Financial Management Systems:

Lack of Disciplined Process Puts Effective Implementation of Treasury's Governmentwide Financial Report System at Risk

GAO-06-413: Published: Apr 21, 2006. Publicly Released: Apr 21, 2006.

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For the past 9 years, since the first audit of the consolidated financial statements of the U.S. government (CFS), one of the major impediments to our ability to render an opinion on the CFS is that the federal government has not had adequate system, controls, and procedures to properly prepare the CFS. To address some of the internal control weaknesses identified in our audit report, Treasury began developing the Governmentwide Financial Report System (GFRS). The goal of this new system is to directly link information from federal agencies' audited financial statements to amounts reported in the CFS, a concept that we strongly support. We reported internal control weaknesses and GAO recommendations regarding the preparation of the CFS, along with progress made in this area in a separate report. This report provides our assessment of Treasury's ongoing effort to develop and implement GFRS and makes recommendations for reducing the risks associated with the development of GFRS.

Treasury's development of GFRS is a positive initiative and Treasury has made progress towards preparing the CFS based on agencies' audited financial statements, which has been one of our principal concerns. Treasury, though, has not yet effectively implemented the disciplined system development processes necessary to provide reasonable assurance that GFRS will meet all of its performance, schedule, and cost goals and result in the most efficient and effective means of preparing the CFS. Specifically, Treasury has not developed a concept of operations or any other document that adequately defines or documents the expected performance of GFRS; developed a detailed project plan and schedule through completion of GFRS; developed a budget justification for GFRS in its Capital Asset Plan and Business Case (commonly referred to as the Exhibit 300), as called for in Office of Management and Budget (OMB) Circular No. A-11; and implemented the disciplined processes necessary to effectively manage the GFRS project, which has contributed to usability problems encountered by its users. A disciplined software development and acquisition process can maximize the likelihood of achieving the intended results (performance) within established resources (costs) on schedule. In our work at certain other federal agencies, we have found that project deficiencies such as those we have identified with the GFRS project have led to a range of problems, from increased cost and reduced functionality to system failure. Going forward, it will be important that Treasury better mitigate its risks so that long-standing internal control weaknesses regarding the preparation of the CFS can be eliminated and, more importantly, Treasury ends up with a system that fully meets its and agencies' needs.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To reduce the risks associated with the development of GFRS, the Secretary of the Treasury should direct the Treasury Fiscal Assistant Secretary to follow the budget justification and reporting processes set out in OMB Circular No. A-11 and ensure that funding needs are fully addressed.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: During fiscal year 2008, we found that the Department of the Treasury implemented GAO's recommendation. Treasury followed the budget justification and reporting processes by including its Governmentwide Financial Report System (GFRS) as a component of another system development which integrated and streamlined several of Treasury's key systems.

    Recommendation: To reduce the risks associated with the development of GFRS, the Secretary of the Treasury should direct the Treasury Fiscal Assistant Secretary to develop and adopt a concept of operations that fully describes the functionality expected to be provided by GFRS and the material internal control weaknesses that are expected to be addressed by the system.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: During fiscal year 2008, we found that the Department of the Treasury implemented GAO's recommendation. Treasury prepared a concept of operations for its Governmentwide Financial Report System (GFRS) as a component of another system development which integrated and streamlined several of Treasury's key systems.

    Recommendation: To reduce the risks associated with the development of GFRS, the Secretary of the Treasury should direct the Treasury Fiscal Assistant Secretary to develop and effectively implement the disciplined processes necessary to properly manage the development of GFRS, including the development of a detailed project plan and schedule through the completion of the system.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: During fiscal year 2008, we found that the Department of the Treasury implemented GAO's recommendation. Treasury prepared (1) a risk assessment and mitigation plan for its Governmentwide Financial Report System (GFRS), (2) requirements documents describing the fiscal year 2007 enhancements, and (3) a project plan for GFRS.

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