1. Intragovernmental Accounting and Eliminations Process 2007 Federal Investments & Borrowings Seminar April 12, 2007 Presented by: Ella Hughes-Bailey ella.hughes-bailey@fms.treas.gov Financial Management Service, Governmentwide Accounting

2. 2 Topics of Discussion What are Intragovernmental Transactions? Impact of Intragovernmental Transactions on the Financial Report of the U.S. Government (FR) Investments & Borrowings Reciprocal Categories Quarterly Intragovernmental Process Yearend Intragovernmental Process Tools to Resolve Borrowings and Investments Differences

3. 3 What are Intragovernmental Transactions? Transactions between two different Federal Government entities (includes both interdepartmental and intradepartmental transactions). Types of Intragovernmental Transactions Fiduciary CategoriesNon-Fiduciary Categories Investment in Treasury Securities with BPD Transfers Borrowings from Treasury (BPD & FFB) Buy/Sell FECA Transactions with DOL Employee Benefits Transactions with OPM

4. 4 Impact of Intragovernmental Transactions on the Financial Report on the U.S. Government (FR)  Unreconciled Intragovernmental Transactions are Still a Material Weakness at the Consolidated Federal Government Level  Impact of Agencies Intragovernmental Reconciliation on the FR  Resolving Intragovernmental Transactions Continue to Remain a Difficult Challenge

5. 5 Investments and Borrowings Reciprocal Categories (RC) F/SRCDescriptionAccounting Impact BS01Investments in Treasury/BPD Securities Assets/Liabilities related to Principle, Discount, Premium, Amortization, Debt BS02Interest on Investments (BPD) with Treasury Assets/Liabilities related to Interest Receivable/Payable SONC SOCNP 03Interest on Investments (BPD) with Treasury Revenue/Expense Gains/Losses SONC SOCNP 05Interest on Borrowings (BPD & FFB) with Treasury Revenue/Expense SOCNP06Federal BorrowingsGains/Losses BS17BPD/FFB Borrowings from Treasury Asset/Liabilities related to Loans Receivable/Payable

6. 6 Quarterly Intragovernmental Process Federal Program Agencies, Confirms Fiduciary Balances in IFCS Reminder: IFCS recertifications are due by April 30, 2007 Verifying Agencies “F” Transactions Submissions Reminder: Files must me submitted in the required format per TFM FMS Provides IRAS Reports to Agencies to Facilitate Reconciliations Change: Beginning 3 rd quarter FY 2007, verifying agencies will generate IRAS reports Agencies Submits Status of Disposition Certification to FMS Reminder: Unresolved confirmed vs. confirmed differences > $50 M will require a CFO action plan for the 3 rd Quarter, FY 2007 Change: Unknown explanation of differences > $50 will also require a CFO action plan for the 3 rrd Quarter, FY 2007 FMS Provides Comparative Status of Disposition Report to Agencies

7. 7 Examples of Investments & Borrowings Reporting Differences (1 st Quarter 2007) RC Description Providing Agency Receiving Agency Net Difference 01 Federal Debt/InvestmentsTreasury $0 Billion Agency A $3.8 Billion $3.8 Billion 17Loans Receivable/PayableTreasury $108.9 Billion Agency B $105.6 Billion$3.3 Billion 01Federal Debt/InvestmentsTreasury $25.4 Billion Agency C $24.2 Billion $1.2 Billion 01Federal Debt/InvestmentsTreasury $1.5 Billion Agency D $2.3 Billion$0.8 Billion 01Federal Debt/InvestmentsTreasury $8.8 Billion Agency E $8.1 Billion$0.7 Billion 01Federal Debt/InvestmentsTreasury $1.6 Agency F $1.1$0.5 Billion

8. 8 Yearend Intragovernmental Process Verifying Agencies Identify Intragovernmental Trading Partners by Federal Line Item in GFRS Module 4 Verifying Agencies Generates IRAS Reports Based on Closing Package Data CFOs Certify Closing Package Material Differences/Status of Disposition Certification Report FMS Provides Agencies Intragovernmental Comparative Closing Package Explanations of Differences Report

9. 9 Changes to Yearend Process CFO Representation Due 3 rd Quarter (August 7, 2007) Instead of Yearend IG Agreed Upon Procedures (Audit Requirements) IGs Specifies Preferred Option for Implementation in FY 2007 Option 1 – IG AUPs Option 2 – IG AUPs, Performance Audit or Internal Control Reviews Options 1 or 2 Due August 29, 2007 Based on 3 rd Quarter Data Instead of After FR is Issued

10. 10 Tools to Resolve Investments and Borrowings Differences OMB and Treasury Intragovernmental Reporting Requirements & Guidance OMB Circular A-136, Financial Reporting Requirements OMB Bulletin 06-03, Audit Requirements for Federal Financial Statements OMB Memorandum M-03-01, Business Rules for Intragovernmental Transactions, Dated November 13, 2006 Treasury Financial Manual, Part 2, Chapter 4700, Agencies Reporting Requirements for the Financial Report of the United States Government Treasury Bulletin 2007-03, Intragovernmental Business Rules, Effective FY 2007 Federal Intragovernmental Transactions Accounting Policies Guide Agencies Policies and Procedures Frequent Communication with Trading Partners Intragovernmental Dispute Resolution Committee

11. 11 Quarterly Reporting Key Dates ItemRequired Action Quarters 2 nd 3 rd 4th 1IFCS Opens04-09-0707-09-0710-09-07 2IFCS Closes04-24-0707-24-0710-19-07 3Agencies “F” Transactions Files Due to FMS04-24-0707-24-0710-19-07 4FMS Provides IRAS Reports to Agencies04-30-07 Agencies Generates Quarterly Reports07-31-0710-25-07 5Agencies Submits Quarterly Status of Disposition Certification Due to FMS 05-07-0708-07-07N/A 6FMS Provides Comparative Status of Disposition to Agencies 05-10-0708-09-07N/A 7CFO Representations are Due08-07-07 8Audit Procedures are Due08-29-07

12. 12 Tentative FYE 2007 Intragovernmental Key Dates Due DateDescription 11-16-07 ( Midnight e.s.t.) IG/IPA Opines on Closing Package, including Trading Partner Note (Module 4) in GFRS 11-21-07Verifying Agencies Generates Intragovernmental Reporting and Analysis (IRAS) reports based on closing package data to agencies 11-26-07CFOs certify the Closing Package Material Differences/Status of Disposition Certification Report 11-29-07FMS provides Intragovernmental Comparative Closing Package Explanations of Differences Report to CFOs & IGs

13. 13 In Closing... AGENCIES WHO RECONCILE DURING THE YEAR ARE MORE LIKELY TO HAVE RECONCILED BALANCES AT YEAREND!

14. 14 Questions!