Panel offers advice to agencies on financial management technology

Federal agencies are implementing the technology necessary to bring them up to speed with key financial management laws, software industry representatives told lawmakers Wednesday. But agencies could put the information produced by new financial systems to better use, experts from the private sector said.

Until recently, "technology was the challenge" in complying with financial laws, said Donna Morea, executive vice president of the public sector group at American Management Systems Inc. (AMS), a Fairfax, Va.-based IT company. Now, the government has standardized financial reporting and administrative requirements across agencies, making it easier for software companies to design widely applicable management products, she said.

IT products that can help agencies consolidate and modernize financial management systems are readily available, and most agencies are "at a point where they can move beyond technology," Morea said. "While technology is critical, people and their understanding of how to change relevant business processes and decision-making ultimately will determine the success of major [financial] modernization initiatives."

Lawmakers have criticized AMS for a failed contract to upgrade the Thrift Savings Plan's computer system. But members of the House Government Reform Subcommittee on Efficiency and Financial Management invited AMS and three other IT companies to testify on ways agencies can better apply technology.

Although 21 of 24 major agencies received clean opinions on audits of their 2002 financial statements, at least 19 of those agencies violated standards in the 1996 Federal Financial Management Improvement Act, the General Accounting Office reported earlier this month. That law requires the 24 agencies covered by the 1990 Chief Financial Officers Act to produce accurate, timely financial information that managers can use in making budget and policy decisions.

The 19 agencies failed to follow the 1996 law in at least one of six major areas: security, consolidation of disparate and duplicative financial management systems, maintenance of accurate and timely financial records, reconciliation of data discrepancies, adherence to federal accounting standards and compliance with financial guidelines in the government's Standard General Ledger.

"While much more severe at some agencies than others, the nature and severity of the problems indicate that overall, agency management lacks the full range of information needed for accountability, performance reporting and decision-making," Sally Thompson, GAO's director of financial management and assurance, said in testimony.

At the end of fiscal 2002, 17 of the 24 CFO Act agencies planned on establishing new financial management systems, according to GAO. Thompson urged these agencies to "adopt leading practices, such as top management commitment and business process reengineering, to ensure successful systems implementation."

But "simply implementing the latest and greatest software solution on financial management is not a panacea," said Wayne Bobby, director of solutions for federal finance and administration for the Oracle Corp. More than 40 federal agencies are using Oracle's financial software.

Agencies should make sure that financial managers coordinate with staff in other divisions, including human resources and procurement, when implementing new software, Bobby testified. A lack of coordination "inadvertently" creates barriers preventing agency managers from using financial information for "budget and project planning," he said.