EXECUTIVE OFFICE OF THE PRESIDENT 


OFFICE OF MANAGEMENT AND BUDGET 


WASHINGTON, D.C. 20503 

THE DIRECTOR 	 September 20, 2013 

M-13-23 

MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND 

ESTABLISHMENTS 

FROM: 	 Sylvia M. Burwell ~..8 Director 


SUBJECT: 	 Appendix D to Circular No. A-123, Compliance with the Federal Financial 


A1anagementlmprovementActofl996 


In support of the Administration's commitment to making the Government more 

efficient, effective, and creative, the Office of Management and Budget (OMB) re-examined 

existing financial systems policy to ensure we meet the purposes ofthe Federal Financial 

Management Improvement Act (FFMIA) of 1996. One of the purposes ofFFMIA was to 

provide for the establishment ofuniform.fmagu:i_al systems, standards, and reporting. Initial 

efforts to implement the FFMIA resulted in burdensome compliance frameworks that contributed 

to outcomes that did not make sense. Specifically, financial system modernization projects all 

too often cost more than they should, took longer than necessary to deploy, and delivered 

solutions that did not meet our business needs. 

Building on recent policies-including OMB Memoranda M-10-26, Immediate Review 

ofFinancial Systems IT Projects, and M-13-08, Improving Financial Systems through Shared 

Services-Appendix D to Circular No. A -123 defines new requirements for determining 

compliance with the FFMIA. The goal of this Appendix is to transform our compliance 

framework so that it will contribute to efforts to reduce the cost, risk, and complexity of financial 

system modernizations. The objective ofthis approach will be to provide additional flexibility 

for Federal agencies to initiate smaller-scale financial modernizations as long as relevant 

financial management outcomes (e.g., clean audits, proper controls, timely reporting) are 

maintained. The Appendix: 

• 	 Replaces "check the box" compliance approaches with an outcome-based approach to assess 

FFMIA compliance and establishes aseries offinancial management goals that are common 

to all Federal agencies; 

• 	 Removes unnecessary financial management system requirements that drive complexity and 

cost and focuses on requirements thatemphasize the Federal Government's business and 

information needs; 

• 	 Eliminates the lengthy and resource-intensive financial system software test and certification 

program and the requirement that financial management system requirements be met through 

1 
a single technology product and emphasizes the deployment of newer, cost-effective 


technology through shared service approaches; and 


• 	 Solidifies the Department ofTreasury's (Treasury) role in achieving Government-wide 

financial systems policy goals by adding responsibilities to develop and maintain, in 

coordination with OMB and Federal agencies, Federal Financial Management System 

Requirements and to publish the requirements in the Treaswy Financial Manual. 

The interim final version ofAppendix D to OMB Circular No. A-123 is effective 

October 1, 2013. OMB plans to continue to work closely with Treasury, the Chief Financial 

Officers Council and the President's Council oflnspectors General on Integrity and Efficiency to 

provide further implementation guidance. 

2 
APPENDIX D: COMPLIANCE WITH THE FEDERAL FINANCIAL MANAGEMENT 


IMPROVEMENT ACT OF 1996 

TABLE OF CONTENTS 

1. Purpose 

2. Rescission 

3. Authorities 

4. Applicability/Scope 

5. Definitions 

6. Policy 

7. FFMIA Compliance 

8. Responsibilities 

9. Compliance with Section 508 of the Rehabilitation Act 

10. Information Contact . 

11. Review Date 

12. Effective Date 

13. Revision Summary 

1. Purpose 

To provide guidance in determining compliance with the FFMIA for agencies subject to the 

Chief Financial Officers Act of 1990 (CFO Act). 

2. Rescission 

Appendix D rescinds all previously issued versions of Circular No. A-127, Financial 

Management Systems, dated December 19, 1984; July 23, 1993; June 10, 1999; December 1, 

2004; and January 9, 2009. 

3. Authorities 

Appendix Dis issued pursuant to the Budget and Accounting Procedures Act of 1950 (31 

U.S.C. 3512, 3513); the Federal Managers' Financial Integrity Act of 1982, Pub. L. 97-255 

(31 U.S.C. 3512(c), (d)) (FMFIA); the Chief Financial Officers Act of 1990, Pub. L. 101-576 

(CFO Act); 31 U.S.C. Chapter 11; the Federal Financial Management Improvement Act of 

1996, Pub. L. 104-208 (31 U.S.C. 3512 note) (FFMIA); the Clinger-Cohen Act (also known 

as the Information Technology Management Reform Act of 1996) (Pub. L. 104-106, Div. E); 

and the Federal Information Security Management Act of2002, Pub. L. 104-347 (44 U.S.C. 

3541 et seq.) (FISMA). 
4. Applicability/Scope 

A. 	The policies contained in Appendix D apply to the 24 CFO Act agencies. Component 

agencies are not required to be assessed separately, but should be included in the agencywide assessment. Agencies not governed by the CFO Act are encouraged to follow the 

guidance. 

B. 	The financial management systems identified in Appendix D must adhere to the policies 

and procedures contained in OMB Circular No. A-123, Management's Responsibility for 

Internal Control (Circular A-123). 

C. 	The policies contained in OMB Circular No. A-130, Management ofFederal information 

Resources (hereinafter Circular A-130), govern agency management ofinformation 

systems and technology investments, including financial management systems. The 

policies contained in Circular A-130 apply to all agency information resources, including 

financial management systems as defmed in Appendix D. 

D. 	The financial management systems identified in Appendix D must adhere to the policies 

and procedures contained in OMB Circular No. A-136, Financial Reporting 

Requirements (Circular A-136). 

E. 	Transactions are posted to the financial system in accordance with the standard general 

ledger accounting requirements the Department ofTreasury (Treasury) published in the 

United States Standard General Ledger (USSGL) supplement to the Treasury Financial 

Manual (TFM). 

5. 	 Definitions 

For the purposes ofAppendix D, and viewing the definitions in Section 806 ofthe FFMIA in 

light of current accounting information system practices, the following definitions apply: 

Afinancial management system includes an agency's overall financial operation, reflecting 

the people, processes, and technology to capture, classify, summarize, and report data in a 

meaningful manner to support business decisions. It includes hardware, applications and 

system software, personnel, procedures, data, and reporting functions. The financial 

management system can be fully integrated with other management information systems (i.e., 

mixed systems) where transactions automatically flow into an accounting general ledger. 

The financial management system could also include manual processes to post transactions 

from other management systems into the accounting general ledger. 

The financial system is an information system or set of applications that comprise the 

accounting portion ofthe financial management system that maintains all summary or 

detailed transactions resulting from budgetary and proprietary financial activity. The 

financial system encompasses processes and records that: 

• 	 Identify and record all valid transactions; 

2 
• 	 Describe on a timely basis the transactions in sufficient detail to permit proper 

classification oftransactions for financial reporting; 

• 	 Measure the value oftransactions in a manner that permits recording their proper 

monetary value in the financial statements; and 

• 	 Determine the time period in which transactions occurred to permit recording of 

transactions in the proper accounting period. 

A mixed system is a hybrid offinancial and non-financial portions ofthe overall financial 

management system. The following are examples ofmixed systems: payment and invoice 

systems, procurement systems, receivable systems, loan systems, grants systems, payroll 

systems, budget formulation systems, billing systems, property management systems, travel 

systems, or other mission operational systems that impact a financial system. 

6. 	 Policy 

The Federal Government's financial management system policy is to make the best use of 

financial management systems to initiate, record, process, and report transactions to support 

agency missions in making business decisions and to provide transparency to the public. 

These systems shall help agencies ensure the effectiveness and efficiency of operations, 

reliability offinancial reporting, and compliance with applicable laws and regulations. 

To comply with this policy, each agency shall acquire, implement, and maintain financial 

management systems following the policies prescribed in Circular A-130, as well as 

associated financial management system guidance. For example, agencies must: 

• 	 Meet information technology needs through cost-effective intra-agency and interagency sharing; and 

• 	 Maximize the use of commercial, off-the-shelf technology. 

In addition, OMB Memorandum M-13-08, Improving Financial Systems Through Shared 

Services (March 25, 2013) and subsequent guidance provides further direction for leveraging 

s];lared service solutions for future modernization offinancial or mixed systems. 

7. 	 FFMIA Compliance 

A. 	FFMIA requires that each agency, as identified in Section 4.A, shall establish and 

maintain financial management systems that substantially comply with the following 

three FFMIA Section 803(a) requirements: Federal Financial Management System 

Requirements, applicable Federal accounting standards, and the USSGL at the transaction 

level. 

3 
1. Federal Financial Management System Requirements 

Federal Financial Management System Requirements consist ofthree parts: 

(a) reliable financial reporting, (b) effective and efficient operations, and 

(c) compliance with applicable laws and regulations. 

A. 	Financial reporting objectives include reliable, timely, and accurate fmancial 

information for managing day-to-day operations and reporting on an agency's 

financial condition. Reliable financial reporting also includes maintaining 

internal control over financial reporting and financial system security. 

B. 	 Effective and efficient operations objectives include maintaining cost effective 

financial operations and ensuring resources are safeguarded against waste, 

loss, and misuse. 

C. 	 Compliance objectives ensure financial transactions are consistent with laws, 

regulations, and policies. 

OMB and Treasury will develop, issue, and maintain the Federal Financial 

Management System Requirements to support these areas and publish them in the 

TFM. 

ii. 	 Federal Accounting Standards 

Agency financial management systems shall maintain accounting data to permit 

reporting in accordance with Generally Accepted Accounting Principles (GAAP). 

The Federal Accounting Standards Advisory Board (F ASAB) is the body designated 

by the American Institute ofCertified Public Accountants (AICPA) as the source of 

GAAP for Federal reporting entities. The GAAP Hierarchy consists of the sources of 

accounting principles and the framework for selecting the principles used in the 

preparation of general-purpose financial statements of Federal reporting entities. The 

sources of accounting principles that are generally accepted are categorized in 

descending order of authority as follows 1

: 

A. 	 Officially established accounting principles consist ofFASAB Statements of 

Federal Financial Accounting Standards (Standards) and Interpretations. 

F ASAB Standards and Interpretations will be periodically incorporated in a 

publication by the F ASAB. 

1 !fan accounting transaction or event is not specified by a pronouncement in category A, then the Federal entity 

should determine if the accounting treatment is specified by an accounting principle ofone ofthe remaining 

categories (8 through D) in descending order of importance. The Federal entity should consider accounting 

principles for similar transactions or events within categorie!> A through D before considering other accounting 

literature. However, a Federal entity should not follow the accounting treatment specified in accounting principles 

for similar transactions or events where those accounting principles either (1) specifically prohibit the application of 

the accounting treatment to the particular transaction or event, or (2) indicate that the accounting treatment should 

not be applied to other transactions or events by analogy. 

4 
B. 	 F ASAB Technical Bulletins and, if specifically made applicable to Federal 

reporting entities by the AICP A and cleared by the F ASAB (i.e., F ASAB does 

not object to the pronouncement's issuance), AICPA Industry Audit and 

Accounting Guides. 

C. 	 Technical Releases ofthe Accounting and Auditing Policy Committee ofthe 

FASAB. 

D. Implementation guides published by the F ASAB staff, as well as practices that 

are widely recognized and prevalent in the Federal Government. 

Requirements in OMB Circular No. 136, Financial Reporting Requirements that are 

not specified by a pronouncement described in categories A through C above are 

considered to be at level D ofthe Federal GAAP Hierarchy because they constitute 

"practices that are widely recognized and prevalent in the Federal Government." 

iii. The U.S. Government Standard General Ledger at the Transaction Level2 

Financial events shall be recorded applying the requirements of the USSGL guidance 

in the TFM. Application ofthe USSGL at the transaction level means that each time 

an approved transaction is recorded in the financial management system, it will 

generate appropriate general ledger accounts for posting the transaction according to 

the rules defmed in the USSGL guidance. 

B. 	 Each audit required by 31 U.S.C. 3521(e) must report whether the agency financial 

management systems comply with the requirements of Section 803(a). Further, the head 

of an agency subject to the CFO Act must annually determine whether its financial 

management systems comply with the requirements of Section 803(a). Management's 

determination shall be based upon the performance ofthe three requirements of 

Section 803(a) and the consideration ofthe results of that performance. Management 

should use the performance results from various sources, including the report on its 

annual financial statements, reports on the effectiveness ofinternal controls, and other 

performance results or evaluations, as appropriate. 

The FFMIA Compliance Determination Framework (Attachment 1) was developed to 

assist agencies in determining whether they are in compliance with the Section 803(a) 

requirements of FFMIA. The Framework is a risk and evidence-based assessment model 

that leverages existing audit tests, evaluations, and reviews that auditors, agency 

management, and others already perform. This work may include the external audit 

report and internal reports prepared by the agency in providing any assurances over the 

financial statements. The major elements of the framework are as follows: 

• 	 There are a series offinancial management goals common to all Federal agencies 

and agreed upon by the financial management community. For example, one goal 

2 Individual transactions may be recorded in the financial system in detail or in summary as long as the transaction is 

traceable to the transaction source. 

5 
is to "provide timely and reliable Federal financial management information of 

appropriate form and content for continuing use by stakeholders external to the 

agency, including the President, the Congress, and the public." 

• 	 One or more compliance indicator(s) is associated with each financial 

management goal. The indicators specify the recommended evidence agencies 

should consider when determining whether it meets each goal. For example, one 

compliance indicator for the above-referenced goal is the agency's audit opinion 

on its financial statements.3 Each compliance indicator corresponds to one or 

more of the Section 803(a) requirements. The authoritative references include the 

applicable USSGL and F ASAB sources. 

• 	 Each compliance indicator has recommended risk (or performance) levels 

agencies should consider when evaluating whether it meets the goal. For 

example, an agency with an unqualified opinion on its financial statements and no 

material weaknesses would be at low risk for not being in compliance with 

FFMIA, while an agency that has material weaknesses, even with an unqualified 

opinion, would likely be at high risk for not being in compliance. 

Agency compliance indicators may consist of a mix ofrisk levels (i.e., some indicators 

may be at low risk while others at a medium or high level of risk). In making the 

compliance determination, each agency head will need to assess the relative importance 

or weight ofthe financial management goals for the agency and apply judgment when 

making the final compliance determination. An agency does not have to be at low risk 

for each compliance indicator to be in compliance with FFMIA. Still, lower risk should 

decrease the likelihood that an agency is not in compliance, while higher risk should 

increase the likelihood that an agency is not in compliance. 

C. 	 For agencies that use shared service organizations, the service organizations are required 

to provide customer agencies with a Report on Controls at a Service Organization 

Relevant to User Entities' Internal Control over Financial Reporting (also known as a 

SOC 1). The SOC 1 is an important tool for agency management and auditors as they 

evaluate the effect ofthe controls at the service organization on the user entities' controls 

for financial reporting. Agency and auditor testing of a service provider's controls could 

take the form of input/output controls, performance monitoring, or process controls. 

8. 	 Responsibilities 

Agencies shall perform the fmanciai management system responsibilities prescribed by the 

legislation listed in Section 3 ("Authorities") and the regulations listed in Section 4 

("Applicability/Scope") ofthis Appendix. The responsibilities include, but are not limited to, 

the following: 

3 Evidence ofmeeting the Government-wide financial management goals may include the results ofmanagement 

assessments of internal control, audits, compliance reviews, and other information that is considered relevant and 

appropriate. 

6 
A. Office of Management and Budget 

• 	 Issue policy on the establishment ofFederal Government financial management 

systems. 

• 	 Issue policy on the assessment of financial management system compliance with 

Section 3 ("Authorities") of this Appendix. 

• 	 Monitor the establishment and operation of Federal Government financial 

management systems and their compliance with Section 3 ("Authorities") ofthis 

Appendix. 

• 	 Establish a governance structure that provides clear roles and responsibilities of key 

stakeholders, such as Treasury, agencies, and other boards to ensure the intended 

outcomes ofthe FFMIA are achieved. 

• 	 Provide additional guidance and criteria for how ongoing and future financial systems 

modernization projects will be evaluated or evaluate any proposed changes to the 

financial management system requirements. 

B. 	 CFO Act Agencies 

• 	 Develop and maintain fmancial management systems, in accordance with Circular 

A-130 and Circular A-123, which comply with Section 6 ("Policy") ofthis Appendix. 

• 	 Determine annually whether financial management systems of the agency comply 

with Section 6 ("Policy") ofthis Appendix. 

• 	 Establish, ifneeded, a remediation plan identifying resources, remedies, and target 

dates to bring the agency's financial management systems into compliance. 

• 	 Report, if needed, compliance with the Federal Financial Management System 

Requirements, Federal accounting standards, and USSGL at the transaction level 

through the reporting structure established by Section VI ofCircular A-123. 

C. 	Department of the Treasury 

• 	 Develop and maintain the Federal Financial Management System Requirements that 

agencies' financial management systems must support to be in compliance with 

Section 6 ("Policy") ofthis Appendix. 

• 	 Establish and co-chair, with OMB, a Change Advisory Board to evaluate and 

approve, as necessary, any proposed changes to the Federal Financial Management 

System Requirements. 

7 
• 	 Coordinate approved changes to the Federal Financial Management System 

Requirements with OMB and agencies to minimize the cost and organizational 

impact of the changes. 

• 	 Support OMB with other financial management system responsibilities. 

9. 	 Compliance with Section 508 of the Rehabilitation Act 

Each agency must ensure that the electronic and information technology developed, 

procured, maintained, or used pursuant to this Appendix is accessible to individuals with 

disabilities as required by Section 508 ofthe Rehabilitation Act. 

10. Information Contact 

All questions or inquiries should be referred to the Office of Federal Financial Management 

at (202) 395-3993. 

11. Review Date 

Appendix D shall be reviewed three years from its issuance date to ascertain its effectiveness 

and revise as needed. 

12. Effective Date 

The interim final version of Appendix D to OMB Circular No. A-123 is effective 


October 1, 2013. 


13. Revision Summary 

Section Revision to Circular Purpose ofRevision 

Section 1. 

Purpose 

Changed Circular No. A-127 to 

Circular No. A-123, Appendix D 

To provide a single source of 

guidance for OMB's policies for 

.internal controls, including those 

over financial management 

systems, and the Federal Managers' 

Financial Integrity Act of 1982 

Section 3. 

Authorities 

Added the Budget and Accounting 

Procedures Act of 1950 

To align the Department of the 

Treasury's responsibilities for 

maintaining consolidated financial 

management systems with agency 

financial management systems 

Section 4. 

Applicability/Scope 

Revised references To update references and make 

them current 

8 
Section Revision to Circular Purpose of Revision 

Section 5. 

Definitions 

Revised various definitions To update definitions to provide 

agencies with more options for 

designing and operating their 

fmancial management systems, 

including eliminating the term core 

financial system and using the 

statutory termfinancial system 

Section 6. 

Policy 

Removed requirements to 

implement financial systems 

certified by the Financial Systems 

Integration Office 

To update and remove references to 

discontinued core financial systems 

testing and product certification 

functions 

Section?. 

Service Provider 

Requirements 

Removed requirements for 

selecting a service provider 

To narrow the scope of this 

Appendix to meeting FFMIA 

compliance requirements 

Section 7. 

FFMIA Compliance 

Revised the guidance for FFMIA 

compliance determinations 

To clarify the definition ofFFMIA 

compliance and align compliance 

determinations with the revised 

fmancial management system 

requirements, to be published in the 

Treasury Financial Manual 

Section 8. 

Assignment of 

Responsibilities 

Removed responsibilities for the 

Financial Systems Integration 

Office and General Services 

Administration 

To align responsibilities with the 

elimination ofthe financial system 

certification program 

New Section New Requirement 

Section 8.C 

Department ofthe 

Treasury 

Added responsibilities for the Department ofthe Treasury to develop, in 

coordination with OMB and Federal agencies, the Federal Financial 

Management System Requirements 

9 
Attachment 1- FFMIA Compliance Determination Framework 

Organization and Content 

The compliance model information contained in this Attachment is organized as follows: 

• 	 Federal Financial Management Categories: Categories are groupings ofrelated goals. The two categories are (1) financial 

information management and reporting and (2) fmancial management and internal controls. 

• 	 Federal Financial Management Goals: Goals articulate clear statements ofwhat the agency wants to achieve to advance its 

mission and address relevant problems, needs, and challenges. The first two digits of a goal's reference ID correspond to the first 

two digits of each requirement's ID from the "Federal Financial Management System Requirements" contained in the Treasury 

Financial Manual. For example, requirement 1.1.1.1, "provide GL account classifications," corresponds to goall.l , "consistently, 

completely, and accurately record and account for Federal funds, assets, liabilities, revenues, expenditures, and costs." Further, 

each requirement has a reference to the associated financial management regulatory guidance that promulgates the three 

requirements of Section 803 (a) ofthe FFMIA. Achievement of goals should be assessed to determine whether an agency is in 

compliance with FFMIA. 

• 	 Federal Financial Management Compliance Indicators: Compliance indicators are quantifiable or otherwise observable 

characteristics used to measure progress towards goals and demonstrate how well or at what level a goal has been achieved. 

Indicators are a subset ofthe information already being produced by agencies and auditors. 

• 	 Risk Levels: Risk levels identify the degree ofrisk that the agency is not in compliance with FFMIA. 

The figure below provides an overview ofthe compliance model framework for determining FFMIA compliance. 
Financia l 

Management Goals 

Compliance 

lndicato,rs 

FFMIA 803(a) 


Requirements 


Federal Financial 

t n formatio n 

ManagementAnd 

Reporti n g 

Financial 


StatementAudit 


Results 


FederalAccounting 


Standards 


Financial 


Managementand 


Internal Controls 


AgencyA-123 


I nternal Control 


Reviews 


~ 

Agency A-123, 


Appendix A, 


Internal Control 


Revievils 


FISMA Reviews 

I Othe' I


Financial 


M anagement 


system 


Requirements 


US Standard 


G e neral Ledgerat 


theT ran saction 


Level 


2 
Intended Use 

Each CFO Act agency shall determine whether its financial management systems comply with the three requirements of 

Section 803(a) ofthe FFMIA. The FFMIA Compliance Determination Framework includes performance results based on annual 

financial statements, the "Federal Financial Management System Requirements" contained in the Treasury Financial Manual, and 

other information considered relevant and appropriate. The FFMIA Compliance Determination Framework goals and compliance 

indicators are intended to be used during the ongoing operation ofFederal financial management systems. 

• 	 Agency Heads should use the goals and compliance indicators to assist in determining FFMIA compliance. If a goal is not met, 

then the Agency Head should evaluate the associated fmancial management system requirements and the effectiveness ofrelated 

internal controls to help identifY the root cause(s) offailure to meet the goal. Financial management system requirements are 

defined in the "Federal Financial Management System Requirements" document contained in the Treasury Financial Manual. 

• 	 Meeting key compliance indicators associated With the goals puts an agency at lower risk of not being in compliance with FFMIA. 

Table 1, FFMIA Compliance Determination Framework, provides an overview ofthe risk levels associated with the compliance 

indicators. For example, receiving a qualified, disclaimer, or adverse opinion on the fmancial statements puts the agency at high 

risk ofnot being in substantial compliance with any one ofthe three Section 803(a) requirements, while receiving an unqualified 

opinion without material weaknesses most likely puts the agency at low risk. 

• 	 Agency Heads should use the table to inform their determination ofcompliance with FFMIA. 

o 	 While the compliance indicators are the key ones to be considered in the determination of compliance, they are not meant 

to provide a complete list ofwhat can be considered in assessing achievement of each goal. In other words, a low risk 

rating for compliance indicator 1.2.a does not necessarily provide full assurance that goal 1.2 has been achieved. 

o 	 It is anticipated that an agency's compliance indicators will fall into a mix of risk levels; for example, compliance indicator 

l.l.a may be at the low risk level, while 1.2.a might be at the medium risk level. 

o 	 Agency Heads will need to assess the relative importance ofthe various compliance indicators and risk levels for their 

agencies and apply their judgment in making the determination ofsubstantial compliance with the three Section 803(a) 

requirements of FFMIA. 

• 	 Auditors will use judgment in determining what internal control weaknesses rise to the level ofa material weakness and in making 

their determination ofFFMIA compliance. 

3 
o 	 Auditors may use these goals and compliance indicators to help determine FFMIA compliance. For example, auditors 

performing the financial statement audits may use the results of other types of audits (e.g., other financial, performance, 

compliance), as appropriate, in their determination ofFFMIA compliance. 

o 	 OMB audit guidance provides auditors with information on determining FFMIA compliance, which should be combined 

with any auditor assessments of agency goal achievement. 

4 
Table 1. 

' 	

FFMIA C ·rr ~ -- D F k 


GOAL 
 COMPLIANCE INDICATOR RISK (OR PERFORMANCE) LEVEL 

LOW RISK MEDIUM RISK HIGH RISK 

1. Federal Financial Information Management And Reportin~ 

1.1. Consistently, 

-~ 

1.l.a Current I prior year's agency­ • Agency- or • Agency-reported • Agency- or 

completely, and reported material weaknesses, auditor-reported reportable auditor-reported 

accurately record reportable conditions, or non- control conditions or non­ material 

and account for conformances, 1 or auditor- deficiencies that conformances weaknesses 

Federal funds, reported material weaknesses, individually or OR 

assets, liabilities, or significant deficiencies2 collectively are • Auditor-reported 

revenues, related to accounting for and not considered significant 

expenditures, and recording Federal funds, significant deficiencies 

costs assets, liabilities, revenues, 

expenditures, and costs 

1.2 Provide timely and 1.2.a Current I prior year's agency­ • Agency-reported­ • Agency-reported • Agency-reported 

reliable Federal reported material weaknesses, control reportable material 

financial reportable conditions, or non- deficiencies that conditions or non- weaknesses 

management conformances related to individually or conformances 

information3 of internal reporting of financial collectively are 

appropriate form management information not considered 

and content to used for managing current significant 

agency program Government programs and 

managers for activities 

managing current 

Government 

programs and - ·-­

1 As used in this model, "agency-reported material weaknesses or reportable conditions or non-conformances" refers to terminology for agencies defined in OMB 

Circular No. A-123. 

2 As used in this model, "auditor-reported material weaknesses or significant deficiencies" refers to terminology for auditors defmed in OMB Bulletin No. 07-04 

and subsequent guidance. 3 As used in this model, "financial management information" is generated from both agency administrative operations (for example, obligations/disbursements 

for office furniture, facilities, utilities, or personnel) and agency program operations (for example, disbursements for benefits/services to the public or collections 

oftax revenue). 

5 
GOAL COMPLIANCE INDICATOR RISK (OR PERFORMANCE) LEVEL 

LOW RISK MEDIUM RISK HIGH RISK 

activities 

1.3 Provide timely and 1.3.a Audit opinion on agency • Unqualified • Not applicable • Qualified,

reliable Federal financial statements Disclaimer, or 

financial Adverse 

management 1.3.b Unaudited interim agency • On time • Not on time for • Not on time for 

information of fmancial statements submitted current quarter current and prior 

appropriate form to OMB within 21 calendar quarters 

and content for days after the end ofthe first 

continuing use by three quarters ofthe fiscal year 

stakeholders 1.3.c Agency financial reports • On time • Not on time for • Not on time for 

external to the submitted to OMB, the current year current and prior 

agency, including Government Accountability years 

the President, the Office, and the Congress by 

Congress, and the November 15 

public 

1.4 Provide timely and 1.4.a Agency costs, as presented in • Agency- or • Agency-reported • Agency- or

reliable Federal the Statement ofNet Costs, in auditor-reported reportable auditor-reported 

financial accordance with OMB Circular control conditions or non­ material 

management No. A-136, are clearly linked to deficiencies that conformances weaknesses 

information of agency strategic goals and are individually or OR 

appropriate form free from agency-reported collectively are • Auditor-reported 

and content that can material weaknesses, reportable not considered significant 

be linked to conditions, or non­ significant deficiencies 

strategic goals and conformances, or auditor-


performance 
 reported material weaknesses or 

4 information significant deficiencies 

1.4.b Financial and performance • Agency-reported • Agency-reported • Agency-reported

4 This goal is meant to present OMB's long-term intention for linking financial management information to strategic goals and performance information. The 

compliance indicators to assess progress on achieving this goal vary widely across agencies, are evolving, and should be viewed as interim ones to help move 

agencies towards accomplishment ofthe goal over time. 

6 
GOAL COMPLIANCE INDICATOR RISK (OR PERFORMANCE LEVEL 

LOW RISK MEDIUM RISK IDGHRISK 

information, as presented in the control reportable material 

performance section ofthe deficiencies that conditions or non- weaknesses 

Agency Financial Report or individually or conformances 

Performance & Accountability collectively are 

Report, is free from agency- not considered 

reported material weaknesses, significant 

reportable conditions, or nonconformances 

2. Financial Management and Internal Controls 

2.1 Provide internal 2.l.a Current I prior year's agency­ • Agency- or • Agency-reported • Agency- or 

control to restrict reported material weaknesses, auditor-reported reportable auditor-reported 

Federal obligations reportable conditions, or non- control conditions or non­ material 

and outlays to those conformances, or auditor- deficiencies that conformances weaknesses 

authorized by law reported material weaknesses or individually or OR 

and within the significant deficiencies related collectively are • Auditor-reported 

amount available to restricting agency not considered significant 

obligations and outlays to significant deficiencies 

those authorized by law and 

within the amount available 

2. 1.b Antideficiency Act (ADA) • None required • Required within • Required for 

Violation Report required to be within last 2 fiscal last 2 fiscal years current fiscal year 

submitted years preceding preceding the 

the current fiscal current fiscal year 

year 

7 
GOAL COMPLIANCE INDICATOR RISK (OR PERFORMANCE LEVEL 

LOW RISK MEDIUM RISK HIGH RISK 

2.2 Perform Federal 

financial 

management 

operations 

effectively within 

resources available 

2.2.a Current I prior year's instances 

of non-compliance with laws 

and regulations related to 

prompt payments or debts 

owed to the Federal 

Government 

• No reported 

instances 

• Instances reported 

in current year 

• Instances reported 

in current and prior 

years 

2.3 Minimize waste, 

loss, unauthorized 

use, or 

misappropriation of 

Federal funds, 

property and other 

assets within 

resources available 

2.3.a Current I prior year's agencyreported material weaknesses, 

reportable conditions, or nonconformances, or auditorreported material weaknesses or 

significant deficiencies related 

to minimizing waste, loss, 

unauthorized use, or 

misappropriation of Federal 

funds, property and other 

assets 

• Agency- or 

auditor-reported 

control 

deficiencies that 

individually or 

collectively are 

not considered 

significant 

• Agency-reported 

reportable 

conditions or nonconformances 

OR 

• Auditor-reported 

significant 

deficiencies 

• Agency- or 

auditor-reported 

material 

weaknesses 

8 
GOAL COMPLIANCE INDICATOR RISK (OR PERFORMANCE LEVEL 

LOW RISK MEDIUM RISK HIGH RISK 

2.4 Minimize Federal 2.4.a FISMA or other (for example, • Agency- or • Agency-reported • Agency-reported

financial National Institute of Standards non-conformances, 

management system 

auditor-reported control 

and Technology-related) reportable 


security risks to an 


control deficiencies

significant deficiencies5 deficiencies that OR conditions, or 

acceptable level impacting financial material 

management systems in the 

individually or • Auditor-reported 

weaknesses 

agency Security Certification 

collectively are control 

not considered deficiencies OR

and Accreditation ofFederal significant • Auditor-reported 

Information Systems significant 

deficiencies or 

material 

weaknesses -

5 OMB Memorandum 12-20 defmes a significant deficiency as "a weakness in an agency's overall information systems security program or management control 

structure, or within one or more information systems that significantly restricts the capability ofthe agency to carry out its mission or compromises the security 

of its information, information systems, personnel, or other resources, operations, or assets. In this context, the risk is great enough that the agency head and 

other agencies must be notified and immediate or near-immediate corrective action must be taken." 

9 

I