Report laments accounting systems

"Financial Management: FFMIA Implementation Critical for Federal Accountability"

Longstanding problems with federal financial systems make it difficult for agencies to produce reliable financial information and for agencies to make the proper association between projects and their results, a new report by the government's auditor says.

"The central challenge to producing reliable, useful and timely data throughout the year and at year-end is overhauling financial and related management information systems," the General Accounting Office report says.

Agencies have recognized the seriousness of their financial systems problems, the GAO report says, but many have a long way to go.

"In some cases, it could be years before corrective actions are completed," GAO said in the report, "Financial Management: FFMIA Implementation Critical for Federal Accountability."

"The size and complexity of many federal agencies and the discipline needed to overhaul or replace their financial management systems present a significant challenge," the report says.

Because of the poor condition of agency accounting systems, agencies must go through "extraordinary efforts" to produce annual financial statements, the report notes. "This is not a measure of financial management success and requires resources that could otherwise be better used to address underlying financial management systems and control problems."

Under the Federal Financial Management Improvement Act, agencies must prepare remediation plans describing actions they took or plan to take to improve systems. GAO found 16 of the 19 agencies it reviewed completed those reports in fiscal 1999 and that those reports had improved over fiscal 1998.

But 11 of the plans lacked important details describing corrective actions, and 10 plans did not disclose the type and amount of resources needed to execute the fixes, the report states.

GAO credits the Office of Management and Budget for improvements in financial systems. GAO, however, recommended that OMB hone its financial management guidance by addressing the differing interpretations of the meaning of "substantial compliance," the nature and extent of audit work necessary to assess compliance with FFMIA.

The report specifically notes that the Defense Department represents the government's most difficult challenge because at DOD, "financial management systems reform will have to be part of a broader initiative to transform its overall business processes that will take years to complete," the report notes.

About the Author

Christopher J. Dorobek is the co-anchor of Federal News Radio’s afternoon drive program, The Daily Debrief with Chris Dorobek and Amy Morris, and the founder, publisher and editor of the DorobekInsider.com, a leading blog for the Federal IT community.

Dorobek joined Federal News Radio in 2008 with 16 years of experience covering government issues with an emphasis on government information technology. Prior to joining Federal News Radio, Dorobek was editor-in-chief of Federal Computer Week, the leading news magazine for government IT decision-makers and the flagship of the 1105 Government Information Group portfolio of publications. As editor-in-chief, Dorobek served as a member of the senior leadership team at 1105 Government Information Group, providing daily editorial direction and management for FCW magazine, FCW.com, Government Health IT and its other editorial products.

Dorobek joined FCW in 2001 as a senior reporter and assumed increasing responsibilities, becoming managing editor and executive editor before being named editor-in-chief in 2006. Prior to joining FCW, Dorobek was a technology reporter at PlanetGov.com, one of the first online community centers for current and former government employees. He also spent five years at Government Computer News, another leading industry publication, covering a variety of federal IT-related issues.

Dorobek is a frequent speaker on issues involving the government IT industry, and has appeared as a frequent contributor to NewsChannel 8’s Federal News Today program. He began his career as a reporter at the Foster’s Daily Democrat, a daily newspaper in Dover, N.H. He is a graduate of the University of Southern California. He lives in Washington, DC.


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