1 Introduction to Federal Accounting Presented by: John Reifsnyder, CDFM Graduate School Instructor [email protected].

1

Introduction to Federal

Accounting

Presented by:

John Reifsnyder, CDFM

Graduate SchoolInstructor

[email protected]

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



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



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.


• 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

11


Prompt Payment Act of 1982

Pay vendors on time or pay interest

12


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


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

33

What is an Obligation?

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.

37

OBLIGATION

Delivered Order

UNPAID PAID

Expenditures in the Budget

Expenditure

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

39

What is an Outlay?

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


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

59

Cash Accounting

60

Accrual Basis of Accounting

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



OMB APPORTIONMENT

74

General Journal

Apportionments 4510 20,000

Allotments-Realized Resources

4610 20,000



ALLOTMENT

75

General Journal

Allotments-Realized Resource 4610 2,000

Commitments 4700 2,000



COMMITMENT

76

General Journal

Commitments 4700 2,000

Undel. Orders – Obligs. Unpaid 4801 2,000



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



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



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

90

Statement of Net Costs

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


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

95


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:

Questions?

?

?

?

?

?

98

99

Good Luck and Happy Trails

[email protected]

1 Introduction to Federal Accounting Presented by: John Reifsnyder, CDFM Graduate School Instructor [email protected].

Documents

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