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Reports Management Processes

By Harold Phillips,2014-05-18 00:22
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Reports Management Processes

    Appendix I Financial Management Laws

    and Regulations

    Federal Statutes:

    Appropriations Law

    Fundamental, long-standing statutes deal with the appropriation of monies to agencies from

    Congress, including the appropriate use and control of these monies. These statutes deal with the

    purpose, amount, and time of appropriations, as well as the availability of the associated monies.

    The following summary provides specific citations to these statutes, their common names, and

    their requirements.

    Federal Managers Financial Integrity Act of 1982 The Federal Managers Financial Integrity Act (FMFIA) of 1982 amended the Accounting and

    Auditing Act of 1950 to require ongoing evaluations and reports of the adequacy of the systems

    of internal accounting and administrative control of each executive agency. FMFIA is comprised

    of two parts. Office of Management and Budget (OMB) Circular A-123, Managements

    Responsibility for Internal Control (Effective beginning with Fiscal Year 2006) (Revised

    December 21, 2004), is the primary vehicle for implementing FMFIA in the executive branch

    and describes internal control requirements. Agencies are also required to report annually on

    whether the agency accounting system complies with OMB A-127.

    The FMFIA requires agency heads to establish controls that reasonably ensure:

    ? Obligations and costs are in compliance with applicable law

    ? Funds, property, and other assets are safeguarded against waste, loss, unauthorized

    use, or misappropriation

    ? Revenues and expenditures are recorded and accounted for properly. (OMB revised Circular A-123 in 1995 to incorporate ideas from subsequent management

    legislation, such as the Chief Financial Officers Act.) The Circular provides guidance on

    improving the accountability and effectiveness of Federal programs and operations by

    establishing and reporting on management controls.

    Chief Financial Officers Act of 1990 and Government Management Reform Act of 1994

    The Chief Financial Officers (CFO) Act of 1990 laid the foundation for significant financial

    management reform in the Federal government. The Act emphasizes strong financial leadership,

    improved systems of accounting, financial management and internal control, and reliable

    financial information. A key element of the Act is the requirement for Federal agencies to

    produce audited financial statements. The Government Management Reform Act of 1994

    (GMRA) expanded financial statement audit coverage to include department-wide and

    Government-wide audited financial statements.

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The CFO Act mandates three actions:

    ? Strong financial management leadership: The CFO Act established, in OMB, the

    Deputy Director for Management and the Office of Federal Financial Management,

    and created chief financial officer positions in major agencies to provide financial

    management direction

    ? Enhanced financial management systems: The CFO Act mandates that agency CFOs

    develop and maintain agency financial management systems that comply with

    applicable accounting principles, standards, and requirements; internal control

    standards; and requirements of OMB and Treasury

    ? Improved financial information: By requiring agency CFOs to maintain systems that

    report cost information, integrate accounting and budgeting, and systematically

    measure performance, the CFO Act emphasizes improved reliability and usefulness

    of agency financial information. Most importantly, the CFO Act requires that

    financial statements be prepared and audited.

    Government Performance and Results Act of 1993

    The Government Performance and Results Act (GPRA) of 1993 holds Federal agencies

    accountable for achieving program results and requires them to identify missions, set goals,

    measure performance, and report on their accomplishments.

    Under GPRA, each Federal agency must develop and submit a multi-year strategic plan, which

    contains the agencys mission statements and long-term strategic goals. Agencies must also

    submit annual performance plans, which include performance goals linked to the budget and

    indicators of how performance will be measured. Annual performance reports, also required

    under the Act, provide information on the extent to which the agency met its annual performance

    goals.

    Federal Financial Management Improvement Act of (FFMIA) of 1996

    The FFMIA of 1996 requires agencies to implement and maintain systems that substantially

    comply with (1) Federal accounting standards, (2) the USSGL at the transaction level, and

    (3) Federal financial management systems requirements. In addition, the FFMIA requires

    agencies auditors to report whether agency systems comply with FFMIAs systems

    requirements. Agencies that determine their systems do not substantially comply must develop

    and submit remediation plans to OMB.

    To comply with Federal financial management system requirements, OMB implementation

    guidance requires that systems meet the Circular A-127 requirements, Joint Financial

    Management Improvement Program (JFMIP)s Federal Financial Management Systems

    Requirements, and Circular A-130, Appendix III. Debt Collection Act of 1982 and Debt Collection Improvement Act of 1996

    The Debt Collection Improvement Act (DCIA) is an extension of the Debt Collection Act. The

    purpose of these Acts is to require proper collection of debts, to authorize the compromise or

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    suspension of some debts, and to authorize the use of certain collection tools that are available in the private sector. The use of electronic payment and offset methods is required. Federal Information Security Management Act (FISMA) of 2002 (Public Law 107-347, Title III) The FISMA reiterates security requirements contained in existing OMB policies and in Federal laws such as the Computer Security Act of 1987, the Paper Reduction Act of 1995, and Clinger-Cohen Act of 1996. The Act mandates that Federal agencies implement an information security program and designate a senior information security officer. FISMA also established evaluation and reporting requirements that requires each agency to report any significant deficiencies and an information security policy, procedure, or practice.

    Reports Consolidation Act of 2000

    This Act gives OMB the authority to combine financial reports to the President and Congress that contain performance and accountability information.

    Clinger-Cohen Act (CCA) - The Information Technology Management Reform Act of 1996

    This Act provides that the Government information technology shop be operated exactly as an efficient and profitable business would be operated. Acquisition, planning, and management of technology must be treated as a “capital investment.” While the law is complex, all consumers of hardware and software in the Department should be aware of the Chief Information Officers

    leadership in implementing this statute.

    Economy Act (31 U.S.C. ? 1535)

    The Economy Act permits the head of an agency or major organizational unit to place an Order with a major organizational unit within the same agency or another agency for goods or services if amounts are available, it is in the best interest of the Federal government, the Seller is able to provide the requested goods or services, and the goods or services cannot be provided by contract as conveniently or cheaply by a commercial enterprise.

    The amount obligated by the Buyer is deobligated to the extent that the Seller has not incurred obligations, before the end of the period of availability of the appropriation. The obligations by the Seller may be in providing the goods or services, or establishing a contract with a third party to provide the requested goods or services.

    Regulatory Guidance:

    OMB Circular A-11, Preparation, Submission, and Execution of the Budget (June 30, 2006) Preparing, Submitting, and Executing the Budget (Revised July 25, 2003)

    OMB made major revisions to Circular A-11 that merged the budget formulation and execution guidance to reinforce the requirement for agencies to integrate budget and performance and to improve the quality of their financial information. In addition, A-11 contains new guidance on managing physical and financial assets.

    OMB Circular A-25, User Charges

    The Circular:

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    ? Establishes Federal policy regarding fees assessed for Government services and for

    sale or use of Government goods or resources

    ? Provides information on the scope and types of activities subject to user charges and

    on the basis upon which user charges are to be set

    ? Provides guidance for agency implementation of charges and the disposition of

    collections.

    OMB Circular A-123, Managements Responsibility for Internal Control (Effective beginning

    with Fiscal Year 2006) (Revised December 21, 2004), Management Accountability and Control

    (or Successor Documents) (June 21, 1995)

    This Circular, which is the primary OMB guidance for FMFIA, is described in the section that

    relates to that act.

    Prompt Payment Final Rule (Formerly OMB Circular A-125, Prompt Payment) (September 29,

    1999)

    The Final Rule, the primary OMB guidance for Prompt Payment Act, is described in the section

    related to the specific act.

    OMB Circular A-127, Financial Management Systems (July 23, 1993), Financial Management

    Systems (or Successor Documents) (July 23, 1993)

    This Circular augments FFMIA by specifically mandating that Federal Agencies implement

    integrated core accounting and financial management systems. To be fully integrated, the system

    must address:

    ? Standard data classification (both data and format)

    ? Common processes for handling similar accounting events

    ? Consistent internal control mechanisms

    ? Elimination of duplicate transaction entry.

    Circular A-127 also prescribes policies and standards for agencies to follow in developing,

    operating, evaluating, and reporting on financial management systems generally. It incorporates,

    by reference, Circulars A-123 and A-130, as well as all Federal financial management systems

    requirements published by JFMIP.

    OMB Circular A-129, Managing Federal Credit Programs (November 2000)

    This Circular prescribes policies and procedures for justifying, designing, and managing Federal

    credit programs, and for collecting non-tax receivables. It sets principles for designing credit

    programs, including:

    ? Preparation and review of legislation and regulations

    ? Budgeting for the costs of credit programs and minimizing unintended costs to the

    Government

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    ? Improving the efficiency and effectiveness of Federal credit programs.

    Circular A-129 also sets standards for extending credit, managing lenders participating in

    Government guaranteed loan programs, servicing credit and non-tax receivables, and collecting

    delinquent debt.

    OMB Circular A-130, Management of Federal Information Resources (November 28, 2000)

    OMB reissued Circular A-130 in revised form in December 2000 as Transmittal Memorandum

    No. 4. The expanded version of Circular A-130 provides guidance on the Paperwork Reduction

    Act, the Clinger-Cohen Act, the CFO Act, and others. This includes the requirement for all

    electronic systems, including financial management systems, to have a defined association with

    the agencys enterprise architecture.

    The Circular provides specific guidance on collecting and managing information and records

    management, including:

    ? Electronic information collection

    ? Provision of information to the public

    ? Information dissemination systems

    ? Information safeguards.

    It further mandates agencies to establish a capital planning and investment control (CPIC)

    process that links information technology investments to improved mission performance. The

    CPIC also establishes the links among agency processes, including strategic planning, IT

    planning, enterprise architecture integration, performance planning, financial management

    planning pursuant to the Chief Financial Officers Act of 1990, and budget formulation and

    execution. Specifically, sections of

    A-130 cover these four areas:

    ? Capital planning and investment control processes must be followed and

    documented by all agencies. These processes, stemming from Clinger-Cohen, must

    integrate Information Resource Management (IRM) strategic and performance plans,

    financial management plans, the agencys IT enterprise architecture, and its budget.

    The agencys process for CPIC should include an IRM strategic plan, an IT capital

    plan, and an IT investment portfolio as described in OMB Circular A-11, Preparation,

    Submission and Execution of the Budget (June 30, 2006), Preparation, Submission

    and Execution of the Budget (June 30, 2006), the annual budget circular.

    ? Enterprise architecture framework and planning processes require an agency to

    document and submit to OMB its current and target IT architecture and related

    support strategies, transition roadmaps, and IT and security standards, as well as a

    summary of the information services used throughout the Agency. The enterprise

    architecture framework anticipated by A-130 is driven by the business needs of the

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    agency and is composed of layers complying with the FEAF developed by the CIO 1Council.

    ? Ensuring security in information systems is accomplished by explicitly

    incorporating security into the enterprise architecture and life-cycle planning for

    systems, and ensuring that security supports the agencys business operations. The

    agencys security plan must comply with the Federal Information Security

    Management Act (Public Law 107-347); Title III; policies and procedures outlined in

    Appendix III to A-130, Security of Federal Automated Information Resources; and

    the National Institute of Standards and Technology (NIST) requirements. Independent

    advice and comment on the security plan must be solicited prior to the plans

    implementation.

    ? Information technology acquisition requires the use of adequate competition in

    contracting, allocating the Intragovernmental Solution between the government and

    the contractor, and maximizing the return on investment. Major information systems

    should be structured into useful segments with narrow scope and brief duration. Off-

    the-shelf software should be used unless analysis clearly documents other approaches

    are more effective.

    U.S. Government Accountability Office (GAO) Red Book

    The GAO Red Book is an appropriations law resource, officially entitled Principles of Federal

    Appropriations Law including its annual update. The Red Book serves as a detailed fiscal law

    guide covering those areas of law in which the Comptroller General renders decisions. The Red

    Book describes existing legal authorities to illustrate the principles discussed, their application,

    and exceptions.

    Intragovernmental Transactions Accounting Policies Guide

    The Intragovernmental Transactions Accounting Policies Guide, updated on August 15, 2008

    provides government-wide policies for federal program agencies to account for and reconcile

    transactions occurring within and between each other. The guide provides accounting policies

    relative to Intragovernmental transactions, tools to facilitate reconciliation, and a basis for the

    elimination of Intragovernmental balances. Statements of Federal Financial Accounting Standards (SFFAS)

    The Federal Accounting Standard Advisory Board (FASAB) was created in 1990 to develop and

    recommend Statements of Federal Financial Accounting Standards (SFFASs) for use by the

    Federal government. The growing body of SFFAS issued by FASAB is considered to be

    generally accepted accounting principles for Federal government entities.

    The accounting standards that have resulted from FASABs work are central to effectively meeting financial management improvement goals of the CFO Act and other legislation. In

    particular, FASABs standards for managerial cost accounting, as described in SFFAS 4, are a

1 The FEAF layers describe and link business processes, information flows, applications, data descriptions and

    relationships, and technology infrastructure.

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primary source of guidance. This and other FASAB standards foster financial information and

    reporting that is understandable, relevant, and reliable concerning the financial position,

    activities, and results of operations for the Federal government and its departments and agencies.

    Furthermore, the standards prescribe accounting systems and internal control that help

    demonstrate that Federal programs are conducted in compliance with laws and regulations.

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