Federal Agencies Don't Comply with CFO Act

Journal of Accountancy, August 1994 | Go to article overview

Federal Agencies Don't Comply with CFO Act


The federal government is not meeting the requirements of the 1990 Chief Financial Officers Act, according to the Office of Management and Budget. A financial management indicators table released by former OMB Director Leon Panetta showed that of the 23 major federal agencies covered by the act, only 2--the General Services Administration and the National Science Foundation (NSF)--had received unqualified audit opinions.

The table, which appears in the Clinton administration's budget for the 1995 fiscal year, provides objective measures for tracking federal agencies' progress in meeting key financial management goals. According to Panetta, the table is intended to answer the following questions:

* Did auditors find agency financial statements to be accurate?

* Did auditors identify significant deficiencies in agencies' accounting controls?

* How well are agencies collecting delinquent loans?

* Are collections of total receivables increasing?

* Were vendors paid on time?

Accordingly, the OMB will use the table to track, for each federal agency, the number of unqualified audit opinions, the number of material weaknesses, the percentage change in delinquencies and collections and the percentage of payments to vendors made on time, among other measures.

Detailed findings. OMB auditors identified significant deficiencies in accounting controls at all but one agency--the NSF. The Food and Drug Administration led in material weaknesses with a total of 34. The Department of Defense (DOD), with a total budget of $281.9 billion, had only 2 unqualified audit opinions out of 15 audits.

"Government financial management still is in disarray," said Jim Kaitz, vice-president of government relations at the Financial Executives Institute. "The General Accounting Office (GAO) and the OMB have identified enormous amounts of money wasted due to fiscal mismanagement."

Kaitz cited these examples of government waste:

* The DOD spent up to $40 billion on unneeded items because its inventory control systems were inadequate. …

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