Centers for Disease Control and Prevention:

Independent Accountants Identify Financial Management Weaknesses

GAO-01-40: Published: Nov 15, 2000. Publicly Released: Dec 15, 2000.

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This report documents GAO's concurrence with the findings of PricewaterhouseCoopers' (PwC) report on the Centers for Disease Control and Prevention's (CDC) financial management operations. To effectively monitor and evaluate PwC's work, GAO reviewed PwC's methodology for conducting its work, its collection techniques, resulting analysis, and the draft and final reports. Overall, PwC found significant weaknesses in CDC's financial management procedures, operations, systems, and staff. PwC stated that CDC's financial management capabilities has not kept pace with its expanding mission and funding growth. GAO notes that PwC's report provided CDC with both a framework and critical steps for beginning a long-term upgrading effort, and CDC should use this report as a guide.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve financial operations and to begin changing CDC's culture to value financial management, the CDC Director should prepare and expeditiously implement a comprehensive financial management improvement plan that incorporates the over 60 recommendations to PwC's October 12, 2000, report on its management review of CDC's financial management practices.

    Agency Affected: Department of Health and Human Services: Public Health Service: Centers for Disease Control and Prevention

    Status: Closed - Implemented

    Comments: During its review of CDC financial management, GAO concurred with findings from a review conducted by PricewaterhouseCoopers (PWC) which determined that CDC had significant weaknesses in its core financial management processes including weaknesses in the guidance provided for financial and budget processes, communication of financial management issues, and financial management systems development and training. PWC issued 60 recommendations for CDC to improve its overall financial management. CDC recently completed an effort to determine the status of actions that the agency has taken to address the 60 recommendations from PWC's report. CDC reported and provided supporting documentation to show that it has improved its guidance for financial and budget processes by developing a series of budget execution Standing Operating Procedures and revising its budget structure to better align funding with the structure of the agency. CDC also established a monthly newsletter called Budget Notes that is distributed through its home page to communicate budget policy issues. They also developed a series of year-end closing meetings between budget and accounting staff to improve communication about financial statement preparation. Finally, CDC implemented key phases of the new Unified Financial Management System (UFMS), an Oracle Database accounting system and provided specialized Oracle training to accounting and budget staff. These actions have contributed to CDC establishing a culture that focuses on financial management issues and helped the agency obtain a "clean" audit opinion.

    Recommendation: To improve financial operations and to begin changing CDC's culture to value financial management, the CDC Director should implement changes to its Chief Financial Officer (CFO) organization to enhance the skill sets of its financial management staff and increase the overall visibility of financial management. In implementing these changes, CDC should ensure that its CFO executives have expertise and proven track records in their respective areas, especially in accounting.

    Agency Affected: Department of Health and Human Services: Public Health Service: Centers for Disease Control and Prevention

    Status: Closed - Implemented

    Comments: During its review of CDC financial management, GAO concurred with findings from a review conducted by PricewaterhouseCoopers (PWC) which determined that CDC had significant weaknesses in the skill set of its financial management staff, the visibility of financial management staff throughout the agency and weaknesses in the expertise its CFO executives. CDC has reported and provided documentation to show that it has made significant changes to address these weaknesses. For example, CDC has reorganized the Financial Management Office. All fiscal and budget staff in the CDC Program Offices (CIOs) now report to FMO. This change expands the role of financial management in the programs, and improves communication and coordination. CDC also developed a Financial Management Certificate Program with specific tracks for accountants, budget analysts and financial management. The program has 278 employees enrolled and 123 have completed their tracks. In addition, CDC hired a Chief Operating Officer and Financial Management Officer who hold Masters of Business Administration degrees and selected a Certified Public Accountant to serve as Chief Financial Officer and Deputy Director of Finance and Accounting. CDC also intensified its efforts to recruit, hire and train talented accountants. Currently, CDC's Financial Management Office (FMO) includes 27 MBAs, 17 CPAs, and 7 CGFMs. These actions have contributed to CDC establishing a culture that focuses on financial management issues and helped the agency obtain a "clean" audit opinion.

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