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Wednesday, May 10, 2006

Managers get advice on meeting new financial reporting requirement

"As a June 30 Office of Management and Budget deadline approaches for agencies to issue assurances of their internal controls over financial reporting, experts have different ideas on how to secure immediate and long-term compliance.

At a Tuesday breakfast for members of the federal financial community, government and industry panelists made various recommendations for meeting the deadline, which is set in OMB's Circular A-123. These ranged from implementing information technology systems to winning buy-in from top management.

Fiscal 2006 is the first year in which agencies covered by the 1990 Chief Financial Officers Act must provide assurances that the internal processes that feed into financial reports are accurate and effective. Agency heads will be required to note any significant or 'material' weaknesses in those controls and identify corrective actions.

The Circular A-123 rules are widely compared to the private sector's 2002 Sarbanes-Oxley Act accounting regulations, instituted in response to the WorldCom and Enron scandals. That law requires leaders of publicly traded companies to take responsibility for corporate financial statements. With a head start in complying with enhanced accounting rules, industry representatives offered advice to government managers. "

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