Financial Management: Providing a Foundation for Transition - AGA

25say executives, include trying to put a value ona historic monument that will never be sold orrequiring periodic valuation of warships.Reconciling intragovernmental transfers is mademore difficult by a lack of clear guidelines fromthe Treasury, say some respondents. Together,PP&E and intragovernmental transfers may bethe biggest current barriers to gaining a cleanopinion for the U.S. consolidated financial report.Liabilities are of major concern to the FederalGovernment, including environmental cleanupcosts. Grant makers are concerned, because grantaccrual methods can be opinion busters andtypically involve a great deal of conversation withauditors and grantees, says an executive.Decision support is not exactly at the bottomof the priority focus list (some items not listedranked a bit lower), and the question posed inTable 4 is about annual financial reports, notmanagement accounting. Still, it seems a pitythat the current model for federal financialstatements does not motivate CFOs to make thehighest and best use of financial information atop concern. We will discuss this shortly.Working with auditorsThree out of four executives think that theapproach that financial auditors take today influencescontrols and accountability mechanisms inways that add value to the management of government(see Figure 3). It is all about communicationand transparency, say many executives. Their topsuggestion for a successful audit is to have early,frequent and focused meetings with auditors and tofully disclose issues and potential risks with them.Early, because if auditors come at mid-year, asthey often do, then issues they identify will bedifficult to fix by the end of the year. Frequent, inorder that all parties stay on track throughout theaudit cycle. Focused, to prevent “fishing expeditions”should auditors go outside the scope oftheir charge. Full disclosure, to inspire trust andavoid surprises to either party.Figure 3:Opinions of executives on whether theapproach used by federal auditors addsvalue to government management75%Yes25%NoEducate auditors about the mission and operationsof an entity, say several executives, andmake sure that they are on board with theorganization’s vision and goals. If auditors askfor something, give it to them (but talk to theaudit manager if a request does not make sense).Always talk to the IG about risks (hopefullythroughout the year) and get IG and auditorinput on plans to mitigate risk and beforemaking accounting changes.Several respondents advised preparing a memorandumof understanding with an agreed-uponscope for the audit, then tracking the auditclosely to keep it in scope. This is not as mucha problem when the auditor is an independentpublic accounting (IPA) firm on contract to an