Financial Information at your Fingertips – INTRODUCING the 21st Century Reporting System

Kerry Dunn May 25, 2021

The Annual Financial Report of the Government of Canada Fiscal Year 2018-2019[1] reports revenues of $332.2 billion and expenditures of $346.2 billion.

Expenditures include $98.4 billion ‘Other direct program expenses’, which ‘represent the operating expenses of the Government’s 130 departments, agencies, and consolidated Crown corporations and other entities, etc.’ This is a significant 28.4% of total expenses.

Decisions about these billions of operating expenditures are made not just at the senior management level of Deputy Ministers and Assistant Deputy Ministers but also by Directors General, Directors and other budget holders at the operational level where program and project plans are executed, and movement toward objectives occurs.

It is at the operational level where the heavy lifting takes place, where contracts are awarded, equipment purchased, staff and contractors hired, commitments made, budgets allocated and reallocated, and lapses or overspending occur.

The effects of these operational decisions, good or bad, roll up through directorates, branches, sectors, departments, ministries, Treasury Board, parliamentary committees and eventually to Parliament itself.

It is therefore vital that expenditure decisions, made at the operational level, are informed and effective. It is here where expenditure decisions for billions of dollars are made based on facts, management experience and analysis, evaluation, and recommendations available from the finance function, especially the assigned Financial Management Advisor(s) (FMAs).

It is facts that are the foundation of informed decisions enabling better business outcomes.[2]

What is needed then is a new way of thinking about the value and use of information and a much better systematic process for delivering valuable information to end users. The prevalence of ‘black books’ at the operational level is symptomatic of the need for a modern, flexible, agile and responsive reporting capability.

Treasury Board Secretariat (TBS) itself encourages ‘Business Innovation – New business models (i.e. doing things completely differently) …Potential unlocked through completely different workflows’[3]

Furthermore, ‘Financial information supports decision making and accountability to Canadians.’[4]

What is needed are comprehensive enterprise-wide portfolios of internal reports, sourced from a rigorously maintained database (SAP – the Government of Canada Financial and Materiel (GCFM) solution [5]) and automatically produced and delivered by Business Intelligence tools – all with greater reliability, efficiency, economy and much reduced human effort.

So, what is operational reporting? Wikipedia defines it as ‘reporting about operational details that reflects current activity. Operational reporting supports the day-to-day activities of the organization – that is the nuts-and-bolts work of government.

To efficiently provide core operational data to decision makers a 21st century financial reporting system needs to be created with:

  • ERP Database Rigorously Maintained,
  • Comprehensive Portfolios of Easily Accessible, Enterprise-Wide Internal Reports,
  • Embedded Analysis, Evaluations and Recommendations
  • Automated Production and Distribution of Reports to Authorized Users.

Broadly, the 21st century reporting system will:

  • Inform various levels of the governance system in a common, consistent, reliable, accurate, cohesive, coherent, understandable and timely manner.
  • Provide embedded analyses, evaluations and recommendations for action.
  • Improve the understanding and decision making of operational managers.
  • Highlight areas of interest for more detailed examination.
  • Help to detect errors and fraud and provide early warning of potential problem areas.
  • Have great utility in performance measurement of organization units and managers.
  • Provide common, consistent and timely communications throughout government.
  • Enable increased efficiency, effectiveness, economy, transparency, accountability and compliance.
  • Enable fact-based decision making, improving resource utilization, monitoring and control.

Attributes of a modern reporting system

Consists of comprehensive portfolios of core and standard-format reports containing data that is relevant, focused, up-to-date, reliable, error free and consistent; supplemented with analyses, evaluations and recommendations, all generally accepted as valuable by end users.

Data reported is congruent with at least two important perspectives:

1. The purpose-based perspective reporting on Core Responsibilities<>Programs<>Projects.

2. The traditional Cost Centre perspective, complying with the Financial Administration Act (FAA).

Report data is sourced from ‘the official departmental system of record,’ the department’s ERP system, a ‘Single Source of Truth.’[6] Data quality is rigorously maintained using in-period transaction processing rules; period-end cycle of review, error corrections, back-dating, reconciliations, commitment management and standard adjustments in accordance with a set of accounting principles adapted for government. This ensures data accuracy and comparability between periods.

Report production and delivery occurs automatically shortly after period-end from the ERP/BI systems, on schedule, to authorized and secure targets, and with minimal human intervention.

Enterprise-wide report layouts have a ‘common look and feel’ and include analytical calculations supplemented with textual notes section for clarification.

Reports have a roll-up, drill-down capability to display different levels of aggregation depending on the needs of the manager.

In Summary:

Acquiring information is only the beginning of the decision-making process. The real value-add is the analysis, evaluation and recommendations embedded in the reports – remedial and proactive action can quickly follow.

Good financial and statistical information, easily accessible and well used will have positive tactical and strategic impacts on the key concepts of efficiency, effectiveness, economy, transparency, accountability and compliance.

All enabled by the 21st century reporting system.

 

Kerry Dunn is a CPA with over 25 years of experience in both public and private sector financial management. His experience varies from corporate management in the credit union industry, to resource management, reporting and project costing with the federal government. Kerry is now the Senior Financial Management Advisor at Dunnco Management Corporation.
Contact Kerry directly to learn more.

 

[1] Department of Finance Canada.

[2] ‘Organizations of all sizes and types will often succeed or fail on the quality of their decision-making’, Dr. Jon Warner, CEO RX4 Group.

[3] TBS document ‘Financial Management Transformation’ dated November 22, 2016, GCDOCS #22991927

[4] The Policy on Financial Management (April 01, 2017) 3.2.3

[5] Standard on Enterprise Resource Planning Systems (May 01, 2012)

[6] Implementing Centralized Reporting using SAP Analytics 2016 ASUG Annual Conference.