Three Broad Government Spending Purposes - 1) Current Operations 2) Capital Outlays 3) Debt Service Present Value Analysis - Three Components - Determines what $$ Rec'd in Future is Worth Today 1) inflation component - year over year loss in value 2) enterprise component - inherent risk 3) unique component - Budget Accounting and Procedures Act of 1950 - Requires the head of each federal agency to establish and maintain I/C's. Federal Managers Financial Integrity Act of 1982 (FMFIA) - requires the head of each agency to evaluate controls on an annual basis, reporting any weakness along with a corrective action plan ** (resulted in the "green book") ** Single Audit Act of 1984 (amended in 1996) - requires the audit of state and local governments and npo's receiving federal funding Sarbanes Oxley Act of 2002 - Placed restrictions on publicly traded companies following Enron scandal. Requires mgmt to report on I/C's for financial reporting in its annual report. (ICOFR) - Internal Controls Over Financial Reporting Chief Financial Officers Act of 1990 (CFO Act): - required 10 federal agencies to produce audited annual financial reports that included a report on internal control. expanded in 1994 by GMRA INTERNAL CONTROLS - systems and techniques managers use to provide reasonable assurance that agency objectives met in an effective/efficient manner, in compliance with laws/regulations, and to safeguard assets. Implemented to accomplish certain results, prevent problems, or detect problems that have occurred. Some controls can both detect and prevent problems (but only if their existence is known). TIME VALUE OF MONEY - Used in consideration of capital budgeting 1) Present Value Analysis 2) Future Value Analysis 3) Payback Analysis Flowcharting - Iterative process requiring changes throughout development, each step represents a decision, also used to evaluate processes for effective internal controls Earned Value Management (EVM) - project mgmt system that weighs both schedule and cost performance to determine if a project is delivering expected results on time and within budget Regression Analysis - Predicts the relationship between variables: 1) Direct Linear Regression 2) Indirect Linerar Regression 3) Non-linear Regression 4) No Relationship ** See Limits of Regression Analysis Correlation Coefficient - Determines the degree of accuracy the analysis (variables) can be used to predict results (1=perfect correlation .85 considered reliable for forecasting) Multiple Regressions - analyzes multiple IV's and look for items with the highest correlation coefficient as being the most like predictors Limits of Regression Analysis - Data ranges must be relevant (e.g., sample size might be too small to project on a larger population) Difficult to find data sets with high correlation coefficients Bad data = bad results (garbage in, garbage out) Correlation is not Causation, have to be able to explain how one set of data would influence another Data Analytics - inspecting, cleaning, transforming, and modeling data to find useful information, conclusions, and support decision making Data Mining - (Predictive) sorting through large data sets and using filters and algorithms to pick out relationships ** See strengths and weaknesses Predictive Analytics - data collected through a variety of techniques to analyze current and historical facts to make predictions about future events Data Mining Strengths and Weaknesses - * Strengths Analyst is able to review complete data sets Ability to link together multiple data sources * Weaknesses Must have quality data Must have ability to understand program requirements and how this is represented in the data Starting a Data Analytic Program - Collaborate with other agencies for data collection and sharing Determine ROI in Analytics Programs Give leaders clear concise analysis they can use to support data driven programs Enable employees at all levels to see and utilize data for their needs (not just the needs of senior leaders Managers to demand the use of data and provide employees with targeted on the job training Forensic Auditing - examination of financial information that is likely to be used for the investigation and prosecution of financial crimes Need to have knowledge of basic legal principles, standards for discovery Steps for Forensic Auditing - a) data collection, b) data preparation, c) data analysis, and d) reporting Benford Digital Analysis - based on observation that more transactions begin with the number one than larger numbers. More transactions will start with number one than number two ... and more with number two, than number three, etc... Because there is an expected distribution of numbers, the testing an point out potentially fraudulent transactions Competitive Source Analysis - Used to determine if there is a benefit to contracting government services to the private sector: 1) Conduct a management study 2) Prepare a performance work statement - defines the expected outputs/results 3) Project the in-house and contract costs 4) Select the best alternative - combination of performance and price Ratio Analysis - Active use of numbers to point out problems and indicate performance, questions to ask, etc. They serve as starting points for further inquiry