A Message from the Chief Financial Officer

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This is our first Performance and Accountability Report. In it, we have integrated financial and results-oriented performance information about our agency. The Report contains our audited consolidated financial statements, which we prepared to meet the requirements of the Government Management Reform Act of 1994, and our annual performance report, as required by the Government Performance and Results Act of 1993.

We have been entrusted with more than a half a trillion dollars in assets that belong to our primary stakeholders — Federal employees, retirees and their survivors and dependents. We recognize our accountability for these resources, which encompasses safeguarding them from fraud, waste and mismanagement and providing a timely and accurate accounting of how we use them. Consequently, I am very pleased to be able to report that the independent public accounting firm of KPMG LLP has issued an unqualified or "clean" opinion on both our consolidated financial statements and on the “stand-alone” statements of the Retirement, Health Benefits, and Life Insurance Programs. I believe this accomplishment reflects our commitment to fulfilling our stewardship responsibilities with sound financial management.

I am also pleased to report that we have made significant progress in addressing our material weaknesses in management control and nonconformances with Federal financial systems requirements. During fiscal year 2000, we resolved four material weaknesses and nonconformances relating to the Retirement, Health Benefits and Life Insurance Programs, and one relating to financial management documentation. We also made noteworthy progress toward the resolution of two other issues -- Health Benefits Program Enrollment and Premium Reconciliation and Fraud and Abuse in the Health Benefits Program.

While we have made important strides in financial management during the year, we know we have work left to do. We are addressing internal control and financial management systems issues relating to our Revolving Fund Programs and Salaries and Expense account. To resolve these, we are working to implement a new core financial management system in fiscal year 2003 that will meet all Federal requirements. In addition, we are working with our Investigations Service to streamline our processes in order to support the growth in their business volume.

Our accomplishments in financial management during fiscal year 2000, including the preparation of this Report, could not have been possible without the hard work of our financial, actuarial and audit staffs. I very much appreciate their professionalism and dedication.

Kathleen M. McGettigan
Chief Financial Officer
U.S. Office of Personnel Management