David Norquist Tampa Bay PDI April 3rd, 2014 A Brief History of Federal Financial Management

2 10,000 BC Early hunter gatherer societies: No central government No written language No accounting

Civilization starts w/ four key advances: Shift to farming Central government Early writing (PP&E) Accountants (Scribes) 4,000 BC Early Accounting

Article 1, Section 9 “No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.” U.S. Constitution

Article 1, Section 9 Budgeting Accounting “No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.” U.S. Constitution

“Appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law.” 31 U.S.C. § 1301(a) Purpose Statute

“That it shall not be lawful for any department of the government to expend in any one fiscal year any sum in excess of appropriations made by Congress for that fiscal year, or to involve the government in any contract for the future payment of money in excess of such appropriations.” Anti-Deficiency Act

1. Required the President to formally submit the national budget to Congress each year 2. Created “BOB” – Bureau of the Budget (OMB) 3. Established GAO responsible to Congress Budget and Accounting Act

Congressional Budget and Impoundment Act 1. Established Committees on the Budget 2. Established Congressional Budget Office 3. Limited executive branch “impoundments” 4. Moved Fiscal Year from 1 July to 1 Oct Names of laws get too long

Requires Agency heads to provide assurance: 1. Obligations are in compliance with law 2. Funds and property are safeguarded against waste, loss or misuse. 3. Revenues/expenditures are properly reported. From this law came OMB Circular A (Shift to acronyms) FMFIA

1. Shifted responsibility from GAO to OMB 2. Led to CFOs in major Federal entities. 3. Increased emphasis on internal controls 4. Required annual independent audits of financial statements CFO Act

Accounting: Annual Audited Financial Statements 22 Clean Audit Opinions (out of 24 CFO Act Agencies) Mgmt Assurance and Internal Control Assessments A-123 Process Budgeting: Record Debt Sequestration 12 Where are we today?

13 Gross Federal Debt *Dollars are in millions.

14 How did we get here?

Act created the “Congressional Joint Select Committee on Deficit Reduction.” If legislation with $1.2 trillion in savings is not passed by January 15, 2012, automatic cuts go into effect in January Budget Control Act of 2011

Total Goal for Reduction $1,200 Reduction for Debt Service -$216 Reduction to Defense -$492 $492/nine years = -$55/year Reduction to non-Defense -$492 Medicare (-$16 to -$22) and Discretionary (-$39 to-$33) 16 What does Sequester do? Dollars are in Billions.

Defense $552$556$577 Sequester $497$511$522 Nondefense$506$520$530 Sequester $469$483$494 Grand Total $966$994 $1, Year by Year View Dollars are in Billions.

Bipartisan Budget Agreement Raise the Sequester Caps for 2014/2015+$63 Paid for by Cuts spread over 10 years: Extend Direct Spending CAPS into FY2022/23-$28 Federal Employee Retirement Changes -$ 6 Military Retirement Changes-$ 6 Over a dozen smaller changes-$ 9 Higher Education Changes-$ 5 Strategic Petroleum Reserve-$ 3 New Health Benefit Option (FEHB self +1)-$ 3 Higher Pension Benefit Guaranty Premiums-$ 8 TSA Aviation Security Fees-$12 Customs User Fees extended into FY2022/23-$ 7 Total Reduction-$85 18 Dollars are in Billions.

Defense $497$511$522 Adjustment Nondefense$469$483$494 Adjustment Grand Total$1,012$1,014 $1, Budget Agreement by Year Dollars are in Billions. Totals do not match due to rounding.

20 Problem solved?

21 The Other Shoe

Accounting led to writing and civilization Budgeting led to overspending and more laws Summary

Thank you QUESTIONS?