[Congressional Record Volume 143, Number 117 (Monday, September 8, 1997)]
[House]
[Pages H6970-H6972]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 THE PRESIDENTIAL AND EXECUTIVE OFFICE FINANCIAL ACCOUNTABILITY ACT OF 
                                  1997

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from California [Mr. Horn] is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. HORN. Mr. Speaker, I rise to speak on a bill that will improve 
the financial operations of the White House.
  Last Thursday the Subcommittee on Government Management, Information, 
and Technology, which I chair,

[[Page H6971]]

marked up H.R. 1962, the Presidential and Executive Office Financial 
Accountability Act of 1997.
  This bill will bring fiscal accountability to the highest office in 
the land. It received unanimous bipartisan support from the 
subcommittee and has been forwarded to the full Committee on Government 
Reform and Oversight for its consideration.
  The vehicle for this essential reform is the Chief Financial Officers 
Act of 1990. The Chief Financial Officers Act was landmark legislation. 
It was bipartisan in nature, passed in a Democratic Congress by both 
Republicans and Democrats. It was inspired by the realization that 
billions of dollars are lost through waste, fraud, abuse, and 
mismanagement in the Federal Government.
  Mr. Speaker, the waste stems in part from obsolete and inefficient 
financial management systems that fail to produce consistent and 
reliable information. Congress realized that this and related problems 
could be addressed through improved management and specifically through 
improved central coordination of internal controls and financial 
accounting.
  The Chief Financial Officers Act was designed to help executive 
branch agencies improve their financial operations. It established 
leadership positions within the Office of Management and Budget, which 
is the President's management and fiscal responsibility agency to 
administer through the Federal Government his desires. The Office of 
Management and Budget dealt with these financial management issues, and 
included the Deputy Director for Management at that time.
  The Chief Financial Officers Act also established the Office of 
Federal Financial Management within the Office of Management and 
Budget, and the position of controller to serve as the principal 
advisor to the Deputy Director for Management on financial management 
issues.
  The act installed a chief financial officer and a deputy chief 
financial officer in every major department and agency. The chief 
financial officers oversee all financial management activities within 
their agencies and they report directly to the head of the agency on 
financial matters.
  This high-level reporting is crucial. Financial management, like 
information technology, is a technical subject that many executives 
prefer to avoid. That is a bad habit that can lead to a wide variety of 
problems in any organization. The solution is to make certain that 
financial management has a place at the executive leadership table.
  Mr. Speaker, chief financial officers are also charged with 
developing and maintaining an integrated agency accounting and 
financial management system, including financial reporting and internal 
controls. Furthermore, an agency's chief financial officer provides 
guidance and oversight of financial management personnel, activities, 
and operations. This ensures in-house expertise on financial 
management. It also establishes a point of responsibility for all 
financial operations.
  The chief financial officers prepare annual management reports for 
their agencies that are transmitted to Congress. They also prepare 
audited financial statements. These are submitted to the Office of 
Management and Budget. Beginning next year, the financial statements 
will be compiled by the Director of the Office of Management and Budget 
and the Secretary of the Treasury, and distilled into a government-wide 
audited financial statement. This will be a first in American history. 
Not since 1789 have we had one financial statement that reflected what 
happens in the executive branch.
  Although implementation of the Chief Financial Officers Act is not 
yet complete, the act has already proved effective. The Chief Financial 
Officers Act brings fiscal discipline to the 24 executive branch 
agencies affected by it. Several agency chief financial officers have 
stated that the benefits agencies gain by strengthening internal 
controls and applying private business sector approaches to financial 
management and reporting far outweigh the costs and difficulties 
involved.
  Given the importance of the Chief Financial Officers Act, it might 
surprise some people to learn that the law was never applied to the 
Executive Office of the President. Americans look to the White House 
for leadership of the executive branch. Procedures in the Executive 
Office of the President ought to embody the best practices of the 
public and private sectors for the administration of the executive 
branch. We have the right to expect that the White House will set a 
model of excellence in this regard.
  Regardless of administration or party, White House offices have not 
consistently met that standard. The White House pays for equipment it 
no longer needs. It has even paid for items that were never delivered. 
In the last Congress we learned of egregious waste and abuse due to 
inadequate accounting controls. The White House Communications Agency, 
for instance, paid only 17 percent of its bills on time. The taxpayers 
were stuck for penalties and interest on the other 83 percent of its 
obligations. This is a dismal performance.
  Recent news reports confirm the impression that financial controls at 
the White House are weak. For example, it was reported last month that 
the White House has had to take extraordinary action to avoid 
exhausting its annual staff travel budget several months early this 
year. That had already happened once before, but it was not revealed.
  The cause of the problem is very simple: People like to travel and no 
one is telling them not to. As the President's spokesman acknowledges, 
staff accompanying the President are increasingly bloated because 
``people are taking seriously the inflated titles that they've been 
given.'' Those are the words of the White House spokesman.
  The solution to this problem is to make certain someone in the White 
House has both the technical expertise to watch the books, and the 
authority to enforce limits on spending by working with the responsible 
executives in charge of the various offices that are part of the 
Executive Office of the President.
  And that is the role of a chief financial officer. It is abundantly 
clear that the Executive Office of the President could benefit from the 
fiscal discipline imposed by the Chief Financial Officers Act. The 
Chief Financial Officers Act would bring accountability to the 
financial operations in the White House.
  If there had been a chief financial officer in the White House, the 
unorthodox accounting practices that prevailed in the travel office and 
which were used by the White House to justify the firing of longtime, 
dedicated employees would not have been permitted. A chief financial 
officer would have provided the travel office manager with the guidance 
and expert advice that was sorely needed.

  A chief financial officer serves as a control to prevent abuses of 
power, whether minor or serious--as in destroying financial records of 
national interest. The Presidential and Executive Office Accountability 
Act of 1997 would provide for the appointment of a chief financial 
officer in the Executive Office of the President. H.R. 1962 does so in 
such a way as to address White House concerns about the privacy of 
certain high-level information.
  The Presidential and Executive Office Financial Accountability Act of 
1997 would make the White House more accountable for its own 
operations. The chief financial officer would review and audit the 
White House's financial system and records. A system of internal 
control would be established to prevent and to correct errors. The 
chief financial officer would review and audit the White House's 
financial systems and records. This type of control has worked well in 
other Federal agencies, including the Department of Justice and the 
Central Intelligence Agency.
  The substance of this bill passed the House of Representatives with 
overwhelming support last fall. It was the part of H.R. 3452, the 
Presidential and Executive Office Accountability Act, which passed the 
House by a vote of 410 to 5 on September 24, 1996. Unfortunately, as 
the 104th Congress raced to a close, the chief financial officer 
provision did not make it into law.
  In the months since the House voted almost unanimously for this 
provision, its importance has become only quite clear. Many of the 
White House's financial systems are arcane. We are working with the 
relevant staff of the President in a cooperative, bipartisan way to 
increase this accountability. A good first step toward serious reform 
is to

[[Page H6972]]

hold the Executive Office of the President to the same standards of 
fiscal accountability as the various departments under the Chief 
Financial Officers Act. It is essential that the financial systems of 
the Executive Office of the President serve the President and his 
senior staff in an efficient and effective manner.
  As the President and Congress work together to eliminate unneeded 
programs and make others fiscally more effective, it is essential that 
the highest public office in the land be an example of financial 
accountability.

                              {time}  1430

  I look forward to this legislation clearing the Committee on 
Government Reform and Oversight and coming before the House. I would 
hope that, as last year, this would be overwhelmingly passed on 
suspension.

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