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A Message from the Chief Financial Officer
 The Performance and Accountability Report for Fiscal Year 2005 is the Agency's principal publication and report to the President and the American people on our stewardship and management of the public funds to which we have been entrusted. In addition to financial performance, this Report also covers policy and program performance – how well the Agency implemented its goals and objectives.
I am pleased to report that, for the third year in a row, USAID received an unqualified or "clean" opinion from our Inspector General (IG) on all five of the Agency's principal financial statements. In addition, we have met accelerated financial and performance reporting deadlines. With these accomplishments, the American people can have confidence that the financial and performance information presented here is timely, accurate, and reliable. At the same time, we achieved a number of other key goals:
- As part of USAID's commitment to implement a unified, integrated financial management system that substantially complies with system requirements under the Federal Financial Management Improvement Act (FFMIA), we successfully installed Phoenix, the new financial management system, on February 15, 2005, in eight Latin America and the Caribbean (LAC) region missions – Bolivia, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Jamaica, and Nicaragua – and, on July 19, 2005, in nine Europe & Eurasia (E&E) missions – Armenia, Bosnia and Herzegovina, Georgia, Hungary, Kazakhstan, Kosovo, Russia, Serbia and Montenegro, and Ukraine – bringing a total of 22 overseas locations on-line, including the five pilot missions – Egypt, Ghana, Peru, Colombia, and Nigeria – that implemented Phoenix last year. The next deployment phase is to the Asia Near East (ANE) missions in December 2005. After that, the plan is to deploy to Africa, which will complete our worldwide rollout in April 2006. This project has been implemented with few hitches and continues to stay within budget.
- On May 31, 2005, Phoenix was upgraded to a web-based version, that not only gives users a different look and feel, but also changes some of the steps to enter data into the system. This new version enables the Agency to meet key financial management strategic objectives, including running from a common platform with the State Department, complying with new Federal requirements, and complying with security best practices, such as standards-based encryption.
- In addition to the continued rollout of the Phoenix system, a number of enhancements to financial reports were released in early September to provide users with complete, accurate, and timely financial information needed for decision-making purposes.
- In November 2005, the Phoenix hardware and operations will be moved to the Department of State's Charleston Financial Services Center. This consolidation will result in cost-savings to the taxpayer. By physically co-locating State and USAID financial system operations, the State team can support many of the aspects of running Phoenix, such as maintaining the hardware, database, and storage aspects of Phoenix, that they already support for their own financial management system.
- The Agency continues to make progress in implementing the Government Performance and Results Act (GPRA). We continue to evaluate and improve our performance indicators, targets, and reporting system. We are in the midst of introducing reforms that will more directly link budgeting to specific operational goals.
- With respect to the President's Management Agenda (PMA), USAID has maintained a "green" progress score on the scorecard for Improving Financial Management. To get to a "green" status score, USAID needs to have systems and processes institutionalized that will provide accurate and timely data that can be used by managers to answer critical business and management questions.
- The Agency recently closed two long-standing Federal Managers' Financial Integrity Act (FMFIA) material weaknesses – Primary Accounting System and Information Resources Management Processes - leaving no material weaknesses to report this year.
- We also took aggressive actions to eliminate and reduce vulnerabilities associated with auditor reported weaknesses identified in the FY 2004 Government Management Reform Act (GMRA) audit.
The Independent Auditor's Report on USAID's Consolidated Financial Statements, Internal Controls, and Compliance for
FY 2005 contains one new material weakness related to USAID's Accruals Reporting System. The audit report also includes several audit recommendations and reportable conditions. We have accepted responsibility for addressing these issues and expect to take final actions by the end of FY 2006. We foresee no major impediments to correcting these weaknesses. Additional details regarding the weaknesses and our specific plans for addressing the audit recommendations can be found in the Management's Discussion and Analysis and Financial Sections of this Report. Actions taken regarding issues from the FY 2004 audit are also included in these sections.
While we are pleased with our accomplishments in FY 2005, we will continue to improve all aspects of performance and strive to maintain higher financial management standards in FY 2006. We will also continue to promote effective internal controls and focus on implementation of the PMA and other financial management initiatives. I am confident that we will resolve any impediments that could affect the IG's ability to issue an unqualified audit opinion next year, and we will continue to meet accelerated financial reporting deadlines.
Lisa D. Fiely
Chief Financial Officer
November 15, 2005
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