1. 1 ISSUE AND CHALLENGES IN GOVERNMENT ACCOUNTABILITY JOHN E. HOMAN 2015–2016 AGA National President East Tennessee Chapter Fall Training Event November 9, 2015

2. 2 THE AGENDA WHY “CELEBRATING THE GOVERNMENT WORKFORCE” for 2015–2016 KEY ISSUES IN GOVERNMENT ACCOUNTABILITY Address gaps in accounting education Connect with early- career professionals Consider international expansion

3. 3 Theme for 2015–2016: Celebration of the Government Workforce AND ITS DEDICATION, SKILL AND INTEGRITY AT THE FEDERAL AND STATE/LOCAL LEVELS

4. 4 Bankruptcy in Detroit, San Bernardino and major pension shortfalls in Illinois Intergovernmental financial risk Sequestration, multiple debt limit crises and government shutdown Mortgage crisis of 2008 and TARP UNPRECEDENTED CHALLENGES These events have led to the creation of austerity policies, adversely impacting employee morale and reduced the optimism of our members CELEBRATION OF THE GOVERNMENT WORKFORCE STATE AND LOCAL LEVEL FEDERAL LEVEL

5. 5 Lack of recognition of the dedication and skill of the government workforce Unfair comparisons are often made of the compensation of government workers Imply government employee lack of competence, efficiency and innovation CELEBRATION OF THE GOVERNMENT WORKFORCE MEDIA

6. 6 IDENTIFY SEEK ways to change the public’s perception of the government worker opportunities to share positive aspects of beneficial programs, for example use of analytics to identify and prevent fraud and improper payments movement to shared services to reduce cost through standardization from you, about your stories and successes opportunities to highlight positive examples, through the Journal, Topics, member feature stories HEAR PROVIDE KEY FOCUS FOR THE COMING YEAR

7. 7 DEA scientists using precision microscopes, calibration equipment to fight drug cartels DOI environmental officers using sophisticated spawning techniques to create Pacific salmon that would otherwise be extinct Capital Police developing responses to all types of terrorist threats Federal agency use of analytics identify and prevent fraud and improper payments Movement to shared services to reduce cost through standardization FOCUS FOR THE COMING YEAR SEEK OPPORTUNITIES TO SHARE POSITIVE ASPECTS OF BENEFICIAL PROGRAMS

8. 8 Hear from you, about your stories and successes so they can be shared through: FOCUS FOR THE COMING YEAR LEVERAGE OPPORTUNITIES TO COMMUNICATE BROADLY JOURNAL The Journal of Government Financial Management is published quarterly TOPICS A weekly newsletter featuring industry news, upcoming events and more MEMBER PROFILE Published on the web and in Topics

9. 9 Key Issues in Government Accountability NEED TO ADDRESS CRITICAL GAPS IN ACCOUNTING EDUCATION

10. 10 The current form and content of CPA examination has very limited requirements related to government accounting There is no requirement that examinees have any knowledge whatsoever of the governance structure of federal accounting A prospective CPA does not have to have any knowledge of the operation of the Federal Accounting Standards Advisory Board and the standard set of federal statements are not listed as ones that a CPA should be knowledgeable about FORM AND CONTENT OF UNIFORM CPA EXAMINATION CRITICAL GAPS IN ACCOUNTING EDUCATION

11. 11 Only five states require that CPA candidates have completed any formal coursework in government accounting, and Only seven require a mix of courses of which government classes may be a part EDUCATION REQUIREMENTS FOR CPA CANDIDATES CRITICAL GAPS IN ACCOUNTING EDUCATION

12. 12 CRITICAL GAPS IN ACCOUNTING EDUCATION The availability of government accounting courses at our colleges and universities is very limited. The best information on the paucity of the government offerings is a survey of the Accounting Departments of all the Association of Collegiate Schools of Business which found that of 487 responding schools: only 313 or 64% had any course in government accounting and of the other schools, the vast majority only had between one and three classes in government accounting AVAILABILITY OF GOVERNMENT ACCOUNTING COURSE IS LIMITED

13. 13 The latest data on the number of PhDs in government accounting has shown a precipitous decline in the number of new PhDs qualified to teach government accounting. From 2001 to 2005, there were fewer than 10 government accounting dissertation completions each year and only two in 2005. Discussions with current practitioners indicate that the decline has likely continued to decline FACULTY IS NOT BEING DEVELOPED IN THE GOVERNMENT AREA CRITICAL GAPS IN ACCOUNTING EDUCATION

14. 14 In federal accounting, CPAs have a knowledge level the same as a layman. It is fair to say that government accounting is largely un-taught at our higher educational institutions. It is probable that today the average CPA practitioner will have never taken a government accounting class and will have only a rudimentary knowledge of the government and fund accounting used by our state and local governments. CRITICAL GAPS IN ACCOUNTING EDUCATION IMPACT CPAs in America are entering the profession with little or no knowledge of government accounting

15. 15 The United States has more than 90,000 state and local governments, and more than 24 million individuals are employed in federal, state and local governments in the United States. The U.S. Department of Education has a near trillion-dollar balance sheet. Many federal agencies are bigger than the largest Fortune 500 companies. Government is important and the problems of fiscal sustainability for the key programs the entire nation relies upon, such as social security and Medicare, affect every citizen and cannot be addressed properly when there is not an educated professional workforce. CRITICAL GAPS IN ACCOUNTING EDUCATION IMPACT The public needs to know and understand government finances

16. 16 CGFM AGA national office is: working with OPM to position CGFM as a preferred credential for Accounting and Auditing Series collaborating with cabinet-level agencies to incorporate training and certification into their training programs meeting with representatives from higher education to expand and promote the CGFM certification in our universities and by governments We need to close the gap in our accounting professionals’ education, and to address the gaps in the CPA examination’s content and education requirements We all need to lobby the higher education community to add government accounting programs to the accounting and business curriculums Government accounting education must be augmented and improved. CRITICAL GAPS IN ACCOUNTING EDUCATION WHAT CAN BE DONE

17. 17 CRITICAL GAPS IN ACCOUNTING EDUCATION WHAT CAN BE DONE “When the largely unfunded liabilities of the federal government exceed over $20 trillion dollars and are rising each year, upon the education of the accountants of the country, the fate of the country depends.” “Upon the education of the people of this country, the fate of this country depends.” – British Prime Minister Benjamin Disraeli

18. 18 Only 7% of federal workforce is under age of 30; turnover at the 2- to 5-year level in public accounting at highest level in years The future leaders in FM and AGA May require different (new) marketing strategies by all in the profession The future is international – where there are opportunities for growth October 2014 – welcomed Mexico City Chapter Identifying regions/locations with considerable stable government FM presence OTHER ISSUES EARLY CAREERS INTERNATIONAL EXPANSION