Statement of The Honorable Linda M. Springer
Controller, Office of Federal Financial Management
Office of Management and Budget
Subcommittee on Government Efficiency and Financial Management
Committee on Government Reform
United States House of Representatives
September 15, 2004
Role of the Chief Financial Officer in the Federal Government
Thank you, Mr. Chairman.
I appreciate the opportunity to testify before this Subcommittee to discuss
the role of the Chief Financial Officer (CFO) in the Federal Government.
Just over two years ago, I joined the Office of Management and Budget (OMB)
to become the Controller and head of the Office of Federal Financial Management.
At the time, approximately a decade had passed since the enactment of the
CFO Act of 1990 (CFO Act), which created the position of a CFO at the major
departments and agencies in the Federal Government. As the statutory head
of financial management in the Federal Government, I direct and oversee
these CFOs in carrying out substantial portions of their responsibilities.
This vantage point, combined with 25 years of private sector financial and
management experience underlies the perspective I will share with you today
on the role and effectiveness of our CFOs.
Financial Officer Responsibilities
The CFO Act sets forth the specific authority and details the responsibilities
of the major Federal agency CFO offices (31 U.S.C. 902). These statutory
duties can be categorized into the following eight areas:
of financial management matters to the agency head;
of agency financial management activities;
and maintenance of the agencys accounting and financial management
input for selection of deputy CFOs;
of agency financial management staff, activities and operations;
and submission of performance and accountability reports on the agencys
of financial execution of the agencys budget; and
of and recommendations related to cost coverage of an agencys
charges imposed for services and things of value rendered.
Under the CFO Act, the CFO is designated as the executive tasked with financial
management and related responsibilities at the agency. While his or her
statutory activities are often downstream from the policy
setting process that leads to program enactment, the CFO is an important
member of an agencys leadership team. From budgeting and funding
at the front end, through cost management during program execution, to the
final accounting and reporting of the disposition of expenditures, the CFO
is involved throughout the entire lifecycle of nearly every agency initiative.
This requires CFOs to maintain a knowledge of the agencys operations
that is distinguished by its high level of both breadth and depth.
This broad knowledge has made CFOs attractive candidates for expanded duties
at their agencies. A recent study conducted by the CFO Council examined
the variation in roles and duties of CFOs at the 24 major agencies. Using
nine functional areas , the study results support the assertion that agency
CFOs have varied duties. Consistent with the CFO Act, all CFOs are responsible
for financial systems, operations, and analysis, and nearly all CFOs are
also tasked with budget formulation, budget execution, and performance management
functions. What is noteworthy is the prevalence of CFOs having additional
duties in the areas of personnel (6), procurement (10), and grants
management (11) functions.
Clearly, the CFO is increasingly recognized as being positioned to provide
agency-wide leadership that other officials with more limited portfolios
Financial Officers Council
Established by the CFO Act of 1990, the CFO Council provides a venue for
the CFOs to meet on a periodic basis to advise and coordinate the financial
management activities of their agencies. The Council addresses such matters
as improved quality of financial information, financial data and information
standards, consolidation and modernization of financial systems, internal
control, legislation affecting financial operations and organizations, and
other financial management matters. As Controller, I lead the Council and
work with it to achieve our objectives in these areas.
CFOs are actively engaged in the Council and are integrally involved with
the planning of the meeting agendas. Several of the CFOs who serve on the
Executive Steering Committee, which meets monthly with the Office of Federal
Financial Management to discuss emerging issues, provide committee updates,
and help to prepare the agenda for the upcoming Council meeting. At least
one CFO co-owns (with OMB) each Council meeting, by preparing and presenting
the topics for consideration and discussion by the Council.
The CFO Council has historically accomplished its goals through a committee
structure. These committees were recently realigned to better respond to
emerging issues and support the needs of the Federal financial community.
There exists a good balance on the committees between the CFOs and Deputy
CFOs, which provides institutional knowledge, continuity and consistent
progress regardless of changes in political leadership. The Office of Federal
Financial Management partners with the CFOs in all of their committee work.
The following is a listing and brief description of the current CFO Council
Practices: This committee helps to resolve common financial
management and business process challenges through exposure to new ideas
and strategies from best practice organizations and alternative
perspectives of government and industry leaders. Recent committee activity
has focused on scheduling events to hear about private sector approaches
to business process re-engineering and shared Federal agency practices
in meeting accelerated financial reporting deadlines.
Management Policies and Practices: This newly-formed committee
is comprised of representatives from Federal agencies who work collaboratively
to identify and address emerging issues. An initial effort of the committee
has been to survey the agencies to determine the scope of internal control
assurance being provided by management and auditors. Additionally, the
committee has undertaken a project, with the Inspector General community,
to consider the costs and benefits of additional assurances on Federal
agency internal controls.
Reporting Acceleration: The mission of this committee is to
help agencies identify and eliminate common barriers to issuing their
Performance and Accountability Reports, including the reporting of their
audited financial statements by the November 15 deadline. While the
committee assists agencies in accelerating their annual reporting processes,
it provides the greatest value by increasing agency awareness of common
problems and their solutions, providing a forum for their discussion
and resolution, and providing a key interface with the audit community
on areas of mutual interest.
Systems and E-Government: This committee actively helps to improve
Federal financial systems and reporting by championing systems that
produce data needed to efficiently and effectively manage the day-to-day
operations of the Federal Government, as well as promote the standardization
of financial data and the elimination of redundant Federal financial
systems. This past year, the committee participated in a number of key
initiatives designed to transform the way the Federal Government as
an enterprise deploys and uses information technology (IT). The committee
also participated in the Line of Business Initiatives
for financial management and back office grants management, which are
developing supporting information systems architectures for the future.
Payments: This committee continues to assist agencies in identifying
and eliminating improper payments within their programs and activities.
Additionally, it has helped agencies prepare for the challenges of meeting
the requirements of the Improper Payments Information Act (IPIA) by
developing a standard format for IPIA reporting requirements and guidance
for measuring improper payments in large and complex programs.
Measurement: This committee is designing and developing a performance
measurement system based on key financial management indicators that
will allow government managers and other stakeholders to assess the
financial management performance of both the Federal Government as a
whole and each individual agency.
information on the CFO Council committees, please refer to the 2004 Federal
Financial Management Report, located at www.whitehouse.gov/omb/financial.)
CFO is not the CFO of the past. Successful CFOs possess not only financial
acumen and subject expertise, but have the full range of leadership skills
that are found in CFOs of well-run private sector financial management
organizations. To be effective in the expanded areas for which they are
responsible, these financial executives and their offices have a comprehensive
understanding of both the operational and strategic missions of their
agencies. All of these characteristics support the objective that agencies
and the American citizens deserve decisions that are informed by accurate
and timely financial information and that programs are executed in an
environment of robust control and cost consciousness.
for your time. I am happy to entertain any of your questions.