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Friday, February 25, 2011

Government should adopt web-based financial reporting, industry tells House panel

The government should adopt web-based financial reporting and establish a central website for the public distribution of federal financial information, panelists urged a House panel Feb. 16.

"Financial reporting information needs to switch from a paper-based, static reporting model to more electronic, dynamic and readily available online availability," said Jonathan Breul, executive director of the IBM Center for the Business of Government. Breul testified before the House oversight and Government Reform government organization, efficiency and financial management subcommittee, chaired by Rep. Todd Platts (R-Pa.).

Breul, along with panel member Mike Hettinger, an executive director at Grant Thornton, assisted with a December 2010 paper (.pdf) commissioned by the Federal Accounting Standards Advisory Board on improving the relevancy of the annual consolidated financial report of the federal government. Among the 10 recommendations were calls for replacing paper-based reporting with electronic measures and establishing a public website.

Electronic reporting "is essential if we are to move in the direction of improving the availability and transparency of government information," Hettinger said.

-David Perera, FierceGovernmentIT.com

Tuesday, February 22, 2011

THE CFO ACT OF 1990: Current Systems Considerations, Modernization and Achieving Compliance

The Chief Financial Officers (CFO) Act of 1990 called for major reforms in federal financial management. As we celebrate the first 20 years of this landmark legislation, it is important to reflect on the accomplishments and the remaining challenges. Among the foundational requirements of the CFO Act was a call for the "systematic measurement of performance, the development of cost information and the integration of systems - program, budget and financial.'"! Systems, along with people and processes, are at the heart of highperforming CFO organizations. A lot has been achieved in the past two decades. We have seen federal agencies go from a complete lack of accountability to clear, auditable financial statements, vast improvements in financial reporting, and greater visibility and transparency to American taxpayers. When we look to the future, the evolution of financial management systems that support the systematic measurement of performance, the development of cost information, and the integration of systems as called for in the CFO Act will be a continuing priority. This article addresses the current state of financial management systems and what needs to be done to continue the movement to high performance.

- Robert Maitner, AGA Journal of Government Financial Management, Winter 2010

Monday, February 21, 2011

USPS, DHS, DoD contribute to 'dire' finances

When it comes to the federal budget, the GAO's High Risk List and the deficit, Jeanette Franzel isn't pulling any punches.

"The condition of federal finances is really dire right now."

That was the assessment of the Managing Director for Financial Management and Assurance team at the Government Accountability Office speaking with the Federal Drive at the Association of Government Accountants National Leadership Conference.

"We are faced," said Franzel, "with having to deal with both the short term critical issues as well as rethinking programs in the long term and we don't want to damage the short term economic recovery."

Franzel said there is a third factor complicating matters: trying to operate under a continuing resolution that doesn't seem to have any resolution at all. "We at GAO," said Franzel, "have been managing at a very prudent level, hoping to, once we get our budget, be on track, but again, there's risk there."

Difficult financial times, said Franzel, can make it easier to see what's needed for a good financial system to run well. For example, "the importance of good financial data and estimates and regular updates is just really heightened in this type of an environment, and financial people are doing that to the best of their ability given the systems and data available right now."

As for the three major departments she's been concentrating on, Franzel sounded most concerned about the U.S. Postal Service, despite the President's FY 2012 budget request granting relief from early payments into the retirement system they've been asking for.

Saying the Department of Defense has "a long way to go," Franzel explained DoD's being, yet again, on GAO's High Risk List. "DoD has been one of the impediments to GAO's being able to issue an opinion on the Consolidated Financial Report of the federal government, and the reason is that DoD itself does not get audits and because DoD is material to the Consolidated Financial Report, we can't give an opinion."

The Department of Homeland Security is in a similar situation, said Franzel, but for a different reason. "Also unable to have a clean audit opinion," said Franzel, DHS has "some significant issues with financial systems." Franzel said that's understandable "if you think about the creation of the Department of Homeland Security, it came from a lot of different federal agencies across government, so that department is still struggling with integrating its financial management and its systems."

-Suzanne Kubota, FederalNewsRadio.com

DoD on path to obtain clean books by 2017

Despite the Defense Department's poor track record of meeting deadlines for achieving audit readiness, the Pentagon is on a path to meeting what it believes is the current legislative deadline for producing demonstrably clean financial reports, the department's number two accountant said Friday.

The 2010 Defense authorization bill established a benchmark requiring all of DoD to be audit-ready by 2017, and unlike previous goals, that date is achievable, according to Mark Easton, the Pentagon's deputy chief financial officer.

He said the department's leadership now realizes that solving the problem doesn't simply boil down to having its financial experts do a better job.

"The way we're approached it before oftentimes gives you the impression that as a financial management community we can fix this ourselves," Easton told attendees at an Association of Government Accountants conference in Washington. "We've learned over time, probably the hard way and while probably not putting resources to the best use, that you really have to change the way that the organization does business. That's what we're trying to do in DoD. And we're talking about changing an economy--a very complex economy--that's in many cases bigger than a country." Easton said DoD's current effort to get the documentation of its finances aligned with various federal financial management requirements will require an approach that attempts to make it clear to all the department's dispersed pieces that each of them has a role in the process.

"Previous efforts have focused on things that don't resonate with the enterprise," he said. "People looked at the comptroller or the CFO or the resource manager and said, 'financial is someone else's job, audit is something you want to avoid.' The combination of those two things is not the right message when you're talking about financial auditability. Financial auditability says, 'I know my business and I'm ready to present it to a financial auditor.'"

DoD, which is responsible for more than half of the government's discretionary spending, has been on what Easton called a 20-year "journey" to achieve a clean audit.

-Jared Serbu, FederalNewsRadio.com

Friday, February 18, 2011

Experts push financial reporting overhaul

As the administration and Congress begin the battle of the budget, a task group report suggests the numbers might be even more complicated than most of the country realizes.

"Let's be honest. This is one of the most important, and most boring hearings in Congressional history," Rep. Jim Cooper (D-Tenn.) said during the Oversight and Government Reform Subcommittee on Government Organization, Efficiency and Financial Management's first in a series of hearings on financial reform Wednesday.

The subcommittee heard from three experts about recommendations from the Federal Accounting Standards Advisory Board (FASAB).

"Our focus is to look at financial information of the federal government, particularly how that information is reported and then acted upon," said subcommittee chairman Todd Platts (R-Pa.). "Specifically we are looking at the Consolidated Financial Report (CFR) and how we can make it more useful. The question we are asking is how we take than information and make it more useful, not just to Congress, but to the American people."

Platts said that given the $14 trillion deficit, the public is paying attention to whether Congress is spending tax dollars responsibly - or not.

The task force identified serious problems with the financial information government auditors collect and how they report it. It focused primarily on the CFR, a record of how agencies have spent money and the costs of unfunded but obligated programs such as Medicare.

"The static, paper-based reports the government delivers today contain important information," said Jonathan Breul, a member of the task force and a former Office of Management and Budget official. "However, those reports are not presented or available in a way that makes them easy to use or easy to understand."

The task force conducted a user-needs study which showed citizens, executives and managers in both the private and public sector had difficulty understanding information in federal financial reports.

The task force developed ten recommendations it says will improve the usefulness of the CFR. Four of the recommendations focus on ways to enhance the communication of the data by making it easier to access, search and understand.

FASAB wants to develop a way to link agency financial statements to performance measures to give users a better idea of whether or not the money is being spent wisely. They said numbers lack meaning when there is no context as to whether or not the spending had meaningful results.

Breul said this goal is in line with the recently passed Government Performance and Results Modernization Act. The law calls for OMB to develop governmentwide standards to measure agency performance and identify inefficient programs.

-Meg Beasley, FederalNewsRadio.com

Wednesday, February 16, 2011


WASHINGTON, DC (February 16, 2011) -- The U.S. Government Accountability Office (GAO) today released the biennial update to its list of federal programs and operations at “high risk” for waste, fraud, abuse, and mismanagement or needing broad-based transformation.

Gene L. Dodaro, Comptroller General of the United States and head of the GAO, announced that the Interior Department’s management of oil and gas resources has been added to the high-risk list. At the same time, Dodaro noted that two issues—the Department of Defense’s (DOD) personnel security clearance program and the 2010 Census—had been dropped from the list because of sufficient progress in addressing past vulnerabilities. As a result of these changes, a total of 30 programs and operations are on GAO’s 2011 high-risk list.

“Although oil and gas resources represent one of the largest sources of revenue for the federal government, it’s far from clear that Interior has been collecting all the funds to which the American people are entitled. I am hopeful that the addition of this area to the high-risk list will encourage the Department to successfully make fundamental changes to enhance its ability to carry out its important mission,” Dodaro said.

The Comptroller General released the 2011 list (GAO-11-278 - http://www.gao.gov/products/GAO-11-278) at a bipartisan briefing on Capitol Hill with leaders of the Senate Homeland Security and Governmental Affairs Committee and the House Oversight and Government Reform Committee.

Dodaro observed that a number of areas that remained on the high-risk list had shown improvement, although not enough to drop the high-risk designation. “We at GAO will continue to work with Congress and the Administration to help hasten progress,” Dodaro said.

“While DOD still has several issues on the list, it has demonstrated real progress in turning around a troubled program, enough to allow GAO to remove the security clearance function from the list,” Dodaro said.

The list is updated every two years and released at the start of each new Congress to help in setting oversight agendas. Recent Congresses and administrations have been particularly alert to GAO’s high-risk list and have used its finding to help tailor agency-specific solutions as well as develop broader, government-wide initiatives.

There were 14 areas on the high-risk list when the program was started in 1990. Since then, there have been 39 additions, 21 removals (eight of which were among the original 14), and two areas that were consolidated.

The complete 2011 high-risk list is available on-line at http://www.gao.gov/products/gao-11-278 .

Defense comptroller: Continuing resolution for 2011 is dangerous

If the Defense Department has to operate under a continuing resolution for the rest of fiscal 2011 "bad things will happen" and Pentagon officials will face the hard choice of "which child do you kill" when it comes to funding key programs such as a new Air Force tanker, Robert Hale, the Defense comptroller told reporters at the Pentagon this afternoon.

Defense, along with the rest of the federal government, has been operating under continuing resolutions, which set funding at 2010 levels since the start of the 2011 fiscal year in October. Budgetary uncertainty already has caused the Navy to delay construction of a new Virginia-class submarine and the Army to institute a temporary hiring freeze of civilian personnel, Hale said.

The lack of a full-year budget has hobbled efforts by the services to repair war-worn equipment, and a $2 billion cut in the working capital fund -- cash as Hale explained it -- could impede Defense efforts to buy fuel for its vehicles, ships, and aircraft.

The House Appropriations Committee approved on Feb. 11 a 2011 Defense base budget of $512 billion -- down $32.8 billion from the requested budget -- in a continuing resolution expected to go to a vote by the full House this week. The panel also approved an overseas contingency budget, which funds operations in Afghanistan and Iraq for $157.8 billion -- almost $200 million below the requested $159 billion.

The cuts pose "serious risks" and are dangerous for Defense, Hale said, noting that the department needs a base budget of at least $540 billion this year.

Hale said he "cannot think of a more serious [budget] situation in the past 30 years" of his federal service. In addition to hurting Defense, contractors could start laying off skilled workers.

Hale told reporters that a continuing resolution was "not only a bad idea, but a bad way to budget."

-Bob Brewin, NextGov.com

Tuesday, February 15, 2011

Simple Tech Tool Could Cut Billions in Spending, Help Both Parties

One way of lowering the tone of rhetoric on political issues would be to make it more fact-based.

If the White House wants to try to find any kind of common ground with Rep. Issa and his Committee on Oversight and Government Reform Investigations, and to achieve its own goal of paring federal spending, it would do well to support one of Issa's pet projects, passage of S. 303, the Federal Financial Assistance Management Improvement Act.

That bill, which enjoys bipartisan support, died in the last Congress when a conference committee could not reconcile Senate and House versions. It would require all government agencies to adopt a uniform financial data standard for both their internal financial information and whatever financial info they collected from the private sector in regulatory filings.

Why is that important? Today, there's a wide range of reporting software and procedures which mean that it becomes difficult, if not impossible, to quickly and easily either find out whether a government agency is efficient or to make the information that companies have to report to government easily understood and scrutinized.

While it wasn't named, most believe the best "standard" for reporting under S. 303 would be the eXtensible Business Reporting Language (XBRL). It has the potential to not only cut government waste and inefficiency, but to help businesses make better decisions and cut their supply chain waste, among other benefits. The US lags behind the rest of the world in widespread implementation of XBRL.

Issa has pointed out that the GAO's annual review of the federal government's consolidated financial statements has never produced a clean audit opinion, because agencies use inconsistent standards.

Beyond the auditing problems, by not standardizing on XBRL the government is denying itself an important tool to improve decision-making and interagency cooperation.

-W. David Stephenson, HuffingtonPost.com

Monday, February 14, 2011

Platts zeroes in on agency financials

Two upcoming hearings will set the tone for how House Republicans will oversee federal financial management.
Congressman Todd Platts (R-Pa.) spoke with Federal News Radio in his first interview since being appointed chairman of the Oversight and Government Reform's Subcommittee on Government Organization, Efficiency and Financial Management.
Platts said the first step to ensuring taxpayer money isn't being wasted is seeing how the money is being spent. Starting this week, the subcommittee will hold the first of two hearings on the consolidated financial report - a record of how agencies have handled money.
He said the first hearing, scheduled for Feb. 16, will look at how to make the report more useable for Congress, the administration and the public.

Platts said a second hearing with the report's authors - the Department of the Treasury, the Office of Management and Budget and the Government Accountability Office - will take place on March 9.

He added that information from those hearings will guide the subcommittee in subsequent hearings about more focused topics.

Platts said he hopes agencies will view his subcommittee as an ally in their effort to provide the best services they can.

In addition to agency financial reports, Platts said the subcommittee also will look at performance ratings. He said both factors contribute to determining how efficiently money is spent.

Platts said work the subcommittee already has done with Treasury is proof of the smooth transition. He said the committee is talking to Treasury about strengthening its ability to go after non-tax debt, such as outstanding fines.

Another issue Platts plans to address is improper payments, which he said have ballooned four-fold in four years. He said the estimate for improper payments when he was last chairman was $35 billion - the latest estimate is $125 billion. Platts said this is both good and bad news.

-Meg Beasley, FederalNewsRadio.com

Friday, February 11, 2011

Reporters' Roundup: Federal news countdown, financial management

Two upcoming hearings will set the tone for how House Republicans will oversee federal financial management. Rep. Todd Platts (R-Pa.) spoke with Federal News Radio in his first interview since being appointed chairman of the Oversight and Government Reform's Subcommittee on Government Organization, Efficiency and Financial Management.

-Meg Beasley, DorobekINSIDER, FederalNewsRadio.com

Wednesday, February 02, 2011

Federal Financial Management Systems: A New Reality

The Association of Government Accountants published its most recent whitepaper summarizing the January 11, 2011 Financial Systems Summit.  The report provides a narrative account of the summit presentations by OMB, Treasury, participating federal agencies and the private sector.

Federal Financial Management Systems: A New Reality
A Report on the Federal Financial Systems Summit, January 11, 2011

At the summit Office of Management and Budget Controller, Danny Werfel, and Chief Information Officer, Vivek Kundra, outlined the way forward for federal financial management systems acquisition projects.

The message was clear: the age of massive system implementations is over. The future course will be one of smaller-scale projects with clearly defined deliverables and timeframes.

As the government financial management profession's thought leader, AGA brought together federal financial management professionals and their private-sector counterparts to discuss the challenges and to pave the way forward in what Werfel calls "the new reality."

Download the White Paper (PDF) Here...

Sen. Tom Coburn presses Pentagon leaders to improve financial management

Republican says he’ll push for budget freeze on some accounts until books can be audited

WASHINGTON — Sen. Tom Coburn on Tuesday asked the nation’s top military leaders to get the Pentagon’s financial books in order, saying he would press for a budget freeze on some accounts until they can be audited.

Coburn, R-Muskogee, sent a letter to the chiefs of staff of the U.S. Army, Air Force, Navy and Marine Corps asking them “to aggressively pursue financial improvement and audit readiness in order to preserve the military’s ability to take care of our troops today and to invest in the needed modernization of our weapon systems for the future.”

Coburn wrote that better financial management could save money and prevent cuts, but that strong leadership was needed to overcome “institutional resistance” to changes at the Pentagon.

The senator said the Pentagon could not produce financial statements that could be audited and that managers couldn’t make important financial decisions without accurate data.

The Government Accountability Office, the auditing arm of Congress, has repeatedly placed some of the Pentagon’s business operations in its “high-risk” category “because of their vulnerability to waste, fraud, abuse and mismanagement.”

In a report last week, the GAO said the Pentagon has made some progress toward reforming its business practices, including naming a chief management officer and a deputy chief management officer.

-Chris Casteel, NewsOK.com

OPM's security clearance reformer retires

Kathy Dillaman, the Office of Personnel Management official in charge of improving the security clearance process, retired Monday after 35 years of government service, Federal Times reported. However, she will serve as a senior policy advisor to OPM Director John Berry for the next year or two on issues such as security clearance reform and implementing a new financial management system, according to an e-mail she wrote announcing her departure.

-Alyah Khan, FCW.com