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Management Integrity: Controls, Compliance, and Challenges

The Federal Managers’ Financial Integrity Act of 1982 (FMFIA) requires an annual review of the adequacy of NSF program and activity management controls. The NSF Management Controls Committee (MCC), chaired by the Chief Financial Officer, is responsible for oversight and for reporting of the Foundation’s management and internal control program to the NSF Director on an annual basis.

The MCC requires that individual offices provide assurance statements each year on the FMFIA reviews within their own organizations on program and activity management controls. Individual assurance statements from each of NSF’s Assistant Directors and Staff Office Directors serve as the primary basis for NSF’s assurance that management controls are adequate, (Section 2 of FMFIA) and that NSF systems are in compliance with all applicable laws and administrative requirements, including OMB Circulars A-123 (Management Accountability and Control) and A-127 (Financial Management Systems) and Section 4 of FMFIA. The MCC asserted to the NSF Director that agency management controls and financial management systems taken as whole provide reasonable assurance that the objectives of FMFIA were achieved for FY 2000. The MCC also provided reasonable assurance that the NSF systems that are being used to compile information for NSF’s annual GPRA Performance Report have been evaluated and provide adequate controls. It was also determined that agency assets were properly safeguarded.

Through an independent assessment conducted during the annual CFO Act audit, NSF internal accounting systems were found to be compliant with the Federal Financial Management Improvement Act of 1996 (FFMIA). During the FY 2000 certification process, the MCC did not identify any material weaknesses as defined by OMB guidance. The MCC evaluated the progress made on one repeat reportable condition in the FY 1999 financial statement audit related to the recording and accountability of property, plant, and equipment maintained by a NSF contractor. The MCC identified that credible progress to correct this reportable condition had been made in FY 2000. An independent assessment made during this year’s annual CFO audit confirmed this condition has been resolved. The MCC reported several management challenges identified through the FMFIA assessment process which do not impact the internal controls of the Foundation, but warrant attention of senior management in order to maintain the long-term effectiveness of operations at NSF. These challenges include data and systems management activities, program management support to include training and outreach, recruitment and retention of staff, and access security to systems. The MCC will address these issues, most of which require long-term attention.

IG’s Statement of Management and Performance Challenges
As required by the Reports Consolidation Act of 2000, this report includes a statement by the Inspector General (IG) addressing NSF’s most serious management and performance challenges. This statement can be found in the section, “Other Reporting Requirements.” The IG’s list of management and performance challenges addresses four primary areas: System and Data Management; Program Management; Staffing and Human Resource Management; and Security and Controls. As noted in the IG’s statement, these management challenges have been acknowledged and are being addressed by NSF management. Following the IG’s statement is the Director’s response.

The Director’s Statement of Assurance for FY 2000

Consistent with the provisions of the Reports Consolidation Act of 2000, and with the approval of the Office of Management and Budget, NSF has included the results of the management evaluations required by the Federal Managers’ Financial Integrity Act (FMFIA) for the period ending September 30, 2000 into the annual Accountability Report.

Based on internal management evaluations, and in conjunction with results of independent financial statement audits, NSF can provide reasonable assurance that the objectives of Section 2 of FMFIA (internal controls) and Section 4 of FMFIA (financial management systems) have been achieved. NSF can also state that it is in substantial compliance with the Federal Financial Management Improvement Act (FFMIA) as well.

The NSF Management Controls Committee (MCC), under the chairmanship of the agency’s Chief Financial Officer, provides continued senior executive attention to management control issues. The Office of the Inspector General, represented as an advisory member of the MCC, continues to provide useful and constructive suggestions for improving the agency’s management controls and financial management policies and practices.

I am confident that NSF’s significant accomplishments in the achievement of FMFIA objectives will continue and that level of assurance will be provided for FY 2000 and beyond.

Signature of Rita R. Colwell
Rita R. Colwell




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