Academic journal article Journal of Accountancy

Clinton Signs New Federal Agency Audit Bill

Academic journal article Journal of Accountancy

Clinton Signs New Federal Agency Audit Bill

Article excerpt

President Clinton signed into law a bill that will help codify accounting standards set by the Federal Accounting Standards Advisory Board (FASAB). The Federal Financial Management Improvement Act of 1996 (S 1130) requires each federal agency to implement and maintain financial management systems that comply with uniform federal accounting standards. The FASAB is identified as the standard-setting body. The Office of Management and Budget (OMB) and the General Accounting Office (GAO) will draft specific audit procedures for the new law.

The conference report of the bill said that although there had been efforts to strengthen federal internal accounting controls in the past, federal financial management continued to be deficient. It said federal practices failed to identify costs fully, reveal the total liabilities of congressional actions and accurately report the U.S. government's financial condition. The report also said that using FASAB's accounting concepts and standards would enable agencies to report information that would help Congress evaluate federal programs and activities.

To ensure the agencies comply with FASAB standards, the 1996 act requires

* Agencies to report in the audits of their financial statements whether they have complied with the uniform accounting standards.

* Auditors to report findings of noncompliance. They also must report details on the extent and causes of the failure to comply.

* Agency heads to determine whether their agencies' financial management systems implemented and maintained uniform accounting standards. …

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