13484 Federal Register / Vol. 60, No. 48 / Monday, March 13, 1995 / Notices

for the Kewaunee Nuclear Power Plant,

located in Kewaunee County,

Wisconsin.

The proposed amendment would

have modified the facility technical

specifications by adding requirements

for the steam exclusion system.

The Commission had previously

issued a Notice of Consideration of

Issuance of Amendment published in

the Federal Register on August 3, 1994

(59 FR 39600). However, by letter dated

February 27, 1995, the licensee

withdrew the proposed change.

For further details with respect to this

action, see the application for

amendment dated April 21, 1994, and

the licensee’s letter dated February 27,

1995, which withdrew the application

for license amendment. The above

documents are available for public

inspection at the Commission’s Public

Document Room, 2120 L Street, NW.,

Washington, DC 20555, and at the local

public document room located at the

University of Wisconsin Library

Learning Center, 2420 Nicolet Drive,

Green Bay, Wisconsin 53401.

Dated at Rockville, Maryland, this 7th day

of March 1995.

For the Nuclear Regulatory Commission.

Richard J. Laufer,

Project Manager, Project Directorage III–3,

Division of Reactor Projects—III/IV Office of

Nuclear Reactor Regulation.

[FR Doc. 95–6066 Filed 3–10–95; 8:45 am]

BILLING CODE 7590–01–M

OFFICE OF MANAGEMENT AND

BUDGET

Office of Federal Financial

Management

Notice of Proposed Revisions to OMB

Circular No. A–123, ‘‘Management

Accountability and Control’’

AGENCY: Office of Management and

Budget, Office of Federal Financial

Management.

ACTION: Proposed Revisions to OMB

Circular No. A–123.

SUMMARY: This Notice offers interested

parties an opportunity to comment on

proposed revisions to OMB Circular No.

A–123, ‘‘Management Accountability

and Control.’’

FOR FURTHER INFORMATION CONTACT:

Cindy Salavantis, OMB, Office of

Federal Financial Management, (202)

395–6911.

Dated: March 7, 1995.

John B. Arthur,

Associate Director for Administration.

Attachment

Management Accountability and

Control

AGENCY: Office of Management and

Budget.

ACTION: Proposed Revisions to OMB

Circular No. A–123.

SUMMARY: This Notice offers interested

parties an opportunity to comment on

proposed revisions to Office of

Management and Budget (OMB)

Circular No. A–123, ‘‘Management

Accountability and Control.’’ The

Circular, which was previously titled

‘‘Internal Control Systems,’’ implements

the Federal Managers’ Financial

Integrity Act of 1982 (FMFIA).

Also, this action seeks comments on

a proposal to streamline agency FMFIA

reporting, which has not yet been

incorporated into this proposed revision

to Circular No. A–123. OMB is

permitted by the Government

Management Reform Act (GMRA) of

1994 (P.L. 103–356) to consult with the

Congress on modifications to current

reporting requirements. A possible

modification affecting FMFIA reporting

is under consideration (see

Supplementary Information below for

further details).

DATES: All comments on this proposal

should be in writing, and must be

received by April 12, 1995. Late

comments will be considered only to

the extent practicable. When comments

are sent in by facsimile, they should be

followed up with an original printed

copy.

ADDRESSES: Office of Management and

Budget, Office of Federal Financial

Management, Management Integrity

Branch, Room 6025, New Executive

Office Building, Washington, DC 20503.

For a copy of the current Circular,

contact Office of Administration,

Publications Office, Room 2200, New

Executive Office Building, Washington,

DC 20503, or telephone (202) 395–7332.

FOR FURTHER INFORMATION CONTACT:

Cindy Salavantis, Office of Federal

Financial Management, Management

Integrity Branch, telephone (202) 395–

6911 and fax (202) 395–3952.

SUPPLEMENTARY INFORMATION: The

proposed revision alters current

requirements for executive agencies on

evaluating management controls,

consistent with recommendations made

by the National Performance Review.

The proposed revision integrates many

of the current policy issuances on

management control into a single

document, and provides a framework

for integrating management control

assessments with other work now being

performed by agency managers, auditors

and evaluators.

The proposed revision emphasizes

that management controls should

benefit rather than encumber

management, and should make sense for

each agency’s operating structure and

environment. By giving agencies the

discretion to determine which tools to

use in arriving at the annual assurance

statement to the President and the

Congress, the Circular represents an

important step towards a streamlined

management control program that

incorporates the reinvention principles

of this Administration.

The proposed revision is presented in

five sections:

Section I. Introduction. This section

describes a framework for agency

management control programs.

Particular attention is directed to the

integration of agency management

control activities with other

management requirements and policies,

such as the Government Performance

and Results Act, the Chief Financial

Officers (CFOs) Act, the Inspector

General Act, and other congressional

and Executive Branch requirements.

The foundation of this proposed policy

is that management control activities are

not stand alone management practices,

but rather are woven into the day-to-day

operational responsibilities of agency

managers.

Agencies are encouraged to plan for

how the requirements of the Circular

will be implemented. Agencies are also

encouraged to establish senior level

management councils to address

management accountability and related

issues within the broad context of

agency operations.

Section II. Establishing Management

Controls. This section defines

management controls, and requires

agency managers to develop and

implement appropriate management

controls. Included in this section are

general and specific management

control standards, drawn in large part

from the standards issued by the

General Accounting Office.

By including these standards in this

proposed revision, OMB is continuing

its efforts to integrate various

management control policies into a

single document. It is anticipated that

this effort will make it easier for Federal

managers to implement good

management controls.

Section III. Assessing and Improving

Management Controls. This section

states that agency managers should

continuously monitor and improve the

effectiveness of management controls.

This continuous monitoring, and other

periodic evaluations, should provide the

basis for the agency head’s annual
Federal Register / Vol. 60, No. 48 / Monday, March 13, 1995 / Notices 13485

assessment of and report on

management controls.

Agencies are encouraged to use a

variety of information sources to arrive

at the annual assurance statement to the

President and the Congress. Several

examples of sources of information are

included in this section.

Agency managers and the agency’s

senior management council will

consider and make recommendations to

the agency head regarding the annual

assurance statement required by FMFIA,

and which deficiencies in management

controls should be considered material

and included in the agency head’s

FMFIA Report.

Section IV. Correcting Management

Control Deficiencies. This section states

that agency management is responsible

for taking timely and effective action to

correct management control

deficiencies. Correcting these

deficiencies is an integral part of

management’s responsibilities and must

be considered a priority by the agency.

Section V. Reporting on Management

Controls. This section describes the

required components of the agency’s

annual FMFIA report and the suggested

report distribution to the President and

the Congress.

Periodically, questions are raised as to

FMFIA coverage by government

corporations. This section presents

FMFIA requirements as they pertain to

government corporations pursuant to

the CFOs Act. 31 U.S.C. 9106.

Finally, as noted in the Summary

above, this Notice also seeks input on a

proposal to streamline agency FMFIA

reporting, which has not yet been

incorporated into this proposed revision

to Circular No. A–123. Respondents are

encouraged to comment on a possible

modification affecting FMFIA reporting

which has been proposed by the CFO

Council.

Under this proposal, agencies would

consolidate FMFIA information with

other performance-related reporting into

a broader ‘‘Accountability Report’’ to be

issued annually by the agency head.

This report would be issued as soon as

possible after the end of the fiscal year,

but no later than March 31 for agencies

producing audited financial statements

and December 31 for all other agencies.

The other components of the proposed

‘‘Accountability Report’’ include:

audited financial statements; agency

management’s followup on audit

recommendations; financial reporting

data on prompt payment and civil

monetary penalties; and available

information on agency performance

compared to its stated goals and

objectives, in preparation for

implementation of the Government

Performance and Results Act. While

financial data would be reported for the

fiscal year just ended, the most current

information available at the time the

report is issued would be included on

management controls and audit

followup issues.

John B. Arthur,

Associate Director for Administration.

To the Heads of Executive Departments

and Establishments

Subject: Management Accountability

and Control

1. Purpose and Authority. As Federal

employees develop and implement

strategies for reengineering agency

programs and operations, they should

design management structures that help

ensure accountability for results, and

include appropriate, cost-effective

controls. This Circular provides

guidance to Federal managers on

improving the accountability and

effectiveness of Federal programs and

operations by establishing, assessing,

correcting, and reporting on

management controls.

The Circular is issued under the

authority of the Federal Managers’

Financial Integrity Act of 1982 as

codified in 31 U.S.C. 3512.

The Circular replaces Circular No. A–

123, ‘‘Internal Control Systems,’’

revised, dated August 4, 1986, and

OMB’s 1982 ‘‘Internal Controls

Guidelines’’ and associated ‘‘Questions

and Answers’’ document, which are

hereby rescinded.

2. Policy. Management accountability

is the expectation that managers are

responsible for the quality and

timeliness of program performance,

increasing productivity, controlling

costs and mitigating adverse aspects of

agency operations, and assuring that

programs are managed with integrity

and in compliance with applicable law.

Management controls are the

organization, policies, and procedures

used to reasonably ensure that (i)

programs achieve their intended results;

(ii) resources are used consistent with

agency mission; (iii) programs and

resources are protected from waste,

fraud, and mismanagement; (iv) laws

and regulations are followed; and (v)

reliable information is obtained,

maintained, reported and used for

decision making.

3. Actions Required. Agencies and

individual Federal managers must take

systematic and proactive measures to (i)

develop and implement appropriate,

cost-effective management controls for

results-oriented management; (ii) assess

the adequacy of management controls in

Federal programs and operations; (iii)

identify needed improvements; and (iv)

take corresponding corrective action.

4. Effective Date. This Circular is

effective upon issuance.

5. Inquiries. Further information

concerning this Circular may be

obtained from the Management Integrity

Branch, Office of Federal Financial

Management, Office of Management and

Budget, Washington, DC 20503, 202/

395–6911.

6. Copies. Copies of this Circular may

be obtained by telephoning the

Executive Office of the President,

Publication Services, at 202/395–7332.

[to be signed by Director, OMB]

Attachment

I. Introduction

The proper stewardship of Federal

resources is a fundamental

responsibility of agency managers and

staff. Federal employees must ensure

that government resources are used

efficiently and effectively to achieve

intended program results. Resources

must be used consistent with agency

mission, in compliance with law and

regulation, and with minimal potential

for waste, fraud, and mismanagement.

To support results-oriented

management, the Government

Performance and Results Act (GPRA,

P.L. 103–62) requires agencies to

develop strategic plans, set performance

goals, and report annually on actual

performance compared to goals. As the

Federal government implements this

legislation, these plans and goals should

be integrated into (i) the budget process,

(ii) the operational management of

agencies and programs, and (iii)

accountability reporting to the public on

performance results, and on the

integrity, efficiency, and effectiveness

with which they are achieved.

Management controls—organization,

policies, and procedures—are tools to

help program and financial managers

achieve results and safeguard the

integrity of their programs. This Circular

provides guidance on using the range of

tools at the disposal of agency managers

to achieve desired program results and

meet the requirements of the Federal

Managers’ Financial Integrity Act

(FMFIA).

Framework. The importance of

management controls is addressed, both

explicitly and implicitly, in many

statutes and executive documents. The

Federal Managers’ Financial Integrity

Act (P.L. 97–255) establishes specific

expectations with regard to management

controls. The agency head must

establish controls that reasonably ensure

that: (i) obligations and costs comply

with applicable law; (ii) assets are

safeguarded against waste, loss,
13486 Federal Register / Vol. 60, No. 48 / Monday, March 13, 1995 / Notices

unauthorized use or misappropriation;

and (iii) revenues and expenditures are

properly recorded and accounted for. 31

U.S.C. 3512 (c)(1). In addition, the

agency head annually must evaluate and

report on the control and financial

systems that protect the integrity of

Federal programs. 31 U.S.C. 3512 (d)(2).

The Act encompasses program and

administrative areas as well as

accounting and financial management.

Instead of considering controls as an

isolated management tool, agencies

should integrate their efforts to meet the

requirements of FMFIA with other

efforts to improve effectiveness and

accountability. Thus, management

controls should be an integral part of the

entire cycle of planning, budgeting,

management, accounting, and auditing.

They should support the effectiveness

and the integrity of every step of the

process and provide continual feedback

to management.

For example, good management

controls can assure that performance

measures are complete and accurate.

The management control standard of

organization would align staff and

authority with the program

responsibilities to be carried out,

improving both effectiveness and

accountability. Similarly, accountability

for resources could be improved by

more closely aligning budget accounts

with programs and charging them with

all significant resources used to produce

the program’s outputs and outcomes.

Meeting the requirements of the Chief

Financial Officers Act (P.L. 101–576, as

amended) should help agencies both

establish and evaluate management

controls. The Act requires the

preparation and audit of financial

statements for 23 Federal agencies. In

this process, auditors report on internal

controls and compliance with laws and

regulations. Therefore, the agencies

covered by the Act have a clear

opportunity both to improve controls

over their financial activities, and to

evaluate the controls that are in place.

The Inspector General Act (P.L. 95–

452, as amended) provides for

independent reviews of agency

programs and operations. Offices of

Inspectors General (OIGs) and other

external audit organizations frequently

cite specific deficiencies in management

controls and recommend opportunities

for improvements. Agency managers,

who are required by the Act to follow

up on audit recommendations, should

use these reviews to identify and correct

problems resulting from inadequate,

excessive, or poorly designed controls,

and to build appropriate controls into

new programs.

Federal managers must carefully

consider the appropriate balance of

controls in their programs and

operations. Fulfilling requirements to

eliminate regulations (‘‘Elimination of

One-Half of Executive Branch Internal

Regulations,’’ Executive Order 12861)

and streamline staffing (the Federal

Workforce Restructuring Act of 1994,

P.L. 103–226), should reinforce to

agency managers that too many controls

can result in inefficient and ineffective

government, and therefore that they

must ensure an appropriate balance

between too many controls and too few

controls. Managers should benefit from

controls, not be encumbered by them.

Agency Implementation. Appropriate

management controls should be

integrated into each system established

by agency management to direct and

guide its operations. A separate

management control process need not

be instituted, particularly if its sole

purpose is to satisfy the FMFIA’s

reporting requirements.

Agencies need to plan for how the

requirements of this Circular will be

implemented. Developing a written

strategy for internal agency use may

help ensure that appropriate action is

taken throughout the year to meet the

objectives of the FMFIA. The absence of

such a strategy may itself be a serious

management control deficiency.

Identifying and implementing the

specific procedures necessary to ensure

good management controls, and

determining how to evaluate the

effectiveness of those controls, is left to

the discretion of the agency head.

However, agencies are encouraged to

streamline their management control

efforts in accordance with the

recommendations of the National

Performance Review.

The President’s Management Council,

composed of the major agencies’ chief

operating officers, has been established

to foster governmentwide management

and cultural changes (‘‘Implementing

Management Reform in the Executive

Branch,’’ October 1, 1993). Many

agencies are establishing their own

senior management council, often

chaired by the agency’s chief operating

officer, to address management

accountability and related issues within

the broader context of agency

operations. Relevant issues for such a

council include ensuring the agency’s

commitment to an appropriate system of

management controls; recommending to

the agency head which control

deficiencies are sufficiently serious to

report in the annual FMFIA report; and

providing input for the level and

priority of resource needs to correct

these deficiencies. (See also Section III

of this Circular.)

II. Establishing Management Controls

Definition of Management Controls.

Management controls are the

organization, policies, and procedures

used by agencies to reasonably ensure

that (i) programs achieve their intended

results; (ii) resources are used consistent

with agency mission; (iii) programs and

resources are protected from waste,

fraud, and mismanagement; (iv) laws

and regulations are followed; and (v)

reliable information is obtained,

maintained, reported and used for

decision making.

Management controls, in the broadest

sense, include the plan of organization,

methods and procedures adopted by

management to ensure that its goals are

met. Management controls include

processes for planning, organizing,

directing, and controlling program

operations. A subset of management

controls are the internal controls used to

assure that there is prevention or timely

detection of unauthorized acquisition,

use, or disposition of the entity’s assets

that could have a material effect on its

financial statements.

Developing Management Controls. As

Federal employees develop and

implement strategies for reengineering

agency programs and operations, they

should design management structures

that help ensure accountability for

results. As part of this process, agencies

and individual Federal managers must

take systematic and proactive measures

to develop and implement appropriate,

cost-effective management controls.

Such controls guarantee neither the

success of agency programs, nor the

absence of waste, fraud, and

mismanagement, but they are a means of

managing the risk associated with

Federal programs and operations. To

help ensure that controls are

appropriate and cost-effective, agencies

should consider the extent and cost of

controls relative to the importance and

risk associated with a given program.

Standards. Agency managers should

incorporate basic management controls

in the strategies, plans, guidance and

procedures that govern their programs

and operations. Controls should be

consistent with the following standards,

which are drawn in large part from the

‘‘Standards for Internal Control in the

Federal Government,’’ issued by the

General Accounting Office (GAO).

General management control

standards are:

• Compliance With Law. All program

operations, obligations and costs must

comply with applicable law. Resources
Federal Register / Vol. 60, No. 48 / Monday, March 13, 1995 / Notices 13487

should be efficiently and effectively

allocated for duly authorized purposes.

• Reasonable Assurance and

Safeguards. Management controls must

provide reasonable assurance that assets

are safeguarded against waste, loss,

unauthorized use, and

misappropriation. Management controls

developed for agency programs should

be logical, applicable, reasonably

complete, and effective and efficient in

accomplishing management objectives.

• Integrity, Competence, and

Attitude. Managers and employees must

have personal integrity and are

obligated to support the ethics programs

in their agencies. The spirit of the

Standards of Ethical Conduct requires

that they develop and implement

effective management controls and

maintain a level of competence that

allows them to accomplish their

assigned duties. Effective

communication within and between

offices should be encouraged.

Specific management control

standards are:

• Delegation of Authority and

Organization. Managers should ensure

that appropriate authority,

responsibility and accountability are

delegated to accomplish the mission of

the organization, and that an

appropriate organizational structure is

established to effectively carry out

program responsibilities. To the extent

possible, controls and related decisionmaking authority should be in the hands

of line managers and staff.

• Separation of Duties and

Supervision. Key duties and

responsibilities in authorizing,

processing, recording, and reviewing

official agency transactions should be

separated among individuals. Managers

should exercise appropriate oversight to

ensure individuals do not exceed or

abuse their assigned authorities.

• Access to and Accountability for

Resources. Access to resources and

records should be limited to authorized

individuals, and accountability for the

custody and use of resources should be

assigned and maintained.

• Recording and Documentation.

Transactions should be promptly

recorded, properly classified and

accounted for in order to prepare timely

accounts and reliable financial and

other reports. The documentation for

transactions, management controls, and

other significant events must be clear

and readily available for examination.

• Resolution of Audit Findings and

Other Deficiencies. Managers should

promptly evaluate and determine proper

actions in response to known

deficiencies, reported audit and other

findings, and related recommendations.

Managers should complete, within

established timeframes, all actions that

correct or otherwise resolve the

appropriate matters brought to

management’s attention.

Other policy documents may describe

additional specific standards for

particular functional or program

activities. For example, OMB Circular

No. A–127, ‘‘Financial Management

Systems,’’ describes government-wide

requirements for financial systems. The

Federal Acquisition Regulations define

requirements for agency procurement

activities.

III. Assessing and Improving

Management Controls

Agency managers should

continuously monitor and improve the

effectiveness of management controls

associated with their programs. This

continuous monitoring, and other

periodic evaluations, should provide the

basis for the agency head’s annual

assessment of and report on

management controls, as required by the

FMFIA. Agency management should

determine the appropriate level of

documentation needed to support this

assessment.

Sources of Information. The agency

head’s assessment of management

controls can be performed using a

variety of information sources.

Management has primary responsibility

for monitoring and assessing controls,

and should use other sources as a

supplement to—not a replacement for—

its own judgment. Sources of

information include:

• Management knowledge gained

from the daily operation of agency

programs and systems.

• Management reviews conducted (i)

expressly for the purpose of assessing

management controls, or (ii) for other

purposes with an assessment of

management controls as a by-product of

the review.

• IG and GAO reports, including

audits, inspections, reviews,

investigations, outcome of hotline

complaints, or other products.

• Program evaluations.

• Audits of financial statements

conducted pursuant to the Chief

Financial Officers Act, as amended,

including: information revealed in

preparing the financial statements; the

auditor’s reports on the financial

statements, internal controls, and

compliance with laws and regulations;

and any other materials prepared

relating to the statements.

• Reviews of financial systems which

consider whether the requirements of

OMB Circular No. A–127 are being met.

• Reviews of systems and

applications conducted pursuant to the

Computer Security Act of 1987 and

OMB Circular No. A–130, ‘‘Management

of Federal Information Resources.’’

• Annual performance plans and

reports pursuant to the Government

Performance and Results Act.

• Reports and other information

provided by the Congressional

committees of jurisdiction.

• Other reviews or reports relating to

agency operations, e.g. for the

Department of Health and Human

Services, quality control reviews of the

Medicaid and Aid to Families with

Dependent Children programs.

Use of a source of information should

take into consideration whether the

process included an evaluation of

management controls. Agency

management should avoid duplicating

reviews which assess management

controls, and should coordinate their

efforts with other evaluations to the

extent practicable.

If a Federal manager determines that

there is insufficient information

available upon which to base an

assessment of management controls,

then appropriate reviews should be

conducted which will provide such a

basis.

Identification of Deficiencies. Agency

managers and employees should

identify deficiencies in management

controls from the sources of information

described above. A deficiency should be

reported if it is or should be of interest

to the next level of management. Agency

employees and managers generally

report deficiencies to the next

supervisory level, which allows the

chain of command structure to

determine the relative importance of

each deficiency.

A deficiency that the agency head

determines to be significant enough to

be reported outside the agency (i.e.

included in the annual FMFIA report to

the President and the Congress) should

be considered a ‘‘material weakness.’’

This designation requires a judgment by

agency managers as to the relative risk

and significance of deficiencies.

Agencies may wish to use a different

term to describe less significant

deficiencies, which are reported only

internally in an agency. In identifying

and assessing the relative importance of

deficiencies, particular attention should

be paid to the views of the agency’s IG.

Agencies should carefully consider

whether systemic problems exist that

adversely affect management controls

across organizational or program lines.

The Chief Financial Officer, the Senior

Procurement Executive, the Senior IRM

Official, and the managers of other
13488 Federal Register / Vol. 60, No. 48 / Monday, March 13, 1995 / Notices

functional offices should be involved in

identifying and ensuring correction of

systemic deficiencies relating to their

respective functions.

Agency managers and staff should be

encouraged to identify and report

deficiencies, as this reflects positively

on the agency’s commitment to

recognizing and addressing management

problems. Failing to report a known

deficiency would reflect adversely on

the agency.

Role of Senior Management Council.

Many agencies have found that a senior

management council is a useful forum

for assessing and monitoring

deficiencies in management controls.

The membership of such councils

generally includes both line and staff

management; consideration should be

given to involving the IG. Such councils

generally recommend to the agency

head which deficiencies are deemed to

be material to the agency as a whole,

and should therefore be included in the

annual FMFIA report to the President

and the Congress. (Such a council need

not be exclusively devoted to

management control issues.) This

process will help identify deficiencies

that although minor individually, may

constitute a material weakness in the

aggregate. Such a council may also be

useful in determining when sufficient

action has been taken to declare that a

deficiency has been corrected.

IV. Correcting Management Control

Deficiencies

Agency managers are responsible for

taking timely and effective action to

correct deficiencies identified by the

variety of sources discussed in Section

III. Correcting deficiencies is an integral

part of management accountability and

must be considered a priority by the

agency.

The extent to which corrective actions

are tracked by the agency should be

commensurate with the severity of the

deficiency. Corrective action plans

should be developed for all material

weaknesses, and progress against plans

should be periodically assessed and

reported to agency management.

Management should track progress to

ensure timely and effective results. For

deficiencies that are not included in the

FMFIA report, corrective action plans

should be developed and tracked

internally at the appropriate level.

A determination that a deficiency has

been corrected should be made only

when sufficient corrective actions have

been taken and the desired results

achieved. This determination should be

in writing, and along with other

appropriate documentation, should be

available for review by appropriate

officials. (See also role of senior

management council in Section III.)

As managers consider IG and GAO

audit reports in identifying and

correcting management control

deficiencies, they must be mindful of

the statutory requirements for audit

followup included in the IG Act, as

amended. Under this law, management

has a responsibility to complete action,

in a timely manner, on audit

recommendations on which agreement

with the IG has been reached. 5 U.S.C.

Appendix 3. (Management must make a

decision regarding IG audit

recommendations within a six month

period and implementation of

management’s decision should be

completed within one year to the extent

practicable.) Agency managers and the

IG share responsibility for ensuring that

IG Act requirements are met.

V. Reporting on Management Controls

Reporting Pursuant to Section 2. 31

U.S.C. 3512(d)(2) (commonly referred to

as Section 2 of the FMFIA) requires that

annually by December 31, the head of

each executive agency submit to the

President and the Congress (i) a

statement on whether there is

reasonable assurance that the agency’s

controls are achieving their intended

objectives; and (ii) a report on material

weaknesses in the agency’s controls.

OMB may provide guidance on the

composition of the annual report.

• Statement of Assurance. The

statement on reasonable assurance

represents the agency head’s informed

judgment as to the overall adequacy and

effectiveness of management controls

within the agency. The statement must

take one of the following forms:

statement of assurance; qualified

statement of assurance, considering the

exceptions explicitly noted; or

statement of no assurance.

In deciding on the type of assurance

to provide, the agency head should

consider information from the sources

described in Section III of this Circular,

with input from senior program and

administrative officials and the IG. The

agency head must describe the

analytical basis for the type of assurance

being provided, and the extent to which

agency activities were assessed. The

statement of assurance must be signed

by the agency head.

• Report on Material Weaknesses.

The FMFIA report should include

agency plans to correct the material

weaknesses and progress against those

plans.

Reporting Pursuant to Section 4. 31

U.S.C. 3512 (d)(2)(B) (commonly

referred to as Section 4 of the FMFIA)

requires an annual statement on

whether the agency’s financial

management systems conform with

government-wide requirements. These

financial systems requirements are

presented in OMB Circular No. A–127,

‘‘Financial Management Systems,’’

section 7. If the agency does not

conform with financial systems

requirements, the statement should

discuss the agency’s plans for bringing

its systems into compliance.

If the agency head judges a deficiency

in financial management systems and/or

operations to be material when weighed

against other agency deficiencies, the

issue should be included in the annual

FMFIA report in the same manner as

other material weaknesses.

Distribution of FMFIA Report. The

assurance statements and information

related to both Sections 2 and 4 should

be provided in a single FMFIA report.

Copies of the report should be

transmitted to the President; the

Director of OMB; the President of the

Senate; the Speaker of the House of

Representatives; and the Chairpersons

and Ranking Members of the Senate

Committee on Governmental Affairs, the

House Committee on Government

Operations, and the relevant authorizing

and appropriations committees and

subcommittees. In addition, 10 copies of

the report should be provided to OMB’s

Management Integrity Branch.

Government Corporations. Section

306 of the Chief Financial Officers Act

established a reporting requirement

related to management controls for

corporations covered by the

Government Corporation and Control

Act. 31 U.S.C. 9106. These corporations

must submit an annual management

report to the Congress not later than 180

days after the end of the corporation’s

fiscal year. This report must include,

among other items, a statement on

control systems by the head of the

management of the corporation

consistent with the requirements of the

FMFIA.

The corporation is required to provide

the President, the Director of OMB, and

the Comptroller General a copy of the

management report when it is submitted

to Congress.

[FR Doc. 95–6024 Filed 3–10–95; 8:45 am]

BILLING CODE 3110–01–P

OFFICE OF PERSONNEL

MANAGEMENT

Excepted Service

AGENCY: Office of Personnel

Management.

ACTION: Notice.