Living the Shared Services Reality

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• Living the Shared Services Reality

FMI PD Week 2005
Terry Hearn, FCMA Assistant Deputy
Minister Corporate Management
November 24, 2005
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Agenda

• What will Shared Services Look Like?
• New Financial Environment
• Questions that CFOs will have
• SSO Experience (MOUs SLAs)
• Conclusion
• Questions

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Overview

• Shared Services is a key element of the
  Government of Canada Management Agenda
• We need to work together to make it a success!!!

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Typical SSO vs. Departmental Functions

• Shared Service Organization
• Accounts Payable
• Accounts Receivable
• Interdepartmental Settlements
• Corporate Accounting
• Travel / Relocation Claims
• Specified Policies (mostly accounting policies)
• Training (for functions under SSO mandate)
• Support the preparation of trial balance and
  financial statements
• Processing of JVs, accruals and adjusting entries

• Department / Agency
• Financial management advisory services
• Corporate planning, budgeting, accountability
• Specified Policies (mostly financial policies)
• Training (for functions retained by the
  department/agency)
• Trial balance and financial statement
  verification, certification and attestation
• Determination and calculation of accruals and
  adjusting entries
• Coordination of inquiry requests

Exact split of functions under SSO to be
determined
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New Financial Environment

• Recent public and international events have
  changed the landscape within the Government of
  Canada particularly with respect to financial
  accountabilities
• Increasing demands are being placed on the CFO by
  the Comptroller General of Canada to certify and
  attest to the accuracy and reasonableness of
  financial statements and other key EMS documents
• Shared services will result in the transfer of
  functions and processes which feed financial
  statements and other documents to which CFOs must
  certify and attest
• What does this mean for the CFO?

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New Financial Environment

• Need to consider how the CFO will be able to do
  his/her job and meet these increased expectations
  in light of the shift of these functions to the
  SSO.
• Will the SSO be required to certify and attest to
  the underlying data, statements, or other
  information provided to the Department/Agency?
• If so, how will this affect the timeliness of the
  information?
• Who is accountable when something goes wrong?
  The SSO? The Department/Agency?

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Key Questions Which CFOs Will Have

• How do I need to structure my new organization to
  operate in a new SSO environment?
• Team dedicated to managing the relationship with
  the SSO?
• Quality Assurance/Monitoring Teams?
• Team dedicated to monthly trial balances
  financial statements?
• Who will manage and respond to various ATIP,
  Ministerial Inquiries, Parliamentary Questions,
  etc.?
• What about the FAA?
• Who is now responsible for performing Section 32,
  33, 34?
• Will changes to the FAA be required?
• How will my regional operations be affected?
• What level of support will be available in the
  regions and/or non-urban centre?

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Key Questions Which CFOs Will Have

• What happens if I have to hire additional staff
  to compensate or supplement the SSO?
• Who pays?
• What if my departments / agencys priorities
  suddenly change?
• Program A to Program B?
• How will new short-term (e.g. 1-2 year)
  initiatives be managed compared to permanent
  ongoing initiatives?
• What if I need customized services not offered by
  the standard suite of services from the SSO?

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Key Questions Which CFOs Will Have

• Will Departments Agencies be given more time to
  perform quality assurance before signing-off?
• Movement towards shortening timeframes for
  attestation but is this realistic in a shared
  service environment?
• How will informal or ad hoc requests be handled?
• Will I still be able to request informal or ad
  hoc requests without being charged for this
  service?
• What if we are not satisfied with the services or
  level of service provided by the SSO?
• Recourse mechanisms? Financial / Non-Financial

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SSO Experience (MOUs SLAs)

• The purpose of the MOU / SLA is to
• Establish the governing principles that define
  the relationship between the two organizations
• Define the financial arrangements between the
  organizations (i.e. technical framework /
  financial authorities for transferring funds
  between organizations)
• Identify the roles and responsibilities of each
  party under the agreement
• Identifying and setting service level standards

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SSO Experience (MOUs SLAs)

• Key Elements of the Memorandum of Understanding
  (MOU) between SSO and Departments/Agencies
• Accountability and Responsibility
• Governing Principles
• Guiding Principles for Shared Transactional
  Services
• Planning, Reporting and Budget
• Invoicing / Payment requirements
• Priority Planning
• Audit arrangements
• Privacy / Security Controls
• Consequences for Non-Performance
• Dispute Resolution

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SSO Experience (MOUs SLAs)

• Key Elements of the Service Level Agreement (SLA)
  between SSO and Departments/Agencies
• Roles and responsibilities
• Timeframes
• Deliverables
• Performance measures/indicators

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SSO Experience (MOUs / SLAs)

• Other considerations when developing MOUs / SLAs
• Need to balance the level of detail contained
  within the agreements
• A too high level agreement will leave many areas
  open to interpretation by both parties
• An overly detailed agreement will be excessively
  demanding, resource intensive, and will not allow
  for much flexibility
• Need to consider both parties interests
  (Win-Win!) and work closely together (SSO
  Relationship Team)
• Do not underestimate the time required to
  properly negotiate appropriate MOUs / SLAs
• MOUs/SLAs will require ongoing evolution over the
  years to address challenges as they arise, and
  new realities that may not exist today

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SSO Experience

• Other considerations
• Cannot misjudge the magnitude of the culture
  change required and the need for change
  management
• Both parties need to fully understand and accept
  their new roles and responsibilities under a SSO
  model
• Need to focus on building a long-term partnership
  and relationship
• A focus on too many short term outcomes or us
  vs. them propositions will undermine the long
  term potential of SSO

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Conclusion

• SSO Model will introduce significant change. We
  need to make it a success!!!
• Clearly delineate the Services provided by the
  SSO and invest resources into developing MOUs
  and comprehensive SLAs
• Build internal capacity and re-organize to secure
  a compliance and assurance financial management
  framework
• Communicate (keep up to date) and cooperate!

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QUESTIONS??