**Core Competencies in Financial Management for Program Managers**

**Foreword**

*Core Competencies in Financial Management for Program Managers in the Federal*

*Government*was developed jointly by the Human Resources Committee of the Chief Financial Officers (CFO) Council and the Joint Financial Management Improvement Program (JFMIP).  This document is exclusively devoted to individuals whose subject-matter expertise and focus is not financial management: program and project managers in line organizations. It is intended to serve as a general guideline to assist managers in their understanding of financial management policies, procedures, regulations and the areas in which they need to develop specific skills to improve the management of their projects and programs.

This document is based on the premise that all federal managers, regardless of their subject area, have financial management responsibilities. Each agency will need to define the “program” managers for whom this document is intended. Generally, this will depend on the program manager’s level of responsibility for management of government resources where competency in financial management is necessary. Additional factors such as the scope of program responsibility, the range or span of management control and the size or type of the program unit or organization may also influence this determination.

The Congress legislated a new approach to financing the programs and activities of

the federal government when President Clinton signed into law the Government

Performance and Results Act (GPRA) of 1993. Since 1996, agencies have

been preparing strategic plans covering all major programs and activities of the agencies for the next five years as part of the Congressional budget submission. Specific performance measures for each program are must accompany the budget request. These measures are be the basis on which funding decisions are made with emphasis on holding federal program managers accountable for achieving the results defined in the program output/outcome goals and objectives contained in the budget request.  A specific program evaluation process, the Program Assessment Rating Tool (PART) helps to determine success or failure.

Mere execution of the budget no longer suffices as one of the criteria for

successful program implementation. Federal spending is linked to specific results

described in plans. Evaluation is based on program results that may include

numerous measures of performance in financial terms. Therefore, it is essential for all

program managers to understand not only the basics of budgeting but other areas of

financial management such as cost accounting, so that sound judgments can be made

on the allocation and management of scarce resources.

**Contents**

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . 1

Core Competencies for Program Managers:

Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Training Resources . . . . . . . . . . . . . . . . . . . . . . . . 7

Appendix. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

**Introduction**

**Background**

The CFO Council and JFMIP recognized that there was a need to identify areas of competence for program managers, especially in view of the responsibility imposed on federal program managers to embrace the requirements of the GPRA.  Financial and program managers need to be able to communicate with one another in order to accomplish the strategic plans required by the GPRA. Indeed, it is absolutely imperative since evaluation of success or failure will be based on objective, quantifiable, performance measures described in terms of the cost of achieving specific outputs and outcomes for which resources were appropriated by Congress. 

**Purpose of this Document**

This document is intended to be used as a reference tool and guide for program

managers (no matter where their organizational placement may be or the size or scope

of their mission). Effective financial management of resources is a responsibility of

program managers at all levels in any organization. On a day to day basis, the program

manager, not the financial manager, is responsible for actions influencing the financial

management of resources appropriated by the Congress.  Performance based

planning and budgeting are expected by both the Congress and will be the norm. The program manager will be leading the effort with the financial management staff providing financial and program data in a supporting role. Thus, program managers will need to clearly articulate their information needs to financial and information management staff so that the appropriate systems can be designed to capture and report program management information that is useful.

**Format**

This document presents the core competencies in financial management for program

managers in the order of the steps of the management cycle—planning, budgeting,

execution and evaluation. Also included are specific developmental activities and

desired skills for each core competency. Much of this experience and knowledge can

be obtained on the job, however, classroom training may be essential to gain specific

knowledge and skills. Successful program managers will most likely achieve

financial management competence through a combination of classroom instruction,

practical applications and on the job experience relying on financial management

personnel in their agencies for expert guidance, counsel and financial information.

**Conclusions and Recommendations**

Program managers need to be prepared for the challenges of performance based program reviews by increasing their knowledge of financial management and its place in the program management cycle. We encourage program managers to use this guide to prepare for performance planning and budgeting.

**Core Competencies for Program Managers**

Every phase of the traditional management cycle—planning, budgeting, execution

and evaluation—contains financial information that helps managers set direction,

determine necessary resources, monitor actual experience and define success or failure.

Thus, the following competencies deal not only with financial management, but also

with the skills, knowledge and abilities in management that are essential for success.

To divorce financial skills and discipline from general management responsibilities of

program managers would be to diminish its importance, and leads to an unrealistically

narrow definition of the responsibilities most program managers are actually called

upon to perform.

The following core competencies are presented within the context of the

management cycle. Within each core competency, specific skills are described that, if

acquired, will enable the program manager to become more effective. The financial

management staff of the organization should support the program manager with more

detailed knowledge and information as necessary in each stage of the management

process.

**Planning**

**Core Competency:**

**Experience in the development of program and resource plans and**

**budgets (including program performance measures) which reflect a**

**general knowledge of strategic planning and detailed knowledge of the**

**strategic planning process required by the Government Performance**

**and Results Act.**

Planning is the most important step in the management process but also the step

most often left out. The GPRA is designed to change this practice by requiring each

agency to develop a mission statement, goals and objectives that set the vision and

strategic direction for the agency together with the budget request for the budget year.

Specific performance measures must be included with the plans so that decisions on

resource levels will be tied to performance plans and agency program managers can be

held accountable for fulfilling them. The program manager should acquire the

following skills and abilities to facilitate the strategic planning process.

**Developmental Goals:**

• Gain a clearer understanding of the requirements of the GPRA and its application

within your agency.

• Develop the capacity to analyze the political and economic environment in which

agency programs will operate in order to set the stage for effective planning and

be flexible and able to react quickly to changes in the planning environment.

• Learn to manage the planning process by understanding the steps involved in

developing strategic, performance, and resource plans.

• Gain an understanding of reengineering and operational alternative methods of

providing programs and services such as the use of outsourcing, franchising,

enterprise funding and working capital fund operations to become more

innovative and effective.

• Gain experience developing objective program performance measures that

describe success in terms of specific outcomes and outputs. To meet this goal, a

thorough understanding of cost accounting and/or cost distribution principles may

be necessary where performance measures include cost data.

**Budget Formulation Activities**

**Core Competency:**

**Proficiency in the development, presentation, justification and**

**execution of program budgets based on a thorough understanding of**

**the Federal budget process.**

The Congressional budget process is lengthy, time consuming and can be extremely

complex. Yet, agencies’ operations and existence depend on it. Program managers

must understand the budget context within which their programs operate in order to

ensure that resources match (to the best of their ability) program requirements.

Understanding the lexicon of financial terms associated with appropriation law and

execution of the budget will enable the program manager to identify funding pitfalls to

be avoided and opportunities for additional resources that might otherwise go

unnoticed. Program managers must also become experts in the internal

budgeting processes within their organizations to ensure that program budgets clearly

present and justify the resources necessary to accomplish the mission, goals and

objectives contained in the program plans (both strategic and operational).

**Developmental Goals:**

• Seek training on the impact of appropriation law on program financing.

• Be able to identify the limits of flexibility under the existing appropriation levels

for possible reprogramming opportunities that may be available to improve

program operations and meet desired goals and objectives.

• Develop an understanding of the concepts and terminology associated with the

federal appropriation process such as authorizations, apportionments, allotments,

commitments, obligations, liquidations, etc.

• Gain expertise in reading and understanding financial reports produced by agency

financial management systems to identify and analyze financial implications of

operational issues that may affect the well being of programs.

• Establish an interactive working relationship with key agency budget officers and

finance directors.

• Training and/or experience in preparing the OMB Exhibit 300, Capital Asset Plan and Business Case.

**Execution**

**Core Competency:**

**Ability to protect against fraud or mismanagement of government**

**resources by applying a knowledge of the agency’s system and policy**

**for administrative control of funds, contracting and procurement**

**procedures, and skill in exercising program management controls.**

After the plans have been approved and budget levels established, the execution of

the financial plan or budget becomes the next challenge for the program manager.

Compliance with appropriation law is essential but execution goes beyond the basic

authorities. Program managers need to understand the rules and regulations regarding

procurement of goods and services in order to properly account for and manage those

resources. Central to effective program management is a system of management

controls to safeguard government resources from waste or abuse. Many management

controls are financial in nature and the program manager should understand the basis

for them. For example, a manager of a motor pool needs to know the basic cost

standards for operation and maintenance of vehicles in order to determine whether

vehicles are achieving efficiency standards (such as average miles per gallon of

gasoline). Also, the program manager must operate within the Federal Acquisition

Regulations governing procurement and contracting.

**Developmental Goals:**

• Gain specific knowledge of internal agency administrative control of funds

activities such as spending allotments and allowances for agency programs.

• Be able to review and understand the flow and purpose of internal agency

documents such as allotments, obligations, payments, accounts receivable,

refunds, etc., and related documentation including vouchers, invoices, receiving

reports and cost reports for reasonableness, appropriateness and accuracy.

• Develop an understanding the Financial Management Reports and analyze actual spending against the projected.

• Become familiar with principles and application of Earned Value Management and other analytical methods to assess program/project progress and effectiveness.

• Obtain an understanding of legislation that affects program and financial

management such as the Chief Financial Officers Act, Government Performance

and Results Act, Federal Financial Management Improvement Act (FFMIA),

Anti-Deficiency Act, Federal Managers Financial Integrity Act, Debt Collection

Act, Cash Management Improvement Act, Merged Year Account legislation,

Government Management Reform Act and any program specific legislation.

• Understand the basic principles of cost accounting and the concepts of accrued

expenditures, direct and indirect costs, and overhead allocation within the context

of managing towards accomplishment of performance objectives.

• Obtain an understanding of agency accounting systems and gain the ability to

review transactions and recommend adjustments as necessary to program and/or

financial management systems.

• Broad understanding of the appropriation process and specific understanding of the implications of appropriations to the programs for which responsible.

**Evaluation**

**Core Competency:**

**Ability to manage an evaluation process that quantifies and qualifies**

**program performance against performance standards and objectives**

**contained in strategic and operational plans.**

Program managers must be accountable for program results***.***It is good basic

management, and the GPRA demands it. If the other steps of the management process

are followed and the program manager has gained competence in financial

management, then evaluation of program accomplishment should be easily achieved.

However, it is extremely important that in the beginning of the management process,

well developed performance measures be identified so that success (or failure) is

clearly defined.  These measures play a large role in the Program Assessment Rating Tool (PART), that is used to assess a program’s effectiveness.

**Developmental Goals:**

• Analyze agency programs in terms of whether they are meeting the objectives and

goals for which they were established.

• Identify financial management system needs for better technology and support for

program operations.

• Understand the importance and implications of program audits and evaluations

conducted by internal agency management, GAO or Inspectors General and take

action to correct program deficiencies through problem resolution.

• Identify methods and techniques to determine customer satisfaction and to

benchmark the delivery of goods and services to improve customer service and

agency responsiveness.

**Training Resources**

There are a number of courses that can help managers strengthen their understanding and application of sound financial management principles.  These courses are available within  agencies, from established educational institutions, and from the many vendors in the business of professional education. Classroom instruction is very important in order to gain the essential principles and policies of various financial management processes and techniques. However, this knowledge must be reinforced through practical applications in order for program managers to build competence in the financial management of their programs. Program managers will also benefit from management training in leadership, quality management, team management and oral and written communications. These skills will facilitate the application of financial management principles to program

operations.

An excellent resource for program managers to find the types of training to meet

their specific needs is through the Internet. By locating the FinanceNet address —

www.financenet.gov — provides access to the web pages that contain many of the

course catalogs and training materials from both private and public sector

organizations in the education and training business.

**Appendix**

**Contributors to the *Core Competencies in Financial Management for Program***

***Managers in the Federal Government***

**Project Direction**

Edmundo Gonzales, Chairman, Human Resources Committee of the Chief Financial

Officers Council

Virginia Robinson, Executive Director, Joint Financial Management Improvement

Program

**Project Team**

John Sander, Department of State, Chair

Len Bechtel, Environmental Protection Agency

Steve Leeds, Department of Commerce

Deborah Mahdi, Nuclear Regulatory Commission

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