General Ledger Overview June 2014

Transforming Financials at the People’s Department

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General Ledger OverviewOctober 2014

Transforming Financials at the People’s DepartmentBackground

Historically, each federal agency developed its own accounting structure and reported to the federal government using its agency structure. Because each agency accounted for its funds differently, it was difficult to consolidate the data across the federal government. In order to provide consistent reports and to enhance financial control, the federal government adopted the United States Standard General Ledger (USSGL), which is a standard chart of accounts that must be used by all federal agencies.

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Transforming Financials at the People’s DepartmentStandard General Ledger (SGL)

Provides basic general ledger (G/L) accounts

Agencies are allowed to expand the basic SGL chart of accounts to accommodate agency specific needs

More standardization as USDA agencies converted to FMMI

Defines proprietary, budgetary, and memorandum accounts to be used in agencies' accounting systems

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Transforming Financials at the People’s DepartmentSGL Account Types

Assets Liabilities Net Position Budgetary Resources

Appropriations, Collections, Borrowing Authority, Contract Authority, Interagency Work Agreements

Status of Budgetary Resources Unapportioned, Apportioned, Allotted, Committed, Obligated,

Expended, Expired, Canceled

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Transforming Financials at the People’s Department

Budgetary vs Proprietary Accounting

Budgetary Accounting Facilitates the controlling and accounting for budget authority

and funds. It has four main purposes: Record the appropriation receipts and status of appropriations Delegate budget authority Record valid obligations Control the use of budgetary resources

Proprietary Accounting Facilitates the accounting for assets, liabilities, net position,

revenues, and expenses. It has two main purposes: Determine result of operations from revenues and expenses Determine financial position

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Transforming Financials at the People’s DepartmentAccounting Equations

BudgetaryBudgetary Resources = Status of Budgetary Resources

ProprietaryAssets = Liabilities + Net PositionExpanded as:

Assets = Liabilities + Net Position + Revenues – Expenses + Gains - Losses

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Accounting Events

Transforming Financials at the People’s DepartmentFMMI General Ledger

The General Ledger (G/L) is the record where each financial transaction that occurs in FMMI is document. In FMMI, the Financial Accounting (FI) module is responsible for

ensuring that USDA’s G/L is kept accurate, up-to-date and in balance

By keeping the G/L up-to-date, the FI module enables USDA to report its financial status

When postings are made, FMMI automatically posts the document to the appropriate G/L accounts

FMMI also records all financial activities in “real-time,” which means that when a transaction is processed, it is immediately posted to the General Ledger

For instance, a FMMI user based in Kansas City could view a customer invoice posted in Minneapolis just seconds afterwards.

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Transforming Financials at the People’s DepartmentFMMI Organizational Hierarchy

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Transforming Financials at the People’s DepartmentFinancial Accounting Module (FI)

The Financial Accounting (FI) module addresses USDA’s financial, budgetary, and statutory reporting requirements. Immediately after the user enters the appropriate data, FMMI displays

updated information on the relevant accounts, account totals, and balances. It also has the capability to display information regarding the Balance Sheet and Statement of Net Cost

Every transaction resulting in a financial impact posts to the FI module The account balances of each G/L Account (USSGL + sub-account) are

housed in the FI module The FI module houses three special ledgers

Ledger 95: Holds data for the Trial Balance by Fund Ledger 96: Holds data for the FACTS I reporting Ledger 97: Holds data for the FACTS II reporting

The FI module is a source of many financial reports

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Transforming Financials at the People’s DepartmentFMMI G/L Structure

The FMMI General Ledger follows the structure mandated by the United States Standard General Ledger (USSGL). The USSGL provides a uniform Chart of Accounts and

technical guidance for standardizing federal accounting The USSGL contains five major sections:

Chart of Accounts Accounting DescriptionsAccounting TransactionsUSSGL AttributesReport Crosswalks

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Transforming Financials at the People’s Department

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The Chart of Accounts provides the basic structure for the USSGL, incorporating both proprietary and budgetary accounts.

Chart of Accounts

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Example Account –

Account Number: 2190 Account Title: Other Liabilities with Related Budgetary

Obligations Normal Balance: Credit Definition: The amount of liabilities for which there is a

related budgetary obligation (USSGL account 49X1). This account does not close at year end.

Chart of Accounts (Cont.)

Transforming Financials at the People’s DepartmentFMMI Chart of Accounts

FMMI incorporates the United States Standard General Ledger (USSGL) and uses the USSGL's Chart of Accounts:

G/L account numbers are assigned within the predefined ranges detailed above

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Transforming Financials at the People’s DepartmentFMMI G/L Account Structure

FMMI uses the four-digit USSGL accounting numbering system. FMMI also captures a lower level of detail by expanding the standard numbering system by sub-account and RSC/BOC.

This expanded numbering system allows subsidiary accounts to be created for USSGL accounts. These accounts roll up to the 4-digit USSGL accounts. FMMI

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Transforming Financials at the People’s Department

Finding the Chart of Accountsin FMMI

The G/L Chart of Accounts can be found in FMMI by running an ECC report located under: General Ledger Management>Financial Reports>General Ledger Reports>G/L Chart of Accounts Report

Account Definitions (Long Text) help us determine how to record events that should be captured in the accounting system.

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Transforming Financials at the People’s Department

Adjustments; Accruals; and Posting Models

As part of the monthly activities, various transactions such as accruals and G/L adjustments are recorded and processed through the G/L Posting Model, as follows: A G/L Adjustment is a corrective action to an accounting error identified as a result

of reconciliation or other detailed analysis This adjustment is processed as a direct entry using the Create Parked G/L

Account Document transaction The accrual entry is processed as a direct entry by the General Ledger Processor,

using the Create Accrual transaction. FMMI uses G/L posting models to derive dependent characteristics. It

performs validations for each entered FI document line item, and if any of these validations fail, FMMI prompts the user to correct the relevant item.

FMMI automatically creates the budgetary ledger postings from the proprietary postings derived by the posting model.

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Transforming Financials at the People’s Department

G/L OverviewQuestions

Ledger ____ holds data for FACTS I reporting.

True / False: In FMMI the General Ledger account number is a 12 digit number.

Which FMMI module has the Chart of Accounts? _____________

True / False: One purpose of Budgetary Accounting is to record the appropriation receipts and status of appropriations.

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Transforming Financials at the People’s Department

G/L OverviewQuestions (Cont.)

(Match the G/L Account to the G/L Classification)

G/L Account A. 1000 B. 2000 C. 3000 D. 4000 E. 5000 F. 6000 G. 8000 H. 9000

G/L Classification Expense

___ Liabilities

___ Net Cost

___ Assets ___ Memorandum Accts

(Credit Reform) ___ Budgetary Accounts ___ Revenue & Other

Financing Sources ___

Agency Statistical/ Memorandum Accounts ___

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Transforming Financials at the People’s Department

Where to Find More on the USSGL

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USSGL Main Page: http://www.fms.treas.gov/ussgl/index.html

USSGL Common Questions:http://fms.treas.gov/ussgl/questions.html

Transforming Financials at the People’s Department

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Where to go with questions:

1) Supervisor

2) Program Budget Office

Where to go forMore Information

Transforming Financials at the People’s Department

G/L OverviewAnswers

Fill in the Blank: Ledger _96_ holds data for FACTS I reporting

True / False: In FMMI the General Ledger account number is a 12 digit number. (FMMI G/L account numbers are 10 digits – page 15)

Which FMMI module has the Chart of Accounts? _Financial Accounting - FI Module_

True / False: One purpose of Budgetary Accounting is to record the appropriation receipts and status of appropriations.

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Transforming Financials at the People’s Department

G/L OverviewAnswer (Cont.)

(Match the G/L Account to the G/L Classification)

G/L Account A. 1000 B. 2000 C. 3000 D. 4000 E. 5000 F. 6000 G. 8000 H. 9000

G/L Classification Expense

_F_ Liabilities

_B_ Net Cost

_C_ Assets _A_ Memorandum Accts

(Credit Reform) _G_ Budgetary Accounts _D_ Revenue & Other

Financing Sources _E_

Agency Statistical/ Memorandum Accounts _H_

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Transforming Financials at the People’s Department

Provide this page to your supervisor as documentation of completing this required overview.

I certify that I have completed the General Ledger (G/L) Overview.

__________________(Employee’s Name)

___________________ (Employee’s Signature)

General Ledger OverviewCertification

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