Panelists discuss evolving role of federal CFOs

Since the passage of the 1990 Chief Financial Officers Act, federal CFOs have played increasingly complex roles, compelling fresh discussions about where these officials fit in agencies' management structures, witnesses told lawmakers Wednesday.

Over the past 14 years, the government's CFOs have taken on management responsibilities outside of those prescribed in the 1990 law, witnesses testified at a hearing of the House Government Reform Subcommittee on Efficiency and Financial Management. "The CFO is increasingly recognized as being positioned to provide agencywide leadership that other officials with more limited portfolios cannot offer," Office of Management and Budget Controller Linda Springer testified.

The 1990 CFO Act requires 23 major agencies to let a Senate-confirmed CFO oversee accounting systems, prepare performance and accountability reports and help keep spending in line with the budget. Under the act, the CFO is to report directly to the head of the agency.

But over the years, agencies have taken a variety of approaches to implementing the act, panelists testified. As agencies designate chief information officers, chief human capital officers and chief procurement officers to work alongside CFOs, some have considered assigning a "chief management officer" to oversee these officials, testified Edward DeSeve, a professor at the University of Maryland's School of Public Policy.

"If a CFO with statutory responsibility is required to report through a management officer, [his or her] effectiveness and authority is likely to be diluted," DeSeve told lawmakers.

But C. Morgan Kinghorn Jr., president of the National Academy of Public Administration, a congressionally chartered nonprofit organization, noted that there is an increasing need for CIOs, chief human capital officers and CFOs to coordinate. "I believe financial management is the most central and potentially integrating function in management," he testified. "But all three crucial management operations need to be more unified and less balkanized."

One solution could be to let the CFO also act as the overall head of management, Kinghorn said. But the idea of appointing an "Undersecretary for Management" shouldn't be discounted, he added. Such an official "might be an answer to the consolidation of all management functions short of the secretary or agency head."

The evolving role of the CFO is of particular interest to Rep. Todd Platts, R-Pa., chairman of the subcommittee. Platts is sponsoring legislation that would expand the CFO Act to cover the Homeland Security Department, currently the only major department not subject to that law.

Homeland Security officials have argued that there is no need to include them, because they voluntarily comply with most of the provisions. But Platts has said that he feels the department would benefit from having a Senate-confirmed CFO who reports directly to the secretary, as required by the 1990 law.