[Senate Report 118-302]
[From the U.S. Government Publishing Office]
Calendar No. 708
118th Congress} { Report
SENATE
2d Session } { 118-302
======================================================================
IMPROVING FEDERAL FINANCIAL
MANAGEMENT ACT
__________
R E P O R T
OF THE
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
TO ACCOMPANY
S. 4700
TO MODIFY THE GOVERNMENTWIDE FINANCIAL
MANAGEMENT PLAN, AND FOR OTHER PURPOSES
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
December 17 (legislative day, December 16), 2024.--Ordered to be
printed
__________
U.S. GOVERNMENT PUBLISHING OFFICE
WASHINGTON : 2025
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware RAND PAUL, Kentucky
MAGGIE HASSAN, New Hampshire RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona JAMES LANKFORD, Oklahoma
JACKY ROSEN, Nevada MITT ROMNEY, Utah
JON OSSOFF, Georgia RICK SCOTT, Florida
RICHARD BLUMENTHAL, Connecticut JOSH HAWLEY, Missouri
ADAM SCHIFF, California ROGER MARSHALL, Kansas
David M. Weinberg, Staff Director
Alan S. Kahn, Chief Counsel
Lena C. Chang, Director of Governmental Affairs
James F. Hiebert, Professional Staff Member
William E. Henderson III, Minority Staff Director
Christina N. Salazar, Minority Chief Counsel
Andrew J. Hopkins, Minority Counsel
Laura W. Kilbride, Chief Clerk
Calendar No. 708
118th Congress} { Report
SENATE
2d Session } { 118-302
======================================================================
IMPROVING FEDERAL FINANCIAL
MANAGEMENT ACT
December 17 (legislative day, December 16), 2024.--Ordered to be
printed
_______
Mr. Peters, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 4700]
[Including cost estimate of the Congressional Budget Office]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 4700) to modify the
governmentwide financial management plan, and for other
purposes, having considered the same, reports favorably thereon
with an amendment, in the nature of a substitute, and
recommends that the bill, as amended, do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
IV. Section-by-Section Analysis of the Bill, as Reported.............3
V. Evaluation of Regulatory Impact..................................4
VI. Congressional Budget Office Cost Estimate........................4
VII. Changes in Existing Law Made by the Bill, as Reported............6
I. Purpose and Summary
The purpose of S. 4700, the Improving the Federal Financial
Management Act, is to update the Chief Financial Officers Act
of 1990 by standardizing Chief Financial Officers' (CFO)
responsibilities, expanding the authority of Deputy CFOs,
establishing metrics based on financial performance, and
strengthening internal controls.\1\
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\1\On July 22, 2020, the Committee approved S. 3287, the CFO Vision
Act. That bill is substantially similar to S. 3287. Accordingly, this
committee report is, in many respects, similar to the committee report
for S. 3287. See S. Rept. 116-278.
---------------------------------------------------------------------------
II. Background and Need for the Legislation
In 1990, Congress passed the Chief Financial Officers Act
of 1990 (hereafter ``CFO Act'') to improve and standardize
financial management practices across the federal government.
The CFO Act established the CFO position at 24 federal
agencies, vested financial managementfunctions in that role,
and required regular reporting on financial management practices.\2\
The CFO Act also required the Office of Management and Budget (OMB) to
produce a government-wide financial management plan every five
years.\3\ However, OMB has not produced such a standalone report since
2009, instead including reporting on financial management planning in
the President's Management Agenda produced every four years.\4\
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\2\The Chief Financial Officers Act of 1990, Pub. L. No. 101-576
(1990), Title II.
\3\The Chief Financial Officers Act of 1990, Pub. L. No. 101-576
(1990), Sec. 301.
\4\Government Accountability Office, Federal Financial Management:
Substantial Progress Made Since the CFO Act of 1990 and Preliminary
Observations, (GAO-20-203T) (Oct. 30, 2019) (https://www.gao.gov/
products/GAO-20-203T).
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In the 30 years since the CFO Act was passed, agencies have
made substantial progress on improving the quality of financial
controls and reporting. In 1996, only 6 of the 24 CFO Act
agencies produced a clean audit.\5\ In 2023, 19 of the 24 CFO
Act agencies produced a clean audit.\6\ The Government
Accountability Office (GAO) identified that improvements in
agencies' preparation and audit of financial reports, internal
control systems, financial management information technology
systems, and workforce drove improvements in the quality and
certainty of financial management systems.\7\
---------------------------------------------------------------------------
\5\Department of the Treasury, Financial Management Service, 1996
Consolidated Financial Statements of the United States Government (May
21, 1997).
\6\Department of the Treasury, Bureau of the Fiscal Service, 2023
Financial Report of the United States (Feb. 15, 2024).
\7\Government Accountability Office, Federal Financial Management:
Substantial Progress Made Since the CFO Act of 1990 and Preliminary
Observations, (GAO-20-203T) (Oct. 30, 2019) (https://www.gao.gov/
products/GAO-20-203T).
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However, GAO also identified areas for continued
improvement of agency financial management practices and better
compliance with CFO Act requirements. After reviewing financial
management best practices and surveying each agency CFO, GAO
recommended that agencies should further standardize the
responsibilities of CFOs, including to have responsibilities
over budget execution functions. GAO also recommended that
agencies report on the quality of internal controls. Finally,
GAO recommended that OMB produce a government-wide financial
management plan every four years to align with other
government-wide performance management standards.\8\ The bill
responds to GAO's recommendations by further standardizing CFO
responsibilities, requiring audits of internal controls, and
requiring four-year financial management plans.
---------------------------------------------------------------------------
\8\Id.
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III. Legislative History
S. 4700 was introduced on July, 11, 2024, by Senator James
Lankford (R-OK). The bill was referred to the Committee on
Homeland Security and Governmental Affairs. Senator Margaret
Wood Hassan (D-NH) joined as an additional cosponsor on July
23, 2024.
The Committee considered S. 4700 at a business meeting on
September 18, 2024. At the business meeting, Senator Lankford
offered a substitute amendment, as well as a modification to
that amendment. The Lankford substitute amendment, as modified,
made a technical change to amend an improperly cited date on
the bill. The Committee adopted the modification to the
Lankford substitute amendment, and the Lankford substitute
amendment, as modified by unanimous consent, with Senators
Peters, Hassan, Sinema, Rosen, Ossoff, Butler, Paul, Lankford,
Romney, Marshall, and Scott present.
The bill, as amended by the Lankford substitute amendment,
as modified was ordered reported favorably by roll call vote of
11 yeas to 0 nays, with Senators Peters, Hassan, Sinema, Rosen,
Ossoff, Butler, Paul, Lankford, Romney, Scott, and Marshall
voting in the affirmative. Senators Carper, Blumenthal,
Johnson, and Hawley voted yea by proxy, for the record only.
IV. Section-by-Section Analysis of the Bill, as Reported
Section 1. Short title
This section establishes the short title of the bill as the
``Improving Federal Financial Management Act''.
Section 2. Chief Financial Officers; Government-wide financial
management plan
This section amends title 31 to update CFO
responsibilities, expands authorities of deputy CFOs, and
clarifies agencies' financial management practices.
Subsection (a) defines the duties and responsibilities for
agency CFOs and deputy CFOs, including budget formulation,
budget execution, risk management, and accounting. It also
requires CFOs to provide annual agency financial statements and
maintain a four-year financial management plan with
performance-based financial metrics. This section also
clarifies that in the event that an agency's CFO position is
vacant, deputy CFOs are to serve as acting CFOs and carry out
the same duties.
Subsection (b) requires OMB, in consultation with the CFO
Council, the Chief Information Officers Council, the Chief Data
Officers Council, the Chief Acquisition Officers Council, the
Council of the Inspectors General on Integrity and Efficiency,
and GAO to develop a government-wide four-year financial
management plan with annual status reports.
Subsection (c) updates requirements for the information and
internal controls for agencies' annual audits.
Subsection (d) provides technical and conforming changes to
title 5, to ensure it complies with the changes made in title
31.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of this bill and determined
that thebill will have no regulatory impact within the meaning
of the rules. The Committee agrees with the Congressional Budget
Office's statement that the bill contains no intergovernmental or
private-sector mandates as defined in the Unfunded Mandates Reform Act
(UMRA) and would impose no costs on state, local, or tribal
governments.
VI. Congressional Budget Office Cost Estimate
The Congressional Budget Act of 1974 requires the
Congressional Budget Office, to the extent practicable, to
prepare estimates of the budgetary effects of legislation
ordered reported by Congressional authorizing committees. In
order to provide the Congress with as much information as
possible, the attached table summarizes information about the
estimated direct spending and revenue effects of some of the
legislation that has been ordered reported by the Senate
Committee on Homeland Security and Governmental Affairs during
the 118th Congress. The legislation listed in this table
generally would have small effects, if any, on direct spending
or revenues, CBO estimates. Where possible, the table also
provides information about the legislation's estimated effects
on spending subject to appropriation and on intergovernmental
and private-sector mandates as defined in the Unfunded Mandates
Reform Act.
ESTIMATED BUDGETARY EFFECTS AND MANDATES INFORMATION
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Spending subject
Last Budget Direct Revenues, to Pay-as-you-go Budgetary
Bill number Title Status action function spending, 2025-2034 appropriation, procedures effects Mandates Contact
2025-2034 2025-2029 apply? after 2034
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S. 4700....................... Improving Federal Ordered reported 09/18/24 800 Between zero 0 Not Estimated... Yes No No Matthew Pickford
Financial and $500,000
Management Act.
S. 4700 would revise requirements for the Office of Management and Budget and federal agencies to prepare governmentwide financial plans. Under current law,
those plans cover five years; the bill would require four-year financial plans and would expand the types of information reported. The bill also would broaden
requirements for auditing each agency's internal controls. Enacting S. 4700 could affect direct spending by some agencies that are allowed to use fees,
receipts from the sale of goods, and other collections to cover operating costs. CBO estimates that any net changes in direct spending by those agencies would
be negligible because most of them can adjust amounts collected to reflect changes in operating costs. CBO estimates that enacting S. 4700 would have no effect
on revenues. CBO has not estimated the bill's effects on spending subject to appropriation. The bill contains no intergovernmental or private-sector mandates
as defined in the Unfunded Mandates Reform Act.
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VII. Changes in Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in brackets, new matter is
printed in italic, and existing law in which no change is
proposed is shown in roman):
UNITED STATES CODE
* * * * * * *
TITLE 5--MONEY AND FINANCE
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
Subpart B--Employment and Retention
* * * * * * *
CHAPTER 33--EXAMINATION, SELECTION, AND PLACEMENT
* * * * * * *
Subchapter III--Details, Vacancies, and Appointments
* * * * * * *
SEC. 3348. VACANT OFFICE.
* * * * * * *
(e) This section shall not apply to--
(1) The General Counsel of the National Labor
relations Board;
(2) the General Counsel of the Federal Labor
Relations Authority;
(3) any Inspector General appointed by the President,
by and with the advice and consent of the Senate; or
[(4) any Chief Financial Officer appointed by the
President, by and with the advice and consent of the
Senate;]
[(5)](4) an office of an Executive agency (including
the Executive Office of the President, and other than
the Government Accountability Office) if a statutory
provision expressly prohibits the head of the Executive
agency from performing the functions and duties of such
office.
* * * * * * *
TITLE 31--MONEY AND FINANCE
* * * * * * *
Subtitle--General
* * * * * * *
CHAPTER 9--AGENCY CHIEF FINANCIAL OFFICERS
* * * * * * *
SEC. 902. AUTHORITY AND FUNCTIONS OF THE AGENCY CHIEF FINANCIAL
OFFICERS
(a)[An] It shall be the duty and responsibility of each
agency Chief Financial Officer to oversee and provide
leadership in the areas of budget formulation and execution,
planning and performance, risk management, internal controls,
financial systems, and accounting. In carrying out the
preceding sentence, each agency Chief Financial Officer shall--
(1) * * *
(2) * * *
(3) develop and maintain an integrated agency
accounting and financial management system, including
financial reporting and internal controls, which--
(A) * * *
(B) * * *
(C) complies with any other requirements
applicable to such areas and systems; and
(D) provides for--
(i) complete, reliable, consistent,
and timely information which is
prepared on a uniform basis and which
is responsive to the financial
information needs of agency management;
(ii) the development and reporting of
cost information;
(iii) the integration of accounting
and budgeting information; [and]
(iv) the systematic measurement of
[performance;] performance and
integration of performance and cost
information; and
(v) annual agency financial
statements prepared in accordance with
United States generally accepted
accounting principles;
(4) * * *
(5) prepare, in consultation with financial
management and other appropriate experts, an agency
plan to implement the 4-year financial management plan
prepared by the Director of the Office of management
and Budget under section 3512(a)(2) of this title and
to achieve and sustain effective financial management
in the agency which shall--
(A) be completed within 90 days of the
issuance of a government wide plan under
section 3512(a)(2) of this title;
(B) be revised as determined necessary by the
Chief Financial Officer;
(C) include performance-based financial
management metrics against which the financial
management performance of the agency shall be
assessed; and
(D) be submitted upon completion or revision
to the head of the agency, the Director of the
Office of Management and Budget, the
Comptroller general, the appropriate committees
of Congress, and be made publicly available;
[(5)] (6) direct, manage, and provide policy guidance
and oversight of agency financial management personnel,
activities, and operations, including--
[(A) the preparation and annual revision of
an agency plan to--
[(i) implement the 5-year financial
management plan prepared by the
Director of the Office of Management
and Budget under section 3512(a)(3) of
this title; and
[(ii) comply with the requirements
established under sections 3515 and
subsections (e) and (f) of section 3521
of this title;]
[(B)](A) the development of agency financial
management budgets;
[(C)](B) the recruitment, selection, and
training of personnel to carry out agency
financial management functions;
[(D)](C) the approval and management of
agency financial management systems design or
enhancement projects; and
[(E)](D) the implementation of agency asset
management systems, including systems for cash
management, credit management, debit collection
and property and inventory management and
control;
[(6)](7) prepare and transmit, by not later than 60
days after the submission of the audit report required
by section 3521(f) of this title, an annual report to
the agency head [and the Director of the Office of
Management and Budget,], the Director of the Office of
Management and Budget, the Comptroller General, and
appropriate committees of Congress which shall be made
publicly available and, which shall include--
(A) a description and analysis of the status
of financial management of the [agency] agency,
including--
(i) the progress of the agency in
implementing the agency plan described
in paragraph (5)
(ii) the progress of the agency in
implementing the governmentwide 4-year
financial management plan prepared by
the Director of the Office of
Management and under section 3512(a)(2)
of this title; and
(iii) the performance of the agency
against financial management metrics
established by the Director of Office
Management and Budget;
(B) * * *
(C) * * *
(D) a summary [of the reports] of--
(i) the reports; on internal
accounting and administrative control
systems submitted to the President and
the Congress under [the amendments made
by the federal managers' Financial
Integrity Act of 1982 (Public Law 97-
255); and] section 3512(d) of this
title;
(ii) agency spending data published
under the Federal Funding
Accountability and Transparency Act of
2006 (31 U.S.C. 6106 note); and
(iii) the reporting of the agency
under the Federal Financial Management
Improvement Act of 1996 (31 U.S.C. 3512
note); and
[(7)](8) [monitor the] manage the formulation and
financial execution of the budget of the agency in
relation to actual expenditures [, and prepare and
submit to the head of the agency timely performance
reports; and];
(9) be responsible for linking performance and cost
information, including the preparation and submission
to the head of the agency of timely performance reports
that incorporate cost information;
[(8)](10) review, on a biennial basis, the fees,
royalties, rents, and other charges imposed by the
agency for services and things of value it provides,
and make recommendations on revising those charges to
reflect inflation and costs incurred by it in providing
those services and things of value[.]; and
(11) coordinate with senior agency personnel,
including the Chief Data Officer, Chief Information
Officer, Chief Performance officer, Chief Acquisition
Officer, Chief Risk Officer, and Chief Evaluation
Officer of the agency on--
(A) the exercise of authorities under this
subsection; and
(B) the strategic planning, performance
measurement and reporting, and risk management
functions of the agency.
* * * * * * *
SEC. 903. ESTABLISHMENT OF AGENCY DEPUTY CHIEF FINANCIAL OFFICERS
(a) There shall be within each agency described in section
901(b) an agency Deputy Chief Financial Officer, who shall
report directly to the agency Chief Financial Officer on
financial management matters and who shall assist the agency
Chief Financial Officer in the performanceof each of the duties
of the agency Chief Financial Officer under this chapter. The position
of agency Deputy Chief Financial Officer shall be a career-reserved
position in the Senior Executive Service.
(b) * * *
(c) Notwithstanding subchapter III of chapter 33 of title
5, in the event of a vacancy in the position of Chief Financial
Officer of an agency, the Deputy Chief Financial Officer of the
agency shall serve as the acting Chief Financial Officer.
* * * * * * *
Subtitle III--Financial Management
* * * * * * *
CHAPTER 35--ACCOUNTING AND COLLECTION
* * * * * * *
Subchapter II--Accounting Requirements, Systems, and Information
* * * * * * *
SEC. 3512. EXECUTIVE AGENCY ACCOUNTING AND OTHER FINANCIAL MANAGEMENT
REPORTS AND PLANS.
(a)
(1) The Director of the Office of management and
Budget shall prepare and submit to the appropriate
committees of the Congress and make available on the
website described under section 1122 [a financial
management status report and a government 5-year
financial management plan] a government wide 4-year
financial management plan and a financial management
status report.
[(2) A financial management status report under this
subsection shall include--
[(A) a description and analysis of the status
of financial management in the executive branch
[(B) a summary of the most recently completed
financial statements--
[(i) of Federal agencies under
section 3515 of this title; and
[(ii) of government corporations;
[(C) a summary of the most recently completed
financial statement audits and reports--
[(i) of federal agencies under
section 3521 (e) and (f) of this title;
and
[(ii) of Government corporations;
[(D) a summary of reports on internal
accounting and administrative control systems
submitted to the President and the Congress
under the amendments made by the Federal
Managers' Financial Integrity Act of 1982
(Public Law 97-255);
[(E) a listing of agencies whose financial
management systems do not comply substantially
with requirements of section 3(a) of the
Federal Financial Management Improvement Act of
1996, and a summary statement of the efforts
underway to remedy the noncompliance; and
[(F) any other information the Director
considers appropriate to fully inform the
Congress regarding the financial management of
the Federal Government.]
[(3)](2)
(A) A government-wide [5-year] 4-year
financial management plan under this subsection
[shall describe] shall--
(i) describe the activities the
Director, the Deputy Director for
Management, the Controller of the
Office of Federal Financial Management,
and agency Chief Financial Officers
shall conduct over the next [5 fiscal
years to improve the financial
management of the Federal Government.]
4 fiscal years to improve the financial
management of the Federal Government in
a manner that is strategic,
comprehensive, and cost-effective; and
(ii) be developed in consultation
with the Chief Financial Officers
Council, the Chief information Officers
Council, Chief Data Officer Council,
the Chief Acquisition Officers Council,
the Council of the Inspectors General
on Integrity and Efficiency, the
Government Accountability Office, and,
as appropriate other councils and
financial management experts.
(B) Each government-wide [5-year] 4-year
financial management plan prepared under this
subsection shall--
(i) describe the existing financial
management structure and any changes
needed to establish an integrated
financial management system;
(ii) be consistent with applicable
accounting principles, standards, and
requirements;
(iii) provide a strategy [for
developing] for improving financial
management systems, including--
(I) developing and
integrating individual agency
accounting, financial
information, and other
financial management systems to
ensure adequacy, consistency,
and timeliness of financial
information;
(II) linking performance and
cost information to facilitate
effective and efficient
decision making;
(III) eliminating duplicative
and unnecessary systems; and
(IV) identifying
opportunities for agencies to
share systems and encouraging
agencies to do so where
practicable;
[(iv) identify and make proposals to
eliminate duplicative and unnecessary
systems, including encouraging agencies
to share systems which have sufficient
capacity to perform the functions
needed;]
[(v)] (iv) identify projects to bring
existing systems into compliance with
the applicable standards and
requirements;
(v) provide a strategy for reporting
performance and cost information;
(vi) contain milestones for equipment
acquisitions and other actions
necessary to implement the [5-year] 4-
year plan consistent with the
requirements of this section;
(vii) [identify] provide a strategy
for strengthening the Federal financial
management workforce, including
identification of financial management
personnel needs and actions to ensure
those needs are met;
(viii) include a plan for ensuring
the annual audit of financial
statements of executive agencies
pursuant to section 3521(h) of this
title; [and]
(ix) include comprehensive financial
management performance-based metrics
against which the financial management
performance of executive agencies can
be assessed; and
[(ix)] (x) estimate the costs of
implementing the government-wide [5-
year] 4-year plan
(3) A financial management status report under this
subsection shall include--
(A) a description and analysis of the status
of financial management in the executive
branch, including the progress made towards
implementing the government wide 4-year
financial management plan, the status of
remaining challenges, and, as necessary based
on obligations or expenditures, any updates or
revisions to the cost estimates included in the
most recent governmentwide 4-year financial
management plan
(B) a summary of the performance of agencies
against the metrics developed and identified by
the Director of the Office of management and
Budget in the government wide 4-year financial
management plan;
(C) a summary of the most recently completed
financial statements--
(i) of Federal agencies under section
3515 of this title; and
(ii) of Government corporations;
(D) a summary of the most recently completed
financial statement audits and reports--
(i) of Federal agencies under
subsections (e) and (f) of section 3521
of this title; and
(ii) of Government corporations;
(E) a summary of reports on internal
accounting and administrative control systems
submitted to the President and Congress under
subsection (d);
(F) a listing of agencies whose financial
management systems do not comply substantially
with the requirements of section 803(s) of the
Federal Financial Management Improvement Act of
1996 (31 U.S.C. 3512 note), and a summary
statement of the efforts underway to remedy the
non-compliance; and
(G) any other information the Director
considers appropriate to fully inform Congress
regarding the financial management of the
Federal Government.
(4)
(A) Not later than [15 months after the date
of the enactment of this subsection] 6 months
after the date of enactment of the Improving
Federal Financial Management Act, the Director
of the Office of Management and Budget shall
submit the first financial management status
report and government wide [5-year] 4-year
financial management plan under this subsection
to the appropriate committees of the Congress
(B)
(i) [Not later than January 31 of
each year there-after] At a minimum,
concurrently with the submission of the
budget of the United States Government
under section 1105(a) of this title
made in the first full fiscal year
following any year in which the term of
the President commences under section
101 of title 3, the Director of the
Office of Management and Budget shall
submit to the appropriate committees of
the Congress a [financial management
status report and a revised government
wide 5-year] governmentwide 4-year
financial management plan to cover the
succeeding [5 fiscal years] 4 fiscal
years. including a report on the
accomplishments of the executive branch
in implementing the plan during the
preceding fiscal year.
(ii) The Director shall include with
each [revised government wide 5-year]
governmentwide 4-year financial
management plan a description of any
substantive changes in the financial
statement audit plan required by
[paragraph (3)(B)(viii),] paragraph
(2)(B)(viii) progress made by executive
agencies in implementing the audit
plan, and any improvements in Federal
Government financial management related
to preparation and audit of financial
statements of executive agencies.
(C) Each year, concurrently with the
submission of the budget of the United States
Government under section 1105(a) of this title,
the Director of the Office of Management and
Budget shall submit to the appropriate
committees of Congress and the Comptroller
General a financial management status report.
[(5) Not later than 30 days after receiving each
annual report under section 902(a)(6) of this title,
the Director shall transmit to the Chairman of the
Committee on Government Operations of the House of
representatives and the Chairman of the Committee on
Governmental Affairs of the Senate a final copy of that
report and any comments on the report by the Director.]
(b) * * *
(c) * * *
(d)
(1) * * *
(2) By December 31 of each year (beginning in 1983),
the head of each executive agency, based on an
evaluation conducted according to guidelines prescribed
under paragraph (1) of this subsection, shall prepare a
statement on whether the systems of the agency comply
with subsection (c) of this section, including--
(A) if the head of an executive agency
decides the systems do not comply with
subsection (c) of this section, a report
identifying any material weakness in the
systems and describing the plans and schedule
for correcting the weakness; [and]
(B) a separate report on whether the
accounting system of the agency conforms to the
principles, standards, and requirements the
Comptroller General prescribes under section
3511(a) of this title[.]; and
(C) a separate report on the results of the
assessment and conclusion required under
subsection (e)(2).
(3) The head of each executive agency shall sign the
statement and reports required by this subsection and
submit them to the President and Congress. The
statement and reports are available to the public,
except that information shall be deleted from a
statement or report before it is made available if the
information specifically is--
(A) prohibited from disclosure by law; or
(B) required by Executive order to be kept
secret in the interest of national defense or
the conduct of foreign affairs.
(e) The head of each executive agency shall--
(1) in establishing the internal accounting and
administrative controls under subsection (c), identify
the key financial management information needed for 13
effective financial management and decision making; and
(2) annually assess and make a conclusion on the
effectiveness of the internal controls of the executive
agency over financial reporting and key financial
management information identified under paragraph (1).
[(e)] (f) To assist in preparing a cost-based budget
undersection 1108(b) of this title and consistent with
principles and standards the Comptroller General prescribes,
the head of each executive agency shall maintain the accounts
of the agency on an accrual basis to show the resources,
liabilities, and costs of operations of the agency. An
accounting system under this subsection shall include monetary
property accounting records.
[(f)] (g) The Comptroller General shall--
(1) cooperate with the head of each executive agency
in developing an accounting system for the agency; and
(2) approve the system when the Comptroller General
considers it to be adequate and in conformity with the
principles, standards, and requirements prescribed
under section 3511 of this title.
[(g)] (h) The Comptroller General shall review the
accounting systems of each executive agency. The results of a
review shall be available to the head of the executive agency,
the Secretary, and the President. The Comptroller General shall
report to Congress on a review when the Comptroller General
considers it proper.
* * * * * * *
SEC. 3521. AUDITS BY AGENCIES.
* * * * * * *
[(e) Each financial] (e)(1) Each financial statement
prepared under section 3515 by an agency shall be audited in
accordance with applicable generally accepted government
auditing [standards--] standards.
[(1)] (A) in the case of an agency having an
Inspector General appointed under chapter 4 of title 5,
by the Inspector General or by an independent external
auditor, as determined by the Inspector General of the
agency; and
[(2)] (B) in any other case, by an independent
external auditor, as determined by the head of the
agency.
(2) As part of each audit under this subsection, the
auditor shall--
(A) evaluate the design of the internal
control of the agency over financial reporting
and key financial information, as assessed and
reported on by the head of the agency under
section 3512(d)(2)(C) of this title;
(B) determine whether those controls have
been implemented;
(C) for controls that are properly designed
and implemented, perform sufficient tests of
those controls to conclude whether the controls
are operating effectively, including sufficient
tests to support a low level of assessed
control risk; and
(D) communicate controls that the auditor
concludes are not suitably designed and
implemented or are not operating effectively,
as appropriate under applicable generally
accepted government auditing standards.
(3) Audits under this subsection shall be conducted--
* * * * * * *
(f) * * *
(g) * * *
(h) Each financial statement prepared by an executive
agency for a fiscal year after fiscal year 1991 shall be
audited in accordance with this section and the plan required
by section [3512(a)(3)(B)(viii)] 3512(a)(3)(B)(viii) of this
title.
* * * * * * *
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