OPEN RECOMMENDATIONS FOR USAID’S
MAJOR MANAGEMENT PROBLEMS
USAID HAS NOT IMPLEMENTED A COMPREHENSIVE INFORMATION MANAGEMENT SYSTEM
Problem Description: The U.S. Agency for International Development’s (USAID) effort to develop and implement its New Management System (NMS), which is meant to consolidate primary information systems into a single integrated network, has not been fully successful. The NMS is only partially functional and has created problems in agency operations. In 1996, USAID deployed the system without sufficient testing, and subsequent difficulties forced USAID to suspend its use for most administrative functions in overseas missions in April 1997. Despite an expenditure of at least $92 million as of January 1999, the NMS is not likely to be fully operational and compliant with federal accounting standards for several more years. Until then, USAID will not have accurate information to ensure that its operations and programs are being managed in a cost-effective and efficient manner.
While there currently are no open recommendations related to USAID’s NMS, we will continue to monitor USAID’s reform efforts. These efforts include steps being taken by USAID to correct the deficiencies of the NMS, including appointing a Chief Information Officer, who has instituted more disciplined processes for planning, developing, and implementing information technology. An NMS program manager has also been appointed to handle deficiencies and implement remedial actions within the NMS. However, USAID does not anticipate fully implementing the NMS across the agency for several more years.
USAID’S ACTIONS NOT ADEQUATE TO RESOLVE THE YEAR 2000 PROBLEM
Problem Description: Although OMB recognizes that USAID is making progress in achieving Year 2000 compliance for its seven mission-critical systems, USAID has not completed implementation for four of these systems. System remediation and implementation are scheduled to be complete in July 1999. While we currently have no open recommendations related to USAID’s Year 2000 problem, we will continue to monitor its remediation efforts.
USAID REMAINS VULNERABLE TO WEAK FINANCIAL MANAGEMENT
Problem description: USAID continues to face financial management challenges. The lack of an integrated financial management system and the existence of material control weaknesses hinder the agency’s ability to routinely produce reliable and timely financial management information or to prepare auditable financial statements. As we discussed in our January 1999 Performance and Accountability Series report, USAID’s Office of Inspector General (OIG) was unable to express an opinion on the agency’s financial statements for fiscal years 1996 and 1997. In March 1999, the OIG also disclaimed an opinion on the fiscal year 1998 financial statements. The process of preparing financial statements and subjecting them to independent audit is the first step in generating, on a routine basis, complete, reliable, and timely financial information for decisionmakers at all levels. Without financial integration and strong controls, USAID’s systems do not comply with federal accounting and management requirements.
Our work leading us to identify financial management as a major management challenge at USAID was done as part of our overall audit of the consolidated financial statements of the federal government. USAID is in the process of correcting some of its deficiencies in this area in part by contracting a number of its financial management functions to organizations outside the agency, including a private bank and another U.S. government agency. In addition, USAID submitted a plan to the Office of Management and Budget outlining these and other steps to address some of its financial management deficiencies over the next 5 years. While there currently are no open recommendations related to USAID’s financial management, we will continue to monitor the agency’s efforts to overcome its long-standing problems in this area.
