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 +$X Unassigned cost -$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 > FFS PWE & Job # > 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 1:1 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.