[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1130 Referred in House (RFH)]







104th CONGRESS
  2d Session
                                S. 1130


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 4, 1996

      Referred to the Committee on Government Reform and Oversight

_______________________________________________________________________

                                 AN ACT


 
    To provide for the establishment of uniform accounting systems, 
  standards, and reporting systems in the Federal Government, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Financial Management 
Improvement Act of 1996''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds the following:
            (1) Much effort has been devoted to strengthening Federal 
        internal accounting controls in the past. Although progress has 
        been made in recent years, Federal accounting standards have 
        not been uniformly implemented in financial management systems 
        for agencies.
            (2) Federal financial management continues to be seriously 
        deficient, and Federal financial management and fiscal 
        practices have failed to--
                    (A) identify costs fully;
                    (B) reflect the total liabilities of congressional 
                actions; and
                    (C) accurately report the financial condition of 
                the Federal Government.
            (3) Current Federal accounting practices do not accurately 
        report financial results of the Federal Government or the full 
        costs of programs and activities. The continued use of these 
        practices undermines the Government's ability to provide 
        credible and reliable financial data and encourages already 
        widespread Government waste, and will not assist in achieving a 
        balanced budget.
            (4) Waste and inefficiency in the Federal Government 
        undermine the confidence of the American people in the 
        Government and reduce the Federal Government's ability to 
        address vital public needs adequately.
            (5) To rebuild the accountability and credibility of the 
        Federal Government, and restore public confidence in the 
        Federal Government, agencies must incorporate accounting 
        standards and reporting objectives established for the Federal 
        Government into their financial management systems so that all 
        the assets and liabilities, revenues, and expenditures or 
        expenses, and the full costs of programs and activities of the 
        Federal Government can be consistently and accurately recorded, 
        monitored, and uniformly reported throughout the Federal 
        Government.
            (6) Since its establishment in October 1990, the Federal 
        Accounting Standards Advisory Board (hereinafter referred to as 
        the ``FASAB'') has made substantial progress toward developing 
        and recommending a comprehensive set of accounting concepts and 
        standards for the Federal Government. When the accounting 
        concepts and standards developed by FASAB are incorporated into 
        Federal financial management systems, agencies will be able to 
        provide cost and financial information that will assist the 
        Congress and financial managers to evaluate the cost and 
        performance of Federal programs and activities, and will 
        therefore provide important information that has been lacking, 
        but is needed for improved decisionmaking by financial managers 
        and the Congress.
            (7) The development of financial management systems with 
        the capacity to support these standards and concepts will, over 
        the long term, improve Federal financial management.
    (b) Purposes.--The purposes of this Act are to--
            (1) provide for consistency of accounting by an agency from 
        one fiscal year to the next, and uniform accounting standards 
        throughout the Federal Government;
            (2) require Federal financial management systems to support 
        full disclosure of Federal financial data, including the full 
        costs of Federal programs and activities, to the citizens, the 
        Congress, the President, and agency management, so that 
        programs and activities can be considered based on their full 
        costs and merits;
            (3) increase the accountability and credibility of Federal 
        financial management;
            (4) improve performance, productivity and efficiency of 
        Federal Government financial management;
            (5) establish financial management systems to support 
        controlling the cost of Federal Government;
            (6) build upon and complement the Chief Financial Officers 
        Act of 1990 (Public Law 101-576; 104 Stat. 2838), the 
        Government Performance and Results Act of 1993 (Public Law 103-
        62; 107 Stat. 285), and the Government Management Reform Act of 
        1994 (Public Law 103-356; 108 Stat. 3410); and
            (7) increase the capability of agencies to monitor 
        execution of the budget by more readily permitting reports that 
        compare spending of resources to results of activities.

SEC. 3. IMPLEMENTATION OF FEDERAL FINANCIAL MANAGEMENT IMPROVEMENTS.

    (a) In General.--Each agency shall implement and maintain financial 
management systems that comply with Federal financial management 
systems requirements, applicable Federal accounting standards, and the 
United States Government Standard General Ledger at the transaction 
level.
    (b) Priority.--Each agency shall give priority in funding and 
provide sufficient resources to implement this Act.
    (c) Audit Compliance Finding.--
            (1) In general.--Each audit required by section 3521(e) of 
        title 31, United States Code, shall report whether the agency 
        financial management systems comply with the requirements of 
        subsection (a).
            (2) Content of reports.--When the person performing the 
        audit required by section 3521(e) of title 31, United States 
        Code, reports that the agency financial management systems do 
        not comply with the requirements of subsection (a), the person 
        performing the audit shall include in the report on the audit--
            (A) the name and position of any officer or employee 
        responsible for the financial management systems that have been 
        found not to comply with the requirements of subsection (a);
            (B) all facts pertaining to the failure to comply with the 
        requirements of subsection (a), including--
                    (i) the nature and extent of the noncompliance;
                    (ii) the primary reason or cause of the 
                noncompliance;
                    (iii) any official responsible for the 
                noncompliance; and
                    (iv) any relevant comments from any responsible 
                officer or employee; and
            (C) a statement with respect to the recommended remedial 
        actions and the timeframes to implement such actions.
    (d) Compliance Determination.--
            (1) In general.--No later than the date described under 
        paragraph (2), the Director, acting through the Controller of 
        the Office of Federal Financial Management, shall determine 
        whether the financial management systems of an agency comply 
        with the requirements of subsection (a). Such determination 
        shall be based on--
                    (A) a review of the report on the applicable 
                agency-wide audited financial statement;
                    (B) the agency comments on such report; and
                    (C) any other information the Director considers 
                relevant and appropriate.
            (2) Date of determination.--The determination under 
        paragraph (1) shall be made no later than 90 days after the 
        earlier of--
                    (A) the date of the receipt of an agency-wide 
                audited financial statement; or
                    (B) the last day of the fiscal year following the 
                year covered by such statement.
    (e) Compliance Implementation.--
            (1) In general.--If the Director determines that the 
        financial management systems of an agency do not comply with 
        the requirements of subsection (a), the head of the agency, in 
        consultation with the Director, shall establish a remediation 
        plan that shall include the resources, remedies, and 
        intermediate target dates necessary to bring the agency's 
        financial management systems into compliance.
            (2) Time period for compliance.--A remediation plan shall 
        bring the agency's financial management systems into compliance 
        no later than 2 years after the date on which the Director 
        makes a determination under paragraph (1), unless the agency, 
        with concurrence of the Director--
                    (A) determines that the agency's financial 
                management systems are so deficient as to preclude 
                compliance with the requirements of subsection (a) 
                within 2 years;
                    (B) specifies the most feasible date for bringing 
                the agency's financial management systems into 
                compliance with the requirements of subsection (a); and
                    (C) designates an official of the agency who shall 
                be responsible for bringing the agency's financial 
                management systems into compliance with the 
                requirements of subsection (a) by the date specified 
                under subparagraph (B).
            (3) Transfer of funds for certain improvements.--For an 
        agency that has established a remediation plan under paragraph 
        (2), the head of the agency, to the extent provided in an 
        appropriation and with the concurrence of the Director, may 
        transfer not to exceed 2 percent of available agency 
        appropriations to be merged with and to be available for the 
        same period of time as the appropriation or fund to which 
        transferred, for priority financial management system 
        improvements. Such authority shall be used only for priority 
        financial management system improvements as identified by the 
        head of the agency, with the concurrence of the Director, and 
        in no case for an item for which Congress has denied funds. The 
        head of the agency shall notify Congress 30 days before such a 
        transfer is made pursuant to such authority.
            (4) Report if noncompliance within time period.--If an 
        agency fails to bring its financial management systems into 
        compliance within the time period specified under paragraph 
        (2), the Director shall submit a report of such failure to the 
        Committees on Governmental Affairs and Appropriations of the 
        Senate and the Committees on Government Reform and Oversight 
        and Appropriations of the House of Representatives. The report 
        shall include--
                    (A) the name and position of any officer or 
                employee responsible for the financial management 
                systems that have been found not to comply with the 
                requirements of subsection (a);
                    (B) the facts pertaining to the failure to comply 
                with the requirements of subsection (a), including the 
                nature and extent of the noncompliance, the primary 
                reason or cause for the failure to comply, and any 
                extenuating circumstances;
                    (C) a statement of the remedial actions needed; and
                    (D) a statement of any administrative action to be 
                taken with respect to any responsible officer or 
                employee.
    (f) Personal Responsibility.--Any financial officer or program 
manager who knowingly and willfully commits, permits, or authorizes 
material deviation from the requirements of subsection (a) may be 
subject to administrative disciplinary action, suspension from duty, or 
removal from office.

SEC. 4. APPLICATION TO CONGRESS AND THE JUDICIAL BRANCH.

    (a) In General.--The Federal financial management requirements of 
this Act may be adopted by--
            (1) the Senate by resolution as an exercise of the 
        rulemaking power of the Senate;
            (2) the House of Representatives by resolution as an 
        exercise of the rulemaking power of the House of 
        Representatives; or
            (3) the Judicial Conference of the United States by 
        regulation for the judicial branch.
    (b) Study and Report.--No later than October 1, 1997--
            (1) the Secretary of the Senate and the Clerk of the House 
        of Representatives shall jointly conduct a study and submit a 
        report to Congress on how the offices and committees of the 
        Senate and the House of Representatives, and all offices and 
        agencies of the legislative branch may achieve compliance with 
        financial management and accounting standards in a manner 
        comparable to the requirements of this Act; and
            (2) the Chief Justice of the United States shall conduct a 
        study and submit a report to Congress on how the judiciary may 
        achieve compliance with financial management and accounting 
        standards in a manner comparable to the requirements of this 
        Act.

SEC. 5. REPORTING REQUIREMENTS.

    (a) Reports by Director.--No later than March 31 of each year, the 
Director shall submit a report to the Congress regarding implementation 
of this Act. The Director may include the report in the financial 
management status report and the 5-year financial management plan 
submitted under section 3512(a)(1) of title 31, United States Code.
    (b) Reports by the Comptroller General.--No later than October 1, 
1997, and October 1, of each year thereafter, the Comptroller General 
of the United States shall report to the appropriate committees of the 
Congress concerning--
            (1) compliance with the requirements of section 3(a) of 
        this Act, including whether the financial statements of the 
        Federal Government have been prepared in accordance with 
        applicable accounting standards; and
            (2) the adequacy of uniform accounting standards for the 
        Federal Government.

SEC. 6. CONFORMING AMENDMENTS.

    (a) Audits by Agencies.--Section 3521(f)(1) of title 31, United 
States Code, is amended in the first sentence by inserting ``and the 
Controller of the Office of Federal Financial Management'' before the 
period.
    (b) Financial Management Status Report.--Section 3512(a)(2) of 
title 31, United States Code, is amended by--
            (1) in subparagraph (D) by striking ``and'' after the 
        semicolon;
            (2) by redesignating subparagraph (E) as subparagraph (F); 
        and
            (3) by inserting after subparagraph (D) the following:
                    ``(E) a listing of agencies whose financial 
                management systems do not comply substantially with the 
                requirements of the Federal Financial Management 
                Improvement Act of 1996, the period of time that such 
                agencies have not been in compliance, and a summary 
                statement of the efforts underway to remedy the 
                noncompliance; and''.

SEC. 7. DEFINITIONS.

    For purposes of this Act:
            (1) Agency.--The term ``agency'' means a department or 
        agency of the United States Government as defined in section 
        901(b) of title 31, United States Code.
            (2) Director.--The term ``Director'' means the Director of 
        the Office of Management and Budget.
            (3) Federal accounting standards.--The term ``Federal 
        accounting standards'' means applicable accounting principles, 
        standards, and requirements consistent with section 
        902(a)(3)(A) of title 31, United States Code, and includes 
        concept statements with respect to the objectives of Federal 
        financial reporting.
            (4) Financial management systems.--The term ``financial 
        management systems'' includes the financial systems and the 
        financial portions of mixed systems necessary to support 
        financial management, including automated and manual processes, 
        procedures, controls, data, hardware, software, and support 
        personnel dedicated to the operation and maintenance of system 
        functions.
            (5) Financial system.--The term ``financial system'' 
        includes an information system, comprised of one or more 
        applications, that is used for--
                    (A) collecting, processing, maintaining, 
                transmitting, or reporting data about financial events;
                    (B) supporting financial planning or budgeting 
                activities;
                    (C) accumulating and reporting costs information; 
                or
                    (D) supporting the preparation of financial 
                statements.
            (6) Mixed system.--The term ``mixed system'' means an 
        information system that supports both financial and 
        nonfinancial functions of the Federal Government or components 
        thereof.

SEC. 8. EFFECTIVE DATE.

    This Act shall take effect on October 1, 1996.

            Passed the Senate August 2, 1996.

            Attest:

                                             KELLY D. JOHNSTON,

                                                             Secretary.