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David Norquist Indianapolis, IN November 8th, 2012

A Brief History of Federal Financial Management. David Norquist Indianapolis, IN November 8th, 2012. 10,000 BC. Early hunter gatherer societies: No central government No written language No accounting. 4,000 BC Early Accounting. Civilization starts w/ four key advances:

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David Norquist Indianapolis, IN November 8th, 2012

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  1. A Brief History of Federal Financial Management David Norquist Indianapolis, IN November 8th, 2012

  2. 10,000 BC Early hunter gatherer societies: No central government No written language No accounting

  3. 4,000 BC Early Accounting • Civilization starts w/ • four key advances: • Shift to farming • Central government • Early writing (PP&E) • Accountants (Scribes) Tablet from Sumaria

  4. 1787 U.S. Constitution Article 1, Section 9“No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.”

  5. 1787 U.S. Constitution Article 1, Section 9BudgetingAccounting“No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.”

  6. 1809 Purpose Statute “Appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law.” 31 U.S.C. § 1301(a)

  7. 1870 Anti-Deficiency Act “That it shall not be lawful for any department of the government to expend in any one fiscal year any sum in excess of appropriations made by Congress for that fiscal year, or to involve the government in any contract for the future payment of money in excess ofsuch appropriations.”

  8. 1921 Budget and Accounting Act 1. Required the President to formally submit the national budget to Congress each year2. Created “BOB” – Bureau of the Budget (OMB)3. Established GAO responsible to Congress

  9. 1974 Names of laws get too long Congressional Budget and Impoundment Act1. Established Committees on the Budget2. Established Congressional Budget Office 3. Limited executive branch “impoundments”4. Moved Fiscal Year from 1 July to 1 Oct.

  10. 1982 (Shift to acronyms) FMFIA Requires Agency heads to provide assurance:1. Obligations are in compliance with law2. Funds and property are safeguarded against waste, loss or misuse.3. Revenues/expenditures are properly reported. From this law came OMB Circular A-123

  11. 1990 CFO Act 1. Shifted responsibility from GAO to OMB2. Led to CFOs in major Federal entities.3. Increased emphasis on internal controls4. Required annual independent audits of financial statements.

  12. Where we are today • Annual Audited Financial Statements • 21 Clean Audit Opinions (out of 24 Agencies) • Use of “Generally Accepted Accounting Principles” • Mgmt Assurance and Internal Control Assessments • A-123 Process • 2011 Deficit was $1.29 Trillion. • S&P lowered outlook on US bonds to “Negative” • 1 in 3 chance they will lower AAA bond rating within 2 yrs

  13. Federal Debt

  14. Debt by country

  15. Proposals on Budget • Peterson-PEW Commission on Budget Reform • http://budgetreform.org/ • National Commission on Fiscal Responsibility and Reform (Obama appointed commission) • www.fiscalcommission.gov/ • Office of Management and Budget • http://www.whitehouse.gov/omb/budget • House Budget Committee (Cong. Paul Ryan) • http://budget.house.gov/

  16. Summary Accounting led to writing and civilization Budgeting led to overspending and more laws

  17. Thank you QUESTIONS? David.Norquist@kearneyco.com

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