Easing financial reporting
- By Paula Shaki Trimble
- Mar 12, 2000
The failure of many agencies to receive a clean audit statement this month
has not — necessarily — been the lack of improvement to their financial
One of the requirements of the commercial off-the-shelf financial software
approved for federal use is to automate the production of financial statements.
Automating this process should help agencies create annual audited financial
statements, according to government officials and analysts.
Because the software allows agencies to integrate financial management
solutions used to track accounts used for personnel, payroll, budget, expenses
and sales, "you'll be able to produce financial statements quite quickly,"
said David Kleinberg, deputy chief financial officer at the Transportation
Agencies are required by the Chief Financial Officers Act of 1990 to
produce an annual financial statement for the previous fiscal year and have
it evaluated by their inspectors general by March 1. Only 11 of 24 major
federal agencies received clean opinions from their inspectors general on
their fiscal 1999 financial statements, according to information released
this month by the Senate Governmental Affairs Committee. The Transportation
Department is expected to receive a clean audit, bringing the total number
of agencies with a complete financial statement to 12.
Congress plans to hold hearings this month to examine the financial
accounting practices at each agency as well as governmentwide issues related
to financial accountability. Agency officials say a consolidated governmentwide
financial statement due by the end of this month will be complete.
The Office of Management and Budget originally set a goal of having
21 of 24 agencies receive clean opinions about their financial statements,
according to the June 1999 Federal Financial Management Status Report and
Five-Year Plan. On Feb. 7, OMB revised its goal to 18 clean opinions.
The Federal Financial Management Improvement Act of 1996 requires each agency
to install and maintain systems that comply with federal financial management
system requirements, applicable federal accounting standards and the U.S.
Government Standards General Ledger. OMB Circular A-127 also requires each
agency to establish and maintain a single, integrated financial management
Joshua Gotbaum, OMB executive associate director and controller, said
last month that agencies' priorities include continuing to upgrade financial
management systems with commercial technology, developing performance measures,
installing financial tracking systems and integrating performance and results
"The next generation of financial systems that will be available to
federal agencies will solve a lot of the problems that have haunted federal
financial officials for decades," said Warren Suss, a federal market analyst.
New systems will pull together financial and administrative information
throughout the enterprise, and financial statements will be immediately
linked into the financial side of the system, according to Suss. The commercial
market is turning its attention to the federal niche, he said.
Several agencies are integrating new financial management and human
resources systems, including the departments of Veterans Affairs, Treasury,
Interior, Energy, and NASA and the General Services Administration. DOT,
which was late in having its statement evaluated by its inspector general,
will start installing the Oracle Corp. financial application suite in mid-April
and expects it to be operational departmentwide by September 2001, Kleinberg
"The basic purpose for upgrading our accounting systems is for the regular
things, but it also gives you the financial statements in a nice and clean
way," he said.
Government officials acknowledged that new, integrated financial management
software systems will make producing the annual financial statements easier
but did not blame difficulty producing accurate or timely statements this
year on agencies' lack of automated financial systems.
"The IG just didn't start the audit on time," said Bert Edwards, CFO
at the State Department. "We've always had a late start. This year it's
April. The year before was August. The year before was October. I think
next year we'll be timely."
For the fiscal 2000 financial statements, the CFO Council hopes to have
clean reports from all major agencies, Edwards said.
The results of the audits carry some weight in determining the condition
of government agencies' records systems, said Patrick Smith, executive director
of GSA's Financial Management System Service Center.
Some legacy financial systems do not meet modern requirements for integrated
cost accounting systems, yet they produce clean reports every year, Smith
New systems will focus on the end results and will support planning
decisions, he said. The Government Performance and Results Act requires
that type of planning.
"We should be able to tell Congress what we're spending, how we're spending
it and what we're getting for it," Smith said.