Financial Management Status Report and Five-Year Plan
Staff Paper Prepared for the President's Commission to Study Capital Budgeting

June 17, 1998

OMB publishes a financial management status report and five-year plan for the Federal Government each year, as required by the Chief Financial Officers Act of 1990. This Act laid the groundwork for improved financial management by establishing agency CFOs, reorganizing and strengthening OMB's financial management functions and authorities, and requiring a pilot program for agencies to begin preparing and auditing financial statements (a requirement later extended to financial statements for all cabinet departments and major independent agencies).

Since 1995 OMB has prepared the report and plan jointly with the CFO Council, which consists of the CFOs of the 24 cabinet departments and major independent agencies. OMB and the CFO Council jointly established eight priorities for Federal financial management, each of which is supported by specific objectives, tasks, and the milestones for accomplishing these tasks. The plan is thus a means whereby OMB and the agencies agree on what needs to be done in financial management: the priorities and the steps to accomplish them. Because of its joint development, the plan embodies agency input and commitment as well as central guidance.

The eight priorities are long-term and meant to remain as the priorities for some time. Since established in 1995, only one change has been made. This year the former third priority, "issue accounting standards and financial statements," will be strengthened and elevated to first place: "obtain unqualified opinion on financial statements and issue accounting standards." (The basic Federal accounting standards and concepts have been issued but more are to come.) This change reflects a Presidential commitment to obtain an unqualified audit opinion on the Government-wide financial statements for FY 1999. The action plans for each priority, however, may change from year to year as work is completed and new issues come up. For example, under the objective of issuing the Government-wide financial statements, one new task is for the agencies to develop plans, including milestones, for resolving the financial reporting deficiencies identified by the auditors of the FY 1997 financial statements; a related task is to provide quarterly reports on the progress of these plans to OMB.

The other seven priorities are: improve financial management systems; implement the Government Performance and Results Act; develop human resources and CFO organizations; improve management of receivables; ensure management accountability and control; modernize payments and business methods; and improve administration of Federal assistance programs.

The document contains a chapter on each priority: background; major accomplishments during the year; the main narrative, which is the status of the priority and performance information; and the plan of objectives, tasks, and milestones to accomplish the goals of the priority. It also appends several other statutory reports, such as status reports on debt collection and prompt payment.

President's Commission to Study Capital Budgeting

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