II

104TH CONGRESS

2D SESSION S. 1993

To require certain expenditures by the Federal Reserve System to be made

subject to congressional appropriations, to prohibit the maintenance of

surplus accounts by Federal reserve banks, to provide for annual independent audits of Federal reserve banks, to apply Federal procurement

regulations to the Federal Reserve System, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 26, 1996

Mr. DORGAN (for himself and Mr. REID) introduced the following bill; which

was read twice and referred to the Committee on Banking, Housing, and

Urban Affairs

A BILL

To require certain expenditures by the Federal Reserve System to be made subject to congressional appropriations,

to prohibit the maintenance of surplus accounts by Federal reserve banks, to provide for annual independent

audits of Federal reserve banks, to apply Federal procurement regulations to the Federal Reserve System,

and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Federal Reserve Fiscal

3 Responsibility Act of 1996’’.

4 SEC. 2. NON-MONETARY POLICY SPENDING SUBJECT TO

5 CONGRESSIONAL APPROPRIATIONS.

6 (a) DETERMINATION BY COMPTROLLER GENERAL.—

7 (1) IN GENERAL.—The Comptroller General of

8 the United States, in consultation with the Board,

9 shall specifically identify the functions and activities

10 of the Board and of each Federal reserve bank that

11 are related to the establishment and conduct of the

12 monetary policy of the United States.

13 (2) REPORT.—Not later than April 30, 1997,

14 the Comptroller General of the United States shall

15 submit a report to the Congress containing the in16 formation referred to in paragraph (1).

17 (b) CERTAIN SPENDING SUBJECT TO APPROPRIA18 TIONS.—After September 30, 1997, all expenditures by

19 the Board or any Federal reserve bank shall be made only

20 as provided in advance in an appropriations Act, except

21 that funds to pay expenditures related to the establish22 ment and conduct of monetary policy, as identified under

23 subsection (a), shall not be subject to appropriations in

24 advance.

25 (c) ANNUAL REPORT.—The Comptroller General of

26 the United States shall submit an annual report to the
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1 Congress on the compliance of the Federal Reserve Sys2 tem with the requirements of this section.

3 SEC. 3. TREATMENT OF SURPLUS ACCOUNT.

4 (a) TERMINATION OF SURPLUS ACCOUNT AUTHOR5 IZATION.—

6 (1) AMENDMENTS TO THE FEDERAL RESERVE

7 ACT.—Section 7(a) of the Federal Reserve Act (12

8 U.S.C. 289) is amended—

9 (A) in the subsection heading, by striking

10 ‘‘AND SURPLUS FUNDS’’;

11 (B) by striking paragraphs (2) and (3);

12 (C) in paragraph (1)—

13 (i) by striking ‘‘(1) STOCKHOLDER

14 DIVIDENDS.—’’; and

15 (ii) by redesignating subparagraphs

16 (A) and (B) as paragraphs (1) and (2), re17 spectively, and moving the margins 2 ems

18 to the left; and

19 (D) in paragraph (2), as redesignated, by

20 striking ‘‘subparagraph (A)’’ and inserting

21 ‘‘paragraph (1)’’.

22 (2) RETURN OF FUNDS.—Not later than 30

23 days after the date of enactment of this Act, each

24 Federal reserve bank shall transfer to the Board for

25 transfer to the Secretary of the Treasury for deposit
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1 in the general fund of the Treasury, all funds held

2 on the date of enactment of this Act by that Federal

3 reserve bank in a surplus account established under

4 section 7(a) of the Federal Reserve Act (as that sec5 tion existed on the day before the date of enactment

6 of this Act).

7 (b) DETERMINATION BY COMPTROLLER GENERAL.—

8 (1) IN GENERAL.—The Comptroller General of

9 the United States shall determine what percentage,

10 if any, of the net earnings of the Federal reserve

11 banks should be transferred on an annual basis to

12 the Secretary of the Treasury for deposit in the gen13 eral fund of the Treasury.

14 (2) REPORT.—Not later than 6 months after

15 the date of enactment of this Act, the Comptroller

16 General of the United States shall report its deter17 mination under paragraph (1) to the Congress, to18 gether with any recommendations for necessary leg19 islative action.

20 SEC. 4. ANNUAL INDEPENDENT AUDITS.

21 (a) AUDIT REQUIRED.—Each Federal reserve bank

22 shall annually obtain an audit from an independent audi23 tor using generally accepted auditing standards.

24 (b) AUDITOR’S QUALIFICATIONS.—The independent

25 auditor referred to in subsection (a) shall—
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1 (1) be a certified public accountant who is inde2 pendent of the Federal reserve bank; and

3 (2) meet any other qualifications that the

4 Board may establish.

5 (c) CERTIFICATION REQUIRED.—In each audit re6 quired under subsection (a), the auditor shall certify,

7 under penalty of perjury—

8 (1) that the auditor is a certified public ac9 countant and is independent of the Federal Reserve

10 System; and

11 (2) that the auditor conducted the audit using

12 generally accepted auditing standards.

13 (d) CERTIFICATION BY FEDERAL RESERVE BANK.—

14 Not later than 30 days after the completion of each audit

15 required under subsection (a), the Federal reserve bank

16 shall provide to the Comptroller General of the United

17 States—

18 (1) a certification, under penalty of perjury,

19 that—

20 (A) the Federal reserve bank has obtained

21 the audit required under subsection (c);

22 (B) the Federal reserve bank has received

23 the certifications of the auditor required under

24 paragraph (1); and
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1 (C) the audit fully complies with sub2 section (a); and

3 (2) proof that the Federal reserve bank and the

4 Board have each received a copy of the audit report.

5 (e) REPORT TO BOARD.—Each Federal reserve bank

6 shall submit a copy of the audit conducted under this sec7 tion to the Board, or an independent auditor designated

8 by the Board.

9 (f) AUDIT OF FEDERAL RESERVE SYSTEM.—The

10 Board, in consultation with the Comptroller General of the

11 United States, shall annually obtain an audit of the com12 bined financial statements of all Federal reserve banks

13 from an independent auditor, using generally accepted ac14 counting standards, based on reports of audits submitted

15 to the Board under subsection (d).

16 SEC. 5. APPLICABILITY OF FEDERAL PROCUREMENT PRO17 CEDURES.

18 (a) APPLICABILITY.—The following provisions of law

19 apply to the Board and to each Federal reserve bank as

20 if the Board and such banks were executive agencies for

21 the purposes of such provisions of law:

22 (1) Title III of the Federal Property and Ad23 ministrative Services Act of 1949 (41 U.S.C. 251 et

24 seq.).
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1 (2) Title IX of the Federal Property and Ad2 ministrative Services Act of 1949 (40 U.S.C. 541 et

3 seq.).

4 (3) The Office of Federal Procurement Policy

5 Act (41 U.S.C. 401 et seq.).

6 (4) The Information Technology Management

7 Reform Act of 1996 (division E of Public Law 104–

8 106; 40 U.S.C. 1401 et seq.).

9 (b) EFFECTIVE DATE.—This section shall become ef10 fective on October 1, 1996.

11 SEC. 6. DEFINITIONS.

12 For purposes of this Act—

13 (1) the term ‘‘Board’’ means the Board of Gov14 ernors of the Federal Reserve System; and

15 (2) the term ‘‘Federal reserve bank’’ has the

16 same meaning as in the third undesignated para17 graph of section 1 of the Federal Reserve Act.

Æ