[Congressional Record Volume 149, Number 117 (Friday, August 1, 2003)]
[Senate]
[Pages S10916-S10917]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FITZGERALD (for himself and Mr. Akaka):
  S. 1567. A bill to amend title 31, United States Code, to improve the 
financial accountability requirements applicable to the Department of 
Homeland Security, and for other purposes; to the Committee on 
Governmental Affairs.
  Mr. FITZGERALD. Mr. President, I rise today to introduce the 
Department of Homeland Security Financial Accountability Act. I am 
joined in introducing this legislation by the distinguished Senator 
from Hawaii, Senator Akaka, who serves as the ranking member of the 
Governmental Affairs Subcommittee on Financial Management, the Budget, 
and International Security, which I chair.
  This bill is a companion bill to H.R. 2886 that Congressman Todd 
Platts, chairman of the Subcommittee on Government Efficiency and 
Financial Management, introduced in the House of Representatives on 
July 24, 2003. The House bill has bipartisan support from the 
leadership of the House Government Reform Committee, including Chairman 
Tom Davis, Ranking Minority Member Henry Waxman, and the vice chairman 
and ranking minority member of the Subcommittee on Government 
Efficiency and Financial Management, Marsha Blackburn and Edolphus 
Towns.
  The purpose of this bill is to ensure that the Department of Homeland 
Security is included in the Chief Financial Officers Act of 1990, as 
amended, and is subject to the same audit requirements that currently 
apply to over 100 Federal agencies.
  Improving financial management in the Federal Government to eliminate 
waste, fraud, and abuse, has long been a priority for me. The Chief 
Financial Officers Act (CFO Act) is regarded as one of the most 
important statutes that contributes significantly towards accomplishing 
this objective. The original CFO Act required 24 Federal agencies to 
submit audited financial statements to the Office of Management and 
Budget (OMB) and the Congress, thereby improving the accountability of 
Federal agencies to the taxpayer. In the 107th Congress I sponsored the 
Accountability of Tax Dollars Act that extended this audit requirement 
to all Federal agencies with budgets over $25 million, unless the 
Office of Management and Budget provided a waiver from the requirement. 
President Bush signed the Accountability of Tax Dollars Act into law on 
November 7, 2002, as Public Law 107-289.
  As my colleagues may know, an auditor may certify a financial 
statement as unqualified, also known as a clean audit, or as 
unqualified. An unqualified opinion means that an agency's financial 
statements present fairly, in all material respects, the financial 
position, results of operations, and cash flows of the agency. A 
qualified opinion contains an exception to the standard opinion, but 
the exception is not of sufficient magnitude to invalidate the 
statement as a whole. Finally, an agency may also receive a disclaimer 
of opinion. A disclaimer is the worst case because it indicates that 
the agency's accounts are in such disorder that the auditor is not in a 
position to make any certification.
  This past year we have seen dramatic improvement by Federal agencies 
regarding their financial reporting and audit compliance. In February 
2003, the Office of Management and Budget announced that a record 21 of 
the 24 CFO Act agencies submitted unqualified financial audits, 
including for the first time the Agriculture Department. As a member of 
the Senate Committee on Agriculture, Nutrition, and Forestry, I raised 
the issue of financial management with Secretary Ann Veneman at her 
nomination hearing on January 18, 2001, and stressed the importance of 
unqualified opinions. I was, therefore, pleased to see that the USDA 
received its first unqualified opinion this year, demonstrating 
remarkable improvement in the department's financial management.

  I also discussed financial management recently with the Department of 
Homeland Security, Secretary Tom Ridge, when he testified before the 
Government Affairs Committee on May 1, 2003. At that time, Secretary 
Ridge assured me that financial management is a top priority for the 
Department, and every effort will be made to comply with the provisions 
of the CFO Act. While Secretary Ridge and the Office of Management and 
Budget have demonstrated their commitment to financial accountability, 
the bill I am introducing today will ensure that future secretaries and 
future administrations also will comply with the CFO Act.
  The legislation I propose will ensure that the Department of Homeland 
Security is subject to the same financial management requirements as 
all other cabinet departments by accomplishing the following: It will 
include the Department in the list of agencies covered by the CFO Act, 
and make necessary adjustments to the Homeland Security Act of 2002 so 
that it is consistent with the provisions of the CFO Act; it will 
ensure that the Chief Financial Officer at the Department of Homeland 
Security is subject to the same requirements as all other similarly 
situated CFOs in cabinet-level departments by providing that the CFO is 
nominated by the President and confirmed by the Senate; it will require 
the CFO at the Department of Homeland Security to report directly to 
the Secretary and be a part of the statutorily created CFO Council; and 
it will require the Department of Homeland Security to include in each 
performance and accountability report an audit opinion of the 
Department's internal controls over its financial reporting.
  Application of the Chief Financial Officers Act to the Department of 
Homeland Security is essential to ensure that effective financial 
management and reporting requirements are adhered to by the newest, and 
one of the largest, cabinet-level departments in the Federal 
Government. The Department of Homeland Security is in the process of 
integrating 22 agencies, many with disparate financial systems and a 
number with their own CFOs. Inclusion of the Department within the 
management requirements of the CFO Act will help ensure that the 
financial process is properly managed by requiring full financial 
disclosure of the Department's financial activities. Therefore, I urge 
my colleagues to support passage of this bill to protect against 
financial waste, fraud, and abuse within the Department of Homeland 
Security.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record.

                                S. 1567

       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 ``Department of Homeland 
     Security Financial Accountability Act''.

     SEC. 2. CHIEF FINANCIAL OFFICER OF THE DEPARTMENT OF HOMELAND 
                   SECURITY.

       (a) In General.--Section 901(b)(1) of title 31, United 
     States Code, is amended--
       (1) by redesignating subparagraphs (G) through (P) as 
     subparagraphs (H) through (Q), respectively; and
       (2) by inserting after subparagraph (F) the following:
       ``(G) The Department of Homeland Security.''.
       (b) Appointment or Designation of CFO.--The President shall 
     appoint or designate a Chief Financial Officer of the 
     Department of Homeland Security under the amendment made by 
     subsection (a) by not later than 180 days after the date of 
     the enactment of this Act.
       (c) Continued Service of Current Official.--The individual 
     serving as Chief Financial Officer of the Department of 
     Homeland Security immediately before the enactment of this 
     Act may continue to serve in that position until the date of 
     the confirmation or designation, as applicable (under section 
     901(a)(1)(B) of title 31, United States Code), of

[[Page S10917]]

     a successor under the amendment made by subsection (a).
       (d) Conforming Amendments.--
       (1) Homeland security act of 2002.--The Homeland Security 
     Act of 2002 (Public Law 107-296) is amended--
       (A) in section 103 (6 U.S.C. 113)--
       (i) in subsection (d) by striking paragraph (4), and 
     redesignating paragraph (5) as paragraph (4);
       (ii) by redesignating subsection (e) as subsection (f); and
       (iii) by inserting after subsection (d) the following:
       ``(e) Chief Financial Officer.--There shall be in the 
     Department a Chief Financial Officer, as provided in chapter 
     9 of title 31, United States Code.''; and
       (B) in section 702 (6 U.S.C. 342) by striking ``shall 
     report'' and all that follows through the period and 
     inserting ``shall perform functions as specified in chapter 9 
     of title 31, United States Code.''.
       (2) FEMA.--Section 901(b)(2) of title 31, United States 
     Code, is amended by striking subparagraph (B), and by 
     redesignating subparagraphs (D) through (H) as subparagraphs 
     (C) through (G), respectively.

     SEC. 3. FUNCTIONS OF CHIEF FINANCIAL OFFICER OF THE 
                   DEPARTMENT OF HOMELAND SECURITY.

       Section 3516 of title 31, United States Code, is amended by 
     adding at the end the following:
       ``(f) The Secretary of Homeland Security--
       ``(1) shall submit for fiscal year 2004, and for each 
     subsequent fiscal year, a performance and accountability 
     report under subsection (a) that incorporates the program 
     performance report under section 1116 of this title for the 
     Department of Homeland Security; and
       ``(2) shall include in each performance and accountability 
     report an audit opinion of the Department's internal controls 
     over its financial reporting.''.

  Mr. AKAKA. Mr. President. As the ranking member of the Subcommittee 
on Financial Management, the Budget, and International Security, I am 
honored to work with my colleague Senator Fitzgerald, Chairman of the 
Subcommittee, to introduce the ``Department of Homeland Security 
Financial Accountability Act.''
  Our bill would add the Department of Homeland Security (DHS) to the 
Chief Financial Officers Act of 1990 (CFO Act), P.L. 101-576. It is a 
companion measure to bipartisan legislation, H.R. 2886, introduced in 
the House on July 24, 2003. Adding DHS would ensure that Congress will 
have timely and accurate financial information imperative for good 
governance of the resources of the Department entrusted to making our 
homeland safe.
  The CFO Act recognizes the responsibility of governmental agencies to 
be accountable to taxpayers. This bill would require the President to 
appoint, subject to Senate confirmation, a Chief Financial Officer for 
DHS, who would report directly to the Director of the Department 
regarding financial management matters. It also requires the DHS CFO to 
be a member of the CFO Council. This Council is charged with advising 
and coordinating the activities of its members' agencies on such 
matters as consolidation and modernization of financial systems, 
improved quality of financial information, financial data and 
information standards, internal controls, legislation affecting 
financial operations and organizations, and any other financial 
management matters. In addition, the bill would require the DHS CFO to 
prepare and provide for audit, annual financial statements that are 
submitted to Congress, which will aid in congressional oversight of the 
Department.
  Although the DHS bill adopted by the Govermental Affairs Committee 
last year, S. 2452, would have put the new Department under the CFO 
Act, the enacted version of the bill, P.L. 107-296, did not. All other 
Federal departments and major agencies are under the requirements of 
the Act. Since the passage of the CFO Act in 1990, tremendous 
improvements have been made in agency financial management. For 
example, all CFO Act agencies, except for the Department of Defense and 
the Agency for International Development, achieved clean opinions from 
their auditors on their financial statements in fiscal year 2003. 
Initially, none of the agencies were able to do so. Also, the General 
Accounting Office has reported that the number and severity of internal 
control problems reported for CFO Act agencies have been significantly 
reduced. We expect good corporate governance from the private sector; 
we should also expect good governance from federal agencies.
  Adding DHS to the CFO Act would also require that it meet the 
requirements of the Federal Financial Management Improvement Act of 
1996 (FFMIA), P.L. 104-208, which mandates that all agencies subject to 
the CFO Act meet certain financial system conditions. The goal of FFMIA 
is for agencies to have systems that provide reliable financial 
information available for day-to-day management.
  It is our responsibility to ensure the Federal Government is 
accountable to the American taxpayers. I am pleased to join with the 
Chairman of our Subcommittee to ensure that DHS has the financial 
management systems and practices in place to provide meaningful and 
timely information needed for effective and efficient management 
decision-making.
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