Financial Management

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Financial Management
Governors Office of Planning and Budget
Process and Procedures Project
How to Stay in Compliance Under Program Based
Budgeting
Presented March 5, 2007
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Opening

• Housekeeping
• Please put cell phones on vibrate or turn them
  off
• No food or drink in the training room
• Restrooms are located off the lobby
• Website address for additional support
  information http//www.sao.georgia.gov
• Path Active ProjectsgtFinancial Management
  Process and Procedures Projectgt
• Check out Presentations or Survey links
• Sign up for additional courses
• Please hold questions until the end

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Presenters

• Bart Haberbosch
• State Accounting Office
• Connie Buck
• Office of Planning and Budget

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To whom is this presentation directed?
Budgeting and Accounting
Budgeting
Accounting
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Agenda

• Opening
• Program Budgeting
• Appropriations Bill
• BudgetNet and SAO PeopleSoft Financials
  Integration
• Reconciliations
• Next Steps
• Questions

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Opening

• Lynn Vellinga
• State Accounting Officer
• Shelley Nickel
• Director, Office of Planning and Budget

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Performance Audit
FY2006 Findings
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Performance Audit FY2006 Findings

• Discussion
• Complex Fiscal Year
• PeopleSoft Upgrade
• Program Based Budgeting
• Amended Fiscal Year Budget substantially changed
  level of detail
• Budgetary Compliance not defined by law until
  after the 10th month of the fiscal year

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Performance Audit FY2006 Findings

• Not able to demonstrate that
• Funding sources were appropriately allocated to
  programs
• Expenditures reported by funding source were
  within the available Program Budget
• Budget amounts in BudgetNet differed from those
  in PeopleSoft
• Varying interpretations of Flex
• Expenditures not consistently allocated across
  programs

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Performance Audit - Actions

• Agencies are responsible for budgetary compliance
  
• Agencies should commence corrective actions today
  
• Corrective action plans must be submitted to SAO
  by the end of March

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Performance Audit

• OPB continues to work with the SAO, SBO, HBO to
  improve the budgeting process
• OPB and SAO realize that HB 1026 caused many
  difficulties

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Performance Audit - Response

• Financial Management Process and Procedures
  Project

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Financial Management Process and Procedures
Project

• Findings in the FY2006 audit report resulted in a
  joint project between SAO/OPB
• Will deliver
• Clear and concise guidelines for budget control
• Standardized Statewide Policies and Procedures
• (i.e. Year-end cut offs on amendments)
• Reconciliation Procedures and Tools
• Reports
• Queries
• Templates
• In depth training for agency accounting and
  budgeting personnel over the next several months
• This should result in better compliance with
  Program Budgeting

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Financial Management Process and Procedures
Project

• Process/Approach
• Formed Steering Committee
• Co-Chairs Shelley Nickel and Lynn Vellinga
• Members
• Susan Ridley (OPB)
• David Tanner (OPB)
• Sherrie Southern (SAO)
• Sandra Warr (SAO)
• Ray Kauffman (OPB)
• Connie Buck (OPB)
• Sue Aiken (OPB)
• Bart Haberbosch (SAO)
• Joyce Smith (SAO)
• Susan Banks (SAO)
• Anteo Group
• Carl Vinson Institute of Government (Training)

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Financial Management Process and Procedures
Project

• Process/Approach
• Selected a representative focus group
• Department of Driver Services
• Department of Education
• Department of Human Resources
• Department of Technical and Adult Education
• Department of Transportation
• Office of Planning and Budget
• Pardons and Paroles

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Financial Management Process and Procedures
Project

• Process/Approach (continued)
• Face to face interviews with Focus Group agencies
  both accounting and budgeting personnel
• Focus Group sessions to validate findings
• Validated findings using a statewide agency
  survey

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Financial Management Process and Procedures
Project

• Thank you for your time and input during the
  project!

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Financial Management Process and Procedures
Project

• Findings
• Lack of standard policies and procedures for
  budgeting and accounting
• Lack of needed tools (Reports, queries, etc.)
• Open data issues in PeopleSoft
• Lack of uniform training at appropriate levels
• Difficulty in tracking multiple year budgets
• Difficulty in tracking multiple year funding
  sources

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Project outcomes
High Level Sessions

• Policies/Procedures

Reports
System Modifications
Queries
In-Depth Training
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Annual Budget Management Process
I. Program Budgeting
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I. Program Budgeting
High Level Project Focus
Reconciliations
Revenue Recognition
Appropriation Bill
Expenditure Control
Reporting
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Financial Management
I. Program Budgeting
Process and Procedures Project

• The process of budget development and creation of
  the appropriations bill is outside the scope of
  this project.
• This presentation addresses the process after the
  appropriation bill has been signed by the
  Governor.

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I. Program Budgeting Cycle for FY2008
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I. Program Budgeting FY 2007 Cycle

• Submit 4th Quarter allotment
• Attend training sessions
• Commence reconciliations

Mar 07

• Continue with training
• Provide Program Expenditure Reports
• Continue reconciliations

Apr 07

• Enter Amended FY amendment

May 07

• Begin Year end cleanup amendments

Jun 07

• Close books in PeopleSoft
• Year End Program Expenditure Reports

Jul 07

• BudgetNet Final Amendments

Aug 07
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I. Program Budgeting (O.C.G.A. 45-12-71)Definitio
ns

• Program a discrete set of activities undertaken
  to carry out an agencys core business
• Budget complete financial plan for the fiscal
  year as proposed in the budget report and
  modified and adopted by appropriation and revenue
  Acts
• Budget Allotment process of authorizing the
  withdrawal of state funds from the treasury based
  on a determination that the budget allotment
  request is consistent with an approved work plan

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I. Program Budgeting Key Components

• Governors Budget Report to Legislature is
  required to include (O.C.G.A. 45-12-75)
• Program level expenditures by fund source
• Stated Purpose for each program
• Agency (object) class expenditures - 2 years
  actual, current year estimate, and requested
  amounts
• Budget request for all fund sources

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I. Program Budgeting Key Components

• Appropriation bill
• Authorizes maximum expenditures by program and
  state fund source
• Federal and other funds are estimated amounts
• Federal funds are continually appropriated -
  meaning agencies can amend in or out as dictated
  by receipt or non-receipt of funds
• Program and fund sources are the level of control

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I. Program Budgeting What do statutes mean?

• All the information submitted by an agency in the
  budget development process as modified by the
  Governor and legislature becomes part of the
  agencys financial plan
• An agencys financial plan enables OPB to oversee
  an agencys expenditures to assure compliance
  with the Governors policies and legislative
  intent
• Federal and Other funds are estimates and
  agencies are responsible to assure that
  expenditures are in line with funds earned

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Budget Compliance
II. Appropriations Bill
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II. Appropriations Bill Example (FY2007) HB
1027
Program
Purpose
Funding Sources
Amended FY 2007 HB94http//www.legis.ga.gov/leg
is/2007_08/house/budget/budgetDocuments.html
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II. Flex language FY 2007 HB 1027 Section 54

• Interpretation of the flex language varies
• When processing flex amendments compliance cannot
  be assured
• Therefore, the OPB Director has suspended the
  processing of flex amendments until further
  notice
• Agencies can request a fiscal affairs transfer to
  move funds between programs

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II. Appropriations Bill Compliance Appropriatio
n Bill - HB 1027 Section 57

• Budgetary Control per Appropriations Act
• The appropriations consist of
• the amount stated, for each line
• at the lowest level of detail for State Funds,
  Federal Funds, and as provided by law for the
  other funds,
• in each case as associated with the statement of
  Program Name and Program Purpose.

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II. Appropriations Bill Compliance Fund Sources

• What does to be controlled at the lowest level
  of detail mean?
• For state funds this means
• State General Funds
• Lottery Funds
• Tobacco Funds
• State Motor Fuel
• Brain and Spinal Injury Trust Fund
• Governors Emergency Funds

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II. Appropriations Bill Compliance Fund Source
Detail

• For Federal and Other Funds this means detail
  level
• Federal Funds - there are 16 detail items in the
  bill
• Other Funds - there are 10 detailed items in the
  bill (For reporting purposes Other Funds are
  rolled up)

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II. Budgetary Compliance

• Multiple organizations involved
• Governors Office of Planning and Budget
• State Accounting Office
• Department of Audits and Accounts
• Different roles and responsibilities defined by
  statute
• Some responsibilities overlap
• General Assembly wants to assure compliance with
  legislative intent

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II. Budgetary Compliance

• Conflicting messages
• Program and Sub-programs vs no Sub-programs
• Object Classes vs no Object Classes
• Fund Sources by Program expense and/or revenue
• Revenue Recognition - Agency vs Program

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II. Budgetary Compliance

• Previous messages appear contradictory
• Ask yourself who is requesting the information
  and what is their role
• Oversight
• Control
• Reporting

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II. Office of Planning and Budget

• OPBs main responsibility is to insure that
  agencies have a financial plan that aligns with
  the Governors and General Assemblys legislative
  intent
• In order to do that

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II. Office of Planning and Budget

• OPB reviews and approves AOB/Amendments. The
  detailed information needed may include
• Authorized position and motor vehicle counts
• Implementation plans
• Object classes
• Sub-programs
• OPB also assures that state fund expenditures are
  within the appropriated amounts by program and
  fund source

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II. Office of Planning and Budget

• Coordinates the fiscal affairs and procedures of
  the state to assure the carrying out of the
  financial plans and policies approved by the
  General Assembly, including administration of a
  system of annual operating budgets and amendments
  thereto and of expenditure control (O.C.G.A.
  45-12-73. (4))

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II. Office of Planning and Budget

• The annual operating budget including such
  schedules and supplementary information as may be
  required by OPB, shall be the financial plan for
  the budget unit and when approved by OPB shall
• Govern the approved expenditures for the
  applicable object class, and
• Ensure that these expenditures conform to both
  the letter and the intent of approved
  appropriations acts. (O.C.G.A. 45-12-80. (d))

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II. State Accounting Office

• Provides statewide policies and procedures for
  financial accounting
• Provides the tools for reporting, tracking and
  monitoring through the PeopleSoft systems
• Prepares and publishes annual financial reports
• Comprehensive Annual Financial Report (CAFR)
  (GAAP)
• Statewide Single Audit Report (Federal)
• Budgetary Compliance Report (Statutory)

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II. State Accounting Office

• Budgetary Compliance Report
• Demonstrates compliance with the appropriation
  bill for both revenue and expense
• Shows budget to actual variance for all state
  entities in the appropriation bill
• For budgetary compliance under program budgeting,
  in addition to expenditures, revenue must be
• Distributed by program, and
• In alignment with allotment requests

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II. Department of Audits and Accounts

• Annually issues an Agreed Upon Procedures Report
  on compliance with the Appropriation Bill
• Reviews agency operations and SAO reports to
  determine if agencies are compliant with the
  Appropriations Act and are maintaining adequate
  accounting records
• Conducts performance audits to
• determine if programs are meeting objectives
• measure programs results and effectiveness
• evaluate the efficiency of resource allocations
• and assess compliance with laws and regulations

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II. How Compliance is Evaluated
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II. Compliance Responsibility

• OPB and SAO monitor, report and assist agencies
  with compliance
• Agencies are responsible for assuring compliance
  with the Appropriation Bill

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III. BudgetNet and SAO PeopleSoft Financials
Integration
Budget Process
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III. BudgetNet and SAO PeopleSoft Financials
Integration

• For those agencies not on SAO PeopleSoft
  Financials
• All state agencies work in BudgetNet
• Agencies not on SAO PeopleSoft Financials need a
  process to ensure budget control in their
  financial software package is consistent and in
  sync with BudgetNet
• View the following presentation as an example or
  model for keeping BudgetNet and any financial
  system consistent and in sync

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III. BudgetNet and SAO PeopleSoft Financials
Integration

• The following discussion focuses on the
  integration between BudgetNet and SAO PeopleSoft
  Financials from the latter's perspective

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III. BudgetNet and SAO Peoplesoft Financial
Integration - Trees

• Trees are key!
• Know your trees
• and tree levels

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Tree Chart
III. Loading Applications - Trees
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III. BudgetNet and SAO PeopleSoft Financials
Integration

• Two trees are critical to program budgeting
• Program Tree
• Funding Source Trees

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III. BudgetNet and SAO PeopleSoft Financials
Integration

• One program tree for all agencies
• Program numbers (values) are consistent with
  BudgetNet
• Program tree (KK_PROGRAM) has 3 levels - ALL,
  program and subprogram
• Program level is consistent and at the same level
  as the appropriations bill

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III. BudgetNet and SAO PeopleSoft Financials
Integration

• Funding Source Tree
• Each agency has an individual funding source tree
  BCM_FUND_SRC
• The top three levels are set by SAO
• ALL
• FS_CAT (for allotment monitoring)
• FS_TYPE (for monitoring at the same level as the
  appropriation bill)

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Federal Funds
Governors Emergency Funds
Lottery Funds
Other Funds
State General Funds
Tobacco Funds
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III. Budgetary Compliance - Fund Sources in
PeopleSoft

• From the Appropriations Bill, what does to be
  controlled at the lowest level of detail mean?
• From the SAO PeopleSoft Financials perspective

• The lowest level of detail for Fund Source in the
  Appropriations Bill maps to the FS_TYPE level on
  the funding source tree

• PeopleSoft has fund tree levels FS_CAT
  (Controlling the allotment) and FS_TYPE
  (Controlling at the level of the appropriation)

• For state funds FS_CAT and FS_TYPE are the same
  (one to one)
• State General Funds
• Lottery Funds
• Tobacco Funds
• State Motor Fuel
• Brain and Spinal Injury Trust Fund
• Governors Emergency Funds

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III. Budgetary Compliance - Fund Sources in
PeopleSoft

• For Federal Funds (FS_CAT FED1)
• There are 16 detail items in the bill (FS_TYPE)
• For Other Funds (FS_CAT OTH1)
• There are 10 detail items in the bill (FS_TYPE)

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III. Budgetary Compliance - Fund Sources in
PeopleSoft
Program Maps to KK_Program Tree
Funding Sources Maps to BCM_FUND_SRC tree
Even though Agency and Other Funds are shown
separately in the Bill, they are mapped to Other
at the FS_TYPE level
Amended FY 2007 HB94http//www.legis.ga.gov/leg
is/2007_08/house/budget/budgetDocuments.html
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III. BudgetNet and SAO PeopleSoft Financials
Integration
Purpose of PeopleSoft Commitment Control

• Monitor and control revenues and expenditures
  against budgets at various budget levels
• Manage operational needs
• Meet reporting requirements for Federal and
  Statutory compliance
• Ability to control budget by Object Class,
  Program, and Fund Source
• Provides tools to manage and budget by Program

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III. Loading Applications Management Controls
Need a budget line entry under either scenario or
entries will not pass budget checking process
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III. Loading Applications Management Controls
Need a budget line entry under either scenario or
entries will not pass budget checking process
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III. Loading Applications Budget Process
Approval of AOB/Amendment triggers update to
Program Ledger
Agency
BudgetNet
PeopleSoft
ORG Ledger
REVEST Ledger
AOB/ Amendments
DEPTSUM Ledger
PROGRAM Ledger
ALLOTMENT
ALLOTMENT Ledger
CLASS Ledger
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III. Loading Applications Budget Process
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III. Loading Applications Budget Process
Agency
BudgetNet
PeopleSoft
ORG Ledger
REVEST Ledger
AOB/ Amendments
DEPTSUM Ledger
PROGRAM Ledger
ALLOTMENT
ALLOTMENT Ledger
CLASS Ledger
Warrant approval triggers update to Allotment
Ledger
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III. Loading Applications Budget Process
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III. Loading Applications Allotment Process
Rejected
Rejected
Rejected
Rejected
BudgetNet
OPB Reviews and Approves
BudgetNet
Commissioner Of Insurance verifies allotment
Warrant Office Quality Control Check
issues Warrant
Agency prepares allotment request in BudgetNet
Module Submits Electronically to OPB
Comptroller approves warrant Electronically.
Approved
Approved
Approved
E-Mail
Approved
Budget Net Interface
OPB Generates Interface
E-mail containing the Date and allotment number
sent to Treasury OPB Audits SAO
Agency Requesting Funds
Allotment Data sent to PeopleSoft Allotment Ledg
er (Program and Fund Source)
Notification to Treasury
Non-PeopleSoft Agency
PeopleSoft Allotment Ledger
Authorization to expend allotted State funds
by agency
State funds transferred from treasury account
to agency bank account
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III. Program Budgeting-Policy/ Procedure First
Quarter Allotments
Gives agencies the flexibility to enter
encumbrances prior to the start of the new fiscal
year.
The earlier the AOB is entered and approved,
the earlier the allotment can be approved.
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IV. Reconciliations
Policy and Procedures
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3 Point Reconciliation
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IV. Reconciliations -Policy/Procedures for
Balancing BudgetNet to PeopleSoft
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IV. Reconciliations

• BudgetNet AOB/Amendments to PeopleSoft Program
  Ledger
• BudgetNet Allotments to PeopleSoft
  Allotment Ledger
• PeopleSoft Financial Revenue Estimate Ledger
  (Revest) to PeopleSoft Program Ledger

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IV.i. Reconciliations BudgetNet AOB/Amendments
to PeopleSoft Program Ledger
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IV.ii. Reconciliations BudgetNet Allotments
to PeopleSoft Allotment Ledger
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IV.iii. Reconciliations PeopleSoft Financial
Org Budgets to PeopleSoft Program Ledger
Budgets
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V. Project Next Steps

• Statewide policies and procedures are being
  drafted
• In-depth training on reconciliations with
  reports, queries, and templates will be made
  available
• Address the issue of not having Budget Year on
  the Trial Balance (before new fiscal year)

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V. Next Steps - Training

• Statewide training

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V. Next Steps - Agency

• Submit corrective action plans to SAO by the end
  of March
• Commence corrective actions today
• Perform reconciliations
• Make adjusting entries
• Confirm revenue is recognized by program
• Sign up for training when the announcements go out

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VI. Questions

• The Web cast will be available at the SAO website
  http//www.sao.georgia.gov (OPB will have a link
  on their website directing others to the SAO
  website)
• Stay up to date on the project by frequently
  visiting the SAO web site