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Homeland Security: Financial Management and Budgeting

Executive Summary

Financial management and budgeting are becoming an interesting topic with the increasing public awareness about the roles of the state. This paper analyses financial management and budgeting in a state organization named the Department of Homeland Security. In this project, the mission, objectives, and goals of the organization are considered since these are important things to consider in budgeting and financial management. The ethical considerations in budgeting, overall cash management, and investment strategies for the organization are reviewed. The rules and regulations governing budgeting in the Department of Homeland Security are also reviewed and the financial position of the organization is analyzed. The paper concludes that the Department of Homeland Security is doing well in budgetary control and financial management but more needs to be done.


Financial management in the public sector is always an interesting topic. It covers the sources of finances for public corporations, the required controls and the revenues of the public sectors (Wang, 2010). Budgeting and financial management refers to making estimates of the resources needed for a fiscal year, sourcing for the financial resource requirements and then ensuring that the resources are used correctly.

Department of Homeland security is a government agency, which was formed in 2002 to safeguard the United States from threats (Hutton, 2008). The proposal for the formation of the Department of Homeland Security was because of the US government effort to transform government operations. The areas of operation of the department are aviation, border security, disaster response, defense against chemical threats, sailing, and defense against cyber security threats (Haulley, 2006). The main work for the Department of Homeland Security department is to keep the United States safe for all the citizens.

Mission and Goals

The mission of the Department of Homeland Security is to secure the US nation from the many threats the state faces.

The mission statement is “the department of Homeland Security will lead a unified national effort to secure America. We will prevent and deter terrorist attacks and protect against and respond to threats and hazards to the nation. We will ensure safe and secure borders, welcome lawful immigrants and visitors and promote free-flow of commerce” (Hutton, 2008).

According to Haulley (2006), the goals and objectives of the department are:

  1. To protect the United States of America
  2. To reduce the vulnerability of the United States to terrorism
  3. To reduce damage as a result of terrorist activities that may occur in the United States
  4. Assist in the recovery of life and property in case of terrorist activities or natural calamities

To be able to meet the above objectives, GHS has five components, which are Coast Guard, Customs and Border Protection, Immigrations, Customs Enforcement and Transport Security Administration, and the Federal Emergency Management Agency. All these components have different roles but the efforts are directed towards meeting the overall objectives of the department (Hutton, 2008).

Ethical considerations related to financing and budgeting in the organization

Ethics in business means maintenance of neutrality, expertise and adherence to rules and regulations in the conduct of business (Jones & McCaffery, 2008). All organizations should uphold business ethics at all times to ensure there is integrity and justice in operations. The Department of Homeland Security is not an exception to this. The department should put in place control systems to prevent fraud, waste, and abuse of any sort to financial resources allocated.

In financial management and financial management of the Department of Homeland Security department, one of the ethical considerations is conflicting interests. There could be a conflict of interest in individuals, professionals, organizations and other stakeholders. This could affect financial management to a greater extend (Premchand, 1990).

Another ethical issue in budgeting and financial management is the misallocation of resources. Resources meant for one department can be rechanneled to another department without following the correct procedure (Rubin, 2008). People in the Department of Homeland security department could use the budget data to benefit themselves or to push for their agenda.

The other important ethical issue in financial management in GHS is political interference (Wang, 2010). Political leaders could use the budget for the department as a tool to advance their political agenda. People entrusted with the budgeting process could also withhold or provide inaccurate information to the budgeting agencies. There is thus a need to ensure that the people involved in the budgeting process for GHS are people with high integrity to ensure ethical problems do not arise.

Technological considerations for improving efficiency or effectiveness

One of the main aims for the formation of the Department of Homeland Security department was to reduce inefficiencies in service delivery in the United States (Hutton, 2008). The department intended to enhance efficiency by combining the efforts of various government agencies and removing redundancy. The GHS department has been successful in this role of enhancing efficiency and effectiveness. This has been achieved majorly by the use of technological advancement. The Department of Homeland Security could therefore consider embracing technological considerations to continue improving efficiency and effectiveness.

One way in which GHS has embraced technology to increase efficiency is by making use of cross-trained workforce in its sub-departments. For instance, the department has deployed people trained in anti-terrorism, anti-narcotics and other areas to the ports entry points of the United States of America. This would ensure that the same group of employees completes several tasks thus dealing away with parallel operations.

Another technological consideration in the Department of Homeland Security to enhance efficiency and effectiveness was to eliminate redundancy in information and communication spending. Before the department was formed, several government agencies were performing similar parallel tasks and each using its own communication and transport facilities. By integrating the activities of these agencies into one, the redundancy of telecommunication was eliminated. The department also employs up-to-date communication systems to ensure the operations are efficient and effective (Haulley, 2006).

The GHS has considered asset utilization as a technological tool of enhancing efficiency and effectiveness. GHS acquires and makes use of the most efficient transport and communication assets in the world, which range from boats, vehicles, planes and other types of property. The assets are well maintained to ensure that they are performing effectively and efficiently all the time.

Applicable laws, regulations, and policies affecting the organization’s financial and budgetary operations

In its financial and budgetary functions, the Department of Homeland Security department refers to several rules and regulations, which have been formed to improve public sector financial management in the United States. One of the Acts that govern the department is the Department of Homeland Security Act of 2002 and the Homeland Security Appropriations Act of 2004 because they give the department legal existence, powers to spend and the overall guidelines to budgeting (Hutton 2008). The Department of Homeland Security Financial Accountability Act (DHS FAA) authorizes the appointment of a Chief Financial Officer for DHS.

The managers in the GHS should act according to the Federal Manager’s Financial Integrity Act (FMFIA), which provides that government agencies in the United States of America should put in place effective internal control systems. The budgetary and financial management functions in GHS are also regulated by the GAO standards for internal control as implemented by the Government Accountability Office in the federal government, which requires that government agencies should be reasonable in expenditure and that the expenditure should be reflected in effectiveness and efficiency in operations.

Evaluation of the organization’s budget process and revenue sources

The budgetary process and financial management for GHS are still a big challenge. The budgeting process is left in the hands of the Deputy Chief financial officer. The budgeting process is done depending on data gathered by the Government Accountability Office (GAO), Office of Management and Budget (OMB), and the U.S. Treasury Department. These budgeting agencies collect data from the Department of Homeland security and together with Government Accountability Office come up with a budget for the Department of Homeland Security. The Department of Homeland Security develops annual budgets with data, information and regulation from statutory sources, past years’ data, review of risk threats to the United States and requests from other agencies.

The main sources of finance for the Department of Homeland security are appropriations from the Federal Reserve. Department of Homeland Security falls under the Department of State Defense, which is a major component of public expenditure in the United States of America. GHS, therefore, gets its major funding from the Federal Reserve appropriations.

Another source of finances for the GHS is granted from other federal agencies that work hand in hand with the department such as the Federation of Bureau Investigation (FBI) and Criminal Investigation Agency (CIA). GHS receives grants from these agencies and other government agencies because it provides the agencies with support in the course of their work. It is in the books that GHS receives many grants and it is hard to coordinate all of them.

Internal factors impacting successful strategic financial planning

Several factors within an organization affect successful financial planning. The first factor is human resources (Rubin, 2008). The quality of human resources is a big factor in strategic planning since the process requires the use of human capital. If the employees involved in strategic management are well educated and are people of high integrity, then the strategic management process will not suffer challenges.

The existence of clear-cut goals and objectives of an organization also affects strategic financial planning. An organization must have a clear understanding of the goals and objectives in order to have an elaborate strategic management. Another factor is coordination between various components of an organization. This is because strategic financial planning is done for the organization, as a whole thus the organization structure is a factor (Wang, 2010).

Availability of finances and stability of finances is also a factor in strategic financial planning. An organization that does not have regular and stable sources of finance will face challenges in strategic planning (Jones & McCaffery, 2008). The efficiency and effectiveness of an organization in terms of the use of resources is also a factor that affects strategic financial planning.

Organization’s usage of cost-benefit analysis

Cost-benefit analysis is an economical decision-making tool for evaluating projects. It is used to determine if a project or proposal is good for investment (Mishan & Quah, 2007). In most cases, costs and benefits are expressed in terms of money but in other cases, they are expressed in other terms. The rationale for the cost-benefit analysis is to compare the costs and the benefits of a project and make a decision on whether to invest in the project or not. If the costs outweigh the benefits, the project is not worth investing in and vice versa.

The Department of Homeland Security employs the use of cost-benefit analysis to a great extend although the costs and benefits are not always expressed in financial terms. The costs include social costs such as pollution and benefits include social benefits as well such as prevention of crime (Haulley, 2006). Most social costs cannot be quantified and therefore they require objective judgment. The GHS department uses cost-benefit analysis when undertaking any project and a lot of judgment is needed since most of the costs and benefits are unquantifiable.

Overview of the organization’s cash management and/or investment strategies

The Department of Homeland Security has put measures in place to ensure that there is sound cash management and sound general investment activities. The Chief Financial officer leads these activities. The department has come up with a project named Transformation and Systems Consolidation (TASC), which aims to ensure there is integration in financial management, asset acquisition and management. This project has also strengthened internal controls and has gone a long way to ensure that the Department provides reports according to regulations (Hutton, 2008).

The Department of Homeland Security has also been able to reduce the number of financial material weaknesses and material weaknesses in internal controls. It has also established a Financial Assistance Policy Oversight (FAPO), which is responsible for the accounting of funds and processing of grants received by the department. In pursuit of sound cash management and good investment strategies, the Department of Homeland Security makes its budget requests to GAO in time to ensure that there are no delays in funding. Using Fleet Management Analysis and Reporting (FMARS), the department develops reports on alternative cheap fuel sources and methods to prevent wastage.

Assessment of the organization’s overall financial condition

The Department of Homeland Security is financially sound. It has a good financial base since it is under the department of US defense, which receives a good proportion of Federal Reserve allocations (Hutton, 2008). In case of calamities where the department needs to spend more than the allocated funds, the government can authorize additional funds to be appropriated to the department and also other agencies with which the department works closely can increase their grants.

The Department of Homeland security has also been able to reduce its overheads and administrative costs through efficiency review programs. Because of the Efficiency Review initiative, the department has been able to save on administration costs. These savings are mainly realized through efficiencies in asset acquisition and the use of information technology.


Budgeting and financial management are important roles in the management of the public sector. Over the past years, the public sector has been accused of inefficiencies and corruption, which led to poor service delivery to the citizens (Premchand, 1990). This is, however, changing and people demand better services from government and government corporations. There is thus an increasing need to evaluate the budgeting process and financial management in the public sector. The Department of Homeland Security has put measures in place to ensure that it achieves an improvement in financial management and budgeting process but it is clear that more can be done.


Haulley, F. (2006). The Department of Homeland Security. New York: Rosen Classroom.

Hutton, J. (2008). Department of Homeland Security: Better Planning and Assessment Needed to Improve Outcomes for Complex Service Acquisitions. New Jersey: DIANE Publishing.

Jones, L & McCaffery, J. (2008). Budgeting, financial management, and acquisition reform in the United States Department of Defense. New York: IAP.

Mishan, E. & Quah, E. (2007). Cost-benefit analysis. New York: Routledge.

Premchand, A. (1990). Government financial management: issues and country studies. Washington DC: International Monetary Fund.

Rubin, I. (2008). Public budgeting: policy, process, and politics. New Jersey: M.E. Sharpe.

Wang, X. (2010). Financial Management in the Public Sector: Tools, Applications, and Cases. New York: M.E. Sharpe.

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