Danny Werfel

1
The CFO Act Where Do We Go From Here?

• Danny Werfel
• Office of Management and Budget
• May 7, 2008

2

• The Chief Financial Officer (CFO) of a company
  or public agency is the corporate officer
  primarily responsible for managing the financial
  risks of the business or agency. This officer is
  also responsible for financial planning and
  record-keeping, as well as financial reporting to
  higher management.
• - Wikipedia entry for CFO

3
CFO Act Objectives

•  
• Public Reporting Provide transparency into
  government finances, including the fiscal
  sustainability of government operations over time
  and the effectiveness of government programs.
• Internal Controls Facilitate process,
  technology, and human capital improvements that
  ensure strong internal controls and sound
  accounting practices.
• Decision Support Provide Federal leaders
  financial information to help improve management
  decisions and drive better stewardship outcomes
  (reduced fraud, error, waste).

4
Improving Financial Performance
Expands routine data use
Uses financial information to drive results in
key areas
No repeat weaknesses under FMFIA Sec. 2 or Sec. 4
No repeat auditor weaknesses
FFMIA compliant
Meets reporting deadlines
Clean audit opinion
No more than one repeat weakness under FMFIA Sec.
2 or Sec. 4
No more than one repeat auditor weakness
No material non-compliances
No chronic or significant ADA violations
5
Roles of Federal CFO
Strategic Planner
Risk Manager
Provider of Key Management Data
Financial Report Preparer
Compliance Officer
Transaction Processor
6
PMA Results
?
7 Billion in Improper Payment Eliminations
7 Billion in Real Property Disposals
Four consecutive years of declines in material
weaknesses
All agencies meeting 45 day reporting deadline
19 of 24 agencies w/ clean opinions
7
Challenges of Meeting CFO Role in Federal
Environment

• Overwhelmed by compliance
• Responsibilities without authority
• Complex (and sometimes decentralized) financial
  operations
• Human capital needs
• Resources to maintain steady state operations
  and initiate improvements (e.g., program
  integrity)

8
The Path Forward

• At the Agencies
• Integrated approach to financial management
• Changing the Footprint of financial operations
• Zeroing in on the connection between CFO
  activities and agency mission objectives
• At OMB, FASAB, Congress, and GAO
• Reconsideration of whats required for compliance

9
Integrated Approach to Financial Management

• CFOs in Integrated Organizations
• Are more informed on organizational risk,
  business goals, and data needs
• Can standardize and/or centralization business
  processes more seamlessly
• Can more readily leverage other parts of the
  organization to help reduce workload in non-core
  responsibilities

10
Changing the Footprint of Financial Operations

• Federal CFOs need additional capacity to move
  beyond compliance
• Federal CFOs should evaluate financial operations
  for opportunities to
• Centralize and standardize activities
• Leverage shared service providers

11
Zeroing in on the Connection to Mission
Objectives

• Federal CFOs should be working to identify
• activities or work products that add value to the
  organizations mission effectiveness  
• obstacles that exist in realigning or expanding
  current activities to ensure greater impact on
  organizational effectiveness

12
Reconsideration of Whats Required

• Public Reporting how can financial reports be
  more useful to the public, Congress, and other
  government leaders?
• Internal Controls how can requirements better
  align controls with risk?
• Decision Support
• should financial reports serve dual purpose of
  stewardship and information for decision-making?
• can we facilitate cost accounting and other
  business intelligence tools to help agencies
  manage risks and achieve business goals?