United States Government Accountability Office

GAO Report to Congressional Committees

DEPARTMENT OF 

HOMELAND 

SECURITY 

Science and 

Technology 

Directorate’s 

Expenditure Plan 

June 2007 

 

GAO-07-868 
Contents 

Letter 1

Scope and Methodology 2

Results 3

Concluding Observations 5 

Agency Comments and Our Evaluation 6 

Appendix I Briefing Slides 8 

Appendix II Comments from the Department of 

Homeland Security 33 

Appendix III GAO Contact and Staff Acknowledgments 35 

Abbreviations 

CBRNE chemical, biological, radiological, nuclear, and explosive 

CFO Chief Financial Officer

DHS Department of Homeland Security 

FTE full-time equivalent 

PPA program, project, and activity 

S&T Science and Technology Directorate 

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Page i GAO-07-868 Science and Technology Directorate's Expenditure Plan
United States Government Accountability Office

Washington, DC 20548 

June 22, 2007 

The Honorable Robert C. Byrd 

Chairman 

The Honorable Thad Cochran 

Ranking Minority Member 

Subcommittee on Homeland Security 

Committee on Appropriations 

United States Senate 

The Honorable David E. Price 

Chairman 

The Honorable Harold Rogers 

Ranking Minority Member 

Subcommittee on Homeland Security 

Committee on Appropriations 

House of Representatives 

Subject: Science and Technology Directorate’s Expenditure Plan 

In recent years GAO and others have reported on problems in the financial 

management environment at the Department of Homeland Security’s 

(DHS) Science and Technology Directorate (S&T). S&T was established by 

the Homeland Security Act of 2002 to, among other things, coordinate the 

federal government’s civilian efforts to identify and develop 

countermeasures to emerging terrorist threats to our nation.1

 As DHS’s 

primary research and development arm, the directorate is tasked with 

providing federal, state, local, and tribal officials with state-of-the-art 

technology and other resources, such as protocols and training procedures 

for use in responding to, and recovery from, chemical, biological, 

radiological, nuclear, and explosive attacks. S&T is led by an Under 

Secretary and has a Chief Financial Officer (CFO) who is responsible for 

all budgeting and accounting for financial resources. 

S&T receives funds for research, development, acquisition, and 

operations. It also receives funds for management and administration that 

support the operations of the directorate in both headquarters and the 

 1

Pub. L. No. 107-296, §§ 301-302, 116 Stat. 2135, 2163-2164 (2002). 

Page 1 GAO-07-868 Science and Technology Directorate's Expenditure Plan
field, such as the expenditures for personnel compensation and benefits, 

travel, and rent. The Department of Homeland Security Appropriations 

Act, 2007 (Appropriations Act) provided about $973 million for S&T, of 

which about $838 million (about 86 percent) was for research, 

development, acquisition, and operations, and $135 million (about 

14 percent) was for salaries and expenses of the Office of the Under 

Secretary and for management and administration of programs and 

activities.2

 The Appropriations Act restricted S&T from obligating 

$60 million (about 44 percent) of the $135 million until the Secretary of 

Homeland Security prepared a fiscal year 2007 expenditure plan that was 

to be received and approved by the Committees on Appropriations of the 

Senate and House of Representatives that: 

• was broken down by program, project, and activity (PPA),3

• contained a detailed breakdown and justification of the management 

and administrative costs for each PPA, and 

• described the method utilized to develop the budget for administration 

costs in the budget requests for fiscal years 2006 and 2007.4

The Appropriations Act also required GAO to review the plan. In 

responding to this mandate, we assessed whether S&T’s fiscal year 2007 

expenditure plan satisfied the above conditions of the Appropriations Act.5

In April 2007, we briefed your offices on the preliminary results of our 

work. On May 9, 2007, Congress released the $60 million management and 

administration funding that had been restricted by the act. 

To accomplish our objective, we analyzed S&T’s fiscal year 2007 

expenditure plan and related documentation. We also interviewed the S&T 

CFO and other program officials, and discussed their process for 

developing their budget requests and documents. While we did not 

independently verify the reasonableness of the projected management and 

Scope and 

Methodology 

 2

Pub. L. No. 109-295, 120 Stat. 1355, 1375 (2006). 

3

PPA is the most specific level of budget items identified in budget related documents. For 

example, S&T currently has 11 PPAs, such as laboratory facilities and border and maritime. 

4

For purposes of this report, future costs will be referred to as “projected expenditures.” 

5

In addition, the Appropriations Act required that S&T spend no more than $3,000 for 

official reception and representation expenses. To meet this requirement, S&T officials said 

that these expenses are tracked separately and are being monitored to ensure that they do 

not exceed this limit. (See app. I for additional information.) 

Page 2 GAO-07-868 Science and Technology Directorate's Expenditure Plan
administration expenditure data in the expenditure plan and supporting 

documentation, we discussed these projected expenditures with S&T 

officials to reconcile any data inconsistencies. (As discussed later in this 

report, our review identified misclassifications of expenditure data.) This

report and accompanying briefing slides (see app. I) convey the 

information provided during the April 2007 briefings to your offices and, 

where appropriate, updated information. We conducted our work at S&T’s 

headquarters in Washington, D.C., from February 2007 to May 2007, in 

accordance with generally accepted government auditing standards. 

The S&T fiscal year 2007 expenditure plan, including related

documentation and other information provided by S&T program officials, 

did not fully satisfy the conditions set forth in the Appropriations Act. 

Prior to the obligation of the $60 million, the Appropriations Act required 

S&T to provide an expenditure plan by PPA, as well as a detailed 

breakdown and justification for the projected management and 

administrative expenditures by PPA. While the research and development 

data in the expenditure plan were presented by PPA, such as for 

laboratory facilities and explosives, the management and administration 

data were not. For example, S&T’s expenditure plan described the 

projected expenditures for research, development, acquisition, and 

operations for each specific PPA, whereas the projected management and 

administrative expenditures were not broken out by these categories. 

Because the management and administration data were not broken out by

PPA, the condition requiring a detailed breakdown and justification of 

these projected expenditures by PPA was not satisfied. S&T officials 

indicated that the breakdown and justification of these expenditures were 

not provided in the expenditure plan because S&T manages these costs by 

business areas and functions, such as business operations, rather than by 

PPA. Further, according to S&T officials, the management and 

administration account represents funds that support S&T’s entire mission 

and, for the most part, are not directly attributable to any one PPA. 

However, in response to our data request, S&T broke out the projected 

management and administration expenditures by PPA using various 

methodologies to estimate the allocation of these costs to each PPA. Using 

such a methodology is consistent with generally recognized allocation 

methodologies. For example, S&T apportioned the total business 

operations expenditures, which include, among other things, rent, 

supplies, and employee bonuses and awards, to each PPA based on the 

number of full-time equivalent (FTE) staff budgeted for each of them. 

According to S&T officials, accounting for these costs by PPA—in order to 

have actual cost data to use in formulating future estimates rather than 

Results 

Page 3 GAO-07-868 Science and Technology Directorate's Expenditure Plan
allocating projected expenditures across PPAs—would require either 

significant changes to its financial accounting system or the use of an offline system designed solely for this purpose. (See app. I for the 

approximate estimates on the breakout of projected management and 

administration expenditures by PPA.) 

The expenditure plan, including related documentation and other 

information provided by program officials, partially satisfied the legislative 

condition to describe the method utilized to derive the budget for 

projected administration expenditures in the fiscal years 2006 and 2007 

budget requests. The plan identified the categories of expenses that the 

budget requests were intended to cover—such as salaries, benefits, and 

business operations—and indicated that the fiscal year 2007 budget 

request was developed based on the prior year expenditures for these 

categories. However, the plan did not describe the method used to develop 

each category of expenses. S&T officials acknowledged this and added 

that in addition to historical expenditure data from S&T's financial 

systems, the budget requests were also based on projections of new 

expenses.

As required, S&T provided its Fiscal Year 2007 Expenditure Plan, dated 

January 11, 2007, to the Committees on Appropriations of the Senate and 

the House of Representatives. However, S&T officials recently made 

changes in the plan to correct misclassification of the planned 

management and administration funding by groups of similar expenses, 

such as equipment and travel. For example, projected travel expenditures 

were revised downward from about $4 million to $358,000, while projected 

equipment expenditures were revised upward from about $478,000 to 

about $8 million. S&T identified these misclassifications in responding to 

our questions and data requests as part of this review. On May 9, 2007, 

S&T provided Congress with information on its revised management and 

administration funding by groups of similar expenses. 

During the course of our work, we observed instances in which S&T 

operations may not have been in compliance with GAO’s Standards for 

Internal Control in the Federal Government6 and associated guidance in 

two areas. The plan submitted to Congress did not accurately reflect the 

classification of the management and administration funding by groups of

 6

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999). 

Page 4 GAO-07-868 Science and Technology Directorate's Expenditure Plan
similar expenses. The inaccuracies were not identified during 

management’s review, which suggests that S&T may not have an effective 

review process in place. The GAO standards require that management 

generally design internal controls to ensure that ongoing monitoring 

occurs during the normal course of operations. The internal controls could 

include a strategy to ensure that ongoing monitoring is effective and that 

separate evaluations are conducted where problems are identified. These 

standards also state that internal controls need to be clearly documented, 

and the documentation should be readily available for examination. 

In addition, S&T does not appear to be in compliance with GAO standards 

and associated guidance regarding adequate staffing, particularly in 

managerial positions. Further, S&T has experienced significant personnel 

turnover in a key operations and program management function. During 

our review, we found that about 35 percent of S&T’s total authorized FTE 

positions were vacant as of March 2007, and about 53 percent of the CFO 

office FTE positions were vacant.7

 Further, S&T has had two different 

CFOs in the 23 months since that position was established in July 2005. 

S&T officials acknowledged the importance of documented internal 

controls. Officials stated that on the basis of departmental guidelines, they

are in the process of developing written standard operating procedures 

that, among other things, describe the internal controls to ensure that 

budgetary data are properly reviewed for accuracy and reliability. In 

addition, S&T developed a hiring plan in December 2006 and stated that it

expects to be fully staffed by the end of calendar year 2007. As a result, we 

are not making recommendations at this time. 

In order to facilitate oversight and accountability of S&T, Congress has 

required information on the projected full expenditures of S&T’s PPAs, 

including projected expenditures for management and administration, as

well as those for research, development, acquisition, and operations. While 

S&T does not account for or report its management and administration 

expenditures by PPA, S&T demonstrated that it can allocate these 

projected expenditures across each PPA using acceptable methodologies.

It is important to recognize, however, that these projected expenditures 

will generally be estimates and will not be based on historical data of 

actual costs from S&T’s financial management system. 

Concluding 

Observations 

 7

DHS stated that since that time S&T’s CFO office has increased its staffing level. 

Page 5 GAO-07-868 Science and Technology Directorate's Expenditure Plan
Further, internal controls serve as the first line of defense in detecting

errors, fraud, waste, abuse, and mismanagement. We identified areas of 

weakness in S&T’s internal controls, which S&T acknowledged. S&T plans 

to develop and document controls in these areas. If effectively

implemented, this should help the directorate to improve its accountability 

and provide Congress better information. 

We provided a draft of this report to DHS for review and comments. On 

June 15, 2007, we received written comments on the draft report, which 

are reproduced in full in appendix II. DHS generally agreed with the report

and its findings. 

With regard to our observation that S&T’s operations may not have been in

compliance with GAO’s Standards for Internal Control in the Federal 

Government, DHS reported that S&T has taken a number of actions to 

correct previous financial management problems and deficiencies, and is

working to implement other corrective measures. For example, DHS 

stated that S&T has initiated an independent review of its internal 

controls, and has developed corrective action plans to address potential 

weaknesses identified by the review. We support S&T’s efforts to 

strengthen its internal controls and encourage the department to take 

aggressive action to monitor their implementation and effectiveness. 

DHS also provided technical comments on specific sections of the report,

which we have considered and incorporated where appropriate. 

We will send copies of this report to the Secretary of Homeland Security 

and the Under Secretary of the Science and Technology Directorate, and

other interested congressional committees. We will also make copies 

available to others on request. In addition, the report will be available at 

no charge on GAO’s Web site at http://www.gao.gov. If you have any 

questions or need additional information, please contact me at (202) 512-

8777 or by e-mail at Larencee@gao.gov. Contact points for our Offices of 

Agency Comments 

and Our Evaluation 

Page 6 GAO-07-868 Science and Technology Directorate's Expenditure Plan
Congressional Relations and Public Affairs may be found on the last page 

of this report. Key contributors to this report are acknowledged in 

appendix II.

Eileen Larence 

Director 

Homeland Security and Justice Issues 

Page 7 GAO-07-868 Science and Technology Directorate's Expenditure Plan
Appendix I: Briefing Slides Appendix I: Briefing Slides 

DHS Science and Technology 

Directorate’s Expenditure Plan

Briefing to Congressional Committees

April 4 and 10, 2007

Page 8 GAO-07-868 Science and Technology Directorate's Expenditure Plan
Appendix I: Briefing Slides 

Page 9 GAO-07-868

2

Briefing Overview

• Introduction

• Objectives, Scope, and Methodology

• Results in Brief

• Background

• Findings

Science and Technology Directorate's Expenditure Plan
Appendix I: Briefing Slides 

Page 10 GAO-07-868

3

Introduction

• The Department of Homeland Security’s (DHS) Science and Technology Directorate (S&T) was established by the Homeland Security Act of 2002

to, among other things, coordinate the federal government’s civilian efforts 

to identify and develop countermeasures to chemical, biological, radiological, nuclear, and other emerging terrorist threats to our nation.1

• S&T is led by an Under Secretary and has a Chief Financial Officer (CFO) who is responsible for all budgeting and accounting for financial resources. As of May 2007, both of these persons had been in office for less than 1 

year.

• GAO and others have reported on, and S&T officials have acknowledged, 

problems in S&T’s financial management environment.

• The Department of Homeland Security Appropriations Act, 2007 provided 

about $973 million for S&T, of which $135 million was for salaries and

expenses of the Office of the Under Secretary for Science and Technology and for management and administration of programs and activities.2

1Pub. L. No. 107-296, §§ 301-302, 116 Stat. 2135, 2163-2164 (2002).

2 Pub. L. No. 109-295, 120 Stat. 1355, 1375 (2006).

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4

Introduction (cont’d)

• The Department of Homeland Security Appropriations Act, 2007 restricted

S&T from obligating $60 million of the $135 million for management and

administration until the Secretary of Homeland Security prepared a fiscal

year 2007 expenditure plan that was received and approved by the

Committees on Appropriations of the Senate and House of

Representatives that:

1. Was broken down by program, project, and activity (PPA),3

2. Contained a detailed breakdown and justification of the management 

and administration costs for each PPA,

3. Described the method utilized to develop the administration costs in

the budget requests for fiscal years 2006 and 2007.4

• The Appropriations Act also required GAO to review the plan. In addition, the Appropriations Act required that S&T spend no more than $3,000 for 

official reception and representation expenses.

3PPA is the most specific level of budget items identified in budget related documents. For example, S&T currently has 11 PPAs,

such as laboratory facilities and border and maritime security. (See page 21 of the report for a list of S&T PPAs.) 4For this briefing, future costs will be referred to as “projected expenditures.”

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Page 12 GAO-07-868

5

Objectives, Scope, and Methodology

• In responding to this mandate, we assessed whether S&T’s fiscal year

2007 expenditure plan satisfied the above conditions of the Appropriations

Act.

• To accomplish our objective, we analyzed the S&T fiscal year 2007

expenditure plan and related documentation. We also interviewed the S&T 

CFO and other program officials and discussed their process for

developing their budget requests and documents. While we did not

independently verify the reasonableness of the projected management and 

administration expenditure data in the expenditure plan and supporting documentation, we discussed these projected expenditures with S&T 

officials to reconcile any data inconsistencies. (As discussed later, our

review identified misclassifications of expenditure data.) 

• We conducted our work at S&T’s headquarters in Washington, D.C., from 

February 2007 to May 2007 in accordance with generally accepted 

government auditing standards. 

Science and Technology Directorate's Expenditure Plan
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6

Results in Brief

• The S&T fiscal year 2007 expenditure plan, including 

related documentation and other information provided 

by program officials, did not fully satisfy the conditions 

set forth in the Appropriations Act. 

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7

Results in Brief (cont’d)

• While the research and development portion of the expenditure plan 

was broken out by PPA, such as laboratory facilities and explosives,

the management and administration portion was not broken out by

these categories, as required.

• Because the management and administration data were not broken 

out by PPA, the condition requiring a detailed breakdown and 

justification of these projected expenditures by PPA was also not

satisfied.

• S&T officials said that they manage the management and 

administration costs by business areas and functions, such as 

business operations, rather than by PPA. Further, according to S&T 

officials, the management and administration account represents funds 

that support S&T’s entire mission, and, for the most part, are not

directly attributable to any one PPA.

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8

Results in Brief (cont’d)

• Nevertheless, without a sense of the management and administration costs that indirectly

support S&T’s PPA, Congress does not have the information it requested as to their full

costs in order to facilitate budgetary accountability and oversight.

• Upon request, S&T staff were able to provide us a breakout of the projected management

and administrative expenditures by PPA using various methodologies to estimate the 

allocation of these costs to each PPA. For example, S&T apportioned the total business 

operations costs, which include, among other things, rent, supplies, and employee bonuses

and awards, to each PPA based on the number of full-time equivalent (FTE) staff budgeted 

for the PPA.

• Using such a methodology is consistent with generally recognized allocation

methodologies.

• According to S&T officials, accounting for these costs by PPA—in order to have actual cost 

data to use in formulating future estimates rather than allocating projected expenditures

across PPAs—would require either significant changes to its financial accounting system or 

the use of an off-line system designed solely for this purpose.

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9

Results in Brief (cont’d)

• The expenditure plan, including related documentation and other information 

provided by program officials, partially meets the condition requiring S&T to

describe the method used to derive the budget for planned administration

expenditures in the fiscal years 2006 and 2007 budget requests.

• The plan identified the categories of expenses that the budget requests were 

intended to cover—such as salaries, benefits, and business operations—and

indicated that the fiscal year 2007 budget request was developed based on the 

prior year expenditures for these categories. However, the plan did not describe

the method used to develop each category of expenses.

• S&T officials acknowledged this and provided us a general description of their

method, and added that in addition to historical expenditure data, the budget

requests were also based on projections of new expenses.

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10

Results in Brief (cont’d) 

• During the course of our work, we observed instances in which S&T 

operations may not have been in compliance with GAO’s Standards for

Internal Control in the Federal Government 5 and associated guidance. For 

example:

• While responding to our data request, and after the appropriate

management officials had reviewed the data in the expenditure

plan, S&T officials realized they had misallocated some of the 

management and administration funding in the expenditure plan,

indicating that S&T may not have an effective review process in

place.

• Further, we identified issues related to inadequate staffing at S&T 

and significant turnover in the CFO position, which could adversely

affect S&T in carrying out its financial functions.

5GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.:

November 1999).

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11

Background

• As DHS’s primary research and development arm, S&T has the 

mission of protecting the homeland by providing federal, state,

local, and tribal officials with state-of-the-art technology and 

other resources. Among other things, S&T:

• develops and deploys state-of-the-art, high-performance,

affordable systems to prevent, detect, and mitigate the 

consequences of chemical, biological, radiological, nuclear, and

explosive (CBRNE) attacks, and

• develops equipment, protocols, and training procedures for

response to, and recovery from, CBRNE attacks.

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12

Background (cont’d)

• S&T’s budget justification and subsequent appropriations consist of

funding for:

• management and administration that supports the operation of

S&T in both headquarters and the field, such as personnel

compensation, benefits, travel, and rent, and

• research, development, acquisition, and operations.

6

• On May 9, 2007, Congress released the $60 million management

and administration funding that had been restricted by the

Appropriations Act.

6For this briefing, research, development, acquisition, and operations will be referred to as “research and

development.”

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13

The expenditure plan, including related documentation,

partially satisfied the condition that the plan be prepared 

by PPA

• While the research and development data in the expenditure plan 

were presented by PPA, the management and administration data 

were not.

• For research and development, the plan includes a breakout of 

the projected expenditures for fiscal year 2007 by PPA and a 

detailed description of each one, as well as the significant 

program deliverables.

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14

Projected research and development expenditures are

broken down by PPA

• The expenditure plan provided a breakdown of projected research and 

development expenditures by the following PPAs:

• Borders and Maritime 

• Chemical and Biological Countermeasures

• Command, Control, and Interoperability

• Explosives

• Human Factors

• Infrastructure and Geophysical 

• Innovation 

• Laboratory Facilities 

• Testing and Evaluation/Standards 

• Transition 

• University Programs 

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15

Projected management and administration expenditures 

are not broken down by PPA

• For management and administration, S&T officials indicated that the plan is not broken down by PPA because S&T manages these costs by business areas and functions, such as business 

operations, rather than by PPA. 

• In response to our data request, S&T officials prepared a breakout of the projected management 

and administration expenditures by PPA. Because they do not manage these costs in this way, S&T officials used various methodologies to estimate the allocation of these costs to each PPA.

• For example, S&T apportioned the total business operations costs, which include, among 

other things, rent, supplies, and employee bonuses and awards, to each PPA based on

the number of full-time equivalent (FTE) staff budgeted for the PPA.

• Using such a methodology is consistent with generally recognized allocation 

methodologies.

• Without including the management and administration costs that indirectly support S&T’s PPAs, Congress does not have the information it requested as to their projected full costs in order to

facilitate budgetary accountability and oversight.

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16

S&T’s breakout of projected management and 

administration expenditures by PPA

Total 29,242

Variance due to timing of new hires 955

Subtotal 294 838,109 28,286 14,735 33,673

Infrastructure and Geophysical 12 74,781 690 346 1,374

Human Factors 16 6,800 711 277 1,833

Borders and Maritime 12 33,436 786 415 1,374

Command, Control, and Interoperability 23 62,612 1,527 761 2,634

Chemical/Biological Countermeasures 24 313,553 3,759 1,799 2,749

Explosives 15 105,231 1,074 553 1,718

Transition 12 24,040 872 346 1,374

Innovation 9 38,000 1,499 553 1,031

Laboratory Facilities 157 105,649 14,874 8,371 17,982

University Programs 9 48,575 2,030 968 1,031

Testing and Evaluation/Standards 5 25,432 463 346 573

Business 

operationsc

Headquarters

administration

salaries and

benefitsb

Total salaries

and benefitsa

Business area and functions

Fiscal year

2007 budget

Total

Program, project, and activity (PPA) budgeted FTEs

Dollars in thousands

Source: S&T.

Note: Totals may not add due to rounding.

aSalaries and benefits were based on actual full-time equivalent (FTE) positions per PPA. bSalaries and benefits for the Office of the Under Secretary and other headquarters offices were allocated based on FTEs per PPA. cBusiness operation expenses were allocated based on FTEs per PPA.

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17

S&T’s breakout of projected management and 

administration expenditures by PPA (continued)

135,000

955

38,776 14,646 358 2,041 1,530 134,045

2,969 1,275 33 182 137 7,005

2,615 239 33 17 12 5,735

2,353 744 33 81 61 5,849

4,546 1,092 33 152 114 10,860

8,437 4,720 33 764 572 22,832

3,893 1,674 33 256 192 9,394

2,243 510 33 59 44 5,481

1,671 1,243 33 93 69 6,192

6,747 1,648 33 257 193 50,104

2,137 837 33 118 89 7,242

1,164 664 33 62 46 3,351

Total

SBIR

administrationg

OGC

complianceg Travel SETAe f

Working 

capital fundd

Business area and functions

Dollars in thousands

dWorking capital fund elements were allocated by FTE and PPA dollars depending on independent cost elements. eSystems Engineering and Technical Assistance (SETA) costs were allocated based on direct support and indirect costs by PPA budget percentage. f

Travel was allocated evenly among each PPA.

gOffice of General Counsel (OGC) compliance and Small Business Innovation Research (SBIR) program administration were allocated based on PPA 

budget percentage.

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18

Because S&T did not provide projected management and administration 

expenditures by PPA, the expenditure plan did not include a detailed

breakdown and justification of these projected expenditures by PPA, as 

required

• As discussed previously, S&T manages the management and 

administration costs by business areas and functions. Further,

according to S&T officials, the management and administration 

account represents funds that support S&T’s entire mission, and,

for the most part, are not directly attributable to any one PPA.

• S&T officials told us that to account for these costs by PPA—in

order to have actual cost data to use in formulating future estimates

rather than allocating projected expenditures across PPAs—would

require either significant changes to its financial accounting system

or an off-line system designed solely for this purpose.

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Page 26 GAO-07-868

19

S&T’s expenditure plan partially described the method utilized to

develop projected administration expenditures, as required

• The expenditure plan, including related documentation and other

information provided by program officials, partially satisfied the

condition to describe the method used to develop the projected

administration expenditures in the fiscal years 2006 and 2007 

budget requests.

• The expenditure plan identified the categories of expenses that

these budget requests were intended to cover, such as salaries, 

benefits, and business operations. It also indicated that the fiscal 

year 2007 budget request was developed based on the prior year

costs. However, it did not describe the method used to develop 

each category of expenses. 

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20

S&T officials were able to generally describe the method 

utilized to develop projected administration expenditures 

upon request

• S&T officials acknowledged that the expenditure plan did not describe the method

used to develop each category of expenses and provided us a general description of

their method, and added that in addition to historical cost data from S&T's financial

systems, the budget requests were also based on projections of new expenses.

• The budget is built by business areas and functions, including business

operations,

7 Systems Engineering and Technical Assistance staff supporting

corporate functions, travel for senior management, salaries and expenses, and

the working capital fund.8

• After deriving the costs for each business area and function, they developed

tables for groups of similar expenses, such as equipment and supplies and 

materials, in order to comply with the legislative requirement for displaying the 

projected expenditure data in the President’s budget. 

• S&T reported the projected management and administration expenditures in its

fiscal year 2007 expenditure plan by these groups of similar expenses.

7Business operations includes, among other things, rent, supplies, and employee bonuses and awards. 8The working capital fund is a type of intragovernmental revolving fund that agencies use to support services that are shared across the

agency.

Science and Technology Directorate's Expenditure Plan
Appendix I: Briefing Slides 

Page 28 GAO-07-868

21

Other legislative requirements are satisfied

• S&T provided its Fiscal Year 2007 Expenditure Plan, dated January 11,

2007, to the Committees on Appropriations of the Senate and the House of

Representatives.

• However, S&T recently made changes to correct misclassification of

the planned management and administration funding in the plan. S&T 

identified these misclassifications in response to our questions and 

data requests. On May 9, 2007, S&T resubmitted this information to

Congress.

• As required by the mandate, GAO has reviewed the expenditure plan,

including related documentation and other information provided by program 

officials.

Science and Technology Directorate's Expenditure Plan
Appendix I: Briefing Slides 

Page 29 GAO-07-868

22

Other legislative requirements are satisfied (cont’d)

• The expenditure plan, including related documentation and other

information provided by program officials, satisfied the condition to 

include no more than $3,000 for official reception and 

representation expenses.

• While the expenditure plan does not specifically address funding for

official reception and representation expenses, S&T officials said 

that these expenses are tracked separately, senior management 

must approve these expenses, and they are monitored to ensure

that they do not exceed $3,000.

Science and Technology Directorate's Expenditure Plan
Appendix I: Briefing Slides 

Page 30 GAO-07-868

23

S&T may be lacking key internal controls to guide financial 

management decisions

• The Federal Managers’ Financial Integrity Act

9 requires that agencies establish internal controls 

according to standards specified in the GAO standards.

• GAO standards require that management generally design internal controls to ensure that

ongoing monitoring occurs during the normal course of operations. It could include a strategy to 

ensure that ongoing monitoring is effective and will trigger separate evaluations where problems

are identified. 

• During their analysis of financial documents to respond to our request, and after the 

appropriate management officials had reviewed the data, S&T officials realized that the 

expenditure plan did not accurately reflect the classification of the management and 

administration funding by groups of similar expenses such as equipment and supplies and

materials. As previously discussed, S&T subsequently revised this information and resubmitted it 

to Congress.

• For example, projected travel expenditures were revised downward more than 10-fold

(from about $4 million to $358,000), while projected equipment expenditures were 

revised upward from about $478,000 to about $8 million after the numbers were

reviewed.

• These inaccuracies not identified during management's review suggest that S&T may not

have an effective review process in place. 

9Pub. L. No. 97-255, 96 Stat. 814 (Sept. 8, 1982). The key provisions of FMFIA were codified at 31 U.S.C. § 3512 

(c), (d).

Science and Technology Directorate's Expenditure Plan
Appendix I: Briefing Slides 

Page 31 GAO-07-868

24

S&T may be lacking key internal controls to guide financial 

management decisions (cont’d)

• In addition, S&T does not appear to be in compliance with GAO standards 

and associated guidance regarding adequate staffing, particularly in

managerial positions. Further, S&T has experienced significant personnel

turnover in a key operations and program management function.

• As of March 9, 2007, S&T had not filled about 35 percent of its total

authorized FTE positions for headquarters and field operations (135 of

383) and about 53 percent of the FTE positions that had been

allocated to the CFO’s office (19 of 36).

10

• S&T developed a hiring plan in December 2006. S&T expects to be 

at full strength by the end of calendar year 2007.

10DHS stated that since that time S&T’s CFO office has increased its staffing level.

Science and Technology Directorate's Expenditure Plan
Appendix I: Briefing Slides 

Page 32 GAO-07-868

25

S&T may be lacking key internal controls to guide 

financial management decisions (cont’d)

• S&T first established a CFO position in July 2005, and has had 

two different CFOs in the 23 months since that position was 

established.

• The understaffing at S&T headquarters and field operations,

including the CFO office, and the significant turnover in the 

CFO position may lead to ineffective internal controls and 

adversely affect S&T in carrying out its financial functions.

Science and Technology Directorate's Expenditure Plan
Appendix II: Comments from the Department 

of Homeland Security

Page 33 GAO-07-868 Science and Technology Directorate's Expenditure Plan

Appendix II: Comments from the Department 

of Homeland Security 
Appendix II: Comments from the Department 

of Homeland Security

Page 34 GAO-07-868 Science and Technology Directorate's Expenditure Plan
Appendix III: GAO

A

 Contact and Staff 

cknowledgments 

Page 35 GAO-07-868

Appendix III: GAO Contact and Staff 

Acknowledgments 

Eileen R. Larence, (202) 512-8777 

In addition to the contact named above, Steve Morris, Assistant Director; 

Virginia Chanley; Willie Commons III; Thomas Hackney; Kyle Lamborn; 

Linda Miller; and Katrina Moss made key contributions to this report. 

Science and Technology Directorate's Expenditure Plan

GAO Contact 

Acknowledgments 

(440575) 
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