Section 3 - Ch2

Question 1

Office of Management and Budget

Answer 1

Office of Management and Budget

• Mission is to assist the president in preparing the federal budget and supervise its administration by the executive agencies
• Roles: improve administrative and program management, develop better performance measures, and reduce unnecessary burdens on the public.
• Guidance in the form of “Circulars” and “Bulletins”
  
  • Circulars used when the nature of the subject matter is of “continuing effect” (begin with “A”)
    
    • Principal Circular for “budget matters”: OMB Circular A-11
  • Bulletin: when subject matter requires single or one-time action by departments. Issued in an annual series in chronological order. The last 2 numerals are the fiscal year.

Question 2

Department of the Treasury/FMS

Answer 2

*Department of the Treasury/FMS

Department of the Treasury: serves as the financial manager and fiscal agent of the U.S. government. The Treasury’s Financial Management Service (FMS) disburses 950M federal payments, collects receipts of $2.4T annually, oversees daily cash flow of $10B, provides centralized debt collection services/ gov’t wide accting/rpting

FMS guidance:

• Unites States Standard General Ledger (USSGL):the Federal Financial Management Improvement Act of 1996 mandated federal agencies use of USSGL. USSGL -> budgetary accounting (appropriations life cycle and budget authority) and proprietary accounting (assets, liabilities, revenues, exp)

Question 3

Status of Budgetary Resources

Answer 3

*Status of Budgetary Resources

The Status of Budgetary Resources during Budget Execution

• Basic budgetary equation… Budgetary Resources = Status of Budgetary Resources
• Budgetary Resources components:
  
  • Appropriations for the current year
  • Borrowing and contract authority
  • Unobligated balances of mulit-year and no-year money from prior reporting periods
  • Spending authority from offsetting collections
  • Recoveries of prior year obligations
• Budgetary Resources may have the following status:
  
  • Obligations incurred: (Federal level) binding agreement that will result in outlays. Budgetary resources must be made available before obligations can be incurred.
  • Unobligated balances available
  • Unobligated balance unavailable (lapsed budgetary authority)

Question 4

Tracking Status (of Budgetary Resources)

Answer 4

*Tracking Status

Tracking Status of Budgetary Resources: budgetary events that are tracked include:

• Receipt of appropriations
• Apportionment and allotment of appropriations
• Commitment of funds
• Obligation of funds

Allotment: formal delegation of authority to incur obligations.

Commitments: do NOT legally encumber the allotment. (Like a marriage “engagement”) An Obligation is like a “marriage”.

Question 5

In Budgetary Accounting, entries are only made against an appropriation for transactions FUNDED by that appropriation.

Answer 5

In Budgetary Accounting, entries are only made against an appropriation for transactions FUNDED by that appropriation.

Question 6

*Federal Budgetary vs. Proprietary Accounting

Answer 6

*Federal Budgetary vs. Proprietary Accounting

Budgetary Accounting (MOD ACCURAL)

Proprietary Accounting (ACCRUAL): focuses on the financial consequences of operations during the period and the financial position of the entity.

CFO Act:

• Established deputy director of OMB for management
• Appointed CFO at the 24 largest agencies
• Required submission of audited financial statements
• Annual independent audits required

Federal Financial Management Improvement Act of 1996: Mandated largest federal executive branch agencies comply with:

• Accounting Standards
• Systems requirements
• US SGL (General Ledger use)

Federal Credit Reform Act of 1990: requires recognition of expected losses arising from defaulted loan guarantees (now an ACCRUAL or Proprietary Accounting focus as compared to before).

Under the FCRA, present values must be used to determine and recognize the cost today of estimated cash flows occurring in the future (Direct Loans and Loan Guarantees (Section III - Ch5)

Question 7

Budgetary and Proprietary Accounting

Examples to illustrate “Timing Differences”

Answer 7

Budgetary and Proprietary Accounting

Examples to illustrate “Timing Differences”