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<H1><CENTER>A message from the<br>
Assistant Secretary of the Army (FM&C)</CENTER></H1>

<P>
<CENTER><EM>by<BR>
Ms. Helen T. McCoy</EM></CENTER>
<P><BR>
<P>
       Recently I had the opportunity
to testify before a congressional committee about my views on
financial management in the Department of the Army and our progress
in implementing the Chief Financial Officers (CFO) Act. The invitation
noted the subject of the hearing was "Department of Defense
Financial Management Problems." The other Services' Assistant
Secretaries and I certainly agreed that there are many problems.
However, there is also a great deal of good news, and I want to
share some of the notable improvements we have made in Army financial
management and stewardship.
<P>
<U><B>The Army As a CFO Act pilot</B></U>
<P>
       We are now preparing
our financial report for Fiscal Year 1995 -- our last year as
a pilot before full implementation of CFO reporting under the
Government Management Reform Act of 1994. Looking back over the
four years of reporting experience -- and to the future, as we
prepare to support consolidated DoD financial reporting -- we
in the Army have learned that the CFO Act is not just about preparing
financial statements, or even audits. The statements and audits
are the means to an end -- and that end is the integration of
financial and functional information, not only in systems and
data, but in all aspects of our day-to-day management.
<P>
        Without doubt, the
single greatest benefit the Army has derived from its experience
as a CFO Act pilot is recognition and acknowledgment of the differences
between systemic and management problems -- between problems which
require DoD-wide efforts and will take years to resolve, and those
which we in the Army can, and must, take immediate responsibility
for. We have formed strong partnerships with functional proponents
throughout the Army to resolve internal problems with how we safeguard
and account for the assets entrusted to us. I believe we have
been very aggressive in our efforts to find new and improved ways
of doing business with the tools and resources that are available
to us today.
<P>
<U><B>Management controls</B></U>
<P>
       One of the most immediate
outcomes of our first audits under the CFO Act audit was the restructuring
of our management control process. The GAO found that, although
the Army had a good management control policy and program framework,
commanders and managers in the field often simply were not using
it. In response, we initiated a self-assessment of our management
control policy and process, including feedback sessions with Army
managers and an independent assessment by a private accounting
firm. This self-assessment confirmed the GAO's findings and pointed
out several specific problems with the process -- too much centralization,
too little flexibility for commanders and managers, and little
sense of "ownership." The checklists that were used
to evaluate controls were excessive in number and length, confusing
in format and style, and filled with minor procedural requirements.
<P>
       Based on this self-assessment,
we developed a restructured management control process that became
effective on October 1, 1994. The new process reduces workload
and promotes ownership and accountability by limiting required
evaluations to <U>key</U> management controls, by providing maximum
flexibility to commanders and managers in conducting evaluations,
and by raising the level of responsibility for certifying evaluations.
Our new process encourages the use of <U>existing</U> review mechanisms
-- as does the new Office of Management and Budget (OMB) Circular
A-123 ("Management Accountability and Control," June
21, 1995) -- thereby eliminating redundant efforts and embedding
management control evaluations in routine management processes.
<BR>

<P>
<U><B>Partnerships and progress</B></U>
<P>
        The Army financial
management community has formed strong and lasting partnerships
with functional proponents in the Army and throughout the Department
of Defense. We are working together to improve not only our systems
interface capabilities, but in a variety of business process re-engineering
efforts. These include: The Army Joint Reconciliation Program;
DoD Acquisition and Financial Management Review Team; Supply Requisition
and Accounting; Military Pay and Personnel Systems; Unit Commanders
Finance Report; Initiative to Reduce Out of Service Debt; Anti-Deficiency
Act Violation Cases; Consolidation of Army Finance and Accounting
Support. <BR>

<P>
<B>The Army commitment</B>
<P>
        I am proud of the Army's
demonstrated commitment to the letter, and the spirit, of the
Chief Financial Officers Act. Even more important, "CFO"
is becoming our way of doing business in the Army, and the impact
of our efforts is expanding beyond the forums of internal federal
management. Earlier this year, we were deeply gratified when The
Comptroller General testified before the Senate Subcommittee on
Defense, Committee on Appropriations, that <I>"...Army's
proactive approach to implementing the CFO Act has been noteworthy...
its top leadership made strong, visible, commitments to addressing
the Act's objectives. This momentum continues today. The Army's
advice is now sought by other DoD components seeking to upgrade
their financial reporting capabilities."</I> I can assure
you that commitment remains stronger than ever.
<P>
        The Army is equally
committed to implementation of the Government Performance and
Results Act, and to the framework it offers for the meaningful
integration of financial and program performance information.
We have been incorporating readiness-related program performance
measures into our annual financial statements since FY 1993, and
we continue working to identify and report more meaningful and
objective measures. We are especially committed to ensuring that
we focus these initial efforts on core Army missions in support
of readiness and sustainability.
<P>
<U><B>Conclusion</B></U>
<P>
        As a direct result
of our experiences as a CFO Act pilot, we have recognized that
sound financial management and stewardship transcend any individual
organization, functional area, or system. Within the Army, we
are breaking down the traditional stovepipe barriers between functional
and financial mangers, and working <U>together</U> to fix our
problems and to improve every aspect of our stewardship. I believe
our efforts to make "CFO" our way of doing business
have paid great dividends already.
<P>
<P>
<CENTER><STRONG>Helen T. McCoy</STRONG><BR>
Assistant Secretary of the Army<BR>
<EM>(Financial Management<BR>
and Comptroller)</EM></CENTER>
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