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Public Financial Management in the United States

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1:05 Budget Management and Executive Leadership John Radford, State Controller ... Uniform excellence in financial management policies ... – PowerPoint PPT presentation

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Title: Public Financial Management in the United States


1
Public Financial Management in the United States
  • Opening Doors United States and Malaysia A
    Model International Partnership in Transparency
    and Citizen Access for Honest Government
  • December 2, 2004

2
Seminar Agenda
  • 100 Introductions Kinney Poynter, NASACT
  • 105 Budget Management and Executive Leadership
    John Radford, State Controller (OR)
  • 120 State Controllership J. Radford
  • 140 State Treasurer Roles and Responsibilities
    Vern Larson, State Treasurer (SD)
  • 200 State Auditor Function K. Poynter
  • 220 Professional Standards Richard Johnson
    (IA), Member of the Financial Accounting
    Foundation
  • 230 Questions and Answers

3
Budget Management Executive Leadership
  • Strategic planning
  • Performance management
  • Program evaluation
  • Budget development
  • Economic forecast revenues
  • Expenditure forecasts
  • Cash balances
  • Restricted
  • Unrestricted
  • Budget methods instructions

4
Budget Management Executive Leadership
  • Budget Technology Systems
  • Position control system
  • Budget development system
  • Revenue and expenditure history projections
  • What if budgets, request, governor recommended,
    and legislative budgets
  • Presentation system narrative and statistics
  • Database, control, and reporting system
  • Systems Integration
  • Accounting, Payroll, Personnel, Purchasing, etc.

5
Budget Management Legislative Leadership
  • Full time legislative fiscal office
  • Strategic planning
  • Performance management
  • Program evaluation (may include legislative
    audit)
  • Legislative financial history (by
    program/agency)
  • Legislative political priorities
  • Support legislative budget review and approval
    processes
  • Legislative technologies

6
Budgetary Controls
  • Legislative appropriations or limitations
  • Position controls on hiring
  • Use of budgetary allotments
  • Use of encumbrance accounting
  • Other administrative cost controls
  • Human Resources
  • Travel
  • Purchasing
  • Printing

7
Objectives of State Controllership
  • Financial management systems
  • Minimal investment maximum value
  • Trusted financial information
  • Compliance with national accounting standards
  • Compliance with federal and state laws
  • Support management decisions with sound business
    controls
  • Balance cost, risk, and ethical values

8
State ComptrollersSelection Process
  • Elected by the People 14
  • Appointed by Cabinet Head 16
  • Appointed by the Governor 18
  • Other 2

9
Benefits of State Controllership
  • Uniform excellence in financial management
    policies
  • Consolidated investments in accounting and
    payroll
  • Enhanced legal compliance and ability to deter
    fraud
  • Improved support of elected officials
  • Better administrative capacities of the state

10
Controllership Technologies
  • Central accounting systems
  • Cash control and link to Treasury/Bank systems
  • Accounts payable
  • Project Grant Accounting
  • Accounts Receivable
  • Fixed Asset Controls
  • Purchasing Encumbrance Control
  • Uniform payroll system
  • Data Warehouse

11
Controllership Performance
  • Financial data with high integrity, support
    decision making, and viewed as credible
  • Timely external annual financial reports
    conforming to national standards
  • Financial discipline and controls that support
    the business and protect all stakeholders
  • Uniform access to financial data that enhances
    capacity to implement key policies
  • Cost effective systems that protect state
    information and meet international control
    standards

12
State TreasurersSelection Process
  • Elected by the People 37
  • Elected by the Legislature 4
  • Appointed by the Governor 6
  • Duties Held by other Officials 4
  • Includes District of Columbia

13
State Treasurers Responsibilities
  • Cash Management 50
  • Banking Services 49
  • Unclaimed Property 31
  • Investment of Retirement/Trust Funds 29
  • Management of Compensation 29
  • Bond Issuance 28
  • Debt Service 27
  • Arbitrage Rebate 25
  • Deferred Bonded Debt 11
  • Archives Disbursement of Document 6

14
Treasury Management
  • Major Function Areas of Treasury Management
  • Cash Management
  • Banking Services
  • Unclaimed Property
  • Investment of Retirement/Trust Funds

15
Cash Management
  • Maximize Investments
  • Ensure bank balance is maintained near minimum
    average
  • Monitor local accounts for balance maintenance
    and investment (Sweep Accounts)
  • Fund Management
  • Account Reconciliation (Zero Errors)
  • Cash Concentration (Lower Fees)
  • New Technologies
  • Check 21 Eliminate float and loss exposure,
    create efficiencies and savings

16
Banking Services
  • Credit Card Services
  • ACH/ Wire Services
  • College Savings Plan (529)
  • Banking Contracts
  • Daily Deposits
  • Public Deposits
  • Collateralization (Securities, Letter of Credit,
    Surety Bonds)

17
Unclaimed Property
  • The Countries Premier Public Protection Program
  • Collect Escheated Property Under State Unclaimed
    Property Laws
  • Return Unclaimed Property to the Rightful Owners

18

Taxes-Revenues Where Do We Get the Money?
55
16
15
11
3
Video Lottery/ Telecom Tax
One Time Receipts and Transfers From Reserves
Contractors Excise Tax, Insurance Company Tax
and Bank Franchise Tax
Sales and Use Tax
Other Continuing Receipts
South Dakota Budget 2,907,015,129
19
What your tax dollar pays for
52
30
10
8
Social/Human Svcs Programs Medicaid/care State
Hospital
TANF
Protecting the Public DOC UJS HP
The rest of State Govt 13 Depts 4 Bureaus L
egislature
Governor
Education K-12 Higher Ed. Tech Schools
South Dakota Budget 2,907,015,129
20
State Auditor Roles and Responsibilities
  • Internal Auditing (not independent)
  • Focus is on reporting internally to management
  • External Auditing (independent)
  • Focus is on reporting to third parties outside
    the audited entity
  • Governments typically have internal auditors and
    an external auditor

21
State AuditorsSelection Process
  • Elected by the People 19
  • Appointed by Legislature 28
  • Appointed by the Governor 4
  • Other 2
  • Includes Guam
  • Includes Puerto Rico

22
Types of Engagements
  • Financial Audits
  • Attestation Engagements
  • Performance Audits
  • Nonaudit Services

23
Financial Audits
  • Financial
  • Includes financial statement audits (GAAP and
    OCBOA)
  • Others include
  • Providing special reports for elements, accounts,
    or items of a financial statement
  • Reviewing interim financial information
  • Reporting on service organizations

24
Attestation Engagements
  • Attestation Engagements
  • Examining, reviewing or performing agreed-upon
    procedures on a subject matter or assertion
  • Can cover a broad range of financial and
    nonfinancial subjects including
  • Internal control over financial reporting
  • Compliance with laws and regulations
  • Reliability of performance measures

25
Performance Audits
  • Performance Audits
  • Objective, systematic examination to provide an
    independent assessment against objective
    criteria
  • Encompass a wide variety of objectives
  • Program effectiveness and results
  • Economy and efficiency
  • Prospective analysis

26
Nonaudit Services
  • Auditors may
  • Perform tasks requested by management that
    directly support the entitys operations, or
  • Provide information or data without providing
    verification, analysis, or evaluation
  • May or may not result in the issuance of a
    report
  • Synonymous with consulting services

27
Compliance Auditing
  • Important in government accounting and auditing
  • Accounting
  • Financial statement auditing
  • Performance auditing

28
Audits of Federal Grants
  • Single Audits
  • organization-wide basis vs. grant-by-grant basis
  • Any nonfederal entity that expends 500,000 or
    more a year in federal awards
  • Audit of the financial statements and the
    schedule of federal awards
  • For each major program
  • obtain an understanding of internal controls
    pertaining to the compliance requirements
  • assess control risk and perform tests of controls
    (low assessed control risk)
  • determine compliance with laws and regulations

29
Distribution of Federal Grants
2003 US BUDGET - 2.1 TRILLION GRANTS- 400
BILLION
30
Steep Rise in Federal Grants
31
Professional Standards
  • Accounting principles
  • Financial Accounting Foundation
  • Financial Accounting Standards Board (private
    sector)
  • www.fasb.org
  • Governmental Accounting Standards Board (public
    sector)
  • www.gasb.org

32
Professional Standards
  • Auditing Standards
  • For Governments and Other Non-Publicly Traded
    Entities
  • Government Auditing Standards (the Yellow Book)
    published by the U.S. Government Accountability
    Office
  • www.gao.gov/govaud/ybk01.htm
  • Statements on Auditing Standards published by the
    American Institute of Certified Public
    Accountants
  • www.aicpa.org
  • For Publicly Traded Companies
  • Public Company Accounting Oversight Board
  • www.pcaobus.org

33
Other Requirements
  • Circulars promulgated by the U.S. Office of
    Management and Budget
  • OMB Circular A-133
  • Audits of States, Local Governments, and
    Non-Profit Organizations
  • OMB Circular A-87
  • Cost Principles for State, Local and Indian
    Tribal Governments

34
Questions?
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