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OMB Bulletin No. 98-04

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|T H E   W H I T E   H O U S E                                          | OMB Bulletin No. 98-04        | Help

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|January 16, 1998 
 
 
BULLETIN NO. 98-04 
 
TO THE HEADS AND INSPECTORS GENERAL OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS 
 
SUBJECT: Addendum to OMB Bulletin No. 93-06 
 
1. Purpose. This Addendum revises Office of Management and Budget (OMB) Bulletin 93-06, "Audit 
Requirements for Federal Financial Statements," to amend the reporting requirements generally and to 
implement the reporting requirements of the Federal Financial Management Improvement Act (FFMIA) 
of 1996 (Public Law 104-208). 
 
2. Addendum: 
 
a. Paragraph 7.c.(3) is amended by adding a subparagraph "(c)" that reads as follows: 
 
"For compliance with the Federal Financial Management Improvement Act (FFMIA) of 1996, the 
auditor is required to perform sufficient tests to report whether the reporting entity's financial 
management systems substantially comply with the Federal financial management systems requirements, 
applicable accounting standards, and the United States Standard General Ledger at the transaction 
level. To meet this requirement, the auditor's report shall state the. auditor's reporting requirement and 
that the auditor performed tests of compliance using the implementation guidance for FFMIA issued by 
OMB on September 9, 1997. Further, the auditor shall report instances where the reporting entity's 
systems did not substantially comply with the Federal financial management systems requirements, 
applicable accounting standards, and the United States Standard General Ledger at the transaction level 
or that the tests disclosed no instances where such systems did not substantially comply with these 
systems requirements. Where tests disclosed that the reporting entity's systems did not substantially 
comply with the foregoing requirements, the auditor'.s report on compliance shall:(i) Identify the entity or organization responsible for the financial management systems that were found 
not to comply with the requirements. 
 
(ii) Include all facts pertaining to the noncompliance, including: 
 
(A) the nature and extent of the noncompliance; 
 
(B) the primary reason or cause of the noncompliance; and 
 
(C) any relevant comments from reporting entity management or employees responsible for the 
noncompliance. 
 
(iii) Provide recommended remedial actions and the time frames to implement such actions." 
 

b. Appendix B is amended to include FFMIA and OMB Memorandum M-97-13, "Computer 
Difficulties Due to the Year 2000 -- Progress Reports," dated May 7, 1997. 
 
c. Paragraph 7.c.(3) is amended by adding a subparagraph "(d)" that reads as 
 
"The auditor's report on compliance shall state whether or not providing an opinion on compliance was 
an objective of the audit."d. Appendix C is added to provide illustrative auditor reporting guidance. Use of this reporting 
language is not required. It is provided to assist the auditor in reporting in accordance with the 
1994 revision of Government Auditing Standards and this Addendum. 
 
3 . Effective Date. This Addendum is effective for audits of Federal financial statements as of and for 
the year ended September 30, 1997. 
 
4. Inquiries. Further information regarding this Addendum may be obtained by contacting the Office of 
Federal Financial Management, OMB, Washington, DC 20503, telephone (202) 395-3993. 
 
Franklin D. RainesDirector 
 
Attachment 
 
**APPENDIX C** 
 
**Illustrative Auditor Reporting on Compliance with Laws and Regulations based on an** **Audit of 
Federal Financial Statements Performed in Accordance with OMB Bulletin 93-06, "Audit 
Requirements for Federal Financial Statements," as Amended** 
 
[Addressee] 
 
We have audited the financial statements of [Name of Federal Agency] as of and for the year ended 
September 30, 19xx, and have issued our report thereon dated March 1, xxxx. We conducted our 
audit in accordance with: generally accepted auditing standards; the standards applicable to financial 
audits contained in Government Auditing Standards, issued by the Comptroller General of the United 
States; and, Office of Management and Budget (OMB) Bulletin No. 93-06, "Audit Requirements for 
Federal Financial Statements," as amended. 
 
The management of [Name of Federal Agency] is responsible for complying with laws and regulations 
applicable to the agency. As part of obtaining reasonable assurance about whether the agency's financial 
statements are free of material misstatement, we performed tests of its compliance with certain 
provisions of laws and regulations, noncompliance with which could have a direct and material effect on 
the determination of financial statement amounts and certain other laws and regulations specified in 
OMB Bulletin 93-06, as amended, including the requirements referred to in the Federal Financial 
Management Improvement Act (FFMIA) of 1996. 
 
The results of our tests of compliance with the laws and regulations described in the preceding 
paragraph disclosed instances of noncompliance with the following laws and regulations that are 
required to be reported under Government Auditing Standards and OMB Bulletin 93-06, which are 
described below [or in an accompanying schedule]. 
 
List laws and regulations for which noncompliance was disclosed exclusive of FFMIA1/ 
 
The results of our tests of compliance disclosed no instances of noncompliance with other laws and 
regulations discussed in the preceding paragraph. 
 
Under FFMIA, we are required to report whether the agency's financial management systems 
substantially comply with the Federal financial management systems requirements, applicable accounting 
standards, and the United States Standard General Ledger at the transaction level. To meet this 
requirement, we performed tests of compliance using the implementation guidance for FFMIA issued by 
OMB on September 9, 1997. 
 
The results of our tests disclosed no instances where the agency's financial management systems did not 
substantially comply with the three requirements discussed in the preceding paragraph. 
 
[If the results of tests disclosed that the agency's systems did not substantially comply with the 
foregoing requirements, the preceding sentence should be replaced with the following:"The results of our tests disclosed instances, described below (or described. in an accompanying 
schedule), where the agency's financial management systems did not substantially comply with the three 
requirements discussed in the preceding paragraph."In addition, when tests disclosed that the agency's systems did not substantially comply with the 
*foregoing requirements, the auditor's report on compliance or an accompanying schedule* *should 
provide the following information as required by FFMIA and paragraph. 7.c. (3)(c) of this* 
*Bulletin.* 
 
1. The entity or organization responsible for the financial management systems that were *found 
not to comply with the requirements. 
 
2. All facts pertaining to the noncompliance, including: (a) the nature and extent of the* 
*noncompliance, (b) the primary reason or cause of the noncompliance, and (c) any* *relevant 
comments from reporting entity management or employees responsible for the noncompliance. 
 
3. Recommended remedial actions and the time frames to implement such actions.]* 
 
Providing an opinion on compliance with certain provisions of laws and regulations was not an objective 
of our audit and, accordingly, we do not express such an opinion.2/ This report is intended for the 
information of the management of [Name of Federal Agency]. However, this report is a matter of public 
record, and its distribution is not limited. 
 

1/ FFMIA does not impose any compliance requirements; rather, it requires reporting of substantial 
noncompliance with requirements contained in government-wide policies, e.g., OMB Circular A- 1 27, 
"Financial Management Systems;" Statements of Federal Financial Accounting Standards; and the 
United States Standard General Ledger published by the Department of the Treasury. 
2/ If the objective is to express an opinion on the agency's compliance with laws and regulations, the 
auditor should follow Statement on Standards for Attestation Engagements No. 3, "Compliance 
Attestation," issued by the American Institute of Certified Public Accountants. 
 



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