Homeland Security
Transforming Departmentwide Financial Management Systems Remains a Challenge Gao ID: GAO-07-1041T June 28, 2007Since 2003, when the Department of Homeland Security (DHS) began operations, it has faced the difficult challenge of bringing together 22 diverse agencies and developing an integrated financial management system to provide reliable, timely, and useful financial information. GAO's 2007 report, Homeland Security: Departmentwide Integrated Financial Management Systems Remain a Challenge, GAO-07-536, emphasized the key issues related to DHS attempting to transform its financial management systems. For today's hearing, this testimony, based on GAO's recent report, (1) summarizes DHS's financial system transformation efforts, (2) points out key financial system transformation challenges at DHS, and (3) highlights the building blocks that DHS should consider to form the foundation for successful financial management system transformation efforts.
DHS began implementation of the Electronically Managing Enterprise Resources for Government Effectiveness and Efficiency (eMerge2) program in January 2004 to integrate financial management systems across the entire department and to address the multitude of financial management weaknesses DHS inherited. In December 2005, the DHS Chief Financial Officer (CFO) decided not to exercise the next contract option with the systems integrator, and by September 2006, DHS's new CFO stated that eMerge2 was officially "dead." DHS officials have stated that about $52 million was spent on this project before it was halted but could not provide documentation to support this amount. DHS's decision to end the project before spending an estimated $229 million was prudent; however, the agency has made little progress since that time and as a result has missed an invaluable opportunity to address existing financial management problems. While DHS officials have recognized the need for an integrated financial management system, the department has not yet developed an overall transformation strategy that includes financial management policies and procedures, standard business processes, a human capital strategy, and effective internal controls. DHS officials have acknowledged that the Internal Controls Over Financial Reporting Playbook issued in March 2007 has a policy and process focus and does not comprise a strategy for financial systems modernization. DHS's recently developed high-level financial management systems strategy, the Transformation and Systems Consolidation, focuses on leveraging existing systems investments across DHS components and is still in the early stages of development. More detailed implementation strategies will be necessary to fully address financial management system integration efforts. Consolidating financial management systems for an entity as large and diverse as DHS poses significant management challenges. DHS also has an opportunity to reap substantial benefits by reengineering business processes and standardizing those processes in terms of both productivity gains and staff portability across the various components. Based on industry best practices, GAO has identified four key building blocks that will be critical to DHS's ability to successfully complete its financial management transformation: (1) developing a concept of operations, (2) defining standard business processes, (3) developing a migration and/or implementation strategy for DHS components, and (4) defining and effectively implementing disciplined processes necessary to properly manage the specific projects. Fully embracing these four building blocks and human capital best practices will be critical to the success of any future financial management plan or strategy that addresses implementing and/or migrating to an integrated departmentwide financial management system at DHS.
GAO-07-1041T, Homeland Security: Transforming Departmentwide Financial Management Systems Remains a Challenge
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Testimony:
Before the Subcommittee on Federal Financial Management, Government
Information, Federal Services, and International Security, Committee on
Homeland Security and Governmental Affairs, U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 3:00 p.m. EDT:
Thursday, June 28, 2007:
Homeland Security:
Transforming Departmentwide Financial Management Systems Remains a
Challenge:
Statement of McCoy Williams:
Director, Financial Management and Assurance Keith Rhodes:
Chief Technologist, Applied Research and Methods:
Center for Technology and Engineering:
GAO-07-1041T:
GAO Highlights:
Highlights of GAO-07-1041T, a testimony before the Subcommittee on
Federal Financial Management, Government Information, Federal Services,
and International Security, Committee on Homeland Security and
Governmental Affairs, U.S. Senate
Why GAO Did This Study:
Since 2003, when the Department of Homeland Security (DHS) began
operations, it has faced the difficult challenge of bringing together
22 diverse agencies and developing an integrated financial management
system to provide reliable, timely, and useful financial information.
GAO‘s 2007 report, Homeland Security: Departmentwide Integrated
Financial Management Systems Remain a Challenge, GAO-07-536, emphasized
the key issues related to DHS attempting to transform its financial
management systems.
For today‘s hearing, this testimony, based on GAO‘s recent report, (1)
summarizes DHS‘s financial system transformation efforts, (2) points
out key financial system transformation challenges at DHS, and (3)
highlights the building blocks that DHS should consider to form the
foundation for successful financial management system transformation
efforts.
What GAO Found:
DHS began implementation of the Electronically Managing Enterprise
Resources for Government Effectiveness and Efficiency (eMerge2) program
in January 2004 to integrate financial management systems across the
entire department and to address the multitude of financial management
weaknesses DHS inherited. In December 2005, the DHS Chief Financial
Officer (CFO) decided not to exercise the next contract option with the
systems integrator, and by September 2006, DHS‘s new CFO stated that
eMerge2 was officially ’dead.“ DHS officials have stated that about $52
million was spent on this project before it was halted but could not
provide documentation to support this amount. DHS‘s decision to end the
project before spending an estimated $229 million was prudent; however,
the agency has made little progress since that time and as a result has
missed an invaluable opportunity to address existing financial
management problems.
While DHS officials have recognized the need for an integrated
financial management system, the department has not yet developed an
overall transformation strategy that includes financial management
policies and procedures, standard business processes, a human capital
strategy, and effective internal controls. DHS officials have
acknowledged that the Internal Controls Over Financial Reporting
Playbook issued in March 2007 has a policy and process focus and does
not comprise a strategy for financial systems modernization. DHS‘s
recently developed high-level financial management systems strategy,
the Transformation and Systems Consolidation, focuses on leveraging
existing systems investments across DHS components and is still in the
early stages of development. More detailed implementation strategies
will be necessary to fully address financial management system
integration efforts.
Consolidating financial management systems for an entity as large and
diverse as DHS poses significant management challenges. DHS also has an
opportunity to reap substantial benefits by reengineering business
processes and standardizing those processes in terms of both
productivity gains and staff portability across the various components.
Based on industry best practices, GAO has identified four key building
blocks that will be critical to DHS‘s ability to successfully complete
its financial management transformation:
* developing a concept of operations,
* defining standard business processes,
* developing a migration and/or implementation strategy for DHS
components, and
* defining and effectively implementing disciplined processes necessary
to properly manage the specific projects. Fully embracing these four
building blocks and human capital best practices will be critical to
the success of any future financial management plan or strategy that
addresses implementing and/or migrating to an integrated departmentwide
financial management system at DHS.
What GAO Recommends:
Though there are no recommendations in this statement, in its related
report (GAO-07-536), GAO made six recommendations focused on the need
for DHS to define a departmentwide financial management strategy and
embrace best practices, including human capital practices, to foster
its systems integration effort. DHS concurred with GAO‘s
recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-1041T].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact McCoy Williams at (202)
512-9095 or Keith Rhodes at (202) 512-6412.
[End of section]
Mr. Chairman and Members of the Subcommittee:
It is a pleasure to be here today to participate in this hearing on the
Department of Homeland Security's (DHS) ongoing efforts to effectively
modernize its financial management systems. Modern financial management
systems are a critical component to instituting strong financial
management as called for by the Chief Financial Officers (CFO) Act of
1990,[Footnote 1] the Federal Financial Management Improvement Act of
1996,[Footnote 2] and other legislation. Hearings such as this one
today can be very useful to foster meaningful financial management
reform.
Over the years, we have reported on various agencies' financial
management system implementation failures. As we testified[Footnote 3]
in March 2006, agencies continue to struggle with developing and
implementing integrated financial management systems that achieve
expected functionality within cost and timeliness goals. Our recent
report,[Footnote 4] which was prepared at the request of this
subcommittee, discusses in detail some of the most significant problems
and observations we identified with DHS's financial management system
modernization efforts. Since 2003, GAO has designated implementing and
transforming DHS as high risk[Footnote 5] because the agency has yet to
implement a corrective action plan that includes a comprehensive
transformation strategy, and because its management systems--
especially related to financial, information, acquisition, and human
capital management--are not yet integrated and wholly operational.
Today, we would like to provide our perspectives on the importance of
DHS following best practices in developing and implementing its
financial management systems. Specifically, we would like to:
* summarize DHS's financial management systems transformation efforts,
* point out key financial management system transformation challenges
at DHS, and:
* highlight the building blocks that form the foundation for successful
financial management system transformation efforts.
Our statement is based upon our recently issued report,[Footnote 6] as
well as our previous reports and testimonies, which were performed in
accordance with U.S. generally accepted government auditing standards.
Background:
Since DHS began operations in March 2003, as mandated by the Homeland
Security Act of 2002,[Footnote 7] it has faced the daunting task of
bringing together 22 diverse agencies and developing an integrated
financial management system. DHS inherited many financial management
weaknesses and vulnerabilities from the 22 agencies. Auditors had
identified 30 reportable conditions,[Footnote 8] 18 of which were
considered material internal control weaknesses[Footnote 9] in the
components prior to the transfer to DHS. In fiscal year 2003, the DHS
financial statement auditors reported 14 reportable conditions, of
which 7 were considered to be material weaknesses. While incremental
progress has been made, the material internal control weaknesses and
financial reporting problems continued in fiscal year 2006. In fiscal
year 2006, while the total number of reportable conditions decreased to
12, the number of material weaknesses increased to 10. Some of the more
recent material weaknesses identified by the auditors include problems
with fund balance with treasury, budgetary accounting, and
intergovernmental balances.
In early March 2007, DHS officials issued the Internal Controls Over
Financial Reporting (ICOFR) Playbook, a high-level plan with a stated
purpose of addressing the existing internal control weaknesses. DHS
officials have reported that the ICOFR Playbook draws from internal
control best practices to establish a management control program that
measures performance and provides accountability for improvement. DHS
officials expect the ICOFR Playbook to guide DHS for the next several
years through fundamental financial management improvement across the
spectrum of financial activities supporting the agency's mission.
eMerge2 Project Was Unsuccessful:
DHS began implementation of the Electronically Managing Enterprise
Resources for Government Effectiveness and Efficiency (eMerge2) program
in January 2004 to integrate financial management systems across the
entire department and to address the department's financial management
weaknesses. eMerge2 was expected to establish the strategic direction
for migration, modernization, and integration of DHS financial,
accounting, procurement, personnel, asset management, and travel
systems, processes, and policies. In February 2005, the DHS CFO
conducted a review of the eMerge2 effort. DHS chose not to exercise the
next contract option, and DHS's contract with Bearing Point, Inc.
(Bearing Point), the systems integrator, to acquire and implement
eMerge2 expired in December 2005.
In March 2006, DHS's Deputy CFO testified[Footnote 10] that eMerge2 was
taking a new direction in that the department was going to perform an
assessment of existing financial management systems at the component
level to determine whether internal resources could be leveraged. DHS
officials also reported that they were going to review the Office of
Management and Budget's (OMB) Financial Management Line of Business
initiative to assess whether migration to a shared service provider was
a feasible option. In March 2006, we testified[Footnote 11] that DHS
was at an important crossroads in implementing a financial management
system, and we discussed the necessary building blocks that form the
foundation for successful financial management system implementation
efforts.
Finally, in September 2006, the newly appointed CFO stated that eMerge2
was officially "dead." See figure 1 for a summary of the eMerge2
timeline. DHS officials have stated that approximately $52 million was
spent on the eMerge2 project before it was halted in December 2005. DHS
could not provide any documentation to support these reported costs.
DHS's decision to end the project before spending an estimated $229
million on a financial management system that would not provide the
expected system functionality and desired performance was prudent, and
we support the decision to cut its losses. However, the agency has made
little progress since that time and has missed an invaluable
opportunity to address existing financial management problems.
Figure 1: Timeline of Key eMerge2 Events:
[See PDF for image]
Source: GAO.
[End of figure]
Financial Management Systems Transformation Efforts Are Incomplete:
While DHS officials have recognized the need for an integrated
financial management system, the department has not developed an
overall financial management transformation strategy that includes
financial management policies and procedures, standard business
processes, a human capital strategy, and effective internal controls.
DHS officials have acknowledged that the ICOFR Playbook has a policy
and process focus and does not comprise a strategy for financial
systems modernization. DHS's high-level financial management systems
strategy, Transformation and Systems Consolidation (TASC), focuses on
leveraging existing systems investments across DHS components, and is
still in the early stages of development. More detailed implementation
strategies will be necessary to fully address financial management
system integration efforts.
DHS recently provided us with its high-level strategy--TASC--which
calls for DHS to consolidate its financial management systems into one
of two models: the Transportation Security Administration (TSA) systems
model or the U.S. Customs and Border Protection (CBP) systems model,
which the department refers to as shared baselines. Some of the main
objectives of this strategy are to realize cost savings and operational
efficiencies, reduce the number of financial systems, and ensure that
internal controls are embedded in these financial systems. DHS and OMB
officials told us that OMB approved DHS's decision to rely on its in-
house core financial management operations.
Our concern is that the components where the proposed shared baselines
are currently in use have numerous financial management weaknesses and
consequently do not appear to be good candidates to be the models for
an entity with an annual budget in excess of $40 billion. For example,
the financial statement auditors for TSA reported[Footnote 12] that
TSA--which is serviced by the Coast Guard--was unable to provide
sufficient evidential matter or make knowledgeable representations to
support fiscal year 2005 and 2006 transactions and account balances,
particularly for budgetary accounting and undelivered orders and
property, plant, and equipment, among others. While DHS officials have
stated that TSA's audit shortcomings were centered on policies and
procedures and are not systems-oriented problems, our analysis of the
auditor's report indicated that the problems were broad based. As DHS
has recognized, success in financial management rests upon a
comprehensive framework of people, policies, processes, systems, and
assurance. Accordingly, it is imperative that DHS fully understands the
policy and procedures weaknesses at TSA in order to prevent such
weaknesses from affecting subsequent users.
In addition, the TASC strategy document and other draft documents DHS
recently provided to us are incomplete. The documents provide a high-
level perspective of the systems comprising the TSA shared baseline and
broad time frames for migrating various DHS components. Much more
detailed planning is needed to ensure that DHS has a solid foundation
and road map for this transformation effort. For example, it is not
clear which DHS component is expected to host[Footnote 13] the TSA
shared baseline and what other services will be provided. Issues
related to how this change will affect DHS's human capital are not yet
addressed. Further, the TASC strategy does not address the CBP baseline
nor, most importantly, how these various systems will ultimately be
unified for departmentwide information needs. Much more detail is
needed to provide a financial management strategy or plan for
integrating and modernizing DHS's financial management systems.
Moreover, we would like to highlight the need for a close
interrelationship between TASC and the ICOFR Playbook. The ICOFR
Playbook calls for policies and procedures to be developed in a variety
of financial management areas, such as intragovernmental transactions;
legal and other liabilities; budgetary accounting; property, plant, and
equipment; and operating materials and supplies. It is important that
these policies and procedures be embedded in the financial systems that
are discussed in TASC so that rework is minimized. While the ICOFR
Playbook in particular continues to focus primarily on getting a
"clean" audit opinion on DHS's annual financial statements, getting a
"clean" audit opinion, although important, is not the end goal. The end
goal is to establish a fully functioning CFO operation that includes
(1) modern financial systems that provide reliable, timely, and useful
information to support day-to-day decision making and oversight and for
the systematic measurement of performance; (2) a cadre of highly
qualified senior-level and supporting staff; and (3) sound internal
controls that safeguard assets and ensure proper accountability.
Ultimately, DHS must be able to provide reliable, useful, and timely
financial management information so that DHS leadership and the
Congress are well positioned to make fully informed decisions to secure
America's homeland.
Four Key Building Blocks and Effective Human Capital Management Must
Drive DHS's Financial Management Transformation Efforts:
Mr. Chairman, at this time I would like to point out that based on
industry best practices, we have identified four key building blocks
that will be critical to DHS's ability to successfully complete its
financial transformation. Our March 2006 testimony[Footnote 14] and,
more recently, our report for this subcommittee,[Footnote 15] pointed
out that careful consideration of these four concepts, each one
building upon the next, will be integral to the success of DHS's
strategy. The four concepts are (1) developing a concept of operations,
(2) defining standard business processes, (3) developing a migration
and/or implementation strategy for DHS components, and (4) defining and
effectively implementing disciplined processes necessary to properly
manage the specific projects. Fully embracing these four building
blocks and human capital best practices will be critical to the success
of any future financial management system plan or strategy for
transforming departmentwide financial management systems at DHS. We
have continued to refine these key issues to ensure they remain closely
aligned with DHS's stated approach--most recently, the department's
TASC strategy.
DHS also has an opportunity to reap substantial benefits by
reengineering business processes and standardizing those processes to
realize productivity gains and staff portability across the various
components. In addition, identifying staff with the requisite skills to
implement such systems and identifying gaps in needed staff skills and
filling them are necessary to successfully implementing and operating a
new financial management system. Any DHS financial management system
transformation plan or strategy will be inherently complex and
challenging, making the adoption of best practices even more important
for this undertaking. Table 1 highlights the key issues to be
considered for each of the four areas.
Table 1: Key Issues for DHS to Consider Based on the Four Building
Blocks:
Building block: Concept of operations: Describe systems characteristics
for a proposed system from a user's perspective;
Key issues:
* Define how DHS's day-to-day financial management operations are and
will be carried out to meet mission needs;
* Clarify which component and departmentwide systems are considered
financial management systems;
* Include a transition strategy that is useful for developing an
understanding of how and when changes will occur;
* Develop an approach for obtaining reliable information on the costs
of its financial management systems investments;
* Link DHS's concept of operations to its enterprise architecture.
Building block: Standard business process: Identify preferred business
processes to standardize applications and training and portability of
staff;
Key issues:
* Assign responsibility for developing departmentwide standard business
processes that meet the needs of its component agencies;
* Develop an approach to encourage agencies to adopt new processes
rather than selecting other methods that simply automate old ways of
doing business;
* Provide a foundation for component efforts to describe the business
processes needed for unique missions, or develop subprocesses to
support those at the departmentwide level.
Building block: Strategy for implementing the shared baseline approach:
Utilize a detailed plan to consolidate financial management operations;
Key issues:
* Develop specific criteria for requiring component agencies to migrate
to one of the shared baselines rather than attempting to develop and
implement their own stovepiped business systems;
* Provide the necessary information for a component agency to make a
selection of a shared baseline system;
* Define and instill new values, norms, and behaviors within component
agencies that support new ways of doing work and overcoming resistance
to change;
* Build consensus among customers and stakeholders on specific changes
designed to better meet their needs;
* Plan, test, and implement all aspects of the transition from one
organizational structure and business process to another.
Building block: Disciplined processes: Reduce development time and
enhance effectiveness by adopting industry standards and best
practices;
Key issues:
* Incorporate industry standards and best practices into DHS-wide
guidance related to financial management systems implementation
efforts;
* Take actions to reduce risks and costs associated with data
conversion and interface efforts;
* Adopt an oversight process to ensure that modernization efforts
effectively implement the prescribed policies and procedures.
Source: GAO.
[End of table]
As we previously stated, effective human capital management is critical
to the success of any transformation effort. We reported in our
Executive Guide: Creating Value Through World-class Financial
Management[Footnote 16] that having staff with the appropriate skills
is key to achieving financial management improvements, and managing an
organization's employees is essential to achieving results. Strategic
human capital management for financial management projects includes
organizational planning, staff acquisition, and team development. The
independent public accountants who conducted DHS's fiscal year 2006
audit have stated that many of the department's difficulties in
financial management and reporting can be attributed to the original
stand-up of a large, new, and complex executive branch agency without
adequate organizational expertise in financial management and
accounting. Moreover, DHS's Resource Management Transformation Office
officials have stated that because of staffing shortages, outside
contractors are currently performing some of the financial management
activities or duties that internal DHS staff would normally perform.
Some of the most pressing human capital challenges at DHS include (1)
successfully completing its ongoing transformation; (2) forging a
unified results-oriented culture across the department; (3) obtaining,
developing, providing incentives to, and retaining needed talent; and
(4) most importantly, maintaining leadership at the top, to include a
chief operating officer or chief management officer.
Having adequate and sufficient human resources with the requisite
training and experience to successfully implement a financial
management system is a critical success factor. Strategic human capital
planning is necessary for all stages of a financial systems
implementation. Agencies across the federal government face the
challenge of sustaining the momentum of transformation because of the
limited tenure of key administration officials. Managing the
transformation of financial management systems at an organization the
size and complexity of DHS requires comprehensive coordinated planning
and integration of key management functions across all components of
the department.
In our related report, released today, we made six recommendations
focused on the need for DHS to develop a financial management plan or
strategy and to fully adopt the building blocks and human capital
practices that are vital to minimizing the risk related to modernizing
its financial management systems. In written comments on a draft of
this report, DHS concurred with our recommendations and described the
approach and steps that are planned to improve DHS's financial
management systems.
Concluding Observations:
GAO and others have found that the key to implementing systems that
meet cost, schedule, and performance objectives is to have effectively
implemented the disciplined processes necessary to reduce risks to
acceptable levels. Ending eMerge2 was a prudent decision; however, we
are concerned that DHS still lacks a clearly defined financial
management strategy or financial management system implementation
effort to even begin to address the integration and transformation
issues highlighted in our most recent high-risk report.
Given that DHS is one of the largest and most complex executive branch
agencies in the federal government, developing, operating, maintaining,
and transforming its financial management systems represent a
monumental challenge. This challenge is compounded by the relatively
recent creation of DHS and the poor condition of the range of legacy
financial and related business systems it inherited. Critical success
factors for DHS's transformation efforts will include using the four
building blocks and human capital best practices to provide reasonable
assurance that the risks associated with implementing a departmentwide
integrated financial management system are minimized. If properly
implemented, the recommendations included in our related report
released today, which are based on best practices, will help reduce the
risk associated with a project of this magnitude and importance to an
acceptable level. Otherwise, DHS runs the risk of repeating the failure
of eMerge2. At the request of this subcommittee, this testimony
summarizes the results of our first review of DHS's financial
management transformation efforts. We look forward to continuing to
work with you as we continue to monitor DHS's efforts to transform its
financial management systems. As DHS moves forward, your subcommittee's
continuing efforts to oversee the status of this transformation will be
critical to its success.
Mr. Chairman, this concludes our prepared statement. We will be happy
to respond to any questions you or other members of the subcommittee
may have at this time.
Contacts and Acknowledgments:
For information about this statement, please contact McCoy Williams,
Director, Financial Management and Assurance, at (202) 512-9095 or
williamsm1@gao.gov, or Keith A. Rhodes, Chief Technologist, Applied
Research and Methods, Center for Engineering and Technology, at (202)
512-6412 or rhodesk@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this testimony. Individuals who made key contributions to this
testimony include Kay Daly, Assistant Director; Chris Martin, Senior
Level Technologist; Felicia Brooks; Francine Delvecchio; and Chanetta
Reed.
FOOTNOTES
[1] Pub. L. No. 101-576, 104 Stat. 2838 (Nov. 15, 1990). The Department
of Homeland Security Financial Accountability Act of 2004, Pub. L. No.
108-330 § 3, 118 Stat. 1275, 1276 (Oct. 16, 2004), added DHS to the
list of CFO Act agencies.
[2] Pub. L. No. 104-208, div. A., § 101(f), title VIII, 110-Stat. 3009,
3009-389 (Sept. 30, 1996).
[3] GAO, Financial Management Systems: DHS Has an Opportunity to
Incorporate Best Practices in Modernization Efforts, GAO-06-553T
(Washington, D.C.: Mar. 29, 2006).
[4] GAO, Homeland Security: Departmentwide Integrated Financial
Management Systems Remain a Challenge, GAO-07-536 (Washington, D.C.:
June 21, 2007).
[5] GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.:
January 2007).
[6] GAO-07-536.
[7] Pub. L. No. 107-296, 116 Stat. 2135 (Nov. 25, 2002).
[8] Under standards issued by the American Institute of Certified
Public Accountants (AICPA), reportable conditions are matters coming to
the auditors' attention relating to significant deficiencies in the
design or operation of internal controls that, in the auditors'
judgment, could adversely affect the department's ability to record,
process, summarize, and report financial data consistent with the
assertions of management in the financial statements. The AICPA
recently revised its guidance for audits of financial statements
beginning on or after December 15, 2006, to replace the term
"reportable condition" with "significant deficiency."
[9] A material weakness was previously defined as a reportable
condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level
the risk that misstatements caused by error or fraud in amounts that
would be material in relation to the financial statements being audited
may occur and not be detected within a timely period by employees in
the normal course of performing their assigned functions. The new
definition of a material weakness is a significant deficiency, or
combination of significant deficiencies, that results in more than a
remote likelihood that a material misstatement of the financial
statements will not be prevented or detected. According to AICPA
guidance, this change is effective for audits of financial statements
beginning on or after December 15, 2006.
[10] Department of Homeland Security, March 29, 2006, testimony before
the House Government Reform Subcommittee on Government Management,
Finance, and Accountability and the House Homeland Security
Subcommittee on Management, Integration, and Oversight.
[11] GAO-06-553T.
[12] Department of Homeland Security, Performance and Accountability
Report Fiscal Year 2006 (Washington, D.C.: November 2006).
[13] Information technology hosting involves providing secure facility
space, networks, and hardware to host software applications and
providing the necessary personnel to operate this secure environment.
[14] GAO-06-553T.
[15] GAO-07-536.
[16] GAO/AIMD-00-134.
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Government Accountability Office, 441 G Street NW, Room 7125
Washington, D.C. 20548:
Public Affairs:
Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548:
