Internal Control Material Weaknesses, Significant Deficiencies, and Other Challenges Pose Risks to Federal Spending Data Quality

		Financial Audits and Readiness Reviews Indicate That Agencies Face Data Quality Issues in Three Broad Areas

As of February 2017, 22 of the 24 CFO Act agencies had issued annual  financial reports for fiscal year 2016 and 19 of the 22 CFO Act agencies’  auditors reported material weaknesses and/or significant deficiencies in  internal control over financial reporting in their audit reports that may  affect the quality of information reported under the DATA Act. Treasury officials told us that they are aware of these challenges, but they  do not expect that these issues will be resolved before the May 2017  reporting deadline. Longstanding issues related to agency financial  information, systems and internal controls, and reporting challenges  related to agency DATA Act report submissions underscore the need for  OMB to address our open recommendation to provide additional  guidance to address potential clarity, consistency, or data quality issues  and for OMB to implement a process for communicating data quality  limitations to the public. OMB Guidance Directs Agencies to Leverage Existing Assurance Processes Despite Known Limitations

Another area of risk to data quality is the agency senior accountable  official (SAO) assurance process that leverages assurance processes of  existing source systems with known data quality challenges. However, our  review of the assurance statement posted on GSA’s website found that  the statement focuses on security controls rather than data quality and  appears to apply specifically to procurement management. We will continue to monitor this  issue moving forward. Accordingly, we are not making a  recommendation at this time but will assess the quality of the assurance  process in our future work. Efforts to Establish Data Governance Structure Are Still at an Early Stage

OMB has taken some actions to improve its data governance framework,  but efforts to establish a fully functioning data governance structure are at  an early stage with many specifics yet to be worked out. In September 2016, OMB established a Data Standards Committee to  focus on clarifying existing data element definitions and identifying the  need for new standards. OMB approved a charter for this committee in  November 2016. The charter  states that the committee is to make publicly available both the topics of  its proceedings and the resulting outcomes. Keeping records of the Data Standards Committee’s activities and  releasing them publicly could facilitate consultation with stakeholders. Conclusions

Across the federal government, agencies are making final preparations to  submit the data required by the DATA Act’s May 2017 deadline. This  represents the culmination of almost 3 years of effort by OMB, Treasury,  and federal agencies to address the many policy and technical challenges  presented by the act’s requirements including the need to standardize  data elements across the entire federal government, link data contained  in agencies’ financial and award management systems, and expand the  type and amount of data to be reported. Looking forward, attention will increasingly focus on another critical goal  of the act—improving the quality of the data being produced and the  mechanisms and assurances needed to communicate such information to  users. These reviews have identified material  weaknesses and significant deficiencies reported in agencies’ financial  audits and identified several widespread and longstanding issues that  present risks to agencies’ ability to submit quality data for DATA Act  reporting. Recommendation for Executive Action

To promote transparency in the development and management of data  standards for reporting federal spending, the Director of the Office of  Management and Budget should ensure that the Data Standards  Committee makes information about the topics of the committee’s  proceedings and any resulting outcomes available to the public. OMB  generally agreed with our recommendation. More specifically, it addresses the following: (1) risks to  data quality related to known material weaknesses and other deficiencies,  including internal controls over financial reporting, that have been  identified in selected previous audits, reviews, and reports conducted by  GAO, inspectors general (IG), and external auditors; (2) risks to data  quality related to challenges in operationalizing DATA Act policy and  technical guidance; (3) approaches that agencies will use to assure the  quality of their data submissions and any associated limitations; and (4)  efforts taken to establish a data governance structure. In our analysis of agencies’ material weaknesses, significant deficiencies,  and other challenges reported by independent auditors, we identified  three overall categories that could affect data quality: (1) Accounting and  Financial Management, (2) Financial Management Systems, and (3)  Information Technology (IT) Security and Controls. OMB and Treasury are working to implement the Digital  Accountability and Transparency Act of 2014 (DATA Act), which  includes several provisions that may address these  recommendations once fully implemented. However, OMB has not documented this monitoring plan.
Why GAO Did This Study

Across the federal government, agencies are making final preparations to submit the required data by the DATA Act's May 2017 deadline. This represents the culmination of almost 3 years of effort by OMB, Treasury, and federal agencies to address many policy and technical challenges. Moving forward, attention will increasingly focus on another critical goal of the act: improving the quality of the data produced.
Consistent with GAO's mandate under the act, this is the latest in a series of reports reviewing the act's implementation. This report examines (1) risks to data quality related to known material weaknesses and other deficiencies previously identified by GAO, IGs, and external auditors; (2) risks to data quality related to challenges in operationalizing policy and technical guidance; (3) agencies' assurances of the quality of their data submissions; and (4) efforts taken to establish a data governance structure. GAO reviewed DATA Act implementation documents and auditors' reports on known challenges and interviewed staff at OMB, Treasury, and other agencies.

What GAO Found

Internal control weaknesses and other challenges pose risks to data quality. Material weaknesses and significant deficiencies reported in agencies' financial audits and other challenges reported in Inspectors General (IG) readiness review reports show several widespread and longstanding issues that present risks to agencies' abilities to submit quality data as required by the Digital Accountability and Transparency Act of 2014 (DATA Act). These issues fall into three categories: (1) accounting and financial management, (2) financial management systems, and (3) information technology security and controls. GAO has also reported weaknesses and challenges in government-wide financial management systems used for DATA Act reporting.
Challenges with guidance will impact data quality. Challenges related to how agencies report certain intragovernmental transactions, reconcile recipient address information, and align required DATA Act files with missing data continue to present risks to the quality of data displayed on USASpending.gov. The Office of Management and Budget (OMB) and the Department of the Treasury (Treasury) have stated that they do not expect to resolve these challenges before the May 2017 reporting deadline. Unresolved challenges affecting data quality could lead policymakers and the public to draw inaccurate conclusions from the data. This challenge underscores the need for OMB to address GAO's open recommendation that it provide agencies with additional guidance to address data quality issues. GAO will continue to assess how OMB, Treasury, and agencies address data quality issues moving forward.
Limitations exist with data quality assurance processes. OMB guidance directs senior accountable officials at each agency to rely on existing assurance processes when they certify that their agencies' DATA Act submissions are valid and reliable. However, GAO identified concerns regarding some existing assurance processes. For example, OMB directed agencies to use a General Services Administration assurance statement attesting to the quality of data in two source systems, but the assurance statement focuses on data security rather than data quality, and it is unclear whether it applies to both procurement and financial assistance data. OMB is aware of these issues and expects to finalize the assurance process in time for the May 2017 reporting deadline. Accordingly, GAO is not making a recommendation at this time but will assess the quality of the assurance process in future work.
Efforts to establish a data governance structure are still at an early stage. OMB has taken some actions to improve its data governance framework, but efforts to establish a fully functioning data governance structure are at an early stage with many specifics yet to be worked out. OMB formally chartered the Data Standards Committee as an advisory body in November 2016 to focus on clarifying existing data element definitions and identifying needs for new standards. The charter states that the committee will promote transparency by making the topics and outcomes of its proceedings public, but OMB has not kept records of the committee's meetings nor has the committee produced a work plan for moving forward. Public information about the committee's activities and outcomes would facilitate consultation with stakeholders, as required by the act.

What GAO Recommends

GAO recommends that the Director of OMB ensures that the Data Standards Committee publicly releases information about the topics of its proceedings and any resulting outcomes. OMB generally agreed with GAO's recommendation.