Impossible Goals

If you had told Clarence C. Crawford in 1979, when he was starting in federal financial management, that there would come a day when agencies would produce audited financial statements, he probably would not have believed you. And no way would he have believed that agencies could produce them 45 days after the close of the fiscal year. "The idea of having audited financial statements seemed like almost an impossibility at that time," Crawford says. Even five or 10 years ago, a 45-day close looked like an unrealistic goal.

But now, almost every federal agency is producing audited financial statements by Nov. 15 each year, a month and a half after the Sept. 30 close of the fiscal year. In financial management, that is a benchmark of sound accounting. It doesn't make federal agencies financial management leaders, but it shows they're capable of matching the performance of leading private sector firms.

Developments during the past 20 years have helped financial managers achieve the quick close. One was the 1990 Chief Financial Officers Act, which gave managers clout. Another was the development of better reporting standards through the Federal Accounting Standards Advisory Board. A third was the attention that administrations and various members of Congress have paid. But the most important is the hard work of federal financial managers and their employees.

"You've seen a level of professionalism develop over the years," says Crawford, who now is the chief financial officer at the Office of Personnel Management. In the past two decades, managers improved computer systems, modernized accounting, boosted staff competency and learned from the advice of auditors. By 2000, virtually all were producing audited financial statements, albeit five or six months after the end of the fiscal year.

The Bush administration set the goal of a 45-day close. The Office of Management and Budget gave agencies four years to accomplish it. Many professionals thought it wouldn't happen. But it did. They had been laying the groundwork for years. It was a stretch, but they had the capability. The goal helped focus their efforts.

The Treasury Department and the Social Security Administration were the first to meet the challenge-two years early. In fiscal 2004, all major agencies, except the Homeland Security and Health and Human Services departments, were on time. DHS finished four days late and HHS a few weeks late. The fact that the statements also include performance and accountability reports makes the achievement all the more impressive. When managers set a goal that seems impossible, employees often say there's no way they can do it. But then they do, and they gain a sense of pride and confidence.

The next task for financial managers, now that they have stronger procedures in place, is to better integrate budget and performance data. It is no small job- some would say it's impossible in the federal government.

But impossibility can be a strong motivator.