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The Forest Service continues agency-wide financial management improvement efforts to demonstrate its ability to effectively and efficiently safeguard and manage public funds and property. Significant progress has been made toward this goal. Through the dedication of resources, the agency has resolved systemic issues, such as the use of a financial management system of records compliant with the Federal Financial Management Improvement Act (FFMIA) and Joint Financial Management Improvement Program (JFMIP) standards. Organizational changes have been made to ensure appropriate agency financial management oversight and monitoring. While significant systems and processes have been implemented, these efforts have also served to highlight a number of critical issues remaining. The Forest Service is committed to resolving outstanding financial management issues while implementing sustainable processes for the future.

Great success was achieved by the Forest Service in early FY 2003 as the agency successfully completed a full audit of its’ annual FY 2002 financial statements and subsequently received an unqualified or “Clean” audit opinion on its financial statements. This was the first time the agency completed a full audit of its financial statements. This unqualified opinion, although important, is only a first step in the Agency’s continuing effort to improve accountability. Additional work on business process design, operation, and control is still required to address the reportable conditions and material weaknesses indicated in the report. Sustained improvement is necessary to receive additional unqualified audit opinions that will ultimately enable the Agency’s financial management activities to be removed from General Accounting Office’s “high risk list.”

Additional success in reconciling key agency accounts has positioned the agency for continued financial management improvements. The agency is in its second year of using the Budget Formulation and Execution System (BFES) to improve its financial management (including incident financial management), and is developing a project work planning system (WorkPlan) to better manage its program and increase the accountability of its financial operations. The Forest Service will continue to improve internal controls over its reconciliation and accountability of fund balances, as well as accurate recording of property transactions. In addition, the Forest Service will reengineer agency programs and operations to provide improved management structures that help ensure accountability for results, including appropriate cost-effective controls.

The Forest Service will continue to improve its financial management by building on its recent successes. Through aggressive work and dedication of resources, this positive momentum will continue to produce valuable results like those that resulted in the unqualified audit opinion on the agency’s FY 2002 annual financial statements.