Canadian Government Executive - Volume 24 - Issue 07

February/March 2019// Canadian Government Executive / 9 FINANCIAL T he Annual Financial Report of the Govern- ment of Canada Fiscal Year 2017-2018 reports revenues of $313.6 billion and expenditures of $332.6 billion. Expenditures include $99.2 billion direct program expenses, which “rep- resent the operating expenses of the Government’s 128 departments, agencies, and consolidated Crown corpora- tions and other entities, etc.” Decisions about these billions of operating expenditures are made not just at the senior management level of dep- uty ministers and assistant deputy ministers but also by director generals, directors and other budget holders at the operational level where business and project plans are executed and movement toward objectives occurs. It’s at the operational level where the heavy lifting take place: where contracts are awarded, equipment pur- chased, staff and contractors hired, commitments made, budgets allocated and reallocated, and lapses or over- spending occur. The effects of these operational decisions, good or bad, roll up through directorates, branches, sec- tors, departments, ministries, Treasury Board, parliamen- tary committees and eventually to Parliament itself. It is therefore vital that expenditure decisions, made at the operational level, are informed and effective. As men- tioned, it is here where expenditure decisions for billions of dollars are made based on facts, management experience, financial and management training, intuition and advice and guidance available from the finance function, especial- ly the assigned Financial Management Advisor(s) (FMAs). Facts are the foundation of informed decisions enabling better business outcomes. However, it’s been my experi- ence working as a contract senior FMA in the finance func- tion of nine federal government departments that those facts are very hard to come by for the average operational manager in program or policy or procurement shops. They are hard to come by because reliable, mature and comprehensive portfolios of generally accepted financial operating reports, such as those found in well managed private-sector enterprises, do not exist. Current reporting systems rely heavily on cumbersome Excel based manual report production and delivery which is time-consuming, labour-intensive, error-prone and inefficient. Often mul- tiple human resources must be dedicated to assembling the information and creating and distributing the re- ports. This manual work significantly disrupts normal work schedules – especially with demands for ad hoc information. And with new demands for information, the whole man- ual process must be repeated. What is needed then is a new way of thinking about the value and use of information and a much better systematic process for delivering valuable information to end users. The prevalence of ‘black books’ at the operational level is symptomatic of the need for a modern, flexible, agile and responsive reporting capability. Treasury Board Secre- tariat (TBS) itself encourages “Business Innovation – New business models (i.e. doing things completely differently) …Potential unlocked through completely different work- flows” Furthermore, “Financial information supports deci- sion making and accountability to Canadians.” What is needed are comprehensive portfolios of internal reports, sourced from a rigorously maintained database (the Government of Canada Financial andMateriel (GCFM) solution ) and automatically produced and delivered by business intelligence tools – all with greater reliability, ef- ficiency, economy and much-reduced human effort. So, what is operational reporting? Wikipedia defines it as “reporting about operational details that reflects cur- rent activity. Operational reporting is intended to support the day-to-day activities of the organization.” Operational reporting is not public reporting, such as is the purview of the Public Sector Accounting Standards Board (PSAB), nor does operational reporting include ‘big data analytics.’ Rather, operational reporting focuses on day-to-day decision making, the nuts-and-bolts work of program, policy and procurement shops. Operational report portfolios focus on key expenditure areas such as salaries, operations & maintenance (O&M), capital investments, grants & contributions, etc., in such detail as to provide financial and statistical information that will help operational managers efficiently and eco- nomically execute business plans and achieve business objectives within budget. To efficiently provide core operational data to decision- makers, a modern financial reporting system needs to be created that has: • Comprehensive portfolio(s) of core and standard-format internal reports. • Data sourced from the rigorously maintained Enter- prise Resource Planning (ERP) system, produced and delivered automatically by business intelligence tools. • Transactions input to the ERP processed in accordance with a set of rules. • The ERP adjusted at period-end in accordance with ac- counting principles adapted for the federal government, providing a consistent full and complete economic pic- ture. • Reports that cover a consistent time period – i.e. calen- dar month, fiscal year etc. – and produced at period-ends. Broadly, a modern reporting system will: • Inform various levels of the governance system in a com- mon, consistent, reliable, accurate, cohesive, coherent, understandable and timely manner. • Provide embedded analyses, evaluations and recom- mendations for action. • Improve the understanding and decision making of op- erational managers. • Highlight areas of interest for more detailed examina- tion. • Help to detect errors and fraud and provide early warn- ing of potential problem areas. • Have great utility in performance measurement of orga- nization units and managers. • Provide common, consistent and timely communica- tions throughout government. • Enable increased efficiency, effectiveness, economy, transparency, accountability and compliance. • Enable fact-based decision making, improving resource utilization, monitoring and control.