Failure of Oracle and Accenture:financial IT system of California for $1 billion is buggy

Financial information system of California (Financial Information System for California, FI$Cal) — the large-scale project transforming and integrating in one state systems in the field of planning of budgets, state procurements, accounting and management of money resources.

As project orderers the U.S. Department of the Treasury, the controller of the State of California, the local treasury and the agency of services of general purpose (Department of General Services) acted. The single system is constructed based on the solutions Oracle PeopleSoft for personnel management and Oracle Hyperion for budgeting automation.

Expenses on the project

Expense plans on creation of FI$Cal changed in process of project implementation. Initially in administration of the state called the amount of $1.6 billion. In 2014 California estimated costs at $673 million, in the 2017th — at $910 million. In April, 2019 the Californian auditor Elaine Howle specified investment volume — $918 million. The signed seven-year contract with Accenture should bring the companies of $298 million profit.

2019: A system is created with a large number of errors

In April, 2019 it became known that the uniform financial IT system in California is created with a large number of errors. Because of them investors call into question the accuracy of key indicators which they address during decision making on bond purchase.

When in October, 2018 the main body of California controlling finance implemented FI$Cal, it had problems of interaction of employees among themselves, and other departments had difficulties with marking of money transfers. Large volumes of transactions overloaded systems, and interaction of the old and new systems led to big data deferences in FI$Cal.^[1]

The accounting IT system of California which for $1 billion was created by Accenture and Oracle works with huge errors

The controller of California Betty Yee in April, 2019 expressed the intentions to suspend work of FI$Cal until all defects in a system are not eliminated. If not to make it, then, according to her, state bodies can provide inexact data on income for the annual financial report of the state — very important document indicating a financial status of California. The wrong data will be seen by auditors, and it can undermine investor confidence and even to lead to growth of percent on the credits, Yee reported.

Loss of investor confidence can negatively affect credit rating of the state that, in turn, can lead to value addition of the credits, decrease in rates of economic growth and assignment of additional expenses on taxpayers.

We want to be sure that we provide as much as possible exact shared financial state of the budget. It just gives to investors confidence in the fact that resources will be — she added.

The controller of California Bettie Yi insists on need to disconnect a single financial system until in it all defects are not eliminated

As notes the Bloomberg agency, problem implementation of the IT system became a striking example of a dilemma which the American cities and states through the whole country face, trying to update the low technologies. Even when they find financing for upgrade, difficulties of government functions and integration of the outdated software in many cases lead to delays and an overexpenditure of means.

By April, 2019 state bodies of California continue to be connected gradually to FI$Cal, and complete migration on a single system is planned for July, 2019, despite all defects in it.

However Bettie Yi warned legislature that if more and more departments pass to FI$Cal, and errors in a system will not be eliminated, risks of inexact reports will grow in 2018-2019 financial year. Auditors and controllers of the state work with project managers for problem solving.

The financial information system of California cost the state almost $1 billion

According to Yi, the release of the audit report for financial year which ended in June was postponed since March for April, 2019 partly because of errors in FI$Cal.

It is similar to the fact that we try to assemble the car, to repair it and to go. If to fix problems now, then it will be possible to save time and taxpayers money in the long term — said Yi and added that the financial wellbeing of California does not cause concern.

The auditor polled 17 agencies and managements which already passed to a single financial system. Many of them stated difficulties of integration which often resulted in bad technical results. Most of respondents said that they "are dissatisfied with system performance, training, documentation and technical support". Because of technical issues state agencies were forced to delay the publication of the financial statements.

In the audit report it is said that project implementation which by 2019 lasts more than 20 years "will demand more time and resources, than it was planned initially".

Elaine Houl recommended to turn on in Fi$Cal new indicators of the reporting from state agencies that will allow the state to start realistic planning of budgets after project completion. The auditor also recommended to the Californian technology department (California Department of Technology) which is one of the organizations controlling Fi$Cal to submit the new project report which reflects the updated changes in cost, volume and terms of implementation.

By April, 2019 passed 154 Californian state bodies to FI$Cal.

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