HD94 - Final Report on the Review of the Financial Accounting and Control Operations of the State Comptroller


Executive Summary:
We have completed our final review of the operations of the State Comptroller as they relate to the Commonwealth's financial accounting and control operations practices as required by Section 1-2.2.B. of Chapter 4 of the 2004 Virginia Acts of Assembly, Special Session 1. For this final report, in addition to providing our final recommendations, we are also repeating the recommendations that we made in our interim report dated November 18, 2004 and providing an update on the status of those recommendations in Chapter 4. A comprehensive report summary and recommendations begins on page 1. Our interim report is set out in chapters one through four of this report and the final review is set out in chapters 5 through 8.

There is a significant opportunity for the Comptroller's Office to improve financial management leadership, increase communication, strengthen internal controls, and create efficiency in the Commonwealth. Throughout this report, we describe areas for improvement and make specific recommendations such as increasing the use of technology, improving access to training, and consolidating of Commonwealth business functions.

The Comptroller's Office should exercise the same degree of financial management leadership and authority as a controller of a major corporation. However, in Virginia, decentralization initiatives in the early 1990s and recurring budget reductions in the Comptroller's Office had the effect of making agencies work independently, eroding the Office's financial management leadership. Expecting agencies to work differently now will not occur without resistance. The Comptroller and his staff will also need to change the way they operate in order to overcome the resistance towards central financial management leadership. The process of change begins with a sound long-term strategic plan that examines future trends and develops a business case for statewide financial management systems modernization.

We recommend the Comptroller and his staff begin a comprehensive strategic planning process that considers our recommendations made throughout this report. The plan should focus on defining a vision for the statewide financial management leadership of the Office, identifying opportunities for using best practices in our technology oriented environment, improving overall communications and coordination between the Comptroller's Office and agencies, and reducing costs by creating efficiencies. Our specific recommendations are throughout this report and, in general, support the need for significant improvement. As part of the strategic plan, the Comptroller should identify optimum employment levels and funding to achieve the desired results and seek changes to the maximum employment levels and funding to support his plan.

[Preliminary Report - see House Document No. 48, 2004 (HD48)]