From the U.S. Government Accountability Office, www.gao.gov Transcript for: 30 Years of Reforms to Financial Management under Chief Financial Officer Act Description: It's been nearly 30 years since the enactment of the Chief Financial Officers Act, legislation that, at the time, was heralded as a comprehensive reform that would modernize the government's financial management leadership structure in order to better manage and safeguard taxpayer provided resources and manage government costs. So, did it work? We talked to GAO's Dawn Simpson, an expert on federal financial management and a director in our Financial Management and Assurance team about her recent review of the CFO Act. Related GAO Work: GAO-20-566, Federal Financial Management: Substantial Progress Made since Enactment of the 1990 CFO Act; Refinements Would Yield Added Benefits Released: August 2020 [ Music ] [Dawn Simpson]: Lawmakers and government leaders need access to timely and reliable financial information in order to make policy choices. [Holly Hobbs]: Hi and welcome to the Watchdog Report, your source for news and information from the US Government Accountability Office. I'm Holly Hobbs. It's been nearly 30 years since the enactment of the Chief Financial Officers Act, legislation that, at the time, was heralded as a comprehensive reform that would modernize the government's financial management leadership structure in order to better manage and safeguard taxpayer provided resources and manage government costs. So, did it work? Today we talked to GAO's Dawn Simpson, an expert on federal financial management and a director in our Financial Management and Assurance team about her recent review of the CFO Act. Thank you for joining us, Dawn. [Dawn Simpson]: Thank you for having me, Holly. [Holly Hobbs]: So, Dawn, did the reforms under the CFO Act to achieve their intended goal? [Dawn Simpson]: The federal government has significantly improved its financial management. These improvements have been in 5 areas covered by the CFO Act: leadership, financial reporting, internal control, financial management systems, and the financial management workforce. For example, the CFO Act modernized the government's financial management leadership structure. Within the Office of Management and Budget, a deputy director for management and controller positions were established. CFO was designated at each of the major executive agencies. In addition, reliable financial reporting was also a key piece of the legislation. The CFO Act began the process of preparing and auditing federal financial statements. Annual federal financial statement audits identified significant internal control weaknesses, including the significance of improper payments and information security weaknesses. In response to these weaknesses, agencies significantly improved their internal control, which increases the rules liability of their financial information. Also, Treasury and OMB have made significant progress in improving controls related to the consolidated financial statements of the U.S. government. While substantial progress has been made, challenges remain in these 5 areas to fully achieve the vision of the CFO Act. [Holly Hobbs]: So, given that lawmakers and government leaders just provided trillions in funding to respond to COVID-19, what impact could that have on the government's goal of achieving effective financial management? [Dawn Simpson]: Now, more than ever, lawmakers and government leaders need access to timely and reliable financial information in order to make policy choices. The reforms initiated as a result of the CFO Act are essential in helping to provide the type of information needed to make such tough choices. [ Music ] [Holly Hobbs]: So, it sounds like the Chief Financial Officers Act provides changes to improve government financial management, but despite having been approved 30 years ago, there's still work to be done. Dawn, did we make any recommendations for improving federal financial management? [Dawn Simpson]: We identified 8 matters where Congress should consider legislation to help address the challenges we identified. These matters are in 4 main areas. One area relates to standardizing the responsibilities of CFOs and defining the responsibilities of deputy CFOs. A second area relates to financial management plans. The federal government lacks a complete and integrated government-wide financial management plan and agency plans to implement the government-wide plan. A complete and integrated government-wide 4-year financial management plan would help to ensure that the federal government is developing direct, transparent, and consistent actions to address financial management challenge. A third area relates to reliably measuring and assessing the quality of agencies' financial management. Agencies have limited financial management performance-based metrics. By developing and using performance-based metrics, agencies would be able to more readily assess their financial management needs and take steps to improve their financial management. The last area relates to identifying the key financial management information needed for effective financial management and decision making, and assessing testing and reporting on the effectiveness of agencies' internal controls over the information, including controls over financial reporting. This would enhance agency leaders' access to accurate and reliable financial data and, in turn, their ability to make more informed financial decisions. [Holly Hobbs]: Dawn, last question, what's the bottom line of your report? [Dawn Simpson]: Substantial progress has been made to improve federal financial management since enactment of the CFO Act nearly 30 years ago. Addressing the challenges discussed in our report would help the federal government fully achieve the vision of the CFO Act, which is to have reliable, useful, and timely information for effective and efficient decision making. [Holly Hobbs]: That was Dawn Simpson discussing GAO's recent review of federal financial management. Thank you for your time, Dawn. [Dawn Simpson]: Thank you, Holly. [Holly Hobbs]: And thank you for listening to the Watchdog Report. To hear more podcasts, subscribe to us on Apple Podcasts, and make sure you leave a rating and review to let others know about the work we're doing. For more from the congressional watchdog, the U.S. Government Accountability Office, visit at gao.gov.