Taking the Next Steps to High Performance in Federal Financial Management
Steinhoff, Jeffrey C. Cgfm, Cpa, Cfe, Price, Laura Cgfm, Cpa, The Journal of Government Financial Management
Passage of the Chief Financial Officers (CFO) Act of 1990 ushered in a new era in federal financial management. The CFO Act and the companion legislation that followed significantly changed the landscape of the federal CFO. The legislative framework moved the CFO far beyond basic accounting responsibilities to a role of agency leader in providing support across the range of programs and operations. The expectations for the CFO were raised appreciably, as were the requirements.
Today, the federal CFO is at a crossroads. By any measure, there has been ground-breaking progress in federal financial management. The federal finance organization of today does not at all resemble what you would have seen two decades ago. At the same time, AGA's latest annual CFO survey shows that CFOs feel overly burdened by compliance requirements and routine finance operations.1 The federal financial management community has talked a lot about the next steps in the journey. But what do those next steps entail or better yet, what are the attributes that represent a high-performing federal finance organization?
Based on research of authoritative sources, such as policies and guidance developed by the Office of Management and Budget (OMB), the Department of the Treasury (Treasury) and the Government Accountability Office (GAO), this article seeks to capture the concept of what high performance means for a federal finance organization.
High-Performing Federal Finance Organizations Operate in Three Areas of Responsibility
Federal finance organizations operate primarily within three distinct areas of responsibility (hereafter referred to as dimensions): as the provider of accounting and finance support services, as business support to program managers, and as the financial adviser to the agency's highest levels of management. Accordingly, CFOs and their staff have roles and responsibilities associated with each of these dimensions. Properly balancing these roles and responsibilities is key to the finance organization's success.
* Dimension 1 - Finance Operations: The finance organization carries out basic finance functions, including budget execution and processing of transactions, financial reporting, compliance with laws and regulations, and financial risk management, with excellence and ease.
* Dimension 2 - Program Operations: The finance organization supports the achievement of the agency's programs with reliable, useful and timely financial information, cost-effective internal controls and highquality financial analyses.
* Dimension 3 - Enterprise Operations: The finance organization is a leader at the enterprise level, involved in agency-wide strategic leadership.
High-performing finance organizations are those that have moved far beyond the basic accounting, control, compliance and financial reporting tasks that represent the "back room" of finance in the first dimension, to a role in regularly providing value and insight to program managers and those in the executive "board room" of the agency, where decision support and strategic leadership occur.
The dimensions are interrelated and complementary. High performance in one dimension can enhance performance in other dimensions. There is also some natural overlap among the dimensions as a high-performing finance organization will concurrently work across the three dimensions in addressing a particular information need or management initiative. The finance organization plays various roles across each of these dimensions. Within these dimensions, the finance organization will carry out roles that either create value or preserve value. An example of creating value is assisting program managing in integrating performance metrics when formulating budgets and operational strategies, which helps improve operations and drive performance. An example of preserving value is implementing a comprehensive fraud risk program that assesses and mitigates fraud risk. …