A rally behind accounting codes

Use of common financial standards is seen as a precursor to governmentwide reforms

The government finally is putting the cart behind the horse when it comes to financial management. The Financial Systems Integration Office (FSIO) last week released governmentwide accounting codes to help agencies standardize their business processes, financial data and interfaces for financial reporting.

Officials said the standards should encourage agencies to divert some of the energy they expend on building new financial systems to improving the reporting functions of their existing systems.

'There have been standards on the books for a number of years, but agencies had too much freedom to interpret them,' said Mary Mitchell, program manager for the governmentwide Financial Management Line of Business (FM LOB) initiative and executive director of FSIO.

Lawmakers and financial experts have criticized the Office of Management and Budget and the General Services Administration for asking agencies to participate in the FM LOB before OMB and GSA put the basic building blocks in place. 

'They needed to look at things like a common governmentwide accounting code, which would help bring everything together for the FM LOB,' said Mike Hettinger, director of practice, planning and marketing at Grant Thornton, a consulting company. Hettinger is a former staff director of the House Oversight and Government Reform Committee's Government Management, Finance and Accountability Subcommittee. 

The newly released Common Governmentwide Accounting Classification standards offer agencies a common way to code and categorize financial transactions. The standards establish a common understanding of the concepts of managing financial transactions. They will be recognized across government just as standards for automated teller machines are recognized and used by all banks, said Linda Combs, outgoing controller at OMB.

'The federal government needs to reduce the data and process variability within and among federal agencies,' she said.

The accounting classifications used in financial systems have varied from agency to agency and often from bureau to bureau in the same agency. 
All parts of the new framework will ensure greater consistency in reporting financial data, said Joe Kull, a director at PricewaterhouseCoopers and former OMB deputy controller.

Having common business processes will drive standardization in implementing and configuring financial systems, said Danny Harris, deputy chief financial officer at the Education Department. He is also chairman of the financial systems oversight team of the Chief Financial Officers Council, whose members helped draft the new framework.

Most of the emphasis on improving financial management in the past has been on building new systems, Harris said. However, the focus should be on data and business processes. 'Let's make the system[s] support those, not the other way around,' he said.  

OMB and FSIO said they will publish a sequencing plan this fall with recommendations about the order in which agencies should implement elements of the new accounting standards. Mitchell said agencies will develop their own plans to implement the standards.

'Ultimately, it will lead to the ability to aggregate and compare data across the government and simply feed accurate data into those systems,' she said. Auditors have been unable to assess the government's consolidated financial statement because they say the data is unreliable and may not be comparable.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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