EXHIBIT III
Independent Auditors' Report
Compliance and Other Matters
Background:
FFMIA requires that an agency's financial management systems substantially comply with Federal financial management systems requirements, accounting standards issued by the Federal Accounting Standards Advisory Board, and use of the U.S. Government Standard General Ledger at the transaction level.
Condition:
We noted that seven of the HTF's (FHWA and FTA) key financial systems (TEAM, ECHO, DOTS, UPACS, FMIS, RASPS, and DIMS), which feed financial data into Delphi, do not comply substantially with the categories of FFMIA compliance listed in OMB Circular No. A-127, Policies and Standards for Financial Management Systems, Section 7 - Financial Management System Requirements. Specifically, we noted weaknesses in the following:
| Category of Non-Compliance | TEAM | ECHO | DOTS | UPACS | FMIS | RASPS | DIMS |
|---|---|---|---|---|---|---|---|
| Does not adhere to functional requirements | X | X | X | ||||
| Does not adhere to Computer Security Act requirements | X | X | X | X | X | X | X |
| Inadequate systems and processing documentation | X | X | X | ||||
| Lacks adequate internal controls | X | X | X | X | X | X | X |
| Lacks adequate training and user support | X | X | X | ||||
| Lacks appropriate maintenance | X | X |
Cause:
FHWA and FTA feeder systems are not fully integrated with the core financial accounting system, Delphi, due to feeder systems lacking common data elements or functionality consistent with Delphi.
Effect:
These conditions may adversely affect the HTF's ability to accurately report the results of its financial operations, in a timely manner.
Criteria:
The Federal Financial Improvement Management Act of 1996, Section 803(a) states that Federal financial management systems comply with (1) Federal accounting standards, (2) Federal system requirements, and (3) the USSGL at the transaction level. FFMIA emphasizes the need for agencies to have systems that can generate timely, reliable, and useful information with which to make informed decisions to ensure ongoing accountability.
OMB Circular No. A-127, Federal Financial Systems, Section 7(b) Integrated Financial Management Systems states that financial management systems shall be designed to provide for effective and efficient interrelationships between software, hardware, personnel, procedures, controls, and data contained within the systems. In doing so, they shall have one or more of the following characteristics:
Common Data Elements - Standard data classifications (definitions and formats) shall be established and used for recording financial events. Common data elements shall be used to meet reporting requirements and, to the extent possible, used throughout the agency for collection, storage and retrieval of financial information. Government-wide information standards (e.g., the U. S. Government Standard General Ledger) and other external reporting requirements shall be incorporated into the agency's standard data classification requirements.
Common Transaction Processing - Common processes shall be used for processing similar kinds of transactions throughout the system to enable these transactions to be reported in a consistent manner.
Consistent Internal Controls - Internal controls over data entry, transaction processing and reporting shall be applied consistently throughout the system to ensure the validity of information and protection of Federal government resources.
Efficient Transaction Entry - Financial system designs shall eliminate unnecessary duplication of transaction entry. Wherever appropriate, data needed by the systems to support financial functions shall be entered only once and other parts of the system shall be updated through electronic means consistent with the timing requirements of normal business/transaction cycles.
Recommendation:
We recommend that FWHA and FTA address and resolve the weaknesses noted in the seven HTF key financial systems that do not comply with the categories of FFMIA compliance.
