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May 20, 1993
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES
SUBJECT: Financial Accounting Principles and Standards
Purpose. This Circular establishes the policies and procedures
for approving and publishing financial accounting principles and standards. It
also establishes the policies to be followed by Executive Branch agencies and
OMB in seeking and providing interpretations and other advice related to the
Background. The Secretary of the Treasury, the Director of the
Office of Management and Budget (OMB), and the Comptroller General of the
United States ("the Principals") established the Federal Accounting Standards
Advisory Board (FASAB) in October 1990 by a memorandum of understanding (MOU).
The role of FASAB is to deliberate upon and make recommendations to the
Principals on accounting principles and standards for the Federal Government
and its agencies. The MOU states that if the Principals agree with the
recommendations, the Comptroller General and the Director of OMB will publish
the accounting principles and standards.
Coverage. The provisions of this Circular apply to all Executive
Branch departments and agencies.
Definitions. As used in this Circular:
a. Executive agency ("agency") means any executive branch
department, independent commission, board, bureau, office, agency, or other
establishment of the Federal Government, including independent regulatory
commissions and boards. It does not include federally-owned or controlled
corporations that are preparing financial statements in accordance with
generally accepted accounting principles promulgated by the Financial
Accounting Standards Board, or the legislative or judicial branches of the
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).
a. FASAB Recommendations. The Director of OMB will review each
statement of accounting principles, standards, or concepts recommended by FASAB
and decide upon the appropriateness of the statement and its desirability for
the Federal Government. If a recommended statement of accounting principles or
standards is agreed to by the Director, the Secretary of the Treasury, and the
Comptroller General, the Director will issue a SFFAS, signed by the Director.
Each SFFAS, or a notice of its availability, will be published in the
Federal Register and distributed throughout the Federal
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
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
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
Inquiries. For information concerning this Circular, contact the
Financial Standards and Reporting Branch, OFFM, telephone 202-395-3993.