One Washington - Strengthening plans for reliable financial statements

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Some of Washington’s most essential state agency financial computer systems are “legacy” systems. This means they are out of date and in need of replacement. The State Legislature established the One Washington program to replace such aging software with Workday, a modern cloud-based enterprise resource planning (ERP) system. The state's IT project dashboard shows the planned cost to modernize the state’s administrative systems will be about $465 million.

The extremely complex, multiphase project spans years of planning and tasks. Among its challenges: transferring billions of dollars in budget data for more than 100 state agencies. This data feeds the state's financial statements; the statements are essential for maintaining transparency, accountability and fiscal stability in Washington. As it worked through the many necessary steps, One Washington decided to delay Workday's launch from June 2022 to July 2025.

This performance audit examined risks related to the accuracy and reliability of financial statements, during and after the transition to Workday. By conducting our review now, the audit can offer recommendations while risks are likely more easily addressed.

Read a two-page summary of the report.

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Key results

The audit identified several areas in which One Washington follows essential leading practices that will help ensure the successful transfer of financial data. Then, after Workday launches, state agencies will enter new data in Workday or in legacy systems that connect to it. As with transferred data, this new data must be classified correctly. Both One Washington and the Office of Financial Management (OFM) have taken steps to address risks related to classifying data correctly in Workday.

Successful implementation of Workday will rely in part on One Washington’s ability to adequately address three tasks. It must:

  • Properly train end-users
  • Share information about the new system with its partners and customer agencies
  • Address staff turnover and vacancies within the program

We found One Washington still faced challenges in all three areas. Additionally, state agencies must also address turnover and vacancies among their staff.

Finally, we identified two additional areas of risk to the project’s successful completion. First, the compressed time window for training agency staff to use the new system. This risk increases as multiple delays pushed back deliverables in the overall project schedule. Second, One Washington has a high-level strategy but has not yet formalized its contingency plans. Its strategy document includes a high-level description of the types of contingency plans One Washington plans to follow if issues arise that could jeopardize the success of system implementation or its functionality. But it has yet to finalize these plans.

Background

One Washington aims to modernize core administrative services currently running on decades-old computer systems. One of these systems, the Agency Financial Reporting System (AFRS), is the central hub for accounting information in state government. Each month, the state processes about $4.3 billion in payments through AFRS. AFRS processes about 2.9 million payment transactions annually. State agency employees use it and other software to produce accurate financial statements. The State Auditor's Office audits these statements regularly, as they serve as key indicators of the state's creditworthiness. When the transition to Workday is complete, 100 agencies will need to adopt new processes for managing the state’s finances.

However, putting a new system like Workday in place is complex. Such projects carry known risks that can have significant consequences. Poor data quality, for example, can lead to incorrect decision-making, operational inefficiencies and financial losses. Conducting an IT project of this magnitude requires managers to allocate project resources to mitigate risks effectively. They must balance the need for adequate training with ensuring system functionality. Inadequate skills in managing information technology (IT) projects and poor planning can lead to delays and increased costs.

Major risks addressed

One Washington has followed, or plans to follow, four leading practices to successfully transfer data to Workday. These practices will help ensure the data in Workday will be complete, accurate and usable. Working with Office of Financial Management (OFM), One Washington will:

  1. Identify data to be moved, to maintain data integrity and reduce unnecessary work 
  2. Analyze that data and map it to the new system
  3. Plan to isolate affected systems and backed up data before the transfer
  4. Test data before and after the transfer

One Washington and OFM have also taken steps to address three risks related to classifying new data correctly in Workday after it launches. The possible problems include:

  • Staff unfamiliar with the new system will make mistakes
  • The new system will lack automation to apply codes or identify errors
  • The new system might not effectively communicate with legacy systems at state agencies

To address these risks, One Washington is:

  • Automating processes
  • Implementing rules for transaction codes
  • Creating a map to translate data from older systems to the new Workday system

In addition, OFM is providing training for users at state agencies.

Insufficient training could pose risks

One Washington has taken several steps to help prepare agencies for the transition to Workday, but significant risks remain.

Successful implementation of Workday relies on One Washington’s ability to adequately train end-users. It must also communicate information about the new system clearly and effectively. And One Washington as well as participating agencies must be able to address turnover and position vacancies among staff.

One Washington has begun to prepare agencies for the transition to Workday. Activities so far including training on how to use Workday, and encouraging agency staff to take training in accounting fundamentals. It has also developed plans to continue to support agencies after Workday’s implementation.

Despite these steps, risks to the proposed training schedule remain. The time allocated for training on Workday might be insufficient. In addition, training is scheduled for a time when staff are busy with year-end activities such as reconciling accounts. Taken together, these issues mean people who must learn how to use Workday might lack capacity to do so.

Multiple delays could jeopardize launch

Multiple delays in the course of the project pose significant risks to One Washington's schedule. They particularly affect data migration from AFRS to Workday. These delays could jeopardize the planned launch on July 1, 2025. Additionally, delays in the system design put critical testing and end-user training at risk.

Further delays to project tasks could require One Washington to reduce or cut essential activities. Reducing some essential tasks raises the risk of inadequate system understanding and errors.

Unfinished contingency plans

One Washington and OFM have not yet finalized contingency plans for project failure or severe complications affecting financial statement accuracy. One Washington is working on a deployment plan with contingency strategies. The two main options under consideration should major problems arise:

  • Continuing with AFRS
  • Launching Workday despite issues and resolving them post-launch

As of July 11, 2024, the deployment plan awaited final approval. Until One Washington finalizes its contingency plans and its criteria for making a go/no-go decision, this area remains a project risk that could affect the state’s financial reporting accuracy.

Recommendations

The audit made recommendations to One Washington and OFM to address risks affecting the state’s ability to produce accurate and reliable financial statements. They included:

  • Finalizing contingency plans
  • Ensuring project resources are up-to-date and accessible to state agency users
  • Establishing clear go/no-go decision points in the project schedule to mitigate risks associated with prematurely launching the state’s new financial management system