Financial Management: Providing a Foundation for Transition - AGA

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14Cost/benefit analysis and targeted compliance.Some executives say that Congress and OMBshould do more cost/benefit analyses on therequirements they make of entities. As mentionedearlier under “Financial Report,” not all entitieshave the problem that a government-widecompliance requirement seeks to solve. Executivesfrequently mentioned two examples of this: theImproper Payments Information Act (IPIA) andthe Recovery Auditing Act (RAA). The Acts maybe great ideas in cases where entities have significantreal or potential problems with improperpayments. Some do not, yet still have to squeezeout scarce resources to comply with IPIA andRAA mandates. For entities that historically havenot had a material weakness in this area, someexecutives suggest biennial or triennial instead ofannual audits.Consolidating compliance activities canhappen outside and inside an entity, say executives.Outside, Congress and OMB can consolidateand rationalize all or most finance-relatedcompliance requirements, including the content,format and due dates of their reports. Thiswould reduce overlaps and redundancy and helpleaders take a holistic view of finance, accountingand performance measurement. The consolidatedresult would be broad reform instead ofpiecemeal solutions.Some of our respondents say they have reducedthe resources needed for compliance by consolidatingand coordinating the work of the variousteams involved. For example, portions of the complianceor reporting work for FISMA, FFMIA,the President’s Management Agenda, the CFOAct, A-123 and the PAR can be consolidated inorder to save resources. This requires planning,scheduling and collaboration among differentparts of an entity, but the result can be more comprehensivesolutions to problems. Consolidationalso reduces data calls to program managers andpromotes partnership among CxOs andother executives.
15Top risksRespondents to the in-person interview of executivesand the online survey of managers indicated that thetop three risks to accomplishing their mission areproblems with, in order, human capital, leadershipand systems. Compliance is a strong fourth issue forthe executives (see Figure 2). Other issues includeCongressional and Executive Branch politics, the needfor more accountability, lack of standard operatingprocedures and poor or unintegrated financial andperformance measures.Figure 2:Relative importance of major risks categories by percentageof times mentioned in executive survey responses% of all mentions4035302520151050Human Capital Systems Leadership ComplianceRisk categoryHuman capitalTo government leaders, human capital meanspeople with the right skills and experience. Ourannual surveys indicate that, for the past severalyears, human capital has been the number oneconcern of CFOs and other financial executivesin both defense and civilian entities, far moreso than any other issue. For example, in the2008 survey, more than twice as many executiverespondents listed human capital as a riskthan systems or leadership. This finding willnot surprise anyone in a government supportfunction such as financial management. Forthe past 10 years, the number of federal financeand accounting employees either has declinedor held steady. At the same time, the amount ofwork required for many support functions hasrisen, in part because of increased mandates forcompliance with outside rules (see box, Outsidemandates for financial information, on page 12).As a result, say respondents, they face the humancapital problems described below.• Federal hiring procedures are complex andlengthy, say many respondents. People todayare not willing to jump through as manyhoops or wait as long as they once were.• For several years now, top leaders have knownthat Babyboomer retirements are causingbrain drains throughout the government. Saysone financial executive, “I expect to lose 65percent of the staff in my division in the next5 years, which includes Acquisition Officers,Contracting Officers and Senior Accountants.A lot of institutional knowledge will be lost,especially in the areas of systems.”• A shortage of mid- and senior-level financeand accounting professionals in the governmenthas caused some entities to lure themaway from others with promises of promotions,training and meaningful work. “Wedon’t have people in the pipeline who arecapable of taking some of our middle- andupper-level management positions,” says anexecutive, “So it is easier to hire people fromother bureaus.”• Private companies and enforcement agenciesoffer higher salaries to talented financial professionalsthan can most governments.
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 12 and 13: 10more likely to add value to opera
Page 14 and 15: 12• Better guidance and clearer r
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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