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, prograns and activities that fall within the scope of the legislation. 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.

It

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:

Payments for credits against Social Security
Contributions,

:
Federal old-Age and Survivors Insurance Trust
Fund,

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 ACFA 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 å minimum of 56% of HHS outlays and in excess of $250 billion dollars. For FY 1992 over 50% of His 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).

Sincerely yours,

Kevth Holey
Assistant Seddetary for

Management and Budget

Enclosures

Enclosure A

ANALYSIS OF HHS ACCOUNTS UNDER THE CHIEF FINANCIAL OFFICER LEGISLATION

Agenci

Appropriation Accouri Tulo

Code

Onday in FY 9
...**
UTI,440.023

4.790
30.611.894
1.568.973

61.935

1 1

FDA Salaries and Epursus, FDA

75_0600 Salaries and Ewenses, FDA (Popedules)

75J_0600 Rental Payments (FDA)

73_0601 Buildinos und Faciales, FDA

75X0803 Revolving Fund la Corunication and Other Services

75X4303 Cooperative Research and Development Agreements (FDA) 75X3140

Food and Drug administration Uncomndtional Gin Fund 75X8247 MRSA Health Resources and Services

75_0350 Health Professions & Nursing Student Loans (HASA)

75J_0350 Consolidated Worteng Fund (HASA)

75X3903 Medical Facilities Quaranta and Loan Fund

T5X1430 Health Professions Graduate Student Loan Fund

75X4305 Nurse Training Fund

75X4306 Health Professions Education Fund

175X4307 Vaccine Injury Compensation

75_03.20 Vaccine Improvement Program Trust Fund

7520X8175 Public Health Service Condilonal GIR Fund, HASA

75X8234 Patients' Banent Fund, PHS Hasplats, HASA

75X8889 HS Indlan Hoalth Services

75_0390 Indian Health Services (Medicare Medicalon

752_0690 Indlan Health Facilities

75X0391 Consolidated Worldng Fund (Grants for Research, IHS)

75X3921 Aonts and Charges/Operation and Malntenance of Quarters (IHS) 75X5071 Contributions, Indian Health Faciales

74XB073 COC Disease Control, Research, and Training

75_0943 Cooperativo Rasoarch and Development Agreements (COC) 75X5 146 Hazardous Suastance Trust Fund (Transtor from EPA)

75208145 Gins and Donations, COC

75X8250 NIH National Library of Medicine

75_0807 John E Fogarty International Caren

75_0819 Bulldings and Fallhlas, NIH

75X0838 National Institute on Aging

75_0843 Nallonal Insthulo on Aging (Royalties)

75J_0843 National Institute of Child Heath and Human Development 75_0844 National Inse of Child Health & Human Dev (Royalties)

175 J_0844 Office of the Dlrector, NIH

(700)

414.763.216

(1.011) 55.810.665

ANALYSIS OF HHS ACCOUNTS UNDER THE CHIEF ANANCIAL OFFICER LEGISLATION

Outiara la FY 83

Symbol

Codo

Appropriation Account Tube

Apancy

NIH

S 4 5

5

National Heart, Lung, and Blood Instituto

75_0872 National Hean. Lung, and Blood Institut. (Royalties)

75J_0872 National Institute of Dental Research

75_0873
National Institute of Dental Reseach (Poyatles)

75 J_0873
National Insentute of Diabetes, and Dloosevo and Kidney Diseases 75_0884
Nat Inst of Diabetes. & Digestive & Kidney Diseases (Floyalties) 75J_0884
National Institute of Allergy and Intectious Diseases

75_0885
Nallonal Institute of Allergy & Infectious Diseases (Royalties) 75 J_0885
Nallonal Insthute of Neurological Disorders and Stoke

75_0886 National Institute of Neurological Disordert & Stroke (Aloyalties) 751_0886 National Eye Instituto

75_0887 National Institute of Arthstels & Musculoskeletal & Skin Diseases 75_0888 National Cancer lor Nursing Research

75_0689 National Institute on Deatness & Other Communication Disorders 75_0890 National Center for Human Genome thesearch

75_0891 Management Fund, NIH

75_3966 Managernent Fund, NIH Moyanlas)

75J_3966 Service and Supply Fund, NIH

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

75X8248 National Institutes of Health conditional Gin Fund

75X8253 Pallents' Bonen Fund, National Institutes of Health

75X8888

$1,071,524.266

(384) 129.844.650

5,478 520.113.461

7.635 675.135.691

1.245 523.726,706

0 21.999.586 161.108.734

3.530.972
38,287.507

0
(10.163.669)

1.100
(1.299,495)

o
1.696.213
121.458
56.255

S 5 5 5

1

1

2 2 2

5 6

ADAMHA Foderal Subsidy for Salnt Elizabeths Hospital

Construction and Renovallon, Saint Alzabeths Hospital
Alcohol, Drug Abuse, and Mental Health
Alcohol. Drug Abuse, and Mamal Heath (Royaltles)
Cooperative Research and Development Agreements (ADAMHA)
Saint Elzabeths Hospital Unconditional Git Fund
Patients' Bene Fund, Saint Elizabeths Hospital

75_1300
75X1312
75_1361
75J_1361
75X147
75X8555
75X8559

22.049,042

26.608 1,173.163.123

(6.686)

0 (3.308)

0

OASH

Retirement Pay and Medical Benefits for Commissioned Officers
Office of the Assistant Secretary for Health
Scientific Acimies Overseas. Special Fordon Currency Program
Service and Supply Fund, OASH
Public Health Service Unconditional Gin Fund

75_0379
75_1101
75X1102
75X4552
75X8249

103.581.509
81.589.846

1.310.822
(5.640.633)

236.940

2

ANALYSIS OF HHS ACCOUNTS UNDER THE CHIEF FINANCIAL OFFICER LEGISLATION