AGA Update and Issues and Challenges in Government Accountability

John E. Homan AGA National President-Elect AGA Southern Arizona Chapter April 15, 2015

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Agenda

AGA Current Activities

 CFO-CIO Summit May 1 in Washington  Government Performance Summit, May 4-5, 2015  CEAR Dinner, May 20 in Washington  Professional Development Training in Nashville July 12-15, 2015

Theme for 2015-16 Celebrating the Government Workforce Key issues in Government Accountability

 Need to bring Government and the private sector together  AGA Corporate Partner Group  Need to Address Gaps in Accounting Education  Need to Address Human Capital Issues  How AGA can help your career 2

AGA Current Activities

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AGA Current Activities

  Recent Events: New Chapters in Mexico City expanding AGA’s international focus And in South Florida  Associations Summit in New York December 2 (AICPA, IIA, AAA, AGA, FEI and IMA)  AGA Systems Summit held on January 8  400 live guests ; 400 virtually  AGA National Leadership Conference completed February 11-12  685 total guests  Michael McConnell former Director of ODNI  Mayor Nutter of Philadelphia  AGA Journal of Financial Management Latest issue on Accountability, Transparency and Citizen Engagement sent out March 1 4

AGA Current Activities-CTD

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Certificate of Excellence in Accountability

Reporting (CEAR) program underway

 19 submissions, 10 from CFO Act Agencies  Annual Awards Dinner is May 20 

CFO-CIO Summit May 1 at Marriott in DC

 Mark Reger, Deputy Controller OMB  Tony Scott, CIO of OMB  Brad Hutcher, CFO HUD  Rafael Diaz, CIO HUD 5

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AGA Current Activities-CTD

AGA Performance Summit, Washington May 4-5, 2015  General (Ret.) Ronald R. Fogleman, 15th Chief of Staff,

U.S. Air Force

 Tim Bowling, Chief Quality Officer, U.S. Government

Accountability Office

 AGA PDT, Gaylord Opryland, Nashville July 12-15, 2015  PDT theme is “Innovate, Transform, Achieve”  Over 75 breakout sessions in all areas-Federal, State/Local, Speakers include:  Gene L Dodaro, Comptroller General of United States  David Mader, Controller of the Office of Federal Financial Management, OMB 6

Theme for 2015-2016: Celebrating the Government Workforce

AND THE DEDICATION, SKILL AND INTEGRITY AT BOTH THE FEDERAL AND STATE/LOCAL LEVELS 7

The Current Environment

  Many in the media malign and denigrate the work of those in government  Often times we hear of the lack of competence, the supposed lack of efficiency and innovation in solving problems  My perspective on Government is a very positive one which contrasts with a lot of what we all hear about Government and government workers Often hear the phrase “need to make government operate more like a business” implying that what goes on in government is second rate and inferior to the private sector  This has led to the imposition of austerity policies which are often not thought out and which adversely impact worker morale and reduce the normal optimism of our members  Unfair comparisons are often made of the compensation of government workers who are among the most highly skilled and specialized individuals working in the most complex environments 8

A Key Focus for the Coming Year

   Identify ways to change the public’s perception of the Government worker  Seek opportunities to share positive aspects of beneficial programs, for example:   Use of analytics to identify and prevent fraud and improper payments Movement to shared services to reduce cost through standardization Hear from you, about your stories and successes so they can be shared Provide opportunities to highlight positive examples, through The Journal, TOPICs, member feature stories  Support the work of our Corporate Partners Group as a bridge between Governments and the AGA and the public 9

Key Issues in Government Accountability

NEED TO BRING GOVERNMENT AND THE PRIVATE SECTOR TOGETHER AGA CORPORATE PARTNER ADVISORY GROUP SURVEYS AND THOUGHT LEADERSHIP 10

AGA Corporate Partner Advisory Group Committees

 CPAG is the corporate arm of AGA and is an important bridge between the private sector and government  80 firms (large and small) from across the full spectrum of companies which serve the government  It unites the major private sector companies who serve the federal and state/local governments with those governments  Its membership is a Who’s Who of the major private sector firms in the Government market-The major Accounting firms, Consultancies, IT Firms are all members 11

CPAG Corporate Partners Professional Level

Accenture Audimation Bank of America Booz Allen Hamilton Boston Consulting Group CACI CGI Federal Citi CliftonLarsonAllen LLP CohnReznick Deloitte.

EY Federal Management Systems Inc FI Consulting Fiserv Graduate School Grant Thornton LLP IBM Infor Kearney & Company KPMG LLP LMI Management Concepts MasterCard Mayer Hoffman McCann P.C.

McGladrey Miracle Systems LLC MorganFranklin Consulting Navigant Oracle PNC Bank N.A.

PwC Robbins Gioia SAP Savantage SUSE T. Curtis & Company* VISA Watkins Government Services Wells Fargo Williams Adley & Co LLP WithumSmith+Brown

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CPAG Sponsored Annual Surveys

 Inspector General Community Sponsor: Kearney & Company, Released September 2014  Chief Financial Officer Community Sponsor: Grant Thornton LLP, Released October 2014  Chief Information Officer Community Sponsor: Accenture, Released January 2015 13

CPAG Thought Leadership

 Research Projects 

Internal Controls in Federal Grants and Programs

Sponsor: Crowe Horwath – December 2014 Release

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Impact of Defense Contract Audit Agency (DCAA) Service Issues

Sponsors: Cotton & Co and KPMG

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Federal Financial Reporting Model

Sponsor: CliftonLarsonAllen

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Key Issues in Government Accountability

NEED TO ADDRESS CRITICAL GAPS IN ACCOUNTING EDUCATION 15

Critical Gaps in Accounting Education

  Form And Content of Uniform CPA Examination: Recently attended AICPA focus group on form and content of CPA examination which alerted me to the issues  The current form and content of CPA examination has very limited requirements related to government accounting. There is no requirement that Examinees have any knowledge whatsoever of the governance structure of federal accounting. A prospective CPA does not have to have any knowledge of the operation of the Federal Accounting Standards Advisory Board and the standard set of federal statements are not listed as ones that a CPA should be knowledgeable Education Requirements for CPA Candidates: Only five states require that CPA candidates have completed any formal course work in government accounting and only seven require a mix of courses of which government classes may be a part.

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Critical Gaps in Accounting Education (contd.)

Availability of Government Accounting Course is Limited: The availability of government accounting courses at our colleges and Universities is very limited. The best information on the paucity of the government offerings is a survey of the Accounting Departments of all the Association of Collegiate Schools of Business which found that of 487 responding schools only 313 or 64 % had any course in government accounting and of these schools, the vast majority only had between one and three class offerings in government accounting.

Faculty is not Being Developed in the Government Area: The latest data on the number of PhDs in Government accounting has shown a precipitous decline in the number of new PhDs qualified to teach Government accounting. In the period of 2001 to 2005 there were fewer than 10 government accounting dissertation completions each year and only 2 in 2005.

 Discussions I had with current practitioners indicate that the decline has likely gotten worse since then 17

Critical Gaps in Accounting Education Impact

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CPAs in America are entering the profession with little or no knowledge of government accounting

 In Federal Accounting , CPAs have a knowledge level the same as a layman.

 At a general level - For the larger group of students who don’t necessarily want to pursue public accounting careers, or who only want to take a course or two to understand government accounting issues, the offerings at our colleges are not available or are sparse. It is fair so say that government accounting is largely un- taught at our higher educational institutions. 

It is probable that today the average CPA practitioner will have never taken a government accounting class and will have only a rudimentary knowledge of the government and fund accounting used by our state and local governments.

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Critical gaps in Accounting Education Impact

 The Public needs to know and understand Government Finances: The United States has over 90,000 state and local governments and over 24 million individuals are employed in federal, state and local governments in the United States The United States Department of Education has a near trillion dollar balance sheet. Many federal agencies are bigger than the largest Fortune 500 companies.

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Government is Important and the problems of fiscal sustainability for the key programs the entire nation relies upon such as social security, and Medicare affect every citizen and cannot be addressed properly when there is not an educated professional workforce .

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Critical Gaps in Accounting Education-What Can be Done

Government accounting education must be augmented and

improved.  The CGFM certification must be expanded and actively promoted by our universities and by governments themselves to close the gap in our accounting professional’s education, and to address the gaps in the CPA examination’s content and education requirements.  All of us in the profession need to lobby the university community to add government accounting programs to the accounting curriculum and to expand the menu of classes and programs.

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Critical Gaps in Accounting Education What Can be Done

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The late British Prime Minister Benjamin Disraeli once said

“Upon the education of the people of this country, the fate of this country depends.”

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I would like to paraphrase him and state my view of the Untied States fiscal reality of today: “When the largely

unfunded liabilities of the federal government exceed over $20 trillion dollars and are rising each year, upon the education of the accountants of the country, the fate of

the country depends.” We, at AGA need to make it our mission to expand government accounting education.

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Key Issues in Government Accountability

NEED TO ADDRESS HUMAN CAPITAL ISSUES 22

Human Capital Issues

 Attended Association Summit in December (AICPA, IIA, AAA, AGA, FEI and IMA) and there are many current human capital issues  The Public Accounting profession is experiencing turnover to other areas outside of accounting/financial management particularly at the two to five area experience level. Competition at entry level has increased  Women’s participation in accounting majors has declined inexplicably the last two years  Foreign enrollment in U.S Universities and Accounting programs is declining  Accounting needs to be classified as a STEM (Science, Technology, Engineering and Mathematics ) discipline to help keep international students graduating in the United States when they pursue their careers. This is a major AICPA initiative.

 At federal level less than 7% of workforces is under age 30. Government can often recruit personnel in other areas more easily than in finance. Who will replace the current pool ?

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