Question

Problem 2 – Federal Financial Management Environment

Requirements: Compare and contrast the financial management responsibilities of:

1. Department of the Treasury

2. Office of Management and Budget

3. Government Accountability Office

4. Federal Accounting Standards Advisory Board

Answer 1

1.

The main difference between treasury management and financial management lies in their level of activity. The financial management focuses on the long-term and strategic investments, but when it comes to treasury management, the focus is on short-term and day to day monitoring of the investments. Simply put, treasury management is a part of financial management.

The difference between financial management and treasury management, are discussed hereunder:

1. A part of financial management, which is concerned with the planning and controlling of firm’s cash and funds, is known as treasury management. The managerial activity that deals with the management of firm’s financial resources, to achieve the overall aim of the enterprise, is known as financial management.
2. While financial management is concerned with the formulation, coordination and administration of the financial plan, treasury management is all about execution of the same.
3. The main objective of financial management is that is regular monitoring of income and expense budgets. On the contrary, treasury management focuses on preparation and presentation of financial statements.
4. Financial Management is all about the establishment of firm’s overall financial strategy, which is long-term in nature. As against, treasury management talks about the mechanism to be used for accounting and development system, which is short term.

2.

As a primary support agency for the President, OMB has important and varied responsibilities. A 1986 study identified 95 statutes, 58 executive orders, five regulations, and 51 circulars that reflected OMB's operational authorities at the time.13Most observers include as "major functions" of OMB those listed below.

Budget Formulation and Execution

The Budget and Accounting Act, 1921, as amended and recodified, requires the President to submit each year a consolidated budget proposal for Congress's consideration.

Legislative Coordination and Clearance

OMB plays a key role in coordinating the President's legislative activities. Under Circular No. A-19, OMB's LRD coordinates executive branch review and clearance of congressional testimony and correspondence and agencies' draft bills to ensure compliance with the President's policy agenda, make known the Administration's views on legislation, and allow affected agencies to provide input during intra-executive branch policy development.

Regulatory and Information Policy

OMB exercises considerable influence over agency regulations. Under Executive Order 12866, OIRA works with OMB's RMOs to review agency rules and cost-benefit analyses.

3.

The GAO conducts audits of federal government agencies to ensure that funds are spent efficiently and as intended. The agency reviews government programs and policies to determine if they are achieving their intended goals, and investigates allegations of illegal activity within the government. The GAO also issues legal determinations on proposed rules regarding other government agencies.

The GAO has broad authority to review the Federal Reserve's function and operations, and it conducted reviews of the emergency lending programs that were enacted following the 2008 financial markets collapse. It does not have the authority to review individual meetings and monetary policy decisions made by the Fed.

The Comptroller General is appointed by the President from a bipartisan list of Congressional recommendations. Gene L. Dodaro was appointed to the position in 2010; his 15-year term will expire in 2025.

4.

The Federal Accounting Standards Advisory Board (FASAB) is a United States federal advisory committee whose mission is to improve federal financial reporting through issuing federal financial accounting standards and providing guidance after considering the needs of external and internal users of federal financial information.^[2] FASAB is designated as the body that sets U.S. generally accepted accounting principles (GAAP) for the United States Government and its component entities, referred to as federal financial reporting entities.^[3] The AICPA Council designated FASAB as the body that establishes GAAP for federal entities in 1999.^[4]

The Chief Financial Officers Act of 1990 required annual, audited financial statements for the United States Government and its federal reporting entities. In order to apply the statutes of the CFO Act of 1990, the Secretary of the Treasury, the Director of the Office of Management and Budget (OMB), and the Comptroller General established FASAB to develop the "applicable accounting principles" for the newly required financial statements.

FASAB issues the Statement of Federal Financial Accounting Standards (SFFAS), Interpretations, Technical Bulletins, Technical Releases, and Staff Implementation Guidance.