Letter from the Chief Financial Officer
I am pleased to provide the fiscal year 2017 Agency Financial Report on behalf of the U.S. General Services Administration. The AFR is a culmination of our financial management community’s year-round 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 sincerely thank all GSA employees for their excellent work and dedication throughout this fiscal year, and for their contributions to GSA’s culture of financial transparency, accountability, and control.
As noted in the Administrator’s letter at the beginning of this report, GSA’s mission is to deliver the best value in real estate, acquisition, and technology services to government and the American people. This mission is unique within the federal government, both for GSA’s customer-facing role as the original shared service provider, and for the volume of interagency financial transactions that flow through the agency.
Office of the Chief Financial Officer
An active and empowered Office of the Chief Financial Officer (OCFO) is a critical component of how GSA achieves its mission, and how it provides customer agencies and all Americans with assurance the agency is responsibly managing financial resources. The OCFO provides GSA Service and Staff Offices with financial management services that include: budget formulation and execution, financial reporting and operations, internal controls, data management and analytics, and performance management. The OCFO is also responsible for the development and submission of the annual GSA budget, the GSA FY 2018-2022 Strategic Plan, the FY 2018 Annual Performance Plan, and this Agency Financial Report.
In FY 2017, the OCFO continued to serve as a partner and financial advisor to GSA’s Service and Staff Offices. The OCFO monitored internal controls, supported the annual financial statement audit, managed our financial management shared services provider and led the implementation of the Digital Accountability and Transparency Act of 2014 (DATA Act) and the Enterprise Risk Management framework.
Resolving Financial Management Challenges
GSA’s FY 2017 unmodified audit opinion conveys the diligence with which OCFO, and GSA, work to provide assurance of financial integrity. The auditors did identify four significant deficiencies in FY 2016 that have served as focus areas for operational improvements in FY 2017. These deficiencies had 12 associated findings. Four of the findings were related to general controls over financial management systems tools, one was related to budgetary accounts and transactions controls, two were related to the classification of capital and operating leases, and five were related to entity level controls, including worksheet adjustments, prior year findings, budgetary accounts and transactions, and the need for a formal process for assessing third party service providers that host or operate GSA financial systems.
To address the four financial management systems findings and the entity level control finding, GSA and our Federal Shared Service Provider (FSSP) (U.S. Department of Agriculture FMLoB) collaborated to strengthen, document, and test the shared responsibilities between the two agencies. GSA initiated controls to test the reconciliations performed by our FSSP. In addition, we performed an extensive review of our worksheet adjustment process to determine the root cause. We improved processes to ensure more transactions were inputted via the system of record; thereby reducing worksheet adjustments. In addition, we jointly issued two new standard operating procedures (SOPs) with our SSP to clarify roles related to processing, billing and collection of services for the Federal Acquisition Service, and the Public Building Service.
We also worked closely with USDA to strengthen financial systems controls to reduce variances between critical feeder systems and our official accounting system. We focused on standardizing reports, and timely communication of rejections with our stakeholders to improve timeliness and accuracy. I realize that we need to strengthen our controls over budgetary accounts and transactions and sufficiently monitor all accounts, regardless of system constraints or any other limitations.
To address the two findings related to the classification of capital and operating leases, OCFO implemented a lease classification review to reduce the dependency on customer budgetary scoring results to make the classification determination. The Public Building Service also strengthened the scoring process, provided training to stakeholders, and analyzed a sample of leases to ensure new controls were effective. OCFO also reviewed 100 percent of all historical straight line rent schedules to ensure accurate lease data and disclosures.
GSA continues to work to reduce improper payments and conducts detailed testing on purchase card and rental of space payments. GSA has consistently achieved purchase card improper payment targets, but has missed our aggressive targets for rental of space payments in both FY 2016 and FY 2017. Our target for rental of space payments in FY 2016 was 99.881 percent and 99.975 percent in FY 2017, both well above the governmentwide performance of 95.33 percent for high priority programs. GSA OCFO is implementing improvements to our rental of space payment program to ensure better results in FY 2018 and to set the payment target to a more pragmatic, yet still challenging goal of 98.2 percent.
Key Financial Management Accomplishments In FY 2017
In addition to our focus on identified significant deficiencies and associated findings, OCFO continued to implement our aggressive and proactive transformation initiatives in FY 2017 to further improvements in GSA’s financial control environment. Our key accomplishments included:
- 44 Financial Process Standardization and Improvement Initiatives Completed. As part of OCFO’s reorganization efforts in FY 2016, Communities of Practice (COPs) were established for key functional areas to lead process standardization and improvement. Project teams successfully implemented 44 initiatives ranging from national standardization of funds certification activities for the Public Building Service, to the standardization of Reimbursable Work Authorization (RWA) intake, review, and acceptance. The OCFO has also standardized Pegasys data entry which increased efficiency and reduced errors in GSA’s financial system of record. Many thanks to our partners across GSA who have helped our COP initiative be so successful in its inaugural year.
- 12 Percentage Point Increase in OCFO Employee Satisfaction, and an 8 Percentage Point Increase in Overarching Engagement Scores in FY 2017. At the beginning of OCFO’s transformation in FY 2015, the leadership group set a high standard for employee satisfaction, engagement, and commitment to OCFO’s core values of integrity, collaboration, and excellence. Building off FY 2016’s record engagement scores for OCFO, we continued to see significant increases in FY 2017. OCFO scored 79 percent for staff satisfaction (compared to the governmentwide average of 61 percent), and a 78 percent for staff engagement (up 12.4 percentage points from FY 2015). These scores indicate our workforce has embraced the challenges of transformation, and is focused on providing results for our customers.
- 100 percent of Annual SLAs Achieved During a Significant Staffing Reduction. Since beginning its transformation in FY 2015, OCFO has reduced staff from an 840 FTE budget to 540 FTE through a combination of outsourcing, organizational streamlining, and improved / standardized financial management processes. While achieving these reductions, OCFO has continued to improve operational performance. Our Service Level Agreement (SLA) metrics have continued to surpass expectations, which is a testimony to the hard working staff and innovative and agile OCFO team.
Over the last three years GSA has made significant progress in developing a culture of financial transparency, accountability, and control. As a trusted partner with GSA’s service and staff offices, the leadership provided by the OCFO continues to strengthen GSA’s financial controls, performance and decision making. 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 08, 2017