Financial Management:

Agencies Face Many Challenges in Meeting the Goals of the Federal Financial Management Improvement Act

T-AIMD-00-178: Published: Jun 6, 2000. Publicly Released: Jun 6, 2000.

Contact:

Gloria L. Jarmon
(202) 512-3000
contact@gao.gov

 

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

Pursuant to a congressional request, GAO discussed the challenges most of the major federal department agencies face in meeting the basic expectations laid out in the Federal Financial Management Improvement Act of 1996 (FFMIA), focusing on: (1) problems with agencies' systems that prevent them from meeting the expectations of FFMIA; (2) how agencies are able to receive a "clean" audit opinion on their financial statements even though their financial systems do not comply with FFMIA's requirements; and (3) key elements in addressing these systems problems, including the importance of sound information technology investment and control processes.

GAO noted that: (1) FFMIA requires auditors performing annual financial statement audits of the Chief Financial Officers (CFO) Act agencies to report whether agencies' financial management systems comply with the act's requirements; (2) the act defines financial management systems as the financial systems and financial portions of mixed systems necessary to support financial management, including automated and manual processes, procedures, controls, data, hardware, software, and support personnel dedicated to the operation and maintenance of systems functions; (3) based on GAO's review of fiscal year 1999 audit reports for the 20 agencies reported to be noncompliant with FFMIA, GAO identified five primary reasons: (a) nonintegrated financial management systems; (b) inadequate reconciliation procedures; (c) noncompliance with the U.S. Government Standard General Ledger; (d) lack of adherence to federal accounting standards; and (e) weak security over information systems; (4) although the number of agencies receiving unqualified audit opinions is increasing, the financial management systems of most agencies continue to be noncompliant with FFMIA's requirements; (5) in many cases, agencies spent considerable resources to obtain a clean opinion because their financial statements could not be produced from their financial systems; (6) key elements for improving financial systems include: (a) plans to replace or overhaul agencies' systems; (b) information technology investment and security guidance; (c) Joint Financial Management Improvement Program software certification; and (d) systems requirements documents and checklist; (7) the federal government's size and complexity and the discipline needed to overhaul or replace its financial management systems presents a significant challenge, not simply a challenge to overcome a technical glitch, but a demanding management challenge that requires attention from the highest levels of government; and (8) however, with concerted effort, the federal government can make progress toward improving its financial management systems and thus achieve the goals of the CFO Act and provide accountability to the nation's taxpayers.

Jul 30, 2014

Jul 9, 2014

Jun 19, 2014

May 30, 2014

May 15, 2014

May 13, 2014

May 12, 2014

May 2, 2014

Mar 27, 2014

Looking for more? Browse all our products here