The Congress enacted a number  of statutory reforms during the 1990s in the area of financial management. The executive branch management scorecard for the financial  performance area not only recognizes the importance of achieving an  unqualified or “clean” opinion from auditors on financial statements, but  also focuses on the fundamental and systemic issues that must be  addressed in order to routinely generate timely, accurate, and useful  financial information and provide sound internal control and effective  compliance systems, which represents the end goal of the CFO Act. PMA provides the visibility needed for  sustaining these efforts. This is not surprising, considering the well-recognized need  to transform financial management and other business processes at  agencies such as the Department of Defense (DOD), the results of our  analyses under FFMIA, the various financial management operations we  have designated as high risk, and known long-standing material  weaknesses. The  objective of establishing a separate initiative for improper payments was  to ensure that agency managers are held accountable for meeting the goals  of the IPIA and are therefore dedicating the necessary attention and  resources to meeting IPIA requirements. Effective implementation of the IPIA will be an important step towards  addressing the longstanding, significant issue of improper payments. Strategic Human Capital Management

The PMA recognizes that people are an important organizational asset to  an agency. Considerable progress has been made in strategic human capital  management since we designated it as high risk in 2001. To be effective, human capital reform needs to avoid further  fragmentation within the civil service, ensure reasonable consistency  within the overall civilian workforce, and help maintain a reasonably level  playing field among federal agencies competing for talent. The  budget and performance integration initiative includes elements such as  the Program Assessment Rating Tool (PART) used to review programs, an  emphasis on improving outcome measures, and improving monitoring of  program performance. Integrating management and performance issues with budgeting is  absolutely critical for progress in government performance and  management. OMB’s PART builds on GPRA  by actively promoting the use of results-oriented information to assess  programs in the budget. Further, although the evaluation of programs  in isolation may be revealing, it is often critical to understand how each  program fits with a broader portfolio of tools and strategies to accomplish  federal missions and performance goals. Although substantial progress has been made, the government  continues to face challenges in fully reaching its potential in this area. To implement the PMA initiative, OMB has taken a number of actions. While many e-government initiatives are showing tangible results, we  found, in March 2004, that overall progress on the 25 OMB-sponsored e- government initiatives was mixed. For example, the scorecard assesses  whether an agency has an enterprise architecture in place that is linked  to the Federal Enterprise Architecture, which is intended to provide a  government wide framework to guide and constrain federal agencies’  enterprise architectures and information technology investments. We continue to review various aspects of this  initiative. In DOD’s support infrastructure management area, which we identified as  high-risk in 1997, DOD has made progress and expects to continue making  improvements. The inclusion of real property asset management on the President’s  Management Agenda, the executive order, and agencies’ actions are  clearly positive steps in an area that had been neglected for many years. However, despite the increased focus on real property issues in recent  years, the underlying conditions—such as excess and deteriorating  properties and costly leasing—continue to exist and more needs to be  done to address various obstacles that led to our high risk designation.
Why GAO Did This Study

As part of its work to improve the management and performance of the federal government, GAO monitors progress and continuing challenges related to the President's Management Agenda (PMA). The Administration has looked to GAO's high-risk program to help shape various governmentwide initiatives, including the PMA. GAO remains committed to working with the Congress and the Administration to help address these important and complex issues.

What GAO Found

The administration's implementation of the PMA has been a very positive initiative. It has served to raise the visibility of key management challenges, increased attention to achieving outcome-based results, and reinforced the need for agencies to focus on making sustained improvements in addressing long-standing management problems, including items on GAO's high-risk list. Our work shows that agencies have made progress in the areas covered by the PMA, and the Office of Management and Budget (OMB) has indicated it will continue to focus on high-risk areas during the President's second term. Importantly, OMB needs to place additional attention on the Department of Defense's (DOD) many high-risk areas and overall business transformation efforts. While considerable progress has been made in connection with PMA issues, a number of significant challenges remain. In the area of financial performance, the PMA recognizes the importance of timely, accurate and useful financial information and sound internal control. Agencies made significant progress in meeting accelerated financial statement reporting deadlines, and OMB has refocused attention on improving internal controls. However, agencies face several challenges--improvement lags on financial management reforms, especially at DOD which must overhaul its financial management and business operations. The PMA established a separate initiative for improper payments to ensure that agency managers are held accountable for meeting the goals of the Improper Payments Information Act of 2002. Effective implementation of this Act will be an important step toward addressing this area, which involves tens of billions of dollars. The PMA recognizes that people are an important organizational asset. A governmentwide framework for advancing human capital reform is needed to avoid further fragmentation within the civil service, ensure management flexibility as appropriate, allow a reasonable degree of consistency, provide adequate safeguards within the overall civilian workforce, and help maintain a level playing field among federal agencies competing for talent. The initiative to integrate management and performance issues with budgeting is critical for progress in government performance and management. OMB's Program Assessment Rating Tool (PART) is designed to use results-oriented information to assess programs in the budget formulation process. However, more should be done to assess how each program fits within the broad portfolio of tools and strategies used to accomplish federal missions. Many e-government initiatives are showing tangible results. However, the government continues to face challenges, such as establishing a federal enterprise architecture intended to provide a framework to guide agencies' enterprise architectures and investments. The inclusion of real property asset management on the PMA, an executive order, and agencies' actions are all positive steps in an area that had been neglected for years. However, the underlying conditions--such as excess and deteriorating properties--continue to exist. More needs to be done in areas such as improving capital planning among agencies.