OVERVIEW

Introduction

The Department's Bureau of Resource Management (RM), headed by the Assistant Secretary for Resource Management and Chief Financial Officer (CFO), employs over 500 people around the globe--in Washington, Charleston, South Carolina, and Bangkok, Thailand. With five major operating units, the CFO oversees all strategic and performance planning, State operations and foreign assistance budgeting and resource management, global accounting, disbursing and payroll, financial systems, and issuance of the financial statements and "annual report" of the Department. The CFO also coordinates and leads the remediation of vulnerabilities within the Department's global critical infrastructure. RM produces a number of essential documents including the Department's Strategic Plan, Joint Performance Plan with USAID, Performance and Accountability Report, Budget-in-Brief, and the Congressional Budget Justification Document.

RM's customers are all embassies, consulates, and missions overseas, nearly 40 other U.S. Government agencies overseas, all domestic bureaus and employees of the State Department, and the Broadcasting Board of Governors. RM's services to its customers are critical in order that they can do their job to create a more secure, democratic, and prosperous world.

The CFO's mission statement is incorporated into the Department's strategic goal for Management and Organizational Excellence as Performance Goal 5. This Performance Goal has two initiatives, one each for the President's Management Agenda's initiatives for Improved Financial Performance and Budget and Performance Integration.

IMPROVED FINANCIAL PERFORMANCE

Goals and Strategies

Improving financial performance means that the Department knows where every dollar comes from and where every dollar goes in a timely and accurate manner. Accurate and timely information is critical to managing our programs on a day-to-day basis, obtaining the best performance, and ensuring accountability to the American public. It is also a core competency of world-class organizations.

To do this, RM will:

• Produce on-time, accurate and useful financial statements on a routine basis.
• Obtain an unqualified ("clean") opinion on annual Departmentwide financial statements.
• Produce award winning Performance and Accountability Reports.
• Implement seamless financial systems and processes that meet Federal and Department requirements.
• Ensure effective internal controls are in place and functioning.
• Consolidate and standardize financial operations.
• Leverage best business practices and electronic technologies (E-Gov).
• Build a top-notch finance team.
• Undertake other value-added activities that support strategic decision-making and mission performance.

Key measures of our success in this area are aligned with how OMB scores financial management related to achieving a "green" status rating on the President's Management Agenda. Other measures of success include:

• Are we on target in our consolidation of financial services to the Charleston Financial Services Center?
• Are we implementing the President's mandate to effectively adopt E-Gov solutions, especially in the areas of payroll, travel and grants?
• Are we adequately investing in our greatest asset - our people?

Performance

At the end of FY 2004, the Department had met seven of the nine OMB-established criteria and achieved a "Yellow" score for status. During FY 2005, the Department satisfied the remaining two criteria. As a result, in the first quarter of FY 2005, the Department achieved its goal of obtaining a "Green" status score for improved financial performance.

Consolidating and Standardizing our Worldwide Financial Operations

While we modernize our major corporate financial management systems, we are also consolidating our worldwide financial operations to our Charleston and Bangkok Financial Service Centers (FSC) to provide world-class financial services. The recent highlights of RM consolidation efforts are:

• Completed relocation of the Department's Washington DC - based financial operations to Charleston FSC.
• Continued hiring, staffing and training of the Charleston FSC staff.

Customer Service

Customer service is the hallmark of the Bureau of Resource Management. As the Department moves to a single world-class financial system, RM has redoubled its emphasis on customer service and support. The Overseas Post Support Desk, in addition to helping posts with implementation of new financial systems and changes, has been expanded to become a state-of-the-art help desk for financial management professionals in the Department and in other agencies we service. As part of this effort, RM is moving the customer support function towards a 24/7 operation, leveraging our presence in time zones roughly equidistant around the globe (Charleston, Bangkok and Paris), and integrating former Washington-based operations into our customer support regime. For example, the former American Payroll Resolution Center is now operational in Charleston.

Building a Top-Notch Finance Team

Establishing a worldwide cadre of qualified financial managers presents a difficult challenge to the CFO. Unlike most other Government agencies, the CFO must manage the dynamics of three personnel systems that include financial management personnel: Foreign Service, Civil Service and Foreign Service Nationals (FSNs). Our primary strategy is to maintain a vigorous and active training program for financial management practitioners. We view the training program as critical — in implementing new systems, establishing RM as the lead bureau within the Department on financial management issues, and also in ensuring that information in the field is current and authoritative. In 2005, the training program was strengthened to provide overseas customers a full line-up of training opportunities — offering 107 separate courses, for a total of 1,605 training seats available in 14 different locations around the globe. Our training program enjoys customer approval ratings in excess of 90 percent.

The Road Ahead

Looking ahead, State will continue to achieve fundamental "compliance" results. Moving beyond compliance-based results, State management is making decisions based on meaningful financial information to achieve better performance results in the form of lower costs, improved efficiencies and/or improved outcomes for agency mission.

State will also undertake other value added activities that support effective strategic decision-making and mission performance. These activities include:

• Enhancing management and internal controls. The Department maintains a robust system of management controls overseen by senior leadership and administered by RM. The Department's strong commitment to management controls has served as a positive catalyst for change and there are no material weaknesses reported under FMFIA or by the independent auditors. Recent events in the private sector have increased concerns related to financial management, and in particular on internal controls. To address these concerns, Congress passed the Sarbanes-Oxley Act of 2002, which establishes new demands for corporate accountability and includes several important sections related to internal controls for public companies. In December 2004, OMB revised Circular A-123, Management's Responsibility for Internal Control, to strengthen internal control in the Federal government. The Department is well-positioned to fully implement the requirements of revised circular A-123 in FY 2006, as required.
  
  
• Streamlining and consolidating global financial operations. In FY 2005, State completed a multi-year effort to consolidate and streamline our worldwide financial operations in our Charleston, South Carolina and Bangkok, Thailand locations.
  
  
• Leveraging best business practices and electronic technologies (E-Gov). The Department will select and begin implementation of an electronic Travel (eTS) program, beginning with our overseas locations. The program will be piloted at several overseas locations by July 2005. In addition, working with the Department of Agriculture's National Finance Center, State will reach a decision for migrating its current Consolidated American Payroll Processing System (that pays both civil service and foreign service employees).
  
  
• Partnering with other Federal agencies. The Joint Financial Management System (JFMS) investment is a cooperative effort by the Department of State and USAID to improve service and save money through collaboration on financial systems and functions. USAID and State are working together to migrate from two separate financial systems operations that use commercial off-the-shelf (COTS) software and different technical architectures to a common technical environment. The end goal of the JFMS is to create a common financial systems platform for State and USAID to manage all domestic and overseas financial management activities starting in FY 2006.

FINANCIAL MANAGEMENT SYSTEMS

Implement a Global Financial Management System (GFMS)

For the past two decades, the Department accounted for its resources through multiple outdated and disjointed legacy financial systems. Some posts effectively conducted operations through the integration of little more than a collection of Excel spreadsheets. Often, it could take up to 45 days after a financial event occurred for overseas financial data to update the Department's Central Financial Management System (CFMS).

The Global Financial Management System (GFMS) project integrates the Department's overseas and domestic financial operations onto common financial management software platform in Charleston. The GFMS program replaces the Department's 20-year-old overseas systems and legacy mainframe systems with modern open systems technology and COTS software certified by JFMIP. The platform will provide a single integrated view of financial data through data standardization, common business processes, and the seamless exchange of information through the Department's financial and administrative sectors. This will dramatically improve operations and reduce costs by eliminating system redundancies and replacing obsolete and unsupported financial systems. It will also provide the infrastructure for integrating other administrative activities within the Department, such as the Integrated Logistics Management System (ILMS).

The diagram below depicts the state of our financial systems at the beginning of FY 2003 and the end state of our global vision for the beginning of FY 2007.

D

The following implementations will become the Department's Global Financial Management System.

Regional Financial Management System (RFMS)

RFMS is the new global accounting and disbursing system that has been implemented for posts around the world, and the building block of GFMS. RFMS is comprised of a commercial-off-the-shelf, accounting system for funds management, obligation, and voucher processing, and the RFMS/D disbursing system developed by the Department for Treasury disbursing services. The worldwide implementation of RFMS replaced the obsolete Paris Accounting and Disbursing system (mainframe-based) used at FSC Paris and the Overseas Financial Management System (Wang-based) used at FSCs Charleston and Bangkok. RFMS incorporates State's standard account structure and improves transaction standardization and timeliness between RFMS and CFMS, which results in the consistent, timely processing and recording of financial data on a worldwide basis. In addition, the overseas interface was reengineered for RFMS and now provides daily updates of overseas financial transactions to CFMS. These daily updates allow headquarters managers to ascertain the worldwide balance of our accounts on a daily basis, something never before possible.

In addition, RFMS implemented a new reporting tool, called R/Viewer which provides daily updates on all financial transactions to 168 posts overseas and allows them to analyze, and "slice and dice" their financial data for local reporting purposes using modern reporting and query tools on their local workstation.

Central Financial Management System (CFMS)

CFMS is the Department's primary and central accounting system in Washington. It is a mainframe-based COTS product that will be upgraded to the RFMS-based software beginning in FY 2006. Upon completion of this conversion, the Department will have in place a common worldwide core financial management system software platform.

Global Direct Connect

Global Direct Connect will move posts that have operationally practical and reliable network connections (estimated at over 85 percent of our embassies) from their current batch processing environment to a real time, on line connection with GFMS. Currently, there are 28 posts using Global Direct Connect. Our plan is to 20 to 25 more posts to Global Direct Connect by the end of FY 2006.

Becoming a Financial Line of Business Center of Excellence

In FY2004, the Administration asked agencies with the skills and capabilities to function as government-wide service providers in the area of Financial Management to submit business cases for doing so as part of the Fiscal Year 2006 budget process. After assessing potential service providers' in several areas, including but not limited to past performance, current capabilities, and ability to operate a customer-focused organization, four agencies were designated Financial Management (FM) Line of Business (LoB) Centers of Excellence (COEs).

Recognizing that the offerings of these four service providers were geared toward domestic operations, the Department prepared an FY07 Exhibit 300 business case and application to become a COE for foreign affairs agencies. The Department welcomes this opportunity to continue to service the foreign affairs community and further the President's Management Agenda and has prepared and submitted a proposal to become a Financial Line of Business Center of Excellence.

Joint Financial Management System (JFMS) with USAID

The Joint Financial Management System (JFMS) investment is a cooperative effort by the Department of State and USAID to improve service and save money through collaboration on financial systems and functions. At issue was the pursuit of separate implementations of the same financial system software when a joint effort would improve efficiency based on economies of scale.

The goal of the JFMS is to create a common financial systems platform for State and USAID to manage all domestic and overseas financial management activities starting in FY 2006. The JFMS investment combines the Department's Global Financial Management System (GFMS) and USAID's Phoenix investment.

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Joint Assistance Management System (JAMS) with USAID

USAID and the Department of State are implementing a Joint Assistance Management System (JAMS). The system will collect assistance information and will interface with the Joint Financial Management System being implemented by the two agencies. JAMS will be based on a commercial product called "Grantium." Grantium was selected from a field of commercial products because of its ability to be easily configured for assistance processes. Other features include a robust reporting capability.

First Quarter FY 2006 will be devoted to an analysis of current assistance processes at both agencies. Processes will be mapped to determine similarities and differences so that common processes can be developed to the maximum extent practicable. State and USAID are identifying subject matter experts and other team members for the project. Current plans are to perform a proof of concept of JAMS during FY 2006.

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