Tuesday, Feb. 13, 2007

View Monday, Feb. 12, 2007 Recap

Leading and Managing the IRS

Internal Revenue Service Commissioner Mark Everson kicked off the second day of AGA’s Fifth Annual National Leadership Conference Tuesday morning by discussing the challenges of managing change at America’s massive tax agency.

“As a leader, you have to be ruthless in your priorities,” he said. “It is so, so easy for all of us to do our jobs, but to accomplish little.”

He said the IRS was under fire 10 years ago to improve its customer service while beefing up enforcement efforts. Service improved considerably before Everson began his term as IRS commissioner, but the service focused has not wavered over the last four years. He has also concentrated on restoring the credibility of the IRS enforcement arm and on modernizing the agency.

Everson stressed that different problems require different solutions. In order to bring real change to the operations of the IRS, for example, he moved his CFO to the CIO position, work processes were standardized and 10 large IRS campuses were combined into four. Moving some leaders into lateral positions helps them to see the big picture, he said, which helps them better understand how all the pieces of the IRS fit together.

Sometimes, decisions must be made from the top down, he said, citing the mandate to require electronic tax filing by corporations and large non-profit organizations. “We got a lot of ridicule,” he said, but the results have been gratifying.

A focus on enforcement has resulted in double the number of audits and enforcement revenue that increased by $11 billion between 2005 and 2006, he said.

Everson concluded by saying, “I love doing this work. Public service is a great honor.” Despite the huge challenges and problems, he said, “I thing they’re worth it.”

Message from The Hill

U.S. Rep. Todd R. Platts, 19^th District of Pennsylvania and chair of the Subcommittee on Governmental Management, Finance and Accountability, accepted the Distinguished Federal Leadership Award on Tuesday. Saying he knew what he wanted to do when he grew up when he was in eighth grade, Platt added that he enjoys being with other dedicated public servants. “I appreciate what you are doing on behalf of the citizens,” Platt said.

Rep. Jim Cooper, 5^th District of Tennessee, offered a sobering presentation on the federal fiscal imbalance. “Seldom have the American people been so out of touch with what’s going on,” Cooper said, adding that budget deficits are the only number most Americans relate to when discussing the issue.

He explained that there are three deficits. The first, the one that is most often reported, is the unified federal budget deficit, which this year was $248 billion. There is also the net operating cost deficit, which hovers around $450 billion when using accrual accounting. The third deficit is the $4 trillion fiscal gap, which Cooper said is “an impossibly large number that I am deeply worried about.”

Cooper said it took more than 250 years for the U.S. government to borrow $5 trillion. In the last six years, we have borrowed an additional $3 trillion. Claiming that the Treasury Department “hid the numbers,” Cooper published a book entitled “Financial Report of the United States.” He said, “No one ever lobbies us about this.” State and local governments, which are much more solvent, continue to come to Congress looking for more money. “We don’t have it.”

He advocates that the federal government shift to accrual accounting, which would include liabilities for federal employees, military and veterans’ benefits as well as Social Security and Medicare, which do not currently appear in the federal budget. “How can you care for your seniors and not count them?” Cooper asked.

Any business that makes more than $5 million a year is required to use accrual accounting. State and local government practice accrual accounting. “The federal government is the big lawbreaker on this,” Cooper said, adding that he is frustrated by the mainstream media’s lack of interest in this issue. “We need to get the Wall Street Journal on board with this. They are not covering it.”

The U.S. government is borrowing $7 billion to $8 billion from foreign entities every work day, he said. President Bush has borrowed more money from foreign entities than all previous presidents combined. Current estimates by Standard & Poors show that the federal government will lose its AAA bond rating by 2012 and that Treasury bonds will become junk debt by 2025. “We are destroying the credit rating of the United States government,” Cooper said. “It is a clear and present danger.”

Cooper urged participants at AGA’s National Leadership Conference to weigh in on the Federal Accounting Standards Advisory Board (FASAB) Preliminary View: Accounting for Social Insurance, Revised, which was issued in October. Comments are due by April 16. The crux of the issue is what form of accrual accounting to use when accounting for social insurance. Find out more at www.fasab.gov.

GAO's High Risk Program and 21st Century Challenges

Deputy Comptroller General Gene L. Dodaro, CGFM, described the U.S. Government Accountability Office's (GAO) High-Risk List as a program with a lot of "staying power."

In its 17th year, the list has evolved from one that highlights fraud, waste and abuse in federal government programs to one that puts the spotlight on broader challenges involving efficiency, effectiveness and major transformations. Since 1990, Dodaro said, 33 areas have been added, 18 have been removed and two areas were combined.

New on the list for 2007 was federal oversight of food safety. Dodaro said that even though the U.S. has the safest food supply in the world, 76 million people come down with a food-borne illness every year. The e-coli outbreak from unsafe spinach in California cost an estimated $35 million to $74 million. "It doesn't take a lot to have a significant effect," he said. Other additions to the 2007 list are protecting the technology critical to U.S. national security interests and financing the nation's transportation system. 

The effect of the High-Risk List, he said, has been sustained congressional attention to these issues, $20 billion in financial benefits annually, and increased priority on these areas within the agencies. "There's a lot of work remaining to be done," Dodaro said.

NLC coverage by Marie S. Force, Christina M. Camara and Jennifer I. Curtin.