# Presentation: 676645

## 
GSA’s Experience With 
Implementing A-123

Presented at the Federal Financial 
Management Conference
March 10, 2006

**GSA’s Experience With **
**Implementing A-123**
- Presented at the Federal Financial
- Management Conference
- March 10, 2006

## Topics	

- Materiality
- Senior Assessment Team
- Selling A-123 to GSA
- Test Locations
- Resources
- Review Process
- Assessments

**Notes:**
Lost opinion due to lack of reconciliations and old projects lingering in our systems.

A/P Desk Example
Packed folders with Invoices, Receiving Reports, and Purchase Orders
Took 10 hours/day to get invoices paid 
Had to missing documentation reprinted or search past payments where documentation was improperly filed
Constantly getting calls (from parents with starving children) about late payments or invoice payment amounts that were different from what they billed
Cleaned files by getting rid of the old stuff
Started to take 8 hours a day
Invested additional time to reconciling vendor statements so our payments exactly matched what they expected (both sides were willing to adjust)
Job was performed in 7 hours a day as a result.

## Materiality

- GSA consulted the General Accountability Office’s (GAO) Financial Audit Manual (section 230.11) to see what GAO recommended for determining materiality.
- GSA selected 3⁄4 of 1% of the larger of assets or expenses for our A-123 Materiality in each major GSA fund.

**Notes:**
Review Tracking Grid

## Senior Assessment Team

- GSA’s Senior Assessment Team (SAT) has met once to discuss: planning, materiality, entity level  controls, test locations, key processes, risk assessments, and IT controls.
- The SAT is comprised of GSA’s CFO, DCFO, CIO, Budget Director, Systems Director, and Controllers (major fund CFOs).
- GSA’s OIG participated in an advisory capacity.

**Notes:**
OIG is good to have so you know what they are testing and can leverage their testwork.

## Selling A-123 to GSA

- Getting “buy in” from the associates at GSA was relatively easy because:
- Sold Internal Control as not only in our best interest but more importantly our CUSTOMER’S best interest.
- Sold A-123 as testwork with which managers could base their FMFIA assertions; and
- The loss of GSA’s Unqualified Opinion streak identified a clear and unfortunate outcome of internal control breakdowns.

**Notes:**
Show Ralph Graphic

Show DataVac for “Sucking up bad data in the GL”

## Test Locations

- GSA has 11 regional operations and chose to deploy testing teams to 6 of the regions based on:
- Volume of financial activity
- Past financial performance (good and bad)
- Locality

## Resources

- GSA has four major funds and $20 B in revenues/expenses.
- GSA contracted with an accounting firm for $500 K and 7 staff (2 systems auditors and 5 accountants).  The contractors are being supplemented with 15 GSA associates.
- GSA associates will NOT be testing controls in their area of responsibility in order to maximize:
- Independence
- Cross-pollinization

## Review Process

- Testing has begun and will continue until May.
- Sample sizes tend to gravitate to 45 (but not always and never more) to maximize possibility of external auditor reliance and consistency with the FAM.
- Test plans and sample selections were circulated throughout GSA BEFORE the testing teams deployed so Regional staff/management knew what to expect and sample documentation could be pulled.

## Assessments

- Control assessments involving any “gray area” will gravitate towards high risk.  In other words: If there are mixed results, we will label the Final Control Risk Assessment as HIGH (as opposed to MEDIUM).
- The logic is to prevent our SAT labeling risk as low (i.e., effective control) and our external auditor determines the same control is not functioning effectively.
- Assessments of ineffective controls will identify whether the breakdown is due to the design of the control or whether the control simply isn’t operating as intended.

## Wrap Up

- If you would like copies of GSA’s SAT charter, tracking grid, implementation plan, or a sample test plan, feel free to email me at:
**Douglas.Glenn@GSA.Gov**