Sheila Conley: Enterprise risk management properly implemented could strengthen decision making

Sheila Conley, deputy assistant secretary and deputy chief financial officer at the Department of Health and Human Services, is one of 50 new fellows for the National Academy of Public Administration.

How will you use your NAPA fellowship to promote/influence good government?

NAPA provides a unique opportunity to engage with a wide range of fellows, who are knowledgeable and experienced in government management and policy matters.

I am looking forward to tapping into the collective expertise and wisdom of the fellows to help inform and advance the business portfolio at HHS while also participating in efforts to address pressing governmentwide issues, such as reducing improper payments and enhancing program integrity.  It is more important than ever to champion good government initiatives and best practices, many of which can be gleaned from NAPA reports and studies.

What do you think is the most important change the government needs to make in the next 5 years?

Enterprise risk management (ERM) is an emerging discipline in the federal government that, if properly implemented could strengthen agency decision-making, performance and ability to accomplish mission goals.  ERM challenges agencies to develop a risk aware culture, identify and prioritize enterprise risks and establish a risk appetite to help align agency resources with areas of greatest risk.  Successful ERM implementation requires changes in organizational culture, behaviors and attitudes about risk at every level of the agency. While it is critical for ERM to be endorsed by agency officials “setting the tone at the top,” it is also important to assess the “mood in the middle” and “buzz at the base” of the organization to develop a sustainable program that aligns with the agency’s culture.  Depending on an organization’s willingness and ability to enhance ERM, it could take five years or more to achieve the many benefits of a successful ERM program. 

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GAO released the revised Green Book, standards to help agencies achieve goals and safeguard resources

Internal control helps an entity run its operations efficiently and effectively, report reliable information about its operations, and comply with applicable laws and regulations. The Standards for Internal Control in the Federal Government, known as the "Green Book," sets the standards for an effective internal control system for federal agencies.

2014 Green Book Overview 

2014 Green Book

Today's GAO Publications

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

Deepwater Horizon Oil Spill: Update on Federal Financial Risks and Claims Processing.
GAO-11-397R, April 18.
http://www.gao.gov/products/GAO-11-397R

Status of Fiscal Year 2010 Federal Improper Payments Reporting.
GAO-11-443R, March 25.
http://www.gao.gov/products/GAO-11-443R
Podcast available - http://www.gao.gov/podcast/watchdog_episode_55.html

Management Report: Improvements Are Needed in Internal Control Over Financial Reporting for the Troubled Asset Relief Program.
GAO-11-434R, April 18.
http://www.gao.gov/products/GAO-11-434R

GAO RELEASES LATEST “HIGH RISK” LIST OF PROGRAMS AT RISK FOR WASTE, FRAUD AND ABUSE

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


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

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

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

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

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

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

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


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

OMB MEMORANDUM M-10-31: Immediate Review of Information Technology Projects

As part of the FY 2012 Budget formulation process, CIO Council agencies will be required to develop and put in place improvement plans for their highest-risk IT projects. Pursuant to that objective, agencies shall take the following steps:

1. Identify agency high-risk IT projects,
2. Develop improvement plans for these projects, and
3. Present improvement plans in TechStat sessions.

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Interview with Christine Shafik of DOE: “It is a transformational time”

Christine Shafik is director of the Office of Risk Management for the U.S. Department of Energy. In this role, she is responsible for the oversight of the department’s financial resource planning, as well as the management of the department’s Financial Management Oversight Program. She also plays a vital role in the implementation of an effective internal control program and in the management of the department’s audit resolution and follow-up activities. Finally, Shafik is responsible for providing a corporate financial review and analysis to the CFO of the department.

We had the chance to talk to her about the Recovery Act funds because the Department of Energy received around $40 billion to create more clean-energy jobs, as well as make the country less dependent on foreign oil. We learned how the Department of Energy has gone above and beyond OMB requirements, what forward-looking risk management means, and how Shafik manages an extremely large amount of information on a day-to-day basis.

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FederalNewsRadio - Federal CFO Insights - William Collison (FDA)

Leveraging Commercial Best Practices

William Collinson,
Acting Director, Office of Financial Management, Food and Drug Administration

The show will focus on how commercial best practices are being leveraged by federal agencies and what benefits we are starting to see across our government. Discussion highlights:

• Internal controls
• Risk control and management
• Business intelligence/analytics
• Activity-based cost accounting
• Sarbanes-Oxley
• CFO Act
• Government Performance and Results Act
• OMB Circular A-123

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Commentary: Change and the transition

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

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

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

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

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

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

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

FederalNewsRadio - CFO Insights - Jimaye Sones (DISA)

Financial Accountability: How the federal government is moving toward financial accountability

Jimaye Sones - Comptroller, Defense Information Systems Agency

Financial accountability goes beyond implementing controls or achieving a clean audit opinion…it's about moving the culture of the entire agency - not just financial managers - to become the best stewards of taxpayers' dollars possible.

The strategy to achieve this, includes four tenets
1. Integrity
2. Full and open financial disclosure
3. Fiscal discipline
4. Professional competency

Federal and commercial entities continue to improve their accountability through the requirements of OMB Circular A-123 and Sarbanes Oxley in the commercial sector where entities assess their processes and controls and implement corrective actions to become more financially accountable and to reduce their risks.

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FederalNewsRadio - CFO Insights - Douglas Webster (DOL)

Enterprise Risk Management

Douglas Webster - Chief Financial Officer, Department of Labor

How can Enterprise Risk Management help CFOs reduce Federal Agency's risk exposure and some of the challenges they face in expanding its reach beyond financial compliance requirements?

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