The Office of Federal Financial Management: An Overview
August 13, 2020
The Office of Federal Financial Management: An Overview
Introduction
OFFM Functions
In an effort to improve federal financial management,
Congress established the Office of Federal Financial
Financial Management Implementation
Management (OFFM). A component of the Office of
The OFFM Controller’s financial management functions
Management and Budget (OMB), OFFM centralizes the
include
development and implementation of financial management
policies, reviews agency audit reports, and leads the Chief
establishing financial management policies and
Financial Officer (CFO) Council, among other statutory
requirements in the executive branch, and issuing
responsibilities. Given its central role in managing financial
policies and directives to guide their implementation;
management improvements across the executive branch,
OFFM’s structure and policy focus, as well as the
advising the DDM on the requirements for developing,
effectiveness of its activities, may raise issues for Congress.
operating, and improving financial management
systems;
Origin of OFFM
The Chief Financial Officers Act of 1990 (CFO Act) was
leading the activities of the CFO Council, settling
the result of five years of bipartisan effort to increase
disputes among executive agencies around the
federal accountability through financial management
implementation of financial management policies, and
reforms. The CFO Act sought to improve agency financial
facilitating the exchange of best practices with state and
management systems to reduce fraud, waste, and abuse of
local government CFOs; and
government resources, and ensure agencies produce
complete, reliable, timely, and consistent financial
maintaining qualification standards for CFOs and other
information to inform decisionmaking. Through the CFO
financial management staff, and providing agencies with
Act, Congress statutorily vested responsibility for
advice on their selection and retention.
coordinating federal financial management practices in
OMB. To implement improvements, the CFO Act
Agency Audit Reports
established OFFM within OMB.
Congress has required most executive branch agencies to
prepare annual audited financial statements and submit
OFFM Roles
them to Congress and the OMB Director (31 U.S.C.
§3515(a)). Auditors appointed by agency inspectors general
OMB Deputy Director for Management
must also submit the accompanying audit reports to the
The CFO Act established the presidentially appointed,
agency head and the OFFM Controller (31 U.S.C.
Senate-confirmed role of Deputy Director for Management
§3521(f)). In practice, these audit reports are included with
(DDM), who reports directly to the OMB Director and is
the agency financial statements in an annual report.
the primary official responsible for financial management
in the U.S. government (31 U.S.C. §502). The DDM’s
OMB Circular A-136 provides guidance to executive-
functions include establishing government-wide policies for
branch agencies on the preparation of audited financial
executive-branch agencies in the areas of financial
statements and annual reports (31 U.S.C. §3515(d)). These
management, program and project management, and
annual reports can take the form of a Performance and
general management (31 U.S.C. §503).
Accountability Report (PAR) or an Agency Financial
Report (AFR) for executive-branch agencies, and an
OFFM Control er
Agency Management Report (AMR) for government
The CFO Act also established the presidentially appointed,
corporations. OFFM reviews these annual reports to verify
Senate-confirmed role of OFFM Controller (31 U.S.C.
that they contain the required information—as documented
§504). The Controller—who is the head of OFFM—reports
in Circular A-136—in addition to compiling and tracking
directly to the DDM and is responsible for carrying out the
material weaknesses described in the annual reports.
DDM’s financial management functions (31 U.S.C.
§504(a)). The Controller serves a four-year term intended to
Government-Wide Improvement Plan
bring stability to the role, and provide the Controller
OMB must annually submit to Congress a government-
sufficient time to implement and maintain a federal
wide five-year plan describing how the OMB Director, the
financial management program. In FY2020, the office
DDM, the OFFM Controller, and agency CFOs plan to
employed 17 personnel working under the direction of the
improve federal financial management (31 U.S.C.
Controller.
§3512(a)). The five-year plan must (1) provide a strategy
for integrating agency financial management systems, (2)
identify projects for bringing systems into compliance with
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The Office of Federal Financial Management: An Overview
applicable accounting standards, and (3) contain milestones
practices related to program and project management (31
for achieving these goals while identifying the required
U.S.C. §1126(b)).
personnel and resources, in addition to other requirements.
Other OFFM Functions
OMB previously published the financial management status
OFFM performs additional functions peripheral to its
report and government-wide five-year plan in a single
federal financial management responsibilities under the
document called the Federal Financial Management
CFO Act. For example, the OFFM Controller must work
Report. Since 2009, OMB has ceased publishing a single
with the CFO Council and other stakeholders to incorporate
document covering the statutory requirements, and it is
“Open Data Policy” requirements into federal acquisition
unclear to CRS where the required components may be
and grant-making processes (Executive Order 13642; see 5
found.
U.S.C. §552 note). The “Open Data Policy,” as described in
the executive order, requires that new and modernized
Review and Revision of Circulars
government information technology (IT) resources be
OFFM provides executive-branch agencies with policy
machine-readable and publicly available, subject to existing
guidance on financial management topics including the
security and privacy restrictions. OFFM performs various
preparation and audit of financial statements; financial
other financial management functions to support the DDM,
systems requirements; and management controls through
which are not covered in detail in this In Focus.
the periodic review, revision, and dissemination of OMB
circulars. OFFM also serves as a point of contact for agency
Issues for Congress
inquiries related to several circulars, including Circular A-
Given the central role OFFM plays in federal financial
136, which provides guidance to agencies on the
management, Congress may evaluate the structure and
preparation of financial statements, and Circular A-123,
effectiveness of the office. Potential issues may be grouped
which provides agencies with requirements for establishing,
into two categories:
assessing, and reporting on the status of internal controls.
OFFM Structure and Policy Focus: Does OFFM have the
OFFM Council Membership
appropriate number of personnel to perform its various
A CFO Council consisting of the DDM, the OFFM
duties? What is the proper scope for OFFM’s activities?
Controller, the Fiscal Assistant Secretary of the Treasury,
What is the proper balance between OMB and executive-
and 24 agency CFOs was established to coordinate agency
branch agencies regarding financial management
activity on financial modernization and improvement (31
improvements? Can OMB find potential benefits by
U.S.C. §901 note). The DDM serves as council chair, and
viewing federal financial management improvements and
the Controller leads the council’s activities on the DDM’s
federal IT improvements holistically?
behalf. The CFO Council has several statutory
responsibilities, including disseminating best practices in
Financial Management Effectiveness: Should private-
the areas of financial system modernization, quality of
sector financial management practices align with agencies
financial information, financial data standards, and internal
whose missions lack a clear profit motive? What is the
controls (31 U.S.C. §901 note). In practice, this consultative
appropriate frequency for publishing government-wide
body provides agencies’ perspectives to OMB and assists
financial management improvement plans, and what
OFFM with the drafting of some financial management
information should they contain? Have federal financial
policies.
management reforms produced more accurate data for
internal and external decisionmakers?
In addition to leading the CFO Council, the OFFM
Controller is also a member of the Council of the Inspectors
In evaluating these questions, Congress may consider
General on Integrity and Efficiency (CIGIE) and the
policy options that involve trade-offs in terms of financial
Program Management Policy Council. Pursuant to the
cost and personnel allocation. These policy options may
Inspector General Reform Act of 2008, CIGIE has several
also improve the quality of financial information provided
responsibilities, including sharing best practices among
to internal and external decisionmakers.
agency inspectors general and identifying, reviewing, and
discussing areas of weakness and vulnerability in federal
Dominick A. Fiorentino, Analyst in Government
programs (5 U.S.C. App §11). The Program Management
Organization and Management
Improvement Accountability Act created the Program
Management Policy Council, which is responsible for,
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among other things, coordinating and improving agency
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The Office of Federal Financial Management: An Overview
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