The AGA Weblog

Blog-cation

The Blog is on vacation this week. We'll be back on Monday with Ken Bresnahan, a principal at Grant Thornton, LLP, and he's blowing up financial statements. Be sure to come by to see what he's up to!

The AGA National Office Staff wishes you and yours a Happy Thanksgiving!

New Tools for a Government Financial Manager

By: Anthony Rainey

Anthony Rainey is a member of AGA’s Washington D.C. Chapter, the Emerging Issues Committee and the Steering Committee Partnership for Intergovernmental Management and Accountability. He is the agency fiscal officer for the Office of the Chief Technology Officer, District of Columbia. He has also held financial management positions at District of Columbia Courts (federal), and the cities of Norfolk, VA, Gresham, OR, and Seattle, WA.

The presidential campaigns used new tools in their strategies to engage people. The financial manager and their staffs need to become familiar with these new tools and incorporate them into their strategies. The major change required for these new tools is that finance must be more proactive rather than reactive, with results examined in real time.

·      Internet —We need to monitor the changes in the Internet (the enormous network of networks connecting disparate computers using languages called protocols). Internet Protocol Version 6 (aka IPV6) has now expanded the addresses and tags that can be used. Have our governments transitioned to IPV6?

·      Web—We need to accommodate the different vehicles that customers use to travel on the “http” protocol to visit our sites. Can the different vehicles (MS Internet Explorer or Firefox or Safari or on a Web-enabled phone or PDA) that visitors use to access out sites allow them to seamlessly navigate through our Web pages?

·      XML—Do our Web pages use of “eXtensible Markup Language” utilize well-formed and valid smart tags with corresponding end tags to get the user where she or he needs to go?

·      XBRL—Are we presenting our financial documents—PAR, budget, CAFR or PAFR—into “eXtensible Business Reporting Language” to our customers so that they are not seeing a large financial document as a mere block of text but rather as a set of smart tags for the different parts (assets, liabilities, net assets, revenues, expenditures) that can be drilled down to the lowest level?

·      Wikis—Are we using “What I Know Is” tools, internally and externally, to aggregate and share financial information on an ongoing basis in a collaborative manner?

·      Blogs—Are we utilizing blogs to discuss financial topics and issues, internally and externally, to enhance and refine ideas, opinions and approaches in a collaborative manner?

·      Social Bookmarking—Are we engaging the customers of our financial information by inquiring what they want to know (categorize whether it is a salary or revenue query) and where they go (assigning a tag—bookmark) to find it? Do we examine these social bookmarks to modify or adapt our financial information based on user trends?

·      Social Media —Are we creating financial information forums utilizing blogs, Wikis, podcasts, MySpace, Facebook, Youmeo, Twitter or Plaxo to keep in touch with our users of financial information?

·      Collaboration—If we do not manage collaboratively now, then what do we need to learn about it to enable us to take advantage of collaborative tools like Google Docs or MS SharePoint? Do our Intranet websites allow for collaboration? What is our government’s or agency’s strategy on collaboration?

If you expect that citizens and customers will wait for you to implement the above, or come to you asking you to implement the above, then nothing will change. I believe that we must engage our customers about government finance with these existing tools. I believe that the government budget, accounting and auditing professions must incorporate these tools into their existing strategies. The easiest way to implement them is to incorporate them, where appropriate, into your defined business processes. If presidential campaigns can use these tools with people all across the country, many of whom never met face-to-face, then why can’t government finance do the same?

Driving the Message

By: Rebekah Stephens

Rebekah Stephens is the Planning and Performance Coordinator, Metropolitan Government of 

Nashville and Davidson County.

It is safe to say that as many governments as there are operating in this country, there are as many ways of planning strategically and collecting and using performance data to make decisions. However, one of the most important components of every government’s efforts, regardless of the approach taken or the method used, is the inclusion of front-line staff in the creation of the mission and goals of the organization and work toward those goals.

The Metropolitan Government of Nashville and Davidson County began its efforts around strategic planning and performance management in 2002 and, technically speaking, has been fairly successful.  In a relatively short time 37 departments have implemented strategic business plans and use those plans as the foundation for their organization’s program-based budgets. We are in the process of moving the rest of organizations within the government to program-based budgets as well.

Additionally performance measures are included in individual employee performance evaluations and performance information is used to make decisions on everything from staffing to purchases to determining equipment needs and a host of other decisions too numerous to mention here. 

It is safe to say that we are on the right track. At this point one of the main challenges is how we can drive the message of strategic planning and performance management down to the front-line. How can we help departments communicate the goals and mission so that the folks who are on the front-lines meeting with customers and getting the work done hear the message and know how they contribute to the success of the organization.

How does the message get communicated in such as way that the front-line staff clearly sees how they “fit?”  

At this point Metro has begun to transition from trying to put the mechanics of strategic planning and performance management in place to something much more difficult, yet some might say, much more important. We are trying to shift the culture of the government.

So the question, at least for Metro, has become how can we drive the message down into the organization so that everyone in the organization will see the purpose of their work?

How do you communicate to employees how their efforts on a day to day basis contribute to the broader goals of the organization?

Here are a few steps Metro has taken to ensure that each organization’s message is communicated to every staff member from the department director to the front-line employee.

• We have partnered with Metro Human Resources to ensure that the official forms used for employee performance evaluations contain a place to include the performance measures for which the individual employee is directly responsible and the performance data for those measures. The measures that are included in the individual employee performance evaluation forms should either be the same as or contribute to one or more measures in their organization’s strategic business plan.

• It is extremely important for staff NOT to view the conversations about their performance as a “gotcha.” There are several recognition programs throughout Metro organizations that acknowledge the front-line employees’ contribution to the mission and goals of the organization. 

• The Department of Finance and Metro Human Resources, jointly, offer training sessions to managers specifically on how to talk with employees about their performance. During the training, managers discuss different ways to communicate with their staff about performance. The training also addresses how supervisors and front-line employees can work together to include performance measures in the individual employee performance evaluations that help the employee see how they contribute directly to the mission and goals of the organization.

However, as you can imagine, our work is not done. Please feel free to comment with ideas that your organization has about getting the word out to front-line staff about their part in the success of your organization.

For information on Metro’s performance go to: www.nashville.gov/performance.

Thank you.  

The New Federal CFO Roadmap

By: Vincent Dennis

Vincent Dennis is the former deputy director of the National Reconnaissance Office for Business Plans and Operations. He is now a managing director with BearingPoint Public Services and a CFO SAGE (Strategic Advisors to Government Executives), a group of current and former federal CFOs convened by the Council for Excellence in Government to exchange thought leadership and strategic advice within federal financial management.

The incoming Obama administration should look to the Chief Financial Officers Act to effectively confront the historic and unprecedented financial challenges facing the country today. The leadership contribution of federal CFOs must be enhanced and maximized. The Council for Excellence in Government’s Federal CFO Roadmap has identified some objectives to help make this happen:

• Improving investment decision-making and enterprise risk management through tighter coupling of strategic planning, program analysis and evaluation and performance budgeting.
• Improving strategic (and operational) collaboration with agency and department leaders.
• Enhancing agility of CFO organization to more responsively support program priorities.
• Forecasting future program performance through enhanced financial, performance and risk information analysis.
• Enabling standardized, properly controlled enterprise business management processes through integrated business systems.
• Expanding aperture of auditable financial statement process to encompass improvements in managerial cost accounting and program-enhancing management decision information.

The unifying theme is the seminal role for the CFO in shaping, supporting and prosecuting an agency’s or department’s mission at every level through enhanced decision-making. While these objectives are directionally aligned with the path most federal CFOs are currently taking, their attainment requires overcoming a number of hurdles.  

CFOs cannot allow themselves or their organizations to be captured by any single initiative, objective, priority or responsibility. To the extent pressures to balance and prioritize are not countervailing, CFOs must continue to do both. An implementation of a new financial management system doesn’t elicit a pass on producing program-relevant decision information. This is but one example of the balancing act CFOs must confront in executing their broad responsibilities. 

Some CFOs new to the federal government have tended to try and drive their organizations to be more like commercial enterprises. Parallels of course do exist but the differences are stark and must be respected. What needs to be encouraged and harnessed, however, is the flow of ideas, perspectives and talents from both sides of that divide. 

Based on my experience as a CFO, the surest way to align strategy to execution is to elevate the agency or departmental CFO to a position in the leadership mirroring that afforded to their commercial counterparts. Commercially, CEOs and their CFOs are paired in every strategic dimension. The commercial CFO is central to the development, communication and execution of an organization’s objectives. This is not yet the norm in the federal government. One way to bake-in this role is for the administration to select cabinet secretaries or agency directors and their CFOs (political or careerist) in tandem—a package deal of sorts—to improve performance in the critical first year.

CFOs must lower internal barriers to cooperation, by fiat or by outreach. Adopting an enterprise-wide approach—to unify efforts across the organization—is essential. CFO responsibilities cannot be neatly siloed from those of the chief procurement officer, the chief administrative officer, chief information officer and other mission roles. Achieving the objectives reflected in the Federal CFO Roadmap is an enterprise-wide responsibility. Few activities are purely the province of any one element and parsing them into planning, finance or mission buckets guarantees sub-optimal decision-making. An agency that collaborates across functions is especially essential in investment planning and risk management.

The statutes, regulations and managerial expectations defining the federal CFO have enduring relevance. They support an evolving interpretation of the federal CFO role and serve as a means for improving the business of government. If in the next two years the new administration can achieve most or all of the Federal CFO Roadmap objectives, it would present all of us with a major reason to celebrate the CFO Act on its platinum anniversary.

What are your thoughts on: the biggest challenges for federal CFOs in getting beyond accountability and transparency to mission-based insight, and why this is so critical for new federal CFOs in the upcoming transition?

Why Service Efforts and Accomplishments and Citizen-Centric Reporting Are So Important

By: Eric S. Berman, CPA

Eric S. Berman, CPA, a member of AGA’s Greater Boston Chapter, is a deputy comptroller of the Commonwealth of Massachusetts. He is AGA’s representative to the Governmental Accounting Standards Advisory Council to GASB (GASAC) and a member of the Financial Management Standards Board.

I am proud to be your representative to GASAC, and I encourage you to give me your feedback.

On Friday, Nov. 7, I participated in a GASB user’s forum discussing Service Efforts and Accomplishments reporting. Using the request for response (RFR) released from GASB that AGA gave comment, I put myself in some of your shoes and gave your thoughts to the board. You may be an auditor, or a federal inspector general, or an educator but you are all part of AGA. During my testimony, I realized why AGA is unlike any other governmental entity. Accountability crosses so many aspects of governmental operations. We can give a perspective unlike any other peer organization.

On Friday, Nov. 14, 2008, I will give oral testimony on how AGA feels about GASB’s request for responses on Service Efforts and Accomplishments (SEA) reporting. By and large, we should feel good about the RFR. The RFR discusses many of the aspects of AGA’s Citizen-Centric Reporting program. The major points in the RFR are below.

The Four Essential Components of SEA reporting, including:

·      A section on the report’s purpose and scope—the knowledge of why the information is being reported and to which portion of a government the information relates. In other words, what is being reported and what is your audience?

·      A section on the government’s major goals and objectives—the basis for determining which measures to use for that explain the government’s mission and most important operations.

·      Key measures of SEA performance—these focus the key calculations that are most important to report users.

·      A discussion and analysis of the results of those measures and challenges facing those measures, including what has been achieved and what changed the level of achievement.

Qualitative Characteristics of the information in an SEA report, including:

·      Relevance—are the measures germane to the aspect being reported on?

·      Understandability—are the measures easily understood?

·      Comparability—are they comparable within the government and with peers?

·      Timeliness—are they presented at a time when they are useful?

·      Consistency—are the measures easily replicated from period to period?

·      Reliability—can the measurements be verified without bias?

Sounds familiar? Many of these aspects are hallmarks of AGA’s Citizen-Centric program.

I will report on behalf of you that overall, the Financial Management Standards Board of AGA is pleased with these guidelines. Like any other proposal, we have some questions and suggestions.

However, one thing is for certain—we spend a lot of time as auditors, educators, financial managers and reporters rationalizing the efficacy of a footnote, or an accounting treatment. Granted, these are very important to stakeholders like rating agencies, public interest advocacy groups and bondholders. I am about to commit blasphemy to some of you, but do the Joe the Plumbers of the world really care about what is in a securities lending footnote? I believe that at the very least, SEA reporting and especially Citizen-Centric reporting is the future of a good portion of financial reporting, maybe even as the primary vehicle to reach out to citizens, leaving traditional financial reporting as a secondary vehicle.

A recent AGA survey shows that the vast majority of the respondents, 89 percent, said that, as taxpayers, they are entitled to transparent financial management information, and 57 percent said that government has an obligation to provide it. They further indicated that government is failing to meet its financial management reporting needs, and that poor performance has created a problem of trust between residents and their governments. The survey showed that governments need new innovative means of communication to overcome those challenges. At the very least, Citizen-Centric is extremely effective at reporting short- and medium-term inter-period equity, thereby meeting some of that challenge. Maybe longer period equity could be reported using a subset of the current presentation.

In Massachusetts, our citizens just overwhelmingly voted down an initiative to eliminate the state’s income tax. In my view, it’s a sign that citizens realize that the necessities and initiatives of government cost money. But there’s always a back story to any action. In return for their increasingly hard-earned tax dollars over the next few years, as the AGA survey shows, citizens will demand information in a timely manner that they can easily understand. What better vehicle than SEA reporting, especially citizen-centric reporting? 

Tell me what you think about SEA reporting.

A final word—AGA should be especially proud that AGA member Lisa Parker, former finance director of Saco, Maine is now leading GASB’s SEA project. You’re doing a great job Lisa!

Auditing in the 21st Century—Part II

By: Lealan Miller, CGFM

Lealan Miller, CGFM, a member of AGA’s Idaho Centennial Chapter, is a partner with Eide Bailly LLP, and a member of AGA’s National Executive Committee.

In a post on AGA’s blog  last April, I discussed a few of the issues I’ve experienced with auditing in the 21^st century. In that post I also referred to the fact that auditing in the 21^st century had significantly evolved since Rick Fair, AGA National President, presented the topic at the San Diego Professional Development Conference in 2006. Last April I could not have foreseen the developments that would continue to evolve over the past few months within this topic. It will be interesting to explore the effects the change in the financial markets, status of the economy, and the changes in the leadership of the federal government will have on auditors and their clients in the 21^st century but that will be at another time.

You will recall from my previous blog, and to be included in all future blogs, the following list of challenges and opportunities, which auditors and their clients are faced with regularly:

• Doing more with less
• Effective usage of both internal and external resources
• Creating the integrated auditor
• Adapting to new organizational environments
• “Tuning in” on an organization’s strategic relationships
• Auditing in a highly automated environment
• Effective usage of automation to audit
• Addressing management concerns with the cost and other effects of fraud
• Finding new tools to meet the audit challenge
• Meeting the challenges created by the new economy
• Generational differences (Baby Boomers, Generation X and Generation Y)

Last April I discussed the following items from the list above: “doing more with less,” “creating the integrated auditor” and “addressing management concerns with the cost and other effects of fraud.” Today I would like to address: “auditing in a highly automated environment” and “finding new tools to meet the audit challenge.”

Auditing in a Highly Automated Environment

I can honestly say that I do not have a single client that uses a paper-only financial accounting system. Further, the majority of our firm’s audit staff do not even know what green-bar paper looks like! We are not only working and auditing in a computerized accounting environment, but we are working and auditing in an environment in which many processes are becoming highly automated. The days of filing paper forms are long gone, with many local governments supporting online submission of paperwork including payments of water, sewer and trash, and requests for new service. These are only a few ways in which governments are becoming increasingly automated. The various automated systems are integrated with the accounting system, which posts the transactions to the various sub accounts, and posts the final entries to the general ledger. Gone are the days of massive paper trails, which as auditors, we were able to rely on in order to obtain sufficient evidence regarding the amounts recorded in the general ledger.

Auditors are now required to critically explore ways in which we can audit through the IT system, rather than auditing the paper trail around the IT system. IT audit specialists are now used to test IT controls and to ensure systems are integrating information and posting transactions correctly. IT audit specialists are necessary not only to document and appropriately test complex computer systems, but also in order to effectively communicate with the respective organization’s IT personnel.

As auditors in the 21^st century, it is critical that we maintain professional skepticism when dealing with automated systems, in order to not overlook risks that continue to evolve within this area. We as humans tend to get lazy, and at times are convinced that once financial information is in the IT system, the system is foolproof, and any required processing of that information will be performed properly. Unfortunately, we have all heard the stories where this is not the case; therefore, as auditors, and as government entities, we must continue to address the risks that continue to evolve within our increasingly automated accounting environments.

Finding New Tools to Meet the Audit Challenge

The previous discussion brings us to the second item, “finding new tools to meet the audit challenge.” The tools that I have found to be most effective are not necessarily new, and are highly available to auditors and government entities in order to meet the ever-evolving “audit challenge.” One tool of critical importance, and discussed in the previous topic is the use of IT specialists. IT specialists have the ability to effectively document and test transactions through the accounting IT systems, test security over the system, and to test hard and soft internal controls of the respective systems.

The amount of data that is available to auditors is becoming enormous. As a result, it is increasingly difficult to easily manage and disaggregate massive amounts of data. The use of software programs that specialize in analyzing data, performing fraud analytics and identifying transactions to be tested has provided significant assistance in auditing the data. However, as auditors we must understand the systems, and data sets to determine the appropriate methods in which to analyze data throughout the audit process.

Continuous auditing is another tool that could be implemented in the highly automated environment. This would allow the auditor to identify issues earlier, help the government entity correct internal control issues quicker, and reduce the amount of year-end audit procedures. 

This discussion is a high-level view of these topics, with many other aspects to be explored and discussed in greater detail. Unfortunately, there is neither time nor space to do so at this time.

As auditors and organizations in today’s changing environment, we experience many challenges, and I believe that these challenges are what make our jobs interesting and exciting. What are your thoughts?

Promoting Financial Literacy

By: Tom Sadowski, CGFM, CPA

Tom Sadowski, CGFM, CPA, a member of AGA’s Mid-Missouri Chapter, is the Missouri state controller. He’s an AGA Past National President and a two-time Past National Treasurer.

Indulge me today while I talk about my kids. None of them are AGA members and none of them work in government financial management, so I don’t have to worry about them ever reading this—please don’t say anything to them.

Grant has a finance degree from the University of Missouri. He owns a small business in Fort Lauderdale, FL.

Cale has an architecture degree from the University of Kansas. He works for an architecture firm in Manhattan.

Kaitlyn is still in school and is following a familiar path of trying to figure out a career. I don’t know what it will be but it will not be finance-related. As much as she is like me she did not get that gene. My bet is she will work for a human services, not-for-profit organization as a policy or administrative person. The kid can think and write and she has passion.

Jatha and I have treated all three the same as best we could. They always got the same allowance (age-adjusted, of course). Grant, being the oldest, was the guinea pig for all matters financial. When he got old enough to need new athletic shoes on a regular basis we started having negotiations over how much he could spend. It didn’t take us too long to figure out that we needed a better way. The solution? Figure out how much we spent on clothes for him and add it to his allowance. “Grant, this is what you get each month and it covers clothes, shoes, gas, eating out, etc.” Guess what he wanted for Christmas? Clothes.

We did other things for them that helped make them financially literate (that was the outcome, not our purpose):

·      We got them a joint checking account in their name and ours. We had online banking so we could monitor their account. If they overdrew the account they paid the fees.

·      When they were old enough, we got them a credit card in their name with a $500 monthly limit.

·      When they had jobs we talked to them about the earnings statement and what the taxes were (that opened some eyes). I also did their tax returns for them.

·      Even when we were paying bills for them, like their student account, we would talk about what the charges were, etc.

·      We gave them room to make mistakes but with limited risk. They were learning by doing and by making occasional mistakes.

·      In general, we encouraged them to talk to us about money issues and we tried not to make too many judgments about their financial decisions.

If you stayed with me this long, you may be thinking “Hey, Tom, is there a point to all this? We got it that you are proud of your kids, but what does this have to do with me?” I am glad you asked. I’ll be getting to my questions to you in a minute.

First, while we pride ourselves on being an educated country, as a nation we are financially illiterate. I have thought that for some time, but starting with the run up in oil prices and continuing through the sub prime fiasco and the subsequent bailout/rescue plan, the evidence is clear and damning. What could have been a great teaching moment has degenerated into something as unintelligible and obtuse as our presidential debates and most of the political ads I saw. (I think there was one good one, but maybe that was a GEICO commercial. By the way, I voted for the Gecko and the Aflac duck. I know what you’re thinking. The Gecko is not a natural-born citizen. But at least he is articulate on financial matters.)

Second, I hope we only pay once for the financial crisis. Can we learn the true causes so we understand and not just point fingers of blame?

Can we understand that while there were some bad characters, you can trace a lot of this to human behavior? To paraphrase a GEICO commercial “Human beings behaving humanly. How existential.”

If we don’t understand this then we are sowing the seeds for the next crisis in the same fields where we are planting our fixes. I don’t know about you, but I want to get my money’s worth for my $800 billion. Just like General Patton never wanted to have to capture the same real estate twice, I never want to pay for the same real estate twice.

To the questions:

1. What have you done to promote financial literacy in your personal world and your work world? Specific examples would be great.
2. As controllers and auditors we ought to understand this stuff. What role do we have in helping resolve this crisis and ensuring we don’t head down this path again? In your answer, please indicate your sector and whether you have any direct responsibility in this area (banking, securities, insurance, etc.).

Linking our Statistical Reporting System with the Financial Statements Published by the Federal or State Governments

By: Jesse Hughes, Ph.D., CGFM, CPA, CIA, International Consultant; Professor Emeritus of Accounting, Old Dominion University 

In the United States, is there any effort to link our statistical reporting system with the financial statements published by the federal or state governments?

In 1993, the United Nations (UN) updated the System of National Accounts (SNA) to provide for full accrual financial statements with fixed assets reported on the fair value basis. The intent was to provide better analytical measures for fiscal policy. In 2001, the International Monetary Fund issued the Government Finance Statistics (GFS) Manual to provide detailed procedures for implementation of the desired SNA by the UN. These procedures identified the procedures for preparation of four financial statements: Statement of Government Operations, Balance Sheet, Statement of Sources and Uses of Cash and Statement of Other Economic Flows. The following footnote in the GFS Manual identifies the linkage anticipated with the accounting system: “Although the GFS system is described in standard accounting terms, it is important to remember that it is a statistical reporting system that might differ in important ways from the underlying financial accounting system from which most of the GFS statistics will be derived.”

The International Public Sector Accounting Standards provide a standard for reporting on the General Government Sector that would provide such a linkage. Many developed and under-developed countries around the world have made or are in the process of making the linkage between the desired statistical reporting system and the underlying financial accounting system. Yet, I am not aware of such an effort in the United States. We prepare a set of financial statements but I do not see the linkage to our statistical reporting system. The financial statements for the government are subject to audit but the financial statements for the statistical systems are not. Have I missed something or do we want two different sets of financial statements: one for statistical reporting and another for financial reporting? If these are not linked and they report on the same thing (even if the fixed assets are measured differently), doesn’t this create confusion among the readers of the financial statements?

 

Preparing for the Transition

By: Michael J. Hettinger

Michael J. Hettinger is director, Practice Planning and Marketing, Grant Thornton LLP.

Regardless of who wins today’s election, the president-elect will have to be prepared to hit the ground running. With so many important national issues taking center stage in this election from the Iraq War to the current economic crisis, management issues for the most part have taken a back seat. As the next president prepares to take office on Jan. 20, those issues will begin to take on increasing importance. 

Immediately following the election, transition teams will be formed to take on the massive task of turning campaign promises into policy and identifying key individuals who can carry out that policy. There are 77 days between the election and the inauguration of the next president and while there will be no shortage of advice, there are a couple of specific areas that I believe the next Administration should be thinking about.

Finding leaders:  According to the Brookings Institution, it took an average of 8.7 months for the Bush Administration to move an appointee through the Senate confirmation process in 2001. This is a long time for agencies wait for their senior leadership. From the standpoint of management, this means the many agencies will have to operate with acting career officials in key positions such as Chief Financial Officers. Assuming the early focus of appointees will rightfully be on Defense, Homeland Security and Treasury appointees, this situation may persist for many months. The individuals appointed to these acting positions need to step up and play an active role working with the new president’s team to ensure a seamless transition as well as provide effective leadership in the transition.

Defining the management agenda:  We have heard a lot from the campaign trail about going through the federal budget line-by-line, reducing earmarks, making government programs work more effectively and eliminating under-performing programs. If this sounds familiar it is because the Bush Administration invested a significant amount of time, through the PMA, in these issues. As a result, there is a wealth of public information about the effectiveness of just about every government program. The next administration can build on that information, adding its own ideas. The beauty of the PMA is its simplicity. The next president can learn from that approach and while one can disagree with some of the results, it is clear that agency officials—political and career—knew what was expected. By defining a simple management agenda, with clear goals and making sure that information is transparent, the next administration can build on the success of the PMA.

Working with Congress:  To be successful in moving appointees through the confirmation process and in implementing its policies, the next administration must recognize Congress as a partner and a co-equal branch of the government. From the standpoint of eliminating ineffective programs and reducing budgets it is of little use for the next administration to go it alone, only to have Congress overturn those decisions through the annual appropriations process. Time and again over the last eight years we have seen numerous policies and budget-cutting proposals overridden by congressional directives, in many cases simply because Congress was not informed of the intent behind the proposals and in other cases because there was a compelling policy or political reason to disagree. Remember, Congress created most of these programs through legislation and they have a sincere interest in seeing them function as intended. Since both major party candidates are sitting U.S. senators, I am hopeful they understand the need to work with Congress if they truly want to implement what they have proposed.

Dealing with the human capital crisis:  Each year Grant Thornton surveys hundreds of federal CFOs, CIOs, defense finance personnel, procurement officials and CHCOs, and each year the one issue that consistently rises to the top is human capital. Whoever wins is going to have to deal with this issue and not just the impending retirements of the baby boomers but also reforming the General Schedule, reviewing the NSPS and finding ways to attract more young people into government service.

The next president has his work cut out for him. What are your thoughts?

Preparing Your Agency/Entity for an E-Commerce Application

By: Teresa L. Pullen

Teresa L. Pullen is E-Commerce Fiscal Coordinator, State Controller's Division, State of Oregon

“PLASTIC” was the single-word career advice given to Benjamin by a family friend in the 1967 American classic film The Graduate. Plastic meant something very different then.

People want to conduct their business with government the same way they do with the private sector—fast, efficient, cheap and 24/7 using their plastic, meaning their credit cards. Government agencies at all levels have been accepting electronic payment for years, but many still do not. Why not? It’s just like cash or a check. Or is it?

Here in Oregon, the State Controller’s Division has a citizen-centric mission to improve the quality of life for all Oregonians by making government work better. Our version of Joe the Plumber would define government working better by convenience to him: “Make it cost less and get me out of a waiting line to get necessary business licenses, pay fines, fees, registrations, taxes, citations and recurring bill payments.” He wants to do business online—and government should want that, too. 

Oregon processes more than $1 billion in professional, business, recreational and personal license fees. The state of Oregon decided to transform business processes and automate key systems, boosting productivity and providing citizens with more self-service options. Results are faster with online delivery.  Administrative and operational costs go down. Online credit card payments reduce manual check processing. Checks are handled on average six times between the customer and their bank, and bad ones repeat. Cash only needs to be mishandled once. Processing an online request costs approx. $1.60 compared to $6.60 for an over-the-counter transaction. The online process offers improved internal controls through preset banking times and automated posting of the accounting information.   

Making the leap to plastic can be risky business. We’ve experienced some key issues in building effective e-government transaction portals:

• Agencies must understand and document their business practices.
• Agencies must fully comprehend their authorizing legislation.
• Agencies must learn the intricacies of this new sales channel.
• Opportunity to rethink and re-engineer their business processes.
• Automate the transaction end-to-end; customer to accounting.
• Agency should position themselves for a new product delivery model.
• Plan, document, build, test, execute and integrate.
• What do customers need now and what do they expect in the future?  

What are the barriers? Major causes of project failure are bad communications between relevant parties. Other challenges include:

• Agency needs legislative authority. 
• Program, fiscal and IT suffer communication deficiencies.
• Knowledge, skills and abilities in this new environment.
• Lack of planning and scheduling resources and activities.
• Lack of testing to ensure quality control.
• Staff struggles to implement new technology, new processes and new software while simultaneously performing their daily work.
• Level of vendor assistance for licensing software sometimes offers challenges.
• Archiving data, data security, PCI compliance, Oregon Consumer Identity Theft Protection Act, etc. Know your security regulations. 

We’ve formed a central support group that has performed these processes with numerous agencies numerous times. This can be a BIG HELP. Study your demographics and encourage adoption through incentives, such as a discount or a longer time to pay. Convenience fees will be accepted by some customers but prevent adoption by others.

In times of limited budget and IT resources, e-payment projects can slow. Some are entrenched in their current processes and resist change despite the efficiencies in database management and accounting that electronic payment could bring. 

Career advice in 2008? PLASTIC. Government knows and authenticates our customers in selling our products. The risks are low and the benefits high. What are you doing in your agency to promote this citizen-centric payment option? I want to hear your stories and I’ll tell you mine about the wonderful world of e-commerce.