"Federal agencies continue to earn the lowest marks in their financial performance in spite of calls from the White House and Congress for fiscal belt-tightening and zero tolerance for fraud and fiscal mismanagement.
The latest executive branch management scorecard gives the lowest possible rating - unsatisfactory - to the financial performance of 17 out of 26 federal agencies. Efforts of some agencies to improve financial performance in fact are in 'serious jeopardy,' according to the President's Management Agenda (PMA) rating system.
What’s taking agencies so long to improve?
The Chief Financial Officers Act of 1990 requires agencies to submit to the OMB annual, audited financial statements for each revolving fund, trust fund, office, bureau and activity that performs a substantial commercial function. Agencies also are required to maintain an integrated agency accounting and financial management system that systematically measures performance.
It’s a tall order. Since the passage of the CFO Act, an OMB document says, “agencies have been engaged in a process of catching up to long-established private-sector practices of financial reporting.” Before the CFO Act created accounting guidelines, OMB records show that agencies took more than five months to prepare their end-of-year financial statements. These days, CFOs regularly finish their annual financial statements within 45 days after the fiscal year ends.
Other roadblocks slow improvement. An OMB official tells Government Leader that agencies must show sustained improvement before their progress is recognized. “Repeat material weaknesses keep most agencies at red,” the OMB official said. “They must make their systems comply with federal financial management system standards. For each weakness/deficiency, agencies must submit corrective action plans to OMB and meet scheduled milestones. Slippage in meeting planned actions can result in a progress downgrade under the PMA.”
“Achieving ‘green’ in financial performance isn't something that agencies accomplish overnight or on their own,” the official added. “It requires detailed, multiyear plans and collaboration.”
A November 2005 Government Accountability Office report titled “Driving the Transformation of Federal Financial Management” says federal agencies also lack up-to-date IT auditing systems and accounting software to improve their financial performance reporting. "