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Wednesday, August 08, 2007

Report finds gaps in compliance with financial management law

Federal agencies have made incremental progress in improving their financial management systems, but most remain unable to routinely produce reliable, timely and useful financial information needed for day-to-day management, according to a new report by congressional auditors.

The Government Accountability Office found that 17 agencies failed to comply with at least one aspect of the 1996 Federal Financial Management Improvement Act. The law requires that the 24 agencies covered by the 1990 Chief Financial Officers Act implement and maintain financial management systems that comply with federal guidelines, applicable accounting standards and the U.S. Government Standard General Ledger.

"Addressing the problems with agencies' financial management systems remains a significant challenge to improved financial management in the federal government," the report (GAO-07-914) stated. "This problem is particularly severe at the Department of Defense. Many agencies are still a long way from accomplishing the goals of the CFO Act of 1990 and FFMIA."

Auditors identified six major recurring problems: financial management systems that are not integrated; inadequate reconciliation procedures; inaccurate and untimely recording of data; noncompliance with the general ledger; failure to adhere to federal accounting standards; and poor security of information systems.

The deficiencies cited by auditors were nearly identical those found in a similar report last year. That report found that 18 agencies were out of compliance with financial laws.

Rather than offering any new recommendations, GAO will host a forum later this year on the impediments federal managers face in bringing their agencies into compliance with the requirements of the law. Chief financial officers, members of the inspectors general community, top OMB officials, congressional staffers and financial management experts from the private sector are expected to attend.

-Robert Brodsky, GovExec.com

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