Russ Rumbaugh was at the helm of the Navy’s financial management during a remarkably busy couple of years.
As the assistant secretary for financial management and comptroller throughout 2023 and 2024, Rumbaugh led during a period when the Department of the Navy undertook major finance systems modernization efforts and when the Marine Corps notched a clean audit opinion, the first for any Defense Department organization.
He was quick to demure about overreaching when it came to that clean audit during an interview for the Society of Defense Financial Management’s The Business of Defense podcast on Federal News Network.
“The Marine Corps’ opinion, more than any other, made me very aware of how much work it takes to get there, how much the Marines themselves did, how much the Department of Navy supported and how much we got support up at the Office of the Secretary of Defense, and from Congress, to clear roadblocks,” Rumbaugh said.
Having just left his Navy post in January of this year, Rumbaugh shared critical takeaways from his tenure, detailing what financial management success looks like and how modern finance technology can help improve policy and mission decision-making.
Understand desired financial management outcomes and priorities
When it comes to financial management, teams can’t live in their own bubbles, he pointed out. It’s critical that finance teams fully understand their organizations’ overall goals, priorities and desired outcomes.
“You don’t want to walk in just trying to say, ‘This is the answer.’ You have to understand where they’re trying to go, and in financial management, you need to help them understand how to do that,” Rumbaugh said.
That includes helping provide details about compliance, for instance, and the probable impact of different financial choices. And to be clear, he added, it’s not about saying no.
Instead, it involves asking a lot of questions, Rumbaugh said, questions like, “How do we get to where you’re going? And what’s the best way to do it?” It also involves working across multiple disciplines within the organization.
Plus, it’s critical to make the connection between budget and strategy because that helps overcome roadblocks to progress, he said, noting that he’s “very proud of how, with the Department of Navy, we made sure budget was tied to strategy.”
Rumbaugh cited the Marine Corps’ clean audit as an example of leadership setting priorities, ensuring the connection to budget and then acting against strategy.
“The Marines excelled at tone from the top. The commandants — first retired Gen. David Berger and then Gen. Eric Smith — were very clear that they wanted a clean audit opinion,” he said. “They understood directly from members of Congress. They understood their responsibility to the American taxpayer. And they were always very, very clear that they cared about that.”
Understand direct and dotted-line responsibilities
Rumbaugh noted that as the comptroller he felt he had responsibilities directly to multiple leaders in the Navy but also indirectly to leaders in DoD.
“I absolutely thought I was staffed to the commandant and to the chief of naval operations and to support the secretary of Defense as well. I always thought I was responsible to Mike McCord, the CFO for DoD writ large,” he recalled. “You have both your organizational reporting chain and a functional reporting chain. I never felt a tension in that.”
Although he never felt tension, Rumbaugh acknowledged that in a large federal organization that mix of direct and dotted-line responsibilities broadens the necessary focus of the financial team.
Plus, he had his own priorities for the team as well. “They were: Grow the DON in a healthy way, make hard choices without haste, and keep the best FM team the best.”
Understand the critical need for modern financial technology
Rumbaugh was quick to note the integral role of technology to improving financial management too. “There is a before and an after — a modern financial management system versus a legacy,” he said.
And making the move to modern technologies, while incredibly beneficial, is hard. He recounted his earliest conversations with the Marine Corps, which upgraded its financial systems just a couple of years before it achieved the clean audit.
Corps financial leaders shared with him that while the upgrade was unbelievably painful, it made the clean audit possible.
“We cannot get to a clean audit opinion unless we are in modern financial management systems because those legacy systems are throwing off so much chaff, so many unmatched transactions, so many dollar figures you can’t trust, so many steps that the independent public auditors can’t confirm,” Rumbaugh said.
“You can never chase down every rathole until you’re in a modern system. You can’t do it.”
Now, he expects the Navy will be next to clear the clean audit hurdle. By October, the entire service will be operating a modern financial management system, he said. The last three Navy commands are completing their migration now.
“I believe we will be the first military department to be totally in a modern financial management system — and that sets up further progress on the audit,” Rumbaugh said.
Understand the value of financial management technology in delivering against policy
During graduate school, Rumbaugh had a realization — that one way to describe policy was as “everybody’s opinion.” It led him toward becoming more technically inclined.
“I committed to the budget side, to being financial management and being aware of that, including going and taking statistics,” he said. “In fact, one of my great teeth-cutting jobs was as a temp worker after my time in the service [in the Army] where I was responsible for just Microsoft Access database analysis. That fundamental understanding of databases has been key to knowing how to unlock the budget to help with strategy and leadership decisions.”
Since then, he has continued to evolve the pairing of policy, budget and technical prowess and said it provides an ideal feedback loop for using financial management to aid in decision-making.
“That process gets stronger the more rigor and analytic detail you have underneath it, which is why it ties so much back to audit,” Rumbaugh said, adding, “When you’re dealing on the financial management side, I have $1 and if I put it here, everybody can see it, and if I put it there, everybody can see it. Everybody can see the decision that is being made and that creates a more distinct choice and record, and why the budget process ends up being a decision-making process for so many more things because it touches everything, and you can convert everything into the same denominator, dollars.”
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