Although many federal agencies are required by law to publicly release their budget data, undergo independent audits, and release their submissions for a quality review, a new report from the Government Accountability Office (GAO) finds some have failed to fulfill their obligations. Pursuant to the 2014 Digital Accountability and Transparency Act (DATA Act), the GAO reviewed federal agencies' compliance with government-wide data standards and exposes the lack of consistency in agencies' data reporting capabilities. The findings highlight the need for reforms to standardize financial operations across the federal government.
The GAO DATA Act report analyzed the quality of data submitted by 51 federal agencies. Of the reviewed agencies, 37 agencies supplied high-quality data, and 11 published moderate or low-quality data. In a recent interview, Paula Rascona, a Director on the Financial Management and Assurance Team at GAO, claimed GAO has "seen improvements in a number of agencies that are reporting."
However, the study results showed that many federal agencies are failing to fully comply with DATA Act requirements. In addition to the 51 agencies’ reports that GAO reviewed, 47 federal entities did not provide transparent, timely, and complete budget data. These federal agencies cited the following issues for their non-compliance: the Office of Inspector General (OIG) did not finish the audit report or was unaware of their requirement to do so, the OIG lacked the time and resources to conduct the audit, or the OIG did not believe it was their responsibility to lead the report.
The largest noncompliant federal entity was the Department of Homeland Security (DHS), whose Q1 FY2019 obligations exceeded $21 billion. DHS failed to conduct the agency audit required by the Chief Financial Officers Act (CFO Act). But the problems occur across the executive branch. Director Rascona argued that "agencies are interpreting the requirements of the data definition… differently." The Director further added that agencies "don't have good controls, to make sure that the information they're submitting is of quality and agrees with the contracting documents." Correcting these process issues is critical to standardizing the spending data gathered by agencies so that Congress can make informed policy decisions.
On Wednesday, the Senate’s Homeland Security and Governmental Affairs Committee approved the CFO Vision Act introduced by Senator Michael Enzi (R-WY). The CFO Vision Act is designed to "help boost financial accountability… by promoting consistency across agencies, making it easier for them to carry out long-term initiatives and planning, and empowering them to make more informed and strategic policy decisions." The bill implements six tenets to tackle some of the issues agencies currently face:
Standardizes CFO responsibilities across government.
Mandates that CFOs collaborate with other senior agency personnel on internal financial controls.
Codifies the deputy CFOs' role.
Requires OMB to develop performance-based metrics to measure the effectiveness of financial management.
Designates authority to agency leaders and auditors in designing and maintaining rigorous internal financial controls.
Revises governmentwide and agency-level financial management planning requirements.
Standardizing CFO responsibilities and codifying deputy CFOs' roles in the budget formulation process will provide consistent application of procedures across government. Forty-five percent of agencies included in the GAO report recommended establishing and implementing additional procedures and guidelines. The measures proposed by Senator Enzi would provide the desired structure and guidance to ensure agencies have a complete understanding of how to perform their required functions when collecting and reporting essential information.
The CFO Vision Act would replace the mandate requiring the OMB to release a five-year financial management plan each year with a new provision requiring a report every four years and an update on its progress annually. OMB has not released a plan since 2009, but its successful completion is imperative to developing an inventory of federal programs so that Congress can identify duplicative spending within agencies.
Developing performance-based metrics will assist CFOs and Congress in tracking the implementation of new data standards. The CFO Vision Act directs the OMB to develop these metrics. Congressional involvement in creating the performance metrics would help foster continuity across successive administrations.
Since the CFO Act in 1990, federal agencies have substantially expanded the supply of budget data they provide. But, releasing more information will not help policymakers unless the information is reliable. Federal agencies need more consistent rules and oversight to provide quality data that can be used as evidence for future policy decisions. Sen. Mark Warner (D-VA) declared the CFO Vision Act’s approval a step in the right direction towards “renew[ing] American’s trust that their government is making smart, informed decisions about how [Congress] use[s] taxpayer dollars.”
Until all agencies can efficiently provide timely, complete, and quality information, taxpayers and policymakers will not fully understand the relationship between a program's funding and the results it achieves. Additionally, spending and budget data are essential to developing a long-awaited inventory of federal agencies. This will help identify duplicative or poorly functioning programs across government: a task that will be crucial to tackling the debt crisis.