Recognizing the need for a more  holistic approach to address the seriousness of these problems, OMB  launched the FMLOB initiative in March 2004, in connection with the 2001  President’s Management Agenda (PMA). In part, the FMLOB initiative is intended to reduce the cost and upgrade  the quality and performance of federal financial management systems by  leveraging shared service solutions and implementing other  governmentwide reforms that foster efficiencies in federal financial  operations. Progress Continues but Achieving FMLOB Goals Requires Much More Work and Time

OMB and FSIO efforts to implement the FMLOB initiative continue to  show progress and have effectively addressed 5 of the 18  recommendations and made progress toward addressing the remaining 13  recommendations we made related to four areas considered key building  blocks for governmentwide financial management systems—a concept of  operations, standard business processes, migration strategy, and  disciplined processes. OMB has not completed development of a concept of operations  representing the first and foremost building block on which all system  planning processes as well as the remaining building blocks are built. For example, according to FSIO officials, it may  take as many as 15 years or more before software that incorporates the  standard business processes currently under development is in use  governmentwide. In addition, development of a migration timeline  reflecting agencies’ commitment to migrating to shared service providers  has not yet been completed. We also recognize that incorporating standard business  processes into operational systems will be a much longer-term effort since  OMB is not requiring agencies to consider migrating to a shared service  provider until upgrading to the next major release of their core financial  systems, and adoption of these standards is not required until migration  occurs. OMB has yet to take sufficient  actions to fully address these recommendations, despite the critical role of  OMB oversight, established in various statutes, in helping to ensure the  success of agency modernization efforts. Achieving FMLOB goals requires effective  OMB oversight of agency modernization projects. Actions Still Needed to Address Prior Recommendations Related to Oversight of Financial Management System Modernization and Other IT Projects

Although OMB has taken steps to address some of the oversight-related  recommendations we have made since 2005, it has yet to fully address  them. Appendix I: Scope and Methodology

To determine the Office of Mana toward addressing our prior recommend management line of business (FMLOB) initiative, we reviewed relevant  OMB and Financial Systems Integration Office (FSIO) policies, guidance,  reports, and memorandums related to actions taken and actions remaining  and interviewed key OMB and FSIO officials, including senior officials in  OMB’s Office of Federal Financial Management (OFFM) and Office of  Electronic Government and Information Technology (E-Gov and IT). In addition, OMB Circular No. Enhance existing oversight efforts to improve financial management syste implementations by  developing a structured process to identify and evaluate specific and  systemic implementation weaknesses and risks specifically related to financial management system modernizations, including those associated  with projects on the Management Watch List and High Risk List and others  identified through reviews of agency provided information, as well as their  costs, and discussions with agency officials;  implementing processes to ensure that agencies more effectively and  consistently comply with guidance related to implementing financial  management system modernization projects, including the use of  disciplined processes to reduce the risk of implementation failures; and clarifying guidance so that agencies consistently report planned and spending related to financial management system modernization projects including the financial portion of mixed systems.
Why GAO Did This Study

In March 2004, the Office of Management and Budget (OMB) launched the financial management line of business (FMLOB) initiative, in part, to reduce the cost and improve the quality and performance of federal financial management systems by leveraging shared service solutions and implementing other reforms. In March 2006, GAO reported that OMB's approach did not fully integrate certain fundamental system implementation-related concepts and recommended OMB take specific actions. This report discusses (1) OMB's progress in addressing GAO's prior FMLOB recommendations and implementation challenges and (2) the effectiveness of OMB's monitoring of financial management system modernization projects and their costs. GAO's methodology included reviewing OMB's FMLOB-related guidance and reports and interviewing OMB and Financial Systems Integration Office (FSIO) staff.

What GAO Found

OMB has made progress toward implementing the FMLOB initiative. In March 2006, GAO recommended that OMB place a high priority on fully integrating four key concepts into its approach. As shown in the table, OMB has completed actions to fully address 5 of GAO's 18 recommendations. Although OMB has made progress toward completing the remaining 13 recommendations, extensive work remains before the goals of the FMLOB initiative are achieved. For example, OMB has yet to finalize a financial management system concept of operations, the first and foremost critical building block on which the remaining three concepts will be built. In addition, development of a migration timeline reflecting agencies' commitment for migrating to shared service providers has not yet been completed. Further, agencies are not required to consider migrating until the next major release of their core financial system and much work remains before the software used by shared service providers will incorporate the standard business processes currently under development. Accordingly, FSIO officials stated it could take 15 years or more before software that incorporates these standard business processes is in use governmentwide. We recognize that the FMLOB initiative represents a long-term effort; however, expediting efforts to address our prior recommendations could help achieve more effective and timely benefits. Until OMB fully integrates the four key concepts into its approach, the extent to which FMLOB goals will be achieved is uncertain. The Chief Financial Officers Act of 1990 and other information technology (IT) reform legislation contain requirements related to OMB's oversight of agency financial management systems modernization and other IT projects. Achieving FMLOB goals requires effective OMB oversight of agency modernization projects, but OMB has yet to fully address GAO's previously reported oversight-related recommendations such as taking actions to define and ensure that agencies effectively implement disciplined processes and develop a more structured review of agency efforts. In addition, OMB does not obtain and report complete and accurate data concerning agencies' spending on financial management system modernization projects. The lack of sufficient information and processes to effectively monitor agency modernization efforts and their costs limits OMB's ability to evaluate and help reduce the risks associated with financial management system implementations as well as achieve FMLOB goals.