This directive was reviewed and certified as current and necessary by Bruce M. Carnes,
Director, Office of Management, Budget and Evaluation/Chief Financial Officer, 9/18/02. |
| U. S. Department of Energy |
ORDER
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DOE O 413.1A
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Approved:
4-18-02
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| SUBJECT: MANAGEMENT CONTROL PROGRAM | |
1. OBJECTIVES. To establish requirements and assign responsibilities for the Department
of Energy (DOE) Management Control Program. The objectives of the Management
Control Program are to
a. ensure sound management controls and overall consistency in exercising the
statutory authorities that vest in the Secretary and the Director, Office of
Management, Budget and Evaluation/Chief Financial Officer (CFO) for
implementing the Federal Managers' Financial Integrity Act of 1982 (P.L. 97-
255) and related central agency guidance;
b. evaluate management controls using existing information and day-to-day
knowledge to the maximum extent possible;
c. provide reasonable assurance that the Department's, including the National
Nuclear Security Administration's (NNSA's), programs are protected from waste,
fraud, and mismanagement;
d. promote open recognition of problems prior to identification by outside
organizations;
e. focus attention on correcting the most serious problems facing the Department,
NNSA, and component organizations; and
f. report the status of the Department's, including NNSA's, major problems up
through the chain of command to the President and Congress.
2. CANCELLATION. DOE O 413.1, Management Control Program, dated 12-6-95.
Cancellation of an Order does not, by itself, modify or otherwise affect any contractual
obligation to comply with the Order. Canceled Orders that are incorporated by reference
in a contract remain in effect until the contract is modified to delete the reference to the
requirements in the canceled Orders.
3. APPLICABILITY.
a. DOE Elements. Except for the exclusions in paragraph 3c, this Order applies to
all DOE elements, including the NNSA; however, only the Departmental
elements named in Attachment 1, Departmental Elements, are required to
maintain separate management control programs. All other Departmental
organizations must not establish separate management control programs as
required by this Order, but must participate in the programs established by the
respective Departmental elements to which they report.
b. Contractors. Except for the exclusions in paragraph 3c, the Contractor
Requirements Document (CRD), Attachment 2, sets forth requirements of this
Order that will apply to contractors responsible for the management and operation
of the Department-owned facilities whose contracts include the CRD, hereafter
referred to as site/facility management contractors. This Order does not apply to
other than site/facility management contractors. Any application of any
requirements of this Order to other than site/facility management contractors will
be communicated separately from this Order.
c. Exclusions. The Bonneville Power Administration, which is treated as a
Government Corporation, is exempt from the reporting requirements in this
Order.
4. REQUIREMENTS. Requirements are set forth in Chapters I through VII.
5. RESPONSIBILITIES.
a. Secretary. Reports annually to the President and Congress on the status of the
Department's management controls and its most significant Departmental
challenges.
b. Heads of Departmental Elements, including the NNSA Administrator.
(1) Maintain stewardship of Federal resources and ensure they are used
efficiently and effectively to achieve intended program results.
(2) Take systematic and proactive measures to establish cost-effective and
appropriate management controls.
(3) Establish and maintain a separate management control program as
required by this Order.
(4) Appoint a management control action officer to coordinate all planning,
evaluating, and reporting related to the DOE Management Control
Program.
c. Director, Office of Management, Budget and Evaluation/Chief Financial Officer.
(1) Coordinate the Management Control Program for DOE.
(2) Oversee the process of evaluating and reporting on management controls
and financial management systems.
(3) Review Departmental elements' assurance memorandums to evaluate
whether reporting requirements in this Order are followed.
(4) Evaluate for the Secretary year-end assurance memorandums and
attachments prepared by Departmental elements and identify potential
Departmental challenges.
(5) Prepare and present to the Departmental Internal Control and Audit
Review Council an executive summary on the status of DOE's
management controls and potential Departmental challenges.
d. Inspector General.
(1) Provides technical assistance in the evaluation and improvement of
management and financial management system controls.
(2) Reviews year-end assurance memorandums from Departmental elements
to ensure that previously detected waste and other problems are
appropriately disclosed.
(3) Provides independent written assurance to the Secretary annually on
whether the evaluation of DOE management controls has been carried out
in a reasonable and prudent manner.
(4) Reports on whether the Department's financial systems comply with
Federal financial management system requirements, applicable Federal
accounting standards, and the standard general ledger at the transaction
level.
e. Departmental Internal Control and Audit Review Council (DICARC) provides
senior management oversight of the DOE Management Control Program and
reviews and approves Departmental challenges for forwarding to the Secretary.
Membership includes the Director of the Office Management, Budget and
Evaluation/Chief Financial Officer (Chairperson); the Inspector General; the
Principal Deputy Administrator for NNSA; Assistant Secretary for Environmental
Management; a Headquarters Secretarial Officer, appointed on a rotating basis;
and a Special Assistant to the Secretary. 6. REFERENCES.
a. General Accounting Office, "Policy and Procedures Manual for Guidance of
Federal Agencies," Title 2, Accounting; Title 6, Pay, Leave, and Allowances; and
Title 7, Fiscal Procedures, which prescribes standards for internal management
controls and financial systems operations.
b. Office of Management and Budget Circular A-123, revised, "Management
Accountability and Control" dated 6-21-95, which prescribes policies for
establishing, evaluating, and reporting on agency management controls.
c. Office of Management and Budget Circular A-127, "Financial Management
Systems," dated 7-23-93, which prescribes policies for developing, operating,
evaluating, and reporting on financial management systems.
d. Office of Management and Budget's Revised Implementation Guidance for the
Federal Financial Management Improvement Act (FFMIA), dated January 2001,
details the specific requirements of FFMIA, as well as factors to consider in
reviewing systems for compliance with the Act.
e. Office of Management and Budget Circular A-130, revised, "Management of
Federal Information Resources," dated 11-30-00, which establishes policy for the
management of Federal information resources.
f. Public Law 97-255, 31 United States Code 3512, Federal Managers' Financial
Integrity Act of 1982 (FMFIA), which requires establishing internal management
controls in accordance with GAO standards; evaluating internal management
controls in accordance with Office of Management and Budget guidelines; and
reporting annually by the Secretary to the President and Congress.
g. Public Law 81-784, Title I, Part II, Accounting and Auditing Act of 1950, as
amended, sections 112 and 113, 31 United States Code 3512, which requires
Federal departments to maintain effective systems of internal controls.
h. Public Law 106-531, 31 United States Code Chapter 35 as amended, Reports
Consolidation Act of 2000, which authorizes the consolidation of several key
financial and performance management reports required of Federal agencies.
i. Public Law 106-398, Title X, subtitle G, "Government Information Security
Reform Act," which amends the Paperwork Reduction Act of 1995, by enacting a
new subchapter on "Information Security." The Act primarily addresses the
program management and evaluation aspects of security.
j. Public Law 104-208, 31 United States Code 3512, Federal Financial Management
Improvement Act of 1996 (FFMIA), which requires
(1) each agency to implement and maintain financial management systems
that comply substantially with Federal financial management systems
requirements, applicable Federal accounting standards and the United
States Government Standard General Ledger accounting at the transaction
level, and
(2) auditors to report on the Department's compliance with the previously
stated requirements as part of the financial statement audit report.
7. CONTACT. For assistance, contact the Office of Management, Budget and Evaluation,
Office of Program Liaison and Financial Analysis at 301-903-2551.
SPENCER ABRAHAM
Secretary of Energy
CONTENTS
Page
CHAPTER I - REQUIREMENTS OVERVIEW. . . . . . . . . . . . . . . . .I-1
CHAPTER II - IDENTIFYING PROGRAMS AND ADMINISTRATIVE
FUNCTIONS
1. General . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
2. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
3. Criteria for Identifying Programs and Administrative FunctionsII-1
4. Developing the List of Programs and Administrative Functions II-2
CHAPTER III - SUMMARY MANAGEMENT REVIEW
1. General . . . . . . . . . . . . . . . . . . . . . . . . . .III-1
2. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . .III-1
3. Conducting Summary Management Reviews . . . . . . . . . . .III-1
4. Existing Information. . . . . . . . . . . . . . . . . . . .III-1
a. Prior-Year Reportable Problems . . . . . . . . . . . .III-2
b. Current-Year Evaluations and Information . . . . . . .III-2
c. Strategic Plans, Budgets, and Customer Needs . . . . .III-2
5. Underlying Management Principles. . . . . . . . . . . . . .III-3
a. Policies and Objectives Have Been Established and are Understood
and Accepted . . . . . . . . . . . . . . . . . . . . .III-3
b. Roles and Responsibilities Have Been Assigned and are
Understood and Accepted. . . . . . . . . . . . . . . .III-3
c. Work is Planned and Controlled to Ensure That Objectives are MetIII-3
d. Employees are Capable of Performing Their Assigned Tasks and are
Adequately Supervised. . . . . . . . . . . . . . . . .III-3
e. Responsibilities for Critical Verifications and Approvals are Assigned
to Separate Employees and/or Organizations . . . . . .III-3
f. Decisions are Based on Accurate, Up-To-Date InformationIII-4
g. Work is Assessed to Ensure it Meets Expectations . . .III-4
h. General and Application Control Activities are in Place for Information
Systems. . . . . . . . . . . . . . . . . . . . . . . III-4
i. Problems are Identified and Corrected. . . . . . . . .III-4
6. Reportable Problem Identification . . . . . . . . . . . . .III-4
7. Action Plans for Reportable Problems Identified and Departmental Challenges III-5
8. Summary Management Review Documentation . . . . . . . . . .III-6
CONTENTS (continued)
Page
CHAPTER IV - SUMMARY FINANCIAL MANAGEMENT SYSTEM REVIEW
1. General . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
2. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
3. Conducting Summary Financial Management System Reviews. . . IV-1
4. Department of Energy Financial Management System Inventory. IV-2
5. Existing Information. . . . . . . . . . . . . . . . . . . . IV-2
6. Compliance With Financial Management Systems Requirements . IV-3
7. Reportable Nonconformance Identification. . . . . . . . . . IV-4
8. Action Plans for Reportable Nonconformances Identified. . . IV-4
9. Summary Financial Management System Review Process DocumentationIV-4
10. Major Contractor Financial Management Systems . . . . . . . IV-5
CHAPTER V - ACTION PLANS
1. General . . . . . . . . . . . . . . . . . . . . . . . . . . .V-1
2. Preparation of Action Plans . . . . . . . . . . . . . . . . .V-1
3. Required Format . . . . . . . . . . . . . . . . . . . . . . .V-1
a. Title. . . . . . . . . . . . . . . . . . . . . . . . . .V-1
b. Reportable Problem or Reportable Nonconformance. . . . .V-1
c. Headquarters Organization (Field Only) and Program and Administrative
Function . . . . . . . . . . . . . . . . . . . . . . . .V-1
d. Description. . . . . . . . . . . . . . . . . . . . . . .V-2
e. Assessment of Progress . . . . . . . . . . . . . . . . .V-2
f. Critical Milestones. . . . . . . . . . . . . . . . . . .V-2
g. Success Indicators for Closed Action Plans . . . . . . .V-2
h. Name, Title, and Date. . . . . . . . . . . . . . . . . .V-2
4. Submitting Action Plans with Assurance Memorandums . . . . .V-3
5. Departmental Action Plans . . . . . . . . . . . . . . . . . .V-3
CHAPTER VI - REPORTING
1. General . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
2. Reporting Requirements. . . . . . . . . . . . . . . . . . . VI-1
a. Assurance Memorandum . . . . . . . . . . . . . . . . . VI-1
b. Action Plan(s).. . . . . . . . . . . . . . . . . . . . VI-2
CONTENTS (continued)
Page
CHAPTER VII - TRACKING
1. General . . . . . . . . . . . . . . . . . . . . . . . . . .VII-1
2. Tracking Requirements . . . . . . . . . . . . . . . . . . .VII-1
ATTACHMENT 1. DEPARTMENTAL ELEMENTS
ATTACHMENT 2. CONTRACTOR REQUIREMENTS DOCUMENT
ATTACHMENT 3. ADMINISTRATIVE FUNCTIONS AND CROSSCUTTING AREAS
ATTACHMENT 4. SAMPLE SUBMISSION
ATTACHMENT 5. DEFINITIONS CHAPTER I
REQUIREMENTS OVERVIEW
The DOE Management Control Program requires DOE elements to evaluate and report on the status of
the management controls used in the Department's programs and administrative functions and to report
and correct any problems identified. DOE elements must
1. identify annually the programs and administrative functions subject to the evaluation and
reporting requirements in this Order (see Chapter II);
2. conduct annual summary management reviews of programs and administrative functions (see
Chapter III);
3. conduct annual summary financial management system reviews of financial management
systems or system components contained in the Department of Energy Financial Management
System Inventory (see Chapter IV);
4. develop executive-level summary action plans reflecting the timely and effective correction of
reportable problems and financial system reportable nonconformances of concern to the next
higher level of management (see Chapter V);
5. report the status of management controls and any reportable problems and/or financial
management system nonconformances through the Department's reporting management chain
to support the Secretary's reportto the President and Congress (see Chapter VI); and
6. track progress on correcting reportable problems and financial system nonconformances (see
Chapter VII).
The head of each Departmental element must appoint a management control action officer to
coordinate all planning, evaluating, and reporting related to the DOE Management Control Program. CHAPTER II
IDENTIFYING PROGRAMS AND ADMINISTRATIVE FUNCTIONS
1. GENERAL. Each Departmental element is required to develop an annual list of its programs
and administrative functions to serve as the basis for the evaluations of management controls
required by this Order.
2. PURPOSE. The list designates those specific programs, administrative functions, and other
sensitive areas for which summary management reviews are to be performed. This list further
helps ensure that all appropriate Departmental activities are evaluated and reported on.
3. CRITERIA FOR IDENTIFYING PROGRAMS AND ADMINISTRATIVE FUNCTIONS.
The following paragraphs outline the criteria for identifying each Departmental element's
programs, administrative functions, and other activities that are subject to the requirements of
this Order. The word "program" as used in this chapter refers to programs identified by
Congress as funding control levels (e.g., budget and reporting code EM01, DP02, etc.).
a. Headquarters Elements.
(1) Each individual program with a total obligational authority of $10 million or
more.
(2) If no individual program has a total obligational authority of $10 million or
more, all programs must be consolidated and treated as a single program at the
organizational level (e.g., General Counsel, Hearings and Appeals).
b. Field Elements. Each individual program with a total obligational authority of $5
million or more if total Departmental funding for the program is $10 million or more.
c. Headquarters and Field Elements.
(1) Each applicable administrative function and crosscutting area, included in
Attachment 3, regardless of funding level.
(2) Each "sensitive area" identified by the Office of Management, Budget and
Evaluation in its annual year-end reporting guidance, regardless of funding
level.
Evaluation of programs and activities that do not meet these criteria is not required under this
Order. However, Departmental elements have the option of including these programs and
activities if management considers them to be sensitive at the local level.
4. DEVELOPING THE LIST OF PROGRAMS AND ADMINISTRATIVE FUNCTIONS.
a. The Departmental element must develop its list using budget reports on current-year
funding and unobligated carryover to identify the programs for which it is responsible
and programs that are subject to the requirements of this Order.
b. The list must identify applicable administrative functions and crosscutting program
areas, as well as any sensitive areas, regardless of funding level.
c. The programs, administrative functions, and other activities in the list may be aligned to
reflect the Departmental element's internal use. However, Departmental elements must
document that all applicable programs (identified by budget and reporting code),
administrative functions, and other activities have been included.
d. Occasionally, funding is provided to a Departmental element that does not have the
programmatic responsibility to determine the manner in which those funds are used. In
those instances, the Departmental element with the funding must exclude that program
from its list after documenting that the Departmental element with the programmatic
responsibility agrees and has included that program on its own list.
CHAPTER III
SUMMARY MANAGEMENT REVIEW
1. GENERAL. Each Departmental element is responsible for evaluating the adequacy of its
management controls to determine whether they conform to the principles and standards
established by Office of Management and Budget Circular A-123. This evaluation is
accomplished by performing annual summary management reviews of the Departmental
element's programs and administrative functions.
2. PURPOSE. Summary management reviews must provide an overall look at the operations
under a manager's cognizance and provide a framework for identifying and summarizing
inadequate management controls and reportable problems.
3. CONDUCTING SUMMARY MANAGEMENT REVIEWS. Heads of Departmental elements
may perform summary management reviews in a manner that suits their method of operation.
However, the appropriate responsible managers must be involved to ensure that adequate
summary management reviews are conducted.
During a summary management review, managers must
a. consider existing information regarding the activities under their cognizance;
b. consider underlying management principles included below;
c. determine if there are problems which should be reported to the next higher level of
management;
d. develop action plans to correct the reportable problems identified; and
e. document, in a succinct manner, the process used and the rationale for the conclusions
reached.
4. EXISTING INFORMATION. The following types of information, as well as any other
relevant information available to management, must be considered during performance of the
summary management review. Not all of the types of information will be available to every
organization; therefore, managers must determine which items are applicable. Furthermore, if
the available information is not sufficient, the head of the Departmental element should ensure
that an appropriate evaluation is conducted to obtain the needed information.
a. Prior-Year Reportable Problems. Managers must consider problems at the
organizational level that were reported the previous year, as well as prior-year
Departmental challenges. The following factors must be considered:
(1) any changes that have affected the nature of the problem;
(2) whether critical milestones reported last year still appropriately describe the
corrective actions to be taken and are on schedule; and
(3) whether the root cause has been fixed for problems that are now considered
closed.
b. Current-Year Evaluations and Information. Managers must consider available current-
year information to determine whether any new potentially reportable problems have
surfaced or any previously undetected reportable problems exist. The following factors
must be considered:
(1) current-year internal and external reviews, audits, appraisals, and other types of
evaluations and any problems that were disclosed;
(2) activity reports and other existing mechanisms for reporting to management and
any problems that were disclosed;
(3) day-to-day knowledge of the program or administrative function that would
indicate whether reportable problem(s) exist;
(4) problems identified through ongoing improvement-related initiatives;
(5) problems uncovered by reviews or audits in other areas that may also exist in the
program or administrative function being evaluated; and
(6) information on the status of site/facility management contractors' activities.
c. Strategic Plans, Budgets, and Customer Needs. The strategic plan, the budget, annual
performance plans, and the needs of customers are critical DOE processes and interests
that must be considered in determining whether reportable problems exist. The
following factors must be considered:
(1) difficulties in meeting the goals and/or objectives in the immediate
organization's and/or the Department's strategic plan;
(2) difficulties in achieving the performance targets in the immediate organization's
or Department's performance plans;
(3) problems for which funding has been requested and/or identified in the budget;
and
(4) problems in meeting customer needs.
5. UNDERLYING MANAGEMENT PRINCIPLES. When conducting the summary
management review, managers must consider the following underlying principles which
incorporate the principles stated in the General Accounting Office's Standards for Internal
Controls in the Federal Government.
a. Policies and objectives have been established and are understood and accepted.
Management must set expectations for the organization before employees can do their
jobs, satisfy their customers, and strive to improve the quality of their work. Specific
policies and objectives reflecting requirements in applicable laws and regulations and
the Departmental element's mission, core values, and operating philosophy must be
established. Once these have been established, managers must take actions to ensure
that employees share the organization's vision.
b. Roles and responsibilities have been assigned and are understood and accepted. It is
management's obligation to ensure that an organizational structure and delegations of
authority are in place to support the accomplishment of the organization's mission and
that employees understand what their responsibilities are. Before taking responsibility
for their work, employees must know management's expectations, know why a task is
being performed, and be empowered to carry out assigned tasks.
c. Work is planned and controlled to ensure that objectives are met. Work must be
carefully planned and controlled to ensure management's objectives are met. Relevant
risks associated with achieving management's objectives, such as those defined in
strategic and annual performance plans, should be identified and analyzed to form a
basis for determining how risks should be managed. Needs must be thought out,
organizational goals identified, lines of communication put in place, manpower and
other resources provided, and accountability established. Management must also ensure
that the right material, tools, and processes are in place and used appropriately.
d. Employees are capable of performing their assigned tasks and are adequately
supervised. Management must ensure that employees are capable of performing
assigned tasks. Work assigned to employees should be equivalent to their skill levels.
Employees should have appropriate education and training, including professional
development and on-the-job training. Employees should be supervised to ensure they
understand the specific tasks assigned to them and that the organization's work is
successfully accomplished.
e. Responsibilities for critical verifications and approvals are assigned to separate
employees and/or organizations. Some critical tasks and work processes require
verifications or approvals to ensure that the final product meets specifications or that
strict operating requirements are adhered to. Management is responsible for assigning
the responsibility for these critical verifications and approvals to employees and/or
organizations that are separate from those performing the work.
f. Decisions are based on accurate, up-to-date information. Decision making must be
based on accurate information that is available when needed. This requires that
significant events and relevant data be promptly and accurately documented, recorded,
and distributed in a form and time frame that permits people to perform their duties
efficiently. Managers must also use information from other internal and external
sources that could affect their operations.
g. Work is assessed to ensure it meets expectations. Employees must critically assess their
efforts and determine if they have accomplished what they set out to do. In addition, a
system of assessments must be established and implemented by management. In
carrying out these assessments, work performance should be measured against defined
standards and must be conducted by competent individuals with expertise in the subject
area involved. Management should also track major agency achievements and
compare these to the plans, goals, and objectives established under the Government
Performance and Results Act.
h. General and application control activities are in place for information systems. General
controls apply to all information systems mainframe, minicomputer, network, and end
user environment. These controls include backup and recovery procedures,
contingency and disaster planning, controls over acquisition, implementation and
maintenance of all systems software, protection of systems networks from inappropriate
access, and processes in place for safely developing new systems and modifying
existing systems. Application controls should be installed at an application's interfaces
with other systems to ensure that all inputs are received and are valid and outputs are
correct and properly distributed.
i. Problems are identified and corrected. Problems must be identified, documented,
analyzed, resolved, and followed up. Management must be committed to preventing
problems, correcting them when identified, and improving quality. Managers should
establish an environment in which problems are viewed as opportunities for
improvement.
6. REPORTABLE PROBLEM IDENTIFICATION. After considering day-to-day knowledge,
existing information, and the underlying management principles, heads of Departmental
elements must determine whether any of the problems identified are reportable. Generally, if
the problem would be of concern to the next higher level of management, it should be
considered by the head of the Departmental element to be reportable. As problems are reported
up the management chain, judgments of reportability are made by progressively senior
individuals with a broader perspective on the Department's mission and function.
The following guidance is provided to aid heads of Departmental elements in determining
whether a problem is reportable to the next higher level of management. Specifically, heads of
Departmental elements must consider whether the problem in their view:
a. substantially impairs the organization's performance, mission, and strategic plan;
b. violates significant statutory or regulatory requirements;
c. substantially weakens safeguards against waste, loss, unauthorized use, and
misappropriation of funds or other assets;
d. results in a conflict of interest;
e. creates adverse publicity that affects the organization's credibility;
f. merits the attention of senior DOE management, the Secretary, Congressional Oversight
Committees or the Executive Office of the President;
g. exists in a majority of programs, administrative functions, and/or organizations and can
cause harm, even though minor individually, because the aggregate is significant;
h. risks or results in the actual loss of either $10 million or 5 percent of the resources of a
budget line item;
i. could reflect adversely on the management integrity of the organization if not reported;
j. endangers national security; and/or
k. has received significant adverse audit coverage.
7. ACTION PLANS FOR REPORTABLE PROBLEMS IDENTIFIED AND DEPARTMENTAL
CHALLENGES. An action plan must be developed for the actions the Departmental element
will take to correct each reportable problem identified. Action plans for prior year reportable
problems must be updated on an annual basis including the year of closure. In addition,
Departmental elements responsible for a Departmental challenge, or portion of a Departmental
challenge, should ensure the actions in the Departmental plan are updated. Instructions for
completing the action plan(s) are in Chapter V.
8. SUMMARY MANAGEMENT REVIEW DOCUMENTATION. Heads of Departmental
elements must document the summary management review in a succinct narrative that is
sufficient to evidence
a. that a summary management review was conducted;
b. what information was used to conduct the evaluation; and
c. the rationale for the conclusion reached.
Managers are encouraged to retain additional supporting documents (e.g., management reports)
as part of the summary management review documentation if they are critical to the
conclusions reached and are not readily available otherwise. In determining the need for
documentation, managers should keep in mind that they are not required to maintain exhaustive
documentation and must use their best judgment as to the minimum amount required to
adequately support their evaluation and conclusions reached. However, documentation should
be sufficient to withstand review by auditors or other reviewers. CHAPTER IV
SUMMARY FINANCIAL MANAGEMENT SYSTEM REVIEW
1. GENERAL. The Department is responsible for evaluating its financial management system to
determine whether it conforms to the principles and standards established by the Comptroller
General and the requirements of Office of Management and Budget Circulars A-127 and A-130
and the Government Information Security Reform Act. This evaluation is accomplished
through the performance of two types of financial management system reviews:
a. Summary Financial Management System Reviews. Summary financial management
system reviews must be conducted annually by each Departmental element responsible
for a financial management system and/or system component.
b. Financial Statement Audit Reviews. As part of the audit of the Department's financial
statements, the Inspector General, or contractor working for the Inspector General, must
review the Department's financial management systems annually to determine whether
they substantially comply with requirements delineated in the Federal Financial
Management Improvement Act.
The remainder of this chapter contains requirements pertaining to the summary financial
management system review.
2. PURPOSE. The purpose of the summary financial management system review is to give the
manager an overall look at the financial system and/or system component under his or her
cognizance and provide a framework for identifying and summarizing reportable
nonconformances.
3. CONDUCTING SUMMARY FINANCIAL MANAGEMENT SYSTEM REVIEWS.
Departmental elements have the flexibility to perform the summary financial management
system review in a manner that suits their method of operation. However, the appropriate
financial and systems managers must be involved to the extent required to ensure an adequate
summary financial management system review is conducted.
During the summary financial management system review, managers must
a. consider the existing information they have at their disposal regarding their financial
management system or system component;
b. determine whether the system complies with General Accounting Office, Office of
Management and Budget, Joint Financial Management Improvement Program (JFMIP),
and legal and regulatory requirements;
c. determine if there are nonconformances which should be reported to the next higher
level of management;
d. develop plans for the actions they will take to correct the reportable nonconformances
identified; and
e. document, in a succinct manner, the process used and the rationale for conclusions
reached.
4. DOE FINANCIAL MANAGEMENT SYSTEM INVENTORY. The Department must review
the following financial management systems and system components:
a. Departmental Integrated Standardized Core Accounting System (DISCAS),
b. Financial Information System (FIS),
c. Departmental Funds Distribution System (FDS),
d. Management Analysis and Reporting System (MARS),
e. Financial Management System (FMS) of the Power Marketing Administrations,
f. Corporate Human Resources Information System (CHRIS), and
g. Departmental Budget Formulation System (BFS).
Departmental elements must evaluate only requirements under their control during the
summary financial management system review. For example, operations offices and field
elements would consider only those DISCAS requirements not controlled by Headquarters.
5. EXISTING INFORMATION. In conducting the summary financial management system
review, managers must consider existing information at their disposal. Examples of such
sources of information are:
a. Inspector General and/or General Accounting Office reviews;
b. day-to-day knowledge;
c. management reviews, including, but not limited to, computer security reviews and
summary management reviews;
d. financial statement audits and findings;
e. Department's 5-Year Systems Development Plan;
f. problems identified through ongoing initiatives;
g. system change requests;
h. problem(s) identified by user groups or councils; and
i. prior Summary Financial Management System reviews.
If existing information is insufficient for an adequate evaluation, the manager must use other
techniques (e.g., financial analysis, questionnaires, transaction testing) to obtain the needed
information.
6. COMPLIANCE WITH FINANCIAL MANAGEMENT SYSTEMS REQUIREMENTS. The
financial management system must comply with applicable requirements in Title 2, Title 6, and
Title 7 of the GAO Policies and Procedures Manual, Office of Management and Budget
Circulars A-127 and A-130, the Government Information Security Reform Act, JFMIP System
Requirements, and applicable accounting standards. To enable these requirements to be met,
financial management systems must process and record financial events effectively and
efficiently, and provide complete, timely, reliable and consistent information for decision
makers and the public. Specific requirements call for the following:
a. an agency-wide financial information classification structure that is consistent with the
U.S. Government Standard General Ledger;
b. integrated financial management systems;
c. use of the Standard General Ledger at the transaction level;
d. timely, useful reports on financial information and performance measures;
e. budget preparation, execution and reporting in accordance with Office of Management
and Budget;
f. adherence to design, development, operation and maintenance requirements;
g. incorporation of Government Information Security Reform Act and other Government-
wide computer security requirements;
h. up-to-date systems documentation adequate to user needs;
i. appropriate internal controls;
j. training and user support services;
k. ongoing maintenance for continued effective and efficient operations; and
l. adherence to Federal accounting standards.
The Office of Management, Budget and Evaluation must issue annual instructions on the
specific requirements to be considered during the summary financial management system
review.
7. REPORTABLE NONCONFORMANCE IDENTIFICATION. Heads of Departmental
elements must judge whether any of the nonconformances identified are reportable. Generally,
nonconformances that would be of concern to the next highest level of management are
reportable. As nonconformances are reported up, judgments of reportability are made by
progressively senior individuals.
The following is provided to assist heads of Departmental elements in determining if a
nonconformance is reportable to the next highest level of management. Specifically, reportable
nonconformances in a financial management system must meet one or more of the following
criteria:
a. merits the attention of senior management, the Director, Office of Management, Budget
and Evaluation/Chief Financial Officer and/or the Secretary;
b. prevents the financial system from achieving central control over financial transactions
and resource balances;
c. results in significant adverse effect on external reporting and internal management
decisions; and
d. prevents conformance of financial systems with the Financial Management System
Requirements in paragraph 6.
In addition, if management has agreed to a material systems weakness identified through
audited financial statements, that issue must be considered a reportable nonconformance and an
action plan must be submitted with the assurance memorandum. Heads of Departmental
elements should bear in mind that the existence of a reportable nonconformance does not
preclude the system's overall conformance with financial management system requirements, so
long as the nonconformances, when considered together, are not sufficiently serious to prevent
reasonable assurance that the system as a whole conforms.
8. ACTION PLANS FOR REPORTABLE NONCONFORMANCES IDENTIFIED. An action
plan must be developed for the actions the Departmental element will take to correct each
reportable nonconformance identified. Action plans must be updated on an annual basis,
including the year of closure. Instructions for preparing action plans are in Chapter V.
9. SUMMARY FINANCIAL MANAGEMENT SYSTEM REVIEW PROCESS
DOCUMENTATION. Heads of Departmental elements must document the summary financial
management system review in a succinct narrative sufficient to evidence:
a. That a summary financial management system review was conducted;
b. What information was used to conduct the evaluation; and
c. The rationale for the conclusion.
Managers are encouraged to retain additional supporting documents (e.g. management reports,
etc.) as part of the summary financial management system review documentation if critical to
the conclusions reached and not readily available otherwise. In determining the need for
documentation, managers should keep in mind that they are not required to maintain exhaustive
documentation and must use their best judgment as to the minimum amount required to
adequately support their evaluation and conclusions reached. However, documentation should
be sufficient to withstand review by auditors and other reviewers.
10. MAJOR CONTRACTOR FINANCIAL MANAGEMENT SYSTEMS. Heads of field
elements are responsible for ensuring that major contractor financial management systems and
practices necessary to carry out the Department's financial policy, principles and objectives are
acceptable.
CHAPTER V
ACTION PLANS
1. GENERAL. Action plans are used by Departmental elements to describe their reportable
problems and financial management system reportable nonconformances and the timely and
effective actions they plan to take to correct them. In addition, cognizant Headquarters
organizations use the field action plans to identify potential reportable problems or
nonconformances during their year-end process, which are then considered for inclusion as one
of the Departmental challenges reported by the Secretary.
2. PREPARATION OF ACTION PLANS. Action plans must
a. concisely describe reportable problems or nonconformances, their root cause(s), and
impact on the Department;
b. consolidate related or similar problems within the same program and administrative
function at the Departmental element level;
c. be prepared at the executive summary level, using existing information when available;
d. identify planned critical milestones that portray broad, summary-level steps to rectify
the problem, and its root cause(s);
e. reflect only those actions to be taken by the Departmental element reporting the
problem; and
f. reflect critical milestones that are in line with the direction of the Departmental
element's strategic plan.
3. REQUIRED FORMAT. Action plans must include the categories detailed below. (See
Attachment 4 for a sample action plan.)
a. Title. A descriptive name for the action plan.
b. Reportable Problem or Reportable Nonconformance. Indicate whether the action plan
relates to a reportable problem or a financial management system reportable
nonconformance.
c. Headquarters Organization (Field Only) and Program or Administrative Function.
Identify the cognizant Headquarters organization and the title of the program or
administrative function, consistent with the Department's budget and reporting codes or
the administrative functions in Attachment 3. Reportable problems in crosscutting
areas must identify the crosscutting area as the program or administrative function and
the cognizant Headquarters element with programmatic responsibility for correcting it.
d. Description. A brief explanation describing the reportable problem or nonconformance,
its impact on the program or administrative function, and the root cause(s).
e. Assessment of Progress. A brief explanation of progress in implementing the
milestones and alleviating the problem or nonconformance during the current reporting
period. If the last critical milestone is not the closure date of the problem or
nonconformance, the projected month and year for closure must be indicated. Any
slippage in critical milestone dates during the current reporting period must be
explained and the overall impact on the completion of the plan provided.
f. Critical Milestones.
(1) In chronological order, provide the key tasks and target dates representing broad
events required to correct the problem and its root cause(s).
(2) All critical milestones must list an "Original Target Completion" date by month
and year. This is the date included in the original action plan as the proposed
completion of the milestone and must stay the same through closure. A
"Revised Target or Actual Completion" date denoted by month and year must be
listed if:
(a) the milestone target completion date has been revised, in which case the
most current date must be listed; or
(b) the milestone has been completed, in which case the completion month
and year must be listed.
Critical milestones completed during the current year should correspond with
planned actions indicated on the prior year's plan.
g. Success Indicators for Closed Action Plans. A statement provided only for those
reportable problems or nonconformances that are being closed. Briefly describe the
qualitative or quantitative success indicators used to show completed actions have
eliminated the problem or nonconformance and its root cause(s).
h. Name, Title, and Date. Provide the name and title of the manager responsible for
reporting problems or nonconformances to the next higher level of management and the
date the action plan was prepared or updated.
4. SUBMITTING ACTION PLANS WITH ASSURANCE MEMORANDUMS. An action plan
for reportable problems and reportable nonconformances must be submitted with the
Departmental element's annual assurance memorandum. In addition, a cover sheet providing
an index and crosswalk for the action plans submitted is required. The cover sheet should
include the following information:
a. program, as indicated by the Department's budget and reporting code, or administrative
function included on the applicable action plan;
b. title of the action plan;
c. responsible Headquarters organization;
d. closed or open designation; and
e. page number.
The information above should be included for new action plans and action plans from the
previous year that continue to be reportable. Departmental elements should also include
information on action plans reported previously that have closed during the reporting year.
Finally, Departmental elements should include updated Departmental challenge action plans
under their responsibility with their year assurance memorandum. Attachment 4 includes a
sample format for the index and crosswalk.
5. DEPARTMENTAL ACTION PLANS. Each of the Departmental challenges will have a
corresponding action plan including assignment of a responsible program manager(s) and the
office responsible for each critical milestone.
Responsible offices should also ensure that appropriate planned critical milestones are included
in subsequent year's performance plans. Inclusion will help to ensure actions necessary for
closure are completed within the timeframe intended. Action plans related to the Departmental
challenges will be updated yearly by responsible program organizations and tracked by the
Office of Management, Budget and Evaluation.
CHAPTER VI
REPORTING
1. GENERAL. Heads of Departmental elements must report annually on the management
controls and financial management system(s) in their respective programs and administrative
functions. The following factors must be considered, where applicable, in preparing the annual
report:
a. current year summary management review and related action plans;
b. status of reportable problems identified in the prior year;
c. status of actions taken to correct problems previously reported by the Secretary;
d. current financial management system review and related action plans; and
e. site/facility management contractors' management controls and financial management
systems.
Headquarters annual assurance reports must, if applicable, summarize field and/or
Headquarters reportable problems at the overall DOE level. The annual assurance reports must
not supercede, but must build on, the reporting required under other Departmental programs.
2. REPORTING REQUIREMENTS. Departmental elements' annual assurance reports must
include an assurance memorandum and action plans for correcting reportable problems and/or
financial system reportable nonconformances. The DOE Office of Management, Budget and
Evaluation must issue detailed reporting requirements annually that contain specific
information on preparing the current year's report. These annual instructions will incorporate
the Office of Management and Budget's current reporting requirements, specify current
Department-wide sensitive areas, provide current year report dates, and outline the language to
be used in the annual assurance report. (See Attachment 4 for a sample assurance
memorandum.) The basic requirements are as follows:
a. Assurance Memorandum. The annual assurance memorandum is a high-level document
that presents salient issues of concern to the next higher level of management and
should be prepared in an executive summary fashion. It must include the following:
(1) A statement that management controls were reviewed using all known
information, including assurances from site/facility management contractors,
and that underlying management principles incorporating the General
Accounting Office's Standards for Internal Controls in the Federal Government
were considered.
(2) A statement that current Department-wide sensitive areas (identified annually in
the reporting instructions issued by the Office of Management, Budget and
Evaluation) have been considered and whether or not deficiencies were
identified.
(3) A statement that there is or is not reasonable assurance that management
controls were working effectively and programs and administrative functions
were performed economically and efficiently consistent with applicable laws;
property, funds and other resources were safeguarded; obligations and costs
were proper; and accountability for assets was maintained.
(4) A statement that the financial management system does or does not comply with
Government-wide financial management system requirements. (Only
organizations with financial management systems should include this
statement.) In addition, Departmental elements with site/facility management
contractors must include a statement that the contractor financial management
system does or does not conform to DOE requirements.
(5) An executive summary of the reportable problems and system nonconformances
in action plans attached to the assurance memo. If reportable problems are
being closed, the letter must also include a statement that actions taken have
resolved the problem. Cognizant Headquarters elements must include a
statement indicating concurrences with reportable problem closures reported by
field elements.
(6) An optional brief summary of other significant issues facing the reporting
Departmental element. These are issues the head of the Departmental element
believes meet the standard of a reportable problem, either as a current or
emerging issue, but for which correction is outside the scope of their
responsibility or operational authority.
b. Action Plan(s). Plans for correcting reportable problems and financial management
system reportable nonconformances identified in the Departmental element's assurance
memorandum must be attached. All milestones in Departmental challenge action plans
must be incorporated into and represented by an action plan from the responsible
organization. The format and instructions for the action plan provided in Chapter V
should be strictly adhered to. Guidance for determining which problems and financial
management system nonconformances should be reported are in Chapters III and IV,
respectively.
CHAPTER VII
TRACKING
1. GENERAL. Departmental elements and the Director, Office of Management, Budget and
Evaluation/Chief Financial Officer must track all reportable problems and nonconformances
identified during the year-end evaluation and reporting process to monitor the progress towards
correction.
2. TRACKING REQUIREMENTS. Action plans for all reportable problems and
nonconformances must be tracked through completion and validated to ensure intended results
have been achieved. The Department's management control tracking program is two pronged
as described below:
a. Departmental elements must locally track all reportable problems and reportable
nonconformances. Actions must be tracked through completion and validation that
actions have produced intended results. If reportable problems are identified by
site/facility management contractors, Departmental elements may rely on the
site/facility management contractors' systems to track problems and nonconformances
if the contractor has adequate procedures in place to ensure adequate tracking occurs
through closure.
b. The Office of Management, Budget and Evaluation must track Departmental challenges
reported by the Secretary. DEPARTMENTAL ELEMENTS
Except for the exclusions in paragraph 3c, this Order applies to all Departmental elements. Changes to
the following list of Departmental elements will be identified within the annual guidance and
requirements document issued by the Office of Management, Budget and Evaluation. All
Departmental elements are required to maintain a separate management control program. All other
Departmental organizations must not establish separate management control programs as required by
this Order, but must participate in the programs established by the respective Departmental elements to
which they report.
Chief Information Officer
Civilian Radioactive Waste Management
Congressional and Intergovernmental Affairs
Counterintelligence
Economic Impact & Diversity
Energy Efficiency & Renewable Energy
Energy Information Administration
Environment, Safety and Health
Environmental Management
Fossil Energy
General Counsel
Hearings and Appeals
Independent Oversight & Performance Assurance
Inspector General
Intelligence
Management, Budget, and Evaluation/Chief Financial Officer
National Nuclear Security Administration (NNSA)
Nuclear Energy, Science & Technology
Policy and International Affairs
Public Affairs
Security
Science
Worker and Community Transition
Federal Energy Regulatory Commission
Albuquerque Operations Office
Chicago Operations Office
Idaho Operations Office
Nevada Operations Office
Oak Ridge Operations Office
Oak Ridge Operations Office - NNSA
Oakland Operations Office
Oakland Operations Office - NNSA
Richland Operations Office
Savannah River Operations Office
Savannah River Operations Office - NNSA
Carlsbad Field Office (WIPP)
Golden Field Office
Ohio Field Office
Rocky Flats Field Office
National Energy Technology Laboratory
Southeastern Power Administration
Southwestern Power Administration
Western Area Power Administration
Naval Petroleum and Oil Shale Reserves in CUW
Pittsburgh Naval Reactors Office
Schenectady Naval Reactors Office
Strategic Petroleum Reserve Project Management Office
Office of River Protection
CONTRACTOR REQUIREMENTS DOCUMENT
DOE O 413.1A, MANAGEMENT CONTROL PROGRAM
Department of Energy (DOE) site/facility management contractors must consider all existing
information and report annually to the appropriate head of a Departmental element on the status of
their management control and financial management systems. Definitions for management control and
financial management systems are contained in Attachment 5, "Definitions." Significant problems the
Department needs to be aware of, which meet any of the following criteria, must be reported:
1. substantially impairs the organization's mission;
2. could constitute a violation of a significant statutory or regulatory requirements;
3. substantially weakens safeguards against waste, loss, unauthorized use, and misappropriation
of funds or other assets;
4. results in a conflict of interest;
5. creates adverse publicity that affects the organization's credibility;
6. merits the attention of senior DOE management, the Secretary, congressional committees or the
Executive Office of the President;
7. exists in a majority of programs, administrative functions, and/or organizations and can cause
harm, even though minor individually, because the aggregate is significant;
8. risks or results in the actual loss of either $10 million or 5 percent of the resources of a budget
line item;
9. could reflect adversely on management integrity if not reported;
10. endangers national security;
11. has received significant adverse audit coverage; and/or
12. significantly impairs the Department's ability to meet financial management systems
requirements as outlined in this CRD and section IV(6) of DOE Order 413.1A..
ADMINISTRATIVE FUNCTIONS AND CROSSCUTTING AREAS
This attachment identifies the program and administrative functions and crosscutting areas that must be
identified as separate activities in both Headquarters and field element lists where applicable,
regardless of funding level. All field elements have responsibility for administrative functions and
should conduct summary management reviews in these areas and report any administrative problems
identified. However, only Headquarters elements with Department-wide administrative
responsibilities are required to perform summary management reviews of the administrative
function(s) under their cognizance. As such, summary management reviews are to be performed for
each of these activities, with emphasis placed on the evaluation of the listed subactivities.
Administrative Functions
1. Human Resource Management
2. Facilities Management
a. Site Development Planning
b. Facilities Engineering
c. In-House Energy Management (Headquarters Only)
3. Information Management
4. Printing and Graphics
5. Control of Real Property
6. Commercial Activities Review (Headquarters Only)
7. Equal Opportunity (Headquarters Only)
8. Budget
a. Budget Formulation
b. Budget Execution
9. Finance and Accounting
a. Disbursements
b. Receipts
c. Cash Management
d. Administrative Control of Funds
e. Miscellaneous Asset Accounting
f. Payroll
g. Travel
h. Financial/Accounting Systems
i. Financial Administration of Reimbursable Work
j. Financial Management Oversight
10. Procurement and Assistance Management
a. Acquisition
b. Financial Assistance
c. Sales Contracts
d. Funds - In Agreements
11. Contractor Human Resources Management
12. Control of Personal Property
13. Program/Project Management and Control
14. Business Management
Crosscutting Areas
1. Environmental Management
2. Nuclear Safety Management
3. Nonnuclear Safety and Health Management
Administrative Functions
1. Human Resource Management - Includes subfunctions such as staffing, training, labor
management relations, position classification and compensation, and employee relations. This
functional category covers all activities related to personnel of the Federal sector. Staffing
includes activities associated with recruiting, placing, detailing, reassigning and/or promoting
Federal employees as well as activities related to reviewing, approving, and executing
necessary disciplinary actions to maintain an effective Federal work force. Training includes
activities associated with Federal employee development and training to assure maximum
utilization of the existing work force. The labor management relations function includes
activities of negotiating and making agreements with Federal employee organization on the
rights, benefits, and entitlement of employment. Position classification and compensation
includes activities directed towards assuring salaries are properly determined and positions are
organized in the most efficient manner; pay changes, special salary scales, benefit programs,
relocation payments, workers compensation, and related pay/compensation programs are
property administered.
2. Facilities Management - Includes all agency activities associated with facility planning
engineering, improvement, and maintenance. The major functions included under this unit are:
a. Site Development Planning includes all activities related to developing, maintaining,
and administering the DOE site development planning program. It also includes
subfunctions such as overseeing the preparation of site development plans by all DOE
sites; reviewing site construction projects and space allocation/ utilization for
conformance to the approved site plan; and maintaining an up-to-date site development
plan library. The purpose of this activity is to ensure the efficient utilization of land,
facilities, and utilities and to assure priorities and scope of the planned construction
activities meet the approved operational objectives.
b. Facilities Engineering includes subfunctions such as utilities management, facilities
maintenance, and facility energy conservation. Utilities management includes
overseeing programs of site/facility management contractors, providing technical
administration and management of utility contracts for DOE facilities, and providing
technical support in utility rate hearings. Facility maintenance is accomplished on a
continuing, effective, and efficient basis. Energy conservation activities are directed
towards assuring methods are employed throughout DOE (including in its Government-
owned, contractor-operated facilities) to reduce consumption and increase efficiency in
use of energy in existing facilities, new construction, and general operations.
c. In-House Energy Management (Headquarters Only) includes all aspects of development
and execution of retrofit projects to improve energy efficiency in DOE owned facilities.
Specific subfunctions are budget formulation and budget execution. Budget
formulation includes: development of retrofit projects by energy conservation surveys
and central plant studies, including engineering and economic analyses; ranking and
selection of projects; and budget preparation. Program execution includes: financial
plan preparation; controlling, and monitoring of obligation and costs; and completion of
surveys, studies, and retrofit projects.
3. Information Management - includes all agency activities and Federal oversight of contractor
activities associated with the planning, budgeting, operation, transmission, dissemination,
protection, and retention of information. This includes requirements in the Clinger-Cohen Act,
Paperwork Reduction Act, the Government Information Security Reform Act, and Office of
Management and Budget Circular A-130. The major functions include strategic planning,
information technology capital planning and investment processes, information standards and
architecture, records management, unclassified computer security, telecommunications and
telecommunications security, and the management and operations of ADP resources and
facilities.
4. Printing and Graphics includes the activities associated with the internal production and
acquisition of services and equipment for printing and publishing of technical and scientific
reports, administrative documents, forms, etc.; preparation of visual presentation (i.e., view
graphs, 35-mm slides, etc.); supporting photography (including industrial photography); and
copying. Micropublishing is included when it is used in lieu of distribution of hard copies.
Coverage of internal activities, as well as oversight of contractor activities, could be provided
under the functional category. The specific coverage afforded would include management,
operation and maintenance, resource projects, and acquisition of printing services from the
Government Printing Office, etc.)
5. Control of Real Property - This area includes all activities associated with the management and
control of DOE real property and space management. Real property management activities
include planning for future real estate needs; acquisition, control and disposition of DOE-
owned real property; assuring effective and efficient utilization of real property assets; real
property inventory management; and oversight of major contractor real estate activities. Space
management activities include planning for space needs; acquiring, controlling and disposing
of space; assuring for effective and efficient use of assigned space (DOE-leased, -owned, or -
controlled); and oversight of the major contractor space management activities.
6. Commercial Activities Review. Under the Headquarters-managed program, DOE
organizations periodically review their in-house commercial activities to determine the most
cost effective means of conducting their work, i.e., continued in-house or by contractor.
7. Equal Opportunity (Headquarters Only). This program encompasses three main activities for
affirmative action, complaints and investigations, and external civil rights. The affirmative
action program ensures that DOE fulfills its responsibility to develop and implement an
affirmative action program (including special emphasis programs for women and Hispanics) in
accordance with Federal laws, Executive orders, and regulations. The complaints and
investigations program develops and administers the EEO discrimination complaint processing
and adjudication program within DOE. The external civil rights program implements
compliance with and enforces laws prohibiting discrimination in programs and activities
receiving financial assistance from the Department.
8. Budget. This administrative function would include all agency activities associated with
budgeting. The major functions included under this unit are
a. Budget Formulation represents the initial stage of the budget process in which data is
developed; annual estimates of funding requirements are prepared; detailed analysis and
reviews are performed; budget data is consolidated and summarized; detailed
justification is developed including prioritizing requirements; presentations are
provided to internal and external reviewing and approving authorities; and budget
changes are controlled and communicated throughout the organization. This category
would include evaluation of all budgetary activities occurring up to the time an
approved fiscal year funding appropriation is received by the agency.
b. Budget Execution represents the phase of the budget process during which funding for
the approved fiscal year is made available to carry out the Department's missions,
functions, and program. Activities performed under the execution phase seek to assure
obligations incurred and resulting expenditures are in accordance with existing laws,
regulations, and control levels and that approved program objectives are accomplished
within approved funding authorizations. These activities include preparation of
approved financial plans; controlling and monitoring of this plan through a process of
apportionment, allotment, suballotment; identifying and analyzing trends in receipt,
obligation, and expenditure of funds; preparing and documenting requests for increases
or decreases in funding levels; initiating reprogramming requests when appropriate; and
reporting on the status of funding to internal and external management officials.
9. Finance and Accounting. This administrative function includes all activities related to the
financial operations of the agency except for budgetary type activities. The major functions
included under this unit are
a. Disbursements include financial/accounting systems related to payments; e.g., payroll,
travel, cash advances for grants and other programs, online transactions with other
Federal agencies, letters of credit, accounts payable, other liabilities. Federal oversight
of major contractor disbursement activity would also be addressed in this category.
b. Receipts include financial/accounting systems associated with collections, billings,
reimbursements, accounts receivable, sale proceeds, automated transactions with other
Federal agencies, etc. Federal oversight of major contractor receipt related activities
would also be addressed in this category.
c. Cash Management encompasses all activities associated with the management of cash
and physical control of cash. Activity would involve evaluation of control systems
which assure prompt payments and collections, prompt depositing of cash; proper
control, accounting and processing of cash related transactions; proper management of
letters of credit and cash advance transactions; etc. Federal oversight of major
contractor cash management activities would also be addressed in this category.
d. Administrative Control of Funds includes the responsibilities for the effective control of
funds by restricting obligations and expenditures against each appropriation or fund to
the amount of the apportionment, reapportionment, allotment, or approved funding
program.
e. Miscellaneous and Asset Accounting includes the recording of all properties, plant and
capital equipment, suspense account activity, and other assets in the Department of
Energy accounting system and also ensure that assets are uniformly classified in proper
accounts as prescribed by DOE.
f. Payroll includes all activities associated with the processing of time and attendance
sheets and maintenance of pay and leave records.
g. Travel includes the activities relating to all types of authorized travel by DOE
employees in carrying out their duties with the Department.
h. Financial/Accounting Systems includes accounting and reporting systems such as
general ledger, product pricing and costing, financial inventories, cost/budget,
obligation/budget, plant and capital equipment, reimbursable work, DISCAS, etc. Also
includes the periodic generation of automated validator routines to ensure the accuracy
and consistency of the accounting data among the various data sets.
i. Financial Administration of Reimbursable Work The Department's policy on the
financial administration of reimbursable work is published in Chapter 13 of the DOE
Accounting Handbook. A review of the financial administration of reimbursable work
should address these requirements.
j. Financial Management Oversight includes responsibilities for oversight of all financial
management activities related to the programs and operations of DOE.
10. Procurement and Assistance Management. This administrative function would include all
agency activities involving (a) the acquisition of necessary supplies and services to perform
agency programs of the desired quality, in a timely manner, and at fair and reasonable prices;
and (b) providing assistance to a non-Federal party by transferring money, property, services,
or anything of value in order to accomplish a public purpose of support or stimulation
authorized by Federal statute. The major functions included under this unit are
a. Acquisition includes the following subfunctions: establishment of needs, description of
requirements to satisfy agency needs, solicitation and selection of sources, award of
contracts, oversight of contractors' activities to ensure compliance with the terms of the
contracts, issuing approvals required under the contracts so that work proceeds in an
orderly manner and contractors are paid appropriately while the work goes forward,
modifying the contracts when appropriate, and closeout.
b. Financial Assistance includes the following subfunctions associated with the award and
administration of financial assistance instruments. In the pre-award phase, in general,
these subfunctions are presolicitation planning, solicitation, merit review, negotiations,
and developing the special terms of conditions of award/agreement. (The pre-award
subfunctions may vary if a noncompetitive award(s) is anticipated.) The postaward
administration subfunctions include programmatic monitoring, monitoring and
enforcement of award/agreement terms and conditions (especially recipient cash
management, report submission, property management), audit resolution, settlement,
follow-up, and closeout.
c. Sales Contracts includes the following subfunctions: determination of authority, pricing
announcement of sales opportunity(ies), evaluation of purchase requests, negotiation of
contractual document, contract execution, contract administration, delivery of goods or
services payment.
d. Funds-In Agreements includes the following subfunctions: determination of authority,
execution of delegation documents, pricing negotiation and execution of agreements,
assurance of necessary resources, arrangements for advances/billing, provision of goods
or services.
11. Contractor Human Resource Management. This administrative function includes all agency
activities associated with management of the Human Resource Management functions of DOE
contractors, and involves the development and negotiation of Advance Understandings on
Personnel Costs as part of the contracts as well as all actions required of the Contracting
Officer. The Federal activities performed include management of contractor compensation,
including incentive compensation, welfare benefits, retirement income programs and training
and development. Control systems are in place which require Federal analysis and approval of
contractor compensation and benefit program policies and practices as well as evaluation of
contractor performance in these areas of Contractor Human Resource Management.
12. Control of Personal Property. This administrative function includes all activities associated
with the development, implementation, and administration and policies, programs, and
procedures for effective and economical acquisition planning, acquisition, receipt, inspection,
storage, issue, use, control, physical protection, physical inventories, care and maintenance,
disposal, determination of requirements and maintenance of related operating records,
(exclusive of accounting records) as appropriate, for Government personal property (inclusive
of major contractor personal property) which includes equipment, supplies consumed incident
to the operation of the Department, the inventory of equipment held for future use, motor
equipment, motor vehicles, aircraft, and watercraft. It includes such established management
functions as (a) conducting periodic appraisals of performance, (b) furnishing staff assistance
and guidance to DOE and contractor counterparts, and (c) making special surveys and studies
of practices and procedures and regular staff reviews and analyses of property requirements in
budget estimates, financial plans, and reports.
13. Program/Project Management and Control. This administrative function includes all activities
associated with developing, executing and managing the Department's Major Systems projects
(total project cost of $400 million or greater and any Other Project designated by the Secretary)
and Other Projects (total project cost less than $400 million and not designated as a Major
System). All associated implementing management policies, processes, and practices of the
Department's and its site/facility management contractors' construction efforts are covered
under this function. It includes staff responsibilities for the Acquisition Executive, including
the responsibility for budget validation, independent assessments and oversight of
Secretarial/program offices and field elements for project execution. Also included are the
implementation and review of field project management systems, processes, and procedures,
including the review and approval of contractor project management systems.
14. Business Management. This administrative function includes all agency activities associated
with business management systems, processes, and procedures including contractor
management systems. Included is the review, development and implementation of efficient,
cost effective, standards, procedures and systems throughout the DOE complex, including
contractor organizations.
Crosscutting Areas
1. Environmental Management. All Headquarters and field line managers are responsible for
assuring their respective activities comply with environmental requirements. Activities
included in this area are those that affect the quality of air, water, soil, including self
assessments performed to assure effectiveness, regardless of where funded. The following
activities are included.
a. Assuring compliance with Federal, State, and local environmental protection statutes
and related Departmental Orders and regulations.
b. Implementing independent environmental audit systems and quality assurance
programs.
c. Analyzing hazards to assess associated risks and the adequacy of risk limiting
mechanisms.
d. Investigating environmental incidents to determine contributing factors and provide
feedback to correct identified problems.
e. Collecting, evaluating, and disseminating information on DOE's performance regarding
environmental projects.
f. Anticipating and detecting emergencies and maintaining emergency response.
2. Nuclear Safety Management. All Headquarters and field line managers are responsible for
assuring their respective activities comply with Departmental nuclear safety policies, regardless
of where they are funded. Activities included in this area involve implementing and carrying
out Departmental policy for nuclear reactors and nonreactor nuclear facility safety, including
self-assessment functions performed. Reactor and nonreactor nuclear facility safety
encompasses all systems and activities that can influence the potential for uncontrolled release
of fission products, or for nuclear criticality. The process of ensuring nuclear safety involves
not only verifying that nuclear reactor and nonreactor nuclear facility designs comply with
applicable standards, but also verifying that plant modification; operations, maintenance, and
plant material conditions meet nuclear safety requirements and that human performance aspects
that could potentially affect nuclear safety are receiving appropriate attention. Also included is
the anticipation and detection of nuclear related emergencies, as well as maintaining an
emergency response capability.
3. Nonnuclear Safety & Health Management - All Headquarters and field line managers are
responsible for assuring their activities comply with nonnuclear safety and health requirements.
Activities included in this area encompass those that affect the well-being of both operating
personnel and the general public. They also include the responsibility for DOE elements to
protect Government and public property against accidental loss and damage. Nonnuclear
safety and health issues include the following activities regardless of whether they are funded.
a. Assuring compliance with Federal, State, and local safety and health statutes and related
Departmental Orders and regulations.
b. Anticipating and detecting emergencies and maintaining emergency response
capability.
c. Providing safety and health services for Federal employees.
d. Implementing independent appraisal systems for safety and health functions, including
quality assurance programs.
e. Analyzing hazards to assess associated risks and the adequacy of risk limiting
mechanisms.
f. Investigating safety and health incidents to determine contributing factors and provide
feedback to correct identified problems.
g. Collecting, evaluating and disseminating information on DOE's performance in the area
of safety and health issues, particularly epidemiology and radiological protection.
h. Performing safety certifications of packages for shipment of DOE radioactive materials. SAMPLE SUBMISSION
MEMORANDUM FOR THE SECRETARY
FROM: HEAD OF DEPARTMENTAL ELEMENT
SUBJECT: Management Control and Financial Management System Review
In accordance with the Federal Managers' Financial Integrity Act, I have completed a summary
management review of the management controls for the (name of Departmental element) in effect as of
the fiscal year ending September 30, . The review was performed in conformity with Departmental
guidelines and accordingly included a review of whether the management controls comply with
underlying management principles which incorporate the General Accounting Office's Standards for
Internal Controls in the Federal Government. The review included consideration of the results of
audit reports, internal management reviews, assurances from site/facility management contractors
under my cognizance, and all other known information. In addition, our review considered the areas of
(1) environmental management, (2) nuclear safety management, and (3) nonnuclear safety
management, and no problems were identified. The results of the review indicate there is (is not)
reasonable assurance that the management controls were working effectively and that program and
administrative functions were performed in an economical and efficient manner consistent with
applicable laws; property, funds, and other resources were safeguarded against waste, waste, loss,
unauthorized use or misappropriation; obligations and costs were proper; and accountability for assets
was maintained. The concept of reasonable assurance recognizes that management controls must be
cost effective, and there is always some potential for errors or irregularities to go undetected.
The above review did, however, (did not) disclose the following (any) reportable problems.
An evaluation of the financial management system for the (name of Departmental element) has also
been conducted in accordance with DOE guidelines. The results of the review indicate that the system
generally conforms (does not conform) with Federal financial management system requirements. In
addition, the financial management systems of site/facility management contractors under my
cognizance are in conformance with DOE accounting policies and procedures.
The financial management systems evaluation did (did not) disclose the following (any) financial
management system reportable nonconformances.
Upon review of all reportable problem closures identified by field elements, we concur that with the
actions taken, closure is warranted. (Optional Section) The review also disclosed the following
significant issues facing my organization. While these issues may meet the definition of a reportable
problem, correction of these issues is outside the scope of my Departmental element's responsibility or
operational authority and, therefore, I have attached no action plans.
The attachment to this report contains the action plans for correcting reportable problems of the
management control system and reportable nonconformances of the financial management system. 200X INDEX AND CROSSWALK FOR ACTION PLANS
AAA Field Office
PROGRAM/
ADMINISTRATIVE
FUNCTION
TITLE
HQ
ORG
OPEN/
CLOSED
PG
#
New action plans for current FY assurance memorandum:
Information Management
Unclassified Computer Security
Problems
SO
Open
1
Action plans submitted with prior FY assurance memorandum that continue for current FY:
Nuclear Safety
Management
Nuclear Safety Oversight of
Contractors
NE
Open
3
Action plans submitted with prior FY assurance memorandum that have been closed in current FY:
Environmental
Restoration
Lack of Environmental Restoration
Performance
EM
Closed
5
Updated action plans for Departmental challenge:
Environmental
Restoration
Environmental Compliance
EM
Open
7
Page 1 of 2
ACTION PLAN
AAA Operations Office
September 30, 200X
Title: Ineffective Management of Projects at DOE Laboratory
Action Plan: Reportable Problem: X Reportable Nonconformance:
HQ Organization: CR Program/Admin. Function: Program/Project Management
Description: Performance of DOE Laboratory in the area of project management was evaluated as
"needs improvement." The "needs improvement" assessment reflects problems/weaknesses in project
management. These weaknesses have been particularly evident in several key projects at the
Laboratory that have experienced severe problems maintaining schedule, staying within budget, and
maintaining the expected level of quality. This performance problem is critical at this time because the
Department plans to invest nearly one billion dollars in new projects at the Laboratory over the next
five years.
The key weaknesses identified include (1) poor project development and baseline definition, (2) failure
to integrate program and project management, (3) lack of implementation and enforcement of project
controls by the Laboratory, and (4) insufficient oversight. Continued poor project performance at the
Laboratory could impact the Laboratory's capability to meet assigned missions.
Assessment of Progress: In response to the identified project management deficiencies, the
Department and Laboratory have undertaken additional assessment activities to determine root causes,
corrective actions, and implementation strategies required to fully establish and maintain an effective
construction project management program and ensure proper management of the Stockpile
Management at the Laboratory. A key result of these efforts was the formulation of a Nuclear
Construction Projects Office (NCPO) within the field site in July of 1997. The NCPO was established
to provide a single DOE field line management organization responsible for management oversight of
projects at the Laboratory. The NCPO includes both field office and site personnel, and therefore,
previously cited actions were incorporated into the formulation of the new office. Page 2 of 2
Critical Milestones
Original Target
Completion
Month/Year
Revised Target
or Actual
Month/Year
1. Develop laboratory corrective action plan.
12/97
12/97
2. Reconstitute DOE/lab project oversight
committee.
12/98
04/99
3. Strengthen management structure.
12/98
01/99
4. Strengthen project management controls.
09/99
09/00
5. Prepare interface agreement for Stockpile
Management.
11/99
09/00
Success Indicator for Closed Corrective Action Plans:
Is plan closed? X Yes _____ No, not applicable.
Formal project reviews occur monthly, with "at risk" projects. Several of the Laboratory's projects
have turned around and been taken off the Chief Operating Officer's watch list. DOE staff now also
participate in the generation, negotiation, and assessment of contract performance measures for the
laboratory related to project management.
Name: John B. Surname
Title: Assistant Manager for Facilities Management
Date: September 16, 200X
DEFINITIONS
1. Action Plans describe reportable problems or reportable financial management system
nonconformances, their root cause(s), and the actions planned for correcting them.
2. Assurance Report is an annual report from heads of Departmental elements on the status of
management controls and financial management system(s) within their respective programs and
administrative functions.
3. Departmental Challenge is a reportable problem determined to be of significance at the overall
Departmental level, warrants the attention of the President and/or Congress, and is reported by
the Secretary.
4. Financial Management Systems are systems both manual and automated used to collect,
classify, analyze, and report data for financial decision making; process, control, and account
for financial transactions and resources; formulate and execute the budget; and generate
financial information in support of the Department's mission.
5. Management Controls (internal controls) are the organization, procedures and methods
managers use to achieve their goals. They include processes for planning, organizing,
directing, and controlling operations. Management controls are designed to reasonably assure
that programs achieve intended results; resources are used consistent with DOE's mission and
are protected from waste, loss, unauthorized use, and misappropriation; laws and regulations
are followed; and decisions are based on reliable data. Management controls apply to all
programs and administrative functions.
6. Programs and Administrative Functions are the Departmental element's programs and
administrative functions subject to evaluation and reporting.
7. Reportable Nonconformance is a financial management system nonconformance with Office of
Management and Budget and General Accounting Office requirements that is of concern to the
next higher level of management. Chapter IV contains specific criteria to aid managers in
determining whether a nonconformance is reportable.
8. Reportable Problem is a problem that generally would be of concern to the next higher level of
management. Chapter III contains specific criteria to aid managers in determining whether a
problem is reportable.
9. Responsible Manager is a manager responsible for a specific program or administrative
function.
10. Sensitive Area is an area identified by the Office of Management, Budget and Evaluation in its
annual year-end reporting guidance which must be identified as a separate program in each
Department element's list of programs and administrative functions, regardless of funding
level.
11. Significant Issue is an issue reported by the head of a Departmental element which meets the
standard of a reportable problem either as a current or emerging issue, but for which correction
is outside the scope of their responsibility or operational authority.
12. Site/Facility Management Contractors is a term used to describe the universe of contractors
responsible for the management and operation of Department-owned facilities. These may
include management and operating contractors, integrated, integrating contractors, etc.
13. Summary Management Review is an annual evaluation of a Departmental element's programs
and administrative functions based on day-to-day knowledge and existing evaluations. It is an
overall look at an operation and provides a framework for identifying and summarizing
inadequate management controls and reportable problems.
14. Summary Financial Management System Review is an annual evaluation of the Departmental
element's financial management system to determine if it conforms to Federal financial
management system requirements.