oversight

JFMIP News: A Newsletter for Government Financial Managers, Winter 1997, Vol. 8. No. 4

Published by the Government Accountability Office on 1997-01-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

A Newsletter for Government Financial Managers                                                          Winter 1997             Vol.8. No.4.




    A special tribute toMr. Charles A. Bowsher,                    Franklin Raines                           Congressman Stephen Horn
    former Cornptroller General wvill be made at    Director, Office of Management and Budget          Chairman, Subcommittee on Government
                the JFMJP Conference                                                                  Management, Information, and Technology




JEMIP 26th Annual Conference
  TFinancial
     he Joint Financial Management Improvement Program will sponsor its 26th Annual
                Management Conference on Tuesday, March 18, 1997. This year's theme is
     Shaping FinancialManagement for the 21st Century.

  The keynote speakers are Congressman Stephen Horn, Chairman, Subcommittee on
Government Management, Information, and Technology, and Franklin Raines, Director,
Office of Management and Budget. James Hinchman, Acting Comptroller General of the
United States will also make brief remarks.
    A plenary session on The Future of Federal Financial Management will be led by Cora
Beebe, Office of Thrift Supervision, featuring G. Edward DeSeve, Office of Management
and Budget; Gene Dodaro, General Accounting Office; and Gerald Murphy, Department of
the Treasury. The luncheon session is highlighted with the presentation of the Donald L.               ____________

Scantlebury Memorial Awards for distinguished leadership in financial management in the                      Insidethis Issue
public sector.                                                                                  Integrating Performnance Measurement

   Concurrent panels to be held in the morning session are:                                      into the Budget Process.3
   AImplementing Cost Accounting in the Federal Government                                      Auditing Peformance Measures             .
 B Success Stories on Using Financial Statements                                                 A.       News.13
    Resolving Issues with Audited Financial Statements                                          Perspective on Government Peformance
  The afternoon concurrent panel sessions include: tResults                                      and             Act . . . . . . . . .       15
 * Financial Management Systems: A New Strategy                                                 Hlds-Risk Report Seieslfrom GAO.a.m. 15
    *The Rapidly Changing World of Electronic Procurement and Payment
   CnFranchising, Cross-Servicing, and Outsourcing: What Works?
    The site of the Conference is the Crystal Gateway Marriott Hotel, 1700 Jefferson Davis
Highway, Arlington, Virginia. For additional information on the program and registration,
see pages 6 - 7 of this issue of the JFMIP News. o


                                                                            69(~A'~29P                       o
JFMIP NEWS                                                                                                                        Winter 1997




Senior Federal Financial Officials Retire JFMIP Executive
    he federal financial management             Treasurer of the United States, Bureau of        Director Retires
    community will miss some colleagues         Government Financial Operations, Office of
    that recently retired from the federal      the Secretary, and the Bureau of Alcohol,              irginia B. Robinson retired on
government. They include:                       Tobacco and Firearms. Prior to joining the             F brgua 1.1997o         r    ears of
                                                Treasury Department, Mr. Blackmer was a           AdFebruary 1, 1997, after 34 years of
                                                                      TreasuryDepartmen,
                                                                       Mr. Blaa                   V Federal service. She was the Executive
    * L. Paul Blackmer, Jr., Chief Financial    supervisory auditor with the U.S. General        Director of the Joint Financial Management
      Officer, Bureau of Engraving and          Accounting Office.                               Improvement Program since January 1988.
      Printing, Department of the Treasury          John C. Martin retired after 25 years of     As JFMIP Executive Director, many govern-
    * Clyde G. McShan, H, Deputy Chief          federal service. As the Inspector General of     mentwide projects were completed in the
      Financial Officer, Department of          the Environmental Protection Agency              areas of human resources development,
                                                (EPA) since October 26, 1983, he was             financial systems requirements, and most
      Commerce                                  responsible for the supervision of a             recently, travel management improvements
    * John C. Martin, Inspector General,        nationwide staff of auditors and                 in the federal government. Ms. Robinson
      Environmental Protection Agency           investigators whose job is to prevent and        was very active on U.S. Chief Financial
                                                detect fraud, waste, abuse; and promote          Officers Council committees on human
    * Matthew G. Schwienteck, Associate         economy efficiency, and effectiveness in the     resources, cost accounting, and legislation,
      Commissioner for Financial Policy         programs and operations of EPA. Mr.              as well as with the Federal Financial
      and Operations, Social Security Ad-       Martin initiated a program of internal audits    Managers Council, and other organizations'
      ministration                              and special reviews resulting in dramatic        activities. Under her leadership at JFMIP,
                                                costs savings and improvements in the            the organization disseminated good financial
    * James M. Taylor, Chief Financial Offi-    delivery of environmental programs. Prior        management practices and policies not only
      cer, and Executive Director for Opera-    to coming to EPA, Mr. Martin served as the       through JFMIP publications, but also
      tion, Nuclear Regulatory                  Assistant Inspector General for                  electronically through FinanceNet on the
      Commission.                               Investigations at the Department of              World Wide Web.
                                                Housing and Urban Development. In 1981
    L. Paul Blackmer, Jr. was the Associate     he supervised a special task force                  Mrs. Robinson is an outstanding speaker
Director (Chief                                 investigating public corruption and              and was asked frequently to make presentations
Financial Officer)                              government fraud. He began his federal           on various financial management topics.
of the Bureau of                                service in 1971 as a special agent and then as   She is a proponent of continuing
Engraving and                                   a supervisory special agent in the Federal       professional education for financial
Printing (BEP),                                 Bureau of Investigation.                         management personnel in the federal
Department of the                                                                                government, and, under her leadership, the
Treasury since                                     After 30 years of federal service, Clyde      JFMIP and CFO Human Resources
1991. As the CFO                                G. McShan, II retired from the federal           Committee developed a framework of core
of BEP, Mr.                         /           government. He was the Deputy Chief              competencies for financial management
Blackmer was                                    Financial Officer and Director for Financial     personnel in the federal government.
responsible for the                             Management, Department of Commerce.
financial                                       He was responsible for financial management         Prior to JFMIP, Ms. Robinson was the
management and            L. Paul Blacbner Jr   and accounting activities throughout the         Associate Director, Accounting and
accounting                                      Department including the development of          Financial Management Division, at the U.S.
activities                                      an integrated financial management system.       General Accounting Office. She also held
throughout the                                  Prior to that, Mr. McShan was the Director,      managerial or accounting positions at the
bureau. His                                     U.S. Department of Agriculture's National        Department of Energy, Department of
leadership led to                               Finance Center (NFC) in New Orleans,             Commerce, and the Department of the
major improvements to the bureau's              Louisiana from 1981 until 1993. Under his        Navy.
financial management system. Prior to that      leadership, the NFC became a recognized             The JFMIP and federal financial
he served in various managerial positions at                                                      m       an       d federal missncia
the BEP and other bureaus in the Treasury                                  Continued onpag 12.   management community will miss her
Department, including the Office of the                                                          tremendously and convey to her and her
                                                                                                 family best wishes for the future.     o
2
Winter 1997                                                                                                                   JFMIP NEWS




  Integrating Performance Measurement                                                         Inspectors General
          into the Budget Process                                                             Auditor Training
      he Government Performance and             * Giving managers authority to set and        Inst it ut e
 *    Results Act (GPRA) Implementation           meet goals.
      Committee of the Chief Financial            Manager's accountability
                                                                      .    for                       e Inspectors General Auditor
Officers Council has been focusing on             performance against goals.                     Training Institute, sponsored by the
integrating performance measurement with                                                         Trainin Incit           onsority t
the budget process. A report, Integrating         In using performance measures to assist     E      residencts Council on Integrity &
Performance Measurement into the Budget        budget formulation, the agency must make       Efficlency (oC i), provides a broad
Process, was issued January 21, 1997. This     decisions on alternative resource levels.      The Institute has provided training to over
report is a user guide to multiple ideas and
best practices in connecting resources with        Organizational factors may complicate      5,000 people since it was founded in 1990.
results. Examples of how eight entities (the   the issues as the Office of the Chief
Departments of Agriculture, Defense,           Financial Officer and Office of Budget may         To enable the Institute to be most
Health and Human Services, Housing and         be separate. In addition, some executives      responsive to the needs of the Federal audit
Urban Development, Transportation, the         may be skeptical of future use of              community, the PCIE recently authorized
Treasury, and Veterans Affairs and the         performance information in budget              the InstitutC to create Curriculum Advisory
Social Security Administration) reported       decisions made by the Office of                Groups (CAG). They are charged with the
their approaches to integrating performance    Management and Budget and Congress.            responsibility of providing advice on
measures in their fiscal year 1998 budget                                                     curriculum content to the Institute's Director.
requests are included in this report.                Short- and long-term factors may         Three CAGs, dealing with financial, EDP,
                                                 dominate, as budget is concerned with the    and analytical methodologies, respectively, are
    The first part of the report is a            short-term whereas GPRA covers the total     now functional. More than 20 Federal audit
guidebook on how to integrate performance        program and is concerned both with short-    organizations are represented on these CAGs.
measurement into the budget process. The         and long-term. The status of an
integration task depends on setting strategic    organization's movement toward cost             Each of the groups are considerig such
 direction, developing performanse measures      accounting may be problematic, causing      issues as who are the ideal recipients of
kee otesrtgcdirection,
            dvlpnpe              formanemaulatin difficulty to quantify incremental changes  Institute training; what specific skills and
buydgets thatstintegicdraectper    ,formance ing with accuracy. An organization also needs   abilities should be taught; and, when is the
bumeaustan resograte performance                 to consider funding options as a            best time in an auditor's career to provide
               measues
                  resorce
                        an rquest, andconsequence               of program goals not having  the various types of training. The Institute
assessing results,                               been met.                                   is very appreciative of the efforts of each
                                * . ^.                                                      ~~~~~~~~~~~~~~~~member
                                                                                                        of the CAGs.
    The second part of the report discusses          InfruaigprfracCesrs
challenges which organizations may                      formulating performance measures,        The EDP CAG is the first ofthe three
encounter in linking program activities to       goals are that they be high level and aThEDCAistefrtotetre
rescoultsnthes challenge inogram aclude: io      manageable number. Some research may be     groups to make recommendations for
res      r ofese camienges inci ute              needed to determine their actual program    specific training programs. All four of their
     Fear of committing the organization to      benefit or effect.                          recommendations were accepted by the
     goals for which outcomes are                                                            Institute's Board of Directors and, the
     influenced by factors beyond the                Presentation formats still are being    training programs will be available in the
     organization's control.                     established for use within agencies, to     next few months.
 * Lack of a thorough understanding of         OMB, and to Congress. Moreover, the
   the relationship between resources,         organization faces limits on the making of         The first of the 4 programs, titled "How
   outputs, and outcomes.                      changes to account structures for budgets,     to Use IDEA Software," gives auditors a
                                               strategic plans, and results.                  thorough understanding of this powerful
   *
   Environment     where outcome results are                                                  software package providing them an
   derived from multiple agency programs          The report will be available on             alternative automated method to analyze
    or state/local government activities.      FinanceNet. o                                  data. It will be conducted initially on May
 * Environment where the length of time                                                       13-14, 1997, at the Institute's Fort Belvoir,
   needed to achieve program results is                                                       Virginia location. This "hands-on" training
   longer than the reporting time frame.                                                                                 Continued on page 11.

                                                                                                                                            3
JFMIP NEWS                                                                                                                       Winter 1997




Auditing
Performance
Mea sures                                        performed to verify controls were operating
                                                 properly. Testing was done primarily over
                                                                                                    OIG, in
                                                                                                 cooperation\
                                                 the controls at DOL's national office for       with the Office
     he Department of Labor's Office of the      summarizing the data from the region and        of Job Corps,
     Ins p-ector General has been auditing       field offices into performance measures. For    linked audited
     the annual financial statements             a small number of selected measures, data       financial
prepared by the DOL since fiscal year 1986.      accuracy was tested at the field offices.       statements
OIG began auditing the performance                   With increasing attention to rogram         with auditing the program's performance
information included in the financial            outcomes, DOL's OIG expande the audit           measures. The reports provide clear and
statements in fiscal year 1992. The audit of     focus to help DOL's agencies structure          reliable information for program evaluation;
performance information was undertaken           performance measures which addressed            they also provide significant advantages over
because of the increasing demand forut           prora urposes and intended outcomes.            previously available information about
complete and reliable information about          programquentlotes and intscopewauexpande        federal programs including:
how well federal programs achieve their       Consequently, the audit scope was expanded            e            ments of program results and
mission. Recent legislation and executive     to include a comparison between the                 *thei keyt aelem eentseoprograesutshand
action have concentrated attention on         reported measures and the agency's mission            their costs are presented together,
 hangionghae oncentratederal gverntont
                                     ostatement,           goals, and intended outcomes           * the data is arranged in a manner that
cherangi tay,
            .       theffedrsa governmnto     based upon the program's authorizing                  facilitates analysis and comparison
operates. Major enorts are underway to        legislation. DOL's programs are currently             between centers, contractors, and
change management of federal orgamzations in the process of revising their performance              regions, and
and programs, moving away from budget-        measures to reflect achievement of intended
driven systems toward performance-driven      outcomes.                                              statement data have been audited to
systems. These efforts are directed at                                                               verify accuracy and agreement with
changing managers' focus away from inputs         The OIG plans to work with program                 source documents.
(dollars and FTEs) and outputs (products      management and staff to develop                       The statements reflect the results the
completed) to outcomes; i.e., the external    methodologies for merging financial
impact upon groups benefitting from the       information with performance measures.             program achieved and how much each result
programs.                                     This includes identifying direct costs             cosrmthetaxpayers. By highlighting
                                              associated with reported measures,                 performance differences of regions, useful
    OMB has issued Bulletin No. 97-01         developing a methodologyto allocate                information is supplied for program
which prescribes requirements as to the       indirect costs to reported measures, and           managers and both good and poor
form and content of agency financial          identifying a format (program results              contractor/center performances are
statements. The performance measures          statements) for presentation ofperformance         identified. The Job Corps has attributed
presented in the overview should relate to    measures linked with financial data. This          many program changes to analyses
the purposes and goals of programs and be     initiative is consistent with the Statement of     stemming from the OIG's cost reports
consistent with measures previously           Federal Financial Accounting Standard No.              Further, in a cooperative effort with the
included in budget documents and other        4, Managerial CostAccounting Concepts and          Office of Job Corps, the OIG surveyed best
materials related to implementation of the    Standardsfor the Federal Government.               practices currently used at high performing
Government Performance and Results Act.                                                          centers. These were defined as those
                                                  The GIG has performed this type of             prcieposeansytmthtava
    Initially, the OIG's audit of performance audit for DOL's Job Corps program. The             positive effect on operating efficiency or
information was focused on determining        Job Corps is an employment and training            positive        The prating efficied
whether the management control                   program offering, in a residential setting, a   performance. The process identified
environment and structure were adequate to       wide range of services designed to assist       practices that helped improve the students'
ensure the reliability of reported numbers.      economically disadvantaged, unemployed,         opportunities for success. It was found that,
Interviews were conducted to gain an             and out-of-school youth ages 16-24. Since       by having these key practices in place, a
understanding of the management controls.        1989, the OIG has developed and audited         center was most likely to be effectively
Risk assessments were performed over the         cost-based program results statements of the    accomplishing the Job Corps mission.
controls in place to determine the reliability   Job Corps program.                                 For further information, call Mike
of the controls. Limited testing was                                                             McFadden, DOL OIG, (202) 219-5906. c
4
Wintcr 1997                                                                                                                   JFMIP NEWS




Evaluating FY 1995
Accountability
Reports
T     he Chief Financial Officers Council's
      Reports Streamlining Project Team
                                                  Evaluations of the six pilot agency
                                               reports were solicited from interested
                                                                                                 * Providing the most pertinent program
                                                                                                    and financial performance measures that
      evaluated the results of six agencies    stakeholders. The evaluations indicate that          tie to strategic/programs goals.
that developed pilot Accountability Reports    future Accountability Reports should:
for FY 1995. The agencies include:               * Focus on linking                                                      * Placing
                                                   the most relevant                                                        pertinent
 * General Services Administration                 performance data to                                                      support data or
 * National Aeronautics and Space                  the program and                                                          agency contact
   Administration                                  agency goals;                                                            points in the
 * Nuclear Regulatory Commission                * Include expected                                                          Supplemental
                                                                                                                            Section of the
 * Social Security Administration                  performance                                                              report.
 * Department of the Treasury                     standards relative to
                                                  the goals;                                                             *Providing    a 1-2
 * Department of Veterans Affairs               * Explain, if                                                               page section on

    These six agencies were allowed to            performance                                                               Program
integrate pertinent material from five            standards were not                                                        Highight". u
previously issued reports into one report         met, the actions to                                                       Highlights up
that is user friendly, minimizes technical        be taken tofront
language, and contains the most important                     ie                        take;                              summarizing
and useful information about their financial      performance;                                                             the most
and program performance. The five               * Include trend data;                               pertinent performance information.
previously issued reports are the Federal
Managers' Financial Integrity Act Report,       * Minimize technical language, with a            * Working with the auditors to include a
the Chief Financial Officers Act Annual            preference for simple, easy to read             brief, non-technical summary of the
Report, management's Report on Final               reports;                                        agency's financial condition, including
Actions required by the Inspector General                       integration
                                                                .Imrove     of other staruto       an explanation of any audit
Act, Civil Monetary Penalty and Prompt                po         rt
                                                                  g                                qualifications and auditor's opinion.
Payment Act reports, and available                 reportig requirements with the
information on agency performance                  program performance information; and             The Accountability Reports can be
compared with its stated goals and              * Explain the significance of the auditors'     found electronically on agency websites.
objectives, in preparation"for                      d              d                            A limited number of the evaluation reports
                       t .as
implementation of theqovernment
                                                  ~~~~~~~~findingss
                                                    i
                                                               and opinion in lay terms...
                                                               a o                              are available by contacting Lorraine Green,
Performance and Results Act.                     The project team also recommended that         (202) 273-5516. o
    The project team chaired by Frank          agencies need to place special emphasis in
Sullivan, Deputy Chief Financial Officer,      the FY 1996 Accountability Report on:
Department of Veterans Affairs, concluded        * Timeliness
that the FY 1995 Accountability Reports          * Integrating statutory reports require-
successfully presented a comprehensive             ments
picture of each pilot agency's programs, but
further improvements are needed.                * Providing strategic/program goals
                                                   within each program or operation and
                                                   the goals should be tied to the agency's
                                                   budget submission.

                                                                                                                                             5
Congressman Stephen Horn
Franklin Raines
Director; Office of Management and Budget


                                                               Tuesday, March 18, 1997
                                                              Crystal Gateway Marriott Hotel
The Future of Federal Financial Management                             Arlington, Va.
Led by: Cora Beebe, Chief Financial Officer, Office of
Thrift Supervision
G. Edward DeSeve, Controller, Office of Federal
Financial Management, Office of Management and                          A Special Tribute to
Budget                                                                  CalsA
Gene L. Dodaro, Assistant Comptroller General,                          Charles A. Bowsher
Accounting and Information Management, General                      former Comptroller General
Accounting Office                                                       of the United States
Gerald Murphy, Fiscal Assistant Secretary, Department
of the Treasury




Implementing Cost Accounting in the                       Financial Management Systems-- A New
Federal Government                                        Strategy
Led by: Norwood (Woody) Jackson, Deputy Controller,       Led by: Alvin Tucker, Deputy Chief Financial Officer,
Office of Federal Financial Management, Office of         Department of Defense
Management and Budget                                     R. Schuyler Lesher, Deputy Chief Financial Officer;
Jeffrey Steinhoff, Director, Planning and Reporting,      Department of the Interior
Accounting and Information Management Division,           James K. McCann, Vice President, Information Services,
General Accounting Office                                 Northrop Grumman
Frank Sullivan, Deputy Chief Financial OfficerN
Department of Veterans Affairs                            The Rapidly Changing World of Electronic
Success Stories on Using Financial Statements             Procurement and Payment
Led by: Vincette Goerl, Chief Financial Officer; U.S.     Led by: Bettsy Lane, Director; Cash Management
Customs Service                                           Directorate, FinancialManagement Service, Department of
Dale W. Sopper, Acting Deputy Commissioner for            the Treasury
Finance, Assessment and Management, Social Security       Dennis Fischer, Chief Financial Officer; General Services
Administration                                            Administration
Arnold G. Holz, Chief Financial Officer; National         Gary Glickman, President, Phoenix Planning and
Aeronautics and Space Administration                      Evalution, Ltd.

Resolving Issues with Audited Financial                   Franchising, Cross-Servicing, and
Statements                                                Outsourcing: What Works?
Led by: Cornelius (Neil) Tierney, George Washington       Led by: Clyde McShan, Vice President, CDSI
University                                                Richard Ferris, Associate Directorfor Investigations,
Thomas Bloom, Inspector General, Department of            Office of Personnel Management
Education                                                 Ernest Hardaway, Senior Vice President, Federal
Irwin (Ted) David, Acting Chief Financial Officer; U.S.   Occupational Health Service
Department ofAgriculture                                  Edwin A. Verburg, Associate Administrator for
                                                          Administration, Federal Aviation Administration
Registration Information                                                             CPE Credit
Attendance at this conference can be approved under the                              This conference qualifies for 7.2 hours of continuing
Government Employees' Training Act. Training authorizations                          profesional education credit.
should be submitted no later than March 12, 1997. Early
submissions are recommended. Submissions made after                                  Payment Information
March 12 will be accepted, but registrant may have to                                The cost for the conference is $100. Individuals with a
register at the conference site.                                                     sponsoring agency should submit an approved training
                                                                                     authorization or purchase order. The purchase order should
Registration at the hotel will begin at 7 a.m. and the program                       include a complete mailing address, phone number and
will begin at 8 a.m.                                                                 billing address for each participant.

Accommodations                                                                       You also may submit a registration form and a check payable
A small block of rooms is available at the hotel for the                             to the USDA Graduate School. VISA, MasterCard, Diners Club
government rate. Please call the Crystal Gateway Marriott                            and American Express are accepted. All authorizations,
Reservation Desk at (703) 920-3230 by February 20, and                               checks and registrations should be sent to:
indicate that you are with the JFMIP Conference.
                                                                                     JFMIP Conference
Cancellation Policy                                                                  USDA Graduate School, Room 142(IH)
Cancellations must be in writing and received by March 12,                           600 Maryland Avenue S.W.,
1997, or a billing will be made. Substitutions will be                               Washington, DC 20024-2520
accepted.
                                                                                     All registrations will be accepted unless otherwise notified.
                                                                                     No confirmations will be sent.

                                                                                     For further information about registration, contact
                                                                                     Debbie Herway, (202) 401-9193 or Isabelle Howes,
                                                                                     (202) 401-9138, or fax (202) 401-7304.




                                                                          Please Print

Name
                                                               (as you want it to appear on your badge)
Title
DepartmenVOrganization
Office (eg: Bureau or Administration)
Address                                                                                                               Roon/Suite
City                                                                                        State                          Zip
Office Phone ( )                                                                            Fax(
Please not any special accommodations you need (e.g. dietary, sign language interpretation). Be specific.



Please indicate means of payment. (Vendor is USDA Graduate School).
_      Purchase order/training authorization attached. (Please include four copies of your authorization form).
_ Check (Payable to USDA Graduate School)
_ Please charge my 0 VISA 0 MasterCard 0 Diners Club 0 American Express
Credit Card Number                                                                                       Expiration Date
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            Mail to: JFMIP Conference, USDA Graduate School, Room 142 (IH), 600 Maryland Ave., S.W., Washington, DC 20024-2520
                                                           Fax: (202) 401-7304
JFMJP NEWS                                                                                                                          Wintcr 1997




                                                         information access by both the            qualified opinion on its FY 1995 financial
Reen gineering the                                       government and the private sector,        statements, Customs is working to resolve
Fed era
Fede      Payments
     rall Payme nts                                  *   Electronic access to needed
                                                         Electronicinformation,
                                                                                                   the problems identified from these risk
                                                                                                   assessments and hopes to get a clean opinion
                                                       information,                                on its FY 1996 financial statements.
Process                                              . Cross-servicing for agency program and
                                                       administrative support,                         After the audits of Customs' FY 1994
                                                     * Payee profiles will be developed, and       and 1995 statements, Customs had initiated
    The Department of the Treasury's                                                               meetings with operational, financial and
    *Financial Management Service (FMS)              *Customer service organizations will be       audit staffs, which were facilitated by an
  T set out a vision of the federal                   created as a one-stop shop for payment       independent public accounting firm. An
government's financial infrastructure for the         information for payes.                       analysis was done to assess Customs' ability
21st century in a report, Reengineering the          The next step in the process is to            to compile each line item on the financial
Federal Payments Process: Concept Operiew        designate an Implementation Team whose            statement and whether each item was
(September 1996). The report was                 role is to develop the financial business case    auditable. Because cash is regularly
developed under the leadership of FMS, but       for the concept, further delineate the details    reconciled, cash balance shown in the
had government customers on its advisory         of the vision, determine the funding require-     general ledger is easily obtainable and easy
board and steering committee. More details       ments, establish the roles and responsibilities   to audit; in risk assessment, therefore, cash
are available in a companion report,             under the new concept, develop an                 balance ranks low with regard to
Reen~gineeinng the Federal Payments Process:     implementation plan with key milestones           compilation and low with regard to any
Assessment and Design. This document             and a project time schedule, and manage the       problems in auditing the amount shown on
provides guidance for the team that will be      transition to the future process. o               the Statement of Financial Position.
chosen to implement the vision.
                                                                                                       An example of higher risk for Customs
   A customer-emphasized payments                                                                  was the compilation of an auditable number
process redesign concept has centered on the                                                       for drawback payments (these are refunds of
complete business process, especially the                                                          previously paid duties on exported goods
management of all payment related data.          U S Customs                                       that are imported into the country); such
The vision is a fully integrated, electronic      *                                                compilation initially was precluded as
government payment process with linked,
standardized data that are accessible and
                                                 Service Uses Risk                                 Customs then lacked an ability to relate a
                                                                                                   payment made to the specific entry; risk
convenient to its customers and                   A                                   4            assessment early on identified the problem.
                                                     ssessm en
                                                            F. t to .
                                                                                  -

stakeholders.                                                                                      Risk assessments also assisted in prioritizing
                                                 U                                            |    corrections of review weaknesses and in
   The goals of payments process concept
implementation will be to:
                                                 Improve nan cIal                                  resource allocations issues.

  *improve customer service,                     S ta te me nts                                        The Customs/Treasury OIG experiences
                                                                                                   showed that where risk assessment is
  * reduce government operating costs, and                                                         partnership between the auditee and
  * provide opportunities to agencies to               or the past 2 years, the U.S. Customs       auditor, the process works and should be a
    redirect resources to mission-related
    fnctions.                                    FTreasury
                                                       Service, and the Department of the
                                                                 Office of Inspector General
                                                 (OIG) have worked together to assess
                                                                                                   regular part of an agency's capability to
                                                                                                   compile and issue auditable financial
                                                                                                   statements.
   The concept, once implemented,                whether data needed for Custom's financial
provides a number of new features to the         statements was available and auditable.              Copies of the Risk Assessment are
federal government's payment process.            These assessments assisted both parties with      available by contacting Thomas Diaforli,
These are:                                       the preparation of the financial statements       Director, Accounting Services Division,
  * Standardized data among all                  for the Office of Chief Financial Officer, and    U.S. Customs Service on (317) 298-1220.      3

    government entities,                         the assessment of controls underlying
  0 Governmentwide data files that will          Customs' financial management information
     have integrated databases capabilities to   for OIG. As a result of these efforts, the
    support common ftinctions, allowing          preparation of the fiscal year 1996 financial
    for efficient cross servicing and secured    statements was done in a more efficient
                                                 manner. Although Customs receive a
8
Winter 1997                                                                                                                     JFMIP NEWS




Corps of Engineers'
Financial Management
System
 The     Army Corps of Engineers has
      worked out and encompassed a dozen
                                                     transaction-driven general ledger
                                                     updates
                                                                                                 capability as a component of State's financial
                                                                                                 system.
      prototype development concepts into
CEFMS, the Corps of Engineers' Financial            a fourth-generation relational database         Strictly from the Corps' view, it
Management System. Design concepts                  that is table driven                                         estimates that CEFMS's
inherent to the system were structured to           for flexibility                                              combined savings and cost
identify work, resources, and accounts.             source code                                                  avoidances will equal $200
Within that framework, functional processes         demonstrated in use                                          million over its 10-year life
identify and record funds, commit funds,            to be transportable to                                       cycle. This return comes
obligate funds, expend and disburse funds,          other mainframe                                              from the finance and
manage assets and facility accounts, process        systems.                                                     accounting functions alone,
labor and payroll, prepare bills and collect                                                                     and it is further estimated
funds, and provide information for decisions        CEFMS works in                                               that other productivity
and reports.                                    relationship with other                                          savings and cost avoidances
                                                Corps' systems for real    A                                     to be realized from
    The Corps states that CEFMS is the first    estate management,                                               operations using CEFMS
government-owned/developed financial            program/project                                                  will match
management system that fully integrates         management, and                                                  finance/accountingsavings.
business processes and supports the             resident management.
management of all types of work and funds.      CEFMS interchanges to                                                  Within DOD, the
The system provides managers in all             non-Corps' systems including the Defense         Department of the Army Major Automated
ftmctional areas with accurate, timely, and     Civilian Personnel Data System, the              Information Systems Review Council
relevant financial information. Its features    Integrated Army Travel System, the               cleared CEFMS at the start of 1996 for the
include:                                        Program Budget Accounting System, the            start of full-scale deployment. An earlier
  * single source data entry in compliance      Standard Army Automated Contracting              review was done by Treasury in which the
     with the Corps' standard data dictionary   System, and the Defense Civilian Personnel       Financial Management Service's Center for
                                                System.                                          Applied Financial Management analyzed
 * electronic signature capability that                                                          CEFMS in comparison to systems on the
   enhances fiscal integrity and internal           Although the CEFMS system specifically       General Services Administration's financial
   control at the same time as its replaces     was designed, developed, tested, and             management system schedule. The study
   widespread use of paper forms [In            implemented for Army Corps of Engineers          recommendation was that the Corps of
   approving the electronic signature           users and customers, CEFMS-by its                Engineers continue development and
   capability (November 19, 1996), the          design-offers value-added flexibility. Its       deployment of the CEFMS system.
   General Accounting Office stated "we         code structures may be adapted to non-
   have concluded that the electronic           Corps' users. The Departments of the Army           For more information, contact Charlie
   signatures generated by this system          and Air Force are implementing strategies to     Glenn, U.S. Army Corps of Engineers,
   provide at least the same quality of         use CEFMS for general fund accounting;           (202) 761-1938. o
   evidence as the handwritten signatures       the Defense Transportation Command will
   they are designed to replace. Principles     adapt it for its revolving fund type business;
   applied in the development and               the Defense Finance and Accounting Service
   implementation of the (electronic            (DFAS) also will refine CEFMS to address
   signature system) can be used in any         mission requirements. Subparts of CEFMS
   number of applications to provide            are finding usefulness to other departments;
   authenticity and data integrity              for example, the Department of State is
   capabilities."]                              using the Corps' electronic signature
 * real-time funds control

                                                                                                                                             9
JFMIP NEWS                                                                                                                         Winter 1997




                                                mismanagement. The program covers both           * Reviewed OMB Circular A-1 30,
   "Best practices" in                          administrative and programmatic                     Appendix III and updated its System
        cia i
     Fi nan                                     operations. Some activities initiated in 1996
                                                   Deeacap                   tcbinclude:
                                                                                                    Security Handbook which provides
                                                                                                    policy and procedures regarding use of
                                                 OKDeveloped
                                                   A *       a tactical plan to combat
,Mv, anag eme nt                                    fraud that contains 29 sub-initiatives
                                                                                                    automated information resources.
                                                    that address fraud prevention and            * Issued specifications/edits for the 7th
                                                    detection, referral and investigation,         consecutive year to help employers
  A gencies were requested last fall to             enforcement and management                     accurately prepare and correct wage
 AM submit their "best practices" in                information/control.                           reports on paper forms with guidance
5F-Mfinancial management. JFMIP is                                                                 also provided for filing by magnetic
highlighting some examples of the                * Streamlined its financial systems review         media. This approach focuses on
submissions in this newsletter and will            program required by the Federal                  preventative measures to help ensure
publish all best practices submissions on          Managers' Financial Integrity Act                accurate reporting, including edits on
FinanceNet in the near future.                     (FMFIA) in response to NPR                       screen data before wage reports are
                                                   initiatives. Following two consecutive           produced. The guidelines have
FinancialManagement System Reporting                3-year review cycles of systems, the            eliminated reconciliation of
                                                    cycle has been changed to 5 years which         discrepancies between SSA and IRS
   The Library of Congress (LOC)                    includes a limited review by the system         wage data. The guidelines will be made
implemented the Federal Financial System            manager and a detailed review by an             available on Internet this year.
for fiscal year 1995, including its Reports         independent contractor. Staff hours
Management System (RMS). The RMS                    expended were reduced by about 3,300           For further information, contact Ken
provides distributed reporting to over 300          hours during the first 5-year review        Goodman at (410) 965-0981.
users in various locations. The users no            cycle.
longer are required to wait for the              * Developed the 9th annual report on           Travel Management
accounting office to distribute reports but         internal control that describes the                       S
they can select from a menu of over 20              prga             oeiiaefadwseThe',Gcncral
                                                    theycan0program to eliminate fraud, waste,                 Services
                                                                                               initiated a number        Administration
                                                                                                                  of initiatives to improve
reports.                                           abuse and management inefficiency and        travel management. These initiatives are:
                                                   certifies with reasonable assurance
    RMS provides security by report team           compie with requiremence
and by data. Access to data is restricted by       comphance with requirements.                    A. Eliminate pre-trip obligation of all travel
division code and budget organizational          * Controlled and responded to all third           and allow offices to issue the type of travel
code. LOC's report teams include budget,           party findings (U.S. General                    orders that best suit their particular needs -
spending, payroll, external reporting,             Accounting Office, SSA's Office of              annual, quarterly, or trip-by-trip.
accounting, and disbursing. Users can enter        Inspector General, etc.), tracked the           B. Allow a flat 75% of M&IE on all partial
report parameters (e.g., fiscal year, fund,        implementation of all audit findings and        days for trips of two or more days, under
budget object code, etc.), submit reports,         coordinated corrective action.                  the Lodgings Plus method of
and view, print, or download reports. Many       * Managed a comprehensive program to              reimbursement.
of the reports are designed to allow the user      review all agency programmatic systems
to specify sort criteria and to select either      to ensure compliance with established           C. Develop a GSA's "preferred properties
detail or summary report formats. LOC has          accounting principles and management            list," comprised of hotels from existing
found that distributed reporting is a major        control standards. Efforts were directed        Federal hotel programs that utilize
improvement in financial management.               toward developing accounting                    negotiated lodging rates/amenities
                                                   requirements, reviewing functional              packages. All preferred properties agree to
    LOC continues to enhance existing              requirements documents, participating           bill the lodging component only, directly to
reports and add new reports. For further           on inter-component workgroups and               GSA. These properties are promoted
information, contact Jamie L. McCullough           performing validation activities                within GSA but participation by the
at (202)707-4160.                                  associated with the modernization of            traveler is voluntary. Benefits include lower
                                                   programmatic systems.                           daily rates and reduced transportation costs
Financial Mana~gement Controls                   * Conducted On-site Security Control              in many cases in addition to other benefits.
   The Social Security Administration               and Audit Reviews by SSA Regional              D. Contract with one Travel Management
(SSA) has instituted a Management Control           Security Officer staffs in the regional        Center to service all GSA travelers
Program (MCP) to safeguard assets and               offices and Integrity Staffs in the                                      Continued on pag IL
deter/detect fraud, abuse, waste, and               program service centers.
10
Winter 1997                                                                                                                                 JFMIP NEWS




                                                    IG Institute                                          Best Practices
I nternet                                           continuedfromn page 3.                                continuedfrom page 10.
                                                    will be delivered in a small group setting               nationwide. Benefits are that the TMC will
                                                    allowing every student to personally                     issue American Express traveler checks on
                                                    experiment with the software.                            location, promote and book hotel and
                                                                                                             rental car reservations under GSA's direct
                                                       The other three recommended training                  billing agreement programs. Airline tickets
                                                    programs, now in various stages of develop-              will be charged to a centralized American
                                                    ment, are (1) methods and techniques for                 Express account, thereby eliminating this
                                                    using the Internet and World Wide Web as                 large dollar item from the traveler voucher
IGNet and FinanceNet                                effective and efficient auditing tools; (2) the          and simplifying the vouchering process.
                                                    fundamentals of information systems auditing,            One TMC contractor reduces the
   The home pages for IGNet and                     which includes learning skills to review and             administrative burden of managing the
FinanceNet have been revised, with                  evaluate controls and apply traditional                  TMC program, provides for reliable and
improved appearances and utility. The               standards in the EDP environment; and, (3)               consistent reconciliation of accounts and
home pages are reached at:                          COBIT, a total control concept relating to               management reporting, and ensures
                                                    information and related technology that can              consistent TMC travel policy nationwide at
   Http://www.sbaonline.sba.gov/ignet/ig.html       be incorporated into audits.                             GSA.
   http://www.financenet.gov/                           The members of the EDP CAG were:                     E. Issue AMEX card to anyone who travels.
                                                      * John Lainhart IV, Inspector General,                 Benefits include permitting the traveler to
                                                        U.S. House of Representatives                        obtain a travel advance at his/her
   Transportation's Office of the Chief               * John Dye, Small Business                             convenience, streamlining travel functions
Financial Officer established a world wide              Administration, OIG                                  and maximizing government funds,
web home page which is reached at:                      T     F               O                              contributing to the goal of achieving a
                                                      * Terrn Fazio-Hamilton, Office of                      paperless travel process in addition to other
   http://ostpxweb.dot.gov/budget/index.htm             Personnel Management, OIG                            benefits.

FinancialManagement Service,                            D
                                                        Chris Hendricks, Department of                       F. Negotiate direct billing agreements with
Finartmncial   ofnagc
                 theTreasury
                        t                               Defens,               .                              car rental companies. Benefits include no
Department of the Treasurty                           * David Kent, formerly with the                        state or local taxes, rental is eliminated from
    The FMS home page has moved from                    Department of Transportation, OIG                    the voucher and simplifies the vouchering
the Fedworld to a Department of the                   * Joseph Lawson, Department of                         process, and utilizes existing government
Treasury server. Its new address is:                    Treasury, OIG                                        car rental program terms and conditions.
   http://www.fms.treas.gov/                          * J. Mickey McDermott, General                         G. Link travel reimbursement to time and
                                                        Accounting Office                                    attendance process to process travel
    For specific information, use addresses as                                                               electronically. GSA is developing a
indicated below:                                       The Institute welcomes any suggestions                simplified electronic voucher process to be
                                                    from managers of audit organizations, EDP                incorporated into the time and attendance
Treasury Approved Sureties:                         experts, and front-line auditors for any other           process because the voucher process will be
                                                    suggestions for training programs. If you                simplified with only a few expense items to
   http:H/www.fms.trcas.gov/c570.htmI               wish to share any of your ideas and/or                   appear on the voucher. The other travel
Monthly Treasury Statement:                         suggestions, please send them to:                        expense items will be processed through
                                                       Curriculum Advisory Group - EDP                       such means as direct billing of large items
   http://www.fms.treas.gov/mts/mts.html               The Inspectors General AuditorTraining Instituit      such as air, hotel, and rental car charges,
                                                       P. 0. Box 518                                         use of the American Express card for
Treasury Financial Manual:                             Fort Belvoir, VA 22060-0518                           issuing advances, and use of the Sprint
   http://www.fms.treas.gov/tfm/tfmintro.html           FAX (703) 805-4503                                   Card for telephone expenses.
                                                        Any questions regarding current or planned           For further information, contact Paul
Treasury Bulletin:                                      Institute training programs should be directed    Taylor at (202) 501-0070.
   http://www.fis.treas.gov/bulletiritbissues.hnl       to Ms. Gale Moore, Registrar, at the above
                                                        address. She can be reached by phone at
                                                        (703) 805-4501. The Institute's E-mail                                          Continuedonpage 12.
                                                        address on the Internet is: igati@erols.com u
JEMIP NEWS                                                                                                                                 Wintcr 1997




Best Practices                                        Retirements
con tinuedfrom page I1.                               continuedfrom page 2.
Training and Education                                leader in providing                                  systems accountant, Accounting Officer,
                                                      financial                                            Director of Finance and Deputy Chief
    The Patent and Trademark Office has               management                                           Financial Officer responsible for the
reengineered its process for requesting,              services to the                                      formulation, presentation and execution of
approving and tracking training requests.             Federal sector. He                                   SSA's budget.
The new process is intended to create a               joined NFC in
paperless work environment, streamline and            1972 and held                                             James Taylor
decentralize the training process, and link to        several managerial                                    retired after 44
the central training database, Registrar.             positions before                                     years of federal
                                                                   being appointed                        ~~~~service. As the
    The new process incorporates advanced                                                                   Executive Director
technology and a streamlined workflow. A                  Dirctor. Mr.a hidsG                   c~a        for Operations at
unique, electronic training form was                      M~a         ea i
                                                          Federal service in                               the U.S. Nuclear
implemented in Procurement Desktop to                     195a nadtrRegulatory
handle all types of training (external,                    i9h5 Uaass                                      Commissionthe
internal, group and individual) and to                    wt      SAsCmisoh
iernable electroupanic certindicaio forandpaymOffice              of the Inspector General.                was the chief staff
                               enableforelectronic
                                          payment atcertification                                          official of NRC
the program office level. Procurement                         Matthew G. Schwienteck, Associate            that managed the
Desktop, a client-server system, supports                 Commissioner for Financial Policy and            day to day health           JamesM. Taylor
every phase in the Federal Acquisition                    Operations, Social Security Administration,      and saftey mission
process and includes a real time, online                  retired after 33 years of federal service. As    and operations of
interface to the Federal Financial System. It             the Associate Commissioner, he was               the agency. As the
performs electronic routing and interface                 responsible for the Agency's financial           CFO, he oversaw all accounting, budgeting
with the central accounting system, and an                accounting,                                      and other financial management activities of
interface was developed to Registrar. The                 payment and                                      the agency. Mr. Taylor joined the NRC in
request is electronically routed for approvals            reporting                                        May 1980 and since then served in several
and fund obligation in FFS. This expedites                operations;                                      managerial positions of increasing
the certification for payment and eliminates              oversaw the                                      responsibilities. Prior to joining NRC, he
the paper certification process (the SF-182               development of                                   worked at the Department of Energy and
is no longer required) and the need to enter              financial                                        served 20 years as an engineering duty
training records manually into Registrar.                 management                                       officer in the U.S. Navy Nuclear Power
    The new process has empowered                     systems and their                                    Program.
program offices with a better tracking                itgrainwt                                                FI       n h eea iaca
mechanism for their training funds because            the Agency's                                           M      P ament  fmun iyexend our best
                                                      programmatic and                                     maaeetcmuit               xedorbs
they now have the responsibility of                   administrative                                       wishes to them. o
registering, obligating, and certifying their                                  Matthew G. Schwienteck
training requests. The new training form              processes; and
also allows program offices to use the bank           developed and
card to pay for the training, and it aids the         executed policies
program offices in tracking their training            and procedures for systems security, internal
expenditures.                                         controls, and financial management. Mr.
                                                      Schwienteck began his Federal career in
   For more information, contact Mr. W.B.             1963, as a defense contract auditor for the
Erwin at (703) 305-8051. o                            Department of Defense. Since joining SSA
                                                      in 1966, he has held positions of
                                                      successively higher levels of responsibilities,
                                                      including internal auditor, supervisory
                                                      financial management analyst, supervisory




12
Winter 1997                                                                                                                       JFMIP NEWS




                                                has been filled by Phil Calder as the new       Accounting for Selected Assets and Liabilities,
                        FASAB
                           News                 GAO representative.                             which requires accrual of unpaid expenses at
                                                                                                the end of the fiscal year for which payment
                                                   On January 17, both Marty Ives               is expected during the following fiscal year,
Elmtner Staats Leaves                           (representing the state and local government    including accrued entitlement benefits

    In January, Elmer Staats, Chairman of       perspective) and Neil Tierney (representing     payable. The Board discussed diverse
the FASAB Board since its inception in          the private sector accounting perspective)      characteristics of social insurance programs.
October 1990, completed his term as the         left their respective seats. Replacing them,    The Board also discussed special disclosures
first chairman of the Board. During his         respectively, are Dr. Linda Blessing and        for social insurance. Also, the Board agreed
tenure, Mr. Staats guided the Board in the      Don Chapin.                                     that the social insurance "money's worth"
development of the "due process"                                                                estimates that were proposed disclosures in
procedures of the Board, helping ensure that    Executive Director Change                       the stewardship exposure draft are simplistic
the accounting concepts and standards               Ron Young retired as Executive Director     and should be dropped. Other points of
proposed by the Board would be subject to       of the FASAB staff on September 30, 1996.       agreement were that no additional liability
comment and input by all interested federal     Wendy Comes, who was named as the               (beyond "due and payable" amount) would
and non-federal financial managers. These       Wnendy Comes, whecor was namedofcaslth          be on the balance sheet, cashflow
procedures have helped garner support for       appointedrasthecpermanent xecutilvey            projections, use of a iability-type number
the new accounting and reporting principles     apone      stepraetEeuieand                          other statistics. It is expected that this
and standards developed by the Board, thus      Director.                                       will be a high priority project.
helping ensure a smoother transition to a
             unifed opproch
                      feera accuntng ad
unified approach to federal accounting and      Eposure Draft:Discussion and Analysis
                                                Management's                                    Accounting for the Cost of Capital
reporting.                                                                                          At the January meeting the Board
    Under Chairman Staats' guidance the             The Board has approved an exposure          discussed the comments received on the
Board developed, obtained principals'           draft of a proposed Statement of Federal        Accounting for the Cost of Capital by Federal
approval for, and issued two concepts           Financial Accounting Concepts, Management's     Entities. In total, comments were received
documents, a core set of accounting             Discussion andAnalysis. Concepts in the         from 40 respondents. About half of the
standards and principles, managerial cost       statement are based on existing guidance        comments were generally supportive of the
accounting concepts and standards, and a        from the SEC, AICPA, and other sources          cost of capital accounting. Most focused on
reporting model that puts more emphasis on      but have been tailored for the unique           the basic issue of whether accounting for the
the costs of federal operations and             circumstances of federal reporting entities.    cost of capital is feasible. During the
programs.                                       The draft statement suggests that a general     January meeting discussion, most Board
                                                purpose federal financial report should         members emphasized the potential
David Moss becomes new Chairman                 include management's discussion and             importance of the cost of capital
                                                analysis (MD&A) of the financial                information to the financial management of
    The principals of the FASAB have            statements. The discussion and analysis         the federal government, and expressed their
appointed David Mosso as the successor to       should summarize and explain the                desire to continue with the project.
Elmer Staats as Chairman, effective January     information in the financial statements that    However, because of the conflicting
1997. From 1985 to the present, Mr. Mosso       addresses the objectives of federal financial   responses, Board members felt the need to
worked for the Financial Accounting             reporting. The statement also points out        develop some pilot studies to develop facts
Standards Board (FASB), first as a Board        that MD&A should present a description of       to show what types of activities and for
member, then for two years as Vice              the entity and its programs, operating          what purposes cost of capital information
Chairman of the Board, and for the last         environment, and operations.                    could be used.
eight years as Assistant Director of Research       The exposure draft has been posted on
and Technical Activities, where he oversaw          The ere       dr    hasbe      page, or     Publi-t*     fftdrafn           i Io         i
the FASB major accounting projects which        anyone wishing to gain access to it.            concepts and standards
lead to statements of financial accounting      aone wsi            todan aces toat             c      s       t
standards.                                      Comments are requested no later than May            The Board has released FASAB Report
                                                18, 1997.                                       No. 1, Federal FinancialAccounting Concepts
Other Board Membership Changes                     . .                                          and Standards-An Overview. It summarizes
                                                Social insurance                                the concepts and standards that comprise
   Donald Chapin on September 30 left his           At the January meeting of the Board,        generally accepted accounting principles for
Board seat as the GAO representative, as he     members began a project on social               the federal government and also relates the
simultaneously retired from GAO. His seat       insurance. Currently, social insurance          significance ofeach concept and standard.
                                                programs are covered by Standard No. 1,                                       Continued on page 15.

                                                                                                                                                 13
JFMIP NEWS                                                                                                                              Wintcr 1997




      The Legislative Emphasis on Performance Management
ChiefFinancial Officers Act of 1990                initiate program performance reform with a      included in Public law 104-208, "Omnibus
                                                   series of pilot projects in setting program     Consolidated Appropriations Act," signed
    The CFO Act (findings and purposes             goals, measuring program performance            into law on September 30, 1996. With
section) states current financial reporting        against those goals, and reporting publicly     intent to "build upon and complement the
practices of the Federal Government do not         on their progress; improve Federal program      Chief Financial Officers Act of 1990 (Public
accurately disclose the current and probable       effectiveness and public accountability by      Law 101-576; 104 Stat. 2838), the
future cost of operating and investment            promoting a new focus on results, service       Government Performance and Results Act
decisions, including the future need for cash      quality, and customer satisfaction; help        of 1993 (Public Law 103-62; 107 Stat.
Or other resources, do not permit adequate         Federal managers improve service delivery,      285) and the Government Management
comparison of actual costs among executive         by requiring that they plan for meeting         Reform Act of 1994 (Public Law 103-356;
agencies, and do not provide the timely            program objectives and by providing them        108 Stat. 340)," the CFO Act agencies, this
information required for efficient                 with information about program results and      new Act imposes the requirement for the
management of programs.                            service quality; improve congressional          agency to:
    The CFO Act (authority and functions           decisionmaking by providing more objective        "an
of agency Chief Financial Officers section)        information on achieving statutory                 implaement andem mhaitai finncly
states an agency Chief Financial Officer shall     objectives, and on the relative effectiveness   musantagemenith
                                                                                                               systems th natncmply
develop and maintain an integrated agency          and efficiency of Federal programs and          sanatilywth        Fedueafnanial,
accounting, and financial management           spending; and improve internal                       mngmn ytm eurmns
system, including financial reporting
                         system,
                            reporting  and financial
                                  including
                                       and     management of the Federal Government.                applicable
                                                                                                   ~the UnitedFederal accounting standards,
                                                                                                               States Government   Standard and
internal controls, which provides for (i)          GPRA establishes requirements for                General Ledger at the transaction level."
complete, reliable, consistent, and timely     strategic plans, annual performance plans
information which is prepared on a uniform         and reports, managerial accountability and          Further, for CFO Act agency financial
basis and which is responsive to the financial     f                                               statements, this new law requires the auditor
information needs of agency management;            flexibility, pilot projects, and training,      to "report whether the agency financial
(ii) the development and reporting of cost         The GovennwntMana ement               o17nAtt   management systems comply" with the
information; (iii) the integration of accounting   of 1994                                         requirement. For noncompliance, the
and budgeting information; and (iv) the                                                            auditor prepares a report to which the
systematic measurement of performance.                 This Act states in part (financial          agency must respond with a remedial plan.
                                                   statements of agencies section) the head of     According to the Act, "A remediation plan
The Government Performance and Results             each executive agency subject to this           shall bring the agency's financial
Act of 1993                                        requirement shall prepare and submit to the     management systems into substantial
                                                   Director of the Office of Management and        compliance no later than 3 years..." or under
   The Government Performance and                  Budget an audited financial statement for       a time table arranged between the agency
Results Act (GPRA) states (findings and            the preceding fiscal year, covering all         and OMB.
purposes section) federal managers are             accounts and associated activities of each
            seriously~ ~
serously disadvantaged    ~ theirte
                             n ~effrt
                         inoiae
                            their     ~ toc
                                          to~~acout
                                      diandtae
                                  efforts      office, bureau, and activity of the agency.         Managerial CostAccounting Concepts and
effectiveness, because of insufficient             The Act states each audited financial           Standards (SFFAS No. 4)
articulation of program goals and                  statement of an executive agency under this        FASAB recommended and 0MB
 articulationofrogrmatn goas
                           p    rand               section shall reflect (in part) results of         aprv    recommended anting
inadequate information on program                  operations of those offices, bureaus, and       approved in July 1995 this accounting
performance; and congressional                     activities. The Act also requires               standard on managerial cost accounting.
policymaking, spending decisions and               actves.TeAt              alreqes                The standard addresses the requirement for
program oversight are seriously                    Section) an annual governmentwide financial     cost accounting, responsibility segments, ful
handicapped by insufficient attention to           statement beginning for FY 1997 that            cost, inter-entity costs, and costing
program performance and results.                   contains in part results of operations of the   methodology. JFMIP is currently
                                                         containsi part results ofoprationsofthe   developing an exposure draft on cost
    GPRA states (purposes section) the             executive branch.                               accounting system requirements, and the
purpose of the Act is to improve the                                                               CFO Council Cost Work Group is
confidence of the American people in the           Federal FinancialManagement                     proceeding with a study of the
capability of the Federal Government, by           ImprovementAct of 1996                          implementation of the cost accounting
systematically holding Federal agencies               The Federal Financial Management             standard.
accountable for achieving program results;          Improvement Act(FFMIA) of 1996 was

14
Winter 1997                                                                                                                      JFMIP NEWS




               Perspective on Government                                                        High-risk report
              Performance and Results Act                                                       series from GAO
 F   ranklin Raines, Director, Office of
     Management and Budget, addressed a
                                                 standards, improve account structures to
                                                 minimize reconciling, and transform work
                                                                                                    he General Accounting Office began in
                                                                                                      1990 a special effort to review and
 FGPRA Symposium held October 7-8,               from clerical to analytical and service.               9report on the federal program areas its
1996, and jointly sponsored by the Chief            The public must be shown that the           work identified as high risk because of
ResuceianOffPcrA  Cocleumeaon                    government can deliver services. Program       vulnerabilities to waste, fraud, abuse, and
Committees and the Joint Financial               managers are a focus for information. The      mismanagement. Following the 1990 focus,
Management Improvement Program. Mr               quality of information provided to them        GAO first in 1992 and subsequently in
Raines indicated that the utility of             depends on our implementation and use of       1995 reported on the status of efforts to
performance
performanes management
               machi ement   is that Sthartin
                          ofigas.    it          standards,
                                                 to all users,general ledgerrequisite
                                                               and systems   accountsfor
                                                                                      common    improve
                                                                                                GAO     hasthose areas.
                                                                                                            released     In February
                                                                                                                     its third series of1997,
                                                                                                                                         reports
promotes achievement of goals. Starting          financial and knowledge workers.               providing the current status of designated
out, agencies consider their missions; recent                                                   hg-ikaes
experience has demonstrated that agencies            Mr. Raines recalled what happened          high-risk areas.
lacking clear concepts of mission can get        when the Government Finance Officers               GAO's High Risk Series reports are
eliminated. In followup to flows of              Association (GFOA) began for state and         available in both ASCII text and PDF file
resources, they ask why resources are being      local governments its Certificate of           formats from Internet world wide web site
consumed. They seek timely, accurate, and        Achievement in Financial Management            http/wgog             T he rort numbe
usefujl financial information
              usefu  finacial and
                   nformtion       adequate
                                nd adquate       Reotn        rgrrzpopin
                                                 Reporting program,                 optto
                                                                        prompting competition   http://Wwww    gao.gov/ are:
                                                                                                and title designations    The report number
systems to process and report that               for such recognition and attaining a status
information. From unified systems,               where continued annual receipt became a        GAO/HR--97--1: Overview
everyone should have the same data;              standard for its recipients. Analogous to      GAO/HR--97--2: Quick Reference Guide
program managers should get at least             such practice, Mr. Raines indicated that
monthly financial reports.                       from the start of his being OMB Director,      GAO/HR--97--3: Defense Financial
                                                 he will insist that each and every budget      Management
    Now and in the future, government            review meeting he attends must deal with
agencies must do more with less. Agencies        management as well as budget issues. a         GAO/HR--97--4: Defense Contract
must measure the results of their programs,                                                     Management
and they must seek improvements. Where                                                          GAO/HR--97--5: Defense Inventory
Fannie Mae, for example, formerly used a                                                        Management
regional office structure to purchase housing    canuedfrpge 13.Ma
loans, a restructuring of the system to bring                                                   GAO/HR--97--6: Defense Weapon
the function in-house realized substantial       The Board intends the report to be a toot to   Systems Acquisition
benefits.                                        educate users of financial reports including   GAO/HR--97--7: Defense Infrastructure
    At OMB, Mr. Raines will use strategic        Congress, agency and program managers,
plans to supersede traditional budget            and citizens. It is posted on FinanceNet.      GAO/HR--97--8: IRS Management
submissions. The balanced budget by 2002                                                        GAO/HR--97--9: Information Management
foresees continued constrained resources.        Training on FASAB standards
Both appropriations and accountability will                                                     GAO/HR--97--10: Medicare
be performance-measure driven. A strategic           FASAB has completed its "core" set of      GAO1R--97--l1: Student Financial Aid
sense-knowledge of mission, objectives,          accounting standards that provides the
and where and how to use resources to get        basics of what is to be called Generally       GAO/HR--97--12: Department of Housing
results-will characterize successful             Accepted Accounting Principles for the         and Urban Development
management. Mr. Raines stated that               federal government. To meet the need for
OMB's Resource Management Offices will           training on these standards, staff members     GAO/HR--97--13: Department ofEnergy
help department and agencies focus on the        d
GPRA approach, strategic plans using             developed a 1-day and then a 2-day seminar     Contract Management
performance measures will be considered for      addressing the highlights of the concepts      GAO/HR--97--14: Superfund Program
Munding, and justifications must tie in to the   and standards. For further information, call   Management o
plans. The ideas are to work smarter, use        Dick Tingley, (202) 512-7361. o
                                                                                                                                            15
      JFMIP wishes to acknowledge
      and thank the following
      contributors to this issue:

      Thomas Diaforli          Customs


      WB. Erwin                Patent & Trademark                                                     *




      Charlie Glenn            Corps of Engineers
                                                                              This quarterly newsletter is
                                                                         published by the Joint
      Ken Goodman              SSA                                       Financial Management
                                                                         Improvement Program to
      Bena Klugel              Treasury/FMS                              promote sharing and
                                                                         dissemination of current
      Jamie McCullough         LOC                                       financial management
                                                                         information, activities, and
      Mike McFadden            DOL OIG                                   practices.

                                                                            Suggestions and article
      Gale Moore               IG Institute                              submissions may be sent to
                                                                         JFMIP News, or faxed to
      Paul Taylor              GSA                                       (202) 512-9593, telephone
                                                                         (202) 512-9201.
      Dick Tingley             FASAB                                  Publications Manager          Frank Kramer
                                                                      Publications Specialist:      Bruce WKletz

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Shaping FinancialManagement for the 21st Centuty
              The JFMIP 26th Annual Conference
              will be held on March 18, 1997, at the
                   Crystal Gateway Marriott Hotel