Date: August 1, 2000
Sunset Review: August 1, 2004
SUBJECT: Approval of Financial Management Systems
1. PURPOSE. This directive states the policy and procedures for the approval of significant modifications to, or replacements of, existing financial management systems.
2. SCOPE. This directive applies to all financial management and revenue systems (as defined in OMB Circular A-127, revised July 13, 1999) of all bureaus, the Departmental Offices (DO), the Office of the Inspector General (OIG), and the Office of the Treasury Inspector General for Tax Administration (TIGTA). It does not apply to the Governmental central accounting systems maintained by the Financial Management Service (FMS) and Bureau of the Public Debt (BPD), which are the responsibility of the Fiscal Assistant Secretary. Because government-wide fiscal accounting responsibilities are unique, the implementation of Fiscal Program financial systems are within the purview of the Fiscal Assistant Secretary (see Treasury Directive (TD) 27-02) and not within the scope of this Directive.
3. APPLICABILITY. This directive does not require the bureaus, DO, OIG, or TIGTA to establish a system for their use when they are being cross-serviced by another organization whose system meets the requirements of this directive.
4. POLICY. It is the policy of the Department of the Treasury (hereafter referred to as "the Department") that the bureaus, DO, OIG, and TIGTA establish and maintain financial management systems which:
a. comply with accounting principles, standards, and requirements of the Comptroller General, the Office of Management and Budget (OMB), and the Department (see TD 32-01);
b. comply with the internal control standards of the Comptroller General, OMB, and the Department (see TD 40-04);
c. comply with the policies prescribed by the Department's Assistant Secretary for Management/Chief Financial Officer (ASM/CFO) as contained in this and other related Treasury Directives;
d. comply with the provisions included in the Joint Financial Management Improvement Program's (JFMIP's) system requirements documents;
e. comply with "Raines' Rules" (OMB Memo M-97-02; October 25, 1996) regarding investments in major information systems proposed for funding in the President's budget;
f. comply with the requirements included in the Office of Management and Budget's (OMB's) Circular A-127 (revised July 13, 1999), in the Federal Manager's Financial Integrity Act, and the Federal Financial Management Improvement Act;
g. procure and implement, for a core financial system as defined by JFMIP, a system that has been certified by the JFMIP (for those bureaus electing to be cross-serviced by another Federal entity, the service provider must use a certified system);
h. meet all requirements of the Clinger-Cohen Act of 1996 (formerly known as the Information Technology Management Reform Act);
i. provide complete, reliable, consistent, and timely information which is prepared on a uniform basis and which is responsive to the financial information needs of bureau and Departmental financial management and program management personnel;
j. provide for the development and reporting of cost information;
k. integrate accounting and budgetary information;
l. measure performance;
m. provide effective control over, and accountability for assets for which the bureaus or DO are responsible;
n. integrate the accounting functions of the bureaus or DO with the Governmentwide fiscal accounting system and reporting responsibilities of the Secretary of the Treasury under 31 U.S.C. 3513; and
o. provide data to the Department's Financial Analysis and Reporting System (PARS) for central reporting and analysis.
5. DEFINITIONS.
a. Financial Systems are defined in OMB Circular No. A-127, paragraph 5, dated July 23, 1993 (revised July 13, 1999), as an information system comprised of one or more applications, that is used for any of the following:
(1) collecting, processing, maintaining, transmitting, and reporting data about financial events;
(2) supporting financial planning or budgeting activities;
(3) accumulating and reporting cost information; or
(4) supporting the preparation of financial statements.
b. Financial systems support the financial functions required to track financial events, provide financial information significant to the financial management of the agency, and/or required for the preparation of financial statements. Financial systems encompass automated and manual processes, procedures, controls, data, hardware, software, and support personnel dedicated to the operation and maintenance of system functions. A financial system may include multiple applications that are integrated through a common database or are electronically interfaced, as necessary, to meet defined data and processing requirements;
c. The term "mixed system" means an information system that supports both financial and non-financial functions of the Federal government or components thereof;
d. The term "financial management systems" means the financial systems and the financial portions of mixed systems necessary to support financial management. For purposes of this Directive, the term, financial management systems, will include all financial and mixed systems as defined by the JFMIP and OMB Circular A-127 (revised July 13, 1999);
e. Fiscal Program Systems (or Governmentwide Central Accounting Systems) refer to those systems whose primary purpose is to maintain Governmentwide "central" accounts administered by the Department to comply with statutory requirements for accounting and the production of overall financial reports for the Federal Government.
6. RESPONSIBILITIES.
a. The Assistant Secretary (Management) and Chief Financial Officer (ASM/CFO) is responsible for directing, managing, and providing policy guidance and oversight of financial management personnel, activities, and operations, including the approval of bureau, DO, OIG, and TIGTA financial management systems design or enhancement projects. As with all major capital investments of a systems nature, significant financial management systems and/or enhancements must be brought to the Capital Investment Review Board (CIRB) for approval, which is chaired by the ASM/CFO. These responsibilities may be delegated to certain bureau heads or boards at the discretion of the ASM/CFO, depending on unique circumstances at the bureaus.
b. The Deputy CFO's organization, including the Office of Financial Systems Integration shall:
(1) review proposals to replace, or significantly modify, financial management systems and/or recommend to the ASM/CFO any significant proposals for CIRB review/approval, per CIRB guidelines;
(2) review the documentation provided to determine if such proposals conform with the policies in paragraph 4;
(3) review the documentation to determine if the system, or changes, conform to principles, standards, and related accounting requirements prescribed by the CFO Act, OMB, and the Comptroller General;
(4) recommend to the ASM/CFO whether individual proposals should be approved or disapproved if below the CIRB thresholds; and
(5) ensure that proposals to replace or modify all financial and mixed systems conform to the requirements established by the Fiscal Assistant Secretary for governmentwide financial reporting by the Financial Management Service and the Bureau of the Public Debt.
c. Heads of Bureaus, the Deputy Chief Financial Officer, the Inspector General, and Treasury Inspector General for Tax Administration, as it relates to their respective bureaus and offices shall:
(1) ensure that all financial management systems and financial reporting practices conform with the policies and guidance of the Department and that significant changes to, or replacements of, financial management systems are processed in accordance with this directive;
(2) submit Request for Approval for proposed plans to design and install a new financial management system, or significantly modify an existing system, to the Deputy CFO for review and recommendation to the ASM/CFO in accordance with paragraph 8;
(3) obtain the written approval of the ASM/CFO before obligating any funds for, or beginning to implement, the proposed plans; and
(4) conform with the capital programming policies established by each bureau or entity obtaining Investment Review Board approval as required.
7. SYSTEM MANUALS. All financial management systems shall be documented through system manuals. The manual shall be comprehensive and current to instruct new officials or employees in the functions and operations of the system. Uniform standards shall be maintained in the financial management systems manuals. The Deputy CFO will issue procedural guidelines for the development of a system manual for financial management systems.
8. PROCEDURES. In considering proposed changes to systems, the Departmentwide principles and standards for financial management systems must be used (See TD 32-01). When a bureau determines the need for a new system, or major changes to an existing system, the following procedures apply:
a. discuss the proposal with the Deputy CFO as soon as a broad outline of the proposal has been developed in accordance with the organization's business plan;
b. keep the Deputy CFO informed on the development of the proposal before submitting for approval;
c. prepare documentation required by paragraph 9. And forward it to the Deputy CFO for review and approval upon completion of the conceptual design of the system or contemplated changes to an existing system;
d. be responsible for the bureau level Investment Review Board approval of all financial systems expenditures involving financial system updates; and
e. report the status of the system project in a consistent manner to the Investment Review Board and the Deputy CFO.
9. REQUEST FOR APPROVAL OF SYSTEMS DEVELOPMENT/MODIFICATION. The following documentation is required to be submitted to the Deputy CFO before beginning the design of a new system, a segment of a new system, or a major change to an existing system:
a. a memorandum addressed to Treasury's ASM/CFO, containing a statement that the bureau head has determined that the system design of the financial management system, or segment thereof, complies with the prescribed principles, standards, and related requirements as stated in paragraph 4;
b. a document describing the project and how the system supports the organization's strategic plan and performance goals;
c. a feasibility study describing the options considered and the justification for the recommended option; and
d. a cost benefit analysis, which includes the cost of development, maintenance, and operation of the system(s).
10. CANCELLATION. TD 32-02, "Approval of Financial Management Systems," dated August 27, 1992, is superseded.
11. AUTHORITY. 31 U.S.C. 3512 and 3513, as amended by the CFO Act of 1990.
12. REFERENCES.
a. TD 27-01, "Organization and Functions of the Office of the Assistant Secretary for Management and Chief Financial Officer.""
b. TD 32-01, "Accounting Principles and Standards."
c. TD 32-05, "Responsibilities for Establishing and Maintaining Fiscal Accounting Systems."
d. TD 40 04, "Treasury Internal (Management) Control Program."
e. OMB Circular A-123 (Revised Management Accountability and Control), dated June 21, 1995.
f. OMB Circular A-127, "Financial Management Systems," dated July 23, 1993 (revised July 13, 1999)
g. OMB Circular A-130, "Management of Federal Information Resources" dated February 8, 1996.
h. CFO Act of 1990; Public Law 101-576 (104 Stat. 2838).
i. OMB Guidelines for Evaluating Financial Management/Accounting Systems, dated May, 1985.
j. JFMIP's Financial Handbook for Federal Executives and Managers, dated February, 1996.
k. JFMIP's Core Financial System Requirements, dated February, 1999.
13. OFFICE OF PRIMARY INTEREST. Director, Office of Financial
Systems Integration/Deputy CFO, Office of the Assistant Secretary (Management)/CFO.
/S/
Lisa Ross
Acting Assistant Secretary for Management
and Chief Financial Officer