doing; what it has accomplished, particularly in relation to prior years and targets; and how it is managing its programs and resources. In many ways, the MD&A represents the most important part of the Report, and thus the portion of the review that receives the most attention. Part D addresses the Financial Section, which is composed of a message from the Chief Financial Officer (which is optional), the auditors’ report, the financial statements and notes, and Required Supplementary Information (RSI) and Required Stewardship Information (RSSI), if applicable. The portion of Part C related to the financial statements, RSI, and RSSI is included primarily for the preparers of the statements. Although some reviewers will still evaluate the manner in which the financial information is presented in the financial statements, the CEAR Program relies primarily on the organization auditing the financial statements to assure adherence with the applicable standards and criteria. Part E addresses the Other Information which contains: a summary by the entity’s Inspector General of the entity’s most serious management and performance challenges and the entity’s progress addressing the challenges; summary tables of material deficiencies in internal control and system information on payment integrity, including Improper Payments Information Act, as amended by the Improper Payments Elimination and Recovery Act and Improper Payments Elimination and Recovery Improvement Act reporting details; information regarding the entity’s progress pursuant to the Fraud Reduction and Data Analytics Act; square footage and operations and maintenance costs associated with the Reduce the Footprint policy; the most recent inflationary adjustments to civil monetary penalties required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act; information pursuant to the Grant Oversight and New Efficiency (GONE) Act; and possibly other information. Section II is for the Performance and Accountability Reports and addresses the Section included in a Performance and Accountability Report, but not in an Agency Financial Report. This section should be used by PAR preparers and reviewers in combination with Section I.
13. The report on compliance should include: a report of noncompliance with provisions of applicable laws, regulations, contracts, and grant agreements identified in the audit, except for those instances of noncompliance that, in the auditors’ judgement, are clearly inconsequential, with a list of the provisions of those laws, regulations, contracts, and grant agreements that tests disclosed are reportable instances of non-compliance; and a description of the scope of the testing of compliance with provisions of laws, regulations, contracts, and grant agreements, and whether the tests performed provided sufficient, appropriate evidence to support an opinion on compliance with provisions of applicable laws, regulations, contracts, and grant agreements., a statement that either the objective was not to provide an opinion on compliance with provisions of applicable laws, regulations, contracts, and grant agreements and therefore the auditor does not express an opinion, or the objective was to provide an opinion and a reference to the separate audit opinion. Item a: 17-03, para 7.21 Item b: 17-03, para 7.23 14. The report on compliance should also reflect instances in which the entity’s financial management systems did not substantially comply with the 1) Federal financial management system requirements, 2) Federal accounting standards, or 3) United States Standard General Ledger at the transaction level requirements of the FFMIA; or state that the audit disclosed no instances in which the entity’s financial management systems did not substantially comply. Where tests disclose that the reporting entity’s systems did not comply substantially with one or more of the three requirements, the auditors’ report on compliance, (or an accompanying schedule that is referenced in the compliance report) should disclose which of the three requirements for which the reporting entity’s systems did not substantially comply and group findings together based on the requirement they relate to; When tests disclosed that the entity’s systems did not substantially comply with one or more of the three previously mentioned requirements, the report should identify: the entity or organization responsible for the system(s) found not to comply substantially; 17-03, para 7.24
34. Reconciliation of Net Cost of Operations to Budget The footnotes should include a reconciliation of proprietary and budgetary information in a way that helps users relate the two. The reconciliation should be disclosed for the current and prior years. A-136, Section II.3.9.40 35. . Entities that disclose the existence of public-private partnerships should disclose the following: the purpose, objective, rationale, statutory authority, costs, and benefits of the partnership; the amounts, if known, of Federal and non-Federal funding over the life of the partnership and a description of the funding; the contractual terms governing payments to and from the partnership (including information on how the expected partnership life was determined, when payments are expected, whether payments are made directly or indirectly, and any non-monetary payments), payments to and from the partnership for the reporting periods, and expected payments over the life of the partnership; information about the contractual risks of loss and potential monetary effects if the risks are/were realized and information about remote risks of loss if included in the terms of the partnership; and amounts recognized on the statements, instances of non-compliance with provisions governing the partnership, borrowing or capital investment by the private entity that is contingent on the reporting entity’s promise to pay, and a description of events of termination. A-136, Section II.3.9.41 36. For entities included in the agency’s financial statements as disclosure entities, the agency should disclose information to meet the following objectives: The nature of the Government’s relationship with the entity or entities; the nature and magnitude of the relevant activity during the period and balances at the end A-136, Section II.3.9.42
In instances where the entity does not have such internal controls, human capital, and systems and other infrastructure, a description of the resources the entity requested in its most recent budget submission to Congress to establish and maintain the necessary internal controls, human capital, and information systems and other infrastructure. 16. The report should describe, for all programs and activities whose gross annual improper payments (i.e., the total amount of overpayments and underpayments) exceed (1) both 1.5 percent of outlays and $10,000,000 of all program or activity payments made during the fiscal year or (2) $100,000,000 (regardless of the improper payment percentage of total program the statistical sampling process conducted to estimate the improper payment rate for each program identified as being susceptible to significant improper payments, or a description by entities granted OMB approval to use a non-statistical sampling and methodology, the justification for using the non-statistical methodology. A-136, Section II.4.5.VII 17. Agencies performing improper payment risk assessments should include a description of the assessments, including the risk factors considered, if applicable. Agencies should discuss the basis for groupings of programs or activities, if applicable, and highlight any changes that have been made to the risk assessment from the prior year, if applicable. A-136, Section II.4.5.VIII 18. The report should include a report on the entity’s fraud reduction efforts that includes the entity’s progress implementing (1) financial and administrative controls established pursuant to the Fraud Reduction and Data Analytics Act, (2) the fraud risk principle in the Standards for Internal Control in the Government, and (3) A-123 with respect to leading practices for managing fraud risk. The report should include information on entity progress identifying risks and vulnerabilities to fraud, (including with respect to payroll, beneficiary payments, grants, large contracts, and purchase and travel cards) and entity progress on establishing strategies, procedures, and other steps to curb fraud. A-136, Section II.4.6 19. The report should present the total square office and warehouse footage associated with the entity’s assets subject to the “Reduce the Footprint” policy pursuant to the requirements in the Freeze the Footprint policy from the latest available reporting year, and compare it to the FY 2015 “Freeze the Footprint” baseline implementing guidance, including: A-136, Section II.4.8
CERTIFICATE OF EXCELLENCE IN ACCOUNTABILITY REPORTING GUIDELINES # Description Source Section III – Summary of Performance and Financial Information 1. The Summary includes the most relevant performance and financial information. A-136, Section III 2. The Summary can be a 1-6 page high level summary, a 6-16 page more detailed summary, an MD&A that can be easily extracted from the PAR or AFR and issued as a stand-alone document, or a short video posted on the entity’s website. A-136, Section III 3. The Summary should be the final printed report available for public distribution, or a print-out of the electronic version of the report. 4. The cover of the Summary should contain the name of the entity, the title of the report, and the fiscal year. 5. The Summary should identify the relationship between the Summary of Performance and Financial Information and the AFR or PAR and APR. 6. The information presented in the Summary of Performance and Financial Information should be modified, as necessary, to avoid the impression that the reader is reading the AFR or PAR. CERTIFICATE OF EXCELLENCE IN ACCOUNTABILITY REPORTING SFFAS No. Description Effective Date Section IV – Statements of Federal Financial Accounting Standards effective in future years 49 Public-Private Partnerships: Disclosure Requirements Beginning after 9/30/18 (FY 2019) Early adoption permitted.
51 Insurance Programs Beginning after 9/30/18 (FY 2019) 52 Tax Expenditures Beginning after 9/30/18 (FY 2019) Earlier implementation is encouraged. 53 Budget and Accrual Reconciliation Beginning after 9/30/18 (FY 2019) Earlier implementation is encouraged. 54 Leases: An Amendment of Statement of Federal Financial Accounting Standards (SFFAS) 5, Accounting for Liabilities of the Federal Government, and SFFAS 6, Accounting for Property, Plant, and Equipment Beginning after 9/30/20 (FY 2021) Early adoption is not permitted. CERTIFICATE OF EXCELLENCE IN ACCOUNTABILITY REPORTING Section V – Noteworthy features, Recommendation, and Special Awards