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.
