Intragovernmental Revolving Funds:

Commerce Departmental and Census Working Capital Funds Should Better Reflect Key Operating Principles

GAO-12-56: Published: Nov 18, 2011. Publicly Released: Nov 18, 2011.

Additional Materials:

Contact:

Susan J. Irving
(202) 512-3000
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Agencies can improve their efficiency through the use of shared services, which are often financed through intragovernmental revolving funds (IRF). GAO was asked to (1) identify key operating principles the Commerce Departmental and Census Bureau Working Capital Funds (WCF), which are one type of IRF, should follow to ensure appropriate tracking and use of federal funds and (2) evaluate how departmental and Census policies and procedures for managing these WCFs reflect these principles. GAO identified four key operating principles based on a review of governmentwide guidance on business principles, internal controls, managerial cost accounting, and performance management. GAO also discussed the reasonableness of the principles with staff of the two WCFs and the Office of Management and Budget; these staff generally found the principles to be reasonable. GAO reviewed WCF authorizing legislation and statutory authorities, analyzed agency policies and data, and interviewed agency officials.

Four key operating principles offer a framework for effective WCF management: (1) Clearly delineate roles and responsibilities; (2) Ensure self-sufficiency by recovering the agency's actual costs; (3) Measure performance; (4) Build in flexibility to obtain customer input and meet customer needs Commerce and Census guidance do not identify the roles and responsibilities of all key WCF personnel. While all involved had a clear informal understanding of who is responsible for managing the Departmental WCF, Commerce's guidance does not discuss its CFO Council--an entity with an important role related to WCF increases and changes. Census lacks a process to coordinate and consolidate information managed by disparate divisions and ensure appropriate tracking of funds. There are also opportunities for the agencies to achieve greater management efficiencies by consolidating certain WCF services. Commerce has a transparent process to ensure recovery of actual costs. However, Census' process could be more transparent. The Commerce Departmental WCF's rate setting and review processes are clearly described, coordinated, and designed to recover actual annual costs. Entities such as the Commerce CFO Council and algorithm review group help to facilitate shared understanding among fund managers, customers, and service providers. Census has a fragmented and limited description of its processes and lacks a formal process to communicate with customers. Census customers GAO spoke with had a mixed understanding about how certain WCF costs are determined, limiting their ability to make appeals and suggest improvements. Both WCFs could benefit from performance measures that assess operational effectiveness. Commerce and Census have identified performance measures related to organizational strategic goals. However, neither has established WCF operational performance measures such as responsiveness to customer inquiries and billing error rates. Moreover, both WCFs support similar management and administrative services that could potentially be consolidated. Both WCFs obtain customer input and have flexibility to adjust to customer needs, but challenges exist. In general, customers GAO interviewed said they had regular and ongoing discussions with fund managers or service providers. At Commerce, its CFO Council and WCF managers periodically assess and shift resources to address changes in customer needs and prioritize requests for services. However, the statutory cap on one bureau's payments into the WCF limits the level of services that can be provided to all Commerce bureaus. To provide services beyond the capacity of the WCF, Commerce enters into a memorandum of understanding with specific customers. The Census WCF's ability to build and maintain an operating reserve helps to provide price stability for customers throughout the decennial census cycle when the costs of management and administrative services supported through the WCF fluctuate dramatically. Similar to Commerce, Census has the flexibility to provide additional services by billing customers directly. GAO is making seven recommendations to improve the management of the two WCFs, including updating and consolidating WCF guidance, establishing a process to measure WCF performance, and examining opportunities to consolidate certain WCF services. The Commerce Secretary agreed with all of our findings and recommendations and has directed managers of both the departmental WCF and the Census WCF to begin implementing GAO's recommendations.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On January 19, 2012, a Department of Commerce official provided GAO with a written letter from the Commerce Secretary stating the actions taken in response to our recommendations. The letter states that Departmental Management has updated the Working Capital Fund handbook to include a description of the Commerce CFO Council and its roles and responsibilities. The team has requested and is awaiting an updated copy of the handbook. On February 26, 2012, they provided the Department of Commerce's 2012 Working Capital Fund handbook. The team confirmed that a new appendix has been added to the handbook describing the roles and responsibilities of the Commerce CFO Council.

    Recommendation: To improve the management of the Commerce Departmental Working Capital Fund, the Secretary of Commerce should update the Commerce Departmental WCF handbook to include a description of the Commerce CFO Council and its roles and responsibilities.

    Agency Affected: Department of Commerce

  2. Status: Open

    Comments: On 3/29/12, Commerce provided an update stating that Commerce and OMB agreed that modifying the Commerce Business System (CBS) at this time is not cost beneficial in light of the Department's plans to implement a new system in FY2014. Commerce will include the recordation of the availability of appropriations advanced to Commerce and its bureaus from client agencies as a requirement for the new system. On 4/9/13, Commerce provided a list of the compensating controls it has implemented to mitigate the identified risks. On 3/14/14, we asked the Department to provide confirmation to us (including documentation) whether the new system (BAS) has been implemented, including a field to capture the period of availability of funds advanced from the bureaus. On 4/14/14, Commerce responded that the Department is currently in the planning phase of BAS and projects that all bureaus will be implemented by 2020. Since it is still in the planning phase, they do not yet have any supporting documentation that the new system includes a field to record the availability of appropriations advanced to Commerce from other agencies. On 6/6/14, the team sought clarification on a possible end-date for the planning phase. On 1/22/15, Commerce provided an update stating that the Department's BAS project is still in the planning phase but did not specify an end-date for the planning phase. On 3/24/15, Commerce said it currently does not have an anticipated end-date for the planning phase of the BAS project as they are still exploring shared services options. However, Commerce said that recording the period of availability is included among the BAS requirements. On 4/6/15, we asked the Department to provide documentation that shows this data field is included among the requirements and for a timeframe as to when Commerce will make a final decision on the system.

    Recommendation: To improve the management of the Commerce Departmental Working Capital Fund, and to meet its responsibilities in ensuring the proper use of federal funds and to help guard against the use of canceled appropriations, the Secretary of Commerce should revise its financial systems to electronically record and monitor the period of availability of appropriations advanced to Commerce and its bureaus from client agencies.

    Agency Affected: Department of Commerce

  3. Status: Open

    Comments: In Commerce's Working Capital Fund (WCF) Handbook for fiscal year 2014, the Department identified specific performance measures for several of the services provided and supported through the fund. The handbook includes a "performance metrics" section for several of the WCF service providers, including the Offices of Acquisition Management, the Office of the Chief Information Officer, the Office of Financial Management, and the Office of Security. In some cases, the Department described specific performance metrics for certain projects. For example, the Office of Acquisitions includes timeliness targets for: (1) responding to governmentwide data calls related to grants management and (2) awarding and completing customers' acquisition packages. The Office of the Chief Information Officer includes metrics to measure system availability and responsiveness to customer inquiries related to network connectivity and end-user support, among others. However, for other offices and projects, the performance metric is either unclear or not identified. On 3/14/14, we requested that the Department provide additional explanation and documentation. On 4/14/14, Commerce provided examples of some of the surveys they administer to evaluate services provided and supported through the WCF. However, the metrics do not appear to be directly tied to the performance of the WCF. On 6/6/14, the team suggested to have a discussion with the WCF manager to discuss further. Commerce's WCF handbook for fiscal year 2015 outlines similar metrics to what was included in the prior year's handbook. On 3/26/15, the team spoke with a Commerce official to seek clarification on some of the efforts Commerce has taken to implement this recommendation. Following up from that conversation, on 4/6/15, we requested supporting documentation to illustrate how some of the performance metrics have been applied to projects related to reduced spending, improved efficiencies, and/or cost savings/avoidance. On 4/6/15, the Commerce liaison replied and agreed to pull together the requested documentation.

    Recommendation: To improve the management of the Commerce Departmental Working Capital Fund, the Secretary of Commerce should establish performance measures to assess performance of WCF operations, such as billing error rates, and determine what additional measures would be helpful to improve WCF management.

    Agency Affected: Department of Commerce

  4. Status: Closed - Implemented

    Comments: The Department of Commerce established a Working Capital Fund (WCF) Working Group in fiscal year 2014 to discuss, communicate, and share best practices. Participants included the budget directors and appropriate management and staff from Departmental Management, the Census Bureau, and the National Institute of Standards and Technology. Each entity presented an overview of its WCF to the full group in October 2014 through December 2014, including information about governance, funding sources, services provided, billing, and management challenges. Commerce provided us with copies of each presentation. The Working Group reconvened in January 2015 and February 2015 to recap the three WCF presentations and discussed similarities and differences. The group determined there are similar but not overlapping characteristics across the three WCFs such as, institutional support and shared services. The group agreed that best practices should continue to be communicated and shared, however, it was agreed that the fundamental mission of each WCF group was different, thereby involving certain services unique to each fund. For example, Commerce said the Departmental WCF's purpose is to provide centralized shared services to its bureaus, including the Census Bureau. All 80 WCF projects were established with the purpose of sharing centralized services with Census as well as the other bureaus. Some WCF projects are already specific to Census such as those provided through the Office of General Counsel and the Office of Security. In comparison, the Census Bureau provides bureau-specific centralized services that widely benefit all of its programs but cannot be accurately or efficiently charged to one specific program or project as is done with the Departmental WCF. The Census WCF also provides the management, technology, and logistical infrastructure at regional offices and a central processing facility that support all of the bureau's surveys, censuses, and programs. In addition, the Census WCF manages nearly $300 million in reimbursable agreements through its WCF to provide specialized survey and statistical services for other agencies and non-federal government entities as well as to fairly distribute common costs to these reimbursable projects. The WCF Working Group agreed that by collaborating and learning more about each bureau's WCF, they are able to strengthen the management of each specific WCF (documentation, handbooks, reporting, common challenges, benchmarking and replicating success stories). Commerce confirmed that the Working Group agreed to meet monthly over the next 9 months of fiscal year 2015 to discuss various best practice topics including: carryover challenges, apportionments, reporting, financial systems, governance, annual handbooks, rate setting, and performance metrics.

    Recommendation: To improve the management of the Commerce Departmental Working Capital Fund, the Secretary of Commerce should coordinate with the Census Bureau to examine the management and administrative (M&A) services provided through both WCFs to determine what services might be consolidated.

    Agency Affected: Department of Commerce

  5. Status: Closed - Implemented

    Comments: The Census Bureau took three steps to implement this recommendation. First, on 10/12/12 the Bureau provided us with its Working Capital Fund (WCF) "As-Is Workflow" document (dated June 2012), which included a section defining the roles and responsibilities of major stakeholder groups involved with the Census Bureau's Working Capital Fund (WCF): WCF external stakeholders, WCF management, WCF services providers, and WCF customers. In addition, the Bureau included an appendix to this document with more detailed information about the members of each of the 4 stakeholder groups, their roles, responsibilities, and points of contact. Second, the Census Bureau included this same information in its FY2013 Service Rate Bulletin (SRB). Third, in July 2012, the Bureau developed and issued a final WCF Communications Strategy and Policy, which provides the communications framework and guidelines for the WCF. The document provides an approach and recommendations to help increase transparency surrounding WCF operations and activities, including the rate-setting process. Included in the strategy document is a "communications matrix," detailed communications process steps, guiding principles, and identification of the roles and responsibilities of key individuals involved in the development and execution of communications to support the Bureau's WCF.

    Recommendation: To improve the management of the Census Bureau Working Capital Fund, the Secretary of Commerce should require the Under Secretary for Economic Affairs as well as the Census Director to develop guidance that clarifies and consolidates existing WCF policies to include: a. roles and responsibilities of key personnel responsible for WCF management, and b. a process to coordinate information managed by disparate divisions to provide an overarching view of the WCF and ensure the appropriate tracking of funds.

    Agency Affected: Department of Commerce

  6. Status: Open

    Comments: On 4/9/13, the Census Bureau provided a copy of its FY2013 Service Rate Bulletin (SRB). In addition, the Bureau provided copies of its Working Capital Fund (WCF) "As-Is Workflow" document, which includes specific sections (1) describing more detailed information about how the various WCF rates are set, (2) providing an overview of WCF reporting to external stakeholders and customers, (3) providing an overview of internal reporting and monitoring for the WCF, and (4) identifying the various WCF communication forums for WCF customers (both internal and external). The Bureau also established and issued a final Communications Strategy and Policy document. In a prior update, Census said it planned to establish a more formalized governance structure for the WCF in FY2013 that will include three components: a WCF Charter, an Executive Oversight Committee, and a Customer Advisory Board. They said once these processes are standardized and the governance structure is formalized, they will create a comprehensive WCF Handbook (similar to the Commerce WCF Handbook) and a corresponding set of policies and procedures. The WCF Handbook will be available to both internal and external customers to provide increased transparency through standardized, accessible rate information. On 3/14/14, we asked Census for an update on whether this governance structure has been established and the corresponding handbook developed. On 4/14/14, Commerce provided an update that the Census Bureau expects to circulate a draft of the handbook for review and approval by 7/31/14. It is the Bureau's intention to finalize the handbook by the end of fiscal year 2014. On 3/3/15, we requested Census to provide a status update on this and confirm whether the handbook has been finalized. If it has not been finalized, we requested they provide a new target completion date and a draft copy of the handbook if possible. If the handbook is final, we requested they provide us with a copy. On 3/24/15, Commerce said the handbook continued to be delayed due to prioritization of staff resources on improvement efforts and operations. The handbook is still being developed, and Census expects to circulate it for internal review in March, with final completion of the handbook by 4/30/15. On 4/6/15, we requested that Commerce provide us with a copy of the finalized handbook when it is available at the end of April 2015.

    Recommendation: To improve the management of the Census Bureau Working Capital Fund, the Secretary of Commerce should require the Under Secretary for Economic Affairs as well as the Census Director to include a more detailed explanation in WCF guidance on the rate-setting process for all components of the fund, such as an explanation of how rates are determined and costs distributed, and establish a formal process similar to the Departmental WCF's process to communicate with customers.

    Agency Affected: Department of Commerce

  7. Status: Open

    Comments: On 10/12/12, Census provided an update stating, "the Census Bureau engaged a contractor, who in close collaboration with the Census Bureau: 1) assessed Census Working Capital Fund (WCF) processes and procedures; 2) conducted benchmark studies of eight other Agency working capital funds and one large commercial organization; 3) evaluated current Census performance measures; 4) surveyed a broad cross-section of Census Bureau stakeholders, and external reimbursable customers; and, 5) established 15 meaningful performance measures to improve management of the WCF and allow comparison of the Census WCF to other working capital funds. On 4/9/13, Census said it established specific performance metrics for activities managed by the Budget and Finance divisions, and have been tracking them for 4 months. They said they were also actively in the process of developing performance frameworks and measures for all other offices under the CFO and would send us the performance framework after a baseline review was completed and documents were finalized and approved. On 3/14/14, we requested an update on the status of the Bureau's performance framework for the WCF and any supporting documentation to show how these metrics are being used/implemented. On 4/14/14, Commerce said the Census Bureau has not yet implemented perfomance measures but expects to finalize and approve a set of measures for Budget and Finance by 6/30/14. Draft measures for other offices are expected by 9/30/14. On 2/27/15, we received an overview document Census officials presented at the Departmental WCF Working Group meeting on 11/17/14, which included references to WCF performance measures for budget and finance activities and administrative services, among others. For example, metrics included the number of WCF rates recovering more/less than full cost and number of projects closed with differences between estimated cost and actuals within a threshold. On 3/3/15, we requested Census to confirm whether the performance measures are finalized and any documentation that provides further explanation or detail on the established measures and illustrates how Census is implementing them. On 3/24/15, Commerce shared Census' response: Since November 2014, Census worked with the CFO units to review and evaluate the metrics, and made some suggested changes to the proposed metrics. The bureau is refining the formats and will collect March data to finalize the set of performance metrics by 4/15/15. On 4/6/15, the team requested that Census provide us with a copy of their finalized metrics in late April 2015.

    Recommendation: To improve the management of the Census Bureau Working Capital Fund, the Secretary of Commerce should require the Under Secretary for Economic Affairs as well as the Census Director to establish performance measures to assess performance of WCF operations and determine what would be helpful to improve WCF management.

    Agency Affected: Department of Commerce

 

Explore the full database of GAO's Open Recommendations »

Jul 29, 2015

Jul 28, 2015

Jul 22, 2015

Jul 7, 2015

Jun 24, 2015

Jun 16, 2015

Jun 3, 2015

May 26, 2015

May 21, 2015

Looking for more? Browse all our products here