text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Federal Financial Management 
  Improvement Act of 1996''.
  
  SEC. 2. FINDINGS AND PURPOSES.
  
      (a) Findings.--The Congress finds the following:
              (1) Much effort has been devoted to strengthening Federal 
          internal accounting controls in the past. 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 Government's ability to provide 
          credible and reliable financial data and encourages already 
          widespread Government waste, and will not assist in achieving a 
          balanced budget.
              (4) Waste and inefficiency in the Federal Government 
          undermine the confidence of the American people in the 
          Government and reduce the Federal Government's ability to 
          address vital public needs adequately.
              (5) To rebuild the accountability and credibility of the 
          Federal Government, and restore public confidence in the 
          Federal Government, 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, and expenditures or 
          expenses, and the full costs of programs and activities of the 
          Federal Government can be consistently and accurately recorded, 
          monitored, and uniformly reported throughout the Federal 
          Government.
              (6) Since its establishment in October 1990, the Federal 
          Accounting Standards Advisory Board (hereinafter 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 to evaluate the cost and 
          performance of Federal programs and activities, and will 
          therefore provide important information that has been lacking, 
          but is needed for improved decisionmaking by financial managers 
          and the Congress.
              (7) The development of financial management systems with 
          the capacity to support these standards and concepts 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 an agency from 
          one fiscal year to the next, and uniform accounting standards 
          throughout the Federal Government;
              (2) require Federal financial management systems to support 
          full disclosure of Federal financial data, including the full 
          costs of Federal programs and activities, to the citizens, the 
          Congress, the President, and agency management, so that 
          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 Federal Government;
              (6) build upon 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 agencies to monitor 
          execution of the budget by more readily permitting reports that 
          compare spending of resources to results of activities.
  
  SEC. 3. IMPLEMENTATION OF FEDERAL FINANCIAL MANAGEMENT IMPROVEMENTS.
  
      (a) In General.--Each agency shall implement and maintain 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 agency 
          financial management systems comply with the requirements of 
          subsection (a).
              (2) Content of reports.--When the person performing the 
          audit required by section 3521(e) of title 31, United States 
          Code, reports that the agency financial management systems do 
          not comply with the requirements of subsection (a), 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 that have been 
          found not to comply with the requirements of subsection (a);
              (B) all facts pertaining to the failure to comply with the 
          requirements of subsection (a), 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 responsible 
                  officer or employee; and
              (C) a statement with respect to the 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 the requirements of subsection (a). Such determination 
          shall be based on--
                      (A) a review of the report on the applicable 
                  agency-wide audited financial statement;
                      (B) the agency comments on such report; and
                      (C) any other information the Director considers 
                  relevant and appropriate.
              (2) Date of determination.--The determination under 
          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 
          the requirements of subsection (a), the head of the agency, in 
          consultation with the Director, shall establish a remediation 
          plan that shall include the resources, remedies, and 
          intermediate target dates necessary to bring the agency's 
          financial management systems into compliance.
              (2) Time period for compliance.--A remediation plan shall 
          bring the agency's financial management systems into compliance 
          no later than 2 years after the date on which the Director 
          makes a determination under paragraph (1), unless the agency, 
          with 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;
                      (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 fund 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 time period specified under 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 that have been found not to comply with the 
                  requirements of subsection (a);
                      (B) the facts pertaining to the failure to comply 
                  with the requirements of subsection (a), 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.
  
  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; or
              (3) the Judicial Conference of the United States by 
          regulation for the judicial branch.
      (b) Study and Report.--No later than October 1, 1997--
              (1) the Secretary of the Senate and the Clerk of the House 
          of Representatives shall jointly conduct a study and submit a 
          report to Congress on how the offices and committees of the 
          Senate and the House of Representatives, and all offices and 
          agencies of the legislative branch may achieve compliance 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 Congress on how the judiciary 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.--No later than March 31 of each year, the 
  Director shall submit a report to the Congress regarding 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, 
  1997, and October 1, of each year 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) of 
          this Act, 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 by--
              (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 a department or 
          agency of the United States Government as defined 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 one 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 both financial and 
          nonfinancial functions of the Federal Government or components 
          thereof.
  
  SEC. 8. EFFECTIVE DATE.
  
      This Act shall take effect on October 1, 1996.
  
              Passed the Senate August 2, 1996.
  
              Attest:
  
                                               KELLY D. JOHNSTON,
  
                                                               Secretary.
target: Federal Financial Management Improvement Act of 1996 - 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 for an agency with a remediation plan. 
  Requires a report by the Director of OMB if an agency fails to bring its financial management systems into compliance within the specified time period. 
  Directs the:  (1) Secretary of the Senate and the Clerk of the House, jointly, to study and submit a report to the Congress on how the Congress and the legislative branch may achieve compliance; and (2) Chief Justice of the United States to study and submit a report to the Congress on how the judiciary may achieve such compliance. 
  Sets forth:  (1) reporting requirements; (2) conforming amendments; (3) definitions; and (4) the effective date.
feat_title: Federal Financial Management Improvement Act of 1996