Financial Management Progress and Prioritie
Since the passage of the CFO Act of 1990, the federal financial community has made important strides in instilling strong accounting and financial reporting practices. This year, 21 of the 24 CFO Act agencies obtained an opinion from the independent auditors on their financial statements as of the issuance of this Financial Report. Out of the 24 major CFO Act agencies, there were 21 clean opinions and two disclaimers in FY 201433. In addition, 25 auditor-identified material weaknesses were reported in FY 2014, an approximately 59 percent decline from the 61 material weaknesses that were identified at the start of this past decade. An increasing number of federal agencies have initiated and sustained disciplined and consistent financial reporting operations, implemented effective internal controls around financial reporting, and have successfully integrated transaction processing and accounting records. These efforts have resulted in improved results on financial statement audits. However, weaknesses in basic financial management practices and other limitations continue to prevent two of the CFO Act agencies, and the Government as a whole, from achieving an audit opinion.
Today, accountability means providing transparent information to the public about where and how federal dollars are being spent. It means protecting against fraud. It means avoiding wasteful or excessive use of taxpayer funds. It means ensuring that the federal government is not only responsible stewards of taxpayer dollars, but frugal stewards as well, looking for every opportunity to save money and create greater inefficiencies.
The federal government has come a long way since the passage of the CFO Act in 1990. Today, the federal financial management community is focused on three important improvement initiatives:
Improving the quality, utility, and transparency of financial information;
Protecting against waste, fraud, and abuse; and
Helping agencies maximize the impact of their limited financial resources.
Improve the Quality, Utility, and Transparency of Federal Financial Information DATA Act
The Digital Accountability and Transparency Act (DATA Act), signed on May 9, 2014, sets forth a clear vision for the future of Federal spending transparency. The Act primarily amends the Federal Funding Accountability and Transparency Act (FFATA) by requiring that all federal spending be displayed on a website in a searchable, downloadable, and machine-readable format. This includes information on obligations, outlays, budgetary authority, unobligated balances, and other budgetary resources for each appropriations account. It also expands award reporting to include all award spending and requires that OMB and Treasury issue data definition and exchange standards by May 2015. By 2017, all agencies must report this data to a centralized website and adhere to the data standards and guidance issued by OMB and Treasury. This will expand Federal spending transparency and unlock spending data for use by the public and agencies. Posting this financial information will allow spending comparisons across and within agencies that have never been possible before.
Since the DATA Act was signed into law, OMB and Treasury have been partnering to lead governmentwide implementation. They have established a robust governance structure with representatives from agencies and functional communities fostering collaboration on data standards, policy changes, USAspending.gov improvements, and agency implementation. The implementation project plan was developed to be collaborative, iterative, incremental, and agile, with a data centric focus. This approach sets the foundation for future success with shorter term and intermediate deliverables.
USASpending.gov
USAspending.gov was established to provide clear information on federal award spending. Continuing to improve the quality, utility and transparency of this federal spending information is a foundational Administration commitment to open government, as identified in the U.S. Government’s National Action Plan for Open Government. To continue its efforts to improve the quality of spending data, OMB will issue additional policy guidance to adjust USAspending.gov reporting requirements and procedures pursuant to the DATA Act. To align our federal spending and financial management transparency efforts, the Administration has transferred responsibility for USAspending.gov from GSA to Treasury. Treasury’s leadership in executing a governmentwide federal spending transparency vision enables the federal government to move forward in achieving the objective of making spending data more useful, accurate, and timely – consistent with the agency’s other work through financial reporting, work on improper payments, among other priority areas. Over the next year, USAspending.gov will reflect improvements in both website usability and functionality, leveraging the lessons and successes learned from Recovery Act reporting and data display.
Moving forward, in concert with Treasury, OMB will continue to collaborate with the Government Accountability & Transparency Board and both federal and non-federal stakeholders to evolve the Administration’s governmentwide spending transparency framework to effectively provide the public with transparent information about how federal dollars are being spent.
Protect Against Waste, Fraud, and Abuse
Improper Payments
Addressing improper payments is a central component of the Administration’s overall efforts to eliminate waste, fraud, and abuse. When the President took office in 2009, the improper payment error rate was 5.42%, an alltime high. Since then, the Administration, working together with Congress, has made progress by strengthening accountability and transparency through annual reviews by agency inspectors general, and expanded requirements for high-priority programs. As a result of this concerted effort, in FY 2013 the Administration reported an improper payment rate of 3.53%. Over FY 2014, the federal government experienced improper payment rate increases in major programs including Medicare Fee for Service, Earned Income Tax Credit, Medicaid, Unemployment Insurance, and Supplemental Security Income. Other major programs experienced a decrease in improper payment rates, including Medicare Part C, Supplemental Nutrition and Assistance, and Public Housing/Rental Assistance. On net, these changes resulted in a governmentwide improper payment rate of 4.02%34. Additionally, DOD has taken steps to improve its improper payment sampling and estimation plan for the Defense Finance and Accounting Service’s (DFAS) Commercial Payments to implement recommendations made by the Government Accountability Office (GAO)35. Furthermore, agencies recovered roughly $20 billion in overpayments through the payment recapture audits and other methods in FY 2014.
