Agencies speed up financial reporting

All but two major agencies submitted financial statements by Monday, meeting a deadline that is nearly three months earlier than last year's, the Office of Management and Budget announced Tuesday.

"We are pleased that federal agencies are now able to issue financial and performance information in a time frame that is comparable to the private sector," said OMB Controller Linda Springer in a statement.

The Bush administration has gradually tightened the financial reporting deadline for the 24 agencies covered by the 1990 Chief Financial Officers Act in an attempt to move reporting closer to the end of the fiscal year.

Last year and in 2002, OMB asked agencies to complete statements by Feb. 1, marking a jump of about a month from the 2001 deadline of Feb. 27. In the last and most significant jump, OMB asked for 2004 statements, included as part of agencies' Performance and Accountability Reports, by Nov. 15, just 45 days after the close of the fiscal year.

The Homeland Security and Health and Human Services departments were the only agencies that didn't make the deadline, but both agencies plan to hand in the statements by the end of the week, according to OMB.

Homeland Security is in the process of "crossing the T's and dotting the I's" and will complete the statements in the "next day or two," said Larry Orluskie, a spokesman for the department. Until President Bush signed the Homeland Security Financial Accountability Act in October, DHS wasn't covered by the CFO Act, a law requiring agencies to undergo annual audits and place presidentially appointed and Senate-confirmed CFOs in charge of finances.

But DHS "has in many ways acted as a CFO Act agency since its inception," said an OMB official who asked to remain anonymous. The department's recently changed status "had no effect" on the failure to meet Monday's deadline, Orluskie said.

"Our challenges were collecting data from a new department comprised of so many agencies and closing [the books] three months earlier than last year," Orluski said. "But you know what, we're doing it."

HHS did not respond to a request for comment.

Timely submission of financial statements is one of the requirements to earn a yellow light, indicating "mixed results," on the Office of Management and Budget's quarterly management score card. But neither the Homeland Security Department nor HHS stand to lose ground because both already received red lights for "unsatisfactory performance" on the last score card, which rates accomplishments as of the close of fiscal 2004 on Sept. 30.

The other 22 agencies' meeting of the accelerated deadline marks a "major step forward" in financial and program management, said Jonathan Breul, a senior fellow at the IBM Center for the Business of Government. The faster financial reporting is impressive enough, but agencies also needed to prepare performance information in time for the earlier deadline-a task that's even more challenging, he said.

"Particularly in the case of performance information, it took some heroic efforts" to get the Performance and Accountability reports in on time, Breul said. Agencies collect financial data and provide interim reports over the course of the year. But performance data "doesn't come with the same regularity" and often needs to be collected from states and other outside parties, he noted.

By handing in performance and financial information earlier, agencies make that information available in time for the budget process, Breul said. "Getting information in a timely manner is paramount for decision making," he added.

But Tabetha Mueller, a spokeswoman for the House Government Reform Subcommittee on Government Efficiency and Financial Management, said that while she shares the desire for timely information, she hopes the quality of reporting doesn't suffer. "Our goal is timely financial information that's useful," she said. "So, yes, having the books closed early is a great way to make sure that happens. But at the same time, we want to learn from the audits."

OMB set the Nov. 15 goal early in the administration. "At the time, agencies were submitting their financial reports as late as five months after the end of the fiscal year," the OMB official said. "Such a lengthy delay in financial reporting led to, in many cases, outdated information that did not allow [managers] to make informed decisions."

Agencies have worked toward the new deadlines for several years, and OMB is "confident in the quality of the financial information" submitted, the administration official said. "In fact, the accelerated deadline has been a catalyst for greater financial discipline and better control," the official added.

The Treasury Department will review the CFO Act agencies' financial statements and issue a consolidated financial report on Dec. 15. The government has yet to pass an annual audit, largely because of financial management problems at the Defense Department.