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What Keeps CFOs Financial Professionals Up At Night? Ann Ebberts, PM AGA CEO April 2019

Explore the importance of data transparency for CFOs and financial professionals. Learn about the challenges, legislation, and benefits of transparency in government and financial sectors.

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What Keeps CFOs Financial Professionals Up At Night? Ann Ebberts, PM AGA CEO April 2019

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  1. What Keeps CFOs Financial Professionals Up At Night? Ann Ebberts, PM AGA CEO April 2019

  2. AGENDA- Data Transparency- Who is Using the Data?- Changing Workforce

  3. Data Transparency

  4. Transparency … • Definitions: openness, accountability, and candor • Aspects of transparency relevant to management practice: • information disclosure • clarity • accuracy • Transparency is a tool that helps to improve policy outcomes

  5. http://analytics.usa.gov 4/08/2019 • Top sites include: • USPS Tracking • Social Security • National Weather Service • Refund Status Results

  6. Initiated by Federal Inspector Generals www.oversight.gov • Website launched in late 2017 • In last five years IGs. . . • Identified $138B in potential savings • $88B in investigative recoveries • 28,427 successful prosecutions • 7,733 successful civil actions • 73 IGs – and staff, protecting your tax dollars from Fraud, Waste, Abuse and Mismanagement

  7. 73 Federal IGs Published… • Most frequently cited Challenges: • Information Technology Security and Management • Performance Management and Accountability • Human Capital Management • Financial Management • Procurement Management • Facilities Management • Grants Management

  8. Federal Legislation – Driving Transparency • 1990 - The Chief Financial Officers Act • 1993 - Government Performance and Results Act • 1996 - Federal Financial Management Improvement Act • 2002 - Improper Payments Information Act • 2006 - Federal Funding Accountability and Transparency Act • 2009 - The American Recovery and Reinvestment Act • 2010 - Improper Payments Elimination and Recovery Act • 2011 - Government Performance and Results Modernization Act • 2013 - Improper Payments Elimination and Recovery Improvement Act • 2014 - Digital Accountability and Transparency Act (DATA Act) • 2014 - Government Reports Elimination Act • 2015 - Fraud Reduction and Data Analytics Act • 2016 - Grants Oversight and New Efficiency Act • 2016 - Program Management Improvement and Accountability Act • …….. And many more….

  9. Federal Spending - www.USASpending.gov

  10. First Qtr (Oct-Dec): • California: $127.5 B • Texas: $84.5 B • Florida: $72.6 B • Pennsylvania: $71.3 B • Virginia: $35 B • Cities w/ largest $: • VA Beach - $1.13 B • Chesapeake - $451 M • Newport News - $351.7 M

  11. Recently Released:Financial Report of the U.S. for FY18 https://www.fiscal.treasury.gov/files/reports-statements/financial-report/2018/03282019-FR(Final).pdf

  12. Who is Using the Data?

  13. Who Is Using the Data? • Government executives and program managers • CFOs, auditors, inspectors general…. • State and local policy-makers and managers • Private entrepreneurs • Academics/ researchers • General public • Oversight entities How do (or will) YOU use the data????

  14. Uses of Government Data … • Government sites -- examples: • Analytics.usa.gov • USASpending.gov • Performance.gov; Data.gov (home of open data), USA.gov, and federal department/agency websites • State websites • Non-profit organizations -- examples: • U.S. Public Interest Research Group (PIRG) • Truth in Accounting • USAFacts.org • Coalition for Regulatory Innovation

  15. U.S. Public Interest Research Group (PIRG) U.S. PIRG Education Fund published “Following the Money 2018” reviewing state data transparency – published May 2018. Eight years evaluating State websites - using A-F grades. U.S. PIRG states that websites should be: Comprehensive – multi source data One-Stop – on one website One-Click – searchable Note: Page 30….References AGA CCR and states that post a CCR received extra credit for transparency !!! Source: www.uspirg.org/sites/pirg/files/reports/Following the Money 2018...

  16. How Does Your State Rate in Transparency?

  17. Transparency – “Top” and “Bottom” States Virginia Grade: C Score: 70 Rank: 27th https://uspirg.org/sites/pirg/files/reports/FtM%20NATIONAL%20FINAL%20VERSION_0.pdf

  18. https://www.datapoint.apa.virginia.gov/

  19. Citizen-Centric Reporting (CCR) www.agacgfm.org/ccr “A government’s obligation to the people for its actions and use of resources” -AGA’s definition of accountability “Giving the citizens numbers they can understand.” -Governing . . . Access to spending data is the first step. The CCR provides the next logical step to informing our citizens.

  20. Communicating with Citizens via the CCR • Benefits of creating a CCR for your agency: • Simplicity, clarity of data presentation -- demographics, finances, services, challenges, accomplishments • Clear line of sight from spending to results • Engagement with the public • Send your CCR to AGA to receive comments, suggestions for improvement – ccr@agacgfm.org • AGA recognizes well designed and informative CCRs with an AGA Certificate of Excellence • AGA recently cited by Public Interest Research Group for progressive work with CCR (page 30 of the report) https://uspirgedfund.org/reports/usf/following-money-2018

  21. Examples of Government Entities that Create CCRs City/County of Honolulu Clark County Treasurer, WA Guam, Office of Public Accountability Federal Aviation Administration Dept of Homeland Security

  22. Benefits Realized by Transparency • Members of both parties support government transparency • States with larger revenue streams tend to have more transparency, with many expanding to counties and municipalities Access to data has resulted in: • Fewer public information requests • Lower printing costs – printing fewer documents • Better data, increased competition and potential for savings • Agencies have more visibility pricing across contracts • Vendors use website as analytical tool to bid more competitive prices

  23. Truth in Accounting (TIA): “Financial State of the States – 2017” • www.truthinaccounting.org • www.statedatalab.org • Report released September 2018 40 States don’t have enough money to pay their bills: • $1.5 T in unfunded debt • $837.5 B in pension debt

  24. “Top” and “Bottom” States

  25. Black is a “Sunshine” State -- No Tax Payer Burden • A grade: surplus < $10,000 (3 states) • B grade: surplus $100 to $10,000 (7 states) • C grade: burden $0 to $4,900 (12 states) • D grade: burden $5,000 to $20,000 (18 states) • F grade: burden <$20,000 (10 states) Virginia burden is $1,900 for each taxpayer

  26. State of the Cities “Financial State of the Cities” • www.truthinaccounting.org • www.statedatalab.org • Report released January 2019

  27. Top Cities: Virginia Beach $5,900

  28. Page 110-111 • Virginia Beach • $5,900 • Per taxpayer to balance the budget

  29. “Our Nation, in Numbers” • Federal, state and local data from 70+ government sources • Details and summaries • Launched April 18, 2017 • Continuously updated

  30. Who Else Uses Publicly Available Data? • REDFIN, Zillow, Trulia, HomeAway, VRBO: • Nearby restaurants, shops • Crime rate • School ratings • Access to public transportation Detour: The app currently features 10 separate guides for San Francisco, with free previews available for Austin, New York, London, Paris, Berlin, Barcelona, and Marrakech. Chicago and Los Angeles are listed as “coming soon.” 

  31. The Workforce and the Work….Is Changing

  32. Where are the Government Employees? • Federal workers, as well as state and local government employees, account for anywhere between 12% and 25% of total employment. • 12.6% work in federal government (~ 2.77 M) • 23.1% work in state government • 64.4% work in local government • According to Bureau of Labor Statistics – (Aug 2015) • More than 21,995,000 government employees in U.S.

  33. “Threats or Opportunities” to Public Sector Financial Management? • Government agencies have numerous legacy systems and replacement is costly • Technology is changing at a rapid pace • Citizen demand for data and data transparency is increasing • Public sector workforce is aging • Attracting and retaining new hires is difficult • Most college graduates don’t know much about public sector opportunities for government financial management

  34. The A, B, C, D, E’s of Financial Professionals A: Artificial Intelligence, Robotic Process Automation (RPA), Machine Learning -- increasing speed, accuracy, and analysis B: Block chain Distributed Ledger Technologies (irrefutable, collaborative, transparent) C: Cyber Security Building enterprise security to support mission, manage IT risks/access or disruption of financial data

  35. The A, B, C, D, E’s of Financial Professionals E: Enterprise Risk Management (COSO Framework – Feb 2017) An enterprise, collaborative and integrated approach to strategy, risk management, priority setting, and assessment of results with a robust system of checks and balances D: Data Analytics Leveraging data to turn insights into action

  36. Opportunities! • Technology is an enabler! • Robotic Process Automation (bots), Artificial Intelligence, Blockchain, Analytics • Automating repetitive and well-documented processes, visualizing anomalies, and data outliers, and more! • Focus less on input and more on analysis • How do we redefine and “re-imagine” the work? • Technology enables telework and mobile computing • Can we hire someone from Seattle, WA to do work “for” Montpelier, Vermont?

  37. Why spend effort and money on the data?

  38. There is no “gain” without “pain”.There are some barriers to change.

  39. Is Artificial Intelligence a Threat to Government Accountants and Auditors? • Hawaii Chapter PDT – Aug 2018 -- 250 state and local gov’t accountants, auditors, grants managers, business analysts • 73% not - or mildly worried Donny Shimamoto Article in Winter 2018-19 AGA Journal

  40. Opportunities for Change! • Potential elimination of labor-intensive and repetitive tasks • Leverage technology to: • Add real value to analysis – financial and programmatic data • Provide analytics insights and communicate your findings • Design more effective internal controls • Engage in different roles • Help agencies manage risks associated with AI, RPA, etc. • Move from testing transactions to testing algorithm analysis and effectiveness • Confirm integrity of analysis, ensure data accuracy and completeness • Use AI to clear exceptions automatically

  41. After a Presentation on AI. . . “AI will allow personnel to expand on the human values and unique traits they bring to the workplace that no machine…no matter how intelligent, can offer” Donny Shimamoto Article in Winter 2018-19 AGA Journal

  42. Technology Threats, Trends and Tools Journal of Government Financial Management AGA Winter 2018-2019, includes: • Artificial Intelligence… • Finance in a Digital World… • The Blockchain Brief… • Harnessing and Protecting Data Assets… • The ABCDs of Technology… • Can Blockchain Help the DoD Audit….

  43. Role of Government Financial Leaders is Changing From Financial Transaction Processing CFO Survey: Current Responsibilities SOURCE: “Annual CFO Survey: Navigating Disruption,” Association of Government Accountants, January 2018. 87% Financial Reporting 82% Financial Accounting Operations 75% Financial Systems 75% Budget Formulation 74% Budget Execution To Strategic Partner CFO Refocus • Thought leadership • Data analytics • Performance monitoring and management 47 Department of Treasury, Office of Fiscal Service - 2018

  44. New Roles for CFOs 5 Strategic Planning & Mission Support Communicating Results 4 Levels of a 21st Century FM Office —Maturity Model Data Management & Analytics 3 • Develop strategic plan linked to program performance • Operational support and decision-making • Performance evaluation • Use of advanced data analytics and use of data as a strategic asset Financial & Regulatory Controls 2 • Financial and management reporting • Program performance reporting • External communications Core Budget & Accounting Operations 1 • Performance measurement • IT management • High-quality data creation • Regulatory compliance • Accounting policy • Risk management • Internal controls • Budget formulation and execution • Transaction processing Department of Treasury, Office of Fiscal Service - 2018

  45. Training, Retraining, Upskilling and Reskilling • According to the World Economic Forum, by 2022 no less than 54% of all employees will require significant retraining and upskilling. • Of these: • About 35% are expected to require additional training of up to six months • 9% will require reskilling lasting six to 12 months • 10% will require additional skills training of more than a year

  46. Our Responses to these Changes? • Those who can retire….retire? • Ask senior leadership about plans for the future • Learn more about new technologies – read, podcasts… • Volunteer to serve on a pilot in your organization • Get additional training on your own • Be a part of the change or change will “happen to you” • Make the “job you have, the job you want”

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