    Highlights of a Forum Convened by the Comptroller General of the
    United States: Improving the Federal Government's Financial
    Management Systems (16-APR-08, GAO-08-447SP).

    Since the enactment of key financial management reforms, such as
    the Chief Financial Officers (CFO) Act of 1990 and the Federal
    Financial Management Improvement Act of 1996 (FFMIA), the federal
    government has devoted significant resources to improving
    financial management activities and practices. At the same time,
    continuing attention is needed to address persistent,
    long-standing accountability problems and to redefine success for
    federal financial management. Successfully implementing financial
    management systems has been a particular challenge to the federal
    government. Many agency financial management systems do not
    routinely produce the accurate, timely, and meaningful
    information needed for management decision making. This forum
    brought together knowledgeable and recognized financial
    management leaders from the federal government, including the
    CFO, Chief Information Officer, and Inspector General
    communities, and selected other officials with extensive
    experience in financial management from both the public and
    private sectors. The forum addressed (1) the future of federal
    financial management, (2) applying lessons learned from federal
    financial management system implementations, and (3) strategies
    for transforming federal financial management culture. These
    highlights do not necessarily represent the views of the
    organizations that the participants represent, including GAO.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-08-447SP
        ACCNO:   A81708
      TITLE:     Highlights of a Forum Convened by the Comptroller General
    of the United States: Improving the Federal Government's
    Financial Management Systems
         DATE:   04/16/2008
      SUBJECT:   Accountability
    	     Budget activities
    	     Cost analysis
    	     Data integrity
    	     Federal agencies
    	     Financial analysis
    	     Financial institutions
    	     Financial management
    	     Financial management systems
    	     Knowledge, skills and abilities
    	     Lessons learned
    	     Performance measures
    	     Reporting requirements
    	     Strategic information systems planning
    	     Strategic planning
    	     Systems analysis
    	     Systems design
    	     Systems evaluation
    	     Systems integrity
    	     Systems management
    	     CG Forum

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    GAO-08-447SP

    This is a work of the U.S. government and is not subject to copyright
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    United States Government Accountability Office:
    GAO:

    April 2008:

    Highlights Of A Forum:

    Convened by the Comptroller General of the United States:

    Improving the Federal Government's Financial Management Systems:

    GAO-08-447SP:

    GAO Highlights:

    Highlights of a forum, GAO-08-447SP.

    Why GAO Convened This Forum:

    Since the enactment of key financial management reforms, such as the
    Chief Financial Officers (CFO) Act of 1990 and the Federal Financial
    Management Improvement Act of 1996 (FFMIA), the federal government has
    devoted significant resources to improving financial management
    activities and practices. At the same time, continuing attention is
    needed to address persistent, long-standing accountability problems and
    to redefine success for federal financial management. Successfully
    implementing financial management systems has been a particular
    challenge to the federal government. Many agency financial management
    systems do not routinely produce the accurate, timely, and meaningful
    information needed for management decision making.

    This forum brought together knowledgeable and recognized financial
    management leaders from the federal government, including the CFO,
    Chief Information Officer, and Inspector General communities, and
    selected other officials with extensive experience in financial
    management from both the public and private sectors. The forum
    addressed (1) the future of federal financial management, (2) applying
    lessons learned from federal financial management system
    implementations, and (3) strategies for transforming federal financial
    management culture. These highlights do not necessarily represent the
    views of the organizations that the participants represent, including
    GAO.

    What Participants Said:

    Forum participants expressed a wide range of views on key topics
    related to improving the federal government�s financial management
    capabilities and better integrating the role of financial managers to
    achieve 21st-century goals. An overarching theme from the forum was
    that financial management systems are a critical factor in agencies�
    ability to achieve the systematic measurement of performance; the
    development of cost information; and the integration of program,
    budget, and financial information for management reporting.

    Shaping the Future of Federal Financial Management:

    Many participants emphasized the need for financial management
    organizations to play a broader role as a strategic partner in meeting
    overall agency and program objectives. One of the themes emerging from
    the forum was that federal financial leaders should focus more of their
    efforts on comprehending and meeting program managers� financial
    information requirements and not simply on financial reporting
    compliance. According to participants, current obstacles to future
    success include limited resources, competing initiatives, and varying
    levels of commitment among some federal officials to address long-
    standing financial management issues.

    Lessons Learned from Financial Management System Implementations:

    The forum participants generally agreed that there has been a growing
    body of knowledge based on lessons learned from past federal financial
    management system implementation efforts. Consequently, managers
    possess a greater knowledge of the system design and implementation
    challenges they face, as well as possible solutions to these
    challenges. Experience related to financial management, human capital
    management, systems ownership, customization of commercial off-the-
    shelf software, and the purchase of shared services has provided useful
    insights that should help financial managers avoid some of the
    obstacles that impeded past projects. Financial managers also reported
    identifying various useful system implementation practices, including
    conducting independent verification and validation, and periodically
    reevaluating system implementation projects.

    Strategies for Transforming Federal Financial Management Culture:

    Participants stated that in order to remain relevant, the financial
    management community must be willing to proactively embrace change and
    focus on ways of proving value to the entire organization. Forum
    participants discussed the need to continually reexamine the roles of
    the CFO and other federal financial organizations. Participants
    suggested working toward a better integration of people, processes, and
    data. According to some participants, the key for CFOs in creating
    value for their organization is delivering information that makes a
    difference, including developing appropriate business metrics. To
    facilitate such a transformation, federal financial management human
    capital strategies could be better focused on attracting and retaining
    a new technology-savvy generation of financial professionals with 21st-
    century skill sets.

    To view the full product, click on [hyperlink,
    http://www.gao.gov/cgi-bin/getrpt?GAO-08-447SP]. For more information,
    contact Kay Daly at (202) 512-9095 or dalykl@gao.gov.

    [End of section]

    Contents:

    Letter:

    Introduction:

    Background:

    Shaping the Future of Federal Financial Management:

    Applying Lessons Learned from Past Federal Financial Management System
    Implementations:

    Strategies for Transforming Federal Financial Management Culture to
    Capitalize on Financial Management System Modernization Opportunities:

    Appendix I: List of Participants on December 11, 2007:

    Appendix II: Forum Agenda:

    Appendix III: Discussion Questions Sent in Advance of Forum:

    Appendix IV: Results of Electronic Survey:

    Appendix V: Contact and Staff Acknowledgments:

    Related GAO Products:

    Figures:

    Figure 1: Federal Financial Management Reform Framework:

    Figure 2: Comparison of 2007 Financial Statement Audit Results to FFMIA
    Assessments:

    Abbreviations:

    CFO: chief financial officer:

    CIO: chief information officer:

    COTS: commercial off-the-shelf:

    DHS: Department of Homeland Security:

    E-gov: electronic government:

    ERP: enterprise resource planning:

    FFMIA: Federal Financial Management Improvement Act:

    FMFIA: Federal Managers' Financial Integrity Act:

    FMLOB: financial management line of business:

    FSIO: Financial Systems Integration Office:

    GPRA: Government Performance and Results Act:

    IG: inspector general:

    IT: information technology:

    IV&V: independent verification and validation:

    JFMIP: Joint Financial Management Improvement Program:

    OMB: Office of Management and Budget:

    PA/PAS: Presidential Appointee/Presidential Appointee Senate Confirmed:

    PMA: President's Management Agenda:

    [End of section]

    United States Government Accountability Office:
    Washington, DC 20548:

    Introduction:

    Since the enactment of key financial management reforms such as the
    Chief Financial Officers (CFO) Act of 1990 and the Federal Financial
    Management Improvement Act of 1996 (FFMIA), the federal government has
    devoted significant resources to improving financial management
    activities and practices. There has been a recognition of the value and
    need for good financial management throughout government. At the same
    time, continuing attention is needed to address persistent, long-
    standing accountability problems and to redefine success for federal
    financial management. Effectively seizing these opportunities will be
    important to the federal government in transforming its operations to a
    world-class level.

    GAO previously identified the following success factors as instrumental
    in achieving the vision of becoming a world-class finance organization:
    culture, customer, leadership, organization, people, process, and
    technology. Improving the federal government's financial management
    technology is one of the key success factors that has been a particular
    challenge. Financial management systems are a critical factor in
    agencies' ability to achieve accountability and transparency in federal
    finances.[Footnote 1] Modernized systems can help agencies minimize
    errors, systematically measure performance, develop cost information,
    and integrate program, budget, and financial information for management
    reporting. This will be important as the federal government faces
    difficult fiscal challenges that will require reliable cost and
    performance information to support timely decisions on spending, and,
    at the same time, address potential fraud, waste, and abuse.

    Many agency financial management systems do not routinely produce
    accurate, timely, and meaningful information needed for management
    decision making. For example, auditors reported that 13 of the 24 CFO
    Act agencies were not compliant with FFMIA for fiscal year 2007. The
    inability of more than half of the 24 CFO Act agencies to comply with
    the requirements of FFMIA demonstrates that many agencies continue to
    struggle to implement modern financial management systems that
    effectively support program management.

    Recognizing that decision makers can benefit from a better
    understanding of the challenges and opportunities associated with the
    implementation of modern, effective federal financial management
    systems, GAO convened a forum on December 11, 2007. The forum provided
    a venue for bringing together 36 knowledgeable and recognized senior-
    level leaders from the federal financial management community to share
    insights on the critical challenges and opportunities for improving
    federal financial management system implementation efforts.
    Participants included individuals from the CFO, Chief Information
    Officer (CIO), and Inspector General (IG) communities. In addition,
    executive-level officials and experts with extensive experience in
    federal financial management from federal oversight agencies and a
    variety of private sector organizations that specialize in assessing
    and improving federal financial systems and internal controls also
    participated in the conference. (See app. I for a list of forum
    participants.)

    The forum addressed (1) the future of federal financial management, (2)
    applying the lessons learned from federal financial management system
    implementations, and (3) strategies for transforming federal financial
    management culture to capitalize on financial management system
    modernization opportunities. (See app. II for the forum's agenda.) This
    forum was designed to engage in a rich and substantive discussion, on a
    nonattribution basis, and to obtain a range of views on key issues
    affecting the role, organization, and focus of federal financial
    management and the related financial management systems. (See app. III
    for discussion questions provided in advance to participants that were
    used to help facilitate forum discussion.)

    This summary captures the ideas and themes that emerged at the forum,
    the collective discussion of forum participants, the responses to
    electronic survey questions (see app. IV for the electronic survey
    results), and comments received from participants based on a draft of
    this summary. The forum comments summarized do not necessarily
    represent the views of any of the organizations that these participants
    represent, including GAO.

    I would like to thank all the forum participants for taking the time to
    share their knowledge, insights, and perspectives. We at GAO will
    benefit from these insights as we carry out our work to improve federal
    financial management for Congress and the nation. The Joint Financial
    Management Improvement Program (JFMIP) Principals[Footnote 2] also have
    great interest in the points raised during this forum and plan to
    monitor progress on these issues. We look forward to working with the
    entire federal financial management community and the forum's
    participants on this and other important issues of mutual interest and
    concern in the future.

    Signed by:

    Gene L. Dodaro:
    Acting Comptroller General of the United States:
    April 16, 2008:

    [End of introduction]

    Background:

    The role of financial management in the federal government is evolving.
    Many agencies have made great strides toward generating more accurate
    and reliable annual financial statements. However, the process of
    preparing financial statements and subjecting them to independent audit
    is only the first step toward satisfying the mandate for a world-class
    financial management organization. To reap the full benefits of well-
    intended reforms, federal financial management organizations and
    operations must go beyond an audit opinion toward (1) establishing
    seamless systems and processes, (2) routinely generating reliable cost
    and performance information and analysis, (3) undertaking other value-
    added activities that support strategic decision making and mission
    performance, and (4) building a finance team that supports the agency's
    mission and goals.

    Billions of dollars have been spent on developing and implementing
    financial management systems throughout the federal government. These
    systems are intended to support the interrelationships and
    interdependencies between budget, cost, and management functions.
    Financial management systems are not only critical for meeting federal
    financial management requirements, but more importantly for producing
    complete, reliable, timely, and consistent financial information for
    use by the executive branch of the federal government and Congress in
    the financing, management, and evaluation of federal programs. Many
    efforts are under way to implement new core financial systems[Footnote
    3] and supporting financial management systems such as logistics,
    acquisition, and human resources. However, recent efforts to modernize
    financial management systems have often exceeded budgeted cost,
    resulted in delays in delivery dates, and did not provide the
    anticipated system functionality and performance. To help reduce those
    risks associated with acquiring and implementing financial management
    systems, the Office of Management and Budget (OMB) has undertaken a
    number of initiatives intended to address long-standing financial
    management problems.

    Federal Financial Management Legislative Framework:

    Efforts to improve financial management and associated systems can be
    traced back to a series of management reform laws passed by Congress
    over the past three decades. This series started with the Federal
    Managers' Financial Integrity Act of 1982 (FMFIA), which Congress
    passed to strengthen internal controls and accounting systems
    throughout the federal government, among other purposes.[Footnote 4]
    While agencies had achieved some early success in identifying and
    correcting material internal control and accounting system weaknesses,
    their efforts to implement FMFIA did not produce the results Congress
    intended.

    Therefore, beginning in the 1990s, Congress passed additional
    management reform legislation to improve the general and financial
    management of the federal government. The CFO Act was the beginning of
    such legislation, and laid the foundation for other key legislative
    reforms that followed a common thread of increased accountability and
    better management practices. The CFO Act established a leadership
    structure, provided for long-range planning, required audited financial
    statements, sought improvement in systems of accounting, financial
    management, and internal controls, and strengthened accountability
    reporting. The first related legislation that followed the CFO Act was
    the Government Performance and Results Act of 1993 (GPRA), which
    requires agencies to develop strategic plans, set performance goals,
    and report annually on actual performance compared to goals. GPRA was
    followed by the Government Management Reform Act of 1994, which made
    permanent the pilot program in the CFO Act for annual audited agency-
    level financial statements, expanded this requirement to all CFO Act
    agencies, and established a requirement for the preparation and audit
    of governmentwide consolidated financial statements.

    The Federal Financial Management Improvement Act of 1996 (FFMIA) built
    on the foundation laid by the CFO Act by reflecting the need for CFO
    Act agencies to have systems that can generate reliable, useful, and
    timely information with which to make fully informed decisions and to
    ensure accountability on an ongoing basis. FFMIA requires the
    departments and agencies covered by the CFO Act to implement and
    maintain financial management systems that comply substantially with
    (1) federal financial management systems requirements, (2) applicable
    federal accounting standards, and (3) the U.S. Government Standard
    General Ledger at the transaction level. FFMIA also requires auditors
    to state in their CFO Act financial statement audit reports whether the
    agencies' financial management systems substantially comply with these
    three FFMIA requirements.

    The Clinger-Cohen Act of 1996 (also known as the Information Technology
    Management Reform Act of 1996) sets forth a variety of initiatives to
    support better decision making for capital investments in information
    technology (IT), which has led to the development of the Federal
    Enterprise Architecture and better-informed capital investment and
    control processes within agencies and across government. The
    Accountability of Tax Dollars Act of 2002 required most executive
    agencies that are not otherwise required, or are exempted by OMB, to
    prepare annual audited financial statements and to submit such
    statements to Congress and the Director of OMB. The Improper Payments
    Information Act of 2002, requires executive branch agency heads to
    review their programs and activities annually, identify those that may
    be susceptible to significant improper payments, and report estimates
    of improper payments for susceptible programs. Lastly, in 2004 the
    Department of Homeland Security (DHS) Financial Accountability Act made
    DHS subject to the CFO Act, which requires DHS to issue audited
    financial statements, among other things.

    As shown in figure 1, if successfully implemented, these reforms
    provide a solid basis for improving accountability of government
    programs and operations as well as routinely producing valuable cost
    and operating performance information. The figure shows the three
    levels of the pyramid that result in the end goal, accountability and
    useful management information. The bottom level of the pyramid is the
    legislative framework, as discussed above, that underpins the
    improvement of the general and financial management of the federal
    government. The second level shows the drivers that build on the
    legislative requirements and influence agency actions to meet these
    requirements. The four drivers are (1) the President's Management
    Agenda (PMA),[Footnote 5] (2) CFOs, (3) congressional and other
    oversight, and (4) the activities of the JFMIP Principals.

    Figure 1: Federal Financial Management Reform Framework:

    [See PDF for image]

    This figure is a pyramid with four levels depicting the Federal
    Financial Management Reform Framework as follows:

    Base level: Legislative framework;
    * (1982) Federal Managers' Financial Integrity Act;
    * (1990) Chief Financial Officers Act;
    * (1993) Government Performance and Results Act;
    * (1994) Government Management Reform Act;
    * (1996) Federal Financial Management Improvement Act;
    * (1996) Clinger-Cohen Act;
    * (2002) Accountability of Tax Dollars Act;
    * (2002) Improper Payments Information Act;
    * (2004) Department of Homeland Security Financial Accountability Act.

    Next level: Drivers;
    * PMA;
    * CFOs;
    * Congress;
    * JFMIP Principals.

    Penultimate level: Key success factors;
    * Integrated systems;
    * Reliable financial and performance data for reporting;
    * Effective internal control.

    Top level: End goal;
    * Accountability and useful management information.

    Source: GAO.

    [End of figure]

    One of the President's five PMA goals is to improve financial
    performance by ensuring that federal financial management systems
    produce accurate, timely, and useful information to support operating,
    budget, and policy decisions. CFOs in place at federal agencies are
    responsible for developing and maintaining integrated accounting and
    financial management systems, directing, managing, and providing policy
    guidance and oversight of all agency financial management personnel,
    activities, and operations, and overseeing the recruitment, selection,
    and training of personnel to carry out agency financial management
    functions. They are to provide leadership on financial management
    issues and are expected to serve as change agents. Congressional and
    other financial management oversight bodies are to help ensure that
    federal financial management initiatives are properly focused and on
    track. JFMIP was originally formed under the authority of the Budget
    and Accounting Procedures Act of 1950 as a joint and cooperative
    undertaking of GAO, the Department of the Treasury, OMB, and the Office
    of Personnel Management, working in cooperation with each other to
    improve financial management practices in the federal government. In an
    effort to eliminate duplicative roles and streamline financial
    management improvement efforts, the four JFMIP Principals agreed to
    realign JFMIP's responsibilities for financial management policy and
    oversight as described in a December 2004 OMB memorandum.[Footnote 6]
    As a result of the realignment, JFMIP ceased to exist as a separate
    organization. The JFMIP Principals continue to meet periodically to
    address key financial management challenges that face the federal
    government.

    Since the passage of the CFO Act, agencies have made progress in
    achieving the requirements of these laws. The key success factors to
    achieve progress, as shown in the third level of the pyramid, are
    integrated systems, reliable financial and performance data for
    reporting, and effective internal control. However, much work remains
    to fulfill the underlying goals of the CFO Act and FFMIA. For example,
    while the CFO Act has proven to be an effective foundation for federal
    financial accountability, GAO has identified[Footnote 7] the following
    five principal challenges to fully realizing the world-class federal
    financial management anticipated by the CFO Act:

    * Modernize and integrate financial management systems to provide a
    complete range of financial and cost information needed for
    accountability, performance reporting, and decision making.

    * Build a more analytic financial management workforce to support
    program managers and decision makers.

    * Solve long-standing internal control weaknesses.

    * Enhance financial reporting to provide a complete picture of the
    federal government's overall performance, financial condition, and
    future fiscal outlook.

    * Ensure that financial management reform is sustained given the
    leadership changes that occur at the end of any administration and the
    long-term nature of many of the ongoing reform initiatives.

    Status of Federal Efforts to Implement Financial Management Framework:

    While the ability to produce the data needed for efficient and
    effective management of day-to-day operations in the federal government
    would be of significant value to the agency, taxpayers, and Congress,
    reporting by GAO and other auditors demonstrates this has been a long-
    standing challenge at most federal agencies. Although 19 out of the 24
    CFO Act agencies received an unqualified or "clean" opinion on their
    financial statements in fiscal year 2007, auditors for 8 of the 19
    reported that agencies' systems did not substantially comply with FFMIA
    as illustrated in figure 2. This shows that irrespective of these
    unqualified opinions, many agencies do not have financial management
    systems that produce timely, reliable, and useful financial information
    with which to make informed decisions and ensure accountability on an
    ongoing basis--the ultimate goal of the CFO Act. Furthermore, the wide
    disparity in the types and severity of the findings reported by
    auditors may indicate a general lack of clarity among agencies
    regarding what constitutes "substantial compliance" with FFMIA.

    Figure 2: Comparison of 2007 Financial Statement Audit Results to FFMIA
    Assessments:

    [See PDF for image]

    This figure contains a pie-chart and a subset of that pie-chart. The
    following information is depicted:

    CFO Act agencies' financial statement audit results:
    Unqualified opinion: 19 agencies;
    Disclaimer or qualified opinion: 5 agencies.

    CFO Act agencies' systems not substantially compliant with FFMIA:
    Unqualified opinion: 8 agencies;
    Disclaimer or qualified opinion: 5 agencies.

    Source: CFO Act agencies.

    Note: Data are compiled from CFO Act agencies' Performance and
    Accountability Reports for fiscal year 2007.

    [End of figure]

    Auditors have also reported on the inability of agencies to meet
    federal financial management systems requirements, which involve not
    only core financial systems, but also other enterprise resource
    planning (ERP) solutions--a business system that is intended to meet
    the information needs of both internal and external customers and to
    promote standardization and integration of business processes and
    systems across the agency.[Footnote 8] While the problems are much more
    severe at some agencies than at others, the federal government's access
    to relevant, timely, and reliable data to effectively manage and
    oversee its major programs, which is the ultimate objective, continues
    to be restricted.

    Across the federal government, agencies have efforts under way to
    implement new financial management systems or to upgrade existing
    systems. Agencies expect that new systems will provide reliable,
    useful, and timely data to support day-to-day managerial decision
    making and assist taxpayer and congressional oversight. As GAO has
    reported,[Footnote 9] implementing and upgrading information systems is
    a difficult job and brings a degree of new risk. However, organizations
    that follow and effectively implement accepted best practices in
    systems development and implementation, also known as disciplined
    processes, together with human capital management and other IT
    management practices, can manage to reduce these risks to acceptable
    levels.

    Ongoing Governmentwide Initiatives Intended to Help Address the Federal
    Financial Management Reform Framework:

    Within the last decade, there have been a number of initiatives related
    to improving federal financial management capabilities. Some of these
    initiatives are in collaboration with the CIO[Footnote 10] and
    CFO[Footnote 11] Councils and are broad-based attempts to reform
    financial management operations across the federal government. For
    example, the PMA, as mentioned earlier, has been a key initiative to
    drive change. As the federal organization with primary responsibility
    for federal financial management systems, OMB has also introduced other
    initiatives dedicated to addressing financial management problems. For
    example, OMB developed and continues to evolve governmentwide Federal
    Enterprise Architecture[Footnote 12] products and has required a
    mapping of agency architectures to this federal architecture as part of
    the budget review process. Another key OMB initiative is referred to as
    the lines of business,[Footnote 13] which promotes business-driven,
    common solutions to enhance the federal government's performance and
    services. OMB's financial management line of business (FMLOB)
    initiative is intended to address past financial management systems'
    weaknesses and implementation failures and support the PMA goal of
    expanding electronic government. The goals of the FMLOB initiative
    include:

    * providing timely and accurate data for decision making;

    * facilitating stronger internal controls that ensure integrity in
    accounting and other stewardship activities;

    * reducing costs by providing a competitive alternative for agencies to
    acquire, develop, implement, and operate financial management systems
    through shared service solutions;

    * standardizing systems, business processes, and data elements; and:

    * providing for seamless data exchange between and among federal
    agencies by implementing a common language and structure for financial
    information and system interfaces.

    OMB expects its initial framework for the competitive migration to
    either a public shared service provider or a qualified private sector
    provider under the FMLOB initiative to help agencies maximize value by
    considering alternative solutions in a reasoned and structured manner.
    However, as we previously recommended,[Footnote 14] OMB needs to define
    standard business processes and ensure that agencies do not continue
    developing and implementing their own stovepiped systems.[Footnote 15]
    Failure to do so may require additional work, increase costs to adopt
    these standard business processes, and further delay the transformation
    of federal financial management systems. In a January 2008
    memo,[Footnote 16] OMB recognized the risks associated with
    nonstandardized processes and updated its guidance on the FMLOB.
    Current plans are for the Financial Systems Integration Office (FSIO)
    to continue developing business standards and incorporate them into
    software requirements and only permit agencies and shared service
    providers to utilize the certified products as configured. While
    reforming federal financial management is an undertaking of tremendous
    complexity, it presents great opportunities for improvements in
    financial management system implementations and related business
    operations.

    Shaping the Future of Federal Financial Management:

    Participants provided a variety of perspectives on the future of
    federal financial management during the forum. Many participants
    emphasized the need for federal financial management organizations to
    play a broader role as a strategic partner in meeting overall agency
    and program objectives. Several indicated that more focus is needed to
    meet the needs of program managers for managing programs more
    effectively. Finally, a number of participant comments focused on
    several factors that will continue to challenge efforts to improve
    government financial management in the future, including potentially
    competing governmentwide initiatives.

    Emphasizing Strategic Role Is Key to Future Success of Federal
    Financial Management Organizations:

    The purpose of financial management systems should go beyond providing
    the data necessary to comply with various financial reporting
    requirements to focus on routinely producing reliable, useful, and
    timely financial information that federal managers can use for day-to-
    day decision-making purposes. One of the themes emerging from the forum
    was that federal financial management leaders should refocus their
    efforts on comprehending and meeting program managers' financial
    information requirements and not simply on meeting financial reporting
    compliance requirements.

    Role of Financial Management Systems Is Evolving to Focus More on
    Program Manager Needs:

    Certain participants indicated that they considered financial
    management systems as "enablers" for providing needed financial
    information that can be viewed as part of the organization's overall
    infrastructure. One participant stated that financial management
    systems are a component of what is needed to become a world-class
    financial management organization. In determining the role of financial
    management systems, one participant indicated that financial management
    leaders need to know what information is needed for decision making and
    work backward to determine how it can be provided. However, forum
    participants expressed concerns regarding the current focus of
    government financial management systems on accounting information and
    less on the need to understand program managers' information needs and
    how agency business works.

    Some participants indicated that the lack of integration between
    current financial and program systems limits their potential
    effectiveness as a tool for management decision making. One participant
    stated that financial information is just one "piece of the puzzle"
    needed to effectively manage agency programs and operations. Another
    participant stated that much of the data in their core financial
    systems consists of summary level data that is difficult to
    disaggregate to provide useful information for a program management
    perspective. Other participants expressed similar views pertaining to a
    lack of accurate data flowing from "feeder systems" and a need for
    financial systems to tie into program systems. Finally, another
    participant stated that the federal financial management community
    needs to think about accessibility of financial information in the
    future as users become more technology driven in an electronic
    government (E-gov) environment.

    Producing Accurate, Timely, and Useful Financial Data Is Important Part
    of Broader Goal:

    Responses to one of our electronic survey questions indicate concern
    that more integration of financial and program information is needed.
    When asked to what extent they believe financial systems now provide
    program managers with reliable, useful, and timely information to
    assist them in the day-to-day management of the agency, 21 of 33
    participants responded that they believed such systems provide little
    or no information needed to meet such needs. Ten participants indicated
    that information provided by current financial management systems meet
    program manager needs to a moderate extent while only one participant
    indicated that program manager needs are being met to a large extent.

    In contrast to concerns that finance organizations should focus more
    efforts toward meeting the needs of program managers, some participants
    cautioned that complying with basic financial reporting requirements
    remains an important aspect of agency finance organization activities.
    One participant stated that efforts over the past several years at his
    agency focused on cleaning up financial reporting and systems. As a
    result, the agency managers are now in a much better position to ask
    themselves whether the information produced from their systems was
    "good enough" for the agency's program management needs. Prior to these
    efforts, agency managers were not in a good position to use this
    financial data to help make program assessments. Finally, participants
    indicated that producing accurate financial statements should be viewed
    as a by-product of effective business processes and financial
    management systems. The primary goal is not to prepare perfect
    financial statements; rather, the primary goal is to improve financial
    management systems so that financial information from these systems can
    be used to help manage agencies more effectively.

    Shifting Focus from Financial Reporting Compliance to Program
    Stewardship:

    Now that most agencies are receiving clean audit opinions and fewer
    material weaknesses are identified, participants indicated that more
    effort can be focused on business processes and program manager needs.
    Several participants expressed concern that, due to the efforts devoted
    to preparing financial reports and meeting financial reporting
    compliance requirements, finance organizations have not focused
    sufficient attention on understanding and meeting the financial
    management needs of program managers. As a result, they indicated the
    extent to which program managers' decisions are linked to financial-
    related performance indicators is limited and less informed. For

    example, one participant indicated that he is amazed at the extent to
    which efforts have focused primarily on compliance issues as opposed to
    talking with program managers to help them understand their financial
    management information needs and training them how to effectively link
    financial and program data to better manage their programs.

    Other participants pointed to a need for federal financial management
    to focus its efforts on providing program managers with analytic
    "dashboards" containing both program and financial performance data on
    a regular and timely basis. One participant discussed an inventory
    tracking system used in a large retail organization as an example of an
    application developed to effectively link program and financial
    information to meet a variety of needs. The participants generally
    agreed that agencies need to focus on these types of enterprise
    information systems in order to produce information needed for program
    stewardship. This financial information should result from the business
    processes where the transactions are being recorded--outside the CFO's
    office.

    Financial Management Improvement Efforts Have Reached a Crossroads:

    The federal government has made progress in the past 15 years in
    achieving the CFO Act's goals and objectives. For example, unqualified
    audit opinions for CFO Act agencies financial statements have grown
    from 6 in fiscal year 1996 to 19 in fiscal year 2007. Nevertheless,
    significant agency efforts to improve federal financial management
    systems have resulted in limited progress as indicated by the majority
    of agencies still not in compliance with FFMIA. Across the federal
    government, evidence exists suggesting that agencies have made gradual
    improvements related to the accuracy of financial information, the
    reliability of financial reporting processes and systems, and the level
    of compliance with various financial management laws and regulations.
    However, despite the successes in meeting financial reporting
    compliance requirements, participants expressed concern that managers
    may have reached a crossroads for determining how and where to proceed
    with regard to future financial system implementation efforts.

    Opportunities Remain for Addressing FFMIA Compliance Issues:

    While agencies have come a long way in improving federal financial
    management, opportunities exist to help agencies move to the next level
    and reach agreement on what constitutes substantial compliance with
    FFMIA. The government's focus on financial management has led to
    gradual improvements in the accuracy of financial information, the
    reliability of financial reporting processes and systems, and
    compliance with FFMIA requirements, as reflected in electronic survey
    results. For example, the extent to which participants believe internal
    controls have improved through significant agency efforts to comply
    with FFMIA indicate general agreement that efforts are achieving
    results. With regard to electronic survey results, 22 of 35 respondents
    said that internal controls had improved to a large or moderate extent
    through these efforts.

    On the basis of electronic survey questions regarding compliance with
    FFMIA, however, participants' views concerning what constitutes
    compliance and who should have a role in assessing compliance vary.
    When asked how much progress they believed their respective agency had
    made in achieving compliance with the three requirements of FFMIA, 25
    of 35 participants responded it had done so to a moderate or large
    extent. On the other hand, when asked to what extent they believe
    agreement exists regarding what constitutes substantial compliance with
    FFMIA, 20 of 35 respondents indicated that agreement exists to little
    or no extent while 15 of 35 believed agreement exists to a moderate
    extent. Importantly, none of the forum participants indicated that the
    federal financial community has reached agreement in this area to a
    large extent, indicating that this may be an area on which to focus in
    the future. Regarding the role of IGs and independent public accounting
    firms in assessing substantial compliance with FFMIA, 18 of 35
    respondents believe they should have little or no role, while 16
    believe they should have a large or moderate role in the assessment.

    Opinions Vary on Focus of Remaining Efforts to Ensure Continued
    Progress:

    Although participants acknowledged that efforts to improve government
    financial management have been significant and are resulting in gradual
    improvements, forum participants' comments varied regarding the
    progress still to be achieved. One participant expressed the view that
    much progress has been made in that agencies are now providing
    financial statement auditors with good financial information. Another
    participant agreed that progress has been made, especially over the
    past few years with FSIO's[Footnote 17] (formerly JFMIP) help. However,
    one participant cautioned that it seems as though agencies are reaching
    a plateau in implementing new systems. In this regard, it is not
    unusual, in the normal evolution of financial management systems, for
    there to be challenges in moving forward. Implementing a financial
    management system is risky, and when compounded with rapidly evolving
    technology and standards, the risk is increased. A participant stated
    that agencies are at a point where they need to decide over the next
    several years whether to focus their efforts on financial reporting, or
    on developing performance analytics. Another participant expressed the
    view that agency efforts need to move to the next level and focus more
    on meeting agency business needs with appropriate data.

    Efforts on Current Initiatives Highlight Needs for Future Improvements:

    OMB's financial management line of business (FMLOB) initiative is an
    important component of the PMA for improving overall government
    performance management, focusing on business-driven, common solutions
    to help address financial management system weaknesses and
    implementation failures. However, in response to an electronic survey
    question, none of the 33 participants that answered believed the
    resources available to implement the initiative are fully adequate.
    Additionally, in connection with this initiative, OMB had established a
    goal of migrating the majority of agencies toward the use of shared
    service providers capable of providing a variety of financial
    management services to multiple agencies by 2011. Based on responses to
    an electronic survey question, however, participants appeared uncertain
    regarding the ability of their respective organizations to reach this
    goal by 2011, with 15 of 33 respondents indicating that the transition
    will occur either to a moderate or to a large extent and 12 of 33
    indicating it will occur to little or no extent. Six of the respondents
    indicated that they did not know or that the question was not
    applicable to them.

    Participants expressed views that significant resources have been
    devoted to improving federal financial management and have facilitated
    a better understanding of the issues involved in making further
    improvements to financial management systems. For example, one
    participant agreed that using agencies' past experiences as case
    studies may provide good models for other agencies to learn from as
    they work through similar challenges. Other participants expressed the
    view that improvement efforts also highlight the need to focus on
    common data and standardization to facilitate common solutions. One
    participant stated that agency leadership should first agree on what
    data are needed by internal and external stakeholders. Another
    participant stated that standard data elements are an important
    component of system implementations and those being developed through
    the FMLOB initiative will facilitate greater integration of financial
    and program management systems in the future.

    Addressing Challenges to Continued Progress:

    While agencies have taken important steps that have contributed to
    improving federal financial management over the last several years,
    future improvements in federal financial management may become
    increasingly difficult. According to participants, obstacles to future
    success of modernization efforts include limited resources available,
    competing governmentwide initiatives, and varying levels of commitment
    among some federal officials to address long-standing financial
    management issues. These obstacles continue to limit the ability of the
    federal financial management community to effectively consider and
    address the needs of key stakeholders, including program managers.

    Balancing and Meeting Customer Needs and Financial Reporting
    Requirements with Limited Resources:

    Many participants expressed concerns that finance organizations face
    significant challenges in balancing and meeting the needs of various
    stakeholders. Participants indicated that compliance requirements have
    continued to increase in complexity. One participant indicated that
    financial reporting requirements have become more complex to the point
    where a danger exists that accounting compliance requirements have
    become so prescriptive that they may begin to drive business processes
    rather than business processes driving accounting processes.
    Participants discussed other countries that recently implemented modern
    financial management systems and expressed the concern that United
    States legislative requirements and standards are too extensive and
    complex. Streamlining and simplifying financial reporting requirements
    to focus on essential information needed by decision makers, according
    to some participants, is critical for realizing continued progress in
    government financial management. Resource limitations will continue to
    represent a challenge to making progress in government financial
    management. One participant noted that although agencies continue to
    struggle with legacy systems and sound business cases exist for
    upgrading them, competing priorities often result in a lack of
    resources to fund financial management system improvement projects.

    Overcoming Long-standing Parochial Interests:

    Participants also expressed significant concern related to stovepipes-
    -organizational barriers that limit communication--among various
    initiatives that hamper federal governmentwide improvement efforts and
    management effectiveness. The following provides examples of some of
    the long-standing obstacles and challenges forum participants
    identified:

    * It is very costly to gather the information needed to meet financial
    reporting requirements.

    * There are significant differences in how agency finance organizations
    operate and devote resources to conducting budget and financial
    reporting activities.

    * Budget, accounting, and program management are all disconnected in
    today's environment.

    * OMB's various lines of business initiatives are serving to preserve
    existing stovepipes. For example, it is unclear why separate lines of
    business are needed for budget and financial management.

    * There should be increased awareness of the benefits of merging
    financial management activities together and demonstrating greater
    value through more effective integration.

    * It may be necessary to better educate stakeholders regarding the
    value of financial management information for project management
    purposes.

    Participants noted that varying levels of interest in financial
    management information by stakeholders including program managers and
    Congress indicate a general lack of usefulness of such information for
    program management or decision-making purposes. According to
    participants, some legislators and senior agency leadership do not seem
    to appreciate the benefits of financial reports despite the fact that
    preparing reports consumes significant resources. Some participants
    thought these leaders were more focused on budget-oriented information.
    This effectively demonstrates the perceived lack of understanding of
    the value of financial management information to stakeholders, and the
    need to develop performance information that stakeholders consider
    meaningful.

    Applying Lessons Learned from Past Federal Financial Management System
    Implementations:

    The forum participants generally agreed that there has been a growing
    body of knowledge based on lessons learned from past federal financial
    management system implementation projects that provide useful insights
    for future efforts. Managers now possess a greater knowledge of the
    system design and implementation challenges they face, as well as
    possible solutions to these challenges. As one participant noted,
    "agencies currently possess a good list of dos and don'ts" with respect
    to various system implementation challenges. Echoing the prior comment,
    other participants stated that it is time to start putting into
    practice the lessons learned from previous implementation efforts. As
    part of an effort to begin confronting these challenges, forum
    participants offered a range of perspectives, insights, and examples
    pertaining to the (1) experience obtained from modernizing federal
    financial management systems that can benefit future implementation
    efforts, and (2) practices agencies found most effective in monitoring
    progress and identifying implementation issues on a timely basis.

    Experience Obtained from Modernizing Federal Financial Management
    Systems Can Benefit Future Efforts:

    Financial managers have gained valuable lessons learned experiences
    with regard to implementing financial management systems over the
    years. For example, experience related to human capital management,
    systems ownership, customization of commercial off-the-shelf (COTS)
    software, and the purchase of shared services has provided useful
    insights that can help financial managers avoid some of the obstacles
    that impeded past system implementation projects. According to
    participants, the effective integration of responses to lessons
    acquired from previous implementation efforts are critical components
    of a successful system implementation project.

    Experienced Top Leadership Is Critical Component of Implementation
    Success:

    Because federal financial management system implementation is such a
    complicated and multifaceted endeavor requiring large amounts of
    federal resources, participants commented that it was critical for
    agencies to identify and obtain the services of experienced, top talent
    for project oversight and management purposes. For example, a
    participant stated that agencies should consider focusing on
    identifying the right oversight body capable of providing direct,
    decision-making authority at the highest level within the agency to
    increase the likelihood of implementation success. In addition, another
    participant noted that obtaining personnel with demonstrated, effective
    project management skills was critical to successful system
    implementation. Another participant stated that an agency should use
    its "A-Team" for system implementation projects rather than relatively
    less qualified, but more readily available, personnel. The participant
    also pointed out that the private sector typically devotes its top
    talent and significant resources to system implementation projects.
    Participants also stressed the importance of holding qualified program
    managers responsible for implementation results.

    Several participants suggested the federal government should facilitate
    ways of sharing top system implementation talent among agencies. One
    participant stated that experience is of critical importance in the
    area of systems implementation; however, there is currently only a
    limited pool of top-level experienced talent. Consequently, the federal
    government may wish to look for creative ways to share or move these
    resources among agencies to best meet the federal government's
    collective needs. Based on the experiences of two participants,
    personnel with the requisite talent and experience are currently
    employed by the federal government; however, such talent is not present
    at all agencies. Nevertheless, participants provided examples of
    federal agencies whose personnel had acquired significant system
    implementation experience over the past decade or more. According to
    one participant, more experienced project managers eventually
    contributed to successful implementation outcomes at their respective
    agencies.

    Challenges in Moving from Systems Ownership to Use of Shared Services:

    Forum participants commented that shifting agency focus from system
    ownership to the purchase of financial system shared services may make
    more economic and operational sense. According to one participant, it
    may be more efficient for large agencies to de-emphasize systems
    ownership and instead focus on purchasing large-scale system services
    from other agencies or the private sector. Conversely, it may be more
    economical for smaller agencies to contract with large agencies to
    obtain required system services such as financial processing.
    Participants noted that large agencies generally possess the necessary
    infrastructure required to purchase large-scale services in a more
    economical manner, primarily due to their greater economies of scale,
    particularly with regard to processing activities.

    Focusing less on system ownership could allow federal agencies to
    devote more resources to value-added activities, such as financial
    analysis and managing people and processes, according to one
    participant. Another participant believed that purchasing certain
    financial systems services from other agencies or the private sector
    might help an agency to "right size" its CFO position. For example,
    through such purchases of financial services, it may not be necessary
    for a CFO to perform many of an agency's financial statement
    preparation and internal control reporting responsibilities.
    Outsourcing these responsibilities to other agencies or the private
    sector could free CFO resources for more value-added program management
    and oversight activities. However, participants also expressed a number
    of concerns and provided certain caveats regarding the transition from
    systems ownership to the purchase of shared services:

    * The advantages of economies of scale with regard to transaction
    processing may be questionable because the agency doing the outsourcing
    generally would still need many of the related accounting skills in-
    house.

    * Some agency financial leaders may be reluctant to transition to the
    purchase of certain financial services because they fear losing control
    of critical functions. In order to address this concern, the federal
    financial management community must work to convince agency officials
    that they will continue to have access to the data at the endpoint.

    * It may be necessary to develop a phased approach for the transition
    to shared service providers in order to gain the trust of agency
    financial and program leaders. The approach of trying to convince
    agencies of the benefits of wholesale outsourcing many business
    activities may not be effective; consequently, a pared down "case
    study" approach may be more effective.

    * All key stakeholders, such as agency management and shared service
    providers, need to be "at the table" for decision-making purposes.
    However, agencies should have accountability for ensuring the success
    of their systems.

    Participant responses to GAO's electronic survey questions tended to
    reinforce the importance of focusing on making the most efficient and
    effective use of existing resources (e.g., performing higher-level
    financial management activities vs. transaction processing) when
    attempting to implement a financial management system or move to a
    shared service provider. For example, the responses to the question
    concerning the extent to which participants believed resources invested
    in federal financial management system modernization efforts yielded a
    commensurate level of value to the federal government tended to vary,
    with 18 of 34 participants stating it had occurred from a moderate to a
    large extent, and 15 of 34 stating it had occurred to little or no
    extent. On a related note, 16 of 34 participants responding to our
    electronic survey question concerning areas of needed improvement
    indicated that the area of "human capital" could benefit the most from
    the introduction of enhanced guidance, training, or other tools
    designed to assist implementation efforts.

    Minimizing COTS Customization Facilitates Standardization and
    Interoperability:

    Participants generally agreed that refraining from excessive COTS
    software customization may help to reduce the perpetuation of parochial
    (nonenterprisewide) financial management and related business
    practices. According to participants, the need for excessive
    customizing of COTS software may be an indicator of inefficient agency
    business practices. A participant stated that if an agency's business
    practices did not conform to the software, the agency should focus on
    reengineering its practices rather than customizing the COTS software.
    Participants also suggested that excessive customization of COTS
    software may result in promoting inefficiency by working around an
    inefficient business practice instead of working to eliminate it.

    Several participants identified the inefficient, wasteful use of
    federal resources as one of the significant problems resulting from
    excessive COTS customization. For example, one participant noted that
    when federal agencies expend resources for research and development
    purposes in order to customize COTS software, private-sector vendors
    sometimes are the beneficiaries of this activity. According to the
    participant, customization results in altered COTS software code.
    Vendors sell the altered COTS software developed for one agency to
    other federal agencies; however, the government is not necessarily
    compensated for its related software research and development
    expenditures to customize the software. Another participant stated that
    agencies, as part of the COTS customization process, have wasted
    resources in requiring the use of separate sets of overly prescriptive
    processes for implementing COTS software. A participant stated that
    experienced COTS-based system integrators have been successful in
    avoiding such costly customizations by using their own implementation
    processes and methodologies. From another participant's perspective,
    experienced systems integrators have not always been a panacea and that
    adherence to disciplined processes has been predictably shown to be the
    best indicator for success by reducing project risk.

    According to some participants, the development of governmentwide
    standards for various agency business processes is a critical
    evolutionary step in the system implementation process. A participant
    stated it was important for the federal financial management community
    to begin thinking about standardization, particularly as agencies have
    become more aware of lessons learned from past projects and now
    collectively have a good list of "dos and don'ts" to begin working
    from. The participant also noted that OMB/FSIO's work with regard to
    standard business processes was especially meaningful. However, another
    participant cautioned that agencies should be aware that implementation
    failures have occurred because managers decided to ignore the systems
    development and implementation standards they believed too general in
    nature. This might result in managers engaging in implementation
    activities that could increase the project risk.

    Participants suggested it might be of value for agencies to begin their
    standardization efforts by focusing on the areas of data management. A
    participant stated that agencies are increasingly tending to view data
    as a commodity or basic element of management, and as a result,
    government should begin focusing more of its efforts on data
    standardization (e.g., OMB's efforts on setting business standards).
    Another participant suggested that additional federal efforts should be
    devoted to data standardization and the conversion of old data into new
    systems. A participant noted the urgency of the matter by stating that
    the efforts to clean data for conversion can take years. Other
    participants stressed the importance of focusing on essential data.

    Practices Agencies Found Most Effective in Monitoring Progress and
    Identifying Implementation Issues on a Timely Basis:

    Federal financial managers reported identifying various system
    implementation practices over the years that have proven useful in
    helping to facilitate successful financial system implementation
    outcomes. The practices include verification and validation conducted
    by independent sources, periodically reevaluating system implementation
    projects, and reliance on the authority of top management to oversee
    project implementation. According to participants, such practices
    provide early warning of potential problems.

    Periodically Reevaluating Modernization Projects Helps Agencies
    Identify Problems and Potential Solutions:

    Participants suggested that it may be necessary from time to time for
    agencies to step back and evaluate ongoing implementation efforts from
    a broader perspective in order to assess progress. According to
    participants, this is important because it helps project managers
    better determine whether a project is making appropriate progress on
    the path to meeting its objectives. For example, one participant stated
    that in a previous system implementation, he had another executive who
    was not directly involved in the implementation attend meetings in
    order to act as an impartial sounding board and to ask the important
    question, "Does it make sense?" He believed this practice bolstered the
    project's internal accountability, which in turn decreased project
    risk.

    Oversight Bodies with Appropriate Authority Enhance Accountability:

    Participants generally agreed that executive oversight bodies with the
    appropriate authority were critical in helping to remove any
    impediments to implementation and to assess whether a particular
    project should continue or be terminated. One participant stressed the
    importance of having a top-level executive involved in overseeing the
    implementation project that did not have direct responsibility for the
    project. According to another participant, top management "courage" is
    key to identifying situations and making difficult determinations
    whether project efforts should proceed or be terminated. Another
    participant stated that courage is key to objectively assessing the
    viability of an implementation project. However, participants did note
    that sometimes the determination of whether or not to terminate a
    project was also influenced by such factors as the level of project
    funding or a negative relationship with a contractor.

    Independent Verification and Validation Efforts Help Reduce Risk and
    Provide Additional Support to Stakeholders:

    Participants agreed that independent verification and validation (IV&V)
    efforts help to identify and provide early warning of potential federal
    financial management system implementation problems. Participants also
    generally agreed that having an effective IV&V in place was important,
    particularly when attempting to decide whether a project should be
    terminated. Another participant recommended the use of IV&V
    contractors, but cautioned that this would have to be carefully
    managed. For example, another participant stated that while the use of
    an IV&V review can be an important tool in assessing the effectiveness
    of an implementation project, agency officials must take steps to
    oversee these reviews to avoid "falling asleep at the wheel" and
    accepting without question the findings of an IV&V contractor.

    Strategies for Transforming Federal Financial Management Culture to
    Capitalize on Financial Management System Modernization Opportunities:

    Participants provided a variety of comments related to the need to
    transform the federal financial management culture to best capitalize
    on financial management system modernization opportunities. In
    responding to an electronic survey question asking how far along
    organizations are in transforming their business systems, 17 of 31
    participants indicated that moderate progress has been achieved while
    12 indicated that little or no progress had been made. Only one
    indicated that their efforts were substantially complete. Participants
    emphasized the importance of the financial management culture
    transforming itself to focus on assuring their financial systems
    provide information integral to the successful operation of an entire
    organization. Additionally, participants discussed the relevance of the
    CFO and financial management organizations and the need to attract and
    retain a new generation of financial management professionals with new
    skill sets.

    Increasing Relevance of CFO and Government Finance Organizations:

    There was a perception expressed by some participants that (1)
    management often views accountants as merely technicians and not as
    relevant to decision making, and (2) the federal financial management
    community continues to develop financial statements that no one reads.
    According to some participants, the accounting profession is at a
    crisis point. In order to remain relevant, the federal financial
    management community must be willing to proactively embrace change and
    transform its organizational culture to focus on ways for financial
    management systems to provide value to the entire organization. Other
    forum participants commented on the need to continually reexamine the
    roles of the CFO and other federal financial management organizations.
    Finally, participants emphasized the importance of developing
    appropriate business metrics to demonstrate the ability to deliver
    greater value to the organization.

    Redefining Roles of CFO and Other Federal Financial Management
    Organizations:

    Many participants expressed views and concerns regarding the role of
    financial management leadership in improving future federal financial
    management. In response to two electronic survey questions, 29 of 32
    respondents indicated that "the role of the CFO" and "success for
    financial management" need to be redefined. Additionally, one
    participant stated that agency CFOs will need to assume broader roles
    to achieve world-class status, including focusing on how best to
    support broad, overall program stewardship goals.

    Participants generally agreed that CFOs now have a limited role in the
    management decision-making process within the federal government. One
    of the points that a participant raised was that this is because
    requested funds are appropriated by Congress and do not require
    approval by the CFO as in the private sector. As a result, the
    government CFO has less clout in decision making. According to one
    participant, in the private sector the CFO holds an important role in
    key management decisions and is frequently the path to becoming Chief
    Executive Officer, whereas, in the federal environment, the CFO is
    often the accountant and preparer of financial statements and not
    involved in key management decisions. In order to attain similar
    status, participants stated that federal government CFOs and other
    federal financial management organizations should consider adopting a
    more forward-looking financial analysis outlook and identifying ways of
    demonstrating the value of their financial management perspective to
    the organization's management.

    Participants suggested that it is critical that the behavior of the
    federal financial management community changes to increase its focus on
    becoming more relevant to management and the entire organization.
    According to participants, federal financial managers need to do more
    than just provide data; they need to add value to the organization with
    respect to providing useful information to program managers.
    Participants stated that the federal financial management cultural
    change will require spending more time with program managers to gain
    the perspectives and insight needed to maximize their value as
    financial advisors across the organization and to assist in decision
    making. Participants suggested that the federal financial management
    community focus additional effort on helping program managers
    understand how to integrate financial management information and why it
    is important to the decision-making process. According to some
    participants, agency CFOs should transform the culture of their
    organizations to focus on their role as advisors, rather than their
    "bean counter" role.

    Differing Opportunities and Challenges Associated with Career CFO
    Positions and Politically Appointed Positions:

    One participant suggested that making CFOs career positions would
    result in greater continuity and reduce turnover within the federal
    financial management community. However, there was more support for the
    opposing view that there is great merit in having political appointees
    in CFO positions to gain support on issues. For example, one
    participant stated that only politically appointed CFOs will have "a
    seat at the table," in making key organizational decisions. One
    participant served as both a politically appointed CFO and a career-
    status CFO and stated that political appointees are treated very
    differently. That is, politically appointed and confirmed members
    generally have more public support, and thus they have more influence
    in decision making among their peers.

    Some participants suggested that agencies need to assess how to change
    the human capital strategy regarding the different requirements, roles,
    and responsibilities of career and political positions. According to
    several participants, the federal financial management community
    continues to experience a great deal of turnover, particularly since
    many federal CFOs are political appointees. Some participants expressed
    concern about the level of skill in the politically appointed CFO
    community and whether those CFOs had the requisite experience necessary
    to fill the position. Thus, some participants expressed a need to
    evaluate whether increased reliance on career CFO positions might
    better provide for continuity of the CFO community. Some participants
    also stated that the federal financial management community might
    consider addressing the creation of two classes of financial management
    professionals within federal financial management organizations, one
    class for PA/PAS (Presidential Appointee/Presidential Appointee Senate
    Confirmed) and another for career financial management professionals.
    According to some participants, agencies may benefit from examining the
    roles of financial management political appointees, the number of such
    political appointees, and where they are in organizations.

    Participants also discussed whether the cultural transformation of the
    federal financial management community might be furthered through
    having set term appointments for CFOs. Such a change would allow CFOs
    to be a member of the "political team," as well as provide an
    additional degree of stability and continuity to the position. One
    participant suggested 5 to 7 years may be a realistic option for the
    term of a federal CFO.

    Delivering Value through Reliable Data and Development of Appropriate
    Business Metrics:

    Participant responses varied to an electronic survey question regarding
    the extent to which they believed modernization efforts were leading
    toward positive cultural transformation and creating more
    organizational value, with 19 of 32 indicating from a moderate to a
    large extent, and 13 of 32 indicating to little or no extent. It was
    suggested by a participant that the key to creating value for their
    organization is through the CFO's vision and ability to deliver value
    that makes a difference. The participant also stated that such value-
    added activities include developing appropriate business metrics and
    demonstrating the influence of effective internal controls on mission
    effectiveness. Another participant pointed to an example where a new
    agency CFO was tasked with developing a new set of performance metrics
    for each program. This effort resulted in the financial management
    organization expanding beyond its traditional accounting and budget-
    related activities to develop critical program performance metrics. The
    participants agreed that the establishment of business metrics and
    related goals helps a CFO demonstrate the ability to deliver greater
    value to the organization as an advisor, rather than as a mere
    "cruncher" of numbers.

    Attracting and Retaining Appropriately Skilled Financial Talent Is Key
    to Successful Transformation of Federal Financial Management Community:

    The financial management environment is more and more reliant on
    accounting processes that are increasingly more sophisticated.
    Consequently, the federal financial management community must attract
    and retain a new generation of financial management professionals who
    have greater capabilities for using such sophisticated technology and
    information in new ways. Although the environment is changing, the
    ability of agencies to change their financial management cultures over
    the past 17 years, since the passage of the CFO Act, has been
    encumbered by the legacy of an existing workforce with limited
    technological abilities. To facilitate the transition from the old way
    of doing things, it was suggested that federal financial management
    human capital strategies could be better focused on attracting and
    retaining a new technology-savvy generation of financial professionals.
    Participants agreed that the future transformation of the federal
    financial management culture depends on the new skill sets of the next
    generation of federal financial management professionals. Additionally,
    the skill sets and responsibilities of current federal financial
    management professionals may shift with a growing use of contractors.

    Challenges Exist in Recruiting and Retaining Talent in Financial
    Management:

    When asked to what extent do human capital issues significantly
    challenge their agencies' ability to realize the benefits associated
    with financial management system modernization efforts, 31 of 32
    respondents indicated it occurred from a large to moderate extent. As
    the financial management environment continues to evolve, federal
    financial management human capital strategies must adapt in order to
    address challenges associated with transforming the federal financial
    management culture, including retaining effective, experienced CFOs and
    financial talent within the federal government. Some participants
    expressed concern that there is a growing sentiment that financial
    management is not highly valued because agency leaders have failed to
    recognize significant ongoing CFO efforts. Participants stated that it
    is more difficult to hire good people and retain CFOs and financial
    talent within the federal government when the heads of federal agencies
    do not value the CFO's insights and perspectives or the contributions
    of other financial managers. It was suggested that federal financial
    management professionals need to feel they are relevant and valued.
    Without proper recognition for good performance, federal financial
    management professionals may lack needed incentives. Participants
    commented that federal financial management professionals are not
    interested in being part of something viewed as unimportant.

    Growing Use of Contractors Could Facilitate or Impede Growth of
    Agencies' Financial Management Knowledge Base:

    A few participants were concerned that the growing use of contractors
    also raised issues related to the erosion of the federal financial
    management critical knowledge base and intellectual capital. The
    movement toward outsourcing federal financial reporting and recording
    activities, if not properly managed, may pose a threat to the
    continuity of the federal financial management community and may
    potentially weaken federal financial management organizations' ability
    to provide value-added services to management. As one participant
    stated, even defining the "federal financial management workforce" is
    difficult due to the roles now carried out by contractors.

    Although one participant suggested that agencies should rely less on
    contractors and build a skill base within their organization, another
    participant supported a greater, but more efficient use of contractors.
    Agency CFOs could consider as a model how various CIOs commonly
    outsource network and maintenance requirements for how to keep
    architecture and other strategic activities in-house, allowing them to
    focus on business processes and systems. One of the participants also
    cautioned that the federal financial management community should avoid
    outsourcing strategic activities. Thus, according to the participant,
    the federal government should control the most important financial and
    program management responsibilities, as well as ensure that the
    appropriate level of oversight and accountability is maintained in-
    house for the systems and information produced from contractor
    arrangements.

    [End of section]

    Appendix I: List of Participants on December 11, 2007:

    Host:

    Hon. David M. Walker:
    Comptroller General of the United States:
    U.S. Government Accountability Office:

    Participants:

    Michael G. Barker:
    Director, Federal Programs Oracle Corporation:

    Kenneth E. Carfine:
    Fiscal Assistant Secretary:
    U.S. Department of the Treasury:

    John R. Cherbini:
    Partner in Charge, Federal Advisory Services:
    KPMG, LLP:

    Clarence C. Crawford:
    Director of Financial Management Solutions Center:
    Deloitte Consulting, LLP:

    Geoffrey Darnell:
    Director, Public Sector Solution Management:
    SAP:

    Larry J. Eisenhart:
    Vice President of Financial Management:
    AOC Solutions, Inc.

    Joseph Farinella:
    Assistant Inspector General for Audit:
    U.S. Agency for International Development:

    Lisa D. Fiely:
    Acting Chief Financial Officer:
    U.S. Department of Labor:

    Hon. Gregory H. Friedman:
    Inspector General:
    U.S. Department of Energy:

    Adam H. Goldberg:
    Chief, Office of Federal Financial Management:
    Office of Management and Budget:

    Patricia E. Healy:
    Deputy Chief Financial Officer:
    U.S. Department of Agriculture:

    Terry L. Hurst:
    Deputy Assistant Secretary for Grants:
    U.S. Department of Health and Human Services:

    Hon. Claude M. Kicklighter:
    Inspector General:
    U.S. Department of Defense:

    C. Morgan Kinghorn, Jr.
    Chief Operating Officer, Global Public Sector:
    Grant Thornton, LLP:

    Joseph L. Kull:
    Director, Washington Federal Practice:
    PricewaterhouseCoopers, LLP:

    Wayne G. Leiss:
    Chief Information Officer, Office of Thrift Supervision:
    U.S. Department of the Treasury:

    William M. McCabe:
    Chief Financial Officer:
    U.S. Nuclear Regulatory Commission:

    Clyde G. McShan, II:
    Executive Vice President:
    Savantage Solutions:

    Mary J. Mitchell:
    Deputy Associate Administrator, Office of Technology Strategy:
    Financial Systems Integration Office Executive:
    Office of Governmentwide Policy:
    U.S. General Services Administration:

    Daniel J. Murrin:
    Partner, Americas Director of Public Sector Services:
    Ernst & Young, LLP:

    Catherine Nelson:
    Vice President:
    Booz Allen Hamilton:

    Elizabeth T. O'Neil:
    Director of Consulting:
    CGI Federal, Inc.

    Daniel R. Petrole:
    Deputy Inspector General:
    U.S. Department of Labor:

    Hon. Phyllis F. Scheinberg:
    Assistant Secretary for Budget and Programs/Chief Financial Officer:
    U.S. Department of Transportation:

    Radha Sekar:
    Director, Business Integration Office:
    U.S. Department of Defense:

    Hon. Richard L. Skinner:
    Inspector General:
    U.S. Department of Homeland Security:

    Relmond P. Van Daniker:
    Executive Director:
    Association of Government Accountants:

    Daniel I. Werfel:
    Acting Controller, Office of Federal Financial Management:
    Office of Management and Budget:

    Adm. James B. Whittaker (Retired):
    President:
    The Whittaker Group:

    Michael Wood:
    Chief of Staff, Office of Inspector General:
    U.S. Department of the Interior:

    GAO Participants:

    Sallyanne Harper:
    Chief Administrative Officer/Chief Financial Officer:

    Jeffrey C. Steinhoff:
    Managing Director, Financial Management and Assurance:

    McCoy Williams:
    Director, Financial Management and Assurance:

    George Strader:
    Controller, Controller/Administrative Services Office:

    Nabajyoti Barkakati:
    Acting Chief Technologist, Applied Research and Methods:

    [End of section]

    Appendix II: Forum Agenda:

    12:30 p.m.
    Check-in:

    1:00 p.m.
    Welcome & Opening Remarks:
    * Comments from the Comptroller General:
    * Participant Introductions:

    1:15 p.m.
    Topic 1: Shaping the Future of Government Financial Management:

    2:40 p.m.
    Break:

    3:00 p.m.
    Topic 2: Lessons Learned from Financial Management System
    Implementations to Date:

    4:00 p.m.
    Topic 3: Transforming Organizational Culture to Capitalize on Financial
    Management System Modernizations:

    4:45 p.m.
    Wrap up:

    5:00 p.m.
    Adjournment:

    [End of section]

    Appendix III: Discussion Questions Sent in Advance of Forum:

    Topics/Discussion Questions:

    Topic 1: Shaping the Future of Government Financial Management:

    1. In your opinion, what is reliable, useful, timely, and relevant
    financial information?

    * What criteria and methods are well-suited for assessing agencies'
    progress in developing such information?

    2. How have modernization efforts to date improved agencies' abilities
    to operate more efficiently and effectively?

    * What are the challenges that agencies face in delivering timely,
    useful, and relevant data to decision makers? What can we do to make
    users of the information more involved in the development and delivery
    of the reports?

    * How has financial information improved and how is it being used by
    decision makers?

    * What are the major problems that agencies face when improving their
    financial management? Are the problems limited to financial management
    system implementations?

    * What steps can agencies take to ensure newly implemented systems
    support and facilitate agencies' current and future strategic needs
    through appropriate integration with other agency systems and business
    process reengineering?

    * What actions are being taken to effectively "retire" prior systems,
    including their associated input, maintenance, and output activities?

    * How have agency performance metrics changed as a result of financial
    management system implementations?

    3. What is the role of financial management systems in enabling federal
    agencies to become world-class finance organizations?

    * Are these systems assisting in providing reliable, useful, timely,
    and relevant financial information? Why or why not (or what are the
    impediments)?

    * Are these systems assisting in developing full cost? Why or why not
    (or what are the impediments)?

    * Are the existing systems supporting agency needs?

    * Are agencies successful in purchasing commercial systems and changing
    their processes to fit their systems?

    * Is this approach still a valid model of operation?

    * What can we do to improve the quality and effectiveness of the
    systems?

    * Is there a need for an overarching financial management vision and
    related strategies and systems to define the federal government
    financial management organization and how improvement efforts should be
    measured?

    4. Is there a need to reevaluate or change key financial management
    legislation (e.g., FFMIA and the CFO Act) or related accounting and
    auditing requirements to support agencies implementing financial
    management systems?

    * How has FFMIA implementation helped or hindered agencies in meeting
    their goals of improving financial management?

    * What are the major challenges to achieving FFMIA compliance?

    * How do financial management systems assist in reaching the goals of
    FFMIA at the agency and governmentwide level?

    * What are the significant challenges for the auditor with respect to
    reporting under FFMIA?

    - What are some indicators that you use to assess FFMIA compliance?

    - How could the current FFMIA guidance be changed to help provide
    additional clarity?

    - Will this assist agencies in meeting the goals of the statute?

    * What level of auditor assurance should be required (positive vs.
    negative assurance)?

    - What are the differences between the two?

    - How will reporting one or the other assist in assurances that
    agencies have reliable, timely, and useful financial information?

    5. What are the current obstacles to implementing the financial
    management line of business initiative designed to streamline the
    implementation and operation of financial management systems through
    the use of designated shared service providers?

    * What do you see as key drivers to make it successful?

    * How will overall cost and administrative burden be reduced and
    service delivery improved?

    * To what extent should agency financial management services be
    contracted out and how much dependence should be placed on the
    contractor community?

    * What measures should agencies use to ensure accountability and proper
    oversight for service delivery in an environment increasingly dependent
    on shared service providers?

    * What can be done to provide for continuity of current initiatives
    between administrations so that the current momentum and progress
    continues?

    6. How is the federal government staying abreast of leading edge
    technologies and approaches for delivering world-class financial
    management?

    * Given emerging technologies, such as Service Oriented Architecture,
    is the concept of a single integrated system still suitable?

    * Has Extensible Business Reporting Language (XBRL) been properly
    considered, implemented, or used in the federal government?

    * What key challenges need to be addressed to drive successful
    implementation of XBRL or other new technologies at the federal level?

    * What other technological advancements exist that should be
    considered?

    Topic 2: Lessons Learned from Financial Management System
    Implementations to Date:

    1. What lessons have agencies learned while modernizing federal
    financial management systems that can benefit future efforts?

    * Do existing system implementation methodologies provide an
    appropriate fundamental framework for successful implementations?

    * Is there agreement on what widely accepted systems development and
    implementation efforts (known as disciplined processes) should be used
    for systems implementations (e.g., requirements management, testing,
    data conversion and system interfaces, risk management, project
    management)?

    2. What actions have agencies found to be most effective in monitoring
    progress and identifying implementation issues on a timely basis?

    * What are the primary root causes of system implementation problems
    and failures and how can they be minimized or avoided?

    * When do you cut your losses on a project that is not meeting its
    cost, schedule, or performance goals?

    3. Since modernization efforts are underway across the federal
    government, how could future implementations be improved to take
    advantage of available resources on a governmentwide basis?

    * What types of additional implementation assistance and support (e.g.,
    guidance, coordination, advisory services) would be beneficial?

    4. All things considered, has the investment in financial management
    systems resulted in an adequate return on investment?

    * Is there any gap between the new system's capability and in improving
    efficiency and reducing operational costs?

    * Are the true costs and benefits of new systems implementation being
    identified and measured?

    * Do agencies achieve cost savings after having implemented new
    systems?

    * What can the government do as a whole to help reduce the cost of
    investments in the future?

    * What can be done to avoid expensive upgrades or implementations every
    5 to 10 years?

    Topic 3: Transforming Organizational Culture to Capitalize on Financial
    Management System Modernizations:

    1. How are financial management system implementations affecting agency
    human capital strategies?

    * To what extent are both financial and nonfinancial components
    affected such that line managers in all components better understand
    the financial implications of their decisions and the value of useful
    financial information readily available from reliable financial
    management systems?

    * Have system implementations significantly affected agency strategies
    related to training, outsourcing, and developing and retaining critical
    skills?

    * Do agencies' financial management organizations have appropriate and
    sufficient human capital resources to fully utilize modernized
    financial management systems to more effectively execute agency
    financial management strategies?

    * Are human capital strategies aligned with movement toward greater use
    of shared service providers and outsourcing financial reporting and
    recording activities to ensure appropriate oversight and accountability
    for the systems and information produced from these arrangements?

    2. In addition to improving financial reporting, how are agencies
    planning to utilize improved financial management system capabilities
    to deliver greater organizational value and resolve financial reporting
    weaknesses identified in many agencies' annual financial statement
    audits?

    * Have agencies developed plans that clearly distinguish between
    weaknesses reported in financial statement audits due to system
    limitations vs. other limitations?

    * How do agencies plan to coordinate system and non-system related
    efforts to ensure reported weaknesses are addressed?

    * What kind of "road maps" have agencies developed to communicate,
    promote, and guide future uses of improved capabilities with clear
    linkages/mappings from system capabilities to specific goals and
    results/outcomes in both of these areas?

    * What are some examples of significant business outcomes (e.g.,
    improved analysis, innovative solutions to problems, operating cost
    savings) that improved financial management system capabilities will
    assist agencies in achieving?

    [End of section]

    Appendix IV: Results of Electronic Survey:

    Topic 1: Shaping the Future of Government Financial Management:

    Question 1: To what extent do you believe that your financial
    management systems are now able to provide reliable, useful, and timely
    information to assist program managers in the day-to-day management of
    the agency?

    1) Large extent;
    * Percentage of responses: 3%;
    * Number of responses: 1.

    2) Moderate extent;
    * Percentage of responses: 30%;
    * Number of responses: 10.

    3) Little or no extent;
    * Percentage of responses: 64%;
    * Number of responses: 21.

    4) Don't know/Not applicable;
    * Percentage of responses: 3%;
    * Number of responses: 1.

    Question 2: To what extent do you believe agreement exists within the
    federal financial community regarding what constitutes substantial
    compliance with FFMIA?

    1) Large extent;
    * Percentage of responses: 0%;
    * Number of responses: 0.

    2) Moderate extent;
    * Percentage of responses: 43%;
    * Number of responses: 15.

    3) Little or no extent;
    * Percentage of responses: 57%;
    * Number of responses: 20.

    4) Don't know/Not applicable;
    * Percentage of responses: 0%;
    * Number of responses: 0.

    Question 3: To what extent do you believe OIGs or IPAs should have a
    role in assessing substantial compliance with FFMIA?

    1) Large extent;
    * Percentage of responses: 20%;
    * Number of responses: 7.

    2) Moderate extent;
    * Percentage of responses: 26%;
    * Number of responses: 9.

    3) Little or no extent;
    * Percentage of responses: 51%;
    * Number of responses: 18.

    4) Don't know/Not applicable;
    * Percentage of responses: 3%;
    * Number of responses: 1.

    Question 4: To what extent do you believe internal controls have
    improved through FFMIA compliance efforts?

    1) Large extent;
    * Percentage of responses: 14%;
    * Number of responses: 5.

    2) Moderate extent;
    * Percentage of responses: 49%;
    * Number of responses: 17.

    3) Little or no extent;
    * Percentage of responses: 34%;
    * Number of responses: 12.

    4) Don't know/Not applicable;
    * Percentage of responses: 3%;
    * Number of responses: 1.

    Question 5: How much progress do you think that your agency has made in
    achieving compliance with the three components of the FFMIA?

    1) Large extent;
    * Percentage of responses: 26%;
    * Number of responses: 9.

    2) Moderate extent;
    * Percentage of responses: 46%;
    * Number of responses: 16.

    3) Little or no extent;
    * Percentage of responses: 20%;
    * Number of responses: 17.

    4) Don't know/Not applicable;
    * Percentage of responses: 9%;
    * Number of responses: 3.

    Question 6: To what extent do you believe the resources available to
    implement the PMA and FMLOB initiatives are adequate?

    1) Fully adequate;
    * Percentage of responses: 0%;
    * Number of responses: 0.

    2) Marginally adequate;
    * Percentage of responses: 27%;
    * Number of responses: 9.

    3) Inadequate;
    * Percentage of responses: 64%;
    * Number of responses: 21.

    4) Don't know/Not applicable;
    * Percentage of responses: 9%;
    * Number of responses: 3.

    Question 7: In connection with the FMLOB goal of migrating the majority
    of agencies by 2011, to what extent do you believe your organization
    will transition to the use of SSPs by this date?

    1) Large extent;
    * Percentage of responses: 24%;
    * Number of responses: 8.

    2) Moderate extent;
    * Percentage of responses: 21%;
    * Number of responses: 7.

    3) Little or no extent;
    * Percentage of responses: 37%;
    * Number of responses: 12.

    4) Don't know/Not applicable;
    * Percentage of responses: 18%;
    * Number of responses: 6.

    Topic 2: Lessons Learned from Financial Management System
    Implementations to Date:

    Question 8: To what extent have the resources invested in federal
    financial management system modernizations yielded a commensurate level
    of value to the government organization and taxpayer?

    1) Large extent;
    * Percentage of responses: 3%;
    * Number of responses: 1.

    2) Moderate extent;
    * Percentage of responses: 50%;
    * Number of responses: 17.

    3) Little or no extent;
    * Percentage of responses: 44%;
    * Number of responses: 15.

    4) Don't know/Not applicable;
    * Percentage of responses: 3%;
    * Number of responses: 1.

    Question 9: To what extent do you believe agreement exists regarding
    what constitute the disciplined processes (e.g., requirements
    management; testing; data conversion; configuration, risk and project
    management; and quality assurance) that should be used in system
    implementation projects?

    1) Large extent;
    * Percentage of responses: 22%;
    * Number of responses: 7.

    2) Moderate extent;
    * Percentage of responses: 53%;
    * Number of responses: 17.

    3) Little or no extent;
    * Percentage of responses: 25%;
    * Number of responses: 8.

    4) Don't know/Not applicable;
    * Percentage of responses: 0%;
    * Number of responses: 0.

    Question 10: To what extent do you believe adequate guidance exists
    concerning the use of disciplined processes to ensure the success of
    system implementation projects?

    1) Large extent;
    * Percentage of responses: 24%;
    * Number of responses: 8.

    2) Moderate extent;
    * Percentage of responses: 46%;
    * Number of responses: 15.

    3) Little or no extent;
    * Percentage of responses: 30%;
    * Number of responses: 10.

    4) Don't know/Not applicable;
    * Percentage of responses: 0%;
    * Number of responses: 0.

    Question 11: To improve future implementations, which of the following
    areas could benefit MOST through enhanced guidance, training, or other
    tools designed to assist implementation efforts?

    1) Disciplined processes;
    * Percentage of responses: 27%;
    * Number of responses: 9.

    2) Human capital (e.g., project manager, project staffing, training);
    * Percentage of responses: 47%;
    * Number of responses: 16.

    3) Business process reengineering;
    * Percentage of responses: 27%;
    * Number of responses: 9.

    4) Don't know/Not applicable;
    * Percentage of responses: 0%;
    * Number of responses: 0.

    [End of table]

    Topic 3: Transforming Organizational Culture to Capitalize on Financial
    Management System Modernizations:

    Question 12: Do we need to redefine success for financial management?

    1) Yes;
    * Percentage of responses: 91%;
    * Number of responses: 29.

    2) No;
    * Percentage of responses: 9%;
    * Number of responses: 3.

    3) Unsure;
    * Percentage of responses: 0%;
    * Number of responses: 0.

    Question 13: Do we need to redefine the role of the CFO?

    1) Yes;
    * Percentage of responses: 91%;
    * Number of responses: 29.

    2) No;
    * Percentage of responses: 3%;
    * Number of responses: 1.

    3) Unsure;
    * Percentage of responses: 6%;
    * Number of responses: 2.

    Question 14: To what extent are modernization efforts leading to
    positive transformation of your organization's financial management
    culture toward creating more organizational value?

    1) Large extent;
    * Percentage of responses: 9%;
    * Number of responses: 3.

    2) Moderate extent;
    * Percentage of responses: 50%;
    * Number of responses: 16.

    3) Little or no extent;
    * Percentage of responses: 41%;
    * Number of responses: 13.

    4) Don't know/Not applicable;
    * Percentage of responses: 0%;
    * Number of responses: 0.

    Question 15: To what extent do human capital issues significantly
    challenge your organization's ability to realize benefits associated
    with financial management system modernization efforts?

    1) Large extent;
    * Percentage of responses: 84%;
    * Number of responses: 27.

    2) Moderate extent;
    * Percentage of responses: 13%;
    * Number of responses: 4.

    3) Little or no extent;
    * Percentage of responses: 3%;
    * Number of responses: 1.

    4) Don't know/Not applicable;
    * Percentage of responses: 0%;
    * Number of responses: 0.

    Question 16: How far along is your organization in transforming its
    business systems to effectively meet its organizational needs?

    1) Substantially complete;
    * Percentage of responses: 3%;
    * Number of responses: 1.

    2) Moderate progress has been achieved;
    * Percentage of responses: 55%;
    * Number of responses: 17.

    3) Little or no progress has been achieved;
    * Percentage of responses: 39%;
    * Number of responses: 12.

    4) Don't know/Not applicable;
    * Percentage of responses: 3%;
    * Number of responses: 1.

    General:

    Question 17: As it relates to your participation in today's Forum, what
    has been your primary experience and/or role related to federal
    financial management system modernization projects?

    1) Agency Financial Leadership;
    * Percentage of responses: 33%;
    * Number of responses: 10.

    2) Agency Information Technology Leadership;
    * Percentage of responses: 10%;
    * Number of responses: 3.

    3) Oversight Leadership (including IG and other agencies involved in
    governmentwide efforts);
    * Percentage of responses: 27%;
    * Number of responses: 8.

    4) External Advisors/Consultants/Private Sector;
    * Percentage of responses: 20%;
    * Number of responses: 6.

    5) Other;
    * Percentage of responses: 10%;
    * Number of responses: 3.

    Note: Percentages for Questions 5 and 11 do not total 100 percent due
    to rounding.

    [End of section]

    Appendix V: Contact and Staff Acknowledgments:

    GAO Contact:

    Kay L. Daly, (202) 512-9095 or dalykl@gao.gov:

    Staff Acknowledgments:

    In addition to the contact above, Michael S. LaForge, Assistant
    Director, and C. Robin Hodge, Analyst-in-Charge, managed all aspects of
    the work, and Latasha L. Brown, Francine DelVecchio, and James A.
    Kernen made important contributions to organizing the forum and
    producing this report.

    [End of section]

    Related GAO Products:

    Financial Management: Long-standing Financial Systems Weaknesses
    Present a Formidable Challenge. GAO-07-914. Washington, D.C.: August 3,
    2007.

    DOD Business Transformation: Lack of an Integrated Strategy Puts the
    Army's Asset Visibility System Investments at Risk. GAO-07-860.
    Washington, D.C.: July 27, 2007.

    Business Modernization: NASA Must Consider Agencywide Needs to Reap the
    Full Benefits of Its Enterprise Management System Modernization Effort.
    GAO-07-691. Washington, D.C.: July 20, 2007.

    Homeland Security: Departmentwide Integrated Financial Management
    Systems Remain a Challenge. GAO-07-536. Washington, D.C.: June 21,
    2007.

    Federal Financial Management: Critical Accountability and Fiscal
    Stewardship Challenges Facing Our Nation. GAO-07-542T. Washington,
    D.C.: March 1, 2007.

    Financial Management: Improvements Under Way but Serious Financial
    Systems Problems Persist. GAO-06-970. Washington, D.C.: September 26,
    2006.

    Financial Management Systems: Lack of Disciplined Processes Puts
    Effective Implementation of Treasury's Governmentwide Financial Report
    System at Risk. GAO-06-413. Washington, D.C.: April 21, 2006.

    Financial Management Systems: DHS Has an Opportunity to Incorporate
    Best Practices in Modernization Efforts. GAO-06-553T. Washington, D.C.:
    March 29, 2006.

    Financial Management Systems: Additional Efforts Needed to Address Key
    Causes of Modernization Failures. GAO-06-184. Washington, D.C.: March
    15, 2006.

    CFO Act of 1990: Driving the Transformation of Federal Financial
    Management. GAO-06-242T. Washington, D.C.: November 17, 2005.

    National Aeronautics and Space Administration: Long-standing Financial
    Management Challenges Threaten the Agency's Ability to Manage Its
    Programs. GAO-06-216T. Washington, D.C.: October 27, 2005.

    DOD Business Systems Modernization: Navy ERP Adherence to Best Business
    Practices Critical to Avoid Past Failures. GAO-05-858. Washington,
    D.C.: September 29, 2005.

    Financial Management: Achieving FFMIA Compliance Continues to Challenge
    Agencies. GAO-05-881. Washington, D.C.: September 20, 2005.

    Business Modernization: Some Progress Made toward Implementing GAO
    Recommendations Related to NASA's Integrated Financial Management
    Program. GAO-05-799R. Washington, D.C.: September 9, 2005.

    Business Systems Modernization: Internal Revenue Service's Fiscal Year
    2005 Expenditure Plan. GAO-05-774. Washington, D.C.: July 22, 2005.

    DOD Business Systems Modernization: Long-standing Weaknesses in
    Enterprise Architecture Development Need to Be Addressed. GAO-05-702.
    Washington, D.C.: July 22, 2005.

    Army Depot Maintenance: Ineffective Oversight of Depot Maintenance
    Operations and System Implementation Efforts. GAO-05-441. Washington,
    D.C.: June 30, 2005.

    DOD Business Systems Modernization: Billions Being Invested without
    Adequate Oversight. GAO-05-381. Washington, D.C.: April 29, 2005.

    Internal Revenue Service: Assessment of the Fiscal Year 2006 Budget
    Request. GAO-05-566. Washington, D.C.: April 27, 2005.

    Information Technology: OMB Can Make More Effective Use of Its
    Investment Reviews. GAO-05-276. Washington, D.C.: April 15, 2005.

    Information Technology: Customs Automated Commercial Environment
    Program Progressing, but Need for Management Improvements Continues.
    GAO-05-267. Washington, D.C.: March 14, 2005.

    Office of Personnel Management: Retirement Systems Modernization
    Program Faces Numerous Challenges. GAO-05-237. Washington, D.C.:
    February 28, 2005.

    DOD Systems Modernization: Management of Integrated Military Human
    Capital Program Needs Additional Improvements. GAO-05-189. Washington,
    D.C.: February 11, 2005.

    Department of Defense: Further Actions Are Needed to Effectively
    Address Business Management Problems and Overcome Key Business
    Transformation Challenges. GAO-05-140T. Washington, D.C.: November 18,
    2004.

    Business Systems Modernization: IRS's Fiscal Year 2004 Expenditure
    Plan. GAO-05-46. Washington, D.C.: November 17, 2004.

    Financial Management: Improved Financial Systems Are Key to FFMIA
    Compliance. GAO-05-20. Washington, D.C.: October 1, 2004.

    Financial Management Systems: HHS Faces Many Challenges in Implementing
    Its Unified Financial Management System. GAO-04-1089T. Washington,
    D.C.: September 30, 2004.

    Financial Management Systems: Lack of Disciplined Processes Puts
    Implementation of HHS' Financial System at Risk. GAO-04-1008.
    Washington, D.C.: September 23, 2004.

    Information Technology: DOD's Acquisition Policies and Guidance Need to
    Incorporate Additional Best Practices and Controls. GAO-04-722.
    Washington, D.C.: July 30, 2004.

    Department of Defense: Financial and Business Management Transformation
    Hindered by Long-standing Problems. GAO-04-941T. Washington, D.C.: July
    8, 2004.

    Information Security: Agencies Need to Implement Consistent Processes
    in Authorizing Systems for Operation. GAO-04-376. Washington, D.C.:
    June 28, 2004.

    DOD Business Systems Modernization: Billions Continue to Be Invested
    with Inadequate Management Oversight and Accountability. GAO-04-615.
    Washington, D.C.: May 27, 2004.

    Information Technology: The Federal Enterprise Architecture and
    Agencies' Enterprise Architectures Are Still Maturing. GAO-04-798T.
    Washington, D.C.: May 19, 2004.

    National Aeronautics and Space Administration: Significant Actions
    Needed to Address Long-standing Financial Management Problems. GAO-04-
    754T. Washington, D.C.: May 19, 2004.

    DOD Business Systems Modernization: Limited Progress in Development of
    Business Enterprise Architecture and Oversight of Information
    Technology Investments. GAO-04-731R. Washington, D.C.: May 17, 2004.

    Information Technology: Early Releases of Customs Trade System
    Operating, but Pattern of Cost and Schedule Problems Needs to Be
    Addressed. GAO-04-719. Washington, D.C.: May 14, 2004.

    Information Technology Investment Management: A Framework for Assessing
    and Improving Process Maturity (Version 1.1). GAO-04-394G. Washington,
    D.C.: March 2004.

    Information Technology Management: Governmentwide Strategic Planning,
    Performance Measurement, and Investment Management Can Be Further
    Improved. GAO-04-49. Washington, D.C.: January 12, 2004.

    Human Capital: Key Principles for Effective Strategic Workforce
    Planning. GAO-04-39. Washington, D.C.: December 11, 2003.

    Business Modernization: NASA's Challenges in Managing Its Integrated
    Financial Management Program. GAO-04-255. Washington, D.C.: November
    21, 2003.

    Business Modernization: NASA's Integrated Financial Management Program
    Does Not Fully Address Agency's External Reporting Issues. GAO-04-151.
    Washington, D.C.: November 21, 2003.

    Business Modernization: Disciplined Processes Needed to Better Manage
    NASA's Integrated Financial Management Program. GAO-04-118. Washington,
    D.C.: November 21, 2003.

    Information Technology: Architecture Needed to Guide NASA's Financial
    Management Modernization. GAO-04-43. Washington, D.C.: November 21,
    2003.

    Information Technology: Leadership Remains Key to Agencies Making
    Progress on Enterprise Architecture Efforts. GAO-04-40. Washington,
    D.C.: November 17, 2003.

    DOD Business Systems Modernization: Important Progress Made to Develop
    Business Enterprise Architecture, but Much Work Remains. GAO-03-1018.
    Washington, D.C.: September 19, 2003.

    Business Systems Modernization: IRS Has Made Significant Progress in
    Improving Its Management Controls, but Risks Remain. GAO-03-768.
    Washington, D.C.: June 27, 2003.

    Business Modernization: Improvements Needed in Management of NASA's
    Integrated Financial Management Program. GAO-03-507. Washington, D.C.:
    April 30, 2003.

    Department of Housing and Urban Development: Status of Efforts to
    Implement an Integrated Financial Management System. GAO-03-447R.
    Washington, D.C.: April 9, 2003.

    Information Technology: A Framework for Assessing and Improving
    Enterprise Architecture Management (Version 1.1). GAO-03-584G.
    Washington, D.C.: April 2003.

    DOD Business Systems Modernization: Continued Investment in Key
    Accounting Systems Needs to be Justified. GAO-03-465. Washington, D.C.:
    March 28, 2003.

    DOD Business Systems Modernization: Improvements to Enterprise
    Architecture Development and Implementation Efforts Needed. GAO-03-
    458. Washington, D.C.: February 28, 2003.

    Customs Service Modernization: Automated Commercial Environment
    Progressing, but Further Acquisition Management Improvements Needed.
    GAO-03-406. Washington, D.C.: February 28, 2003.

    Customs Service Modernization: Third Expenditure Plan Meets Legislative
    Conditions, but Cost Estimating Improvements Needed. GAO-02-908.
    Washington, D.C.: August 9, 2002.

    DOD Financial Management: Important Steps Underway but Reform Will
    Require a Long-term Commitment. GAO-02-784T. Washington, D.C.: June 4,
    2002.

    Customs Service Modernization: Management Improvements Needed on High-
    Risk Automated Commercial Environment Project. GAO-02-545. Washington,
    D.C.: May 13, 2002.

    Tax Administration: IRS Continues to Face Management Challenges in its
    Business Practices and Modernization Efforts. GAO-02-619T. Washington,
    D.C.: April 15, 2002.

    Business Systems Modernization: IRS Needs to Better Balance Management
    Capacity with Systems Acquisition Workload. GAO-02-356. Washington,
    D.C.: February 28, 2002.

    Human Capital: Building the Information Technology Workforce to Achieve
    Results. GAO-01-1007T. Washington, D.C.: July 31, 2001.

    Business Systems Modernization: Results of Review of IRS' March 2001
    Expenditure Plan. GAO-01-716. Washington, D.C.: June 29, 2001.

    Information Technology: DLA Should Strengthen Business Systems
    Modernization Architecture and Investment Activities. GAO-01-631.
    Washington, D.C.: June 29, 2001.

    Customs Service Modernization: Results of Review of First Automated
    Commercial Environment Expenditure Plan. GAO-01-696. Washington, D.C.:
    June 5, 2001.

    Information Technology: Architecture Needed to Guide Modernization of
    DOD's Financial Operations. GAO-01-525. Washington, D.C.: May 17, 2001.

    District of Columbia: Weaknesses in Financial Management System
    Implementation. GAO-01-489. Washington, D.C.: April 30, 2001.

    Tax Systems Modernization: Results of Review of IRS' Third Expenditure
    Plan. GAO-01-227. Washington, D.C.: January 22, 2001.

    Tax Systems Modernization: Results of Review of IRS' August 2000
    Interim Spending Plan. GAO-01-91. Washington, D.C.: November 8, 2000.

    Indian Trust Funds: Improvements Made in Acquisition of New Asset and
    Accounting System But Significant Risks Remain. GAO/AIMD-00-259.
    Washington, D.C.: September 15, 2000.

    Tax Systems Modernization: Results of Review of IRS' March 7, 2000,
    Expenditure Plan. GAO/AIMD-00-175. Washington, D.C.: May 24, 2000.

    Executive Guide: Creating Value Through World-class Financial
    Management. GAO/AIMD-00-134. Washington, D.C.: April 2000.

    Indian Trust Funds: Interior Lacks Assurance That Trust Improvement
    Plan Will Be Effective. GAO/AIMD-99-53. Washington, D.C.: April 28,
    1999.

    Federal Information System Controls Audit Manual, Volume I: Financial
    Statement Audits. GAO/AIMD-12.19.6. Washington, D.C.: January 1999.

    District of Columbia: Status of Efforts to Develop a New Financial
    Management System. GAO/AIMD-97-101R. Washington, D.C.: July 9, 1997.

    Information Security: Opportunities for Improved OMB Oversight of
    Agency Practices. GAO/AIMD-96-110. Washington, D.C.: September 24,
    1996.

    Financial Management Reform. GAO/T-AFMD-90-31. Washington, D.C.:
    September 17, 1990.

    Managing the Cost of Government: Building an Effective Financial
    Management Structure. GAO/AFMD-85-35. Washington, D.C.: February 1985.

    [End of section]

    Footnotes:

    [1] Financial management systems encompass more than an agency's
    automated information systems and include both the automated and manual
    processes, procedures, controls, and personnel needed to support agency
    financial management.

    [2] The four JFMIP Principals are the Comptroller General of the United
    States, the Secretary of the Treasury, and the Directors of the Office
    of Management and Budget (OMB), and Office of Personnel Management.

    [3] According to systems requirements issued by OMB, core financial
    systems are the backbone of an agency's integrated financial management
    system. Core financial systems provide specific functional capabilities
    necessary for managing a general ledger, controlling spending, making
    payments, managing receivables, measuring costs, funds management, and
    reporting in the federal environment.

    [4] The Budget and Accounting Procedures Act of 1950 has required heads
    of executive agencies to establish and maintain systems of accounting
    and internal control that met certain criteria and standards. See Act
    of Sept. 12, 1950, �113, 64 Stat. 835, 836 (codified, as revised, at 31
    U.S.C. �3512 (b)).

    [5] In the summer of 2001, President Bush introduced the PMA, which
    outlined specific governmentwide goals and strategies to address the
    nation's most pressing management issues.

    [6] OMB, Realignment of Responsibilities for Federal Financial
    Management Policy and Oversight, memorandum (Washington, D.C.: Dec. 2,
    2004).

    [7] GAO, CFO Act of 1990: Driving the Transformation of Federal
    Financial Management, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
    06-242T] (Washington, D.C.: Nov. 17, 2005).

    [8] An ERP solution is an automated system using commercial off-the-
    shelf software consisting of multiple, integrated functional modules
    that perform a variety of business-related tasks such as accounts
    payable, general ledger accounting, and supply chain management.

    [9] GAO, Financial Management Systems: Additional Efforts Needed to
    Address Key Causes of Modernization Failures, [hyperlink,
    http://www.gao.gov/cgi-bin/getrpt?GAO-06-184] (Washington, D.C.: Mar.
    15, 2006).

    [10] The CIO Council was first established in 1996 by executive order.
    See Exec. Order 13011, Federal Information Technology, � 3, 61 Fed.
    Reg. 37657 (July 19, 1996). The CIO Council's existence was codified
    into law by Congress in the E-Government Act of 2002. See 44 U.S.C. �
    3603. The CIO Council serves as the principal interagency forum for
    improving practices in the design, modernization, use, sharing, and
    performance of federal government agency information resources. The
    council's role includes developing recommendations for information
    technology management policies, procedures, and standards; identifying
    opportunities to share information resources; and assessing and
    addressing the needs of the federal government's IT workforce.

    [11] The CFO Council was established by section 302 of the CFO Act of
    1990 to advise and coordinate the activities of the agencies of its
    members on such matters as consolidation and modernization of financial
    systems, improved quality of financial information, financial data and
    information standards, internal controls, legislation affecting
    financial operations and organizations, and any other financial
    management matters. See 31 U.S.C. � 901 note.

    [12] OMB is developing the Federal Enterprise Architecture, a business-
    based framework for governmentwide improvement, to transform the
    federal government to one that is citizen-centered, results-oriented,
    and market-based.

    [13] In March 2004, OMB initiated a governmentwide analysis of five
    lines of business--financial management, human resources management,
    grants management, federal health architecture, and case management--
    and in March 2005 started a task force to address a sixth line of
    business on IT security. Three additional lines of business were
    initiated in March 2006 on budget formulation and execution,
    geospatial, and IT infrastructure optimization.

    [14] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-184].

    [15] Stovepiped systems are systems procured and developed for a
    specific purpose and contain data that cannot be easily shared with
    other systems.

    [16] OMB, Update on the Financial Management Line of Business,
    memorandum (Washington, D.C.: Jan. 28, 2008).

    [17] The Financial Systems Integration Office (FSIO) was formerly known
    as the Joint Financial Management Improvement Program (JFMIP) staff
    office. In December 2004, the JFMIP Principals voted to modify the
    roles and responsibilities of the JFMIP. The FSIO Executive reports to
    OMB's Office of Federal Financial Management Controller. See OMB,
    Update on the Financial Management Line of Business and the Financial
    Systems Integration Office memorandum (Washington, D.C.: Dec. 16,
    2005).

    [End of section]

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