Introduction to
Federal
Accounting
Presented by:
John Reifsnyder, CDFM
Graduate School
Instructor
[email protected]
1
Accounting

The Systematic
- Classification
Of the financial
- Recording
records of an
- Reporting
enterprise
- Analyzing
- Interpretation
used to
- recognize the factors that determine financial condition
- evaluate the progress or failures of an activity
2
Common Accounting Terms
Accounting Cycle
 Double Entry Accounting
 General Journal
 Ledger Accounts
 General Ledger
 Cash and Accrual Basis of
Accounting

details later
3
The United States
Constitution
“No money shall be drawn from the Treasury but
in consequence of appropriations made
by law . . .”
– and –
“. . . A regular statement and account of receipts
and expenditures of all public money . . . shall be
published from time to time.”
(Article 1, Sec 9, Clause 7)
4
Accounting Introduction
Federal accounting framework
 Budgetary accounting
 Financial accounting
 Managerial cost accounting
Users of Federal Financial Information
 External users (citizens and Congress)
 Internal users (agency heads and
management)
5
Federal Financial Statements
Consolidated Statements
Balance Sheet
UNITED STATES GOVERNMENT
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(In billions of dollars)
Assets:
Cash and other monetary assets
Accounts receivable
Loans receivable
Taxes receivable
Inventories and related property
Property, plant, and equipment
Other assets
Liabilities
and net position:
Total assets
Accounts
payable
Federal debt securities held by the
Federal employee and veteran ben
Environmental liabilities
Benefits due and payable
Loan guarantee liabilities
Other liabilities
Commitments
Total liabilities and contingencie
Net position
Total liabilities and net position
Consolidated Statements
Statement of Net Cost
UNITED STATES GOVERNMENT
CONSOLIDATED STATEMENT OF NET COSTS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
(In billions of dollars)
National defense
Human resources:
Education, training, employme
social services
Health
Medicare
Income security
Social security
Veterans benefits and services
Total human resources
Physical resources:
Energy
National resources and enviro
Commerce and housing credit
Transportation
Community and regional devel
Total physical resources
Net interest:
Treasury securities held by th
Other functions:
International affairs
General science, space, and te
Agriculture
Administration of justice
General government
Total other functions
Total
Consolidated Statements
Statement of Change
in Net Position
UNITED STATES GOVERNMENT
CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 1997
(In billions of dollars)
Net cost of Government operations
Less:
Financing sources
from non-exchange revenues:
Individual income tax and
tax withholdings
Corporation income taxes
Unemployment taxes
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous
Total non-exchange revenues
Other earned revenues
Excess of costs over revenues
before unreconciled transactions
Unreconciled transactions affecting
the change in net position.
Change in net position
Net position-beginning of period
Net position-end of period
1,603.3
1,247.5
179.8
27.8
55.8
19.7
20.0
26.1
1,576.7
11.6
-15.0
Required Supplemental
Stewardship Information Vol 6B, Chapter 11
RSI - Vol 6B, Chapter 12 (DM)
12.4
-2.6
-5,000.4
-5,003.0
6
Accounting-Related
Legislation

BUDGET AND ACCOUNTING ACT OF 1921:
- ESTABLISHED AN EXECUTIVE BUDGET PROCESS
- REQUIRED THE PRESIDENT TO SUBMIT HIS BUDGET
RECOMMENDATIONS TO CONGRESS EACH YEAR. TO ASSIST
HIM, THE BUREAU OF THE BUDGET WAS CREATED
- CONGRESS WOULD BETTER COORDINATE REVENUE AND
SPENDING DECISIONS
- APPROPRIATIONS COMMITTEES JURISDICTION OVER
SPENDING WAS STRENGTHENED
- GOVERNMENT ACCOUNTABILITY OFFICE (GAO) WAS
ESTABLISHED
7
Accounting-Related
Legislation
1950 BUDGET AND ACCOUNTING ACT





Amended the 1921 Budget and Accounting Act.
Assigned to the executive branch the responsibility for maintaining
accounting systems and producing financial reports.
The Comptroller General, in consultation with the Director of OMB,
was required to prescribe the principles, standards, and related
requirements for accounting to be observed by the executive
agencies.
Each was given the responsibility for establishing and maintaining
systems of accounting and internal controls.
Established accounting systems of executive agencies were required
to conform to the principles, standards, and related requirements
prescribed by the CG.
8
Accounting-Related
Legislation
•
THE CONGRESSIONAL BUDGET AND
IMPOUNDMENT CONTROL ACT OF 1974
-
Changed the fiscal year to October 1 through
September 30
- Established the Congressional Budget Office (CBO)
-Established to provide data to the Congress on
and analysis of the federal budget
- Established the House and Senate Budget
Committees
-Charged with development of a “Concurrent
Resolution on the Budget”
Accounting-Related
Legislation

1982 Federal Managers’ Financial Integrity
Act:

Each agency reports the results of a self-evaluation of
the adequacy of systems of internal control

Assurance that agencies are managed properly

Obligations and costs comply with applicable laws

Funds, property and other assets are safeguarded
against waste, loss, and unauthorized use
10
Accounting-Related
Legislation

Prompt Payment Act of 1982
Pay vendors on time or pay interest
11
Accounting-Related
Legislation

Chief Financial Officers Act of 1990
- Required the establishment of CFOs in
cabinet departments and specified
agencies
- CFOs charged with overseeing financial
management activities
12
Accounting-Related
Legislation

Government Performance and Results Act of
1993
Requires agencies:
 to submit 5-year strategic plans…DoD must update
at least every 4 years
 to submit annual performance plans
 Now part of Performance Budget
 to report prior year program performance by
November 15th of each year
 Performance and Accountability Report (PAR) or
separate Performance and Accountability reports
 Shifts focus of programs from workload activities
to performance metric outputs and outcomes.
13
Accounting-Related
Legislation

Government Management Reform Act – 1994
- Required systems to:
-- support the control of cost of
government
-- support full cost reporting and full
disclosure of financial data
- Required application of accounting standards
to produce consistency in financial reporting
14
Accounting-Related
Legislation




Federal Financial Management Improvement
Act – 1996
Each agency head establish, evaluate, and maintain
adequate systems of accounting and internal control
Incorporate accounting standards and reporting
objectives
Each audit of an agency’s financial statements shall
report if the agency is in compliance with the preceding
requirements
15
Federal Accounting Standards
Advisory Board (FASAB)


Develops and recommends federal accounting
concepts and standards
 established in 1990
 5 Concepts
 36 Standards
Federal Generally Accepted Accounting
Principles (GAAP)
16
Implementation of Federal
Accounting Standards
Office of Management
and Budget (OMB)
Government
Accountability Office
(GAO)
Department of
Treasury
17
Types of Government Funds
Department of Defense:
 Appropriated Funds
 Reimbursable Funds
 Revolving Funds
 Trust Funds
 Nonappropriated Funds
18
Budgetary Accounting


Budgetary accounting is often referred to as
fund accounting.
Budgetary accounts are a set of accounts that
are self-balancing and represent different
levels of obligational authority for different
units.
19
Budgetary Accounting

Purpose




Record appropriation status
Record subdivisions of budgetary
authorities
Record valid commitments, obligations,
expenditures, outlays
Control use of budgetary authorities
 Use for appropriate purpose
 Use during time provided
 Use within amount provided
20
Budgetary Definitions

Appropriations


Apportionment


Distribution of congressional budgetary authority to
a federal agency by OMB
Allotment


Congressional authorization to obligate government
and make payment from the Treasury
Distribution of apportioned budgetary authority to
organizational activities
Commitment

Administrative reservation of budgetary authority
21
Budgetary Definitions
(cont’d)

Obligation


Outlays/Disbursements


Budgetary authority used to fund goods and services
received
Expired Authority


Payment for costs incurred, goods and services
received
Expended Authority


Legally encumbers a specified sum of budgetary
authority that requires future payment
Budgetary authority that is no longer available for
new obligations
Canceled Authority

Budgetary authority that has been closed
22
Categories of Appropriations
 Annual Appropriations
 Multiyear Appropriations
 No-Year Appropriations
 Permanent (Indefinite) Appropriations
23
Flow of Funds
CONGRESS
THE PRESIDENT
PRESIDENT AND CONGRESS
AGREE ON THE BUDGET
PRESIDENT SIGNS
APPROPRIATIONS
BILLS
TREASURY
ISSUE TREASURY
WARRANTS AND
CREATES “BANK
ACCOUNTS”
Units A, B, C
BUDGET
EXECUTION
BEGINS
Agency
Divisions
Agency
Hqs
.
OMB
APPORTIONS THE
APPROPRIATIONS
Fiscal Law
 An agency may obligate and expend
appropriations:
 Only for a proper purpose
 Only within the authorized time limits
 Within the amounts established by Congress
for a bona fide need
25
Purpose
Proper Purpose Rule:
For the purposes for which they were
appropriated
per 31 U. S. C. 1301 (a):
“ Appropriations shall be applied only to the
objects for which the appropriations were
made except as otherwise provided by law ”
26
Time

Within the authorized time limits:
 Expenditure of funds must be incurred
within the time for which the appropriation
was made available.
 Do not execute current year funds for prior
or future year expenditures.
(31 USC 1502)
27
Time
 A valid obligation must be made to an
appropriation within the period the
funds are available.
 O&M: One fiscal year
 RDTE: Two fiscal years
 Procurement: Three fiscal years
 MILCON: Five fiscal years
 SCN: Five fiscal years
 No Year: Dollar specific, indefinite
expiration
28
Amount
 Within the amounts established by Congress:
 The obligation may not exceed the amount
appropriated by statute, nor may it be
incurred before the appropriation becomes
law (31 U.S.C. 1341)
29
No-Year Appropriations

31 U.S.C. 1555

A No-Year Account is to be Closed If:


Agency Head or President Determines
Purpose Fulfilled
No Disbursements Have Been Made for
Two Years
30
Flow of Resources
 Commitments (FMR Volume 3 Chapter 8)
 Obligations (Bona fide need - FMR Volume 11A 020507)
 Obligating Documents
• Contracts, Purchase Orders
• Travel Orders
• Requisitions
• Military Interdepartmental Purchase Requests
(MIPR)
– Project Orders (FMR Volume 11A, Chapter 2)
– Economy Act Orders (FMR Volume 11A,
Chapter 3)
 Outlays
31
Accounting Classification


Identifies the source of funding and purpose
for which used
Creates an audit trail
32
What is an Obligation?
33
Government Definition




Orders placed,
Contracts awarded,
Grants issued,
Services received, etc.--- that will require payments (“outlays”) during the
same or a future period.
34
Obligations are Classified as:
OBLIGATION
Undelivered Order
Unpaid
4801
Paid
4802
Delivered Order
Paid
4902
Unpaid
4901
35
What is an “Accrued
Expenditure”?
Charges…that reflect liabilities incurred and
the need to pay for:



services…
goods…received…
amounts becoming owed under programs
for which no current service or performance
is required (such as annuities, benefit
payments..)*
Expenditures accrue regardless of when
cash payments are made…*
*GAO, “Glossary of Federal Terms Used in the Federal Budget Process”, 1981.
36
Expenditures in the Budget
OBLIGATION
Delivered Order
Expenditure
PAID
UNPAID
37
Accrual Accounting Events
Timing of the Recording of Purchase of
Materials Under Accrual Method of Accounting
Records in Accounting Records in Month in Which:
Transaction
Placing an order for
materials
Materials Delivered
Payment made for
materials
Materials used or
consumed
Order is Placed
Materials are
Delivered
Bill is Paid
Materials are used
As an obligation
As an accrued
expenditure
As a disbursement of
cash
As an applied cost
38
What is an Outlay
?
39



A payment of an obligation
Once all payments are made, the obligation
goes away (is “liquidated”)
Outlays during a fiscal year may be for
payment of obligations incurred in prior
years or in the same year
40
Outlays are Paid Obligations
OBLIGATION
Undelivered Order
UNPAID
Delivered Order
PAID OUTLAY PAID
UNPAID
41
Reimbursements

Project Order (41 U.S.C. 23):

Placed with and accepted by:
 A DoD Government Owned and
Government Operated (GOGO)
establishment.
 Shipyard, arsenal, ordinance plant or
other manufacturing plant or shop.
42
Project Orders

Same as a commercial contract to the customers’ appropriation






Extends beyond the life of the appropriation. Up to five years
after the appropriation expires for new obligations
Over-billing may create a 31 USC 1517 violation
Normally issued for the overhaul or manufacturing of a specific
number of items within a specific time frame for a specific price
Performing activity should incur costs of not less than 51% of the
total costs of performing the work
The performing activity must not accept the project order if the
requirements of the project order regulations are not met
A Military Interdepartmental Purchase Request (DD 448 Form) is
used to issue project orders
43
Project Order Characteristics


Specific regarding work to be done
Single purpose with identification to a final product or end
item

Includes a production schedule

Includes funded cost per item

Usually mission oriented

Be performed in house

Bona fide need in the year executed

Commence work within a reasonable time (90 days)

Return orders for cancellation if work financed by an
expiring appropriation is not started by 1 January
44
Economy Act Orders


Must be closed-out by 30 September.
Change in dollar amount requires:
 An amendment to the original MIPR
(DD Form 448).
 Acceptance (DD Form 448-2) of the
amendment by the performing
activity.
 Adjust the obligation in accounting
based on the acceptance of (DD
Form 448-2).
45
Non-Economy Act Orders



Non-Economy Act orders are for intragovernmental support, where a DoD activity
needing goods and services obtains them from
a Non-DoD agency.
Specific statutory authority is required to place
an order with a Non-DoD agency for goods or
services, and to pay the associated cost.
If specific statutory authority does not exist,
the default will be the Economy Act, 31 U.S.C.
1535.
Customer/Provider Scenario



Customer (ordering agency) prepares MIPR requesting
the repair and overhaul of 400 widgets for a total cost of
$ 1,300,000. The MIPR was issued as a Project Order
and is funded with an annual O&M appropriation
Performing agency accepts the MIPR and prepares a
MIPR acceptance, DD Form 448-2
Based on the MIPR acceptance the ordering agency
records an obligation in their accounting records and the
performing agency records an order received in their
accounting records in the amount of $1,300,000
47
Order Impact On Customer/ Provider Books
Provider Books
Reimbursements Earned
Orders Received
MIPR ACCEPTANCE
$ 1.3M
FY ’10 – 15 – Available
To complete Work thru
30 Sept., 2015
Assumes O&M customer
4220/4210 Unfilled Orders/Anti.
Reimb & Other Income
$ 1.216M
Collections
$ 1.216M
Billed to Customer based on
Cost In support of the Project
(SF 1080 bill submitted)
4251/4220 R.E./UFO
1310/5200 A/R - REV
Unfilled Orders
$ 84
Should complete work by
30 Sept. 2015
4252/4251 R.E. COLL./R.E
1010/1310
FWTT/A.R.
Customer Books
Cost
Obligations
MIPR ACCEPTANCE
Project Order
(DD 448-2)
4610/4801
$ 1.3M
$ 1.216 M
Payment / Liquidation
$ 1.216 M
Based on SF 1080 Bill
4801/4901
6100/2110
3100/5700
4901/4902
2110/1010
Unliquidated Obligations
$ 84
Must be de-obligated if not
Completely liquidated by
30 Sept. 2015
48
How do we Link to the
Budget?


Accounting events are assigned unique
identifiers from a standard government-wide
list (U.S. Standard General Ledger)
All federal agencies are required to use these
standard accounts in order to properly link to
the Budget
49
USSGL Chart of Accounts








1000
2000
3000
4000
5000
6000
7000
8000
Assets
Liabilities
Net Position (Capital)
Budgetary
Revenues and Financing
Sources
Expenses
Gains and Losses
Memorandum Accounts
50
Flow of Budget Authority
President signs appropriation into law, thereby creating budget
authority - the authority for an agency to obligate the
government to pay for goods and services
OMB prepares to apportion
Accounting processes now come
into play
Treasury prepares agency warrant
OMB apportionment
Agency request
apportionment
Agency headquarters
allotment
Major Organizations
Sub-allotment or allocation
Subordinate organizations
51
Flow of
Budget Authority
Organizational element with allotment or allocation
(continued)
Organization may commit to reserve budget authority for
actual obligation later in the fiscal period
Obligate for goods and services
Expenditure
Receipt of goods/services:
cancellation or undelivered orders
Cost
Consumable supplies = cost
Supplies for inventory issued/consumed = cost
Equipment in revolving fund:
Capitalized/depreciated = cost(in some accounting systems)
Outlay
Cash from the Treasury pays for
goods/services
52
Budgetary Accounting
RESOURCES = STATUS OF RESOURCES
4119
4201
4450
Appropriations
4510
Total Actual
Resources Collected 4610
4700
4801
4901
4902
4650
4350
Unapportioned
Apportionments
Allotments
Commitments
Undel Order, Unpaid
Deliv Order, Unpaid
Deliv Order, Paid
Expired Authority
Canceled Authority
53
Proprietary Accounting

Purpose





Accounting for assets and liabilities
Accounting for revenues and
expenses
Determining financial position
Determining results of operations
SFFAS NO. 7
54
Proprietary Accounting

Balance Sheet



Assets = Liabilities + Net Position
1000 Assets = 2000 Liabilities + 3000
Net Position (Capital)
Statement of Net Cost

Expenses – Exchange Revenue = Net
Cost of Operations
55
The Historical Cost Concept


Generally accepted accounting
principles (GAAP) requires that assets
always be stated at their actual cost
rather than at their current market
values
Accounting is concerned with what you
paid for something, not what it is worth
today
56
The Matching Principle
Concept



Expenses of a period that are recorded and
reported are only those incurred to produce
the revenues generated for the same period
Some expenses require periodic adjustment to
reflect only the amount of expenses for the
financial period
Examples:
 Prepaid Insurance
 Prepaid Rent
 Depreciation of Capital Assets
57
Cash versus Accrual
Accounting

Cash accounting -

revenue is recorded when cash is
received and expenses when cash
payment is made
fails to match revenue with related
expenses, therefore does not lead to
logical income measurement
58
Cash Accounting
59
Accrual Basis of Accounting
60
Accrual Accounting (cont.)


Example: $10,000 payroll that is split between
two reporting periods:
A portion is earned but not paid at end of the
month:
 4 days ($4,000) earned in September
 6 days($6,000 to be earned in October)
 $4,000 is recorded as a payroll expense in
September. $4,000 is recorded as a liability
(salaries payable)
61
Flow of Accounting Data
Recognized A
Transaction Has
Occurred
Prepare A
Trial Balance
Prepare A
Source
Document
Make Period End
Adjustments
and Accruals
Analyze and
Prepare a Journal
Entry
Prepare
Financial Statements
(Reports)
Process (Record)
Into Accounting
Records
Close the Books
62
The Accounting Process
(Cycle)
The Cycle Involves:
 Work Performed During The Period





JOURNAL ENTRIES
POSTING TO LEDGER ACCOUNTS
DETERMINING UNADJUSTED BALANCES
ESTABLISHING A TRIAL BALANCE AND COMPLETING
WORKSHEET
Work Performed At The End Of The Period


JOURNALIZE AND POST ADJUSTING AND POST
CLOSING ENTRIES
PREPARE POST CLOSING TRIAL BALANCE AND
FINANCIAL STATEMENTS
63
General Journal



“Original” day-to-day record showing
the “debit” and “credit” effect of each
event
Includes a brief explanation for each
event
Used to update the general ledger
accounts
64
Ledger Account



Means of accumulating in “one place”
all information regarding changes in a
specific account
Comprised of three elements
 title
 left side which is called the debit side
 right side which is called the credit
side
Commonly referred to as a “T Account”
65
General Ledger


All ledger accounts are maintained
within the general ledger
Federal government general ledger
account structure is established,
maintained, and updated by the
Treasury Department
66
Accounts And Ledgers







Accounts Are Classified As Follows:
Assets Liabilities Costs/Expenses Revenue/Income Equity -
Gains/Losses
Budget
Memorandum
(What Is Owned)
(What Is Owed)
(What Is Spent)
(What Is Earned)
(Assets –Liabilities =
Net Worth)
67
The Accounting Equation

Assets = Liabilities + Equity
Or

A=L+E
Or
A–L=E
Given The Accounting Equation, With Any Two
Of The Three Factors, We Can Determine The
Third Factor
68
Double Entry Accounting




Forms the basis for most current day
accounting operations
Every business transaction affects two
or more accounts
Equal debit and credit entries are made
for every transaction
Total of all debit entries must equal the
total of all credit entries
69
Normal Account Balance





Refers to the Debit (left side) or Credit
(right side) of a ledger account
Assets normally have debit balances
Liabilities and net position accounts
normally have credit balances
Expense accounts normally have debit
balances
Revenue accounts normally have credit
balances
70
Debit and Credit Guide
Account Type
Affected By
Transaction
Assets
Liabilities
Net Position
Budgetary
Revenues
Expenses
Effect of
Transaction on
Account
How You Record
Debit
+
DR
Credit
Normal Balance
DR
-
CR
+
CR
CR
CR
CR
CR*
DR / CR **
CR
CR
-
DR
+
-
DR
DR
+
-
DR
+
DR
-
DR
CR
* = To increase the budgetary account “Other Appropriations Realized” you debit (DR)
** = Budgetary Accounts have either a debit or credit balances, depending on the
account.
71
General Journal
APPROPRIATIONS
Reference
Debit
Credit
Account Title and Explanation
Appropriations-Realized Resources 4119
Unapportioned Appropriations
4450
Funds With Treasury
1010
Unexpended Appropriations
3101
100,000
100,000
100,000
100,000
72
General Journal
OMB APPORTIONMENT
Reference
Debit
Credit
Account Title and Explanation
Unapportioned Authority
4450
Apportionment
4510
25,000
25,000
73
General Journal
ALLOTMENT
Reference
Debit
Credit
Account Title and Explanation
Apportionments
4510
Allotments-Realized Resources
4610
20,000
20,000
74
General Journal
COMMITMENT
Reference
Debit
Credit
Account Title and Explanation
Allotments-Realized Resource
4610
Commitments
4700
2,000
2,000
75
General Journal
OBLIGATION
Reference
Debit
Credit
Account Title and Explanation
Commitments
4700
Undel. Orders – Obligs. Unpaid
4801
2,000
2,000
76
General Journal
RECEIPT OF MAT’LS ORDERED
Reference
Debit
Credit
Account Title and Explanation
Undel. Orders – Obligs. Unpaid
4801
Del. Orders – Oblig. Unpaid
4901
Operating Materials Held for Use
1511
Accounts Payable
2110
Unexpended Appropriation
3107
Expended Appropriation
5700
2,000
2,000
2,000
2,000
2,000
2,000
77
General Journal
PAYMENT OF INVOICE
Reference
Debit
Credit
Account Title and Explanation
Delivered Orders Oblig. Unpaid
4901
Delivered Orders Oblig - Paid
4902
Accounts Payable
2110
Fund Balance With Treasury
1010
2,000
2,000
2,000
2,000
78
General Ledger
Fund Balance with Treasury
1010
(1) 100,000,000
(7) 2,000,000
Operating Materials & Supplies
1511
(6) 2,000,000
Accounts Payable
2110
(7) 2,000,000
(6) 2,000,000
98,000,000
0
Unexpended Appropriations
3100
(6) 2,000,000
(1) 100,000,000
Other Appropriations Realized
4119
(1) 100,000,000
Unapportioned Authority
4450
(2) 25,000,000
98,000,000
Approtionment
4510
(3) 20,000,000
(2) 25,000,000
75,000,000
Allotments Realized Resources
4610
(4) 2,000,000
5,000,000
Undelivered Orders
Obligations, Unpaid
4801
(6) 2,000,000
(5) 2,000,000
(1) 100,000,000
(3) 20,000,000
Commitments
4700
(5) 2,000,000
(4) 2,000,000
18,000,000
Delivered Orders
Obligations, Unpaid
4901
(7) 2,000,000
(6) 2,000,000
Delivered Orders
Obligations, Paid
4902
(7) 2,000,000
Expended Appropriations
5700
(6) 2,000,000
79
Trial Balance
DR
1010
Fund Balance with U.S. Treasury
$ 98,000,000
1511
Operating Material & Supplies Held for Use
$
4119
Other Appropriations Utilized
$ 100,000,000
CR
2,000,000
3100
Unexpended Approopriations
$ 98,000,000
4450
Unapportioned Authority
$ 75,000,000
4510
Apportionment
$
4610
Allotments - Realized Resources
$ 18,000,000
4902
Expended Authority - Paid
$
2,000,000
5700
Expended Appropriations
$
2,000,000
$ 200,000,000
5,000,000
$ 200,000,000
80
BALANCE SHEET
ASSETS
1010 Fund Balance With Treasury
1511 Operating Mat’l Supplies Held for Use
TOTAL ASSETS
$ 98,000,000
2,000,000
$100,000,000
LIABILITIES
0
EQUITY
3100 Unexpended Appropriations
5700 Expended Appropriations
$98,000,000
2,000,000
TOTAL EQUITY
$100,000,000
TOTAL LIABILITIES AND EQUITY
$100,000,000
81
BUDGETARY BALANCE SHEET
RESOURCES
4119 Other Appropriations Realized
TOTAL RESOURCES
$100,000,000
$100,000,000
STATUS OF RESOURCES
4450 Unapportioned
4510 Apportioned
4610 Allotments
4902 Delivered Orders, Obligations, Paid
Total Status of Resources
$ 75,000,000
5,000,000
18,000,000
2,000,000
$100,000,000
82
Managerial Cost Accounting

Is the process of:
- Accumulating
- Measuring
- Analyzing
- Interpreting
- Reporting Cost
Source: SFFAS No. 4
83
Managerial Cost Accounting

Full Cost

Direct Costs (Direct Labor/Direct Material)

Indirect Costs (Overhead)

Intra-entity Costs (General and Administrative)

Inter-entity Costs

Cost of goods and services received from other entities

Providing entity responsible for providing cost data

Recognition limited to material amounts
84
Working Capital Funds



Established to satisfy recurring DoD
requirements using a businesslike buyer-andseller approach.
Have a goal to breakeven over the long term.
Use the funds collected to pay for acquisition
of resources needed to operate the fund.
Reference - 10 U.S.C., Section 2208
DoDFMR Volume 3, Chapter 19
85
DEFENSE WORKING CAPITAL FUND
How it Works
APPROPRIATES
$ FUNDS
CUSTOMERS
OPERATING FORCES
READINESS COMMANDS
PLACE
ORDERS
REVOLVING
FUNDS
CONGRESS
APPROPRIATED
$ WORKING
CAPITAL AT INCEPITON
OF THE FUND
LABOR COSTS
PAY
WORKING
CAPITAL
$$
BILL FOR
COSTS/
SERVICES
FINANCES COST OF PERFORMING WORK
DIRECT MATERIAL
PRODUCTION
OVERHEAD
GENERAL &
ADMINISTRATIVE
86
Objectives of Federal
Financial Reporting

Budgetary Integrity


Operating Performance


Funding properly spent?
Outputs and outcomes?
Controls

Safeguarding assets?
87
Federal Financial Reporting
DoDFMR Volume 6B
 Balance Sheet (Chapter 4)
 Statement of Net Cost (Chapter 5)
 Statement of Changes in Net Position
(Chapter 6)
 Statement of Budgetary Resources (Chapter 7)
 Statement of Custodial Activity (Chapter 9)
88
Statement of Net Costs

Also Referred to as:



Purpose



Statement of Operations
Income statement
intended to provide revenue and expense
details
reports results (net profit or net loss)
Prepared on basis of general ledger
5000 and 6000 account balances
89
Statement of Net Costs
90
Statement of Changes in Net
Position

Reports the




beginning net position
effect of those transactions that caused the
net position to change
ending net position
Prepared on the basis of the Statement
of Net Costs and the “Financing
Sources”
91
Statement of Changes in Net
Position




ITEMS THAT INCREASE NET
POSITION
Excess of revenue over
cost (net income)
Legislative
appropriations
Property obtained from
another govt. agency for
which no reimbursed is
required





ITEMS THAT DECREASE NET
POSITION
Excess of cost over
revenue (net loss or net
cost of operations)
Property provided to
another agency for which
no reimbursement is
expected
Funds returned to the
Treasury
Appropriations returned
92
Statement of Financial
Position

Also referred to as the Balance Sheet
 assets
 dollar amount of future economic
benefits owned and managed by the
agency
 liabilities
 dollar amounts owed by the agency
 net position (equity)
 the difference between assets and
liabilities
93
Statement of Financial
Position





Summarizes the net worth or liquidity of
an entity at a particular time
Changes from day to day
Accounts on this statement are
permanent accounts
Is a summary of accounting equation
Assets = Liabilities + Government
Equity
94
Statement of Financial
Position
95
Statement of Budgetary
Resources


Provides information on how budget
resources were made available as well
as their status at the end of the
reporting period.
Should be reconcilable to the budget
execution information reported on the
SF 133 Report on Budget Execution and
Budgetary Resources.
96
SF 133 Report on Budget Execution
and Budgetary Resources
The SF 133 consists of the following sections:
Questions?
?
?
?
?
?
98
Good Luck and Happy Trails
[email protected]
99