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We're talking SFIS: introducing the common business language of DoD.

The Standard Financial Information Structure (SFIS) is making a big name for itself in Department of Defense (DoD) business management circles. Commonly pronounced "ess-fis," this comprehensive data structure supports requirements for budgeting, financial accounting, cost/performance management, and external reporting throughout the DoD. SFIS is a standard for categorizing financial information along several dimensions to support financial management and reporting functions.

Providing a common foundation to track, process, and report DoD business transactions, it's truly a transformational driver that will help DoD achieve integration and interoperability. It also plays a key role in helping achieve and sustain an unqualified audit opinion on consolidated DoD financial statements.

Many Countries, One Language

"Over the past 50 years, the Services and Defense agencies have developed separate business systems and processes to ensure they fulfill and sustain mission-critical support to the warfighter," said Dave Wabeke, acting director of the Financial Management Domain (FMD) within the Business Management Modernization Program. "While these independent solutions served their respective organizations well, the enterprise-level result is an inability to effectively leverage business data across the Department for strategic planning, cost visibility, and joint business operations."

This stovepiped approach has resulted in non-integrated financial data and processes. As such, most systems can't share data, and there is only a nominal connection between budget, procurement, entitlement, disbursement, accounting, and performance.

"SFIS allows people and systems throughout the Department to communicate with each other using a common business vocabulary," said Mr. Wabeke. "Therefore, it will facilitate an end-to-end connection of key business activities, help provide auditable financial data, and serve as a basis for sound financial analysis and executive decision support for the Department."

SFIS also addresses authoritative guidance and requirements from a number of sources. The Federal Financial Management Improvement Act of 1996 and the Office of Management and Budget (OMB) Circular A-127 mandate improved financial management and require enhanced financial systems to support the generation of auditable financial statements. Specifically, OMB A-127 requires financial management systems to reflect an agency-wide financial information classification structure that is consistent with the United States Standard General Ledger (USSGL), provides tracking of specific programs expenditures, and covers financially related information.

The circular also says that financial system designs shall support agency budget, accounting, and financial management reporting processes by providing consistent financial information for budget formulation, budget execution, programmatic and financial management, performance management, and financial statement preparation.

By meeting these requirements and ideally encompassing the complete financial management process, SFIS enables traceability of budget resources throughout a transaction's life cycle (for example, from commitment of funds through disbursement). Since SFIS provides the means for categorizing financial information along several dimensions, its implementation--both by users and within systems--will make the structure inherent in all DoD business processes in which financial transactions occur.

SFIS 101

That being said, it's important to understand what SFIS is and what it isn't. SFIS is not a simple data-categorization scheme, but rather an information construct containing multiple dimensions of information to support both DoD and federal requirements. A good way to visualize the SFIS structure (see Figure 1) is as a central transaction that connects to six key information components: appropriation account information, budget program information, organizational information, transactional information, trading partner information, and cost accounting information.

[FIGURE 1 OMITTED]

The appropriation account information describes the department and main account that a transaction cites, and identifies the U.S. Treasury Appropriation Symbol/Treasury Appropriation Fund Symbol established by OMB and the Treasury. Budget program information describes the budget activity, budget sub-activity, and budget line item to which a transaction refers.

Organization information describes the organization that owns the transaction and includes additional data elements related to the owning organization (such as that entity's accounting and disbursing station). Transactional information includes the data elements needed to tie a transaction resulting from a specific business event to a specific general ledger posting. It also includes data elements required by the Treasury to satisfy Federal Agencies' Centralized Trial-Balance System reporting.

Trading partner information describes the trading partner organization with which the owning organization is doing business for exchange transactions (purchases, sales, or transfers). And finally, cost accounting information captures any financial, operational, or programmatic data needed to support cost accounting that is not covered by other SFIS components.

When a business event (such as replenishing inventory) occurs, the SFIS information components already described are essentially "attached" to that transaction, as appropriate. The transaction then automatically carries with it detailed information on budget and program, cost, customer identification, appropriation and funding, and federal entity.

As DoD's suite of enterprise-level business capabilities continues to evolve, SFIS will be a common thread through many initiatives driving financial management transformation, including the Enterprise Business Process Model (EBPM); the DoD USSGL Transaction Library; the Program/Budget (P/B) Framework; and the Cost Accounting Methodology. (For additional information on these initiatives, visit http://www.dod.mil/comptrol]er/bmmp/ pages/FM.html.)

Joint Development Approach

Collaboration among the DoD components and Core Business Missions has been integral to the development of financial management transformation initiatives, including SFIS. For nearly two years, combat and services support communities from across DoD came together to support development of the EBPM (outlining the Department's common processes and business scenarios). The EBPM laid the foundation for applying SFIS, as well as transaction posting rules, standard cost-accounting processes and methodologies, and integration of Planning, Programming, Budgeting, and Execution information.

The components and Core Business Missions have been heavily involved in the development of SFIS. As an example of such participation, in March 2004, over 100 experts from throughout DoD participated in verifying and validating the proposed SFIS attributes at two major Financial Management Domain workshops on SFIS and cost accounting.

After incorporating the results of these workshops, FMD representatives briefed the Domains, Treasury, OMB, the DoD Office of the Inspector General, the Business Modernization and Systems Integration Directorate, and the Office of the Under Secretary of Defense (Comptroller). SFIS was incorporated into the DoD Business Enterprise Architecture, Version 2.2.1, in July 2004.

How Will SFIS Be implemented?

Implementation of SFIS is getting under way, and it is being initially fielded through new system starts using commercial off-the-shelf Enterprise Resource Planning projects, including the Defense Enterprise Accounting and Management System (ERP), the General Fund Enterprise Business System, and the Navy ERP.

Although these projects are at various stages of progress, SFIS is a standard toward which all DoD system owners are working. DoD's primary goal is to implement SFIS in source systems, eliminating the crosswalks and expensive system interfaces that are so prevalent today.

To learn more about SFIS you are invited to attend one of two workshops, entitled Applying the Standard Financial Information Structure, on Thursday, June 2, 2005, at the ASMC Professional Development Institute in Salt Lake City. For further information on SFIS or to become actively involved in supporting its implementation, please e-mail FMDomain@osd.mil.

SFIS: Adding Value Enterprise-Wide

* Standardizes financial reporting across DoD components

* Enables costing and valuation of DoD programs, assets, and liabilities

* Allows decision makers to more efficiently compare similar programs and activities executed across the DoD

* Allows decision makers to go to the level of detail they require for information retrieval and auditability

* Improves the efficiency of maintaining business systems, thereby eliminating costly maintenance and translation of nonstandard data and systems and allowing resources to be redirected to the warfighting mission

* Links program execution to performance, budgetary resources, and actual financial information

Christine Wenrich is divisions chief, Joint Requirements and Accounting Policy, Financial Management Core Business Mission, Business Management Modernization Program. Weinrich is a member of the Yankee Chapter.
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Title Annotation:Standard Financial Information Structure, Department of Defense
Author:Wenrich, Christine
Publication:Armed Forces Comptroller
Geographic Code:1USA
Date:Mar 22, 2005
Words:1265
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