Homeland Security isn’t the only federal agency using color-coded warning signals. As part of the President’s Management Agenda (PMA) initiative, David Walker, the Comptroller General of the U.S., uses a red, yellow and green rating system to indicate whether the financial management, reporting and controls of government agencies are up to snuff.
In his most recent report to Congress, Walker and the Government Accountability Office took a look at, among other things, improper payments being made by 15 government agencies. Ten of those agencies were rated red, for having significant problems; the rest were ranked yellow. No greens in sight.
Walker estimates that improper payments made by the U.S. government exceeded $45 billion in 2004, and he expects that total to rise as the PMA program forces accountants to identify and report further mismanagement. The problem is so pervasive that it took an act of Congress to launch the cleanup. In 2002, lawmakers passed the “Improper Payments Information Act.”
Then during the first quarter of this year, the White House introduced a separate PMA program focused on improper payments. Both initiatives followed in the footsteps of the Chief Financial Officers Act of 1990, another federal financial management reform.
The report is filled with woeful findings, generally linked to deficiency reports identified by GAO as "high risk due to their greater vulnerabilities to fraud, waste, abuse, and mismanagement.” For example, the Department of Defense is deficient in 14 of the 25 high-risk areas. Meanwhile, 11 of 23 agencies covered by the CFO Act had to restate their 2004 financials due to errors, that’s up from the five agencies that issued restatements for 2003.
There are some favorable reports too: Seven of the agencies improved their scores to green from the initial baseline established in December; and all but one were able to issue their FY 2004 financial statements by the accelerated reporting date.
Kudos to the administration for taking a hard line on healing itself. But I’ve heard tough talk before. Let’s see if agencies can really avoid the red light district for good, and whether the administration is committed to reforming wayward agencies.
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