Secret Service
Additional Guidance Would Enhance Financial Management and Communication of Candidate Protection Spending to Congress Gao ID: GAO-10-762 June 30, 2010Due to the unprecedented pace and crowds of the 2008 presidential campaign, the U.S. Secret Service (Secret Service), a component of the Department of Homeland Security (DHS), exceeded its budgeted amount for fiscal year 2009 presidential candidate nominee protection funding, but did not notify Congress of this shortfall (fiscal year 2009 shortfall) until June 2009--5 months after the Inauguration. In response to the Conference Report accompanying the 2010 DHS Appropriations Act, this report addresses the extent to which, at the time of the fiscal year 2009 shortfall, (1) Secret Service had the necessary internal controls in place to help ensure it could effectively manage and report on funds for presidential candidate protection; and (2) Secret Service and DHS had policies and procedures in place to help ensure that information related to the fiscal year 2009 shortfall was communicated to DHS and Congress. To conduct the audit work, GAO reviewed appropriation laws and regulations, Secret Service financial reports, and various DHS and Secret Service policy and procedural documents. GAO also interviewed officials from DHS and Secret Service.
At the time of the fiscal year 2009 shortfall, Secret Service did not have--and still does not have--all of the necessary internal controls, including policies and procedures, in place to help ensure it can effectively manage and report on funds for presidential candidate protection. For example, the agency relied on undocumented manual processes to prepare and review two key reports--the Monthly Execution and Staffing Report and the Presidential Campaign Cost Report--used to monitor obligations, manage its funds by subaccounts, and report to Congress. Documenting the processes to prepare and review these reports could decrease the risk of future reporting errors and be useful to managers in controlling operations. Secret Service also did not have documented procedures for charging costs for certain candidate protection activities that cut across multiple subaccounts. The subaccounts are not discrete, and Secret Service officials stated that they lacked clarity and procedures on which to use to cover costs for certain protection activities. Documenting policies and procedures for charging such costs could be useful in controlling operations and monitoring budget execution. Also, neither DHS nor Secret Service had documented benchmarks to serve as an early warning system when monitoring obligations and expenditures for potential future funding shortfalls. Lastly, DHS' budget guidance did not specify how to develop such benchmarks. Developing and implementing guidance on how to document benchmarks could help ensure that any future potential shortfalls in presidential candidate protection funds are identified in a timely manner. DHS and Secret Service lacked sufficient policies and procedures to ensure that information related to the fiscal year 2009 shortfall was communicated to DHS and Congress. At the time of the shortfall, DHS had written guidance on how to communicate a violation of the Antideficiency Act--which prohibits federal officials from obligating or expending funds in excess of appropriations--and notify Congress of a reprogramming, or shifting funds within an appropriation. However, because they mistakenly determined the guidance did not apply, Secret Service informed DHS of the shortfall and requested assistance in covering it. GAO issued a legal opinion determining that DHS and Secret Service violated reprogramming notification requirements and the Antideficiency Act. Further, DHS had no written guidance on communicating a reprogramming that did not require congressional notification. Since the shortfall, DHS and Secret Service developed a Corrective Action Plan (CAP) to address issues related to the shortfall. DHS implemented two of the four communication-related CAP measures, but has not provided written guidance for implementing the other two, which require that (1) components complete internal funding reviews prior to submitting reprogramming requests and articulate the negative impact of using internal resources to cover shortfalls, and (2) DHS provide timely submission of reprogramming notifications to the Appropriations Committees.Implementing these measures could help ensure better communication among Secret Service, DHS, and Congress in the event of future shortfalls, and help DHS and the committees assess whether DHS effectively provides information about potential shortfalls. GAO recommends that DHS and Secret Service (1) document certain financial management, cost allocation, and benchmark procedures, and (2) provide guidance on remaining communications-related corrective actions. DHS concurred.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: David C. Maurer Team: Government Accountability Office: Homeland Security and Justice Phone: (202) 512-9627GAO-10-762, Secret Service: Additional Guidance Would Enhance Financial Management and Communication of Candidate Protection Spending to Congress
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
June 2010:
Secret Service:
Additional Guidance Would Enhance Financial Management and
Communication of Candidate Protection Spending to Congress:
GAO-10-762:
GAO Highlights:
Highlights of GAO-10-762, a report to congressional committees.
Why GAO Did This Study:
Due to the unprecedented pace and crowds of the 2008 presidential
campaign, the U.S. Secret Service (Secret Service), a component of the
Department of Homeland Security (DHS), exceeded its budgeted amount
for fiscal year 2009 presidential candidate nominee protection
funding, but did not notify Congress of this shortfall (fiscal year
2009 shortfall) until June 2009”5 months after the Inauguration. In
response to the Conference Report accompanying the 2010 DHS
Appropriations Act, this report addresses the extent to which, at the
time of the fiscal year 2009 shortfall, (1) Secret Service had the
necessary internal controls in place to help ensure it could
effectively manage and report on funds for presidential candidate
protection; and (2) Secret Service and DHS had policies and procedures
in place to help ensure that information related to the fiscal year
2009 shortfall was communicated to DHS and Congress. To conduct the
audit work, GAO reviewed appropriation laws and regulations, Secret
Service financial reports, and various DHS and Secret Service policy
and procedural documents. GAO also interviewed officials from DHS and
Secret Service.
What GAO Found:
At the time of the fiscal year 2009 shortfall, Secret Service did not
have”and still does not have”all of the necessary internal controls,
including policies and procedures, in place to help ensure it can
effectively manage and report on funds for presidential candidate
protection. For example, the agency relied on undocumented manual
processes to prepare and review two key reports”the Monthly Execution
and Staffing Report and the Presidential Campaign Cost Report”used to
monitor obligations, manage its funds by subaccounts, and report to
Congress. Documenting the processes to prepare and review these
reports could decrease the risk of future reporting errors and be
useful to managers in controlling operations. Secret Service also did
not have documented procedures for charging costs for certain
candidate protection activities that cut across multiple subaccounts.
The subaccounts are not discrete, and Secret Service officials stated
that they lacked clarity and procedures on which to use to cover costs
for certain protection activities. Documenting policies and procedures
for charging such costs could be useful in controlling operations and
monitoring budget execution. Also, neither DHS nor Secret Service had
documented benchmarks to serve as an early warning system when
monitoring obligations and expenditures for potential future funding
shortfalls. Lastly, DHS‘ budget guidance did not specify how to
develop such benchmarks. Developing and implementing guidance on how
to document benchmarks could help ensure that any future potential
shortfalls in presidential candidate protection funds are identified
in a timely manner.
DHS and Secret Service lacked sufficient policies and procedures to
ensure that information related to the fiscal year 2009 shortfall was
communicated to DHS and Congress. At the time of the shortfall, DHS
had written guidance on how to communicate a violation of the
Antideficiency Act”which prohibits federal officials from obligating
or expending funds in excess of appropriations”and notify Congress of
a reprogramming, or shifting funds within an appropriation. However,
because they mistakenly determined the guidance did not apply, Secret
Service informed DHS of the shortfall and requested assistance in
covering it. GAO issued a legal opinion determining that DHS and
Secret Service violated reprogramming notification requirements and
the Antideficiency Act. Further, DHS had no written guidance on
communicating a reprogramming that did not require congressional
notification. Since the shortfall, DHS and Secret Service developed a
Corrective Action Plan (CAP) to address issues related to the
shortfall. DHS implemented two of the four communication-related CAP
measures, but has not provided written guidance for implementing the
other two, which require that (1) components complete internal funding
reviews prior to submitting reprogramming requests and articulate the
negative impact of using internal resources to cover shortfalls, and
(2) DHS provide timely submission of reprogramming notifications to
the Appropriations Committees. Implementing these measures could help
ensure better communication among Secret Service, DHS, and Congress in
the event of future shortfalls, and help DHS and the committees assess
whether DHS effectively provides information about potential
shortfalls.
What GAO Recommends:
GAO recommends that DHS and Secret Service (1) document certain
financial management, cost allocation, and benchmark procedures, and
(2) provide guidance on remaining communications-related corrective
actions. DHS concurred.
View [hyperlink, http://www.gao.gov/products/GAO-10-762] or key
components. For more information, contact David C. Maurer at (202) 512-
9627 or maurerd@gao.gov, or Susan Ragland at (202) 512-9095 or
raglands@gao.gov.
[End of section]
Contents:
Letter:
Background:
Documenting Internal Control Procedures Could Help Improve Financial
Management of Funds for Presidential Candidate Protection:
Additional Guidance Could Help DHS and Secret Service Further Improve
Communication in the Event of Future Funding Shortfalls:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: U.S. Secret Service--Statutory Restriction on Availability
of Funds Involving Presidential Candidate Nominee Protection, B-
319009, April 27, 2010:
Appendix II: DHS CFO-Secret Service Corrective Action Plan (CAP):
Appendix III: Comments from the Department of Homeland Security:
Appendix IV: GAO Contacts and Acknowledgments:
Tables:
Table 1: PPAs for Secret Service Salaries and Expenses:
Table 2: Communication-Related CAP Measures Implemented in DHS
Guidance:
Figure:
Figure 1: Fiscal Year 2009 Shortfall: Timeline of Key Events:
Abbreviations:
CAP: Corrective Action Plan:
CFO: Chief Financial Officer:
CFOC: Chief Financial Officer's Council:
CFOC A-123 Guidance: Chief Financial Officers Council's Implementation
Guide for OMB Circular A-123, Management's Responsibility for Internal
Control:
DHS: Department of Homeland Security:
fiscal year 2009 shortfall: Fiscal Year 2009 Presidential Candidate
Nominee Protection Funding Shortfall:
NSSE: National Special Security Event:
OCFO: Office of the Chief Financial Officer:
OMB: Office of Management and Budget:
PPA: Program, Project, or Activity:
TOPS: Travel Manager, Oracle, PRISM, Sunflower system:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
June 30, 2010:
The Honorable Frank R. Lautenberg:
Interim Chairman:
The Honorable George V. Voinovich:
Ranking Member:
Subcommittee on Homeland Security:
Committee on Appropriations:
United States Senate:
The Honorable David E. Price:
Chairman:
The Honorable Harold Rogers:
Ranking Member:
Subcommittee on Homeland Security:
Committee on Appropriations:
House of Representatives:
The U.S. Secret Service (Secret Service)--a component agency of the
Department of Homeland Security (DHS)[Footnote 1]--protects, among
others, major presidential and vice presidential candidates during
presidential campaigns.[Footnote 2] During the 2008 presidential
campaign and 2009 Inauguration, Secret Service provided an
unprecedented level of protection, including for more than 700
candidate campaign trips in the final weeks of the campaign, as well
as the swearing-in ceremony, attended by an estimated 2 million
people. In June 2009--7 months after the 2008 presidential election
and 5 months after the Inauguration--DHS notified the Senate and House
Appropriations Committees that the final protection costs associated
with the 2008 presidential campaign and Inauguration exceeded the
amount Secret Service had budgeted for fiscal year 2009 campaign
protection and that it would reprogram $5.1 million to cover this
shortfall.[Footnote 3] In the Conference Report accompanying the 2010
DHS Appropriations Act, the conferees expressed concerns about the
ability of DHS and Secret Service to provide timely budget
information, and noted other instances of budgetary execution problems
at Secret Service.[Footnote 4] The Conference Report also directed GAO
to:
* review the events surrounding the fiscal year 2009 presidential
candidate nominee protection funding shortfall (fiscal year 2009
shortfall);
* determine whether Secret Service's actions violated section 503 of
the Consolidated Security, Disaster Assistance, and Continuing
Appropriations Act, 2009 (section 503),[Footnote 5] which requires DHS
to notify the Appropriations Committees 15 days in advance of
reprogramming appropriated funds if the reprogramming exceeds $5
million or 10 percent of the amount allotted for a particular
activity, or the Antideficiency Act,[Footnote 6] which prohibits
federal officials from obligating or expending funds in excess or
advance of an appropriation; and:
* identify any actions taken or provide recommendations for actions to
be taken to address any violations.
On April 27, 2010, GAO issued a legal opinion determining that DHS and
Secret Service violated section 503 and the Antideficiency Act.
[Footnote 7] The legal opinion is reproduced in appendix I.
In accordance with the mandate, this report addresses (1) the extent
to which Secret Service had the necessary internal controls, including
financial management policies and procedures, in place to help ensure
it could effectively manage and report on funds for presidential
candidate protection, and (2) the extent to which Secret Service and
DHS had policies and procedures in place to help ensure that
information related to the fiscal year 2009 shortfall was communicated
to DHS and Congress. As our report was focused on financial management
internal controls and communication among DHS, Secret Service, and the
Appropriations Committees regarding presidential candidate protection
funding, we did not assess the appropriateness of overall fiscal year
2009 presidential candidate protection spending. On April 27, 2010, we
briefed the staff of the Senate and House Appropriations Subcommittees
on Homeland Security regarding information contained in this report.
To address our objectives, we reviewed and analyzed DHS and Secret
Service policies and procedures for funds control in place during the
fiscal year 2009 shortfall, which we compared against Standards for
Internal Control in the Federal Government,[Footnote 8] to determine
if they were designed to help ensure that Secret Service could
effectively manage and report on funds for presidential candidate
protection, and help prevent violations of the Antideficiency Act. We
also reviewed and analyzed section 503, the Antideficiency Act, Office
of Management and Budget (OMB) Circular A-11,[Footnote 9] and internal
DHS guidance--such as the fiscal year 2009 Budget Execution Guidance--
to compare the policies and procedures in place during the fiscal year
2009 shortfall to maintain compliance with these laws and regulations
against communication and actions taken by Secret Service and DHS
officials. Further, we compared the November 2009 DHS Chief Financial
Officer (CFO)-Secret Service Corrective Action Plan (CAP) against the
Chief Financial Officers Council's Implementation Guide for OMB
Circular A-123, Management's Responsibility for Internal Control (CFOC
A-123 Guidance)--widely viewed as a "best practices" methodology for
developing and executing CAPs.[Footnote 10] We did so in order to
determine whether the CAP was developed and executed in accordance
with this guidance. In addition, we reviewed and analyzed updated
policies and procedures in place since the fiscal year 2009 shortfall--
such as the fiscal year 2010 Budget Execution Guidance and the DHS CFO
Financial Management Policy Manual Draft of Section 2.4-Budget
Execution--which we compared against the CAP to determine the extent
to which the CAP measures had been incorporated into guidance. We also
reviewed and analyzed Secret Service financial reports to determine if
they provided financial management officials with adequate information
for decision-making purposes. We discussed the reports' methodology
with Secret Service officials and determined that the results are
sufficiently reliable for the purposes of this review. As this was not
a financial audit, we did not trace individual transaction-level
information to source documentation, nor did we assess the reliability
of information drawn from financial management and personnel systems
that fed into these reports.
In addition, we interviewed Secret Service and DHS financial
management officials to determine whether these officials had adequate
financial management information for decision-making purposes. We also
interviewed Secret Service and DHS officials to determine the
management and reporting process for the fiscal year 2009 presidential
campaign protection costs. Finally, we interviewed budget officials
and congressional liaisons at Secret Service and DHS involved in
communication related to the fiscal year 2009 shortfall to describe
their role in (1) communicating the shortfall among Secret Service,
DHS, and the Appropriations Committees; (2) taking actions to address
the shortfall; and (3) developing and implementing new or revised
policies and procedures to address potential future funding shortfalls.
We conducted this performance audit from November 2009 to June 2010 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the work to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our objectives. We believe that the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our objectives.
Background:
Secret Service has two missions--conducting criminal investigations
and providing protection. The criminal investigative mission includes
conducting investigations in areas such as financial crimes, identity
theft, counterfeiting, computer fraud, and computer-based attacks on
banking, financial, and telecommunications infrastructure, among other
activities. As part of the protective mission, Secret Service
protects, among others, the sitting President and Vice President and
their families; major presidential and vice presidential candidates
and, within 120 days of the general presidential elections, their
spouses; the President-and Vice President-elect; and former presidents
and their spouses.
In addition to day-to-day protection activities, Secret Service is
required to provide protection for National Special Security Events
(NSSE).[Footnote 11] The NSSE designation was established by statute
in December 2000, for "special events of national significance"
requiring significant law enforcement presence. The kinds of events
categorized as NSSEs include presidential inaugurations, international
summits held in the United States, major sporting events attended by
protected persons, and presidential nominating conventions. For
instance, during the 2008 presidential campaign and the 2009
Inauguration, a number of events were designated as NSSEs, including
both the Democratic and Republican Nominating Conventions, and the
concert celebrating the Inauguration on the National Mall.
Designations are at the discretion of the President, signed by the
Secretary of DHS, generally on the basis of the size of the event, its
significance, and importance of anticipated attendees. Since fiscal
year 2007, Secret Service has received $1 million annually in
appropriations towards NSSE funding, which is available until expended.
Like other federal agencies receiving annual appropriations, Secret
Service must comply with a variety of fiscal laws, or those laws
related to the control and use of public funds. Specifically, the
Antideficiency Act and section 503 outline requirements that must be
met in the management of, and reporting on, funds, such as the funds
for 2008 presidential candidate protection. The Antideficiency Act
prohibits the making or authorizing of "an expenditure or obligation
exceeding an amount available in an appropriation or fund for the
expenditure or obligation."[Footnote 12] Section 503 states that "None
of the funds — shall be available for obligation or expenditure for
programs, projects or activities through a reprogramming of funds in
excess of $5,000,000 or 10 percent, whichever is less — unless the
Committees on Appropriations...are notified 15 days in advance of such
reprogramming of funds."[Footnote 13]
Reliable financial systems are critical to meeting the reporting
requirements associated with the Antideficiency Act and section 503.
Since October 2004, Secret Service has been using the "Travel Manager,
Oracle, PRISM, Sunflower" system (TOPS) to manage its financial
business processes.[Footnote 14] TOPS is an integrated financial
management system comprised of four applications:
* Travel Manager--input and management of travel vouchers;
* Oracle Financials--core financial and general ledger system;
* PRISM--procurement activities; and:
* Sunflower--property management.
Secret Service maintains financial data within TOPS by project code
and object class.[Footnote 15] In addition, Secret Service uses the
Man hours system to capture hours worked by its agents and certain
support staff.
According to Secret Service officials, prior to fiscal year 2005,
Secret Service had one appropriation account, the Protection Services
and Activity account, to manage appropriated funds for salaries and
expenses. In fiscal year 2005, the Conference Report accompanying the
2005 DHS Appropriations Act itemized specific amounts for activities
supported by Secret Service's Salaries and Expenses appropriation
account.[Footnote 16] The itemizations were made at Secret Service's
Program, Project, or Activity (PPA) level. Secret Service uses PPAs as
subaccounts used to capture and track financial data such as funds
allotted, obligations, and expenditures.[Footnote 17] According to
Secret Service, three PPAs were used to fund 2008 campaign-related
protection activities:
* Presidential Candidate Nominee Protection, which is for the
protection Secret Service provides to major presidential and vice
presidential candidates, and their spouses;
* NSSE, which is used for Secret Service planning and implementing
security for designated NSSEs to ensure the physical protection of the
President, the public, and other Secret Service protectees who
participate in NSSEs; and:
* Protection of Persons and Facilities, which operates to ensure the
personal safety of certain designated individuals, such as the
President and Vice President and former presidents and their spouses,
protect the buildings and grounds where these individuals reside and
work, and protect foreign heads-of-state visiting the United States.
* Table 1 shows the PPAs for Secret Service's Salaries and Expenses
account and the related fiscal year 2009 itemizations for each PPA.
Table 1: PPAs for Secret Service Salaries and Expenses:
Name of PPA: Protection of Persons and Facilities[A];
Fiscal year 2009 itemizations (dollars in thousands): $705,918;
Percentage of total budget authority: 50.1%.
Name of PPA: Domestic Field Operations;
Fiscal year 2009 itemizations (dollars in thousands): $241,772;
Percentage of total budget authority: 17.2%.
Name of PPA: Headquarters, Management and Administration;
Fiscal year 2009 itemizations (dollars in thousands): $182,104;
Percentage of total budget authority: 12.9%.
Name of PPA: Protective Intelligence Activities;
Fiscal year 2009 itemizations (dollars in thousands): $59,761;
Percentage of total budget authority: 4.2%.
Name of PPA: Rowley Training Center;
Fiscal year 2009 itemizations (dollars in thousands): $53,189;
Percentage of total budget authority: 3.8%.
Name of PPA: Electronic Crimes Special Agent Program and Electronic
Crime Task Forces;
Fiscal year 2009 itemizations (dollars in thousands): $51,836;
Percentage of total budget authority: 3.7%.
Name of PPA: Presidential Candidate Nominee Protection[A];
Fiscal year 2009 itemizations (dollars in thousands): $41,082;
Percentage of total budget authority: 2.9%.
Name of PPA: White House Mail Screening;
Fiscal year 2009 itemizations (dollars in thousands): $33,701;
Percentage of total budget authority: 2.4%.
Name of PPA: International Field Office Administration, Operations and
Training;
Fiscal year 2009 itemizations (dollars in thousands): $30,000;
Percentage of total budget authority: 2.1%.
Name of PPA: Support Missing and Exploited Children;
Fiscal year 2009 itemizations (dollars in thousands): $8,366;
Percentage of total budget authority: 0.6%.
Name of PPA: National Special Security Events (NSSE)[A];
Fiscal year 2009 itemizations (dollars in thousands): $1,000;
Percentage of total budget authority: 0.1%.
Name of PPA: Total;
Fiscal year 2009 itemizations (dollars in thousands): $1,408,729;
Percentage of total budget authority: 100.0%.
Source: GAO analysis of H.R. Conf. Rep. No. 111-298 (2009).
[A] These PPAs will be discussed in greater detail later in this
report.
[End of table]
The unpredictable and changing nature of protectee activities creates
ongoing challenges for Secret Service. These challenges include:
1. generally short notice--sometimes 2-3 days--of protectees'
schedules and frequent schedule changes, which makes it difficult to
budget for costs in advance;
2. newly scheduled events requiring shifts in personnel to maintain
current assignments, often resulting in unexpected or additional
overtime costs;
3. personnel cost information not being in real time due to delays in
completion of travel vouchers;
4. the unanticipated increase in pace of the 2008 presidential
campaign compared to previous campaigns upon which the fiscal year
2009 budget was based--for instance, the preinaugural events following
the 2008 campaign included a three-stop train trip and a concert on
the National Mall, not part of previous campaigns; and:
5. the venue and activity being at the discretion of the protectee, to
which Secret Service must adapt its protection services.
In this context, Secret Service received $41 million in appropriated
funds within its Presidential Candidate Nominee Protection PPA for
fiscal year 2009. The amounts designated for PPAs are found in the
explanatory statement accompanying DHS' fiscal year 2009
Appropriations Act. Section 503(e) of the Appropriations Act provides
that "such dollar amounts specified in this Act and accompanying
explanatory statement shall be subject to the conditions and
requirements ... of this section." Early in fiscal year 2009, Secret
Service realized that, due to the increased pace of the campaign and
the large crowds, it might have a shortfall but believed at the time
it could cover the additional expenses with funds from other PPAs. In
January 2009, Secret Service contacted DHS and requested assistance to
cover the shortfall. In May 2009, DHS directed Secret Service to
submit a reprogramming request for the funding, which, after revision
by DHS and Secret Service, was submitted to the Senate and House
Appropriations Committees June 30, 2009. Figure 1 outlines the key
events pertaining to the fiscal year 2009 shortfall.
Figure 1: Fiscal Year 2009 Shortfall: Timeline of Key Events:
[Refer to PDF for image: timeline]
October-December 2008:
Secret Service realized it might have candidate protection shortfall;
into December, Secret Service believed it could cover shortfall by
charging other PPAs, including the NSSE PPA.
January 15, 2009:
Secret Service Assistant Director for Administration informed the DHS
Under Secretary for Management (USM) by telephone of a funding
shortfall of approximately $4 million due to increased costs
associated with the presidential campaign and Inauguration.
January 16, 2009:
Director of Secret Service e-mailed DHS Secretary‘s Chief of Staff,
notifying him that DHS Deputy Secretary said that DHS would cover half
of fiscal year 2009 shortfall, and Secret Service‘s intent to follow
up with DHS CFO.
February 10, 2009:
Secret Service noted the potential shortfall during the 1st quarter
review with the Office of the Chief Financial Officer (OCFO) Budget
Division.
May 15, 2009:
The Secret Service shortfall issue was revisited again during the mid-
year review, and DHS directed Secret Service to submit a reprogramming
request.
June 1, 2009:
Secret Service submitted a reprogramming for $5.1 million to DHS.
June 30, 2009:
OMB approved the reprogramming notification, which had been revised by
Secret Service and resubmitted to OMB. DHS submitted it to Congress
the same day.
Source: GAO analysis of DHS and Secret Service documents.
[End of figure]
In light of these events, the Conference Report accompanying the
fiscal year 2010 DHS Appropriations Act required the DHS CFO and the
Secret Service Assistant Director for Administration to brief the
Appropriations Committees on the process to be implemented in fiscal
year 2010 to ensure the problems related to the fiscal year 2009
shortfall did not reoccur.[Footnote 18] Prior to the briefing, DHS and
Secret Service developed a corrective action plan (CAP) to address the
issues surrounding the shortfall. The CAP includes measures to
"increase visibility," "improve funds control," and "increase the
rigor of internal and external reprogrammings." See appendix II for
the full text of the CAP.
Documenting Internal Control Procedures Could Help Improve Financial
Management of Funds for Presidential Candidate Protection:
Secret Service Has Not Documented Processes for Preparing Key Reports:
Secret Service financial management personnel use an undocumented,
manual process to prepare two key reports used to monitor obligations,
manage its funds by PPA, and report to Congress: the Monthly Execution
and Staffing Report, and the Presidential Campaign Cost Report. The
Monthly Execution and Staffing Report provides data, by account and
PPA, on enacted funding, unobligated carryover(s), obligations and
expenditures to date, and staffing levels. Secret Service provides the
Monthly Execution and Staffing Report to other external parties, such
as the Appropriations Committees. The Presidential Campaign Cost
Report is used internally to monitor costs (budgeted and actual)
during the presidential campaign.
Secret Service financial management personnel manually integrate
information from several sources to prepare the Monthly Execution and
Staffing Report. Each month, staff draw financial data from (1) 16
reports generated from TOPS--the Secret Service financial management
system, (2) information from the Manhours system, which tracks work
hours associated with each project, and (3) information from other
accounting department reports and the SF-133[Footnote 19] to prepare
the Monthly Execution and Staffing Report. Furthermore, TOPS is set up
to maintain and report financial data by project code and object
class. As a result, the financial data needs to be manually adjusted
in order to be presented by PPA in the Monthly Execution and Staffing
Report. Secret Service officials acknowledged that they had not
documented the procedures for developing and reviewing the Monthly
Execution and Staffing Reports, and they agreed that it would be
beneficial to have those procedures documented.
Standards for Internal Control in the Federal Government state that
internal controls need to be clearly documented and the documentation
should appear in management directives, administrative policies, or
operating manuals.[Footnote 20] Such documentation is useful to
managers in controlling their operations and to any others involved in
evaluating or analyzing operations. Documenting the process for
preparing the Monthly Staffing and Execution Report would be useful to
managers in controlling operations, as relying on an undocumented
manual process to pull together information for the Monthly Execution
and Staffing Report increases the risk of errors in that report. For
example, as a result of human error, the Monthly Execution and
Staffing Report for September 2009 originally sent to the
Appropriations Committees overstated current year obligations for one
PPA by $3 million while understating obligations for another PPA by $3
million. Similarly, an error in the Monthly Execution and Staffing
Report for March 2009 occurred because the expenditures-to-date amount
for one account was not updated and therefore the amount from the
previous month was incorrectly carried forward for that account. Also,
we noted several instances on the Monthly Execution and Staffing
Reports that we reviewed where some formulas were inadvertently
missing from columns such as unobligated authority and unexpended
obligations. Secret Service could decrease the risk of reporting
incomplete, inaccurate information by having documented procedures in
place for its staff to prepare and review the Monthly Execution and
Staffing Report. While other controls may also assist in helping to
ensure Secret Service reports complete and accurate information,
documenting these procedures to prepare and review the Monthly
Execution and Staffing Report is a key first step.
Secret Service Uses Informal Processes for Splitting Costs across PPAs:
Secret Service also does not have documented procedures in place for
how to split out costs for protection activities that could cut across
multiple PPAs. Congress itemizes specific amounts from the Salaries
and Expenses appropriation to individual PPAs. According to Secret
Service, the activities associated with PPAs are not discrete because
activities and costs related to PPAs may overlap. For example,
according to Secret Service budget staff, during fiscal year 2009 they
split costs for the January 2009 Inauguration across multiple PPAs--
Presidential Candidate Nominee Protection ($4.1 million), Protection
of Persons and Facilities ($1.0 million), and NSSE ($5.6 million).
Budget staff explained that it charged some Inauguration costs to the
Presidential Candidate Nominee Protection PPA because President-Elect
Obama was in attendance. Similarly, some costs were charged to the
Protection of Persons and Facilities PPA because former presidents and
President Bush attended the Inauguration. Also, because the
Inauguration was designated as an NSSE, some costs of the Inauguration
were charged to the NSSE PPA.
Similarly, during fiscal year 2010, Secret Service had another
instance when it could justify charging costs across multiple PPAs but
before doing so it had to seek clarification from DHS on the
appropriate process and any necessary documentation. To help cover
costs for the April 2010 Nuclear Security Summit, an NSSE, Secret
Service used funds from the Protection of Persons and Facilities PPA
($1.9 million) because the summit included costs such as fencing and
construction. While Secret Service staff have charged costs to
multiple PPAs in some cases, they expressed concern because they were
not certain whether this was the correct procedure to follow.
As with the documentation of the process for preparing the Monthly
Execution and Staffing Reports, and in accordance with Internal
Control Standards, documented policies and procedures for charging
costs in situations where more than one PPA is applicable would be
useful to managers in controlling their operations. Establishing
policies and procedures for charging costs could clarify how Secret
Service can split costs between multiple PPAs and help manage funds
for presidential candidate protection and other PPAs. Also, the lack
of documented policies and procedures increases the risk of reporting
incomplete, inaccurate information because Secret Service officials
could unknowingly charge expenditures to the wrong PPA.
DHS and Secret Service Lack Documented Early Warning System Benchmarks
for Monitoring Obligations and Expenditures:
Neither DHS nor Secret Service have documented early warning system
benchmarks to use when monitoring Secret Service obligations and
expenditures, and therefore these benchmarks may be inconsistently
applied. The CAP developed by DHS and Secret Service outlines the
actions that, if implemented, will help ensure that Secret Service
financial management staff are monitoring obligations and
expenditures, and effectively anticipating shortfalls. The plan
directs Secret Service to implement an early warning system to track
actual obligations against planned and anticipated obligations and to
develop benchmarks that would act as "red flags" alerting the Secret
Service CFO of potential funding shortfalls. While DHS and Secret
Service have identified this as an action item in the CAP, Secret
Service does not yet have a documented system of red flags to alert
its staff to potential funding shortfalls. Similarly, DHS' Budget
Execution Guidance does not provide specific guidance on developing
benchmarks, and Secret Service officials have not documented their own
internal benchmark for monitoring obligations and expenditures as an
early warning system.
Internal Control Standards state that internal controls need to be
clearly documented and that managers need to compare actual
performance to planned or expected results, and activities need to be
established to monitor performance measures and indicators. Even
though documentation does not exist for such a system, both Secret
Service and DHS noted that they take certain actions to identify
potential funding shortfalls. For example, DHS officials told us that
for annual appropriations, they would expect to see 25 percent of the
appropriated amount used each quarter. Any deviations would be
communicated during DHS' quarterly reviews of Secret Service. Secret
Service budget staff also said they use this "straight-line" approach
to monitor budget execution. Nevertheless, written guidance on how to
develop and document appropriate benchmarks for monitoring obligations
and expenditures could help ensure a consistent application of red
flags and therefore increase the effectiveness of an early warning
system to alert officials of potential funding shortfalls.
Additional Guidance Could Help DHS and Secret Service Further Improve
Communication in the Event of Future Funding Shortfalls:
DHS and Secret Service Did Not Follow DHS' Fiscal Year 2009 Guidance
on Communicating Reprogramming Requests and Antideficiency Act
Violations:
At the time of the fiscal year 2009 shortfall, DHS had written
guidance covering communication necessary if a funding shortfall
required a reprogramming notification under section 503, or was a
potential or actual Antideficiency Act violation. Specifically, DHS'
fiscal year 2009 Budget Execution Guidance outlined the process for
components to develop and submit a reprogramming request to DHS to
comply with section 503 and required that DHS' Office of the CFO
(OCFO) transmit decisions on the requests to the component.[Footnote
21] For example, the Budget Execution Guidance requires all
reprogrammings to be submitted at least 45 days in advance of
anticipated expenditure of funds. In July 2008, DHS' OCFO issued
guidance concerning the investigation and reporting of Antideficiency
Act violations. This guidance requires that, among other things,
employees notify their supervisors if they suspect a potential
Antideficiency Act violation, the component and DHS CFO evaluate the
circumstances and complete a preliminary review, and--if it is
determined a potential violation exists--an independent investigative
officer complete a formal investigation and submit a report within 6
months.
The Secret Service's former CFO told us that he did not believe that
the actions Secret Service took in January 2009 to address the fiscal
year 2009 shortfall required congressional notification under section
503, or constituted an Antideficiency Act violation. Secret Service
budget officials reported that, to cover the fiscal year 2009
shortfall in the Presidential Candidate Nominee Protection PPA, which
reached $10.7 million, they charged three PPAs. They showed a negative
balance of $4.1 million in the Presidential Candidate Nominee
Protection PPA, and charged $5.6 million to the NSSE PPA and $1
million to the Protection of Persons and Facilities PPA. The former
CFO told us that, at the time, he did not see the need for a
reprogramming notification, and therefore the agency did not need to
follow DHS' guidance on communicating reprogramming requests. However,
Secret Service budget officials acknowledged that, as discussed later
in this report, the reprogramming request Secret Service submitted to
DHS--and DHS submitted to the Senate and House Appropriations
Committees on June 30, 2009--was for a $5.1 million reprogramming into
the Presidential Candidate Nominee Protection PPA and did not mention
or include amounts associated with other PPAs. The requested $5.1
million reprogramming exceeded section 503 notification thresholds.
Therefore, GAO concluded that DHS and Secret Service violated section
503 and the Antideficiency Act.[Footnote 22]
According to Secret Service officials, in January 2009 Secret Service
communicated to DHS the fiscal year 2009 shortfall and requested
assistance in covering it. According to the former Secret Service CFO,
the agency realized it might have a shortfall in the Presidential
Candidate Nominee Protection PPA as early as October 2008, but
determined it could likely cover the costs using funding from both the
Presidential Candidate Nominee Protection and NSSE PPAs. However, with
the designation of additional NSSEs related to the Inauguration in
December 2008, by January 2009 the agency realized it could not cover
the costs from these two PPAs. Secret Service then informed DHS in
January 2009 that it would have a funding shortfall in its
Presidential Candidate Nominee Protection PPA--of which the agency
could cover half. According to the former Secret Service CFO, DHS then
agreed to look for funding to help cover the shortfall. DHS did not
instruct Secret Service to submit a reprogramming request until May
2009--4 months after the agency's first communication.
Following DHS' direction, Secret Service submitted a $5.1 million
reprogramming request to DHS on June 1, 2009, an amount exceeding the
section 503 threshold. DHS then followed its internal guidance in
obtaining OMB approval of the request. Following OMB's initial
approval of the reprogramming request on June 19, 2009, Secret Service
then modified its request--increasing the amount to include costs
associated with the G20 Summit, which had just been designated an
NSSE, and extended protection for former Vice President Cheney, of
which Secret Service had just become aware--and resubmitted the
request to DHS on June 25, 2009. After receiving OMB's second approval
on June 30, 2009, DHS submitted a reprogramming notification to
Congress on the same day for $5.1 million to be reprogrammed into the
Presidential Candidate Nominee Protection PPA.
DHS Lacked Guidance on Process for Communicating Internal
Reprogrammings:
At the time of the fiscal year 2009 shortfall, there was no written
guidance outlining the process for communicating within DHS or to the
Appropriations Committees information about "internal reprogramming"
[Footnote 23] of funds. For instance, the fiscal year 2009 Budget
Execution Guidance does not include direction to components regarding
how to report internal reprogrammings under the section 503 threshold
in Monthly Execution and Staffing Reports. However, DHS stated that
Secret Service was aware that it was permitted to internally reprogram
funds between PPAs. According to Secret Service officials, they
determined at the time that they could internally reprogram funds, and
when doing so that they should report a negative balance in the
Monthly Execution and Staffing Report. According to Secret Service
officials, DHS communicated to Secret Service after the fact that it
should have internally reprogrammed funding from another PPA into the
Presidential Candidate Nominee Protection PPA and avoided showing a
negative balance in unobligated authority. However, in the past,
Secret Service had submitted Monthly Execution and Staffing Reports
that had included negative balances in the Unobligated Authority
column. According to Secret Service officials in the Office of
Administration, DHS had not informed them not to do so.
DHS and Secret Service Developed CAP to Improve Communication and
Implemented Some of These CAP Measures:
Since the fiscal year 2009 shortfall, Secret Service and DHS developed
a CAP to, among other things, improve communication about internal and
external reprogrammings. In addition, Secret Service officials told us
that their communication with DHS about budget execution has improved,
and DHS officials said that they now provide more training and
guidance to components, such as guidance on general budget execution
and Monthly Execution and Staffing Reports.[Footnote 24] For instance,
DHS' fiscal year 2010 Budget Execution Guidance now requires that
Monthly Execution and Staffing Reports present information on both
internal and section 503 reprogrammings. The CAP contains measures to
improve guidance on what information to communicate during a funding
shortfall, and requires that[Footnote 25]
* all internal transfers and reprogrammings be approved by the DHS CFO
in writing within 24 hours of submission,
* all reprogramming proposals be submitted in writing and in the
appropriate format with required information included,
* components must first initiate an internal funding review and
clearly articulate the negative impact of using internal resources to
cover the shortfall, and:
* all above-threshold reprogrammings be submitted to the
Appropriations Committees in a timely manner.
CFOC A-123 Guidance is widely viewed as a "best practices" methodology
for executing the requirements of appendix A of OMB Circular A-123,
which requires management to develop corrective action plans for
material weaknesses.[Footnote 26] This guidance provides that agencies
construct a corrective action planning framework to facilitate plan
preparation, accountability, monitoring, and communication. Key
information to be included in corrective actions specified in this
guidance includes, among other things, a description of the deficiency
in sufficient detail to provide clarity and facilitate a common
understanding of what needs to be done. DHS has developed and
implemented two of the four communications-related CAP measures in
accordance with this guidance. For instance, DHS' fiscal year 2010
Budget Execution Guidance and DHS CFO's Financial Management Policy
Manual draft of Section 2.4-Budget Execution include updated guidance
to components on how to implement two of the CAP measures outlined
above, as shown in table 2. However, DHS did not develop and implement
the remaining two of the communications-related CAP measures in
accordance with this guidance.
Table 2: Communication-Related CAP Measures Implemented in DHS
Guidance:
CAP measure: All internal transfers and reprogrammings must be
approved by the DHS CFO in writing within 24 hours of submission;
Guidance: DHS' fiscal year 2010 Budget Execution Guidance;
How CAP measure is implemented in guidance: The procedures for
internal reprogramming requests--those below section 503 thresholds--
now require the notification and written approval of the DHS CFO.
CAP measure: All internal transfers and reprogrammings must be
approved by the DHS CFO in writing within 24 hours of submission;
Guidance: DHS CFO's Financial Management Policy Manual draft of
Section 2.4-Budget Execution;
How CAP measure is implemented in guidance: DHS will notify components
within 1 day of the CFO‘s decision on the internal reprogramming
action.
CAP measure: All reprogramming proposals must be submitted in writing
and in the appropriate format with required information included;
Guidance: DHS' fiscal year 2010 Budget Execution Guidance;
How CAP measure is implemented in guidance: Guidance provides the
appropriate format for internal and section 503 reprogramming
requests, including a template for components' use.
Source: GAO analysis of DHS data from DHS guidance and CAP.
[End of table]
Additional Guidance Could Help Ensure Better Communication in the
Event of Future Funding Shortfalls:
While DHS has implemented two of the four communication-related
measures from the CAP in accordance with CFOC A-123 guidance, it has
not developed and implemented the remaining two. Specifically, DHS has
not provided written guidance describing what needs to be done to
implement the CAP measures requiring that (1) components complete
internal funding reviews prior to submitting reprogramming requests
and articulate the negative impact of using internal resources to
cover the shortfall--such as delays in hiring or postponement of
training activities, or both--or (2) DHS provide timely submission of
reprogramming notifications to the Senate and House Appropriations
Committees. Implementing these remaining communication-related
measures from the CAP could help ensure that DHS and Secret Service
communicate effectively with each other and Congress in the event of
future funding shortfalls.
Specifically, receiving guidance on the information DHS would like to
receive from components regarding their internal funding review and
the negative impact of using their internal resources could help
improve the effectiveness with which reprogramming requests are
approved by DHS. For instance, Secret Service submitted a
reprogramming request related to the April 12-13, 2010, Nuclear
Security Summit to DHS on February 25, 2010. According to Secret
Service officials in the Office of Administration, DHS denied their
initial reprogramming request for the Nuclear Security Summit in part
because it did not sufficiently describe Secret Service's internal
funding review and the negative impact upon the agency if it used
internal resources. Secret Service subsequently revised and
resubmitted its request to DHS on March 12, 2010. According to Secret
Service officials, if DHS had provided clear guidance on its
expectations for what information the reprogramming request should
have included in this area, DHS could have approved the request more
quickly.
In addition, clearly defining time frames for its timely submission of
reprogramming notifications to the Appropriations Committees, a
measure delineated by DHS in the CAP, could help enable DHS and the
committees to assess whether DHS effectively provides information
about potential funding shortfalls. After receiving the revised
Nuclear Security Summit request from Secret Service, DHS submitted the
request to OMB for approval on April 5, 2010, more than 5 weeks after
Secret Service's initial submission. OMB approved the request on April
8, 2010--3 days after DHS' submission. DHS then submitted the
reprogramming notification to the Appropriations Committees on April
9, 2010, 6 weeks after Secret Service's initial submission.[Footnote
27] Having the notification submitted 3 days--including the weekend--
before the Nuclear Security Summit created challenges for Secret
Service because, according to Secret Service officials, it was unaware
of what funds would be available to cover the costs of the summit.
Without clarifying what is meant by timeliness with respect to
processing reprogramming requests, DHS is limited in its ability to
assess whether its submission of this notification was completed in a
timely manner and, consequently, to help Secret Service manage
potential funding shortfalls and provide Congress the information it
needs when making budgetary decisions.
Conclusions:
Secret Service performs the important mission of protecting
presidential candidates and nominees. Because of the larger crowds and
faster pace of the 2008 presidential campaign compared to prior
campaigns, Secret Service's spending exceeded the amount budgeted in
its fiscal year 2009 Presidential Candidate Nominee Protection PPA.
Given the importance of providing the Appropriations Committees with
complete and accurate financial data concerning presidential candidate
protection activities, it is imperative that Secret Service have the
necessary documented internal control procedures in place, including
financial management policies and procedures, to help ensure it can
effectively manage and report on funds for presidential candidate
protection. Relying on an undocumented manual process to pull together
information for key reports on presidential candidate protection
activities increases the risk that inaccurate information will be
reported to Congress and errors could be made in budget management.
Similarly, the lack of documented policies and procedures for
splitting costs for presidential candidate protection activities
across multiple PPAs increases the risk of reporting incomplete,
inaccurate information on these activities. Also, lack of guidance on
how to develop and document appropriate benchmarks for monitoring
presidential candidate protection obligations and expenditures limits
the ability of Secret Service financial management officials to
identify any future funding shortfalls.
Further, recognizing the communication breakdowns that occurred during
fiscal year 2009, DHS and Secret Service have taken steps to improve
communication, including developing the CAP. However, DHS has not
clarified in its guidance all of the CAP measures, including
components' required documentation of internal funding reviews and the
negative impacts of using internal resources in reprogrammings; and
the time frames associated with its timely submission of reprogramming
notifications to the Appropriations Committees. Providing this
guidance could help DHS ensure it is able to approve components'
reprogramming requests more quickly, assess whether its submission of
the reprogramming notifications to the Appropriations Committees are
timely, and, ultimately, provide Congress the information it needs
when making budgetary decisions.
Recommendations for Executive Action:
To improve financial management controls and communication related to
presidential candidate protection budget execution, we recommend that
the Secretary of DHS take the following five actions:
* direct the Director of Secret Service to develop documented
procedures for preparing and reviewing its Monthly Execution and
Staffing Reports and Presidential Campaign Cost Reports;
* direct the Director of Secret Service to develop written policies
and procedures for charging costs when protection activities may be
funded by multiple PPAs;
* direct the DHS CFO to ensure that DHS' components, including Secret
Service, have guidance and training on how to develop and document
appropriate benchmarks for monitoring obligations and expenditures;
* direct the DHS CFO to develop and provide written guidance
clarifying the elements necessary in a reprogramming request from a
component to document internal funding reviews and the negative impact
of using internal sources; and:
* direct the DHS CFO to define time frames by which DHS could assess
timeliness of submissions of reprogramming notifications to the
Appropriations Committees.
Agency Comments and Our Evaluation:
On June 23, 2010, DHS provided written comments on a draft of this
report. DHS concurred with all five of our recommendations, and DHS
and Secret Service are taking steps to improve financial management
controls and communication related to presidential candidate budget
execution. For instance, Secret Service has developed documented
procedures for preparing and reviewing its Monthly Execution and
Staffing Reports and Presidential Candidate Costs Reports, and begun
to develop written policies and procedures for charging costs when
protection activities may be funded by multiple PPAs. In addition, the
DHS CFO plans to develop a scorecard to keep track of all
reprogramming notifications and assess the timeliness of submissions.
DHS' comments are reproduced in appendix III.
We are sending copies of this report to the Secretary of Homeland
Security and interested congressional committees. In addition, this
report will be available at no charge on the GAO Web site at
[hyperlink, http://www.gao.gov].
Should you or your staff have any questions concerning this report,
please contact either David Maurer at 202-512-9627 or by e-mail at
maurerd@gao.gov or Susan Ragland at 202-512-9095 or by e-mail at
raglands@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. Key contributors to this report are listed in appendix IV.
Signed by:
David C. Maurer:
Director, Homeland Security and Justice Issues:
Signed by:
Susan Ragland:
Director, Financial Management and Assurance:
[End of section]
Appendix I: U.S. Secret Service--Statutory Restriction on Availability
of Funds Involving Presidential Candidate Nominee Protection, B-19009,
April 27, 2010:
United States Government Accountability Office:
Washington, DC 20548:
B-319009:
April 27, 2010:
The Honorable Robert C. Byrd:
Chairman, Subcommittee on Homeland Security:
Committee on Appropriations:
United States Senate:
The Honorable George V. Voinovich:
Ranking Minority Member, Subcommittee on Homeland Security:
Committee on Appropriations:
United States Senate:
The Honorable David Price:
Chairman, Subcommittee on Homeland Security:
Committee on Appropriations:
U.S. House of Representatives:
The Honorable Harold Rogers:
Ranking Minority Member, Subcommittee on Homeland Security:
Committee on Appropriations:
U.S. House of Representatives:
Subject: U.S. Secret Service Statutory Restriction on Availability of
Funds Involving Presidential Candidate Nominee Protection:
The conference report, H.R. Conf. Rep. No. 111-298, at 92 (2009),
accompanying the Department of Homeland Security Appropriations Act,
2010, Pub. L No. 111-83, 123 Stat. 2142 (Oct. 28, 2009), directed GAO
to examine whether the Department of Homeland Security (DHS) and the
United States Secret Service (USSS) violated section 503 of the
Consolidated Security, Disaster Assistance, and Continuing
Appropriations Act, 2009, Pub. L. No. 110-329, div. D, 122 Stat. 3652,
3680 (Sept. 30, 2008) and the Antideficiency Act, 31 U.S.C. § 1341.
[Footnote 1] For the reasons set out below, we conclude that DHS and
USSS violated both section 503(b) and the Antideficiency Act.
Our practice when rendering opinions is to obtain the views from the
relevant agency to establish a factual record and the agency's legal
position on the subject matter. GAO, Procedures and Practices for
Legal Decisions and Opinions, GAO-06-1064SP (Washington, D.C.: Sept.
2006), available at www.gao.gov/legal/resources.html. In this regard,
we conducted meetings with both USSS and DHS officials, requesting and
receiving from both agencies accounting reports, policy and procedure
documents, and copies of relevant internal correspondence.
Background:
Both the Antideficiency Act and section 503(b) restrict the
availability of funds for obligation and expenditure. The
Antideficiency Act prohibits an officer or employee of the United
States Government from making or authorizing an expenditure or
obligation in excess of or in advance of available appropriations. 31
U.S.C. § 1341(a)(1). Thus, an appropriation must be available for an
agency to incur an obligation or the Antideficiency Act will be
violated.
Section 503(b) states:
"None of the funds provided by this Act ... shall be available for
obligation or expenditure for programs, projects, or activities
through a reprogramming of funds in excess of $5,000,000 or 10
percent, whichever is less, that: (1) augments existing programs,
projects, or activities; ... that would result in a change in existing
programs, projects, or activities as approved by the Congress, unless
the Committees on Appropriations of the Senate and the House of
Representatives are notified 15 days in advance of such reprogramming
of funds."
Pub. L. No. 110-329, § 503(b).
This section, which applies to amounts greater than $5 million,
restricts the availability of funds for obligation (and expenditure)
by means of reprogramming of programs, projects, and activities (PPAs)
until proper notice is provided. The amounts designated for PPAs are
found in the explanatory statement[Footnote 2] accompanying DHS's
fiscal year 2009 appropriations act. Section 503(e) of the
appropriations act
provides that "such dollar amounts specified in this Act and
accompanying explanatory statement shall be subject to the conditions
and requirements ... of this section." Id at § 503(e).
USSS falls under the direction of the Secretary of Homeland Security,
18 U.S.C. § 3056(g), and is required, among other things, to protect
presidential and vice presidential candidates along with their spouses
and children, 18 U.S.C. § 3056(a).
For fiscal year 2009, USSS received a fiscal year appropriation of
$1,408,729,000. Pub. L. No. 110-329, 122 Stat. at 3667. The
explanatory statement itemizes $41,082,000 for the Presidential
Candidate Nominee Protection PPA. 154 Cong. Rec. H9,801. Obligations
in connection with presidential candidate nominee protection end with
the inauguration of the President and Vice President, in the present
case, on January 20, 2009. Letter from Undersecretary of Management,
Department of Homeland Security, to the Chairman, Subcommittee on
Homeland Security, Committee on Appropriations, United States Senate,
June 30, 2009 (Reprogramming Notification).
On June 30, 2009, 5 months after its presidential candidate nominee
protection ended, DHS notified the Subcommittees on Homeland Security
of the House and Senate Appropriations Committees that USSS had
expended $5,100,000 more than had been designated for the Presidential
Candidate Nominee Protection PPA.[Footnote 3] Reprogramming
Notification. DHS explained that USSS had used balances from another
USSS PPA to "cover [a] shortfall in funding this fiscal year as a
result of the protective efforts for the 2008 Presidential Campaign."
Id
Discussion:
At issue here is whether (1) DHS and USSS violated section 503(b), and
(2) if so, whether a violation of section 503(b) constitutes a
violation of the Antideficiency Act.
Section 503(b):
On June 30, 2009, DHS notified the House and Senate Subcommittees on
Homeland Security of a reprogramming of $5.1 million to cover a
shortfall in the USSS Presidential Candidate Campaign Protection PPA.
Section 503(b) requires the Secretary of Homeland Security to provide
a 15-day advance notification of proposed PPA reprogrammings in excess
of $5 million. As noted above, the 2008 presidential campaign
officially ended on January 20, 2009, and all USSS obligations for
candidate protection had been incurred by that time. Nevertheless, 5
months elapsed between the end of the campaign and notification of the
$5.1 million reprogramming for the Presidential Candidate Nominee
Protection PPA.
While it is unclear from the documentation provided to us by USSS and
DHS when USSS exceeded the section 503(b) $5 million threshold, the
threshold had to have been exceeded by the Inauguration on January 20,
2009, when candidate protection ended. According to DHS, USSS used
amounts from its National Special Security Events PPA to cover its
candidate protection obligations that exceeded the $41 million
itemized in the explanatory statement for the presidential candidate
protection PPA. Reprogramming Notification. However, section 503(b)
specifically provides that no funds are available through a
reprogramming in excess of $5 million unless House and Senate
Appropriations Committees are notified 15 days in advance of the
reprogramming. Since DHS failed to notify the appropriations committees
15 days in advance of the obligation of the reprogrammed funds, and
USSS incurred obligations in excess of the $5 million threshold more
than 15 days prior to congressional notification of the reprogramming,
we conclude that DHS and USSS violated section 503(b).
Antideficiency Act:
The second question asks whether a violation of section 503(b)
constitutes a violation of the Antideficiency Act. If an agency incurs
an obligation in excess or advance of amounts that are legally
available to the agency, the agency has violated the act. B-317450,
Mar. 23, 2009. The Antideficiency Act extends to all provisions of law
that implicate the availability of agency appropriations and "agencies
must consider the effect of all laws that address the availability of
appropriations." Id., at 5. Section 503(b) is one such law. Under
section 503(b), none of the funds appropriated to DHS in fiscal year
2009 were legally available for obligation through a reprogramming in
excess of $5 million "unless the Committees on Appropriations of the
Senate and House of Representatives are notified 15 days in advance of
such reprogramming." Pub. L. No. 110-329, § 503(b).
In B-290600, July 10, 2002, we addressed a situation similar to the
one at issue here. In that decision, we determined that both the Air
Transportation Stabilization Board (ATSB) and the Office of Management
and Budget (OMB) violated the Antideficiency Act when OMB apportioned
and ATSB obligated an appropriation in advance of its legal
availability. The Air Transportation Safety and System Stabilization
Act of 2001 authorized ATSB to issue subsidies and loan guarantees to
air carriers that incurred losses as a result of the September 11,
2001, terrorist attacks. Pub. L. No. 107-42, title I, § 101(a)(1), 115
Stat. 230 (Sept. 22, 2001). Congress enacted budget authority for this
purpose but the act provided that the budget authority would be
available only to the extent that the President notified Congress of a
need to use the budget authority to make a loan guarantee. Id at §
101(b). In January 2002, after enactment, OMB apportioned funds to
ATSB, and ATSB signed a loan guarantee obligating $172 million. B-
290600. However, it was not until 4 months later, in May 2002, that
the President transmitted to Congress the required notification. Id As
a result, when OMB apportioned and ATSB obligated the $172 million in
January 2002, the budget authority was not legally available. Id The
result was an Antideficiency Act violation. Id Because the President's
notification followed rather than preceded the obligation of budget
authority, ATSB obligated funds in advance of the legal availability
of the appropriation.
We arrive at a similar conclusion in this case. Like ATSB, USSS
obligated funds that were unavailable for obligation because DHS had
not satisfied the section 503(b) notification requirement. USSS
reprogrammed and obligated $5.1 million to cover shortfalls in the
Presidential Candidate Nominee Protection PPA, yet these funds could
not be reprogrammed until DHS notified Congress 15 days in advance of
the reprogramming Thus, USSS and DHS violated the Antideficiency Act.
The Antideficiency Act requires that the agency head "shall report
immediately to the President and Congress all relevant facts and a
statement of actions taken." 31 U.S.C. § 1351. In addition, the agency
must send a copy of the report to the Comptroller General on the same
date it transmits the report to the President and Congress. 31 U.S.C.
§ 1351, as amended by Consolidated Appropriations Act, 2005, Pub. L
No. 108-447, div. G, title I, § 1401, 118 Stat. 2809, 3192 (Dec. 8,
2004). See also B-304335, Mar. 8, 2005.
Sincerely yours,
Signed by:
Lynn H. Gibson:
Acting General Counsel:
Appendix I Footnotes:
[1] In addition to this legal opinion, GAO is examining DHS's and
USSS's financial management practices, as well as DHS policy and
procedures related to communications with its component agencies. See
H.R. Conf. Rep. No. 111-298, at 92 ("conferees direct the Comptroller
General to ... identify all actions taken or recommended to be taken
to address and correct any violation").
[2] 152 Cong. Rec. H9,801 (daily ed. Sept. 28, 2008).
[3] On some fiscal management issues, USSS does not act independently
of its parent agency, DHS. Meeting between DHS Directorate of
Management, Budget and Finance, and GAO, Jan. 12, 2010. DHS requires
its component agencies, including USSS, to submit a written
reprogramming request to the DHS Directorate of Management, Budget and
Finance. DHS submits all reprogramming notifications required under
section 503(b) to the House and Senate Appropriations Committees. Id.
[End of section]
Appendix II: DHS CFO-Secret Service Corrective Action Plan (CAP):
November 30, 2009:
DHS CFO-USSS Corrective Action Plan:
Increase Visibility: Implement strategies so both USSS and CFO can
more closely monitor obligations and expenditure, effectively
anticipate shortfalls, and take the necessary actions before an over-
obligation of funds occurs.
* Annual Obligation Plan: USSS will submit to CFO an annual obligation
plan, with anticipated monthly obligations by PPA, prior to the start
of each fiscal year. Updates for the plan will be provided to CFO
before the start of each month.
* against planned and anticipated obligations to develop benchmarks
that would act as red flags alerting USSS CFO of potential funding
shortfalls.
Improve Funds Controls: Implement strategies to improve the control
over funds distribution, including allotment, obligation, and
expenditure.
* USSS will implement fiscal controls procedures to ensure that
internal and external reprogramming requests are submitted
significantly before anticipated over-obligations are anticipated to
occur.
* DHS CFO has specific procedures in place if the monthly Budget
Execution Report shows overspending at the PPA level. Specific
training will be implemented to ensure that these procedures are
followed.
Increase the Rigor of Internal and External Reprogrammings: Specific
processes will be implemented to standardize the process for internal
and external reprogrammings, increase the rigor of the process, and
ensure that the reprogramming vetting process does not impose
burdensome delays.
* All internal transfers and realignments will now require the
notification and written approval of DHS CFO. The Department's written
response will be sent within 24 hours.
- DHS will implement new procedures to increase the rigor and
responsiveness of reprogramming requests.
- All external (above threshold) reprogramming proposals will be
submitted to the Appropriations Committees in a timely manner.
- DHS components will be required to fast initiate an internal funding
review to identify lower priority spending within their components
before reaching out to the Department to identify sources in other
components.
- A reprogramming can only be requested if insufficient internal funds
can be identified and the component can clearly articulate the
negative impact of using internal resources to cover the shortfall.
- All reprogramming proposals must be submitted in writing and in the
appropriate format. A reprogramming will only be considered in the
Department after the impact of reducing funding for lower priority
efforts is clearly articulated and communicated to DHS CFO in writing.
[End of section]
Appendix III: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
June 23, 2010:
Mr. David C. Maurer:
Director, Homeland Security and Justice Issues:
and:
Ms. Susan Ragland:
Director, Financial Management and Assurance:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Maurer and Ms. Ragland:
Re: Draft Report GA0-10-762 (Reference # 440844), Secret Service:
Additional Guidance Would Enhance Financial Management and
Communication of Candidate Protection Spending to Congress:
Thank you for the opportunity to review the draft report concerning
the U.S. Secret Service's (USSS) Financial Management System. The
Department of Homeland Security (DHS) and USSS concur with GAO's
report findings and proposed recommendations. There were five
recommendations for executive action. To facilitate oversight and
ensure accountability over results, DHS will include these
recommendations as Mission Action Plans for USSS and the DHS Chief
Financial Officer (CFO), as appropriate. We would like to respectfully
offer the following comments:
GAO Recommendation #(1): That the Secretary of DHS directs the
Director, USSS, to develop documented procedures for preparing and
reviewing its Monthly Execution and Staffing Report and Presidential
Campaign Costs Reports.
DHS Response: DHS concurs with this recommendation. The DHS Financial
Management Policy Manual (FMPM) Section 2.5, Administrative Control of
Funds, requires Components to establish and maintain effective
controls over appropriations and other funds, and to develop and
implement procedures and internal controls to comply with
administrative control of funds policy. The CFO recently conducted a
limited-scope review of component-level policies and procedures to
determine component compliance with department-wide policy. During the
review, it was noted that USSS does not have policies and procedures
in place regarding administrative control of funds.
DHS will direct USSS to develop internal policy and procedures that
address administrative control of funds, including specific procedures
for preparing and reviewing the Monthly Execution and Staffing Report
and the Presidential Campaign Costs Reports. In addition, DHS will
issue a memorandum to all DHS component heads stressing the importance
of administrative control of funds and the need for written policies
and procedures in place to ensure compliance with laws and regulations.
USSS has developed and documented procedures for preparing and
reviewing its Monthly Execution and Staffing Reports and Presidential
Campaign Costs Reports.
GAO Recommendation # (2): That the Secretary of DHS directs the
Director, USSS, to develop written policies and procedures for
charging costs when protection activities may be funded from multiple
Programs, Projects, or Activities (PPAs).
DHS Response: DHS concurs with this recommendation. The DHS Financial
Management Policy Manual Section 2.5, Administrative Control of Funds,
requires components to establish and maintain effective controls over
appropriations and other funds, and to develop and implement
procedures and internal controls to comply with administrative control
of funds policy. As stated above, USSS does not have policies and
procedures in place regarding administrative control of funds. DHS
will direct USSS to develop internal policy and procedures that
address administrative control of funds, including specific policies
for determining the appropriate funding for costs associated with
protection activities that may be funded from multiple PPAs.
USSS has begun to develop written policies and procedures for charging
costs when protection activities may be funded by multiple PPAs.
GAO Recommendation # (3): That the Secretary of DHS directs the DHS
CFO to ensure that DHS' components, including USSS, have guidance and
training on how to develop and document appropriate benchmarks for
monitoring obligations and expenditures.
DHS Response: DHS concurs with this recommendation. The DHS CFO has
established a budget execution workshop to train all DHS components in
the following areas/categories:
* The purpose and process of apportionments and reapportionments;
* The purpose of tracking all obligations and expenditures;
* Administrative control of component resources;
* The Anti-Deficiency Act (ADA);
* Fiscal Law: Purpose, Time and Amount;
* Establishing obligation and outlay rates for annual, multi-year and
no-year appropriations;
* Preparing operating and expenditure plans;
* Reporting obligations and expenditures to OMB and Congress;
* The SF-133, Report on Budget Execution and Budgetary Resources.
GAO Recommendation # (4): That the Secretary of DHS directs the CFO to
develop and provide written guidance clarifying the elements necessary
in a reprogramming request from a component to document internal
funding reviews and the negative impact of using internal sources.
DHS Response: DHS concurs with this recommendation. On May 19, 2010,
the DHS CFO issued updates to the FY2010 Budget Execution Guidance,
Section F: Requirements for Reprogramming Requests & Below Threshold
Requests. The updated guidance requires Components to:
* Perform an internal review of resources to identify lower priority
spending that can be used to offset the potential shortfall before
seeking assistance from the Department.
* Analyze the impact of shifting resources from lower priority
activities.
The DHS CFO will expand the guidance on Section F of the FY2010 Budget
Execution Guidance to include minimum elements required to document
internal funding reviews and impact the reprogramming.
GAO Recommendation # (5): That the Secretary of DHS directs the DHS
CFO to define timeframes by which DHS could assess timeliness of
submissions of reprogramming notifications to the Appropriations
Committees.
DHS Response: DHS concurs with this recommendation. The updated FY2010
Budget Execution Guidance requires Components to notify the Department
no less than 45 calendar days before the reprogramming action needs to
occur but no later than May 28, 2010. The DHS CFO will further define
timeframes for reprogramming notifications for the following:
* Component submission to the DHS CFO.
* DHS CFO submission to the Office of Management and Budget.
* DHS CFO submission to the Appropriations Committees.
* DHS notification to Components of the Appropriations Committees
decision.
In addition, the DHS CFO will develop a scorecard to keep track of all
reprogramming notifications and assess the timeliness of submissions.
Thank you for the opportunity to comment on this draft report and we
look forward to working with you on future homeland security issues.
Sincerely,
Signed by:
Jerald E. Levine:
Director:
Departmental Audit Liaison Office:
[End of section]
Appendix IV: GAO Contacts and Acknowledgments:
GAO Contacts:
David C. Maurer, (202) 512-9627 or maurerd@gao.gov Susan Ragland,
(202) 512-9095 or raglands@gao.gov:
Acknowledgments:
In addition to the contacts named above, Susan Poling, Managing
Associate General Counsel; Kirk Kiester, Assistant Director; Glenn
Slocum, Assistant Director; David Alexander; Thomas Armstrong; Labony
Chakraborty; Kathryn Crosby; Jill Evancho; Gabrielle Fagan; Tyrone
Hutchins; and Felicia Lopez made key contributions to this report.
[End of section]
Footnotes:
[1] Homeland Security Act of 2002, Pub. L. No. 107-296, title VIII, §
821,116. Among other things, this law transferred Secret Service from
the Department of the Treasury to DHS, effective March 1, 2003.
[2] "Major" presidential and vice presidential candidates are
determined by the DHS Secretary after consultation with an advisory
committee consisting of the Speaker and minority leader of the House
of Representatives, Senate majority and minority leaders and at least
one other member chosen by the committee. Secret Service also
protects, among others, the President and Vice President; the
President-and Vice President-elect; former Presidents and their
spouses; and, within 120 days of the general presidential elections,
spouses of major presidential and vice presidential candidates. 18
U.S.C. sec. 3056(a)(7).
[3] Reprogramming is the shifting of funds within an appropriation--
from one object class to another or from one program activity to
another--to use them for purposes other than those contemplated at the
time of the appropriation. See GAO, Glossary of Terms Used in the
Federal Budget Process, at 85, GAO-05-734SP (Washington, D.C.:
September 2005).
[4] H.R. Conf. Rep. No. 111-298, at 92 (2009).
[5] Pub. L. No. 110-329, div. D., § 503, 122 stat. 3652, 3680 (Sept.
30, 2009).
[6] 31 U.S.C. § 1341 (a)(1)(A).
[7] GAO, U.S. Secret Service--Statutory Restriction on Availability of
Funds Involving Presidential Candidate Nominee Protection, B-319009
(Apr. 27, 2010).
[8] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[9] OMB Circular No. A-11, Preparation, Submission, and Execution of
the Budget (June 2008). This circular was updated in March 2010.
[10] Chief Financial Officer's Council, Implementation Guide for OMB
Circular A-123, Management's Responsibility for Internal Control
Appendix A, Internal Control Over Financial Reporting (July 2005).
[11] Pub. L. No. 106-544, § 3, 114 Stat. 2715, 2716 (Dec. 19, 2000).
[12] 31 U.S.C. § 1341(a)(1)(A).
[13] Pub. L. No. 110-329, div. D., 122 Stat. 3652, 3680 (Sept. 30,
2008).
[14] DHS does not currently have an integrated departmentwide
financial system and therefore there are various financial systems in
place across the DHS components.
[15] Secret Service uses project codes to internally capture and track
financial data. The first three digits of the project code indicate,
for example, inauguration, campaign, or president-elect protection.
Following guidance from OMB Circular No. A-11, Schedule O, object
classes are types of transaction categories such as overtime, travel
of persons, and communications.
[16] H.R. Conf. Rep. No. 108-774, at 60-61 (2004).
[17] GAO, Glossary of Terms Used in the Federal Budget Process, at 80,
[hyperlink, http://www.gao.gov/products/GAO-05-734SP] (Washington,
D.C.: September 2005).
[18] H.R. Conf. Rep. No. 111-298, at 92 (2009).
[19] The SF-133 is a report on budget execution and budgetary
resources. It allows for the monitoring of the status of funds that
were apportioned by the SF-132 Apportionment and Reapportionment
Schedule and funds that were not apportioned. It also ties an agency's
financial statements to their budget execution. See OMB Circular No. A-
11, at sec. 121 and 130 (March 2010).
[20] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1].
[21] DHS provides its Budget Execution Guidance to components to
ensure that they adhere to statutory, administrative, and
congressional budget execution requirements and procedures.
[22] B-319009.
[23] According to DHS' fiscal year 2010 Budget Execution Guidance,
internal reprogrammings are realignments between PPAs within the same
appropriation that are below the section 503 thresholds. This is
distinct from charging multiple PPAs to cover the costs of an
activity, as Secret Service did during the 2008 presidential campaign.
[24] As of June 2010, DHS' training for Secret Service is scheduled
for July 26, 2010.
[25] For the purposes of our analysis the measures in the CAP related
to increased rigor of internal and external reprogrammings are
characterized as actions DHS and Secret Service are taking to improve
communication.
[26] A-123's use of the term "material weakness" is similar to the
same term used by auditors to identify internal control weaknesses
found during a financial statement audit. The circular's use of the
same term encompasses not only financial reporting, but also
encompasses weaknesses found in program operations and compliance with
applicable laws and regulations. Material weaknesses for the purposes
of this circular are determined by management, whereas material
weaknesses reported as part of a financial statement audit are
determined by independent auditors.
[27] In response to questions from the Appropriations Committees, DHS
revised the reprogramming and resubmitted it to OMB on April 13, 2010.
The revised reprogramming was approved by OMB April 15, 2010, and sent
to the committees on April 16, 2010. It was approved by the Senate
Appropriations Committee on April 21, 2010, and the House
Appropriations Committee on April 27, 2010.
[End of section]
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