OMB says agencies must expand cost management

The Office of Management and Budget expects agencies to do a better job of managing costs, to be reflected in their fiscal 2006 budgets by reducing improper payments, tightening controls over federal credit cards and managing real property.

Agencies are now fulfilling more stringent OMB financial-reporting requirements. “Agencies are moving from being good financial reporters to good financial managers,” Linda Springer, controller of OMB’s Office of Federal Financial Management, said yesterday at a government financial managers’ conference sponsored by Treasury’s Financial Management Service.

Twenty of the 24 major agencies have received clean audits. This year for the first time agencies will have to produce year-end financial statements by Nov. 15, just 45 days from the end of the fiscal year, instead of up to five months later.

Eight agencies already accomplished that last year. (GCN story)

Agencies are filing their quarterly financial reports faster and beginning to produce monthly reports with the help of integrated financial management systems, she said.

The ultimate goal is to have accurate and timely information, on demand, for decision-making and to manage costs,” Springer said. Her comments reflected OMB’s expectations of results included in an OMB report released earlier this week.

Agencies have identified $35 billion in annual improper payments. OMB wants agencies to go beyond making sure the correct recipient gets funds to assuring that funds go to the purpose intended. If they aren’t, OMB wants an action plan to eliminate the payments.

For example, an agency may award a grant to a university for research. The agency should review how the funds are used to make sure that the university is not using some of the funds elsewhere, such as building a facility associated with the research, she said.

The federal government owns 28 percent of the nation’s land mass and $300 billion worth of real property assets, such as office buildings, visitor centers, launch sites and hospitals, but does not do a good job of managing them, the OMB report said.

President Bush signed an executive order early this year that requires agencies to develop databases of what they own, determine what assets they need, establish an agency real property officer and sell off properties they don’t need. Springer cited the lengthy process agencies must go through to sell to the public. OMB is looking at incentives, such as agencies being allowed to keep a portion of sale proceeds, to better manage their property assets.

Delinquencies in the government’s use of 2.5 million credit cards used for purchases and travel are decreasing, but better agency controls and more oversight are necessary, Springer said.

Agencies spent $16.5 billion with federal credit cards in fiscal 2003, she said.

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