Auditor: California’s billion-dollar accounting software project remains behind schedule

(CN) – In what has become an eternal refrain, an ambitious billion-dollar effort to update California’s outdated accounting system has once again fallen behind, hampering the state’s ability to produce accurate financial reports in a way that could hurt her credit rating and make it difficult for her to obtain federal funding.

“The project office will not complete the project on its scheduled end date of June 2022,” California State Auditor Michael Tilden said in a new report highlighting the latest setbacks.

Developers began work on California’s financial information system, dubbed FI$Cal, in 2007 with the goal of streamlining accounting and procurement processes for the state’s 152 departments. Project leaders named FI$Cal as “one of the largest and fastest growing IT companies” in state history.

FI$Cal has been launched in phases over the past few years and the state says it has helped eliminate hundreds of old legacy systems and finally brought the agencies together under one accounting roof. The new program is used by the state treasurer’s office to track the state’s more than $2 trillion in annual banking transactions, while the governor and legislature use it during budget negotiations.

But the project has been plagued by persistent delays and cost overruns. While the design and development phase officially began in 2012, the state has routinely pushed back the completion deadline and bumped projected costs to $1.1 billion, according to the Office of the Legislative Analyst. .

“Even when the project office officially declares the project complete, it will not have implemented all of the functionality promised, and this will likely incur significant expense,” Tilden’s report states.

Last July, FI$Cal Director Miriam Barcellona Ingenito released an update celebrating the critical onboarding milestone at the Office of the State Comptroller.

“This is a huge moment in FI$Cal history, and one that the state can be very proud of,” Ingenito wrote.

But the auditor’s report notes that lack of staff and resources at the State Comptroller’s Office prevented it from verifying annual state financial statement data produced by FI$Cal against its old system. – a critical delay to complete the project by June 2022.

“In July 2021, the state comptroller was expected to begin verifying data for fiscal year 2020-21 with support from the project office. However, this effort is overdue. According to the former Chief Deputy Director of the Project Office, who left the Project Office in November 2021, a shortage of resources at the State Comptroller level is the primary reason for the delay,” Tilden says. “The State Comptroller’s staff team leader assigned to the project confirmed that staffing shortages, along with the delay in closing the state’s fiscal year 2019-2020 financial statements, caused a delay in data verification.”

But, the report adds, this is just the latest “of many completion dates the project office has missed” since June 2016. A staffing shortage at the FI$Cal office threatens its ability to maintain the new software when vendors currently supporting the projects are inevitably pulling out.

“The likelihood that the volume of work to maintain FI$Cal will increase in the near future as more agencies use the system, creates the risk that the department may not be able to provide all support and maintenance functions needed after the project’s official end date,” says Tilden.

Despite efforts by the California Department of Technology to recruit new IT employees, the project has seen a 15% vacancy rate over the past five years, which the department attributes to fierce competition for security-savvy employees. information and financial business processes.

“Staffing challenges are not unique to the department – ​​many sectors of the economy are currently struggling to hire and retain staff amid the ongoing Covid-19 pandemic, Tilden says. “However, the department will need to mitigate these challenges as it prepares to fully manage the maintenance of FI$Cal.”

From its inception, FI$Cal was intended to help the state produce more timely reports on its finances. But Tilden says California has failed for the past three years to meet the federal government’s April 1 deadline to release its financial statements for audit, putting billions of dollars in federal funding at risk.

The agencies attributed their delay to difficulties learning the new software. In response, the Department of Technology launched the FI$Cal Learning Center to provide online training to state agencies.

“While critical, these critical efforts have not yet resulted in all agencies submitting timely financial reports to the state comptroller,” Tilden’s report said, adding that the auditor will continue to monitor the project in under the auditor’s “high risk” program.

In an email, FI$Cal spokesperson Lisa Gray said while there are ongoing issues, FI$Cal has also had successes, including making spending data more transparent. for the public.

“Today, FI$Cal serves as the departmental accounting system for 151 departments and approximately 15,000 users processing $436 billion in expenses each year. The Office of the State Treasurer’s functionality manages approximately $3.3 trillion of state government banking transactions every year,” she said. , our Open FI$Cal website allows the public to view spending data for every department in the system, increasing government transparency. Departments pay their bills and balance their budgets daily using the FI$Cal system.

“We recognize, however, that there are challenges that arise from such a large and complex system and we are working diligently to resolve them,” Gray added. “We look forward to continuing to work with departments, the State Auditor’s Office and our partners in the Legislature to ensure that the FI$Cal system serves its purpose.

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