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The Chief Financial officers (CFO) Act of 1990 (HR 5607) requires Executive Branch agencies to produce audited financial statements for all trust funds, revolving funds, and accounts having substantial commercial activity starting as of the end of fiscal year 1991. Included in the CFO Act is a provision, section 3515(e) (3), that allows the Director of the Office of Management and Budget (OMB) to waive the requirement for preparation and/or audit of fiscal year 1991 financial statements.

Our Department has made an assessment of all accounts, programs and activities that fall within the scope of the legislation. It is attached at Enclosure A and requires coverage of 60 accounts which represent 80% of our outlay.. We are making an early effort to aggressively engage in the preparation and audit of financial statements for those activities covered by the CFO Act. Our desire was to begin the process in FY 1991. Towards this end, we and our Inspector General have jointly developed a plan. However, the Administration's request for 1991 funding of this effort did not materialize.

Our present strategy takes into consideration major variables that affect early implementation of the legislation. The first is the absence of funding. The President's FY 1992 budget includes funding that will allow us to make major progress. A second variable involves the size and complexity of program activities.

We are now pursuing a phase-in strategy that will, by necessity, require some deferment in implementation. Accordingly, we must request OMB waiver for some of the CFO Act's requirements. revised plan is as follows:

Our

1.

For FY 1991 we will continue the preparation and audit of all seven program activities of the Social Security Administration which account for $253 billion. These include:

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2.

In addition, we will prepare and audit statements for
the Office of the Secretary Working Capital Fund.
For FY 1991 we will begin in FY 1991 to phase-in
preparation and audit of financial statements in the
Public Health Service. Initially, this will involve
selected accounts (e.g., FDA Revolving Fund for
Certification and Service, NIH Management Fund, NIH
Service and Supply Fund and OASH Service and Supply
Fund) and the balance of the accounts will be limited,
both in number and in scope, because of limited
existing resources. It will, therefore, be necessary
to obtain waivers for most of the 44 appropriation
accounts of the PHS. In addition, we will be forced to
delay and request waiver for FSA and HCFA programs. Be
assured we will do as much as we can with what we have
but, as has been made manifest to you, funding and
other resource constraints greatly limit our capacity.
As new resources arrive in FY 1992, they will allow us
to produce FY 1992 financial statements that will be
audited for all HHS accounts (60) falling within the
purview of the CFO Act.

3.

It should be noted that for FY 1991, HHS will have audited financial statements incorporating a minimum of 56% of HHS outlays and in excess of $250 billion dollars. For FY 1992 over 50% of HHS accounts will be included in audited financial statements. That will incorporate approximately 80% of the Department's outlays, the remainder of which falls outside the scope established by the CFO Act.

Based upon the aforementioned plan, and in accordance with the waiver provision of the CFO Act, I am requesting a waiver of the preparation and audit of the FY 1991 financial statements as described above and as itemized in Enclosure B.

If there are questions regarding our phase-in plan or waiver request, your staff should feel free to contact Dennis Fischer, Deputy Assistant Secretary for Finance (202-245-2084).

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Enclosure A

ANALYSIS OF HHS ACCOUNTS UNDER THE CHIEF FINANCIAL OFFICER LEGISLATION

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National Ubrary of Medicine
John E Fogarty International Cancer
Buildings and facilitias, NIH
National Institute on Aging
Nallonal Institute on Aging Poyanlas)
National Institute of Child Health and Human Development
Nalonai Inst of Child Health & Human Dev (Royalties)
Office of the Director, NIH
Office of the Director, NIH Royales)
Research Resources
National Cancer Instituto
Nallonal Cancer Institute (Aoyalties)
National Institute of General Medical Sciences
National Institute of Environmental Health Sciences
National Institute of Environmental Health Sciences (Royahies)

75_0807 75_0819 75X0838 75_0843 75J_0843 75_0844

75 J_0844 75_0846 75 J_0846 75_0848 75_0849 75J_0849 75_0851 75_0862 75J_0862

71.911,936 13.932.537 29.515.092 214,328.975

(700) 414.763.216

(1.011) 55.810.665

(104,332) 399.287,204 1,580,547,964

(217.656) 652.441.295 193.954.240

5

5 5 4

5

(755)

1. Revolving Funds 2 Trust Funds I P10 Program 4. Substantial Commerclal Activity 5. Not covered by Law 6 Not an Active Account

ANALYSIS OF HHS ACCOUNTS UNDER THE CHIEF FINANCIAL OFFICER LEGISLATION

Apancy

Appropriation Account TUB.

Symbol

Outlaya in FY 89

Code

S

5

5

5

NIH National Heart, Lung, and Blood Instituse

75_0872 National Heart, Lung, and Blood institus. (Poyatles)

75 J_0872 National Institute of Dental Research

75_0873
National Institute of Dental Research oyaltles)

75J_0873
Nallonal Institute of Dlaberes, and Dipositive and Kidney Diseases 175_0884
Nat Inst of Dlabedes. & Digestire & Kidney Diseases (Royalties) 75J_0884
National Institute of Allergy and Infectious Diseases

75_0885
Nallonal Institute of Allergy & Infectious Diseases (Royaltles) 75J_0885
National Insinute of Neurological Disorders and Suoka

75_0886 National Institute of Neurological Disorders & Swoke (Floyaltes) 75_0886 National Eye Instituto

75_0887 National Institute of Arthotels & Musculoskeletal & Skin Disassos 75_0888 Nallonal Center for Nundng Research

75_0689 Nauonal Institute on Deatness & Other Communication Disorders 175_0890 National Center for Human Genoma Piscearch

75_0891 Management Fund, NIH

75_3966 Management Fund, NIH Moyatles)

75J_3966 Service and Supply Fund, NIH

75X4554 cooperative Plesearch and Development Agreements (NIH) 75X5145 National Institutes of Health Unconditional Gin Fund

75X8248 National Institutes of Health Conditorial Gin Fund

75X8253 Pallents' Bonent Fund. Nallonal Institutes of Health

75X8888 ADAMHA Federal Subsidy for Salnt Elizabeths Hospital

75_1300 Construction and Renovation. Saint Elizabeths Hosphal

75X1312 Alcohol. Drug Abuse, and Mental Health

75_1361
Alcohol. Drug Abusa, and Mamal Heahn (Royalties)

T5J_1361
Cooperative Research and Development Agreemonts (ADAMHA) 75X3147
Saint Elzabeths Hospital Unconditional GM Fund

75X8555
Patients' Benant Fund, Saint Elizabeths Hospital

75X8559

$1.071.524,266

(384) 129.841.650

5.478 520.113.461

7.635 675,135.691

1.245 523.726.706

0 231.999.586 161.108.734 25.530.972 38,287,507

0 (10.165.669)

1.100 (1,299,495)

0 1,696.213 121.458 56.255

5 4 5 5 5 5 5

1

1 2 2 2

5 6 5

22.049.042

26.608 1,173.163.123

(6.6867

0 (3.308)

0

1

2 6

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1. Revolving Funds 2 Trust Funds 2 Pilot Program 4. Substantial Commercial Activity 5. Na covered by Law 6. Not an Active Account

ANALYSIS OF HHS ACCOUNTS UNDER THE CHIEF FINANCIAL OFFICER LEGISLATION

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HDS

Program Administration, FSA
Family Support Payments to States
Low Income Homo Energy Assistanco
Rolugos and Entrant Assistance
Community Services Bloct Grand
Interim Assistanca to States for Legalization
Payments to States for AFDC Work Programs
Gins and Contributions, community Services Administration
Social Services Block Grant
Grants to States for Social and Child Welfare Services
Human Development Services
Paymonts to Slates for Foster Care and Adoption Assistance
General Departmental Management
Policy Research
Olrice of the Inspector General
Ollice for Chil Rights
Office of Consumer Allairs
Working Capital Fund, OS

os

175_1634 75X1634 75_1636 75_1645

2,669.735.775

832.949 2.835.339.055 1.343.881.531

un no

75_0120 75_0122 75_0128 75_0135 75_0137 75X4503

80.556.013

4.855.847 36.778.719 15.460.805 1.627.902 7.04 2.040

5 5 5 5 5 1

1. Povolving Funds 2 Trust Funds 3. Pilot Program 4. Substantial Commercial Activity 5. Hot covered by Law 6. Not an Active Account

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