The 5 dimensions to further transform federal financial management

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The changing role of the CFO

It is critical that the CFO organization has and continues to transition from an enabling function to an enabling function.

Inclusion of modernization in financial planning and strategy

We’re seeing a ton of interest in business intelligence tools where even your standard accountant is really embracing the use of tools that allow them to analyze data faster.

When Congress passed the CFO Act of 1990, its goal was to bring some consistency and standardization to how agencies manage and report on their funding.

Now, more than 30 years later, the law has not only strengthened the role of the chief financial officer, but has transformed the entire field of agency financial management.

Nearly all agencies received a clean audit in 2020, most have strong internal controls in place, and the CFO role itself has been elevated to that higher stratum.

Now is the time for the CFO’s office to transform again.

Rep. Carol Maloney (D-NY) introduced the CFO Vision Act 2022 in March to do several things, including standardizing CFO responsibilities to improve strategic decision-making, give deputy CFOs enough authority to minimize the effects of CFO turnover and revise financial management. planning by requiring the publication of government-wide and agency-wide plans to assess progress in addressing financial management issues.

New CFO bill would codify agency programs

In many ways, the bill would confirm and codify much of what agencies are already doing today.

Nikki Reid, a partner at KPMG, said agencies don’t have to wait for new legislation to accelerate the transformation of their financial management efforts.

“It’s critical that the CFO organization has and continues to transition from an enabling function to an enabling function,” Reid said on the modern government: Increasing the impact of federal finances Pin up. “To me, that’s literally what it’s all about going from a hands-on accountant to a purely compliance-based organization to someone who’s focused on operations and really gives to the mission areas and leadership of these agencies the means to make strategic decisions.”

Data and technology are the enablers that guide these decisions. CFO organizations haven’t always had high-quality data, and the evolution of technology over the past five years has really driven that transformation.

Agencies now have more transparency in their data and more accountability for the quality of information, Reid said. Laws ranging from the Digital Accountability and Transparency Act (DATA) to several that focus on abusive payments have driven progress across the board, she added.

Data helps make better financial decisions across government

“Some agencies are really embracing and leveraging predictive analytics, which I’m so excited about,” she said. “When you think about the impacts on cash and accounts receivable, and the impacts from a budget perspective, the government needs all of this data to make decisions.

“Being able to harness sometimes non-quantitative – or increasingly qualitative – aspects of data in this decision-making effort, from a predictive perspective, is eye-opening and amazing. It’s probably the most important thing I see our customers start doing, and it’s great.

That means agencies need to take advantage of historical data and combine it with new tools and methodologies to inform this predictive analysis, Reid said. She gave the example of a client going through a major transformation effort, deciding to move from a general fund to a working capital model.

“To be in working capital, you need to have a lot more information and details about how you’re spending your money to develop the product or service you’re producing. In doing so, they need to have a lot more insight and insight into their data,” Reid said. “They realize their data isn’t perfect, but they have to start. The advantage of this organization is that it uses data visualization and analysis, and it is easier to see where it has holes in its data. »

That’s one of the reasons it’s important to start using data to make decisions, she said, because the data will “cleanse itself,” so to speak.

The four factors of federal financial transformation

On the technology side, CFOs partner with other senior executives, whether it’s the CIO, the CFO, or the CDO.

“We really look at transformation in what we call dimensions. The first is the service delivery model, which really understands how you deliver your services. So it could be your funding model, your general fund or your working capital. It could be your service level agreements. Do you have shared service providers? It’s everything that allows you to operate effectively as a finance function,” she said. “The second would be the people. Yes, we use tools, but you need people to make this activity work properly. So really focusing on people, making sure they’re empowered, they know what their job is, they’re trained appropriately. All of this must be a real aspect of transformation.

The third dimension is that of data. Agencies need to make sure their data is clean, but they also need to start using data to improve their decisions.

The fourth dimension is technology, which means automating manual processes through robotic process automation and other capabilities.

“We’re seeing a ton of interest in business intelligence tools where even your standard accountant is really embracing using tools that allow them to analyze data faster. No one will ever stop using Excel, right? But some of our government counterparts are really embracing using more efficient tools to analyze data,” she said.

“There are large-scale implementations of hardcore financial systems going on today, and there’s a push to go to shared service providers. But there are still agencies that are actually implementing new financial systems. That’s not what I’m talking about today. I really focus on those technology enablers like low-code apps that allow you to really manage your data, manage decision-making, and manage workflow more efficiently. »

And the last is process and politics.

“Most CFOs are very, very familiar with process cycle memos and process stories, and all those things that go with controls and internal control documentation. But your policy and process really needs to be the foundation of what you do to make sure you’re consistent and your teams are doing things right,” Reid said. “At the root of it all is your program and change management. You have to adopt these dimensions if you really want to have a real strategy and a real change.

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