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 ~firstname.lastname@example.org 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 email@example.com. 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 1990 K Street NW te 430 shington, DC 20006 Official Business Penaltv for Private Use $300
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)