Commonwealth Financial Management

Goal

The Commonwealth's central financial accounting system needs an upgrade to current technology. The current hardware and software is decades old, leading to reduced efficiencies, resource intensive "work-arounds" and limited ability to increase functionality. The system is also at risk for continued support as the equipment, application and support resources age.

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History

The Commonwealth Accounting and Reporting System (CARS) is the official financial accounting system of the Commonwealth. CARS was designed and constructed in the 1970's, underwent a significant upgrade in 1986 and another upgrade for Y2K. The Commonwealth's official financial accounting system is based on mainframe technology, uses primarily the outdated COBOL language, and stores information in a non-relational (flat file) proprietary database. It provides General Ledger (GL), Accounts Payable (AP) and receipting functionality.

CARS is operated, maintained and governed by the Department of Accounts (DOA). Investment decisions for maintenance and upgrades for CARS are conducted by the Commonwealth's Comptroller.

Due to CARS' limited functionality, the development of separate Agency financial accounting systems flourished in the 1990's. Today, most institutions of higher education, as well as large Executive Branch agencies such as VDOT, VEC, and VSP, operate their own financial accounting systems; in total 127 entities have interfaces with CARS. These systems provide accounting information to CARS through a non-industry-standard interface. Only 61 of the over-100 Executive Branch agencies use CARS as their primary financial application.

In 2006, the Commonwealth entered into a public-private partnership agreement with CGI, a private IT service provider, to upgrade and transform the state's current information technology systems and develop statewide enterprise applications. Additionally, in 2006 the General Assembly created the Virginia Enterprise Applications Program (VEAP), to oversee the modernization of the Commonwealth administrative systems.

In 2008, the Virginia Department of Transportation, in collaboration with VEAP and the Department of Accounts, proposed development of a new financial accounting system to meet the needs of VDOT and the Commonwealth. The new system will provide a base from which the Commonwealth can replace CARS. The current project to replace these systems, first at VDOT, then at DOA is a critical initiative.

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Current Efforts

In July 2009, Accenture was awarded a system integration contract to develop a financial accounting system using Oracle's PeopleSoft software. In concert with this award, the Commonwealth purchased an Enterprise License Agreement (ELA) for components of PeopleSoft. The ELA provides the financial and human resource software licenses necessary to support Executive, Legislative and Judicial Branch agencies who are not already utilizing Oracle or PeopleSoft Enterprise Resource Planning (ERP) software.

This modernization initiative is called the Cardinal Project. The project consists of two parts. Part 1 is the delivery of a full financial application to replace VDOT's current system and is scheduled for delivery in June 2011. Part 2 is the delivery of a financial application for use by the Department of Accounts (fiscal office only) in June 2012. Due to funding constraints, the DOA application will be implemented as a "base" financial system, having the same functional capability currently contained within CARS today. This base functionality will serve as the foundation for enterprise financial accounting systems, excluding budget development. Over time, its functional capability will be expanded to meet additional agency needs.

Modern ERP systems provide numerous benefits, including improved management, analysis, reporting and integration with existing financial systems. Implementation of any ERP presents risk, as well as rewards. VDOT, DOA and EAD are working closely with business stakeholders across the Commonwealth to address and mitigate the risk of this initiative.

DOA and EAD recognize the need for phases beyond Part 2. Part 3, which is not included in the current Accenture statement of work (but is allowed for in the contract), will provide data migration, training, and roll-out of the new Cardinal financial accounting application to the remaining 136 entities that rely on CARS for financial accounting. Additionally, Part 3 will provide a standard interface for exchanging data with those agencies that operate their own financial application, e.g., VSP, VEC, etc. Detailed planning for Part 3 has not yet been conducted. Additional functionality, beyond GL, AP and receipting, to allow for further consolidation of agency financial systems into Cardinal is envisioned for Part 4 and beyond.

VDOT is providing $50M for Part 1. EAD is providing $8M for Part 2. Furthermore, EAD has allocated an additional $4M for Part 3, but significantly more funding will be necessary to complete this phase of the project.

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Future Efforts

Planning for Part 3 is in development.

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Other Strategic Challenges

Governance of this new enterprise system has not yet been finalized. The Executive Branch, along with staffers from the Auditor's office, Joint Commission On Technology and Science (JCOTS) and staffers from the General Assembly have been working on a Governance model to address the Commonwealth's applications. These efforts are promising and will lead to a viable governance model for the Commonwealth's applications, to include the central administrative enterprise applications.

Funding for Part 3 and long term funding for maintenance and operations (M&O) have not yet been finalized. (It is expected that maintenance and support for Parts 1 and 2 of Cardinal will cost $10M-$12M annually.) This issue is closely tied to ongoing governance efforts and will likely be one of the first issues to be addressed by any new governance structure. The objective is to develop and implement a funding mechanism that shares cost equitably across all areas and maximizes allowable Federal revenues.

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Contact

Susan McCleary at susan.mccleary@vita.virginia.gov, 804-225-2277

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