August 4, 2020
Federal Financial and Budgetary Reporting: A Primer
Introduction
Current law also requires Treasury to release annually a
To improve the transparency and integrity of the federal
publication detailing government receipts and outlays (see
government and its activities, Congress has established in
31 U.S.C. §3513(a)). Since 2001, this report has been called
law a still-evolving framework for budgetary and financial
the Combined Statement of Receipts, Outlays, and Balances
reporting. This In Focus outlines several categories of
of the U.S. Government. The report includes, among other
reporting and related statutory requirements for executive
things, details of (1) receipts by source and (2)
branch entities. Financial and budgetary reporting may help
appropriations, outlays, and balances by agency and
Congress, the President, and agency executives make better
account.
informed decisions about the allocation and use of
government resources and guard against potential misuse
Financial Management Improvement
and misapplication of such resources. Accordingly, the
Congress also established mechanisms to identify financial
design and implementation of these laws may raise issues
management improvements. CFOs within CFO Act
for Congress.
agencies must include a financial management status update
in the agency’s annual report (31 U.S.C. §902(a)(6)).
Major Areas of Reporting
Separately, OMB must annually submit to Congress both a
report describing the status of financial management in the
Agency Audited Financial Statements
executive branch and a government-wide five-year plan for
Beginning in 1990, Congress has mandated that most
improving federal financial management (31 U.S.C.
executive branch agencies prepare annual audited financial
§3512(a)). OMB previously published the financial
statements and submit them to Congress and the director of
management status report and government-wide five-year
the Office of Management and Budget (OMB) (31 U.S.C.
plan in a single document called the Federal Financial
§3515(a)). At agencies with statutorily appointed inspectors
Management Report. Since 2009, OMB has ceased
general (IGs), these annual audits are to be directed by the
publishing a single document covering the statutory
agency IG, but in practice such audits are typically
requirements, and it is unclear to CRS where the required
contracted by the IG to an independent public auditor. The
components may be found.
Chief Financial Officers (CFO) Act of 1990 established the
position of CFO at 24 large executive branch agencies—
Internal Controls Reporting
known since 1990 as the “CFO Act agencies” (31 U.S.C.
Congress has passed two pieces of legislation instituting
§901(b)). Each CFO Act agency must submit an annual
requirements for internal controls at executive agencies.
report to the agency head and OMB containing the
Agencies are required to establish internal accounting and
aforementioned financial statements and audit reports (31
administrative controls (31 U.S.C. §3512(c)(1)), a provision
U.S.C. §902(a)(6)).
included in the Federal Managers’ Financial Integrity Act
of 1982 [FMFIA]). Additionally, agencies must identify
OMB provides guidance to executive agencies on the
non-compliant accounting and administrative systems and
preparation of financial statements in Circular A-136 (see
report a remediation plan to Congress and the President
31 U.S.C. §3515(d)). These annual reports may be included
annually (31 U.S.C. §3512(d)(2)). In practice, agencies
in an agency’s Performance and Accountability Report
include this reporting with annually audited financial
(PAR) or an Agency Financial Report (AFR). OMB is then
statements.
required to submit a “financial management status report”
to Congress summarizing agency financial statements and
Another statutory provision focuses on financial
audit reports (31 U.S.C. §3512(a)(2)).
management systems and applies only to the 24 CFO Act
agencies (see 31 U.S.C. §3512 note, commonly referred to
Government-Wide Reporting
as the Federal Financial Management Improvement Act of
In addition to agency-level financial reporting, the
1996 [FFMIA]). This provision requires federal agencies to
Department of the Treasury, in coordination with OMB, is
implement and maintain financial management systems that
required to submit a government-wide audited financial
comply substantially with federal system requirements,
report to Congress and the President (31 U.S.C. §331(e)(1),
federal accounting standards (in practice, as defined by the
enacted in 1994 as part of the Government Management
Federal Accounting Standards Advisory Board (FASAB)),
Reform Act). The report, known as the Financial Report of
and the United States Government Standard General Ledger
the United States Government, compiles information
at the transaction level (31 U.S.C. §3512 note). CFO Act
included in agency-level audited financial statements and
agencies and their auditors must attest to the compliance of
annual reports. The Government Accountability Office
agency financial systems with federal requirements and
(GAO) audits the government-wide report (31 U.S.C.
recommend remedial actions in annual audit reports (31
§331(e)(2)).
U.S.C. §3512 note). Annually, OMB must summarize
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Federal Financial and Budgetary Reporting: A Primer
agency internal controls reports as well as identify agencies
by agencies to the Treasury’s Government-wide Treasury
failing to comply with federal financial management system
Account Symbol Adjusted Trial Balance System.
requirements in a status report submitted to Congress (31
U.S.C. §3512(a)(2)). In practice, Treasury and OMB
Improper Payment Reporting
publish this information in the Financial Report of the
Congress has enacted multiple provisions seeking to reduce
United States Government.
the incidence of improper payments. Current law requires
executive agencies to, among other things, estimate the
President’s Budget Submission
amount of improper payments for programs identified as
The President’s annual budget submission is one of the
susceptible to “significant” improper payments and
most comprehensive modes of reporting budgetary
implement a plan to reduce and recover improper payments
information. The President is required annually to submit a
(31 U.S.C. §3352(a), (c), and (d); included in the Payment
consolidated budget to Congress that must include, in part,
Integrity Information Act of 2019). Improper payments
estimated receipts, expenditures, and proposed
reporting requirements are typically met via AFRs or PARs.
appropriations for the next five fiscal years and actual
In 2009, OMB established PaymentAccuracy.gov, where
receipts, expenditures, and appropriations for the previous
agencies with “high priority” programs must report rates
fiscal year (31 U.S.C. §1105(a)). Account-level information
and amounts of improper payments and targets for reducing
about actual and proposed budgets is included in the Budget
improper payments, among other requirements (Executive
Appendix volume. The Appendix contains, for each account,
Order 13520; see 31 U.S.C. §3321 note).
prior year obligations, current year appropriations, and
proposed appropriations, among other information.
Other Forms of Financial and Budgetary Reporting
Other modes of budgetary and financial reporting have been
Reporting on Federal Awards
enacted into law that are not discussed here. Examples
In 2006, Congress mandated the creation of a publicly
include, but are not limited to, Congressional Budget Office
available database of all recipients of federal grants, loans,
reports to House and Senate Budget Committees (2 U.S.C.
contracts, and other forms of assistance. The
§602(e)) and program-level reporting such as the annual
USAspending.gov website was established pursuant to the
Old-Age and Survivors Insurance and Federal Disability
Federal Funding Accountability and Transparency Act
Insurance Trustees report (42 U.S.C. §401(c)).
(FFATA). Current law requires that award information be
made available on a searchable website within 30 days of
Issues for Congress
the award date (see 31 U.S.C. §6101 note). Federal award
Congress has taken a sustained interest in financial and
information is found at the Award Search portal on
budgetary reporting. For the purposes of this In Focus,
USAspending.gov. Current data sources for
potential issues may be grouped in two categories:
USAspending.gov include (1) agency financial system(s)
and award system(s), (2) the FFATA Sub-award Reporting
1. External stakeholder needs: Do diverse
System, (3) the System for Award Management (SAM),
stakeholders find currently reported financial and
and (4) the Federal Procurement Data System Next
budgetary information useful and at the right
Generation (FPDS-NG or FPDS).
levels of detail? To what extent do “clean” audit
opinions translate into meaningful information for
Reporting on Budget Execution
stakeholders and improved financial management?
Congress has passed two separate provisions that resulted in
What options may Congress consider for
extensive reporting on budget execution at the account
transparency of government-, agency-, account-,
level: disclosure on USAspending.gov and periodic review
and program-level information?
of the pace of federal spending via SF-133 reports.
2. Internal stakeholder needs: Within agencies, can
legacy financial and budgetary systems ensure
In 2014, Congress mandated account-level reporting on
efficient, timely, and accurate reporting? Are
appropriated amounts and obligations, among other
reporting requirements causing duplications of
requirements (FFATA, as amended by the Digital
effort? How might data and systems be integrated?
Accountability and Transparency Act of 2014; see 31
What are the consequences for non-compliance?
U.S.C. §6101 note). This account-level view of budget
In evaluating these questions, Congress may consider
execution is made publicly available at the Spending
policy options that involve trade-offs and synergies. For
Explorer portal on USAspending.gov.
example, increased transparency might entail additional
costs, and replacement of legacy systems and manual
Separately, OMB established the SF-133 Report on Budget
processes might reduce long-term costs and increase
Execution and Budgetary Resources to fulfill a statutory
accuracy.
requirement for the President to review the pace of
obligations or expenditures at least four times annually (31
U.S.C. §1512(d)). SF-133s have historically provided
Dominick A. Fiorentino, Analyst in Government
quarterly snapshots of appropriations and obligations at the
Organization and Management
account level. These reports are posted on the OMB
IF11610
MAX.gov website and are populated using data submitted


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Federal Financial and Budgetary Reporting: A Primer


Disclaimer
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