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

VHA Finance Conference August 2011 FINANCIAL POLICY 2

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Presenters Yolanda Bostic – Auditor, FQAM, VISN 7 Karen P. Brown - Supervisory Accountant, VA Office of Financial Policy Ogbeide Oniha - Director, VHA Financial Management & Accounting Policy Marilyn Patton - Lead Accountant, VHA Accounting Policy Jana L. Sjoquist - Staff Accountant, VA Office of Financial Policy Carolyn A. Wright - Associate Director, MQAS 4

Presentation Objectives  Overview of process for development of VA policies and how they relate to VHA guidance and processing in daily operations  Overview of the role of auditing in ensuring policy compliance  Identify where to locate the policies and changes  Overview of the process for requesting assistance with policy.  Identify VHA Policy Initiatives 5

Agenda VA Policy Process VHA Policy Development and Assistance Process The Role of Auditing in Ensuring Policy Compliance VHA Policy Initiatives Questions 6

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Presentation Purpose  To identify the Chief Financial Officer’s duties as promulgated by legislation,  To assist in understanding the Office of Financial Policy (OFP) Accounting, Payroll, and Travel Policy Service,  To provide an overview of the process implemented and refined to update VA policy,  To identify OFP Policy which has replaced VA Directives, Handbooks, Manuals, Bulletins, and Travel Notices, and  To identify resources available when questions arise related to financial policy. 8

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. 9

VA CFO Organization Grants Management Service Director Grants Management Service Director Office of Financial Policy Associate Deputy Assistant Secretary Office of Financial Policy Associate Deputy Assistant Secretary Office of the Deputy Assistant Secretary for Finance Office of the Deputy Assistant Secretary for Finance Management/Financial Reports Service Director Management/Financial Reports Service Director Executive in Charge and Chief Financial Officer Executive in Charge and Chief Financial Officer Secretary of VA Cash and Debt Management Service Director Cash and Debt Management Service Director Accounting and Payroll Policy Service Director Accounting and Payroll Policy Service Director Systems to Drive Performance (Initiative) Program Manager Systems to Drive Performance (Initiative) Program Manager Office of Financial Policy Deputy Director Office of Financial Policy Deputy Director 10

VA Accounting and Payroll Policy Service Director Staff Accountant Supervisory Accountant Staff Accountant Systems and Procedures Analyst Systems and Procedures Analyst Systems Accountant Systems and Procedures Analyst Accounting Accounting & FMS Payroll Travel Supervisor Systems and Procedures Analyst 11

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. 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 and other Governmentwide programs and initiatives. Provides VA-wide customer support.  More information on OFP may be accessed through the VA internet Web site: 12

VA 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 and reviews draft financial policies and procedures submitted by the SMEs, and concurs on chapter to be presented to the FPSC. - FPSC – reviews and approves (or disapproves) policy guidance submitted by the FPWG and recommends approved policy to the VA CFO. Comprised of representatives from VA’s senior management and Administrations’ Chief Financial Officers. - CFO (senior executive level) - reviews, approves, and issues policies. 13

VA Financial Policy Revision  FPII Completed – Jul 2011  Rescission Memorandum submitted to rescind superseded Directives, Handbooks, Manuals, Bulletins, and Travel Notices, as appropriate. These will be archived.  Financial Policy Improvement (FPI) On-going project to review, update, or rescind published policy or to implement new policy guidance; Project will review published Volumes/Chapters on a recurring basis very 3 years; New guidance will be incorporated into existing or new chapters; Draft charter is being reviewed to ensure the same level of support and participation as the original FPII. 14

VA Directive Flowchart Process 6. Concurrence and draft policy forwarded to CFO for approval & signature. No 4. Comments received & researched. Yes Back to 3. No Yes 7. CFO approved policy forwarded to AS/OI&T for certification & signature. Receive signature? Ye s 8. Signed policy published. Approve policy? No YesNo Week 1Weeks 2 to 20Weeks 20 to 22Weeks 22 to 24Weeks 24 to Proposed new/revised policy posted to VAIQ and reviewed by respective staff for comments & concurrence. 2. Policy researched and drafted by OFP, Administration, or other staff office. 1. Possible need for new policy or revision identified to OFP. Need to include comments? Receive concurrence from all? 5. Communicate decision to appropriate staff. Back to 3. Receive concurrence? Back to 3. 15

6. FPWG approved policy forwarded to FPSC for review, discussion & vote. No 1. Possible need for new policy or revision identified. 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. No Week 1Weeks 2 to 4Weeks 5 to 6 Weeks 7 to 8 Weeks 9 to 10 Yes Approve policy? Yes Back to 4. No Yes 7. FPSC approved policy forwarded to CFO for approval & signature. Approve policy? 8. CFO approved & signed policy published. Ye s Policy needed? 5. Draft policy reviewed by FPWG for discussion & vote. 4. Main POC, OFP contact, and SMEs assigned to draft policy. 3. Request reviewed by FPWG for discussion and SME identification. Back to 5. Approve Policy? VA FPI Flowchart Process 16

Why the FPI Process Is Boss  FPI 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, 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. 17

OFP Volume and Chapter Matrix VA OFP VOLUMES AND CHAPTERSVA FINANCIAL POLICY DIRECTIVES/HANDBOOKS REL OFP VOLREL OFP CHOFP TITLEOFP DATEDIRDIR TITLEREL HDBKTITLE DESCRIPTION VOLUME I - GENERAL ACCOUNTING I1 Introduction to VA’s Accounting Policies 1/27/2009 I1A Process to Update/Develop Financial Policy and Procedures 1/12/2009 I1B Quality Financial Information 12/8/2010 I2 United States Standard General Ledger 1/27/ General Ledger Accounting 4520 Standard General Ledger Chart of Accounts and Definitions I3 Maintenance of the Standard General Ledger 1/27/2009 I3A PAID Accounting Operations 1/27/2009 I4 Financial Management System 1/27/ Financial Management Systems None I4ARevenue Source Codes8/20/2009 I4B Account Classification Codes 1/27/2009 I5 Management Responsibility for Internal Control - Rvsn 11/29/ Management Accountability and Control Program None 18 The spreadsheet with OFP Volumes and Chapters to Directives/Handbooks Matrix: is available in the VA Notice which is hyperlinked on the VA OFP Volumes Web site,

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Presentation Purpose  Introduction to the organization and structure of the VHA Office of Financial Management and Accounting Policy (10A3A).  Policy/regulatory research resources and process.  Outline the procedure for submitting a policy inquiry.  Process for requesting changes to VA Financial Policy 20

Organization and Structure Chief Financial Officer Deputy Chief Financial Officer Associate Chief Financial Officer Director, Financial Analysis and Oversight Director, Financial Management and Accounting Policy 21

VHA Financial Management and Accounting Policy Director, Financial Management and Accounting Policy Supervisory Accountant Policy Inquiries & Financial Indicators Special Projects: Cost Centers, BOCs, FPI, & FHCC Supervisory System Analyst Transit Benefits & Travel Card Policy and Oversight Payroll Policy & Oversight Agent Cashier, PFOP, & Debit Card 22

Process to Request VHA Policy Assistance  Determine the subject of the inquiry. Financial/Accounting Policy Transaction Processing through FMS/IFCAP, etc. Contracting  Request Assistance from Local Resources, i.e., Chief Fiscal/Financial Officer, Contracting Officer, IFCAP Coordinator, Chief, Voluntary Service, etc. 23

 Send an to the appropriate policy Outlook Mailbox or Mailgroup. Refer to VHA Alert Volume 2011, Issue 9 VHA Central Office Reorganization. Process to Request VHA Policy Assistance  Describe your situation completely and succinctly. 24

 What Happens Next Inquiry is assigned to an Accountant to research. Accountant may respond by requesting additional information. The Accountant assigned the inquiry begins to research. When necessary, other organizations are contacted for assistance. A response is drafted and reviewed for quality control purposes by a minimum of one other person. Response is provided. Process to Request VHA Policy Assistance 25

 Identify policy to be changed and complete the Request for Policy Update form located on the OFP Accounting Policy web site,  Present the justification and recommendation to the Station Chief Financial/Fiscal Officer for concurrence.  Send the recommendation to the VHA CFO Accounting Policy (10A3A) Mailbox. Process to Request VA Policy Changes 26

 VHA Policy will review the completed documentation and assess the overall impact to VHA.  VHA Policy will submit approved requests to VA Policy. Process to Request VA Policy Changes 27

Policy/Regulatory Research Sources  Research the VA Policy Website for a published VA Policy. Use references and resources included in the Policy for additional research:  Research the VHA Policy Website for published Policy:  Research the HR Policy Website for published Policy: 28

 Research the Construction and Facilities Management Website for published Policy:  Appropriation Law (GAO opinions and US Code):  Federal Accounting Standards Advisory Board Pronouncements:  VA General Counsel:  VA OIG Publications: Policy/Regulatory Research Sources 29

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The Role of Auditing in Ensuring Policy Compliance 31

Audit Community  VHA Financial Quality Assurance Management (FQAM)  VA Management Quality Assurance Service (MQAS)  VA Internal Control Service (ICS)  VA Systems Quality Assurance Service (SQAS)  Office of Inspector General (OIG)  Government Accountability Office (GAO) 32

Who Are We? FQAM  Internal oversight  Unique to each VISN  Review specific areas  Long-term relationship with each medical center  Reviews all medical centers within the VISN MQAS  External oversight  Reports to VA  Reviews random areas  Short-term relationships with the medical center  Reviews selected medical centers nationally 33

Who Are We? Please note:  Because FQAMs report to the VISN, there may be variability in terms of what each FQAM may be reviewing in each VISN at any point in time. However, there is some consistency.  FQAM & MQAS makes a collaborative effort to work together. 34

What We Do?  Oversight  Audits  Reviews  Investigations  Queries  Management Advisory Services 35

False Perceptions of Auditors 36

We’re Here to HELP! Our goal is to promote effective, efficient and ethical practices and procedures based on current policies. Teach + Train = Change 37

How Policy Affects Our Audits  We provide oversight to ensure that current policy is followed at Station, VISN and National levels.  We use current VA and VHA policies and procedures to design our audit/review plans.  Findings are based on current policy. Non- compliance with policy will lead to findings. 38

How Policy Affects Our Audits  Request clarification from the appropriate policy office when a policy or procedure does not appear to be designed appropriately or requires clarification so that we may incorporate it into our program appropriately. 39

How Policy Affects Our Audits  Reasons for not following policy – lack of knowledge (training & education), existing policy may not be clear or there are inconsistencies, or simply accustomed to doing it the way it has always been done 40

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OVERVIEW VA’s financial management policies and procedures were developed to ensure compliance with: Appropriation and Debt Management laws and regulations, Office of Management and Budget (OMB) Circulars, Statement of Federal Financial Accounting Standards (SFFAS), Federal Accounting Standards Advisory Board (FASAB), Department of Treasury’s Financial Management Service (FMS), and Other guidance, laws and regulations. 42

OVERVIEW VA completed final phase of updating its financial policies under the Financial Policy Improvement Initiative (FPII). The FPII contract with Grant Thornton ended June 2011 and produced over 170 approved chapters grouped under 16 volumes. VHA facilities expressed the need for more detailed procedures to supplement several of VA approved policy chapters to meet VHA operational needs. Initial assessment - 73 of 170 VA policy chapters require supplemental procedures. These appendices will also incorporate VHA Handbooks, Directives and Alerts and any relevant policy. These appendices will be developed with VHA finance community support. 43

PROJECT OBJECTIVE The primary objective of this initiative is to develop a set of national procedures in the form of appendices to these VA policy chapters to ensure that financial policy and procedural information is standardized and accurate, and clear detailed procedures are readily available across the Administration. 44

The Director, VHA Financial Management & Accounting Policy, will have oversight over the policy development project. The VHA 10A3A project team will consist of a project manager to schedule, monitor progress and coordinate activities, accountants to coordinate technical working group meetings, an administrative support person and a technical writer. VHA Accounting Policy staff will coordinate meetings with Subject Matter Experts (SMEs) and Working Groups. Subject matter experts (SMEs) will include representatives from accounting, budget, and finance staffs in Medical Facilities, VHA Central Office, and VA Office of Financial Policy. For each Appendix, or related group of Appendices, the SMEs and the VHA 10A3A project team will meet at a convenient location to develop the Appendices. The PROCESS 45

VHA Advisory groups, including Financial Management Advisory Council (FMAC), Fiscal Quality Assurance Managers (FQAM), and Veterans Integrated Service Network (VISN) CFO’s, will form a VHA Financial Policy Working Group to review each Appendix via conference calls. Prior to submission to the Executive level Steering committee, comprised of VHA AsCFO, DepCFO and CFO, a technical writer will review and edit each Appendix. Approved Appendices will be forwarded to VA for review and inclusion in VA Policy Chapters. The PROCESS 46

PROCESS FLOW DIAGRAM The PROCESS 47

Key Activities Some of the key activities to complete a review of VA Policy to ensure all VHA specific requirements are included: Obtain an inventory of VA’s published policies by Volume and by Chapter. Obtain an inventory of VHA Finance Office policies ( Directives, Handbooks, Alerts, Manuals, Memorandums and Notices). Institute the VHA Financial Policies Working Group (VHA FPWG). The VHA FPWG will include representatives from FMAC, FQAM, National Fiscal Officers, CPAC Fiscal Officers, and MQAS. The Identify VHA Subject Matter Experts (SME’s) from the VHA Finance Community for each Chapter (no more than six to nine participants per Chapter). Create a Work Plan, which lists all VA Policy chapters, and establishes a due date, to ensure that each VA Policy Chapter is reviewed in a timely manner. 48

Solicit input from VHA’s SME’s to assist in the process of reviewing VA Policy, and, as appropriate, determine the need for a VHA specific appendix to the Chapter or the incorporation of existing VHA Policy into an Appendix. Determine whether existing VHA financial policies and procedures are applicable, and determine if the policy should be incorporated into VA Policy as an Appendix or whether it should be revised as necessary and maintained. Once this has been determined, VHA Accounting Policy will meet with the SMEs at a mutually convenient site and create a draft of the Appendix or modify the VHA Policy as appropriate. Create a SharePoint site to facilitate revisions from the SMEs. Once a draft is created, forward to the VHA FPWG for final review. Annotate the source of any changes to each Appendix for each chapter, using the tracked change function, to facilitate the review of the appendices. Utilize teleconference and/or NetMeeting, when beneficial, to ensure engagement of all chapter participants. Key activities 49

Ensure that all VHA SMEs and other VHA offices (VISN CFO’s, FMAC, FQAM) have reviewed and accepted the preliminary drafts of the appendices prior to submission. Annotate the source of any changes to each Appendix for each chapter, using the tracked change function, to facilitate the review of the appendices. Incorporate amendments by Senior Management into a Final Document to be forwarded to VA Accounting Policy for approval to include with VA Policy. Submit to VA Accounting Policy for incorporation as an appendix to the policy. Key activities 50

Questions or Comments? Now is the time! 51