1. Governmentwide Accounting Presenter: Jim Sturgill May 8, 2007

2. 2 Presentation Summary  Where we are…  The future…

3. 3 Where we are…

4. 4 The Financial Report of the United States Government (FR)  Provides the President, Congress, and the American people with a comprehensive view of the Federal Government’s financial results  Discusses important financial issues and significant conditions that may affect future operations  Presents the financial condition of the Federal Government using the accrual basis of accounting  No opinion rendered for the 10 th consecutive year from the Government Accountability Office (GAO)

5. GAO Findings  Three major impediments continue to prevent GAO from issuing an opinion:  Serious financial management problems at the Department of Defense (DoD)  Inability to adequately reconcile intragovernmental activity and balances  Ineffective process for preparing the FR

6. DoD Financial Management Problems  Financial statements were not auditable Efforts for improvement  Continually to improve its system to correct its financial reporting problems and produce auditable statements  Business Management Modernization Program

7. Efforts to Reconcile Intragovernmental Activity and Balances Problem  Intragovernmental Out-of-Balance Condition Efforts for improvement  Business Rules for Intragovernmental Activities  Use of Central Accounting Data  Inspector General Agreed Upon Procedures (IG AUP)

8. 8 $99,595 Intragovernmental Out-of-Balance Condition All Categories (In Millions) $97,630 **Excludes agency activity that reported the General Fund as its trading partner, intradept activity, and benefits contributions activity with trading partners other than OPM & DOL $247,129

9. 9 Business Rules for Intragovernmental Activities  Collaborative effort between the CFO Council, Treasury, and OMB  Provide accounting guidance on the exchange of goods and services, transfers between Federal agencies, and for recording and reconciling nonexchange transactions with fiduciary agencies (BPD, FFB, DOL, & OPM) by OMB and Treasury  Established the need for the Dispute Resolution Committee to facilitate the resolution of accounting, reporting timing differences or contractual disputes between Federal entities

10. 10 Use of Central Accounting Data (UCAD) Purpose  To Improve interagency eliminations by providing agencies a tool to reconcile transactions and balances directly to Treasury Central Accounting data Benefit  Addresses the reporting inconsistencies by matching with the Treasury Central Accounting data (one-to- one relationship from Central Accounting System to year-end financial reporting)

11. 11 UCAD (cont’d)  Authoritative Source FMS’ central accounting system acts as the “bank” for federal agencies. It is the authoritative source for:  FBWT  CIHO  Investments  Borrowing Activity  Net Outlays  Non-Expenditure Transfers  Appropriation Warrants

12. 12 IG AUP Purpose  Supplements the audit of intragovernmental activity and balances Benefit  Supports the process of eliminating intragovernmental activity and balances to the FR

13. 13 IG AUP (cont’d) Based upon results in FY 2006, agencies need to  Update departmental policies and guidelines to ensure the accuracy of the intragovernmental reporting  Resolve on-going reportable conditions  Perform and complete all of the steps of the 3rd Quarter Audit Requirements to improve interagency eliminations by providing agencies a tool to reconcile transactions and balances

14. 14 FR Preparation Process Findings #1: Consistency with underlying information in agencies audited financial statements Resolution:  Developed the Closing Package methodology, which is a set of special purpose financial statements used to prepare the FR

15. 15 FR Preparation Process Findings (cont’d) #2: Address disclosures required by GAAP Resolution:  Modified the TFM to collect the disclosures required by GAAP in FY 2006:  Earmarked Funds – Reporting requirement per FASAB SFFAS No. 27  Social Insurance – Reporting requirement per FASAB SFFAS No. 25, 26, & 28

16. 16 FR Preparation Process Findings (cont’d) #3: Define reporting entity Resolution:  Developed the procedures to identify the entities to required to be consolidated into the FR

17. 17 FR Preparation Process Findings (cont’d) #4: Internal controls Resolution:  Developed and documented policies and procedures  Instituted effective management reviews

18. 18 FR Preparation Process Findings (cont’d) #5: Reconciliation Statements Resolution:  Develop a process to fully identify and report the items needed to reconcile the operating results to the budget results

19. 19 The Future …

20. 20 Fiduciary Funds Disclosure  Include assets collected/received by agencies but that belong, by law, to non-federal entities  FASAB requires:  These assets and related liabilities will not be in agencies’ balance sheets,  These activities must be disclosed Effective in FY 2009

21. 21 GWA Modernization Project Objectives  Change the fundamental reconciliation process  Streamline agency access and eliminate the redundant reporting process  Provide a central location for accounting data  Replace the current legacy Central Accounting System (STAR)

22. 22  Cash Accounting and Reporting Modernization Activity  Internal system to define a strategy for General Ledger posting logic and to establish the logic and database relationships necessary to update General Ledger (GL) transactions  To Implement and integrate the United States Standard General Ledger to record cash and other monetary assets and liabilities of the Federal Government with the existing GWA database CARMA

23. 23  Financial Information Reporting Standardization  Replaces FACTS I and II, IFCS, IRAS, and part of TROR  Provides a mechanism to implement the tie- points on a government-wide scale  Tentatively scheduled for 3 rd quarter FY 2011 FIRST

24. 24  Impact on the reconciliation statements  Collect both the budgetary and proprietary SGLs  Apply edits at Treasury Account Symbol level based on SGL tie points  Provide feedback to agencies FIRST (cont’d)