OMB Releases Federal Grant Reform Guidance

OMB and the Council on Financial Assistance Reform (COFAR) are pleased to inform you that today the Federal Register will file for online public inspection reforms to OMB Guidance entitled "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards." The guidance will be published in the December 26th edition of the Federal Register.

Please join us on Friday, December 20, 2013, at 11:45 a.m. for a COFAR webcast on the new guidance. Please visit www.cfo.gov/cofar for more information and to register for the webcast. Questions may be submitted to COFAR@omb.eop.gov.

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Financial management and freedom of choice

At a time when governments are increasingly looking to private-sector solutions to improve efficiency and solve complex challenges, the Treasury Department appears to be headed in the opposite direction when it comes to shared services, with potentially disastrous results.

In April, the CIO Council published the Federal Shared Services Implementation Guide, which establishes a strategy for moving agencies to shared-services environments for business areas such as budget formulation, human resources and, notably, financial management. Charged by the Obama administration with developing an implementation strategy, Treasury's Office of Financial Innovation and Transformation (FIT) developed a plan to streamline and consolidate financial management systems by tapping federal shared service providers (FSSPs) almost exclusively.

Although consolidation might be a good idea, major concerns exist about the viability of the chosen approach.

Representatives from the Software and Information Industry Association and its member companies met with Office of Management and Budget and FIT officials to understand how their effort would improve upon previous attempts, such as the Lines of Business initiative, which ultimately failed in 2006. So far, however, those conversations have led to more questions than answers, particularly concerning the role of commercial providers in the new shared-services arrangement.

Consolidation is a noble goal but not when it flies in the face of efficiency and rationality.

In fact, OMB and Treasury recently announced plans to "assign" all agencies to an existing FSSP, deviating from the April memo and leaving commercial providers completely out of the picture. That action makes little sense in theory and is not feasible in practice. It fails to recognize the complexity of the current federal financial management system environment.

Today only a handful of the agencies covered by the Chief Financial Officers Act receive their core financial management services from an FSSP, and most of those agencies are themselves FSSPs. Even Treasury, which is implementing the initiative and has its own shared-services center, does not host the core financial management systems of three of its largest bureaus. Presumably, those bureaus were deemed too large or complex to use Treasury’s center or another FSSP.

Most agencies are running their own financial management systems powered by commercial software, and those systems largely work as intended. And we know that commercial software has the right capabilities because even the FSSPs use commercial software as their backbone.

By virtue of their size, large federal agencies cannot simply pick up their financial systems and move them to an FSSP. If the Department of Homeland Security or Defense Department tried, the provider would be completely overwhelmed by the complexity and number of financial transactions generated on a daily basis. The cost of migration would far outweigh any projected cost savings.

Consolidation is a noble goal but not when it flies in the face of efficiency and rationality. The administration needs to wake up to the fact that an agency like DHS, with a $40 billion budget and 22 component agencies, is already operating at such a large and complex scale that moving it to a new FSSP would be an unwieldy, expensive mess.

Instead, the administration should take a step back and focus on its original objectives of boosting efficiency and saving money. To start, officials must determine whether there is any evidence that we are currently wasting significant money on our financial management systems. And because commercial software powers the federal government's financial systems -- even the FSSPs -- the private sector must be included in the reform process.

Ultimately, agencies need the freedom to choose the financial management solution that is best for them. They should not be bullied into switching to an FSSP that likely won't meet their needs.

-Mike Hettinger, FCW.com
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Viewpoint: A meaningful management agenda for CFOs

The Association of Government Accountants and Grant Thornton recently released their annual Federal Chief Financial Officer Survey. It explains how President Obama challenged his Cabinet to develop a new management agenda. This would entail a new CFO management agenda, part of which is suggested in the survey. Actually, the CFOs are in a position and capable of fulfilling a more meaningful management agenda.

First, however, one matter should be addressed. The survey states that “transparency and accountability are key elements in the Administration’s management agenda.” It then states that few program managers see value in audits. I would add that probably a few financial managers do not see value in financial audits. This is a real contradiction due, in part, to the fact that, based on their experience, many CFOs do not appreciate the importance of audited financial statements.

In every sector but the federal government, audited financial statements have been accepted as the norm. They are taken as a given, expressly to demonstrate accountability and the existence of reliable financial data. One could argue that financial audits in government are even more important because governments are spending money taken involuntarily from others. It is time to stop the debate about the value of audited financial statements. Clean audit opinions represent the basic blocking and tackling necessary for effective organizations.

The survey also says: “Effective program performance is an agency’s very reason for being, so this remains at the heart of the New CFO Management Agenda” and “More often than not, federal CFOs are charged with overseeing the entire performance management of the agency as a way to ensure that the organization’s results are measured and maximized.” But it also says that “almost two-thirds of CFOs interviewed do not believe that the recently passed Government Performance and Results Act (GPRA) Modernization Act has had an impact on their agency.” This dichotomy signifies what the CFO management agenda should be.

Many CFOs also have the performance improvement portfolio. Even if the CFO does not have the performance improvement officer designation, he or she can be a catalyst for advancement of sound performance management activities. As CFOs quoted in the survey stated: “Program offices pay more attention when it comes directly from the CFO, who controls the budget” and “CFOs can validate costs and cost savings.”

The first CFO Council, established in 1992 by the CFO Act, developed a vision for CFOs. It believed the CFO position should focus on more than processing financial transactions and assuring compliance. It postulated that better CFOs would be advisers to senior management; establish partnerships with program managers; and be major players in improving the management of resources. At the risk of generalizing, this expanded role is no longer universally fulfilled.

I propose that the CFO management agenda entail giving CFOs a proactive role in determining, improving and assuring program performance. Doing so would not require more time, only a change in perspective and approach. The Government Performance and Results Act, as amended, already requires the detail work of defining performance measures, determining and reporting performance results, and using performance information to drive performance improvement.

Therefore, CFOs should move beyond a silo whose primary objectives are reducing administrative costs and processing data that assure auditable financial statements. The CFO management agenda should involve CFOs in:

■ Working with their agency’s program managers to establish meaningful outcome and output measures for all programs.

■ Establishing and maintaining the systems that enable performance data to be collected for all measures.

■ Using the data to drive performance improvement, i.e., the already-defined role for the PIO.

■ Complementing the use of Performance.gov to demonstrate accountability for performance results with the use of Agency Financial Reports/Performance and Accountability Reports to show the relationship between performance results and the financial resources expended to achieve those results.

There is another element that should be included in the CFO management agenda. The ability to continue to deliver services in the face of shrinking budgets will require that programs be as cost-effective as possible.

Many CFOs have the budget development function in their agencies. As budget officers, they should demand that program managers specify the costs of producing the outputs for each program in order that preference can be given to the most cost-effective alternatives. I suspect that many program managers cannot provide that information. Hence, another element for the agenda is that CFOs, as the accounting officers, should build the cost accounting systems with which those costs can be ascertained and the budget officers’ requests be met.

None of these pieces for a new CFO management agenda are short-term. Nor will they furnish the low-hanging fruit that makes for good press releases. But they are the kind of CFO management agenda items that can produce major, meaningful and long-lasting results.

-Hal Steinberg, FederalTimes.com
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Hal Steinberg is technical director for the Association of Government Accountants’ Certificate of Excellence in Accountability Reporting program. He previously was acting controller and deputy controller of the Office of Federal Financial Management and associate director for management in the Office of Management and Budget.

Agencies can’t always tell who’s dead and who’s not, so benefit checks keep coming

The U.S. government has a problem with dead people. For one thing, it pays them way too much money.

In the past few years, Social Security paid $133 million to beneficiaries who were deceased. The federal employee retirement system paid more than $400 million to retirees who had passed away. And an aid program spent $3.9 million in federal money to pay heating and air-conditioning bills for more than 11,000 of the dead.

These mistakes are part of a surprising glitch at the heart of the federal bureaucracy. Because of a jury-rigged and outdated system meant to track deaths, the government has trouble determining exactly which Americans are deceased.

As a result, Washington is bedeviled by both the living dead and the dead living.

The task of tracking deaths for the federal bureaucracy is an enormous one; about 2.5 million Americans die each year. Federal officials say the vast majority of these cases are handled correctly: The death is recorded. Government money is no longer sent to that person.

But not always. In fact, glitches in the system have paid more than $700 million to the dead, according to government audits performed since 2008.

The trouble with dead people often begins with something called the Death Master File, which is kept by the Social Security Administration. Every day new reports are added, provided by relatives, funeral homes and the state agencies that issue official death certificates.

The list contains 90 million reports.

The problem is that not all of them are correct.

Now, after years of inattention, President Obama and two senators have laid out ideas to improve the system. In his 2014 budget, Obama requested $22 million to improve the death reports that come in from states by upgrading their systems to transmit faster and more accurate data.

In the Senate, Carper and Sen. Tom Coburn (R-Okla.) have written a bill that would require all federal agencies to check the Death Master File before paying benefits. It would also give all agencies access to the full file, not just the partial one. And it would require new efforts to make sure the data in the file are accurate.

-David A. Fahrenthold, WashingtonPost.comREAD MORE...

Interior takes financial management system to an enterprise cloud

The Interior Department’s Financial and Business Management System is being migrated to an enterprise cloud run by Virtustream, the company reported.  

FBMS provides the administrative backbone to support DOI’s financial transactions, acquisitions, travel, grants and subsidies, and property and fleet management functions across 60 offices. When fully deployed, it will replace and/or integrate 160 of Interior's 162 legacy business systems and subsystems, according to the agency website.

Virtustream, a provider of cloud software and services, is working with prime contractor Unisys to move the financial management system, which is based on SAP software, to its Virginia-based data center, which complies with security guidelines stipulated by the Federal Information Systems Management Act (FISMA).

SAP application hosting is the first project Interior officials and contractors are tackling as the department expedites its move to the cloud. In August, Interior awarded a set of contracts valued at up to $10 billion to 10 vendors in a bid to transform overall IT capabilities. 

Interior expects to save $100 million each year from 2016 to 2020 by moving applications to the cloud. 

Virtustream is SAP-certified in both cloud and hosting services. The company is currently going through the process to get security accreditation for its enterprise cloud under the federal government’s Federal Risk and Authorization Management Program, said Kevin Dattolico, chief sales officer for Virtustream.

-Rutrell Yasin, GCN.com
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AGA Executive Reports Address Shared Service and Improper Payment Reduction Strategies

AGA released two reports identifying specific steps that all levels of government can take to get more for their money, promote program excellence and reduce improper payments. The papers summarize two special sessions conducted this summer during AGA's training event in Dallas.

One session examined lessons learned by governments at the forefront of implementing shared service arrangements; the other explored the feasibility of developing a common strategy to reduce improper payments across all levels of government.

The reports, entitled, "Envisioning and Realizing the Promises of Shared Services," and "Reducing Improper Payments through Collaboration," are available in AGA's Thought Leadership Library.

The sessions revealed that shared services can be used to accomplish critical government objectives, including efforts to mitigate improper payments. AGA Executive Director Relmond P. Van Daniker explained that a number of federal databases are actually shared services that help states mitigate improper payments by improving their ability to determine program eligibility and payment amounts.

For example, "the National Directory of New Hires maintained by the U.S. Department of Health and Human Services, helps states mitigate improper payments," Van Daniker said. "The national directory allows state agencies to match new hires, reported by employers, with individuals owing child support. It further helps state agencies reduce unlawful or erroneous public assistance payments, including payments for welfare, Supplemental Nutrition Assistance Program (formerly food stamps) and Medicaid payments."

In a similar vein, the Treasury Offset Program (TOP) is a shared service that collects delinquent debts owed to federal agencies or states. Jeffrey Schramek, U.S. Department of the Treasury(Treasury), spoke during each session, alluded to the success of TOP. Under TOP, federal agencies and states can offset delinquent debts - including overpayments -against appropriate federal and state payments. "TOP's successful state program recovered more than $3 billion for the states, alone, in 2012," said Schramek.

Arizona Comptroller, Clark Partridge, co-chair of AGA's Intergovernmental Partnership, highlighted how AGA's intergovernmental ToolKits and guides help to reduce improper payments. During the session on improper payments, Partridge identified the Intergovernmental Partnership's Cooperative Audit Resolution and Oversight Initiative guide as an excellent resource to reduce improper payments by determining the underlying cause of audit findings. AGA's ToolKits and guides are available online and are free to use.

Cooperation, and the ability to agree on a shared mission, is fundamental to developing successful shared-service arrangements, according to Dan Murrin, Partner, Ernst & Young (EY). EY sponsored the session on shared services and Murrin moderated the session on improper payments.

Murrin said that governments can be more successful in mitigating improper payments by working together. 

"Governments can develop shared systems that help verify eligibility and payment amounts," Murrin said. "There are opportunities to establish regional eligibility systems and to develop 21st-century cooperative arrangements that leverage investments made by governments." Murrin added that the use of shared services provides opportunities to standardize processes and improve governments' ability to work together in preventing improper payments.

Richard Gregg, Treasury's Fiscal Assistant Secretary, issued a challenge to government financial officials while closing the session on shared services, "The benefits of shared services are too large for us to ignore as a government." Gregg further stated, "To realize the cost savings and the better flow of information that can be derived from shared services, the government accountability community must develop the courage to act and make a commitment to change."

According to Van Daniker, AGA will build on information contained in the reports to forge alliances among officials at all levels of government in an effort to improve government performance and increase accountability.

From 500 to 70, OMB reduces number of financial system requirements

The Office of Management and Budget actually canceled a financial management circular earlier this month.

Circular A-127 no longer governs agency financial management systems. Instead, OMB rolled a small set of these old requirements into the new Appendix D of Circular A- 123 back in September.

OMB said Appendix D went into effect Oct. 1 and therefore rescinded all previously issued versions of Circular A-127 from Dec. 19, 1984; July 23, 1993; June 10, 1999; Dec. 1, 2004; and Jan. 9, 2009.

Norman Dong, the acting controller at OMB, said the goal of the rescission of A- 127 and the new Appendix D is to improve the quality, utility and the reliability of federal financial information.

The new guidance features only 70 requirements that OMB hopes will drive agencies toward outcomes such as reporting timely financial data or eliminating waste, fraud and abuse.

Dong said Appendix D now focuses on ways agencies can gauge how well they are in meeting the requirements of the Federal Financial Management Improvement Act (FFMIA), such as the number of and nature of material weaknesses and audit opinion from the inspector general or third party analysis. Formerly A-127, and now Appendix D, help agencies implement FFMIA.

Another major change with Appendix D is the focus on shared services. OMB has strongly encouraged agencies to move to federal shared service providers for financial management when appropriate, but some of the requirements under A-123 made it more difficult.

Dong said one example of this change in approach to financial management happened when a service provider and customer agency initially had discussions about hosting the system and identified more than 700 gaps between how the customer and provider were doing business. But, he said, when they shifted the conversation away from how they were doing business and focused on what needs to be achieved, the number of differences dropped dramatically.

OMB eventually will fold Appendix D into the rewrite of Circular A-123, governing the internal controls of agency financial management.

Dong said the goal is to rationalize and harmonize OMB's guidance on federal financial management. He said it's important to make sure the requirements are reasonable and rationale.

OMB announced in February it would lead an effort to do the first major grants policy rewrite in years.

Dong said OMB will release the A-123 update in the coming months. He said OMB is conferring with agencies on a number of different aspects of the rewrite, including the improper payments requirements.

In addition to the A-123 update, OMB released a new bulletin on Oct. 21, giving agencies an updated set of minimum standards for their financial audits.

OMB made 26 changes to the 67-page document around areas such as reporting, written representation from management and the scope of the audit.

-Jason Miller, FederalNewsRadio.com
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DHS CFO Sherry heading to the IRS

Peggy Sherry is taking her management skills to a new agency.

The Homeland Security Department's CFO is heading to the IRS, the agency confirms.

Sherry will be the deputy commissioner for operations support, replacing Beth Tucker, who retired at the end of September.

Sherry will join the IRS Nov. 4 after spending more than six years at DHS.

In her new role, Sherry will direct IRS' support functions, including the CFO, human capital office, information technology, privacy and agencywide shared services.

The deputy commissioner is one of the top two positions at the IRS under the service's commissioner.

She becomes the fourth senior official to join the agency this year. Werfel became the acting commissioner in May after the scandal involving the IRS improperly singling out conservative groups for special scrutiny.

-Jason Miller, FederalNewsRadio.com
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OMB updates financial reporting rules

What: Appendix D to Circular No. A-123, Compliance with the Federal Financial Management Improvement Act of 1996

Why: Federal agencies are getting new flexibility in modernizing their financial management systems, per a Sept. 20 memo from Sylvia Burwell, director of the Office of Management and Budget.

The new framework changes the way agencies comply with the Federal Financial Management Improvement Act (FFMIA), to eliminate some restrictions on technology products and phase out a testing and certification program for the deployment of financial management software, while paving the way for the use of shared services across agencies. The OMB has also established a set of common goals for financial management across all federal agencies. The memo also charges the Treasury Department with developing requirements for federal financial management systems.

-Adam Mazmanian, FCW.com
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AGA's Financial Management Standards Board (FMSB) Seeks Input on New Reporting Framework

FMSB seeks input on the development of a new reporting framework targeting executive and legislative decision-makers. 

Comments due by December 1st.

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GCN Names Danny Werfel Government Executive of the Year

GOVERNMENT EXECUTIVE OF THE YEAR
Werfel championed technology's problem-solving power

With newly minted degrees in law and public policy in the late 1990s, Danny Werfel might not have seemed an obvious choice as a passionate advocate of using technology to solve the ills of government. By the time he became controller of the Office of Management and Budget in 2009, however, he was a leading force for the application of technology in federal financial management.

-Brian Robinson, GCN.com
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Morin paints challenging way ahead for Air Force's audit readiness

The Air Force is facing an ever increasing likelihood that it will not get its financial house in order by the first congressionally-mandated 2014 deadline.

By the end of this fiscal year, all of the Defense Department must be able to develop an auditable statement of budgetary resources.

But Jamie Morin, the Air Force's outgoing comptroller and President Barack Obama's nominee to be DoD's second director of the Cost Assessment and Program Evaluation (CAPE) office, told lawmakers Thursday the service would struggle to meet the 2014 deadline.

Morin said meeting the financial auditability deadlines remains an important priority for DoD and there has been real progress made over the last few years.

The Air Force's struggles are not new. Morin told lawmakers in 2011 that the Air Force's systems were among the biggest roadblocks it faces.

Lawmakers also pressed Jo Ann Rooney, the President's nominee to be the undersecretary of the Navy, on the service's ability to meet the congressional financial mandates.

Rooney said she didn't have details about the Navy's status in part because of the fiscal uncertainty that hasn't let the service hire skilled workers and plan accordingly.

Sen. John McCain (R-Ariz.) told Rooney to go back and figure out where the Navy stands on meeting the legal deadlines. He said if she doesn't know the answer, she isn't qualified to hold the undersecretary job.

With the first deadline now less than a year away, lawmakers will pay close attention to DoD's progress, and want consequences should they miss the 2017 deadline to have an auditable financial statement.

Several members of the Armed Services Committee co-sponsor the Audit the Pentagon Act of 2013, introduced by Sens. Tom Coburn (R-Okla.) and Joe Manchin (D-W.Va.). The bill states that if DoD fails to obtain a clean audit opinion by 2018, the military services would be barred from spending money to fund new major acquisition programs beyond what's known as "milestone B" — in essence, the actual engineering and manufacturing of new systems.

-Jason Miller, FederalNewsRadio.com
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AGA Publishes 2013 Federal CFO Survey Results

CFOs: Something's Gotta Give

Survey on federal financial executives shows struggle to achieve results in the face of increasing requirements and a demoralized workforce

Continuing to provide adequate services in the face of unprecedented across-the-board cuts; a declining, dispirited workforce; and growing financial and other management requirements is the top concern of federal Chief Financial Officers (CFOs), according to the 18th annual Federal CFO Survey conducted by the Association of Government Accountants (AGA) in partnership with Grant Thornton LLP.

CFOs crave a clear and consistent framework that helps them set priorities and accomplish goals important to their leadership. Unless a new, focused management agenda is put in place, CFOs fear they can't continue to meet growing requirements in the face of extraordinary challenges.

When asked about their greatest challenges, almost a third of financial executives interviewed and a quarter of those who responded on-line said the services they provide are at risk in the face of growing requirements and declining resources, including people. "Government needs to adjust expectations based on the funding it has. Government can do all the old jobs poorly, or it can do the new jobs well," noted AGA Executive Director, Relmond Van Daniker. He continued, "CFOs cited many serious short- and long-term challenges. However, they are in a position to lead their agencies and the government as a whole to sustainable solutions to these challenges."

Other findings of the survey illuminated the challenges facing CFOs. They met the data quality and reporting challenges of the Recovery Act, but they do not see lasting benefits from those transparency efforts. Internal control activities produce benefits, but their application appears focused on financial reporting rather than program performance. CFOs embraced major Administration initiatives like the Campaign to Cut Waste and Reducing Improper Payments, but because they have to implement the mother-of-all across the board cuts, more mature cost management is lacking.

AGA and Grant Thornton conducted in-person interviews with more than 100 U.S. federal financial leaders and senior leaders of oversight groups such as the Office of Management and Budget (OMB). Approximately half of these interviewees had job titles of CFO or Deputy CFO; others were direct reports or other financial executives. Almost 200 other federal financial leaders participated in an online survey. Both online and in-person survey instruments included closed and open-ended questions. AGA and Grant Thornton have conducted this survey annually since 1996.

The report is the product of AGA's Corporate Partner Advisory Group (CPAG) research project sponsored by Grant Thornton LLP. The project leader for this research report was Denise Lippuner, CPA.

READ THE REPORT HERE...

OMB Circular A-123, Appendix D Becomes Effective October 1, 2013

On September 20th, the interim final version of OMB Circular A-123, Appendix D, Compliance with the Federal Financial Management Improvement Act of 1996 (M-12-23) was released.  Appendix D, effective October 1, 2013, provides additional guidance and defines new requirements for Financial Management Systems determining compliance with the FFMIA.  Appendix D rescinds all previously issued versions of Circular A-127, Financial Management Systems.

Please see http://www.whitehouse.gov/sites/default/files/omb/memoranda/2013/m-13-23.pdf for OMB Circular A-123, Appendix D.

Financial system shared services still lacks governance model

Establishing a governance model for the latest Office of Management and Budget attempt to move federal financial managed systems onto a shared systems model remains an unfinished priority, officials said during a Sept. 25 panel.

OMB released in March a memo (.pdf) requiring agencies to use "with limited exceptions" a shared services solution when modernizing core accounting or mixed financial systems, with preference given to federal agencies designated as a shared service provider. The idea is that shared infrastructure for processes that can be standardized within and across agencies will reduce spending on financial systems, which currently consumes about $8.4 billion annually, said Elizabeth Angerman, director of the Office of Financial Innovation and Transformation within the Treasury Department. She spoke at an AFCEA-Bethesda morning event in Rockville, Md.

The concept is similar to the George W. Bush-era OMB's financial management line of business initiative, which also faced difficult governance questions that were never fully resolved; the FMLoB effort fell further behind when in its first term, the Obama administration de-emphasized Bush-era OMB policies.

"We don't have the governance structure set up, and that is a concern for our politicals--that they don't have a say, that it'll be some other secretary, and that secretary is five, six levels removed," said Myrian Myer, Labor Department associate deputy chief financial officer.

If the expectation is that agencies are (again) going to contract with each other for financial system services, "what are the rules, who gets a say, how is that going to work?" Myer said. "All those things need to be figured out, and they can be--but they haven't yet."

-David Perera, FierceGovernmentIT.com

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OMB gives agencies more control over financial management systems

Agencies are gaining more control over how to upgrade their financial management systems.

Instead of a strict set of rules around the technology requirements for federal systems, the Office of Management and Budget will rescind Circular A-127 that governs financial systems, and, through this memo, move and simplify those regulations into Appendix D of Circular A-123.

OMB Director Sylvia Burwell wrote in a memo to agency leaders that said, "The goal of this Appendix is to transform our compliance framework so that it will contribute to efforts to reduce the cost, risk, and complexity of financial system modernizations. The objective of this approach will be to provide additional flexibility for federal agencies to initiate smaller-scale financial modernizations as long as relevant financial management outcomes (e.g., clean audits, proper controls, timely reporting) are maintained."

In a nutshell, implementing the Federal Financial Management Improvement Act (FFMIA) has become arduous and ended up forcing agencies into costly financial management upgrades.

So now Appendix D is more streamlined. OMB reduced the number of requirements from more than 500 to about 60 that focus on outcome or output.

OMB began to dismantle FFMIA regulations over the last several years. The administration closed down the Federal Systems Integration Office (FSIO) in March 2011 and moved a lot of the oversight and standards work to the Treasury Department's Office of Financial Innovation and Transformation (OFIT).

-Jason Miller, FederalNewsRadio.com
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CFTC Seeks Chief Financial Officer

Apply now for an exciting opportunity as the Chief Financial Officer at the Commodity Futures Trading Commission (CFTC). With an expanded mission and authority to include oversight of the swap markets, the CFTC continues to protect the American public by promoting market integrity, transparency and preventing and prosecuting fraud, manipulation and other abuse in the futures and options markets. Please visit www.cftc.gov to learn more about the CFTC.

This position is located in the Financial Management Branch of the Office of the Executive Director.  As the Director, Office of Financial Management Branch, you will serve as the Chief Financial Officer (CFO), or principal technical advisor to the Executive Director and the Chairman on the financial management programs of the Commission and is a member of the Commission's senior management team.

Director, Financial Management, CT-505-16

Open: 08/29/13    Closes:  09/20/13

https://www.usajobs.gov/GetJob/ViewDetails/350664100?share=email.

OMB following a familiar path as it shapes new financial internal controls

The Office of Federal Financial Management is taking a page out of the cybersecurity reform book in how it's changing how agencies oversee spending.

OFFM is updating its Circular A-123 guidance to be more like the future vision of cybersecurity — based on risk and data, and done more than every three years.

Mike Wetklow, the chief of the accountability performance branch at OFFM in the Office of Management and Budget, said there are several guiding principles going into the revision, including integrating an internal controls framework, reducing the compliance burdens and innovation through data analysis.

"Many of these principles we are putting in practice, we're going to have examples of charge cards, improper payments and data analytics," said Wetklow during a panel discussion at the Association of Government Accountant's Internal Control and Fraud Prevention Training event Tuesday in Washington. "We have a lot of things we are trying to do differently like, for example, with Hurricane Sandy last year. There was a memo earlier in the year about internal control plans. A lot of our discussions were we didn't want to make this a new Recovery Act or have this big compliance exercise right in the middle of disaster response, but to really use the internal controls as a risk management tool. We didn't ask agencies to document their control environment, the risk assessment, the control activities, the full gauntlet of all those things. We asked them to simply do a thoughtful analysis of their risks that came about from the extra funding that went into their programs, and just work with OMB on that."

Federal financial management and cybersecurity policy face similar challenges. Both need to keep up with the changing environment and expectations, and move from a static to a dynamic approach.

Like FISMA, A-123 turned into a static process.

A-123 is a 30-plus-year-old policy from OMB regarding how agencies, and specifically CFOs and their budget staffs, handle the oversight of money, otherwise known as internal controls. Internal controls ensure agencies meet policy and legislative requirements for financial reporting and the effectiveness and efficiency of programs.

OMB last revised A-123 in 2004 after Congress passed the Sarbanes-Oxley bill.

Experts say this latest set of changes is part of the pendulum that seems to swing every decade or so between more or less reporting requirements.

He said one of the biggest changes is what is being added to A-123 to meet the intent and spirit of Congress when it wrote the Federal Financial Management and Improvement Act (FFMIA).

"In the near term, and this will be literally in a couple of weeks, we plan to rescind OMB Circular A-127 and replace it with a new Appendix D to A-123," Wetklow said. "And if you ask yourself, why A-123? When you read the committee report [to FFMIA], it talks a little about financial systems. It talks more about internal controls, business processes, and visibility into government operations. Our hope in what we are doing is we are going to reduce compliance burdens by getting rid of all of these complicated checklists that only serve to drive system's costs and risks, and integrate our processes with the already existing things in A-123."

A-127 addresses financial management system requirements. OMB slowly has been moving away from strict financial management system requirements, and focusing more on standards and outcomes over the last decade.

He said A-123 also will need to be integrated with several other initiatives including new credit card abuse guidance OMB issued last week, improper payment laws that includes the Do Not Pay list and other changes to financial oversight that have come over the past 10 years.

-Jason Miller, FederalNewsRadio.com
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Bill puts contract spending on the hook if Pentagon misses audit deadline

New legislation introduced by Sens. Tom Coburn (R-Okla.) and Joe Manchin (D-W.Va.) aims to push the Pentagon toward being ready for a full financial audit by restricting spending on major weapons programs if DoD fails to get its books in order.

Coburn, who has introduced similar legislation in the past, said a full financial audit will help DoD better prioritize funding.

"This summer the Pentagon canceled important training and furloughed thousands of civilian personnel while it continued to waste billions on non-defense spending that had nothing to do with its core mission," he said in a statement. "A full and complete audit is the only way the department will be able to make better decisions about how it uses valuable taxpayer dollars."

Under the Audit the Pentagon Act of 2013, if DoD fails to obtain a clean audit opinion by 2018, the military services would be barred from spending money to fund new major acquisition programs beyond what's known as "milestone B" — in essence, the actual engineering and manufacturing of new systems.

In addition, the bill would prohibit DoD from purchasing off-the-shelf IT systems if they would take more than three years to install. The bill would require DoD to include terms in its contracts allowing for the termination of IT system contracts that aren't delivered on schedule.

Congress has mandated DoD pass a full financial audit by the end of fiscal 2017. Meanwhile, DoD leadership has set an interim deadline to provide auditable Statement of Budgetary Resources — a full accounting of money flowing in and out of the Pentagon — by the end of 2014.

-Jack Moore, FederalNewsRadio.com
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GAO Seeks Comments on Green Book Exposure Draft

GAO has issued its Green Book Exposure Draft, 
Standards for Internal Control in the Federal Government: 2013 Exposure Draft, 
GAO-13-830SP

Federal Managers' Financial Integrity Act (FMFIA) requires that federal agency executives periodically review and annually report on the agency's internal control systems. FMFIA requires the Comptroller General to prescribe internal controls standards. These internal control standards, first issued in 1983, present the internal control standards for federal agencies for both program and financial management.

Green Book revisions undergo an extensive, deliberative process, including public comments and input from the Green Book Advisory Council. GAO considers all Green Book comments and input from the Green Book Advisory Council in finalizing revisions to the standards.

It is available for public comment until December 2nd.
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Payroll snafu leads to delayed paychecks for many feds

Employees at multiple federal agencies, who would normally receive a direct deposit electronic paycheck today, will have to wait until Tuesday because of a mix-up by the Interior Business Center, one of the largest federal payroll processors.

The official pay date for all agencies serviced by the center's Federal Personnel Payroll System is technically the first Tuesday after the end of the pay period — in this case Sept. 17. Payments, though, are generally provided via direct deposit on the Friday prior to the official pay date, which is today.

However, "an oversight occurred during the certification process" for the current pay period, the center's Payroll Operations Divisions Chief Linda Rihel-Todd said in an email to agencies obtained by Federal News Radio. For affected employees, that means either no electronic payment was deposited into their account or a deposit was made but with a hold on it until Sept. 17.

Some banks could still process payroll deposits today, meaning employees would be paid today, but that's on a bank-by-bank — and even branch-by-branch — basis, according to a senior official at one of the affected agencies.

-Jack Moore, FederalNewsRadio.com
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GSA plans to stop providing HR shared services

The General Services Administration is getting out of the human resources and payroll shared service provider business.

The decision came as part of the review by administrator Dan Tangherlini. He wants GSA to focus on its core missions: acquisition, real estate and some of the technology services, said Anne Rung, GSA's associate administrator in the Office of Governmentwide Policy.

She said HR services just don't fit into their plans anymore.

GSA's HR services provides payroll and other services to 40 agencies and about 30,000 employees, 18,000 of which are its own employees. GSA services mostly small agencies, with the exception of the Office of Personnel Management.

GSA's decision comes as the Obama administration is applying more pressure on agencies to share resources.

The Office of Management and Budget issued a shared services strategy in May 2012, setting a series of deadlines. It followed in March with a memo requiring agencies to consider federal shared service providers first when it's time to upgrade their financial management systems. And OMB created Uncle Sam's List (USL) to have one place to promote the availability of shared services.

OMB is planning to launch version 1.1 of USL in a few weeks that will include a simplified user interface and an easier way to promote existing services, said Peter Warren, who is leading the effort for OMB.

Scott Bernard, OMB's chief architect, said version 2 of Uncle Sam's List is expected to be ready in 2014 and will take into account the findings of a recent survey of acquisition, technology and financial management workers.

With GSA bowing out of HR shared services, including payroll, that leaves only the Interior Business Center (IBC), the Agriculture Department's National Finance Center (NFC) and the Treasury Department's HRConnect as civilian agency providers. But only the IBC and the NFC are payroll providers.

The fifth provider, the Defense Finance and Accounting Service, serves only the Defense Department.

OMB's push for agencies to consolidate commodity IT or seriously consider a government shared services center for financial management are major reasons why there is a growing optimism and demand for shared services.

Another area where there is both a need and a desire for shared services is with geospatial information. Nearly every agency uses geospatial data and more than 30 are part of the Federal Geographic Data Committee (FGDC).

The Homeland Security Department also is looking to expand the cybersecurity line of business. With the recent award for continuous monitoring-as-a-service, Jeff Spicka, the project manager for the Information Systems Security Line of Business, said DHS is looking for more opportunities to set up cyber service providers.

Michael Casella, the chief financial officer at GSA, said agencies need policy help from OMB to solve the funding challenges.

A franchise fund lets providers charge up to four percent more than the cost of the service to pay for technology or other program upgrades. Without a franchise fund, shared service providers under law are prohibited from charging customer agencies anything more than the cost of the service.

Casella said another barrier is the cost of migrating to a shared service provider from legacy systems or switching from one to another.

OMB's deputy controller Norm Dong said the administration understands these funding and franchise fund challenges and encourages agencies to submit a budget proposal to set up a franchise fund.

At the same time, Dong said OMB is looking at policies or guidance for agencies around what recourse they have if the service provider isn't performing well.

-Jason Miller, FederalNewsRadio.com
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Government charge card abuse a firing offense under new OMB guidelines

Federal employees who make illegal or improper purchases with government charge cards could face dismissal under new guidelines from the Office of Management and Budget.

In a memo to the heads of agencies, OMB Director Sylvia Burwell laid out new steps to curb charge-card violations as part of the implementation of the 2012 Government Charge Card Abuse Prevention Act.

The law, approved by Congress and signed by President Barack Obama last fall, ordered agencies to firm up internal safeguards for identifying and stopping unauthorized purchases.

By Sept. 30, agencies need to certify to OMB that they have internal controls in place, according to the memo. Agencies are expected to develop specific penalties for employees who violate charge card policies. Employees who make "illegal, improper or erroneous" purchases with government cards should face disciplinary actions, including dismissal, the memo stated.

Burwell has tasked agency human resources and charge card management officials with developing the proper penalties for violations.

OMB's guidelines also instruct agencies to report government charge card violations at least twice a year. The new reporting requirements go into effect this year for agencies that spend more than $10 million annually on charge cards. The semi-annual reports will have to detail all purchase card violations as well as the disciplinary actions taken. The first report is due Jan. 31.

The 2012 law also instructed agency inspectors general to conduct periodic risk assessments on the use of agency charge cards. Agency IGs are now required to compile an annual status report on charge card audit recommendations.

-Jack Moore, FederalNewsRadio.com
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GAO's Green Book standards near first revision since 1999

The Green Book, the Government Accountability Office's standards for internal control, is nearing its first revision since 1999.

GAO released a draft (.pdf) of the updated standards Sept. 3. The Green Book outlines the concepts and principles of internal control, which GAO defines as the policies and procedures an organization uses to carry out its objectives.

The standards described in the Green Book are about as broad as that definition. In the draft, GAO divides the standards into five sets of principles, one of which instructs management to demonstrate a commitment to integrity and ethics, establish expectations of competence, and enforce accountability.

The general concepts in the draft are not different from the 1999 version (.pdf), GAO says, but the enumerated principles are a new approach that define the standards in greater detail.

In the draft, GAO requests comments from federal officials, accounting professionals, academics and whoever else is interested by Dec. 2. The forthcoming revision to the Green Book will be the third since 1983, when GAO first issued (.pdf) the standards.

- Zach Rausnitz, FierceGovernment.com
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