EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, DC 20503
May 11, 2001
OMB BULLETIN NO. 01-XX
| TO: | THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS, CHIEF FINANCIAL OFFICERS, AND INSPECTORS GENERAL |
| FROM: | JOSEPH KULL DEPUTY CONTROLLER |
| SUBJECT: | Draft Guidance for the Form and Content of Agency Financial Statements |
The last decade has seen the development of a statutory framework for improving financial management and accountability in the Federal Government. The preparation and audit of financial statements in accordance with generally accepted standards is an integral part of this framework. With three quarters of major federal agencies receiving an unqualified audit opinion for FY 2000 and all major agencies submitting their financial statements timely, much progress has been made. However, good financial management is more than just producing financial statements once a year. Our goal is to systematically produce timely, useful and reliable information that is useful for making operating, budget, and policy decisions. We recognize that it will take time to reach this goal, so we have set forth the following intermediate steps.
Improving Timeliness. Agencies must be able to close their books more quickly and prepare statements closer to the end of the reporting period. Preparing interim financial statements will improve agencies= ability to accomplish this as well as provide more timely information. The following new requirements to improve timeliness are included in this bulletin:
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Interim Reporting for FY 2002 -- For annual reporting periods beginning with FY 2002, unaudited interim financial statements (without footnotes) will be required. For the six-month period ending March 31, 2002, unaudited financial statements (without footnotes) shall be prepared and submitted to OMB by May 31, 2002. In FY 2003, unaudited financial statements shall be prepared and submitted to OMB on a quarterly basis (i.e., December 31, March 31, and June 30) no later than 45 days after the end of the reporting period. The interim financial statement requirement contained in this bulletin will then be consistent with the reporting of budget execution information under OMB Circular No. A-34, Instructions on Budget Execution.
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Accelerated Reporting for FY 2001 and FY 2002 -- For FY 2001, the due date for both stand-alone financial statements and accountability reports to OMB and the Congress is February 27, 2002. For annual reporting periods beginning with FY 2002, all agencies must submit accountability reports to OMB by February 1 of the following fiscal year (i.e., February 1, 2003 for FY 2002). This will enable accountability reports to be available at the time the President=s Budget is sent to the Congress.Enhancing Usefulness. Financial statements that compare like information from period to period and are integrated with other reporting requirements facilitate the identification of trends and other analysis. The following new requirements are contained in this bulletin to enhance usefulness:
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Comparative Reporting for FY 2001 -- For annual reporting periods beginning with FY 2001, the preparation of comparative financial statements is required. Comparative reporting is also required for interim financial statements beginning with FY 2002._
Integrated Reporting for FY 2002 -- Integrated accountability reports will be required for FY 2002 and subsequent years.Ensuring Reliability. An unqualified audit opinion provides assurance that the financial statements are reliable. The following goals and requirements will guide our efforts to improve reliability:
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"Clean" Audit Opinions -- "Clean" audit opinions on all civilian agency financial statements are expected by FY 2003 (period ended September 30, 2003) and government-wide by FY 2005 (period ended September 30, 2005); and_
Audits of Major Components for FY 2003 -- Annual audits of all major agency component units are required beginning with FY 2003. Unaudited annual financial statements are required for fiscal years beginning after September 30, 2001 (FY 2002). In addition to improving the reliability of agency component data, this will facilitate production of the government-wide financial statements.The attached bulletin also proposes changes that are technical in nature. These changes are discussed generally below and in more detail beginning on page 7 of the bulletin.
Technical Changes. The form and content of agency financial statements is modified to achieve the following objectives:
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Better Integration with the Budget -- Establishes greater linkage between the Statement of Budgetary Resources and the President=s Budget;_
Greater Consistency in Reporting -- Enhances consistency of reporting across government by providing additional explanatory guidance for preparing the Statement of Budgetary Resources and Statement of Financing;_
Clearer Relationships Between Statements -- Facilitates an understanding of the flow of information between statements by consistently formatting like information contained in different statements; and_
Updated, Consolidated and Easier-to-use Document -- Updates the bulletin for the financial reporting and disclosure requirements promulgated by the Federal Accounting Standards Advisory Board that were not reflected in previous guidance and consolidates prior form and content amendments.Government-wide Financial Statements. Once finalized, this bulletin will define the form and content for Federal agency financial statements. Some of the reporting requirements, however, are intended to support the production of the Financial Report of the United States Government (government-wide financial statements). This additional information may be relocated within agency financial statements in the future to enhance its integrity. Agency Chief Financial Officers and Inspectors General are responsible for providing the Department of the Treasury with timely and accurate information to support the production of the government-wide statements.
Suggestions, comments, or questions should be directed to David Zavada at 725 17th Street, N.W., Room 6025, Washington, D.C. 20503 or dzavada@omb.eop.gov. Comments are due to the Office of Federal Financial Management no later than June 1, 2001.
Additional copies of this memorandum, as well as the draft attachment, may be obtained from the OMB home page on the Internet at http://www.whitehouse.gov/OMB/financial.
Attachment
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