GAO: Agencies lack day-to-day financial management tools
Report finds that while audits are solid, their underlying accounting systems are insufficient.
Agencies do not have the ability to gather the information necessary for proper day-to-day financial management, according to a report from congressional auditors.
The Government Accountability Office found that while most agencies under the 1990 Chief Financial Officers Act have obtained clean audits on their financial statements, underlying financial systems remain a serious problem.
According to the report (GAO-05-881), the systems at 16 of the 23 CFO Act agencies do not comply with one or more of the requirements of the 1996 Federal Financial Management Improvement Act.
GAO found that six types of problems are regularly identified: financial systems that are not integrated; inadequate reconciliation procedures; untimely and inaccurate recording; noncompliance with the Government Standard General Ledger; failure to adhere to federal accounting standards; and poor security of information systems.
These problems are "a significant challenge" for federal agencies if their financial management is to improve, GAO stated in the 56-page report.
For six agencies, nothing indicated that the financial management systems were outside the law's requirements, which is in compliance with the Office of Management and Budget reporting guidances. But GAO auditors believe that the current OMB standard is insufficient under the law.
GAO states in its report that this type of assurance could create the false impression that the auditors are reporting that agencies' systems are compliant when, in fact, additional work needs to be done.
The report did not make any new recommendations, but rather reinforced those made in an October 2001 report (GAO-02-29). Those included requiring agency auditors to provide assurance that the organization's financial statement is in "substantial compliance" with the law's requirements and to clearly define what "substantial compliance" means.
In comments on the report, OMB agreed with GAO's assessment that many agencies need to improve their reporting of financial information.
Sally E. Thompson, OMB director of financial management and assurance, wrote the President's Management Agenda includes measures on the quality of agencies' accounting processes.