Clean audits deserve a bonus, officials say

Financial Management: Recurring Financial Systems Problems Hinder FFMIA Compliance

The federal government should pay bonuses to financial management personnel whose agencies quickly produce clean audits and comply with the Federal Financial Management Improvement Act (FFMIA) of 1996, two federal officials told a Congressional subcommittee.

Offering financial incentives could motivate agencies to more rapidly pursue clean audits and compliance with FFMIA, said Sally Thompson, the General Accounting Office's director of financial management and assurance and Karen Cleary Alderman, executive director of the Joint Financial Management Program. They testified Oct. 29 before the House Government Reform Subcommittee on Government Efficiency and Financial Management.

"We need a combination of a carrot and a stick," said Thompson. "Congress provided us at the GAO the flexibility to award for performance and we found that effective."

Each year, GAO officials audit the financial statements of 24 federal agencies and attempt to form a view of the overall state of federal finances. For the sixth consecutive year, agency officials were unable to render an opinion on the federal government's overall financial state.

Thompson and Alderman were responding to a question from Rep. Todd Russell Platts (R-Pa.), who asked if performance bonuses for financial management officials would provide the necessary incentive for clean audits and FFMIA compliance. Platts chairs the subcommittee.

If financial incentives are used, they should be awarded for work that is "measurable, specific, time sensitive" and the person has to actually have control over the successful system, Thompson said.

Finding, training and retaining qualified program managers is a problem for agencies, Alderman said. Financial incentives should be an option the federal government considers, she said.

"As an observer of program managers in the federal government, I can say they are a scarce commodity and in high demand," she said. "And they could make double or more [in pay] in the private sector."

Although those who lead projects do so out of "public service incentive," it would be "nice to have incentives for these folks," Alderman said.

On the stick of the scenario, however, members of the subcommittee were pushing hard for Thompson and Alderman to talk about penalties for noncompliance.

Marsha Blackburn (R, Tenn.) said she is tired of the lack of accountability to produce clean audits in the federal government. The solution appears to always be "further down the road," Blackburn said.

"My constituents, when they find it takes 12 years to learn to count dollars [in the federal government,] aren't going to want to give their dollars any more," she said. "In the private sector, you don't have 'expectations,' you have 'requirements.' "

When agencies receive a disclaimer, or failing mark, on their federal audit, "nobody loses their job, nobody's hand gets slapped and there's no change in the process and procedures," Blackburn said.