Progress of Federal Financial Management: The CFO Act, Government Management Reform Act, and Beyond

Article excerpt

INTRODUCTION

Successful federal financial management has been a long-running governmental goal throughout many administrations. The Bush, Sr. administration established the Chief Financial Officers Act of 1990, the first financial management legislation with a governmental focus since 1950. The Bill Clinton administration amended Bush's act with the Government Management Reform Act in 1994, further creating a focus on the need for improvement within the federal government financial domain. There has not been a major piece of federal financial management legislation since Clinton's administration. With the new administration emphasizing "change", this paper will identify the progress made in federal financial management, specifically since the Chief Financial Officers Act and the Government Management Reform Act, and identify areas that still need attention.

LITERATURE REVIEW

There has been a dramatic spike in the publication of information regarding the current state of federal financial management and opinions about what the next steps should be in the coming years. This spike is most likely caused by the fifteenth anniversary of the Government Management Reform Act as well as the feeling of "change" permeating throughout the government due to the historical administration change that occurred at the beginning of this year.

PROGRESS MADE AND OPINIONS ABOUT FUTURE

Most of the published research in the area addresses how far financial management has come since 1990. Many of the authors provide their opinion about where the focus should be in the future. Laine and Kreyche suggest that modifying the U.S. Standard General Ledger, methods for loan accounting, financial reporting and internal controls are essential for improving federal financial management (Laine & Kreyche, 2005). Steinberg suggests that governing bodies must "consolidate the [...] statutes and circulars" since changes over the years were made incrementally. This is in addition to other major changes mentioned such as reformatting the general accounting methods used and changing the entire budget structure, just to name a few (Steinberg, 2006). Peters focused her suggestions on the two largest problem areas preventing the government-wide financial statements from obtaining an unqualified opinion: the Department of Defense and the Homeland Security Department (Peters, 2008). Fadairo, Williams, Trotman, and Onyekelu-Eze offered their opinion that the previous financial management legislation had, in fact, achieved its goals, meticulously offering evidence to support their claim (Fadairo, Trotman & Onyekelu-Eze, 2008).

ADDRESSING PROBLEMS

Many current articles attempt to address problems surfacing in federal financial management and offer suggestions to alleviate them. Steinhoff and Price attempt to define what it means for a governmental agency to be performing well when it comes to federal financial management, by offering criteria and questions for CFOs to ask themselves in order to shed light on where they are perhaps neglecting their agency (Steinhoff & Price, 2009). Aguilera, Holmberg, and Gregory discuss the government's creation of the Department of Defense's CFO Academy as a response to the growing responsibilities thrust upon governmental financial executives and managers (Aguilera, Holmberg & Gregory, 2009). The Academy aims at training and preparing "middle and senior level members of government's financial management community" (Aguilera, Holmberg & Gregory, 2009). Allen offers a plea with taxpaying citizens to take the initiative and pay attention to annual reports released from the government and government agencies, citing the corporate bailouts and growing deficits as creating an even greater need for accountability (Allen, 2009). Lastly, Steinberg summarizes a full review he submitted to the Association of Government Accountants (AGA) regarded the "pilot program" of alternative reports that agencies can submit, attempting to deduce whether the new reports increase transparency and accountability while eliminating unnecessary information and time-consuming reports (Steinberg, 2009). …