Table of Contents 

EXECUTIVE SUMMARY ................................................................................................................................................1

INTRODUCTION ..............................................................................................................................................................5

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A FRAMEWORK FOR IMPROVING FINANCIAL PERFORMANCE ....................................................................

ELIMINATING IMPROPER PAYMENTS ..................................................................................................................

RIGHT-SIZING THE GOVERNMENT’S REAL PROPERTY .................................................................................

IMPROVING INTRAGOVERNMENTAL REPORTING ..........................................................................................

IMPLEMENTING THE FINANCIAL MANAGEMENT LINE OF BUSINESS (FMLoB) .....................................

STRENGTHENING INTERNAL CONTROLS............................................................................................................

MODERNIZING GRANTS MANAGEMENT..............................................................................................................

IMPROVING FISCAL SUSTAINABILITY REPORTING ........................................................................................

THE FRAMEWORK’S FOUNDATION: CORE ACTIVITIES ................................................................................

I. Improving Financial Reporting...............................................................................................................................

II. Strengthening Internal Controls ............................................................................................................................

III. Improving Financial Systems................................................................................................................................

IV. Improving Asset Management...............................................................................................................................

V. Improving Grants Management .............................................................................................................................

VI. Improving Audit Requirements .............................................................................................................................

CONCLUSION.................................................................................................................................................................

APPENDICES...................................................................................................................................................................

APPENDIX A: SUMMARY OF FY 2007 AUDITED FINANCIAL STATEMENT RESULTS BY AGENCY AND SELECTED 

COMPONENTS..................................................................................................................................................................

APPENDIX B: MATERIAL WEAKNESSES REPORTED BY AUDITORS AND FEDERAL MANAGERS’ FINANCIAL INTEGRITY 

ACT TABLES....................................................................................................................................................................

APPENDIX C: GOVERNMENT CORPORATIONS REQUIRED TO SUBMIT AUDITED FINANCIAL STATEMENTS TO OMB.......

APPENDIX D: ACCOUNTABILITY OF TAX DOLLARS ACT AGENCIES REQUIRED TO SUBMIT AUDITED FINANCIAL 

STATEMENTS TO OMB....................................................................................................................................................

APPENDIX E: COMPLIANCE WITH THE FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT OF 1996 (FFMIA).....

APPENDIX F: EXECUTIVE BRANCH MANAGEMENT SCORECARD ....................................................................................

APPENDIX G: DEBT COLLECTION DEFICIENCIES AND CORRECTIVE ACTIONS ................................................................

APPENDIX H: THE OFFICE OF FEDERAL FINANCIAL MANAGEMENT’S STRATEGIC OBJECTIVES .....................................

 

Federal Financial Management Report (2008) i
Executive Summary 

The Office of Federal Financial Management within the Office of Management and Budget has 

developed a “Framework for Improving Financial Performance” to provide direction and clarity 

on how the President’s improvement goals for financial management will be met. This 

“Framework” is the subject of this Federal Financial Management Report 2008 (“the Report”) 

and also fulfills the Office of Federal Financial Management’s requirement, under section 301(a) 

of the Chief Financial Officers Act of 1990 (CFO Act) (Pub. L. No. 101-576) (codified at 31 

U.S.C. 3512(a)), for providing Congress and the financial management community with a 

Government-wide “Five-Year” financial management plan and status report. 

The Framework (as depicted in the accompanying diagram) is intended to provide the public 

with a simple tool for identifying: (1) the ultimate objective (or “apex”) of the Government’s 

financial management improvement efforts (i.e., the financial management goals of the 

President’s Management Agenda); (2) the priority projects currently underway in the Federal 

financial community to help support and facilitate the President’s Management Agenda’s goals 

(i.e., current Government-wide financial management reform activities); and (3) the day-to-day 

financial management activities or core activities that help ensure a strong foundation is in place 

for achieving Federal agencies’ success.

 

Federal Financial Management Report (2008) 1 
FRAMEWORK OVERVIEW

The President’s Management Agenda – How We Define and Measure Financial Management 

Success. The President’s Management Agenda provides Federal agencies with a concise set of 

clear and measurable financial management performance goals that allow Federal managers, 

Congress, and the public to gauge whether taxpayer funds are being properly accounted for and 

wisely spent. These performance measures include, among others, the achievement of clean 

audit opinions, elimination of material weaknesses in internal control, timely financial reporting, 

disposal of excess real property, and elimination of improper payments. These measures allow 

the American public to assess whether taxpayer dollars are properly accounted for and wisely 

spent. 

Reform Activities – Priority Financial Management Initiatives that Support the President’s 

Management Agenda’s Objectives. In support of the President’s Management Agenda, the 

Federal financial community has undertaken a series of improvement efforts intended to 

strengthen key areas of financial management and thus help ensure the President’s Management 

Agenda success. These activities include improving and/or strengthening: internal controls, 

financial systems, payment accuracy, real property management, grants management, and 

financial reporting for the Government as a whole. 

Core Activities – The Foundation of Effective Financial Management. The core activities 

represent the universe of day-to-day actions that the Federal financial community undertakes to 

effectively manage the resources of the Federal Government. The core activities further 

represent each major area wherein the Office of Federal Financial Management has the 

responsibility to issue Government-wide policies and requirements. Some core activities (e.g., 

internal controls) contain critical components or areas that are also represented in the reform 

activities portion of the Framework. This is because the Office of Federal Financial 

Management, working with the Federal financial community, has determined that this core 

activity required some degree of reform to enhance or strengthen the activity on a “go-forward” 

basis. In this way, the reform activities (or columns) serve to both support the President’s 

Management Agenda’s success and strengthen the foundation of Federal financial activities. 

FY 2007 RESULTS 

As noted above, the financial management-related initiatives of the President’s Management 

Agenda provide a series of critical financial management goals that, if attained, provide the 

public with confidence that taxpayer dollars are being properly accounted for and wisely spent. 

In FY 2007, Federal agencies either maintained or improved on prior year performance levels for 

all key outcome measures. Specific FY 2007 results are as follows: 

Clean Audit Opinions. Nineteen of twenty-four CFO Act agencies, representing more 

than 80% of all Federal outlays, achieved a clean audit opinion. This represents the same 

number of agencies that achieved a clean audit opinion in fiscal years 2005 and 2006. 

With these results, the Federal Government is well positioned to achieve its FY 2012 

target of 22 CFO Act agencies achieving a clean opinion. 

Federal Financial Management Report (2008) 2 
Material Weaknesses. The total number of auditor-reported material weaknesses declined 

from 41 to 39 for FY 2007. This marks the fourth year in a row that material weaknesses 

declined, with a more than 35% decline in weaknesses since 2001. Additionally, five 

new agencies received clean audit opinions with no material weaknesses: the 

Departments of Justice, the Interior, Energy, the Small Business Administration, and the 

U.S. Agency for International Development. This brings the total number of agencies 

realizing this important accomplishment to 13, up from just seven in 2001. 

The decrease in weaknesses this year is more notable in light of recent changes to 

Government auditing standards that lowered materiality thresholds and have the potential 

effect of characterizing more audit findings as “material weaknesses.” In other words, 

while auditing standards are getting tougher, Federal agencies kept pace by decreasing 

the number of material weaknesses. These results exceed the Government-wide 

performance target of a 10% annual reduction in repeat material weaknesses. See 

Appendix B of this Report for a more detailed breakdown and description of material 

weaknesses in FY 2007. 

Timely Reporting. For the third consecutive year, every major Federal agency met the 

Government-wide performance target to issue their audited financial statements within 45 

days of the close of the fiscal year. This Government-wide performance target will 

remain the same for future years. 

Improper Payments. The improper payment rate for the programs that originally reported 

in FY 2004 decreased from 4.4% to 3.1%. The largest portion of this reduction is 

attributable to the Medicare Fee-for-Service program, which reduced its error rate for the 

third consecutive year, representing more than a 60% drop in errors since FY 2004. With 

these results, the Federal Government is well positioned to achieve its FY 2012 target to 

reduce improper payments in the programs that were originally reported in FY 2004 to 

2.5%. 

Excess Real Property. The Federal Government disposed of more than $2.5 billion in 

excess real property in FY 2007 and has disposed of over $7 billion in real property since 

FY 2004. With these results, the Federal Government is well positioned to achieve its 

FY 2012 target to dispose of a cumulative $12 billion in excess real property since the 

initiative was first launched in 2004. 

Federal Financial Management Report (2008) 3 
LOOKING FORWARD

The reform and core activities highlighted in this Report are intended to position agencies to 

achieve the President’s Management Agenda objectives described above. The reform activities, 

in particular, reflect the Administration’s current priorities for improving financial management, 

based on the key challenges and opportunities in today’s environment. The Office of Federal 

Financial Management will continue monitoring the financial management environment and as it 

changes, certain core activities may take on new significance and become reform initiatives, or 

the standards for current initiatives may change. Moreover, a regular re-evaluation of the 

Administration’s reform priorities will be guided by the President’s Management Agenda with a 

focus on results. 

Federal Financial Management Report (2008) 4 
Federal Financial Management Report (2008) 5 

Introduction

The Office of Management and Budget’s (OMB) Office of Federal Financial Management 

(OFFM) is responsible for the financial management policy of the Federal Government and is led 

by the OMB Controller under the direction of the OMB Deputy Director for Management. 

OFFM’s mission is to promote and support first-class financial management in the executive 

branch of the Federal Government. To accomplish this mission, OFFM’s objectives1 are to: 

(1) Provide effective leadership on Government-wide financial management 

improvement initiatives that result in successful outcomes for the financial 

management-related initiatives of the President’s Management Agenda (PMA); and 

(2) Issue Government-wide financial management policies and requirements that are 

user-friendly, transparent, consistently complied with by Federal agencies, and that 

facilitate improved financial management without undue burden on agency and 

taxpayer resources. 

Why does financial management matter? In short, it matters to all of us as public taxpayers and 

as Federal agencies and managers. As illustrated in the below diagram, sound financial 

management embodies the basic tenets of public reporting (i.e., transparency), internal controls, 

and decision support. 

With the tenets of public reporting, internal controls, and decision support, in mind, OFFM has 

developed a “Framework for Improving Financial Performance” to not only provide direction 

 

1

 See Appendix H for a complete description of OFFM’s strategic objectives. 
and clarity on how its objectives will be met. This “Framework” is the subject of this Report and 

also fulfills OFFM’s requirement, under the Chief Financial Officers Act of 1990 (CFO Act), for 

providing Congress and the financial management community with a Government-wide “FiveYear” financial management plan. 

PMA

The PMA provides Federal agencies with a concise set of clear 

and measurable financial management performance goals that 

allow Federal managers, Congress, and the public to gauge 

whether taxpayer funds are being properly accounted for and 

wisely spent. The first three columns of the “Framework for 

Improving Financial Performance” represent key financial 

management-related initiatives that are also monitored through 

the PMA. Like all of the reform activities, each has clearly 

defined goals. Progress on these goals is tracked and publicly reported at www.results.gov to 

provide transparency and hold the Federal Government accountable for continued progress. As 

noted throughout this Report, Federal agencies are making significant progress on each of these 

areas. However, work still remains to meet the President’s vision. 

Eliminating Improper Payments - Agencies are improving the accuracy of Federal payments by 

strengthening controls over the payment process, ensuring that dollars are properly accounted 

for, and are going to the right person in the correct amount. Since 2004, the Federal Government 

has established an impressive track record of making improper payment measurements 

transparent to the public and then taking quick and effective action to eliminate them. More than 

70 programs that were designated as high-risk for improper payments have been measured since 

2004. By the end of 2008, almost 100% of programs that were previously designated as highrisk will be measured. Further, agencies have reduced the improper payment error rate in the 

programs originally measured and reported from 4.4% (FY 2004) to 3.1% (FY 2007). The goal 

for FY 2008 and subsequent years is an annual improper payment reduction of .1%. 

Right-sizing the Government’s Real Property - Agencies have established a comprehensive 

inventory of all the Government’s real property assets. From this inventory, we know where our 

excess and surplus property is and are taking aggressive action to eliminate those properties from 

the Federal books. Since 2004, we have identified and disposed of more than $7 billion in 

unneeded property. The goal for FY 2008 is to dispose of an additional $1 billion in excess real 

property and to dispose of a cumulative $12 billion by 2012. 

Improving Financial Reporting - Agencies have improved the quality of their financial reporting. 

Nineteen of 24 major agencies received clean audit opinions and agencies reduced the number of 

material weaknesses reported from 62 in FY 2001 to 39 in FY 2007. The respective goals for 

FYs 2008 and 2012 are for 21 and 22 agencies to receive clean audit opinions and to reduce 

material weaknesses to 37 and 30. 

Federal Financial Management Report (2008) 6 
The following diagrams illustrate the key FY 2007 results, 2008 goals and 2012 targets for the 

financial management-related PMA initiatives. 

Reform Activities

To support the PMA, the Federal financial community has undertaken a series of improvement 

efforts intended to strengthen key areas of financial management and thus help ensure the PMA’s 

success. The Reform Activities include the following seven initiatives: 

1. Eliminating Improper Payments, 

2. Rightsizing the Government’s Real Property, 

3. Improving Intragovernmental Reporting, 

4. Implementing the Financial Management Line of Business, 

5. Strengthening Internal Controls, 

6. Modernizing Grants Management, and 

7. Improving Fiscal Sustainability Reporting. 

Federal Financial Management Report (2008) 7 
This Report discusses these activities in greater detail, highlighting for each initiative, the 

Strategic Goal, FY 2012 Targets, Interim Objectives, FY 2008 Priority Actions, and Status 

Update. 

Core Activities

The Core Activities represent the foundation for holding the overall structure in place. In short, 

the core activities represent the universe of day-to-day activities that the Federal financial 

community must undertake to effectively manage the resources of the Federal Government. The 

Core Activities include: 

1. Improving Financial Reporting, 

2. Strengthening Internal Controls, 

3. Improving Financial Systems, 

4. Improving Asset Management, 

5. Improving Grants Management, and 

6. Improving Audit Requirements. 

Of note, some of these core activities (e.g., internal controls) contain critical components or areas 

that are also represented in the reform activities portion of the Framework. This is because 

OFFM, working with the Federal financial community, has determined that this core activity 

required some degree of reform to enhance or strengthen the activity on a “go-forward” basis. In 

this way, the reform activities serve to both support the PMA’s success and strengthen the 

foundation of Federal financial activities. This Report includes a detailed discussion of each 

Core Activity. 

Finally, Appendices A through H provide supplementary information for a complete 

representation of the Governmental-wide “Five-Year” financial management plan and status 

report for FY 2007. 

The Chief Financial Officers Council and the President’s Council on Integrity and Efficiency

OFFM’s ongoing work with the Chief Financial Officers Council (CFOC) and the President’s 

Council on Integrity and Efficiency (PCIE) is critical to ensuring that the Framework described 

in this Report is carried out effectively. The CFOC was established, specifically by the CFO 

Act, as a mechanism for advising and coordinating the activities of its member agencies on 

matters such as improved quality of financial information, financial data and information 

standards, consolidation and modernization of financial systems, internal controls, legislation 

affecting financial operations and organizations, and other financial management efforts. 

Presently, the CFOC has six “Transformation Teams” that assist in carrying out the Framework’s 

efforts: (1) Central Reporting, (2) Improper Payments, (3) Grants Governance, (4) Performance 

Metrics, (5) Financial Standardization, and (6) Financial Systems Integration Office (FSIO). In 

addition, the Audit Committee of the PCIE plays a critical role in helping OFFM to develop and 

oversee financial management policies and requirements that help facilitate accurate, reliable, 

and timely financial reporting. 

Federal Financial Management Report (2008) 8 
Federal Financial Management Report (2008) 9 

A Framework for Improving Financial Performance 

The Framework is intended to provide the public with a simple tool for identifying: (1) the 

ultimate objective (or “apex”) of the Government’s financial management improvement efforts 

(i.e., the financial management goals of the PMA); (2) the priority projects currently under-way 

in the Federal financial community to help support and facilitate the PMA success (i.e., current 

Government-wide financial management reform activities); and (3) the day-to-day financial 

management activities or core activities that help ensure a strong foundation is in place for 

achieving Federal agencies’ success. 

After re-evaluating the reform activities that were identified in 2007, the Office of Federal 

Financial Management determined that three of the seven 2007 reform activities should be 

clarified to narrow the reform activity and to better focus on achieving longer-term success in 

specific key areas. To this end for 2008, the respective 2007 reform activities for the Financial 

Report of the U.S. Government, Grants Management, and Social Insurance Reporting were 

changed to focus specifically on Intragovernmental transactions,2 Grants Modernization, and 

Fiscal Sustainability Reporting. For these, as well as all other reform activities, this Report 

highlights a strategic goal, a performance target for fiscal year (FY) 2012 (i.e., a 5-year target), 

interim or short-term objectives, planned actions for the upcoming year, and a status update for 

the past year. 

 

2

 These are transactions between Federal entities. 
Eliminating Improper Payments 

Improper payments occur when Federal funds go to the 

wrong recipient, the recipient receives the incorrect amount 

of funds, documentation is not available to support a 

payment, or the recipient uses the funds in an improper 

manner. The Improper Payment Information Act of 2002 

(IPIA) (Pub. L. No. 107-300) created a permanent framework 

for assessing every Federal program and dollar for risk of 

improper payments, annually measuring the accuracy of payments, and initiating program 

improvements to ensure that payment errors and improprieties are reduced and ultimately 

eliminated. This reform activity supports the PMA objective to identify and eliminate improper 

payments. 

STRATEGIC GOAL: 

 Reduce the Government-wide improper payment dollar amount and rate. 

FY 2012 TARGET(S):

 Reduce improper payment rate of programs that reported in the baseline year of 

FY 2004 from 4.4% to 2.5%. 

INTERIM OBJECTIVES: 

 Measure improper payments in programs that are at significant risk of improper 

payments on an annual basis. 

 Identify the causes of improper payments and develop specific corrective action 

plans. 

 Ensure adequate return on investment for all program integrity efforts. 

FY 2008 PRIORITY ACTIONS: 

 Complete root cause analysis for all reporting programs. 

 Prepare rigorous return-on-investment analyses for program integrity activities. 

 Work with the Congress to enact the President’s legislative reforms to eliminate 

errors. 

 Expand reporting of contract improper payments and risk assessments of contract 

payments. 

 Collaborate with external stakeholders to further develop a Federal-State partnership project to 

enhance program integrity efforts in Federally-funded, State-administered programs such as 

Medicaid. 

STATUS UPDATE: 

 Implemented action plans to ensure 100% error measurement reporting for all previously identified 

high-risk programs. 

 Decreased improper payment rate in the programs originally reporting in the baseline year (FY 2004) 

from 4.4% to 3.1%. 

 Decreased the Government-wide improper payment rate for all programs that reported an error rate in 

FY 2006 from 2.9% to 2.7%. 

Federal Financial Management Report (2008) 10 
Right-sizing the Government’s Real Property 

On February 4, 2004, the President signed Executive Order 

13327, Federal Real Property Asset Management. To meet 

the requirements of the Executive Order, agencies must 

develop and implement the necessary tools (e.g., planning, 

inventory, performance measures) to manage their portfolio 

of real property assets at the right size, in the right condition, 

and at the right cost. This reform activity supports PMA 

objectives to identify and dispose of excess Federal real 

estate. 

STRATEGIC GOAL: 

 Right-size the Federal real property inventory. 

FY 2012 TARGET(S):

 Dispose of $12 billion in unneeded Federal real property. 

INTERIM OBJECTIVES: 

 Capture inventory data/performance metrics on all constructed assets. 

 Dispose of unneeded Federal real property. 

 Obtain legislative authority to reform asset management and disposition, 

including the retention of sales proceeds. 

FY 2008 PRIORITY ACTIONS: 

 Enact the President’s legislative proposal to allow Executive agencies to 

retain a portion of the net proceeds of sales which would be directed toward 

the agency’s real property capital asset needs. 

 Facilitate inter and intra-agency coordination on real property efforts such as 

facility security and historic preservation. 

 Ensure that agencies are using asset-specific performance data in their decision-making process. 

 Implement a common Federal screening format to increase information sharing among Executive 

agencies on unneeded assets. 

 Initiate review of the Federal Real Property Profile focusing on opportunities for Government-wide 

performance improvements (e.g., lease or asset consolidation). 

STATUS UPDATE: 

 Reported to the Government-wide database, inventory, and performance data on more than 1.2 

million assets valued at $1.5 trillion. 

 Disposed of approximately $7 billion in unneeded real property assets since FY 2004. 

 Identified more than 21,000 excess and surplus assets suitable for disposition with annual operating 

costs of $132 million. 

Federal Financial Management Report (2008) 11 
Improving Intragovernmental Reporting 

Each year, the Treasury Department and OMB issue the 

Financial Report of the U.S. Government, which presents the 

consolidated financial statements for the Government as a 

whole. The Government Accountability Office (GAO) has 

issued a disclaimed audit opinion on the Government’s 

financial statements for eleven consecutive years. One of the 

reasons is the Government’s inability to adequately account for 

and reconcile intragovernmental transactions between 

departments and agencies. This reform activity supports the 

PMA objectives for ensuring strong accounting practices through the achievement of a clean 

audit, the elimination of material weaknesses, and producing timely financial information to help 

guide decision-making.

STRATEGIC GOAL: 

 Receive an unqualified or “clean” audit opinion on the Financial Report’s 

consolidated financial statements. 

FY 2012 TARGET(S):

 Reduce the intragovernmental transactions material weakness to an 

immaterial level. 

INTERIM OBJECTIVES: 

 Downgrade the intragovernmental transactions material weakness to a 

significant deficiency. 

 Facilitate more systemic quarterly reconciliations. 

FY 2008 PRIORITY ACTIONS: 

 Implement an Intragovernmental Dispute Resolution Committee. 

 Define recommended systems changes, if needed. 

 Reconvene discussions with CFOs and publish “Watch List” more widely for 

resolution of largest imbalances. 

 Complete work on a standardized interagency agreement template. 

STATUS UPDATE: 

 Updated and published standard intragovernmental business rules that are effective for all agencies 

(via OMB Memorandum M-07-03 & Treasury’s Bulletin No. 2007-03). 

 Drafted a Memorandum of Understanding for CFOs to affirm their agency’s participation in the 

Intragovernmental Dispute Resolution Committee process. 

 Distributed a draft interagency agreement template. 

 Held initial discussions with CFOs and published “Watch List,” which resulted in a $5 billion 

decrease in intragovernmental imbalances. 

Federal Financial Management Report (2008) 12 
Implementing the Financial Management Line of Business 

(FMLoB) 

The FMLoB is improving the cost, quality, and performance of 

financial management operations by adopting common standards 

and shared solutions as well as implementing other Governmentwide improvements to foster efficiencies in Federal financial 

operations. This reform activity supports PMA objectives by 

significantly improving the quality of financial data Government 

managers need to make timely and successful decisions while 

reducing the cost of Government operations. 

STRATEGIC GOAL: 

 Implement Government-wide solutions that yield lower cost and risk results 

in financial management activities. 

FY 2012 TARGET(S):

 Require Federal and commercial shared service providers to implement core 

financial management software with (adopted) standard financial 

management business processes. 

INTERIM OBJECTIVES: 

 Define and implement a common Government-wide accounting 

classification (CGAC) structure. 

 Define and implement standard core financial business processes. 

 Adopt CGAC and standard core financial business process adopted 

(inherently) in the certified core financial management software. 

 Implement common financial management performance metrics across the 

Federal Government. 

FY 2008 PRIORITY ACTIONS: 

 Complete development of business process standards including the 

reimbursables, receivables, and reporting processes. 

 Revise certified software policy to require CGAC and business process standards to be inherent in the 

core financial management software. 

 Update Migration Policy Guidance to include financial system acquisition best practices. 

 Develop performance metrics for the cost of financial management activities. 

STATUS UPDATE: 

 Published the final CGAC structure. 

 Finalized business process standards for the funds control and payment management processes. 

 Developed and began collecting common information technology performance metrics.

Federal Financial Management Report (2008) 13 
Strengthening Internal Controls 

Effective internal control over financial reporting is the foundation 

for successful financial management. Reliable financial 

information is critical for key decisions being made on a daily 

basis—ranging from routine decisions such as purchasing office 

supplies to more mission-related decisions such as building 

satellites. Federal agencies must strengthen internal control over 

financial reporting in order to sustain clean audit opinions within 

financial reporting deadlines in the wake of increasing financial 

audit scrutiny. This reform activity supports PMA objectives for 

ensuring strong accounting practices as evidenced by the achievement of a clean audits and the 

elimination of material weaknesses (MW). 

STRATEGIC GOAL: 

 Improve effectiveness of internal control over financial reporting.

FY 2012 TARGET(S):

 Achieve full compliance with A-123, Appendix A by all CFO Act agencies. 

 Eliminate 20% of all current Government-wide auditor-identified MW. 

 Implement full integration of the assessment process with other internal 

control reviews (e.g., Federal Information Security Management Act of 2002, 

Pub. L. No. 107-347 (FISMA), IPIA, etc.) 

INTERIM OBJECTIVES: 

 Use A-123, Appendix A assessment results to improve MW corrective action 

plans, and enhance internal control based on lessons learned and best 

practices. 

FY 2008 PRIORITY ACTIONS: 

 Facilitate forum between the financial, acquisition, and information 

technology communities to discuss overall internal control frameworks and to 

better integrate and leverage existing internal control reviews. 

 Update OMB guidance, as necessary, based on lessons learned. 

 Receive updated corrective action plans from agencies that reflect lessons 

learned from FY 2007 A-123, Appendix A implementation and achieve 

consensus between management, Inspectors General, and OMB. 

STATUS UPDATE: 

 Completed second year of A-123, Appendix A implementation in all 24 CFO agencies. 

 Implemented a full scope Appendix A assessment (testing all key processes) in 17 of the 24 CFO Act 

agencies. 

 Implemented a multi-year phased-in assessment (testing a portion of the key processes) and received 

plans for testing the remaining processes within three years for the remaining 7 of the 24 CFO Act 

agencies. 

Federal Financial Management Report (2008) 14 
Modernizing Grants Management 

Each year, the Federal Government provides over $450 billion 

of grants to more than 60,000 grantees—State, local and tribal 

Governments, colleges and universities and non-profit 

organizations. These dollars are awarded though more than 

1,000 grant programs managed by federal 

agencies. Improved solutions for grants 

management are essential for the 

strengthening of accountability and increasing 

the cost efficiency of grant programs. This 

reform activity supports the PMA objective to 

use financial information to manage costs and ensure Federal dollars are wisely 

and effectively spent.

STRATEGIC GOAL: 

 Implement Government-wide solutions that increase transparency of grant 

activities, lower administrative costs, and simplify application/reporting. 

FY 2012 TARGET(S):

 Expand searchable public website to include sub-grant awards. 

 Complete migration by major grant-making agencies to the Grants Management 

Line of Business (GMLoB) consortia. 

 Make available FIND and APPLY capabilities on Grants.gov for 100% of all discretionary grants.

INTERIM OBJECTIVES: 

 Develop searchable public website for grants awards. 

 Complete required grant streamlining activities under the Federal Financial Assistance Management 

Improvement Act of 1999 (Pub. L. 106-107). 

 Commence migration of grant systems to GMLoB consortia. 

FY 2008 PRIORITY ACTIONS: 

 Expand and maintain the searchable public website for sub-grant awards under the Federal Funding 

Accountability and Transparency Act of 2006, Pub. L. No. 109-282 (Transparency Act). 

 Complete Pub. L. No. 106-107 activities, including single location for grants administration policies, 

standard grant forms. 

 Develop revisions to OMB Circular No. A-133 to improve the quality of Single audits. 

STATUS UPDATE: 

 Developed a searchable public website for grant awards under the Transparency Act with public 

access available on December 13, 2007. Initiated the pilot project for collecting and reporting subgrantee data. 

 Implemented 100% FIND and 75% APPLY functionality on Grants.gov. 

 Developed and proposed consolidated standard grant forms for the reporting on financial and 

performance information, property, and inventions by grantees. 

Federal Financial Management Report (2008) 15 
Federal Financial Management Report (2008) 16 

Improving Fiscal Sustainability Reporting 

Federal entitlement programs such as Medicare and Social 

Security are on an unsustainable fiscal path. OMB is working 

with the Treasury Department, the Government Accountability 

Office, and the Federal Accounting Standards Advisory Board 

(FASAB) to improve fiscal sustainability reporting3 in the 

Financial Report. This will help readers of the Financial 

Report assess long-term fiscal sustainability, and alert 

lawmakers and the public of the impending fiscal crisis that 

will occur if no action is taken. This reform activity supports 

PMA objectives for producing timely and reliable financial information to help guide decisionmaking. 

STRATEGIC GOAL: 

 Report comprehensive fiscal sustainability data, including social insurance 

and other programs, that facilitate and guide reform efforts to address the 

long-term fiscal imbalance. 

FY 2012 TARGET(S):

 Provide comprehensive fiscal sustainability data, including social insurance 

disclosures, in the Financial Report used by lawmakers and the public to 

inform the debate on entitlement reform. 

INTERIM OBJECTIVES: 

 Develop a “Statement of Fiscal Sustainability” and include as a principal 

statement within the Government-wide Financial Report. 

FY 2008 PRIORITY ACTIONS: 

 Launch pilot project to develop a prototype Statement of Fiscal 

Sustainability. 

STATUS UPDATE: 

 Achieved clean audit opinion on all agency-level Statements of Social Insurance (SOSI) for the 

second straight year and for the first time achieved a clean audit opinion on the Government-wide 

SOSI. 

 Audited SOSI published for the second year at the agency and Government-wide levels. 

 Received broad array of comments and viewpoints on FASAB’s Social Insurance Preliminary Views 

document. 

 Launched a FASAB Sustainability Task Force that began work on improved sustainability reporting. 

 

3

 The FASAB Sustainability Task Force has not yet defined fiscal sustainability reporting. However, fiscal 

sustainability reporting, as used here, is meant to align with the FASAB’s financial reporting objective, specifically, 

“whether future budgetary resources will likely be sufficient to sustain public services and to meet obligations as 

they come due.” (Statement of Financial Accounting Concepts 1, paragraph 139) 
Federal Financial Management Report (2008) 17 

The Framework’s Foundation: Core Activities 

The Framework’s Core Activities represent the “every day” activities and statutory 

responsibilities of OFFM. Through these activities and responsibilities, OFFM improves, 

strengthens, and manages the Federal Government’s financial management policies, practices, 

and procedures.

I. Improving Financial Reporting 

During FY 2007, OFFM continued to improve Federal financial 

reporting in three key areas: (1) Government-wide financial 

reporting requirements (OMB Circular No. A-136, Financial 

Reporting Requirements); (2) accounting standards; and (3) 

consolidated Government-wide financial statements (in coordination 

with the Department of the Treasury). 

 

OMB Circular No. A-136, Financial Reporting Requirements 

OMB, in conjunction with the CFO Council, provides updates to OMB guidance relating to 

agency and Government-wide financial reporting in the OMB Circular A-136, Financial 

Reporting Requirements (Circular A-136). The A-136 subcommittee under the CFO Council 

was created to perform this work, with all CFO Act agencies represented. Circular No. A-136

establishes a central reference point for all Federal financial reporting guidance for Executive 

Branch departments, agencies, and entities required to submit audited financial statements, 

interim financial statements, and Performance and Accountability Reports (PAR) under the CFO 

Act4

, the Accountability of Tax Dollars Act of 2002 (“ATDA”)5 (Pub. L. 107-289), and Annual 

Management Reports under the Government Corporations Control Act6 (codified at 31 U.S.C. 

9101 et seq.). This Circular is available on the OMB home page (by clicking the “Circulars” 

link) on the Internet, which is currently located at http://www.whitehouse.gov/OMB/.

Significant achievements in FY 2007 include an earlier issuance of the revised Circular No. A136 and the establishment of a pilot to streamline PAR reporting. The PAR pilot allows agencies 

to select an alternative reporting format. Under the new format, an Agency Financial Report 

(AFR) is required on November 15, an Annual Performance Report (APR) is transmitted to 

OMB with the Congressional Budget Justification (CBJ), and a “Highlights” document that 

contains performance and brief financial information in a user-friendly format is published on 

the Friday prior to the release of the President’s Budget. 

 

4

 Pub. L. No. 101 – 576 

5

 Pub. L. No. 107 – 289 

6

 31 U.S.C. § 9101 et seq. 
Accounting Standards 

The FASAB was established as an advisory board under the Federal Advisory Committee Act to 

facilitate the standard setting process. FASAB’s mission is to consider and recommend 

accounting concepts and standards for the Federal Government. In 1999, The American Institute 

of Certified Public Accountants (AICPA) formally recognized accounting standards published by 

FASAB as generally accepted accounting principles (GAAP) for Federal financial reporting 

entities (i.e., a “stamp of approval” for accounting). 

The Deputy Controller represents OMB on the FASAB. Additionally, an OFFM representative 

serves on the Accounting and Auditing Policy Committee (AAPC), a permanent committee 

sponsored by the FASAB. The AAPC assists the Federal Government in improving financial 

reporting through the timely identification, discussion, and recommendation of solutions to 

accounting and auditing issues within the framework of existing authoritative literature. 

During FY 2007, FASAB issued Statement of Federal Financial Accounting Concepts 5,

Definitions of Elements and Basic Recognition Criteria for Accrual-Basis Financial Statements; 

Technical Release 7, Clarification of Standards Relating to the National Aeronautics and Space 

Administration's Space Exploration Equipment; and Interpretation 7: Items Held for 

Remanufacture. The AAPC completed the Implementation Guide for SFFAS 29: Heritage 

Assets and Stewardship Land and the Clarification of Standards Related to Inter-Entity Cost. 

The Financial Report of the U.S. Government 

Each year, the Department of the Treasury, in coordination with OMB, prepares the Financial 

Report of the U.S. Government. The Report contains the consolidated, audited financial 

statements of the Government as a whole. The Report also serves as an important example of 

improved transparency for reporting Government-wide financial information. The Treasury and 

OMB promote the Financial Report to increase awareness of America’s fiscal position and 

condition. 

The 2007 Financial Report was published on December 17, 2007 and is located on the Internet 

at http://www.fms.treas.gov/fr/index.html. The Treasury issued the Financial Report, for FY 

2007, as an important piece of the Government’s effort to increase public awareness of the 

Government’s current and future spending obligations. For the past four years, OMB has 

required the Treasury to issue the Report on December 15 (or the first business day after the 

weekend when the due date falls on a Saturday or Sunday), rather than on the March 31 statutory 

deadline, to provide financial information early enough to be useful in the budget process. 

In FY 2006, the SOSI became a principal financial statement. It was audited as part of the 

consolidated financial statements (CFS). This year, after designing its audit to provide a separate 

opinion on this statement, GAO issued a clean opinion on the 2007 SOSI. Nevertheless, for the 

11th consecutive year, the GAO issued a disclaimer of opinion on the Financial Report’s CFS. A 

disclaimer of an audit opinion means that sufficient information was not available for the auditor 

to form an opinion about the reliability of the information in the financial statements. Even so, 

Federal Financial Management Report (2008) 18 
19 of the 24 most significant Federal agencies included in the Report received unqualified or 

“clean” audit opinions on their financial statements. 

During FY 2008, OMB, working with Treasury, will continue to focus on the elimination of 

intragovernmental imbalances, one of the three primary material weaknesses that contribute to 

the disclaimer of an opinion on the CFS; the other two primary material weaknesses are 

challenges that involve the Federal Government’s process for preparing and consolidating the 

CFS and certain financial management challenges at the Department of Defense. Other 

significant goals for FY 2008 include collaborating with Treasury to address mutual corrective 

actions for eliminating material weaknesses, prioritize compilation findings, establish a plan to 

meet major milestones, and meet with GAO routinely to review other audit-related issues. 

Federal Financial Management Report (2008) 19 
II. Strengthening Internal Controls 

The OMB Circular No. A-123 (Circular No. A-123), 

Management’s Responsibility for Internal Control, is the 

policy document that implements the requirements of the 

FMFIA. The FMFIA requires that management establish 

and maintain effective internal control to achieve the 

objectives of 1) effective and efficient operations, 2) reliable 

financial reporting, and 3) compliance with applicable laws 

and regulations. The FMFIA also requires the head of each 

Executive agency to report annually to the President and the 

Congress on the effectiveness of the internal controls and any identified material weaknesses in 

those controls. 

Circular No. A-123 contains multiple appendices that address, at a more detailed level, one or 

more of the objectives of effective internal control. The requirements in the appendices are the 

core activities to support the goal of strengthening internal control Government-wide. 

Appendix A—Internal Control over Financial Reporting 

Appendix A provides a methodology for agency management to assess, document, test, and 

report on the internal control over financial reporting. The Appendix also encourages an 

integrated approach with other legislative and regulatory requirements to review internal control. 

The new requirements were developed in consultation with the Financial Standardization Team 

of the CFO Council. The Council and OMB produced a supplementary Implementation Guide 

(http://www.cfoc.gov/documents/Implementation_Guide_for_OMB_Circular_A-123.pdf), which 

provides a more hands-on perspective of how to implement the new requirements, and a 

Frequently Asked Questions (FAQ) document, which elaborates on concepts in the Appendix. 

The results of the FY 2007 assessment can be found in Appendix B of this Report. The FAQ 

document can be found at 

(http://www.whitehouse.gov/omb/circulars/a123/faq_a123_appx_a.pdf). 

Appendix B—Improving the Management of Government Charge Card Programs 

The Federal Government has more than 3.1 million charge cards in use under the General 

Services Administration’s (GSA’s) SmartPay Program. The cards are used to purchase goods 

and services, pay for Government employee travel, and travel-related expenses, and to acquire 

fuel and maintenance services for Government vehicles, aircraft and other equipment. In FY 

2007, these transactions totaled more than $27 billion, with $18.7 billion (nearly 70%) spent 

through purchase cards alone. This program continues to demonstrate the improved efficiencies 

of charge card use, through an estimated $1.8 billion in annual cost avoidance, as compared to 

prior, paper-based procurement processes. Other benefits of the program include refunds paid to 

agencies that were in excess of $174 million in FY 2007, as well as access to reduced-price 

airfares under the GSA City Pairs Program. FY 2007 usage of the City Pairs Program saved the 

Government a projected $3 billion over regularly priced airfares. 

Federal Financial Management Report (2008) 20 
OFFM provides oversight of Federal charge card programs through Appendix B to OMB 

Circular No. A-123. This guidance requires agencies to maintain internal controls that reduce 

the risk of fraud, waste, and error in Government charge card programs. As required by 

Appendix B, agencies submit updated copies of their Charge Card Management Plans to OMB 

on an annual basis, and submit performance information on either a quarterly or annual basis, 

depending on the size of the agency. OFFM works with agencies to ensure strong internal 

control policies and procedures Government-wide, and assists agencies with strengthening their 

programs when appropriate. OFFM also works closely with the GSA SmartPay program, which 

manages the primary contracts with the Federal Government’s charge card providers, to ensure 

the program is operating effectively and efficiently. 

Appendix C—Requirements for Effective Measurement and Remediation of Improper 

Payments 

Appendix C implements the requirements of the IPIA. It consolidates previous guidance 

documents that had been issued as OMB memoranda under Circular No. A-123. Appendix C 

addresses all categories of improper payments that include, but are not limited to, programmatic 

disbursements, benefit entitlements, loan guarantees, contract and other types of administrative 

payments. Appendix C also encompasses the requirements mandated under Section 831 of the 

Defense Authorization Act for Fiscal Year 2002 (Pub. L. No. 107-107), that added a new 

subchapter to the U.S. Code (31 USC §§3561-3567). This law is more commonly known as the 

Recovery Auditing Act. 

Federal Financial Management Report (2008) 21 
III. Improving Financial Systems

In FY 2007, OMB continued its efforts to ensure that 

agencies are in substantial compliance with FFMIA Section 

803(a) requirements: (1) Federal financial management 

systems requirements; (2) applicable federal accounting 

standards; and (3) the United States Standard General 

Ledger at the transaction level. Agencies have made 

measurable progress in achieving substantial compliance 

with FFMIA since last year. Specifically, 14 agency heads 

reported that their agencies were in substantial compliance with FFMIA, two more than in FY 

2006 and ten more than in FY 2001 when only four agency heads reported substantial 

compliance. 

The success in reducing the number of FFMIA noncompliance results is attributable to the 

efforts of the PMA’s initiative on Improving Financial Performance. Substantial compliance 

with FFMIA is one of the initiative’s standards of success and agencies must report substantial 

compliance before they can receive the passing rating of “Green.” By monitoring an agency’s 

progress toward FFMIA compliance on a quarterly basis, at the PMA status meetings, each 

agency has been more focused on actively resolving non-compliances. 

In addition to OMB’s oversight of agencies’ FFMIA compliance effort, OMB has also developed 

the FMLoB initiative to address the Federal Government’s long-term need to improve financial 

management and assist agencies in substantially complying with FFMIA. The goal of the 

FMLoB is to improve the cost, quality, and performance of financial management systems by 

leveraging shared service solutions and implementing other Government-wide reforms that foster 

efficiencies in Federal financial operations. To meet the goal, the initiative established projects 

to define and develop uniform business standards (i.e., common Government-wide accounting 

code, business processes, data, and business rules). Over the next several years, software 

vendors will be required to incorporate these standards into their financial systems. This 

approach will better ensure that agencies begin implementing a financial system with a baseline 

set of FFMIA standards inherent in the software. 

OMB continued its effort to migrate agencies to a shared service model, which requires 

designated public and qualified commercial providers to deliver both financial management and 

financial systems services to multiple agencies. Most recently, the Department of Agriculture 

selected a commercial shared service provider, and the Environmental Protection Agency, the 

Department of Housing and Urban Development, and the Office of Personnel Management 

issued solicitations for FMLoB shared services. By focusing on developing financial standards 

and incorporating them into Federal software, the FMLoB initiative will ensure that all agencies 

that use financial systems with standard configurations meet FFMIA Section 803(a) 

requirements. 

Federal Financial Management Report (2008) 22 
IV. Improving Asset Management 

OFFM is improving asset management throughout the 

Federal Government by coordinating activities in the 

areas of real property and financial assets, including the 

collection of debts owed to the Government. 

Real Property 

Strengthening the management of the Federal Government’s assets has been an important 

objective of this Administration. The Government owns approximately 1.2 million real property 

assets with a replacement value in excess of $1.5 trillion and holds title to approximately one in 

every four acres of the United States’ land. The Administration continues to require that Federal 

real property assets be accounted for, and that effective plans be made for the acquisition, 

management, and the disposition of assets. 

 

The Administration has taken specific steps to improve the management of real property on a 

Government-wide level by implementing the requirements of Executive Order 13327, “Federal 

Real Property Asset Management,” signed on February 4, 2004. This Order directed all major 

agencies to establish the position of a Senior Real Property Officer (SRPO), who is accountable 

for the effective management of agency real properties. The Executive Order also created an 

interagency Federal Real Property Council to develop guidance, serve as a clearinghouse for best 

practices, and facilitate the efforts of the agency SRPOs. 

Using the Executive Order as a framework, the Administration is using the PMA to track and 

hold agencies accountable for achieving the goals and objectives of the Real Property Asset 

Management initiative. Specifically, agencies are being held accountable for the improved 

accuracy of their real property inventory and performance measurement data reporting and the 

implementation of specific actions, which will lead to the disposal of unneeded assets, improve 

the condition of mission critical assets, and ensure that assets are managed at the right cost. 

Debt Collection 

The Debt Collection Improvement Act of 1996 (DCIA) (section 31001 of Pub. L. No. 104-134) 

established a framework for improved federal debt collection Government-wide by centralizing 

the management of delinquent obligations in the Department of the Treasury and providing 

agencies with more effective debt collection tools, such as centralized administrative offsets and 

administrative wage garnishments. The DCIA requires agencies to take prompt action to 

recover debts, aggressively monitor all accounts, properly screen potential borrowers in the case 

of credit programs, and resolve the outstanding debt through a variety of options, including 

referring the debt to the Department of Justice for litigation and the Department of the Treasury 

for administrative offset and cross-servicing. Compliance with DCIA yields significant and 

measurable savings for the taxpayer. 

Federal Financial Management Report (2008) 23 
DCIA requires OMB to report annually on any deficiencies in the standards and policies of 

Federal agencies for compromising, writing down, forgiving, and discharging indebtedness, and 

progress made in improving those standards and policies. 

OMB Circular No. A-129, Policies for Federal Credit Programs and Non-Tax Receivables 

(Circular No. A-129) requires agencies to submit an annual report providing OMB with 

information on: (1) internal debt collection processes; (2) agency identified deficiencies in 

current policies; (3) actions taken by agencies to comply with DCIA and Circular No. A-129; 

and (4) intended actions to improve debt collection policies and practices. For FY 2007 these 

reports were due by December 31, 2007, and OMB has received report submissions from the 24 

CFO Act agencies. 

Overall, agencies have strong policies and procedures in place consistent with the requirements 

of DCIA and Circular No. A-129, and continue to strive to improve their debt collection 

practices. In FY 2006 several agencies updated their internal policies and procedures to ensure 

compliance with DCIA, Circular No. A-129, or the Federal Claims Collections Standards 

(FCCS) as a result of their internal reviews of existing processes. A number of agencies have 

reported that they are still working to come into compliance with specific aspects of the DCIA, 

Circular No. A-129, or the FCCS. See Appendix G: Debt Collection Deficiencies and 

Corrective Actions, which includes a table of notable deficiencies and corrective actions that 

were reported to OMB. 

OMB will continue to work with the agencies as well as the Financial Management Service’s 

Debt Management Service within the Department of the Treasury to ensure that agencies are in 

compliance with the DCIA, Circular No. A-129, and the Federal Claims Collections Standards. 

Federal Financial Management Report (2008) 24 
V. Improving Grants Management 

OFFM, working cooperatively with the grant-making 

agencies and the grantee community, establishes 

Government-wide policy and requirements to ensure that 

grants are managed properly, Federal dollars are spent in 

accordance with applicable laws and regulations, and 

Federal grants are free from fraud and waste. Each year, 

the Federal Government provides over $450 billion in 

grants to State, local and Tribal Governments, colleges and 

universities, and other non-profit organizations—roughly 

one-sixth of the Federal budget. 

A significant goal of the Administration was to streamline grant processes and reduce the 

administrative burden on grantees in accordance with the Federal Financial Assistance 

Management Improvement Act of 1999 (Pub. L. 106-107). The purpose of this Act was to 

improve the effectiveness and performance of Federal grant programs, simplify grant application 

and reporting requirements, improve the delivery of services to the public, and facilitate greater 

coordination among those responsible for delivering such services. To implement the Act, 

OFFM worked with the Grants Governance Transformation Team (more commonly known as 

the Grants Policy Committee) of the Chief Financial Officers Council to achieve the following: a 

single portal for use in finding and applying for financial assistance opportunities; a limited 

number of standard application forms; a revised approach to issuing and locating OMB guidance 

and agency implementing regulations that apply to grant award and administration; greater 

consistency across the different sets of OMB cost principles; and a standard funding opportunity 

announcement format that makes it easier for potential applicants to find the information they 

need to decide whether to apply and to submit responsive applications. 

In 2004, OMB Circular No. A-123 was revised to emphasize the need for integrated and 

coordinated internal control assessments covering all internal control related activities, including 

grants management. Thus, agencies must test key controls to document their effectiveness. 

These internal control reviews, at the grantee level, combined with the revised OMB Circular 

No. A-133, Audits of States, Local Governments, and Non-Profit Organizations (Circular No. A133) requirements have resulted in grantees being more proactive in ensuring that their programs 

comply with applicable laws and regulations. 

Future efforts to streamline the grants management process include completing the establishment 

of Government-wide standards for post-award reporting: financial, performance/progress, and 

property (intellectual, real, and tangible personal property); adopting a new approach to award 

content and format that has potential payoffs for both recipients and agencies in applying and 

complying with administrative and national policy requirements; reducing the number of system 

variations and disparate business processes, including those related to grant payment; enhancing 

the quality of Single Audits under OMB Circular No. A-133; and establishing training and 

certification standards for Federal grants managers. 

Federal Financial Management Report (2008) 25 
VI. Improving Audit Requirements 

OMB provides audit requirements to implement the audit 

provisions of several key pieces of legislation, such as the 

Inspector General Act of 1978 (5 U.S.C. App.), FMFIA, 

CFO Act, Government Management Reform Act of 1994 

(GMRA) (Pub. L. No. 103-356), and the FFMIA. The 

periodic review and improvement of audit requirements is 

important in ensuring the integrity and transparency of 

agencies’ financial data and internal controls so that taxpayer 

resources are protected from waste, fraud, and 

mismanagement. 

On September 4, 2007, OMB Bulletin No. 07-04, Audit Requirements for Federal Financial 

Statements was released and rescinded the OMB’s previous audit requirements, Bulletin No. 06-

03. The audit requirements are periodically revised to provide new procedural guidelines to 

enhance and update the minimum requirements for audits of Federal financial statements. 

Bulletin No. 07-04 was updated by OFFM in conjunction with the Financial Statement Audit 

Network of the PCIE. The changes in the Bulletin apply to audits of financial statements of all 

executive departments, agencies, and Government corporations. 

The most significant change in the Bulletin relates to the removal (effective starting in fiscal year 

2008) of the requirement that the auditor test the internal controls related to the performance 

information in the Management’s Discussion and Analysis of the financial statements. OMB has 

had this requirement since OMB Bulletin No. 93-06 (January 8, 1993). In the 1993 issuance, 

OMB signaled that it intended “to expand the auditor’s responsibilities in this area in future 

years.” With this issuance, OMB will begin the steps necessary to make this intention a reality. 

 Consequently, OMB will develop a separate framework for independent audit review of 

performance data and the internal controls that support valid and reliable reporting of such data 

starting in fiscal year 2008. 

Other noteworthy changes to the Bulletin included: (1) expanded requirements for previouslyissued and restated financial statements; (2) a requirement for following the AICPA’s 

Codification of Statements on Auditing Standards (AU) § 552, Reporting on Condensed 

Financial Statements and Selected Financial Data when reporting on a “Highlights” or similar 

document; and (3) a deletion of the citation of the FFMIA, from the Bulletin’s Appendix E 

(General Laws). This change clarifies that auditors are only required to test and report on an 

entity’s compliance with FFMIA. 

Federal Financial Management Report (2008) 26 
Conclusion 

Over the past 5 years, the Federal Government has made significant progress in achieving the 

President’s vision for improving financial management. Overall, Federal agencies have achieved 

more clean audit opinions, fewer auditor-identified material weaknesses, more timely financial 

reporting, more disposals of excess real estate, and have made fewer improper payments. Over 

the next 5 years, the Federal Government is well positioned to build on that progress by 

improving results in all of these key performance areas of the PMA. 

The reform and core activities highlighted in this Report are intended to position agencies to 

achieve the objectives described above. The reform activities, in particular, reflect the 

Administration’s current priorities for improving financial management, based on the key 

challenges and opportunities in today’s environment. OFFM will continue monitoring the 

financial management environment and as it changes, certain core activities may take on new 

significance and become reform initiatives or the standards for current initiatives may change as 

was done for three of the seven 2008 reform activities. Moreover, a regular re-evaluation of the 

Administration’s reform priorities will be guided by the PMA with a focus on results. 

OFFM has been organized to most effectively implement the PMA principles and the reform and 

core activities included in this Report. As a result of the PMA, every CFO across the Federal 

Government now shares common goals for improving financial performance, and a financial 

management community exists that works closely with one another to respond to long-standing 

and arising financial challenges. As OMB, Federal CFOs, and the financial management 

community look toward the next 5 years of financial management improvements, the principles 

of the PMA will continue to guide our efforts because financial management and its basic tenets 

of public reporting (i.e., transparency), internal controls, and decision support matters to all of us, 

as public taxpayers and Federal agencies and managers. 

Federal Financial Management Report (2008) 27 
APPENDICES 

Federal Financial Management Report (2008) 28 
Appendix A: Summary of FY 2007 Audited Financial 

Statement Results by Agency and Selected Components 

In FY 2007, agencies subject to the CFO Act were required to prepare annual financial 

statements subject to audit. OMB also designates those individual entity components that must 

prepare audited financial statements. 

CFO Act Agency: FY 2007 Audit Opinion 

Department of Agriculture (USDA) Qualified 

Department of Commerce (DOC) Unqualified 

Department of Defense (DOD) Disclaimer 

Department of Education (Education) Unqualified 

Department of Energy (DOE) Unqualified 

Department of Health and Human Services (HHS) Unqualified 

Department of Homeland Security (DHS) Disclaimer 

Department of Housing and Urban Development 

(HUD) Unqualified 

Department of the Interior (DOI) Unqualified 

Department of Labor (DOL) Unqualified 

Department of Justice (DOJ) Unqualified 

Department of State (State) Disclaimer 

Department of Transportation (DOT) Unqualified 

Department of the Treasury (Treasury) Unqualified 

Department of Veterans Affairs (VA) Unqualified 

Agency for International Development (USAID) Unqualified 

Environmental Protection Agency (EPA) Unqualified 

General Services Administration (GSA) Unqualified 

National Aeronautics and Space Administration 

(NASA) Disclaimer 

National Science Foundation (NSF) Unqualified 

Nuclear Regulatory Commission (NRC) Unqualified 

Office of Personnel Management (OPM) Unqualified 

Federal Financial Management Report (2008) 29 
Federal Financial Management Report (2008) 30 

CFO Act Agency: FY 2007 Audit Opinion 

Small Business Administration (SBA) Unqualified 

Social Security Administration (SSA) Unqualified 

Agency Component:

Food and Nutrition Service (USDA) Unqualified 

Forest Service (USDA) Unqualified 

Rural Development (USDA) Qualified 

Department of Army General Funds (DOD) Disclaimer 

Department of Navy General Funds (DOD) Disclaimer 

Department of Air Force General Funds (DOD) Disclaimer 

Military Retirement Trust Fund (DOD) Unqualified 

U.S. Army Corp of Engineers Civil Works Program 

(DOD) Disclaimer 

Department of Army Working Capital Fund (DOD) Disclaimer 

Department of Navy Working Capital Fund (DOD) Disclaimer 

Department of Air Force Working Capital Fund 

(DOD) Disclaimer 

Centers for Medicare and Medicaid Services (HHS) Unqualified 

Federal Aviation Administration (DOT) Unqualified 

Internal Revenue Service (Treasury) Unqualified 

Civil Service Retirement and Disability Fund (OPM) Unqualified 

Federal Employees Health Benefits Program (OPM) Unqualified 

Federal Employees Life Insurance Program (OPM) Unqualified 
Appendix B: Material Weaknesses Reported by Auditors and 

Federal Managers’ Financial Integrity Act Tables 

OMB audit guidance requires auditors to disclose material weaknesses in internal control over 

financial reporting. The FMFIA and OMB guidance require the head of each executive agency 

to annually report whether there is reasonable assurance that the agency’s controls are achieving 

their intended objectives and whether the agency’s financial management systems conform to 

Government-wide requirements. 

Agency heads are required to identify material weaknesses related to agency programs and 

operations (pursuant to Section 2 of FMFIA) and non-conformances with Government-wide 

financial systems requirements (pursuant to Section 4 of FMFIA). Reporting material 

weaknesses under FMFIA is not limited to weaknesses over financial reporting. 

The following tables include: the number of material weaknesses reported by independent 

auditors, the number of material weaknesses reported by agency heads under Section 2 of 

FMFIA, and the number of financial system non-conformances reported by agency heads under 

Section 4 of FMFIA. 

Table Definitions: 

• Beginning – the number of material weaknesses (beginning balance) reported in the 

Independent Auditor’s Report for the prior fiscal year. 

• New – the number of new material weaknesses reported in the Independent Auditor’s 

Report for the current fiscal year which could include reportable conditions reported by 

the auditors from the prior fiscal year whose severity has risen to the level of a material 

weakness. 

• Resolved – the number of material weaknesses reported in the Independent Auditor’s 

Report for the current fiscal year that were reported as resolved by the auditors or whose 

severity has been reduced to that of a reportable condition. 

• Consolidated – the number of material weaknesses reported in the Independent 

Auditor’s Report that were combined with other repeat material weaknesses from a prior 

fiscal year or with a new material weakness from the current fiscal year 

• Ending – the number of material weaknesses (ending balance) reported in the 

Independent Auditor’s Report for the current fiscal year. The number is calculated by 

adding the number of new material weakness reported by the auditors from the current 

fiscal year to the number of material weaknesses reported the prior fiscal year and then 

subtracting the number of weaknesses resolved and consolidated weaknesses during the 

current fiscal year. 

 

Federal Financial Management Report (2008) 31 
Fiscal Year 2007: 

Auditor-Reported Material Weaknesses 

 Beginning New Resolved Consolidated Ending 

Agriculture 2 0 0 0 2 

Commerce 0 0 0 0 0 

Defense 12 1 0 0 13 

Education 0 0 0 0 0 

Energy 1 0 1 0 0 

HHS 2 2 0 0 4 

Homeland 10 0 0 3 7 

HUD 0 2 0 0 2 

Interior 1 0 1 0 0 

Justice 1 0 1 0 0 

Labor 0 0 0 0 0 

State 0 2 0 0 2 

DOT 2 0 1 0 1 

Treasury 1 0 0 0 1 

VA 3 1 0 0 4 

AID 1 0 1 0 0 

EPA 0 0 0 0 0 

GSA 0 0 0 0 0 

NASA 2 0 0 0 2 

NSF 0 0 0 0 0 

NRC 2 0 1 0 1 

OPM 0 0 0 0 0 

SBA 1 0 1 0 0 

SSA 0 0 0 0 0 

Totals 41 8 7 3 39 

Federal Financial Management Report (2008) 32 
FY 2007 Auditor-Reported Material Weaknesses by Category 

As a whole, the Government is 

improving controls over financial 

reporting and operations. For the 

fourth year in a row, auditor-reported 

material weaknesses have declined, 

with a more than 35% decrease in 

weaknesses since 2001. 

A material weakness is a significant 

deficiency, or combination of significant deficiencies, that increases 

the odds that a material misstatement 

of the financial statements will go 

undetected or not be prevented. 

Material weaknesses can be viewed 

in terms of car maintenance. If a car 

never had the oil changed, the odds that the car would not function properly over time would 

increase. If in addition to neglecting oil changes the filters and essential fluids are not monitored 

the odds that the car will break down increase substantially. Just as these significant deficiencies 

present a material weakness in the proper performance of the car, the failure to correct auditorreported material weaknesses increases the risk that financial systems and processes will break 

down leading to unreliable financial information for management decisions as well as costly 

fraud, waste, and abuse. 

Property, Plant, 

and Equipment

15%

Budgetary 

Reporting

8%

Accounts Payable 

and Other Liabilities

8% Fund Balance 

with Treasury

5%

Intragovernmental 

Reconciliation

3%

Financial 

Management and 

Reporting

33%

Financial Systems 

and Security

28%

Key Challenges 

Looking forward, OFFM will work with agencies to continue to reduce material weaknesses by 

targeting the key areas of Financial Systems and Security, Financial Management and Reporting, 

and Budgetary Reporting. 

Information Technology (IT) security significant deficiencies were found in 19 agencies, seven 

of which were material weaknesses under Financial Systems and Security. Auditors found the 

controls over IT security needed to be improved in various areas, including updating risk 

assessments, providing IT security training, strengthening password controls, and enhancing 

controls over system software modification. By improving IT security agencies can prevent 

unauthorized access to and increase the reliability of financial information. 

Funds control significant deficiencies were found in 10 agencies, six of which were material 

weaknesses under Financial Management and Reporting and Budgetary Reporting. Auditors 

found agencies were not properly monitoring funds to ensure appropriate transactions were 

deobligated in a timely manner. In a sense, agencies were reserving money for a specific use but 

not following up to see if the funds were used. By regularly reviewing transactions for potential 

deobligations, funds could be made available for use elsewhere and account balances such as 

undelivered orders would not be overstated. 

Federal Financial Management Report (2008) 33 
Fiscal Year 2007: 

FMFIA Section 2 – Consolidated Totals 

 Adequate and Effective 

Management Controls Number of Material Weaknesses 

 Section 2 

Operational 

Section 2 

Financial 

Reporting 

Beginning New Resolved Consolidated Reassessed Ending

Agriculture Qualified Qualified 4 2 1 0 1 4 

Commerce Qualified Unqualified 1 0 0 0 0 1 

Defense Qualified No 

Assurance 34 6 12 3 7 18 

Education Qualified Unqualified 2 1 1 0 0 2 

Energy Unqualified Qualified 1 0 1 0 0 0 

HHS Qualified Qualified 3 1 1 1 0 2 

Homeland Qualified No 

Assurance 13 11 0 2 3 19 

HUD Unqualified Unqualified 0 0 0 0 0 0 

Interior Unqualified Unqualified 0 0 0 0 0 0 

Justice Qualified Unqualified 2 1 1 0 0 2 

Labor Qualified Unqualified 1 0 0 0 0 1 

State Qualified Qualified 0 2 0 0 0 2 

DOT Qualified Qualified 2 1 1 0 0 2 

Treasury Qualified Qualified 6 0 0 0 0 6 

VA Qualified Qualified 1 1 0 0 1 1 

AID Qualified Qualified 4 0 3 0 0 1 

EPA Unqualified Unqualified 0 0 0 0 0 0 

GSA Unqualified Unqualified 0 0 0 0 0 0 

NASA Qualified Qualified 3 0 0 0 0 3 

NSF Unqualified Qualified 0 0 0 0 0 0 

NRC Qualified Unqualified 2 0 0 1 0 1 

OPM Unqualified Unqualified 0 0 0 0 0 0 

SBA Unqualified Unqualified 1 0 1 0 0 0 

SSA Unqualified Unqualified 0 0 0 0 0 0 

 TOTAL 80 26 22 7 12 65 

Federal Financial Management Report (2008) 34 
Fiscal Year 2007: 

FMFIA Section 2 – Operational 

 Adequate and Effective 

Management Controls Number of Material Weaknesses 

 Unqualified Qualified No 

Assurance Beginning New Resolved Consolidated Reassessed Ending

Agriculture X 0 0 0 0 0 0 

Commerce X 1 0 0 0 0 1 

Defense X 29 2 12 3 7 9 

Education X 2 1 1 0 0 2 

Energy X 0 0 0 0 0 0 

HHS X 1 1 0 1 0 1 

Homeland X 3 10 0 0 3 10 

HUD X 0 0 0 0 0 0 

Interior X 0 0 0 0 0 0 

Justice X 1 1 0 0 0 2 

Labor X 1 0 0 0 0 1 

State X 0 1 0 0 0 1 

DOT X 0 1 0 0 0 1 

Treasury X 5 0 0 0 0 5 

VA X 1 0 0 0 1 0 

AID X 2 0 1 0 0 1 

EPA X 0 0 0 0 0 0 

GSA X 0 0 0 0 0 0 

NASA X 1 0 0 0 0 1 

NSF X 0 0 0 0 0 0 

NRC X 2 0 0 1 0 1 

OPM X 0 0 0 0 0 0 

SBA X 0 0 0 0 0 0 

SSA X 0 0 0 0 0 0 

 TOTAL 9 15 0 49 17 14 5 11 36 

Federal Financial Management Report (2008) 35 
Fiscal Year 2007: 

FMFIA Section 2 – Financial Reporting 

 Adequate and Effective 

Management Controls Number of Material Weaknesses 

 Unqualified Qualified No 

Assurance Beginning New Resolved Consolidated Reassessed Ending

Agriculture X 4 2 1 0 1 4 

Commerce X 0 0 0 0 0 0 

Defense X 5 4 0 0 0 9 

Education X 0 0 0 0 0 0 

Energy X* 1 0 1 0 0 0 

HHS X 2 0 1 0 0 1 

Homeland X 10 1 0 2 0 9 

HUD X 0 0 0 0 0 0 

Interior X 0 0 0 0 0 0 

Justice X 1 0 1 0 0 0 

Labor X 0 0 0 0 0 0 

State X 0 1 0 0 1 

DOT X 2 0 1 0 0 1 

Treasury X 1 0 0 0 0 1 

VA X* 0 1 0 0 0 1 

AID X* 2 0 2 0 0 0 

EPA X 0 0 0 0 0 0 

GSA X 0 0 0 0 0 0 

NASA X* 2 0 0 0 0 2 

NSF X* 0 0 0 0 0 0 

NRC X 0 0 0 0 0 0 

OPM X 0 0 0 0 0 0 

SBA X 1 0 1 0 0 0 

SSA X 0 0 0 0 0 0 

 TOTAL 12 10 2 31 9 8 2 1 29 

Federal Financial Management Report (2008) 36 

* Qualified due to a scope limitation. The entity is implementing Circular No. A-123, Appendix A requirements 

over multiple years. 
Fiscal Year 2007: 

FMFIA Section 4 – Financial Management Systems 

 Systems Conform to 

Requirements Number of Non-conformances 

 Yes 

Yes, with 

Non -

conformances 

No Beginning New Resolved Consolidated Reassessed Ending 

Agriculture X 0 1 0 0 0 1 

Commerce X 0 0 0 0 0 0 

Defense X 1 0 0 0 0 1 

Education X 0 0 0 0 0 0 

Energy X 0 0 0 0 0 0 

HHS X 2 1 1 0 2 

Homeland X 3 0 0 0 0 3 

HUD X 0 0 0 0 0 0 

Interior X 0 0 0 0 0 0 

Justice X 2 0 1 0 1 0 

Labor X 0 0 0 0 0 0 

State X 0 1 0 0 0 1 

DOT X 1 0 0 0 0 1 

Treasury X 1 0 0 0 1 0 

VA X 2 1 0 0 0 3 

AID X 0 0 0 0 0 0 

EPA X 0 0 0 0 0 0 

GSA X 0 0 0 0 0 0 

NASA X 1 1 0 0 0 2 

NSF X 0 0 0 0 0 0 

NRC X 1 0 1 0 0 0 

OPM X 0 0 0 0 0 0 

SBA X 0 0 0 0 0 0 

SSA X 0 0 0 0 0 0 

 TOTAL 14 8 2 14 5 2 1 2 14 

Federal Financial Management Report (2008) 37 
Appendix C: Government Corporations Required to Submit 

Audited Financial Statements to OMB 

Government Corporation: FY 2007 Audit Opinion

Commodity Credit Corporation Unqualified 

Community Development Financial Institutions Fund Disclaimer 

Corporation for National and Community Service Unqualified 

Export-Import Bank of the United States Unqualified 

Federal Crop Insurance Corporation Unqualified 

Federal Deposit Insurance Corporation Not Received1

Federal Home Loan Banks Not Received1

Federal Housing Administration Fund Unqualified 

Federal Prison Industries, Incorporated Unqualified 

Financing Corporation Not Received1

Government National Mortgage Association Unqualified 

Millennium Challenge Corporation Unqualified 

National Credit Union Administration Central Liquidity Facility Not Received1

Overseas Private Investment Corporation Unqualified 

Pension Benefit Guaranty Corporation Unqualified 

Resolution Funding Corporation Not Received1

Rural Telephone Bank N/A2

Saint Lawrence Seaway Development Corporation Unqualified 

Tennessee Valley Authority Unqualified 

1

 The entity has a calendar year-end; the financial statements were not due as of the printing of this Report. 

2 The Rural Telephone Bank has completed its mission and is no longer in existence.

Federal Financial Management Report (2008) 38 
Appendix D: Accountability of Tax Dollars Act Agencies 

Required to Submit Audited Financial Statements to OMB 

 

Agency: FY 2007 Audit Opinion 

Advisory Council on Historic Preservation Qualified 

African Development Fund Unqualified 

Appalachian Regional Commission Not Received 

Architectural and Transportation Barriers Compliance Board Unqualified 

Armed Forces Retirement Home Unqualified 

Barry Goldwater Scholarship and Excellence in Education Fund Not Received 

Broadcasting Board of Governors Unqualified 

Christopher Columbus Fellowship Foundation Not Received 

Central Intelligence Agency Disclaimer 

Chemical Safety and Hazard Investigation Board Unqualified 

Commission on Civil Rights Unqualified 

Commission of Fine Arts Not Received 

Commission for the Preservation of America’s Heritage Abroad Not Received 

Committee for Purchase from People Who Are Blind or 

Severely Disabled Unqualified 

Commodities Futures Trading Commission Unqualified 

Consumer Product Safety Commission Unqualified 

Court Services and Offender Supervision Agency for DC Not Received1

Defense Nuclear Facilities Safety Board Unqualified 

Federal Financial Management Report (2008) 39 
Federal Financial Management Report (2008) 40 

Agency: FY 2007 Audit Opinion 

Delta Regional Authority Unqualified 

Denali Commission Unqualified 

Equal Employment Opportunity Commission Unqualified 

Farm Credit Administration Unqualified 

Farm Credit System Insurance Corporation Not Received1

Federal Communications Commission Unqualified 

Federal Election Commission Unqualified 

Federal Financial Institutions Examination Council Appraisal 

Subcommittee Not Received 

Federal Housing Finance Board Unqualified 

Federal Labor Relations Authority Not Received 

Federal Mediation and Conciliation Service Unqualified 

Federal Mine Safety and Health Review Commission Unqualified 

Federal Retirement Thrift Investment Board Not Received1

Federal Trade Commission Unqualified 

Harry S. Truman Scholarship Foundation Unqualified 

Institute of American Indian and Alaska Native Culture and Arts 

Development Not Received 

Institute of Museum and Library Services Unqualified 

Inter-American Foundation Unqualified 

James Madison Memorial Fellowship Foundation Not Received 

Japan-U.S. Friendship Commission Unqualified 
Federal Financial Management Report (2008) 41 

Agency: FY 2007 Audit Opinion 

Marine Mammal Commission Unqualified 

Merit Systems Protection Board Unqualified 

Morris K. Udall Scholarship and Excellence in National 

Environmental Policy Foundation Unqualified 

National Archives and Records Administration Unqualified 

National Capital Planning Commission Unqualified 

National Commission on Libraries and Information Science Not Received 

National Council on Disability Not Received 

National Credit Union Administration Not Received1

National Endowment for the Arts Unqualified 

National Endowment for the Humanities Unqualified 

National Labor Relations Board Unqualified 

National Mediation Board Unqualified 

National Transportation Safety Board Unqualified 

Nuclear Waste Technical Review Board Unqualified 

Occupational Safety and Health Review Commission Unqualified 

Office of Government Ethics Unqualified 

Office of Navajo and Hopi Indian Relocation Commission Unqualified 

Office of Special Counsel Unqualified 

Peace Corps Unqualified 

Presidio Trust Qualified 

Railroad Retirement Board Unqualified 
Federal Financial Management Report (2008) 42 

Agency: FY 2007 Audit Opinion 

Securities and Exchange Commission Unqualified 

Selective Service System Disclaimer 

Smithsonian Institution Not Received 

SI/John F. Kennedy Center for the Performing Arts Unqualified 

SI/National Gallery of Art Unqualified 

SI/Woodrow Wilson International Center for Scholars Unqualified 

Trade and Development Agency Unqualified 

U.S. Court of Appeals for Veterans Claims Unqualified 

U.S. Holocaust Memorial Museum Unqualified 

U.S. Interagency Council on Homelessness Unqualified 

U.S. International Trade Commission Unqualified 

Vietnam Education Foundation Unqualified 

White House Commission on the National Moment of 

Remembrance Unqualified 

1 The entity has a calendar year-end; the financial statements were not due as of the printing of this Report.
Appendix E: Compliance with the Federal Financial 

Management Improvement Act of 1996 (FFMIA) 

Under the FFMIA, Federal agencies are required to maintain financial management systems that 

substantially comply with Federal financial management system requirements, applicable 

Federal accounting standards, and the U.S. Standard General Ledger at the transaction level. 

FFMIA provides that both the head of the agency and the independent auditor publish a 

determination of compliance on an annual basis. The table below indicates the FY 2007 

compliance findings for each CFO Act agency. 

Agency Head Auditor 

Agriculture NO NO 

Commerce YES YES 

Defense NO NO 

Education YES NO 

Energy YES YES 

HHS NO NO 

Homeland NO NO 

HUD YES NO 

Interior YES YES 

Justice YES YES 

Labor YES YES 

State YES NO 

DOT NO NO 

Treasury NO NO 

VA NO NO 

AID YES YES 

EPA NO NO 

GSA YES YES 

NASA NO NO 

NSF YES YES 

NRC NO NO 

OPM YES YES 

SBA YES YES 

SSA YES YES 

TOTAL YES 14 11 

Federal Financial Management Report (2008) 43 
Appendix F: Executive Branch Management Scorecard 

OMB, in consultation with Federal agencies, professional associations, and academics, has 

established Standards for Success for each Government-wide initiative of the PMA. For the 

Improving Financial Performance initiative, a limited number of clear, meaningful, and 

attainable financial goals were established that every Federal agency must meet. Each individual 

goal is an indicator of financial management excellence, and reflects standards established either 

by law or Administrative action. 

Each quarter, agencies receive ratings reflecting both their current status in meeting the standards 

and the progress they are making. The ratings use a familiar Red, Yellow, and Green stoplight 

format, and every agency CFO is responsible for moving their agency toward Green. Agencies 

who do not meet individual goals must prepare action plans for meeting them as well as 

demonstrate ongoing progress in achieving results. 

The “Yellow” standards reflect the core competencies of Federal financial management: 

achieving a clean audit, resolving material weaknesses in a timely manner, having in place a 

financial system that meets Federal standards, meeting reporting deadlines, and complying with 

laws and regulations. The standards ensure the financial data produced by Federal agencies is 

both timely and reliable. 

The “Green” standards measure the ultimate objective of financial management reform: ensuring 

that financial information is available for managers on demand and that information is actively 

being used to drive results in key areas of operations. 

Agencies must present evidence to OMB that the standards have been met, and OMB assesses 

many factors including: the goals that agencies are looking to achieve, how agencies are using 

data strategically to drive the goals, and how agencies will measure the results to know the 

desired goals were achieved. In order to maintain ‘Green’ status, agencies need to have a plan to 

continually expand their efforts so that all managers have the financial information needed to 

operate their programs. 

The following charts show the current Standards for Success for the Improving Financial 

Performance Scorecard, as well as the current Status and Progress scores for each agency. The 

fourth quarter results provided here present the agencies’ ratings as of September 30, 2007. 

These ratings were before the publication of the fiscal year 2007 audited financial statements. 

Federal Financial Management Report (2008) 44 
 The President’s Management Agenda 

Improving Financial Performance Standards for Success 

(as of 4th Quarter FY 2007)

Explanation of Current Status Score 

Agency: 

• Meets all Yellow Standards for Success; 

• Currently produces accurate and timely 

financial information that is used by 

management to inform decision-making and 

drive results in key areas of operations; 

• Is implementing a plan to continuously 

expand the scope of its routine data use to 

inform management decision-making in 

additional areas of operations. 

• Reports in its audited financial statements 

that its systems are in compliance with the 

Federal Financial Management Improvement 

Act; 

• Has no repeat material auditor-reported 

internal control weaknesses; AND

• Has no repeat material weakness reported 

under Section 2 Over Financial Reporting and 

no repeat non-conformances reported under 

Section 4 of the Federal Managers’ Financial 

Integrity Act that impact the agency’s internal 

control over financial reporting or financial 

systems. 

Agency: 

• Receives an unqualified opinion on its 

audited annual financial statements; 

• Meets financial reporting deadlines; 

• Has no chronic or significant Anti-Deficiency 

Act Violations; 

• Has no more than one repeat material 

auditor-reported internal control 

weaknesses; 

• Has no material non-compliance with laws 

or regulations; AND

• Has no more than one repeat material 

weaknesses reported under Section 2 over 

Financial Reporting and no more than one 

non-conformance reported under Section 4 

of the Federal Managers’ Financial Integrity 

Act that impact the agency’s internal 

control over financial reporting or financial 

systems. 

Agency: 

• Receives an opinion other than 

unqualified on its annual financial 

statements; 

• Does not meet financial reporting 

deadlines; 

• Cannot report in its audited annual 

financial statements that its systems are 

in compliance with the Federal Financial 

Management Improvement Act; 

• Commits chronic or significant AntiDeficiency Violations; 

• Has more than one repeat material 

auditor reported internal control 

weaknesses; 

• Is in material non-compliance with laws 

or regulations; OR

• Has more than one repeat material 

weaknesses reported under Section 2 

over Financial Reporting and more than 

one non-conformance reported under 

Section 4 of the Federal Managers’ 

Financial Integrity Act that impact the 

agency’s internal control over financial 

reporting or financial systems. 

Explanation of Progress Score 

Green – Implementation is proceeding according 

to plans.

Yellow – Slippage in implementation schedule, 

quality of deliverables, or other issues requiring 

adjustments by agency in order to achieve 

initiative on a timely basis.

Red – Initiative in serious jeopardy. Unlikely 

to realize objectives without significant 

management intervention.

Federal Financial Management Report (2008) 45 
Executive Branch Management Scorecard 

Financial Management (Baseline – Current) 

FY02 Q2 FY04 Q4 FY06 Q4 FY07 Q4 FY08 Q1 FY02 Q2 FY04 Q4 FY06 Q4 FY07 Q4 FY08 Q1

AGRICULTURE RRRRR GGGGY

COMMERCE RYGGG GGGGG

DEFENSE RRRRR GYGGY

EDUCATION RGGGG GGGGG

ENERGY RGRRG GGGGG

EPA RGGGG YGGGG

HHS RRRRR YYGGG

HOMELAND RRRR GRYY

HUD RRRGG YYGGG

INTERIOR RRRYY YGGGG

JUSTICE RRRRY GGGGG

LABOR YGGGG GGGGG

STATE RYGGR GGGGY

DOT RRRRY GGGGG

TREASURY RRRYY YYGGY

VA RRRRR GRGYY

AID RRYGG YGGGG

Corps of Eng RRRRR YYGYG

GSA YRRGG GGGGG

NASA RRRRR GRYGY

NSF GGGGG GGGGG

OPM RYYGG GGGGG

SBA RRRYG YGGGG

SMITHSONIAN RRGGG YYGGG

SSA YGGGG GGGGG

Current Status Progress

Federal Financial Management Report (2008) 46 
Appendix G: Debt Collection Deficiencies and Corrective 

Actions 

Agency Deficiency Corrective Actions to be Taken or Recently 

Completed 

Agriculture 

(USDA) 

Some agencies within USDA have not been 

compliant with the requirement to write off 

delinquent debt more than 2 years old if 

there are no estimated material collections. 

USDA established a departmental waiver program 

and continues to coordinate write-off plans across 

the agency identifying bureau-specific action items. 

Health and 

Human 

Services 

(HHS) 

The Centers for Medicare and Medicaid 

Services have not been reporting all eligible 

discharged/closed-out debt to the Internal 

Revenue Service (IRS) on Form 1099C. 

HHS is currently implementing the system changes 

necessary to report all eligible discharged/closed-out 

debt to the IRS on Form 1099C. HHS anticipates the 

completion of system changes in 2008 with the 

issuance of Form 1099C in January 2009. 

Social 

Security 

Administration 

(SSA) 

SSA previously reported that the Old-Age 

and Survivors Insurance and Disability 

Insurance (OASDI) and Supplemental 

Security Income (SSI) programs have not 

been compliant with the requirement to 

write-off delinquent debt greater than 2 

years old, if there are no estimated material 

collections. 

SSA has completed all of the necessary actions to 

ensure compliance for both the OASDI and SSI 

programs. 

Homeland 

Security 

(DHS) 

DHS previously identified a need to develop 

comprehensive debt collection procedures. 

DHS components have issued policies; 

however, corrective actions completed to 

date have not been fully effective in 

ensuring that all eligible debts are referred 

to the appropriate program (e.g., Treasury 

Offset Program). 

DHS has developed a working group tasked with 

reviewing and commenting on pre-published debt 

management policy initiatives and conducting 

periodic debt collection workshops. DHS’ FY 2008 

internal control audit will continue to examine debt 

collection procedures. 

State (DOS) Detailed procedures for recording the writeoff of debts in the accounting system are 

not fully developed. 

These procedures will be finalized after the 

implementation of a new domestic financial 

management system. The implementation date is 

still to be determined. 

Labor (DOL) Historically, the Mine Safety and Health 

Administration (MSHA) had not referred 

aged delinquent debt to Treasury for 

collection and DOL agencies had not 

complied with the requirement to write off 

delinquent debt greater than 2 years old if 

there were no estimated material 

collections. 

MSHA has referred 93% of eligible debts to Treasury 

for collection. DOL agencies have improved the 

write-off of debt greater than 2 years old in 

accordance with OMB Circular No. A-129. 

Defense 

(DOD) 

In 2006, DOD identified a deficiency in that 

the Taxpayer Identification Number (TIN) 

was not provided on all certified vouchers 

submitted to a disbursing office for 

payment. 

In 2007, DOD reports that a valid TIN is captured in 

more than 90% of commercial payments. 

Justice (DOJ) The FBI previously identified problems with 

treating debt in a uniform manner. The 

Executive Office for United States Attorneys 

(EOUSA) previously identified problems 

with the recording of interest and penalties 

during the pendency of bankruptcy cases. 

The FBI compiled a Debt Collection Manual and a 

2007 policy initiative which consolidates FBI debt 

collection matter in a single unit. EOUSA resolved 

the identified recording problems. 

Federal Financial Management Report (2008) 47 
Appendix H: The Office of Federal Financial Management’s 

Strategic Objectives 

Objective 1: Provide effective leadership on Government-wide financial management 

improvement initiatives that result in successful outcomes for the financial 

management-related initiatives of the PMA. 

• Improper Payments. Coordinate and implement the PMA initiative on improper 

payments to ensure that agencies are taking the necessary steps to report improper 

payment measurements on all high-risk programs and reduce Government-wide improper 

payments. By 2012: 

o Close reporting gap on high-risk programs. 

o Reduce improper payment rate for programs originally reported in FY 2004 to 

2.5%. 

• Financial Performance. Coordinate and implement the PMA initiative on financial 

performance to ensure that agencies achieve all financial management compliance 

indicators and use financial data strategically to drive results. By 2012: 

o All agencies continue to meet the 45-day deadline reporting deadline. 

o 10% reduction in repeat material weaknesses annually, with the Government-wide 

weakness total at 30 or fewer. 

o 22 out of 24 major agencies achieve a clean audit opinion. 

• Real Property. Coordinate and implement the PMA initiative on real property asset 

management to ensure that agencies are meeting right-sizing goals including the 

disposition of unneeded assets. By 2012: 

o Achieve $1 to $3 billion in real property disposals annually with a cumulative 

total of $12 billion in disposals between 2004 and 2012. 

Objective 2: Issue Government-wide financial management policies and requirements 

that are user-friendly, transparent, consistently complied with by Federal agencies and 

that facilitate improved financial management without undue burden on agency and 

taxpayer resources. 

• Financial Systems Oversight. Implement the FMLoB initiative, achieving lower-risk and 

lower-cost results in financial system modernizations and activities through leveraging of 

shared service providers and other standardization efforts. Also, coordinate the oversight 

of Federal financial systems implementations to ensure that agencies are implementing 

and maintaining financial systems that are in compliance with OMB requirements and the 

FFMIA. 

Federal Financial Management Report (2008) 48 
Federal Financial Management Report (2008) 49 

• Strengthening Internal Controls. Improve the effectiveness of Government-wide 

internal controls, such that all CFO Act agencies are compliant with Circular No. A-123 

with no scope limitations. 

• Government-wide Financial Reporting. Contribute to the achievement of a clean audit 

opinion on all the Government-wide financial statements by helping to develop and 

implement solutions that eliminate existing material weaknesses and prevent the 

occurrence of new weaknesses. Achieve a 20% annual reduction in intragovernmental 

imbalances listed on the CFOC’s Watch List. 

• Grants. Implement Government-wide solutions that increase transparency of grant 

activities, lower administrative costs, and simplify application and reporting.