piece of insulating foam from  left bipod ramp section of the External Tank 81.7 seconds after takeoff
- Systemic cultural, organizational, and managerial issues within SSP and NASA overall contributed to failure (CAIB Report)

- 3

## Issue

- Corrective action update from STS-121:
- Technical Deficiency
- First flight of External Tank with PAL ramp removed to eliminate debris source
- TPS on External Tank performed within expected parameters
- Worksite stabilization tests performed using the Orbiter Boom Sensor System (OBSS)
- Added Instrumentation to gather in-flight data
- Testing of Reinforced Carbon-Carbon (RCC) crack and gouge repair techniques to detect TPS damage and repair integrity
- Future Technical Work Within Program:
- Modification to Ice Frost Ramp design being developed
- Target implementation on ET 124 for STS 117 (Feb 2007)
- Other Deficiency
- Post-Columbia NASA governance structure successfully implemented and exercised

- 4

## Deficiency Milestone Status

| Major Milestones from CAP | Milestone Completion Dates |  |  |  |
| --- | --- | --- | --- | --- |
|  | Original Plan | Revised Plan | Actual Date | Comments (if schedule has changed or milestones are late) |
| Removal of bi-pod ramp (due to foam loss on STS 107) | Implement before STS 114 | N/A | July 2005 |  |
| Successful first flight of an External Tank (ET) with a fully removed protuberance air load (PAL) ramp.
 | Implement on next flight after STS 114 | N/A | July 2006 | Identified in July 2005 as part of STS 114 post flight analysis
STS 121 was the first flight with a fully removed PAL ramp. |
| Successful Performance of STS 121 Thermal Protection System on External Tank | July 2006 | N/A | July 2006 | STS 121 TPS on External Tank performed within expected parameters. |
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |
|  |  |  |  |  |

- 5

## Recommendation

- Recommend Removal of Space Shuttle Program as a Material Weakness (MW)
- Major test flight objectives of STS 114 and STS 121 have been met
- Current governance processes have been effectively exercised
- The program is prepared to resume ISS assembly missions with next flight

- 6

## Information Technology Security

- Office of the Chief Information Officer
- Scott Santiago
- July 28, 2006

## Background

- The NASA OIG through their audits of NASA’s IT Security Program had identified a large number of deficiencies over the years that led them to recommend IT Security be declared a Material Weakness.
- NASA has been working since FY 2003 to correct those deficiencies found as a result of those audits and to correct systemic problems with the ITS Program.

- 2

## Issue

- _Description of deficiency:_ The NASA IT Security Program needs more effective implementation, monitoring, verification and validation and enforcement. In addition, NASA’s policy and procedures have not kept up with new OMB directives
- _Root cause:_ NASA policy and procedures are deficient and out of date and there is inconsistency in how Centers and contracts have implemented processes to meet Agency requirements. This has resulted in a number of recurring deficiencies.

- 3

## Deficiency Milestone Status

| Major Milestones from CAP | Milestone Completion Dates |  |  |  |
| --- | --- | --- | --- | --- |
|  | Original Plan | Revised Plan | Actual Date | Comments (if schedule has changed or milestones are late) |
| 1. Update NASA IT security policy and requirement documents. | FY2004 | 1/06 | May 16, 2006 | Delays in the review and approval process |
| 2. Establish standard operating processes to meet Agency requirements | FY2004 | FY2005 | May 16, 2006 | Tied to NPR2810 approval |
| 3. Update the ITS Training and Certification Program | FY2004 | FY2005 | FY2006 | Completed last step in series of changes, updated ITS training curriculum to support role based training. |
| 4. Establish independent methods for verification and validation processes; 3rd Party Reviews, CIS Benchmarks, Patch Mgmt, Vulnerability scanning, C&A | FY2004 | Second quarter FY2007 |  | 83% complete schedule revised based on Milestone #5. below |
| 5. Establish appropriate organization structure to ensure consistency in how Centers implement processes to meet Agency requirements | FY2004 | Fourth quarter FY2006 |  | 50% complete schedule revised based on new requirement to conduct ITS review across Agency |
| 6. Revise IT Security clause and include in contracts | FY2004 | First quarter FY2007 |  | 80% complete revised schedule needed to complete external review in Commerce Business Daily |

- 4

## Planned Actions for Next Quarter

- New draft IT Security clause is out for review in the Commerce Business Daily. Once approved, it is to be included in all contracts.
- Increase training and outreach efforts on the use of the NASA Database (R2D2) used in support of IT Security Plans and Certification and Accreditation (C&A)
- Establish an implementation plan for replacing the existing vulnerability scanning tool
- Establish cross-organizational team and conduct IT Security review of the Agency and Center IT Security Operations

- 5

## Recommendation

- Continue to categorize NASA’s IT Security Program as an Other Weakness (OW) until all milestones are implemented and they begin to demonstrate the required results.

- 6

## NASA Declassification Program Management Challenge (MC)

- Office of Security and Program Protection
- Clint Herbert, Deputy Assistant Administrator
- July 28, 2006

## Background

- NASA had a significant backlog of permanent records containing classified national security information (CNSI) that needed to be reviewed for continued classification pursuant to EO 12958 amended.**  **

- 2

## Issue

- Deficiency Description:
- NASA faces a December 2006 deadline to insure that all permanent records containing CNSI that are 25-years old or older are subjected to classification review. Poor records management practices prevents the identification of records subject to Section 3.3 of EO 12958 amended; resulting in NASA’s inability to identify its total universe to be considered for declassification. The identified root causes have significantly impeded the classification review program’s efforts.  EO 12958 as amended contains a sliding-window requirement for NASA to conduct yearly classification reviews of permanent records containing CNSI.
- Root Causes:
- Insufficient staffing;
- Historically poor records management;
- Insufficient funding;
- Lack of Declassification Guides;
- Insufficient resident expertise to perform classification reviews for older programs;
- Insufficient support from senior management (commitment of resources)
- Corrective Action Plan (CAP):
- A comprehensive CAP has been developed and has been distributed to the OMC, all Mission Directorates, and Center Security Offices on 2 November 2005.

- 3

## Deficiency Milestone Status

| Major Milestones from CAP | Milestone Completion Dates |  |  |  |
| --- | --- | --- | --- | --- |
|  | Original Plan | Revised Plan | Actual Date | Comments (if schedule has changed or milestones are late) |
| Obtain CIA Initial Support to the NASA Declassification Program | 9/27/04 | N/A | 9/27/04 | Continuous |
| Established, trained, and appointed initial DCA’s from Mission Directorates and Centers | 
1/29/05 | 
N/A | 
3/17/05 | Continuously updated as dictated by changes in personnel |
| Corrective Action Plan, “Classification/Declassification Management Plan,” was distributed to OMC, OIG, Mission Directorates and Center Security Offices | 

8/01/05 | 

N/A | 

11/2/05 | 
Plan remains unchanged. |
| Established NASA Automatic Declassification Authority Letter  | 8/03/05 | N/A | 8/03/05 |  |
| Complete Phase-I 25 yr Mandatory Declassification Review | 12/31/06 | N/A | N/A | Declass Program continues on yearly schedule thereafter |

- 4

## 	Planned Actions for Next Quarter

-   Continue declassification efforts.
-   Goal is 300K-500K pages reviewed per month

- 5

## Recommendation

- This deficiency should continue to be carried as a Management Challenge.
- NASA has made significant progress in declassification efforts and continues to be positioned to meet the December 31, 2006 deadline.
- Approximately 1.2 million pages, from an original 17 million pages, remain under this initial deadline.
- The activity must maintain its visibility to ensure equity owners (MD) continue focus on meeting the mandatory deadline.

- 6

## Government Accountability Office (GAO)Open Audit Recommendation

- Office of Infrastructure and Administration
- Olga Dominguez
- July 28, 2006

## Background

- During the August 2005 Operations Management Council Meeting, “GAO Audit Recommendation” was elevated to a Management Challenge as a direct result of the impact of GAO’s report on Mission Management Aircraft (MMA) utilization (press and congressional).

- 2

## Issue

- Description of deficiency
- NASA management recognizes the need to effectively and timely implement audit recommendations issued by GAO.
- As a direct result of increased audit activity resulting in politically sensitive and highly visible GAO audit products (i.e., IEMP and MMA) the Operations Management Council elevated "GAO Audit Recommendations" to a Management Challenge in August 2005.

- 3

## Issue (Cont’d)

- Root Cause
- Increase in GAO audit activity specific to NASA resulting from the Vision for Space Exploration (VSE)
- Highly visible and politically sensitive GAO audits  (i.e., Mission Management Aircraft)
- Continued Congressional interest in the health of NASA's financial management and related systems (i.e., IEMP)

- 4

## GAO Recommendations Pending Final Management Action (3/31/06)

- 33 Recommendations > 1 Year
- 21 Recommendations “past due” planned corrective action date

- 5

## GAO Recommendations Pending Final Management Action (7/24/06)

- 5 Recommendations >1 Year
- 0 Recommendations “past due” planned corrective action date

- 6

## Deficiency Milestone Status

| Major Milestones from CAP | Milestone Completion Dates |  |  |  |
| --- | --- | --- | --- | --- |
|  | Original Plan | Revised Plan | Actual Date | Comments (if schedule has changed or milestones are late) |
| Implementation of GAO  recommendations from IEMP audit reports has been aggressively pursued.  

Of  45 audit recommendations, issued from 2003 – 2005, only (2) remain open pending final management action. | Multiple

Through 10/2006 | Multiple | Multiple

 |  |
| Corrective action on remaining (17) GAO audit recommendations across SOMD, SMD,. OCFO, IEMP, Chief Eng., I&A, and Procurement are proceeding under various CAPs | Multiple

Through 2007
 | Multiple
 | Multiple
 | Various corrective action plans extend through October 2007.
 |

- 7

## Planned Actions for Next Quarter

- Mission Directorates and Mission Support Offices will continue to aggressively pursue implementation of corrective action plans relative to GAO recommendations pending final management action.
- Management Systems Division will continue to monitor the status of GAO recommendations.
- Weekly updates on GAO audit activity (senior staff).

- 8

## Recommendation

- This deficiency should be closed because of the aggressive implementation of GAO audit recommendations, particularly with respect to those addressed to IEMP (including OCIO and OCFO).
- 4 of the 6 GAO recommendations issued with respect to NASA’s mission management aircraft activities have been closed by GAO (impetus for reporting GAO recommendations as a Management Challenge).
- The universe of GAO audit recommendations pending final management action has decreased by 55% a total of (42) in March 2006, to (19) in July 2006.
- Of the 19 recommendations pending final management action none are “past due” relative to current planned corrective action dates.

- 9

## Mission Management Aircraft

- Infrastructure and Administration
- Joe Walker
- July 28, 2006

## Background

- GAO audit of Agency’s FY03 and FY04 Mission Management Aircraft (MMA) operations highlighted control deficiencies with respect to management of NASA’s MMA.
- MMA operations were also questioned in several prior GAO and NASA IG audit reports.

- 2

## Issue

- Inadequate documentation and periodic review of MMA mission requirements – Resolved
- A-76 cost comparisons of all alternatives to government ownership of MMA are underway and on track for Aug 2006 completion
- Insufficient HQ oversight - Resolved
- Lack of integrated IT system to capture and report aircraft cost & utilization
- NASA Aircraft Information System (NAMIS) implemented for MMA utilization data. (Complete, 6 months early).
- Core Financial BW unable to provide accurate aircraft cost allocation and reporting to comply with OMB A126. Solution identified; policy revision published and system changes initiated to support implementation targeted for end of FY06.

- 3

## Deficiency Milestone Status

| Major Milestones from CAP | Milestone Completion Dates |  |  |  |
| --- | --- | --- | --- | --- |
|  | Original Plan | Revised Plan | Actual Date | Comments (if schedule has changed or milestones are late) |
| Revise NASA MMA policy to align with OMB A126 and coordinate with OMB | Dec 2005 |  | Dec 2005 |  |
| PA&E Review of MMA Mission Requirements | Dec 2005 |  | Dec 2005 |  |
| Conduct A76 Cost Comparisons of alternatives to government ownership of MMA | Aug 2006 |  |  |  |
| Increase HQ staff to centrally manage MMA documentation and oversight | Dec 2005 |  | Nov 2005 |  |
| Fund and implement NASA Aircraft Mgmt Info System (NAMIS) to provide visibility into MMA utilization
 | Dec 2006
 | June 2006
 | May 2006 | Accelerated NAMIS implementation for centers with MMA aircraft |
| Provide visibility into aircraft costs using Agency accounting system as required by OMB A126 | Oct 2008 | Oct 2006 |  | Modified Agency policy and accounting system to facilitate accumulation and reporting of aircraft costs by Centers |
|  |  |  |  |  |
|  |  |  |  |  |

- 4

## Planned Actions for Next Quarter

- Execute system changes (by September 30) necessary to implement solution to provide visibility into costs and comply with OMB A126
- Receive satisfactory quarterly aircraft cost reports from each Center beginning August 15th
- Complete Cost Comparison (A-76) studies on MMA by August 31, 2006

- 5

## Recommendation

- The aircraft cost accounting issue should continue to be carried and reported as “Other Weakness” until satisfactory quarterly aircraft cost reports are received from all Centers.

- 6