For CFOs, recent laws make their roles more complicated

Chief financial officers often see some of the same challenges in hiring and recruiting financial managers, producing cost information and performance and risk ...

In the 25 years since Congress passed the CFO Act, chief financial officers have more responsibility in their portfolios, while recent laws like the Digital Accountability and Transparency Act, and Federal IT Acquisition Reform Act have made their roles more complicated.

Martha Rubenstein, National Science Foundation CFO, said the rules and responsibilities among other members of an agency’s C-suite are often unclear.

“FITARA actually muddied some of the waters,” Rubenstein said during a Nov. 17 Association of Government Accountants and Grant Thornton panel discussion in Washington. “I know the CIO and I are having conversations about that. I don’t mind all the CXOs (chief executive officers) for the most part, because when something is totally human capital, I know it goes to the CHCO (Chief Human Capital Officers Council). When something is totally IT, it goes to the CIO. Almost everything else ends up in my lap as CFO. We talk about financial reporting, but it’s such a bigger job than that.”

Rubenstein said she can see the benefits of having more group involvement from agency acquisition, IT and financial managers, as required by FITARA. But she wants to know where the priority is on the agency’s financial management system.

“When you look at … all the systems any organization has, where does the priority fall,” she said. “So when Treasury calls up and says we have a new GTAS (Governmentwide Treasury Account Symbol Adjusted Trial Balance System) requirement and we need everyone to add this data element or whatever it happens to be, and the CIO has 25 systems with a multitude of priorities, how high is that going to rise in that portfolio?”

A growing amount of data — and the push to make financial information available to the public under the DATA Act — raises other questions for the CFOs.

A large chunk of a CFO’s responsibility is producing and managing cost information, so that the agency and Office of Management and Budget can determine what programs are working and which ones should receive future funding.

Dave Mader, OMB controller and OPM’s acting deputy director for management, said CFOs should look for data  that shows them the tangible outcomes of a specific agency program.

“We’re just starting to learn how to use that data to answer that question around ‘am I actually getting the outcomes that I expect for the investment that I’ve made’ — whether it’s in a new program or a new system or a hiring initiative,” he said. “‘Am I really getting the outcome, and can you show me the evidence?’ CFOs can play a role there. I don’t think they’re going to own it. But they’ll be a key contributor to it.”

But Rubenstein said other factors, like politics or a CFO’s personality and skillset, can often overtake the value of financial data and its role in the decision-making process.

“We try to be really rational,” she said. “We talk about costs and we talk about having really clean systems. But the overlay of the political context makes this just so challenging to do this job. This idea of performance … we want to evaluate our programs and then have the costs associated with them so we can make good decisions, but the fact is that programs aren’t decided because of our ability to prove the value of the program or the cost. It’s not how this happens.”

Earning a clean audit

That same information can also help an agency achieve a clean, independent financial audit for each fiscal year.

For Rubenstein, she sees the audit as a baseline for her work, or a box that the agency needs to check. But she said there’s more to her role as a responsible CFO than just the audit.

“The emphasis, at least at NSF, to get clean audit opinions and have a new financial system, is only one piece,” Rubenstein said. “It’s very important, but it’s only one piece of the portfolio. It makes me crazy, but it’s not the only thing that makes me crazy. The portfolio hasn’t really changed since the CFO Act. The CFO organization hasn’t lost any responsibility. If anything it keeps accruing additional responsibilities.”

But some CFOs question whether the time and money the agency spends on the audit process is worth it — and whether successful agencies need a full, top-to-bottom financial audit every year.

Mader said he asked OMB that very question as part of last year’s budget proposal.

“I can envision that if you have an entity that for the last four or five years has been running a clean opinion, do you need to spend — I don’t even want to know the amount — to conduct that audit,” Mader said. “Can you actually develop a protocol that would allow you to go in [to some programs] and do sampling at a level that would give you the same assurance?”

Looking ahead

Many of the CFO Act initiatives, like cost information management and reporting and hiring new financial management experts, are still a challenge for today’s chief financial officers,

AGA and Grant Thornton suggest the CFO assume more of a taxpayer advocate role within their agencies — focused on using financial data to advise others on budgetary decisions.

“Federal CFOs should stop trying to be everything to everyone and instead focus on areas where they can truly add value,” the report said. “CFOs could take much greater responsibility, but it needs to be channeled in the right direction.”

Doug Criscitello, executive director of MIT’s Center for Finance and Policy and former CFO at the Housing and Urban Development Department, suggested CFOs move to a more tactical, mission-focused approach.

“Could you have an independent shop, in-house, that was your data scientists?” he said. “[You have] groups that were taking hard looks at data to determine what works, what doesn’t, as an input. Knowledge is power.”

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