Steven H. Emerson, CPA, CGFM, CGAP, CFE, CITP, CGMA


10 nov. 2013 (il y a 7 années et 11 mois)

350 vue(s)

AGA Montgomery Chapter CGFM Exam Review

Presented By

Steven H. Emerson, CPA, CGFM, CGAP, CFE, CITP, CGMA

Information System

Organized collection, processing, transmission and
dissemination of information in accordance with
defined procedures, whether automated or manual.

Financial System

Information system, comprised of one or more
applications, that is used for any of the following:

Collecting, processing, maintaining, transmitting and
reporting data about financial events

Supporting financial planning or budgeting activities

Accumulating and reporting cost information

Supporting the preparation of financial statements

Information system that supports both financial and
nonfinancial functions.

The financial systems and the financial portions of
mixed systems necessary to support financial

The Financial Systems Integration Office (FSIO) is the
successor to the Joint Financial Management Improvement
Program of the Federal Government (JFMIP).

The FSIO financial management system requirements

Collect accurate, timely, complete, reliable and consistent

Provide for adequate agency management reporting

Support policy decisions

Support the preparation and execution of agency budgets

Facilitate the preparation of financial statements, and other
financial reports in accordance with accounting and reporting

Provide information for budgeting, analysis and reporting,
including consolidated financial statements

Provide a complete audit trail to facilitate audits

Maintaining the chart of accounts of the entity

Maintaining the integrity of the accounting and reporting

Accounting for all financial transactions of the entity

Accounts payable

Travel reimbursement

Reporting on the financial results and the financial
condition of the entity

Monitoring budget execution

Monitoring operating performance

Managing financial assets, especially cash

Maintaining financial controls

Budget formulation


Credit management

Debt collection

Cost analysis

Performance measurement

Financial system development and operation

Overall system management, consisting of accounting classification
management and transaction control

General ledger management, consisting of general ledger account
definition, accruals, closing and consolidation, general ledger analysis
and reconciliation

Funds management, consisting of budget preparation, funds
allocation, budget execution and funds control

Receivables management, consisting of customer information
maintenance, receivable establishment, debt management and
collections and offsets

Payables management, consisting of payee information maintenance,
payment warehousing, execution, confirmation and follow

Cost management, consisting of cost setup and accumulation, cost
recognition, cost distribution and working capital revolving fund

Reporting, consisting of general reporting, external reporting, internal
reporting and ad hoc query

An existing system may rely on computing technology
or software that is no longer supported by its producer

The organization may have outgrown its existing
system(s) either in volume of transactions or in
number of activities

New requirements may be imposed on the
organization that require different processes

The organization may conclude that newer
applications will be more cost effective than older ones

Gain an understanding both within and outside the
financial management organization that it (finance) is
the user of the system and what that entails

Develop and strengthen the interface between the
system developer and the user activities

Define user requirements

Communicate and monitor user requirements

It is vital that the financial manager communicate to
the software developer the needs of a financial
management software system. Items such as:

Chart of accounts requirements

Budgetary control





Ideally, both the requirements group and the
development group need to be made up of accounting
and IT personnel.

The same as in developing financial management

Gaining an understanding both within and outside the
financial management organization that it (finance) is
the user of the system and what that entails

Developing and strengthening the interface among the
IT department, the purchasing function and other user

Defining user requirements

Communicating and monitoring user requirements

No COTS product will exactly meet all of the identified
requirements of a government

Any COTS designed for the level of government of
interest will support the accomplishment of the
financial manager’s high
level objectives

COTS will be successful only if the financial manager
adapts to the COTS system, which may require process
redesign or reengineering.

Some governments decide to augment their COTS
system with additional software or interfaces. This
should be avoided due to:

Augmenting the COTS tends to increase the cost of
the project

COTS vendors will not provide support for the
augmented software or interfaces

Subsequent releases or updates to the software will
require updates to the augmented systems which will
add additional costs to the total project

Within the federal government certain agencies offer
servicing” to other agencies on a fee

Private sector businesses offer processing services to
federal, state and local government agencies

Benefits include:

Avoidance of developmental and operational staff

Assurance that hardware and software will remain
current as technology changes

A concern is lack of flexibility

Purchasers must accept the product provided by the

Most cases do not have the ability to modify operations

Many companies implemented Business Process
Reengineering (BPR) in the 1990s due to a spate of
publications including an article in the Harvard
Business Review by Michael Hammer

BPR presents the concept that organizations should
eliminate functions that do not add value

BPR should be properly implemented by starting at a
clean slate

Organizations should not assume any process is

Organizations should envision the most effective and
efficient way to achieve the organization’s goals

BPR lost some of its luster because critics accused it of
trying to increase productivity to maximum while
disregarding aspects such as work environment and
employee satisfaction

BPR was also accused of being a technique for

Many very large organizations have adopted the
concepts of BPR, but they may not use the phrase
“BPR” in their organization

Account Cleanup and Data Conversion

Account Cleanup

Requires research and analysis of all accounts that have not
been active to determine if they should be discontinued

Balances of discontinued accounts should be transferred to
another account or written off

valid accounts should not be carried into the new

Data Conversion

formatting data from the old system to the new

A computer program can accomplish this

New attributes may have to be entered manually

Business Process Redesign

The replacement or major modification of financial
management systems offers the opportunity to re
and re
design business processes

In order to be successful, the redesigned business
processes must be implemented in parallel with system

In simplest terms, business process redesign:

Mapping all activities in a process

Identifying activities that do not create value for elimination

ordering of activities to a more logical stream

A computer may replace human intervention

Change Management

“Sometimes it’s easier to change

than it is to


Changing staff is usually not an option and instead staff
must be made comfortable and productive in the new

Include all affected parties in the decision process

People tend to buy into change in which they participate

People who do the work tend to know more about the work

Constant communication is important

Most people do not react well to surprises

Rejection at the worker level can undermine the best planned
and most expensive applications

Work Force Planning

Successful implementation of a new financial
management system will require a total rethinking of
what is required of the work force

Senior management must assess what skills will be
required, the number of people with those skills and
how the organization will get to implementation of the
new system

The U.S. Office of Personnel Management (OPM) has
developed a model that has components that may not be
appropriate to all organizations but provides a useful

OPM Model Checklist

Set strategic direction

Organize and mobilize strategic partners

Set vision/mission/values/objectives

Review organizational structure

Conduct business process reengineering

Set measures for organizational performance

Supply, demand and discrepancies

Analyze permanent work force demographics

Describe nonpermanent work force

Conduct skills assessment and analysis

OPM Model


Develop action plan

Design a work force restructuring plan

Develop ways to address skills gaps

Set specific goals

Implement action plan

Communicate the plan

Conduct recruitment and training

Implement retention strategies

Restructure where needed

Conduct organizational assessments

Monitor, evaluate and revise

Assess effectiveness

Adjust plan as needed

Address new work force and organizational issues

Verification and Validation

Verification that the system contains all of the processes
and outputs that are expected

Validation that the computations and outputs and reports
are accurate and correct

For small entities verification and validation would most
likely be done by the financial manager who is both the
sponsor of the project and the person responsible for the
outputs of the system

For large projects a third party may perform the verification
and validation and this may be referred to as “Independent
Verification and Validation”

Ownership of Systems

In very small and very large organizations the entire
financial management systems are likely to be within
the financial management organization and the
question of who “owns” the system does not come up

In many organizations the IT department owns the
hardware and provides a computing service to financial

The finance department believes it owns the software and can
make modifications at will

The IT department believes the software is its property

Ownership should be made clear in the IT policy of the

Ownership of Data

If IT happens to own both the hardware and software, IT should never
own the financial data

Financial management must maintain stewardship over the data

Stewardship of the data includes:

Data integrity

the quality, timeliness and reliability of data in the system

Data collection synchronization

how data collection cycles are timed and
cutoff dates and times set so that necessary data
feeds between systems can

Reduced data redundancy

eliminating multiple occurrences of the same data.
This is best accomplished by entering the data at the point where the transaction
is initiated

Data accessibility

ensuring that only authorized users can access the data

Data availability

managing the data that needs to be transferred or exchanged
between systems


ensuring that data collected by the system has enough inherent
flexibility so the system can adapt to change over time to meet new information
requirements and adopt new financial performance reporting measures

Ownership of


Stewardship functions fall into four categories

Data definition

defining what data requirements and
characteristics will be contained within the system

Data creation and capture

defining how the data will be
collected in the records and reports

Data usage

ensuring that data is being used in line with its
definition or that the definition is changed to reflect the
users’ needs through feedback to the data definition function

Data assurance

attesting to data integrity through feedback
to the data creation and capture function

Operational Issues

Most critical operational issues between finance and IT
are scheduling and priorities

Operational meetings should occur between finance
and IT to review and discuss past and future

The finance department must clearly communicate its
schedule requirements and seek priority for use of
computing resources

Internal Controls

consist of five components

The control environment

organizational factors such as integrity, ethical values,
competence, management philosophy and operating style. Tone of the organization

Risk assessment

identification and analysis of relevant risks and risk factors to the
organization and its objectives

Control activities

general controls such as data center, software and access controls and
application controls such as authorization, approval and segregation of duties. These
controls will be commensurate with the inherent nature of the information, the possible
consequences of errors, needed degree of reliability, cost
benefit of the control and
vulnerability of agency assets to loss or misuse

Information and communication

capturing pertinent information, financial and
nonfinancial, from a variety of systems and other sources and communicating it to
management on a regular basis


process of consistent and continuous monitoring of internal control systems
by managers as well as separate evaluations by independent auditors and reviewers

The establishment of internal controls is the responsibility of management

Internal controls are subject to review by independent auditors

Internal controls are an integrated part of the overall management process to promote
efficiency, reduce risk of asset loss and ensure reliability of financial information


Organizations should conduct a cost
benefit analysis for
each financial management system to ensure:

Alignment of system with organization’s mission needs

Acceptability of information (internally and externally)

Accessibility of information (internally and externally)

Realization of projected benefits. Quantify improvements in
performance results through measurement of program



Organizations should perform post
reviews and should address the following questions:

How effective is the system in supporting the meeting of
stated program objectives and performance targets?

How satisfied are the “customers” or “users” of the financial
system and its information

the needs assessment?

How efficiently does the system operate (in terms of
resources such as time, dollars and other resources) to
minimize resource consumption?

Does the system’s accomplishment of its objectives and
benefits outweigh cost and risk considerations?

How well does the system maintain its integrity throughout
the management cycle in terms of avoiding fraud and abuse?

Historically administrative support systems have been
developed or acquired separately and then attempted
to “bridge” these separate systems together

This “best of breed” approach has the advantage of
providing each component of the organization with
the best system for that component’s individual needs

Enterprise Resource Planning systems or ERPs have
recently been developed to offer large
scale integrated
administrative support systems

ERPs have the advantage of universal compatibility and
end processing

Flexibility is lacking and while the ERP will not fulfill
anybody’s wish list, the enterprise
wide benefits may
drive the separate components of the organization to
alter their business processes to accommodate the ERP

Steven H. Emerson, CPA, CGFM, CGAP, CFE, CITP, CGMA

P.O. Box 834

Helena, AL 35080

(205) 807

(205) 449
8666 (Fax)