Financial management upgrades a priority for OMB

The government's financial management systems have advanced "literally from the Dark Ages," according to a top administration official, who added that federal agencies still have a long way to go.

Joshua Gotbaum, Office of Management and Budget executive associate director and controller, outlined his financial management priorities for the upcoming year and for the long term during a speech Friday at the 11th Annual Federal Leadership Conference. The conference, sponsored by the Association of Government Accountants, was held at the Ronald Reagan Building and International Trade Center in Washington, D.C.

"In the financial management area, we need to build on what we have done for financial standards and reports," Gotbaum said. Financial management has been a focus since the passage of the Chief Financial Officers Act of 1990 and the Federal Financial Management Improvement Act of 1996. The Government Performance and Results Act also requires financial accountability from government agencies, he said.

Gotbaum's priorities for the upcoming year are to:

* Continue upgrading financial management systems. That involves expanding the activities of the Joint Financial Management Improvement Program, which establishes governmentwide requirements for commercial systems beyond agencies' core financial management systems.

* Take advantage of commercial technology to improve and upgrade financial management systems. "We push unique requirements, so we lose the benefit of experience that vendors have," Gotbaum said. "We need to resist the temptation to customize."

* Develop performance measures. This area needs work, but agencies such as the Social Security Administration and the Transportation Department are getting there, Gotbaum said.

* Install financial tracking systems.

* Provide accountability, which requires agencies to integrate performance information with results information.

For the long term, Gotbaum would like to see suggestions made to Congress about ways to modernize the CFO Act.

"CFOs need to be integrated into the policy and operations of agencies," he said. To do that, the government must begin the long process of integrating budget systems and budget accounts with financial management systems and financial management accounts, he said. Unlike the private sector, government budget and financial activities are accounted for separately.

Improving the government's financial accounting probably will not mean moving to a consolidated financial management system for the entire government, Gotbaum said.

"Right now we are just trying to get agencies consolidated and on the same standards," he said. Gotbaum acknowledged there are good arguments for a single government system but said he prefers agencies to focus on improving the existing systems.