Federal Financial Management Improvement Act of 1997 - Requires each Federal agency to: (1) implement and maintain financial management systems that comply with Federal requirements, Federal accounting standards, and the U.S. Government Standard General Ledger at the transaction level; and (2) give priority in funding and provide sufficient resources to implement this Act. Requires: (1) audit reporting of whether an agency's financial management systems comply with requirements; (2) compliance determination by the Director of the Office of Management and Budget (OMB), acting through the Controller of the Office of Federal Financial Management; and (3) if there is noncompliance with the standards, a remediation plan. Sets forth a limitation on the time period for bringing the agency's financial management systems into compliance.
Allows the transfer of up to two percent of agency funds for priority financial management system improvements.
Requires a report by the Director of OMB if an agency fails to bring its financial management systems into compliance within the period described. Sets forth penalties.
Directs: (1) the Secretary of the Senate and the Clerk of the House, jointly, to study and report to the Congress on how each entity in the legislative branch may comply; and (2) the Chief Justice of the United States to study and report to the Congress on how the judicial branch may achieve compliance.
[Congressional Bills 105th Congress]
[From the U.S. Government Printing Office]
[H.R. 435 Introduced in House (IH)]
105th CONGRESS
1st Session
H. R. 435
To provide for the establishment of uniform accounting systems,
accounting standards, and accounting reporting systems in the Federal
Government, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 9, 1997
Mr. Sanford 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 systems,
accounting standards, and accounting reporting systems in the Federal
Government, and for other purposes.
Be it enacted by the Senate and House of Representatives 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 1997''.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--The Congress finds the following:
(1) Much effort has been devoted to strengthening Federal
internal accounting controls. Although progress has been made
in recent years, Federal accounting standards have not been
uniformly implemented in financial management systems for
agencies.
(2) Federal financial management continues to be seriously
deficient, and Federal financial management and fiscal
practices have failed to--
(A) identify costs fully;
(B) reflect the total liabilities of congressional
actions; and
(C) accurately report the financial condition 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 activities. The continued use of these
practices undermines the ability of the Federal Government to
provide credible and reliable financial data, encourages
already widespread Federal Government waste, and will not
assist in achieving a balanced budget.
(4) Waste and inefficiency in the Federal Government
undermine the confidence of the people of the United States in
the Government and reduce the ability of the Federal Government
to address vital public needs adequately.
(5) To rebuild the accountability and credibility of, and
restore public confidence in, the Federal Government, Federal
agencies must incorporate accounting standards and reporting
objectives established for the Federal Government into their
financial management systems so that all the assets and
liabilities, revenues, expenses, and the full costs of programs
and activities of the Federal Government can be consistently
and accurately recorded, accurately monitored, and uniformly
reported throughout the Federal Government.
(6) Since its establishment in October 1990, the Federal
Accounting Standards Advisory Board (in this Act referred to as
the ``FASAB'') has made substantial progress toward developing
and recommending a comprehensive set of accounting concepts
and standards for the Federal Government. When the accounting concepts
and standards developed by FASAB are incorporated into Federal
financial management systems, agencies will be able to provide cost and
financial information that will assist the Congress and financial
managers in evaluating the cost and performance of Federal programs and
activities, and will provide important information that is needed for
improved decision making by the Congress and financial managers.
(7) The development of financial management systems with
the capacity to support the accounting standards and concepts
developed by FASAB will, over the long term, improve Federal
financial management.
(b) Purposes.--The purposes of this Act are to--
(1) provide for consistency of accounting by Federal
agencies from one fiscal year to the next, and for uniform
accounting standards throughout the Federal Government;
(2) require Federal financial management systems to enable
full disclosure of Federal financial data, including the full
costs of Federal programs and activities, to the citizens of
the United States, the Congress, the President, and agency
management, so that Federal programs 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 efficiency of
Federal Government financial management;
(5) establish financial management systems to support
controlling the cost of the Federal Government;
(6) build on and complement the Chief Financial 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 Federal agencies to monitor
execution of the budget by more readily permitting reports that
match spending of resources to results of activities.
SEC. 3. IMPLEMENTATION OF FEDERAL FINANCIAL MANAGEMENT IMPROVEMENTS.
(a) In General.--Each Federal agency shall implement financial
management systems that comply with Federal financial management
systems requirements, applicable Federal accounting standards, and the
United States Government Standard General Ledger at the transaction
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 section 3521(e) of
title 31, United States Code, shall report whether the
financial management systems of the agency which is being
audited comply with subsection (a) of this section.
(2) Content of reports.--If the person performing an audit
required by section 3521(e) of title 31, United States Code,
reports that the agency financial management systems do not
comply with subsection (a) of this section, the person
performing the audit shall include in the report on the audit--
(A) the name and position of any officer or
employee responsible for the financial management
systems;
(B) all facts pertaining to the failure to comply,
including--
(i) the nature and extent of the
noncompliance;
(ii) the primary reason or cause of the
noncompliance;
(iii) any official responsible for the
noncompliance; and
(iv) any relevant comments from any such
responsible officer or employee; and
(C) a statement with respect to recommended
remedial actions and the timeframes to implement such
actions.
(d) Compliance Determination.--
(1) In general.--No later than the date described under
paragraph (2), the Director, acting through the Controller of
the Office of Federal Financial Management, shall determine
whether the financial management systems of an agency comply
with subsection (a). The determination shall be based on--
(A) a review of the report on the applicable
agency-wide audited financial statement;
(B) the agency comments on the report; and
(C) any other information the Director considers
relevant and appropriate.
(2) Date of determination.--The determination required by
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
subsection (a), the head of the agency, in consultation with
the Director, shall establish a remediation plan that shall
describe the resources, remedies, and intermediate target dates
necessary to bring the agency's financial management systems
into such compliance.
(2) Time period for compliance.--A remediation plan shall
bring the agency's financial management systems into compliance
with subsection (a) no later than 2 years after the date the
Director makes a determination under paragraph (1), unless the
agency, with the concurrence of the Director--
(A) determines that the agency's financial
management systems are so deficient as to preclude
compliance with the requirements of subsection (a)
within 2 years after such date;
(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 agency's financial
management systems into compliance with the
requirements of subsection (a) by the date specified
under subparagraph (B).
(3) Transfer of funds for certain improvements.--For an
agency that has established a remediation plan under paragraph
(2), the head of the agency, to the extent provided in an
appropriation 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 funds 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 period described in paragraph (2), the Director
shall submit a report of such failure to the Committees on Governmental
Affairs and Appropriations of the Senate and the Committees on
Government Reform and Oversight and Appropriations of the House of
Representatives. The report shall include--
(A) the name and position of any officer or
employee responsible for the financial management
systems;
(B) the facts pertaining to the failure to comply,
including the nature and extent of the noncompliance,
the primary reason or cause for the failure to comply,
and any extenuating circumstances;
(C) a statement of the remedial actions needed; and
(D) a statement of any administrative action to be
taken with respect to any responsible officer or
employee.
(f) Personal Responsibility.--Any financial officer or program
manager who knowingly and willfully commits, permits, or authorizes
material deviation from the requirements of subsection (a) may be
subject to administrative disciplinary action, suspension from duty, or
removal from office.
(g) Penalties Provided.--If an agency fails to bring its financial
management systems into compliance within the period described in
subsection (e)(2), the agency shall be subject to the following
penalties:
(1) The amounts otherwise appropriated to the agency for
fiscal year 2000 shall be reduced by 1 percent.
(2) The amounts otherwise appropriated to the agency for
fiscal year 2001 shall be reduced by 2 percent.
(3) The amounts otherwise appropriated to the agency for
fiscal year 2002 shall be reduced by 3 percent.
(4) The amounts otherwise appropriated to the agency for
fiscal year 2003 shall be reduced by 4 percent.
(5) The amounts otherwise appropriated to the agency for
fiscal year 2004 shall be reduced by 5 percent.
SEC. 4. APPLICATION TO CONGRESS AND THE JUDICIAL BRANCH.
(a) In General.--The Federal financial management 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; and
(3) the Judicial Conference of the United States by
regulation for the judicial branch.
(b) Study and Report.--Not later than October 1, 1998--
(1) the Secretary of the Senate and the Clerk of the House
of Representatives shall jointly conduct a study and submit a
report to the Congress on how each entity in the legislative
branch may comply 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 the Congress on how the judicial
branch may achieve compliance with financial management and
accounting standards in a manner comparable to the requirements
of this Act.
SEC. 5. REPORTING REQUIREMENTS.
(a) Reports by Director.--Not later than March 31 of each year, the
Director shall submit a report to the Congress regarding the
implementation of this Act. The Director 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,
1998, and annually 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),
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 standards 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 sentence 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 subparagraph (F);
and
(3) by inserting after subparagraph (D) the following:
``(E) a listing of agencies whose financial
management systems do not comply substantially with the
requirements of the Federal Financial 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
noncompliance; and''.
SEC. 7. DEFINITIONS.
For purposes of this Act:
(1) Agency.--The term ``agency'' means the departments and
agencies of the United States Government listed in section
901(b) of title 31, United States Code.
(2) Director.--The term ``Director'' means the Director of
the Office of Management and Budget.
(3) Federal accounting standards.--The term ``Federal
accounting standards'' means applicable accounting principles,
standards, and requirements consistent with section
902(a)(3)(A) of title 31, United States Code, and includes
concept statements with respect to the objectives of Federal
financial 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,
procedures, controls, data, hardware, software, and support
personnel dedicated to the operation and maintenance of system
functions.
(5) Financial system.--The term ``financial system''
includes an information system, comprised of 1 or more
applications, that is used for--
(A) collecting, processing, maintaining,
transmitting, or reporting data about financial events;
(B) supporting financial planning or budgeting
activities;
(C) accumulating and reporting costs information;
or
(D) supporting the preparation of financial
statements.
(6) Mixed system.--The term ``mixed system'' means an
information system that supports financial and nonfinancial
functions of the Federal Government or components thereof.
SEC. 8. EFFECTIVE DATE.
This Act shall take effect on October 1, 1998.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Government Reform and Oversight.
Referred to the Subcommittee on Government Management, Information and Technology.
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