E-government Implementation in Kenya, an evaluation of Factors hindering or p...Editor IJCATR
Use of ICT in Government has ability to improve service delivery to its citizens, and yet many developing countries have
lagged behind in the implementation of E-government. Many e-government initiatives also failed to achieve their objectives in
developing countries. This paper therefore aims to identify critical failure or success factors in Kenya, using Heeks’ Factor Model. A
survey questionnaire was developed and data were collected and analyzed from officials and interested citizens. The analysis result
enabled to highlight seven specific success and failure factors in Kenya. The enablers of e-government projects are good strategy
formulation, internal and external drive, employee competence and enough funding, whereas main failure of e-government are weak
ICT infrastructure, poor Project management and Design. Data analysis highlights both strengths and weaknesses for each factor or
factor. Finally, the study ends up with recommendations for policy makers to shape the future of e-government system in developing
countries.
E-government Implementation in Kenya, an evaluation of Factors hindering or p...Editor IJCATR
Use of ICT in Government has ability to improve service delivery to its citizens, and yet many developing countries have
lagged behind in the implementation of E-government. Many e-government initiatives also failed to achieve their objectives in
developing countries. This paper therefore aims to identify critical failure or success factors in Kenya, using Heeks’ Factor Model. A
survey questionnaire was developed and data were collected and analyzed from officials and interested citizens. The analysis result
enabled to highlight seven specific success and failure factors in Kenya. The enablers of e-government projects are good strategy
formulation, internal and external drive, employee competence and enough funding, whereas main failure of e-government are weak
ICT infrastructure, poor Project management and Design. Data analysis highlights both strengths and weaknesses for each factor or
factor. Finally, the study ends up with recommendations for policy makers to shape the future of e-government system in developing
countries.
Political and Legal Factors affecting Electronic Government in Kurdistan EECJOURNAL
Legal factors affecting electronic government include all regulatory and law determinants that can negatively or positively affect results of market actions and decisions of management of company functioning in particular country. Electronic government (e-Government) in its simplest form can mean using information and communication technology (ICT) tools to provide services to citizens. Still with the huge benefits and synergies that e-Government grants to governments and societies, it faces many obstacles and challenges. Therefore, there are always a number of critical success factors and risks associated with e-Government. The aim of this study is to analyze the critical political and legal factors effecting on the implementation of implementing electronic government in Kurdistan. The study adopted six political and legal factors to measure the influence on implementing electronic government, these factors were; transparency of government, power distance indicator, regulations and standard, employment law, political commitment, and privacy. By using quantitative research method via applying a structure survey for the citizens in Kurdistan region of Iraq, however the findings showed that transparency of government will have significant and positive influence on implementing electronic government, power distance indicator will have significant and positive influence on implementing electronic government, regulations and standard will have significant and positive influence on implementing electronic government, employment law will have significant and positive influence on implementing electronic government and political commitment will have significant and positive influence on implementing electronic government.
Three Strategies to Accelerate Your Agency's Migration to the CloudGov BizCouncil
Federal agencies have tough decisions to make as they move past the low-hanging fruit and start migrating older and more interconnected systems to the cloud.
Three Strategies to Improve the Citizen ExperienceGov BizCouncil
After a difficult 2014, federal agencies are looking to pivot toward modernizing their customer service infrastructures to better serve an increasingly digital-savvy public. Agencies are well on their way to making technological improvements, but without the corresponding cultural shifts agencies will continue to fall short of their goals. Drawing on recent studies from the Government Accountability Office (GAO) and the American Customer Satisfaction Index (ACSI), this issue brief lays out a roadmap to help your agency achieve a more citizen-centric mindset.
Download this GBC Issue Brief to learn:
How federal customer satisfaction with public services currently stacks up against the private sector,
What steps the federal government is taking to modernize its customer service infrastructure and what more it could be doing, and
Three strategies that can help your agency better engage with those it serves as well as improve its overall public perception.
Disclaimer! This paper is in work in progress. Contact the authors for more information.
Abstract
The interactions between minimum wage policy and tax evasion remain largely unknown. We study firm-level employment effects of a large and biting minimum wage increase in Latvia conditional on labor tax compliance. The Latvian labor market is characterized by the prevalence of envelope wages, i.e., unreported cash-in-hand complements to the official wage. We apply machine learning to classify firms between compliant and tax-evading using a unique combination of administrative and survey data. We then show that firms engaged in labor tax evasion are insensitive to the minimum wage shock. Our results suggest that these firms use wage underreporting as an adjustment margin, converting (part of ) the envelope into legal wage. Increasing minimum wage contributes to tax rule enforcement, but this comes at the cost of negative employment consequences for compliant firms.
Political and Legal Factors affecting Electronic Government in Kurdistan EECJOURNAL
Legal factors affecting electronic government include all regulatory and law determinants that can negatively or positively affect results of market actions and decisions of management of company functioning in particular country. Electronic government (e-Government) in its simplest form can mean using information and communication technology (ICT) tools to provide services to citizens. Still with the huge benefits and synergies that e-Government grants to governments and societies, it faces many obstacles and challenges. Therefore, there are always a number of critical success factors and risks associated with e-Government. The aim of this study is to analyze the critical political and legal factors effecting on the implementation of implementing electronic government in Kurdistan. The study adopted six political and legal factors to measure the influence on implementing electronic government, these factors were; transparency of government, power distance indicator, regulations and standard, employment law, political commitment, and privacy. By using quantitative research method via applying a structure survey for the citizens in Kurdistan region of Iraq, however the findings showed that transparency of government will have significant and positive influence on implementing electronic government, power distance indicator will have significant and positive influence on implementing electronic government, regulations and standard will have significant and positive influence on implementing electronic government, employment law will have significant and positive influence on implementing electronic government and political commitment will have significant and positive influence on implementing electronic government.
Three Strategies to Accelerate Your Agency's Migration to the CloudGov BizCouncil
Federal agencies have tough decisions to make as they move past the low-hanging fruit and start migrating older and more interconnected systems to the cloud.
Three Strategies to Improve the Citizen ExperienceGov BizCouncil
After a difficult 2014, federal agencies are looking to pivot toward modernizing their customer service infrastructures to better serve an increasingly digital-savvy public. Agencies are well on their way to making technological improvements, but without the corresponding cultural shifts agencies will continue to fall short of their goals. Drawing on recent studies from the Government Accountability Office (GAO) and the American Customer Satisfaction Index (ACSI), this issue brief lays out a roadmap to help your agency achieve a more citizen-centric mindset.
Download this GBC Issue Brief to learn:
How federal customer satisfaction with public services currently stacks up against the private sector,
What steps the federal government is taking to modernize its customer service infrastructure and what more it could be doing, and
Three strategies that can help your agency better engage with those it serves as well as improve its overall public perception.
Disclaimer! This paper is in work in progress. Contact the authors for more information.
Abstract
The interactions between minimum wage policy and tax evasion remain largely unknown. We study firm-level employment effects of a large and biting minimum wage increase in Latvia conditional on labor tax compliance. The Latvian labor market is characterized by the prevalence of envelope wages, i.e., unreported cash-in-hand complements to the official wage. We apply machine learning to classify firms between compliant and tax-evading using a unique combination of administrative and survey data. We then show that firms engaged in labor tax evasion are insensitive to the minimum wage shock. Our results suggest that these firms use wage underreporting as an adjustment margin, converting (part of ) the envelope into legal wage. Increasing minimum wage contributes to tax rule enforcement, but this comes at the cost of negative employment consequences for compliant firms.
API-led connectivity: How to leverage reusable microservicesAbhishek Sood
Government agencies across the globe – whether they be state, local, central, or federal – face a digital transformation imperative to adopt cloud, IoT, and mobile technologies that legacy systems often struggle to keep up with.
This white paper explores how to take an architectural approach centered around APIs and microservices to unlock monolithic legacy systems for digital transformation.
Find out how to build up your API management strategy, and learn how you can:
Accelerate project delivery driven by reusable microservices
Secure data exchange within and outside agencies
Use API-led connectivity to modernize legacy systems
And more
Benefits and Challenges of Data Center ConsolidationRahi Systems
Data center consolidation enables centralization, introduces standards, integrate systems and legacy support. Learn on 10 recommended steps for firms in a consolidation https://goo.gl/ztT1w1
The DATA Act: A Revolution in Federal Government TransparencyOmar Toor
On May 9, 2014, the Digital Accountability and Transparency Act (DATA Act), was signed into law. The Act, drawing some lessons from both the Federal Funding Accountability and Transparency Act of 2006 (FFATA) and the American Recovery and Reinvestment Act of 2009 (ARRA), is the nation’s first legislative mandate for data transparency. It requires the Department of the Treasury (Treasury) and the White House Office of Management and Budget (OMB) to transform U.S. federal spending from disconnected documents into open, standardized data, and to publish that data online.
www.pwc.com/publicsector
Essentials of Automations: Optimizing FME Workflows with ParametersSafe Software
Are you looking to streamline your workflows and boost your projects’ efficiency? Do you find yourself searching for ways to add flexibility and control over your FME workflows? If so, you’re in the right place.
Join us for an insightful dive into the world of FME parameters, a critical element in optimizing workflow efficiency. This webinar marks the beginning of our three-part “Essentials of Automation” series. This first webinar is designed to equip you with the knowledge and skills to utilize parameters effectively: enhancing the flexibility, maintainability, and user control of your FME projects.
Here’s what you’ll gain:
- Essentials of FME Parameters: Understand the pivotal role of parameters, including Reader/Writer, Transformer, User, and FME Flow categories. Discover how they are the key to unlocking automation and optimization within your workflows.
- Practical Applications in FME Form: Delve into key user parameter types including choice, connections, and file URLs. Allow users to control how a workflow runs, making your workflows more reusable. Learn to import values and deliver the best user experience for your workflows while enhancing accuracy.
- Optimization Strategies in FME Flow: Explore the creation and strategic deployment of parameters in FME Flow, including the use of deployment and geometry parameters, to maximize workflow efficiency.
- Pro Tips for Success: Gain insights on parameterizing connections and leveraging new features like Conditional Visibility for clarity and simplicity.
We’ll wrap up with a glimpse into future webinars, followed by a Q&A session to address your specific questions surrounding this topic.
Don’t miss this opportunity to elevate your FME expertise and drive your projects to new heights of efficiency.
Elevating Tactical DDD Patterns Through Object CalisthenicsDorra BARTAGUIZ
After immersing yourself in the blue book and its red counterpart, attending DDD-focused conferences, and applying tactical patterns, you're left with a crucial question: How do I ensure my design is effective? Tactical patterns within Domain-Driven Design (DDD) serve as guiding principles for creating clear and manageable domain models. However, achieving success with these patterns requires additional guidance. Interestingly, we've observed that a set of constraints initially designed for training purposes remarkably aligns with effective pattern implementation, offering a more ‘mechanical’ approach. Let's explore together how Object Calisthenics can elevate the design of your tactical DDD patterns, offering concrete help for those venturing into DDD for the first time!
Transcript: Selling digital books in 2024: Insights from industry leaders - T...BookNet Canada
The publishing industry has been selling digital audiobooks and ebooks for over a decade and has found its groove. What’s changed? What has stayed the same? Where do we go from here? Join a group of leading sales peers from across the industry for a conversation about the lessons learned since the popularization of digital books, best practices, digital book supply chain management, and more.
Link to video recording: https://bnctechforum.ca/sessions/selling-digital-books-in-2024-insights-from-industry-leaders/
Presented by BookNet Canada on May 28, 2024, with support from the Department of Canadian Heritage.
Kubernetes & AI - Beauty and the Beast !?! @KCD Istanbul 2024Tobias Schneck
As AI technology is pushing into IT I was wondering myself, as an “infrastructure container kubernetes guy”, how get this fancy AI technology get managed from an infrastructure operational view? Is it possible to apply our lovely cloud native principals as well? What benefit’s both technologies could bring to each other?
Let me take this questions and provide you a short journey through existing deployment models and use cases for AI software. On practical examples, we discuss what cloud/on-premise strategy we may need for applying it to our own infrastructure to get it to work from an enterprise perspective. I want to give an overview about infrastructure requirements and technologies, what could be beneficial or limiting your AI use cases in an enterprise environment. An interactive Demo will give you some insides, what approaches I got already working for real.
Software Delivery At the Speed of AI: Inflectra Invests In AI-Powered QualityInflectra
In this insightful webinar, Inflectra explores how artificial intelligence (AI) is transforming software development and testing. Discover how AI-powered tools are revolutionizing every stage of the software development lifecycle (SDLC), from design and prototyping to testing, deployment, and monitoring.
Learn about:
• The Future of Testing: How AI is shifting testing towards verification, analysis, and higher-level skills, while reducing repetitive tasks.
• Test Automation: How AI-powered test case generation, optimization, and self-healing tests are making testing more efficient and effective.
• Visual Testing: Explore the emerging capabilities of AI in visual testing and how it's set to revolutionize UI verification.
• Inflectra's AI Solutions: See demonstrations of Inflectra's cutting-edge AI tools like the ChatGPT plugin and Azure Open AI platform, designed to streamline your testing process.
Whether you're a developer, tester, or QA professional, this webinar will give you valuable insights into how AI is shaping the future of software delivery.
Connector Corner: Automate dynamic content and events by pushing a buttonDianaGray10
Here is something new! In our next Connector Corner webinar, we will demonstrate how you can use a single workflow to:
Create a campaign using Mailchimp with merge tags/fields
Send an interactive Slack channel message (using buttons)
Have the message received by managers and peers along with a test email for review
But there’s more:
In a second workflow supporting the same use case, you’ll see:
Your campaign sent to target colleagues for approval
If the “Approve” button is clicked, a Jira/Zendesk ticket is created for the marketing design team
But—if the “Reject” button is pushed, colleagues will be alerted via Slack message
Join us to learn more about this new, human-in-the-loop capability, brought to you by Integration Service connectors.
And...
Speakers:
Akshay Agnihotri, Product Manager
Charlie Greenberg, Host
Accelerate your Kubernetes clusters with Varnish CachingThijs Feryn
A presentation about the usage and availability of Varnish on Kubernetes. This talk explores the capabilities of Varnish caching and shows how to use the Varnish Helm chart to deploy it to Kubernetes.
This presentation was delivered at K8SUG Singapore. See https://feryn.eu/presentations/accelerate-your-kubernetes-clusters-with-varnish-caching-k8sug-singapore-28-2024 for more details.
State of ICS and IoT Cyber Threat Landscape Report 2024 previewPrayukth K V
The IoT and OT threat landscape report has been prepared by the Threat Research Team at Sectrio using data from Sectrio, cyber threat intelligence farming facilities spread across over 85 cities around the world. In addition, Sectrio also runs AI-based advanced threat and payload engagement facilities that serve as sinks to attract and engage sophisticated threat actors, and newer malware including new variants and latent threats that are at an earlier stage of development.
The latest edition of the OT/ICS and IoT security Threat Landscape Report 2024 also covers:
State of global ICS asset and network exposure
Sectoral targets and attacks as well as the cost of ransom
Global APT activity, AI usage, actor and tactic profiles, and implications
Rise in volumes of AI-powered cyberattacks
Major cyber events in 2024
Malware and malicious payload trends
Cyberattack types and targets
Vulnerability exploit attempts on CVEs
Attacks on counties – USA
Expansion of bot farms – how, where, and why
In-depth analysis of the cyber threat landscape across North America, South America, Europe, APAC, and the Middle East
Why are attacks on smart factories rising?
Cyber risk predictions
Axis of attacks – Europe
Systemic attacks in the Middle East
Download the full report from here:
https://sectrio.com/resources/ot-threat-landscape-reports/sectrio-releases-ot-ics-and-iot-security-threat-landscape-report-2024/
Dev Dives: Train smarter, not harder – active learning and UiPath LLMs for do...UiPathCommunity
💥 Speed, accuracy, and scaling – discover the superpowers of GenAI in action with UiPath Document Understanding and Communications Mining™:
See how to accelerate model training and optimize model performance with active learning
Learn about the latest enhancements to out-of-the-box document processing – with little to no training required
Get an exclusive demo of the new family of UiPath LLMs – GenAI models specialized for processing different types of documents and messages
This is a hands-on session specifically designed for automation developers and AI enthusiasts seeking to enhance their knowledge in leveraging the latest intelligent document processing capabilities offered by UiPath.
Speakers:
👨🏫 Andras Palfi, Senior Product Manager, UiPath
👩🏫 Lenka Dulovicova, Product Program Manager, UiPath
DevOps and Testing slides at DASA ConnectKari Kakkonen
My and Rik Marselis slides at 30.5.2024 DASA Connect conference. We discuss about what is testing, then what is agile testing and finally what is Testing in DevOps. Finally we had lovely workshop with the participants trying to find out different ways to think about quality and testing in different parts of the DevOps infinity loop.
Securing your Kubernetes cluster_ a step-by-step guide to success !KatiaHIMEUR1
Today, after several years of existence, an extremely active community and an ultra-dynamic ecosystem, Kubernetes has established itself as the de facto standard in container orchestration. Thanks to a wide range of managed services, it has never been so easy to set up a ready-to-use Kubernetes cluster.
However, this ease of use means that the subject of security in Kubernetes is often left for later, or even neglected. This exposes companies to significant risks.
In this talk, I'll show you step-by-step how to secure your Kubernetes cluster for greater peace of mind and reliability.
2. Meeting 21st Century Information
Technology Challenges:
An Intergovernmental Roadmap
Case Studies Relating to 2 CFR Part 225
Cost Principles for State, Local, and Indian Tribal Governments
(2 CFR Part 225)
Purpose Statement
State governments, in partnership with federal agencies, deliver and support a host of
federally funded programs that enhance the quality of life for our citizens. All of these
programs are enabled by state information technology (IT) solutions and services. For
nearly a decade, states have been optimizing these IT investments through
consolidation strategies and leveraging common services to be more efficient and cost
effective. Currently, federal regulations on cost principles do not acknowledge this
evolution in state IT business models. Clarity, consistent interpretation and flexibility in
the use of federal funds for IT acquisition, operation and delivery of enterprise services
is lacking. Through case study illustrations, the purpose of this report is to outline the
challenges posed by current federal cost allocation regulations and policies and to
recommend reforms and alternative approaches.
Introduction
State and local governments rely heavily on the “digital infrastructure” (the critical
information and communications technology infrastructure) to run government. This
“invisible” infrastructure is now part of the fabric of government service delivery that
supports state and local programs, enables effective and efficient services, and supports
our economy. In addition, this infrastructure is the basis for our 21st century economy
and allows states to deliver service 24 hours a day seven days a week.
This evolving and more sophisticated digital infrastructure supports the lifeblood of
state government - the efficient and effective movement of information. An expanding
portfolio of online services to meet the expectations of the public is now the norm in
state government. State portals offer hundreds of online services for residents and
businesses. Governors and other state leaders are now more interested in measuring,
monitoring and managing performance – this requires new ways of collecting, sharing
1
3. and analyzing digital data. Information management - especially across organizational
boundaries, the silos of agencies and other levels of government—is now a necessity.
The majority of state enterprise IT agencies are structured in a similar fashion and
operate as internal service providers to state agencies and other public entities on a
chargeback basis, user fee or comparable model of delivering services. The agencies
are “customers” that purchase data center, network, e-mail or voice services under a
published rate or pro- rated assessment method. These services are often purchased
with federal funds by program agencies and must be allocated and accounted for under
2 CFR Part 225, Principles for State, Local, and Indian Tribal Governments (OMB
CircularA-87).1 This complex IT business environment in state government presents a
host of challenges that must be addressed by the enterprise IT organization and the
various agencies delivering programs. An ongoing challenge is addressing the
modernization of state IT legacy systems which has emerged as a significant financial,
technical and programmatic challenge to the states’ ability to deliver effective and
efficient services. The results of a recent survey of State CIOs classified more than half
of their IT systems as “legacy” with the majority of this identified group considered
mission or business critical. 2
The response to these challenges has been a focus on the “enterprise view” of
information technology investment and management. The introduction and evolution
of new IT governance models, organizational structures, business disciplines and
innovative solutions illustrate this enterprise perspective. Other related trends include
the adoption of enterprise architecture as a framework for IT, the gradual migration
from stovepipe, single purpose systems to enterprise class shared services and less
reliance on custom developed software and solutions. A key trend is the move to
enterprise IT consolidation and related services.
State CIOs have an obligation to ensure that state IT services are delivered in the most
efficient and cost-effective manner possible. That work often leads to an examination of
how the state’s “digital” infrastructure (primarily networks, data centers,
telecommunication services and applications) are managed and whether IT services and
business solutions are provided via consolidated, decentralized or shared service modes
of delivery. Invariably, state CIOs find themselves exploring strategic IT consolidation
and shared services offerings as ways to improve operational efficiency, optimize
service delivery and lower costs. Enterprise consolidation focuses on how the state
organizes delivery of IT services to agencies: combining existing organizations, services
or applications into a single operation. Consolidation typically is mandated by law,
executive order or state CIO directive. Shared services focus on the delivery of a
1
Innovative Funding for State IT: Models, Trends, and Perspectives, National Association of State Chief Information
Officers (NASCIO), September 2008, http://www.nascio.org/publications/documents/NASCIO-
InnovativeFunding2008.pdf
2
Digital States at Risk!: Modernizing Legacy Systems, National Association of State Chief Information Officers
(NASCIO), December 2008, www.nascio.org/publications/documents/NASCIO-DigitalStatesAtRisk.pdf
2
4. particular service or services in the most efficient and effective way, as a way of gaining
economies of scale and other benefits.
The trend is toward greater centralization of IT management and consolidation to
exercise a greater degree of control over IT direction and investments while delivering
more-efficient IT support to increasingly complex government organizations. Today,
most of the states are in a middle ground of this movement, slowly maturing and
adopting the characteristics of a more centralized approach with IT consolidation and
shared application delivery initiatives. National surveys of state CIOs reveal a
continued progression toward more IT consolidation in the future.3 The direction of
state government is clear – enterprise IT consolidation and shared services is the
strategic direction and favored approach by elected state leaders.
3
NASCIO’s Survey on Enterprise Data Center Consolidation in the States: Strategies and Business Justification, National
Association of State Chief Information Officers, (NASCIO), August 2007 and NASCIO’s Survey on IT Consolidation
and Shared Services in the States: A National Assessment (May 2006)
3
5. CASE STUDY ONE
ERP IMPLEMENTATION
This case study demonstrates the challenges that current federal cost allocation policies pose for a
state that is seeking to develop and implement an Enterprise Resource Planning (ERP) system
that serves multiple state agencies. An ERP system is an enterprise-wide information system
designed to coordinate all the resources, information, and activities needed to complete business
processes for multiple state agencies.
Background
The Office of Technology (OT) in the subject state operates as an internal service fund, which is a fund
used to account for goods or services given to one department by another on a cost reimbursement bases.
The OT has been asked by a number of state government agencies to consider providing an ERP system
that would support most of the business system that maintains the data for a variety of business
functions, such as financials, projects, human resources and customer relationship management in a
single database.
An ERP system is based on a common database and a modular software design. The common
database can allow every department of a state to store and retrieve information in real-time.
Information in an ERP system should be reliable, accessible, and easily shared. The modular
software design should enable a department to select the modules they need, mix and match
modules from different vendors, and add new modules of their own to improve business
performance.
Ideally, the data for the various business functions are integrated. In practice the ERP system
may comprise a set of discrete applications, each maintaining a discrete data store within one
physical database.
Implementation of such a system would require an up-front capital and operating investment for
servers and other equipment, software purchase, custom development and installation,
contractual charges, and deployment and operating costs. Once systems are developed and
implemented, the state expects costs to be recovered by charging back shared services to
individual state agencies using a per-transaction and personnel count model. While the
legislature may initially appropriate dollars to the OT, any on-going operational or asset
replacement costs would not be funded through a direct appropriation once systems are
implemented.
The issues that the OT needs to address include: the lack of up-front money to fund an ERP
system; which system costs can be capitalized; which costs are considered operating costs; and
whether the cost of financing any capital outlays for both programming and equipment would be
considered recoverable from agencies.
4
6. Issues with Current Policy:
Issue #1: The OT is unclear on guidelines for chargebacks related to the
development/acquisition costs of the intangible software asset. While Governmental Accounting
Standards Board (GASB) Statement No. 51 provides guidance on accounting for intangible
assets in the State CAFR, 2 CFR Part 225 and the HHS Implementation Guide (ASMB C-10)
were written many years before GASB 51 was issued. Updating these Federal documents to
reflect GASB 51 would provide more clarity for State governments in terms of Federal
requirements.
Issue #2: The OT is unclear on the guidelines for inclusion of interest incurred on the
development/acquisition of the intangible software assets in the chargeback rate. It appears that
2 CFR Part 225 allows interest incurred to develop or acquire land, buildings and equipment.
However, the OT could not find any authoritative Federal guidance on the allowability of
interest for intangible assets.
Issue #3: The OT will incur a significant cash deficit during the ERP system’s early years
because some of the costs will have to be capitalized and the amortization will be billed over the
useful life of the assets, rather than when the expenditures are incurred. Considering that
negative cash balances are not allowed by state governments, bonds will likely be required to
finance the project, and interest costs may not be allowed in the Federal billings.
Issue #4: If the State legislature provides up-front appropriations to initially fund the project, the
OT is unsure as to: 1) how its retained earnings and cash limitations calculations would be affected
and 2) how future replacement of system components for normal re-conditioning will be funded given
that replacement costs tend to be relatively high.
Recommendation Based on Case Study One:
This workgroup recommends that OMB issue an interpretation of 2 CFR Part 225 to
clarify whether financing costs for software development projects are allowable or
unallowable, and if allowable, that OMB specify the criteria necessary to establish cost
allowance.
The state government participants of the workgroup recommend that OMB issue an
interpretation to allow software financing costs (including interest) for state and local
government grantees. The Federal DCA participant is neutral on whether OMB should
allow or disallow these costs.
Guidance that Supports the Recommendation:
The recommendation assumes that GASB statement # 51 is implemented and,
therefore, that software-related costs are capitalized as intangible assets.
The following guidance supports group’s recommendation:
5
7. • GASB Statement No. 51 provides guidance on recognizing computer software as
an intangible asset .
• Appendix B, section 23(b) of 2 CFR Part 225 provides in part that financing costs
(including interest) paid or incurred on or after September 1, 1995 associated with
otherwise allowable costs of equipment is allowable, subject to the conditions in section
23.b.(1) through (4).
• Appendix B, section 15.a.(2) of 2 CFR Part 225 states that “Equipment’’ means an
article of nonexpendable, tangible personal property having a useful life of more than
one year and an acquisition cost which equals or exceeds the lesser of the capitalization
level established by the governmental unit for financial statement purposes, or $5000.
This statement makes it clear that 2 CFR Part 225 does not cover intangible assets.
However, it should be noted that 2 CFR Part 225 has not been revised for some years.
As a result, new standards and directives, such as GASB Statement No. 51, should be
considered by OMB when issuing an interpretation.
• ASMB C-10, question 3-3 regarding capitalization of ADP equipment specifically
states that “At the time of this guide's publication no applicable industry-wide
governmental accounting standards exist for the treatment of these costs.
Governmental units are to treat these costs in accordance with their established
capitalization policies. In the future should the Governmental Accounting
Standards Board issue applicable pronouncements on this subject, governmental
units will be required to follow them.”
• The DHHS Implementation Guide for 2 CFR Part 225 (ASMB C-10), Question 3-4
asks: “Where financing was obtained to develop an ADP system, are there any
limitations with respect to claiming interest expense associated with these costs?”
The answer states: “Interest is only allowable on capital expenditures where
there is interest expense and depreciation (or use allowance) in the current
period. If development costs are not amortized, i.e. written off as expenditures,
then no interest is allocable or allowable under Federal programs. However,
interest expense incurred in the first year of the expenditure is allowable.” For
those software projects capitalized and amortized in accordance with GASB 51,
allowing the associated interest costs may be consistent with the DHHS
Implementation Guide.
• Appendix A, section A.1, states that “The principles are designed to provide that
federal awards bear their fair share of cost recognized under these principles
except where restricted or prohibited by law.” This further supports this group’s
recommendation by stressing that the concept of fairness.
Risks and Benefits of Recommendation to Allow Financing Costs for
Software Projects
Risks
1. Financing costs for software development projects may be significant. Allowing
state and local governmental grantees to charge these types of costs to Federal
programs will result in increased costs to Federal programs.
6
8. 2. 2 CFR Part 225 currently disallows interest with the exceptions of interest
incurred to acquire or construct land, buildings or equipment. Software
development projects are intangible assets. Allowing financing costs for these
types of projects would further broaden the exceptions to disallowance of
interest costs.
Benefits
1. GASB Statement No. 51 requires capitalization and amortization of software
development projects as capital assets. Since the financial accounting
requirements for software development projects are becoming similar to the
accounting requirements for tangible assets (buildings and equipment), it may be
equitable to broaden the interest allowability exceptions to encompass
capitalized software development projects.
2. Many state governments are currently experiencing large general fund budget
deficits. There may be a growing need for state governments to use debt to
finance software development projects.
3. Successful software development projects may improve the efficiency of and
accounting for Federal programs performed by the state and local governments.
Disallowing interest costs for these projects may discourage these initiatives.
4. For those software projects capitalized and amortized in accordance with GASB
Statement No. 51, allowing the associated interest costs may be consistent with
the DHHS Implementation Guide (ASMB C-10).
7
9. CASE STUDY TWO
Shared Services
Information Technology Assets and Staffing Model
This case study identifies issues associated with the treatment of capitalized assets and staff
when systems developed by multiple agencies are combined into a consolidated system.
Background
The legislature in the subject state approved an Information Technology (IT) consolidation with
the understanding that the consolidation would be “self funding” (i.e., that the consolidation
would pay for itself through a savings in spending on infrastructure and operations). This case
study identifies several issues that surfaced as a result of the IT consolidation.
Issues Dealing with Current Policy:
Issue #1: Capitalized Assets:
Assets that once resided in various state departments were purchased with a mix of funds from
different sources, including both federal funds and state general funds. Prior to system
consolidation, these assets were capitalized and partially depreciated by the department that
purchased them. As a result of the IT consolidation, these assets are now being used to provide
services to all state departments, which is complicating billing and charging to departments that
originally purchased the assets.
The newly-created IT department is unsure how to simplify accounting and billing for assets
that were capitalized at various departments and purchased using a mix of funding sources. For
example, the Department of Labor purchased a new server with $750,000 in federal funds just
prior to the consolidation. Now, as a result of the IT consolidation, this server will provide
services to all state departments. It is unclear how the IT department should account and bill for
the assets purchased by other departments or how the Department of Labor should treat assets
that are capitalized on the Department’s books.
Issue #2: Information Technology Staff:
Pending a budget modification that will take place over the next five years, state information
technology staff was placed in a new ”hybrid” organization. The Department of Labor’s IT
personnel are now employees of the newly-created IT department, but they will still be included
in the Department of Labor’s budget for the next two years. Prior to IT consolidation, each
position was funded through general, cash or federal funding and, based on the service /benefit
they provided, charged directly to the grant or to the indirect cost pool in the Department of
Labor.
These reassigned employees will continue to provide the service/benefit that they provided prior
to consolidation, but, as a result of the consolidation’s efficiencies, they will serve additional
departments by providing services such as email. It is unclear how the newly-created IT
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10. Department should bill for these reassigned employees or how the Department of Labor should
seek reimbursement for the billed services since these employees are still included in its budget.
Issue #3: Shared services:
Under a shared services agreement, a state and a number of its local governments have agreed to
collaboratively develop an IT system. Each party is providing certain capital assets needed to
develop the system and are appropriately recording these assets in their own accounting system.
The subject state and local governments have provided IT assets in an equal proportion. To
minimize the administrative burden and cost, while maximizing the benefit to taxpayers, each
government has signed a Memorandum of Understanding agreeing to forgo billing among any of
the participating governments.
2 CFR Part 225 currently requires each grantee to account for and allocate the grantee’s costs to
all users. The state government currently must account for its costs and allocate its costs to all
users, including local governments. The state government cannot claim the local governments’
costs without adequate billing documentation from the local governments.
Issue #4: Calculation of rates and adjustments at the service level:
It can be difficult for governments to calculate billing rates at the service level when a vendor
fails to provide a detailed breakdown of costs. Without a detailed cost breakdown, costs cannot be
tied to services rendered. For example, a vendor that delivers several services may only provide
one invoice that includes lease payments for virtual servers, network implementation, and
consulting fees for various services. If the vendor does not provide a detailed breakdown, the
calculation of fees by service would be incorrect. In addition, a virtual server’s cost may benefit
several services, but if the services cannot be identified, it is easy to have an over- or under-
recovery of costs. In the case of over recovery, a refund and/or a penalty may result.
2 CFR Part 225 does not clearly define a “service activity,” but given the size of the IT budget,
several services could easily exceed the $5 million budget threshold specified in an Appendix C.
2 CFR Part 225 and ASMB C-10 require that the revenues and expenses be separately
accounted for and monitored by individual service.
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11. Recommendations Based on Case Study Two
Recommendation #1 Relating to Capitalized Assets: OMB should issue an
interpretation as to how states should handle capitalized and partially depreciated assets
when consolidating information technology systems. In the event that OMB interprets
these expenses as being unallowable, the State members of the sub-work group
recommend amending 2 CFR Part 225 to allow states to handle the consolidation of
information technology on capitalized and partially depreciated assets during
consolidation efforts in a manner consistent with 45 CFR 92.32 Equipment, as explained
below. The DCA representative advised that depreciation on federally funded
equipment is unallowable.
Guidance Applying to Recommendation #1
The Department of Health and Human Services has issued Title 45 of the Code of
Federal Regulations, which relates to public welfare. Part 92 of Title 45 establishes
uniform administrative rules for Federal grants and cooperative agreements and
subawards to State, local and Indian tribal governments.
• 45 CFR 92.32(c)(1) states that “Equipment shall be used by the grantee or sub
grantee in the program or project for which it was acquired as long as needed,
whether or not the project or program continues to be supported by federal
funds. When no longer needed for the original program or project, the
equipment may be used in other activities currently or previously supported by
a federal agency.”
• 45 CFR 92.32(e) provides guidance on disposition of the equipment when
original or replacement equipment acquired under a grant or sub grant is no
longer needed for the original project or program or for other activities and how
to treat them if fair market value is under $5,000 or over $5,000.
Recommendation #2 Relating to Technology Staff:
The group recommends that OMB provide additional guidance on the use of
excess staff capacity created by the consolidation of IT systems. If
OMB does not issue additional guidance, the group recommends that 45 CFR
92.32 (c)(2), which applies to excess equipment capacity, be applied to
excess staff capacity.
Guidance Applying to Recommendation #2:
45 CFR 92.32(c)(2) provides guidance on excess capacity for equipment. It states that
“The grantee or subgrantee shall also make equipment available for use on other
projects or programs currently or previously supported by the Federal Government,
providing such use will not interfere with the work on the projects or program for
which it was originally acquired. First preference for other use shall be given to other
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12. programs or projects supported by the awarding agency. User fees should be
considered if appropriate.”
Risks and Benefits of Recommendations #1 and #2:
Benefits
1. Squarely places responsibility for these assets with experts statutorily assigned to
manage IT in state government.
2. Sharing underutilized assets creates efficiency in operational, licensing, facility
(space) and power/cooling costs.
3. Architectural design and development can be better synchronized, improving
operational efficiency and sharing of information.
4. Management of shared systems and assets are simplified and more consistent.
5. Extended flexibility will enhance efficiency and effectiveness and ultimately
resulting in the cost savings to all programs as new organization creates shared
services model among multiple agencies and applies cost allocation methodology
individually to each prospective service with both direct and indirect costs
identified.
Risks
1. Inventory of assets and source of funding must be carefully investigated and
managed to appropriately account for asset transfer and return on initial
investment.
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13. Publication Acknowledgements
This document was developed by the Information Technology and Shared Services
Sub-Work Group of the A-87 Work Group of AGA’s Partnership for Intergovernmental
Management and Accountability.
Members, Information Technology and Shared Services Sub-Work Group
Chair: Richard Thompson, Chief Information Officer, Maine
Brenda Bolander, State Comptroller, Oklahoma
Bryan Hoffman, Administrative Financial Manager, Office of Technology, West Virginia
Bhavna Punatar, Cost Allocation Specialist, Office of the State Comptroller, Colorado
Doug Robinson, Executive Director, National Association of State Chief Information
Officers
Janet Turner, Senior Negotiator, Division of Cost Allocation, US Department of Health
and Human Services
Members, A-87 Work Group
Co-Chairs: Richard (Ted) Mueller, Director, Indirect cost Group, Office of the Chief Financial
Officer, US Department of Education (Retired)
Merril Oliver, Deputy Director, Maryland Governor’s Grants Office
Janet Atchison, State Accounting Division, Montana Department of Administration
Fred Deminico, Office of the Comptroller, Massachusetts
Terry Hurst, Deputy Assistant Secretary, Office of Grants, US Department of Health and
Human Services
Chris Lipsey, CGFM, Staff Accountant, Food and Nutrition Service, US Department of
Agriculture
Dick Thompson, Chief Information Officer, Maine
Terry Storms, Auditor, Office of the Inspector General, US Department of Commerce
Darryl Mayes, National Director, Division of Cost Allocation, US Department of Health and
Human Services
Scott Pattison, Executive Director, National Association of State Budget Officers
Bhavna Punatar, Cost Allocation Specialist, Colorado Comptroller’s Office
Kathleen Weller, Director Office of Audits, Michigan Department of Education
AGA Staff: Helena Sims, Director or Intergovernmental Relations
####
The Partnership for Intergovernmental Management and Accountability (Partnership)
was established by the Association of Government Accountants (AGA) in September
2007 to open the lines of communication among governments. The mission of the A-87
Work Group is to identify and prioritize issues or concerns relating to 2 CFR Part 225,
Cost Principles for State, Local and Indian Tribal Governments, and provide
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14. recommendations for alternative approaches that could benefit all levels of
government. AGA is the premier Association in advancing government accountability.
AGA supports the careers and professional development of government financial
professionals working in federal, state and local governments, as well as the private
sector and academia. Founded in 1950, AGA has a long history as a thought leader for
the government accountability profession. Through education, research, publications,
certification and conferences, AGA promotes transparency and accountability in
government. www.agacgfm.org
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