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Financial Management Performance Debt Collection ACF shares debt collection efforts with the PSC. ACF identifies debts needing collection and, for entitlement grants, does the actual collection as well. Some debts are collected up front, through a grant offset, before a new grant is awarded; others are collected via a check from the grantee long after the initial grant was paid, and often after undergoing a protracted appeals process. For discretionary grants, the PSC does the actual collection after ACF identifies outstanding debts; again, these debts are often subject to appeals. Finally, the PSC manages the accounting records for both discretionary and entitlement debts which are collected. These debt collection efforts have allowed a low level of accounts receivable to be maintained. Over the last three years, from FY 1995 to FY 1997, total accounts receivable (outstanding debts) have ranged from a low of $400 million to a high of $936 million. ACF reduced accounts receivable from $612.9 million in FY 1996 to $179.6 million at the end of FY 1998. ACF reported to the Department in the latest update to the FY 1998 CFO Report that we continue to forward 100 percent of all debts to the Program Support Center for cross-servicing. We do not anticipate any change in this activity. There are different types of collection efforts: collection of child support delinquencies through the Internal Revenue Service's tax offset program and the new Treasury Offset Program (TOP), pursuit of funds provided to repatriates under the Repatriation program, and collection of program and audit disallowances.
Federal Managers’ Financial Integrity Act In the FY 1998 Annual FMFIA Report, the Assistant Secretary provided reasonable assurance to the Secretary that, taken as a whole, ACF is in compliance with the requirements and responsibilities of the Federal Managers’ Financial Integrity Act. Senior managers were able to provide certification to the Assistant Secretary that with the exception of a few problems that need improvement, ACF management controls are adequately maintained. Nevertheless, based on recommendations from ASMB reviews of ACF discretionary grants activities and on continuing problems mentioned during the audits of ACF FY 1996-98 financial statements, the Assistant Secretary is declaring two new agency-wide material weaknesses for FY 1998: discretionary grants monitoring and audit resolution. Appropriate senior managers and grants officers have developed corrective action plans to fix these problems. Year 2000 Issues
Readiness ACF has prepared for the impact of the new millennium on its computer systems in a variety of ways. It identified 86 systems that needed to be repaired, replaced, or retired. Of these, 55 were classified as mission critical. The vast majority of these mission critical systems carried out functions related to grant-making and tracking. Therefore, 47 systems were subsumed into ACF’s new Grant Application Tracking and Evaluation System (GATES). The functions that these systems carried out are now carried out by GATES, which was designed and constructed as a Y2K compliant system. The other six mission critical systems are AFCARS, RHYMIS, CSENet, FPLS, TROS, and EVS (the latter four systems are OCSE systems). Like GATES, AFCARS was designed as a Y2K-compliant system. It employs a bridge to ensure that incoming data from States is Y2K compliant. RHYMIS was replaced with a Y2K compliant version and the approximately 400 grantees that use the system were supplied with new RHYMIS software and are receiving technical assistance to ensure that the PCs that the system runs on at grantee sites are Y2K compliant. CSENet is a Y2K compliant application that runs on a network consisting of a host PC and 55 workstation PCs that exchange information on child support between States and territories. The other OCSE systems have been repaired at the Social Security Administration (SSA) site where they are housed. Therefore, ACF judges the risk to its internal systems and operations posed by the millennium rollover to be slight. In addition, ACF has completed its Y2K remediation efforts well in advance of the Department’s March 1999 deadline and a full year prior to the millennium rollover. This will allow ACF time to ensure that risks posed by possible non-compliance of outside entities can be mitigated. In mid-1998, ACF contracted for independent review services that were directed to Independent Validation and Verification (IV&V) of ACF’s seven mission-critical systems. During 1998, Y2K compliance certifications and final IV&V assessment reports were received for AFCARS, RHYMIS, EVS and FPLS. In late autumn 1998, OCSE asked Lockheed Martin (the current maintainer but not the original developer for CSENet) to engage in an independent review of CSENet’s Y2K readiness. This de facto IV&V revealed problems with the hardware and operating system software on which the system runs, as well as with the communications protocol it uses. As a result, OCSE has decided to replace all the hardware for each workstation (56 PCs including the host PC) and to upgrade the operating system software. OCSE plans to have all 56 PCs replaced by March 31, 1999. Nevertheless, it should be noted that the CSENet application itself remains Y2K compliant. The GATES and TROS IV&V will be completed by the end of January 1999. Additionally, concurrent with the IV&V review and certification, the Office of the Inspector General is conducting its own review of ACF’s mission-critical systems. Cost The following chart indicates ACF’s Y2K Conversion Costs for all Systems (dollars in millions):
Risks and Contingency Plans Despite its confidence in its Y2K readiness, ACF is also preparing for the worst-case Y2K scenario. It has developed and submitted to the Department Business Continuity and Contingency Plans (BCCPs) for all its mission-critical systems. In ACF’s estimation, these plans ensure that should all or part of a system or function be adversely affected by the millennium rollover, ACF will be able to continue operations until problems are fixed. ACF has identified four core business functions: (1) grant-making and tracking; (2) information gathering and tracking; (3) supporting States in child support enforcement activities; and (4) providing technical support to states and other grantees. Worst Case Scenario The worst-case Y2K scenario would involve ACF’s inability to carry out one or more of its core business functions due to the millennium rollover. ACF believes that a worst-case Y2K scenario would be the result of outside entities’ non-compliance with Y2K requirements. ACF Grant-making and Tracking If NIH’s DCRT, where GATES is run, were to experience a total Y2K-related failure during a key grant-making period, grants might be delayed and grantees may not be able to deliver services due to a lack of funding. Since grants are made prior to the grant period, the impact of such a failure would not be felt immediately. Furthermore, the agency can process grants manually, perhaps requiring a longer grant distribution period. A more serious Y2K-related risk, in ACF’s estimation, would arise if the CORE Accounting System, the Program Support Center (PSC), or the Department of the Treasury experienced Y2K-related failures that prevented the release of funds or caused erroneous distribution of monies. Again, however, the impact of this kind of failure would not be felt immediately by grantees, allowing the affected parties to mitigate some of the negative effects. ACF’s grant-making ability is also dependent upon the Y2K readiness of PSC’s Payment Management System (PMS) and the Department of the Treasury. The Administration on Aging (AoA) plans to conduct an end-to-end Y2K test of all its systems through to the Department of the Treasury. Any problems revealed by this test will be mitigated immediately. Since all of ACF’s grants follow the same process, ACF is confident that AoA's end-to-end test will reveal and mitigate any potential problems to which GATES might be exposed. In addition, ACF's contingency plan for GATES will be revised, if necessary, in light of results gained from the end-to-end test. Information Gathering or Tracking In the worst case scenario, this core business function would not be carried out for some period of time. In the case of AFCARS, funding might be affected if a system failure caused State submission of information to be delayed. This would be especially problematic if the failure occurred during one of two key information-gathering periods. The AFCARS contingency plan includes mitigation actions that would be taken if a failure were to occur during one of these periods. In the case of RHYMIS, information gathered by this system is compiled for a mandatory report to Congress on Runaway and Homeless Youth. Policy decisions are also made based upon the information collected by the system. However, funding is not dependent upon the information gathered by RHYMIS and the nature of the mandatory report is such that there is a significant lag time between the period for which information is gathered and when it is reported. Supporting States in Child Support Enforcement Activities In the worst case scenario, the Federal child support enforcement system would no longer be available to assist States in their efforts to establish and enforce child support orders. Since three of the four child support enforcement systems reside at SSA, potential Y2K-related problems with SSA’s infrastructure pose a risk for these systems. The fourth system, CSENet, is an information exchange system composed of a host PC and workstations. In the worst case scenario for this system, the telecommunications links between the host and several or all workstations in the States would be lost. If this were to occur for an extended period of time, information about a delinquent absentee parent might be lost or erroneously processed. This could affect child support order establishment, collections, or enforcement. Providing Technical Support to States and other Grantees In the worst case scenario, ACF would be so consumed with mitigating Y2K problems with its own systems or infrastructure that it would be unable to provide technical support to States that needed it. This might adversely affect States’ ability to solve their own Y2K or other system problems.
Contingency Plan ACF submitted disaster recovery/contingency plans to the Department that were developed in conjunction with the ACF program offices. These plans, which have the support and approval of the program offices, address the risks to ACF's mission-critical systems posed by the Y2K date issue. OMB promulgated new requirements for Business Continuity/Contingency Planning (BCCP) on December 21, 1998. ACF is in the process of reviewing these requirements, and will provide information required by OMB when the requirements have been finalized. Briefly, the new requirements involve the repackaging of ACF’s system Contingency Plans in such a way that demonstrates that both the systems and the core business functions that they support will be able to function if Y2K related problems arise. Information for all reporting has been developed with the cooperation of central and regional offices and is collected, managed, and reported by ACF’s Y2K Team. ACF’s Y2K Chief Information Officer (CIO) is kept informed through Y2K Team status updates and briefings, and endorses and supports the Team by hands-on involvement and a keen interest in the progress of Y2K activities. The CIO regularly advises ACF’s Assistant Secretary about the Agency’s progress toward full Y2K compliance and, beginning in June 1998, the HHS Deputy Secretary started meeting with ACF’s Assistant Secretary on ACF’s Y2K remediation efforts. ACF was appointed as the HHS lead OPDIV for the Y2K Outreach Human Services Sector Working Group. The focus for this group is directed primarily at data exchange partners, such as States, territories, private providers, Indian Tribes, and grantees. Limitations of the Financial Statements
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