In the years since the CFO Act of 1990 became law, Linda M. Combs has had a front-row seat for much of its rocky implementation. The controller in the Office of Management and Budget (OMB), formerly the finance chief at both the Department of Transportation and the Environmental Protection Agency, knows how difficult it is for the government’s 24 specialized agencies — some of which dwarf the largest corporations both in size and complexity — to improve financial management. Combs has been frustrated at times by the slow pace of change, which would be wholly unacceptable in the corporate world, but she is optimistic that her current focus on improving internal controls will bring greater integrity to government finance. The goal, she says, is to improve timeliness and accuracy, ultimately ushering in a governmentwide consolidated audit. “Why improve financial management?” she asks rhetorically. “You improve financial management because it helps better serve our constituents, the American people.”
Last year, all federal agencies filed within the new 45-day deadline. Why was that a priority?
When we came in in 2001, agencies were taking an average of five months to report. We said that was just totally unacceptable. So we gave agencies and departments a year’s notice that they would have to report sooner. The 45-day deadline, which surpasses what the corporate world does, was arrived at because someday we want to get a governmentwide clean audit. We figured that if in 45 days we could roll everything up and get the governmentwide audit, we would be consistent with what the corporate world requires within its 60-day reporting time frame.
Will the 24 departments and agencies be able to meet the deadline consistently?
I was so proud that we had 100 percent of our financial statements completed within the deadline in 2005. And while we don’t know about this year yet [the deadline was November 15], I believe the deadline will be met year after year. In addition, the accuracy has continued to improve. That’s in essence what that 45-day deadline has done. It’s driven more-effective reporting processes.
What processes are those?
The agency CFOs started looking at what they were doing on a monthly basis in their business units, their agencies, and their departments. Also, agencies are preparing comprehensive financial statements, including all footnote disclosures, at the end of the third quarter of the fiscal year. These changes ensure that the 45-day deadline will be met, and provide better access to information throughout the year.
You don’t have the levers — penalties, incentive compensation — to make the agencies comply. What motivated them?
Most people who go into government work believe that public service is a public trust, and when given high goals and expectations they step up to the plate…. Of course, there’s also peer pressure. Nobody likes to be embarrassed. Plus, one of the things that the President did early on, when he established the President’s Management Agenda, was make it very clear [that we needed to] achieve results and be accountable to the American taxpayer.