OMB Circular A-123 Lessons Learned: Strategies for Sustained Compliance and Outlook for the Future

1. OMB Circular A-123 Lessons Learned: Strategies for Sustained Compliance and Outlook for the Future Presented by Frank Petersen, Director Office of Quality Assurance, National Aeronautics and Space Administration

2. OMB NASA A-123-A: Multi-Year Approach • NASA instituted a multi-year approach to fully implement the requirements of A-123, Appendix A • Year 1 assessment focused on significant financial statement line items • Year 2 focuses on a restructured approach to cover key cycles and sub processes while continuing to building upon the foundation established in year 1

3. Year 1: Laying the Ground Work • Instituted a “Top Down” approach • Established the Senior Assessment Team to oversee A-123 implementation across NASA • Identified significant financial statement line items for documentation and testing • Developed a comprehensive methodology for implementing the A-123 requirements over 3 years

4. Year 1: Lessons Learned • Focus efforts on core requirements to optimize resources • Leverage existing documentation and resources to produce process narratives and flow charts (optional) • Develop “high level” standard processes across financial management • Build “universal ownership” into the process for implementing a system of “sound” financial controls

5. Year 2: Building Upon the Foundation • Continue to promote effective Agency-wide internal control management • Senior Assessment Team improving methodology for fully integrated approach to internal control • Preparing comprehensive internal control guidance for programmatic, financial, and institutional • Ensuring a uniform process for gathering supporting documentation and evidence for the Annual Statement of Assurance

6. Year 2: Building Upon the Foundation • Incorporate FY ’06 Key controls into Center CFO’s individual development plans • Develop Financial Management Internal Control Framework (ongoing initiative) • Define agency level standard business processes • Develop standard control objectives and control activities • Establish financial management training program • Establish high level generic Key controls model

7. Strategies for Sustained Compliance • Make internal control management common business practice • Leverage resources across the Agency • Establish an agency-wide internal control training program • Overcome barriers to sound financial management practices through: • Universal buy-in from top to bottom • Shared responsibility • Comprehensive communication • Sound monitoring practices • Risk based approach

8. Embed Effective Internal Control Management into the Culture • Continue to build synergy and coalitions agency wide – Involve stakeholders in the process • Ensure controls are adequate, unobtrusive, withstand scrutiny, safeguard assets, and address: • Quantitative and Qualitative issues • Continue growth and development of uniform system of internal control

9. Outlook for the Future • Benefits for Today, Tomorrow, and Beyond… • Integrated enterprise system confluence of business processes and accounting information creates greater: • Need for sound internal control • Understanding of non-financial business process impacts on the general ledger • Increased reliance on information obtained to make management decisions

10. Outlook for the Future (cont.) • Movement toward shared services and standard business processes across the organization creates need for solid internal control structure • Inside and outside of shared service environment • Stakeholder monitoring and risk assessment • Third party checks and balances • Exception processing controls