JMD has overall responsibility for managing the working capital fund and AFF. Justice’s working capital fund was created by Congress on January 2, 1975. The fund is authorized to maintain moneys from four distinct sources, or functions (see table 1). The first and primary function of the fund is to finance, on a reimbursable basis, administrative shared services provided by JMD to other components of the department and other federal agencies. The second function of the working capital fund is to collect up to 3 percent of funds collected pursuant to civil debt collection litigation activities into the fund. A third function of the working capital fund is to collect up to 4 percent of earnings from its shared services provision. Finally, the working capital fund’s fourth function is to capture expired departmental unobligated balances into the working capital fund’s Unobligated Balance Transfers (UBT) account. Because the working capital fund is a no-year account, all amounts earned or collected by the fund are available without fiscal year limitation to be used for specific authorized purposes. For example, amounts from three of the four working capital fund functions may be used for capital equipment investments and financial system improvements. The largest portion of the working capital fund comes from charges for centralized administrative and infrastructure support services and functions collected on a reimbursable basis from Justice components. The shared services provided by the working capital fund are generally commercial functions, such as data processing, publications, building services, financial operations, employee data, telecommunications, property management, and space management (see working capital fund services and support in fig. 1). While most Justice components use the working capital fund to obtain administrative shared services, there is no statutory requirement that they do so. For fiscal year 2010, Justice’s largest customers were the U.S. Attorney’s Office, JMD, the Bureau of Prisons, the Federal Bureau of Investigation, and the Drug Enforcement Administration (see customers in fig. 1). Some services are also available to other federal agencies. For example, the Department of Homeland Security (DHS) was the largest non-Justice customer of the working capital fund. The working capital fund received $38 million from DHS in fiscal year 2010 for information technology services. However, JMD officials told us that DHS is exiting the working capital fund and its remaining agreements with the fund are expected to be completed by fiscal year 2013. To set and review rates for working capital fund services, JMD develops, in the context of Justice’s budget formulation process, an annual 2-year operating plan. As a part of developing the operating plans, JMD sets the rates for its services using one of three strategies. The “dollar-per-widget” strategy aligns rates with the cost of the service provided. JMD creates an internal cost schedule of these services that lists, for example, how much a photocopy or scan job costs. This strategy is designed to bill customers for the amount of service actually used. The pass-through charge strategy is used to set rates for services that the working capital fund acquires from another provider. Customer rates are based on costs as determined by the non-Justice service providers, such as the flexible spending account services provided by the Office of Personnel Management and rent charges from the General Services Administration. The allocation strategy is applied when actual usage is more difficult to predict, such as for information technology security, e-government services, and acquisition support. Allocations are determined in various ways, such as a percentage of full-time equivalents (FTE), a percentage of budget authority, or a weighted average of both. Additionally, JMD staff factor in data such as recent cost information and expected use of a service for the coming year. To calculate the estimated cost for a specific customer, JMD reviews the customer’s actual use in prior years and expected use for the upcoming fiscal year. From that, JMD calculates a percentage to charge customers that will cover the cost of providing that level of service. All customers using a service are charged a percentage of total estimated costs throughout the year. JMD officials told us that they generally apply the dollar-per-widget and pass-through charge strategies in setting shared services rates and that they only use the allocation strategy when the other strategies would not work well. Justice established its eight-member Customer Advisory Board (CAB) in 1994 to improve customer satisfaction with the working capital fund. The CAB also advises JMD on fund management issues. The eight components represented on the CAB are the Bureau of Alcohol, Tobacco, Firearms and Explosives; Bureau of Prisons; Drug Enforcement Administration; Federal Bureau of Investigation; General Legal Activities; U.S. Attorneys; U.S. Marshals Service; and Office of Inspector General. JMD elected these eight components to be members of the CAB because they were the working capital fund’s largest customers. JMD convenes an annual meeting with CAB members at the beginning of each fiscal year to present the updated operating plan and selected purchases for the year. We have previously identified the following four key operating principles to guide the management of working capital funds. For further information about the four key principles and their underlying components, see figure 2. Clearly delineate roles and responsibilities: Appropriate delineation of roles and responsibilities promotes a clear understanding of who will be held accountable for specific tasks or duties, such as authorizing and reviewing transactions, implementing controls over working capital fund management, and helping ensure that related responsibilities are coordinated. In addition, this reduces the risk of mismanaged funds and tasks or functions “falling through the cracks.” Moreover, it helps customers know who to contact if they have questions. Ensure self-sufficiency by recovering the agency’s actual costs: Transparent and equitable pricing methodologies allow agencies to ensure that rates charged recover the agencies’ actual costs and reflect customers’ service usage. If customers understand how rates are determined or changed—including the assumptions used— customers can better anticipate potential changes to those assumptions, identify their effect on costs, and incorporate that information into budget plans. A management review process can help to ensure that the methodology is applied consistently over time and provides a forum to inform customers of decisions and discuss as needed. Measure performance: Performance goals and measures are important management tools applicable to all operations of an agency, including the program, project, or activity levels. Performance measures and goals could include targets that assess fund managers’ responsiveness to customer inquiries, the consistency in the application of the funds’ rate-setting methodology, and the billing error rates. Performance measures that are aligned with strategic goals can be used to evaluate whether and, if so, how working capital fund activities are contributing to the achievement of agency goals. A management review process comparing expected to actual performance allows agencies to review progress toward goals and potentially identify ways to improve performance. Build in flexibility to obtain customer input and meet customer needs: Opportunities for customers to provide input about working capital fund services or voice concerns about needs in a timely manner enable agencies to regularly assess whether customer needs are being met or have changed. This also enables agencies to prioritize customer demands and use resources most effectively, enabling them to adjust working capital fund capacity up or down as business rises or falls. By incorporating these principles in written guidance, agencies promote consistent application of management processes and provide a baseline for agency officials to assess and improve management processes. Moreover, agencies can use guidance as a training tool for new staff and as an information tool for customers, program managers, stakeholders, and reviewers. JMD has well-established policies and procedures for tracking and monitoring each of the four working capital fund functions to adhere to authorized purposes. JMD uses its financial management system, the Financial Management Information System (FMIS), to track moneys by project codes to distinguish among the different working capital fund functions. Additionally, Justice’s written policies direct the head of each component to maintain a financial accounting system with internal controls in place to ensure effective management and disbursement of federal funds. FMIS also supports the departmentwide fund control system; it is designed to restrict both obligations and expenditures from each appropriation or fund account to the amount available for obligation or expenditure. Since 1984, all working capital fund moneys are identified and tracked using reimbursement code numbers so that JMD can identify the source of all funds and monitor obligations established against the working capital fund’s partitioned subaccounts related to each of the fund’s four functions. Balances associated with each function are tracked in separate partitions in the working capital fund and remain available until expended. This ensures that the funds associated with the four working capital fund functions are tracked and managed to ensure that they are used in accordance with its authorities. JMD structures its reimbursable agreements with customers in a way that facilitates adherence to the Economy Act—the statutory authority underlying most of the shared services orders received from customers. For example, Justice aligns its agreements to coincide with a single fiscal year and has policies against accepting advanced funds from federal customers (instead, Justice generally receives reimbursements after providing shared services). This helps Justice and its customers comply with the Economy Act’s deobligation requirements and mitigates the risk of using appropriated funds when they are not legally available. Justice’s policies also require that JMD establish an accurate and reliable tracking system to monitor, on an ongoing and consistent basis, obligations established against reimbursable agreements for billing purposes. Justice has issued guidance on how JMD should manage payments to the working capital fund so that those amounts are accurately recorded and controlled, and ensure that anticipated and actual reimbursements for goods or services provided are properly recorded. Further, Justice’s policies govern how JMD controls and monitors shared services funds and describe the responsibilities of both the provider and customer. For example, these policies task JMD, in the role of the service provider, with the responsibility of monitoring reimbursements anticipated, earned, billed, unbilled, and collected, in relation to the agreed-upon agreement amount.