Time to fix the federal spending house of (reporting) horrors

Since childhood I’ve loved horror movies. In “The Haunting of Hill House” one of the characters comments on the fact that the house has no perfect right angles. She posits that if you take all of the slightly off corners and not-quite-straight lines, “The house adds up to one big distortion as a whole!” Or something like that. How I remember that line from a 1963 movie I have no idea, but it reminds me of federal finance. And the fact that despite the billions in sunk investments in systems, financial processes are such that when you add up all the layers, it takes something akin to archaeology for a citizen to unearth a specific fact about where and how money was spent.

Tom Temin
The government has made a lot of progress cleaning up its books. At the recent Association of Government Accountants training conference, I caught up with Comptroller General Gene Dodaro. He acknowledged that all the agencies operating under the Chief Financial Officers Act except for Defense have achieved unqualified audits. In DoD, the Marine Corps is the first of the armed services to get there, but the greater Navy, Army and Air Force still have a couple of years to go. Where things get out of kilter is in the broken relationships among core financial systems and the various other systems that support procurement, disbursements and programs. This may be why, as one Pentagon manager points out, program people often don’t really know the cost bases of what they do. Getting auditability and traceability of your cash accounting doesn’t necessarily equate to sound management. It came to mind late last year when Reuters published a report on vast and tangled financial reconciliation distortions that occur monthly between the Navy, the Defense Finance and Accounting Service and the Treasury. So little of it matches that DFAS employees make up numbers to force everything to square up. Recently on The Federal Drive, the Government Accountability Office’s Stan Czerwinski, the director of strategic issues, noted how well accounted for the money spent on the 2009 stimulus was. He contrasted it with the relative opaqueness of USAspending.gov. It’s easy to get lost trying to figure out what’s going on. How ironic is that? Even with all those unqualified audit opinions, it’s still nearly impossible to find specific information about, say, how many dollars were spent with a particular contractor, or in which ZIP codes money went. When nothing is standard, it’s easy to get lost. Like the fabled Hill House, federal spending has so many formats, data elements and definitions, that when you add it all up it’s almost impossible to decipher. Federal financial systems have their own internal logic and produce assurance that convinces auditors that everything is square. But they have no real connection to USASpending.gov. Czerwinski noted that strong central control over the site and support from top leadership helped Recovery.gov work. That is, a strong governance structure is required before agencies can decide on formats and data elements. USASpending.gov lacks that clear governance and authority structure. Federal financial people don’t live and die by what’s in it, so they don’t pay that much attention to it. That’s why the Digital Accountability and Transparency Act is so promising. It’s been knocking around for a year. The House passed a version. But now the White House has sent the Senate a marked version that waters down the requirement that the financial systems be established as the source of spending information. The markup, as reported by Federal News Radio Executive Editor Jason Miller, puts the Treasury and the White House into the mix of authorities the act would establish to set standards and define data elements. It potentially spoils the idea of uniformity across government. Equally promising are new rules for grant spending, which outweigh contract spending. The new approach sweeps away several old OMB circulars and forces agencies to unify how they account for and report grant spending. It comes from the same White House that is trying to alter the DATA Act. The concept is simple. Builders and suppliers mean the same universal thing when they say “2 x 4”, “T-square” or “5D nail”. In the domain of federal expenditures, it’s time to make data uniform across the whole enterprise.

Tom Temin is host of The Federal Drive, which airs 6-9 a.m. on Federal News Radio (1500AM). This post was originally written for his personal blog, Temin on Tech.