ABC Implementation Status

1
ABC Implementation Status

• National Park Service

2

• Accomplished
• Established internal ABC Core Team (field and
  central office representatives, budget, finance,
  performance)
• Brought in Contractor with ABC experience
• Adapted existing coding scheme (account string)
  to improve alignment with ABC
• Ground-truthed resulting activity coding with
  field operations.
• Internal Activities and Outputs developed
• Conducted presentations for leadership
• Distribution of ABC video and CD training
  materials
• Crosswalk completed
• Extract files being sent to DOI (Calibre)

3

• On-going
• Integrating/coordinating Key metrics, Non-key
  metrics, PART metrics, Outputs, and Activities
• Developing additional ABC training to be included
  with performance training for new Strategic Plan
  and Operational Plans
• Further re-alignment of existing coding
  methodologies
• Develop methodology for internal auditing (late
  2004)
• Assessment of methodology that is best fit for
  entering time and attendance (mid 2004-2005)
• Presentations to leadership

4
Realignment of Existing Coding

• NPS has coded activities for over 30 years.
• The Primary Work Element (PWE) field contains NPS
  Activity Information.
• Currently, a budget source code is embedded in
  the field containing Activity information. This
  code forces permutations just like the DOI's
  combination of activity and goal strategy coding.
• Many of the existing codes are artifacts from
  management initiatives over the past 30 years and
  are being cleaned up. Over 270 PWEs eliminated
  for 2004.
• During 2004, a coding scheme that separates the
  Activity code from the budget code will be
  explored and implemented if possible.

5
Construction and Grants

• Problems being worked out with coding of
  Construction and Grants.
• NPS currently has nearly 20 Activity codes that
  are aligned on 3 funding sources related to
  "Construction" funding. None of the codes
  designate "why" the money is being spent.
• DOI's coding scheme provides 28 different
  Activity codes (15 maintenance, 13 construction)
  that NPS Construction would need to be spread.
• NPS begins about 130 "Construction" projects
  annually carrying total costs of 200-300
  million.
• There are about 450 Multi-year projects in any
  one year.

6
FY 2004 Proposed Solution

• NPS plans to send FFS journal info to DOI on a
  daily basis with no DOI Activity Code for
  Construction and Grants.
• This will cause an "exception" in the Caliber
  system.
• NPS will hand tool a quarterly report of
  Construction and Grants costs that will minus out
  the "exception" dollars and re-submit them as
  totals and include the appropriate DOI Activity.
• This way provides the daily extract using the
  standardized extract script so that daily costs
  can be traced while providing for a remapping of
  dollars on a quarterly basis to the actual DOI
  Activities that the Construction projects and
  Grants contribute.

7
FY 2004 Proposed Solution
FFS Extract File Transactions coded with direct
construction project PWEs will have a blank DOI
activity code
DOI Calibre system Unassigned cost X Unassign
ed cost -X DOI Activity X DOI Activity
X DOI Activity X
Net to zero
Periodic manual process to be automated Determine
direct construction project cost by DOI activity
using the following mapping IWPN gt FFS PWE Job
gt DOI activity
A construction project may relate to more than 1
DOI activity. NPS will trace to the best fit
Activity. Multiple job numbers in FFS for the
same project may facilitate mapping to more than
1 activity.
8

• NPS will explore necessary changes to the scripts
  that produce the extract files to automate the
  tracing of a given Construction Project to a
  specific DOI Activity code.
• Grants will be handled in a similar fashion.
• Other Construction issues not resolved. Most
  significantly, the dollar value forwarded for
  capital projects.

9
Problems Recommendations

• The justification for having the ABC model hard
  coded in the accounting system was to eliminate
  allocations. There is a perception that only
  transactions entered into the accounting system
  can be counted on to provide a tracing of dollars
  to Activities and outputs.
• However, the 11 rule forces an arbitrary
  allocation of dollars.
• In a service organization, there are few
  activities that contribute to only one output and
  few outputs that contribute to only one outcome.
  Yet, our ABC infrastructure builds in an
  automatic allocation of dollars to goals. The
  effect of the allocation is hidden because the
  allocation is forced to occur outside of the
  process. It cannot be audited and the Bureaus
  will not be able to reconcile their more accurate
  dollar to goal models with the Department's.
• Eliminate the rule.

10
Problems Recommendations

• We are trying to code 3 or more perspectives into
  the Activity code. For example
• Activity Function
  Strategy
• how what
  why
• data coll. IT mgt.
  PEO 1
• This makes the ABC system burdensome, inflexible,
  and difficult to maintain. It creates a situation
  that forces permutations across the 16
  Mission-related Strategies this permutation
  effect is why we chose ignore important
  Activities such as those in the IT field, Safety,
  Law Enforcement, and many others.
• Eliminate function and strategy from the Activity
  templates.

11
Problems Recommendations

• We do not apply a standard definition for what an
  Activity or Output is.
• We created Activities that are supersets of
  groups of Activities so that the term now
  reflects functions and programs.
• Consequently, certain Activities are included in
  many such supersets so that a singular activity
  (i.e. data collection) does not represent how
  much that Activity actually costs.
• While this "higher use" concept simplified the
  rapidly growing number of Activities, it obscures
  what Activities are actually performed and their
  costs.
• Adopt the industry-standard definitions
  associated with ABC.

12
Problems Recommendations

• There is a tension is between creating Activities
  that are useful at the Department level and those
  that are useful to the field managers in the
  bureaus.
• The perception that the Department can have
  meaningful Department-wide, mission-related
  Activities endures though the bureau missions
  differ significantly as does the purpose for
  which they apply an Activity.
• Consequently, we tried to create Activities that
  were both meaningful to the bureaus and were
  Department-wide. The approach was to roll up many
  of the bureau-specific Activities to a more
  general Activity. We ended up creating many
  Activities that do not have measurable outputs.
• We proved that you can't have a top-down and a
  bottom-up ABC effort. The Department must choose
  one direction or the other.

13
Problems Recommendations

• Placing all of our Activity codes into the
  accounting systems makes the ABC system
  burdensome, inflexible, and difficult to
  maintain.
• We are creating problems for the accounting
  systems they were not designed to deal with. The
  accounts should not be changing from year to
  year, however, from the ABC perspective, the
  codes will need to be flexible enough to change
  on a regular basis to accommodate political
  initiatives such as that of the Secretary or an
  OMB request that we connect ABC to PART.
• Because the Activity model is hard coded in the
  accounting systems, we will see a continuing
  shifting of accounts to accommodate initiatives.
• Get the model out of the General Ledger.

14
Problems Recommendations

• Currently, our accounting systems are aligned to
  our budget structures which are aligned to the
  appropriation process. Our account codes and our
  accounting methodologies support the budget
  formulation process.
• Accounting systems (business and government) are
  intended to demonstrate fiduciary responsibility
  and are primarily for an audience outside the
  organization.
• Managerial cost accounting systems are meant to
  provide managers a functional view of costs so
  that efficiency can be managed.
• Merging the two together adversely impacts the
  functionality of both the new system will be
  less useful for making budget decisions and
  managing performance. In addition, it will
  highlight situations were appropriations are
  being spent in a manner not planned for (i.e.
  initiatives).
• Separate the Activity codes from the accounting
  systems.

15
Problems Recommendations

• The great concern expressed regarding the
  validity of allocations and the unbounded faith
  in the veracity of accounting system transactions
  skews our perception of traceability and
  accountability. This then requires us to ignore
  the standard COTS ABC applications used by
  business and nearly every other Federal
  organization.
• We are now building an expensive cost management
  application that will place a significant
  financial burden on the bureaus and will provide
  little value to the field managers.
• Standard ABC applications will allow each
  organization within the Department to demonstrate
  accountability, cost efficiencies and cost
  effectiveness in terms that directly relate to
  their missions and the jobs they perform.
• Adopt a commercial off-the-shelf ABC application
  suitable for government organizations.