DOE Undelivered Orders UDO Remediation Progress Update

1
DOE Undelivered Orders (UDO) Remediation Progress
Update
Superusers/Financial Statement Workshop March 20
22, 2007

• Rick Loyd, Director, Office of Finance and
  Oversight

2
KPMG DOE Audit Report stated

• Accounting for obligations and undelivered orders
  
• Found significant deficiencies in the
  Departments internal controls over the timely
  recording of the obligation and de-obligation of
  funds.
• The identified deficiencies precluded the
  Department from ensuring the accuracy, validity,
  and completeness of obligations and undelivered
  orders.
• The Department should enhance established
  controls to ensure that
• obligations are recorded in a timely manner
• correct all remaining conversion errors
• resolve and correct negative undelivered order
  balances
• ensure that obligated funds are promptly
  de-obligated when those funds are no longer needed

3
DOE UDO Corrective Action Plan

• Near Term Corrective Actions (Q2)
• Phase 1 UDO Review gt 500k
• Negative UDO/Blank CID Correction
• Correction Guide for Legacy UDO Issues
• Automatic De-obligation of Travel and Training
  Obligations
• Checklist Implementation
• Mid Term Corrective Actions (Q3 Q4)
• Phase 2 UDO Review lt 500K
• Improve UDO Guidance/STARS Reports
• New GL to PO Reconciliation Discoverer Report
• CDR Report Revisions
• Stale Balance Reports
• 2108 Review Certification Guidance
• Communicate and Partner with Programs and
  Procurement Officials (Ongoing)

4
Solid Progress To Date

• Near Term Corrective Actions (Q2)
• UDO Review by Value gt 500k
• 99 complete, 1172 CIDs reviewed, net obligation
  3.7 million
• Negative UDO/Blank CID Correction
• 96 complete, 396 CIDs corrected, net obligation
  12.9 million
• Automatic De-obligation of Travel Obligations
• Completed Jan 25. 2821 CIDs de-obligated for
  1.4 million
• Automatic De-obligation Training Obligations
• Completed Feb 15. 1625 CIDs de-obligated for
  800 thousand
• Checklist Implemented
• KPMG Audit review of UDO and Abnormal Balances
  began Feb. 26
• 8 sites to be reviewed varying sample sizes
• Audit work completed at 2 sites no audit
  findings

5
Phase 2 Review Population
The Population
Allottees CIDs

• Phase 2 Review encompasses the 9/30/2006 UDO
  population not addressed by the Phase 1 review
• Excluding those CIDs subject to the new automated
  deobligation process (travel and training UDO
  balances less than 5,000)
• Excludes CIDs for which the UDO balance has been
  liquidated during FY 2007
• A listing of the current Phase 2 population was
  e-mailed to each allottee

6
Phase 2 Review Methodology

• The Phase 2 review will only require a
  reconciliation of the current cumulative
  obligation balance, and not the 9/30/2006 balance
  as was required for Phase 1.
• The Phase 2 review will not include a stale
  balance review for all CIDs in the review
  population, as was the case with the Phase 1
  review. Instead, offices will perform the stale
  balance procedures in this SOP only for those
  CIDs identified on the Stale Balance Report.

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Phase 2 Review Methodology (Continued)

• Field CFOs should use a risk-based approach to
  ensure those CIDs with the most likelihood of
  having errors impacting the 2108 and financial
  statements are reviewed and corrected prior to
  June 30th.
• Differences identified by the GL to PO
  reconciliation procedures would be one example of
  identifying those CIDs with a higher risk of data
  errors. Another risk-based strategy would be to
  review the CIDs with the largest balances first,
  or those that are more likely to lack supporting
  documentation.
• It is expected that all UDOs identified below
  will be reconciled to source documents, and
  corrections made if necessary, by September 30,
  2007.
• The Correction Guide for Legacy UDO Issues
  provides information and tools to assist field
  offices in identifying and resolving differences
  most likely to be encountered.
• Reconciliation of the STARS GL undelivered order
  balance to the office's procurement system may be
  substituted for actual source document
  verification if the cumulative obligation
  balances in both systems for the CID are the
  same.

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Phase 2 Reporting and Documentation

• Field CFOs will report the summary results of the
  progress of their Phase 2 reviews on the 5th
  workday of each month. The summary information
  to be provided includes the
• Number and dollar value of UDOs reconciled to
  source documents
• Number and dollar of UDOs to be
  reviewed/corrected
• The monthly summary information should be
  e-mailed to Bill Johnson at william.johnson_at_hq.doe
  .gov
• Documentation of the Phase 2 reconciliations
  should be maintained locally to provide audit
  evidence that the reconciliations were performed.
  

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Questions/Comments?

• Field CFO comments due next week on Phase 2
  requirements, as well as the rest of the revised
  Obligation Review and 2108 Certification Guide