[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1130 Reported in Senate (RS)]





                                                       Calendar No. 548

104th CONGRESS

  2d Session

                                S. 1130

                          [Report No. 104-339]

_______________________________________________________________________

                                 A BILL

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

_______________________________________________________________________

                             July 30, 1996

                       Reported with an amendment





                                                       Calendar No. 548
104th CONGRESS
  2d Session
                                S. 1130

                          [Report No. 104-339]

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

               August 8 (legislative day, July 10), 1995

 Mr. Brown (for himself, Mr. Craig, Mr. Burns,  Mr. Inhofe, Mr. Lott, 
   Mr. Glenn, Mr. Nickles, Mr. Gorton, Mr. Levin, Mr. Faircloth, Mr. 
 Grassley, and Mr. Kyl) introduced the following bill; which was read 
      twice and referred to the Committee on Governmental Affairs

                             July 30, 1996

               Reported by Mr. Stevens, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
    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,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Accounting Standardization 
Act of 1995''.</DELETED>

<DELETED>SEC. 2. FINDINGS AND PURPOSES.</DELETED>

<DELETED>    (a) Findings.--The Congress finds the following:</DELETED>
        <DELETED>    (1) Much effort has been devoted to strengthening 
        Federal internal accounting controls in the past. Although 
        progress has been made in recent years, there still exists no 
        uniform Federal accounting system for Federal Government 
        entities and institutions.</DELETED>
        <DELETED>    (2) As a result, Federal financial management 
        continues to be seriously deficient, and Federal financial 
        management and fiscal practices have failed to identify costs, 
        failed to reflect the total liabilities of congressional 
        actions, and failed to accurately report the financial 
        condition of the Federal Government.</DELETED>
        <DELETED>    (3) Current Federal accounting practices do not 
        adequately report financial problems of the Federal Government 
        or the full cost 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.</DELETED>
        <DELETED>    (4) Waste and inefficiency in Federal Government 
        undermine the confidence of the American people in the 
        Government and reduces the Federal Government's ability to 
        address adequately vital public needs.</DELETED>
        <DELETED>    (5) To rebuild the accountability and credibility 
        of the Federal Government, and restore public confidence in the 
        Federal Government, a uniform Federal accounting system, that 
        fully meets the accounting standards and reporting objectives 
        for the Federal Government, must be immediately established so 
        that all the assets and liabilities, revenues and expenditures 
        or expenses, and the full cost of programs and activities of 
        the Federal Government can be consistently and accurately 
        recorded, monitored, and uniformly reported throughout all 
        Government entities for control and management evaluation 
        purposes.</DELETED>
        <DELETED>    (6) Since its establishment in October 1990, the 
        Federal Account Standards Advisory Board (hereinafter referred 
        to as the ``FASAB'') has made substantial progress in 
        completing its efforts to develop and recommend uniform 
        ``generally accepted accounting standards'' for the Federal 
        Government. The FASAB has issued statements on accounting and 
        managerial cost standards based on sound, modern business 
        practices. The proposed standards will provide cost and 
        financial information that will assist the Congress and 
        financial managers 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.</DELETED>
        <DELETED>    (7) Through implementation of these standards in 
        Federal accounting systems, over the long term, improved 
        financial management is a likely outcome. Codification and 
        implementation of these standards will resolve a long standing 
        deficiency with Federal accounting systems.</DELETED>
<DELETED>    (b) Purposes.--The purposes of this Act are to--</DELETED>
        <DELETED>    (1) establish a Federal accounting system that 
        must be implemented and used to ensure--</DELETED>
                <DELETED>    (A) consistency of accounting by a Federal 
                entity from one fiscal year to the next; and</DELETED>
                <DELETED>    (B) uniformity of accounting between the 
                several Federal entities and governmentwide; 
                and</DELETED>
        <DELETED>    (2) make full disclosure of Federal financial 
        data, including the full cost 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;</DELETED>
        <DELETED>    (3) increase the accountability and credibility of 
        Federal financial management;</DELETED>
        <DELETED>    (4) improve performance, productivity, and 
        efficiency of the Federal Government financial 
        management;</DELETED>
        <DELETED>    (5) control the cost of Federal 
        Government;</DELETED>
        <DELETED>    (6) build upon and complement the authorities 
        provided the Comptroller General, the Secretary of the 
        Treasury, and the Director of the Office of Management and 
        Budget in the Accounting and Auditing Act of 1950, the Chief 
        Financial Officers Act of 1990, the Government Performance and 
        Results Act of 1993, and the Government Management Reform Act 
        of 1994; and</DELETED>
        <DELETED>    (7) monitor budget execution, financially and 
        performance-wise, including the regular reporting to actual 
        dollars and activities.</DELETED>

<DELETED>SEC. 3. ESTABLISHMENT OF A UNIFORM FEDERAL ACCOUNTING 
              SYSTEM.</DELETED>

<DELETED>    (a) In General.--Beginning with fiscal year 1997, the 
President shall require the heads of agencies to implement and maintain 
a uniform Federal accounting system established in accordance with this 
Act and other applicable law.</DELETED>
<DELETED>    (b) Federal Accounting Standards.--In accordance with the 
Memorandum of Understanding dated October 10, 1990 between the 
Department of the Treasury, the Office of Management and Budget, and 
the General Accounting Office, the Secretary of the Treasury, the 
Director, Office of Management and Budget, and the Comptroller General 
shall agree on proposed Federal accounting standards and 
interpretations recommended by the FASAB. The Comptroller General and 
the Director of the Office of Management and Budget shall publish such 
Federal accounting standards.</DELETED>
<DELETED>    (c) Approved Federal Accounting Standards.--</DELETED>
        <DELETED>    (1) In general.--The Federal accounting system 
        shall satisfy existing and future Federal accounting standards 
        as recommended by the FASAB and approved by the Department of 
        the Treasury, the Office of Management and Budget, and the 
        General Accounting Office.</DELETED>
        <DELETED>    (2) Interim principals.--Pending issuance of the 
        FASAB final accounting standards or in the absence of the FASAB 
        accounting standards, the following hierarchy of the generally 
        accepted accounting principles for the Federal Government shall 
        apply:</DELETED>
                <DELETED>    (A) Individual statements agreed to and 
                published by the Joint Financial Management Improvement 
                Program (JFMIP) principals.</DELETED>
                <DELETED>    (B) Form and content requirements included 
                in OMB Bulletin 93-02, dated October 22, 1992, and 
                subsequent issuance.</DELETED>
                <DELETED>    (C) Accounting standards contained in 
                agency accounting policy, procedures manuals, or 
                related guidance as of March 29, 1991, so long as they 
                are prevalent practices.</DELETED>
                <DELETED>    (D) Accounting principles published by 
                authoritative standards setting bodies and other 
                authoritative sources--</DELETED>
                        <DELETED>    (i) in the absence of other 
                        guidance in the first three parts of this 
                        hierarchy; and</DELETED>
                        <DELETED>    (ii) if the use of such accounting 
                        standards improve the meaningfulness of the 
                        financial statements.</DELETED>
<DELETED>    (d) Authority To Modify or Amend.--In accordance with the 
Memorandum of Understanding dated October 10, 1990, the FASAB may 
recommend the modification, amendment, or revision, or interpretation 
of any Federal accounting standard to the Secretary of the Treasury, 
the Director, Office of Management and Budget, and the Comptroller 
General.</DELETED>
<DELETED>    (e) Standard and General Ledger and Uniform Accounting 
Transactions.--For purposes of this Act, a Federal accounting system 
shall satisfy the United States Government Standard General Ledger as 
approved by the Department of the Treasury, the Office of Management 
and Budget, and the General Accounting Office to ensure all government 
entities and institutions account for similar activities in the same 
way and consistency from one fiscal year to the next.</DELETED>
<DELETED>    (f) Federal Accounting System Requirements.--For purposes 
of this Act, a Federal accounting system shall be consistent with the 
Federal financial management systems requirements, as amended from time 
to time, adopted by the Secretary of the Treasury, the Director of the 
Office of Management and Budget, and the Comptroller General pursuant 
to the continuing program for improving financial management authorized 
by section 3511(e), title 31, United States Code, and the Federal 
accounting standards published pursuant to subsections (b), (c), and 
(d) of this section.</DELETED>

<DELETED>SEC. 4. THE SCOPE OF THE APPLICATION.</DELETED>

<DELETED>    (a) In General.--The FASAB may recommend to the Secretary 
of the Treasury, the Director of the Office of Management and Budget, 
and the Comptroller General, the application of Federal accounting 
standards and Federal financial management systems requirements to a 
corporation, agency or instrumentality subject to chapter 91 of title 
31, United States Code, or a federally chartered corporation or 
instrumentality.</DELETED>
<DELETED>    (b) Compliance Requirement.--Upon the recommendation of 
the FASAB, the Secretary of the Treasury, the Director of the Office of 
Management and Budget, and the Comptroller General may require a 
corporation, agency, or instrumentality subject to chapter 91 of title 
31, United States Code, or a federally chartered corporation or 
instrumentality to comply with all or part of a Federal accounting 
standard and Federal financial management systems 
requirements.</DELETED>

<DELETED>SEC. 5. ENFORCEMENT.</DELETED>

<DELETED>    (a) In General.--</DELETED>
        <DELETED>    (1) Uniform system.--Each Federal agency shall 
        implement and maintain a uniform Federal accounting system in 
        accordance with the requirements of this Act.</DELETED>
        <DELETED>    (2) Priority.--Each Federal agency shall give 
        priority in funding and provide sufficient resources to 
        implement this Act.</DELETED>
        <DELETED>    (3) Private sector involvement.--Each Federal 
        agency may implement this Act by utilizing the assistance of 
        private sector firms to develop basic systems, subject to the 
        requirements specified in this Act.</DELETED>
<DELETED>    (b) Audit Compliance Finding.--Each audit required by 
section 3521 of title 31, United States Code, shall report whether the 
agency accounting system complies substantially with the requirements 
of a uniform Federal accounting system.</DELETED>
<DELETED>    (c) Penalties.--</DELETED>
        <DELETED>    (1) Compliance determination.--Not later than 30 
        days after the receipt of an audit report identifying an agency 
        accounting system in substantial noncompliance with the 
        requirements of a uniform Federal accounting system under this 
        Act, the Controller of the Office of Federal Financial 
        Management, based on review of the audit report, agency 
        comments thereto, and such other information as the Controller 
        deems relevant and appropriate, shall determine whether the 
        agency accounting system complies substantially with the 
        requirements of a uniform Federal accounting system.</DELETED>
        <DELETED>    (2) Penalties provided.--If the Controller 
        determines that an agency accounting system does not 
        substantially comply with the requirements of a uniform Federal 
        accounting system, the agency shall be subject to the following 
        penalties:</DELETED>
                <DELETED>    (A) 1 percent across-the-board budget 
                reduction of the entity's or institution's budget for 
                the fiscal year 1998.</DELETED>
                <DELETED>    (B) 2 percent across-the-board budget 
                reduction of the entity's or institution's budget for 
                the fiscal year 1999.</DELETED>
                <DELETED>    (C) 3 percent across-the-board budget 
                reduction of the entity's or institution's budget for 
                the fiscal year 2000.</DELETED>
                <DELETED>    (D) 4 percent across-the-board budget 
                reduction of the entity's or institution's budget for 
                the fiscal year 2001.</DELETED>
                <DELETED>    (E) 5 percent across-the-board budget 
                reduction of the entity's or institution's budget for 
                the fiscal year 2002.</DELETED>
        <DELETED>    (3) Penalties enforcement.--The Department of the 
        Treasury shall accordingly reduce the amount as set forth in 
        paragraph (2) upon receipt of determination of noncompliance 
        from the Controller.</DELETED>
        <DELETED>    (4) Anti-deficiency violation penalties.--Any 
        financial officer who knowingly or willingly commits, permits, 
        or authorizes deviation from the accounting and reporting 
        standards and procedures established in accordance with this 
        Act and other applicable law, shall be subject to possible 
        administrative disciplinary action, suspension from duty, or 
        removal from office. and, when warranted, upon conviction, 
        shall be fined not more than $5,000 or imprisoned for not more 
        than 2 years, or both.</DELETED>

<DELETED>SEC. 6. APPLICATION TO CONGRESS AND THE JUDICIAL 
              BRANCH.</DELETED>

<DELETED>    The Federal accounting system required by this Act may 
be--</DELETED>
        <DELETED>    (1) adopted by the Senate by resolution as an 
        exercise of the rulemaking power of the Senate;</DELETED>
        <DELETED>    (2) adopted by the House of Representatives by 
        resolution as an exercise of the rulemaking power of the House 
        of Representatives; and</DELETED>
        <DELETED>    (3) adopted by the Administrative Conference of 
        the Courts by regulations for the judicial branch.</DELETED>

<DELETED>SEC. 7. REPORTING REQUIREMENTS.</DELETED>

<DELETED>    Not later than March 31 of each year, the Office of 
Management and Budget and the General Accounting Office shall report 
separately to the Congress regarding implementation of this Act. The 
Office of Management and Budget may include its report in the Financial 
Management Status Report and the 5-year Financial Management Plan 
issued pursuant to section 3512(a)(1) of title 31, United States 
Code.</DELETED>

<DELETED>SEC. 8. DEFINITIONS.</DELETED>

<DELETED>    For purposes of this Act:</DELETED>
        <DELETED>    (1) Agencies.--The term ``agencies'' means a 
        department or agency of the United States Government but does 
        not include a Government corporation as such term is defined in 
        chapter 91 of title 31, United States Code, or a federally 
        chartered corporation.</DELETED>
        <DELETED>    (2) Consistency.--The term ``consistency'' refers 
        to the compilation or allocation of reporting of costs in the 
        same manner by the Federal entity from one fiscal year to 
        another. An inconsistent compilation, use or reporting of data 
        must be clearly and conspicuously communicated by the Federal 
        entity to the Congress, President, GAO, OMB, and the Treasury 
        in the year of inconsistency.</DELETED>
        <DELETED>    (3) Uniformity.--The term ``uniformity'' refers to 
        the comparability of compilation or allocation, use or 
        reporting of costs between Federal entities and governmentwide 
        pursuant to the standards recommended by the FASAB.</DELETED>
        <DELETED>    (4) Full disclosure.--The term ``full disclosure'' 
        refers to the accuracy of the financial statements, operating 
        reports and related and appropriate footnote disclosures made 
        in compliance with the standards recommended by the 
        FASAB.</DELETED>
        <DELETED>    (5) Full cost.--The term ``full cost'' refers to 
        the uniform and consistent determination, compilation, and 
        reporting of costs in compliance with standards recommended by 
        the FASAB.</DELETED>
        <DELETED>    (6) Federal accounting standards.--The term 
        ``Federal accounting standards'' includes reporting 
        objectives.</DELETED>

<DELETED>SEC. 9. CONFORMING AMENDMENT.</DELETED>

<DELETED>    Section 3521(f) of title 31, United States Code, is 
amended by striking the period at the end of the first sentence and 
inserting ``and the Controller of the Office of Federal Financial 
Management.''.</DELETED>

<DELETED>SEC. 10. DUTIES OF THE COMPTROLLER GENERAL.</DELETED>

<DELETED>    Nothing in this Act shall be construed to supersede or 
diminish the authority of the Comptroller General to prescribe 
accounting principles, standards, and requirements pursuant to section 
3511, title 31, United States Code.</DELETED>

<DELETED>SEC. 11. EFFECTIVE DATE.</DELETED>

<DELETED>    This Act shall take effect on the date of enactment of 
this Act.</DELETED>

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.