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 government�s financial management
capabilities and better integrating the role of financial managers to
achieve 21st-century goals. An overarching theme from the forum was
that financial management systems are a critical factor in agencies�
ability to achieve the systematic measurement of performance; the
development of cost information; and the integration of program,
budget, and financial information for management reporting.
Shaping the Future of Federal Financial Management:
Many participants emphasized the need for financial management
organizations to play a broader role as a strategic partner in meeting
overall agency and program objectives. One of the themes emerging from
the forum was that federal financial leaders should focus more of their
efforts on comprehending and meeting program managers� financial
information requirements and not simply on financial reporting
compliance. According to participants, current obstacles to future
success include limited resources, competing initiatives, and varying
levels of commitment among some federal officials to address long-
standing financial management issues.
Lessons Learned from Financial Management System Implementations:
The forum participants generally agreed that there has been a growing
body of knowledge based on lessons learned from past federal financial
management system implementation efforts. Consequently, managers
possess a greater knowledge of the system design and implementation
challenges they face, as well as possible solutions to these
challenges. Experience related to financial management, human capital
management, systems ownership, customization of commercial off-the-
shelf software, and the purchase of shared services has provided useful
insights that should help financial managers avoid some of the
obstacles that impeded past projects. Financial managers also reported
identifying various useful system implementation practices, including
conducting independent verification and validation, and periodically
reevaluating system implementation projects.
Strategies for Transforming Federal Financial Management Culture:
Participants stated that in order to remain relevant, the financial
management community must be willing to proactively embrace change and
focus on ways of proving value to the entire organization. Forum
participants discussed the need to continually reexamine the roles of
the CFO and other federal financial organizations. Participants
suggested working toward a better integration of people, processes, and
data. According to some participants, the key for CFOs in creating
value for their organization is delivering information that makes a
difference, including developing appropriate business metrics. To
facilitate such a transformation, federal financial management human
capital strategies could be better focused on attracting and retaining
a new technology-savvy generation of financial professionals with 21st-
century skill sets.
To view the full product, click on [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-08-447SP]. For more information,
contact Kay Daly at (202) 512-9095 or [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, �113, 64 Stat. 835, 836 (codified, as revised, at 31
U.S.C. �3512 (b)).
[5] In the summer of 2001, President Bush introduced the PMA, which
outlined specific governmentwide goals and strategies to address the
nation's most pressing management issues.
[6] OMB, Realignment of Responsibilities for Federal Financial
Management Policy and Oversight, memorandum (Washington, D.C.: Dec. 2,
2004).
[7] GAO, CFO Act of 1990: Driving the Transformation of Federal
Financial Management, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
06-242T] (Washington, D.C.: Nov. 17, 2005).
[8] An ERP solution is an automated system using commercial off-the-
shelf software consisting of multiple, integrated functional modules
that perform a variety of business-related tasks such as accounts
payable, general ledger accounting, and supply chain management.
[9] GAO, Financial Management Systems: Additional Efforts Needed to
Address Key Causes of Modernization Failures, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-06-184] (Washington, D.C.: Mar.
15, 2006).
[10] The CIO Council was first established in 1996 by executive order.
See Exec. Order 13011, Federal Information Technology, � 3, 61 Fed.
Reg. 37657 (July 19, 1996). The CIO Council's existence was codified
into law by Congress in the E-Government Act of 2002. See 44 U.S.C. �
3603. The CIO Council serves as the principal interagency forum for
improving practices in the design, modernization, use, sharing, and
performance of federal government agency information resources. The
council's role includes developing recommendations for information
technology management policies, procedures, and standards; identifying
opportunities to share information resources; and assessing and
addressing the needs of the federal government's IT workforce.
[11] The CFO Council was established by section 302 of the CFO Act of
1990 to advise and coordinate the activities of the agencies of its
members on such matters as consolidation and modernization of financial
systems, improved quality of financial information, financial data and
information standards, internal controls, legislation affecting
financial operations and organizations, and any other financial
management matters. See 31 U.S.C. � 901 note.
[12] OMB is developing the Federal Enterprise Architecture, a business-
based framework for governmentwide improvement, to transform the
federal government to one that is citizen-centered, results-oriented,
and market-based.
[13] In March 2004, OMB initiated a governmentwide analysis of five
lines of business--financial management, human resources management,
grants management, federal health architecture, and case management--
and in March 2005 started a task force to address a sixth line of
business on IT security. Three additional lines of business were
initiated in March 2006 on budget formulation and execution,
geospatial, and IT infrastructure optimization.
[14] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-184].
[15] Stovepiped systems are systems procured and developed for a
specific purpose and contain data that cannot be easily shared with
other systems.
[16] OMB, Update on the Financial Management Line of Business,
memorandum (Washington, D.C.: Jan. 28, 2008).
[17] The Financial Systems Integration Office (FSIO) was formerly known
as the Joint Financial Management Improvement Program (JFMIP) staff
office. In December 2004, the JFMIP Principals voted to modify the
roles and responsibilities of the JFMIP. The FSIO Executive reports to
OMB's Office of Federal Financial Management Controller. See OMB,
Update on the Financial Management Line of Business and the Financial
Systems Integration Office memorandum (Washington, D.C.: Dec. 16,
2005).
[End of section]
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. ***