For fiscal year 2003, OIGs and  their contract auditors reported that the systems of 17 of the 23 CFO Act  agencies did not substantially comply with at least one of FFMIA’s three  requirements—federal financial management systems requirements,  applicable federal accounting standards, or the SGL at the transaction  level. In total,  for 6 of the 23 CFO Act agencies, the auditors provided negative assurance  by stating that nothing came to their attention that would indicate the  systems did not comply with FFMIA for fiscal year 2003. However, the  auditors identified and reported deficiencies that relate to the three FFMIA  requirements. Nonintegrated Financial Management Systems

The CFO Act calls for agencies to develop and maintain an integrated  accounting and financial management system that complies with federal  systems requirements and provides for (1) complete, reliable, consistent,  and timely information that is responsive to the financial information needs  of the agency and facilitates the systematic measurement of performance;  (2) the development and reporting of cost management information; and  (3) the integration of accounting, budgeting, and program information. Agencies Struggle to Implement New Financial Systems

In an effort to address problems such as nonintegrated systems, inadequate  reconciliations, and lack of compliance with the SGL, a number of agencies  have efforts under way to implement new financial management systems or  to upgrade existing systems. Agencies anticipate that the new systems will  provide reliable, useful, and timely data to support managerial decision  making and assist taxpayer and congressional oversight. Our work at DOD, HHS, and NASA has shown that agencies face significant  problems in implementing financial management systems and are not  following the necessary disciplined processes for efficient and effective  implementation of financial management systems. Disciplined processes have been shown to mitigate some of the risks  associated with software development and acquisition efforts to acceptable  levels. Conclusions

Long-standing problems with agencies’ financial systems continue to make  it difficult for agencies to routinely produce reliable, useful, and timely  financial information. VI) on a draft of this report, OMB  agreed with our assessment that while federal agencies continue to make  progress in addressing financial management systems weaknesses, many  agencies still lack the ability to produce the data needed to efficiently and  effectively manage day-to-day operations. Moreover, according to PMO, core financial systems certification does not  mean that agencies that install these packages will have financial  management systems that are compliant with the Federal Financial  Management Improvement Act (FFMIA) of 1996.
Why GAO Did This Study

The ability to produce the data needed to efficiently and effectively manage the day-to-day operations of the federal government and provide accountability to taxpayers has been a long-standing challenge to most federal agencies. To help address this challenge, the Federal Financial Management Improvement Act of 1996 (FFMIA) requires the 23 Chief Financial Officers Act agencies 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 (SGL) at the transaction level. FFMIA also requires GAO to report annually on the implementation of the act.

What GAO Found

Federal agencies continue to make progress in addressing their financial management weaknesses; however, for fiscal year 2003, auditors for 17 of the 23 CFO Act agencies still reported that agencies' financial management systems failed to comply with FFMIA. The nature and severity of the reported problems indicate that generally agency management lacked the full range of reliable, useful, and timely information needed for accountability, performance reporting, and decision making. Six main types of problems related to agencies' systems were consistently identified. As prescribed in OMB's reporting guidance, auditors for six agencies provided negative assurance on agency systems' FFMIA compliance for fiscal year 2003. This means that nothing came to their attention to indicate that financial management systems did not meet FFMIA requirements. GAO continues to believe that this type of reporting is not sufficient under the act and that report users may have the false impression that auditors have reported agency systems to be compliant. To address problems such as nonintegrated systems, inadequate reconciliations, and lack of SGL compliance, agencies are implementing or upgrading financial management systems. Agencies anticipate the new systems will provide reliable, useful, and timely data to support managerial decision making. However, our work at DOD, HHS, and NASA has shown significant problems exist in implementing financial management systems and that agencies are not following the necessary disciplined processes for efficient and effective implementation of these systems. Disciplined processes have been shown to reduce the risks associated with software development and acquisition efforts to acceptable levels and are fundamental to successful system acquisition and implementation. Moreover, governmentwide initiatives to improve financial management systems can help enhance the government's performance and services for citizens.