Chapter 17 - Accounting and Reporting for the Federal Government

Accounting for Governmental Nonprofit 16th

Edition by Reck Solution Manual
Contact me here sellertbsm2014hotmail!com to
download the Solution Manual
INSTANTLY!!!
"R#C$ F%R &'$ &$(& )A*+, (%-.&#%* /A*.A-
A*0 )%%+ "0F1
&est )an2 203 .(0
(olution /anual 203 .(0
)oo+ "0F 403 .(0
CHAPTER 17: ACCOUNTING AND REPORTING FOR THE FEDERAL
GOVERNMENT
OUTLINE
Number Topic TypeT!"# $%!%u"
&re: 1'e(
)ue"%io*":
17-1 Federal financial management responsibilities #dentif5 *e6
17-2 Federal GAA" hierarch5 Compare *e6
17-4 Conceptual frame6or2 0escribe 11-4
17-4 Accounts used in federal accounting $7plain 11-4
17-8 *et position and net assets Compare 11-8
17-9 FA(A) compared to GA() Contrast 11-9
17-7 Federal funds #dentif5, compare *e6
17-: (te6ardship assets 0efine, compare *e6
17-; )udgetar5 accounts used b5 federal agencies #dentif5 11-;
17-1
Chapter 17 - Accounting and Reporting for the Federal Government
17-10 "erformance accountabilit5 report $7plain, identif5 *e6
C!"e":
17-1 Agenc5 "AR and audit report Calculate, e7plain *e6
17-2 FA(A) #nternet *e6
17-4 .!(! Government-6ide financial statement audit #nternet, evaluate 11-4 revised
E+erci"e"Prob,em":
17-1 <arious /ultiple Choice 11-1 revised
17-2 Fund balance 6ith .!(! &reasur5 Compute 11-2
17-4 Agenc5 financial statements, continuation of 17-2! =$ 11-4
17-4 (tatement of net cost =$s, F( 11-4
17-8 (tatement of budgetar5 resources "repare F( 11-8, revised
17-9 &ransactions and statement of financing =$s, F( 11-9
17-7 Financial statement anal5sis Anal5sis *e6
17-2
Chapter 17 - Accounting and Reporting for the Federal Government
CHAPTER 17: ACCOUNTING AND REPORTING FOR THE FEDERAL
GOVERNMENT
Ans6ers to >uestions
17-1! Although the three principals of the =oint Financial /anagement #mprovement "rogram
?=F/#"@ have the authorit5 for establishing sound financial management polic5 and
oversight, the principals have delegated the responsibilit5 to the %ffice of /anagement
and )udgetAs %ffice of Federal Financial /anagement, the %ffice of "ersonnel
/anagement, and the Chief Financial %fficers Council! &he delegation occurred in 2004,
once the principals of the =F/#" 6ere satisfied 6ith the operations of the FA(A)!
=F/#" no longer meets as a stand-alone organiBation! ?&he three principals of the =F/#"
are the Comptroller General, the (ecretar5 of the &reasur5, and the 0irector of %ffice of
/anagement and )udget!@
17!2! &he GAA" hierarchies for the federal government and state and local governments are
Cuite similar! %ne maDor difference is that federal authoritative guidance comes from
FA(A) 6hile state and local government authoritative guidance is issued b5 GA()!
&here are also some differences in the t5pe of outside guidance accepted as authoritative
b5 the t6o standard-setting bodies! )oth hierarchies have been codified b5 the respective
standard-setting bodies, the FA(A) and the GA()!
&here are four categories of principles 6ith the highest level ?categor5 a@ being the
statements and interpretations issued b5 the respective standard-setting bodies! Categor5
a principles can also be found in the FA() or A#C"A pronouncements if made applicable
to state and local governments b5 the GA()! &he categor5 b principles include the
&echnical )ulletins issued b5 the respective standard-setting bodies! A#C"A #ndustr5 and
Accounting Guides are also considered categor5 b principles if made applicable to federal
entities b5 the FA(A) or state and local governments b5 the GA()! &he GA() can also
ma2e A#C"A (tatements of "osition applicable! Categor5 c principles are different for the
t6o hierarchies! Technical Releases of the Accounting and Auditing Policy
Committee of the FASAB are considered category c for federal entities;
whereas, AICPA Practice Bulletins made applicale y !ASB are considered
category c for state and local go"ernments# Category d guidance is the
same, consisting of implementation guides issued y the respecti"e standard$
setting odies, as well as widely accepted practices#
17!4! &he conceptual frame6or2 for the federal government is at about the same stage as that
for state and local governments, even though the GA() 6as established si7 5ears earlier!
&he FA(A) has issued si7 concepts statements, and the GA() five! (tatement of
Federal Financial Accounting Concepts ?SFFAC) No. 1 identifies the users of federal
financial information and their information needs, and establishes the obDectives of
financial reporting for the federal government, much li2e GA() Concepts Statement No.
1! SFFAC No. 2 provides criteria for determining the reporting entit5 and provides
guidance on the nature of the financial statements to be prepared and their form and
content! &he GASBS 14 ?a reporting standard rather than a concepts statement@ provides
17-4
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, Ans6ers, 17- 4 ?ContAd@
comparable criteria to SFFAC No. 2 for defining the reporting entit5! SFFAC No. 3
describes the /anagement 0iscussion E Anal5sis as does GASBS No. 34! SFFAC No. 4
for the federal government describes five intended audiences and Cualitative
characteristics for the consolidated financial report of the .! (! Government, as does the
GA()As Concepts Statement No. 1 for state and local governments! SFFAC No. 5
describes the elements of financial statements, similar to GA()As Concepts Statement 4
titled F$lements of Financial (tatements!G Recentl5 issued SFFAC No. 6 is similar to the
GA()As Concepts Statement 3 on communication methods in general purpose e7ternal
financial reporting!
17!4! &he account name Estimated Revenes used b5 state and local governments is a
budgetar5 account representing the governmentAs estimate of the amount of revenue
e7pected to be realiBed during the 5ear! Federal agencies use the account !t"e#
App#op#iations Rea$i%ed in their budgetar5 trac2 to capture the amount Congress has
appropriated to an agenc5 for the upcoming 5ear! !t"e# App#op#iations Rea$i%ed is for
basic operating appropriations, rather than appropriations earmar2ed for specific
purposes! !t"e# App#op#iations Rea$i%ed is closer in meaning to App#op#iations of state
and local governments than it is to Estimated Revenes!
A federal agenc5 uses the account Fnd Ba$ance &it" '.S. (#eas#) in its proprietar5
trac2 as an asset that represents the balance available to the agenc5 at the 0epartment of
&reasur5! &his account 6ould be most similar to cash and cash eCuivalents at the state
and local government level! Fnd Ba$ance &it" '.S. (#eas#) 6ill be reduced
throughout the 5ear b5 the dollar value of chec2s dra6n! (ee #llustration 17-12 for a
comparison of these terms! )ecause the5 are budgetar5 accounts, Estimated Revenes
and !t"e# App#op#iations Rea$i%ed have more in common 6ith each other than either one
does 6ith Fnd Ba$ance &it" t"e '.S. (#eas#)!
17!8! Agree, in part! &he net position account on the balance sheet of a federal agenc5
represents the difference bet6een assets and liabilities, as net position does for a state or
local government! 'o6ever, net position is classified into t6o categories1 une7pended
appropriations and cumulative results of operations, 6hich are different than the
classifications of net position for a state or local government! .ne7pended
appropriations is the amount of the entit5As appropriations represented b5 undelivered
orders and unobligated balances! Cumulative results of operations is measured since the
inception of the activit5 as the net difference bet6een e7pensesHlosses and financing
sources, 6hich includes appropriations, revenues, and gains!
17-9! Agree, in part! #t is true that the FA(A) sets standards for e7ternal financial reporting for
federal agenciesI ho6ever, its mission is considerabl5 broader than GA()As mission in
that it also sets standards for internal management accounting and performance
measurement! For e7ample, FA(A)As obDectives for e7ternal financial reporting are
designed to assist users in evaluating budgetar5 integrit5, operating performance,
ste6ardship, and adeCuac5 of s5stems and controls! &he audiences for federal financial
17-4
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, Ans6ers, 17-9 ?ContAd@
reports include Congress, federal e7ecutives, program managers, as 6ell as citiBens and
their intermediaries! Although the GA() does provide guidance in presenting
information on service efforts and accomplishments, its mission and activities to date
have been primaril5 focused on e7ternal financial reporting and governmental GAA"!
17!7! &he t6o groups of funds used b5 federal government entities are federal funds and trust
funds! &here are three federal fund t5pesJGeneral Fund, special funds, and revolving
funds! &he General Fund is similar in intent to the General Fund of state and local
governments! #t receives all revenue and other receipts not earmar2ed ?or identified@ for
a specific purpose! General appropriations are made from the General Fund! (pecial
funds are established for a specific non-business-t5pe purpose! &hese funds are most
similar to a special revenue fund used b5 state and local governments! Revolving funds
are established for business-t5pe activities ma2ing them similar to the proprietar5 funds
of state and local governments!
&he second fund group is trust funds! &here are t6o t5pes of trust fundsJtrust funds and
deposit funds! &rust funds are established 6hen a la6 or statute indicates that funds must
be used for a specific purpose! FreCuentl5, the purpose benefits those e7ternal to the
federal government, similar to trust funds of state and local governments! 'o6ever, this
is not al6a5s the case! #n some instances the trust funds of the federal government
actuall5 benefit the government, ma2ing the funds similar to special revenue funds at the
state and local government level! &he second t5pe of trust fund is a deposit fund!
0eposit funds hold receipts on behalf of others, ma2ing them similar to agenc5 funds at
the state and local government level!
17!:! (te6ardship assets are of t6o t5pesJheritage assets and ste6ardship land! 'eritage
assets have historical or natural significanceI cultural, artistic, or educational significanceI
or are architecturall5 significant! (te6ardship land is land that is not used b5 the federal
government for operating purposes!
General propert5, plant and eCuipment ?""E$@ of the federal government is used for
operating purposes and as such is accounted for in the same manner as ""E$ of state and
local governments, not-for-profit entities, and for-profit entities! &he costs of the assets
are capitaliBed and if the asset is depreciable, depreciation e7pense is recorded
periodicall5! (te6ardship assets, ho6ever, are not recorded! Rather the5 are noted on the
financial statements 6ith disclosures in the notes to the financial statements! &he note
disclosure should provide information on maDor categories of heritage assets, multi-use
heritage assets, and ste6ardship land! Additionall5, changes in ste6ardship assets should
be provided, including ph5sical units added and 6ithdra6n during the 5earI methods of
acCuisition and 6ithdra6alI and condition information
17-8
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, Ans6ers ?ContAd@
17!;! &he budgetar5 accounts reCuired b5 the .!(! Government (tandard General -edger are1
!t"e# App#op#iations Rea$i%edJthe account that represents the agenc5As available
resources for the 5ear! &his account normall5 has a debit balance!
)udgetar5 accounts that e7plain 6here funds are in the spending c5cleJ
'nappo#tioned At"o#it)* Appo#tionments* A$$otments* Commitments* 'nde$ive#ed
!#de#s, and E+pended At"o#it)! &hese budgetar5 accounts normall5 have a credit
balance and 6hen summed 6ill add to the !t"e# App#op#iations Rea$i%ed.
&he use of the Commitments account is optional, though highl5 recommended!
)udget authorit5 flo6s do6n through the accounts in the seCuence given in #llustration
17-11! &his seCuence is the same as the order provided in the second bullet point that
lists the accounts e7plaining 6here funds are in the spending c5cle.
17!10! A "AR is the consolidated performance and accountabilit5 report prepared annuall5 b5
most federal agencies! #t contains several components including1
An agenc5 head messageJanalogous to a transmittal letter!
A managementAs discussion and anal5sis!
"erformance reportJprovides information on the agenc5As success in achieving the
goals in its strategic plan and performance budget!
Financial statementsJthere are seven reports, t6o ?statement of social insurance and
statement of net changes in social insurance amounts@ of 6hich are onl5 prepared b5 a
limited number of agencies! &he other five statements are the balance sheet,
statement of net costs, statement of changes in net position, statement of budgetar5
resources, and statement of custodial activit5!
%ther accompan5ing informationJincludes summar5 statements and information
from the #nspector General concerning an5 serious management and performance
challenges!
(olutions to Cases
17-1! &he information provided in the solution is based on *A(AAs 2010 financial statements!
*umbers presented are in millions of dollars!
a. &he portion of *A(AAs assets that is represented b5 ""E$ is 82!9 percent
?3;,948H31:,42:@! As 5ou can see, and 6ould be e7pected, a considerable portion of
*A(AAs assets are ""E$! &6o maDor depreciable assets reported are the #nternational
(pace (tation and the (pace (huttle!
*A(A operated 6ith a negative change in net assets in both 2010 ?-32,0:0@ and 200;
?-34,281@! Although the total change 6as not as negative in 2010 as in 200;, the
agenc5As net position dropped from 31;,849 in 200; to 314,018 in 2010, a decline of
2:!4 percent!
17-9
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, Case 17-1 ?ContAd@
b! *A(AAs audit 6as conducted b5 $rnst E Koung! Given the large number of agencies
and organiBations of the federal government that reCuire audits, it is common for the
government to contract 6ith public accounting firms for audits of federal agencies!
(ince *A(A is a federal entit5, generall5 accepted government audit standards issued
b5 the Comptroller General, Government Accountabilit5 %ffice are used to conduct
audits of *A(A!
c. $rnst E Koung identified ineffective internal controls related to the accounting for
propert5, plant and eCuipment ?""E$@ and operating materials and supplies in 200;!
Given the large investment in ""E$, ineffective internal controls 6ould have a
significant impact on the Cualit5 of the financial information presented! Although
*A(A has corrected man5 problems, the effect has carried into 2010! 0ue to the
200; inadeCuacies in internal controls the auditor 6as not able to obtain sufficient
competent evidential support for amounts on the 2010 statement of net costs and
changes in net position! #n particular, several beginning balances could not be relied
upon due to the problems identified in 200;! &hus, the negative changes in net assets
identified in part a ma5 actuall5 be larger or smaller than reported!
)ased on the 2010 audit, there should not be ongoing problems 6ith the *A(A audit!
$rnst E Koung implies that *A(A has addressed the internal control problems and
the onl5 reason the 2010 audit 6as Cualified 6as due to lac2 of reliance on beginning
balance amounts! &his assumes no ne6 problems develop or are identified during
subseCuent audits!
17-2! &he information provided in the solution is current as of =ul5 1, 2011!
a. According to the FA(A) Leb site the mission of the FA(A) is Fto develop
accounting standards after considering the financial and budgetar5 information needs
of congressional oversight groups, e7ecutive agencies, and the needs of other users of
federal financial information!G
b. &here are nine members of the FA(A)! &hree of the members represent the FA(A)
sponsors ?principals@, coming from the Government Accountabilit5 %ffice ?GA%@,
0epartment of &reasur5, and %ffice of /anagement and )udget ?%/)@! $ach
sponsor selects its o6n representative! &he other si7 members are to be nonfederal
individuals from the general financial communit5, accounting and auditing
communit5, or academia! *onfederal members are appointed b5 the sponsors! &he
chair of the FA(A) is a nonfederal member appointed b5 the sponsors!
c. &he FA(A) is funded b5 the three sponsors!
d. Given the funding source and the method of selecting members, it could be argued
that the FA(A) is not independent in appearance! &he sponsors are affected b5 the
decisions of the FA(A) and as members of the FA(A), the sponsors are in a position
to influence the standards issued! &o pass a standard t6o-thirds of the board
17-7
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, Case 17-2 ?ContAd@
members must approve! &echnicall5, the composition of the board ma2es it possible
for the nonfederal members to override the decisions of the sponsorsI ho6ever, all
nonfederal members 6ould need to be in agreement! Finall5, t6o of the sponsors
?principals@, the Comptroller General and the 0irector of the %ffice on /anagement
and )udget, have veto po6er over an5 FA(A) statement if the5 act 6ithin the ;0 da5
revie6 period for final statements!
e. &he ans6er to this assignment 6ill change, given that the proDect agenda is on-going!
At the time the te7tboo2 6ent to print active proDects included1
A#C"A %mnibusJe7amines adopting guidance for accounting and financial
reporting issues that 6ere previousl5 onl5 in the professional auditing literature!
Application of the -iabilit5 0efinitionJreconsiders accounting and reporting for
long-term commitments of the federal government that could potentiall5 result in
a net outflo6 of resources!
FA() Reporting b5 Federal $ntitiesJreconsiders reporting b5 federal entities
that primaril5 appl5 accounting standards issued b5 the FA()!
/easurement Attributes Concepts (tatementJe7amines providing guidance on
the selection of measurement attributes in future federal financial reporting
standards!
Financial Report Concepts (tatementJrevisits the reporting model described in
SFFAC No. 2, $ntit5 and 0ispla5
Federal $ntit5 Concepts (tatementJe7amines defining the boundaries of the .!(!
Government reporting entit5 and the component reporting entities!
0eferred /aintenance E Asset #mpairmentJdevelops guidance for reporting
information about deferred maintenance and asset impairment!
$armar2ed FundsJevaluates e7isting standards, identif5ing areas 6here actual
results from the standard on earmar2ed funds do not match the boardAs
e7pectations!
*atural ResourcesJdevelops reporting reCuirements to enhance accountabilit5
for and ste6ardship over federal natural resources!
(te6ardship #nvestmentsJdetermines the appropriate categoriBation of the final
ste6ardship categor5!
,. &he FA(A) standards are not proprietar5! An5one can access the standards at the
FA(A) Leb site 666!fasab!gov! &his is unli2e the FA() Codi,ication, 6hich is
accessed through subscription, or the GA() Codi,ication 6hich can be purchased in
hardcop5 or electronic form!
17!4! &he FK 2010 report for the .! (! government is available at
666!fms!treas!govHfrHinde7!html! &he 2011 report should be available in 0ecember of
2011! &he ans6ers to these Cuestions are based on the FK 2010 ?i!e!, %ctober 1, 200; M
(eptember 40, 2010@ report!
17-:
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, Case 17-4 ?ContAd@
a. &he Comptroller General of the GA% 6as not able to render an opinionI therefore, he
reported a disclaimer of opinion because he 6as unable to determine the reliabilit5 of
significant portions of the consolidated financial statements due to
Fcertain material 6ea2nesses in internal control over financial reporting and other
limitations on the scope of our 6or2NG ?pg! 2:@
b. &hree maDor deficiencies 6ere identified in the audit report! &he5 6ere F?1@ serious
financial management problems at the 0epartment of 0efense ?0%0@ that have
prevented 0%0As financial statements from being auditable, ?2@ the federal
governmentAs inabilit5 to adeCuatel5 account for and reconcile intragovernmental
activit5 and balances bet6een federal agencies, and ?4@ the federal governmentAs
ineffective process for preparing the consolidated financial statementsG ?pg! 2;@!
&he audit report identifies five material 6ea2nesses! &he5 indicate that the federal
government 6as unable to1
(atisfactoril5 determine that propert5, plant, and eCuipment and inventories and
related propert5, primaril5 held b5 0%0, 6ere properl5 reported!
Reasonabl5 estimate or adeCuatel5 support amounts reported for certain liabilities!
(upport significant portions of the reported total net cost of operations, most
notabl5 related to 0%0, and adeCuatel5 reconcile disbursement activit5 at certain
federal entities!
AdeCuatel5 account for and reconcile intragovernmental activit5 and balances
bet6een federal entities!
$nsure that the federal governmentAs accrual-based consolidated financial
statements 6ere ?1@ consistent 6ith the underl5ing audited entitiesA financial
statements, ?2@ properl5 balanced, and ?4@ in conformit5 6ith GAA"!
#dentif5 and either resolve or e7plain material differences bet6een ?1@ certain
components of the budget deficit reported in &reasur5As records that are used to
prepare the Reconciliation of *et %perating Cost and the .nified )udget 0eficit,
the (tatement of Changes in Cash )alance from .nified )udget and %ther
Activities, and the Fiscal "roDections for the .!(! Government, and ?2@ related
amounts reported in federal entitiesA financial statements and underl5ing financial
information and records! ?pg! 228@
c. &6ent5 federal agencies out of 24 reCuired to report under the CF% Act received
unCualified opinions in FK 2010, as did eight of 11 additional significant reporting
agencies! &he list of agencies is included in the annual financial report of the .!(!
government! &he managementAs discussion and anal5sis reports on this topic in a
section titled FFinancial (tatement Audit Results!G
d. *o! &he Comptroller General disclaimed an opinion on the statement of social
insurance, unli2e 2007, 200:, and 200; 6hen the statement received a clean audit
opinion! &he reason the statement did not receive a clean opinion 6as primaril5
17-;
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, Case 17- 4 ?ContAd@
due to uncertainties related to the achievement of cost reduction gro6th in /edicare!
A revie6 of the statement of social insurance 6ill sho6 that proDected e7penditures
e7ceed e7pected revenue for all programs! 'o6ever, for /edicare ?parts A and )@
there is a large reversal in the trend of increasingl5 large deficits! #n 200; the
combined parts A and ) deficit 6as estimated at 340,;48 billion! For 2010 the
statement indicates a combined deficit of 320,420 billion! &his represents a significant
e7pected cost savings, the uncertaint5 of 6hich contributes to the Comptroller
GeneralAs concerns!
No%e %o I*"%ruc%or1 &he annual report of the .!(! government is certainl5
provocative and li2el5 to result in a spirited discussion among students! Le suggest
5ou focus on the tremendous accounting challenges in auditing the largest
organiBation in the 6orld, and stress the positive aspects of ho6 far federal agencies
have come in the fe6 5ears since audit reCuirements 6ere enacted!
(olutions to $7ercises and "roblems
17-1! 1! b. 9! b!
2! a. 7! a!
4! c! :! d!
4! d! ;! b.
8! a. 10! c!
17-10
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions ?ContAd@
17!"
a" #$M%&'A'($N $) M(SS(NG AM$&N'S* +ebit, #redit,
%R$%R(E'AR- A##$&N'S
A##$&N'S %A-A./E 0 !12331333
A##&M&/A'E+ +E%RE#(A'($N !16331333
A%%R$%R(A'($NS &SE+ 415331333
$%ERA'(NG MA'ER(A/S AN+ S&%%/(ES 0 !17331333
#&M&/A'(6E RES&/'S $) $%ERA'($NS 1371712 717331333
$%ERA'(NG7%R$GRAM E8%ENSES 411531333
+E%RE#(A'($N AN+ AM$R'(9A'($N 111531333
%/AN' AN+ E:&(%MEN' ;1<331333
&NE8%EN+E+ A%%R$%R(A'($NS!314 !11331333
'$'A/ AM$&N'S G(6EN 161<331333 1<1!331333
)&N+ .A/AN#E =('> 'REAS&R-!314 !12331333 ??????????
'$'A/S%R$%R(E'AR- A##$&N'S 01<1!331333 01<1!331333
.&+GE'AR- A##$&N'S
E8%EN+E+ A&'>$R('-!314 0 415331333
A%%$R'($NMEN'S!314 6331333
&N+E/(6ERE+ $R+ERS!314 115331333
'$'A/ AM$&N'S G(6EN 0 3 616331333
$'>ER A%%R$%R(A'($NS REA/(9E+!314 616331333 ???????? ?
'$'A/S.&+GE'AR- A##$&N'S 0 616331333 0 616331333
Note*
&ne@pended Appropriation, A0!11331333B C E@pended Authority A0415331333B D
0616331333 Aoriginal appropriationB
17-11
Chapter 17 - Accounting and Reporting for the Federal Government
Appropriation, &,ed A0415331333B C &ne@pended Appropriation, A0!11331333B D
0616331333 Aoriginal appropriationB
Ch! 17, (olutions, 17-2 ?ContAd@
b"
A%%R$%R(A'($NS &SE+ +&R(NG )- !314 0415331333
'$'A/ E8%ENSES +&R(NG )- !314 ANote AB 512331333
NE' +E#REASE (N #&M&/A'(6E RES&/'S $) $%ERA'($NS 0 ;331333
ANE' +E#REASE (N #&M&/A'(6E RES&/'S $) $%ERA'($NS (S '>E SAME AS
NE' +E#REASE (N ASSE'S $'>ER '>AN )&N+ .A/AN#E =('> 'REAS&R- ()
A%%R$%R(A'($NS (S '>E $N/- )(NAN#(NG S$&R#EB
ANote A* 'otal e@pen,e, i, the ,um of $perating7%rogram E@pen,e, of 0411531333
and +epreciation and AmortiEation of 0111531333"B
172" a"
+ebit, #redit,
.&+GE'AR-
E8%EN+E+ A&'>$R('-!314 415331333
A%%$R'($NMEN'S!314 6331333
$'>ER A%%R$%R(A'($NS REA/(9E+!314 511331333
%R$%R(E'AR-
#&M&/A'(6E RES&/'S $) $%ERA'($NS 512331333
$%ERA'(NG7%R$GRAM E8%ENSES 411531333
+E%RE#(A'($N AN+ AM$R'(9A'($N 111531333
A%%R$%R(A'($NS &SE+ 415331333
#&M&/A'(6E RES&/'S $) $%ERA'($NS 415331333
17-12
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, 17-4 ?ContAd@
b" )E+ERA/ AGEN#-
.A/AN#E S>EE'
AS $) SE%'EM.ER 231 !314
ASSETS
(N'RAG$6ERNMEN'A/*
)&N+ .A/AN#E =('> 'REAS&R-!314 0 !12331333
G$6ERNMEN'A/*
$%ERA'(NG MA'ER(A/S AN+ S&%%/(ES !17331333
%/AN' AN+ E:&(%MEN' ANE' $) A##&M&/A'E+
+E%RE#(A'($N $) 0!16331333B 612331333
'$'A/ ASSE'S 01112331333
LIABILITIES
A##$&N'S %A-A./E 0 !12331333
NET POSITION
&NE8%EN+E+ A%%R$%R(A'($NS !11331333
#&M&/A'(6E RES&/'S $) $%ERA'($NS 61<331333
'$'A/ NE' %$S('($N <13331333
'$'A/ /(A.(/('(ES AN+ NE' %$S('($N 01112331333
17-14
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions ?ContAd@
174"
R&RA/ ASS(S'AN#E AGEN#-
S'A'EMEN' $) NE' #$S'
)$R '>E -EAR EN+E+ SE%'EM.ER 231 !314
)$$+ .ANF
#$S'S 0 <162!1;33
/ESS* EARNE+ RE6EN&E !16111<33
NE' #$S' 713!31<33
>$&S(NG SER6(#ES
#$S'S 7142;1533
/ESS* EARNE+ RE6EN&E 11!271433
NE' #$S' 61!311133
#RE+(' #$&NSE/(NG
#$S'S !12<11333
/ESS* EARNE+ RE6EN&E ;71333
NE' #$S' !12341333
'$'A/
#$S'S 1<146!1233
/ESS* EARNE+ RE6EN&E 21<261233
NE' #$S' $) $%ERA'($NS 01515!61333

17-14
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions ?ContAd@
175" )E+ERA/ AN'(:&('(ES A+M(N(S'RA'($N
S'A'EMEN' $) .&+GE'AR- RES$&R#ES
)$R '>E 11 M$N'>S EN+E+ A&G&S' 211 !314
.&+GE'AR- RES$&R#ES*
.&+GE' A&'>$R('- ANote AB*
A%%R$%R(A'($NS RE#E(6E+ ANote AB 041;<41;55
'$'A/ .&+GE'AR- RES$&R#ES 041;<41;55
S'A'&S $) .&+GE'AR- RES$&R#ES*
$./(GA'($NS (N#&RRE+ ANote .B 0411441;55
&N$./(GA'E+ .A/AN#ES ANote #B 7531333
'$'A/ S'A'&S $) .&+GE'AR- RES$&R#ES 041;<41;55
#>ANGE (N $./(GA'E+ .A/AN#E*
$./(GA'E+ .A/AN#E1 .EG(NN(NG $) '>E %ER($+ 0 11!131!13
$./(GA'($NS (N#&RRE+ ANote .B 411441;55
$&'/A-S ANote +B A416<31<24B
&N%A(+ $./(GA'($NS1 EN+ $) %ER($+ ANote EB 0 6641121
Note A* 'otal budgetary re,ource, are given by the balance of $ther
Appropriation, RealiEed of 041;<41;55"
Note .* E@pended authority of current year of 0214;317!4 plu, 06641121
obligated budgetary authority for undelivered order, at ;721714"
Note #* &nobligated balance, i, the ,um of allotment, and commitment,"
Note +* $utlay, eGual, e@pended authority1 and i, al,o eGual to the decrea,e in
fund balance, Hith the &"S" 'rea,ury during the periodthe eGuivalent
of ca,h di,bur,ed"
Note E* $bligated balance at yearend i, eGual to undelivered order,"
17-18
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions ?ContAd@
176" a" )/$$+ #$N'R$/ #$MM(SS($N
GENERA/ I$&RNA/
+ebit, #redit,
1" .&+GE'AR-
$'>ER A%%R$%R(A'($NS
REA/(9E+!314 713331333
&NA%%$R'($NE+ A&'>$R('-!314 713331333
%R$%R(E'AR-
)&N+ .A/AN#E =('> 'REAS&R-!314 713331333
&NE8%EN+E+ A%%R$%R(A'($NS!314 713331333
!" .&+GE'AR-
&NA%%$R'($NE+ A&'>$R('-!314 713331333
A%%$R'($NMEN'S!314 713331333
2" .&+GE'AR-
A%%$R'($NMEN'S!314 113331333
A//$'MEN'S!314 113331333
4" .&+GE'AR-
A//$'MEN'S!314 <731333
&N+E/(6ERE+ $R+ERS!314 <731333
5" .&+GE'AR-
&N+E/(6ERE+ $R+ERS!314 1731333
E8%EN+E+ A&'>$R('-!314 1731333
17-19
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, 17-9 ?ContAd@
)/$$+ #$N'R$/ #$MM(SS($N
GENERA/ I$&RNA/
+ebit, #redit,
%R$%R(E'AR-
$%ERA'(NG7%R$GRAM E8%ENSES 1731333
+(S.&RSEMEN'S (N 'RANS('!314 1731333
+(S.&RSEMEN'S (N 'RANS('!314 1731333
)&N+ .A/AN#E =('> 'REAS&R-!314 1731333
&NE8%EN+E+ A%%R$%R(A'($NS!314 1731333
A%%R$%R(A'($NS &SE+ 1731333
6" .&+GE'AR-
&N+E/(6ERE+ $R+ERS!314 2<51333
E8%EN+E+ A&'>$R('-!314 2<51333
%R$%R(E'AR-
)&RN('&RE AN+ E:&(%MEN' 1;31333
$%ERA'(NG MA'ER(A/S AN+ S&%%/(ES 1751333
$%ERA'(NG7%R$GRAM E8%ENSES 431333
A##$&N'S %A-A./E 2<51333
&NE8%EN+E+ A%%R$%R(A'($NS!314 2<51333
A%%R$%R(A'($NS &SE+ 2<51333
7" .&+GE'AR-
&N+E/(6ERE+ $R+ERS!314 1;21333
E8%EN+E+ A&'>$R('-!314 1;21333
17-17
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, 17-9 ?ContAd@
)/$$+ #$N'R$/ #$MM(SS($N
GENERA/ I$&RNA/
+ebit, #redit,
%R$%R(E'AR-
$%ERA'(NG7%R$GRAM E8%ENSES 1;21333
A##R&E+ )&N+E+ %A-R$// AN+
.ENE)('S 1;21333
&NE8%EN+E+ A%%R$%R(A'($NS!314 1;21333
A%%R$%R(A'($NS &SE+ 1;21333
;" %R$%R(E'AR-
A##$&N'S %A-A./E 1;<1333
A##R&E+ )&N+E+ %A-R$// AN+
.ENE)('S 1;21333
+(S.&RSEMEN'S (N 'RANS('!314 27!1333
+(S.&RSEMEN'S (N 'RANS('!314 27!1333
)&N+ .A/AN#E =('> 'REAS&R-!314 27!1333
<" .&+GE'AR-
&N+E/(6ERE+ $R+ERS!314 431333
E8%EN+E+ A&'>$R('-!314 431333
%R$%R(E'AR-
$%ERA'(NG7%R$GRAM E8%ENSES 431333
A##R&E+ )&N+E+ %A-R$//
AN+ .ENE)('S 231333
A##$&N'S %A-A./E 131333
17-1:
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, 17-9 ?ContAd@
)/$$+ #$N'R$/ #$MM(SS($N
GENERA/ I$&RNA/
+ebit, #redit,
$%ERA'(NG7%R$GRAM E8%ENSES 631333
$%ERA'(NG MA'ER(A/S AN+ S&%%/(ES 631333
+E%RE#(A'($N AN+ AM$R'(9A'($N !1533
A##" +E%RE#(A'($N)&RN" AN+ E:&(%" !1533
&NE8%EN+E+ A%%R$%R(A'($NS!314 431333
A%%R$%R(A'($NS &SE+ 431333
13" .&+GE'AR-
E8%EN+E+ A&'>$R('-!314 7;;1333
$'>ER A%%R$%" REA/(9E+!314 7;;1333
%R$%R(E'AR-
#&M&/A'(6E RES&/'S $) $%ERA'($NS 4<51533
$%ERA'(NG7%R$GRAM E8%ENSES 4<21333
+E%RE#(A'($N AN+ AM$R'(9A'($N !1533
A%%R$%R(A'($NS &SE+ 7;;1333
#&M&/A'(6E RES&/'S $) $%ERA'($NS 7;;1333
17-1;
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, 17-9 ?ContAd@
b" )/$$+ #$N'R$/ #$MM(SS($N
.A/AN#E S>EE'
$#'$.ER 211 !314
ASSETS
(N'RAG$6ERNMEN'A/*
)&N+ .A/AN#E =('> 'REAS&R-!314 06145;1333
G$6ERNMEN'A/*
$%ERA'(NG MA'ER(A/S AN+ S&%%/(ES 1151333
)&RN('&RE AN+ E:&(%MEN'1 NE' $)
A##&M&/A'E+ +E%RE#(A'($N $) 0!1533 1771533
'$'A/ ASSE'S 0617531533
LIABILITIES
A##$&N'S %A-A./E 0 !161333
A##R&E+ )&N+E+ %A-R$// AN+ .ENE)('S 231333
'$'A/ /(A.(/('(ES
#$6ERE+ .- .&+GE'AR- RES$&R#ES !461333
NET POSITION
&NE8%EN+E+ A%%R$%R(A'($NS 61!1!1333
#&M&/A'(6E RES&/'S $) $%ERA'($NS !<!1533
'$'A/ NE' %$S('($N 615341533
'$'A/ /(A.(/('(ES AN+ NE' %$S('($N 0617531533
17-20
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, 17-9 ?ContAd@
c" )/$$+ #$N'R$/ #$MM(SS($N
S'A'EMEN' $) #>ANGES (N NE' %$S('($N
)$R '>E M$N'> EN+E+ $#'$.ER 211 !314
#&M&/A'(6E
RES&/'S $)
$%ERA'($NS
&NE8%EN+E+
A%%R$%R(A'($NS
.EG(NN(NG .A/AN#ES 0 3 0 3
.&+GE'AR- )(NAN#(NG S$&R#ES*
A%%R$%R(A'($NS RE#E(6E+ 713331333
A%%R$%R(A'($NS &SE+ 7;;1333 A7;;1333B
'$'A/ )(NAN#(NG S$&R#ES 7;;1333 61!1!1333
NE' #$S' $) $%ERA'($NS ANote AB A4<51533B ?????????
EN+(NG .A/AN#ES 0 !<!1533 061!1!1333
Note A* $perating7program e@pen,e, of 04<21333 C depreciation and
amortiEation of 0!1533"
17-21
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, 17-9 ?ContAd@
d" )/$$+ #$N'R$/ #$MM(SS($N
S'A'EMEN' $) .&+GE'AR- RES$&R#ES
)$R M$N'> EN+E+ $#'$.ER 211 !314
.&+GE'AR- RES$&R#ES*
.&+GE' A&'>$R('- ANote AB 0713331333
S'A'&S $) .&+GE'AR- RES$&R#ES*
$./(GA'($NS (N#&RRE+ ANote .B 0 <731333
&N$./(GA'E+ .A/AN#ES A6A(/A./E ANote #B 613231333
'$'A/ S'A'&S $) .&+GE'AR- RES$&R#ES 0713331333
#>ANGE (N $./(GA'E+ .A/AN#E*
$./(GA'($NS (N#&RRE+ <731333
$&'/A-S ANote +B A57!1333B
$./(GA'E+ .A/AN#E1 EN+ $) %ER($+ ANote EB 0 4!;1333
Note A* 'otal budgetary re,ource, are the total appropriation, for the year1 or
0713331333"
Note .* $bligation, incurred eGual, e@pended budgetary authority of 07;;1333
A,ee Entry 13AB plu, the remaining balance of &ndelivered
$rder,!312 of 01;!1333 A0<731333 07;;1333B1 or 0<731333" (n thi,
ca,e1 ,ince the )lood #ontrol #ommi,,ion obligate, prior to all
e@penditure, of budgetary authority1 the amount incurred al,o i, ,imply
the amount obligated by the credit to &ndelivered $rder,!314 A,ee
Entry 4B"
Note #* 'otal budgetary re,ource, of 0713331333 le,, amount obligated of
0<731333 A,ee Note .B eGual, 0613231333"
Note +* $utlay, al,o eGual, the decrea,e in )und .alance, Hith the &"S"
'rea,ury during the periodthe eGuivalent of ca,h di,bur,ed"
Note E* $bligated balance, at yearend include &ndelivered $rder, A01;!1333B
and Account, %ayable and other accrued liabilitie, A0!461333B1 or
04!;1333 in total"
17-22
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions ?ContAd@
177"
a" )(NAN#(A/ #A%A.(/('-
A1B (N+(6(+&A/ (N#$ME 'A8ES7'$'A/ RE6EN&ES* 7;"!J
A01172!"<370!1!16"53B
A!B +E.' /$A+ A071354"53C0!31"!37041!<6"33B* 16;"<J
b" )(NAN#(A/ %ER)$RMAN#E
A1B (N'ER%ER($+ E:&('- A0!1!16"537041!<6"33B* 3"5!
c. )(NAN#(A/ %$S('($N
A1B N$NEARMARFE+ )&N+S7'$'A/ RE6EN&ES* 6"27
A014111<"7370!1!16"53B
A!B :&(#F RA'($ A04!;"6707!"<B or A04!;"670!27"!BK* 5";; or 1";1
A2B #A%('A/ ASSE' #$N+('($N A0;11"63701152;"43BKK* 3"52
K Since it i, difficult to identify current portion, of longterm debt1 only
,omeHhat identifiable current liabilitie, Here u,ed in the calculation" Iu,t
Account, %ayable Ha, u,ed in the fir,t calculation and Account, %ayable
plu, .enefit, +ue and %ayable Here u,ed in the ,econd calculation"
KK 'he total gro,, capital a,,et value Ha, adLu,ted for nondepreciable a,,et,
Acon,truction in progre,, and landB"
d. All but tHo mea,ure, indicate that the federal government i, in poor financial
condition" 'he Guick ratio i, Hell over one u,ing either calculation1 indicating
,ufficient ca,h to pay current liabilitie,1 a,,uming current liabilitie, are
correctly identified" Additionally1 the capital a,,et condition ratio of 3"52
indicate, that there i, ,ufficient life remaining in capital a,,et,"
'he federal government relie, heavily on individual income ta@e," +ebt load
i, e@tremely high by any benchmark u,ed" (llu,tration 137 indicate, that for
local government, a load greater that 25J i, e@tremely high" (nterperiod
eGuity i, poor given that only 5!J of net co,t, are covered by current period
revenue," )inally1 the negative net po,ition indicate, that there are no
17-24
Chapter 17 - Accounting and Reporting for the Federal Government
Ch! 17, (olutions, 17-7 ?ContAd@
re,erve, on Hhich to draH to help addre,, the interperiod eGuity ,ituation"
'he financial ,tatement, of the federal government reflect the financial
concern, e@pre,,ed by #ongre,,1 the %re,ident1 and citiEen,"
17-24