Year 2000 Issues for Information Systems

Michigan Office of the
Auditor General
Thomas H. McTavish, C.P.A.
Auditor General

EXECUTIVE DIGEST #0759797
Year 2000 Issues for Information Systems

INTRODUCTION
This report, issued in February 1998, contains the results of our performance audit of the Year 2000 Issues for Information Systems, Year 2000 Project Office, Department of Management and Budget. This was our initial audit of the State's efforts to address the year 2000 problem. We plan to periodically determine the status of the State's year 2000 issues as the State makes progress in resolving these issues.

AUDIT PURPOSE
This financial audit was conducted as part of the constitutional responsibility of the Office of the Auditor General. Performance audits are conducted on a priority basis related to the potential for improving effectiveness and efficiency .

BACKGROUND
The year 2000 problem is the result of the way dates are stored and computed in many computer systems. For the past several decades, programmers typically used two digits to represent the year to save data storage and processing costs, which were expensive at the time. However, in this format, the year 2000 is indistinguishable from the year 1900 because both are represented as "00." As a result, most computer systems that use two-digit years will not work beyond the year 1999 if corrective action is not taken. Most State agencies have computer programs that use the two-digit years; therefore, those programs will not correctly process dates beyond December 31, 1999. Effective dates for benefits, license expirations, tax payments, personnel/payroll transactions, and other transactions are all potentially affected by this problem.

In response to the year 2000 problem, the Department established the Year 2000 Project Office, which reports to the State's chief information officer. The mission* of the Year 2000 Project Office is to oversee and facilitate agencies in achieving year 2000 operability for their critical computer applications by December 31, 1998 and for their other computer applications by December 31, 1999.

For fiscal year 1996-97, the Year 2000 Project Office was appropriated $55.6 million. Act 114, P.A. 1997, stipulates that the unexpended portion of the appropriation is to be considered a work project appropriation and any unencumbered or unallotted funds are to be carried over into the succeeding fiscal year. The Year 2000 Project Office was in the process of completing estimates for project costs, and it expected to finalize them by January 1, 1998.

AUDIT OBJECTIVES AND CONCLUSIONS

Audit Objective: To assess the effectiveness of the Year 2000 Project Office in implementing key processes to achieve year 2000 compliance.

Conclusion: Our assessment , for this initial audit of Year 2000 issues, disclosed that the Year 2000 Project Office was reasonably effective in implementing key processes to achieve year 2000 compliance. The Office has completed, or has plans to complete, all key processes within the awareness and assessment phases of the project. However, we noted a reportable condition regarding contingency plans and system assessments (Finding 1).

AUDIT SCOPE AND METHODOLOGY
Our audit scope was to examine the program and other records of the Year 2000 Project Office and of various State agencies. Our audit was conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States and, accordingly, included such tests of the records and such other auditing procedures as we considered necessary in the circumstances.

To accomplish our audit objective, we utilized a framework established by the U.S. General Accounting Office (GAO). This framework presents a structured approach to follow in planning, managing, and evaluating year 2000 programs. The framework is based on the work of the federal Best Practices Subcommittee of the Interagency Year 2000 Committee and incorporates guidance and practices identified by leading organizations in the information technology industry.

Our methodology included examination of records and activities of the Year 2000 Project Office for the period October 1996 through September 1997. We collected background information about the State's plans to address year 2000 issues. We conducted interviews with Office staff and other State agency personnel regarding the awareness and assessment of the year 2000 problem. We Our methodology included examination of records and activities of the Year 2000 Project Office for the period October 1996 through September 1997. We collected background information about the State's plans to address year 2000 issues. We conducted interviews with Office staff and other State agency personnel regarding the awareness and assessment of the year 2000 problem. We Our methodology included examination of records and activities of the Year 2000 Project Office for the period October 1996 through September 1997. We collected background information about the State's plans to address year 2000 issues. We conducted interviews with Office staff and other State agency personnel regarding the awareness and assessment of the year 2000 problem. We developed a checklist based on a framework established by the GAO to assess year 2000 issues. In addition, we evaluated and reported on the results of our data gathering and examination phase.

AGENCY RESPONSES
Our audit report contains 1 findings and 3 corresponding recommendations. The Department's preliminary response indicated that it agreed with the recommendations.

Full Audit Report - #0759797 - Year 2000 Issues for Information Systems

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This page was created on 3/12/98.


INTRODUCTION This report, issued in February 1998, contains the results of our performance audit of the Year 2000 Issues for Information Systems, Year 2000 Project Office, Department of Management and Budget. This was our initial audit of the State's efforts to address the year 2000 problem. We plan to periodically determine the status of the State's year 2000 issues as the State makes progress in resolving these issues.

AUDIT PURPOSE This financial audit was conducted as part of the constitutional responsibility of the Office of the Auditor General. Performance audits are conducted on a priority basis related to the potential for improving effectiveness and efficiency .

BACKGROUND The year 2000 problem is the result of the way dates are stored and computed in many computer systems. For the past several decades, programmers typically used two digits to represent the year to save data storage and processing costs, which were expensive at the time. However, in this format, the year 2000 is indistinguishable from the year 1900 because both are represented as "00." As a result, most computer systems that use two-digit years will not work beyond the year 1999 if corrective action is not taken. Most State agencies have computer programs that use the two-digit years; therefore, those programs will not correctly process dates beyond December 31, 1999. Effective dates for benefits, license expirations, tax payments, personnel/payroll transactions, and other transactions are all potentially affected by this problem. In response to the year 2000 problem, the Department established the Year 2000 Project Office, which reports to the State's chief information officer. The mission* of the Year 2000 Project Office is to oversee and facilitate agencies in achieving year 2000 operability for their critical computer applications by December 31, 1998 and for their other computer applications by December 31, 1999. For fiscal year 1996-97, the Year 2000 Project Office was appropriated $55.6 million. Act 114, P.A. 1997, stipulates that the unexpended portion of the appropriation is to be considered a work project appropriation and any unencumbered or unallotted funds are to be carried over into the succeeding fiscal year. The Year 2000 Project Office was in the process of completing estimates for project costs, and it expected to finalize them by January 1, 1998.

AUDIT OBJECTIVES AND CONCLUSIONS Audit Objective: To assess the effectiveness of the Year 2000 Project Office in implementing key processes to achieve year 2000 compliance. Conclusion: Our assessment , for this initial audit of Year 2000 issues, disclosed that the Year 2000 Project Office was reasonably effective in implementing key processes to achieve year 2000 compliance. The Office has completed, or has plans to complete, all key processes within the awareness and assessment phases of the project. However, we noted a reportable condition regarding contingency plans and system assessments (Finding 1).

AUDIT SCOPE AND METHODOLOGY Our audit scope was to examine the program and other records of the Year 2000 Project Office and of various State agencies. Our audit was conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States and, accordingly, included such tests of the records and such other auditing procedures as we considered necessary in the circumstances. To accomplish our audit objective, we utilized a framework established by the U.S. General Accounting Office (GAO). This framework presents a structured approach to follow in planning, managing, and evaluating year 2000 programs. The framework is based on the work of the federal Best Practices Subcommittee of the Interagency Year 2000 Committee and incorporates guidance and practices identified by leading organizations in the information technology industry. Our methodology included examination of records and activities of the Year 2000 Project Office for the period October 1996 through September 1997. We collected background information about the State's plans to address year 2000 issues. We conducted interviews with Office staff and other State agency personnel regarding the awareness and assessment of the year 2000 problem. We Our methodology included examination of records and activities of the Year 2000 Project Office for the period October 1996 through September 1997. We collected background information about the State's plans to address year 2000 issues. We conducted interviews with Office staff and other State agency personnel regarding the awareness and assessment of the year 2000 problem. We Our methodology included examination of records and activities of the Year 2000 Project Office for the period October 1996 through September 1997. We collected background information about the State's plans to address year 2000 issues. We conducted interviews with Office staff and other State agency personnel regarding the awareness and assessment of the year 2000 problem. We developed a checklist based on a framework established by the GAO to assess year 2000 issues. In addition, we evaluated and reported on the results of our data gathering and examination phase.

AGENCY RESPONSES Our audit report contains 1 findings and 3 corresponding recommendations. The Department's preliminary response indicated that it agreed with the recommendations.