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						 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-08-447SP

   

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

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 governmentï¿½s 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 agenciesï¿½ 
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 managersï¿½ 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 [email protected]. 

[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 [email protected]: 

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, ï¿½113, 64 Stat. 835, 836 (codified, as revised, at 31 
U.S.C. ï¿½3512 (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, ï¿½ 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. ï¿½ 
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. ï¿½ 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] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "E-mail Updates." 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office: 
441 G Street NW, Room LM: 
Washington, D.C. 20548: 

To order by Phone: 
Voice: (202) 512-6000: 
TDD: (202) 512-2537: 
Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: [email protected]: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, [email protected]: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, [email protected]: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: 
*** End of document. ***