In light of these events, the Conference Report accompanying the fiscal  year 2010 DHS Appropriations Act required the DHS CFO and the Secret  Service Assistant Director for Administration to brief the Appropriations  Committees on the process to be implemented in fiscal year 2010 to ensure  the problems related to the fiscal year 2009 shortfall did not reoccur. Prior to the briefing, DHS and Secret Service developed a corrective action  plan (CAP) to address the issues surrounding the shortfall. Documenting Internal Control Procedures Could Help Improve Financial Management of Funds for Presidential Candidate Protection

		Secret Service Has Not Documented Processes for Preparing Key Reports

Secret Service financial management personnel use an undocumented,  manual process to prepare two key reports used to monitor obligations,  manage its funds by PPA, and report to Congress: the Monthly Execution  and Staffing Report, and the Presidential Campaign Cost Report. Secret Service Uses Informal Processes for Splitting Costs across PPAs

Secret Service also does not have documented procedures in place for  how to split out costs for protection activities that could cut across  multiple PPAs. Also, the lack of documented  policies and procedures increases the risk of reporting incomplete,  inaccurate information because Secret Service officials could unknowingly  charge expenditures to the wrong PPA. DHS and Secret Service Lack Documented Early Warning System Benchmarks for Monitoring Obligations and Expenditures

Neither DHS nor Secret Service have documented early warning system  benchmarks to use when monitoring Secret Service obligations and  expenditures, and therefore these benchmarks may be inconsistently  applied. Additional Guidance Could Help DHS and Secret Service Further Improve Communication in the Event of Future Funding Shortfalls

		DHS and Secret Service Did Not Follow DHS’ Fiscal Year 2009 Guidance on Communicating Reprogramming Requests and Antideficiency Act Violations

At the time of the fiscal year 2009 shortfall, DHS had written guidance  covering communication necessary if a funding shortfall required a  reprogramming notification under section 503, or was a potential or actual  Antideficiency Act violation. According to Secret Service officials, in January 2009 Secret Service  communicated to DHS the fiscal year 2009 shortfall and requested  assistance in covering it. DHS and Secret Service Developed CAP to Improve Communication and Implemented Some of These CAP Measures

Since the fiscal year 2009 shortfall, Secret Service and DHS developed a  CAP to, among other things, improve communication about internal and  external reprogrammings. DHS has developed and implemented two of the four communications- related CAP measures in accordance with this guidance. Specifically, DHS has  not provided written guidance describing what needs to be done to  implement the CAP measures requiring that (1) components complete  internal funding reviews prior to submitting reprogramming requests and  articulate the negative impact of using internal resources to cover the  shortfall—such as delays in hiring or postponement of training activities,  or both—or (2) DHS provide timely submission of reprogramming  notifications to the Senate and House Appropriations Committees. Implementing these remaining communication-related measures from the  CAP could help ensure that DHS and Secret Service communicate  effectively with each other and Congress in the event of future funding  shortfalls. Given the importance of  providing the Appropriations Committees with complete and accurate  financial data concerning presidential candidate protection activities, it is  imperative that Secret Service have the necessary documented internal  control procedures in place, including financial management policies and  procedures, to help ensure it can effectively manage and report on funds  for presidential candidate protection. Recommendations for Executive Action

To improve financial management controls and communication related to  presidential candidate protection budget execution, we recommend that  the Secretary of DHS take the following five actions:    direct the Director of Secret Service to develop documented procedures  for preparing and reviewing its Monthly Execution and Staffing Reports  and Presidential Campaign Cost Reports;    direct the Director of Secret Service to develop written policies and  procedures for charging costs when protection activities may be funded by  multiple PPAs;    direct the DHS CFO to ensure that DHS’ components, including Secret  Service, have guidance and training on how to develop and document  appropriate benchmarks for monitoring obligations and expenditures;    direct the DHS CFO to develop and provide written guidance clarifying the  elements necessary in a reprogramming request from a component to  document internal funding reviews and the negative impact of using  internal sources; and    direct the DHS CFO to define time frames by which DHS could assess  timeliness of submissions of reprogramming notifications to the  Appropriations Committees. We are sending copies of this report to the Secretary of Homeland Security  and interested congressional committees. 31 U.S.C.
Why GAO Did This Study

Due to the unprecedented pace and crowds of the 2008 presidential campaign, the U.S. Secret Service (Secret Service), a component of the Department of Homeland Security (DHS), exceeded its budgeted amount for fiscal year 2009 presidential candidate nominee protection funding, but did not notify Congress of this shortfall (fiscal year 2009 shortfall) until June 2009--5 months after the Inauguration. In response to the Conference Report accompanying the 2010 DHS Appropriations Act, this report addresses the extent to which, at the time of the fiscal year 2009 shortfall, (1) Secret Service had the necessary internal controls in place to help ensure it could effectively manage and report on funds for presidential candidate protection; and (2) Secret Service and DHS had policies and procedures in place to help ensure that information related to the fiscal year 2009 shortfall was communicated to DHS and Congress. To conduct the audit work, GAO reviewed appropriation laws and regulations, Secret Service financial reports, and various DHS and Secret Service policy and procedural documents. GAO also interviewed officials from DHS and Secret Service.

What GAO Found

At the time of the fiscal year 2009 shortfall, Secret Service did not have--and still does not have--all of the necessary internal controls, including policies and procedures, in place to help ensure it can effectively manage and report on funds for presidential candidate protection. For example, the agency relied on undocumented manual processes to prepare and review two key reports--the Monthly Execution and Staffing Report and the Presidential Campaign Cost Report--used to monitor obligations, manage its funds by subaccounts, and report to Congress. Documenting the processes to prepare and review these reports could decrease the risk of future reporting errors and be useful to managers in controlling operations. Secret Service also did not have documented procedures for charging costs for certain candidate protection activities that cut across multiple subaccounts. The subaccounts are not discrete, and Secret Service officials stated that they lacked clarity and procedures on which to use to cover costs for certain protection activities. Documenting policies and procedures for charging such costs could be useful in controlling operations and monitoring budget execution. Also, neither DHS nor Secret Service had documented benchmarks to serve as an early warning system when monitoring obligations and expenditures for potential future funding shortfalls. Lastly, DHS' budget guidance did not specify how to develop such benchmarks. Developing and implementing guidance on how to document benchmarks could help ensure that any future potential shortfalls in presidential candidate protection funds are identified in a timely manner. DHS and Secret Service lacked sufficient policies and procedures to ensure that information related to the fiscal year 2009 shortfall was communicated to DHS and Congress. At the time of the shortfall, DHS had written guidance on how to communicate a violation of the Antideficiency Act--which prohibits federal officials from obligating or expending funds in excess of appropriations--and notify Congress of a reprogramming, or shifting funds within an appropriation. However, because they mistakenly determined the guidance did not apply, Secret Service informed DHS of the shortfall and requested assistance in covering it. GAO issued a legal opinion determining that DHS and Secret Service violated reprogramming notification requirements and the Antideficiency Act. Further, DHS had no written guidance on communicating a reprogramming that did not require congressional notification. Since the shortfall, DHS and Secret Service developed a Corrective Action Plan (CAP) to address issues related to the shortfall. DHS implemented two of the four communication-related CAP measures, but has not provided written guidance for implementing the other two, which require that (1) components complete internal funding reviews prior to submitting reprogramming requests and articulate the negative impact of using internal resources to cover shortfalls, and (2) DHS provide timely submission of reprogramming notifications to the Appropriations Committees.Implementing these measures could help ensure better communication among Secret Service, DHS, and Congress in the event of future shortfalls, and help DHS and the committees assess whether DHS effectively provides information about potential shortfalls.

What GAO Recommends

GAO recommends that DHS and Secret Service (1) document certain financial management, cost allocation, and benchmark procedures, and (2) provide guidance on remaining communications-related corrective actions. DHS concurred.