The Chief Financial Officers (CFO) Act of 1990 requires the DoD to produce private sector-style financial statements that can win unqualified opinions from auditors. After many years of effort to comply, the department is now projecting that its balance sheets will not be ready until 2017 and is unable to predict when its income statements will be ready. Given that discouraging situation, combined with the increasingly widespread realization that external financial statements are of no practical use for internal management, the question arises whether it makes sense for the DoD to continue its pursuit of “CFO compliance.”
The Financial Systems Integration Office, the federal office that manages the Financial Management Line of Business, will stop testing and certifying federal financial systems on March 31.
In a letter posted to the Office of Management and Budget website March 16 OMB controller Danny Werfel said OMB will “develop the new path for financial systems in the Federal government.”
With a planned March 31 update to core financial systems requirements, “we believe that FISO has finished developing FMLoB business process and data standards as it related to its mission,” Werfel wrote. “In response to these challenges, we have reassessed the need for the core financial systems testing and product certification program and will be discontinuing this function,” he added.
The FMLoB has been an effort to consolidate financial systems within the government, with four federal agencies and private sector organizations acting as centralized service centers to other agencies.
For example, the Interior Department’s National Business Center hosts financial systems and business operations for external executive branch organizations, and a few legislative branch organizations.
Four senators have asked President Obama to remove Arnold Fields as the special inspector general for Afghanistan reconstruction, saying a recent government review had found major deficiencies in audits carried out by Fields’s office.
Twice in the past 18 months “we have repeatedly raised concerns regarding performance of the SIGAR,” wrote Sen. Claire McCaskill (D-Mo.), chairman of the homeland security subcommittee on contracting oversight. She was joined in the letter by Sens. Tom Coburn (R-Okla.), Susan Collins (R-Maine) and Charles E. Grassley (R-Iowa). SIGAR is the abbreviation for Fields’s office.
SIGAR spokeswoman Susan Phelan said that Fields was en route to Afghanistan and that she had no direct comment on the senators’ letter. Phelan said Fields had welcomed recommendations made by the Council of Inspectors General on Integrity and Efficiency, an independent government organization that carried out the review, and had vowed to implement them by Sept. 30.
In February of this year, the Council of Inspectors General began its review, which Fields initiated, according to SIGAR’s Web site. That review “found multiple major deficiencies in SIGAR audits including failure to meet minimum standards for quality control,” the senators wrote.
McCaskill and others have in the past recommended that the office of the special inspector general for Iraq reconstruction, a parallel organization run by Stuart W. Bowen Jr., a figure popular on Capitol Hill, be merged with SIGAR so that there is only one inspector general for work in both countries.
-Walter Pincus, WashingtonPost.com
The Government Accountability Office (GAO) recently issued the following publications:
Presentations By The Acting Comptroller General
1. “Ensuring Accountability in a Time of Financial and Fiscal Stress,” by Gene L. Dodaro, acting comptroller general, before the American Institute of CPAs’ National Governmental Accounting and Auditing Update Conference, in Washington, D.C. GAO-09-930CG, August 10, 2009.
2. “Ensuring Accountability in a Time of Financial and Fiscal Stress,” by Gene L. Dodaro, acting comptroller general, before the National Association of State Auditors, Comptrollers, and Treasurers’ 2009 annual conference, in Dearborn, Michigan. GAO-09-952CG, August 17, 2009
B-318386, U.S. Fish and Wildlife Service–Steller’s and Spectacled
Eiders Conservation Plan, August 12, 2009
Because considerable conservation efforts over several years have
not halted the decline of two threatened eider species, GAO will
not object to the U.S. Fish and Wildlife Service’s (FWS) proposed
use of appropriated funds to purchase and distribute caps and other
items to residents of Alaska North Slope communities in furtherance
of the agency’s eider conservation plan. FWS will print images of
the threatened eiders on these items and, for some items, include
eider conservation messages. The items, which FWS will distribute
as part of agency outreach events, will help residents identify the
threatened species and serve as reminders of the agency’s
B-318325, National Indian Gaming Commission–Reimbursing Bicyclists
as Part of the Agency’s Transportation Fringe Benefit Program,
August 12, 2009
Under the federal government’s transportation fringe benefit
program, as established by 5 U.S.C. sect. 7905 and Executive Order
No. 13150, the National Indian Gaming Commission (NIGC) provides
monthly transit subsidies to employees who certify that they use
mass transit to commute to and from work. NIGC may use its
authority under 5 U.S.C. sect. 7905 to extend the program to
provide a $20 cash reimbursement to those employees who commute to
and from work by bicycle. If NIGC chooses to do so, NIGC should
consider the provisions of the Internal Revenue Code, 26 U.S.C.
sect. 132(f)(5), and guidance provided by the Internal Revenue
Service and the Office of Management and Budget.
B-317634, Inclusion of Public-Private Partnership Roadways in
Calculating Total Lane Miles When Apportioning Highway Trust Funds,
August 17, 2009
Responding to a request for an opinion from Senator Bingaman,
Chairman, Subcommittee on Energy, Natural Resources and
Infrastructure, Committee on Finance, GAO has issued an opinion
concluding that the Department of Transportation (“DOT”), in
calculating highway lane miles under 23 U.S.C. § 104(b) as part
of its annual apportionment of highway funds to states, may
properly include mileage for roadways operated or maintained
by private third parties under long-term public-private partnership
agreements with a state (so-called ‘P3 agreements’)
The future financial systems health of the Defense Department depends on enterprise resource planning projects that are mostly late and over budget, according to the Government Accountability Office.
In testimony presented Sept. 29 before a Senate Homeland Security and Government Affairs subcommittee, the GAO said the Defense Department has identified 10 ERPs essential to transforming its business operations. Of those ten, so far one–the Defense Logistics Agency’s Business System Modernization–has been implemented despite $5.8 billion already spent, according to the GAO.
That spending figure will likely increase by at least another $6.9 billion, according to figures in the GAO’s prepared testimony.
During the hearing, Defense officials emphasized the importance of ERPs in making the notoriously messy DoD books auditable at fiscal year’s end. The 10 ERPs being implemented should replace more than 500 legacy systems.
As for the department’s stated goal of achieving a clean audit by 2017–a goal that previously was by 2007, but which was changed after the Pentagon realized it would be impossible–Robert Hale, the DoD comptroller and chief financial officer, said it’s doable. That is, doable for budget information and information pertaining to mission critical assets.
“If we try for everything, I’m afraid we’ll get nothing once again. I believe firmly we’ve got to pick some priorities and go after it. The only way, in my mind, to set those priorities is to focus on what we use to manage in the Department of Defense,” Hale said.
Under current audit guidelines, a clear financial picture in those areas would be insufficient to get a clean audit, Hale acknowledged. The rules might need to be changed, he added, since the hurdle to getting a clean audit would be historical asset cost data.
-David Perera, FierceGovernmentIT.com
– go to the hearing , complete with prepared statements, or go directly to the
– download the (.pdf)
– read the fiscal
OMB instructed Agencies on its expectations for Delivering an Efficient, Effective, and Accountable Government by providing immediate attention to GPRA and Executive Order 13576.
(This story is part of Federal News Radio’s special report, .)
“I think there is an opportunity to evolve our financial management model and compliance framework in a way that we are moving beyond the basics of financial statements, and moving directly into a space where the CFO sees across government significant discipline and consistency in how we are tackling some of the other elements of the bottom line of government,” said Danny Werfel, the controller in the Office of Management and Budget, a position akin to that of the federal CFO.
Twenty-three years later, experts in and out of government say . And now, CFOs are evolving beyond the initial requirements of the law.
Part of the expanded role CFOs play is derived from several of the administration’s priorities, such as reducing improper payments and better managing real property.
-Jason Miller, FederalNewsRadio.com