[Federal Register Volume 60, Number 48 (Monday, March 13, 1995)]
[Notices]
[Pages 13484-13488]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6024]



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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Financial Management


Notice of Proposed Revisions to OMB Circular No. A-123, 
``Management Accountability and Control''

agency: Office of Management and Budget, Office of Federal Financial 
Management.

action: Proposed Revisions to OMB Circular No. A-123.

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summary: This Notice offers interested parties an opportunity to 
comment on proposed revisions to OMB Circular No. A-123, ``Management 
Accountability and Control.''

for further information contact: Cindy Salavantis, OMB, Office of 
Federal Financial Management, (202) 395-6911.

    Dated: March 7, 1995.
John B. Arthur,
Associate Director for Administration.

Attachment
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OFFICE OF MANAGEMENT AND BUDGET
Management Accountability and Control
AGENCY: Office of Management and Budget.

ACTION: Proposed Revisions to OMB Circular No. A-123.

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SUMMARY: This Notice offers interested parties an opportunity to 
comment on proposed revisions to Office of Management and Budget (OMB) 
Circular No. A-123, ``Management Accountability and Control.'' The 
Circular, which was previously titled ``Internal Control Systems,'' 
implements the Federal Managers' Financial Integrity Act of 1982 
(FMFIA).
    Also, this action seeks comments on a proposal to streamline agency 
FMFIA reporting, which has not yet been incorporated into this proposed 
revision to Circular No. A-123. OMB is permitted by the Government 
Management Reform Act (GMRA) of 1994 (P.L. 103-356) to consult with the 
Congress on modifications to current reporting requirements. A possible 
modification affecting FMFIA reporting is under consideration (see 
Supplementary Information below for further details).

DATES: All comments on this proposal should be in writing, and must be 
received by April 12, 1995. Late comments will be considered only to 
the extent practicable. When comments are sent in by facsimile, they 
should be followed up with an original printed copy.

ADDRESSES: Office of Management and Budget, Office of Federal Financial 
Management, Management Integrity Branch, Room 6025, New Executive 
Office Building, Washington, DC 20503. For a copy of the current 
Circular, contact Office of Administration, Publications Office, Room 
2200, New Executive Office Building, Washington, DC 20503, or telephone 
(202) 395-7332.

FOR FURTHER INFORMATION CONTACT: Cindy Salavantis, Office of Federal 
Financial Management, Management Integrity Branch, telephone (202) 395-
6911 and fax (202) 395-3952.

SUPPLEMENTARY INFORMATION: The proposed revision alters current 
requirements for executive agencies on evaluating management controls, 
consistent with recommendations made by the National Performance 
Review. The proposed revision integrates many of the current policy 
issuances on management control into a single document, and provides a 
framework for integrating management control assessments with other 
work now being performed by agency managers, auditors and evaluators.
    The proposed revision emphasizes that management controls should 
benefit rather than encumber management, and should make sense for each 
agency's operating structure and environment. By giving agencies the 
discretion to determine which tools to use in arriving at the annual 
assurance statement to the President and the Congress, the Circular 
represents an important step towards a streamlined management control 
program that incorporates the reinvention principles of this 
Administration.
    The proposed revision is presented in five sections:
    Section I. Introduction. This section describes a framework for 
agency management control programs. Particular attention is directed to 
the integration of agency management control activities with other 
management requirements and policies, such as the Government 
Performance and Results Act, the Chief Financial Officers (CFOs) Act, 
the Inspector General Act, and other congressional and Executive Branch 
requirements. The foundation of this proposed policy is that management 
control activities are not stand alone management practices, but rather 
are woven into the day-to-day operational responsibilities of agency 
managers.
    Agencies are encouraged to plan for how the requirements of the 
Circular will be implemented. Agencies are also encouraged to establish 
senior level management councils to address management accountability 
and related issues within the broad context of agency operations.
    Section II. Establishing Management Controls. This section defines 
management controls, and requires agency managers to develop and 
implement appropriate management controls. Included in this section are 
general and specific management control standards, drawn in large part 
from the standards issued by the General Accounting Office.
    By including these standards in this proposed revision, OMB is 
continuing its efforts to integrate various management control policies 
into a single document. It is anticipated that this effort will make it 
easier for Federal managers to implement good management controls.
    Section III. Assessing and Improving Management Controls. This 
section states that agency managers should continuously monitor and 
improve the effectiveness of management controls. This continuous 
monitoring, and other periodic evaluations, should provide the basis 
for the agency head's annual [[Page 13485]] assessment of and report on 
management controls.
    Agencies are encouraged to use a variety of information sources to 
arrive at the annual assurance statement to the President and the 
Congress. Several examples of sources of information are included in 
this section.
    Agency managers and the agency's senior management council will 
consider and make recommendations to the agency head regarding the 
annual assurance statement required by FMFIA, and which deficiencies in 
management controls should be considered material and included in the 
agency head's FMFIA Report.
    Section IV. Correcting Management Control Deficiencies. This 
section states that agency management is responsible for taking timely 
and effective action to correct management control deficiencies. 
Correcting these deficiencies is an integral part of management's 
responsibilities and must be considered a priority by the agency.
    Section V. Reporting on Management Controls. This section describes 
the required components of the agency's annual FMFIA report and the 
suggested report distribution to the President and the Congress.
    Periodically, questions are raised as to FMFIA coverage by 
government corporations. This section presents FMFIA requirements as 
they pertain to government corporations pursuant to the CFOs Act. 31 
U.S.C. 9106.
    Finally, as noted in the Summary above, this Notice also seeks 
input on a proposal to streamline agency FMFIA reporting, which has not 
yet been incorporated into this proposed revision to Circular No. A-
123. Respondents are encouraged to comment on a possible modification 
affecting FMFIA reporting which has been proposed by the CFO Council.
    Under this proposal, agencies would consolidate FMFIA information 
with other performance-related reporting into a broader 
``Accountability Report'' to be issued annually by the agency head. 
This report would be issued as soon as possible after the end of the 
fiscal year, but no later than March 31 for agencies producing audited 
financial statements and December 31 for all other agencies. The other 
components of the proposed ``Accountability Report'' include: audited 
financial statements; agency management's followup on audit 
recommendations; financial reporting data on prompt payment and civil 
monetary penalties; and available information on agency performance 
compared to its stated goals and objectives, in preparation for 
implementation of the Government Performance and Results Act. While 
financial data would be reported for the fiscal year just ended, the 
most current information available at the time the report is issued 
would be included on management controls and audit followup issues.
John B. Arthur,
Associate Director for Administration.

To the Heads of Executive Departments and Establishments

Subject: Management Accountability and Control
    1. Purpose and Authority. As Federal employees develop and 
implement strategies for reengineering agency programs and operations, 
they should design management structures that help ensure 
accountability for results, and include appropriate, cost-effective 
controls. This Circular provides guidance to Federal managers on 
improving the accountability and effectiveness of Federal programs and 
operations by establishing, assessing, correcting, and reporting on 
management controls.
    The Circular is issued under the authority of the Federal Managers' 
Financial Integrity Act of 1982 as codified in 31 U.S.C. 3512.
    The Circular replaces Circular No. A-123, ``Internal Control 
Systems,'' revised, dated August 4, 1986, and OMB's 1982 ``Internal 
Controls Guidelines'' and associated ``Questions and Answers'' 
document, which are hereby rescinded.
    2. Policy. Management accountability is the expectation that 
managers are responsible for the quality and timeliness of program 
performance, increasing productivity, controlling costs and mitigating 
adverse aspects of agency operations, and assuring that programs are 
managed with integrity and in compliance with applicable law.
    Management controls are the organization, policies, and procedures 
used to reasonably ensure that (i) programs achieve their intended 
results; (ii) resources are used consistent with agency mission; (iii) 
programs and resources are protected from waste, fraud, and 
mismanagement; (iv) laws and regulations are followed; and (v) reliable 
information is obtained, maintained, reported and used for decision 
making.
    3. Actions Required. Agencies and individual Federal managers must 
take systematic and proactive measures to (i) develop and implement 
appropriate, cost-effective management controls for results-oriented 
management; (ii) assess the adequacy of management controls in Federal 
programs and operations; (iii) identify needed improvements; and (iv) 
take corresponding corrective action.
    4. Effective Date. This Circular is effective upon issuance.
    5. Inquiries. Further information concerning this Circular may be 
obtained from the Management Integrity Branch, Office of Federal 
Financial Management, Office of Management and Budget, Washington, DC 
20503, 202/395-6911.
    6. Copies. Copies of this Circular may be obtained by telephoning 
the Executive Office of the President, Publication Services, at 202/
395-7332.

[to be signed by Director, OMB]

Attachment

I. Introduction

    The proper stewardship of Federal resources is a fundamental 
responsibility of agency managers and staff. Federal employees must 
ensure that government resources are used efficiently and effectively 
to achieve intended program results. Resources must be used consistent 
with agency mission, in compliance with law and regulation, and with 
minimal potential for waste, fraud, and mismanagement.
    To support results-oriented management, the Government Performance 
and Results Act (GPRA, P.L. 103-62) requires agencies to develop 
strategic plans, set performance goals, and report annually on actual 
performance compared to goals. As the Federal government implements 
this legislation, these plans and goals should be integrated into (i) 
the budget process, (ii) the operational management of agencies and 
programs, and (iii) accountability reporting to the public on 
performance results, and on the integrity, efficiency, and 
effectiveness with which they are achieved.
    Management controls--organization, policies, and procedures--are 
tools to help program and financial managers achieve results and 
safeguard the integrity of their programs. This Circular provides 
guidance on using the range of tools at the disposal of agency managers 
to achieve desired program results and meet the requirements of the 
Federal Managers' Financial Integrity Act (FMFIA).
    Framework. The importance of management controls is addressed, both 
explicitly and implicitly, in many statutes and executive documents. 
The Federal Managers' Financial Integrity Act (P.L. 97-255) establishes 
specific expectations with regard to management controls. The agency 
head must establish controls that reasonably ensure that: (i) 
obligations and costs comply with applicable law; (ii) assets are 
safeguarded against waste, loss, [[Page 13486]] unauthorized use or 
misappropriation; and (iii) revenues and expenditures are properly 
recorded and accounted for. 31 U.S.C. 3512 (c)(1). In addition, the 
agency head annually must evaluate and report on the control and 
financial systems that protect the integrity of Federal programs. 31 
U.S.C. 3512 (d)(2). The Act encompasses program and administrative 
areas as well as accounting and financial management.
    Instead of considering controls as an isolated management tool, 
agencies should integrate their efforts to meet the requirements of 
FMFIA with other efforts to improve effectiveness and accountability. 
Thus, management controls should be an integral part of the entire 
cycle of planning, budgeting, management, accounting, and auditing. 
They should support the effectiveness and the integrity of every step 
of the process and provide continual feedback to management.
    For example, good management controls can assure that performance 
measures are complete and accurate. The management control standard of 
organization would align staff and authority with the program 
responsibilities to be carried out, improving both effectiveness and 
accountability. Similarly, accountability for resources could be 
improved by more closely aligning budget accounts with programs and 
charging them with all significant resources used to produce the 
program's outputs and outcomes.
    Meeting the requirements of the Chief Financial Officers Act (P.L. 
101-576, as amended) should help agencies both establish and evaluate 
management controls. The Act requires the preparation and audit of 
financial statements for 23 Federal agencies. In this process, auditors 
report on internal controls and compliance with laws and regulations. 
Therefore, the agencies covered by the Act have a clear opportunity 
both to improve controls over their financial activities, and to 
evaluate the controls that are in place.
    The Inspector General Act (P.L. 95-452, as amended) provides for 
independent reviews of agency programs and operations. Offices of 
Inspectors General (OIGs) and other external audit organizations 
frequently cite specific deficiencies in management controls and 
recommend opportunities for improvements. Agency managers, who are 
required by the Act to follow up on audit recommendations, should use 
these reviews to identify and correct problems resulting from 
inadequate, excessive, or poorly designed controls, and to build 
appropriate controls into new programs.
    Federal managers must carefully consider the appropriate balance of 
controls in their programs and operations. Fulfilling requirements to 
eliminate regulations (``Elimination of One-Half of Executive Branch 
Internal Regulations,'' Executive Order 12861) and streamline staffing 
(the Federal Workforce Restructuring Act of 1994, P.L. 103-226), should 
reinforce to agency managers that too many controls can result in 
inefficient and ineffective government, and therefore that they must 
ensure an appropriate balance between too many controls and too few 
controls. Managers should benefit from controls, not be encumbered by 
them.
    Agency Implementation. Appropriate management controls should be 
integrated into each system established by agency management to direct 
and guide its operations. A separate management control process need 
not be instituted, particularly if its sole purpose is to satisfy the 
FMFIA's reporting requirements.
    Agencies need to plan for how the requirements of this Circular 
will be implemented. Developing a written strategy for internal agency 
use may help ensure that appropriate action is taken throughout the 
year to meet the objectives of the FMFIA. The absence of such a 
strategy may itself be a serious management control deficiency.
    Identifying and implementing the specific procedures necessary to 
ensure good management controls, and determining how to evaluate the 
effectiveness of those controls, is left to the discretion of the 
agency head. However, agencies are encouraged to streamline their 
management control efforts in accordance with the recommendations of 
the National Performance Review.
    The President's Management Council, composed of the major agencies' 
chief operating officers, has been established to foster governmentwide 
management and cultural changes (``Implementing Management Reform in 
the Executive Branch,'' October 1, 1993). Many agencies are 
establishing their own senior management council, often chaired by the 
agency's chief operating officer, to address management accountability 
and related issues within the broader context of agency operations. 
Relevant issues for such a council include ensuring the agency's 
commitment to an appropriate system of management controls; 
recommending to the agency head which control deficiencies are 
sufficiently serious to report in the annual FMFIA report; and 
providing input for the level and priority of resource needs to correct 
these deficiencies. (See also Section III of this Circular.)

II. Establishing Management Controls

    Definition of Management Controls. Management controls are the 
organization, policies, and procedures used by agencies to reasonably 
ensure that (i) programs achieve their intended results; (ii) resources 
are used consistent with agency mission; (iii) programs and resources 
are protected from waste, fraud, and mismanagement; (iv) laws and 
regulations are followed; and (v) reliable information is obtained, 
maintained, reported and used for decision making.
    Management controls, in the broadest sense, include the plan of 
organization, methods and procedures adopted by management to ensure 
that its goals are met. Management controls include processes for 
planning, organizing, directing, and controlling program operations. A 
subset of management controls are the internal controls used to assure 
that there is prevention or timely detection of unauthorized 
acquisition, use, or disposition of the entity's assets that could have 
a material effect on its financial statements.
    Developing Management Controls. As Federal employees develop and 
implement strategies for reengineering agency programs and operations, 
they should design management structures that help ensure 
accountability for results. As part of this process, agencies and 
individual Federal managers must take systematic and proactive measures 
to develop and implement appropriate, cost-effective management 
controls. Such controls guarantee neither the success of agency 
programs, nor the absence of waste, fraud, and mismanagement, but they 
are a means of managing the risk associated with Federal programs and 
operations. To help ensure that controls are appropriate and cost-
effective, agencies should consider the extent and cost of controls 
relative to the importance and risk associated with a given program.
    Standards. Agency managers should incorporate basic management 
controls in the strategies, plans, guidance and procedures that govern 
their programs and operations. Controls should be consistent with the 
following standards, which are drawn in large part from the ``Standards 
for Internal Control in the Federal Government,'' issued by the General 
Accounting Office (GAO).
    General management control standards are:
     Compliance With Law. All program operations, obligations 
and costs must comply with applicable law. Resources 
[[Page 13487]] should be efficiently and effectively allocated for duly 
authorized purposes.
     Reasonable Assurance and Safeguards. Management controls 
must provide reasonable assurance that assets are safeguarded against 
waste, loss, unauthorized use, and misappropriation. Management 
controls developed for agency programs should be logical, applicable, 
reasonably complete, and effective and efficient in accomplishing 
management objectives.
     Integrity, Competence, and Attitude. Managers and 
employees must have personal integrity and are obligated to support the 
ethics programs in their agencies. The spirit of the Standards of 
Ethical Conduct requires that they develop and implement effective 
management controls and maintain a level of competence that allows them 
to accomplish their assigned duties. Effective communication within and 
between offices should be encouraged.
    Specific management control standards are:
     Delegation of Authority and Organization. Managers should 
ensure that appropriate authority, responsibility and accountability 
are delegated to accomplish the mission of the organization, and that 
an appropriate organizational structure is established to effectively 
carry out program responsibilities. To the extent possible, controls 
and related decision-making authority should be in the hands of line 
managers and staff.
     Separation of Duties and Supervision. Key duties and 
responsibilities in authorizing, processing, recording, and reviewing 
official agency transactions should be separated among individuals. 
Managers should exercise appropriate oversight to ensure individuals do 
not exceed or abuse their assigned authorities.
     Access to and Accountability for Resources. Access to 
resources and records should be limited to authorized individuals, and 
accountability for the custody and use of resources should be assigned 
and maintained.
     Recording and Documentation. Transactions should be 
promptly recorded, properly classified and accounted for in order to 
prepare timely accounts and reliable financial and other reports. The 
documentation for transactions, management controls, and other 
significant events must be clear and readily available for examination.
     Resolution of Audit Findings and Other Deficiencies. 
Managers should promptly evaluate and determine proper actions in 
response to known deficiencies, reported audit and other findings, and 
related recommendations. Managers should complete, within established 
timeframes, all actions that correct or otherwise resolve the 
appropriate matters brought to management's attention.
    Other policy documents may describe additional specific standards 
for particular functional or program activities. For example, OMB 
Circular No. A-127, ``Financial Management Systems,'' describes 
government-wide requirements for financial systems. The Federal 
Acquisition Regulations define requirements for agency procurement 
activities.

III. Assessing and Improving Management Controls

    Agency managers should continuously monitor and improve the 
effectiveness of management controls associated with their programs. 
This continuous monitoring, and other periodic evaluations, should 
provide the basis for the agency head's annual assessment of and report 
on management controls, as required by the FMFIA. Agency management 
should determine the appropriate level of documentation needed to 
support this assessment.
    Sources of Information. The agency head's assessment of management 
controls can be performed using a variety of information sources. 
Management has primary responsibility for monitoring and assessing 
controls, and should use other sources as a supplement to--not a 
replacement for--its own judgment. Sources of information include:
     Management knowledge gained from the daily operation of 
agency programs and systems.
     Management reviews conducted (i) expressly for the purpose 
of assessing management controls, or (ii) for other purposes with an 
assessment of management controls as a by-product of the review.
     IG and GAO reports, including audits, inspections, 
reviews, investigations, outcome of hotline complaints, or other 
products.
     Program evaluations.
     Audits of financial statements conducted pursuant to the 
Chief Financial Officers Act, as amended, including: information 
revealed in preparing the financial statements; the auditor's reports 
on the financial statements, internal controls, and compliance with 
laws and regulations; and any other materials prepared relating to the 
statements.
     Reviews of financial systems which consider whether the 
requirements of OMB Circular No. A-127 are being met.
     Reviews of systems and applications conducted pursuant to 
the Computer Security Act of 1987 and OMB Circular No. A-130, 
``Management of Federal Information Resources.''
     Annual performance plans and reports pursuant to the 
Government Performance and Results Act.
     Reports and other information provided by the 
Congressional committees of jurisdiction.
     Other reviews or reports relating to agency operations, 
e.g. for the Department of Health and Human Services, quality control 
reviews of the Medicaid and Aid to Families with Dependent Children 
programs.
    Use of a source of information should take into consideration 
whether the process included an evaluation of management controls. 
Agency management should avoid duplicating reviews which assess 
management controls, and should coordinate their efforts with other 
evaluations to the extent practicable.
    If a Federal manager determines that there is insufficient 
information available upon which to base an assessment of management 
controls, then appropriate reviews should be conducted which will 
provide such a basis.
    Identification of Deficiencies. Agency managers and employees 
should identify deficiencies in management controls from the sources of 
information described above. A deficiency should be reported if it is 
or should be of interest to the next level of management. Agency 
employees and managers generally report deficiencies to the next 
supervisory level, which allows the chain of command structure to 
determine the relative importance of each deficiency.
    A deficiency that the agency head determines to be significant 
enough to be reported outside the agency (i.e. included in the annual 
FMFIA report to the President and the Congress) should be considered a 
``material weakness.'' This designation requires a judgment by agency 
managers as to the relative risk and significance of deficiencies. 
Agencies may wish to use a different term to describe less significant 
deficiencies, which are reported only internally in an agency. In 
identifying and assessing the relative importance of deficiencies, 
particular attention should be paid to the views of the agency's IG.
    Agencies should carefully consider whether systemic problems exist 
that adversely affect management controls across organizational or 
program lines. The Chief Financial Officer, the Senior Procurement 
Executive, the Senior IRM Official, and the managers of other 
[[Page 13488]] functional offices should be involved in identifying and 
ensuring correction of systemic deficiencies relating to their 
respective functions.
    Agency managers and staff should be encouraged to identify and 
report deficiencies, as this reflects positively on the agency's 
commitment to recognizing and addressing management problems. Failing 
to report a known deficiency would reflect adversely on the agency.
    Role of Senior Management Council. Many agencies have found that a 
senior management council is a useful forum for assessing and 
monitoring deficiencies in management controls. The membership of such 
councils generally includes both line and staff management; 
consideration should be given to involving the IG. Such councils 
generally recommend to the agency head which deficiencies are deemed to 
be material to the agency as a whole, and should therefore be included 
in the annual FMFIA report to the President and the Congress. (Such a 
council need not be exclusively devoted to management control issues.) 
This process will help identify deficiencies that although minor 
individually, may constitute a material weakness in the aggregate. Such 
a council may also be useful in determining when sufficient action has 
been taken to declare that a deficiency has been corrected.

IV. Correcting Management Control Deficiencies

    Agency managers are responsible for taking timely and effective 
action to correct deficiencies identified by the variety of sources 
discussed in Section III. Correcting deficiencies is an integral part 
of management accountability and must be considered a priority by the 
agency.
    The extent to which corrective actions are tracked by the agency 
should be commensurate with the severity of the deficiency. Corrective 
action plans should be developed for all material weaknesses, and 
progress against plans should be periodically assessed and reported to 
agency management. Management should track progress to ensure timely 
and effective results. For deficiencies that are not included in the 
FMFIA report, corrective action plans should be developed and tracked 
internally at the appropriate level.
    A determination that a deficiency has been corrected should be made 
only when sufficient corrective actions have been taken and the desired 
results achieved. This determination should be in writing, and along 
with other appropriate documentation, should be available for review by 
appropriate officials. (See also role of senior management council in 
Section III.)
    As managers consider IG and GAO audit reports in identifying and 
correcting management control deficiencies, they must be mindful of the 
statutory requirements for audit followup included in the IG Act, as 
amended. Under this law, management has a responsibility to complete 
action, in a timely manner, on audit recommendations on which agreement 
with the IG has been reached. 5 U.S.C. Appendix 3. (Management must 
make a decision regarding IG audit recommendations within a six month 
period and implementation of management's decision should be completed 
within one year to the extent practicable.) Agency managers and the IG 
share responsibility for ensuring that IG Act requirements are met.

V. Reporting on Management Controls

    Reporting Pursuant to Section 2. 31 U.S.C. 3512(d)(2) (commonly 
referred to as Section 2 of the FMFIA) requires that annually by 
December 31, the head of each executive agency submit to the President 
and the Congress (i) a statement on whether there is reasonable 
assurance that the agency's controls are achieving their intended 
objectives; and (ii) a report on material weaknesses in the agency's 
controls. OMB may provide guidance on the composition of the annual 
report.
     Statement of Assurance. The statement on reasonable 
assurance represents the agency head's informed judgment as to the 
overall adequacy and effectiveness of management controls within the 
agency. The statement must take one of the following forms: statement 
of assurance; qualified statement of assurance, considering the 
exceptions explicitly noted; or statement of no assurance.
    In deciding on the type of assurance to provide, the agency head 
should consider information from the sources described in Section III 
of this Circular, with input from senior program and administrative 
officials and the IG. The agency head must describe the analytical 
basis for the type of assurance being provided, and the extent to which 
agency activities were assessed. The statement of assurance must be 
signed by the agency head.
     Report on Material Weaknesses. The FMFIA report should 
include agency plans to correct the material weaknesses and progress 
against those plans.
    Reporting Pursuant to Section 4. 31 U.S.C. 3512 (d)(2)(B) (commonly 
referred to as Section 4 of the FMFIA) requires an annual statement on 
whether the agency's financial management systems conform with 
government-wide requirements. These financial systems requirements are 
presented in OMB Circular No. A-127, ``Financial Management Systems,'' 
section 7. If the agency does not conform with financial systems 
requirements, the statement should discuss the agency's plans for 
bringing its systems into compliance.
    If the agency head judges a deficiency in financial management 
systems and/or operations to be material when weighed against other 
agency deficiencies, the issue should be included in the annual FMFIA 
report in the same manner as other material weaknesses.
    Distribution of FMFIA Report. The assurance statements and 
information related to both Sections 2 and 4 should be provided in a 
single FMFIA report. Copies of the report should be transmitted to the 
President; the Director of OMB; the President of the Senate; the 
Speaker of the House of Representatives; and the Chairpersons and 
Ranking Members of the Senate Committee on Governmental Affairs, the 
House Committee on Government Operations, and the relevant authorizing 
and appropriations committees and subcommittees. In addition, 10 copies 
of the report should be provided to OMB's Management Integrity Branch.
    Government Corporations. Section 306 of the Chief Financial 
Officers Act established a reporting requirement related to management 
controls for corporations covered by the Government Corporation and 
Control Act. 31 U.S.C. 9106. These corporations must submit an annual 
management report to the Congress not later than 180 days after the end 
of the corporation's fiscal year. This report must include, among other 
items, a statement on control systems by the head of the management of 
the corporation consistent with the requirements of the FMFIA.
    The corporation is required to provide the President, the Director 
of OMB, and the Comptroller General a copy of the management report 
when it is submitted to Congress.

[FR Doc. 95-6024 Filed 3-10-95; 8:45 am]
BILLING CODE 3110-01-P