Override Logging Table OLOG Reviews Unliquidated Obligation ULO Reviews UpwardDownward Adjustments

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Override Logging Table (OLOG) ReviewsUnliquidated
Obligation (ULO) ReviewsUpward/Downward
Adjustments

• Presented byHoward Campbell

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Override Logging Table (OLOG) Reviews
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Override Logging Table (OLOG) ReviewsWhat is
OLOG?

• OLOG is an online table that maintains a record
  of all Foundation Financial Information System
  (FFIS) override activity
• FFIS conducts edits on all transactions as they
  are processed, and rejects those that do not meet
  established criteria
• FFIS users, with proper override authority, have
  the ability to override transaction errors
• Non-Fatal Errors
• Warnings (Do not require overrides)
• Overrideable errors
• Fatal Errors
• Hard errors (Can not be overridden require
  corrective action)
• Non-fatal errors range in severity from Level 1
  to Level 9

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Override Logging Table (OLOG) ReviewsHistory

• OLOG review requirement established in 2002
• FFIS Security Administrator Handbook (June 2002)
• Section 5.9.5
• (OLOG) Table creates an audit trail for the
  Security Administrator to track users overriding
  errors in documents and batches...
• This table must be monitored for users
  overriding errors with levels of 5-9. Violations
  and trends must be reported to the appropriated
  financial manager for immediate correction
• Levels 5-9 included errors regarding budget
  execution, the general ledger, and project cost
  accounting, and the authority to override them
  should be limited to financial/resource managers,
  or similar.
• All Foundation Financial Information System
  applications must have these logs activated for
  audit trail purposes. The data on the OLOG table
  will be retained for audit and reporting
  purposes

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Override Logging Table (OLOG) ReviewsHistory

• FFIS Bulletin 02-12 (October 2002) - Policy for
  Agencies to Implement a Monthly Review of the
  Override Logging Table to Track and Monitor Users
  Overriding Document Errors in the Foundation
  Financial Information System
• Based on an OIG recommendation (June 2002)
• All agencies must develop and implement
  procedures to review the OLOG table monthly. The
  agencies FFIS Security Administrator in
  conjunction with Financial Managers must review
  and certify that all overrides were recorded in
  accordance with the requirements contained in the
  Security Administrator Handbook
• On a quarterly basis the override analysis
  shall be provided to the agency CFO for review
  and certification

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Override Logging Table (OLOG) ReviewsProblem

• FY 2006 Consolidated Financial Statement Audit
  Report
• Section 2 Reportable Condition Finding 3
  Additional Financial Management Issues Warrant
  Attention
• Our review disclosed that agencies had not
  adequately monitored overrides of document
  errors
• Generally agencies did not provide evidence of
  reviews or the evidence provided did not
  demonstrate that overrides had been effectively
  reviewed
• Recommendation 1 Ensure that agencies comply
  with FFIS Bulletin 02-12 by providing a standard
  and effective method of monitoring and reviewing
  overrides
• FY 2007 Consolidated Financial Statement Audit
  Report
• Section 2 Significant Deficiency Finding 3
  Improvements Needed In Certain Financial
  Management Practices and Processes
• Last year we reported that agencies had not
  adequately monitored overrides of document
  errors

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Override Logging Table (OLOG) ReviewsProblem

• OLOG Table Limitations
• Only 2 documents can be viewed online, at one
  time
• No ad hoc query feature online
• Users can only search by the tables key fields
  (BATCH ID, DOC ID, ERROR, and LEVEL)
• OLOG data not available in the Financial Data
  Warehouse (FDW), for ad hoc reporting
• The OLOG table updates did not include the actual
  error codes associated with the individual
  overrideable error conditions present on each
  document

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Override Logging Table (OLOG) ReviewsSolution

• FFIS Enhancement Implemented
• The OLOG table updates now allow users to view
  the actual error codes associated with the
  individual overrideable error conditions present
  on each document
• FDW Enhancements
• The OLOG table added - allows users to perform ad
  hoc queries/reviews of override activity, as
  needed
• The Error Table (ETAB) added - provides users
  with more descriptive information associated with
  the errors identified on the OLOG table.
• Quarterly OLOG Review Report
• Part of a standard Brio query, to be used by all
  FFIS agencies
• Report combines OLOG data with data from the
  general ledger, to provide a snapshot of the
  volume (document count) and magnitude (dollar
  value) of override activity

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Override Logging Table (OLOG) ReviewsSolution

• OCFO Bulletin 08-02 (February 2008)
• Supersedes FFIS Bulletin 02-12
• Requires quarterly review of OLOG activity, at a
  minimum
• Requires quarterly certification of OLOG activity
• Quarterly OLOG Review Report
• Must be initialed by Agency Security
  Administrator, or designee
• To certify users have appropriate override
  authority, in accordance with the requirements of
  the Security Administrator Handbook
• Must be signed by Agency Chief Financial Officer,
  or designee
• To certify that override activity has not
  compromised the Agencys sound financial
  management principles and practices
• Must be maintained as supporting documentation
  for audit purposes

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Override Logging Table (OLOG) ReviewsResults

• FY 2008 2nd Quarter Certifications
• OCFO processed and distributed OLOG review
  queries and certification reports, for all FFIS
  applications
• Submission of certifications to OCFO required to
  close open audit recommendation
• OCFO has received certifications for 10 out of 17
  FFIS applications to date (59)
• FY 2008 3rd Quarter Certifications
• OCFO will process and distribute OLOG review
  queries and certification reports, for all FFIS
  applications
• Submission of certifications to OCFO required
• Future Quarterly Certifications
• Agencies will process and review OLOG queries
• Agencies will certify and maintain certification
  reports, for audit purposes

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Unliquidated Obligations (ULO) Reviews
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Unliquidated Obligations (ULO) ReviewsHistory

• USDA DR 2300-001 (January 1984) - Improvement of
  Management Controls Over Unliquidated Obligations
• Required at least an annual review of inactive
  unliquidated obligations
• Inactive obligations were defined as projects or
  activities with no physical or fiscal activity
  for at least 12 months
• USDA DR 2300-001 (Revised April 2002) - Reviews
  of Unliquidated Obligations
• Required semi-annual review of inactive
  unliquidated obligations
• Required annual certification of semi-annual
  reviews, by agency CFOs
• Required that appropriate record of the reviews
  and certifications be retained, for audit purposes

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Unliquidated Obligations (ULO) ReviewsProblem

• FY 2005 Consolidated Financial Statement Audit
  Report
• Section 2 Reportable Condition Finding 3
  Additional Financial Management Issues Warrant
  Attention
• Our review disclosed that obligations were not
  always valid because agencies were not
  effectively reviewing all unliquidated (open or
  active) obligations and taking appropriate
  actions (de-obligating)
• (90 percent) obligations reviewed were invalid
  and agencies indicated the items would be
  de-obligated
• We also requested evidence of the March 31,
  2005 review from seven agencies. Three were
  unable to provide complete evidence of their
  reviews
• Recommendation 7 Provide oversight to ensure
  that general ledgers reflect valid obligations
  and that agencies perform the required reviews of
  unliquidated obligations appropriately and
  effectively. Additionally, ensure that agencies
  maintain evidence of the reviews

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Unliquidated Obligations (ULO) ReviewsProblem

• FY 2006 Consolidated Financial Statement Audit
  Report
• Section 2 Reportable Condition Finding 3
  Additional Financial Management Issues Warrant
  Attention
• Our review again disclosed that obligations
  were not always valid because agencies were not
  effectively reviewing all unliquidated (open or
  active) obligations and taking appropriate
  actions (de-obligating)
• This year(52 percent) of the obligations
  reviewed were invalid and agencies planned to
  de-obligate the items
• FY 2007 Consolidated Financial Statement Audit
  Report
• Section 1 Material Weakness Finding 1
  Improvements Needed In Overall Financial
  Management
• We again noted that obligations were not always
  valid because agencies were not effectively
  reviewing all unliquidated (open or active)
  obligations and taking appropriate actions
  (de-obligating)
• This year we selected a similar sample (48
  percent) of the obligations reviewed were invalid
  and agencies planned to de-obligate the items
• In its FMFIA report for 2007, USDA reported an
  overall lack of a comprehensive review of
  unliquidated obligations accounts were not being
  de-obligated on a timely basisagencies need to
  implement effective and sustainable control
  procedures over the review and certification

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Unliquidated Obligations (ULO) ReviewsCorrective
Actions

• USDA DR 2300-001 (Revised August 2006) - Reviews
  of Unliquidated Obligations
• Requires annual reviews and certifications of
  unliquidated obligation balances as of July 31,
  by August 31 each fiscal year
• Requires written notification from program and/or
  procurement personnel
• Requires obligations with no activity for the
  most recent 12 months to be de-obligated, unless
  there is a documented bona-fide purpose for the
  obligation to remain and a justification for the
  period of inactivity
• Agency CFO, or equivalent, must retain
  documentation for a period of 5 years
• Requires agency CFO, or equivalent, to submit
  annual certifications to OCFO by August 31
• Requires OCFO to monitor agency compliance

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Unliquidated Obligations (ULO) ReviewsCorrective
Actions

• Aged Unliquidated Obligations Query
• Standard Brio query, to be used by all FFIS
  agencies
• Reports focus on inactive open obligations, where
  the last action taken falls into one of the
  following aging categories
• 1 to 2 Years
• 2 to 3 Years
• 3 to 4 Years
• 4 Years
• Agencies expected to process and review as
  needed, to comply with DR 2300-001
• Original distribution to FFIS agencies (April
  2007)
• Revised query distribution to FFIS agencies
  (October 2007)

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Upward/Downward Adjustments
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Upward/Downward AdjustmentsChallenge

• FFIS and Upward/Downward Adjustments
• FFIS automatically posts upward/downward
  adjustments, if all of the following criteria are
  met
• No Year flag on the FUND table is set to N
• Fiscal Year is greater than Budget Fiscal
  Year
• Obligations/expenditures are increased or
  decreased
• Adjustments are posted for each transaction line,
  where the above criteria are met
• Unlike recoveries for no-year and multi-year
  funds, there is no way for FFIS to offset an
  upward adjustment on one line of a document
  against a downward adjustment on another line
• Upward/Downward Adjustments Inflation
• When a single document increases both upward and
  downward adjustments
• Accounting corrections
• When routine business activities arent properly
  netted against each other
• Accrual estimate reversals vs. actual activity

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Upward/Downward AdjustmentsWhat Can You Do?

• Detect Upward/Downward Adjustments Inflation
• Routine review of activity in GL accounts 4871
  and 4881
• Categorize transactions
• Accounting Corrections
• Balanced accounting adjustment vouchers (B2s,
  BVs, etc.)
• Errant document entry subsequent
  cancellation/deletion
• Correcting current fiscal year activity or prior
  fiscal year activity
• Accrual/Period-End Estimate Reversal
• Actual Activity
• Is it associated with an accrual or estimate?
• New Accrual/Period-End Estimate
• Due to lack of actual activity

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Upward/Downward AdjustmentsWhat Can You Do?

• Correct Upward/Downward Adjustments Inflation
• Process SV-97 (downward) and SV-98 (upward) as
  appropriate
• Accounting Corrections
• Always adjust for both upward and downward
  adjustments
• Accrual/Period-End Estimate Reversal
• Do not adjust (unless for offsetting
  obligation/expense estimates)
• Actual Activity
• When associated with an accrual or estimate
• Always adjust for both upward and downward
  adjustments, in the amount of the actual activity
• When NOT associated with an accrual or estimate
• Do not adjust
• New Accrual/Period-End Estimate
• Due to lack of actual activity
• Always adjust for both upward and downward
  adjustments, in the amount of the new
  accrual/estimate

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Upward/Downward AdjustmentsExpected Results

• Proper detection and correction of
  upward/downward adjustment inflation should lead
  to the following equation
• Reversed accruals/period-end estimates
• (without associated actual activity or new
  accruals/estimates)
• Actual activity NOT associated with an
  accrual/estimate
• Improved Financial Statement Reporting
• Statement of Budgetary Resources (SBR) and SF-133
• Particularly Lines 2 and 8

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Contact Information

• Howard Campbell
• Office of the Chief Financial Officer, ACFO-FO
• Systems Analysis and Requirements Division
• Office 202-720-7975
• Fax [phone]
• Email Howard.Campbell_at_USDA.GOV