Report urges consolidation of financial management regulations

The myriad statutes, circulars and bulletins that govern federal financial management should be consolidated to clarify officials' duties, according to a new assessment from the National Academy of Public Administration.

The report, developed from interviews with federal and industry officials, made 16 recommendations on federal financial management. A single, integrated statute should be developed to unify rules, NAPA said.

By the authors' count, 25 different laws and circulars govern how agencies should manage their finances. "A collection of bits and pieces of statutes, circulars, bulletins and memoranda form the guidance for federal financial management," the report said.

"There is no sense of the relative importance of any of these components," the authors wrote, saying the fragmentation makes it particularly difficult for new government financial executives to set policies and carry out day-to-day financial management operations.

Rep. Todd Platts, R-Pa., chairman of the House Government Reform Management, Finance and Accountability Subcommittee, requested the study. Tabetha Mueller, a spokeswoman for the subcommittee, said the recommendation to consolidate rules is reflected in legislation currently being developed. The measure would centralize existing financial management rules, stripping out expired provisions and making reporting requirements more consistent.

Mueller said the subcommittee has worked slowly on the measure, mindful that some rules need more flexibility than a statute would allow, and that some consistency and consolidation work is also under way on federal accounting standards through the Office of Management and Budget and the General Services Administration. That work is being completed in connection with the financial management lines of business initiative to consolidate back-end technology systems.

Given the short time remaining in the current congressional session, the measure will not be presented until next year when the new Congress begins, Mueller said. Democrats have not been involved in the drafting stage, she said, but "it's something we'd be glad to share with them."

Asked about the measure's possible future should subcommittee leadership change hands in January, Mueller expressed hope that Platts' positive relationship with ranking member Edolphus Towns, D-N.Y., would continue. "The things we work on, they're not really hot-button partisan issues," she said.

NAPA also recommended enhancing the role of inspectors general in financial management. Legislation introduced by Platts and enacted in 2004 to address financial management problems at the Homeland Security Department resulted in an expanded role for the DHS inspector general, and the NAPA report urged other agencies to adopt a similar model to take full advantage of that in-house resource. In addition, the report contained several recommendations on agencies' budget formulation and tracking. Agencies have spent "hundreds of millions of dollars" during the past several years to upgrade their information technology for accounting systems, the authors said. But similar investments in the parallel budget systems have not taken place and are much needed, they said.

NAPA recommended improvements in the links among program performance, budgeting and accounting procedures, allowing agencies to more accurately estimate programs' full cost. The report also suggested that budget and accounting data be made more user-friendly to program managers.

Mueller said the committee does not favor NAPA's recommendation to more closely align budget systems -- which are based on cash accounting to reflect congressional appropriations -- and financial accounting, which uses an accrual system to account for future liabilities such as pension payments. She said the two types of systems serve different purposes, and it would not be feasible or helpful to eliminate either.