Independent Audit of the National Aeronautics and Space Administration
Opening Statement By Chairman Brad Miller
Good afternoon. I am pleased to call to order this joint hearing of the Subcommittee on Investigations and Oversight and the Subcommittee on Space and Aeronautics. Our purpose is to examine the Fiscal Year 2009 audit of financial operations at the National Aeronautics and Space Administration.
NASA's independent auditors, the firm of Ernst & Young, decided not to render an opinion on whether the agency's financial documents fairly represented the financial condition of the agency in the last fiscal year. Such “disclaimed opinions” have been far too frequent in recent years at NASA.
Seventeen years ago, the Subcommittee on Investigations and Oversight held a hearing to discuss financial management at NASA. In those days, NASA had just been placed on the Government Accountability Office’s "high-risk" list for their lack of an appropriate financial management system. The bottom line was that NASA could not tell you with confidence what their bottom line was. At that hearing, the Subcommittee learned that NASA had apparently obligated to spend money without being sure it actually had the funds—which constitutes a violation of the Anti-deficiency act.
It only took about half as long to get to the moon as it has taken to clean up NASA’s financial performance, but three tries, hundreds of millions of dollars and the hard work of many NASA employees later they have shown definite improvement.
Our message today is encouraging – the disclaimer of this audit is very different from those NASA received earlier this decade. Today we are only discussing one material weakness not four. The significant remaining problem is that NASA has been unable to meet accounting requirements for setting an asset value on the Shuttle and Space Station programs. While any material weakness is disappointing, we have come a long way from the days when NASA could not say with confidence who had spent money on what, when. We are no longer talking about NASA accountants fixing records by arbitrarily making adjustments to accounts on the order of billions of dollars. In short, this is the best disclaimed opinion an agency could hope for.
And we have more good news: NASA received guidance in October from the Federal Accounting Standards Advisory Board on how to value the Shuttle and Station using estimates of value. This provides a glimmer of hope that NASA can produce a valuation that will pass muster with their accounting firm. It is my strong desire to see that happen, this fiscal year, so that if I see you the three of you this time next year, it will be at a Christmas party not an oversight hearing.. The difficulties in trying to value assets such as the Space Shuttle and Space Station, that have no real market value, leads people to believe NASA can’t keep its books. There was a time when that claim would have been true, but it is not true today and I hope that the auditing done next year will make that clear.
There are other matters that challenge NASA’s accounting operation—I am particularly concerned about the environmental liabilities issues that Ernst and Young mention. However, I expect all the parties before us today can work together to sustain the progress we have seen in NASA’s financial management system.
At this time, I will thank the witnesses for participating in the hearing and now yield to Chairwoman Giffords for her opening statement.
Opening Statement By Chairwoman Gabrielle Giffords
Good afternoon. I want to join Chairman Miller in welcoming our witnesses to this afternoon’s hearing. In the interest of getting to our witnesses as soon as possible, I will be brief in my opening remarks. I am a strong supporter of NASA, because I believe that it is one of the “crown jewels” of the nation’s R&D enterprise. Moreover, it can inspire, educate, and improve our society through its activities. I want to ensure that NASA receives the resources that it will need to carry out the many tasks that we have given it. At the same time, I feel the equal responsibility of ensuring that NASA is a good steward of those resources—resources which ultimately come from the American taxpayers. I take that responsibility seriously, as I know my colleagues do. That is why Chairman Miller and I called today’s hearing.
As many of you already know, NASA recently received the results of its annual independent financial audit. It once again received a “disclaimed” opinion. That is not what we want to see from NASA. At the same time, it was not totally a surprise, since NASA has been receiving disclaimed opinions for most of this decade. That’s the bad news, and one of the reasons we are holding today’s hearing.
We need to know why NASA got a disclaimed opinion, how NASA can get a clean opinion, and what NASA intends to do to ensure that it won’t get another disclaimer next year. However, I also wanted to hold this hearing because it is clear that there is a lot of good news to report on the financial management front at NASA.
It is clear from the auditor’s report and the NASA IG’s findings that NASA has made truly significant improvements in its financial management systems and practices. In short, after almost a decade of serious shortcomings in its approach to financial management, NASA is now very close to closing the books on those problems. That is very good news, and I hope that it will not get lost sight of today as we discuss what remains to be done.
Before I close, I would note that the dramatic improvement we have seen in NASA’s financial management didn’t just happen. It was the result of a lot of hard work by a dedicated team under the leadership of the former CFO, the Honorable Ronald Spoehel. He persevered in a thankless but ultimately very significant task, and he should take great pride in what he was able to accomplish. We often overlook the important role that individuals can play in making our government work better. Mr. Spoehel and his team were such individuals, and we owe them our gratitude. Dr. Robinson, I hope that you will build on the progress made to date as you assume the duties of CFO, and I am confident that you will do so effectively and efficiently.
With that, I again want to welcome our witnesses and I look forward to your testimony.
Witnesses
Panel
1 - Hon. Paul K. Martin
Inspector General National Aeronautics and Space Administration (NASA) National Aeronautics and Space Administration (NASA)
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2 - Mr. Thomas Howard
Deputy Inspector General National Aeronautics and Space Administration (NASA) * Mr. Howard is accompanying the Hon. Paul K. Martin. National Aeronautics and Spa
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3 - Mr. Daniel Murrin
Partner Assurance and Advisory Business Services Ernst & Young LLP Assurance and Advisory Business Services Ernst & Young LLP
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4 - Hon. Elizabeth Robinson
Chief Financial Officer National Aeronautics and Space Administration (NASA) National Aeronautics and Space Administration (NASA)
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