Financial Management: Profile of DOD Comptroller/CFO Financial Manager
(Letter Report, 06/27/97, GAO/AIMD-97-97).
GAO reviewed the qualifications, including formal education, training,
and professional certifications, and professional work experience, of
personnel serving in key financial management positions for major
organizations within the Department of Defense (DOD), focusing on
information obtained through biographies and profile instruments
completed by key financial management staff in the DOD Comptroller's
office. GAO did not verify the accuracy of this information.
GAO noted that: (1) in collaboration with the DOD Comptroller's Office,
GAO identified the three Defense executives (Comptroller/Chief Financial
Officer (CFO), Deputy Comptroller, and Deputy CFO) and 21 staff in the
Office of Accounting Policy as the key staff responsible for DOD
financial management; (2) the three executives: (a) had formal education
degrees ranging from bachelors to doctorate; (b) had certifications in
government financial management; and (c) had served in DOD financial
management-related positions from 4 to 27 years, with two of the
executives also having prior careers with congressional committees and
congressional agencies; (3) of the 21 staff in the Office of Accounting
Policy, 19 had responded to GAO's survey as of April 8, 1997; (4) the
respondents included 3 senior executives, 14 GS-15s, 1 GS-14, and 1
GS-13; and (5) highlights from the profiles of these staff follow: (a)
18 staff held bachelors degrees in accounting or a business-related
field, 10 held master degrees, 8 of which were also in business-related
fields, and one respondent also held a doctorate in management; (b) 16
staff had completed courses in six or more accounting-related subject
areas as part of their bachelors and masters studies, typically equating
to at least 24 credit hours--the general standard for personnel serving
in GS-510 accountant positions--and 14 of these staff members listed
their education major as accounting; (c) 8 staff indicated that they had
completed accounting-related training and 4 additional staff had
completed other financial-related training during 1995 and 1996, and of
the remaining respondents, 7 reported receiving training in general
topics such as computers or attending professional seminars and
symposiums; (d) 3 staff reported being both Certified Public Accountants
and Certified Government Financial Managers (CGFM), a fourth staff
member holds the CGFM and other certifications, such as Certified Cost
Analyst, 13 additional staff also hold the CGFM, and 2 staff reported
holding no professional certifications; and (e) the average length of
professional work experience was 26 years, with 13 of the 19 staff
performing tasks in several financial management-related functions
throughout their careers.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-97-97
TITLE: Financial Management: Profile of DOD Comptroller/CFO
Financial Manager
DATE: 06/27/97
SUBJECT: Financial management
Federal employees
Chief financial officers
Education or training
Accounting
Defense audits
Human resources training
IDENTIFIER: Association of Government Accountants Certified Government
Financial Manager Program
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Cover
================================================================ COVER
Report to the Under Secretary of Defense (Comptroller)
June 1997
FINANCIAL MANAGEMENT - PROFILE OF
DOD COMPTROLLER/CFO FINANCIAL
MANAGERS
GAO/AIMD-97-97
DOD Profiles
(918860)
Abbreviations
=============================================================== ABBREV
CFO - chief financial officer
CGFM - Certified Government Financial Manager
CPA - Certified Public Accountant
DFAS - Defense Finance and Accounting Service
DOD - Department of Defense
JFMIP - Joint Financial Management Improvement Program
Letter
=============================================================== LETTER
B-273001
June 27, 1997
The Honorable John J. Hamre
Under Secretary of Defense (Comptroller)
Dear Dr. Hamre:
The Department of Defense (DOD) needs accurate financial information
to effectively manage the Department's vast resources--over a
reported
$1 trillion in assets, 3 million military and civilian personnel, and
a budget of an estimated $250 billion for fiscal year 1997.
Financial management information not only helps disclose DOD's
financial position and results of operations but also provides the
Congress with information for making decisions and assessing DOD's
performance. Further, the quality of the financial information being
produced by DOD and other federal departments will be assessed under
the provisions of the Chief Financial Officers (CFO) Act of 1990, as
expanded by the Government Management Reform Act of 1994, which
includes the requirement for audited DOD financial statements.
In a series of assignments, we are reviewing several areas presenting
the greatest challenges to DOD financial management. As highlighted
in our February 1997 high-risk series report,\1 one of these
challenges is putting in place a quality, professional financial
management workforce. Our goal is to identify actions the Department
needs to consider in order to enhance its workforce to meet the basic
goals of the CFO Act, including
bringing more effective general and financial management practices
to the federal government;
providing improvements in federal agencies' systems of accounting,
financial management, and internal controls; and
providing for the production of complete, reliable, timely, and
consistent financial information for use by the federal agencies
and the Congress.
This is the first of several planned reports focused on DOD's
financial management workforce. Our objectives for this body of work
include (1) identifying the qualifications, including formal
education, training, and professional certifications, and
professional work experience, of personnel serving in key financial
management positions for major organizations within the Department,
(2) comparing these qualifications to equivalent positions in state
governments and the private sector, and (3) identifying steps DOD has
taken and any additional opportunities that exist to enhance the
qualifications of this workforce to meet the tasks outlined above.
This report contains information on the first objective by presenting
the information we obtained through biographies and profile
instruments completed by key financial management staff in your
office. We did not verify the accuracy of this information. We used
profile instruments because the specific qualification and experience
information above was not available in personnel databases and
individual personnel records. To complete our work under the first
objective, we also plan to issue individual reports to the
Departments of the Air Force, Army, and Navy and to the Defense
Finance and Accounting Service (DFAS) on the data we are collecting
on financial management staff in key positions in each of those
organizations. We believe these reports can help the Department
begin to develop plans to enhance qualifications, including education
and training requirements, as necessary. Our final report in this
series will discuss the qualifications of personnel serving in key
financial management positions across DOD and compare the results to
the qualifications of equivalent positions in private sector
companies and large state governments. We will also identify those
steps DOD has taken and others it should consider implementing to
enhance its financial management workforce to fully meet the
objectives of the CFO Act.
--------------------
\1 High-Risk Series: Defense Financial Management (GAO/HR-97-3,
February 1997).
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
In collaboration with your office, we identified the three Defense
executives (Comptroller/CFO, Deputy Comptroller, and Deputy CFO) and
21 staff in the Office of Accounting Policy as the key staff
responsible for DOD financial management. The three executives (1)
had formal education degrees ranging from bachelors to doctorate, (2)
had certifications in government financial management, and (3) had
served in DOD financial management-related positions from 4 to 27
years, with two of the executives also having prior careers with
congressional committees and congressional agencies.
Of the 21 staff in the Office of Accounting Policy, 19 had responded
to our survey as of April 8, 1997. The respondents included 3 senior
executives, 14 GS-15s, 1 GS-14, and 1 GS-13. Highlights from the
profiles of these staff follow.
Eighteen staff held bachelors degrees in accounting or a
business-related field, and 10 held masters degrees, 8 of which
were also in business-related fields. One respondent also held
a doctorate in management.
Sixteen staff had completed courses in six or more
accounting-related subject areas as part of their bachelors and
masters studies, typically equating to at least 24 credit
hours--the general standard for personnel serving in GS-510
accountant positions. Fourteen of these staff members listed
their education major as accounting.
Eight staff indicated that they had completed accounting-related
training and four additional staff had completed other
financial-related training during 1995 and 1996. Of the
remaining respondents, seven reported receiving training in
general topics such as computers or attending professional
seminars and symposiums.
Three staff reported being both Certified Public Accountants
(CPA)\2 and Certified Government Financial Managers (CGFM).\3 A
fourth staff member holds the CGFM and other certifications,
such as Certified Cost Analyst. An additional 13 staff also
hold the CGFM. Two staff reported holding no professional
certifications.
The average length of professional work experience was 26 years,
with 13 of the 19 staff performing tasks in several financial
management-related functions throughout their careers.
--------------------
\2 The CPA certification program has existed since 1917. State
organizations administer this program, awarding the certificate based
on the applicant's formal education, professional work experience,
and successful completion of a comprehensive examination developed by
the American Institute of Certified Public Accountants.
\3 The CGFM program was initiated by the Association of Government
Accountants in July 1994. Until June 30, 1996, the certificate was
awarded based on an evaluation of an applicant's formal education and
professional work experience in government financial management.
Future certifications will require, in addition, the successful
completion of three comprehensive examinations covering (1) the
governmental environment, (2) governmental accounting, financial
reporting, and budgeting, and (3) governmental financial management
and control.
REQUIREMENTS FOR FINANCIAL
MANAGERS
------------------------------------------------------------ Letter :2
The CFO Act requires that an agency's Chief Financial Officer oversee
all financial management activities relating to the programs and
operations of the agency. Among the key responsibilities of a CFO
are overseeing the recruitment, selection, and training of personnel
to carry out agency financial management functions.
In November 1995, the Joint Financial Management Improvement Program
(JFMIP)\4 published Framework for Core Competencies for Financial
Management Personnel in the Federal Government,\5 designed to
highlight the knowledge, skills, and abilities that accountants,
budget analysts, and financial managers in the federal government
should possess or develop to perform their functions effectively in
line with the CFO Act. JFMIP stressed the need for federal
government financial managers to be well-equipped to contribute to
financial management activities, such as the execution of budgets,
under increasingly constrained resource caps and the preparation,
analysis, and interpretation of consolidated financial statements.
In defining core competencies needed to effectively perform as a
senior accountant and financial manager, JFMIP emphasized the need
for a broad range of knowledge, skills, and abilities, including
accounting education with updated knowledge of accounting
principles and federal accounting concepts;
knowledge of agency financial statements, internal control
environment, and agency business practices;
strategic vision for formulation of budgets;
resource and program management skills, with knowledge of
appropriation structure and agency management control systems;
and
human resource skills to effectively manage a large workforce.
This series of reports will focus on those military and civilian
individuals who are filling key financial management positions in
DOD, generally including staff at and above the levels of GS-13
(civilian) or O-4 (military).
We performed our audit work from January 1997 to May 1997. A more
detailed discussion of our scope and methodology is contained in
appendix I, including a copy of the profile instrument we used to
collect information on the previously identified dimensions. We
requested written comments on a draft of this report from the
Secretary of Defense or his designee. The Under Secretary of Defense
(Comptroller) provided written comments. These comments are
discussed in the "Agency Comments and Our Evaluation" section of this
report. DOD's comments are reprinted in appendix II.
--------------------
\4 JFMIP is a joint and cooperative undertaking of the Office of
Management and Budget, General Accounting Office, Department of the
Treasury, and Office of Personnel Management to improve and
coordinate financial management policies and practices throughout the
government.
\5 Framework for Core Competencies for Financial Management Personnel
in the Federal Government, A Joint Project of the Human Resources
Committee of the Chief Financial Officers Council and the Joint
Financial Management Improvement Program, November 1995.
PROFILE OF DOD COMPTROLLER
EXECUTIVES
------------------------------------------------------------ Letter :3
Figure 1 shows the formal education, professional certifications, and
careers of the top three executives included in our survey--the DOD
Comptroller/CFO, the Deputy Comptroller, and the Deputy CFO. The
formal education for these executives ranged from bachelors to
doctorate degrees. Majors ranged from accounting and economics to
areas such as public administration, defense affairs, and U.S.
foreign policy. All three executives have been awarded the Certified
Government Financial Manager professional certification. The DOD
Comptroller/CFO and Deputy Comptroller had 4 and 5 years of
experience in DOD, respectively, with most of their other career
experiences being mainly associated with congressional committees and
congressional agencies, such as the Congressional Budget Office and
the Congressional Research Service. The Deputy CFO had spent his
entire 27-year career in the Department. The executives have served
in financial management-related positions throughout their DOD
careers.
Table 1
Profile of DOD Comptroller Executives
------------------ --------------------------------------------------
DOD Comptroller/CFO
----------------------------------------------------------------------
Education: Bachelors -Political Science/Economics,
Masters -Soviet Studies and International
Economics,
Doctorate -International Politics/Economics/U.S.
Foreign Policy
Certifications: Certified Government Financial Manager (CGFM)
Career: DOD -4 years, Senate Armed Services Committee -9
years, Congressional Budget Office -6 years
Deputy Comptroller
----------------------------------------------------------------------
Education: Bachelors -Political Science,
Masters -Defense Affairs and Economics
Certifications: CGFM
Career: DOD -5 years, House Armed Services Committee -3
years, Congressional Research Service -10 years,
private sector -1 year
Deputy CFO
----------------------------------------------------------------------
Education: Bachelors -Accounting,
Masters -Public Administration
Certifications: CGFM
Career: DOD -27 years
----------------------------------------------------------------------
PROFILE OF ACCOUNTING POLICY
STAFF
------------------------------------------------------------ Letter :4
The Accounting Policy staff consists of three members of the senior
executive service and 18 personnel ranging from grades GS-13 through
GS-15. As of April 8, 1997, all but 2 of the 21 staff had completed
profile instruments on their qualifications and experience. The
respondents included the 3 senior executives, 14 GS-15s, 1 GS-14, and
1 GS-13.
As shown in table 1, 18 of the 19 respondents held bachelors degrees:
14 in accounting and 4 in other business majors. Ten of the staff
also held masters degrees, with eight being in business-related
majors. One of the executives also held a doctorate degree in
management. Sixteen staff had completed courses in 6 or more
accounting-related subjects during either bachelors or masters degree
programs, with 14 reporting their major as accounting. Typically,
when courses are completed in the six accounting-related subjects,
universities can award at least 24 credit hours in accounting, which
is the general standard for personnel serving in GS-510 accountant
positions.
Table 2
Degrees and Majors
Majors Bachelors Masters Doctorate
---------------------------- ------------ ------------ ------------
Accounting 14 0 0
Other business 4\a 8 1
Other 0 2 0
======================================================================
Total with degrees 18 10 1
----------------------------------------------------------------------
\a In commenting on a draft of this report, DOD indicated that the
two staff who did not complete a profile hold business degrees with
major emphasis in accounting.
We asked the officials to provide us with information on the types of
training received during the 2-year period of 1995 and 1996.
Specific topics of training in the profiles were categorized in four
groups--accounting-related, financial-related, general, and other.
The general category included topics such as supervision, computers,
and diversity issues. Respondents were also encouraged to identify
all additional training received under the "other" category. In
figure 1, general and other training statistics are combined into a
single category. As shown in this figure, all of the respondents had
completed some type of training during this period. Twelve of the 19
staff had completed training that included accounting and/or
financial topics. Seven other staff completed training in the
general category only.
Figure 1: Training Completed
During the 2-Year Period of
1995 and 1996
(See figure in printed
edition.)
Figure 2 shows the numbers and types of professional certifications
held by the Accounting Policy staff. Of the 19 who responded, 17
staff members reported having at least one professional certificate:
13 hold the CGFM, while 3 hold the CGFM and CPA, and one holds the
CGFM and other certificates, such as the Certified Cost Analyst.
Figure 2: Professional
Certifications
(See figure in printed
edition.)
In commenting on a draft of this report, DOD indicated that one of
the two staff who did not complete a profile is a CPA. No
certifications were identified for the other staff member who did not
complete the profile.
Figure 3 shows the average number of years of work experience by
grade for the Accounting Policy staff. The average ranges from 18
years for the GS-13 staff member to 31 years for the three senior
executives for an overall average of 26 years for the 19 respondents.
As the figure shows, the Accounting Policy staff have spent most of
their careers in DOD. Their profiles also show that 13 of the 19
staff have performed tasks in 3 or more of the financial
management-related functions shown below throughout their careers.
Figure 3: Professional Work
Experience
(See figure in printed
edition.)
The profile instrument listed five specific financial
management-related functions and associated tasks, including
financial statement preparation--preparing annual financial
statements and footnotes,
financial reporting/accounting policy--preparing financial reports
and consulting on the application of accounting policy,
financial analysis--performing tasks associated with cost
accounting, business process improvements, budgeting, cash flow
analysis, cost analysis, revenue and expenditure forecasting,
and other analysis of financial position and operations,
accounting operations--recording and reporting accounting
transactions, and
accounting systems development and maintenance--performing tasks
associated with functional design and maintenance of accounting
and finance systems.
Figure 4 shows the number of Accounting Policy staff who indicated
that they have performed one or more of the five financial management
functions above and the average number of years of experience in each
function. For example, all but one of the 19 respondents have
performed financial analysis for an average of 12 years.
Figure 4: Experience in
Financial Management Functions
(See figure in printed
edition.)
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :5
In commenting on a draft of this report, DOD generally concurred with
the contents and provided additional information regarding
professional certifications, formal education, and training. We have
modified the report as appropriate to reflect the training received
by one of the respondents and added notes to table 2 and figure 2 to
reflect this additional data on the two staff who did not complete a
profile instrument.
In its response, DOD also indicated that all staff in the Accounting
Policy office are encouraged to attend training periodically,
including mandatory training on new standards promulgated by the
Federal Accounting Standards Advisory Board. We support this
initiative to keep staff abreast of current issues pertinent to their
jobs. DOD's comments are reprinted in appendix II.
---------------------------------------------------------- Letter :5.1
We are sending copies of this report to the Chairmen and Ranking
Minority Members of the Senate Committee on Governmental Affairs and
the House Committee on Government Reform and Oversight, and to the
Director of the Office of Management and Budget. Copies will also be
made available to others upon request.
If you have any questions about this report, please contact me at
(202) 512-9095. Major contributors to this report are listed in
appendix III.
Sincerely yours,
Lisa G. Jacobson
Director, Defense Audits
SCOPE AND METHODOLOGY
=========================================================== Appendix I
In collaboration with DOD Comptroller officials, we identified key
financial managers in the DOD Comptroller organization as those
individuals in executive leadership positions (the DOD
Comptroller/CFO, the Deputy Comptroller, and the Deputy CFO) and the
management and professional staff in the Office of Accounting Policy.
The officials excluded other divisions because those personnel were
not involved in accounting or budget execution-related functions.
For the DOD Comptroller executives, we obtained information from
official biographies on their formal education, professional
certifications, and careers. We collected information on 19 of the
21 Accounting Policy staff who completed profile instruments
regarding their (1) formal education, (2) continuing professional
education, (3) professional certifications, and (4) professional work
experience. We used a profile instrument due to our concern
regarding the completeness of personnel records and personnel data
bases. Information in this report is derived from profile
instruments and subsequent information provided by DOD in its
response to the draft of this report regarding training received by
one of the 19 respondents. Figure I.1 is the profile instrument we
used to obtain personnel qualification information from the key
financial management staff on the Accounting Policy staff. We did
not verify the responses reflected in the biographies and profiles we
received.
We conducted our work from January 1997 through May 1997 in
accordance with generally accepted government auditing standards. We
requested written comments on a draft of this report from the
Secretary of Defense or his designee. The Under Secretary of Defense
(Comptroller) provided written comments. These comments are
discussed in the "Agency Comments and Our Evaluation" section of this
report and reprinted in appendix II.
Figure I.1: Profile Instrument
Used to Collect Qualification
and Experience Information on
Accounting Policy Staff
(See figure in printed
edition.)
(See figure in printed
edition.)
(See figure in printed
edition.)
(See figure in printed
edition.)
(See figure in printed
edition.)
(See figure in printed edition.)Appendix II
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
=========================================================== Appendix I
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III
ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C.
Robert L. Self, Senior Evaluator
Dennis B. Fauber, Senior Evaluator
Francine M. DelVecchio, Communications Analyst
DENVER FIELD OFFICE
Lowell E. Hegg, Assistant Director
John C. Furutani, Evaluator
*** End of document. ***