Agencies struggle to deploy financial management systems 30 years after CFO Act

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The 24 Chief Financial Officers Act agencies still struggle to meet federal requirements implementing financial management systems, despite making “significant progress” since the law’s enactment in 1990, according to the Government Accountability Office.

“Inadequate” project planning, requirements and oversight continue to hinder financial management system accountability, largely because the government lacks a long-term modernization plan, GAO found in a report released Thursday.

Some legacy systems rely on outdated programming languages, like the Treasury Department‘s IRS System 6 for taxpayer data, which was written in assembly language code and Common Business Oriented Language (COBOL). In 2019, GAO found 10 critical financial management systems across government ranged in age from 8 to 51 years old and cost $337 million annually just to maintain.

“Without a comprehensive, long-term plan, agencies may miss the opportunity to strategize a long-term vision and take appropriate actions to effectively increase the use of shared services government-wide,” reads the report.

This is particularly important because in June the Office of Management and Budget formally designated Treasury a quality service management office (QSMO), tasked with eventually operating a federal marketplace for shared financial management services.

The CFO Act became law at a time when many financial management systems had an “obsolete” World War II-era structure. So the legislation charged CFOs with approving and managing the replacement or upgrade of such systems, according to the report.

While CFOs’ efforts over the last 30 years prepared government to continue operations during the ongoing coronavirus pandemic, they still lack a standardized set of responsibilities like oversight that Congress could legislate, GAO found.

GAO in the report further recommended Congress require OMB to present a four-year financial management plan and annual status report that include steps for improving systems based on agency and CFO plans.

“Periodically preparing and implementing plans at the government-wide level would help to ensure that the federal government is developing direct, transparent, and consistent actions to improve financial management systems, strengthen the federal financial management workforce, and effectively link performance and cost information for decision-making,” reads the report.

OMB should also be required to create performance-based metrics for agencies to assess the quality of their financial management, including information technology capital investments, and identify their needs, according to GAO.

Agency heads should be asked to identify key information outside of financial reporting, like acquisitions and grants management, needed for decision-making, the report found.

GAO expressed support for the bipartisan the CFO Vision Act of 2020, introduced in February by Sen. Mike Enzi, R-Wyo.

Among other things, the chairman of the Senate Budget Committee’s bill would standardize CFO responsibilities and require a four-year financial management plan from OMB that includes steps to improve systems, OMB introduce performance-based metrics, and agency heads to identify key information.

“These recommendations can help further improve government-wide financial management,” Enzi said in a statement. “Better financial management will lead to more efficiency, accountability, data, and ultimately better federal budgets.”

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financial management systems, Government Accountability Office (GAO), IRS, Mike Enzi, Office of Management and Budget (OMB), QSMOs, Treasury Department
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