1. Office of Federal Financial Management Office of Management and Budget
OMB Update
Northern Virginia AGA - Spring Training
March 24, 2015
Office of Federal Financial Management
Office of Management and Budget

2. Internal Controls
1981/1982/1983 –
OMB Issued Circular No. A-123, Internal Control Systems and Internal Control Guidelines
Federal Managers Financial Integrity Act
1986 – OMB Required Management Control Plans to guide efforts
1995 – OMB updated A-123, Management Accountability and Control to reflect GPRA, CFO Act, IG Act
2004 – OMB updated A-123, Management’s Responsibility for Internal Control and added Appendix A, Internal Control Over Financial Reporting
OMB’s vision for 2015 Update – transform and evolve existing internal control compliance frameworks so that it creates a more value added, integrated, risk based, and less burdensome set of requirements for agencies. The revised guidance will:
Clarify technical terminology to help program managers better understand and implement internal controls
Introduce ERM concepts as defined by the COSO framework
Replace “check the box” compliance approach with risk management-based approaches to support agency missions
Streamline assurance statement reporting
Build on successful implementation of internal controls over financial reporting
Be put out for comment in Spring 2015 with an implementation date of 2016

3. ERM and Internal Controls

4. Streamlining Assurance Statements

5. Additional Considerations
Service Organizations
Internal Controls in Disaster Situations
Fraud
Internal Controls over Financial Assistance (i.e., Grants)

6. Improper Payments - Brief History
November 2002 – Improper Payments Information Act (IPIA)
Created basic framework for identifying and reporting improper payments
November 2009 – Executive Order 13520
Improved agency accountability
Increased transparency
July 2010 – Improper Payments Elimination and Recovery Act (IPERA)
Put into law specific thresholds for identifying high-risk programs
Strengthened corrective action plans
Expanded payment recapture audits
Established annual OIG compliance reviews
January 2013 – Improper Payments Elimination & Recovery Improvement Act (IPERIA)
Codified EO requirements
Improved agency estimation and recovery of improper payments
Reinforced and accelerated the Administration’s “Do Not Pay” efforts

7. A-123 Appendix C Update
Vision: transform improper payment compliance framework to create a more unified, comprehensive, and less burdensome set of requirements for agencies and OIGs
IPERIA required OMB to issue new guidance—we approached it as an opportunity to overhaul Appendix C of OMB Circular A-123
Process: as we drafted the new Appendix C, we had to consider the following:
The three statutes and the Executive Order
Previous Appendix C version (M-11-16)
Input from agencies, OIGs, GAO, and OMB

8. New Appendix C Highlights
The updated guidance reconciles IPERIA requirements that are identical to requirements from EO 13520
Consolidates and streamlines reporting requirements for agencies and OIGs
Agencies can incorporate most of their reporting into AFR or PAR
OIGs for agencies with high-priority programs are no longer required to issue separate reports under EO and IPERA—one report will suffice
Provides a more detailed categorization of improper payments
Adds an internal control framework for addressing improper payments
Provides guidance to agencies—as required by IPERIA—to strengthen the statistical validity of estimates and include payments to Federal employees in the definition of improper payments, among other things

9. New Improper Payment Categories
Previously only three categories; not very useful
New guidance establishes new categories for reporting improper payments
Provides more granularity on estimates, leading to:
More effective corrective actions at the program level
More focused strategies for reducing improper payments at the government-wide level
Better communication about the nature of improper payments

10. Corrective Actions
We are conducting an analysis to identify program-specific corrective actions with the highest return-on-investment or potential for substantially reducing improper payments
Questions we are interested in:
Which current corrective actions are the most effective in reducing improper payments in your programs?
Could you list one or two things that your programs are not already doing (but could realistically do) that would lead to a significant decrease in improper payments?
What, if any, are the barriers preventing your agency from taking these actions, and what would it take to overcome those barriers?
If you implemented these actions, by how much could the improper payment rate go down for your programs?
How has your agency advanced data analytics and improved technology to prevent and reduce improper payments ?

11. Internal Control Standards
Internal Control over Improper Payments
Agencies reporting improper payments will summarize the status of internal control over improper payments in their AFR or PAR
Purpose is to provide a thoughtful analysis linking agency efforts in establishing internal controls with reported improper payment rates
Internal Control Standards
Program A
Program B
Program C
Program D
Program E
Control Environment 3 2 4 1
Risk Assessment
Control Activities
Information and Communication
Monitoring
Legend:
4 = Sufficient controls are in place to prevent improper payments
3 = Controls are in place to prevent improper payments but there is room for improvement
2 = Minimal controls are in place to prevent improper payments
1 = Controls are not in place to prevent improper payments

12. DATA Act Main Update Overview
OMB and Treasury are working in partnership to implement the DATA Act
Today’s presentation:
Context of Federal spending transparency
Overview of the DATA Act
Progress thus far
Next steps

13. Federal Spending Transparency History
Federal Funding Accountability and Transparency Act (FFATA)
Recovery Act
Government Accountability and Transparency Board (GATB)
Data Accountability and Transparency Act (DATA Act)

14. DATA Act Summary
Purpose: to establish government-wide financial data standards and increase the availability, accuracy, and usefulness of Federal spending information.
Passed Congress on April 28. Signed into law on May 9, (P.L ).
Amends the Federal Funding Accountability and Transparency Act (FFATA) to require full disclosure of Federal agency expenditures.
It also requires the development of Government-wide data standards, takes steps to simplify financial reporting, and improves the quality of the spending data.

15. DATA Act Implementation Approach
Data-centric
Avoid massive system changes, focus on managing data
Incremental
Release data as it becomes available
Reuse
Maximize and leverage use of existing processes and investments
Collaborative
Feedback drives improvements
Iterative/Agile
Conduct many small scale pilots

16. Better Data, Better Decisions, Better Government
Vision and Goals
Vision
Provide reliable, timely, secure, and consumable financial management data for the purpose of promoting transparency, facilitating better decision making, and improving operational efficiency.
Better Data, Better Decisions, Better Government
Goals
Capture and make available financial management data to enable the data consumers to follow the complete life cycle of Federal spending -- from appropriations to the disbursements of grants, contracts, and administrative spending
Standardized information exchanges – definitions and format – to enable timely access to discoverable and reusable detail transaction level data
Accomplishments-to-date
Assumed program responsibility over USAspending.gov
Successfully piloted “Intelligent Data” prototype
Conducted “Award ID linkage” feasibility study

17. 360 Spending Transparency

18. DATA Act in Context of Spending Life Cycle
Appropriation
Apportionment
Allotment
(Allocation)
Commitment
Obligation
Payment
Receipts/
Financing
360 Spending Life Cycle
DATA Act
FFATA (USAspending.gov)
Award

19. Data Definition Standards
Importance
Other elements of DATA Act are dependent on data standards
Effects all stakeholders and downstream recipients of Federal funds
Goals
Standardize data definitions – collaborate with Federal and non-Federal stakeholders to define common data elements across communities
Look at industry standards – during implementation, carefully examine common practices and uses to maximize positive impact
Consider implications – use collaboration tools and outreach processes to understand and consider potential implications for stakeholders in their future reporting and compliance based on standards
Accomplishments-to-date
Compiled list of FFATA and DATA Act elements which must be defined according to DATA Act
Established Interagency Advisory Committee (IAC) to coordinate cross-community collaboration within Federal government

20. Challenges
Requires ongoing high level support in multiple sectors to push for transformational changes and innovative thinking
Short implementation timeline – requires fast, early action and reporting on results
Limited resources – no additional funding for implementation
Requires collaboration and active participation across federal communities, including procurement, grants, financial management, budget
Diverse and broad set of stakeholders including, congress, state & local governments, private industry, general public, transparency advocacy groups, and international community

21. Stakeholder Engagement
GitHub page:
Town Hall last Fall – all presentations on GitHub
Speaking engagements and trainings such as today’s discussion
Collaboration with non-Federal partners
Future webcasts about DATA Act implementation and/or DATA Act section 5 pilot

22. Next Steps Finalize the plan to implement the DATA Act
Consult with public and private stakeholders in establishing the data standards
Standardize the data element definitions
Develop a blueprint of the data elements based on the standard definitions
Continue pilot efforts on data exchange standards and publication options, and on reducing reporting burden
Upcoming Dates:
March 27, 2015: Webcast on DATA Act implementation
March 20 and 27, 2015: Updated information posted on GitHub
April 1, 2015: Webcast on Section 5 Pilot
May 2015: OMB and Treasury issue guidance on data definitions and exchange
May 2015: Section 5 pilot is launched

23. The New Uniform Guidance
♫ Are You Ready for This ?
The New Uniform Guidance
2 CFR 200

24. Guidance Reform History
Nov. 2009: Executive Order: Reduce Improper Payments
Feb 2011: Presidential Memo: Reduce Administrative Burden
Feb 2012: Advance Notice of Proposed Guidance (public comments)
Feb 2013: Notice of Proposed Guidance (public comments)
Dec 2013: Final Uniform Guidance
† April 2013

25. Guidance Reform History
December 2013: Uniform Guidance Published
January-April 2014: Training Webcasts, Publish 2014 Single Audit Compliance Supplement
June 2014: Agencies Submit Draft Rules to OMB, Continued Outreach on Implementation
December 2014: Final Guidance Effective, Baseline Metrics Collected, Case Studies of Best Practices Published
Fall 2014: Metrics, Additional FAQs and Webcast

26. Eliminating Duplicative and Conflicting Guidance
Received
Awards
A-102 & A-89
A-87
A-133 &A-50
Subawards to universities
A-110
A-21
Subawards to nonprofits
A-122
Then:
INSERT YOUR
STATE OR AGENCY HERE
Now: All OMB guidance streamlined in 2 CFR 200.

28. 2 CFR 200 -Basic Layout 6 Subparts A through F
Subpart A, 200.XX – Acronyms & Definitions
Subpart B, 200.1XX – General
Subpart C, 200.2XX – Pre Award - Federal
Subpart D, 200.3XX – Post Award – Recipients
Subpart E, 200.4XX – Cost Principles
Subpart F, 200.5XX – Audit
11 Appendices - I through XI

29. Top Ten Impact Changes 200.1 through 99 Standard Definitions
, Review of risk of applicants
Must have framework for evaluating risks
Should consider financial stability, performance history, audit reports
, Supplies (computing devices)
, Procurement Standards
, Requirements for pass-through entities

30. Top Ten Impact Changes 200.407, Prior Written Approval (22 items)
, Direct Costs
, Indirect Costs
Must accept approved negotiated rates (some exceptions)
10% of MTDC de minimis IDC
One time four-year extension of current approved rate (final and pre-determined rates only)
, Compensation – Personal Services
200.5XX, Single Audits
Higher Threshold ( )
Better Transparency ( )
More Focus on Risk ( )

31. Agency Implementation
Adopted by 28 Federal awarding agencies on December 19, 2014
Agency implementation regulations available in 2 CFR
Effective for awards issued on or after December 26, 2014

32. Resources The COFAR website is available at: https://cfo.gov/cofar/
Includes:
FAQs
Webcasts
Crosswalk to agency exceptions and additions

33. “I like the dreams of the future better than the history of the past…” T. Jefferson