Control over financial systems approval shifts to OMB

One of Washington's oldest financial management organizations will be dissolved and its main responsibilities will be absorbed into the Office of Management and Budget.

The change came as a shock to some chief financial officers, who received the news in a Dec. 2 memo. The Joint Financial Management Improvement Program, run by the Treasury Department, the Government Accountability Office, OMB and the Office of Personnel Management, has certified and tested financial systems since 1950. It operated out of its own office near 20th and K streets in Washington.

Within six months, that office will no longer exist. Responsibility for certifying financial systems will fall to a new Chief Financial Officers Council committee, which will be chaired by a senior OMB official. Other JFMIP duties will be divided between OMB and OPM.

The memo, signed by OMB's deputy director for management, Clay Johnson, said JFMIP's four principals--the Treasury secretary, comptroller general, OMB director and OPM director--agreed to the change Dec. 1.

Linda Springer, OMB's controller, said the changes were made in response to the 1990 Chief Financial Officers Act, which gave more responsibility for financial management to OMB. JFMIP duties overlapped those given to OMB, she said. Even though certification of financial management systems will now fall under OMB's jurisdiction, she said she expects other agencies to have more control over the process.

"All of the agencies--not just the ones on the [JFMIP] steering committee, all 24 major agencies--will have input and give direction…through the CFO Council," she said. All of the CFO Act agencies, she said, will be able to participate on the newly formed CFO Council committee. The JFMIP steering committee has only six members, who represent GAO, JFMIP, OMB, OPM, Treasury and the General Services Administration.

The committee responsible for certifying financial systems will "have much more force behind it," said Springer, because the CFO Act explicitly gives the council and the OMB's Office of Federal Financial Management authority over financial systems. She added that she received no complaints about the policy change.

Jeffrey Steinhoff, GAO's managing director for financial management and assurance, said he did not think the change would have an impact on his agency's input on financial systems. Under the current policy, he said, he gives advice to JFMIP but is not involved with the actual approval of systems.

"People associated that with us, but I wasn't approving those systems…Any time I gave any comments, I had caveats that 'this is just advice,' " he said.

The change is consistent with the CFO Act, Steinhoff said, adding that he expects to have frequent interactions with OMB under the new policy. "It clearly places the onus where the onus should be," he said.

Others were still trying to determine what the change will mean. "It was a big shock to me," said Jeffrey Smith, chief financial officer at the Equal Employment Opportunity Commission. He said he does not expect to see big differences in how financial systems are approved, but that it's too early to tell what the impact will be.

The EEOC has frequently switched its financial management systems in recent years, partly because of changes in JFMIP certification.

"This puts more control with people who have a vested interest in the outcome," said Tabetha Mueller, spokeswoman for the House Government Reform Subcommittee on Government Efficiency and Financial Management, because OMB is responsible for overseeing financial management across government.

Steinhoff added that ultimately, agencies have to take responsibility for software and how they implement it. One of the biggest challenges, he said, is connecting different systems that produce financial data.

JFMIP directed all inquiries about the policy shift to OMB.