Ending fraud, waste and abuse requires true financial management transformation

For too long, accountability in federal financial management has been treated as a compliance exercise rather than a leadership imperative. Despite years of reform, many agencies remain stuck in outdated financial environments that make accountability difficult to achieve. 

Legacy systems were built for static accounting, not real-time management. Manual reconciliations, siloed data, and unreliable interfaces hinder leaders from seeing the full financial picture, while aging technology increases risk and drains resources.

The pressure to change is now urgent. Executive order 14249 and Office of Management and Budget memo M-24-30 make it clear that financial management teams can no longer afford a slow, cautious approach to modernization. Compounding these issues are the unique demands of federal financial management, made even more challenging by mandates to adopt AI alongside the ongoing realities of tightened budgets and shrinking workforces.

The solution requires more than shifting existing processes to a new platform or incremental streamlining. It’s time for a true transformation of this mission-critical capability. Agencies should adopt a transformative approach to financial management that aligns with the Treasury Department’s directive to leverage core financial systems to ensure robust, centralized oversight and reporting standards.

What’s standing between agencies and more efficient financial management?

According to the Government Accountability Office, the government struggles to adequately account for transactions and balances across agencies. Many agencies can’t reliably pass audits, let alone implement new approaches to mitigate fraud, waste, and abuse. Daily batch reports and spreadsheets can’t keep up with the demand for real-time visibility.

These systems are costly to maintain and resistant to integration with modern tools and cross-agency processes. They’re also dependent on shrinking pools of skilled personnel as vendors phase out support. And they are inherently risky due to outdated processes and limited visibility, and vulnerable to cyber threats following years of patchwork fixes that have created multiple entry points.

Treasury’s efficiency and accountability push directly addresses these challenges by requiring agencies to decommission outdated platforms, adopt standardized financial systems built for interoperability and oversight, and streamline financial operations through AI-powered automation and shared service models.

By combining automation for speed and accuracy — with scalable systems that work across programs and generative AI powered by cloud-native tools — agencies can achieve real-time visibility, stronger compliance, and better decision-making across the enterprise.

Is the cloud the answer? Yes, but …

Lifting and shifting broken business processes into the cloud only transfers inefficiencies and compliance risks with little gain. To truly meet fraud-prevention and efficiency mandates, agencies must rethink, recast, and reimagine financial processes from the ground up.

While some legacy platforms will continue to be supported by vendors, they can’t deliver the full capabilities that modern financial management demands. True leaps in efficiency, agility, and accountability depend on the cloud.

Cloud-native financial platforms enable seamless data sharing across systems and agencies, continuous updates to meet Treasury and OMB standards, and AI-powered automation that accelerates fraud detection, payment verification, and decision-making.

However, a significant hurdle remains. Most commercial off-the-shelf (COTS) platforms weren’t designed for federal financial processes or their unique auditing and reporting requirements. While customization is possible, it’s costly and time-consuming. Agencies should instead turn to COTS solutions that are purpose-built for government financial practices. 

Properly implemented, these platforms inject speed, accuracy, and transparency into workflows that have long been manual, fragmented, and opaque. 

What to look for in a cloud-native platform

The Treasury Department’s Financial Management Quality Service Management Office (FM-QSMO) publishes a list of core financial management requirements to improve standardization, along with pre-vetted solutions that reduce risk and accelerate adoption.

Beyond simply meeting the baseline standards, agencies should look for cloud-native solutions with features that include embedded analytics for real-time insights for better decision-making; low-code/no-code tools that empower teams to adjust workflows without heavy IT support; integrated AI to streamline complex multi-system tasks, flag risks, and even suggest corrective actions; and extensibility and/or interoperability to other systems used for analytics, budgeting, or interfacing with human capital and supply chain solutions.

Successful implementation also depends on working with providers who understand both the technology and the complexities of federal financial management. An agency’s implementation partners must have hands-on experience to help agencies redesign business processes and implement their modernization plans. 

Operationalizing change

Success is 50% technology and 50% change management. Leaders must prepare their organizations for migration, skilling, and cultural shifts. Laying the groundwork for transformation requires actions that cross multiple domains, including:

Getting everyone on board. Early engagement, transparent communication, and training internal “champions” are critical to overcoming resistance and slowing down progress.

Maintaining functionality. A risk often voiced by users is losing any custom features from legacy systems. Agencies should distinguish between essential business needs and standard government processes. Specialized functions can be added later, once a compliant, streamlined foundation is in place.

Ensuring data readiness. AI and modern platforms require high-quality, properly configured data. Agencies must prioritize data cleansing and governance now to ensure modernization delivers the desired results. 

When modern cloud platforms are paired with a clear transformation strategy alongside trusted partners, financial management evolves from a back-office function to a strategic asset built to protect taxpayer dollars and enable mission success. 

The path forward is clear, and delaying is out of the question. Agencies must act now: engage with industry, learn from peers already on their modernization journey, and prepare for a future powered by AI and automation. Those that wait risk falling further behind, not just technologically, but in their ability to demonstrate accountability to the American people. 

The tools exist. The mandate is explicit. The only question is whether leadership will treat financial management transformation as the mission-critical priority it has always been. The agencies that answer “yes” won’t just achieve compliance — they’ll build the foundation for eliminating fraud, waste, and abuse at scale, and set a new standard for financial stewardship in government.

Sandeep Dorawala is president, enterprise systems & solutions, at SMX.