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  • 8.

    GAO and the Department auditors have reported since its inception that internal control and financial management weaknesses have prevented the Department from implementing successful financial management systems that improve Department business operations and provide accurate and reliable day-to-day financial and performance information. For fiscal years 2006 and 2005, the Department auditors were unable to provide an opinion on the Department consolidated financial statements. GAO points out in its report that achieving a “clean” opinion is not the end game. The Department needs to resolve its outstanding internal control issues.

    • How will obtaining a clean opinion on the Department’s financial statements impact its financial management modernization?

While there continues to be much focus on agency and governmentwide audit opinions, getting a clean audit opinion, though important in itself, is not the end goal. The end goal is the establishment of a fully functioning Chief Financial Officer (CFO) operation that includes (1) modern financial management 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 financial management 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. Because of the 10 material weaknesses reported20 by DHS financial statement auditors, DHS management, the Congress, and others do not have reliable financial data for managing the agency. It is imperative that DHS reengineer its processes across the agency as part of addressing these material weaknesses.

In early March 2007, DHS officials issued a high-level plan to address these material weaknesses, referred to as the Internal Control Over Financial Reporting Playbook. However, the Playbook is not a comprehensive effort to address DHS’s financial management systems needs because it is limited to financial statement preparation based on two tracks. The first track focuses on corrective action strategies for material weaknesses, and the second track focuses on building support for the Secretary’s internal control over financial reporting assurance statement. Much more detail is needed to provide a financial management strategy or plan for integrating and modernizing DHS’s financial management systems. In addition, it is important to fix the problems that are embedded in the existing financial management systems before other DHS components are migrated to the any of these systems.


We are sending a copy of this report to the Secretary of Homeland Security, and other interested parties. This report is also available on GAO’s home page at http://www.gao.gov. Should you have any questions on matters discussed in this

20Department of Homeland Security, Performance and Accountability Report Fiscal Year 2006 (Washington, D.C.: November 2006).

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GAO-07-1157R DHS Posthearing Questions

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