Financial management reform bill on the way

Rep. Todd Platts, R-Pa., chairman of the House Government Reform Subcommittee on Government Efficiency and Financial Management, plans to introduce a comprehensive financial management bill that would replace the hodgepodge of current law.

Instead of forcing federal financial managers to wade through 800 pages of text from the past 20 years of financial management law, Platts wants to create a new, streamlined law. His latest effort follows a string of initiatives to increase accountability and efficiency in the federal government.

"There's no use generating reports if they just sit on the shelf and aren't looked at," he told Government Executive during an interview in his Washington office. While the new bill still is in its nascent stages, Platts said he should be ready to introduce it by early fall.

The congressman said he thinks of the federal budget like his checkbook, which he balances "to the penny" at the end of each month. While he acknowledges that financial management is "often dry, and not very exciting," he said "it's one of the most important functions of government."

Earlier this year, Platts introduced the Program Assessment and Results Act, which would require the Office of Management and Budget to review federal programs every five years. He also wrote the legislation that requires the Homeland Security Department to submit an audit opinion on its internal controls, something that is not required of other agencies.

He acknowledges opposition to some of his efforts. Some people, he said, were concerned that the PAR Act would be used as a political tool to cut federal programs. He said the act should prevent that from happening, because it would create empirical evidence of the effects of programs and prevent them from being cut for purely political reasons.

In the past, his opposition has included leaders of his own party. Homeland Security officials and the Bush administration resisted his legislation requiring an audit opinion on internal controls at DHS.

Platts and his staff work closely with the Government Accountability Office, which has generally favored focusing more on internal controls.

"It appears that having weak internal controls is the primary root cause for improper payments in the federal government," said McCoy Williams, a director in GAO's financial management and assurance team who has testified before Platts' subcommittee. Agencies reported $35.7 billion worth of improper payments in fiscal 2003, according to his testimony.

Williams and his staff are working on a cost-benefit analysis of requiring audit opinions on internal controls as a result of the DHS requirement. The report will be released this summer.

"As a general rule of thumb … you don't want controls to be put in place that cost you more than the benefits derived from those costs," said Williams.

Platts' newest effort to create a simplified act has not yet attracted public comments. Financial managers have said that the current patchwork of legislation requires a lot of time-consuming administrative work.

Since 1990, Congress has passed several pieces of financial management reform legislation. The 1990 Chief Financial Officers Act created CFO positions at major federal agencies and required agencies to develop five-year financial plans. The 1993 Government Performance and Results Act soon followed, and required agencies to set performance goals and measure progress toward them.

The 1994 Government Management and Reform Act required audits, the 1996 Clinger-Cohen Act created chief information officers at the major federal agencies, and the 1996 Federal Financial Management Improvement Act required agencies' financial statements to include a report that explains how the statements comply with accounting standards and other laws.

After creating the need for all that paperwork, Congress passed the 1998 Government Paperwork Elimination Act, which encouraged agencies to store and spread information electronically.

Now, Platts said, agencies waste time dealing with the multiple laws. He and his staff will be meeting with GAO and other financial management groups over the next several months to discuss the streamlining bill.