Letter from the Chief Financial Officer
On behalf of the GSA, I am pleased to provide the FY 2018 Agency Financial Report (AFR). The AFR represents the culmination of our financial management community’s efforts to accurately track and disclose GSA’s financial status, and to ensure that the agency continues to act as a good steward of public funds. I would like to sincerely thank all of GSA's financial management personnel for their dedication, diligence, and excellent work in compiling this report, as well as staff from other offices who partnered with OCFO to assure accountability and transparency in the execution of their fiduciary duties.
GSA’s mission expanded and will continue to grow as a result of Government-wide Agency Reform Initiatives. FY 2018 has been a year of reform, improvement, and change. Staff throughout the agency focused on addressing management and service challenges, and identifying new and innovative ways to best serve our customers throughout Government.
Audit and Compliance
During FY 2018, GSA enhanced its remediation program for audit and non-compliance issues by increasing executive ownership. For each financial audit finding, GSA OCFO developed a CAP, which was assigned to a senior accountable official responsible for full implementation. OCFO has an established and optimized procedure for monitoring CAP execution and reporting CAP results to the MCOC. As CAP steps are completed with supporting documentation provided, the work is reviewed to ensure the root cause was addressed.
In FY 2017, GSA’s independent auditors did not identify any material weaknesses; however, they identified three significant deficiencies and seven non-significant deficiencies. For the deficiencies that were identified, GSA worked proactively and diligently to mitigate the issues. All seven non-significant findings were closed, and two of the three significant findings were closed in FY 2018.
The first significant deficiency was related to controls over access to financial management systems. GSA implemented an automated program to manage patching, user validation and administrative account access compliance. These tools are implemented in multiple phases and when complete will support all account management. GSA also completed an inventory of third party service providers and developed a standard operating procedure for evaluating service provider internal controls. In addition, GSA made notable progress in standardizing the execution, review, and reporting of vulnerability scans, increasing controls around system access, and backups. GSA had new findings in this area in FY 2018, and will implement corrective action plans to address the root causes in FY 2019.
The second significant deficiency, monitoring controls over financial management, is a roll-up of non-significant deficiencies concerning consistent enforcement of monitoring controls over financial reporting processes. GSA is addressing these concerns by executing a CAP for each of the non-significant
findings. Highlights of corrective actions taken to date include increased review and verifications of asbestos reports for accuracy, updated internal policies over RWA acquisition/construction to align with Federal accounting standards, increased oversight and accountability for tracking construction in process projects to ensure timely recording of substantial completion, and updated standard operating procedures for accounting adjustments for non-level rent to clearly define roles and responsibilities and reconciliation requirements.
The third significant deficiency related to budgetary controls over apportionments GSA did not effectively monitor apportionment to allow for support time to request reapportionment from OMB when customer obligations exceeded what was anticipated and apportioned. While the OMB does not intend to restrict the amount of customer orders GSA can fill, the apportionment process effectively places limitations on resources available to spend on reimbursable activities. In response to this FY 2017 finding, GSA improved monitoring controls over apportionment levels, SF-133 execution, and revenue/business volume forecasts to ensure alignment between budgetary and proprietary forecasts. During FY 2018, the OCFO improved monitoring over the apportionment process and worked with the business lines to improve communications on anticipating business volumes and forecasts. Furthermore, GSA is exploring expanded automated, preventative controls to ensure compliance with apportionment limitations as part of GSA’s corrective action.
Key Financial Accomplishments in FY 2018
GSA OCFO continues to work closely with OMB, Treasury and FASAB to improve Federal financial reporting. Our collaborative goal is to achieve a “clean” audit opinion for the 17U.S. Government's Consolidated Financial Report. A current impediment to a “clean” opinion is intragovernmental balances between Federal agencies. As GSA’s mission is to support other Federal agencies through acquisition support and occupancy services, one of OCFO’s key financial management activities is to resolve discrepancies in those balances. GSA OCFO staff has been working closely with our Federal partners to identify and resolve intragovernmental billing differences. With Treasury, we have been advancing a Government-wide solution to address intragovernmental differences. Early implementation of Treasury’s G-Invoicing system should improve the controls by having a central repository of general terms and conditions for agreements with our Federal partners. OCFO is engaging the various program managers of the business feeder systems to help develop our implementation strategy.
GSA made significant improvements to the Rental of Space high risk program. In FY 2018, GSA improved the Rental of Space payment processes and worked with OMB to establish a realistic target, bringing the program into compliance. Test results show that this program’s improper payment rate is 0.29 percent with a monetary loss to the Government below 1.0 percent of program outlays.
Ambitious Goals for CFO-Wide Transformation
OCFO Leadership set ambitious goals for the organization in FY 2018 to drive improvements and gain efficiencies. Meeting these goals enabled OCFO to deliver the high-quality, efficient services that our partners rely on to deliver acquisition, technology, and real estate solutions to the entire Federal Government.
OCFO was recently recognized by OMB for its business transformation efforts and contributions to the President’s Management Agenda - Cross-Agency Priority Goal 6. OCFO pursued the high-value services mandated by Cross-Agency Priority Goal 6 during FY 2018, specifically through the following initiatives:
18Eliminate, Optimize, and Automate Initiative [PDF - 1 MB] - OCFO launched a broad scale initiative to eliminate, optimize, and automate our GSA-wide financial management workload. We sought to eliminate manual tasks by adding value through optimization and reduction in the level of effort needed to complete tasks, and automation of work processes with a focus on robotics process automation.
Our leadership team established an ambitious goal of identifying 40,000 hours of annualized work across GSA to be saved and reallocated to more value-added reporting, analytics, and control work. OCFO staff contributed nearly 200 ideas as candidates for hours that could be re-allocated to higher value or new requirements across all functional areas. From these staff submissions, OCFO identified nearly 100,000 hours of workload across GSA for evaluation and further exploration.
- Robotics (software “bots”) - One of the enablers of the eliminate, optimize and automate initiative is process robotics. In FY 2018 OCFO created a robust internal capability to implement process robotics solutions for opportunities identified both within financial functions and across GSA. OCFO set an ambitious goal to fully implement at least ten bots during the calendar year, a target which OCFO will fully achieve. The use of bots has allowed OCFO to significantly reduce the amount of time spent manually completing dashboards, financial transactions, queries, and reconciliations. This time has been reallocated to providing high-value services for our partners.
In FY 2018, OCFO deployed process robotics applications eliminating 7,280 labor hours annually and have planned automations for FY 2019 that will eliminate an additional 184,000 per year for OCFO and PBS. Success of GSA’s automation initiatives is expected to allow a shifting of resources. These resources could be applied to tasks such as mitigating interagency discrepancies, researching root causes of chargebacks and implementing FASAB changes that impact our financial statements.
HR Links/Payroll including additional controls - GSA implemented a new Human Resources system that consolidated the functionality from four legacy systems. The new system provides employee performance, human resources, time, and leave management in one solution. HR Links includes improved front end time and attendance controls that assist employees and supervisors in submitting accurate timesheets. In addition, the integration of leave requests and time and attendance reporting into a single system has streamlined the process of requesting and reporting leave, while reducing the chance of human error.
GSA made significant progress in FY 2018 in developing a culture of financial transparency, accountability, and control within our agency and across Government. GSA continues to receive a clean opinion on its financial reports and is working with Treasury and OMB to address areas keeping the Federal Government from obtaining a clean opinion.
As we move into FY 2019, GSA OCFO will expand the use of Robotics Process Automation, support the Treasury's G-Invoicing initiative and refine our service offerings for GSA and Federal partners. This is an exciting time for GSA OCFO, and I look forward to another year of progress. I appreciate all the support I receive from staff as we work to improve our operations and ensure GSA remains a good steward of public funds.
Gerard E. Badorrek
Chief Financial Officer
November 8, 2018