Progress in Addressing Challenges

As a Significant Entity included in the Financial Report of the United States Government, the PBGC takes theintegrity and thoroughness of its internal controls very seriously. Management has made significantprogress in addressing our four reportable conditions and is fully committed to completing action on themfurther improving our internal processes and systems. In accordance with guidance provided by the Officeof Management and Budget in OMB Circular A-136, the following provides a summary of actions thatmanagement is taking to correct each reportable condition:

• Systems Integration - In FY 2006, the PBGC completed the first phase of a multiyear effort toconsolidate and improve core financial management systems. On October 1, 2006, ConsolidatedFinancial System (CFS) became the new system of record consolidating three general ledger systemsand our budget execution and administrative payments system into a single integrated environment. The passing of this major milestone positions the PBGC closer to the resolution of this reportablecondition. The second phase will focus on Business Process Re-engineering (BPR) for increasedintegration between this system and others in the Corporation. The PBGC plans to completecorrective action on this major effort by FY 2009.
• System Security - The PBGC has added resources to develop an enterprise-wide system securityprogram. Significant progress has been made in developing the Enterprise Information SecurityPolicies and an Enterprise-wide Security Plan with implementation in the final stages. Through theinternal controls program, deficiencies in critical processes across the Agency are being corrected ormitigated. Risk assessment and system security plans for all significant financial managementapplications and general support systems have either been completed or initiated. The PBGC isworking on a comprehensive framework to formalize its progress under the Certification andAccreditation program to ensure compliance with NIST Special Publication 800-37, Guide for the Security Certification and Accreditation of Federal Information Systems. The PBGC expects tofully complete Certification and Accreditation on two of its significant financial managementapplications (including the consolidated general ledger and budget system) as well as on its mostcritical general support systems in FY 2007 with Certification and Accreditation to follow on its twoother primary significant financial systems when they are placed into operation in early FY 2008.
• Premiums - The PBGC's Financial Operations Department has made considerable progress byimplementing a new data capture process, improved image capture systems, a new e-filing system,and additional manual controls. For example, in the past, a significant number of premium payment transactions were suspended because the payments could not be initially associated with an existingcustomer account or failed other validation tests. As a result of an increased emphasis in this areaand process improvements, the backlog of unresolved suspended transactions that existed at theend of FY 2004 has been eliminated, and the time required resolving such transctions has beengreatly reduced. As of October 31, 2004, there were $66.5 million in suspended transactions, andtwo years later, these amounts have been reduced to $3.3 million (a 95% reduction). As of the sametime periods, the dollar value associated with suspended transctions which were not resolved withina 60-day window has been reduced from $5.2 million to $41,000 (a 99% reduction). A new system,Premium and Practitioner System (PPS), to be fully integrated with the new Consolidated FinancialSystem, has been designed to further improve timeliness and accuracy in premium operations. Thenew system will strengthen financial management and customer service capabilities, and will besupplemented with updated documentation of procedures for processing and estimating premiums. The contract to implement PPS was awarded at the end of FY 2006, and implementation will occurin FY 2008.
• Continuity of Operations Plan - The PBGC's Facilities and Services Department, along with theOffice of Information Technology, worked to address this reportable condition by conducting aninternal review of the causes of a disruption in the availability of the PBGC computer nerwork atthe end of FY 2005 last year. A contingency planning policy statement that addresses acomprehensive set of objectives for the establishment of the organizational framework andresponsibilities for comprehensive contingency planning was established and implemented. Thepolicy's objectives are comprised of ten (10) components. The PBGC has completed its efforts onthe Continuity of Operations, Occupant, Emergency, and Pandemic Influenza Plans. Workcontinues on the remaining components which include, but are not limited to, a Business ImpactAnalysis (BIA), an IT Risk Assessment, and various other recovery/communication plans. Inaddition, the PBGC has a testing and exercise plan, which includes participation in government-wide Forward Challenge COOP exercises. Management plans to complete work on this condition in FY 2007.
• While the reportable conditions represent significant challenges to the Corporation, the PBGC will continue to expend the resources to see to their complete and timely resolution.

 

Chief Financial Officer

 

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