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Federal agencies unveil five-year financial management plan.

The Office of Management and Budget and the Chief Financial Officers Council have released the fourth annual Federal Financial Management Status Report & Five-Year Plan, a comprehensive look at federal plans to redesign agency and governmentwide financial statements and accounting standards, revise financial management policy and improve debt collection.

Federal financial statements

The report outlines the status and performance of accounting standards and financial reports for federal agencies. The Government Management Reform Act of 1994 required audited financial statements for all of the activities of the 24 agencies covered by the Chief Financial Officers Act of 1990. As of July 1995, almost 59 of the 100 entities preparing audited financial statements received unqualified opinions, and 43 were audited without material weaknesses. The report said that in 1997 a federal governmentwide financial statement would be prepared and audited for the first time.

"For the first time ever annual audits of all the federal agencies will address financial management problems that have inhibited federal agencies from operating as efficiently as the nonfederal community," said Norwood J. Jackson Jr., deputy controller of the OMB's office of federal financial management. Jackson told the Journal that the first goal was to issue organizationwide financial statements on each federal agency and to have them audited and submitted to the OMB in the spring of 1997. The second goal was to produce financial statements on the government as a whole for fiscal year 1997. "That audit will be done by the General Accounting Office," said Jackson. "The inspectors general and CPA firms will perform the audits of all the agencies in support of the governmentwide audit."

Streamlining management reports

The report said six federal agencies were creating prototype accountability reports for fiscal year 1995 to serve as models for other agencies. The report said these reports would integrate financial management and program performance information required by the CFOs Act, the Government Performance and Review Act and the Federal Managers' Financial Integrity Act.

"Currently, all these reports are due at different times," said Jackson. "This is an effort to consolidate the information required by various reports to be able to focus on all the issues at one time."

The Single Audit Act

The report said the overall quality of single audit reports prepared by independent public accountants remained about the same as in 1994. The majority of audit deficiencies related to audits conducted in accordance with OMB Circular A-133, Audits of Institutions of Higher Education and Other Non-Profit Organizations. The report said the Single Audit Act had significantly improved the auditing of federal programs on a grant-by-grant basis, but that procedures still needed to be updated. The report's suggestions included:

* The dollar thresholds for single audits need to be increased.

* The method for determining major programs should be based on risk.

* Single audit reports and the submission schedule should be simplified.

Improving debt collection and payment methods

The report said federal agencies collected a cumulative total of $8.5 billion of debt owed to the government in 1994, compared with a cumulative total of $3.1 billion in 1990. The report attributed the increase to modern debt collection techniques, enhanced computer systems and well-trained staff.

Federal Assistance Programs

Here is a list of OMB tasks and milestones to develop policy and complete regulatory implementation of governmentwide audit requirements for federal financial assistance under OMB Circulars A-128, Audits of State and Local Governments, and A-133.
Task Milestone

Issue final revision of OMB December 1995
Circular A-133

Have agencies implement revision One year after issuance

Work with Congress to enact Ongoing
revision to the Single Audit Act

Consolidate OMB Circular A-128 December 1996
into Circular A-133 and issue

Implement the consolidated One year after issuance
Circular A-128

Complete update of compliance December 1996
supplement for OMB Circular A-128

Merge OMB's two compliance December 1996
COPYRIGHT 1996 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Journal of Accountancy
Date:Jan 1, 1996
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