U.S. Department of the Treasury

1. U.S. Department of the Treasury GTAS & Intragovernmental Reporting May 8, 2014

2. Agenda • Problem Statement • Treasury's Initiatives • What Does This Mean For You? • Next Steps • Questions

3. Problem StatementThe Need for a Government-wide Solution

4. The SolutionTreasury's Initiatives to Mitigate the Material Weakness 1 2 3 4 Treasury has developed solutions for mitigating the IGT material weakness. These efforts include: Strengthening Policy Guidance: Treasury issued revised TFM guidance effective FY2013 for IGT. Improving IGT Data Transparency: Treasury implemented GTAS in Q1 FY2014. Measuring Agency Performance: Treasury implemented Scorecards for the 35 verifying agencies in FY2013. Increasing Accountability: Treasury/OMB issued OMB Bulletin 14-02 allowing Treasury/OMB to request agencies complete IGT agreed-upon procedures.

5. Treasury InitiativesOverview Implement preventative controls to reduce the risk of mis-statement, non-compliance with Treasury business rules and reduction of IGT differences.

6. Treasury InitiativesStrengthening Policy Guidance • Transfer Logic Model (TLM) • Simplifies the identification of transfers and resulting USSGL usage Select from a set of multiple choice questions and receive a recommended accounting treatment Treasury Financial Manual (TFM) • Provides comprehensive instructions on all processes and accounting IGT related

7. What Does this Mean for you?Strengthening Policy Guidance Departments and Agencies should: • Develop processes and controls to review annual TFM changes and update internal guidance accordingly • Implement processes to exchange Minimum Accounting Data Elements (MADEs) with trading partners • Utilize Treasury tools to improve IGT reporting • Utilize processes such as dispute resolution to address long-standing differences with trading partners

8. Treasury InitiativesImproving IGT Data Transparency Develop comprehensive validations and edits, agency certification of data, and TAS reporting.

9. Treasury InitiativesImproving IGT Data Quality The conversion from IRAS to GTAS offers several improvements to IGT Reporting: Accountability Transparency • Enforces USSGL guidance and standards (FFMIA 1996) • USSGL ensures consistency and standardization of Federal financial reporting • Improves data quality through validations and edits • Agency data to be viewed by trading partners upon certification • Intragovernmental differences can be seen between trading partners researched upon data certification • Granularity of data improved over time Confidence Efficiency • Reduces agency reporting requirements • Replaces four legacy systems • Ensures consistency between budgetary and proprietary reporting • Allows more granularity with IGT reconciliations • Increased data output options • Improved data quality resulting from validations, edits, and business rules in the system • Increased information sharing between trading partners encourages timely research and reconciliation of differences

10. Treasury InitiativesImproving IGT Data Quality

11. What does this mean for you?GTAS Before After

12. What does this mean for you?Timing of Reporting Before After Optional reporting extension for changes to intragovernmentalbalances, not previously available as of the initial deadline.

13. Treasury InitiativesMeasuring Agency Performance Evaluate agency compliance with TFM policy, monitor trends, and propose corrective actions.

14. Treasury InitiativesManaging Agency Performance

15. What does this mean for you?Agency Scorecard Performance • Treasury distributes to each participating agency, a draft scorecard each quarter. • Treasury facilitates meetings with each significant entity that receives a scorecard. • Agencies research and reconcile differences with trading partners. • Agencies document rationale, or root cause for significant differences with trading partners. • Treasury distributes a final scorecard, after evaluating all supporting documentation received.

16. What does this mean for you?Identification & Documentation of Differences • Treasury provides agencies with Targeted Differences Forms (TDFs) for each material difference highlighted in the scorecard. • Material Difference Reports, previously submitted to Treasury, may be updated during this process. • Previously “unknown” or “unidentified” differences receive further research and often become identified and documented via TDF.

17. Treasury InitiativesIncreasing Accountability Establish audit requirements to evaluate compliance, accuracy and timeliness of agency IGT reporting.

18. What does this mean for you?Increasing Accountability Dispute Resolution • Purpose: Eliminate recurring differences that cannot be resolved between agencies • Process: Agencies submit forms requesting Treasury's guidance on the dispute • Outcome: Treasury deliberates and proclaims a decision that eliminates IGT differences Agreed-Upon Procedures (AUP): • Purpose: Risk-based approach targeting the worst offenders • Process: Treasury will utilize objective criteria to identify agencies to execute AUPs during existing Financial Statement audits • Outcome: Increased compliance and reconciliation of IGT differences

19. What does this mean for you?Increasing Accountability – AUP OMB Bulletin 14-02 • 13.34Starting in fiscal year 2014, Agency Inspectors General will be notified by OMB/Treasury in the first quarter of fiscal year if they have been selected to complete Intragovemmental Transactions (IGT) agreed-upon procedures (AUP). This selection will be made by OMB/Treasury based on the results of lntragovemmental Reporting and Analysis System (IRAS) and IGT Scorecard reporting from quarter four of the previous year. The AUP will be targeted to identify, analyze, and facilitate OMB Bulletin No. 14-02, Audit Requirements for Federal Financial Statements the correction of the underlying internal control or process weaknesses at those agencies selected by OMB/Treasury. Upon selection, Treasury will work with the Agency and OIG/IPA to define the scope and logistics of the AUP engagement.

20. What does this mean for you?Increasing Accountability – AUP Background: • Treasury solicited feedback from the Financial Statement Auditor's Network (FSAN), Independent Public Accounting Firms and GAO to identify audit methods to enforce IGT compliance. • Based on recommendations from the audit community, Treasury and OMB updated OMB Bulletin 14-02, Section 11 to include the AUPrequirement. Purpose: • The purpose of the AUP is to report on Department/Agency compliance with Treasury policy and regulations. In determining compliance, Treasury seeks to evaluate the accuracy, timeliness, and completeness of: • Reporting and recording of IGT; • Reconciliation processes for IGT; • Communication with Trading Partners regarding IGT reconciliation; and • Processes for correcting/adjusting IGT reporting errors.

21. What does this mean for you?Increasing Accountability – AUP Selection: • Agencies that consistently have large differences and/or recurring IGT differences have an increased likelihood to be selected to execute AUPs. • Agency auditors will execute AUPs during existing Financial Statement audit timelines and submit an audit report to Fiscal Service. Example

22. Next Steps • Treasury is examining additional solutions including: • Pilot of the Transfer Logic Model (started April 2014) • Issuance of General Fund Guidance (2015) • Enhancement to GTAS edits and guidance (2015) • Ongoing IGT scorecarding (2014)

23. Questions?

24. Contact Information Kirstie Pottmeyer Hart Section Chief Government-wide Accountingkirstie.hart@fiscal.treasury.gov (304) 480-5304