circular no a136 revised overview 1 purpose: this circular establishes a central point of reference for all federal financial reporting guidance for executive branch departments agencies and entities required to submit audited financial statements interim financial statements and performance and accountability reports (par) under the chief financial officers act of 1990 (cfo act) (pub l no 101 576) the accountability of tax dollars act of 2002 (atda) (pub l no 107 289) and annual management reports under the government corporations control act (31 usc  9101 et seq) this circular is available on the office of management and budget (omb) home page on the internet which is currently located at http:wwwwhitehousegovomb the overview of this circular consists of sections 2 through 5 section 2 provides background information on federal financial reporting; section 3 discusses entities to which this circular applies; section 4 states the effective date of this circular; section 5 provides federal financial reporting policy and references the relevant bulletin and memoranda for which this specific guidance supersedes; and section 6 provides contact information for inquiries part a of this circular incorporates and updates bulletin 0109 form and content of agency financial statements which provides guidance and instruction to those covered departments agencies and other entities on preparing pars guidance on preparing the financial report of the united states government (fr) is located in part b of this circular 2 background: executive branch agencies must generally prepare and submit audited financial statements to the omb the cfo act as amended by the government management reform act of 1994 (gmra) (pub l no 103 356) requires the major 24 agencies of the federal government to prepare and submit audited financial statements for those federal entities not covered by the cfo act the atda requires those federal agencies and entities to also prepare and submit audited financial statements to omb and the congress and the government corporations control act requires government corporations to submit annual management reports to omb and the congress under the reports consolidation act of 2000 (pub l no 106531) agencies are permitted to submit combined reports in implementing statutory requirements for financial and performance management reporting to improve the efficiency of executive branch performance these reports are combined in the par which consists of the annual performance report required by the government performance and results act (gpra) (pub l no 103 62) with annual financial statements and other reports such as agencies assurances on internal control accountability reports by agency heads and inspector generals assessments of the agencies most serious management and performance challenges pars provide financial and performance information that enables the president the congress and the public to assess the performance of an agency relative to its mission and to demonstrate accountability the department of the treasury in coordination with omb prepares and submits the fr as required by gmra the fr presents and discusses the governments financial condition and operations for the fiscal year and includes consolidated financial statements and related disclosures as well as reports on stewardship responsibilities important financial management issues are also discussed in managements discussion and analysis section of the fr 3 coverage: the provisions of this circular apply to each executive branch department agency and other entity (entity) that is required to prepare audited financial statements under the cfo act gmra the atda and the government corporations control act except any corporation that is required to register a class of its equity securities with the securities and exchange commission (sec) 4 effective: the provisions of this circular are effective in their entirety for the preparation of financial statements for the end of fiscal year (fy) 2005 unless otherwise specified earlier implementation is permitted unless otherwise specified 5 policy for federal financial statements and pars: a general the purpose of accelerated reporting is to better ensure that timely and accurate financial and performance information is made available to federal agency managers as soon as possible after the end of the fiscal year and throughout the year b preparation agencies shall prepare pars in accordance with form and content of the performance and accountability report located in part a of this circular which supersedes all other bulletins and memoranda (see section 4e) providing guidance on preparation of pars except for omb circular no a11 preparation submission and execution of the budget as amended located at http:wwwwhitehousegovombcircularsindexhtml c submission date i pars agencies shall submit their pars to omb and the congress1 no later than 45 days after the end of the fiscal year (for those agencies with a september 30 fiscal year end the due date is november 15) this 1copies of the reports must be provided to the speaker of the house of representatives the president and the president pro tempore of the senate the chairmen and ranking minority member of the senate committee on homeland security and government affairs and the house committee on government reform and the chairmen and ranking minority member of the budget committees relevant authorization and oversight committees and appropriation subcommittees circular makes this 45day deadline a permanent annual requirement for all executive agencies regardless of fiscal year agencies shall submit a draft of the par to ombs office of federal financial management (offm) and the appropriate resource management office (rmo) ten working days before agencies issue the final par and should include all sections of the par ii annual management reports effective fy 2006 government corporations shall submit their annual management reports as described in government corporations control act to omb and the congress¹ no later than 45 days after the end of the fiscal year (for those corporations with a september 30 fiscal year end the due date is november 15) this circular makes this 45day deadline a permanent annual requirement for all government corporations regardless of fiscal year government corporations shall submit a draft of the annual management report to ombs offm and the appropriate rmo ten working days before government corporations issue the final annual management report and should include all sections of the management report government corporations that present their financial statements in accordance with the financial accounting standards board (fasb) are also required to report information to the department of the treasury to support government wide financial statements as specified in part b of this circular any corporation that is required to register a class of its equity securities with the sec is excluded from the omb accelerated due dates iii financial report of the united states government the us treasury is required to issue the financial report of the united states government no later than one month after the 45day deadline as noted in (i) and (ii) above (for a september 30 fiscal year end this due date is december 15) this circular makes this deadline a permanent annual requirement iv interim financial statements agencies shall submit unaudited interim financial statements to omb 21 days after the end of each of the first three quarters of the fiscal year agencies should include managements explanation of significant variances in types or amounts of assets liabilities costs revenues obligations and outlays along with the submitted statements this circular makes this deadline a permanent quarterly requirement d submission format and contact information the draft and final reports (ie pars annual management reports etc) shall be submitted electronically in a pdf format or specified website location (preferred) offices of the chief financial officer should submit the final pars (and annual management reports for government corporations) to ombs offm and appropriate rmo department of the treasury (main) financial management service (fms) and the government accountability office (gao) using the electronic addresses provided in attachment 1 to be considered final the electronic files must include all required signatures in addition four (4) hard copies of the par should be provided to omb as soon as they are available e relevant omb memoranda and bulletin i this circular reiterates and incorporates the accelerated reporting requirements specified in the following memoranda: external reporting changes (december 21 2001) located at http:wwwwhitehousegovombfinancialyearendreporting2001pdf and memorandum: requirements for accountability of tax dollars act (december 6 2002) located at http:wwwwhitehousegovombfinancialaccountablityoftaxdollarspdf ii in addition this circular incorporates updates to accelerated and other reporting requirements for fy 2004 that were provided in memorandum m0420 fy 2004 performance and accountability reports and reporting requirements for the financial report of the united states government (july 22 2004) located at http:wwwwhitehousegovombmemorandafy04m0420pdf iii this circular also incorporates reporting requirements from fy 2002 that were provided in memorandum fy 2002 financial and performance reporting dated october 18 2002 iv this circular incorporates and updates bulletin 0109 form and content of agency financial statements revised september 25 2001 6 inquiries: for information concerning this circular you may contact the financial standards and grants branch office of federal financial management telephone 202 3953993 7 copies: copies of this circular may be obtained from http:wwwombgov attachment 1 contacts for submission of pars and annual management reports office of management and budget office of management and budget new executive office building new executive office building office of federal financial management resource management office 725 17th street nw suite 6025 725 17th street nw washington dc 20503 washington dc 20503 attn: offm (office number email email: davidzavadastatementsombeopgov telephone and fax should be telephone: (202) 3953993 obtained from respective rmo) fax: (202) 3953952 department of the treasury department of treasury (main) financial management services room 509b 1500 pennsylvania ave nw 3700 eastwest highway room 2064 hyattsville md 20782 washington dc 20220 attn: faye mccreary attn: ann davis email: financialreportsfmstreasgov email: anndavisdotreasgov telephone: (202) 8749910 telephone: (202) 6221028 fax: (202) 8749907 fax: (202) 6221511 government accountability office 441 g street nw room 5v09 washington dc 20548 attn: lynda downing email: uscfsgaogov telephone: (202) 5129168 fax: (202) 5129596 part a form and content of the performance and accountability report (par) part a table of contents title secex no page section 1 guide to part a form and content of the par what is the purpose of part a what is the relationship between part a and the hierarchy of accounting principles for federal entities when is part a effective to which entities does part a apply  what should the annual financial statement include  what elements of the annual financial statements are required to be presented on a comparative basis what steps should agencies take to ensure consistency between information presented in the statement of budgetary resources and the budget of the united states government why does the consolidated statement of financing present amounts and balances on a consolidated and a combined basis should all of the lines illustrated in the statement of budgetary resources and the statement of financing be presented in the agencys statements what is required for a performance and accountability report  in managements discussion and analysis may agencies reference the performance section of the report rather than incorporating key performance measures into the mda 11 12 13 14 15 16 17 18 19 110 111 1 2 3 3 4 5 5 6 6 6 7 analysis of significant changes 8 section 2 general instructions for the annual financial statements format of the par agency head (secretary) message part 1: managements discussion analysis part 2: performance section part 3: financial section a cfo letter b auditor report 21 22 22a 22b 22c 22d 12 14 14 14 15 15 c financial statements and notes section 3 balance sheet general illustrative statement consolidated balance sheet assets liabilities net position 31 32 33 34 35 16 17 19 23 27 section 4 statement of net cost general illustrative statement consolidated statement of net cost program costs earned revenues net program costs costs not assigned to programs earned revenues not attributed to programs net cost of operations 41 42 43 44 45 46 47 48 28 30 30 31 32 32 32 32 section 5 statement of changes in net position general illustrative statement consolidated statement of changes in net position earmarked funds net position beginning balances budgetary financing sources other financing sources net cost of operations net change net position ending balances 51 52 53 54 55 56 57 58 59 33 34 36 36 39 40 41 41 41 section 6 statement of budgetary resources general combined vs consolidated statement format of the statement of budgetary resources illustrative statement combined statement of budgetary resources budgetary resources status of budgetary resources  relationship of obligations to outlays 61 62 63 64 65 66 67 42 43 43 45 49 49 49 section 7 statement of financing general illustrative statement consolidated statement of financing resources used to finance activities resources used to finance items not part of the net cost of operations components requiring or generating resources in future periods components not requiring or generating resources net cost of operations 71 72 73 74 75 76 77 53 54 55 56 57 58 59 section 8 statement of custodial activity general illustrative statement statement of custodial activity sources of collections disposition of collections net custodial activity 81 82 83 84 85 60 61 62 62 62 section 9 notes to the financial statements (part 1 of 2) note 1 significant accounting policies note disclosures related to the balance sheet note 2 nonentity assets note 3 fund balance with treasury note 4 cash and other monetary assets note 5 investments format of note note 6 accounts receivable net note 7 taxes receivable net note 8 direct loans and loan guarantees nonfederal borrowers format of note note 9 inventory and related property net  note 10 general property plant and equipment net note 11 other assets note 12 liabilities not covered by budgetary resources note 13 debt format of note 91 92 93 94 95 ex 9a 96 97 98 ex 9b 99 910 911 912 913 ex 9c 63 64 65 66 68 68 69 69 70 70 84 86 88 88 89 89 note 14 federal employee and veteran benefits note 15 environmental and disposal liabilities note 16 other liabilities format of note note 17 leases note 18 life insurance liabilities note 19 commitments and contingencies note 20 earmarked funds (effective fy 2006) 914 915 916 ex 9d 917 918 919 920 90 91 91 91 93 95 95 96 section 9 notes to the financial statements (part 2 of 2) note disclosures related to the statement of net cost note 21 intragovernmental costs and exchange revenue format of note note 22 suborganization program costsprogram costs by segment format of note note 23 cost of stewardship ppe note 24 stewardship assets through transfer donation or devise note 25 exchange revenues note disclosures related to the statement of changes in net position note 26 cleanup cost adjustments 921 ex 9e 922 ex 9f 923 924 925 926 98 98 99 99 101 101 101 101 section 9 notes to the financial statements (part 2 of 2 continued) note disclosures related to the statement of budgetary resources note 27 apportionment categories of obligations incurred note 28 available borrowingcontract authority end of period note 29 terms of borrowing authority used note 30 adjustments to beginning balance of budgetary resources note 31 permanent indefinite appropriations note 32 legal arrangements affecting use of unobligated balances note 33 explanation of differences between the statement of budgetary resources and the budget of the united states government note 34 undelivered orders at the end of the period note 35 contributed capital note disclosures related to the statement of financing note 36 explanation of relationship between liabilities not covered by budgetary resources on the balance sheet and the change in components requiring or generating resources in future periods note 37 description of transfers that appear as a reconciling item on the statement of financing note disclosures related to the statement of custodial activity note 38 incidental custodial collections note 39 nonexchange revenues note disclosures not related to a specific statement 940 note 40 dedicated collections 941 note 41 restatements 927 928 929 930 931 932 933 934 935 936 937 938 939 940 941 101 102 102 102 102 102 102 103 103 103 103 104 104 104 105 section 10 required supplementary stewardship information general stewardship property plant and equipment heritage assets stewardship land summary of minimum reporting requirements stewardship investments nonfederal physical property human capital research and development summary of minimum stewardship reporting requirements stewardship responsibilities 101 102 102a 102b 102c 103 103a 103b 103c 103d 104 106 107 107 108 108 109 109 109 110 111 112 section 11 required supplementary information managements discussion analysis purpose responsibility scope mission and organizational structure performance goals objectives and results analysis of entitys financial statements and stewardship information analysis of entitys systems controls and legal compliance possible future effects of existing events and conditions other management initiative information and issues limitations of the financial statements deferred maintenance intragovernmental amounts statement of budgetary resources statement of custodial activity segment information risk assumed information 111 111a 111b 111c 111d 111e 111f 111g 111h 111i 111j 112 113 114 115 116 117 114 114 115 115 115 115 116 117 118 118 118 119 119 122 122 122 123 section 12 other accompanying information performance measures revenue foregone tax burdentax gap tax expenditures with directed flow of resources management challenges ipia reporting details other agencyspecific statutorily required reports 121 122 123 124 125 126 127 124 124 124 125 125 125 130 appendix list of statements of federal financial accounting concepts and standards interpretations technical bulletins and technical releases a 131 section 1 guide to part a form and content of the par table of contents 11 what is the purpose of part a 12 what is the relationship between part a and the hierarchy of accounting principles for federal entities 13 when is part a effective 14 to which entity does part a apply 15 what should the annual financial statement include 16 what elements of the annual financial statements are required to be presented on a comparative basis 17 what steps should agencies take to ensure consistency between information presented in the statement of budgetary resources and the budget of the united states government 18 why does the consolidated statement of financing present amounts and balances on a consolidated and a combined basis 19 should all of the lines illustrated in the statement of budgetary resources and the statement of financing be presented in the agencys statements 110 how does the annual financial statement relate to accountability reports and performance and accountability reports 111 in managements discussion and analysis may agencies reference the performance section of the report rather than incorporating key performance measures into the mda when an agency issues a performance and accountability report 11 what is the purpose of part a form and content of the par part a is issued under the authority of 31 usc 3515 (d) part a defines the form and content for federal agency financial statements that are required to be submitted to the director of the office of management and budget (omb) and the congress pursuant to the requirements of the chief financial officers act as amended by the reports consolidation act of 2000 (pl106531) these statements are in addition to the reports submitted to omb for purposes of monitoring budget execution federal financial statements are prepared in accordance with policies prescribed by omb in part a of this circular these formats and instructions provide a framework within which individual agencies have flexibility to provide information useful to the congress agency managers and the public 12 what is the relationship between part a and the hierarchy of accounting principles for federal entities in april 2000 the american institute of certified public accountants (aicpa) through statement on auditing standards (sas) no 69 the meaning of present fairly in conformity with generally accepted accounting principles (gaap) in the independent auditors report as amended by sas no 91 federal gaap hierarchy established the following hierarchy of accounting principles for federal governmental entities: a federal accounting standards advisory board (fasab) statements and interpretations plus aicpa and financial accounting standards board (fasb) pronouncements if made applicable to federal governmental entities by a fasab statement or interpretation; b fasab technical bulletins and the following pronouncements if specifically made applicable to federal governmental entities by the aicpa and cleared by the fasab: aicpa industry audit and accounting guides and aicpa statements of position; c aicpa accounting standards executive committee (acsec) practice bulletins if specifically made applicable to federal governmental entities and cleared by the fasab and technical releases of the accounting and auditing policy committee of the fasab; and d implementation guides published by the fasab staff and practices that are widely recognized and prevalent in the federal government in the absence of a pronouncement covered by federal gaap or another source of established accounting principles the auditor of a federal governmental entity may consider other accounting literature depending on its relevance in the circumstances other accounting literature includes for example fasab concept statements; pronouncements in (a)(d) of the hierarchy when not specifically made applicable to federal governmental entities; fasb concept statements; governmental accounting standards board (gasb) statements interpretations technical bulletins and concept statements; aicpa issue papers; international accounting standards of the international accounting standards committee; pronouncements of other professional associations or regulatory agencies; aicpa technical practice aids; and accounting textbooks handbooks and articles guidance prescribed in part a that is specified by a fasab aapc aicpa or fasb pronouncement as described in paragraphs (a)(c) above are considered to be a b or clevel gaap as appropriate requirements in part a that are not specified by a pronouncement described in paragraphs (a)(c) above are considered to be level (d) of the federal gaap hierarchy because they constitute practices that are widely recognized and prevalent in the federal government the statements of federal financial accounting concepts (sffacs) the statements of federal financial accounting standards (sffass) interpretations technical bulletins and technical releases addressed in part a are listed in appendix a of this circular sffacs and sffass are set and promulgated by fasab following procedures adopted by the three fasab principals from omb the department of the treasury and the government accountability office (gao) the principal members however retain their authorities separately and jointly to establish and adopt accounting standards for the federal government as evidenced by this circular issued by omb when directed by the omb through this circular gaap serves as authoritative guidance for federal agencies in preparing the reports addressed in this circular 13 when is part a effective the provisions of part a are effective in their entirety for the preparation of financial statements for the end of fiscal year (fy) 2005 unless otherwise specified earlier implementation is permitted unless otherwise specified note: changes related to sffas 27 identifying and reporting earmarked funds are effective for fy 2006 earlier implementation of sffas 27 is not permitted 14 to which entity does part a apply part a applies to the executive branch agencies specified section 3 of the overview of this circular components of executive branch agencies required by law to issue financial statements prepared in accordance with accounting standards other than those promulgated by fasab shall continue to comply with applicable standards when the reporting entities of which these components are a part issue consolidated or consolidating statements that include such components gaap for federal entities shall be applied to these components (see section 12 for guidance on determining gaap for federal entities) the executive branch agencies covered by this circular are reporting entities and as such are required to prepare organizationwide financial statements sffac no 2 entity and display includes two types of criteria for determining which components of executive departments and agencies shall be included in their organizationwide financial statements the first is the conclusive criterion ie there is an inherent conclusion that for financial reporting purposes any organization meeting this criterion is part of a specified larger entity appearance in the budget of the united states government analytical perspectives section currently entitled federal programs by agency and account is a conclusive criterion any organization program or budget account including offbudget accounts and government corporations included in that section shall be considered part of the federal government as well as part of the executive department or agency with which it appears omb approval shall be obtained for exemptions to the conclusive criterion the second type of criteria is indicative criteria the indicative criteria described in sffac no 2 should be considered in the aggregate when determining what components to include in an executive department or agencys organizationwide financial statement 15 what should the annual financial statements include the annual financial statements of a reporting entity shall consist of: (1) managements discussion and analysis (part of rsi) (2) basic statements and related notes (3) required supplementary stewardship information (rssi) (4) required supplementary information (rsi) in addition the annual financial statements may include other accompanying information (oai) oai should provide users of the financial statement with a better understanding of the entitys programs and the extent to which the programs objectives are achieved preparation of the annual financial statement is the responsibility of agency management in carrying out that responsibility each agency cfo should prepare a policy bulletin or guidance memorandum that guides agency fiscal and management personnel in the preparation of the annual financial statement the basic statements shall include: (1) balance sheet (2) statement of net cost (3) statement of changes in net position (4) statement of budgetary resources (5) statement of financing (6) statement of custodial activity when applicable basic statements prepared in accordance with this circular should present summary or detailed information necessary to make the statements most useful to users care should be taken to avoid placing so much detail in the body of the statements that they cannot be easily understood where substantial detail is necessary to properly convey the information the body of the statement should contain summary information and the detail should be reported in notes to the statements the instructions provided in the circular for each of the basic statements describe how information should be presented 16 what elements of the annual financial statements are required to be presented on a comparative basis the six basic statements identified above and the related footnotes should present balances and amounts for the current year and the prior year the mda should include comparisons of the current year to the prior year and should provide an analysis of the agencys overall financial position and results of operations to assist users in assessing whether that financial position has improved or deteriorated as a result of the years activities information presented in the rssi and rsi should also be presented on a comparative basis when the information would be meaningful to the user of the financial report (see section 21 general instructions for the implementation dates for the requirement to prepare comparative financial statements) note: for fy 2006 the initial year of implementation for earmarked funds do not restate prior periods per the provisions of sffas 27 17 what steps should agencies take to ensure consistency between information presented in the statement of budgetary resources and the budget of the united states government better linkage between budgetary information presented in the financial statements and the budget of the united states government is critical to ensuring the integrity of the numbers presented both reports contain actual information agencies should follow the steps identified below to avoid inconsistencies between the two documents: agencies should ensure that the budgetary information used to prepare the statement of budgetary resources (sbr) is consistent with the budgetary information reported to the federal agencies centralized trialbalance system ii (facts ii) during the 4th quarter window the information submitted through the facts ii system will be used to produce the 4th quarter sf 133 report on budget execution and budgetary resources; the fms 2108 yearend closing statement; and much of the initial data that will appear in the prior year column of the program and financing schedule of the budget the budgetary information reported should be coordinated with the agencys budget office  due to timing differences subsequent changes may be made to budgetary information included in the budget but after the sbr has been published agencies should post all subsequent changes whether material or nonmaterial to ombs max a11 budget preparation system during the timeframes provided by omb agencies should also post all subsequent changes made to ombs max a11 budget preparation system whether material or nonmaterial to facts ii during its revision window (novemberdecember timeframe) these efforts should also be coordinated with the agencys budget office  agencies should discuss any material changes to budgetary information subsequent to the publication of the audited statement of budgetary resources (sbr) with their auditors to determine if restatement or note disclosure is necessary at a minimum any material differences between comparable information contained in the sbr and the actual information presented in the budget of the united states government must be disclosed in the footnotes to the sbr 18 why does the consolidated statement of financing present amounts and balances on a consolidated and a combined basis the statement of financing demonstrates the relationship between budgetary amounts reported on the statement of budgetary resources (which is prepared on a combined basis) to the proprietary amounts reported on the statement of net cost (which is prepared on a consolidated basis) the focus of this presentation is to reconcile net obligations to the net cost of operations lines number 1 2 and 4 of the statement of financing are reported on a combined basis as presented in the statement of budgetary resources this allows the user to follow the flow of reported amounts through the financial statements line 5 (net obligations) of the statement of financing while reported on what appears to be a combined basis is in fact a consolidated number this is because the intraentity obligations reported on line 1 are reduced by the corresponding intraentity offsetting collections and recoveries reported on line 2 and the offsetting receipts reported on line 4 19 should all of the lines illustrated in the statement of budgetary resources and the statement of financing be presented in the agencys statements no the illustrative statements have been provided as a guide to assist agencies in identifying the proper placement of information on the statements thus ensuring greater consistency between agency financial statements and the budget execution reports lines may be combined using discretion where balances are related in nature material components however should continue to be displayed separately on the face of the statement or in a footnote 110 what is required in the performance and accountability reports (par) the reports consolidation act (rca) of 2000 (pl106531) provides permanent authority for agencies to integrate financial and performance information into a single consolidated accountability report beginning with the fy 2000 reports it also allows consolidation of other reports with omb approval and after consultation with the appropriate congressional committees see section 22 format of the par for reporting requirements and layout of a final par 111 in managements discussion and analysis may agencies reference the performance section of the report rather than incorporating key performance measures into the mda no the reports consolidation act was intended to provide the congress and the public with one report that presents a comprehensive and integrated picture of each agencys performance the performance and accountability report will provide a large amount of detail about the agencys financial and program performance but an overall summary of the report should be included in the beginning of the document the mda is an excellent means of providing this summary redundancy may be reduced by providing key performance information in the mda with the other performance measures displayed in the performance section of the report analysis of significant changes the following table summarizes the significant changes reflected in this circular based on requirements incorporated from omb bulletin no 0109 form and content of agency financial statements as amended by omb memoranda m0420 fy 2004 performance and accountability reports and reporting requirements for the financial report of the united states government (july 22 2004) external reporting changes (december 21 2001) and requirements for both the accountability of tax dollars act (december 6 2002) and the government corporations control act (sec 31 usc sec 9101 etc seq) section title section number change a136 main 3 effective fy 2006 government corporations included in accelerated reporting requirements except for corporations who are required to report to the sec 4 c iv interim financial statements include managements explanation of significant variances guide to the circular 110 what is required in the performance and accountability report (see section 22) general 22 format of the par added to provide guidance on reporting requirements and layout of the report financial statements various lines on the balance sheet the statement of net cost the statement of changes in net position and the statement of budgetary resources have been added deleted renamed separated or combined these changes were made to more clearly describe the activity reported in the lines to improve the linkage between the statements and with the budget of the united states government annual financial statement instructions 21 modified instructions for preparing the annual financial statements to clarify guidance; reduce redundant disclosures; and to ensure consistency with the statements of federal financial accounting standards other omb circulars etc part a form and content of the performance and accountability report separate section added balance sheet 31 included effective date for sffas 27 definition of earmarked funds and instructions regarding prior periods in initial year of implementation for sffas 27 (effective fy 2006) 32 added separate illustrative statements for fy 2005 and for fy 2006 for fy 2006 added separate lines for cumulative results of operations and unexpended appropriations for earmarked funds to implement sffas 27 (effective fy 2006) 33 revised description of general ppe for sffas 23 which eliminated the category of national defense ppe 35 added requirements for unexpended appropriations and cumulative results of operations for earmarked funds to implement sffas 27 (effective fy 2006) statement of net cost 41 changed definition of intragovernmental and public costs to align with the department of the treasurys definition 42 illustrative statement for consolidated statement of net cost no longer separates intragovernmental and public costs and revenues on the face of the statement these separate costs and revenues are displayed in footnote 921 effective fy 2006 early implementation is permitted for agencies not implementing in fy 2005 refer to omb bulletin 0109 section 4 for illustrative guidance statement of changes in net position 52 added separate illustrative statements for fy 2005 and fy 2006 and subsequent to display earmarked funds (effective fy 2006) 52 added lines 2(a) changes in accounting principles and 2 (b) corrections of errors in accordance with sffas 21 52 added lines for required separate display of earmarked funds (effective fy 2006) 52 added subtotal line net change 53 new section on earmarked funds to implement sffas 27 (effective fy 2006) 54 explanation of separate reporting of corrections of errors and changes in accounting principles in accordance with sffas 21 55 clarification of certain differences between appropriations received on the statement of changes in net position and appropriations line of the statement of budgetary resources 58 new section for new line item net change statement of budgetary resources 61 additional explanatory information added about the statement of budgetary resources 63 new information on the format of the sbr (effective fy 2006) 64 added separate illustrative statements for fy 2005 and for fy 2006 to reflect changes in the sf 133 (effective fy 2006) 67 b c new information added to describe fy 2006 requirements for (b) change in unpaid obligated balances and (b) net outlays (effective fy 2006) statement of financing no change statement of custodial activity 81 exchange revenue reporting requirements added per sffas 7 83 clarification on accrual adjustments required for nonexchange revenue and not for exchange revenue notes to the balance sheet 91 added requirement to disclose changes in generally accepted accounting principles that affect the financial statements and to include explanation of concepts that are unique to federal financial statements such as fund balance with treasury and earmarked funds modified the provisions for restatement to comply with paragraphs 20 and 26 of sffas 27 93 modified the fund balance with treasury footnote disclosure to include nonbudgetary fbwt in section b status of fund balance with treasury 95 added note on investments for earmarked funds to implement sffas 27 (effective fy 2006) 910 added reference to sffas 11 16 and 23 912 added crossreference to section 34 for definition of covered and not covered by budgetary resources 914 added language to clarify that the reporting requirements for note 14 are for entities that administer pensions other retirement benefits and other post employment benefits 920 added note for earmarked funds to implement sffas 27 (effective fy 2006) notes to the statement of net cost 920 old note entitled intragovernmental costs removed 921 new note on intragovernmental costs and exchange revenue to report intragovernmental and public costs and revenues since no longer reported on the face of the statement (see 42) effective fy 2006 early implementation is permitted 925 old note 25 gross cost and earned revenue by budget functional classification removed notes to the statement of budgetary resources 934 new note entitled undelivered orders at the end of the period (effective fy 2006) notes to the statement of custodial activity 940 revised dedicated collections note (previously 939) to exclude earmarked funds (effective fy 2006) notes not related to specific statements 941 disclosures related to restatements rssi 102b national defense ppe removed to comply with sffas 23 102c national defense ppe removed from table and guidance provided for condition description from sffas 6 rsi 104a risk assumed information removed from rssi and included in rsi per sffas 5 mda 111 all sections updated to reflect guidance from omb memoranda deferred maintenance 112 additional guidance added from sffas 6 risk assumed information 115 moved from rssi per sffas 5 other accompanying information updated section 12 to include information from omb memorandum fy 2002 financial and performance reporting dated october 18 2002 and omb memorandum m0420 fy 2004 performance and accountability reports and reporting requirements for the financial report of the united states government 125 management challenges 126 ipia reporting details 127 other agency specific statutorily required reports appendix a update of fasab issuances subsequent to bulletin 0109 part b preparing the financial report of the united states government updated guidance in omb memorandum m0420 fy 2004 performance and accountability reports and reporting requirements for the financial report of the united states government (attachments 4 through 7) section 2 general table of contents 21 instructions for agency financial statements 22 format of the par section 21 instructions for agency financial statements a reporting entities should ensure that information in the financial statements is presented in accordance with federal gaap and the requirements of this circular preparers of financial statements seeking additional guidance on matters involving the recognition measurement and disclosure requirements should refer to the specific fasab standards governing those requirements these standards are available at http:wwwfasabgov where the fasab standards and interpretations or the instructions in this circular do not provide guidance agencies shall follow the hierarchy of accounting principles described in section 12 b comparative financial statements are required information for the current and preceding years should be presented regardless of the type of audit opinion rendered by the auditor footnotes should contain the information necessary for full disclosure of both years c when agencies present disaggregated information for component organizations the total column for the entity as a whole shall reflect consolidated totals net of intraentity transactions except for the statement of budgetary resources which is presented on a combined basis with the exception of the statement of budgetary resources financial statements that use a multicolumn format to present information on an entitys major components or lines of business as well as the consolidated amounts are referred to as consolidating statements eliminations for intraentity transactions needed to arrive at the consolidated amounts should also be presented in a column on the face of the consolidating statements currently the statement of net cost requires certain disaggregated statements to be presented in the notes to the financial statements entities may elect to include disaggregated statements for other primary financial statements such as the balance sheet statement of changes in net position andor statement of custodial activity to enhance usefulness of the information entities may include any disaggregated statements not presented in the notes to the financial statements as required supplementary information d the format displays in this circular are generally for illustrative guidance only agencies may modify the displays to best present the information for their programs in doing so they may add or remove lines and may use different words than those provided in the displays however agencies must report their assets liabilities and net position by the lines displayed in the illustrative balance sheet and in the illustrative statement of changes in net position to support the compilation and audit of the fr to enhance reporting at the entitylevel agencies may combine these illustrated lines in their statements but the composition of these lines must be provided ie either as subcategories on the face of the statements or in a footnote conversely to ensure that reporting at the entitylevel is meaningful agencies may also disaggregate the illustrated lines in their statements but the total of these lines must be provided ie either a total on the face of the statement or in a footnote e combine lines using discretion where balances are related in nature and are not material enough to warrant separate disclosures designate discrete balances of an immaterial amount as other the other category should not aggregate to an amount which is material f exclude statement line items footnotes and lines or columns in footnotes that do not apply or except as described in d above are not informative for the reporting entity g schedule totals presented in the footnotes in support of amounts presented in financial statements must agree with the amounts presented in the body of the financial statements h round dollar amounts to the nearest whole dollar thousand or million based upon informative value to the reporting entity maintain the chosen rounding level throughout the principal statements and footnotes ensure that individual line items add up to the totals by adjusting the line items for differences created by the rounding process rather than adjusting column totals i do not use line numbers on illustrative statement formats they are for reference purposes only j sequentially number footnotes without regard to the numbers in this document k interim unaudited financial statements without footnotes are required on a quarterly basis the interim statements must be submitted to omb 21 days after the end of each quarter interim statements may be limited to a balance sheet statement of net cost and statement of budgetary resources management discussion and analysis rssi and rsi are not required for quarterly reporting omb bulletin 0102 audits of federal financial statements appendix b (wwwwhitehousegovomb) lists major agency components that are required to prepare financial statements and subject them to annual audits 2 agencies are also encouraged to develop a brief highlights version of the annual par the par highlights should exist as a standalone document presenting key findings and relevant financial and performance data agencies should prepare the highlights document in a manner and writing style appropriate for the general public agencies may find it useful to prepare a par highlights with a cd of the entire par document included as an alternative to distributing numerous printed copies of the entire par document section 22 format of the par the purpose of this section is to provide reporting requirements and layout for a complete and final performance and accountability report (par)2 22a agency head (secretary) message: a dated transmittal letter signed by the agency head should be located at the beginning of the report it must include: a brief message from the agency head highlighting: (1) the agencys mission goals and accomplishments upholding the mission (2) an assessment of whether financial and performance data in the report is reliable and complete identifying material internal control weaknesses and actions the agency is taking to resolve them (the letter may reference a more detailed discussion of this topic elsewhere in the report); and (3) a federal managers financial integrity act (integrity act) statement of assurance indicating whether (a) management controls are in place and (b) financial systems conform with governmentwide standards the statement must take one of the following forms: statement of assurance; qualified statement of assurance with exceptions explicitly noted; or statement of no assurance (effective through fy 2005) 22b part 1: managements discussion and analysis a par must contain a section entitled managements discussion and analysis (mda) the mda is section 1 of the par and should follow the agency head (secretary) message to be useful it must be concise and readable to a nontechnical audience the mda is an overview of the financial and performance results see section 11 of this document for an outline of the required information to be included in the mda beginning with fy 2006 management assurances required under the integrity act and omb circular a123 managements responsibility for internal control must be separately identified within the mda as part of the information provided in accordance with section 111g analysis of the entitys systems controls and legal compliance 22c part 2: performance section the annual program performance information submitted per the government performance and results act (gpra) should contain all of the required elements for the annual performance report as specified in omb circular no a11 part 6 preparation and submission of strategic plans annual performance plans and annual program performance reports as amended in developing the mda preparers should draw from this section to provide an overview of the most significant performance results 22d part 3: financial section a cfo letter a signed letter from the chief financial officer (cfo) that briefly summarizes: (1) planned time frames for correcting audit weaknesses and noncompliance; (2) major impediments to correcting audit weaknesses and noncompliance; (3) progress made in correcting previously reported problems; and (4) integrity act information if the agency chooses not to include it in the par mda b auditors report reporting guidance for the auditors report is located in omb bulletin 0102 audit requirements for federal financial statements the final report must be signed by the auditor c financial statements and notes see sections 3 through 12 in this document for information on the financial statements notes rsi and rssi and other accompanying information (oai) section 3 balance sheet table of contents 31 general 32 illustrative statement consolidated balance sheet 33 assets 34 liabilities 35 net position 31 general the balance sheet presents as of a specific time amounts of future economic benefits owned or managed by the reporting entity exclusive of items subject to stewardship reporting (assets) amounts owed by the entity (liabilities) and amounts which comprise the difference (net position) the balance sheet displayed in section 32a and b illustrates a consolidated twocolumn format to allow the user to make appropriate comparisons with prior periods reporting entities preparing financial statements in accordance with this circular may present similar information or may present information in separate columns for their primary components eg bureaus or major lines of business combine entity and nonentity assets on the face of the balance sheet and disclose nonentity assets in the footnotes combine liabilities covered by budgetary resources and liabilities not covered by budgetary resources on the face of the balance sheet disclose liabilities not covered by budgetary resources in the footnotes sffas 27 identifying and reporting earmarked funds is effective for periods beginning after september 30 2005 see note 920 and sffas 27 for more details on earmarked funds the illustrative statement (32b) consolidated balance sheet (beginning fy2006) shows the portion of cumulative results of operations and unexpended appropriations for earmarked funds separately from all other funds on the face of the balance sheet based on sffas 27 requirements prior periods shall not be restated in the initial year of implementation (fy 2006) for the purposes of earmarked funds fy 2005 should not be restated also the provisions of sffas 27 need not be applied to immaterial items 32a illustrative statement consolidated balance sheet (reporting fy2005 and prior) departmentagencyreporting entity consolidated balance sheet as of september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx assets (note 2): (cy) (py) intragovernmental: 1 fund balance with treasury (note 3) $ xxx $ xxx 2 investments (note 5) xxx xxx 3 accounts receivable (note 6) xxx xxx 4 loans receivable xxx xxx 5 other (note 11) xxx xxx 6 total intragovernmental xxx xxx 7 cash and other monetary assets (note 4) xxx xxx 8 investments (note 5) xxx xxx 9 accounts receivable net (note 6) xxx xxx 10 taxes receivable net (note 7) xxx xxx 11 loans receivable and related foreclosed property net (note 8) xxx xxx 12 inventory and related property net (note 9) xxx xxx 13 general property plant and equipment net (note 10) xxx xxx 14 other (note 11) xxx xxx 15 total assets $ xxxx $ x xxx liabilities (note 12): intragovernmental: 16 accounts payable $ xxx $ xxx 17 debt (note 13) xxx xxx 18 other (notes 16 17 and 18) xxx xxx 19 total intragovernmental xxx xxx 20 accounts payable xxx xxx 21 loan guarantee liability (note 8) xxx xxx 22 debt held by the public (note 13) xxx xxx 23 federal employee and veteran benefits (note 14) xxx xxx 24 environmental and disposal liabilities (note 15) xxx xxx 25 benefits due and payable xxx xxx 26 other (notes 16 17 and 18) xxx xxx 27 total liabilities xxxx xxxx 28 commitments and contingencies (note 19) net position: 29 unexpended appropriations xxx xxx 30 cumulative results of operations xxx xxx 31 total net position $ xxxx $ xxxx 32 total liabilities and net position $ xxxx $ xxxx the accompanying notes are an integral part of these statements 32b illustrative statement consolidated balance sheet (report beginning fy2006) departmentagencyreporting entity consolidated balance sheet as of september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx assets (note 2): (cy) (py) intragovernmental: 1 fund balance with treasury (note 3) $ xxx $ xxx 2 investments (note 5) xxx xxx 3 accounts receivable (note 6) xxx xxx 4 loans receivable xxx xxx 5 other (note 11) xxx xxx 6 total intragovernmental xxx xxx 7 cash and other monetary assets (note 4) xxx xxx 8 investments (note 5) xxx xxx 9 accounts receivable net (note 6) xxx xxx 10 taxes receivable net (note 7) xxx xxx 11 loans receivable and related foreclosed property net (note 8) xxx xxx 12 inventory and related property net (note 9) xxx xxx 13 general property plant and equipment net (note 10) xxx xxx 14 other (note 11) xxx xxx 15 total assets $ xxxx $ x xxx liabilities (note 12): intragovernmental: 16 accounts payable $ xxx $ xxx 17 debt (note 13) xxx xxx 18 other (notes 16 17 and 18) xxx xxx 19 total intragovernmental xxx xxx 20 accounts payable xxx xxx 21 loan guarantee liability (note 8) xxx xxx 22 debt held by the public (note 13) xxx xxx 23 federal employee and veteran benefits (note 14) xxx xxx 24 environmental and disposal liabilities (note 15) xxx xxx 25 benefits due and payable xxx xxx 26 other (notes 16 17 and 18) xxx xxx 27 total liabilities xxxx xxxx 28 commitments and contingencies (note 19) net position: 29 unexpended appropriations earmarked funds (note 20) xxx xxx 30 unexpended appropriations other funds xxx xxx 31 cumulative results of operations earmarked funds(note 20) xxx xxx 32 cumulative results of operations other funds xxx xxx 33 total net position $ xxxx $ xxxx 34 total liabilities and net position $ xxxx $ xxxx the accompanying notes are an integral part of these statements 33 assets general categories assets are tangible or intangible items owned by the federal government which have probable economic benefits that can be obtained or controlled by a federal government entity the intragovernmental assets of an agency are separately reported on the face of the balance sheet nonentity assets which may be intragovernmental or governmental (ie nonfederal) are separately disclosed in the footnotes entity nonentity and intragovernmental assets are defined below in accordance with sffas no 1 entity assets these are assets that the reporting entity has authority to use in its operations the authority to use funds in an entitys operations means that entity management has the authority to decide how funds are used or management is legally obligated to use funds to meet entity obligations eg repay loans from treasury nonentity assets these are assets that are held by an entity but are not available to the entity an example of nonentity assets is income tax receivables which the internal revenue service collects for the us government but has no authority to spend combine entity and nonentity assets on the face of the balance sheet eg entity intragovernmental accounts receivable and nonentity intragovernmental accounts receivable shall be combined and reported as a single intragovernmental accounts receivable line item on the face of the balance sheet disclose nonentity assets in a note to the financial statements (note 2; section 92) intragovernmental assets these assets arise from transactions among federal entities these assets are claims of a federal entity against other federal entities report intragovernmental assets separately from transactions with nonfederal entities the federal reserve and governmentsponsored enterprises (ie federally chartered but privately owned and operated entities) the term nonfederal entity encompasses domestic and foreign persons and organizations outside the u s government fund balance with treasury this is the aggregate amount of the entitys accounts with treasury for which the entity is authorized to make expenditures and pay liabilities this account includes clearing account balances and the dollar equivalent of foreign currency account balances foreign currency account balances reported on the balance sheet shall be translated into us dollars at exchange rates determined by the treasury and effective on the financial reporting date to the extent that the reporting entity maintains fund balances in deposit suspense and clearing accounts that are not available to finance the entitys activities those balances should be disclosed as nonentity assets the fund balance which the entity is authorized to use shall be disclosed by fund type in the notes to the financial statement; eg trust fund revolving fund etc (note 3; section 93) cash and other monetary assets cash consists of: (i) coins paper currency and readily negotiable instruments such as money orders checks and bank drafts on hand or in transit for deposit; (ii) amounts on demand deposit with banks or other financial institutions; (iii) cash held in imprest funds; and (iv) foreign currencies which for accounting purposes shall be translated into us dollars at the exchange rate on the financial statement date other monetary assets include gold special drawing rights and us reserves in the international monetary fund this category is principally for use by the department of the treasury the amount of cash and other monetary assets that the reporting entity holds and is authorized to spend is entity cash the cash and other monetary assets that a federal entity collects and holds on behalf of the us government or other entities are nonentity cash and other monetary assets the components of cash and other monetary assets shall be disclosed in the notes to the financial statement (note 4; section 94) investments investments in federal securities shall be reported separately from investments in nonfederal securities investments in federal securities include nonmarketable par value treasury securities marketbased treasury securities marketable treasury securities and securities issued by other federal entities nonfederal securities include those issued by state and local governments governmentsponsored enterprises and other private corporations investments are normally reported at acquisition cost or amortized acquisition cost (less an allowance for losses if any) the components of investments including the market value of marketbased and marketable treasury securities shall be disclosed (note 5; section 95) (see sffas no 1 for further information on investments in par value treasury securities and in marketable and marketbased treasury securities expected to be held to maturity) effective fy 2006 reporting entities with material investments in treasury securities attributable to earmarked funds must include in the required note (note 5; section 95) on investments as described in sffas 27 paragraphs 27 and 28 accounts receivable net federal entity claims for payment from other entities gross receivables shall be reduced to net realizable value by an allowance for doubtful accounts disclose the method(s) of calculating the allowance for doubtful accounts and the dollar amount of the allowance (note 6; section 96) taxes receivable net federal entity claims for taxes owed by the public gross receivables shall be reduced to net realizable value by an allowance for uncollectible taxes receivable disclose the method(s) of calculating the allowance for uncollectible taxes and the dollar amount of the allowance (note 7; section 97) interest receivable net interest income earned but not received as of the reporting date report interest receivable as a component of the appropriate asset accounts no interest shall be recognized as revenue on accounts receivable and investments that are determined to be uncollectible until the interest is actually collected accrued interest on uncollectible accounts receivable however shall be disclosed until the requirement to pay interest is waived by the federal government or the related bad debt is written off interest receivable related to pre1992 and post1991 direct loans and acquired defaulted guaranteed loans shall be reported as a component of loans receivable and related foreclosed property loans receivable and related foreclosed property net the net value of credit program receivables and related foreclosed property are considered an entity asset if as provided by law or omb circulars the entity has the authority to determine the use of the funds collected or if the entity is legally obligated to use the funds to meet entity obligations e g loans payable to treasury disclose the components of this line in the notes to the financial statement (note 8; section 98) receivable from borrowings when a loan guarantee program which is generating negative subsidy guarantees a loan and the lender has not disbursed the loan as of the balance sheet date a proprietary receivable from borrowings shall not be reported it is sufficient to report the undelivered order which is recorded to obligate the funds and the borrowing authority or unobligated balances to support the undelivered order negative subsidies and downward reestimates of subsidy special fund receipt accounts for negative subsidies and downward subsidy reestimates are to be included in the credit reporting entitys financial statements any assets in the accounts are nonentity assets and are offset by intragovernmental liabilities covered by budgetary resources inventory and related property net disclose additional information about each category below in the notes to the financial statement (note 9; section 99) category description inventory tangible personal property that is (i) held for sale including raw materials and work in process (ii) in the process of production for sale or (iii) to be consumed in the production of goods for sale or in the provision of services for a fee operating materials tangible personal property to be consumed in normal and supplies operations stockpile materials strategic and critical materials held due to statutory requirements for use in national defense conservation or national emergencies they are not held with the intent of selling in the ordinary course of business seized property monetary instruments real property and tangible personal property of others including illegal drugs contraband and counterfeit items seized by authorized law enforcement agencies as a consequence of various laws in the actual or constructive possession of a custodial agency only seized monetary instruments shall be recognized as seized assets when seized (and a liability shall be reported in other liabilities in an amount equal to the seized asset value) seized property other than monetary instruments and additional information regarding seized property shall be disclosed forfeited property (i) monetary instruments intangible property real property and tangible personal property acquired through forfeiture proceedings; (ii) property acquired by the government to satisfy a taxpayers liability; and (iii) unclaimed and abandoned merchandise goods held under these goods are referred to as commodities commodities price support and are items of commerce or trade having an exchange value stabilization programs general property plant and equipment net sffas no 6 as amended by sffas 11 16 and 23 defines general property plant and equipment (ppe) as any ppe used in providing goods and services sffas no 6 also provides guidance for determining the cost of general ppe acquired by purchase capital lease donation devise judicial process exchange forfeiture or transfer from other federal entities minimum disclosure requirements for general ppe can be found in section 910 general ppe has one or more of the following characteristics: it is primarily used to produce goods or services or to support the mission of the entity but it may be used for alternative purposes (eg by other federal programs state or local governments or nongovernmental entities) or it is used in a significantly selfsustaining activity which finances its continuing cycle of operations through the collection of revenue (businesstype activities) or it is used by entities in activities whose costs can be compared to other entities performing similar activities for entities operating as businesstype activities all ppe shall be categorized as general ppe whether or not it meets the definition of other ppe categories (eg heritage assets) land and land rights acquired for or in connection with general ppe shall be included in general ppe internal use software whether commercial offtheshelf internally developed or contractor developed shall be capitalized and depreciated if it meets the criteria of general ppe refer to sffas no 10 for further guidance on internal use software depreciation shall be recognized on all general ppe except land and land rights of unlimited duration the depreciation expense associated with the use of general ppe is calculated through the systematic and rational allocation of the cost less its estimated salvageresidual value over the estimated useful life of the general ppe heritage assets and stewardship land are categories of ppe not reported on the balance sheet with one exception multiuse heritage assets are heritage assets that are predominantly used in general government operations (eg buildings such as the main treasury building which is used as an office building) the cost of acquisition betterment or reconstruction of multiuse heritage assets shall be capitalized as general ppe and depreciated with an appropriate footnote disclosure explaining that physical quantity information for the multiuse heritage assets is included in required supplemental stewardship information reporting for heritage assets (section 102) other assets the other assets category shall include assets that are not reported in a separate category on the face of the balance sheet reporting entities should disclose in the notes the amount and nature of categories of other assets (note 11; section 911) examples of other assets may include but are not limited to advances and prepayments advances are cash outlays made by a federal entity to its employees contractors grantees or others to cover a part or all of the recipients anticipated expenses or as advance payments for the costs of goods and services the entity receives prepayments are payments made by a federal entity to cover certain periodic expenses before those expenses are incurred progress payments on work in process are not to be included in advances and prepayments 34 liabilities general categories a liability is a probable future outflow or other sacrifice of resources as a result of past transactions or events financial statements shall recognize probable and measurable future outflows or other sacrifices of resources arising from (1) past exchange transactions (2) governmentrelated events (3) governmentacknowledged events or (4) nonexchange transactions that according to current law and applicable policy are unpaid amounts due as of the reporting date sffas no 5 describes the general principles governing the recognition of a liability liabilities shall be recognized when they are incurred regardless of whether they are covered by available budgetary resources this includes liabilities related to appropriations canceled under m account legislation (pl 101510 sec1405) liabilities of federal agencies are classified as liabilities covered or not covered by budgetary resources the intragovernmental liabilities of an agency are separately classified on the face of the balance sheet these terms are defined below in accordance with sffas no 1 liabilities covered by budgetary resources liabilities incurred which are covered by realized budgetary resources as of the balance sheet date budgetary resources encompass not only new budget authority but also other resources available to cover liabilities for specified purposes in a given year available budgetary resources include: (1) new budget authority (2) unobligated balances of budgetary resources at the beginning of the year or net transfers of prior year balances during the year (3) spending authority from offsetting collections (credited to an appropriation or fund account) and (4) recoveries of unexpired budget authority through downward adjustments of prior year obligations liabilities are considered covered by budgetary resources if they are to be funded by permanent indefinite appropriations which have been enacted and signed into law and are available for use as of the balance sheet date provided that the resources may be apportioned by omb without further action by the congress and without a contingency having to be met first liabilities not covered by budgetary resources this category is for liabilities which are not considered to be covered by budgetary resources as provided in the previous paragraph combine liabilities covered by budgetary resources with liabilities not covered by budgetary resources on the face of the balance sheet eg intragovernmental accounts payable covered by budgetary resources and intragovernmental accounts payable not covered by budgetary resources shall be combined and reported as a single intragovernmental accounts payable line item on the face of the balance sheet disclose liabilities not covered by budgetary resources in a note to the financial statements (note 12; section 912) intragovernmental liabilities these liabilities are claims against the entity by other federal entities report intragovernmental liabilities separately from claims against the reporting entity by nonfederal entities including governmentsponsored enterprises and the federal reserve system accounts payable the amounts owed by the reporting entity for goods and services received from other entities progress in contract performance made by other entities and rents due to other entities interest payable interest incurred but unpaid on liabilities of the reporting entity report interest payable as a component of the appropriate liability accounts liabilities for loan guarantees for post1991 loan guarantees the present value of the estimated net cash flows to be paid as a result of loan guarantees for pre1992 loan guarantees the amount of known and estimated losses to be payable disclose the components of the line in the notes to the financial statement (note 8; section 98) negative loan guarantee liability when the total loan guarantee liability for all credit programs of a reporting entity is negative it should be reported as an asset if a loan guarantee liability is the result of both positive and negative amounts for the various components the total will be shown as a liability and negative components disclosed debt amounts borrowed from the treasury the federal financing bank other federal agencies or the public under general or special financing authority (eg treasury bills notes bonds and federal housing administration debentures) the components of debt shall be disclosed in the notes to the financial statement (note 13; section 913) federal employee and veteran benefits entities that are responsible for administering pensions other retirement benefits (eg health benefits for retirees) and other postemployment benefits should calculate and report these liabilities and related expenses in accordance with sffas no 5 liabilities for federal employee and veteran benefits include the actuarial portion of these benefits they do not include liabilities related to ongoing continuous expenses such as employees accrued salary and accrued annual leave which are reported in the other liabilities line item disclose in the notes to the financial statements the actuarial liabilities assumptions used to compute the actuarial liabilities and the components of expense for the period for pensions other retirement benefits and other postemployment benefits (note 14; section 914) environmental and disposal liabilities sffas no 5 provides criteria for recognizing a contingent liability which shall be applied to determine if cleanup costs should be recognized as liabilities andor disclosed in the notes sffas no 6 supplements the liability standard by providing guidance for recording cleanup costs related to general ppe and stewardship assets used in federal operations the guidance applies to cleanup costs from federal operations known to result in hazardous waste which the federal government is required by federal state andor local statutes andor regulations to cleanup depending on the materiality of the amount the liability for cleanup costs may be displayed separately or included with other liabilities the footnote disclosures required for liabilities (note 15; section 915) associated with cleanup costs are described in sffas no 6 benefits due and payable these are amounts owed to program recipients or medical service providers as of the balance sheet date that have not yet been paid these amounts include payables by the federal entity for benefits goods or services provided under the terms of a benefits program (other than federal employee and veteran benefits programs) whether or not such amounts have been reported to the federal entity (eg estimated payments due to health providers for services that have been rendered and that will be financed by the federal entity but have not yet been reported to the federal entity) benefit programs reported on this line item include but are not limited to federal oldage and survivors insurance federal hospital insurance (medicare part a) federal supplementary medical insurance (medicare part b) grants to states for medicaid federal disability insurance supplemental security income railroad retirement unemployment insurance and black lung other liabilities this line item covers liabilities that are not recognized in specific categories it includes (but is not limited to) liabilities related to: capital leases insurance advances and prepayments deposit fund amounts held in escrow and accrued liabilities related to ongoing continuous expenses such as federal employee salaries and accrued employee annual leave this item also covers estimated losses for claims or other contingencies if (1) a past event or exchange transaction has occurred (eg a federal entity has breached a contract with a non federal entity) as of the date of the statements (2) a future outflow or other sacrifice of resources is probable and (3) the future outflow or sacrifice of resources is measurable (eg the amount can be reasonably estimated) do not include cleanup costs if material which shall be reported as environmental and disposal costs examples of claims or other contingencies include: (1) indemnity agreements reimbursements due to licensees or contractors for losses incurred in support of federal activities; (2) adjudicated claims claims against the federal government that are in the process of judicial proceedings; and (3) commitments to international institutions payments due to international financial institutions separate reporting of items within other liabilities is appropriate if the amounts are significant to the balance sheet disclose the items within this line and any additional information necessary to understand the liabilities in the notes to the financial statement (note 16; section 916) lease liabilities this item is the liability for capital leases report the lease liability as a component of the other liabilities line item on the balance sheet and disclose the components of and other information about the capital lease liability in a separate footnote (note 17; section 917) according to omb circular no a11 preparation and submission of budget estimates capital leases entered into during fy 1992 and thereafter are required to be fully funded in the first year of the lease insurance liabilities report insurance liabilities as a component of the other liabilities line item on the balance sheet and disclose insurance liabilities in a separate footnote (note 18; section 918) entities with federal insurance and guarantee programs except social insurance and loan guarantee programs shall recognize a liability for unpaid claims incurred resulting from insured events that have occurred as of the reporting date the amount recognized is the liability known with certainty plus an accrual for a contingent liability recognized when an existing condition situation or set of circumstances involving uncertainty as to possible loss exists and the uncertainty shall ultimately be resolved when one or more future events occur or fail to occur a future outflow or other sacrifice of resources is probable and the future outflow or sacrifice of resources is measurable life insurance programs shall recognize a liability for future policy benefits in addition to the liability for unpaid claims incurred commitments and contingencies a loss contingency is an existing condition situation or set of circumstances involving uncertainty as to possible loss to an entity the uncertainty should ultimately be resolved when one or more future events occur or fail to occur the likelihood that the future event or events will confirm the loss or the incurrence of a liability can range from probable to remote sffas no 5 as amended by sffas no 12 contains the criteria for recognition and disclosure of contingent liabilities in addition to the contingent liabilities required by sffas no 5 the following shall also be disclosed: (1) an estimate of obligations related to canceled appropriations for which the reporting entity has a contractual commitment for payment and (2) amounts for contractual arrangements which may require future financial obligations (note 19; section 919) 35 net position the components of net position are classified as follows: unexpended appropriations this amount includes the portion of the entitys appropriations represented by undelivered orders and unobligated balances unexpended appropriations attributable to earmarked funds if material should be shown separately on the face of the balance sheet upon implementation of sffas 27 in fy 2006 (note 20; section 920) cumulative results of operations the net results of operations since inception plus the cumulative amount of prior period adjustments this includes the cumulative amount of donations and transfers of assets in and out without reimbursement beginning in fy 2006 cumulative results of operations attributable to earmarked funds if material should be shown separately on the face of the balance sheet in accordance with the provisions of sffas 27 (note 20; section 920) section 4 statement of net cost table of contents 41 general 42 illustrative statement consolidated statement of net cost 43 program costs 44 earned revenues 45 net program costs 46 costs not assigned to programs 47 earned revenues not attributed to programs 48 net cost of operations 41 general the statement of net cost is designed to show separately the components of the net cost of the reporting entitys operations for the period however the organizational structure and operations of some entities are so complex that to fully display their suborganizations major programs and activities may require supporting schedules to supplement the information in the statement of net cost the supporting schedules shall be included in the notes to the financial statements net cost of operations is the gross cost incurred by the reporting entity less any exchange revenue earned from its activities the gross cost of a program consists of the full cost of the outputs produced by that program plus any nonproduction costs that can be assigned to the program (nonproduction costs are costs linked to events other than the production of goods and services) the net cost of a program consists of gross cost less related exchange revenues by disclosing the gross and net cost of the entitys programs the statement of net cost provides information that can be related to the outputs and outcomes of the programs and activities the statement of net cost and related supporting schedules classify revenue and cost information by suborganization or responsibility segment and to the extent practicable within each classification by major program (suborganizations are considered to be generally equivalent to responsibility segments) preparers of the statement of net cost should present responsibility segments that align directly with the major goals and outputs described in the entitys strategic and performance plans required by the government performance and results act (gpra) the statement of net cost and related supporting schedules should show the net cost of operations for the reporting entity as a whole and its programs and suborganizations this can be accomplished by reporting by program: (1) expense costs (2) related exchange revenues (3) the excess of costs over exchange revenues (net program costs) (4) the costs that cannot be assigned to specific programs or outputs and (5) the exchange revenues that cannot be attributed to specific programs and outputs intragovernmental gross costs and earned revenues shall be disclosed in note 21 the changes in illustrative statement 42 consolidated statement for net cost is effective for fy 2006 however early implementation is permitted for agencies not implementing in fy 2005 refer to omb bulletin 0109 section 4 for illustrative guidance preparers are encouraged to consult the implementation guide to sffas no 7 accounting for revenue and other financing sources for illustrations and explanations designed to assist in understanding and applying the standards for classifying recognizing and measuring inflows of resources to the federal government and its component reporting entities 42 illustrative statement consolidated statement of net cost departmentagencyreporting entity consolidated statement of net cost for the years ended september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx program costs: (cy) (py) program a: 1 gross costs (note 21) $ xxx $ xxx 2 less: earned revenue 3 net program costs xxx xxx other programs: program b: xxx xxx program c: xxx xxx program d: xxx xxx program e: xxx xxx program f: xxx xxx other programs: xxx xxx total other program costs: xxxx xxxx 4 cost not assigned to programs xxxx xxxx 5 less: earned revenues not attributed to programs xxx xxx 6 net cost of operations $ xxxx $ xxxx the accompanying notes are an integral part of these statements 43 program costs the reporting entity should report the full cost of each programs output which consists of (a) both direct and indirect costs of the output and (b) the costs of identifiable supporting services provided by other segments within the reporting entity and by other reporting entities the reporting entity should accumulate and assign costs in accordance with the costing methodology in sffas no 4 program costs also include any nonproduction costs that can be assigned to the program but not to its outputs the costs of program outputs shall include the costs of services provided by other entities whether or not the providing entity is fully reimbursed the costs of program outputs shall include specific imputed costs that are incurred by the reporting entity but paid in total or in part by other entities to the extent that accounting standards require them to be recognized in financial statements (see fasab interpretation no 6 accounting for imputed intradepartmental costs: an interpretation of sffas 4) in the case of employee benefits the imputed amount is the difference between employeremployee contributions and the total cost of the benefit reporting entities are required to recognize the following costs including the portions that are funded through the office of personnel management (opm) the department of defense the department of the treasury the department of labor or other agencies: (1) employees pension postretirement health and life insurance benefits (2) other postemployment benefits for retired terminated and inactive employees which includes unemployment and workers compensation under the federal employees compensation act and (3) losses in litigation proceedings (see fasab interpretation no 2 accounting for treasury judgment fund transactions) to ensure consistency agencies should not recognize costs other than those listed until omb provides further guidance in accounting for the listed costs reporting entities should refer to relevant sffas and interpretations such as sffas nos 4 and 5 and interpretation no 2 the standard general ledger and the department of treasury financial management service intragovernmental fiduciary transactions accounting guide for guidance reporting entities should also consult with the funding and administering agencies such as opm for information needed to properly record interentity costs for further guidance on the recognition of interentity costs that are not fully reimbursed or are not reimbursed at all the reporting entity should consult the interentity cost standard in sffas no 4 costs related to the production of outputs shall be reported separately from costs that are not related to the production of outputs (eg nonproduction costs) in addition the costs of stewardship ppe listed below shall be reported separately from other nonproduction costs: the cost of acquiring constructing improving reconstructing or renovating heritage assets other than multiuse heritage assets; and the cost of acquiring stewardship land agencies should consider differentiating other significant costs if by doing so the usefulness of the statements would be improved either because the amount of a particular cost is large or because of its special nature for example when reporting on a program that makes transfer payments it may be useful to differentiate between the transfer payments and administrative costs 44 earned revenues earned revenues are exchange revenues which arise when a federal entity provides goods and services to the public or to another government entity for a price the full amount of exchange revenue is to be reported on the statement of net cost or a supplementary schedule regardless of whether the entity is permitted to retain the revenues in whole or in part any portion of exchange revenue that cannot be retained by the entity is reported as a transferout on the statement of changes in net position (see sffas no 7 for information on exchange revenues) earned revenues should be deducted from the full cost of outputs or outcomes to determine their net cost unless it is not practical or reasonably possible to do so however there are no precise guidelines to determine the degree to which earned revenue can reasonably be attributed to outputs outcomes programs or suborganizations the attribution of earned revenues requires the exercise of managerial judgment in exercising this judgment it is important to provide users of the statement of net cost with the ability to ascertain whether exchange revenues are sufficient to cover the costs incurred to produce the goods or services involved earned revenue shall be deducted from the gross cost of programs to determine the net program costs 45 net program costs this is the difference between a programs gross costs and its related exchange revenues if a program does not earn any exchange revenue there is no netting and the term used might be total program costs 46 costs not assigned to programs a reporting entity and its suborganizations may incur: (a) high level general management and administrative support costs that cannot be directly traced assigned on a causeandeffect basis or reasonably allocated to segments and their outputs and (b) nonproduction costs that cannot be assigned to a particular program these costs are part of the entity and suborganization costs and should be reported on the statement of net cost as costs not assigned to programs 47 earned revenues not attributed to programs earned revenue that is insignificant or cannot be attributed to particular outputs or programs should be reported separately as a deduction in arriving at net cost of operations of the suborganization or reporting entity as a whole 48 net cost of operations this is the gross cost incurred by the reporting entity less any exchange revenue earned from its activities this amount represents the net cost of a suborganization or entity that is funded by sources other than exchange revenues the financing sources for net cost of operations are reported on the statement of changes in net position section 5 statement of changes in net position table of contents 51 general 52 illustrative statement consolidated statement of changes in net position 53 earmarked funds 54 net position beginning balances 55 budgetary financing sources 56 other financing sources 57 net cost of operations 58 net change 59 net position ending balances 51 general the statement of changes in net position reports the change in net position during the reporting period net position is affected by changes to its two components: cumulative results of operations and unexpended appropriations the statement format is designed to display both components of net position separately to enable the user to better understand the nature of changes to net position as a whole 2a illustrative statement fy 2005 consolidated statement of changes in net position 5 departmentagencyreporting entity consolidated statement of changes in net position for the years ended september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx 2xxx 2xxx (cy) (cy) (py) (py) cumulative cumulative results unexpended results unexpended of operations appropriations of operations appropriations 1 beginning balances $ xxx $ xxx $ xxx $ xxx 2 adjustments () a changes in accounting principle () xxx xxx xxx xxx b corrections of errors () xxx xxx 3 beginning balances as adjusted xxx xxx xxx xxx budgetary financing sources: 4 appropriations received xxx xxx 5 appropriations transferredinout () xxx xxx 6 other adjustments (rescissions etc) () xxx xxx xxx xxx 7 appropriations used xxx xxx xxx xxx 8 nonexchange revenue xxx xxx 9 donations and forfeitures of cash and cash equivalents xxx xxx 10 transfersinout without reimbursement () xxx xxx 11 other budgetary financing sources () xxx xxx other financing sources: 12 donations and forfeitures of property xxx xxx 13 transfersinout without reimbursement () xxx xxx 14 imputed financing from costs absorbed by others xxx xxx 15 other () xxx xxx 16 total financing sources xxx xxx xxx xxx 17 net cost of operations () xxx xxx 18 net change xxx xxx xxx xxx 19 ending balances $ xxxx $ xxxx $ xxxx $ xxxx the accompanying notes are an integral part of these statements 52b illustrative statement for fy 2006 and subsequent periods consolidated statement of changes in net position departmentagencyreporting entity consolidated statement of changes in net position for the years ended september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx 2xxx 2xxx (cy) (cy) (py) (py) cumulative cumulative results unexpended results unexpended of operations appropriations of operations appropriations 1 beginning balances $ xxx $ xxx $ xxx $ xxx 2 adjustments: (a) changes in accounting principles () xxx xxx xxx xxx (b) corrections of errors () xxx xxx 3 beginning balances as adjusted xxx xxx xxx xxx budgetary financing sources: 4 appropriations received (a) earmarked funds xxx xxx (b) all other funds xxx xxx 5 appropriations transferredinout () xxx xxx 6 other adjustments (rescissions etc) () xxx xxx xxx xxx 7 appropriations used (a) earmarked funds xxx xxx xxx xxx (b) all other funds xxx xxx xxx xxx 8 nonexchange revenue (a) earmarked funds xxx xxx (b) all other funds xxx xxx 9 donations and forfeitures of cash and cash equivalents (a) earmarked funds xxx xxx (b) all other funds xxx xxx 10 transfersinout without reimbursement () xxx xxx 11 other budgetary financing sources () (a) earmarked funds xxx xxx (b) all other funds xxx xxx other financing sources: 12 donations and forfeitures of property (a) earmarked funds xxx xxx (b) all other funds xxx xxx 13 transfersinout without reimbursement () xxx xxx 14 imputed financing from costs absorbed by others xxx xxx 15 other () xxx xxx 16 total financing sources xxx xxx xxx xxx 17 net cost of operations () (a) earmarked funds xxx xxx (b) all other funds xxx xxx the accompanying notes are an integral part of these statements f departmentagencyreporting entity consolidated statement of changes in net position for the years ended september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx 2xxx 2xxx (cy) (cy) (py) (py) cumulative cumulative results unexpended results unexpended of operations appropriations of operations appropriations 18 net change (a) earmarked funds xxx xxx xxx xxx (b) all other funds xxx xxx xxx xxx 19 ending balances (a) earmarked funds xxxx xxxx xxxx xxxx (b) all other funds xxxx xxxx xxxx xxxx total all funds $ xxxx $ xxxx $ xxxx $ xxxx 53 earmarked funds effective fy 2006 report earmarked nonexchange revenue and other financing sources including appropriations and net cost of operations separately on the face of the statement of changes in net position to implement sffas 27 identifying and reporting earmarked funds report the portions of cumulative results of operations and unexpended appropriations attributable to earmarked funds separately on the face of the statement of changes in net position as illustrated in 52b see note 920 and sffas 27 for more detailed information sffas 27 contains certain categories of funds that are excluded from the reporting requirements and specific guidance if more than one component entity is responsible for carrying out a program financed with earmarked revenues and other financing sources based on sffas 27 requirements prior periods shall not be restated in the initial year of implementation (fy 2006) therefore for fy 2005 do not restate the provisions of sffas 27 need not be applied to immaterial items eliminations between earmarked funds and other funds within the reporting entity where applicable should be disclosed in note 20 earmarked funds 54 net position beginning balances effective fy 2006: if material the net position balances attributable to earmarked funds are reported separately from all other funds beginning balances shall agree with the amounts 3 accounting principles board opinion no 20 par 13 reported as net position on the prior years balance sheet adjustments for corrections of errors and changes in accounting principles should be reported in accordance with sffas 21 reporting corrections of errors and changes in accounting principles corrections of errors errors in financial statements result from mathematical mistakes mistakes in the application of accounting principles or oversight or misuse of facts that existed at the time the financial statements were prepared3 once it has been determined that an error has occurred and restatement is required the following provides guidance from sffas 21 on how management should correct an error in the financial statements paragraph 10: when errors are discovered after the issuance of financial statements and if the financial statements would be materially misstated absent correction of the errors corrections should be made as follows: (a) if only the current period statements are presented then the cumulative effect of correcting the error should be reported as a prior period adjustment the adjustment should be made to the beginning balance of cumulative results of operations in the statement of changes in net position (b) if comparative financial statements are presented then the error should be corrected in the earliest affected period presented by correcting any individual amounts on the financial statements if the earliest period presented is not the period in which the error occurred and the cumulative effect is attributable to prior periods then the cumulative effect should be reported as a prior period adjustment the adjustment should be made to the beginning balance of cumulative results of operations in the statement of changes in net position for the earliest period presented (c) the nature of an error in previously issued financial statements and the effect of its correction on relevant balances should be disclosed financial statements of subsequent periods need not repeat the disclosures paragraph 11: prior period financial statements should only be restated for corrections of errors that would have caused any statements presented to be materially misstated management actions related to correction of errors the following policy relates to actions required by management concerning material errors that escaped detection until after they were included in the published audited financial statements management shall assume responsibility for any false or misleading information in the financial statements or omissions that render information made in the financial statements misleading as such as soon as possible after errors are detected management shall notify their auditors and inform their primary users of their financial statements of the error and plans for correcting it in the financial statements auditors are bound by the requirements of the aicpa audit standards au 561 subsequent discovery of facts existing at the date of the auditors report based on this guidance the auditor determines whether action should be taken to prevent future reliance on the published audit report if the auditor decides that the effect on the financial statements or auditors report of the subsequently discovered information can promptly be determined the auditor may determine that disclosure should consist of issuing as soon as practicable revised financial statements and auditors report however if it is determined by the auditor that subsequently discovered information is not reliable; the auditor may decide to change the audit opinion therefore it is imperative that management work with their auditor as soon as the error is detected to assist the auditor in any actions that need to be taken see note 941 restatements for specific information to be included in the financial statement notes changes in accounting principles a change in accounting principle is a change from one generally accepted accounting principle to another one that can be justified as preferable for the purposes of this standard changes in accounting principles also include those occasioned by the adoption of new federal financial accounting standards unless otherwise specified in transitioning instructions of a new fasab standard for all changes in accounting principles that would have resulted in a change to prior period financial statements: (a) the cumulative effect of the change on prior periods should be reported as a change in accounting principle the adjustment should be made to the beginning balance of cumulative results of operations in the statement of changes in net position for the period that the change is made (b) prior period financial statements presented for comparative purposes should be presented as previously reported; and (c) the nature of the changes in accounting principle and its effect on relevant balances should be disclosed in the current period financial statements of subsequent periods need not repeat the disclosure beginning balances as adjusted are the sum of the beginning balances of net position as reported on the prior years balance sheet and prior period adjustments 55 budgetary financing sources this section displays financing sources and nonexchange revenue that are also budgetary resources or adjustments to those resources as reported on the statement of budgetary resources and defined as such by omb circular no a11 preparation submission and execution of the budget as amended appropriations received this amount includes appropriations received during the current reporting period these are amounts appropriated from treasury general fund receipts such as income taxes that are not earmarked by law for a specific purpose this amount will not necessarily agree with the appropriations received amount reported on the statement of budgetary resources (sbr) because of differences between proprietary and budgetary accounting concepts and reporting requirements for example certain dedicated and earmarked receipts are recorded as appropriations received on the sbr but are recognized as exchange or nonexchange revenue (ie typically in special and nonrevolving trust funds) and reported on the scnp in accordance with sffas no7 another example is with certain parentchild reporting described in section 936 of this document: note 36 descriptions of transfers that appear as a reconciling item on the statement of financing the above examples are not all inclusive appropriations transferredinout this is the amount of appropriations received in the current or prior year(s) that have been transferred in or out during the current reporting year other adjustments this amount includes adjustments to either cumulative results of operations or unexpended appropriations some examples of adjustments include rescissions of appropriations and cancellations of expired appropriationexpenditure accounts which would also be included in line 6 permanently not available on the statement of budgetary resources in addition the appropriations used by collecting entities to provide refunds of monies deposited to treasury and trust funds shall be reported on this line item rather than as an appropriations used appropriations used appropriations are considered used as a financing source when goods and services are received or benefits are provided this is true whether the goods services and benefits are payable or paid as of the reporting date and whether the appropriations are used for items that are expensed or capitalized appropriations used does not include undelivered orders or unobligated appropriations appropriations used does not increase net position; it is subtracted from unexpended appropriations but added to cumulative results of operations for a net zero effect on net position as a whole nonexchange revenue this amount includes revenues the federal government is able to demand or receive due to its sovereign powers see sffas no 7 for a discussion of the recognition and measurement criteria for taxes and other nonexchange revenues donations and forfeitures of cash and cash equivalents this amount includes voluntary gifts and involuntary forfeitures of resources to the federal government by nonfederal entities donations of financial resources may be in the form of cash or securities this amount also includes the forfeiture of seized cash and cash equivalents transfersinout without reimbursement this amount includes intragovernmental non appropriated balance transfers in or out during the current reporting year nonappropriated balances include financing sources and revenue not reported as unexpended appropriations exchange revenue (included in calculating an entitys net cost of operations) required to be transferred to the treasury or another federal entity shall be recognized as a transferout other budgetary financing sources this amount includes other financing sources that affect budgetary resources and are not otherwise classified above 56 other financing sources this section displays financing sources and nonexchange revenue that do not represent budgetary resources as reported on the statement of budgetary resources and defined as such by omb circular no a11 the items within this section shall directly tie to the statement of financing section other resources donations and forfeitures of property this amount includes voluntary gifts and involuntary forfeitures of resources to the federal government by nonfederal entities these resources may be in the form of land or buildings the amount of revenue arising from donationsinvoluntary forfeitures of nonfinancial resources shall be recognized in accordance with criteria in sffas no 6 transfersinout without reimbursement this amount includes intragovernmental transfers in or out of capitalized assets during the current reporting year the amount of the transfer shall be recorded at the book value of the transferring entity if the book value is not known the amount recognized should be the assets estimated fair value at the date of the transfer imputed financing from costs absorbed by others this amount includes financing of certain costs by one federal entity on behalf of another federal entity (eg the payment of certain employee benefit costs by opm for employees of other federal agencies) imputed financing shall equal the amount of imputed costs as reported on the statement of net cost other this amount includes other financing sources that do not represent budgetary resources and are not otherwise classified above 57 net cost of operations this amount shall agree with the net cost of operations as reported on the statement of net cost the net cost of operations is subtracted from the total financing sources and beginning balance as adjusted to yield the ending balance of net position as it relates to the cumulative results of operations 58 net change report the net change from beginning balances as adjusted to ending balances (subtotal of lines 4 though 17 in illustrative statement 52a) report the net change from beginning balances as adjusted to ending balances (subtotal of lines 16 and 17 in illustrative statement 52b) 59 net position ending balances ending balances shall agree with the amounts reported as net position on the current years balance sheet section 6 statement of budgetary resources table of contents 61 general 62 combined vs consolidated statement 63 format of the statement of budgetary resources 64 a fy 2005 illustrative statement combined statement of budgetary resources b fy 2006 illustrative statement combined statement of budgetary resources 65 budgetary resources 66 status of budgetary resources fy 2005 67 a relationship of obligations to outlays fy 2005 b change in obligated balances fy 2006 c net outlays fy 2006 61 general the statement of budgetary resources (sbr) and related disclosures provide information about how budgetary resources were made available as well as their status at the end of the period it is the only financial statement predominantly derived from an entitys budgetary general ledger in accordance with budgetary accounting rules which are incorporated into gaap for the federal government information on the sbr should be consistent with and reconciled to the budget execution information reported on the report on budget execution and budgetary resources (sf 133) and with information reported in the budget of the united states government to ensure the integrity of the numbers presented the sbr is an agencywide report which aggregates accountlevel information reported in the sf 133 consistency between budgetary information presented in the financial statements and the budget of the united states government is critical to ensure the integrity of the numbers presented the federal agencies centralized trialbalance system ii (facts ii) helps to ensure the consistency of data the facts ii data submitted by agencies are ussglbased trial balances which are used to populate the sf 133 and the actual column of the program and financing schedule of the budget the ussglbased trial balance is also used to prepare the statement of budgetary resources facts ii revision period the primary purpose of the facts ii revision period is to make facts ii consistent with the amounts in the prioryear column of the budget due to timing differences subsequent changes whether material or nonmaterial may be made to the budgetary information included in the budget after the sbr has been published all subsequent changes whether material or nonmaterial must be made in facts ii during the revision period any changes to budgetary information subsequent to the publication of the audited sbr that are material to the sbr should be discussed between the agencies and their auditors to determine if restatement or note disclosure is necessary any material differences between comparable information contained in the sbr and the budget at a minimum must be disclosed in the footnotes to this statement (note 33; section 933) budget information for the entitys major budget accounts will be presented as required supplementary information (section 113) recognition and measurement of budgetary information reported on this statement should be based on budget terminology definitions and guidance in omb circular no a11 preparation submission and execution of the budget (as amended) omb circular no a11 (as amended) provides definitions and instructions for each line item reported in this statement (wwwwhitehousegovomb) 62 combined vs consolidated statement the budgetary information presented in this statement shall be presented on a combined basis and not a consolidated basis preparation of consolidated financial statements involves lineby line elimination of interentity balances in order to remain consistent with the aggregate of the accountlevel information presented on the sf 133 consolidation of this statement is not appropriate accordingly linebyline consolidation of this statement is not permitted 63 format of the statement of budgetary resources the format of the sbr is based on the sf 133 the format outlined in this document for fy 2005 remains effective through the end of fy 2005 beginning with fiscal year 2006 omb revised its format of the sf 133 to align with this change the illustrative format of the statement of budgetary resources will also change the new format of the sbr planned to be included in omb circular a11 as amended should be used beginning with the first quarter of fiscal year 2006 as agencies submit interim financial statements to omb the comparative fiscal year 2006 sbr should include fiscal year 2005 data prepared in the fiscal year 2006 format two enhancements are included to the sbr to facilitate the reconciliation of information between the sbr and actual information reported in the budget of the united states government these two enhancements are: separate column for nonbudgetary credit reform (financing accounts) these are non budgetary accounts that record all the cash flows activity resulting from post1991 direct loans and loan guarantees this activity in the financing account is reported separately in the budget of the united states government and is excluded from the budget surplus deficit totals the separate presentation in the sbr allows for a clear distinction between budgetary accounts and nonbudgetary credit reform accounts offsetting receipts line distributed offsetting receipts were introduced as a new line item in the sbr offsetting receipts offset the outlays of an agency as a whole and are therefore not reflected in budget execution reports (sf 133) at the account level since the sbr is an agency wide report offsetting receipts must be included to reconcile to information in the budget of the united states government a more extensive discussion on offsetting receipts can be found in section 67 64 a illustrative statement combined statement of budgetary resources (fy 2005 and prior) departmentagencyreporting entity combined statement of budgetary resources (page 1 of 2) for the years ended september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx 2xxx 2xxx (cy) (cy) (py) (py) nonbudgetary nonbudgetary credit program credit program budgetary financing accounts budgetary financing accounts budgetary resources: 1 budget authority: 1a appropriations received $ xxx $ xxx $ xxx $ xxx 1b borrowing authority xxx xxx xxx xxx 1c contract authority xxx xxx xxx xxx 1d net transfers () xxx xxx xxx xxx 1e other xxx xxx xxx xxx 2 unobligated balance: 2a beginning of period xxx xxx xxx xxx 2b net transfers actual () xxx xxx xxx xxx 2c anticipated transfers balances xxx xxx xxx xxx 3 spending authority from offsetting collections: 3a earned 1 collected xxx xxx xxx xxx 2 receivable from federal sources xxx xxx xxx xxx 3b change in unfilled customer orders 1 advance received xxx xxx xxx xxx 2 without advance from federal sources xxx xxx xxx xxx 3c anticipated for rest of year without advances xxx xxx xxx xxx 3d previously unavailable xxx xxx xxx xxx 3e transfers from trust funds xxx xxx xxx xxx 3f subtotal xxx xxx xxx xxx 4 recoveries of prior year obligations xxx xxx xxx xxx 5 temporarily not available pursuant to public law xxx xxx xxx xxx 6 permanently not available xxx xxx xxx xxx 7 total budgetary resources $ xxxx $ xxxx $ xxxx $ xxxx departmentagencyreporting entity combined statement of budgetary resources (page 2 of 2) for the years ended september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx 2xxx 2xxx (cy) (cy) (py) (py) nonbudgetary nonbudgetary credit program credit program budgetary financing accounts budgetary financing accounts status of budgetary resources: 8 obligations incurred: 8a direct $ xxx $ xxx $ xxx $ xxx 8b reimbursable xxx xxx xxx xxx 8c subtotal xxx xxx xxx xxx 9 unobligated balance: 9a apportioned xxx xxx xxx xxx 9b exempt from apportionment xxx xxx xxx xxx 9c other available xxx xxx xxx xxx 10 unobligated balance not available xxx xxx xxx xxx 11 total status of budgetary resources xxxx xxxx xxxx xxxx relationship of obligations to outlays: 12 obligated balance net beginning of period xxx xxx xxx xxx 13 obligated balance transferred net () xxx xxx xxx xxx 14 obligated balance net end of period: 14a accounts receivable xxx xxx xxx xxx 14b unfilled customer orders from federal sources xxx xxx xxx xxx 14c undelivered orders xxx xxx xxx xxx 14d accounts payable xxx xxx xxx xxx 15 outlays: 15a disbursements xxx xxx xxx xxx 15b collections xxx xxx xxx xxx 15c subtotal xxx xxx xxx xxx 16 less: distributed offsetting receipts xxx xxx xxx xxx 17 net outlays $ xxxx $ xxxx $ xxxx $ xxxx the accompanying notes are an integral part of these statements 64b illustrative statement combined statement of budgetary resources (beginning with fy 2006) departmentagencyreporting entity combined statement of budgetary resources (page 1 of 2) for the years ended september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx 2xxx 2xxx (cy) (cy) (py) (py) nonbudgetary nonbudgetary credit reform credit reform budgetary financing accounts budgetary financing accounts budgetary resources: 1 unobligated balance brought forward october 1: $ xxx $ xxx $ xxx $ xxx 2 recoveries of prior year unpaid obligations xxx xxx xxx xxx 3 budget authority 3a appropriation xxx xxx xxx xxx 3b borrowing authority xxx xxx xxx xxx 3c contract authority xxx xxx xxx xxx 3d spending authority from offsetting collections 3d1 earned 3d1a collected xxx xxx xxx xxx 3d1b change in receivables from federal sources xxx xxx xxx xxx 3d2 change in unfilled customer orders 3d2a advance received xxx xxx xxx xxx 3d2b without advance from federal sources xxx xxx xxx xxx 3d3 anticipated for rest of year without advances 3d4 previously unavailable xxx xxx xxx xxx 3d5 expenditure transfers from trust funds xxx xxx xxx xxx 3e subtotal xxx xxx xxx xxx 4 nonexpenditure transfers net anticipated and actual xxx xxx xxx xxx 5 temporarily not available pursuant to public law xxx xxx xxx xxx 6 permanently not available xxx xxx xxx xxx 7 total budgetary resources $ xxxx $ xxxx $ xxxx $ xxxx departmentagencyreporting entity combined statement of budgetary resources (page 2 of 2) for the years ended september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx 2xxx 2xxx (cy) (cy) (py) (py) nonbudgetary nonbudgetary credit program credit program budgetary financing accounts budgetary financing accounts status of budgetary resources: 8 obligations incurred: 8a direct $ xxx $ xxx $ xxx $ xxx 8b reimbursable xxx xxx xxx xxx 8c subtotal xxx xxx xxx xxx 9 unobligated balance: 9a apportioned xxx xxx xxx xxx 9b exempt from apportionment xxx xxx xxx xxx 9c subtotal xxx xxx xxx xxx 10 unobligated balance not available xxx xxx xxx xxx 11 total status of budgetary resources xxxx xxxx xxxx xxxx change in obligated balance: 12 obligated balance net 12a unpaid obligations brought forward october 1 xxx xxx xxx xxx 12b less: uncollected customer payments from federal sources brought forward october 1 xxx xxx xxx xxx 12c total unpaid obligated balance net xxx xxx xxx xxx 13 obligations incurred net () xxx xxx xxx xxx 14 less: gross outlays xxx xxx xxx xxx 15 obligated balance transferred net 15a actual transfers unpaid obligations () xxx xxx xxx xxx 15b actual transfers uncollected customer payments from federal sources () xxx xxx xxx xxx 15c total unpaid obligated balance transferred net xxx xxx xxx xxx 16 less: recoveries of prior year unpaid obligations actual xxx xxx xxx xxx 17 change in uncollected customer payments from federal sources () xxx xxx xxx xxx 18 obligated balance net end of period 18a unpaid obligations xxx xxx xxx xxx 18b less: uncollected customer payments from federal sources xxx xxx xxx xxx 18c total unpaid obligated balance net end of period xxx xxx xxx xxx net outlays 19 net outlays: 19a gross outlays xxx xxx xxx xxx 19b less: offsetting collections xxx xxx xxx xxx 19c less: distributed offsetting receipts xxx xxx xxx xxx 19d net outlays xxx xxx xxx xxx the accompanying notes are an integral part of these statements 4 there are however rare exceptions in which outlays reported in the budget do not correspond to disbursements reported on the statement of transactions 65 budgetary resources this section of the statement is designed to present the total budgetary resources available to the reporting entity budgetary resources include new budget authority unobligated balances at the beginning of the period and transferred in and out during the period spending authority from offsetting collections recoveries of prior year unpaid obligations and any adjustments to these resources the resources reported on this statement shall agree with and be reconciled to the total budgetary resources reported for the aggregate of all budget accounts on the sf 133 expired obligated and unobligated balances that cancel at the end of the fiscal year must be reported as canceled on the yearend sbr authority canceled in previous years should not be included on the current sbr 66 status of budgetary resources this section of the statement is designed to display information about the status of budgetary resources at the end of the period it consists of the obligations incurred the unobligated balances at the end of the period that remain available and unobligated balances at the end of the period that are unavailable except to adjust or liquidate prior year obligations the total amount displayed for the status of budgetary resources shall equal the total budgetary resources available to the reporting entity as of the reporting date the status of budgetary resources reported on this statement shall agree with and be reconciled to the total status reported for the aggregate of all budget accounts on the sf 133 67 a relationship of obligations to outlays fy 2005 this section of the statement displays the obligated balances and outlays during the reporting period outlays outlays consist of disbursements net of offsetting collections4 the outlays shall agree with and be reconciled to the agency outlay totals reported in the budget of the united states government (ie with the aggregate of the outlays for accounts within the budget) the outlays shall also agree with and be reconciled to the aggregate of outlays reported on the sf 133 for the aggregate of all budget accounts including nonbudgetary financing accounts and the disbursements and collections reported to treasury on a monthly basis (sf 224 statement of transactions; sf 1219 statement of accountability; and sf 1220 statement of transactions) per omb circular no a11 (as amended) offsetting receipts offsetting receipts are collections that are credited to general fund special fund or trust fund receipt accounts and that offset gross outlays unlike offsetting collections which are credited to expenditure accounts and offset outlays at the account level offsetting receipts are credited to receipt accounts and offset outlays at the agency or governmentwide level offsetting receipts may be distributed to agencies or undistributed distributed offsetting receipts offset the outlays of the agency while undistributed offsetting receipts offset governmentwide outlays distributed offsetting receipts typically offset the outlays of the agency that conducts the activity generating the receipts and the subfunction to which the activity is assigned offsetting receipts are composed of: proprietary receipts from the public receipts from intragovernmental transactions and offsetting governmental receipts this line item on the statement of budgetary resources should include all distributed offsetting receipts for the agency a listing of distributed offsetting receipt accounts can be found at the following website wwwfmstreasgov go to financial management service combined statement part four other information this is an unpublished part of the combined statement of receipts outlays and balances of the united states government issued by the department of the treasury agencies should include in the sbr the receipt accounts in part 4 classified as: proprietary receipts from the public intrabudgetary receipts deducted by agencies offsetting governmental receipts the amount of distributed offsetting receipts reported in this statement should be the aggregate of cash collected in these receipt accounts and reported to treasury on a monthly basis (sf 224 statement of transactions; sf 1219 statement of accountability; and sf 1220 statement of transactions) the amount of offsetting receipts that are distributed to agencies and reported in this statement shall also agree with and be reconciled to the deductions for offsetting receipts as reported in the budget of the united states government undistributed offsetting receipts credited to governmentwide outlay totals should not be included in the sbr net outlays for fy 2005 the amount on this line shall equal line 15c outlays subtotal less line 16 less: offsetting receipts this amount shall agree with and be reconciled to the net outlays (gross outlays less offsetting collections and receipts) for the agency as reported in the budget of the united states government 67b change in obligated balances: fy 2006 this section of the statement displays the change in obligated balances during the reporting period 5 there are however rare exceptions in which outlays reported in the budget do not correspond to disbursements reported on the statement of transactions 67c net outlays: fy 2006 outlays outlays consist of disbursements net of offsetting collections5 the outlays shall agree with and be reconciled to the agency outlay totals reported in the budget of the united states government (ie with the aggregate of the outlays for accounts within the budget) the outlays shall also agree with and be reconciled to the aggregate of outlays reported on the sf 133 for the aggregate of all budget accounts including nonbudgetary financing accounts and the disbursements and collections reported to treasury on a monthly basis (sf 224 statement of transactions; sf 1219 statement of accountability; and sf 1220 statement of transactions) per omb circular no a11 (as amended) offsetting receipts offsetting receipts are collections that are credited to general fund special fund or trust fund receipt accounts and that offset gross outlays unlike offsetting collections which are credited to expenditure accounts and offset outlays at the account level offsetting receipts are credited to receipt accounts and offset outlays at the agency or governmentwide level offsetting receipts may be distributed to agencies or undistributed distributed offsetting receipts offset the outlays of the agency while undistributed offsetting receipts offset governmentwide outlays distributed offsetting receipts typically offset the outlays of the agency that conducts the activity generating the receipts and the subfunction to which the activity is assigned offsetting receipts are composed of: proprietary receipts from the public receipts from intragovernmental transactions and offsetting governmental receipts this line item on the statement of budgetary resources should include all distributed offsetting receipts for the agency a listing of distributed offsetting receipt accounts can be found at the following website wwwfmstreasgov go to financial management service combined statement part four other information this is an unpublished part of the combined statement of receipts outlays and balances of the united states government issued by the department of the treasury agencies should include in the sbr the receipt accounts in part 4 classified as: proprietary receipts from the public intrabudgetary receipts deducted by agencies offsetting governmental receipts the amount of distributed offsetting receipts reported in this statement should be the aggregate of cash collected in these receipt accounts and reported to treasury on a monthly basis (sf 224 statement of transactions; sf 1219 statement of accountability; and sf 1220 statement of transactions) the amount of offsetting receipts that are distributed to agencies and reported in this statement shall also agree with and be reconciled to the deductions for offsetting receipts as reported in the budget of the united states government undistributed offsetting receipts credited to governmentwide outlay totals should not be included in the sbr net outlays line 19d is calculated it is computed as line 19a less line 19b less line 19c this amount shall agree with and be reconciled to the net outlays (gross outlays less offsetting collections and receipts) as reported in the budget of the united states government section 7 statement of financing table of contents 71 general 72 illustrative statement consolidated statement of financing 73 resources used to finance activities 74 resources used to finance items not part of the net cost of operations 75 components requiring or generating resources in future periods 76 components not requiring or generating resources 77 net cost of operations 71 general the statement of financing is the bridge between an entitys budgetary and financial (ie proprietary) accounting the statement of financing articulates the relationship between net obligations derived from an entitys budgetary accounts and net cost of operations derived from the entitys proprietary accounts by identifying and explaining key differences between the two numbers most entity transactions are recorded in both budgetary and proprietary accounts however because different accounting bases are used for budgetary and proprietary accounting some transactions may appear in only one set of accounts (eg accrual of environmental and disposal liabilities which is recorded only in the proprietary records) furthermore not all obligations or offsetting collections may result in expenses or exchange revenue (eg purchase of a building is capitalized on the balance sheet in the proprietary accounts but obligated and outlayed in the budgetary accounts) the statement is structured to first identify total resources used by an entity during the period (budgetary and other) and then makes adjustments to the resources based upon how they were used to finance net obligations or net cost budgetary resources reported in this statement are those resources as defined in omb circular no a11 and also reported on the statement of budgetary resources other resources reported in this statement are also reflected in the statement of changes in net position preparers of financial statements should refer to fasabs implementation guide to sffas no 7 for more detailed guidance useful in preparing the statement of financing preparers of financial statements have flexibility as to the level of detail presented eg the information should be presented for the reporting entity as a whole and if the preparer elects for the major suborganizations or responsibility segments or for the major budget accounts the budgetary information used to calculate net obligations (ie lines 14) must be presented on a combined basis in the statement of financing to enable a direct tie to the statement of budgetary resources 72 illustrative statement consolidated statement of financing departmentagencyreporting entity consolidated statement of financing (page 1 of 2) for the years ended september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx (cy) (py) resources used to finance activities: budgetary resources obligated 1 obligations incurred $ xxx $ xxx 2 less: spending authority from offsetting collections and recoveries xxx xxx 3 obligations net of offsetting collections and recoveries xxx xxx 4 less: offsetting receipts xxx xxx 5 net obligations xxx xxx other resources 6 donations and forfeitures of property xxx xxx 7 transfers inout without reimbursement () xxx xxx 8 imputed financing from costs absorbed by others xxx xxx 9 other () xxx xxx 10 net other resources used to finance activities xxx xxx 11 total resources used to finance activities xxxx xxxx resources used to finance items not part of the net cost of operations 12 change in budgetary resources obligated for goods services and benefits ordered but not yet provided () xxx xxx 13 resources that fund expenses recognized in prior periods xxx xxx 14 budgetary offsetting collections and receipts that do not affect net cost of operations 14a credit program collections which increase liabilities for loan guarantees or allowances for subsidy xxx xxx 14b other xxx xxx 15 resources that finance the acquisition of assets xxx xxx 16 other resources or adjustments to net obligated resources that do not affect net cost of operations () xxx xxx 17 total resources used to finance items not part of the net cost of operations xxx xxx 18 total resources used to finance the net cost of operations xxxx xxxx departmentagencyreporting entity consolidated statement of financing (page 2 of 2) for the years ended september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx (cy) (py) components of the net cost of operations that will not require or generate resources in the current period: components requiring or generating resources in future periods: 19 increase in annual leave liability xxx xxx 20 increase in environmental and disposal liability xxx xxx 21 upwarddownward reestimates of credit subsidy expense () xxx xxx 22 increase in exchange revenue receivable from the public xxx xxx 23 other () xxx xxx 24 total components of net cost of operations that will require or generate resources in future periods xxx xxx components not requiring or generating resources: 25 depreciation and amortization xxx xxx 26 revaluation of assets or liabilities () xxx xxx 27 other () xxx xxx 28 total components of net cost of operations that will not require or generate resources xxx xxx 29 total components of net cost of operations that will not require or generate resources in the current period xxxx xxxx 30 net cost of operations $ xxxx $ xxxx the accompanying notes are an integral part of these statements 73 resources used to finance activities this section reflects the budgetary resources obligated and other resources that are used to finance the activities of the agency the obligations of budgetary resources are net of offsetting collections recoveries and offsetting receipts the other resources are financing sources that increase net position but are not budgetary resources budgetary resources obligated obligations incurred this line item will agree with the obligations incurred (line 8) as reported on the statement of budgetary resources this line item will include all budget accounts including nonbudgetary financing accounts less: spending authority from offsetting collections and recoveries this line item will agree with the spending authority from offsetting collections (line 3 for fy 2005 and line 3d for fy 2006) and recoveries (line 4 for fy 2005 and line 2 for fy 2006) as reported on the statement of budgetary resources this line item will include all budget accounts including nonbudgetary financing accounts obligations net of offsetting collections and recoveries this line item is the difference between the two preceding lines less: offsetting receipts this line item will agree with the offsetting receipts (line 16 in fy 2005 and line 19c in fy 2006) as reported on the statement of budgetary resources net obligations this line item is the difference between the two preceding lines net obligations reflect obligations incurred net of offsetting collections recoveries and offsetting receipts other resources the line items in this section will agree with the corresponding line items as reported on the statement of changes in net position: donations and forfeitures of property (line 12) transfers inout without reimbursement (line 13 only) imputed financing from costs absorbed by others (line 14) and other (line 15) these resources increase net position but are not budgetary resources as reported on the statement of budgetary resources or defined as such in the omb circular no a11 74 resources used to finance items not part of the net cost of operations this section adjusts total resources used to finance the activities of the entity to account for items that were included in net obligations and other resources but were not part of the net cost of operations this section would include items in which the expense was recognized in a prior period but the budgetary resource and obligation are recognized in the current period (eg upwarddownward reestimates of subsidy expense accrued in the prior period but obligated in the current period) it would also include budgetary resources and obligations recognized in the current period that do not affect the net cost of operations (eg the acquisition of assets reflected in net obligations but not in net cost of operations for the period) change in budgetary resources obligated for goods services and benefits ordered but not yet provided this amount reflects undelivered orders or adjustments thereof reflected in net obligations but not part of net cost of operations this line item is typically a reduction to total resources used to finance activities resources that fund expenses recognized in prior periods this line item reflects the obligation of resources that were part of the net cost of operations in a prior period the expense would have been reported on this statement in a prior period as a component requiring or generating resources in future periods (section 75) an example includes the liquidation of a liability with budgetary resources provided in the current period such activities include decreases in annual leave and environmental cleanup liabilities budgetary offsetting collections and receipts that do not affect net cost of operations this line item reflects offsetting collections and receipts that are not reported as exchange revenue on the statement of net cost gross offsetting collections and receipts are offset against obligations incurred to determine net obligations in the resources used to finance activities section of this statement since not all of offsetting collections and receipts are exchange revenue an adjustment is needed on this line the adjustment reflects the portion of offsetting collections and receipts that are not reported on the statement of net cost credit program collections which increase liabilities for loan guarantees or allowances for subsidy certain collections in the financing account represent budgetary resources but do not affect net cost these collections do however adjust amounts on the balance sheet for example the accounting for subsidy expense illustrates this reconciling item in determining net obligations in the resources used to finance activities section subsidy expense is reflected as both a component of obligations incurred and offsetting collections the program account obligates the subsidy expense and the financing account collects and retains the subsidy until disbursement of a loan or default claim the subsidy expense is reflected as both an obligation on the statement of budgetary resources and an expense on the statement of net cost the collection however is reflected as an offsetting collection on the statement of budgetary resources but reflected as a contraasset or liability on the balance sheet other other transactions generating differences between net obligations and net cost of operations that are reflected on this line include the collection of exchange revenue receivable from the public and advances received for work not yet performed resources that finance the acquisition of assets this line item reflects budgetary resources obligated that are not expenses as reported on the statement of net cost an example of this activity includes purchases of capitalized assets other resources or adjustments to net obligated resources that do not affect net cost of operations this line item includes activities not otherwise classified above this activity may include noncash recoveries of prior year obligations recoveries are budgetary resources that offset obligations on the statement of budgetary resources but are not a proprietary financing source used to offset costs on the statement of net cost other examples include donations of property forfeitures of property and transfers of property these examples are reported as other resources in the first section of this statement but are not reported on the statements of net cost or budgetary resources 75 components requiring or generating resources in future periods the costs of the federal government are not always funded in the period the costs are incurred this section identifies items that are recognized as a component of the net cost of operations for the period but the budgetary resources (and related obligation) will not be provided (or incurred) until a subsequent period increase in annual leave liability this line item includes the expense related to the increase in annual leave liability for which the budgetary resources will be provided in a subsequent period increase in environmental and disposal liability this line item includes the expense related to the increase in environmental and disposal liability for which the budgetary resources will be provided in a subsequent period upwarddownward reestimates of credit subsidy expense this line item includes the expense recognized as a result of an upwarddownward reestimate of credit program subsidy cost for which the budgetary resources (or obligation) will be provided (or incurred) in a subsequent period while budgetary resources are not provided in the current period credit subsidy reestimates should be reflected as liabilities covered by budgetary resources since the budget authority to fund the reestimates is permanent and indefinite and no further congressional action is needed to provide the resources increase in exchange revenue receivable from the public exchange revenue from the public is reflected as it is earned as a component of the net cost of operations for the period but will normally not be reflected in net obligations until it is received budgetary resources are normally not recognized from the public until collected in accordance with the omb circular no a11 other this line item includes activities not otherwise classified above 76 components not requiring or generating resources this section includes items that are recognized as part of the net cost of operations for the period but will not generate or require the use of resources depreciation and amortization this line item includes the depreciation and amortization of assets reflected as a component of net cost of operations for the period for capitalized assets budgetary resources are obligated when the asset is acquired not when it is depreciated revaluation of assets or liabilities this line item includes gains and losses recognized during the revaluation of assets or liabilities other this line item includes activities not otherwise classified above 77 net cost of operations this amount is the sum of the line items total resources used to finance net cost of operations and total components of net cost of operations that will not require or generate resources in the current period this line item will agree with the net cost of operations as reported on the statement of net cost section 8 statement of custodial activity table of contents 81 general 82 illustrative statement statement of custodial activity 83 sources of collections 84 disposition of collections 85 net custodial activity 81 general the statement of custodial activity is required for entities that collect nonexchange revenue for the general fund of the treasury a trust fund or other recipient entities in addition the statement of custodial activity is required for selected exchange revenues specified in sffas 7 including oil and gas revenues the collecting entities do not recognize as revenue those collections that have been or should be transferred to others as revenues rather they shall account for sources and disposition of the collections as custodial activities on the statement of custodial activity an exception to requiring preparation of the statement of custodial activity is made when collecting entities have custodial collections that are immaterial and incidental to their primary mission in these cases the sources and disposition of the collections may be disclosed in accompanying footnotes custodial collections are normally nonexchange revenues such as taxes and duties collected by the internal revenue service and the us customs and border protection exchange revenue is normally reported on the statement of net cost however sffas 7 identified certain exceptional circumstances in which the entity recognizes virtually no costs in connection with earning the revenue that it collects (see paragraph 45 of sffas no 7) in these identified situations the exchange revenue is reported in the statement of custodial activity rather than on the statement of net cost information on the sections of the statement of custodial activity is presented below also see sffas no 7 and the related implementation guide 82 illustrative statement statement of custodial activity departmentagencyreporting entity statement of custodial activity for the years ended september 30 2xxx (cy) and 2xxx (py) (in dollarsthousandsmillions) 2xxx 2xxx (cy) (py) revenue activity: sources of cash collections: 1 individual income and ficaseca taxes $ xxx $ xxx 2 corporate income taxes xxx xxx 3 excise taxes xxx xxx 4 estate and gift taxes xxx xxx 5 federal unemployment taxes xxx xxx 6 customs duties xxx xxx 7 miscellaneous xxx xxx 8 total cash collections xxxx xxxx 9 accrual adjustments () xxx xxx 10 total custodial revenue xxxx xxxx disposition of collections: 11 transferred to others (by recipient): recipient a xxx xxx recipient b xxx xxx recipient c xxx xxx 12 (increase)decrease in amounts yet to be transferred () xxx xxx 13 refunds and other payments xxx xxx 14 retained by the reporting entity xxx xxx 15 net custodial activity $ 0 $ 0 the accompanying notes are an integral part of these statements report in this section of the statement the components of collections such as by type of tax and duty collection of pastdue receivables for others or other appropriate identifier to describe the source and nature of the collections if refunds of taxes or other nonexchange revenues are material in relation to the gross collections made consider reporting them by component separately in a footnote this section of the report also includes the nonexchange revenue accrual adjustment which shall be shown separately and added or subtracted from the net collections to determine the total custodial nonexchange revenue guidance for calculating the accrual adjustment can be found in sffas no 7 and the related implementation guide if the accrual adjustments are material in relation to the gross collections consider reporting them separately in a footnote the accrual adjustment is not applicable to exchange revenue exchange revenues are reported on an accrual basis 84 disposition of collections this section of the statement accounts for the disposition of the revenue reported in the preceding section amounts transferred to others identify the specific agencies to which collections were transferred and the amounts transferred amounts yet to be transferred report the change in liability for revenue yet to be transferred the liability may exist because the revenue has been accruedand is receivablebut has not yet been collected or because collections already made have not yet been transferred to the entity for which collected as of the end of the reporting period amounts of refunds and other payments report the amounts of refunds and other payments made this line is normally not applicable to exchange revenue amounts retained by the collecting entity in some cases collecting entities are permitted to retain a portion of amounts collected amounts retained shall be separately reported by the collecting entity as a disposition of collections 85 net custodial activity the total of the sources of collections section (total revenue) shall equal the total of the disposition of collections section (total disposition of revenue) the net custodial activity shall always equal zero 83 sources of collections section 9 notes to the financial statements (part 1 of 2) table of contents 91 note 1 significant accounting policies notes related to the balance sheet 92 note 2 nonentity assets 93 note 3 fund balance with treasury 94 note 4 cash and other monetary assets 95 note 5 investments 96 note 6 accounts receivable net 97 note 7 taxes receivable net 98 note 8 direct loans and loan guarantees nonfederal borrowers 99 note 9 inventory and related property net 910 note 10 general property plant and equipment net 911 note 11 other assets 912 note 12 liabilities not covered by budgetary resources 913 note 13 debt 914 note 14 federal employee and veteran benefits 915 note 15 environmental and disposal liabilities 916 note 16 other liabilities 917 note 17 leases 918 note 18 life insurance liabilities 919 note 19 commitments and contingencies 920 note 20 earmarked funds (effective fy 2006) 91 note 1 significant accounting policies describe the reporting entity and identify its major components summarize the accounting principles and methods of applying those principles that management has concluded are appropriate for presenting fairly the entitys assets liabilities net cost of operations changes in net position and budgetary resources disclosure of accounting policies should identify and describe the accounting principles followed by the reporting entity and the methods of applying those principles in general the disclosure should encompass important judgments as to the valuation recognition and allocation of assets liabilities expenses revenues and other financing sources disclosures of accounting policies should not duplicate details presented elsewhere as part of the notes to the financial statements the summary of significant accounting policies should include a description of changes in generally accepted accounting principles that impact the financial statements and an explanation of concepts such as fund balance with treasury and earmarked funds that are unique to federal financial statements in addition the summary of significant accounting policies should disclose any significant changes in the composition of the reporting entity or significant changes in the manner in which the reporting entity aggregates information for financial reporting purposes these changes in effect result in a new reporting entity and their impact should be reported by restating the financial statements for all prior periods presented in order to show the new reporting entity for all periods presented except for certain portions of earmarked funds as described in paragraphs 20 and 26 of sffas 27 92 note 2 nonentity assets 2xxx 2xxx (cy) (py) intragovernmental: fund balance with treasury $ xxx $ xxx investments xxx xxx accounts receivable xxx xxx loans receivable xxx xxx other xxx xxx total intragovernmental xxx xxx cash and other monetary assets xxx xxx accounts receivable xxx xxx taxes receivable xxx xxx loans receivable and related foreclosed property xxx xxx inventory and related property xxx xxx other xxx xxx total nonentity assets xxxx xxxx total entity assets xxxx xxxx total assets $ xxxx $ xxxx other information: disclose intragovernmental nonentity assets separately from other nonentity assets also provide other information needed to understand the nature of nonentity assets 93 note 3 fund balance with treasury a fund balances: 2xxx 2xxx (cy) (py) (1) trust funds $ xxx $ xxx (2) revolving funds xxx xxx (3) appropriated funds xxx xxx (4) other fund types xxx xxx total $ xxxx $ xxxx b status of fund balance with treasury 2xxx 2xxx (cy) (py) (1) unobligated balance (a) available xxx xxx (b) unavailable xxx xxx (2) obligated balance not yet disbursed xxx xxx (3) nonbudgetary fbwt xxx xxx total $xxxx $ xxxx c other information: instructions a fund balances the total of all undisbursed account balances with the us treasury as reflected in the entitys records and summarized by fund type line (4) other fund types should include balances in deposit accounts such as for collections pending litigation awaiting determination of the proper accounting disposition or being held by the entity in the capacity of a banker or agent for others if any of the balances under other fund types are material list them separately b status of fund balance the total of the entitys fund balance with treasury as reflected in the entitys general ledger and represented by unobligated and obligated balances unobligated balances shall be segregated to show available and unavailable amounts certain unobligated balances may be restricted to future use and are not apportioned for current use explain such restrictions include in (3) entity fbwt in unavailable receipt accounts clearing accounts etc that do not have budget authority and nonentity fbwt recognized on the balance sheet c other information explain any discrepancies between fund balance with treasury as reflected in the entitys general ledger and the balance in the treasury accounts disclose any other information necessary for understanding the nature of the fund balances 94 note 4 cash and other monetary assets 2xxx 2xxx (cy) (py) a cash $ xxx $ xxx b foreign currency xxx xxx c other monetary assets (1) gold xxx xxx (2) special drawing rights xxx xxx (3) us reserves in the international monetary fund xxx xxx (4) other xxx xxx (5) total other monetary assets xxx xxx d total cash and other monetary assets $ xxxx $ xxxx e other information: instructions report the amount of cash and other monetary assets cash the total of cash under the control of the reporting entity which includes coin paper currency purchased foreign currency negotiable instruments and amounts on deposit in banks and other financial institutions cash available for agency use should include petty cash and cash held in revolving funds which will not be transferred to the general fund foreign currency the total us dollar equivalent of nonpurchased foreign currencies held in foreign currency fund accounts other monetary assets this amount represents other items including gold special drawing rights and us reserves in the international monetary fund total cash and other monetary assets the sum of lines a b and c(5) other information disclose as other information any restrictions on cash restricted cash includes holdings which are unavailable for agency use (nonentity cash) and have not been transferred to the general fund restricted cash also includes cash held in escrow to pay property taxes and insurance related to property associated with defaulted loans as well as other amounts of legally restricted cash for specific purposes disclose any restrictions on the use or conversion of cash denominated in foreign currencies and the significant effects if any of changes in the exchange rate on the entitys financial position that occur after the end of the reporting period but before the issuance of financial statements provide other information as appropriate such as the valuation rate of gold 95 note 5 investments exhibit 9a note 5 investments amounts for 2xxx (cy) balance sheet reporting (1) (2) (3) (4) (5) (6) unamortized amortization (premium) investments other market value cost method discount net adjustments disclosure a intragovernmental securities: (1) marketable xxx xxx xxx xxx xxx (2) nonmarketable: par value xxx xxx xxx xxx xxx (3) nonmarketable: marketbased xxx xxx xxx xxx xxx subtotal xxx na xxx xxx xxx xxx (4) interest receivable xxx xxx total xxxx xxxx b other securities: (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx (3) xxx xxx xxx xxx xxx subtotal xxx na xxx xxx xxx xxx (4) interest receivable xxx xxx total xxxx xxxx amounts for 2xxx balance sheet reporting (1) (2) (3) (4) (5) (6) unamortized amortization (premium) investments other market value cost method discount net adjustments disclosure b intragovernmental securities: (1) marketable xxx xxx xxx xxx xxx (2) nonmarketable: par value xxx xxx xxx xxx xxx (3) nonmarketable: marketbased xxx xxx xxx xxx xxx subtotal xxx na xxx xxx xxx xxx (4) interest receivable xxx xxx total xxxx xxxx b other securities: (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx (3) xxx xxx xxx xxx xxx subtotal xxx na xxx xxx xxx xxx (4) interest accrued xxx xxx total xxxx xxxx c other information: instructions columns 1 through 4 are for disclosing amounts to be recognized on the balance sheet column 4 equals column 1 plus or minus column 3 column 5 includes any reduction in value that is more than temporary and other adjustments and column 6 equals column 4 minus column 5 securities are normally recognized at cost or amortized cost on the balance sheet however market value is used for balance sheet purposes (except for pension and other retirement plans) when (a) there is intent to sell the securities prior to maturity and (b) there is a reduction in value that is more than temporary column 6 is to be used to disclose the market value of all marketable securities and all nonmarketable marketbased securities a intragovernmental securities marketable federal securities can be bought and sold on the open market nonmarketable par value treasury securities are issued by the bureau of the public debt to federal accounts and are purchased and redeemed at par exclusively through treasurys federal investment branch nonmarketable marketbased treasury securities are also issued by the bureau of public debt to federal accounts they are not traded on any securities exchange but mirror the prices of particular treasury securities trading in the government securities market b note on investments for earmarked funds (effective fy 2006) in accordance with sffas 27 investments in treasury securities for earmarked funds should be accompanied by a note paragraph 27 of the standard explains issues to be addressed in the note sffas 27 paragraph 28 intragovernmental investments in treasury securities provides an example of a note that addresses the requirements stated in paragraph 27 c other information disclose any other information relative to understanding the nature of reported investments such as permanent impairments 96 note 6 accounts receivable net present the gross receivables the method used to estimate the allowance for uncollectible accounts and the net amount due do not include receivables related to direct or guaranteed loans which are reported in note 8 97 note 7 taxes receivable net disclose the gross taxes receivable allowance for uncollectible taxes receivable and net taxes receivable also disclose the method used to compute the allowance for uncollectible taxes 98 note 8 direct loans and loan guarantees nonfederal borrowers a direct loan and loan guarantee programs: exhibit 9b list the direct loan andor loan guarantee programs administered by the reporting entity: (1) (2) (3) sections b through o illustrate the required financial and statistical disclosures these sections provide an analysis of the reporting entities direct loans and loan guarantees including: loans receivable allowance for subsidy costs liability for loan guarantees foreclosed property modifications reestimates and administrative costs sections b through o must be supplemented by narrative and discussions which include the following topics: description of the characteristics of the loan programs; events that have had a significant and measurable effect on subsidy rates subsidy expense and subsidy reestimates; nature of modifications; and the number of and restrictions on foreclosed property the comparative disclosures required for this note are limited to those required by sffas nos 2 18 and 19 direct loans b direct loans obligated prior to fy 1992: b1 direct loans obligated prior to fy 1992 (present value method): (1) (2) (3) (4) (5) (6) loans present value of assets direct loan receivable interest foreclosed value related to programs gross receivable property allowance direct loans net (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx total xxx xxx xxx xxx xxx b2 direct loans obligated prior to fy 1992 (allowance for loss method): loans allowance value of assets direct loan receivable interest for loan foreclosed related to programs gross receivable losses property direct loans net (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx total xxx xxx xxx xxx xxx c direct loans obligated after fy 1991: (1) (2) (3) (4) (5) (6) loans allowance for value of assets direct loan receivable interest foreclosed subsidy cost related to programs gross receivable property (present value) direct loans (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx total xxx xxx xxx xxx xxx d total amount of direct loans disbursed (post1991): direct loan programs current year prior year (1) xxx xxx (2) xxx xxx total xxx xxx e subsidy expense for direct loans by program and component: e1 subsidy expense for new direct loans disbursed (current reporting year): (1) (2) (3) (4) (5) (6) direct loan interest fees and other programs differential defaults collections other total (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx total xxx xxx xxx xxx xxx subsidy expense for new direct loans disbursed (prior reporting year): direct loan interest fees and other programs differential defaults collections other total (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx total xxx xxx xxx xxx xxx e2 modifications and reestimates (current reporting year): (1) (2) (3) (4) (5) direct loan total interest rate technical total programs modifications reestimates reestimates reestimates (1) xxx xxx xxx xxx (2) xxx xxx xxx xxx total xxx xxx xxx xxx modifications and reestimates (prior reporting year): direct loan total interest rate technical total programs modifications reestimates reestimates reestimates (1) xxx xxx xxx xxx (2) xxx xxx xxx xxx total xxx xxx xxx xxx e3 total direct loan subsidy expense: direct loan programs current year prior year (1) xxx xxx (2) xxx xxx total xxx xxx f subsidy rates for direct loans by program and component: budget subsidy rates for direct loans for the current years cohorts: direct loan interest fees and other programs differential defaults collections other total (1) xx xx xx xx xx (2) xxx xxx xxx xxx xxx g schedule for reconciling subsidy cost allowance balances (post1991 direct loans) in millions of dollars beginning balance changes and ending balance fy 2xxx (cy) beginning balance of the subsidy cost allowance $ add: subsidy expense for direct loans disbursed during the reporting years by component: (a) interest rate differential costs (b) default costs (net of recoveries) (c) fees and other collections (d) other subsidy costs total of the above subsidy expense components adjustments: (a) loan modifications (b) fees received (c) foreclosed property acquired (d) loans written off (e) subsidy allowance amortization (f) other ending balance of the subsidy cost allowance before reestimates add or subtract subsidy reestimates by component: (a) interest rate reestimate (b) technicaldefault reestimate total of the above reestimate components ending balance of the subsidy cost allowance fy 2xxx (py) $ defaulted guaranteed loans h defaulted guaranteed loans from pre1992 guarantees: h1 defaulted guaranteed loans from pre1992 guarantees (present value method): (1) (2) (3) (4) (5) (6) value of assets defaulted related to guaranteed defaulted loans present guaranteed loan guarantee receivable interest foreclosed value loans programs gross receivable property allowance receivable net (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx total xxx xxx xxx xxx xxx h2 defaulted guaranteed loans from pre1992 guarantees (allowance for loss method): value of assets defaulted related to guaranteed defaulted loans allowance guaranteed loan guarantee receivable interest for loan foreclosed loans programs gross receivable losses property receivable net (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx total xxx xxx xxx xxx xxx i defaulted guaranteed loans from post1991 guarantees: (1) (2) (3) (4) (5) (6) value of assets defaulted allowance for related to guaranteed subsidy defaulted loans cost guaranteed loan guarantee receivable interest foreclosed (present loans programs gross receivable property value) receivable net (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx total xxx xxx xxx xxx xxx loan guarantees j guaranteed loans outstanding: j1 guaranteed loans outstanding: (1) (2) (3) outstanding principal loan guarantee of guaranteed loans amount of outstanding programs face value principal guaranteed (1) xxx xxx (2) xxx xxx total xxx xxx j2 new guaranteed loans disbursed (current reporting year): outstanding principal loan guarantee of guaranteed loans amount of outstanding programs face value principal guaranteed (1) xxx xxx (2) xxx xxx total xxx xxx j3 new guaranteed loans disbursed (prior reporting year): outstanding principal loan guarantee of guaranteed loans amount of outstanding programs face value principal guaranteed (1) xxx xxx (2) xxx xxx total xxx xxx k liability for loan guarantees: k1 liability for loan guarantees (present value method for pre1992 guarantees): (1) (2) (3) (4) liabilities for liabilities for loan guarantees total losses on pre1992 for post1991 liabilities loan guarantee guarantees guarantees for loan programs present value present value guarantees (1) xxx xxx xxx (2) xxx xxx xxx total xxx xxx xxx k2 liability for loan guarantees (estimated future default claims for pre1992 guarantees): liabilities for liabilities for loan guarantees total losses on pre1992 for post1991 liabilities loan guarantee guarantees estimated guarantees for loan programs future default claims present value guarantees (1) xxx xxx xxx (2) xxx xxx xxx total xxx xxx xxx l subsidy expense for loan guarantees by program and component: l1 subsidy expense for new loan guarantees (current reporting year): (1) (2) (3) (4) (5) (6) loan guarantee interest fees and other programs supplements defaults collections other total (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx total xxx xxx xxx xxx xxx subsidy expense for new loan guarantees (prior reporting year): loan guarantee interest fees and other programs supplements defaults collections other total (1) xxx xxx xxx xxx xxx (2) xxx xxx xxx xxx xxx total xxx xxx xxx xxx xxx l2 modifications and reestimates (current reporting year): (1) (2) (3) (4) (5) loan guarantee total interest rate technical total programs modifications reestimates reestimates reestimates (1) xxx xxx xxx xxx (2) xxx xxx xxx xxx total xxx xxx xxx xxx modifications and reestimates (prior reporting year): loan guarantee total interest rate technical total programs modifications reestimates reestimates reestimates (1) xxx xxx xxx xxx (2) xxx xxx xxx xxx total xxx xxx xxx xxx l3 total loan guarantee subsidy expense: loan guarantee programs current year prior year (1) xxx xxx (2) xxx xxx total xxx xxx m subsidy rates for loan guarantees by program and component: budget subsidy rates for loan guarantees for the current years cohorts: loan guarantee interest fees and other programs supplements defaults collections other total (1) xx xx xx xx xx (2) xxx xxx xxx xxx xxx n schedule for reconciling loan guarantee liability balances (post1991 loan guarantees) in millions of dollars beginning balance changes and ending balance fy 2xxx (cy) beginning balance of the loan guarantee liability $ add: subsidy expense for guaranteed loans disbursed during the reporting years by component: (a) interest supplement costs (b) default costs (net of recoveries) (c) fees and other collections (d) other subsidy costs total of the above subsidy expense components adjustments: (a) loan guarantee modifications (b) fees received (c) interest supplements paid (d) foreclosed property and loans acquired (e) claim payments to lenders (f) interest accumulation on the liability balance (g) other ending balance of the loan guarantee liability before reestimates add or subtract subsidy reestimates by component: (a) interest rate reestimate (b) technicaldefault reestimate total of the above reestimate components ending balance of the loan guarantee liability fy 2xxx (py) $ o administrative expense: direct loan loan guarantee programs programs (1) $xx (1) $xx (2) xxx (2) xxx total xxx total xxx instructions a direct loan and loan guarantee programs identify the names of the direct loan and loan guarantee programs operated by the reporting entity the federal credit reform act of 1990 divides direct loans and loan guarantees into two groups: (a) pre1992 refers to the direct loan obligations or loan guarantee commitments made prior to fy 1992 and the resulting direct loans or loan guarantees and (b) post1991 refers to the direct loan obligations or loan guarantee commitments made after fy 1991 and the resulting direct loans or loan guarantees the definitions and explanations of terms and concepts in these instructions can be supplemented by referring to omb circular no a11 section 185 and subsequent issuances of the corresponding circulars additional guidance on accounting and reporting requirements can be found in sffas nos 2 18 and 19 section 506(a)(1) of the federal credit reform act exempts the credit activities of certain agencies such as fdic and tva these agencies can report in accordance with other requirements agencies should disclose that direct loan obligations and loan guarantee commitments made after fy 1991 and the resulting direct loans or loan guarantees are governed by the federal credit reform act of 1990 as amended sffas no 2 provides that the present value of the subsidy costs (which arises from interest rate differentials interest supplements defaults (net of recoveries) fee offsets and other cash flows) associated with direct loans and loan guarantees be recognized as a cost in the year the direct or guaranteed loan is disbursed direct loans are reported net of an allowance for subsidy at present value and loan guarantee liabilities are reported at present value agencies should also disclose whether pre1992 direct loans and loan guarantees are reported on a present value basis or are reported under the allowance for loss method (under the allowance for loss method the nominal amount of the direct loans is reduced by an allowance for uncollectible amounts and the liability for loan guarantees is the amount the agency estimates will more likely than not require a future cash outflow to pay default claims under the present value method the nominal amount of direct loans is reduced by an allowance equal to the difference between the nominal amount and the present value of the expected net cash flows from the loans and the liability for loan guarantees is the present value of expected net cash outflows due to the loan guarantees) depending on the reporting method selected by management for pre1992 direct loans and loan guarantees agencies should choose the appropriate format from the alternatives shown in sections b h and k above (note: agencies should follow either the net present value method or the allowance for loss method but not both they may not change from one method to the other without the advance approval of omb) agencies should disclose that their loans receivable net or their value of assets related to direct loans is not the same as the proceeds that they would expect to receive from selling their loans when the reporting entity has made payments on behalf of borrowers which should be collected from the borrowers the resulting receivables shall be reported in the same column as loans receivable for either direct loans or defaulted guaranteed loans receivables related to administrative costs of operating these programs shall be reported as accounts receivable in note 6 and not as credit program receivables in this note narrative and discussion provide other information related to direct loan and loan guarantee programs as appropriate including a description of the characteristics of the loan programs any commitments to guarantee managements method for accruing interest revenue and recording interest receivable and managements policy for accruing interest on nonperforming loans disclose a discussion and explanation of events and changes in economic conditions other risk factors legislation credit policies and subsidy estimation methodologies and assumptions that have had a significant and measurable effect on subsidy rates subsidy expense and subsidy reestimates the discussion should also include events and changes that have occurred and are more likely than not to have a significant impact but the effects of which are not measurable at the reporting date changes in legislation or credit policies include for example changes in borrowers eligibility the levels of fees or interest rates charged to borrowers the maturity terms of loans and the percentage of a private loan that is guaranteed if modifications were made explain the nature of the modifications the discount rate used in calculating the expense and the basis for recognizing a gain or loss related to the modification also if appropriate disclose that the subsidy expense resulting from reestimates that is included in the financial statements but not reported in the budget until the following year with respect to the foreclosed property reported in sections b c h and i the following information should be disclosed: changes from prior years accounting methods if any  restrictions on the usedisposal of the property  number of properties held and average holding period by type or category  number of properties for which foreclosure proceedings were in process at the end of the period b direct loans obligated prior to fy 1992 for each program with pre1992 direct loans report loans receivable gross and interest receivable in columns 2 and 3 respectively if the present value method is used report in column 4 the estimated net realizable value of related foreclosed property and report in column 5 the present value allowance the sum of columns 2 through 4 less column 5 is reported as value of assets related to direct loans (column 6) if the allowance for loss method is used report in column 4 the allowance for loan losses and in column 5 the estimated net realizable value of related foreclosed property the sum of columns 2 3 and 5 less column 4 is reported as value of assets related to direct loans (column 6) c direct loans obligated after fy 1991 for each program with post1991 direct loans report loans receivable gross interest receivable and the estimated value of related foreclosed property in columns 2 3 and 4 respectively foreclosed property associated with post1991 direct and acquired defaulted guaranteed loans shall be valued at the net present value of the projected cash flows associated with the property to practicably accomplish this requirement foreclosed property may be recorded at the estimated net realizable value at the time of foreclosure if the differences are not material a portion of the related allowance for subsidy account should apply to the foreclosed property but that amount need not be separately determined rather the allowance account is subtracted from the sum of the credit program assets to determine the net present value of the assets for additional guidance related to foreclosures refer to sffas no 2 5760 and sffas no 3 7991 report the related allowance for subsidy cost in column 5 report the sum of columns 2 through 4 less column 5 as the value of assets related to direct loans (column 6) d total amount of direct loans disbursed report the total amount of direct loans disbursed for the current reporting year and the prior reporting year for each program e subsidy expense for direct loans by program and component disclose for each program the total subsidy expense and its components the subsidy expense for modifications and the total subsidy expense and its components for reestimates during the current and prior reporting years e1 subsidy expense for new direct loans disbursed: disclose for each program the total subsidy expense for new direct loans disbursed and its components: interest rate differential costs default costs (net of recoveries) fees and other collections and other costs in column 2 disclose the present value of the amount of the subsidy expense attributable to the interest rate differential between the interest rate charged to the borrowers and the discount rate used to calculate the present value of the direct loans and the subsidy costs; in column 3 the present value of the estimated defaults (net of recoveries); in column 4 the present value of the estimated fees collected (offsetting expense); in column 5 the present value of other cash flows including prepayments; and in column 6 the total of columns 2 through 5 e2 direct loan modifications and reestimates: in column 2 disclose the subsidy expense for modifications of direct loans previously disbursed (whether pre1992 or post 1991) in columns 3 and 4 disclose reestimates of the subsidy expense for direct loans previously disbursed by component (interest rate and technicaldefault); and in column 5 the total of columns 3 and 4 e3 total direct loan subsidy expense: the total subsidy expense for the current and prior years direct loans modifications and reestimates f subsidy rates for direct loans by program and component: disclose for each program the budget subsidy rates estimated for the cohorts of the current reporting year also disclose the subsidy rate for the following components: interest rate differential costs default costs (net of recoveries) fees and other collections and other costs estimated for direct loans in the current years budget for the current years cohorts these rates should be consistent with the rates published in the federal credit supplement to the budget of the us government each subsidy rate is the dollar amount of the total subsidy or a subsidy component as a percentage of the direct loans obligated in the cohort entities are encouraged to use trend data to display significant fluctuations in subsidy rates such trend data if used should be accompanied with analysis to explain the underlying causes for the fluctuations the reporting entity should state the following in its disclosure: the subsidy rates disclosed pertain only to the current years cohorts these rates cannot be applied to the direct loans disbursed during the current reporting year to yield the subsidy expense the subsidy expense for new loans reported in the current year could result from disbursements of loans from both current year cohorts and prior year(s) cohorts the subsidy expense reported in the current year also includes modifications and reestimates g schedule for reconciling subsidy cost allowance balances for post1991 direct loans display a reconciliation between the beginning and ending balances of the subsidy cost allowance for outstanding direct loans reported in the entitys balance sheet the reconciliation is required for direct loans obligated on or after october 1 1991 the effective date of the federal credit reform act of 1990 reporting entities are encouraged but not required to display reconciliations for direct loans obligated prior to october 1 1991 in schedules separate from the direct loans obligated after september 30 1991 schedules for pre1992 direct loans would not have all the same reconciling items as for post1991 direct loans h defaulted guaranteed loans from pre1992 guarantees for each program with pre 1992 loan guarantees report gross receivables from defaulted guaranteed loans assumed for direct collection in column 2 and the related interest receivable in column 3 if the present value method is used report the estimated net realizable value of related foreclosed property in column 4 and the present value allowance in column 5 the sum of columns 2 through 4 less column 5 is reported as value of assets related to defaulted guaranteed loans receivable net (column 6) if the allowance for loss method is used report the allowance for loan losses in column 4 and the estimated net realizable value of related foreclosed property in column 5 the sum of columns 2 3 and 5 less column 4 is reported as value of assets related to defaulted guaranteed loans receivable net (column 6) i defaulted guaranteed loans for post1991 guarantees for each program with post 1991 loan guarantees report gross receivables from defaulted guaranteed loans assumed for direct collection related interest receivable and the estimated value of related foreclosed property in columns 2 3 and 4 respectively report the related allowance for subsidy cost in column 5 report the sum of columns 2 through 4 less column 5 as the value of assets related to defaulted guaranteed loans receivable net (column 6) for foreclosed property see the instructions for section c the sum of the amounts reported in column 6 of sections b c h and i shall equal the amount reported on the balance sheet as loans receivables and related foreclosed property net j guaranteed loans outstanding for each loan guarantee program report in column 2 the face value of outstanding principal of guaranteed loans disbursed by a third party in column 3 report the amount of this outstanding principal that is guaranteed also report the amount of new guaranteed loans disbursed for the current and prior reporting years k liability for loan guarantees for each program with pre1992 loan guarantees report in column 2 the liability for losses if the present value method is used to calculate the liability report in column 2 the present value of liabilities for losses on pre1992 loan guarantees if the estimated future default claims method is used report in column 2 the estimated future default claims for each program with post1991 loan guarantees report in column 3 the present value of the estimated net cash flows (outflows less inflows) to be paid by the entity as a result of the loan guarantees report the total of columns 2 and 3 as total liabilities for loan guarantees (column 4) l subsidy expense for loan guarantees by program and component disclose for each program the total subsidy expense and its components the subsidy expense for modifications and the subsidy expense for reestimates during the current and prior reporting years l1 subsidy expense for new loan guarantees : disclose for each program the total subsidy expense for new loan guarantees (ie the loan guarantees on new guaranteed loans) and its components: interest supplement costs default costs (net of recoveries) fees and other collections and other costs disclose in column 2 the present value of the amount of the interest supplements; in column 3 the present value of the estimated payments for defaults on loan guarantees (net of recoveries); in column 4 the present value of the estimated fees collected (offsetting expense); in column 5 the present value of other cash flows; and in column 6 the total of columns 2 through 5 l2 loan guarantee modifications and reestimates: disclose in column 2 the subsidy expense for modifications of loan guarantees in guaranteed loans previously disbursed by a third party (whether pre1992 or post1991) disclose in columns 3 and 4 reestimates of the subsidy expense for loan guarantees previously committed by component (interest rate and technicaldefault); and in column 5 the total of columns 3 and 4 l3 total loan guarantee subsidy expense: the total subsidy expense for the current and prior years loan guarantees modifications and reestimates m subsidy rates for loan guarantees by program and component: disclose for each program the subsidy rates for the following components: interest supplement costs default costs (net of recoveries) fees and other collections and other costs estimated for loan guarantees in the current years budget for the current years cohorts these rates should be consistent with the rates published in the budget of the us government each subsidy rate is the dollar amount of the total subsidy or a subsidy component as a percentage of the guaranteed loans obligated in the cohort entities may use trend data to display significant fluctuations in subsidy rates such trend data if used should be accompanied with analysis to explain the underlying causes for the fluctuations the reporting entity should state the following in its disclosure: the subsidy rates disclosed pertain only to the current years cohorts these rates cannot be applied to the guarantees of loans disbursed during the current reporting year to yield the subsidy expense the subsidy expense for new loan guarantees reported in the current year could result from disbursements of loans from both current year cohorts and prior year(s) cohorts the subsidy expense reported in the current year also includes modifications and reestimates n schedule for reconciling loan guarantee liability balances for post1991 loan guarantees display a reconciliation between the beginning and ending balances of the liability for outstanding loan guarantees reported in the entitys balance sheet the reconciliation is required for loan guarantees committed on or after october 1 1991 the effective date of the federal credit reform act of 1990 reporting entities are encouraged but not required to display reconciliations for loan guarantees committed prior to october 1 1991 in schedules separate from the loan guarantees committed after september 30 1991 schedules for pre 1992 loan guarantees would not have all the same reconciling items as for post 1991 loan guarantees o administrative expense report the portions of salaries and other administrative expenses that have been accounted for in support of the direct loan programs and loan guarantee programs report the expenses for the individual programs if material 99 note 9 inventory and related property net the following describes the information that shall be disclosed for each category of inventory and related property seized and forfeited property that cannot be sold due to legal restrictions but which may be either donated or destroyed shall be subject to the disclosure requirements described below however no financial value shall be recognized for these items inventories general composition of inventory  basis for determining inventory values including the valuation method and any cost flow assumptions  changes from prior years accounting methods if any  balances for each of the following categories of inventory: (1) inventory held for current sale (2) inventory held in reserve for future sale (3) excess obsolete and unserviceable inventory and (4) inventory held for repair unless otherwise presented on the financial statements  the difference between the carrying amount of the inventory before identification as excess obsolete or unserviceable inventory and its expected net realizable value  restriction on the sale of inventory  the decision criteria for identifying the category to which inventory is assigned  changes in the criteria for identifying the category to which inventory is assigned operating materials and supplies general composition of operating materials and supplies  basis for determining operating materials and supplies values including the valuation method and any cost flow assumptions  changes from prior years accounting methods if any  balances for each of the following categories of operating materials and supplies: (1) items held for use (2) items held in reserve for future use and (3) excess obsolete and unserviceable items  the difference between the carrying amount of the operating materials and supplies before identification as excess obsolete or unserviceable and their estimated net realizable value  restriction on the use of operating materials and supplies  the decision criteria for identifying the category to which operating materials and supplies are assigned  changes in the criteria for identifying the category to which operating materials and supplies are assigned stockpile materials general composition of stockpile materials  basis for valuing stockpile materials including valuation method and any cost flow assumptions  changes from prior years accounting methods if any  restriction on the use of material  balances of stockpile materials in each of the following categories: (1) stockpile materials and (2) stockpile materials held for sale  decision criteria for categorizing stockpile materials as held for sale  changes in the criteria for categorizing stockpile materials as held for sale seized property explanation of what constitutes a seizure and a general description of the composition of seized property  method(s) of valuing seized properties  changes from prior years accounting methods if any  analysis of change in seized property including the dollar value and number of seized properties that are: (1) on hand at the beginning of the year (2) seized during the year (3) disposed of during the year and (4) on hand at the end of the year as well as known liens or other claims against the property this information should be presented by type of seized property and method of disposition where material  for seized monetary instruments a liablility shall be reported in other liabilities in an amount equal to the seized asset value forfeited property composition of forfeited property  method(s) of valuing forfeited property  restrictions on the use or disposition of forfeited property  changes from prior years accounting methods if any  analysis of change in forfeited property providing the dollar value and number of forfeited properties that: (1) are on hand at the beginning of the year (2) are made during the year (3) are disposed of during the year by method of disposition and (4) are on hand at the end of the year this information should be presented by type of property forfeited where material  if available an estimate of the value of property or funds to be distributed to federal state and local agencies in future reporting periods goods held under price support and stabilization programs basis for valuing the commodities including the valuation method and any cost flow assumptions  changes from prior years accounting methods if any  restrictions on the use disposal or sale of commodities  analysis of change in the dollar value and volume of commodities including those: (1) on hand at the beginning of the year (2) acquired during the year (3) disposed of during the year by method of disposition (4) on hand at the end of the year (5) on hand at years end and estimated to be donated or transferred during the coming period and (6) that may be received as a result of collateral related to nonrecourse loans outstanding the analysis should also show the dollar value and volume of purchase agreement commitments 910 note 10 general property plant and equipment net the major classes of general ppe should be determined by the reporting entity examples of major classes of general ppe may include but are not limited to buildings and structures furniture and fixtures equipment vehicles and land the following are the minimum disclosures required for each major class of general ppe: cost associated accumulated depreciation and book value  estimated useful life  method(s) of depreciation  capitalization threshold(s) including any changes in threshold(s) during the period  restrictions on the use or convertibility of general ppe recognition and measurement criteria for general ppe are in sffas no 6 as amended by sffas nos 11 16 and 23 if adjustments are required to existing ppe in the period that the standards are implemented in order to comply with the recognition and measurement criteria the adjustments should be made and disclosed by major class in accordance with the standard 911 note 11 other assets 2xxx 2xxx (cy) (py) a 1 intragovernmental (1) $ xxx $ xxx (2) xxx xxx (3) xxx xxx total intragovernmental xxx xxx 2 xxx xxx 3 xxx xxx 4 xxx xxx total other assets $ xxxx $ xxxx b other information: instructions 1 list and describe the major homogenous components of other assets 2 provide other information needed to understand the nature of other assets 912 note 12 liabilities not covered by budgetary resources 2xxx 2xxx (cy) (py) intragovernmental: accounts payable $ xxx $ xxx debt xxx xxx other xxx xxx total intragovernmental xxx xxx accounts payable xxx xxx debt held by the public xxx xxx federal employee and veteran benefits xxx xxx environmental and disposal liabilities xxx xxx benefits due and payable xxx xxx other xxx xxx total liabilities not covered by budgetary resources $ xxxx $ xxxx other information: disclose intragovernmental liabilities not covered by budgetary resources separately from other liabilities not covered by budgetary resources provide other information needed to understand the nature of liabilities not covered by budgetary resources liabilities not covered by budgetary resources are liabilities for which congressional action is needed before budgetary resources can be provided see section 34 for additional definitions of liabilities covered and not covered by budgetary resources 913 note 13 debt exhibit 9c note 13 debt 2xxx 2xxx 2xxx (py) (py) (cy) beginning net ending net ending balance borrowing balance borrowing balance a treasury debt: (1) intragovernmental $xx $xx $xx $ xxx $ xxx (2) held by the public xxx xxx xxx xxx xxx (3) total treasury debt xxx xxx xxx xxx xxx b agency debt: (1) intragovernmental xxx xxx xxx xxx xxx (2) held by the public xxx xxx xxx xxx xxx (3) total agency debt xxx xxx xxx xxx xxx c other debt: (1) debt to the treasury xxx xxx xxx xxx xxx (2) debt to the federal financing bank xxx xxx xxx xxx xxx (3) debt to other federal agencies xxx xxx xxx xxx xxx (4) total other debt xxx xxx xxx xxx xxx d total debt xxxx xxxx xxxx xxxx xxxx e classification of debt: 2xxx 2xxx (cy) (py) intragovernmental debt xxxx xxxx debt held by the public xxxx xxxx total debt xxxx xxxxx f other information: instructions all debt is classified as not covered by budgetary resources except for (a) direct loan and guaranteed loan financing account debt to treasury and (b) that portion of other debt which is covered by budgetary resources at the balance sheet date lines a (1) and (2) treasury debt should be reported by the treasury department only and should distinguish between debt held by government agencies and debt held by the public on line b enter the amounts of agency debt issued under special financing authorities (eg federal housing administration (fha) debentures and tennessee valley authority bonds) report separately agency debt held by government agencies and agency debt held by the public on line c enter the amounts of debt owed to federal agencies as follows: on line c(1) debt owed to the treasury which includes direct loan and guaranteed loan financing account debt to treasury as well as other debt owed to treasury; on line c(2) debt owed to the federal financing bank; and on line c(3) debt owed to other federal agencies net borrowing and repayment is not to include amounts that result from refinancing classification of debt report as intragovernmental debt all debt owed to treasury the federal financing bank or other federal agencies or accounts (line a(1) b(1) and c(4) ) this amount shall equal the intragovernmental debt amount reported on the balance sheet report all debt held by the public on lines a(2) and b(2) this amount shall equal debt held by the public on the balance sheet other information provide the names of the agencies other than treasury or the federal financing bank to which intragovernmental debt is owed and the amounts provide other information relative to debt (for example redemption or call of debts owed to the public before maturity dates writeoffs of debts owed treasury or the federal financing bank etc) 914 note 14 federal employee and veteran benefits entities that are responsible for administering pensions other retirement benefits and other postemployment benefits should calculate and report these liabilities and related expenses in accordance with sffas no 5 for entities that are responsible for administering pensions other retirement benefits and other postemployment benefits the following are the minimum disclosures required for pensions and other retirement benefits: the assumptions used to calculate the liability (in the case of a pension plan that uses assumptions that differ from those used by the primary plans the civil service retirement system (csrs) the federal employees retirement system (fers) and the military retirement system (mrs) the pension plan using the different assumptions should disclose how and why the assumptions used differ from those of the primary plans)  separate disclosure of the individual components of expense for the period (the normal cost interest on the liability for the period prior and past service cost from plan amendments during the period if any any gainslosses due to a change in the medical inflation rate assumption and other actuarial gains or losses during the period if any) 915 note 15 environmental and disposal liabilities disclose environmental and disposal liabilities in accordance with sffas no 5 and sffas no 6 for environmental hazards resulting from ongoing operations include the: (1) sources of cleanup requirements (2) method for assigning estimated total cleanup costs to current operating periods (3) unrecognized portion of estimated total cleanup cost associated with general ppe (4) material changes in total estimated cleanup costs due to changes in laws technology or plans and the portion of the change in estimate that relates to prior period operations and (5) nature of estimates and the disclosure of information regarding possible changes due to inflation deflation technology or applicable laws and regulations exhibit 9d 916 note 16 other liabilities 2xxx (cy) noncurrent current total a 1 intragovernmental (1) $ xxx $ xxx $ xxx (2) xxx xxx xxx (3) xxx xxx xxx total intragovernmental xxx xxx xxx 2  xxx xxx xxx 3  xxx xxx xxx 4  xxx xxx xxx total other liabilities $ xxxx $ xxxx $ xxxx 2xxx (py) noncurrent current total b 1 intragovernmental (1) $ xxx $ xxx $ xxx (2) xxx xxx xxx (3) xxx xxx xxx total intragovernmental xxx xxx xxx 2  xxx xxx xxx 3  xxx xxx xxx 4  xxx xxx xxx total other liabilities $ xxxx $ xxxx $ xxxx c other information: instructions  other liabilities include all liabilities not reported elsewhere separately disclose the current portion of other liabilities  other information provide other information necessary for understanding other liabilities 917 note 17 leases note 17 leases a entity as lessee: capital leases: 2xxx 2xxx (cy) (py) summary of assets under capital lease: land and buildings xxx xxx machinery and equipment xxx xxx other xxx xxx accumulated amortization xxx xxx description of lease arrangements: future payments due: asset category fiscal year (1) (2) (3) totals year 1 xxx xxx xxx xxx year 2 xxx xxx xxx xxx year 3 xxx xxx xxx xxx year 4 xxx xxx xxx xxx year 5 xxx xxx xxx xxx after 5 years xxx xxx xxx xxx total future lease payments xxx xxx xxx xxx less: imputed interest xxx xxx xxx xxx less: executory costs (eg taxes) xxx xxx xxx xxx net capital lease liability xxxx xxxx xxxx xxxx lease liabilities covered by budgetary resources xxxx lease liabilities not covered by budgetary resources xxxx operating leases: description of lease arrangements: future payments due: asset category fiscal year (1) (2) (3) totals year 1 xxx xxx xxx xxx year 2 xxx xxx xxx xxx year 3 xxx xxx xxx xxx year 4 xxx xxx xxx xxx year 5 xxx xxx xxx xxx after 5 years xxx xxx xxx xxx total future lease paymentsxxxx xxxx xxxx xxxx b entity as lessor: capital leases: description of lease arrangements: future projected receipts: asset category fiscal year (1) (2) (3) totals year 1 xxx xxx xxx xxx year 2 xxx xxx xxx xxx year 3 xxx xxx xxx xxx year 4 xxx xxx xxx xxx year 5 xxx xxx xxx xxx after 5 years xxx xxx xxx xxx total future capital lease receivables xxxx xxxx xxxx xxxx operating leases: description of lease arrangements: future projected receipts: asset category fiscal year (1) (2) (3) totals year 1 xxx xxx xxx xxx year 2 xxx xxx xxx xxx year 3 xxx xxx xxx xxx year 4 xxx xxx xxx xxx year 5 xxx xxx xxx xxx after 5 years xxx xxx xxx xxx total future operating lease receivables xxxx xxxx xxxx xxxx c other information: instructions sffas nos 5 and 6 provide the criteria for liability and asset recognition with respect to capital leases a entity as lessee summary of assets under capital lease: enter the gross assets under capital lease by major asset category and the related total accumulated amortization description of lease arrangements: provide information that discloses the agencys funding commitments including but not limited to the major asset categories and associated lease terms including renewal options escalation clauses contingent rentals restrictions imposed by lease agreements and the amortization period future payments due: enter future lease payments by major asset category for all noncancellable leases with terms longer than one year for capital leases show deductions for imputed interest and executory costs separately disclose the portions of the capital lease liability covered by budgetary resources and not covered by budgetary resources (see appendix b of omb circular no a11 for additional guidance but observe a difference in terminology: that the term capital leases as used in this note includes capital leases and lease purchases as the terms are used in omb circular no a11) according to the omb circular no a11 capital leases entered into during fy 1992 and thereafter are required to be fully funded in the first year of the lease b entity as lessor description of lease arrangements: provide the information necessary to disclose the commitment of the entitys assets including but not limited to the major asset category and lease terms future projected receipts: enter future lease revenues by major asset category for all noncancellable leases with terms longer than one year c other information provide other information necessary for understanding leases that is not disclosed in the above categories 918 note 18 life insurance liabilities federal entities providing whole life insurance should provide all disclosures required by private sector standards they should also separately disclose all components of the liability for future policy benefits with a description of each amount and an explanation of its projected use and any other potential uses (eg reducing premiums determining and declaring dividends available andor reducing federal support in the form of appropriations related to administrative costs or subsidies) see sffas no 5 for further guidance 919 note 19 commitments and contingencies a loss contingency is an existing condition situation or set of circumstances involving uncertainty as to possible loss to an entity the uncertainty should ultimately be resolved when one or more future events occur or fail to occur the likelihood that the future event or events will confirm the loss or the incurrence of a liability can range from probable to remote sffas no 5 as amended by sffas no12 contains the criteria for recognition and disclosure of contingent liabilities in addition to the contingent liabilities required by sffas no 5 the following shall also be disclosed: (1) an estimate of obligations related to canceled appropriations for which the reporting entity has a contractual commitment for payment and (2) amounts for contractual arrangements which may require future financial obligations 920 note 20 earmarked funds (effective fy 2006) earmarked funds are financed by specifically identified revenues and are required by statute to be used for designated activities or purposes and must be accounted for separately from the governments general revenues see sffas 27 identifying and reporting earmarked funds for the required criteria for an earmarked fund sffas 27 requires disclosure of all earmarked funds for which the reporting entity has program management responsibility see the standard for information and details on disclosing information on selected individual earmarked funds and for all remaining earmarked funds shown in aggregate also see sffas 27 for guidance on selecting earmarked funds to be presented individually or in aggregate the following information should be disclosed for each individually reported earmarked fund or portion thereof for which a component entity has program management responsibility  a description of each funds purpose how the entity accounts for and reports the fund and its authority to use those revenues and other financing sources  the sources of revenue or other financing for the period and an explanation of the extent to which they are inflows of resources to the government or the result of intragovernmental flows  any change in legislation during or subsequent to the reporting period and before the issuance of the financial statements that significantly changes the purpose of the fund or that redirects a material portion of the accumulated balance the total cumulative results of operations of all earmarked funds shown in the note disclosure should agree with the cumulative results of operations of earmarked funds shown on the face of the component entitys balance sheet and the statement of changes in net position sffas 27 contains specific guidance if more than one component entity is responsible for carrying out a program financed with earmarked revenues and other financing sources also see sffas 27 for restatement rules on an entity reporting a different portion of an earmarked fund than it reported in prior years or does not report an earmarked fund that it reported in the previous year or does report an earmarked fund that it did not report in the previous year refer to sffas 27 for additional disclosure requirements section 9 notes to the financial statements (part 2 of 2) table of contents note disclosures related to the statement of net cost 921 note 21 intragovernmental costs and exchange revenue 922 note 22 suborganization program costsprogram costs by segment 923 note 23 cost of stewardship ppe 924 note 24 stewardship assets through transfer donation or devise 925 note 25 exchange revenues note disclosures related to the statement of changes in net position 926 note 26 cleanup cost adjustments note disclosures related to the statement of budgetary resources 927 note 27 apportionment categories of obligations incurred 928 note 28 available borrowingcontract authority end of period 929 note 29 terms of borrowing authority used 930 note 30 adjustments to beginning balance of budgetary resources 931 note 31 permanent indefinite appropriations 932 note 32 legal arrangements affecting use of unobligated balances 933 note 33 explanation of differences between the statement of budgetary resources and the budget of the united states government 934 note 34 undelivered orders at the end of the period 935 note 35 contributed capital note disclosures related to the statement of financing 936 note 36 explanation of differences between liabilities not covered by budgetary resources and components requiring or generating resources in future periods 937 note 37 description of transfers that appear as a reconciling item on the statement of financing note disclosures related to the statement of custodial activity 938 note 38 incidental custodial collections 939 note 39 nonexchange revenues note disclosures not related to a specific statement 940 note 40 dedicated collections 941 note 41 restatements 921 note 21 intragovernmental costs and exchange revenue exhibit 9e suborganization a suborganization b total 2xxx (py) total (cy) program a intragovernmental costs public costs total program a costs agrees with snc intragovernmental earned revenue public earned revenue total program a earned revenue agrees with snc program b intragovernmental costs total program b costs agrees with snc total program b earned revenue agrees with snc program c public costs total program c costs agrees with snc 2xxx intragovernmental earned revenue public program c earned revenue total earned revenue agrees with snc instructions disclose intragovernmental costs (exchange transactions made between two reporting entities within the federal government) separately from costs with the public (exchange transactions made between the reporting entity and a nonfederal entity) disclose intragovernmental exchanges revenue (exchange transactions made between two reporting entities within the federal government) separately from exchange revenue with the public (exchange transactions made between the reporting entity and a nonfederal entity) describe the definition criteria used for this classification and include an explanation that makes it clear to the reader that the intragovernmental expenses relate to the source of goods and services purchased by the reporting entity and not to the classification of related revenue if necessary provide an example: for exchange revenue with the public the buyer of the goods or services is a nonfederal entity for intragovernmental costs the buyer and seller are both federal entities if a federal entity purchases goods or services from another federal entity and sells them to the public the exchange revenue would be classified as with the public but the related costs would be classified as intragovernmental the purpose of this classification is to enable the federal government to provide consolidated financial statements and not to match public and intragovernmental revenue with costs that are incurred to produce public and intragovernmental revenue 922 note 22 suborganization program costsprogram costs by segment for some entities the organizational structure and operations are so complex that supporting schedules should be used to fully display their suborganizations major programs and activities in addition an agencys statement of net cost may display highly aggregated program information and the programs may have clearly distinguishable segments information on the net cost of the segments should be disclosed in the footnotes supporting schedules similar to the illustration in exhibit 9f should be included in the notes to the financial statements and present detailed cost and revenue information supporting the summary information presented in the statement of net cost 922 note 22 suborganization program costsprogram costs by segment reporting entity supporting schedule by suborganization for the year ended september 30 2xxx (cy) (in dollarsthousandsmillions) suborgani suborgani suborgani combined intraentity consolidated zation a zation b zation c total eliminations total crosscutting programs program a: gross costs xxx xxx xxx xxx xxx less: earned revenues xx xx xx xx xxx net program costs x xxx xxxx xxxx xxxx xxxx other programs program b: xxx xxx xxx xxx program c: xxx xxx xxx xxx program d: xxx xxx xxx xxx xxx program e: xxx xxx xxx xxx program f: xxx xxx xxx xxx other programs xxx xxx xxx xxx total other program costs xxxx xxxx xxxx xxxx xxxx xxxx cost not assigned to programs xxx xxx xxx xxx xxx less: earned revenues not attributed to programs xx xx xx xx xx net cost of operations xxxx xxxx xxxx xxxx xxxx xxxx exhibit 9f 922 note 22 suborganization program costsprogram costs by segment (continued) reporting entity supporting schedule by suborganization for the year ended september 30 2xxx (in dollarsthousandsmillions) suborgani suborgani suborgani combined intraentity consolidated zation a zation b zation c total eliminations total crosscutting programs program a: gross costs xxx xxx xxx less: earned revenues xx xx xx xx xxx net program costs x xxx xxxx xxxx xxxx xxxx other programs program b: xxx xxx xxx xxx program c: xxx xxx xxx xxx program d: xxx xxx xxx xxx xxx program e: xxx xxx xxx xxx program f: xxx xxx xxx xxx other programs xxx xxx xxx xxx total other program costs xxxx xxxx xxxx xxxx xxxx xxxx cost not assigned to programs xxx xxx xxx xxx xxx less: earned revenues not attributed to programs xx xx xx xx xx net cost of operations xxxx xxxx xxxx xxxx xxxx xxxx note 923 note 23 cost of stewardship ppe the cost of acquiring constructing improving reconstructing or renovating heritage assets (other than multiuse heritage assets) and the cost of acquiring stewardship land and any costs to prepare stewardship land for its intended use shall be recognized as a cost in the statement of net cost in the period when it is incurred these costs shall be separately reported on the face of the statement of net cost or disclosed in the footnotes depending on the materiality of the amounts and the need to distinguish such amounts from other costs relating to measures of outputs or outcomes of the reporting entity (see sffas no 8) 924 note 24 stewardship assets acquired through transfer donation or devise if the cost of heritage assets and stewardship land transferred from other federal entities is not known then the receiving entity shall disclose their fair value heritage assets and stewardship land acquired through donation or devise shall not be recognized as a cost in calculating net cost but the fair value of the property shall be disclosed if the fair value is not known or reasonably estimable information related to the type and quantity of assets received shall be disclosed (see sffas nos 6 and 8) 925 note 25 exchange revenues reporting entities that provide goods and services to the public or another government entity should disclose specific information related to their pricing policies and any expected losses under goods made to order these disclosures are described in sffas no 7 note disclosure related to the statement of changes in net position 926 note 26 cleanup cost adjustments the cost for any cleanup cost liability recognized upon implementation of the standard requiring such recognition shall be shown on the statement of changes in net position as a prior period adjustment the amounts involved shall be disclosed in a note and to the extent possible amounts associated with current and prior periods should be identified see sffas no 6 note disclosures related to the statement of budgetary resources 927 note 27 apportionment categories of obligations incurred disclose the amount of direct and reimbursable obligations incurred against amounts apportioned under category a b and exempt from apportionment this disclosure shall agree with the aggregate of the related information as reported on the agencys yearend sf 133s report on budget execution and budgetary resources and lines 8a and 8b in the statement of budgetary resources apportionment categories shall be determined in accordance with the guidance provided in omb circular no a11 preparation submission and execution of the budget (as amended) 928 note 28 available borrowingcontract authority end of period disclose the amount of available borrowing and contract authority at the end of the period 929 note 29 terms of borrowing authority used disclose the repayment requirements financing sources for repayment and other terms of borrowing authority used 930 note 30 adjustments to beginning balance of budgetary resources disclose and explain the amounts adjusted during the reporting period of the budgetary resources available at the beginning of the year 931 note 31 permanent indefinite appropriations disclose the existence purpose and availability of permanent indefinite appropriations 932 note 32 legal arrangements affecting use of unobligated balances disclose the information about legal arrangements affecting the use of unobligated balances of budget authority such as time limits purpose and obligation limitations for example the portion of trust fund receipts collected in the current fiscal year that (1) exceed the amount needed to pay benefits or other valid obligations and (2) the excess of receipts temporarily precluded from obligation by law due to a benefit formula or other limitation the receipts; however are assets of the trust fund and available for obligation as needed in the future 933 note 33 explanation of differences between the statement of budgetary resources and the budget of the united states government identify and explain material differences between amounts reported in the statement of budgetary resources and the actual amounts reported in the budget of the united states government as required by sffas no 7 agencies can find comparable information reported in the sbr to the presidents budget (ie net outlays) in a table entitled federal program by agency and account on the cdrom located in the pocket of the analytical perspective volume of the budget of the united states government differences in and of themselves may or may not indicate a reporting error legitimate reasons for differences could exist for example expired unobligated balances are reported in the statement of budgetary resources and sf 133 but not in the budget of the united states government this disclosure should be provided when comparable line items differ between the presidents budget and the statement of budgetary resources the reporting entity should disclose that the presidents budget with actual numbers for the fiscal year has not yet been published explain when it is expected to be published and indicate where it will be available 934 note 34 undelivered orders at the end of the period (effective fy 2006) disclose the amount of budgetary resources obligated for undelivered orders at the end of the period beginning with fy 2006 the format of the sbr will change and the amount of undelivered orders at the end of the period will no longer be reported on the face of the statement due to the change in the statement format this note disclosure will be required to comply with sffas 7 paragraph 79 (a) 935 note 35 contributed capital the amount of any contributed capital received during the reporting period note disclosures related to the statement of financing 936 note 36 explanation of differences between liabilities not covered by budgetary resources and components requiring or generating resources in future periods identify and explain the relationship between amounts reported as liabilities not covered by budgetary resources on the balance sheet and amounts reported as components requiring or generating resources in future periods on the statement of financing 937 note 37 description of transfers that appear as a reconciling item on the statement of financing when budget authority and other resources are allocated to another agency or bureau (allocation transfer of appropriation see omb circular a11 sections 204 (l) and 715) the following guidance applies the parent (transferor of the appropriation) should report the activity in its financial statements unless the allocation transfer is material to the childs (recipient of the transfer) financial statements if the allocation transfer is material to the childs financial statements the child should report the activity relating to the allocation in all of its financial statements except the statement of budgetary resources in this case the parent should continue to report the appropriation and the related budgetary activity in its statement of budgetary resources it is the responsibility of the parent to ensure that the reporting to treasury through facts i is consistent with the presentation in the financial statements when the child reports material allocation transfers in its statement of net cost both the parent and the child should report a reconciling item on their respective statements of financing in their footnotes the parent and child should provide a general description of the funds transferred to or the funds received from another entity including the nature and purpose of the transfer agencies are encouraged to add more detail (eg their trading partneragency bureau and account title for each parent appropriation) as they deem necessary note disclosures related to the statement of custodial activity 938 note 38 incidental custodial collections organizations that collect immaterial custodial revenues that are incidental to their primary mission may disclose the sources and amounts of the collections and the amounts distributed to others in accompanying footnotes rather than on the face of the statement 939 note 39 nonexchange revenues entities preparing a statement of custodial activity for nonexchange revenue should disclose the: (1) basis of accounting (2) factors affecting the collectability and timing of taxes and other nonexchange revenues and (3) cash collections and refunds by tax year and type of tax for the reporting period these disclosures are described in sffas no 7 note disclosures not related to a specific statement 940 note 40 dedicated collections effective fy 2006 for funds meeting the definition of earmarked funds (see sffas 27 paragraphs 1118) follow the instructions for new note 20 instead of this note effective fy 2006 the following instructions apply only to dedicated collections that do not meet the definition of earmarked funds a reporting entity may be responsible for funds financed with dedicated collections that are held for later use to accomplish the funds purpose such funds include all funds within the budget classified as trust funds those funds within the budget that are classified as special funds but that are similar in nature to trust funds and those funds within and outside the budget that are fiduciary in nature financial information about dedicated collections (ie collections material to the reporting entity beneficiaries or contributors) should be separately presented on the face of the principal statements or disclosed in the notes to those statements immaterial amounts may be presented separately in special reports to the beneficiaries and contributors most dedicated collections are included in the financial statements of the entity carrying out the program and responsible for administration of the fund the minimum requirements to be reported or disclosed include the following: a description of each funds purpose how the administrative entity accounts for and reports the fund and its authority to use those collections  the sources of revenue or other financing for the period and an explanation of the extent to which they are inflows of resources to the government or the result of intragovernmental flows  condensed information about assets and liabilities showing investments in treasury securities other assets liabilities due and payable to beneficiaries other liabilities and fund balance  condensed information on net cost and changes to fund balance showing revenues by type (exchangenonexchange) program expenses other expenses other financing sources and other changes in fund balance  any revenues other financing sources or costs attributable to the fund under accounting standards but not legally allowable as credits or charges to the fund preparers are encouraged to refer to sffas no 7 paragraphs 8387 for further guidance on the reporting and disclosure requirements for dedicated collections effective fy 2006 preparers should refer to sffas 27 for reporting and disclosure requirements for funds meeting the definition of earmarked funds 941 note 41 restatements agencies shall provide information to address the restatement of financial statements due to material errors in a separate note entitled restatements the following information should be addressed in the note: the nature of the error and the reason for the restatement the year (s) being restated which financial statements are impacted the amounts being restated and the effect of the restatement on the financial statements as a whole (ie change in overall net position change in audit opinion etc) in addition agencies should further discuss the actions management took after discovering the error 6 the board eliminated the use of rssi to report information about weapons systems when it issued sffas 23 eliminating the category national defense property plant and equipment additionally sffas 25 reclassification of stewardship responsibilities and eliminating the current services assessment eliminated the use of rssi for reporting stewardship responsibilities classification of other items of information currently designated rssi may be dealt with in one or more future standards section 10 required supplementary stewardship information 101 general 102 stewardship property plant and equipment 102a heritage assets 102b stewardship land 102 c summary of minimum reporting requirements 103a nonfederal physical property 103b human capital 103c research and development 103d summary of minimum reporting requirements 104 stewardship responsibilities 104a social insurance 101 general6 the stewardship objective of federal financial reporting requires the federal government to report on its stewardship over certain resources entrusted to it and certain responsibilities assumed by it that cannot be measured in traditional financial reports these resources and responsibilities do not meet the criteria for assets and liabilities that are required to be reported in the financial statements but are important to understanding the operations and financial condition of the federal government at the date of the financial statements and in subsequent periods stewardship resources involve substantial investment by the federal government for the benefit of the nation costs of stewardshiptype resources are treated as expenses in the financial statements in the year the costs are incurred however these costs and resultant resources are intended to provide longterm benefits to the public and are included as required supplementary stewardship reporting to highlight for the user their longtermbenefit nature and to demonstrate accountability over them depending on the nature of the resources stewardship reporting could consist of financial or nonfinancial data to achieve the objectives of required supplementary stewardship information (rssi) reporting resources and responsibilities for which the federal government is accountable have been table of contents 103 stewardship investments categorized into three distinct groups and measures of accountability established for each the three major groups are as follows: stewardship property plant and equipment (ppe) stewardship investments stewardship responsibilities reporting requirements for financial and nonfinancial data have been defined so that the unique characteristics of stewardship can be displayed entities should make the determination of how best to apply the stewardship standards based on a thorough analysis of their individual entity including its mission financial practices and the impact of its mission and operations on financial report users and on the nation all entity determinations of the applicability of stewardship standards should be thoroughly documented 102 stewardship property plant and equipment stewardship ppe consists of assets whose physical properties resemble those of general ppe that are traditionally capitalized in financial statements however due to the nature of these assets (1) valuation would be difficult and (2) matching costs with specific periods would not be meaningful yet the federal government should be able to demonstrate accountability over these assets by reporting on their existence and condition stewardship ppe includes: heritage assets such as federal monuments and memorials and historically or culturally significant property  stewardship land eg land not acquired for or in connection with general ppe 102a heritage assets heritage assets are unique and are generally expected to be preserved indefinitely heritage assets may be unique because they have historical or natural significance are of cultural educational or artistic importance or have significant architectural characteristics these assets shall be reported in terms of physical units rather than cost fair value or other monetary values no amount shall be shown on the balance sheet of federal financial statements for heritage assets except for multiuse heritage assets in which the predominant use of the asset is in general government operations the costs of acquisition betterment or reconstruction of multiuse heritage assets shall be capitalized as general ppe and depreciated with required supplementary stewardship information providing the physical quantity information for the multiuse heritage assets the costs of acquiring constructing improving reconstructing or information on stewardship definitions measurement minimum reporting and implementation guidance can be found in sffas nos 5 6 8 11 14 16 and 17 7 see sffas 6 paragraph 78 (footnote 58) for guidance on managements authority in determining the level of condition 8 condition information may be reported with the deferred maintenance information in rsi entities should reference the condition and deferred maintenance information if reported elsewhere in the report renovating heritage assets other than multiuse shall be considered an expense in the period incurred when determining the net cost of operations 102b stewardship land stewardship land is land and land rights not acquired for or in connection with items of general ppe land is defined as the solid surface of the earth excluding natural resources these assets shall be reported in terms of physical units rather than cost fair value or other monetary values no asset amount shall be shown on the balance sheet of federal financial statements for stewardship land the acquisition cost of stewardship land shall be considered an expense in the period acquired when determining the net cost of operations 102c summary of minimum stewardship reporting requirements the following table summarizes the minimum stewardship reporting required for heritage assets and stewardship land information reported heritage assets stewardship land 1 description of assets describe each major category: 1 collectible 2 noncollectible describe by principal organization significant holdings by category of major use 2 description of acquisitions and withdrawals describe methods of acquisition and withdrawal describe methods of acquisition and withdrawal 3 accounting for physical items or dollars account for physical units by major category: beginning balance additions withdrawals ending balance account for physical units by major category: beginning balance additions ending balance 4 condition description7 describe overall condition 8 describe overall condition withdrawals 5 deferred maintenance reference information on deferred maintenance included elsewhere in the report if required reference information on deferred maintenance included elsewhere in the report if required 6 presentation of financial information reference principal statements for financial information on multiuse heritage assets not applicable 103 stewardship investments stewardship investments are substantial investments made by the federal government for the benefit of the nation but are not physical assets owned by the federal government when incurred they are treated as expenses in determining the net cost of operations however these items merit special treatment so that users of federal financial reports know the extent of investments that are made for longterm benefit such investments should be measured in terms of expenses incurred for: (1) federallyfinanced but not federallyowned physical property (non federal physical property); (2) certain education and training programs (human capital); and (3) federallyfinanced research and development (research and development) 103a nonfederal physical property nonfederal physical property investments are expenses included in the calculation of net cost incurred by the reporting entity for the purchase construction or major renovation of physical property owned by state and local governments reporting will include data in nominal dollars on investment for the year being reported upon and the preceding four years additional years data may also be reported if such data would provide a better indication of the nature of the investment 103b human capital human capital investments are expenses included in net cost for education and training programs that are intended to: (1) increase or maintain national economic productive capacity and that (2) produce outputs and outcomes that provide evidence of maintaining or increasing national productive capacity the definition excludes education and training expenses for federal civilian and military personnel reporting will include data in nominal dollars on investment for the year being reported upon and the preceding four years additional years data may also be reported if such data would provide a better indication of the investment continued categorization of human capital expenses as investment for stewardship purposes is predicated on demonstrated outputs and outcomes consistent with the intent of the program sffas no 8 describes the criteria which shall be met for these expenses to continue to be categorized as stewardship investments outcome and output measures that are used to justify continued treatment of expenses as stewardship investments should be clearly identified in the agencys financial statement and the relationship of the outcomes and outputs to the stewardship investments should be readily apparent 103c research and development research and development investments are expenses included in the calculation of net costs to support the search for new or refined knowledge and ideas and for the application or use of such knowledge and ideas for the development of new or improved products and processes with the expectation of maintaining or increasing national economic productive capacity or yielding other future benefits reporting will include data in nominal dollars on investment for the year being reported upon and the preceding four years additional years data may also be reported if such data would provide a better indication of the investment continued categorization of research and development expenses as investment for stewardship purposes is predicated on demonstrated outputs and outcomes consistent with the intent of the program sffas no 8 describes the criteria which shall be met for these expenses to continue to be categorized as stewardship investments outcome and output measures that are used to justify continued treatment of expenses as stewardship investments should be clearly identified in the agencys financial statement and the relationship of the outcomes and outputs to the stewardship investments should be readily apparent 103d summary of minimum reporting requirements the following table summarizes the minimum reporting required for nonfederal property human capital and research and development information reported nonfederal property human capital research and development 1 annual investment by category or level include full cost of the investment made for the current year including description of federal property transferred to state and local governments and the preceding 4 years report additional years of data if it provides a better indication of investment include full cost of the investment made for the current year and the preceding 4 years report additional years of data if it provides a better indication of investment include full cost of the investment made for the current year and the preceding 4 years report additional years of data if it provides a better indication of investment 2 description of major programs describe major programs involving federal investments including description of programs or policies under which noncash assets are transferred to state and local governments describe major education and training programs considered federal investments describe major research and development programs  in some cases the information is not available because entities have maintained records on the basis of outlays rather than expenses agencies in this situation should continue to report historical data on an outlay basis for any years in which reporting is required and for which expense data is not available if neither historical expense nor outlay data are available for each of the five years entities need report expense data for only the current reporting year and such other years as available at the end of five years however the agency will be able to report the expenses to be categorized as investments for each of the preceding five years 9 under sffas 25 reclassification of stewardship responsibilities and eliminating the current services assessment as amended by sffas 26 presentation of significant assumptions for the statement of social insurance the statement of social insurance (sosi) including accompanying notes and significant assumptions will become basic information while the remaining information about social insurance required by sffas 17 will be reported as rsi sffas 28 defers for one year the effective dates of ssfas 25 and sffas 26 the provisions of this standard will be effective for periods beginning after september 30 2005 104 stewardship responsibilities9 reporting on stewardship responsibilities aids in assessing the federal governments financial condition and the sufficiency of future budgetary resources to sustain public services and meet obligations as they become due stewardship responsibilities at the entitylevel have been identified and reporting requirements are addressed below for social insurance supplementary stewardship information for social insurance programs is to be reported to address fundamental questions about the current and future financial condition of these programs these fundamental questions include whether the programs are sustainable as currently constructed and what effect these programs have on the overall financial condition of the government information required to be disclosed for social insurance programs is intended to facilitate an assessment of the longterm sustainability of the program as well as the ability of the program to raise resources from future program participants to pay for benefits to present participants disclosure requirements for social insurance programs are discussed in summary below financial statement preparers and auditors should refer to sffas no 17 for a more detailed discussion programs defined as social insurance consist of: oldage survivors and disability insurance (oasdi or social security); hospital insurance (hi) and supplementary medical insurance (smi) collectively known as medicare; railroad retirement benefits; black lung benefits; and unemployment insurance (ui) the rssi information provided for each of these programs should include the following financial and actuarial disclosures: longrange cashflow projections longrange projections of the ratio of contributors to beneficiaries (dependency ratio) actuarial present value of future benefits and future contributions and tax income forfrom current and future beneficiaries sensitivity analysis illustrating the effect of the changes in the most significant assumptions on the projections and present values statebystate solvency analysis for the ui program the actuarial present value of future benefit payments contributions and tax income for current and future participants should be summarized in a statement of social insurance the statement of social insurance should cover a fiveyear period beginning with the current period covered in the financial statements financial and actuarial disclosures should be accompanied by a narrative describing the program how it is financed how benefits are calculated and an interpretive analysis of trends revealed by the data management may provide any additional information pertaining to the financial conditions of its program that it believes may be useful and appropriate additional information on definitions measurement minimum reporting and implementation guidance as well as illustrative disclosure formats can be found in sffas no 17 section 11 required supplementary information table of contents 111 managements discussion analysis 111a purpose 111b responsibility 111c scope 111d mission and organizational structure 111e performance goals objectives and results 111f analysis of entitys financial statements and stewardship information 111g analysis of entitys systems controls and legal compliance 111h possible future effects of existing events and conditions 111i other management information initiatives and issues 111j limitations of the financial statements 112 deferred maintenance 113 intragovernmental amounts 114 statement of budgetary resources 115 statement of custodial activity 116 segment information 117 risk assumed information 111 management s discussion analysis annual performance and accountability reports (par) must contain a section entitled managements discussion and analysis (mda) the mda is section 1 of the par and should follow the entity head letter (secretarys message) to be useful the mda must be concise and readable to a nontechnical audience not all material items in the basic statements notes and other sections of the annual financial report need to be discussed in mda 111a purpose the mda should serve as a brief overview of the entire par it includes most important matters that could: lead to significant actions or proposals by top management of the reporting unit; be significant to the managing budgeting and oversight functions of congress and the administration; or significantly affect the judgment of citizens about the efficiency and effectiveness of their federal government furthermore conformance to us generally accepted accounting principles for federal entities requires the inclusion of an mda of the financial statements and related information 111b responsibility the content of mda is the responsibility of management its preparation should be a joint effort of both the chief financial officer (cfo) office and program offices the mda should provide a balanced analytical assessment of performance that includes both positive and negative information 111c scope the mda is an integral part of the annual financial statement and should be regarded as required supplementary information (rsi) the following summarizes the requirements for the mda as stated in sffac no 3 and sffas no 15 pursuant to sffas no 15 the mda may reference information in other discrete sections of the financial statement or it may be based on information contained in reports separate from the financial statement at a minimum the mda should address the entitys: mission and organizational structure; performance goals objectives and results; financial statements; systems controls and legal compliance; and the mda should also include forwardlooking information about the possible effects of anticipated future demands events conditions and trends management should discuss important problems that need to be addressed and actions that have been planned or taken to address those problems actions needed planned and taken may be discussed within the sections listed above or in a separate section of the mda 111d mission and organizational structure the mda should contain a brief description of the mission(s) of the entity and describe its related organizational structure consistent with the entitys strategic plan 111e performance goals objectives and results this section should summarize the more detailed performance information reported in the performance section of the par the mda should include (in no specific order): highlights of most important performance goals and results (positive and negative) for the applicable year related to and consistent with major goals and objectives in the entitys strategic and performance plans including trend data where available (this applies to goals being evaluated by quantitative and descriptive criteria) these highlights should: o provide a clear objective picture of the entitys program results compared to its goals and objectives o indicate the extent to which its programs are achieving their intended goals and objectives and explain performance trends o discuss the strategies and resources the entity uses to achieve its performance goals o evaluate the significance of underlying factors that may have affected the reported performance these may include information about factors that are substantially outside the entitys control as well as information about factors over which the entity has significant control; and o include an explanation of plans and timelines to improve performance where targets were not met  a summary of the procedures management has designed and followed to provide reasonable assurance that reported performance information is relevant and reliable; a discussion of important limitations and difficulties associated with performance measurement and reporting should be noted to the extent relevant entities are encouraged to describe in the par how they are currently integrating performance and financial information to help the reader assess the relative efficiency and effectiveness of entity programsoperations efficiency is measured by relating outputs (the quantity of services provided) to inputs (the costs incurred to provide the services) effectiveness is measured by the outcome or the degree to which a predetermined objective is met and is commonly combined with cost information to show cost effectiveness entities should strive to articulate efficiency and effectiveness by developing and reporting objective measures that to the extent possible address efficiency and effectiveness and by relating major goals and objectives in their strategic plan to cost categories (ie responsibility segments) presented in the statement of net cost further entities should include a strategic vision for enhancing the integration of financial and performance information in future pars 111f analysis of the entitys financial statements and stewardship information the mda should help users understand the entitys financial results position and condition conveyed in the principal financial statements the mda should include comparisons of the 10 the annual assurance statements consist of: (1) managements overall statement of assurance (as required by section 2 and section 4 of the fmfia) and (2) managements assurance over the effectiveness of the internal controls over financial reporting as a subset of the overall statement of assurance current year to the prior year and should provide an analysis of the agencys overall financial position and results of operations to assist users in assessing whether that financial position has improved or deteriorated as a result of the years activities it should give users the benefit of managements understanding of: major changes in types or amounts of assets liabilities costs revenues obligations and outlays; the relevance of particular balances and amounts shown in the principal financial statements particularly if relevant to important financial management issues; and the entitys stewardship information this section should also include a discussion of key financialrelated measures that emphasize financial trends and assess financial operations 111g analysis of the entitys systems controls and legal compliance in reporting on the status of systems and internal controls that support preparation of the financial statements performance information and compliance with applicable laws management should provide a brief summary of material weaknesses revealed by management or through audits or otherwise known to management in accordance with the federal managers financial integrity act (integrity act) beginning with fy 2006 the assurance statement that was previously included as part of the agency head message will now be separately identified in this section and combined with the new separate assurance statement on the effectiveness of internal control over financial reporting required by omb circular a123 managements responsibility for internal control management assurances shall include the annual assurance statements10 (signed by the head of the agency) summary of material weaknesses and nonconformances and summary of corrective action plans this assurance statement shall also include an annual statement on whether the agencys financial management systems conform to governmentwide requirements (as required by section 4 of the fmfia) the financial systems requirements are mandated by the federal financial management improvement act (ffmia) and omb circular no a127 financial management systems section 7 omb a11 section 52 information on financial management outlines requirements for agencys plans for bringing its systems into substantial compliance financial management systems include both financial and financiallyrelated (or mixed) systems to satisfy the reporting requirements of the improper payments information act (ipia) for fiscal year 2005 a brief summary of what agencies have accomplished and plan to accomplish must be included in the mda all other required information should be included as an item in oai of the report 111h possible future effects of existing events and conditions the discussion of current demands risks uncertainties events conditions and trends goes beyond a mere description of existing conditions management should address the possible future effect of those factors that may include but not necessarily be limited to demographic characteristics claims contingencies deferred maintenance commitments or major unfunded liabilities information about the possible effects of anticipated future demands events conditions and trends should be labeled projected or projection and the key underlying assumptions explained forwardlooking information may comprise a separate section of mda or may be incorporated with the sections listed in section 111c 111i other management information initiatives and issues management has the discretion to include a summary in the mda of other information initiatives and issues it identifies this could include summarizing entity progress in implementing key administration management initiatives 111j limitations of the financial statements the mda should include a section articulating the limitations of the principal financial statements this section should state the following: 1 the principal financial statements have been prepared to report the financial position and results of operations of the entity pursuant to the requirements of 31 usc 3515 (b) 2 while the statements have been prepared from the books and records of the entity in accordance with us generally accepted accounting principles (gaap) for federal entities and the formats prescribed by omb the statements are in addition to the financial reports used to monitor and control budgetary resources which are prepared from the same books and records 3 the statements should be read with the realization that they are for a component of the us government a sovereign entity 112 deferred maintenance deferred maintenance is maintenance that was not performed when it should have been or was scheduled to be and which therefore is put off or delayed for a future period sffas 6 as amended by sffas no 14 requires that deferred maintenance information be included as rsi it is important to note that footnote 58 cited in par 78 of sffas 6 provides that acceptable services and condition may vary both between entities and among sites within the same entity management shall determine what level of service and condition is acceptable determination of acceptable condition therefore affects the amount of deferred maintenance in some cases such as heritage assets and stewardship land management may determine that maintenance is not needed in that case deferred maintenance would not exist for general property plant and equipment (ppe) heritage assets and stewardship land the following information related to deferred maintenance shall be reported as rsi: the identification of each major class of asset for which maintenance was deferred  the method of measuring deferred maintenance for each major class of asset see sffas nos 6 and 14 for detailed guidance on the extent of the disclosures for the condition assessment survey or the total lifecycle cost method either method may be used for measuring deferred maintenance management may elect to present stratification of critical and non critical amounts of maintenance needed to return each major class of asset to its acceptable operating condition if management elects to make this disclosure the disclosure should include managements definition of critical and non critical maintenance financial statement preparers are encouraged to refer to sffass no 6 and 14 for additional information 113 intragovernmental amounts intragovernmental amounts include transactions between federal entities included in the financial report of the united states government these transactions include activities with federal cfo act and noncfo act entities as identified in the treasury financial manual report as required supplementary information intragovernmental amounts for: (1) assets (2) liabilities (3) nonexchange revenue and (4) for certain reporting entities earned revenue from trade (buysell) transactions along with the gross cost to generate such revenue report these amounts by trading partner (reciprocal federal entity) report intragovernmental gross cost to generate earned revenue from trade transactions by budget functional classification intragovernmental asset and liability categories reported as rsi should agree with the intragovernmental asset and liability line items reported on the balance sheet the intragovernmental rsi may be limited to the consolidated agencywide financial statements that is only the 24 executive departments and agencies covered by this circular are required to report intragovernmental rsi in their annual financial statement the intragovernmental rsi reporting requirement does not extend to federal components that are required to prepare financial statements all amounts should be net of intraentity transactions (consolidated) transactions with components of federal departments or agencies should not be reported separately but should be included in the activity reported for the federal department or agency for example food and nutrition service forest service and rural development mission area are not separate federal departments or agencies but are components of the us department of agriculture (usda) which is a federal department transactions with food and nutrition service forest service and rural development mission areas would be included in the rsi reported for usda intragovernmental assets: intragovernmental assets reported as rsi should agree with the intragovernmental asset line items and totals on the reporting entitys consolidated agencywide balance sheet for each intragovernmental asset line item on the consolidated agencywide balance sheet a corresponding column heading should be reported in the intragovernmental assets supplementary information that identifies the trading partner balances that make up the line item reporting entities may aggregate trading partners whose individual totals for a particular asset category collectively comprise less than 20 percent of the total asset line item category if intragovernmental transactions with a trading partner are material in one asset line item category but immaterial in another asset line item category report transactions with the trading partner for each asset line item category for example assume a reporting agency has the following intragovernmental assets: fund balance with the us treasury$200; accounts receivable$100 (agency a$82 agency b$9 agency c$4 agency d $5); loans receivable$100 (agency a $5 agency b$90 agency c$5); investments$100 (agency a$32 agency b$50 agency c$18); and other$20 (agency a$2 agency b$15 agency c$2 agency d $1) in this case the reporting entitys intragovernmental assets may be presented in the supplementary information as follows (this example is for illustrative purposes only): intragovernmental assets: trading fund balance accounts loans partner with treasury receivable receivable investments other us treasury $ 200 $ $ $ $ agency a 82 5 32 2 agency b 9 90 50 15 other 9 5 18 3 total $ 200 $ 100 $ 100 $ 100 $ 20 intragovernmental liabilities: intragovernmental liabilities reported as rsi should agree with the intragovernmental liability line items and totals on the reporting entitys consolidated agencywide balance sheet for each intragovernmental liability line item on the consolidated agencywide balance sheet a corresponding column heading should be reported in the intragovernmental liabilities supplementary information that identifies the trading partner balances that make up the line item if intragovernmental transactions with a trading partner are material in one liability line item category but immaterial in another liability line item category report transactions with the trading partner for each liability line item category trading accounts debtborrowings partner payable from other agencies other agency a $ xxx $ xxx $ xxx agency b xxx xxx xxx agency c xxx xxx xxx other xxx xxx xxx total $ xxxx $ xxxx $ xxxx intragovernmental earned revenues: agencies with total intragovernmental earned revenues from trade transactions (net of intraentity activity) greater than $500 million shall report such revenues by trading partner trading partner earned revenue agency a $ xxx agency b xxx agency c xxx agency d xxx total $ xxxx intragovernmental nonexchange revenue: agencies shall report by trading partner intragovernmental nonexchange revenues transferred in and out trading nonexchange revenue partner transfersin transfersout agency a $ xxx $ xxx agency b xxx xxx agency c xxx xxx total $ xxxx $ xxxx 114 statement of budgetary resources it is important to monitor budget execution at the individual account level accordingly budgetary information aggregated for purposes of the statement of budgetary resources should be disaggregated for each of the reporting entitys major budget accounts and presented as rsi for purposes of this presentation small budget accounts may be aggregated the major accounts and the aggregate of small budget accounts should in total agree with the amounts reported on the face of the statement of budgetary resources 115 statement of custodial activity entities that collect taxes and duties should provide the following required supplementary information relating to their potential collections and custodial responsibilities (see sffas no 7): a discussion of the factors affecting the collectibility of compliance assessments recognized as taxes receivable if reasonably estimable claims for refunds that are not yet accrued but are likely to be paid when administrative action is complete the amount of assessments that the entity still has statutory authority to collect at the end of the period but has no future collection potential and are therefore defined as writeoffs and if reasonably estimable the amounts by which trust funds may be over or under funded in comparison with requirements of law this information should also be presented by recipient entities that are trust funds these disclosures are not applicable to exchange revenue presented on the statement of custodial activity 116 segment information each franchise fund and other intragovernmental support revolving fund that is not separately reported on the entitys principal statements shall report the following required supplementary information: condensed information about assets liabilities and net position as of the reporting date: (1) fund balance (2) accounts receivable (3) ppe (4) other assets (5) liabilities due and payable for goods and services received (6) deferred revenues (7) other liabilities and (8) cumulative results of operations all franchise funds and other intragovernmental support revolving funds shall report the following required supplementary information: a brief description of the services provided by the fund and the identity of the funds major customers (major customers are organizations that account for more than 15 percent of the fund s revenues) and a summary for the reporting period by product or line of business of: (1) the full cost of goods and services provided (2) the related exchange revenues and (3) the excess of full costs over exchange revenues 117 risk assumed information all federal insurance and guarantee programs other than social insurance life insurance and loan guarantee programs shall report risk assumed information these disclosures are in addition to the liability for unpaid claims from insured events that have already occurred and any contingent liability that meets criteria for recognition risk assumed is generally measured by the present value of unpaid expected losses net of associated premiums based on the risk inherent in the insurance or guarantee coverage in force the specific requirements for risk assumed information are presented in sffas no 5 accounting for liabilities of the federal government as part of the discussion of insurance and guarantee liabilities (see paragraphs 105 to 114) note: amendments to sffas no 5 have moved these disclosures from rssi to rsi section 12 other accompanying information table of contents 121 performance measures 122 revenue foregone 123 tax burdentax gap 124 tax expenditures with directed flows of resources 125 management challenges 126 ipia reporting details 127 other agencyspecific statutorily required reports 121 performance measures additional performance measures beyond key measures included in the mda may be presented as other accompanying information management has broad discretion in the manner in which performance information is displayed among the options available to management is a statement format similar to the statement of program performance measures illustrated in sffac no 2 managements display of performance information should include sufficient explanatory information that would help users understand the significance of the measures the results and any deviations from goals or plans 122 revenue foregone 123 tax burdentax gap preparers of statements of entities that collect taxes may consider presenting the information described below if the information is readily available and the preparers believe the information will enhance the usefulness of the statements refer to sffas no 7 for further guidance  a perspective on the income tax burden this could take the form of a summary of the latest available information on the income tax and on related income deductions exemptions and credits for individuals by income level and for corporations by value of assets  available information on the size of the tax gap collecting entities should provide any relevant estimates of the annual tax gap that become available as a result of federal surveys or studies if the entity discloses differences between the prices it charges in exchange transactions and full cost or market price it should consider providing an estimate of the amount of revenue foregone and should explain whether and to what extent the quantity demanded was assumed to change as a result of a difference in price 124 tax expenditures with directed flows of resources preparers of statements may consider presenting the information described below if the information is readily available and the preparers believe that the information will enhance the usefulness of the statements see sffas no 7 for further guidance  tax expenditures related to entity programs information on tax expenditures relevant to entity performance may be presented but it should be appropriately described explained and qualified  directed flows of resources related to entity programs information on directed flows of resources related to an entitys programs may be presented but it should be appropriately described explained and qualified 125 management challenges the par shall include a statement prepared by the agencys inspector general (ig) that summarizes what the ig considers to be the most serious management and performance challenges facing the agency and briefly assesses the agencys progress in addressing those challenges this statement must be provided to the agency head at least 30 days before the par due date comments by the agency head may be appended to the igs statement the agency head may comment on but not modify the ig statement the igs management challenges statement and the agency heads response should be included as an oai item in the agency par 126 ipia reporting details i describe your agencys risk assessment(s) performed subsequent to compiling your full program inventory list the risksusceptible programs (ie programs that have a significant risk of improper payments based on omb guidance thresholds) identified through your risk assessments be sure to include the programs previously identified in the former section 57 of omb circular a11 ii describe the statistical sampling process conducted to estimate the improper payment rate for each program identified iii describe the corrective action plans for: a reducing the estimated rate of improper payments include in this discussion what is seen as the cause(s) of errors and the corresponding steps necessary to prevent future occurrences if efforts are already underway andor have been ongoing for some length of time it is appropriate to include that information in this section b grantmaking agencies with risk susceptible grant programs discuss what your agency has accomplished in the area of funds stewardship past the primary recipient include the status on projects and results of any reviews iv the table below is required for each reporting agency please note the following changes from prior year reporting: (1) all risk susceptible programs must be listed in this chart whether or not an error measurement is being reported; (2) where no measurement is provided agency should indicate the date by which a measurement is expected; (3) if the current year (cy) is the baseline measurement year indicate by either footnote or by na in the prior year (py) column; (4) if any of the dollar amount(s) included in the estimate correspond to newly established measurement components in addition to previously established measurement components separate the two amounts to the extent possible; (5) include outlay estimates for cy 1 2 and 3; and (5) agencies are expected to report on cy activity and if not feasible then py activity is acceptable  future year outlay estimates (cy1 2 and 3) should match the outlay estimates for those years as reported in the most recent presidents budget improper payment reduction outlook ($ in millions) program py outlays py py $ cy outlays ip cy ip $ cy1 est outlays cy1 ip cy1 ip $ cy 2 est outlays cy2 ip cy2ip $ cy3 est outlays cy3 cy3 $ cy ip note: over and underpayments should be indicated if this information is available the absolute value of the dollars and the rates should be shown do not net the figures v discuss your agencys recovery auditing effort if applicable including any contract types excluded from review and the justification for doing so; actions taken to recoup improper payments and the business process changes and internal controls instituted andor strengthened to prevent further occurrences in addition complete the table below agency component (if applicable) amount subject to review for cy reporting actual amount reviewed and reported amounts identified for recovery amounts identified actual amount reviewed amounts recovered cy amounts recovered py(s) vi describe the steps the agency has taken and plans to take (including time line) to ensure that agency managers (including the agency head) are held accountable for reducing and recovering improper payments vii a describe whether the agency has the information systems and other infrastructure it needs to reduce improper payments to the levels the agency has targeted b if the agency does not have such systems and infrastructure describe the resources the agency requested in its fy 2006 budget submission to congress to obtain the necessary information systems and infrastructure viii describe any statutory or regulatory barriers which may limit the agencies corrective actions in reducing improper payments and actions taken by the agency to mitigate the barriers effects ix additional comments if any on overall agency efforts specific programs best practices or common challenges identified as a result of ipia implementation 127 other agencyspecific statutorily required reports other agencyspecific statutorily required reports pertaining to an agencys financial or performance management may be included in the performance and accountability report after consultation with omb and congress the head of the agency must determine if inclusion of an agencyspecific report will make the reported information more useful to decision makers consultation with congress includes the committee on governmental affairs of the senate the committee on government reform of the house of representatives and any other committee of congress having jurisdiction with respect to the report being proposed for consolidation appendix a statements of federal financial accounting concepts and standards interpretations technical bulletins and technical releases this is a listing of the statements of federal financial accounting concepts (sffac) and standards (sffas) interpretations technical bulletins and technical releases set and promulgated by the federal accounting standards advisory board (fasab) sffac no 1 objectives of federal financial reporting sffac no 2 entity and display sffac no 3 managements discussion and analysis concepts statements of federal financial accounting standards sffas no 1 accounting for selected assets and liabilities for fiscal years ending on and after september 30 1994 sffas no 2 accounting for direct loans and loan guarantees for fiscal years ending on and after september 30 1994 sffas no 3 accounting for inventory and related property for fiscal years ending on and after september 30 1994 sffas no 4 managerial cost accounting concepts and standards for fiscal years beginning after september 30 1996 sffas no 5 accounting for liabilities of the federal government for fiscal years beginning after september 30 1996 sffas no 6 accounting for property plant and equipment for fiscal years beginning after september 30 1997 sffas no 7 accounting for revenue and other financing sources and concepts for reconciling budgetary and financial accounting for fiscal years beginning after september 30 1997 sffas no 8 supplementary stewardship reporting for fiscal years beginning after september 30 1997 sffas no 9 deferral of sffas 4 managerial cost accounting for fiscal years beginning after september 30 1997 statements of federal financial accounting concepts sffas no 12 recognition of contingent liabilities from litigation (amends sffas no 5) for fiscal years beginning after september 30 1997 sffas no 13 deferral of paragraph 652 material revenuerelated transactions (amends sffas no 7) for fiscal years beginning after september 30 1998 sffas no 14 amendments to deferred maintenance reporting (amends sffas nos 6 and 8) for fiscal years beginning after september 30 1998 sffas no 10 accounting for internal use software (amends sffas no 6) for fiscal years beginning after september 30 2000 sffas no 11 amendments to accounting for ppe: definitions (amends sffas nos 6 and 8) for fiscal years beginning after september 30 1998 rescinded by sffas 23 sffas no 15 managements discussion and analysis standards for fiscal years beginning after september 30 1999 sffas no 16 amendments to accounting for ppe: multiuse heritage assets (amends sffas nos 6 and 8) for fiscal years beginning after september 30 1999 sffas no 17 accounting for social insurance for fiscal years beginning after september 30 1999 sffas no 18 amendments to accounting standards for direct loans and loan guarantees for fiscal years beginning after september 30 2000 sffas no 19 technical amendments to accounting standards for direct loans and loan guarantees in sffas no 2 for fiscal years beginning after september 30 2002 sffas no 20 elimination of certain disclosures for fiscal years beginning after september 30 2000 sffas no 21 reporting corrections of errors and changes in accounting principles for fiscal years beginning after september 30 2001 sffas no 22 change in certain requirements for reconciling obligations and net cost of operations for fiscal years beginning after september 30 2000 sffas no 23 eliminating the category national defense property plant and equipment for fiscal years beginning after september 30 2002 sffas no 24 selected standards for the consolidated financial report of the united states government for fiscal years beginning after september 30 2001 sffas no 25 reclassification of stewardship responsibilities and eliminating the current services assessment for fiscal years beginning after september 30 2004 sffas no 26 presentation of significant assumptions for the statement of social insurance for fiscal years beginning after september 30 2004 sffas no 27 identifying and reporting earmarked funds for fiscal years beginning after september 30 2005 sffas no 28 deferral of the effective date of reclassification of the statement of social insurance: amending sffas 25 and 26 for fiscal years beginning after september 30 2005 interpretations interpretation no 1 reporting on indian trust funds in general purpose financial reports of the department of interior and in the consolidated financial statements of the united states government: an interpretation of sffas 7 interpretation no 2 accounting for treasury judgment fund transactions: an interpretation of sffas no 4 and sffas no 5 interpretation no 3 measurement date for pension and retirement health care liabilities interpretation no 4 accounting for pension payments in excess of pension expense interpretation no 5 recognition by recipient entities of receivable nonexchange revenue: an interpretation of sffas 7 technical bulletin 20001 purpose and scope of fasab technical bulletins and procedures for issuance technical bulletin 20021 assigning to component entities costs and liabilities that result from legal claims against the federal government technical bulletin 20022 disclosures required by paragraph 79(g) of sffas 7 technical bulletin 20031certain questions and answers related to the homeland security act of 2002 technical releases technical release no 1 audit legal representation letter guidance interpretation no 6 accounting for imputed intradepartmental costs: an interpretation of sffas 4 technical bulletins technical release no 2 determining probable and reasonably estimable for environmental liabilities in the federal government technical release no 3 auditing estimates for direct loan and loan guarantee subsidies under the federal credit reform act amendments to technical release 3: preparing and auditing direct loan and loan guarantee subsidies under the federal credit reform act technical release no 4 reporting on nonvalued seized and forfeited property technical release no 5 implementation guidance on statement of federal financial accounting standards 10: accounting for internal use software technical release no 6 preparing estimates for direct loan and loan guaranty subsidies under the federal credit reform act amendments to technical release 3: preparing and auditing direct loan and loan guaranty subsidies under the federal credit reform act part b preparing the financial report (fr) of the united states government part b table of contents title secex no page section 1 scope and background  1 137 section 2 legal representation letter 2 138 section 3 management representation letter 3 139 section 4 adherence to due dates 4 141 appendices agencies required to prepare closing package and to submit representation letters a 142 key dates for the financial report of the united state government b 143 contact information c 145 1 scope and background as required under the government management reform act the secretary of the treasury in coordination with the director of the office of management and budget (omb) annually prepares and submits to the president and the congress an audited financial statement for the preceding fiscal year the comptroller general of the united states audits these financial statements as required by this circular the financial report of the united states government (financial report) is due no later than december 15 following the end of the fiscal year the department of the treasury (treasury) prepares the financial report from data provided by federal entities entities that have some activity that is material to at least one financial statement line or footnote disclosure must provide their data to treasury by preparing a closing package including specialpurpose financial statements and submitting it through the governmentwide financial report system (gfrs) in addition these entities must also submit intragovernmental balance information by trading partner the reporting requirements for these processes are provided in the treasury financial manual (tfm) volume 1 part 2 chapter 4700 a list of applicable entities is also provided in the tfm and appendix a below respectively the tfm is available on the web at wwwfmstreasgov the specialpurpose financial statements directly link the entities audited consolidated departmentlevel financial statements to the financial report the agencies auditors will opine on the specialpurpose financial statements including the reclassified balance sheets the statements of net cost the statements of changes in net position and the accompanying notes (see omb bulletin no 0102 as amended for additional guidance on auditing the specialpurpose financial statements see treasurys tfm for a listing of documents that must accompany the audit opinion on the specialpurpose financial statements) the intragovernmental balance information by trading partner which is required to be reconciled quarterly is subject to agreed upon procedures as defined by treasury in the tfm in addition the office of the chief financial officer and the office of inspector general must provide a copy of the management representation letters and the legal representation letter respectively (see below for additional guidance on preparing and submitting these letters) all other executive agencies must submit their preclosing adjusted trial balances (atbs) through the federal agencies centralized trial balance system (facts i) to be used in the compilation of the financial report reporting entities from the legislative and judicial branches of the united states government are also encouraged to submit their atbs the reporting requirements for these processes are provided in the tfm the financial report is prepared from federal entities audited financial statements and trial balances in accordance with generally accepted accounting principles promulgated by the federal accounting standards advisory board (fasab) entities that are required by law or policy to prepare and issue financial statements in accordance with accounting standards other than those recommended by fasab should continue to do so these reporting entities must identify to treasury differences resulting from applying different accounting standards that could be material to the users of the reporting entitys financial statements if these differences are material to the financial report the standards promulgated by fasab should be applied to those material items and subsequently sent to treasury for consolidation into the financial report the reporting entities also need to provide to treasury any additional disclosures required by fasab and treasurys tfm that would not be required by other standards 2 legal representation letter when preparing the legal representation letters the general counsel should reference the guidance found in omb bulletin no 0102 audit requirements for federal financial statements appendix h2 (see wwwwhitehousegovombbulletins) cases and claims should be reported using the format found at wwwusdojgovcivilformsformshtm in addition to reporting the status of pending contingent liabilities the interim legal representation letters should also include the cases reported in the previous years legal representation letters that are no longer pending the final representation letter should be limited to new information (ie cases that arise subsequent to the interim letter or changes in the status of cases that were reported in the interim letter) the final letter should not repeat information from the interim letter that has not changed any subsequent changes in cases that arise after the final representation letter but before the end of the audit fieldwork on the financial report must be emailed to treasury fms (see appendix c for email address) when preparing the management schedule which shows how the information contained in the legal counsels response was considered in preparing the financial statements the chief financial officer should follow the format provided in omb bulletin no 0102 audit requirements for federal financial statements appendix h3 the schedule should be consistent with information presented in the legal representation letters and the footnotes to the financial statements an assessment as to whether pending threatened litigation or unasserted claims should be reported or disclosed in the financial statements must be made by management this determination extends to cases in which legal counsel has classified the likelihood of loss as unknown the name and telephone number of the individual who is able to answer questions regarding the presentation of legal claims and assessments in the financial statements should also be provided the office of inspector general should submit the interim and final (updates only) legal representation letters and management schedule no later than august 29 and november 15 respectively the documents should be submitted electronically in pdf format including signatures to the department of justice fms and gao at their electronic addresses provided in appendix c the office of inspector general should inform fms via email of any subsequent changes in cases after the final legal representation letter but prior to november 30 on november 30 the email update should be sent to fms indicating changes or in accordance with the statement on auditing standards (sas) no 85 management representations managements representations may be limited to matters that are considered either individually or collectively material to the financial statements provided management and the auditor have reached an understanding on materiality for this purpose materiality may be different for different representations a discussion of materiality may be included explicitly in the representation letter in either qualitative or quantitative terms materiality considerations would not apply to those representations that are not directly related to amounts included in the financial statements in addition because of the possible effects of fraud on other aspects of the audit materiality would not apply to management or those employees who have significant roles in internal control also in accordance with sas no 85 the management representation letter should be signed by those members of management with overall responsibility for financial and operating matters that the auditor believes are responsible for and knowledgeable about directly or through others in the organization the matters covered by the representations such members of management normally include the agency head and the chief financial officer as required by sas no 89 audit adjustments the management letter should include a representation regarding the materiality of unrecorded financial statement adjustments aggregated by the auditors a list of any uncorrected misstatements including those audit adjustments waived by the componentlevel should be attached to the management representation letter management is required to include a representation that addresses the consistency of budgetary data reported on the statement of budgetary resources and the budgetary data submitted through facts ii to prepare the yearend sf 133s reports on budget execution and budgetary resources omb plans to amend omb bulletin no 0102 to include this representation in the future management may consider using the following sample representation: the information presented on the departments statement of budgetary resources agrees with the information submitted on the departments yearend reports on budget execution and budgetary resources (sf no changes at their electronic address provided in appendix c 3 management representation letter omb and the department of the treasury rely on the written representations obtained from agency management as part of their financial statement audit therefore it is important that management representations include all representations that are required by generally accepted auditing standards and omb bulletin no 0102 appendix e general representations must however be modified to be consistent with findings reported by the auditor 133s) this information will be used as input for the fiscal year 20xx actual column of the program and financing schedules reported in the fiscal year 20xz budget of the us government such information is supported by the related financial records and related data similar to legal representation letters an email must be sent to omboffm and the department of the treasury (main) (see appendix c for email address) whether there are no changes or changes due to subsequent changes to the management representation letter or agency financial statements that have arisen after the management representation letter and financial statements have been submitted but before the end of the audit fieldwork on the financial report management may consider using the following sample email: the purpose of this email is to inform you that nothing has come to our attention that would require modification to the management representation letter furnished to our auditors and sent to you dated insert date additionally nothing has come to our attention that would materially affect amounts reported in insert agencys names financial statements for the fiscal years ended september 30 20xy and 20xx or require additional disclosures to these financial statements we understand that these representations will be relied upon by the government accountability office as part of their efforts in auditing the united states government consolidated financial statements for the fiscal years ended september 30 20xy and 20xx additional representations are required in relation to the audit of the specialpurpose financial statements (closing package) and can be found in omb bulletin no 0102 as amended appendix k these representations may be combined with the representations required for the audit of the generalpurpose financial statements (financial statements included in part a of a136) in one management representation letter rather than two separate letters the office of the chief financial officer should submit the management representation letters electronically in pdf format including signatures to omboffm the department of the treasury (main) and gao at the addresses provided in appendix c the management representation letters should be submitted as soon as they are available but no later than november 15 (generalpurpose financial statements) and november 18 (specialpurpose financial statements) following the end of the fiscal year the office of the chief financial officer should inform omboffm and the department of the treasury (main) via email of any updates to the management representation letters and updates to financial statements due to subsequent events up through november 30 on november 30 the email update should be sent to omboffm and the department of the treasury (main) indicating changes or no changes at their electronic addresses provided in appendix c 4 adherence to due dates the financial report is issued 30 days after agencies submit their performance and accountability reports to omb and the congress therefore it is essential that agencies adhere to the dates published in the tfm chapter 4700 and appendix b of part b of circular a136 these are no later than dates; earlier submissions are encouraged appendix a agencies required to prepare closing package and to submit representation letters department of agriculture department of commerce department of defense department of education department of health and human services department of homeland security department of housing and urban development department of interior department of labor department of state department of transportation department of the treasury us agency for international development environmental protection agency general services administration national aeronautics and space administration national science foundation office of personnel management small business administration social security administration farm credit system insurance corporation federal communications commission federal deposit insurance corporation national credit union administration pension benefit guaranty corporation securities and exchange commission smithsonian institution tennessee valley authority us postal service department of energy department of justice department of veterans affairs nuclear regulatory commission exportimport bank of the united states railroad retirement board key dates for the financial report of the united states government key due date who should submit recipient 7212005 cfo act and atda agencies (all) cfo submits 3rd quarter financial statements when available but nlt 8292005 agencies in appendix a ig submits interim legal representation letter and management schedule doj fms gao payroll providers ig submits retirement health benefits and life insurance withholdingscontributions and supplemental semiannual headcount report opm agencies in appendix a cfo submits intragovernmental fourth quarter 2005 data files fms all ifcs closes for 4th quarter 2005 (final) fms agencies in appendix a cfo submits 4th quarter status of disposition certification fms all cfo submits draft performance and accountability report omb offm and rmo 11152005 cfo submits 2005 performance and accountability report omb offm and rmo main treasury fms gao when available but nlt 11152005 appendix b requirement omb offm and rmo 1012005 10192005 10192005 10272005 1112005 all agencies in appendix a cfo submits management representation letter omb offm main treasury gao when available but nlt 11152005 agencies in appendix a ig submits final legal representation letter and management schedule doj fms gao 11162005 (midnight est) agencies in appendix a preparers submit closing package data through gfrs (refer to tfm part 2 chapter 4700 for further details) fms 11162005 (midnight est) agencies excluded from appendix a nonverifying agencies submit adjusted trial balances through facts i and notes through gfrs fms 11182005 (noon est) cfo submits approval of closing package (refer to tfm part 2 chapter 4700 for further details) fms agencies in appendix a key due date who should submit recipient requirement 11182005 (noon est) agencies in appendix a cfo submits management representation letter for the special purpose financial statements omb offm main treasury gao 11182005 (noon est) agencies in appendix a ig submits opinion on closing package (refer to tfm part 2 chapter 4700 for documents to attach to the opinion) omb offm fms and gao 11232005 cfo submits representation on intragovernmental activity and balances fms and gao 11302005 agencies in appendix a cfo submits adjusted trial balances through facts i fms agencies in appendix a ig sends email on subsequent changes or no changes to cases after the final legal representation letter (changes occurring) fms 11302005 agencies in appendix a cfo sends email on subsequent changes or no changes to the management representation letter and financial statements due to subsequent events omb offm and main treasury 1222005 agencies in appendix a ig submits agreedupon procedures report on the closing package intragovernmental activity and balances fms and gao see ombs amendments to omb bulletin no 0102 audit requirements for federal agencies in appendix a 11302005 financial statements dated july 2004 for agencies subject to the accountability of tax dollars act appendix c contact information for legal and management representation letters office of management and budget new executive office building office of federal financial management 725 17th street nw suite 6025 washington dc 20503 attn: dana james email: davidzavadastatementsombeopgov telephone: (202) 3953993 fax: (202) 3953952 office of management and budget new executive office building resource management office 725 17th street nw washington dc 20503 (office number email telephone and fax should be obtained from the respective rmo) department of the treasury(main) 1500 pennsylvania avenue nw room 2064 washington dc 20220 attn: ann davis email: anndavisdotreasgov telephone: (202) 6221028 fax: (202) 6221511 department of the treasury financial management services room 509b 3700 eastwest highway hyattsville md 20782 attn: faye mccreary email: financialreportsfmstreasgov telephone: (202) 8749910 fax: (202) 8749907 government accountability office 441 g street nw room 5v09 washington dc 20548 attn: lynda downing email: uscfsgaogov telephone: (202) 5129168 fax: (202) 5129596 department of justice office of the assistant attorney general 950 pennsylvania avenue nw room 3138 washington dc 20530 attn: col sharon riley email: legallettersusdojgov telephone: (202) 5143886 fax: (202) 5148071 (beginning august 15) department of justice 1100 l street nw room 9048 washington dc 20005 attn: barbara clatterbos email: legallettersusdojgov telephone: (202) 6167922 fax: (202) 5141908