oversight

Core Financial System Checklist: Systems Reviewed Under the Federal Financial Management Improvement Act of 1996 (Exposure Draft)

Published by the Government Accountability Office on 1997-12-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                      United States General Accounting Office

GAO                   Financial Management Series




December 1997         Core Financial System Checklist
                      Systems Reviewed Under the Federal
                      Financial Management Improvement
                      Act of 1996




                      Exposure Draft




GAO/AIMD-98-2 1.2.2




                  07025/         /591i      ?
PREFACE


The Federal Financial Management Improvement Act (FFMIA) of 1996, requires, among
other things, that agencies implement and maintain management systems that comply
with federal financial management systems requirements. These requirements are
detailed in the Financial Management Systems Requirements series issued by the Joint
Financial Management Improvement Program (JFMIP) and in the Office of Management
and Budget (OMB) guidance referred to in those documents.

To help agencies review their financial management systems and assist auditors with their
responsibilities under FFMIA,1 we have developed eight checklists, which we are issuing
concurrently for comment as exposure drafts. Seven of the checklists reflect the system
requirements defined by JFMIP. The eighth checklist, based on the JFMIP framework
document, describes a single integrated financial management system and is primarily a
reference tool rather than a standard-setting document.

As more system requirements are issued, we intend to develop additional checklists.
When these checklists are issued in final form, they will be available on the Internet on
GAO's Home Page (www.gao.gov).

Additional copies of the exposure draft of this checklist can be obtained from Room 1100,
700 4th St. NW, U.S. General Accounting Office, Washington, D.C. 20548, or by calling
(202) 512-6000. Please send comments by February 28, 1998 to Robert W. Gramling,
Director, Corporate Audits and Standards, Accounting and Information Management
Division, at

                       U.S. General Accounting Office
                       441 G Street NW, Room 5089
                       Washington, DC 20548




  ne1. Dodaro
Assistant Comptroller General
Accounting and Information Management Division




'The final form of this checklist will be included in GAO's Financial Audit Manual.

Page 1                                       GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
         (BLANK)




Page 2      GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
CONTENTS


Preface                                                                                    1

Overview                                                                                   3
  Authoritative Guidance                                                                   3
  How to Use This Checklist                                                                3
  Agency System Architecture                                                               5

Requirements Checklist                                                                     9
  Core Financial System Management Function                                               11
  General Ledger Management Function                                                      26
  Funds Management Function                                                               29
  Payment Management Function                                                             41
  Receipt Management Function                                                             54
  Cost Management Function                                                                62
  Reporting Function                                                                      68




  Abbreviations

  ACH     automated clearing house
  BPA     blanket purchase agreements
  CFO     chief financial officer
  FFMIA   Federal Financial Management Improvement Acto of 1996
  GPO     Government Printing Office
  JFMIP   Joint Financial Management Improvement Program
  NARA    National Archives and Records Administration
  OMB     Office of Management and Budget
  OPAC    online payment and collection system




Page 3                                   GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
         (BLANK)




Page 4      GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
OVERVIEW


The Federal Financial Management Improvement Act (FFMIA) of 1996, requires, among
other things, that agencies implement and maintain financial management systems that
comply with federal financial management systems requirements. These system
requirements are detailed in the Financial Management Systems Requirements series
issued by the Joint Financial Management Improvement Program (JFMIP) and Office of
Management and Budget (OMB) Circular A-127, Financial Management Systems. The
JFMIP requirements documents identify (1) a framework for financial management
systems, (2) core financial systems requirements, and (3) 16 other systems supporting
agency operations. Figure 1 illustrates how these elements fit together in an agency
systems architecture.

Figure 1: Agency Systems Architecture




                                                                     u Forfeited
                                                                        Asset
                                               Loan    \Systm                          System /   ersonnel/
                                                System                                             Payroll
                       /ene/       ys /nt                                                         System
                                                                    System

              Insurance Claim                     Core                                              Non-financial
                                                                                                  rFinancial
         So eFSystem           r             inancial              RMtgeing,                           Systems

                       Grant
                      System                     PSystem            System(                       Bud t

                                            System Property                            Revenue
                      \~ \         /   ~~         Management       Acquisitin          System
                                            S\\=ys...                System

                                                   artmentalExecutive Inf ormti'"n"'0
                                                           Workstation Support 'ool$




Source: JFMIP Federal Financial Management System Requirements documents.

Page 5                                                                 GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
To date, JFMIP has issued the framework and core documents and 6 of the 16 systems
identified in the architecture.2

GAO is issuing this and seven other checklists that correspond to the JFMIP documents
as part of its Financial Management Series. GAO will issue other checklists as additional
systems requirements are defined.

Authoritative Guidance

OMB Circular A-127 and OMB's Implementation Guidance for the Federal Financial
Management Improvement Act (F'FMIA) of 1996, issued September 9, 1997, provide the
basis for assessing compliance with the FFMIA requirement for agencies to implement
and maintain financial management systems that comply substantially with federal
requirements. OMB's September 1997 implementation guidance identifies various criteria
that an agency must meet to be in substantial compliance with these requirements.

The source of all the questions in this checklist is the Joint Financial Management
Improvement Program Federal Financial Management System Requirements Core
Financial System Requirements (FFMRS-1, September 1995).

Purpose of This Guide and How to Use It

The purpose of this document is to provide a checklist to assist (1) agencies in
implementing and monitoring their systems and (2) management and auditors in
reviewing the systems to determine if they are in substantial compliance with FFMIA.
The checklist, the JFMIP source document, and the two previously mentioned OMB
documents (Circular A-127 and the September 9, 1997 implementation guidance) should
be used concurrently by experienced staff.

OMB's 1997 implementation guidance provides indicators for chief financial officers and
inspector generals to assist them in determining whether the agency's financial
management systems substantially comply with federal financial management systems
requirements. Filling out this checklist will allow agencies to systematically determine
whether specific systems requirements are being met. Agencies can assess the
significance of any noncompliances in determining substantial compliance by considering
the "indicators" in OMB's 1997 implementation guidance. For example, the annual agency
assurance statement issued pursuant to section 4 of the Federal Managers' Financial


2 Thusfar, the series includes the (1) Framework for Federal Financial Management
Systems, (2) Core Financial System Requirements, (3) Inventory System Requirements, (4)
Seized/Forfeited Asset System Requirements, (5) Direct Loan System Requirements, (6)
Guaranteed Loan System Requirements, (7) Travel System Requirements, (8) and
Personnel-Payroll System Requirements.

Page 6                                       GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Integrity Act is one of those indicators. Agencies can use GAO's checklists to help
determine annual compliance with the section 4 requirement.

The following Core Requirements section contains a brief narrative followed by the
checklist, which is organized by functions contained in the source JFMIP document.

In the checklist, two columns follow each question. Use the first column to answer each
question "Yes," "No," or "NA." Use the second column to explain your answer. A "Yes"
answer should indicate that the agency's system or systems provide for the capability
described in the question. For each "Yes" answer, briefly describe how the system(s)
contain the capability and refer to a source that explains or shows the capability.

A "No" answer indicates that the capability does not exist. For a "No" answer, the second
column should provide an explanation and a reference to the supporting documentation.
Such explanations could include the following: (1) The agency is working on modifying
or implementing its system(s) to have the capability available in subsequent years. (2)
Management believes the capability is not cost effective and will not enhance the systems'
ability to manage operations. Refer to any cost-benefit studies that support such
explanation. If there are none, provide a full explanation.

Not every guide may apply to an agency. Further, while a guide may be applicable to an
agency, certain questions within the guide may not be applicable. Answer such
nonapplicable question(s) with an "NA" and provide an appropriate explanation in the
second column.




Page 7                                       GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
         (BLANK)




Page 8      GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
CORE FINANCIAL SYSTEM REQUIREMENTS

The core financial system requirements document helps agencies meet government
requirements by establishing standard requirements for the "backbone" modules of an
agency's integrated financial management system in accordance with laws and policies.

The seven function of the core financial system are discussed below.

1. Core Financial System Management consists of the processes necessary to maintain
   system processing rules consistent with established financial management policy.
   This function sets the framework in which all other core financial system functions
   operate. (The checklist questions for this area are drawn from pp. 19-26 of the
   source document.)

2.   General Ledger Management is the central function of the core financial system. The
     general ledger is the highest level of summarization and must maintain account
     balances by the fund structure and individual general ledger accounts established in
     the core financial system management function. (The checklist questions for this
     area are drawn from pp. 27-29 of the source document.)

3.   Funds Management is a system for ensuring that the agency does not obligate or
     disburse funds in excess of those appropriated and/or authorized. (The checklist
     questions for this area are drawn from pp. 30-35 of the source document.)

4.   Payment Management is a function that provides appropriate control over all
     payments made by or on behalf of an agency. (The checklist questions for this area
     are drawn from pp. 36-41 of the source document.)

5. Receipt Management is the function that supports activities associated with recording
   agency cash receipts, including servicing and collecting receivables. (The checklist
   questions for this area are drawn from pp. 42-45 of the source document.)

6.   Cost Management attempts to measure the total cost of performing an activity. (The
     checklist questions for this area are drawn from pp. 46-49 of the source document.)

7. Reporting is the function that provides financial information in a timely and useful
   fashion to (1) support management's fiduciary role; (2) support budget formulation
   and execution functions: (3) support fiscal management of program delivery and
   program decision making: (4) support internal and external reporting requirements,
   including, as necessary, the requirements for financial statements prepared in
   accordance with the form and content prescribed by OMB, reporting requirements

Page 9                                       GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements

    prescribed by Treasury, and legal, regulatory and other special management
    requirements of the agency; mad (5) monitor the financial management system. (The
    checklist questions for this area are drawn from pp. 50-52 of the source document.)

The checklist questions follow the JFMIP source document. It should be noted that not
 all questions will apply in all situations and, as with the use of any checklist, professional
judgment should be exercised. Using the JFMIP source document along with the two
previously mentioned OMB documents will help ensure that the user is cognizant of the
background information and definitions necessary to fully understand the questions.




Page 10                                        GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system       Yes/no                  Explanation
          management function          NA

 Does the system:

  1. Provide the capability to
     classify accounting
     transactions by the following
     structures: fund, program,
     organization, project, object,
     and any other structure
     needed to meet the data
     classification and reporting
     needs of the agency?

  2. Achieve, to the extent
     possible, consistency in
     budget and accounting
     classifications and
     synchronization between
     those classifications and the
     agency's organizational
     structure?




Page 11                                   GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system            Yes/no                  Explanation
          management function               NA
  3.      Provide a fund structure that
          defines each entity for which
          separate accounting and
          reporting are needed to meet
          legal and assigned
          responsibilities and reporting
          requirements? This structure
          should provide for
          identification of
          appropriation or fund
          accounts established by OMB
          and Treasury through the
          budget process, receipt
          accounts, credit program and
          financing accounts, deposit
          funds, clearing accounts, and
          other accounts as may be
          deemed necessary. The fund
          structure must provide for
          additional detail below the
          appropriation level to support
          fiscal year accounting,
          appropriation subaccounts
          used for reporting to
          Treasury, and financial
          statement preparation.

  4.      Relate Federal Account
          Symbols and Titles (FAST)
          structures established by
          Treasury to the system's fund
          structure for reporting
          purposes?




Page 12                                        GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system         Yes/no                  Explanation
          management function            NA
  5. Identify the type of
     budgeting, accounting, and
     reporting treatments to be
     used for each fund (e.g., 1
     year appropriation, no-year
     appropriation, revolving fund,
     trust fund, receipt account)?

  6. Provide a program structure
     with sufficient levels of detail
     to allow reporting for all
     categories on which
     budgetary decisions are
     made, whether legally
     binding, as in appropriation
     limitations, or in the nature
     of policy guidance, as in
     Presidential passbacks,
     congressional mark-up tables,
     or internal agency decisions?

  7. Provide an organization
     structure based on
     responsibility assignments,
     such as offices, divisions, and
     branches?




Page 13                                     GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system             Yes/no                   Explanation
          management function                NA
  8.      Use agency location codes
          assigned by Treasury for all
          transactions and reports
          involving Treasury disbursing
          centers, such as SF-224
          "Statement of Cash
          Transactions," SF-215
          "Deposit Ticket," and SF-5515
          "Debit Voucher"?

  9.      Provide a project structure
          that is independent of the
          other classification structures
          to allow multiple
          organizations, programs, and
          funding sources to be
          associated with a project?
          Projects are used to plan and
          account for undertaking
          something that is to be
          accomplished, produced, or
          constructed, and having a
          finite beginning and a finite
          ending, such as a
          construction project or a
          research and development
          project.




Page 14                                         GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system            Yes/no                  Explanation
          management function               NA

 10.      Provide an object class
          structure consistent with the
          standard object class codes
          contained in OMB Circular
          A-11, Preparation and
          Submission of Budget
          Estimates? This structure
          must also accommodate
          additional levels (higher
          and/or lower) needed to
          support agency management
          reporting and control needs.

  11.     Provide a revenue source
          code structure to identify and
          classify types of revenue and
          receipts received by an
          agency so that they may be
          represented properly on the
          agency's financial
          statements?

  12.     Support other classification
          structure elements necessary
          to meet agency management
          reporting and control needs?




Page 15                                        GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system            Yes/no                   Explanation
          management function               NA

  13.     Derive the expanded
          accounting classification
          structure from abbreviated
          user input so that user input
          is minimized, data entry is
          easier, and errors are
          reduced? Examples of
          methods include entering
          "shorthand codes" using a
          keyboard function to look up
          additional elements,
          "clicking" on entries in a
          "look-up table" or "pop-up
          menu," and scanning a bar
          code.


  14.     Be flexible enough to handle
          additions, deletions, and
          changes to accounting
          classification structure codes
          without extensive program or
          system changes? Table-driven
          systems, where frequently
          changed information is kept
          in tables separate from
          program logic under a system
          administrator's control, and
          database management
          systems are two examples of
          ways to provide such
          flexibility.




Page 16                                        GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system           Yes/no                  Explanation
          management function              NA
  15.     Use a chart of accounts
          consistent with the basic
          numbering structure provided
          in SGL? Any expansion to the
          numbering system must roll
          up to the accounts provided
          in SGL.

  16.     Incorporate both proprietary
          and budgetary accounts in
          the system and maintain the
          appropriate relationships
          between accounts as
          described in SGL?

  17.     Use account titles consistent
          with the account titles
          provided in SGL?

  18.     Provide subsidiary support
          for SGL accounts? This
          support, whether provided by
          subsidiary accounts or
          additional data elements, may
          be as detailed as the agency
          deems appropriate for asset
          protection, management
          information, and fund
          accounting.




Page 17                                       GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system             Yes/no                   Explanation
          management function                NA
 19.      Support an account structure
          for multiple appropriations or
          funds and multiple fiscal
          years within the
          appropriations, including
          single-year, multiyear, and
          no-year appropriations? Other
          classification structure
          elements should be used to
          break out account balances
          as deemed appropriate by the
          agency for reporting or
          control purposes.

 20.      Use the chart of accounts as
          the basis for preparing
          external reports to OMB and
          Treasury?

 21.      Use standardized transactions
          identified by reference codes
          to control transaction editing,
          posting to the appropriate
          general ledger accounts, and
          updating of other information
          maintained in the system,
          such as document balances
          and available funding?




Page 18                                         GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system              Yes/no                  Explanation
          management function                 NA
 22.      Provide an easily
          accomplished capability for a
          knowledgeable person with
          proper authority to establish
          or modify standardized
          transactions, including
          system-generated
          transactions?

 23.      Provide the capability for
          transactions to update both
          budgetary and proprietary
          accounts based on a single
          input?

 24.      Provide the capability for
          generating all of the
          appropriate debit and credit
          entries (at least four pairs) to
          the general ledger from a
          single line of information
          with a transaction reference
          code?




Page 19                                          GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system             Yes/no                   Explanation
          management function                NA

 25. Process system-generated
     transactions, such as
     automated accruals, closing
     entries, cost allocation
     transactions, recurring
     payments, and transactions
     that generate other
     transactions in those cases
     where a single transaction is
     not sufficient, using
     transaction definitions that,
     may be easily maintained by
     a knowledgeable and
     authorized person?

 26.      Provide the capability for
          transactions to liquidate,
          partially or in full, the
          balance of existing
          documents? This capability
          will be used in the liquidation
          of commitments, undelivered
          orders, payables, receivables,
          or other items, as
          appropriate.




Page 20                                         GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system           Yes/no                  Explanation
          management function              NA
 27.      Provide audit trails to trace
          transactions from source
          documents, original input,
          other systems, system-
          generated transactions, and
          internal allocation
          transactions through the
          system? Provide transaction
          details to support account
          balances?


 28.      Provide audit trails to trace
          source documents through
          successive levels of
          summarization to the
          financial statements and the
          reverse?

 29.      Provide audit trails to
          identify changes made to
          system parameters and tables
          that would affect the
          processing or reprocessing of
          financial transactions?

  30.     Provide the ability to select
          items for review based on
          user-defined criteria by type
          of transaction? Examples of
          reasons to select items are
          payment certification and
          financial statement audits.



Page 21                                       GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system            Yes/no                   Explanation
          management function               NA
 31.      Provide the capability to post
          to the current and prior
          months concurrently until
          month-end closing and to
          maintain and report balances
          separately for the current and
          prior months? For example, a
          user could post transactions
          in early December for events
          that apply to November. At
          the same time, transactions
          for events occurring in
          December should be posted
          to affect December balances;
          these transactions would be
          reflected in December
          reports but not November
          reports. Barring unusual
          circumstances, this overlap
          should be of limited duration
          (a few days) at the beginning
          of each month.

 32.      At year-end, provide for the!
          capability to post to the
          current year by month, as
          well as to the prior year,
          regardless of when year-end
          closing occurs? For example,
          a user should be able to post
          to the previous fiscal year,
          while also posting
          transactions to the new year.



Page 22                                        GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system            Yes/no                  Explanation
          management function               NA
 33. Provide control over the
     processing and reprocessing
     of all erroneous transactions
     through the use of error
     file(s) and/or suspense
     accounts? Erroneous
     transactions must be
     maintained and tracked until
     either corrected and posted
     or deleted at the request of
     an authorized user.

 34.      Provide standard record
          format(s) for interface of
          transactions from other
          systems to the core financial
          system and subject all
          transactions from interfacing
          systems to the core financial
          system edits, validations, and
          error correction procedures?

 35.      Support both batch and on-
          line data entry, and use the
          same edit and update rules as
          appropriate for each mode?

 36. Support simultaneous data
     entry/access by multiple
     users in a variety of modes?




Page 23                                        GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system           Yes/no                   Explanation
          management function              NA

 37.      Comply with management
          controls designed to ensure
          that transactions are
          processed in accordance with
          prescribed standards and
          procedures, the integrity of'
          data in the system is
          maintained, and access is
          restricted to authorized
          users?

 38. Archive transactions and
     related information needed
     for audit trails in a format
     accessible by audit software?

 39.      Provide the capability to
          archive or purge closed
          documents?


 40.      Allow documents to be
          reopened?

 41.      Purge (or archive) other core
          financial system data stores
          as needed to limit data
          maintained to that
          appropriately needed for
          analysis and control?




Page 24                                       GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


          Core financial system            Yes/no                  Explanation
          management function               NA
 42.      Retain system records in
          accordance with federal
          regulations established by the
          National Archives and
          Records Administration
          (NARA), GAO, and others?

 43.      Archive data needed for
          comparative analysis and
          presentation of historical
          information?




Page 25                                        GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


            General ledger management;           Yes/no                   Explanation
                      function                    NA
           Does the system:

           1.   Post transactions to the
                General Ledger in accordance
                with the transaction
                definitions established by the
                core financial system
                management function?

           2.   Maintain historical data to
                produce comparative
                financial reports for
                management use?

           3.   Provide for month-end and
                year-end closing and rollover
                of the General Ledger
                account balances under the
                control of an authorized
                system administrator?

           4.   Provide the capability for
                multiple preliminary year-end
                closings before final year-end
                closing while maintaining the
                capability to post current
                period data?




Page 26                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


            General ledger management           Yes/no                    Explanation
                        function                 NA

           5.   Provide the capability for
                selective, automatic
                generation of recurring
                accrual entries and reversals
                in the next fiscal period?

           6.   Allow for accruals of
                contracts or other items that
                cross fiscal years?

           7.   Selectively generate required
                transactions as needed by the
                year-end closing procedures?

           8.   Separately identify amounts
                which would be eliminated
                when preparing intra-agency
                and interagency
                consolidations?

           9. Prepare trial balances and
              other supporting information
              needed for external reports
              and financial statements,
              including consolidated
              statements?




Page 27                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             General ledger management.           Yes/no                  Explanation
                         function                  NA
           10.   Report a comparison
                 between the amounts in the
                 other components of the core
                 financial system and the
                 related control accounts in
                 the General Ledger and
                 annotate on the report those
                 accounts that are out of
                 balance?

           11.   Provide control accounts in
                 the General Ledger to
                 balance between the General
                 Ledger and other systems,
                 such as, property and travel]
                 management?

           12.   Provide mechanisms for
                 users with the proper
                 authorization to correct out-
                 of-balance conditions
                 discovered during the
                 reconciliation process?
                 Maintain an audit trail of any
                 such corrections, either
                 internal or external to the
                 system?




Page 28                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


            Funds management function              Yes/no                    Explanation
                                                    NA

           Does the system:

           1. Provide the capability to
              record the funding and
              related budget execution
              documents?

           2.    Establish limitations and
                 control the use of funds
                 against them consistent with
                 appropriation and
                 authorization language?

           3.    Establish limitations in
                 accordance with credit
                 reform objectives for loan
                 programs, including program
                 lending limits and available
                 subsidy amounts?

           4.    Distribute, track, control, and
                 report funds authorized at
                 various funding levels based
                 on SGL and accounting
                 classification structure?

            5.   Modify limitations in
                 accordance with
                 apportionment actions,
                 reprogramming, rescissions,
                 and other adjustments?



Page 29                                                  GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Funds management function             Yes/no                  Explanation
                                                    NA

           6.    Record and control funds
                 that receive other budgetary
                 authority in addition to
                 appropriations and identify
                 the type of authority?

           7. Record the expiration and
              cancellation of appropriation
              authority in accordance with
              OMB Circular A-34 and SGL?

           8.    Provide for maintaining
                 operating plans at or below
                 the funds control level of the
                 classification structure?

           9.    Allow authorized personnel[
                 to reallocate funds at
                 designated levels?

           10.   Provide the ability to account
                 for budgetary resources at a
                 lower level in the accounting
                 classification structure than
                 that for which they are
                 budgeted and controlled?

          11.    Provide for notification of
                 funds availability prior to the
                 issuance of a commitment,
                 obligation, or expenditure?



Page 30                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Funds management function            Yes/no                  Explanation
                                                   NA
           12.   Update funds available to
                 help prevent the incurrence
                 of commitments/obligations/
                 expenditures in excess of
                 available fund balances? In
                 particular, the system must:

                 -- provide for designated
                    authorities to establish
                    and modify the level of
                    funds control using
                    elements of the
                    classification structure,
                    including object class,
                    program, organization,
                    project, and fund.
                 - provide for designated
                    authorities to establish
                    and modify the system's
                    response (either reject
                    transaction or provide
                    warning) to the failure of
                    a funds availability edit
                    for each transaction type.
                 - provide the capabilities
                    and controls for
                    authorized users to
                    override funds availability
                    edits.




Page 31                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


            Funds management function            Yes/no                   Explanation
                                                  NA
              -   provide notification to
                  users, in the appropriate
                  manner, of transactions
                  failing the funds
                  availability edit? In some
                  cases (such as a request
                  for goods and services not
                  filled yet), the appropriate
                  action is to place the
                  transaction in an error file
                  and/or suspense account
                  for corrective action. In
                  other cases, where the
                  actual event has already
                  occurred (such as labor
                  hours worked or a
                  contract already signed),
                  the transaction should be
                  recorded and a warning
                  or report issued to alert
                  the user to the need for
                  follow-up action.
              -   record the financial
                  impact of all transactions
                  that affect the availability
                  of funds, such as
                  commitments,
                  liquidations, obligations,,
                  and expenditures?
              -   update all appropriate
                  accounts to ensure that
                  the system always
                  maintains the current
                  status of funds?



Page 32                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Funds management function            Yes/no                  Explanation
                                                   NA
           13.   Use the appropriate
                 calculations for determining
                 funds availability on
                 adjustments to obligations or
                 expenditures based on
                 whether the funds cited are
                 current, expired, or
                 cancelled?

           14.   Check commitment
                 transactions against available
                 funds?

           15.   Check available funds for
                 obligating documents
                 (including amendments to
                 obligating documents
                 resulting in a change to
                 dollar amounts or to the
                 classification structure)?

           16.   Check available funds when
                 the expenditure exceeds the
                 obligating document due to
                 quantity or price variances
                 within tolerances, additional
                 shipping charges, etc.?




Page 33                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Funds management function            Yes/no                   Explanation
                                                   NA

           17.   Adjust available funds
                 balances as reimbursable
                 orders are accepted? In the
                 case of reimbursable orders
                 from the public, an advance
                 must also be received before
                 additional funding authority
                 is recorded.

           18.   Check available funds for
                 commitments and obligations
                 incurred in support of
                 reimbursable agreements?

           19.   Provide the capability to
                 enter commitment documents
                 into the core financial system
                 on-line and from multiple
                 locations, as well as through
                 an interface with other
                 systems?

           20.   Capture, at a minimum:

                 -   requisition number?
                 -   accounting classification
                     structure(s)?
                 -   estimated amount(s)?




Page 34                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Funds management function             Yes/no                  Explanation'
                                                    NA

           21.   Provide for modifications to
                 commitment documents,
                 including ones that change
                 the dollar amount or the
                 accounting classification
                 structure cited? Invoke funds
                 availability editing for the
                 changed amounts?

           22.   Allow for commitment
                 documents to be future-
                 dated, stored, and posted at
                 the appropriate date?

           23.   Close commitment
                 documents under the
                 following circumstances: (a)
                 by the system upon issuance
                 of an obligating document,
                 (b) by the user with
                 appropriate authorization,
                 and (c) as part of the year-
                 end closing?


           24.   Record obligations based on
                 obligating documents and
                 liquidate the related
                 commitments, either partially
                 or fully at the user's request?




Page 35                                                GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Funds management function          Yes/no                   Explanation
                                                 NA

           25.   Record obligations for which
                 there is no related
                 commitment?

           26.   Maintain information related
                 to each obligation document,
                 including amendments? At a
                 minimum, the core financial
                 system must capture:

                 -- obligating document
                    number?
                 - vendor number?
                 - accounting classification
                    structure(s)?
                 -- dollar amount(s)?

           27.   Allow obligation documents
                 to be entered into the core
                 financial system on-line and
                 from multiple locations as
                 well as through an interface
                 with other systems?




Page 36                                             GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Funds management function           Yes/no                  Explanation
                                                  NA
           28.   Allow for transactions
                 creating anticipated
                 obligation documents to be
                 entered early, stored, and
                 posted at the appropriate
                 date in order to aid in
                 distributing workload? If the
                 anticipated obligation does
                 not occur, permit the user to
                 delete the transaction
                 without posting it?

           29. Allow multiple commitments
               to be combined into one
               obligating document and one
               commitment document to be
               split between multiple
               obligating documents?

           30. Provide for properly
               authorized cancellations of
               posted obligating documents?

           31.   Provide on-line access to all
                 obligations by selection
                 criteria, e.g., document
                 number?

           32.   Maintain an on-line history
                 file of closed-out documents
                 for a user-defined period of
                 time?



Page 37                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Funds management function           Yes/no                   Explanation
                                                  NA

           33.   Retain (for audit trail
                 purposes) the original
                 machine-readable records
                 along with all amendments?

           34.   Close obligating documents
                 either (a) by the system
                 automatically upon complete
                 performance/delivery or (b)
                 by the user, with appropriate
                 authorization?

           35. Record various intra-
               governmental acquisition
               types such as a GSA Personal
               Property Center,
                 reimbursable orders, and
                 printing from the
                 Government Printing Office
                 (GPO)?

           36.   Record and maintain
                 contracts and grants so that
                 fiscal year-to-date and
                 inception-to-date information
                 can be presented?


           37.   Record Blanket Purchase
                 Agreements (BPA's) and
                 records of call?




Page 38                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Funds management function            Yes/no   I              Explanation
                                                   NA

           38.   Record delivery orders on
                 contracts?

           39.   Record expenditures related
                 to payments made out of an
                 imprest fund, using third-
                 party drafts, and using
                 government credit cards?

           40.   Record expenditures claimed
                 against advance payments
                 made, such as travel
                 advances, contract advances,
                 and grant payments made in
                 advance?

           41.   Maintain current information
                 on commitments and
                 obligations according to the
                 classification structure on a
                 fund by fund basis?


           42.   Track the use of funds
                 against operating or financial
                 plans?


           43.   Report plan to actual at the
                 level of the operating plans?




Page 39                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Funds management function             Yes/no                  Explanation
                                                    NA

           44.   Summarize, compare, and
                 report the operating plans to
                 the appropriate level of funds
                 control?

           45.   Provide the ability to produce
                 detailed listings and summary
                 reports by the defined level
                 of funds control for those
                 documents that represent
                 commitments, undelivered
                 orders, and expenditures?

           46.   Provide control features that
                 ensure that amounts reflected
                 in the fund control structure
                 agree with the General
                 Ledger account balances at
                 the end of each update cycle?

           47.   Maintain historical data on all
                 commitment, undelivered
                 order, payable, and payment
                 transactions?


           48.   Maintain open documents to
                 show status of commitments,
                 undelivered orders, accruals,
                 and disbursements by
                 document line item?




Page 40                                                GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function          Yes/no                  Explanation
                                                 NA
           Does the system:

           1. Maintain payee information
              that includes data to support
              obligation, accounts payable,
              and disbursement processes?

           2.   Support payments made to
                third parties that act as an
                agent for the payee?

           3.   Maintain information needed
                to support IRS 1099
                reporting, including taxpayer
                identification numbers and
                payee type (e.g., sole
                proprietorship, partnership,
                corporation)? In cases where
                a third party acting as agent
                receives the payment,
                maintain 1099 information for
                the principal party rather
                than the agent?

           4.   Allow multiple payment
                addresses and/or bank
                information for a single
                payee?

           5. Provide search capability for
              payee information?




Page 41                                             GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function         Yes/no                  Explanation
                                                NA

           6.   Produce payee listings based
                on agency defined criteria,
                e.g., payee name and
                number?

           7.   Warehouse and schedule
                payments in accordance with
                applicable regulations, for
                example, OMB Circular
                A-125, the Cash Management
                Improvement Act of 1990, as
                amended, and travel
                regulations?

           8.   Record an accrued liability
                upon receipt and acceptance
                of goods and services and
                properly identify them as
                capital asset, expense,
                prepaid expense, or
                construction?




Page 42                                            GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function            Yes/no                   Explanation
                                                   NA
           9.    Access previously entered
                 information and/or record
                 additional information
                 necessary to determine the
                 due date and amount of
                 vendor payments in
                 accordance with OMB
                 Circular A-125, based on
                 invoices, receiving reports,
                 and contracts or purchase
                 orders? Due date
                 determination should
                 consider special situations
                 such as contract provisions
                 specifying non-standard
                 acceptance periods, laws
                 specifying payment terms for
                 certain commodities such as
                 meat or dairy products,
                 failure to return a defective
                 invoice in a timely fashion,
                 and other situations specified
                 in OMB Circular A-125.

           10.   Split an invoice into multiple
                 payments on the appropriate
                 due dates when items on the
                 invoice have different due
                 dates?




Page 43                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function           Yes/no                  Explanation
                                                  NA

           11.   Record discount terms and
                  determine whether taking the
                  discount is economically
                 justified as defined in the
                 Treasury Financial Manual,
                 Volume I, section 6-8040?

           12.   Record additional shipping
                 and other charges to adjust
                 the payment amount, if
                 payments are authorized?

           13. Adjust the asset or expense
               recorded with the liability if
               the authorized payment
               (based on the invoice) is
               different from the amount
               accrued (based upon receipt
               and acceptance) using
               contract information and any
               increase is within agency
               tolerances? Adjust the
               obligation amount as well
               and edit for funds availability
               to cover increases?




Page 44                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function           Yes/no                  Explanation
                                                  NA

           14.   Update the funds control and
                 budget execution balances to
                 reflect changes in the status
                 of undelivered orders and
                 expended appropriations as
                 well as changes in amounts?
                 Amounts may be different
                 because of changes in prices
                 or other authorized charges.

           15.   Establish payables and make
                 payments on behalf of
                 another agency citing the
                 other agency's funding
                 information?

           16. Allow orders to be reopened
               by authorized staff after final
               payment has been made?

           17. Allow changes to payment
               schedules by authorized staff
               prior to submission to the
               disbursing office?




Page 45                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function             Yes/no                    Explanation
                                                    NA

           18.   Handle credit memoranda for
                 returned goods or other
                 adjustments? The capability
                 must allow applying a credit
                 memorandum to a payment
                 due to the vendor issuing the
                 credit or, if there are pending
                 orders, to a future payment,
                 or, if there are no
                 outstanding payments to the
                 vendor and no pending
                 orders, establish an accounts
                 receivable.

           19.   Reestablish payables for
                 voided checks or checks that
                 have been returned but have
                 not been negotiated; allow
                 for reversing the accounting
                 transaction leading to the
                 disbursement and
                 reestablishing a payable, as
                 appropriate?




Page 46                                                  GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function            Yes/no                  Explanation
                                                   NA

           20.   Record obligations, expenses,
                 assets, etc., associated with
                 payments made through use
                 of imprest funds, third-party
                 drafts, and government credit
                 cards? Establish payables to
                 replenish the imprest fund or
                 pay the financial institution
                 handling the third-party
                 drafts and credit cards?

           21.   Schedule payments of
                 advances, prepaid expenses,
                 loans, grants, etc., with the
                 appropriate accounting
                 entries for each?

           22.   Record expenses, assets, etc.,
                 based upon performance
                 funded by advances, prepaid
                 expenses, and grants and
                 make the appropriate
                 liquidations? Update funds
                 control balances to reflect
                 obligation changes?

           23.   Identify and select payments
                 to be disbursed in a
                 particular payment cycle
                 based on their due dates?
                 Provide the capability for
                 review and certification by an
                 authorized certifying officer?


Page 47                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function             Yes/no                    Explanation
                                                    NA

           24.   Allow specific payments
                 selected for disbursement to
                 be excluded from the
                 payment cycle and held for
                 later payment?

           25.   Compute amounts to be
                 disbursed to include
                 discounts, withholdings,
                 interest, or penalties in
                 accordance with applicable
                 regulations? Generate the
                 appropriate transactions to
                 reflect the above deductions
                 and additions?

           26.   Include on each payment
                 relevant identification
                 information (e.g., contract
                 number, invoice number, and
                 interest penalty amount and
                 calculations)?

           27.   Collect information on
                 discounts taken, discounts
                 lost, and interest penalties to
                 comply with applicable
                 prompt pay reporting
                 requirements?




Page 48                                                  GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function           Yes/no                    Explanation
                                                  NA

           28.   Calculate totals by
                 appropriation symbol for
                 inclusion on the payment
                 schedule, except unidentified
                 appropriations?

           29.   Provide for various forms of
                 payment to be used, i.e.,
                 check or electronic transfer
                 of funds (e.g., automated
                 clearing house (ACH), wire)?
                 The requirements related to
                 these payments are:

                 -   consolidate multiple
                     payments to a single
                     payee up to the
                     prescribed limitation in
                     order for the disbursing
                     office to produce one
                     check and itemize all
                     payments covered by the
                     one check. Allow for
                     separate checks to a
                     payee in specific
                     instances where needed.




Page 49                                                GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function          Yes/no                  Explanation
                                                 NA

                 -- allow a payment to be
                    removed from the
                    automated scheduling
                    stream and to be
                    scheduled as a manual
                    payment.
                 -- provide the capability to
                    schedule and make
                    payments in various forms
                    (e.g., ACH, SF-1166) as
                    required by an agency's
                    disbursing office(s)
                    including physical media
                    (e.g., tape, electronic
                    transfer).

           30.   Prepare reports to Treasury
                 on disbursements made by an
                 agency with its own
                 disbursing authority?




Page 50                                             GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function            Yes/no                   Explanation
                                                   NA
           31.   Process transactions resulting
                 from payments made using
                 other systems, such as
                 payroll? Record
                 disbursements, assets,
                 expenses, obligations, or
                 other accounts as
                 appropriate, but do not
                 schedule a payment to be
                 made by the core financial
                 system, since the payment
                 has already been
                 accomplished by the other
                 system?

           32.   Record disbursements made
                 through Online Payment and
                 Collection system (OPAC) by
                 another agency against the
                 agency's funds?

           33.   Record payments made by
                 another entity, such as a
                 finance center, on behalf of
                 the agency using agency
                 funds?




Page 51                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function         Yes/no                    Explanation
                                                NA

           34. Provide information about
               each payment to reflect the
               stage of the scheduling
               process that the payment has
               reached and the date each
               step was reached:

                 -   payment scheduled?
                 -   schedule sent to
                     appropriate disbursing
                     office?
                 -   payment issued by
                     appropriate disbursing
                     office?

           35. Provide for the comparison
               of the agency's payment
               schedule and disbursing
               office's accomplished
               payment schedule?

           36.   Update the agency's records
                 when payment information is
                 received from disbursing
                 office to include: the paid
                 schedule number, check
                 numbers, and date and
                 amount of payment?




Page 52                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Payment management function            Yes/no                    Explanation
                                                   NA

           37. Maintain payment history of
               every payment by the core
               financial system authorizing
               document number, payment
               schedule number, payment
               date, invoice number, vendor
               number, and appropriation
               charged?

           38.   Provide on-line access to
                 vendor and payment
                 information?

           39. Provide on-line access to
               open documents based on
               agency selection criteria, e.g.,
               document number?

           40.   Produce IRS 1099s?

           41.   Produce the SF-224?

           42.   Produce the SF-1219 and SF-
                 1220?

           43.   Produce supporting
                 information needed to
                 prepare the prompt pay
                 report in accordance with
                 requirements in OMB
                 Circular A-125?


Page 53                                                 GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


            Receipt management function          Yes/no                  Explanation
                                                  NA

           Does the system:

           1. Support the calculation and
              generation of customer bills
              based upon billing source,
              event and/or time period, and
              type of claim in accordance
              with agency program
              requirements? Bases used for
              billing may include, but are
              not limited to:

                -   percentage of
                    reimbursable obligations,
                    accrued expenditures, or
                    costs using data recorded
                    by the cost accumulation
                    function;
                -   fee schedules for goods or
                    services provided;
                -   duplicate payments;
                -   erroneous payments; and
                -   payment schedules or
                    other agreements with
                    other entities

           2.   Record the establishment of
                receivables along with the
                corresponding revenues,
                expenditure reductions, or
                other appropriate offsets?




Page 54                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Receipt management function           Yes/no                  Explanation
                                                  NA

           3.   Support the establishment
                and tracking of receivables to
                be paid under installment
                plans, including plans for
                which payments have been
                rescheduled?

           4.   Print bills using different
                methods to accommodate the
                generation of standard forms
                such as SF-1080s or SF -
                1081s and turnaround
                documents to be used as a
                remittance advice?

           5.   Prepare and transmit billing
                data to the Online Payment
                and Collection (OPAC)
                system operated by the
                Treasury Financial
                Management Service to
                obtain funds from other
                federal agencies in
                accordance with interagency
                agreements? Provide
                supporting data for OPAC
                transactions to agencies
                billed that can be used by
                them to verify the OPAC
                charges?




Page 55                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


           Receipt management function            Yes/no                  Explanation
                                                   NA

           6.    Allow transactions related to
                 manually prepared bills to be
                 entered by authorized
                 personnel with proper
                 internal control compliance?

           7.    Record adjustments to bills
                 and post to customer
                 accounts?

           8.    Date the bills with the system
                 generated date or with the
                 date supplied by an
                 authorized user?

           9.    Print statements as well as
                 bills?

           10.   Accept transactions from
                 other systems in a standard
                 format for entry into the core
                 financial system?

           11.   Maintain detailed information
                 by account (e.g., individual,
                 employee, private sector
                 organization, state or local
                 government, or other federal
                 agency) sufficient to provide
                 adequate audit trails and to
                 support billing and research
                 activities?


Page 56                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


            Receipt management function           Yes/no                  Explanation
                                                   NA

           12.   Maintain accounts for
                 reimbursable orders and
                 identify government and
                 nongovernment accounts?

           13.   Update each account when
                 billing documents are
                 generated and collections are
                 received?


           14.   Provide the ability to add,
                 modify, or delete
                 nonfinancial account data by
                 authorized personnel?

           15.   Maintain individual
                 receivables and references to
                 appropriate supporting
                 documentation?


           16.   Provide on-line query
                 capability to receivable and
                 account information?


           17.   Provide information, on a
                 summary basis and on
                 individual receivables, on the
                 age of receivables to allow
                 for adequate management
                 and prioritization of
                 collection activities?



Page 57                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


            Receipt management function           Yes/no                   Explanation
                                                   NA

           18.   Provide for the calculation
                 and assessment of interest,
                 administrative charges, and
                 penalty charges on overdue
                 receivables? Allow for the
                 waiver of these charges with
                 appropriate authority?

           19.   Identify and report
                 receivables that meet
                 predetermined criteria for
                 bad debt provisions or write-
                 off?

           20.   Maintain data for receivables
                 referred to other federal
                 agencies and/or outside
                 organizations for collections?

           21.   Record the write-off of
                 delinquent or uncollectible
                 receivables and maintain data
                 to monitor closed accounts?

           22.   Produce dunning (collection)
                 letters for overdue
                 receivables in accordance
                 with Treasury requirements
                 and existing legislation?




Page 58                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


            Receipt management function            Yes/no                    Explanation
                                                    NA

           23.   Provide the user the ability to
                 customize the dunning
                 process parameters and
                 dunning letter text?

           24.   Provide information to allow
                 either manual or automated
                 reporting of delinquent
                 accounts to commercial
                 credit bureaus and referral to
                 collection agencies or other
                 appropriate governmental
                 organizations?

           25.   Produce IRS 1099s in the
                 amounts of debts forgiven?

           26.   Maintain a history of billings
                 and receipts for each
                 receivable and account in
                 accordance with agency
                 requirements?

           27.   Match receipts to account
                 number or bill number and
                 apply to appropriate
                 receivable(s)?

           28.   Provide the ability to apply
                 receipts to more than one
                 receivable?



Page 59                                                  GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


            Receipt management function           Yes/no                   Explanation
                                                   NA
           29. Update receivable balances
               on a document-by-document
               basis, classifying and posting
               against principal, interest,
               fees, etc., as appropriate?'

           30.   Identify receivables that have
                 been reduced by some means
                 other than cash collections,
                 such as adjustments?

           31.   Provide for reestablishment
                 of a receivable for checks
                 returned due to insufficient
                 funds?

           32.   Record complete and partial
                 receipts according to the
                 Federal Claims Collection Act
                 of 1966, as amended, and
                 other applicable laws and
                 regulations?

           33.   Record revenues, expenditure
                 reductions, or other
                 appropriate offsets associated
                 with collections for which no
                 receivable was previously
                 established?




Page 60                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


            Receipt management function           Yes/no                    Explanation
                                                   NA

           34.   Track deposits and related
                 debit vouchers for
                 reconciliation to deposit
                 confirmation information
                 provided by Treasury or the
                 banking system?

           35.   Provide for the processing of
                 cash or credit card receipts?

           36.   Provide information to allow
                 for offset of funds due to
                 delinquent indebtedness
                 through appropriate means,
                 such as administrative offset,
                 federal employee salary
                 offset, and income tax refund
                 offset?




Page 61                                                 GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


                Cost management function          1
                                                  Yes/no
                                                      NA
                                                                            Explanation


           Does the system:

           1.    Use the accrual basis of
                 accounting when recognizing
                 costs? The cost of goods and
                 services used, consumed,
                 given away, lost, or destroyed
                 must be recognized within
                 the period of time the event
                 occurred, regardless of when
                 they were ordered, received,
                 or paid for. Similarly,
                 revenues must be recognized
                 when earned.

           2.    Reduce asset balances such
                 as inventories and prepaid
                 expenses as they are used
                 and expensed?

           3.    Use the agency's accounting
                 classification structure to
                 identify information such as
                 fund, program, organization,
                 project, and object class to
                 support the cost
                 accumulation and distribution
                 processes?




Page 62                                                GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


                Cost management function           Yes/no                    Explanation
                                                    NA

           4.    Provide support for the fees,
                 royalties, rents, and other
                 charges imposed by the
                 agency for services and
                 things of value that it
                 provides? Sufficient
                 information must be
                 accumulated to support Chief
                 Financial Officer (CFO)
                 recommendations made
                 during biennial reviews on
                 revising the charges to reflect
                 costs incurred by the agency
                 in providing those services
                 and things of value.

           5. Identify all costs incurred by
              the agency in support of
              activities of revolving funds,
              trust funds, or commercial
              functions, including the
              applicable portions of the
              related salaries and expense
              accounts identified with
              those activities?




Page 63                                                  GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


                Cost management function          Yes/no                  Explanation
                                                   NA
           6.    Provide for a variety of
                 information to support the
                 decision-making process, the
                 management of the agency,
                 and external reporting? Th1is
                 will include:

                 -  cost reports to be utilized
                    in the analysis of
                    programmatic activities.
                 - supporting schedules and
                    operating statements in
                    support of financial
                    statement preparation and
                    audit.
                 - meaningful cost
                    information needed to
                    support performance
                    measures.
                 - ability to provide cost
                    information directly to
                    other systems in the
                    agency requiring this data.
                 -- ability to receive cost
                    information directly from
                    the Managerial Cost
                    Accounting System for
                    reporting and analysis.




Page 64                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Cost management function          Yes/no                  Explanation
                                                NA
               -- cost information for
                  comparison to other
                  program data to
                  determine compliance
                  with planned budgeted
                  activities and effective
                  utilization of available
                  budgetary resources.
               -- support of the billing
                  process by providing cost
                  information to the
                  receivable function for
                  producing bills.

           7. Provide for identifying costs,
              based on the accounting
              classification structure,
              including the ability to:

               -- identify and record direct
                  costs incurred, including
                  input on costs from
                  feeder systems, such as
                  inventory, travel and
                  payroll?




Page 65                                            GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


             Cost management function           Yes/no                    Explanation
                                                 NA

              -   allocate indirect costs to
                  interim and final cost
                  objects using a method
                  consistent with agency
                  cost accounting
                  standards? The preferred
                  method for assigning
                  indirect costs is one that
                  best provides for a
                  causal/beneficial
                  relationship between the
                  costs being distributed
                  and the cost object
                  receiving the cost.
                  Indirect cost allocation
                  may be based on total
                  cost incurred, direct labor
                  hours used, square
                  footage, metered usage, or
                  any other reasonable
                  basis.
                  allow for multilevel
                  allocation and
                  reallocation?
               -- support variance analysis,
                  adjustment of rates and
                  disposition of variance by
                  performing periodic
                  allocations to adjust cost
                  based on estimated rates
                  to the actual costs
                  incurred for the period?




Page 66                                               GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
          Core Financial System Requirements


                Cost management function         Yes/no                   Explanation
                                                  NA

           8.    Provide the capability to
                 distribute costs to cost
                 objects regardless of how
                 they have originally been
                 posted to the system (e.g.,
                 for financial statement
                 presentation)?

           9.    Provide an audit trail that
                 traces the transaction from
                 the original cost pool to the
                 final cost object?




Page 67                                              GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


            Reporting function              Yes/no                  Explanation
                                             NA

 Does the system:

  1. Allow for the information
     contained in the system to be
     queried to present specific!
     detailed data as requested'?

  2.      Present information resulting
          from system queries to be
          formatted to facilitate the
          understanding of the
          information by non-technical
          users and unformatted for
          more technically proficient
          users?

  3.      Provide for the production of
          formatted reports by
          personnel accessing the
          system? The system must
          allow for the reformatting of
          reports to present different
          sorts of the information, the
          presentation of only specific
          information in the format
          selected, the summarization
          of data, and the modification
          of report formats to tailor the
          reports to the specific
          requirements of the user.




Page 68                                         GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


           Reporting function            Yes/no                    Explanation
                                          NA

  4.   Allow users to design reports
       and extract files for their
       specific requirements and to
       perform table look-ups and
       expansion of codes when
       needed to clarify the
       information contained within
       the reports?

  5. Facilitate the analysis of
     information contained in the
     system by allowing analysts
     to obtain report information
     and the results of system
     queries in data files that can
     be transferred to other
     applications or analytical
     tools?

  6.      Provide for easy access to
          historical files for
          comparative, analytical, and
          trend information?

  7. Use financial data that can be
     traced directly to SGL
     accounts to produce reports
     providing financial
     information, whether used
     internally or externally?




Page 69                                        GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


            Reporting function             Yes/no                  Explanation
                                            NA
  8.      Maintain accounting data to
          permit reporting in
          accordance with accounting
          standards recommended by
          the Federal Accounting
          Standards Advisory Board
          (FASAB) and issued by the
          Director of OMB and
          reporting requirements issued
          by the Director of OMB and
          the Secretary of the Treasury
          (see appendix B of the
          source document)?

  9. Provide summarized data
     electronically to systems
     used by the agency for
     decision support and
     financial statement
     preparation?

 10.      Provide data in the format
          required, including electronic
          formats, to central agency
          systems used for summary
          financial reporting?

 11.      Report events and
          transactions according to the
          accounting classification
          structure and within a given
          accounting period?



Page 70                                        GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


           Reporting function           Yes/no                  Explanation
                                         NA

 12.   Maintain the financial
       information required for
       program performance,
       financial performance, and
       financial management
       performance measures and
       needed for budgeting,
       program management, and
       financial statement
       presentation?

 13.      Produce, distribute, and
          provide access to formatted
          reports defined by agency
          management for the specific
          requirements of the agency?

  14. Provide supporting
      information needed to
      monitor the overall operation
      of the system to determine if
      operations are on schedule,
      ensure that all necessary
      operating steps have been
      completed successfully, and
      alert the system manager to
      malfunctions on a timely
      basis?




Page 71                                     GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)
Core Financial System Requirements


            Reporting function              Yes/no                  Explanation
                                             NA

 15.      Provide system managers
          with sufficient information to
          determine the functions and
          operations performed by
          specific users and reportsl
          generated or accessed?


 16.      Perform and report the result
          of data integrity verifications
          such as reconciliations
          between reports produced
          and data sets within the
          system and the results of
          validity, combination, and
          balancing?


 17.      Provide for sufficient audit
          trails to trace data errors and
          the result of various
          operations of the system?




(922241)




Page 72                                         GAO/AIMD-98-21.2.2 - Proposed Core Checklist (12/97)