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Sunday, November 30, 2008

FSIO Quarterly Newsletter - Summer/Fall 2008

FSIO recently posted its latest Quarterly Newsletter online.

This issue includes:
  • An interview with Owen Barewell, FSIO Transformation Team Chairman and DOE DCFO
  • SSP Spotlight on GSA's Federal Integrated Solutions Center (FISC)
  • FMLOB Procure-to-pay standardization
  • Reimbursables Standard Business Process plans

Commentary: Change and the transition

For months one of the most frequently heard words on television has been “change.” Now we know that President-elect Barack Obama will lead that change and federal agencies will be affected. How agencies prepare for and execute change will determine if envisioned outcomes are achieved.

Meaningful discussion of change must distinguish between external change imposed on agencies and internal change agencies introduce to meet the demands of external change. Organizations cannot control external change. For example, the government is not in a position to directly “control” changes in U.S. demographics or political developments in other countries. Similarly, agencies cannot control the priorities of Congress and the president as they relate to program issues. But organizations must manage and control their response to external change.

Best-practice organizations engage in meaningful strategic planning and use that planning to proactively drive internal change. The most successful private-sector companies almost universally engage in proactive change, as their success in a changing environment demands it. As organizations become more reactive to change, however, options typically diminish while the urgency and risk of change increases. Carried to the extreme, organizations are reluctant to undergo change until at the brink of the proverbial “burning platform.”

Government organizations tend to be more risk averse than the private sector. As one Senate staffer recently said, “Congress only has the budget and embarrassment” to induce agencies to meet congressional program objectives. As a result, agencies tend to be slow to change because change brings risk, and risk can bring embarrassment. Moreover, change in agencies — lacking a profit incentive — is often driven by legislative priorities. Consequently, planning takes on a compliance orientation. Agency strategic plans may meet the mandates of the Government Performance and Results Act, but too seldom truly guide agency business decisions. Moreover, the strategic planning process is underused as a primary basis of adapting to the changing demands in the external environment.

Managing risk by becoming more proactive in managing change requires two actions. First, organizations must undertake strategic planning that is less focused on generating glossy public reports and more on driving business decisions across the agency. Such strategic planning is an ongoing process that scans the external environment and proactively seeks change to align organizational goals, objectives and processes to the needs of the shifting environment.

Second, the management of risk is often addressed in an informal, even haphazard manner. A disciplined approach to enterprisewide risk management, using an established framework facilitating a more complete identification, assessment, treatment and monitoring of risk is required. Risk management typically operates within functional silos. Government needs to borrow a private-sector best practice, enterprise risk management, to cross functional silos and focus on those key risks that can adversely affect the achievement of agency strategic objectives.
The transition to a new administration will bring major change — and major risks. As stewards of the public trust, government managers must drive internal change while cognizant of the corresponding risks, and apply the best practices of meaningful strategic planning and enterprise risk management to achieve the results rightfully expected by the nation’s citizens.

-Douglas Webster, FederalTimes.com

Douglas Webster is chief financial officer at the Labor Department and co-author of a newly published book on change management, “Chasing Change.”

Monday, November 24, 2008

Today's GAO Publications

The Government Accountability Office (GAO) today released the following reports:

Confirmation of Political Appointees: Eliciting Nominees' Views on Management Challenges within Agencies and across Government.
GAO-09-194, November 17.

Federal Farm Programs: USDA Needs to Strengthen Controls to Prevent Payments to Individuals Who Exceed Income Eligibility Limits.
GAO-09-67, October 24.
Highlights - http://www.gao.gov/highlights/d0967high.pdf

Wildland Fire Management: Interagency Budget Tool Needs Further Development to Fully Meet Key Objectives.
GAO-09-68, November 24.
Highlights - http://www.gao.gov/highlights/d0968high.pdf

Interim Guidance Posted to GAO's Yellow Book Web Page

The U.S. Government Accountability Office (GAO) has posted the document "Interim Guidance on Reporting Deficiencies in Internal Control for GAGAS Financial Audits and Attestation Engagements (November 2008)" on the Yellow Book Web page. Call Michael Hrapsky at 202.512.9535 with questions or send an e-mail to yellowbook@gao.gov.

New FASAB Exposure Drafts

FASAB Releases Exposure Draft on Social Insurance

The Federal Accounting Standards Advisory Board (FASAB) is seeking input on the exposure draft Social Insurance Accounting, Revised. Social Insurance comprises five programs; however, two programs, Social Security and Medicare, are of special significance because of the high rate of participation among citizens, the fiscal challenges related to the programs, and the challenges associated with incorporating estimates of future cash flows of this magnitude in financial statements.

From the outset, members have agreed on the objectives of financial reporting for social insurance programs but have had different views about how best to achieve the objectives and about the timing of the recognition of expense and liability for social insurance programs.
Chairman Tom Allen says that "this exposure draft represents a compromise. It proposes enhanced reporting but does not resolve the two strongly held views regarding when the obligating event occurs for social insurance programs and, thus, when the liability and expense definitions are met within those programs." Comments on the exposure draft are due by Feb. 9, 2009.

FASAB Releases ED on Estimating the Historical Cost of General Property, Plant and Equipment

The FASAB is seeking input on an exposure draft, Estimating the Historical Cost of General Property, Plant, and Equipment--Amending Statements of Federal Financial Accounting Standards 6 and 23.This Statement proposes to clarify that reasonable estimates of original transaction data historical cost may be used to value general property, plant, and equipment. Comments on the exposure draft are due by Jan. 30, 2009.

Friday, November 21, 2008

Today's GAO Publications

The Government Accountability Office (GAO) today released the following publications:

Department of Labor: Better Cost Assessments and Departmentwide Performance Tracking Are Needed to Effectively Manage Competitive Sourcing Program.
GAO-09-14, November 21
Highlights - http://www.gao.gov/highlights/d0914high.pdf

Thursday, November 20, 2008

FederalNews Radio - Federal CFO Insights - Thomas Cooley (NSF)

Grants Management: Challenges and Solutions for Managing Grants Across the Federal Government

Thomas Cooley - Chief Financial Officer and Director, Office of Budget, Finance and Award Management (BFA)
National Science Foundation

How are grants being managed at the National Science Foundation and across the federal government?

The "landscape" of federal grants:
  • How much money are we talking about?
  • What types of grants are out there to meet that purpose?


  • What does P.L. 106-107 (the Federal Financial Assistance Management Improvement Act) mean for the federal government and their customers in the grants community?
Unfunded mandates
  • What does that mean?
  • What impact can such activities have on the grants community?

Listen Here

Administration touts continued progress on financial audits

Agencies have achieved the best audit results in recent years, giving the incoming administration a solid foundation for further progress, the Office of Management and Budget announced on Wednesday.

All but four of the 24 agencies required to have annual audits under the 1990 Chief Financial Officers Act received clean opinions for fiscal 2008, and all submitted their paperwork on time, OMB reported. In fact, seven agencies handed in their reports three days early, and every agency left a cushion of at least an hour before the midnight deadline on Monday, according to an OMB official who spoke on condition of anonymity. This was in marked contrast to 2004 -- the first year agencies were required to accelerate reporting to 45 days after the close of the fiscal year -- when agencies were "using every minute" available, the official said.

Of particular note, the Treasury Department achieved a passing mark despite last-minute complications as the government got more involved in stabilizing the economy. The takeover of mortgage giants Fannie Mae and Freddie Mac had to be reflected in the department's financial statements, for instance, since it occurred shortly before the end of the fiscal year on Sept. 30.

Administration officials also praised the Army Corps of Engineers, which earned its first clean audit, providing a glimmer of hope for its parent agency, the Defense Department. The Army Corps is the largest Defense entity to achieve a passing mark thus far, and doing so required a massive concerted effort because of the agency's large property inventory and decentralized structure, the OMB official said.

Agencies also made a dent in material weaknesses -- issues that give auditors pause about the reliability of financial information -- reducing them by 18 percent from 39 in fiscal 2007 to 32 in fiscal 2008. The Transportation Department boasted its first clean audit with no material weaknesses, showing that this combination is "very possible and viable" even for large agencies, the OMB official noted.

Agencies won plaudits for identifying more improper payments, which include over- or underpayments to beneficiaries of federal programs such as housing assistance and food stamps.

OMB estimated that the governmentwide payment error rate in fiscal 2008 was 3.9 percent or $71.7 billion. While this is an increase of $16.7 billion over fiscal 2007, it includes mistaken payments for 12 programs that were reviewed the first time in 2008 and is a much more comprehensive estimate than before, the OMB official said. Agencies have taken steps to eliminate mistakes identified in past years, the budget office noted, reducing the error rate for programs examined in fiscal 2004 from 4.4 percent to 3 percent.

It will fall to President-elect Obama's management team to continue this progress, and address lingering material weakness and bringing the four agencies that failed their audits up to speed. Those agencies -- the Defense, Homeland Security and State departments, and NASA -- share some challenges. Defense and Homeland Security have trouble with property inventories and keeping track of how much cash they have on hand, for instance. But other obstacles, such as Defense's outdated financial systems, are more unique.

Johnson recommended that the incoming administration set clear financial management goals and marshal the energy to achieve them. Motivating employees shouldn't be hard, he said. "The Obama administration is going to be very pleased with how well-prepared the financial management people are in each of the agencies to tackle these issues," Johnson said.

-Amelia Gruber, GovExec.com

Wednesday, November 19, 2008

AGA Research Study Sees Bright Future for XBRL Use in State/Local Governments

Research studied the creation of XBRL-enchanced CAFR Statements in the state of Oregon

Alexandria, VA (November 19, 2008) - Using XBRL (short for eXtensible Business Reporting Language) in public sector financial reporting is the subject of a research study, released in September 2008 by the Association of Government Accountants (AGA).

This report entitled, XBRL and Public Sector Financial Reporting: Standardized Business Reporting: the Oregon CAFR Project, studied the feasibility of developing and using an XBRL taxonomy to tag data in a state's Comprehensive Annual Financial Report (CAFR). It is the first actual pilot implementation of XBRL in the governmental sector.

AGA's research team built a taxonomy that tagged two statements in the Oregon CAFR: the Statement of Activities and the Statement of Net Assets. The taxonomy was used to reproduce an instance document with tagged data. The data was then rendered (reproduced) in the form of the original statements. The taxonomy included 150 Governmental Accounting Standards Board (GASB)-compliant tagged data elements.

The report describes the research effort, provides a brief technical overview of XBRL, and contains graphics demonstrating the processes of converting the CAFR data into XBRL, creating the instance document and rendering the instance document into a readable conventional file format.

The significant findings of the research were that:

1) A CAFR taxonomy for all states would have to be at a relatively high level since line items (at least by title) are likely to vary considerably among the states.
2) There are good reasons for looking at XBRL to improve the handling, exchange and reporting of public sector financial information.
3) There is a tremendous opportunity for more research in this area and an even greater opportunity for improved municipal reporting.

Monday, November 17, 2008

Federal CFOs could be key players in Obama administration

Chief financial officers could play a significant role in shaping agency missions during the next administration. But first, they'll need to learn the ins and outs of federal financial management, which is very different than in the private sector, where most incoming CFOs are likely to have been schooled.

"President-elect Obama has talked about wanting to bring a scalpel to programs and to really look at places in the federal government where we can take money from certain things that are no longer effective and apply it to other things," said Patricia Healy, who served nine years as deputy chief financial officer at the Agriculture Department before retiring from federal service in January 2008.

To help bring incoming CFOs up to speed, Healy led a group of current and former federal executives working as advisers to the Council for Excellence in Government, a nonprofit organization in Washington that works to improve public sector management, to produce the "Federal CFO Roadmap." The five-page document outlines the responsibilities of finance personnel and the key laws that govern reporting and accountability requirements.

Healy advised incoming CFOs to read the laws behind their responsibilities and develop strong partnerships with career personnel who can help them navigate the requirements.

"This is the time for the CFOs to really become involved with their agency's missions," she said. "There's not going to be new money. We're going to have to make do with what we have and we're going to have to use it in the best way."

-Katherine McIntyre Peters, GovExec.com

Nonprofits urge Obama to focus on program performance

A coalition of good government groups this week will add its wish list to a growing pile of advice for President-elect Barack Obama and the 111th Congress, ranking performance measurement and improvement as top priorities.

"Performance must be paramount if governing for excellence is to be attained and replicated," the Government Performance Coalition stated in draft recommendations. "Good policies and sound investments will fall short of the mark if anything less than exceptional performance is the predominate mode of operation."

The advocates for a more effective government urged Obama and Congress to set standards and demand accountability through a performance-based framework at executive and legislative branch agencies. This should include linking agency budgets with annual performance plans, developing outcome measures that focus on critical priorities, and applying an objective system to evaluate program and individual successes, the groups said.

They also recommended issuing short reports that give the public a better understanding of the government and fuel a more meaningful debate about fiscal priorities, performance results and future challenges.

The coalition called for greater investment in human resources, including recruiting, orienting, developing and retaining a productive federal workforce, and engaging in workforce planning to address future skills needs.

Finally, the coalition suggested promoting the strategic use of technology to reengineer work processes to improve service delivery and accountability. This also would help meet the expectations of an increasingly tech-savvy population by tapping the Internet to give people instant access to the government.

The coalition, which was founded in 2000 and consists of 18 good government groups, does not advocate specific policy programs or positions, but rather, presents lawmakers and the administration with tools they can use to formulate an effective government management agenda.

-Brittany Ballenstedt, GovExec.com

Today's GAO Publications

The Government Accountability Office (GAO) released the following publications:

Federal Real Property: Government's Fiscal Exposure from Repair and Maintenance Backlogs Is Unclear.
GAO-09-10, October 16.
Highlights - http://www.gao.gov/highlights/d0910high.pdf

Financial Audit: Securities and Exchange Commission's Financial Statements for Fiscal Years 2008 and 2007.
GAO-09-173, November 14.
Highlights - http://www.gao.gov/highlights/d09173high.pdf

U.S. Government Accountability Office: Performance and Accountability Report Fiscal Year 2008.
GAO-09-1SP, November 14

Financial Audit: IRS's Fiscal Years 2008 and 2007 Financial Statements.
GAO-09-119, November 10.
Highlights - http://www.gao.gov/highlights/d09119high.pdf

Friday, November 14, 2008


Washington, DC— Thanks to a new Roadmap available at www.excelgov.org, current and incoming Federal Chief Financial Officers (CFOs) now have an innovative resource to look to for a detailed explanation of required duties, and an outline of evolving roles and responsibilities based on emerging trends in the industry.

With this new federal CFO Roadmap, all current and future public sector CFOs will have a common starting point. It includes a listing of the required duties per the CFO Act of 1990, as well as an outline of key budget and performance milestones and activities. The document also provides public sector CFOs with an overview the federal financial management industry and the future role of the CFO.

The Council for Excellence in Government developed the federal CFO Roadmap in partnership with the management and technology consulting firm BearingPoint, and under the direction and expertise of the Council’s CFO SAGE (Strategic Advisors to Government Executives) community. The CFO SAGE program brings together former and current federal CFO "all stars" and other senior financial management leaders into a live and interactive community designed to provide thought leadership and strategic advice, counsel and mentoring opportunities to government agency CFOs and other government financial executives.


Thursday, November 13, 2008

Outdated systems, poor security plague IRS

The Internal Revenue Service has serious issues with outdated financial management systems and insufficient information security that could affect the accuracy of its financial statements, according to a Government Accountability Office report released on Wednesday.

The report concluded that the agency's internal controls were not effective and that it did not comply with legal requirements for federal financial management systems.

The report says the IRS has yet to clearly articulate its plans to update the financial management systems or establish metrics to help determine the financial efficacy of its enforcement and collection programs.

The IRS is currently in the midst of the Business Systems Modernization program to upgrade its aging networks, for which the agency requested $222 million for fiscal 2009. The IRS began the program in 1999 after a previously failed effort, and plans to modernize its technology and consolidate the more than 400 legacy systems currently in use. GAO has designated the entire program as high risk.

GAO gives the IRS credit for taking steps to improve its internal controls and processes, but said the remaining challenges were enough to seriously hamper the agency's efforts to fulfill its mission.

The IRS' information security vulnerabilities are among the biggest concerns with financial management. In early November, the Treasury Department inspector general for tax administration identified material weaknesses in the taxpayer information system that could lead to identity theft. GAO's report echoed the IG's concerns.

GAO made 147 recommendations to help the agency strengthen its controls over financial management processes; 66 of those relate to information security. The IRS said it was dedicated to improving its financial management systems and cited several initiatives, such as testing the outsourcing of some transactions to Treasury's consolidated service center.

-Gautham Nagesh,NextGov.com


Friday, November 07, 2008

Today's GAO Publications

The Government Accountability Office (GAO) today released the following reports and correspondence:

Financial Audit: Bureau of the Public Debt's Fiscal Years 2008 and 2007 Schedules of Federal Debt.
GAO-09-44, November 7.
Highlights - http://www.gao.gov/highlights/d0944high.pdf

The Nation's Long-Term Fiscal Outlook: September 2008 Update.
GAO-09-94R, November 6.

Thursday, November 06, 2008


Washington, D.C. – (Nov. 6, 2008) – Acting Comptroller General Gene Dodaro Thursday released a list of 13 urgent issues the Government Accountability Office (GAO) has identified as among those needing the attention of President-Elect Obama and the 111th Congress during the transition and the first year of the new administration and Congress. The list is the centerpiece of a new Web site GAO launched Thursday that is designed to help make the transition an informed and smooth one across the federal government.

See the website at: http://www.gao.gov/transition_2009

Wednesday, November 05, 2008

Obama outlines government reform plan

President-elect Barack Obama has already laid out a comprehensive set of government reform plans, including major changes to the Bush administration’s Program Assessment Rating Tool (PART), sweeping ethics reform and a new approach toward financial regulation.

Obama laid out his plans in an 11-page memo released last month. It calls for a new chief performance officer in the White House, who will oversee a strengthened PART. Under the new program, the president would have the authority to use poor PART assessments to replace agency heads, demand improvement plans, and reduce or eliminate program budgets.

The Bush administration has said repeatedly that PART assessments do not directly correlate to an agency’s budget.

Obama would restructure many federal agencies under the plan, thinning the ranks of what he calls “Washington middle managers” and boosting staffing levels in field offices. But Obama’s government reform memo doesn’t provide specifics on how many management jobs would be cut, and which agencies would be most affected.

Obama also hopes to increase transparency, through steps like creating a searchable database of lobbyist contacts and posting complete government contracts on the Internet. His team hopes those efforts will eliminate ethical lapses like those at the Interior Department’s Minerals Management Service, where employees accepted gifts and meals from oil companies they regulated.

The plan also addresses another set of regulatory agencies making headlines: financial regulators.

“The large, complex institutions that dominate the financial landscape today no longer fit into discrete categories,” it says. “We need a streamlined system of oversight, one that reflects 21st century markets.”

Obama’s plan calls for consolidating some of the agencies, and requiring more detailed disclosures from financial institutions.

-Gregg Carlstrom, FederalTimes.com

Monday, November 03, 2008

Today's GAO Publication

The Government Accountability Office (GAO) today released the following presentation:

"Transforming DOD Business Operations," by Gene L. Dodaro, acting comptroller general, before the Defense Finance 2008 conference. GAO-09-160CG, October 27, 2008 [slides]