oversight

Financial Management: Profile of DOD Comptroller/CFO Financial Manager

Published by the Government Accountability Office on 1997-06-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to the Under Secretary of
                 Defense (Comptroller)



June 1997
                 FINANCIAL
                 MANAGEMENT
                 Profile of DOD
                 Comptroller/CFO
                 Financial Managers




GAO/AIMD-97-97
          United States
GAO       General Accounting Office
          Washington, D.C. 20548

          Accounting and Information
          Management Division

          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

          1
           High-Risk Series: Defense Financial Management (GAO/HR-97-3, February 1997).



          Page 1                                                           GAO/AIMD-97-97 DOD Profiles
                   B-273001




                   (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.


                   In collaboration with your office, we identified the three Defense
Results in Brief   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.




                   Page 2                                             GAO/AIMD-97-97 DOD Profiles
                         B-273001




                     •   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.


                         The CFO Act requires that an agency’s Chief Financial Officer oversee all
Requirements for         financial management activities relating to the programs and operations of
Financial Managers       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

                         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.
                         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.



                         Page 3                                                              GAO/AIMD-97-97 DOD Profiles
    B-273001




    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.




    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.



    Page 4                                                           GAO/AIMD-97-97 DOD Profiles
                                      B-273001




                                      Figure 1 shows the formal education, professional certifications, and
Profile of DOD                        careers of the top three executives included in our survey—the DOD
Comptroller                           Comptroller/CFO, the Deputy Comptroller, and the Deputy CFO. The formal
Executives                            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



                                      The Accounting Policy staff consists of three members of the senior
Profile of Accounting                 executive service and 18 personnel ranging from grades GS-13 through
Policy Staff                          GS-15. As of April 8, 1997, all but 2 of the 21 staff had completed profile




                                      Page 5                                                 GAO/AIMD-97-97 DOD Profiles
                              B-273001




                              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
                                                                                            Degree
                              Majors                                   Bachelors                  Masters              Doctorate
                              Accounting                                         14                       0                       0
                                                                                    a
                              Other business                                      4                       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.




                              Page 6                                                             GAO/AIMD-97-97 DOD Profiles
                                      B-273001




Figure 1: Training Completed During
the 2-Year Period of 1995 and 1996    20    Number of staff




                                      15




                                      10


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                                       5
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                                      Categories of training




                                      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.




                                      Page 7                                           GAO/AIMD-97-97 DOD Profiles
                                        B-273001




Figure 2: Professional Certifications
                                        20   Number of staff




                                        15
                                                                    13




                                        10




                                         5
                                             3
                                                                               2
                                                          1

                                         0

                                                 CGFM & CGFM & CGFM                None
                                                 CPA    other
                                                 Type of certifications held




                                        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.




                                        Page 8                                            GAO/AIMD-97-97 DOD Profiles
                                  B-273001




Figure 3: Professional Work
Experience                        35   Average number of years


                                  30


                                  25


                                  20


                                  15


                                  10


                                   5


                                   0

                                           SES (3    GS-15     GS-14       GS-13
                                           staff)    (14       (1 staff)   (1 staff)
                                                     staff)
                                           Staff by grade

                                                    Average years in other public/private sector

                                                    Average years in DOD




                                  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.




                                  Page 9                                                           GAO/AIMD-97-97 DOD Profiles
                                       B-273001




                                       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                   20      Number of staff performing function
                                                                     18


                                                              16

                                       15
                                                                                     13
                                                                             12


                                       10
                                                9




                                         5




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                                    Average years performing functions




                                       In commenting on a draft of this report, DOD generally concurred with the
Agency Comments                        contents and provided additional information regarding professional
and Our Evaluation                     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




                                       Page 10                                             GAO/AIMD-97-97 DOD Profiles
B-273001




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.


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




Page 11                                             GAO/AIMD-97-97 DOD Profiles
Contents



Letter                                                                                              1


Appendix I                                                                                         14

Scope and
Methodology
Appendix II                                                                                        20

Comments From the
Department of
Defense
Appendix III                                                                                       21

Major Contributors to
This Report
Tables                  Table 1: Profile of DOD Comptroller Executives                              5
                        Table 2: Degrees and Majors                                                 6

Figures                 Figure 1: Training Completed During the 2-Year Period of 1995               7
                          and 1996
                        Figure 2: Professional Certifications                                       8
                        Figure 3: Professional Work Experience                                      9
                        Figure 4: Experience in Financial Management Functions                     10
                        Figure I.1: Profile Instrument Used to Collect Qualification and           15
                          Experience Information on Accounting Policy Staff




                        Abbreviations

                        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


                        Page 12                                            GAO/AIMD-97-97 DOD Profiles
Page 13   GAO/AIMD-97-97 DOD Profiles
Appendix I

Scope and Methodology


             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.




             Page 14                                            GAO/AIMD-97-97 DOD Profiles
                                           Appendix I
                                           Scope and Methodology




Figure I.1: Profile Instrument Used to Collect Qualification and Experience Information on Accounting Policy Staff




                                           Page 15                                                  GAO/AIMD-97-97 DOD Profiles
Appendix I
Scope and Methodology




Page 16                 GAO/AIMD-97-97 DOD Profiles
Appendix I
Scope and Methodology




Page 17                 GAO/AIMD-97-97 DOD Profiles
Appendix I
Scope and Methodology




Page 18                 GAO/AIMD-97-97 DOD Profiles
Appendix I
Scope and Methodology




Page 19                 GAO/AIMD-97-97 DOD Profiles
Appendix II

Comments From the Department of Defense




              Page 20          GAO/AIMD-97-97 DOD Profiles
Appendix III

Major Contributors to This Report


                       Robert L. Self, Senior Evaluator
Accounting and         Dennis B. Fauber, Senior Evaluator
Information            Francine M. DelVecchio, Communications Analyst
Management Division,
Washington, D.C.
                       Lowell E. Hegg, Assistant Director
Denver Field Office    John C. Furutani, Evaluator




(918860)               Page 21                                      GAO/AIMD-97-97 DOD Profiles
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