Academic journal article The Government Accountants Journal

The Chief Financial Officers Act: A Ten Year Progress Report

Academic journal article The Government Accountants Journal

The Chief Financial Officers Act: A Ten Year Progress Report

Article excerpt

Ten years ago Congress enacted the Chief Financial Officers Act (CFO Act). That statute touched off a decade of unprecedented achievements in the federal government's financial management. More important, the Act set in motion-and hopefully in concrete-processes that are making accountability an integral part of the government's practices and programs. This article describes the most significant achievements resulting from the Act. It also identifies and discusses the challenges in ensuring that accountability will continue as a cornerstone of government management.

Establishing the Infrastructure

The stated purposes of the Chief Financial officers Act were to:

* bring more effective general and financial management practices to the federal government;

* provide for improvement in each agency's financial management systems; and

* ensure reliable and timely financial reporting.

To undertake this ambitious agenda, the Office of Federal Financial Management (OFFM), established by the CFO Act within the Office of Management and Budget (OMB), developed the necessary infrastructure based on an eight-part program. The eight parts were:

* Organization-The OFFM was organized; the responsibilities and authorities for the CFO positions in each of the 23 agencies covered by the CFO Act were defined;1 the initial CFOs and deputy CFOs were appointed; and a CFO Council, composed of a governmentwide chief financial officer, the head of the OFFM (titled the controller), and the agency CFOs and deputy CFOs, was established to advise the governmentwide CFO on financial management matters and coordinate the implementation of financial management improvements.

* Personnel-Since personnel is the key ingredient in any activity, programs were started to assess the adequacy of financial management staffs' professional qualifications and capabilities; recommend ways to correct problems that impaired staff capacities; and provide OFFM's advice regarding qualifications, recruitment, performance and retention to agencies.

* Accounting Standards-The Federal Accounting Standards Advisory Board (FASAB) was established through a memorandum of understanding among OMB, the U.S. Department of the Treasury, and the U.S. General Accounting Office. FASAB's mission was to develop and recommend accounting standards with which agencies could prepare and auditors could audit general purpose financial statements. Simultaneously, OFFM defined the "form and content" for the agencies` financial statements.

* Financial Systems-A policy was established requiring each agency to move from numerous duplicative, inconsistent and antiquated systems to a single, integrated financial management system that would encompass financial systems and the financial portions of mixed systems. Introduced into the reviews of agencies' budget requests was an in-depth analysis of their plans and progress for new financial management systems.

* Internal Control-The emphasis on strengthening and evaluating internal controls, begun with passage of the Federal Managers' Financial Integrity Act (FMFIA) in 1982, was continued. Auditors were directed to identify differences between the weaknesses management reported pursuant to the FMFIA requirements and weaknesses detected in financial audits.

Asset Management-To manage the federal government's assets more productively, programs were started to make extensive use of electronic means to move cash to states, vendors, employees and benefit recipients; and to use a wide variety of techniques, including income tax refund offset and private sector collection agencies, to pursue delinquent debts.

* Federal Assistance-Since financial management of $200 billion of federal funds is shared with the states and other federal grant recipients, this part was addressed by strengthening the rules for administering the funds. Particular attention was paid to helping recipients expand the use of financial audits to increase the credibility of their reported financial information and controls and assure compliance with the grant programs' requirements. …

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