Financial Management: Providing a Foundation for Transition - AGA

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20SystemsSurvey respondents listed information technology(IT) and systems as the third greatestrisk to accomplishing their mission. Importantissues included integrating financial and performanceinformation and standardizing data andsystems, if not across the whole government,then at least in different categories of service orwithin a large department.Several respondents pointed to the lack ofintegrated information for financial and programmanagement as a major risk. This includeslinking data for planning, programming, budgetingand execution. Without such linkage, governmentwill continue to find it hard to show therelationship between dollars allocated and resultsachieved. In what some believe will be a nearterm period of belt tightening caused by hugedeficits, this could be fatal to some programs.Most financial systems depend on feeds fromprogram systems that initially capture financialand performance information. When thosesystems do a poor job, it is reflected in financialand performance information and reporting.Many agencies and departments hope to solvethis problem by implementing large enterpriseresource planning (ERP) systems, but such projectsappear to run into snags regularly, mostly inthe area of program data integration.Our executive respondents agree that there is noreal government-wide strategy for business ITand systems, no priorities and no master plans.In the case of business and financial systems,such a strategy and its related plans should, theysay, be based on the following principles:• Link and integrate financial, budget, programperformance, human resources and otherrelated business information.• Have fewer systems than there are now.• Standardize information and data across governmentfor most business activities.More use of shared services providers (SSP)would help in reducing the number of systemsand standardizing information. Several respondentsapplauded the concept of OMB’s FinancialManagement Line of Business (FMLOB)initiative, which aims at consolidating financialmanagement systems through shared serviceproviders. They see SSPs as a good choice whendeciding what to do about obsolete legacysystems. These respondents were less laudatoryabout how the FMLOB and other initiativesplayed out across the government. Some thoughtthat OMB’s separate Lines of Business initiativeshad the side effect of further stovepipinginformation flow and processes in entities. Aswell, executives in entities that are implementingERPs were not favorably disposed towardFMLOB and similar initiatives.One of the least costly ways for CFOs to ensurethe utility of entity business systems is to be partof the implementation team and participate inprototyping the systems. In this way, the needsof current and future financial systems will beconsidered entity-wide.
21Looking forwardHow can the government enhance financialmanagement? Financial policy makers and executivesin the survey listed the improvement initiatives theythink Congress and Executive Branch leaders shouldcontinue or start—and also what not to do.What to continueSince 2000, legislators and administration policymakers introduced many initiatives aimed atimproving how the government manages itsfinances and uses financial and performanceinformation (see box, Outside mandates forfinancial information on page 12). Which arethe most important to continue for the next 2to 5 years? Table 3 shows what our executiverespondents think, including financial, OMBand oversight leaders.Table 3:Survey executives’ ranking of current financial managementinitiatives that should be emphasized over the next 2 to 5 yearsInitiative1. Cost, budget and performance reporting2. Program efficiency and effectiveness (A-123, Section 2)3. Financial management systems (A-123, Section 4)4. Financial statement audits, continue current depth and scope5. Financial reporting (A-123, Appendix A)6. Performance and Accountability Report7. Increasing the use of shared service providers (FMLOB)8. Effective measurement and remediation of improper payments(A-123, Appendix C)Cost, budget and performance;program efficiency and effectivenessProviding actionable information on cost, budgetand performance so that it can be used to improveprogram efficiency and effectiveness is the cornerstoneof what the CFO organization is supposedto do, according to many survey respondents.Actionable information may be sorely needed inthe near future, say several executives, becausethere may not be enough money to continue thestatus quo, much less expand programs. Says one,“We have huge deficits and they may continue,so there will be a contraction in defense spendingonce the wars in Iraq and Afghanistan are over.Economy and efficiency will be important. Whenit comes time to cut back, some people will wantto simply cut out programs because that is the easiestthing to do. The reality is that we won’t be ableto or can’t just cut all those programs. We have tolook at everything and say, do we need this? Whatdo we give up if we do this? Can we make thisprogram better and more efficient? If the answer isno, then the program may need to be cut.”One of the constant themes throughout the 2008survey is to eschew accounting for accounting’ssake. Instead, say many respondents, CFOs shouldfocus on adding value to entity programs and mission.Indeed, said one, “There should not be anyeffort expended to create financial information thatis not of value to manage programs,” says an executive.Making this a reality could result in a strongerrole for CFOs in an integrated environment ofaccounting, budget and performance management.Financial management systemsIn the previous section on risks, executives andmanagers listed systems as the third greatest riskto accomplishing their entities’ missions, so itis no surprise that systems initiatives are near
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 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 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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