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The Financial Frontier

Fourteen years after passage of the Federal CFO Act, sloppy accounting continues to plague federal agencies and evade congressional attention.
Julia Homer, CFO Magazine
May 1, 2004

At one point in the movie Apollo 13, the American public sleeps as the astronauts drift dangerously into the stratosphere. The same could be said to apply to financial management at the National Aeronautics and Space Administration. Shortly before NASA defended its budget request for the 2005 fiscal year, PricewaterhouseCoopers issued a disclaimed audit opinion—and the Senate just yawned.

New CFO Gwendolyn Brown (see "NASA, We Have a Problem") is trying to improve NASA's financial management, but the odds are stacked against her. Fourteen years after passage of the Federal CFO Act, sloppy accounting continues to plague federal agencies and evade congressional attention. Even with its inability to account for half a trillion dollars in year-end adjustments, NASA is not the worst offender; its problems are dwarfed by those of the Department of Defense.

In both cases, the scale and complexity of operations help explain the agencies' inability to account for their expenditures. But isn't this precisely why they should be compelled to do so? Given the astronomical budget deficit and the sure prospect of a Social Security crisis, shouldn't the production of auditable financial statements be a priority?

Maybe what NASA and the other agencies need is their own Sarbanes-Oxley Act. As research editor Don Durfee reports in our most-recent survey (see "It's Better (and Worse) Than You Think"), most finance executives say they are working harder than ever since its passage. At the same time, the legislation might well be called the CFO Enhancement Act. Sarbox has given the CFO more responsibility for producing accurate financial statements, and provided a hefty club for CFOs to wield.

Clearly the Federal CFO Act doesn't have enough clout.




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