NASA OIG: Synopsis of Management Issues Associated with NASA’s Integrated Financial Management Program

National Aeronautics and
Space Administration

Office of Inspector General
Washington, DC 20546-0001

JUN 3 2005

TO: Administrator

FROM: Inspector General

SUBJECT: Synopsis of Management Issues Associated with NASA’s Integrated Financial Management Program

In connection with the audit of NASA’s FY 2004 financial statements, the Office of Inspector General (OIG) engaged Ernst & Young (E&Y) to conduct a root cause analysis of issues associated with NASA’s ongoing challenges in effectively implementing its integrated financial management system. To conduct the analysis, E&Y attempted to engage the Agency in a collaborative approach. While the Agency provided access to relevant systems and individuals, anticipated collaboration in reaching a consensus did not materialize, primarily as a result of differences over the utility of such an approach with Integrated Financial Management Program management. Subsequently, E&Y was directed by the OIG to conduct the analysis without the collaboration. Also, E&Y benchmarked NASA against other organizations that have implemented integrated financial management systems.

E&Y produced a draft report on March 15, 2005, on the results of its analysis and suggested corrective actions. After receiving extensive comments from the OIG, E&Y produced a second draft on April 6, 2005. Rather than continue generating iterations of the draft until E&Y completed a final report, the OIG modified the contract with E&Y to accept the April 6 draft as the final product expected of E&Y. The attached synopsizes the lessons identified in the E&Y draft. Because the E&Y effort was based primarily on interviews of Agency employees and contractors, we did not obtain management comments on the attached synopsis.

In my view, the attached synopsis reflects the most significant problems in financial management at NASA:

• financial management is decentralized, with Center Chief Financial Officers more responsive to Center operational needs than to enterprise solutions for the Agency, and
• Agency-wide business processes suitable for an integrated approach have not been established.

Proceeding with enterprise solutions under these circumstances is untenable.

The synopsis contains several suggestions for NASA to address ongoing challenges and to improve its future implementation of enterprise solutions. I appreciate your commitment to improving the Agency’s financial management. My office is dedicated to assisting you in this regard.

If you have questions, please call me at 202-358-1220

Sincerely

[signed]

Robert W. Cobb
Inspector General

Attachment

cc: Deputy Administrator/Mr. Gregory
Chief Financial Officer/Ms. Sykes
Integrated Financial Management Program Officer/Mr. Ciganer

Full document with attachments available at http://www.hq.nasa.gov/office/oig/hq/memos/managementissues.pdf