Leadership and internal controls are key to the successful
implementation of managerial cost accounting practices,
the Government Accountability Office has said in a new
report measuring the extent to which federal agencies
base managerial decisions on cost information they develop.
The Chief Financial Officers Act of 1990 and the Joint
Financial Management Improvement Program’s Framework for
Federal Financial Management Systems, in addition to
other regulations have established requirements and
accounting standards for managerial cost accounting
information at federal agencies.
MCA entails gathering and analyzing financial data and
non-financial data – such as hours worked, units produced,
grants managed, people trained, etc. – in order to
allocate costs to performance goals, program activities
and outputs, according to GAO-05-1013R.
It said the Department of Labor implemented a
department-wide MCA system that 15 of its 18 component
agencies have used as a base for their specific needs,
while the Department of Veterans Affairs has left it up
to components to implement MCS systems.
GAO also noted that VA has an MCA system in operation
at one of its two largest agency components.
It said MCA-related controls needed strengthening at
both agencies and cited control weaknesses such as “not
validating non-financial data and not documenting
policy and MCA procedures,” which could make data less
reliable.
DoL and VA cited existing and planned uses of MCA
information such as budgeting, resource allocation,
financial reporting, etc., however, VA disagreed with
GAO’s recommendations.
