Nominee lays out priorities for federal financial management

President Obama's pick to be the government's top financial executive on Wednesday told senators he would focus on reducing improper payments and managing stimulus spending if confirmed.

Danny Werfel, nominated to be head of the Office of Management and Budget's Office of Federal Financial Management, told the Senate Homeland Security and Governmental Affairs Committee eliminating inefficient spending, including payment errors and investments in unnecessary real property, would be a priority.

Other goals include controlling the cost of financial management operations and modernizations; improving grants management; strengthening financial statement audits at individual agencies and governmentwide; and meeting the Obama administration's transparency requirements, especially for Recovery Act spending, he said.

Werfel, who served as the principal deputy to the controller since March 2006 and completed several stints as acting controller, told the committee government is headed in the right direction. OMB has worked with agencies to reduce payment errors in previously measured programs, shed unneeded assets, improve audit results and make more financial information publicly available, the nominee noted.

"Yet, in each of these areas, we are falling short of acceptable levels of performance," Werfel said. "At too many federal agencies, persistent weaknesses in basic financial management practices lead to unreliable reporting, payment errors and other forms of government waste. Of note, the amount of remaining improper payments on the government's books is staggering and must be corrected."

While facing systemic and persistent challenges, the financial management office must tackle additional situational challenges such as those presented by the Recovery Act and the Troubled Asset Relief Program. These programs "demand more detailed and timely financial reporting and more sophisticated risk management approaches to be successful," he told senators.

Werfel said he would address these "sweeping challenges" by working with financial managers to move beyond the basics of accounting and reporting to more strategic thinking on how to improve the value of government services; control the cost of operations; prevent waste, fraud and abuse; and improve financial transparency.

Werfel has worked with agencies to initiate risk management processes for their stimulus efforts. He has asked them to identify areas rife with potential for financial errors and has helped them to develop risk mitigation plans. For example, a program that has received 500 to 600 times its normal level of funding as a result of the stimulus act and has not received significant staff boosts, would be susceptible to erroneous payments and should develop a plan for confronting that challenge, he said.

The tools necessary to meet financial management goals are at the government's disposal, according to Werfel. These range from detailed inventories of improper payments and unnecessary real property to technologies that support transaction processing.

Sen. Tom Carper, D-Del., acting as chairman of the Senate committee, joked that the sparse attendance at the hearing was a good sign that Werfel's nomination was noncontroversial, and praised Werfel's experience.

"Occasionally we have folks nominated -- by any administration -- they may be very bright people, they may also turn out to do a good job in the position to which they're nominated, but they have to go through a period of training and get their sea legs before they can actually make much of a contribution," Carper said. "We're fortunate, given the experience you bring to this job and your enthusiasm and intellect. I think we'll get good results in a hurry and, in fact, already are."