OMB tries new tactic for fixing financial reporting problems
CFOs and IGs lead new effort to improve reporting accuracy and efficiency
Even as agencies close their financial books in record time, the government is looking at unreliable financial data. It’s hard to get a true financial picture because of seemingly intractable financial reporting problems.
Comptroller General David Walker, the top official at the Government Accountability Office, said the audit agency still can’t provide an opinion on the government’s consolidated financial statement, partially because of longstanding and pervasive financial-management problems at the Defense Department.
Other factors also contribute to the reporting problems, Walker said. One is the government’s inability to adequately account for and reconcile accounting practices among agencies. Another is the labor-intensive process agencies use to prepare financial statements.
However, the Office of Management and Budget will try something new to solve those problems. It has organized a group of chief financial officers and inspectors general to examine how agencies do their financial reporting. They want to find out what works and what doesn’t and then share their findings with other agencies.
The IG community alone spends more than $100 million a year conducting financial audits. “It’s a costly process, and we want to make sure that it is as efficient and effective from the IG perspective as it can possibly be,” said Greg Friedman, vice chairman of the President’s Council on Integrity and Efficiency and IG at the Energy Department. He is part of the study group.
The issue is whether agencies can prepare statements that reflect their true financial condition, he said.
OMB is hoping that the best practices the initiative uncovers can help all federal agencies, said Linda Combs, OMB’s controller.
“Our goal is to have federal agencies produce user-friendly information in a format that facilitates internal controls,” Combs said at a recent hearing of the Senate Homeland Security and Governmental Affairs Committee’s Federal Financial Management, Government Information, Federal Services and International Security Subcommittee.
The CFOs and IGs will take a fresh look at financial reporting and assess whether agencies are asking the right questions and getting the most pertinent information.
Among other things, the study group will assess the quality and amount of communication that occurs between IGs who audit agencies’ financial statements and the agency staff members who prepare them, Friedman said.