Horn hands agencies poor financial grades

The chairman of a House oversight committee last week gave half of the major federal agencies failing grades on their ability to manage financial information. Some observers say the poor performance stems, in part, from inadequate or outdated information systems.

Rep. Steve Horn (R-Calif.), chairman of the Government Management, Information and Technology Subcommittee, issued the grades and based them on the second-ever governmentwide audit of federal financial books. "The audit report shows that the federal government is unable to report accurately, to the taxpayers or to Congress, how it spent more than $1.8 trillion in fiscal year 1998," he said.

Horn graded 24 agencies. Twelve received an "F." Only two, NASA and the National Science Foundation, received an "A." Horn, a former political science professor, has made a name for himself by grading agencies. His report cards on agencies' progress in making Year 2000 fixes have received widespread media coverage.

David Walker, the new comptroller general of the United States, told the House panel that weaknesses in information technology were partly to blame for agencies' poor handling of financial information.

"The central challenge in generating timely, reliable data throughout the year is overhauling financial and related management information systems.... Most federal agencies' financial management systems do not meet systems requirements and cannot provide reliable financial information for managing day-to-day government operations and holding managers accountable," Walker said in prepared testimony.

Walker said the government's books were so unreliable that the General Accounting Office was "unable to express an opinion on the financial statements of the U.S. federal government." Having systems that will generate reliable financial data continually will help agencies perform better year-round - not just when Congress asks for the numbers, according to Walker.

Ed DeSeve, the outgoing deputy director for management at the Office of Management and Budget, said changes in accounting standards and requirements have made it difficult for some agencies to balance their books, but he agreed that the government has room to improve on generating an accurate ledger. "We have set the bar high for ourselves and will redouble our efforts to improve the reliability of financial information provided by agencies," he said.

"Poor recordkeeping is a problem that potentially costs taxpayers billions of dollars each year," said Rep. Pete Sessions (R-Texas) in a prepared statement.

Sessions, former vice chairman of the subcommittee, now chairs the recently formed congressional Results Caucus, which monitors government performance and management, and he sits on the House Budget Committee. "In my view, these revelations make it imperative that the federal government begins to conform to standard business practices, without which the government is widely susceptible to waste, fraud and abuse," he said.

But subcommittee member Rep. Jim Turner (D-Texas) said Horn's grading agencies on financial management may not be helpful in determining the problems agencies face.

Turner, who used Horn's own criteria to grade the legislative branch on its financial management, said, "The results of grading the agencies may not reflect that there has been significant progress." Turner gave Congress itself a "D-minus" for its performance.