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Thursday, October 31, 2013

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 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.

Thursday, October 24, 2013

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

Wednesday, October 23, 2013

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

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

Monday, October 21, 2013

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.


Tuesday, October 15, 2013

GCN Names Danny Werfel 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

Friday, October 11, 2013

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

Tuesday, October 08, 2013

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.