Signed into law on May 9, 2014, the DATA Act expanded on previous federal transparency legislation by requiring the disclosure of federal agency expenditures and linking agency spending information to federal program activities so that both policymakers and the public can more effectively track federal spending. The DATA Act requires government- wide reporting on a greater variety of federal funds, such as budget and financial information, as well as tracking of these funds at multiple points in the federal spending lifecycle. To improve the quality of these data, the act requires that agency-reported award and financial information comply with new data standards established by OMB and Treasury. These standards specify the items to be reported under the DATA Act and define and describe what is to be included in each element with the aim of ensuring that information will be consistent and comparable. The act identifies OMB and Treasury as the two agencies responsible for leading government-wide implementation. Two key components of ensuring the accuracy, completeness, and consistency of federal spending data are OMB releasing policy guidance and Treasury developing technical guidance for the agency submissions and publication of the data required under the act. Toward that end, OMB has taken a number of steps to help agencies meet their reporting requirements, including establishing 57 standardized data element definitions for reporting federal spending information, issuing guidance to operationalize selected standards and clarify agency reporting requirements, and meeting with agencies to assess their readiness to meet the reporting requirements under the act. Specific actions include the following: In May 2015, OMB issued initial guidance to federal agencies on reporting requirements pursuant to the Federal Funding Accountability and Transparency Act (FFATA) as well as the new requirements that agencies must employ pursuant to the DATA Act. The guidance also directs agencies to (1) implement data definition standards for collecting and reporting agency-level and award-level data by May 9, 2017; (2) implement a standard data exchange format for providing data to Treasury to be displayed on USASpending.gov or a successor site; and (3) link agency financial systems with award systems by continuing to use specified unique identification numbers for financial assistance awards and contracts. In May 2016, OMB released guidance on reporting financial and award information required under the act. This guidance addresses (1) reporting financial and award level data, (2) linking agency award and financial systems using a unique award identifier, and (3) assuring that data submitted to Treasury for publication on USASpending.gov are sufficiently valid and reliable. In November 2016, OMB issued additional guidance in response to questions and concerns reported by agencies. This guidance specifies DATA Act reporting responsibilities for intragovernmental transactions, explains how to report financial assistance awards with personally identifiable information, and clarifies the senior accountable official (SAO) assurance process over the data submitted to the DATA Act broker, a system to standardize data formatting and assist reporting agencies in validating their data prior to submission. The May and November 2016 guidance also directs agency SAOs to leverage existing data quality and management controls established in statute, regulations, or federal policy when submitting their assurance over the data. In addition to issuing policy guidance to help agencies meet their reporting requirements under the act, OMB’s Controller and Treasury’s Fiscal Assistant Secretary conducted a series of meetings with CFO Act agencies to obtain information on any challenges that could impede effective implementation and assess agencies’ readiness to report required spending data in May 2017. Treasury also led efforts to develop the technical guidance and reporting systems to facilitate agency reporting. In April 2016, Treasury released the DATA Act Information Model Schema (DAIMS), or schema version 1.0, which provides information on how to standardize the way financial assistance awards, contracts and other financial and non-financial data will be collected and reported under the DATA Act. A key component of the reporting framework laid out in the schema is the DATA Act broker. According to Treasury guidance documents, agencies are expected to submit three files sourced from their financial management systems to the broker. The broker is also expected to extract award and sub-award information from existing award reporting systems that currently supply award data (covering federal assistance including grants and loans, as well as procurements) to USASpending.gov. These award reporting systems—including the Federal Procurement Data System-Next Generation (FPDS-NG), System for Award Management (SAM), the Award Submission Portal (ASP), and the FFATA Subaward Reporting System (FSRS)—compile information submitted by agencies and award recipients to report, among other things, procurement and financial assistance award information required under FFATA. A more detailed discussion of the broker and the agency file submission process can be found in our August 2016 correspondence. In addition to developing the schema version 1.0 and the broker, Treasury also issued an implementation playbook that outlines 8 steps and a recommended timeline for agency implementation, and hosted multiple meetings, including weekly office hour calls and monthly technical workshops, to help agencies prepare and test their data for submission to the broker. To help improve the quality of the data, the act also requires agencies’ IGs and GAO to assess and report on the completeness, timeliness, quality, and accuracy of spending data submitted by federal agencies. The first IG reports were due to Congress in November 2016. However, agencies are not required to submit spending data in compliance with the act until May 2017. As a result, the IGs did not report on the spending data in November 2016. The Council of the Inspectors General on Integrity and Efficiency (CIGIE) developed an approach to address what it describes as the IG reporting date anomaly and maintain early IG engagement with the agencies. CIGIE encouraged but did not require the IGs to undertake assessments of their respective agencies’ readiness to submit spending data in accordance with DATA Act requirements and delayed issuance of the mandated audit reports to November 2017. The Federal Audit Executive Council DATA Act Working Group—established by CIGIE to assist the IG community in understanding and meeting its DATA Act oversight requirements—issued the DATA Act Readiness Review Guide (version 2.0) on June 2, 2016, to guide IGs in conducting their readiness reviews. According to the review guide, the main objectives of the IG readiness reviews are to assess whether an agency’s DATA Act implementation plan or process is “on track to meet the requirements of the DATA Act,” and to provide, as needed, recommendations or suggestions on how to improve the agency’s likelihood of compliance with the requirements of the DATA Act. As of February 2017, 22 of the 24 CFO Act agencies had issued annual financial reports for fiscal year 2016 and 19 of the 22 CFO Act agencies’ auditors reported material weaknesses and/or significant deficiencies in internal control over financial reporting in their audit reports that may affect the quality of information reported under the DATA Act. In addition, as of February 2017, 20 of the 24 CFO Act agencies’ IGs had issued readiness review reports. Of these, 16 IGs identified a range of issues and challenges which may affect agencies’ abilities to produce quality data for submission to Treasury as part of the DATA Act reporting requirements. Further, 9 of the 22 CFO Act agencies’ auditors reported agencies’ financial management systems did not substantially comply with Section 803(a) of FFMIA, which may limit an agency’s ability to provide reliable and timely financial information for managing day-to-day operations and to produce reliable financial statements, maintain effective internal control, and comply with legal and regulatory requirements, including the DATA Act. Our analysis of material weaknesses, significant deficiencies, and other challenges reported in agency annual financial reports and agency IGs’ DATA Act readiness reviews identified data quality issues and challenges in three broad areas that increase the risk agencies may not be able to report complete, timely, and accurate data as required under the DATA Act by May 2017. These issues and challenges relate to internal controls over financial reporting and financial management operations, properly recorded and reconciled accounting balances and transactions, and other issues related to the proper use of accounting practices in accordance with U.S. generally accepted accounting principles. Fourteen of the 22 CFO Act agencies’ auditor’s reports noted material weaknesses and significant deficiencies, and 14 of the 20 IG readiness reviews reported issues or challenges related to accounting and financial management. See appendix III for a list of agencies that had deficiencies in this area. According to some of the auditor’s reports, issues in this area could result in misstatements in budgetary balances, obligations, and undelivered orders—which are part of the information to be posted on USASpending.gov. Some examples include the following: One agency’s auditor reported a material weakness in controls over financial management related to the maintenance of accounting records, recording obligations at the transaction level, and accounting and internal controls over obligations and undelivered orders. The auditor also reported a significant deficiency related to ineffective monitoring and reviewing, and inappropriate certification as to the validity of obligation balances, which resulted in invalid obligations remaining open. According to the auditor, these deficiencies restrict the availability of funding authority, and increase the risk of misstating obligation balances as of year-end. These types of issues increase the risk that quarterly obligation amounts reported by agencies under DATA Act requirements may be inaccurate or incomplete. Another agency’s IG readiness review reported that the various layers of data validation and reconciliation involved in the agency’s DATA Act implementation are complex and require coordination with each reporting bureau. According to the agency’s IG, the complexities of performing reconciliations of reported data to source systems presents a challenge to the agency’s ability to ensure the quality and validity of data reported. This set of issues included longstanding challenges with disparate or antiquated financial management systems that affect financial reporting. These challenges include system infrastructure and integration issues such as systems that do not consolidate transaction level financial data or do not capture required data elements such as award identifiers used to link financial and non-financial data.