Federal Financial and Budgetary Reporting: A Primer
Updated September 20, 2022
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 (31
government and its activities, Congress has established in
U.S.C. §3513(a)). Since 2001, this report has been called
law an 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 details of (1)
reporting and related statutory requirements for executive
receipts by source and (2) appropriations, outlays, and
branch entities. Financial and budgetary reporting may help
balances by agency and account.
Congress, the President, and agency executives make better
informed decisions about the allocation and use of
Financial Management Improvement
government resources and guard against potential misuse
Congress also established mechanisms to identify financial
and misapplication of such resources. Accordingly, the
management improvements. CFOs within CFO Act
design and implementation of these laws may raise issues
agencies must include a financial management status update
for Congress.
in the agency’s annual report (31 U.S.C. §902(a)(6)).
Separately, OMB must annually submit to Congress both a
Major Areas of Reporting
report describing the status of financial management in the
executive branch and a government-wide five-year plan for
Agency Audited Financial Statements
improving federal financial management (31 U.S.C.
Beginning in 1990, Congress has mandated that most
§3512(a)). OMB previously published the financial
executive branch agencies prepare annual audited financial
management status report and government-wide five-year
statements and submit them to Congress and the director of
plan in a single document called the Federal Financial
the Office of Management and Budget (OMB) (31 U.S.C.
Management Report. Since 2009, OMB has ceased
§3515(a)). At agencies with statutorily appointed inspectors
publishing a single document covering the statutory
general (IGs), these annual audits are to be directed by the
requirements, and OMB has not identified where the
agency IG, but in practice such audits are typically
required components may be found.
contracted by the IG to an independent public auditor. The
Chief Financial Officers (CFO) Act of 1990 established the
Internal Controls Reporting
position of CFO at 24 large executive branch agencies—
Congress has passed two pieces of legislation instituting
known since 1990 as the “CFO Act agencies” (31 U.S.C.
requirements for internal controls at executive agencies.
§901(b)). Each CFO Act agency must submit an annual
Agencies are required to establish internal accounting and
report to the agency head and OMB containing the
administrative controls (31 U.S.C. §3512(c)(1)), a provision
aforementioned financial statements and audit reports (31
included in the Federal Managers’ Financial Integrity Act
U.S.C. §902(a)(6)).
of 1982 [FMFIA]). Additionally, agencies must identify
non-compliant accounting and administrative systems and
OMB provides guidance to executive agencies on the
report a remediation plan to Congress and the President
preparation of financial statements in Circular A-136 (31
annually (31 U.S.C. §3512(d)(2)). In practice, agencies
U.S.C. §3515(d)). These annual reports may be included in
include this reporting with annually audited financial
an agency’s Performance and Accountability Report (PAR)
statements.
or an Agency Financial Report (AFR). OMB is then
required to submit a financial management status report to
Another statutory provision focuses on financial
Congress summarizing agency financial statements and
management systems and applies only to the 24 CFO Act
audit reports (31 U.S.C. §3512(a)(2)).
agencies (31 U.S.C. §3512 note, commonly referred to as
the Federal Financial Management Improvement Act of
Government-Wide Reporting
1996 [FFMIA]). This provision requires federal agencies to
In addition to agency-level financial reporting, the
maintain financial management systems that comply
Department of the Treasury, in coordination with OMB, is
substantially with federal system requirements, federal
required to submit a government-wide audited financial
accounting standards (in practice, as defined by the Federal
report to Congress and the President (31 U.S.C. §331(e)(1),
Accounting Standards Advisory Board (FASAB)), and the
enacted in 1994 as part of the Government Management
United States Government Standard General Ledger at the
Reform Act). The report, known as the Financial Report of
transaction level (31 U.S.C. §3512 note). CFO Act agencies
the United States Government, compiles information
and their auditors must attest to the compliance of agency
included in agency-level audited financial statements and
financial systems with federal requirements and recommend
annual reports. The Government Accountability Office
remedial actions in annual audit reports (31 U.S.C. §3512
(GAO) audits the government-wide report (31 U.S.C.
note). Annually, OMB must summarize agency internal
§331(e)(2)).
controls reports and identify agencies failing to comply
https://crsreports.congress.gov
Federal Financial and Budgetary Reporting: A Primer
with federal financial management system requirements in
made publicly available at the Spending Explorer portal on
a status report submitted to Congress (31 U.S.C.
USAspending.gov.
§3512(a)(2)). In practice, Treasury and OMB publish this
information in the Financial Report of the United States
Separately, OMB established the SF-133 Report on Budget
Government.
Execution and Budgetary Resources to fulfill a statutory
requirement for the President to review the pace of
President’s Budget Submission
obligations or expenditures at least four times annually (31
The President’s annual budget submission is one of the
U.S.C. §1512(d)). SF-133s provide quarterly snapshots of
most comprehensive modes of reporting budgetary
appropriations and obligations at the account level. These
information. The President is required annually to submit a
reports are posted on the OMB MAX.gov website and are
consolidated budget to Congress that must include, in part,
populated using data submitted by agencies to the
estimated receipts, expenditures, and proposed
Treasury’s Government-wide Treasury Account Symbol
appropriations for the next five fiscal years and actual
Adjusted Trial Balance System.
receipts, expenditures, and appropriations for the previous
fiscal year (31 U.S.C. §1105(a)). Account-level information
Improper Payment Reporting
about actual and proposed budgets is included in the Budget
Congress has enacted multiple provisions seeking to reduce
Appendix volume. The Appendix contains, for each account,
the incidence of improper payments. Current law requires
prior year obligations, current year appropriations, and
executive agencies to estimate the amount of improper
proposed appropriations, among other information.
payments for programs identified as susceptible to
“significant” improper payments and implement a plan to
Reporting on Federal Awards
reduce and recover improper payments (31 U.S.C.
In 2006, Congress mandated the creation of a publicly
§3352(a), (c), and (d); included in the Payment Integrity
available database of all recipients of federal grants, loans,
Information Act of 2019). Improper payments reporting
contracts, and other forms of assistance. The
requirements are typically met via AFRs or PARs. In 2009,
USAspending.gov website was established pursuant to the
OMB established PaymentAccuracy.gov, where agencies
Federal Funding Accountability and Transparency Act
with “high priority” programs must report rates and
(FFATA). Current law requires that award information be
amounts of improper payments and targets for reducing
made available on a searchable website within 30 days of
improper payments (31 U.S.C. §3321 note).
the award date (31 U.S.C. §6101 note). Federal award
information is found at the Award Search portal on
Other Forms of Financial and Budgetary Reporting
USAspending.gov. Current data sources for
Other modes of budgetary and financial reporting have been
USAspending.gov include (1) agency financial system(s)
enacted into law that are not discussed here. Examples
and award system(s), (2) the FFATA Sub-award Reporting
include Congressional Budget Office reports to House and
System, (3) the System for Award Management (SAM),
Senate Budget Committees (2 U.S.C. §602(e)) and
and (4) the Federal Procurement Data System Next
program-level reporting such as the annual Old-Age and
Generation (FPDS-NG or FPDS).
Survivors Insurance and Federal Disability Insurance
Trustees report (42 U.S.C. §401(c)).
Reporting on Apportionments
Annual appropriations and other budgetary legislation
Issues for Congress
provide agencies with the authority to enter into
Potential financial and budgetary reporting issues for
obligations. With certain exceptions, OMB apportions
Congress may be grouped in two categories:
appropriated funds to prevent agencies from exhausting
them prematurely. OMB uses apportionment “footnotes” to
1. External stakeholder needs: Do diverse
provide additional information or direction to agencies. Due
stakeholders find currently reported financial and
to concerns that OMB may use footnotes to condition
budgetary information useful and at the right
funding availability on certain agency actions, Congress
levels of detail? To what extent do “clean” audit
required OMB and agencies to publicly disclose certain
opinions translate into meaningful information for
information about apportionments beginning in 2022 (P.L.
stakeholders and improved financial management?
117-103). Apportionment documents and associated
What options may Congress consider for
footnotes can be found on the OMB MAX.gov website.
transparency of government-, agency-, account-,
and program-level information?
Reporting on Budget Execution
2. Internal stakeholder needs: Within agencies, can
Congress has passed two separate provisions that resulted in
legacy financial and budgetary systems ensure
extensive reporting on budget execution at the account
efficient, timely, and accurate reporting? Are
level: disclosure on USAspending.gov and periodic review
reporting requirements causing duplications of
of the pace of federal spending via SF-133 reports.
effort? How might data and systems be integrated?
What are the consequences for non-compliance?
In 2014, Congress mandated account-level reporting on
In evaluating policy options, Congress may consider trade-
appropriated amounts and obligations, among other
offs and synergies. For example, increased transparency
requirements (FFATA, as amended by the Digital
might entail additional costs, and replacement of legacy
Accountability and Transparency Act of 2014; 31 U.S.C.
systems and manual processes might reduce long-term costs
§6101 note). This account-level view of budget execution is
and increase accuracy.
https://crsreports.congress.gov
Federal Financial and Budgetary Reporting: A Primer
Dominick A. Fiorentino, Analyst in Government
Organization and Management
IF11610
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF11610 · VERSION 3 · UPDATED