Please Note

1. Please Note • This presentation varies slightly from the original. The slides have been updated to comply with internet publishing requirements.

2. VA FINANCIAL POLICY OVERVIEW VA Financial Management Training Conference Tuesday, March 29, 2011

3. CFO Authority Title 31, Section 902(a)(5) of the United States Code (U.S.C.) requires that each agency’s Chief Financial Officer (CFO) “direct, manage, and provide policy guidance and oversight of agency financial management personnel, activities, and operations.” Title 38, Section 309 of the U.S.C. states that the Secretary shall designate the Assistant Secretary whose functions include budgetary and financial functions as the Chief Financial Officer of the Department. The Chief Financial Officer shall advise the Secretary in financial management of the Department and shall exercise the authority and carry out the functions specified in section 902 of U.S.C. Title 31. 3

4. Secretary of VA VA CFO Organization Acting Assistant Secretary for Management Office of the Deputy Assistant Secretary for Finance (DAS) Office of Financial Policy Associate Deputy Assistant Secretary Office of Financial Policy Deputy Director Management/Financial Reports Service Director Cost/Debt Management Service Director Accounting and Payroll Policy Service Director 4

5. Accounting and Payroll Policy Service Director Staff Accountant Staff Accountant Supervisory Accountant Systems Accountant Systems and Procedures Analyst Systems and Procedures Analyst Systems Accountant 5 March 2011

6. OFP Responsibilities • VA OFP provides VA-wide financial policy and guidance. • OFP scope of responsibilities: • Develops, coordinates, issues, evaluates, and reviews VA financial policies, systems, and procedures for compliance with all financial laws and regulations. • Prepares VA’s annual Consolidated Financial Statements and other comprehensive financial reports (e.g., President’s Management Agenda scorecards and Office of Management and Budget/Treasury reports). • Works with the Office of the Inspector General’s independent contract auditors on VA’s annual Consolidated Financial Statements audit. • Assists VA’s Office of Budget in incorporating statements and audit results in the Annual Performance and Accountability Report (PAR). • Develops policies and procedures for cash and debt management in accordance with the Debt Collection Improvement Act of 1996 and other Governmentwide programs and initiatives; such as, Electronic funds transfer (EFT), collection action, as well as compromise, waiver, suspension, and termination of collection action; Debt collection reporting (e.g., Treasury Report on Receivables); and Treasury Offset and Cross-Servicing Programs. • Provides VA-wide customer support through financial integrity/guidance, analysis of expenditures and collection of funds, payroll, cash, and debt management oversight, asset property and inventory management oversight, and cost accounting. • More information on OFP may be accessed through the VA intranet Web site: http://vaww4.va.gov/FINANCE/policy/about.asp 6

7. Financial Policy Revision • Financial Policy Improvement Initiative (FPII) • Established to address financial statement material weaknesses and significant deficiencies by developing, updating, and standardizing VA wide financial policy and procedures. • Established Integral Roles of the Subject Matter Expert (SME), Financial Policy Working Group (FPWG), Financial Policy Steering Committee (FPSC), and Chief Financial Officer (CFO) • SME– first line reviewer of policies. • FPWG – formulates or revises VA financial policies and procedures. • FPSC – comprises of representatives from VA’s senior management and Administrations’ Chief Financial Officers. The FPSC vote’s approval on the revised or new policies and procedures forwarded by the FPWG and recommends approval by the VA CFO. • CFO – senior executive level review and approves policies. 7

8. Directive Flowchart Process 1. Possible need for new policy or revision identified to OFP. 3. Proposed new/revised policy posted to VAIQ and reviewed by respective staff for comments & concurrence. 2. Policy researched and drafted by OFP or contracted to outside vendor for draft. Receive concurrence from all? Yes No 4. Comments received & researched. 7. CFO approved policy forwarded to AS/OI&T for certification & signature. 6. Concurrence and draft policy forwarded to CFO for approval & signature. Need to include comments? Approve policy? Yes Back to 3. Yes No No 5. Communicate decision to appropriate staff. Back to 3. Receive signature? No Yes No 8. Signed policy published. Receive concurrence? Back to 3. Yes Week 14 to 17 Week 17 to 19 VA Dir 6330 Week 1 Week 2 to 12 (up to 70 days) Week 12 to 14 8 Historical Week 1 Week 2 to 20 Week 20 to 22 Week 22 to 24 Week 24 to 26

9. Week 5 to 6 Week 9 to 10 Week 7 to 8 Week 2 to 4 Week 1 3. Request reviewed by FPWG for discussion and SME identification.. Yes No 5. Draft policy reviewed by FPWG for discussion & vote. No Financial Policy Flowchart Process 1. Possible need for new policy or revision identified. Policy needed? 2. Possible need for policy researched and drafted by OFP or other staff. All proposals are reviewed by OFP prior to FPWG review. Identify where the new policy or change is written. 4. Main POC, OFP contact, and SMEs assigned to draft policy. Yes 7. FPSC approved policy forwarded to CFO for approval & signature. 6. FPWG approved policy forwarded to FPSC for review, discussion & vote. Approve policy? Approve Policy? Back to 4. Yes No No Back to 5. Approve policy? Yes 8. CFO approved & signed policy published. 9 * Travel Policy is also using this approach for updating their policy.

10. Why the FPII Process Is Boss • FPII Process • Buy-in and approval from lower to upper level – Hands on approach • Partnership for development/ revision of accounting policy • All request flow through OFP for initial review and then presented to FPWG. • Draft policy developed and written by a POC and assigned SMEs (by FPWG) • FPWG reviews the draft policy as a group and resolves issues • FPSC reviews the policy as a group; resolves or submits back to FPWG for resolution • Directive Process • Top down approach for implementing policy • All request flow through OFP for initial review and preparation of draft policy • Draft policy is posted to VAIQ for comments • Comments are worked as received, but require concurrence from each staff – worked through VAIQ, email or calls • If concurrence is not received from every office, OFP must contact non-responding office and request review and concurrence, adding additional time overall. • Onus is on OFP to receive concurrence, not each staff to respond timely. 10

11. What We’ve Accomplished • Three year contract was awarded to Grant Thornton • 80 chapters completed in the Base Year (7/31/09) • 60 chapters completed by end Option Year 1 (7/31/10) • 29 chapters scheduled to be completed by end of Option Year 2 (6/30/11) • 16 chapters published outside of GT contract through FPII • Current status (as of March 28th for Option Year 2) • 9 chapters are completed (FPSC approved) • 9 chapters are different stages of work (GT, SME’s, FPWG, and FPSC) • 10 chapters updated outside the GT contract 11

12. OFP Policy Volumes • General Accounting • Appropriations, Funds, & Related Information • Miscellaneous Accounting Topics • Revenue & Expenses • Assets • Liabilities • Financial Reporting • Cash Management • [Placeholder] • Grants Management • Committee on Waivers & Compromises • Debt Management • Cost Accounting • Travel • Payroll • Charge Card Programs 12

13. Research Resources for Accounting Policy • Questions should start with Administration and Other Staff Office points of contact and guidance • VHA Outlook contact: VHA Accounting Policy (173A) • VBA Outlook contact: VAVBAWAS/CO/FINREP • NCA Finance Service: Ph# 540-658-7280 – NCA Finance Group • OFP Outlook contact: OFP Accounting Policy • Publications and Guidance Web sites: • VA OFP Pubs Library: http://www.va.gov/finance/policy/pubs/ • VHA: http://www.va.gov/vhapublications/ • VBA: http://www.benefits.va.gov/WARMS/Site_Map.asp • VA General Counsel: http://www.va.gov/OGC/ • VA OIG: http://www.va.gov/oig/publications/ 13

14. OFP Publications and Web Site OFP Internet Site http://www.va.gov/finance/policy • Policy Updates • “Site Search”, right side of the page in the Quick Links section: search on Office of Finance rather than VA overall 14

15. What’s Next? • Review of financial policy volumes and chapters for possible rearrangements based on relationships and/or logic. • GAP Analysis – input from Administrations (develop list of required/missing financial policies) • Rescission of all old financial MPs, directives, handbooks, and bulletins • 3 to 5 Year Financial Policy Update Schedule that will include reviews of financial policy volumes and chapters for revisions based on updated legislation and related accounting guidance 15

16. “End of Presentation” 16