To its credit, in April 2000, NASA began an effort known as IFMP. As a result, we reported that:  NASA has increased its risks of implementing a system that will not  optimize mission performance, and will cost more and take longer to  implement than necessary;   the core financial module is not being designed to integrate the cost and  schedule data that program managers need to oversee the work of  NASA’s contractors; and    costly rework will likely be required to fix requirement defects not  identified prior to implementation. When NASA announced in  June 2003 that the core financial management module was complete, NASA  officials acknowledged that additional work remained, including the need  to develop and configure a cost-allocation structure within the system so  that it would accumulate the full cost of NASA’s programs and projects for  external financial reporting purposes. Consequently, only about one-third of the transaction types that  NASA uses in its business processes are currently implemented and fully  automated in the core financial module. However, prior to implementation,  NASA tested only 120, or 53 percent, of the 225 unique financial events or  transaction types identified by NASA as critical for carrying out day-to-day  operations and producing external financial reports. Despite these  concerns, NASA did not alter its implementation plan for the module. However,  NASA did not thoroughly test or implement key requirements prior to  implementation and has not used the new system as an opportunity to drive  needed changes in its management practices and business processes. NASA Has Not Reengineered Processes to Properly Account for PP&E and Materials

The core financial module, as implemented in June 2003, does not  appropriately capture and record PP&E and material in the module’s  general ledger at the transaction level. NASA’S Implementation of IFMP Has Created New Reporting Problems

NASA’s implementation of the core financial module has also created new  reporting issues. Although NASA knew about these problems prior to  implementation, the agency went forward with its implementation plans. Core Financial Module Does Not Substantially Comply With FFMIA

The system limitations discussed previously related to full-cost accounting,  property accounting, budgetary accounting, accrued costs, and accounts  payable—combined with the findings from our April 2003 report—indicate  that NASA’s new core financial module and related systems, as  implemented in June 2003, do not substantially comply with the  requirements of FFMIA. This act provides agencies a blueprint for building  fully integrated financial management systems that routinely provide  decision makers with timely, reliable, and useful financial information. Conclusion

If NASA continues on its current track, the core financial module and IFMP  will fail to achieve the agency’s stated objective of providing reliable, timely  financial information for both internal management decision-making and  external reporting purposes. In making that  representation, NASA officials acknowledged that, as part of their  implementation strategy, they had not yet converted the system to support  full-cost accounting. Comments From the National Aeronautics and Space Administration

Objective, Scope, and Methodology

The objective of this report was to assess whether the National Aeronautics  and Space Administration (NASA) Integrated Financial Management  Program’s (IFMP) core financial module, as implemented on June 2003,  would satisfy NASA’s external reporting requirements, such as reliable and  auditable financial statements, congressional information needs, and other  reporting requirements. We did  not assess other aspects of the core financial module’s capabilities.
Why GAO Did This Study

In April 2000, the National Aeronautics and Space Administration (NASA) began its Integrated Financial Management program (IFMP), its third attempt at modernizing its financial management processes and systems. In April 2003, GAO reported that NASA's acquisition strategy has increased the risk that the agency will implement a system that will cost more and do less than planned. This report is one of a series of reviews of NASA's acquisition and implementation of IFMP, and focuses on the core financial module's ability to provide the information necessary for external financial reporting.

What GAO Found

The core financial module of IFMP provides NASA its first agencywide accounting system--a significant improvement over the 10 disparate systems previously used. However, to meet IFMP's aggressive implementation schedule, NASA deferred testing and implementation of many key requirements of the core financial module. Consequently, when NASA announced, in June 2003, that this module was fully operational at each of its 10 centers, about two-thirds of the financial events or transaction types needed to carry out day-to-day operations and produce external financial reports had not been implemented in the module. NASA officials acknowledged that, as part of their implementation strategy, they had not yet converted the module to support full-cost accounting. In addition, we found that NASA also deferred implementation of other key core financial module capabilities. Because NASA did not use disciplined processes for defining, managing, and testing key system requirements, or substantially reengineer its business processes prior to implementation, the core financial module, as implemented in June 2003, does not address several long-standing external reporting issues and has created some new problems. Long-standing external financial reporting issues have not been addressed. NASA has not used its implementation of the core financial module as an opportunity to drive needed changes in its management practices and business processes. Therefore, the system does little to address NASA's ability to properly account for $37 billion of reported property or certain aspects of the agency's $15 billion annual budget. New financial reporting problems have emerged. NASA went forward with its aggressive implementation plans even though agency managers knew of problems with the module's ability to properly process and record certain transactions. As a result, the module does not appropriately capture critical information on the cost of NASA's operations, such as certain accrued costs, accounts payable, and obligation transactions. In April 2003, GAO reported that the core financial module did not address key internal management information requirements. Now, GAO has found that the module cannot reliably provide key financial data needed for external financial reporting. Although NASA intends to address many of these issues, its implementation approach raises concerns over its ability to do so. These deferred external reporting capabilities, combined with the findings from our April 2003 report, indicate that NASA's June 2003 core financial module and related systems do not substantially comply with the requirements of Federal Financial Management Improvement Act (FFMIA). FFMIA addresses the need for agencies' financial systems to provide value to those who use financial data. NASA must address these issues if the core financial module and IFMP are to achieve the objective of providing reliable, timely financial information for both internal management decision-making and external reporting purposes.