Agency financial systems still deficient

Wednesday - 9/7/2011, 3:19pm EDT

This story has been updated from its original version to include comments from OMB.

By Jason Miller
Executive Editor
Federal News Radio

Agencies continue to struggle with their financial systems running contracts, grants and loan programs nearly five years after the Office of Management and Budget established procedures to improve those same systems through the financial management line of business effort.

The House Oversight and Government Reform Committee found in a survey of the largest 26 agencies that many department financial systems continue to rely on employees to manually input data and at least 10 agencies didn't provide enough information for the committee to understand their processes to oversee data quality.

The report highlights long-standing problems with agency record keeping and financial systems.

Started under the Bush administration, the FM LOB required agencies to consider moving to shared service providers when their financial systems were in need of an update. OMB also standardized financial reporting through the effort.

Under the Obama administration, OMB deemphasized shared service providers and started to focus on systems to meet governmentwide financial management requirements, such as invoice processing. And in June 2010, OMB halted and reviewed agency financial management projects to get many back on track to deliver new functionalities.

"The Obama administration has carried out an aggressive approach to managing financial management systems across the government based on failures that have occurred in the past," said OMB spokeswoman Moira Mack. "The goal was to right-size projects to manage risks while driving results within 18-24 month increments. Last summer, the administration halted all financial systems projects and submitted them to a rigorous review and approval process. Unnecessary and underperforming projects were either terminated or reduced in size, resulting in over $1 billion in decreased project budgets. All financial system projects that were approved continue to undergo formal assessments by OMB to ensure that projects stay on track and are meeting the agencies' critical business needs."

But Rep. Darrell Issa (R-Calif.), chairman of the committee, found these efforts haven't made much of a difference.

The committee staff reviewed 329 pages of responses from the 26 agencies and found:

  • 21 of 26 agencies responding reported the widespread use of manual processes in reporting systems.
  • The Department of the Interior uses manual processes in almost every step of its financial reporting.
  • The Department of Veterans Affairs has established an office, known as the Data Quality Service (DQS), tasked with manually transferring information among various IT systems.
  • At least 10 of 26 agencies did not provide sufficient answers to Oversight questions on the public availability of management IT data - even though some of these described their management IT systems in detail.
  • Other agencies responded that they do not make any financial information public. For example, the Department of Transportation, does not publically report any of its grants, loans or contracts.
  • The Small Business Administration reports very limited information on grants and loans, and has no reporting of contracts.
  • A few agencies make management IT data publicly available on their own websites.

The committee said in a release the results prove once again that agencies do not have one standard method for reporting financial data and are not doing enough to make their data publicly available.

Mack said agencies continue to work to reform these systems by moving toward commodity technology that takes advantage of the government's purchasing power, shutting down excess data centers and transitioning to the cloud.

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