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Decision Time for Chief Financial Officers: Be Tacticians or Strategists
A quarter-century after the CFO Act, a survey finds the job’s definition is murky.
Twenty-five years after the CFO Act sought to modernize financial reporting, chief financial officers find it tough to recruit qualified analysts, integrate their data systems and maintain clarity on their roles within their agencies, a report released Tuesday found.
“With the influx of additional CXOs across the government, the role of the CFO within an agency has become less defined, and in some cases less prominent,” said an analysis of 20 years of surveys and focus groups conducted by the Association of Government Accountants and Grant Thornton LLP. And though the financial management community has accomplished many of the act’s goals for building skills and achieving clean audits, “agencies still experience many of the same shortcomings that plagued the government in 1990,” the report said. “However, improper payments are up, systems are not managed efficiently and adequate transparency of information seems elusive.”
The new centrality of data analytics, shared services and risk management means that “CFOs find hiring and retaining qualified staff increasingly challenging,” the report said, and financial systems remain unstandardized and not integrated. “CFOs find themselves without the critical cost information because they increasingly must use their resources on compliance mandates instead,” an example being requirements for data standardization under the 2014 Digital Accountability and Transparency Act.
The role of one federal CFO can differ widely from counterparts with the same title at another federal department, the respondents noted. “New management positions — such as the chief risk officer, chief evaluation officer and chief data officer — have been created to oversee different activities within an agency, sometimes overlapping the CFO’s role, resulting in the CFO’s loss of some management and oversight functions,” the report said. “CFOs have also expressed concern about having too many responsibilities at the budget oversight and financial management level that steal focus from the broader management initiatives.”
This mixed state of progress puts federal CFOs at a crossroads, the report said, one that Congress, the Office of Management and Budget and the next administration ought to address.
“In one vision, CFOs are seen as strategists who lead risk management, performance, financial analysis and similar initiatives within their organizations,” the report said. “In another, CFOs are repurposed as taxpayer advocates, promoting financial transparency within their organizations.”
Making the CFO role uniform as a forward-looking strategist (rather than a tactician ensuring missions are carried out) would require Congress, the Office of Management and Budget and the Treasury Department to “recognize the capability inherent in the CFO function,” the analysts wrote.
If the CFO plays the role of taxpayer advocate, Treasury would be given greater financial management powers and responsibilities to drive governmentwide balance sheet development and management as well as give strategic policy advice beyond near-term election cycles.
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