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PEGMSW_ekqAutoList18a.a."(a)a.a.a.a.($0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#2#  0  )3  0(#(#(hCEKQW]cioAutoList8a.a.a.a.a.a.a.a. hCEKQW]cioAutoList9a.a.a.a.a.a.a.a.({$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#2#  a  )3  0p(#(#`8G_cgmquy}Bullet ListBullet List1. EEGOW_gowAutoList14(a)(a)(a)(a)(i)(a)(a)(a)  [$Ӏ  5    _XXXXԀAnillustrativeauditor'sreportoncompliancewithlawsandregulationsisprovidedinAppendixG.  Useofthisguidanceisoptional.(  Z6Times New Roman Regular(hH  Z 6Times New Roman Regulara, b, c,Level 1Level 2Level 3Level 4Level 5C:\PROGS\WP\STANDARD.WPT6#`n4Quick a.   .0 (5hCEKQW]cioAutoList1a.a.a.a.a.a.a.a.3#37=CIQYag1.a.i.(1)(a)(i)1)a)($    (;3$2#  0  .3  0  (EhCEKQW]cioAutoList2a.a.a.a.a.a.a.a.(UhCEKQW]cioAutoList3a.a.a.a.a.a.a.a.(ehCEKQW]cioAutoList4a.a.a.a.a.a.a.a.(F$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#2#(   )3  0h(#h(#<:Default Para " [$Ӏ  1    _XXXXԀThislistisincludedinOMBBulletin9701(OMB'sFormandContentBulletin),whichprescribes  thePrincipalStatementsthatshallbeprepared.(hH  Z 6Times New Roman Regular<:footnote ref<j^: footnote teQ\  `$Times NewRomanQXXXE2 `CG TimesE-%(EGMSY_ekqAutoList32A.A.A.A.A.A.A.A.&$1<:endnote refe(eEGMSY_ekqAutoList191.1.1.1.1.1.1.1.&$2$35;AGOW_e31.a.i.(1)(a)(i)1.a.\  `$Times NewRoman2 `CG Times(EGMSY_ekqAutoList201.1.1.1.1.1.1.1.(zEGMSY_ekqAutoList21A.A.A.A.A.A.A.A.1, 2, 3,Level 1Level 2Level 3Level 4Level 54#hN2Quick 1.  .0   [$Ӏ  2    _ThefollowingXXXXFederalfinancialmanagementsystemsrequirementsdonotrequiretestingastheydo  notaffectthereportingentitysabilitytopreparefinancialstatementsinaccordancewithFederalaccountingstandards:L 8` L 3   3283  0    requirementscontainedintheFrameworkforFederalFinancialManagementSystems;and3݌(#(# Ќ   3   3283  0    requirementsforsystemsthatproduceinformationwhichisnotmaterialtothefinancial  statements,e.g.,travelsystems.(hH  Z 6Times New Roman Regulari., ii., iii.,Level 1Level 2Level 3Level 4Level 56#in4Quick i.   .0 ((3/g$ !   d  + [$Ӏ  4    _XXXXԀAnillustrativeauditorsreportoninternalcontrolisprovidedinAppendixF.Useofthisguidance  isoptional.#XXXX^#(  Z6Times New Roman Regular  [$Ӏ  8    _XXXXԀInverylimitedcircumstances,reportableconditionsthatsignificantlyimpairanentitysabilityto  meetFederalfinancialmanagementsystemsrequirements(suchasreportableconditionsrelatedtocomputersecurityoverfinancialinformationcoveredbyOMBCircularA130,Appendix3)mayrepresentconditionsreportableunderFFMIA.#XXXX^##y  <<= 8C J [$Ӏ  9    _XXXX#XXXX^#XXXXԀInverylimitedcircumstances,reportableconditionsthatsignificantlyimpairanentitysabilityto  meetFederalfinancialmanagementsystemsrequirements(suchasreportableconditionsrelatedtocomputersecurityoverfinancialinformationcoveredbyOMBCircularA130,Appendix3)mayrepresentconditionsreportableunderFFMIA.#XXXX# L !  _    10  ڀXXXXThisillustrativemanagementrepresentationlettermustbecustomizedtothesituationofthe  auditedentity.Representationsnumber113relatetotheopiniononthefinancialstatements;numbers1416relatetomanagement'sassertionabouttheeffectivenessofinternalcontrol;numbers1719relatetomanagement'sassertionaboutthefinancialmanagementsystems'substantialcompliancewithFederalfinancialmanagementsystemrequirements;andnumbers2022relatetocompliancewithlawsandregulations.AUSection333,"ManagementRepresentations,"CodificationofStatementson   AuditingStandards,providesexamplesofadditionalrepresentationsthatmaybeappropriate.a&c  [$Ӏ  11    _ԀXXXXIftheobjectiveistoexpressanopinionontheagencysinternalcontroloverfinancialreporting,  theauditorshouldfollowStatementonStandardsforAttestationEngagementsNo.2, Reportingonan  EntitysInternalControlOverFinancialReporting,issuedbytheAmericanInstituteofCertifiedPublicAccountants.#XXXX`#64Heading 3  5+ ` hp x (#5XXXE2 `CG TimesE    8.` hp x (#8S\  `&Times New RomanS:ao8Body Text 2XXXE2 `CG TimesE S\  `&Times New RomanS 86Block Text X X 2( ` hp x 2XXXE2 `CG TimesE   8.` hp x (#8S\  `&Times New RomanS\  `&Times New Roman  [$Ӏ  13    _ԀXXXXIftheobjectiveistoexpressanopinionontheagencyscompliancewithlawsandregulations,the  auditorshouldfollowStatementonStandardsforAttestationEngagementsNo.3, Compliance  Attestation,issuedbytheAmericanInstituteofCertifiedPublicAccountants.<ll:Endnote TextXXXS\  `&Times New RomanSS\  `&Times New RomanS64Body Text8.` hp x (#8XXXE2 `CG TimesE8.` hp x (#8S\  `&Times New RomanS<:Body Text In X 5+ ` hp x (#5XXXE2 `CG TimesE  8.` hp x (#8S\  `&Times New RomanS6&&4Hyperlink            $359=AEIMQ4 1111111$35;?CGKOS5i.1111111($     mailto:finance@opm.gov6yz4Heading 1  XXXE2 `CG TimesE     S\  `&Times New RomanS  < [$Ӏ  12    _ԀXXXXFFMIAdoesnotimposeanycompliancerequirements;rather,itrequiresreportingonwhetheran  agency'sfinancialmanagementsystemssubstantiallycomplywiththefinancialmanagementsystemsrequirementscontainedingovernmentwidepolicies,e.g.,OMBCircularA127,"FinancialManagementSystems;"StatementsofFederalFinancialAccountingStandards;andtheUnitedStates  GovernmentStandardGeneralLedgerpublishedbytheDepartmentoftheTreasury.FFMIAimposesadditionalreportingrequirementswhentestsdiscloseinstancesinwhichagencysystemsdonotsubstantiallycomplywiththeforegoingrequirements.#XXXX`# d(5EGMSY_ekqAutoList221.1.1.1.1.1.1.1.&$ d d% %dK KdTABLE A(EGOW_gowAutoList23(1)(1)(1)(1)(1)(1)(1)(1)(UEGMSY_ekqAutoList241.1.1.1.1.1.1.1.(eEGMSY_ekqAutoList251.1.1.1.1.1.1.1.(EGOW_gowAutoList26(1)(1)(1)(1)(1)(1)(1)(1) EGMSY_ekqAutoList27a.a.1.a.a.a.a.a.(EGMSY_ekqAutoList28A.A.A.A.A.A.A.A.(EGMSY_ekqAutoList29a.a.a.a.a.a.a.a.(hH  Z 6Times New Roman Regular EGMS[agmsAutoList301.1.(1)1.1.1.1.1.(eEGMSY_ekqAutoList31a.a.a.a.a.a.a.a.  [$Ӏ  14    _XXXXManagementandtheauditorshouldagreeonamaterialityleveltouseintheletterofinquiry.A  guidelineforsettingthematerialitylevelforthelegalletteris0.5percentofplanningmateriality,asdefinedinthePCIEPolicyManual:FederalFinancialStatementAuditManualandGAOsFinancial  AuditManual.#XXXX_#(EGMSY_ekqAutoList331.1.1.1.1.1.1.1.  '  _XX  OMBBulletin99__0 @` AuditsofAgencyFinancialStatements󀀀 DRAFT07/22/99#XX.#   [$Ӏ  7    _Theauditorisnotexpectedtotestallprovisionsofeachlawpresented.However,theauditoris  expectedtotest,ataminimum,theprovisionscitedabove.(EGOW_gowAutoList34(1)(1)(1)(1)(1)(1)(1)(1)(EGMSY_ekqAutoList35a.a.a.a.a.a.a.a.(դEGMSY_ekqAutoList38a.a.a.a.a.a.a.a.(EGMSY_ekqAutoList361.1.1.1.1.1.1.1. [$Ӏ  15    _ThisillustrativeresponseisbasedonexamplespresentedinAUSection337CoftheCodification  ofStatementsonAuditingStandards.(EGOW_gowAutoList40(1)(1)(1)(1)(1)(1)(1)(1) ( [$Ӏ  16    _SeeParagraph3oftheAmericanBarAssociation(ABA)StatementofPolicyandthe  accompanyingCommentaryforguidancewheretheresponseislimitedtomaterialitems.hͶEGKOSW[_cAutoList37"""""""")1)a)('EGOW_gowAutoList42(1)(1)(1)(1)(1)(1)(1)(1)  [$Ӏ  3    _ForthoserequirementswhichwereupdatedandreissuedduringFY1999,auditorsshouldtest  systemsforcompliancewithpreFY1999requirementsandareencouragedtoadviseentitymanagementofpotentialnoncompliancewithnewrequirementsthatcometotheauditorsattention.AuditorsshouldtestforcompliancewithFY1999requirementsduringFY2000audits.  [$Ӏ  1    _Asrequiredbyparagraph8.b.ofOMBBulletinNo.99__,theCFOshallprepareandtheauditorshallreviewasummaryofthe  informationcontainedinthelegalcounselsresponseusingthisformat.AnelectronicversionofthisformisavailableinMircosoftExcelatOMBs_website_ԀontheInternetathttp://www.whitehouse.gov/WH/EOP/omb.http://www.whitehouse.gov/OMB./(under<6X9`(Courier    n [$Ӏ  1    _Asrequiredbyparagraph8.b.ofOMBBulletinNo.99__,theCFOshallprepareandtheauditorshallreviewasummaryofthe  informationcontainedinthelegalcounselsresponseusingthisformat.AnelectronicversionofthisformisavailableinMircosoftExcelatOMBs_website_ԀontheInternetat34)    5  3http://www.whitehouse.gov/3WH/EOP33/omb33OMB333.333/(under336   7 t3333 333b333B33ulleti333ngz333ns)3. TABLE B(EGMSY_ekqAutoList41a.a.a.a.a.a.a.a. !  _WXXXX    o[Xr` hp x (#%'0*,.8135@8:<H?AXo8+l+XXdd8TRX3'X3' Letter3' Letter3'T,P.+(#(#K(#__[OMBletterhead]OMBBULLETIN99__TOTHEHEADSANDINSPECTORSGENERALOFEXECUTIVEDEPARTMENTSANDESTABLISHMENTSSUBJECT:AuditRequirementsforFederalFinancialStatements1.Purpose.ThisBulletin,whichincludesanAttachmentandAppendicesAthroughI,establishes i  minimumrequirementsforauditsofFederalfinancialstatements.TheBulletinisissuedundertheauthorityoftheBudgetandAccountingActof1921,asamended,andtheBudgetandAccountingProceduresActof1950,asamended.ItimplementstheauditprovisionsoftheChiefFinancialOfficers(CFOs)Actof1990(P.L.101-576),asamended,theGovernmentManagementReformAct(GMRA)of1994(P.L.103356),andtheFederalFinancialManagementImprovementActof1996(P.L.104208).TherequirementsofthisBulletinaresetforthintheAttachment.2.Applicability.TheprovisionsoftheBulletinapplytoauditsoffinancialstatementsofexecutive 9 departmentsandagenciesandcertaincomponentsoftheseagencies,listedinAppendicesAandB,respectively.3.EffectiveDate.TheprovisionsofthisBulletinareeffectiveforauditsoffinancialstatementsforfiscal !j yearsendingonorafterSeptember30,1999.AuditreportsshallbesubmittedtotheagencyheadinsufficienttimetoenabletheagencyheadtomeettheduedateforsubmittingtheauditedfinancialstatementunderGMRA,nolaterthanMarch1followingtheendofthefiscalyearforwhichthefinancialstatementsareprepared.4.Inquiries.FurtherinformationconcerningthisBulletinmaybeobtainedbycontactingtheOfficeof #F ManagementandBudget(OMB),OfficeofFederalFinancialManagement,Washington,DC20503,telephone(202)395-3993.5.Copies.IndividualcopiesofthisBulletinmaybeobtainedfromtheOMBhomepageonthe '."# Internetathttp://www.whitehouse.gov/WH/EOP/omb. ((#$  r  `     h      p JacobJ.LewDirectorAttachment#XXXXN#  - () ,P ,  ,  **/ddd Xdd Xdd X(#(#, dd ,* dd ,X dd +    XXXX  vXX SignificantRevisionstoOMBBulletinNo.98-08, d Q4Xr` hp x (#Xr` XQ"AuditRequirementsforFederalFinancialStatements,asamended #XXv ##XXXX # * ;  *   OMB9808,asamended 8 LocationReference ' 2  'm  OMB99__ 8 TechnicalChange ' 2  '  PurposeofChange  2" ^ XXParagraph6.a.(1)(c)  w   Deletedsection.  w   StatementofFederalFinancial w   AccountingStandards(SFFAS)No.14, AmendmentstoDeferred  R  MaintenanceReporting,whichiseffectiveforperiodsbeginningafterSeptember30,1998,changedthelocationofdeferredmaintenanceinformationfromanotetotheprincipalstatementstorequiredsupplementalinformation.    Paragraph6.a.(2)  . NochangeforFY1999audits.Addedsentencestodescribefuturerequirements. w ForFY2000andbeyond,OMBwillrequireexaminationlevelassuranceforstewardshipPP&EusingtheAICPAsattestationstandards.ThisrequirementiscontingentonmodificationstotheaccountingstandardsrelatingtoreportingtheconditionofstewardshipPP&E.<Z Xx:xj(XXr` X<  ?" Paragraph6.a.(3)  S# NochangeforFY1999audits.Addedsentenceto_descibe_Ԁfuturerequirements.  .& ForFY2000andbeyond,willrequireexaminationlevelassuranceforstewardshipinvestmentsusingtheAICPAsattestationstandards..  * Paragraph6.a.(5)   T+ NochangeforFY1999audits.Addedsentencetodescribefuturerequirements.  !. ToadviseauditorsofOMBsintenttorevisetheauditrequirementsforL 8`3Lsocialinsuranceinformationforsubsequentperiodsinwhichtheapplicableaccountingstandardsbecomeeffective.@Xr` XZ Xx:xj(XF@ #A4 Paragraph6.e.  U%5 UpdatedlistofJFMIPfunctionalrequirementsforFederalfinancialsystems.  &0!8 Updatedforfunctionalrequirementsreissuedin1999.ClarifiedwhenauditorsshouldtestforcompliancewithJFMIPrequirementsissuedduringthecurrentyear.  y("= Paragraph6._i._  )$> RelocateddiscussionoflegalletterstoParagraph8.  *$@ Providesadditionalguidanceonthepreparationoflegalletters.  *$B AppendixC  +E&C Addedspecificprovisionsofgenerallawstobetested.  ,'E ToclarifythatallprovisionsofthegenerallawslistedinAppendixCneednotbetested.  -'H .+ . .  AppendixF&G  d RevisedillustrativeauditorsreportstoreflectrequirementsofStatementsonAuditingStandards(SAS)#87, 3Restr333cio333i333v333ctingtheUseofanAuditors333r333R33eport3.  ?  IllustratesrequirementsofSAS#87andclarifiestheauditorsresponsibilityforinternalcontrolandcompliance.  v  AppendixH     OPMsAgreedUponProcedures(AUPs),formerlypresentedinAppendixH,havebeenredesignatedAppendixI.OPMsAUPsrevisedtoreflecttheuseofRITSdatavs.datafromForm2812.   Revisionsreflectmorewidespreaduseofelectronicinformation.  e  NewAppendix  /  AddednewAppendixH,withthreedistinctdocuments(H1,H2,H3).IncludedanewrequirementforCFOstoprepareandauditorstoreviewasummaryoftheinformationprovidedinlegalresponsesusingaprescribedformat.  e ProvidesadditionalguidanceonthepreparationoflegalletterstomorecloselycomportwithAUSection337requirementsoftheCodification A  ofStatementonAuditingStandards,  S ! andtofacilitatethecollectionofdataconcerninglitigation,claims,andassessmentsforagencywideandgovernmentwidereporting. .w%   'p% XX OMBBulletinNo.99__  0 h  h(#h(#  r  `     h   AUDITSOFFEDERALFINANCIALSTATEMENTS1.BACKGROUND.TheGovernmentManagementReformAct(GMRA)of1994amendedtherequirementsoftheChiefFinancialOfficers(CFOs)Actof1990byrequiring,amongotherthings,theannualpreparationandauditoforganizationwidefinancialstatementsof24executivedepartmentsandagencies(AppendixA).TheGMRAalsorequiresauditedfinancialstatementsofcomponentsofexecutivedepartmentsandagenciesdesignatedbytheDirectoroftheOfficeofManagementandBudget(OMB),whichareidentifiedinAppendixB.Inaddition,theFederalFinancialManagementImprovementAct(FFMIA)of1996requires,amongotherthings,thatthereportontheseauditsstatewhethertheagencyfinancialmanagementsystemscomplysubstantiallywithFederalfinancialmanagementsystemsrequirements,applicableFederalaccountingstandards,andtheU.S.GovernmentStandardGeneralLedgeratthetransactionlevel.2.DEFINITIONS.ForthepurposesofthisBulletin,thefollowingdefinitionsapply:0 r a.0` r(#r(#"AnnualFinancialStatement"meansthefinancialstatementofareportingentityas ] describedinSection3515ofTitle31oftheUnitedStatesCodeandOMBBulletin9701,"FormandContentofAgencyFinancialStatements"andsubsequentissuances(OMB'sFormandContentBulletin),and,shallbecomprisedof: ` (#` (# 0 r 0` r(#r(#(1)0 ` (#` (#OverviewoftheReportingEntity(alsocalledManagement'sDiscussionand ? Analysis).  (# (# 0 r 0` r(#r(#(2)0 ` (#` (#PrincipalStatementsandRelatedNotes.ThePrincipalStatements   1      ׀includethe 3 followingfinancialstatementsandnotesthereto:  (# (# 0 r 0` r(#r(#0 ` (#` (#(a)0 (# (#BalanceSheet.!!(#(# 0 r 0` r(#r(#0 ` (#` (#(b)0 (# (#StatementofNetCost."(#(# 0 r 0` r(#r(#0 ` (#` (#(c)0 (# (#StatementofChangesinNetPosition.#(#(# 0 r 0` r(#r(#0 ` (#` (#(d)0 (# (#StatementofBudgetaryResources.$ (#(# 0 r 0` r(#r(#0 ` (#` (#(e)0 (# (#StatementofFinancing.% !(#(# 0 r 0` r(#r(#0 ` (#` (#(f)0 (# (#StatementofCustodialActivity,ifapplicable.&!"(#(# 0 r 0` r(#r(#0 ` (#` (#(g)0 (# (#NotestoPrincipalStatements.'!#(#(#  ("$ 0 r 0` r(#r(#(3)0 ` (#` (#RequiredSupplementaryStewardshipInformation,ifapplicable. (# (# 0 r 0` r(#r(#(4)0 ` (#` (#RequiredSupplementaryInformation,ifapplicable. (# (# 0 r 0` r(#r(#(5)0 ` (#` (#OtherAccompanyingInformation,ifapplicable. (# (# L h(`L 3   0 r 3.2h  b  .3  0` r(#r(#  CodificationofStatementsonAuditingStandardsisacodificationofStatementson   AuditingStandardsissuedbytheAmericanInstituteofCertifiedPublicAccountants(AICPA).TheAICPA'sstandardsoffieldworkandreportingareincorporatedintheirentiretyinGovernmentAuditingStandardsbyreference.3.9.݌ ` (#` (# Ќ  L h((L 3    r 302h  c  .3  0 `   "Federalaccountingstandards"arethosestandardsincludedinthehierarchyofFederal   accountingstandardsdescribedinparagraph5ofthisBulletin.300݌ ` (#` (# Ќ  L Uh((L 3    r 3B22Uh  d  .3  0 `   "Federalfinancialmanagementsystemsrequirements"arethoserequirementsdescribed o  inOMBCircularA127, FinancialManagementSystems.3B2y2݌ ` (#` (# Ќ   r &  e.0 ` GovernmentAuditingStandardsarethosestandardsissuedbytheComptrollerGeneral ] oftheUnitedStates.']3 ` (#` (# 0 r f.0` r(#r(#"Independentauditor"meansanauditorwhomeetstheindependencestandards K specifiedintheGovernmentAuditingStandards.E` (#` (# 0 r g.0` r(#r(#"Internalcontrol,"asitrelatestothePrincipalStatementsandRequiredSupplementary 9 StewardshipInformation,isaprocess,effectedbytheagency'smanagementandotherpersonnel,designedtoprovidereasonableassurancethatthefollowingobjectivesaremet: ` (#` (# Ѐ0 r 0` r(#r(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#0p(#(#0p(#p(#0 (#(#0x (# (#0 x(#x(#0@ $ $!j (# (# 0 r 0` r(#r(#&  (1)0 ` (#` (#Reliabilityoffinancialreportingtransactionsareproperlyrecorded, d processed,andsummarizedtopermitthepreparationofthePrincipalStatementsandRequiredSupplementaryStewardshipInformationinaccordancewithFederalaccountingstandards,andthesafeguardingofassetsagainstlossfromunauthorizedacquisition,use,ordisposition;'7  (# (# 0 r 0` r(#r(# ` (#` (# 0 r 0` r(#r(#(2)0 ` (#` (#Compliancewithapplicablelawsandregulationstransactionsareexecutedin $@  accordancewith:(a)lawsgoverningtheuseofbudgetauthorityandotherlawsandregulationsthatcouldhaveadirectandmaterialeffectonthePrincipalStatementsorRequiredSupplementaryStewardshipInformation,and(b)anyotherlaws,regulations,andgovernmentwidepoliciesidentifiedbyOMBinAppendixCofthisBulletin;and  (# (#   *%& 0 r 0` r(#r(#(3)0 ` (#` (#Reliabilityofperformancereportingtransactionsandotherdatathatsupport   reportedperformancemeasuresareproperlyrecorded,processed,andsummarizedtopermitthepreparationofperformanceinformationinaccordancewithcriteriastatedbymanagement.  (# (#  0 r h.0` r(#r(#"Managementletter"meansaletterpreparedbytheauditorwhichdiscussesfindings   andrecommendationsforimprovementsininternalcontrol,thatwereidentifiedduringtheauditandwerenotrequiredtobeincludedintheauditor'sreportoninternalcontrol,andothermanagementissues.SeeChapter5,paragraph5.28ofGovernmentAuditing   Standards. ` (#` (# in  0 r inP?i  .0` r(#r(#  "Materialweaknessesininternalcontrol"arereportableconditionsinwhichthedesign u  oroperationoftheinternalcontroldoesnotreducetoarelativelylowleveltheriskthaterrors,fraudornoncomplianceinamountsthatwouldbematerialinrelationtothePrincipalStatementsorRequiredSupplementaryStewardshipInformationbeingauditedormaterialtoaperformancemeasureoraggregationofrelatedperformancemeasuresmayoccurandnotbedetectedwithinatimelyperiodbyemployeesinthenormalcourseofperformingtheirassignedfunctions.Theauditorshallusethisdefinitionofmaterialweaknessestoreportonanentity'sinternalcontrolinaccordancewiththerequirementsofGovernmentAuditingStandardsandthisBulletinratherthan E thedefinitionofmaterialweaknessesusedbymanagementtoprepareanagency'sFederalManagers'FinancialIntegrityAct(FMFIA)of1982report.inP?w?ی ` (#` (# Ќ  ݀0 r j.0` r(#r(#"OverviewoftheReportingEntity"meansabriefnarrativeoverview,preparedby -v management,alsocalledManagement'sDiscussionandAnalysis(MD&A),whichdescribesthereportingentityanditsmission,activities,programandfinancialresults,andfinancialcondition.OMBsFormandContentBulletinfurtherdefinesthe"OverviewoftheReportingEntity." ` (#` (#  `n  0 r `nEk  .0` r(#r(#  "Reportableconditions"arematterscomingtotheauditor'sattentionthat,inthe  "R auditor'sjudgment,shouldbecommunicatedbecausetheyrepresentsignificantdeficienciesinthedesignoroperationofinternalcontrol,thatcouldadverselyaffecttheorganization'sabilitytomeettheobjectivesinparagraph2.g.ofthisBulletin.`nEE ی ` (#` (# Ќ  0 r l.0` r(#r(#"ReportingEntity"meansoneoftheexecutivedepartmentsandagenciesand &4!" componentsofsuchdepartmentsandagencieslistedinAppendicesAandB,oranagency,bureau,orotherorganizationthatrepresentsameaningfulunitforprogrammanagement,forwhichafinancialstatementisprepared,andforwhichmanagementchosetohaveanauditperformedinaccordancewiththisBulletin.OMBsFormandContentBulletinfurtherdefines"ReportingEntity."+&'` (#` (# 0 r  r(#r(#  L eh((L r m.0 ` "UnitedStatesGovernmentStandardGeneralLedger(SGL)"meanstheuniformchart  ofaccountsprescribedbytheDepartmentoftheTreasuryinitsTreasuryFinancial  Manual.` (#` (# 3.FREQUENCYOFAUDIT.Auditsshallbeperformedannually.4.RESPONSIBILITYFORAUDIT.ForpurposesofthisBulletin,thefollowingresponsibilitiesapply:0 r a.0` r(#r(#Forthe24executivedepartmentsandagenciesandselectedcomponentsofsuch {  departmentsandagencieslistedinAppendicesAandB,theauditsoffinancialstatementsshallbeperformedbytheInspectorGeneral(IG)oftheexecutivedepartmentoragencyorbyanindependentauditorasdeterminedbytheIG. ` (#` (# 0 r b.0` r(#r(#GMRAprovidesthat,inlieuofanauditotherwiserequired,theComptrollerGeneralof ] theUnitedStatesmay,athisorherdiscretionandfollowingconsultationwiththeIG,performtheaudit. ` (#` (# 5.ACCOUNTINGPRINCIPLESANDSTANDARDS.TheFederalAccountingStandardsAdvisoryBoard(FASAB)wasestablishedbytheSecretaryoftheTreasury,theDirectorofOMB,andtheComptrollerGeneral(thePrincipals)torecommendFederalaccountingstandardstothePrincipals.SpecificstandardsagreeduponbythePrincipalsareissuedbytheDirectorofOMBandtheComptrollerGeneralasStatementsofFederalFinancialAccountingStandards(SFFASs).FederalagenciesarerequiredtofollowthesestandardsinthepreparationoffinancialstatementspursuanttoGMRA.RecognizingthattheSFFASsmaynotexplicitlyaddressalltransactionsofdepartmentsandagencies,thePrincipalsadoptedthefollowinghierarchyofFederalaccountingstandards:0 r a.0` r(#r(#Individualstandards(SFFASs)agreedtobytheDirectorofOMB,theComptroller !X General,andtheSecretaryoftheTreasuryandpublishedbyOMBandtheGeneralAccountingOffice. ` (#` (# 0 r b.0` r(#r(#InterpretationsrelatedtotheSFFASsissuedbyOMBinaccordancewiththe $@  proceduresoutlinedinOMBCircularA134,"FinancialAccountingPrinciplesandStandards." ` (#` (# 0 r c.0` r(#r(#RequirementscontainedinOMB'sFormandContentBulletinineffectfortheperiod ((#$ coveredbythefinancialstatements. ` (#` (#   *%& 0 r d.0` r(#r(#Accountingprinciplespublishedbyotherauthoritativestandardsettingbodiesandother   authoritativesources(a)intheabsenceofotherguidanceinthefirstthreepartsofthishierarchy,and(b)iftheuseofsuchaccountingprinciplesimprovesthemeaningfulnessofthefinancialstatements. ` (#` (# 6.SCOPEOFAUDIT.FinancialstatementsshallbeauditedinaccordancewithGovernment   AuditingStandardsandtheprovisionsofthisBulletin.    L  (Lf0 r &  a.0` r(#r(#WithrespecttothePrincipalStatementsandRequiredSupplementaryStewardship   Information,theauditorshall: ` (#` (# 0 r 0` r(#r(#(1)0 ` (#` (#' ]WDeterminewhetherthePrincipalStatementspresentfairly,inallmaterial 'p  respects,inconformitywithFederalaccountingstandards,theassets,liabilities,andnetposition;netcosts;changesinnetposition;budgetaryresources;reconciliationofnetcoststobudgetaryobligations;and,ifapplicable,custodialactivity.  (# (#  0 r 0` r(#r(#0 ` (#` (#(a)0 (# (#Ifconsolidatingstatementsarepresented,theauditorshallconsiderthe g consolidatingstatementssupplementalinformation&  andreportinaccordancewithparagraph7.c.(1)(a)ofthisBulletin,unlesstheauditor'sobjectiveistoexpressanopinionontheconsolidatingstatements.'GZ (#(# 0 r 0` r(#r(#0 ` (#` (#(b)0 (# (#IftheauditorisunabletodeterminewhetherthePrincipalStatements  arefairlypresentedbecause,forexample,oftheauditor'sinabilitytoobtainsufficientcompetentevidentialmatterduetoinadequateaccountingrecords,theauditorshall,totheextentpracticable,obtainsufficientevidenceaboutclosingbalancestoenabletheauditortoopineonthesubsequentyear'sfinancialstatements. (#(# 0 r 0` r(#r(#(2)0 ` (#` (#Considerstewardshipproperty,plant,andequipment(PP&E)required   supplementaryinformationandperformtheproceduresdescribedinAUSection558,"RequiredSupplementaryInformation,"oftheCodificationof "  StatementsonAuditingStandards.Pendingmodificationsoftheapplicable g#! accountingstandardsthatrequirereportingontheconditionofstewardshipPP&E,forfiscalyear2000andbeyond,OMBwillrequireexaminationlevelassuranceforstewardshipPP&EusingtheAICPAsAttestationStandards.  (# (# 0 r 0` r(#r(#(3)0 ` (#` (#Considerstewardshipinvestments(includingnonFederalphysicalproperty '"& (suchashighways),humancapital(expendituresfortrainingandeducation),andresearchanddevelopment)requiredsupplementaryinformationandperformtheproceduresdescribedinAUSection558,"RequiredSupplementaryInformation,"oftheCodificationofStatementsonAuditing G+%* Standards.Forfiscalyear2000andbeyond,OMBwillrequireexamination ',p&+ levelassuranceforstewardshipinvestmentsusingtheAICPAsAttestationStandards.  (# (# L   L 3   0 r 0` r(#r(#3&c2(  4  )3  0 ` (#` (#  Determinewhetherriskassumedinformation(includingprojectionsofpension, W deposit,andotherinsuranceprogramsrequiredbySFFASNo.5,"AccountingforLiabilitiesoftheFederalGovernment")ispresentedfairlyinallmaterialrespects,inaccordancewiththerequirementsofSFFASNo.5,andanysubsequentrevisions.Inassessingthereasonablenessofriskassumedinformation,theauditorshallconsidertheneedtofollowtheguidanceinAuditing(AU)Section336, UsingtheWorkofaSpecialist,oftheCodificationofStatementsonAuditingStandards.3&cqc݌w  (# (# Ќ  0 r 0` r(#r(# ` (#` (# f?W    f0 r 0` r(#r(#2(  5  )3  0 ` (#` (#  Considersocialinsuranceinformation,whenpresented,otheraccompanying 7  information.SeeAUSection551,CodificationofStatementsonAuditing 1z  Standards.Forfutureperiods,OMBwillmodifytheauditrequirementsfor +t  socialinsuranceinformationwhentheapplicableaccountingstandardsbecomeeffective.fg݌  (# (# Ќ   r L M/  L 3   0 r 3i2M/  b  .3  0` r(#r(#  Withrespecttotheinternalcontrolobjectivesdescribedinparagraphs2.g.(1)and(2) \ ofthisBulletinrelatingtothePrincipalStatementsandRequiredSupplementaryStewardshipInformation,theauditorshallobtainanunderstandingofthecomponentsofinternalcontrol(seeAUSection319.07,CodificationofStatementsonAuditing J Standards)andassessthelevelofcontrolriskrelevanttotheassertionsembodiedin D theclassesoftransactions,accountbalances,anddisclosurecomponentsofthefinancialstatements.SuchcontrolsincluderelevantEDPgeneralandapplicationcontrolsandcontrolsrelatingtointraagencyandintragovernmentaltransactionsandbalances.Forthoseinternalcontrolsthathavebeenproperlydesignedandplacedinoperation,theauditorshallperformsufficientteststosupportalowassessedlevelofcontrolrisk.SeeAUSection319.45.63oftheCodificationofStatementsonAuditing   Standards.Thoseinternalcontrolsthathavenotbeenproperlydesignedorplacedin   operationandthoseinternalcontrolsthatarefoundtobeineffectiveshallbereportedinaccordancewithparagraph7ofthisBulletin.3ii݌ ` (#` (# Ќ      zo0 r 0` r(#r(#2M/(  1  )3  0 ` (#` (#  Inobtaininganunderstandingofthecomponentsofinternalcontrol,particularly $! theriskassessmentcomponent,andassessingcontrolrisk,theauditorshallobtainanunderstandingoftheprocessbywhichtheagencyidentifiesandevaluatesweaknessesrequiredtobereportedunderFMFIAandrelatedagencyimplementingprocedures.zoo݌  (# (# Ќ      q0 r 0` r(#r(#2M/(  2  )3  0 ` (#` (#  Theauditorshallcomparematerialweaknessesdisclosedduringtheauditwith *$' thosematerialweaknessesreportedintheagency'sFMFIAreportthatrelateto +%( thefinancialstatementsoftheentityunderauditanddocumentmaterialweaknessesdisclosedbyauditthatwerenotreportedintheagencysFMFIAreport.Theauditorshouldconsiderwhetherthefailuretodetectandreportmaterialweaknessesconstitutesareportableconditionormaterialweaknessintheentitysinternalcontrol.qq݌  (# (# Ќ  0 r c.0` r(#r(#Withrespecttotheinternalcontrolobjectivedescribedinparagraph2.g.(3)ofthis   Bulletinrelatingtoperformancemeasures,theauditorshallobtainanunderstandingofthecomponentsofinternalcontrolrelatingtotheexistenceandcompletenessassertionsrelevanttotheperformancemeasuresincludedintheOverviewoftheReportingEntity.Thoseinternalcontrolsthathavenotbeenproperlydesignedandplacedinoperationshallbereportedinaccordancewithparagraph7ofthisBulletin.Theobjectiveofgaininganunderstandingofinternalcontrolinthissubparagraphistoreportdeficienciesinthedesignofinternalcontrol,ratherthantoplanthefinancialstatementaudit.Forfutureperiods,OMBisconsideringexpandingauditcoveragetoincludegaininganunderstandingofcomponentsofinternalcontrolrelatingtoeachofthefiveassertions(existenceoroccurrence;completeness;rightsandobligations;valuationorallocation;andpresentationanddisclosure)relevanttotheperformancemeasuresincludedintheOverviewoftheReportingEntity. ` (#` (# 0 r d.0` r(#r(#Withrespecttocompliancewithapplicablelawsandregulations,theauditorshall ? performtestsofcompliancewithlawsandregulationsthatcouldhaveadirectandmaterialeffectonthePrincipalStatementsandRequiredSupplementaryStewardshipInformation,andanyotherlaws,regulations,andgovernmentwidepoliciesidentifiedbyOMBinAppendixCofthisBulletin. ` (#` (# L P  L0 r e.0` r(#r(#WithrespecttocompliancewithgovernmentwidepoliciescontainedinOMBCircular d A127,usingtheguidanceinAppendixD,theauditorshallperformtestsofcompliancewithFederalfinancialmanagementsystemsrequirements   2      ,applicableFederal !X accountingstandards,andtheSGLatthetransactionlevel.ThisprovisiononlyappliestoauditsofentitieslistedinAppendicesAandB.CircularA127requirestheagencytoestablishandmaintainasingle,integratedfinancialmanagementsystemthatcomplies #F withcharacteristicsstatedtherein,thatincludemaintainingaccountingdatatopermitreportinginaccordancewithFederalaccountingstandards,applicationoftheSGLatthetransactionlevel,andincorporationofthefunctionalrequirementsissuedbytheJointFinancialManagementImprovementProgram(JFMIP)initsseriesFederalFinancial  ManagementSystemsRequirements(FFMSR).AsofthedateofthisBulletin,the   issuancesinthisseriesare: ` (#` (#  r  `     0 r 0` r(#r(#0 ` (#` (#FrameworkforFederalFinancialManagementSystems,FFMSR0,January   1995,  (# (# 0 r 0` r(#r(#0 ` (#` (#CoreFinancialSystemRequirements,JFMIPSR994,February1999,*  (# (# 0 r 0` r(#r(#0 ` (#` (#HumanResourcesandPersonnelPayrollSystemRequirements,JFMIPSR {  995,April1999,*  (# (# 0 r 0` r(#r(#0 ` (#` (#TravelSystemRequirements,FFMSR3,January1991,o  (# (# 0 r 0` r(#r(#0 ` (#` (#Seized/ForfeitedAssetSystemRequirements,FFMSR4,March1993,i  (# (# 0 r 0` r(#r(#0 ` (#` (#DirectLoanSystemRequirements,JFMIPSR998,June1999*c  (# (# 0 r 0` r(#r(#0 ` (#` (#GuaranteedLoanSystemRequirements,FFMSR6,December1993,] (# (# 0 r 0` r(#r(#0 ` (#` (#InventorySystemRequirements,FFMSR7,June1995,andW (# (# 0 r 0` r(#r(#0 ` (#` (#ManagerialCostAccounting,FFMSR8,February1998.Q (# (# L %Ͷh L r  ` *denotesrequirementsthathavebeenupdatedandreissuedduringFY1999'   3       E 0 r f.0` r(#r(#WithrespecttoinformationaccompanyingthePrincipalStatements,theauditorshall 9 assesswhethertheinformationandmannerofitspresentationintheOverviewoftheReportingEntity(orMD&A)andanyotheraccompanyinginformationismateriallyinconsistentwiththeinformationinthePrincipalStatements. ` (#` (#  r 0 r g.0` r(#r(#Withrespecttorequiredsupplementaryinformationreferredtoinparagraph2.a.(4)of d thisBulletin,theauditorshallperformtheproceduresdescribedinAUSection558,CodificationofStatementsonAuditingStandards.!X` (#` (# 0 r h.0` r(#r(#Theauditorshallobtainwrittenrepresentationfrommanagementaspartofanaudit #L conductedinaccordancewiththisBulletin.SeeAUSection333,"ManagementRepresentations,"oftheCodificationofStatementsonAuditingStandards.An $@  illustrativemanagementrepresentationletterisprovidedinAppendixE.%: !` (#` (# Ї7.AUDITREPORT.0 r a.0` r(#r(#Anauditreport,orseparateauditreports,onthePrincipalStatements,internalcontrol,  andcomplianceshallbepreparedatthecompletionoftheaudit.Theauditreport(s)shallbesubmittedtotheagencyheadinsufficienttimetoenabletheagencyheadtomeettheduedateforsubmittingtheauditedfinancialstatementunderGMRA,nolaterthanMarch1followingtheendofthefiscalyearforwhichthefinancialstatementswereprepared.Theauditresultsshallbediscussedwithmanagementassoonaspracticablebut,inanycase,priortoissuanceoftheauditreport. ` (#` (# 0 r b.0` r(#r(#Theauditreport(s)shallstatethattheauditwasmadeinaccordancewithGovernment {  AuditingStandardsandtheprovisionsofthisBulletin.u ` (#` (# 0 r c.0` r(#r(#Theauditreport(s)shallinclude:i ` (#` (# 0 r 0` r(#r(#(1)0 ` (#` (#Anopinionastowhetherthereportingentity'sPrincipalStatementsarefairly ] presentedinallmaterialrespectsinconformitywithFederalaccountingstandards.SeeAUSection623.05oftheCodificationofStatementson Q AuditingStandards.K (# (# 0 r 0` r(#r(#0 ` (#` (#(a)0 (# (#Withrespecttoreportingonotheraccompanyinginformation,which ? includestheinformationreferredtoinparagraphs2.a.(1),2.a.(5),and6.a.(5)ofthisBulletin,theauditorshallfollowAUSection551,CodificationofStatementsonAuditingStandards.-v(#(# 0 r 0` r(#r(#0 ` (#` (#(b)0 (# (#WhenstewardshipPP&Eandstewardshipinvestmentsreferredtoin !j paragraphs6.a.(2)and(3),respectively,andrequiredsupplementaryinformationreferredtoinparagraph2.a.(4)ofthisBulletinarepresented,theauditorshallfollowAUSection551.15,Codificationof !X StatementsonAuditingStandards. "R(#(# 0 r 0` r(#r(#0 ` (#` (#(c)0 (# (#IfthePrincipalStatementsarenotpreparedinaccordancewithFederal #F accountingstandards,theauditorshallreportthedeparture(s)fromthosestandardsand,ifpracticable,theeffectsofthedeparture(s)onassets,liabilities,andnetposition;netcosts;changesinnetposition;budgetaryresources;reconciliationofnetcoststobudgetaryobligations;and,ifapplicable,custodialactivityeitherdirectlyintheauditor'sreportonthePrincipalStatementsorbyreferenceintheauditor'sreporttoanexplanatorynoteintheNotestoPrincipalStatementspreparedbymanagement.+&'(#(# Ї0 r 0` r(#r(#0 ` (#` (#(d)0 (# (#Iftheauditordisclaimsanopinion,thereportshalldescribewhythe  auditorwasunabletoconducttheauditinaccordancewithGovernmentAuditingStandardsandthisBulletin.Ifmaterial  weaknessesandotherreportableconditionspreventedtheconductoftheauditinaccordancewithGovernmentAuditingStandardsandthis   Bulletin,suchconditionsshallbeincludedinthereportoninternalcontroldescribedinparagraph7.c.(2),alongwithrecommendationsforcorrectingthecondition(s). (#(# 0 r 0` r(#r(#0 ` (#` (#(e)0 (# (#Whenthereisachangeinaccountingprinciples,forexample,changes   tocomplywithSFFASs,theauditorsreportonthePrincipalStatementsshallincludeanexplanatoryparagraphidentifyingthenatureofthechangeandreferringthereadertothenotetothePrincipalStatementsthatdiscussesthechangeindetail. (#(# 0 r 0` r(#r(#(2)0 ` (#` (#Areportoninternalcontrol   4      ,whichshallataminimum:] (# (# 0 r 0` r(#r(#0 ` (#` (#(a)0 (# (#Statethat,withrespecttointernalcontroloverfinancialreportingas Q describedinparagraphs2.g.(1)and(2)ofthisBulletin,theauditorobtainedanunderstandingofthedesignofinternalcontrols,determinedwhethertheyhavebeenplacedinoperation,assessedcontrolrisk,and&  performedtestsofthereportingentity'sinternalcontrols.'˝ (#(#  0 r 0` r(#r(#0 ` (#` (#(b)0 (# (#Statethat,withrespecttotheinternalcontrolobjectivedescribedin -v paragraph2.g.(3)ofthisBulletin,andrelatingtotheperformancemeasuresincludedintheOverviewoftheReportingEntity,theauditorobtainedanunderstandingofthedesignofinternalcontrolsrelatingtotheexistenceandcompletenessassertionsanddeterminedwhethertheyhavebeenplacedinoperation. (#(# 0 r 0` r(#r(#0 ` (#` (#(c)0 (# (#Statewhetherornotthetestsperformedprovidedsufficientevidenceto #L supportanopiniononinternalcontrols. (#(# 0 r 0` r(#r(#0 ` (#` (#(d)0 (# (#Describereportableconditionsandmaterialweaknessesidentified %: ! duringtheaudit. (#(#  '."# 0 r 0` r(#r(#0 ` (#` (#(e)0 (# (#Identifythosematerialweaknessesdisclosedbyauditthatwerenot  reportedinthereportingentitysFMFIAreport. (#(# 0 r 0` r(#r(#(3)0 ` (#` (#Areportonthereportingentity'scompliancewithapplicablelaws,regulations,  andgovernmentwidepolicyrequirements.   5        (# (#  0 r 0` r(#r(#0 ` (#` (#(a)0 (# (#Theauditorshallreportnoncompliancewithlawsandregulations   disclosedbyaudit,exceptforthoseinstancesofnoncompliancethat,intheauditor'sjudgment,areclearlyinconsequential.Inmeetingthisrequirement,theauditorshalllistthoselawsandregulationsthattestsdisclosedreportableinstancesofnoncompliance. (#(# L E h%L 3   0 r 0` r(#r(#0 ` (#` (#3X2E(  c  )3  0 (# (#  Withrespecttolawsandregulationstestedforwhichtheaudit o  disclosednoreportableinstancesonnoncompliance,thereportshallstatethattheauditdisclosednoreportableinstancesofnoncompliancewiththeselawsandregulations.Alistingoftheselawsandregulationsisnotrequired.3X݌ (#(# Ќ  0 r 0` r(#r(#0 ` (#` (#(c)0 (# (#Forcompliancewithgovernmentwidepolicyrequirementscontainedin K OMBCircularA127andreferredtoinFFMIA,theauditorshallreportwhetherthereportingentitysfinancialmanagementsystemssubstantiallycomplywithFederalfinancialmanagementsystemsrequirements,Federalaccountingstandards,andtheSGLatthetransactionlevel.Tomeetthisrequirement,theauditorsreportshallstatetheauditorsreportingrequirementandthattheauditorperformedtestsofcomplianceinaccordancewiththerequirementsofthisBulletin(seeAppendixD).TheauditreportshallreflectinstancesinwhichthereportingentityssystemsdidnotsubstantiallycomplywiththethreeFederalfinancialmanagementsystemsrequirements,orstatethattheauditdisclosednoinstancesinwhichthereportingentityssystemsdidnotsubstantiallycomplywiththethreerequirements.Inaddition,asrequiredbyFFMIA,wheretestsdisclosedthatthereportingentityssystemsdidnotsubstantiallycomplywiththethreerequirements,theauditorsreportoncomplianceshall: (#(#   &4!"     0 r 0` r(#r(#0 ` (#` (#0 (# (#2E(  i  )3  0h(#(#  Identifytheentityororganizationresponsibleforthefinancial   managementsystemsthatwerefoundnottocomplywiththerequirements.݌ h(#h(# Ќ      E0 r 0` r(#r(#0 ` (#` (#0 (# (#2E(  ii  )3  0h(#(#  Includeallfactspertainingtothenoncompliance,includingthe   natureandextentofthenoncompliance,theprimaryreasonorcauseofthenoncompliance,andanyrelevantcommentsfromreportingentitymanagementoremployeesresponsibleforthenoncompliance.Ep݌ h(#h(# Ќ  0 r 0` r(#r(#0 ` (#` (#0 (# (#(iii)0h(#(#Providerecommendedremedialactionsandthetimeframesto {  implementsuchactions. h(#h(# L E( L 3   0 r 0` r(#r(#0 ` (#` (#32E(  d  )3  0 (# (#  Withrespecttotheobjectivesoftestsofcompliancegenerally,the i  auditorsreportoncomplianceshallstatewhetherornotprovidinganopiniononcompliancewasanobjectiveoftheauditandwhetherornotthetestsperformedprovidedsufficientevidencetosupportanopinion.3݌ (#(# Ќ  0 r d.0` r(#r(#Inpreparingthereportsinparagraph7.c.,theauditorshallreportthestatusofknown K butuncorrectedmaterialfindingsandrecommendationsfrompriorauditsthataffectthecurrentauditobjectives.SeeChapter4,paragraphs4.7,4.10,and4.11ofGovernmentAuditingStandards.9` (#` (# 0 r e.0` r(#r(#Thereportingentityshallprovidecommentsontheauditor'sfindingsand -v recommendationsincludedintheauditreport,includingcorrectiveactionstakenorplannedandcommentsonthestatusofcorrectiveactionstakenonpriorfindings.Totheextentpractical,thesecommentsshallbeincludedintheauditreportsoninternalcontrolorreportoncompliance.Ifcorrectiveactionsarenotnecessary,anexplanatorystatementshallbeincludedintheapplicableauditreport. ` (#` (# 0 r f.0` r(#r(#Copiesoftheauditreportshallbedistributedtotheheadoftheexecutivedepartment #L oragencyandsubsequentlyincludedintheCFOsannualreportortheagencysAccountabilityReport. ` (#` (#  r 8.LEGALLETTERS.Theauditorshallrequestentitymanagementtosendaletterofinquirytothoselawyerswithwhommanagementconsultedconcerninglitigation,claims,andassessments.SeeAUSection337,"InquiryofaClient'sLawyerConcerningLitigation,Claims,andAssessments,"oftheCodificationofStatementsonAuditingStandards. )"$%   *%& 0 r a.0` r(#r(#TheletterofinquiryshallbesenttolegalcounselnolaterthanOctober15andshall   includearequestforaninterimresponsetobeeffectivenoearlierthanDecember1,exceptasnotedinparagraph8.d,andsubmittedtotheauditorbyDecember15followingtheendofthefiscalyearforwhichthefinancialstatementsareprepared.Inaddition,theletterofinquiryshallincludearequestforanupdatedresponsetobeeffectivenoearlierthanFebruary15andsubmittedtotheauditorbyMarch1followingtheendofthefiscalyearforwhichthefinancialstatementsareprepared.(SeeAppendixH1forillustrativeletterofinquiryfromentitymanagementtolegalcounselandAppendixH2forillustrativeletterofresponsefromlegalcounseltotheauditor.) ` (#` (# 0 r b.0` r(#r(#TheCFOshallprepareandtheauditorshallreviewasummaryoftheinformation {  containedinthelegalcounselsresponse.(SeeAppendixH3forformattobeusedtocompilelegalrepresentationletterdataforfinancialreportingpurposes.) ` (#` (# 0 r c.0` r(#r(#TheIGshallsubmittoOMB(DeputyController,OfficeofFederalFinancial c  Management),DepartmentoftheTreasury(Commissioner,FinancialManagementService),andtheGeneralAccountingOffice(AssistantComptrollerGeneral,AccountingandInformationManagementDivision)copiesoftheinterimandupdatedlegalresponsesdescribedinparagraph8.a.,andacopyoftheCFOssummarydescribedinparagraph8.b.byDecember31andMarch10,respectively. ` (#` (# L դ((L0 r  3   3p2դ  d  .3  0` r(#r(#  IftheauditiscompletedpriortoDecember1,thelegalresponseprovidedin 9 connectionwiththeauditmaybeusedinplaceoftheinterimresponsedescribedinparagraph8.a.Inaddition,anupdatedlegalresponsetobeeffectivenoearlierthanFebruary15shallbeprovided.TheselegalresponsesandcopiesoftheCFOssummariesdescribedinparagraph8.b.shallbesubmittedinaccordancewithparagraph8.c.3p݌ ` (#` (# Ќ  9.MANAGEMENTLETTER.Conditionsthatarenotrequiredtobeincludedintheauditreport,butthattheauditorconsidersnecessarytocommunicate,shouldbeseparatelycommunicatedtomanagementofthereportingentityinamanagementletter.Ifamanagementletterisissued,theauditorshallrefertothatmanagementletterintheauditor'sreportoninternalcontrol(seeparagraph5.28ofGovernmentAuditingStandards). $@   10.XXXXAGREEDUPONPROCEDURES:RETIREMENT,HEALTHBENEFITS,ANDLIFE &4!" INSURANCEWITHHOLDINGS/CONTRIBUTIONSANDSUPPLEMENTALSEMIANNUALHEADCOUNTREPORTSUBMITTEDTOTHEOFFICEOFPERSONNELMANAGEMENT(OPM). TheAgreedUponProcedures(AUPs)enumeratedinAppendixI1shallbeperformed )"$% annuallyforeachentitylistedinAppendixA.#XXXX#SeeAUSection622,"EngagementstoApplyAgreed *%& UponProcedurestoSpecifiedElements,Accounts,orItemsofaFinancialStatement"ofthe +&' CodificationofStatementsonAuditingStandards.XXXXԀTheAUPsaredesignedtoassistOPMinassessing  thereasonablenessoftheRetirement,HealthBenefits,andLifeInsurancewithholdings/contributionsaswellassemiannualHeadcountinformationsubmittedbyagencies.TheAUPsshallbeappliedtothe12monthsendedSeptember30ofeachyear.#XXXX#  L (( L 3   XXXX r 32  a  .3  0 `   TheAUPsshallbeappliedseparately,andtheresultsreportedseparately,foreach   AgencyPayrollOffice(APO)thatservices30,000ormoreemployees.3݌ ` (#` (# Ќ   r L  (L    r0 r 0` r(#r(#2(  1  )3  0 ` (#` (#  IfanagencydoesnothaveanAPOthatservices30,000ormoreemployees,it   shallperformtheAUPsonitslargestAPO.r݌  (# (# Ќ   X XE( ` hp x Xr` XEXXXXX XXXXX XX  #XXXX#XXXX   ݌̌ X X'Xr` XX'XXXXXXXX   r  ` (2)0 Ifanagencyperformspayrollcrossservicingfunctionsforotheragencies u  (referredtoasclientagencies),theauditorofthecrossservicingagencywillbetheprincipalauditorforthepurposeofapplyingtheseAUPs.Accordingly,theauditorforanagencyperformingpayrollcrossservicingfunctionsshallapplytheAUPsandreporttheresultsseparatelyforeachAPOthatservices30,000ormoreemployees.#XXXX#XXXXԀTheextentofparticipationbytheauditorsfortheclient W APOsshouldbedeterminedinconjunctionwiththeprincipalauditor.#XXXX#Q (# (# L e( L 3    r 332e  b  .3  0 `   Thereportontheapplicationoftheseproceduresshallbesubmittednolaterthanthe E December15followingtheendofthefiscalyearforwhichthefinancialstatementsare ? prepared.Totheextentpractical,managementscommentsontheauditorsfindingsshallbeincludedinthereport.AgenciesshallnotifyOPMbyNovember15ofeach 3| yearofanyanticipateddelaysordifficultiesincompletingtheAUPsandsubmittingtherequiredreportbytheDecember15deadline.33j݌'p` (#` (# Ќ   r c.0 ` Agenciesshallsubmitthreecopiesofthereportontheapplicationoftheseprocedures d totheInspectorGeneralofOPMatthefollowingaddress: ` (#` (#  K.` hp x (#Xr` XK0   `  U.S.OfficeofPersonnelManagement (#(#    `  OfficeofInspectorGeneralXXXXE.` hp x (#XE #L 0   `  Room6400 (#(# 0   `  1900EStreet,_N.W._ (#(# 0   `  Washington,DC20415 (#(#  E.` hp x (#XE#XXXX# &4!" &   XXXX11.INSPECTORGENERALOVERSIGHT.  L h (L ;   ;0  2h  a  .3  0` (#(#  IGsshall:;݌` (#` (# Ќ  0  0` (#(#(1)0 ` (#` (#Ensurethatauditsareperformedandauditreportscompletedinatimely   mannerandinaccordancewiththerequirements'ԀofthisBulletin.ThisresponsibilitypertainstoauditsconducteddirectlybyIGstaffandauditsconductedbyindependentauditorsundercontract.  (# (# 0  0` (#(#(2)0 ` (#` (#Providetechnicaladviceandliaisontoagencyofficialsandindependent   externalauditors.  (# (# 0  0` (#(#(3)0 ` (#` (#Obtainormakequalitycontrolreviewsofauditsmadebyindependentexternal o  auditorsandprovidetheresults,whenappropriate,tootherinterestedorganizations.  (# (# 0  0` (#(#(4)0 ` (#` (#Monitorandreportonmanagement'sprogressinresolvingauditfindingsrelated W toauditsmadepursuanttothisBulletin,inaccordancewiththeInspectorGeneralActof1978,asamended,theprovisionsofOMBCircularA-50,"AuditFollowup,"andFFMIA.  (# (# L ( L   3   32  b  .3  0 `   IGsareencouragedtoworkwithCFOstoacceleratethepreparationoffinancial 9 statements,andtoacceleratethecompletionofaudits.3݌ ` (#` (# Ќ   'p         TableofAppendices   eAppendixA:0 ` ExecutiveDepartmentsandAgenciesRequiredtoPrepareFinancialStatements` (#` (# AppendixB:0 ` ComponentsofExecutiveDepartmentsandAgenciesRequiredtoPrepareFinancial   Statements ` (#` (# AppendixC:0 ` GeneralLaws ` (#` (# AppendixD:0 ` TheFederalFinancialManagementImprovementActof1996!OMBImplementation   GuidanceforCFOsandIGs ` (#` (# AppendixE:0 ` IllustrativeManagementRepresentationLettero ` (#` (# AppendixF:0 ` IllustrativeAuditorsReportonInternalControlc ` (#` (# AppendixG:0 ` IllustrativeAuditorsReportonCompliancewithLawsandRegulationsW` (#` (# AppendixH:0 ` GuidanceRegardingLegalLetters#XXXX+#XXXXK` (#` (# AppendixI:0 ` AgreedUponProcedures:Retirement,HealthBenefits,andLifeInsurance ? Withholdings/ContributionsandSupplementalSemiannualHeadcountReportSubmittedtotheOfficeofPersonnelManagement#XXXXa#XXXX3|` (#` (#   'p    APPENDIXA     EXECUTIVEDEPARTMENTSANDAGENCIESREQUIREDTOPREPAREFINANCIAL  STATEMENTS     DepartmentofAgricultureDepartmentofCommerceDepartmentofDefenseDepartmentofEducationDepartmentofEnergyDepartmentofHealthandHumanServicesDepartmentofHousingandUrbanDevelopmentDepartmentoftheInteriorDepartmentofJusticeDepartmentofLaborDepartmentofStateDepartmentofTransportationDepartmentoftheTreasuryDepartmentofVeteransAffairsAgencyforInternationalDevelopmentEnvironmentalProtectionAgencyFederalEmergencyManagementAgencyGeneralServicesAdministrationNationalAeronauticsandSpaceAdministrationNationalScienceFoundationNuclearRegulatoryCommissionOfficeofPersonnelManagementSmallBusinessAdministrationSocialSecurityAdministration  !X    APPENDIXB    COMPONENTSOFEXECUTIVEDEPARTMENTSANDAGENCIESREQUIREDTOPREPAREFINANCIALSTATEMENTS   6          DepartmentofAgriculture   0  FoodandNutritionService (#(# 0  ForestService (#(# 0  RuralDevelopmentMissionArea (#(# DepartmentofDefense u  0  DepartmentofArmyGeneralFunds (#(# 0  DepartmentofNavyGeneralFunds (#(# 0  DepartmentofAirForceGeneralFunds (#(# 0  MilitaryRetirementTrustFund0h(#(#]h(#h(# 0  U.S.ArmyCorpsofEngineersCivilWorksProgram (#(# 0  DepartmentofArmyWorkingCapitalFund (#(# 0  DepartmentofNavyWorkingCapitalFund (#(# 0  DepartmentofAirForceWorkingCapitalFund (#(# 0   (#(# DepartmentofHealthandHumanServices 9 0  HealthCareFinancingAdministration (#(# &  DepartmentofLabor 'p 0  UnemploymentTrustFund (#(# '!DepartmentofTransportation  ^ 0  FederalAviationAdministration (#(# 0  HighwayTrustFund (#(#   #L &   DepartmentoftheTreasury  0  BureauofAlcohol,TobaccoandFirearms0(#(#(#(# 0  InternalRevenueService (#(# 0  UnitedStatesCustomsService (#(# OfficeofPersonnelManagement   0  CivilServiceRetirementandDisabilityFund (#(# 0  FederalEmployeesHealthBenefitsProgram (#(# 0  FederalEmployeesLifeInsuranceProgram'7  (#(#   APPENDIXC    GENERALLAWS    7        @*Anti-DeficiencyAct(codifiedasamendedin31U.S.C.1341,1342,1351,1517)L 8`(L 3     3283  0 `   31U.S.C.1341(a)(1)(A)and(C)3R݌ ` (#` (# Ќ   3     3283  0 `   31U.S.C.1517(a)31݌ ` (#` (# Ќ  ProvisionsGoverningClaimsoftheUnitedStatesGovernmentasprovidedprimarilyinsections37113720EofTitle31,UnitedStatesCode(includingprovisionsoftheDebtCollectionImprovementActof1996,Pub.L.No.104134,110Stat.1321358,whichalsoiscodifiedinvarioussectionsof5U.S.C.,18U.S.C.,26U.S.C.,28U.S.C.,31U.S.C.,42U.S.C.)#XXXX#XXXX   3   3283  0 `   21U.S.C.371121#XXXXX#XXXX3݌o ` (#` (# Ќ     3   3283  0 `   21U.S.C.3717(a),(b),(c),(e)and(f)#XXXX(#XXXX3݌i ` (#` (# Ќ     3   3283  0 `   21U.S.C.3719#XXXXS#XXXX3݌c ` (#` (# Ќ  FederalCreditReformActof1990,Pub.L.No.101-508,104Stat.1388-610(codifiedinvarioussectionsof2U.S.C.)#XXXXc#XXXX0   3   3283  0` (#(#  2U.S.C.661c(b)and(e)3݌K` (#` (# Ќ  PayandAllowanceSystemforCivilianEmployeesasprovidedprimarilyinChapters5159ofTitle5,UnitedStatesCode#XXXX_#XXXX 3   0  3283  0` (#(#  5U.S.C.5332and53433N݌3|` (#` (# Ќ   3     3283  0 `   29U.S.C.2063,݌-v` (#` (# Ќ  PromptPaymentAct(codifiedasamendedin31U.S.C.39013907)#XXXX#XXXX 3   0  3F283  0` (#(#  31U.S.C.3902(a)and(b)3F}݌d` (#` (# Ќ   3   0  3'283  0` (#(#  31U.S.C.3902(f)3'^݌ ^` (#` (# Ќ   3   0  3283  0` (#(#  31U.S.C.390438݌!X` (#` (# Ќ   3   0  3283  0` (#(#  31U.S.C.3906(a)(1)3݌  "R` (#` (# Ќ    APPENDIXD      THEFEDERALFINANCIALMANAGEMENTIMPROVEMENTACTOF1996  OMBIMPLEMENTATIONGUIDANCEFORCFOsandIGs    Introduction    TheFederalFinancialManagementImprovementActof1996(FFMIA),31U.S.C.3512,fundamentallydoestwothings:L 8``L 3   3283  0    establishesinstatutecertainfinancialmanagementsystemrequirementsthatarealready {  establishedbyExecutiveBranchpolicies,and3݌ (#(# Ќ   3   3283  0    establishesnewrequirementsforauditorstoreportonagencycompliancewiththesebasic i  requirements,andforagencyheadsandagencymanagementtocorrectdeficiencieswithinacertaintimeperiod.3 ݌ (#(# Ќ  TheActappliesonlytoauditsoftheentitieslistedinAppendicesAandBoftheBulletin. Substantivestatutoryrequirement  E The1997OmnibusConsolidatedAppropriationsActincludesTitleVIII,theFederalFinancialManagementImprovementActof1996.Section803(a)oftheActstates:0  InGeneral!EachagencyshallimplementandmaintainfinancialmanagementsystemsthatcomplysubstantiallywithFederalfinancialmanagementsystemsrequirements,applicableFederalaccountingstandards,andtheUnitedStatesGovernmentStandardGeneralLedger(SGL)atthetransactionlevel. (#(# Thesethreerequirements!Federalfinancialmanagementsystemrequirements,applicableFederalaccountingstandards,andtheSGL!arealreadywell-establishedinExecutiveBranchpolicydocuments.Thesedocuments,whicharedescribedinmoredetailbelow,include:OMBCirculars(A-127, FinancialManagementSystemsandA-134, FinancialAccountingPrinciplesandStandards),JointFinancialManagementImprovementProgram(JFMIP)documents(suchastheCoreSystemRequirements),andTreasuryDepartmentpolicies.Section803(a)ofFFMIAdoesnotestablishanynewfinancialsystemrequirements,butitprovidesstatutoryauthorityforexistingExecutiveBranchfinancialsystemrequirements.  *%& OthersectionsofFFMIAestablishnewproceduralrequirements.However,thesenewrequirements followthebasicprinciplesestablishedinFederalauditpolicies: 3   3283  0    Section803(b)(1)requiresthatauditorsreportwhetheragencysystemssubstantiallycomply  withFederalfinancialmanagementsystemsrequirements;3݌ (#(# Ќ   3   3283  0    Section803(c)(1)requiresthattheheadofeachagencydeterminewhethertheagencys   financialmanagementsystemscomplywiththeAct,basedonareviewofthereportontheapplicableagencywideauditedfinancialstatementandanyotherinformationtheheadoftheagencyconsidersrelevantandappropriate;3݌ (#(# Ќ   3   3283  0    Section803(c)(3)requiresthat,whentheagencyheaddisagreeswiththeauditorsfindings, u  theDirectorofOMBshallreviewsuchdeterminationsandprovideareportonthefindingstotheappropriatecommitteesoftheCongress;3݌ (#(# Ќ   3   3283  0    Section803(c)(3)requiresthatwhentheagencyheadagreeswiththeauditorsfindingsof ] noncompliance,a_remediation_Ԁplanshallbedeveloped,inconsultationwithOMB,thatdescribestheresourcesandmilestonesforachievingcompliance;and3݌ (#(# Ќ   3   3p283  0    Section804(b)requiresthattheInspectorGeneral(IG)reportonagencyprogressinachieving E complianceintheIGssemiannualreportrequiredbytheIGAct,asamended.3p݌ (#(# Ќ  Inadditiontothesereportingrequirements,bothOMBandGAOhaveannualreportingrequirementsundertheAct.Moredetailedinformationregardingagencyresponsibilitiesfollows. RelationshiptoSection4ofFMFIA(theIntegrityAct)  !j Thereisaclose,ifnotoverlapping,relationshipbetweenFFMIA