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.
January 27, 2014
The Government Accountability Office (GAO) today released the following reports, correspondence and testimonies:
Information Technology: DHS Needs to Improve Its Independent Acquisition Reviews.
GAO-11-581, July 28.
American Battle Monuments Commission: Improvements Needed in Internal Controls and Accounting Procedures-Fiscal Year 2010.
GAO-11-577R, July 28.
Improper Payments: Reported Medicare Estimates and Key Remediation Strategies, by Kay L. Daly, director, financial management and assurance, and Kathleen M. King, director, health care, before the Subcommittee on Government Organization, Efficiency, and Financial Management, House Committee on Oversight and Government Reform.
GAO-11-842T, July 28.
DOD Financial Management: Numerous Challenges Must Be Addressed to Achieve Auditability, by Asif A. Khan, director, financial management and assurance, before the Panel on DOD Financial Management, House Committee on Armed Services.
GAO-11-864T, July 28.
– Ariel Levin-Waldman, FederalNewsRadio.com
WILLIAMSBURG, Va. – The Obama administration has said little publicly about the assorted back office Lines of Business initiatives started under the Bush administration. Agencies and industry alike were left wondering what the plan was going forward, especially if consolidations with federal shared service providers still would be required.
At least for the financial management line of business, the Office of Management and Budget is offering some clarity.
Adam Goldberg, OMB’s chief of the financial analysis and systems branch, says the LOB still is underway as it has been since 2003.
But OMB also has seen some additional potential improvements thanks to the Recovery Act.
“We have started to look at other opportunities where we could deliver financial management reforms probably a little earlier than we would be able to move all the agencies onto a consolidated financial system,” says Goldberg at the. “The direction we are going now is to continue with standardization and consolidation efforts and start to look at other solutions to deliver benefits to meet emerging needs like data and transparency reporting.”
OMB believes the Recovery Act has shown that obtaining better and more accurate data more quickly is just the beginning.
“We want to look at other technology solutions to reduce the cost of transactions,” he says. “We have to find ways to automate data from the time we get money from Congress until the time we spend it.”
Goldberg adds that the Recovery Act has expanded who needs access to financial data.
“One of the things we are trying to do is understand how can we accelerate the capture and reporting of information and with Recovery Act and it’s not just federal agencies that need to have access to the information to met reporting requirements, but we need to provide it out to state and localities and companies who are receiving monies under the Recovery Act to make sure they are able to fulfill the reporting requirements and make sure the numbers and reporting elements are in alignment with one another,” he says.
Goldberg adds that OMB earlier in October issued the final set of standards so now agencies and industry have.
Along with these standards, agencies also received a common governmentwide accounting classification structure in 2008 to complete the updating of the federal financial management standards.
Goldberg says OMB now is leading an effort to make sure the common account classification structure and the business process standards align.
Goldberg adds that over the next six months OMB will finalize all the financial management information to ensure everything is aligned.
Vendor financial management system software providers eventually will have to meet the new standards.
As for the FM LOB, Goldberg says between 12 and 14 agencies have migrated to a shared service provider, including the Office of Personnel Management most recently.
-Jason Miller, WFED
Nearly 500 government financial leaders gathered at AGA’s Federal Financial Systems Summit (FSS) in Washington, DC to learn about and discuss the near-term and future prospects of federal financial management and systems in a budget constrained environment. AGA released its Executive Report on the summit sessions on their website recently.