Financial Management: Providing a Foundation for Transition - AGA

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10more likely to add value to operations. Says anexecutive, “Understand what risk is acceptable.Some risk needs to be accepted in order to getthings done. Controls need to focus on managementanalysis and review that help understandwhere weaknesses lie and how they can beimproved.” Also, many say that auditing controlsfor the sake of a clean opinion is of little value.Survey respondents would like A-123 and otherinternal control guidelines to be more clear andprecise. However, one-size-fits-all compliancerequirements ignore that entities need to tailorcontrols to their processes and missions. In addition,no new government-wide rules are needed forcontrol compliance, but oversight entities shouldmaintain the pressure to develop effective controls.In summary, the future path of internal controlleads to integrated controls of both financial andperformance processes, particularly those that arecentral to an entity’s mission. Controls focus onimportant risks to mission and are continuallymonitored for their effectiveness. Such controlstend not to become paper exercises, but insteadare valued elements of sound operations.Continuing resolutions:a challenge to CFOsCFOs and their entities are hit frequently bycontinuing resolutions (CRs), which at bestdistract from government operations and atworst lower effectiveness. All public servantswould consider it a joy not to have CRs, butthese bumps in the road are a part of their lives:in the past 3 decades Congress and the ExecutiveBranch have managed to pass all appropriationsbills on time only in 4 years.Our survey asked financial executives theiropinions about the affects of CRs; Table 2below shows the results. Almost all intervieweesTable 2:Executives’ opinions on continuing resolutionsIn any of the past 3 fiscal years, has your entity had to operate under a continuing resolution?No 5%Yes 95%Problems caused by continuing resolutions% YesDelay or cutbacks in CFO initiatives 66Cutbacks in other significant entity programs 60Delays or cutbacks in contracting/acquisition plans 79Other problems 40
11have worked under CRs in the past three years.About one in five has experienced CR-relatedproblems that have affected some aspect of theirentity’s program and mission. The reportedproblems include issues of program integrity,poor resource management, inability to plan,distraction from the core business of financialmanagement and wasteful incremental fundingof projects and contracts.Program integrity. Says an executive, “CRs hurtus the most in the area of program integrity,which is funded last in priority. Program integrityincludes risk management, facility maintenance,etc. In CRs, people abandon lookingat return on investment and do the immediatething, rather than what will be important in thelong term. If we are in the process of measuringsomething, we have to stop measuring for awhileand then return to it, with a lot of observationsand data lost in between.”Planning. “CRs lead to poor management ofresources, as managers are forced to be reactive,rather than proactive,” says an executive. “Theycan’t plan ahead and start new projects. Whenfunding is received it is often too late in the yearto fully execute.”Distraction. “The CFO gets distracted and loses3 or more months in most CRs. This causesdelays and cutbacks and hinders the ability of theorganization to move forward,” says an executive.Waste of time. “The problem with CRs isthat, after the process is started, you have todevelop a spend plan that needs to be approvedby the department, then by Congress, whichcan take up to 60 days,” says an executive, “Allthis time delay for a CR that can be as shortas 10 days. Better not to have CRs, but if wedo, then have CRs for an extended period of30 days or so.” In addition, CRs can causeincremental funding of contracts, which meansmore work for entity staff.Loss of quality. According to an executive,“Once a budget is approved, everything shiftsto the hurry-up and obligate mode—we losethe window of opportunity to provide qualityreviews of financial decisions because the rush toobligate doesn’t always allow it.”Everyone agrees CRs are inevitable, so planningfor and dealing with these bills is critical.Most executives want OMB, the White Houseand Congress to accept responsibility for theiractions related to CRs and then agree to helpimprove the process of managing under acontinuing resolution. Here are some of theirstrategic and tactical suggestions for dealingwith continuing resolutions.Strategic actions. At a macro level, strategicimprovements all require coordination betweenthe White House, OMB and Congress. Thesestrategic improvements include:• Thirty-day (minimum) continuing resolutions.There is a pretense that somehow a2-day or 2-week CR will allow enough timeto work out the details to resolve an approvedbudget. In fact, the shorter-term CRs causetoo much anxiety on all fronts. A 30-day CRis a reasonable timeframe. Should a budget beapproved before 30 days, the budget becomesimmediately effective and supersedes the continuingresolution.• Biennial budget. This means giving everyfederal entity a 2-year appropriation. The topichas been discussed at various levels for morethan 20 years. This can be done in ways thatensure that legislators have a hand in shapingthe federal budget.
Page 1: Association of Government Accountan
Page 4 and 5: 2Table of contentsAbout the Associa
Page 6 and 7: 4Road to transformationReviewing th
Page 8 and 9: 6government decision making. From t
Page 10 and 11: 8Positive opinions on A-123When the
Page 14 and 15: 12• Better guidance and clearer r
Page 16 and 17: 14Cost/benefit analysis and targete
Page 18 and 19: 16• Many executives say their peo
Page 20 and 21: 18Some CFOs report success in reduc
Page 22 and 23: 20SystemsSurvey respondents listed
Page 24 and 25: 22the top of those that they want c
Page 26 and 27: 24Financial statements and audits:
Page 28 and 29: 26IG office, as it is when the audi
Page 30 and 31: 28ConclusionDesign by www.sparkdesi
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Financial Management: Providing a Foundation for Transition - AGA

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