NLC 2005 - a big success!
By: Christina M. Camara
More than 500
government finance professionals attended AGA’s Third Annual National Leadership
Conference last week in Washington, D.C. With a theme of "Improving Government
Performance: Financial Managers Take Center Stage," the conference brought
together leaders from federal, state and local governments as well as the
private sector and academia.
Some highlights
of the conference:
Financial Management at the U.S. Department of
Homeland Security (DHS)— Andrew B. Maner, MBA, CFO of the DHS, knew
he was in for a challenge when DHS secretary nominee Judge Michael Chertoff told
him, “Oh my God, you have a hard job.”
 The
challenge of bringing together 22 agencies from 11 departments, covering
everything from hurricane response to drug seizures and more, is indeed a
challenge, Maner told the audience at the close of AGA’s National Leadership
Conference Tuesday. While no handbook exists to create a new agency, starting
from scratch also means that bad habits haven’t been established yet, he said.
The department has already made some important
strides in the financial arena. DHS was just two days late in submitting a
combined Performance and Accountability Report for the first time last fall. The
department is developing a new financial system, and recent legislation has
established the department as a CFO Act agency with the requirement that its
internal controls will have be audited in 2006. An internal control committee
has been set up to develop the correct approach to the audit, which will be a
first among federal government departments. “A lot of people are watching how we
do things,” Maner said, adding that he believes DHS is “leading the way” in
internal controls. Despite the multiple systems, processes, organizations and
locations involved in the new department, Maner said, “We don’t have a messy
bureaucracy. It is a very flat place to make a decision: You want it, it’s
done.”
 The
Presidential Election and its Impact on Managing Government Operations—Paul C.
Light, Ph.D., the founder of the Center for Public Service at the Brookings
Institution, kicked off the conference with a keynote speech on trends in
government management and how AGA can play a role in communicating good
government to the American people. Surveys repeatedly show that Americans are
resistant to the idea that government is getting better. In fact, they are
convinced that government is not particularly accountable and that the lion’s
share of government money is wasted. That belief persists, Light said, even
though financial statements are cleaner and fraud, waste and abuse are down.
“The message is not getting out to the American people,” he said.
Better management
has become central to the conversation about good government. Different
management structures were considered immediately after the events of Sept. 11,
2001, with the creation of the U.S. Department of Homeland Security and the
re-organization of U.S. intelligence functions. Better administration of
programs can help boost Americans’ confidence in government.
Light also stressed
the important role AGA can play in reassuring taxpayers that their money is well
spent. Americans are not worried so much about what government is doing, but how
they’re doing it. “They’re saying, ‘Show us the results.’ “He urged AGA to
continue pushing for improvements in tracking and monitoring government
accountability and to quadruple efforts to measure performance of government
entities, which will serve to restore public confidence.
Identity Fraud—
Called the fastest-growing white-collar crime in the country, identity theft
affected 4.25 percent of the U.S. adult population last year, according to
Joanna Crane, identity theft program manager at the U.S. Federal Trade
Commission. Identity thieves who created new accounts in someone else’s name
usually used the new accounts for six months, and it took victims more than 60
hours to resolve the problems.
 Attendees
also heard about efforts of the Social Security Administration and various state
motor vehicle departments to balance the need for privacy with the need to root
out terrorists. The terrorists of Sept. 11, 2001 used false Social Security
numbers to establish bank accounts in Florida, and four of the hijackers held
multiple drivers’ licenses with different identities.
The challenges are
daunting, according to Selden Fritschner, with the American Association
of Motor Vehicle Administrators. He pointed to the fact that 240 different, but
valid, ID cards and driver’s licenses are now in use in U.S. and Canada, with 32
in New York alone. There are more than 1,400 versions of U.S. birth certificates
and 40 versions of the Social Security card. The AAMVA proposes a common set of
security features on every driver’s license and a standard set of issuance
procedures.
But Jody Westby,
JD, managing director at PricewaterhouseCoopers LLP, pointed our that the
issuers of credit are mostly to blame for identity theft due to sloppy
procedures and unverified information that is used to issue credit. Requiring
all credit checks to be verified will reduce fraud. “This is a situation you can
do something about,” Westby said.
Emerging Issues—
Joseph Kull, CGFM, CPA, director at PricewaterhouseCoopers
LLP, discussed a research project of AGA’s Corporate Partner Advisory Group that
aims to make Performance and Accountability Reports more useful. The plan is to
gather suggestions from CFOs and others and made recommendations to the U.S.
Office of Management and Budget (OMB). Some ideas for improvement include better
identifying users’ needs, recognizing that most users want information that
looks forward instead of looking back, as in the traditional accounting model.
He added that PARs of 400-600 pages are simply overwhelming.
William Taylor,
CGFM, chair of AGA’s Professional Certification Board, said that AGA
leaders are working with the University of Maryland to offer governmental
accounting courses to be offered on nights and weekends to meet the needs of
working professionals. He added that the need for governmental accounting
classes is great, as fewer accounting graduates are taking the CPA exam and the
number of accounting doctoral candidates are at a 17-year low.
Nancy Valley,
CGFM, CPA, a KPMG partner, discussed the impact of the private-sector
Sarbanes-Oxley Act on state and local governmental entities. She noted that over
the last six months, governmental entities are picking up the SOX internal
control requirements as best practices for their organizations. The California
Pubic Employees Retirement System, for example, is considering adopting some of
those regulations as it has demanded better accountability from corporations it
invests in. Rating agencies may also start asking questions about the strength
of internal controls, which can further drive the effort forward. A CPAG
research project will survey state and local governments for gaps in their
internal control structures and also touch on auditor independence and other
issues.
 Governing
by Network—Stephen Goldsmith, a Harvard professor and former mayor of
Indianapolis, spoke about the need for governments to solve problems through
collaboration with nonprofit organizations and the private sector. The recent
argument over outsourcing at the federal levels is becoming “increasingly
shrill” and “increasingly irrelevant,” he said. Rather than focus on whether a
service should be wholly privatized or purely governmental, more complicated
models can be used. Government will always have too little money and too many
problems, he said. Creating networks can be “messy,” he said, but they can
transform governments into entities that provide better value to the public.
State and Local
E-Government Initiatives—Faisal A. Hanafi, executive adviser to the Internet
Business Solutions Group at Cisco Systems, and Helene Heller, the senior
director of Project and Information Management at the Housing Authority of New
York City, discussed the new dialing codes made available to deliver
government-related information to citizens. In New York City, 16 call centers at
various agencies were combined into one 3-1-1 dialing code about two years ago.
New Yorkers now have one number to call for nonemergency city services, such as
setting up appointments with city inspectors. The 3-1-1 center, operated by city
employees, takes 40,000 calls a day and can handle requests in 179 different
languages. In contrast, the Texas 2-1-1 system is de-centralized, with 150 call
center agents employed by nonprofit agencies working in different locations all
over the state. Hanafi and Heller also led participants through the questions
they would need to answer to help determine the capabilities of a new system and
how it could be implemented.
Evolving Role of the CFO—Chief financial
officers at various levels of government talked about their ever-changing, and
sometimes confusing, role and the need to give the position a higher public
profile.
Samuel Mok, CGFM, CFO of the U.S.
Department of Labor; Natwar Gandhi, CGFM, CFO of the District of
Columbia; and Edward Long, CFO of Fairfax County, VA, gave audience
members an insightful and sometimes humorous look at what their jobs entail.
Gandhi’s role as CFO is unique—he is the most
powerful municipal-level CFO in the country. While the CFO was a “tool of the
mayor” 10 years ago, the dire financial problems Washington, D.C. faced in the
late 1990s led Congress to make the position independent and empowered the CFO
to shut off cash to agencies, without regard to politics. Closing D.C. General
Hospital in 2001, for example, was a financial decision made at “great political
cost” to Mayor Anthony Williams.
Mok, by contrast, said his powers are limited and
the responsibilities of the office often overlap with that of the chief
information officer. CIOs are in charge of information technology and CFOs
oversee financial management. The conflicts are creating “operational
inefficiencies” and should be resolved, he said.
Mok, who also received AGA’s Distinguished
Federal Leadership Award Tuesday, said CFOs should raise the public profile of
their positions and of the products they produce. Financial statements are being
produced more quickly but they need to be made more useful. “We fail to market
that to our leaders,” he said.
Challenges
Facing Government and Looking to the Future—William Hudnut, the mayor of
Chevy Chase, MD, former mayor of Indianapolis, IN, and a resident fellow at the
Urban Land Institute, urged attendees to take a long-range view of the future of
their communities. Begin at the end and work backward, he said. “Where do we
want to be five, 10 years from now?” He noted that the U.S. population is
expected to grow by 60 million people between 2000 and 2025. Where will those
people live? He noted that 90 percent of land development since the 1950s has
been in the suburbs. While suburban living is popular, people are longing for a
sense of place. Sometimes, the only way to know if you’ve moved from one
community to another is not when you see new city halls, monuments or museums,
but the franchises repeating themselves. “A whole bunch of 7-11 stores don’t
make a place.” He also urged the audience to promote reinvestment in central
cities. “You can’t be a suburb of nothing.”
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