Improving Federal Costing for Better Decisions

With no definitive guidance on costing for internal management decision-making, the federal government would benefit greatly from an improved approach. In their new research paper, Larry R. White, CMA, CFM, CPA, CGFM; Anton van der Merwe; and Tim O’Leary*, CPA, CGFM, CGAP introduce federal executives and managers to IMA’s Conceptual Framework for Managerial Costing (CFMC), the first comprehensive accounting framework in history focused purely on creating cost information for decision support and optimization.

Improving Federal Costing for Better Decisions looks closely at the federal approach and provides recommendations for applying the CFMC to efficiently generate actionable cost information for managers and employees at all levels of government organizations.

Key recommendations generated by applying the IMA’s CFMC to government accounting issues include:

• The federal government should go beyond the standards in Statement of Federal Financial Accounting Standards (SFFAS) 4 and require causal modeling to ensure that agencies use correct information for decision making.
• The federal government should prescribe an analytical doctrine for decision-making information that departs from financial reporting and compliance regulations and places dominance on causality.
• Federal financial and resource management doctrine needs to emphasize capacity management and optimization rather than expenditure control.
• Budget protocols should be reoriented to causal cost, resource, and operational information.

These recommendations can be used for more effective decision-making in government and improved stewardship of federally-funded services on behalf of the public interest. 

*The views expressed by Mr. O’Leary are his personal views and do not necessarily represent the views of the Department of Energy, National Nuclear Security Administration, or the United States Government.