Financial Management

Pursuant to a congressional request, GAO responded to a series of questions regarding federal agencies' financial management, financial reporting, and accounting operations.

GAO noted that: (1) the Department of the Treasury coordinated its financial reporting, accounting system modernization, credit management, debt collection, and cash management activities with the Office of Management and Budget (OMB) and GAO; and (2) GAO, OMB, and Treasury each have distinct responsibilities in establishing financial management policy, developing regulations, and monitoring agency performance. GAO found that: (1) Treasury's Financial Management Service (FMS) established the Federal Agency Financial System Program to fulfill its operational responsibility for federal financial systems; (2) federal agencies' use of off-the-shelf accounting software can save both money and time; (3) FMS supports a cross-servicing concept, where one agency provides financial services to other agencies; and (4) FMS is developing a governmentwide financial database to provide an analytical capability all agencies can use in evaluating financial performance. GAO believes that all federal agencies need to: (1) have primary accounting systems which incorporate standard governmentwide features; (2) conduct financial audits and report their results; and (3) supplement budget receipt and outlay information with accounting data which reflect their assets and liabilities. GAO strongly supports enactment of legislation to establish an adequate financial management structure, promote long-range planning, and require the annual preparation and audit of agency and governmentwide financial statements.