June 30 Milestone for OMB A-123 Compliance May Be Met By Adapting Existing BRAC Financial Management System
Real Property Asset Management Methodology Has Created Proven Financial Tracking Solutions
Herndon, VA (14 APRIL | 2006) - A June 30 milestone for compliance with Office of Management and Budget Circular A-123 (OMB A-123) may be met by adapting a methodology already used in the Department of Defense to comply with financial tracking provisions related to programs such as Base Realignment and Closure (BRAC), according to VISTA, a leading provider of real property asset management and consulting for government.
OMB A-123 tasks federal managers with improving the accountability and effectiveness of Federal programs and operations through enhanced, documented management controls.
The circular requires establishment of policies and procedures regarding program results; use of resources to support agency missions; safeguards from waste, fraud, and mismanagement; and collection and maintenance of reliable and timely data for decision-making.
Federal agencies complying with OMB A-123 have until June 30 to submit a management assurance statement explaining their internal financial controls, and how those controls are documented to ensure their effectiveness. The management assurance statement will accompany each agency's fiscal 2006 financial report.
The similarities between the OMB A-123 management assurance statement and BRAC financial tracking systems become more apparent when viewed from the perspective of real property asset management, according to VISTA President and CEO David Baxa.
"Many federal agencies have not yet fully developed a policy regarding the financial impact of their real property holdings on their organization's mission fulfillment," Baxa said. "Without that understanding, it is unfortunately likely that an organizations' financial management system may be vulnerable to waste, fraud or mismanagement."
On the other hand, real property asset analysis - which includes program tracking application development - has already been built into financial management policies and procedures used in the Department of Defense. These internal controls, Baxa maintained, may be adapted to suit the requirements of OMB A-123 compliance as well.
Real property asset management - now a key initiative of the President's Management Agenda for executive agencies - requires a four-phase methodology:
- Capacity Analysis: Inventory available assets; determine accuracy of data; analyze capacity in terms of operational functionality
- Mission Value Analysis: Determine how attributes of inventory support overall mission execution
- Scenario Analysis: Apply "what-if" scenarios to aspects of capacity with true mission value; analysis of how scenarios affect capability to accomplish objectives
- Implement plan; conduct impact analysis; create audit trail of previous activity; track activity against new or changing requirements
Following this methodology, a custom database application developed for the U.S. Army dramatically improved that service's financial performance in previous rounds of BRAC, Baxa said.
Databases developed for the Army enabled that branch of military service to report on fund distribution and account balances, checked against records of the Defense Finance and Accounting Center. This was particularly important for proper use of funds obligated for the Base Realignment and Closure (BRAC). For the BRAC program alone, the money set aside by military construction committees averaged between $100 and $400 million per year, totaling some $5 billion across five years of a single BRAC implementation.
The Army's internal goal was to have approximately 95 percent of each year's BRAC money obligated after the first year. With the assistance of their new financial tracking system, the service realized an obligation rate that soon exceeded 98 percent.
"This type of work, including the close scrutiny and tracking of real property assets on the total cost of program execution, is becoming increasingly critical as the government moves to streamline its operations," Baxa explained.
"Whether complying with the financial reporting requirements of Executive Order 13327, or OMB Circular A-123, no federal financial system can be developed to adequately address converging regulations and legislation without understanding the impact of real property," Baxa continued. "Fortunately, the work called for in new initiatives affecting civilian agencies has already been vetted to some extent by the military. With the proper application of a four-phase real property asset management methodology, comparable civilian financial reporting requirements can likewise be met with positive results."
On May 3, a professional development seminar geared toward senior federal financial managers will provide insight into current legislative and regulatory initiatives that demand a greater understanding of agencies' real property assets in the context of better financial reporting.
"Top Financial Performance: Real Property Management In the Era of Full Accountability" will be held Wednesday, May 3, from 8:00 AM to 10 AM, at the City Club of Washington at Franklin Square (1300 I Street, NW Washington, DC 20005). For more information or to register for the seminar, please contact kimberly.price@vistatsi.com.
About VISTA
VISTA transforms real property from a must pay bill to a bottom line benefit. VISTA eliminates unnecessary spending in real property, delivering as much as 100-to-1 return on investment in its management, information technology and real property consulting services. By comparing an organization's mission, budgets, workforce trends and owned or leased property, VISTA creates solutions that cut costs, eliminate waste and improve workplace efficiency. For more than 20 years, VISTA has enabled its clients to become leaders in complying with real property regulations and legislation - protecting their cash positions while becoming more fiscally responsible. For more information, visit www.vistatsi.com.
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