CFOs: Surviving in a New Era - AGA

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executive summary
The Association of Government Accountants (AGA)
and Grant Thornton LLP have surveyed government
chief financial officers (CFO) since 1996. The National
Association of State Auditors, Comptrollers and
Treasurers (NASACT) and the Government of Canada
joined us in 2008. The 2011 survey reports on 1,385
online and in-person interviews with federal and
state financial professionals, including 38 Canadian
officials. AGA, NASACT and Grant Thornton will
publish a second report on state government in
August 2011.
Risk management needs attention
In times of tight budgets and shrinking staffs,
effective management becomes critical. Small
mistakes can multiply and have global implications.
Governments need new solutions to
survive and thrive – and CFOs have at their
fingertips the right concepts and processes for
the challenge. One way is through effective risk
management. When focused on core missions,
risk management helps governments
set priorities, avoid unneeded costs
and deliver better services to citizens.
Unfortunately, U.S. federal
and state financial executives
and managers give a C to
a B- grade on how well
their entities integrate
internal controls with risk
management. Financial
executives say that many
non-financial leaders and
managers do not understand
risk, either ignoring it or
becoming so risk-averse as
to paralyze operations.
Governments need the financial perspective on
risk management that CFOs provide. Financial
management leaders know how to handle financial
risks, but are usually absent from the operations
or mission risk arenas. This is unfortunate
because operations risks tend to cause financial
problems and vice versa. Financial executives say
that recent budget shortfalls and cuts are causing
new risks to government missions, to financial
management and to risk management itself. As
financial staffs get smaller, oversight declines and
more things slip through the cracks. Less money
makes it difficult to start new activities, so CFOs
must become sales agents for better risk management
efforts.
Predictive and statistical
analytics can deliver more value
Predictive or statistical analytics or modeling
uses data mining, statistical analysis, game
theory and geospatial analysis
to extract information from
data, and then applies it
to predicting trends
and patterns and
to identifying