What Could Be NEXT for Federal Financial Management?
Steinberg, Harold I., The Journal of Government Financial Management
The Chief Financial Officers Act was passed 16 years ago to bring more effective financial management practices to the federal government. The basic steps have been taken and successfully completed. An organizational structure, in which no one was solely responsible for financial management, has been replaced by clearly defined responsibilities and authorities. Financial transaction processing, which required an indeterminable number of old, uncoordinated, inefficient accounting systems, is now being considered for consolidation into Shared Service Centers. Initially, a scant three agencies were able to prepare agency-wide financial statements and only one received an unqualified auditors' opinion. Currently, all prepare audited financial statements and at one time or another, all but two have received a "clean" opinion.
It is therefore a good time to consider whether the foundation exists for further improving the federal government's financial management. In other words, what has been learned during the past 16 years? What has been undertaken in stages that can now be restructured in its totality? And where have there been deviations from the best long-term solutions?
This article proposes what could be done to further improve the federal government's financial management. Some proposals might be difficult to adopt and the will to begin might be absent. Some might not be politically acceptable. All are described, however, hoping that the most critical will be initiated.
CONSOLIDATE the Financial Management Statutes and Circulars
Numerous statutes were enacted to cause better financial management practices. (see Figure 1.) To some extent, they all contributed. However, while some statutes complemented each other, many overlapped and some even conflicted.
To guide implementation of these statutes, the Office of Management and Budget (OMB) issued circulars and bulletins, including Circulars A-123 Management's Responsibility for Internal Control; A-127 Financial Management Systems; A-130 Management of Federal Information Resources; A-134 Financial Accounting Principles and Standards; A-136 Financial Reporting Requirements; and Bulletin 01-02 Audits Requirements for Federal Financial Statements.
Further improving financial management does not require additional legal requirements. However, consolidating the existing statutes and their requirements into a single comprehensive statute and doing likewise with the circulars/bulletins, would greatly simplify and enhance the understanding of federal financial management. It would enable the expectations and rules that define and govern financial managers' performance to be ascertained from a single statute and regulation.
The consolidated statute should articulate the purpose of financial management: obtaining and effectively using and accounting for resources to accomplish efficiently the organization's mission. It should define desired policies for financial management, identify the elements and define the requirements for each element in a manner that assures their integration. It should also define, at least in report language, the roles, responsibilities and interrelationships of the various participants in financial management: strategic planners, budgeters, accountants, program managers, auditors, chief information officers and other stakeholders.
A possible approach to obtaining the consolidated statute would be for the Government Accountability Office (GAO) to examine existing financial management legislation and guidance documents, recommend the vision and draft integrating legislative language. OMB could then prepare the integrated guidance in consultation with GAO.
Another consideration is that the development of a new consolidated statute should examine and consider the Department of the Treasury's role in financial management. The CFO Act recognized that the major responsibility and authority for …
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Publication information: Article title: What Could Be NEXT for Federal Financial Management?. Contributors: Steinberg, Harold I. - Author. Journal title: The Journal of Government Financial Management. Volume: 55. Issue: 3 Publication date: Fall 2006. Page number: 52+. © Association of Government Accountants Winter 2008. Provided by ProQuest LLC. All Rights Reserved.