CFOs look ahead
Reordering priorities to get to green
- By David Perera
- Mar 28, 2005
The change between what a chief financial officer’s duties have been and what they are becoming is the difference between gazing into the rear-view mirror or plowing straight ahead, according to some members of an emerging generation of CFOs.
Under the new paradigm, CFOs must do more than produce clean audits and deliver reams of technically correct information. “Customers don’t want stacks and stacks of data,” said Susan Grant, the Energy Department’s CFO.
Program managers want real-time information now. They don’t need a picture-perfect vision of last year’s transactions, Grant said, speaking at the
final Joint Financial Management Improvement Program conference.
“We’re killing them with accounting reports,” Grant said, while “they’re looking for business intelligence.”
But breaking from the traditional mindset of CFOs as bean counters requires cultural change, Grant said. “You need your program data and your financial data coming together to improve [agency] operational decision-making.”
As a result, CFOs need to think “about ourselves as being chief management officers,” she said. DOE is one of only eight agencies with a green score for financial management on the President’s Management Agenda quarterly score card.
Agencies that follow this new way of thinking about how CFOs fit into program management will see their ranking improve on the score card, said Danny Werfel, chief of the financial integrity and analysis branch within the Office of Management and Budget’s Office of Federal Financial Management.
On the color-coded score cards, compliance with financial regulations, such as
the Federal Financial Management Improvement Act, earns agencies a yellow score, Werfel said. Green scores are reserved for agencies with managers who “are using financial data to make better decisions,” he added.
“If your agency has purchased a $400 hammer, you’re at yellow if that transaction was recorded appropriately,” Werfel said. Agencies with green scores don’t make such purchases because timely dissemination of financial data lets officials prevent inappropriate buys, he said.
In the private sector, enterprises that are the size of major federal departments expect to have regular access to their financial status throughout the year, said Samuel Mok, the Labor Department’s CFO.
“If you think of a company of that size in which there’s no monthly review, weekly review of financial statements and performance in the commercial sector, I think most managers would have been fired,” he said.
A lack of OMB guidance should be no reason for CFOs to hold back in reordering their priorities, Grant said. “I don’t want OMB guidance on any of it. I would much rather set my own course.”
“Let me take it over to them and show them what I can do,” Grant added. “That’s what they want.… They’re people just like us.”
David Perera is a special contributor to Defense Systems.