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Federal Financial Management Improvement Act (FFMIA) Compliance Assessment

FFMIA is designed to improve federal financial management by requiring that financial management systems provide reliable, consistent disclosure of financial data in accord-ance with generally accepted accounting principles (GAAP) and standards. FFMIA requires USAID to implement and maintain a financial management system that complies substantially with:

• Federal financial management systems requirements
• Standards promulgated by the Federal Accounting Standards Advisory Board (FASAB), and the
• U.S. Standard General Ledger (USSGL) at the transaction level.

USAID management has determined that the Agency is in overall substantial compliance with FFMIA.

The OIG is also required to report on compliance with these requirements as part of the annual audit of USAID’s financial statements. In successive audits prior to FY 2006, the OIG determined that USAID’s financial management systems did not substantially comply with FFMIA accounting and systems requirements. The USAID Administrator also reported this instance of noncompliance. In the FY 2006 Government Management Reform Act (GMRA) audit report, the OIG provided positive assurance of FFMIA substantial compliance. As noted in a recent GAO report,¹ USAID is the only CFO Act agency to have achieved compliance with the requirements of FFMIA and to have a positive assurance statement based on the extent of audit work performed against FFMIA. In the FY 2007 GMRA audit report, the OIG noted no instances of overall substantial noncompliance with FFMIA. However, because the OIG did not conduct a full audit, USAID received a negative assurance statement for FFMIA compliance. A detailed discussion of the financial management systems goals, strategies, and framework follows.

¹: Footnote: August 3, 2007, GAO-07-914 Financial Management: Long-standing Financial Systems Weaknesses Present a Formidable Challenge. USAID was the only CFO Act agency to have achieved compliance with the requirements of FFMIA and to have a positive assurance statement based on the extent of audit work performed against FFMIA. GAO states, “In fiscal year 2006, auditors for one CFO Act agency, the U.S. Agency for International Development (AID), provided positive assurance—which is an opinion based on the nature and extent of audit work performed—that AID’s financial management systems substantially complied with the requirements of FFMIA. Auditors for the remaining six CFO Act agencies provided negative assurance of FFMIA compliance.”(back to text)

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