Obama Wants to Fix Government Accounting Woes

If the federal government were a public company, it would be in big trouble.

For the 13th year in a row, the Government Accountability Office was unable to render an opinion on the federal government’s consolidated financial statements because of “widespread material internal control weaknesses and other limitations.” Acting Comptroller General Gene Dodaro specifically cited “serious financial management problems” at the Pentagon, the federal government’s “inability to adequately account for and reconcile intergovernmental activity and balances between agencies” and “the ineffective process” the government uses to prepare its consolidated financial statements.

These accounting problems have real consequences. The GAO found, for example, that the federal government made at least $98 billion in improper payments last year.

Today, the Obama administration took a step toward whipping the government’s financial management into shape. No, a balanced budget remains a distant dream, but there is now at least some hope Uncle Sam will be forced to become more efficient and more accountable in spending our money.

The Treasury Department and the Office of Management and Budget have opened a new Office of Financial Innovation and Transformation, which will work to reduce costs, streamline processes and provide more transparency on financial information. The office will use a proposed $17 million budget next year to develop governmentwide solutions for agency financial-management services, including invoice processing, cash collections, and interagency agreement management. Agencies will be provided central automated solutions for processing transactions and producing financial reports.

The administration hopes this initiative will save hundreds of millions of dollars a year by increasing efficiency and reducing unnecessary paperwork. For example, agencies spend $750 million a year processing paper invoices for payments. If the government could cut that cost by 20 percent through automation, that would save taxpayers $150 million.

“It’s time to stop the increasing cost of financial operations and systems in the government today,” said OMB Controller Danny Werfel.

“All agencies will work closely with Treasury and OMB to chart a new course for financial management,” said Dick Gregg, the Treasury Department’s acting assistant secretary for fiscal affairs.

Now that’s change we can believe in—let’s hope they follow through on this initiative.