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FMI
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IGF JOURNAL
VOLUME 25, NO. 1
we must eliminate some of them, and
modernize and standardize our financial
processes, operations, and data across
departments and agencies.
Internal Controls
The OCG provides government-wide
leadership and functional direction for the
system of internal controls over financial
management, including financial reporting.
Oureffortstoimprovethequalityoffinancial
information include implementing the 2009
Policy on Internal Control
. This policy is a key
part of the renewed financial management
suite and includes directives that set out
requirements for an array of controls in key
financial risk areas. It seeks to ensure that
risks relating to the stewardship of public
resources (e.g., error, mismanagement,
fraud or other irregularities) that could
affect the integrity of financial information,
are adequately managed through effective
internal controls.
The
Policy on Internal Control
requires
chief financial officers (CFOs) to
support deputy heads by establishing
and maintaining a system of internal
control related to financial management.
In addition, other senior departmental
managers are responsible for establishing
and maintaining a system of internal
control for their areas of responsibility.
Although the policy has laid a solid
foundation for our current work, we plan
to review it periodically to ensure that it
continues to support financial management.
Financial Management Applications
In conjunction with the Chief Information
Office Branch (CIOB) of the Treasury
Board Secretariat, the OCG is working
on increasing the interoperability and
integration of financial information,
processes and systems across the federal
government.
In May 2012, the Chief Information
Officer took an important step toward
reform by implementing the Treasury
Board
Standard on Enterprise Resource
Planning Systems
. The federal government
has selected SAP as its financial enterprise
resource planning (ERP) system; and OCG
and CIOB are managing this migration
effort.
By way of context, five or six predominant
financial software platforms are in use
today, and most of the federal government’s
130 departments and agencies operate
their own unique platform. Moving to
a common ERP system will improve
the quality, timeliness and reliability of
information for decision makers. It will
also reduce variability, create efficiencies,
and avoid duplication and unnecessary
costs in back offices.
Currently, we are working closely
with CIOB, Human Resources and
Skills Development Canada and other
key stakeholders to develop a common
configuration for SAP. Over the next few
years, departments willmove to the common
configuration. As a first step, departments
with straightforward requirements are
expected to begin moving to the common
financial application in April 2014.
Financial Processes and Data
The first step we took toward con
solidating financial systems was to
define the requirements of the financial
management processes. In doing this,
we developed a series of 20 common
financial management business processes
that focus on improving departments’
financial management, controls and
processes. Departments had created their
own processes and procedures, some of
which lacked proper controls, and did not
comply with policy.
The second step was to standardize the
data elements that support and drive these
processes. This standardization allows
financial data to be integrated and provides
for a view of expenditures that is consistent
government-wide.
The next step will be to ensure that
these financial processes and data are
fully integrated with and supported by the
common financial application.
Standardizing systems, processes and
data will allow for increased collaboration
and integration. By eliminating redundant
infrastructure and the costs associated
with maintaining and supporting it, we
will achieve economies of scale. We will
also further standardize services and
information and rationalize systems, which
will enable consolidation and cost savings.
Transactions Centre Consolidation
Budgets 2012 and 2013 set out the
Government’s
ongoing
commitment
to streamlining, consolidating and
standardizing administrative functions,
including financial management—a clear
sign that the government is determined
to modernize its financial management
practices and is serious about reducing
back office costs.
To make effective use of the common
financial system, we are looking at ways
to transform the delivery of back-office
services and administrative support by
sharing and consolidating services.
Financial management functionality
in departments will be fully utilized to
streamline the processing of routine and
recurring administrative transactions. We
will also consider centralizing units that
process financial transactions as a way to
deliver financial services to departments
more efficiently. This centralization could
reduce the time that departmental financial
specialists spend on routine transactions
and allow them to concentrate on providing
higher-value
financial
management
services.
2. Information for Decision Making
Financial information is critical to informed
decision making, and we need to improve
our ability to provide this information.
Three main concerns must be addressed:
1. Stakeholders do not believe they
are being given the complete set
of costs to facilitate the scrutiny of
large-scale investment decisions.
The controversy surrounding the
costs of replacing Canada’s fighter
jets and other military acquisitions is
a good example of a situation where
concerns were expressed about the
completeness of estimates.
2. Concern
is
increasing
about
departments’ ability to provide
sufficiently detailed and reliable cost
estimates to support government
decision making. The lifespan of a
project or initiative often reveals a
pattern of escalating cost estimates.
3. The current policy and funding
decision-making processes may not
sufficiently challenge the proposed
resource requests. As a result, there
is concern that initiatives are not
being designed with a view to cost
containment.
To address these concerns, we have
instituted a requirement for CFOattestation
and are developing guidance and tools
to support cost accounting and analysis
throughout the decision-making process.
Chief Financial Officer Attestation
The government’s focus has been, and con-
tinues to be, on cost containment: How can
we make sure that costs not only do not rise
but that they actually decrease? A Cabinet
subcommittee has been created to find ways
to reduce costs and improve efficiencies in
operations. This emphasis at the political
level is tremendously valuable in driving the
difficult modernization efforts.
COMPTROLLERSHIP INITIATIVES
