Section 3, Chapter 2 - Federal Budgetary Accounting

Question 1

Which agencies are the central financial management agencies of the executive branch?

Answer 1

• OMB
• The department of the treasury (treasury)

Question 2

Which agencies provide budget guidance (guidance design to meet the requirements of the budget legislation) and budgetary reporting requirements?

Answer 2

OMB and treasury

Question 3

What is OMB’s predominant mission?

Answer 3

To assist in the implementation of the president vision across the executive branch

Question 4

How does OMB accomplish its mission of assisting in the implementation of the president vision across the executive branch?

Answer 4

• overseeing the preparation of the federal budget, the performance of the executive branch agencies, and related initiative, such as development of legislative proposals and congressional testimony
• evaluates the effectiveness of agency programs, policies, and procedures; assesses competing funding demands among agencies; and set funding priorities for the president’s budget
• ensures that agency reports, rules, testimony before Congress and proposed legislation are consistent with the presence budget and administration policies
• and coordinates the administrations procurement, financial management, information and regulation policies

Question 5

What is OMB primary role?

Answer 5

• To improve administrative and program management
• developed better performance measures and coordinating mechanisms
• Reducing any unnecessary burdens to the public

Question 6

What does OMB use to accomplish its mission?

Answer 6

• circulars and bulletins to provide guidance
• OMB works closely with treasury and other government wide council, such as the chief financial officers, counsel, and the president management council, to develop and implement plans to improve the management of government

Question 7

When does OMB use circular series?

Answer 7

when the nature of the subject matter is of continuing effect

Question 8

When does OMB use bulletin series?

Answer 8

when the subject matter requires single or one time action by the department for establishments of a transitory nature

Question 9

How are circulars identified?

Answer 9

The letter “A” followed by a number

For example, OMB circular A-11

When an instruction needs to be revised, the pertinent circular will be re-issued with the same number and a new date

Question 10

How are bulletins issued?

Answer 10

• in an annual series, numbered in chronological order
• The last two numerals of the fiscal year of issuance, are used to indicate the annual series

Example: bulletin no. 21-02 what is the second bulletin issued in fiscal year 2021

Question 11

Who are OMB circulars and bulletins issued by?

Answer 11

The OMB Director to the heads of agencies

Question 12

Who issues OMB memoranda?

Answer 12

Issued by any of the OMB appointees to the designated positions (e.g., CFO, IG) within the agencies

Question 13

How are OMB memoranda numbered?

Answer 13

In an annual series similar to bulletins (school year, and then chronologically)

M-21-01 signifies the first memorandum of the FY 2021 to

Question 14

What is the principle OMB circular regarding budget matters?

Answer 14

OMB Circular A-11, preparation, submission, and execution of the budget

Question 15

How often is OMB Circular A-11 issued and what are the parts?

Answer 15

• updated annually. Usually July.
• parts include:
  1. Part one. General information.
  2. Part two. Preparation and submissions of budget estimates
  3. Part three. Selected actions following transmittal of the budget.
  4. Part four. Instructions of budget execution.
  5. Part five. Federal credit programs.
  6. Part six. Federal performance framework: strategic planning, annual performance, plans and reports, priority goals, performance reviews, custom experience and program and project management
  7. Part seven. Appendices.

Question 16

When is standard form 133, report on budget execution and budgetary resources required? What does it serve?

Answer 16

• Required for every budget account
• Serves as a basis for the statement of budgetary resources required as a principal statement in all audited financial statements

Question 17

What does Circular A-136, financial reporting requirements address? How often is it updated?

Answer 17

• The form and content of financial statements, required note disclosures, and supplemental information

It’s updated annually

Question 18

What does the department of treasury serve as?

Answer 18

The financial manager and fiscal agent of the US government

Question 19

What does the Treasury’s Bureau of the Fiscal Service (Fiscal Service) do?

Answer 19

• Operates the federal governments, collection and deposit systems, oversee a daily cash flow of over $179 billion
• Borrows the money needed to operate the federal government through the sale of treasury bills, bonds and notes, and accounts for the resulting debt
• Provide central payment services to federal program agencies
• Provides government wide accounting and reporting services and manages the collection of delinquent debt owed to the government

Question 20

What does the treasury do?

Answer 20

Provides administrative, financial management, and IT services to a wide range of federal government clients through a shared service provider (the Administrative Resource Center (ARC))

Question 21

The fiscal service gathers and publishes government wide financial information that is used by the public and private sectors to monitor the government financial status, and establish fiscal and monetary policies. What do these publications include?

Answer 21

• The daily and monthly treasury statements, covering receipts, outlays, cash and debt operations of the United States treasury
• the treasury bulletin covering national economic indicators, cash and debt of the treasury and international economic indicators
• The combined statement of receipts, outlay, and the balances of the United States government covering annual cash receipts, outlet and balances
• The financial report of the US government providing audited financial statements, prepared in accordance with the generally accepted accounting principles

Question 22

What does the fiscal service publish guidance for federal agency operations?

Answer 22

• The treasury financial manual describes the physical responsibilities of the federal agencies and other concerned parties by providing policies, procedures, and instructions
• the United States standard general ledger (USSGL) provide a uniform chart of account and technical guidance to be used in standardized journal entries for federal agency accounting and preparing the financial report

Question 23

What did the Federal Financial Management Improvement Act of 1996 require for general ledger?

Answer 23

Mandated federal agencies comply with “ the United States, government standard general ledger at the transaction level”

Requires agencies to revise or replace their systems to conform to the USSGL at the transaction level

Question 24

What does the USSGL provide for?

Answer 24

• it provides for two sets of accounts agencies are required to follow

One set of accounts supports budgetary, accounting, and the other supports proprietary accounting

Question 25

What are budgetary accounting and transactions concerned with? When are they required to be reported?

Answer 25

• The life cycle of an appropriation and measuring use of budgetary authority
• Entries are required anytime the appropriation is used

Question 26

What is proprietary accounting concerned with? When are entries made?

Answer 26

• Assets, liabilities, revenues, and expenses or costs
• Entries are typically based on a cruel accounting concepts so that captured the financial effects of transactions and events as costs are incurred, as revenue is earned, as assets are acquired, or liabilities are incurred, regardless of the timing of budget recognition

Question 27

What is the primary objective of budgetary accounting?

Answer 27

To report on budgetary resources, and the use and status of budgetary resources

Question 28

What does the basic budgetary equation require?

Answer 28

Budgetary resources = the status of budgetary resources

Question 29

What do budgetary resources include?

Answer 29

Several forms of authority granted to agencies

Together these authorities represent the amount available to enter into obligations that will result in immediate or future outlets involving federal governments

Question 30

What are the components of budgetary resources?

Answer 30

• appropriations of the current year
• Borrowing and contract authority
• Un obligated balances of multi year, and no year money from prior reporting periods
• spending authority from offsetting collections
• Recoveries of prior year obligations

Question 31

What does the status of budgetary resources indicate?

Answer 31

The disposition of budgetary resources made available via the means of components of budgetary resources

Question 32

What are the statuses of budgetary resources?

Answer 32

• Obligations incurred
• Unobligated balances available
• un obligated balances available (for example: lapsed budgetary authority that cannot be used for adjustments to prior obligations, chargeable to the appropriation that lapsed)

Question 33

What does budgetary resource mean?

Answer 33

Amounts available to incur obligations in the given year

The term comprises new budgetary authority and unobligated balances of budgetary authority provided in previous years

Question 34

What does obligation mean?

Answer 34

A binding agreement that will result in outlays, immediately or in the future

Budgetary resources must be made available before obligations can be incurred legally

Question 35

What does outlay mean?

Answer 35

A payment to liquidate an obligation (other than the repayment of debt).

Outlet are a measure of government spending

Question 36

What does the total status of budgetary resources always equal?

Answer 36

The budgetary resources

Question 37

What does OMB require of agencies to monitor budgetary resources?

Answer 37

To submit a SF-133, Report on Budget Execution and Budgetary Resources

Each quarter

Question 38

When is an SF 133 required?

Answer 38

It’s required for each treasury account fund symbol

Question 39

The SF 133 does what?

Answer 39

• fulfills the legal requirement that the president review federal expenditures at least four times a year
• Allows the monitoring of the status of funds were apportioned as well as funds that were not apportioned
• provides a consistent presentation of information across programs with each agency and across agencies, which helps program, budget, and accounting staff to communicate
• Provides a historical reference that can be used to help prepare the presence, budget, program operating plans, and spend out estimates
• provides a basis to determine obligation patterns when programs are required to operate under a continuing resolution
• Ties and agencies financial statements to their budget execution

Question 40

The SF 133 is divided into what four sections?

Answer 40

1. Budgetary resources section shows whether budgetary resources are available for obligation or not.
2. ** status of budgetary resources** section indicates the amount of budgetary resources that have been obligated as well as the amount not yet obligated
3. ** Changes in obligated balance** section reports how obligated balances changed
4. ** Budget authority and outlays, net** section reports, whether obligated amounts have been outlayed (spent) or not

Question 41

The SF 133 and the Statement of Budgetary Resources generally align. But what are two key differences between them?

Answer 41

1. The SF 133 presents amounts for a single treasury account fund symbol, while the statement of budgetary resources presents combined amounts for all of agency’s budget accounts
2. The statement of budgetary resources is audited when presented in annual financial reports

Question 42

What are the critical budgetary events that are tracked?

Answer 42

• Receipt of appropriations
• Apportionment and allotment of appropriations
• Commitment of funds prior to issuance of orders for goods and services
• Obligations of funds when goods and services are ordered

Question 43

What does the status of obligation show?

Answer 43

whether the goods and services have been received, and whether the payment has been made as follows
- Undelivered orders/unpaid
- Undelivered orders/paid (e.g., paid or advanced)
- delivered orders, unpaid
- Delivered orders, paid

Question 44

What is an allotment?

Answer 44

A formal delegation of authority, by the head of a federal entity to other entity employees, to incur obligations within the amount allotted

Question 45

What is done once funds are allotted?

Answer 45

A formal entry is made in a budgetary accounting system to record the allotment

Question 46

What is a commitment?

Answer 46

To enhance planning and control, agencies, reserve, budgetary authority, through recognition of commitments for planned spending based on estimates

These entries do not legally encumber the allotment

Question 47

Why do most federal agencies generally use commitment accounting?

Answer 47

To avoid overspending

Question 48

What does status of obligations provide?

Answer 48

Information needed to determine if appropriations have been expended

Question 49

When are appropriations considered expended?

Answer 49

When goods or services are received, and accepted by the government

Question 50

What must an agency do when the accounting entry is made to change the status of obligations from undelivered orders, unpaid to delivered orders, unpaid to agency?

Answer 50

The agency must make another accounting entry to recognize the amount of the appropriation expended

Question 51

In the budgetary accounting system system, entries are only made against an appropriation for transactions funded by that appropriation. What does that mean?

Answer 51

• programs funded by multiple appropriations must determine which appropriation is authorized to cover an obligation
• Good and services used in the current year, but ordered in a prior year, were. charged against a prior year’s appropriation
• Specific transactions may not be allowable or appropriate charges against an appropriation

Question 52

What journal entries are made to track the status of budgetary resources?

Answer 52

1. Establishing initial accountability for an appropriation.
2. Recognizing the apportionment of an appropriation.
3. Recognizing the allotment of funds to sub components.
4. Recognizing a commitment to reserve budget authority.
5. Recognizing creation of an obligation.
6. Recognizing delivery of the order.
7. recognizing payment of the order.
8. Recognizing de-obligation, if needed.

Question 53

What is the journal entry to record appropriation of funds by Congress?

Answer 53

D: other appropriations realize $500,000
C: unapportioned authority $500,000

Question 54

What is the journal entry to record in a portion of funds by OMB in the first quarter?

Answer 54

D: unapportioned authority $150,000
C: apportionment $150,000

Question 55

What is the journal entry to record allotment of funds to finance first quarter operations?

Answer 55

D: apportionment $150,000
C: allotments — realized resources $150,000

Question 56

What is the journal entry to record purchase request placed for items to be ordered from vendors (recognizing a commitment to reserve budget authority)?

Answer 56

D: allotments — realized resources $10,000
C: commitments $10,000

This entry reserves budget authority for the estimated amount to be expended on this purchase, but does not legally encumber the allotment. This status enables management to better plan for, and control, the use of resources.

Question 57

What is the journal entry that recognizes the creation of an obligation? (to obligate funds for supplies ordered, but not delivered)

Answer 57

D: commitments $10,000
C: undelivered orders, unpaid $10,000

This entry releases the prior commitment and establishes an obligation related to undelivered orders. Undelivered orders are recognized for the best estimate of the cost of the supplies at the time they are ordered. In addition to tracking the status of the order (undelivered or delivered), the entries also track the status of the obligated amount as unpaid or paid

Question 58

What journal entry recognizes delivery of an order? (to record the change in status of the obligation from one delivered to delivered which also identifies the budget authority as expended)

Answer 58

D: undelivered orders, unpaid $9000
C: delivered orders, unpaid $9000

Question 59

What journal entry recognizes payment of the order?

Answer 59

D: delivered orders, unpaid $9000
C: delivered orders, paid $9000

Question 60

What journal entry recognizes the obligation if needed? (to de-obligate the portion of the original estimated obligation it was not needed to fund the final invoice.)

Answer 60

D: undelivered orders, unpaid $1000
C: allotments— real resources $1000

Question 61

What is the account “ other appropriations” track?

Answer 61

To track the basic operating appropriation received by the entity.

Question 62

What does the entity do after the appropriation is received in a warrant, is issued by treasury?

Answer 62

The entity will request that OMB apportion the appropriation for the entity. Until OMB apportions the appropriation, the entity cannot commit the funds or charge expenditures against the funds.

Question 63

What does the account “ unapportioned authority” represent?

Answer 63

the balance of appropriations not yet apportioned by OMB, but available for later apportionment.

Question 64

What happens when unapportioned funds are apportioned?

Answer 64

When OMB apportions these funds, the balance in this account would be reduced and the balance in another budget resource account, representing apportioned funds, would be increased to so indicate.

Question 65

Is the allotment account balance represents?

Answer 65

The amount of money available to carry out the agency or program operations.

The agency or program cannot expend more than the balance of this account, and any funds remaining in the account when the account expires will be forfeited

Question 66

What are the requirements for an obligation to be valid?

Answer 66

In order to be valid, an obligation must be a binding agreement entered into by an authorized agent of the entity, supported by documentary evidence of one of the following conditions:
• A binding written agreement between an agency and another party that is (a) executed before the end of the period of availability for obligation for a purpose authorized by law, and (b) used for specific goods to be delivered, real property to be purchased or leased, or work or services to be provided
• A valid loan agreement showing the amount and the terms of the repayment
• An order required by law to be placed with a government agency
• An order issued under a law authorizing purchases without advertising (a) when necessary, because of a public exigency, (b) for perishable subsistence supplies, or (c) within specific monetary limits
• A grant or subsidy payable as authorized by law • A liability that may result from pending litigation • the employment of persons or expenses of authorized travel • Services provided by public utilities
• Another legal liability of the government as long as funds are legally available

Question 67

It’s important for agencies to de-obligate funds timely. Timely obligation insures what?

Answer 67

That the status of resources is accurate and supports effective management of budgetary resources

Question 68

What funds are recorded in the general fund?

Answer 68

Receipts not earmarked by law for specific purpose, such as income tax receipts and the proceeds of general borrowing

Question 69

What do general fund appropriation accounts record?

Answer 69

General fund expenditures

Question 70

Where do general fund appropriations draw from?

Answer 70

They draw from the general fund receipts and borrowing collectively, and therefore are not specifically linked to receipt accounts

Question 71

What do special funds consist of?

Answer 71

Receipt accounts for those receipts designated by law for specific purposes, and the associated appropriation accounts for the expenditure of those receipts

Question 72

For budgetary, accounting purposes, certain receipts, designated for use, and specific activities, are referred to as what?

Answer 72

Offsetting, collections, or offset receipts

Question 73

Where a receipt is collected, and expenditure against it is authorized, a fund, referred to, as what is established to account for activity?

Answer 73

A revolving fund

Question 74

Where are revolving fund receipts (collections) and expenditures (outlays) recorded?

Answer 74

In the same budget account

Question 75

What are deposit funds used for?

Answer 75

To account for monies that do not belong to the government

This includes monies, held temporary by the government until ownership is deemed (such as earned money paid by bidders for mineral leases) or held by the government as an agent for others (such as state and local income, taxes, withheld from federal employee salaries, and not yet paid the state or local government).

Question 76

Why are deposit fund transactions excluded from the budget totals?

Answer 76

Because the funds are not owned by the government

Question 77

When can trust funds and trust revolving funds be used?

Answer 77

When the law designates their use

In that case, the government itself is often the beneficiary of the trust, and no true fiduciary relationship exist between the government and an outside party

Question 78

Does a fund type alter the financial accounting requirements?

Answer 78

No, all fund types are subject to the same accounting standards

The financial accounting standards require an analysis of the economic substance of the transactions, without regard to the fund type established in the budget. For example, in the 1980s, the budget included a mouse that met characteristics of fiduciary activities as trust funds rather than deposit funds. Although included in the budget reports as federal funds, the financial accounting excluded, these funds, because the balances were owned by non-federal entities.

Question 79

The budget process is the government principal mechanism for what?

Answer 79

• Reaching agreements on goals
• Allocating resources among competing uses
• Assessing the government fiscal efforts on economic stability and growth

Question 80

What is budget execution designed to do?

Answer 80

To control and track tax receipts and the use of resources according to the purposes for which budget authority was approved

Question 81

What is budgetary measurement designed to do?

Answer 81

Designed to assist in the control and allocation of resources by showing the cash outlaysimplied by each decision when the decision is made

Question 82

How is proprietary accounting distinguished from budgetary accounting?

Answer 82

The timing of its entries and the underlining objectives

Question 83

What does proprietary accounting focus on?

Answer 83

The financial consequences of the operations during the period and the financial position of the entity

Question 84

What did the CFO act require in order to address the problem with proprietary accounting?

Answer 84

• required improvements to federal financial management by charging OMB with certain leadership responsibilities
• Required the appointment of a CFO at certain large agencies
• Established annual financial statement audits on a pilot basis

Question 85

What did the government management reform act of 1994 do?

Answer 85

• It made the CFO act requirements permanent
• extended the financial audit requirements to all agencies covered in the CFO act
• Required an audited government wide consolidated financial statement

Question 86

The FY 1997 financial statements were the first three audited. What opinion was given?

Answer 86

It resulted in a disclaimer of opinion

Question 87

What is happened since the passage of the CFO act of 1990?

Answer 87

• The federal financial community has made strides, and it’s still strong accounting and financial reporting
• An increasing number of federal agencies have initiated, an sustain, disciplined and consistent financial reporting operations, implemented effective internal controls around financial reporting, and successfully, integrated transaction processing and accounting records
• improves results on financial statement, audits where almost all of the 24 CFO act agencies now routinely achieve clean opinions

Question 88

Differences between budgetary and proprietary accounting are generally explained by what?

Answer 88

The timing differences in annual flows

Question 89

What are the key annual flows traditionally used in the budgetary accounting model?

Answer 89

• budgetary authority
• Obligations and outlay at the entity level
• Receipts, outlays, and the deficit (or surplus) at the government wide level

Question 90

What governs the timing of recognition of flows related to the budget?

Answer 90

• Budget concepts
• Laws and regulations

Question 91

What are the key annual flows in the proprietary model? Together, what do these flows comprise?

Answer 91

• revenues
• Other financing sources and costs

Together, these flows comprise net results of operations

Question 92

What governs the timing of recognition for proprietary flows?

Answer 92

Accrusl concepts embodied in the general accepted accounting principles

Question 93

When are events and transactions recognized using accrual concepts?

Answer 93

When they have an economic consequence, regardless of when cash is transferred or received

Question 94

What does the accrual model provide?

Answer 94

• A snapshot of the financial position of an entity (stock data)
• information about the financial effects of transactions during the period (flow data)

Question 95

How does budgetary accounting differ from proprietary accounting with regard to recording commitments?

Answer 95

• budgetary accounting: entries are made for commitments of funds in advance of preparing orders to procure goods and services
• Proprietary accounting: entries are not made for commitments

Question 96

How does budgetary accounting differ from proprietary accounting with regard to recording obligations?

Answer 96

• budgetary accounting: entries are made for obligation of funds at the time goods and services are ordered
• proprietary accounting: entries are not made for obligations as defined by budget concepts

Question 97

How does budgetary accounting differ from proprietary accounting, with regard to expending appropriations?

Answer 97

• budgetary accounting: entries are made to expend preparations when goods and services, chargeable to the appropriation are received regardless of when they are used, consumed, or paid for
• Proprietary accounting: entries are made to 1. Record assets, when goods or services that will last or benefit more than a year, and otherwise meet the criteria for assets are received, and. 2. Record expense when the goods or services are used or consumed also, when goods and services are received, entries are made to establish an account payable in the event, that goods and services are not immediately paid for. Entries are made to reduce cash and accounts payable upon payment.

Question 98

How does budgetary accounting differ from a proprietary, counting for transactions funded by an appropriation?

Answer 98

• Budgetary accounting: entries are made only against an appropriation for transactions funded by that appropriation
• proprietary accounting: goods and services consumed in the current period, our recognized as expenses in the current period without regard to the funding source. If funding is not available or, for any other reason, the good and serves are not paid for immediately, a liability is recognized

Question 99

How does budgetary accounting differ from proprietary accounting for transactions, not funded by the appropriation?

Answer 99

• budgetary accounting: entries are not made against an appropriation for transactions, not funded by the appropriation
• Proprietary accounting: goods and services consumed in the current period, but not paid for in prior periods Are expense in the current period, even if funding was derived from a prior year’s appropriation

Question 100

Requests are made by agency personnel for supplies and outside services, and an estimated amount is provided. A commitment has been made, and should be recognized for budgetary control purposes. However, no exchange has occurred. What entries are done for budgetary and proprietary accounting?

Answer 100

A commitment has been made, and should be recognized for budgetary control purposes. However, no exchange has occurred.

budgetary accounting (to record purchase request, placed for supplies and outside services):
D: allotment — realized resources
C: commitments

Proprietary accounting: no entry

Question 101

A specific order is placed for supplies and services. An obligation is recognized, and an undelivered order is established. However, no exchange has occurred. What entry is made for budgetary and proprietary accounting?

Answer 101

Budgetary accounting (to obligate funds for supplies, ordered, but not delivered):
D: commitments
C: undelivered order, paid

Proprietary accounting: no entry

Question 102

Supplies are received. The actual cost was less than the estimated at the time of order so the balance of undelivered orders must be removed in total, including the de-obligation. Actual costs are charged to delivered orders (to recognize expended authority) and the allotment restored for the unused budget authority. The proprietary accounts, the asset received, and the use of appropriations as a financing means. What are the entries for budgetary and proprietary accounting?

Answer 102

Budgetary accounting (to record delivered goods, and the necessary de-obligation):
D: undelivered orders, unpaid
C: delivered orders, unpaid
C: allotments— realized resources

Proprietary accounting (to record receipt of supplies under the consumption method):
D: operating materials & supplies (asset)
C: accounts payable

(to record financing source for supplies)
D: unexpended appropriations
C: appropriations used

Question 103

The agency prepares a dispersing schedule to direct treasury to pay the invoice?
What budgetary and proprietary accounting entries are made ?

Answer 103

Budgetary accounting: none

Proprietary accounting: (to record request to treasury for payments)
D: accounts payable
C: disbursements in transit

Question 104

Treasury notifies the agency that the invoice has been paid. What are the budgetary and proprietary accounting entries?

Answer 104

Budgetary accounting (to recognize the change in status from unpaid to paid):
D: delivered orders, unpaid
C: delivered orders, paid

proprietary accounting: (to record issuance of payment by the treasury)
D: disbursements in transit
C: fund balance with treasury

Question 105

Funds are used by the agency. The agency has elected the consumption method rather than the purchase method of accounting for its operating materials and supplies. Under the purchase method of accounting for operating materials and supplies, each purchase is recognized immediately as an expense. If the purchase method had been elected, what’s the entry for budgetary and proprietary accounting?

Answer 105

Budgetary accounting: none

Proprietary accounting (to record supplies used):
D: operating expense
C: operating materials & supplies

Question 106

Contingency liabilities are recognized because a plaintive raised. The claim against the agency is expected to prevail in a law lawsuit. What are the budgetary and proprietary accounting entries that are made?

Answer 106

Budgetary accounting: none

Proprietary accounting (to recognize a liability and expense for a claim, considered probable of being settled in the plaintiffs favor and the amount can be estimated)
D: operating expense
C: contingent liability