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David Norquist Tampa Bay PDI April 3rd, 2014

A Brief History of Federal Financial Management. David Norquist Tampa Bay PDI April 3rd, 2014. 10,000 BC. Early hunter gatherer societies: No central government No written language No accounting. 4,000 BC Early Accounting. Civilization starts w/ four key advances: Shift to farming

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David Norquist Tampa Bay PDI April 3rd, 2014

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  1. A Brief History of Federal Financial Management David Norquist Tampa Bay PDI April 3rd, 2014
  2. 10,000 BC Early hunter gatherer societies: No central government No written language No accounting
  3. 4,000 BC Early Accounting Civilization starts w/ four key advances: Shift to farming Central government Early writing (PP&E) Accountants (Scribes)
  4. 1787 U.S. Constitution 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.”
  5. 1787 U.S. Constitution Article 1, Section 9BudgetingAccounting“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.”
  6. 1809 Purpose Statute “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)
  7. 1870 Anti-Deficiency Act “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 ofsuch appropriations.”
  8. 1921 Budget and Accounting Act 1. Required the President to formally submit the national budget to Congress each year2. Created “BOB” – Bureau of the Budget (OMB)3. Established GAO responsible to Congress
  9. 1974 Names of laws get too long Congressional Budget and Impoundment Act1. Established Committees on the Budget2. Established Congressional Budget Office 3. Limited executive branch “impoundments”4. Moved Fiscal Year from 1 July to 1 Oct.
  10. 1982 (Shift to acronyms) FMFIA Requires Agency heads to provide assurance:1. Obligations are in compliance with law2. Funds and property are safeguarded against waste, loss or misuse.3. Revenues/expenditures are properly reported. From this law came OMB Circular A-123
  11. 1990 CFO Act 1. Shifted responsibility from GAO to OMB2. Led to CFOs in major Federal entities.3. Increased emphasis on internal controls4. Required annual independent audits of financial statements.
  12. Where are we today? Accounting: Annual Audited Financial Statements 22 Clean Audit Opinions (out of 24 CFO Act Agencies) MgmtAssurance and Internal Control Assessments A-123 Process Budgeting: Record Debt Sequestration
  13. Gross Federal Debt *Dollars are in millions.
  14. How did we get here?
  15. Budget Control Act of 2011 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 2013.
  16. What does Sequester do? Total Goal for Reduction $1,200 Reduction for Debt Service -$216 Reduction to Defense -$492 $492/nine years = -$55/yearReduction to non-Defense -$492 Medicare (-$16 to -$22) and Discretionary (-$39 to-$33) Dollars are in Billions.
  17. Year by Year View 2014 2015 2016Defense $552 $556 $577Sequester -55 -55 -55 $497 $511 $522Nondefense $506 $520 $530Sequester -37 -37 -36 $469 $483 $494Grand Total $966$994 $1,016 Dollars are in Billions.
  18. 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 Fee s -$12 Customs User Fees extended into FY2022/23 -$ 7 Total Reduction -$85 Dollars are in Billions.
  19. Budget Agreement by Year 2014 2015 2016Defense $497$511$522Adjustment +22 + 9 + 0Nondefense$469$483$494Adjustment +22 + 9 + 0 Grand Total $1,012 $1,014 $1,016 Dollars are in Billions. Totals do not match due to rounding.
  20. Problem solved?
  21. The Other Shoe
  22. Summary Accounting led to writing and civilization Budgeting led to overspending and more laws
  23. Thank you QUESTIONS? David.Norquist@kearneyco.com
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