Cfo

United States General Accounting Office

GAO

Accounting and Financial
Management Division

September 1991

The Chief Financial
Officers Act
A Mandate for Federal
Financial Management
Reform

GAO/AFMD-12.19.4

Preface

The Chief Financial Officers (CFO) Act of 1990
(Public Law 101-576) marks the beginning of what
promises to be a new era not only in federal
management and accountability, but also in efforts to
gain financial control of government operations.
The government has a responsibility to use timely,
reliable, and comprehensive financial information
when making decisions which have an impact on
citizens’ lives and livelihood. Despite good intentions
and past efforts to improve financial management
systems, this is still not done.
The Congress mandated financial management reform
by enacting the CFO Act, which was signed into law
by President Bush on November 15, 1990. This is the
most comprehensive and far-reaching financial
management improvement legislation since the
Budget and Accounting Procedures Act of 1950 was
passed over 40 years ago. The CFO Act will lay a
foundation for comprehensive reform of federal
financial management. The act establishes a
leadership structure, provides for long-range
planning, requires audited financial statements, and
strengthens accountability reporting.
Federal financial managers, auditors, and program
managers at all levels of government will be affected
as agencies take actions required under the CFO Act
to improve financial management systems and
information. Therefore, it is essential that the CFO
Act’s provisions are fully understood.

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GAO/AFMD-12.19.4 CFO Act

Preface

This booklet will help agency managers and other
interested parties (1) become familiar with the CFO
Act’s principal features, (2)better understand the
actions needed to successfully implement the act, and
(3) identify the sources for additional information to
assist in carrying out the act’s provisions.

Charles A. Bowsher
Comptroller General
of the United States

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GAO/AFMD-12.19.4 CFO Act

Financial Statements and Audits

Since 1984, GAO has audited the financial statements
for various federal agencies, including the General
Services Administration and the Departments of
Agriculture, the Air Force, Housing and Urban
Development, and Veterans Affairs. These audits
improved the quality of agency financial information
and identified significant problems in agency financial
operations and reporting.
The CFO Act requires that financial statements be
prepared for trust and revolving fund operations and
for agency programs that are substantially
commercial functions. For example, this would
include programs for providing (1) insurance,
(2) loans and loan guarantees, and (3) a service or
thing of value for which a fee, royalty, or rent is
charged. The act also establishes a pilot project
whereby certain agencies, listed in table 1, are to
prepare agencywide financial statements for specific
years.

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GAO/AFMD-12.19.4 CFO Act