• State Auditor Again Blasts California’s Implementation of Nearly $1 Billion Financial System

    August 16th, 2018 by admin Categories: Blogs Tags: , , , , , , ,

    In addition to a 70% budget increase since 2005 this seemingly interminable FI$CAL project is far from complete, with less than 1/3 of state departments converted over, most other remaining departments who were supposed to go live last month represent much larger state organizations and problems are expected to mount. And perhaps most disturbing, the Auditor cites the state’s top IT organization, the California Department of Technology, with failure to provide major stakeholders with timely information before key project decisions.

    Expect the California papers tomorrow to be full of the State Auditor’s findings about the debacle that is unfolding at the largest state IT project in history, the state’s nearly $1 billion financial system – FI$CAL. It’s less than 5% the size of the old DMV debacle in the mid-1990’s which led to my appointment as the state’s first Chief Information Officer in 1995.

    While previous FI$CAL problems have resulted in ever accelerating budget increases, the Auditor’s latest report warns of an even more disturbing development over and above the 70% increase in budget, and now threatens new and even greater financial exposure.

    The State Auditor says:

    [State]  entities that have implemented FI$Cal struggle with producing financial statements on time and are unsatisfied with system performance, training and documentation, and technical support. ..some of the 64 entities scheduled to begin using FI$Cal in fiscal year 2018–19 may face similar challenges. Several of these entities represent financially significant portions of the State’s Comprehensive Annual Financial Report (CAFR) due to their relatively large size. Since the CAFR informs stakeholders—including credit rating agencies, which rate the State’s bonds—about the State’s financial position, FI$Cal’s problems with implementation and user training create a significant risk of the State experiencing the following negative outcomes:

    • could negatively affect credibility among investors, the public, and credit rating agencies, and potentially result in a lower credit rating for the State, which could ultimately cost taxpayers.
    • Most entities reported needing additional resources to assist with FI$Cal implementation and post‑implementation activities.
    • Some entities may not be able to use FI$Cal to meet federal reporting requirements necessary to receive mission‑critical federal funds.

    The report continues:

    We continue to be concerned about some aspects of CDT’s oversight of the project. CDT has consistently failed to publish its monthly oversight reports on time even during critical points leading up to the project’s largest release. Publishing these reports is a key way that CDT communicates to the project office and other stakeholders about potential problems that could negatively affect the project’s cost, schedule, and scope. The Statewide Information Management Manual requires CDT to issue its oversight reports by the 10th working day of each month for a project as critical as FI$Cal. However, similar to last year, CDT was late in submitting its monthly oversight reports throughout 2018. In fact, CDT did not publish its May 2018 oversight report until two weeks after it was due—which happened also to be one day after the steering committee unanimously approved the decision in late June to move forward with the implementation of all 64 entities in the July 2018 release.

    In this report, the IPO escalated its previously expressed concerns and indicated that the project is at significant risk, in need of immediate corrective action, and had a low probability of realizing the full scope of the July 2018 release. It also reported that the project office had still not sufficiently addressed all of the conditions CDT established for approving the project’s most recent SPR, including the need to develop a contingency plan for addressing risks associated with the July 2018 departmental implementation.

    The IPO also reported significant risks in the areas of time, resource, and risk management and recommended that the steering committee consider delaying the 2018 departmental implementation until issues related to month‑end and year‑end processing are resolved and stabilized. As the oversight entity for the State’s information technology projects and a member of the FI$Cal steering committee, CDT has a key role in overseeing the FI$Cal project and informing stakeholders of its concerns. However, in the two steering committee meetings in June that led up to this decision, the CDT representative did not share any specific information about its significant concerns when oversight entities were asked to comment. Instead, the representative indicated that CDT fully supported the decision to proceed with the July 2018 release. While it is unclear to what extent this untimely report, or concerns raised by CDT, would have affected the steering committee’s June 27, 2018, decision to move forward with implementing all 64 entities, these omissions hindered the committee’s ability to make informed decisions that fully accounted for all potential risks involved. A chief with CDT’s project approvals and oversight branch stated that, given the size and complexity of the project, these reports require additional review from CDT management to ensure sufficient levels of detail as well as accuracy of the reports. He further stated that CDT responds to comments from the project office prior to the report’s release.

    Although neither CDT’s oversight concerns nor the project office’s failure to meet SPR conditions were discussed at the steering committee meetings leading up to the July 2018 FI$Cal release, he stated that the project office was already aware of the issues from prior meetings between project leadership and CDT. Nonetheless, we question the inconsistency between CDT’s oversight reports and discussions at critical project meetings. In addition, CDT’s website continued to award an overall satisfactory rating as of the end of June 2018, indicating that no corrective action was necessary for the FI$Cal project. CDT’s actions are contradictory to its report findings and a disservice to stakeholders who rely on timely and accurate information.

    This report coupled with the Bee’s latest disclosure that IT problems lie at the heart of the ridiculous DMV lines across the state, Real ID isn’t the only problem with California’s DMV, should make any incoming administration weary about having billion dollar IT disasters dropped in its lap, especially here in the Home of Silicon Valley.

    Please read them both.


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