By Mary Margaret Yodzis 

This year is one for the history books, but 2020 also marks the 30th anniversary of a landmark event in government financial management —passage of the CFO Act. In the past three decades, the traditional duties of government financial professionals shifted from the basic accounting, finance, control, reporting and compliance tasks to active roles in data analytics and decision-making. In a panel discussion at AGA’s recent National Leadership Training in Washington, D.C., moderated by a chief architect of the CFO Act, AGA Past National President Jeffrey C. Steinhoff, top government financial leaders presented the outlook for the profession in another major shift on its way.

Panelist Gene L. Dodaro, Comptroller General, U.S. Government Accountability Office (GAO), began the discussion with salient points from his recent testimony before Congress on progress resulting from the CFO Act. Dodaro said the legislation:

  • Streamlined systems and activities.
  • Provided comprehensive accounting standards — both accrual standards and ones that “anticipate the obligations of the government to sustain commitments made into the future.”
  • Initiated audits that brought “much-needed discipline and accountability and better stewardship over taxpayer dollars” and highlighted the problems of improper payments and weaknesses in information systems.
  • Encouraged better internal controls — “When we started audits across the federal government in 1996, only six of the 24 agencies were able to get clean opinions. This past year, it was 22 of 24, because thousands of weaknesses have been addressed and remediated over the years.”

Dodaro said GAO encouraged Congress to build upon the work of the CFO Act, recommending lawmakers:

  • Modernize the CFO function and all departments and agencies.
  • Strengthen the deputy CFO functions “so they are fully prepared to step into the CFO position when the inevitable turnover happens, because of the political appointment of most of the CFOs.” 
  • Improve the linkage between cost and performance information, “which is one of the goals of the CFO Act, but we haven’t fully realized the potential there.”
  • Modernize systems to provide more timely day-to-day information for financial decision-making and strengthen requirements for developing systems plans.
  • Reskill the workforce. “As we modernize, they need a wider range of skills in the IT, analytics and other arenas.”

Deputy Comptroller of the United States in the Office of Management and Budget, Tim Soltis added, “The CFO Act is a good strategic document. It sets up a structure and a need to transform. But the vision was based on the situation in the 80s, and the vision we need now is not there. Through the CFO Act, we successfully accounted for the cost of government with the CFO Act, but we didn’t manage it, and now there is no guidance on the roles of CFOs in debt and deficit.”

Fiscal Assistant Secretary of the Treasury David Lebryk noted that the legislation gave standing and credibility to the CFO position, “but the CFO hasn’t taken full advantage of it to drive change in the organization. The real challenge is looking forward. What are the meaningful performance measures, and what are meaningful things we should measure? We need to make sure we’re not spending too much time in systems and technology instead of data and analytics.”

Concerning recent legislation, including the Government Performance Results, DATA, Foundations of Evidence-Based Policymaking, Open Government, and GREAT acts, Dodaro said they must be implemented successfully and fully integrated into operations before CFOs can build upon them. “These reform measures are in their early stages,” he noted, “and they are going to make important contributions. But we should start thinking conceptually about how to integrate these different pieces into a more comprehensive assessment of performance.”

Steinhoff and Dodaro stressed that change is on the way with technology and system integration “We stand at the threshold of another unprecedented opportunity to recast our profession through explosive advances in technology and access to unbounded data to turn into information,” said Steinhoff.

Added Dodaro, “Our national finances are on an unsustainable long-term fiscal path. While the key drivers are healthcare costs and interest, all aspects of government are going to be under scrutiny to perform better and more efficiently over time. CFOs and all in the profession have a great opportunity to contribute to what will be a national imperative to better manage the finances of our government. The real question is whether the accountability community can use all these tools we’ve been developing to deal with the debt and deficit and provide better information to help decision-makers minimize effects on programs and U.S. citizens.”

Soltis said linking budget, performance and spending data is crucial for decision-making, but the way the profession goes about it is outdated and insufficient today “We have lots of data, but what data would be needed to make good decisions on real property, IT or cybersecurity? Decisions need to be made from the reports we produce, but they don’t link budget, spending and performance.”

 The panel cautioned financial professionals test innovations before deploying them. “We have an innovation lab at GAO,” Dodaro said, “to test how to do audits with new technologies and techniques before we use them. It’s not that we don’t take risks going forward; it’s that we manage risk. We’ve got to make the audits more efficient, and the only way to do that is with better systems in place, whether shared or other modern systems. It’s been done in the private sector — and nobody is talking about getting rid of audits or doing the Fortune 500 together in one audit. We have to find a way to be more efficient. Above all, we can’t lose ground in proper accountability and stewardship.”

The next goal in the CFO Act is “making the government an integrated enterprise,” Soltis said. “We need to discuss whether the model from 30 years ago is still valid.”