Thursday, August 09, 2007

GAO Casts a Dubious Eye at Federal Accounting Progress

The General Accountability Office recently referred to continuing weaknesses in government agency financial systems as a "formiddable challenge." Most federal agencies had not reached compliance with the Federal Financial Management Improvement Act (FFMIA) of 1996, over a decade ago. Six particularly common shortcomings included nonintegrated systems, lack of appropriate reconciliations, lack of accurate and timely reporting, noncompliance with the U.S. Standard General Ledger, weak security and failure to comply with federal accounting standards. GAO did praise agencies for developing remediation plans and OMB efforts to improve system implementation but criticized the Department of Defense for particularly poor modernization of its financial system.

The GAO report raises several questions: could inadequate accounting systems impact the battle in Iraq and the welfare of soldiers in the field; can the U.S. Government REALLY take on any new programs when they struggle to account for present activities and are the goals of the FFMIA realistic. It would be interesting to see whether federal financial reporting has reached the caliber of state governments yet.


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