Improving Financial Management

Improving Financial Management Issue Summary

     In the government structure of the past, financial management and
project management failed to work together to achieve results. This was
mainly because line managers did not have access to or control over the
financial tools they needed to get things done. Even with some 120,000
federal employees producing hundreds of rules and thousands of reports,
executives and managers often lacked a clear financial picture of their
organizations. Worse, many never received the type of useful financial
data they needed to support a results driven approach to providing
customer service.

     Why? To start, past federal financial systems did not follow the
same professional financial standards required of private companies,
states, and localities. The federal financial management structure was a
hodgepodge of redundant programs that failed to incorporate budgeting,
accounting, and product sales within one coordinated system. Any private
business that operated this way would soon go belly up. A total lack of
focus on results was another key reason the financial structure was so
unresponsive. To solve this problem, we have shifted the focus away from
internal cash flow controls that have no connection with achieving
results and toward financial information that supports the timely
delivery of programs and services to customers.
 
     The President has articulated a clear vision of the future for
federal financial management. It emphasizes technology for transferring
funds quickly and cost effectively, and as an efficient way to collect
and disperse meaningful financial information to line managers. The
National Performance Review is implementing recommendations in support
of this vision. The NPR has identified readily available technologies
that can automatically compile and monitor financial data. Working in
the background, these systems can alert managers to potential problem
areas while monitoring accountability for program spending. Such
automated capabilities can let line managers focus on performance and
results while bringing financial personnel onto the project team as
advisors and consultants.
 
     We are working to achieve two main objectives. One is to build a
strong financial management infrastructure that takes much more
advantage of Electronic Funds Transfer, Electronic Reporting, and other
cost efficient technologies. The second is to incorporate sound business
and financial practices. These will support line managers in achieving
results, and provide the Administration and Congress with a clearer
picture of federal finances.

     During the past year, working together, we have made progress. The
Chief Financial Officer's Council has developed a strategic plan for
integrating budget, financial, and program information government-wide.
By the spring of 1995, the Financial Accounting Standards Advisory Board
is committed to issuing a complete set of federal accounting standards.
The Secretary of Commerce has approved a digital signature standard so
agencies can now dramatically increase their use of electronic data
interchange and fund transfers. At the agency level, we are seeing a new
effort to market internal services, such as payroll processing, to other
federal entities.

     Your participation in this Electronic Open Meeting will go a long
way toward energizing, refining, and implementing NPR Recommendations
affecting financial management systems. During the next two weeks you'll
be able to connect, engage, and network with participants across the
federal workforce. By sharing experiences and ideas on government
reinvention, this Electronic Open Meeting will help forge the
enterprising and pragmatic solutions needed to create a government that
works better and costs less.