oversight

JFMIP News: A Newsletter for Government Financial Managers, Fall 1999, Vol. 11, No. 3

Published by the Government Accountability Office on 1999-09-01.

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

J     o     i        n   t         Financial                                M    a n a g e m e   n   t    Improvement                                    Program




A Newsletter                 for   Government       Financial        Managers                                                              Fall   1999       Vol.   1 1.     0.3.




                                                                                                                                to the Gover~ent     Pe~ormanc~ an
A Joint Perspective                                                                                                             Act of 1993, Paperwork Reductio
      2
                                                                                                                                1995, and Information
CFO Council Update                                                                                                             :ment Reform Act of
      3                                                        n October 19th, the American Institute of         Information Technology Resources Bo
                                                               Certified Public Accountants’ (AICPA)             was formalize                  by Executive Order
Revised OMl3 Circular A-I 10                                   Council                                                                          this Executive Order
      4                                                        designated the                                    were to:

Updated Core Competencies                                          Accounting
      4                                           Standards Advisory Board
                                                            ) asthe accounting
CFO       Fellaws        Class                    st~ld~ds-s~~iilg body for                                             Improve the m~agement and use            within
      4                                           Federal         government                                            and among agencies by identi~ing         haring
                                                  entities under Rule 203 of                                            experiences, ideas, and promising practices
Financial Manqement                     Profile   the AICPA’s Code of
  Bert Edwards                                                                                                        Provide innovative, m~ti-~sciplina~,
                                                  Professional Conduct.
     5                                                                                                                project-specific support to agencies to enhance
                                                  Rule 203 provides, in part,                                         interoperability, minimize unnecessary
FACTS           II                                that an AICPA member               David Mono,                      duplication of effort, and capitalize on agency
                                                  shal1 not (1) express an         FASAB Chairwzan
   6                                                                                                                  successes.
                                                  opihn         or state affirmatively                               In concert with these goals, the ITRB has two
Sta#~iimpetitive                    through       that the f-mancialstatements                                   primary objectives. The Board conducts con~dential
                                                  or other financial data of any entity are presented in         assessments of mission critical information system
      10
                                                                 with generally accepted accounting              projects at the request of client agencies. Also, based
FFMC                                                                 P) or (2) state that he or she is not       upon the Board members’ own experience and insights
   11                                                                aterial modifications that should be        gleaned from the thirteen assessmentsconducted
                                                  made to such statements or data in order for them to be        1993, the ITRB shares information across all lev
New CFO Council Members                           in conformity with GA/Xl?, if such statements or data          government in the form of publicly available g
      12                                          contain any departure from an accounting principle
                                                  promulgated by bodies designated by the Council to
Small Agency Council
  12                                              establish such principles, that has a material effect on
                                                  the state    Its or data taken as a whole.
Fimancial System Compliance                           The      CPA Council designated the Financial
    Guide
                                                  Accounting      Standards Board (FASB) as the                         The Diminishing Pool of Skilled Information
      12
                                                  standards-setter for the private sector in 1973 and the               Technology Executives: IT Brain Drain
FASAB           Update                            Governmental Acc[~untiilg Standards Board (GASB)
                                                                                                                           laging Informati~)~ Systems: A Practical
      13                                          as the standards-sever for states and locai governments
                                                                                                                            ssment Tool
                                                           6. These are authoritative standard-setting
GAO Revised htemal                      Control   bodies under Rule 203. Until the AICPA action, the                  Assessing the Kisks of-
 Standards                                                                                                            Commercial         -The-Shelf    ms
                                                  Federal Governnl~Ilt did not have a Rule 203
      14                                                                                                             Board memb          are execut’   experienc
                                                  designated accountin standards-setter. -With this
                                                  designation, Federal        vernment reporting entities        practitioners from Federal agencies   ring diver
                                                  will be able to obtain      it opinions that indicate that     program, technical, and acquisition rnaI~agem~~r
                                                  the financial statements are presented in conformity           expertise to developing and managing major
                                                                                                                 informatic       terns.
                                                  with G        rather than an “other corn~relleIlsive basis
                                                                                                                     The I         developed its most           ide,
                                                                                                                   sscssing       Risks of Commercial-          hclf
                                                                                                                 Applications, to assist      Federal             in
                                                                                                                                                              Cmtirwed     on &mgc 6.
      II recognition         of the major milestones         strategies-       issuing comprehensive             functional       evaluate        whether        financial     systems
      achieved     in FY 1999 and the major                  requirements,          providing        critical      tools to       substantialiy    comply with re~Ltir~menrs,       The
      ch&ng~S           that      face   the     Federal     faciiitate industry partnerships,               und improve          Financial     Systtm Co?nplinnce RaGm          G&de,
      c~I~~~i~           in FY 2000,         this Joint      the       chances         for      sr1ccessfl11         systems                       ored CT0 Council,       the PC
Perspective         ’      is                                d~pl~~yrn~nt.                                                                         II’ offers a tool to agencies,
devoted entirely          to                                       PY      1999       marks       major        strides       in                                     and the     vendor
Federal        financial                                     d~v~l~~Ill~~t         of JFMIP           fina‘ncial      system      community         to help establish       consistent
systems issues. The                                          r~quir~rneIlt      documents.          These serve many              expectations and methods to conduct financial
                          of                                 roles. They provide benchmarks                    for agency         InaIla~ern~nt    system compliance reviews. This
          ment        and                                    compliance under FF IA and have served as a                          document is in exposure draft until December
             and      the                                    too1 for oversight agencies to evaluate systems.                     20, 1999. I r~c~)rnlneiid the article on
Chief         Financial                                     They are used to help justify agency system                           to your attention.
                                                             irnpr(~v~nl~Ilts      or replacements.             They help
                                                             organize        the private          sector market             by
                                                             C~rnrnuIlicati~~        rnan~iat~~       ~Il~ti~nali~       that
                                                            commercial         software must be able to provide                                             ncil     and the        JF
Report            and       Fxecutive L>i&ctw, jFMIP                                                                              partnered    to reengineer       the Gore Fina
                                                             to Federal agencies, as well as id~Iitifyin~
Five-Year          Ian                                      value-added          features      desired        by Federal          Systems        testing         qualificarion          ad

articulates       the                                        agencies.                                                            procurement-      processes       to address         long
g~v~rnrnc~l~id~        priority       “Co      establish                                                                                          iencies in the previously existing
                                                                                        II? updated four financial
financial management      systems throughout          the                                                                                         ctober     1, 1999 marked              the
                                                            system         requirements            documents:           Core
Federal ~~v~rnrn~nt        to support       fiscal and                                                                                               old process to new process. It
                                                            F~~~~ci~L System, Human Resources 0 I”ayrall
~r~~r~~~rnati~  accountability       by:                                                                                          was accomplished        on time and on
                                                            Systems Requirements,               Direct Loan System
                                                                                                                                  Success reflects hard work and sup
  1) Providing  a financial management                      Requirements, and Travel System Requirements.
                                                                                                                                  many business partners including              the
     systems environment    in which financial              The Seized Property & Fofeited Assets System
                                                                                                                                  Steermg Committee,         CFO Council i
     systems can be successfXly planned,                    Requirements comments have been evaluated
                                                                                                                                  and Sky I,esher, Chairman                of the CF
     developed, operated, and mailltaiI~ed.                 and a final documenr              is being prepared for
                                                                                                                                  Council Financial Systems Committe
                                                            issuance. This fall, three additional                 exposure
   ,)                    gover      ent systems                                                                                   GAO, the Logistics
                                                            drafts are being issued.                      These include
                        s that      port inf.~rmati~~n                                                                            the General Services           dministrarion-hc~t~
                                                            ~~ay~~~t~ed tom System Requirements,                       Chant
        standards.                                                                                                                the Federai Technology         Service staff and the
                                                                                           irements and, subject to
                                                                                                                                  Federal Supply       Service staff,         the Fedcra
   1          roving r-he a~lailabiiity   of systems                                        P Steering Committee,                 agencies, and the vendors.
        that meet ~~verilrnc~l~i~~~        systems                                    equzremmts. ~~rnI~~eIlts are
        req~ir~l~~n~s.”                                                         ecember.        Each of these e%rts
                                                            reflects l~~ld~rship coming from stakcholder
                                                                encies-        Small Business ~dx~illisrrarioI1,
 Fall   1999                                                                                                                                JFMIl’   NEWS




                                                                     By Sallyame Hurper,
                                                                   Vice Chair, CEO Council

           he Chief Financial                                                                              Management Improvement Act (FFMIA). In
                   Council) is p&d to support                                                              this regard, CFO Cotmcil and PCIE are
                            cooperation, idea           government’s         financial     management      collaborating on a methodology for reviewing
           sharing, and management reform.              personnel bring the best skills to their jobs,     agencies’ financial management systems
Working        tqcther                                  have the right tools at hand, do their jobs to     which, under FFMIA, must comply with
                                                        the public’s satisfaction, and make that vital     federal financial systems requirements,
                                                        connection between their work and their            applicable federal accounting standards, and
                                                        agencies’ missions. For example, our Human         the US Government Standard General
                                                        Resources Committee has made significant           Ledger.
                                                        progress improving          opportunities    for
                                                        professional development. We are working              coun~b~l~~   to the Public
                                                        with the Federal Learning Exe                          The best-run private corporations can
                                                        establish a Federal Finance                        point to healthy balance sheets and robust
                                                        assembling the most co                             returns on investment to demonstrate their
                                                        database possible of learning opportunities        management capabilities to shareholders.
                                                        for federal financial personnel. Special efforts   With a body of “investors” encompassing the
iIlformation                                            have been made to link course offerings            entire U.S. citizenry, government has a bigger
concerning        good                                  Core Competencies published by JF                  and even more important job to do. The
financial   management      rechniques and              This will streamline users’ searchesfor courses    CFO Council serves as a support network for
practices, we think the CFO Council has                 most pertinent to their career development         each CFO agency working to earn a “clean,”
much to contribute.                                     needs. To help define those needs, the             or unqualified, audit opinion on its annual
                                                        committee has also published an executive          financial statements. It is also a key partner in
          Council efforts begin with assuring
                                                        toolkit-available     at Financenet-to      help   the ongoing development of a set of
           ncc: with statutes such as GPKA,
                                                        supervisors and their employees tailor             governmentwide financial statements that
            FFMIA, and the CFO Act itself, but
                                                        individual professional development plans          merit the same “clean” audit opinions. We
the group’s outlook is much wider and more
                                                        (IDPs) to the needs ofthe organization aswell      appreciate the support of JFMIP in
proactive.
                                                        as their own career interests.                     disseminating information        on the latest
                                                                                                           developments in government accounting and
          are~y in           unica tions
     The CFO Council and ~F~IP maintain a                rmtin~   Sys               Tit                    auditing. The CFO Council recognizes that
                                                            Early on, the CFO Council recognized a         one of the best ways to inspire public
high profile at the Financenet wcbsite, which is
                                                        need ro modernize the government’s                 confidence in the way that government
the intemet’s      center for information       about
                                                        Il~anageIncnt of financial data, assuring          manages the public’s business is to generate a
public financial     tna~a~ei~ent    issues-whether
                                                        consistency and compliance with professional       financial picture that professional auditors can
concerning      U.S. state ~ove~ments,        Federal
                                                        standards, and expanding the government’s          endorse without reservation, and JFMIP
agencies,      or international     govemments.
                                                        ability to report clearly on its use of public     helps assure that financial managers have the
Financenet’s       wealth    of information       and
                                                        funds to achieve results that                      information they need.
worldwide      set of links is designed to keep
                                                        American citizens. The
communications            among      policy-makers,
financial    managers, and taxpayers open and                                                              Into the ture
transparent. Through Financenet, government                                                                    The CFO Council’s track record is a solid
                                                        (CIOs) has been critical to successin this area.   one, and there is every indication that this
employees,      educators,   and citizens of any
                                                           e rely also on the wo                           group will continue as a recognized leader and
country can have access to information          about
                                                           anagement Office                                a valuable partner-with      OMB, Treasury,
critical issues in public finance and how
                                                        testing, and maintaini                             JFMIP, the PCIE, and the CIO Council-in
government organizations are addressing those
                                                        sofnvare requirements. PM0 support for the         charting a course for the future of financial
issueson a global basis. Newsgoups provide a
                                                        CFO Council’s financial systems strategy is        management in government. We’re looking
forum for open discussion, and one Financenet
                                                        essential to . cessin rhis area.                   forward to working with you well into the
area that is growing rapidly is the International
GovNews Project. This section of the site is                The GF         Council has established an      f&me.   0.

devoted to over 200 discussion groups, arranged         equally important partnership with the
by topic, open to international government              Inspectors General, who comprise rhe
personnel and taxpayers everywhere.                     members of the President’s Council on
CJovNews forums provide easy public accessto            Integrity and Efliciency (I’CIE).     The two
a wide range ofgovernmcnt information, as well          organizations are working together in several
as a useful channel for policy makers seeking           areas, including support for agencies’
public feedback.                                        compliance with the Federal Financial
                                                                                          esources     ~oll~rni~~ee
                 r public access to data from                                             U.S. Chief Financial
~~dcr~ly-~ded            research,       which      were                                ) Council and the                               he   U.S.    Chief        Ikmcial            fiicers
published    in the Federai Register on October                                      anagemcnt In~~r(~ve~ll~ilt
8, 1999.          These       requirements,        which                          ) have recently updated the                                                           !&liows.       The
constitute     a revision       to Circular      A-110,        core      competencies         documents           for
Uniform     Administrative         Requirements        for     accountants, for financial managers, and for                 established      to identify     and develc
Grants and Agreements            with Insti~tio~ls      of     budget analysts. The tities and document
EIigher    Education,          ospitals, and         ther      numbers ofthe publications      are lisred below.            financial    ll~a~age~~~e~lt positions. Each Fellow
Non-Profit     Organizations,      were mandated by                 Recognizing the accelerating rate of change                                     II challenging       de
the FY 1999 Omnibus Appro~riati~~ns                Act.        in Federal financial rnanag~ln~~t               a                                  ental
     The      new       requirements        apply     when              as cstah~is~e~ lasi year to ensure                                      ent from their own.                 C
federally-ended           research is cited by Federal                  mpetencies documents              are current.      FelIows receive formal                mining       from
agencies as the basis for regulations              or other       ree work groups            reviewed         the initial   Federal Executive            Insrirtrte    and die
actions that have legal effect. In these cases,                     ument in the series, Framework few Core                        artmcnt ofAgr~cL]It~~~e
interested parties can request the underlying                  C0mpetencie.s     for      Finanriill            nagemen t           I~rogmm is designed
data by making a request under the provisions                  Personnel in the Federal Government, that was                Fellows         op     tuniries        t0    af3rl-n    their
of the Freedom o                  rmation Act.        n the    published in November 1995.               ~ompet~neies
                                                                                                                            lea~iers~i~~           ential       by     ~e~~~)nst~atill~
public      notice,                  stated     tha      the   for accountantst budget analysts, and financial
                                                                                                                            initiative,      cr   ivity. ada~rabili~,            and the
procedures         were           ed to balance          the   managers were addressed in this fra~new~rk
                                                                                                                            ability to lead as well as to work effectively on
public’s     right to access with the need to                  document.
                                                                                                                            teams.
preserve       the independence            of traditional           The core competency              d~)cL~Illents were
scientific research. Safeguards were added to                  revised ro reflect changes in Federal financial                   The participants       of this year’s CF
protect     the confidentiality         and privacy of         management        legislation         and regulations,       Fellows    and        their    assignments   are
research participants,          as well as to protect          standards issued by the Federal Accounting                   summarized    below.
commercial           trade      secrets,     confidential      Standards Advisory Board, and changes in the                      IAm   chtel is from the ~r~~~irol~~lental
business information           and similar intellectual        workplace at large. For ftuther infor                        Protecti   Agency (EPA) and is wor
property.                                                      please contacr the co-chairs of the                          the Department     of Transpo~~ri~)~       (
     The new requirements             were issued after        Board-Doris           Chew,                                  Len is currently          work
OMB sought public comment earlier this year                    219-0528 or John Sander, S                                     l&berg,    Deputy       CF
on two separate p posals. Those proposals
generated over 12             0 comments, with some
strongly in favor of expanded public access,                        Core Competencies j~~cco~ntants             in the
and orhers more concerned                about potential            Federal Government (JFMIP-ET-99-R);                        ariner medals a
damage to scientific             research.      The new
                                                                     Coye   Compettnczesfor Ei‘nancinl                         e also works on              a~rn~nt-wide     financial
requirements        incorporate      changes suggested
                                                                    Managers in the Federal Government                      rnaIlagern~~t  policies,        drafting proposed new
in those comments.                 Agencies     will now
                                                                    (JFMIP-ET-99-I   1); and                                policies for unclaimed          assets and unliq
incorporate       the new requirements          into their
procedures       for administering         Federal grant             Core ~o~petenc~esf~
                                                                                                                                                           uman     Resonrccs
programs.         For more information              on this
revision, please contact Gilbert Tran, (202)                                                                                Committee               ard      the   ~overill~e~lt
3953052.        a                                              electronically       on                                      Performance           and Kcs~dts    Act    (GP
                                                               website: ww~~.~i~l~~nce                                      ~~~~l~~~le:l~~ti~I~ Committee.
                                                               JFMIP uses the General           Accounting                        I’atricia Clark, from the L)c
                                                                  ocument      ~~strjbu~~on     Center     to fulfill       Labor, is at the Joint F
                                                               publication    requests.     Please contact GAO at           IIllpr[)vernent      Program      (J
                                                               (202) 5124000,        fax (202) 512-6061 or TDD              d~~relo~Illenta~        assignme
                                                               (202) 512-2537. D                                            commercial         off-the-she1
                                                                                                                            ~n~~~~age~~~e~~tsystem sofrware to qualify the
                                                                                                                            software        for Federal agency use. She is
                                                                                                                                                                    corztirrzLed   m pqp   7.
                                                                                          District of Columbia              and several other states. We has received the
                                                         r the Bureau   of Financial      Andrew Barr Lifetime Achievement                         Award from the Association                 of
                                                                                          Government           Accountants         (1993), the Lifetime Achievement                    Award
                                                                                                                      from the Government               Finance Officers Association
                                                                                                                      of the        etropolitan       Washington        Area (1993), the
                                                                                                                      Lifetime       Public Service Award from the Greater
                                                                                                                      Washington           Society of CPAs (1997),                   and the
                                      rvice nationals who work                                                        McKelvy Prize from Wesleyan University                         (1997).
at     overseas      posts.           r. Edwards’        Financial                                                         Mr. Edwards’            management           philosophy       is to
                                                 s overseas costs                                                     make the best use of available resources, but always
                                                                                                                      plan for change. The explosion of the Internet and
     gregating    $4 billion   annu                                                                                   e-commerce,          proliferation       of “paperless”        business
                                                                                                                      practices,       and particularly           the globalization           of
                                                                                                                      world      economy          will continue          to increase the
                                                                                                                      demand          for     instantaneous           information          and
                                                                                                                      exacerbate the competition                 for human resources.
                                                                                                                      To remain competitive,                managers must invest in
                                                                                                                      people.      “While we will have to cope with ‘less is
                                      istrict   of C~i~~~bia                                                          beautiful’, the skill base of remaining employees will
                                                                                                                      have to increase. The US government                    can no longer
            s was team leader on a                                                                                    be the employer              of lact resort, particularly-in
                                                                                         financial management and information                       technology.       A critical failing in
                                                                                         government          is to cut the training budget when resources are reduced.
                                                                                         A better strategy is to reduce employment                         and use f&nds to train the
                                                                                         rest.      The second issue is compensation.                           Even the smaller US
                                                                                         government          agencies are equivalent to ‘Fortune 500’ companies, and it
                                                                                         is simply         foolish       to expect financial               managers         to work         for
                                                                anager in 1966, and      ll(~Ilc~~mparable salaries.” Mr. Edwards strongly endorses attainment
                                                                Edwards co-led an        of professional           recognition       - CGFM, CPA, CIA, and others - to
                                                       la government   foll~~wing its    demonstrate             independently          established        skills and to improve
                                                      1s changed the thrust of his       marketability,          and strongly supports 40+ hours of training annually.
                                                                                        The Federal governnlent                 must upgrade educational                requirements       for
                                                                                        entry-level         linancial       personnel         and engage in multiple-agency
                                                                                         recruiting       to attract appropriate                young people into the Federal
                                                                                        government.
                                                                                                 lobalization,         coupled        with      the demand           for instantaneous
                                                                                        information,            drives standardization              in information           reporting       to
                                                                                        facilitate a common approach to communication                             and across-the-board
                            usiness School                                              comparisons            of agency operations              - nationally       and world wide -
                   lmgton       Society of                                              against agency objectives                   and results.          Concomitant           technology
                                                                                        i~lproveIne~lts           must come to process and provide that information
                                                                                        faster. Standardization               drives agencies to improve stewardship                      and
                                                                                        accountability          in their organizations.           But, standards development              and
                                                         een a member   o               rechnoiogical          improvements           materialize      on different timelines.            Mr.
                                                                                        Edwards sees that “new standard-setters                          have a tendency to expect
                                                                                        more change than can be timely and effectively implemented                               by entities
                                                                                        affected. This has occurred with FAST, GASB, and now with FASAB.
                                                                                        A standard which causes US government                           agencies to receive qualified
                                                                                        auditors’ reports -possibly              impacting the entire US government-does
                                                                                        not serve a useful purpose lfthe inability to compiy is due to complexity
                                                                                        and massive systems change.”                        Balancing       the cost of increasingly
TFMII’       S                                                                                                                                    Fall 1999




clarifying the myriad risks they will encounter        package, given current business needs and                   S applicatio~l package without suf%cient
when facing a commercial-ofl-the-shelf                 organizational conditions. Answers to each                  sisand prep~ratii~n encounter significant
 (COTS) implementation. This tool, which               question are provided by the choice a, b or c,       challenges which can be related to issueswith
shares guidelines and information gleaned              which correlate to three levels of risk: low,        the business processes used to build an
from case examples, is designed to promote             medium and high, respectively.                       application, technologies used to construct a
greater awareness and better informed                      If most of the responses are a’s, an             system,       and     organizational     change
decisions when considering a COTS solution.            organization has a low risk profile for              management. Careful consideration of these
Ultimately, this knowledge should lead to              impl~nlenting a COTS application                     issueswill help to minimize an organizati~n’s
more successful COTS implementations as                While an overall profile of low risk i               risk profile and curb future expenditures.
increasing numbers of Federal agencies turn            indicator, it is important to note that this does        An underlying message of the guide is
to these solutions.                                    not mean a “no-risk” profile. Every COTS             “Caveat emptor”.       The majority of COTS
    The guide contains questions organized             product      implementation     involves some        solutions require extensive customization to
around five broad categories: business                 degree of risk.                                      meet the needs and support the business
purpose,        organization,      technology,             If most of the responses are b’s, an             processes of the Federal environme~lt.
acquisition, and implementation.          Each         organization      has a moderate risk for            Federal agencies must make major bus
category represents a critical aspect inherent         implementing a COTS application product.             process reengineering changes to use C
to the successful implementation of a COTS             Respondents should carefully examine the             solutions as delivered.
application.    Each question prompts the              questions with medium risk (b) and high risk         provide only a partial solution and require an
respondent to consider those factors which             Cc) responses          t0    identify     specific   interface to an existing system. The interface
are key to a successful COTS application               vulnerabilities.                                     may be simple or difficult to implement, but
package implementation.           Respondents              If most of rhe responses are c’s, an             usually requires time, personnel, and fading
carefully consider each answer in terms of             organization has a high degree of risk for           to resolve subsequent problems.
how it pertains to projects within their own           implementing         a COTS           product.           This and the other
organization.                                          Respondents should review the questions to           downloaded from the
    Completing the questions and assessing             help their organization identify critical areas      www.itrb.fed.gov.      To
results will help respondents to better                that need to be reexamined, regardless               conract Avis Ryan at or 202-219-8370.        cl
understand the overall level of risk associared        COTS implementation            phase.
with implementing a COTS application                   organizations attempting to implement a
                                                   -




         he Federal Agencies’ Centralized              branch agency will use FACTS I                       those agencies chat do not submit all of
         Trial-Balance System (FACTS II) is a          least some of their year-end
         key part of a joint ORB-Treas~l~              Many other independent agencies, and even
         initiative  to eliminate duplicate            many Legislative Branch agencies will use
 year-end reporting and improve the quality of         FACTS II for FY 1999 reporting as well.
 budget data that agencies provide to OMB                  Some large agencies, like the State
 and Treasury. OMB and Treasury’s Financial            Department, have opted to grow into using
Management          Service  (FMS)       joinrly       FACTS II gradually. State ~epa~inent plans           sessionswill be avaiiable in FY
developed the system; FMS operates it.                 to increase the number of fund symbols each
    Agency FACTS II data will fulfill the              quarter from year-end FY I999 through
requirements of the FMS 2108 Year-End                  year-end 2000, with their year-end 2QOO                       LI are interested in wo
Closing Statement and the SF 133 Keport on             submission including all their fund symbols.                  II project on a detail
Budget Execution. FACTS II data also will be           Other agencies are using a similar approach.                      contact Chris Fair
used to produce much of the initial set of prior       The     Agriculture     Department’s     Rural       395-4836, e-mail c~is-f~rh~~omb.~op.gov;
year data in the Program and Financing                 Development Administration was the first             or Jeff      oge, (202) 874-6179, e-mail
Schedule published in the President’s Budget.          agency to successfi~llyproduce a bulk file that      je~~r~y.hoge~fms.sprint.con~.
    In its year-end reporting @dance, FMS              passed all FACIS II edits, submi~ing reports             For additional infor~nation, see the
asked agencies whether they plan to use                for approximately 50 fund symbols, in&ding           FACTS          II      Web               at
                                                                                                                                                Page
FACTS II starting with year-end 1999                   credit accounts.                                     ~vw~r.f~is.treas.gov/L~sgl/factsii. n
reporting, or whether they would submit data               OMB and FMS are closely monitoring
the “old way”.         Almost every cabinet            FACTS II compliance and will follow lip with
department and major independent executive
Fall   1999




working on the development of system               Human Services (HHS).        Steve’s primary       Agency-wide Planning System which has
testing tools, facilitating actions to improve     focus while at HCFA has been working to            been approved by the Administrator. She is
financial    management        processes, and      help resolve the proper valuation of HCFA’s        developing implementation plans and wrote
researching relevant financial management          accounts receivable balance. This issue is the     selected         administrative        accounting
issues. Pat is coordinating special meetings,                                                         procedures for proposed distribution to state
such as forums on the core financial system                                                           officials    administering      specific USDA
test, and developing articles for press releases                                                      programs. In addition, she is assisting the
and newsletters to communicate JFMIP                                                                  CFO Council HK Committee with planning
initiatives effectively.                                                                              for a Consolidated Recruitment approach
     Tracy Dahbura, from EPA is currently                                                             based on the Office of Personnel
working at the National Science Foundation                                                            Management’s        new competency          based
(NSF).                                                                                                profile.
     Tracy has selected projects during her                                                                Tyndall Traversa, from the National
fellowship that benefit the CFO Council, the                                                          Oceanic and Atmospheric Administration
National Science Foundation,           and the                                                        PJOJW,         is working at the National
Fellows program.. She is working with Bert                                                            Institutes of Standards and Technology
Edwards, CFO at the State Department, and                                                             O-ST),        both     organizations      at the
the joint CFO/Chief Information Ofiicers                                                              Department of Commerce. She is analyzing
 (CIO) Council project team assessing the                                                             NISTs Working Capital Fund             accounting
implementation       issues of SFFAS #lO -                                                            and financial management practices, Federal
                                                   final impediment to HCFA and HI-IS
Accounting for Internal Use Sofiware. She is                                                          accounting standards, and central agencies
                                                   receiving an unqualified audit opinion on
also studying options for the implementation                                                          requirements, to ensure that NIST financial
                                                   their financial statements. In this project,
of cost accounting and allocation of costs                                                            management         effectively    supports      its
                                                   Steve led a Workgroup tasked to evaluate
within the NSF accounting structure in                                                                programs. She is planning and coordinating
                                                   Medicare contractor suggestions for the
support of GPRA. Finally, she serves as the                                                           the organizational development of NISI3
                                                   write-off       of    various       receivables,
primary Fellow contact within the program,                                                            financial offices, including areas such as:
                                                   recommended approval of these receivables to
including maintaining the Fellows website                                                             benchmarking;        process mapping          and
                                                   HCFA management and visited Medicare
and initiating agency briefings for the                                                               reengineering;      systems planning;         and
                                                   contractor sites to monitor the progress of
Fellows.                                                                                              customer service. For NOAA, she is guiding
                                                   independent consultants retained to evaluate
     Adolphus Hawkes, from the Office of                                                              the development and implementation of a
                                                   receivable balances.
CFO at the Department of Labor is working                                                             Management Information System for the
                                                        Lou Pennock, from the Defense Finance         Advanced Weather Interactive Processing
at the Employment Training Administration          & Accounting Service (DFAS), is working at
(ETA) within the Department.         From May                                                         System, and plans to design a cost/benefit
                                                   the National       Aeronautics    .and Space
through mid-August, he worked in the OffIce                                                           analysis of the National Weather Service
                                                   Administration (NASA). Lou’s fellowship at         modernization.       Tyndall is participating in
of Compliance and Financial Statements at          NASA includes assignments that provide
the Defense Finance and Accounting Service,                                                           the       Government-wide            Recruitment
                                                   support within rotational assignments in
performing research on accounting issues                                                              Consortium and anticipates helping with one
                                                   Financial        Management,         Resources     of the Financial Systems’ Committee’s
affecting the audit opinion of Department of       Management, Office of the IG, l-month
Defense (DOD) financial statements.           At                                                      priorities for FY 2000.
                                                   detail assignments at Kennedy Space Center
ETA, Adolphus is working on the Grant                                                                      In addition to individual assignments, the
                                                   and Langley Research Center, and an
Contract    Management Information System                                                              Fellows work on class projects, including
                                                    assignment in the CFO front office. Projects
 (GCMIS) conversion to Labor’s accounting                                                             drafting articles on fnancial management
                                                   include a study on rhe Administrative Control
system. He is documenting a number of                                                                 topics for various publications.         They are
                                                   of Reimbursable Activity, participation on a
financial management and accounting related                                                           helping to advance the Fellows Program by
                                                   NASA Systems project, and participation on a
processes within the Division of Accounting                                                            speaking at public meetings and to groups
                                                    Council Financial Systems Subcommittee.
and is the Administrator for the Division of                                                          within their host and home agencies. q
                                                        Deborah Staton-Wright, from Food &
Accounting’s web page and conference. This         Nutrition    Service at the Department of
conference is designed to promote dialogue         Agriculture (USDA), will worked in various
among ETA regional offices on accounting,           agencies within USDA, where is assigned to
grant management           and other financial      the Office of CFO.
management related issues.                              At USDA, Deborah is a member of the
      Steve Nash, from the Social Security          Leadership 2000 Planning Team, a project
Administration      (SSA), is working at the        consisted of designing and providing
Health      Care Financing       Administration     recommendations       for    an     Integrated
(HCFA) at the Department of Health and
 ~FA!lIl’                                                                                                                                                                      Fall 1999




             ctober 1, close to 30 documents                         not disclose info~n~ation            about producrs or        l~laiiagernent   and work force implications        of-
 were posted to the Kn                                               vendors that do not receive a certificate.                    new systems-selecting,        implementing,       and
 results of the process.      eat interest is the                                       II’ process provides           valuable    operatmg? How will Federal agencies acquire
 list of sofnvare packa                                                                    agencies, but the information           the right skills to succeed?
                                                                     is not suffGcnt to successfully select software.                    What should the qualification      process be
                          rinagement      Systems,                  Agencies still must test and evaluate whether                  for Federal agencies that cross service to other
                                                                     the package will meet transaction                 volume,     Federal agencies? The current policy is to test
                                                                     agency       specific      inf&rmation        technology      and qualify cross servicers on a voluntary
                                                                     architecture,           and                                   basis. What is the policy on qualifying      private
        5.1.6
                                                                     requirements.          The      JF                            sector companies who want to sell accounting
               racle, Public Sector Financials        Release       provides an adaptable model fitr agencies to                   services to Federal       agencies through         an
            1 I, Version 3.0                                        use, but success in implementing                   systems     “application    hosting” arrangement?
        PeopleSoft,       Financials for Education                  remains        an agency responsibility.              Other          What are the technology     trends and what
        and Government,           Version 7.5                        Federal resources, including the Infimnation                  arc the system security issues of current
          her documents             provide      inf~~rrn~tioI1     Technology           Resources        Board,     can help      apphcations and emerging technologies?
 ab         value-added         features,      supplenl~ntal        agencies achieve success. (see article on front                      These questions highlight       some of the
 information           about      how       the test was            page).                                                         challenges in meeting the financial systems
 constructed         and the depth              of the test               What is the outcome of this process?                     goals presented in the Financial ~~nu~e~e~t
 coverage, and agency purchase plans. In the                        Clearly, the process has clarified requirements                Status Repoti rind Five-Tear Plan as we move
 three weeks after these documents                         were     and developed            objective     methods      to test    into the next century. They also underscore
 posted, there were about 1000 “hits” a week                        requirements         that can be used by the CFO               the need for agencies and the oversight
 on the Knowledgebase,                suggesting that the           community,          the oversight c~)nln~Llni~,          and   community      to manage expectations.      This is a
 con~mullication            oak are being met.                 In   software developers.            Feedback from Federal          dif;ficult and complex business. JFMIP looks
                              hosted      its 4th “Open             agencies in the market to acquire new systems                  forward to continue partnering       with the many
                              r 6, 1999 to present the              is that their &Tort and cost have been reduced.                who must play a role in achieving success. o
                              s and answer questions.               Market information             increased for vendors.
                              kc to share some critical             Also, vendors indicated that the test effort
 observations       from the testing process. Small                 drove them to improve their products in two
 and large company’s                  software        products      ways-it       provided      information      that enabled
qualified under the new process. The key was                        them to understand Federal requirements                 and
functionality.       Unlike core system applications                they had no other choice but to improve
currently in use by Federal agencies, all of the                    software packages in order to pass the JFMIP
packages qualified to date are client server or                     qualification      test. Finally, Federal agencies
web enabled             applications.       The test and            acquiring systems in FY 2000 and beyond will
quali~cation         applies to a specific sofnvare                 benefit from the streamlined                 procurement
version      of vendor          sofrware.      While      some      process. This reform effort demonstrated                 the
vendors are the same, none of the packages                          seriousness of the CFO Council commitment
that qualified        under the new process are the                 to create tools that will help them improve
                                                                                                                                          ur new address, telephone          and fax
         version as ol-fered under the previous                     financial systems. It also demonstrated                 that
                                                                    rapid progress is possible when there is CEO                     numbers are:
        S schedule.           All qualified           packages
                     reduced expected results from                  Council commitment,               focused resources, an
                         sreps, however,            there are       empowered        organization,        and accountability
significant     differences in software complexity                  for results.
and user interface designs and value added
                      e of the packages are enterprise
resource programs.              JFMIP only tesred the                                           eded expectations and
core accounting              functions.       Testing       and     also raised many questions.
                              continuous       process and              What should be the timing for requiring
                            schedule can add qualified                           ) implement new requirel~leIlts     and
                           time. So newly qualified                                          for newly established
                            an be available to Federal                                      at do agencies need to
agencies without delay. F.                ly, we would like         successfully     make decisions       about     new                   Please make a note of these changes
to reemphasize that the J                 IP output of the          systems      and achieve       successful    system              for iirrure reference.
test and qualification         process is a certificate of          implementations?         How      can investment                            II’ documents are distributed
compliance       issued to software versions that                   decisions be better justified?       Will there be               through the GAO Distribution      Center:
successfully produce expected results. We do                        adequate      budgetary   resources to pay for                   20215 12-60~~.
                                                                    system improvements?         What are the change
       This designation          came after extensive               Directors     members Judy O’Dell of Beucier,                   satisfied    such criteria.        Accordingly,       the
  work by two AICPA Task Forces. The first                          Kelly & Irwin, Ltd.; Marilyn Pendergast ot                      AICI’A      Board recommended            that Council
  Task Force was charged with establishing                          Urbach,      Kahn and Werlin,          PC; and Bill              adopt a resolution to designate E‘ASAB under
  Rule 203 cognition.               At the May 1999                 Truehart     of Reading is Fundamental.           The            Rule 203.       On October        19th, the AICPA
  meeting, Council approved the criteria to bc                      remaining      members were Dan             urrin of            Council approved the resolution.           The AICI’A
  used        in         designating          accounting            Ernst      and     Young         (AICPA       Federal           Chairman      Robert Elliott and the Task Force
 s~~dards-setting          bodies under Rule 203.                  Accounting      &Auditing     Subcommittee);       Sam           Chair Gary Previts will be meeting                  with
 They are: Independellc~;              Due Process and                 cCal1 of the State of Florida’s              Audit           FASRB leadership          later this year to confer
 Standards;      Domain        and Authority;    Human             General’s Office (Association         of Government              Rule 203 status on FASAB.
 and          Financial           Resources;           and         Acc(~uli~aIlts); Tom Fritz ofthe Private Sector                       FASAB        will    provide       more      details
 C~m~r~hensiven~ss            and Consistency.                     Council;      and Dr. Linda Blessing of the                      regarding changes in its operations in the next
      The RICPA Board Chair appointed a task                       Arizona      State Board of Regents           (former            issue of its newsletter.        A Federal Register
 force to assess the FASAB against the Council                     FASAH         member       and AICPA          Council            notice was published          on October        8th and
 -approved         criteria,       and     to    provide           member).                                                         provides information         on the revisions to the
 rec(~mmendaKions           to assist the Board and                     The Board         task force evaluated         the          ~ern~)ran~~~lrn        of Understanding            under
 Council regarding          Rule 203 designation        for        mission and process of the FASRK based on                        which      FASAB         operates.         For     more
 FASAl~. The Board task force had very broad                       the Council-approved        criteria, recommended                infbrmation,     please contact FASAB at (202)
 representation       from the AICPA Board, the                    changes in FASAB procedures, and assisted in                     512-7350.     u
 private    sector, and government.               It was           incorporating      those changes in FASAB’s
 chaired by Professor Gary Previts of Case                             emorandum      of Understanding        and Rules
     estern     eserve University.        The members              of Procedure.      With the changes completed,
 included current and former AICPA Board of                        the task force deemed the FASAB to have

                                                                                                                                                                   --.--.~




  sophisticated       systems with requirements               of    predecessors)      and GAS13 have not ventured                        Mr. Edwards is proud of the fact that the
  new FASAB standards and                                           into this arena in their nearly 70- and 15year                  State Department            has received an unqualified
 will     be one challenge              facing      financial       respective existences. The principal benefit of                 opinion          on its department-wide                 financial
      nagers in the next five to ten years.                         the annual audit is the discipline            that must         statements in FY 1997 and 1998. He believes
     odernization       in US government            agencies        accommodate          the annual audit process -                 the U.S. government                can achieve a “clean”
 will require very substantial expenditures                 for    formal closing schedule, assigned due dates                      opinion                011         the           consolidated
 har        re, software, and “peoplewear”.                        and responsibilities         fbr completing         closing      govcrrtment-wide            financial statements within
           . Edwards sees standardization             of core      steps, etc.        This wiil lead to quarterly,                  the next two to three years.
 ~equire~nents for financial systems facilitating                  monthly,      and perhaps real-time reporting              in          Like most fL]ture-focused                 leaders, Mr.
 development         of C TS products.           However,          the near future.”         Basically, US government               Edwards            wants      to maintain           the State
 he cautions that core requiremenrs             should not         agencies need to understand              that they must          Department             at the forefront           of modern
 attempt to be so comprehensive                 as to defy         comply.                                                          business             practices         -        e-commerce,
 implcmen~ation.          Also, once the Y2K “crisis”                     But, to truly improve          st~wardsllip       and     state-of-the-art           systems,       leader       in best
 has passed, focus should be directed to system                    accountability      in their organizations,         what is      practices. As the chair of r-he CFO Council
                  r. Edwards is concerned whether                  really needed is “a close relationship                   and     Financial            Statements          and         Standards
              roducts, which incorporate              private      mutual understanding            between financial and            Committee, he wants to “develop appropriate
              ccepted      security      standards,        can     operational     managers.        For 2OO+ years, US              responses on behalf ofthe 24 CFO agencies to
 continue to be used if unreasonable                 security      government        agency operational            managers        ‘due process’ documents                 issued bv FASAB,
measures        are mandated.             The need for             have managed             the budget.           We now           JFMIP, GAO, OMK and others which impact
customized         features to sat-is@ such security               understand that this focus has resulted in a $6                 financial management.”
measures could substantially increase the cost                     trillion    (!) accumulated           deficit.          Our           Change          is inevitable.          Iiut changing
of                                                                 traditional    cash-oriented       budgeting     must be        without          planning     for change can have dire
             agerial cost accounting         and audited           rcconcilcd       to      GA&-oriented            financial      coIlscqLlcIlccs.          This applies to the financial
financial      statements      are much needed ro                  reporting.      budgeting      in the state and local           management              arena as well.          Mr. Edwards
interject discipline into the management                  and      government       sector is gradually       moving those         would          have 11s remember             that “generally
reporting        processes.       SFFAS        No. 4 “is           entities to GAAP budgeting,                and the U.S.         accepted            accounting        principles        requires
arguably        the     most     far-reaching         GAAP         government       should take notice.”                           general          acceptance.          General       acceptance
standard        cvcr issued.           FASB       (and its                                                                         requires resources for implementation.”                        0
                                                                                                                                                                                                          Fall 1999




                                                                                                                                                             Since 1992, DFAS has consolidated              338
                            American                Management                organizational            subjects.               About          125      finance and accounting operations into 5 major
                                      survey of over 1,000                                                                                              Centers and 20 Operating          Locations, with it:
                 issociation                                                  functional      and systems courses can provide
                 large             and             medium-sized               DFAS employees with the skills needed to                                  headquarters located in Arlington, VA. During
                 corporations          recently showed that                   perform      their jobs. Courses are taught by                            this period, the agency has trained tens 01
   companies that increased their training after                              contractors        through          a large-scale         financial       thousands of administrators,         technicians, and
   announcing         layof& were twice as likely to                          management           education and training contract,                    executives in subjects ranging from                A tc
   report improved            profits and productivity                 as     as well as by “commercial                         off-the-shelf           (almost) Z. Functional         and systems training
   the firms that didn’t invest in training.                       The        course providers. To support ongoing srudy,                              courses now available to DFAS personnel and its
  AMA survey found the strongest correlation                                  there is a network               of 17 Career Learning                   customers, as well as to other government
   in the data occurs when training                      activity is          Centers and satellite training rooms at DFAS                             groups in the near future, include:
  matched against organizational                   performance.               locations enhance employee skills.                                            Accounting
  Companies            that      increase        their      training               In fiscal year                 1999,       nearly        8,000           Computerized      Accounts Payable System
  activities when job cuts occur are 80% more                                 participants        learned about DFAS policies,                               (both DOS and Windows)
  likely to increase worker productivity;                       more          processes and the associated systems in classes.                              Defense Cash Accountability          System
  than twice            as likely         to report           quality         Some 14,000             individuals         took courses or                   Defense Joint Military Pay System
  improvement;             and 80% more likely                        to      computer-based              training        on a suite of                     Defense Transportation        Payment System
  increase shareholder            value. The 1999 survey,                     Y2K-compliant            office automation             sof&vare.
                                                                                                                                                            Defense Working Capital Fund/Unit Cost
  in the process of publication                   at press time,              Nearly       275 supervisors                  and managers
  continues        to reflect these trends. [Source:                          attended        courses          within        a three-tiered                 Disbursing
  Ann~d         Srafhg          and Structure               Surveys,          executive development                series. DFAS Director                    Military Pay
  American Management Association, New York,                                 Thomas Bloom addressed students through                                        Travel and Transportation        Allowances
  NY, 1996; 1998; 1999.                         For dctail$, sc(:             video     teleconferencing,               to spotlight            the         Vendor Pay
  www.Nn~~ct.or~rc~~c~s~i~/com~~ldi~~.l~t                                     agency’s clear goals for service that thrills its                             . . .and many others, as well as study courses
  m or contact AMA Research Director,                        Dr. Eric        customers.                                                                for the CGE’M and DFMC.
  Greenberg via email at cgrecnbc~amanet.org.]                                    Each           educational               activity          adds           DFAS readers may access a complete listing
       Like      its corporate             counterparts,            the      momentum              to a comprehensive                   training       at http://c&4Dod.dfas.mil/pso/f~trac.
 Defense        Finance        and Accounting                 Service        program to increase the professionalism                         of all         Call        800-443-4426            or      E-mail
  (DFAS)         chooses to stay competitive                         by      DFAS           employees.                Fourteen             Career      ~olutions.solutions@dfas.mil        for information.
 investing        in human            capital.         DFAS        has       Development                Plans         identify        training,
 reduced its number of personnel from more                                   developmental                      assignments                    and
 than 3 1,000 in 1993 to about 20,000 today.                                 self-development                initiatives         needed           to    investment      in certification       training     in both
 But its investment                 in training         has been             succeed in a given DFAS career field. Still                                financial and organizational             terms. Initially,
 increasing.        Between FY 1996 and FY 1999,                             evolving are training opportunities                       that aim         several hundred participants              will report on
 the agency’s investment                 in training climbed                 toward the goal of certification.                                          their Icvels of satisfaction and learning within
 from $9 million to nearly $29 million.                                           The agency has implemented                           its own          the CGFM           courses.       Smaller      samples of
       Consolidation             dramatically            increased           structure,         the        Professional            Leadership           participants      and their supervisors           will help
 training      requirements           within      this relatively            Certification          Program-a             combination             of    link the courses to the agency’s published core
 young agency. Before DFAS was activated in                                  courses and leadership-oriented                    assignments.            competencies          for financial        managers,        as
 January        1991,        the defense           finance        and        In addition, DFAS will be providing                         courses        applied on the job. A prototype                  evaluation
 accounting world was a complex, fragmented                                  to prepare for the Certified                       Government             can help DFAS spotlight                  its progress in
 community,          built around 250 finance and                            Financial Manager               (CGFM)-a            designation           meeting goals in the agency’s performance
 accounting systems scattered across 338 sites.                              advanced by the Association of Government                                 contract as well as requirements                  of federal
 The       finance       area alone             had over             80     Accountants.            The CGFM is earned through                         financial management           legislation.
 systems-today              there are 20.               Some SO             examination,             experience,          and continuing                     Benefiting      from the DFAS experience,
 military       and civilian            pay systems were                    professional           education          requirements.           The      new customers and other government                      units
 consolidated        to three-one            for Army, Navy                 agency next will provide courses related to a                              can take classes at its U.S. and international
 and Air Force members, one for Marines, and                                defense-oriented                certification            requiring         locations.      DFAS serves as a resource for the
one for Department                     of Defense            (DOD)          examination,         now under development                     by the      Department        of Defense, the Military Services,
civilians.           Scores        of defense             financial         American        Society of Military              Comptrollers.             other CFO and Defense Agencies, and diverse
management               functions,          including           cash        (Check details on www.agacgfnl.org                               and      government,            private       and       professional
accountabiliry,          debt collection,            vendor pay             www.asmconliric.org                 respectively.)                         organizations.        Through      its growing role as a
and travel allowances devolved to 5 DFAS                                          DFAS anticipates                that the CGFM               and      prime agent for cost-effective                 government
Centers and 20 Operating                     Locations,         with        eventually              the           Defense            Financial         financial management           training, DFAS builds
DFAS headquarters located in Arlington,                         VA.         Management               Certification          (DFMC)            will     its competent, competitive            staff.
      Such massive reengineering                     meant that             positively      influence         the competence              of the             For more information,              call the DFAS
staff needed-and                have an ongoing                 need        workforce.        To monitor            that expectation,            an    Business Solutions Division at 8004434428,
for-training              in      both         technical          and       internal       team        will       study       the agency’s             or E-mail solutions.solutions@dfas.mil.                   o

                                                                                                             10
         he     Federal      Financial    Managers                 The F       C was invited to establish a link   FinanceNet        (www.~I~a~~cexlet.gov).           All
                           C) in Washington,       DC         to the CF        , and they now have a Liaison to    Finance Directors and financial managers of
         is still active and has recently under               the CFQC,         who attends their him              Departments,        agencies      and bureaus       are
         gone some changes in membership.                     meetings and reports back to the FF                  encouraged to join the E;FMC and participate
     II the DC Chapter was formed, it filled a                Since the FFMC’s focus is mainly operat              in their meetings.       Representatives      from the
communications          void     in the     financial         the Liaison       can better relate the CFOC         General     Services Administration            and the
management        community     that has since been           activities to the FF C members and bring               epartment      of the Treasury         have recently
                                                              back activities of special interest to the FFMC.     presented topics of interest to the members. A
                                                              This also provides the FFMC with a visibility        representative        from        the      Of&ice     of
                                                              they have not been afforded in the past.             management       and Budget has been invited to
broadened their membership to include major                        The     ofhcers     of the FFMC         are:    next meeting.       In addition,      plans are under
subordinate       organizations     of the cabiner level      Chair-Jack        Shipley,   U.S. Environmental      way for the annual retreat, which will provide
Departments         such    as the Internal     Revenue       Protection      Agency;        Vice Chair-James      a concentrated     block of time for members to
Service       and      the     E‘cderal     Bureau       of   Turdici,   Nuclear      Regulatory   Commission;     get away from           their    of&es      and share
Investigation.             They      also    invited      a   and Sccrera~~reasurcr-Davicii         Ostermeyer,    experiences and make plans for the future.
                         from         the      Financial      U.S. Agency for International       Development.         For more infc~rmation,         contact any of the
    nagement Committee ofthe Small Agency                     The FFMC meets the third Thursday of every           FFMC Ofiicers through            the FinanceNet,      or
Council     (a council of financial management                CVCI~ numbered       month (the next meeting will    contact Jack Shipley at (202)564-4905.             CI
personnel      from small independent          agencies)      be December 16) at IO:00 am. The meeting
to join the I+M<:.                                            agenda, location and minutes are posted on
agencies will be able to refer to the standards                      concerned      the identification      of appropriate                and maintain internal control and to identify
for planning purposes but may not implement                          guidance fbr investments in %CKs and other                           and      address          major           performance             and
them until the Congressional    review has been                      ‘Treasury securities not intended to be held to                      management          challenges and areas at greatest
completed.     SEAS 16 is avaiiable OJI the                          maturity.      Concern was expressed by SOI~C                        risk      fitr     fraud,           waste,          abuse,        and
FASAK website.                                                       AAI’C      members       that          G’s c&x-ts in                 rnis~n~~~~a~e~~~eJlt. They will be usef~rl to both
                                                                     developing      guidance on this question might                      program and financial managers in all federal
                                                                     lead to developing       an accounting       standard -             departments          and agencies in meeting                     their
                                                                     which is not within               C’s charter.     Also,             missions and objectives                     and in achieving
                                        e AAPC discussed             some suggested that               B’s Bulletin 97-01                 financial accountability.
  the definition            of iiabilities        covered      by    (Form      and Content)         would     contain    the                  The format of-the new standards, as well as
  budgetary          resources.      The St-atement             of   necessary guidance.         It was decided that for                 the concepts expressed by them, arc consistent
  Federal Financial            Accounting         Standards      1   the November         AAPC meeting appropriate                       with      those contained                  in the document
  (SFFAS 1) and OMB Bulletin 97-01 require                           guidance would be                 aped, with critical               “Internal       Control - Integrated                  Framework”
  balance sheet reporting            of liabilities covered          input coming from                                                   published        in 1992 by the Committee                            of
  and not covered by budgetary resources. The                             For more inforxiiation           on FASAB        or            Sponsoring         Organizations               of the Treadway
        PC is working          with QMR to clarify the               AAX,         please     access its website             at           Commission.              The G               document         defines
  definition     of liabilities covered by budgetary                 www.~~nancet.~ov/fedjfasal~.htin            or contact              internal control as an                      gal component            of
  resources.            The     most         cently      drafted     the staffat (202) 512-7350.          n                              an or~alli~ation’s           maJla~emelit that provides
  definition     is posted on the            PC website and                                                                              reasonable         assurance            that the following
  comments are welcomed.                                                                                                                 objectives are being achieved:
        At its September            meeting,       the AAPC                                                                               (1) eEectiveness and efficiency of operations,
  welcomed two new members from the                                                                                                       (2) reliability of financial reporting,                    and
  Council:           I,arry Eisenhart,        Deputy                                                                                      (3) compliance             with applicable               laws and
  Department           of State, and Frank Sullivan:                                                                                     regulations.        There are five broad standards
  Deputy        CFO,         Department          of Veterans                                                                             that define the minimum                         level of quality
 Affairs.      They replace Ted David and Steve                                                                                          acceptable for internal control in governmmt
  Schaeffer whose terms were completed.                     Both                                                                         and provide          a basis against which agency
 Mr. David             and Mr. Schaefi?r              provided                                                                           internal control can be evaluated. These five
  invaluable      assistance to the Committee                 and                  he U.S. General Accounting                  Office    standards cover the areas of (1) Control
 will be missed.                                                                  has issued its revised “Standards                for   Environment,           (2) Risk Assessment,
        One of the issue discussed focused OJI                                     Internal     Control       in rhe Federal              (3) Control Activities,                (4) Information            and
 what constitutes permanent indefinite budget                                      Government,”                                          Communications,               and (5) Monitoring.
 authority and how liabilities relate to this kind                              /Aisle-00-21.3.~).             This publication                III developing          rhe new standards, GA
 of budget authority.                For the November                updates and replaces the previous standards                         subjected them ro a very lengthy, rigorous,
 meeting, the task force working on this issue                       first issued in 1983 in accordance with the                         ;Ind though ,,: ~roccss     rivi\li)Ir.o p&lic            exposure,
 will develop possible criteria and definitions                                      Managers’      Financial      Integrity       Act   comment,                      x I_                Two       separate
 to cover the kinds of liabilities                 covered by                        ) of 1982, <and generally referred to as            exposure         drafts were issued and many
 permanent         indefinite     budget authority.                               recn Book.”        The new standards are               comments             were           received           from        the
       Another          discussion       topic      was legal        c&ctive          for fiscal year 200                                accounting,               audit,             and           academic
 liabilities when more than one federal enriry is                    reports required by F                                               communities.                 The         final
 involved.                                                                 The standards            update was performed                 coordinated        with the Oftice of
       There is no apparent basis OJI which to                       primarily         in response to (1) the effect upon                and Budget and officials ofthe
 establish      guidance         for assigning          such a       internal control as a result ofrapid advances in                    Officers Council.
 liability   to a particula r federal entity.               One      iIiforll~~lti(~~l teclinolo,g       management,            (2) a          Copies of the standards are being widely
 suggestion made was that an arbiter should be                       greater recognition             of the role of human                disrribL~ted            throughout                 the        federal
 designated          to assign such responsibility,                  capital management             as an important         factor in    government.           Individuals           may obtain copies             -
                       Department        of Justice or the           internal         control,     and (3) the need to                   from GAO Distribution                    at ROOJII 1100, 700
                     anagement       and Budget.           After     implement           updates of the standards used in                4th Street, NW, ~lslliii~t~)n,                    DC 20548, or
 discussion,         it was decided            that for the          the private sccror where useful in the federal                      by calling (202) 5 I2-~0~~.                   The standards are
 November           meeting      AAPC       will develop a           government             environment.                The      new     also available           on the Internet                 at GAO’s
 draft document            that lays out the issues and              standards also reflect the increased emphasis                       homepage at www.gao.gov                        under the link to
 provides guidance for assigning the arbiter                         upon internal control inherent in important                         “Special Publications.”               u
 role to some agency.                                                legislation such as the Chief Financial Ofiicers
       The Agenda             Committee         considered       a   Act of 1990, rhe Government                     l’crfhrmnnce
request from the Railroad Retirement                      Board      a~iti liesults Act of 1993, and the Federal
 (RELB) regarding xxounting                 for investments          Financial l~~lii~l~e~~~e~~t Improvement                  Act 0i
in Treasury securities, specifically in Treasury                     1996.          Thcsf standards provide the overall
zero-coupon           bonds (ZCRs)          KlIB’s question          framework           for federal agcncics to establish
                                                                 -
                                                                                                     4
 Fall 1999                                                                                                                                                  JFMlI’




                                                                                                                  er-Focus              er i

                                                          Success
                                                          factors



                                                          Goals
                                                                                                                                    Provide                  Build a
        he techn~~logy and pr~uctivi~      gains                                                                                                             team
                                                                                                                                 meaningful
        that we see and experience in our daily                                                                                information         to         that
        lives have impacted the role of the                                      priomy.         i                                 decision-               delivers
        finance organization.     In the private                                                                                    makers.                 results.
sector, there was a time when most of the                                                      /II
finance or~~iza~i~~n’s  resources were devoted
                                                          Practices       1. Build a                  4. Assess the            7. Develop               10. Build a         /
                                                                          foundation     of                                    systems      that        finance
           .ated costs were a
                                                                          control    and                                       support     the          organization
                                                                          accountability                                       partnership              that attracts
                                                                                                                               between                  and retains
eco~~my,     expectations                                                 2. Provide  clear                                    finance     and          talent.
finance organizati[~                                                      strong executive                                     operations.
data and recurring                                                        leadership.                                                                   11. Develop     a
                                                                                                                               8. Reengineer            finance    team
                                                                          3. Use training                                      processes     in         with the right
                                                                          to change      the                                   conjunction              mix of skills
                                                                          culture   and                                        with new                 and
                                                                          engage     line                                      technology.              competencies.
                                                                          managers.
                                                                                                                               9. Translate
     n this context,      a world-class  finance                                                                               financial    data
org~~zatio~     can best be defined in terms of                       1                        // /   addvalue.                into meaning-
the    business     ~~urcorn~s   it produces-                                                                                  ful information.
                         roved business analysis,


                                                                                                                        Similarly,     in the federal sector, the push
                       erformance.        As federal                                                               towards       creating     a smaller, more       results
agencies      continue      to     improve        their                                                            oriented       g~~vern~lellt     has intensif
management        and financia1 accoL~n~abiii~,                                                                    urgency to find ways to do more with
       lust look we11 hey          +h,e .milestone of                                                              ci-fectiveiy evaluate and improve             the v
                                    ‘nion on their                                                                 derived      from governl~leilt       programs
                                                                                                                   spending,         the       chngress     and
           ‘wing   better business outcome.                                                                        decisionmakers            ust have accurate         and
                                                                                                                         ble financial irlf~)rn~~~ri(~n on program cost



      OvemenF e

idenrifv      the success factors,
                                                 contributors                     to this issue:

                                                 Karen        Cleary            Alderman                         ......          JFMIP

                                                 Patricia           Clark.            ....                      JFMIP     CFC    Fellow

                                                 Carol       Codori              ............                                    DFAS

                                                 Wendy          Comes                     ..........                            FASAB

                                                 Tracy        Dahbura                     .....                                                or call,       202/219-0526

                                                 Bert       Edwards               ............                                    State
   Our new address, telephone          and fax
numbers are:                                     Chris       Fairhall             ............                                    OMB
                                                                                                                                               The                         ews is published             quarterly
                                                 Steve        Fisher           ............                                     JFMIP

                                                 Liz Gustafson                      ............                                   GSA    bY      the         Joint          Financial                anagement

                                                 Diane        Handley ............                                                GAO     Improvement               Program.           The purpose             of the
                                                 Sallyanne             Harper.                     ..........                      EPA    newsletter           is     to        promote            sharing       and
                                                 Patricia           Healy           ...........                                  USDA     ~sseminati~~n          of current f~mancial rn~ag~~l~nt
                                                 Henry        Hoffman                ............                                  FTC
                                                                                                                                          i~f~~rmatio~,          activities       and practices.
                                                 Larry       Kitt       ...............                                             INS
                                                                                                                                               Suggestions             and article               submissi~~n      arc
                                                 Lucy       Lomax            ............                                       FASAB
                                                                                                                                          encouraged          and may be sent to
    Please make a note of these changes          Janet        McBride.                      ..........                          JFMIP
for future reference.                            Larry       Modlin           .............                                       GAO     at the above address, fax 202/2
                      ents are distributed
                                                 Avis       Ryan          ..............                                           GSA    doris.chew(@gsa.gov.                                          Website:
                   0 distribution   Center:
                                                 Jack       Shipley             .............                                      EPA    ~ww.~inanc~~~t.~ov/f~d/jfini~/jf~ip.~tm
                                                 Dorothy            Sugiyama                      .........                     JFMIP

                                                 Dick       Tingley ............                                                FASAB             Soliciting          Editor:        Doris
                                                 Gilbert       Tran          .............                                        OMB          Publications            Specialist:           B




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