NASA speeds up financial system

NASA will implement its integrated financial management system by fiscal 2005 — a year earlier than expected — in hopes of zipping its accounting standards up to par, officials said.

The Feb. 15 decision to accelerate roll-out of the system, came two days after the agency learned its new auditor, PricewaterhouseCoopers, would disclaim opinion on the agency's bookkeeping despite the fact that it had received high marks from its previous auditor, Andersen.

"NASA did not provide sufficient documentary evidence needed to support amounts reported as obligations, expenses, property, plant and equipment, and materials in its fiscal year 2001 financial statements," Patrick McNamee, a partner at PwC, testified before the House Government Efficiency, Financial Management and Intergovernmental Relations Subcommittee March 20.

The lack of auditable data reflects the agency's outdated approach to financial management, PwC and government officials said. NASA's 10 centers operate with decentralized, nonintegrated systems.

"Although the systems have been upgraded over the years, they remain antiquated and expensive to maintain," Alan Lamoreaux, NASA's assistance inspector general for audits, testified at the hearing.

"[They] do not provide NASA management with online, up-to-date information designed to assist managers in making daily decisions," Lamoreaux continued. "Each system is unique, and the cost to maintain the systems is high because each system must be evaluated and updated based on its unique capabilities."

PwC also identified significant deficiencies in the agency's internal controls and reported substantial noncompliance with the Federal Financial Management Improvement Act, which requires that agencies have reliable and timely financial management systems.

The findings follow five years worth of high marks from NASA's previous auditor, Andersen.

NASA contends that PwC used a different sampling method and sought more information than Andersen, making it difficult to provide the necessary records on time.

The General Accounting Office reported last year that Andersen's work failed to meet professional standards.

"Is NASA the government's Enron?" Rep. Steve Horn (R-Calif.), said in his opening statement at the hearing. "Did the agency's financial management problems begin in fiscal year 2001 or were they always present?"

GAO has put the agency on its high-risk list for contract management every year since 1990, in part because of its failure to implement an integrated system. Further, congressional staff members found a $644 million misstatement in NASA's records for fiscal 1999, officials said.

"It has become increasingly clear that modernizing NASA's financial management system is essential to providing accurate, useful financial information for external financial reporting as well as internal management decision-making," Gregory Kutz, GAO's director for financial management and assurance, testified at the hearing.

For instance, the agency doesn't have detailed support for amounts reported against cost limits for its international space station and shuttle programs, Kutz said.

He noted that this was NASA's third attempt to implement a new financial management system. The agency abandoned its previous efforts after 12 years and spending $180 million.

Its current core finance project is on budget and schedule, said Paul Pastorek, NASA's general counsel. It should be deployed agencywide by June 2003.

Getting the entire system developed by SAP AG up and running is estimated to cost $475 million, according to Kutz.

Meanwhile, NASA and PwC are working together to prevent a repeat audit outcome for fiscal 2002. PwC has a five-year contract with NASA to check its books.

"Pricewaterhouse has called it correctly," Pastorek said.


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