Since the enactment of key financial mgmt. (FM) reforms, the fed. gov¿t. has devoted significant resources to improving FM activities and practices. Yet continuing attention is needed to address persistent, long-standing accountability problems and to redefine success for fed. FM. Many gov¿t. agency FM systems do not produce the accurate, timely, and meaningful info. needed for mgmt. decision making. This forum brought together FM leaders from the fed. gov¿t., incl. the CFO, CIO, and IG communities, and other officials with extensive experience in FM from both the public and private sectors. The forum addressed: the future of fed. FM; applying lessons learned from fed. FM system implementations; and strategies for transforming fed. FM culture.

" Given the federal government's continuing fiscal challenges, it is more important than ever that the Congress, the administration, and federal managers have reliable, useful, and timely financial and performance information to help ensure fiscal responsibility and demonstrate accountability, particularly for the federal government's largest department, the Department of Defense. GAO has previously reported that serious and continuing deficiencies in DOD's financial management make up one of three major impediments to achieving an opinion on the U.S. government's consolidated financial statements. GAO's statement focuses on (1) the effect of continuing financial management challenges on DOD management and operations and (2) DOD's efforts to improve financial management and its remaining challenges. GAO's statement is primarily based on previously issued reports, including GAO's updates on DOD high-risk areas and its audit reports on DOD's financial management, inventory management and asset visibility, weapon system costs, business transformation, and business system modernization. "

GAO reviewed the federal government's internal control and accounting systems, focusing on agencies': (1) progress in complying with the Federal Managers' Financial Integrity Act of 1982; and (2) efforts to correct remaining problems. GAO found that: (1) agencies reported that more than a third of the serious internal control weaknesses in financial management, procurement, debt collection, and property management which they had cited since 1983 remained uncorrected; and (2) agency self-evaluations identified 229 new weaknesses in 1986. GAO also found that agencies: (1) reported that they had corrected many of their internal control problems; (2) did not always ensure the prompt and effective correction of problems; and (3) sometimes delayed the resolution of audit findings, which could have saved millions of dollars. In addition, GAO found that: (1) agencies' accounting systems did not provide the reliable and timely data they needed to decide policy or manage their operations; (2) agencies' attempts to correct these problems were frequently costly or seriously delayed; and (3) Congress is considering legislation to ensure the implementation and continuity of comprehensive reform of the government's accounting and financial management systems.

Statement of Asif A. Khan, Dir., Financial Management and Assurance, GAO. Given the federal government's continuing fiscal challenges, it is more important than ever that the Congress, the administration, and federal managers have reliable, useful, and timely financial and performance information to help ensure fiscal responsibility and demonstrate accountability, particularly for the federal government's largest department, the Department of Defense (DOD). GAO has previously reported that serious and continuing deficiencies in DOD's financial management make up a major impediment to achieving an opinion on the U.S. government's consolidated financial statements. This statement focuses on (1) the effect of continuing financial management challenges on DOD management and operations; and (2) DOD's efforts to improve financial management and its remaining challenges. This is a print on demand report.

As part of its work to improve the management and the performance of the federal government, GAO monitors progress and continuing challenges related to the five crosscutting initiatives in the President's Management Agenda (PMA). The President cited GAO's high-risk areas and major management challenges in developing these initiatives. GAO remains committed to working with the Congress and the Administration to help address these complex issues. There has been continuing progress in implementing the five crosscutting PMA initiatives to improve the management and performance of the federal government. However, progress has been uneven, and a continuing focus is needed to improve the management and performance of the federal government and ensure accountability. These five crosscutting PMA initiatives are interrelated and must be addressed in an integrated way. Strategic human capital management: Considerable progress has been made in this area since we designated it as high risk in 2001. Serious human capital shortfalls, however, continue to erode the ability of many agencies, and threaten the ability of others, to economically, efficiently, and effectively perform their missions. Budget and performance integration: The administration has set forth an ambitious agenda for performance budgeting but the federal government has a long way to go before it can meet its goals. More explicitly infusing performance information into resource allocation decisions is critical for further progress in government performance and management. Improved financial performance: This initiative is aimed at ensuring that federal financial systems produce accurate and timely information to support operating, budget, and policy decisions. Although a range of improvements is under way, much work remains to be done across government. Expanded electronic government: E-government offers many opportunities to better serve the public, make government more efficient and effective, and reduce costs. Although substantial progress has been made, the government has not yet fully reached its potential in this area. Competitive sourcing: The administration has committed to using competitions to determine whether public or private sources should provide commercial services. OMB has proposed changes to the procedures for conducting public-private competitions under its Circular A-76. However, some of the proposed changes are not consistent with sourcing principles or recommendations of the Commercial Activities Panel. Congressional support has proven to be critical in sustaining interest in management initiatives over time. A focus on the quality of program performance and effective management is critical today, and now is the time to act.