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Managerial Cost Accounting: USDA Tools and Data Definitions

Office of the Chief Financial Officer. 1. Agenda. IntroductionsThe Challenge

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Managerial Cost Accounting: USDA Tools and Data Definitions

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    1. Managerial Cost Accounting: USDA Tools and Data Definitions Presented by Jim Temple, ACFO-FSPM

    2. Office of the Chief Financial Officer 1 Agenda Introductions The Challenge & the Solution Managerial Cost Accounting Workgroup Financial Management Modernization Initiative (FMMI) FMMI’s Role in Managerial Accounting MCA Workgroup Activities Downstream Applications

    3. Introductions Managerial Cost Accounting & FMMI Jim Temple Budget & Performance Management System Bob McGrath Automated Cost Management System Stacye Teachman

    4. Managerial Cost Accounting: What Is It? Managerial Cost Accounting = The processes associated with the recording, distribution and analysis of expense and revenue data for internal management decisions and controls.   Provides an organization with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.   It is the portion of accounting devoted to information needed by the management of that organization (as opposed to financial accounting to external parties).

    5. Managerial Cost Accounting: The Challenge The Challenge: Make Government Spending More Accountable and Efficient. USDA must implement financial applications and practices that support the vision of financial transparency articulated in the Department's Strategic Goals. USDA must attain compliance with SFFAS 4/30 and other, related financial reporting requirements: A-136, particularly Statement of Net Cost provisions FFATA.

    6. Managerial Cost Accounting: The Solution The Solution: Create the environment in USDA to financial accountability through implementation and use of comprehensive managerial accounting. Implement Department-wide standards and practices that will provide consistent reporting, internally and externally, of financial results. Implement the financial systems infrastructure to support the accounting, decision-making and reporting activities needed to support this goal.

    7. Managerial Cost Accounting Workgroup The Managerial Cost Accounting (MCA) Workgroup was established with this goal in mind. MCA Workgroup is made up of agency & Department representatives. MCA Workgroup (under CFO Council direction) is charged with establishing standards for comprehensive MCA practices. MCA Workgroup becomes the source for defining common activities across the Department and its units. With the help of the MCA workgroup, Department reporting can be completed, and unit effectiveness tested, based on consistent application of metrics & common sources of financial data.

    8. FMMI and Managerial Cost Accounting

    9. FMMI and Managerial Cost Accounting FMMI becomes the financial system of record as deployments occur. FMMI provides the unified systems infrastructure to support the accounting, decision-making and reporting activities needed for the goal of uniform MCA. FMMI provides the opportunity for standardizing common activities in three tiers: Common across all agencies/offices; Common across like activities within various units; or, Unique activities within units.

    10. FMMI and Managerial Cost Accounting FMMI’s Cost Management (CO – Controlling Module & PS – Project Systems Module) accumulates all expense and revenue posted entries and applies them by assigned organization/unit cost centers. Data is accumulated at cost center level (and below): Work Breakdown Structure (WBS) Elements accumulate cost data for individual projects and reimbursable agreements. USDA’s legacy cost allocation activities are performed here. Other allocated costs are assigned here as required by budgeting activities and cost reporting.

    11. FMMI and Managerial Cost Accounting FMMI becomes the source of financial data used in the application of MCA across all activities of the Department. Opportunity for standardizing common activities in three tiers: Common across all agencies/offices Common across like activities within various units Unique activities within units Used to integrate the financial components of program activities and outcomes to the Department’s Strategic Goals.

    12. FMMI Elements FMMI Elements: FMMI includes the Cost Centers portion of the CO module. This aids in the financial management of a division, branch, region or section, any identified organizational unit. Cost centers (and related Funds Centers) provide clear and continuous status against budgetary goals. FMMI includes the WBS Elements portion of the Project Systems. This is used to track and report costs for reimbursable agreements, sales orders or internal projects.

    13. FMMI & Other Solution Elements Existing ‘downstream applications’ provide the basis for comprehensive managerial accounting. They provide ABC, internal simulation and service delivery measurement. They are used to consolidate financial & performance data across systems and functions. Opportunities for downstream cost applications include: Improved functionality for budgeting & full costing to program levels; and, Better integration with costing and budget formulation tools (including SAP’s own application).

    14. FMMI & Downstream Applications FMMI provides specific opportunities for downstream cost applications include. Cost applications will receive financial data from one common source (FMMI). This provides consistent collection, and timely dissemination, of expense/revenue data. Activities can be developed and reported consistently in support of USDA’s and agency Strategic Goals. USDA has purchased and begun to deploy the SAP application (BPMS/CMIS). USDA also has other applications being deployed that can meet the same standards of timely and comprehensive managerial accounting (ACMS, etc.).

    15. Office of the Chief Financial Officer 14 MCA Workgroup and Cost Accounting Practices

    16. FMMI and the MCA Workgroup FMMI and downstream applications are being implemented concurrently. Both can proceed with coordinating assistance of the MCA Workgroup. Standardized reporting of cost information can be established in BI, the data warehouse and reporting module of FMMI, and provide more usable data to downstream applications. Reporting requirements for MCA can be met through their dissemination to financial and program management, report developers and their respective audiences.

    17. MCA Workgroup: Next Steps MCA standards will be developed for common activities and metrics: MCA study teams will prepare standards; These will be reviewed, revised and approved by the full MCA Workgroup; and, Standards will be presented to the CFO Council for ratification and Department implementation. MCA study teams will focus on: Department-wide standards & metrics; Activities common to many USDA units; Issues specific to only portions of the Department.

    18. MCA Workgroup – Other Considerations The MCA Workgroup will formulate recommendations for integrated policy guidance across all relevant financial applications for consistent, reliable cost information. This is required to feed common data elements from FMMI to MCA applications. It is needed to meet full Department compliance with SFFAS 4/30. It is essential across FMMI, WebTA and other source systems to support ACMS, BPMS/CMIS and other agency billing and costing applications.

    19. Downstream Applications and Managerial Cost Accounting

    20. MCA Downstream Applications Applications Introduction and Agency Experience Feedback and Questions

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