1 introduction to federal accounting presented by: john reifsnyder, cdfm graduate school instructor...
TRANSCRIPT
1
Introduction to Federal
Accounting
Presented by:
John Reifsnyder, CDFM
Graduate SchoolInstructor
2
Accounting
The Systematic
- Classification- Recording- Reporting- Analyzing- Interpretation
Of the financial records of an
enterprise
used to
- evaluate the progress or failures of an activity - recognize the factors that determine financial condition
3
Common Accounting Terms
Accounting Cycle Double Entry Accounting
General Journal Ledger Accounts General Ledger
Cash and Accrual Basis of Accounting
details later
4
The United States Constitution
“No money shall be drawn from the Treasury but in consequence of appropriations madeby 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)
5
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)
6
Federal Financial Statements
UNITED STATES GOVERNMENT CONSOLIDATED BALANCE SHEETAS OF SEPTEMBER 30, 1997
(In billions of dollars)
Consolidated Statements
Assets:Cash and other monetary assets
Accounts receivableLoans receivableTaxes receivableInventories and related property
Property, plant, and equipment
Other assets Total assets
Commitments and contingencieNet position Total liabilities and net position
Liabilities and net position:Accounts payableFederal debt securities held by the
Federal employee and veteran ben
Environmental liabilitiesBenefits due and payableLoan guarantee liabilitiesOther liabilities Total liabilities
UNITED STATES GOVERNMENT CONSOLIDATED STATEMENT OF NET COSTSFOR THE YEAR ENDED SEPTEMBER 30, 1997
(In billions of dollars)
Consolidated Statements
National defenseHuman resources:Education, training, employme
social servicesHealthMedicareIncome securitySocial securityVeterans benefits and services Total human resources
Physical resources:EnergyNational resources and enviroCommerce and housing creditTransportationCommunity and regional devel Total physical resources
Net interest: Treasury securities held by th
Other functions:International affairsGeneral science, space, and teAgricultureAdministration of justiceGeneral government Total other functions Total
UNITED STATES GOVERNMENT CONSOLIDATED STATEMENT OF CHANGES IN NET POSITIONFOR THE YEAR ENDED SEPTEMBER 30, 1997
(In billions of dollars)
Consolidated Statements
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
1,247.5
179.8
27.8
55.8
19.7
20.0
26.1
1,603.3Net cost of Government operations
1,576.7
11.6
-15.0
12.4
-2.6
-5,000.4
-5,003.0
Balance Sheet
Statement of Net Cost
Statement of Changein Net Position
Required Supplemental Stewardship Information -
Vol 6B, Chapter 11RSI - Vol 6B, Chapter 12 (DM)
7
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
8
Accounting-Related Legislation1950 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.
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”
10
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
12
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
13
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.
14
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
15
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
16
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)
17
Implementation of Federal Accounting Standards
Office of Management and
Budget (OMB)Government
Accountability Office (GAO)
Department of Treasury
18
Types of Government Funds
Department of Defense:
Appropriated Funds
Reimbursable Funds
Revolving Funds
Trust Funds
Nonappropriated Funds
19
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.
20
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
21
Budgetary Definitions
Appropriations Congressional authorization to obligate
government and make payment from the Treasury
Apportionment Distribution of congressional budgetary
authority to a federal agency by OMB Allotment
Distribution of apportioned budgetary authority to organizational activities
Commitment Administrative reservation of budgetary
authority
22
Budgetary Definitions (cont’d) Obligation
Legally encumbers a specified sum of budgetary authority that requires future payment
Outlays/Disbursements Payment for costs incurred, goods and services
received Expended Authority
Budgetary authority used to fund goods and services received
Expired Authority Budgetary authority that is no longer available for
new obligations Canceled Authority
Budgetary authority that has been closed
23
Categories of Appropriations
Annual Appropriations
Multiyear Appropriations
No-Year Appropriations
Permanent (Indefinite) Appropriations
Flow of FundsCONGRESSTHE PRESIDENT
PRESIDENT AND CONGRESS AGREE ON THE BUDGET
PRESIDENT SIGNS APPROPRIATIONS BILLS
OMB
APPORTIONS THEAPPROPRIATIONS
TREASURY
ISSUE TREASURYWARRANTS ANDCREATES “BANKACCOUNTS”
Agency
Hqs.Agency Divisions
BUDGETEXECUTION BEGINS
Units A, B, C
25
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
26
Proper Purpose Rule:
For the purposes for which they were appropriatedper 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 ”
Purpose
27
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)
28
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
29
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)
30
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
31
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
32
Accounting Classification
Identifies the source of funding and purpose for which used
Creates an audit trail
34
Orders placed, Contracts awarded, Grants issued, Services received, etc.--
-- that will require payments (“outlays”) during the same or a future period.
Government Definition
35
Obligations are Classified as:
OBLIGATION
Undelivered Order Delivered Order
Unpaid 4801
Paid 4802
Paid 4902
Unpaid 4901
36
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.
38
Accrual Accounting EventsTiming of the Recording of Purchase of
Materials Under Accrual Method of Accounting
Records in Accounting Records in Month in Which:
Transaction Order is Placed Materials are Delivered
Bill is Paid Materials are used
Placing an order for materials
As an obligation
Materials Delivered As an accrued expenditure
Payment made for materials
As a disbursement of cash
Materials used or consumed
As an applied cost
40
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
41
Outlays are Paid Obligations
OBLIGATION
Undelivered Order Delivered Order
UNPAID PAID PAID UNPAIDOUTLAY
42
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.
43
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
44
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
45
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).
Non-Economy Act Orders Non-Economy Act orders are for intra-
governmental 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.
47
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
48
Order Impact On Customer/ Provider Books
$ 84
Should complete work by30 Sept. 2015
$ 84
Must be de-obligated if not Completely liquidated by30 Sept. 2015
Unfilled Orders
Unliquidated Obligations
Provider Books
Customer Books
$ 1.216M
4252/4251 R.E. COLL./R.E 1010/1310 FWTT/A.R.
$ 1.216 M
4901/49022110/1010
Collections
Payment / Liquidation
$ 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
$ 1.216 M
Based on SF 1080 Bill
4801/4901 6100/2110 3100/5700
Reimbursements Earned
Cost
MIPR ACCEPTANCE $ 1.3MFY ’10 – 15 – AvailableTo complete Work thru30 Sept., 2015Assumes O&M customer
4220/4210 Unfilled Orders/Anti.Reimb & Other Income
MIPR ACCEPTANCE $ 1.3M
Project Order(DD 448-2)
4610/4801
Orders Received
Obligations
49
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
50
USSGL Chart of Accounts 1000 Assets 2000 Liabilities 3000 Net Position (Capital) 4000 Budgetary 5000 Revenues and Financing
Sources 6000 Expenses 7000 Gains and Losses 8000 Memorandum Accounts
51
Flow of Budget AuthorityPresident 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
Treasury prepares agency warrant
OMB apportionment
Agency request
apportionment Agency headquarters
allotment
Major Organizations
Sub-allotment or allocation
Subordinate organizations
Accounting processes now come into play
52
Flow ofBudget Authority (continued)
Organizational element with allotment or allocation
Organization may commit to reserve budget authority for actual obligation later in the fiscal period
Obligate for goods and services
ExpenditureReceipt of goods/services:cancellation or undelivered orders
CostConsumable supplies = costSupplies for inventory issued/consumed = costEquipment in revolving fund:Capitalized/depreciated = cost(in some accounting systems)
OutlayCash from the Treasury pays for goods/services
53
Budgetary Accounting
RESOURCES = STATUS OF RESOURCES
4119 Appropriations4201 Total Actual
Resources Collected
4450 Unapportioned4510 Apportionments4610 Allotments4700 Commitments4801 Undel Order, Unpaid4901 Deliv Order, Unpaid4902 Deliv Order, Paid4650 Expired Authority4350 Canceled Authority
54
Proprietary Accounting
Purpose Accounting for assets and liabilities Accounting for revenues and
expenses Determining financial position Determining results of operations
SFFAS NO. 7
55
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
56
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
57
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
58
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
61
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)
62
Flow of Accounting Data
Recognized A Transaction Has
Occurred
Prepare ASource
Document
Analyze and Prepare a Journal
Entry
Process (Record)Into Accounting
Records
Prepare A Trial Balance
Make Period EndAdjustments and Accruals
PrepareFinancial Statements
(Reports)
Close the Books
63
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
64
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
65
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”
66
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
67
Accounts And Ledgers Accounts Are Classified As Follows:
Assets - (What Is Owned) Liabilities - (What Is Owed) Costs/Expenses - (What Is Spent) Revenue/Income - (What Is Earned) Equity - (Assets –Liabilities = Net Worth)
Gains/LossesBudgetMemorandum
68
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
69
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
70
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
71
Debit and Credit GuideAccount Type Affected By Transaction
Effect of Transaction on Account
How You Record
Normal BalanceDebit Credit
Assets+ DR DR
- CR
Liabilities+ CR CR
- DR
Net Position+ CR CR
- DR
BudgetaryCR* DR / CR **
- DR
Revenues+ CR CR
- DR
Expenses+ 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.
72
General Journal
Appropriations-Realized Resources4119 100,000
Unapportioned Appropriations 4450 100,000
Reference Debit Credit
Account Title and Explanation
APPROPRIATIONS
Unexpended Appropriations 100,000
3101
Funds With Treasury 1010 100,000
73
General Journal
Unapportioned Authority 4450 25,000
Apportionment
4510 25,000
Reference Debit Credit
Account Title and Explanation
OMB APPORTIONMENT
74
General Journal
Apportionments 4510 20,000
Allotments-Realized Resources
4610 20,000
Reference Debit Credit
Account Title and Explanation
ALLOTMENT
75
General Journal
Allotments-Realized Resource 4610 2,000
Commitments 4700 2,000
Reference Debit Credit
Account Title and Explanation
COMMITMENT
76
General Journal
Commitments 4700 2,000
Undel. Orders – Obligs. Unpaid 4801 2,000
Reference Debit Credit
Account Title and Explanation
OBLIGATION
77
General Journal
Undel. Orders – Obligs. Unpaid 4801 2,000
2,000Del. Orders – Oblig. Unpaid 4901
Operating Materials Held for Use 2,0001511
Accounts Payable 2110 2,000
Unexpended Appropriation
3107
2,000
Reference Debit Credit
Account Title and Explanation
RECEIPT OF MAT’LS ORDERED
2,000Expended Appropriation
5700
78
General Journal
Delivered Orders Oblig - Paid 4902 2,000
Accounts Payable 2110 2,000
Fund Balance With Treasury 1010 2,000
Delivered Orders Oblig. Unpaid 4901 2,000
Reference Debit Credit
Account Title and Explanation
PAYMENT OF INVOICE
79
(1) 100,000,000 (7) 2,000,000 (6) 2,000,000 (7) 2,000,000 (6) 2,000,000
98,000,000 0
(6) 2,000,000 (1) 100,000,000 (1) 100,000,000 (2) 25,000,000 (1) 100,000,000
98,000,000 75,000,000
(3) 20,000,000 (2) 25,000,000 (4) 2,000,000 (3) 20,000,000 (5) 2,000,000 (4) 2,000,000
5,000,000 18,000,000
(6) 2,000,000 (5) 2,000,000 (7) 2,000,000 (6) 2,000,000 (7) 2,000,000
(6) 2,000,000
General Ledger
46104510
3100 4119 4450
1010Operating Materials & Supplies
4700
Fund Balance with Treasury
Expended Appropriations
Accounts Payable
Obligations, Paid
5700
1511 2110
4902
Commitments
Obligations, Unpaid Obligations, Unpaid4801 4901
Other Appropriations Realized Unapportioned AuthorityUnexpended Appropriations
Approtionment Allotments Realized Resources
Undelivered Orders Delivered Orders Delivered Orders
80
DR CR
1010 Fund Balance with U.S. Treasury 98,000,000$
1511 Operating Material & Supplies Held for Use 2,000,000$
4119 Other Appropriations Utilized 100,000,000$
Unexpended Approopriations 98,000,000$
Unapportioned Authority 75,000,000$
Apportionment 5,000,000$
Allotments - Realized Resources 18,000,000$
Expended Authority - Paid 2,000,000$
Expended Appropriations 2,000,000$
200,000,000$ 200,000,000$
5700
4510
Trial Balance
3100
4450
4610
4902
81
BALANCE SHEET
ASSETS
1010 Fund Balance With Treasury $ 98,000,000
1511 Operating Mat’l Supplies Held for Use 2,000,000
TOTAL ASSETS $100,000,000
LIABILITIES 0
EQUITY
3100 Unexpended Appropriations $98,000,000
5700 Expended Appropriations 2,000,000
TOTAL EQUITY $100,000,000
TOTAL LIABILITIES AND EQUITY $100,000,000
82
BUDGETARY BALANCE SHEET
RESOURCES
4119 Other Appropriations Realized $100,000,000
TOTAL RESOURCES $100,000,000
STATUS OF RESOURCES
4450 Unapportioned $ 75,000,000
4510 Apportioned 5,000,000
4610 Allotments 18,000,000
4902 Delivered Orders, Obligations, Paid 2,000,000
Total Status of Resources $100,000,000
83
Managerial Cost Accounting
Is the process of:- Accumulating
- Measuring
- Analyzing
- Interpreting
- Reporting CostSource: SFFAS No. 4
84
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
85
Working Capital Funds
Established to satisfy recurring DoD requirements using a businesslike buyer-and-seller 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 2208DoDFMR Volume 3, Chapter 19
86
CUSTOMERSOPERATING FORCES
READINESS COMMANDSAPPROPRIATES
$ FUNDS
CONGRESSAPPROPRIATED
$ WORKINGCAPITAL AT INCEPITON
OF THE FUND
REVOLVINGFUNDS
WORKINGCAPITAL $
$
LABOR COSTS DIRECT MATERIALPRODUCTION OVERHEAD
GENERAL &ADMINISTRATIVE
PLACE ORDERS PAY BILL FOR
COSTS/ SERVICES
FINANCES COST OF PERFORMING WORK
DEFENSE WORKING CAPITAL FUND How it Works
87
Objectives of Federal Financial Reporting
Budgetary Integrity Funding properly spent?
Operating Performance Outputs and outcomes?
Controls Safeguarding assets?
88
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)
89
Statement of Net Costs
Also Referred to as: Statement of Operations Income statement
Purpose 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
91
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”
92
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
93
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
94
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
96
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.
SF 133 Report on Budget Execution and Budgetary Resources
The SF 133 consists of the following sections: