Forest Service: Year-end Financial Reporting Significantly Improved, but Certain Underlying Problems Remain

In November 2004, the Forest Service issued its finalized version of the "USDA Forest Service Business Operations Plan, Version 2, which defines long-term and short-term financial management goals. The Plan is divided into 6 goals, one of which is to "Ensure Financial Accountability." The goal statement is as follows: Effectively accomplish Business Operations components of the agency's efforts to improve and maintain financial accountability and integrity as demonstrated through an unqualified audit opinion. Objectives include (1) sustain financial management improvements and maintain an unqualified audit opinion through excellence in resource and capital asset management; (2) provide accurate reports to internal and external business partners; (3) agency and budget decisions are based on the use of tools that assess agency performance; (4) sustain financial improvements through the issuance of manuals and handbooks, the provision of financial management training, and the resolution of material weaknesses and audit findings; and (5) agency use of WorkPlan improves budget formulation and allocation processes.

In April 2004, the agency initiated a Financial Management Improvement Plan (FMIP) to reengineer the budget and finance business processes and standardize the budget and finance functions into a centralized location. The design phase was completed in November 2004 at which time the building/testing phase began. To address organization issues, the project team prepared a centralization business case, including an estimate of the investment required to implement the centralized processes as well as anticipated benefits. In January 2005, the Budget and Finance Operations Center in Albuquerque, New Mexico opened and centralization of activities is scheduled to be completed by October 2005. The FMIP assumes that centralization will improve internal controls by reducing the number of accounting stations from 153 to a single location. The FMIP also provides for standardization of business processes and procedures to eliminate redundancies, errors, and rework in order to ensure accountability for transaction processing and reporting. The plan focuses on fixing the accounting processes (i.e. source of accounting errors and control weaknesses). Internal control corrective actions, including training, are addressed in a series of detailed plans that cover the various facets of Forest Service's financial operations such as property, receivables, budget execution and payments. To specifically address FFMIA weaknesses, the Chief Financial Officer issued an updated remediation plan that details the areas of noncompliance and corrective actions planned.

The USDA Forest Service's Business Operations Strategic Plan, Version 2, dated October 2004 along with the Forest Service Financial Management Improvement Plan and Material Weakness Action Plan Details, provide target dates for corrective actions, persons responsible for carrying out corrective actions, status, and resources needed including FTEs and contract amounts.

The USDA Forest Service Financial Management Improvement Plan and Material Weakness Action Plan Details, provide persons responsible for carrying out corrective actions, target dates, status, and resources needed including FTEs and contract amounts.

In April 2004, the agency initiated a Financial Management Improvement Plan (FMIP) to reengineer the budget and finance functions. The FMIP prioritizes the improvement initiatives, including financial management system enhancements, using the following criteria: (1) Criticality of "fixing" the process (versus the risk of not fixing), (2) Return on investment, (3) Resources available to make the change, (4) Readiness for change, and (5) Dependencies on other initiatives.