Financial Management:

Federal Financial Management Improvement Act Results for Fiscal Year 1998

AIMD-00-3: Published: Oct 1, 1999. Publicly Released: Oct 1, 1999.

Additional Materials:

Contact:

Sally E. Thompson
(202) 512-3000
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a legislative requirement, GAO reviewed federal agencies' efforts to implement the Federal Financial Management Improvement Act (FFMIA), focusing on: (1) compliance of chief financial officer (CFO) agencies' financial systems with FFMIA's requirements; (2) whether CFO agencies' financial statements have been prepared in accordance with applicable accounting standards; and (3) agencies' plans to ensure that their systems comply with FFMIA requirements.

GAO noted that: (1) as a result of the audits of CFO agencies' financial statements and FFMIA's requirements, agencies are more aware of their financial management weaknesses and have started addressing them; (2) however, in terms of agency auditors' assessments of compliance with FFMIA, there has been little discernible progress since last year; (3) for the agencies whose fiscal year (FY) 1998 audit reports had been issued as of September 14, 1999, those whose financial management systems were not in compliance with FFMIA in FY 1997 were still not in compliance in FY 1998; (4) issues GAO identified in its report last year under FFMIA proved to be continuing significant challenges to agencies; (5) for FY 1998, auditors for 17 of 20 CFO agencies reported that the agencies' financial systems did not comply substantially with FFMIA's requirements; (6) although the statutory reporting deadline is March 1, the remaining four CFO agencies, as of September 14, 1999, had not yet issued their audited financial statements for FY 1998; (7) all four of the agencies were found by their auditors to be noncompliant with FFMIA for FY 1997; (8) auditors reported that the financial systems of 11 of these 17 agencies found to be noncompliant in FY 1998 were noncompliant with all three FFMIA requirements--federal financial management systems requirements, applicable federal accounting standards, and the Standard General Ledger; (9) auditors for 16 of the 17 agencies had reported for FY 1997 that the agencies likewise did not comply with FFMIA; (10) the seventeenth agency was reported as complying with the requirements of FFMIA in FY 1997 but was found to be noncompliant with systems requirements in FY 1998 due to auditors' interpretations of what constitutes substantial compliance; (11) further, in some agencies, factors that contributed to systems being found noncompliant increased, in part because agencies had problems implementing new accounting standards that became effective in FY 1998; (12) GAO's audit of the financial statements for the U.S. government for FY 1998 also showed that many agencies did not meet applicable accounting standards; (13) GAO issued a special series of reports this year that discusses major management challenges and program risks that must be addressed to improve the performance, management, and accountability of federal agencies; and (14) significant time and investment are needed for agencies to address and correct long-standing financial management systems problems.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: OMB's multidisciplinary approach to reviewing agency remediation plans appears to have prompted significant improvements in the plans. As discussed in its report, Financial Management: FFMIA Implementation Necessary to Achieve Accountability (GAO-03-31), GAO reviewed 15 FFMIA remediation plans prepared and submitted by federal agencies. GAO's review showed that 14 of the 15 plans contained detailed corrective actions for all instances of FFMIA noncompliance. Although only 5 of the 15 remediation plans specifically mentioned resource requirements, OMB has instructed agencies to include this information in their OMB Circular A-11 budget submissions. OMB Circular A-11, Section 52.2 states that the guidance in Section 52 outlines the information that must be provided on remediation activities to fulfill FFMIA requirements. Specifically, Section 52.4 directs officials to identify FFMIA remediation activities planned and underway and describe the resources, remedies, interim target dates, and officials responsible for bringing systems into substantial compliance with FFMIA. Although not available to GAO at the time of its report, GAO has subsequently reviewed 17 business cases from five different agencies. Sixteen of the 17 business plans were for financial management systems, although only nine of the plans addressed a FFMIA compliance area. However, all of the plans had a table (OMB Exhibit 300) listing the resources needed for the project. Finally, GAO's review showed that 14 of the 15 plans provided specific time frames for the corrective actions.

    Recommendation: The Director of the Office of Management and Budget should require the Deputy Director for Management, as part of the consultative process for future remediation plans, to work with the agencies to ensure that all remediation plans are prepared and submitted timely and to review the plans for: (1) detailed corrective actions that fully address reported problems; (2) inclusion of resource requirements; and (3) specific timeframes needed to implement and resolve problems.

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

  2. Status: Closed - Implemented

    Comments: All 24 CFO Act agency audits were completed by March 1, 2001.

    Recommendation: The Director of the Office of Management and Budget should require the Deputy Director for Management to work with the agencies to ensure that the agencies' financial statements are audited and issued by the March 1 statutory deadline.

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

 

Explore the full database of GAO's Open Recommendations »

Sep 20, 2016

Sep 6, 2016

Aug 19, 2016

Aug 12, 2016

Jul 29, 2016

Jul 28, 2016

Jul 13, 2016

Jul 11, 2016

Jun 13, 2016

Looking for more? Browse all our products here