With the FY 2008 fiscal year behind us, and the independent financial audit process nearing conclusion, I wanted to share with you the significant progress the Agency has made in the last year on our financial management. While recognizing the advances NASA has made recently in financial reporting, we know there is still much work to be done before the Agency can again achieve a “clean” audit opinion and resolve its long-standing material weaknesses in financial reporting. Ron Spoehel, our Chief Financial Officer, joined the Agency in September 2007. Through his leadership, and that of his Deputy Terry Bowie, there has been material progress in the financial reporting processes by which the Agency maintains and closes its books, as well as in the effective use of financial reports to drive improved operational execution performance.
This past year, Ron led the Agency to take a new approach toward resolving financial reporting, internal control, and audit weaknesses. To begin, the Agency developed and introduced a Comprehensive Compliance Strategy (CCS) establishing requirements for all of NASA to be in compliance with the federal standards for generally accepted accounting principles (GAAP) and other applicable financial standards, to demonstrate such compliance through auditable evidence, and to operate with robust and comprehensive internal controls over financial reporting. To measure and monitor the effectiveness of the CCS operation, a Continuous Monitoring Program (CMP) was introduced across the Agency. In brief, the CMP requires each of our Centers, as financial reporting organizations, to perform and certify to a full suite of 84 control activities each month and 119 each quarter and to report the results of those reviews and any corrective actions to Headquarters. Headquarters then reviews the data, oversees any remedial actions required and looks for any systemic issues that may need to be addressed at the Agency level. The result is that we are already identifying, raising and resolving financial data issues faster and more consistently than ever before. This means that the financial information we now use is more accurate and reliable. Overall, these initiatives have allowed the Agency to maintain its “green” rating on progress for the Financial Management Improvement component of the President’s Management Agenda (PMA) Scorecard and, in particular, the CMP also has helped the Agency achieve “green” on eight of nine key federally monitored financial metrics.
Coupled with the improvements in the Agency’s financial reporting processes as noted above, NASA also has made enhancements this past year in the presentation and use of financial analytics and reporting, which are giving us better information to make decisions, and the results can be seen in our improved obligation rates and financial performance measures. As one example, the Agency was able to more effectively put its available appropriations budget to work this year through the concerted efforts of many operations around the Agency. This focus on budget execution drove a $2.4 billion increase in obligations performance for FY 2008, to $18.7 billion total, producing year-end results not achieved since before FY 2000. We also are putting all this enhanced financial analytical capability to good use providing Agency leadership with more focused and actionable reports as another component of program reviews.
While building on the stronger foundation we have now put in place, we intend to continually improve the Agency’s financial management processes and financial reporting capabilities. Look for even more enhancements in the near future.