Information Technology:

Treasury Needs to Strengthen Its Investment Board Operations and Oversight

GAO-07-865: Published: Jul 23, 2007. Publicly Released: Jul 23, 2007.

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The Department of the Treasury relies extensively on information technology (IT) to carry out its mission. For fiscal year 2007, Treasury requested about $2.8 billion--the third largest planned IT expenditure among civilian agencies. GAO's objectives included (1) assessing Treasury's capabilities for managing its IT investments and (2) determining any plans the agency has for improving its capabilities. GAO used its IT investment management framework (ITIM) and associated methodology to address these objectives, focusing on the framework's stages related to the investment management provisions of the Clinger-Cohen Act of 1996.

While Treasury has established many of the capabilities needed to select, control, and evaluate its IT investments, the department has significant weaknesses that hamper its ability to effectively manage its investments. Specifically, the department has executed 19 of the 38 key practices that the ITIM requires to build a foundation for IT investment management (Stage 2), including practices needed to ensure that projects support business needs and that a disciplined process exists for capturing investment information. In addition, the department has executed 11 of the 27 key practices required to manage investments as a portfolio (Stage 3), including documenting policies and procedures for conducting postimplementation reviews. However, Treasury does not have an executive investment review board--a group of executives from IT and business units that is intended to be the final decision-making authority--that is actively engaged in the investment management process. In addition, the department does not have any policies and procedures for managing its nonmajor investments, although they represent almost 70 percent of the total number of investments. Until the department addresses these weaknesses, it will not have the investment management structure needed to effectively assess and manage the risks associated with its multibillion-dollar portfolio. To its credit, Treasury has initiated efforts to improve its investment management process. For example, it has recently implemented a process for identifying major projects that should receive additional oversight. However, the department has not developed a comprehensive improvement plan that (1) is based on an assessment of strengths and weaknesses; (2) specifies measurable goals, objectives, and milestones; (3) specifies needed resources; (4) assigns clear responsibility and accountability for accomplishing tasks; and (5) is approved by senior-level management. GAO has previously reported that such a plan is instrumental in helping agencies coordinate and guide improvement efforts. Until Treasury develops this plan and the controls for implementing it, the department risks not being able to put in place an effective management process that will provide appropriate executive-level oversight for minimizing risks and maximizing returns.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In January 2008, the Department of the Treasury established the Executive Investment Review Board, composed of senior Department and Bureau executives such as the Chief Information Officer, the Comptroller of the Currency, and the Commissioner of Public Debt. The board has since been actively engaged in the investment planning and management process.

    Recommendation: To strengthen Treasury's investment management capability, the Secretary of the Department of the Treasury should direct the Assistant Secretary for Management, in collaboration with the CIO, to develop and implement a plan to establish an executive investment review board, composed of executives representing IT and business units, that would be actively engaged in the investment management process.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Not Implemented

    Comments: In September 2011, Treasury informed us that it plans to deploy a program to select and oversee nonmajor investments by the end of the second quarter of fiscal year 2012. Given the amount of time elapsed since we made this recommendation, we are closing it as not implemented.

    Recommendation: To strengthen Treasury's investment management capability, the Secretary of the Department of the Treasury should direct the Assistant Secretary for Management, in collaboration with the CIO, to develop and implement a plan to develop and implement policies and procedures to manage nonmajor investments.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Implemented

    Comments: The department of Treasury has addressed the key practices associated with instituting the investment board. In January 2008, the Department of the Treasury established the Executive Investment Review Board, composed of senior Department and Bureau executives including the Chief Information Officer, the Comptroller of the Currency, and the Commissioner of Public Debt. Since then, the board has been actively engaged in the investment planning and management process. The department also instituted mechanisms to ensure board members stay informed of investment management policies, procedures, tools and techniques given. According to the Director for Capital Planning and Investment Control, while the CIO is charged with the development and maintenance of the Department's IT investment process, the E-board is informed of this process. Finally, the CIO is also responsible for ensuring the E-Board's decisions are carried out.

    Recommendation: Treasury's plan should include actions to address the weaknesses in eight critical processes identified in this report, beginning with those identified in our Stage 2 analysis and continuing with those identified in our Stage 3 analysis. The plan should, at a minimum, provide for fully implementing, in Stage 2, actions to fully address instituting the investment board.

    Agency Affected: Department of the Treasury

  4. Status: Closed - Not Implemented

    Comments: In September 2011 Treasury informed us that a formalized plan has not been completed yet, but work was underway to address key elements. It reported that a working team was formed in June 2011 to review Department-level capital planning and investment control policies and to develop reporting requirements. The Department anticipates completing this review some time in the second quarter of fiscal year 2012. Given the amount of time elapsed since we made this recommendation, we are closing it as not implemented.

    Recommendation: In developing the plan, the Secretary of the Department of the Treasury should direct the Chief Information Officer to ensure that the plan draws together ongoing and additional efforts needed to address the weaknesses identified in this report, including those relating to the CIO's role in performing investment management responsibilities. The plan should also (1) specify measurable goals, objectives, and milestones; (2) specify needed resources; (3) assign clear responsibility and accountability for accomplishing tasks; and (4) be approved by senior management. In implementing the plan, the Chief Information Officer should ensure that the resources are available to carry out the plan and that progress is measured and reported periodically to the Secretary of the Department of the Treasury.

    Agency Affected: Department of the Treasury

  5. Status: Closed - Not Implemented

    Comments: Treasury has policies and procedures for ensuring its major IT investments support the Department's business needs. The Department delegated the management of its nonmajor investments to its bureaus, but has no mechanism for ensuring that the bureaus have policies and procedures to align these investments with business needs. In September 2011 Treasury informed us that it intended to deploy a nonmajor select and control program by the end of the second quarter of fiscal year 2012. Given the amount of time elapsed since we made this recommendation, we are closing it as not implemented.

    Recommendation: Treasury's plan should include actions to address the weaknesses in eight critical processes identified in this report, beginning with those identified in our Stage 2 analysis and continuing with those identified in our Stage 3 analysis. The plan should, at a minimum, provide for fully implementing, in Stage 2, actions to fully address meeting business needs.

    Agency Affected: Department of the Treasury

  6. Status: Closed - Implemented

    Comments: The department of Treasury took steps to fully address the key practices associated with selecting an investment. Specifically the department added policies and procedures for selecting non-major investments in its Capital Planning and Investment Control (CPIC) manual. Additionally, the manual now specifies that the selection and reselection of new and ongoing non-major investments is to be submitted to the Executive Investment Review Board (E-Board) for their review and approval. Consistent with this, the selected major and non-major investments for fiscal year 2010 were provided to the E-Board for their review and approval in November 2008.

    Recommendation: Treasury's plan should include actions to address the weaknesses in eight critical processes identified in this report, beginning with those identified in our Stage 2 analysis and continuing with those identified in our Stage 3 analysis. The plan should, at a minimum, provide for fully implementing, in Stage 2, actions to fully address selecting an investment.

    Agency Affected: Department of the Treasury

  7. Status: Closed - Implemented

    Comments: Treasury has documented policies and procedures for management oversight of IT projects and systems in its Capital Planning and Investment Control (CPIC) manual. Specifically, Treasury's Executive Investment Review Board (E-Board) is responsible for providing investment oversight for both major and non-major investments. Consistent with this, the E-board was provided with summary level information on all IT investments in November 2008. Additionally, Treasury established a new process called the Treasury High Visibility List as a mechanism to track implementation of corrective actions for underperforming projects. The Treasury High Visibility List reports are presented to the Chief Information Officer who determines whether to elevate issues to the E-Board.

    Recommendation: Treasury's plan should include actions to address the weaknesses in eight critical processes identified in this report, beginning with those identified in our Stage 2 analysis and continuing with those identified in our Stage 3 analysis. The plan should, at a minimum, provide for fully implementing, in Stage 2, actions to fully address providing investment oversight.

    Agency Affected: Department of the Treasury

  8. Status: Closed - Not Implemented

    Comments: In September 2011 Treasury informed us that it was in the process of reviewing its policies and procedures for defining the portfolio criteria. It reported that it had formed a working team in June 2011, and expected to complete the review in the third quarter of fiscal year 2012. Given the amount of time elapsed since we made this recommendation, we are closing it as not implemented.

    Recommendation: Treasury's plan should include actions to address the weaknesses in eight critical processes identified in this report, beginning with those identified in our Stage 2 analysis and continuing with those identified in our Stage 3 analysis. The plan should, at a minimum, provide for fully implementing, in Stage 3, actions to fully address defining the portfolio criteria.

    Agency Affected: Department of the Treasury

  9. Status: Closed - Not Implemented

    Comments: In September 2011, Treasury informed us that it was in the process of revising its annual planning process as part of the capital planning and investment control program and was developing a standard set of criteria based on departmental strategies and initiatives to determine if an individual investment merits further funding. Given the amount of time elapsed since we made this recommendation, we are closing it as not implemented.

    Recommendation: Treasury's plan should include actions to address the weaknesses in eight critical processes identified in this report, beginning with those identified in our Stage 2 analysis and continuing with those identified in our Stage 3 analysis. The plan should, at a minimum, provide for fully implementing, in Stage 3, actions to fully address creating the portfolio.

    Agency Affected: Department of the Treasury

  10. Status: Closed - Not Implemented

    Comments: In September 2011, Treasury informed us that it plans to deploy a nonmajor select and control program by the end of the second quarter of fiscal year 2012 to address this recommendation. Given the amount of time elapsed since we made this recommendation, we are closing it as not implemented.

    Recommendation: Treasury's plan should include actions to address the weaknesses in eight critical processes identified in this report, beginning with those identified in our Stage 2 analysis and continuing with those identified in our Stage 3 analysis. The plan should, at a minimum, provide for fully implementing, in Stage 3, actions to fully address evaluating the portfolio.

    Agency Affected: Department of the Treasury

  11. Status: Closed - Not Implemented

    Comments: The Department also informed us that it is in the process of revising its evaluation activities, including PIRs --as part of the revision of the capital planning and investment control program that is currently underway. Given the amount of time elapsed since we made this recommendation, we are closing it as not implemented.

    Recommendation: Treasury's plan should include actions to address the weaknesses in eight critical processes identified in this report, beginning with those identified in our Stage 2 analysis and continuing with those identified in our Stage 3 analysis. The plan should, at a minimum, provide for fully implementing, in Stage 3, actions to fully address conducting post-implementation reviews.

    Agency Affected: Department of the Treasury

 

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