A FEDERAL CASE.

• Author: Dresner, Marcia
• Position: Brief Article

Like private-sector CFOs, CFOs in the federal government must meet the challenges of new regulations, respond to technological change and do more with less. But their results are measured differently.

The federal financial arena has changed at an incredible rate during the last 10 years, and so has the role of the federal CFO. The most recent round of reforms started with the Chief Financial Officers Act of 1990 and continued with the Government Performance and Results Act of 1993. These two laws expanded an ever-increasing list of alphabet-soup acronyms (now numbering an even dozen) that require better control of financial processes and more accountability to Congress, the executive branch and the citizens of the United States.

Essentially, the responsibilities of private and public CFOs don't seem all that different. The U.S. Chief Financial Officers Council (www.financenet.gov) is an organization of the CFOs and deputy CFOs of the largest federal agencies, senior officials of the Office of Management and Budget and the Department of the Treasury, who collaborate to improve federal financial management. Its mission statement says, "We influence the future of the federal government through ethical and effective leadership; serve as a catalyst for constructive change to ensure the integrity of financial information needed for decision-making; and measure program and financial performance to achieve desirable results." Substitute "Company X" for "federal government," and it sounds like any CFO's job. But you really can't make that substitution, because the federal government measures results in a far different way than does the private sector.

According to Roger Scearce, former deputy director of the Defense Finance and Accounting Service (the finance and accounting services provider of the Department of Defense) and now a vice president with American Management Systems (a provider of financial management solutions to the federal government), the federal CFO is "the honest broker: the professionally-credentialled steward of the organization's resources," who provides the tools and financial information an agency needs to succeed in its mission.

Winds of Change

Bert Edwards is assistant secretary for the Bureau of Finance and Management Policy and CFO at the Department of State. Before that, though, when he was at Arthur Andersen, he co-authored a landmark 1986 study, "Sound Financial Reporting in the U.S. Government: A Prerequisite to Fiscal Responsibility." The preface says, "A lack of accountability caused by inadequate information can help produce a fiscal crisis." But there's more at stake than a potential fiscal crisis. "A democratic system," the study concludes, "derives its greatest strength from informed citizens free to express their views, That strength depends upon providing citizens timely and accurate information."

Before 1990, though, such information didn't always exist. There were no CFOs at most agencies, and little financial control. "There was no appreciation of the CFO's role in government," according to Bill Earle, assistant director and CFO of the Bureau of Alcohol...