By: Mark Odell

Mark Odell is a senior technical leader for Northrop Grumman guiding in the application of advanced enterprise architecture. Throughout the past 23 years, Mr. Odell has designed and guided the implementation of large-scale enterprise information systems for government and commercial industry in a variety of vertical markets.

Today’s corporations and governments invest in information technology (IT) automation for a variety of reasons under the banner of IT modernization. The most frequent reasons for IT investment include:
• take advantage of new technology (including tech refresh),
• reduce costs of performing business,
• to improve operational efficiencies or solve some problem with the existing IT solutions.

Often there are other reasons stated for the IT investments, but in general, they are variations on these themes. Based on the above noted reasons, the real motivation is not technical, but is oriented towards a business concern.

As new IT investments are considered many aspects across the enterprise should be included in the development of the business case and ultimately frame the business solution space. Typically the IT solution space is ‘engineered’ from a technical perspective (with a systems engineering discipline), while there are other considerations that should be addressed for well rounded and mature enterprise decision making. Traditionally, architecture focuses on hardware, software, and communications.

These other enterprise considerations span technology, operational, cost, market space, performance and collaborative arrangements with partners, just to name a few. In addressing these various dimensions of the business solution space, it is often helpful to look at the proposed IT solution from a business viewpoint and not weigh the considerations on the technical elegance of the solution. In contrast, technical solutions have been evaluated and developed for decades based on requirements that are perceived to be necessary to accomplish the business objective. The requirements are frequently focused on the acquisition of a perceived technical solution and the requirements do not necessarily balance the other business perspectives needed for better investment decision-making. For example, several key questions illustrate some of these other dimensions and how a proposed technical IT solution may fit within the business solution space.
• What purpose does the IT provide? Does the IT have an impact on the business? (performance, efficiency, operational costs, time to market, competitive advantage)
• When was the last time that the IT solution (old or new) was evaluated to determine if the IT was supporting the business activity?
• Have the business needs changed as a result of the IT?
• Does the business still need to perform this legacy function?

These questions point to an emerging domain of enterprise understanding that is becoming more important as executive leadership attempts to optimize their organizations and business operations to produce their products and services and generate revenue and or benefit for their constituent market space. This enterprise wide understanding must address and define the enterprise business and the accompanying technical solutions infrastructure needed to sustain and grow the operation.

In order to achieve a greater understanding of the interplay of business and technical IT, an Enterprise Architecture (EA) is often claimed to be the solution. Assimilation and analysis of all the information across the perspectives requires some mechanism to account for all of the enterprise complexities. Only recently (relatively speaking) has the practice of EA begun to capture and model these other nontraditional dimensions of the enterprise condition such as business, technical, financial, operational and informational viewpoints. Evidence of exploration in these additional enterprise viewpoints can be seen in the Open Distributed Processing (ITU-T Recommendation X.906 | ISO/IEC 19793) and DoDAF version 2.0 development efforts within the last two years. It appears that EA practices are beginning to address the broader concerns of business strategic planning rather than limit to the technical IT solution planning. This suggests the emergence of a Business Architecture that is coupled with a more traditional technical and systems architecture to capture the broader scope of the enterprise to which EA is often advertised.

The Business Architecture includes a spectrum of enterprise dimensions that are usually not addressed sufficiently in traditional EA models. These include the definitions, relationships, and interactions of business operations, capabilities, policies, organization, mission objectives, and mission/market space as being the blueprint or model that represent how the business is intended to operate. This type of blueprint has the potential to guide several organizational and developmental strategic planning activities which may include a broader spectrum such as;
• functional organizational structure,
• data and information structures including the exchanges between business operations and supporting applications,
• business process refinement and supporting software application development and or configuration of composite software applications,
• supporting technology infrastructure.

Unfortunately, most organizations practice traditional architecture as a mechanism to document the IT system that is being proposed or has already been built. In fact the majority of the broader spectrum of enterprise dimensions outlined above, considers the business operations and how the IT should support the business.

This suggests that the practice of architecture may be overlooking the importance of a non-traditional IT centric model for the business so that strategic budget planning for IT investment, portfolio management, operational performance tuning, and capabilities based analysis, may be conducted to streamline and improve the enterprise operation. We may be looking at the dawn of a new era for Business Architecture modeling and analysis to support and leverage new management techniques.

TOMORROW: Juan DeJesus, Director of Electronic Commerce, U.S. Army Financial Command, U.S. Department of Defense, recipient of AGA's Achievement of the Year Award

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.
At the latest GASB Public Hearing in Kansas City on the exposure draft, Fund Balance Reporting and Governmental Fund Definitions, there was a recurring theme from organizations that gave testimony, including AGA about how the GASB is proposing to codify fund types – which begs the question – have the current definition of fund types in place since NCGA Statement No. 1 outlived their usefulness?

The proposal that GASB has issued has generated a large amount of comment. Definitions of special revenue funds and capital projects funds generated a significant amount of discussion at the hearing. Just what are we using these funds for?

In the Commonwealth of Massachusetts, many special revenue funds have one revenue source and one appropriation. However, a fund was set up because the legislature told us to. Capital projects funds are largely administrative in nature. But they are useful tools for capturing bond and grant inflows and capital asset acquisition (by whatever method) outflows. These funds tie to bond authorizations or activities.

Governments need to ask themselves – is the purpose of a fund the same today as it was in 1980 or 1970? Because of GASB 34, isn’t the world going full accrual anyway, leaving funds as relics of a distant past? Or, do we need funds to maintain control?

As a response to AGA’s important testimony in Kansas City on the proposed standard, board members have asked us at AGA the following:

1. In some circumstances of federally funded capital projects (namely highways and water and sewer systems), federal law allows assigning unspent proceeds from one project that is completed to another without penalty. Is this a:
a. restricted (amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation),
b. limited, (used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority,)
c. assigned (specifically identified restrictions but not limited or restricted) or
d. unassigned fund balance movement?

2. One of the arguments for a capital projects fund is that it encompasses all activities in capital assets that will last longer than a year and / or be financed with bond proceeds. Is this the proper way to think of a capital projects fund or is it just pure construction flows with due to / from transactions between debt service funds, special revenue funds and the general fund?

I’d like your feedback on these two questions so that AGA can work with the GASB to decide the future definitions of capital projects and other fund types.

As almost a second phase to the ED, GASB is also studying the current financial resources measurement basis, (what we affectionately call fund perspective,) its usefulness and effectiveness. Which begs the question:

• What are your thoughts on the usefulness and effectiveness of fund perspective for governmental funds?
• Does fund perspective in its current form adequately measure inter-period equity (the ability of current resources to pay for current in near – term costs?)
• Alternatively, should fund perspective have either a focus closer to the budget or as an annual subset of entity wide statements?

In one of my previous lives, I was a news writer for a radio station in Boston. The late sportscaster, Vin Maloney, used to start his broadcasts as follows reading from my script (changed for context of course): And now, other tasty tidbits from the pu pu platter of GASAC –

• Board member Girard Miller is leaving the GASB. He will be sorely missed. Girard’s intellectual insight on the public markets and especially on how OPEB funding should be structured, should be listened to by all governments who will even remotely attempt to fund OPEB. Girard, I’ll see you on the beach in Malibu some day. And as Bruce Springsteen sings, “we’ll look back on this and it will all seem funny.”
• Bankruptcy of Governments (Chapter 9). GASB is starting on a project revolving around Chapter 9. This will be a narrow scope project, with research to be reported on by November. Governments don’t technically fail, but under Chapter 9, their contracts are restructured. There are not many governments with these sorts of issues, but they are high in profile. Vallejo, California is the tip of the iceberg in California alone. We have heard of a high profile city and county also in California in similar straits. The key research is on the revaluation of assets and liabilities in bankruptcy. Chapter 9 may come into play as governments realize that the promises that were made in the past around OPEB are completely unaffordable and existing contracts are inflexible.
• Service Efforts and Accomplishments. Contrary to popular belief, GASB is not mandating service efforts and accomplishments reporting. SEA reporting has been in the governmental arena since before the NCGA. AGA has elements of SEA reporting in citizen’s centric reporting. GASB clearly has said that they have no role in three key areas: 1) setting goals and objectives for programs and services, 2) developing specific non-financial measures and 3) setting benchmarks. What GASB has a role in is defining the elements of reporting. The FMSB has commented on GASB’s proposal. I encourage you to read the comments on your behalf.
• Pension Liabilities at Fair Market Value. With the recent market turmoil, rumblings have started about whether pension liabilities should be reported at fair market value, similarly to for-profit enterprises. If they are reported at FMV, the smoothing of actuarial gains and losses are effectively eliminated. I can see why this has become an issue for actuaries and preparers. Just what is the right asset base to measure the UAAL?

This blog is your forum to give me feedback to present to the GASB on your behalf. I am looking forward to hearing your thoughts.

TOMORROW: Sam Mok, CGFM, CIA, Managing Member, Condor International Advisors, LLC, AGA National President-Elect, on "AGA and You"

By: Joseph L. Kull, CGFM

Joseph L. Kull, CGFM, a member of AGA’s Washington, D.C. Chapter, is a director in the Washington Federal Practice for PricewaterhouseCoopers LLC.

I'm told that the AGA Blog is read by more than 1,000 people per week. Wow, that's a lot of people to share ideas with. The whole idea of blogging, You Tubing, My Facing, and the gazillion other things you do/search/find/dive into on the Internet also leads very nicely into the subject du jour.

First the transition. Everyone in Washington seems to be offering the next administration their ideas on management issues and priorities for the next President’s Management Agenda. Regardless of who gets elected, the government's management problems are not going to go away. It's just a matter of what we call them and which ones get the attention.

I'm not going to venture out into the transition advice quagmire. I just hope the next administration builds on the progress made to date, and since this is the AGA Blog, let's take financial management. In 2009, we can really talk about better financial management [and all that goes with] rather than untimely and often unreliable financial reporting as we did back in 2000. Whatever agenda is established, there should be clear priorities, adequate resources and authority, and reasonable time frames to get things done.

The big unknown is the impact this interconnected 'flat world' is going to have on what we need to do and how we do it. And both will be driven largely by our customers, the taxpayers, as it should be. With their laptops, cell phones, Blackberrys, the world literally at their fingertips—the 'infrastructure' of our connected world—they will drive what information and services they want, and will expect them to get the information and service when they want it, not when we can provide it.

In our financial management world, some states and cities are already opening up their books so the taxpayers can see how their money is being spent. USAspending.gov already provides some information on grants and contracts, and people better start paying attention to the Obama-sponsored Federal Financial Accountability and Transparency Act of 2006, which requires grant and contact information down to the sub-recipient level.

Program and financial information should be available to the taxpayer. The 'can't' answer just won't fly much longer. Times are tight, and people will start asking questions. Can you provide the answers? When others can and do, how will an organization that is unwilling or unable fare?

Is your agency, department, ready for this kind of transparency? If not, why not? And wouldn't you rather give people the information rather than have them cobble it together themselves, subject to their own spin and bias?

TOMORROW: Warren Master, Editor-in-Chief, The Public Manager on "Transforming Bureaucratic Cultures"

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), City of Norfolk, Virginia, City of Gresham, Oregon, and City of Seattle, Washington.

It will be interesting to see what the effect of the move to International Financial Reporting Standards (IFSR) will be on public sector accounting (federal, state and municipal entities) that currently follows Federal Accounting Standards Advisory Board (FASAB) and Governmental Accounting Standards Board (GASB) pronouncements. The private sector's Financial Accounting Standards Board (FASB) is in the process of reviewing the impact of a transition to IFSR. As there are public sector accounting standards throughout the world, there does not seem to be much press about how the public sector accounting is preparing for this transition to IFSR or what some of the IFSR implications may impact public sector accounting.

For example, public sector agencies responsible for loans may be receiving IFSR compliant financial statements. Public sector agencies in acquisitions that require audited financial statements may begin to receive IFSR compliant financial statements. Public sector agencies that provide financial, social, health or educational services to individuals or provide transfer payments to individuals as a pre-condition may begin to see IFSR compliant financials.

ORIGINS: Just as the North American Free Trade Agreement (NAFTA), emulating European trade agreements making it easier to engage in commerce between transnational borders, lead to the modification of the United States’ “Standard Industrial Classification” (SIC) codes to the “North American Industry Classification System” (NAICS) that enabled 'comparability' in assessing the financial results of firms in North America, so will the accounting systems. The reason is simple—as firms trade, invest, borrow, employ and transfer capital, assets and debt between borders (electronically), the private sector wants to make sure that the Generally Accepted Accounting Principles (GAAP) among the forms is the same.

Why have we not seen governmental accounting standards begin some kind of transition toward the IFSR for public sector accounting?

Will such a transition impact trade and be used in foreign aid and foreign assistance legislation when transferring resources between countries? What are the impacts on national, state and municipal governments?

As the U.S. federal government does not have an audited financial statement but each state and municipal government does, and as state and local government in the U.S. get bond ratings, how will Moody's, Fitch, and Standard and Poor's address the new IFSR?

Is the GASB and public finance professional organizations in the U.S. going to prepare the transition to the IFSR if the FASB moves to "world GAAP" standards?

TOMORROW: Joseph L. Kull, CGFM, Director, PricewaterhouseCoopers LLP

Past National President Sam McCall "Truly Honored" by King Award

Distinguished, honorable and a consummate Southern gentleman were just a few of the phrases used by his peers to describe AGA Past National President Sam M. McCall, CGFM, CPA, CIA, CGAP, the recipient of this year’s Robert W. King Memorial Award.

The award, named for the Association’s founding father, is AGA’s highest honor. It is bestowed in the form of a gold medallion for extraordinary service that enhances AGA’s national prestige and stature.

As AGA’s 56th National President in 2005–2006, McCall embraced the theme of “Accountability Reporting with a Citizen Focus.” He placed his attention on the advancement of AGA’s Certificates of Excellence in Accountability (CEAR) and Services Efforts and Accomplishments (SEA) Reporting as well as the then-fledgling Citizen-Centric Reporting effort.

Upon notification that he would be receiving this year’s King Award, McCall said, “I was very honored, given the many AGA members who are deserving of such recognition.”

McCall is known throughout the Association for his quiet demeanor—until he has something important to say.

“When Sam speaks up, you know it’s about something significant,” said AGA Executive Director Relmond Van Daniker, DBA, CPA. “He was an insightful leader during his year as President and throughout his term on the National Executive Committee. I know I speak for the entire staff when I say we are delighted to see Sam honored with AGA’s top award.”

Immediate Past National President Jeffrey Hart, CGFM, agrees. “There is no one any more deserving of the Robert W. King Memorial Award than Sam McCall. Sam has had an amazing career, and he continues to make major contributions to AGA and the profession. One only has to look at his career to be inspired. More than anything, when I think of Sam, I think of the consummate Southern gentleman. At the same time, he can be direct and to the point when that is exactly what’s needed, and he never ceases to amaze me with his wonderful sense of humor.”

An AGA member since 1984 and a founding member of the Tallahassee Chapter, McCall has served on the Professional Certification Board since its inception in 1994 and as a member of the Audit Committee. McCall, 61, spent more than 30 years working for the Florida Auditor General—13 of them as deputy auditor general—before leaving the state nine years ago to become the city auditor of Tallahassee.

AGA Past National President Jullin Renthrope, CGFM, CPA, CFE, CGFO, said he was very pleased to hear that McCall will be honored with the King Award. “It is always a pleasure to communicate with Sam, on a professional as well as social level,” Renthrope said. “Sam's sincere professional commitment and many years of dedication and service in government financial management distinguishes him as most deserving of such recognition. I admire and appreciate his professional integrity and accomplishments, particularly his dedication and service to AGA.”

Looking back at his tenure as National President, several memories stand out for McCall. “My favorite moments as National President included greeting PDC attendees who took the time to stop by the President's suite in San Diego, speaking to attendees at the luncheon on the last day of the conference (with my wife and two of my staff present), and feeling welcome and appreciated by all of the AGA chapters I visited, especially the AGA Baton Rouge and New Orleans Chapters after Hurricane Katrina. I know those chapter members were dealing with many important work and family priorities, but they still took the time to come to the meeting during my visit. That meant a lot to me.”

When asked what accomplishment he is most proud of from his year as President, McCall listed the reprioritizing the National Executive Committee (NEC) agenda to focus on chapter and member needs; the establishment of the Academy for Government Accountability; and having the support of the National Board of Directors to recognize the Professional Certification Board chair and the Corporate Partner Advisory Group chair as necessary, contributing members of the NEC.

Going forward, he hopes to see AGA continue to focus on “advancing government accountability” and providing information that engages citizens in the operation and financial sustainability of their government. “We should treat citizens not as ‘customers’ of the government, but as its owners, having every right to demand and receive information on federal, state and local government performance,” McCall said. “The fiscal issues facing each level of government are too important to assume they will correct themselves without our involvement.”

He added, “AGA is very fortunate to have an extremely qualified executive director and a dedicated and professional National Office staff. With their help, and the continued support of our members, AGA is positioned to have a significant impact on government accountability activities into the future.”

AGA Field Representative and Past National President Bobby A. Derrick, CGFM, said McCall’s outstanding reputation is well known throughout the Association. “I can tell you one of my highlights with AGA was the opportunity and privilege of not only meeting Sam, but being able to work with him,” Derrick said. “I quickly learned, like anyone else who has ever met Sam, that he is a distinguished, honorable and consummate professional with strong family values and a great sense of humor.”

McCall and his wife Anita, a retired second grade teacher, reside in Quincy, FL. They have a son, daughter-in-law and three grandchildren.

“I am truly honored to receive this recognition,” McCall concluded. “Somehow saying ‘thank you’ does not seem to adequately express my gratitude to those AGA members who have allowed me to be part of this organization.”

Hart said, “Sam has been a great mentor and advisor to me, and someone I am proud to call a friend. I wish him the heartiest congratulations on receiving this prestigious award!”

We suspect that Bob King would concur.

—By: Marie S. Force

TOMORROW: Amy Abbott, CGFM, State of Tennessee, on "The Four Keys to CGFM"

By: Kelly Stefanko, CPA

Kelly Stefanko, CPA, is the Deputy City Auditor, City of Norfolk, VA. She chairs AGA’s National Emerging Leaders Focus Group and serves as a member of the National Executive Committee.

AGA’s challenge to recruit, develop, motivate and retain key talent to meet its leadership needs is never ending. As younger leaders take over, their generationally-shaped workplace habits, attitudes and values will reshape the organization. In this second blog installment on what AGA is doing to help ensure we have a well-stocked legion of leaders, we pose the question—are we doing enough?

Believing in the value of its professional development conferences to develop loyalty and a sense of engagement, AGA has made a substantial investment in making it possible for more emerging leaders to attend through the PDC hotel scholarship offered to every AGA chapter. Scholarship awardees are expected to attend the Emerging Leaders Session on Sunday, July 27, at 1 p.m. All PDC attendees are welcome. The first hour of the session will allow for introductions and a great opportunity for a participative brainstorming and feedback session of the Emerging Leaders focus group.

The Emerging Leaders focus group is AGA’s national sounding board for generation x and y thinking. Usually, the group holds a conference call on the first Wednesday of the month to offer opinions and insight for an hour on a specific topic near and dear to AGA. If you belong to generation x or y and it sounds like something you want to participate in, simply e-mail Jessica Jones at jjones@agacgfm.org. Fresh voices and ideas are always welcomed!

Today, there’s a bonus way for your voice to be heard—simply add your comments to this blog!

The AGA Blog is a great example of a potential topic of a focus group discussion for generation x and y members

• Has the AGA Blog become or do you foresee it becoming part of your daily routine? Why/why not?

• Do you have friends or coworkers in your generation that read blogs dealing with their profession daily?

Similarly, we’re curious what are generation x and y members perceptions of the CGFM—is it something you’re interested in?

Knowing why or why not, which can be different from one generation to another, can have a huge impact on the how AGA markets its products and services.

Past focus group meetings have solicited innovative ideas on:

• How to better recruit/retain Early Career members and how AGA can build loyalty with them

• AGA opportunities for mentoring

• AGA’s investment in recruiting full-time college students

Ideas generated in focus group discussions have already started to take action. For instance, in response to the desire for more informal mentoring opportunities at large conferences, AGA is arranging to have reserved tables at the PDC’s Monday luncheon, which will give those on emerging leaders hotel scholarship the opportunity to meet, talk with and learn from AGA leaders, such as National Executive Committee members and Past National Presidents and Treasurers.

So, what do you think about all of this focus on developing “emerging leaders”? Is AGA on the right path or is there a different avenue we should be taking?

Can you suggest an alternative way of referring to AGA’s current and future leaders who are in their 20s and 30s?

Is “emerging leaders” too similar and therefore cause confusion with the AGA label “early careers”?

AGA is YOUR organization. I’m looking forward to hearing what YOU think!