Federal financial managers played key roles in bolstering the flagging economy during the past year. They spent hundreds of billions of dollars in Recovery Act funds in a wide-ranging attempt to resuscitate spending and pumped similar amounts into the financial system to restore stability and liquidity under the Troubled Assets Relief Program. They also distributed tens of millions of dollars to promote automobile sales and to curb greenhouse gas emissions under Cash for Clunkers, and managed rebate programs to encourage consumers to buy more energy-efficient appliances.
All these new initiatives, designed to shore up a weak economy, boost consumer confidence and promote energy conservation, have taken a toll on the financial management staffs of the federal departments administering them.
Not only are agencies implementing complex new programs, but greater demands on existing social insurance programs, such as Medicare, Medicaid and unemployment insurance, have created additional burdens on staff. New transparency and reporting requirements have added to the workload as well, placing managers under greater scrutiny for how they spend taxpayer dollars.
Complicating matters is that as federal disbursements have risen, so too have erroneous payments, which stem in many cases from outdated computer systems, insufficient reporting processes and ineffective internal controls. In 2009, federal auditors estimated that agencies incorrectly paid $98 billion to individuals, organizations and contractors. That's only an estimate-the real number is likely much higher, officials say. To counter that trend, President Obama in November 2009 signed Executive Order 13520, which requires agencies to take a number of steps aimed at reducing errors and to designate individuals responsible for implementing those steps. So in addition to everything else on financial managers' plates, they can now add fixing the problems that lead to improper payments.
Federal agencies have struggled for years to address fundamental challenges with their financial reporting, accounting and internal controls, says Jeanette Franzel, managing director of financial management and assurance at the Government Accountability Office. "Now, on top of those basic challenges there are extremely complicated programmatic challenges," she says.
She cites the Treasury Department's Troubled Asset Relief Program as a prime example. "The amount of effort-heroic effort-that was required to put in place the accounting systems and successfully manage the program took a tremendous amount of resources and management attention," Franzel says, noting auditors gave the program a clean opinion, a testament to managers' commitment and skills.
In the June 15 issue of Government Executive, Katherine McIntire Peters outlines the issues chief financial officers face.