Risk Management = Change Management The Judicial Branch journey in risk management, internal control and consolidated financial reporting. Mary E. Peterman MPA, CGFM, CPA Deputy Chief, Finance and Procurement Office

Disclaimer Views expressed are those of the speaker Official judicial policy is determined by the Judicial Conference

How the Federal Courts are organized 1 Supreme Court 13 Appellate Courts 12 Circuits 94 District Courts 94 Bankruptcy Courts Court of International Trade Court of Federal Claims U.S. Court of Appeals for Veterans Claims U.S. Court of Appeals for the Armed Forces U.S. Tax Court = More than 200 “operating units”

Governance Judicial Conference - The Judicial Conference of the United States is the national policy-making body for the federal courts. The current name took effect when Congress enacted Section 331 of Title 28 of the United States Code. Before that, the body was known as the Conference of Senior Circuit Judges from its creation in 1922. The Judicial Conference also supervises the Director of the Administrative Office of the U.S. Courts in his role as the administrative officer of the courts of the United States under 28 U.S.C. § 604. In addition, certain statutes authorize the Judicial Conference to act in a variety of specific areas dealing with the administration of the courts.

AO Organization Judicial Conference AO Director AO Deputy Director Department of Program Services Department of Administrative Services Finance and Procurement Office Finance and Accounting Division Procurement Management Division Investment Services and Compliance Services Department of Technology Services

Judicial Branch vs. Executive Branch Differences President sets budget Yes No Congress appropriates money GAO FASAB sets GAAP OMB A-123 OMB A-136 In the financial report of the U.S. Potentially

Why? It is critical to ensure accuracy and reliability of the financial information that leadership throughout the AO and Courts relies on to make decisions and for which we are accountable to prevent and detect errors, fraud, waste and abuse. Transparency and accountability to our stakeholders and taxpayers.

Notional Future State ERM & I/C Framework Judicial Conference AO Director AO Deputy Director Planning (and Risk Management) DPS Program Risk (Internal Control over Operations) DAS (FPO) Financial Management Risk (Internal Control Over Financial Operations, Systems and Reporting) DTS IT Risk (General IT & System Controls, Cyber Security, etc.) Committee on Audits and AO Accountability Courts Internal Control Assertion ICE Tool Court I/C Self Assessments Office of Audit Independent Risk Based Audit Plan External Audits, Performance Audits Consolidated Financial Statement Audit

Leading people through change There are five stages that individuals go through when making a change (Hiatt & Creasey, 2012): Awareness of the need to change Desire to participate in and support the change Knowledge about how to change Ability to implement new skills and behaviors Reinforcement to maintain the change Source: Abudi, G. (2013). Change management would be easy if people weren't involved: best practices for managing the people- side of change management. Paper presented at PMI® Global Congress 2013—North America, New Orleans, LA. Newtown Square, PA: Project Management Institute.

Leading people through change Consider the following conversation starters to get stakeholders engaged in the change- focused project: Highlight what happens if the change does not happen and the impact on the individual and the organization Discuss the benefits of change and how the change may personally benefit the individual Promote the ability to learn new skills or increase knowledge when change occurs Discuss the ability to get involved in something exciting and new Additionally, consider engaging stakeholders by asking the following questions in a small group setting or casual conversations: What do they believe may or may not work about this change project? How would they proceed with the change initiative if they were managing it? What do they want to know to alleviate their concerns? What does success look like to them? Source: Abudi, G. (2013). Change management would be easy if people weren't involved: best practices for managing the people-side of change management. Paper presented at PMI® Global Congress 2013—North America, New Orleans, LA. Newtown Square, PA: Project Management Institute.

Change Management Understanding. Individuals and organizations need to understand the importance and reasoning behind a change initiative. This is winning the ‘mind’ of the individual through intellectual awareness and understanding. Motivation. Once individuals understand the reasons for change, they must be motivated to act on this change. There are many reasons why individuals may choose not to support a change even when they understand the rationale behind the change. This step wins the ‘hearts’ of those whose support is needed. Tools. When individuals understand the need for change and are willing to engage, they still need the capacity in terms of knowledge and ability. ‘Tools’ was intended to reference the policies, procedures, processes and technologies required for an understanding and motivated individual to act. Incentives. It is difficult, if not impossible, to sustain new behaviors when old behaviors continue to be rewarded. ‘Incentives’ refers to rewarding the desired new behavior and discouraging the old behaviors used prior to the change. New performance standards must be developed and connected to appraisal systems to ensure that changes are sustained and guide future actions. Source: AFERM https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=2ahUKEwios- mK3YbfAhXkyVQKHXjkDG4QFjAAegQICxAC&url=https%3A%2F%2Fwww.aferm.org%2Fwp-content%2Fuploads%2F2015%2F10%2FThe-Role-of-Organizational-Change-in-Effective-ERM- Q22014.pdf&usg=AOvVaw0CTnM9xAgDWy1MD7X53yPH

Change Management for ERM and IC Program 1. Define your organization’s strategic initiatives and their objectives. 2. Understand the drivers for change within your organization 3. Develop a strong communication strategy. 4. Identify and utilize existing controls. 5. Define roles and responsibilities. 6. Drive results.