ARCHIVED - Survey of Best Practices of Comptrollership

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A. Accounts receivable management including limits on credit, use of offsets of payables and receivables, seizure of assets to settle accounts, etc.

Tax Refund Offset: In the United States, the General Services Administration (GSA) has entered into an agreement with the Internal Revenue Service which allows the GSA to submit an electronic list of delinquent debtors for matching against taxpayer refund files.

B. Cash flow management, e.g. use of electronic data interchange (EDI) to simplify and speed payments.

In the United States, the market for EDI and EDI-related technologies is expanding each month. Based on this momentum, it is inevitable that electronic message formatting and transmission will soon be the preferred way of conducting business in the U.S. The goal is to streamline, improve, and lower the cost of federal procurement and finance-related activities by making new payment tools available government-wide within five years. The following are some examples of this practice:

- Pre-authorized Debit (PAD);

- Paperless Information Exchange (PIX).

Bruce Anderson
Assistant Auditor-General

Martin Matthews
Assistant Auditor-General

Department of Agriculture
Department of Customs
Department of Education
Treasury Board Secretariat
State Services Commission
Office of the Prime Minister and Cabinet
Department of Defence
Department of Housing

Department of Agriculture (USDA)
Department of Commerce
Department of Defense (DOD)
Department of Education
Department of Energy
Department of Housing and Urban Development (HUD)
Department of the Interior (Interior)
Department of State
Department of Transportation (DOT)
Department of the Treasury
Department of the Treasury, Financial Management Service (FMS)
Department of Veterans Affairs (VA)
Environmental Protection Agency (EPA)
General Services Administration (GSA)
National Aeronautics and Space Administration (NASA)
National Science Foundation (NSF)
Nuclear Regulatory Commission (NRC)
Social Security Administration (SSA)
Office of Management and Budget (OMB)

David H. Roth
(formerly) Assistant Auditor General

John W. Holmes
Principal

Tom Wileman
Researcher

1. Deputy's Accountability

2. Managerial Accountability Framework

3. Approach

4. Financial Statements

5. Annual Management Representation

6. Revenue Management

7. Expenditure Management

8. Financial Benchmarking

9. Information Technology

10. Stewardship Reporting

11. Role as "Conscience" of Department

12. Internal Control

13. External Auditing

14. Managing Risk

15. Alternative Delivery Mechanisms

16. Lessons Learned

17. Other Modern Trends

Chapter I Comptrollership Questionnaire Accountability Framework

Chapter II Survey Questionnaire Responses and Findings

A. Their managers deliver programs giving consideration to obtaining the best possible value from public resources.

• In the United Kingdom, it is the long-standing practice that the permanent head of a government department (known as the permanent secretary) is appointed as its accounting officer. This reflects the fact that the accounting officer has personal responsibility, under the minister, for the overall organization, management and staffing of the department and for department-wide procedures, where these are appropriate, in financial and other matters. The permanent secretary must ensure that there is a high standard of financial management in the department as a whole; that financial systems and procedures promote the efficient and economical conduct of business and safeguard financial propriety and regularity throughout the department; and that financial considerations are fully taken into account in decisions on policy proposals. Specific responsibility for the organization, management, staffing and financial and other procedures in a defined area of the department, such as an agency, may be assigned to an additional accounting officer.
• Chief executives of government departments in New Zealand have formal annual performance agreements over and above their departmental statements of objectives and outputs. Performance on both strategic and immediate management issues is subject to annual assessment by the State Services Commission, which draws on the views of the minister, central agencies and key interested parties. There is an element of performance-related pay linked to the performance assessment. In addition, chief executives are employed on term contracts where reappointment, or appointment to another position, is dependent upon performance.

Most chief executives have formal annual performance agreements with their key divisional managers which mirror their own performance agreements.

• In the United States, the Government Performance and Results Act (GPRA) is targeted to attain best performance for best value for government programs. Other specially targeted programs have been enacted recently with this objective in mind. For example, the Franchise Fund Pilot Program (Sec. 403, Government Management Reform Act (GMRA)) creates business-like competition among federal agencies to provide common administrative services better, faster, and at lower cost.
• The U.S. Vice-President's National Performance Review recommended that common administrative services be offered on a competitive, fee-for-service basis. The results would lead to more efficient and effective operations for the federal government as a whole, and federal program managers in particular. The Department of Treasury is one of six agencies allowed under the Government Management Reform Act (GMRA) to operate a franchise fund on a pilot basis. This fund will finance entrepreneurial services, such as training, consulting, accounting systems cross-servicing, debt collection, and other administrative services provided to federal agencies and other entities.

B. Their managers make decisions in light of timely, relevant and reliable financial information, analysis and advice.

• The Department of Transport in the United States has developed an Executive Reporting Framework (ERF) to provide complete, consistent, reliable and timely information and create an environment that fosters cross-cutting identification, analysis, discussion and resolution of issues. The system accesses information from departmental financial systems as well as financial and programmatic systems in use by the various operating administrations. ERF will contain data to aid decision makers in managing resources or communicating information about those resources to senior management.

C. Cost-effective controls, suitable to the government environment, are in place to safeguard assets and to ensure probity.

• In the U.K., mechanisms exist in government departments to control assets and ensure probity. For example, a register of assets is maintained and responsibilities are separated for placing contracts and other ordering and receiving goods.
• In the United States, the Federal Managers' Financial Integrity Act (FMFIA) was designed to improve the government's ability to manage its programs through strong management controls and accounting systems. The Act specifically mandates the safeguarding of assets. Agency heads are required to make an annual report to the President and Congress to certify that an agency has "reasonable assurance" that the appropriate safeguards are in place and are being used.
• The American Quality Assurance Program of the Environmental Protection Agency (EPA) is based on the Federal Managers' Financial Integrity Act (FMFIA) requirements and is designed to safeguard assets by maintaining an internal control system which includes statistical tests of accounting transactions to ensure compliance with policies and procedures. The financial managers complete an annual certification of their assessment of financial controls and [compliance] with required accounting principles and standards. In addition, EPA prepares annual financial statements of its appropriations and the scope of the annual CFO financial statement audit includes an evaluation of the internal control systems.

• All budget managers in the Department of the Environment in the U.K. are required to attend training on their financial responsibilities and to submit stewardship reports at the year-end to confirm that they have carried out a structured review of their management of resources in the preceding year and identified any shortcomings and priorities for improvement. The stewardship report process is intended to demonstrate that managers have satisfied themselves that, in their areas of responsibility, financial controls are satisfactory and are operating properly and financial management is effective. The reports are collated by the central Finance Directorate and submitted to the accounting officer, with an overall comment on the stewardship of resources in the year concerned and advice on any lessons learned and action required.
• In the United States, aside from FMFIA controls, the CFOs Act includes specific financial reporting requirements. Foremost is the requirement of annual audited financial statements reporting on the activities of the entire agency, starting for FY 1996. A Consolidated Government-wide Financial Statement will also be required for FY 1997, audited by the Government Accounting Office (GAO).
• Six departments and agencies in the United States are pilot-testing a new Accountability Report issued under the Government Management Reform Act. This report consolidates what had been separate reports on agency performance and financial information into a single document.

The report contains overviews of the department's mission, goals and performance measures; audited financial statements; status of management controls; Prompt Payment Act compliance; audit follow-up, and other items of interest to departmental managers and customers. Data and information for the report are obtained from all departmental organizations and financial reporting systems. The purpose is to present a comprehensive picture of the department's performance as compared to its stated goals and objectives. It is intended to answer the question, "How well did the department do in what it set out to do?"

• In the United States, several departments and agencies are developing Activity-Based Cost Management Programs.
• In practice, accounting officers in the United Kingdom delegate financial management responsibility not just to their Finance Divisions, but also to their line managers.

As an example, in the Department of the Environment, cash budgets for running costs are delegated to heads of command, who then delegate them to directors and to divisional managers. This means that the Department's running costs are managed at some 90 separate cost centres. The Finance Directorate controls the Department's running costs at departmental, or vote, level.

The Department of the Environment also has over 100 expenditure programmes, ranging through grants to local authorities, agencies and non-departmental public bodies, to partnerships of local authorities and business, to voluntary organizations, and grants to individuals. Responsibility for planning and controlling expenditure on these programs is formally delegated to line managers.

The responsibilities of budget managers are set out in Statements of Resource Management Responsibility. Further guidance on how managers should carry out these responsibilities is given in two levels: the first covers the mandatory rules or key requirements that managers must meet; the second, called the Resource Management Handbook, gives more discretionary guidance on best practice.

The Statements of Resource Management Responsibility set out in detail the level of delegations given to the Department by the Treasury. Each year Parliament approves the level of programme and administration expenditure budgets. Administration budgets for each cost centre are set following the Department's corporate planning round. Where budget managers delegate financial functions, they are required to set out in writing the limits of the delegations they give to their staff. Budget and programme managers are not allowed to create new expenditure commitments beyond the amount and value of the delegations they currently have, without Finance and, in some cases, Treasury approval.

• In the Department of the Environment in the United Kingdom, a clear organization and framework of financial responsibility has recently been agreed for the Department which takes into account the nature of the Department's programmes and delegates responsibility to the lowest effective level. Financial processes and a financial system have been developed to support this.
• In the United States, the CFOs Act identifies the functions that should report to the CFO and stipulates that the CFO should have a direct reporting relationship to the agency head. Each of the 24 agencies subject to the Act must submit an organization plan to the Office of Management and Budget (OMB) for the OMB director's approval. This organization plan describes the CFO's specific role and responsibilities.
• Ultimately, the head of the agency in the United States is the principal policy official who decides on the appropriate CFO structure necessary to carry out the financial management mission of the agency, subject to the approval of the OMB director as required by the CFOs Act.

(i) Program delivery and major project decisions routinely take into account financial management considerations.

• In the United Kingdom, responsibility for improving the efficiency of departmental administration and the effectiveness of policies and programmes lies in the first place with line managers. A department's approach needs to take account of how its activities are delivered - whether, for example, by the department itself or by third parties.
• In the United Kingdom, the forward planning of all expenditure is carried out in the public expenditure survey conducted each year by the Treasury and the Public Expenditure Committee of the Cabinet. For example, within a department, budget managers submit forward plans to the Finance Directorate, together with strategic priorities in accordance with government policy. These are then submitted by the minister in charge of a department to the Cabinet's Public Expenditure Committee. The Public Expenditure Committee then makes recommendations on the overall total of expenditure to be allocated to each department. Once these recommendations have been ratified by the full Cabinet, the Finance Directorate advises the secretary of state on how resources should be allocated among programmes.

Part of the public expenditure settlement is a decision on the level of the department's running costs over the next three years. Within this, administration budgets and forward plans for individual commands are negotiated and agreed internally, taking into account the implications for budgets of changing policy priorities.

• In the United Kingdom, all submissions for ministerial agreement of new programmes/initiatives with financial implications are scrutinised by the Finance Directorate before reaching ministers.

B. Assets, liabilities, revenues and expenditures are managed to optimize cash flows and minimize capital costs.

• The following are examples of the process in the United States:

- Collections - The Environmental Protection Agency (EPA) utilizes lockboxes, Fedwire, private collection agencies, and Department of Justice (DOJ) attorneys to expedite receiving and processing collections. EPA is investigating the use of electronic lockboxes.

- Investments - EPA strives to make timely and efficient transfers of collections to the U.S. Treasury in order to minimize borrowing costs.

- Payments - EPA utilizes the Electronic Certification System (ECS) for invoice payment, which provides same-day payment versus the 3-day time frame for the manual process. Grant advances and payments are made via the automated clearing house process, which is also an electronic funds transfer system.

- Imprest Funds - EPA has experienced a 48% reduction in imprest funds due to: implementation of a bank credit card for small purchases; travellers' use of their government travel card to obtain a travel advance; and use of third-party drafts for other reimbursements.

Timely and reliable advice is available to the managers at all levels to report their financial government responsibilities.

• In the United States, EPA has incorporated senior resource official (SRO) responsibilities into senior management positions in headquarters and regional offices to include resources management responsibilities in the acquisition, grant and financial management areas. SRO financial management responsibilities include budget formulation and execution, implementation of the Chief Financial Officers Act, and management of resources for internal and external agency use. SROs and their staffs have access to the IFMS, the Agency's financial management system, and ad hoc financial reports are available through another automated system.
• Executive Window, the official on-line information system in the United States for the General Services Administration (GSA), provides comprehensive financial, program and performance information as well as tools for its graphic portrayal and analysis.
• The United States Commerce Department is implementing a state-of-the-art administrative management system which will replace and/or integrate existing financial and administrative management systems. The Department is also developing a Financial Executive Decision Support System which will provide access to data from other existing databases.

A. Departmental focus - aimed at departmental financial management practices, systems and services.

• In the United Kingdom, a separate internal audit function reviews and provides assurance on the department's financial and operating systems on a rolling basis.
• In New Zealand, the annual reports of government departments and most Crown entities include a Statement of Service Performance containing performance measures for each output class. The performance information is audited by the Audit Office. The targets for each performance measure are set before the beginning of the year in the Statements of Intent (Crown entities) or the Departmental Forecast Report (departments). The appropriateness of performance information is not yet as strong as it should be to ensure accountability, but the process is in place.
• In the United States, financial management is primarily the responsibility of each federal agency. The CFOs Act describes the roles and responsibilities of the CFO and the deputy CFO, and the CFO's direct reporting relationship to the head of the agency. The Office of Management and Budget provides guidance and policy direction, but operational implementation is at the agency level. Annual or other mandated reporting such as CFOs Act reporting, annual audited financial statements and the Federal Managers' Financial Integrity Act (FMFIA) Assurance Statements sent to the President and Congress are primary tools for focusing agency attention.

B. Meaningful to the deputy head - the assurance statements, and reports on remedial actions taken, should be at a level of detail that is meaningful.

• In the United Kingdom and New Zealand, a summary of significant audit findings and proposed action is circulated to the permanent secretary. Summary information on significant divergence from financial plans is circulated to senior management. An overview of the progress is provided for review meetings with the permanent secretary.
• In the United States, the FMFIA report identifies any agency material weakness(es), and a corrective action plan is included, with milestone dates for accomplishing correction. These items are reviewed at the deputy department level.

C. Common framework - using a common set of objectives and expectations, which allows for overall consistency across departments and agencies.

• In the United Kingdom, the framework of responsibilities and the objectives of financial management for a department are agreed by the permanent secretary and possibly by the Management Board of senior staff. Common payment, accounting and other systems are developed where necessary.
• The United States Department of Commerce has developed several policy handbooks covering the following areas of financial management: accounting principles and standards, cash management, and credit and debt management. These handbooks provide bureaus with a one-source tool for referencing financial management policies issued by oversight agencies (OMB) and/or adopted specifically by Commerce. The handbooks also reference source documents, such as public law or OMB circulars, to assist financial managers in more detailed research and resolution of accounting and reporting issues.

D. Uniquely adapted - tailored to the organization's specific requirements, the nature of its management.

• In the United States, EPA has established a Superfund cost recovery program, which enables parties responsible for site contamination to obtain more information than is available in the Agency's accounting system. To address these needs, the Agency maintains two other systems, the Superfund Cost Recovery Image Processing System (SCRIPS) and the Superfund Cost Organization and Recovery Enhanced System (SCORE$). SCORE$ produces concise summaries of all Superfund site transactions, and SCRIPS maintains document images supporting the summary statement.

E. Not burdensome - as far as possible, the assurance statements and the data underlying them should be based on mechanisms and sources of information already available, using modern information technology.

• In the United States, the Accountability Reports, an authorized pilot program for six agencies and departments - Social Security Administration, General Services Administration, National Aeronautics and Space Administration, Nuclear Regulatory Commission, Department of Veterans Affairs, and Department of the Treasury - will consolidate separate financial management reports into a single document so that a reader may find relevant information in one place. As well, the Office of Management and Budget has consolidated several of its financial management reports into its Federal Financial Management Status Report and Five-Year Plan.

The issues remaining relate to the meaning and quality of public sector balance sheet information, in such areas as the valuation of heritage and infrastructural assets, and recognition of certain public sector liabilities (welfare, pensions, etc.).

The Government Performance and Results Act (GPRA) requires that agencies develop Strategic Plans and annual Performance Plans, and report on actual performance. Special attention is being paid in the FY 1998 budget formulation process to strategic planning and the development of agency program performance measures. These measures will provide the agency head and others with information on how well agency programs perform.

A. Accounts receivable management including limits on credit, use of offsets of payables and receivables, seizure of assets to settle accounts, etc.

• Tax Refund Offset: In the United States, the General Services Administration (GSA), has entered into an agreement with the Internal Revenue Service (IRS) which allows the agency to submit an electronic list of delinquent debtors to the IRS for matching against taxpayer refund files. Where a match is found, refunds are applied to the debt instead of being returned to the taxpayer. Using this method, the agency has collected debts that it was unsuccessful in collecting in any other manner.
• The Credit Alert Interactive Voice Response System (CAIVRS) in the United States is an on-line access database of delinquent debtors. CAIVRS helps prevent the federal government from making loans to individuals who are delinquent on federal debt. If the applicant is delinquent, further credit is not approved until the debt is repaid or other arrangements are made with the credit agency. In 1995, there were 2.4 million inquiries into the system and 32,000 matches.
• The Debt Collection Improvement Act of 1996 in the United States allows for an electronic offset of payment to an individual or organization when that individual or organization has an outstanding delinquent debt to the government.

B. Cash flow management, e.g. the use of EDI to simplify and speed payments.

• In the United States, the market for EDI and EDI-related technologies is expanding each month. Based on this momentum, it is inevitable that electronic message formatting and transmission will soon be the preferred way of conducting business in the U.S. The goal is to streamline, improve, and lower the cost of federal procurement and finance-related activities by making new payment tools available government-wide within five years. The following are some examples of this practice:

C. Charging of interest on overdue accounts.

• The United States Federal Claims Collection Act of 1966, as amended, provides authority for agency heads to charge interest on outstanding debts owed to the federal government, to assess charges to cover the costs of processing and handling delinquent claims, and to assess penalties. Specific agency examples follow.

- In August 1994, Rural Development implemented the Pre-authorized Debit System (PAD) to accommodate the collection and application of payments received for community and business program loans. PAD employs an agreement between the borrower and Rural Development authorizing a direct automated clearing house (ACH) debit against the borrower's bank account for the amount of the loan payment on the payment due date. The ACH debit is initiated and recorded by the Rural Development finance office. PAD reduces late payments and delinquencies and eliminates borrower intervention in the payment process. A future initiative is to implement PAD for electronic and telephone borrowers.

- Rural Development uses the Internal Revenue Service refund and salary offset programs to collect delinquent loan debt. As of April 1996 for offset year 1996, Rural Development has collected over $2.2 million. Since the inception of the offset program in 1997, Rural Development has collected over $36 million in delinquent debt.

- Rural Development has initiated a project to implement a lockbox system with a private sector bank for electronic and telephone borrowers. This system will employ customer-initiated payments using an ACH system to generate electronic funds transfer from borrowers' financial institutions for next-day credit to the agency. The bank will furnish the Rural Development finance office with monthly collection data on tape in a format which can be updated to borrower files. Future phases include requirements for the bank to perform edits on borrowed identification numbers; validate payment amounts to amounts billed; and convert borrowers to PAD.

A. Cash management techniques, e.g. use of predetermined recurring payment to avoid interest charges on late payments.

• In the United States the primary goal is to pay bills on time and to collect debts on time. The U.S. cash management policy is "zero float." In order to eliminate float, the United States is using modern techniques, such as electronic funds transfer, EDI, EBT, credit cards for collections and payment cards for travel, fleet management and small purchases. The U.S. also has the ability to do offset without inconveniencing the payor or the payee. The following are some specific examples:

B. Obtaining of supplier discounts for early payment.

• In the United States, the GSA's Office of Finance, in an ongoing effort to improve cash flow, has developed a home page on the Internet where vendors are provided with a list of the TOP TEN EASY WAYS TO BE PAID QUICKER BY GOVERNMENT (GSA). In addition to encouraging vendors to sign up for electronic funds transfers, the list suggests that vendors offer cost-effective discounts for early payment.
• Virtually all recurring payments of the National Aeronautics and Space Administration (NASA) in the United States are processed electronically, and payment centres are encouraged to maximize electronic payment for all vendors. With the implementation of the Electronic Certification System by all payment centres, NASA has been able to reduce the lead time required for release of payment authorizations to Treasury by two days. NASA's recent streamlining initiatives have been grouped into two basic categories: best practices and restructuring initiatives. The best practices initiatives involve changes such as streamlining travel reimbursement by statistically sampling rather than testing all voucher documentation and replacing imprest funds with bank cards and electronic fund transfers. Both efforts are in the process of implementation. The restructuring initiatives involve changes such as consolidating travel and payroll processing at single sites.

C. Other

• In the United States, the Rural Development Finance Office has initiated a project to implement digital signature electronic invoicing for certain project cost payments. Currently, invoices for these costs are mailed to the U.S. Department of Agriculture's National Finance Centre in New Orleans for data conversion and payment. Electronic invoicing will provide Rural Development field offices with fund control and electronic submission capability and enable them to certify invoices for payment and perform on-line edits of the invoicing information.

A. The establishment of performance measurement criteria for budgeting purposes and the development of benchmarks for comparing actual results.

• In New Zealand, a significant amount of information is collected and published on the quality, quantity and cost of government outputs. Some departments benchmark their performance against other departments. Some attempts have been made to develop benchmark ratios and indicators for comparison of inputs and processes but as government outputs tend to be unique intra-nationally there has been little done on outputs.
• In the United States, the Environmental Protection Agency has developed two sets of performance measures to gauge the performance of critical accounting and financial management functions. The first set of measures focuses on key accounting and financial management responsibilities. These measures encompass the areas of accounts receivable, payments to commercial vendors and grantees, cash reconciliations and cost recovery operations. The second set of measures focuses on broader fiscal resources management areas such as contracts, grants, property, funds management and program financial management. The agency is currently pilot-testing these measures.

B. The use of performance indicators for comparison of programs within the department, between departments, or with the private sector or other national governments.

• The Social Security Administration (SSA) in the United States has a wide range of performance measures used in formulating and executing budgets and allocating costs between trust and general fund programs. In order to estimate resources requirements and execute statutory responsibility to allocate costs, SSA routinely has tracked workloads (receipts, processed, pendings), work years, productivity and unit costs. SSA developed formulas to measure performance, determined abilities of measurement systems to compute that performance, collected information from customers and stakeholders regarding service delivery preferences and developed a revised business plan based upon the feedback received. Some outcome measures also are used (e.g. payment accuracy). An SSA accountability report includes performance measures that focus on the extent to which programs are achieving their intended outcomes; the adequacy of program financing; the efficiency of operations; and progress in achieving agency goals.
• The Joint Commission for the Accreditation of Health Care Organizations (JCAHO) grid scores Veterans Health Administration (VHA) hospitals in the United States and reviews most health care institutions in the country using standard criteria that assess the structures, work processes, and selected outcomes in medical facilities. This review of organizational quality allows for comparison with other public sector facilities, as well as those in the private sector, because the Commission's criteria are a standard used by both types of facilities.

A. Ensuring that the organization is being served by efficient, effective and economical accounting and financial management information systems.

• In 1996, the President of the United States signed the Information Technology Management Reform Act (ITMRA), which established agency chief information officers (CIOs) and required the OMB director to develop, as part of the budget process, a process for analysing, tracking and evaluating the risks and results of all major capital investments made by an executive agency for information systems. Furthermore, the ITMRA builds on the CFOs Act requirements for integrated accounting systems by requiring the agency head to work with the CIO and CFO to ensure that agency systems effectively provide financial or program performance data for the agency's financial statements.
• U.S. Custom Service duties, taxes and fees are collected and accounted for by an automated system. The system tracks, controls, and processes all commercial goods imported into the country, and is widely recognized as one of the world's most sophisticated and integrated large-scale business systems. Through EDI and risk assessment techniques, the system cuts costs and reduces paperwork requirements for Customs and importers.
• EPA uses an off-the-shelf accounting, financial management and budgeting software package for control over its financial operations. The off-the-shelf package, while modified slightly to accommodate the agency's specific needs, enables the agency to avoid the costs and inefficiencies of software developed and maintained in-house. EPA is part of an interagency users group for the software, and that users group guides development of the software to ensure that the vendor meets federal needs efficiently, effectively and economically. EPA implements upgrades of the off-the-shelf software at least annually to stay current with evolving financial requirements.

B. Policy and procedures on the development and implementation of information technology.

• Clinger-Cohen Act of 1996 (Information Technology Management Reform Act (ITMRA))

In the United States, the Clinger-Cohen Act fundamentally changes the way the government plans for and acquires large information technology (IT) [systems]. Responsibility is placed on agency heads for the success of their IT systems. The ITMRA streamlines and improves the process that the government uses to manage its vast portfolio of information technology investments in several ways: (i) it establishes criteria for agencies to evaluate IT investment programs, modelled on the best practices of successful companies; (ii) it builds on successful corporate models by designating a high-level chief information officer in all Cabinet and major independent agencies, reporting to the office of the agency head, with primary responsibility for IT management and carrying out agency functions under the Paperwork Reduction Act; (iii) it encourages the administration to use interagency groups to share expertise and technology; and (iv) it encourages agencies to procure information technology in smaller, incremental purchases - rather than massive mega-contracts - to better target the technology to meet agency needs.

OMB has asked agencies to follow the practices set out in OMB memorandum 97-02. These are:

1. the system must support the core mission that needs to be done by the government;
2. no alternative private sector or government party can do the work;
3. work processes involved have been simplified to increase chances of using off-the-shelf software;
4. portfolio management and analysis demonstrate that the return on this investment is equal to or better than other agency IT investments;
5. the system is consistent with agency and government IT architectures;
6. risk is minimized with fully tested pilots before production, minimized custom design, clear measures of progress, and buy-in from program officials - to ensure that clients are buying what they want;
7. modular procurement assists agencies in procuring the smallest possible segments, with no deliverables out more than 18 months; and
8. risk is appropriately allocated between vendor and agency through the increased use of performance-based contracts rather than level of effort or cost plus.

• Rural Development has prescribed policies and procedures for managing requests for automation to modify, enhance or develop automated systems. A Review Council, which consists of senior management, approves the allocation of information resources consistent with strategic business goals and objectives. A System Review Board, which consists of financial and program managers, sets priorities for requests for automation implementation.

C. The integration of human resources, material management, accounting and/or other databases.

• The Office of Public and Indian Housing (PIH) within the Department of Housing and Urban Development (HUD) was part of a project to implement an integrated financial system to support the department's consolidated financial control and reporting requirements. The general objective of the project was to provide an integrated accounting system across the department that met the central agency requirements. The focus of the project was to support special statutory accounting requirements for spending. The system provides direct access to a central integrated database within a user-friendly windows environment.
• All of the Department of Treasury's 12 bureaus are serviced by a single payroll processor. The use of a single processor allows for consistency in the payment of the numerous types of premium payment unique to these bureaus. And because information in stored in a common database, information can be shared among the agencies.
• The off-the-shelf software that EPA uses integrates accounting, financial management and budgeting. In addition, the agency is implementing a fixed asset module that is part of the off-the-shelf package, which will integrate property and other asset management within the core system. EPA has also developed interfaces between the core financial system and its integrated payroll and personnel system, so that data flows from the payroll system to the core financial system quickly and without rekeying. An interface also exists with the grants and procurement systems.

- An Economic and Fiscal Update, which is published with the budget. It is updated in December and before each general election. The Economic and Fiscal Update is produced by the secretary of the Treasury rather than the government of the day.

- Estimates of Expenditure (in the budget), which identify the high-level objective for each main area of expenditure and the amounts to be spent, together with the performance measures and targets to be achieved.

- Departmental Forecast Reports and Statements of Intent, which provide supplementary information about general and financial management objectives of each department or Crown entity.

- The Crown Financial Statements, which provide a consolidated statement of the financial activities of the Crown for the year.

- Departmental and Crown entity Annual Reports, which report against the Departmental Forecast Reports and Statements of Intent, and contain some reporting against the Estimates of Expenditure.

Before the administration designates a PBO, the agency must have a clear mission with broad support from key "stakeholders," and it must be able to clearly distinguish between its policy-making, regulatory and service delivery functions.

In a major change from how the government normally does business, agencies will hire "chief executives" of the PBOs on a fixed-term contract, with a clear agreement on performance goals, service delivery and, in some cases, taxpayer savings. Agencies will pay chief executives at market rates, with a large chunk of pay tied to performance.

1. Eliminate pre-trip obligations of travel and allow GSA offices to issue orders that best suit their needs - annual, quarterly or trip-by-trip. Status: An annual blanket travel authorization pilot was implemented in the Office of the Chief Financial Officer on October 1, 1995.
2. Under the Lodgings Plus method of reimbursement, allow a flat 75% meals and incidental expenses (M&IE) on all partial days for trips of two or more days. Status: This policy change was implemented on January 1, 1996 for all temporary duty travel (TDY) at GSA.
3. Under the Lodgings Plus method of reimbursement, allow a $75 threshold on receipts for miscellaneous items (does not apply to lodging costs). Status: This policy change was implemented throughout GSA on October 5, 1995.
4. Exploit planned and existing "preferred" hotel programs that utilize negotiated lodging discounts and direct billing mechanisms. Direct billing will also be expanded to rental car companies as well. Status: GSA implemented direct billing agreements with 19 hotels on July 31, 1995. The number of hotels has been expanded to 26. A pilot on direct billing for car rental costs will start in the immediate future.
5. Have one travel management centre (TMC) contractor.

There are currently six pilot applications:

1. Electronic Proposal Forms Submission - An NSF forms server will provide the capability for electronic submission of administrative information related to proposals.
2. Proposal Status Inquiry - The NSF proposal status server will allow principal investigators and other authorized individuals to receive the current status of a pending proposal.
3. Submission of Final Project Report - An NSF forms server will provide an electronic version of its final project report, and enable electronic submission of the form and attachments.
4. Cash Transaction Request - NSF will allow access to a menu-driven cash request system, including automatic e-mail acknowledgement and confirmation.
5. Submission of Review Information - Proposal reviewers will be provided with access to a menu-driven system allowing reviewers to enter ratings and review comments or cut and paste from a local word processing document.
6. Announcements of Award Actions - The NSF server will provide a list of recent awards, including information on the institution, principal investigator, amount and duration.

Chapter III Synopsis, Conclusions, Recommendations and Action Plan