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Tough budget times lead to Golden Age for the CFO
Wednesday - 4/10/2013, 4:57pm EDT
Federal News Radio
Adaptability in an evolving budgetary environment means the difference between extinction and survival. One group of federal workers that has learned that lesson are chief financial officers. No longer just an accountant or bookkeeper, today's model CFO thrives as a trusted business partner and a strategic ally assisting in the decision-making process.
The transformation of CFOs has been steady and slow, Doug Criscitello, director at Grant Thornton and former CFO at the Small Business Administration and Housing and Urban Development, told the Federal Drive with Tom Temin and Emily Kopp, as part of the special report, Rise of the Money People.
Activities within agencies are more intertwined with finances as analysts use sophisticated quantitative analysis to better understand program costs, he said. "It's really accrued to the federal government's interest that financial data is being used significantly more today than it has in the past."
According to Criscitello, the key drivers for the shift to a data and analytics-based approach to financial management were the Government Performance and Results Act of 1993 (GPRA), which established statutory requirements for agencies to plan, track and report performance to Congress; and the modernization of that bill in 2010 (GPRAMA) which, among other things, increased emphasis on goal-setting and performance management, and held individuals responsible.
There's been "a rapid shift from organizations that have traditionally been largely accounting and administrative oriented, or backroom, to organizations that are really involved in the full range of matters to support program management," said Jeff Steinhoff, executive director at KPMG Government Institute, on In Depth with Francis Rose.
"We need to model different budgetary scenarios," Criscitello said. "The future is anything but a steady state. The notion that you'll continue to plod along, have your programs, you'll get subsequent appropriations and that will just occur year in and year out…that's no longer the paradigm that we're operating in. We need financial analysts who can really show, under different budgetary scenarios, how an agency will fare and how it will run its programs down the road."
Future of the CFO
Most CFOs are political appointees. Because of that, they have to be able to roll with the punches, Steinhoff said. And, a CFO has to assume his appointment with a working knowledge of the industry or else be handicapped, he added. Furthermore, the entire office of the chief financial officer needs to develop expertise on the programs within the agency.
"Today's fiscal realities are not going to just go away if some resolution to sequestration takes place. They're going to be with us for years and years, if not decades to follow, and people recognize today more and more that they are not going to have the type of resource base to really do the backroom things," Steinhoff said. "They're going to have to move to a much more agile, much more effective management structure. They view the CFO as one mechanism for helping them get to that."
Criscitello and Steinhoff agree federal financial management is a very attractive profession to young workers. When the federal budget is in a steady state or a surplus, folks aren't as concerned about the financial implications of everything they're doing within government.
"I think people recognize the money is where the action's at right now. The people who work on federal financial management and budgeting …crisis makes for interesting times for us," Criscitello said.
As the baby boomers are leaving in increasing numbers you're going to see an opportunity to recast what the finance role is, Steinhoff said.
"Especially in the current problem…it's not going away in our lifetime," Criscitello said. "We're going to be operating in this fiscally austere environment and that's good for business."