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Cleaning Up the Government’s Books

Controller Linda Combs is leaving the Office of Management and Budget after two years, citing the successful acceleration of agencies' financial re...
Sarah JohnsonJuly 13, 2007

Linda Combs, controller of the Office of Management and Budget, is retiring after two years of overseeing the federal government’s financial-management policy.

During her watch as OMB controller — which followed stints as CFO of the Department of Transportation and the Environmental Protection Agency — Combs chalked up a record of improved financial reporting performance among federal agencies. Since her appointment by President Bush in 2005, the 24 CFO Act agencies have been filing their annual reports on time after the OMB shrunk the filing window from five months to 45 days. Combs considers the fact that all of the agencies met the deadline in 2006 and 2005 to be one her proudest achievements as controller. The agencies also began using new tightened internal-control regulations, which the OMB says are similar to the requirements of Section 404 of the Sarbanes-Oxley Act.

Combs tells CFO.com she has no immediate plans except relaxation for a few months when she returns to her North Carolina residence in August with her husband, Dave Combs, who recently retired as chief information officer of the U.S. Department of Agriculture. “It’s an important time in my life to reflect on the good things that have happened,” she says.

In addition to meeting their filing deadlines during Combs’s tenure, the federal agencies “have reduced annual improper payments by more than $8 billion, received more clean audit opinions, significantly reduced material weaknesses, and created the first governmentwide real property inventory with which to effectively manage our investments in real estate,” says Clay Johnson, deputy director for management at the OMB.

One goal Combs won’t see realized by her last day is a governmentwide consolidated audit. Nineteen of the 24 agencies received unqualified audit opinions in 2005, a vast improvement compared with 1990, when only 1 had a clean audit opinion. Still, many of the agencies have been dogged by lack of integrated controls, material weaknesses, and restatements. Many have consistently performed below par when it comes to being able to “produce reliable, useful, and timely financial information,” according to the Government Accountability Office’s most recent annual report on the progress of the Federal Financial Management Improvement Act of 1996.

The government won’t be able to achieve a consolidated audit until the largest agency, the Department of Defense, achieves a clean audit, Combs says. The agency’s sordid financial history is rife with failed business systems and missed budget projections.

Nevertheless, Combs has faith that a consolidated audit is an achievable goal. By collaborating more during the past few years, CFOs and deputy CFOs are on their way to making it happen, she says. They have been learning from each other’s mistakes and knowledge, as well as that of corporate CFOs, through monthly meetings with the government’s CFO Council, which Combs chairs. “Many of the corporate CFOs have the same issues as the CFOs of very large agencies,” she says, adding that the largest agencies’ budgets rival those of the top two Fortune 500 companies.

Her successor, who for now is deputy controller Danny Werfel, told CFO.com the OMB has a list of milestones the CFO Act agencies are set to meet. The more immediate priorities include the conformity of accounting standards across the agencies based on OMB guidance.

Because of the myriad issues that each agency faces and the complexity of their financial systems, Combs’s to-do list has changed seemingly by the hour since she became controller, she says. “I think there’s no good time to leave these jobs. There’s always something that needs to happen.”

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