VA seeks cure for accounting woes
- By Paula Shaki Trimble
- Feb 06, 2000
Facing the nightmare of transferring data from 48 software packages into
its central accounting system, the Department of Veterans Affairs is planning
a drastic move to replace its patchwork system with a single commercial
financial management system.
The challenge of replacing systems with a new commercial product lies
in finding software that meets government requirements with little customization.
Offering help is the Joint Financial Management Improvement Program. JFMIP
is an independent organization responsible for testing and qualifying commercial
vendors to meet government accounting requirements. It is lending its knowledge
to the VA and more than a dozen other agencies interested in abandoning
mainframe-based systems in favor of commercial off-the-shelf solutions.
Edward Powell, assistant secretary for financial management at the VA,
said that with the current system, the VA is like a person who has handed
out 48 automated teller machine cards linked to his checking account that
transmit transaction information in different formats. With so many ATM
cards and so many formats, the person might spend more time trying to sort
out all the data than actually balancing his checkbook, he said.
"That is an oversimplification of the mess of reconciling [the VA's financial]
statements," Powell said.
The VA's core financial system has 48 software packages that flow financial
information from the agency's hospitals, cemeteries, administrative offices
and other facilities into a core ledger, Powell said. To complicate matters
further, the old system is based on Cobol, the second-oldest high-level
programming language. Cobol is labor-intensive and inflexible, and it is
quickly becoming a lost art to programmers.
About 35 percent of staff time at the VA's data processing center is
spent re-entering data and reconciling input errors, Powell said.
To keep an accurate ledger, the VA is creating a set of standards for
financial management and logistics data. Using those standards, the VA will
choose a COTS system to replace its aging financial management system.
The effort, called the Integrated Financial/Logistics Management Standards
(IFMS), began about a year ago and is expected to be complete by the end
of 2003. The VA recently chose KPMG LLP to consult on the capabilities of
commercial products that could meet the VA's requirements. Another contractor
on the project, Booz-Allen & Hamilton Inc., is helping the VA assess
its information technology infrastructure and business processe
looking for the first time to bring to VA a comprehensive management information
system that is integrated with everything we do," Powell said. At the VA,
IFMS will be used to make sure that in addition to the core financial system,
all other records, such as electronic patient records and human resources
data, can interact.
The new financial management system is expected to cost $75 million
to $150 million. The VA plans to pilot an integrated service network by
September and procure software in early 2001. A test system should be available
The VA is not the only agency looking to the commercial IT market for financial
management systems, said Karen Alderman, executive director of JFMIP. While
virtually every agency is looking at some aspect of financial management
systems, 13 federal agencies have indicated to JFMIP that they plan to buy
new core financial systems within five years.
A Coordinated Effort
The Federal Financial Management Improvement Act of 1996 requires each
agency to implement and maintain systems that comply with federal financial
management system requirements, applicable federal accounting standards
and the U.S. Government Standards General Ledger. Office of Management and
Budget Circular A-127 also requires each agency to establish and maintain
a single, integrated financial management system. JFMIP has developed a
framework for the capabilities of those integrated systems.
JFMIP has certified six vendors' software as meeting the government's
requirements for financial management. They are American Management Systems
Inc.'s Momentum, Digital Systems Group's IFMIS, ICF Information Technology's
Federal Financial Assistant, Oracle Corp.'s Public Sector Financials, PeopleSoft
Inc.'s Financials for Education and Government and Rel-Tek Systems &
Design Inc.'s Core Financial System. The VA will buy its system only from
a company certified by JFMIP, Powell sa
"We're hoping to organize a market
for commercial off-the-shelf federal financial management systems," Alderman
said. By creating a standard data set and test criteria for any vendor that
wants to be JFMIP-qualified, the independent group reduces the burden on
agencies to conduct testing individually and reduces the cost of those tests,
It costs JFMIP about $500,000 to produce the test criteria. The organization
receives about $2.4 million in annual funding from its sponsoring agencies,
which are the General Accounting Office, the Treasury Department, the Office
of Management and Budget, the Office of Personnel Management and the General
"The type of work JFMIP has done to date is necessary to meet government
requirements but is not sufficient to ensure successful implementation,"
Alderman said. "We test in the vendor- provided environment. Agencies may
have different IT environments."
Every software package tested by JFMIP needed some improvements to meet
the extra government requirements, Alderman said. For example, the government's
budget process and requirements for an audit trail for each transaction
are much more difficult than in the private sector, she said.
And in some cases, COTS software can cause agencies to fall behind in
financial systems integration. At NASA, problems with KPMG's Performance
Series software have put the agency's Integrated Financial Management Program
more than 18 months behind schedule. In mid- January, NASA issued a notice
to KPMG stating that its software does not work and that the company had
10 days to propose a solution.
NASA officials think KPMG "underestimated the size of the job," said
David Howell, NASA's Integrated Financial Management Program director.