Financial Management:

Additional Actions Needed to Improve Federal Financial Management Systems

AFMD-90-14: Published: Apr 27, 1990. Publicly Released: Apr 27, 1990.

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GAO reviewed efforts by the Office of Management and Budget (OMB) and the Department of the Treasury to improve the federal government's financial management operations.

GAO found that: (1) due to the lack of a governmentwide financial management plan to help guide and control their efforts, agencies struggled in developing financial systems; (2) in April 1989, OMB began developing a governmentwide financial management improvement plan; (3) the Financial Management Service's (FMS) Federal Agency Financial Systems Program helped in furthering governmentwide improvements in financial management systems, but the program still needed improvements; (4) program officials believed that insufficient resources hindered their efforts to accomplish their objectives; (5) 2 years after the program's establishment, there were only eight program staff regulating the entire federal government; (6) FMS did not develop a comprehensive strategy defining program objectives; (7) Treasury's plans did not rank program objectives or identify milestones for accomplishing them; and (8) a comprehensive strategy would provide agencies with direction and focus and would be an integral part of an OMB long-range financial management plan.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Subsequent to the issuance of this report, Congress passed the CFO Act in November 1990. The act gave OMB broad, new authority and responsibility for directing federal financial management, modernizing the government's financial management systems, and strengthening financial reporting. The act also established a new Office of Federal Financial Management in OMB that assumed the role of the Federal Agency Financial Systems Program in carrying out these governmentwide responsibilities.

    Recommendation: The Director, OMB, and the Secretary of the Treasury, together, should clarify the role of the FMS Federal Agency Financial Systems Program. The Director, OMB, should then ensure that FMS is provided sufficient resources to effectively fulfill the program's role.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  2. Status: Closed - Implemented

    Comments: OMB has worked with FMS to address the role of the Federal Agency Financial Systems Program, and will ensure sufficient resources are made available. OMB has added a senior systems manager to its staff and significantly upgraded its ability to implement the Price Waterhouse review methodology. The OMB CFO Act report indicates that OMB and Treasury databases will be integrated.

    Recommendation: The Director, OMB, and the Secretary of the Treasury, together, should clarify the role of the FMS Federal Agency Financial Systems Program. The Director, OMB, should then ensure that FMS is provided sufficient resources to effectively fulfill the program's role.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  3. Status: Closed - Implemented

    Comments: OMB was required by the Chief Financial Officers Act to report annually to the Chairmen, House Committee on Government Operations and the Senate Committee on Governmental Affairs. In April 1992, OMB issued a federal financial management status report and 5-year plan, which addressed progress and problems in resolving critical aspects of federal financial management.

    Recommendation: Because of continued congressional interest in improving the federal government's financial management systems, the Director, OMB, should report annually to the House Government Operations Committee and the Senate Governmental Affairs Committee on the progress in implementing, and any impediments to achieving, the objectives outlined in the long-range, governmentwide financial management improvement plan being prepared by the CFO Council.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  4. Status: Closed - Implemented

    Comments: OMB was required by the Chief Financial Officers Act to obtain agencies' 5-year financial management systems plans that will identify budgetary needs. This action depended on OMB submission to Congress of its governmentwide plan by February 1992. OMB guidance for developing agencies' CFO financial management plans directs agencies to identify implementation costs in their annual budget requests.

    Recommendation: The Director, OMB, should direct the CFO Council to ensure that the resources needed for implementing the governmentwide financial management improvement plan are identified in each agency's budget.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  5. Status: Closed - Implemented

    Comments: OMB was required by the Chief Financial Officers Act to submit to Congress a financial management plan and a financial management status report by February 1992. The plan, issued in April 1992, includes milestones and other actions necessary for implementation.

    Recommendation: The Director, OMB, should direct the CFO Council to establish realistic milestones to gauge progress achieved under each planned objective and update the governmentwide financial management improvement plan based on that examination.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  6. Status: Closed - Implemented

    Comments: The Chief Financial Officers Act required OMB to submit to Congress a financial management status report and a governmentwide financial management plan by February 1992. The plan, which was issued in April 1992, included an objective to identify personnel needs and resources and estimate the costs of implementation, which agencies were to develop as part of their individual implementation plans. Since then, OMB has provided $604 million in 1992 and $625 million in 1993 for improving agency financial systems.

    Recommendation: The Director, OMB, should direct the Chief Financial Officer (CFO) Council to develop and implement a long-range, governmentwide financial management improvement plan and ensure that the plan includes reasonable estimates of the costs and resources needed to implement the plan.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  7. Status: Closed - Implemented

    Comments: Officials from both Treasury and OMB have worked with the CFO Council on a strategy for reviewing agencies' financial systems. In 1990, OMB and FMS performed intensive on-site system plan reviews at five agencies. In 1991, OMB held meetings with agencies to discuss their 5-year system plans. The OMB governmentwide financial improvement plan discusses the strategy for improving monitoring.

    Recommendation: Once the FMS Federal Agency Financial Systems Program's role is clearly defined, the Secretary of the Treasury, in consultation with OMB, should issue a comprehensive financial management systems strategy for the program. This strategy should be in concert with the long-range, governmentwide financial management improvement plan being developed by OMB and the CFO Council. Once developed, the strategy should be communicated to all federal agencies.

    Agency Affected: Department of the Treasury

 

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