Chief Financial Officers Act of 1990 CFO Act

By the late 1980s, scandals such as fraud at the Department of Housing and Urban Development and the savings and loan crisis had exposed weak federal accounting, with agencies unable to say reliably what they owned, owed, or spent. The Chief Financial Officers Act, signed by President George H. W. Bush on November 15, 1990, brought private-sector financial management practices to government. It created a Deputy Director for Management at the Office of Management and Budget and an Office of Federal Financial Management led by a Controller.

The act established chief financial officers, many appointed with Senate confirmation, in the largest departments and agencies, now 24 CFO Act agencies, and required them to develop integrated accounting systems and annual financial statements audited by inspectors general or outside auditors. The Government Management Reform Act of 1994 extended audits to all 24 agencies and required a consolidated financial report of the United States government, first issued for fiscal 1997, which the Treasury Department prepares and the Government Accountability Office audits.

Most agencies now receive clean audit opinions, but GAO has never been able to express an opinion on the government's consolidated statements, mainly because of serious weaknesses at the Department of Defense, which completed its first full audit in 2018 and has not yet passed one. The financial reports also estimate improper payments, which exceeded $160 billion in fiscal 2024, and the long-term fiscal outlook. Supporters say the act made federal finances far more transparent, while critics say the remaining gaps, especially at the Pentagon, show how far accountability still has to go.