Agencies still struggling to get finances in order

By Kellie Lunney

October 17, 2000

klunney@govexec.com

Most agencies failed to get their finances in order for fiscal 1999, according to a General Accounting Office report.

Of the 24 agencies covered under the Chief Financial Officers Act, only the Energy Department, NASA and the National Science Foundation complied with the financial requirements of the 1996 Federal Financial Management Improvement Act of 1996.

Under FFMIA, agencies must produce timely and reliable statements demonstrating their compliance with federal financial management systems requirements, federal accounting standards and the U.S. government standard general ledger. If an agency believes its systems are not FFMIA-compliant, it must develop a remediation plan to achieve compliance within three years.

According to GAO, the FFMIA compliance results for fiscal 1999 were similar to those for 1997 and 1998.

"This continuing, widespread noncompliance with FFMIA is indicative of the overall longstanding poor condition of agency financial systems," said the GAO report, "FFMIA Results for Fiscal Year 1999" (GAO/AIMD-00-307).

Reasons for noncompliance included:

On the bright side, 15 of the 24 CFO Act agencies received clean audits on their financial statements for fiscal 1999, up from 12 in fiscal 1998. Of the 15 agencies receiving clean opinions, however, 12 did not comply "substantially" with FFMIA requirements for fiscal 1999. GAO also noted that more agencies are submitting their audited financial statements on time.

GAO emphasized, however, that a clean opinion is not an end in itself. "Although a clean opinion indicates that year-end financial information is fairly presented, it provides no assurance about the effectiveness and efficiency of financial systems used to prepare the statements or whether use of the same or other information generated by the financial systems for management use throughout the year would be appropriate," said the report.

The report recommended that the Office of Management and Budget continue to work with agencies on getting their finances in order and on meeting the deadline for submitting their annual financial statements.

OMB said the GAO report did not give agencies enough credit for their improvement in meeting FFMIA requirements, and that an agency's noncompliant status does not accurately measure the progress many agencies have made in one or more compliance areas.

Regarding weak computer security, OMB said many problems relating to computer security need to be tackled on a departmentwide level by the chief information officer.


By Kellie Lunney

October 17, 2000

http://www.govexec.com/management/2000/10/agencies-still-struggling-to-get-finances-in-order/7796/