Mid-Course Correction

eople often put off balancing their checkbooks, fearing what they might learn about their finances. But in 1996, the Immigration and Naturalization Service decided it was time to face the truth about its tangled financial operations. INS made a commitment to turn around its record of financial mismanagement, and, in fiscal 2001, the agency received its first clean audit. INS officials say other agencies can do the same, though the road to successful financial management isn't easy.

"If you want to try something that will try every bit of your patience . . . I can think of nothing more difficult than putting a new financial management system in place," George Bohlinger, INS' executive associate commissioner for management, told a group of federal managers in November.

INS was plagued with financial management problems when Bohlinger joined the organization in 1996. He was immediately given the task of turning its financial woes into a financial win. INS had inadequate record-keeping systems, making it impossible to track visa application fees and other data properly. Poor oversight of fee collections and abuse of government-issued travel cards were other issues the agency needed to address.

Bohlinger soon realized INS had no real plan for reversing its pervasive financial mismanagement. He determined that the agency needed more than just a new computer system-it needed to change its financial processes. Bohlinger and his staff decided to first tackle the agency's difficulty in reconciling its financial data with that of the Treasury Department, which oversees federal agency budgets.

"Cleaning up the old data was a key item we had to do from the beginning," says Soraya Correa, INS' director of financial system modernization. "You cannot bring up a system effectively if you don't have clean data."

The agency had to to make adjustments and clarify its outstanding debits and credits. The effort revealed that INS was $250 million out of line with Treasury's records. "We had to go and balance our payables against receivables, which had not been done with any regularity when we overtook this process, and required that folks around the country go through and clean up their finances," Bohlinger says.

As INS cleaned up its books, the agency called in outside experts to help make its financial system compliant with the standard general ledger system. The 1996 Federal Financial Management Improvement Act requires agencies to produce timely and reliable financial statements and to develop a three-year remediation plan if they are not compliant. In 1998, INS enlisted Savantage Inc. to develop its new system and link it to the agency's antiquated and duplicative accounting system.

"We found we had inconsistent business practices because we had so many different systems that didn't communicate with each other. So we came out with a whole new set of business procedures compliant with federal accounting standards," Correa says.

Bohlinger and crew spent the next few years redefining the relationship between the agency's headquarters and its field offices. They set up an office in Texas for accounts payable, an office in Vermont to collect money and an operation in Minnesota to manage payroll. INS then started an ongoing validation and verification process.

The next major step involved bringing the new system online and training key users, such as program managers and administrative personnel. During fiscal 2002, the agency briefed more than 1,500 employees on the new system.

"We modified the software to make it more user-friendly for the average person that would enter commitment, obligation and payment transactions-the people who actually use the checkbook as opposed to the accountants who manage the checkbook," Correa says. However, she cautions against large-scale modifications of new software: "If you go hog-wild modifying, you could modify yourself out of compliance."

"Do not change the software to meet the whims or maybe objections of people in the field," Bohlinger says. "You really have got to be very strong in this." According to Bohlinger, disjointed systems kept INS from getting a clean audit. "The inclination of individual organizations [is] to say 'here in Iowa we do this' and 'let's make it fit,' once you go down that road you never can go back," he says. "You need to change your business practices so that they are not only uniform around the country, but they also comport with how the software operates."

Today, INS has a financial system that provides managers with real-time access to financial data. When information is entered into the system, balances are automatically adjusted, and managers can view updated budget balances any time.

"The way we used to operate, people could obligate money from accounts that did not have sufficient money," Martinez says. "We weren't good at keeping our books straight. The new system does not allow people to do these things."

But the agency still has a way to go in improving its financial management, Correa says. "You're not really done when you bring up the system, that's when the real work begins," she says. "We're constantly reviewing our business practices today, constantly reviewing our software. Look at it as, 'I am a federal agency trying to comply with federal standards, how do I do that?'"