The U.S. Department of Agriculture (USDA) manages a wide array of programs that affect the lives of all Americans and millions of people around the world. USDA relies on a multitude of financial management systems to help operate its complex organization which, in fiscal year 1994, managed $146 billion in assets and accounted for $75 billion in expenses. To more efficiently manage these programs, the Department of Agriculture Reorganization Act of 1994 authorized USDA to regroup complementary programs from 43 component agencies into 29 agencies under seven overall mission areas. The seven mission areas are: (1) farm and foreign agricultural services, (2) rural economic and community development, (3) food, nutrition, and consumer services, (4) natural resources and environment, (5) research, education, and economics, (6) food safety, and (7) marketing and regulatory programs. According to USDA, its reorganization will also consolidate or eliminate 1,100 of its more than 14,000 field offices. The Chief Financial Officers (CFO) Act of 1990 vested agency CFOs with the responsibility for overseeing all financial management activities relating to the programs and operations of the agency. This includes the responsibility for developing and maintaining an integrated agency accounting and financial management system that provides for (1) complete, reliable, consistent, and timely information that is prepared on a uniform basis, (2) the development and reporting of cost information, (3) the integration of accounting and budgeting information, and (4) the systematic measurement of performance. In March 1993, the former USDA Secretary decided to establish the Office of the CFO to oversee all financial management activities relating to the programs and operations of the Department, including USDA’s departmentwide financial management systems. The Office of the CFO also manages the National Finance Center (NFC). NFC develops, manages, and operates the financial management systems that support the budgeting and accounting functions for most of USDA’s salaries and administrative expenses, and performs most of USDA’s administrative systems functions such as payroll and property. Although the Office of the CFO manages NFC, it shares responsibility for many of the NFC systems with the Assistant Secretary for Administration and various user groups. Most of USDA’s large component agencies develop and manage their program accounting and budgeting systems independently. These component agency systems account for most of USDA’s annual expenses. We and USDA’s Office of Inspector General (OIG) have previously reported on USDA’s numerous component agency and NFC financial management system weaknesses. As a result of these audit findings, USDA, over the past several years, has reported many financial management system material weaknesses and nonconformances. For example, in its fiscal year 1994 Federal Managers’ Financial Integrity Act report, USDA cited 22 financial management system material nonconformances, some dating back to 1988. These nonconformances were related to both NFC’s financial management systems and those managed by component agencies. As a result of these weaknesses, in 1994 and 1995, the Office of Management and Budget (OMB) reported as a high-risk area USDA’s aged and outmoded financial systems, inadequate financial system controls, ineffective central system planning and installation, and inaccurate financial reports. In addition, the vast majority of USDA’s financial management systems do not meet financial management system standards set by OMB, the Department of the Treasury, and the Joint Financial Management Improvement Program (JFMIP). Most of USDA’s financial management systems were developed in isolation without common guidelines, definitions, or oversight and using incompatible accounting and data standards. In addition, these systems are not integrated; do not provide policy, program management, and operating staff with necessary financial data in a timely manner; and do not provide USDA with a common language for financial management. As a result, USDA can draw similar information from different systems and obtain different results. Also, the lack of integration and standardization makes sharing or merging information across systems and organizations very difficult. As a result of these weaknesses, many USDA component agencies also maintain duplicative, costly, and time-consuming unofficial or “cuff” records and systems. In addition, as we mentioned in our recent letter to the Secretary of Agriculture, these weaknesses have also resulted in delayed financial statement preparation and audits. To address USDA’s pervasive financial management system weaknesses and carry out its financial management system responsibilities under the CFO Act, in March 1993, the Department initiated the Financial Information Systems Vision and Strategy (FISVIS) project. The FISVIS team is composed of officials from the Office of the CFO, component agencies, and NFC. FISVIS’ ultimate goal is to have a single, integrated, and seamless financial management system implemented by 1998. USDA established several vision statements for the FISVIS project, including the following: Policy, management, program, and operating personnel will have access to timely, accurate, reliable, consistent, and complete financial information when and in the form they need it. Agencies will retain the flexibility to develop and maintain financial and mixed systems to support their mission. Implementation of the FISVIS effort will result in streamlined operations and, therefore, in increased efficiency. Budget, program, and financial data will be integrated. The Department and agencies will work cooperatively to meet agency financial information needs and departmental requirements. The Office of the CFO intends to accomplish its FISVIS vision by using an incremental approach, based on a foundation that would achieve, and then build on, early successes. To achieve its FISVIS vision statements, USDA identified five major strategies: (1) provide communication, oversight, and project management, (2) develop and implement departmentwide financial standards and definitions, (3) develop and implement a foundation system, (4) assist owners of feeder systems to integrate their systems into the Foundation system, and (5) support interim improvement efforts. The objectives of our review were to assess whether the FISVIS project will (1) resolve USDA’s major financial management system weaknesses and (2) consolidate USDA’s separate financial and mixed systems that perform similar functions, as well as reengineer USDA’s financial processes. To assess whether FISVIS will resolve USDA’s current financial management system weaknesses, we first identified these weaknesses by reviewing our and the OIG’s consolidated USDA and component agency financial statement audit reports and other audit reports. We also reviewed USDA’s Federal Managers’ Financial Integrity Act report, its 5-year Financial Management Plan prepared pursuant to the CFO Act, and other pertinent documents. After identifying USDA’s financial management system weaknesses, we assessed the FISVIS October 1993 strategy document and implementation plan and interviewed the former and current FISVIS project manager, CFO, and Deputy CFO to determine USDA’s strategy to address these weaknesses. We also interviewed OIG officials to determine whether they believed that the FISVIS strategy would address their audit findings. In addition, we interviewed an OMB budget examiner for USDA to discuss USDA’s financial management system problems and FISVIS’ strategy for addressing them. We also reviewed the USDA Financial and Accounting Standards Manual and the USDA Financial Management Information Architecture Document, and assessed the Foundation system’s procurement by reviewing the General Service Administration’s Financial Management System Software Multiple Award Schedule contract and other relevant procurement documents. In addition, we interviewed the General Service Administration’s Contracting Officer, a Department of the Treasury Financial Management Service official, the Contracting Officer and Contracting Officer’s Technical Representative for the Foundation system, and USDA Office of Information Resource Management Acquisition Review Team officials. Because USDA had not completed acceptance testing of the Foundation system software by the end of our review, we did not assess the implementation of the Foundation system. We also reviewed the June 1995 proposed rule on the Office of the CFO’s delegation of authority. We interviewed the CFO, Deputy CFO, and other officials about the Office of the CFO’s role involving component agency and NFC financial management systems. We also interviewed the senior financial officials of USDA’s largest component agencies and reviewed their financial management system plans. In addition, we assessed the Consolidated Farm Service Agency’s plans to use the Foundation system contract to procure the same software and interviewed the manager of this project and other pertinent officials. To assess whether the FISVIS project will address consolidating financial and mixed systems that perform similar functions and reengineering USDA’s financial processes, as prescribed by our draft Federal Financial Management Systems Review Methodology, we developed an inventory of USDA’s component agencies and NFC financial management systems. We asked the component agencies and NFC to characterize the functions that these financial management systems perform by the functions and definitions listed in the JFMIP’s Framework for Federal Financial Management Systems. We also identified USDA’s planned financial management system improvement and business process reengineering efforts by interviewing component agency and NFC officials as well as reviewing budgeting, planning, and other pertinent documents. We performed our work at the Department of Agriculture in Washington, D.C.; FISVIS project team headquarters in Alexandria, Virginia; and the National Finance Center in New Orleans, Louisiana. We also visited the Consolidated Farm Service Agency in Kansas City, Missouri; the Rural Economic and Community Development mission area in Washington, D.C., and St. Louis, Missouri; the Forest Service in Rosslyn, Virginia; the Natural Resources Conservation Service in Washington, D.C.; the Animal and Plant Health Inspection Service in Hyattsville, Maryland; the Agricultural Research Service in Greenbelt, Maryland; and the Food and Consumer Services in Alexandria, Virginia. Our work was performed between September 1994 and July 1995, in accordance with generally accepted government auditing standards. We requested written comments from the Secretary of Agriculture on a draft of this report. In response, we received written comments from USDA’s Chief Financial Officer. These comments are discussed, along with our evaluation, in chapter 4 and are reprinted in appendix I.