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Political leaders endorse AICPA reform proposals.


The concept of restoring accountability to federal financial management was warmly supported by congressional leaders and Bush administration officials at an American Institute of CPAs colloquium last December in Washington, D.C.

After opening remarks by AICPA President Philip B. Chenok, Chairman Charles Kaiser, Jr., delivered the keynote address. He discussed the AICPA four-part proposal for improving federal financial management, including

* Appointing an independent chief financial officer of the United States.

* Establishing a uniform system of financial accounting and reporting principles and standards to be used throughout the federal government.

* Issuing annual financial statements--governmentwide and at the departmental level--in a complete, consistent, reliable and timely manner.

* Requiring annual independent audits of these financial statements--governmentwide and for each department and agency.

Former Senator William Proxmire heartily endorsed all four proposals, noting that enactment of the program would give Congress information necessary for dealing with the mounting federal debt. The former Banking and Housing and Urban Affairs committee chairman added, "Right now, the federal government doesn't know the cost of its credit and insurance programs. As a result, it can't match premiums to expenses, and the programs cost taxpayers tens of billions of dollars each year."

Senator William Roth, ranking minority member of the Committee on Government Affairs, proposed the creation of a chief financial officer who would be responsible for the financial management side of the Office of Management and Budget.

According to an AICPA task force report, the lack of a CFO with governmentwide responsibility for recording, monitoring and reporting the financial operations of the federal government is a primary reason consistent accounting standards, uniform reporting and adequate financial systems and controls have never been implemented by the federal government.

Roth also proposed the institution of a two-year budgeting process to allow for planning and increased congressional oversight to head off further crises.

Francis S. M. Hodsell, executive associate director of OMB and the Bush-appointed chief financial officer of the federal government, agreed with the AICPA's call for the CFO to head an independent agency in the executive branch, on a level with the budget director, treasury secretary and comptroller general, adding that legislation to that effect could be introduced in 1990. The CFO would be appointed by the president for a fixed term and confirmed by the advice and consent of Congress.

Hodsell also agreed with the proposed establishment of uniform accounting standards but noted they should be tailored to the special circumstances and needs of the federal government.

Senator Jim Sasser, chairman of the Senate Budget Committee, called for honest budgeting and aggressive financial management as ways to turn the corner on the mounting federal deficit. He supports a movement for CFOs in every federal agency to act as "junkyard dogs," working with inspectors general to improve federal financial management.

Representative Frank Horton, ranking minority member of the House Committee on Government Operations, proposed the creation of a powerful CFO post to be placed in the OMB in order to "put the M back in OMB." He also endorsed the AICPA's call for uniform accounting standards, adding, however, that adoption of these two proposals "would be a sufficiently radical first step."

Representative John Conyers, Jr., chairman of the House Committee on Government Operations, also believes that CFO legislation could be passed this year. He plans to hold extensive hearings on ways to make the financial management practices of federal agencies more consistent and understandable.

In a videotape presentation, Jack F. Kemp, secretary of the Department of Housing and Urban Development, reported on measures he has recommended as a way to end past abuses in his department. Such measures include installing a chief financial officer for the department and a comptroller for the Federal Housing Authority as well as requiring independently audited financial statements. Charles A. Bowsher, comptroller general of the United States, strongly endorsed the AICPA's position on federal financial management reform and urged accountants to present their case in a manner the public can understand.

PHOTO : Philip B. Chenok (left) and John Conyers, Jr.
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Publication:Journal of Accountancy
Date:Feb 1, 1990
Previous Article:1989 tax act.
Next Article:OMB lists agencies most vulnerable to fraud.

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