Defense Needs Auditing; Congress Should Back Up 1990 Law with Funding

Article excerpt


In what can aptly be described as a moment of bipartisan cooperation, a Democrat-controlled Congress passed the Chief Financial Officers Act of 1990. In a report published shortly thereafter by the General Accounting Office, the CFO Act was heralded as "the beginning of what promises to be a new era not only in federal management and accountability, but also in efforts to gain financial control of government operations."

The report added: "This is the most comprehensive and far-reaching financial management improvement legislation since the Budget and Accounting Procedures Act of 1950 ... The CFO Act will lay a foundation for comprehensive reform of federal financial management."

A key provision of the bipartisan legislation is a requirement that federal agencies undergo independent financial audits. Heretofore, this most basic of internal controls was too often foreign to the public sector. Accounts of a federal agency paying $200 for a hammer or $600 for a toilet seat were common fodder for journalists and late-night comics alike. To their credit, federal lawmakers recognized the need for reform and enacted the CFO act as an integral part.

In general, the CFO act has lived up to its billing. Well more than 20 federal agencies of varying sizes and missions have been independently audited, which in turn have produced aggregate savings of tens of billions of dollars. Even some of the largest federal agencies, including the Social Security Administration, have demonstrated improved financial stewardship and operational efficiency.

However, as we approach the law's 15-year anniversary - the CFO act was signed by President George H.W. Bush on Nov. 15, 1990 - the largest federal agency, the Department of Defense, has yet to undergo an independent financial audit. Indeed, the Department of Defense is the only federal agency required by the CFO act to be independently audited that has failed to do so. In an era when the agency's budget has increased from $267.2 billion in fiscal 2000 to $419.2 billion in fiscal 2006, and the Pentagon is prosecuting the war on terrorism both at home and abroad, the case is even more compelling.

This truth is not lost on either the administration or select lawmakers. The White House, through the Office of Management and Budget, has twice issued Statements of Administration Policy this year urging Congress not to cut the funds budgeted to help the Department of Defense prepare for its audit. …