June 1, 2012
Defense Department leaders preparing for historic budget cuts should tap the expertise of their financial management executives, who see the current challenges as their moment to “step up to the plate and shine,” stated a new survey conducted by the American Society of Military Comptrollers and Grant Thornton LLP.
The 10th annual survey, released Thursday, summarizes responses from 742 uniformed and civilian defense financial leaders and employees on their role in helping the Pentagon prepare for new military conflicts and a possible budget sequester, and adjusting to a “mind-set of less.”
With top Defense leaders preoccupied with macro issues, “now is truly a time for all [financial management] professionals to assume a leadership role in meeting the challenges of significantly reduced resources in an uncertain and dangerous world,” an analysis of the survey results said.
“We are seeing an increased need for the strategic financial management professional who combines technical finance knowledge with strong analytics and sound operational knowledge,” Al Tucker, executive director of the controllers association, said in a statement. “These professionals can craft budget-cutting solutions that assess and protect priority programs while still generating funds for investments required by the president’s new policy guidance.”
Retired Vice Adm. Lewis Crenshaw, a principal at Grant Thornton and the primary interviewer for the survey, said, “a sluggish U.S. economy, the return of troops from Iraq and Afghanistan, the specter of sequester, a gridlocked election-year Congress, and a rethinking of Defense strategy have combined to create a ‘perfect financial management storm.’ ” If the right people are in place, he added, “the financial management corps is ready to step up and shine.”
The survey showed that about two-thirds of financial managers are optimistic about their ability to bring cultural change to reflect the new austerity. But “inertia, resistance to change and entrenched interests that want to maintain the status quo all can work against these efforts,” the survey report said. The most important skills required of modern financial managers are critical thinking, analytical prowess, understanding the operational context of the programs they support, and creating and using performance measures, respondents said.
The survey showed a gap between top executives and field managers on some key questions. Asked whether pay and hiring freezes are having a significant impact on the workforce, 77 percent of executives said no, but only 39 percent of lower-level managers agreed.
Similarly, the goal of achieving auditable financial statements -- a challenge that has vexed the Pentagon for nearly two decades -- is a higher priority for top-level executives than for field managers.
The financial managers were asked which of several approaches top defense leaders likely would take. Options included shifting financial management tasks to nonspecialists; requiring managers to take a 5 percent to 10 percent across-the-board budget cut; negotiating to reduce the number of reports and services required; and outsourcing financial management operations. None of these choices is realistic, the majority of respondents said, but the most likely is an across-the-board cut to program budgets.
June 1, 2012