Extreme makeover for financial management?

Twenty-three years have passed since the Federal Manager's Financial Integrity Act introduced financial best practices to the federal government.

"What we see is 23 years' worth of layered laws and directives," said Edward Kearney, managing partner at the accounting firm Kearney and Co.

All those laws and directives have created confusion, Kearney said last week during testimony before the House Government Reform Committee's Government Management, Finance and Accountability Subcommittee. The hearing was a first step toward identifying areas in which federal agencies might benefit from new legislation to simplify financial management.

Rep. Todd Platts (R-Pa.), the subcommittee's chairman, plans to introduce a bill that would streamline layers of financial management laws and eliminate those that are no longer necessary. Subcommittee members had asked the National Academy of Public Administration to make recommendations, and the hearing provided a first look at the preliminary findings of a NAPA task force.

G. Edward DeSeve, a task force member, said the Treasury Department should not be limited to a small role in governmentwide financial management. DeSeve, a former Office of Management and Budget controller, is now a managing partner at Governmentum Partners, a consulting firm.

When the Chief Financial Officers Act of 1990 was under consideration, OMB and Treasury were in the midst of a turf battle over which organization would lead the CFO Council. OMB won, DeSeve said. Treasury, however, "can provide strong leadership, if provided the opportunity," he added.

Lawmakers should also resolve a potential statutory conflict between federal CFOs and chief information officers about who is responsible for financial management systems, DeSeve said. "If the two of them aren't working well together, there is a potential core problem, so we need to do some ironing out," he said.

In addition, financial managers need to expand their focus beyond producing unqualified agency financial statements, DeSeve said. That focus has detracted from efforts to give project managers real-time financial data so they can make better decisions, he said.

"We don't have actionable information in the federal government for program managers," he added.

During the hearing, Platts announced the formation of a congressional management caucus to highlight management issues in new legislation. Despite the importance of good management in achieving the intent of legislation, the caucus' prospectus states that management issues "are often overlooked, underappreciated or simply ignored."