Justice increases frequency of financial reviews
To help meet earlier deadlines for submitting audit materials to the Office of Management and Budget, the Justice Department will review its finances more frequently, an agency official said Thursday.
Rather than waiting until the end of the fiscal year to tidy up its books, Justice will check on financial statements at regular intervals throughout the year, said Paul Corts, the department's chief financial officer, at a conference sponsored by the Association of Government Accountants. Eventually, Justice would like to review its accounts every month, he said.
The department already has started moving in that direction. Last fiscal year, Justice inspected its books at the nine-month mark, but discovered that was too late in the process, Corts said. So this year, the department will conduct a six-month review. In subsequent years, Justice will move to quarterly and then monthly assessments, he said.
Justice also is holding workshops to impress upon financial managers that they cannot wait until the last minute to close out their books, Corts said. A new "swat team" will look for glitches as the auditing process proceeds and correct problems when they occur, he added.
These steps will require Justice to devote extra money and resources to financial management, but they are necessary for the department to meet earlier deadlines for submitting audited financial statements to OMB, Corts said. The administration is gradually moving audit deadlines closer to Sept. 30, which marks the end of each fiscal year.
OMB moved the cutoff date up about a month in fiscal 2002 and 2003, asking agencies to submit audited financial statements by Feb. 1 rather than Feb. 27. This year, the deadline will take another leap back. OMB has asked agencies to hand in fiscal 2004 statements by Nov. 15, 2004, just 45 days after the close of the fiscal year.
The Justice Department will find the November deadline challenging even after managers begin conducting more frequent interim financial assessments, Corts predicted. Justice is in the midst of a major effort to streamline its financial management systems. The department is moving from seven basic accounting systems to two, he said, and this project will take several years to complete.
Despite these challenges, Justice recently received its third clean audit opinion in a row, Corts said. The department moved from a "qualified" opinion in fiscal 2000 to "unqualified" opinions in fiscal 2001, 2002 and 2003. Qualified opinions mean auditors suspect portions of agencies' financial statements are unreliable, while unqualified opinions mean the statements passed muster.
Even agencies receiving unqualified opinions on audits have plenty of room for improvement in financial management, OMB officials have testified at congressional hearings.
At Justice, officials have come to expect clean audits and are focused on other financial management challenges, including the consolidation of accounting systems, Corts said. The lack of a consolidated system remains one of the Justice's greatest obstacles toward better bookkeeping.
Justice has yet to move up from a red rating on the financial portion of OMB's quarterly traffic light-style management score card, but has received a green light--the highest possible rating-for progress in this area.
The Justice Department wants to reach a point where reliable financial information is used fully in assessing the performance of programs and making budget decisions. This already happens to some extent, Corts noted. For instance, the department's financial team is helping ensure that grant money disbursed by the Office of Justice Programs is used wisely.
Reliable financial data is necessary to evaluate whether programs such as Project Safe Neighborhoods, which is intended to reduce gun violence, are effective, Corts said. Managers are in the process of gathering data to assess whether funds spent on that project have helped produce meaningful drops in gun-related crimes.