North Carolina Asset Protection News

Integrated Financial Management Systems

Financial management systems must be designed with effective and efficient interrelationships between software, hardware, personnel, procedures, controls, and data contained within the systems.  To be integrated, financial management systems must have (i) standard data classifications (definition and formats) established and used for recording financial events; (ii) common processes used for processing similar kinds of transactions; (iii) internal controls over data entry, transaction processing, and reporting applied consistently; and (iv) a system design that eliminates unnecessary duplication of transaction entry.

The financial management systems policy stated in OMB Circular A-127 Financial Management Systems, requires that each agency establish and maintain a single, integrated financial management system.  Without a single, integrated financial management system to ensure timely and accurate financial data, poor policy decisions are more likely due to inaccurate or untimely information; managers are less likely to be able to report accurately to the President, the Congress, and the public on government operations in a timely manner; scarce resources are more likely to be directed toward the collection of information rather than to delivery of the intended programs; and modifications to financial management systems necessary to keep pace with rapidly changing user requirements cannot be coordinated and managed properly.  The basic requirements for a single, integrated financial management system are outlined in Section 7 of OMB Circular A-127.

Having a single, integrated financial management system does not necessarily mean having only one software application for each agency covering all financial management system needs.  Rather, a single, integrated financial management system is a unified set of financial systems and the financial portions of mixed systems encompassing the software, hardware, personnel, processes (manual and automated), procedures, controls, and data necessary to carry out financial management functions, manage financial operations of the agency, and report on the agencys financial status to central agencies, Congress, and the public.  Unified means that the systems are planned for and managed together, using common data elements, operated in an integrated fashion, and linked together electronically in an efficient and effective manner to provide agencywide financial system support necessary to carry out the agencys mission and support the agencys financial management needs.

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	Did You Know?
	LLC envelope offers substantial advantages over other entities LLC envelope offers substantial advantages over other entities, there are at least five common circumstances when a tax regime other than an S corporation may be more appropriate: 1) the business cannot qualify as an S corporation; 2) the one-class-of-stock limitation for S corporations cannot accommodate certain business terms agreed to by the parties; 3) the business involves appreciating assets (i.e., assets that have, or are likely to have, a fair market value in excess of basis), such as real estate; 4) the business has considerable debt and the owners anticipate significant losses; and 5) the wage-reduction tax strategy explained previously will not benefit the owners because either the primary income of the business is excluded from self-employment tax or, in the case of newly formed companies, one or more employee-owners already receive aggregate wages or self-employment income from an existing business in an amount which approaches the taxable wage base limitation