Longstanding weaknesses in the financial systems of government agencies pose a "formidable challenge," according to a report released by the Government Accountability Office.

The report follows up on the progress that CFOs at 24 government agencies have made since the passage of the Federal Financial Management Improvement Act of 1996. The GAO found that most agencies have not progressed to the point that their financial systems are substantially compliant with the requirements of the FFMIA. Some agencies have made little progress so far.

"Agencies continue to fall short in their attempts to establish the financial systems needed to create the full range of information needed for day-to-day management," said the report. The GAO identified six types of problems in the agencies' systems and said they remain a significant obstacle to effective management of the federal government.

Those problems include nonintegrated financial management systems, inadequate reconciliation procedures, lack of accurate and timely reporting, noncompliance with the U.S. Government Standard General Ledger, lack of adherence to federal accounting standards and weak security.

The GAO did see progress in two areas: the agencies' required remediation plans and the Office of Management and Budget's efforts to address system implementation problems. But the report said agencies are continuing to struggle to modernize their financial systems, and singled out the Defense Department, where the GAO said the problem is particularly acute.

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