	Background

IRFs generally do not receive appropriations directly. Key Operating Principles Provide a Framework for Effective WCF Management

We identified four key operating principles that offer a framework to  effectively manage WCFs. As previously discussed, to identify key  principles, we reviewed governmentwide guidance on business operating  principles, internal controls, managerial cost accounting, and performance  management. Commerce Departmental, Census, and OMB staff generally found the  principles to be reasonable. 1. However, while the Commerce Departmental WCF handbook includes  the roles and responsibilities of many key personnel and review groups  involved with fund management, it leaves out information on the cross- departmental role of the Commerce CFO Council, which is comprised of  the CFOs from each of Commerce’s bureaus and has an important role  regarding increases or changes to the WCF. This  limits the usefulness of the guidance for bureau staff, customers, and  other stakeholders. Principle 2: Ensure Self-sufficiency by Recovering the Agency’s Actual Costs

		Commerce Has a Transparent Process for Ensuring Recovery of Actual Costs

According to service providers and customers, the rate-setting processes  for the Commerce Departmental WCF are transparent, clearly  coordinated, and designed to recover annual actual costs. Census  customers we spoke with had mixed responses about how M&A costs are  determined. Both Commerce and Census Have a Management Review Process, but Census’ Process Could Be Improved

Both Commerce and Census WCFs have a management review process  that examines how rates are set. However, the level of transparency  differs between the two organizations. Census provides a fragmented and limited description of  how it sets rates and there is no formal process to communicate with  customers. Principle 3: Measure Performance

		Both WCFs Could Benefit from Performance Measures to Assess Operational Effectiveness

OEB has processes in place that help it manage the operations of the  Commerce Departmental WCF. Opportunities Exist for Management to Potentially Consolidate WCF Services

Although the Commerce Departmental and Census WCFs are intended to  achieve economies of scale by supporting services and projects that are  performed more advantageously when centralized, both WCFs support  similar M&A services that could potentially be supported by one WCF. Principle 4: Build in Flexibility to Obtain Customer Input and Meet Customer Needs

		Both WCFs Regularly Obtain Customer Input and Allow Some Flexibility to Adjust to Customer Needs, but Challenges Exist

In general, customers we interviewed said they had regular and ongoing  interactions with fund managers or service providers. When the needs of  customers exceed the capacity of the Commerce Departmental WCF, the  department and the customer enter into a memorandum of understanding  (MOU), outside of the standard suite of services offered through the  WCF. Census uses its operating reserve to maintain price stability for  customers throughout the decennial cycle. Conclusions

WCFs provide agencies with an opportunity to operate more efficiently by  consolidating services and creating incentives for customers and  managers to exercise cost control and economic restraint. Additionally, Census does not have a process  to facilitate coordination among key WCF personnel to ensure appropriate  tracking of funds. Recommendations for Executive Action

We make seven recommendations to the Secretary of Commerce. 2. Establish performance measures to assess performance of WCF  operations, such as billing error rates, and determine what additional  measures would be helpful to improve WCF management. Develop guidance that clarifies and consolidates existing WCF  policies to include:  a.  roles and responsibilities of key personnel responsible for WCF        management, and  b.  a process to coordinate information managed by disparate        divisions to provide an overarching view of the WCF and ensure        the appropriate tracking of funds. Include a more detailed explanation in WCF guidance on the rate- setting process for all components of the fund, such as an explanation  of how rates are determined and costs distributed, and establish a  formal process similar to the Departmental WCF’s process to  communicate with customers. In his letter that is reprinted in  appendix II, the Secretary agreed with our findings and recommendations  and has directed the managers of both the Commerce Departmental  WCF and the Census Bureau WCF to begin implementing our  recommendations. Appendix I: Expanded Version of WCF Key Operating Principles

	WCF Key Operating Principles

Principle  Clearly delineate roles and responsibilities  Appropriate delineation of roles and  responsibilities promotes a clear  understanding of who will be held accountable  for specific tasks or duties, such as authorizing  and reviewing transactions, implementing  controls over WCF management, and helping  ensure that related responsibilities are  coordinated.
Why GAO Did This Study

Agencies can improve their efficiency through the use of shared services, which are often financed through intragovernmental revolving funds (IRF). GAO was asked to (1) identify key operating principles the Commerce Departmental and Census Bureau Working Capital Funds (WCF), which are one type of IRF, should follow to ensure appropriate tracking and use of federal funds and (2) evaluate how departmental and Census policies and procedures for managing these WCFs reflect these principles. GAO identified four key operating principles based on a review of governmentwide guidance on business principles, internal controls, managerial cost accounting, and performance management. GAO also discussed the reasonableness of the principles with staff of the two WCFs and the Office of Management and Budget; these staff generally found the principles to be reasonable. GAO reviewed WCF authorizing legislation and statutory authorities, analyzed agency policies and data, and interviewed agency officials.

What GAO Found

Four key operating principles offer a framework for effective WCF management: (1) Clearly delineate roles and responsibilities; (2) Ensure self-sufficiency by recovering the agency's actual costs; (3) Measure performance; (4) Build in flexibility to obtain customer input and meet customer needs Commerce and Census guidance do not identify the roles and responsibilities of all key WCF personnel. While all involved had a clear informal understanding of who is responsible for managing the Departmental WCF, Commerce's guidance does not discuss its CFO Council--an entity with an important role related to WCF increases and changes. Census lacks a process to coordinate and consolidate information managed by disparate divisions and ensure appropriate tracking of funds. There are also opportunities for the agencies to achieve greater management efficiencies by consolidating certain WCF services. Commerce has a transparent process to ensure recovery of actual costs. However, Census' process could be more transparent. The Commerce Departmental WCF's rate setting and review processes are clearly described, coordinated, and designed to recover actual annual costs. Entities such as the Commerce CFO Council and algorithm review group help to facilitate shared understanding among fund managers, customers, and service providers. Census has a fragmented and limited description of its processes and lacks a formal process to communicate with customers. Census customers GAO spoke with had a mixed understanding about how certain WCF costs are determined, limiting their ability to make appeals and suggest improvements. Both WCFs could benefit from performance measures that assess operational effectiveness. Commerce and Census have identified performance measures related to organizational strategic goals. However, neither has established WCF operational performance measures such as responsiveness to customer inquiries and billing error rates. Moreover, both WCFs support similar management and administrative services that could potentially be consolidated. Both WCFs obtain customer input and have flexibility to adjust to customer needs, but challenges exist. In general, customers GAO interviewed said they had regular and ongoing discussions with fund managers or service providers. At Commerce, its CFO Council and WCF managers periodically assess and shift resources to address changes in customer needs and prioritize requests for services. However, the statutory cap on one bureau's payments into the WCF limits the level of services that can be provided to all Commerce bureaus. To provide services beyond the capacity of the WCF, Commerce enters into a memorandum of understanding with specific customers. The Census WCF's ability to build and maintain an operating reserve helps to provide price stability for customers throughout the decennial census cycle when the costs of management and administrative services supported through the WCF fluctuate dramatically. Similar to Commerce, Census has the flexibility to provide additional services by billing customers directly.

What GAO Recommends

GAO is making seven recommendations to improve the management of the two WCFs, including updating and consolidating WCF guidance, establishing a process to measure WCF performance, and examining opportunities to consolidate certain WCF services. The Commerce Secretary agreed with all of our findings and recommendations and has directed managers of both the departmental WCF and the Census WCF to begin implementing GAO's recommendations.