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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, these efforts paid off, with 23 of the 24 CFO Act agencies receiving an audit opinion: the best performance by the Federal Government to date.
As part of the Administration’s Campaign to Cut Waste, the federal government has worked hard to bring down the rate of improper payments and recapture misallocated funds, dispose of unnecessary real estate, and identify $3 billion in cost savings on civilian real property. In FY 2011, Federal agencies cut wasteful improper payments by nearly $18 billion dollars and recaptured $1.2 billion in erroneous payments. When combined with results from last year, we have prevented over $20 billion in error and recaptured over $1.9 billion, putting us on pace to meet the President’s goal of reducing improper payments by $50 billion by the end of 2012. In addition, during FY 2011, we saved $1.5 billion in real property costs, and identified more than $1.8 billion in additional savings opportunities, putting us on track to exceed the President’s goal.
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 2011 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 to achieving this milestone, the number of auditor-identified materials weaknesses has dropped to 31, 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 civilian agencies to achieve $3 billion in savings by FY 2012 through reducing annual operating costs, generating income through disposing of assets, using existing real property more effectively by consolidating existing space, expanding telework, and other space realignment efforts. 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 chart to the right depicts the savings goals and the savings achieved so far for ten of the major land holding agencies as well as all the CFO Act agencies combined. Further detail is available on each agency at their page on this site.
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.
