What did you accomplish?

On November 15, 2002 the United States Department of the Treasury successfully completed its audit and produced its first integrated Performance and Accountability Report (PAR) with an unqualified opinion for the third year in a row. Treasury accelerated the audit and production of the PAR by 3½ months from Fiscal Year 2001 and met OMB's deadline two full years ahead of the mandated requirement for the Federal Government. This accomplishment is more impressive when one considers the size and diversity of Treasury's bureaus, which also utilize a wide variety of core financial systems.

Number of Treasury Bureaus/Reporting Entities:	25
Number of Core Financial Systems:	23
Number of Auditors (including GAO, IGs, & IPAs):	9
Net Revenue Collected by Treasury in FY 2002:	$1.8 Trillion
Total Debt Managed by Treasury at the end of FY 2002:	$6.2 Trillion

What is the nature of the challenge you faced?

Early in the Bush administration, Treasury generally took over 20 days to close its monthly books and 5 months to close the books and report audited financial information at year-end.

Although Treasury was in compliance with all external reporting requirements and deadlines, on April 11, 2001 the new leadership challenged the bureaus to improve their reporting capabilities over the next 15 months by moving to a 3 day, monthly closing of the Treasury's books by no later than July 3, 2002.

In February 2002, the Department formally committed to the Secretary to complete the FY 2002 audit and PAR by November 15, 2002. The Department knew this was a very aggressive target given several of the bureaus had yet to achieve a 3-day monthly close. However, it was believed this was what the Secretary expected and the lessons learned would be invaluable for closing in future years regardless of whether or not Treasury met it's self-imposed FY 2002 deadline.

What were the barriers/hurdles to getting it solved?

There were numerous challenges that Treasury and the bureaus had to address and overcome in order to accelerate the monthly and year-end closing of our books. This includes the following:

• Material systems deficiencies
• Needed the complete commitment of bureaus and audit partners
• No additional funds or resources were available for the bureaus to undertake initiative
• Reluctance of staff to change current business practices
• Potential focus on timeliness versus quality of data
• Cooperation of other agencies in providing timely external data
• Ensuring the monthly close process would not be inconsistent with year-end process
• Performance measurement reporting was not as rigorous as financial reporting (no 3-day close)

How did you overcome barriers/hurdles and meet the challenge?

The barriers/hurdles were overcome and the challenge was ultimately met through hard work and dedication by the bureaus. However, there were several factors along the way that were critical to the success of this initiative:

• Management commitment at the highest levels of Treasury and the bureaus (Secretary and Bureau Heads), with frequent reinforcement from the top
• Bureau CFO and Performance staff commitment and dedication to the project
• Recognition that the initiative encompassed changes in systems, processes, reporting - a whole new approach
• Ongoing communication and cooperation between Treasury, the bureaus, and stakeholders/other agencies
• Active participation/communication/cooperation between management and the Treasury's Inspector General and independent audit firms, Treasury Inspector General for Tax Administration, and General Accounting Office
• Identification and resolution of common issues/problems through cross-bureau project teams
• Reduction of cycle time achieved through process improvement (not by just trying to do the same things faster)
• Change in the approach of accountants, so they became more comfortable working with estimates and accruals
• Treasury financial data warehouse in place to receive, consolidate, review, and report financial data from the bureaus
• Development of key metrics for monthly measurement and reporting on progress to Secretary/bureau heads
• Rewarding and recognition of outstanding performers
• Hiring of a dedicated program manager with strong project management, business reengineering, and customer service skills to oversee the 3-day close project
• Changing approach to doing things as soon as possible, not waiting until month/year end
• Adoption of the mantra that "no issue or impediment is insurmountable"

Did you utilize outside resources?

No extensive use of outside resources was obtained, only limited guidance from a 3-Day Close leadership team from Alcoa. Their insight was invaluable in structuring the project, avoiding pitfalls, and gaining lessons learned from Alcoa. They recommended hiring a full-time Project Manager for the initiative to oversee the project for Treasury.

What tools did you use to track progress?

The Department's principal tracking and reporting tool was the "Performance and Accountability Report (PAR)Timeline" and the "Monthly Progress Report to the Secretary". The PAR timeline was a detailed schedule of tasks and deliverables for both the Bureaus and the Department. The monthly progress report was delivered to the Secretary each month and posted on the Department's intranet. Key components of this report included

• Monthly tracking of days to close across bureaus and reporting entities. The Department required that all monthly information be received from bureaus/reporting entities no later than 7:00 PM Eastern Standard Time of the third business day of the month regardless of whether the month is also the end of a quarter or the end of the year. Bureaus failing to accomplish this task were "red-flagged" in the progress report. Several tables and charts were used to track bureau progress. One example is provided below.

Figure 1 - Average Numbers of Days to Close

• Monthly tracking of data quality across bureaus and reporting entities. An important tool in tracking the data quality of bureau data submissions was the Data Quality Scorecard. This scorecard evolved in parallel with the project's implementation progress. For example, in the earlier stages of project implementation the enforcement of data quality parameters was lax, but as the project matured the data quality was held to progressively higher standards. With this in mind, project management's objectivity and fairness in setting the acceptable quality levels for the measured parameters was considered crucial by bureau/reporting entities.
• Monthly Financial Management Report. The ultimate goal of this initiative was to provide managers better and more timely information in order to manage their organizations. This required the development of a Monthly Financial Management Report (MFMR) that provided useful and meaningful information to senior management. The generation of this report was particularly challenging given there was not an existing model or template for this report at Treasury or elsewhere in the Federal Government. The MFMR contains the Department's year to date sources of income, as well as the use of budgetary resources on administrative and custodial accounts.

Is the problem solved for good?

The Department successfully met the Secretary's challenge of a 3-Day Close by June 2002 and accelerated year-end close by November 15, 2002. The Department has continued to close the monthly books in 3 days and is working to refine/improve our processes and data quality for our accelerated monthly and year-end closing of the books. The reason the Department has continued to meet and exceed our original challenge is that the Department and bureaus have reaped numerous benefits from the project. These benefits include:

• Freeing up valuable resources by eliminating "repair work"
• Timely, higher quality financial data for internal management
• Better communication and cooperation between organizations
• Process improvements at all locations through employee creativity
• Elevation of the financial community within the bureaus/reporting entities
• Positive image for the Treasury in the financial community
• Setting the stage for additional improvements
• Improved morale and sense of pride across the Department

This has enabled the bureaus to take ownership of the initiative and continue its success. Even our bureaus that have transitioned to the Department of Homeland Security and the Department of Justice have strived to continue to close their books in an accelerated timeframe at their new agencies.

Contacts:
For further information please contact Jim Lingebach (202-622-0818) or Stuart Levy (202-622-1355).