Course Introduction/ Determine the Difference Between Internal and External Reporting © Dale R Geiger 2011 © Dale R Geiger 2011 Terminal Learning Objective • Task: Determine the difference between internal and external reporting • Condition: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors • Standard: with at least 80% accuracy: • Define the characteristics of accounting information • Identify key components of GFEBS output • Classify GFEBS reports as internal or external © Dale R Geiger 2011 Cost Maturation Process Single Use Persistent Use Universal Use Estimated Future Cost Expected and Actual Cost Planned & Actual Cost Cost Benefit Analysis Continuous Improvement Role Based, Org Based, Output Based Control Cost Informed Decisions Cost-Managed Organizations Cost-Managed Enterprise Cost War High Intensity Conflict Cost War Full Spectrum Operations Cost War Insurgency Starting here (Some work is being done now) © Dale R Geiger 2011 TARGET Transforming the Army: Four Requirements for Success Need Leadership Status Action Team with ACE to create “informed” leaders Exploit existing strong leadership capabilities ACE Build strong staff, strong organization Select, develop ACEs (Asst to Comdr – Enterprise) Design and deliver advanced training Process Cost Info Modify “winning the cost war” template as needed Use new tools as they come online © Dale R Geiger 2011 ACE Development: PCAM & ICAM • Principles of Cost Analysis and Management • • • Targeted at entry level CP11 Personnel, Sergeants, Lieutenants, Junior Captains Course Length: Three Weeks Pre-requisites: On Line Math Refresher • Intermediate Cost Analysis and Management • • • Targeted at mid career CP11 Personnel, Staff Sergeants and above, Senior Captains, Majors and above Course Length: Three Weeks Pre-requisites: On Line Math Refresher © Dale R Geiger 2011 Stackable Credentials Based on the Financial Management Career Field * NOTE: Stackable credentials are based on Financial Management (BC36/CP11) career field demands for cost management, which is the Army maximum; other career fields will use a subset of these requirements © Dale R Geiger 2011 All CEs will require basic, advanced, and master skills with a concentration in: Readiness – Capacity management and force cost analysis Materiel – Logistics and working capital funds cost analysis Human Capital – Manpower cost analysis Services & Infrastructure – Services and capital asset costing FAs and CPs that are common to all CEs should train to become a master in any CE ICAM • Develop advanced cost management skills • Next step for those already fulfilling the role of ACE or who wish to become and ACE © Dale R Geiger 2011 Purpose of Course • Develop skills in Cost Management • Includes conference, demonstration and practical exercises, and case study • Emphasizes critical thinking • Introduces Excel templates to facilitate calculations • Introduce and apply skills in Leadership Driven Management • Heavy emphasis on case studies requires students to analyze real-world scenarios © Dale R Geiger 2011 Remember Valley Forge • Refer to the article by Ms Matiella • Why does the Army need to become more cost effective? • What is the difference between Cost Benefit Analysis and a Cost-Managed Organization? • How fiscal constraints pose an “asymmetric threat”? • How should we respond? © Dale R Geiger 2011 10 Example External Report: Tax Return • Why? • How? • Test of success? • Dynamics? Internal Report: Checkbook • Why? • How? • Test of success? • Dynamics? © Dale R Geiger 2011 37 Research: System Uses at 59 Federal Organizations reqr costing mgmt control OH allocation 58 59 50 51 41 42 53 54 55 43 44 45 34 35 36 25 26 27 17 18 10 33 52 pricing 56 57 46 47 48 37 38 39 40 28 29 30 31 32 19 20 21 22 23 24 11 12 13 14 15 16 WVA VMSS BLM FGIS © Dale R Geiger 2011 PBS 38 Research: System Uses at 59 Federal Organizations reqr costing mgmt control OH allocation 58 59 50 51 41 42 53 54 55 43 44 45 34 35 36 25 26 27 17 18 10 33 52 pricing 56 57 46 47 48 37 38 39 40 28 29 30 31 32 19 20 21 22 23 24 11 12 13 14 15 16 WVA VMSS BLM FGIS © Dale R Geiger 2011 PBS 39 Research: System Uses at 59 Federal Organizations reqr costing mgmt control OH allocation 58 59 50 51 41 42 53 54 55 43 44 45 34 35 36 25 26 27 17 18 10 33 52 pricing 56 57 46 47 48 37 38 39 40 28 29 30 31 32 19 20 21 22 23 24 11 12 13 14 15 16 WVA VMSS BLM FGIS © Dale R Geiger 2011 PBS 40 Research: System Uses at 59 Federal Organizations reqr costing mgmt control OH allocation 58 59 50 51 41 42 53 54 55 43 44 45 34 35 36 25 26 27 17 18 10 33 52 pricing 56 57 46 47 48 37 38 39 40 28 29 30 31 32 19 20 21 22 23 24 11 12 13 14 15 16 WVA VMSS BLM FGIS © Dale R Geiger 2011 PBS 41 Research: System Uses at 59 Federal Organizations reqr costing mgmt control OH allocation 58 59 50 51 41 42 53 54 55 43 44 45 34 35 36 25 26 27 17 18 10 33 52 pricing 56 57 46 47 48 37 38 39 40 28 29 30 31 32 19 20 21 22 23 24 11 12 13 14 15 16 WVA VMSS BLM FGIS © Dale R Geiger 2011 PBS 42 Research: System Uses at 59 Federal Organizations reqr costing mgmt control OH allocation 58 59 50 51 41 42 53 54 55 43 44 45 34 35 36 25 26 27 17 18 10 33 52 pricing 56 57 46 47 48 37 38 39 40 28 29 30 31 32 19 20 21 22 23 24 11 12 13 14 15 16 WVA VMSS BLM FGIS © Dale R Geiger 2011 PBS 43 Research: System Uses at 59 Federal Organizations reqr costing mgmt control OH allocation 58 59 50 51 41 42 53 54 55 43 44 45 34 35 36 25 26 27 17 18 10 33 52 pricing 56 57 46 47 48 37 38 39 40 28 29 30 31 32 19 20 21 22 23 24 11 12 13 14 15 16 WVA VMSS BLM FGIS © Dale R Geiger 2011 PBS 44 Learning Check • What are the basic uses for Cost Accounting systems? • Should all cost systems be the same? • Why or why not? © Dale R Geiger 2011 45 What about GFEBS? • • • • General Fund Enterprise Business System Used Army-wide Permits real-time posting of financial transactions Reports costs according to Budget-relevant and non-Budget-relevant Cost Objects • Are GFEBS reports internal or external? 46 © Dale R Geiger 2011 Unit Cost Report © Dale R Geiger 2011 47 Unit Cost Report This report shows the actual and planned quantities and actual and planned (average) unit cost for various SKFs (Statistical Key Figures) such as Headcount © Dale R Geiger 2011 48 Discussion Questions • Who would use this report? • How might they use it? • If you were the Senior Leader of this organization, would you be surprised that your cost per headcount was $78,919.20? • What would you want to know about that number? • Would this be an internal or external report for you? © Dale R Geiger 2011 49 Learning Check • What characteristics would identify a report as internal to an organization? • What characteristics would identify a report as external to an organization? © Dale R Geiger 2011 50 Conclusion • Needs for internal cost information are as varied as the organizations themselves • External cost reports: • Facilitate comparison of organizations by external users • Are unlikely to meet internal management information needs © Dale R Geiger 2011 51 ... Task: Determine the difference between internal and external reporting • Condition: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness... One Week Two Week Three Understanding Cost Learning the Process Applying the Process Cost Benefit Analysis Cost Control Theory CBA Examples Org Based Control Cost Management Role Based Control... make a difference in the decision • Timely – frequency and lag time • Relevance is in the eye of the User © Dale R Geiger 2011 18 Who are the Users? • Users may be INTERNAL or EXTERNAL • Internal