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Recommended practices and professional excellence.

The fundamental purpose of the Government Finance Officers Association (GFOA) is to enhance and promote the professional management of governmental financial resources by identifying, developing and advancing fiscal strategies, policies and practices for the public benefit. Traditionally, GFOA has relied on the development of publications and training programs to fulfill this mission, along with awards programs, research projects, and the adoption of formal policy statements addressing federal fiscal issues and recommended practices that the GFOA suggests state and local governments follow.

Early in 1993, the GFOA Executive Board reviewed the various policy statements of the organization, which are developed initially by the GFOA standing committees then approved by the Executive Board and the membership. Recognizing the value of "recommended practices" and the important role they play in helping GFOA members implement what the profession accepts as preferred practice, the board decided to give greater emphasis to this activity. To embark on this new direction, the board asked the standing committees and the staff to carefully review current GFOA recommended practices and to identify areas for which recommended practices should be developed. This fundamental shift in focus is already bearing fruit.

During the 1994 Annual Conference in Minneapolis, work was completed on a number of recommended practices covering such diverse topics as funding practices of pension plans and the importance of meaningful performance measures. These new recommended practices have been added to a GFOA publication--a compilation of GFOA's recommended practices--which is updated annually and made available at no charge on a request basis. Other recommended practices that have been developed over the years are concerned with following generally accepted accounting principles, adhering to the GFOA Disclosure Guidelines for State and Local Government Securities, and investing public funds prudently. The GFOA now has 31 current recommended practices. However, GFOA members are strongly encouraged to suggest areas for future recommended practices, as our work has only just begun.

Recommended practices serve other purposes that extend beyond the association's goals. The GFOA Code of Professional Ethics sets forth several standards of conduct that all government finance officers are enjoined to adhere to in the fulfillment of their professional responsibilities to enhance the performance of all persons engaged in public finance. Recommended practices provide guidance to individual finance officers in meeting these standards.

The Code of Ethics urges finance officers, for example, to abide by professional practices and recommended standards and to promote excellence in the public service. In some matters, it is specific in advising members of the profession to exercise prudence and integrity in the management of funds in their custody and in all financial transactions and to present statements and financial information pursuant to applicable law and generally accepted accounting practices and guidelines. The responsibility is on each individual, says the Code, for maintaining his or her own competence, for enhancing the competence of colleagues, and for providing encouragement to those seeking to enter the field of government finance. The GFOA has adopted recommended practices that relate directly to these concerns.

Another important benefit of the development of recommended practices has been to provide a public forum for the debate of current issues of concern in the profession. Last spring, members of the GFOA Committee on Governmental Debt and Fiscal Policy had a thorough and spirited discussion of the advantages and disadvantages of competitive and negotiated methods of bonds sales in the process of developing a GFOA recommended practice that recognizes there are a number of conditions that determine the most responsible, efficient and cost-effective method of selling bonds.

Recommended practices can focus attention on issues of the day. The new recommended practice on the use of derivatives by state and local governments was widely reported by financial news services and served to educate the public and policy makers at all levels of government about state and local government concerns about these financial products. GFOA involvement in this area was indeed controversial, as the recommended practice questioned the appropriateness of these investment options for some state and local investors while proponents of derivative products were downplaying their riskiness.

Working on the cutting edge and speaking out on current issues have provided GFOA committee members excellent opportunities for the exchange of disparate views and an open and critical examination of public finance policies. When the GFOA Executive Board initially discussed the need for recommended practices and encouraged this activity by the standing committees, we could only glimpse the full potential of this undertaking. Now, it is clear that recommended practices not only will provide professional guidance, but will advance the management of government financial resources and bring greater visibility to the association, to the profession and to our efforts to promote excellence in public finance.

JEFFREY L. ESSER is executive director of the Government Finance Officers Association.
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Author:Esser, Jeffrey L.
Publication:Government Finance Review
Article Type:Editorial
Date:Oct 1, 1994
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