Financial Management

The Defense Department's (DOD) financial management systems, policies, and procedures continue to be hampered by significant weaknesses. DOD has yet to establish policies or implement many of the accounting requirements that were being phased in and are now effective. Consequently, DOD personnel are confronting an enormous challenge to improving financial management--the most difficult in the federal government. Training is essential to bringing DOD financial managers up-to-date and keeping them current on enhanced accounting standards and legislation requirements. This report is the culmination of GAO's effort to survey the backgrounds and training of key financial managers, not only throughout various DOD organizations but also in large state governments and the private sector group. GAO has issued a series of reports profiling key DOD financial managers, including their formal education, professional work experience, training, and professional certifications. GAO also recently issued a report profiling the background and training of key financial personnel in large state governments and private sector companies. This report summarizes lessons learned from the results of GAO's survey of large state government and private sector companies that DOD could use to augment its existing plans to upgrade the competencies of its key financial managers.

GAO noted that: (1) a key lesson learned from its survey data is that many state government and private-sector organizations place a strong emphasis on training as a means of upgrading workforce knowledge of current financial management, accounting, and reporting requirements; (2) on average, key financial managers in the surveyed large state governments and private-sector organizations received 31 hours and 26 hours of training, respectively, in 1996--most of which was in technical accounting subjects; (3) some of the surveyed organizations had established training requirements for their financial personnel; (4) also, several organizations noted that their programs were designed, in part, in recognition of the training requirements that existed for employees holding professional certifications; (5) these approaches may be useful to DOD in addressing its financial management problems; (6) over half of the key DOD financial managers GAO surveyed--who all held leadership positions throughout DOD's network of financial organizations--had received no financial- or accounting-related training during 1995 and 1996; (7) these key personnel face the challenge of leading DOD's efforts to produce reliable financial data: (a) throughout a large complex DOD organization with acknowledged difficult financial deficiencies; and (b) that build upon existing requirements to include recent, more comprehensive accounting standards and federal financial management system requirements; (8) in addition, full implementation of the Government Performance and Results Act will require DOD financial personnel to provide information on cost data associated with DOD's program results; (9) technical financial- and accounting-related training to supplement on-the-job experiences of DOD's key financial managers is critical to ensuring that such accurate financial data are available; (10) the Secretary of Defense has stated in a recent major reform initiative that while the department is a world-class organization, it is rendering second-rate education, training, and professional development to its civilian employees; (11) moreover, the Defense Finance and Accounting Service (DFAS) is developing a plan intended to identify the kinds of skills and developmental activities DFAS financial personnel need to improve their competencies; and (12) in addition, DOD has not yet established a departmentwide focus with accountability to ensure that efforts to improve DOD's financial managers' training are effectively coordinated with the Secretary's broader training reform initiative.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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