DEPARTMENT OF THE INTERIOR
ACCOUNTING HANDBOOK
TABLE OF CONTENTS
CHAPTER 1. OVERVIEW
1.1 What is the Purpose and Scope of the Accounting Handbook?
1.2 What Other Documentation Does This Handbook Reference?
1.3 Who Will Modify and Interpret the Handbook?
1.4 What is the Effective Date of this Handbook?
1.5 Where Can I Direct Questions and Comments?
CHAPTER 2. ASSETS
2.1 What is the Purpose of this Chapter?
2.2 What are the Authoritative Sources?
2.3 What are Assets and How are they Recognized?
2.4 What are the Requirements for the Ledgers?
2.5 What are the Specific Standards for Assets?
2.5.1 Cash
2.5.2 Fund Balance with Treasury
2.5.3 Accounts Receivable and Losses on Accounts Receivable
2.5.3.1 What is a Method for Estimating the Allowance for Doubtful
Accounts and Loans Receivable?
2.5.3.2 What are the Bureau/Office Responsibilities?
2.5.3.3 What is the Criteria for Accounts Receivable Collectibility?
2.5.3.4 Loans Receivable
2.5.3.4.1 How are Loans Receivable Recorded?
2.5.3.4.2 What is the Criteria for Collectibility of Loans
Receivable?
2.5.4 Interest Receivable
2.5.5 Advances and Prepayments
2.5.6 Inventory
2.5.7 Property, Plant, and Equipment (PP&E)
2.5.8 Investments in Treasury Securities
2.5.9 Stewardship PPE
2.5.10 Intangible Assets
2.5.11 Other Assets
2.6 What are the Standards for Transfers of Assets Within the Federal
Government?
2.7 What are the Standards for Donated Assets?
2.8 What is the Procedure for Assets Held by Award Recipients?
CHAPTER 3. CHAPTER. LIABILITIES AND EQUITY OF THE U.S.
GOVERNMENT
3.1 What is the Purpose of this Chapter?
3.2 What are the Authoritative Sources?
3.3 What are Liabilities and how are they Recognized?
3.4 What are the Requirements for the Ledgers?
3.5 What are the Specific Accounting Standards?
3.5.1 Accounts Payable, Interest Payable, and Other Current Liabilities
3.5.2 Capital Leases
3.5.3 Federal Debt and Related Interest Costs
3.5.4 Pensions, Other Retirement Benefits, and Other Post-Employment Benefits
3.5.5 Insurance and Guarantees
3.5.6 Exchange and Nonexchange Transactions
3.5.7 Environmental Contingent Liability
3.6 How are Compensated Absences Accrued?
3.7 What are Contingencies?
3.8 What is Equity of the U.S. Government?
3.9 What Equity Accounts Does the Department of Interior Use?
CHAPTER 4. REVENUES AND OTHER FINANCING SOURCES
4.1 What is the Purpose of this Chapter?
4.2 What are the Authoritative Sources?
4.3 What are the Specific Accounting Standards?
4.3.1 Exchange Revenue
4.3.2 Nonexchange Revenue
4.3.3 Other Financing Sources
4.3.4 Other Financing Sources-Prior Period Adjustments
4.3.5 Budgetary Information
4.3.6 Accountability for Dedicated Collections
CHAPTER 5. FINANCIAL AND MANAGEMENT ACCOUNTING REPORTS
5.1 What is the Purpose of this Chapter?
5.2 What are the Authoritative Sources?
5.3 What are General Purpose Financial and Management Accounting Reports?
5.4 Who is Responsible for Financial Reporting?
5.5 What are the Principles of Financial Reporting?
5.6 What are the Requirements for Financial Statements?
5.7 What Reports are required by External Agencies?
5.8 What Internal Reports are required?
5.9 How Do Bureaus/Offices Measure Successful Reporting?
CHAPTER 6. GENERAL ACCOUNTING
6.0 What is the Purpose of this Chapter?
6.1 General Ledger Accounting
6.1.1 What are the Authoritative Sources?
6.1.2 What are the Department of Interior’s Accounting Control Activities for
General Ledger Accounting?
6.1.3 What Does the General Ledger Posting Process Include?
6.1.4 What Does the General Ledger System Include?
6.1.5 What is the Elimination Process?
6.1.5.1 What are the Authoritative Sources?
6.1.5.2 What is the Department of Interior Guidance?
6.1.5.3 What are the Bureau/Office Responsibilities?
6.1.5.4 What are Trading Partner Codes?
6.1.5.5 What are the Categories of Intra-Governmental Transactions?
6.1.5.6 What are Reciprocal Accounts?
6.1.5.7 What is the Elimination Worksheet?
6.1.5.8 What are the Key Elements of the Elimination Process?
6.1.5.9 What are Reconciliations and Confirmations?
6.1.5.10 What is the Reconciliation Process?
6.1.5.11 What are Reconciliation Differences?
6.1.5.12 How Does the Timing of Recording Accruals Affect Eliminations?
6.1.5.13 What are the Yearend Procedures?
6.2 Grants and Cooperative Agreements
6.2.1 What are the Authoritative Sources?
6.2.2 What are Grants and Cooperative Agreements?
6.2.3 What is the Department of Interior Guidance?
6.2.4 What are the Accounting Procedures?
6.2.5 What are the Responsibilities of Recipients and Bureau/Office Finance Offices?
6.2.6 What are the Requirements for Financial Reporting?
6.3 Gifts and Donations (G&D)
6.3.1 What are the Authoritative Sources?
6.3.2 What are the Bureau/Office Responsibilities?
6.3.3 How Do Bureaus/Offices Process Donated Funds?
6.3.4 How Do Bureaus/Offices Process Services In-Kind?
6.3.5 How Do Bureaus/Offices Account for Other Assets?
6.3.6 How are Obligations and Expenses Recorded?
6.3.7 How Do Bureaus/Offices Post Transfers of Gifts and Donations Between
Bureaus/Offices?
6.3.8 What Yearend Entries are Required?
6.4 Cost Recovery/User Charges
6.4.1 What are the Authoritative Sources?
6.4.2 What is the Department of Interior Guidance?
6.4.3 What is the General Policy?
6.4.4 What are the Exceptions to the General Policy?
6.4.5 What are the Methods for Calculating User Charges?
6.4.5.1 How are User Charges Determined?
6.4.5.2 How are Direct Costs Determined?
6.4.5.3 How are Indirect Costs Determined?
6.4.5.4 How is the Indirect Cost Pool Identified?
6.4.6 What are the Cost Accounting Processes?
6.4.7 How is the Policy in OMB Circular A-25 Implemented?
6.4.8 What are the Responsibilities for Implementing OMB Circular A-25?
6.4.9 How Are User Charge Collections Handled?
6.4.10 What Reviews and Reports Are Required?
6.4.11 What are the Policies and Procedures for Rights-of-Way Projects?
6.4.11.1 What is the Purpose and Scope?
6.4.11.2 What is the Authority for Rights-of-Way Projects?
6.4.11.3 What is the Department of Interior Guidance?
6.4.11.4 What are the Exclusions?
6.4.11.5 What are the Definitions and Responsibilities?
CHAPTER 7. ACCRUAL ACCOUNTING
7.1 What is the Purpose of this Chapter?
7.2 What are the Authoritative Sources?
7.3 What is the Department of Interior Guidance?
7.4 Who is Responsible for Accrual Accounting?
7.5 What is the Definition of Accruals (Estimates)?
7.6 What are the Criteria for Developing Estimates?
7.7 What are the Categories for Which Estimates May Be Developed?
7.8 What are Some General Assumptions for Accounts Payable Accruals?
CHAPTER 8. MANAGERIAL COST ACCOUNTING
8.1 What is the Purpose of this Chapter?
8.2 What are the Authoritative Sources?
8.3 What are the Purposes for Using Cost Information?
8.4 What are the Managerial Cost Accounting Concepts?
8.5 What are the Managerial Cost Accounting Standards?
8.6 What Costing Method Does the Department of Interior Use?
CHAPTER 9. FISCAL OPERATIONS
9.0 What is the Purpose of this Chapter?
9.1 Payroll, Benefits, and Allowances
9.1.1 What is the Accounting Function’s Responsibility for Payroll, Benefits, and
Allowances?
9.1.2 What are the Authoritative Sources?
9.1.3 What are the Objectives of the Department of Interior’s Time, Attendance, and
Leave Reporting?
9.1.4 What are the Principles and Standards for Time and Attendance Reports?
9.1.5 What are the Requirements for the Time and Attendance Function?
9.1.6 What are the Standards for Time and Attendance Records?
9.1.7 What is the Official Payroll/Personnel System for the Department of Interior?
9.1.8 How are Collections of Erroneous Payments Made From Employees?
9.1.9 How are Waivers for Erroneous Payments Processed?
9.2 Uniform Allowances
9.2.1 What is the Purpose of the Uniform Allowances Section?
9.2.2 What are the Authoritative Sources?
9.2.3 What is the Department of Interior Guidance?
9.2.4 What are the Departmental Responsibilities for Uniforms?
9.2.5 How are Uniform Allowances Determined?
9.2.6 How are Payments for Uniforms Made?
9.3 Undelivered Orders
9.3.1 What are Undelivered Orders?
9.3.2 Who is Responsible for Implementing Procedures for Undelivered Orders?
9.3.3 Why is it Necessary to Review Undelivered Orders?
9.3.4 What are the Minimum Review Requirements?
9.4 Records Management
9.4.1 What is the Purpose of this Section on Records Management?
9.4.2 What are the Authoritative Sources?
9.4.3 Who is Responsible for Records Management?
9.4.4 What are the Requirements for Records Management?
9.4.5 What is a Records Schedule?
9.4.6 How are Exceptions to the General Records Schedule Obtained?
9.4.7 How are Accountable Officers’ Accounts Identified?
9.4.8 When are Accountable Officers’ Accounts Transferred to the Federal
Records Centers?
9.4.9 What is the Procedure for Disposal of Certain Records Subject to GAO Audit?
9.4.10 What are the Special Requirements Relating to Disposal of Bureau/Office
Records?
9.4.11 How is GAO Approval to Dispose of Records Requested?
Appendices
• Appendix A, Acronym Glossary, explains the acronyms used in the Handbook.
• Appendix B, Glossary, contains a lexicon of financial terms used in the
Handbook.
DEPARTMENT OF THE INTERIOR
ACCOUNTING HANDBOOK
CHAPTER 1. OVERVIEW
1.1 What is the Purpose and Scope of the Accounting Handbook?
The purpose of the Accounting Handbook, hereafter referred to as the Handbook, is to
document principles and guidance to be followed by all Bureaus/Offices of the U.S.
Department of the Interior (DOI). All DOI Bureaus/Offices are required to comply with
the standards contained herein. Each Bureau/Office, however, may define supplementary
directives and standards to satisfy their unique needs, as long as they are consistent with
the DOI-wide standards.
The scope of material included in the Handbook is defined by the roles and
responsibilities of the Office of Financial Management (PFM) as opposed to those of
other DOI offices such as the Office of Budget and the Office of the Inspector General
(OIG), and by the historical division in DOI of accounting functions from other
supporting functions such as payroll and contracting. Other offices and functions have
guidance or procedure manuals covering their responsibilities. This Handbook includes
guidance related to PFM responsibilities, and includes summaries and references to other
offices' policies as needed to describe the interactions of PFM activities with other DOI
activities.
1.2 What Other Documentation Does This Handbook Reference?
The references in the DOI Electronic Library of Interior Policies (ELIPS) are linked to
this Handbook as follows:
• Series: Budget, Part 328, Administrative Control of Funds – describes DOI
requirements for controlling funds.
• Series: Financial Management, Part 330: General, Chapter 2, Principal
Authoritative Sources for Financial Policies and Accounting Standards – lists the
principal authoritative sources for financial policies and accounting standards.
• Series: Financial Management, Part 330: General, Chapter 3, DOI Financial
Management/Accounting Organization – lists the DOI financial management and
accounting organization roles and responsibilities.
• Series: Financial Management, Part 340: Management Accountability and
Control – lists general policy, responsibilities, standards, guidelines, and reporting for
management accountability and control.
• Series: Financial Management, Part 341: Financial Management Systems – lists
policies and responsibilities for DOI financial management systems.
• DOI Handbooks: DOI financial policies and procedures are also contained in
handbooks that can be accessed at www.doi.gov/pfm/policy.html.
• Federal Generally Accepted Accounting Principles (GAAP) Hierarchy at
http://www.fasab.gov/accepted.html governs what constitutes GAAP for U.S.
Government reporting entities.
1.3 Who Will Modify and Interpret the Handbook? PFM is responsible for
establishing and implementing a policy development and maintenance process as defined
in 330 DM 1. Modification and interpretation of this Handbook will follow the same
process.
Submit requests for waivers or exemptions to the provisions of this Handbook in writing
to the Director of PFM. Each request shall identify the specific requirement(s), state fully
the reason(s) for the request, identify the period covered by the waiver or exemption, and
include supporting documentation. The Director, PFM will promptly issue a response to
each request for waiver or exemption.
1.4 What is the Effective Date of this Handbook? This Handbook is effective upon
issuance.
1.5 Where Can I Direct Questions and Comments? Bureaus/Offices may direct
questions or comments about this Handbook to PFM at 202-208-4701. Address written
requests for interpretations of policies and standards to: Office of Financial
Management, MS 5412 MIB, 1849 C Street NW, Washington, D.C. 20240
DEPARTMENT OF THE INTERIOR
ACCOUNTING HANDBOOK
CHAPTER 2. ASSETS
2.1 What is the Purpose of this Chapter?
This chapter establishes accounting standards to measure and recognize assets in general
purpose financial reports, which are issued for users both internal and external to the
Department of Interior (DOI). Assets are tangible or intangible items owned by the
federal government that have probable economic benefits that can be obtained or
controlled by a federal government entity.
2.2 What are the Authoritative Sources?
The policies and procedures contained in this chapter are issued pursuant to:
• Federal Accounting Standards Advisory Board (FASAB) Statements of Federal
Financial Accounting Standards (SFFAS) SFFAS No. 1, Accounting for Selected
Assets and Liabilities, http://www.fasab.gov/pdffiles/sffas-1.pdf
• SFFAS No. 2, Accounting for Direct Loans and Loan Guarantees
http://www.fasab.gov/pdffiles/sffas-2.pdf
• SFFAS No. 3, Accounting for Inventory and Related Property at:
http://www.fasab.gov/pdffiles/sffas-3.pdf
• SFFAS No. 6, Accounting for Property, Plant, and Equipment, SFFAS No. 10,
Accounting for Internal Use Software, SFFAS No. 11, Amendments to
Accounting for PP&E: Definitions and SFFAS No. 16, Amendments to
Accounting for PP&E: Multi-use Heritage Assets at
http://www.fasab.gov/standards.html
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources at
http://fasab.gov/pdffiles/sffas-7.pdf
• SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and
Loan Guarantees http://www.fasab.gov/pdffiles/sffas18.pdf
• SFFAS No. 19, Technical Amendments to Accounting Standards for Direct
Loans and Loan Guarantees http://www.fasab.gov/pdffiles/sffas-19.pdf
• FASAB Interpretation #1: Reporting on Indian Trust Funds in General Purpose
Financial Reports of the Department of Interior and in the Consolidated
Financial Statements of the United States Government: An Interpretation of
SFFAS No.7 http://fasab.gov/interprt.html
• FASAB Interpretation # 5: Recognition by recipient Entities of Receivable
Nonexchange Revenue: An Interpretation of SFFAS 7
http://fasab.gov/interprt.html.
• Accounting and Auditing Policy Committee (AAPC) Federal Financial
Accounting and Auditing Technical Release No. 2: Determining Probable and
Reasonably Estimable for Environmental Liabilities in the Federal Government
http://www.fasab.gov/aapc/technicl.html
• AAPC Federal Financial Accounting and Auditing Technical Release No. 3:
Federal Accounting Standards Advisory Board Auditing Estimates for Direct
Loan and Loan Guarantee Subsidies under the Federal Credit Reform Act
Amendments to Technical Release 3: Preparing and Auditing Direct Loan and
Loan Guarantee Subsidies under the Federal Credit Reform Act
http://www.fasab.gov/aapc/technicl.html
• AAPC Federal Financial Accounting and Auditing Technical Release No. 4:
Reporting on Non-Valued Seized and Forfeited Property
http://www.fasab.gov/aapc/technicl.html
• AAPC Federal Financial Accounting and Auditing Technical Release No. 6:
Federal Accounting Standards Advisory Board Preparing Estimates for Direct
Loan and Loan Guarantee Subsidies under the Federal Credit Reform Act
Amendments to Technical Release 3: Preparing and Auditing Direct Loan and
Loan Guarantee Subsidies under the Federal Credit Reform Act
http://www.fasab.gov/aapc/technicl.html
• AAPC Federal Financial Accounting and Auditing Technical Release No.10:
Accounting for Internal Use Software http://www.fasab.gov/aapc/technicl.html.
• GAO Policy and Procedures Manual for Guidance of Federal Agencies, Title 2,
Appendix 1 – Most of the standards contained in this appendix have been superseded
by standards issued by FASAB. Standards not yet superseded are listed in the GAO
publication Accounting Principles, Standards, and Requirements - Title 2 Standards
not Superseded by FASAB Issuances, GAO-02-248G, November 2001 at
http://www.gao.gov.
• OMB Bulletin No. 01-09, "Form and Content of Agency Financial Statements;"
http://www.whitehouse.gov/omb/bulletins/b01-09.html
2.3 What are Assets and How are they Recognized?
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 1, Accounting for Selected Assets and Liabilities, Paragraphs 18-26,
define intra-governmental and governmental assets, and entity and non-entity assets at
http://www.fasab.gov/pdffiles/sffas-1.pdf.
B. Federal Agency Guidance
• Treasury Financial Manual Vol. 1 http://www.fms.treas.gov/tfm/vol1/index.html
• GAO Policy and Procedures Manual for Guidance of Federal Agencies, Title 7,
http://www.gao.gov.
C. DOI Guidance
• Specific balance sheet line items and disclosures requiring special attention are
included in the Financial Statement Preparation Guidance, Chapter 2 Balance Sheet,
A-Assets at www.doi.gov/pfm/finstate.html.
2.4 What are the Requirements for the Ledgers?
Bureaus/Offices must maintain sufficiently detailed general ledger and subsidiary ledger
accounts to provide the categories of assets needed for reports. Bureaus/Offices must
review asset accounts and verify them as prescribed in the schedule of reconciliations
located in the DOI Accounting Handbook, Chapter 6.1.2, General Ledger Accounting.
2.5 What are the Specific Standards for Assets?
2.5.1 Cash
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 1, Accounting for Selected Assets and Liabilities, Paragraphs 27-
30, http://www.fasab.gov/pdffiles/sffas-1.pdf designate cash as an asset, include
the items that make up cash and define entity, non-entity, and restricted cash.
B. Federal Agency Guidance
• Treasury Financial Manual Vol. 1, inclusive, with specific references to Parts 2,
4, 5, and 6 http://www.fms.treas.gov/tfm/vol1/index.html
• CashLinkII http://www.fms.treas.gov/cashlink/index.html
• GAO Policy and Procedures Manual for Guidance of Federal Agencies, Title
7, inclusive, with specific reference to Chapters 2, 5, and 6 http://www.gao.gov.
• GAO Policy and Procedures Manual for Guidance of Federal Agencies, GAO
publication Accounting Principles, Standards, and Requirements - Title 2
Standards not Superseded by FASAB Issuances, GAO-02-248G, November
2001, E-30 Foreign Currency, at http://www.gao.gov.
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
• Cash Management Handbook www.doi.gov/pfm/policy.html.
2.5.2 Fund Balance with Treasury
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 1, Accounting for Selected Assets and Liabilities, Paragraphs 31-
39, http://www.fasab.gov/pdffiles/sffas-1.pdf define fund balance with Treasury;
describe what the fund balance includes and does not include, how it is increased
and decreased; define authority to borrow, obligated balance not yet disbursed and
the unobligated balance; and discuss the explanation of differences between the
fund balance with Treasury and an agency’s general ledger balances.
B. Federal Agency Guidance
• Treasury Financial Manual Vol. 1, inclusive, with specific references to Parts
2, 4, 5, and 6 http://www.fms.treas.gov/tfm/vol1/index.html
• Fund Balance with Treasury Reconciliation Procedures, a Supplement to 1
TFM 2-5100 http://www.fms.treas.gov/tfm/vol1/supplements/background.html
• CashLinkII http://www.fms.treas.gov/cashlink/index.html
• GAO Policy and Procedures Manual for Guidance of Federal Agencies, Title
7, inclusive, with specific reference to Chapters 2, 3, 5 and 6 http://www.gao.gov.
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
2.5.3 Accounts Receivable and Losses on Accounts Receivable (See Section 2.5.9
of this Handbook for a discussion on Loans Receivable.)
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 1, Accounting for Selected Assets and Liabilities, Paragraph 40
states that an accounts receivable arises from claims to cash or other receivables.
Paragraphs 41-52, discuss recognition of receivables, separate reporting, entity
versus non-entity receivables, and recognition of losses due to uncollectible
amounts http://www.fasab.gov/pdffiles/sffas-1.pdf
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources at
http://fasab.gov/pdffiles/sffas-7.pdf
B. Federal Agency Guidance
• Treasury’s “Instructional Workbook for Preparing the “Report on
Receivables Due From the Public” Section A at
http://www.fms.treas.gov/debt/dmrecv.doc.
• OMB Circular A-129, Policies for Federal Credit Programs and Non-Tax
Receivables, Appendix A - IV, Managing the Federal Government’s
Receivables http://www.whitehouse.gov/omb/circulars/a129/a129rev.html.
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
• Department of the Interior Financial Administration Memorandum No. 2001-014,
September 27, 2001 www.doi.gov/pfm/policy.html.
• Cash Management Handbook www.doi.gov/pfm/policy.html.
• Credit and Debt Management Handbook www.doi.gov/pfm/policy.html.
Record the receivable in the appropriation or fund that will be credited when
collections are accomplished, unless otherwise provided by law or Departmental
policy. Internal control begins prior to the transaction that gives rise to the receivable.
Bureaus/Offices should control the events and conditions surrounding the delivery of
goods, services, etc., that generate receivables so that there is a reasonable assurance
that the receivable will be collected in full. After the receivable has been created, the
responsibility shifts to the control exercised over the conditions that may affect its
collection value. Thus, methods of control require administrative procedures that
provide adequate control over the receivables from the initial transaction to
collection. After establishing the controls, measure the effectiveness of the controls
by periodic examination rather than relying on a low loss ratio as a measure of such
effectiveness. Document the controls in Bureau/Office supplements.
2.5.3.1 What is a Method for Estimating the Allowance for Doubtful Accounts
and Loans Receivable?
Bureaus/Offices must establish and maintain reserves for losses on accounts and
loans receivable. Since it is a normal part of doing business that not all receivables are
actually collected, establish an allowance for doubtful accounts to reduce the gross
amount of receivables to its estimated net realizable value. Accounts receivable and
associated interest, penalties, fines, and administrative receivables are recorded in the
following asset standard general ledger (SGL) accounts:
131A – Accounts Receivable, Off-Budget, Billed
131C – Accounts Receivable, On-Budget, Billed
131G – Accounts Receivable, Off-Budget, Billed – Refund Receivable
131H – Accounts Receivable, Off Budget, Billed – Refund Receivable –
Capitalized Assets
131J – Accounts Receivable, Off Budget, Billed – Advance/Deferred
Revenue/Suspense
134A – Interest Receivable- Billed
136A – Penalties, Fines, and Administrative Fees Receivable- Billed
Make regular estimates, at least quarterly, for receivables that are not collectible.
The allowance for doubtful accounts should take into consideration not only the
principal amount of potentially uncollectible accounts receivable but also the amount
of any related interest, penalties, fines, and administrative fees. The allowance for
doubtful accounts is recorded as a credit in the contra- SGL accounts with a debit to
SGL 6720 - Bad Debt Expense. For non-exchange revenue, debit the contra-revenue
account. The contra-SGL accounts are:
1319 - Allowance for Loss on Accounts Receivable vs. SGL 131A & 131C
1349 - Allowance for Loss on Interest Receivable vs. SGL 134A
1369 - Allowance for Loss Penalties, Fines, and Administrative Fees
Receivable vs. SGL 136A
2.5.3.2 What are the Bureau/Office Responsibilities?
• Review the accounts receivable overdue status codes and dates that have been
assigned to delinquent account receivable debt to verify their accuracy.
• Report by no later than the 15
th
day of the last month of each quarter, any loan
balances that are potentially uncollectible. Base this report on an analysis of both
current and long-term loan balances. For each loan which is deemed potentially
uncollectible, provide the following information:
Name of loan
Fund
Program
Cost authority
Unbilled amount (with separate columns for principal and interest)
Billed amount not yet paid (with separate columns for principal, interest,
penalties, and administrative fees)
Factors which might indicate that the collection is uncertain, including
individual risk factors associated with groups or categories of similar loans
• Review overdue status codes to determine which should be excluded from the
allowance for doubtful accounts.
• Analyze specific debts which are less than 180 days delinquent and which are
associated with debtors who have one or more other outstanding debts that are
more than 180 days delinquent to determine if all delinquent debts associated with
the debtor should be included in the allowance.
• Summarize the totals by Bureau/Office and fund to establish the current estimate
for the allowance for doubtful accounts.
• Prepare and enter the document(s) into the accounting system to adjust the
allowance for doubtful accounts SGLs by Bureau/Office and fund to equal the
current estimate.
• Perform a Bureau-wide analysis of the estimate of the allowance for doubtful
accounts for adequacy.
2.5.3.3 What is the Criteria for Accounts Receivable Collectibility?
• FASAB requires that losses on receivables be recognized when it is more likely
than not that the receivables will not be totally collected. The phrase “more likely
than not” means more than a 50 percent chance of loss occurrence.
• Use age of receivables as the primary criterion in estimating the allowance for
accounts receivable that will not be collected. Except as adjusted below, the
estimate for the allowance for doubtful accounts will be all debts more than 180
days delinquent. Adjust this amount as follows:
The allowance will be increased for the total amount of debt that is less than
180 days delinquent that is bankrupt.
The allowance may be increased for debt less than 180 days delinquent if it is
owed by a debtor who has other debt which is over 180 days delinquent.
Analyze the debtor’s history and related factors to determine if it is
appropriate to include the debt less than 180 days delinquent in the allowance.
The allowance may be decreased for debt more than 180 days delinquent if
the debt is in a certain status. For example, a debt being collected through
installment payments will be excluded from the allowance estimate even
though the debt is more than 180 days delinquent.
2.5.3.4 Loans Receivable (See Section 2.5.3.1 of this Handbook for allowance for
doubtful accounts for loans receivable; Section 2.5.3.2 for a discussion of
Bureau/Office responsibilities; and Section 2.5.3.4.2 for the criteria for
collectibility.)
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 2, Accounting for Direct Loans and Loan Guarantees, concerns
the recognition and measurement of direct loans, the liability associated with
loan guarantees, and the cost of direct loans and loan guarantees
http://www.fasab.gov/pdffiles/sffas-2.pdf. SFFAS No. 2 states that generally,
direct loans obligated and outstanding prior to October 1, 1991, are recorded as
loans receivable at their outstanding principal balance reduced by an allowance
for estimated uncollectible amounts. Direct loans and loan guarantees
committed after September 30, 1991, are estimated at the net present value of
their estimated net cash inflows.
Paragraph 22 and 23 discuss the recognition of post 1991 direct loans and
loan guarantees
Paragraphs 24-29 discuss the subsidy costs of post 1991direct loans and
loan guaranteed
Paragraphs 30-32 discuss subsidy amortization and reestimation
Paragraphs 33-36 discuss criteria for default cost estimates
Paragraphs 37-38 discuss revenues and expenses
Paragraphs 39-40 discuss pre-1992 direct loans and loan guarantees
Paragraphs 41-56 discuss modification of direct loans and loan guarantees
Paragraphs 57-60 discuss foreclosure of post-1991 direct loans and loan
guarantees
Paragraph 61 discusses the write-off of direct loans
• SFFAS No. 18, Amendments to Accounting Standards for Direct Loans
and Loan Guarantees amends SFFAS No. 2 to improve financial reporting for
subsidy costs and performance of Federal credit programs at
http://www.fasab.gov/pdffiles/sffas18.pdf.
• SFFAS No. 19, Technical Amendments to Accounting Standards for Direct
Loans and Loan Guarantees presents technical amendments to portions of
SFFAS No. 2 http://www.fasab.gov/pdffiles/sffas-19.pdf .
• AAPC Federal Financial Accounting and Auditing Technical Release No.
3: Federal Accounting Standards Advisory Board Auditing Estimates for
Direct Loan and Loan Guarantee Subsidies under the Federal Credit
Reform Act Amendments to Technical Release 3: Preparing and Auditing
Direct Loan and Loan Guarantee Subsidies under the Federal Credit
Reform Act removes preparation guidance to only include audit guidance and
reflects new guidance and terminology in the area of credit reform
http://www.fasab.gov/aapc/tr3-revised.pdf.
• AAPC No. 6: Federal Accounting Standards Advisory Board Preparing
Estimates for Direct Loan and Loan Guarantee Subsidies under the
Federal Credit Reform Act Amendments to Technical Release 3: Preparing
and Auditing Direct Loan and Loan Guarantee Subsidies under the
Federal Credit Reform Act amends the implementation guidance to prepare
and report credit subsidy estimates provided in Technical Release 3
http://www.fasab.gov/aapc/aapctr6.pdf.
B. Federal Agency Guidance
• Treasury’s Instructional Workbook for preparing the “Report on
Receivables Due From the Public” states under the “Authority” section,
“Generally, direct loans obligated and outstanding prior to October 1, 1991, are
recorded as loans receivable at their outstanding principal balance reduced by an
allowance for estimated uncollectible amounts. Direct loans and loan guarantees
committed after September 30, 1991, are accounted for in accordance with the
Statement of Federal Financial Accounting Standards No. 2, Accounting for
Direct Loans and Loan Guarantees, at the net present value of their estimated
net cash inflows.” See http://www.fms.treas.gov/debt/dmrecv.doc
• Treasury Financial Manual Vol. I, Part 2, Chapter 4600
http://www.fms.treas.gov/tfm/vol1/index.html
• Accounting Principles, Standards, and Requirements - Title 2 Standards
not Superseded by FASAB Issuances, Standard 110, Imputed Interest,
requires that agencies constructing property, plant, or equipment for sale outside
the government must consider imputed interest http://www.gao.gov.
• OMB Circular A-129, Managing Federal Credit Programs
http://www.omb.gov/circulars/a129/a129rev.html
• Principles of Federal Appropriation Law, Second Edition, Vol. 1, Chapter
11 Federal Assistance: Guaranteed and Insured Loans http://www.gao.gov
(legal products).
C. DOI Guidance
• Financial Statement Preparation Guidance, at
www.doi.gov/pfm/finstate.html
• Cash Management Handbook www.doi.gov/pfm/policy.html.
• Credit and Debt Management Handbook www.doi.gov/pfm/policy.html.
2.5.3.4.1 How are Loans Receivable Recorded?
• Current loans receivable are recorded in SGL 135A- Loans Receivable, Billed.
Potentially uncollectible balances should be recorded in SGL 1359 - Allowance
for Loss on Loans Receivable. If it is determined that the current portion of the
loan is probably uncollectible, it follows that the long-term portion of the loan
in SGL 135B - Loans Receivable - Unbilled may also be uncollectible. If this
is the case, SGL 1359 should also include the long-term portion of the loan.
• SGL 134L - Interest Receivable - Loans and SGL 136L - Penalties, Fines, and
Administrative Fees Receivable on Loans use the same contra-asset SGLs as are
used for accounts receivable. SGL 1349 - Allowance for Loss on Interest
Receivable and SGL 1369 - Allowance for Loss on Penalties, Fines, and
Administrative Fees Receivable are credited to off-set the asset SGLs,
respectively, with a debit to SGL 6720 - Bad Debt Expense. Debt the contra-
revenue account for non-exchange revenue. SFFAS No. 2, Accounting for
Direct Loans and Loan Guarantees, Paragraph 39 discusses the allowance for
uncollectible amounts for direct loans and loan guarantees.
http://www.fasab.gov/pdffiles/sffas-2.pdf.
• Loans governed by the Credit Reform Act of 1990 should not be considered or
included in the analysis to establish an allowance for doubtful loans receivable.
The allowance for Credit Reform Loans is already taken into account in the
subsidy analysis for such loans.
2.5.3.4.2 What is the Criteria for Collectibility of Loans Receivable?
Factors that might indicate that collectiblity is uncertain include the following:
• Loan performance experience
Loan being delinquent either presently or intermittently in the past.
Payer/debtor having another loan that is delinquent or has been written off.
This type/group of loan having a greater than normal number of defaults.
• Current and forecasted international, national, or regional economic conditions
that may affect the performance of the loans.
• Drought conditions or other regional economic conditions exist which indicate
potential deferral or non-payment.
• Financial and other relevant characteristics of borrowers
Loans are being reviewed for “Ability to Pay”.
Loans have been granted “Ability to Pay” relief.
Payers/debtors are in known financial difficulty.
Payments were renegotiated, or renegotiation has been proposed.
Billed portions of a loan are delinquent or have been written off.
Non-loan bills for the same debtor are delinquent or have been written off.
The debtor is in bankruptcy.
• Newly developed events that would affect the loan’s performance. An
allowance will be booked at the Bureau/Office, fund, and project level for each
loan where any factor would indicate that there is doubt about its collectibility at
the present time.
2.5.4 Interest Receivable
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 1, Accounting for Selected Assets and Liabilities, Paragraphs 53-
56 discuss when interest receivable is recognized and not recognized
http://www.fasab.gov/pdffiles/sffas-1.pdf
B. Federal Agency Guidance
• Treasury Financial Manual Vol. I, Part 2, Chapter 3400, and 4300
http://www.fms.treas.gov/tfm/vol1/index.html
• Treasury’s “Instructional Workbook for Preparing the “Report on
Receivables Due From the Public” Section A at
http://www.fms.treas.gov/debt/dmrecv.doc.
• 31 CFR Subtitle B, Chapter IX, Parts 900-904
http://www.gpoaccess.gov/cfr/index.html
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
• Cash Management Handbook www.doi.gov/pfm/policy.html.
• Credit and Debt Management Handbook www.doi.gov/pfm/policy.html.
2.5.5 Advances and Prepayments
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 1, Accounting for Selected Assets and Liabilities, Paragraphs 57-
61, http://www.fasab.gov/pdffiles/sffas-1.pdf define advances and prepayments,
how to record.
B. Federal Agency Guidance
• Treasury Financial Manual Vol. I, Part 6, Chapter 2000
http://www.fms.treas.gov/tfm/vol1/index.html
• GAO publication Accounting Principles, Standards, and Requirements -
Title 2 Standards not Superseded by FASAB Issuances, GAO-02-248G,
November 2001, Standard G10 for advances to grant recipients at
http://www.gao.gov
• Accounting Principles, Standards, and Requirements - Title 2 Standards not
Superseded by FASAB Issuances, Standard L-40, Long Term Contracts,
discusses advances under long-term contracts http://www.gao.gov.
• The Economy Act of 1932 (31 U.S.C. Subtitle II, Chapter 15, Subchapter III,
Sec. 1535) http://www.gpoaccess.gov/uscode/browse.html prescribes the rules for
the purchase of supplies, equipment, or service by one Federal Government
bureau or department from another Federal Government bureau or department.
• OMB Circular A-102, Grants and Cooperative Agreements with State and
Local Governments http://www.whitehouse.gov/omb/circulars/index.html
• OMB Memorandum M-03-10, “Business Rules for Intergovernmental
Transactions,” at http://www.whitehouse.gov/omb/memoranda/m03-01.html
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
• Department of Interior Interagency Acquisitions Handbook
www.doi.gov/pfm/policy.html.
• Cash Management Handbook www.doi.gov/pfm/policy.html.
2.5.6 Inventory
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 3, Accounting for Inventory and Related Property, provides
accounting standards for inventory, operating materials and supplies, stockpile
materials, seized and forfeited property, foreclosed property, and goods held
under price support and stabilization programs,
http://www.fasab.gov/pdffiles/sffas-3.pdf
• Accounting and Auditing Policy Committee (AAPC) Federal Financial
Accounting and Auditing Technical Release No. 4: Reporting on Non-Valued
Seized and Forfeited Property clarifies the required reporting of non-valued
seized and forfeited property http://www.fasab.gov/aapc/ffactr4.pdf
B. Federal Agency Guidance
• JFMIP Inventory, Supplies, and Materials System Requirements
http://www.jfmip.gov/jfmip.
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
2.5.7 Property, Plant, and Equipment (PP&E)
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 6, Accounting for Property, Plant, and Equipment at
http://www.fasab.gov/pdffiles/sffas-6.pdf
Paragraphs 17-20 provide the definition of property, plant, and equipment
Paragraphs 21-76 provide recognition and measurement principles;
implementation guidance; and disclosure requirements for general PP&E,
federal mission PP&E, heritage assets, and stewardship land
Paragraphs 77-84 define deferred maintenance, and give the standard for
recognition, and disclosure requirements
Paragraphs 85-111 define cleanup costs, recognition and measurement
estimation methods, implementation guidance, and disclosure requirements.
• SFFAS No. 10, Accounting for Internal Use Software, provides recommended
accounting standards for the cost of commercial off-the-shelf software and
software developed by contractors or internally
http://www.fasab.gov/pdffiles/fasab10.pdf.
• SFFAS No. 11, Amendments to Accounting for PP&E: Definitions, amends
definitions contained in SFFAS 6 and 8 for Federal mission property, plant, and
equipment; and the classification of space exploration equipment as general
PP&E in these two statements http://www.fasab.gov/pdffiles/sffas6&8.pdf
• SFFAS No. 14, Amendments to Deferred Maintenance Reporting, changes
the status of deferred maintenance to be included as required supplemental
information http://www.fasab.gov/pdffiles/sras14.pdf
• SFFAS No. 16, Amendments to Accounting for PP&E: Multi-use Heritage
Assets, amends accounting and reporting standards for heritage assets that have a
heritage characteristic and are used in general government operations
http://www.fasab.gov/pdffiles/sras16.pdf
• Accounting and Auditing Policy Committee (AAPC) AAPC Federal
Financial Accounting and Auditing Technical Release No. 2: Determining
Probable and Reasonably Estimable for Environmental Liabilities in the
Federal Government assists federal agencies in determining probable and
reasonably estimatible liabilities related to the environmental cleanup
responsibilities http://www.fasab.gov/aapc/aapctr2.pdf.
• Federal Financial Accounting and Auditing Technical Release No. 4:
Reporting on Non-Valued Seized and Forfeited Property clarifies the required
reporting of non-valued seized and forfeited property
http://www.fasab.gov/aapc/ffactr4.pdf
• Federal Financial Accounting and Auditing Technical Release No. 5:
Implementation Guidance on Statement of Federal Financial Standards 10:
Accounting for Internal Use Software http://www.fasab.gov/aapc/tr5.pdf.
B. Federal Agency Guidance
• Accounting Principles, Standards, and Requirements - Title 2 Standards not
Superseded by FASAB Issuances, Standard L-40, Long Term Contracts,
discusses how to compute the liability for property, plant, and equipment
constructed under long-term contracts. It also states that the appropriate property,
plant, and equipment accounts (including construction in progress) shall be
adjusted based on liabilities recorded http://www.gao.gov.
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html,
Chapter 2 Balance Sheet, A. Assets.
• Real Property Financial Management Policy Guide discusses the DOI
requirements for real property http://www.doi.gov/pfm/real_property_guide.pdf.
• DOI Financial Statement Guidance Memorandum No. 2001-001, Standard
for Capitalizing the Cost of Internal Software www.doi.gov/pfm/finstate.html.
DOI will capitalize internal use software following the requirements of SFFAS
Number 10 effective October 1, 2000. Costs incurred prior to October 1, 2000,
whether capitalized or not, should not be adjusted to the amounts that would have
been capitalized, had this statement been in effect when those costs were incurred.
2.5.8 Investments in Treasury Securities
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 1, Accounting for Selected Assets and Liabilities, Paragraphs 62-
73, http://www.fasab.gov/pdffiles/sffas-1.pdf discuss investments by Federal
entities in Treasury securities including:
non-marketable par value Treasury
market-based Treasury securities expected to be held to maturity
marketable Treasury securities expected to be held to maturity
This standard also discusses accounting and reporting for federal and non-federal
securities, valuation subsequent to acquisition, disclosure of market value, and
investment reclassification.
B. Federal Agency Guidance
• Treasury Financial Manual Vol. I, Part 2, Chapters 3400 and 4300
http://www.fms.treas.gov/tfm/vol1/index.html
• Treasury Operating Circular “Responsibilities Relating to Government
Investment Accounts and Investment in Government Account Series (GAS)
Treasury Securities” http://www.publicdebt.treas.gov/dfi/dfioctc.htm.
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
2.5.9 Stewardship PPE
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 6, Accounting for Property, Plant, and Equipment at
http://www.fasab.gov/pdffiles/sffas-6.pdf
Paragraphs 17-20 provide the definition of property, plant, and equipment
Paragraphs 21-76 provide recognition and measurement principles,
implementation guidance, and disclosure requirements for general PP&E,
federal mission PP&E, heritage assets, and stewardship land,
• SFFAS No.8, Supplementary Stewardship Reporting, establishes standards for
Federal government reporting over certain resources entrusted to it and certain
responsibilities assumed by it http://www.fasab.gov/pdffiles/sffas-8.pdf.
• SFFAS No. 11, Amendments to Accounting for PP&E: Definitions, amends
definitions contained in SFFAS 6 and 8 for Federal mission property, plant, and
equipment; and the classification of space exploration equipment as general
PP&E in these two statements http://www.fasab.gov/pdffiles/sffas6&8.pdf
• SFFAS No. 16, Amendments to Accounting for PP&E: Multi-use Heritage
Assets, amends accounting and reporting standards for heritage assets that have a
heritage characteristic and are used in general government operations
http://www.fasab.gov/pdffiles/sras16.pdf
• SFFAS No. 25, Reconciliation of Stewardship Responsibilities and
Eliminating the Current Services Assessment changes the classification of
information about stewardship responsibilities and eliminates the requirement to
present certain information about stewardship responsibilities knows as “Current
Services Assessment” required by SFFAS No. 8
http://www.fasab.gov/pdffiles/sffas-25.pdf.
• Objectives of Federal Financial Reporting Statement of Federal Financial
Accounting Concepts, Chapter 4, Paragraphs 134-145 discusses the stewardship
objective http://www.fasab.gov/pdffiles/sffac-1.pdf.
B. Federal Agency Guidance
• Treasury Financial Manual Vol. I, Part 2, Chapter 4700, Closing Package for
the Governmentwide Financial Report System
http://www.fms.treas.gov/tfm/vol1/index.html
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
defines stewardship PP&E and discusses the DOI requirements.
2.5.10 Intangible Assets - Assets that are used to produce or sell goods and services
but do not have a physical form. Examples of intangible assets include: patents,
copyrights, franchises, organization costs, etc.
A. Generally Accepted Accounting Principles (GAAP)
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
2.5.11 Other Assets - The total of those assets not included in any of the previous
classifications.
A. Generally Accepted Accounting Principles (GAAP)
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
2.6 What are the Standards for Transfers of Assets Within the Federal
Government?
Non-Monetary Exchange
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources, paragraphs
344-346 and paragraphs 356-360 at http://fasab.gov/pdffiles/sffas-7.pdf provide
standards for transfer of assets without reimbursement.
• FASAB Interpretations #1: Reporting on Indian Trust Funds in General
Purpose Financial Reports of the Department of Interior and in the
Consolidated Financial Statements of the United States Government: An
Interpretation of SFFAS No.7 states, “The assets, liabilities and operating
transactions of the Indian trust funds are not part of the Department of Interior and
should not be included in the balance sheet, statement of net cost, and statement of
changes in financial position of the Department or of the United States Government.
However, the Department does have a fiduciary responsibility for these funds and is
required to report on them in footnotes to the financial statements by SFFAC No. 7”
http://www.fasab.gov/interpretations/intprt1.htm.
• FASAB Interpretation # 5 Recognition by Recipient Entities of Receivable
Nonexchange Revenue: An Interpretation of SFFAS 7 states, “Entities that
receive nonexchange revenue collected on their behalf by another entity should
recognize the revenue based on the best available evidence at the time the financial
report is prepared”. http://fasab.gov/interprt.html.
B. Federal Agency Guidance
• United States Standard General Ledger at http://www.fms.treas.gov/ussgl/index.html
C. DOI Guidance
• Real Property Financial Management Policy Guide discusses the DOI
requirements for real property http://www.doi.gov/pfm/real_property_guide.pdf.
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
• DOI Posting Models at http://www.doi.gov/pfm/policy.
Monetary Exchange
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources, paragraphs
294-296, http://fasab.gov/pdffiles/sffas-7.pdf provide standards for the sale of assets.
B. Federal Agency Guidance
• Accounting Principles, Standards, and Requirements - Title 2 Standards not
Superseded by FASAB Issuances, Standard 110, Imputed Interest, requires that
agencies constructing property, plant, or equipment for sale outside the government
must consider imputed interest http://www.gao.gov.
C. DOI Guidance
.
• Real Property Financial Management Policy Guide discusses the DOI
requirements for real property http://www.doi.gov/pfm/real_property_guide.pdf
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
Business-like Activities
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. #6, Accounting for Property, Plant, and Equipment, paragraphs 24-
25, http://fasab.gov/pdffiles/sffas-6.pdf categorize business-like activities as general
PP&E.
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
• The provisions of Monetary Exchange above do not apply to sales or other
transactions that occur in the normal operations of a business-like activity (e.g.,
revolving fund). However, it does apply to transfers of property that are not part of
the normal operation of such business-like activities.
2.7 What are the Standards for Donated Assets?
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources, paragraphs
258-259, http://fasab.gov/pdffiles/sffas-7.pdf define and provide standards for
donated assets.
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
• Real Property Financial Management Policy Guide discusses the DOI
requirements for real property http://www.doi.gov/pfm/real_property_guide.pdf.
• An example for DOI: the Bureau of Reclamation (BOR) receives up-front funding
for construction projects from the Bonneville Power Administration in lieu of
receiving an allocation through the budget process. BOR uses SGL 5750-
Expenditure Financing Sources – Transfer-In.
2.8 What is the Procedure for Assets Held by Award Recipients?
A. Generally Accepted Accounting Principles (GAAP)
B. Federal Agency Guidance
• Accounting Principles, Standards, and Requirements - Title 2 Standards not
Superseded by FASAB Issuances, Standard G10, Grants and Cooperative
Agreements, states that the recipient must use the property in accordance with the
terms and conditions of the assistance agreement. G10 also states, “The award
recipients are generally required to return to the federal government … property or
facilities purchased or otherwise made available under the conditions of the awards
(or the appropriate federal share, relative to the disposition or sale of property
acquired with federal funds), unless legal title thereto is vested unconditionally in the
recipient by the terms of the award”.
G-10 states, “When title to assets acquired by award recipients vests in the
government, appropriate property records shall be established, and the capital assets
should be included in the financial statements of the federal agency that has the title.
Such assets shall be recorded at their cost to the award recipient, and the agency ’s
Invested Capital account shall be increased by a like amount. The agency shall follow
its normal depreciation policy”. http://www.gao.gov.
C. DOI Guidance
• Real Property Financial Management Policy Guide discusses the DOI
requirements for real property http://www.doi.gov/pfm/real_property_guide.pdf.
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
• DOI Accounting Handbook, Chapter 6.2.
DEPARTMENT OF THE INTERIOR
ACCOUNTING HANDBOOK
CHAPTER 3. LIABILITIES AND EQUITY OF THE U.S. GOVERNMENT
3.1 What is the Purpose of this Chapter?
This chapter identifies accounting standards to measure and recognize liabilities in
general purpose financial reports, which are issued for users both internal and external to
the Department of Interior (DOI). Liabilities include both liabilities covered by
budgetary resources and liabilities that are not covered by budgetary resources. This
chapter also identifies accounting standards for measuring and reporting equity of the
U.S. government. Equity includes cumulative results, capital stock, invested capital,
unexpended appropriations, and related accounts which represent ownership of the
government by its own agencies or third parties.
This chapter defines the points at which liabilities associated with different types of
events and transactions are recognized. Recognition means recording a dollar amount in
the general ledger and reporting that amount on the face of the financial statements.
3.2 What are the Authoritative Sources?
The policies and procedures in this chapter are issued pursuant to the following
guidelines:
• SFFAS No. 1, Accounting for Selected Assets and Liabilities,
http://www.fasab.gov/pdffiles/sffas-1.pdf
• SFFAS No. 2, Accounting for Direct Loans and Loan Guarantees,
http://www.fasab.gov/pdffiles/sffas-2.pdf
• SFFAS No. 5, Accounting for Liabilities of the Federal Government,
http://fasab.gov/pdffiles/sffas-5.pdf
• SFFAS No. 12, Recognition of Contingent Liabilities from Litigation,
http://fasab.gov/pdffiles/sffasno5.pdf
• SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and
Loan Guarantees, http://fasab.gov/pdffiles/sffas18.pdf
• SFFAS No. 19, Technical Amendments to Accounting Standards for Direct
Loans and Loan Guarantees, http://fasab.gov/pdffiles/sffas-19.pdf
• FASAB Interpretation of Federal Financial Accounting Standards
Interpretation (IFFAS) No. 2 “Accounting for Judgment Fund
Transactions” http://www.fasab.gov/interprt.html.
• FASAB’s IFFAS No. 3 “Measurement Date for Pension and Retirement Health
Care Liabilities.” http://www.fasab.gov/interprt.html
• FASAB’s IFFAS No. 4 “Accounting for Pension Payments in Excess of Pension
Expense.” http://www.fasab.gov/interprt.html
• Accounting and Auditing Policy Committee (AAPC) Federal Financial
Accounting and Auditing Technical Release No. 1: Audit Legal Representation
Letter Guidance http://www.fasab.gov/aapc/technicl.html.
• AAPC Federal Financial Accounting and Auditing Technical Release No. 2:
Determining Probable and Reasonably Estimable for Environmental Liabilities
in the Federal Government http://www.fasab.gov/aapc/technicl.html.
• (AAPC) Federal Financial Accounting and Auditing Technical Release No. 3:
Federal Accounting Standards Advisory Board Auditing Estimates for Direct
Loan and Loan Guarantee Subsidies under the Federal Credit Reform Act
Amendments to Technical Release 3: Preparing and Auditing Direct Loan and
Loan Guarantee Subsidies under the Federal Credit Reform Act Federal
Financial Accounting and Auditing Technical Release 3
http://www.fasab.gov/aapc/technicl.html.
• OMB Bulletin No. 01-09, "Form and Content of Agency Financial Statements;"
http://www.whitehouse.gov/omb/bulletins/b01-09.html
• GAO publication Accounting Principles, Standards, and Requirements - Title 2
Standards not Superseded by FASAB Issuances, http://www.gao.gov
3.3 What are Liabilities and How are they Recognized?
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 5, Accounting for Liabilities of the Federal Government
http://fasab.gov/pdffiles/sffas-5.pdf,
Paragraph 19 defines a liability
Paragraphs 20-32 define and give examples of events, transactions, exchange and
non-exchange transactions, government-related events and government-
acknowledged events
Paragraphs 33-34 discuss probable future outflow or other sacrifice of resources
and measurability.
• SFFAS No. 12, Recognition of Contingent Liabilities from Litigation, paragraphs
10-11 amend SFFAS No. 5. SFFAS No. 12 provides an exception to the contingent
liability standard for recognizing loss contingencies on matters of pending or
threatened litigation and unasserted claims http://fasab.gov/pdffiles/sffasno5.pdf.
• FASAB Interpretation # 2: Accounting for Treasury Judgment Fund
Transactions addresses (1) how Federal entities should report the costs and liabilities
arising from claims to be paid by the Treasury Judgment Fund and (2) how the
Judgment Fund should account for the amounts that it is required to pay on behalf of
Federal entities. http://www.fasab.gov/interpretations/intprt2.htm.
• FASAB Interpretation # 3: Measurement Date for Pension and Retirement
Health Care Liabilities http://www.fasab.gov/interpretations/intprt3.htm.
• Interpretation # 4: Accounting for Pension Payments in Excess of Pension
Expense gives further interpretation of SFFAS No.5
http://fasab.gov/interpretations/intprt4.htm.
• AAPC Federal Financial Accounting and Auditing Technical Release No. 2:
Determining Probable and Reasonably Estimable for Environmental Liabilities
in the Federal Government http://www.fasab.gov/aapc/technicl.html.
B. Federal Agency Guidance
• Accounting Principles, Standards, and Requirements - Title 2 Standards not
Superseded by FASAB Issuances, Standard C30 Compensated Absences
http://www.gao.gov.
• Principles of Federal Appropriation Law, Second Edition, Vol. 1, Chapters 4
and 5, Availability of Appropriations http://www.gao.gov (Legal Products).
• Principles of Federal Appropriation Law, Second Edition, Vol. 1, Chapter 6,
Availability of Appropriations http://www.gao.gov.
• Principles of Federal Appropriation Law, Second Edition, Vol. 1, Chapter 7,
Obligation of Appropriations http://www.gao.gov.
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
3.4 What are the Requirements for the Ledgers?
Bureaus/Offices must maintain sufficiently detailed general ledger and/or subsidiary
ledger accounts to provide the categories of liabilities needed for reports. Review, verify,
and document reviews of liability accounts and undelivered orders at least quarterly in
order to certify obligations at yearend. The liability includes amounts due from the
federal entity to pay for benefits, goods, or services provided under the terms of the
program, as of the federal entity’s reporting date, whether or not such amounts have been
reported to the federal entity. This means that unreported amounts must be estimated,
accrued, and reported on the financial statements and other general-purpose financial
reports, Chapter 7, Accrual Accounting, of this Handbook.
3.5 What are the Specific Accounting Standards?
3.5.1 Accounts Payable, Interest Payable, and Other Current Liabilities
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 1, Accounting for Selected Assets and Liabilities, paragraphs 74–
80, http://www.fasab.gov/pdffiles/sffas-1.pdf provide the accounting standards for
accounts payable, interest payable, and other current liabilities.
B. Federal Agency Guidance
• Principles of Federal Appropriation Law, Second Edition, Vol. 1, Chapters 4
and 5, Availability of Appropriations http://www.gao.gov (Legal Products).
• Principles of Federal Appropriation Law, Second Edition, Vol. 1, Chapter 6,
Availability of Appropriations http://www.gao.gov.
• Principles of Federal Appropriation Law, Second Edition, Vol. 1, Chapter 7,
Obligation of Appropriations http://www.gao.gov.
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html.
3.5.2 Capital Leases
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 5, Accounting for Liabilities of the Federal Government,
paragraphs 43-46, http://fasab.gov/pdffiles/sffas-5.pdf provide the standards for
capital leases.
• FASAB Interpretation # 2: Accounting for Treasury Judgment Fund
Transactions addresses (1) how Federal entities should report the costs and
liabilities arising from claims to be paid by the Treasury Judgment Fund and (2)
how the Judgment Fund should account for the amounts that it is required to pay
on behalf of Federal entities. http://www.fasab.gov/interpretations/intprt2.htm.
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
• Cash Management Handbook www.doi.gov/pfm/policy.html.
3.5.3 Federal Debt and Related Interest Cost
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 5, Accounting for Liabilities of the Federal Government,
paragraphs 47-55, http://fasab.gov/pdffiles/sffas-5.pdf provide the standards for
federal debt and related interest cost.
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
• Cash Management Handbook www.doi.gov/pfm/policy.html.
3.5.4 Pensions, Other Retirement Benefits, and Other Post-Employment Benefits
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 5, Accounting for Liabilities of the Federal Government,
paragraphs 56-96, http://fasab.gov/pdffiles/sffas-5.pdf provide the standards for
pensions, other retirement benefits, and other post-employment benefits. To help
employer entities compute their pension liability, the Office of Personnel
Management will provide relevant cost factors and methodologies to agencies
annually through the Department.
• FASAB Interpretation # 3: Measurement Date for Pension and Retirement
Health Care Liabilities http://www.fasab.gov/interpretations/intprt3.htm
• FASAB Interpretation # 4: Accounting for Pension Payments in Excess of
Pension Expense gives further interpretation of SFFAS No.5
http://fasab.gov/interpretations/intprt4.htm.
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
3.5.5 Insurance and Guarantees
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 5, Accounting for Liabilities of the Federal Government,
paragraphs 97-121, http://fasab.gov/pdffiles/sffas-5.pdf provide the standards for
the insurance and guarantee program.
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
• Credit and Debt Management Handbook www.doi.gov/pfm/policy.html.
3.5.6 Exchange and Nonexchange Transactions
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 5, Accounting for Liabilities of the Federal Government,
paragraphs 126-133, http://fasab.gov/pdffiles/sffas-5.pdf provide the standards for
exchange and nonexchange transactions.
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
3.5.7 Environmental Contingent Liability
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 5, Accounting for Liabilities of the Federal Government
http://fasab.gov/pdffiles/sffas-5.pdf
• SFFAS No. 6, Accounting for Property, Plant, and Equipment
http://fasab.gov/pdffiles/sffas-6.pdf
• SFFAS No.12, Recognition of Contingent Liabilities Arising from Litigation:
An Amendment of SFFAS No. 5, Accounting for Liabilities of the Federal
Government http://fasab.gov/pdffiles/sffasno5.pdf
• Accounting and Auditing Policy Committee (AAPC) Federal Financial
Accounting and Auditing Technical Release No. 2: Determining Probable
and Reasonably Estimable for Environmental Liabilities in the Federal
Government http://www.fasab.gov/aapc/technicl.html
B. Federal Agency Guidance
• OMB Bulletin No. 01-09, "Form and Content of Agency Financial
Statements;" http://www.whitehouse.gov/omb/bulletins/b01-09.html
C. DOI Guidance
• Draft Environmental Contingent Liability Handbook, at
www.doi.gov/pfm/ecl.htm.
3.6 How are Compensated Absences Accrued?
A. Generally Accepted Accounting Principles (GAAP)
• Accounting Principles, Standards, and Requirements - Title 2 Standards not
Superseded by FASAB Issuances, Standard C30 Compensated Absences,
http://www.gao.gov
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
3.7 What are Contingencies?
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 5, Accounting for Liabilities of the Federal Government, paragraphs
35-42, http://fasab.gov/pdffiles/sffas-5.pdf, define a contingency, a loss contingency,
criteria for recognition of a contingent liability, and criteria for disclosure of a
contingent liability.
• SFFAS No. 12, Recognition of Contingent Liabilities from Litigation, paragraphs
10-11 amend SFFAS No. 5. SFFAS No. 12 provides an exception to the contingent
liability standard for recognizing loss contingencies on matters of pending or
threatened litigation and unasserted claims http://fasab.gov/pdffiles/sffasno5.pdf.
• FASAB Interpretation # 2: Accounting for Treasury Judgment Fund
Transactions addresses (1) how Federal entities should report the costs and liabilities
arising from claims to be paid by the Treasury Judgment Fund and (2) how the
Judgment Fund should account for the amounts that it is required to pay on behalf of
Federal entities. http://www.fasab.gov/interpretations/intprt2.htm.
• AAPC Federal Financial Accounting and Auditing Technical Release No. 1:
Audit Legal Representation Letter Guidance
http://www.fasab.gov/aapc/technicl.html.
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
3.8 What is Equity of the U.S. Government?
The nature of proprietary accounting for a federal agency closely resembles that of a
private sector firm. As with the private sector firm, assets equal liabilities plus capital.
However, “capital” in federal accounting is called “Equity of the U.S. Government.”
Therefore:
ASSETS = LIABILITIES + EQUITY OF THE U.S. GOVERNMENT
Types of equity accounted for by DOI include unexpended financing sources,
investments, and net results of operations.
On the Balance Sheet, all equity accounts which make up the total DOI “Equity of the
U.S. Government are presented in the ‘Net Position’ sections ”. SFFAC 2 – Entity
and Display, paragraph 84 “Net Position”, http://www.fasab.gov/pdffiles/sffac-2.pdf
defines net position.
3.9 What Equity Accounts Does the Department of Interior Use?
The following equity accounts are used by DOI and are presented as subcomponents of
“Net Position” on the balance sheet. See also Financial Statement Preparation
Guidance, at www.doi.gov/pfm/finstate.html.
• Unexpended appropriations – “Unexpended Appropriations-Cumulative” (SGL
3100) represents equity from an appropriation authorized but for which goods and
services to be funded by the appropriation have not been ordered or received. This
account represents the amount of unexpended appropriations after fiscal yearend
closing. The normal balance is a credit. The balance in the account remains the
same during the fiscal year. Activity to increase or decrease unexpended
appropriations is reflected in other SGL accounts in the 3100 series. At yearend,
the nominal SGL accounts in the 3100 series are closed to this SGL account.
During the fiscal year, the net of debit and credit balances in the 3100 series
accounts reflects the total remaining balance of unused appropriations. The SGL
is only used for appropriations from the general fund and not from special or
available funds. See the Financial Statement Preparation Guidance, Chapter 7
at www.doi.gov/pfm/finstate.html
• Cumulative Results of Operations – “Cumulative Results of Operations” (SGL
3310) is the net difference since the inception of the activity between expenses and
losses and financing sources including appropriations, revenues, and gains. The
normal balance is a credit. This SGL amount should not change during the year, but
will change at yearend post closing. The U.S. Government Standard General Ledger
Accounts and Descriptions Supplement, Section II
http://fms.treas.gov/ussgl/tfm_releases/effective04/sec2.doc identifies the normal
balances for all SGL accounts.
expenses and losses – represent consumption of goods and services on an accrual
basis and losses from the disposal of assets. Activity in expenses and losses is
reflected in SGL accounts in the 6000 and 7200 series. Because expenses and
losses decrease equity, these accounts normally have debit balances.
appropriations, revenues, and gains – include appropriations used to fund agency
operations for which goods and services have been received; earnings from
provision of goods and services to other agencies on an accrual basis; and gains
from the disposal of assets.
DEPARTMENT OF THE INTERIOR
ACCOUNTING HANDBOOK
CHAPTER 4. REVENUES AND OTHER FINANCING SOURCES
4.1 What is the Purpose of this Chapter?
The purpose of this chapter is to define and provide the accounting standards for revenue
and other financing sources. SFFAS No.7, Accounting for Revenue and Other
Financing Sources, paragraphs 30-32, http://fasab.gov/pdffiles/sffas-7.pdf define
revenue and other financing sources. SFFAS No. 7, paragraph 30 states, “Revenue comes
from two sources: exchange transactions and nonexchange transactions.”
4.2 What are the Authoritative Sources?
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources
http://fasab.gov/pdffiles/sffas-7.pdf
• SFFAS No. 7, Implementation Guide, http://fasab.gov/pdffiles/impguid7.pdf
• SFFAS No. 13, Deferral of Paragraph 65.2 – Material Revenue – Related
Transactions, http://fasab.gov/pdffiles/sffasno7.pdf
• SFFAS No. 20, Elimination of Certain Disclosures,
http://fasab.gov/pdffiles/stdedition7.pdf
• FASAB Interpretations # 1: Reporting on Indian Trust Funds in General
Purpose Financial Reports of the Department of Interior and in the
Consolidated financial Statements of the United States Government: An
Interpretation of SFFAS No. 7 http://www.fasab.gov/interprt.html
• FASAB Interpretation # 5: Recognition by Recipient Entities of Receivable Non
exchange Revenue: An Interpretation of SFFAS 7.
http://www.fasab.gov/interprt.html
• Technical Bulletin 2002-1, Assigning to Component Entities Costs and
Liabilities that Result from Legal Claims Against the Federal Government
http://www.fasab.gov/tchbl.html.
• Technical Bulletin 2002-2, Disclosures Required by Paragraph 79(g) of SFFAS 7
http://www.fasab.gov/tchbl.html.
• GAO Policy and Procedures Manual for Guidance of Federal Agencies, Title 2,
Appendix 1 – Most of the standards contained in this appendix have been superseded
by standards issued by FASAB. Standards not yet superseded are listed in the GAO
publication Accounting Principles, Standards, and Requirements - Title 2 Standards
not Superseded by FASAB Issuances, GAO-02-248G, November 2001 at
http://www.gao.gov.
• OMB Bulletin No. 01-09, "Form and Content of Agency Financial Statements;"
http://www.whitehouse.gov/omb/bulletins/b01-09.html
4.3 What are the Specific Accounting Standards?
4.3.1 Exchange Revenue
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources,
paragraphs 33-47, http://fasab.gov/pdffiles/sffas-7.pdf define exchange revenue;
provide the standards for recognition and measurement of exchange revenue, and
disclosures and other accompanying information.
B. Federal Agency Guidance
• The United States Standard General Ledger at
http://www.fms.treas.gov/ussgl/index.html
• JFMIP Revenue System Requirements http://www.jfmip.gov/jfmip/docs.htm
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
• DOI Accounting Models at http://www.doi.gov/pfm/policy.
4.3.2 Nonexchange Revenue
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources,
paragraphs 48-69.4, http://fasab.gov/pdffiles/sffas-7.pdf define nonexchange
revenue; provide the general standard, taxes and duties standards, fines and
penalties standards, donations standards, other nonexchange revenue; and
disclosures, supplementary information, and other accompanying information.
• FASAB Interpretation # 5: Recognition by Recipient Entities of Receivable
Non exchange Revenue: An Interpretation of SFFAS 7.
http://www.fasab.gov/interprt.html
B. Federal Agency Guidance
• The United States Standard General Ledger at
http://www.fms.treas.gov/ussgl/index.html
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
• Credit and Debt Management Handbook www.doi.gov/pfm/policy.html.
• DOI Accounting Models at http://www.doi.gov/pfm/policy.
4.3.3 Other Financing Sources
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources, paragraphs
70-75, http://fasab.gov/pdffiles/sffas-7.pdf define other financing sources;
provide standards for recognition and measurement of other financing sources,
financing imputed for cost subsidies, and transfers of assets. Bureaus/Offices
must adhere to the legislative requirements when operations are financed from
Special Receipt Funds or Available Receipt Funds. Refer to the Treasury and
DOI posting models to obtain the appropriate accounting entries.
B. Federal Agency Guidance
• The United States Standard General Ledger at
http://www.fms.treas.gov/ussgl/index.html
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
4.3.4 Other Financing Sources–Prior Period Adjustments
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources, paragraph
76 http://fasab.gov/pdffiles/sffas-7.pdf provides the standards for prior period
adjustments.
• SFFAS No.21, Reporting Corrections of Errors and Changes in Accounting
Principles, http://fasab.gov/pdffiles/sffas-21.pdf amends SFFAS No. 7.
B. Federal Agency Guidance
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
4.3.5 Budgetary Information
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources, paragraphs
77-82, http://fasab.gov/pdffiles/sffas-7.pdf provide the standards for budgetary
information.
• SFFAS No.22, Change in Certain Requirements for Reconciling Obligations and
Net Cost of Operations, http://fasab.gov/pdffiles/sffas-22.pdf amends SFFAS
No. 7.
B. Federal Agency Guidance
• OMB Circular A-11, "Preparation, Submission, and Execution of the
Budget" http://www.whitehouse.gov/omb/circulars/index.html
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
4.3.6 Accountability for Dedicated Collections
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources, paragraphs
83-87, http://fasab.gov/pdffiles/sffas-7.pdf provide the standards for
accountability for dedicated collections.
B. Federal Agency Guidance
• Treasury Financial Manual Vol. I, Part 2, Chapter 1500
http://www.fms.treas.gov/tfm/vol1/index.html
DEPARTMENT OF THE INTERIOR
ACCOUNTING HANDBOOK
CHAPTER 5. FINANCIAL AND MANAGEMENT ACCOUNTING REPORTS
5.1 What is the Purpose of this Chapter?
This chapter provides general information regarding Department of Interior (DOI)
financial reporting requirements. The reports described herein are designed to meet the
institutional and programmatic management needs of Headquarters, Bureaus/Offices.
Federal financial reporting consists of general purpose and management accounting
reports.
5.2 What are the Authoritative Sources?
The guidance and procedures in this chapter are issued pursuant to the following laws,
regulations, and guidelines:
• Chief Financial Officers Act of 1990, 31 U.S.C. Sec. 3512, 3515 (Public Law 101-
576)
• Government Performance and Results Act of 1993
• Government Management Reform Act of 1994
• Federal Financial Management Improvement Act of 1996 (FFMIA) (P.L. 104-
208)
• Federal Accounting Standards Advisory Board (FASAB) Statements of Federal
Financial Accounting Standards (SFFAS), Interpretations, Technical Bulletins,
Technical Releases, and Concepts at: http://www.fasab.gov
• OMB Circulars and Bulletins at http://www.whitehouse.gov/omb
OMB Circular A-11, "Preparation, Submission, and Execution of the Budget"
OMB Circular A-127, "Financial Management Systems" and Transmittal
Memorandum No. 2
OMB Circular A-130, Transmittal Memorandum No. 4, Management of Federal
Information Resources
OMB Circular A-134, “Financial Accounting Principles and Standards”
OMB Bulletin 01-09, “Form and Content of Agency Financial Statements”
OMB Bulletin 01-02, "Audit Requirements for Federal Financial Statements"
• GAO Policy and Procedures Manual for Guidance of Federal Agencies, Title 2,
Appendix 1 – Most of the standards contained in this appendix have been superseded
by standards issued by FASAB. Standards not yet superseded are listed in the GAO
publication Accounting Principles, Standards, and Requirements - Title 2
Standards not Superseded by FASAB Issuances, GAO-02-248G, November 2001
at http://www.gao.gov.
• Treasury Financial Manual, Volume I Chapter 2-4000, Federal Agencies’,
Centralized Trial-Balance System (FACTS)
http://www.fms.treas.gov/tfm/index.html.
• DOI Handbooks: Handbooks that can be accessed at www.doi.gov/pfm/policy.html
5.3 What are General-Purpose Financial and Management Accounting Reports?
General-purpose financial reports include internal management reports and external
management reports. The objective of internal management reporting is to supply
management with clear, concise, and useful budget execution reports and accounting
data. External management reports provide financial management information to users
outside of the Department. The objective of external financial reporting is to comply
with the reporting requirements of central agencies.
General-purpose financial reports should provide the following information:
• sources and uses of budgetary resources
• operations and the related resources
• government's assets
• government's liabilities and financial responsibilities
• concerns with the future
• disclosure of the levels of financial controls
Management accounting reports shall provide a means of comparing plans to
performance, and for comparing similar operations from period-to-period and between
organizations. Analyses of variances are integral to reporting results to operating and
program managers and to the Chief Financial Officer (CFO).
5.4 Who is Responsible for Financial Reporting?
The Bureau heads and CFOs are responsible for ensuring that all financial information
reported by their Bureaus/Offices meets the guidance of this chapter. The DOI CFO is
responsible for ensuring that all financial information reported by the Office of Financial
Management (PFM) or another office within the Office of the Secretary meets the
guidance of this chapter. The DOI CFO and Bureau CFOs should delegate authority and
responsibility as necessary to ensure compliance with this guidance without imposing an
administrative burden on offices responsible for reporting. However, the DOI CFO and
Bureau CFOs may not delegate responsibility for overall compliance with this guidance.
5.5 What are the Principles of Financial Reporting?
• A comprehensive financial reporting system – This entails various kinds of
reports, which are an essential feature of the financial management system. These
bring together financial and quantitative factors which can reveal significant data
needed by management for funding; planning; controlling; and evaluating, in
financial terms, operations and progress.
• Report Preparation:
Include all pertinent financial transactions for the period covered and disclose all
essential facts that have a direct bearing on financial condition and operations;
Prepare key reports timely to meet the needs for management decisions at all
levels;
Prepare and issue reports to comply with legal requirements;
Develop report data, financial or otherwise, directly from accounting records
(ledgers, accounts, files, etc.) and have adequate accounting support;
Report data on a consistent basis from one period to another; if deviations are
necessary, justify the effect on financial condition and operations and document
the deviation;
Prepare reports, statements and supporting schedules, to the extent practicable
and permissible by law or regulation, in layman's terminology which is readily
understood and meaningful to those who utilize the reports; and
Use reports developed at the Departmental level, to the extent possible, to form
the basis for official external reports, budget estimates, and other financial data.
• Verification
Complete reconciliations and verifications as prescribed in Chapter 6.1.2 of
this Handbook to ensure that reports are correct, valid, and in agreement with
accounting records.
Establish controls for all reports and reconcile these reports with applicable
general ledger control accounts. This is necessary whether the source data is
recorded by manual or automated means.
In addition to the verification and reconciliation requirements prescribed
above, Bureaus/Offices shall take action to ensure:
submission of legible copies of the reports and statements;
legible correction of errors on all copies of the reports
clear identification of all adjustments or data applicable to prior periods;
verification for completeness, including page numbers, inclusion of all
pages, complete and proper headings, and proper labels;
verification of the printout or typing of the final report;
verification of addressees and addresses for transmitting reports; and
dated submissions and supporting papers.
• Compliance with Due Dates – Individual report instructions will specify a "due date."
Usually, the "due date" is expressed in terms of a specific number of working days
after the close of the time period covered by the report. For instance, when a due date
of "9 working days after the end of the quarter" is prescribed, forward the required
report to reach the addressee no later than the close of business (COB) on the ninth
working day of the subsequent quarter. In some instances, individual report
instructions will prescribe a "due date" on a particular calendar day of a month. In
these instances, the required report shall reach the addressee by the COB of the
prescribed calendar day. Unless there are instructions otherwise, due dates that fall on
Saturday are due on the preceding Friday; due dates that fall on Sunday are due on
the following Monday.
5.6 What are the Requirements for Financial Statements?
The CFO Act of 1990 and the Government Management Reform Act of 1994 require
audited financial statements for all activities of the Department. The Director of OMB
prescribes the form and content of financial statements to be prepared under these Acts in
OMB Bulletin 01-09, “Form and Content of Agency Financial Statements” at
http://www.whitehouse.gov/omb. DOI guidance for preparing financial statements is
contained in the Financial Statement Preparation Guidance, at
www.doi.gov/pfm/finstate.html. See also Statement of Federal Financial Accounting
Concepts (SFFAC) SFFAC 1 – Objectives of Federal Financial Reporting, SFFAC 2
– Entity and Display, SFFAC 3 – Management’s Discussion and Analysis –
Concepts, SFFAC 4 – Intended Audience and Qualitative Characteristics for the
Consolidated Financial Statement of the United States Government
http://www.fasab.gov/concepts.html.
• Fairness of Presentation – Provide full disclosure of financial operations and
financial position in accordance with accounting principles and standards specified
under the hierarchy of authority in Federal Generally Accepted Accounting
Principles (GAAP) Hierarchy at http://www.fasab.gov/accepted.html.
Full disclosure carries with it the burden of reporting, as necessary, unsatisfactory
conditions and violations of statutory limitations. Full disclosure implies that
financial statements shall not be adjusted arbitrarily or in such a manner as to
eliminate such conditions or violations. Financial statements shall fully disclose any
alternate accounting basis for the preparation of statements that are not fully in
accordance with the principles and standards of the FASAB or this Handbook.
All financial reports must identify their purpose and present logical data consistent
with that purpose. If the report classifications do not provide the means of disclosing
significant factors affecting the financial data, append proper footnotes and references
to the report. These explanations and interpretations should be expressed as simply as
possible to help report users understand the information in its proper context.
Prepare all financial reports on a consistent basis over time and from period to period.
Once an accounting principle or reporting concept is adopted, it should be used for all
similar transactions and events unless there is good cause to change. Where
significant changes are made in accounting classifications or other concepts
underlying a financial report that significantly impairs comparability; disclose the
nature, reason, and effect of the change until comparability is obtained. Identify
adjustments separately, but adjustments will be reported on the financial statements as
cumulative with final numbers.
Financial reports should be reliable, verifiable, and free from bias. To be reliable,
financial reports should be comprehensive. Nothing material should be omitted from
the report nor should anything be included that would likely cause the information to
mislead the intended report user.
Financial and operational reports, compiled on a monthly basis, shall include both
current and cumulative transactions recorded on a timely basis. See the Financial
Statement Preparation Guidance, Chapter 5, Section 11 Restatements for prior
period adjustments at www.doi.gov/pfm/finstate.html. Use SGL 740* to record
prior period adjustments. Bureaus/Offices should coordinate with PFM in the event a
significant prior period adjustment becomes necessary. Bureaus/Offices should
periodically review SGL 740* balances to determine if prior period adjustments are
material and if they will require a restatement of prior year statements in the annual
report. Set forth adjustments and corrections separately in the statements in such a
manner that their financial significance can be readily determined.
• Accuracy – Define financial data by the DOI Posting Models
http://www.doi.gov/pfm/policy. Prepare financial reports directly from general ledger
accounts, or from records under general ledger control and reconciliation. System
design and procedures shall ensure that all financial transactions pertaining to an
accounting period are accounted for, either by direct processing into the accounting
system, or by identification and provision of a reasonable estimate if the transaction
cannot be received in time for direct processing. Chapter 7 of this Handbook
discusses developing and documenting estimates. To ensure accuracy and
completeness of reports, closeout procedures shall provide a review of accounts
before final closing of the books for the accounting period.
Procedures must state that a professional accountant will supervise all accounting
work. Such procedures may provide for day-to-day processing controls, proof of
batch listings, and journals of original entry. Assign approval of closeout procedures,
journal vouchers, general ledger reconciliation and corrections, and formal statements
as a responsibility of professional accountants.
One of the most important functions of a finance office is to ensure the accuracy of
the financial statements. Steps that need to be taken to increase the likelihood of
accurate numbers on financial statements include:
Ensure that the financial statements are drawn from the information contained in
the system;
Require that adequate work papers and documentation exist to support the flow of
numbers from the system to the financial statements;
Document all adjustments to amounts derived from the accounting system;
Reconcile internal records timely with data from outside sources, such as reports
from the Department of the Treasury;
Review the numbers for reasonableness, including a comparison against prior
year amounts and an explanation of variances as needed; and
Disclose any uncertainty regarding the reliability of the numbers and the reasons
thereof in the notes to the financial statements.
• Timeliness – Prepare official financial accounting reports from financial accounting
systems or subsystems as directed by the CFO in accordance with due dates
established by the Department. Such financial reporting system(s) must be able to
produce reports timely enough to meet the mandatory internal and external reporting
deadlines. Provide financial data for management accounting reports by the DOI Key
Milestones at http://www.doi.gov/pfm/finstate.html. Include financial transactions
issued or approved by management through the last workday of the reporting period
in the reports.
Timely financial accounting information is especially critical to the successful
preparation of the reporting entity’s financial statements. A major factor in obtaining
an unqualified audit opinion on the Department’s financial statements is ensuring that
bureau audits stay on time. Any Bureau/Office audit that falls behind risks the
possibility of a scope limitation, and subsequent disclaimer of an opinion by the
auditors. Since the preparation of the Department-wide consolidated financial
statement and subsequent audit opinion relies on the cumulative results of the
individual Bureau/Office audits, any one Bureau/Office that falls behind will hold up
the whole Department and may adversely affect the Department's audit opinion.
• Comparability – The financial statements are to include consolidated, comparative
financial data from the immediate prior year unless a differing opinion has been
issued by PFM. Prior year data must be reported in a format consistent with the
current year's data. See the Financial Statement Preparation Guidance, at
www.doi.gov/pfm/finstate.html for current requirements and formatting.
5.7 What Reports are Required by External Agencies?
Departmental accounting system(s) shall have the capability of producing financial and
budgetary reports, and supporting schedules, as required by OMB and Treasury. The
Joint Financial Management Improvement Program (JFMIP)“Core Financial
Requirements” discusses core financial system requirements for financial systems
http://www.jfmip.gov/jfmip/systemrequirements.htm. Refer to Treasury Financial
Manual, Volume 1, Part 2 at www.fms.treas.gov/tfm for Treasury reports and
www.whitehouse.gov/omb/circulars/index.html for OMB reports.
In addition to the formal financial statements and budget reports, other external financial
reports required are listed below:
EXTERNAL FINANCIAL REPORTS
FORM NO.
FORM
TITLE
REQUIRED REPORT REFERENCE
FREQUENCY
Exhibit 140
Report on
Unvouchered
Expenditures
A-11, Section 140
Annual
Exhibit 52
Report on
Resources for
Financial
Management
Activities
A-11, Section 52
Annual
Exhibit 53
Agency IT
Investment
Portfolio
A-11, Section 53
Annual
SF-133
Report on
Budget
Execution and
Budgetary
Resources
Prepared from FACTS II information
Quarterly
FACTS II
Treasury’s
Federal
Agencies’
Centralized
Trial-balance
System II
http://www.fms.treas.gov/factsii/index.html
Quarterly
2108
Yearend
Closing
Statement
Prepared from FACTS II information
Annually
SF-224
Statement of
Transactions
http://www.fms.treas.gov/tfm/vol1/a%2D02%2D04.html
Monthly
Biennial
review of
User
Charges
CFO Act of 1990 P.L. 101-576
OMB Circular A-25
Biennially
International
Transactions
Department of Commerce - Directive #19
Quarterly
Annual
Report of
Quarters
Income and
Expense
Ex Order
12250
Contributions
to Federally
Conducted and
Federally
Assisted
Activities
Ex Order 12250 goes thru Civil rights group and then to
the department
Annually
Credit
Reform Loan
Balance
Confirmation
Report
Form is e-
mailed from
BPD “Balance
Confirmations”
Submit all
reports using
the Debt
Management
Information
System
(DMIS)
Treasury
Report on
Receivables
(TROR)
Refer to I TFM 2-4100 for instructions on preparing the
TROR
http://www.fms.treas.gov/debt/dmrpts.html
http://www.fms.treas.gov/debt/trorworkbk.html.
Quarterly
5.8 What Internal Reports are Required?
The Department’s financial reporting goals are to achieve and maintain unqualified audit
opinions for departmental and Bureau/Office financial statements, to strengthen financial
controls, and to ensure that financial data produced for management decision-making is
reliable, verifiable, and consistent with the annual audited financial statements. PFM’s
website at www.doi.gov/pfm/finstate.html includes key milestones for quarterly and
yearend reports; financial statement checklists for CFO/Bureau Directors and
Finance Officers, and Program Managers Guide to Financial Statement Audits.
This guidance is provided to standardize Bureau/Office reports, provide a checklist for
Bureau/Offices to uniformly review reports, establish reporting dates, and establish
responsibilities for the audit process.
• Integrated Financial Performance Metrics – This report implements the integrated
financial performance metrics necessary for Office of Management and Budget
(OMB), Treasury, and internal reporting requirements. See
http://www.doi.gov/pfm/metrics.html for the report format. (under construction). The
current instructions are in FAM 2003-015 dated July 1, 2003. The report provides the
indicators, measures, objectives, data sources, PFM staff contacts, and reporting
frequency (includes due dates) by functional area. Refer to the website referenced
above for current format requirements. The Monthly Debt Management Reporting
requirements were rescinded as of fiscal year 2004. Refer to the Departmental Credit
and Debit Management Handbook for debt management guidance. (EDITORIAL
NOTE: Link to this Handbook)
The measures were chosen to demonstrate whether Bureau/Office finance operations
are “healthy”; if not, the measures will indicate which areas require closer
management attention. The performance measures will help ensure compliance with
financial-related laws and regulations.
5.9 How Do Bureaus/Offices Measure Successful Reporting?
The Department's financial management systems and the reports that they generate
must serve Department decision-makers and managers at various levels. Individuals
from all disciplines within the Department must work together to achieve successful
reporting. To achieve this goal, an active partnership must exist among Bureau/Office
headquarters and all levels of Bureau/Office management. The Bureau/Office heads
are responsible to assure that all the necessary individuals are involved in the process.
Managers in each of the responsible functions must be accountable and committed.
Such information should support:
• Informed program and resource decisions--this requires information to support the
budget and management decision process, both within the Department and at the
executive and Congressional level. Ongoing information relating to the cost of
producing products and services should allow managers to better control costs; make
informed program decisions and necessary adjustments during the course of a year;
and to avoid “surprises” at yearend. DOI is integrating cost accounting with
budgetary accounting through Activity Based Costing (ABC). Refer to
http://www.doiu.nbc.gov/abc/ for information on ABC.
• Compliance with law, policy requirements, and budget and management
decisions—this requires the establishment of controls and the tracking of spending
against requirements. The availability of historical product and service cost
information, consistently applied, should serve to improve the quality and reliability
of agency estimates used in preparing budgets.
• Efficient, effective program delivery--this requires reporting on service efforts,
accomplishments, and costs. During the 1990s, several laws were enacted which
shifted the focus of government decision making and accountability away from a
preoccupation with the activities that are undertaken to a focus on the results of those
activities.
• Proper stewardship over Federal resources--this requires reporting on
management's accountability for resources, as well as their cost and service potential.
• Protection from future liabilities resulting from current decisions and events--
this requires information on such things as loan guarantees, insurance exposures,
pension commitments, and environmental clean-up decisions.
• Meeting external reporting requirements--this requires Bureau/Office budget
formulation and execution presentation, as well as financial statements describing the
financial position, results of operations, cash flows, and reconciliation to budget
reports.
• Regular review of reports to keep abreast of management’s ever changing
information requirements--Perform reviews, as needed, to determine if current
reports are still needed, or if revisions are required to meet the changing needs of
program managers. Provide new reports as needed to enhance or maintain sound
decision-making. Additional changes in budget or program classifications may be
necessary during this review.
DEPARTMENT OF THE INTERIOR
ACCOUNTING HANDBOOK
CHAPTER 6. GENERAL ACCOUNTING
6.0 What is the Purpose of this Chapter?
This Chapter includes general ledger accounting, grants and cooperative agreement
accounting, gifts and donations, and cost recovery/user charges. The provisions of this
chapter apply to all transactions affecting the Department of Interior’s (DOI) assets,
liabilities, investments, revenues, and expenses.
6.1 General Ledger Accounting
6.1.1 What are the Authoritative Sources?
• Federal Accounting Standards Advisory Board (FASAB) Statements of
Federal Financial Accounting Standards (SFFAS), Interpretations, Technical
Bulletins, Technical Releases, and Concepts at: http://www.fasab.gov.
• GAO Policy and Procedures Manual for Guidance of Federal Agencies
http://www.gao.gov.
• Treasury Financial Manual, Volume I
http://www.fms.treas.gov/tfm/index.html.
• OMB Memorandum M-03-10, “Business Rules for Intergovernmental
Transactions,” at http://www.whitehouse.gov/omb/memoranda/m03-01.html
6.1.2 What are the Department of Interior’s Accounting Control Activities for
General Ledger Accounting?
The following accounting control activities are prescribed for Bureau/Office
accounting and subsidiary accounting systems:
• Documentation
Fully document all transactions, processing procedures, and systems of
administrative controls, and other internal controls (e.g., objectives,
techniques) so that a clear audit trail is established.
Establish controls to assure that financial transaction documents are received
and processed in a timely manner. Properly classify documents. Dispose in
accordance with records management standards.
Include internal control requirements in directives, policies, manuals, plans,
flowcharts, and desk procedures.
• Recording Transactions and Events – Use the journal entry process for
recording financial transactions in appropriate general ledger accounts. A
transaction recorded in an accounting journal must consist of two or more journal
entry lines where the debit and credit totals balance. Each journal entry line must
identify specific transaction information.
Promptly and accurately record and classify transactions and other significant events in
the proper account, in the proper amount, and in the proper period.
Maintain an approved system of general ledger and subsidiary accounts for assets,
liabilities, net worth, revenues, costs, budgetary accounts, and memo accounts (8000-
9000 series of accounts).
Use system controls to automatically record transactions in the proper accounts, as well
as to prevent billings in excess of customer agreement amounts and in excess of
expenses incurred.
Provide periodic inspections by a second individual to ensure transactions are properly
recorded.
• Execution of Transactions and Events
Only execute transactions and other significant events that are authorized by
persons acting within the scope of their authority.
Clearly communicate authority to managers and employees and include the
specific terms under which the authority exists.
Perform a systematic, ongoing administrative review of disbursement
transactions to ensure proper certification of vouchers and disbursement of
Government funds. May employ statistical sampling in the administrative
review process.
• Reconciliation of Accounts
Proper reconciliation of accounts shall consist of identification of differences
between general ledger balances and subsidiary ledgers. The reconciliation
must include the timely processing (preferably in the following month) of the
identified items constituting the difference between controlling accounts and
the detail. Promptly, bring accounting records into agreement with the results
of audits or physical inventories when they are taken. Investigate differences
to determine the causes and implement procedures to prevent recurrence of
errors and, if applicable, effect recoveries.
Reconcile General Ledger accounts to subsidiary ledgers and source
documents as frequently as possible, but no less frequently than prescribed by
the following schedule:
General Ledger Account Frequency
Cash Monthly
Imprest Funds Monthly
Advances Monthly
Accounts Receivable Monthly
Deposit Accounts Monthly
Suspense Accounts Monthly
Inventories Monthly (Bring into balance after physical
inventory)
Fixed Assets Annually
Other Assets Annually
Undelivered Orders Quarterly
Accounts Payable Monthly
Other Liabilities Quarterly
Investments Monthly
Budgetary to Proprietary Monthly
Accounts
Statement of Financing Monthly
To other Statements
Interim SF-133, Reports Quarterly
On Budget Execution and
Budgetary Resources/FACTS
II to General Ledger
General Ledger Monthly
Investment and Fund
Balances Reconciled
to Treasury
Review of Suspense Monthly
Accounts, Accounts
with Abnormal Balances,
and Old Account Balances,
Correcting Invalid Entries,
and Documenting the
Review
Perform Variance Monthly
Analysis
Precede the preparation of external financial statements or financial reports by
complete reconciliations.
Performance standards are developed for these reconciliations and reviews
and will be reported to PFM as prescribed by the Integrated Performance
Metrics Report. (See Chapter V, Financial and Management Accounting
Reports and http://www.doi.gov/pfm/metrics.html for the report format.
(under construction). The current instructions are in FAM 2003-015 dated
July 1, 2003.)
Normal schedules and work papers for such reconciliations shall be of
sufficient detail to ensure the accuracy of financial statements and reports.
Retain the working papers and records on which such verifications are based
within the Bureau/Office in a form that will facilitate audit.
The reconciliation of general ledger accounts with subsidiary and support
records helps to substantiate and maintain the accuracy of account postings
and balances. Different tools may be used to accomplish a meaningful
reconciliation based on the finance officer’s professional judgment and
knowledge of the systems and controls involved. Employ computer-assisted
procedures whenever possible. When it is not feasible to pull every document,
statistical sampling may be used. Base statistical sampling on an adequate
sample size to reach a confidence level that will support the risk level. Fully
document all reconciliation procedures.
• Periodic Activities – Bureaus/Offices must generate accrual transactions,
adjusting entries, consolidation entries, and closing entries at the end of a period
(month, quarter, or year) for reporting purposes. The core financial system must:
Provide for month-end, quarter-end, and yearend closing and rollover of the
general ledger account balances under the control of an authorized system
administrator;
Provide the capability for multiple preliminary yearend closings before final
yearend closing, while maintaining the capability to post current period data;
Provide the capability for selective, automatic generation of recurring accrual
entries and reversals in the next fiscal period;
Allow for accruals of contracts or other items that cross fiscal years;
Selectively generate required transactions as needed by the yearend closing
procedures;
Separately identify amounts which would be eliminated when preparing
intra-agency and interagency consolidations (see a discussion on eliminations
in 6.1.5 of this Chapter); and
Prepare trial balances and other supporting information needed for external
reports and financial statements, including consolidated statements.
The Bureau/Office financial management personnel are responsible for
performance and execution of all necessary monthly, quarterly, fiscal yearend,
calendar, and annual accounting activities. This includes recording accruals,
recording consolidating and adjusting entries, preparing trial balances, and the
generation of the required external and internal reports such as the SF-224,
"Statement of Transactions," and the SF-133, "Report on Budget
Execution/FACTS II." This also includes the automatic generation of reversals
for the accruals in the next accounting period.
• Period Cutoff – The Bureau/Office financial management personnel must
establish appropriate cutoff dates for processing the data for the various
operational activities and system processes to accomplish the period-end closing.
Provide these cutoff dates to all users in sufficient time to allow for compliance.
• Annual Activities – Financial management personnel are responsible for the
establishment and performance of all required annual activities such as fiscal and
calendar yearend closing activities. This includes consolidating and adjusting
entries, pre/post-closing trial balances, nominal (temporary) account closing,
external and internal management reports, and balance forward account amounts.
General requirements for adjusting and closing current and expired account
balances for appropriations are in 31 U.S.C. Subtitle II, Chapter 15, Subchapter
IV, Sections 1551-1558 http://www.gpoaccess.gov/uscode/browse.html. Specific
instructions to executive departments for adjusting and closing accounts are set
forth in OMB Circular A-11, Part 4, Chapter II, Section 130, “SF-133 Instructions
on Budget Execution," at http://www.whitehouse.gov/omb and the Treasury
Financial Manual, Volume I, Part 2, Chapter 4200
http://www.fms.treas.gov/tfm/index.html.
Maintain records to account for total budget authority, unobligated balance, and
obligated balance (unliquidated obligations) for expired appropriations. In
accordance with P.L. 101-510, expired appropriations are valid for liquidation for
only 5 years Treasury Financial Manual, Volume I, Part 6, Chapter 6000
http://www.fms.treas.gov/tfm/index.html.
Maintain records to account for each appropriation account at the time of closing
for closed appropriations. This is represented by the canceled unobligated
amount, canceled amount of unliquidated obligations (undelivered orders), and
amount of accounts payable when the account was closed.
6.1.3 What Does the General Ledger Posting Process Include?
The general ledger posting process records financial transactions in the general ledger
using the double-entry accounting method. Posting to the ledger should follow a standard
set of pro- forma entries established by the Department for recording transactions with
the appropriate transaction numbers (referred to as the ACEN). All transactions posted to
the general ledger must be traceable to the source document and the transaction number.
The DOI Posting Models can be found at http://www.doi.gov/pfm/policy.
Post all transactions to record financial events to the general ledger either directly or
indirectly through subsidiary ledgers regardless of the origin of the transaction. Post all
accounting transactions at the original point of entry (i.e., the first time the transaction is
associated with debits and credits), using standard Departmental codes, including general
ledger accounts and budget object codes. Record other necessary information using
attributes and other codes as permitted by the financial systems, but do not use non-SGL
account codes for this purpose. Provide an adequate audit trail that allows all individual
transactions to be traced from the general ledger to the source document.
6.1.4 What Does the General Ledger System Include?
Financial management data must be recorded and reported in the same manner
throughout the Department and should conform with the standard definitions as shown in
Appendix B, "Glossary."
• Ledgers to be Maintained – A ledger is defined as a group of accounts. The two
classes of ledgers are general ledgers that contain control accounts and subsidiary
ledgers that contain detail-supporting accounts.
• General Ledger – The general ledger is a uniform system of accounts in which
all transactions are summarized. It contains control accounts from which the trial
balance and related supporting schedules are prepared, and establishes a control point
for the accounting system. Refer to the DOI chart of accounts for the specific general
ledger accounts used for summary balances. Maintain General Ledger accounts to
provide balances that are auditable and reconcilable.
• Subsidiary Ledgers – Subsidiary ledger accounts are used to accumulate and
segregate detailed transactions during an accounting period and support or generate
entries recorded in applicable general ledger control accounts. The combined
balances of the subsidiary ledger accounts must agree with the balance of the related
control account in the general ledger. Subsidiary ledger accounts may also have
accounts that are subsidiary.
6.1.5 What is the Elimination Process?
Elimination represents the process where a federal entity having transactions with
another federal entity insures that the amounts on its trial balances for specific
accounts correlate with those amounts in the reciprocal accounts of the federal entity
with which business was conducted. Federal entities conducting business with one
another are referred to as “trading partners.”
All DOI reporting entities are required to report and eliminate intra-governmental
account balances (currently proprietary accounts) in financial statements to offset the
effect of transactions between (a) a DOI reporting entity and other federal agencies,
(b) DOI reporting entities and (c) organizations within a DOI reporting entity.
For the most part, the Department’s accounting systems were designed and
implemented prior to the establishment of the requirement to eliminate intra-
governmental transactions. Current systems cannot produce the necessary
reconciliation between buyers and sellers. Consequently the current approach to
eliminations Interior-wide calls for resource intensive manual reconciliations.
6.1.5.1 What are the Authoritative Sources?
• Treasury’s Federal Intragovernmental Transactions Accounting Policies Guide
for reconciliation and elimination of intragovernmental, intra-departmental, and
intra-bureau transactions at http://www.fms.treas.gov/irri/regulations.html
• OMB Memorandum M-03-10, “Business Rules for Intergovernmental
Transactions,” at http://www.whitehouse.gov/omb/memoranda/m03-01.html
• Treasury Financial Manual Vol. 1, Part 2, Chapter 4060
http://www.fms.treas.gov/tfm/vol1/index.html
• OMB Bulletin No. 01-09, "Form and Content of Agency Financial
Statements;" http://www.whitehouse.gov/omb/bulletins/b01-09.html
6.1.5.2 What is the Department of
Interior Guidance?
Bureaus/Offices will complete the
following:
• Post all accruals by the 15
th
day of the subsequent month following the end of the
quarter. Support all accrual balances by the agreement number (Ordering office’s
obligation number).
• Identify and clear collections or disbursements from clearing accounts that are
over thirty days old.
• Process refunds of over-collections within thirty days of the end of a project.
• Include the ordering office’s obligation numbers and servicing period on all
IPACs. Charge back IPAC transactions exceeding the obligation amount.
• Analyze advances quarterly. Monthly costs reports should be generated for
advances so that the advances can be drawn down.
• Clear Treasury Statements of Differences so that the Statement does not exceed
$100,000 or contain transactions older than three months. All adjusting entries
must have supporting documentation.
6.1.5.3 What are the Bureau/Office
Responsibilities?
Bureaus/Offices are responsible to:
• Establish and maintain an internal control structure for intra-governmental, intra-
departmental, intra-bureau transactions.
• Document and support the information recorded in its accounting records related
to intra-governmental, intra-departmental, and intra-bureau transactions.
• Reconcile the intra-governmental fiduciary, intra-departmental, and intra-bureau
assets, liabilities, revenues and expenses in its accounting records to the
supporting documentation and corresponding records in the trading partners’
accounts.
• Ensure that the reconciliation and confirmed balances for intra-governmental
fiduciary, intra-departmental, and intra-bureau transactions agree to the
Department’s audited financial statements and FACTS I reporting.
• Ensure that no part of the elimination process results in a negative balance
6.1.5.4 What are Trading Partner Codes?
A trading partner is an agency, department Bureau/Office or other federal entity that
is party to intragovernmental transactions with another federal agency. Bureaus are
required to use the two digit department code of the trading partner when reporting
USSGL account balances relating to activity with another federal agency. When the
trading partner is another Interior Bureau/Office, the two character Bureau/Office
partner code must be used in conjunction with the Interior department code of “14”.
Interior guidance alternately employs both “F” and “G” to designate government
trading partners while “N” identifies those partners that are non-government or
public. Appendix B of Treasury’s Federal Intra-governmental Transaction
Accounting Policies Guide contains a comprehensive listing of Federal trading
partner codes http://www.fms.treas.gov/irri/regulations.html.
Note: When identifying Treasury as the trading partner in a transaction, users should
differentiate between the usage of Trading Partner code “G.20” and “G.99”.
• Trading Partner Code G.20 should be used for transactions with the administrative
Treasury entity for activities like reimbursable services, and for fiduciary
transactions with the Bureau of Public Debt and the Federal Financing Bank.
• On the other hand, Trading Partner “G.99” reflects transactions occurring with the
Treasury General Fund. Further discussion of the topic can be found in FY 2003
Financial Statement Preparation Guidance, Chapter 6
www.doi.gov/pfm/finstate.html.
6.1.5.5 What are the Categories of Intra-governmental Transactions?
Intra-governmental transaction data falls into four categories: sale of goods and
services to federal reporting entities, intra-governmental fiduciary transactions,
transfers-in (out) and prior period adjustments.
• Sale of Goods and Services to Federal Reporting Entities. The revenues and
expenses resulting from transactions with other federal reporting entities.
• Intra-governmental Fiduciary Transactions. These are specific transactions which
have been identified by the Department of Treasury, Financial Management
Service in its Intra-governmental Fiduciary Transactions Accounting Guide.
These transactions include:
Investments in Treasury Securities issued by the Bureau of Public Debt
Borrowings from the Bureau of Public Debt and Federal Financing Bank
Federal Employees Compensation Act transactions with the Department of
Labor
Employee benefit transactions with the Office of Personnel Management
6.1.5.6 What are Reciprocal Accounts?
Pairings of related standard general ledger accounts are used by a seller and buyer
agency to reconcile like intra-Department activity balances. Bureaus/Offices record
transactions that correlate with their trading partner role. In general, if a
Bureau/Office trading partner’s role is that of seller, then the seller’s pertinent
transactions will relate to revenues and assets. On the other hand, if a bureau’s trading
partner role is that of buyer, then the pertinent transactions of the buyer will reflect
transactions related to expenses and liabilities. In most instances a Bureau/Office’s
records will reflect a combination of the Bureau/Office in the roles of both buyer and
seller.
Several comparisons exist that look at the position of the Bureau/Office in relation to
its trading partners (TP). For illustrative purposes only the chart below presents the
most common comparisons. There are instances where reclassifications rather than
accruals may be necessary.
SGLs with which the trading partner would be concerned are indicated with the “TP”
suffix. * Denotes wild card.
#
Comparison of
Reciprocal
Accounts
The
Bureau/Office’s
Comparative Trading
Partner’s
SGL
SGL
1
Bureau’s Revenue
versus TP Expenses
5200, 590E, 590N
TP 610A, TP 610Z, TP 610*
2
Bureau’s Assets
Versus TP Liabilities
131C, 131D, 131*,
1410, 1450
TP 2110, TP 2120, TP 2190,
TP 2213, TP 2310, TP 2400
3
Bureau’s Expenses
versus TP Revenues
610A, 610Z, 610*
TP 5200, TP 520E, TP 590N
4
Bureau’s Liabilities
versus TP Assets
2110, 2120, 2213,
2310, 2400
TP 131C, TP 131D, TP
131*, TP 1410, TP 1450
5
Bureau’s Transfer
Outs versus TP
Transfer Ins
573*, 5745, 5760,
5765, 5765B
TP 572*, TP 5740, TP 5750,
TP 5755, TP 5755B
6
Bureau’s Transfer Ins
versus TP Transfer
Outs
572*, 5740, TP
5750, TP 5755, TP
5755B
TP 573*, TP 5745, TP 5760,
TP 5765, TP 5765B
7
Unexpended
Appropriation –
Transfers In versus
TP Transfers Out
3102
TP 3103
8
Unexpended
Appropriation –
Transfers Out versus
TP Transfers In
3103
TP 3102
6.1.5.7 What is the Elimination Worksheet?
The worksheet below indicates the minimum steps a Bureau/Office should employ in
the elimination process. It is meant to serve as a basis on which Bureaus/Offices may
elaborate in creating individual checklists.
Due
Date
Completed
Task
Notified
Load detail worksheets to the XA drive.
•
Load unbilled receivables to the XA drive (131C & 131D).
•
Load advance report to the XA drive.
•
Reconcile all elimination reports to Hyperion amounts,
unbilled/advance reports.
•
Add Hyperion journals to detail worksheets.
•
Validate trading partners on transfers in/out.
•
Record unbilled/advance journals with other trading
partners.
•
Resolve (reconciling and doing 9998 adjustments
(Hyperion)) intra-bureau elimination differences. (BOR to
BOR, MMS to MMS, etc.)
•
Complete bureau to bureau reconciliations.
•
Update trading partners joint snapshot worksheet.
•
Update Top 10 list.
•
Communicate corrections/problems within own bureau and
follow-up.
•
6.1.5.8 What are the Key Elements of the Elimination Process?
As the checklist above indicates, there are several key elements to the elimination
process.
• Detail worksheets reflect data derived from the accounting systems that the
Bureau/Office makes available to its trading partners by posting on the X drive in
Hyperion. The detailed worksheets, or a separate tab or worksheet, should reflect
any Hyperion adjustments impacting federal proprietary trading partners. (In
those instances where Bureaus/Offices do not use the snapshot, a tabbed
worksheet should present the same data.)
Both Unbilled Receivables and Advances from Others represent data derived
from the accounting systems that the Bureau/Office makes available to its
trading partners by posting on the X drive in Hyperion.
Advances from others for service orders:
There will be no advance payments for service orders unless a requirement is
explicitly stated in legislative language. The legislative language pertaining to
the Department of Interior’s Franchise Fund does explicitly mandate the
payment of advances. The Economy Act does not mandate such payments.
Advances for orders of Goods:
Advances will be permitted for orders of goods that exceed $1,000,000; however, the
advance cannot exceed 50% of the ordered amount. In order to be permitted advances
for goods less then $1,000,000 must be explicitly stated in legislative language.
For permissible advances, the buyer records the payment as an “advance to.”
The seller records the receipt of payments as “advance from”. According to
OMB Memorandum M-03-10, “Business Rules for Intergovernmental
Transactions,” at http://www.whitehouse.gov/omb/memoranda/m03-01.html,
the seller is responsible for providing the buyer with monthly status updates of
earned revenue; and advance payments made prior to the effective date of the
Business Rules require the monthly status report.
Negative Accounts Receivable – Prior to the OMB Business Rules for
Intergovernmental Transactions, negative accounts receivable were treated as
advances. Bureaus/Offices should follow one of the following options:
Leave the negative accounts receivable as a negative unbilled and
track it to see if more expenses will reduce the negative unbilled.
Refund the money.
Move it to an advance.
• Joint Snapshot worksheets used by trading partners to document totals of assets,
liabilities, revenues and provide a means of reconciling differences. In those
instances where Bureaus/Offices do not use the snapshot, a tabbed worksheet
should present the same information.
• The Top 10 automated listing identifies variances between trading partners.
Bureaus/Offices should complete columns labeled “Amount Reconciled”,
“Explanation Type”, and “Explanation”.
6.1.5.9 What are Reconciliations and Confirmations?
• Intra-governmental Fiduciary Transactions Reconciliation
The Intra-governmental Fiduciary Transactions Accounting Guide contains
policies and procedures for accounting, reporting and reconciling implementation
by all federal entities for the following intra-governmental transactions:
Investments in Treasury Securities issued by the Bureau of Public Debt
Borrowings from the Bureau of Public Debt and Federal Financing Bank
Federal Employees Compensation Act transactions with the Department of
Labor
Employee benefit transactions with the Office of Personnel Management
The Department shall reconcile with its trading partners each quarter the four
fiduciary transactions identified in Treasury’s Federal Intra-governmental
Fiduciary Transactions Accounting Policies Guide.
• Intra-governmental Expenses
There are three types of intra-governmental expenses to be reflected in the
financial statements, one from the Office of Personnel Management and two from
the Department of Labor. These expenses should be reported as part of operating
expenses on the Statement of Net Cost and are listed below:
Employee Pension and Retirement Benefit Expenses
This expense is an “imputed cost “ for retirement costs paid by the Office of
Personnel Management that will never be paid by the Department. The Office
of Personnel Management (OPM) provides rates for recording the estimated
cost of pension and other future retirement benefits paid by OPM on behalf of
federal agencies. Under Federal accounting standards the cost of these
benefits must be reflected on the financial statements of the agency that
receives the benefit. The Department will present these costs as part of
operating expenses on the face of the financial statement (and is identified as
employee benefit expense in the operating expense footnote). The
Bureaus/Offices shall also include this expense on their financial statements,
however, they may elect to present them on a separate line as long as they
remain a part of total expenses.
Department of Labor Actuals and Accruals
The Department of Labor provides information to the Department regarding
the two types of workers compensation figures that must be reflected in
agency financial statement.
FECA Accrued Liability
Represents the difference between the FECA benefits actually paid by the
FECA Special Benefits Funds to beneficiaries (through the current fiscal
year) and the agency’s actual cash payments to the Fund (through the prior
year). Generally there is a two to three year timing difference between
these payments. The accrued FECA liability equals actual payments due,
but not yet paid due to timing differences.
FECA Actuarial Liability
Represents estimated future payments for disabled workers presently in
the system. It includes the expected liability for death, disability, medical,
and other approved costs and is recorded as a liability to the public.
6.1.5.10 What is the Reconciliation
Process?
The following suggested methodology for reconciliations represents a modification of
the Financial Management Service recommended process and is a broad overview
that will require alteration to suit each agency’s situation/needs.
• Providing agency gives receiving agency balances by USSGL account.
• Receiving agency compares its balances to appropriate reciprocal USSGL account
balances of the providing agency.
• For fiduciary transactions, the fiduciary entities (BPD, FFB, DOL and OPM) will
make account balance information and other details available through the IFCS
for the receiving agencies to reconcile amounts to their records.
• For other Intra-governmental transactions, agencies should work together to
establish the data needs and availability to facilitate the reconciliations.
• Intra-governmental accounts are reconciled and differences are identified.
6.1.5.11 What are Reconciliation Differences?
The following are common and potential differences resulting from the initial
reconciliation and the recommended adjustments to be made to prepare the final
reconciliation.
Beginning Balances Differences
Timing of Recording Accruals
Estimated Accruals
Unrecorded transactions
6.1.5.12 How Does the Timing of Recording Accruals Affect Eliminations?
When a providing agency generates bills for services or when IPAC transactions are
batch processed subsequent to the end of the period, there may be differences in
activity and balances due to the timing of the receiving agency recording the
transactions. Timing differences can also be caused by a receiving agency delay in
reclassifying IPAC transactions to the proper accounts. IPAC reports and bills
subsequent to the accounting period should be identified and reviewed, with the
appropriate adjustments made. Adjustments should be made to accounts
receivable/accounts payable for bills received after the end of the period that applied
to the period. Bureaus should communicate with each other to identify these timing
differences.
IPACs are sometimes recorded temporarily in a deposit account (cash/deposit liability
entry) and not transferred to the expenditure account in a timely manner. This results
in the cash being reconciled by transaction – at the IPAC number level but the
expenses and revenue not offsetting. In this scenario, the provider has recorded
revenue. However, the receiver cannot record the offsetting expense until the IPAC
is distributed from the deposit account to an expenditure account. This also
understates expenses and expenditures on the financial statements and budgetary
reports. The problem is also apparent at yearend when funding distribution does not
occur until the subsequent year. Because there is an IPAC cutoff around September
30
th
(for charge backs), and the cutoff for SF224 processing is the 10
th
business day in
October, charge backs and/or the remaining undistributed cash balances cannot be
moved without causing irreconcilable balances. In addition, under the FFS PCAS
process or the ABACIS accrual process, if unbilled receivables are not billed timely,
the reconciling differences (by month or quarter) can be substantial. The end result
could be large adjustments posted to the receiver’s books. Requiring these adjusting
entries to be reported in FFS at the transaction level could entail astronomical
resources and hinder the timeliness of quarterly reporting.
6.1.5.13 What are the Yearend Procedures?
At the end of each fiscal year all transactions and activity related to the fiscal year
should be recorded in each agency’s general ledger. Agencies should correspond
with their trading partners to ensure consistency in recording intra-governmental
transactions. Agencies will need to work together to identify the transactions and
amounts in determining the estimated accruals to record.
Transactions Related to Revenues Earned/Expenses Incurred as of September
30 that Occurred Subsequent to Yearend
Transactions, which are incurred as of September 30 and not billed, should be
recorded as accruals in both agencies records. These transactions may have been
billed subsequent to yearend or remain unbilled at the time of accrual. Providing
agencies should identify these transactions and should work with the receiving
agencies to provide detailed information supporting the transactions and the amount
incurred as of the cut-off date and not yet billed. The providing agency should record
these transactions as receivables/revenues as of September 30. The receiving agency
should record these transactions as payables/expense or assets as of September 30.
All bureaus should work together to calculate and estimate accruals and to record
corresponding entries in each set of records so they are in agreement or that long term
accounting policy differences can be easily identified. The providing agency is
typically responsible for estimating the accrual and communicating this information
to the buying agency. Both agencies are responsible for recording the information.
Beginning balances in bureau accounting systems must reconcile with Hyperion
beginning balances by trading partners and the XA server transaction files for
yearend.
Beginning balances must be rolled forward in Hyperion by December 31 to meet first
quarter deadlines for FACTS II.
On a quarterly basis the DOL/OPM accrued costs should be estimated based on the
previous yearend.
6.2 Grants and Cooperative Agreements
6.2.1 What are the Authoritative Sources?
• The Chief Financial Officers Act of 1990 (P.L. 101-576 (31 U.S.C. Sec. 501, et
seq.)) http://www.gao.gov/policy/12_19_4.pdf
• Budget and Accounting Procedures Act of 1950, as amended, (31 U.S.C.
Subtitle III, Chapter 35, Subchapter II, Secs. 3511-3515, Subtitle III, Chapter 35,
Subchapter III, Section 3521 (64 Stat. 832))
http://www.gpoaccess.gov/uscode/browse.html
• Budget and Accounting Act of 1921, as amended, (31 U.S.C. Secs. 701 et seq.,
1101 et seq.) http://uscode.house.gov/title_31.htm
• 31 U.S.C. Subtitle V, Chapter 63
http://www.gpoaccess.gov/uscode/browse.html
• OMB Circular A-102 Grants and Cooperative Agreements with State and
Local Governments http://www.whitehouse.gov/omb/circulars/.
• GAO publication Accounting Principles, Standards, and Requirements -
Title 2 Standards not Superseded by FASAB Issuances, GAO-02-248G,
November 2001, Standard G10 for advances to grant recipients at
http://www.gao.gov
• Principles of Federal Appropriation Law, Second Edition, Vol. 1, Chapter
10, Federal Assistance: Grants and Cooperative Agreements
http://www.gao.gov (Legal Products).
• Cash Management Handbook, Chapter 6, Advances (Editorial Comment:
Link to Handbook)
6.2.2 What are Grants and Cooperative Agreements?
Grants and cooperative agreements are financial assistance instruments, rather than
acquisition instruments, used by the Department of Interior (DOI) to transfer a thing
of value to carry out a public purpose of support or stimulation authorized by Federal
statute. OMB Circular A-102 Grants and Cooperative Agreements with State
and Local Governments Section A http://www.whitehouse.gov/omb/circulars/
defines when to use grants and cooperative agreements. See the Department of
Interior Interagency Acquisitions Handbook for agreements between governmental
departments (agencies) and between bureaus and offices within DOI. (Editorial Note:
Link to Handbook)
6.2.3 What is the Department of Interior Guidance?
It is the guidance of DOI to account for and to administer financial assistance
instruments in accordance with applicable statutory authority, OMB and Treasury
guidelines, and Departmental policies and procedures governing such agreements.
6.2.4 What are the Accounting Procedures?
• Recording of Obligations – The grant or cooperative agreement award document
is the official instrument used in DOI Federal financial assistance programs that:
establishes a legally binding arrangement between DOI Bureaus/Offices
and the recipient;
may contain or reference the terms and conditions of the grant or
cooperative agreement (the sponsor and the recipient must comply with all
laws and regulations pertaining to the financial assistance transaction and
to the underlying objective, whether or not those laws are stated in the
agreement)
provides the documentary basis along with other required forms to initiate
payment processes such as automated clearinghouse (ACH) forms for the
obligation of Federal funds in the DOI accounting systems.
• Contents of an Award – A grant or cooperative agreement award shall at a
minimum
State the legal name of the recipient and the formal name of the
Bureau/Office.
State the amount being awarded, including the appropriation and
accounting classifications to be obligated.
State the dates of the grant or cooperative agreement performance period.
State the purpose of the grant or cooperative agreement.
Include or incorporate by reference all terms, conditions, or agreement
clauses that are required by Departmental, Bureau, or program policies to
be incorporated in each individual grant or cooperative agreement award
document for the type of grant or cooperative agreement being made.
If not clearly stated in a document reference, clearly state:
Performance and financial reporting requirements applicable to the
grant or cooperative agreement, including the frequency and contents
of reports.
Prior approval requirements applicable to the grant or cooperative
agreement and how approval may be obtained.
• Payments – The acceptance of a grant or cooperative agreement creates a legal
duty on the part of the recipient organization to use the funds made available in
accordance with the terms and conditions of the grant or cooperative agreement.
Payment Methods – Grant or cooperative agreement payments are made
to recipients predominately via electronic transfer of funds.
Bureaus/Offices must participate in one of the following electronic
payment applications:
Automated Standard Application for Payments (ASAP) – The
Department of the Treasury’s ASAP system provides next-day
payment services to grantees (and certain contracts approved for
advance funding) via ACH transfer. The grantee or contractor submits
an electronic payment request to the Federal Reserve Bank of
Richmond (FRB Richmond). FRB Richmond processes the request
and sends the payment to the recipient’s bank account.
Field Office and/or Centralized Procurement Staff Responsibilities
Principal responsibilities include the following:
enrolling the recipients with the Financial Management Service;
setting up accounts for the recipients in the ASAP system;
inputting authorizations; and
reconciling accounting records to ASAP accounts. The system
produces various reports for field office and recipient use. For
further information, see I TFM 6.
Health and Human Services’ Payment Management System
(HHS/PMS) The Department of Health and Human Services provides
next-day payment service to grantees (and certain contracts approved
for advance funding) via automated clearinghouse (ACH) transfer
under a cross-servicing agreement. Field Offices desiring the service
must sign individual agreements. The grantee or contractor submits an
electronic payment request to the National Institutes of Health (NIH)
payment-processing center. The payment center processes the request
and sends the payment to the recipient’s bank account via the FRB
Richmond. For some programs, grant recipients have the capability to
draw down cash directly from the HHS/PMS once the field office
obligates funds.
Field Office and/or Centralized Procurement Staff Responsibilities –
Principal responsibilities include the following:
registering recipients with the NIH payment center;
inputting authorizations into the system; and
reconciling accounting records to the system. HHS/PMS provides
SF-224, “Statement of Transactions,” reporting to Treasury and
produces various reports for field office use. Inquiries about the
system should be addressed to:
Department of Health and Human Services
Division of Payment Management
P.O. Box 6021
Rockville, MD 20852
• Timing of Payments – Regardless of the particular method used, limit the
advances to a recipient to the minimum amounts needed, and time the payments
in accord with the actual, immediate cash requirements of the recipient in carrying
out the purpose of the approved program or project. The timing and amount of
cash advances shall be as close as administratively feasible to actual
disbursements for direct program costs and the proportionate share of allowable
indirect costs. See the Cash Management Handbook, Chapter 6. (Editorial Note:
Link to Handbook)
• Withholding Payments – DOI Bureaus/Offices reserve the right, upon written
notice, to withhold future payments after a specified date if the recipient: fails to
comply with the terms and conditions of the grant or cooperative agreement,
including the reporting requirements; or is indebted to the U.S. Government.
Refer to guidance on entitlements for P.L. 93-638 grants or agreements or contact
your grants and agreement coordinator or Native American Affairs Office for
more information.
6.2.5 What are the Responsibilities of Recipients and Bureau/Office Finance
Offices?
Responsibilities of Recipients – Recipients of DOI grants and cooperative
agreements have the following responsibilities:
To establish and maintain a system of accounting and internal controls and to
ensure that an adequate system exists for each of its sub-recipients, contractors
and for any delegated programs.
To establish and maintain a system of internal controls to adequately
safeguard grant funds and resources; to check the accuracy and reliability of
the grant accounting and financial data; to promote its operational efficiency;
and to encourage adherence to prescribed managerial policies.
To draw Federal funds only at the time actually needed to make
disbursements and to prevent withdrawals from exceeding the amount of the
award.
To submit all financial, performance and other prescribed reports required as
a condition of the agreement.
To impose the same standards of timing and amount upon any secondary
recipient organizations.
To balance cash at the closeout of a grant or cooperative agreement by
drawing funds to equal approved outlays or refunding the cash that is in
excess of approved outlays.
• Responsibilities of Bureau/Office Finance Offices – Bureau/Office finance
offices have the following responsibilities:
To participate in one of the two authorized Treasury systems described in 6.2.4 above.
Participation in the Treasury systems is voluntary by the recipients.
To monitor recipient responsibilities for compliance and take corrective action.
To obligate and deobligate grant or cooperative agreement funds, as requested.
To record as an advance or reimbursement in the accounting records, dependent upon
the terms of the grant/cooperative agreement, upon receipt of the 270 and/or a receiving
report signed by the grant manager. See the Cash Management Handbook, Chapter 6 for
advances. (Editorial Note: Link to Handbook)
To reconcile cash with Treasury on a monthly basis as stated in Chapter 6.1.2.
6.2.6 What are the Requirements for Financial Reporting?
The recipient’s financial management systems shall provide for accurate, current, and
complete disclosure of the financial results of each DOI-sponsored project or program
on the accrual method of accounting, in accordance with financial reporting
requirements of the grant or cooperative agreement. Recognize cost and accrued
expenditures based upon performance by the recipients. Determine accrued
expenditures, whenever reasonably practicable, on the basis of actual performance.
Whenever it is not practicable to obtain timely performance reports, projections,
estimates, or extrapolations based on experience, statistical sampling or mathematical
models may be used.
Limit the financial reports submitted to the Department to those required by OMB
and the General Accounting Office, and by the Department in fulfilling its cash
management responsibilities in accordance with Treasury regulations. By law,
financial reporting requirements placed upon financial assistance recipients are
limited to minimize administrative reporting burdens. Generally, reporting shall be no
more frequently than quarterly and no less frequently than annually. If recipients are
not reporting at least quarterly, accruals are still needed on a quarterly basis. The
responsible office shall determine the type and frequency of reporting that best serves
DOI’s financial interests and objectives in making the award.
The responsible official designated by the Bureau/Office shall review reports for
completeness, accuracy, and compliance with the terms and conditions of the award.
The responsible official should follow up with the recipient regarding reports not
received or not received in a timely manner or reports that are inadequate or incorrect
in order to identify and resolve the problem.
6.3 Gifts and Donations
6.3.1 What are the Authoritative Sources?
The General Accounting Office in the Principles of Federal Appropriation Law,
Volume II, Chapter 6, “Gifts and Donations to the Government” http://www.gao.gov
(legal products) defines the term “gifts” as “gratuitous conveyances or transfers of
ownership in property without any consideration.” 25 Comp. Gen. 637,639 (1946); B-
217909, September 22, 1986. The rule is that a government agency may not accept
for its own use (i.e., for retention by the agency or credit to its own appropriations)
gifts of money or other property in the absence of specific statutory authority (16
Comp. Gen. 911 (1937)). Thus, acceptance of a gift by an agency lacking statutory
authority to do so is an improper augmentation. If an agency does not have statutory
authority to accept donations, it must turn the money into the Treasury as
miscellaneous receipts.
A. Generally Accepted Accounting Principles (GAAP)
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources,
paragraphs 258-259, http://fasab.gov/pdffiles/sffas-7.pdf define and provide
standards for donated assets.
• 18 U.S.C. Part I, Chapter 11, Section 209; 31 U.S.C. Section 1353. Subsection
(a); and 5 U.S.C. § 4111 http://www.gpoaccess.gov/uscode/browse.html include
rules regarding accepting private contributions to the salary or expenses of a
federal employee.
• 31 U.S.C. Subtitle II, Chapter 13, Subchapter II, Section 1321 Trust Funds
and Refunds http://www.gpoaccess.gov/uscode/browse.html.
B. Federal Agency Guidance
• GAO Principles of Federal Appropriation Law, Volume II, Chapter 6, “Gifts
and Donations to the Government”; GSA’s implementing regulations, are
found at 41 C.F.R. Part 304, http://www.gpoaccess.gov/cfr/index.html.
• Treasury Financial Manual, Vol. 1, Part 2, Section 1520.20 at
http://www.fms.treas.gov)
C. DOI Guidance
• Financial Statement Preparation Guidance, at www.doi.gov/pfm/finstate.html
• Real Property Financial Management Policy Guide discusses the DOI
requirements for real property http://www.doi.gov/pfm/real_property_guide.pdf.
• Gifts and donations classified as trust fund accounts (defined in the Treasury
Financial Manual, Vol. 1, Part 2, Section 1520.20 at http://www.fms.treas.gov) by
31 U.S.C. Subtitle II, Chapter 13, Subchapter II, Section 1321 Trust Funds and
Refunds, are disbursed in accordance with the terms of the trust. As such, reflect
gifts and donations in full on the Department's accounting records and financial
statements.
6.3.2 What are the Bureau/Office Responsibilities?
The Bureau/Office Finance Officer shall ensure that:
• An internal operating manual is developed and maintained for gifts and bequests;
• A system of administrative controls exists for Gifts and Donations (G&D) Funds.
Budgetary resources available for obligation are limited to the amount of receipts
credited to the G&D account. Therefore, in order to avoid a deficiency violation
for G&D, the account manager should make the following determination for each
proposed obligation:
Is the obligation covered by the existing fund balance for G&D;
Is a collection necessary in advance to cover it; or
Should the obligation be charged to another appropriation, if it properly
supports the mission of that appropriation, such as for travel to give a speech
or otherwise represent the Department; (The obligation may be transferred to
the G&D account once a matching collection has been received.)
• Documentation supporting the value of gifts received, including services in-kind,
is collected and maintained. This includes those gifts of less than $250. Record all
gifts in a log and assign a control number. The dollar amount recorded shall
represent the value of the assets or services actually received. Specifically notate
gifts and decorations from a foreign government.
• Documentation supporting the value of expenses incurred is collected and
maintained. Record expenses in a log and match to, or cite the control number of,
a related donation. The travel voucher shall document the approved payment of
G&D funds for travel. Maintain an authorized "Request for Authorization for
Official Entertainment" or equivalent document for each non-travel expenditure;
• An inventory of capitalized and accountable donated property is maintained;
• A physical count of donated property is taken at least annually and the count is
independently verified;
• Donated property inventory records are updated when an item is excessed to
GSA;
• Information is collected on all G&D donations (monetary receipts, other assets, or
services), expenses, and property dispositions, and forwarded to the
Bureau/Office finance office at least monthly. The information forwarded to the
finance office supports period-end cutoff entries. This includes:
Expenses incurred for which a gift reimbursement has not been received;
Donations received for which offsetting expenditures have not been made;
Donations of assets, such as airline tickets, received for services yet to be
performed; and
Promises of a gift for services yet to be performed.
• A separate set of general and subsidiary ledgers is maintained for revenues,
expenses, and budgetary and statistical accounts of G&D activity, if material.
• Information on all gifts is properly recorded in the accounting records;
• The annual inventory count of donated property is verified.
6.3.3 How Do Bureaus/Offices Process Donated Funds?
Donations made to the Department which match expenses incurred, such as for
employee travel, are not refunds and do not negate the requirement to record a
revenue and a budgetary resource. Instead, record the amount of the donation in full
and record the expense separately. The Statement of Changes in Net Position,
Statement of Financing, and the SF-133, Report on Budget Execution/FACTS II
reflects the full value of funds received and expenses incurred.
An unconditional gift of funds (i.e., no matching expense is expected to be incurred)
is recorded as a debit to Fund Balance with Treasury and a credit to Donated
Revenue. If a gift is received for a service not yet performed, credit Deferred Credits
(Unearned Revenue) instead. Recognize the receipt of a monetary gift also as a
budgetary resource. Since these funds are not subject to apportionment, record them
with a budgetary entry debiting Other Appropriations Realized and crediting
Unobligated Funds not Subject to Apportionment.
6.3.4 How Do Bureaus/Offices Process Services In-Kind?
• Value services provided to the Department generally at the donor's cost. For
specific circumstances, refer to GSA's travel gift valuation rules in 41 CFR 304-9.
Maintain documentation supporting the donor's cost (such as receipts, bills, or
letters). Record donations of services in-kind as a debit to Operating
Expenses/Program Costs and a credit to Donated Revenue; no budgetary entry is
made. See Financial Statement Preparation Guidance, at
www.doi.gov/pfm/finstate.html for reporting on the Statement of Net Cost.
6.3.5 How Do Bureaus/Offices Account for Other Assets?
Refer to Chapter 2.7 of this Handbook.
6.3.6 How are Obligations and Expenses Recorded?
• Record an undelivered order established in G&D funds as a debit to Unobligated
Funds not Subject to Apportionment and a credit to Undelivered Orders. No
proprietary entry is made.
• Record expenses incurred with a debit to Operating Expenses/Program Costs and
a credit to Fund Balance with Treasury or Accounts Payable and a second entry
which:
Debits Deferred Credits and credits Donated Revenue, if a matching
collection has been received previously; or
Debits Accounts Receivable and credits Donated Revenue, if a matching
collection has been promised by a donor. The budgetary entry debits
Undelivered Orders and credits Expended Appropriations.
• Reflect depreciation expense taken on capitalized donated assets with debits to
Operating Expenses/Program Costs, and credits to the Accumulated Depreciation
account of the asset and Donated Revenue. No budgetary entry is made. Report
depreciation on the Statement of Financing as Costs That Do Not Require
Resources, since it is not an expense requiring a cash payment. Depreciation is
also an adjustment subtracted from Total Expenses to reconcile to Accrued
Expenditures on the Statement of Budget and Actual Expenses.
6.3.7 How Do Bureaus/Offices Post Transfers of Gifts and Donations Between
Bureaus/Offices?
Upon the transfer of G&D funds to another bureau, debit the equity account
Transfers-Out to Others Without Reimbursement in the amount of the transfer and
Fund Balance with Treasury credited. Debit the budgetary entry to Unobligated
Funds not Subject to Apportionment and credit to Appropriation Transfers. Reverse
the budgetary transaction for the transfer of funds from another bureau. In this case,
the proprietary entry is to debit Fund Balance with Treasury and credit Transfers-In
from Others Without Reimbursement. Treat all transfers as non-operating changes on
the Statement of Changes in Net Position and as cash flows from financing activities
on the Statement of Financing.
6.3.8 What Yearend Entries are Required?
At yearend, finance offices should ensure that entries are made to reflect the proper
accounting status of transactions Section VI
http://www.fms.treas.gov/ussgl/current.html.
6.4 Cost Recovery/User Charges
6.4.1 What are the Authoritative Sources?
• Title V of the Independent Offices Appropriation Act (IOAA) of 1952 (31
U.S.C. Subtitle VI, Chapter 97, Section 9701) – The IOAA provides general
authority. IOAA states: "It is the sense of Congress that each service or thing of
value provided by an agency . . . to a person . . . is to be self-sustaining to the
extent possible." http://www.gpoaccess.gov/uscode/browse.html
• Specific authority – A specific authority may take precedence over general
authority. (e.g., The Mineral Leasing Act (30 U.S.C. 185), the Copy Fee Statute
(43 U.S.C. 1460), the Federal Land Policy and Management Act (FLPMA) (43
U.S.C. 1734 & 1764)).
• The Economy Act of 1932 (31 U.S.C. Sec. 1535) at
http://uscode.house.gov/download/31c15.doc - prescribes the rules for the
purchase of supplies, equipment, or service by one Federal Government bureau or
department from another Federal Government bureau or department.
• 31 U.S.C. Subtitle V, Chapter 65, Sections 601-608, Intergovernmental
Cooperation http://www.gpoaccess.gov/uscode/browse.html
• Statement of Federal Financial Accounting Standard (SFFAS) #4
“Managerial Cost Accounting Concepts and Standards for the Federal
Government” at http://www.fasab.gov/pdf/sffac-4.pdf also provides guidance.
• OMB Circular A-25 at
http://www.whitehouse.gov/omb/circulars/a025/a025.html - provides executive
agencies guidance on "User Charges." OMB Circular A-25 provides guidance on
all Federal activities that convey special benefits to recipients beyond those
accruing to the general public.
• OMB Circular A-45, Rental and Construction of Government Quarters,
under circulars at http://www.whitehouse.gov/omb/circulars/a045/a045.html
• OMB Circular A-97, Specialized or Technical Services for State and Local
Governments http://www.whitehouse.gov/omb/circulars/a097/a097.html
• Solicitor’s M-Opinion No. M-36987, “BLM’s Authority to Recover Costs of
Minerals Document Processing” (Dec. 5, 1996) at
http://www.doi.gov/sol/solopin - offers general guidance on cost recovery.
6.4.2 What is the Department of Interior Guidance?
OMB Circular A-25 states the purpose as “The Circular establishes Federal policy
regarding fees assessed for Government services and for sale or use of Government
goods or resources. It provides information on the scope and types of activities
subject to user charges and on the basis upon which user charges are to be set.
Finally, it provides guidance for agency implementation of charges and the
disposition of collections.” Bureaus/Offices should use this Circular and the activity
specific information provided in this Section to establish their own specific policies,
procedures, and rates; unless a Bureau/Office has legislation that provides cost
recovery requirements and guidance or directs that specific activities are exempt from
cost recovery.
6.4.3 What is the General Policy?
OMB Circular A-25, Section 4 defines a user charge as conveyance of special
benefits to an identifiable recipient by a federal agency beyond those accruing to the
general public. (User charges do not include transactions between federal agencies.)
The general policy is stated in OMB Circular A-25, Section 6 at
http://www.whitehouse.gov/omb/circulars/a025/a025.html. Section 6-a “Special
Benefits” determines when special benefits exist. Some types of benefits are:
• Private Benefit – benefits only the recipient. The cost of providing private
benefits may be recoverable.
• Independent Public Benefit – benefits only the public or some independent
public interest. An independent public benefit is generally a programmatic
function of an agency, and does not specifically benefit an identifiable recipient.
These costs would be incurred in the absence of any particular cost recoverable
activity. The cost of providing public benefits where there is no identifiable
recipient, or where the ultimate beneficiary is obscure, is not recoverable.
Examples of independent public benefits are wilderness inventories, land use
planning, and programmatic environmental impact statements. See Solicitor’s
Opinion No. M-36987 (Dec. 5, 1996); Mississippi Power & Light Co. v. Nuclear
Regulatory Comm’n., 601 F.2d 223, 231 n.17 (5
th
Cir. 1979), cert denied, 444
U.S. 1102 (1980); Secretarial Decision, Alyeska Pipeline Service Co., July 29,
1977.
• Private benefit with Incidental Public Benefit – a private benefit that
incidentally includes some public benefit. When benefits accrue to the recipient
(private), there may also be incidental public benefits. For example,
environmental studies that must be performed to grant a permit are an integral
part of the permit-granting process and bestow a special benefit on the permit
recipient; however, the studies may also have incidental public benefits. It is not
necessary to segregate the private and public benefits under the IOAA. A
Bureau/Office "may recover the full cost of providing a service to a private
beneficiary, regardless of whether that service may also benefit the public."
(Mississippi Power & Light Co. v. Nuclear Regulatory Commission, 601 F.2d
223, 229 (5th Cir. 1979), cert. denied, 444 U.S. 1102 (1980)). See also, OMB
Circular No. A-25 at 6.a paragraph 3.
An agency cannot recoup the full cost of the regulatory program where part of the
costs is for independent public benefits. Federal Power Comm’n v. New England
Power Co., 415 U.S. 345 (1974); Mississippi Power & Light Co. v. Nuclear
Regulatory Commission, 601 F.2d 223, 228 (5th Cir. 1979), cert. denied, 444 U.S.
1102 (1980). The first step in measuring cost is to be sure that the costs at issue
are supported and relate directly to a special benefit to an identifiable recipient.
The fee or charge must be related to "the value of the direct and indirect services
which the agency confers . . . [and not] the value which the regulated party may
immediately or eventually derive" from the benefit. A fee or charge "cannot be
justified by the revenues received or the profits [earned by the beneficiary], but
must be reasonably related to those attributable direct and indirect costs which the
agency actually incurs . . . ." (National Cable Television Association v. FCC, 554
F.2d 1094, 1107 (D.C. Cir. 1976)(emphasis deleted)).
6.4.4 What are the Exceptions to the General Policy?
In accordance with OMB Circular A-25, Section 6-c, Bureau heads are hereby
delegated the authority to make exceptions to the general user charge policy if the
provision of a free service is an appropriate courtesy to a foreign government or
international organization; or comparable fees are set on a reciprocal basis with a
foreign country. Requests for exceptions and extensions under paragraphs (2) and (3)
of Section 6c shall be submitted to the Director of the Office of Management and
Budget.
Such exemptions require documentation explaining the reason(s) for exemption,
identifying the recipient entity, and providing the estimated dollar value of the
exception. All other recommended fee exemptions must be fully documented and
justified, and submitted to the Director of PFM in advance for review. Other reasons
for exempting user fees include:
• The incremental cost of collecting the charges would be an unduly large part of
the receipts from the activity.
• The recipient is engaged in a nonprofit activity designed for the public safety,
health, or welfare.
Additional user fee exceptions may be granted based on other rational reasons subject
to the approval of PFM. The Director of PFM will review the request and
recommend approval or disapproval to the Departmental Chief Financial Officer
(CFO). Upon Departmental approval by the CFO, the recommended exemptions
must be submitted to OMB for its required approval under OMB Circular A-25.
When the imposition of a user charge is prohibited or restricted by existing law or
regulation, Bureaus/Offices are expected to follow the existing law or regulation and
consider and recommend legislative/regulatory changes, when appropriate, to remove
impediments restricting user charges; see Section 6.4.6 of this Handbook.
6.4.5 What are the Methods for Calculating User Charges?
There are two primary methods for calculating charges/fees, i.e., full cost and market
price; see Section 6.d of OMB Circular A-25. According to OMB Circular A-25
Section 6a, paragraph 2, use full cost when the Government is acting in its capacity as
sovereign and market prices when the Government is not acting in its capacity as
sovereign.
6.4.5.1 How are User Charges Determined?
In setting "fair and equitable" user charges, the IOAA states that each agency must
consider "direct and indirect costs to the Government, value to the recipient, public
policy or interest served, and other pertinent facts." The Supreme Court indicated
that agencies are without authority to consider “public policy or interest served”
because user charges based on such considerations would amount to improper tax
levies (National Cable Television Association v. United States, 415 U.S. 336 (1974)).
Therefore, under the IOAA, direct and indirect cost to the government and value to
the recipient are the only two factors that must be considered in determining "fair and
equitable" costs. See 6.4.2 for value to the recipient.
• Full Cost – See OMB Circular A-25, Section 6-d, paragraph 1. Full cost includes
direct and indirect costs. Apply costs consistently as either direct or indirect in
similar situations. Avoid treating the same type of cost as direct in one instance
and indirect in another.
Exceptions to full cost:
Independent Public Benefit – Each Bureau/Office must carefully review costs
(both direct and indirect) and exclude the cost of independent public benefits.
Specific Legislation – A Bureau/Office should adhere to authorizing
legislation that specifies the types that should be recovered; i.e., interest on the
federal investment, or specifically prohibits recovery of certain categories of
costs, such as the Federal Land Policy and Management Act, 43 USC 1734(b),
which excludes recovery of management overhead.
• Market Price – See OMB Circular A-25, Section 6d, paragraph 2 for the
definition of market price and how to determine it.
A good example of market price is the rates charged for quarters rental. Market
pricing can result in a net surplus or deficit for the activity. Should a loss occur,
management must determine the value of the product/service and whether the
activity is mandated. Losses result in a subsidy of the activity from appropriated
funds. If an activity results in a net deficit and is not mandated, management
should consider discontinuing it.
6.4.5.2 How are Direct Costs Determined?
Direct costs are recoverable if such costs would not have been incurred but for the
recoverable activity and are necessary for the completion of the activity. The
following items, when clearly identifiable with a specific activity, are considered to
be direct costs:
• Personnel Costs
Direct Labor – Direct labor is that portion of base wages or salaries that can be
identified with and charged to a particular activity.
Fringe Benefits – Fringe benefits (e.g. retirement, health insurance, and life
insurance) are those allowances and services provided to employees as
compensation, in addition to the base wages or salaries used in determining the
basic hourly rate or the annual rate of pay. The cost of Bureau/Office-provided
fringe benefits is recovered by applying to direct labor costs a rate that
represents the value of the fringe benefits.
When recovering fringe benefits on an actual basis through the formal
accounting system, only those benefits that can be associated with the specific
activity will be charged as a direct cost.
When using cost-finding techniques to determine the applicable fringe benefits,
the following considerations apply. The Bureau/Office costs for Civil Service
retirement or Social Security benefits are determined by applying the applicable
rate (as authorized by law) to the identified base salaries or wages. The health
and life insurance rate to be applied to the identified base salaries or wages can
be obtained by determining the relationship between the Bureau/Office
insurance costs and the total of the base salaries and wages for all employees.
Leave and Holidays – For purposes of cost recovery, Bureaus/Offices will
recognize the cost of leave (annual leave, sick leave, and holidays) based on a
bureau-wide leave surcharge rate. Leave is not to be charged to a cost
recoverable activity when it is taken. Derive the leave surcharge rate by
referencing the actual leave taken in the prior year. An example of the
derivation of the leave surcharge rate is given in Illustration 1. This leave
surcharge rate will be applied to the sum of the direct labor and fringe benefits
that are charged to (if using actual cost billings) or associated with (if using
cost-finding techniques) the cost recoverable activity. Review and update the
factors used in developing the leave surcharge rate yearly.
Overtime and Premium Pay – When identifiable with a specific activity, charge
overtime and premium pay in the same manner as the regular wage portion of
an employee's earnings.
Other Personnel Costs – Allowances for off-site pay, location allowances,
hardship pay, hazardous duty pay, uniform allowances, incentive pay, cost of
living differential, night differential, etc., are charged in the same manner as the
related base labor charge.
• Equipment Purchases – The acquisition cost of equipment (less estimated
salvage value) that is necessary to the rendering of a service to a non-Federal
recipient may be charged directly to a cost recoverable activity only in the
following two circumstances:
The cost of the equipment is $15,000 or less; or
There is an explicit agreement that allows the Bureau/Office to purchase the
equipment and collect such costs from the recipient. In this instance, the
non-Federal recipient must clearly understand that the rights and title to the
equipment will remain with the Government at the conclusion of the cost
recoverable activity.
In all cases other than the two listed above, the acquisition cost of equipment will not be
charged directly to cost recoverable activities, but a proportionate part of the equipment's
cost (depreciation) will be charged as a cost of the recoverable work. (For a discussion
of depreciation requirements, see SFFAS No. 6, “Accounting for Property, Plant, and
Equipment” and SFFAS No. 11, “Amendments to Accounting for Property, Plant, and
Equipment”) If the portion of collections that represents depreciation pertains to
equipment purchased in the current fiscal year, (where there is specific authority to
reimburse the financing appropriation) such funds may be used in the appropriation in
the current fiscal year. However, if such collections pertain to equipment purchased in
prior fiscal years, such collections (for other than working capital funds) must be
deposited into the General Fund of the Treasury as Miscellaneous Receipts.
• Miscellaneous Items – The following are examples of other items to be
charged as direct costs when incurred or consumed exclusively for the
completion of the specific activity.
Miscellaneous supplies and materials
Equipment rentals
Travel
Purchased services such as printing, ADP services, and photographic
reproduction
Contractual services
6.4.5.3 How are Indirect Costs Determined?
Indirect costs are costs that cannot be directly identified to a cost object; i.e., a
program, project, or activity. The following list contains examples of those types of
items normally considered indirect costs. Unless charged as direct costs or prohibited
by legislation, these costs should be included in the indirect cost pool even if they are
not charged to the administration line item. Cost-finding techniques may need to be
employed to retrieve these costs from other budget line items.
• Space rental
• Utilities, including telephone expenses
• Postage
• Unemployment Compensation Benefit costs
• Data processing, management, and control
• Equipment rentals
• Miscellaneous supplies and materials
• Equipment costs
• Training, employee development, and personnel transfers, including costs of
travel and time in-transit
• Budget development and program planning, coordination, and direction
• Research and development activities
• Administrative support related to a Bureau/Office's overall mission. This is
perhaps the largest portion of indirect costs and usually relates directly to the
administration line item in the general management appropriation. It includes
such costs as procurement, contracting, office services, property management,
vehicle management, supply, finance, payroll, voucher processing, personnel
services, records management, and document control
• Reports – This includes all costs of preparation, review, and distribution of
required recurring reports, such as accounting or property reports
• Public information and inquiries
• Safety management, including inspection, training, and promotion
• Equal Employment Opportunity Office and other affirmative action programs,
including employee counseling and review of grievances and appeals.
6.4.5.4 How is the Indirect Cost Pool Identified?
• General Management - Most Bureaus/Offices have a budget line item for
general management or operating appropriations to carry out their programs.
Usually there is a line item(s) for administration (sometimes called general
administration, administrative programs, administrative expenses, or executive
direction) that supports all Bureau/Office appropriations. Since each
Bureau/Office must be able to accumulate and report costs, these costs may
become the nucleus of the indirect cost pool. Work financed from other
appropriations may also draw support from administrative expenses. These
represent another facet of the indirect cost pool. The Bureau/Office must
determine that portion of the support cost from each activity that benefits the
activity.
• Other Indirect Costs – Costs in the general management budget line item
discussed above are generally not all of the indirect costs. Each Bureau/Office
has other support costs that are accumulated in other activities or cost centers that
support operations. These activities, sometimes called program support or
program services, are not usually budgeted line items. Costs in these activities are
generally prorated or charged directly to budgeted line items. These costs are also
a part of the indirect cost pool.
• Indirect Cost Rate – Indirect costs can be expressed in a number of ways. They
may be applied as a percentage rate to total direct costs, selected direct costs,
direct labor hours, or by any other rational means. The guidance in this Section is
directed at developing a single percentage rate to be applied to total direct costs
for each major program.
The traditional method of developing a percentage rate to determine indirect
costs is to estimate indirect costs for the current period (usually monthly or
quarterly) and calculate the ratio of the estimated indirect costs to estimated
direct costs (i.e., direct labor cost, cost of materials, etc.) for the period. This
method recognizes that significant variances between actual and estimated
indirect and direct costs may occur and therefore requires frequent
recalculation.
A simpler method, for relatively stable programs, is to develop the indirect
cost rate based on historical results. (The traditional method described in the
paragraph above is a more appropriate method to use for rapidly expanding or
contracting programs, which need to be closely monitored, with frequent
adjustments made to the indirect cost rate when appropriate.). Prior year costs
are usually the most applicable base to use in developing the current year's
indirect cost rate.
Elements – The following elements must be considered in developing the
indirect cost rate.
Prior year direct costs – This includes all costs charged to appropriations in
the prior year, including reimbursables, except grants, loans, payments from
receipts, and any direct costs determined to relate to an independent public
benefit. Exclude the indirect costs identified in the next subparagraph.
Prior year indirect costs – This includes all indirect costs identified above
except those indirect costs determined to relate to an independent public
benefit or specifically excluded by authorizing legislation.
Formula – The indirect cost rate formula is as follows:
Prior year indirect costs
÷ = Indirect cost rate
Prior year direct costs
Example – An example of the indirect cost rate calculation
is given in Illustration 2.
Illustration I
Leave Surcharge Rate Calculation Example
Step 1: Assume bureau A has 3,000 employees. By referencing the leave information
for the prior year, it is determined that 96,000 days of leave were taken by the bureau A
employees (i.e., 45,000 days of annual leave, 24,000 days of sick leave, and 27,000 days
representing holidays). The average number of days of leave taken in the prior year per
employee is 32, determined as follows: 96,000 total leave days taken divided by 3,000
employees equals 32 average leave days taken per employee.
Step 2: Subtract the average leave days taken per employee (Step 1) from 260 (duty
days).
260 duty days - 32 average leave days taken = 228 average workdays per employee per
year.
Step 3: Divide the average leave days taken in the prior year (Step 1) by the average
workdays per year (Step 2) to determine the leave surcharge rate.
32 average leave days taken per year divided by 228 average workdays per year equals
14% leave surcharge rate.
Illustration 2
Indirect Cost Rate Calculation
Assume the following prior year information for the ABC Agency.
Appropn. 1 Appropn. 2 Appropn. 3 Appropn. 4 Total
Direct program
1[1]
$365,021,242 $27,648,590 $21,949,872 $20,918,731
$435,538,435
+ Reimbursable program 10,998,406 2,879,815 -0- -0-
13,878,221
Total program cost 376,019,648 30,528,405 21,949,872 20,918,731
449,416,656
-Grants and loans 5,406,520 -0- -0- -0-
5,406,520
- Indirect costs 67,871,410 2,510,198 1,804,828 1,720,041
73,906,477
Prior year direct costs $302,741,718 $28,018,207 $20,145,044 $19,198,690
$370,103,659
Assumption: Appropriation 1 includes amounts for general management.
Also assume that prior year indirect costs were as follows:
Total indirect costs (from above)
2[2]
$73,906,477
Less: Indirect costs attributable to independent public benefit 23,879,076
Indirect costs applicable for cost recovery $50,027,401
Insert the figures into the formula (10-e (3) (b) to arrive at the indirect cost rate.
$ 50,027,401
÷ = 13.52%
$370,103,659
6.4.6 What are the Cost Accounting Processes?
It is preferable that user charge activities have cost accounting processes established
in the formal accounting system (SFFAS # 4, “Managerial Cost Accounting,” will
serve as the principal authoritative reference/guide for cost determination). However,
in some circumstances, described below, acceptable cost-finding techniques may be
used. See Chapter VIII, Managerial Cost Accounting of this Handbook also.
• Applicability – Cost-finding techniques involve the production of cost data by
analytical or sampling methods rather than on the basis of formal cost
accumulation in the accounting system. In determining the costs to be recovered,
there are circumstances where cost-finding techniques should be used in lieu of
accumulating costs through the formal accounting system. Cost-finding
techniques may be appropriate for certain kinds of costs, such as indirect costs,
costs below certain thresholds within programs, or the cost of certain programs in
their entirety. The following criteria are to be used in determining when such an
approach may be used:
The amount of work to be performed is minimal and the scope is limited;
therefore, no need exists for accumulation of data in the formal system.
Reasonable and accurate results can be expected by analytical or sampling
techniques.
The cost to develop and accumulate charges would be inordinately high with
respect to the dollar amount to be realized.
The accumulation of costs under a cost-finding technique would result in
definite savings and economy.
• Documentation – Bureaus/Offices that use cost-finding techniques must
maintain appropriate work papers as part of the official accounting records to
support computations made in the application of cost finding. Review and update
analytical data or sampling results used in developing factors or rates to be
applied in this approach as often as conditions warrant.
6.4.7 How is the Policy in OMB Circular A-25 Implemented?
See OMB Circular A-25, Section 7 for implementation requirements. It is important
that Bureaus/Offices provide appropriate notice of fees to their customers and other
interested parties, and follow rule making procedures regarding an increase in or the
establishment of new fees when required by law or regulation.
6.4.8 What are the Responsibilities for Implementing OMB Circular A-25?
• Department – In accordance with the Chief Financial Officer's Act of 1990, the
Departmental CFO is responsible for overseeing the Department's User Charge
Program. PFM is responsible for providing advice and assistance to the CFO and
Bureaus/Offices on user charge/cost recovery matters. The Solicitor is
responsible for providing legal advice on proposed regulatory or legislative
changes. Legislative proposals must follow the guidance provided in OMB
Circular A-19. Legislative proposals that propose a different treatment of
appropriations and receipts are to be coordinated through the Office of Budget.
• Bureaus/Offices – The responsibility for the initiation, development, and
implementation of user charge procedures consistent with the policies and
authorities contained in OMB Circular A-25 and this Handbook rests with the
head of each Bureau/Office. Bureau/Office responsibilities are the same as agency
responsibilities described in OMB Circular 25, Section 8 except for the additional
following items:
Establish written user charge/cost recovery procedures as a supplement to this
Section, or through regulations, as appropriate, subject to the approval of the
PFM;
Comply with the cash management practices outlined in the Cash
Management Policies and Procedures Handbook; and
Submit legislative proposals, when appropriate, to OMB through the
Departmental CFO and the Office of Budget to: Make receipts available to
the financing appropriation; and/or remove limitations or restrictions placed
on or prohibiting user charge/cost recovery in existing laws.
6.4.9 How Are User Charge Collections Handled?
OMB Circular A-25, Section 9 provides policy for disposition of collections.
6.4.10 What Reviews and Reports Are Required?
• Biennial Review and Report on All User Charge Activities – The Chief
Financial Officers (CFO) Act of 1990 (PL 101-576, 104 Stat. 2838) requires that
user charge programs be reviewed at least every other year. The CFO Act Section
205, Subsection 902 (a) (8), states that the Agency Chief Financial Officer must:
“review, on a biennial basis, the fees, royalties, rents and other charges
imposed by the agency for services and things of value it provides and make
recommendations on revising those charges to reflect costs incurred. . . “
OMB Circular A-25, Section 8e states the biennial review should include: (1)
assurance that existing charges are adjusted to reflect unanticipated changes in
costs or market values; and (2) a review of all other agency programs to determine
whether fees should be assessed for Government services or the user of
Government goods or services. Bureaus/Offices should conduct the biennial
review on all existing user charge/cost recovery activities. Also, identify and
address activities with user charge potential as to whether to pursue user charges.
Submit a report in the format of the Departmental User Charge Data Base to PFM
for each user charge/cost recovery activity. PFM will issue a data call and report
format to provide detailed review and report requirements.
• Annual Cost Recovery Report – After the end of each fiscal year, DOI requires
Bureaus/Offices submit a report containing narrative, financial, and quantitative
data on cost recovery activities on a fiscal year basis. The report format will be
provided. The reports will be due mid-December following the close of the fiscal
year. In order to minimize the reporting burden, the biennial review required by
the CFO Act may be accomplished simultaneously with the cost recovery report
for the years that a biennial review is also required.
6.4.11 What are the Policies and Procedures for Rights-of-Way Projects?
6.4.11.1 What is the Purpose and Scope – This Section prescribes the Department's
policy and procedures for the accumulation of costs and the billing and reporting of
estimated and actual costs for those right-of-way projects where the estimated costs
of processing the application and monitoring the terms of the grant or permit are
$100,000 or more. In addition, the procedures discussed herein must also be
followed for those right-of-way projects that involve two or more Departmental
Bureaus/Offices (irrespective of the estimated cost). Bureaus/Offices may also
follow these policies and procedures where the estimated cost of a right-of-way
project is less than $100,000. The Bureau/Office supplement to this Section must
address the handling of the "less than $100,000" right-of-way projects.
6.4.11.2 What is the Authority for Rights-of-Way Projects?
Section 28 of the Mineral Leasing Act (30 U.S.C.- 185) provides for recovery of
Government costs associated with oil and gas pipeline rights-of-way across Federal
lands. Secretarial Order No. 3066 assigned the Bureau of Land Management as the
lead agency responsible for issuing right-of-way grants and permits for oil and gas
pipelines that cross lands administered by two or more Federal agencies.
A Bureau/Office must employ its specific authority (if any) for recovering costs
associated with non-oil and non-gas pipeline right-of-way grants and permits. In the
absence of any specific authority a Bureau/Office may use the Independent Offices
Appropriation Act (31 U.S.C. 483a) as the cost recovery authority for non-oil and
non-gas pipeline rights-of-way.
6.4.11.3 What is the Department of Interior Guidance?
Accumulate costs associated with processing right-of-way applications, issuing
grants and permits, and administering grant and permit provisions in such a manner
to withstand dispute in a court of law. See Chapter 6.2 of this Handbook for grants
and cooperative agreements. Adequately support billings by internal cost records in
sufficient detail to leave no doubt as to the purpose for which the costs were incurred.
Follow consistent procedures to:
• coordinate activities and provide a mechanism for resolution of disputes,
• authorize work and incur costs under an approved work plan,
• ensure that estimated and actual billings do not materially understate or overstate
Bureau/Office costs,
• ensure that items of costs billed are traceable to a documented entry (i.e.,
contracts; travel vouchers; time and attendance reports), and
• ensure that items of cost are continually reviewed as to accuracy, completeness,
and appropriateness.
6.4.11.4 What are the Exclusions?
Bureaus/Offices must adhere to any cost recovery exceptions that are present in
specific right-of-way legislation. In addition, the cost recovery procedures contained
herein do not apply to right-of-way grants or permits issued on Outer Continental
Shelf lands or to other Federal Government agencies.
6.4.11.5 What are the Definitions and Responsibilities?
• Authorized Officer – The head of the “lead” Bureau/Office or a Secretarial
Officer, as appropriate will designate the authorized officer.
• Bureau/Office Project Manager – An employee of the Bureau/Office officially
designated to plan, coordinate, supervise and manage the resources necessary to
meet the requirements for the granting of a right-of-way and associated ancillary
facility permits. He/she reports to the authorized officer. Where only one
Bureau/Office is involved in a right-of-way application and the subsequent grant
and associated permits, the Bureau/Office project manager is the authorized
officer.
• Responsibilities for Work Planning
The authorized officer is responsible for securing work plans and schedules
from applicants in sufficient detail to permit the planning of work by the
Department's Bureaus/Offices that is needed to process applications; to issue a
grant; and to monitor the construction, operation, maintenance and
termination phase of the grant and associated ancillary facility permits. (In
most cases, the application serves as the work plan.) He/she is also responsible
for disseminating those plans and schedules to the Bureaus/Offices on a
timely basis.
Bureaus/Offices, in turn, are responsible for evaluation of these plans and
schedules and the development of their own cost estimates for right-of-way
projects.
Bureaus/Offices must submit estimates of total costs to the authorized officer
for review and approval. The authorized officer must review each
Bureau/Office's cost estimates and provide the applicant with an estimate of
the total cost of processing the application, issuing grants and permits, and
monitoring construction, operation, maintenance, and termination. This is only
an estimate. Cost recovery is not limited to the amount of the estimate.
However, substantial deviations will likely require explanation.
• Quarterly Cost Estimates
Each Bureau/Office must submit quarterly cost estimates to the authorized
officer in advance of each quarter for purposes of billing the
applicant/grantee/permittee.
In order to develop the estimated cost to the Government for performing a
service, it is necessary to determine and accumulate the various elements of
direct and related indirect costs. A discussion of direct and indirect costs is
contained in 6.4.4.1.
Each Bureau/Office must provide cost estimates by task category. These task
categories are explained in the appendix to this Section and represent
groupings of similar activities into major classifications for billing and
reporting purposes. Bureau/Offices involved in the right-of-way project must
prepare quarterly cost estimates in a format similar to that shown in
Illustration 1. Include a brief description of the work to be performed in each
task category. The cost estimates for each task category are to be further
subdivided into personnel and related benefits, travel, contract, and other.
Each Bureau/Office must also provide the authorized officer a summary of its
estimated costs for the specified quarter.
• Billings for Advances (See DOI Accounting Handbook, Chapter 2.5.5 for
advances, Department of Interior Interagency Acquisitions Handbook, and
Cash Management Handbook, Chapter 6 at www.doi.gov/pfm/policy.html.
The preparation, review, and approval of advance billings are a part of the
work planning process. Each participating Bureau/Office will prepare
estimates of anticipated costs to perform work during a specified quarter of
the fiscal year.
Upon review and approval of the cost estimates, the authorized officer must
submit the cost data from the Bureaus/Offices to the billing office for issuance
of an advance bill. The authorized officer must return approved cost estimates
to the Bureaus/Offices and notify Bureau/Office project managers of any
change rendered to their billings as a result of the review process so that any
costs specifically disallowed are not charged by Bureaus/Offices against
cost-recoverable funds. These approved estimates are the only authorization
for conduct of work and the incurrence of costs for processing right-of-way
applications, and for monitoring the construction, operation, maintenance, and
termination phases of the grant and associated permits. Submit copies of the
approved estimates simultaneously to the appropriate billing office for
advance billing purposes.
• Cost Reports
Provide detailed reports of costs incurred for each quarter and Bureau/Office
summaries to the authorized officer for review as to applicability and
consistency with approved quarterly estimates. These detail cost reports must
relate to specific items and task categories as contained in the advance
billings. Any differences between advance payments and related costs
incurred will be reflected as additions to or deductions from the next advance
billing.
Submit these cost reports to the authorized officer within two months
subsequent to the close of the quarter. For each right-of-way project, the
authorized officer must then summarize the cost information. This cost
information (the summary and the detailed cost reports) must be provided to
the applicant, grantee, or permittee within three months following the close of
the quarter.
• Approval of Bureau Cost Recovery Procedures – Each Bureau/Office
performing any right-of-way work, where such work is subject to cost recovery, is
to issue a supplement to this Section, subject to the approval of PFM, which
specifies the internal procedures to be followed by that Bureau/Office in
conformance with the above stated processes.
Appendix to User Charges
Task Categories
Managerial-Administration: Direct Project staff costs. Includes cost and time spent in
project evaluations, project coordination, technical project direction, developing cost
estimates, administrative and clerical support, training, and preparation of reports and
correspondence and briefing material for public information and inquiry.
Inventory and Analysis-Data Collection: Includes all costs of gathering and compiling
overall resource data required as a result of the application (vegetation, hydrology,
geology, fisheries, wildlife, recreation, etc.). Includes cost and time spent on planning,
mapping, aerial photography, preliminary route analysis, and general research activities.
Studies and Research-Special Studies: Includes cost and time spent in planning,
initiating, conducting, administering, or reviewing topical or site specific study and
research efforts whether contracted or prepared in-house. Also includes work such as use
studies, feasibility studies, and research work occasioned by the right-of-way application.
Use Authorizations-Land Actions: Actions affecting temporary and permanent use of
lands for the benefit of the applicant(s) or permittee(s). Includes cost and time required
for preparation and technical review of Environmental Assessment Reports (EAR)
including costs of public meetings; preparation of and technical review of Environmental
Statements (ES), including costs of developing the ES Preparation Plan, writing and
assembling the ES, distribution and review, and conduct of public hearings/meetings;
field examination including costs and time of field investigations, reconnaissance
surveys, land examination and preparation of field reports, use authorization including
costs and time of issuing authorization for use or removal of resources on public lands
through material sales, temporary use permits, and free use permits; use adjustment
including all costs of affecting changes in existing use authorizations and termination of
authorized use.
Compliance-Surveillance: Includes all costs of ensuring compliance with the terms of a
right-of-way, grant, and associated ancillary facility permit. Includes cost and time spent
inspecting and monitoring the construction, operation, and maintenance of the grant and
permit area(s) to assure compliance with conditions, terms, and stipulations of all grants
and permits, construction plans and specifications for protection of public lands. Also
includes costs of investigation and control of a formal or suspected trespass in violation
of or in the absence of a valid authorization.
Construction Design Facilities: Includes cost and time involved in review of proposed
design concepts, construction modes, and other related documents determined as
necessary by the project manager including review of alignments, engineering design
procedures, special designs, and evaluation and necessary revision of activity plans to
insure compliance with technical stipulations.
Illustration 1
Reimbursable Cost Projections
DATE: May 15, 1981
APPLICANT: XYZ Gas Transmission Company
PERIOD OF ESTIMATE: July 1, 1981 through September 30, 1981
AGENCY: Bureau of Land Management
OFFICE: Colorado State Office
AGENCY PROJECT CODE IDENTIFIER(S): FC51
AGENCY CONTACT: R. 0. WAY
TELEPHONE NUMBER: (303) 327-0119
TASK CATEGORY; Managerial-Administration
1. Approximately six work months will be expended this quarter coordinating and
meeting with the necessary Federal, State, and local government agencies on activities
related to endangered species surveys to comply with the provisions of the Endangered
Species Act.
2. Approximately two work months will be needed to provide the full range of office
support, including typing and editing the terms of the right-of-way grant.
3. Approximately four work months will be needed to draft and publish the terms of the
right-of-way grant.
COST ESTIMATE:
Personnel and Related Benefits............... $19,040
Travel....................................... 750
Contract..................................... 375
Other........................................ 300
Subtotal - Direct Costs...................... 20,465
Indirect Costs (12% X $20,465)............ 2,482
TOTAL COSTS.................................. $22,947
DEPARTMENT OF THE INTERIOR
ACCOUNTING HANDBOOK
CHAPTER 7. ACCRUAL ACCOUNTING
7.1 What is the Purpose of this Chapter?
This Chapter sets forth basic principles, requirements and techniques for the Department
of Interior (DOI) accounting on an accrual basis, where financial transactions are
recorded in the period of occurrence, even though related cash is disbursed or received
during another period. Use of the accrual method provides DOI management with
financial performance information so that informed decisions may be made.
7.2 What are the Authoritative Sources?
• Chief Financial Officers Act of 1990, P.L. 101-576
http://www.gao.gov/policy/12_19_4.pdf
• 31 USC 3512(e) http://uscode.house.gov/title_31.htm
• Government Management Reform Act of 1994, P.L. 103-356
http://www.thecre.com/fedlaw/legal1/s2170.htm
• SFFAS No. 1, Accounting for Selected Assets and Liabilities, Paragraph 77
http://fasab.gov/pdffiles/sffas-1.pdf
• SFFAS No. 7, Accounting for Revenue and Other Financing Sources at
http://fasab.gov/pdffiles/sffas-7.pdf
• FASAB Concept # 1, Objectives of Federal Financial Reporting, Paragraph 145
http://fasab.gov/concepts.html
• OMB Bulletin 01-09 http://www.whitehouse.gov/omb/
7.3 What is the Department of Interior Guidance?
DOI Bureaus/Offices must develop an accrual (estimation) methodology that provides
valid, timely financial estimates. Bureau-specific processes and policies must meet
Generally Accepted Accounting Principles (GAAP) and be supportable. Bureaus/Offices
must determine the estimation methodology for all types of accruals, document and test
the methodology, obtain concurrence from the financial statement auditors for the
methodology, and forward the documentation to DOI Office of Financial Management
by June 1 of each year. Retain documentation reflecting computation and support for
accruals and analysis of accuracy of accruals for reference and audit.
DOI Bureaus/Offices must compute accruals and record them in the accounting system
for each quarterly accounting period. Enter the accruals into the accounting system prior
to quarter-end and September 30 annually.
7.4 Who is Responsible for Accrual Accounting?
Assistant Secretaries, Bureau Directors, bureau financial officials, and program managers
are responsible for implementing proper procedures and ensuring reliable accruals,
including approving accruals developed by personnel outside the finance offices.
7.5 What is the Definition of Accruals (Estimates)?
The accrual method of accounting recognizes the significance and accounting aspects of
financial transactions, events, or allocations in the reporting periods they occur. Costs are
recognized in the accounts when incurred and revenues are recognized when they are
earned.
7.6 What are the Criteria for Developing Estimates?
All Bureau/Office estimation processes must consist of the following steps:
• Identify situations for which accounting estimates are required.
• Identify and document the relevant factors that may affect the accounting estimate.
This includes subjective as well as objective factors. Base the factors on management’s
knowledge and experience about past and current events and its assumptions about
conditions it expects to exist and courses of action it expects to take.
• Accumulate relevant, sufficient, and reliable data on which to base the estimate.
Define data elements key to the methodology. Assess the validity of historical data.
• Develop and document assumptions that represent management's judgment of the
most likely circumstances and events with respect to the relevant factors (including
any exceptions).
• Determine the estimated amount based on the assumptions and other relevant
factors. Demonstrate that the aggregate values below any established threshold or
accounts not considered are insignificant.
• Determine that the accounting estimate is presented in conformity with applicable
accounting principles and that disclosure is adequate.
• Consider whether the resulting accounting estimate is consistent with the
operational plans of the entity.
• Compare prior accounting estimates with subsequent results to assess the reliability
of the process used to develop estimates.
• Establish internal controls over the estimation process including review and
approval by management (someone other than the preparer) of the accounting
estimates, including:
Sources of relevant factors
Development of assumptions
Reasonableness of assumptions and resulting estimates
Consideration of the need to use the work of specialists
Consideration of changes in previously established methods to arrive at
accounting estimates
7.7 What are the Categories for Which Estimates May Be Developed?
Estimates may be developed for the following categories:
• Personnel Compensation, Personnel Benefits and Related Payments
Accrue gross compensation, including overtime, through the end of each quarter.
A labor distribution system may be used to distribute actual charges to cost
accounts and to credit accounts payable. If the labor distribution to cost accounts
does not vary significantly from payroll period to payroll period, the cost
distribution of a representative preceding payroll or the total annual payroll to
date may be used in determining the current accrual.
Accrue merit bonuses and awards, if significant in amount, in the quarter earned.
Accrue the cost of unused annual leave, compensatory time and credit hours
earned quarterly. Obtain accrued annual leave amounts from the Federal
Personnel and Payroll System.
Accrue benefits, including benefits to Social Security, retirement funds, the
Thrift Savings Plan, and group health and life insurance programs in the same
manner as gross compensation. Accrue other benefits, such as relocation-related
real estate costs and personnel allowances, in the quarter earned.
Accrue payments to the Office of Personnel Management for reemployed
annuitants and severance pay for former employees in the same manner as gross
compensation.
Accrue recruitment and relocation bonuses and retention allowances in the
quarter earned.
• Travel and Transportation
Obligate transportation, perdiem, and miscellaneous costs when the travel is
vouchered or travel card billing received from Bank of America. At the end of
the quarter and yearend, base the travel accrual on unvouchered travel
information obtained from Bureaus and Departmental Offices, if the amount
is significant to the Bureau/Office.
Accrue permanent change of station travel, transportation costs, and
transportation of household goods when incurred.
• OPM Life Insurance, Health Insurance, FERS Retirement, and CSRS Retirement,
and DOL Unemployment Compensation, Workers’ Compensation – Establish a
quarterly amount in quarter 01. Review and adjust accrual amount as needed. DOI,
Office of Financial Management will provide yearend accrual amounts from OPM and
DOL. See Chapter 6.1.5 of this Handbook.
• Intra-departmental transactions – Post accruals for intra-departmental transactions in
conjunction with the elimination reconciliation process or from supportable estimates.
Any accruals should be booked prior to the elimination process. Billings for current costs
will be billed according to the OMB Business Rules. See Chapter 6.1.5 of this Handbook
and the Department of Interior Interagency Acquisitions Handbook. (Editorial Note:
Link to the Interagency Acquisitions Handbook)
• Depreciation of Capitalized Real and Personal Property – Compute and recognize
depreciation on a monthly basis. Refer to DOI Real Property Financial Management
Policy Handbook, Item X – Depreciation for real property procedures.
• Contingent Liabilities – Record contingent liabilities based on reports from the
Solicitor’s Office that indicates a loss that is probable and can be reasonably estimated.
• Environmental Liability – Base the quarterly estimate on data provided by field
offices. Refer to Chapter 3.5.7 of this Handbook.
• Interest on Investments – Enter interest on investments the last day of the quarter based
on Bureau and Treasury data.
• Accounts Receivable and Allowance for Doubtful Accounts – Record accounts
receivable and allowance for doubtful accounts quarterly. Refer to Chapter 2.5.3 of this
Handbook.
• Charge Card Purchases – Process charge card purchases billed from Bank of America
through month end or yearend as current period business. Include any significant
amounts not billed by Bank of America as estimates.
• Miscellaneous Revenue, including non-DOI reimbursements – Accrue revenue in the
quarter in which it is earned. Include unbilled receivables and accruals for non-DOI
agencies and the public.
• Contracts, Purchase Orders, and Cooperative Agreements – See Chapter 7.3 of this
Handbook.
• Grants - Bureaus/Offices may use historical, estimates, or actual data to accrue incurred
but not reported (unbilled) grant expenses. An example is: the Fish and Wildlife Service
uses “high level” accrual models that estimate these liabilities based on statistical
analyses of payment patterns and the estimate criteria in Chapter 7.6 above.
• Inventory and Inventory Allowance – If a Bureau employs a perpetual inventory
system, make a rational allowance for excess, obsolete, or unserviceable inventory on a
quarterly basis. If a Bureau accounts for inventory on other than a perpetual basis,
determine the actual inventory at a point in time, and otherwise estimate both inventory
and an allowance on a quarterly basis.
• Reimbursable Revenues – When estimating payables to accrue, Bureaus must also take
into consideration those payables related to reimbursable agreements. The accrual
methodology must identify those transactions related to reimbursable agreements, and
make the appropriate general ledger entries, as shown below.
131D Accounts Receivable-On Budget-Unbilled
5200 Revenue From Services Provided
4251 Reimbursements Earned-Receivable
4221 Unfilled Customer Orders W/O Advance
7.8 What are Some General Assumptions for Accounts Payable Accruals?
In order for any accrual methodology to be successful, some general assumptions must
be made. Bureaus/Offices may add or delete assumptions, use more historical data, etc.
Support all assumptions by a detailed analysis that is reviewed and approved by
management and supported by appropriate documentation. In accordance with the
auditing standards, the financial statement auditors will request an analysis that supports
each assumption below and subjects this analysis to testing. All Bureaus/Departmental
Offices will list the assumptions that will be consistent throughout their process, such as:
• Bureaus/Offices may include intradepartmental accruals using this methodology if the
results are supportable estimates. Book the accruals prior to the elimination process.
• All direct charges are cyclical; therefore, use a cumulative average to estimate the
accrual for such transactions.
• All inter-governmental transactions occurring in a said month are for goods/services
received during the preceding month. This presumes that the rules for intra-governmental
transactions are implemented.
• Accrue travel claims for temporary duty travel, if significant.
• All payments for utilities made during a month are for services received during the
previous month.
• For all document types, the invoice date recorded in the accounting system reflects the
actual date of the invoice.
• Past accrual history is representative of the current amount. However, if history does not
prove consistency then the estimation process needs to be modified to consider the
fluctuations of history and the current period.
• All accrual figures produced from this methodology are inclusive of only non-labor
goods and services. The accrued payroll and benefits will continue to be based on the
automated process.
• For all document types, the acceptance date is the received date. Consider that the vast
majority of the goods or services with an acceptance period within two weeks of the end
of the period are for goods or services provided in the previous period. Since there may
be a number of days between receipt of the goods/services and the acceptance date
entered into the accounting system, Bureaus using the acceptance date assumption
should take a sample of payments and calculate the average number of days between
when the goods/services were received and the acceptance date for the goods/services
based on supporting documentation. To calculate the accrual, use the acceptance date
less the average number of days between the receipt and acceptance dates to determine a
representative receipt date. Update this analysis on a periodic basis.
• Undelivered orders are valid.
DEPARTMENT OF THE INTERIOR
ACCOUNTING HANDBOOK
CHAPTER 8. MANAGERIAL COST ACCOUNTING
8.1 What is the Purpose of this Chapter?
The purpose of this chapter is to describe the managerial cost accounting concepts and
standards and define the costing method used by the Department of Interior (DOI).
8.2 What are the Authoritative Sources?
• The managerial cost accounting concepts and standards contained in this chapter
are based on the Statement of Federal Financial Accounting Standards
(SFFAS) Number 4, Managerial Cost Accounting Concepts and Standards
for the Federal Government, at http://www.fasab.gov/pdffiles/sffas-4.pdf
• FASAB Interpretations # 2: Accounting for Treasury Judgment Fund
Transactions, # 6: Accounting for Imputed Intradepartmental Costs: An
Interpretation of SFFAS No. 4, http://www.fasab.gov/interprt.html
• Technical Bulletin 2002-1, Assigning to Component Entities Costs and
Liabilities that Result from Legal Claims Against the Federal Government
http://www.fasab.gov/tchbl.html.
8.3 What are the Purposes for Using Cost Information?
SFFAS No. 4, Managerial Cost Accounting Concepts and Standards for the Federal
Government http://www.fasab.gov/pdffiles/sffas-4.pdf, paragraphs 31-40 describe the
purposes for using cost information as budgeting and cost control, performance
measurement, determining reimbursements and setting fees and prices, program
evaluations, and economic choice decisions.
8.4 What are the Managerial Cost Accounting Concepts?
SFFAS No. 4, Managerial Cost Accounting Concepts and Standards for the Federal
Government, paragraphs 41-66 http://www.fasab.gov/pdffiles/sffas-4.pdf contain the
concepts of the role of managerial cost accounting in financial management, common
data source for information flow within a financial management system, the relationship
to financial accounting, the relationship to budgetary accounting, cost information for
management purposes, proper financial management that requires the three accounting
processes work closely together to provide useful reporting to both internal and external
users, basis of accounting and recognition/measurement methods, and reconciliation of
information.
8.5 What are the Managerial Cost Accounting Standards?
• SFFAS No. 4, Managerial Cost Accounting Concepts and Standards for the
Federal Government, paragraphs 67-162 http://www.fasab.gov/pdffiles/sffas-
4.pdf contain the managerial cost accounting standards: requirement for cost
accounting, responsibility segments, full cost, inter-entity costs, and costing
methodology. See FASAB Interpretations # 2: Accounting for Treasury
Judgment Fund Transactions and # 6: Accounting for Imputed Intradepartmental
Costs: An Interpretation of SFFAS No. 4 http://www.fasab.gov/interprt.html
Responsibility Segments – For DOI, the bureaus are the responsibility segments; and for
the bureaus, the major programs are the responsibility segments.
8.6 What Costing Method Does the Department of Interior Use?
DOI has adopted Activity Based Costing (ABC) which is a methodology that allows an
organization to focus on the activities or work done that generate cost, and to analyze
what influences the amount of cost, what causes cost to occur, the cost of work
performed, and the outputs produced from the work done. For information on DOI ABC
see http://www.doiu.nbc.gov/abc/.
DEPARTMENT OF THE INTERIOR
ACCOUNTING HANDBOOK
CHAPTER 9. FISCAL OPERATIONS:
9.0 What is the Purpose of this Chapter?
This chapter discusses the accounting function for payroll, benefits, and allowances;
uniform allowances; undelivered orders; and records management.
9.1 Payroll, Benefits, and Allowances
9.1.1 What is the Accounting Function’s Responsibility for Payroll, Benefits,
and Allowances?
The accounting, payroll, and personnel functions all interact in performing
activities and using information related to labor. The Department of Interior
(DOI) policy is that the DOI CFO has primary responsibility for establishing
policy and ensuring performance of the following activities:
• The timely recording of general ledger transactions.
• The accounting treatment of payroll and personnel actions.
• The requirements for authorization, documentation support, and timing of
financial events.
Some labor accounting functions are performed outside the financial accounting
organization. For example, the DOI National Business Center is responsible for
maintaining general ledger transactions related to withholdings.
The payroll/personnel function has primary responsibility for establishing policy
and ensuring performance of the following activities:
• The administration of all payroll and personnel matters.
• The maintenance of employee records to support the general ledger.
Some payroll/personnel functions are performed elsewhere. For example,
employee records to support the general ledger are currently maintained in the
DOI accounting system.
9.1.2 What are the Authoritative Sources?
The guidance and procedures in this chapter are issued pursuant to:
• “Maintaining Effective Control Over Employee Time and Attendance
Reporting”, GAO-03-352G, January 2003
http://www.gpoaccess.gov/gaoreports/index.html.
• Treasury Financial Manual Vol. I, Part 3,
http://www.fms.treas.gov/tfm/vol1/index.html
• Office of Personnel Management's Operating Manuals
http://www.opm.gov/index.asp.
• 5 U.S.C. Part III, Subpart D, Chapter 55, Subchapter VIII, Section 5584
http://www.gpoaccess.gov/uscode/browse.html
9.1.3 What are the Objectives of the Department of Interior’s Time, Attendance,
and Leave Reporting?
The objectives of DOI’s time, attendance, and leave reporting are:
• Prompt payment in the proper amount to all personnel entitled to be paid;
• Prompt accounting for and disposition of all authorized deductions from gross
pay;
• Adequate control over, retention, and disposition of all payroll-related
documents; and
• Prompt preparation of adequate and reliable payroll records to support
management purposes; planning, preparation, execution, and review of the
budget; and internal and external requirements.
9.1.4 What are the Principles and Standards for Time and Attendance
Reports?
Edited and approved time and attendance reports shall be transmitted each pay
period to the payroll processing function. The time and attendance function must:
• Support the collection of time and attendance data based upon an established
tour of duty, including alternative work schedule/flexitime information.
• Support the collection of work hours, leave hours, and all other pay-related
hours, as well as labor hours for cost accounting purposes from one source
document for each employee.
• Support the collection of labor distribution hours by the cost classification
structure.
• Provide for the collection of time and attendance on a dai
ly, weekly, biweekly,
semimonthly, and/or monthly basis.
• Calculate and adjust weekly hours based on Fair Labor Standards Act (FLSA)
requirements.
• Accept time and attendance data through various processing modes.
• Support the correction of current- and prior-pay period time and attendance
records.
• Input time spent by employees who work temporarily in a cost classification
within the department but in different organizations or cost centers or in other
departments.
• Provide for the capture of time and attendance data in fractions of hours.
• Generate a time and attendance report.
• Provide the capability to receive electronic approvals from authorized
supervisory personnel and release data for further system processing.
9.1.5 What are the Requirements for the Time and Attendance Function?
•
All payroll transactions shall be integrated with, and controlled by, the general
ledger accounts of the Bureau/Office. The general ledger accounts and pro-
forma entries shall be in agreement with the DOI Standard General Ledger.
• All personnel must be adequately trained in their functions. Timekeepers and
other personnel outside the accounting offices shall be furnished
comprehensive instructions for recording and processing source documents
relative to time worked or other basis for payment.
• Internal control of basic documentation at the operating level shall include a
separation of functions between timekeeping and distribution of pay.
• Supervisors, who are in a position to know the activities of an employee, shall
review time and attendance reports.
• No personnel will be responsible for certifying their own time except in rare
circumstances. See 205 DM 6.
• Each accounting office is responsible for reconciling the Abstract of
Transactions, the NBC report that shows total disbursements by appropriations
and schedule number, to the general ledger and to the Treasury Fiscal Service
(TFS) Form 6653, Undisbursed Appropriations Account Ledger. Any
differences must be resolved in a timely manner.
9.1.6 What are the Standards for Time and Attendance Records?
Time and attendance is to be recorded accurately to ensure that the presence and
absence of employees are accurately recorded and reported for purposes of
computing payroll, leave, and allowances.
Time and attendance records must be safeguarded together with SF 71s, Request
for Leave or Approved Absence, and overtime approvals to preclude unauthorized
changes to approved documents. The time and attendance report shall show that
each employee is entitled to his or her normal pay or to a greater or lesser amount
by showing the number of hours the employee worked and the nature and lengths
of absences.
The time and attendance report must be signed by the employee and certified as
correct by their supervisor.
9.1.7 What is the Official Payroll/Personnel System for the Department of
Interior?
DOI currently utilizes a department-
wide integrated payroll and personnel system,
Federal Payroll/Personnel System (FPPS), developed and operated by the
National Business Center (NBC). DOI policy is that the payroll application of the
payroll and personnel system must be integrated with the DOI accounting system
with regard to financial data.
9.1.8 How are Collections of Erroneous Payments Made From Employees?
The NBC must:
• Determine whether an erroneous payment has been made to an employee
(paid under Federal funds); whether the employee is indebted to the United
States as a result of such payment; and establish a plan under which the
indebtedness will be recovered (5 U.S.C. Part III, Subpart D, Chapter 55,
Subchapter II, Section 5514 http://www.gpoaccess.gov/uscode/browse.html).
• Review of any objections of the employee involved to the determination of
indebtedness or to the proposed plan of repayment will be made by a superior
officer of the individual receiving the redelegation of the authority delegated
in 205 DM 6. The superior officer reviewing the employee’s objection, upon
conclusion the determination is correct, will concur in or establish a modified
plan for repayment of the indebtedness.
• Review the claim to assure it falls within the statutory time limitation. It is
important that the date of discovery of the erroneous payment be definitely
determined by a management official. This is the date from which the 3-year
statutory limitation is computed.
9.1.9 How are Waivers for Erroneous Payments Processed?
Chapter 205 DM 6 gives the general delegations for waivers. Applications for
waiver must be received either in NBC or the Bureau/Office three years
immediately following the date of discovery of the erroneous payment. If the
application is received after the expiration of that statutory period, the applicant
shall be advised that no action may be taken because the application is time-
barred. Such notice to the applicant shall include the applicable statutory
provision, the date of discovery of the erroneous payment, and the date of receipt
of the application for waiver. Cases of doubt as to the application of the statutory
time limit shall be forwarded to the General Counsel through PFM.
• Standards For Waiver – A waiver may be granted only when collection
would be against equity and good conscience and not in the best interests of
the United States. Generally, these criteria will be met by a finding that the
erroneous payment occurred through administrative error and that there is no
indication of fraud, misrepresentation, fault, or lack of good faith on the part
of the employee or other person having an intere
st in obtaining a waiver of the
claim. Generally, waiver is precluded when an employee or other person
having an interest in obtaining waiver receives a significant unexplained
increase in pay or allowances, or otherwise knows, or reasonably should
know, that an erroneous payment has occurred, and fails to make inquiries or
bring the matter to the attention of the appropriate officials.
Waiver under this standard must necessarily depend upon the facts existing in
the particular case. The facts upon which waiver is based should be recorded
in detail and made a part of the comprehensive written record. The
Government's claim against an employee for repayment of an advance of
funds for travel or relocation expenses may be considered for waiver if: (1) the
a
dvance was made to cover expenses erroneously authorized; (2) the employee
actually spent the advance in reliance on the erroneous travel authorization;
and (3) the employee is indebted to the Government for repayment of all or
part of the amounts advanced after the advance is applied against any
legitimate expenses incurred by the employee.
• Procedure for Obtaining a Waiver
Refer the report of investigation together with a recommendation to the
Office of Hearings and Appeals for waiver of any claim or referral in an
amount aggregating more than $1500 (paid under Federal funds).
Refer the report of investigation together with a recommendation to the
Office of Hearings and Appeals if the claim of the United States is in an
amount aggregating $1500 or less without regard to any repayment, and
such officials have doubt as to whether waiver action is proper.
Advise an employee when an application for waiver of a claim in an
amount aggregating more than $1500 is denied, and of his/her right to
appeal the denial to the Office of Hearings and Appeals.
• Maintain a Register of Waivers showing the disposition of each application
for waiver. The register shall be retained for a period of three years, for
review by the General Accounting Office and the DOI Office of Inspector
General. The register shall contain the following information:
The total amount waived;
The number and dollar amount of waiver applications granted in full;
The number of waiver applications granted in part and denied in part
and the dollar amount of each;
The number and dollar amount of waiver applications denied in their
entirety;
The dollar amount refunded as a result of waiver action by the
Bureau/Office.
9.2 Uniform Allowances
9.2.1 What is the Purpose of the Uniform Allowances Section?
The purpose of this Section is to establish Departmental guidance and procedures for
the payment of uniform allowances to employees under the Federal Employees
Uniform Allowance Act of 1954, as amended. This Section also prescribes the
manner in which payments for uniform allowances are made to eligible employees
and to the vendors who furnish uniforms.
The provisions of this Section are applicable to all Bureaus/Offices. This Section
covers the procedures for payment of initial and replacement uniform allowances to
employees whose duties require the wearing of a uniform. Bureaus/Offices
authorizing employees to wear a prescribed uniform must adhere to the guidance and
procedures and comply with the regulatory authority under which uniform allowances
are authorized.
9.2.2 What are the Authoritative Sources?
• Federal Employees Uniform Allowance Act, Public Law 83-763, 5 U.S.C.
Part III, Subpart D, Chapter 59, Subchapter I, Sections 5901-5903 and
Federal Employees Pay Comparability Act of 1990, PL 101-509.
http://www.gpoaccess.gov/uscode/browse.html.
• 5 U.S.C. Part III, Subpart F, Chapter 79, Section 7903 - Protective Clothing
and Equipment http://www.gpoaccess.gov/uscode/browse.html. .
• 5 CFR 591.101 – 104 http://www.gpoaccess.gov/cfr/index.html.
9.2.3 What is the Department of Interior Guidance?
The payment of a uniform allowance is proper only in those cases where employees
are required by law, regulation, or Bureau/Office directive to wear a uniform, and the
Bureau/Office has not provided the uniform. Uniform is defined as wearing apparel
different from that normally worn in off-duty hours. Items of protective clothing
authorized to be worn by Bureau/Office employees are not considered a uniform and
are not subject to this policy (see 51 Comp. Gen. 446).
9.2.4 What are the Departmental Responsibilities for Uniforms?
• Departmental – The Office of Financial Management, Office of Assistant
Secretary - Policy, Budget and Administration is responsible for furnishing policy
and procedural guidance to implement regulatory directives and issuances, and
providing assistance and guidance to the bureaus and offices on the payment of
employee uniform allowances.
• Bureaus/Offices – Bureaus/Offices are responsible for:
determining the uniform to be worn,
designating who is to wear the uniform,
setting the price for each article of clothing constituting the uniform,
conducting periodic reviews of representative uniform suppliers to
establish initial and replacement uniform allowance costs, and
furnishing uniforms or paying uniform allowances to employees
9.2.5 How are Uniform Allowances Determined?
The maximum uniform allowance is $400 per employee, per year. Listings of each
item of clothing constituting the uniform should be compared with price lists of
representative suppliers to determine employee uniform allowances. A designated
official will review annually the prices of representative suppliers on which uniform
cost estimates are based and adjust the total uniform allowance accordingly.
9.2.6 How are Payments for Uniforms Made?
No uniform allowance may be paid an employee required to wear a uniform as a
condition of his/her employment unless provision has been made in the applicable
appropriation act. Payments must be made at regular fixed intervals. Procedures
must be established which will assure that, in adjusting payments to coincide with
regular payment dates, employees will receive neither more nor less than the total
annual amount to which they are entitled.
• Payment to Employees
Initial Allowance – Payment of the initial annual uniform allowance may be
made as follows:
In advance for the total annual amount;
In advance, periodically, prorated over a shorter period of time until the
total annual amount has been paid;
At the end of a period of service (biweekly, monthly, etc.), as established
by the head of the bureau/office; or
As reimbursement, up to the allowable maximum, to the employee for
purchase of authorized components upon submission of appropriate
evidence of expenditure such as receipts or invoices.
Replacement Allowance – Payment for replacement allowances may be
made as follows:
In advance for the total annual uniform allowance (authorized only when
the employee is expected to remain for the year in a job subject to the
same uniform requirements);
In advance, quarterly, or at more frequent regular intervals;
At the end of an administratively established period of service; or
At any time for the actual cost of uniform articles purchased on a cash or
credit basis, as evidenced by receipts or invoices submitted by the
employee, but not in excess of the annual uniform replacement allowance.
Period Covered by Allowance
Adjustment of Allowance – The uniform allowance payment must cover
the period of service where the wearing of a uniform is required in
accordance with approved bureau or office standards. Reduced
requirements must be considered in adjusting allowance payments as
follows:
Limited period of employment, such as for seasonal employees.
Extended absences in non-pay status such as for military furlough or
educational purposes.
Payment Upon Transfer or Furlough – Employees must be paid for
fractional parts of allowance periods when:
Uniform allowance is payable at the end of administratively established
periods of service;
Employees are separated;
Employees are furloughed for military or educational purposes;
Employees are in other non-duty status for extended periods or are
transferred to positions not requiring the wearing of a uniform.
Refunds – No employee will be required to make a refund of an advanced
initial allowance payment, provided the payment was properly made and the
employee complied with the conditions under which the allowance was
granted. However, a refund will be required when the entire annual
replacement allowance is paid in advance and the employee ceases to be
entitled to a uniform allowance due to a change in position, transfer,
resignation, retirement, etc. In such cases, the employee is entitled to one-
fourth of the annual allowance for each quarter or portion thereof in which the
employee remained eligible for a uniform allowance. The remainder of the
allowance must be recovered by refund from the employee or deduction from
salary or other amounts due to the employee.
• Payment to Vendors – Payments are made to vendors upon presentation of
appropriate evidence by the vendor and the eligible employee of purchase or
rental and subsequent receipt of the uniforms. As specified in PL 101-509,
payments to vendors may be reduced by 4 percent to defray the Government’s
costs of reimbursement.
• Employees Allowance Account – The full amount of clothing purchased as
represented by receipts and vendors invoicing must be posted to the employee’s
allowance account.
9.3 Undelivered Orders
9.3.1 What are Undelivered Orders?
Undelivered orders are contracts or orders issued by the ordering activity for goods or
services that have not been received. No expense or accounts payable is incurred for
undelivered orders.
9.3.2 Who is Responsible for Implementing Procedures for Undelivered Orders?
Assistant Secretaries, Bureau Directors, bureau financial officials, and program
managers are responsible for implementing proper procedures to ensure the timely
review of undelivered orders, cancellation of invalid undelivered orders, and
certification of valid undelivered orders.
9.3.3 Why is it Necessary to Review Undelivered Orders?
The timely expenditure of obligated funds is a fundamental principle of sound
financial management. Excess undelivered orders serve as an indicator that a manager
may not be effectively using allocated funds. Recurring reviews of undelivered
orders, resulting in cancellation or deobligation of invalid obligations, increases funds
available for no-year appropriations and for annual appropriations if the obligation to
the annual fund occurred in the current fiscal year.
9.3.4 What are the Minimum Review Requirements?
• Review undelivered orders quarterly.
• Document and certify quarterly all undelivered orders over 12 months old with
no activity, indicating why the obligation is valid. If the obligation is invalid,
deobligate the obligation with appropriate supporting documentation. Retain the
quarterly documented review for reference and audit.
• Review current year annual obligations as appropriate to identify invalid
obligations.
• Include any adjustments prior to the end of the reporting period, quarterly or
annually.
• Complete the documented, certified quarterly review 30 days after the end of the
quarter.
Report the completed review as a key performance measure accomplishment to
PFM as required by Chapter 5 of this Handbook.
9.4 Records Management
9.4.1 What is the Purpose of this Section on Records Management?
This Section provides guidance and assistance to responsible Bureau/Office
accounting personnel on documentation, record keeping, retention, and disposition of
Federal financial records. Bureaus/Offices are responsible for having a records
management function with approved records disposition schedules that include
financial records.
9.4.2 What are the Authoritative Sources?
• Federal Records Act of 1950 and the Federal Records Management
Amendments of 1976 (44 U.S.C. Secs. 2902(5), 2906, 2909, 3302, 3303(3),
3303a(a), 3309, and 3312) http://www.gpoaccess.gov/uscode/browse.html;
• National Archives and Records Administration Act of 1984, Public Law 98-
497;
• General Accounting Office (GAO) Policy and Procedures Manual for
Guidance of Federal Agencies, Title 7, Fiscal Procedures and Title 8, Records
Management http://www.gao.gov;
• 380 DM, Records Management and 384 DM, Records Disposition.
• 303 DM 6, Indian Fiduciary Trust Records
9.4.3 Who is Responsible for Records Management?
The Bureau/Office records manager is responsible for the Bureau’s records
management program. However, each accounting office is responsible for the care
and protection of the records it creates and that are in its custody. While the records
are in the custody of bureau accounting offices, officials should ensure that the
documents are not prematurely destroyed. Title 18, U.S.C. Part I, Chapter 101, Sec.
2071 http://www.gpoaccess.gov/uscode/browse.html prohibits the destruction of
Federal records without proper authority. If the records are destroyed or are
accidentally mutilated or marred so that their content disappears, notify the Director,
GAO Records Management Center, and the National Archives and Record
Administration (NARA), in writing. The responsibilities of a Bureau/Office
accounting office, relating to these and other records, are included in the GAO
Policies and Procedures Manual for Guidance of Federal Agencies, Title 8, “Records
Management” http://www.gao.gov.
Department of Interior Bureaus/Offices have an additional requirement with respect
to Indian fiduciary trust records. These records must be separately inventoried and
identified and must comply with special retention and disposition procedures as
determined by the Office of Trust records.
9.4.4 What are the Requirements for Records Management?
Each Bureau/Office accounting office, in cooperation with their Records
Management Officer, must ensure a continuing, active records management program
which adheres to Departmental regulations and procedures. The program's objectives
should include:
• Documenting the organization, policies, functions, and procedures completely and
accurately;
• Controlling the quality and content of records produced to include all essential
transactions of the Department, in order to furnish the information necessary to
protect the legal and financial rights of the Government and of persons directly
affected by the Department's activities;
• Simplifying the process of records creation and maintenance; and
• Preserving and disposing of records in a judicious manner.
Additional requirements of DOI
Bureaus/Offices are to:
• Develop a separate records retention
and disposition schedule;
• Evaluate its records to determine if it creates, manages, or uses Indian fiduciary
trust records; and
• Review its records and update its inventory of Indian fiduciary trust records
annually.
• Maintain records in such a manner so as to facilitate an audit by independent
auditors. In addition, GSA and NARA have a statutory right to inspect a
Bureau/Office’s records at any time.
9.4.5 What is a Records Schedule?
A Records Schedule is a document that separately lists and describes each
identifiable system of records. The schedule also lists the retention period of these
systems of records. All accounting records should be listed and accounted for in the
Records Schedule, and their disposition must conform to this schedule.
Virtually all the documents of an accounting office that support the disbursement or
collection of monies is what GAO consider accountable officers' accounts. GAO has
issued guidance in addition to NARA guidance pertaining to these records.
The General Records Schedules, issued by NARA, provide mandatory retention and
disposal standards for records common to most agencies. The General Records
Schedules shall be referred to or incorporated in the Bureau/Office's Records
Schedule. However, records subject to the General Records Schedule or an approved
SF 115, Request for Records Disposition Authority, may not be destroyed until the
completion of an audit, investigation, or review by GAO involving the records,
whichever is later.
The following is the listing of General Records Schedules most likely to affect a
Bureau/Office accounting office:
• Schedule 2 - Payroll and Pay Administration Records
• Schedule 6 - Accountable Officers’ Accounts Records
• Schedule 7 - Expenditure Accounting Records
• Schedule 8 - Stores, Plant, and Cost Accounting Records
• Schedule 9 - Travel and Transportation Records
9.4.6 How are Exceptions to the General Records Schedule Obtained?
GAO will consider requests for not using applicable retention periods specified in the
General Records Schedule provided the agency furnishes the following information:
• A citation of the General Records Schedule authority that would normally apply;
• A copy of operative units’ proposed schedules;
• A brief written explanation of how the records are used in conducting
Government business and the reasons justifying the change;
• Identification of the items needing GAO approval, if a complete schedule is
submitted; and
• Concurrence from the Office of Inspector General and Office of the Solicitor.
In addition, NARA may empower a Bureau/Office to retain records for a longer
period than that specified in the disposal schedules.
9.4.7 How are Accountable Officers’ Accounts Identified?
Pursuant to GAO's definition of accountable officers' accounts, these accounts consist
of the following specific documents or their equivalent:
• Statements of transactions;
• Statements of accountability;
• Collection schedules;
• Collection vouchers;
• Disbursement schedules;
• Disbursement vouchers;
• All other schedules and vouchers; or documents used as schedules or vouchers.
In summary, accountable officers' accounts encompass practically all documents
supporting disbursements or collection of money. The retention period for most of
these records is six-years and three-months.
Bureau/Office specific forms used in lieu of standard-form vouchers or schedules,
and machine-readable/electronic data versions of accountable officers' accounts are
included in this definition of accountable officers' accounts.
9.4.8 When are Accountable Officers’ Accounts Transferred to the Federal
Records Centers?
Accountable officers' accounts may be transferred to the appropriate Federal Records
Centers for storage, for servicing (if necessary), and/or for final destruction. Any
audited accounts and all unaudited accounts more than one full fiscal year old may be
transferred to the appropriate Federal Records Center by agencies without special
permission from GAO. However, GAO must approve authority to transfer
accountable officers’ accounts, which are less than one year old and have not been
audited.
NARA regulations in 36 C.F.R. Chapter XII, Sec. 1228.150 through 1228.164
http://www.gpoaccess.gov/cfr/index.html contain the addresses of the Federal
Records Centers and the areas served by each Bureau/Office, as well as procedural
requirements covering the transfer of records.
Bureau/Office accounting offices transferring fiscal records of any kind to a Federal
Records Center should be careful not to mix accountable officers' account records
with other records. Separate SF-135s, Records Transmittal and Receipt, must be
prepared for accountable officers' account records and other records being transferred.
Instructions for completing SF 135s are on the reverse side of the form.
In addition to the SF-135, an approved DOI “Records Move Request” form must
accompany all DOI records being transferred to a Federal Records Center. Approval
must be obtained from the DOI Associate Deputy Secretary.
9.4.9 What is the Procedure for Disposal of Certain Records Subject to GAO Audit?
When the disposal of records depends on the completion of GAO audits of related
accountable officers' accounts and the records are not required by the General
Records Schedule or some applicable law to be retained for a longer period, the
following retention period applies: "Destroy original documents when three 3 years
old or when audited by the General Accounting Office, whichever is earlier."
However, records that are otherwise scheduled for destruction because their
prescribing retention period has expired may not be destroyed if they are the subjects
of an ongoing GAO audit.
9.4.10 What are the Special Requirements Relating to Disposal of Bureau/Office
Records?
Records may be scheduled for disposal only in accordance with authority granted by
NARA. However, disposal of certain records (i.e., schedule 2 through schedule 10)
also requires GAO approval when the proposed disposition period is less than that
required in the appropriate General Records Schedule. When GAO approval is
required, both GAO and NARA approvals may be requested concurrently.
9.4.11 How is GAO Approval to Dispose of Records Requested?
From a procedural standpoint, the twin approvals by NARA and GAO are
independent of each other. However, when GAO approval is necessary, NARA will
not approve an agency's disposal request until GAO has first agreed with the
proposed disposition.
.
APPENDIX A
ACRONYMS
ABACIS Advanced Budget and Accounting Control Information System
ABC Activity-Based Costing
ACCS Accounting Classification Code Structure
ALC Agency Location Code
ATB Adjusted Trial Balance
BFY Budget Fiscal Year
BOC Budget Object Code
CFO Chief Financial Officer
CFR Code of Federal Regulations
CG Comptroller General, General Accounting Office
CMIA Cash Management Improvement Act of 1990
CSRS Civil Service Retirement System
DOI Department of the Interior
DOJ Department of Justice
DOL Department of Labor
DOS Disk Operating System
DR Departmental Regulation
EFT Electronic Fund Transfer
FACTS Federal Agencies' Centralized Trial-balance System
FAM Financial Administration Memoranda
FASAB Financial Accounting Standards Advisory Board
FASB Financial Accounting Standards Board
FAST Federal Account Symbols and Titles
FECA Federal Employees Compensation Act
FERS Federal Employees Retirement System
FFS Federal Financial System
FFMSR Federal Financial Management Systems Requirements
FMFIA Federal Managers' Financial Integrity Act
FTE Full Time Equivalent (staff years)
FY Fiscal Year
GAO General Accounting Office
GMRA Government Management Reform Act of 1994
GOALS Government On-line Accounting Link System
GPRA Government Performance and Results Act of 1993
GSA General Services Administration
HRM Human Resources Management
IPAC Inter-governmental Payment and Collection
IRS Internal Revenue Service
JFMIP Joint Financial Management Improvement Program
KSA's Knowledge, skills, and abilities
LAN Local Area Network
MOU Memorandum of Understanding
OGC Office of the General Counsel
OIG Office of the Inspector General
OIRM Office of Information Resource Management
OMB Office of Management and Budget
OPEB Other Post-employment Benefits
OPM Office of Personnel Management
OSI Overview and Supplemental Information
PFM Office of Financial Management PMB
PMB Office of Policy, Management, and Budget
PP&E Property, plant and equipment
PPA Prompt Payment Act of 1982
QC Quality Control
R&D Research and Development
RSSI Required Supplemental Stewardship Information
SEC Office of the Secretary, DOI
SF Standard Form
SFFAC Statements of Federal Financial Accounting Concepts
SFFAS Statement of Federal Financial Accounting Standards
SGL Standard General Ledger
SSA Social Security Administration
TFM Treasury Financial Manual
U.S.C. United States Code
WCF Working Capital Fund
APPENDIX B: GLOSSARY
The following glossary gives definitions of common accounting terms. Terms in italics
apply to loans, credits, and guaranteed loans only.
ABACIS the accounting system used by Minerals Management Service and the Office
of Surface Mining.
Absolute controls restrict obligations and/or expenditures to specific funds availability
thresholds and are due to legal limitations.
Activity: The actual work task or step performed in producing and delivering products
and services. An aggregation of actions performed within an organization that is useful
for purposes of activity-based costing.
Activity analysis: The identification and description of activities in an organization.
Activity analysis involves determining what activities are done within a department, how
many people perform the activities, how much time they spend performing the activities,
what resources are required to perform the activities, what operational data best reflect
the performance of the activities, and what customer value the activity has for the
organization. Activity analysis is accomplished with interviews, questionnaires,
observation, and review of physical records of work. It is the foundation for agency
process value analysis, which is key to overall review of program delivery.
Activity-based costing (ABC): A cost accounting method that measures the cost and
performance of process related activities and cost objects. It assigns cost-to-cost objects,
such as products or customers, based on their use of activities. It recognizes the causal
relationship of cost drivers to activities.
Actual cost: An amount determined on the basis of cost incurred including standard cost
properly adjusted for applicable variance.
Actuarial present value: The value of an amount or series of amounts payable or
receivable at various times, determined as of a given date by the application of a
particular set of actuarial assumptions.
Administrative expenses: The portion of salaries and expenses directly related to credit
program operations.
Advice of Allotment is the authority to incur obligations within a specified amount, in
accordance with OMB apportionments, reapportionments, or other statutory authority
making funds available for obligation.
Advisory controls restrict obligations and/or expenditures to specific funds availability
thresholds. They are optional and are established at department or entity discretion.
Allocation: (1) a subdivision of an entity's apportionment. Under most circumstances,
the sum of an entity's allocation would not exceed its apportionments, since absolute
funds control for commitments (if applicable), obligations, and expenditures are required
at the advice of allotment level. Distribution is optional and no legal limitation at the
transaction level is required. (2) The amount of obligation authority transferred from one
Bureau/Office, or account that is set-aside in a transfer appropriation account to carry out
the purpose of the parent appropriation or fund.
Amortization: The gradual extinguishments of any amount over a period of time
through a systematic allocation of the amount over a number of consecutive accounting
periods such as the retirement of a debt by serial payments to a sinking fund.
Applied research: Systematic study to gain knowledge or understanding necessary for
determining the means by which a recognized and specific need may be met.
Apportionment is a distribution made by OMB of amounts available for obligation in
an appropriation or fund account into amounts available for specific time periods,
programs, activities, projects, objects, or combinations thereof. The apportioned amount
limits the obligations that may be legally incurred. An apportionment made by calendar
quarters is a "Category A" apportionment. All other distributions of budgetary resources
(by other time periods, activities, projects, or combinations thereof) are "Category B"
apportionments.
Appropriation: In most cases, appropriations are a form of budget authority provided by
law that permits federal agencies to incur obligations and make payments out of the
Treasury for specified purposes. An appropriation usually follows enactment of
authorizing legislation. An appropriation act is the most common means of providing
budget authority, but in some cases the authorizing legislation itself provides the budget
authority.
Assets: Tangible or intangible items owned by the federal government which would have
probable economic benefits that can be obtained or controlled by a federal government
entity.
Book value: The net amount at which an asset or liability is carried on the books of
account (also referred to as carrying value or amount). It equals the gross or nominal
amount of any asset or liability minus any allowance or valuation amount.
Borrowing authority is budget authority given to a DOI entity to borrow funds from the
Treasury Department, through the issuance of promissory notes or other credits, or
through other specified means, and to obligate, expend, and disburse the borrowed funds,
including through the issuance of promissory notes or other monetary credits.
Budgetary Accounting: The system that measures and controls the use of resources
according to the purposes for which budget authority was enacted; and that records
receipts and other collections by source. It tracks the use of each appropriation for
specified purposes in separate budget accounts through the various stages of budget
execution from appropriation through apportionment and allotment to obligation and
eventual outlay. Budgetary accounts reside in the 4000 series of general ledger accounts
(SFFAS No. 7).
Budget authority: The authority provided by federal law to incur financial obligations,
as follows:
• Provisions of law that make funds available for obligation and expenditure (other
than borrowing authority), including the authority to obligate and expend the
proceeds of offsetting receipts and collections.
• Borrowing authority (see above);
• Contract authority, or the making of funds available for obligation but not for
expenditure. Statutory authority under which contracts or other obligations may
be entered into before an appropriation for the payment of such obligations. The
later appropriation provides cash to liquidate such obligations; and
• Offsetting receipts and collections as negative budget authority and the reduction
thereof as positive budget authority.
Budget authority may be classified by period of availability (1-year, multiple-year, and
no-year), by nature of authority (current or permanent), by the manner of determining the
amount available (definite or indefinite), or as gross (without reduction of offsetting
collections) and net (with reductions of offsetting collections).
Budgetary resources: The forms of authority given to an agency allowing it to incur
obligations; those amounts available to enter into obligations for specified purposes in a
given year. They include: (1) new budget authority, (2) offsetting collections credited to
an appropriation or fund account, (3) recoveries of unexpired budget authority through
downward adjustments of prior year obligations, and, (4) unobligated balances of such
resources at the beginning of the year or transferred in during the year.
Bureau/Office: Includes the eight Bureaus and other offices, including the Office of the
Secretary
Business type activity: Significantly self-sustaining activity which finances its
continuing cycle of operations through collection of exchange revenue.
Canceled Appropriation: (See expired appropriations): After an annual fund's last
expired year, the account is closed, and the balances are canceled. The authority to
disburse is canceled and is no longer available for any purpose.
Capital leases: Leases that transfer substantially all the benefits and risks of ownership
to the lessee.
Capitalize: To record and carry forward into one or more future periods any expenditure
the benefits or process from which will then be realized.
Cleanup costs: The costs of removing, containing, and/or disposing of (1) hazardous
waste from property, or (2) material and/or property that consists of hazardous waste at
permanent or temporary closure or shutdown of associated PP&E.
Collateral: Real or personal property pledged as part or full security on a debt.
Collections: Amounts received by the federal government during the fiscal year.
Collections are classified as follows:
• Budget receipts or off-budget receipts are collections from the public based on the
government's exercise of its sovereign powers, including collections from
participants in compulsory social insurance programs.
• Offsetting collections are collections from government accounts
(intragovernmental transactions) or from the public that are offset against budget
authority and outlays rather than reflected as receipts in computing the budget and
off-budget totals. They are classified as (a) offsetting receipts (i.e., amounts
deposited to receipt accounts), and (b) collections credited to appropriation or
fund accounts. The distinction between these two major categories is that
collections credited to appropriation or fund accounts are offset within the
account that contains the associated disbursements (outlays), whereas offsetting
receipts are in accounts separate from the associated disbursements. Offsetting
collections are deducted from gross disbursements in calculating net outlays.
Commitment is a reservation of funds for anticipated future procurement and is an
optional stage prior to the establishment of an obligation.
Common cost: The cost of resources employed jointly in the production of two or more
outputs and the cost cannot be directly traced to any one of those outputs.
Common data source: All of the financial and programmatic information available for
the budgetary, cost, and financial accounting processes. It includes all financial and
much non-financial data, such as environmental data, that are necessary for budgeting
and financial reporting as well as evaluation and decision information developed as a
result of prior reporting and feedback.
Condition: The condition of an asset is based on an evaluation of the physical condition
of an asset, its ability to perform as planned, and its continued usefulness. Evaluating an
asset's condition requires knowledge of the asset, its performance capacity and its actual
ability to perform, and expectations for its continued performance. The condition of a
long-lived asset is affected by its durability, the quality of its design and construction, its
use, the adequacy of maintenance that has been performed, and many other factors,
including: accidents (an unforeseen and unplanned or unexpected event or circumstance),
catastrophes (a tragic event), disasters (a sudden calamitous event bringing great damage,
loss, or destruction), and obsolescence.
Condition assessment surveys: Periodic inspections of PP&E to determine their current
condition and estimated cost to correct any deficiencies.
Constant dollar: A dollar value adjusted for changes in the average price level. A
constant dollar is derived by dividing a current dollar amount by a price index. The
resulting constant dollar value is that which would exist if prices had remained at the
same average level as in the base period. Any changes in such constant dollar values
would therefore reflect only changes in the real volume of goods and services, not
changes in the price level. Constant dollar figures are commonly used to compute the
real value of the gross domestic product and its components and to estimate the real level
of Federal receipts and outlays.
Consumption method: A method of accounting for goods, such as materials and
supplies, where the goods are recognized as assets upon acquisition and are expensed as
they are consumed.
Contingency: An existing condition, situation, or set of circumstances involving
uncertainty as to possible gain or loss to an entity that will ultimately be resolved when
one or more future events occur or fail to occur.
Continuing resolution, also called a continuation of authority, allows DOI and other
departments of the federal government to continue in operation until regular
appropriations are enacted. Continuing authorities occur when the beginning of a fiscal
year does not complete action on an appropriation.
Contra account: One of two or more accounts which partially or wholly offset another
or other accounts; on financial statements, they may be either merged or appear together.
Contract authority: Contract authority is a subset of budget authority. (See budget
authority.)
Controllable cost: A cost that can be influenced by the action of the responsible
manager. The term always refers to a specified manager since all costs are controllable
by someone.
Cost: The monetary value of resources used or sacrificed or liabilities incurred to
achieve an objective, such as to acquire or produce a good or to perform an activity or
service.
Cost accounting practice: Any disclosed or established accounting method or technique
which is used for measurement of cost, assignment of cost to accounting periods, and
assignment of cost to cost objects.
Cost allocation: A method of assigning costs to activities, outputs, or other cost objects.
The allocation base used to assign a cost to objects is not necessarily the cause of the
cost. For example, assigning the cost of power to machine activities by machine hours is
an allocation because machine hours are an indirect measure of power consumption.
Cost assignment: A process that identifies costs with activities, outputs, or other cost
objects. In a broad sense, costs can be assigned to processes, activities, organizational
divisions, products, and services. There are three methods of cost assignment: (a) directly
tracing costs wherever economically feasible, (b) cause-and- effect, and (c) allocating
costs on a reasonable and consistent basis.
Cost-benefit analysis: The weighing of benefits against costs usually expressed as a
ratio of dollar benefits to dollar costs for each of a variety of alternatives to provide a
comparable basis of choice among them.
Cost driver: Any factor that causes a change in the cost of an activity or output. For
example, the quality of parts received by an activity, or the degree of complexity of tax
returns to be reviewed by the IRS.
Cost finding: Cost finding techniques produce cost data by analytical or sampling
methods. Cost finding techniques are appropriate for certain kinds of costs, such as
indirect costs, items with costs below set thresholds within programs, or for some
programs in their entirety. Cost finding techniques support the overall managerial cost
accounting process and can represent non-recurring analysis of specific costs.
Cost object (also referred to as cost objective): An activity, output, or item whose cost
is to be measured. In a broad sense, a cost object can be an organizational division, a
function, task, product, service, or a customer.
Credit guarantee: An amount the Federal government guarantees to pay to a nonfederal
lender on amounts owned by a nonfederal borrower in the event of a defaulted payment
obligation. The Federal government is obligated to pay a certain percentage of the
principal and interest, as noted in the payment guarantee document.
Credit program: A federal program that makes loans and/or loan guarantees to
nonfederal borrowers.
Current discount rate: With respect to the modification of direct loans or loan
guarantees, it is the discount rate used to measure the cost of a modification. It is the
interest rate applicable at the time of modification on marketable Treasury securities with
a similar maturity to the remaining maturity of the direct or guaranteed loans, under
either pre-modification terms, or post-modification terms, whichever is appropriate.
Current liabilities: Amounts owed by a federal entity for which the financial statements
are prepared, and which needs to be paid within the fiscal year following the reporting
date.
Current services assessment (CSA): Projections of future receipts and outlays from
future activities based on the programs established by current law. The CSA focuses on
the totality of Government operations rather than on individual programs, and shows the
short- and long-term direction of current programs.
Default: The failure to meet any obligation or term of a credit agreement, grant, or
contract. Often used to refer to accounts more than 90 days delinquent.
Deferred maintenance: Maintenance that was not performed when it should have been
or was scheduled to be and which, therefore, is put off or delayed for a future period.
Deposit Fund: An account used to record amounts held temporarily by a Bureau until
ownership is determined or held as an agent for others (OMB Circular A-11).
Depreciation accounting: The systematic and rational allocation of the acquisition cost
of an asset, less its estimated salvage or residual value, over its estimated useful life.
Development: Systematic use of the knowledge and understanding gained from research
for the production of useful materials, devices, systems, or methods, including the design
and development of prototypes and processes.
Differential cost: The cost difference expected if one course of action is adopted instead
of others.
Direct cost: The cost of resources directly consumed by an activity. Direct costs are
assigned to activities by direct tracing of units of resources consumed by individual
activities. A cost that is specifically identified with a single cost object.
Direct credit: An amount owed to the Federal government by a nonfederal entity for
goods and services delivered for which repayments are due over a determined period of
time for both principal and interest.
Direct loan: A disbursement of funds by the government to a nonfederal borrower under
a contract that requires the repayment of such funds within a certain time, with or
without interest. The term includes the purchase of, or participation in, a loan made by
another lender.
Direct loan obligation: A direct loan obligation is a legal or binding agreement by a
federal agency to make a direct loan when specified conditions are met by the borrower
and which will therefore result in outlays, either immediately or in the future.
Direct loan subsidy cost: The estimated long-term cost of a direct loan, calculated on a
net present value basis, excluding administrative costs, at the time the loan is disbursed.
The cost is the aggregate of the following cash flows: loan disbursements; repayments of
principal; and payments of interest and other payments by or to DOI over the life of the
loan after adjusting for estimated defaults, prepayments, fees, penalties, and other
recoveries. The subsidy cost will be estimated and an obligation recorded against budget
authority when the direct loan obligation is incurred.
Disclosure: Reporting information in notes regarded as an integral part of the basic
financial statements.
Discount: The difference between the estimated worth of a future benefit and its present
value; a compensation for waiting or an allowance for returns from using the present
value of these returns in other ways.
Discount rate: An interest rate that is used in present value calculations to equate
amounts that will be received or paid in the future to their present value. The interest rate
used to adjust for the time value of money.
Dividend fund interest rate: The interest rate determined at policy issuance used to
determine the amount of the dividend fund. It is the rate used to credit interest to the
dividend fund, and against which experience is measured to determine the amount of the
interest portion of dividends paid to individual policyholders.
Donated capital: The amount of nonreciprocal transfers of assets or services from State,
local, and foreign governments; individuals; or others not considered parties related to
the Government.
Earmarked Receipts: Specifically identified receipts that are required by statute to be
used for designated activities, benefits, or purposes.
Econometrics model: An equation or a set of related equations used to analyze
economic data through mathematical and statistical techniques. Such models may be
devised in order to depict the essential quantitative impact of alternative assumptions or
government policies.
Economic life: The period during which a fixed asset is capable of yielding services of
value to its owner. (See useful life.)
End user: Any component of a reporting entity that obtains goods for direct use in its
normal operations. The component may also be a contractor.
Entitlement program: A program in which the federal government becomes
automatically obligated to provide benefits to members of a specific group who meet the
requirements established by law.
Entitlement period: The period (such as, monthly) for which benefits become due.
Entity: A unit within the federal government, such as a department, agency, bureau, or
program, for which a set of financial statements would be prepared. Entity also
encompasses a group of related or unrelated commercial functions, revolving funds, trust
funds, and/or other accounts for which financial statements will be prepared in
accordance with OMB annual guidance on Form and Content of Financial Statements.
Estimated cost: The process of projecting a future result in terms of cost, based on
information available at the time. Estimated costs, rather than actual costs, are sometimes
the basis for credits to work-in-process accounts and debits to finished goods inventory.
Event: A happening of consequence to an entity. It may be an internal event that occurs
within an entity, such as the transforming of raw materials into a product. Or it may be
an external event that involves interaction between an entity and its environment, such as
a transaction with another entity, an act of nature, theft, vandalism, a tort caused by
negligence, or an accident.
Exchange Revenue: Inflows of resources to a Bureau that it has earned. They arise
from exchange transactions, which occur when each party to the transaction sacrifices
value and receives value in return, i.e., a two way-flow of resources or of promises to
provide resources (SFFAS No. 7).
Exchange transaction: A transaction that arises when each party to the transaction
sacrifices value and receives value in return.
Executory contract: A contract, which has not been performed by all parties to it.
Executory costs: Those costs such as insurance, maintenance, and taxes incurred for
leased property, whether paid by the lessor or lessee.
Expected value: A statistical measurement attribute that is the sum of the products of
each potential outcome multiplied by the probability of that potential outcome.
Expenditure is the incurrence of an actual liability in accordance with governmental
authority. With respect to provisions of the Antideficiency Act (31 U.S.C. 1513-1514)
and the Congressional Budget and Impoundment Control Act of 1974 (2 U.S.C. 622(i)),
a term that has the same definition as outlay.
Expense: Outflows or other using up of assets or incurrence of liabilities (or a
combination of both) during a period of providing goods, rendering services, or carrying
out other activities related to an entity's programs and missions, the benefits from which
do not extend beyond the present operating period.
Expired appropriations (accounts): Appropriation accounts in which the balances are
no longer available for incurring new obligations because the time available for incurring
such obligations has expired.
FAM: A memorandum to transmit information regarding accounting events that must
be executed prior to updates to the Accounting Handbook and to transmit interim one-
time information.
FFS: The accounting system used by all DOI Bureaus/Offices except Minerals
Management Service and the Office of Surface Mining.
Federal mission property, plant, & equipment (PP&E): Items used to meet a Federal
Government mission in which the specific PP&E used is an integral part of the output of
the mission.
Financing account: A non-budget account associated with each credit program account.
The financing account holds fund balances, receives the subsidy cost payment from the
credit program account, and includes all other cash flows to and from the government
resulting from post-1991 direct loans or loan guarantees.
First-in, first-out (FIFO): A cost flow assumption; the first goods purchased or
produced are assumed to be the first goods sold.
Fixed cost: A cost that does not vary in the short term with the volume of activity. Fixed
cost information is useful for cost savings by adjusting existing capacity, or by
eliminating idle facilities. Also called Non-Variable Cost or Constant Cost.
Fixed value securities: Securities that have a known maturity or redemption value at the
time of issue.
Foreclosure: A method of enforcing payment of a debt secured by a mortgage by seizing
the mortgaged property. Foreclosure terminates all rights that the mortgagor has in the
mortgaged property upon completion of due process through the courts.
Full-absorption costing: A method of costing that assigns (absorbs) all labor, material,
and service/manufacturing facilities and support costs to products or other cost objects.
The costs assigned include those that do and do not vary with the level of activity
performed.
Full cost: The sum of all costs required by a cost object including the costs of activities
performed by other entities regardless of funding sources.
General PP&E land: Land and land rights owned by the Federal Government that are
acquired for or in connection with items of general PP&E.
General-purpose financial reports: Financial reports prepared in accordance with
generally accepted federal accounting standards and DOI financial policies. Accounting
data on these reports come from Bureau/Office general ledgers and include appropriate
estimates, such as accrued liabilities. Typical examples are annual audited financial
statements or SF-133, "Report on Budget Execution." In all cases either the instructions
for the reports or the reports themselves inform users that the reports were prepared in
accordance with applicable accounting standards and financial policies.
General Fund: The accounts for receipts not earmarked by law for a specific purpose,
the proceeds of general borrowing, and the expenditure of these moneys (OMB Circular
A-11).
General Ledger: The general ledger is a uniform system of accounts in which all
transactions are summarized. It contains control accounts from which the trial balance
and related supporting schedules are prepared, and establishes a control point for the
accounting system.
Good: A tangible product produced to provide to a customer.
Government-acknowledged events: Events that are not a liability in themselves, but are
those events that are "of financial consequence" to the federal government because it
chooses to respond to the event.
Government-related events: Nontransaction-based events that involve interaction
between federal entities and their environment.
Guarantee programs: See "Insurance and guarantee programs."
Hazardous waste: A solid, liquid, or gaseous waste, or combination of these wastes,
which because of its quantity, concentration, or physical, chemical, or infectious
characteristics may cause or significantly contribute to an increase in mortality or an
increase in serious irreversible, or incapacitating reversible, illness or pose a substantial
present or potential hazard to human health or the environment when improperly treated,
stored, transported, disposed of, or otherwise managed.
Heritage assets: Property, plant, and equipment that are unique for one or more of the
following reasons: historical or natural significance; cultural, educational or artistic (e.g.,
aesthetic) importance; or, significant architectural characteristics.
Historical cost: Initially, the amount of cash (or its equivalent) paid to acquire an asset;
subsequent to acquisition, the historical amount may be adjusted for amortization.
Human capital: Expenses incurred for education and training programs financed by the
Federal Government for the benefit of the public and designed to increase or maintain
national economic productive capacity.
Incremental cost: The increase or decrease in total costs that would result from a
decision to increase or decrease output level, to add a service or task, or to change any
portion of operations. This information helps in making decisions such as to contract
work out, undertake a project, or increase, decrease, modify, or eliminate an activity or
product.
Indirect cost: A cost that cannot be identified specifically with or traced to a given cost
object in an economically feasible way.
Insurance and guarantee programs: Federal government programs that provide
protection to individuals or entities against specified risks. Because the federal
government frequently commingles aspects of insurance and guarantees within the same
program, this chapter treats the terms as a single type of activity.
Inter-entity: A term meaning between or among different federal reporting entities. It
commonly refers to activities or costs between two or more agencies, departments, or
bureaus.
Interest: The service charge for the use of money or capital, paid at agreed intervals by
the user, commonly expressed as an annual percentage of outstanding principal.
Interest method: A method used to amortize the premium or discount of an investment
in bonds or to amortize the subsidy cost allowance of direct loans. Under this method,
the amortization amount of the subsidy cost allowance equals the effective interest minus
the nominal interest of the direct loans. The effective interest equals the present value of
the direct loans times the effective interest rate (the discount rate). The nominal interest
equals the nominal amount (face amount) of the direct loans times the stated interest rate
(the rate stated in the loan agreements).
Interest rate: The price charged per unit of money borrowed per year, or other unit of
time, usually expressed as a percentage.
Job order costing: A method of cost accounting that accumulates costs for individual
jobs or lots. A job may be a service or manufactured item, such as the repair of
equipment or the treatment of a patient in a hospital.
Land: Land is the solid part of the surface of the earth. Excluded from the definition of
land are the natural resources (that is, depletable resources such as mineral deposits and
petroleum; renewable resources such as timber, and the outer-continental shelf resources
related to land).
Last-in, first-out (LIFO): A cost flow assumption; the last goods purchased are
assumed to be the first goods sold.
Latest acquisition cost: Includes all amounts, except interest, paid to a vendor to acquire
an item.
Latest acquisition cost (LAC) method: A method that provides that all like units that
are held be valued at the invoice price of the most recent like item purchased, less any
discounts, plus any additional costs incurred to bring the item to a form and location
suitable for its intended use.
Liability: A probable and measurable future outflow of resources arising from past
transactions or events.
Life cycle costing: An acquisition or procurement technique, which considers operating,
maintenance, and other costs in addition to the acquisition, cost of assets.
Liquidating account: The budget account that includes all cash flows to and from the
government resulting from pre-1992 direct loans or loan guarantees (those originally
obligated or committed before Oct. 1, 1991), except those pre-1992 direct loans and loan
guarantees that have been directly modified and transferred to a financing account.
Loan guarantee: Any guarantee, insurance, or other pledge with respect to the payment
of all or part of the principal or interest on any debt obligation of a nonfederal borrower
to a nonfederal lender but does not include the insurance of deposits, shares, or other
withdrawable accounts in financial institutions.
Loan guarantee commitment: A binding agreement by a federal entity to make a loan
guarantee when specified conditions are fulfilled by the borrower, the lender, or any
other party to the guarantee agreement.
Loan guarantee subsidy cost: The estimated long-term cost of a loan guarantee,
calculated on a net present value basis, excluding administrative costs, at the time the
guaranteed loan is disbursed by the lender. The cost is the amalgam of the following cash
flows: estimated payments by DOI to cover defaults and delinquencies, interest
subsidies, and other payments; and estimated payments to DOI including origination and
other fees, penalties, and recoveries. The subsidy cost will be estimated and an obligation
recorded against budget authority when the guaranteed loan commitment is made.
Loss: Any expense or irrecoverable cost, often referred to as a form of nonrecurring
charge, an expenditure from which no present or future benefit may be expected.
Lower of cost or market: A valuation rule that recognizes impairment of asset values
but avoids anticipated gains. The rule is typically applied to individual items or groups of
like items, such as inventory or marketable securities. In this rule, "cost" refers to
historical cost and "market" refers to the current replacement cost by purchase or
production.
Maintenance: The act of keeping fixed assets in useable condition. It includes
preventive maintenance, normal repairs, replacement of parts and structural components,
and other activities needed to preserve the asset so that it continues to provide acceptable
services and achieves its expected life. Maintenance excludes activities aimed at
expanding the capacity of an asset or otherwise upgrading it in order to serve needs
different than, or significantly greater than, those originally intended.
Managerial cost accounting system: The organization and procedures, whether
automated or not, and whether part of the general ledger or stand-alone, that accumulates
and reports consistent and reliable cost information and performance data from various
agency feeder systems. The accumulated and reported data enable management and other
interested parties to measure and make decisions about the agency's/segment's ability to
improve operations, safeguard assets, control its resources, and determine if mission
objectives are being met.
Market-based treasury securities: Treasury securities issued to governmental accounts
that are not traded on any securities exchange but mirror the prices of marketable
securities with similar terms.
Marketable treasury securities: Debt securities, including Treasury bills, notes, and
bonds, that the U.S. Treasury offers to the public and are traded in the marketplace. Their
bid and ask prices are quoted on securities exchange markets.
Market value: The estimated amount that can be realized by disposing of an item
through arm's length transactions in the marketplace; the price (usually representative) at
which bona fide sales have been consummated for products of like kind, quality, and
quantity in a particular market at any moment of time. For investments in marketable
securities, the term refers to the value of such securities determined by prices quoted on
securities exchange markets multiplied by the number of bonds or shares held in an
investment portfolio.
Measurable: When deciding to recognize a liability, the liability can be determined with
reasonable certainty or is reasonably estimable.
Modification: A federal government action, including new legislation or administrative
action, that directly or indirectly alters the estimated subsidy cost and the present value
of outstanding direct loans (or direct loan obligations), or the liability of loan guarantees
(or loan guarantee commitments). Direct modifications are actions that change the
subsidy cost by altering the terms of existing contracts or by selling loan assets. Indirect
modifications are actions that change the subsidy cost by legislation that alters the way in
which an outstanding portfolio of direct loans or loan guarantees is administered. The
term modification does not include subsidy cost reestimates, the routine administrative
workouts of troubled loans, and actions that are permitted within the existing contract
terms.
Modification adjustment transfer: A non-expenditure transfer from a financing
account to the Treasury, or vice versa, to offset the difference between the cost of
modification of direct loans (or loan guarantees) and the change in the book value of
direct loans (or loan guarantee liabilities).
Moving average: An inventory costing method used in conjunction with a perpetual
inventory system. A weighted average cost per unit is recomputed after every purchase.
Goods sold are costed at the most recent moving average cost.
Negative subsidies: Will occur in cases where the present value of cash inflows exceeds
the present value of cash outflows.
Negative subsidy account: The budget account for the receipt and/or expenditure of
amounts paid from the financing account when there is a negative subsidy for the
original estimate or a downward reestimate. Special fund expenditure and receipt
accounts must be established with Treasury for any program that has negative subsidies
or downward reestimates of the subsidy.
Net realizable value: The estimated amount that can be recovered from selling, or any
other method of disposing of an item less estimated costs of completion, holding and
disposal.
Nominal dollar: The dollar value assigned to a good or service in terms of prices current
at the time of the good or service is required. This contrasts with the value assigned to a
good or service measured in constant dollars.
Nominal (or face or par) value or amount: The amount of a bond, note, mortgage, or
other security as stated in the instrument itself, exclusive of interest or dividend
accumulations. The nominal amount may or may not coincide with the price at which the
instrument was first sold, its present market value, or its redemption price. Often referred
to as the stated value.
Nonexchange Revenue: Inflows of resources that the Bureau demands (e.g., fines or
penalties) or receives by donation, i.e., there is a one-way flow of resources or promises
(SFFAS No. 7).
Nonexchange transaction: A transaction that arises when one party to a transaction
receives value without giving or promising value in return or one party to a transaction
gives or promises value without receiving value in return.
Nonfederal physical property: Physical properties financed by grants from the Federal
Government, but owned by state and local governments.
Obligated Balance: The cumulative amount of budget authority that has been obligated
but not yet outlayed. It is also known as unpaid obligations (made up of accounts
payable and undelivered orders) net of accounts receivable and unfilled customer orders
(OMB Circular A-11).
Obligations are the amounts of orders placed, contracts awarded, services received, and
similar transactions during a given period that will require payment during the same or a
future period.
Offsetting receipts: Offsetting receipts are a subset of offsetting collections. (See
collections.)
Operating lease: An agreement conveying the right to use property for a limited time in
exchange for periodic rental payments.
Opportunity cost: The value of the alternatives foregone by adopting a particular
strategy or employing resources in a specific manner. Also called Alternative Cost or
Economic Cost.
Original discount rate: The discount rate originally used to calculate the present value of
direct loans or loan guarantee liabilities, when the direct or guaranteed loans were
disbursed.
Other Financing Sources: Inflows of resources other than revenues or gains that
increase the net position of a Bureau (SFFAS No. 7).
Outcome: An assessment of the results of a program compared to its intended purpose.
They shall: 1) be capable of being described in financial, economic, or quantitative
terms; and 2) provide a plausible basis for concluding that the program has had or will
have this intended effect. For measuring outcomes for research and development
programs, results may be reported by a narrative discussion of the major results achieved
by the program during the year.
Outlay: The issuance of checks, disbursement of cash, or electronic transfer of funds
made to liquidate a Federal obligation. Outlays also occur when interest on the Treasury
debt held by the public accrues and when the Government issues bonds, notes,
debentures, monetary credits, or other cash-equivalent instruments in order to liquidate
obligations. Also, under credit reform, the credit subsidy cost is recorded as an outlay
when a direct or guaranteed loan is disbursed.
Output: A product or service generated from the consumption of resources. It can
include information or paper work generated by the completion of the tasks of an
activity.
Output measure: A tabulation, calculation, or recording of activity or effort that can be
expressed in a quantitative or qualitative manner. Outputs shall have two key
characteristics: 1) they shall be systematically or periodically captured through an
accounting or management information system, and 2) there shall be a logical connection
between the reported measures and the program's purpose.
Performance measurement: A means of evaluating efficiency, effectiveness, and
results. A balanced performance measurement scorecard includes financial and
nonfinancial measures focusing on quality, cycle time, and cost. Performance
measurement should include program accomplishments in terms of outputs (quantity of
products or services provided, e.g., how many items efficiently produced?) and outcomes
(results of providing outputs, e.g., are outputs effectively meeting intended agency
mission objectives?).
Post-modification liability: The present value of net cash outflows of loan guarantees
estimated at the time of modification under the post-modification terms, discounted at
the current discount rate.
Post-modification value: The present value of net cash inflows of direct loans estimated
at the time of modification under the post-modification terms, discounted at the current
discount rate.
Post-1991 direct loans: Direct loans obligated after September 30, 1992.
Post-1991 loan guarantees: Loan guarantees committed after September 30, 1992.
Pre-modification liability: The present value of net cash outflows of loan guarantees
estimated at the time of modification under the pre-modification terms, discounted at the
current discount rate.
Pre-modification value: The present value of net cash inflows of direct loans estimated
at the time of modification under pre-modification terms, discounted at the current
discount rate.
Pre-1992 direct loans: Direct loans obligated before October 1, 1992.
Pre-1992 loan guarantees: Loan guarantees committed before October 1, 1992.
Premium deficiency: A condition under which a liability for future policy benefits using
current conditions exceeds the liability for future policy benefits using contract
conditions. In such cases, the difference should be recognized as a charge to operations
in the current period.
Present value (PV): The value of future cash flows discounted to the present at a certain
interest rate (such as the reporting entity's cost of capital), assuming compound interest.
Probable: When deciding to recognize a liability, that which can reasonably be expected
or believed to be more likely than not on the basis of available evidence or logic but
which is neither certain nor proven.
Process: The organized method of converting inputs (people, equipment, methods,
materials, and environment), to outputs (products or services). The natural aggregation of
work activities and tasks performed for program delivery.
Process costing: A method of cost accounting that first collects costs by processes and
then allocates the total costs of each process equally to each unit of output flowing
through it during an accounting period.
Process value analysis: Tools and techniques for studying processes through customer
value analysis. Its objective is to identify opportunities for lasting improvement in the
performance of an organization. It provides an in-depth review of work activities and
tasks, through activity analysis, which aggregate to form processes for agency program
delivery. In addition to activity-based costing, quality and cycle time factors are studied
for a complete analysis of performance measurement. Each activity within the process is
analyzed, including whether or not the activity adds value for the customer.
Product: Any discrete, traceable, or measurable good or service provided to a customer.
Often goods are referred to as tangible products, and services are referred to as intangible
products. A good or service is the product of a process resulting from the consumption of
resources.
Program account: The budget account into which an appropriation to cover the subsidy
cost of a direct loan or loan guarantee program is made and from which such cost is
disbursed to the financing account. Usually, a separate amount for administrative
expenses is also appropriated to the program account.
Proprietary Accounting: Also known as financial accounting, a process that supports
accrual accounting and financial reporting to show actual financial position and results of
operations by accounting for assets, liabilities, net position, revenues, and expenses
(SFFAS No. 7).
Purchases method: A method of accounting for goods, such as materials and supplies,
in which the acquisition cost is recognized as an expense upon purchase of the goods
rather than upon their use.
Reapportionment is a revision approved by OMB of a previous apportionment for an
appropriation or fund account.
Reappropriation: Enacted legislation that continues the availability of unexpended
funds that expired or would otherwise expire.
Recognition: Recognition is the process of formally recording or incorporating an item
into the financial statements of an entity as an asset, liability, revenue, expense, or the
like. A recognized item is depicted in both words and numbers, with the amount included
in the statement totals. Recognition comprehends both initial recognition of an item and
recognition of subsequent changes in or removal of a previously recognized item.
Recognize: To determine the amount, timing, classification, and other conditions
precedent to the acceptance and entry of a transaction. Hence, to give expression on the
books of account; said of transactions. To report that amount in the entity financial
statements either individually or in aggregate with other amounts.
Record: To give expression to a transaction on (or in) the books of account; to enter.
Recourse: The rights of a holder in due course of a financial instrument (such as a loan)
to force the endorser on the instrument to meet his or her legal obligations for making
good the payment of the instrument if dishonored by the maker or acceptor. The holder
in due course must have met the legal requirements of presentation and delivery of the
instrument to the maker of a note or acceptor of a draft and must have found that this
legal entity has refused to pay for or defaulted in payment of the instrument.
Reestimate: Refers to estimates of the subsidy costs performed subsequent to their initial
estimates made at the time of a loan's disbursement.
Reimbursements: Sums received as payment or advance payment for goods or services
furnished either to the public or to another federal government account. If authorized by
law, these sums are credited directly to specific appropriation and fund accounts. These
amounts are deducted from the total obligations incurred (and outlays) in determining net
obligations (and outlays) for such accounts. Reimbursements are offsetting collections.
Restatement (of direct loans or loan guarantees): Refers to establishing a new book
value of a direct loan or the liability of a loan guarantee.
Repairable: An inventory item that is expected to be repaired when broken or worn out.
Replacement cost: The cost to reproduce an inventory item by purchase or manufacture.
In lower of cost or market computations, the term "market" means replacement cost,
subject to ceiling and floor limitations.
Required Supplementary Stewardship Information (RSSI): The category defined by
the Board for reporting information required by the stewardship standards. Stewardship
information may be presented as ROSSI, in the financial statements, or in the notes to
them. Stewardship information will be necessary for a fair presentation of financial
position and results of operations.
Research and development: Federal investment in research and development refers to
those expenses incurred in support of the search for new or refined knowledge and ideas
and for the application or use of such knowledge and ideas for the development of new
or improved products and processes with the expectation of maintaining or increasing
national economic productive capacity or yielding other future benefits. Research and
development is composed of basic research, applied research, and development.
Responsibility center: An organizational unit headed by a manager or a group of
managers who are responsible for its activities. Responsibility centers can be measured
as revenue centers (accountable for revenue/sales only), cost centers (accountable for
costs/expenses only), profit centers (accountable for revenues and costs), or investment
centers (accountable for investments, revenues, and costs).
Responsibility segment: A significant organizational, operational, functional, or process
component which has the following characteristics: (a) its manager reports to the entity's
top management; (b) it is responsible for carrying out a mission, performing a line of
activities or services, or producing one or a group of products; and (c) for financial
reporting and cost management purposes, its resources and results of operations can be
clearly distinguished, physically and operationally, from those of other segments of the
entity.
Revolving Fund: A fund that conducts continuous cycles of business-like activity, in
which the fund charges for the sale of products or services and uses the proceeds to
finance its spending, usually without the need for annual appropriations (OMB Circular
A-11).
Risk category: Subdivisions of a cohort of direct loans or loan guarantees into groups of
loans that are relatively homogeneous in cost, given the facts known at the time of
obligation or commitment. Risk categories will group all loans obligated or committed
for a program during the fiscal year that share characteristics predictive of defaults and
other costs.
Selling expense (cost): Expenses incurred in selling or marketing, e.g., salaries,
commissions, and promotion expenses.
Service: An intangible product or task rendered directly to a customer.
Special Fund: An account for receipts earmarked for specific purposes and the
expenditure of those receipts (OMB Circular A-11).
Specific identification: An inventory system in which the seller identifies which specific
items are sold and which remain in ending inventory.
Standard costs: Predetermined expected unit costs, which are acceptable for financial
reporting purposes if adjusted periodically to reflect actual results.
Standard costing: A costing method that attaches costs to cost objects based on
reasonable estimates or cost studies and by means of budgeted rates rather than
according to actual costs incurred. The anticipated cost of producing a unit of output. A
predetermined cost to be assigned to products produced. Standard cost implies a norm, or
what costs should be. Standard costing may be based on either absorption or direct
costing principles, and may apply either to all or some cost elements.
State and local governments: State and local governments generally include:
• the 50 States and the District of Columbia;
• cities, counties, townships, school districts, special districts, public authorities,
and other local governmental units as defined by the Bureau of the Census; and
• Puerto Rico, the Virgin Islands, and other US territories.
Stewardship: The Federal Government's responsibility for the general welfare of the
nation in perpetuity.
Stewardship investments: Items recognized as expense in calculating net cost, but
meriting special treatment to highlight the substantial investment and long-term benefit
of the expenses. This would include nonfederal physical property, human capital, and
research and development.
Stewardship land: Land and land rights owned by the Federal Government that are not
acquired for or in connection with items of general PP&E.
Stewardship responsibilities: The projected financial impact on the Government of
sustaining the current services that it provides pursuant to laws already enacted. The
commitments and constraints reflected in "current services" are inherent in the tax and
spending policies contained in current law.
Subsidiary Ledger: Subsidiary ledger accounts are used to accumulate and segregate
detailed transactions during an accounting period and support or generate entries
recorded in applicable general ledger control accounts. The combined balances of the
subsidiary ledger accounts must agree with the balance of the related control account in
the general ledger. Subsidiary ledger accounts may also have accounts that are subsidiary.
Subsidy cost: The cost of a grant of financial aid, usually by a governmental body, to
some person or institution for particular purposes.
(a) Credit subsidy cost is the estimated long-term cost to the government of direct loans
or loan guarantees calculated on a net present value basis, excluding administrative costs.
(b) Direct loan subsidy cost is the estimated long-term cost to the government of direct
loans calculated on a present value basis, excluding administrative costs. The cost is the
present value of estimated net cash outflows at the time the direct loans are disbursed.
The discount rate used for the calculation is the average interest rate (yield) on
marketable Treasury securities of similar maturity to the loan, applicable to the time
when the loans are disbursed.
(c) Loan guarantee subsidy cost is the estimated long-term cost to the government of
loan guarantees calculated on a present value basis, excluding administrative costs. The
cost is the present value of estimated net cash outflows at the time the guaranteed loans
are disbursed by the lender. The discount rate used for the calculation is the average
interest rate (yield) on marketable Treasury securities of similar maturity to the loan
guarantees, applicable to the time when the guaranteed loans are disbursed.
Support costs: Costs of activities not directly associated with production. Typical
examples are the costs of automation support, communications, postage, process
engineering, and purchasing.
Title: The right to property; the means by which such right is established.
Total cost method: An accounting method that includes the actual acquisition cost of
each item held plus the costs of any additions, improvements, alterations, rehabilitations,
or replacements that extend the useful life of an asset.
Traceability: The ability to assign a cost directly to a specific activity or cost object by
identifying or observing specific resources consumed by the activity or cost object.
Transaction: A particular kind of external event involving the transfer of something of
value concerning two or more entities. The transfer may be a two way or one-way flow
of resources or of promises to provide resources.
Transfers between appropriation/fund accounts: Occur when all or part of the budget
authority in one account is transferred to another account when law specifically
authorizes such transfers. The nature of the transfer determines whether the transaction is
treated as an expenditure transfer or a non-expenditure transfer.
Trust Fund: An account designated by law for receipts or offsetting receipts earmarked
for specific purposes and the expenditure of these receipts. Some revolving funds are
designated as trust revolving funds, which have no receipt accounts, and the collections
are credited directly to the expenditure account (OMB Circular A-11).
Uncontrollable cost: The cost over which a responsible manager has no influence.
Unit cost: The cost of a selected unit of a good or service. Examples include dollar cost
per ton, machine hour, labor hour, or department hour.
Unobligated balances: Balances of budgetary resources that have not yet been
obligated. Unobligated balances expire (cease to be available for obligation) for:
• 1-year accounts at the end of the fiscal year;
• multiple-year accounts at the end of the period specified;
• no-year accounts only when they are 1) rescinded by law, 2) purpose is
accomplished, or 3) when disbursements against the appropriation have not been
made for 2 full consecutive years.
Useful Life: The normal operating life in terms of utility to the owner.
Value-added activity: An activity that is judged to contribute to customer value or
satisfy an organizational need. The attribute "value-added" reflects a belief that the
activity cannot be eliminated without reducing the quantity, responsiveness, or quality of
output required by a customer or organization. Value-added activities should physically
change the product or service in a manner that meets customer expectations.
Valuation (or accounting valuation): Valuation methods and bases are numerous and
varied; and may be expressed quantitatively and in monetary terms. Application may be
made to a single asset, a group of assets, or an entire enterprise, as determined by various
bases and methods.
Valuation account (allowance or reserve): An account that partly or wholly offsets one
or more other accounts; for example, accumulated depreciation is a valuation account
related to specific depreciable assets and allowance for bad debts is a valuation account
related to accounts receivable. If a valuation account is deducted from the related asset or
liability it is sometimes referred to as a contra-asset or contra-liability account.
Variable cost: A cost that varies with changes in the level of an activity, when other
factors are held constant. The cost of material handling to an activity, for example, varies
according to the number of material deliveries and pickups to and from that activity.
Variable value securities - Securities that have unknown redemption or maturity values
at the time of issue. Values of these securities can vary on the basis of regulation or
specific language in the offering.
Variance: The difference for a year or less between the elements (direct material, direct
labor, factory overhead) of standard cost and actual cost. The term applies to (a) a money
difference or (b) changes in the character or purpose of amounts expended. The amount,
rate, extent, or degree of change, or the divergence from a desired characteristic or state.
Weighted-average: A periodic inventory costing method where ending inventory and
cost of goods sold are priced at the weighted-average cost of all items available for sale.
Write-off: An action to remove an amount from an entity's assets or financial resources.
A write-off of a loan occurs when an entity official determines, after all appropriate
collection tools have been used, that a debt is uncollectible. Active collection on an
account ceases and the account is removed from the entity's receivables.
