VA seeks cure for accounting woes

The challenge: Find commercial software that meets governmentwide requirements

BY Paula Shaki Trimble 02/07/2000 RELATED STORY

VA's time line

Facing the nightmare of transferring data from 48 software packages into its central accounting system, the Department of Veterans Affairs is planning a drastic move to replace its patchwork system with a single commercial financial management system.

The challenge of replacing systems with a new commercial product lies in finding software that meets government requirements with little customization. Offering help is the Joint Financial Management Improvement Program. JFMIP is an independent organization responsible for testing and qualifying commercial vendors to meet government accounting requirements. It is lending its knowledge to the VA and more than a dozen other agencies interested in abandoning mainframe-based systems in favor of commercial off-the-shelf solutions.

Edward Powell, assistant secretary for financial management at the VA, said that with the current system, the VA is like a person who has handed out 48 automated teller machine cards linked to his checking account that transmit transaction information in different formats. With so many ATM cards and so many formats, the person might spend more time trying to sort out all the data than actually balancing his checkbook, he said. "That is an oversimplification of the mess of reconciling [the VAs financial] statements," Powell said.

The VAs core financial system has 48 software packages that flow financial information from the agencys hospitals, cemeteries, administrative offices and other facilities into a core ledger, Powell said. To complicate matters further, the old system is based on Cobol, the second-oldest high-level programming language. Cobol is labor-intensive and inflexible, and it is quickly becoming a lost art to programmers.

About 35 percent of staff time at the VAs data processing center is spent re-entering data and reconciling input errors, Powell said.

To keep an accurate ledger, the VA is creating a set of standards for financial management and logistics data. Using those standards, the VA will choose a COTS system to replace its aging financial management system.

The effort, called the Integrated Financial/Logistics Management Standards (IFMS), began about a year ago and is expected to be complete by the end of 2003. The VA recently chose KPMG LLP to consult on the capabilities of commercial products that could meet the VAs requirements. Another contractor on the project, Booz-Allen & Hamilton Inc., is helping the VA assess its information technology infrastructure and business processe

"We are looking for the first time to bring to VA a comprehensive management information system that is integrated with everything we do," Powell said. At the VA, IFMS will be used to make sure that in addition to the core financial system, all other records, such as electronic patient records and human resources data, can interact.

The new financial management system is expected to cost $75 million to $150 million. The VA plans to pilot an integrated service network by September and procure software in early 2001. A test system should be available by mid-2001. The VA is not the only agency looking to the commercial IT market for financial management systems, said Karen Alderman, executive director of JFMIP. While virtually every agency is looking at some aspect of financial management systems, 13 federal agencies have indicated to JFMIP that they plan to buy new core financial systems within five years.

A Coordinated Effort

The Federal Financial Management Improvement Act of 1996 requires each agency to implement and maintain systems that comply with federal financial management system requirements, applicable federal accounting standards and the U.S. Government Standards General Ledger. Office of Management and Budget Circular A-127 also requires each agency to establish and maintain a single, integrated financial management system. JFMIP has developed a framework for the capabilities of those integrated systems.

JFMIP has certified six vendors software as meeting the governments requirements for financial management. They are American Management Systems Inc.s Momentum, Digital Systems Groups IFMIS, ICF Information Technologys Federal Financial Assistant, Oracle Corp.s Public Sector Financials, PeopleSoft Inc.s Financials for Education and Government and Rel-Tek Systems & Design Inc.s Core Financial System. The VA will buy its system only from a company certified by JFMIP, Powell sa

"Were hoping to organize a market for commercial off-the-shelf federal financial management systems," Alderman said. By creating a standard data set and test criteria for any vendor that wants to be JFMIP-qualified, the independent group reduces the burden on agencies to conduct testing individually and reduces the cost of those tests, she said.

It costs JFMIP about $500,000 to produce the test criteria. The organization receives about $2.4 million in annual funding from its sponsoring agencies, which are the General Accounting Office, the Treasury Department, the Office of Management and Budget, the Office of Personnel Management and the General Services Administration.

"The type of work JFMIP has done to date is necessary to meet government requirements but is not sufficient to ensure successful implementation," Alderman said. "We test in the vendor- provided environment. Agencies may have different IT environments."

Every software package tested by JFMIP needed some improvements to meet the extra government requirements, Alderman said. For example, the governments budget process and requirements for an audit trail for each transaction are much more difficult than in the private sector, she said.

And in some cases, COTS software can cause agencies to fall behind in financial systems integration. At NASA, problems with KPMGs Performance Series software have put the agencys Integrated Financial Management Program more than 18 months behind schedule. In mid- January, NASA issued a notice to KPMG stating that its software does not work and that the company had 10 days to propose a solution.

NASA officials think KPMG "underestimated the size of the job," said David Howell, NASAs Integrated Financial Management Program director.

http://atlantis.fcw.com/fcw/articles/2000/0207/tech-va-02-07-00.asp

-- Martin Thompson (mthom1927@aol.com), February 07, 2000