AGA Richmond Chapter--Winter Seminar February 15, 2011

1. AGA Richmond Chapter--Winter SeminarFebruary 15, 2011 Reflections on the 20th Anniversary of the CFO Act By Edward J. Mazur First Controller, Office of Federal Financial Management

2. A Key Assertion Good policy —once institutionalized— can have a profound affect on performance!

3. Central Observation “The passage of the CFO Act in 1990 marked a noble beginning for what was to become the greatest advance forward in modernizing and making more effective the financial management of the Federal Government.” Edward J. Mazur, Journal of Government Financial Management, Winter 2010, Vol. 59, Issue 4

4. A Brief History • Factors that led to its drafting • Hopes expressed during its passage • The first years • What has been accomplished • How the Act can continue to advance the performance of our Federal departments and agencies • Significant remaining challenges

5. Factors Leading to Passage • Intergovernmental programs, beginning in the mid-1960’s brought the 3 levels of government together • Financial failures of certain cities in the 1970’s focused attention on financial reporting by state and local governments

6. Important Federal Leadership • GAO publishes Yellow Book—1970’s • Comptrollers General Staats & Bowsher • AGA’s Comptrollership Task Force—1983 • GAO report, Managing the Cost of Government: Buildingan Effective Financial Management Structure—1985 • Arthur Anderson report on Federal reporting practices—1986

7. Congressional Leadership • Senate: • John Glenn, Chair Gov’t Affairs • William Roth, ranking member • House: • John Conyers, Chair, Gov’t Operations • Frank Horton, ranking member

8. Passage Signed into law: November 15, 1990 By President George H. W. Bush

9. The Early Years • Support within the Federal financial management community was not assured • Change impacted: • Required experience and qualifications • Role adjustments for Federal IG’s • Relationships with OMB’s Budget side

10. Accomplishments Under the Act General Assessment: Each requirement has been substantively addressed—tools now in place: - policies and standards - performance measures - systems and technologies -trained personnel -teamwork among CFOs and IGs.

11. Accomplishments (cont’d) • Reporting standards in place • Audited financial statements issued 45 days after close of fiscal year • Significant reduction of Auditor-identified material weaknesses among the 24 major CFO Act • Increasing focus on reporting program performance

12. Credit and Acknowledgements • Dedicated men and women throughout our Federal Government • Supportive Congress, generally • Wise appointments to leadership posts • Men and women of the Office of Federal Financial Management • Woody Jackson, former Deputy State Auditor of Virginia

13. Commitments Going Forward • Continued elimination of material weaknesses • That all Federal departments will produce annual financial statements in accordance with established standards

14. Significant Remaining Challenges • Building readership of financial and performance reports • Identify and communicate with agency stakeholders • Secretary of Treasury should communicate with Governors • Form FASAB users advisory group Note: Access the “2010 Financial Report of the United States Government by going to www.fms.treas.gov/fr/index.html

15. Remaining Challenges (cont’d) • Defend the continued application of the CFO Act, through recognizing: • Complexity of Federal government • Reporting as a tool for accountability • Future benefits from “assets” • Stakeholder reliance on “liabilities” • Citizen access to data promotes transparency, but does not equate to full and comprehensive accountability

16. Remaining Challenges (cont’d) • Protect governmental control functions and staff during period of fiscal stress, to: • Ensure accuracy of benefit payments • Timely collection of revenues • Reliability of financial information • Safeguarding of public assets Explain and document the risks from cuts!

17. Remaining Challenges (cont’d) • Congress must use the financial information being provided! • Treasury’s consolidate financial report (CFR) is candid and complete • Contents are supported by OMB, FASAB • GAO audits the CFR; IG’s the agencies • Department and agency staff exercise great diligence in providing information

18. Remaining Challenges (cont’d) BUT—the CFR and its warnings about sustainability has not produced a change in direction by Congress • Reported debt and obligations were $51.8 trillion at 9-30-2010—which is 351% of GDP • 94%of household/nonprofit net worth (Q3 2010) • Foreign interests hold over 50 of U.S. debt • National security is at stake • Quality of life and opportunity is at risk!

19. Intergovernmental Financial Dependency—Selected States

20. Intergovernmental Financial Dependency—Selected States

21. Intergovernmental Financial Dependency—Selected States

22. Closing Thoughts • The governmental financial management community must exert shared leadership, beginning now! • You have the knowledge and understanding • You have access to government leaders • You can anticipate the consequences of inaction • You can lead!

23. Resources for Fiscal Reform Recommendations • President’s Commission on Fiscal Responsibility and Reform—”The Moment of Truth” • http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf • Bipartisan Policy Center Debt Reduction Task Force—”Restoring America’s Future” • http://www.bipartisanpolicy.org/news/press-releases/2010/11/bipartisan-policy-center-task-force-unveils-bold-comprehensive-plan-solv • Peterson-Pew Commission on Budget Reform—”Getting Back into the Black” • http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/Economic_Mobility/Peterson-Pew_report_federal_budget_process_reform.pdf

24. Speaker Contact Information Edward J. Mazur, CPASenior Advisor for Public Sector ServicesClifton Gunderson LLPOffice 804-270-2200, ext 20102Mobile: 804-240-8672 Edward.Mazur@cliftoncpa.com