n an effort to gain control of federal finances, Congress launched a series of reforms this decade, beginning with the 1990 Chief Financial Officers Act. It was the most far-reaching financial management legislation in 40 years. By establishing a financial management leadership structure, requiring audited financial statements and strengthening accountability reporting, the CFO Act laid the groundwork for comprehensive financial management reform.
The CFO Act was expanded under the 1994 Government Management Reform Act (GMRA) to require the 24 agencies responsible for 99 percent of federal spending to prepare annual audited financial statements. This year, under GMRA, the federal government produced for the first time a consolidated financial statement, albeit an unauditable one. GMRA came on the heels of the 1993 Government Performance and Results Act, which required agencies, starting last fall, to establish strategies for measuring performance, which will be tied to specific budget requests.
Most recently, under the 1996 Federal Financial Management Improvement Act (FFMIA), agency auditors are to report on whether their agency's financial systems comply with federal requirements, federal accounting standards and the U.S. Government Standard General Ledger (SGL), which was developed by the Treasury Department in 1986 for governmentwide use to standardize financial data collection and processing and strengthen control and reporting. An interagency board is now in the process of updating the SGL, which is no longer sufficient to meet financial reporting requirements under GMRA and FFMIA.
According to the General Accounting Office, agencies will continue to have difficulty complying with the new financial management requirements because most still lack basic systems needed to provide uniform and reliable financial information.