Secret Service: Additional Guidance Would Enhance Financial Management and Communication of Candidate Protection Spending to Congress
Published: 2010-06-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Due to the unprecedented pace and crowds of the 2008 presidential campaign, the U.S. Secret Service (Secret Service), a component of the Department of Homeland Security (DHS), exceeded its budgeted amount for fiscal year 2009 presidential candidate nominee protection funding, but did not notify Congress of this shortfall (fiscal year 2009 shortfall) until June 2009--5 months after the Inauguration. In response to the Conference Report accompanying the 2010 DHS Appropriations Act, this report addresses the extent to which, at the time of the fiscal year 2009 shortfall, (1) Secret Service had the necessary internal controls in place to help ensure it could effectively manage and report on funds for presidential candidate protection; and (2) Secret Service and DHS had policies and procedures in place to help ensure that information related to the fiscal year 2009 shortfall was communicated to DHS and Congress. To conduct the audit work, GAO reviewed appropriation laws and regulations, Secret Service financial reports, and various DHS and Secret Service policy and procedural documents. GAO also interviewed officials from DHS and Secret Service.
section_title: What GAO Found
paragraphs: At the time of the fiscal year 2009 shortfall, Secret Service did not have--and still does not have--all of the necessary internal controls, including policies and procedures, in place to help ensure it can effectively manage and report on funds for presidential candidate protection. For example, the agency relied on undocumented manual processes to prepare and review two key reports--the Monthly Execution and Staffing Report and the Presidential Campaign Cost Report--used to monitor obligations, manage its funds by subaccounts, and report to Congress. Documenting the processes to prepare and review these reports could decrease the risk of future reporting errors and be useful to managers in controlling operations. Secret Service also did not have documented procedures for charging costs for certain candidate protection activities that cut across multiple subaccounts. The subaccounts are not discrete, and Secret Service officials stated that they lacked clarity and procedures on which to use to cover costs for certain protection activities. Documenting policies and procedures for charging such costs could be useful in controlling operations and monitoring budget execution. Also, neither DHS nor Secret Service had documented benchmarks to serve as an early warning system when monitoring obligations and expenditures for potential future funding shortfalls. Lastly, DHS' budget guidance did not specify how to develop such benchmarks. Developing and implementing guidance on how to document benchmarks could help ensure that any future potential shortfalls in presidential candidate protection funds are identified in a timely manner. DHS and Secret Service lacked sufficient policies and procedures to ensure that information related to the fiscal year 2009 shortfall was communicated to DHS and Congress. At the time of the shortfall, DHS had written guidance on how to communicate a violation of the Antideficiency Act--which prohibits federal officials from obligating or expending funds in excess of appropriations--and notify Congress of a reprogramming, or shifting funds within an appropriation. However, because they mistakenly determined the guidance did not apply, Secret Service informed DHS of the shortfall and requested assistance in covering it. GAO issued a legal opinion determining that DHS and Secret Service violated reprogramming notification requirements and the Antideficiency Act. Further, DHS had no written guidance on communicating a reprogramming that did not require congressional notification. Since the shortfall, DHS and Secret Service developed a Corrective Action Plan (CAP) to address issues related to the shortfall. DHS implemented two of the four communication-related CAP measures, but has not provided written guidance for implementing the other two, which require that (1) components complete internal funding reviews prior to submitting reprogramming requests and articulate the negative impact of using internal resources to cover shortfalls, and (2) DHS provide timely submission of reprogramming notifications to the Appropriations Committees.Implementing these measures could help ensure better communication among Secret Service, DHS, and Congress in the event of future shortfalls, and help DHS and the committees assess whether DHS effectively provides information about potential shortfalls.
section_title: What GAO Recommends
paragraphs: GAO recommends that DHS and Secret Service (1) document certain financial management, cost allocation, and benchmark procedures, and (2) provide guidance on remaining communications-related corrective actions. DHS concurred.

section_title: Letter
paragraphs: The U.S. Secret Service (Secret Service)—a component agency of the  Department of Homeland Security (DHS)—protects, among others, major  presidential and vice presidential candidates during presidential  campaigns. During the 2008 presidential campaign and 2009 Inauguration,  Secret Service provided an unprecedented level of protection, including  for more than 700 candidate campaign trips in the final weeks of the  campaign, as well as the swearing-in ceremony, attended by an estimated 2  million people. In June 2009—7 months after the 2008 presidential election  and 5 months after the Inauguration—DHS notified the Senate and House  Appropriations Committees that the final protection costs associated with  the 2008 presidential campaign and Inauguration exceeded the amount  Secret Service had budgeted for fiscal year 2009 campaign protection and  that it would reprogram $5.1 million to cover this shortfall. In the  Conference Report accompanying the 2010 DHS Appropriations Act, the  conferees expressed concerns about the ability of DHS and Secret Service  to provide timely budget information, and noted other instances of  budgetary execution problems at Secret Service. The Conference Report  also directed GAO to  review the events surrounding the fiscal year 2009 presidential candidate  nominee protection funding shortfall (fiscal year 2009 shortfall);    determine whether Secret Service’s actions violated section 503 of the  Consolidated Security, Disaster Assistance, and Continuing  Appropriations Act, 2009 (section 503), which requires DHS to notify the  Appropriations Committees 15 days in advance of reprogramming  appropriated funds if the reprogramming exceeds $5 million or 10 percent  of the amount allotted for a particular activity, or the Antideficiency Act,  which prohibits federal officials from obligating or expending funds in  excess or advance of an appropriation; and  identify any actions taken or provide recommendations for actions to be  taken to address any violations.
On April 27, 2010, GAO issued a legal opinion determining that DHS and  Secret Service violated section 503 and the Antideficiency Act. The legal  opinion is reproduced in appendix I.
In accordance with the mandate, this report addresses (1) the extent to  which Secret Service had the necessary internal controls, including  financial management policies and procedures, in place to help ensure it  could effectively manage and report on funds for presidential candidate  protection, and (2) the extent to which Secret Service and DHS had  policies and procedures in place to help ensure that information related to  the fiscal year 2009 shortfall was communicated to DHS and Congress. As  our report was focused on financial management internal controls and  communication among DHS, Secret Service, and the Appropriations  Committees regarding presidential candidate protection funding, we did  not assess the appropriateness of overall fiscal year 2009 presidential  candidate protection spending. On April 27, 2010, we briefed the staff of  the Senate and House Appropriations Subcommittees on Homeland  Security regarding information contained in this report.
To address our objectives, we reviewed and analyzed DHS and Secret  Service policies and procedures for funds control in place during the fiscal  year 2009 shortfall, which we compared against Standards for Internal  Control in the Federal Government, to determine if they were designed to  help ensure that Secret Service could effectively manage and report on  funds for presidential candidate protection, and help prevent violations of  the Antideficiency Act. We also reviewed and analyzed section 503, the  Antideficiency Act, Office of Management and Budget (OMB) Circular A- 11, and internal DHS guidance—such as the fiscal year 2009 Budget  Execution Guidance—to compare the policies and procedures in place  during the fiscal year 2009 shortfall to maintain compliance with these  laws and regulations against communication and actions taken by Secret  Service and DHS officials. Further, we compared the November 2009 DHS  Chief Financial Officer (CFO)–Secret Service Corrective Action Plan  (CAP) against the Chief Financial Officers Council’s Implementation Guide  for OMB Circular A-123, Management’s Responsibility for Internal Control  (CFOC A-123 Guidance)—widely viewed as a “best practices”  methodology for developing and executing CAPs. We did so in order to  determine whether the CAP was developed and executed in accordance  with this guidance. In addition, we reviewed and analyzed updated policies  and procedures in place since the fiscal year 2009 shortfall—such as the  fiscal year 2010 Budget Execution Guidance and the DHS CFO Financial  Management Policy Manual Draft of Section 2.4–Budget Execution— which we compared against the CAP to determine the extent to which the  CAP measures had been incorporated into guidance. We also reviewed and  analyzed Secret Service financial reports to determine if they provided  financial management officials with adequate information for decision- making purposes. We discussed the reports’ methodology with Secret  Service officials and determined that the results are sufficiently reliable for  the purposes of this review. As this was not a financial audit, we did not  trace individual transaction-level information to source documentation,  nor did we assess the reliability of information drawn from financial  management and personnel systems that fed into these reports.
In addition, we interviewed Secret Service and DHS financial management  officials to determine whether these officials had adequate financial  management information for decision-making purposes. We also  interviewed Secret Service and DHS officials to determine the  management and reporting process for the fiscal year 2009 presidential  campaign protection costs. Finally, we interviewed budget officials and  congressional liaisons at Secret Service and DHS involved in  communication related to the fiscal year 2009 shortfall to describe their  role in (1) communicating the shortfall among Secret Service, DHS, and  the Appropriations Committees; (2) taking actions to address the shortfall;  and (3) developing and implementing new or revised policies and  procedures to address potential future funding shortfalls.
We conducted this performance audit from November 2009 to June 2010 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the work to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our objectives.
subsections: section_title: Background
paragraphs: Secret Service has two missions—conducting criminal investigations and  providing protection. The criminal investigative mission includes  conducting investigations in areas such as financial crimes, identity theft,  counterfeiting, computer fraud, and computer-based attacks on banking,  financial, and telecommunications infrastructure, among other activities.  As part of the protective mission, Secret Service protects, among others,  the sitting President and Vice President and their families; major  presidential and vice presidential candidates and, within 120 days of the  general presidential elections, their spouses; the President- and Vice  President–elect; and former presidents and their spouses.
In addition to day-to-day protection activities, Secret Service is required to  provide protection for National Special Security Events (NSSE). The  NSSE designation was established by statute in December 2000, for  “special events of national significance” requiring significant law  enforcement presence. The kinds of events categorized as NSSEs include  presidential inaugurations, international summits held in the United  States, major sporting events attended by protected persons, and  presidential nominating conventions. For instance, during the 2008  presidential campaign and the 2009 Inauguration, a number of events were  designated as NSSEs, including both the Democratic and Republican  Nominating Conventions, and the concert celebrating the Inauguration on  the National Mall. Designations are at the discretion of the President,  signed by the Secretary of DHS, generally on the basis of the size of the  event, its significance, and importance of anticipated attendees. Since  fiscal year 2007, Secret Service has received $1 million annually in  appropriations towards NSSE funding, which is available until expended.
Like other federal agencies receiving annual appropriations, Secret Service  must comply with a variety of fiscal laws, or those laws related to the  control and use of public funds. Specifically, the Antideficiency Act and  section 503 outline requirements that must be met in the management of,  and reporting on, funds, such as the funds for 2008 presidential candidate  protection. The Antideficiency Act prohibits the making or authorizing of  “an expenditure or obligation exceeding an amount available in an  appropriation or fund for the expenditure or obligation.” Section 503  states that “None of the funds … shall be available for obligation or  expenditure for programs, projects or activities through a reprogramming  of funds in excess of $5,000,000 or 10 percent, whichever is less … unless  the Committees on Appropriations … are notified 15 days in advance of  such reprogramming of funds.”
Reliable financial systems are critical to meeting the reporting  requirements associated with the Antideficiency Act and section 503. Since  October 2004, Secret Service has been using the “Travel Manager, Oracle,  PRISM, Sunflower” system (TOPS) to manage its financial business  processes. TOPS is an integrated financial management system  comprised of four applications:    Travel Manager—input and management of travel vouchers;    Oracle Financials—core financial and general ledger system;    PRISM—procurement activities; and    Sunflower—property management.
Secret Service maintains financial data within TOPS by project code and  object class. In addition, Secret Service uses the Manhours system to  capture hours worked by its agents and certain support staff.
According to Secret Service officials, prior to fiscal year 2005, Secret  Service had one appropriation account, the Protection Services and  Activity account, to manage appropriated funds for salaries and expenses.  In fiscal year 2005, the Conference Report accompanying the 2005 DHS  Appropriations Act itemized specific amounts for activities supported by  Secret Service’s Salaries and Expenses appropriation account. The  itemizations were made at Secret Service’s Program, Project, or Activity  (PPA) level. Secret Service uses PPAs as subaccounts used to capture and  track financial data such as funds allotted, obligations, and expenditures.  According to Secret Service, three PPAs were used to fund 2008 campaign- related protection activities:    Presidential Candidate Nominee Protection, which is for the protection  Secret Service provides to major presidential and vice presidential  candidates, and their spouses;    NSSE, which is used for Secret Service planning and implementing  security for designated NSSEs to ensure the physical protection of the  President, the public, and other Secret Service protectees who participate  in NSSEs; and    Protection of Persons and Facilities, which operates to ensure the  personal safety of certain designated individuals, such as the President  and Vice President and former presidents and their spouses, protect the  buildings and grounds where these individuals reside and work, and  protect foreign heads-of-state visiting the United States.
Table 1 shows the PPAs for Secret Service’s Salaries and Expenses  account and the related fiscal year 2009 itemizations for each PPA.
The unpredictable and changing nature of protectee activities creates  ongoing challenges for Secret Service. These challenges include  1.  generally short notice—sometimes 2-3 days—of protectees’ schedules  and frequent schedule changes, which makes it difficult to budget for  costs in advance;  2.  newly scheduled events requiring shifts in personnel to maintain  current assignments, often resulting in unexpected or additional  overtime costs;  3.  personnel cost information not being in real time due to delays in  completion of travel vouchers;  4.  the unanticipated increase in pace of the 2008 presidential campaign  compared to previous campaigns upon which the fiscal year 2009  budget was based—for instance, the preinaugural events following the  2008 campaign included a three-stop train trip and a concert on the  National Mall, not part of previous campaigns; and  5.  the venue and activity being at the discretion of the protectee, to which  Secret Service must adapt its protection services.
In this context, Secret Service received $41 million in appropriated funds  within its Presidential Candidate Nominee Protection PPA for fiscal year  2009. The amounts designated for PPAs are found in the explanatory  statement accompanying DHS’ fiscal year 2009 Appropriations Act.  Section 503(e) of the Appropriations Act provides that “such dollar  amounts specified in this Act and accompanying explanatory statement  shall be subject to the conditions and requirements ... of this section.”  Early in fiscal year 2009, Secret Service realized that, due to the increased  pace of the campaign and the large crowds, it might have a shortfall but  believed at the time it could cover the additional expenses with funds from  other PPAs. In January 2009, Secret Service contacted DHS and requested  assistance to cover the shortfall. In May 2009, DHS directed Secret Service  to submit a reprogramming request for the funding, which, after revision  by DHS and Secret Service, was submitted to the Senate and House  Appropriations Committees June 30, 2009. Figure 1 outlines the key events  pertaining to the fiscal year 2009 shortfall.
In light of these events, the Conference Report accompanying the fiscal  year 2010 DHS Appropriations Act required the DHS CFO and the Secret  Service Assistant Director for Administration to brief the Appropriations  Committees on the process to be implemented in fiscal year 2010 to ensure  the problems related to the fiscal year 2009 shortfall did not reoccur.  Prior to the briefing, DHS and Secret Service developed a corrective action  plan (CAP) to address the issues surrounding the shortfall. The CAP  includes measures to “increase visibility,” “improve funds control,” and  “increase the rigor of internal and external reprogrammings.” See  appendix II for the full text of the CAP.
section_title: Documenting Internal Control Procedures Could Help Improve Financial Management of Funds for Presidential Candidate Protection
subsections: section_title: Secret Service Has Not Documented Processes for Preparing Key Reports
paragraphs: Secret Service financial management personnel use an undocumented,  manual process to prepare two key reports used to monitor obligations,  manage its funds by PPA, and report to Congress: the Monthly Execution  and Staffing Report, and the Presidential Campaign Cost Report. The  Monthly Execution and Staffing Report provides data, by account and  PPA, on enacted funding, unobligated carryover(s), obligations and  expenditures to date, and staffing levels. Secret Service provides the  Monthly Execution and Staffing Report to other external parties, such as  the Appropriations Committees. The Presidential Campaign Cost Report is  used internally to monitor costs (budgeted and actual) during the  presidential campaign.
Secret Service financial management personnel manually integrate  information from several sources to prepare the Monthly Execution and  Staffing Report. Each month, staff draw financial data from (1) 16 reports  generated from TOPS—the Secret Service financial management system,  (2) information from the Manhours system, which tracks work hours  associated with each project, and (3) information from other accounting  department reports and the SF-133 to prepare the Monthly Execution and  Staffing Report. Furthermore, TOPS is set up to maintain and report  financial data by project code and object class. As a result, the financial  data needs to be manually adjusted in order to be presented by PPA in the  Monthly Execution and Staffing Report. Secret Service officials  acknowledged that they had not documented the procedures for  developing and reviewing the Monthly Execution and Staffing Reports,  and they agreed that it would be beneficial to have those procedures  documented.
Standards for Internal Control in the Federal Government state that  internal controls need to be clearly documented and the documentation  should appear in management directives, administrative policies, or  operating manuals. Such documentation is useful to managers in  controlling their operations and to any others involved in evaluating or  analyzing operations. Documenting the process for preparing the Monthly  Staffing and Execution Report would be useful to managers in controlling  operations, as relying on an undocumented manual process to pull  together information for the Monthly Execution and Staffing Report  increases the risk of errors in that report. For example, as a result of  human error, the Monthly Execution and Staffing Report for September  2009 originally sent to the Appropriations Committees overstated current  year obligations for one PPA by $3 million while understating obligations  for another PPA by $3 million. Similarly, an error in the Monthly Execution  and Staffing Report for March 2009 occurred because the expenditures-to- date amount for one account was not updated and therefore the amount  from the previous month was incorrectly carried forward for that account.  Also, we noted several instances on the Monthly Execution and Staffing  Reports that we reviewed where some formulas were inadvertently  missing from columns such as unobligated authority and unexpended  obligations. Secret Service could decrease the risk of reporting  incomplete, inaccurate information by having documented procedures in  place for its staff to prepare and review the Monthly Execution and  Staffing Report. While other controls may also assist in helping to ensure  Secret Service reports complete and accurate information, documenting  these procedures to prepare and review the Monthly Execution and  Staffing Report is a key first step.
section_title: Secret Service Uses Informal Processes for Splitting Costs across PPAs
paragraphs: Secret Service also does not have documented procedures in place for  how to split out costs for protection activities that could cut across  multiple PPAs. Congress itemizes specific amounts from the Salaries and  Expenses appropriation to individual PPAs. According to Secret Service,  the activities associated with PPAs are not discrete because activities and  costs related to PPAs may overlap. For example, according to Secret  Service budget staff, during fiscal year 2009 they split costs for the January  2009 Inauguration across multiple PPAs—Presidential Candidate Nominee  Protection ($4.1 million), Protection of Persons and Facilities ($1.0  million), and NSSE ($5.6 million). Budget staff explained that it charged  some Inauguration costs to the Presidential Candidate Nominee Protection  PPA because President-Elect Obama was in attendance. Similarly, some  costs were charged to the Protection of Persons and Facilities PPA  because former presidents and President Bush attended the Inauguration.  Also, because the Inauguration was designated as an NSSE, some costs of  the Inauguration were charged to the NSSE PPA.
Similarly, during fiscal year 2010, Secret Service had another instance  when it could justify charging costs across multiple PPAs but before doing  so it had to seek clarification from DHS on the appropriate process and  any necessary documentation. To help cover costs for the April 2010  Nuclear Security Summit, an NSSE, Secret Service used funds from the  Protection of Persons and Facilities PPA ($1.9 million) because the  summit included costs such as fencing and construction. While Secret  Service staff have charged costs to multiple PPAs in some cases, they  expressed concern because they were not certain whether this was the  correct procedure to follow.
As with the documentation of the process for preparing the Monthly  Execution and Staffing Reports, and in accordance with Internal Control  Standards, documented policies and procedures for charging costs in  situations where more than one PPA is applicable would be useful to  managers in controlling their operations. Establishing policies and  procedures for charging costs could clarify how Secret Service can split  costs between multiple PPAs and help manage funds for presidential  candidate protection and other PPAs. Also, the lack of documented  policies and procedures increases the risk of reporting incomplete,  inaccurate information because Secret Service officials could unknowingly  charge expenditures to the wrong PPA.
section_title: DHS and Secret Service Lack Documented Early Warning System Benchmarks for Monitoring Obligations and Expenditures
paragraphs: Neither DHS nor Secret Service have documented early warning system  benchmarks to use when monitoring Secret Service obligations and  expenditures, and therefore these benchmarks may be inconsistently  applied. The CAP developed by DHS and Secret Service outlines the  actions that, if implemented, will help ensure that Secret Service financial  management staff are monitoring obligations and expenditures, and  effectively anticipating shortfalls. The plan directs Secret Service to  implement an early warning system to track actual obligations against  planned and anticipated obligations and to develop benchmarks that  would act as “red flags” alerting the Secret Service CFO of potential  funding shortfalls. While DHS and Secret Service have identified this as an  action item in the CAP, Secret Service does not yet have a documented  system of red flags to alert its staff to potential funding shortfalls.  Similarly, DHS’ Budget Execution Guidance does not provide specific  guidance on developing benchmarks, and Secret Service officials have not  documented their own internal benchmark for monitoring obligations and  expenditures as an early warning system.
Internal Control Standards state that internal controls need to be clearly  documented and that managers need to compare actual performance to  planned or expected results, and activities need to be established to  monitor performance measures and indicators. Even though  documentation does not exist for such a system, both Secret Service and  DHS noted that they take certain actions to identify potential funding  shortfalls. For example, DHS officials told us that for annual  appropriations, they would expect to see 25 percent of the appropriated  amount used each quarter. Any deviations would be communicated during  DHS’ quarterly reviews of Secret Service. Secret Service budget staff also  said they use this “straight-line” approach to monitor budget execution.  Nevertheless, written guidance on how to develop and document  appropriate benchmarks for monitoring obligations and expenditures  could help ensure a consistent application of red flags and therefore  increase the effectiveness of an early warning system to alert officials of  potential funding shortfalls.
section_title: Additional Guidance Could Help DHS and Secret Service Further Improve Communication in the Event of Future Funding Shortfalls
subsections: section_title: DHS and Secret Service Did Not Follow DHS’ Fiscal Year 2009 Guidance on Communicating Reprogramming Requests and Antideficiency Act Violations
paragraphs: At the time of the fiscal year 2009 shortfall, DHS had written guidance  covering communication necessary if a funding shortfall required a  reprogramming notification under section 503, or was a potential or actual  Antideficiency Act violation. Specifically, DHS’ fiscal year 2009 Budget  Execution Guidance outlined the process for components to develop and  submit a reprogramming request to DHS to comply with section 503 and  required that DHS’ Office of the CFO (OCFO) transmit decisions on the  requests to the component. For example, the Budget Execution Guidance  requires all reprogrammings to be submitted at least 45 days in advance of  anticipated expenditure of funds. In July 2008, DHS’ OCFO issued  guidance concerning the investigation and reporting of Antideficiency Act  violations. This guidance requires that, among other things, employees  notify their supervisors if they suspect a potential Antideficiency Act  violation, the component and DHS CFO evaluate the circumstances and  complete a preliminary review, and—if it is determined a potential  violation exists—an independent investigative officer complete a formal  investigation and submit a report within 6 months.
The Secret Service’s former CFO told us that he did not believe that the  actions Secret Service took in January 2009 to address the fiscal year 2009  shortfall required congressional notification under section 503, or  constituted an Antideficiency Act violation. Secret Service budget officials  reported that, to cover the fiscal year 2009 shortfall in the Presidential  Candidate Nominee Protection PPA, which reached $10.7 million, they  charged three PPAs. They showed a negative balance of $4.1 million in the  Presidential Candidate Nominee Protection PPA, and charged $5.6 million  to the NSSE PPA and $1 million to the Protection of Persons and Facilities  PPA. The former CFO told us that, at the time, he did not see the need for  a reprogramming notification, and therefore the agency did not need to  follow DHS’ guidance on communicating reprogramming requests.  However, Secret Service budget officials acknowledged that, as discussed  later in this report, the reprogramming request Secret Service submitted to  DHS—and DHS submitted to the Senate and House Appropriations  Committees on June 30, 2009—was for a $5.1 million reprogramming into  the Presidential Candidate Nominee Protection PPA and did not mention  or include amounts associated with other PPAs. The requested $5.1 million  reprogramming exceeded section 503 notification thresholds. Therefore,  GAO concluded that DHS and Secret Service violated section 503 and the  Antideficiency Act.
According to Secret Service officials, in January 2009 Secret Service  communicated to DHS the fiscal year 2009 shortfall and requested  assistance in covering it. According to the former Secret Service CFO, the  agency realized it might have a shortfall in the Presidential Candidate  Nominee Protection PPA as early as October 2008, but determined it could  likely cover the costs using funding from both the Presidential Candidate  Nominee Protection and NSSE PPAs. However, with the designation of  additional NSSEs related to the Inauguration in December 2008, by  January 2009 the agency realized it could not cover the costs from these  two PPAs. Secret Service then informed DHS in January 2009 that it would  have a funding shortfall in its Presidential Candidate Nominee Protection  PPA—of which the agency could cover half. According to the former  Secret Service CFO, DHS then agreed to look for funding to help cover the  shortfall. DHS did not instruct Secret Service to submit a reprogramming  request until May 2009—4 months after the agency’s first communication.
Following DHS’ direction, Secret Service submitted a $5.1 million  reprogramming request to DHS on June 1, 2009, an amount exceeding the  section 503 threshold. DHS then followed its internal guidance in obtaining  OMB approval of the request. Following OMB’s initial approval of the  reprogramming request on June 19, 2009, Secret Service then modified its  request—increasing the amount to include costs associated with the G20  Summit, which had just been designated an NSSE, and extended  protection for former Vice President Cheney, of which Secret Service had  just become aware—and resubmitted the request to DHS on June 25, 2009.  After receiving OMB’s second approval on June 30, 2009, DHS submitted a  reprogramming notification to Congress on the same day for $5.1 million  to be reprogrammed into the Presidential Candidate Nominee Protection  PPA.
section_title: DHS Lacked Guidance on Process for Communicating Internal Reprogrammings
paragraphs: At the time of the fiscal year 2009 shortfall, there was no written guidance  outlining the process for communicating within DHS or to the  Appropriations Committees information about “internal reprogramming”  of funds. For instance, the fiscal year 2009 Budget Execution Guidance  does not include direction to components regarding how to report internal  reprogrammings under the section 503 threshold in Monthly Execution  and Staffing Reports. However, DHS stated that Secret Service was aware  that it was permitted to internally reprogram funds between PPAs.  According to Secret Service officials, they determined at the time that they  could internally reprogram funds, and when doing so that they should  report a negative balance in the Monthly Execution and Staffing Report.  According to Secret Service officials, DHS communicated to Secret  Service after the fact that it should have internally reprogrammed funding  from another PPA into the Presidential Candidate Nominee Protection  PPA and avoided showing a negative balance in unobligated authority.  However, in the past, Secret Service had submitted Monthly Execution  and Staffing Reports that had included negative balances in the  Unobligated Authority column. According to Secret Service officials in the  Office of Administration, DHS had not informed them not to do so.
section_title: DHS and Secret Service Developed CAP to Improve Communication and Implemented Some of These CAP Measures
paragraphs: Since the fiscal year 2009 shortfall, Secret Service and DHS developed a  CAP to, among other things, improve communication about internal and  external reprogrammings. In addition, Secret Service officials told us that  their communication with DHS about budget execution has improved, and  DHS officials said that they now provide more training and guidance to  components, such as guidance on general budget execution and Monthly  Execution and Staffing Reports. For instance, DHS’ fiscal year 2010  Budget Execution Guidance now requires that Monthly Execution and  Staffing Reports present information on both internal and section 503  reprogrammings. The CAP contains measures to improve guidance on  what information to communicate during a funding shortfall, and requires  that    all internal transfers and reprogrammings be approved by the DHS CFO in  writing within 24 hours of submission,    all reprogramming proposals be submitted in writing and in the  appropriate format with required information included,    components must first initiate an internal funding review and clearly  articulate the negative impact of using internal resources to cover the  shortfall, and    all above-threshold reprogrammings be submitted to the Appropriations  Committees in a timely manner.
CFOC A-123 Guidance is widely viewed as a “best practices” methodology  for executing the requirements of appendix A of OMB Circular A-123,  which requires management to develop corrective action plans for  material weaknesses. This guidance provides that agencies construct a  corrective action planning framework to facilitate plan preparation,  accountability, monitoring, and communication. Key information to be  included in corrective actions specified in this guidance includes, among  other things, a description of the deficiency in sufficient detail to provide  clarity and facilitate a common understanding of what needs to be done.  DHS has developed and implemented two of the four communications- related CAP measures in accordance with this guidance. For instance,  DHS’ fiscal year 2010 Budget Execution Guidance and DHS CFO’s  Financial Management Policy Manual draft of Section 2.4–Budget  Execution include updated guidance to components on how to implement  two of the CAP measures outlined above, as shown in table 2. However,  DHS did not develop and implement the remaining two of the  communications-related CAP measures in accordance with this guidance.
section_title: Additional Guidance Could Help Ensure Better Communication in the Event of Future Funding Shortfalls
paragraphs: While DHS has implemented two of the four communication-related  measures from the CAP in accordance with CFOC A-123 guidance, it has  not developed and implemented the remaining two. Specifically, DHS has  not provided written guidance describing what needs to be done to  implement the CAP measures requiring that (1) components complete  internal funding reviews prior to submitting reprogramming requests and  articulate the negative impact of using internal resources to cover the  shortfall—such as delays in hiring or postponement of training activities,  or both—or (2) DHS provide timely submission of reprogramming  notifications to the Senate and House Appropriations Committees.  Implementing these remaining communication-related measures from the  CAP could help ensure that DHS and Secret Service communicate  effectively with each other and Congress in the event of future funding  shortfalls.
Specifically, receiving guidance on the information DHS would like to  receive from components regarding their internal funding review and the  negative impact of using their internal resources could help improve the  effectiveness with which reprogramming requests are approved by DHS.  For instance, Secret Service submitted a reprogramming request related to  the April 12-13, 2010, Nuclear Security Summit to DHS on February 25,  2010. According to Secret Service officials in the Office of Administration,  DHS denied their initial reprogramming request for the Nuclear Security  Summit in part because it did not sufficiently describe Secret Service’s  internal funding review and the negative impact upon the agency if it used  internal resources. Secret Service subsequently revised and resubmitted  its request to DHS on March 12, 2010. According to Secret Service officials,  if DHS had provided clear guidance on its expectations for what  information the reprogramming request should have included in this area,  DHS could have approved the request more quickly.
In addition, clearly defining time frames for its timely submission of  reprogramming notifications to the Appropriations Committees, a measure  delineated by DHS in the CAP, could help enable DHS and the committees  to assess whether DHS effectively provides information about potential  funding shortfalls. After receiving the revised Nuclear Security Summit  request from Secret Service, DHS submitted the request to OMB for  approval on April 5, 2010, more than 5 weeks after Secret Service’s initial  submission. OMB approved the request on April 8, 2010—3 days after DHS’  submission. DHS then submitted the reprogramming notification to the  Appropriations Committees on April 9, 2010, 6 weeks after Secret Service’s  initial submission. Having the notification submitted 3 days—including  the weekend—before the Nuclear Security Summit created challenges for  Secret Service because, according to Secret Service officials, it was  unaware of what funds would be available to cover the costs of the  summit. Without clarifying what is meant by timeliness with respect to  processing reprogramming requests, DHS is limited in its ability to assess  whether its submission of this notification was completed in a timely  manner and, consequently, to help Secret Service manage potential  funding shortfalls and provide Congress the information it needs when  making budgetary decisions.
section_title: Conclusions
paragraphs: Secret Service performs the important mission of protecting presidential  candidates and nominees. Because of the larger crowds and faster pace of  the 2008 presidential campaign compared to prior campaigns, Secret  Service’s spending exceeded the amount budgeted in its fiscal year 2009  Presidential Candidate Nominee Protection PPA. Given the importance of  providing the Appropriations Committees with complete and accurate  financial data concerning presidential candidate protection activities, it is  imperative that Secret Service have the necessary documented internal  control procedures in place, including financial management policies and  procedures, to help ensure it can effectively manage and report on funds  for presidential candidate protection. Relying on an undocumented  manual process to pull together information for key reports on  presidential candidate protection activities increases the risk that  inaccurate information will be reported to Congress and errors could be  made in budget management. Similarly, the lack of documented policies  and procedures for splitting costs for presidential candidate protection  activities across multiple PPAs increases the risk of reporting incomplete,  inaccurate information on these activities. Also, lack of guidance on how  to develop and document appropriate benchmarks for monitoring  presidential candidate protection obligations and expenditures limits the  ability of Secret Service financial management officials to identify any  future funding shortfalls.
Further, recognizing the communication breakdowns that occurred during  fiscal year 2009, DHS and Secret Service have taken steps to improve  communication, including developing the CAP. However, DHS has not  clarified in its guidance all of the CAP measures, including components’  required documentation of internal funding reviews and the negative  impacts of using internal resources in reprogrammings; and the time  frames associated with its timely submission of reprogramming  notifications to the Appropriations Committees. Providing this guidance  could help DHS ensure it is able to approve components’ reprogramming  requests more quickly, assess whether its submission of the  reprogramming notifications to the Appropriations Committees are timely,  and, ultimately, provide Congress the information it needs when making  budgetary decisions.
section_title: Recommendations for Executive Action
paragraphs: To improve financial management controls and communication related to  presidential candidate protection budget execution, we recommend that  the Secretary of DHS take the following five actions:    direct the Director of Secret Service to develop documented procedures  for preparing and reviewing its Monthly Execution and Staffing Reports  and Presidential Campaign Cost Reports;    direct the Director of Secret Service to develop written policies and  procedures for charging costs when protection activities may be funded by  multiple PPAs;    direct the DHS CFO to ensure that DHS’ components, including Secret  Service, have guidance and training on how to develop and document  appropriate benchmarks for monitoring obligations and expenditures;    direct the DHS CFO to develop and provide written guidance clarifying the  elements necessary in a reprogramming request from a component to  document internal funding reviews and the negative impact of using  internal sources; and    direct the DHS CFO to define time frames by which DHS could assess  timeliness of submissions of reprogramming notifications to the  Appropriations Committees.
section_title: Agency Comments and Our Evaluation
paragraphs: On June 23, 2010, DHS provided written comments on a draft of this  report. DHS concurred with all five of our recommendations, and DHS and  Secret Service are taking steps to improve financial management controls  and communication related to presidential candidate budget execution.  For instance, Secret Service has developed documented procedures for  preparing and reviewing its Monthly Execution and Staffing Reports and  Presidential Candidate Costs Reports, and begun to develop written  policies and procedures for charging costs when protection activities may  be funded by multiple PPAs. In addition, the DHS CFO plans to develop a  scorecard to keep track of all reprogramming notifications and assess the  timeliness of submissions. DHS’ comments are reproduced in appendix III.
We are sending copies of this report to the Secretary of Homeland Security  and interested congressional committees. In addition, this report will be  available at no charge on the GAO Web site at http://www.gao.gov.
Should you or your staff have any questions concerning this report, please  contact either David Maurer at 202-512-9627 or by e-mail at  maurerd@gao.gov or Susan Ragland at 202-512-9095 or by e-mail at  raglands@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  Key contributors to this report are listed in appendix IV.
section_title: Appendix I: U.S. Secret Service—Statutory Restriction on Availability of Funds Involving Presidential Candidate Nominee Protection, B-319009, April 27, 2010
paragraphs: The Hoorable Rert C. Brd  Cirman, Subcommittee o HomelanSecrit  Committee o Approritions  Uited Ste Snate The Hoorable Geore V. Voiovich  Ranking Miorit Memer, Subcommittee o HomelanSecrit  Committee o Approritions  Uited Ste Snate The Hoorable Dvid Price  Cirman, Subcommittee o HomelanSecrit  Committee o Approritions  U.S. House of Rretive The Hoorable Hrold Rer  Ranking Miorit Memer, Subcommittee o HomelanSecrit  Committee o Approritions  U.S. House of Rretive Subject:  U.S. Secret Service—Stor Rtrictio Avilabilit of Fun Ivolving  The coferece reort, H.R. Cf. R. No. 111-298, t 92 (2009), ccompanyng the  Departmet of HomelanSecrit Approritions Act, 2010, Pub. L. No. 111-83,   123 St. 2142 (Oct. 28, 2009), directed GAO to examie whether the Departmet of  HomelanSecrit (DHS) and the Uited Ste Secret Service (USSS) violted  ectio 03 of the Cnsolidted Secrit, Disaster Assance, anCtinung  Approritions Act, 2009, Pub. L. No. 110-329, div. D, 122 St. 362, 3680 (St. 30,  2008) and the Atideficie Act, 31 U.S.C. § 1341.  For the reasns et oelow,   dditio to thi legal oio, GAO ixaming DHS’s and USSS’s financil  managemectice, as well as DHS olic anrocedre relted to  communictions with it comagcie.  See H.R. Cf. R. No. 111-298, t 92    (“coferee direct the Comtroller Geerl to . . . idetif ll ctionske or  recommeded to e tke to ddress and correct any violtion”).  ceiving from oth agcie ccounting reort, olic anrocedre docme,  we coclde tht DHS and USSS violted oth ectio 03() and the Atideficie  Act.  Octice whe rederingions to o the view from the relevanagto eablictual record and the agy’s legaitio the subject mtter.   GAO, Procedre and Prctice for Legal Deciions and Oions, GAO-06-1064SP  (Washingto, D.C.: St. 2006), ilable t  www.gao.ov/legal/rerce.html.  I  thi regard, we cocted meetings with oth USSS and DHS offici, reqting anre and coie of releant iternal correspdece.
Both the Atideficie Act anectio 03() retrict the ilabilit of fun fo oligatio and expditre.  The Atideficie Act rohiit an officer or em of the Uited Ste Govermet from mking or authorizing anxpditre or  oligatiocess of or i dvance of ilable app § ligatio or the Atideroritions.  31 U.S.C.    1341()(1).  Thus, an approritiousilable for an ag to ian  ficie Act will e violted.
03() te:   “Noe of the fun rovided by thi Act . . . ll ilable fo oligatio or expditre for ro, roject, or ctivitie through reromming of funcess of $,000,000 or 10 ercet,  whichever i less, tht:  (1) augmeting ro, rojec ctivitie; . . . tht wold result i  change iting ros project, or ctivitie as approved by the Cngress, unless the   o Approritions of the Snate and the House of  Committees R of fun.”   retive re otified 1ays dvance of such reromming  Pub. L. No. 110-329, § 03().
Thi ectio, which applie to moun reter than $ millio, retrict the  ilabilit of fun for oligatio (and expditre) by means of reromming of  ro, roject, anctivitie (PPA) until roer otice i rovided.  The  moun degnated for PPA re found i the expanator teme ccompanyng  DHS’s fir 2009 approritions ct.  Sectio 03(e) of the approritions ct  rovide th“such dollr expanator temell subject to the coditions and reqireme . . . of thi  ectio.”  Id. § 03(e).  moun specified i thi Act anccompanyng  USSSll under the directio of the Secret of HomelanSecrit, 18 U.S.C.   §6(), and i reqired, mong other things, to rotect reidetiand vice  reidetil candidte long with their spus and childre, 18 U.S.C. §6().
Cng. Rec. H9,801 (dil ed. St. 28, 2008).
For fir 2009, USSS received  fiapproritio of $1,408,729,000.    Pub. L. No. 110-329, 122 St. t 3667.  The expanator temet itemize $41,082,00 for the PreidetiCandidte Nomiee Protectio PPA.  1Cng. Rec. H9,801.   Oligations connectio with reidetil candidte omiee rotectiod wi the inaugutio of the Preideand Vice Preidet, i the ret case, o Janu 20, 2009.  Letter from Uderecret of Managemet, Departmet of Homeland  ecrit, to the Cirman, Subcommittee o HomelanSecrit, Committee o  S Approritions, Uited Ste Snate, June 30, 2009 (Rromming Notifictio).
Sused baance from another USSS PPA to  over [] hortfll iunding thi fias  result of the rotective effort for  O June 30, 2009,  moth fter it reidetil candidte omiee rotectioded, DHS otified the Subcommittee HomelanSecrit of the HousanSnate  Approritions Committee tht USSSd expded $,100,000 more thanee  degnated for the PreidetiCandidte Nomiee Protectio PPA.  RrommiNotifictio.  DHSxped tht USS “c the 2008 PreidtiCapagn.”  Id.  t issue here i whether (1) DHS and USSS violted ectio 03(), and (2) if o,  io of ectio 03() constitte  violtio of the Atideficie Act.
Sectio 03()
O June 30, 2009, DHS otified the HousanSnate Subcommittee Homel Secrit of  reromming of $.1 millio to cover  hortfll i the USSS  PreidetiCandidte Capagn Protectio PPA.  Sectio 03() reqire the  Secret of HomelanSecrit to rovide -day dvance otifictio of roed  PPA rerommingscess of $ millio.  A oted above, the 2008 reidetil  cpagn officillded o Janua 20, 2009, anll USSSligations for candida protectioeerred by tht time.  Neverth th PreidetiCandidte Nomiee Protectio PPA.   eless,  moth elapsed etwee  e ed of the cpagn anotifictio of the $.1 millio reromming for the  While it i uncler from the docmetio rovided to us by USSS and DHS whe  USSSceeded the ectio 03() $ millio threhold, the threhold hd to hve  eeceeded by the Inaugutio Janua 20, 2009, wheandidte ro eded.   According to DHS, USSS used moun from it NtionaSpeciSecrit Eve PPA to cover itandidte rotectioligations tht eceeded the   ome fil managemet issu, USSS doe ot ct idedetl of it pareag, DHS.  Meeting etwee DHS Directorte of Managemet, Bet and  Finance, and GAO, Jan. 12, 2010.  DHS reqire it comagcie, iclding  USSS, to submit  writte reromming reqt to the DHS Directorte of  Managemet, Bet and Finance.  DHS submit ll reromming otifictions  reqired under ectio 03() to the HousanSnate Approritions Committee.   Id. $41 millio itemized i the expanator temet for the reidetil candidte  rotectio PPA.  Rromming Notifictio.  However, ectio 03() specificll  rovide tho fun re ilable throug rerommingcess of $ milli o  unless HousanSnate Approritions Committee re otified 1ays dvance of the reromming.  Sce DHSiled to otif the approritions commi 1ays dvance of the oligatio of the rerommed fun, and USSSrred oligationscess of t c violted ectio he $ millio threhold more thanays rior to  ngressionaotifictio of the reromming, we coclde tht DHS and USSS  ().
The ecod qtio as whether  violtio of ectio 03() constitte  violt of the Atideficie Act.  If an ag anligatiocess or dvance of  moun thre legall ilable to the ag, the agas violted the ct.    B-31740, Mr. 23, 2009.   The Atideficie Act ete to ll roviions o imlicte the ilabilit of ag approritions an“agcieust consider the  effect of ll l thddress the ilabilit of approritions.”  Id., . Sectio 03() isuch lw.  Uder ectio 03(), e of the fun approrited to DHS fir 2009 were legall ilable for oligatio throug  rerommingcess of $ millio “unless the th reromming.”  Pub. L. No. 110-329, § 03(). hortfll the PreidetiCandidte Nomiee Protectio PPA, et thee fun  cold ot e rerommed until DHS otified Cngressays dvce of the  reromming .  Thus, USSS and DHS violted the Atideficie Act.
The Atideficie Act reqire tht the ag he“sll reort immeditel to the  .C.  PreideanCngress ll relevant fct an temet of ctionske.”  31 U.S §1.  I dditio, the agus copy of the reort to the Comtroller  Geerl o the same dte it transmit the reort to the PreideanCngress.   .   31 U.S.C. §1, as meded by Cnsolidted Approritions Act, 200, Pub. L  I, § 1401, 118 St. 2809, 3192 (Dec. 8, 2004).  See o   No. 108-447, div. G, title B -30433, Mr. 8, 200.
section_title: Appendix II: DHS CFO–Secret Service Corrective Action Plan (CAP)
paragraphs: Appendix II: DHS CFO–Secret Service  Corrective Action Plan (CAP)
DHS CFO-USSS Corrective Action Plan  Increase Visibility: Implement strategies so both USSS and CFO can more closely  monitor obligations and expenditure, effectively anticipate shortfalls, and take the  necessary actions before an over-obligation of funds occurs.    Annual Obligation Plan: USSS will submit to CFO an annual obligation plan, with  anticipated monthly obligations by PPA, prior to the start of each fiscal year. Updates  for the plan will be provided to CFO before the start of each month.
Early Warning System: USSS will track actual obligations against planned and  anticipated obligations to develop benchmarks that would act as red flags alerting  USSS CFO of potential funding shortfalls.
Improve Funds Controls: Implement strategies to improve the control over funds  distribution, including allotment, obligation, and expenditure.    USSS will implement fiscal controls procedures to ensure that internal and external  reprogramming requests are submitted significantly before anticipated over- obligations are anticipated to occur.
DHS CFO has specific procedures in place if the monthly Budget Execution Report  shows overspending at the PPA level. Specific training will be implemented to ensure  that these procedures are followed.
Increase the Rigor of Internal and External Reprogrammings: Specific processes will  be implemented to standardize the process for internal and external reprogrammings,  increase the rigor of the process, and ensure that the reprogramming vetting process does  not impose burdensome delays.     All internal transfers and realignments will now require the notification and written  approval of DHS CFO.  The Department’s written response will be sent within 24  hours.  o  DHS will implement new procedures to increase the rigor and responsiveness of  reprogramming requests.  o  All external (above threshold) reprogramming proposals will be submitted to the  Appropriations Committees in a timely manner.  o  DHS components will be required to first initiate an internal funding review to  identify lower priority spending within their components before reaching out to  the Department to identify sources in other components. .  o  A reprogramming can only be requested if insufficient internal funds can be  identified and the component can clearly articulate the negative impact of using  internal resources to cover the shortfall.   o  All reprogramming proposals must be submitted in writing and in the appropriate  format. A reprogramming will only be considered in the Department after the  impact of reducing funding for lower priority efforts is clearly articulated and  communicated to DHS CFO in writing.
section_title: Appendix III: Comments from the Department of Homeland Security
section_title: Appendix IV: GAO Contacts and Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contacts named above, Susan Poling, Managing  Associate General Counsel; Kirk Kiester, Assistant Director; Glenn  Slocum, Assistant Director; David Alexander; Thomas Armstrong; Labony  Chakraborty; Kathryn Crosby; Jill Evancho; Gabrielle Fagan; Tyrone  Hutchins; and Felicia Lopez made key contributions to this report.