[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 435 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 435

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 9, 1997

 Mr. Sanford introduced the following bill; which was referred to the 
              Committee on Government Reform and Oversight

_______________________________________________________________________

                                 A BILL


 
    To provide for the establishment of uniform accounting systems, 
 accounting standards, and accounting 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 1997''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds the following:
            (1) Much effort has been devoted to strengthening Federal 
        internal accounting controls. 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 ability of the Federal Government to 
        provide credible and reliable financial data, encourages 
        already widespread Federal Government waste, and will not 
        assist in achieving a balanced budget.
            (4) Waste and inefficiency in the Federal Government 
        undermine the confidence of the people of the United States in 
        the Government and reduce the ability of the Federal Government 
        to address vital public needs adequately.
            (5) To rebuild the accountability and credibility of, and 
        restore public confidence in, the Federal Government, Federal 
        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, expenses, and the full costs of programs 
        and activities of the Federal Government can be consistently 
        and accurately recorded, accurately monitored, and uniformly 
        reported throughout the Federal Government.
            (6) Since its establishment in October 1990, the Federal 
        Accounting Standards Advisory Board (in this Act 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 in evaluating the cost and performance of Federal programs and 
activities, and will provide important information that is needed for 
improved decision making by the Congress and financial managers.
            (7) The development of financial management systems with 
        the capacity to support the accounting standards and concepts 
        developed by FASAB 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 Federal 
        agencies from one fiscal year to the next, and for uniform 
        accounting standards throughout the Federal Government;
            (2) require Federal financial management systems to enable 
        full disclosure of Federal financial data, including the full 
        costs of Federal programs and activities, to the citizens of 
        the United States, the Congress, the President, and agency 
        management, so that Federal 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 the Federal Government;
            (6) build on 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 Federal agencies to monitor 
        execution of the budget by more readily permitting reports that 
        match spending of resources to results of activities.

SEC. 3. IMPLEMENTATION OF FEDERAL FINANCIAL MANAGEMENT IMPROVEMENTS.

    (a) In General.--Each Federal agency shall implement 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 
        financial management systems of the agency which is being 
        audited comply with subsection (a) of this section.
            (2) Content of reports.--If the person performing an audit 
        required by section 3521(e) of title 31, United States Code, 
        reports that the agency financial management systems do not 
        comply with subsection (a) of this section, 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;
                    (B) all facts pertaining to the failure to comply, 
                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 such 
                        responsible officer or employee; and
                    (C) a statement with respect to 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 subsection (a). The determination shall be based on--
                    (A) a review of the report on the applicable 
                agency-wide audited financial statement;
                    (B) the agency comments on the report; and
                    (C) any other information the Director considers 
                relevant and appropriate.
            (2) Date of determination.--The determination required by 
        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 
        subsection (a), the head of the agency, in consultation with 
        the Director, shall establish a remediation plan that shall 
        describe the resources, remedies, and intermediate target dates 
        necessary to bring the agency's financial management systems 
        into such compliance.
            (2) Time period for compliance.--A remediation plan shall 
        bring the agency's financial management systems into compliance 
        with subsection (a) no later than 2 years after the date the 
        Director makes a determination under paragraph (1), unless the 
        agency, with the 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 after such date;
                    (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 funds 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 period described in 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;
                    (B) the facts pertaining to the failure to comply, 
                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.
    (g) Penalties Provided.--If an agency fails to bring its financial 
management systems into compliance within the period described in 
subsection (e)(2), the agency shall be subject to the following 
penalties:
            (1) The amounts otherwise appropriated to the agency for 
        fiscal year 2000 shall be reduced by 1 percent.
            (2) The amounts otherwise appropriated to the agency for 
        fiscal year 2001 shall be reduced by 2 percent.
            (3) The amounts otherwise appropriated to the agency for 
        fiscal year 2002 shall be reduced by 3 percent.
            (4) The amounts otherwise appropriated to the agency for 
        fiscal year 2003 shall be reduced by 4 percent.
            (5) The amounts otherwise appropriated to the agency for 
        fiscal year 2004 shall be reduced by 5 percent.

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; and
            (3) the Judicial Conference of the United States by 
        regulation for the judicial branch.
    (b) Study and Report.--Not later than October 1, 1998--
            (1) the Secretary of the Senate and the Clerk of the House 
        of Representatives shall jointly conduct a study and submit a 
        report to the Congress on how each entity in the legislative 
        branch may comply 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 the Congress on how the judicial 
        branch 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.--Not later than March 31 of each year, the 
Director shall submit a report to the Congress regarding the 
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, 
1998, and annually 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), 
        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--
            (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 the departments and 
        agencies of the United States Government listed 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 1 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 financial and nonfinancial 
        functions of the Federal Government or components thereof.

SEC. 8. EFFECTIVE DATE.

    This Act shall take effect on October 1, 1998.
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