Academic journal article The Government Accountants Journal

Governmentwide Financial Management Centers

Academic journal article The Government Accountants Journal

Governmentwide Financial Management Centers

Article excerpt

It is time for the government to establish an organization responsible for designing, developing and operating financial management systems which will meet the needs of all civilian entities of the federal government. For too long now, each Department or independent organization has acted alone in trying to improve financial management processes. Although each organization has proceeded with good intent, the result has been very costly for taxpayers. Additionally, individual efforts have not always provided the material enhancements needed for agencies' financial systems and processes. It is time to explore another way--a cost effective way--to improve the financial management systems and processes in use throughout the federal government.


Public Law 101-576, known as the Chief Financial Officers Act of 1990, established the Deputy Director for Management at the Office of Management and Budget (OMB) as the Chief Financial Officer (CFO) of the government. It also established the Office of Federal Financial Management (OFFM) within the OMB headed by a Controller who reports to the CFO. In the introductory section of the Act, Congress recognizes that the federal government needs fundamental reform in financial management requirements and practices. Congress acknowledged that systems are obsolete and inefficient, and do not provide the complete, consistent, reliable and timely information needed by program managers. In addition, the poor quality of existing systems has forced program managers to establish "cuff" systems which are costly to operate and maintain and which produce results that differ from the results provided by the "official" systems. Echoing the Act, the General Accounting Office (GAO) recently reported that current systems are in extremely poor condition and are generally incompatible, costly to operate and woefully out of date. They stated that reform cannot be viewed as just further automating existing processes. Rather, those processes must be simplified, redirected and reengineered.

Numerous federal agencies have attempted to design and develop new systems to address these problems. These organizations have spent millions of dollars on this effort and still do not have truly viable systems to show for their efforts. Other federal agencies have spent tens of millions of dollars in procuring, modifying and implementing off-the-shelf software. Despite their huge investments, the results have been mixed at best. For example, the GAO recently reported that the Department of State, which for four years has operated with off-the-shelf software that is being modified to meet State's needs, is still notified to meet State's needs, is still not capable of reporting on all types of appropriations.

In effect, the CFO Act has provided a Congressional mandate for reforming the government's financial management activities.

To fully answer this Congressional call to action, the Executive Branch needs to determine how to address existing problems with financial systems most effectively. In so doing, the Executive Branch must recognize that the cost and risk of developing, maintaining and operating administrative systems has grown significantly in the last several years.


Cross-servicing has proven to be a truly successful effort which has effectively improved some aspects of the financial management processes used by federal agencies. Cross-servicing is defined as one federal agency providing services to another agency on a reimbursable basis. The United States Department of Agriculture's (USDA) National Finance Center (NFC) located in New Orleans, Louisiana, has achieved enormous success with cross-servicing. NFC began servicing other federal agencies in 1983. Over the last 10 years, the NFC has provided a wide range of services to an ever increasing number of agencies. The financial management services provided by NFC include payroll/personnel, a wide variety of administrative payments (employee reimbursements, procurement, vendor payments and payments to other government agencies), billing and collection processing (administrative and program), property management systems, and accounting. …

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