Financial Management at the Department of Homeland Security

Witness and Testimony Documents
Deputy Chief Financial Officer and Acting CFO
Department of Homeland Security
May 13, 2011,

Chairman Todd Platts Hearing Opening Statement

In 2003 and 2004, I was proud to work with Ranking Member Ed Towns to sponsor the DHS Financial Accountability Act. That law placed the Department under the CFO Act, requiring a Senate-confirmed CFO, and imposed the first-ever statutory requirement for an audit of internal controls at any Federal agency.

When DHS was created in 2002, it inherited substantial financial management challenges—particularly from the legacy Immigration and Naturalization Service, which had been a component of the U.S. Department of Justice and the U.S. Coast Guard, formerly under the Department of Transportation. Financial management at the Coast Guard presented a unique challenge in that its books had never been subject to a financial audit. Recognizing the many challenges facing the Department, Ranking Member Towns and I wanted to address the root causes of financial management problems before they became ingrained. Therefore, the law focuses on remediating internal controls weakness by requiring a separate assertion and audit opinion of the Department's internal controls over financial reporting.

The Department has a long way to go. DHS still does not have a clean audit opinion, and we are particularly concerned that the Department does not have a Senate-confirmed CFO. Peggy Sherry, our witness today, is a career civil servant and is the Acting CFO. Ms. Sherry, I applaud your efforts, and I certainly appreciate the fact that you are willing to testify before the Subcommittee, but I do believe it is important for the Secretary to show a commitment to sound financial management by complying with the law and nominating a qualified Senate-confirmed CFO to back you up.

I am very pleased by the steady progress DHS has made to address specific weaknesses, and I agree with the strategy of foregoing stand-alone audits at components in favor of directing staff resources to correcting pervasive material weaknesses.

The Department made a decision on Thursday to cancel its procurement of a major financial system, and I am glad we will have a chance to discuss that issue today. Mr. Towns and I remember all too well the debate surrounding eMerge2, the financial systems project that was started in 2003 and abandoned after spending $9 million. The successor to eMerge2, TASC, was able to leverage some of that money, but there are certainly some sunk costs associated with these two failed attempts. I understand the Department is taking a new approach, and we look forward to hearing how that change in focus will help DHS reach its goals. I will add that most of the material weaknesses still on the books are related to processes and not systems, and regardless of what decisions DHS makes on how it will integrate its information systems, the underlying processes must be corrected for that system to function properly.

Again, we are pleased to have Acting CFO Peggy Sherry with us today, and I thank you for agreeing to be here. With that I yield to the Ranking Member for his opening statement.