# Presentation: 676642

## Federal Financial Reporting Update:  Strengthening Processes and Controls David M. ZavadaOffice of Management and BudgetApril 2005

## Accelerated Financial Reporting 

Internal Control Initiatives

On the Horizon 

- Accelerated Financial Reporting
- Internal Control Initiatives
- On the Horizon

## Accelerated Financial Reporting

## Accelerated Reporting: A Significant Accomplishment in 2004

- Agency PARs by November 15th
- Government-wide Financial Report by December 15th
- Quarterly Statements in 21 Days
- Improvements in Underlying Processes and Disciplines/Better Planning
- Driving More Timely and Accurate Financial Information

## Progress From 2002 to 2004

- 2003

- 2002

- 2004

## Building on Accelerated Reporting Success

- Refining New Processes and Disciplines
- CFO Council Acceleration Committee
-  Agency to Treasury Processes
-  Accounting for Intragovernmental Transactions
- Even greater focus on Internal Control over Financial Reporting

## Strengthening Internal Control Over Financial Reporting

## Internal Control Improvement Initiatives

- Policy Revisions to OMB Circular A-123, Appendix A
- Quarterly Monitoring of Internal Control Weaknesses Under PMA

## Why Did OMB Revise Circular A-123?

- PMA Goal - - More Timely and Accurate Financial Reporting
- Build a Capacity to Generate Reliable Financial Information _Throughout the Year_
- Sarbanes-Oxley Changes impetus for CFOC/PCIE Review

## Is this Sarbanes-Oxley for the Federal Government?

- SOX/PCAOB Requirements Were a Model
- Management Assessment/Assurance Similar
- Baseline of Requirements/Environment Different
- Separate Audit Required Only Under Certain Circumstances

## Circular A-123, Appendix A Emphasizes

- Management’s Responsibility
- A Coordinated Approach
- Direct Testing and Documentation
- New Assurance Statement

## Important Management Judgments Necessary 

- Senior Assessment Team
- Project Management
- Scope of Financial Reporting
- Materiality/Risk Areas
- Key Processes and controls
- Extent of Work at Major Components/Locations

## Seeking Efficiencies:Related Baseline Activities

- FMFIA - - Overall Assurance/Remediation
- FISMA - - IT Security Review/Remediation
- IPIA  - -Assessment/Remediation
- Remediation Activities - - New Controls/ Corrective Actions
- Other Program Review Activities

## A-123 Reporting Requirements

- Assurance as of June 30th
- Updated Assurance in PAR (November)
- Three Types of Assurance Statements
- Report Material Weaknesses in Statement
- Summary of Corrective Actions
- More Reporting/Corrective Action Plan Guidance to Follow

## Management/Auditor Interaction:Planning the Assessment

- IG Representation on the Senior Assessment Team
- Consult with IG/IPA in Planning Phase
- Discuss Key Planning Decisions
- Processes Documentation
- Pursue Efficiencies with Financial Audit

## Ongoing Audit Work(As Part of a Financial Audit) 

- Testing of Internal Controls
- Reporting of Material Weaknesses
- Reporting Non-compliance

## Ongoing Monitoring Under the PMA Scorecard

- Quarterly Scorecard Monitors Internal Control Weaknesses
- Corrective Actions Reviewed
- Plan Score Related to Progress
- No Weaknesses to Get to Green Status Score

## More “Green” AgenciesStatus Scores

## On the Horizon

## A-123 Follow-On Activities Underway

- CFOC/PCIE Ongoing Participation
- A-123 Implementation Guide
- Studying Costs/Benefits of a Separate Audit
- Continued Training and Outreach

## Revisions to OMB Circular A-136Federal Financial Reporting Requirements

- One-stop Shopping for Federal Financial Reporting Guidance (December 2004)
- Revisions continue to Consolidate/streamline guidance within A-136
- Two-Part Circular
- Part A - - PAR Reporting Guidance
- Part B - - Government-wide Reporting Guidance
- Sensitive to Minimizing changes for Current Year
- Use the OFFM Website at www.omb.gov

## Focusing on Strengthening Processes and Control
Accelerating Reporting a Significant step
A-123 Revision is Another Milestone
Continue to Consolidate and Streamline our Guidance
Timely and Reliable Financial Information to Manage Program Costs is the Goal 

- Focusing on Strengthening Processes and Control
- Accelerating Reporting a Significant step
- A-123 Revision is Another Milestone
- Continue to Consolidate and Streamline our Guidance
- Timely and Reliable Financial Information to Manage Program Costs is the Goal

## Questions