Academic journal article The Government Accountants Journal

Reinventing Financial Management: Lessons Learned in Standardizing Accounting Systems

Academic journal article The Government Accountants Journal

Reinventing Financial Management: Lessons Learned in Standardizing Accounting Systems

Article excerpt

Efforts are currently being made to "reinvent" various portions of the federal government. Some agencies have been involved in the reinvention process for a substantial period of time. This article is based upon work performed at the U.S. Department of the Interior. Since the Interior effort is now approximately 97% complete, the experience could serve as a useful tutorial of what worked and what didn't work for those who have not yet reached that stage of standardization of their accounting systems in their reinvention process.


In the beginning (December 1983), the Omnipotent Mighty Bureaucracy (OMB--just a joke--as you will see, we needed OMB's support to get this project off the ground) decreed from on high (in the 1985 budget passback --the bureaucratic equivalent of the Ten Commandments) that the Department would have one accounting system by 10/1/84. This was one part of OMB's initial "Reform '88" project. At that time, the Department had separate accounting systems for each of its 10 bureaus.

Realizing that there was insufficient time to convert all bureaus to one system by 10/1/84, the Department proposed to OMB that a study be conducted to determine exactly how many accounting systems were needed and how many computer centers should support the system(s). OMB agreed with this proposal, and in the summer of 1984, a competitive contract was awarded to one of the major accounting firms to conduct the necessary study to provide the answers. OMB constantly participated in meetings on this subject, and closely monitored the study efforts.

Before getting to the specific aspects of the study, the internal structure of Interior should be noted. The Department is composed of a loose confederation of strong bureaus. It has been described as both a conglomerate and a holding company. In 1983 it had 10 bureaus with widely differing missions (i.e., the National Park Service, the Bureau of Reclamation, the Geological Survey, etc.--see Table 1 for the then existing bureaus). There are even those who have posited that the organization is more like a medieval fiefdom than a modern department (with many princes, princesses, dukes, duchesses, earls, knights, etc.). In any event, the bureaus operated with relative autonomy most had vocal constituencies, and powerful friends on Capitol Hill.

When the OMB directive was received, there was only one department administrative system in operation, the payroll/personnel system (referred to as PAY/PERS)(1). Moreover, the Office of the Secretary (O/S), which received the OMB directive, was relatively weak vis-a-via the bureaus, and lacked available funds to support a consulting study. However, O/S viewed the OMB directive as an opportunity to standardize old and inefficient accounting systems. Hence, after OMB agreed to allow the Department to perform a consulting study, the Department's Office of Financial Management had to convince the bureaus to make the funds available to support the study. All except one small organization agreed voluntarily to provide funding. Since that organization's funding comprised only a small portion of the total needed, a decision was made to proceed without the funding from that organization. Doing so also provided a defense against expected future charges from some bureaus to Capitol Hill that the Department forced them to fund the effort.


This project was given the name "FIRM." an acronym standing for Financial Integration Review for Management. This name was purposely chosen at the beginning of the project to psychologically prepare everyone for change. We were attempting to give the impression that there would be no wavering from fulfilling the Department's agreement with OMB to move to one or a few systems. The Department considered the FIRM study, which was to be a multi-year effort, as an opportunity to provide better service to the U. …

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