[Congressional Record Volume 150, Number 99 (Friday, July 16, 2004)]
[Senate]
[Pages S8279-S8280]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FITZGERALD (for himself and Mr. Akaka):
  S. 2683. A bill to provide for certain financial reporting 
requirements to apply to certain small executive branch agencies, and 
for other purposes; to the Committee on Governmental Affairs.
  Mr. FITZGERALD. Mr. President, I am joined today by Senator Daniel K. 
Akaka in introducing the Financial Accountability Expansion Act of 
2004, which would ensure the fiscal accountability of Federal entities. 
This bill would strengthen Federal financial management by subjecting 
all Federal entities in the Executive Branch to the stringent financial 
audit requirements that currently apply to most cabinet level 
departments and major agencies.
  Congressional efforts to improve financial management and to reduce 
the waste, fraud, and abuse of taxpayer dollars began almost 25 years 
ago with the enactment of the Federal Managers Financial Integrity Act 
of 1982, which intended to strengthen internal controls and accounting 
systems. Another important financial management reform initiative was 
the Chief Financial Officers Act (CFO) of 1990. Among other things, the 
CFO Act created 24 CFO and deputy CFO positions in cabinet departments 
and major Executive Branch agencies, and required the annual 
preparation and audit of financial statements.
  I would briefly like to mention that the Department of Homeland 
Security, which is now the third largest Federal department, is the 
only cabinet level department that is not subject to the CFO Act. 
Therefore, on August 1, 2003, Senator Akaka and I introduced S. 1567, 
the Department of Homeland Security Financial Accountability Act, that 
would subject the Department to the same financial management practices 
currently required of all other major Federal agencies. We are pleased 
that the Senate passed this bill, as amended, and the House of 
Representatives is expected to pass its version of the bill in the near 
future.
  The CFO Act improved the financial management of cabinet departments 
and major Federal agencies; however, it did not address the fiscal 
policies and practices of the rest of the Executive Branch. Therefore, 
in 2002, I was the Senate sponsor of the Accountability of Tax Dollars 
Act (ATDA). This Act, which became law on November 7, 2002, amended the 
CFO Act to require agencies with budget authority of over $25 million 
to prepare annual financial statements and have them independently 
audited. Due to the enactment of the ATDA, an additional 76 agencies 
are now subject to requirements for annually audited financial 
statements.
  The ATDA also provided authority to the Director of the Office of 
Management and Budget (OMB) to waive or exempt certain agencies from 
the Act's requirements. The OMB Director may waive these requirements 
during the first two years of implementation if an agency lacks the 
budgeted resources or requires additional time to develop financial 
management practices and systems. The OMB Director may exempt agencies 
with budget authority under $25 million if it is determined that there 
is an absence of risk associated with the agency's operations.
  To improve upon the legislative changes Congress passed in 2002, the 
Financial Accountability Expansion Act of 2004 would further expand the 
audit requirements of the CFO Act to every remaining Federal entity in 
the Executive Branch. Each Executive Branch agency or entity, 
regardless of its size or budget authority, would be subject to the 
financial oversight and accountability that annual audits of financial 
statements provide. In order to assist small agencies that may not have 
adequate financial resources or personnel to comply with these 
requirements, this bill would authorize the Secretary of the Treasury 
to enter into one or more contracts on behalf of the agency, or 
multiple agencies through ``bundling,'' for the preparation and 
independent audit of the financial statement.
  The bill also would require OMB to conduct a thorough assessment and 
submit a report to Congress regarding those Federal entities not 
currently required to prepare financial statements and have them 
independently audited. This study is necessary to ensure that OMB and 
Congress have an accurate and complete picture of the breadth and depth 
of the gaps in the financial accountability of the Executive Branch.
  Senator Akaka and I have long had an interest in ensuring that the 
Federal Government operates effectively and efficiently, and does not 
waste taxpayer dollars through poor fiscal management. The independent 
audits of financial statements that this bill would require of the 
entire Executive Branch would strengthen the fiscal accountability of 
the entire Federal Government and reduce the opportunities for waste, 
fraud, and abuse.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2683

       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 ``Financial Accountability 
     Expansion Act of 2004''.

     SEC. 2. FINANCIAL STATEMENT REQUIREMENT FOR CERTAIN SMALL 
                   AGENCIES.

       (a) In General.--Section 3515 of title 31, United States 
     Code, is amended--
       (1) in subsection (a), by striking ``(1)''; and
       (2) by striking subsection (e) and inserting the following:
       ``(e) The Director of the Office of Management and Budget 
     shall determine which covered executive agencies have size or 
     budgetary limitations that do not support the internal 
     preparation of a financial statement required under this 
     section. The Director of

[[Page S8280]]

     the Office of Management and Budget shall inform the 
     Secretary of the Treasury of such determination, and for such 
     agencies, the Secretary of the Treasury shall prepare the 
     financial statement, or enter into a contract for the 
     preparation of such statement, and shall enter into a 
     contract with 1 or more independent auditors to audit the 
     financial statement required under this section. All 
     requirements of this section shall apply with respect to 
     audited financial statements prepared under this 
     subsection.''.
       (b) Technical and Conforming Amendment.--Section 2 of the 
     Accountability of Tax Dollars Act of 2002 (31 U.S.C. 3515 
     note; Public Law 107-289) is amended by striking subsection 
     (b).

     SEC. 3. CERTAIN FEDERAL ENTITIES WITHOUT ANNUAL AUDITED 
                   FINANCIAL STATEMENT REQUIREMENTS.

       (a) Definition.--In this section, the term ``Federal 
     entity'' means any entity established in the executive 
     branch, including such an entity that administers a special 
     purpose program or any other entity established by 
     presidential or departmental directive that is not required 
     to prepare an annual audited financial statement.
       (b) Annually Audited Financial Statements.--The Office of 
     Management and Budget shall require each Federal entity that 
     is not statutorily required to prepare an annual financial 
     statement and have the statement independently audited, to 
     submit an annually audited financial statement prepared in 
     accordance with United States generally accepted auditing 
     principles to the Office of Management and Budget.
       (c) Report.--
       (1) In general.--Not later than 90 days after the date of 
     enactment of this Act, the Director of the Office of 
     Management and Budget shall submit a report described under 
     paragraph (2) to the--
       (A) Committee on Governmental Affairs of the Senate; and
       (B) Committee on Government Reform of the House of 
     Representatives.
       (2) Content.--The report under paragraph (1) shall 
     include--
       (A) a list of each Federal entity as defined under 
     subsection (a); and
       (B) actions taken by the Office of Management and Budget to 
     implement subsection (b).

     SEC. 4. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as may be 
     necessary to carry out this Act in fiscal year 2005, and each 
     fiscal year thereafter.

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