Message from the Chief Financial Officer
 The
Performance and Accountability Report for Fiscal Year
2006 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. Consistent with the
joint Department of State/USAID strategic framework and plan,
the Performance Section of this Report is a collaborative
effort between the two agencies.
I am pleased to report that for the fourth year in a row,
USAID received an unqualified or “clean” opinion
from our Inspector General on all five of the Agency’s
principal financial statements. In addition, we continue to
meet 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:
- In keeping with 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 completed
the worldwide installation of Phoenix, the new financial
management system, in June. Phoenix is now the accounting
system of record for the Agency, including 51 overseas missions,
and all appropriated fund accounting transactions are now
recorded in this system.
- USAID is committed to minimizing the risk of making erroneous
or improper payments to contractors, grantees, and customers.
We have an aggressive system in place to monitor payments,
especially for high profile programs, including the Global
War on Terror.
- We also implemented a solid program to comply with new
requirements for internal controls over financial reporting.
Twelve key financial processes have been identified at USAID.
We spent the first year implementing this program, documenting
processes and controls, and assessing and testing the highest
risk areas. We will continue our efforts to implement this
program over the next two years, with initial assessments
completed by the end of fiscal year 2008.
- In November 2005, the Phoenix hardware and operations
were 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, that
they already support for their own financial management
system.
- 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 is used by managers
to answer critical business and management questions. We
continue to work hard in order to achieve success in this
area.
- We also took aggressive actions to eliminate and reduce
vulnerabilities associated with auditor-reported weaknesses
identified in the FY 2005 Government Management Reform Act
(GMRA) audit.
- In support of foreign assistance reform and the new joint
performance reporting system, we worked closely with the
Department of State on developing Operational Plan policy
guidance and training as well as on designing the new Foreign
Assistance Coordination and Tracking System (FACTS) to be
used for collecting budget and performance data from the
operational plans worldwide.
The Independent Auditor’s Report on USAID’s Consolidated
Financial Statements, Internal Controls, and Compliance for
FY 2006 contains one new material weakness related to accounting
and reporting of accruals. 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 2007. 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 this Report. Actions taken regarding issues from the FY
2005 audit are also included in this Report.
While we are pleased with our accomplishments in FY 2006,
we will strive to improve all aspects of performance and to
maintain higher financial management standards in FY 2007.
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 the accelerated reporting deadline.
Lisa D. Fiely
Chief Financial Officer
November 15, 2006
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