The FY 2012 Financial Report of the U.S. Government AGA – WV Joint Meeting May 14, 2013 Scott Bell Office of the Fiscal Assistant Secretary U.S. Department of the Treasury

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Key Issues Current Financial Position and Condition (Traditional) Social Insurance & Sustainability (Non-Traditional) Citizen’s Guide 3

4 Agency Performance & Accountability Report Annual Financial Report Agency Performance & Accountability Report Annual Financial Report Agency Performance & Accountability Report Annual Financial Report Audit Inspector General Contract Audit Inspector General Contract Audit Inspector General Contract Agencies reclassify financial information into common format for consolidation Bureau of Fiscal Service (Treasury) Office of Management and Budget (OMB) Fiscal Projections Financial Report of the U.S. Government & Citizen’s Guide Treasury Office of the Fiscal Assistant Secretary Analysis Audit Government Accountability Office 35 Significant Reporting Entities. 115 Other Reporting Entities

Comparing Cost and Deficit 5

What Came In & What Went Out 6 Total FY 2012 Taxes & Other Revenues: $2.5t Gross Cost: $3.9t - Earned Revenue $350.9b +/- Assumption Loss/Gain $320.2b Net Cost: $3.8t - Taxes / Other Revenue $2.5t Net Operating Cost: $1.3t

What We Own & What We Owe 7 Off-balance sheet resources of the U.S. Government (not intended to be used to meet obligations): Stewardship Land (e.g., National parks) and Heritage Assets (e.g., monuments) (Note 27) Stewardship Investments in (1) Non-Federal Physical Property (e.g., interstate, national highways); (2) Human Capital (e.g., job-training, employment programs); and (3) Research and Development (e.g., NIH, DoD, NASA). Natural Resources (oil/gas royalties Required Supplementary Information through 2015, then “basic”). Government’s power to tax

Statement of Social Insurance Net present value: projected expenditures and receipts: –“Open” vs. “Closed” Group Audit Disclaimer - “…significant uncertainties…primarily related to the achievement of projected reductions in Medicare cost growth…prevented us from expressing an opinion on those statements.” Statement of Changes in Social Insurance 8

A Broader Perspective – Fiscal Sustainability 9 What is Fiscal Sustainability? –Debt/GDP stable over the long term. Look at ALL revenues and spending. –Broader focus than SOSI. KEY ASSUMPTIONS Current Law/Policy Projections, NOT Predictions

Pieces of the Puzzle 10

Effect on the Debt 11 “Blessed are the young, for they shall inherit the National debt.” --- Herbert Hoover

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FY 2012 Audit Results Agency Audits - 31 of 35 significant reporting agencies (21 of 24 CFO Act agencies) received clean audit opinions. –Qualified: Dept of Homeland Security, U.S. Agency for International Development (USAID) –Disclaimer: DoD Railroad Retirement Board (RRB). Governmentwide Audit – Disclaimer (16 th consecutive year) –DoD accounting weaknesses –Intragovernmental Balances and Transactions –Compilation / Consolidation Process 13

14 “To state the facts frankly is not to despair the future nor indict the past. The prudent heir takes careful inventory of his legacies and gives a faithful accounting to those whom he owes an obligation of trust.” - John F. Kennedy

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