Core Competencies in Financial Management for Program Managers in the Federal Government

Published by the Government Accountability Office on 1997-04-01.

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

Core Competencies   in Financial   Management
       for Program Managers      in the
            Federal Government

                        A Joint Project of the
Human   Resources  Committee of the Chief Financial Officers       Council
                                and the
        Joint Financial Management      Improvement Program


                                                       April      1997

Joint Financial                  Manademen                 t Improvemen                   t Prodvam

T        he Joint Financial Management Improvement Program fJFMIP) is a joint cooperative undertaking of
         the Office of Management and Budget, the General Accounting Office, the Department of the
         Treasury, and the Office of Personnel Management, working in cooperation with each other and with
operating agencies to improve financial management practices throughout the government. The Program was
initiated in 1948 by the Secretary of the Treasury, the Director of the Bureau of the Budget, and the
Comptroller General, and was given statutory authorization in the Budget and Accounting Procedures Act of
1950. The Civil Service Commission, now the Office of Personnel Management, joined JFMIP in 1966.

The overall objective of JFMIP is to make improvements that contribute significantly to the effective and
efficient operations of governmental programs. Activities aimed at achieving this objective include:

       . Developing general objectives in those areas of common interest to the central agencies for guiding
the improvement of financial management across government and promoting strategies for achieving those

     . Reviewing and coordinating central agencies’ activities and policy promulgations    affecting financial
management to avoid possible conflict, inconsistency, duplication, and confusion.

     . Undertaking projects and special reviews of significant problems and new technologies      in financial
management and publishing the findings and conclusions.

      . Acting as a catalyst and clearinghouse for sharing and disseminating financial management
information about good financial management techniques and technologies.

       . Reviewing the financial management efforts of the operating agencies and serving as a catalyst for
further improvements.

The JFMIP plays a key role in mobilizing resources and coordinating cooperative efforts in the improvement
of financial management practices, and relies on the active participation of federal agencies to be successful.
The Joint Program is guided by a Steering Committee consisting of key policy officials from each of the central
agencies. A key official from a program agency also serves on the Steering Committee. A small staff headed
by an Executive Director provides support to the Committee.
        Core Competencies in Financial Management for Program Managers in the
Federal Government is the second document in a series of core competencies publications
 developed jointly by the Human Resources Committee of the Chief Financial Officers
(CFO) Council and the Joint Financial Management Improvement Program (JFMlP.)
While the first document, Framework for Core Competenciesfor Financial Management
Personnel in the Federal Government, dealt primarily with employees in the financial
management profession, this document is exclusively devoted to those in program
management,positions. It is intended to serve as a general guideline to assist program
managers in their understanding of financial management policies, procedures, regulations
and the areasin which they need to develop specific skills to improve the management of
their programs.

         This document is based on the premise that all federal program managers,
regardless of their subject area, have a consistent series of responsibilities, including
financial management. Each agency will need to define the “program” managers for
whom this document is intended. Generally, this will depend on the program manager’s
level of responsibility for management of government resources where competency in
financial management is necessary. Additional factors such as the scope of program
responsibility, the range or span of management control and the size or type of the
program unit or organization may also influence this determination.

         The Congress legislated a new approach to financing the programs and activities of
the federal government when President Clinton signed into law the Government
Performance and Results Act (GPRA) of 1993. From 1993 to 1996?agencies have been
preparing for the full implementation of the GPRA, culminating with presentation to the
Congress, for the first time in. history, strategic plans covering all major programs and
activities of the agencies for the next five years in conjunction with the FY 1999
Congressional budget request. Specific performance measures for each program must
accompany the budget request. These measures will be the basis on which funding
decisions will be made with emphasis on holding federal program managers accountable
for achieving the results defined in the program output/outcome goals and objectives
contained in the budget request. A specific program evaluation process will determine
successor failure.

         Mere execution of the budget will no longer suffice as one of the criteria for
 successful program implementation. Federal spending will be linked to specific results
 described in plans. EvaluatioIf will be based on program results which may include
numerous measures of performance in financial terms. Therefore, it is essential for all
program- - managers to understand not only the basics of budgeting but other areas of
financial management such as cost accounting, so that soundjudgments can be made on
the allocation and management of scarce resources.


    Foreword ................................................................................ .... i      1
    Introduction ...............................................*................................1        I
    Core Competencies for Program Managers:

             Planning .. ......................................................................... 3

             Budgeting ....*..*.................................................................

             Execution ....................... .................................................. 5

             Evaluation ............ ............................ . .. ............................ . 6

    Training Resources..................................... . . . .............. ............ ...7

    Appendix:          Contributors to the Core Competencies
                       Project .................................*...................................8

         Previous efforts of the JFMIP and the CFO Council have focused primarily on
 establishing the core competencies for financial management personnel., The process I
 began in 1994 following a symposium on government-tide traimng for financial
 personnel.. Initial work resulted in the publication of Frameworkjor Core Competen@es
for Financial Management Personnel in the Federal Government in November 1993.
 During this process it became clear to the CFO Council that there was also a needto
 identify areas of competence for program managers, especially in view of the responsibility
 imposed on federal program managers to embrace the ,requirements of the GPRA.
 Financial and program managers need to be able to communicate with one another in
 order to accompiish the strategic plans required by the GPRA. Indeed, it is,absolutely
 imperative since evaluation of successor failure will be based on objective, quantifiable,
 performance measures described in terms of the cost of achieving specific outputs and
 outcomes for which resources were appropriated by Congress. As a result, the council
 began work to identify and present recommended guidance for the program management
 community in the summer of 1996. Core Competencies in Financial Management for
Program Managers in the Federal Government is the result of these efforts.

Purpose of this Document

        This document is intended to be used as a reference tool and guide for program
managers (no matter where their organizational placement may be or the size or scope of
their mission). Effective financial management of resources is a responsibility of program
managers at all levels in any organization. On a day to day basis, the program manager,
not the financial manager, is responsible for actions influencing the financial management
of resources appropriated by the Congress. As the federal government proceeds to fully
implement the changes mandated by the GPRA, performance based planning and
budgeting will be the norm. The program manager will be leading the effort with the
financial management staff providing financial and program data in a supporting role.
Thus, program managers will need to clearly articulate their information needsto financial
and information management staBso that the appropriate systems can be designed to
capture and report program management information that is useful.


         This document presents the core competencies in financial management for
program managers in the order of the steps of the management cycle--planning, budgeting,
execution and evaluation. Also included are specific developmental activities and desired
skills for each core competency. Much of this experience and knowledge can be obtained
on the job, however, classroom training may be essential to gain specific knowledge, skills
and abilities. Successful program managers will most likely achieve financial management
competence through,a combination of classroom instruction, practical applications and on
the job experience relying on financial management personnel in their agencies for.expert
guidance, counsel and financial information.

Cdnkhsions   and Recommenda$ons

        The CFO Council expects that, with the full implementation of the GPRA,
Congress will fundamentally change the way it provides resources to federal government
programs and activities. The traditional annual appropriation process will be changed
dramatically, getting away from an annual “checkbook” mentality to one based on
objective program accomplishments described in strategic plans submitted by federal
program administrators and managers. With Congress, the Office of Management and
Budget (OMB), the CFO Council, JFMIP, the-General Accounting Office (GAO) and
other management organizations committed to this change, it will succeed. Program
managers should be prepared for this challenge and increase their knowledge of financial
management and its place in the program management cycle. We encourage program
managers to use this guide to prepare for performance planning and budgeting.

Core Competencies for Program Managers
        Every phase of the traditional management cycle--planning, budgeting, execution
and evaluation--contains financial mformation that helps managers set direction, determine
necessaryresources, monitor actual experience and define success or failure. Thus, the
followingcompetencies deal not only with financial management, but also with the skills,
knowledge and abilities in management that are essential for success. To divorce financial
skills and discipline from general management responsibilities of program managers would
be to diminish its importance, and leads to anunrealistically narrow definition of the
responsibilities most program managers are actually called upon to perform.

        The following core competencies are presented within the context of the
management cycle. Within each core competency, specific skills are described that, if
acquired, will enable the program manager to become more effective. The financial
management staff of the organization should support the program manager with more
detailed knowledge and information as necessaryin each stage of the management
Core Competency:      Experience in the development of program and resource plans
                      and budgets (including program performance measures) which
                      reflect a general knowledge of strategic planning and detailed
                      knowledge of the strategic planning process required by the
                      Government Performance and Results Act.

        Planning is the most important step in the management process but also the step
most often left out. The GPRA is designed to change this practice by requiring each
agency to develop a mission statement, goals and objectives that ,setthe vision and
strategic direction for the agency together with the budget ,requestfor the budget year.
Specific performance measures must be included with the plans so that decisions on
resource levels will be tied to performance plans and agency program managers can be
held accountable for fulfilling them. The program manager should acquire the following
skills and abilities to facilitate the strategic planning process.

Developmental Goals:
       l Gain a clear understanding of the requirements of the GPRA and its
         application within your agency.

        l   Develop the capacity to analyze the political and economic environment
            in which. agency programs will operate in order to set the stage for,
            effective.phuu&tg and be flexible-and ablqto react quickly to changes @I
            the planning environment.                ,’ “1.. ..” ‘.
                   ..’I .’ ‘:             _,. :I                    1 ‘,,       ‘, ‘_
        l   Learuto manage the planning process by understanding .th.esteps
            involved in developing strategic.-vperformance and resourceplans.

        l   Gain an understanding of reengineering and operational alternative
            methods of providing programs and. services .such as the use of
            outsourcing, franchising, enterprise funding and working capital fund
            operations to .become more innovative and effective.

        l   Gain experience developing objective program performance measures
            that describe success in terms of specific outcomes and outputs. To meet
            this goal, a thorough understanding of cost accounting and/or cost
            distribution principles may be necessary where performance measures
            include cost data.

Core Competency:       Proficiency in the development, presentation, justification     and
                       execution of program budgets based on a thorough
                       understanding of the Federal budget process.

         The Congressional budget process is lengthy, time consuming and can be
 extremely complex. Yet, agencies’ operations and existence depend on it. Program
 managers must understand the budget context within which theirprograms operate in
 order to ensure that resources match (to the.best of their”aliility)program reiuirements.
Understanding the lexicon of financial terms associatedwith appropriation law and
 execution of the budget will enable the program manager to identity tinding pitfalls to be
 avoided and opportunities for additional resources that might otherwise go unnoticed.
Program managers must also become experts in knowing their internal budgeting
 processeswithin their organizations to ensure that program budgets clearly present and
just@ the resources necessaryto accomplish the mission, goals and objectives contained
in the program plans (both strategic and operational).



    Developmental Goals:

           l   Seek training on the impact of appropriation law on program financing.

           l   Be able to identify the limits of flexibility under the existing appropriation
               levels for possible reprogramming opportunities that may be available to
               improve program operations and meet desired goals and objectives.

           l   Develop an understanding of the concepts and terminology associated
               with the.federal appropriation process such.as terms like auth’orizations,
               apportionments, allotments, commitments, obligations; -liquidations, etc.
                                  .-           1
           l   Gain expertisein reading and understanding financial reports produced
               by agency financial management systems to identify and analyze financial
               implications of operational issues that may affect the well being of
               programs.                                         ,‘_

           l   Establish an interactive working relationship with key agency budget
               offtcers and finance directors.              :i

                                                             ; -.
    Core Competency:        Ability to protect against fraud or’mismanagement of
                            government resources by applying a knowledge of the agency’s
                             system and policy for administrative control of funds,
                             contracting and procurement procedures, and skill in
                            exercising program management
                                                      .’ ,      controls.
            After the plans have been approved and budget levels established, the execution of
    the financial plan or budget becomes the next challenge for the program manager.
    Compliance with appropriation law is essential but execution goes beyond the basic
    authorities. Program managers need to understand the rules and regulations regarding
    procurement of goods and services in order to properly account for and manage those
    resources. Central to etiective program management is a system of’management controls
    to safeguard government resources
                                   ,     from waste or abuse. Many management controls are
    financial in nature and the program manager should understand the basis for them. For
    example, a manager of a motor pool needs to know the basic cost standards for operation
    and maintenance of vehicles in order to determine whether vehicles are achieving
    efficiency standards (such as average miles per gallon of gasoline). Also, the program
    manager must operate within the Federal Acquisition Regulations governing procurement
    and contracting.

Developmental Goals:

           l Gain specific knowledge ofinternal agency administrative control of
             funds activities such as spending allotments and allowances for agency
           0 Be able to review and understand the flow and purpose of internal
             agency documents such as allotments, obligations, payments, accounts
             receivable, refunds, etc., and related documentation including vouchers,
             invoices, receiving reports and cost reports for reasonableness,,
             appropriateness and accuracy.

           l   Obtain an understanding of legislation that impacts on program and
               financial management such as the Chief Financial Officers Act,
               Government Performance and Results Act, Federal Financial
               Management Improvement Act, Anti-Deficiency Act, Federal Managers
               Financial Integrity Act, Debt Collection Act, Cash Management
               Improvement Act, Merged Year Account legislation, Government
               Management Reform Act and any program specific legislation.

       l       Understand the basic principles of cost accounting and the concepts of
               accrued expenditures, direct and indirect costs, and overhead allocation
               within the context of managing towards accomplishment of performance

       l       Obtain an understanding of agency accounting systems and gain the
               ability to review transactions and recommend adjustments as necessary
               to program and/or financial management systems.


Core Competency:         Ability to manage an evaluation process that quantifies and
                         qualifies program performance against performance standards
                         and objectives contained in strategic and operational plans.

        Program managers must be accountable for program results It is good basic
management, and the GPRA demands it. If the other steps of the management process are
followed and the program manager has gained competence in financial management, then
evaluation of program accomplishment should be easily achieved. However, it is
extremely important that in the beginning of the management process, well developed
performance measures be identified so that success(or failure) is clearly defined.

Developmental Goals:

       l   Analyze agency programs in terms of whether they are meeting the
           objectives and goals for which they were established.

       l   Identify financial management system needs for better technology and
           support for program operations.

       l   Understand the importance and implications of program audits and
           evaluations conducted by internal agency management, GAO or
           Inspectors General and take action to correct program deficiencies
           through problem resolution.

       l   Identify methods and techniques to determine customer satisfaction and
           to benchmark the delivery of goods and services to improve customer
           service and agency responsiveness.

Training Resources
         For all of the competencies described in this document there are numerous courses
available within each agency, from established educational institutions, and from the many
vendors in the business of professional education. Classroom instruction is very important
in order to. gain the essential principles and policies of various financial management
processes and techniques. However, this knowledge must be reinforced with practical
applications in order for program managers to truly appreciate the benefits of competence
in the financial management of their programs. Program managers will also benefit from
management training in leadership, quality management, team management and oral and
written communications. These shills will fatiilitate the application of financial
management principles to program operations.

        An excellent resource for program managersto find the types of training to meet
their specific needs is through the Internet. The Financenet address --
www.financenet.gov -- provides accessto the web pages that contain many of the course
catalogs and training materials from both private and public sector organizations in the
education and training business.


Contributors   to the Core Comjetencies in Financial
Management for Program Managers in the Federal
Government                             2

                                                  : .

     Project Direction

           Edrnundo~Gonzales, Chairman, Human kesources Committee of
           the Chief Financial Officers Council

           Virginia Robinson, Executive Director, Joint Financial
           Management Improvement Program                      1

     Project T-earn

           John Sander, Department of State, Chair

           Steve Leeds, Department of Commerce

          Deborah Mahdi; Nuclear Regulatory Commission

          Len Bechtel, Environmental Protection Agency

                         Requests for Publications

       The JFMIP uses the General Accouting Office’s Document Distribution Center to
fulfill publication requests which are made after mail list distribution.

    The first copy of each publication requested is free. Additional copies are $2 each.
Orders for 100 or more copies to be mailed to a single address are discounted 25 percent.
Orders should be sent to the following address, accompanied by a check or money order
made out to the Superintendent of Documents, when necessary.

    Orders by mail:

                      U.S. General Accounting Office/ JFMIP
                      P.O. Box 6015
                      Gaithersburi, MD 20884-6015

    or visit:
                      Room 1100
                      700 4th Street NW (corner of 4th and G Streets NW)
                      U.S. General Accounting Office
                      Washington, DC

    Orders may also be placed by calling (202) 512-6000
    or by using fax number 258-4066, or TDD (301) 413-0006.
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