11

Country ReportCountry ReportU.S.A.U.S.A.

Public Sector Accruals SymposiumPublic Sector Accruals Symposium

Organization of Economic Cooperation & Development Organization of Economic Cooperation & Development

March 3-4, 2009March 3-4, 2009

Nancy Fleetwood

United States of America, Department of the Treasury Deputy Assistant Secretary – Accounting Policy

22

The U.S. - The BasicsThe U.S. - The Basics PopulationPopulation – 306 million – 306 million 2009 Outlays2009 Outlays: $3.1t; Receipts: $2.7t : $3.1t; Receipts: $2.7t

• Unified Budget Deficit: $455bUnified Budget Deficit: $455b• Net Cost: Net Cost: $1t$1t

National DebtNational Debt (as of 9/30/08): $10t (as of 9/30/08): $10t• Public Debt:$5.8tPublic Debt:$5.8t• Intragovernmental: $4.2tIntragovernmental: $4.2t

Hundreds of agenciesHundreds of agencies. . • 35 Reporting entity agencies35 Reporting entity agencies

Fiscal YearFiscal Year: October 1 – September 30: October 1 – September 30 Audit opinionAudit opinion disclaimer for more than a decade. disclaimer for more than a decade.

33

FY 2008 AccomplishmentsFY 2008 Accomplishments For the 4For the 4thth year in a row, all CFO Act agencies completed their year in a row, all CFO Act agencies completed their

audits within 45 days of fiscal year-end (audits within 45 days of fiscal year-end (November 15thNovember 15th).).• 21/24 major Federal agencies received 21/24 major Federal agencies received clean audit opinionsclean audit opinions, (FY07 - 19), (FY07 - 19)

• For the 5For the 5thth consecutive year, the consecutive year, the totaltotal number of number of material weaknessesmaterial weaknesses government-wide government-wide declineddeclined (from 39 to 32 during FY 2008).(from 39 to 32 during FY 2008).

• 14 agencies14 agencies earned a clean audit opinion earned a clean audit opinion with nowith no material weaknesses (including material weaknesses (including the Departments of Commerce, Education, Energy, HUD, Justice, Labor, State, the Departments of Commerce, Education, Energy, HUD, Justice, Labor, State, and Transportation). and Transportation).

The Government issued its consolidated financial report on time by The Government issued its consolidated financial report on time by December 15December 15thth..

For theFor the 22ndnd consecutive year consecutive year, the Government: , the Government: • earned an unqualified audit opinion on its Statement of Social earned an unqualified audit opinion on its Statement of Social

Insurance.Insurance.

• issued a ‘Citizen’s Guide’ to the Financial Report of the U.S. issued a ‘Citizen’s Guide’ to the Financial Report of the U.S. Government’.Government’.

44

Key IssuesKey Issues Current Financial Current Financial

Position and Position and ConditionCondition

Market Market Stabilization & Stabilization & RecoveryRecovery

Social Insurance & Social Insurance & SustainabilitySustainability

55

A Year of A Year of Unprecedented ChangeUnprecedented Change

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$51.1bOther

Budget Deficit vs. Net CostBudget Deficit vs. Net Cost2008 Unified

Budget Deficit$454.8 billion

$549.8bChange in unfunded

postemployment benefit estimates

+

$(46.6b)Decrease in

Capitalized Fixed Assets, net of Depreciation =

2008 Net Cost$1,009.1 billion

+

$4.5bNet Increase in:

Environmental Liabilities; Net Capitalized Fixed Assets;

Other

$110bChange in DoD

estimates

$339bChange in VA

estimates

$100bChange in

OPM estimates

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What Came In & What Came In & What Went OutWhat Went Out

In Out

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What We Own & What We Own & What We OweWhat We Owe

AssetsAssets $1.97 trillion$1.97 trillion Mostly Property Plant Mostly Property Plant

&Equipment&Equipment Other (off-balance Other (off-balance

sheet) sheet) • Stewardship Land Stewardship Land

(national parks, forests)(national parks, forests)• Heritage Assets Heritage Assets

(national memorials, (national memorials, historic structures)historic structures)

Liabilities

$-

$1,000.0

$2,000.0

$3,000.0

$4,000.0

$5,000.0

$6,000.0

Dol

lars

in B

illio

ns

Liabilities by TypeOther Liabilities

Environmental &disposalliabilities

Fed employee &veteran benefitspayable

Federal debtsecurities heldby the public

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Market Stabilization & RecoveryMarket Stabilization & RecoveryHousing & Housing & Economic Economic

Recovery Act Recovery Act (HERA)(HERA)

Emergency Emergency Economic Economic

Stabilization Stabilization Act Act (EESA)(EESA)

Troubled Troubled Assets Assets Relief Relief

Program Program (TARP)(TARP)

Only a small fraction of activity impacted the FY 2008 statements.

Assets LiabilitiesInvestment: preferred stock warrants from Government Sponsored Enterprises (GSEs) 7.0$

Supplementary Financing Program:Treasury borrows $300b and deposits with Federal Reserve.

Keepwell' liability to Freddie Mac 13.8$ Loan Receivable - MBS purchase 3.3$

Dollars in BillionsTransactions impacting the FY 2008 financial statements

300.0$ 300.0$

American Recovery and Reinvestment Act American Recovery and Reinvestment Act (ARRA)(ARRA)

1010

Market Stabilization & RecoveryMarket Stabilization & RecoveryReporting ChallengesReporting Challenges

TransparencyTransparency• Cost / BenefitCost / Benefit

Accounting for transactions and eventsAccounting for transactions and events • Credit Reform.Credit Reform.• ConsolidationConsolidation

Impact of American Recovery and Impact of American Recovery and Reinvestment ActReinvestment Act ( (ARRA)ARRA)

1111

Social Insurance: Social Insurance: An Issue Now & in the FutureAn Issue Now & in the Future

Historical & Projected U.S. Revenue and Cost as % of GDP

Current Trends Are Not Sustainable(as a percent of GDP)

---

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Perc

ent o

f GD

P

Net Interest

OtherGovernment

Medicaid

Medicare

Social Security

Total Revenues

Debt held by the Public(as a percent of GDP)

0

100

200

300

400

500

600

700

1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080Pe

rcen

t of G

DP

WWII 109% of GDP

Historical & Projected U.S. Debt Held by the Public as % of GDP

Under current conditions, actuaries estimate that Under current conditions, actuaries estimate that there will be a social insurance shortfall of there will be a social insurance shortfall of $43t$43t..• 75-year estimate of future benefit expenditures net of 75-year estimate of future benefit expenditures net of

contributions.contributions.

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The Clock is TickingThe Clock is Ticking

1313

We Still Have Work To DoWe Still Have Work To Do

'Harmonizing Entries': 2003-2008

$24.5

$4.1

$(29.8)

$(3.4)

$11.0$6.7

$(30.0)

$(20.0)

$(10.0)

$-

$10.0

$20.0

$30.0

2003 2004 2005 2006 2007 2008

Fiscal Year

billi

ons

of d

olla

rs

'PLUG'

Material Weaknesses:1. DoD Accounting Issues

2. Accounting for/Reconciliation of Intragovernmental Activity and Balances

• FMS must ‘PLUG’ a “harmonizing” entry (i.e., ‘PLUG’) into the equity reported on the Statement of Changes in Net Position to balance.

3. Preparation of Consolidated Financial Statements

For the 12th Consecutive Year, GAO issued a disclaimer of opinion on the Financial Report of the U.S. Government.

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Major InitiativesMajor Initiatives

Governmentwide Governmentwide Accounting and Accounting and

Reporting Reporting Modernization Project Modernization Project

(GWA)(GWA)

Financial Information Financial Information Reporting Reporting

Standardization Standardization (FIRST)(FIRST)

Payment Application Payment Application Modernization Modernization

(PAM)(PAM)

Collections and Collections and Cash Management Cash Management

ModernizationModernization

(CCMM)(CCMM)

Common Governmentwide Accounting Classification

(CGAC)

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On the HorizonOn the Horizon We must have a clean audit opinion on the We must have a clean audit opinion on the

Governmentwide financial statements.Governmentwide financial statements.• Continue to build on agency audit successes.Continue to build on agency audit successes.• Continue to pursue systems and structure initiatives to Continue to pursue systems and structure initiatives to

resolve governmentwide material weaknesses.resolve governmentwide material weaknesses. Financial reporting needs to be relevant to decision-Financial reporting needs to be relevant to decision-

makers.makers.• Build on success of ‘Citizen’s Guide’Build on success of ‘Citizen’s Guide’

Ready to address the reporting challenges of the Ready to address the reporting challenges of the economic recovery effort.economic recovery effort.• Credit ReformCredit Reform• TransparencyTransparency

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Find Out MoreFind Out More

U.S. Department of the TreasuryU.S. Department of the Treasuryhttp://www.fms.treas.gov/fr/index.htmlhttp://www.fms.treas.gov/fr/index.html

Office of Management and BudgetOffice of Management and Budgethttp://www.whitehouse.gov/omb/financial/reports/fy08_5yr_plan.pdfhttp://www.whitehouse.gov/omb/financial/reports/fy08_5yr_plan.pdf

Government Accountability OfficeGovernment Accountability Officehttp://www.gao.gov/financial/fy2008financialreport.htmlhttp://www.gao.gov/financial/fy2008financialreport.html

Federal Accounting Standards Advisory BoardFederal Accounting Standards Advisory Boardwww.fasab.govwww.fasab.gov

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QUESTIONSQUESTIONS

"We might hope to see the finances of the Union as clear and intelligible as a merchant's books, so that every member of Congress and every man

of any mind in the Union should be able to comprehend them, to investigate abuses, and consequently to control them."

President Thomas Jefferson to Treasury Secretary Albert Gallatin, 1802