TO THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES
SUBJECT: Financial Accounting Principles and Standards
b. Accounting standards or principles are those conventions, rules, and procedures necessary to define acceptable accounting practice at a particular time. Accounting standards include broad guidelines of general application and may also include detailed practices and procedures.
c. Interpretation of Federal Financial Accounting Standards is a document of narrow scope that provides clarifications of original meaning, additional definitions, or other guidance pertaining to an existing Statement of Federal Financial Accounting Standards (SFFAS).
b. Status of the SFFASs. SFFASs shall be considered generally accepted accounting principles (GAAP) for Federal agencies. Agencies shall apply the SFFASs in preparing financial statements in accordance with the requirements of the Chief Financial Officers Act of 1990. Auditors shall consider SFFASs as authoritative references when auditing financial statements.
c. Interpretations of the SFFASs. Agencies and individuals desiring guidance relative to the standards shall request such guidance from OMB, to the attention of the Office of Federal Financial Management. OMB will respond to the request by providing technical assistance, unless it decides that the response should be an Interpretation of Federal Financial Accounting Standards. In that event, OMB will provide written copies of the request to the Comptroller General and the Secretary of the Treasury; examine, as appropriate, applicable literature and consult with knowledgeable persons; draft an Interpretation of Federal Financial Accounting Standards; consistent with the intent of the MOU, obtain the consensus of Treasury and GAO on the interpretation; and publish the Interpretation of Federal Financial Accounting Standards.
Interpretations of Federal Financial Accounting Standards will be signed by the Director or Deputy Director for Management, acting in the capacity of chief official responsible for financial management in the United States Government. Also, the Comptroller General and Secretary of the Treasury may publish a response.
d. Applicability to Budget Execution. The SFFASs shall have no effect on the manner in which agencies budget for, monitor and control the expenditure of budgetary resources. Those requirements are defined in OMB Circulars A-11 and A-34 and other OMB documents.
e. Other Directives. OMB may, from time to time, issue other instructions to the agencies regarding accounting and/or financial reporting.
Leon E. Panetta
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