S. 2230, the Federal Management Reorganization and Cost Control Act of 1986

Testimony was given concerning S. 2230, which would establish a separate Office of Financial Management to address the federal government's financial management problems. GAO found that the government has experienced declining managerial effectiveness despite efforts to solve specific management problems. Agency reports under the Financial Managers' Integrity Act have cited serious and long-standing problems with financial and other management systems which have resulted in wasteful spending, poor management, and losses involving billions of dollars. Some of the government's accounting systems still do not conform to the Comptroller General's standards and some agencies do not have reliable debt collection and cash management data. GAO believes that: (1) a strategy for addressing key management problems is essential to ensure that changes in the organizational structure and specific solutions for the problems are successfully implemented; (2) a proposed requirement for financial statements will provide a strong impetus for agencies to improve financial management reporting systems; (3) annual financial audits are needed to ensure the integrity and reliability of financial statements and their underlying management systems; and (4) a financial management structure is needed to ensure that there is continuity across successive administrations and a common set of long-term financial management goals.