DHS reduces improper payments, acting CFO says

The Homeland Security Department is closer to getting its financial records in order and anticipates major gains this year, Peggy Sherry, the department's acting CFO, said May 13.

At the same time, Sherry acknowledged difficulties in transformation of legacy financial management systems. DHS recently canceled its second attempt to modernize its financial system IT in the Transformation and System Consolidation (TASC) contract.

When the department opened its doors in 2003, it inherited 30 significant deficiencies, including 18 material weaknesses, Sherry told the House Oversight Committee's Government Organization, Efficiency and Financial Management Subcommittee.

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With those improvements, the department’s auditable balance sheet balances has increased to approximately 90 percent, she said.

In fiscal 2010, Homeland Security Secretary Janet Napolitano committed to the goal of receiving a qualified audit opinion on the DHS consolidated balance sheet in fiscal 2011. To achieve that goal, the Coast Guard needs to make specific improvements and corrections, Sherry said.

Sherry said she is meeting with Coast Guard officials twice a month to implement their Financial Strategy for Audit Readiness.

“The progress they have made so far is impressive, demonstrating controls over current year activity, verifying the accuracy of accounting data, and analyzing the financial impact of their legacy systems. By executing corrective action plans, implementing new processes, and monitoring risk throughout the fiscal year, the U.S. Coast Guard is putting the department on a path to attaining a balance sheet opinion in FY 2011,” Sherry said.

Sherry said improper payments were reduced departmentwide from $929,000 in fiscal 2008 to $38,000 in fiscal 2010.

DHS subsequently has canceled the procurement, according to Rep. Todd Platts (R-Pa.), chairman of the subcommittee. It is the second time DHS has terminated a financial management modernization effort in recent years, following the suspension of eMerge2 several years ago.

“The Department made a decision on Thursday to cancel its procurement of a major financial system. I remember all too well the debate surrounding eMerge2, the financial systems project that was started in 2003 and abandoned after spending $9 million," Platts said May 13.

"The successor to eMerge2, TASC, was able to leverage some of that money, but there are certainly some sunk costs associated with these two failed attempts. I understand the Department is taking a new approach, and we look forward to hearing how that change in focus will help DHS reach its goals,” he added.

Sherry said she was continuing to collaborate with DHS units “to determine what steps can be taken now to prepare for migration to a new system and improve the fidelity of the current financial system in the short term.”