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Thursday, January 31, 2008

OMB: Give CFOs more responsibility

Now that they have achieved dramatic progress in financial reporting, agency chief financial officers must look beyond their traditional roles as data collectors. Agencies now produce financial statements in a short closing period and increasingly obtain clean audits with few or no major weaknesses, said Danny Werfel, acting controller at the Office of Management and Budget.

Last year, 19 agencies earned clean audits, meaning their financial data was accurate and reliable. Overall, the federal government halved its major accounting weaknesses to 39.

CFOs need a strategy for doing more with the financial data and integrating financial management more tightly with information systems and agency missions, he said. For example, chief executive officers should collaboratively identify the agency’s business goals and risks and work to add value and mitigate risks. CFOs could also turn to other parts of the organization to help reduce their workload in noncore responsibilities.

OMB and oversight agencies should reconsider what’s required of CFOs, including how to better align those requirements with internal controls for managing risk. CFOs could combine accounting and business intelligence software to help manage risk and accomplish agency objectives. For example, they could develop systems to track progress and benchmarks against which to measure their activities, he said.

CFOs also want to improve the usefulness of their financial reports for agency managers, Congress and the public.

CFOs have improved financial reporting despite challenges, Werfel said. For instance, they are overwhelmed with compliance activities for numerous regulations, such as the Federal Information Security Management Act and Circular A-123 on internal controls for financial reporting. CFOs are also responsible for collecting compliance data, but they don’t have the authority to compel program and division leaders to supply such data if they don’t report to the CFO. Many financial operations, such as transaction processing, are complex and decentralized, and resources are shrinking, Werfel said.

-Mary Mosquera, FCW.com
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