Strategic Vision #2 - Strong Internal Financial Management Partnerships
Projects sponsored by the Financial Management QIT during the past four years include: a two-year data cleanup effort of over 3600 Department general ledger accounts; preparation of a Department strategic financial plan; a multi-year project for the redesign of the Department's core financial systems; preparation of a department-wide directive implementing the CFO Act; improvement of cash management and accounts receivable; and a review of financial personnel and training requirements.
The Financial Management QIT will continue to address financial management issues department-wide, including: formulating the goals and visions of the comprehensive financial management strategic plan; assuring that financial management personnel are well qualified and receive necessary training; and ensuring the redesign of ED's financial management systems provides accounting data that is useful to program managers.
Following the successful completion of its pilot program, the Third Party Payment System was implemented July 2, 1996 in all principal offices at headquarters. Each principal office has a select number of authorized officials who may issue and sign third party drafts which have been entered into the system by principal office personnel. The third party drafts may be deposited in the payee's bank account or cashed at First Union National Bank or Riggs National Bank near ED Headquarters. GELCO Information Network functions as the system's draft clearing contractor. GELCO establishes bank accounts for clearing checks, provides daily reconciliation data to OCFO and guarantees payments against fraud if identified within 45 days.
Processing costs have greatly decreased with utilization of the Third Party Payment System. Processing costs for the Imprest Fund averaged $6.30 per transaction, while purchase order processing averaged $54.00 per transaction. Under the Third Party Payment System, processing fees are $1.93 per check, which is incurred after the checks have cleared GELCO's bank account. Current estimates place a $329,000 cost savings per year using the Third Party Payment System in lieu of purchase orders and the imprest fund. During the 297 days the system has been implemented at headquarters, the Department of Education has saved an estimated $125,449. In addition to the cost savings, the Third Party Payment System greatly improves the Department's timely payment performance which is required under the Prompt Payment Act.
Other benefits of the Third Party Payment System enabled ED to eliminate its imprest fund operation and close the cashier office. Consequently, the services of 1.5 full time employees have been freed up to perform other Departmental activities and space previously occupied by the cashier office is now used as a training room for EDCAPS.
During FY 1994, ED expanded its use of the International Merchant Purchase Authorization Card (IMPAC) for small purchases. During FY 1995, ED authorized the card to be used for paying vendors who provide training to ED employees. During FY 1996, ED has developed and implemented an automated system for reconciling the IMPAC bill, creating the payment, and posting the expenditure to the accounting system. Executive Offices are encouraged to use the card for all authorized purchases to eliminate the use of processing purchase orders. The average per month IMPAC card usage has increased during FY 1996 as compared to FY 1995. In FY 1996 the per month average number of purchases in which the card was used increased by 7.8% and the dollar volume increased by 15.1% over the per month average in FY 1995.
As of June 1996, the percentage of salary payments made through direct deposit was 95%. About 258 people in the Department still receive their salary by check. Periodically, employees are encouraged to convert to direct deposit.
The Prompt Payment Quality Control Plan ED implemented in October 1992 to comply with the requirements of OMB Circular A-125, Prompt Payment is still being used today. The plan includes the processing of purchase orders and payments in each Executive Office. The payment process is reviewed to determine that the Department is complying with the Prompt Payment Act and OMB A-125. The on-time rate for FY 1995 was 95.6%. During the first nine months of FY 1996, the year-to-date on-time rate was 95.5%.
Recommendations contained in the Joint Financial Management Improvement Program study titled "Improving Travel Management Government-wide" were a factor in developing the requirements for ED's future travel system. For example, pre-determined travel costs (also referred to as "should costs") were recommended in the study and are addressed. Also, a waiver was obtained from the General Services Administration whereby travel reimbursement can be calculated on a flat daily rate. The first and last day of travel would be calculated at three quarters of daily authorized meals and incidental expenses. ED also plans to employ a split payment process that provides for automated expense reimbursement to a traveler's personal account and payment to the government travel card provider.
The Department has also designed and implemented a system where institutional claims that may at some point in the future become a receivable are being tracked and reported in accordance with the Department's Statement of Accounting Policy.
FY95 saw OCFO lead a successful department-wide effort to reinvent the process used to meet the requirements of the Federal Managers Financial Integrity Act (FMFIA). The FMFIA requires agencies to assess the controls in place to assure the government's assets are protected and to report serious weaknesses to the President and the Congress. Traditionally, the assurance was provided through a series of paper and labor intensive self reviews performed by all POs at ED. The estimated cost of training reviewers, performing the reviews, managing the process, and producing the report in previous years could exceed $1 million.
The reinvented process used to assess management controls focuses on a partnership among members of the department-wide Financial Management Quality Implementation Team, responsible office managers and OIG staff to identify weaknesses. Senior Officers review the status of the weaknesses identified, add new weaknesses they feel need to be reported, and certify that all known material weaknesses for their office are reported. The Senior Officer certifications form the basis for the report to the President and the Congress. This reinvented approach brings a high level focus to the FMFIA process and allows personnel to concentrate on fixing previously identified problems.