There is little debate over the need for reliable financial reports—or for ensuring the integrity of the information on which they are based, which is A-123’s intent.

The challenge is getting managers accustomed to policy, program and procurement rules to infuse what seem like accounting disciplines into their operating units. It’s a cultural as much as a business challenge. And as usual, the issue hinges on whether federal workers have been given the training and manpower needed to get the job done.

Anyone who has followed the saga of Sarbanes-Oxley and its impact on corporate America is familiar with the complaints about the high cost of compliance and the burden of work.

The burdens of A-123 are in some ways less onerous than Sarbanes-Oxley.

Fortunately for federal executives, the burdens of A-123 are in some ways less onerous than Sarbanes-Oxley. Chief among the differences is that A-123 accepts a risk-assessment approach by management, rather than an audit-driven approach, to provide “reasonable assurance” about the controls related to financial reporting. Under Sarbanes-Oxley, public companies must make similar assessments but are subject to review by outside audits.

Yet federal CFOs face many of the same quandaries their corporate counterparts do in determining what exactly constitutes material risks and how to account for them. If the goal of Sarbanes-Oxley was to improve the transparency of corporate America, its language for doing so was anything but transparent. Even top accounting firms, familiar with arcane Financial Accounting Standards Board rules, had to call in consultants and lawyers to discern what actions their clients should take.

The problem then, and now, is how to deal with the real-world complexities of today’s diverse business models. How are companies supposed to treat foreign subsidiaries, partnerships, contractors and subcontractors? Who owns the process? Who owns the risk? Who is responsible for putting the controls in place? Who determines how reliable they are? Is it worth the price?

The diversity of missions and structures of federal agencies are no less complicated.

“Agencies are working hard to comply with the OMB requirements, but they are undertaking this effort from very different starting points,” observed Fred Thompson, vice president for the Council of Excellence in Government. “This means that some are facing centralization, standardization, auto- mation and governance issues that they may not have fully addressed previously.”

That was borne out at a council forum on A-123 compliance earlier this month. An unscientific poll of 51 federal managers there revealed that 17 had completed their A-123 planning and documentation work or were nearly done; 20 were halfway done; and 13 were just starting or had not yet started. And while technology promises to be a potent enabler, a majority reported using manual documentation.

While agencies may submit multiyear plans to demonstrate internal controls, over the short run, the task of building a sustainable system for ensuring and documenting internal controls will be daunting. And if the private sector’s experience is any indication, agencies should expect to see added costs. But in the long run, if done right, the effort sought by A-123 should pay many dividends in the form of greater clarity and understanding about government operations and in turn, improved performance.