In an annual report gauging the success of federal Chief Financial Officers issued last Wednesday, the Office of Management and Budget reviewed the progress of reforms aimed at helping the government better manage its money.
Thirteen of the government's 24 largest agencies received unqualified financial statement opinions for 1998, two more than in 1997. By 2000, every major agency but the Defense Department should receive an unqualified financial statement opinion, OMB said.
In other accomplishments, the General Services Administration is eliminating the once mandatory financial management systems software schedule, and as of June, 85 percent of mission critical federal financial management applications were Y2K compliant.
But, a lot of work remains for federal CFOs. After Y2K, computer security looms as the next big technology issue threatening financial integrity. The governmentwide Chief Financial Officers Council plans to work with inspectors general next year to come up with ways to protect sensitive financial data.
A survey released last month by Grant Thornton LLP, a Chicago-based consulting firm, and the Association of Government Accountants also emphasized the importance of technology to the future of CFOs in government.
"As technology increases the pace of change, CFOs interviewed in this survey understand that radical departures from the norm must be considered seriously and rapidly," the survey, titled "The Shift to an Information Economy," said.
Compared with previous years' surveys, the 1998 responses showed that government CFOs were more concerned with enterprise-wide systems than with financial systems. Enterprise-wide systems link accounting systems with other applications, like inventory, sales order tracking, and even personnel systems.
CFOs also reported that they are feeling the impact of the Government Performance and Results Act, especially for making standard data definitions. Data warehousing was frequently mentioned as one solution to provide a single source for standardized data.
Cutting edge technologies are slowly being accepted in the federal financial world. Only one CFO who responded to the survey used smart cards to prevent overspending, though more agencies are using smart cards to speed up the procurement process, the survey said. E-commerce is slowly moving into agencies, too. Digital signatures need to be accepted and made more secure before e-commerce will take off, respondents said.
Workforce issues also weighed heavily on the minds of this year's surveyed CFOs. The workforce is still behind the times when it comes to technology skills, and CFOs say it's still hard to convince good candidates to work for the government.
"Noncompetitive government pay scales, entrance barriers imposed by slow moving recruiting processes, and portable retirement are eroding the civil service's ability to attract and retain the skilled workforce," one CFO said.
Financial managers recognized additional human resources issues as big priorities. CFOs want to improve professional training and development, recruitment and retention.
But CFOs aren't ruling out outsourcing as an option to deal with HR problems.
"Financial management will get easier as we take away some of the inputting responsibilities. Within three years, people will put their entire financial system (including operations, not just software) out for bid. There's no glory in processing," one CFO said.
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