Government-wide Financial Reporting - AGA

4. Structure
Overview of the As-Is
Environment
The enactment of the CFO Act
ushered in a new era of federal government
accountability. It also put the
“M” (for “Management”) in OMB by
establishing a Presidentially appointed,
Senate-confirmed Deputy Director for
Management (whose role has now been
expanded to include the title of Chief
Performance Officer) and the Office of
Federal Financial Management (OFFM),
headed by a Presidentially appointed,
Senate-confirmed Controller, who
serves at the pleasure of the President.
During development of the CFO
Act, there was significant discussion
as to whether to place the OFFM and
the Controller in OMB, with its central
government-wide management
role and control of the budget, or in
Treasury, with its financial management
expertise and central accounting
capabilities. It was decided that OMB
would have the most leverage to affect
change, given its location within the
Executive Office of the President and
the strong interest of the then-OMB
Director in financial management
reform and improved financial reporting
at the agency and government-wide
levels. Treasury retained its traditional
role as the central accountant and, with
the enactment of the GMRA, became
the preparer of the CFS.
In addition, to leverage the strengths
of both OMB and Treasury, the framers
of the CFO Act proposed to establish a
separate office in Treasury to support the
OFFM’s work, since resources at OMB
were impeded by its size, location (within
the Executive Office of the President) and
mission — primarily a focus on budget
formulation, policy and the control structure
needed to implement and oversee
management of the federal government.
With this separate office, Treasury would
be a partner and valuable technical
resource to OMB and the OFFM.
At the time, it was envisioned that this
Treasury office would employ about 75
people and provide the infrastructure to
support the new CFO Act. This was seen
as the best of both worlds — an OMB
leadership role and a Treasury technical
role and staffing. However, during the
late stages of CFO Act deliberations, the
plan for a separate Treasury office was
dropped due to questions about who had
responsibility for its management. 20
The consolidation of the CFS resides
within the Financial and Budget Reports
Directorate of FMS’s Governmentwide
Accounting Board, which rests six
organizational layers below the Office
of the Fiscal Assistant Secretary (OFAS).
Interestingly, the President’s 2013 budget
proposes to merge FMS with its companion
entity within OFAS, the Bureau of
the Public Debt. Whether the proposed
consolidation will resolve some of the
resource issues remains to be seen.
The resource issue has been raised
beginning with the CFS audit report
for fiscal year 2004. GAO took an
additional step in emphasizing that
the needed systems and resources
infrastructure is a continuing problem
at Treasury. 21 The following language
from GAO’s fiscal year 2004 auditors’
report exemplifies this recurring
message, which was echoed in GAO’s
report on its fiscal year 2011 audit: 22
“Treasury did not have the infrastructure
to address the magnitude of the
fiscal year 2004 financial reporting
challenges it was faced with, such
as an incomplete financial reporting
system, compressed time frames for
compiling the financial information ...
We found that personnel at Treasury’s
Financial Management Service had
excessive workloads that required an
extraordinary amount of effort and
dedication to compile the consolidated
financial statements; however, there
were not enough personnel with specialized
financial reporting experience
to ensure reliable financial reporting
by the accelerated reporting date.”
In carrying out its audit responsibility,
GAO has a small core team assigned
year round to the CFS audit. This team is
augmented at year end with additional
auditors who provide short-term surge
capacity, which Treasury does not have.
Government-wide Financial Reporting 19