From 500 to 70, OMB reduces number of financial system requirements

The Office of Management and Budget actually canceled a financial management circular earlier this month.

Circular A-127 no longer governs agency financial management systems. Instead, OMB rolled a small set of these old requirements into the new Appendix D of Circular A- 123 back in September.

OMB said Appendix D went into effect Oct. 1 and therefore rescinded all previously issued versions of Circular A-127 from Dec. 19, 1984; July 23, 1993; June 10, 1999; Dec. 1, 2004; and Jan. 9, 2009.

Norman Dong, the acting controller at OMB, said the goal of the rescission of A- 127 and the new Appendix D is to improve the quality, utility and the reliability of federal financial information.

The new guidance features only 70 requirements that OMB hopes will drive agencies toward outcomes such as reporting timely financial data or eliminating waste, fraud and abuse.

Dong said Appendix D now focuses on ways agencies can gauge how well they are in meeting the requirements of the Federal Financial Management Improvement Act (FFMIA), such as the number of and nature of material weaknesses and audit opinion from the inspector general or third party analysis. Formerly A-127, and now Appendix D, help agencies implement FFMIA.

Another major change with Appendix D is the focus on shared services. OMB has strongly encouraged agencies to move to federal shared service providers for financial management when appropriate, but some of the requirements under A-123 made it more difficult.

Dong said one example of this change in approach to financial management happened when a service provider and customer agency initially had discussions about hosting the system and identified more than 700 gaps between how the customer and provider were doing business. But, he said, when they shifted the conversation away from how they were doing business and focused on what needs to be achieved, the number of differences dropped dramatically.

OMB eventually will fold Appendix D into the rewrite of Circular A-123, governing the internal controls of agency financial management.

Dong said the goal is to rationalize and harmonize OMB's guidance on federal financial management. He said it's important to make sure the requirements are reasonable and rationale.

OMB announced in February it would lead an effort to do the first major grants policy rewrite in years.

Dong said OMB will release the A-123 update in the coming months. He said OMB is conferring with agencies on a number of different aspects of the rewrite, including the improper payments requirements.

In addition to the A-123 update, OMB released a new bulletin on Oct. 21, giving agencies an updated set of minimum standards for their financial audits.

OMB made 26 changes to the 67-page document around areas such as reporting, written representation from management and the scope of the audit.

-Jason Miller, FederalNewsRadio.com
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