I
104TH CONGRESS
2D SESSION
H. R. 4061
To provide for the establishment of uniform accounting systems, standards,
and reporting systems in the Federal Government, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 11, 1996
Mr. TALENT introduced the following bill; which was referred to the
Committee on Government Reform and Oversight
A BILL
To provide for the establishment of uniform accounting sys-
tems, standards, and reporting systems in the Federal
Government, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Federal Financial
Management Improvement Act of 1996’’.
SEC. 2. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds the following:
(1) Much effort has been devoted to strengthen-
ing Federal internal accounting controls in the past.
Although progress has been made in recent years,
Federal accounting standards have not been uni-
formly implemented in financial management sys-
tems for agencies.
(2) Federal financial management continues to
be seriously deficient, and Federal financial manage-
ment and fiscal practices have failed to—
(A) identify costs fully;
(B) reflect the total liabilities of congres-
sional actions; and
(C) accurately report the financial condi-
tion of the Federal Government.
(3) Current Federal accounting practices do not
accurately report financial results of the Federal
Government or the full costs of programs and activi-
ties. The continued use of these practices under-
mines the Government’s ability to provide credible
and reliable financial data and encourages already
widespread Government waste, and will not assist in
achieving a balanced budget.
(4) Waste and inefficiency in the Federal Gov-
ernment undermine the confidence of the American
people in the Government and reduce the Federal
Government’s ability to address vital public needs
adequately.
(5) To rebuild the accountability and credibility
of the Federal Government, and restore public con-
fidence in the Federal Government, agencies must
incorporate accounting standards and reporting ob-
jectives established for the Federal Government into
their financial management systems so that all the
assets and liabilities, revenues, and expenditures or
expenses, and the full costs of programs and activi-
ties of the Federal Government can be consistently
and accurately recorded, monitored, and uniformly
reported throughout the Federal Government.
(6) Since its establishment in October 1990, the
Federal Accounting Standards Advisory Board
(hereinafter referred to as the ‘‘FASAB’’) has made
substantial progress toward developing and rec-
ommending a comprehensive set of accounting con-
cepts and standards for the Federal Government.
When the accounting concepts and standards devel-
oped by FASAB are incorporated into Federal fi-
nancial management systems, agencies will be able
to provide cost and financial information that will
assist the Congress and financial managers to evalu-
ate the cost and performance of Federal programs
and activities, and will therefore provide important
information that has been lacking, but is needed for
improved decisionmaking by financial managers and
the Congress.
(7) The development of financial management
systems with the capacity to support these standards
and concepts will, over the long term, improve Fed-
eral financial management.
(b) PURPOSES.—The purposes of this Act are to—
(1) provide for consistency of accounting by an
agency from one fiscal year to the next, and uniform
accounting standards throughout the Federal Gov-
ernment;
(2) require Federal financial management sys-
tems to support full disclosure of Federal financial
data, including the full costs of Federal programs
and activities, to the citizens, the Congress, the
President, and agency management, so that pro-
grams and activities can be considered based on
their full costs and merits;
(3) increase the accountability and credibility of
Federal financial management;
(4) improve performance, productivity and effi-
ciency of Federal Government financial manage-
ment;
(5) establish financial management systems to
support controlling the cost of Federal Government;
(6) build upon and complement the Chief Fi-
nancial Officers Act of 1990 (Public Law 101–576;
104 Stat. 2838), the Government Performance and
Results Act of 1993 (Public Law 103–62; 107 Stat.
285), and the Government Management Reform Act
of 1994 (Public Law 103–356; 108 Stat. 3410); and
(7) increase the capability of agencies to mon-
itor execution of the budget by more readily permit-
ting reports that compare spending of resources to
results of activities.
SEC. 3. IMPLEMENTATION OF FEDERAL FINANCIAL MAN-
AGEMENT IMPROVEMENTS.
(a) IN GENERAL.—Each agency shall implement and
maintain financial management systems that comply with
Federal financial management systems requirements, ap-
plicable Federal accounting standards, and the United
States Government Standard General Ledger at the trans-
action level.
(b) PRIORITY.—Each agency shall give priority in
funding and provide sufficient resources to implement this
Act.
(c) AUDIT COMPLIANCE FINDING.—
(1) IN GENERAL.—Each audit required by sec-
tion 3521(e) of title 31, United States Code, shall
report whether the agency financial management
systems comply with the requirements of subsection
(a).
(2) CONTENT OF REPORTS.—When the person
performing the audit required by section 3521(e) of
title 31, United States Code, reports that the agency
financial management systems do not comply with
the requirements of subsection (a), the person per-
forming the audit shall include in the report on the
audit—
(A) the name and position of any officer or em-
ployee responsible for the financial management sys-
tems that have been found not to comply with the
requirements of subsection (a);
(B) all facts pertaining to the failure to comply
with the requirements of subsection (a), including—
(i) the nature and extent of the noncompli-
ance;
(ii) the primary reason or cause of the
noncompliance;
(iii) any official responsible for the non-
compliance; and
(iv) any relevant comments from any re-
sponsible officer or employee; and
(C) a statement with respect to the rec-
ommended remedial actions and the timeframes to
implement such actions.
(d) COMPLIANCE DETERMINATION.—
(1) IN GENERAL.—No later than the date de-
scribed under paragraph (2), the Director, acting
through the Controller of the Office of Federal Fi-
nancial Management, shall determine whether the fi-
nancial management systems of an agency comply
with the requirements of subsection (a). Such deter-
mination shall be based on—
(A) a review of the report on the applicable
agency-wide audited financial statement;
(B) the agency comments on such report;
and
(C) any other information the Director
considers relevant and appropriate.
(2) DATE
OF
DETERMINATION.—The deter-
mination under paragraph (1) shall be made no later
than 90 days after the earlier of—
(A) the date of the receipt of an agency-
wide audited financial statement; or
(B) the last day of the fiscal year following
the year covered by such statement.
(e) COMPLIANCE IMPLEMENTATION.—
(1) IN GENERAL.—If the Director determines
that the financial management systems of an agency
do not comply with the requirements of subsection
(a), the head of the agency, in consultation with the
Director, shall establish a remediation plan that
shall include the resources, remedies, and intermedi-
ate target dates necessary to bring the agency’s fi-
nancial management systems into compliance.
(2) TIME PERIOD FOR COMPLIANCE.—A reme-
diation plan shall bring the agency’s financial man-
agement systems into compliance no later than 2
years after the date on which the Director makes a
determination under paragraph (1), unless the agen-
cy, with concurrence of the Director—
(A) determines that the agency’s financial
management systems are so deficient as to pre-
clude compliance with the requirements of sub-
section (a) within 2 years;
(B) specifies the most feasible date for
bringing the agency’s financial management
systems into compliance with the requirements
of subsection (a); and
(C) designates an official of the agency
who shall be responsible for bringing the agen-
cy’s financial management systems into compli-
ance with the requirements of subsection (a) by
the date specified under subparagraph (B).
(3) TRANSFER
OF
FUNDS
FOR
CERTAIN
IM-
PROVEMENTS.—For an agency that has established
a remediation plan under paragraph (2), the head of
the agency, to the extent provided in an appropria-
tion and with the concurrence of the Director, may
transfer not to exceed 2 percent of available agency
appropriations to be merged with and to be available
for the same period of time as the appropriation or
fund to which transferred, for priority financial
management system improvements. Such authority
shall be used only for priority financial management
system improvements as identified by the head of
the agency, with the concurrence of the Director,
and in no case for an item for which Congress has
denied funds. The head of the agency shall notify
Congress 30 days before such a transfer is made
pursuant to such authority.
(4) REPORT IF NONCOMPLIANCE WITHIN TIME
PERIOD.—If an agency fails to bring its financial
management systems into compliance within the
time period specified under paragraph (2), the Di-
rector shall submit a report of such failure to the
Committees on Governmental Affairs and Appropria-
tions of the Senate and the Committees on Govern-
ment Reform and Oversight and Appropriations of
the House of Representatives. The report shall in-
clude—
(A) the name and position of any officer or
employee responsible for the financial manage-
ment systems that have been found not to com-
ply with the requirements of subsection (a);
(B) the facts pertaining to the failure to
comply with the requirements of subsection (a),
including the nature and extent of the non-
compliance, the primary reason or cause for the
failure to comply, and any extenuating cir-
cumstances;
(C) a statement of the remedial actions
needed; and
(D) a statement of any administrative ac-
tion to be taken with respect to any responsible
officer or employee.
(f) PERSONAL RESPONSIBILITY.—Any financial offi-
cer or program manager who knowingly and willfully com-
mits, permits, or authorizes material deviation from the
requirements of subsection (a) may be subject to adminis-
trative disciplinary action, suspension from duty, or re-
moval from office.
SEC. 4. APPLICATION TO CONGRESS AND THE JUDICIAL
BRANCH.
(a) IN GENERAL.—The Federal financial manage-
ment requirements of this Act may be adopted by—
(1) the Senate by resolution as an exercise of
the rulemaking power of the Senate;
(2) the House of Representatives by resolution
as an exercise of the rulemaking power of the House
of Representatives; or
(3) the Judicial Conference of the United
States by regulation for the judicial branch.
(b) STUDY AND REPORT.—No later than October 1,
1997—
(1) the Secretary of the Senate and the Clerk
of the House of Representatives shall jointly conduct
a study and submit a report to Congress on how the
offices and committees of the Senate and the House
of Representatives, and all offices and agencies of
the legislative branch may achieve compliance with
financial management and accounting standards in a
manner comparable to the requirements of this Act;
and
(2) the Chief Justice of the United States shall
conduct a study and submit a report to Congress on
how the judiciary may achieve compliance with fi-
nancial management and accounting standards in a
manner comparable to the requirements of this Act.
SEC. 5. REPORTING REQUIREMENTS.
(a) REPORTS BY DIRECTOR.—No later than March
31 of each year, the Director shall submit a report to the
Congress regarding implementation of this Act. The Di-
rector may include the report in the financial management
status report and the 5-year financial management plan
submitted under section 3512(a)(1) of title 31, United
States Code.
(b) REPORTS BY THE COMPTROLLER GENERAL.—No
later than October 1, 1997, and October 1, of each year
thereafter, the Comptroller General of the United States
shall report to the appropriate committees of the Congress
concerning—
(1) compliance with the requirements of section
3(a) of this Act, including whether the financial
statements of the Federal Government have been
prepared in accordance with applicable accounting
standards; and
(2) the adequacy of uniform accounting stand-
ards for the Federal Government.
SEC. 6. CONFORMING AMENDMENTS.
(a) AUDITS BY AGENCIES.—Section 3521(f)(1) of
title 31, United States Code, is amended in the first sen-
tence by inserting ‘‘and the Controller of the Office of
Federal Financial Management’’ before the period.
(b) FINANCIAL MANAGEMENT STATUS REPORT.—
Section 3512(a)(2) of title 31, United States Code, is
amended—
(1) in subparagraph (D) by striking ‘‘and’’
after the semicolon;
(2) by redesignating subparagraph (E) as sub-
paragraph (F); and
(3) by inserting after subparagraph (D) the fol-
lowing:
‘‘(E) a listing of agencies whose financial
management systems do not comply substan-
tially with the requirements of the Federal Fi-
nancial Management Improvement Act of 1996,
the period of time that such agencies have not
been in compliance, and a summary statement
of the efforts underway to remedy the non-
compliance; and’’.
SEC. 7. DEFINITIONS.
For purposes of this Act:
(1) AGENCY.—The term ‘‘agency’’ means a de-
partment or agency described in section 901(b) of
title 31, United States Code.
(2) DIRECTOR.—The term ‘‘Director’’ means
the Director of the Office of Management and Budg-
et.
(3) FEDERAL ACCOUNTING STANDARDS.—The
term ‘‘Federal accounting standards’’ means appli-
cable accounting principles, standards, and require-
ments consistent with section 902(a)(3)(A) of title
31, United States Code, and includes concept state-
ments with respect to the objectives of Federal fi-
nancial reporting.
(4) FINANCIAL
MANAGEMENT
SYSTEMS.—The
term ‘‘financial management systems’’ includes the
financial systems and the financial portions of mixed
systems necessary to support financial management,
including automated and manual processes, proce-
dures, controls, data, hardware, software, and sup-
port personnel dedicated to the operation and main-
tenance of system functions.
(5) FINANCIAL SYSTEM.—The term ‘‘financial
system’’ includes an information system, comprised
of one or more applications, that is used for—
(A) collecting, processing, maintaining,
transmitting, or reporting data about financial
events;
(B) supporting financial planning or budg-
eting activities;
(C) accumulating and reporting costs in-
formation; or
(D) supporting the preparation of financial
statements.
(6) MIXED SYSTEM.—The term ‘‘mixed system’’
means an information system that supports both fi-
nancial and nonfinancial functions of the Federal
Government or components thereof.
SEC. 8. EFFECTIVE DATE.
This Act shall take effect on October 1, 1996.
Æ