Introduction
The purpose of this case study is to analyze how to program governance is implemented in government bodies, particularly in terms of the challenges that it encounters. To do so, it will use the example of the Ministry of Finance (MoF) of the United Arab Emirates, which has recently transitioned its accounting to the accrual basis as opposed to the previous cash-based methods. This choice has been made to update the MoF’s practices to match international standards put forward by the IPSAS. An employee of the Ministry was interviewed about the change process, and their contribution was compounded by information from other sources. The author has compared this information to the existing literature on program governance and identified multiple challenges that the MoF has needed to overcome. The results of the case study and analysis are presented in this paper.
Case Study
The decision to switch to the accrual system of accounting was made based on several factors. According to Kieso, Weygandt, and Kimmel (2018), it rose to the status of an international standard over cash accounting because of its advantages in numerous contexts. Having reviewed IPSAS guidelines, the MoF has decided that the switch would benefit it, as well, to the degree that would warrant adopting a new framework. In particular, per Accrual accounting (No date), the Ministry has found seven distinct benefits: performance, rationalization, analysis, resources, cash flow, cost, and accuracy. It expected the new approach to bring increased clarity to its planning while also improving the overall performance through superior assessments and associated corrections. With the initiative settled, the appropriate legislation was passed, and the MoF started the process of organizational change.
According to the interview, there were four objectives in the change: converting the accounting system from cash to accrual for all federal entities, training users in the new process, implementation of changes in the ERP system, and the implementation of the fixed assets process. It is necessary to adjust the frameworks and software employed at all federal agencies under the current ERP system, and training in the new methods is also needed for their workers. Accrual accounting (No date) states that this process would begin in 2017 and was expected to launch fully by the end of 2020. The interview does not mention significant delays but notes that the closure phase has not started yet, and, therefore, it can be assumed that the initiative is close to being finished.
The MoF has implemented a comprehensive program governance model for the change that features multiple levels of oversight. Consultants and coordinators would meet weekly, sponsors and key stakeholders would meet bi-weekly, and senior management of the MoF would receive monthly reports. The project’s steps, starting with its conceptualization and continuing throughout the duration, have been documented and presented to management for review and confirmation or rejection. Two committees that meet twice a month and a Change Control Board oversee the project and make decisions on strategy and project pipelines. MoF implemented all of the necessary program governance practices presented in the questionnaire, and all of the suggested common factors were taken into consideration, as well. As a result, the project proceeded smoothly and stayed on track for timely completion without compromising on substantial matters.
The process encountered three significant challenges, though it addressed them adequately and prevented them from damaging its progress. The first issue was stakeholder communication, as over 205 federal entities were involved in the change, and it was challenging to reconcile their requirements. The project team had to communicate extensively with the different stakeholders, coordinating activities and information and following up with updates to find solutions that suited all stakeholders. The second issue, related to the first, was stakeholder participation and engagement, as it was necessary to convince the different agencies of the benefits of accrual accounting. This process became particularly challenging due to COVID-19 and the associated difficulty in meeting face to face, but the team was able to arrange online sessions. The third and final challenge was managing project interdependencies, as multiple other ongoing projects relied on the ERP that the accounting change was adjusting. The risks had to be monitored, and changes to segments currently in use needed to be deferred until they became available again.
Analysis
Stakeholder communication is a substantial problem for most program governance enterprises, and addressing it may be considered a large part of the discipline’s purpose. As the Project Management Institute (2015) notes, this problem is particularly prevalent in the federal government because it is highly fragmented, resolving management failures by empowering individual positions or agencies. This tendency was demonstrated in the case of the MoF, as it has had to manage over 200 distinct agencies whose goals and practices were not necessarily aligned. There are no particular ways to handle this problem, as it is the result of long-standing governance problems that need to be addressed separately. As such, the response of the MoF, which took on the issue directly and manually managed each stakeholder, was appropriate. With that said, reform is still necessary to streamline such large-scale projects and ensure that they proceed smoothly while satisfying stakeholder needs.
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Stakeholder participation and engagement are also notable problems, as it can be challenging to attract their interest in a project. In this case, various federal agencies were told that they needed to transition to a new accounting system without necessarily understanding why they would need to do so. It was necessary to communicate the benefits and explain why the particular stakeholders in question should become involved in the process. The MoF’s approach was not necessarily optimal, as it did not consider the individual needs of stakeholders but rather provided the same briefings to all of them. With that said, given the number of stakeholders and the restrictions introduced by COVID-19, it can be assumed that in this case, the actions taken were adequate to the purpose.
The third and final challenge, project interdependencies, is particularly relevant to government enterprises, as they are large and frequently have numerous projects taking place at once. Developing an effective governance operating model (2013) claims that supporting these interdependencies is the function of the organizational governance’s structure. If it is not adequate to the task, projects will interfere with each other, leading to setbacks and other problems. In the MoF’s case, no such issues have been described in the interview, and the accrual accounting project was not impeded significantly. As such, it may be assumed that there was little to no interference between initiatives due to the team’s efforts. Overall, the project’s governance appears to have been adequate to its purposes, with most areas covered and challenges addressed.
Reference List
Accrual accounting – a UAE program that ensures federal accounting effectiveness (2020) Web.
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Kieso, D. E., Weygandt, J. J. and Kimmel, P. D. (2018) Accounting: tools for business decision making. 7th edn. Hoboken, NJ: Wiley.
Project Management Institute (2015) Improving program management in the federal government. Web.