Opportunities Await: Why the CFO Should Get a Head Start on Implementing AI

By: Hallie Black, Jack Hurley, Joe Hutchison, and Cole Reeder

Federal Chief Financial Officers (CFO) are now able respond to Congressional inquiries by leveraging and analyzing historical data in seconds and search large populations of financial transactions for anomalies indicating the risk of fraud. Artificial intelligence (AI) provides for this reality. The time has come for Financial Managers to lean into AI, adopt best practices, and champion risk-based implementations.

Although it was originally imagined in 1950,¹ AI exploded after the introduction of ChatGPT in November 2022.² Over 100 million people accessed ChatGPT in the first two months it was publicly available.³ However, AI has been around for much longer, and we use it multiple times per week, if not daily: when we drive (e.g., Global Positioning System [GPS]), when new songs automatically appear on our playlist (e.g., Spotify), and when we shop online (e.g., Amazon suggestions). Recently, AI has become a buzzword in the Federal space to solve mission-focused challenges, including assisting agents to identify contraband, mapping mineral deposits, and triaging and prioritizing law enforcement tips. Despite its prevalence in many areas, AI is still in its infancy when it comes to applying it at the Federal CFO office. In this article, we will explore the background of AI; challenges that CFOs face; and the ways CFO management can invest in, prioritize, and embrace AI to improve their organizations.

What is AI?

AI is the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with an intelligent being.³ AI types include narrow AI, which focuses on performing a specific task very well, such as analyzing data and making predictions, and general AI, which is AI that creates new human-like content based on inputs.⁴ The most prevalent type of narrow AI is generative AI, where new content is created from simply entering text, pictures, or other media into an AI model (e.g., ChatGPT). When performed effectively, large amounts of data can be quickly summarized into concise sentences. When done poorly, AI can produce biased or untrustworthy results. This can occur if AI is trained on data that changes significantly or unexpectedly over time. It is important in any application of AI to monitor for these risks and mitigate them to achieve the most accurate and useful results. To better understand how AI can apply to financial management, we first need to better understand what AI will and will not do. See Exhibit 1 below.

Exhibit 1: AI Capabilities

In the past, concerns about robotic process automation (RPA) replacing the financial management workforce with robots did not materialize; similarly, concerns over AI replacing the financial management workforce jobs are not anticipated. Instead, financial management roles are expected to continue toward performing higher value-add tasks, such as assessing AI-summarized information to make decisions.

Key AI Policies

With the knowledge of AI’s current capabilities in mind, it is important to understand the key Federal policies that are driving the adoption of AI across Federal Agencies. Since 2020, the Federal Government has issued the following policies in Exhibit 2 below that establish principles and boundaries around the use of AI in the Federal Government, with direct implications to the Office of the Chief Financial Officer (OCFO).

Exhibit 2: Federal AI Guidance

Executive Order (EO) 13960⁵: Promoting the Use of Trustworthy AI in Federal Government	Office of Management and Budget (OMB) Memorandum (M)-25-21⁶: Accelerating Federal use of AI Through Innovation Governance and Public Trust
Directs Agencies to: Implement safeguards and monitor compliance to ensure proper use of their AI applications Train all agency personnel responsible for design, development, and use of AI Publish AI use case inventories.	Requires Agencies to perform the following: Identify a Chief AI Officer to champion agency AI goals Establish clear expectations for workforce’s appropriate use of AI Develop an AI Strategy for removing barriers to the responsible use of AI Enable an AI-ready workforce by leveraging AI training to upskill staff, promoting AI talent, and identifying emerging AI resource needs Identify, track and facilitate future AI investment or procurement.

Executive Order (EO) 13960⁵: Promoting the Use of Trustworthy AI in Federal Government

Office of Management and Budget (OMB) Memorandum (M)-25-21⁶: Accelerating Federal use of AI Through Innovation Governance and Public Trust

Directs Agencies to:

Implement safeguards and monitor compliance to ensure proper use of their AI applications

Train all agency personnel responsible for design, development, and use of AI

Publish AI use case inventories.

Requires Agencies to perform the following:

Identify a Chief AI Officer to champion agency AI goals

Establish clear expectations for workforce’s appropriate use of AI

Develop an AI Strategy for removing barriers to the responsible use of AI

Enable an AI-ready workforce by leveraging AI training to upskill staff, promoting AI talent, and identifying emerging AI resource needs

Identify, track and facilitate future AI investment or procurement.

CFO offices should proactively embrace and apply AI concepts from guidance and policy to enhance the efficient processing and management of Agency funds. This must be done while protecting from AI model risks, including biases, hallucinations (i.e., the AI model creates incorrect data not from the source), incorrect/incomplete data sourced, and employees insufficiently trained on AI. CFOs must establish guardrails against these biases upfront to reduce risk. OMB M-25-21 establishes a Chief AI Officer Council that coordinates the development and use of AI across agencies’ programs and promotes shared use of templates and technical resources. Within the Agency, the memorandum requires creation of an Agency AI Governance Board to coordinate and govern issues related to the use of AI. Agencies must enable responsible AI governance by delegating risk acceptance and mitigation for AI use cases to the lowest appropriate level. OCFOs can delegate risk acceptance and empower employees to identify and share AI use cases and best practices.

CFO Challenges

The CFO navigates the daily tasks and tradeoffs of managing budgets, personnel, and complying with existing and emerging requirements. These challenges often overlap and constrain the CFO’s ability to efficiently manage funds and resources that support the Agency’s mission. AI can be used to address these challenges while assisting the OCFO in effectively delivering mission support services. See Exhibit 3 below.

Exhibit 3: Challenge Areas

Area	Challenges
Funding	Anticipating flat or reduced non-defense discretionary future budgets Managing competing requests for funding and growing backlogs of unfunded requirements to prioritize Agency budget requests Programming and planning for AI projects spans multi-year budget cycles and may require repurposing funding earmarked for other purposes.
Workforce	Declining trend of newly acquired bachelor’s and master’s accounting degrees since 2017, reaching a 13-year low of 65,000 graduates in 2022⁷ Lack of Accountants and Financial Analysts trained in how to use AI effectively Retiring workforce – 30% of the Federal workforce is eligible for retirement in the next five years⁸ OCFO vacancies and hiring freezes increase workload on constrained staff Countering employee concerns over technology (e.g., AI) replacing their jobs and the potential for employee misuse of AI model bias.
Governance and Compliance	Staying up to date with emerging Agency and Federal AI policies, AI tools, and training programs Introducing bias or faulty designs by untrained employees into AI models. The lack of oversight in AI implementation affects all aspects of Agency operations, including the OCFO Ensuring financial data is secure and that users of AI tools do not upload sensitive data to public or non-approved AI tools Expanding Congressional attention within the OCFO and Agency programs to focus on effective use of AI funding to improve program outcomes.

Considerations

With Federal policies promoting the adoption of AI and hiring of AI personnel with an emphasis on mission-facing programs, the OCFO is a prime target for embracing AI to optimize the management of Agency funds and its own workforce, as well as ensure enhanced compliance with emerging policies and requirements. Below, we present options that the CFO could consider now to prepare for the successful adoption of AI.

Exhibit 4: Considerations for AI Within OCFO

Funding	Take advantage of emerging Federal AI policy priorities and funding opportunities by presenting AI use cases to Agency leadership that demonstrate the effective use of Agency funds Leverage AI within OCFO as tool to support replacing low-value tasks of already constrained resources with high-value work that enhances OCFO decision-making Begin investing in AI in the near term given long budget planning and programming lead times. Set aside small amounts of funding for AI projects to prove the return on investment (ROI) exists.
Workforce	Leverage AI to “do more with less” given the shortages of talent in the Federal accounting field. Explore and invest in AI training with emphasis on financial management uses; encourage OCFO staff and contractors to take training and obtain relevant certifications Assuage employee fears of AI replacing jobs through transparent, consistent, and ongoing top-down communications with the workforce Identify OCFO positions that could benefit from an AI skillset, such as those that free up the financial Analyst to perform higher value-add tasks Partner with the Agency’s Human Capital Officer to leverage accelerated hiring flexibilities,⁹ as well as hire and/or upskill personnel to obtain the requisite AI knowledge, skills, and abilities. Identify needs that cannot be filled internally (e.g., hiring freezes) and seek out qualified vendors to provide support.
Governance and Compliance	Centralize governance and oversight for financial management AI through developing an OCFO AI Program Management Office, which leverages Federal best practices and lessons learned to: Validate alignment of OCFO AI policies to Agency and Federal requirements Standardize financial AI training, processes, and policies across the OCFOs Promote workforce understanding of what is/is not allowed for use of AI, how to access approved AI tools, and how to submit use cases for approval Establish governance aligned to Agency AI roadmaps and the Government Accountability Office’s (GAO) AI Accountability Framework Support Agency AI Governance Board initiatives in accordance with M-25-21.

Next Steps for CFOs

The exponential rise AI’s integration into Federal agencies has demonstrated the importance of CFOs understanding the technology and strategically funding it to support the workforce and promote compliance within their office. As the gatekeeper of the Agency’s funding, the CFO has the unique ability of taking advantage of hiring authority flexibilities, training and upskilling the workforce, and partnering with internal and external Agency stakeholders and the private sector to identify and implement use cases that will ultimately result in Agency cost savings and efficient operations. With smaller budgets and challenges in hiring/retaining staff at certain agencies, this is truly a time when technology, such as AI, can be leveraged to optimize back-office mission support operations and provide greater value by analyzing data faster for decision-making. Taking these actions, the CFO can better prepare its workforce for the reimagined AI-enabled OCFO, which will provide Financial Managers with the most up-to-date tools to operate at the highest levels, as well as promote mission support in the most effective manner.

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This publication is for informational purposes only and does not constitute professional advice or services, or an endorsement of any kind.

Kearney is a Certified Public Accounting (CPA) firm focused on providing accounting and consulting services to the Federal Government. For more information about Kearney, please visit us at www.kearneyco.com or contact us at (703) 931-5600.

¹Alan Turing (Stanford Encyclopedia of Philosophy)
²ChatGPT sets record for fastest-growing user base – analyst note | Reuters
³Brittanica – Artificial Intelligence
⁴The Difference Between Generative AI And Traditional AI: An Easy Explanation For Anyone (forbes.com)
⁵Federal Register: Promoting the Use of Trustworthy Artificial Intelligence in the Federal Government
⁶https://www.whitehouse.gov/wp-content/uploads/2025/02/M-25-21-Accelerating-Federal-Use-of-AI-through-Innovation-Governance-and-Public-Trust.pdf
⁷2023 Trends Report | Professional Insights | AICPA & CIMA (aicpa-cima.com)
⁸Federal workforce attrition rises back up to pre-pandemic levels (federalnewsnetwork.com)
⁹OPM gives agencies an AI hiring playbook – Nextgov/FCW