Financial Management Reform

GAO discussed proposed legislation intended to strengthen federal financial management. GAO noted that: (1) the proposed legislation would establish a centralized leadership position to direct the government's financial management activities; (2) establishing agency chief financial officers (CFO) is important to the reform process, since CFO would form the network needed to undertake governmentwide financial management reform; (3) the proposed 5-year financial management plan would help agencies share system development efforts, maximize use of cross-servicing arrangements, and provide continuity of improvement efforts; (4) while one proposal called for executive departments and major agencies to prepare financial statements and undergo annual financial audits, another proposal limited financial statements and audits to agency revolving and trust funds and to those agency components which performed substantial commercial functions; (5) financial statements audits could disclose materially misleading loans and accounts and unreported liabilities; (6) most of the reported financial management system problems stem from weak systems and controls; (7) the Office of Management and Budget established an initial governmentwide goal of having the 14 executive departments, the Environmental Protection Agency, and the National Air and Space Administration prepare financial statements by fiscal year 1994; and (8) a proposal requiring annual agency head reports should provide a foundation for the recognition of financial management problems and oversight.