Udall: NASA's Financial Management System Needs More Work

Press Release From: Rep. Mark Udall
Posted: Friday, October 28, 2005

(Washington, DC)  The U.S. House Science Committee's Subcommittee on Space and Aeronautics today held a joint hearing with the House Government Reform Committee's Subcommittee on Government Management, Finance and Accountability.  The hearing examined the unsettled state of NASA's financial management system.

"Over the past several years, both the GAO and the NASA IG have provided NASA with very sobering assessments of its financial management operations," stated Space and Aeronautics Subcommittee Ranking Member Rep. Mark Udall (D-CO).  "So today's hearing is an important one.  As NASA embarks on a major financial Exploration Initiative, Congress and the American taxpayers need to have confidence in NASA's stewardship of the resources entrusted to them."

NASA is currently undertaking a third attempt to modernize its financial management system.  The previous two attempts failed after twelve years of effort and $180 million in expenditures.  The current attempt, which was initiated in 2000, has been criticized by both GAO and the NASA Inspector General (IG) for a range of shortcomings in its design and implementation. 

In addition, the NASA IG has indicated that NASA's independent auditor (Ernst and Young) is planning to give the agency a "disclaimer" on its audit - that is, it failed to get a passing grade - for the third time in four years and will find many of the same "material weaknesses" as in previous years. 

NASA's less than transparent financial practices have long been a concern to Committee Democrats.  Science Committee Ranking Member Rep. Bart Gordon (D-TN) requested that the Committee exercise its oversight powers to address this problem in a letter to Chairman Boehlert more than a year and a half ago (May 19, 2004). 

As one of many examples cited in Ranking Member Gordon's letter, a 2003 financial report from NASA's independent auditors noted that NASA was unable to document adjustments made to their books to eliminate an almost $2 billion discrepancy with the balance reported by the U.S. Treasury. 

"I'm pleased that the Committee is finally holding this hearing," added Rep. Udall.  "When it comes to matters of accounting for taxpayer dollars, there's no such thing as too much transparency.  Any dollar amount that's unaccounted for is one too many.  All parties involved acknowledge that NASA has a long road ahead of it in cleaning up its finances, and success is not yet assured."

Concurrent with the joint hearing, the GAO is releasing a report today requested by Chairman Boehlert and Ranking Member Gordon that assessed the agency's progress in responding to earlier GAO recommendations to improve its financial management system. 

In short, today's GAO report concludes that while NASA has made some progress in the financial management arena, 29 of the GAO's 45 recommendations for improvement and accountability remain open, and only 3 recommendations have been fully implemented.

"Clearly, the agency has its work cut out for it," concluded Rep. Udall.  "I look forward to identifying the most promising approaches for NASA to take in this endeavor and to the day we can again hold this hearing with better news forthcoming from both NASA and GAO."

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