# Presentation: 923885

## Transitioning to Better Federal Financial Management

**  ****Judith R. Tillman**, Commissioner,
-   Financial Management Service,
-   Department of the Treasury

- March 11, 2008

## Government Wide AccountingModernization Project

- Multi-year redesign of Federal Government Central Accounting process
- Affects every federal agency; over 1,700 reporting locations (domestic and foreign)
- Supports the President’s Management priorities

**Notes:**
As Danny mentioned, David Walker testified before the senate that we should make “further revisions to the current federal financial reporting model”.  The GWA Modernization Project, along with the FIRST initiative, are steps in that direction.  Once fully implemented, GWAMP will provide the accounting and financial base to allow for improvements in the consolidated and agency financial reporting.  

Alternate opening:  In support of what you’ve heard previously from David and Danny, I’m going to talk about a couple of initiatives that FMS is working on to assist agencies in their accounting, reporting and reconciliation processes.  The GWA Modernization Project, along with the Financial Information and Reporting Standardization (FIRST) initiative, are steps in that direction.  Once fully implemented, these initiatives will provide the accounting and financial base to allow for improvements in the consolidated and agency financial reporting.  What this means for FMS and our customers, we will have to look at the current operations of our accounting and identify any system and process changes that will need to take place to support this improved way of accounting and reporting.

Some of you have heard about GWAMP and FIRST but we’ve found that we can’t tell this too many times.  If you would like to know more details about these initiatives, please go to the following web site:  www.fms.treas.gov/GWA

As FMS begins to implement the GWAMP modules, every agency processing transactions (payments, collections, Intra-governmental) will be impacted!!  

Once fully implemented, GWAMP will help support the President’s Management Agenda by achieving cost and quality improvements throughout the government and agencies will have access to data at the transaction level on a daily basis.  Result → Financial Reporting should improve.

In addition, once GWAMP and FIRST are fully implemented, there will be a reduction in FMS and agency resources required for maintenance and reporting functions and enable existing personnel to spend more time on analytical duties.

## GWA Modernization ProjectKey Goals and Vision

- Provide effective financial reporting and reconciliation processes
- Eliminate current redundant reporting
- Provide Standardized processes and data elements to manage FBWT

**Notes:**
With the implementation of GWAMP and FIRST, Federal agencies will have a streamlined reporting process as well as consistent reporting to FMS regardless of the reporting mechanism.

As you know, currently all collections, payments and intragovernmental transactions are reported at the Agency Location Code level on a daily basis.  Then, classifications to a Treasury Account Fund Symbol are reported monthly to Treasury via the FMS 224, 1219/1220 or the 1218/1221.  So we make you report daily and monthly and then to add insult to injury we tell you when the two reporting mechanisms don’t match.

The GWA Modernization Project will allow agencies to classify to a TAS/BETC on a daily basis at the initiation of a collection, payment or IPAC transaction.

FMS will provide agencies with timely information on an account statement that will be updated daily.  Agencies will be able to reconcile their fund balance with Treasury on a daily basis.

Once fully implemented, agencies will no longer have to prepare a month end report for Treasury and the Statement of Difference will be eliminated.

In June of 2006, we replaced the trial balance reports (6653, 6654, 6655) with daily account statement, a tool that provides improved processes and data for agencies to reconcile their Fund Balances With Treasury.  

## Major Accomplishments 

- Account Statement, the foundation to provide agencies real time FBWT
- Automated workflow processing of non-expenditure transactions & Warrants – previously a manual paper process
- Ability to classify IPAC transactions– eliminating Statements of Differences and monthly transaction reporting for these transactions
- Finalized the Treasury Account Symbol (TAS) and Business Event Type Code (BETC) formats that comply with the Common Government-wide Accounting Classification (CGAC).
- Developed a Standard Data Registry that complies with CGAC, FMLOB, and Government-wide standards (www.fms.treas.gov/eda)

## Key Transition Dates

- FMS Modifying Feeder systems and processes to enable users - 2007 – 2011
- IPAC – Currently Enabled
- Collections – Enabled 2008
- Payments – Enable Mid 2011
- Specific Agencies  - Now
- All – Middle 2011

**Notes:**
FMS is in the process of modifying all of our feeder systems (SPS, IPAC, Collection mechanisms) to enable users to classify transactions to a Treasury Account Symbol (TAS) and Business Event Type Code (BETC) at the time of initiation.  In October of 2006, we modified the IPAC bulk and on-line screens to allow agencies to report transactions with a TAS/BETC on each transaction.  For the agencies that have taken advantage of this process, GWA has taken over the process of reporting their IPAC transactions to the Central Accounting System, thus eliminating that part of the end of month 224 submission.  

Collection feeder systems (TGAnet, Lockbox, EFTPS, etc) will be transitioned in line with the Transaction Reporting System (TRS) rollout schedule.  The first collection stream is targeted to be the EFTPS collections for IRS.

Now payments are a little more complicated and critical to FMS’ mission.  The three major systems impacting payments are Payment And Claims Enhanced Reconciliation (PACER), Secure Payment System (SPS) and Payment Application Modernization (PAM) and FMS is in the process of working to modify these systems to support these new accounting processes.  That said, we have identified several specific agencies that have limited TAS’s ( 2 to 3) they use to disburse.  For these agencies we have made changes in PACER to derive an agreed upon TAS when the schedule is submitted from SPS.  For these agencies, GWA is reporting their payments for them and they have eliminated their 224 reporting for payments.  

All of the systems will be modified by the middle of 2011 that will enable agencies to classify their payments when they certify their schedules in SPS.  

## Guidance

- Establish Trading Partner Agreements between IPAC trading partners and ensure all necessary TAS/BETC information is included in the agreements.
- Review agency business processes to ensure they can capture the necessary accounting information at the beginning of the transaction.
- Incorporate TAS/BETC in financial system upgrades
- Minimize the use of clearing accounts.
- Waiver request

**Notes:**
As spelled out in TFM 2007-03 implementing the Intra-governmental business rules, agencies need to develop Trading Partner Agreements with all their IPAC Federal partners.

Agencies need to make a commitment to the new reporting processes.  This will mean looking at agency current reporting practices and identifying changes that will necessary to meet the GWAMP requirements. 

In line with the changes identified, agencies should work to clean up current accounting differences and streamline their reporting processes.

Ensure that as financial system upgrades are available from their vendors, agencies procure and implement these changes into their accounting packages.

In line with TFM 2007-07, FMS is working with OMB to discontinue the use of suspense accounts F3875 and F3885.  Those agencies that had a justifiable need for keeping one of these accounts should have submitted a waiver request by January 31, 2007.  FMS has received 24 requests for waivers and is in the process of reviewing and approving/disapproving the requests.  To date only 2 requests have been denied.  The process should be completed by the end of March.

## FIRST – Future Look

- Agency Accounting
-  Systems

**FIRST**

- GFRS

- USSGL based
- Reporting

- Financial Report
- of the
- U. S. Government

- Agency Financial
- Statements

- USSGL database

- Feedback loop

- STAR/
- GWA

**F**inancial **I**nformation and **R**eporting **St**andardization

**Notes:**
FMS seeks constant improvement in the quality of the data in the Financial Report of the United States Government (FR).  Currently FMS receives the this data at a high level from agency financial statements.  In some cases, the accuracy of this data cannot be verified.  FMS collects agency and bank data through various systems which we should leverage to ensure data consistency reported by the agencies that report through these systems.  Additionally, FMS is sensitive to agency concerns about streamlining the central reporting requirements FMS places on agencies.  FMS’s direct objectives are to provide the tools to improve data consistency while streamlining our reporting requirements.  FIRST is an initiative that we believe will achieve both objectives.  

The initial implementation of FMS’s Governmentwide Financial Report System (GFRS) achieved its primary objective of ensuring that the FR contains data that is consistent with agency audited financial statements where the agency statements and the FR statements are comparable (Balance Sheet, Statement of Net Cost, Statement of Changes in Net Position, and Statement of Social Insurance).  FIRST will incorporate the GFRS functionality to ensure the data consistency between Agency Financials and the FR continues for these statements.  In addition, FIRST will streamline reporting requirements by consolidating 13 current requests for Agency ATB type data through FACTS I & II, IFCS, and IRAS into 4/5 ATB submissions (at the Treasury Account Symbol) into FIRST.  FIRST will follow the FACTS II model and edit the ATB data to ensure consistency with: 1) Data already reported through FMS central systems (i.e. Non-expenditure transfers, Appropriation Warrants, Fund Balance), and 2) USSGL posting logic.  These edits will ensure consistency in the FR for two other financial statements not required at the agency level which reconcile the Net Cost to the Unified Budget Surplus/Deficit and the Change in Cash Balance from the Unified Budget.  This is the area in which FMS has much work to do and in which the FIRST initiative provides a substantial benefit. 

## Expected Benefits

- Ease of use of the USSGL for agencies
- Full benefits of USSGL
- Streamlined reporting for the agencies
- Consistent reporting to FMS regardless of reporting mechanism
- Improved quality of financial information.
- Substantial reduction in intra-governmental elimination differences
- Dramatically improved Financial Report of the U. S. Government
- Reduction in FMS and agency resources required for maintenance and reporting functions.
- Logical, long range approach that attacks core problems.

**Notes:**
1/2.  Ease of USSGL Use & Full benefits of USSGL - USSGL is now on the Web and is interactive.  Users no longer have to leaf through hard copy and can gain more info on USSGL posting logic and tie points by using the SGL Interactive Database (SID).
3. Streamlined Reporting -  FIRST will streamline 13 current ATB type data requests to 4/5 ATB submissions.
4. Consistent Reporting – FIRST will utilize FACTS II model to edit ATB data submitted through FIRST with data already reported to FMS central accounting system.
5. Improved Quality – FIRST will provide timely feedback to agencies on pass/fail of ATB data against edits in FIRST.
6. Reduction of Intragov Differences – For transactions submitted to FMS Central Accounting System (Transfers, Approp. Warrants, Fund Balance etc) FMS will edit the agency data against what they reported centrally, instead of agencies trying to eliminate with trading partners who may have accounted for the transaction differnetly/incorrectly.
7. Improved FR Data – As FIRST edits agency ATB data and provides feedback, the consistency of agency data should greatly improve thus improving the Agency financial statements.
8. Reduction in reporting/maintenance functions – As data consistency improves – heroic reporting efforts should be replaced with data analysis functions.
9. Logical approach – This approach goes right to the core problem of little standardization and consistency in agency accounting and reporting across the Federal government.  FIRST applies an already agreed to and developed Government-wide standard (USSGL) and utilizes agency data reported to the central accounting system to ensure that Agency ATBs are consistent with the standard and their own data.