Chief Financial Officers Act and Federal Financial Management Act
The Chief Financial Officer Act of 1990 (CFO Act) provided for tight financial control over agency operations and the central coordination of financial management functions to support an efficient administration of the executive branch. It centralizes organization of federal financial management, required long-term strategic planning to sustain modernization, and began the development of projects to produce audited financial statements for the federal government. As Title IV of the Government Management Reform Act of 1994, the Federal Financial Management Act of 1994 extended the scope of the CFO Act by requiring agency-wide financial statements and a consolidated government-wide financial statement.
Rationale for Cfo Act
By the late 1980s, it was apparent that the financial systems of the federal government were in a deplorable state. The savings and loan crisis had developed undetected, financial scandals had occurred in the Department of Housing and Urban Development, numerous high-risk programs had been identified, and seriously deficient systems of internal control were common.
Financial management systems were obsolete and inefficient. Management, program funding, and revenue-generating activities were impaired. Hundreds of separate accounting systems made monitoring, comparison, and auditing difficult. Enormous investments to upgrade financial systems were failing to achieve the benefits of integration because planning and coordination were lacking.
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