Sarbanes-Oxley for feds arrives

Office of Management and Budget officials released late December a document detailing a set of tighter financial controls federal agencies must implement by the start of the next fiscal year.

The new regulations, found in a revised version of OMB Circular A-123, parallel some of the private-sector internal management strictures created by the Sarbanes-Oxley Act of 2002. The changes intend to strengthen the credibility of the annual agency management assessments of financial status the government is required to produce under the Federal Managers' Financial Integrity Act. Those assessments will now be due 45 days after the end of the fiscal year, the revised circular states.

Compliance with the circular's requirements will be mandatory starting October1; the new regulations apply to agencies also subject to the Chief Financial Officers Act of 1990. The new rules govern "everything that generates entries into your financial statement," OMB Controller Linda Springer told Federal Computer Week shortly before the circular was released.

The new internal controls should be "an integral part of the entire cycle of planning, budgeting, management, accounting, and auditing," the revised circular states. They should not be "an isolated management tool," the circular adds.

A group of government financial officers, auditors and OMB officials first proposed the now-mandatory regulations by comparing government controls with section 404 of the Sarbanes-Oxley Act. Committee members decided that if more exacting controls are a good thing for companies it made sense to parallel them on the federal side, said Elliot Lewis, assistant inspector general at the Labor Department.