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Wednesday, September 21, 2011

20 years later, CFO Act needs some freshening up

Congress must standardize the role of the federal chief financial officer and give deputy CFOs more clout to make up for time between political appointments of CFOs.

These are two of the recommendations from a multi-agency review of the impact and shortcomings of the CFO Act of 1990. Congress required the analysis as part of the Improper Payments Elimination and Recovery Act of 2010.

"Over the past 20 years, the CFO Act has played a pivotal role in improving financial accountability and transparency across the federal government," wrote Danny Werfel, the Office of Management and Budget controller in a blog post. "The report highlights several benefits of the CFO Act, including the increased transparency, greater accountability and significant improvements in financial management and internal controls achieved in recent years. Last year, these strides contributed to 21 out of the 24 CFO Act agencies obtaining unqualified 'Clean' opinions on their financial statement audits--only the second time in the last decade that the government reached that milestone."

The CFO Act helped agencies strengthen financial controls and processes over the last 20 years. Previously, the report stated financial operations were ineffective and inefficient, weak internal controls left resources at risk, personnel were not adequately trained and financial systems could not communicate with each other and were often redundant. The report said fund balances with the Department of the Treasury were reconciled inconsistently, and the government had difficulty managing its assets and costs. The lack of a full-time centralized senior official overseeing agency funding also caused agencies problems prior to the act.

But one of the big holes the review group found was the lack of continuity among agency financial leaders since most CFOs are political appointees.

The review group recommended to Congress to give deputy CFOs the same breadth of responsibilities as the CFOs.

-Jason Miller, FederalNewsRadio.com

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