federal financial management leads to development

8/13/2019 Federal Financial Management Leads to Development

1/86

A PROJECT REPORT

ON

FEDERAL FINANCIAL MANAGEMENTLEADS TO DEVELOPMENT

SUBMITTED BY

A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF

THE REQUIREMENT OF THE DEGREE OF

POST GRADUATE PROGRAMME OF IILM BUSINESS SCHOOL

NEW DELHI

IILM-BUSINESS SCHOOLBADARPUR, NEW DELHI

1


2/86

A C K NO W L E D G E M E N T

I am thankful to all th !a"#lt$ %%&'(for their valuable guidance and support

throughout my project report completed at time.

It was a great learning experience to working process of banking services and

insurance with respect to Standard Chartered Bank it is found good exposure and

the experience to understand the models of insurance and services of SCB.

2


3/86

PREFACE

The conceptual knowledge acuired by management students is best manifested in the research

and report they undergo. !s a part of curriculum of "B! #IB$% I have got a chance to undergo

practical research in F)'al !*+a+"*al %a+a%+t la)( t ).l/%+t0

The present report gives a perfect vent to my understanding of the I&T'(&!TI)&!*

B+SI&'SSspecially the most modern concept of ,'conomic -alue !dded and organi/ation behavior.

The report entitled ,0ederal financial management leads to development is based on the study.

I al( h/ that th*( '/'t 1*ll & &+!*"*al !' %$ +2t &at"h( a+) !'

th( 1h a' 'lat) t th*( t/*"

3


4/86

TABLE OF CONTENTS

30 INTRODUCTION

40 OBJECTIVES OF THE STUDY

50 LITERATURE REVIEW

60 RESEARCH METHODOLOGY

70 DATA ANALYSIS AND INTERPRETATION

80 FINIDINGS

90 RECOMMADATIONS

:0 CONCLUSION

;0 LIMITATIONS OF THE STUDY

3


5/86

INTRODUCTION

5


6/86

INTRODUCTIONThe )ffice of 0ederal 0inancial "anagement #)00"$ within the )ffice of "anagement and

Budget #)"B$ has developed a ,0ramework for Improving 0inancial 1erformance to provide

direction and clarity on how the 1resident2s improvement goals for financial management will

be met. This ,0ramework is the subject of this (eport and also fulfills )00"2s reuirement%

under section 345#a$ of the Chief 0inancial )fficers !ct of 5664 #C0) !ct$ for providing

Congress and the financial management community with a government7wide ,0ive78ear

financial management plan and status report.

Th F'a%1'= *( *+t+)) t /'.*) th /#&l*" 1*th a (*%/l tl !' *)+t*!$*+>

#5$ The ultimate objective #or ,apex$ of the government2s financial management

improvement efforts #i.e.% the financial management goals of thePMA$9

#:$ The priority projects currently underway in the 0ederal financial community to help

support and facilitate 1"! goals #i.e.% current government7wide financial management

reform activities$9 and

#3$ The day7to7day financial management activities or core activities that help ensure a

strong foundation is in place for achieving the 1"!2s success.

The 1"! provides 0ederal agencies with a concise set of clear and measurable financial

management performance goals that allow 0ederal managers% Congress% and the public to gauge

whether taxpayer funds are being properly accounted for and wisely spent. These performance

measures include the achievement of a clean audit opinion% the elimination of material

weaknesses in internal control% timely financial reporting% the elimination of improper payments%

6


7/86

the disposal of excess real property% and the reduction in government costs through the strategic

use of financial data. !s noted throughout this (eport% 0ederal agencies are making significant

progress on each of these areas. ;owever% much work remains until the 1resident2s vision for

improved financial management is fully achieved.

overnment was

responding to numerous financial management challenges. The Comptroller >eneral at the time

had testified that billions of dollars were ,at risk in the 0ederal >overnment2s programs due to

inadeuate financial management systems and controls% and agencies generally could not give

assurance that their financial statements were accurate and reliable. The C0) !ct was a direct

response to these deficiencies and was aimed toward reforming financial management practices

within the 0ederal >overnment. In short% the !ct called for stronger financial leadership% more

disciplined financial controls% improved financial management systems% and accurate and timely

financial information for decision7making. 0ederal C0)s are now in charge of implementing a

number of management reforms% including the 0ederal "anagers2 0inancial Integrity !ct of

56?: #0"0I!$ intended to strengthen internal controls and accounting systems% and the 0ederal

0inancial "anagement Improvement !ct of 566@ #00"I!$ intended to improve financial

management systems. If implemented effectively% the reform environment created by law%

administrative action% and executive order provides a solid foundation for continual

improvements in the 0ederal government2s stewardship of the public2s tax dollars.

The primary instrument used by the !dministration to implement the principles of the C0) !ct

and other 0ederal financial management laws is the 1"!. The 1"! is most clearly embodied

7


8/86

in the ,Improving 0inancial 1erformance initiative. +nder this initiative% the 1resident

identified a limited number of clear% meaningful% and attainable financial goals that every

0ederal agency must meet. 'ach individual goal is an indicator of financial management

excellence% and reflects standards established either by law or !dministrative action.

!s a primary goal% every agency C0) is responsible for meeting standards that reflect a sound

foundation of 0ederal financial managementA achieving a ,clean audit% resolving material

weaknesses in a timely manner% having in place a financial system that meets 0ederal standards%

meeting reporting deadlines% and complying with laws and regulations. These standards ensure

that 0ederal agencies are properly accounting for taxpayer dollars and can produce financial

information that is both timely and reliable. 0ederal agencies must achieve these standards to

move from ,red to ,yellow status on the 1"! stop light scorecard system. C0)s must build

on these standards% and ensure that financial information is available for managers on demand

and is actively being used to drive results in key areas of operations. 0ederal agencies must

demonstrate that financial information is being used effectively to manage costs to move

achieve a ,green status score.

In addition to the Improving 0inancial 1erformance Initiative% the 1resident has also established

additional 1"! initiatives to eliminate improper payments and right7si/e the 0ederal

>overnment2s real estate. +nder these initiatives% agencies achieve ,yellow status by putting

the right tools in place to measure improper payments and identify excess real estate. !gencies.

It indicates that financial management improvement efforts are having their intended result.

;owever% the metrics by which we measure the success of 0ederal financial management

demonstrate that enormous challenges remain. The epartments of efense and ;omeland

8


9/86

Security% two of the largest and most critical agencies in government% do not have clean opinions

on their financial statements. !uditors continue to identify more than34 material weaknesses in

financial reporting across the >overnment. Billions of dollars in improper payments and excess

real property remain on the 0ederal books and compromise our ability to serve the tax payer

most effectively. The 08 :44? results and those achieved over the past five years serve as an

important building block toward addressing the longer7term challenges in 0ederal financial

management.

The )ffice of 0ederal 0inancial "anagement #)00"$ was created within the )ffice of

"anagement and Budget #)"B$ by the Chief 0inancial )fficers #C0)$ !ct of 5664. )00"%

led by the )"B Controller under the direction of the eputy irector for "anagement% is

responsible for the financial management policy of the 0ederal government. )00"

responsibilities include implementing the financial management improvement priorities of the

1resident% establishing government wide financial management policies of executive agencies%

and carrying out the financial management functions of the C0) !ct.

This year great strides were made in the area of 0inancial Systems and Security% which was

reduced by almost =4 percent. ;owever% challenges still remain. &early 4 percent of the

material weaknesses are attributable to three agencies and are predominately in the areas of

0inancial "anagement and (eporting and 0inancial Systems and Security. These key areas

continue to be a challenge across all agencies and )00" will work with the agencies to reduce

material weaknesses.

9


10/86

0inancial "anagement and (eporting material weaknesses were found in seven agencies%

primarily as a result of control issues over the financial reporting process. !uditors found the

controls over the financial statement preparation needed to be improved in various areas

including oversight% data integrity% reconciliations% updating of policies and procedures% and

training. By improving controls over the reporting process agencies are better positioned to

prepare reliable% useful% and timely financial information for decision making. 0inancial Systems

and Security material weaknesses were found in five agencies and primarily were a result of

control issues in Information Technology #IT$ security. !uditors found the controls over IT

security needed to be improved in areas such as updating risk assessments %providing IT security

training% strengthening password controls% and enhancing controls over system software

modification. By improving IT security agencies can prevent unauthori/ed access to and

increase the reliability of financial information.

The 0ederal government has more than 3.5 million charge cards in use under the >eneral

Services !dministration2s #>S!2s$ Smart 1ay 1rogram. The cards are used to purchase goods

and services% pay for >overnment employee travel and travel7related expenses% and to acuire

fuel and maintenance services for >overnment vehicles% aircraft and other euipment. In 08

:44?% these transactions totaled more than D34 billion% with D56. billion #nearly @E$ spent

through purchase cards alone. This program continues to demonstrate the improved efficiencies

of charge card use through an estimated D5.?= billion in annual savings as compared to paper

based purchase processes. )ther benefits of the program include refunds paid to agencies that

were in excess of D5@@ million in 08 :44?% as well as access to reduced7price airfares under the

>S! City 1airs 1rogram. 08 :44? usage of the City 1airs 1rogram saved the >overnment a

10


11/86

projected DF.=: billion over regularly priced airfares. )00" provides oversight of 0ederal

charge card programs through !ppendix B of Circular !7 5:3. This guidance reuires agencies

to maintain internal controls that reduce the risk of fraud% waste% and error in >overnment charge

card programs. !s reuired by !ppendix B% agencies submit updated copies of their Charge

Card "anagement 1lans to )"B on an annual basis% and submit performance information on

either a uarterly or annual basis depending on the si/e of the agency. )00" works with

agencies to ensure strong internal control policies and procedures government7wide. )00" also

works closely with the >S! Smart 1ay program% which manages the primary contracts with the

0ederal government2s charge card providers% to ensure the program is operating effectively and

efficiently. )00" is currently working with >S! and the 0ederal charge card community to

revise !ppendix B. This revision incorporates recommendations made by the >!) in its !pril

:44? audit of the 0ederal 1urchase Card 1rogram as well as comments and suggestions made by

!gencyG)rgani/ation 1rogram Coordinators. The revised !ppendix B will incorporate internal

controls for convenience checks% expand on controls related to property acuired with

government charge cards% and implement specific guidance for ensuring that appropriate

disciplinary actions #including dismissal$ are properly considered and imposed for fraud and

other egregious abuse of a 0ederal charge card.

FEDERAL FINANCIAL MANAGEMENT leads to development of any country or

organi/ation.

F)'at*+ is a system of government in which there is division of powers and functions

between federal government and several regional governments% each of which in its own sphere

11


12/86

coordinate with the others and each of which acts directly on the people through its

administrative machinery.

So we see that its federation which runs countries and organi/ations associated with the country.

!t the end of the day it is federal finance management which decides the economy of the nation.

This way federal financial management decides the finance of the nations and organi/ations.

!nd if federal financial management works in proper way and move in a right direction% it leads

to the overall development of the country.

By utili/ing effective practices from both the commercial and 0ederal sectors% the innovative

ideas and model programs are developed to help 0ederal agencies in their efforts to make

financial management more efficient and effective for the purpose of core development.

The 0ederal government spends billions in a year on financial systems% and development

projects that typically take ?754 years. There are multiple processes within the financial

management framework that are common across all agencies.

0ederal financial management is a key component which provides key solutions to the federal

government. The professionals assigned to this management system conduct research and

develop approaches to address some of the federal government2s most pressing financial

management and financial transformation challenges.

12


13/86

The solutions provided by this management group is most effective as it facilitate bringing all

interested parties together to help find common ground alternative approaches to address shared

challenges as A7

#5$ 0inancial reporting

#:$ Internal controls

#3$ 0inancial systems

#F$ !sset management

#=$ >rant management

#@$ !nd !uditing standards

It also facilitates research on what can work in federal financial management and whyH By

utili/ing effective practices from both the commercial and federal sectors% the innovative ideas

and model programs are developed to help federal agencies in their agencies in their efforts to

make financial management more efficient and effective.

F)'al !*+a+"*al %a+a%+t 1*ll hl/ th a+"$ ' 'a+*?at*+ t>

#5$ (educe redundancy

#:$ "inimi/e complexity

#3$ "aximi/e productivity

#F$ (esult of cost effective financial management.

13


14/86

THE FINANCIAL MANAGEMENT SERVICE

The 0inancial "anagement Service is one of Treasurys newer major bureaus% having been

established as the Bureau of >overnment 0inancial )perations in 56F. 0"S manages the +.S.

governments disbursement and collection systems% provides central accounting and financial

reporting for government as a whole% and provides guidance to federal program agencies in cash

management% credit administration% debt collection% accounting systems% investment

management% and the use of technology in financial activities.

It may seem surprising that an organi/ation that performs so many essential functions took so

long to come into existence% but bear in mind that !merica did not begin with more than 344

million citi/ens and a federal budget of more than D3 trillion. The evolution of 0"S and its

predecessor organi/ations must be seen in the context of the growth and ever increasing

complexity of !mericas financial system over the course of more than two centuries.

The +.S. epartment of the Treasury was created by an !ct of Congress on Sept. :% 5?6. The

Congress directed the Treasury to provide for the collection% safeguarding% and disbursement of

public money% and to maintain a system to account for the governments collections and

payments. !lthough the collection and control of money is critical to any government% the

federal financial infrastructure remained very small for more than 544 years. The (egister of the

Treasury originally carried out the account7keeping functions. Individual departments and

independent agencies conducted most disbursing functions without Treasury oversight. By

modern standards% the administration of federal finances was extremely loose% but then the

federal government was much smaller than it is today% and its duties were far more limited.

14


15/86

)ther than during the relatively few major wars% the government did not collect or spend very

much money% and so the need to centrali/e or moderni/e its payment% collection% or accounting

systems did not exist.

The first major federal financial management reform took place just after


16/86

and the )ffice of the Treasurer of the +nited States. There evidently was considerable

bureaucratic inertia% since while the 0iscal Service was established in 56F4% yet the first 0iscal

!ssistant Secretary was not appointed until 56F=.

! new era began in January 56F when a 0iscal Service reorgani/ation plan established the

Bureau of >overnment 0inancial )perations #B>0)$ and merged all of the Bureau of !ccounts

functions under the new bureau. B>0) also assumed most functions of the )ffice of the

Treasurer% except those performed by the now defunct Cash ivision. In all but name% this

reorgani/ation effectively created 0"S.

)n )ct. 54% 56?F% B>0) was renamed 0"S. Treasury 0iscal !ssistant Secretary Carole Jones

ineen explained the reasoning behind the change in nameA K0inancial "anagement Service

reflects the bureaus new emphasis on achieving greater efficiency and economy in government

financial management. Through the application of sound cash management practices and

increased utili/ation of automated payments% collections% and accounting and reporting systems%

the old Bureau of >overnment 0inancial )perations is evolving from the governments

bookkeeper into the governments central financial manager.K

Since 56?F% 0"S has done its utmost to follow this dictum. The old image of men with uill

pens hunched over thick% musty registers no longer applies. 0"S strives to continually improve

the governments performance by managing the financial infrastructure in support of federal

agencies. The Service employs many advanced technologies that were either in their infancy or

non7existent as recently as when B>0) was established.

16


17/86

0"S is continuing to improve its products and services through initiatives such as 'lectronic

0unds Transfer% the Treasury )ffset 1rogram% the 'lectronic 0ederal Tax 1ayment System% and

various electronic commerce initiatives. 0"S is proud of the progress it has made and looks

forward to the future% confident that it will continue to make many positive contributions to both

government financial management and the !merican financial services industry.

17


18/86

FRAMEWORK FOR DEVELOPING

FINANCIAL PERFORMANCE

The 0ramework is intended to provide the public with a simple presentation ofA

#5$ The ultimate objective #or ,pinnacle$ of the >overnment2s financial management

improvement efforts9

#:$ The projects currently underway in the 0ederal financial community9 and

#3$ The day7to7day financial management activities% or ,core activities that help ensure a strong

foundation is in place for achieving success across all 0ederal agencies.

GOVERNMENT-WIDE FINANCIAL MANAGEMENT IMPROVEMENT

GOALS.

0ederal agencies in the executive branch are focused on achieving the financial management

performance goals that allow 0ederal managers% Congress% and the public to gauge whether

taxpayer funds are being properly accounted for and wisely spent. 'ach reform activity% or

,column% of the ,0ramework for Improving 0inancial 1erformance represents a key financial

18


19/86

management7related initiative that has a defined goal and is monitored for improved results. !s

noted throughout this report% 0ederal agencies are making significant progress towards

achieving each goal.

Eliminating Impropr Pa!mnt" - !gencies have improved the

accuracy of 0ederal payments by #5$ strengthening controls over the payment process% #:$

ensuring that dollars are properly accounted for% and #3$ sending the proper recipient the correct

amount. Since 08 :44F% the 0ederal government has established an impressive track record of

making its improper payment

measurements transparent to the public and then taking uick and effective action to eliminate

those improper payments. "ore than 4 programs that were designated as high7risk for

improper payments in 08 :44F have since been measured. In 08 :44?% almost 544E of

programs that were previously designated as high7risk were measured. 0urther% agencies have

reduced the improper payment error rate in the programs originally measured and reported from

F.FE in 08 :44F to 3.4E in 08 :44?. The goal of reducing the improper payment rate by a

tenth of a percent annually was successfully reached in 08 :44?. The goal for 08 :446 is an

overall error rate of :.6E or lower. Improper payments occur when 0ederal funds go to the

wrong recipient% the recipient receives the incorrect amount of funds% the documentation is not

available to support a payment% or the recipient uses the funds in an inappropriate manner. The

Improper 1ayments Information !ct of :44: #I1I!$ #Sec. 5% 1ub. *. 547344% 55@ Stat. :3=4$

created a permanent framework for assessing every 0ederal program and dollar for risk of

improper payments% annually measuring the accuracy of payments% and initiating program

19


20/86

improvements to ensure that payment errors and improprieties are reduced and ultimately

eliminated.

20


21/86

21


22/86

STRATEGIC GOAL#S$%

(educe the government7wide improper payment rate and total dollar amount.

C&RRENT FOC&S%

1. "easure improper payments in programs that are at significant risk of improper

payments on an annual basis.

40 Identify the causes of improper payments and develop specific corrective action plans to

address these causes.

50 1repare rigorous return7on7investment analyses for program integrity activities and

ensure that these activities achieve an adeuate return7on7investment.

60


23/86

RIG'T-SI(ING T'E GOVERNMENT)S REAL

PROPERT*

!gencies have established a comprehensive inventory of the entire >overnment2s real property

assets that indicates excess and surplus property. The agencies are taking aggressive action to

eliminate those properties from them 0ederal books. Since 08 :44F% the >overnment has

identified and disposed of approximately D? billion in unneeded real property. The goal for 08

:44?% to dispose of an additional D5 billion in excess real property% was achieved. *ooking

forward% the goal is to maintain an annual real property disposal rate of D5 billion of excess real

property with a cumulative disposal goal of D5: billion by :45:. )n 0ebruary F% :44F% the

1resident signed 'xecutive )rder 533:% 0ederal (eal 1roperty !sset "anagement. To meet the

reuirements of the 'xecutive )rder% agencies must

develop and implement the necessary tools #e.g.% planning% inventory %performance measures$ to

manage their portfolio of real property assets at the right si/e% in the right condition% and at the

right cost. This reform activity supports the >overnment2s objective to identify and dispose of

excess 0ederal real estate.

23


24/86

24


25/86

STRATEGIC GOAL#S$%

(ight7si/e the 0ederal real property inventory0

C&RRENT FOC&S%

30 Capture inventory dataGperformance metrics on all constructed assets.

40ispose of unneeded 0ederal real property.

50 )btain legislative authority to reform asset management and disposition% including the

retention of sales proceeds.

60 'nact legislation to allow 'xecutive agencies to retain a portion of the net proceeds of sales

which would be directed toward the agency2s repair and alterations needs.

700acilitate inter and intra7agency coordination on real property efforts such as facility security%

historic preservation% and sustainability.

80 'nsure that agencies are using asset7specific performance data in their decision making

process.

90 evelop performance targets and evaluate opportunities to consolidate leased space and

maximi/e its utili/ation within a epartment as well as government7wide.

25


26/86

Financial Systems Modernization

'fforts to standardi/e financial systems are improving the cost% uality% and performance of

financial management operations by adopting common standards and shared solutions as well as

implementing other government7wide

improvements to foster efficiencies by standardi/ing% consolidating and optimi/ing 0ederal

financial operations. This reform activity supports the objectives of the 0ederal 0inancial

"anagement Improvement !ct #00"I!$ of 566@ by significantly improving the uality of

financial data >overnment managers need to make timely and successful decisions while

reducing the cost of >overnment operations.

26


27/86

27


28/86

STRATEGIC GOAL#S$%

Implement government7wide solutions that yield lower cost and risk results in

financial management activities.

C&RRENT FOC&S

30 0inali/e all business process standards% including (eimbursable and (eporting.

40 (evise certified software policy to reuire common government7wide accounting

classifications and business process standards to be inherent in the core financial

management software.

50 Issue revised financial system reuirements.

60 Issue revised test scenarios.

70 Collect and report performance metrics for the cost and performance of financial

management activities.

28


29/86

STRENGTHENING INTERNAL CONTROLS

'ffective internal control over financial reporting is essential for successful financial

management. (eliable financial information is critical for key decisions being made on a daily

basisLranging from routine decisions such as purchasing office supplies to more mission7

related decisions such as building satellites. 0ederal agencies must strengthen internal control

over financial reporting in order to sustain clean audit opinions within financial reporting

deadlines in the wake of increasing financial audit scrutiny. This reform activity supports

effective financial management as evidenced by the achievement of clean audits and the

elimination of material weaknesses #"


30/86

30


31/86

STRATEGIC GOAL#S$%

Improve effectiveness of internal control over financial reporting.

C&RRENT FOC&S%

30 0acilitate sharing of best practices and lessons learned between agencies.

40 +pdate )"B guidance% as necessary% based on lessons learned.

50 (eceive updated corrective action plans from agencies that reflect lessons learned from

08 :44? !75:3% !ppendix ! implementation and achieve consensus between

management% Inspectors >eneral% and )"B.

60 (eceive updated implementation plans from two agencies that have not completed a full

scope !ppendix ! assessment #testing all key processes$.

31


32/86

IMRO!ING FISCAL S"STAINA#ILIT$ REORTING

0ederal entitlement programs such as "edicare and Social Security are on an unsustainable

fiscal path. )"B is working with the Treasury epartment% the >!)% and the 0ederal

!ccounting Standards !dvisory Board #0!S!B$ to improve fiscal sustainability reporting.F

Improved reporting helps 0ederal stakeholders assess long7term fiscal sustainability and alerts

lawmakers and the public of the impending fiscal crisis that will occur if no action is taken.

Improving fiscal sustainability reporting will result in timely and reliable financial information

to help guide decision7making.

32


33/86

STRATEGIC GOAL#S$%

33


34/86

1. (eport comprehensive fiscal sustainability data% including social insurance and other

programs% that facilitate and guide reform efforts to address the long7term fiscal imbalance.

%.1rovide comprehensive fiscal sustainability data% including social insurance disclosures% in

the 0inancial (eport used by lawmakers and the public to inform the debate on entitlement

reform.

C&RRENT FOC&S%

1. evelop a ,Statement of 0iscal Sustainability and include as a principal statement within the

>overnment7wide 0inancial (eport.

2. *aunch pilot project to develop a prototype Statement of 0iscal Sustainability.

34


35/86

O+JECTIVES OF T'E ST&D*

O+JECTIVES OF T'E ST&D*

To understand how important is F)'al !*+a+"*al %a+a%+t to the

).l/%+tof nations and industries.

The role of government in deciding the F)'al !*+a+"*al %a+a%+t.

35


36/86

;ow to get high performance through F)'al !*+a+"*al %a+a%+t0

+tili/ing effective practices from both the commercial and 0ederal sectors.

To provide 0ederal C0)s with services% ideas%approaches% and model

To disclose material weaknesses in internal control over financial reporting.

To strengthen internal controls and accounting systems.

To identify programs that were vulnerable to improper payments% to estimate

annually the amount of under payments and over payments made by these programs%

and to include this information in the annual performance and accountability reports.

To publish data online regarding improper payments in high priority and high cost

programs.

To improve the cost% uality% and performance of federal financial management

systems by combining agency core systems .

36


37/86

LITERATURE REVIEW

37


38/86

LITERATURE REVIEW OF FEDERAL FINANCIAL

MANAGEMENT:

Deloitte Federal Financial

Management Soltion! Center

Deloitte offers a unique combination of consulting, financial advisory, tax, and audit

services specifically designed to help Federal agencies address their most complex

challenges.

Solutions Center

The eloitte 0ederal 0inancial "anagement Solutions Center #Solutions Center$% located in

overnment. The professionals assigned to our Solutions Center

conduct research on and develop alternative approaches to addressing some of the 0ederal

government2s most pressing financial management and financial transformation challenges.The

Solutions Center is most effective when it can facilitate bringing all interested parties together to

help find common7ground alternative approaches to addressing such shared challenges as

financial reporting% internal controls% financial systems% asset management%grants management%

and auditing standards. In addition% research efforts have identified real7world and time7tested

methods that agency C0)s can use to help transform their organi/ations from transaction

processors and financial systems operators to catalysts and strategists. In leading these

38


39/86

improvements% C0)s can serve as change agents to stimulate beneficial behaviors across their

agencies% while providing the financial leadership needed to determine and align business

direction with financial strategies.

Effective Practices in Financial Management

The Solutions Center also facilitates research on what can work in 0ederal financial

management% and why. By utili/ing effective practices from both the commercial and 0ederal

sectors% the innovative ideas and model programs have been developed to help 0ederal agencies

in their efforts to make financial management more efficient and effective.


40/86

,)ur objective is to provide 0ederal C0)s with services% ideas %approaches% and model

programs to help their agencies in their efforts to better achieve their mission% and thereby give

the !merican taxpayer a greater return on investment% said >ene 1rocknow% "anaging

irector% 0ederal >overnment Services% eloitte O Touches +S! **1.,By integrating effective

practices and personnel with excellent 0ederal and commercial financial improvement

experience% knowledge% and skills% we provide a fresh and more effective approach% said Ira

>oldstein% &ational irector% 0ederal >overnment Services%eloitte Services *1.

A Real'+orld, Time'tested rocess (or -ri*in& Inno*ation

The Solutions Center facilitates the development of workable alternative approaches by

understanding independent and shared research% bringing together relevant stakeholders through

roundtables and other forms of engagement% and applying a deep knowledge of 0ederal financial

management L in both practice and policy L to the analysis. "ore specially% the Solutions

Center professionals make speeches% participate in panel presentations% prepare short articles and

publications% and conduct training sessions.The Solutions Center also offers tailored% fast7paced

,solution sessions where C0)s%key stakeholders% and subject matter specialists can come

together to discuss and evaluate practical answers to the most pressing financial management

problems in the 0ederal agencies.

40


41/86

Led y a Former Federal Go*ernment CFO

The Solutions Center is led by eloitte Consulting **1 irector Clarence Crawford% who

served most recently as the C0) at the )ffice of 1ersonnel "anagement #)1"$. 1rior to joining

)1"% Crawford was C0)GChief !dministrative )fficer for the +.S. 1atent and Trademark

)ffice and Commerce epartment. ;e also worked in the !)% he freuently testified before ;ouse and Senate !ppropriations

Committees.0or more information on The eloitte 0ederal 0inancial "anagement Solutions

Center% please contact Clarence Crawford at :4:7347:F@4 or email clcrawfordPdeloitte.com.

As used in this document, the term Deloitte includes Deloitte & ouche !"A ##$,

Deloitte & ouche ##$,

Deloitte %onsultin ##$, Deloitte 'in(nci(l Ad)isor* "er)ices ##$, Deloitte (+ ##$

(nd Deloitte

T, Finanial Rport o t, &.S. Go/rnmnt%

'ach year% the epartment of the Treasury% in coordination with )"B% prepares theFinancial

Report of the U.S. Government (Financial Report). The Financial Report contains the

consolidated financial statements of the >overnment as a whole% which are subject to audit by

the >overnment !ccountability )ffice #>!)$. TheFinancial Report also serves as an important

41


42/86

example of improved transparency for reporting government7wide financial information. The

Treasury and )"B promote the Financial Report to increase awareness of !merica2s fiscal

position and condition.

The 2008 Financial Report was published on ecember 5=% :44?% and is located on the web

athttpAGGwww.fms.treas.govGfrGindex.html. The Treasury issued the Financial Report as an

important piece of the 0ederal effort to increase public awareness of the >overnment2s current

and future spending obligations. 0or the past five years% )"B has reuired the Treasury to issue

the Financial Report on ecember 5=% rather than on the "arch 35 statutory deadline% to

provide

financial information early enough to be useful in the budget process.

)n 0ebruary 5F% :44?% the Treasury and )"B% in coordination with >!)% released the first7

ever summary of theFinancial Report entitled% The Governments Financial Health:

F0ral Finanial Managmnt Rport #1223$%

@3 G#*) t th 4


43/86

calm the resulting effects on the financial markets and what these efforts mean to the taxpayer.

!lso% this past year% the Treasury epartment and )"B successfully closed 3= of >!)2s ?5

recommendations reported in July :44. In their June :44? report% >!) cited 54 new findings%

which resulted in a total of =@ open recommendations during >!)2s 08 :44? audit. (ecent

)"B and the Treasury epartment actions% taken to address >!)2s new findings and

ecommendations% include updating guidance on standard processes for reconciling

intragovernmental imbalances and continuing outreach efforts to address differences between

what is reported in 0ederal agencies2 financial statements and the consolidated financial

statements. uring 08 :446% )"B will continue working with the Treasury epartment to

address all of >!)2s recommendations from their 08 :44? and prior reports. This includes

focusing on the three primary material weaknesses that contribute to the disclaimer of an

opinion on the consolidated financial statementsA

#5$ elimination of intragovernmental imbalances.

#:$ development of effective processes for preparation of the consolidated financial statements%

#3$ resolution of management issues at the epartment of efense.

43


44/86

Material /ea0nesses Reorted y A)ditors and

Federal Mana&ers2 Financial Inte&rity Act Tales3

)"B audit guidance reuires auditors to disclose material weaknesses in internal control over

financial reporting. The 0"0I! and )"B guidance reuire the head of each executive agency

to annually report whether there is reasonable assurance that the agency2s controls are achieving

the intended objectives and whether the agency2s financial management systems conform to

government7wide reuirements. !gency heads are reuired to identify material weaknesses

related to agency programs and operations #pursuant to Section : of 0"0I!$ and non7

conformances with government7wide financial systems reuirements #pursuant to Section F of

0"0I!$. (eporting material weaknesses under 0"0I! is not limited to weaknesses over

financial reporting. The following tables includeA the number of material weaknesses reported

by independent auditors% the number of material weaknesses reported by agency heads under

Section : of 0"0I!% and the number of financial system non7conformances reported by agency

heads under

Section F of 0"0I!.

Table efinitionsA

N B*++*+ M the number of material weaknesses #beginning balance$ reported in the

Independent !uditor2s (eport for the prior fiscal year.

44


45/86

N N1M the number of new material weaknesses reported in the Independent !uditor2s (eport

for the current fiscal year which could include reportable conditions reported by the auditors

from the prior fiscal year whose severity has risen to the level of a material weakness.

N R(l.)M the number of material weaknesses reported in the Independent !uditor2s (eport

for the current fiscal year that were reported as resolved by the auditors or whose severity has

been reduced to that of a reportable condition.

N C+(l*)at) M the number of material weaknesses reported in the Independent !uditor2s

(eport that were combined with other repeat material weaknesses from a prior fiscal year or

with a new material weakness from the current fiscal year.

N E+)*+ M the number of material weaknesses #ending balance$ reported in the Independent

!uditor2s (eport for the current fiscal year. The number is calculated by adding the number of

new material weakness reported by the auditors from the current fiscal year to the number of

material weaknesses reported the prior fiscal year and then subtracting the number of

weaknesses resolved and consolidated weaknesses during the current fiscal year.

45


46/86

RESEARCH REPORT PREPARED FOR

MEMBERS AND COMMITTEES OF CONGRESS>

CRS I((# Stat%+t + F)'al F*+a+"*al

Ma+a%+t R!'%

V*'*+*a A0 M"M#'t'$, C')*+at'

Specialist in !merican &ational >overnment

January 55% :454

C+'((*+al R(a'"h S'.*"

CRS I((# Stat%+t + F)'al F*+a+"*al Ma+a%+t R!'%

C+'((*+al R(a'"h S'.*" 3

"embers of the 0irst Congress recogni/ed the importance of financial management for the new

federal government by promptly approving the Treasury !ct% signed into law by 1resident

>eorge


47/86

reform and improve financial management in the federal government. The 0ederal "anagers

0inancial Integrity !ct of 56?: #1.*. 67:==% 6@ Stat. ?5F$% one of the first of these measures%

was intended to strengthen internal controls and accounting systems. Internal control involves

agency policies and practices regarding the effectiveness and efficiency of operations% reliability

of financial reporting% and compliance with laws and regulations.5 The Chief 0inancial )fficers

!ct of 5664 #C0) !ct% 1.*. 5457=@% 54F Stat. :?3?$ created new chief financial officer

positions in :F major executive departments and agencies. The original reuirements for audited

financial statements in the C0) !ct were substantially expanded by provisions in the

>overnment "anagement (eform !ct of 566F #1.*. 54373=@% 54? Stat. :?=$% reuiring the :F

C0) agencies to prepare annual audited financial statements covering all accounts. The

statements are now submitted as a part of an agency2s performance and accountability report%

due F= days following the end of the covered fiscal year #generally% &ovember 5=$. The

!ccountability of Tax ollars !ct of :44: #1.*. 547 :?6%55@ Stat. :4F6$ further amended the

C0) !ct% extending the reuirements for preparation of audited financial statements to virtually

all executive branch agencies. In the same year% approval of the Improper 1ayments Information

!ct #1.*. 547344% 55@ Stat. :3=4$ reuired federal agencies to identify programs that were

vulnerable to improper payments% to estimate annually the amount of underpayments and

overpayments made by these programs% and to include this information in the annual

performance and accountability reports. ,mproper pa!ment is defined as any payment that

should not have been made or that was made in an incorrect amount. This includes duplicate

payments% payments to ineligible recipients or for ineligible services% or for services not received

or that do not reflect applicable discounts.

47


48/86

!nother component of federal financial management subject to significant statutory changes in

the last three decades is that of debt recovery% beginning with the ebt Collection !ct of 56?:

#6@ Stat. 5F4$. ! debt% claim% or receivable #the terms are used synonymously$ arises when a

responsible federal official determines that an amount is owed the government. "any types of

government activities generate receivables% including improper beneficiary payments% but the

largest number of federal debts originate from federal credit programs% direct loans along with

loans insured or guaranteed by the government.


49/86


C+'((*+al R(a'"h S'.*" 4

ue from the public and has submitted an overview annual report to Congress on federal debt

collection. In addition to these legislative actions% during the >eorge


50/86


51/86


C+'((*+al R(a'"h S'.*" 5

0inancial management and assist agencies in substantially complying with 00"I!.@ The intent

of the 0"*oB is to improve the cost% uality% and performance of federal financial management

systems by combining agency core systems #such as accounting$ at a limited number of shared

service providers #SS1s$ and by devising uniform government7wide business standards and

processes. The general objective of improving financial performance in the federal government

is noncontroversial. Striving toward more timely and accurate financial information%

strengthening internal controls% reducing improper payments% increasing debt recovery% and

bringing greater order to the management of federal assets appear beyond reproach. In order to

reap full benefits from more timely and accurate financial data% some say such information

needs to be taken into account by government decision makers% within both the executive branch

and Congress. The financial statements may prove of interest for various facets of congressional

oversight. *ikewise% some say the clearer identification of overpayments and underpayments

may lead to administrative actions to correct deficiencies in program implementation. !t the

same time% Congress may use the information for oversight hearings or for consideration of

possible amendments in the authori/ing legislation to remedy existing statutory weaknesses

which may have become evident. !dditional data on improper payments soon will be available

online% pursuant to reuirements in '.). 53=:4.

51


52/86

U+)'l$*+ Pl*"$ P'&l%

To what extent have recent management initiatives improved federal financial performance% and

what significant problems remainH


53/86

4.


54/86

P#'/(F'a%1'= !' F)'al F*+a+"*al Ma+a%+t S$(t%(

The 0ramework is the foundation document for the 0ederal 0inancial "anagement System

(euirements series published by J0"I1. The 0ramework document describes the common

financial management environment% vision% performance outcomes% business processes%

information flows and desired characteristics that are applicable to all financial management

systems covered by the J0"I1 reuirements. Together with all J0"I1 reuirements documents%

the 0ramework achieves an illustration of an integrated financial management infrastructure that

financial applications must be designed to support% and provides a broader context for

understanding and interpreting the reuirements outlined in the J0"I1 0inancial "anagement

System (euirements #00"S($ series.

Th F'a%1'= )"#%+t>

Q 'xplains how federal financial management supports federal agencies and the mission of

government as an inherent component of the delivery of all federal programs.

Q Sets forth financial management performance goals% outcomes% and desired capabilities and

characteristics that future systems should be designed to meet.

Q escribes financial management functions% information flows% and systems that support the

federal agencies in carrying out programs.

54


55/86

Q escribes the agency and central agency roles.

Q *inks financial management to program performance and describes how it supports budget

and performance.

Q 1resents the business needs% performance goals% and information architecture that drive

financial systems reuirements9

Q Summari/es the J0"I1 0ederal 0inancial "anagement Systems (euirements and their

interrelationships.

The 0ramework targets the following audiencesA

Q Fs an# the financial mana%ement comm,nit!. 1resents a more strategic and programmatic

perspective that supports the increased emphasis on improving

financial and program performance and providing meaningful information to

multiple levels of users.

Q s an# enterprise architects. 1rovides a model for the government7wide financial business

and information framework that complements agencyarchitectures and fosters collaboration

among the C0)% CI)% and programcommunities9

55


56/86

Q "ro%ram e1ec,tives an# fe#eral a%encies. 'xplains financial management and systems and

links financial systems to improved program performance. The 0ramework raises awareness

regarding the importance of financial management systems and encourages program executives

to be partners in developing more effective mission support and decision making tools.

Q ommercial service provi#ers. 1rovides information allowing contracted service

providers and systems vendors to better support the 0ederal government.

56


57/86

Th Rl( ! F)'al F*+a+"*al Ma+a%+t

0ederal financial management consists of the financial policies% processes% organi/ations%

applications% and services that ensure financial integrity and efficiency in government.

0inancial management fundamentally supports the mission of government and is an inherent

function of the delivery of all programs. 0inancial management% at all levels of the government%

must account for and control program execution through activities thatA

capture business event information9 ensure budgetary integrity9 establish financial control over

obligations and costs9 and produce accurate% consistent% and complete financial data to enable

cost7effective mission achievement and risk mitigation.

O.'.*1 ! th F)'al F*+a+"*al Ma+a%+t E+.*'+%+t

The federal financial management environment encompasses an integrated process of program

authori/ation% resourcing% governance% execution% and reporting ffective financial management

depends upon appropriate control of business transactions% in accordance with internal control

standards% and recording business event information in a manner that satisfies multiple users and

uses.

57


58/86

0inancial events are the basis for producing financial related information. The combined data

from all financial transactions provide the data for enterprise management information and

decision support. +sers of financial information include the public% the 1resident% Congress%

agency heads% program managers% financial managers% the private sector% and other governments.

S/"*!*"all$, !*+a+"*al .+t *+!'%at*+ %#(t (at*(!$ th !ll1*+>

Q Budgetary reuirements #i.e.% planned% authori/ed% and executed budgetary resources$9

Q Cash management reuirements #i.e.% recording and accounting for cash flows$9

Q !ccrual reuirements #i.e.% recording financial impactLexpenses or revenues associated with

business eventsLat the point those business events occur$

Q Internal control and audit reuirements9 and

Q Information exchange reuirements.

58


59/86

RESEARCH METHODOLOGY

.

RESEARCH METHODOLOGY

59


60/86

(esearch methodology is the systematic way to solve the research problem.

"ethodology can beA

Kthe analysis of the principles of methods% rules% and postulates employed by a disciplineK.

Kthe systematic study of methods that are% can be% or have been applied within a disciplineK.

! documented process for management of projects that contains procedures% definitions and

explanations of techniues used to collect% store% analy/e and present information as part of a

research process in a given discipline.

The study or description of methods.

RESEARCH DESIGN

(esearch design provides the glue that holds the research project together. ! design is used to

structure the research% to show how all of the major parts of the research project 77 the samples

or groups% measures% treatments or programs% and methods of assignment 77 work together to try

to address the central research uestions0

RESEARCH APPROACH

(esearch !pproach refers to the approach or the methodology that has been adopted to conduct

the research. It basically involves the selection of research uestions% the conceptual framework

that has to be adopted% the selection of appropriate research method such as primary research%

secondary research etc.

SAMPLE DESIGN

60


61/86

Sample design is that part of statistical practice concerned with the selection of a subset of

individual observations within a population of individuals intended to yield some knowledge

about the population of concern% especially for the purposes of making predictions based on

statistical inference. S!"1*' will be collected from the studies published earlier of federal

financial management from India and abroad.

SAMPLE SIE

The sample si/e of a statistical sample is the number of observations that constitute it. It is

typically denoted n% a positive integer. The sample si/e is an important feature of any empirical

study in which the goal is to make inferences about a population from a sample. In practice% The

study sample will constitute @4 respondents constituting in the research area .% and the need to have

sufficient statistical power. In a census% data are collected on the entire population% hence the

sample si/e is eual to the population si/e.

61


62/86

DATA COLLECTION

he rese(rch ill -e done on 45alitati/-(sis. ere the d(t( ill -e collected throuh

#6$ S5r/!"

"ur)e*s ill -e done e+tensi)el* to /ind out h(t eole (nd o//ici(ls thin (-out

this

#1$ Cro""-"tional7 orrlation

"ome correl(tion ill -e est(-lished to m(e it more credi-le.

#8$ E9primnt

"ome e+eriment ill (lso -e done to chec i/ it is re(ll* the /(ct.

"ome rim(r* d(t( ill (lso -e collected throuh 45antitati/ rese(rch

method. D(t( ill -e collected ith the use o/

#6$ Ca" "t50i"

#1$ Rlat0 :oo;"

62


63/86

Data will be collected through continuous:-

#6$ O:"r/ation"

#1$ Intr/i


64/86

ANANL*SIS AND

INTERPRETATION

64


65/86

ANANL*SIS AND

INTERPRETATION

30 0rom the data%it is clear that federal financial management plays a vital role in developing the

nation by providing innovative solutions to the federal government. It helps in developing

alternative approaches to addressing some of the 0ederal government2s most pressing financial

management and financial transformation challenges%it facilitates in bringing all interested

parties together to help find common7ground alternative approaches to addressing such shared

challenges as financial reporting% internal controls% financial systems% asset management%grants

management% and auditing standards.

0rom industrial point of view it helps to stimulate beneficial behaviors across their

agencies% while providing the financial leadership needed to determine and align business

direction with financial strategies.it provides uniue combination of consulting%financial

advisory%tax and audit services specially designed to help industries address their most complex

challenges.it helps in integrating effective practices and personnel with excellent 0ederal and

commercial financial improvement experience% knowledge% and skills.

2. After analyzing the ata!it gives us the notion that "ovt also #lays its

role in eciing the feeral financial management %'ach year% the epartment of

the Treasury% in coordination with )"B% prepares theFinancial Report of the U.S. Government

(Financial Report). TheFinancial Report contains theconsolidated financial statements of the

65


66/86

>overnment as a whole% which are subject to audit by the >overnment !ccountability )ffice

#>!)$. TheFinancial Report also serves as an important example of improved transparency for

reporting government7wide financial information. The Treasury and )"B promote the

Financial Report to increase awareness of !merica2s fiscal position and condition. the

>overnment put efforts to calm the resulting effects on the financial markets. !lso% this past

year% the Treasury epartment and )"B successfully closed 3= of >!)2s ?5 recommendations

reported in July :44. In their June :44? report% >!) cited 54 new findings% which resulted in a

total of =@ open recommendations during >!)2s 08 :44? audit.

$. From the ata %e came to &no% that feeral management leas to

enhancement of #erformance 'y increasing public awareness of the >overnment2s

current and future spending obligations. 0or the past five years% )"B has reuired the Treasury

to issue theFinancial Report to providefinancial information early enough to be useful in the

budget process. elimination of intragovernmental imbalances% development of effective

processes for preparation of the consolidated financial statements% and resolution of

management issues at the epartment of efense.

60 !fter the analysis of data it is clear that we utili/ing effective practices from both the

commercial and0ederal sectors% the innovative ideas and model programs have been developed

to help 0ederal agencies in their efforts to make financial management more efficient and

effective.


67/86

ractical( whether they are technical% operational% or policy7oriented9

NA&ency'(oc)sedM addressing the needs and concerns of various stakeholders9

N Inno*ati*e M utili/ing effective practices from both commercial and 0ederal7sector

organi/ations9 and

Res)lts'dri*en(positively impacting the 0ederal financial management community and its

stakeholders.

By integrating effective practices and personnel with excellent 0ederal and commercial financial

improvement experience% knowledge% and skills%

7. 0rom the datait is clear%that material weaknesses can be disclosed through Auditors and

)"B audit guidance reuires auditors to disclose material weaknesses in internal control over

financial reporting. The 0"0I! and )"B guidance reuire the head of each executive agency

to annually report whether there is reasonable assurance that the agency2s controls are achieving

the intended objectives and whether the agency2s financial management systems conform to

government7wide reuirements. !gency heads are reuired to identify material weaknesses

related to agency programs and operations #pursuant to Section : of 0"0I!$ and non7

conformances with government7wide financial systems reuirements #pursuant to Section F of

67


68/86

0"0I!$. (eporting material weaknesses under 0"0I! is not limited to weaknesses over

financial reporting. The following tables includeA the number of material weaknesses reported

by independent auditors% the number of material weaknesses reported by agency heads under

Section : of 0"0I!% and the number of financial system non7conformances reported by agency

heads under

Section F of 0"0 .the number of material weaknesses #beginning balance$ reported in the

Independent !uditor2s (eport for the prior fiscal year.

N1M the number of new material weaknesses reported in the Independent !uditor2s (eport

for the current fiscal year which could include reportable conditions reported by the auditors

from the prior fiscal year whose severity has risen to the level of a material weakness.

R(l.)M the number of material weaknesses reported in the Independent !uditor2s (eport

for the current fiscal year that were reported as resolved by the auditors or whose severity has

been reduced to that of a reportable condition.

C+(l*)at)M the number of material weaknesses reported in the Independent

!uditor2s (eport that were combined with other repeat material weaknesses from a prior fiscal

year or with a new material weakness from the current fiscal year

E+)*+M the number of material weaknesses #ending balance$ reported in the

Independent !uditor2s (eport for the current fiscal year. The number is calculated by adding the

number of new material weakness reported by the auditors from the current fiscal year to the

number of material weaknesses reported the prior fiscal year and then subtracting the number of

weaknesses resolved and consolidated weaknesses during the current fiscal year.

68


69/86

80 0rom the data%it is clear that financial management and assist agencies in substantially

complying with 00"I!.@ The intent of the 0"*oB is to improve the cost% uality% and

performance of federal financial management systems by combining agency core systems #such

as accounting$ at a limited number of shared service providers #SS1s$ and by devising uniform

government7wide business standards and processes.

90 The general objective of improving financial performance in the federal government is non

controversial. Striving toward more timely and accurate financial information% strengthening

internal controls% reducing improper payments% increasing debt recovery% and bringing greater

order to the management of federal assets appear beyond reproach. In order to reap full benefits

from more timely and accurate financial data% some say such information needs to be taken into

account by government decision makers% within both the executive branch and Congress. The

financial statements may prove of interest for various facets of congressional oversight.

*ikewise% some say the clearer identification of overpayments and underpayments may lead to

administrative actions to correct deficiencies in program implementation. !t the same time%

Congress may use the information for oversight hearings or for consideration of possible

amendments in the authori/ing legislation to remedy existing statutory weaknesses which may

have become evident.

To what extent have recent management initiatives improved federal financial performance% and

what significant problems remainH


70/86

). 0rom the given data it is clear% that federal financial management has helped a lot in

increasing the productivity and have minimi/ed the complexity in different sectors and have

improved a lot in enhancing the By utili/ing effective practices from both the commercial

and0ederal sectors% the innovative ideas and model programs have been developed to

help0ederal agencies in their efforts to make financial management more efficient and effective.

;0 0rom the data %we find that we can strengthen internal controls and accounting systems.

Internal control involves agency policies and practices regarding the effectiveness and efficiency

of operations% reliability of financial reporting% and compliance with laws and regulations. The

Chief 0inancial )fficers !ct of 5664 #C0) !ct% 1.*. 5457=@% 54F Stat. :?3?$ created new

chief financial officer positions in :F major executive departments and agencies. The original

reuirements for audited financial statements in the C0) !ct were substantially expanded by

provisions in the >overnment "anagement (eform reuiring the :F C0) agencies to prepare

annual audited financial statements covering all accounts. The statements are now submitted as

a part of an agency2s performance and accountability report% due F= days following the end of

the covered fiscal year . The !ccountability of Tax ollars !ct of :44: #1.*. 547 :?6%55@ Stat.

:4F6$ further amended the C0) !ct% extending the reuirements for preparation of audited

financial statements to virtually all executive branch agencies. In the same year% approval of the

Improper 1ayments Information !ct reuired federal agencies to identify programs that were

vulnerable to improper payments% to estimate annually the amount of under payments and over

payments made by these programs% and to include this information in the annual performance

and accountability reports.

70


71/86

14.0rom the data% it is clear that data is published online regarding improper payments in high

priority and high cost programs% including names of the entities that have received the largest

amount of outstanding improper payments and of the accountable federal officials tasked with

meeting reduction targets in their respective agencies.

3300rom the data it is clear% research efforts have identified real7world and time7tested methods

that agency C0)s can use to help transform their organi/ations from transaction processors and

financial systems operators to catalysts and strategists. In leading these improvements% C0)s

can serve as change agents to stimulate beneficial behaviors across their agencies% while

providing he financial leadership needed to determine and align business direction with

financial strategies.

71


72/86

FINDINGS

72


73/86

FINDINGS

The study2s findings% albeit from a small sample% reinforce the changes and trends reported

previously by other studies.(espondents in interviews and the online survey indicate thatA

N


74/86

N )rgani/ations are experiencing a greater demand for people capable of providing analysis that

supports decision7 making. !ll three major federal financial management positionsLaccountant%

budget analyst and management and financial analyst #see page 6$Lreuire analytical and

decision7support competencies. "uch of this analytical and decision support work is being

driven

by the influx of new reporting reuirements such as )"B Circulars !75:3 and !753@% by the

1erformance !ssessment (ating Tool #1!(T$ and the budgeting process% and )"B and

congressional reuests of agencies to provide program outcomes and measures.

N (espondents indicate that the top competencies reuired for accounting% budget analysis% and

management and financial analyst positions are knowledge of basic federal budgeting%

accounting% and program concepts and principles.

College graduates will not enter the federal workforce with these competencies. !gencies will

have to train them.

N The major competencies that college graduates lack are knowledge of federal appropriations

law and the federal accounting and budget process. 0or existing staff% communication skills and

analytical capabilities are competencies

that survey respondents cited most often as missing.

N Changes in technology% more demands for analytical and decision support skills% and new laws

and regulations reuire a long7term commitment by employees and management to continuing

professional education. !uditors and acuisition professionals in the federal government show

74


75/86

this commitment. They must complete a certain number of continuing professional education

#C1'$ hours in every reporting period to prove that they are maintaining their skills. There is

currently no similar reuirement for federal financial managers.

RECOMMENDATIONS

75


76/86

RECOMMENDATIONS

The federal government shouldA

N evelop a comprehensive improvement plan for the federal financial management workforce%

including proven strategies for making sure the people with the right skills are in the right jobs.

!uide specific to federal financial management is needed to help

agencies develop and implement their plans.

N Incentives are necessary to push this process along. There have been some attempts to make

legislative changes to provide incentives% such as better compensation and benefits% but more is

needed. The ability to make use of such incentives would encourage agencies to do more

effective workforce planning

N Institute a reuirement for continuing professional education #C1'$ for professional and

administrative federal financial management positions% as is done now for federal government

auditors. "anagers would have to obtain a specific number of C1' hours every two years.

'ducation providers could tailor courses that would provide the C1' hours and ensure that

managers obtain and maintain the skills they need. )ne way to ensure that managers obtain C1'

would be to have a certification that includes a C1' reuirement.

76


77/86

N +rge the &ational !ssociation of State Boards of !ccountancy and the !merican Institute of

Certified 1ublic !ccountants to include basic federal accounting uestions on the C1!

examination% which already includes uestions on state and local government accounting.

Including these would encourage colleges and universities to include a ,0ederal !ccounting

545 course in their curriculum. !>! is currently working with colleges and universities to

have such a course included in their curriculam

77


78/86

LIMITATIONS OF THE STUDY

78


79/86

LIMITATIONS

30 The limitations of the study are that the study is limited to specific individuals and is not

broadly studied.

40 ue to the time constraint the study remained limited to certain sectors and does not

cover the impact of federal financial management on all the sectors.

50 The respondents may not respond properly because of being busy in their personal

matters% this may effect the validity of the data.

60 This study covers the importance of federal financial management in preventing

improper payments and other financial problems% but it does not focus on over all

significance of federal financial management.

70 The study is limited to India and +S! and does not consider other economies of the

world.

80 The study takes into consideration the study of federal managers and C0)%s and do not

consider other professionals. This suffers the validity of federal financial management.

79


80/86

CONCLUSION

80


81/86

CONCLUSION

It is concluded that the federal agencies have faced the challenge of providing financial services

in an environment where work is being shaped by new technology integrated financial systems

and the need to respond to new reuirements and reuests for value7added services% often with

existing or reduced budgetary resources. !s federal work is changing% there has been increased

federal government focus on workforce issues and acuiring ,the right people with the right

skills. ;owever% progress toward that goal has been slow. In :445% the >overnment

!ccountability )ffice #>!)$ identified human capital management as a government wide high7

risk area because federal agencies lacked a strategic approach to human capital management that

integrated human capital efforts with their missions and program goals. In following agency

progress on addressingthis high7risk area% >!) has issued a number of reports and provided

testimony before the Congress #several of these are cited in the 'nd &otes to this paper$. In

:445% the 'xecutive )ffice of the 1resident released the 1resident2s "anagement !genda

#1"!$% which set out five management government twide reform initiatives for federal

agencies. The first of the five% Strategic "anagement of ;uman Capital% encourages federal

agencies to implement strategic workforce planning to support the development of a high7

performing workforce.

This report provides another glimpse into the changes taking place in the federal financial

management workforce in :44 and confirms the trends identified in previous reports. The

federal financial management workforce is becoming more professioni/ed. "ore people have

competencies focused on doing a better job supporting decisionmaking. ;owever% there is no

81


82/86

overall strategy for acuiring the right people with the right skills for the right jobs. (ecent

college graduates do not possess the competencies federal financial managers need to support

fully the information reuired for decision support% and strategies must reflect this reality. There

is no evidence that competencies specific to federal financial management #for example%

knowledge of federal appropriations law or the budget$ are likely to be a part of a new college

graduate2s skill set. !s a result% federal agencies must implement programs to fill in the training

gap for these new hires. Some agencies are already doing so.


83/86

BIBLIOGRAPHY

BOOKS>-

1 ( (usyagi 0inancial "anagement#Tata "C>raw ;ill%3rd'dition$

-an ;ome 0inancial "anagement and 1olicy% 1earson 'ducation%:443%

5:th'dition

1rasanna Chandra 0undamentals of financial "anagement

WEBSITES>-

www.federal.financial.in

www.financialmanagement.com

www.financialmanage.co.org

www.googlesearchengine.com

83
http://www.federal/http://www.federal/http://www.google.com/http://www.federal/http://www.google.com/


84/86

QUESTIONNAIRE

84


85/86

QUESTIONNAIRE

30 In which areas the federal financial management is important to the development of

nations and industriesH

#!$ Innovative solution #B$ !lternative approach

#C$!dvisory Tax #$!udit

40 Is there any role of >overnment in deciding the 0ederal 0inancial "anagementH

#!$ 8'S #B$ &)

50 Is there are any different ways to get high performance through federal financial

managementH

#!$ 8'S #B$ &)

60 Can we utili/e effective practices from both the commercial and 0ederal sectorsH

#!$ 8'S #B$ &)

70


86/86

80 Can we improve the cost% uality% and performance of federal financial management

systems by combining agency core systemsH

#!$8'S #B$ &)

90

federal financial management leads to development

Documents