EEOC sweeps up financial management mess

Three years ago, the Equal Employment Opportunity Commission looked like a defendant on the television show People's Court. It was so late reimbursing employees for expenses and paying vendors that some of them sought help in small claims court.

Now, the small, independent agency is a model for financial management reform: It received its first clean audit last month and met the early Nov. 15 deadline set by the Office of Management and Budget for completed financial statements and audits. The about-face comes from a combination of new systems and new people, according to chief financial officer Jeffrey Smith.

Smith, a member of the Senior Executive Service who joined EEOC in 2001, used his background from the Navy and the departments of the Treasury and Housing and Urban Development to overhaul the agency's financial system. Before he arrived, payments to employees and vendors took up to 120 days, leading to the courtroom visits. A 2000 Inspector General report pointed out transaction backlogs remaining from 1999, problems with cash disbursements to employees, and extra information on vendor lists that increased chances of error and fraud.

Smith said he first worked on finding a new system that would let managers keep better account of where the agency's money was going. "The business processes were broken," he said in an interview Monday with Government Executive. Managers in field offices pushed the responsibility for tracking spending back to headquarters, because they didn't have the tools to do it themselves. The result, said Smith, was a lack of accountability.

He turned to the Interior Department's National Business Center, which has supplied the EEOC's financial system since fiscal 2002. The new system, combined with training, allows field office managers to better manage spending, said Smith. For example, each day managers now can look at the daily charges from employees' purchase cards.

Smith also instituted cost-accounting, which tracks exactly how money is spent. He wanted to know how employees, who account for 70 percent of the EEOC's budget, were spending time and wanted to measure how much time was spent on overhead versus core mission functions, such as investigating cases.

Smith surveyed employees in 2004. After the agency organizes all the data, managers will be able to analyze those results to see if they are meeting certain goals, such as having attorneys spend more time on investigations in their beginning stages.

The commission has faced above-average turmoil with its financial systems. FINASST, the system in place in 2001, was dropped by its vendor while the EEOC was still using it. It is now scrambling to find a new system again after it was notified this year that the Joint Financial Management Improvement Program, which certifies systems for agency use, no longer approved its current system.

"We would like to get five to six years out of systems, so it's a little short," said Smith. He said the EEOC plans to implement a new system in fiscal 2006.

The commission's most conscientious critic has been internal: The inspector general, Aletha Brown, grades the agency's progress on the President's Management Agenda. OMB, which grades the large, executive agencies on PMA progress, does not grade the EEOC. When the IG first graded the agency in February 2002, it gave it a red, the lowest ranking, on financial performance.

In November 2003, that score improved to a green for progress, but remained at red for meeting PMA core requirements, which includes receiving a clean audit. Smith said he expects a green score the next time around.

Tabetha Mueller, spokeswoman for the House Government Reform Subcommittee on Government Efficiency and Financial Management, called the EEOC's progress "impressive," noting that they implemented the requirement for a full financial audit a year early. She also said she was glad to see the commission using the auditor's recommendations.

"We want federal agencies to use audit recommendations to improve management," she said, "as the EEOC has clearly done."

Smith said he still sees challenges ahead, including finding a new financial system and a new generation of financial managers as current ones retire. Still, he noted that the clean audit represents a significant milestone for the agency: "Now our challenge is to continue that."