Once again, OMB and CFO Council prod agencies to improve financial accuracy
Agencies are still having trouble balancing their internal checkbooks for interagency transactions. Although they’ve made some progress, agencies still often can’t figure out who gets the debit and who gets the credit when it comes to accounting for funds they exchange for services.
The discrepancies in those balances prevent agencies from giving auditors reliable financial data, and as a result, the federal government annually fails to provide reliably accurate data in its consolidated financial statement.
The Government Accountability Office has not assessed the governmentwide consolidated financial statement for 10 years in large part because agencies cannot match the way they account for intragovernmental activity, GAO Comptroller General David Walker said in the financial statement report from December 2006.
“The Chief Financial Officers Council is aggressively working toward resolving the imbalance in order to restore the public’s trust in our ability to properly account, report and reconcile intragovernmental activity,” said John Cox, the Housing and Urban Development Department’s CFO and leader of the CFO Council’s Central Reporting Transformation Team.
Agencies need to resolve those differences to unlock financial performance, said Danny Werfel, deputy controller at the Office of Management and Budget. He has been tapped to be acting controller when Controller Linda Combs leaves government Aug. 10.
OMB has initiated a number of actions to break down those difficult transactions to develop a consistent governmentwide approach to handling them, Werfel said.
The intragovernmental imbalances undermine agencies’ ability to know how much money they are spending and with whom they are doing business, Cox said.
To identify and resolve differences in how agencies account for transactions, OMB and the CFO Council are setting up the Intragovernmental Dispute Resolution Committee for agencies that are unable to agree on a reconciliation approach and have exhausted other alternatives. Under the plan, agencies can enlist a committee of their peers to provide an impartial assessment and determine the right approach to resolving the imbalance, Werfel said. It should be operational by Sept. 30, Cox added.
In addition, OMB and the Treasury Department have created an Intragovernmental High-Risk Watchlist. The agencies on that list will meet with OMB to explain the corrective actions they are taking to resolve any differences, Cox said.
OMB and the CFO Council based the first watch list on agency balances in the second quarter of fiscal 2007, the period from January through March. The watch list will be distributed quarterly, he said.
Beginning in 2008, OMB will add a new requirement to audit procedures for agencies that have a long history of imbalances with another agency, Cox said. Auditors will focus on internal controls and the agency’s policies and procedures for accounting, reporting and reconciling the imbalances.
Cox’s workgroup at the CFO Council, which recently held its first meeting, will also look for ways to improve the business processes that can create or exacerbate the imbalances.
-Mary Mosquera, FCW.com