Department of Commerce Approach to Implementing A-123 A-123 Presentation May 23, 2006 Lisa Casias Deputy CFO and and Di

1. Department of Commerce Approach to Implementing A-123 A-123 Presentation May 23, 2006 Lisa Casias Deputy CFO and and Director for Financial Management

2. Agenda Background and Challenges A-123 Implementation Approach DOC Timeline Benefits

3. Background • DOC is comprised of 13 diverse bureaus (all but 3 bureaus are on one financial system). • We have approximately 34,000 employees. • In 2005, total assets were approximately $12.7 billion. • In 2005, DOC received an unqualified opinion for the 7th consecutive year. • Since 1st quarter, FY 2005, DOC has maintained a green status rating on the Financial Management Scorecard under the President’s Management Agenda.

4. Background (continued) • Two reportable conditions, Construction in Progress (new) and IT Security. • Corrective action plans are required on all findings – including management letter. • CFOs are required to certify to financial statements and compilation procedures. • Monthly CFO and Finance Officer meetings are held to discuss financial management issues. • Review of business processes to standardize recording of transactions among bureaus on DOC system. • Frequent consultation with the OIG.

5. Challenges Resources • Leveraging existing bureau and Department resources • no contract assistance to date (with the exception of PTO) • Working with the CIO on IT Controls. Testing of IT internal controls is being integrated with internal control testing required by FISMA. However, this testing doesn’t reach the application controls. Buy-in/Understanding • Materiality • Communication/Training Storage and Maintenance of Documentation Timeframe to Meet Requirements

6. Agenda Background and Challenges A-123 Implementation Approach DOC Timeline Benefits

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18. Agenda Background and Challenges A-123 Implementation Approach DOC Timeline Benefits

19. DOC Timeline FY 2005 FY 2006 Assessment Phases Project Initiation Appoint SMC (6/05) Identify FS Prepare Materiality Analysis Appoint SAT Planning Phase Finalize Materiality Finalize Processes/Sub-Processes Document Key Controls Document Processes Integrate Control Activities Develop Communications Plan Develop Test Plan Testing Phase Testing Key Controls Identify Deficiencies & Weaknesses Evaluation Phase SMC and SAT review test results Develop CAPs Reporting Phase Assurance Statement in PAR (as of June 30 – PAR issued 11/15/06) Qtr. 4 Qtr.1 Qtr. 2 Qtr. 3 Qtr. 4

20. Agenda Background and Challenges A-123 Implementation Approach DOC Timeline Benefits

21. Benefits • Formalized the process and reporting on assurance of internal controls. • Assists in enforcing compliance by increasing visibility. • Provides positive opportunity to work with bureaus – working together to get the job done. • Transfer of knowledge among bureaus. • A-123 Inter-agency workgroup.