Chapter 17 - Accounting and Reporting for the Federal Government
Accounting for Governmental Nonprofit 16th
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"R#C$ F%R &'$ &$(& )A*+, (%-.&#%* /A*.A- A*0 )%%+ "0F1 &est )an2 203 .(0 (olution /anual 203 .(0 )oo+ "0F 403 .(0 CHAPTER 17: ACCOUNTING AND REPORTING FOR THE FEDERAL GOVERNMENT OUTLINE Number Topic TypeT!"# $%!%u" &re: 1'e( )ue"%io*": 17-1 Federal financial management responsibilities #dentif5 *e6 17-2 Federal GAA" hierarch5 Compare *e6 17-4 Conceptual frame6or2 0escribe 11-4 17-4 Accounts used in federal accounting $7plain 11-4 17-8 *et position and net assets Compare 11-8 17-9 FA(A) compared to GA() Contrast 11-9 17-7 Federal funds #dentif5, compare *e6 17-: (te6ardship assets 0efine, compare *e6 17-; )udgetar5 accounts used b5 federal agencies #dentif5 11-; 17-1 Chapter 17 - Accounting and Reporting for the Federal Government 17-10 "erformance accountabilit5 report $7plain, identif5 *e6 C!"e": 17-1 Agenc5 "AR and audit report Calculate, e7plain *e6 17-2 FA(A) #nternet *e6 17-4 .!(! Government-6ide financial statement audit #nternet, evaluate 11-4 revised E+erci"e"Prob,em": 17-1 <arious /ultiple Choice 11-1 revised 17-2 Fund balance 6ith .!(! &reasur5 Compute 11-2 17-4 Agenc5 financial statements, continuation of 17-2! =$ 11-4 17-4 (tatement of net cost =$s, F( 11-4 17-8 (tatement of budgetar5 resources "repare F( 11-8, revised 17-9 &ransactions and statement of financing =$s, F( 11-9 17-7 Financial statement anal5sis Anal5sis *e6 17-2 Chapter 17 - Accounting and Reporting for the Federal Government CHAPTER 17: ACCOUNTING AND REPORTING FOR THE FEDERAL GOVERNMENT Ans6ers to >uestions 17-1! Although the three principals of the =oint Financial /anagement #mprovement "rogram ?=F/#"@ have the authorit5 for establishing sound financial management polic5 and oversight, the principals have delegated the responsibilit5 to the %ffice of /anagement and )udgetAs %ffice of Federal Financial /anagement, the %ffice of "ersonnel /anagement, and the Chief Financial %fficers Council! &he delegation occurred in 2004, once the principals of the =F/#" 6ere satisfied 6ith the operations of the FA(A)! =F/#" no longer meets as a stand-alone organiBation! ?&he three principals of the =F/#" are the Comptroller General, the (ecretar5 of the &reasur5, and the 0irector of %ffice of /anagement and )udget!@ 17!2! &he GAA" hierarchies for the federal government and state and local governments are Cuite similar! %ne maDor difference is that federal authoritative guidance comes from FA(A) 6hile state and local government authoritative guidance is issued b5 GA()! &here are also some differences in the t5pe of outside guidance accepted as authoritative b5 the t6o standard-setting bodies! )oth hierarchies have been codified b5 the respective standard-setting bodies, the FA(A) and the GA()! &here are four categories of principles 6ith the highest level ?categor5 a@ being the statements and interpretations issued b5 the respective standard-setting bodies! Categor5 a principles can also be found in the FA() or A#C"A pronouncements if made applicable to state and local governments b5 the GA()! &he categor5 b principles include the &echnical )ulletins issued b5 the respective standard-setting bodies! A#C"A #ndustr5 and Accounting Guides are also considered categor5 b principles if made applicable to federal entities b5 the FA(A) or state and local governments b5 the GA()! &he GA() can also ma2e A#C"A (tatements of "osition applicable! Categor5 c principles are different for the t6o hierarchies! Technical Releases of the Accounting and Auditing Policy Committee of the FASAB are considered category c for federal entities; whereas, AICPA Practice Bulletins made applicale y !ASB are considered category c for state and local go"ernments# Category d guidance is the same, consisting of implementation guides issued y the respecti"e standard$ setting odies, as well as widely accepted practices# 17!4! &he conceptual frame6or2 for the federal government is at about the same stage as that for state and local governments, even though the GA() 6as established si7 5ears earlier! &he FA(A) has issued si7 concepts statements, and the GA() five! (tatement of Federal Financial Accounting Concepts ?SFFAC) No. 1 identifies the users of federal financial information and their information needs, and establishes the obDectives of financial reporting for the federal government, much li2e GA() Concepts Statement No. 1! SFFAC No. 2 provides criteria for determining the reporting entit5 and provides guidance on the nature of the financial statements to be prepared and their form and content! &he GASBS 14 ?a reporting standard rather than a concepts statement@ provides 17-4 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, Ans6ers, 17- 4 ?ContAd@ comparable criteria to SFFAC No. 2 for defining the reporting entit5! SFFAC No. 3 describes the /anagement 0iscussion E Anal5sis as does GASBS No. 34! SFFAC No. 4 for the federal government describes five intended audiences and Cualitative characteristics for the consolidated financial report of the .! (! Government, as does the GA()As Concepts Statement No. 1 for state and local governments! SFFAC No. 5 describes the elements of financial statements, similar to GA()As Concepts Statement 4 titled F$lements of Financial (tatements!G Recentl5 issued SFFAC No. 6 is similar to the GA()As Concepts Statement 3 on communication methods in general purpose e7ternal financial reporting! 17!4! &he account name Estimated Revenes used b5 state and local governments is a budgetar5 account representing the governmentAs estimate of the amount of revenue e7pected to be realiBed during the 5ear! Federal agencies use the account !t"e# App#op#iations Rea$i%ed in their budgetar5 trac2 to capture the amount Congress has appropriated to an agenc5 for the upcoming 5ear! !t"e# App#op#iations Rea$i%ed is for basic operating appropriations, rather than appropriations earmar2ed for specific purposes! !t"e# App#op#iations Rea$i%ed is closer in meaning to App#op#iations of state and local governments than it is to Estimated Revenes! A federal agenc5 uses the account Fnd Ba$ance &it" '.S. (#eas#) in its proprietar5 trac2 as an asset that represents the balance available to the agenc5 at the 0epartment of &reasur5! &his account 6ould be most similar to cash and cash eCuivalents at the state and local government level! Fnd Ba$ance &it" '.S. (#eas#) 6ill be reduced throughout the 5ear b5 the dollar value of chec2s dra6n! (ee #llustration 17-12 for a comparison of these terms! )ecause the5 are budgetar5 accounts, Estimated Revenes and !t"e# App#op#iations Rea$i%ed have more in common 6ith each other than either one does 6ith Fnd Ba$ance &it" t"e '.S. (#eas#)! 17!8! Agree, in part! &he net position account on the balance sheet of a federal agenc5 represents the difference bet6een assets and liabilities, as net position does for a state or local government! 'o6ever, net position is classified into t6o categories1 une7pended appropriations and cumulative results of operations, 6hich are different than the classifications of net position for a state or local government! .ne7pended appropriations is the amount of the entit5As appropriations represented b5 undelivered orders and unobligated balances! Cumulative results of operations is measured since the inception of the activit5 as the net difference bet6een e7pensesHlosses and financing sources, 6hich includes appropriations, revenues, and gains! 17-9! Agree, in part! #t is true that the FA(A) sets standards for e7ternal financial reporting for federal agenciesI ho6ever, its mission is considerabl5 broader than GA()As mission in that it also sets standards for internal management accounting and performance measurement! For e7ample, FA(A)As obDectives for e7ternal financial reporting are designed to assist users in evaluating budgetar5 integrit5, operating performance, ste6ardship, and adeCuac5 of s5stems and controls! &he audiences for federal financial 17-4 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, Ans6ers, 17-9 ?ContAd@ reports include Congress, federal e7ecutives, program managers, as 6ell as citiBens and their intermediaries! Although the GA() does provide guidance in presenting information on service efforts and accomplishments, its mission and activities to date have been primaril5 focused on e7ternal financial reporting and governmental GAA"! 17!7! &he t6o groups of funds used b5 federal government entities are federal funds and trust funds! &here are three federal fund t5pesJGeneral Fund, special funds, and revolving funds! &he General Fund is similar in intent to the General Fund of state and local governments! #t receives all revenue and other receipts not earmar2ed ?or identified@ for a specific purpose! General appropriations are made from the General Fund! (pecial funds are established for a specific non-business-t5pe purpose! &hese funds are most similar to a special revenue fund used b5 state and local governments! Revolving funds are established for business-t5pe activities ma2ing them similar to the proprietar5 funds of state and local governments! &he second fund group is trust funds! &here are t6o t5pes of trust fundsJtrust funds and deposit funds! &rust funds are established 6hen a la6 or statute indicates that funds must be used for a specific purpose! FreCuentl5, the purpose benefits those e7ternal to the federal government, similar to trust funds of state and local governments! 'o6ever, this is not al6a5s the case! #n some instances the trust funds of the federal government actuall5 benefit the government, ma2ing the funds similar to special revenue funds at the state and local government level! &he second t5pe of trust fund is a deposit fund! 0eposit funds hold receipts on behalf of others, ma2ing them similar to agenc5 funds at the state and local government level! 17!:! (te6ardship assets are of t6o t5pesJheritage assets and ste6ardship land! 'eritage assets have historical or natural significanceI cultural, artistic, or educational significanceI or are architecturall5 significant! (te6ardship land is land that is not used b5 the federal government for operating purposes! General propert5, plant and eCuipment ?""E$@ of the federal government is used for operating purposes and as such is accounted for in the same manner as ""E$ of state and local governments, not-for-profit entities, and for-profit entities! &he costs of the assets are capitaliBed and if the asset is depreciable, depreciation e7pense is recorded periodicall5! (te6ardship assets, ho6ever, are not recorded! Rather the5 are noted on the financial statements 6ith disclosures in the notes to the financial statements! &he note disclosure should provide information on maDor categories of heritage assets, multi-use heritage assets, and ste6ardship land! Additionall5, changes in ste6ardship assets should be provided, including ph5sical units added and 6ithdra6n during the 5earI methods of acCuisition and 6ithdra6alI and condition information 17-8 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, Ans6ers ?ContAd@ 17!;! &he budgetar5 accounts reCuired b5 the .!(! Government (tandard General -edger are1 !t"e# App#op#iations Rea$i%edJthe account that represents the agenc5As available resources for the 5ear! &his account normall5 has a debit balance! )udgetar5 accounts that e7plain 6here funds are in the spending c5cleJ 'nappo#tioned At"o#it)* Appo#tionments* A$$otments* Commitments* 'nde$ive#ed !#de#s, and E+pended At"o#it)! &hese budgetar5 accounts normall5 have a credit balance and 6hen summed 6ill add to the !t"e# App#op#iations Rea$i%ed. &he use of the Commitments account is optional, though highl5 recommended! )udget authorit5 flo6s do6n through the accounts in the seCuence given in #llustration 17-11! &his seCuence is the same as the order provided in the second bullet point that lists the accounts e7plaining 6here funds are in the spending c5cle. 17!10! A "AR is the consolidated performance and accountabilit5 report prepared annuall5 b5 most federal agencies! #t contains several components including1 An agenc5 head messageJanalogous to a transmittal letter! A managementAs discussion and anal5sis! "erformance reportJprovides information on the agenc5As success in achieving the goals in its strategic plan and performance budget! Financial statementsJthere are seven reports, t6o ?statement of social insurance and statement of net changes in social insurance amounts@ of 6hich are onl5 prepared b5 a limited number of agencies! &he other five statements are the balance sheet, statement of net costs, statement of changes in net position, statement of budgetar5 resources, and statement of custodial activit5! %ther accompan5ing informationJincludes summar5 statements and information from the #nspector General concerning an5 serious management and performance challenges! (olutions to Cases 17-1! &he information provided in the solution is based on *A(AAs 2010 financial statements! *umbers presented are in millions of dollars! a. &he portion of *A(AAs assets that is represented b5 ""E$ is 82!9 percent ?3;,948H31:,42:@! As 5ou can see, and 6ould be e7pected, a considerable portion of *A(AAs assets are ""E$! &6o maDor depreciable assets reported are the #nternational (pace (tation and the (pace (huttle! *A(A operated 6ith a negative change in net assets in both 2010 ?-32,0:0@ and 200; ?-34,281@! Although the total change 6as not as negative in 2010 as in 200;, the agenc5As net position dropped from 31;,849 in 200; to 314,018 in 2010, a decline of 2:!4 percent! 17-9 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, Case 17-1 ?ContAd@ b! *A(AAs audit 6as conducted b5 $rnst E Koung! Given the large number of agencies and organiBations of the federal government that reCuire audits, it is common for the government to contract 6ith public accounting firms for audits of federal agencies! (ince *A(A is a federal entit5, generall5 accepted government audit standards issued b5 the Comptroller General, Government Accountabilit5 %ffice are used to conduct audits of *A(A! c. $rnst E Koung identified ineffective internal controls related to the accounting for propert5, plant and eCuipment ?""E$@ and operating materials and supplies in 200;! Given the large investment in ""E$, ineffective internal controls 6ould have a significant impact on the Cualit5 of the financial information presented! Although *A(A has corrected man5 problems, the effect has carried into 2010! 0ue to the 200; inadeCuacies in internal controls the auditor 6as not able to obtain sufficient competent evidential support for amounts on the 2010 statement of net costs and changes in net position! #n particular, several beginning balances could not be relied upon due to the problems identified in 200;! &hus, the negative changes in net assets identified in part a ma5 actuall5 be larger or smaller than reported! )ased on the 2010 audit, there should not be ongoing problems 6ith the *A(A audit! $rnst E Koung implies that *A(A has addressed the internal control problems and the onl5 reason the 2010 audit 6as Cualified 6as due to lac2 of reliance on beginning balance amounts! &his assumes no ne6 problems develop or are identified during subseCuent audits! 17-2! &he information provided in the solution is current as of =ul5 1, 2011! a. According to the FA(A) Leb site the mission of the FA(A) is Fto develop accounting standards after considering the financial and budgetar5 information needs of congressional oversight groups, e7ecutive agencies, and the needs of other users of federal financial information!G b. &here are nine members of the FA(A)! &hree of the members represent the FA(A) sponsors ?principals@, coming from the Government Accountabilit5 %ffice ?GA%@, 0epartment of &reasur5, and %ffice of /anagement and )udget ?%/)@! $ach sponsor selects its o6n representative! &he other si7 members are to be nonfederal individuals from the general financial communit5, accounting and auditing communit5, or academia! *onfederal members are appointed b5 the sponsors! &he chair of the FA(A) is a nonfederal member appointed b5 the sponsors! c. &he FA(A) is funded b5 the three sponsors! d. Given the funding source and the method of selecting members, it could be argued that the FA(A) is not independent in appearance! &he sponsors are affected b5 the decisions of the FA(A) and as members of the FA(A), the sponsors are in a position to influence the standards issued! &o pass a standard t6o-thirds of the board 17-7 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, Case 17-2 ?ContAd@ members must approve! &echnicall5, the composition of the board ma2es it possible for the nonfederal members to override the decisions of the sponsorsI ho6ever, all nonfederal members 6ould need to be in agreement! Finall5, t6o of the sponsors ?principals@, the Comptroller General and the 0irector of the %ffice on /anagement and )udget, have veto po6er over an5 FA(A) statement if the5 act 6ithin the ;0 da5 revie6 period for final statements! e. &he ans6er to this assignment 6ill change, given that the proDect agenda is on-going! At the time the te7tboo2 6ent to print active proDects included1 A#C"A %mnibusJe7amines adopting guidance for accounting and financial reporting issues that 6ere previousl5 onl5 in the professional auditing literature! Application of the -iabilit5 0efinitionJreconsiders accounting and reporting for long-term commitments of the federal government that could potentiall5 result in a net outflo6 of resources! FA() Reporting b5 Federal $ntitiesJreconsiders reporting b5 federal entities that primaril5 appl5 accounting standards issued b5 the FA()! /easurement Attributes Concepts (tatementJe7amines providing guidance on the selection of measurement attributes in future federal financial reporting standards! Financial Report Concepts (tatementJrevisits the reporting model described in SFFAC No. 2, $ntit5 and 0ispla5 Federal $ntit5 Concepts (tatementJe7amines defining the boundaries of the .!(! Government reporting entit5 and the component reporting entities! 0eferred /aintenance E Asset #mpairmentJdevelops guidance for reporting information about deferred maintenance and asset impairment! $armar2ed FundsJevaluates e7isting standards, identif5ing areas 6here actual results from the standard on earmar2ed funds do not match the boardAs e7pectations! *atural ResourcesJdevelops reporting reCuirements to enhance accountabilit5 for and ste6ardship over federal natural resources! (te6ardship #nvestmentsJdetermines the appropriate categoriBation of the final ste6ardship categor5! ,. &he FA(A) standards are not proprietar5! An5one can access the standards at the FA(A) Leb site 666!fasab!gov! &his is unli2e the FA() Codi,ication, 6hich is accessed through subscription, or the GA() Codi,ication 6hich can be purchased in hardcop5 or electronic form! 17!4! &he FK 2010 report for the .! (! government is available at 666!fms!treas!govHfrHinde7!html! &he 2011 report should be available in 0ecember of 2011! &he ans6ers to these Cuestions are based on the FK 2010 ?i!e!, %ctober 1, 200; M (eptember 40, 2010@ report! 17-: Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, Case 17-4 ?ContAd@ a. &he Comptroller General of the GA% 6as not able to render an opinionI therefore, he reported a disclaimer of opinion because he 6as unable to determine the reliabilit5 of significant portions of the consolidated financial statements due to Fcertain material 6ea2nesses in internal control over financial reporting and other limitations on the scope of our 6or2NG ?pg! 2:@ b. &hree maDor deficiencies 6ere identified in the audit report! &he5 6ere F?1@ serious financial management problems at the 0epartment of 0efense ?0%0@ that have prevented 0%0As financial statements from being auditable, ?2@ the federal governmentAs inabilit5 to adeCuatel5 account for and reconcile intragovernmental activit5 and balances bet6een federal agencies, and ?4@ the federal governmentAs ineffective process for preparing the consolidated financial statementsG ?pg! 2;@! &he audit report identifies five material 6ea2nesses! &he5 indicate that the federal government 6as unable to1 (atisfactoril5 determine that propert5, plant, and eCuipment and inventories and related propert5, primaril5 held b5 0%0, 6ere properl5 reported! Reasonabl5 estimate or adeCuatel5 support amounts reported for certain liabilities! (upport significant portions of the reported total net cost of operations, most notabl5 related to 0%0, and adeCuatel5 reconcile disbursement activit5 at certain federal entities! AdeCuatel5 account for and reconcile intragovernmental activit5 and balances bet6een federal entities! $nsure that the federal governmentAs accrual-based consolidated financial statements 6ere ?1@ consistent 6ith the underl5ing audited entitiesA financial statements, ?2@ properl5 balanced, and ?4@ in conformit5 6ith GAA"! #dentif5 and either resolve or e7plain material differences bet6een ?1@ certain components of the budget deficit reported in &reasur5As records that are used to prepare the Reconciliation of *et %perating Cost and the .nified )udget 0eficit, the (tatement of Changes in Cash )alance from .nified )udget and %ther Activities, and the Fiscal "roDections for the .!(! Government, and ?2@ related amounts reported in federal entitiesA financial statements and underl5ing financial information and records! ?pg! 228@ c. &6ent5 federal agencies out of 24 reCuired to report under the CF% Act received unCualified opinions in FK 2010, as did eight of 11 additional significant reporting agencies! &he list of agencies is included in the annual financial report of the .!(! government! &he managementAs discussion and anal5sis reports on this topic in a section titled FFinancial (tatement Audit Results!G d. *o! &he Comptroller General disclaimed an opinion on the statement of social insurance, unli2e 2007, 200:, and 200; 6hen the statement received a clean audit opinion! &he reason the statement did not receive a clean opinion 6as primaril5 17-; Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, Case 17- 4 ?ContAd@ due to uncertainties related to the achievement of cost reduction gro6th in /edicare! A revie6 of the statement of social insurance 6ill sho6 that proDected e7penditures e7ceed e7pected revenue for all programs! 'o6ever, for /edicare ?parts A and )@ there is a large reversal in the trend of increasingl5 large deficits! #n 200; the combined parts A and ) deficit 6as estimated at 340,;48 billion! For 2010 the statement indicates a combined deficit of 320,420 billion! &his represents a significant e7pected cost savings, the uncertaint5 of 6hich contributes to the Comptroller GeneralAs concerns! No%e %o I*"%ruc%or1 &he annual report of the .!(! government is certainl5 provocative and li2el5 to result in a spirited discussion among students! Le suggest 5ou focus on the tremendous accounting challenges in auditing the largest organiBation in the 6orld, and stress the positive aspects of ho6 far federal agencies have come in the fe6 5ears since audit reCuirements 6ere enacted! (olutions to $7ercises and "roblems 17-1! 1! b. 9! b! 2! a. 7! a! 4! c! :! d! 4! d! ;! b. 8! a. 10! c! 17-10 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions ?ContAd@ 17!" a" #$M%&'A'($N $) M(SS(NG AM$&N'S* +ebit, #redit, %R$%R(E'AR- A##$&N'S A##$&N'S %A-A./E 0 !12331333 A##&M&/A'E+ +E%RE#(A'($N !16331333 A%%R$%R(A'($NS &SE+ 415331333 $%ERA'(NG MA'ER(A/S AN+ S&%%/(ES 0 !17331333 #&M&/A'(6E RES&/'S $) $%ERA'($NS 1371712 717331333 $%ERA'(NG7%R$GRAM E8%ENSES 411531333 +E%RE#(A'($N AN+ AM$R'(9A'($N 111531333 %/AN' AN+ E:&(%MEN' ;1<331333 &NE8%EN+E+ A%%R$%R(A'($NS!314 !11331333 '$'A/ AM$&N'S G(6EN 161<331333 1<1!331333 )&N+ .A/AN#E =('> 'REAS&R-!314 !12331333 ?????????? '$'A/S%R$%R(E'AR- A##$&N'S 01<1!331333 01<1!331333 .&+GE'AR- A##$&N'S E8%EN+E+ A&'>$R('-!314 0 415331333 A%%$R'($NMEN'S!314 6331333 &N+E/(6ERE+ $R+ERS!314 115331333 '$'A/ AM$&N'S G(6EN 0 3 616331333 $'>ER A%%R$%R(A'($NS REA/(9E+!314 616331333 ???????? ? '$'A/S.&+GE'AR- A##$&N'S 0 616331333 0 616331333 Note* &ne@pended Appropriation, A0!11331333B C E@pended Authority A0415331333B D 0616331333 Aoriginal appropriationB 17-11 Chapter 17 - Accounting and Reporting for the Federal Government Appropriation, &,ed A0415331333B C &ne@pended Appropriation, A0!11331333B D 0616331333 Aoriginal appropriationB Ch! 17, (olutions, 17-2 ?ContAd@ b" A%%R$%R(A'($NS &SE+ +&R(NG )- !314 0415331333 '$'A/ E8%ENSES +&R(NG )- !314 ANote AB 512331333 NE' +E#REASE (N #&M&/A'(6E RES&/'S $) $%ERA'($NS 0 ;331333 ANE' +E#REASE (N #&M&/A'(6E RES&/'S $) $%ERA'($NS (S '>E SAME AS NE' +E#REASE (N ASSE'S $'>ER '>AN )&N+ .A/AN#E =('> 'REAS&R- () A%%R$%R(A'($NS (S '>E $N/- )(NAN#(NG S$&R#EB ANote A* 'otal e@pen,e, i, the ,um of $perating7%rogram E@pen,e, of 0411531333 and +epreciation and AmortiEation of 0111531333"B 172" a" +ebit, #redit, .&+GE'AR- E8%EN+E+ A&'>$R('-!314 415331333 A%%$R'($NMEN'S!314 6331333 $'>ER A%%R$%R(A'($NS REA/(9E+!314 511331333 %R$%R(E'AR- #&M&/A'(6E RES&/'S $) $%ERA'($NS 512331333 $%ERA'(NG7%R$GRAM E8%ENSES 411531333 +E%RE#(A'($N AN+ AM$R'(9A'($N 111531333 A%%R$%R(A'($NS &SE+ 415331333 #&M&/A'(6E RES&/'S $) $%ERA'($NS 415331333 17-12 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, 17-4 ?ContAd@ b" )E+ERA/ AGEN#- .A/AN#E S>EE' AS $) SE%'EM.ER 231 !314 ASSETS (N'RAG$6ERNMEN'A/* )&N+ .A/AN#E =('> 'REAS&R-!314 0 !12331333 G$6ERNMEN'A/* $%ERA'(NG MA'ER(A/S AN+ S&%%/(ES !17331333 %/AN' AN+ E:&(%MEN' ANE' $) A##&M&/A'E+ +E%RE#(A'($N $) 0!16331333B 612331333 '$'A/ ASSE'S 01112331333 LIABILITIES A##$&N'S %A-A./E 0 !12331333 NET POSITION &NE8%EN+E+ A%%R$%R(A'($NS !11331333 #&M&/A'(6E RES&/'S $) $%ERA'($NS 61<331333 '$'A/ NE' %$S('($N <13331333 '$'A/ /(A.(/('(ES AN+ NE' %$S('($N 01112331333 17-14 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions ?ContAd@ 174" R&RA/ ASS(S'AN#E AGEN#- S'A'EMEN' $) NE' #$S' )$R '>E -EAR EN+E+ SE%'EM.ER 231 !314 )$$+ .ANF #$S'S 0 <162!1;33 /ESS* EARNE+ RE6EN&E !16111<33 NE' #$S' 713!31<33 >$&S(NG SER6(#ES #$S'S 7142;1533 /ESS* EARNE+ RE6EN&E 11!271433 NE' #$S' 61!311133 #RE+(' #$&NSE/(NG #$S'S !12<11333 /ESS* EARNE+ RE6EN&E ;71333 NE' #$S' !12341333 '$'A/ #$S'S 1<146!1233 /ESS* EARNE+ RE6EN&E 21<261233 NE' #$S' $) $%ERA'($NS 01515!61333
17-14 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions ?ContAd@ 175" )E+ERA/ AN'(:&('(ES A+M(N(S'RA'($N S'A'EMEN' $) .&+GE'AR- RES$&R#ES )$R '>E 11 M$N'>S EN+E+ A&G&S' 211 !314 .&+GE'AR- RES$&R#ES* .&+GE' A&'>$R('- ANote AB* A%%R$%R(A'($NS RE#E(6E+ ANote AB 041;<41;55 '$'A/ .&+GE'AR- RES$&R#ES 041;<41;55 S'A'&S $) .&+GE'AR- RES$&R#ES* $./(GA'($NS (N#&RRE+ ANote .B 0411441;55 &N$./(GA'E+ .A/AN#ES ANote #B 7531333 '$'A/ S'A'&S $) .&+GE'AR- RES$&R#ES 041;<41;55 #>ANGE (N $./(GA'E+ .A/AN#E* $./(GA'E+ .A/AN#E1 .EG(NN(NG $) '>E %ER($+ 0 11!131!13 $./(GA'($NS (N#&RRE+ ANote .B 411441;55 $&'/A-S ANote +B A416<31<24B &N%A(+ $./(GA'($NS1 EN+ $) %ER($+ ANote EB 0 6641121 Note A* 'otal budgetary re,ource, are given by the balance of $ther Appropriation, RealiEed of 041;<41;55" Note .* E@pended authority of current year of 0214;317!4 plu, 06641121 obligated budgetary authority for undelivered order, at ;721714" Note #* &nobligated balance, i, the ,um of allotment, and commitment," Note +* $utlay, eGual, e@pended authority1 and i, al,o eGual to the decrea,e in fund balance, Hith the &"S" 'rea,ury during the periodthe eGuivalent of ca,h di,bur,ed" Note E* $bligated balance at yearend i, eGual to undelivered order," 17-18 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions ?ContAd@ 176" a" )/$$+ #$N'R$/ #$MM(SS($N GENERA/ I$&RNA/ +ebit, #redit, 1" .&+GE'AR- $'>ER A%%R$%R(A'($NS REA/(9E+!314 713331333 &NA%%$R'($NE+ A&'>$R('-!314 713331333 %R$%R(E'AR- )&N+ .A/AN#E =('> 'REAS&R-!314 713331333 &NE8%EN+E+ A%%R$%R(A'($NS!314 713331333 !" .&+GE'AR- &NA%%$R'($NE+ A&'>$R('-!314 713331333 A%%$R'($NMEN'S!314 713331333 2" .&+GE'AR- A%%$R'($NMEN'S!314 113331333 A//$'MEN'S!314 113331333 4" .&+GE'AR- A//$'MEN'S!314 <731333 &N+E/(6ERE+ $R+ERS!314 <731333 5" .&+GE'AR- &N+E/(6ERE+ $R+ERS!314 1731333 E8%EN+E+ A&'>$R('-!314 1731333 17-19 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, 17-9 ?ContAd@ )/$$+ #$N'R$/ #$MM(SS($N GENERA/ I$&RNA/ +ebit, #redit, %R$%R(E'AR- $%ERA'(NG7%R$GRAM E8%ENSES 1731333 +(S.&RSEMEN'S (N 'RANS('!314 1731333 +(S.&RSEMEN'S (N 'RANS('!314 1731333 )&N+ .A/AN#E =('> 'REAS&R-!314 1731333 &NE8%EN+E+ A%%R$%R(A'($NS!314 1731333 A%%R$%R(A'($NS &SE+ 1731333 6" .&+GE'AR- &N+E/(6ERE+ $R+ERS!314 2<51333 E8%EN+E+ A&'>$R('-!314 2<51333 %R$%R(E'AR- )&RN('&RE AN+ E:&(%MEN' 1;31333 $%ERA'(NG MA'ER(A/S AN+ S&%%/(ES 1751333 $%ERA'(NG7%R$GRAM E8%ENSES 431333 A##$&N'S %A-A./E 2<51333 &NE8%EN+E+ A%%R$%R(A'($NS!314 2<51333 A%%R$%R(A'($NS &SE+ 2<51333 7" .&+GE'AR- &N+E/(6ERE+ $R+ERS!314 1;21333 E8%EN+E+ A&'>$R('-!314 1;21333 17-17 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, 17-9 ?ContAd@ )/$$+ #$N'R$/ #$MM(SS($N GENERA/ I$&RNA/ +ebit, #redit, %R$%R(E'AR- $%ERA'(NG7%R$GRAM E8%ENSES 1;21333 A##R&E+ )&N+E+ %A-R$// AN+ .ENE)('S 1;21333 &NE8%EN+E+ A%%R$%R(A'($NS!314 1;21333 A%%R$%R(A'($NS &SE+ 1;21333 ;" %R$%R(E'AR- A##$&N'S %A-A./E 1;<1333 A##R&E+ )&N+E+ %A-R$// AN+ .ENE)('S 1;21333 +(S.&RSEMEN'S (N 'RANS('!314 27!1333 +(S.&RSEMEN'S (N 'RANS('!314 27!1333 )&N+ .A/AN#E =('> 'REAS&R-!314 27!1333 <" .&+GE'AR- &N+E/(6ERE+ $R+ERS!314 431333 E8%EN+E+ A&'>$R('-!314 431333 %R$%R(E'AR- $%ERA'(NG7%R$GRAM E8%ENSES 431333 A##R&E+ )&N+E+ %A-R$// AN+ .ENE)('S 231333 A##$&N'S %A-A./E 131333 17-1: Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, 17-9 ?ContAd@ )/$$+ #$N'R$/ #$MM(SS($N GENERA/ I$&RNA/ +ebit, #redit, $%ERA'(NG7%R$GRAM E8%ENSES 631333 $%ERA'(NG MA'ER(A/S AN+ S&%%/(ES 631333 +E%RE#(A'($N AN+ AM$R'(9A'($N !1533 A##" +E%RE#(A'($N)&RN" AN+ E:&(%" !1533 &NE8%EN+E+ A%%R$%R(A'($NS!314 431333 A%%R$%R(A'($NS &SE+ 431333 13" .&+GE'AR- E8%EN+E+ A&'>$R('-!314 7;;1333 $'>ER A%%R$%" REA/(9E+!314 7;;1333 %R$%R(E'AR- #&M&/A'(6E RES&/'S $) $%ERA'($NS 4<51533 $%ERA'(NG7%R$GRAM E8%ENSES 4<21333 +E%RE#(A'($N AN+ AM$R'(9A'($N !1533 A%%R$%R(A'($NS &SE+ 7;;1333 #&M&/A'(6E RES&/'S $) $%ERA'($NS 7;;1333 17-1; Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, 17-9 ?ContAd@ b" )/$$+ #$N'R$/ #$MM(SS($N .A/AN#E S>EE' $#'$.ER 211 !314 ASSETS (N'RAG$6ERNMEN'A/* )&N+ .A/AN#E =('> 'REAS&R-!314 06145;1333 G$6ERNMEN'A/* $%ERA'(NG MA'ER(A/S AN+ S&%%/(ES 1151333 )&RN('&RE AN+ E:&(%MEN'1 NE' $) A##&M&/A'E+ +E%RE#(A'($N $) 0!1533 1771533 '$'A/ ASSE'S 0617531533 LIABILITIES A##$&N'S %A-A./E 0 !161333 A##R&E+ )&N+E+ %A-R$// AN+ .ENE)('S 231333 '$'A/ /(A.(/('(ES #$6ERE+ .- .&+GE'AR- RES$&R#ES !461333 NET POSITION &NE8%EN+E+ A%%R$%R(A'($NS 61!1!1333 #&M&/A'(6E RES&/'S $) $%ERA'($NS !<!1533 '$'A/ NE' %$S('($N 615341533 '$'A/ /(A.(/('(ES AN+ NE' %$S('($N 0617531533 17-20 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, 17-9 ?ContAd@ c" )/$$+ #$N'R$/ #$MM(SS($N S'A'EMEN' $) #>ANGES (N NE' %$S('($N )$R '>E M$N'> EN+E+ $#'$.ER 211 !314 #&M&/A'(6E RES&/'S $) $%ERA'($NS &NE8%EN+E+ A%%R$%R(A'($NS .EG(NN(NG .A/AN#ES 0 3 0 3 .&+GE'AR- )(NAN#(NG S$&R#ES* A%%R$%R(A'($NS RE#E(6E+ 713331333 A%%R$%R(A'($NS &SE+ 7;;1333 A7;;1333B '$'A/ )(NAN#(NG S$&R#ES 7;;1333 61!1!1333 NE' #$S' $) $%ERA'($NS ANote AB A4<51533B ????????? EN+(NG .A/AN#ES 0 !<!1533 061!1!1333 Note A* $perating7program e@pen,e, of 04<21333 C depreciation and amortiEation of 0!1533" 17-21 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, 17-9 ?ContAd@ d" )/$$+ #$N'R$/ #$MM(SS($N S'A'EMEN' $) .&+GE'AR- RES$&R#ES )$R M$N'> EN+E+ $#'$.ER 211 !314 .&+GE'AR- RES$&R#ES* .&+GE' A&'>$R('- ANote AB 0713331333 S'A'&S $) .&+GE'AR- RES$&R#ES* $./(GA'($NS (N#&RRE+ ANote .B 0 <731333 &N$./(GA'E+ .A/AN#ES A6A(/A./E ANote #B 613231333 '$'A/ S'A'&S $) .&+GE'AR- RES$&R#ES 0713331333 #>ANGE (N $./(GA'E+ .A/AN#E* $./(GA'($NS (N#&RRE+ <731333 $&'/A-S ANote +B A57!1333B $./(GA'E+ .A/AN#E1 EN+ $) %ER($+ ANote EB 0 4!;1333 Note A* 'otal budgetary re,ource, are the total appropriation, for the year1 or 0713331333" Note .* $bligation, incurred eGual, e@pended budgetary authority of 07;;1333 A,ee Entry 13AB plu, the remaining balance of &ndelivered $rder,!312 of 01;!1333 A0<731333 07;;1333B1 or 0<731333" (n thi, ca,e1 ,ince the )lood #ontrol #ommi,,ion obligate, prior to all e@penditure, of budgetary authority1 the amount incurred al,o i, ,imply the amount obligated by the credit to &ndelivered $rder,!314 A,ee Entry 4B" Note #* 'otal budgetary re,ource, of 0713331333 le,, amount obligated of 0<731333 A,ee Note .B eGual, 0613231333" Note +* $utlay, al,o eGual, the decrea,e in )und .alance, Hith the &"S" 'rea,ury during the periodthe eGuivalent of ca,h di,bur,ed" Note E* $bligated balance, at yearend include &ndelivered $rder, A01;!1333B and Account, %ayable and other accrued liabilitie, A0!461333B1 or 04!;1333 in total" 17-22 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions ?ContAd@ 177" a" )(NAN#(A/ #A%A.(/('- A1B (N+(6(+&A/ (N#$ME 'A8ES7'$'A/ RE6EN&ES* 7;"!J A01172!"<370!1!16"53B A!B +E.' /$A+ A071354"53C0!31"!37041!<6"33B* 16;"<J b" )(NAN#(A/ %ER)$RMAN#E A1B (N'ER%ER($+ E:&('- A0!1!16"537041!<6"33B* 3"5! c. )(NAN#(A/ %$S('($N A1B N$NEARMARFE+ )&N+S7'$'A/ RE6EN&ES* 6"27 A014111<"7370!1!16"53B A!B :&(#F RA'($ A04!;"6707!"<B or A04!;"670!27"!BK* 5";; or 1";1 A2B #A%('A/ ASSE' #$N+('($N A0;11"63701152;"43BKK* 3"52 K Since it i, difficult to identify current portion, of longterm debt1 only ,omeHhat identifiable current liabilitie, Here u,ed in the calculation" Iu,t Account, %ayable Ha, u,ed in the fir,t calculation and Account, %ayable plu, .enefit, +ue and %ayable Here u,ed in the ,econd calculation" KK 'he total gro,, capital a,,et value Ha, adLu,ted for nondepreciable a,,et, Acon,truction in progre,, and landB" d. All but tHo mea,ure, indicate that the federal government i, in poor financial condition" 'he Guick ratio i, Hell over one u,ing either calculation1 indicating ,ufficient ca,h to pay current liabilitie,1 a,,uming current liabilitie, are correctly identified" Additionally1 the capital a,,et condition ratio of 3"52 indicate, that there i, ,ufficient life remaining in capital a,,et," 'he federal government relie, heavily on individual income ta@e," +ebt load i, e@tremely high by any benchmark u,ed" (llu,tration 137 indicate, that for local government, a load greater that 25J i, e@tremely high" (nterperiod eGuity i, poor given that only 5!J of net co,t, are covered by current period revenue," )inally1 the negative net po,ition indicate, that there are no 17-24 Chapter 17 - Accounting and Reporting for the Federal Government Ch! 17, (olutions, 17-7 ?ContAd@ re,erve, on Hhich to draH to help addre,, the interperiod eGuity ,ituation" 'he financial ,tatement, of the federal government reflect the financial concern, e@pre,,ed by #ongre,,1 the %re,ident1 and citiEen," 17-24