Operations Management Council Internal Controls Status Meeting

1
Operations Management Council Internal Controls
Status Meeting

• Tuesday, February 14, 2006
• 1230 pm - 230 pm
• NASA Headquarters
• Room 2X40

2
Status Meeting Agenda for February 14th

• Introduction Ms. Dale 5 min.
• Overview of NASA Internal Control Mr. Jedrey 10
  min.
• Status of Actions from Nov. 9 Meeting Mr. Jedrey
  5 min.
• Target
• Corrective Actions on Internal Control
  Deficiencies Correction Date
• Asset Management (MW) OCFO 10 min. 09/30/06
• Financial Management System (MW) OCFO 10
  min. 11/15/06
• Financial Management Data Integrity (MW) OCFO 10
  min. 09/15/06
• Financial Mgmt. Policy Procedures (MC) OCFO
  5 min. 06/30/06
• Financial Management Staffing (MC) OCFO 5
  min. 09/30/06
• Full Cost Integration (OW) OCFO 5
  min. 12/31/06
• Space Shuttle (MW) SOMD 10 min. 06/30/06
• Shuttle Impact on ISS Operations (MC) SOMD 5
  min. 06/30/06
• Information Technology Security (OW) OCIO 5
  min. Ongoing
• NASA Declassification Program (MC) OSPP 5
  min. 12/31/06
• Open GAO Audit Recommendations (MC) OIM 5
  min. Ongoing
• Mission Management Aircraft (OW) OIM 10
  min. 06/30/06

Key Material Weakness (MW) Other Weakness
(OW) Management Challenge (MC)
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Reason for Senior Level Emphasis Internal
Control

• Key Law Federal Managers Financial Integrity
  Act (1982) applies to programmatic, financial,
  and institutional controls
• GAO Standards for Internal Control in the Federal
  Government (1999) provides 5 standards for
  implementing the law
• Sarbanes-Oxley Act of 2002 prompted by
  enormous bankruptcy scandals of Enron in 2001 and
  WorldCom in 2002, this law requires strict rules
  on corporate governance
• OMB Circular A-123, Managements Responsibility
  for Internal Control (revised 2004) responds to
  Sarbanes-Oxley thrust applied to federal
  government and to place more emphasis on GAOs
  standards
• Revised NPD 1200, NASA Internal Control and
  Accountability (2006) presents Agency policy for
  implementing OMB Circular A-123 with tie into
  NASA Strategic Management Governance Handbook
  (NPD 1000.0)

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Key NASA DefinitionsLevels of Internal Control
Deficiencies

• Material Weakness (MW) a deficiency in
  internal controls that is significant enough to
  be reported outside the Agency.
• Other Weakness (OW) a deficiency in internal
  controls that should be reported and monitored
  internally.
• Management Challenge (MC) a concern about a
  challenge to management. There is insufficient
  information to confirm a serious systemic
  internal control weakness in this area. It may
  pertain to issues that are outside managements
  control or factors that may create an adverse
  condition. Close monitoring is required.

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Examples of Internal Controls

• Published policy, i.e., NASA Directives
• Risk assessments on compliance with directives,
  standards, and other official NASA documents
• Effective use of councils and teams to plan,
  perform, and monitor work
• Regular assessments of physical security and
  information technology security compliance
• Reviews of written delegations of authority for
  accuracy
• Systematic reviews of physical asset inventories
• Certification that products were received
  checked for possible defect or other problem
  before paying vendor
• Reviews of Program Commitment Agreements to
  ensure that cost performance requirements are
  being met
• Records of employee training
• Tracking corrective/preventive actions
  assigning new/more actions as deemed prudent by
  management
• ISO 90012000 based management system audits

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Schedule for 2006 OMC Meetings Internal Controls

• Feb. 14 1st Progress Meeting. Provide
  background on why internal control has become a
  high priority throughout government and the
  private sector. Assess actions taken to correct
  significant Agency deficiencies since Nov. 9
  Decision Meeting. Discuss any proposed new
  deficiencies to include on the councils watch
  list.
• Apr. 12 2nd Progress Meeting to assess actions
  taken during the last quarter.
• July 13 (tentative date) 3rd Progress Meeting
  of 2006
• Oct. 5 (tentative date) Annual Decision Meeting
  for determining what deficiencies will be
  reported outside the Agency in the
  Administrators Statement of Assurance, which is
  required as part of the NASA Performance and
  Accountability Report, submitted to OMB, the
  Congress, and the President.

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Actions from Nov. Internal Controls Meeting

• The CFO, in collaboration with the Asst.
  Administrator for IA and the Asst. Administrator
  for Procurement, will develop a Corrective Action
  Plan (CAP) for the revised deficiency, Asset
  Management (MW). The detailed plan will be
  provided in the Corrective Action Tracking System
  (CATS) and a summary of the CAP will be presented
  by the next OMC meeting.
• Status Open
• The CFO, in collaboration with the CIO, Chief
  Engineer, IEMP Program Executive, Asst.
  Administrator for IA, and the Asst.
  Administrator for Human Capital, as appropriate,
  will develop CAPs for the four new deficiencies
  Financial Management System (MW), Financial
  Management Policy and Procedures (MC), Financial
  Management Data Integrity (MW), and Financial
  Management Staffing (MC). Detailed plans will be
  entered into the CATS and summaries of each CAP
  will be presented at the next OMC.
• Status Open

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Actions from Nov. Internal Controls Meeting

• The Asst. Administrator for Procurement will
  coordinate with the OCFO and OIG to determine if
  acquisition oversight is a deficiency and, if so,
  to develop its scope (e.g., what aspects are
  included, who is responsible, etc). The Office
  of Procurement will present the results at the
  next OMC meeting.
• Status Open
• The OCE will develop proposed changes to NPR
  7120.5 and bring to the PMC for approval by March
  31, 2006.
• Status Open