ASMC PDI 2013 Conference Cancelled Due to Sequestration Constraints

Announcement information can be found at PDI2013.org and ASMConline.org.

IRS issued billions in improper refunds, report says

The Internal Revenue Service issued more than $11 billion in improper payments through its Earned Income Tax Credit program last year, according to an inspector general’s report released this week.

Treasury Department deputy inspector general Michael McKenney found that the IRS has failed to comply for two consecutive years with the Improper Payments Elimination Act, which President Obama signed in 2010. The law requires federal agencies to reduce erroneous payments to a rate of less than 10 percent.

The IRS estimates that at least 21 percent of its EITC payments in 2012 were faulty. That rate showed a decline compared to the previous nine years, but improper payments over the same period increased about 22 percent, rising to at least $11.6 billion, according to the inspector general’s report.

-Josh Hicks, WashingtonPost.com
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5 trends and hurdles for the future of effective financial management

All week long, as part of the Federal News Radio special report, "Rise of the Money People," we've tracked best practices, key personalities and new policies in the financial-management realm.

Today, we turn to the future, examining the three emerging trends that could help federal agencies and their chief financial officers get a better grip on improving their financial systems and the two significant hurdles that stand in their way.

TREND - Shared Services

In terms of financial-management modernization, the new name of the game is shared services.

The Office of Management and Budget made that clear last month when it issued a new final policymandating agencies use a federal shared-services provider when updating their financial systems.

Too often, as agencies went about updating their accounting systems, their plans to build costly new programs from the ground up ran over-budget and behind schedule. OMB paused many agencies' modernization initiatives in the summer of 2010

The earlier approach simply isn't working, said Peggy Sherry, the CFO of the Homeland Security Department.

"They take too long; they're too expensive. ... At the end of the day, they often lead to results that are not what you intended especially as it relates to cost, quality and performance," she said.

Sherry knows firsthand difficulties in modernization efforts.

Over the past few years, DHS twice tried and failed to consolidate 13 different accounting systems into a single, all-encompassing system.

DHS has now opted for more incremental improvements to its financial- management structure. Shared services is a "key element" of the agency's approach, Sherry said.

TREND - Data driving decisions

Especially given the budget environment, using data to drive better results is critical, Sherry said.

"We spend an awful lot of money in the government, but we don't necessarily have a way to be able to look across the portfolio at what that information is," Sherry said. "We don't necessarily collect the data in a consistent manner. So, it's challenging to be able to get quality information and then to be able to do apples-to-apples comparisons."

Even within a single agency, there's often no easy way to find out what various components or regions are paying for a particular service, she said.

The Office of Management and Budget is attempting to combat that lack of awareness with what it calls the "prices-paid portal."

"It's a data warehouse for federal agencies to understand what we're paying for stuff and what our colleagues are paying across government," said OMB Controller Danny Werfel in a keynote address at the Association of Government Accountants summit in February. "It's putting into a single platform information so that we can be smarter about what goods and services to the government cost."

Getting a handle on that basic information will help power a broader inventory of data about what the government owns, what it pays for services, and where agencies can share resources and services, he explained.

TREND - Expansion of the CFO role

From green eyeshade accountants to "master data analyzers," the role of the CFO has evolved since the CFO Act codified the role in 1990.

Part of that transformation has been driven by an increasing cooperation and stronger relationship between agency CFOs and their counterparts on the technology side of the agency — the chief information officer.

The CIO community talks a lot about governance and best practice, Sherry said, two key themes that CFOs can also take to heart.

The emerging reality is that "we are not going to be successful as a financial- management community working in a vacuum," Werfel said in his AGA speech. "We have to take a very integrative approach to managing our organizations and to being successful."

But the CFO role is also broadening in and of itself, moving away from nuts-and- bolts issues.

The CFO role of the future is about high-level decision-making rooted in high- quality data, he said.

HURDLE - Shrinking budgets

The biggest stormcloud on the horizon, as any CFO would say, remains the budget.

Each year, budget pressures seem to grow more acute, Werfel said in his AGA keynote address. 

"Obviously, this year, the budget uncertainty that we face is no longer amorphous, it's become tangible and real," he said.

In an exclusive Federal News Radio survey of CFOs and deputy CFOs, sequestration (and the need to find efficiencies to comply with the steep across-the-board cuts) ranked as CFOs' top priority.

And financial-systems modernization, which is exceedingly complex and expensive, is vulnerable to the budget pressure.

HURDLE - Cultivating a workforce amid decline

As budgets are squeezed, federal employees are asked to take on ever greater responsibility even as waves of retirements and early-outs have reduced staff sizes.

Agency CFOs face particular challenges in growing and cultivating their workforces.

Hiring and retaining the workforce and providing more training are top of mind for CFOs, ranking second and third on a list of their top 2013 priorities, according to the survey.

Fortunately, despite these pressures, those emerging trends in financial management — shared services, data-driven decision-making and others — can offer CFOs some solace.

But agency money people will also need to apply some old-fashioned leadership. There are no cure-alls in the CFO toolbox.

Despite the difficulties, it is in just this type of budget environment that CFOs can shine, by leveraging both new technologies and time-tested best practices.

-Jack Moore, FederalNewsRadio.com
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Bureau of Fiscal Service primes network for influx of new customers

The Treasury Department's Bureau of Fiscal Service has 40 customers buying financial management services, and it's expecting a spike in the coming year or so.

So BFS is preparing its systems and network today for the likely upsurge later.

The expected increase in customers comes from the Office of Management and Budget's requirement for agencies to move to a shared service provider for financial management unless they can justify why they should not move.

Kim McCoy, the chief information officer for the bureau, said the Fiscal Service is in the final stages of upgrading its financial management software, Oracle Federal Financials 11i, and has optimized its network to a great extent.

So the Fiscal Service needs to figure out what else it can do to prepare its systems and software for larger and more complex customers.

-Jason Miller, FederalNewsRadio.com
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Shared services becoming new normal in financial modernization

In terms of financial management modernization, the new name of the game is shared services.

The Office of Management and Budget made that clear last month when it issued a new policy mandating agencies use a federal shared-services provider when they update their financial systems.

As agencies update their financial systems, too often they build costly agency-specific systems from the ground up.

Federal shared-services providers on the other hand, such as the Interior Business Center, attempt to leverage economies of scale and efficiencies both within the Interior Department and for outside agency customers.

"Federal agencies are coming to us because they need to save money," said Joseph Ward, director of the IBC, during an interview on In Depth with Francis Rose, as part of Federal News Radio's special report Rise of the Money People. "They're also coming to us because they see the value in taking those services to a shared services provider."

Ward said this allows agencies to focus more on their core missions.

-Sean McCalley, FederalNewsRadio.com
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Succession planning crucial in financial management arena

The retirement wave will eventually hit the financial management community in the federal government just like other professions within the federal service. To prepare, agencies have begun the succession planning process.

Steve Potts, an instructor at Graduate School USA, former assistant to the Secretary of Energy, and former deputy director of Intelligence Policy at the Defense Department, spoke to theFederal Drive's Tom Temin and Emily Kopp about the biggest needs in the financial management sphere.

The interview is part of Federal News Radio's special report, Rise of the Money People.

-Steve Potts, FederalNewsRadio.com
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Recovery Board opens next frontier in financial accountability

A funny thing happened when Congress approved the American Recovery and Reinvestment Act in February 2009.

While politicians debated whether in was wise to invest more than $804 billion in an effort to stimulate the economy, lawmakers added a provision to the bill giving the Recovery Accountability and Transparency Board, an independent, non-partisan, non-political agency, oversight of the funds.

The "RAT Board" had two goals. One was to provide transparency over the Recovery money, and the other was to root out fraud, waste and mismanagement in the spending of those funds.

Four years later, debate may continue about the success or failure of the Recovery Act. But many consider the RAT Board to be a pioneer in government accountability and transparency.

Federal News Radio's week-long, on-air and online series, "Rise of the Money People: Financial management moves front and center as agencies make the final assault on wasted billions ," focuses on the methods and tools agencies employ in rooting out waste, fraud and abuse in government spending.

-Michael O'Connell, FederalNewsRadio.com
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Experts discuss DoD's challenges in reaching a clean audit

2013 represents 18 years on the High Risk List for the Defense Department. DoD has a 2017 deadline for a clean audit, but it's also required to make interim progress by 2014.

On this week's edition of Pentagon Solutions, Francis discusses whether the Pentagon will meet those deadlines and the challenges it has in meeting them.

Francis' guests today include:

• Al Tucker, former deputy chief financial officer at the Department of Defense; former deputy assistant inspector general for audit in the Office of the Inspector General at the Department of Defense, and former executive director of the American Society of Military Comptrollers
• Asif Khan, director of financial management and assurance at the Government Accountability Office

-FederalNewsRadio.com
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Does a bad audit really affect agency operations?

Year after year, the Government Accountability Office looks at the federal balance sheet and the bottom line is always fuzzy. We know that's not good, but does it really hurt agency operations?

Federal News Radio's Tom Temin and Emily Kopp asked that question to Bob Dacey, the chief accountant at the Government Accountability Office. The interview is part of Federal News Radio's special report, Rise of the Money People — financial management moves front and center as agencies make final assault on wasted billions".

-FederalNewsRadio.com
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CFOs relying more on data, managing risk to find budget efficiencies

If Congress initiated the CFO Act in 1990 and the assorted laws and regulations that followed over the next 23 years to create a governmentwide foundation, then data, risk and the need to continually be the catalyst to find efficiencies are making up the next level of the federal chief financial officers' house.

A new online and exclusive Federal News Radio survey of federal CFOs finds this next stage is taking hold more quickly and having a bigger affect than previously imagined.

Three-quarters of the respondents say their agency uses data to make risk based decisions and more than 60 percent say the use of financial data to help them make budget, program and personnel decisions.

"We are modeling different budget formulation schedules. We have used data to create a cost allocation methodology. We are using HR data and salary data to do workforce planning," wrote one respondent. "We are using a management suite of metrics to manage our bureaus toward goals in multiple areas such as procurement, HR, IT and cybersecurity. We are using Employee Viewpoint Survey data to understand how we can improve diversity and inclusion, and leadership."

As part of Federal News Radio's week-long series, the Rise of the Money People: Financial management moves front and center as agencies make final assault on wasted billions, we surveyed 88 federal CFOs, deputy CFOs and other senior financial managers over a three week period in March, and received a response rate of 17 percent. We received responses from eight cabinet level, five large agency and two small agency CFOs, deputy CFOs and senior financial managers with all but one being a career employee.

-Jason Miller, FederalNewsRadio.com
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From islands to log cabins, agencies struggle to offload excess property

Efforts to offload unused property from the federal books got a boost last month when a team of developers working with the Four Seasons hotel chain submitted the winning $19.5 million bidto purchase the massive Georgetown West Heating Plant from the government.

The Art Deco brick behemoth, near the swanky Georgetown waterfront in Northwest Washington, D.C., had long been a poster child for the difficulties the federal government faces in disposing of excess properties. Despite being mostly vacant for the past decade, the building stood there continuing to rack up $3.5 million in annual upkeep.

The process of disposing of properties that have outlasted their usefulness to the government continues to vex agencies.

Three years ago, President Barack Obama called on civilian agencies to reduce total real-estate costsby $3 billion, a goal they handily surpassed.

But the majority of agency savings resulted not from property disposal but from more small-bore improvements, such as space-management and sustainability initiatives. Of the $3.5 billion agencies reported in real-property savings at the end of 2012, just $984 million came from actually disposing of some of the 14,000 excess properties the government owns.

As part of the special report, Rise of the Money People, Federal News Radio examines why the government has struggled with real-property management and the reform efforts on the table that could help make a difference.

The government owns some 889,000 buildings and structures, according to fiscal 2010 data — the last year for which complete information is available.

More than 15 percent (or 14,000) of those buildings is considered excess, costing the government $190 million each year to operate and maintain, according to administration estimates. Another 71,000 properties are deemed underused, such as half-empty office buildings or warehouses.

The government's inventory of excess buildings and structures spans everything from everyday office buildings in Washington, D.C., and historic log cabins in the Pacific Northwest to manmade caves and even islands.

High-quality data is key to effective financial management. But when it comes to real-property data — such as knowing the location, condition and occupancy rates for buildings owned by the government — it's hard to come by.



-Jack Moore, FederalNewsRadio.com
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Three steps to make it out of the impenetrable (financial) fog

In April 1802, Thomas Jefferson wrote of an "impenetrable fog," much like the one that frequently blankets the nation's capital during the spring months, though the fog he referred to was perhaps not the first one that comes to mind. Instead, the fog of which the third president of the country penned was the one enveloping the financial management system at our highest level of government.

Mr. Jefferson wrote about the "great importance to simplify our system of finance and bring it within the comprehension of every member of Congress," and his goal was that "the finances of the Union be as clear and intelligible as a merchant's books, so that every member of Congress, and every man of any mind in the Union, should be able to comprehend them to investigate abuses, and consequently to control them."

Unfortunately, 211 years later, to the month, "impenetrable fog" can still be used to describe the state of financial management in the federal government.

As President Barack Obama begins his second term, a new OMB director will be taking office to shape his legacy in financial management. I believe this is a great opportunity for this administration to accomplish some game-changing results in the financial management arena without risking hundreds of million of dollars in new systems or hiring armies of consulting contractors to reinvent the wheels. If the new OMB director seizes the opportunity to update the management structure that stymied most former directors, she will put into place an historic exemplar that may be one of President Obama's most long-lasting impacts. It will also be a giant step towards fulfilling Mr. Jefferson's vision from over 200 years ago.

The key to this revamping lies in a single letter of the office's acronym: putting the "M" back in OMB by fully implementing the CFO Act of 1990 in all Cabinet agencies and strengthening the CFO structure within the agency leadership team accordingly.

A quick examination of the current OMB organizational chart will reveal that there is no CFO for the entire federal government, but there is a federal CTO, CIO, etc. Furthermore, the staffing and resources given to the "controller" pale in comparison to those of the budget examiners organization. The Controller of the United States at OMB is like the Treasurer of the United States. Both have grandiose titles, but no real authority over key management operations or programs. The OMB Controller's Office is so thinly staffed and sparsely resourced that it is severely limited in its ability to function as an effective first among equals within the cabinet CFO community.



-Sam Mok, FederalNewsRadio.com
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CFOs exercise new muscle to impact agency performance - FEDCFO.com Quoted for Story

(This story is part of Federal News Radio's special report, Rise of the Money People.)

Federal chief financial officers were responsible for $1.2 trillion in federal spending in 1990. Now it's $3.8 trillion. CFOs today not only face a larger budget, but one that is more complex.

Does that mean the law that created the position of federal chief financial officers 23 years ago, needs to be updated? Has the CFO Act fallen behind the times? And, have agencies met the spirit and intent of the law?

The answers almost across the board from experts in and out of government are: No. No. And, yes.

As part of Federal News Radio's week-long on-air and online special report, " Rise of the Money People: Financial management moves front and center as agencies make the final assault on wasted billions," we explore just how well the CFO Act has survived over the last two-plus decades, and how federal CFOs have morphed from number crunchers to master analyzers of data to help agencies make better decisions.

"I think there is an opportunity to evolve our financial management model and compliance framework in a way that we are moving beyond the basics of financial statements, and moving directly into a space where the CFO sees across government significant discipline and consistency in how we are tackling some of the other elements of the bottom line of government," said Danny Werfel, the controller in the Office of Management and Budget, a position akin to that of the federal CFO.

"We have to be branching out in to more areas of discipline that get at that citizens' bottom line and get more in the areas of financial performance. What happens is CFOs are branching out today in many, many different ways. The issue is whether the framework which they operate under, how they are audited, how they are capturing that information and reporting it publicly, is that following suit and being aligned with CFOs emerging responsibilities around these bottom line issues of citizens' trust in government, program and financial performance, fraud, error and waste."

The framework Werfel is referring to is the CFO Act.

Congress passed it and President George H.W. Bush signed it into law in 1990. It created the position of CFO in the major agencies and instituted the requirement for strong internal controls.

Twenty-three years later, experts in and out of government say agencies have met both the spirit and intent of the law. And now, CFOs are evolving beyond the initial requirements of the law.

Part of the expanded role CFOs play is derived from several of the administration's priorities, such as reducing improper payments and better managing real property.

But the factor that will influence most how CFOs affect federal agency performance is enabled by the growing use of financial data to make better decisions.

"We now have managers of financial information versus processors of financial information in our CFO community," said Doug Davidson, vice president of TFC Consulting and publisher of the financial management blog, FedCFO.com. "And agencies are able to act upon the information they have in front of them versus looking back strictly for auditability."

Davidson said the evolution has been slow, mostly taking place in the last five- to-seven years. But now, financial managers have a much better grasp on where their agency is spending money, and the impact that spending is having on performance and services.

Werfel said the ability of CFOs to impact agency decision making is more important than ever in today's budget climate.

-Jason Miller, FederalNewsRadio.com
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Timeline: The Evolution of Financial Management in the Federal Government

(This interactive timeline is part of Federal News Radio's special report, Rise of the Money People.)

The roots of today's federal financial systems oversight can be traced back to the Accounting and Auditing Act of 1950, which authorized the head of each federal agency to establish internal controls over its assets.

The act also tasked the Government Accountability Office with drawing up accounting standards for agencies and, through audits, ensuring that agency internal controls met those standards.

Over the last three decades, Congress has expanded the scope of financial oversight at agencies, and, with the help of new technology, provided for greater transparency in agencies' fiscal reporting.

This timeline provides an overview of the initiatives introduced by the White House and legislation enacted by Congress to establish greater oversight of government spending.

-Michael O'Connell, FederalNewsRadio.com
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Financial management takes center stage as agencies root out wasted billions

Government spending is changing — drastically. You know. You are experiencing sequestration, having to figure out how the $1.2 trillion in cuts under the Budget Control Act will affect your agency. And now, with the recently-passed fiscal 2013 funding bill, there's more data on where your budgets drop next. All of these, really, are just taking bites around the edges of the nation's $16 trillion deficit.

But there's a shimmering light at the end of the tunnel held by someone with the tools, the understanding and the prominence to restore the government's financial environment. That's right, I'm talking about your agency's chief financial officer.

No, not the stereotype you're thinking; green eye shade, hiding behind his or her calculator and counting every dollar through some unknown formula on an Excel spreadsheet. Don't get me wrong, those people still exist in every organization — and are needed. But, I'm talking about a new breed of CFO in whom are combined the mad science of Victor Frankenstein, the prescience of Gordon Moore (hint: Moore's law), and the efficaciousness of Robert Livingston (think: Louisiana Purchase).

Federal News Radio's week-long, on-air and online series, "Rise of the Money People: Financial management moves front and center as agencies make the final assault on wasted billions," zeros in on CFOS and their soldiers who are in the financial wars, their strategies and tactics for waging the fight, the current and emerging weapons in their arsenal and how their future battles will unfold.

-Lisa Wolfe, FederalNewsRadio.com
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OMB clarifies agency authorities for implementing sequestration cuts

The Office of Management and Budget has directed agencies to take full advantage of the funding flexibilities they have under the law as they implement the automatic budget cuts, known as sequestration, that went into effect March 1.

In an April 4 memo, OMB Controller Danny Werfel also directed agency and department leaders to be mindful of certain types of performance awards and to work with agency inspectors general before making cuts to IG offices.

Many agencies' hands are tied when it comes to implementing the cuts because of their across-the-board nature.

"However, depending on an agency's account structure and any existing flexibilities provided by law, some agencies may have a limited ability to realign funds to protect mission priorities," Werfel wrote.

In fact, the 2013 appropriations bill passed by Congress last month blunted some of the impact of the cuts by shifting funding priorities and, in some cases, granting new increases.

"Agencies with reprogramming or transfer authority should continue to examine whether the use of these authorities would allow the agency to minimize the negative impact of sequestration on core mission priorities," Werfel wrote in the memo.

He told agencies to consider long-term mission goals when making decisions about how to implement the cuts.

The memo reiterated that funding for agencies' independent inspector general offices is subject to sequestration.

"To the extent an agency has discretion in implementing reductions to IG funding due to sequestration, agency heads should be mindful of the independence of the Office of Inspector General and should consult with the IG on a pre-decisional basis on matters that may impact IG funding," the memo stated.

In fact, in cases where IG funding is its own budget line-item (and not "intermingled" with other types of funding), the IGs themselves should be granted the discretion to implement the cuts, Werfel said.

Werfel said the administration continues to urge Congress to eliminate sequestration "as part of a balanced agreement on deficit reduction."

- Jack Moore, FederalNewsRadio.com
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