1. OMB Update Adam Goldberg Office of Federal Financial Management Office of Management and Budget August 22, 2006

2. “Give us clean hearts, so that we might have clean agendas, clean priorities and programs, and even clean financial statements.” Pastor Kirbyjon Caldwell, Benediction, Inauguration of President George Walker Bush, January 20, 2005

3. 3 AGENDA Office of Federal Financial Management (OFFM) – Structure, Objectives, Priorities President’s Management Agenda (PMA) – Where Have We Been and Where Are We Going Hot Topics – Internal Controls (A-123, Appendix A) – Improper Payments (A-123, Appendix C) – Financial Reporting (A-136) – Audit Requirements (Bulleting-01-02) – Financial Systems – Real Property – Grants Management

4. 4 OFFM Mission Statement To promote and support superior financial management practices in the executive branch of the federal government.

5. 5 Linda Combs Controller Confidential Assistant Robert Stillwell Special Assistant Rochelle Bell Danny Werfel Deputy Controller Financial Integrity & Analysis Adam Goldberg, Chief Financial Standards & Grants Carrie Hug, Chief MAJOR AREAS OF RESPONSIBILITY: Financial Reporting (A-136), Internal Controls (A-123), Grants Management, FASAB, Audit Policy, PCIE MAJOR AREAS OF RESPONSIBILITY: PMA (Financial Performance, Improper Payments, Real Property), Financial Systems, Charge Cards, Metrics Angela Donatelli Sally Beecroft Mark Bussow David Alekson Billy Mea Dale Miller (Detail) Vacant Cindy George Dana James Audrey Duchense Tawana Webb Gil Tran Tyson Whitney (Detail) Vacant Administrative Assistant Areletha Venson

6. 6 OFFM Key Strategic Goals Increase the number of agencies with a clean audit opinion –Today = 19; FY 2009 target = 23 Reduce the number of auditor-identified material weaknesses –Today = 50; FY 2009 target = less than 25 Eliminate improper payments –Today = $37.3 billion; FY 2009 target = less than $20 billion Eliminate surplus property –$9 billion by FY 2009

7. 7 No repeat auditor Weaknesses Clean Audit Opinion FFMIA Compliant No Repeat FMFIA Section 4 Weaknesses No Chronic or Significant ADA Violations Meets Reporting Deadlines No Material Non- Compliances No Repeat FMFIA Section 2 Weaknesses Uses Financial Information to Drive Results in Key Areas Expands Routine Data Use Compliance Results Improving Financial Performance What the Initiative Does Ensures managers have accurate and timely financial information for decision making. Description Agencies are expected to account for the taxpayers’ money and provide managers with timely and accurate program cost information to inform management decisions and control costs.

8. 8 How are we doing? Improving Financial Performance

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10. 10 OMB Circular No. A-123 Revised Guidance Management Assurance Self Assessment Enhanced Documentation Annual Reporting New Appendix A –Testing for Reasonable Assurance –Additional Assurance for Internal Control over Financial Reporting Original Guidance Management Assurance Self Assessment Documentation Annual Reporting

11. 11 A-123 (Appendix A) Documentation of assessment methodology, key processes and controls, testing results Direct testing by management New assurance statement; subset of existing assurance statement As of June 30; updated in annual Performance and Accountability Report (PAR)

12. 12 Tools in Place Results Eliminate and/or Recover Improper Payments Sound Corrective Action Plans with Aggressive yet Feasible Reduction Targets Accurate Measurements for High-Risk Programs Eliminating Improper Payments What the Initiative Does Ensures that funds go to the right person in the right amount. Description Agencies are responsible for preventing, identifying, reducing, and recovering improper payments.

13. 13 Consolidates previous guidance on improper payments and recovery auditing Provides for alternative sampling methodologies; Defines conditions for less frequent reporting for certain low risk programs; Clarifies: –activities that are not required if a cost-benefit analysis demonstrates inefficiency; –requirements for State-administered programs; and –requirements for programs with low error rates (i.e., less than 2.5 percent), but significant improper payment amounts. A-123 (Appendix C)

14. 14 Financial Reporting (A-136) Performance section added (per Circular A-11) Federal Accounting Standards and Advisory Board Updates (Statement of Social Insurance, Earmarked Funds, Heritage Assets/Stewardship Lands, Inter-entity costing) Parent/child Reporting (Allocation transfers) PAR Highlights document New Management Assurance statement in MD&A

15. 15 Audit Requirements (Bulletin 01-02) Planned revisions for this year: –New section on compliance with A-123, App. A –New section on management representation letters –Streamlined appendices - reduce duplication with other guidance –Incorporated 2004 amendments, including section on audit requirements for the special purpose financial statements used to compile the Financial Report of the United States Government

16. 16 Financial Management Line of Business (FMLOB) Improve the cost, quality, and performance of financial management operations by leveraging shared service solutions and implementing other government-wide reforms that foster efficiencies in Federal financial operations.

17. 17 FMLOB Framework Results Improved performance of financial system solutions (agency and govt.-wide) -- timely & accurate data for decisions; lower risk and cost; improved stewardship and accounting Competitive Environment Standardization A limited number of high performing and stable shared service providers that offer competitive alternative for Federal agencies Performance Measures Standard quality and cost measures for agencies to benchmark and compare performance of financial system alternatives Transparency Seamless Data Integration Financial data easily compared and aggregated across agencies; reduced cost and risk of establishing interfaces between agency business systems Migration Planning Guidance Menu of services offered by COEs; rules of engagement; comparing public vs. private solutions; human capital implications Standard Business Processes, Rules, & Data Elements Core financial functions such as payables, receivables, funds control Common Accounting Code Uniform standard structure, layout, definitions

18. 18 Rightsize Inventory Tools in Place Results Inventory Data on All Assets Agency Asset Management Plans Performance Metrics Disposition Algorithm Legislative Authority for Disposal Three-Year Capital Action Plan Federal Real Property Management What the Initiative Does Right-size the Federal portfolio of real property assets. Description Agencies are responsible for maintaining real property inventories at the right size, cost, and condition to support agency mission and objectives.

19. 19 Grants Management Big Dollars spread over many agencies/programs –$540 Billion, 26 Federal agencies, >900 programs, + 40,000 grantees President’s Management Agenda –Grants Policy Committee –Grants Management Line of Business –Grants.gov PL 106-107 – Grants Streamlining (FFMIA) All share common themes and vision –Consolidation –Coordination –Communication –Customer Service

20. 20 Grants Policy Committee Vision One place for all grants administration policies –Title 2 Code of Federal Regulations One Catalog with all assistance programs listed –CFDA registration required One announcement format of assistance opportunities –Standard Format, regardless of where posted One electronic portal for grantees –Find, Apply and Reports

21. 21 Questions