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Exam > Section 3, Chapter 4 - Federal Financial Statements And MD&A > Flashcards

Section 3, Chapter 4 - Federal Financial Statements And MD&A Flashcards

1
Q

What do entities use financial reports for?

A

To communicate important information about the entity to persons concerned with the entity

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2
Q

What is a reporting entity?

A

The entity that provides a financial report

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3
Q

What helps establish what is relevant to report readers?

A

Understanding how to establish the boundaries of reporting entity, and ensuring that the report provides information about all organizations within the reporting entity and excludes information about organizations not within the reporting entity

Excluding information about organizations the reporting entity manages or otherwise accountable for would not be complete or could be misleading

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4
Q

What makes deciding what organizations are to be included in the federal government consolidated financial reports challenging?

A

The government is generally comprised of executive, legislative, and judicial branches

However, the federal government has created organizations that operate outside of these branches with varying degrees of independence (such as the federal reserve system, federally funded research and development centers, government, sponsored enterprises, venture capital firms, and other nonprofit organizations)

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5
Q

What did the statement of federal financial accounting concepts (SFFAC) 2 entity and display do?

A

Identified the need to distinguish between consolidated entities and disclosure entities

Helped determine how to present information about organizations that are designed to be relatively independent of the federal government (example: it would be misleading to include liabilities, intended to be satisfied through the continuing operations of the independent organization, and for which the government has not accepted responsibility)

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6
Q

How might disclosure entities be different?

A
  • May have separate legal identity
  • Have a governance structure designed to insulate the organization from political influence
  • Granted relative financial independence
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7
Q

What does the statement of federal financial accounting standards (SFFAS) 47, federal reporting entity, have guidance on?

A
  • detailed guidance, regarding what organizations to include in the federal reporting entity
  • How to distinguish between those that should be consolidated, and those that should be disclosed
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8
Q

Generally, where will organizations budgeted for, owned, or controlled by the federal government be reported?

A

The general purpose federal financial reports

However, a distinction will be made between those entities to be consolidated (consolidated entities) and those that need to be disclosed (disclosure entities)

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9
Q

What reports do reporting entities produce?

A
  • Performance and accountability reports (PAR)
    Or
  • Agency financial reports (AFR)
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10
Q

What’s the key difference between a PAR and an AFR?

A

PAR’s include extensive performance information while AFR do not

Each includes the summary of performance, though

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11
Q

What type of reports are PAR’s and AFR’s?

A

General purpose federal financial reports (GPFFR)

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12
Q

What are PAR’s and AFR’s intended to provide?

A

A single source of information on a federal reporting entities:
- mission and organization
- planned and actual performance
- Financial performance
- Compliance with laws and regulations related to financial management
- The most serious management and performance challenges facing the agency

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13
Q

What do principal financial statements provide readers?

A

Information about the reporting entities financial results of operations during the year and financial position at the end of year

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14
Q

What guidance does GAP provide accountants on?

A
  • Classifying certain transactions and events by defining elements of the financial statements
  • Recognizing transactions and events related to the defined elements
  • Measuring the financial effects of transactions and events
  • Disclosing information necessary to explain, or elaborate on the recognized elements
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15
Q

What is it meant to recognize something?

A
  • To give expression in the books of account
  • Recognition is the process of formally recording, or incorporating an item into the financial statements of an entity as an asset, liability, revenue, expense, or other element
  • A recognized item is depicted in both words and numbers with the amount amount included in statement totals
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16
Q

What is a disclosure?

A

Reporting information in notes or narrative regarded as an integral part of the principal financial statements

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17
Q

Where are notes typically on the statements?

A

Traditionally, notes follow the principal statements

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18
Q

What do principal financial statements refer to?

A

Those statements, individually, and in the aggregate

Includes the notes to the financial statements, since these are considered an integral part of the statement

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19
Q

What are audited statements?

A

Those that have been examined by an independent auditor

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20
Q

What guidance do independent auditors use to conduct their work?

A

Independent auditors conduct their work in accordance with GAGAS

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21
Q

What type of opinion do independent auditors render?

A
  • After applying audit procedures, under GAGAS, the independent auditor renders a report, expressing his or her opinion, regarding the fairness of presentation of the financial statements in conformity with GAAP
  • Renders reports on the reporting entities internal controls, and it’s compliance with laws and regulations
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22
Q

How are the auditors reports presented?

A

In a report that accompanies the audited statements

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23
Q

What type of guidance does GAGAS provide?

A

Guidance regarding the Auditors responsibilities for required supplemental, and other accompanying information (RSI and OIA, respectively) included with the principal financial statements

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24
Q

How are principles financial statements generally presented?

A

As consolidated statements

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25
Q

What do consolidated statements present?

A

Information about the reporting entity, as if it operated as a single organization

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26
Q

What are intra-entity transactions?

A

Financial transactions between the organization within the reporting entity

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27
Q

How are intra-entity transactions reported when presenting consolidated financial statements for the entire reporting entity?

A

They are eliminated

For example, receivables on a selling funds, balance sheet would be eliminated against payables on a buying funds balance sheet, so the assets and liabilities of the entity would not be overstated

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28
Q

What are the principal financial statements for federal entities?

A
  • balance sheet
  • Statement of net cost
  • Statement of changes in net position
  • Statement of budgetary resources
  • Statement of custodial activity
  • Statement of insurance
  • Statement of changes in social insurance
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29
Q

What does the balance sheet present?

A
  • The balance sheet presents, as of a specific time resources that embody economic benefits or services the federal government controls (assets)
  • presents obligations to provide assets or services to another entity at a determinable date (when a specified event occurs) or on demand (liabilities)
  • The difference between assets and liabilities (net position)
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30
Q

What is the statement of net cost designed to do?

A
  • present the cost of operations of a reporting entity, financed by taxpayers, for a given period
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31
Q

What does the statement of net cost display?

A

The net cost of major programs, which should relate to the strategic goals and performance plans (alternatively, the display may present the net cost for each organization within the larger agency)

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32
Q

What should the statement of net cost include?

A
  1. Gross program costs
  2. Related exchange revenues.
  3. The excess of costs over the exchange revenues (net program costs)
  4. The actuarial gains/loss on pension, other retirement, or other post employment benefits, attributable to assumption changes.
  5. The cost that cannot be assigned to specific programs or outputs.
  6. The exchange revenues that cannot be attributed to specific programs and outputs.
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33
Q

What does the statement of changes in net position present?

A
  • The net results of operations for the period
  • other adjustments to cumulative results of operations made during the period
  • Increase/decrease in unexpended appropriations
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34
Q

What is the net results of operations?

A

The excess of financing sources over net cost of operations for the period

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35
Q

What do financing sources include?

A
  • Non-exchange revenue and appropriations used
  • Donations and transfers in
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36
Q

What makes up the net change in cumulative results of operations?

A

The net results of operations, and any other adjustments to accumulative results of operations, such as prior period adjustments, together are the “net changes in cumulative results of operations” for the period Period.

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37
Q

What is the second and last component of change in net position?

A

The increase or decrease in unexpended appropriations

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38
Q

What information does the statement of budgetary resources and related disclosures provide?

A

Information about how budgetary resources are made available as well as the status of those resources at the end of the period

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39
Q

What is the budgetary information reported on the statement of budgetary resources based on?

A

The budgetary accounting rules

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40
Q

How is budgetary information reported in the statement of budgetary resources required to be presented?

A

In the format prescribed for the report on budget execution and budgetary resources (SF 133)

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41
Q

What is the statement of budgetary resources?

A

An agency wide report, which aggregates account level information reported in the agencies SF 133

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42
Q

What does the statement of budgetary resources result in?

A

Budget execution information being subject to audit

Some have concluded that this has resulted in more accurate reporting on budget execution

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43
Q

When is the statement of custodial activity required?

A

It’s required for reporting entities that collect material amounts of non-exchange revenue (or other resources) on behalf of the general fund of the government, a trust fund, or other recipient agencies

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44
Q

When should the statement of custodial activity be presented?

A

When reporting entities meet requirements, the statement of custodial activity should be presented with the sources and disposition of these collections

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45
Q

How should entities collecting immaterial amounts of non-exchange revenues report them?

A

Report the amounts in their statement of changes in net position, with sources and disposition of collections disclosed in the accompanying notes

Amount reported on the statement of custodial activity are not reported as revenue by the collecting entity

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46
Q

What are the five federal social insurance programs?

A
  1. Social Security (old age, survivors, and disability insurance)
  2. Medicare (hospital insurance, Part A) and supplemental medical insurance, Part B/D)
  3. Railroad retirement benefits
  4. Black lung benefits, and unemployment insurance.
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47
Q

What is unique about social insurance program transactions?

A

Social programs blend elements of exchange and non-exchange transactions, and therefore do not completely fit traditional accounting notions of either annual governmental assistance programs (non-exchange transactions) or long-term pension programs (exchange transactions)

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48
Q

Because taxpayers rely on social insurance programs in their long-term planning, fundamental questions about social insurance programs include what?

A
  1. Whether they are sustainable as currently constructed.
  2. What their effect on the government financial condition will be
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49
Q

The statement of social insurance presents the actuarial present values of what?

A
  1. Future benefits.
  2. Contributions and taxes for social insurance programs
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50
Q

What three groups of participants does the statement of social insurance provide amounts for?

A
  1. Current participants eligible for benefits.
  2. Current participants not yet eligible for benefits
  3. Future participants.
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51
Q

Does a statement of social insurance display the net amount for all current participants and net amount for all participants?

A

Yes, it displays the net amount for all current participants (closed group amount amount) and net amount for all positions (open group amount)

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52
Q

Beginning in FY 2011 entities presenting a statement of social insurance also had to present present what?

A

A statement explaining the changes in social insurance net present values from one period to the next

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53
Q

What are the amounts attributed to in the statement of changes in social insurance?

A
  • changes in assumptions (mortality, and birth rates)
  • legislative changes ( benefit formula and tax rates)
  • Interest on prior years present value
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54
Q

GAAP requires what type of segregation on the balance sheet?

A

It requires segregation of intragovernmental assets and liabilities from other assets and liabilities

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55
Q

Federal agencies are required by accounting standards to disclose on the face of the balance sheet or in accompanying notes assets as what?

A
  • Entity
  • Non-entity
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56
Q

What are entity assets?

A

Assets that the reporting entity has authority to use in its operations

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57
Q

What are non-entity assets?

A

Assets held by an entity that are not available to the entity

For example, income tax receivables that the Internal Revenue Service will collect, but have no authority to spend our non-entity

The department of interior explains that non-entity assets are held by the department of interior, but will not be made available to support its operations. Instead, the assets will be forwarded to treasury or other parties at a future date.

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58
Q

Federal agencies are required to disclose the portions of liabilities that are what?

A
  1. Funded liabilities (those covered by budgetary resources)
  2. Unfunded liabilities (those for which congressional action is needed before a budgetary resources can be provided)
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59
Q

Under GAAP for federal entities, what two major assets are excluded from the balance sheet recognition due to issues of evaluation (because FASAB has determined that relevant value is not determinable)?

A

Stewardship property, plant, and equipment

Stewardship land and heritage assets

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60
Q

How is stewardship PP&E and stewardship, land and heritage assets presented on the balance sheet?

A

No asset dollar amount will appear on the balance sheet or in the disclosures

Instead, GAAP requires the entities reference a note on the balance sheet that discloses information about heritage assets and stewardship land

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61
Q

What do the notes present about the reporting entity’s stewardship Land and Heritage assets?

A

Presents the reporting entities stewardship policies and explains how the heritage assets and stewardship land relate to the mission of the reporting entity

It describes a list of the major categories of stewardship land and heritage assets, and for each, specifies the physical units, added and withdrawn during the year

It also specifies the number on hand at the end of the reporting period, and describes the methods of acquisition and withdrawal

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62
Q

What are the components of net position?

A
  • Unexpended appropriations
  • Cumulative results of operations

They are divided into “funds from dedicated collections” and “other”

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63
Q

What are funds from dedicated collections financed by?

A

Specifically identified revenues, often supplemented by other financing sources, which remain available overtime

These specifically identified revenues and other financing sources are required by statute to be used for designated activities, benefits or purposes, it must be accounted for separately from the government general revenues

64
Q

What are dedicated collections designated for?

A

These funds may be used to temporarily finance general government spending

But they are designated for future use in financing specific programs, such as Social Security

65
Q

What will SFFAS 59, accounting and reporting of government land do?

A

Dramatically change how Land is reported by all federal agencies

When amendments are effective in FY 2026, all acquisitions of land and permanent land rights will be expensed so that no amount related to these assets, including stewardship, and general, PPE, Land, and permanent land rights, will appear on the balance sheet

Instead, narrative will explain how the entity manages its land and permanent land rights to meet its mission. Also, the number of acres of land held in each of the following categories in subcategories will be reported: 1. General PPE Land. 2. Stewardship PPE Land.

66
Q

What is included in the sub categories of general PPE Land?

A
  • held for disposal or exchange
  • Commercial use
  • Conservation and preservation
  • Operational
67
Q

What is included in the sub categories of stewardship PPE Land?

A
  • held for disposal or exchange
  • Commercial use
  • Conservation and preservation
  • Operational
68
Q

what does the statement of net cost do?

A

Align with the agencies strategic planning goals as articulated in the MD&A section

69
Q

What is the reader able to determine from each goal?

A
  • The gross cost on an accrual basis
  • That earned (exchange) revenues that offset the costs of that goal
  • The net cost that remains to be financed by budgetary and other resources
70
Q

What do you comparative statements provide?

A

They provide the reader, the ability to determine how efforts, with respective to each goal have changed from prior fiscal year to the present fiscal year

71
Q

Some federal entities also display costs for sub organizations (or components) in separate columns on the statement of net cost. How may entities accomplish this?

A

Through note disclosures

Through this display, the reader is able to determine which sub organizations are responsible for which goals and relative costs

72
Q

Why do sub organizations within larger departments also issue audited financial statements in separate reports?

A

Allow readers who are interested in more detail, the ability to get that detail from so organization financial reports

73
Q

What is the statement of net cost intended to reveal?

A

The cost of the programs including:
- Depreciation
- Unused leave
- Pension costs
- Other costs that are incurred, but not yet paid in the reporting period

Example: includes cost incurred that have been billed to the reporting entity by other entities that have not yet been paid

74
Q

Why are inter-entity activities?

A

Certain support and other services are provided by central federal entities to benefit all or most agencies

The costs are referred to as inter-entity costs

75
Q

How does billing work for inter-entity costs?

A

Some of the inter-entity costs are billed and others are not billed to the benefiting entity. Some that are billed are not billed at an amount sufficient to recover the full cost

76
Q

Explain OPM’s inter entity activities/costs

A

OPM administers post, employment, benefit commitments made by the federal government to civilian employees and pays all retirement and annuities, as well as retiree health benefits

OPM bills agencies employees, federal employees to fund those future retirement benefits however, the amount billed for those retirement annuities is not the cost of the annuities and no amount is billed for the retiree health benefits. The treatment of retiree benefits by OPM provides an example of unreimbursed and under-reimbursed entity costs

77
Q

What is imputed costs?

A

Both under-reimbursed and unreimbursed inter entity cost may be reported by agencies. Where the full cost is not billed, the benefiting entity may recognize under billed amounts as imputed costs.

78
Q

How are imputed costs recognized?

A

They’re recognized by the federal entity that benefits from the service, even though the entity does not have to pay for the service

They also recognize the imputed financing of these costs

79
Q

What is required by accounting standards to ensure significant inter-entity costs are recognized?

A

Accounting standards require recognition of three specific inter-entity cost that are not fully reimbursed as imputed costs:

  1. Unreimbursed cost of employee benefits.
  2. Treasury judgment fund costs to settle litigation.
  3. Un- or under-reimbursed inter-entity costs incurred to support business type activities
80
Q

What is an example of other services provided by one entity to another where the full cost is not reimbursed?

A

Entities that receive use of real property, managed and funded by other entities. The entity receiving the service has the option to recognize the inter-entity costs or not. Disclosures that alert financial statement users to significant unreimbursed inter-entity costs are required.

81
Q

What two components of net position is presented in the statement of changes in net position?

A
  1. Unexpended appropriations
  2. Cumulative results of operations.
82
Q

What does each section of the statement of changes in that position begin with?

A

The prior years closing balance. If there are adjustments attributable to a change in accounting principles (GAAP) or the correction of an error, the effects of such changes are presented

83
Q

What do note disclosures alert the reader in the statement of changes in net position?

A
  1. The cause of the adjustment.
  2. The nature of the change in accounting principle or correction of an error.

An adjusted balance is then presented

84
Q

What are unexpended appropriations?

A

All appropriations received from Congress that remain available to fund future expenditures

85
Q

What is the beginning balance (as adjusted) of the statement of changes in net position increased by?

A

New budgetary resources provided during the periods

86
Q

What are some new budgetary resources?

A
  • Appropriations
  • any transfers in (net of any transfers out) provided during the period

These remain available for specific period of time or until used (expended) to fund the reporting entities operations. Thus, the operations used are deducted to present the net changes for the period. The net change is then added to, or subtracted from the beginning balance to arrive at the ending balance of unexpended appropriations.

87
Q

What is the largest source of financing for most federal entities?

A

Appropriations

88
Q

What are some other sources of financing for federal entities?

A
  • Royalties
  • non-exchange revenues (taxes and fines)
89
Q

Agencies must recognize the “imputed” financing of the cost of activities undertaken, or paid for, by other federal entities. What does this include?

A

some portion of the cost of retirement, benefits, including pensions, health, insurance, and life insurance to retirees, paid for by OPM

90
Q

How does an agency end up with the ending balance of changes in net position?

A

Once the net cost of operations is deducted, the agency accounts for the change in cumulative results of operations, which is added to, or subtracted from, the beginning balance to arrive at the ending balance

91
Q

What other information does the statement of changes in net position provide?

A

Information about the operations funded by dedicated collections, and all other sources

92
Q

What are dedicated collections?

A

Those committed to a certain purpose

Funding not used to finance past operations remains committed to fund the specific purpose (specific programs) in the future

93
Q

What is the statement of budgetary resources based on?

A

The terminology and regulations used in the budget

In fact, it mirrors the SF 133, report on budget execution

94
Q

Where are the amounts on the statement of budgetary resources drawn from?

A

They are drawn from the budgetary accounting system, in contrast to the other statements, were the amounts are drawn from the financial/proprietary accounting system

95
Q

What has the audit of budget execution information done?

A

Increase the accuracy of data

This enhances it usefulness for control purposes

96
Q

Why do some argue that the statement of budgetary resources is not useful or understandable to non-federal users?

A

Budgetary information for single period is not primarily used for control

97
Q

What does the statement of budgetary resources provide users with the first thing to see?

A

Obligations incurred reported. In addition, the outlets related to the reporting entities operations are shown here.

98
Q

What does the statement of budgetary resources combine?

A

It combines the amount for all of the agencies budgetary accounts instead of consolidating the amounts

The totals include transactions within the department, such as movement of funds from one budgetary account to another within the department. Hence, this statement is titled as “combined statement of budgetary resources” rather than “consolidated statement of budgetary resources” consistent with other principal financial statements.

99
Q

What does the statement of custodial activities provide?

A

A means to report on important custodial activities without obscuring the operating results of the reporting entity

100
Q

What do entities acting as collection agents (that is, they collect, but are required to pass certain non-exchange revenues onto another entity) with non-exchange revenues?

A

They do not report non-exchange revenues as their own

The statement of custodial activities reports the collection and disbursement of these funds, and is linked to the balance sheet

101
Q

How does the reporting entity recognize any collected funds not yet dispersed, and the entity receiving the funds?

A

An asset is recognized for any collected funds yet not dispersed, and an equal payable to the entity receiving the funds

102
Q

What is the standard for fiduciary activities on the statement of custodial activity?

A

Although fiduciary activities may appear to be custodial, the standard is to exclude, truly fiduciary activity from the statement of custodial activity

103
Q

What is considered a fiduciary activity?

A

When a non-federal person or entity has an enforceable ownership interest in assets, and those assets are managed by a federal agency (for example, an agency collects certain revenues on behalf of individuals)

104
Q

When did fiduciary activities begin being excluded from the statement of custodial activity and why?

A
  • FY 2009
  • The new standards required fiduciary activity to be disclosed rather than included on the face of the financial statements
105
Q

What are un transferred revenue?

A

Even though it says revenue, they are actually collections to the reporting entity. The receiving federal entity will report revenue.

106
Q

What does SFFAS 53, Budget and Accrual Reconciliation address?

A
  • Long-standing concerns regarding the need to explain differences between budget and accrual results
  • It’s simplified the requirements and made the reconciliation more understandable
107
Q

The current reconciliation shows three types of differences between accrual based net cost and budgetary based net outlays. What are the three types?

A
  1. Components of net cost that are not part of the net outlays (for example, depreciation and amortization expenses of assets previously capitalized and changes in assets/liabilities)
  2. Components of net outlays that are not part of net cost (for example acquisition of capital assets)
  3. Other temporary timing differences (prior period adjustments due to correction of errors)
108
Q

What does reconciliation help answer?

A

The note provides that only detailed explanation of differences between accrual and budgetary information. as the accrual information becomes more familiar to users, more questions will be asked about how it differs from budgetary results. Reconciliation helps answer those questions.

109
Q

Why are note disclosures (sometimes referred to as footnotes) essential?

A

They are an integral part of financial statements, because they are essential to the readers understanding of the principal financial statements

110
Q

What do disclosures provide the reader?

A

A brief description of the reporting entity and summarizes the accounting principles used to prepare the financial statements.

111
Q

What are some note disclosures commonly found in the reporting entity financial reports?

A
  • fund balance with treasury
  • Cash and other monetary assets
  • Investments, net
  • Account and interest receivable, net
  • Tax receivable, net
  • Direct loans and loan guarantees
  • Inventory and related property, net
  • General property, plant and equipment
  • Other assets
  • Asset analysis
  • liability analysis
  • Advances and deferred revenue
  • Debt
  • Federal employee and veteran benefits
  • Environmental and disposal liabilities
  • Leases
  • Life insurance liability
  • Commitments and contingencies
  • Stewardship PPE (referred to as stewardship assets)
  • Reconciliation of net cost to the budget (formally the statement of financing)
  • Budgetary information such as undelivered orders at the year end and differences between the statement of budgetary resources in the amounts presented in the president’s budget
  • custodial activities
  • Funds from dedicated collections
  • Fiduciary activities
  • Subsequent events
112
Q

How can notes be different from financial statement to financial statement?

A

Some provide more detail for specific lines on the financial statements. Others address matters that affect the reporting entity as a whole (for example, commitments and contingencies, m subsequent events

113
Q

What is MD&A in an important vehicle for?

A
  1. Communicating managers insights about the reporting entity.
  2. Increasing the understandability and usefulness of the general purpose financial report.
  3. Providing understandable and accessible information about the reporting entity and its operations, service levels, accomplishments, challenges, and future
114
Q

FASAB requires the inclusion of an MD&A with GAAP financial reports. What topics are required to be addressed in the MD&A?

A
  1. The entities mission and organizational structure.
  2. The entities performance, goals and results.
  3. An analysis of the entities financial statements.
  4. The status of the entity’s systems, control, and legal compliance.
  5. The future affects on the entity of existing, currently known demands, risks, uncertainties, events, conditions, and trends.
  6. Limitations on the GAAP based financial statements.
115
Q

Can OMB direct entities to include other items in the MD&A?

A

Yes

116
Q

What do FASAB’s concepts for MD&A explain?

A
  • Explain the conceptual basis for the role and importance of MD&A
  • The general content of the financial reports
  • The desirable elements of MD&A
117
Q

What type of information is MD&A for reporting purposes?

A

Required supplementary information (RSI)

118
Q

What are the procedures for RSI?

A

The procedures for RSI are different from those performed for basic financial statements and notes

For RSI, the auditor inquires of management regarding the method of measurement and presentation of the information. The auditor wants to be sure the information is drawn from a system of record, and that is consistent with other information in basic financial statements.

119
Q

What are elements of required supplementary information (RSI)?

A
  • Statement of budgetary resources
  • Land from FY22-FY25
  • Deferred maintenance and repairs
  • federal oil and gas resources
120
Q

What should be done to budgetary information aggregated in the statement of budgetary resources for each of the reporting entities major budget account and presented as RSI?

A

Budgetary information aggregated in the statement of budgetary resources, should be disaggregated for each of the reporting entities, major budget accounts, and presented as RSI. Small budget account may be aggregated. The major accounts and the aggregate of small budget accounts, in total, agree with the amounts reported on the statement of budgetary resources.

121
Q

What is deferred maintenance and repairs (DM&R)?

A

Maintenance and repair activity that was not performed when it should have been, or was scheduled to be and which is put off or displayed to a future.

122
Q

What do standards require entities to do for deferred maintenance and repairs?

A
  1. Describe their maintenance and repair policies and how they are applied.
  2. Discuss how they rank and prioritize, maintenance and repair activities among other activities.
  3. Identify factors considered in determining acceptable condition standards.
  4. State whether deferred maintenance and repair solely to capitalize general PPE and stewardship PPE or also to non-capitalized or fully depreciated general PPE
  5. Identify PPE for management does not measure and/or report deferred Maintenance and repairs and the rationale for the exclusion of other than non-capitalized, or fully depreciated general PPE
  6. Provide and ending deferred maintenance and repairs balances by category of PPE
  7. Explain significant changes from prior year.
123
Q

In preparing deferred maintenance and repair information, what are prepare required to do?

A

Consistently apply condition standards related assessment methods and reporting formats unless management determines that changes are necessary

124
Q

To improve deferred maintenance and repair information, what was eliminated?

A
  • requirements to report condition information and option to report a range of deferred maintenance and repair.
  • The option to report critical and non-critical deferred maintenance and repair
125
Q

What does information is included in “other information”?

A
  • information that OMB requires to be included in the AFR and PAR
  • there is also information that the agencies may voluntarily include that is not required
126
Q

What are some examples of items that OMB has required to be presented as other information?

A
  • The inspector general summary of serious management and performance challenges
  • A summary of the financial statement audit and management assurances
  • revenue foregone
  • tax burden, tax gap, and tax expenditures
  • payment integrity information act reporting
  • civil monetary penalty adjustment for inflation
  • biennial review of user fees
  • significant reporting entities federal grants programs must provide a brief summary of expired and cooperative agreement award data
  • Climate related financial risk information
  • Agency audit resolution reports
  • Other agencies specific statutorily required reports
127
Q

What does the Government Management Reform Act (GMRA) require the treasury to produce?

A

An annual consolidated financial report (CFR) for the government as a whole

128
Q

When is the annual consolidated financial report required to be issued?

A

Between December and April following each fiscal year end (September 30)

129
Q

What information do annual consolidated financial reports contain?

A

Information from the executive, legislative, and judicial branches of the government and other organizations meeting the indicative criteria for inclusion

130
Q

What is the annual consolidated financial reports intended to do?

A

Form to GAAP developed by FASAB

131
Q

What do consolidated reports present information about?

A

The reporting entity, as if it operated as a single organizati

132
Q

What are intra-governmental transactions?

A

Financial transactions between the organizations within the reporting entity

133
Q

What happens to intra-governmental transactions, when presenting consolidated financial reports for the entire government?

A

They are eliminated

For example, receivables on a selling agency’s balance sheet would be eliminated against payables on a buying agency’s balance sheet, so that assets and liabilities of the government would not be overstated

134
Q

What’s the general rule about accounting standards of component reporting entity (or agency level) financial statements and consolidated financial statements?

A

All accounting standards applicable to the component reporting entity (or agency level) financial statements are applicable to the consolidated financial statements

135
Q

There are different principal, financial statements required at the consolidated financial reporting level. What are they?

A
  1. Statement of net cost.
  2. Statement of operating and changes in net position.
  3. Reconciliation of net operating cost and unified budget deficit.
  4. Statement of changes in cash balance from unified budget and other activities.
  5. Balance sheet.
  6. Statement of social insurance
  7. Statement of changes in social insurance.
  8. Statement of long-term fiscal projections of the US government.
136
Q

What does the statement of net cost display on the consolidated financial report statement?

A

Similar to the component entities statement of net cost, the consolidated financial report statement of net cost displays the gross cost and related exchange revenues, but by major department and agencies

137
Q

What is reported on a statement of operations and changes in net position of the consolidated financial report statements?

A

Reports the results of operations, including:
- Non-exchange revenues generated principle by the government sovereign power to tax
- Levy duties and assess fines and penalties
- The cost of government operations
- net of revenue earned from sale of goods and services to the public (earned revenues)
- Any adjustments and unreconciled transactions affecting the net position

138
Q

What does the reconciliation of net operating cost and the unified budget deficit report on the consolidated financial report statements?

A

Reports the net operating cost and unified budget deficit relate to each other

The premise of the reconciliation is that accrual and budgetary accounting bases present different measures of the same underlying transactions. These statements report the reconciliation of the results of operations (net operating cost) on the statement of operations, the statement of net position, to the unified budget deficit on the presidents budget

139
Q

In the consolidated financial report statements, what does the statement of changes in cash balance from unified budget and other activities report?

A

It reports all the annual unified budget deficit relates to the change in governments operating cash balance. It explains why the unified budget deficit normally would not result in inequivalent change in the governments operating cash balance

140
Q

In the consolidated financial report statement, how is the balance sheet presented

A

Assets, liabilities, financial position is presented in a similar manner to the balance sheets of the component entities

141
Q

For the consolidated financial report statements, What does the statements of social insurance provide the status estimates of what significant social service programs?

A
  • Social Security
  • Medicare
  • Railroad retirement and Black lung, administered by the Social Security administration
  • The department of health and human services
  • The railroad retirement board
  • The department of labor
142
Q

What are the estimates for social insurance programs? And what are they based on?

A
  • the estimates are actuarial present value of the projections
  • based on the economic and demographic assumptions, representing the trustees’ best estimates as set forth and the relevant Social Security and Medicare trustee report and the relevant agency, PAR or AFR for the railroad retirement board and the department of labor (black lung)
143
Q

In the consolidated financial report statement, what does the statement of changes and social insurance explain?

A

Explains the changes in actuarial present values from the one reporting period to the next

Associates amounts with legislative changes, such as new benefit formulas or tax rates, assumption, changes, such as mortality, rates, or productivity increases, and interest arising from the passage of time

144
Q

In the consolidated financial report statement, what does the statement of long-term fiscal protections for the United States government show?

A

Present value of receipts and spending for federal agencies, as well as how these present values may relate to gross domestic product over the projection period.

145
Q

In the consolidated financial report statement, what is accompanied with the statement of long-term fiscal protections for the United States government?

A

Extensive narrative, as well as data regarding timing of receipts and spending alternative projections and potential effects on debt levels

Some of the accompanying data and narrative is presented as note disclosure, and some is presented as far as RSI

146
Q

In the consolidated financial report statement, what the objective of information in the statement of long-term fiscal protections for the United States government?

A

To assist users in assessing, whether budgetary resources will be sufficient to sustain government services in the future

147
Q

Why is MD&A in the consolidated financial report essential to readers?

A

To gain an understanding of the complex information presented in the CFR

148
Q

What are the principles underlying for MD&A the consolidated financial report?

A

The principles are the same in the consolidated financial report, as they are for the component entities

149
Q

What should the MD&A in the consolidated financial report address?

A
  • Performance measures
  • Financial statements
  • Systems and controls
  • Compliance with laws and regulations
  • other actions taken or planned to address problems
150
Q

For the consolidated financial report statements, what does MD&A provide?

A
  • historical context by presenting trends
  • National context by presenting information about the US economy

Key indicators are included, such as growth in the gross domestic product, employment levels, and changes in the consumer price index

151
Q

As of fiscal year 2023, what does the consolidation financial report process require?

A

The submission of information used to prepare the consolidated final report (CFR)

All federal reporting entities submit an adjusted trial balance and manual adjustments to prepare the CFR and ensure the data ties to the reporting entitie’s audited financial statements

The treasury has a standardized balance sheet across federal agencies so that there is no need for adjustments to align the consolidated balance sheet with the reporting entity balance sheets

152
Q

In addition to the collection and consolidation of financial data, what else is prepared when consolidating financial report?

A

A narrative portion of the report

153
Q

Who prepares the MD&A and another required information?

A

Treasury who works closely with OMB

154
Q

Who audits the consolidated financial report?

A

GAO

155
Q

As of FY 2020, what type of opinion has the consolidated financial report received since 1997?

A

Disclaimer of opinion each year

156
Q

What are the reasons for the persistent disclaimers of opinion for the consolidated financial report?

A
  • certain material weaknesses and internal control over a financial reporting and other limitations on the scope of GAO’s work
  • Significant uncertainty regarding the achievement of projected productions in Medicare cost growth
  • Material, weaknesses and scope limitations, which limited test of compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements
  • weakness in the federal governments process for preparing the consolidated financial statements

Exam (14 decks)

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