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Ensuring Effective Oversight of Government Finances
The Federal government has a fundamental responsibility to be effective stewards of taxpayer dollars. We must be responsible with money that comes in to the government, money that is spent, and money that is used in running the government itself. Decision makers and the public must have confidence that the government is managing its finances effectively to minimize inefficient and wasteful spending, to make informed decisions about managing government programs, and to implement policy. Since the passage of the Chief Financial Officers Act (CFO Act) of 1990, the financial community has made important strides in instilling strong accounting and financial management practices. This year, 23 of the 24 CFO Act agencies received an audit opinion with 21 clean opinions, 2 qualified opinions, and 1 disclaimed opinion. As part of the Administration’s Campaign to Cut Waste, the federal government has worked hard to bring down the rate of improper payments, recapture miss-allocated funds, and dispose of unnecessary real estate. In FY 2012, Federal agencies cut wasteful improper payments, resulting in a decrease in the reported government-wide error rate to 4.35 percent. In total, the government has so far avoided over $47 billion in improper payments over the past three years, almost hitting the President’s ambitious goal of avoiding $50 billion in improper payments by the end of FY 2012. Agencies achieved $2.4 billion in real property cost savings from the 2010 to Q1 of 2012 and are expected to have exceeded the President’s goal of $3 billion in savings by the end of FY 2012. These results are not just about numbers on a ledger. They are about this Administration’s commitment to eliminate wasteful spending and ensure that the proper controls, practices, and safeguards are in place to prevent misspending tax dollars. Although this effort is an ongoing challenge, we are excited that we continue to see improvements within Federal financial management. The initiatives below discuss some of our key efforts to continue improving the management of the government’s finances.
Key Initiatives
Improper payments occur when funds go to the wrong recipient, the recipient receives the incorrect amount of funds, documentation is not available to support a payment, or the recipient uses funds in an improper manner. In fiscal year 2011, Federal government improper payments totaled approximately $115 billion. Although not all improper payments are fraud (most are unintentional), and not all improper payments represent a loss to the government (many improper payments may have been proper, but are considered inaccurate due to missing documentation), all improper payments degrade the integrity of government programs and compromise citizens’ trust in government. To better protect taxpayers and improve efficiency, the Administration is working with Federal and State partners, Congress and other stakeholders to reduce improper payments without negatively impacting citizen access to needed programs. You can learn more about our efforts to reduce improper payments at PaymentAccuracy.gov
Twenty-three of the twenty-four Chief Financial Officers (CFO) Act agencies received an audit opinion in 2012 while operating in an increasingly complex reporting environment. This is the highest number of opinions the Federal government has achieved since the passage of the CFO Act. Federal agencies have implemented rigorous financial management disciplines to ensure that Federal funds are appropriately accounted for and wisely spent. Agency financial statements are audited each year to help maintain accountability for taxpayer dollars. In addition, 32 auditor-identified material weaknesses were reported in FY 2012, an approximately 50 percent decline from the start of this decade ─ this highlights the increased reliability the public can place in Federal financial information.
The Federal government owns or leases roughly 1.1 million real property assets, including land, buildings, and structures. Within this portfolio, there are opportunities for savings by reducing Federally-occupied space and/or using and operating space more efficiently. To achieve this goal, the Administration has taken several steps to improve the management of Federal real property. In June 2010, the President directed Federal agencies to achieve $8 billion in real estate savings between FY 2010 and FY 2012. The President’s directive included two parts: $5 billion in savings through the Department of Defense’s (DOD) Base Realignment and Closure Commission (BRAC) process and $3 billion in non-BRAC savings. Additionally, within his FY 2012 Budget, the President introduced a transformative proposal to significantly reduce and realign our Federal civilian real property inventory. Subsequently, the Administration transmitted to Congress a draft bill (Civilian Property Realignment Act) which expanded on this proposal. The Administration continues to support transformative real property legislation. As of the end of FY 2012, agencies reported a combination of $5.1 Billion in real property related savings from BRAC and $3.5 Billion in non-BRAC real property savings. Detailed information on the Administration’s non-BRAC real property savings are displayed here. For more information on BRAC-related savings, please visit BRAC.gov. These cost savings are proof of the hard work agencies and the Administration are doing to actively improve the Federal Government’s real property asset management. In the Administration’s effort to capture various types of savings, agencies provided data matched to broad categories of metrics. As the Administration moves forward in future real property cost savings and management endeavors, initiatives will emphasize more specific, measurable data elements and tailored outcomes. The next phase of the Administration’s real estate management effort will center on the “Freeze the Footprint” policy, which is outlined in OMB Memorandum M-12-12 “Promoting Efficient Spending to Support Agency Operations.” The “Freeze the Footprint” policy requires agencies to halt growth in their real estate inventory, while encouraging agencies to consolidate, co-locate, better utilize space, and employ 21st century workforce strategies such as telework. The next phase of the Administration’s real property efforts, to be tracked on Performance.gov, will incorporate the square footage baseline requirements from the “Freeze the Footprint” guidance, as well as individual agency co-location, consolidation, and disposal projects.
We continue to focus efforts on properly accounting for, managing, and collecting money that is owed the federal government, such as loans, fees, penalties and unpaid taxes, which is vital to responsible stewardship of taxpayer money. Every year the Federal government is owed hundreds of billions of dollars as a result of uncollected debts. With so much money at stake, Federal agencies, lawmakers, and the public deserve to know how the government is performing when it comes to collecting its debts.
