Major Management Challenges and Program Risks

This publication is part of GAO's performance and accountability series which provides a comprehensive assessment of government management, particularly the management challenges and program risks confronting federal agencies. Using a "performance-based management" approach, this landmark set of reports focuses on the results of government programs--how they affect the American taxpayer--rather than on the processes of government. This approach integrates thinking about organization, product and service delivery, use of technology, and human capital practices into every decision about the results that the government hopes to achieve. The series includes an overview volume discussing governmentwide management issues and 20 individual reports on the challenges facing specific cabinet departments and independent agencies. The reports take advantage of the wealth of new information made possible by management reform legislation, including audited financial statements for major federal agencies, mandated by the Chief Financial Officers Act, and strategic and performance plans required by the Government Performance and Results Act. In a companion volume to this series, GAO also updates its high-risk list of government operations and programs that are particularly vulnerable to waste, fraud, abuse, and mismanagement.

GAO noted that: (1) AID's effort to develop and implement its New Management System (NMS), which is meant to consolidate primary information systems into a single integrated network, has not been fully successful; (2) the NMS is only partially functional and has created problems in agency operations; (3) in 1996, AID deployed the system without sufficient testing, and subsequent difficulties forced AID to suspend its use for most administrative functions in overseas missions in April 1997; (4) despite an expenditure of at least $92 million to date, the NMS is not likely to be fully operational and compliant with federal accounting standards for several more years; (5) until then, AID will not have accurate information to ensure that its operations and programs are being managed in a cost-effective and efficient manner; (6) AID's computer systems in headquarters and in its field offices are not yet equipped to handle the year 2000 problem; (7) AID has not taken adequate steps to address this problem and has not developed contingency plans to ensure continuity of all of its mission-critical business operations; (8) although AID has requested supplemental funds to accelerate the year 2000 compliance process, it continues to face a serious risk that its systems and operations could fail or be significantly degraded; (9) AID continues to face financial management challenges; (10) the lack of an integrated financial management system and the existence of material control weaknesses hinder the agency's ability to produce auditable financial statements; (11) as in the previous year, AID's Office of Inspector General (OIG) was unable to express an opinion on the agency's financial statements for fiscal year 1997; (12) the process of preparing financial statements and subjecting them to independent audit is the first step in generating complete, reliable, and timely financial information for decisionmakers at all levels; (13) without financial integration and strong controls, AID's systems are out of compliance with federal accounting and management requirements; and (14) AID has designated a Chief Information Officer and NMS program manager and made the year 2000 problem its highest information technology priority, and is submitting a plan to address some of its financial management deficiencies over the next 5 years.