6509.11m_10.doc

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FOREST SERVICE HANDBOOKNATIONAL HEADQUARTERS (WO)

WASHINGTON, DC

FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOK

CHAPTER 10 - ACCRUING EARNED REVENUE

Amendment No.: 6509.11m-2007-1

Effective Date: September 6, 2007

Duration: This amendment is effective until superseded or removed.

Approved: JESSE KING Chief Financial Officer

Date Approved: 08/27/2007

Posting Instructions: Amendments are numbered consecutively by Handbook number and calendar year. Post by document; remove the entire document and replace it with this amendment. Retain this transmittal as the first page(s) of this document.

New Document 6509.11m_10 35 Pages

Superseded Document(s) by Issuance Number and Effective Date

Digest:

10 - Establishes code and caption for, “Accruing Earned Revenue”, and sets policy and procedural direction to ensure that all revenue is accrued properly.

11 - Establishes code and caption for, “Monthly Accrual of Unbilled Earned Revenue from Timber Harvests,” and sets forth procedural direction to determine and record an accrual for this revenue flow.

12 - Incorporates direction previously issued in interim directive 6509.11k-2006-8, section 56.76a (Purchaser Road Credit (PRC) and Specified Road Credits (SRC)). Establishes code and caption for “Monthly Accrual of Purchaser Road Credit and Specified Road Credit.” With minor clerical changes, the text sets forth procedural direction to determine and record an accrual for this revenue flow.

WO AMENDMENT 6509.11m-2007-1EFFECTIVE DATE: 09/06/2007DURATION: This amendment is effective until superseded or removed.

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FSH 6509.11m - SERVICEWIDE ACCRUAL HANDBOOKCHAPTER 10 - ACCRUING EARNED REVENUE

Digest--Continued:

13 - Establishes code and caption for, “Annual Accrual of Permit Fees for Special Uses, Grazing, and Minerals”, and sets forth procedural direction to determine and record an accrual for this revenue flow.

14 - Establishes code and caption for, “Quarterly Accrual of Revenue for Plant-A-Tree and Character Licensing of Smokey Bear and Woodsy Owl,” and sets forth procedural direction to determine and record an accrual for this revenue flow.

15 - Establishes code and caption for, “Annual Accrual of Revenue Collected by Third Party Vendors,” and sets forth procedural direction to determine and record an accrual for this revenue flow.

16 - Establishes code and caption for, “Quarterly Accrual of Reimbursable Revenue for Incident-Related Agreements,” and sets forth procedural direction to determine and record an accrual for this revenue flow.

17 - Incorporates direction previously issued in interim directive, 6509.11k-2006-11. Establishes code and caption for, “Annual Accrual of Reimbursable Revenue for Non-Incident-Related Agreements,” and sets forth procedural direction to determine and record an accrual for this revenue flow.


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Table of Contents

10.1 - Authority...........................................................................................................................410.4 - Responsibility....................................................................................................................410.5 - Definitions.........................................................................................................................5

11 - MONTHLY ACCRUAL OF UNBILLED EARNED REVENUE FROM TIMBER HARVESTS...........................................................................................................6

12 - MONTHLY ACCRUAL OF PURCHASER ROAD CREDIT AND SPECIFIED ROAD CREDIT.................................................................................................................9

13 - ANNUAL ACCRUAL OF PERMIT FEES FOR SPECIAL USES, GRAZING AND MINERALS..........................................................................................................13

14 - ANNUAL ACCRUAL OF REVENUE FOR PLANT-A-TREE AND CHARACTER LICENSING OF SMOKEY BEAR AND WOODSY OWL....................................15

15 - ANNUAL ACCRUAL OF REVENUE COLLECTED BY THIRD PARTY VENDORS............................................................................................................................18

16 - QUARTERLY ACCRUAL OF REIMBURSABLE REVENUE FOR INCIDENT-RELATED...........................................................................................................20

17 - ACCRUAL OF REIMBURSABLE REVENUE FOR NON-INCIDENT RELATED AGREEMENTS...................................................................................................24

17.1 - General Information about Accruing Revenue for Non-Incident Reimbursable Agreements....................................................................................................................24

17.2 - Methodology for Determining Revenue Accruals for Non-Incident Reimbursable Agreements....................................................................................................................27

17.21 - Actual Unbilled Expenditures Recorded in PCAS Agreements................................2717.22 - Statistically Estimated Unbilled Expenditures Not Recorded in PCAS Agreements

...................................................................................................................................3017.23 - Actual Unbilled Expenditures Not Recorded in PCAS Agreements.........................3217.24 - Agreement/Project Specific Entries for Sensitive PCAS Agreements......................3417.25 - Separate Project-Level Accrued Revenue Entry for Non-PCAS Agreements..........35


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The Federal Government’s standard accrual-basis accounting requires all Federal agencies to recognize earned revenue when goods and services are sold, regardless of when the money is collected. Recording accrual entries quarterly for revenue flows material to the agency, ensures that sufficient revenue of the accounting period is included in the agency’s standard general ledger and on the quarterly financial statements to match with the expenses of the period; and to display the net results of operations. Materiality for any one revenue flow is defined as 3% of total agency revenue. The related materiality analysis occurs annually at the ASC-B&F in October based on the previous fiscal year’s actual revenue flows and their respective amounts. The materiality determination is effective for the entire fiscal year.

10.1 - Authority

1. Financial Accounting Standards Advisory Board Statements of Federal Financial Accounting Standards No. 7, “Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting” (http://www.fasab.gov).

2. United States Treasury Financial Management Service. “United States Standard General Ledger - Treasury Financial Manual, Section 1 Chart of Accounts, Section II Account Descriptions, and Section III Accounting Transactions” (http://www.fms.treas.gov/ussgl/).

3. Office of Management and Budget. “OMB Circular A-136, Financial Reporting Requirements” (http://www.whitehouse.gov/OMB). This circular provides guidelines for Federal financial processes.

4. Office of Management and Budget. “OMB Circular A-123, Management’s Responsibility for Internal Control, Appendix A, Internal Control Over Financial Reporting (http://www.whitehouse.gov/OMB). This circular describes the internal controls required over Federal financial reporting.

10.4 - Responsibility

1. Director of Budget and Finance, Albuquerque Service Center (ASC-B&F). It is the responsibility of the Director of Budget and Finance, Albuquerque Service Center (ASC-B&F) to calculate, process, and record national-level accruals for revenues as set forth in this chapter. Quarterly quality assurance monitoring shall test the accuracy of estimation techniques and recommend changes for improvement when needed. Materiality determinations shall occur in October of each year based on the previous fiscal year’s actual revenue flows and their respective amounts, and shall remain effective for the entire fiscal year.

2. Washington Office Deputy Chiefs, Regional Foresters, Station Directors, Area Director, Forest Products Laboratory Director, International Institute of Tropical Forestry Director, and Forest Supervisors. It is the responsibility of the Washington Office

http://www.whitehouse.gov/OMB

http://www.whitehouse.gov/OMB

http://www.fms.treas.gov/ussgl/

http://www.fasab.gov/


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Deputy Chiefs, Regional Foresters, Station Directors, Area Director, Forest Products Laboratory Director, International Institute of Tropical Forestry Director, and Forest Supervisors to ensure the quality and integrity of financial data processed in their areas of responsibility, including:

a. Ensuring that all billing information is entered in the Financial Transaction Request System or the interfacing databases such as Timber Information Management (TIM) by the third working day preceding the end of each month, and by the cutoff date published in the Fiscal Year Budget and Finance Annual Closing Procedures and Calendar (available on the following website: http://fsweb.r3.fs.fed.us/asc/bfm. After the cutoff date, fax the billing information to the ASC-B&F as instructed in the Annual Closing Procedures.

b. Ensuring compliance with all procedures in this chapter.

c. Using express overnight mail service during the last week of September to expedite the mailing of deposits to the Treasury-designated lockbox bank to ensure that all collections are recorded before fiscal yearend, September 30.

10.5 - Definitions

Automated Timber Sale Accounting System (ATSA). An automated database that tracks activity on timber sale contracts and permits, including harvest volumes, and related deposits and earnings.

Balance Voucher (BV). An accounting document in the Foundation Financial Information System designed to record accounting adjustments and a variety of original internal business transactions.

IPAC. The U. S. Department of the Treasury’s automated network for “Intra-governmental Payments and Collections,” designed to eliminate the need for Federal entities to issue paper checks to each other.

MMS. MMS is the acronym for the Minerals Management Service, a bureau of the U. S. Department of the Interior. MMS administers subsurface minerals leases such as oil, natural gas, and coal, for all the Federal land management agencies.

National Finance Center (NFC). The U. S. Department of Agriculture’s accounting service center in New Orleans, LA.

Over-the-Counter (OTC). The term used for a sale in which the customer is face-to-face with the sales person, usually in a front office setting.


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Revenue. An inflow of resources that the Government demands, earns, or receives by donation. Revenue comes from two sources: exchange transactions and nonexchange transactions. Exchange revenues arise when a Government entity provides goods and services to the public or to another Government entity for a price. Another term for “exchange revenue” is “earned revenue.” Nonexchange revenues arise primarily from exercise of the Government’s power to demand payments from the public (e.g., taxes, duties, fines, and penalties) but also include donations. Amounts of earned revenue and related accounts receivable, must be recorded in the accounting system, and displayed on financial statements, for the fiscal year in which revenue was earned and reportable. (Federal Accounting Standards Advisory Board, Statement of Federal Financial Accounting Standards 7: Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting).

Transaction Code. A 2-digit alpha-numeric code in the Foundation Financial Information System that classifies the accounting transaction as a miscellaneous order, payment, customer billing, cash receipt, accounting adjustment, and so forth. Transaction Code is superior to Transaction Type. Every accounting and budgetary transaction has both a transaction code and a transaction type.

Transaction Type. A 2-digit alpha-numeric code in the Foundation Financial Information System that classifies the accounting transaction into more detail; subordinate to the Transaction Code. Every accounting and budgetary transaction has both a transaction code and a transaction type.

Unbilled Account Receivable. A Forest Service term describing amounts due from customers for which a bill has not been issued.

United States Standard General Ledger (USSGL). Accounting guidelines issued by the U. S. Department of the Treasury, including a chart of accounts and standard account postings for mandatory use by all Federal government entities.

11 - MONTHLY ACCRUAL OF UNBILLED EARNED REVENUE FROM TIMBER HARVESTS

Historically called the “TSA Receivable Estimate Accrual,” the monthly accrual of unbilled earned revenues from timber harvest activities is required because the actual figures needed to issue the billings are not available until the Timber Sale Accounting (TSA) system closes on approximately the 15th of the subsequent month. The accrued earned revenues are estimated amounts due from timber purchasers for timber harvested and removed during the current month. Because the actual earned revenue amounts for unbilled receivables are not available and formally recorded until the subsequent month, an accrual must be estimated and recorded each month-end in FFIS. The accrual is only for the current month’s estimate of unbilled earned revenues, not the total amount due from the timber purchaser.


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Descriptions of the activities generating the revenue and the quarterly accrual methodology are as follows:

1. Activities Generating Revenue. The value of timber harvested sometimes exceeds the amount the purchaser has paid in advance on the timber sale contract. In these cases, estimated amounts are accrued because actual amounts won’t be available and posted to the FFIS system until the subsequent month when the TSA system closes.

2. Monthly Accrual Methodology. On a monthly basis, an estimated amount of unrecorded revenue related to timber harvest is determined by calculating a seasonally adjusted average of revenues, as described in the “Monthly Unbilled Revenue Accrual,” which may be found under Operations Interfaces on the following website:

http://fsweb.r3.fs.fed.us/asc/bfm/programs/financial-operations/receivables-collections/timber-sales/policies-procedures

The average revenue is calculated using actual monthly revenue to be billed, identified by the TSA system on previous months’ TSA reports. The source document for the actual amounts to be billed is a report produced by the TSA system, report number TSA 992-01, “Accounts Receivable/Accrued Earnings”, more specifically the column headed “Closing Minus Balance.” The ASC-B&F records the accrual entry in FFIS using a multiple line standard voucher (transaction code SV) to enter increases to the various revenue accounts and an increase to accounts receivable. FFIS automatically reverses the accrual entry at the beginning of the subsequent month and the ASC-B&F reviews and approves the reversal by the 10th day of that month.

See the data table in exhibit 01 for the transaction codes, transaction types, standard general ledger postings and voucher information used for the accrual of unbilled earned revenue from timber harvests.

Gail McCrary, 05/18/07,

Mike M., leave “months’” plural possessive. Reports from multiple months are used to calculate the average.




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11 - Exhibit 01

Accrued Unbilled Earned Revenue: Accrual Entry’s Information and Postings

Entry No.

Fund Code(s)Trans Code/Trans Type

Standard General Ledger Postings

Vendor Code

Revenue Source Code; Budget

Object

1. 5008 - National Forest Fund Revenue

5896 - National Grasslands RevenueCWF2 - Cooperative Work, Non-Agreement Based

SV/U1Proprietary: Debit: 1312 Accounts Receivable Credit: 5100 Revenue from Goods SoldBudgetary: None

FS ACCRUAL 0105

2.CWKV - Cooperative Work, Knutson-VandenburgBDBD - Brush DisposalSFSF - Salvage Sale FundTPBP - Botanical ProductsSSCC - Stewardship Contracting

SV/U1Proprietary: Debit: 1312 Accounts Receivable Credit: 5900 Other Revenue Budgetary: None


Mike, the gridlines of all the exhibits don’t show up on the draft you sent back to us. Please make sure that the grid lines are visible.


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12 - MONTHLY ACCRUAL OF PURCHASER ROAD CREDIT AND SPECIFIED ROAD CREDIT

Prior to April 1999, the Forest Service granted Purchaser Road Credit (PRC) to timber purchasers. Under the terms of certain timber sales contracts, timber purchasers were allowed to construct roads, bridges, and culverts to gain access to the timber they purchased. If the Forest Service had a use for the roads upon contract completion, the timber purchaser was given a credit, referred to as a PRC, for the value of the roads. The PRC was established in the Automated Timber Sale Accounting System when the forest accepts the road. See paragraphs 1, 2, 3, and 4 below for direction about the accounting entries.

1. On applicable timber sale contracts, the timber purchaser can use the PRCs to offset payments for timber harvested. As the timber purchaser uses the PRCs instead of cash payments for timber harvested, the amount in Unearned Revenue is reduced and current year revenue is recognized. If all PRCs have not been applied when the contract is closed, they are cancelled and the amounts are removed from the Unearned Revenue account and recorded in the Earned Revenue account.

2. After April 1999, the use of PRCs for new contracts is prohibited and the method of accounting for the costs changed from recording PRCs to recording Specified Road Credit (SRC) as revenue.

Accrual amounts for PRC and SRC assets and revenues are based on reports from the Automated Timber Sale Accounting System (TSA), provided by the Washington Office Financial Management Staff. The funds used to record these entries are CMEX and CNEX because these reimbursable fund accounts allow the Forest Service to record revenue without augmenting an appropriation. The TSA source reports are titled as follows: “Detail for Cost Established,” “Summary for Cost Established,” “Detail for Established Credit,” and “Summary for Established Credit.”

Accrual entries are recorded on a monthly basis and both monthly and yearend entries reverse.

a. PRCs Established. Use the TSA Report 940-01 “PRC Road Credit Established for FY XX” to obtain current year information on road construction costs incurred by the timber contractor. Currently, few PRC contracts remain active from the period prior to April 1999. For PRCs established, accrual entries are recorded with a Standard Voucher document as summarized in exhibit 01.

b. PRCs Applied. In the current fiscal year, the “effective” portion of PRCs established will be used by timber contractors in lieu of cash to pay for timber they have harvested. Obtain the amount of applied PRCs from the TSA Report 926-01


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“FY XX Yearend TSPIRS Report (All Contracts)”, column “FY XX PROCUNIT”. For PRCs applied, accrual entries are recorded with a Standard Voucher document as summarized in exhibit 02.

c. Unapplied PRCs from Closed Contracts. During the current fiscal year, timber contracts are closed which may have PRCs that have not been applied by the contractor toward timber the contractor has harvested. Through April FY 2006, the remaining unapplied PRCs were recorded as Donated Revenue, but effective with month-end May 2006, are reported as Earned Revenue. The TSA Report 926-01 “FY XX Yearend TSPIRS Report (Closed Contracts Only)” column “FY XX C3701” provides information. Note: This is a separate report from the one used for Applied PRCs. For unapplied PRCs from closed contracts, accrual entries are recorded with a Standard Voucher document as summarized in exhibit 03.

d. Established SRCs. Any road construction costs under timber contracts after April 1999 are recognized as revenue upon the acceptance of the roads by the Forest Service. TSA Report 940-01 “SRD Cost Established for FY XX” provides the information on the road construction costs incurred by the timber contractor during the current fiscal year. Details about the accounting entries and postings are provided in exhibit 04.


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12 - Exhibit 01

PRCs Established - Accrual Entry’s Information and Postings


Standard General Ledger

Postings

Asset Recorded

Vendor Code

Revenue Source Code; Budget Object

CNEX - Construction External Reimbursable

Or

CMEX - Construction External Reimbursable

SV/NT Proprietary: Debit: 1712 Improvements to Land

Prism, Culverts, and

Surface

FS ACCRUAL

0210SV/TI Debit: 1740 Other Structures/ Facilities

Bridges

SV/NT, SV/TI

Credit: 2320 Deferred Credits

All Assets

N/A Budgetary: None

N/A

12 - Exhibit 02

PRCs Applied - Accrual Entry’s Information and Postings



Vendor Code


Object

CNEX - Construction External Reimbursable

Or

CMEX - Construction External Reimbursable

SV/RV

Proprietary: Debit: 2320 Deferred Credits

FS ACCRUAL

0210 Credit: 5100 Revenue from Goods Sold

Budgetary: None


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12 - Exhibit 03

Unapplied PRCs from Closed Contracts – Accrual Entry’s Information and Postings



Vendor Code


Object

CNEX – Construction External Reimbursable

Or

CMEX – Construction External Reimbursable

SV/RV

Proprietary: Debit: 2320 Deferred Credits

FS ACCRUAL

0210 Credit: 5100 Revenue from Goods Sold

Budgetary: None

12 - Exhibit 04

Established SRCs - Accrual Entry’s Information and Postings



Asset Recorded

Vendor Code


CNEX – Construction External Reimbursable

Or

CMEX – Construction External Reimbursable

SV/TM Proprietary: Debit: 1712 Improvements to Land

Prism, Culverts, and

Surface

FS ACCRUAL

0210SV/TB Debit: 1740 Other Structures/ Facilities

Bridges

SV/TM, SV/TB

Credit: 5100 Revenue from Goods Sold

All Assets

N/A Budgetary: None

N/A


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13 - ANNUAL ACCRUAL OF PERMIT FEES FOR SPECIAL USES, GRAZING AND MINERALS

During the year, local Forest Service offices generate bills for special uses, grazing, and minerals based on the terms of the respective permit, and collect fees in advance based on the standard period of occupancy, January 1 through December 31. The permit billing and management subsystems, the Special Uses Data System (SUDS) and INFRA-Range (accessed using I-Web) stay open at month-end for October through August.

For month-end September, however, an accrual of permit fees for special uses, grazing, and minerals is required for fiscal years in which SUDS and INFRA-Range close a few days before September 30. During the few days prior to yearend, if any permit changes occur affecting the amount of revenue billed and/or unbilled, then an accrual is necessary to ensure that all permit fee revenue is correctly recorded during the period.


1. Activities Generating Revenue. Local Forest Service offices issue permits for the following activities:

a. Grazing for various types of animals on designated tracts of National Forest System lands and National Grasslands.

b. Special uses such as electricity transmission lines or oil and gas pipelines crossing the forest. Many communications companies have special use permits for the placement of antennas, microwave towers, and relay stations on mountain tops.

2. Annual Accrual Methodology.

a. After SUDS and/or INFRA Range close for the fiscal year, if any changes occur in the fees or billings for special uses, grazing, or minerals, then the local Forest Service offices must fax the information to the ASC-B&F Special Uses/Grazing section at the fax number shown in the Fiscal Year Budget and Finance Annual Closing Procedures (available on the following website: http://fsweb.r3.fs.fed.us/asc/bfm).

b. ASC-B&F uses the information to prepare and record an accrual in FFIS prior to the close of business at yearend.

c. FFIS creates the reversal entry at the beginning of the subsequent month and the ASC-B&F reviews and approves the reversal by the 10th day of that month.

d. The local Forest Service office must input the changes into SUDS and/or INFRA Range during the subsequent month.


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See exhibit 01 for the transaction codes, transaction types, and standard general ledger postings used for the accrual of permit fees for special uses and grazing.

13 - Exhibit 01

Annual Accrual of Permit Fees for Special Uses and Grazing: Information and Postings



Vendor Code


5008 - National Forest Fund Revenue

5896 - National Grasslands Revenue

SV/U1Proprietary: Debit: 1312 Accounts Receivable Credit: 5100 Revenue from Goods SoldBudgetary: None

FS ACCRUAL

0105


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14 - ANNUAL ACCRUAL OF REVENUE FOR PLANT-A-TREE AND CHARACTER LICENSING OF SMOKEY BEAR AND WOODSY OWL

The character licensing of Smokey Bear and Woodsy Owl receives earned revenues quarterly with each 3-month remittance period specified in the license agreement.

Descriptions of the activities generating the revenue and the annual accrual methodology are as follows:

1. Activities Generating Revenue.

a. Plant-A-Tree. Forest Service’s Plant-A-Tree program is a publicized offer to the public. For a contribution of $10, a remitter may have a tree planted in memory of a loved one, or to honor a person, or a special occasion such as a birthday; the Forest Service issues a certificate to the contributor, commemorating the event. The monies finance tree planting projects on National Forest System lands.

b. Smokey Bear and Woodsy Owl Character Licensing. The Forest Service has statutory authority to issue licenses to private businesses to reproduce the images of Forest Service’s characters, Smokey Bear and Woodsy Owl (FSH 6509.11g, chapter 60). The two types of character licenses are as follows:

(1) A single-use license fee is due when the license is signed.

(2) A regular-use license fee is a percentage of the licensee’s sales of Smokey Bear or Woodsy Owl products. According to the license agreement, fees are due every 3 months.

2. Annual Accrual Methodology. Annual accruals are processed for Plant-a-Tree contributions and Smokey Bear and Woodsy Owl royalty revenue because the amount of the receipts is relatively small and the accrual reporting is too great an administrative burden for more frequent accruals.

a. Plant-A-Tree. No accrual is necessary for contributions from individuals because they are recorded in daily business during the month using FTRS which is open and available through the last day of each month. For private companies that make routine contributions, an accrual is recorded for the amount estimated by the Washington Office Forest Management Staff. In the absence of an estimate from the Forest Management, the accrual estimate shall be an average of the previous 12 calendar months of actual contributions.

b. Smokey Bear and Woodsy Owl Character Licensing.


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(1) Single-Use Licenses. ASC-B&F OTC team shall contact the license administrators to determine if there are any unpaid one-time use fees, or fees the administrators have collected and not submitted for deposit. The amount of earned revenue to be accrued for single-use licenses is the amount of unbilled fees plus fee revenue on hand.

(2) Regular-Use Licenses. The ASC-B&F OTC team shall review all open licenses and update the spreadsheet that: (a) lists each license with its respective historical revenues, (b) summarizes actual royalty income received, and (c) calculates a quarterly average of actual earned revenue.

See exhibit 01 for the transaction codes, transaction types, and standard general ledger postings used for the accrual of revenue from Plant-A-Tree and character licensing of Smokey Bear and Woodsy Owl.


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14 - Exhibit 01

Accruing Revenue from Plant-A-Tree and Character Licensing Of Smokey Bear and Woodsy Owl: Information and Postings

Entry Fund Code(s)Trans Code/Trans Type


Vendor Code


Plant-a-TreeCWFS - Cooperative Work, Forest Service (CWFS was used in FY 2006 and prior years.)

CWF2 - Cooperative Work, Non-Agreement Based(CWF2 is used in FY 2007 and subsequent years.)

SV/MSProprietary: Debit: 1312 Accounts Receivable Credit: 5900 Other Revenue Budgetary: None

FS ACCRUAL

0105SmokeyAnd

Woodsy, Royalties

Receivable

LPSB - Smokey Bear Licensing

LPFL - Woodsy Owl Licensing

SV/MSProprietary: Debit: 1312 Accounts Receivable Credit: 5900 Other RevenueBudgetary: None


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15 - ANNUAL ACCRUAL OF REVENUE COLLECTED BY THIRD PARTY VENDORS

To improve customer service to forest visitors, Forest Service enters into agreements with non-government third parties to sell Forest Service maps and recreation passes. These third parties are local businesses such as sporting goods stores, gas stations, outfitter/guides, and convenience stores who want to sell Forest Service recreation passes or maps as a convenience for their customers. The arrangement is advantageous to the Forest Service because the private businesses have longer daily business hours and are open on weekends. Third party vendors are encouraged to purchase the recreation passes and maps, paying for them in advance. However, because some small businesses (often sole proprietorships) cannot afford such an outlay, instead of advance payment being collected, the Forest Service enters into consignment arrangements with the small businesses.

Descriptions of the activities generating the revenue and the annual accrual methodology are as follows:

1. Activities Generating Revenue. Private businesses local to the Forest Service office enter into consignment agreements with the Forest Service for the sale of Forest Service maps, recreation passes, Christmas tree tags, and other such items. The businesses periodically remit the collections to the Forest Service in accordance with the provisions of their agreement. Units shall instruct vendors to remit all collections in a timely manner that allows the Forest Service office to record the actual revenue.

2. Annual Accrual Methodology. Annual accruals are processed for third party vendor revenue because the amount of the receipts is relatively small, and the accrual reporting is too great an administrative burden for more frequent accruals.

a. Units shall minimize the amount of receipts held by third party vendors by establishing the vendors’ remittance dates as weekly at a minimum and every 14 days as a maximum.

b. At yearend, units shall calculate the revenue accrual using the respective vendor’s average daily collection amount, calculated from the last 2 months of receipts that the vendor remitted to the Forest Service. Multiply the vendor’s average daily collection amount times the number of days in the accrual period. Units shall submit the accrual information to the ASC-B&F Receivables and Collections group in accordance with the instructions in the Fiscal Year Budget and Finance Annual Closing Procedures and Calendar, posted annually on the following website: http://fsweb.r3.fs.fed.us/asc/bfm.

http://fsweb.r3.fs.fed.us/asc/bfm


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c. ASC-B&F OTC team shall record the accrual entries submitted by field units. Two examples of the transaction codes, transaction types, and standard general ledger postings are shown in exhibit 01, one for the accrual of recreation receipts and one for map sale revenue collected by third party vendors.

15 - Exhibit 01

Accruing Revenue For Receipts Collected By Third Party Vendors:Information and Postings

Entry No.



Vendor Code


Object

1. FDFD Recreation Fees, Forest Service


FS ACCRUAL

0105

2. MAPS - Reproduction and Sale of Maps to the Public



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16 - QUARTERLY ACCRUAL OF REIMBURSABLE REVENUE FOR INCIDENT-RELATED

Forest Service is the performing agency for many reimbursable agreements pertaining to incident response. The term “incident” applies to wildland fires, hurricane relief assignments, and other such emergency-related work projects.


1. Activities Generating Revenue.

a. Cooperative Protection Agreements, Non-Federal. This section pertains to non-Federal cooperative protection agreements. Annually, Forest Service reviews existing Cooperative Protection agreements established for incident support. New cooperative agreements are negotiated if required to maintain readiness. Until an incident occurs and the agreement is exercised, Forest Service records no financial obligation for these agreements. Each agreement’s provisions document a timeline for billings and cite the Federal statutes that authorize the cooperative fire activity. The ASC-B&F Incident Finance (IF) team makes payments and is the agency staff that generates billings for these agreements. The process steps to exercise a cooperative agreement are as follows:

(1) A wildland fire incident occurs and the Dispatch Center generates a fire job code in the interagency FireCode system. If the incident occurs within State (cooperator) jurisdiction and the agreement’s “Forest Service Assist” block is checked, the letters “PN” are used in the first two positions of the 6-position fire job code. Job code positions 3 through 6 are a unique alpha-numeric identifier assigned to the incident. The PN designation signifies that the incident is on non-Federal land or is under non-Federal jurisdiction according to agreements in place. Not all PNxxxx fire job codes are reimbursable; Dispatch Centers must ensure that they correctly encode the “Reimbursable/Billable” block in the FireCode system.

(2) ASC-B&F IF team distributes a spreadsheet monthly of all fire job codes to the Regional Incident Administrative Coordinators so that field units can validate and identify all reimbursable or cost share job codes.

(3) ASC-B&F IF team monitors all fire job codes identified by the field to determine if the expenses are reimbursable based on the appropriate agreement.


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(4) ASC-B&F IF team obtains a financial management report quarterly, listing all expenses for each fire job code. Reimbursable expenditures are summarized and prepared for billing. If the fire job code was established in appropriated fund WFSU, an expenditure accounting adjustment is required to position the expenses correctly for billing purposes in reimbursable fund WFEX. Beginning July 1, 2006, State “PNxxxx” job codes have reimbursable fund WFEX in their underlying accounting, therefore no accounting adjustment is necessary.

(5) ASC-B&F IF team records quarterly, in FFIS, the initial bills for the preliminary amounts summarized in step 1 (a) (4) above, however the bills are not mailed to cooperators. The entries serve as accruals of estimated revenue during the Forest Service’s process of confirming the charges. Until all expenses are recorded in the FFIS accounting system, the preliminary bills continue to be modified quarterly to keep the accrued revenue current.

(6) ASC-B&F IF team distributes the incident expense summaries to the field where the designated officer, dispatchers, and/or fire manager will review, approve, sign, and return the summaries to the ASC-B&F IF team. When the amounts are confirmed, the ASC-B&F IF team modifies the existing bill’s amount, if necessary; encloses supporting documentation (based on the agreement requirements); and mails it to the cooperator.

(7) The Cooperator uses written communication to inform the local Forest Service unit about any disputed charges, as outlined by the dispute clause in the agreement. The Forest Service field unit shall investigate the disputed charges, negotiate with the cooperator, and request ASC-B&F IF team adjust the billing as appropriate.

(8) The ASC-B&F IF team’s final billing occurs in a timely fashion.

b. Federal Emergency Management Agency (FEMA) Agreements. Forest Service’s business relationship with FEMA is described in the National Response Plan (see http://www.dhs.gov/xprepresp/committees/editorial_0566.shtm), and documented in an interagency cooperative agreement. The Forest Service is the primary, or lead agency for the National Response Plan’s Emergency Support Function #4 (ESF4), the firefighting function. FEMA issues FEMA Form 90-129, Mission Assignment (MA), to the Forest Service, identifying the work to be performed and specifying a dollar limitation. However, FEMA does not expect Forest Service to be the sole agency spending the authorized funds. Forest Service records no unfilled customer order, based on the MA, because it is impossible to determine how much of the MA limitation will be expended by the Forest Service. The process for billing FEMA follows the steps outlined in paragraph 1 (a) (1) above, with the following exceptions:

http://www.dhs.gov/xprepresp/committees/editorial_0566.shtm


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(1) Forest Service field Fire Staff requests ASC-B&F IF team establish the number of job codes required for the emergency. The first position of the 6-position job code is “F” to signify “FEMA.”

(2) ASC-B&F IF team obtains a financial management report from FFIS showing expenses by job code. ASC-B&F IF team analyzes the report and identifies the actual reimbursable expenses. Examples of items not reimbursable are base time and agency-provided medical care.

(3) Once all the expenses have been identified, ASC-B&F IF completes, reviews, and signs the Mission Assignment Reimbursement Request Transmittal form. ASC-B&F IF team uses Treasury’s Intra-Governmental Payment and Collection network, (IPAC) to bill FEMA. In addition, ASC-B&F IF team mails supporting documentation to FEMA.

(4) ASC-B&F IF team bills FEMA incidents monthly as charges occur. Final bills are issued in a timely manner when each mission assignment is closed out and all expenses are recorded in FFIS.

2. Quarterly Accrual Methodology. ASC-B&F IF team prepares and enters a quarterly, high level self-reversing revenue accrual. The accrual amounts are determined using a financial management report which retrieves actual expenses from the Financial Data Warehouse. The quarterly revenue accrual amount represents unbilled expenses incurred after the previous billing cycle. For example, the billing cycle cuts off on the 20th of the last month in the quarter, the revenue accrual would cover expenses incurred from the 21st through the end of the last month in the quarter.

For FEMA MAs, the revenue accrual amount is for unbilled delivered orders.

For the accrual transaction code, transaction type, and standard general ledger postings see exhibit 01.


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16 - Exhibit 01

Accruing Reimbursable Revenue for Non-Federal Cooperative Fire Agreements and Incident-Related Agreements: Information and Postings



Vendor Code


Object

WFEX - Wildland Fire External Reimbursements

SV/PJProprietary: Debit: 1310 Accounts Receivable Credit: 5200 Revenue From Services ProvidedBudgetary: Debit: 4251 Reimbursable and Other Income Earned, Receivable Credit: 4210 Anticipated Reimbursable and Other Income

FS ACCRUAL

0250


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17 - ACCRUAL OF REIMBURSABLE REVENUE FOR NON-INCIDENT RELATED AGREEMENTS

Forest Service uses the FFIS Project Cost Accounting System (PCAS) for the non-incident related agreements’ accounting. PCAS automates the processes for billing, liquidation of advances, and the assessment/adjustment of indirect costs. Agreements with an approved exception (such as complex agreements with multiple partners) are managed in a non-PCAS environment. Revenue is recorded as earned on both PCAS and non-PCAS agreements when a reimbursable billing document (transaction codes BP or BD) is recorded or when an advance is liquidated (transaction code PS) upon performance of work. The majority of revenue recognition is initially achieved by these billing or advance liquidation transactions. Advances are liquidated monthly as work is performed, evidenced by paid and unpaid expenditures. For reimbursable collections, the frequency of billing varies depending on the identity of the Forest Service’s cooperator and the terms of the agreement. A revenue accrual is necessary only when unbilled expenditures exist at fiscal quarter-end reporting periods for which a billing will not be issued. Accounts with unbilled expenditures occur under the following circumstances:

1. Non-federal partners not billed at least quarterly;

2. Federal partners under an approved exception to bill less frequently than quarterly; or

3. Agreements where a billing will not be produced at the quarterly interval for reasons such as:

(a) System constraints when the billing parameters and billing interval conflict,

(b) High level payment accruals not recorded at the agreement level,

(c) Early PCAS cutoff date at fiscal yearend.

17.1 - General Information about Accruing Revenue for Non-Incident Reimbursable Agreements

The complete accounting procedure for non-incident reimbursable agreements is set forth in FSH 6509.11k, chapter 50. The following is a summary of billing requirements, important to note because billed expenditures are not subject to a revenue accrual:

1. USDA and Non-USDA Federal Cooperators. Unless the agreement is an approved exception, billing is required at least quarterly. Exceptions are approved on a case-by-case basis by the ASC-B&F Reimbursable and Collection Agreements (RACA) Branch Chief with consultation as necessary with WO Financial Management Policy staff.


Mike, this section contains text you haven’t seen. At auditors’ insistence, FS must tell the whole story about these agreements.


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2. Non-Federal Cooperators. A monthly billing cycle is Forest Service’s preferred billing frequency for agreements with non-federal partners. However, when monthly billings are not possible, a less frequent billing cycle may be negotiated, with a billing required annually at the end of each fiscal year. Agreement terms must address the applicable billing frequency. To achieve the necessary recognition of revenue, when a billing is issued less frequently than quarterly, a revenue accrual must be recorded each quarter-end financial statement reporting period by the ASC-B&F RACA Branch.

3. Both Federal and Non-Federal Cooperators. At the end of each fiscal year, the USDA sets a cut-off date for PCAS processes to accommodate the Intradepartmental Transaction Reconciliation System (ITRS) reconciliation of agreements between USDA agencies. This early PCAS cycle would result in the billing for expenditures recorded after the cut-off date, otherwise subject to 4th quarter billing, to be delayed until the first PCAS bill cycle of the subsequent fiscal year. If the cut-off date is more than 5 days from the end of the fiscal year, the Director of ASC-B&F shall determine if the anticipated reimbursable revenue amount is material, based on a documented analysis of expenditures during this period and other contributing factors. If expenditures are deemed material or if the accrual for these unbilled expenditures could be easily incorporated into the accrual for another reimbursable revenue accrual category, a manual revenue accrual must be calculated and recorded; otherwise, no revenue accrual will be required.

An example of the transaction code, transaction type, and standard general ledger postings are shown in exhibit 01.


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17.1 - Exhibit 01

Accruing Reimbursable Revenue for Non-Incident-Related Agreements: Information and Postings

SampleFund Code(s)

Trans Code/Trans Type


Vendor CodeRevenue Source Code; Budget Object

NFEX - National Forest System External Reimbursements

SPEX - State and Private Forestry External Reimbursements

FREX - Forest Research, External Reimbursements

CMEX - Construction, External Reimbursements

WFEX - Wildfire Management, External Reimbursements (non-incident related)

LAEX - Land Acquisition, Land & Water, External Reimbursements

YE/UB Proprietary: Debit: 1310 Accounts Receivable Credit: 5200 Revenue From Services ProvidedBudgetary: Debit: 4251 Reimbursable and Other Income Earned, Receivable Credit: 4221 Unfilled Customer Orders Without Advance

For non-Federal partners, “FS ACCRUAL”

The Common Agreement Number (CAN) for USDA agencies.

The Vendor Code representing the parent-level Agency Location Code (ALC) for non-USDA agencies.

0250


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17.2 - Methodology for Determining Revenue Accruals for Non-Incident Reimbursable Agreements

The accrued revenue for non-incident reimbursable agreements is composed of 5 possible categories, depending on the make-up of the whole body of active agreements on the financial statement cut-off date. Those 5 possible segments are as follows:

1. A summary-level accrued revenue entry equal to the actual unbilled expenditures recorded in individual PCAS agreements (sec. 17.21).

2. A summary-level accrued revenue entry equal to the estimated accrued unbilled expenditures recorded at a high level (BFY/Fund/Program) and not to individual PCAS agreements. The accrued expenditures are estimated using the statistical methodology described in Chapter 20, as executed by ASC B&F Service-Wide Accounts Maintenance (SWAM) Branch (sec. 17.22).

3. A summary level accrued revenue entry equal to the unbilled actual expenditures recorded temporarily at yearend by the ASC-B&F Budget Execution staff, based on advice from field units. The temporary recognition of these actual expenditures is described in the Budget and Finance Annual Closing Procedures (sec. 17.23).

4. Separate agreement/project-specific accrued revenue entries for certain sensitive PCAS agreements (sec. 17.24).

5. Separate project level accrued revenue entries for non-PCAS agreements (sec. 17.25).

Specific details describing the steps for determining revenue accrual amounts and data elements are available in the ASC-B&F RACA Branch’s Operating Procedures.

The defining features of each category are set forth in the following subsections.

17.21 - Actual Unbilled Expenditures Recorded in PCAS Agreements

The amount of unbilled expenditures in each of the 3 sub-categories (described below) may be immaterial in and of themselves, but the analysis method captures all subcategories and incorporates all costs to achieve the most complete accrual.

A summary level accrual shall be recorded for unbilled expenditures in non-incident-related PCAS reimbursable accounts, at the end of each financial statement reporting period, as follows:

1. For all agreements in PCAS with billing cycles that don’t coincide with Forest Service financial statement reporting dates. PCAS billing cycle codes are displayed in exhibit 01.


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2. For any of the cycles where a bill will not be issued because the Last Bill Date falls within the affected bill cycle interval causing the agreement to be overlooked by the PCAS billing cycle. A revenue accrual is needed if ASC-B&F employees did not mitigate the occurrence of these timing issues by manually creating a bill or changing the PCAS bill cycle so that PCAS creates the bill.

3. For unbilled expenditures recorded at the agreement level detail in late September, after the PCAS cut-off date but before September 30. The cut-off date is determined each year by USDA Office of the Chief Financial Officer (OCFO) and published in the USDA yearend close-out instructions.

Additional information about the accrual entry is displayed in exhibit 02.


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17.21 - Exhibit 01

PCAS BILLING CYCLE CODES

PCASCycleCode

Billing FrequencyAccrual Needed for Reimbursable Revenue

Yes or No

M Monthly NoQ Quarterly

(end of December, March, June, September)

No

S Semi-annual(end of March, September)

Yes, accrue at December and June financial statement reporting dates

A Annual(end of September)

Yes, accrue at December, March, and June financial statement reporting dates

E End of Project Yes, accrue at December, March, June, and September financial statement reporting dates

17.21 - Exhibit 02

Additional Information About the Summary Level Entry for Unbilled Expenditures in PCAS Agreements

Accounting Level Timing Reversal

The related revenue accrual shall be recorded in region 17 unit 01 at the BFY/fund/program level.

The entry of accrued revenue occurs 2-3 days prior to the end of the quarter for the first three quarters. For the fourth quarter, the entry occurs between the PCAS cut-off date and the end of the quarter.

The revenue accrual shall be reversed within the first 10 days of the subsequent accounting period. For the 4th quarter or Period 13 accrual, the reversal is made in the 1st accounting period of the new fiscal year.


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17.22 - Statistically Estimated Unbilled Expenditures Not Recorded in PCAS Agreements

A summary-level accrued revenue entry shall be prepared for the amount of accrued expenditures unpaid that is estimated using a statistical accrual methodology, managed by ASC-B&F Service-Wide Accounts Maintenance (SWAM) Branch (Chapter 20). The accrual is recorded at a high level (BFY/Fund/Program) and not to individual PCAS agreements

Accrued revenue shall be recorded for unbilled estimated accrued expenditures in non-incident-related reimbursable accounts, at the end of each financial statement reporting period, as follows:

1. A high-level statistical methodology generates accrued estimated expenditures at the end of each quarter. When this methodology produces an entry in reimbursable funds, a manual accrual of revenue related to those estimated accrued expenditures must be recorded. The manual entry is necessary because the estimated accrued expenditures are not recorded at the agreement level detail which would allow PCAS to perform the billing process.

2. The accrual for unbilled estimated accrued expenditures undergoes a materiality analysis by fund and program before it is recorded. Therefore, the funds related to the PCAS agreements must be in sufficient amounts to pass that materiality analysis, otherwise, those funds will have no estimated expenditures accrued and there will be no related accrued revenue.

3. The revenue accrual is contingent upon the level of accounting detail provided in the backup support to the statistical accrual analysis. For example, accruals for non-Federal reimbursables can be identified by the program codes NFXN, FRXN, and so forth. These accruals are recorded at vendor summary code level, FS ACCRUAL. For Federally funded reimbursables, citing program codes NFXF, FRXF, and so forth, job code level detail is required to enable the determination of the funding customer. Federal revenue must be recorded at vendor level detail to enable intra-governmental elimination entries.



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17.22 - Exhibit 01

Additional Information About the Summary Level Accrued Revenue Entry for Statistically Estimated Unbilled Expenditures Not in PCAS Agreements


The related revenue accrual shall be recorded in region 17 unit 01 at the BFY/fund/program level.

The entry of accrued revenue occurs 1-3 days prior to the end of the quarter.



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17.23 - Actual Unbilled Expenditures Not Recorded in PCAS Agreements

This summary level revenue accrual entry occurs only when the Forest Service makes fiscal year-end entries to temporarily recognize actual expenditures that weren’t recorded in the standard way in time for yearend cut-off. At fiscal yearend, some actual expenditures are not recorded in the standard way because of the timing of the transactions and the related computer systems’ yearend cut-off dates. These unbilled actual expenditures are transactions such as the following:

1. Purchase card purchases (goods and services delivered) that haven’t appeared yet in the Purchase Card Management System (PCMS),

2. The current year portion of unfinished travel that crosses accounting periods,

3. Rejected Integrated Acquisition System (IAS) transactions, and

4. Employee cash awards not processed in time for entry into the standard accounting system.

In accordance with the Annual Yearend Closing Instructions, units submit documentation for these transactions and the ASC-B&F Budget Execution staff records them using standard vouchers.

Depending on volume, Budget Execution may record these expenditures at the region, unit, job code level or the region, unit, program code level. Any of these expenditures recorded at the job code level will have their related revenue accrual prepared using the methodology in section 17.21 instead of section 17.23. However, if any of the expenditures are recorded to a high level such as BFY/fund/program, a manual revenue accrual equal to those expenditures is recorded if deemed material. The manual entry is necessary because the expenditures are not recorded at the agreement level detail which would allow PCAS to perform the billing process.

The ASC B&F RACA Branch Chief shall coordinate with other ASC B&F staffs regarding the volume of these actual expenditures and the program accounting codes affected, to determine if any revenue accrual is necessary. If so, a summary-level revenue accrual entry equal to the actual unbilled expenditures shall be recorded at a high level (BFY/Fund/Program) and not to individual PCAS agreements.



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17.23 - Exhibit 01

Additional Information About the Summary Level Revenue Accrual Necessary Due to Manual Temporary Entry of Actual Expenditures


The related revenue accrual shall be recorded at the same accounting level used for the temporary entry of the actual expenditures.

The entry of accrued revenue occurs 1-3 days prior to the end of the quarter. If an obligation recorded in Period 13 is materially significant to warrant a revenue accrual, the revenue accrual entry occurs prior to the Period 13 cut-off date.



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17.24 - Agreement/Project Specific Entries for Sensitive PCAS Agreements

Accrued revenue shall be recorded for unbilled expenditures in that small portion of PCAS agreements that require entries to be recorded at the agreement-level detail. These agreement-specific revenue accruals are essential to maintain special tracking and handling of high-profile, large-dollar agreements such as that with the Bureau of Land Management for conservation work mandated by the Southern Nevada Public Lands Management Act.


17.24 - Exhibit 01

Additional Information About the Separate Agreement/Project-Specific Entries for Certain Sensitive PCAS Agreements


The related revenue accrual shall be recorded at project level detail (Region/Unit and Job Code) with agreement number in description field.

The entry of accrued revenue occurs 2-5 days prior to the end of the quarter.

The revenue accrual shall be reversed at the time the actual billing is processed.


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17.25 - Separate Project-Level Accrued Revenue Entry for Non-PCAS Agreements

Accrued revenue shall be recorded for unbilled expenditures in that small portion of agreements that are not managed by the PCAS system. Additional information about the accrual entry is displayed in exhibit 01.

17.25 - Exhibit 01

Additional Information About the Separate Project Level Entry for Non-PCAS Agreements


The related revenue accrual shall be recorded at project level detail (Region, Unit, and Job Code).

The entry of accrued revenue occurs 2 to 5 days prior to the end of the quarter.

The revenue accrual shall be reversed at the time the actual manual billing is processed.

6509.11m_10.doc

Documents

annual accrual of revenue

quarterly accrual of

revenue flow

revenue accruals

procedural direction

annual accrual of permit

wo amendment

incident related agreements