Congress urged to hold DHS to financial accountability law

In a new report, the Government Accountability Office calls upon Congress to pass legislation applying a key financial management law to the Homeland Security Department.

DHS should be subject to the requirements of the 1990 Chief Financial Officers Act, auditors said in the report (GAO-04-774). Under that law, agencies must place a presidentially appointed, Senate-confirmed chief financial officer in charge of developing and maintaining an integrated accounting system capable of providing accurate and timely financial data to program managers. The law requires the CFO to report directly to the agency head.

To date, 23 major agencies are covered by the law, but Homeland Security is not among them. Congress should add DHS to the list, and should also require the department to comply with the 1996 Federal Financial Management Improvement Act, a law building on the CFO Act, GAO said.

Both the House and Senate have approved bills designed to hold Homeland Security more accountable for financial management (H.R. 4259 and S. 1567). Lawmakers are working out a strategy to get them signed into law once Congress returns from August recess.

GAO didn't endorse either bill in the report, but instead issued a general recommendation.

"We believe that it is of critical importance that DHS be statutorily required to comply with the important financial management reforms legislated in the CFO Act and FFMIA," the auditors said in a report assessing Homeland Security's progress consolidating financial systems inherited from 22 agencies.

At congressional hearings, Homeland Security officials have argued that a law placing the department under the CFO Act is unnecessary. The department voluntarily complies with most of the act's requirements and obtains audit opinions, CFO Andrew Maner has testified.

In a letter responding to GAO's latest recommendation, Maner said an effort to streamline and consolidate the department's disparate financial management systems is under way. DHS plans to implement an improved system in fiscal 2005 and 2006, he wrote, and that system will meet requirements of all applicable financial management laws, including the CFO Act.

By keeping the financial laws and regulations in mind when designing the system, DHS has demonstrated a "commitment to full adherence to the CFO Act and FFMIA," Maner stated. But GAO said there is no reason Homeland Security should be excluded from a law that covers most other major federal agencies.

"We applaud the current leadership at DHS for voluntarily complying with some audit provisions of the CFO Act; however, we continue to strongly support passage of legislation that would statutorily make DHS a CFO Act agency, and thus guarantee future requirements to adhere to important financial management legislation," GAO auditors said in response to Maner's letter.