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[House Report 108-533]
[From the U.S. Government Publishing Office]

108th Congress                                            Rept. 108-533
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1
======================================================================

 
      DEPARTMENT OF HOMELAND SECURITY FINANCIAL ACCOUNTABILITY ACT

                                _______
                                

                  June 9, 2004.--Ordered to be printed

                                _______
                                

  Mr. Tom Davis of Virginia, from the Committee on Government Reform, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 4259]

     [Including cost estimates of the Congressional Budget Office]

    The Committee on Government Reform, to whom was referred 
the bill (H.R. 4259) to amend title 31, United States Code, to 
improve the financial accountability requirements applicable to 
the Department of Homeland Security, to establish requirements 
for the Future Years Homeland Security Program of the 
Department, and for other purposes, having considered the same, 
report favorably thereon without amendment and recommend that 
the bill do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................     2
Section-by-Section...............................................     5
Explanation of Amendments........................................     7
Committee Consideration..........................................     7
Rollcall Votes...................................................     7
Correspondence...................................................     7
Application of Law to the Legislative Branch.....................     8
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................     8
Statement of General Performance Goals and Objectives............     9
Constitutional Authority Statement...............................     9
Federal Advisory Committee Act...................................     9
Unfunded Mandate Statement.......................................     9
Committee Estimate...............................................     9
Budget Authority and Congressional Budget Office Cost Estimate...     9
Changes in Existing Law Made by the Bill, as Reported............    10

                     Committee Statement and Views

                          PURPOSE AND SUMMARY

    The Chief Financial Officers Act (CFO) of 1990, P.L. 101-
576, is the cornerstone of federal financial management reform. 
The CFO Act established a leadership structure for federal 
financial management within the 24 largest departments and 
agencies as well as the Office of Management and Budget (OMB) 
by creating CFO's for all 24 major executive departments. Of 
the 15 cabinet-level departments, the Department of Homeland 
Security (DHS) is the only one not currently subject to the CFO 
Act.
    H.R. 4259 will ensure that the CFO at DHS: (1) is a 
presidential appointee subject to Senate confirmation, (2) 
reports directly to the Secretary and as amended as well to the 
Undersecretary for Management, and (3) is part of the 
statutorily created CFO Council. In addition, the bill ensures 
that DHS will comply with the Federal Financial Management 
Improvement Act of 1996 (enacted as Title VIII of the Omnibus 
Consolidated Appropriations for Fiscal Year 1997, P.L. 104-
208), which establishes important financial management systems 
requirements for the CFO Act agencies.
    Additionally, this legislation requires an opinion-level 
audit of DHS' internal controls. Currently, audit guidance from 
OMB requires a report on internal controls in conjunction with 
annual financial audits. Having an auditor issue an opinion on 
the internal controls report would help uncover inherent 
weaknesses and address problems as business practices are being 
established, before they become ingrained. Strong internal 
controls are essential to sound management.
    In addition, this legislation requires DHS to begin 
developing a Future Years Homeland Security Program and 
Homeland Security Strategy, and it authorizes the establishment 
of an Office of Program Analysis and Evaluation in the Office 
of the Chief Financial Officer to evaluate programs and 
operations in the Department.

                BACKGROUND AND NEED FOR THE LEGISLATION

    When legislation creating the Department of Homeland 
Security (DHS) was signed into law in November 2002 (P.L. 107-
296), the Office of the Chief Financial Officer (CFO) reported 
to the Under Secretary for Management, along with the Chief 
Information Officer (CIO) and the Chief Human Capital Officer 
(CHCO). The purpose of this structure was to create a 
comprehensive, centralized management directorate within the 
Department that would be responsible for all management-related 
activities within the Department. The Under Secretary for 
Management was to report directly to the Secretary, and then 
the CFO, CIO and CHCO were to be appointed by the Secretary and 
report to the Under Secretary for Management.
    Despite Congress's efforts to centralize the new 
Department's management functions within one office, not having 
a Senate-confirmed Chief Financial Officer that reported 
directly to the Secretary gave the appearance that financial 
management at DHS was of less importance than financial 
management at departments and agencies subject to the CFO Act. 
In addition, DHS was not subject to government-wide financial 
management laws such as the Federal Financial Management 
Improvement Act, discussed in the previous section.
    The standing of the Chief Financial Officer (CFO) within 
the agency management structure was a key consideration in 
crafting the CFO Act, P.L. 101-576. To that end, Senate 
confirmation and direct access to the Secretary were deemed 
essential.
    The CFO Act was designed to rectify weaknesses with the 
Federal Managers' Financial Integrity Act (the Integrity Act), 
P.L. 97-255, which was enacted in 1982 to address longstanding 
problems with financial management. The purpose of the 
Integrity Act was to improve internal controls and accounting 
practices. Years later, it was clear that this law had not 
improved financial performance as envisioned. The result was a 
five-year effort culminating in enactment of the CFO Act of 
1990. Among its key provisions, the CFO Act established: (1) 
the position of a CFO at all cabinet-level departments, 
appointed by the President and confirmed by the Senate, to 
report directly to the head of the agency, (2) the Offices of 
the Deputy Director for Management and Federal Financial 
Management within the Office of Management and Budget (OMB) 
along with the positions that head up these two offices, the 
Deputy Director for Management and the Controller, who are both 
appointed by the President and confirmed by the Senate, and (3) 
audits of annual financial statements at the CFO Act agencies, 
which began on a piloted basis in 1990 and were eventually 
expanded to all the accounts of the CFO Act agencies in 1996.
    The CFO Act is the foundation for agency financial 
management and the basis for other important legislation (i.e., 
the Government Management Reform Act, P.L. 103-356, and the 
Federal Financial Management Improvement Act, enacted as Title 
VIII of the Omnibus Consolidated Appropriations for Fiscal Year 
1997, P.L. 104-208, which is a key criterion of the President's 
Management Agenda); therefore, if the CFO Act is not applied to 
DHS, there is also no statutory requirement for compliance with 
these other important reforms. The CFO position is important to 
overall agency management and the CFO has a fiduciary 
responsibility to the agency head, to the federal government 
and to the taxpayers.
    Senate confirmation has its roots in Article II of the 
Constitution. Requiring that the President seek the advice and 
consent of the Senate for the confirmation of officers of the 
United States is a means to maintain a balance of power between 
the President and the Senate.

                          LEGISLATIVE HISTORY

    On July 24, 2003, Subcommittee on Government Efficiency and 
Financial Management Chairman Todd Platts (R-PA) introduced 
H.R. 2886, the ``Department of Homeland Security Financial 
Accountability Act,'' along with full Committee Chairman Tom 
Davis (R-VA) and Ranking Member Henry Waxman (D-CA), and 
Committee Members Marsha Blackburn (R-TN) and Edolphus Towns 
(D-NY). The bill was referred to the Government Reform 
Committee in addition to the Select Committee on Homeland 
Security.
    On September 10, 2003, the Government Efficiency 
Subcommittee held a hearing on the legislation entitled 
``Establishing Sound Business Practices at the Department of 
Homeland Security.'' The purpose of the hearing was to discuss 
financial management challenges at theDepartment as well as 
receive comments from the Administration regarding the proposed 
legislation. Witnesses at the hearing included OMB Controller Linda 
Springer, GAO Financial Management Director McCoy Williams, DHS Chief 
Financial Officer Bruce Carnes, and DHS Assistant Inspector General for 
Audit Richard Berman.
    On September 24, 2003, the Subcommittee on Government 
Efficiency and Financial Management held a business meeting to 
mark up H.R. 2886. The Subcommittee's Chairman, Representative 
Platts, offered an amendment in the nature of a substitute, 
which made the following changes to the bill: (1) removed the 
fiscal year 2003 waiver for DHS' compilation and audit of its 
financial statements, (2) delayed the requirement for DHS to 
obtain an audit opinion on its internal controls from fiscal 
year 2004 until fiscal year 2005, and (3) required the CFO 
Council and the President's Council on Integrity and Efficiency 
(PCIE) to complete a joint study on the potential costs and 
benefits of requiring all of the CFO Act agencies to obtain 
audit opinions of their internal controls over their financial 
reporting. The amendment in the nature of a substitute was 
adopted unanimously by voice vote.
    On October 30, 2003, the House Select Committee on Homeland 
Security marked up an amendment in the nature of a substitute 
to H.R. 2886, offered by Chairman Cox (R-CA), which 
incorporated the changes made at the Government Efficiency 
Subcommittee's markup. In addition to the changes included in 
Representative Platts' amendment, Chairman Cox's amendment at 
the Homeland Security Committee's markup also included the 
following changes to the Homeland Security Act: (1) required 
the Secretary to transmit to Congress a comprehensive report on 
the national homeland security strategy of the United States at 
the same time that the President submits his annual budget 
request to the Congress, (2) established an Office of Program 
Analysis and Evaluation whose purpose is to link financial 
management and budgeting with program analysis and evaluation, 
(3) stipulated that whenever DHS provides notice of 
reprogramming of appropriations to the Congress, the CFO must 
also notify both the House Select Committee on Homeland 
Security and the Senate Committee on Governmental Affairs, and 
(4) required the CFO in addition to reporting to the Secretary 
on financial management matters to report to the Under 
Secretary for Management with respect to the CFO's other 
responsibilities. A bipartisan majority of the members of the 
Committee were present, and Chairman Cox's amendment was 
adopted unanimously by voice vote and ordered to be reported 
favorably to the full House of Representatives.
    On November 6, 2003, the full Committee on Government 
Reform marked up the version of the legislation that was marked 
up at the Government Efficiency Subcommittee, without the 
additional changes made by the Select Committee. A bipartisan 
majority of the members of the Committee were present, and 
Subcommittee Chairman Platts' amendment was adopted unanimously 
by voice vote and ordered reported favorably to the full House 
of Representatives.
    On May 6, 2004, the House Committee on Government Reform 
again convened to consider the Department of Homeland Security 
Financial Accountability Act. The Committee laid on the table 
its previous order to report H.R. 2886 to the House and moved 
to consider H.R. 4259. H.R. 4259 was introduced by Government 
Efficiency Subcommittee Chairman Todd Platts (R-PA), along with 
Chairman Tom Davis, Rep. Waxman (D-CA), Chairman Chris Cox (R-
CA), Rep. Towns (D-NY), Rep. Jim Turner (D-TX), and Rep. 
Blackburn (R-TN) on May 4, 2004 and referred to the House 
Committee on Government Reform and in addition the Select 
Committee on Homeland Security. H.R. 4259 represents a 
compromise between the House Government Reform Committee and 
the Select Committee on Homeland Security. H.R. 4259 
incorporates key changes requested by the House Government 
Reform Committee Ranking Minority Member, Mr. Waxman and the 
Select Committee on Homeland Security. These changes include 
providing for the establishment of an Office of Program 
Analysis and Evaluation (OPA&E), and requiring a Future Years 
Homeland Security Program and Homeland Security Strategy. The 
Select Committee on Homeland Security also requested altering 
the reporting structure for the DHS CFO to allow for dual 
reporting to both the Secretary and the Undersecretary for 
Management, and H.R. 4259 incorporates that change. Finally, 
the new bill also delays the requirement for the Department's 
internal control audit until Fiscal Year 2006. H.R. 4259 was 
ordered favorably reported, by voice vote, the House of 
Representatives.

                           Section-by-Section

Section 1--Short title

    This section provides that the Act may be cited as the 
``Department of Homeland Security Financial Accountability 
Act.''

Section 2--Findings

    This section includes a list of findings.

Section 3--Chief Financial Officer of the Department of Homeland 
        Security

    This section (1) amends 31 U.S.C. Sec. 901(b)(1) by adding 
the Department of Homeland Security (DHS) to the list of 
departments and agencies covered by the Chief Financial 
Officers (CFO) Act of 1990, P.L. 101-576; (2) requires the 
President to appoint or designate a CFO for DHS within 180 days 
from the enactment of the Act with the advice and consent of 
the Senate or designated by the President from current 
officials at the department who were presidentially appointed, 
subject to Senate confirmation; (3) specifies that the current 
CFO at DHS may stay in place until the date of confirmation or 
designation of a successor; (4) makes conforming amendments to 
both the Homeland Security Act of 2002 and the CFO Act; and (5) 
specifies that the CFO shall report to the Secretary, and in 
addition to the Under Secretary for Management on certain 
matters.

Section 4--Functions of the Chief Financial Officer of the Department 
        of Homeland Security

    This section (1) amends 31 U.S.C. Sec. 3516 to make it a 
requirement that DHS submit their annual financial and 
performance management reports in the form of a ``performance 
and accountability report;'' (2) requires DHS to include audit 
opinions of its internal controls in its performance and 
accountability reports beginning with its fiscal year 2006 
report and continuing on indefinitely; (3) states that the 
Secretary of DHS must include an assertion of the internal 
controls that apply to DHS' financial reporting in its fiscal 
year 2005 performance and accountability report; and (4) 
requires that the CFO Council and the President's Council on 
Integrity and Efficiency (PCIE) conduct a study on the 
potential costs and benefits of requiring the CFO Act agencies 
to obtain audit opinions of their internal controls over their 
financial statements. The report shall be completed within 180 
days of the enactment of the bill and shall be submitted to the 
House Committee on Government Reform, the Committee on 
Governmental Affairs of the Senate, and the Comptroller General 
of the United States. The paragraph also provides that GAO 
willperform an analysis of the report within 90 days after receiving it 
and report its findings to the aforementioned committees.

Section 5--Future years Homeland Security Program and Homeland Security 
        strategy

    This section requires the Secretary to develop and update, 
as appropriate, each year a comprehensive homeland security 
strategy, with defined homeland security objectives, for 
submission as part of the Future Years Homeland Security 
Program. The homeland security strategy shall be based on, and 
include at a minimum, a comprehensive assessment, consistent 
with paragraphs (1) through (3) of section 201(d) of the 
Homeland Security Act, and prioritization of the risks to the 
United States from terrorism that identifies: (a) the threat 
posed by terrorism, including an assessment of intentions and 
capabilities of terrorist actors; (b) vulnerabilities in 
potential targets of acts of terrorism, whether owned or 
operated by the Federal Government, State, or local 
governments, or nongovernmental entities; (c) the criticality 
or severity of potential effects of acts of terrorism; and (d) 
the availability, adequacy, and likely effectiveness of 
existing measures to counter potential acts of terrorism. The 
homeland security strategy should also include information on 
national homeland security capabilities necessary to deter, 
prevent, mitigate, and respond to acts of terrorism and to 
implement the strategy; proposed short-term and long-term 
national actions and capabilities necessary to promote homeland 
security; and such other information as the Secretary 
determines to be necessary for the development of a 
comprehensive homeland security strategy. The Future Years 
Homeland Security Program shall include a classified version of 
the homeland security strategy, covering each element of the 
strategy as described, and an unclassified version to the 
extent appropriate.

Section 6--Establishment of Office of Program Analysis and Evaluation

    This section adds an Office of Program Analysis and 
Evaluation to the Office of the Chief Financial Officer.

Section 7--Notification Regarding Transfer or Reprogramming of Funds 
        for Department of Homeland Security

    This section requires the Chief Financial Officer to report 
to the House Select Committee on Homeland Security (or its 
successor), the House Committee on Government Reform and the 
Senate Committee on Governmental Affairs when reporting to 
Congress regarding any reprogramming or transfer of funds.

                       Explanation of Amendments

    No amendments were adopted in committee.

                        Committee Consideration

    On May 6, 2004, the Committee met in open session and 
ordered reported favorably the bill, H.R. 4259 by voice vote, a 
quorum being present.

                             Rollcall Votes

    No rollcall votes were held.

                             Correspondence

                          House of Representatives,
                     Select Committee on Homeland Security,
                                      Washington, DC, May 19, 2004.
Hon. Tom Davis,
Chairman, Committee on Government Reform,
Rayburn House Office Building, Washington, DC.
    Dear Mr. Chairman: On May 6, 2004, the Committee on 
Government Reform ordered reported, H.R. 4259, the Department 
of Homeland Security Financial Accountability Act. As you know, 
the Select Committee on Homeland Security was granted an 
additional referral upon the bill's introduction.
    Because this bill incorporates provisions added by the 
Select Committee on Homeland Security during our markup of the 
original version of this legislation (designated H.R. 2886), 
and because of our mutual desire to move the bill 
expeditiously, I will waive further consideration of H.R. 4259 
by the Select Committee. By agreeing to waive its consideration 
of the bill, the Select Committee does not waive its 
jurisdiction over H.R. 4259. In addition, the Select Committee 
reserves its authority to seek conferees on any provisions of 
the bill that are within its jurisdiction during any House-
Senate conference that may be convened on this legislation. I 
ask your commitment to support any request for conferees by the 
Select Committee on H.R. 4259 or similar legislation.
    I request that you include this letter and your response in 
your Committee Report and in the Congressional Record during 
consideration of the legislation on the House floor. Thank you 
for your attention to these matters.
            Sincerely,
                                           Christopher Cox,
                                                          Chairman.
                                ------                                

                          House of Representatives,
                            Committee on Government Reform,
                                      Washington, DC, May 19, 2004.
Hon. Christopher Cox,
Chairman, Committee on Homeland Security,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: Thank you for your recent letter 
regrading the Select Committee's jurisdictional interest in 
H.R. 4259, the Department of Homeland Security Financial 
Accountability Act. The bill was primarily referred to the 
Committee on Government Reform and additionally to the Select 
Committee on Homeland Security. H.R. 4259 is similar to H.R. 
2886 that both Committees ordered reported last year. Due to 
subsequent discussions between our committees and the 
Department of Homeland Security, H.R. 4259 was introduced. The 
Committee on Government Reform ordered that bill reported on 
May 6, 2004 and at the same time tabled H.R. 2886. The Select 
Committee's actions on H.R. 2886 including House Report 108-358 
will be cited in the Government Reform Committee's re[port on 
H.R. 4259.
    I agree that the Select Committee on Homeland Security does 
not waive its jurisdiction over H.R. 4259 by waiving further 
consideration of the bill. In addition, I will support your 
request for conferees from the Select Committee should a House-
Senate conference on this or similar legislation be convened.
    As you have requested, I will include a copy of your letter 
and this response as part of the Government Reform Committee's 
report and the Congressional Record during consideration of the 
legislation on the House floor. Thank you for your cooperation 
as we work towards the enactment of H.R. 4259.
            Sincerely,
                                                 Tom Davis,
                                                          Chairman.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill ensures that the Department of Homeland Security is 
subject to the same financial accountability requirements as 
all other cabinet-level departments by applying the provisions 
of the Chief Financial Officers Act of 1990 (P.L. 101-576) to 
the new Department. As such this bill does not relate to 
employment or access to public services and accommodations.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives are reflected in the descriptive portions 
of this report.

                   Constitutional Authority Statement

    Under clause 3(d)(1) of rule XIII of the Rules of the House 
of Representatives, the Committee must include a statement 
citing the specific powers granted to Congress to enact the law 
proposed by H.R. 4259. Article I, Section 8, Clause 18 of the 
Constitution of the United States grants the Congress the power 
to enact this law.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) requires a statement whether 
the provisions of the report include unfunded mandates. In 
compliance with this requirement the Committee has received a 
letter from the Congressional Budget Office included herein.

                           Committee Estimate

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 4259. However, clause 3(d)(3)(B) of that rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for H.R. 4259 from the Director of 
the Congressional Budget Office:

H.R. 4259--Department of Homeland Security Financial Accountability Act

    H.R. 4259 would amend the Chief Financial Officers Act and 
the Homeland Security Act to require the President to appoint a 
Chief Financial Officer (CFO), to be confirmed by the Senate, 
to oversee the financial accounting practices of the Department 
of Homeland Security (DHS). The legislation would require DHS 
to submit a performance and accountability report and an audit 
of its internal financial controls to the Office of Management 
and Budget and to the Congress. The legislation also would 
establish an Office of Program Analysis and Evaluation in DHS 
and require the department to prepare a national homeland 
security strategy each year.
    Based on information from DHS, CBO estimates that 
implementing H.R. 4259 would cost $4 million annually, subject 
to the availability of appropriated funds. Enacting the bill 
would not affect direct spending or revenues. H.R. 4259 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act and would not 
affect the budgets of state, local, or tribal governments.
    DHS currently employs a CFO who has the same duties and 
responsibilities as CFOs in other agencies. According to the 
department, DHS currently complies with the provisions of the 
Chief Information Officers Act. The department also currently 
operates an office for Program Analysis and Evaluation. Based 
on information from DHS, CBO estimates that the requirement to 
prepare an audit of the department's internal financial 
controls would cost $4 million a year, subject to the 
availability of appropriated funds.
    Within 180 days of enactment, H.R. 4259 would require a 
joint study by the President's Council on Integrity and 
Efficiency (PCIE) and the Chief Financial Officers Council on 
the potential costs and benefits of requiring all agencies 
under the CFO Act to obtain audit opinions of the internal 
controls over each agency's financial reporting. Under the 
bill, the General Accounting Office would be required to 
provide an analysis of the information provided in the study. 
Based on information from PCIE, CBO estimates the new reports 
would cost less than $500,000.
    Finally, H.R. 4259 would require DHS to develop and 
annually update a comprehensive national homeland security 
strategy. Under the Homeland Security Act, DHS is already 
charged with implementing a future-year security program and a 
homeland security funding analysis. Because the agency is 
already developing such a strategy, CBO expects that the new 
reporting requirement would not add significant costs.
    CBO has previously prepared estimates for a number of 
similar bills. On November 17, 2003, CBO transmitted a cost 
estimate for H.R. 2886, as ordered reported by the House 
Committee on Government Reform on November 6, 2003. On November 
10, 2003, CBO transmitted a cost estimate for H.R. 2886, as 
ordered reported by the House Select Committee on Homeland 
Security on October 30, 2003. On October 29, 2003, CBO 
transmitted a cost estimate for S. 1567, an identically titled 
bill, as ordered reported by the Senate Committee on Government 
Affairs on October 22, 2003. The four pieces of legislation are 
similar, and our estimates of the costs of implementing each 
bill are the same.
    The CBO staff contact for this estimate is Matthew 
Pickford. This estimate was approved by Robert A. Sunshine, 
Assistant Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 31, UNITED STATES CODE

           *       *       *       *       *       *       *

SUBTITLE I--GENERAL

           *       *       *       *       *       *       *

Chapter 9--Agency Chief Financial Officers

           *       *       *       *       *       *       *

Sec. 901. Establishment of agency Chief Financial Officers

  (a) * * *
  (b)(1) The agencies referred to in subsection (a)(1) are the 
following:
          (A) * * *

           *       *       *       *       *       *       *

          (G) The Department of Homeland Security.
          [(G)] (H) The Department of Housing and Urban 
        Development.
          [(H)] (I) The Department of the Interior.
          [(I)] (J) The Department of Justice.
          [(J)] (K) The Department of Labor.
          [(K)] (L) The Department of State.
          [(L)] (M) The Department of Transportation.
          [(M)] (N) The Department of the Treasury.
          [(N)] (O) The Department of Veterans Affairs.
          [(O)] (P) The Environmental Protection Agency.
          [(P)] (Q) The National Aeronautics and Space 
        Administration.
  (2) The agencies referred to in subsection (a)(2) are the 
following:
          (A) * * *
          [(B) The Federal Emergency Management Agency.]
          [(C)] (B) The General Services Administration.
          [(D)] (C) The National Science Foundation.
          [(E)] (D) The Nuclear Regulatory Commission.
          [(F)] (E) The Office of Personnel Management.
          [(G)] (F) The Small Business Administration.
          [(H)] (G) The Social Security Administration.

           *       *       *       *       *       *       *

SUBTITLE III--FINANCIAL MANAGEMENT

           *       *       *       *       *       *       *

CHAPTER 35--ACCOUNTING AND COLLECTION

           *       *       *       *       *       *       *

SUBCHAPTER II--ACCOUNTING REQUIREMENTS, SYSTEMS, AND INFORMATION

           *       *       *       *       *       *       *

Sec. 3516. Reports consolidation

  (a) * * *

           *       *       *       *       *       *       *

  (f) The Secretary of Homeland Security--
          (1) shall for each fiscal year submit a performance 
        and accountability report under subsection (a) that 
        incorporates the program performance report under 
        section 1116 of this title for the Department of 
        Homeland Security;
          (2) shall include in each performance and 
        accountability report an audit opinion of the 
        Department's internal controls over its financial 
        reporting; and
          (3) shall design and implement Department-wide 
        management controls that--
                  (A) reflect the most recent homeland security 
                strategy developed pursuant to section 
                874(b)(2) of the Homeland Security Act of 2002; 
                and
                  (B) permit assessment, by the Congress and by 
                managers within the Department, of the 
                Department's performance in executing such 
                strategy.

           *       *       *       *       *       *       *

                              ----------                              

HOMELAND SECURITY ACT OF 2002

           *       *       *       *       *       *       *

TITLE I--DEPARTMENT OF HOMELAND SECURITY

           *       *       *       *       *       *       *

SEC. 103. OTHER OFFICERS.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Other Officers.--To assist the Secretary in the 
performance of the Secretary's functions, there are the 
following officers, appointed by the President:
          (1) * * *

           *       *       *       *       *       *       *

          [(4) A Chief Financial Officer.]
          [(5)] (4) An Officer for Civil Rights and Civil 
        Liberties.
  (e) Chief Financial Officer.--There shall be in the 
Department a Chief Financial Officer, as provided in chapter 9 
of title 31, United States Code.
  [(e)] (f) Performance of Specific Functions.--Subject to the 
provisions of this Act, every officer of the Department shall 
perform the functions specified by law for the official's 
office or prescribed by the Secretary.

           *       *       *       *       *       *       *

TITLE VII--MANAGEMENT

           *       *       *       *       *       *       *

SEC. 702. CHIEF FINANCIAL OFFICER.

  (a) In General.--The Chief Financial Officer [shall report to 
the Secretary, or to another official of the Department, as the 
Secretary may direct.] shall perform functions as specified in 
chapter 9 of title 31, United States Code, and, with respect to 
all such functions and other responsibilities that may be 
assigned to the Chief Financial Officer from time to time, 
shall also report to the Under Secretary for Management.
  (b) Program Analysis and Evaluation Function.--
          (1) Establishment of office of program analysis and 
        evaluation.--Not later than 90 days after the date of 
        enactment of this subsection, the Secretary shall 
        establish an Office of Program Analysis and Evaluation 
        within the Department (in this section referred to as 
        the ``Office'').
          (2) Responsibilities.--The Office shall perform the 
        following functions:
                  (A) Analyze and evaluate plans, programs, and 
                budgets of the Department in relation to United 
                States homeland security objectives, projected 
                threats, vulnerability assessments, estimated 
                costs, resource constraints, and the most 
                recent homeland security strategy developed 
                pursuant to section 874(b)(2).
                  (B) Develop and perform analyses and 
                evaluations of alternative plans, programs, 
                personnel levels, and budget submissions for 
                the Department in relation to United States 
                homeland security objectives, projected 
                threats, vulnerability assessments, estimated 
                costs, resource constraints, and the most 
                recent homeland security strategy developed 
                pursuant to section 874(b)(2).
                  (C) Establish policies for, and oversee the 
                integration of, the planning, programming, and 
                budgeting system of the Department.
                  (D) Review and ensure that the Department 
                meets performance-based budget requirements 
                established by the Office of Management and 
                Budget.
                  (E) Provide guidance for, and oversee the 
                development of, the Future Years Homeland 
                Security Program of the Department, as 
                specified under section 874.
                  (F) Ensure that the costs of Department 
                programs, including classified programs, are 
                presented accurately and completely.
                  (G) Oversee the preparation of the annual 
                performance plan for the Department and the 
                program and performance section of the annual 
                report on program performance for the 
                Department, consistent with sections 1115 and 
                1116, respectively, of title 31, United States 
                Code.
                  (H) Provide leadership in developing and 
                promoting improved analytical tools and methods 
                for analyzing homeland security planning and 
                the allocation of resources.
                  (I) Any other responsibilities delegated by 
                the Secretary consistent with an effective 
                program analysis and evaluation function.
          (3) Director of program analysis and evaluation.--
        There shall be a Director of Program Analysis and 
        Evaluation, who--
                  (A) shall be a principal staff assistant to 
                the Chief Financial Officer of the Department 
                for program analysis and evaluation; and
                  (B) shall report to an official no lower than 
                the Chief Financial Officer.
          (4) Reorganization.--
                  (A) In general.--The Secretary may allocate 
                or reallocate the functions of the Office, or 
                discontinue the Office, in accordance with 
                section 872(a).
                  (B) Exemption from limitations.--Section 
                872(b) shall not apply to any action by the 
                Secretary under this paragraph.
  (c) Notification Regarding Transfer or Reprogramming of 
Funds.--In any case in which appropriations available to the 
Department or any officer of the Department are transferred or 
reprogrammed and notice of such transfer or reprogramming is 
submitted to the Congress (including any officer, office, or 
Committee of the Congress), the Chief Financial Officer of the 
Department shall simultaneously submit such notice to the 
Select Committee on Homeland Security (or any successor to the 
jurisdiction of that committee) and the Committee on Government 
Reform of the House of Representatives, and to the Committee on 
Governmental Affairs of the Senate.

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TITLE VIII--COORDINATION WITH NON-FEDERAL ENTITIES; INSPECTOR GENERAL; 
UNITED STATES SECRET SERVICE; COAST GUARD; GENERAL PROVISIONS

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Subtitle H--Miscellaneous Provisions

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SEC. 874. FUTURE YEARS HOMELAND SECURITY PROGRAM.

  (a) * * *
  [(b) Contents.--The Future Years Homeland Security Program 
under subsection (a) shall be structured, and include the same 
type of information and level of detail, as the Future Years 
Defense Program submitted to Congress by the Department of 
Defense under section 221 of title 10, United States Code.]
  (b) Contents.--The Future Years Homeland Security Program 
under subsection (a) shall--
          (1) include the same type of information, 
        organizational structure, and level of detail as the 
        future years defense program submitted to Congress by 
        the Secretary of Defense under section 221 of title 10, 
        United States Code;
          (2) set forth the homeland security strategy of the 
        Department, which shall be developed and updated as 
        appropriate annually by the Secretary, that was used to 
        develop program planning guidance for the Future Years 
        Homeland Security Program; and
          (3) include an explanation of how the resource 
        allocations included in the Future Years Homeland 
        Security Program correlate to the homeland security 
        strategy set forth under paragraph (2).

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