Figure 1
Despite Increasing Costs, the FI$Cal Project Will Not Complete Certain Key Features Until After the Official Project End Date
A chart that shows how project plan updates removed key features from the prior project scope, even as the cost of the project grew during those updates. The chart highlights six key features—one of which was the full transition to FI$Cal for annual reporting—for which the governing entities deferred development until after the official project end date in a January 2018 project plan update. That update increased the project costs to $918 million. The chart identifies five more features, including loan accounting that an August 2019 project plan update also deferred. The estimated total project costs reached $1.06 billion during that update. Meanwhile, departmental accounting systems, budgeting, and procurement are anticipated to be complete by the official project end in June 2020.
Figure 2
FI$Cal Has Historically Not Met Target Completion Deadlines
A timeline that shows the project's history of not meeting target completion deadlines. A March 2012 project plan update set the original target completion date in 2016, but in January 2014 a new update extended the project completion deadline to July 2017. A December 2015 project plan update extended the completion deadline to July 2019. In August 2019, the most recent project plan update extended the project completion deadline to June 2020.
Figure 3
The Reported Project Budget Has Increased By More Than $400 Million Since 2012
A line graph showing how the project budget has increased by more than $400 million since a 2012 project plan update set the budget at slightly over $600 million. A 2014 project plan update increased the budget to over $650 million. A 2015 project plan update increased the budget to more than $900 million, with a 2018 update slightly increasing it again to $918 million. Finally, the most recent update in 2019 increased the budget to $1.06 billion, for a total increase of $446 million since 2012.
Figure 4
State Entities We Reviewed Could Incur More than $39 million in Unreported Costs Due to FI$Cal Implementation
A bar graph showing potential costs agencies anticipate to incur due to implementing FI$Cal. We identified $28.5 million in anticipated costs related to FI$Cal during this assessment: Over $4 million in fiscal year 2017-18 and before, and between $7 million and $9 million each year in fiscal years 2018-19, 2019-20, and 2020-21. Additionally, agencies expect future annual costs beyond that of $6.8 million per year. When added to the $10.5 million in anticipated costs identified in our August 2018 report, these total to more than $39 million in potential costs for entities implementing FI$Cal that are not reported in the FI$Cal project's financial documentation.
Figure 5
The State Faces Challenges Because of Weakened Financial Reporting Related to FI$Cal
A flow chart showing how entities using FI$Cal struggling to submit accurate and timely financial statements could eventually lead to an increase in borrowing costs. In fiscal year 2017-18, late and estimated financial reports from state agencies affected the State Controller's ability to produce timely annual financial statements. The State's audited financial statements were not ready by the bond disclosure deadline of April 1 and the State released unaudited statements instead; it could not produce audited statements until two months later. For fiscal year 2018-19 reports, more entities are submitting late reports and may continue to rely on estimates. The State may once again fail to produce audited statements by April 1, which could negatively affect the State's credibility among investors and increase the likelihood of a lower credit rating. Additionally, departments could submit reports that rely extensively on estimates, which could increase the risk of significant errors. If this occurs, our office may not be able to confirm the statements' accuracy and thus issue a modify audit opinion. Delays related to FI$Cal's implementation and reliance on estimates may impair the State's ability to attract investors or increase its borrowing costs.