Thompson: Federal Agencies Need Sound Financial Management Systems Now More Than Ever

WASHINGTON – Senate Governmental Affairs Committee Ranking Member Fred Thompson (R-TN), a leading Congressional advocate for efficient government, today lamented the slow progress of improving federal financial management in the Executive Branch. A recently released General Accounting Office (GAO) report revealed that during the fiscal year ending in September 2000, at least 19 of the Executive Branch?s major agencies had inadequate financial management systems in place.

“Agencies simply aren?t able to tell us on a regular basis where taxpayer dollars are going and whether we?re getting what we paid for,” Thompson said. “At a time like this, where every dollar, every asset, every resource counts, sound financial management is more important than ever.”

The GAO report, required annually by the 1996 Federal Financial Managers Improvement Act, assessed the quality of agency financial systems, and the extent to which they complied with federal standards. According to the report, “[M]ost agencies? financial management systems are unable to routinely produce timely, reliable, and useful information…Agency managers and other decisionmakers need this information for managing day to day operations effectively, efficiently, and economically; measuring program performance; executing the budget; maintaining accountability; and preparing financial statements.”

The report cites specific consequences of poor financial management. Weaknesses in security, for instance, in financial systems at the Department of the Treasury “increase the risk of fraud associated with billions of dollars of federal payments and collections, and weaknesses at the Department of Defense increase the vulnerability of various military operations.”

Senator Thompson emphasized the importance of financial management, particularly in times of emergency. “We can?t afford to lose the momentum we?ve gained in improving federal financial management because of the current crisis. Agencies ? especially those like the Departments of Defense and State ? need to know how much money they have, where their assets are, and whether they?re getting what they paid for. The vulnerabilities cited in the report make it imperative that we redouble our efforts to shore up the government?s financial management.”

Senator Thompson lauded recent efforts by the President and the Office of Management and Budget to address the government?s financial management weaknesses, stating, “It was encouraging to see financial management such a prominent part of the President?s Management Agenda and we can expect to see more substantial improvement in the near future.”

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The GAO report will be available online at