Keynote Address at the 30th Annual International Training Conference of the International Consortium on Governmental Financial Management. A bit about the past and some thoghts on the future of Public Financial Management.

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PUBLIC FINANCIAL MANAGEMENT:
The Past is Prologue/The Future is Fearsome
A look backward and forward at PFM and ICGFM experience and technology
Jim Wesberry
Past President of the
International Consortium on Gov ernm ental Financial Managem ent
Key note Address at the 30th Annual International Training Conference
May 16, 2016 Miam i, Florida, USA
jim wes.com
Introduction
When I was between 14 and 16 years of age I had the unique privilege of serving in
Washington as a Page in the US House of Representatives. I was then, and still am,
intrigued by the inscription on the base of the Statue “Future” at the side of the front
steps to the United States Archives Building “What is Past is Prologue.” It comes from
Shakespeare’s The Tempest, Act II, scene i, in which the character of Antonio utters the
phrase “what’s past is prologue”.
A prologue was then, and still is, a preface to a play or novel that “set the scene” and
provided some background information. The phrase that Shakespeare invented came to
mean today that the past is a preface to the future – we can’t forget the lessons of
history. The past defines the present and therefore sets the stage for the future. A
similar more popular quote is "those who fail to learn the lessons of history are doomed
to repeat them" originated by George Santayana, the Spanish philosopher, essayist,
poet and novelist.”
We must remember and learn from the past to live successfully in the present and
prepare for the future. So today on this 30th anniversary of ICGFM’s flagship annual
event I will talk to you a bit about the past and try to set the stage for the future of
Public Financial Management.

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My lifehasbeen long, interesting and challenging and Icoincidewith Confucius whosaid:
“At fifteen, I aspired to learning.
At thirty, I established my stand
At forty, I had no delusions.
At fifty, I knew my destiny.
At sixty, I knew truth in all I heard.
At seventy, I could follow the wishes of my heart…
…without doing wrong.“
To the above, since I have now lived longer than Confucius, I canadd:
At eighty, I can be outspoken
from my heart and mind
openly and sincerely
giving no mind to
whether someone
becomes offended.
So get ready, something I say may offend you today,in fact I hope something will,
because that will make you think. In recognition of this 30th anniversary conference I
intend to talk a bit about the past, but more importantly about the future of ICGFM,
PFM and related technology.
Past Technology in Public Financial Management
At the very beginning counting was obviously done on fingers, and then tallies were
made by carving notches in wood, bone, and stone. More sophisticated means were clay
tokens then tablets and the knotted string quipu of the Incas and other similar
elementary tools to record numbers culminating with the abacus and finally figures
written carefully with quill pen and ink – feather pens and liquid ink. The “fountain
pen” with a self contained ink compartment became the very latest technology for
accountants.
When I started out with a very old CPA firm as a junior accountant in 1953 the firm’s
technology consisted of one electric adding machine and one calculating machine, both
electric but very large too heavy to carry and slow to operate. We were expected to add
in our heads when in clients’ offices unless they offered us a machine.
The term government financial management was unheard of in those days and public
sector accounting was referred to verbally and in one single accounting class each
semester as “municipal accounting.” There were no accounting standards and auditors
were just getting used to the ten “generally accepted auditing standards.” The
Municipal Finance Officers of the US and Canada (MFOA, now GFOA) had published
one book called the “blue book” on municipal “fund accounting” and that was all there
was.
My three years in Washington left me, unlike all my colleagues, with a great interest in
politics and government and I ended up working on all the firm’s municipal and county
audits while they hid under their desks whenever the firm got a new government audit.
I worked for two firms, then started my ownand became best known for doing public
sector work. During those years there was no new technology until first large

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bookkeeping machines and then computers came along. The first computers were “unit
record” monstrosities with separate card punchers, verifiers, CPUs and continuous
form printers. Then came even larger “main frames” computers. Input was still by
means of perforated cards, memory was tiny and they were mostly used to process
payrolls and print paychecks. The first welcome change came with the use of magnetic
tape in great reels with the ability to selectively retrieve data. Finally, in the most
important step forward in my opinion, large random access disks (called RAMAC by
IBM) made it possible to actually compare budget and actual data rapidly and print it
out but still on continuous forms on large printers. You know the rest: personal
computers that got smaller and smaller, faster and faster and had more and more
memory, laptops, laser and ink jet printers, the personal digital assistant and finally the
smart phone.
Meanwhile the MFOA pushed for improvements at the local level initiating the coveted
award of its “Certificate of Conformance” for annual financial reports produced
according the rules and format it recommended in its updated “Blue Book.”
Government auditing was rare, except for larger entities and even for them very
rudimentary. Because the biggest auditing firms adamantly refused to consider doing
government work, smaller firms like mine had a phenomenal opportunity but most did
not take advantage of it.
Here are a couple anecdotes from my past experiences. I was hired to audit a very
small county in rural Georgia and upon my arrival the very nice little old lady who was
treasurer of the county received me warmly with traditional Southern hospitality and
charm. She showed me into a room that contained one gigantic “well bound” (in
accordance with Georgia law) accounting book lying upon a big table that had
apparently been especially constructed to hold it. It was the biggest manually
maintained book of original entry that I ever saw with huge pages about three feet wide
containing about a hundred columns across on each page with each line containing
entries in impeccably penned script. At the far left were the three important columns
for cash receipts, disbursement and bank balance that were entered daily with the
details posted across the expanse of the pages in the appropriate columns and finally
three columns on the far right for “miscellaneous” items not recorded to the preheaded
columns. The format was not that unusual for the time but the size was enormous.
The sweet lady stepped out to bring me a cup of coffee while I examined the big book.
When she returned I somewhat shyly said to her, Miss “Sweetlady” these columns have
not been added up, there are no totals in the book. With her delightful Southern accent
she calmly said with a big smile, “Why Mr. Wesberry, that’s what our auditor does.”
I spent the next couple days adding it all up…in my head. Would you believe there were
no errors, erasures, or other defects and the book cross added perfectly? I learned that
the previous auditor for years had simply added up the book and prepared a statement
of revenues and expenditures performing no verification work at all.
In one small city the Treasurer kept his “personal” very valuable old gold and silver coin
collection in the city’s vault considering it at face value as part of the city’s funds but
making sure everyone knew it was his own to remove by replacing it with normal

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money at his pleasure. I gave him a deadline to get it out or we would consider it city
funds.
Only the larger governments maintained general ledgers. In one large county the senior
partner of the county’s auditing firm carried the bookkeeping machine prepared
general ledger pages with him in his briefcase and the county only had access to it
through him.
Most governments had multitudes of bank accounts with funds designated for different
purposes and large amounts of idle cash on deposit. Thus they used the bank’s
statements as their accounting system.
We have come a long way since those days.
The International Consortium on Governmental Financial Management
Now a quick history of ICGFM. Dr. Mortimer A. Dittenhofer, who was the main founder
and prime impetus in forming ICGFM, was one of the great auditors and educators of
the 20th Century living on into the 21st to the age of 102 when he passed away just a few
weeks ago. Working with, and learning from, him was one of the greatest privileges of
my life. Though we actually met late in our professional careers, Mort became a friend,
mentor and father in the auditing profession to me. His obituary is attached at the end
of the written copy of this presentation.
I had first asked for Mort’s advice by snail mail from Lima, Peru where I was working
on developing government auditing standards for the Comptroller General. I had read
that Mort was in charge of the team then developing the US General Accounting Office
standards, later called the “yellow book.” We became friends by mail and eventually
after the yellow book was published he moved to become the Executive Director of the
Association of Government Accountants.
Mort’s “Yellow Book” of Government Auditing Standards, the first such compilation of
its type became the model for similar standards in very many countries and
internationally as evidenced today by INTOSAI’s International Standards of Supreme
Audit Institutions (ISSAI) IIA’s Standards for the Professional Practice of Internal
Auditing and IFAC’s International Standards of Auditing (ISA).
Mort and I first met personally at the annual meeting of the Institute of Internal
Auditors held in Miami in 1977. I was 43 and he was 65 years of age. He had already
helped me greatly by then and at our first meeting he said he wanted to ask a favor of
me. Could I help start up an AGA Chapter in Ecuador where I was now working? We
had just formed an IIA Chapter after two long years’ effort. I told Mort that a AGA
chapter would be an impossibility as there were not that many government accountants
in Ecuador and it had been an arduous labor getting the IIA chapter up and running in
a developing country where auditors were not paid enough the cover professional dues
of any kind.
Somehow, during that discussion we agreed that an alternative might be an umbrella
organization composed of AGA, IIA and similar organizations so they could work
together regardless of which had a chapter in a country. Later we wrote back and forth
about the idea and Mort contacted Don Beatty of the Municipal Finance Officers

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Association (MFOA, now GFOA) who also became interested. During the next year the
three of us had two meetings during other professional association events to discuss
how this might work, one in Miami and one in Phoenix.
Finally, with me taking notes on a paper napkin in a revolving bar high above Phoenix,
we came up with a plan. I was to turn our notes into by-laws and policy of the new
organization and Mort was to obtain a charter in the District of Columbia. One major
planned feature, among many that had to be readjusted or changed, was that the
Consortium would hold no meetings or seminars of any kind to avoid conflict and
duplication with its major organizationmembers. Any person who was a member of
any Consortium sponsoring organization would automatically be a member of the
Consortium and eligible to participate in their events at member prices. That turned
out to be very unrealistic as we soon found that there were very few national
organizations like AGA, MFOAand IIA; however, there were individuals across the
world that were interested in ICGFMbut had no way of joining it. So we had to redo all
our plans for membership, dues, etc., ending up with the a structured type of
memberships we now have including much lower dues for less developed country
members.
Mort really did all the original work in Washington alone as soon Don Beatty left MFOA
and I left Ecuador for the private sector in my home town of Atlanta. But Mort kept the
idea alive. He got a pilot group organized under first President Art Litke, a very
distinguished GAO accountant, appointed for a three year term as contemplated in the
bylaws since we assumed it would be hard to get directors together to meet more often
than every three years. The small initial Board of Directors were almost all from the US.
Planning to add international board members we had provided in the bylaws for voting
by the board members via snailmail on any pressing issues. By the time I moved back to
Washington with the OAS Mort had the Consortium formed and running though still
trying to figure out what to do and how to do it.
We had provided in the bylaws that the Executive Director of AGA (first Mort, then
whoever followed him) would automatically be the Secretary General of the
Consortium. What we did not count upon was that Mort would soon leave AGAto teach
at Georgetown University and his replacement at AGAhad practically no interest in
international matters, probably due to the need to get adjusted to his new post. Don
Beatty, the other founder had also left MFOA in similar circumstances. Meanwhile, I
had moved to GAO. Shortly thereafter Art Litke’s three year term ended. Our plan was
to change the bylaws so that I would become Secretary General and Mort president.
My boss, US Comptroller General Charles Bowsher, was most supportive of this plan
but wanted the GAO Legal Council to assure that my role was appropriate. To our
surprise he ruled that I could not be Secretary General because that post involved
financial and administrative management including signing checks and all legal
documents, but he suggested that I could be President. So Mort became Secretary
General again and I ended up as the Consortium’s second President. We also elected a
broader based Board of Directors from a number of countries to try to offset the
dominance of the United States. Now we finally had a more practical operative
structure and we began work. Mort had made contact with Noel Hepworth Executive
Director of the UK’s CIPFA and it replaced MFOA as a major organization member.

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With support of GAO and IFAC’s co-sponsorship we held two conferences in
Washington in the latter part of each year. The first was small but successful; the
second much larger as our topic was extremely timely, the debt crisis of the early 1980’s
featuring the world’s top experts. Noel Hepworth had become very active and offered
CIPFA as host the third conference to be held in London on dates coinciding with the
celebration of 100th anniversary of its founding. By that time my term was ending and
Noel was elected President.
Meanwhile during my tenure we had initiated the monthly WashingtonInternational
Financial Management Forum so colleagues in the US government and internationally
based agencies there could get together informally for roundtable discussions. A
partner in Arthur Andersen offered to edit a monthly newsletter that was snailmailed to
member organizations and individual members. This eventually became the first
ICGFMjournal with Jim Hamilton as editor.
About halfway through my term Mort hit the mandatory retirement age at Georgetown
and moved to Florida International University in Miami and I received an offer I could
not refuse to work for Price Waterhouse realizing a lifetime ambition to be with a big
CPA firm. One day Mort called me on the telephone and said he had an idea. Why not
hold a Consortium conference in Miami for participants from Latin America since that
was my area of specialty? At first we ended up actually hosting two conferences, one in
Spanish in March for Latin American countries and a second in English October for
Caribbean countries. These were successful but Mort and his loyal secretary, Ana
Estivil, were overwhelmed with the double work so in the third year, now with greatly
increased participation, we began the multilingual conference that has continued until
now quickly growing from a Western Hemisphere event to an international one. The
first few conferences were held at the Airport Sofitel Hotel but we quickly outgrew their
facilities and had to move to the Airport Radisson where we continued over quite a few
years until moving to this hotel.
Many people and organizations helped us as we struggled with the first conferences
with practically no working capital. Ifany conference has been a failure we would have
been broke. The first sponsors of the Miami conferences were USAID,
PricewaterhouseCoopers and Casals & Associates. Others gradually followed.
I must tell you an anecdote that shows the great personality and sense of humor of
Mort Dittenhofer. At all these Miami Conferences we always had a great deal of trouble
getting the participants back in the session after the coffee breaks. This threw our
programs far behind schedule. Mort, without telling me, went out in the country and
obtained a very large cow bell. This is the bell that farmers place around a cow’s neck
so they can be located easily in the fields. At the next conference Mort came out after
the first coffee break ringing his cow bell loudly and enjoying every minute of it. The
participants (and I) were astounded to see the octogenarian greatest professor in the
history of government auditing ringing his cow bell as he did for years after that, always
with a big smile on his face. I wonder what ever happened to that cow bell.
The most important person to the success of ICGFM itself and all its conferences was a
very energetic and lovely lady named Audrey Dysland. She had been a US government
finance officer herself and was the first woman president of the Washington Chapter of
AGA. Upon retirement from the Federal government she became CFO of AGA where

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Mort was Executive Vice President and they became close friends. She assisted Mort
with the ICGFM administration and finance duties from its very beginning, finally
becoming its Assistant Secretary General to Mort until he left Washington and then
since she was really doing all the work she was appointed Secretary General. Audrey
and her husband Bob, also a retired government lawyer actually ran ICGFM performing
all duties from legal counsel to official photographer. Inthe early days when ICGFM
had almost no funding they ran it from their home incurring personally all its expenses.
They would never let us repay them for all they spent or for their services. They had
their own office equipment and stored all ICGFMfiles and materials in their basement.
Without them ICGFM and its conferences would never have survived and we would not
be here today.
The Present
I am sure that you all know much more about the present of PFM than I so I will move
on to discuss its possible future and the surrounding technological magic that will affect
it.
The development of IFMS as a key component of PFM began in the early 1990s with
the USAID LAC Regional Financial Management Program (LAC/RFMIP). It was
quickly accepted by the other international donors. If you wish to pursue the
development and present status of PFM in Latin America and the Caribbean (LAC) I
recommend these excellent new publications:
 Interamerican Development Bank: Public Financial Management in Latin
America, The Key to Efficiency and Transparency, 2015 (403 pp.)
https://goo.gl/ceJ5Mb
 Banco Interamericano de Desarrollo: Gestión financiera pública en América
Latina, La clave de la eficiencia y la transparencia, 2015 (433 pp.)
https://goo.gl/e4Nl1H
 US Agency for International Development: Public Financial Management
Practices in Latin America and the Caribbean: A Review of Trends,
Challenges, and Opportunities for Improvement, 2014 (PDF, 123 pp.)
http://goo.gl/SIauAQ
Technology Trends
In 1994 John L. Petersen wrote a book called The Road to 2015. In it he said:
"You are living in the period of time that will produce more change for
humanity than any previous era in history. It is a time of extraordinary
importance that will fundamentally reshape almost every aspect of your
life during the next two decades. Wholesale change is taking place in
almost every segment of your reality - and the pace will only increase in
the coming years."
What he predicted occurred…and continues on…but at what seems like the speed of
light.

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Twenty years ago Mort Dittenhofer insisted that I keynote the 10th annual Miami
Conference. The title of my address was “Cyberaccountability vs. Hyperchange.” I
began by talking about the most exciting technological development of the 199os…the
Internet:
“Originated as a defense effort to secure computer communications
against an attack, Arpanet, as it was then called, linked four sites in the
decade of the "60s. By 1975 it had grown to about 100 sites, primarily
universities and others doing defense work and research. Another 100
sites had joined by 1983. In 1995 there were an estimated 12 million
computers linked to the Internet, half of them permanently attached, the
rest PCs and laptops only intermittently on line.”
Today around 40% of the world population has an internet connection…nearly 3 ½
billion Internet users and there are almost one billion websites. That is what I meant by
“hyperchange.”
Number of Internet Users in the World
Here’s another popular way to illustrate hyperchange:
Time in Years Taken to Reach
50 Million Users
Telephone 75
Radio 38
TV 13
WWW 4
MP3 3
Facebook 2

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Smartphone 1
Klaus Schwab, Founder and Executive Chairman of the World Economic Forum (WEF)
says:
“We stand on the brink of a technological revolution that will
fundamentally alter the way we live, work, and relate to one
another. In its scale, scope, and complexity, the transformation will
be unlike anything humankind has experienced before.”
The WEF recognizes our current position to be at the beginning of the Fourth
Industrial Revolution (see its video at https://www.youtube.com/watch?v=khjY5LWF3tg).
Kevin Kelly, co-founder of Wired says that 20 years ago one who predicted where we
are now would have been declared insane and “the next 20 years are going to make this
last 20 years just pale."
Facebook is getting ready to introduce artificial intelligence and virtual reality. Both of
these fit its strategy of monetizing as many of our social interactions as possible.
Will governments use these to further monetize their revenues?
Facebook’s chief product officer, Chris Cox predicts the soon demise of the keyboard.
Facebook already uses artificial intelligence to personalize your newsfeed, identify you
in photos and translate your posts. The company has built technology that can
recognize objects – even different dog breeds – in photos and videos. The ultimate aim
is to develop algorithms that can understand the nuances of people’s physical
interactions. President Mark Zuckerberg said in his recent keynote speech: “Our goal
with artificial intelligence is to build systems that are better than people at perception
— seeing, hearing, language and so on.”
Will governments eventually also build such systems understanding the nuances of
their citizens? Why not?

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The digital revolution that has been occurring since the middle of the last century is
characterized by a fusion of technologies that is blurring the lines between the physical,
digital, and biological spheres. The response to it must be integrated and
comprehensive, involving all global stakeholders from the public and private sectors
The WEF says that the transformations of the Fourth Industrial Revolution involve
velocity, scope, and systems impact. “The speed of current breakthroughs has no
historical precedent. When compared with previous industrial revolutions, the Fourth
is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost
every industry in every country. And the breadth and depth of these changes herald the
transformation of entire systems of production, management, and governance.
The possibilities of billions of people connected by mobile devices, with unprecedented
processing power, storage capacity, and access to knowledge, are unlimited. And these
possibilities will be multiplied by emerging technology breakthroughs in fields such as
artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D
printing, nanotechnology, biotechnology, materials science, energy storage, and
quantum computing.
Already, artificial intelligence (AI) is all around us, from self-driving cars and drones to
virtual assistants and software that can translate or invest. Impressive progress has
been made in AI in recent years, driven by exponential increases in computing power
and by the availability of vast amounts of data, from software used to discover new
drugs to algorithms used to predict our cultural interests. Digital fabrication
technologies, meanwhile, are interacting with the biological world on a daily basis.
Engineers, designers, and architects are combining computational design, additive
manufacturing, materials engineering, and synthetic biology to pioneer a symbiosis
between microorganisms, our bodies, the products we consume, and even the buildings
we inhabit.”
WEF continues, “As the physical, digital, and biological worlds continue to converge,
new technologies and platforms will increasingly enable citizens to engage with
governments, voice their opinions, coordinate their efforts, and even circumvent the
supervision of public authorities. Simultaneously, governments will gain new
technological powers to increase their control over populations, based on pervasive
surveillance systems and the ability to control digital infrastructure. On the whole,
however, governments will increasingly face pressure to change their current approach
to public engagement and policymaking, as their central role of conducting policy
diminishes owing to new sources of competition and the redistribution and
decentralization of power that new technologies make possible.”
“Ultimately, the ability of government systems and public authorities to adapt will
determine their survival. If they prove capable of embracing a world of disruptive
change, subjecting their structures to the levels of transparency and efficiency that will
enable them to maintain their competitive edge, they will endure. If they cannot evolve,
they will face increasing trouble.”
Given the Fourth Industrial Revolution’s rapid pace of change and broad impacts,
legislators and regulators are being challenged to an unprecedented degree. They will
have to preserve the interest of the consumers and the public at large while continuing
to support innovation and technological development. Regulators will have to

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continuously adapt to a new, fast-changing environment, reinventing themselves so
they can truly understand what it is they are regulating. This means that governments
and regulatory agencies will have to collaborate closely with business and civil society.
Everything indicates that the already rapid technology changes in private and public
sector accounting will accelerate over the next decade. The Internet and high
bandwidth wireless networks will continue to expand and grow. Cloud computing
platforms and applications will combine with advanced analytical tools, ever-larger
data sets and social and mobile computing to reshape the PFM profession.
Smartphones, tablets, notebooks and other mobile computing devices will become the
main tools for managing the government accountant’s complex choreography of work
and life. These technologies will reinvent work and the workplace, allowing greater
flexibility around when, where and how work is done. Increasingly advanced, yet
cheaper, computing power, networks and the Internet will lead to the highly developed
automation of data collection and information sharing. They will also improve data
quality and greatly reduce, but not eliminate, the time required for data validation.
As the time and effort required for data collection and validation is substantially
reduced data analysis tools and software will greatly increase the opportunities to
provide governments with analysis, performance management and decision-support
services.
This combined with the increasing use of robotic assistance means that number of
required accountants and other financial professionals will be reduced dramatically in
government and business.
Ambient intelligence could transform cities through dynamic routing and signage for
both drivers and pedestrians. It could manage mass transit for optimal efficiency based
on real-time conditions. It could monitor environmental conditions and mitigate
potential hotspots proactively, predict the need for government services and make sure
those services are delivered efficiently, spot opportunities to streamline the supply
chain and put them into effect automatically.
To summarize here are some of the most important emerging trends:
 Sensors and actuators, including implantables and wearables, that let us
capture more data and impressions from more objects in more places, and that
affect the environment around them.
 Ubiquitous computing and hyperconnectivity, which exponentially increase the
flow of data between people and devices and among devices themselves.
 Nanotechnology and nanomaterials, which will let us build ever more complex
devices at microscopic scale.
 Artificial intelligence, in which algorithms become increasingly capable of
making decisions based on past performance and desired results.
 Vision as an interface to participate in and control augmented and virtual
reality.
 Blockchain technology, making all kinds of digital transactions secure,
verifiable, and potentially automatic.
Fearsomeness

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Now that we have seen the great opportunities available to us in the future let’s discuss
the possible problems and dangers.
We have seen that more than 30 percent of the global population now uses social media
platforms to connect, learn, and share information. In an ideal world, these interactions
would provide an opportunity for cross-cultural understanding and cohesion. However,
they can also create and propagate unrealistic expectations as to what constitutes
success for an individual or a group, as well as offer opportunities for extreme ideas and
ideologies to spread.
Technology is obviously one of the main reasons why incomes have stagnated, or even
decreased, for a majority of the population in high-income countries. The demand for
highly skilled workers will continue to increase while the demand for workers with less
education and lower skills will further decrease. This will be equally true in government
as in business. The result will further drive a job market with a strong demand at the
high and low ends, but a hollowing out of the middle.
The Fourth Industrial Revolution will also profoundly impact the nature of national
and international security, affecting both the probability and the nature of conflict. The
history of warfare and international security is the history of technological innovation,
As new technologies such as autonomous or biological weapons become easier to use,
individuals and small groups will increasingly become capable of causing mass harm.
This new vulnerability will lead to new fears. But at the same time, advances in
technology will create the potential to reduce the scale or impact of violence, through
the development of such things as new modes of protection and greater precision in
targeting.
While many people thinkthatthe currentworld economic situationwill gradually improveas
it has inmany priorsimilar circumstances, others believe thatthere willbe continual up-and-
down yoyo-like swings inthe economiesofthe countries oftheworld with a gradualtendency
to edge permanently eitherupward ordownward. Many believe that we will not any time
soon, perhapsever, see thelevel of prosperity that somenations achieved during the
20th Century.
We cannotforecast what is going tobe happening in the future butone thing for sure,the next
20 years will bequite differentfrom thepast 20years both as far asthe world economy is
concerned and as far as governmentand business financial managersare concerned.
Some things we may reasonably expect inthe near future could be:
 Becauseofthe simultaneous jarring shocks,dramaticcrises and astonishing
technological changes we areexperiencing and will continue toexperience, it is no
longer possible to fully rely upon past tendencies as a means of forecasting the future,
or to be able to plan usefully more than a shorttime ahead.
 Becausethey believe they havebeendeceived, therewill bea massive lackof
credibility among citizens, investorsand almost everyonein so far as the activities of
business and government are concerned.
 Becausethey are inherently insolvent, mostoftheworld’s governments willbe
experimenting with many varieties ofcreative economics and undergoing severe
periods of readjustmentand austerity accompanied by greatsocialunrest.

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 Becauseofvastdemographic shifts and varying population compositions the
capability ofgovernments to provide social safety nets forthepoor and comfortable
retirement for theaging will becomevirtually impossible.
 Becausethey have heretofore unrealistically inflated asset and security values, those of
the world’s great businessesthat survivewill beobliged tochangemany things about
the waythey dobusiness.
 Becausethey have failed miserably, the entiremechanisms and structures ofall
worldwide financial institutions and systems will beoverhauled.
 Becauseofthe accelerating worldwide cultural and ethical decline exacerbated by hard
economictimes,unemploymentand severe need, the present upsurge offraud, crime
and corruptioninthepublicand privatesectors willcontinueunabated.
 Becauseofthe vastly increasing volume of flows ofinformationofallkinds
exacerbated by the grievous deceptionofcitizensand investorsby peoplein whom
they formerly had faith, therewill be a very high degree of skepticism regarding the
reliability ofany and all informationpublished whetherit befinancialorofany ofthe
nature,especially including that furnished by themedia.
 Becauseofthe worldwidelossofconfidence inpoliticalparties,parliaments and
judiciary systems,the current trend towardmore authoritariangovernance,thus
weakening, ifnotdevastating,democraticprinciples,yetretaining their cosmetic
appearance,could morph intoa form ofgovernment that somehave called
“dictocracy” whether or not it emergesunder thebanner ofsocialism or capitalism.
 Becausethere is norealparagonfor guidancein this technological revolution, thereis
no way to planand budget formorethanthe shortterm.
Whatwill be the roleofthe publicfinancialmanagerinthis drastically changed world?
There will certainly bea drasticneed for someone to try to provide, assure or restore
credibility to institutions and theinformationthey produce.This clearly should be therole of a
financial managers and auditors.
One ofthefew thingsthat willnot change during the remainder ofCentury 21 is the continued
growth and sophisticationof fraudand corruption. There willbe anevengreaterneed for
forensic accountants and auditors to continue therole ofinvestigating,obtaining evidenceand
disclosing cases offraud and corruptionsolong as a free press and prosecutorial will exist.
Many have lostfaith indemocracy and it is underfervent attack inmany countries. Oneofthe
mainreasons forthis is that democraticpracticeshave beenseverely tainted and confidence in
them undermined by financial scandals,conflicts of interest,criminally tainted money,
excesses offinancial transactions (collections and expenditures) beyond statutory limits,
delinquentand/orfraudulent reporting and internal fraud among political parties and
campaigntreasuries.
In the industrialized countries politicalschemers haveunrelentlessly developed “legal”means
of circumventing any and all legislationintended tocleanup political finances. Here is a
thicketthat publicfinancialmanagers and auditors have rarely entered, butone that needs
their attentionunless weplantobury democracy once and forall. Dollarcracy has replaced
democracy across Planet Earth and unless some means of controlling,disclosing and auditing
political funding canbe putinplace,democracy will surely die. Here is a very controversial
and dangerous,but badly needed,role forPFMprofessionals.
The strengthening of credibility ofpublic and private institutions and informationwill bethe
greatest challenge beforebusinesses and governments.
Auditors willhave touse theirtalents and abilities togatherall kinds of information,assess it
and ascertainwhether itis valid. Thisis basically what they have beendoing all thetime but

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primarily limited to thearea offinancialinformationand the controls overthe process of
gathering,recording and reporting it.
Auditors willcontinueto provide assurances regarding the adequacy offinancial information
and controls. They havealready begun to provide attestationservices inotherfields and this
will necessarily begreatly expanded. Unfortunately, in aninformation-oriented society with a
historically nurtured culture of exaggeration, manipulation,and outright “spinning” of all
kinds of informationfrom balancesheets totelevisionnews,there is plenty ofroom for an
informationsociety tobe transformed intoa misinformationsociety.
Today we havea flow ofverbal, printed and visual informationgreater thanatany time in
human history and itis increasing exponentially.
We are deluged by great volumes of money, statistics, reports, news,documents,books, video
recordings and presentations and digital informationcompressing all oftheabove into
magneticfiles that few peoplecan understand if their programs don’twork. Weare
responsiblefor notonly administering, butalsounderstanding the flows andmeanings of
trillions of monetary units.But no humanbeing canreally comprehend a numericalvalue in
the trillions. And soonwe’ll beinthe quadrillions.
One trillionseconds is moretime thanhas existed inall recorded history…31,688years to be
exact. Nohumancould physically count and verify the authenticity of
$1,000,000,000,000.00incurrency whetherphysical or electronic.Fortunately wehave
machines thatcandoso ifthey arecorrectly utilized.
Very soonall humanknowledge will be stored, handled and reported.It is abundantly clear
that wearenowdealing with volumes of informationthat the humanbraincan nolonger cope
with. Yetsomeone, somehow notonly has tocompile,summarize and report on different
combinations and categories ofthis informationbutcommunicatethe results clearly to others
so that they canbe understood. Whata greatopportunity to manipulate any kind of
information. What a great opportunity tofalsify,spin, distort or simply modify cosmetically
any type of information to makemorepleasant.
No business CEO or national President likes toreceive bad informational or financial news. If
authoritarianism grows inthecoming years, as wellmaybe thecase,leaders inbusiness and
government willbe inpositions toseethattheirsubordinates always furnish them good news
whether itrelatesto financial operations and position or the number ofprisonerstakenand
soldiers killed onthebattlefield.
One ofthekey factors inthe collapseoftheformerSoviet Unionwas the fact that factory
managers,inordertoreportthatthey had metproduction quotas, massaged and inflated the
figures. Thus government leaders were fooled intothinking things werebetteroffthanthey
actually were.
A very smart executive inbusiness orgovernment may begreatly concerned that the
stockholders investors or the public receive only favorablefinancialand non-financial news,
but will alsobe greatly concerned toknowwhatthe real situationis,so as to beabletotake
correctivemeasureswhennecessary eventhough they mayhave tobestealthy.
Now this is thebottom line. Hopefully democracy will prevail across theplanet, butwhethera
form of governmentvaries from strongly autocratictopurely democraticnature or from
socialisttocapitalist,there will always be a need for someoneto assureand attest to the
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That will beone of the mainchallengesto public financialmanagers and auditors during the
remainder of the 21st-century…providing credibility eithertothe entire public atlarge ortoa
single powerfulleader or group of elites…
The Next 30Years: ICGFM andPFM
With 30 yearsbehind us let lookas far forward as we can.
ICGFMwill change drastically by using every possible form of communications and training
technology. Everything it publisheswill be digital…academicjournal,e-magazine and
whatever new comesalong.Conferences will bevirtual rather thaninpersonwith the possible
exceptionofa liveconferenceevery few years topermit personalcontacts. Traveland hotel
costs will beeliminated and registrationwill bemuch cheaper, perhaps included inannual
dues.
Sophisticated digital platforms will enable virtual environments that simulate the
benefits of real events, and attendees will also be able to access colleagues and subject
matter experts individually online. Eventually augmented reality headsets and
holograms will make it possible for participants to see speakers and other participants
in three dimensions approximating live participation.
Many new technologies will affect and improve PFM. The Digital Strategy released by
the White House in May, 2012 (https://www.whitehouse.gov/sites/default/files/omb/egov/digital-
gov ernment/digital-government.html) calls for a revolution in mobile, social, cloud, analytics
and the interoperable use of data. It is the most far ranging attempt by any government
to utilize new technologies.
I believe that the three main current trends that will impact most will be:
 DigitalFabrication(alsocalled Additive Manufacturing or 3D printing)
 The Internet ofThings (IoT)
 Blockchaintechnology
3D printers use a variety of methods and technology to assemble physical versions of
digital objects, usually by constructing a thin layer of an object at a time and then
building another layer of the same object immediately on top of the prior one. Digital
fabrication will allow governments to design and produce tangible objects on demand,
wherever and whenever they need them or to contract a local company to fabricate
them. Governments will first use 3D printers to do small-scale production of previously
purchased goods. Later they may use 3D-printing for buildings and electronics.
The Internet of Things (IoT) goes beyond the interconnectedness of machines to
smartsensor integration. The addition of smart sensing will lead to an increased flow of
information that will potentially affect almost every facet of people's lives. IoT is the
network of physical objects—devices, vehicles, buildings and other items—embedded
with electronics, software, sensors, and network connectivity that enables these objects
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The Internet of Things (IoT) is the application of sensors, IT and networking
technologies to connect billions of devices around the world. These enable new, smart
applications, analytics and business and government models that result in a cleaner,
more efficient and sustainable way of living. Just as the internet connected billions of
computing devices and created new applications and models such as search engines,
emails, e-commerce and social media, IoT will advance humanity in ways we can’t yet
imagine.
Experts predict that, by 2022, one trillion networked sensors will be embedded in the
world around us, with up to 45 trillion in 20 years. With this many sources of data for
all manner of purposes, systems will be able to arrive at fast, accurate decisions about
nearly everything. And they’ll be able to act on those things at the slightest prompting,
or with little to no human action at all.
IoT will offer advanced connectivity of devices, systems, and covering a variety of
protocols, domains, and applications. The interconnection of these embedded devices is
expected to usher in automation in nearly all fields, while also enabling advanced
applications and expanding to the areas such as “smart cities.” In these sensors and
smart phones will be able to track materials and assets, letting people know whenthey
are not being used, about to break, or where they are. This will unlock huge amounts of
spare capacity in the system, creating new business models that will drastically change
the way the city functions.
Once all properties of a governmental unit are interconnected the long time problem of
controlling assets and knowing where they are will at last be solved.

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Blockchain will have the greatest impact of all because, among other things, it will
eliminate paper and metal money. It is defined as “A system that’s secure without a
higher authority, distributed across many strangers’ computers, yet tamper-proof, and
promises a mechanism for trust mediated directly between individuals”.
“Blockchain technology will underpin the internet of things, safeguarding privacy,
reducing cost, and ensuring the next wave of change in the digital realm puts real
control in the hands of those who are accountable.”
David Siegel, co-chairman of Two Sigma Investments says the day may come when
banks aren’t even needed to hold money if digital currencies like bitcoin flourish.
With Blockchain, the distributed software protocol that enables bitcoin to work,
authorities like central banks and governments may also see their roles vastly
diminished. “It’s a remarkable power structure shift,” he said. “It will ultimately be very
hard for governments to stop this advancement because this technology will be so
widely available,” making it hard to police, Siegel said. “Probably the same thing will
happen with virtual currencies. How do you stop it? It’s software.”
Though best known for facilitating cryptocurrencies, Blockchain will really have the
potential of third party-free transfer. “That can involve entirely different cultural
interactions than just seeing value as meaning money.For example, we could see voting
and collective decison-making without the use of third-party control. The future can
involve all kinds of creative exchange between human (and even digital) beings that are
direct, private when wanted, and totally in the hands of sender and receiver.”

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Bloomberg News reports that from artificial intelligence to the Blockchain, the world of
finance is being transformed by emerging technologies and that will mean lots of lost
jobs. PFM will not be excluded from this expected loss of jobs. Banks have cut tens of
thousands of jobs since the 2008 financial crisis as global regulatory changes have
shattered the old banking models. That trend will continue as the complexity and
interconnections of financial markets increasingly mean computer algorithms and
artificial intelligence take over the roles of human decision-makers.
Eventually machine learning, in which computers gradually learn to function as
humans, combined with Blockchain will drastically affect the number of humans
necessary to perform public financial management functions. Experts say machines are
now in some sense beginning to think. And what that means is we're seeing machines
encroach on the kind of capabilities that set humans apart. Robots will threaten any
jobs which involve humans sitting in front of screens dealing with information.
Fearsome Justice: The Risk ofDangerto GoodPublic Financial Managers
This subjectis rarely, ifever,discussed in thesetypemeetings.Ihave never beforedealtwith it
publicly.I’ll start by describing a meeting held ina majorLatinAmerican capital city about 25
years ago.
We were just starting out theLAC/RFMIPProjectby doing severalanalysesofPFMincertain
selected countries using teams ofexperienced professionals.Inthevery firstcountry Ireceived
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he represented anorganizationoflocal government publicofficials and would prefer tomeet
after business hours. Itold him tocome by my hotelroom that evening.
The onsite country teamleader and Iwaited forthem inmyroom expecting only one or two
persons. Whenthey arrived about 25or30men,all middleaged or olderstreamed intothe
room filling itup completely. Therewerefolks onthebeds,leaning againstthe wall, sitting on
the window sills and filling upthe entirefloor.They looked very serious and wewere
somewhatshocked.
The spokesmansaid that they represented a nationwideorganizationofmunicipalemployees
who were incharge ofresources, both inmoney andkind with overone thousand members.
They weretreasurers, stock clerks,procurement persons, inventory clerks and any kind of
public officer who was responsibleoraccountable forproperties, resources or money. Never
before orsincehave Iheard ofsuch anorganizationelsewhere.
Here’s their story intheir words as Irememberit told tous:
“We arethelowest level of employeeswho are responsible for
resourcesof our local governments. We work forverysmall
municipalitiesthathave fewemployeesandwereport to locallyelected
politicians…mayors,councilmen,etc. We have familiesin our small
townswherethereislittleopportunityfor employmentso we needour
jobs. All too often our bossesorder usto do thingswe knoware wrong
usually involving their profiting bythelossto themunicipalityof
resources. Theymakeusperformillegal actsontheir behalf which we
resent and have no interest in. Theyget the loot, we getnothing.Our
choice isto cooperate or be firedand replacedbysomeone who will do
their will.Because we are modest people andneed the work wehave no
choice butto do whatthey demand or risk thelivelihood of our families.
The worst part isthatwhen illegal actsarediscovered asthey often are,
we go to jail andthey go free because they are electedofficialswith
prestige,power and, if necessary,highpriceddefense attorneys.”
That meeting was soseriousthat we actually sawgrown middleaged and elderly menwith
tears in theireyes. Wewanted tohelp them and tried ourbesttodo sowith our
recommendations. I’m not toosurewe succeeded.
Frankly,neither Inor my colleaguehad ever thought aboutsuch situations.We haveever
since.
While therisks arethe greatestin the smallest governmental units with few employees and
little possibility ofstrong internal controls, they really exist at every level ofgovernment.
Since thenI have observed a numberofsimilarcases and I believe therearemany more that
never become known.
As governments havebecomelarger and morecomplex,they have also become more and
more subject tothepossibility of higher officials extorting loweremployees tofacilitate illegal
acts ofall kinds. This is a dangerthat every PublicFinancialManager may haveto confront

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during theircareer.Worse yet,weareseeing more and morecollusion among largerand
largergroups ofpublic officials tomake private profit fromtheirofficial posts. Collusive
groups tend tobring more pressure upon employees seeking tobe honest…and many
succumb.
I have since beenlooking forsimilar cases and have seencases of middlelevel and eventop
level publicofficials whohave fallen into threeclasses:
1. Those who are honest and are able toresignrather participate inthecommissionof a
crime.
2. Those who are honest and want toremainso, but cannot gatherthe courage to risk
losing their employment,so they goalong eventhough they make no profitfrom the
crime.
3. Those who try to remainhonestbut succumb tothe pressure whenthey areoffered
and receivepartofthe proceeds of a crimethey otherwise would neverhave imagined
committing.
Clearly the third type isguilty, butmuch less so than the originators and perpetrators. The
first, ofcourse, isinnocent.But whatofthesecond who gains nothing buta lost reputationand
perhaps timein jail fortrying toprotecthis family? Rarely is he shownmercy.
I have noanswertothis problem so Ileave itwith you all tothinkabout.I believe these type
situations will getfar worse inthecoming yearsand willconstitutea greatethical challenge to
the assurance of justicefor PublicFinancial Managers.
I sincerely hope thatyou will notbecome involved is such a situation.
It is easy torantand raveaboutfraud, corruption, bribery and impunity. Ido itall the time.
But it is far harder,though equally important, tocarefully consider the need to protect the
honest from temptations and pressures tobecomedishonest.Thatis one ofthe mainpurposes
of internalcontrols,butsome organizations are too smalland larger organizations oftenapply
subtle threats and peer pressure toenter into conspiracies.
We mustconsiderthe protectionoftheintegrity oftheinnocent with a vigor equal to that we
exerciseinthe prosecutionofthe guilty.
Conclusion
I have tried to make three pointstoday:
1. Be guidedbythe past as youpursuethe presentand prepare for
the future.
2. Maximize theuse of technology.Youcannotavoid it.
3. Stay out of jail.

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We all become thevictims ofhyperchanging technology asthe future unfoldswith lightning
speed. Itpresents great opportunitiesbut also,like anything new,canmakeus uncomfortable
as we seekto dominate it.
Twenty years agoat the10th ICGFMConferencehereinMiami Iclosed my presentation with
this Hyperchange Victim'sSerenity Prayer which Ibelieve is still very appropriate:
God give us the grace to accept with serenity the change that
technology brings,
the foresight to prepare for it in advance,
the courage to manage it if we can, and
the wisdom to accept it…
whether we like it or not.i
i Adapted from The SerenityPrayer by Reinhold Niebuhr
GodBlessYou,
Your Countries
and this
Hyperchanging
Planet
Jim Wesberry
jimwes.com

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INMEMORIAM
Mortimer A. Dittenhofer
January 13, 1914 – March 4, 2016
Mortimer A. Dittenhofer died on Friday March 4, of heart failure at Holy Cross Hospital
in Silver Spring MD. He was 102. At the time he was living independently at Riderwood
Retirement Community in Silver Spring. Mort was born in St Paul, MN January 1914,
only child of Mortimer, a lawyer, and Gertrude (ne Gunzsburg) a socialite and
champion bridge player.
Beyond being a father and twice a husband, Mort had been Professor Emeritus, a Ph.D.,
a Certified Internal Auditor, a Colonel in the Army, an extensively published author, a

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member of innumerable professional organizations, a sought after consultant and
speaker both nationally and in 24 foreign countries, and an inspiration, mentor and
friend to his professional associates, students, friends and neighbors.
Mort graduated from Macalester College with a degree in economics (which awarded
him Distinguished Citizen of the Year in 2002) from Northwestern University in 1942
with an MBA in accounting, and from American University with a Ph.D. in 1974.
As a second lieutenant in the Army in 1942, he was deployed as a Platoon officer of the
23rd Quartermasters Regiments when his unit went to the California coast with the 5th
Armored Division to repel the Japanese in case the Allies lost the battle of Midway.
Landing on Omaha Beach, he had the task of supplying the replacement personnel
needed for the wounded and killed. Later, working with other members of the Allies,
Dittenhofer helped design the accounting system used to account for looted property
rescued from Nazi government.
Back in the States, Dittenhofer was an auditor for the Atomic Energy Commission for
10 years, where under topsecret clearance and armed, he accounted for radioactive
material and weapons. Over the next seven years he worked for NASA and HEW (now
Health and Human Services.) Then on to to the General Accounting Office in 1969 (now
the Government Accountability Office), where he headed a 10-person, 2-1/2 year
working group that developed the ‘Yellow Book’ of government audit standards.
Translated into 23 languages, the Yellow Book set audit standards as practiced by
governments all over the world. Dittenhofer retired from the GAO as an assistant
director.
He then taught accounting and auditing at Georgetown University for seven years and
at Florida International University for 15. At 78, he was perhaps one of the oldest
professors ever granted tenure. More remarkably, he was too consumed with his
teaching, writing and counseling duties to prepare his tenure application package: he
informed his chairman that if they wanted him to have tenure, they would have to
prepare his application package themselves--which they did. In a two-year period, FIU
awarded him Outstanding Achievement Award, Outstanding Educator Award, Most
Supportive Faculty Member, and Distinguished Service Award.
He was a valued member of many professional organizations. He joined The IIA
(Institute of Internal Auditors) in 1969, and his professional life is one that could fill
the pages of a history book. He remains the only internal audit practitioner to receive
both the Bradford Cadmus Memorial and Leon R. Radde Educator of the Year awards.
Even more impressive, Mort is one of only four recipients of The IIA’s Lifetime
Achievement Award. Just last year, he was inducted into The IIA’s American Hall of
Distinguished Audit Practitioners.
Another Association important to him was the International Consortium on
Government Financial Management, which he co-founded in 1977 with Jim Wesberry.
It brings together government entities from the Americas, Africa, Europe and Asia,
from the most local to national, as well as universities, financial management
practitioners and private sector specialists.

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Further honors from other associations include the Gary Einhorn Achievement Award
in 2000 and Lifetime Research Award in 1994 from the Association of Government
Accountants. In addition, he served as a United Nations expert and wrote the
conference text for a 1988 meeting in Vienna Austria.
He helped lay the foundation for internal audit education by establishing The IIA’s
Endorsed Internal Auditing Program at Florida International University. That program
has transitioned into what is known today as the Internal Auditing Education
Partnership, which has flourished and now exists at 45 colleges and universities around
the world. In addition, he is co-editor along with James H. Scheiner of the Sawyer’s
Internal Auditing, 4th and 5th editions, the 1,446-page reference guide plus a 400-
page instructor’s guide. This book is the preeminent reference guide in the world.
His lifetime of authoring has included at least 30 articles, innumerable papers
presented at conferences but not published, and numerous books, including
Behavioral Dimensions of Internal Auditing, 2010, and Applying
Government Accounting Principles which was published when he was 101.
His hobbies included amassing a collection of 245 models of historic fire engines, coin
collecting, and reading military history and espionage novels.
How was he able to achieve so much in his life? total optimism, enthusiasm,
equanimity, perfectionism, and thriving on 5 hours of sleep. His secret for living to 102?
“Always chase the girls!”
Mort is predeceased by two wives and one daughter. He is survived by two children and
three step children and numerous grandchildren and great grandchildren. His
memorial service will be on March 26th at 11 am in the Riderwood Retirement
Community Chapel in Silver Spring with a reception to follow if desired. The family
requests donations to be made to The Cancer Research Institute, New York, NY, in lieu
of flowers.