GAO drafts financial management guide

The use of business-oriented financial management systems is a key element in agencies' efforts to comply with federal management and performance laws, according to the General Accounting Office.

In a study of nine private- and public-sector finance organizations, GAO found that the use of technology is one of seven primary factors in successfully building an efficient and effective finance organization that supports an agency overall.

"The leading finance organizations we visited enhanced their capabilities for providing meaningful information to decision-makers by developing management information systems that support the partnership between finance and operations, re-engineering processes in conjunction with implementing new technology and translating financial data into meaningful information," GAO stated in the draft version of "Executive Guide: Creating Value Through World-Class Financial Management."

GAO last week released the draft because it believed agencies needed governmentwide guidance on the issue of financial management. Through case studies and suggested strategies, the guide is intended to help agencies better understand the results generated by programs. By better understanding the relationship between results and the amount of money spent on a program, agencies may have a better understanding of how to fulfill the requirements of legislation such as the Government Performance and Results Act (GPRA) of 1993, which ties agencies' performance to the budgeting process.

"The same types of things kept being raised as contributing to why certain things work or don't work," said Linda Garrison, assistant director of GAO's Accounting and Information Management Division. "When you hear it that often, it has much more weight."

But technology is only a tool to help bring the information about programs to the people making the decisions, government managers said.

"This is what we've been saying all along the line," said Patrick Smith, executive director of the Financial Management Systems Service Center (FMSSC) at the General Services Administration. "What it's saying is that the [chief financial officer's] role is changing. The CFO is becoming the financial manager instead of the accountant, and there is a big difference between the two."

GAO found that many agencies do not yet have in place the systems or the processes that would enable executives to use financial data to make informed decisions. But steps that are being taken to make it easier for agencies to acquire and use financial management systems, including a new revision to the Office of Management and Budget's Circular A-127, which regulates federal use of such systems, may make a difference, Garrison said.

Under the revision approved by OMB this month, agencies no longer have to purchase core financial management systems from the GSA Financial Management System Software schedule.

After the schedule expires Sept. 30, agencies may instead purchase systems from any contract as long as the system has been certified by the Joint Financial Management Improvement Program (JFMIP). GSA, while it no longer will be in charge of all financial management system procurements, recently created the FMSSC to serve as a center of expertise and best practices for acquiring and implementing financial and other enterprise resource planning system functions.

This is the latest step in a long-range plan by JFMIP, OMB, GSA, the Treasury Department and the CFO Council to improve the integration of financial and program information systems. The group also is working on re-engineering agency business processes to fit commercial off-the-shelf (COTS) systems instead of modifying the software to fit out-of-date processes - another point outlined by the GAO guide.

COTS systems are less expensive and are designed to include best practices that agencies should be using to comply with GPRA, according to the guide. But GAO found that most agency attempts to use COTS systems have been hampered by federal refusal to change their business processes.

The Department of Veterans Affairs is working hard to avoid such a problem in its acquisition of a new core financial management system. Agencywide deployment of the system is planned to begin at the end of this year but not until there has been a complete revamping of current business processes to put in place consistent practices across the agency, said Edward Powell, assistant secretary for financial management at the VA.

"I think government makes a very serious mistake in [modifying a COTS system]," he said. "You don't do the re-engineering of your processes that needs to be done; you just end up computerizing an existent process just because you like the way that process works."

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