Navigating a course takes accurate data

Financial management is a subject that can often seem complex and arcane. But proponents of money management warn that good financial systems are its cornerstone.

Auditors argue that well-managed financial systems are critical beyond the mandate of having auditable books—although they note that those books are important to preventing waste, fraud and abuse. But the true value of real-time financial data is to aid day-to-day decisions.

"Accurate and timely financial information serves as the steering mechanism by which programs can be managed in an effective, efficient and economical manner," said Roger Viadero, the Agriculture Department's inspector general, during a recent congressional hearing. "Without this capability, the course cannot be navigated."

Annual audits and clean financial books ensure that an organization has sound practices, said U.S. Comptroller General David Walker in congressional testimony this year. The final goal: to produce "useful financial information and sound controls with which to make informed decisions and to ensure accountability on an ongoing basis," he said.

"It's having good information for making decisions," said Greg Kutz, director of financial management and assurance at the General Accounting Office.

Legally, there has been an alphabet soup of laws that has reformed the way agencies manage money, including the Chief Financial Officers Act of 1990, the Government Performance and Results Act of 1993, the Government Management Reform Act of 1994, the Federal Financial Management Improvement Act of 1996 and the Clinger-Cohen Act of 1996.

Under those laws, the largest departments and agencies must establish CFOs, audit financial statements annually and set expectations for agencies to deploy more modern financial management systems and produce cost and operating performance information.

Such data becomes critical when an agency is considering outsourcing operations, Kutz said. "I'm not sure how you can make a valid decision" without such elemental data.