    Financial Audit Manual: Checklist for Reports Prepared Under the
    CFO Act--Revised 2003 Exposure Draft (01-OCT-03, GAO-04-44G).

    In July 2001, the U.S. General Accounting Office (GAO) and the
    President's Council on Integrity and Efficiency (PCIE) issued the
    GAO/PCIE Financial Audit Manual (FAM). In April 2003, we issued
    an update to the FAM. The FAM provides guidance for performing
    financial statement audits of federal entities. The FAM is a key
    tool for enhancing accountability over taxpayer-provided
    resources. GAO and the PCIE are committed to keeping the FAM
    current. With this goal in mind,we are now requesting comments on
    an exposure draft that will revise the Checklist for Reports
    Prepared Under the CFO Act (CFO Checklist). This update will
    replace the current CFO Checklist in the FAM Volume II, Section
    1004. Once finalized,the updated CFO Checklist will be designated
    in the FAM Volume II at section 1050.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-04-44G
        ACCNO:   A08663
      TITLE:     Financial Audit Manual: Checklist for Reports Prepared
    Under the CFO Act--Revised 2003 Exposure Draft
         DATE:   10/01/2003
      SUBJECT:   Auditing procedures
    	     Auditing standards
    	     Auditors
    	     Financial records
    	     Internal audits
    	     Internal controls

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    GAO-04-44G

    October 2003

    Dear Colleague:

    In July 2001, the U.S. General Accounting Office (GAO) and the President's
    Council on Integrity and Efficiency (PCIE) issued the GAO/PCIE Financial
    Audit Manual(FAM). In April 2003, we issued an update to the FAM. The FAM
    provides guidance for performing financial statement audits of federal
    entities. The FAM is a key tool for enhancing accountability over
    taxpayer-provided resources.

    GAO and the PCIE are committed to keeping the FAM current. With this goal
    in mind, we are now requesting comments on an exposure draft that will
    revise the Checklist for Reports Prepared Under the CFO Act (CFO
    Checklist). This update will replace the current CFO Checklist in the FAM
    Volume II, Section 1004. Once finalized, the updated CFO Checklist will be
    designated in the FAM Volume II at section 1050.

    The exposure draft of the CFO Checklist can be accessed at either the GAO
    web site (www.gao.gov) or the PCIE web site
    (www.ignet.gov/pande/audit.html). Instructions for providing comments on
    the draft CFO Checklist are attached and can also be found at the GAO and
    PCIE web sites. Please include the rationale for any comments offered so
    that we may fully understand the need for any modifications. The due date
    for comments is December 5, 2003.

    You may address questions to either Mary Mohiyuddin (GAO, 202-512-3087,
    mohiyuddinm@gao.gov) or Curtis Crider (PCIE, 202-208-5724,
    Curtis_Crider@oig.doi.gov).

    We appreciate your attention to this very important project.

    Attachment

                                     Exposure Draft

              Checklist for Reports Prepared Under CFO Act - Revised 2003,
         Section 1050, Volume II of Joint GAO/PCIE Financial Audit Manual (FAM)

                                Instructions for Comment

    We welcome comments from everyone. GAO and the PCIE encourage the widest
    possible distribution of the exposure draft of the FAM update.

    Agency inspectors general should encourage their independent public
    accounting firms to review and comment.

    Please e-mail comments with detailed rationale to
    FAM_Comments@oig.doi.gov. Also include your name, agency name, phone
    number, and e-mail address.

    If you have questions, you may contact:

    o  Mary A. Mohiyuddin (GAO, 202-512-3087, mohiyuddinm@gao.gov)

    o  Curtis Crider (PCIE, 202-208-5724, Curtis_Crider@oig.doi.gov)

    United States General Accounting Office President's Council on Integrity
    and Efficiency

                                        GAO/PCIE

    FINANCIAL AUDIT MANUAL

    Checklist for Reports Prepared Under the CFO Act - Revised 2003 Exposure Draft

                                GAO-04-44G October 2003

    Contents

    Abbreviations 2
    Sections
    I Overview 3
    II General Items Related to the Financial Statements 6
    III Balance Sheet 13
    IV Statement of Net Cost 104
    V Statement of Changes in Net Position 148
    VI Statement of Budgetary Resources 161
    VII Statement of Financing 171
    VIII Statement of Custodial Activity 181
    IX Notes to Financial Statements (Significant Accounting Policies) 191
    X Supplementary Information 193

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
    Page 1

    Abbreviations

    AcSEC Accounting Standards Executive Committee
    AICPA American Institute of Certified Public Accountants
    CFO Act Chief Financial Officers Act of 1990
    COTS commercial off-the-shelf
    CSRS Civil Service Retirement System
    FASAB Federal Accounting Standards Advisory Board
    FASB Financial Accounting Standards Board
    FDIC Federal Deposit Insurance Corporation
    FERS Federal Employees Retirement System
    FFMIA Federal Financial Management Improvement Act of 1996
    FHA Federal Housing Administration
    FIFO first-in, first-out
    FY fiscal year
    GAAP Generally Accepted Accounting Principles
    GDP gross domestic product
    GMRA Government Management and Reform Act of 1994
    GPRA Government Performance and Results Act of 1993
    HI Hospital Insurance (Medicare Part A)
    IMF International Monetary Fund
    Imple. Guide Implementation Guide
    IRS Internal Revenue Service
    LIFO last-in, first-out
    MD&A Management's Discussion and Analysis
    MRS Military Retirement System
    NRV net realizable value
    OASDI Old Age, Survivors, and Disability Insurance (Social Security)
    OMB Office of Management and Budget
    OPEB Other Postemployment Benefits
    ORB Other Retirement Benefits
    PP&E Property, Plant, and Equipment
    RRB Railroad Retirement Benefits
    RSI Required Supplementary Information
    RSSI Required Supplementary Stewardship Information
    SFAS Statement of Financial Accounting Standards
    SFFAC Statements of Federal Financial Accounting Concepts
    SFFAS Statements of Federal Financial Accounting Standards
    SGL U.S. Government Standard General Ledger
    SMI Supplementary Medical Insurance (Medicare Part B)
    SOP Statement of Position
    TVA Tennessee Valley Authority
    UI unemployment insurance
    UTF Unemployment Trust Fund

     October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 2

    Section I Overview

    Introduction

    The Chief Financial Officers (CFO) Act of 1990 and the Government
    Management and Reform Act of 1994 require, among other mandates, that
    agencies' chief financial officers submit annual reports to their agency
    heads and to the Office of Management and Budget (OMB). These annual
    reports are to contain audited financial statements of their agencies. The
    financial statements are to be presented in accordance with generally
    accepted accounting principles (GAAP).1

    This checklist is being issued to assist agencies in preparing these
    statements and auditors in auditing them. Use of this checklist is not a
    requirement. Rather, it is intended to help provide for a systematic,
    organized, and structured approach to preparing or reviewing agency
    financial statements. Furthermore, it should be noted that, while the
    questions contained in the checklist are taken from authoritative sources,
    the checklist itself is not authoritative, nor is it a comprehensive
    guide. Preparers and auditors should also consult financial management
    regulations for the individual agencies, as the regulations may have
    specific guidance when the standards allow alternatives or management
    flexibility.

    Checklist Organization

    The checklist has 10 sections: an overview section, a section related to
    general items in the financial statements, a section for each of the six
    financial statements, and two additional sections. The six sections
    reflecting the financial statements are organized by the line items in
    financial statements to allow the user to proceed through each statement
    from the beginning to the end. The final two sections cover (1)
    disclosures in the notes to the financial statements related to
    significant accounting policies and (2) required supplementary stewardship
    information and required supplementary information.

    Since the financial statements are interrelated, some questions concerning
    line items in one financial statement may also pertain to line items in
    another statement. For example, the questions covering loans receivable in
    the balance sheet section may also deal with matters related to interest
    income and subsidy expense appearing in the statements of financing and
    net cost sections. Because of these relationships, our general
    organizational approach aggregates related information so that questions
    on related line items appearing in more than one financial statement are
    covered only in the first financial statement section in which the line
    item appears. For example, questions concerning interest income and
    subsidy expense would appear only in the balance sheet section. Similarly,
    questions related to the notes to the financial statements section would
    also appear only under the line item of the initial financial statement.

    1The American Institute of Certified Public Accountants recognizes the
    federal accounting standards promulgated by the Federal Accounting
    Standards Advisory Board (FASAB) as generally accepted accounting
    principles.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
    Page 3

    Except for sections I, II, VI, and IX, the first page of each section
    contains a list showing the number of questions in the section. This
    checklist has 784 questions as follows.

    General Items Related to the Financial Statements 24 Balance Sheet 354
    Statement of Net Cost 178 Statement of Changes in Net Position 40
    Statement of Budgetary Resources 27 Statement of Financing 27 Statement of
    Custodial Activity 27 Notes to Financial Statements (Significant

    Accounting Policies) 5 Supplementary Information 102

    Authoritative Guidance

    Each question in this guide is referenced to a source. The sources cited
    are (1) the Statements of Federal Financial Accounting Standards (SFFAS)
    and (2) OMB Bulletin 01-09, Form and Content of Agency Financial
    Statements.

    FASAB statements include Statements of Federal Financial Accounting
    Concepts (SFFAC) and Statements of Federal Financial Accounting Standards
    (SFFAS). The three approved accounting concept statements are #1
    Objectives of Federal Financial Reporting, 1993, #2 Entity and Display,
    1995, and #3 Management's Discussion and Analysis, 1999. The 23 SFFAS
    standards2 covered in this checklist are:

    1. Accounting for Selected Assets and Liabilities, 1993.

    2. Accounting for Direct Loans and Loan Guarantees, 1993.

    3. Accounting for Inventory and Related Property, 1993.

    4. Managerial Cost Accounting Concepts and Standards, 1995.

    5. Accounting for Liabilities of the Federal Government, 1995.

    6. Accounting for Property, Plant, and Equipment, 1995.

    7. Accounting for Revenue and Other Financing Sources, 1996.

    8. Supplementary Stewardship Reporting, 1996.

    9.	Deferral of the Effective Date of Managerial Cost Accounting Standards
    for the Federal Government in SFFAS No. 4, 1997.

    10. Accounting for Internal Use Software, 1998.

    11. Amendments to Accounting for Property, Plant, and Equipment -
    Definitional Changes, 1998.3

    12. Recognition of Contingent Liabilities Arising from Litigation, 1998.

    13. Deferral of Paragraph 65.2 - Material Revenue-Related Transactions
    Disclosures, 1999.

    14. Amendments to Deferred Maintenance Reporting, 1999.

    15. Management's Discussion and Analysis, 1999.

    16.	Amendments to Accounting for Property, Plant, and Equipment -
    Measurement and Reporting for Multi-Use Heritage Assets, 1999.

    17. Accounting for Social Insurance, 1999.

    2FASAB promulgates accounting standards after considering the financial
    and budgetary information needs of Congress, executive agencies, other
    users of federal financial information, and comments from the public.

    3SFFAS 11 was rescinded in its entirety by SFFAS 23.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
    Page 4

    18. Amendments to Accounting Standards For Direct Loans and Loans
    Guarantees, 2000.

    19. Technical Amendments to Accounting Standards for Direct Loans and Loan
    Guarantees, 2001.

    20.	Elimination of Certain Disclosures Related to Tax Revenue Transactions
    by the Internal Revenue Service, Customs and Others, 2001.

    21. Reporting Corrections of Errors and Changes in Accounting Principles,
    2001.

    22. Change in Certain Requirements for Reconciling Obligations and Net
    Cost of Operations, 2001.

    23. Eliminating the Category National Defense Property, Plant, and
    Equipment, 2003.

    SFFAC 4, Intended Audience and Qualitative Characteristic for the
    Consolidated Financial Report of the United States Government, and SFFAS
    24, Selected Standards for the Consolidated Financial Report of the United
    States Government, are not covered in this checklist, as this checklist is
    intended for use at the agency reporting level, and is not to be used for
    the financial report of the U.S. government.

    Subsequent to updating this checklist, FASAB issued SFFAS 25,
    Reclassification of Stewardship Responsibilities and Eliminating the
    Current Services Assessment. The principal effect of SFFAS 25 is to
    present certain social insurance information4 as a basic financial
    statement rather than as Required Supplementary Stewardship Information
    (RSSI), effective for fiscal year 2005. This main revision is not taken
    into consideration with this CFO checklist update, and will be considered
    in the next update of the CFO checklist. However, the elimination of
    current services assessment information and reclassifying risk assumed
    information from RSSI to Required Supplementary Information (RSI),
    effective for fiscal year 2003 are covered in this checklist.

    SFFAS 7 Implementation Guide to Accounting for Revenue and Other Financing
    Sources, 1996, is also covered in this checklist. OMB Bulletin 01-09
    provides the detailed requirements for the form and content of agency
    financial statements.

    How to Use This Guide

    To the right of each question are two columns. The first column provides
    for a "yes," "no," or "N/A" (not applicable) answer to each question. The
    second column provides for an explanation of the answer to each question.
    A "yes" answer should indicate that the financial statements contain the
    information asked by the question. For each "yes" answer, the explanation
    column should include the page number or location in the financial
    statements where the information can be found. Also, any other information
    pertinent to the question and the response should be provided in the
    explanation column.

    An "N/A" answer might indicate that the question does not apply to the
    federal entity. For example, most federal agencies do not administer loan,
    loan guarantee, or loan insurance programs and, therefore, do not have
    credit program receivables and related property. Consequently, the
    questions on these receivables, property, and subsidies would not apply. A
    simple explanation indicating that the reporting entity does not
    administer loan programs would appear in the explanation column of the
    first question in the series.

    A "no" answer indicates that the information asked for in the question is
    not included in the financial statements, notes, or supplementary
    information, respectively. The explanation column should describe in
    sufficient detail why the information is not included. The questions in
    the checklist are worded such that in virtually all instances, a no
    response, would indicate a particular area or certain information is not
    presented in accordance with the FASAB approved statements and OMB
    Bulletin 01-09.

    4The information required by paragraphs 27(3) and 32(3) of SFFAS 17 shall
    be presented as a basic financial statement.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
    Page 5

    Section II
    General Items Related to the Financial Statements

    There are 24 questions in this section. All the questions relate to the
    overall financial statements and are not further divided into categories.

                   General Items (1 - 24)             Yes, No, or N/A Explanation
    1. Does the entity's annual financial
    statement consist of the following items? a.
    management's discussion and analysis (MD&A) of
    the reporting entity b. basic statements and
    related notes c. required supplementary
    stewardship information (RSSI) d. required
    supplementary information (RSI) e. other
    accompanying information (OAI) that provides
    users of the financial statements with a
    better understanding of the entity's programs
    and the extent to which program objectives are
    achieved (OMB Bulletin 01-09, p. 4, section
    1.5)

     October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 6

    Section II
    General Items Related to the Financial Statements

                   General Items (1 - 24)             Yes, No, or N/A Explanation
    2. Do the basic statements include? a. Balance
    Sheet b. Statement of Net Cost c. Statement of
          Changes in Net Position d. Statement of
    Budgetary Resources e. Statement of Financing
          f. Statement of Custodial Activity (OMB
          Bulletin 01-09, pp. 4 & 5, section 1.5)

     October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 7

    Section II
    General Items Related to the Financial Statements

                     General Items (1 - 24)               Yes, No, or Explanation
                                                              N/A
    3. Does the entity use the following hierarchy as
    its sources of guidance in preparing its financial
    statements? a. FASAB Statements and
    Interpretations as well as American Institute of
    Certified Public Accountants (AICPA) and Financial
    Accounting Standards Board (FASB) pronouncements
    if made applicable to federal government entities
    by a FASAB Statement or Interpretation b. FASAB
    technical bulletins and, if specifically made
    applicable to federal government entities by AICPA
    and cleared by FASAB, AICPA Industry Audit and
    Accounting Guides and AICPA Statements of Position
    c. AICPA Accounting Standards Executive Committee
    (AcSEC) Practice Bulletins if specifically made
    applicable to federal government entities and
    cleared by FASAB, as well as Technical Releases of
    the Accounting and Auditing Policy Committee of
    FASAB d. Implementation guides published by FASAB
    staff and practices that are widely recognized and
    prevalent in the federal government e. In the
    absence of a pronouncement covered by federal
    Generally Accepted Accounting Principles (GAAP) or
    another source of established accounting
    principles, other accounting literature, depending
    on its relevance in the circumstances.5 (OMB
    Bulletin 01-09, p. 2, section 1.2 & p. 13, section
    2.1, item B)
    4. Does the entity present comparative information
    and related footnote disclosures for the current
    year and prior year for the six basic financial
    statements, and MD&A? (OMB Bulletin 01-09, p. 5,
    section 1.6 & p. 13, section 2.1, item F)

    5Other accounting literature includes for example, FASAB Concept
    Statements; Governmental Accounting Standards Board (GASB) Statements,
    Interpretations, Technical Bulletins, and Concept Statements; and AICPA
    Issue Papers.

     October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 8

    Section II
    General Items Related to the Financial Statements

                   General Items (1 - 24)             Yes, No, or N/A Explanation
           5. Does the entity present comparative
          information in the RSSI and RSI when the
    information would be meaningful to the user of
    the financial report? (OMB Bulletin 01-09, p.
                      5, section 1.6)
    6. Has the agency prepared quarterly interim
    unaudited financial statements,6 without
    footnotes for itself and for each of its major
    components within 45 days after the end of the
    quarter and submitted them to OMB's Office of
    Federal Financial Management and the agency's
    Resource Management Office? (OMB Bulletin
    01-09, p. 14, section 2.1, item G)
    7. Do the quarterly interim statements include
    full accruals and are intra-entity
    transactions eliminated? (OMB Bulletin 01-09,
    p. 14, section 2.1, item G)
    8. Are these interim statements prepared on a
    comparative basis?7 (OMB Bulletin 01-09, p.
    14, section 2.1, item G)
          9. To the extent that information is not
    available on a quarterly basis, has the entity
          developed reliable, alternative means of
         estimating quarterly amounts and balances?
    (OMB Bulletin 01-09, p. 14, section 2.1, item
                             G)

    6Quarterly statements may be limited to a balance sheet, statement of net
    cost, and statement of budgetary resources; MD&A, RSSI, and RSI are not
    required for quarterly reporting.

    7That is, interim financial statements comparative for the year-to-date
    ending March 31, 2003 for fiscal year 2003 and for fiscal year 2004
    comparative for the year to date ending December 31, 2003, March 31, 2004,
    and June 30, 2004.

     October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 9

    Section II
    General Items Related to the Financial Statements

                  General Items (1 - 24)             Yes, No, or    Explanation
                                                         N/A
    10. When an entity presents disaggregated
    information for component organizations,
    does the total column for the entity as a
    whole reflect consolidated totals net of
    intra-entity transactions, except for the
    Statement of Budgetary Resources, which is
    presented on a combined basis? (OMB Bulletin
    01-09, p. 14, section 2.1, item H)
            When a reporting entity presents its financial statements in a single
        column format, the statements are referred to as consolidated statements.
            With the exception of the Statement of Budgetary Resources, financial
            statements that use a multicolumn format to present information on an
    entity's major components or lines of business as well as the consolidated
        amounts are referred to as consolidating statements. (OMB Bulletin 01-09,
                                                      p. 14, section 2.1, item H)
    11. Are intra-entity transactions needed to
    arrive at the consolidated amounts presented
    in a column on the face of the consolidating
    statements? (OMB Bulletin 01-09, p. 14, item
    H)
    12. Has the entity provided assurance of the
    following? a. information in the financial
    statements is presented in accordance with
    federal GAAP b. the underlying records fully
    support the information (OMB Bulletin 01-09,
    p. 14, section 2.1, item J)
    13. Does the reporting entity include
    franchise funds and other intragovernmental
    support revolving funds among the activities
    covered by its financial statements? (OMB
    Bulletin 01-09, p. 15, section 2.1, item K &
    p. 113, section 11.6)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 10

    Section II
    General Items Related to the Financial Statements

                     General Items (1 - 24)               Yes, No, or Explanation
                                                              N/A
    14. If information about the assets, liabilities,
    costs, and revenues of these franchise funds and
    intragovernmental support revolving funds are not
    separately reported on the entity's basic
    financial statements, then is condensed
    information reported as required supplemental
    information in accordance with the applicable
    SFFASs and required segment information? (OMB
    Bulletin 01-09, p. 15, section 2.1, item K & p.
    113, section 11.6)
    15. Does the entity report its assets,
    liabilities, and net position by the lines
    displayed in the illustrative Balance Sheet and
    Statement of Changes in Net Position in OMB
    Bulletin 01-09? (OMB Bulletin 01-09, p.15, section
    2.1, item L)
    16. If the entity aggregates such illustrated line
    items in reporting at the departmental level, is
    the composition of the aggregated line items
    disclosed? (OMB Bulletin 01-09, p.15, section 2.1,
    item L)
    17. Conversely, if the entity disaggregates such
    line items in its departmental statements, does
    the entity report or disclose the total of the
    disaggregated line items? (OMB Bulletin 01-09,
    p.15, section 2.1, item L)
          18. Are line items, which are immaterial but
    related in nature, combined? (OMB Bulletin 01-09,
                  p. 15, section 2.1, item M)
    19. Are discrete balances of an immaterial amount
    designated as "other?" (OMB Bulletin 01-09, p. 15,
                     section 2.1, item M)"

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 11

    Section II
    General Items Related to the Financial Statements

                   General Items (1 - 24)             Yes, No, or N/A Explanation
          20. If not, are these material balances
        separately reported and designated by name?
    (OMB Bulletin 01-09, p. 15, section 2.1, items
                           M & N)
        21. Are the statement line items, footnotes,
    and lines or columns in footnotes that do not
    apply or are not informative for the reporting
        entity excluded? (OMB Bulletin 01-09, p. 15,
                    section 2.1, item O)
    22. Do schedule totals presented in the
    footnotes, in support of amounts presented in
    financial statements, agree with the amounts
    presented in the body of the financial
    statements? (OMB Bulletin 01-09, p. 15,
    section 2.1, item P)
    23. When presenting dollar amounts in the
    statements and the notes, does the entity do
    the following? a. round dollar amounts to the
    nearest whole dollar, thousand, or million
    based upon informative value to the reporting
    entity b. maintain the chosen rounding level
    throughout the financial statements and
    footnotes c. ensure that individual line items
    add up to the totals by adjusting the line
    items for the differences created by the
    rounding process rather than adjusting column
    totals (OMB Bulletin 01-09, p. 16, section
    2.1, item Q)
    24. Are footnotes sequentially numbered? (OMB
        Bulletin 01-09, p. 16, section 2.1, item S)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 12

    Section III Balance Sheet

    The questions related to the balance sheet are contained under 23 line
    items. The question numbers related to

    each line item follow. Question numbers General items

    Assets

    1. Fund Balance with Treasury

    2. Investments

    3. Accounts Receivable (Net)

    4. Interest Receivable (Net)

    5. Credit Program Receivables

    6. Cash and Other Monetary Assets

    7. Inventory and Related Property

    8. Operating Materials and Supplies

    9. Stockpile Materials

    10. Seized Property

    11. Forfeited Property

    12.	Goods Held Under Price Support and
    Stabilization Programs

    13. General Property, Plant, and Equipment (Net)

    14. Software

    15. Other Assets

    Liabilities

    16. Liabilities in General

    17. Accounts Payable and Interest Payable

    18. Liabilities for Loan Guarantees

    19. Lease Liabilities

    20. Federal Debt and Related Interest

    21.	Pensions, Other Retirement Benefits, and
    Postemployment Benefits

    22. Other Liabilities

    Net Position

    23.	Unexpended Appropriations and Cumulative
    Results of Operations

    1-6

    7 - 22 23 -32 33 -49 50 -54 55 - 96 97 - 102 103 -125 126 -137 138 -150
    151 -158 159 -172

    173 -186 187 -233 234 -262 263 -268

    269 - 272 273 -280 281 -294 295 -299 300 -310

    311 -318 319 -352

    353 -354

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
    Page 13

    Section III Balance Sheet

              General Items (1 - 6)           Yes, No, or N/A      Explanation
    The Balance Sheet presents, as of a specific time, amounts of future
    economic benefits owned or managed by the reporting entity exclusive of
    items subject to stewardship reporting (assets), amounts owed by the
    entity (liabilities), and amounts that comprise the difference (net
    position). (SFFAC 2, par. 57; OMB Bulletin 01-09, p. 17, section 3.1)
        1. Are entity and nonentity assets
    combined on the face of the balance
    sheet?8 (OMB Bulletin 01-09, p. 17,
    section 3.1 and p. 19, section 3.3)
         2. Are the amounts and types of
    nonentity assets disclosed in a note
        to the financial statements? (OMB
    Bulletin 01-09, p. 17, section 3.1;
        p. 19, section 3.3; p. 56, section
                       9.2)
    Liabilities covered by budgetary resources are liabilities covered by
    realized budgetary resources as of the balance sheet date. Budgetary
    resources encompass not only new budget authority but also other resources
    available to cover liabilities for specified purposes in a given year.
    Available budgetary resources include (1) new budget authority, (2)
    unobligated balances of budgetary resources at the beginning of the year
    or net transfers of prior year balances during the year, (3) spending
    authority from offsetting collections (credited to an appropriation or
    fund account), and (4) recoveries of unexpired budget authority through
    downward adjustments of prior year obligations. Liabilities are considered
    covered by budgetary resources if they are to be funded by permanent
    indefinite appropriations or borrowing authority, which have been enacted
    and signed into law as of the balance sheet date, provided that the
    resources may be apportioned by OMB without further action by the Congress
    and without a contingency having to be met first. (OMB Bulletin 01-09, p.
    24, section 3.4)
    3. Are liabilities covered by
    budgetary resources and liabilities
    not covered by budgetary resources
    combined on the face of the balance
    sheet? (OMB Bulletin 01-09, p. 17,
    section 3.1, p. 24, section 3.4)

    8Entity assets are assets that the reporting entity has authority to use
    in its operations. Nonentity assets are assets that are held by an entity
    but are not available to the entity, for example, income tax receivables.
    (OMB Bulletin 01-09, p. 19, section 3.3).

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    Section III Balance Sheet

                   General Items (1 - 6)              Yes, No, or    Explanation
                                                          N/A
        4. Are liabilities not covered by budgetary
           resources disclosed in a note to the
    financial statements? (OMB Bulletin 01-09, p.
    17, section 3.1 & pp. 78 & 79, section 9.12)
         5. Does the Balance Sheet display assets,
    liabilities, and net position? (OMB Bulletin
                01-09, p. 18, section 3.2)
    Intragovernmental assets arise from transactions among federal entities.
    Intragovernmental assets represent claims of a federal entity against
    other federal entities. Intragovernmental liabilities are claims against
    the reporting entity by other federal entities. (OMB Bulletin 01-09, p.
    19, section 3.3; p. 24, section 3.4)
            6. Are intragovernmental assets and
           liabilities reported separately from
          transactions with non-federal entities,
    including the Federal Reserve and government
    sponsored enterprises?9 (OMB Bulletin 01-09,
         p. 19, section 3.3 & p. 24, section 3.4)

    9Government sponsored enterprises are federally chartered but privately
    owned and operated entities.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 15

    Section III
    Balance Sheet

    Assets Fund Balance with Treasury (7 - 22) Yes, No, or N/A   Explanation
    A federal entity's fund balance with the Treasury is the aggregate amount
    of funds in the entity's accounts with Treasury for which the entity is
    authorized to make expenditures and pay liabilities. Fund balance with
    Treasury includes clearing account balances and the dollar equivalent of
    foreign currency account balances. From the reporting entity's
    perspective, a fund balance with Treasury is an asset. From the
    perspective of the federal government as a whole, the fund balance is
    neither an asset nor a liability; it instead represents a commitment to
    make resources available to federal departments, agencies, programs, and
    other entities. (SFFAS 1, par. 31 & 32)
          7. Is the fund balance with Treasury
        reported as an intragovernmental asset?
    (SFFAS 1, par. 31; OMB Bulletin 01-09, p.
                    18, section 3.2)
    8. Are amounts disclosed as fund balances
           in deposit, suspense, and clearing
    accounts that are not available to finance
        entity activities reported as nonentity
          assets? (OMB Bulletin 01-09, p. 19,
                      section 3.3)
        9. Are foreign currency account balances
        reported on the balance sheet translated
          into U.S. dollars at exchange rates
        determined by the Treasury and effective
    at the financial reporting date? (SFFAS 1,
          par. 32; OMB Bulletin 01-09, p. 19,
                      section 3.3)

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    Section III Balance Sheet

           Assets Fund Balance with Treasury (7 - 22)     Yes, No, or Explanation
                                                              N/A
    10. Does the entity's fund balance with Treasury
    also include the following? a. clearing account
    balances b. balances for direct loan and loan
    guarantee activities held in the credit reform
    program, financing, and liquidating accounts c.
    funds actually borrowed from Treasury under
    statutory authority d. the dollar equivalent of
    foreign currency account balances (SFFAS 1, par.
    32 & 35)
        11. Does the entity's fund balance with Treasury
        exclude contract authority10 or unused authority
                 to borrow? (SFFAS 1, par. 34)
    12. Does the entity record an increase in its fund
    balance with Treasury when it does at least one of
    the following? a. receives appropriations,
    reappropriations, continuing resolutions,
    appropriation restorations, and allocations b.
    receives transfers and reimbursements from other
    agencies c. borrows from the Treasury, Federal
    Financing Bank, or other entities d. collects and
    credits amounts to its appropriations or fund
    accounts that the entity is authorized to spend or
    use to offset its expenditures (SFFAS 1, par. 33)

    10Contract authority is a statutory authority under which contracts or
    other obligations may be entered into prior to receiving an appropriation
    for the payment of obligations.

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    Section III Balance Sheet

           Assets Fund Balance with Treasury (7 - 22)     Yes, No, or Explanation
                                                              N/A
    13. Does the entity record a decrease in its fund
        balance with Treasury when each of the following
            occurs? a. disbursements are made to pay
         liabilities or to purchase assets, goods, and
            services b. investments are made in U.S.
    securities c. expired appropriations are canceled
    d. transfers and reimbursements are made to other
    entities or to the Treasury e. appropriations are
          sequestered or rescinded (SFFAS 1, par. 36)
    14. Does the entity distinguish funds within fund
    balance with Treasury as the obligated balance not
    yet disbursed11 and the unobligated balance12 in a
    note to the financial statements? (SFFAS 1, par.
    37; OMB Bulletin 01-09, p. 57, section 9.3, item
    B)
            15. Are fund balances that agencies were
        authorized to use disclosed by fund type (e.g.,
    trust funds, revolving funds, appropriated funds,
        other fund types)? (OMB Bulletin 01-09, pp. 56 &
                    57, section 9.3, item A)
        16. Are any restrictions on unobligated balances
        related to future use disclosed? (SFFAS 1, par.
        38; OMB Bulletin 01-09, p. 57, section 9.3, item
                               B)
    17. Does the entity explain any discrepancies
    between fund balance with Treasury in its general
    ledger accounts and the balance in the Treasury's
    accounts and explain the causes of the
    discrepancies in footnotes to the financial
    statements?13 (SFFAS 1, par. 39; OMB Bulletin
    01-09, p. 57, section 9.3, item C)

    11The obligated balance not yet disbursed is the amount of funds against
    which budgetary obligations have been incurred, but disbursements have not
    been made.

    12The unobligated balance is the amount of funds available to the entity
    against which no claims have been recorded. (SFFAS 1, par. 38)

    13Discrepancies due to time lag should be reconciled and discrepancies due
    to error should be corrected when financial reports are prepared.

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    Page 18

    Section III
    Balance Sheet

           Assets Fund Balance with Treasury (7 - 22)     Yes, No, or Explanation
                                                              N/A
    18. Does the entity disclose any other information
    necessary for understanding the nature of the fund
    balances, including information on unused funds in
    expired appropriations that are returned to
    Treasury at the end of a fiscal year? (SFFAS 1,
    par. 39; OMB Bulletin 01-09, p. 57, section 9.3,
    item C)
         19. Are balances in deposit accounts, such as
    collections pending litigation or funds being held
    by the entity in the capacity of a banker or agent
        for others, disclosed under "other fund types?"
        (OMB Bulletin 01-09, p. 57, section 9.3, item A)
    20. If, however, any of the balances under "other
           fund types" are material, are they listed
        separately? (OMB Bulletin 01-09, p. 57, section
                          9.3, item A)
             21. Is other information necessary for
    understanding the nature of the fund balances with
         Treasury disclosed? (OMB Bulletin 01-09, p.57,
                      section 9.3, item C)
        22. Are unexpended appropriations recognized as
         capital and included under funds with Treasury
        when they are made available for apportionment?
                       (SFFAS 7, par. 71)

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    Section III
    Balance Sheet

             Assets Investments (23 - 32)         Yes, No, or N/A    Explanation
    Investments in federal (i.e., treasury) securities include (1)
    nonmarketable par value Treasury securities, (2) market-based Treasury
    securities expected to be held to maturity, (3) marketable Treasury
    securities expected to be held to maturity, and (4) securities issued by
    other federal entities. Nonfederal securities include those issued by
    state and local governments, private corporations, and
    government-sponsored enterprises. (SFFAS 1, par. 62; OMB Bulletin 01-09,
    p. 20, section 3.3)
    23. Are investments in federal securities
    reported separately from investments in
    nonfederal securities? (SFFAS 1, par. 67;
    OMB Bulletin 01-09, p. 20, section 3.3)
    24. Are investments in federal securities
    initially recorded and reported at their
    acquisition cost or amortized acquisition
        cost (less an allowance for losses, if
           any)? (SFFAS 1, par. 68 & 69; OMB
          Bulletin 01-09, p. 20, section 3.3)
    25. Are investments in federal securities
         acquired in exchange for nonmonetary
         assets recognized at the fair market
        value of either the securities acquired
    or the assets given up, whichever is more
    definitively determinable? (SFFAS 1, par.
                          68)
    26. Subsequent to acquisition, are
    investments in federal securities
    reported at their carrying amount (i.e.,
    acquisition cost) adjusted for amortized
    premium or discount? (SFFAS 1, par.
    70-71; OMB Bulletin 01-09, pp. 59 & 60,
    section 9.5)
    27. Is the interest method (i.e.,
    effective interest rate multiplied by the
    carrying amount) used in amortizing the
    premium or discount over the life of the
    treasury security? (SFFAS 1, par. 71)
        28. Is the market value of market-based
         and marketable securities disclosed?
        (SFFAS 1, par. 72; OMB Bulletin 01-09,
               pp. 59 & 60, section 9.5)

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    Section III
    Balance Sheet

                Assets Investments (23 - 32)          Yes, No, or N/A Explanation
           29. Are investments grouped by type of
        security, such as marketable or market-based
          Treasury securities? (SFFAS 1, par. 72)
    30. Are investment securities, which are
    initially expected to be held to maturity,
    reclassified as securities available for sale
    or early redemption, if significant
    unforeseeable circumstances cause a change in
    the entity's intent or ability to hold these
    securities to maturity? (SFFAS 1, par. 72 &
    73; OMB Bulletin 01-09, pp. 59 & 60, section
    9.5)
    31. If so, is the market value of such
    securities disclosed? (SFFAS 1, par. 72 & 73;
    OMB Bulletin 01-09, pp. 59 & 60, section 9.5)
           32. Does the entity disclose any other
         information relative to understanding the
          nature of reported investments, such as
    permanent impairments? (OMB Bulletin 01-09, p.
                  60, section 9.5, item B)

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    Section III
    Balance Sheet

        Assets Accounts Receivable (Net) (33 - 49)    Yes, No, or    Explanation
                                                          N/A
    33. Is a receivable recognized when a federal
    entity establishes a claim to cash or other
    assets against other entities based on legal
    provisions or when goods or services are
    provided? (SFFAS 1, par. 41)
        34. If the exact amount of a receivable is
          unknown, is a reasonable estimate made?
                    (SFFAS 1, par. 41)
    35. Are receivables from federal entities
    reported as intragovernmental receivables,
    and reported separately from receivables from
    nonfederal entities? (SFFAS 1, par. 42; OMB
    Bulletin 01-09, p. 19, section 3.3)
    Entity receivables are amounts due from other federal or nonfederal
    entities that the federal entity is authorized by law to include in its
    obligational authority or to offset its expenditures and liabilities upon
    collection. Nonentity receivables are amounts that the entity is to
    collect on behalf of the federal government or other entities, and the
    entity is not authorized to spend. (SFFAS 1, par. 43)
    36. Are receivables not available to an
    entity disclosed in a note to the financial
    statements as nonentity assets, separate from
    receivables available to the entity? (SFFAS
    1, par. 43; OMB Bulletin 01-09, p. 19,
    section 3.3 & p. 56, section 9.2)
    37. Are losses on receivables recognized when
    it is more likely than not (greater than a 50
    percent chance of occurrence) that the
    receivables will not be totally collected?
    (SFFAS 1, par. 44)
             38. Is an allowance for estimated
        uncollectible amounts recognized to reduce
    the gross amount of receivables to their net
          realizable value, and is this allowance
           reestimated on each annual financial
    reporting date and when information indicates
           that the latest estimate is no longer
                correct? (SFFAS 1, par. 45)

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    Section III
    Balance Sheet

           Assets Accounts Receivable (Net) (33 - 49)     Yes, No, or Explanation
                                                              N/A
         39. Is an allowance for uncollectible amounts
        based on an analysis of both individual accounts
        receivable and groups of accounts receivable as
    prescribed by the standards? (SFFAS 1, par. 47-51;
                       SFFAS 7, par. 56)
          40. Are accounts that represent significant
         amounts individually analyzed to determine the
               loss allowance? (SFFAS 1, par. 47)
    41. Is the loss estimation for individual accounts
    based on the following? a. debtor's ability to pay
    b. debtor's payment record and willingness to pay
         c. probable recovery of amounts from secondary
          sources including liens, garnishments, cross
    collections, and other applicable collection tools
                       (SFFAS 1, par. 47)
    42. If information is not available to make a
    reliable assessment of losses on an individual
    account basis or if the nature of the receivables
    does not lend itself to individual account
    analysis, are the potential losses assessed on a
    group basis? (SFFAS 1, par. 48)
    43. If potential losses are assessed on a group
    basis, are the receivables separated into groups
    of homogeneous accounts with similar risk
    characteristics? (SFFAS 1, par. 49-51)
    44. Does the reporting entity disclose the
    following? a. major categories of accounts
    receivable by amount and type b. methodology used
    to estimate the allowance for uncollectible
    amounts c. dollar amount of the allowance for
    uncollectible accounts (SFFAS 1, par. 52; OMB
    Bulletin 01-09, p. 60, section 9.6)

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    Section III
    Balance Sheet

         Assets Accounts Receivable (Net) (33 - 49)   Yes, No, or N/A Explanation
    45. Is an account receivable arising from a
    nonexchange transaction recognized when a
    collecting entity establishes a specifically
    identifiable, measurable, and legally
    enforceable claim to cash or other assets
    through its established assessment processes
    to the extent the amount is measurable? (SFFAS
    7, par. 53, footnote 9, 61-63)
    46. Are assessments recognized as accounts
    receivable if an enforceable claim for taxes
    and duties exists in the following instances?
    a. tax returns filed by the taxpayer without
    sufficient payment b. customs documents filed
    by the importer without sufficient payment c.
    taxpayer agreements to assessments at the
    conclusion of an audit or to substitute for a
    tax return (or importer agreements to
    supplemental assessments) d. court actions
    determining an assessment e. taxpayer (or
    importer) agreements to pay an assessment on
    an installment plan f. receivables determined
    to be currently not collectible, but with
    future collection potential (SFFAS 7, par. 53,
    54, 170, & 171)
        47. Is an inter-entity receivable recognized
        when (1) a legally enforceable claim exists
        between a collecting entity and a recipient
    entity for the transfer or repayment of taxes
        or duties and (2) payment of such a claim is
        probable and measurable? (SFFAS 7, par. 60)
        Compliance assessments are proposed assessments by the collecting entity
    in definitive amounts, but with which the taxpayer (or importer) still has
          the right to disagree or object. (SFFAS 7, par. 55.1) Preassessment
          works-in-process are assessments not yet officially asserted by the
    collecting entity that are subject to a taxpayer's right to conference in
             response to initial information notices. (SFFAS 7, par. 55.2)

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    Section III
    Balance Sheet

           Assets Accounts Receivable (Net) (33 - 49)     Yes, No, or Explanation
                                                              N/A
    48. Do nonexchange-related accounts receivable for
    taxes and duties exclude the following? a. amounts
        received or due with tax returns received after
        the close of the reporting period b. compliance
          assessments c. preassessment work-in-process
                       (SFFAS 7, par. 54)
    49. Are compliance assessments reclassified and
    recognized as account receivables in the following
    instances? a. if the taxpayer files an amended tax
    return b. when customs' protest or retention
    period lapses c. when court action or an appeal
    finally determines the assessment d. if taxpayer
    (or importer) agrees to pay currently or through
    an installment agreement e. if an offer in
    compromise is accepted (SFFAS 7, par. 55.1 &
    178-180)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 25

    Section III Balance Sheet

           Assets Interest Receivable (Net) (50 - 54)     Yes, No, or Explanation
                                                              N/A
    50. Is interest receivable recognized for the
    amount of interest income earned but not received
    for the accounting period, including interest
    earned on investments in interest-bearing
    securities? (SFFAS 1, par. 53; OMB Bulletin 01-09,
    pp. 20 & 21, section 3.3)
         51. Is interest receivable also recognized on
         outstanding accounts receivable and other U.S.
    government claims against persons and entities in
         accordance with provisions in 31 U.S.C. 3717,
    Interest and Penalty Claims?14 (SFFAS 1, par. 53)
        52. Does interest receivable exclude interest on
          accounts receivable or investments that are
        determined to be uncollectible unless the entity
    actually collects interest? (SFFAS 1, par. 54; OMB
           Bulletin 01-09, pp. 20 & 21, section 3.3)
    53. Is interest accrued on uncollectible accounts
    receivable not disclosed until (1) the interest
    payment requirement has been waived by the federal
    government or (2) the related debt has been
    written off? (SFFAS 1, par. 55)
        54. Is interest receivable from federal entities
           accounted for and reported separately from
         interest receivable from the public? (SFFAS 1,
                            par. 56)

      14See also Federal Claims Collection Standards, 4 CFR Part 103 par. 102.13)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 26

    Section III Balance Sheet

        Assets Credit Program Receivables (55 - 96)    Yes, No, or   Explanation
                                                           N/A
    The Federal Credit Reform Act of 1990, as amended, divides loans and loan
         guarantees into two groups: pre-1992 and post-1991. Pre-1992 refers to
    direct loan obligations or loan guarantee commitments made prior to fiscal
        year 1992; post-1991 refers to direct loan obligations or loan guarantee
         commitments made after fiscal year 1991.15 (OMB Bulletin 01-09, p. 68,
                                  section 9.8, item A)
    55. Is interest receivable related to pre-1992
          and post-1991 direct loans and acquired
          defaulted guaranteed loans reported as a
        component of credit program receivables and
         related foreclosed property? (OMB Bulletin
                 01-09, p 21, section 3.3)
    56. Are credit program receivables considered
    an entity asset if at least one of the
    following criteria is met? a. The entity has
    the authority to determine the use of the
    funds collected. b. The entity is legally
    obligated to use the funds to meet entity
    obligations (e.g., loans payable to Treasury).
    (OMB Bulletin 01-09, p. 21, section 3.3)
           57. If a loan guarantee program, which
        guarantees a loan, is generating a negative
        subsidy and the lender has not disbursed the
        loan as of the balance sheet date, does the
    entity record and include this amount as part
          of the total undelivered orders?16 (OMB
            Bulletin 01-09, p. 21, section 3.3)
         58. Are special fund receipt accounts for
          negative subsidies and downward subsidy
        reestimates included in the credit reporting
        entity's financial statements? (OMB Bulletin
                 01-09, p. 21, section 3.3)

    15Section 506 (a) of the Federal Credit Reform Act, as amended, exempts
    the credit activities of certain agencies, such as the Federal Deposit
    Insurance Corporation (FDIC) and the Tennessee Valley Authority (TVA).
    These agencies can report in accordance with other requirements.

    16Undelivered orders are the value of goods and services ordered and
    obligated but not yet received. The term is synonymous with unliquidated
    obligations. (The Federal Budget Politics, Policy, Process; copyright 1995
    by Allen Schick; p. 216)

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    Page 27

    Section III
    Balance Sheet

          Assets Credit Program Receivables (55 - 96)    Yes, No, or  Explanation
                                                             N/A
    59. Are any assets in these special receipt fund
          accounts shown as nonentity assets that are
        offset by intragovernmental liabilities covered
        by budgetary resources? (OMB Bulletin 01-09, p.
                       21, section 3.3)
    60. Does the entity disclose that direct loan
    obligations and loan guarantee commitments made
    after fiscal year 1991, and the resulting direct
    loans or loan guarantees, are governed by the
    Federal Credit Reform Act of 1990, as amended?
    (OMB Bulletin 01-09, p. 68, section 9.8,
    instruction A)
    61. Are loan amounts broken out by group
    (pre-1992 and post-1991) and loan program and
    disclosed in a note to the financial statements?
    (OMB Bulletin 01-09, pp. 61 & 70, section 9.8,
    items B & C)
         62. Do the notes disclose other relevant and
        appropriate information related to direct loans
        and loan guarantees including the following? a.
        description of the characteristics of the loan
            program b. commitments to guarantee c.
    management's method for accruing interest revenue
    and recording interest receivable d. management's
         policy for accruing interest on nonperforming
        loans (OMB Bulletin 01-09, p. 69, section 9.8)
    For post-1991direct loans and guarantees, a subsidy expense is recognized
    in the year they are disbursed. For pre-1992 direct loans and guarantees,
    a loss and liability need not be recognized until it is more likely than
    not that a loan (either direct or guaranteed) will go into default. (SFFAS
    2, par. 24 & 39)
         63. Are post-1991 direct loans disbursed and
        outstanding recognized as assets at the present
    value (discounted at a comparable Treasury rate)
        of their estimated net cash inflows? (SFFAS 2,
                  par. 22 & app. B, part I A)

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    Section III Balance Sheet

        Assets Credit Program Receivables (55 - 96)   Yes, No, or N/A Explanation
    64. Is the difference between the outstanding
        principal of post-1991 direct loans and the
          present value of their net cash inflows
    recognized as a subsidy cost allowance? (SFFAS
               2, par. 22 & app. B, part I A)
        65. When post-1991 guaranteed loans default,
           is the value of the assets related to
          defaulted guaranteed loans receivable17
          included in the reported credit program
    receivables? (OMB Bulletin 01-09, p. 64 & 72,
                    section 9.8, item I)
    66. When post-1991 direct loans are written
    off, is the unpaid principal removed from
    unpaid loans receivable and charged against
    the allowance for subsidy costs? (SFFAS 2,
    par. 61)
    67. Are the following components of the assets
    that are related to post-1991 direct and
    defaulted guaranteed loans receivable
    disclosed by loan program? a. loans
    receivable, gross, or defaulted guaranteed
    loans receivable, gross b. interest receivable
    c. estimated net realizable value of
    foreclosed property d. allowance for subsidy
    costs (present value) e. value of assets
    related to direct loans or defaulted
    guaranteed loans receivable, net (OMB Bulletin
    01-09, pp. 61, 64, 70, & 72, section 9.8,
    items C & I)

    17That is, the sum of (1) defaulted guaranteed loans receivable gross, (2)
    interest receivable, and (3) foreclosed property, less the allowance for
    subsidy cost at present value.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
    Page 29

    Section III Balance Sheet

          Assets Credit Program Receivables (55 - 96)     Yes, No, or Explanation
                     Pre-1992 Direct Loans                    N/A
    68. Are losses of pre-1992 direct loans obligated
    recognized (and a corresponding allowance amount
    set up) when it is more likely than not that the
    direct loans will not be totally collected? (SFFAS
    2, par. 39 & app. B, part II A)
         69. Are allowances for uncollectible pre-1992
        loans reestimated each year? (SFFAS 2, par. 39)
    70. Are the following components of assets related
    to pre-1992 direct loans receivable disclosed by
    loan program? a. loans receivable, gross b.
    interest receivable c. foreclosed property d.
    present value allowance18 (if the present value
    method is used) e. allowance for loan losses19 (if
    the allowance-for-loss method is used) (OMB
    Bulletin 01-09, pp. 61 & 70, section 9.8 item B)

    18Under the present value method, the nominal amount of the direct loans
    is reduced by an allowance equal to the difference between the nominal
    amount and the present value of the expected net cash flows from the
    loans. (OMB Bulletin 01-09, p. 68, section 9.8, 4th par.)

    19Under the allowance-for-loss method, the nominal amount of the direct
    loans is reduced by an allowance for uncollectible amounts. (OMB Bulletin
    01-09, p. 68, section 9.8, 4th par.)

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    Section III
    Balance Sheet

    Assets Credit Program Receivables (55 - 96)   Yes, No, or    Explanation
                  Pre-1992 Direct Loans                  N/A
           71. Are the following components of
         defaulted guaranteed loans from pre-1992
         guarantees disclosed by loan program? a.
    defaulted guaranteed loans receivable, gross
    b. interest receivable c. the estimated net
          realizable value of related foreclosed
    property d. the present value allowance (if
         the present value method is used) e. the
    allowance for loan losses (if the allowance
    for loss method is used) f. value of assets
          related to defaulted guaranteed loans
    receivable, net of the respective allowance
        (OMB Bulletin 01-09, pp. 64 & 72, section
                       9.8, item H)
          A loan modification is a federal government action that directly or
         indirectly alters the estimated subsidy cost and the present value of
         outstanding direct loans or the liability of loan guarantees. A direct
        modification changes the subsidy cost by altering the terms of existing
        contracts or through the sale of direct loans. An indirect modification
        changes the subsidy costs by altering the way loans and loan guarantees
             are administered. A modification does not include subsidy cost
    reestimates, routine administrative workouts of troubled loans, and other
        actions permitted within existing contract terms. (SFFAS 2, par. 41-44)
        72. When post-1991 loans are modified, is
         their existing book value changed to an
         amount equal to the present value of the
        loans' net cash inflows that are projected
        under the modified terms from the time of
    the modification to the loans' maturity and
        discounted at the original rate? (SFFAS 2,
             par. 46 & app. B, part I D (4))

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    Section III
    Balance Sheet

          Assets Credit Program Receivables (55 - 96)     Yes, No, or Explanation
                     Pre-1992 Direct Loans                    N/A
    73. When pre-1992 loans are directly modified do
    they meet the following conditions? a. They are
    transferred from the liquidating account to a
    financing account. b. Their book value is recorded
    at their post-modification value. (SFFAS 2, par.
    47 & app. B, part II B (4))
          74. Are subsequent (direct) modifications of
          pre-1992 loans treated as a modification of
              post-1991 loans? (SFFAS 2, par. 47)
    75. When pre-1992 loans are indirectly modified do
        they meet the following conditions? a. They are
        kept in a liquidating account. b. Their bad debt
        allowance is reassessed and adjusted to reflect
         amounts that would not be collected due to the
                modification. (SFFAS 2, par. 47)
         76. Does the entity disclose the following by
    program in the notes to the financial statements?
    a. the nature of the modification of direct loans
        or loan guarantees b. the discount rate used in
    calculating the modification expense c. the basis
         for recognizing a gain or loss related to the
          modification (SFFAS 2, par. 56; OMB Bulletin
              01-09, p. 69, section 9.8, 5th par.)
    77. When post-1991 and pre-1992 loans are sold, is
    the sale treated as a direct modification if the
    agency did not assume sales proceeds in the cash
    flow estimates for the initial subsidy
    calculation? (SFFAS 2, par. 53 & App. B, Part I F,
    footnote 23)

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    Section III
    Balance Sheet

    Assets Credit Program Receivables (55 -   Yes, No, or N/A    Explanation
              96) Pre-1992 Direct Loans
    78. Does the agency disclose the
    expectation that proceeds from the sale
    of its loans will differ from the
    reported face value of the loans or the
    value of their related assets? (OMB
    Bulletin 01-09, p. 69, section 9.8, 1st
    par.)
          Foreclosed property is any asset, which is assumed to be held for sale,
          that is received in satisfaction of a loan receivable or as a result of
                 payment of a claim under a guaranteed or insured loan (excluding
          commodities acquired under price support programs). Pre-1992 foreclosed
    property refers to property associated with direct loans obligated or loan
    guarantees committed before October 1, 1991. Post-1991 foreclosed property
                refers to property associated with direct loans obligated or loan
           guarantees committed after September 30, 1991. (SFFAS 3, par. 79 & 80)
    79. Is post-1991 foreclosed property
    valued at the net present value of the
    projected future cash flows associated
    with the property? (SFFAS 3, par. 81;
    OMB Bulletin 01-09, p. 70, section 9.8,
    item C)
         80. Is pre-1992 foreclosed property
         recorded at cost and adjusted to the
        lower of cost or net realizable value
    with any difference between cost and net
    realizable value carried in a valuation
            allowance? (SFFAS 3, par. 81)
        81. In determining net present value,
    does the projection of future cash flows
        include estimates of the following? a.
          sales proceeds b. rent, management
         expense, and repair costs during the
    holding period c. selling expense (i.e.,
    advertising and commissions) (SFFAS No.
                     3, par. 82)
    82. In estimating sales proceeds for
    projecting the future cash flows
    associated with the property in
    determining net present value, has the
    entity considered its historical
    experience in selling property as well
    as the nature of the sale? (SFFAS 3,
    par. 82)

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    Section III
    Balance Sheet

        Assets Credit Program Receivables (55 - 96)   Yes, No, or N/A Explanation
                   Pre-1992 Direct Loans
        83. Were the estimated future cash flows of
         post-1991 foreclosed property or acquired
    loans discounted at the original (or Treasury)
          discount rate in effect at the time the
         underlying loan or guarantee was granted?
    (SFFAS 2, par. 57& 59; SFFAS 3, par. 83; SFFAS
                       19, par. 7(e))
         84. Is the net present value of post-1991
        foreclosed property adjusted periodically to
    recognize both changes in the expected future
    cash flows and accrual of interest due to the
            passage of time? (SFFAS 3, par. 84)
          85. Are any adjustments in the carrying
          amounts of post-1991 foreclosed property
         included in the presentation of "interest
           income" and the reestimate of "subsidy
                expense?" (SFFAS 3, par. 84)
    86. For post-1991 foreclosed property, are the
         following true? a. Third party claims are
         recorded at their net present value at the
          time of the foreclosure, using the same
           discount rate that applies to related
        foreclosed property. b. Any periodic changes
           in net present value of the claim are
        reflected in "interest income" and "subsidy
                expense." (SFFAS 3, par. 87)
        87. Are receipts or disbursements associated
            with acquiring and holding post-1991
         foreclosed property charged or credited to
          foreclosed property? (SFFAS 3, par. 88)
    88. When the entity acquires foreclosed assets
    in full or partial settlement of post-1991
    direct loans or guarantees, is the present
    value of the government's claim against the
    borrowers reduced by the amount settled as a
    result of the foreclosure? (SFFAS 2, par. 60)

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    Section III
    Balance Sheet

          Assets Credit Program Receivables (55 - 96)     Yes, No, or Explanation
                     Pre-1992 Direct Loans                    N/A
    89. If a lender, debtor, or other third party has
          a legitimate claim to a post-1991 foreclosed
        asset, is the net present value of the estimated
         claim recognized as a special contra-valuation
        allowance? (SFFAS 2, par. 58; SFFAS 3, par. 87)
        90. Is pre-1992 foreclosed property recorded at
        cost and adjusted, if necessary, to the lower of
    cost or net realizable value? (SFFAS 3, par. 81 &
                              85)
          91. Is the net realizable value based on an
          estimate of the market value of the property
        adjusted for any expected losses consistent with
    historical experience, abnormal market conditions,
    and time limitations as well as any other costs of
               the sale? (SFFAS 3, par. 85 & 86)
    92. Is the estimate of market value based on one
    of the following criteria? a. the market value of
    the property if an active market exists b. the
    market value of similar properties if no active
    market exists c. a reasonable forecast of expected
    cash flows adjusted for estimates of all holding
    costs, including any cost of capital (SFFAS 3,
    par. 85)
    93. For pre-1992 foreclosed property, are
    third-party claims recorded at the expected amount
    of cash required to settle the claims? (SFFAS 3,
    par. 87)
    94. If foreclosed property is not sold but placed
    into operation, is the asset removed from
    foreclosed property? (SFFAS 3, par. 90)

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    Section III
    Balance Sheet

        Assets Credit Program Receivables (55 - 96)   Yes, No, or N/A Explanation
                   Pre-1992 Direct Loans
          95. If reimbursement for the transfer of
        assets from one program to another is made,
    are the proceeds from the transfer treated in
        the same manner as a sale to a third party?
                     (SFFAS 3, par. 90)
    96. When the government acquires foreclosed
    assets in full or partial settlement of a
    direct or guaranteed loan (pre-1992 and
    post-1991), is the following information
    disclosed? a. valuation basis for foreclosed
    property b. changes from prior-year's
    accounting methods, if any c. restrictions on
    the use/disposal of property d. balances by
    categories (i.e., pre-1992 and post-1991
    foreclosed property) e. number of properties
    held and average holding period by type or
    category f. number of properties for which
    foreclosure proceedings are in process at the
    end of the period (SFFAS 3, par. 91; OMB
    Bulletin 01-09, pp. 69 & 70, section 9.8)

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    Section III Balance Sheet

        Assets Cash and Other Monetary Assets                       Explanation
                     (97 - 102)                  Yes, No, or N/A
    Cash (including imprest funds) consists of: coins, paper currency, readily
    negotiable instruments (such as checks, money orders, and bank drafts),
    demand deposits, and foreign currencies stated in U.S. dollars at the
    exchange rate on the financial statement date. (SFFAS 1, par. 27; OMB
    Bulletin 01-09, p. 20, section 3.3) Other monetary assets consist of other
    items such as gold, special drawing rights, and U.S. reserves in the
    International Monetary Fund (IMF). (OMB Bulletin 01-09, p. 20, section 3.3
    & p.57, section 9.4, item C)
         97. Are the components of cash and
         other monetary assets disclosed and
        described in a note to the financial
    statements? (OMB Bulletin 01-09, p. 20,
    section 3.3 & pp. 57 & 58, section 9.4)
    Entity cash is the amount of cash that the reporting entity holds and is
    authorized by law to spend. Nonentity cash is the cash that a federal
    entity collects and holds on behalf of the U.S. government or other
    entities. In some instances the entity deposits cash in its accounts in a
    fiduciary capacity for the U.S. Treasury or other entities. (SFFAS 1, par.
    28 & 29)
    98. Does cash available for agency use
         include petty cash and cash held in
          revolving funds that will not be
        transferred to the general fund? (OMB
         Bulletin 01-09, p.58, section 9.4,
                   instruction E)
    99. Is nonentity cash disclosed in the
         notes to the financial statements,
    separately from entity cash? (SFFAS 1,
         par. 29; OMB Bulletin 01-09, p. 17,
    section 3.1, p. 19, section 3.3, & pp.
                 57-58, section 9.4)
        100. If cash is restricted,20 is the
    nature and reason disclosed? (SFFAS 1,
         par. 30; OMB Bulletin 01-09, p. 56,
          section 9.2 & p. 58, section 9.4)

    20Nonentity cash is always restricted. Restricted cash also includes cash
    held in escrow to pay property taxes and insurance related to property
    associated with defaulted loans.

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    Section III
    Balance Sheet

        Assets Cash and Other Monetary Assets (97 -                   Explanation
                            102)                      Yes, No, or N/A
    101. Does the entity disclose any restrictions
    on the use or conversion of cash denominated
    in foreign currencies and the significant
    effects, if any, of changes in the exchange
    rate on the entity's financial position that
    occur after the end of the reporting period
    but before the issuance of financial
    statements? (OMB Bulletin 01-09, p. 58,
    section 9.4)
        102. Is other information on cash and other
         monetary assets disclosed, as appropriate,
          such as the valuation rate of gold? (OMB
            Bulletin 01-09, p. 58, section 9.4)

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    Section III
    Balance Sheet

    Assets Inventory and Related Property (103 Yes, No, or N/A   Explanation
                         - 125)
    Inventory is tangible personal property that is (1) held for sale
    including raw materials and work in process, (2) in process of production
    for sale, or (3) to be consumed in the production of goods for sale or in
    the provision of services for a fee. Inventory does not include other
    assets held for sale such as (1) stockpile materials, (2) seized and
    forfeited property, (3) foreclosed property, and (4) goods held under
    price support and stabilization programs. (SFFAS 3, par. 1; OMB Bulletin
    01-09, p. 21, section 3.3)
         103. Is inventory valued at historical
         cost, latest acquisition cost, or net
    realizable value? (SFFAS 3, par. 20 & 26)
    104. If inventory is valued at historical
    cost, does that cost include the purchase
    amount and all other costs, such as
    transportation and production costs,
    incurred to bring the inventory into its
    current condition and location? (SFFAS 3,
    par. 21)
    105. Are abnormal costs, such as excessive
          handling or rework costs, charged to
    operations for the period? (SFFAS 3, par.
                          21)
    106. Is donated inventory valued at its
    fair value at the time of donation? (SFFAS
    3, par. 21)
    107. Is inventory acquired through
    exchange of nonmonetary assets (e.g.,
    barter) valued at the fair value of the
    asset received at the time of the
    exchange? (SFFAS 3, par. 21)
          108. For inventory acquired through
         exchange of nonmonetary assets, is any
    difference between the recorded amount of
        the asset surrendered and the fair value
    of the asset received recognized as a gain
               or loss? (SFFAS 3, par 21)

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    Section III Balance Sheet

        Assets Inventory and Related Property (103 -  Yes, No, or N/A Explanation
                            125)
    109. Are one of the following historical cost
    flow assumptions used to value inventory? a.
    first-in, first out (FIFO) b. weighted average
    c. moving average d. any other valuation
    method (such as a standard cost system) whose
    results reasonably approximate "a," "b," or
    "c" above (SFFAS 3, par. 22)
    110. If the latest acquisition cost method of
         inventory valuation is used, is the latest
         invoice price (actual cost) applied to all
         like units held, including those acquired
         through donation or nonmonetary exchange?
                     (SFFAS 3, par. 23)
    111. Under the latest acquisition cost method,
    is the inventory revalued periodically (or at
    least by the end of the fiscal year)?21 (SFFAS
    3, par. 23)
        112. If unrealized holding gains/losses are
            recognized, is an allowance account
         established to capture these gains/losses?
                     (SFFAS 3, par. 24)
    113. Is the ending balance of this [gain/loss]
        allowance account the cumulative difference
           between the historical cost, based on
    estimated or actual valuation, and the latest
        acquisition cost of ending inventory? (SFFAS
                        3, par. 24)
    114. Is the balance for the gain/loss account
        adjusted each time the inventory balance is
                adjusted? (SFFAS 3, par. 24)

    21Revaluation results in recognition of unrealized holding gains/losses in
    the ending inventory value. Upon adjustment for unrealized holding
    gains/losses, the latest acquisition cost method then results in an
    approximation of historical cost.

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    Section III Balance Sheet

    Assets Inventory and Related Property (103 - 125)  Yes, No, or Explanation
                                                              N/A
         115. Is the adjustment necessary to bring the
        allowance to the appropriate balance a component
        of the cost of goods sold as computed under the
        latest acquisition cost method?22 (SFFAS 3, par.
                            24 & 25)
    116. If the latest acquisition cost method is used
    to value inventory, is the reported cost of goods
          sold adjusted by the difference between the
    beginning and ending unrealized holding gains and
                losses? (SFFAS 3, par. 24 & 25)
    117. If inventory is valued at net realizable
    value, does it meet the following criteria? a.
    There is an inability to determine approximate
    cost. b. There is immediate marketability at
    quoted prices. c. There is unit interchangeability
    (e.g., petroleum reserves). (SFFAS 3, par. 26)
    118. Are inventory stocks, which are maintained
    because they are not readily available in the
    market or because there is more than a remote
    chance that they will eventually be needed,
    classified as inventory held in reserve for future
    sale, and reported in one of the following
    manners? a. included in the inventory line item on
    the face of the financial statements with separate
    disclosure in the footnotes b. shown as a separate
    line item on the face of the financial statements
    (SFFAS 3, par. 27)

    22Cost of goods sold under the latest acquisition cost method equals (1)
    beginning inventory at beginning-of-the period latest acquisition cost,
    less: beginning allowance for unrealized holding gains/losses, plus:
    actual purchases; and (2) resulting cost of goods available for sale,
    less: ending inventory at end-of-the period latest acquisition cost, plus:
    ending allowance for unrealized holding gains/losses.

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    Section III
    Balance Sheet

        Assets Inventory and Related Property (103 -  Yes, No, or N/A Explanation
                            125)
          119. Is inventory identified as excess,
    obsolete, or unserviceable reported in one of
         the following manners? a. included in the
           inventory line item on the face of the
    financial statements with separate disclosures
        in the footnotes b. shown as a separate line
        item on the face of the financial statements
    (SFFAS 3, par. 29; OMB Bulletin 01-09, p. 74,
                        section 9.9)
        120. Is excess, obsolete, and unserviceable
            inventory valued at its expected net
            realizable value? (SFFAS 3 par. 30)
          121. When inventory is declared excess,
        obsolete, or unserviceable is the difference
        between the carrying amount and the expected
    net realizable value recognized as a loss (or
                 gain)? (SFFAS 3, par. 30)
    122. For excess, obsolete, or unserviceable
    inventory, are any subsequent adjustments to
    the inventory's net realizable value or any
    loss (or gain) upon disposal recognized as
    losses (or gains)? (SFFAS 3, par. 30)
    123. When inventory is held for repair, is it
    valued using one of the following methods? a.
    the allowance method (valued at the same value
          as a serviceable item and a contra-asset
    repair allowance account is established b. the
        direct method (valued at the same value as a
    serviceable item less estimated repair costs)
                  (SFFAS 3, par. 32 & 33)
    124. If inventory is transferred to "inventory
    held for repair," are estimated prior period
    repair costs either credited to the repair
    allowance (under the repair allowance method)
    or to the inventory account (under the direct
    method) and reported as an adjustment to
    equity? (SFFAS 3, par. 34)

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    Section III
    Balance Sheet

    Assets Inventory and Related Property (103 - 125)  Yes, No, or Explanation
                                                              N/A
    125. Does the entity disclose the following about
    its inventory? a. the general composition b. the
    basis for determining inventory values (including
    the valuation method and any cost flow
    assumptions) c. changes from prior years'
    accounting methods, if any d. balances for each of
    the following categories of inventory (unless
    otherwise presented on the financial statements):
    i. inventory held for current sale ii. inventory
    held in reserve for future use iii. excess,
    obsolete, and unserviceable inventory iv.
    inventory held for repair e. the difference
    between the carrying amount of the inventory
    before identification as excess, obsolete, or
    unserviceable, and its expected net realizable
    value f. restriction on the sale of inventory g.
    the decision criteria for categorizing inventory
    h. changes in the criteria for categorizing
    inventory (SFFAS 3, par. 18, 27-29, 31, 32 & 35;
    OMB Bulletin 01-09, pp. 74 & 75, section 9.9)

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    Section III
    Balance Sheet

         Assets Operating Materials and Supplies   Yes, No, or N/A  Explanation
                       (126 - 137)
    Operating materials and supplies are tangible personal property to be
    consumed in normal operations. Excluded are (1) goods that have been
    acquired to construct real property and equipment for the entity's use (2)
    stockpile materials, (3) goods held under price stabilization programs,
    (4) foreclosed property, (5) seized and forfeited property, and (6)
    inventory. (SFFAS 3, par. 36 & OMB Bulletin 01-09, p.21, section 3.3)
        126. Are operating materials and supplies
         recognized and reported as assets when
        produced or purchased? (SFFAS 3, par. 38)
        127. Are operating materials and supplies
        valued at historical cost, including all
        appropriate purchase and production costs
          incurred to bring the items to their
        current condition and location? (SFFAS 3,
                       par. 42-43)
        128. Are donated operating materials and
    supplies valued at their fair value at the
          time of donation? (SFFAS 3, par. 43)
        129. Are operating materials and supplies
        acquired through exchange of nonmonetary
        assets (e.g., barter) valued at the fair
    value of the asset received at the time of
            the exchange? (SFFAS 3, par. 43)
        130. Are operating materials and supplies
        acquired through exchange of nonmonetary
        assets (e.g., barter) valued at the fair
    value of the asset received at the time of
    exchange, and is any difference between the
        recorded amount of the asset surrendered
        and the fair value of the asset received
         recognized as a gain or loss? (SFFAS 3,
                        par. 43)

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    Section III
    Balance Sheet

    Assets Operating Materials and Supplies (126 - Yes, No, or N/A Explanation
                            137)
        131. Is one of the following historical cost
           flow assumptions used to value ending
         operating materials and supplies under the
         consumption method? a. first-in, first-out
        (FIFO) b. weighted average c. moving average
          d. any other valuation method (such as a
    standard cost system) whose results reasonably
    approximate "a," "b," or "c" (SFFAS 3, par. 42
                           & 44)
    132. Are operating materials and supplies
    stocks, which are maintained because they are
    not readily available in the market or because
    there is more than a remote chance that they
    will eventually be needed (although not
    necessarily in the normal course of
    operations), classified as operating materials
    and supplies held in reserve for future use,
    and reported in one of the following manners?
    a. included in the operating materials and
    supplies line item on the face of the
    financial statements with separate disclosure
    in the footnotes b. shown as a separate line
    item on the face of the financial statements
    (SFFAS 3, par. 45)
    133. Are operating materials and supplies
    identified as excess, obsolete, or
    unserviceable reported in one of the following
    manners? a. included in the operating
    materials and supplies line item on the face
    of the financial statements with separate
    disclosure in the footnotes b. shown as a
    separate line item on the face of the
    financial statements (SFFAS 3, par. 47)
        134. Are excess, obsolete, and unserviceable
         operating materials and supplies valued at
        their estimated net realizable value? (SFFAS
                        3, par. 48)

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    Section III Balance Sheet

         Assets Operating Materials and Supplies (126 -   Yes, No, or Explanation
                              137)                            N/A
         135. When operating materials and supplies are
    declared excess, obsolete, or unserviceable is the
         difference between the carrying amount before
             identification as excess, obsolete, or
         unserviceable and the estimated net realizable
        value recognized as a loss (or gain)? (SFFAS 3,
                            par. 48)
    136. For excess, obsolete, or unserviceable
    operating materials and supplies, are any
    subsequent adjustments to the operating materials
    and supplies' estimated net realizable value or
    any loss (or gain) upon disposal recognized as
    losses (or gains)? (SFFAS 3, par. 48)
    137. Does the entity disclose the following
    information about its operating materials and
    supplies? a. general composition b. basis for
    valuation (including valuation method and any cost
    flow assumptions) c. change from prior years'
    accounting methods, if any d. balances in each
    operating material and supply category23 e. the
    difference between the carrying amount of the
    operating materials and supplies before
    identification as excess, obsolete, or
    unserviceable and their estimated net realizable
    value f. restrictions on the use of materials and
    supplies, if any g. decision criteria for
    identifying each category to which material and
    supplies are assigned h. changes in the criteria
    for identifying the category to which the
    operating materials and supplies are assigned
    (SFFAS 3, par. 36, 37, 45-47, 49, & 50; OMB
    Bulletin 01-09, p. 75, section 9.9)

    23Major categories of operating materials and supplies include (1) items
    held for use; (2) items held in reserve for future uses; and (3) excess,
    obsolete, and unserviceable items.

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    Page 46

    Section III
    Balance Sheet

          Assets Stockpile Materials (138-150)     Yes, No, or N/A  Explanation
    Stockpile materials are strategic and critical materials held due to
    statutory requirements for use in national defense, conservation, or
    national emergencies. Not included under this category are (1) items held
    for sale or use in normal operations, (2) items held for use in the event
    of an agency's operating emergency or contingency, and (3) materials
    acquired to support market prices. (SFFAS 3, par. 51 & OMB Bulletin 01-09,
    p. 21, section 3.3)
    138. Are stockpile materials recognized and
    reported as assets when acquired (i.e.,
    recognized as assets using the consumption
    method)? (SFFAS 3, par. 52)
    139. If the contract between the buyer and
    seller of the stockpile materials is silent
    regarding passage of the title, is title
    assumed to pass upon delivery of the goods?
    (SFFAS 3, par. 52)
         140. Are stockpile materials valued at
    historical cost, including all appropriate
        purchase, transportation, and production
    costs incurred to bring the items to their
        current condition and location? (SFFAS 3,
                        par. 53)
    141. Are abnormal costs, such as excessive
          handling or rework costs, charged to
        operations for the period? (SFFAS 3, par.
                           53)
         142. Is one of the following historical
           cost flow assumptions used to value
        stockpile materials under the consumption
        method? a. first-in, first-out (FIFO) b.
        weighted average c. moving average d. any
    other valuation method (such as a standard
          cost system) whose results reasonably
    approximate "a," "b," or "c" (SFFAS 3, par.
                        52 & 53)

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    Section III
    Balance Sheet

            Assets Stockpile Materials (138-150)      Yes, No, or N/A Explanation
    143. If stockpile materials have either
    suffered a permanent decline in value to an
    amount below cost or have become damaged or
    decayed, has their value been reduced to
    expected net realizable value? (SFFAS 3, par.
    54)
           144. Is the resultant decline in value
    recognized as a loss or expense in the period
           in which it occurs? (SFFAS 3, par. 54)
        145. When stockpile materials are authorized
        to be sold, are those materials disclosed as
        stockpile materials held for sale? (SFFAS 3,
                          par. 55)
        146. Are the stockpile materials authorized
         for sale valued using the same basis used
        before they were authorized for sale? (SFFAS
                        3, par. 55)
        147. Is any difference between the carrying
         amount of the stockpile materials held for
           sale and their estimated selling price
               disclosed? (SFFAS 3, par. 55)
        148. If stockpile materials are sold, is the
         cost removed from stockpile materials and
        reported as a cost of goods sold? (SFFAS 3,
                          par. 55)
        149. Is any gain (or loss) from the sale of
        stockpile materials recognized as a gain (or
           loss) at that time? (SFFAS 3, par. 55)

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    Section III
    Balance Sheet

            Assets Stockpile Materials (138-150)      Yes, No, or N/A Explanation
    150. Does the entity disclose the following
    information about its stockpile materials? a.
    general composition b. basis for valuing
    stockpile materials, including valuation
    method and any cost flow assumptions c.
    changes from prior year's accounting methods,
    if any d. restrictions on the use of the
    material e. balances in each category of
    stockpile material (i.e., stockpile materials
    and stockpile materials held for sale) f.
    decision criteria for grouping stockpile
    material as held for sale g. changes in
    criteria for categorizing stockpile materials
    as held for sale (SFFAS 3, par. 56; OMB
    Bulletin 01-09, pp. 75 & 76, section 9.9)

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    Section III
    Balance Sheet

          Assets Seized Property (151 -158)      Yes, No, or N/A    Explanation
    Seized property includes monetary instruments, real property, and tangible
    personal property belonging to others in actual or constructive possession
    of the custodial agency. This includes illegal drugs, contraband, and
    counterfeit items seized by authorized law enforcement agencies (SFFAS 3,
    par. 59; OMB Bulletin 01-09, p. 22, section 3.3) There may be as many as
    three government entities involved with seized property: (1) the seizing
    agency, (2) the custodial agency, and (3) another agency with a "central
    fund" set up for financial recordkeeping of seizure activities. (SFFAS 3,
    par. 57)
        151. If the central fund is other than
        the seizing or custodial entity, does
    the custodial entity maintain sufficient
          internal records to carry out its
        stewardship responsibility? (SFFAS 3,
                       par. 60)
    152. If monetary instruments are seized,
        are seized assets recognized at market
    value of the monetary instruments, and a
         corresponding liability equal to the
        seized asset value established? (SFFAS
    3, par. 61 & 65; OMB Bulletin 01-09, p.
                   22, section 3.3)
    153. Is the existence of seized property
           other than monetary instruments
        disclosed in a note to the statements
          and accounted for in the entity's
        property management records? (SFFAS 3,
                       par. 62)
    154. Is seized property valued at its
    market value when seized (or as soon
    thereafter as reasonably possible if the
    market value cannot be readily
    determined)? (SFFAS 3, par. 63)
    155. If no active market exists for the
    property in the general area in which it
    was seized, is a value in the principle
         market nearest the place of seizure
               used? (SFFAS 3, par. 63)
    156. Is the valuation of property seized
    under the Internal Revenue Code based on
    the taxpayer's equity (market value less
        any third-party liens)? (SFFAS 3, par.
                         64)

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    Section III
    Balance Sheet

             Assets Seized Property (151 -158)        Yes, No, or N/A Explanation
    157. Does the entity disclose the type of
    seized property in its custody and include the
    following information? a. explanation of what
    constitutes a seizure and a general
    description of the composition of seized
    property b. valuation method(s) c. changes
    from prior years' accounting methods, if any
    d. analysis of change in seized property
    (including dollar value and number of seized
    properties) that are i. on hand at the
    beginning of the year, ii. seized during the
    year, iii. disposed of during the year, and
    iv. on hand at the end of the year, as well as
    known liens or other claims against the
    property (SFFAS 3, par. 66; OMB Bulletin
    01-09, p. 22, section 3.3; p. 76, section 9.9)
    158. Does the entity also disclose the method
        of disposal of seized property, if material?
    (SFFAS 3, par. 66; OMB Bulletin 01-09, p. 76,
                        section 9.9)

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    Section III
    Balance Sheet

             Assets Forfeited property (159 - 172)       Yes, No, Or  Explanation
                                                             N/A
    Forfeited property consists of (a) property (i.e., monetary instruments,
    intangible property, real property, and tangible personal property)
    acquired through forfeiture proceedings, (b) property acquired to satisfy
    a tax liability, and (c) unclaimed and abandoned merchandise. (SFFAS 3,
    par. 67 & 68 & OMB Bulletin 01-09, p. 22, section 3.3)
        159. When a forfeiture judgment is obtained for
           seized monetary instruments: a. Are they
    reclassified as forfeited monetary instruments at
            the current market value? b. Is revenue
    recognized in an amount equal to the value of the
        monetary asset? c. Is the liability associated
              with the seized monetary instrument
          classification removed? (SFFAS 3, par. 69)
    160. When a forfeiture judgment is obtained for
    real, tangible, and intangible property: a. Is
    the property recorded as an asset at its fair
    value at the time of forfeiture? b. Is an
    allowance account (contra-asset account)
    established for liens or claims from third party
    claimants against forfeited property? c. Is
    offsetting deferred revenue recognized? (SFFAS 3,
    par. 70)
    161. For forfeited property that cannot be sold
    due to legal restrictions, but may be either
    donated or destroyed, does the entity in lieu of
    recognizing financial value make the required
    disclosures concerning the composition,
    valuation, and disposition of the property?
    (SFFAS 3, par. 71 & 78)
    162. Is revenue from the sale of forfeited
    property recognized when sold? (SFFAS 3, par. 72)

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    Section III
    Balance Sheet

           Assets Forfeited property (159 - 172)      Yes, No, Or N/A Explanation
            Forfeited property not held for sale may be placed into official use,
    transferred to another federal agency, distributed to a state or local law
    enforcement agency, or distributed to a foreign government. (SFFAS 3, par.
                                                                              73)
           163. When a determination is made that
    forfeited property will not be held for sale,
           but distributed in one of the manners
    described above, is the property reclassified
         as forfeited property held for donation or
                  use? (SFFAS 3, par. 74)
        164. Is revenue associated with property not
          disposes of through sale recognized upon
        approval of distribution and the previously
    established deferred revenue reversed? (SFFAS
                        3, par. 74)
    165. Is a distinction maintained in the
    entity's accounting reports between revenue
    arising from the sale of forfeited property
    and revenue arising from forfeited property
    being transferred, donated, or placed into
    official use? (SFFAS 3, par. 72-75 & Table 1)
    166. Is property acquired by the government to
    satisfy a taxpayer's liability recorded when
    title to the property passes to the federal
    government, and is a credit made to the
    related account receivable? (SFFAS 3, par. 76)
    167. Is the property acquired in satisfaction
    of a taxpayer's liability valued at its market
        value less any third party liens? (SFFAS 3,
                          par. 76)
    168. Upon sale of forfeited property acquired
    in satisfaction of a taxpayer's liability, is
    revenue recognized in the amount of the sale
    proceeds, and are the property and third party
    liens removed from the accounts? (SFFAS 3,
    par. 76)
        169. Is unclaimed and abandoned merchandise
        recorded with an offsetting deferred revenue
    when statutory and/or regulatory requirements
        for forfeiture have been met? (SFFAS 3, par.
                            77)

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    Section III
    Balance Sheet

           Assets Forfeited property (159 - 172)      Yes, No, Or N/A Explanation
        170. Is unclaimed and abandoned merchandise
    valued at its market value? (SFFAS 3, par. 77)
    171. Upon the sale of unclaimed and abandoned
    merchandise, is revenue recognized in the
    amount of the sale proceeds, and the
    merchandise and the deferred revenue removed
    from the accounts? (SFFAS 3, par. 77)
    172. Does the entity disclose the following
    information about forfeited property? a.
    composition of the property b. valuation
    method(s) c. restrictions on the use or
    disposition of forfeited property d. changes
    from prior year's accounting methods, if any
    e. analysis of the changes in forfeited
    property by dollar amount and number of
    forfeitures that includes: i. forfeitures on
    hand at the beginning of the year ii.
    additions iii. disposals and method of
    disposition iv. forfeitures on hand at the end
    of the year f. if available, an estimate of
    the value of property or funds to be
    distributed to other federal, state, and local
    agencies in future reporting periods (SFFAS 3,
    par. 78; OMB Bulletin 01-09, p. 76, section
    9.9)

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    Section III Balance Sheet

        Assets Goods Held Under Price Support    Yes, No, or N/A    Explanation
        and Stabilization Programs (173 - 186)
    Goods acquired under price support and stabilization programs (i.e.,
    commodities) are items of commerce or trade (usually farm commodities)
    having an exchange value. Producers of the goods (1) are either given
    nonrecourse loans under which they can, at their option, repay the loan
    with interest or surrender their commodity pledged as collateral for the
    loan or (2) may enter into purchase agreements that allow the producer of
    the option to sell commodities to the government (the Commodity Credit
    Corporation) at the price support rate. (SFFAS 3, par. 92, 93, & 94)
    173. Are nonrecourse loans recognized as
    assets when the loan principal is
    disbursed and recorded at the amount of
    the loan principal? (SFFAS 3, par. 96)
    174. Is interest accrued on nonrecourse
              loans? (SFFAS 3, par. 96)
    175. When the entity has entered into a
    purchase agreement and there is an
    expected loss: a. Is a loss24 recognized
    if it is probable that a loss has been
    incurred on purchase agreements
    outstanding and the amount of the loss
    can be reasonably measured? b. Is a
    corresponding liability recognized?
    (SFFAS 3, par. 97 & 103)
    176. If the contingent loss arising from
    a purchase agreement is not recognized
    because it is less than probable or is
    not reasonably measurable, is the
    contingent loss disclosed if it is at
    least "reasonably possible that a loss
    may occur?" (SFFAS 3, par. 98)
    177. When commodities are acquired to
    satisfy a nonrecourse loan or purchase
    agreement, are they recognized and
    reported as assets at the lower of cost
    or net realizable value? (SFFAS 3, par.
    99 & 104)

    24The loss amount is the difference between the contract price and the net
    realizable value of the commodities.

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    Section III
    Balance Sheet

           Assets Goods Held Under Price Support and      Yes, No, or Explanation
               Stabilization Programs (173 - 186)             N/A
         178. When commodities acquired to satisfy the
    terms of a nonrecourse loan or purchase agreement
        are sold: a. Are revenues recognized? b. Is the
        carrying amount of the commodities removed from
    the asset account and reported as a cost of goods
                   sold? (SFFAS 3, par. 100)
    179. When commodities are held for purposes other
    than sale, is the carrying amount reported as an
    expense and removed from the commodity asset
    account upon transfer? (SFFAS 3, par. 101)
    180. Are all nonrecourse loans recorded at their
    face amounts, and is a valuation allowance set up
    to recognize losses on such loans when it is "more
    likely than not" (i.e., more than a 50 percent
    chance) that loans will not be totally collected?
    (SFFAS 3, par. 102)
           181. Is this allowance reestimated on each
         financial reporting date? (SFFAS 3, par. 102)
        182. Does the cost for the commodities acquired
    through a nonrecourse loan settlement include the
        following amounts? a. loan principal (excluding
          interest) b. processing and packaging costs
        incurred after acquisition c. other costs (e.g.,
        transportation) incurred in taking title to the
                 commodity (SFFAS 3, par. 105)
    183. Does the cost for commodities acquired though
    a purchase agreement include the following
    amounts? a. the unit price agreed upon in the
    purchase agreement multiplied by the number of
    units purchased b. other costs incurred in taking
    title to the commodity (SFFAS 3, par. 106)

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    Section III
    Balance Sheet

         Assets Goods Held Under Price Support and    Yes, No, or N/A Explanation
             Stabilization Programs (173 - 186)
    184. Is any adjustment necessary to reduce the
    carrying amount of the acquired commodities to
    the lower of cost or net realizable value
    recognized as a loss on farm price support in
    the current period and recorded in a commodity
    valuation allowance? (SFFAS 3, par. 107)
    185. Are recoveries of losses recognized up to
    the point of any previously recognized losses
    on the commodities, and is the commodity
    valuation allowance reduced accordingly in the
    current period? (SFFAS 3, par. 107)

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    Section III
    Balance Sheet

           Assets Goods Held Under Price Support and      Yes, No, or Explanation
               Stabilization Programs (173 - 186)             N/A
    186. Is the following information related to goods
    held under price support and stabilization
    programs disclosed? a. basis for valuing
    commodities including valuation method and cost
    flow assumptions (e.g., FIFO, weighted average,
    moving average, specific identification) b.
    changes from prior years' accounting methods, if
    any c. restrictions on the use, disposal, or sale
    of commodities d. analysis of the changes in
    dollar amount and volume of commodities, including
    those i. on hand at the beginning of the year ii.
    acquired during the year iii. disposed of during
    the year by method of disposition iv. on hand at
    the end of the year v. on hand at year's end and
    estimated to be donated or transferred during the
    coming period vi. received as a result of
    surrender of collateral related to nonrecourse
    loans outstanding vii. dollar value and volume of
    purchase agreement commitments (SFFAS 3, par. 108
    & 109; OMB Bulletin 01-09, pp. 76 & 77, section
    9.9)

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    Section III
    Balance Sheet

    Assets General Property, Plant, & Equipment (Net) Yes, No, or  Explanation
                          (187 - 233)                        N/A
    General property, plant, and equipment (PP&E) are any property, plant, and
           equipment used in providing goods or services. (SFFAS 6, par. 23)
    187. Has the entity established, disclosed, and
    consistently followed appropriate capitalization
    thresholds for property, plant, and equipment
    (PP&E) suitable to its financial and operational
    conditions? (SFFAS 6, par. 13)
    188. Does the entity follow a policy that ensures
        its PP&E consists of tangible assets, including
        land, that meet the following criteria? a. have
    estimated useful lives of 2 years or more b. are
        not intended for sale in the ordinary course of
        operations c. are acquired or constructed with
        the intention of being used or being available
           for use by the entity (SFFAS 6, par. 17)
         189. Does PP&E also consist of the following
    items? a. assets acquired through capital leases,
         including leasehold improvements b. property
         owned by the reporting entity in the hands of
          others (e.g., state and local governments,
        colleges and universities, federal contractors)
               c. land rights (SFFAS 6, par. 18)

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    Section III
    Balance Sheet

        Assets General Property, Plant, & Equipment   Yes, No, or N/A Explanation
                     (Net) (187 - 233)
    Capital leases are leases that transfer substantially all the benefits and
    risks of ownership to the lessee. Operating leases are leases in which the
        federal entity does not assume the risks of ownership of PP&E. Multiyear
           service contracts and multiyear purchase agreements for expendable
    commodities are not capital leases. (SFFAS 6, par. 20, footnote 22; SFFAS
                                      5, par. 43)
         190. Does the entity classify a lease as a
        capital lease if at its inception the lease
        meets one or more of the following criteria?
          a. the lease transfers ownership of the
    property to the lessee by the end of the lease
          term b. the lease contains an option to
         purchase the leased property at a bargain
    price c. the lease term is equal to or greater
    than 75 percent of the estimated economic life
        of the lease property, and the beginning of
        the lease term does not fall within the last
         25 percent of the total estimated economic
        life of the property d. the present value of
          rental and other minimum lease payments,
           excluding that portion of the payments
    representing executory cost, equals or exceeds
         90 percent of the fair value of the leased
    property, and the beginning of the lease terms
        does not fall within the last 25 percent of
          the total estimated economic life of the
        property (SFFAS 6, par. 20; SFFAS 5, par. 43

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    Section III Balance Sheet

        Assets General Property, Plant, & Equipment   Yes, No, or N/A Explanation
                     (Net) (187 - 233)
         191. Does the general PP&E asset line item
    exclude the following items? a. items held in
        anticipation of physical consumption such as
    operating materials and supplies b. items the
    federal entity has a reversionary interest in
        c. heritage assets (except multiuse heritage
    assets)25 d. stewardship land (i.e., land not
        included in general PP&E) (SFFAS 6, par. 19,
            21, 57, 58, & 68; SFFAS 16, par. 6)
    192. In determining the level at which the
    entity categorizes its PP&E, has the entity
    considered the following factors? a. the cost
    of maintaining different accounting methods
    for property and the usefulness of the
    information b. the diversity of the PP&E
    (e.g., useful lives, value, alternative uses)
    c. the programs being served by the PP&E d.
    future disposition of the PP&E (SFFAS 6, par.
    22)

    25Multiuse heritage assets are heritage assets used predominately in
    general government operations (e.g., the main Treasury building, which is
    used as an office building).

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    Page 61

    Section III Balance Sheet

    Assets General Property, Plant, & Equipment (Net)  Yes, No, or Explanation
                          (187 - 233)                         N/A
         193. Does the entity categorize an asset under
           general PP&E if it has one or more of the
    following characteristics? a. it could be used for
          alternative purposes (e.g., by other federal
             programs, state or local governments,
        nongovernmental entities) but is used to produce
    goods or services or to support the mission of the
             entity b. it is used for business-type
           activities26 c. it is used by entities in
    activities whose costs can be compared to those of
          other entities performing similar activities
    (e.g., federal hospital services in comparison to
        other hospitals) (SFFAS 6, par. 23; OMB Bulletin
                   01-09, p. 22, section 3.3)
             194. Is PP&E of entities operating as
        business-type activities categorized as general
         PP&E whether or not it meets the definition of
         other PP&E categories (e.g., heritage assets)?
         (SFFAS 6, par. 24; OMB Bulletin 01-09, p. 22,
                          section 3.3)
           195. Are land and land rights specifically
        acquired for or in connection with other general
    PP&E included in general PP&E? (SFFAS 6, par. 25;
          OMB Bulletin 01-09, p. 22 & 23, section 3.3)
    196. Is all general PP&E recorded at cost? (SFFAS
                          6, par. 26)

    26A business-type activity is defined as a significantly self-sustaining
    activity that finances its continuing cycle of operations through the
    collection of exchange revenue.

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    Section III
    Balance Sheet

    Assets General Property, Plant, & Equipment (Net)  Yes, No, or Explanation
                          (187 - 233)                         N/A
    197. Does the cost of general PP&E include all
    costs incurred to bring the PP&E to a form and
    location suitable for its intended use, such as
    the following? a. amounts paid to vendors b.
    transportation charges to the point of initial use
    c. handling and storage costs d. labor and other
    direct or indirect production costs (for assets
    produced or constructed) e. costs of engineering,
    architectural, and other outside services for
    designs, plans, specifications, and surveys f.
    acquisition and preparation costs of buildings and
    other facilities g. an appropriate share of the
    cost of the equipment and facilities used in
    construction work h. fixed equipment and related
    installation costs required for activities in a
    building or facility i. direct costs of
    inspection, supervision, and administration of
    construction contracts and construction work j.
    legal and recording fees and damage claims k. fair
    value of facilities and equipment donated to the
    government l.material amounts of interest costs
    paid (SFFAS 6, par. 26)

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    Section III Balance Sheet

        Assets General Property, Plant, & Equipment   Yes, No, or N/A Explanation
                     (Net) (187 - 233)
         198. Is the cost of general PP&E acquired
         under a capital lease equal to the amount
        recognized as a liability27 for the capital
         lease at its inception? (SFFAS 6, par. 29)
    199. Is the cost of general PP&E acquired
    through donation, will, or judicial process,
    excluding forfeiture, capitalized at estimated
    fair value at the time acquired by the
    government? (SFFAS 6, par. 30)
    200. Is general PP&E transferred from other
    federal entities capitalized at the book value
    recorded by the transferring entity? (SFFAS 6,
    par. 31)
    201. Is general PP&E transferred from other
    federal entities capitalized at the fair value
    at the time of the transfer, if the receiving
    entity cannot reasonably ascertain the book
    value of the PP&E being transferred? (SFFAS 6,
    par. 31)
    202. If general PP&E is acquired through
    exchange between a federal entity and a
    nonfederal entity, is it capitalized at the
    fair value of the PP&E surrendered at the time
    of the exchange? (SFFAS 6, par. 32)
    203. If general PP&E is acquired through
    exchange between a federal entity and a
    nonfederal entity and the fair value of the
    PP&E is more readily determinable than that of
    the PP&E surrendered, is the acquired general
    PP&E capitalized at it's fair value? (SFFAS 6,
    par. 32)
    204. If general PP&E is acquired through
    exchange between a federal entity and a
    nonfederal entity and neither the fair value
    of the PP&E acquired or surrendered is
    determinable, is the acquired general PP&E
    capitalized at the book value of the PP&E
    surrendered? (SFFAS 6, par. 32)

    27The liability is the net present value of lease payments unless the net
    present value of the lease payments exceeds the fair value of the asset,
    in which case the amount recorded as the liability would be the fair value
    of the asset. (SFFAS 5, par. 44)

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    Page 64

    Section III
    Balance Sheet

        Assets General Property, Plant, & Equipment   Yes, No, or N/A Explanation
                     (Net) (187 - 233)
         205. If cash is included in an exchange of
        general PP&E between a federal entity and a
           nonfederal entity, is the cost of PP&E
          acquired increased by the amount of cash
    surrendered or decreased by the amount of cash
                received? (SFFAS 6, par. 32)
    206. For general PP&E acquired through
    exchange between a federal entity and a
    nonfederal entity, is any difference between
    the net recorded amount of the PP&E
    surrendered and the cost of the PP&E acquired
    recognized as a gain or loss? (SFFAS 6, par.
    32)
        207. Is PP&E recognized when title passes to
    the acquiring entity or when PP&E is delivered
        to the entity or to an agent of the entity?
                     (SFFAS 6, par. 34)
    208. If general PP&E is under construction, is
        it recorded as construction work in process
            until it is placed into service and
        transferred to general PP&E? (SFFAS 6, par.
                            34)
           Depreciation expense is calculated through the systematic and rational
            allocation of the cost of general PP&E, less its estimated salvage or
            residual value over its estimated useful life. (SFFAS 6, par. 35, OMB
                                              Bulletin 01-09, p. 23, section 3.3)
    209. Is depreciation expense recognized on all
    general PP&E, except land and land rights of
    unlimited duration? (SFFAS 6, par. 35)
        210. Do estimates of useful life of general
        PP&E consider such factors as physical wear
        and tear and technological change? (SFFAS 6,
                          par. 35)

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    Section III Balance Sheet

    Assets General Property, Plant, & Equipment (Net)  Yes, No, or Explanation
                          (187 - 233)                         N/A
    211. Are changes in estimated useful life or
    salvage and residual value of general PP&E
    accounted for in the period of change and future
    periods? (SFFAS 6, par. 35)
          212. Is the depreciation method systematic,
        rational, and best reflective of the use of the
    PP&E, including the use of a composite or a group
          methodology28 whereby the costs of PP&E are
        allocated using the same allocation rate? (SFFAS
                6, par. 35; SFFAS 23, par. 9(f))
    213. Are depreciation and amortization expenses
    accumulated in contra-asset accounts? (SFFAS 6,
    par. 36)
    214. Are costs that either extend the useful life
    of existing general PP&E or enlarge or improve its
    capacity capitalized and depreciated/amortized
    over the remaining useful life of the asset?
    (SFFAS 6, par. 37)
    215. When general PP&E is disposed of, retired, or
        removed from service, is the asset removed from
          the asset accounts along with the associated
        accumulated depreciation/amortization? (SFFAS 6,
                            par. 38)
    216. Are the differences between the book value of
    the PP&E and the amounts realized, recognized as a
    gain or loss in the period that the general PP&E
    is disposed of, retired or removed from service?
    (SFFAS 6, par. 38)
    217. Is general PP&E removed from general PP&E
    accounts along with associated accumulated
    depreciation/amortization if prior to disposal,
    retirement, or removal from service, it no longer
    provides service in the operations of the entity?
    (SFFAS 6, par. 39)

    28The composite methodology is a method of calculating depreciation that
    applies a single average rate to a number of heterogeneous assets that
    have dissimilar characteristics and service lives. The group methodology
    is a method of calculating depreciation that applies a single, average
    rate to a number of homogenous assets having similar characteristics and
    service lives.

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    Section III
    Balance Sheet

    Assets General Property, Plant, & Equipment (Net)  Yes, No, or Explanation
                          (187 - 233)                         N/A
    218. Is such PP& E that has been removed from the
        asset accounts recorded in an appropriate asset
         account at its expected net realizable value?
                       (SFFAS 6, par. 39)
    219. Is any difference in the book value and its
    expected net realizable value of the about-to-be
    disposed, retired, or removal-from-service PP&E
    recognized as a gain or loss in the period of
    adjustment? (SFFAS 6, par. 39)
    220. Is the expected net realizable value of such
    PP&E assets adjusted at the end of each accounting
        period, and are any further adjustments in value
        recognized as a gain or loss? (SFFAS 6, par. 39)
        221. If historical cost information for existing
         general PP&E has not been maintained, are cost
    estimates based on either of the following costs?
          a. the cost of similar assets at the time of
    acquisition b. the current cost of similar assets
           discounted for inflation since the time of
                 acquisition (SFFAS 6, par. 40)

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    Section III Balance Sheet

    Assets General Property, Plant, & Equipment (Net)  Yes, No, or Explanation
                          (187 - 233)                         N/A
          222. For general PP&E previously considered
             national defense PP&E, is the initial
    capitalization amount for these assets the initial
    historical cost for the items including any major
    improvements or modifications? (SFFAS 23, par. 10)
          223. For general PP&E previously considered
         national defense PP&E where obtaining initial
         historical cost is not practical, is estimated
           historical cost used, based on one of the
         following alternatives? a. current replacement
    cost of similar items, deflated through the use of
         price-level indexes to the acquisition year or
        estimated acquisition year if the actual year is
         unknown b. other information indicating amount
          expended, such as budget, appropriation, or
    engineering documents and other reports reflecting
        amounts expended c. other reasonable approaches
        for estimating historical cost29 (SFFAS 23, par.
                            12 & 13)
          224. For general PP&E previously considered
         national defense PP&E that was in service upon
          implementation of SFFAS 23, are cleanup cost
    liabilities adjusted as needed?30 (SFFAS 23, par.
                              15)

    29For example, the latest acquisition cost may be substituted for current
    replacement cost in some situations.

    30This adjustment may be needed because the Department of Defense may have
    already recognized the total estimated cleanup costs as a liability and
    expense for some military equipment (per paragraph 101 of SFFAS 6).

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 68

    Section III Balance Sheet

    Assets General Property, Plant, & Equipment (Net)  Yes, No, or Explanation
                          (187 - 233)                         N/A
    225. Is accumulated depreciation/amortization
    recorded based on one of the following methods? a.
    the estimated cost of the PP&E and the number of
    years the PP&E has been in use relative to its
    estimated useful life b. the PP&E's estimated net
    remaining cost31 and the depreciation/amortization
    charged over the remaining life based on that net
    remaining cost c. a composite or a group
    methodology whereby the costs of PP&E are
    allocated using the same allocation rate (SFFAS 6,
    par. 41; SFFAS 23, par. 9(f))
    226. If general PP&E would have been substantially
    depreciated or amortized had it been recorded upon
    acquisition, does the entity weigh materiality and
           cost-benefit in considering either of the
             following alternatives? a. record only
         improvements made during the period beyond the
        initial expected useful life of general PP&E b.
    make an aggregate entry for whole classes of PP&E
             (e.g., entire facilities rather than a
    building-by-building estimate). (SFFAS 6, par. 42)
    227. In recording existing general PP&E, is the
    difference in amounts added to asset and
    contra-accounts credited (or charged) to the net
    position of the entity, with the amount of the
    adjustment shown as a "prior period adjustment" in
    the Statement of Changes in Net Position? (SFFAS
    6, par. 43)

    31Net remaining cost is the original cost of the asset less any
    accumulated depreciation/amortization to date (i.e., book value).

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    Section III
    Balance Sheet

    Assets General Property, Plant, & Equipment (Net) Yes, No, or  Explanation
                          (187 - 233)                        N/A
    228. In recording existing general PP&E
    previously identified as national defense PP&E,
    is the difference in amounts added to asset and
    contra accounts reported as a "change in
    accounting principle" and reflected as an
    adjustment to the beginning balance of cumulative
    results of operations in the statement of changes
    in net position, for the period the change is
    made? (SFFAS 23, par. 10 & 16)
    229. Does the entity make the following minimum
    disclosures about its general PP&E? a. the cost,
    associated accumulated depreciation, and book
    value by major class (e.g., building and
    structures, fixtures, equipment) b. the estimated
    useful lives for each major class c. the
    method(s) of depreciation for each major class d.
    capitalization threshold(s) including any changes
    in thresholds(s) during the period e.
    restrictions on the use or convertibility of
    general PP&E (SFFAS 6, par. 45; OMB Bulletin
    01-09, p. 77, section 9.10)
         Property, plant, and equipment are classified as heritage assets if they
    have (1) historical or natural significance; (2) cultural, educational, or
            artistic importance; or (3) significant architectural characteristic.
         (SFFAS 6, par. 57) Multiuse heritage assets are heritage assets that are
        predominately used in general government operations (e.g., buildings such
             as the main Treasury building, which is used as an office building).
                       (SFFAS 16, par. 6; OMB Bulletin 01-09, p. 23, section 3.3)
    230. If the predominant use of the heritage
    asset(s) is in general government operations, is
    the acquisition, betterment, or reconstruction of
    the asset(s) capitalized as general PP&E and
    depreciated over its useful life? (SFFAS 16, par.
    6 & 9; OMB Bulletin 01-09, p. 23, section 3.3; p.
    98, section 10.2A)

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    Section III
    Balance Sheet

        Assets General Property, Plant, & Equipment   Yes, No, or N/A Explanation
                     (Net) (187 - 233)
        231. Does the entity also include a footnote
    disclosure explaining that "physical quantity"
        information for the multiuse heritage assets
          is included in supplemental stewardship
    reporting for heritage assets? (SFFAS 16, par.
    9; OMB Bulletin 01-09, p. 23, section 3.3; p.
                     98, section 10.2A)
         232. Are multiuse heritage assets acquired
          through donation or devise recognized as
    general PP&E at the assets' fair value? (SFFAS
                        16, par. 11)
    233. For multiuse heritage assets acquired
    through donation or devise, are the assets
    fair value also recognized as "nonexchange
    revenue," as defined in SFFAS 7? (SFFAS No.
    16, par. 11)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 71

    Section III
    Balance Sheet

                Assets Software (234 - 262)           Yes, No, or N/A Explanation
            Software includes the application and operating system programs,
         procedures, rules, and any associated documentation pertaining to the
         operation of a computer system or program. "Internal use software" is
          software that is purchased from commercial vendors "off the shelf,"
    internally developed, or contractor-developed solely to meet the entity's
                   internal or operational needs. (SFFAS 10, par. 8)
        234. Does the entity capitalize the cost of
           software when such software meets the
            following criteria? a. specifically
    identifiable b. determinate life of 2 years or
    more c. not intended for sale in the ordinary
    course of operations d. acquired or developed
    with the intention of being used by the entity
        e. meets the criteria for general property,
         plant, and equipment in that it is used in
    providing goods and services (SFFAS 6, par. 17
                 & SFFAS 10, par. 15 & 38)
        235. Does the capitalized cost of internally
          developed software include the full cost
         (i.e., direct and indirect costs) incurred
    during the software development stage? (SFFAS
                        10, par. 16)

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    Section III Balance Sheet

                  Assets Software (234 - 262)             Yes, No, or Explanation
                                                              N/A
    236. Are capitalized internally developed software
    development costs limited to costs incurred after
    the following steps have been taken? a. management
    authorizes and commits to a computer software
    project and believes that it is more likely than
    not that the project will be completed and the
    software will be used to perform the intended
    function with an estimated service life of 2 years
    or more b. the conceptual formulation, design, and
    testing of possible software project alternatives
    (i.e., preliminary design stage) have been
    completed. (SFFAS 10, par. 16)
         237. Do software capitalization costs include
           costs for new software32 and documentation
                  manuals? (SFFAS 10, par. 17)
          238. Do the capitalized costs for commercial
        off-the-shelf (COTS) software include the amount
            paid to the vendor? (SFFAS 10, par. 18)
               239. Do the capitalized costs for
        contractor-developed software include the amount
    paid to a contractor to design, program, install,
        and implement the software? (SFFAS 10, par. 18)
    240. Does the entity capitalize material internal
            costs incurred to implement the COTS or
        contractor-developed software and otherwise make
             it ready for use? (SFFAS 10, par. 18)

    32Examples of costs for new software are salaries of programmers, systems
    analysts, project managers, and administrative personnel; associated
    employee benefits; outside consultants' fees; rent; and supplies.

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    Section III Balance Sheet

                  Assets Software (234 - 262)             Yes, No, or Explanation
                                                              N/A
    241. Does the entity expense as incurred all data
    conversion costs for internally developed,
    contractor-developed, or COTS software as well as
    the cost to develop or obtain software that allows
    for access or conversion of existing data to the
    new software? (SFFAS 10, par. 19)
    242. Does the entity expense costs incurred after
    the completion of final acceptance testing? (SFFAS
                          10, par. 20)
    243. Does the entity treat software that serves
    both internal uses and stewardship purposes33 as
    internal use software and capitalize it to the
    extent such software meets criteria for general
    PP&E? (SFFAS 10, par. 21)
    244. Is computer software that is integrated into
        and necessary to operate general PP&E,34 rather
        than perform an application, considered part of
        the PP&E of which it is an integral part, and is
    it capitalized and depreciated accordingly? (SFFAS
                          10, par. 22)
    245. If the entity purchased software as part of a
        package of products and services, does it use a
    reasonable estimate of the relative fair value of
    the individual elements in allocating the cost as
    capitalizable or noncapitalizable (i.e., expense)
                 elements? (SFFAS 10, par. 23)
    246. If the entity purchased software as part of a
    package of products and services, does it expense
           software costs that are not susceptible to
         allocation between maintenance and relatively
            minor enhancements? (SFFAS 10, par. 23)

    33Software that serves both internal uses and stewardship purposes is
    referred to as multiuse software. An example is a global positioning
    system used in connection with national defense activities and general
    operating activities and services.

    34For example, such software could include software necessary to operate
    airport radar and computer operated lathes.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
    Page 74

    Section III
    Balance Sheet

                    Assets Software (234 - 262)              Yes, No, Explanation
                                                              or N/A
          247. Has the entity established capitalization
        thresholds for its internal-use software including
        bulk purchases of software programs and modules or
         components of a total software system? (SFFAS 10,
                             par. 24)
    248. Does the entity capitalize the acquisition cost
    of enhancements to existing internal-use software, as
    well as related modules, when it is more likely than
        not that they will result in significant additional
                 capabilities? (SFFAS 10, par. 25)
    249. Does the entity expense, in the period incurred,
    the cost of minor enhancements resulting from ongoing
    systems maintenance as well as the purchase of
    enhanced versions of software for a minimal charge?
    (SFFAS 10, par. 26)
         250. Are costs incurred solely to repair a design
    flaw or to perform minor upgrades that may extend the
            useful life of the software without adding
            capabilities expensed? (SFFAS 10, par. 27)
    251. Does the entity recognize a loss upon impairment
              of computer software if either of these
        postimplementation/operational conditions apply? a.
           the software is no longer expected to provide
         substantive service potential and will be removed
    from service b. a significant reduction occurs in the
    capabilities, functions, or uses of the software (or
             module thereof) (SFFAS 10, par. 28 & 29)

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    Section III
    Balance Sheet

                  Assets Software (234 - 262)             Yes, No, or Explanation
                                                              N/A
    252. If impaired software is to remain in use, is
           the loss due to impairment measured as the
        difference between the book value and either of
         the following amounts? a. the cost to acquire
         software that would perform similar remaining
         functions (i.e., unimpaired functions) b. the
           portion of book value attributable to the
         remaining functional elements of the software
                      (SFFAS 10, par. 29)
          253. If the loss due to impairment cannot be
         determined, is the book value of the software
        amortized over the remaining useful life of the
                 software? (SFFAS 10, par. 29)
        254. If impaired software is to be removed from
    use, is the loss due to impairment measured as the
         difference between the book value and any net
          realizable value (NRV)? (SFFAS 10, par. 30)
    255. In situations of impaired software to be
    removed from use, does the entity transfer the
    NRV, if any, to an appropriate asset account until
    such time as the software is disposed of and the
    NRV realized? (SFFAS 10, par. 30)
    256. If the entity's managers conclude that it is
    no longer "more likely than not" that
    developmental software or a module thereof will be
    completed and placed in service, is the
    accumulated book value or the balance in a work in
    process account, if applicable, reduced to reflect
    the expected NRV and a loss recognized? (SFFAS 10,
    par. 31)
    257. Does the entity amortize capitalized internal
        use software systematically and rationally over
    the estimated useful life of the software? (SFFAS
                          10, par. 32)

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    Section III
    Balance Sheet

                Assets Software (234 - 262)           Yes, No, or N/A Explanation
          258. Does amortization of each module or
         component of a software project begin when
    that module or component has been successfully
                tested? (SFFAS 10, par. 33)
    259. If the use of a module is dependent on
    the completion of another module(s), does the
    amortization begin only when both that module
    and the other module(s) have successfully
    completed testing? (SFFAS 10, par. 33)
    260. Are additions to the book value or
    changes in useful life of capitalized software
    treated prospectively (i.e., during the period
    of change and future periods only) when the
    software is amortized? (SFFAS 10, par. 34)
           261. When the entity replaces existing
        internal-use software with new software, is
          the unamortized cost of the old software
             expensed when the new software has
         successfully completed testing? (SFFAS 10,
                          par. 34)
        262. Does the entity disclose, if material,
          the following information regarding its
    capitalized software? a. the cost, associated
    amortization, and book value b. the estimated
        useful life for each major class of software
        c. the method(s) of amortization (SFFAS 10,
                 par. 35; SFFAS 6, par. 45)

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    Section III
    Balance Sheet

            Assets Other Assets (263 - 268)       Yes, No, or N/A   Explanation
    263. Does the entity include under the
    "other" assets category assets that are
    not reported in a separate category on the
    face of the balance sheet? (OMB Bulletin
    01-09, p. 23, section 3.3)
    264. Are other assets listed and described
    in a note to the financial statements and
    broken out by major homogenous components
           and intragovernmental versus other
    (nonfederal) entity assets)? (OMB Bulletin
              01-09, p. 78, section 9.11)
    Advances are cash outlays made by a federal entity to its employees,
    contractors, grantees, or others to cover the recipient's anticipated
    expenses or as advance payments for the costs of goods and services
    acquired by an entity. (SFFAS 1, par. 57 & OMB Bulletin 01-09, p. 23,
    section 3.3) Prepayments are payments made by a federal entity to cover
    certain periodic expenses before those expenses are incurred (SFFAS 1,
    par. 58; OMB Bulletin 01-09, p. 23, section 3.3) Progress payments on work
    in progress are not included in advances and prepayments (OMB Bulletin
    01-09, p. 23, section 3.3)
    265. Are advances and prepayments recorded
        as assets and disclosed in the notes to
        the financial statements? (SFFAS 1, par.
         59; OMB Bulletin 01-09, p. 23, section
                          3.3)
    266. Are amounts of advances or
    prepayments that are subject to a refund
    transferred to accounts receivable? (SFFAS
    1, par. 59)
    267. Are advances and prepayments paid out
    reported separately as assets and not
    netted against the liability for advances
    and prepayments that the entity received?
    (SFFAS 1, par. 60)
    268. Are advances and prepayments that are
    made to federal entities accounted for and
    reported separately from those made to
    nonfederal entities? (SFFAS 1, par. 61)

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    Section III Balance Sheet

         Liabilities Liabilities in General     Yes, No, or N/A     Explanation
                    (269 - 272)
    Liabilities of the federal agencies are reported under two major
    categories: (1) liabilities covered by budgetary resources35 and (2)
    liabilities not covered by budgetary resources.36 Within each of these two
    categories, liabilities are classified as (1) intragovernmental
    liabilities, which are amounts owed to other federal entities or (2)
    governmental liabilities, which are amounts owed to nonfederal entities by
    the federal government or an entity within the federal government. (SFFAS
    1, par. 21; SFFAS 5, footnote 1 in summary; OMB Bulletin 01-09, p. 24,
    section 3.4 & pp. 78 & 79, section 9.12)
    269. Are liabilities covered by
    budgetary resources and liabilities
    not covered by budgetary resources
    combined on the face of the balance
    sheet? (OMB Bulletin 01-09, p. 17,
    section 3.1, p. 24, section 3.4 & pp.
    78 & 79, section 9.12)

    35Liabilities covered by budgetary resources are liabilities covered by
    realized budgetary resources as of the balance sheet date. Budgetary
    resources include (1) new budget authority, (2) unobligated balances of
    budgetary resources at the beginning of the year or net transfers of prior
    year balances during the year, (3) spending authority from offsetting
    collections (credited to an appropriation or fund account), (4) recoveries
    of unexpired budget authority through downward adjustments of prior year
    obligations, and (5) permanent indefinite appropriations or borrowing
    authority, which have been enacted and signed into law as of the balance
    sheet date, provided that the resources may be apportioned by OMB without
    further action by the Congress and without a contingency having to be met.

    36Liabilities not covered by budgetary resources are liabilities for which
    congressional action is needed before budgetary resources can be provided.

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    Section III Balance Sheet

         Liabilities Liabilities in General (269 - 272)   Yes, No, or Explanation
                                                              N/A
    270. Are the amounts and types of liabilities not
    covered by budgetary resources disclosed? (SFFAS1,
    par. 80 & 86; OMB Bulletin 01-09, p. 17, section
    3.1 & p. 24, section 3.4)
    271. Does the federal entity recognize a liability
    for probable37 and measurable38 future outflows or
    other sacrifices of resources arising from one or
         more of the following events? a. past exchange
    transactions b. government-related events, such as
        a federal entity accidentally causing damage to
          private property c. government-acknowledged
        events, such as natural disasters, for which the
    government has taken formal responsibility for the
        related costs d. nonexchange transactions that,
        according to current law and applicable policy,
        are unpaid amounts due as of the reporting date
        (SFFAS 5, par. 19-34; OMB Bulletin 01-09, p. 23,
                          section 3.4)
    272. Are liabilities recognized when incurred
    regardless of whether they are covered by
    available budgetary resources (including those
    liabilities related to appropriations canceled
    under "M" account legislation)? (OMB Bulletin
    01-09, p. 24, section 3.4)

    37Probable refers to that which can be reasonably expected or is believed
    to be more likely than not on the basis of available evidence or logic.
    However, in the context of assessing the outcome of matters of pending or
    threatened litigation and unasserted claims and recognizing an associated
    liability, "probable" refers to that which is likely, not to that which is
    "more likely than not."

    38Measurable refers to that which can be quantified in monetary units with
    sufficient reliability to be reasonably estimable.

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    Section III
    Balance Sheet

    Liabilities Accounts Payable and Interest Payable Yes, No, or  Explanation
                          (273 - 280)                        N/A
    Accounts payable are amounts owed by a federal entity for goods and
    services received from, progress in contract performance made by, and
    rents due to other entities. (SFFAS 1, par. 74; OMB Bulletin 01-09, p. 24,
    section 3.4)
    273. Do accounts payable exclude amounts related
    to ongoing continuous expenses, such as salary
    and related benefits expense, which are
    classified as other current liabilities? (SFFAS
    1, par. 75)
    274. Are (intragovernmental) accounts payable
    owed to other federal agencies reported
    separately from those owed to the public? (SFFAS
    1, par. 76; OMB Bulletin 01-09, p. 18, section
    3.2 & p. 24, section 3.4)
    275. When an entity accepts title to goods,
    whether the goods are delivered or in transit,
    does the entity recognize a liability for the
    unpaid cost of goods? (SFFAS 1, par. 77)
    276. If invoices for goods, for which the entity
        has accepted the title, are not available, does
        the entity estimate the amount owed? (SFFAS 1,
                           par. 77)
    277. For facilities or equipment constructed or
    manufactured by contractors or grantees according
    to agreements or contract specifications, are
    amounts recorded as payable based on an estimate
    of work completed under the contract or the
    agreement in accordance with the federal entity's
    engineering and management evaluation of actual
    performance progress and incurred costs? (SFFAS
    1, par. 78 & 79)
        278. Does the entity disclose accounts payable
         not covered by budgetary resources? (SFFAS 1,
    par. 80; OMB Bulletin 01-09, p. 24, section 3.4;
                     p. 78, section 9.12)

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    Section III
    Balance Sheet

         Liabilities Accounts Payable and Interest    Yes, No, or N/A Explanation
                    Payable (273 - 280)
          279. Is interest incurred but unpaid on
         borrowed funds, late payments, and refunds
    recognized as interest payable and reported as
    a liability at the end of each period? (SFFAS
    1, par. 81; OMB Bulletin 01-09, p. 24, section
                            3.4)
    280. Is interest payable to federal entities
    reported separately from interest payable to
    the public? (SFFAS 1, par. 82)

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    Section III Balance Sheet

           Liabilities Liabilities for Loan      Yes, No, or N/A    Explanation
                Guarantees (281 - 294)
    A loan guarantee is any guarantee, insurance (but not deposit insurance),
    or other pledge with respect to the payment of all or part of the
    principal or interest on any debt obligation of a nonfederal borrower to a
    nonfederal lender. (SFFAS 2, app. C) The Federal Credit Reform Act of 1990
    requires federal entities to estimate and budget for the costs arising
    from default of guaranteed loans made after fiscal year (FY) 1991 (i.e.,
    post 1991). (SFFAS 2, par. 7)
    281. Is the present value of estimated
    net cash outflows from post-1991 (i.e.,
    committed after September 30, 1991) loan
    guarantees recognized as a liability?
    (SFFAS 2, par. 7 & 23)
        282. Does the entity disclose by loan
         program the face value of guaranteed
         loans outstanding and the amount of
    outstanding principal guaranteed? (SFFAS
    2, par. 23; OMB Bulletin 01-09, pp. 60,
            65, & 72, section 9.8, item J)
    283. Does the entity disclose by loan
    program the estimated liabilities39
    arising from post-1991 loan guarantees?
    (OMB Bulletin 01-09, pp. 60, 61, 65, &
    72, section 9.8, item K)
    284. Is a liability for a pre-1992
    (i.e., committed before October 1, 1991)
    loan guarantee recognized when it is
    more likely than not that the loan
    guarantee will require a future cash
    outflow to pay a default claim? (SFFAS
    2, par. 39 & app. B, part IV A)
        285. Does the entity disclose by loan
          program the estimated liabilities
        arising from pre-1992 loan guarantees?
    (OMB Bulletin 01-09, p. 25, section 3.4;
          pp. 60 & 72, section 9.8, item K)

    39The present value of the estimated net cash flows (outflows less
    inflows) to be paid by the entity arising from loan guarantees.

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    Section III Balance Sheet

    Liabilities Liabilities for Loan Guarantees (281 - Yes, No, or Explanation
                              294)                            N/A
         286. Are the liabilities for the pre-1992 loan
    guarantees reestimated each year as of the date of
          the financial statements? (SFFAS 2, par. 39)
        287. Does the entity disclose, by loan program,
    whether pre-1992 loan guarantees are reported on a
               present-value basis40 or under the
    allowance-for-loss method?41 (OMB Bulletin 01-09,
             p. 68, section 9.8, item A, 4th par.)
        288. When the total loan guarantee liability for
        all of the credit programs is negative, is this
    reported as an asset? (OMB Bulletin 01-09, p. 25,
                          section 3.4)
    289. If loan guarantee liability is the result of
    both positive and negative amounts of the various
    components, is the total shown as a liability, and
    are the negative components (of the loan guarantee
    liability) disclosed? (OMB Bulletin 01-09, p. 25,
                          section 3.4)
    290. When post-1991 loan guarantees are modified,
    is the existing book value of the related
    liability changed to an amount equal to the
    present value of net cash outflows that are
    projected under the modified terms from the time
    of the modification to the loan's maturity, and
    discounted at the original discount rate?42 (SFFAS
    2, par. 50 & app. B, part III D(4); SFFAS 19, par.
    7(d))

    40Under the present-value method, the liability for loan guarantees is the
    present value of the expected net cash outflows due to the loan
    guarantees.

    41Under the allowance-for-loss method, the liability for loan guarantees
    is the amount the agency estimates will more likely than not require
    future cash outflow to pay default claims.

    42The original discount rate is the rate that was originally used to
    calculate the present value of the liability when the guaranteed loans
    were disbursed, after adjusting for the interest rate reestimate.

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    Section III
    Balance Sheet

    Liabilities Liabilities for Loan Guarantees (281 - Yes, No, or Explanation
                              294)                            N/A
    291. When pre-1992 loan guarantees are directly
    modified, does the following occur? a. the loan
    guarantees are transferred from the liquidating
    account to a financing account b. the existing
    book value of the liability of the modified loan
    guarantees is changed to an amount equal to their
    postmodification liability (i.e., the present
    value of the net cash outflows under
    postmodification terms discounted at the current
    Treasury rate) (SFFAS 2, par. 51 & app. B, part IV
    B (2) & (4))
    292. When pre-1992 loan guarantees are indirectly
    modified, does the following occur? a. The loan
    guarantees are kept in a liquidating account. b.
    The related liability is reassessed and adjusted
    to reflect any change in the liability resulting
    from the modification. (SFFAS 2, par. 51)
    293. Are subsequent modifications of pre-1992 loan
        guarantees treated as modifications of post-1991
              loan guarantees? (SFFAS 2, par. 51)
    294. If a post-1991 or pre-1992 loan is sold with
           a recourse provision, is the present value
    (discounted at the Treasury rate in effect at the
           time of the sale) of the estimated losses
           recognized as a subsidy expense and a loan
        guarantee liability? (SFFAS 2, par. 54 & app. B,
                          part I F(3))

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    Section III Balance Sheet

         Liabilities Lease Liabilities (295 - 299)    Yes, No, or N/A Explanation
    Capital leases are leases that transfer substantially all of the benefits
    and risks of ownership to the lessee. (SFFAS 5, par. 43)
    295. Is the amount recorded by the lessee as a
        liability under a capital lease arrangement
    the present value of rental and other minimum
         lease payments (excluding executory costs)
         during the lease term? (SFFAS 5, par. 44)
        296. If the present value of the rental and
    other minimum lease payments during the lease
         term exceeds the fair value of the leased
         property, is the liability recorded as the
    fair value43 of the property at the inception
              of the lease? (SFFAS 5, par. 44)
    297. Does the entity use the applicable
    Treasury borrowing rate to determine the
    discount rate charged on a capital lease
    unless both of the following apply? a. It is
    practicable for the lessee to learn the
    implicit rate computed by the lessor. b. The
    implicit rate is less than the Treasury
    borrowing rate. (SFFAS 5, par. 45)
    298. During the lease term, is each minimum
    lease payment allocated between a reduction of
    the obligation and interest expense so as to
    produce a constant periodic rate of interest
    on the remaining balance of the liability?
    (SFFAS 5, par. 46)

    43Fair value is the price for which an asset could be bought or sold in an
    arm's-length transaction between unrelated parties. Roman L. Well and
    Patrick C. O'Brien, Accounting: The Language of Business, 9th ed. (Sun
    Lakes, Arizona: Thomas Horton and Daughters, 1994).

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    Section III
    Balance Sheet

         Liabilities Lease Liabilities (295 - 299)    Yes, No, or N/A Explanation
    299. Does the entity disclose, in a note to
    the financial statements, the following
    information about its capital leases? a. gross
    amounts of assets under capital lease by major
    asset category b. description of the lease
    arrangements, for example, future funding
    commitments, lease terms, renewal options,
    escalation clauses, restrictions, amortization
    periods c. future payments due, by major asset
    category, and deductions for imputed interest
    and executory costs for all noncancelable
    leases with terms longer than 1 year d. a
    breakout of portions of the capital lease
    liability covered by budgetary resources and
    not covered by budgetary resources (OMB
    Bulletin 01-09, p. 84-85, section 9.17)

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    Section III Balance Sheet

    Liabilities Federal Debt and Related Interest  Yes, No, or N/A Explanation
                        (300 - 310)
    Debts are amounts borrowed from the Treasury, the Federal Financing Bank,
    other federal agencies, or the public under general or special financing
    authority such as Treasury bills, notes, bonds, and Federal Housing
    Administration (FHA) debentures. (SFFAS 5, par. 47; OMB Bulletin 01-09, p.
    25, section 3.4)
        300. Does the entity accounting for federal
        debt identify the amount of the outstanding
          debt liability at any given time and the
         related interest cost for each accounting
                 period? (SFFAS 5, par. 48)
         301. Are fixed-value securities with known
         redemption or maturity amounts at time of
         issue valued at their original face (par)
          value net of any unamortized discount or
                premium? (SFFAS 5, par. 50)
    302. For fixed-value securities, is either the
    straight line or interest method44 of discount
    or premium amortization used in the following
    cases? a. short-term securities with a
    maturity of 1 year or less b. longer term
    securities, where the difference between the
    amount of amortization under the interest and
    straight-line methods is immaterial (SFFAS 5,
    par. 50)
          303. For fixed-value securities, is the
          interest method used for amortizing any
        discount or premium on all cases other than
         those described in the previous question?
                     (SFFAS 5, par. 51)
        304. If the entity has issued variable value
        securities of unknown redemption or maturity
        values, are they appraised at their original
        value and periodically revalued on the basis
          of the regulations or offering language?
                     (SFFAS 5, par. 52)

    44The interest method for amortizing a bond premium or discount reduces
    the discount or premium by the difference between the effective interest
    and stated interest on the bond. (SFFAS 1, app B, tables 1 & 2)

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    Page 88

    Section III
    Balance Sheet

    Liabilities Federal Debt and Related Interest (300 Yes, No, or Explanation
                             - 310)                           N/A
    305. Are old currencies issued by the federal
    government and not yet redeemed or written off
    identified as a noninterest bearing federal debt
    liability at face value? (SFFAS 5, par. 55)
         306. Is all debt owed to Treasury, the Federal
    Financing Bank, or other federal agencies reported
    under intragovernmental liabilities on the balance
         sheet and disclosed by category? (OMB Bulletin
            01-09, p. 18 & pp. 79-80, section 9.13)
    307. Are the beginning balances, net borrowings,
    and ending balances of debt disclosed by the
    following categories? a. total Treasury debt
    (reported by the Treasury Department only) broken
    out by government accounts and debt held by the
    public b. total agency debt issued under special
    financing authority (e.g., Federal Housing
    Administration (FHA) debentures and Tennessee
    Valley Authority (TVA) bonds) broken out by debt
    held by government accounts and debt held by the
    public c. other debt broken out by debt owed to
    the Treasury, debt owed to the Federal Financing
    Bank, and debt owed to other federal agencies (OMB
    Bulletin 01-09, pp. 79 & 80, section 9.13)
        308. Is all debt owed to the public reported and
        disclosed as such? (OMB Bulletin 01-09, p. 18 &
                    pp. 79-80, section 9.13)
         309. Are the names of the agencies disclosed,
    other than Treasury or the Federal Financing Bank,
        to which intragovernmental debt is owed, and are
    the amounts disclosed? (OMB Bulletin 01-09, p. 80,
                         section 9.13)

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    Section III
    Balance Sheet

    Liabilities Federal Debt and Related Interest  Yes, No, or N/A Explanation
                        (300 - 310)
         310. Is other information relative to debt
        disclosed (e.g., redemption or call of debt
         owed to the public before maturity dates,
        write-offs of debts owed to Treasury or the
    Federal Financing Bank)? (OMB Bulletin 01-09,
                    p. 80, section 9.13)

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    Section III
    Balance Sheet

    Liabilities Pensions, Other Retirement
    Benefits, and Postemployment Benefits    Yes, No, or N/A     Explanation
                    (311 - 318)
    Federal employee and veterans benefits include the actuarial portion of
    pensions, other retirement benefits, and other postemployment benefits.
    They do not include liabilities related to ongoing continuous expenses
    such as employees' accrued salary, accrued annual leave, unpaid portions
    of employee benefits, and other benefits that are currently due. These
    items are reported under the "other liabilities" line item. (SFFAS 1, par.
    83 & 84; SFFAS 5, par. 56; OMB Bulletin 01-09, p. 25, section 3.4) In the
    context of accounting for pensions, other retirement benefits (ORB), and
    other postemployment benefits, the "administrative entity" manages and
    accounts for the pension or other employee plan, while the "employer
    entity" employs federal workers and generates employee costs, for which it
    would typically receive a salary and expense appropriation. (SFFAS 5, par.
    57, footnote 38) The "aggregate entry age normal" actuarial cost method is
    one under which the expenses or liabilities arising from the actuarial
    present value of projected pension benefits are allocated on a level basis
    over the earnings or the service of the group between entry age and
    assumed exit ages. The portion of the actuarial present value allocated to
    a valuation year is called "normal cost." (SFFAS 5, par. 64)
    311. Is the aggregate entry age normal
    actuarial cost method used to
    calculate, for the administrative
    entity financial statements, the
    liabilities arising from pension and
    ORB expenses? (SFFAS 5, par. 64 & 82)
    312. If other actuarial cost methods
    are used because the results are not
    materially different, does the entity
    provide an explanation why aggregate
    entry age normal is not used? (SFFAS
    5, par. 64 & 82)
    313. Does the administrative entity
    disclose the assumptions used to
    calculate the liability for pensions,
    other retirement benefits, and other
    postemployment benefits? (SFFAS 5,
    par. 67 & 83; OMB Bulletin 01-09, p.
    25, section 3.4; p. 80, section 9.14)

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    Section III
    Balance Sheet

        Liabilities Pensions, Other Retirement Benefits,  Yes, No, or Explanation
            and Postemployment Benefits (311 - 318)           N/A
    314. If the assumptions for a pension plan differ
    from the assumptions used by the three primary
    plans-Civil Service Retirement System (CSRS),
    Federal Employees Retirement System (FERS), and
    Military Retirement System (MRS)-does the
    administrative entity disclose how and why the
    assumptions differ from those of the primary
    plans? (SFFAS 5, par. 67; OMB Bulletin 01-09, p.
    80, section 9.14)
    315. Does the administrative entity report pension
         and ORB assets separately from liabilities as
        opposed to netting them out? (SFFAS 5, par. 68 &
                              85)
    316. Does the administrative entity carry pension
    and ORB assets at their acquisition cost, adjusted
        for amortization, if appropriate? (SFFAS 5, par.
                            68 & 85)
    317. Does the administrative entity disclose the
    market value of pension and ORB investments in
    market-based and marketable securities? (SFFAS 5,
    par. 68 & 85)
    318. Does the employer entity recognize the
    long-term other postemployment benefits liability
    as the present value of future payments discounted
    at the Treasury borrowing rate for securities of
    similar maturity? (SFFAS 5, par. 95)

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    Section III
    Balance Sheet

        Liabilities Other Liabilities (319 - 352)  Yes, No, or N/A  Explanation
    Unless they are reported separately, other liabilities cover liabilities
    not recognized in other categories. They may include, but are not limited
    to: capital leases, insurance, advances and prepayments, deposit funds
    held in escrow, accrued liabilities related to ongoing continuous expenses
    such as federal employee salaries and accrued employee annual leave, and
    estimated losses for claims and other contingencies. Claims and other
    contingencies include indemnity agreements, adjudicated claims, and
    commitments to international institutions. (SFFAS 1, par. 83-86; OMB
    Bulletin 01-09, p. 26, section 3.4)
         319. Does the entity separately report
          items within other liabilities if the
    amounts are material? (OMB Bulletin 01-09,
                   p. 26, section 3.4)
    320. Do all federal insurance and guarantee
    programs (except social insurance and loan
    guarantee programs) recognize a liability
    for unpaid claims incurred resulting from
    insured events that have occurred as of the
    reporting date? (SFFAS 5, par. 104; OMB
    Bulletin 01-09, p. 26, section 3.4)
    321. Do federal insurance programs accrue a
    contingent liability when an existing
    condition, situation, or set of
    circumstances involving uncertainty as to
    possible loss exists, and when the
    following conditions apply? a. the
    uncertainty will be resolved when one or
    more probable future events occur or fail
    to occur. b. future outflow or other
    sacrifice of resources is probable and
    measurable. (SFFAS 5, par. 104 & 108; OMB
    Bulletin 01-09, pp. 26 & 27, section 3.4)
          322. Does the entity also recognize a
    liability for future life insurance policy
         benefits (such as death or disability)?
    (SFFAS 5, par. 104; OMB Bulletin 01-09, p.
                    27, section 3.4)

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    Section III
    Balance Sheet

           Liabilities Other Liabilities (319 - 352)     Yes, No, or  Explanation
                                                             N/A
    323. When insurance payments and losses extend
    beyond the current year, does the liability at
    the end of the year represent net losses
    calculated on a present-value basis to reflect
    the time value of money? (SFFAS 5, par. 109)
    324. Does the entity report under "required
    supplementary information" (RSI) the major
    assumptions and "risks assumed" (i.e., the
    present value of unpaid expected losses net of
    associated premiums based on risk inherent in the
    insurance or guarantee coverage) for all
    sponsored insurance programs (except for social
    insurance, life insurance, and loan guarantee
    programs)? (SFFAS 5, par. 105 & 106; SFFAS 25,
    par. 4)
        325. Does the entity also report under RSI the
         indicators of the range of uncertainty around
        insurance-related estimates and sensitivity of
        the estimates to changes in major assumptions?
             (SFFAS 5, par. 114; SFFAS 25, par.4)
    The liability for future policy benefits is the present value of future
    outflows to be paid to (or on behalf of) policyholders, less the present
    value of future related premiums. In general, for whole life policies, the
    liability for future policy benefits should be no less than the cash
    surrender value that accrues to the benefit of the policyholder. (SFFAS 5,
    par. 116)

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    Section III Balance Sheet

         Liabilities Other Liabilities (319 - 352)    Yes, No, or N/A Explanation
    326. Are liabilities for future benefits of
    whole life insurance policies reported and
    disclosed in accordance with private sector
    standards (i.e., Financial Accounting
    Standards Board (FASB) Statement of Accounting
    Standards (SFAS) 60, 97, & 120; American
    Institute of Certified Public Accountants
    (AICPA) Statement of Position (SOP) 95-1)?
    (SFFAS 5, par. 117; OMB Bulletin 01-09, p. 85,
    section 9.18)
        327. Does the liability for future benefits
          relating to participating life insurance
          contracts equal the sum of the following
    amounts? a. the net level premium reserve for
           death and endowment policy benefits b.
        liability for terminal dividends and c. any
    premium deficiency45 (SFFAS 5, par. 118 & 120)
    328. Has the entity made an assessment to
    compare the liability for future policy
    benefits using actuarial assumptions
    applicable at the time the contract was made
    (contract assumptions) with the liability for
    future policy benefits using assumptions that
    consider the following factors? a. current
    economic conditions (i.e., current and
    expected investments and expected long-term
    yields) b. experience (i.e., mortality,
    morbidity, and termination rates) (SFFAS 5,
    par. 119)

    45A premium deficiency occurs if the liability for future policy benefits
    using current conditions exceeds the liability for future policy benefits
    using contract conditions.

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    Section III Balance Sheet

           Liabilities Other Liabilities (319 - 352)      Yes, No, or Explanation
                                                              N/A
          329. Does the entity separately disclose the
        components46 of the liability for future policy
        benefits of whole life insurance contracts along
    with a description of each amount and explanation
    of its projected use and any other potential uses?
         (SFFAS 5, par. 121; OMB Bulletin 01-09, p. 85,
                         section 9.18)
    330. Does the reporting entity disclose and break
    out the following items? a. the portion of other
    liabilities covered by budgetary resources and the
    portion not covered by budgetary resources b. the
    portion of other liabilities payable to federal
    entities (i.e., intragovernmental liabilities) and
    the portion payable to nonfederal entities c. the
    portion of other liabilities that are noncurrent
    and the portion that are current (SFFAS 1, par. 85
    & 86; OMB Bulletin 01-09, pp. 78 & 79, section
    9.l2 & pp. 81 & 82, section 9.16)
    331. Does the agency record "unearned revenue" as
        a liability if it requests advances or progress
    payments prior to receipt of cash, and it records
                the amounts? (SFFAS 7, par. 37)
          332. Are amounts payable for refunds, refund
            offsets,47 and drawbacks48 recognized as
        liabilities when measurable and legally payable
         under established processes of the collecting
                   entity? (SFFAS 7, par. 57)

    46The net-level premium reserve for a death and endowment policy and the
    liability for terminal dividends.

    47Refund offsets are amounts withheld from refunds on behalf of other
    agencies. (OMB Circular No. A-129 (revised), app. A, Part V, section
    2.c.i. (1) )

    48Drawbacks are refunds payable on all or part of duties paid on imported
    goods that are subsequently exported or destroyed. (SFFAS 7, app. C,
    glossary)

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    Page 96

    Section III
    Balance Sheet

           Liabilities Other Liabilities (319 - 352)      Yes, No, or Explanation
                                                              N/A
    333. Do amounts payable for refunds include refund
        claims filed by the taxpayer when the government
            has determined the amount refundable and
            identified the payee? (SFFAS 7, par. 57)
    334. Are amounts payable for refunds with respect
    to returns or claims filed as of the end of the
    reporting period included in accounts payable for
    refunds if they do not require specific approval
    before payment? (SFFAS 7, par. 57)
    335. For claims filed for refunds where specific
    administrative actions are required before
    payments can be made, are the amounts excluded
    from being recognized as a liability if the
    required administrative actions are not yet
    complete as of the close of the reporting period,
    even if reasonably estimable? (SFFAS 7, par. 58.1)
           336. Are unasserted claims for refunds by
    taxpayers or importers, such as unfiled claims for
        refunds or drawbacks for which no claim has been
           filed, excluded from being recognized as a
    liability, even if reasonably estimable? (SFFAS 7,
                           par. 58.2)
    337. Are amounts voluntarily made as deposits,
    such as those made to stop the accrual of interest
    or those made pending settlements and judgments,
    separately recognized as deposit liabilities?
    (SFFAS 7, par. 59)

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    Section III Balance Sheet

         Liabilities Other Liabilities (319 - 352)    Yes, No, or N/A Explanation
           A loss contingency is an existing condition, situation, or set of
    circumstances involving uncertainty as to possible loss to an entity. The
        uncertainty should ultimately be resolved when one or more future events
        occur or fail to occur. (SFFAS 5, par. 35; OMB Bulletin 01-09, pp. 85 &
                                   86, section 9.19)
    338. Does the entity recognize estimated
    losses for claims or other contingencies if
    all of the following conditions apply? a. a
    past event or exchange transaction has
    occurred b. a future outflow or other
    sacrifice of resources is probable49 c. the
    future outflow or sacrifice of resources is
    measurable (e.g., the federal entity's
    management determines an estimated settlement
    amount). (SFFAS 5, par. 38; SFFAS 6, par. 91;
    SFFAS 12, par. 10 & 11; OMB Bulletin 01-09, p.
    26, section 3.4)
    339. When determining an estimated contingent
        liability, if some amount within a range of
        amounts is a better estimate than any other
          amount within the range, is that amount
               recognized? (SFFAS 5, par. 39)

    49In the context of pending or threatened litigation, "probable" is taken
    to mean "likely;" otherwise, "probable" refers to that which is believed
    to be more "likely than not" or can be reasonably expected.

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    Section III Balance Sheet

           Liabilities Other Liabilities (319 - 352)      Yes, No, or Explanation
                                                              N/A
    340. When determining an estimated contingent
    liability, if no amount within a range of amounts
    is a better estimate than any other amount, does
    the entity recognize a minimum amount in the range
    and disclose a description of the nature of the
    contingency? (SFFAS 5, par. 39)
    341. If any one of the conditions for recognizing
    a contingent liability is not met and there is at
    least a "reasonable possibility" 50 that a loss or
    additional loss may be incurred, does the entity
    disclose the nature of the contingency51 and one
    of the following? a. an estimate of the possible
    liability b. an estimate of the range of the
    possible liability c. a statement that such an
    estimate cannot be made (SFFAS 5, par. 36, 38, 40,
    & 41)
    342. If information about remote contingencies, or
    related to remote contingencies, is included in
    general purpose federal financial reports,52 is
    the information labeled to avoid the misleading
    implication that there is more than a remote
    chance of a loss of that amount? (SFFAS 5, par.
    42)

    50The chance of a future event occurring is less than "probable" but more
    than "remote."

    51Examples of claims or other contingencies include (1) indemnity
    agreements-reimbursements due to licenses or contractors for losses
    incurred in support of federal activities; (2) adjudicated claims (i.e.,
    claims against the federal government that are in the process of judicial
    proceedings); and (3) commitments to international institutions-payment
    due to international institutions.

    52An example of information related to a remote contingency would be the
    total face amount of insurance and guarantees in force.

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    Section III Balance Sheet

           Liabilities Other Liabilities (319 - 352)      Yes, No, or Explanation
                                                              N/A
          343. Does the entity disclose the following
        related to commitments and contingencies? a. an
          estimate of obligations related to canceled
    appropriations for which the reporting entity has
        a contractual commitment for payment b. amounts
         for contractual arrangements that may require
    future financial obligations (OMB Bulletin 01-09,
        p. 27, section 3.4 & pp. 85 & 86, section 9.19)
          344. If material, does the entity separately
    recognize a contingent liability for environmental
           clean-up costs53 for PP&E if the following
         criteria apply? a. they are related to a past
         transaction or event b. the related costs are
    probable and measurable (SFFAS 5, par. 38 & SFFAS
        6, par. 91-93; OMB Bulletin 01-09, pp. 25 & 26,
                          section 3.4)
           345. When clean-up costs are paid, are the
           payments recognized as a reduction in the
    liability for clean-up costs? (SFFAS 6, par. 100)
    346. If clean-up costs have not been previously
    recognized, is a liability recognized for the
    portion of the estimated total clean-up cost that
    is attributable to either the portion of the
    physical capacity used or the portion of the
    estimated useful life that has passed since the
    PP&E was placed into service? (SFFAS 6, par.
    104-106)
    347. Are any subsequent changes (made in periods
    following implementation) in estimated total
    clean-up cost immediately expensed (if costs are
    to be recovered though user charges) and reflected
    in the related liability balance? (SFFAS 6, par.
    104)

    53Clean-up costs are the costs of removing, containing, and/ or disposing
    of (1) hazardous waste from property, or (2) material and/or property that
    consists of hazardous waste at permanent or temporary closure or shutdown
    of associated PP&E. (SFFAS 6, par. 85)

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    Section III
    Balance Sheet

         Liabilities Other Liabilities (319 - 352)    Yes, No, or N/A Explanation
    348. When clean-up costs are recognized for
    the first time, is the offsetting charge for
    any liability for clean-up costs shown as a
    "prior-period adjustment?" (SFFAS 6, par. 105;
    SFFAS 21, par. 13)
    349. Are the amounts of prior-period
    adjustments arising from belated recognition
    of clean-up costs and liabilities disclosed
    and, if possible, are amounts associated with
    current and prior periods noted? (SFFAS 6,
    par. 105; SFFAS 21, par. 13)
    350. Does the entity also disclose the
    following information related to clean-up
    costs? a. the sources (i.e., applicable laws
    and regulations) of clean-up requirements b.
    the method for assigning estimated total
    clean-up costs to current operating periods
    (e.g., physical capacity versus passage of
    time) c. the unrecognized portion of estimated
    total clean-up costs associated with PP&E d.
    the material changes in total estimated
    clean-up costs due to changes in laws,
    technology, or plans e. the portion of change
    in an estimate that relates to prior-period
    operations f. the nature of estimates and the
    disclosure of information regarding possible
    changes due to inflation, deflation,
    technology, or applicable laws and regulations
    (SFFAS 6, par. 107-111; OMB Bulletin 01-09, p.
    81, section 9.15)
    Social insurance programs provide for the maintenance and distribution of
    incomes and medical benefits during periods of unemployment, disability,
    and retirement. These programs are Social Security, Medicare, Railroad
    Retirement Benefits, Black Lung Benefits, and Unemployment Insurance.
    Expense and liability recognition for these programs is the same for both
    the consolidated governmentwide entity and for the component entities.
    (SFFAS 17, par. 2,4, 14, 15, 19, 30, & app. D, glossary)

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    Section III
    Balance Sheet

         Liabilities Other Liabilities (319 - 352)    Yes, No, or N/A Explanation
    351. Does the entity recognize a liability for
    social insurance benefits due and payable
    including claims incurred but not reported?
    (SFFAS 17, par. 22)
    352. Does the liability for unemployment
    insurance include the following amounts? a.
    amounts due to states and territories for
    benefits they have paid to beneficiaries but
    for which they have not withdrawn funds from
    the federal unemployment trust fund (UTF) as
    of the fiscal year end b. estimated amounts to
    be withdrawn from UTF and benefits paid by
    states and territories after fiscal year end
    for compensatory days occurring prior to
    fiscal year end (SFFAS 17, par. 23)

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    Section III
    Balance Sheet

            Net Position Unexpended Appropriations &      Yes, No, or Explanation
          Cumulative Results of Operations (353 - 354)        N/A
    353. Does the line item "unexpended
    appropriations" include both the portion of the
    entity's appropriation represented by undelivered
    orders and unobligated balances? (OMB Bulletin
    01-09, p. 27, section 3.5)
    354. Does the line item "cumulative results of
    operations" include the following items? a. the
    net results of operations since inception b. the
    cumulative amount of prior-period adjustments c.
    the cumulative amount of donations and transfers
    of assets in and out without reimbursement (OMB
    Bulletin 01-09, p. 27, section 3.5)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 103

    Section IV Statement of Net Cost

    The questions related to the Statement of Net Cost are presented under
    three general captions and 12 sections. The question numbers related to
    each caption and section identified below.

    Question Numbers

    Cost Accounting in General

    1. Overall Requirements 1-13

    2. Responsibility Segments 14-18

    3. Full Cost 19-26

    4. Interentity Costs 27-32

    5. Costing Methodology 33-39

    Revenues 40-61

    Costs

    6.	Pensions and Other Retirement and
    Postemployement Benefits 62-89

    7. Inventory, Materials, Supplies, and Commodities 90-98

    8. Property, Plant, and Equipment 99-115

    9. Clean-up Costs 116-124

    10. Interest 125-126

    11. Insurance and Subsidies 127-130

    12. Credit Programs 131-178

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
    Page 104

    Section IV Statement of Net Cost

          Cost Accounting in General Overall     Yes, No, or N/A    Explanation
                Requirements (1 - 13)
    The Statement of Net Cost is designed to show separately the components of
    the net cost of the reporting entity's operations for the period. The
    statement and any related supporting schedules classify revenue and cost
    information by suborganization or responsibility segment. (OMB Bulletin
    01-09, p. 28, section 4.1) Managerial cost accounting is the process of
    accumulating, measuring, analyzing, interpreting, and reporting cost
    information useful to both internal and external groups concerned with the
    way in which the organization uses, accounts for, safeguards, and controls
    its resources to meet its objectives. (SFFAS 4, par. 42) A cost accounting
    "system" is a continuous and systematic cost accounting process that may
    be designed to accumulate and assign costs to a variety of objects
    routinely or as desired by management. (SFFAS 4, par. 74) Cost finding is
    a method for determining the cost of producing goods or services using
    appropriate procedures, for example, special cost studies or analyses.
    (SFFAS 4, par. 76)
    1. Are net costs reported for the entity
                as a whole and for its
        suborganizations54 and major programs?
    (OMB Bulletin 01-09, p. 28, section 4.1)
    2. Does the entity present
    responsibility segments that align
    directly with the major goals and
    outputs described in the entity's
    strategic and performance plans,
    required by the Government Performance
    and Results Act of 1993 (GPRA)? (SFFAS
    4, par. 69; OMB Bulletin 01-09, p. 28,
    section 4.1)

     54Suborganizations are considered to be generally equivalent to responsibility
                                        segments

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                            Section IV Statement of Net Cost

    Cost Accounting in General Overall Requirements (1 Yes, No, or Explanation
                             - 13)                            N/A
    3. In its Statement of Net Cost, does the entity
    show the following? a. the gross cost of goods and
    services provided to federal government agencies
    (intragovernmental) b. the gross cost of goods,
    services, transfers, and grants provided to the
    public c. related exchange revenues d. excess of
    costs over exchange revenues (net program costs)
    e. costs that cannot be assigned to specific
    programs or outputs f. the exchange revenues that
    cannot be attrinuted to specific programs and
    outputs (SFFAS 7, par. 43 & 44; OMB Bulletin
    01-09, pp. 28 & 29, section 4.1 & p. 30, section
    4.2)
    4. Are the costs related to the production of
    goods and services provided to other programs
    (intragovernmental) reported separately from the
    costs of goods, services, transfers, and grants
    provided to the public? (OMB Bulletin 01-09, p.
    31, section 4.3)
    5. Are costs related to the production of outputs
          reported separately from costs that are not
            related to the production outputs (i.e.,
    nonproduction costs)? (OMB Bulletin 01-09, p. 31,
                          section 4.3)
    6. Are costs that cannot be directly traced or
    assigned on a cause-and-effect basis, or
    reasonably allocated to segments and their outputs
    and programs reported on the Statement of Net Cost
    as "Costs not assigned to programs?" (SFFAS 4,
    par. 92; OMB Bulletin 01-09, p. 32, section 4.6)

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                            Section IV Statement of Net Cost

    Cost Accounting in General Overall Requirements (1 Yes, No, or Explanation
                             - 13)                            N/A
    7. Has the entity established appropriate
    procedures and practices to enable the consistent
    and regular collection, measurement, accumulation,
    analysis, interpretation, and communication of
    cost information? (SFFAS 4, par. 68-70)
    8. As a means of providing cost information in an
    efficient and reliable manner on a continuing
    basis, does the reporting entity regularly
    accumulate and report the costs of its activities
    either by means of cost accounting systems or cost
    finding techniques? (SFFAS 4, par. 68-70)

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                            Section IV Statement of Net Cost

    Cost Accounting in General Overall Requirements (1 Yes, No, or Explanation
                             - 13)                            N/A
    9. Does the reporting entity's cost accounting
    system or cost finding technique, at a minimum, do
    the following? a. collect cost information by
    responsibility segments identified by management
    b. define outputs for each responsibility segment
    c. measure the full cost (including the cost of
    goods or services provided by other entities) of
    outputs so that total operational costs and total
    unit costs of outputs can be determined d. use a
    costing methodology (e.g., activity-based, job
    order, standard costing) that is appropriate for
    management's needs and the operating environment
    e. provide information needed to determine and
    report service efforts and accomplishments and
    information necessary to meet the requirements of
    GPRA (or interface with a system that provides
    such information) f. report cost information in a
    timely manner and on a regular basis consistent
    with the needs of management and budgetary and
    financial reporting requirements g. rely on the
    United States Standard General Ledger as a basis
    for integrating its cost information with its
    general financial accounting capability h. supply
    cost data precise enough to provide reliable and
    useful information to internal and external users
    in making evaluations or decisions but also avoid
    unnecessary precision and refinement of data i.
    accommodate management's special cost information
    needs (SFFAS 4, par. 71)

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                            Section IV Statement of Net Cost

             Cost Accounting in General Overall       Yes, No, or N/A Explanation
                   Requirements (1 - 13)
           10. Are all managerial cost accounting
           activities, processes, and procedures
               documented? (SFFAS 4, par. 71)
    11. In determining the appropriate detail for
    its cost accounting processes and procedures,
    has the reporting entity considered the
    following? a. nature of its operations b. the
    precision desired and needed in cost
    information c. the practicality of data
    collection and processing d. the availability
    of electronic data-handling facilities e. the
    cost of installing, operating, and maintaining
    the cost accounting processes f. any specific
    information needs of management (SFFAS 4, par.
    72)
    12. Has the entity used similar or compatible
          cost accounting processes throughout its
            component units? (SFFAS 4, par. 73)
            13. Does the line item "net cost of
        operations," as reported on the Statement of
         Net Cost, agree with the line items of the
        same name that are reported on the Statement
        of Changes in Net Position and Statement of
    Financing? (OMB Bulletin 01-09, p. 38, section
                 5.6 & p. 51, section 7.7)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 109

                            Section IV Statement of Net Cost

    Cost Accounting in General Responsibility Segments Yes, No, or Explanation
                           (14 - 18)                          N/A
    A responsibility segment is a component of a reporting entity that is
    responsible for carrying out a mission, conducting a major line of
    activity, or producing one or a group of related products or services.
    (SFFAS 4, par. 78)
    14. Has the management of the reporting entity
    defined and established responsibility segments?
    (SFFAS 4, par. 77)
           15. Does management designate or establish
    responsibility segments based on the following? a.
    the entity's organizational structure b. its lines
          of responsibility and missions c. its output
    (goods or services it delivers) d. budget accounts
           and funding authorities (SFFAS 4, par. 86)
    16. For each responsibility segment, does the
    entity do the following? a. define and accumulate
    outputs and, if feasible, quantify each type of
    output in units b. accumulate costs and
    quantitative units of resources consumed in
    producing the outputs c. assign costs to outputs
    and calculate the cost per unit of each type of
    output d. establish cost centers within
    responsibility segments, as needed (SFFAS 4, par.
    79 & 88)

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    Section IV Statement of Net Cost

    Cost Accounting in General Responsibility Segments Yes, No, or Explanation
                           (14 - 18)                          N/A
        17. Does the reporting entity include supporting
    schedules in the notes to the financial statements
          if the suborganization's summary information
         provided in the Statement of Net Cost does not
    fully display the suborganization's major programs
        and activities? (OMB Bulletin 01-09, pp. 88-90,
                         section 9.21)
    18. Does the reporting entity disclose gross cost
           and earned revenue,55 by budget functional
          classification? (OMB Bulletin 01-09, p. 91,
                         section 9.25)

    55Gross cost and earned revenue should be net of intra-entity transactions
                                    (consolidated).

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 111

    Section IV Statement of Net Cost

        Cost Accounting in General Full Cost     Yes, No, or N/A    Explanation
                      (19 - 26)
    Full cost is the sum of all costs that contribute to an output and
    includes direct and indirect costs regardless of funding sources. It also
    includes the costs of supporting services provided by other responsibility
    segments or entities. (SFFAS 4, par. 89) Output is any product or service
    generated from the consumption of resources. (SFFAS 4, par. 89) Direct
    costs are costs that can be specifically identified with an output. (SFFAS
    4, par. 90) Indirect costs are costs of resources that are jointly or
    commonly used to produce two or more types of outputs, but are not
    specifically identifiable with any of the outputs. (SFFAS 4, par. 91)
        19. Does the reporting entity include
        all direct costs in the full cost of
             outputs? (SFFAS 4, par. 90)
    20. Does the reporting entity also
    include the following in the full cost
    of outputs? a. indirect costs incurred
    within a responsibility segment b. the
    costs of support services that a
    responsibility segment receives from
    other segments or entities (SFFAS 4,
    par. 91, 122, & 123)
            21. Are the costs of employee
    benefits56 included as part of the cost
          of outputs? (SFFAS 4, par. 93-97)
    22. Are the costs of other
    postemployment benefits reported as
    expenses for the period during which a
    future outflow or other sacrifice of
    resources is probable and measurable on
    the basis of an event occurring on or
    before the accounting date? (SFFAS 4,
    par. 96-97)
    23. Are the full costs of transfer
    payments for welfare, insurance,
    grants, and other public assistance
    programs separately identified from the
    costs of operating such programs?
    (SFFAS 4, par. 98-101; OMB Bulletin
    01-09, pp. 30-32, section 4.3)

    56These include health and life insurance, pension, and other retirement
    benefits, but not other postemployment benefits.

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    Section IV Statement of Net Cost

         Cost Accounting in General Full Cost (19 - 26)   Yes, No, or Explanation
                                                              N/A
            24. Is depreciation expense incurred by
        responsibility segments on general PP&E included
        in the full costs of the goods and services that
           the segments produce? (SFFAS 4, par. 102)
    25. Are the costs of acquiring or constructing
    heritage assets excluded from the full cost of
    goods and services and treated as a program cost57
    or period expense? (SFFAS 4, par. 103)
            26. Are nonproduction costs incurred by
        responsibility segments, such as reorganization
        costs and nonrecurring clean-up costs resulting
    from facility abandonment, excluded from the full
         cost of outputs and treated as current-period
                 expenses? (SFFAS 4, par. 104)

     57Acquisition costs of heritage assets are part of the costs of the entity or
                   the program that makes the property acquisitions.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 113

                            Section IV Statement of Net Cost

        Cost Accounting in General Interentity Costs   Yes, No, or NA Explanation
                          (27 - 32)
    Within the federal government, some reporting entities rely on other
    federal entities to help them achieve their missions.Often, this involves
    support services, but may include the provision of goods. The reporting
    entity generally must account for the full cost of goods or services
    provided to or received from other federal entities. (SFFAS 4, par.
    105-108)
    27. Does the reporting entity include in its
    Statement of Net Cost the full costs of goods
    and services received from other federal
    entities? (SFFAS 4, par. 105)
    28. Does the entity providing goods or services
        to another reporting entity recognize in its
    accounting records, as well as disclose to the
        receiving entity, the full cost of goods and
           services provided? (SFFAS 4, par. 108)
        29. Is recognition of interentity costs that
        are not fully reimbursed limited to material
    items based on an assessment of the importance
        of the individual interentity transaction in
    light of the following factors? a. significance
    to the entity b. directness of relationship to
         the entity's operations c. identifiability
                     (SFFAS 4, par. 112)
    30. Are the costs of broad, general support
    services provided by a federal entity to other
    federal entities excluded from the costs of the
    recipient entity unless such services are
    integral to the receiving entity (e.g.,
    Treasury check-writing services provided for
    the Social Security Administration)? (SFFAS 4,
    par. 112)
    31. If the receiving entity cannot get complete
    information on the full cost of goods or
    services provided by another reporting entity,
    does the receiving entity use a reasonable
    estimate of the cost of the goods or services
    received or the market value of the goods or
    services received if an estimate of the cost
    cannot be made? (SFFAS 4, par. 109)

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                            Section IV Statement of Net Cost

        Cost Accounting in General Interentity Costs   Yes, No, or NA Explanation
                          (27 - 32)
         32. Are interentity expenses and financing
           sources eliminated for any consolidated
        financial statements covering both entities?
                     (SFFAS 4, par. 109)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 115

                            Section IV Statement of Net Cost

         Cost Accounting in General Costing      Yes, No, or N/A    Explanation
                Methodology (33 - 39)
    Cost accumulation is the process of collecting cost data in an organized
    way by responsibility segment. (SFFAS 4, par. 117) Cost assignment is a
    process that identifies accumulated costs with reporting periods and cost
    objects. Three methods of cost assignment are direct tracing, cause and
    effect, and allocating costs on a reasonable and consistent basis. (SFFAS
    4, par. 120) Cost object or cost objective is an activity, output, or item
    the cost of which is to be measured. (SFFAS 4, par. 121) Entities are not
    required to use a particular costing system or costing methodology, but
    the costing system or methodology used should be appropriate to the
    entity's operating environment and used consistently. Four examples of
    acceptable (but not necessarily mutually exclusive) costing methodologies
    are activity-based costing, job order costing, process costing, and
    standard costing. (SFFAS 4, par. 144-147)
    33. Is the entity's accounting system
    capable of identifying costs with
    responsibility segments? (SFFAS 4, par.
    118)
    34. Are the costs of resources consumed
    by responsibility segments classified
    by type of resource, such as costs of
    employees, materials, capital,
    utilities, and rent? (SFFAS 4, par.
    119)
    35. Are data on the quantity of units
    (e.g., staff days, gallons of gasoline
    consumed) related to the various cost
    categories maintained, when appropriate
    and feasible? (SFFAS 4, par. 119)
    36. Are costs assigned to outputs using
        the methods in the following order of
        preference? a. directly tracing costs
        used in the production of an output,
         wherever economically feasible58 b.
        assigning costs on a cause-and-effect
           basis c. allocating costs on a
    reasonable and consistent basis (SFFAS
                    4, par. 124)

    58A method is economically feasible if the benefits resulting from
    implementing the method outweigh its costs.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 116

    Section IV Statement of Net Cost

    Cost Accounting in General Costing Methodology (33 Yes, No, or Explanation
                             - 39)                            N/A
         37. For cost allocation purposes, do indirect
        costs assigned to a given cost pool have similar
              characteristics? (SFFAS 4, par. 136)
    38. Are common costs59 assigned to activities
    either on a cause-and-effect basis, if feasible,
    or through reasonable allocations? (SFFAS 4, par.
    140)
    39. Are the full costing methodologies that are
    most appropriate to a segment's operating
    environment used and consistently followed, and
    any changes made documented and explained? (SFFAS
    4, par. 145 & 146)

    59Common costs refers to the costs of maintaining and operating facilities
    and other resources that cannot be directly traced to any of the
    activities or outputs that share resources.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
    Page 117

                            Section IV Statement of Net Cost

                  Revenues (40-61)               Yes, No, or N/A    Explanation
    Revenues are inflows of resources that the government demands, earns, or
    receives by donation. Revenue comes from two sources: exchange
    transactions and nonexchange transactions. (SFFAS 7, par. 30) Exchange (or
    earned) revenues arise when a government entity provides goods or services
    to the public or to another government entity for a price. (SFFAS 7, par.
    30; OMB Bulletin 01-09, p. 32, section 4.4) Nonexchange revenues arise
    primarily from the government's power to demand payments from the public
    (e.g., taxes, duties, fines), and also include donations. (SFFAS 7, par.
    30) The net cost of a program is the difference between its gross costs
    and related exchange revenues. (OMB Bulletin 01-09, p. 32, section 4.5)
    The net cost of operations by a reporting entity consists of gross cost
    incurred by the reporting entity less any exchange revenue earned from its
    activities. (OMB Bulletin 01-09, p. 28, section 4.1 & p. 33, section 4.8)
        40. Are earned revenues deducted from
        the full cost of outputs or outcomes,
        if practical, to determine their net
    costs? (SFFAS 7, par. 43; OMB Bulletin
             01-09, p. 32, section 4.4)
    41. Is the net amount of gains (or
    losses) subtracted from (or added to)
    the gross cost to determine net cost of
    operations and programs? (SFFAS 7, par.
    44; OMB Bulletin 01-09, p. 28, section
    4.1)
    42. Is earned revenue that is
    insignificant or cannot be attributed
    to particular outputs or programs
    reported separately as a deduction in
    arriving at the net cost of operations
    of the suborganization or reporting
    entity as a whole? (SFFAS 7, par. 44;
    OMB Bulletin 01-09, p. 30, section 4.2
    & p. 33, section 4.7)
    43. Are nonexchange revenues and other
           financing sources excluded from
    calculating net cost of operations for
        the reporting entity? (SFFAS 7, par.
                         44)

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                            Section IV Statement of Net Cost

                        Revenues (40-61)                  Yes, No, or Explanation
                                                              N/A
    44. If the entity incurs virtually no cost in
    connection with earning exchange revenue, is such
    revenue not recognized in the Statement of Net
    Cost, but shown as a financing source on the
    Statement of Changes in Net Position or (if
    appropriate) Statement of Custodial Activity?
    (SFFAS 7, par. 45)
    45. Is any portion of exchange revenue that cannot
            be retained by the entity reported as a
        transfer-out on the Statement of Changes in Net
    Position? (OMB Bulletin 01-09, p. 32, section 4.4)
    46. Does a reporting entity that provides goods or
    services to the public or other government entity
    disclose the following in a note or narrative? a.
    a pricing policy that differs from the full cost
    or market pricing guidance set forth in OMB
    Circular No. A-25 and the possible effect on
    demand and revenue if prices were raised to
    reflect the market or full cost b. exchange
    transactions with the public in which prices are
    set by law or executive order and are not based on
    full cost or market price, or the possible effect
    on demand and revenue if prices were raised to
    reflect the market or full cost c. the nature of
    intragovernmental exchange transactions in which
    goods or services are provided free or at less
    than full cost and the reasons for disparities
    between billing (if any) and full cost d. the full
    amount of any expected loss when specific goods or
    services are provided or made to order under a
    contract and a loss is both probable and
    measurable (SFFAS 7, par. 46 & 47)
         47. Is collected custodial nonexchange revenue
    that is legally retained by the collecting entity
          as reimbursement for the cost of collection,
    recognized as exchange revenue in determining the
    collecting entity's net cost of operations? (SFFAS
        7, par. 60.3; OMB Bulletin 01-09, p. 52, section
                              8.1)

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                            Section IV Statement of Net Cost

                        Revenues (40-61)                  Yes, No, or Explanation
                                                              N/A
    48. Is revenue received from the public or other
    government entity in return for providing goods or
    services recognized and reported in the Statement
    of Net Cost as exchange revenue? (SFFAS 7, par.
    34; OMB Bulletin 01-09, p. 32, section 4.4)
    49. If an exchange transaction is likely to be
    unusual or nonrecurring for a particular entity,
    is a gain or loss recognized rather than a revenue
    or expense? (SFFAS 7, par. 35)
        50. Is exchange revenue recognized when services
        are performed for transactions in which services
        are provided to the public or another government
               entity? (SFFAS 7, par. 34 & 36(a))
    51. If specific goods or services are made to
    order under terms of a contract, is exchange
    revenue (and any probable loss) recognized in
    proportion to estimated total cost when goods and
    services are acquired to fulfill the contract?
    (SFFAS 7, par. 36(b))
    52. When goods are kept in inventory so that they
          are available to customers when ordered, is
         exchange revenue recognized when the goods are
        delivered to the customer? (SFFAS 7, par. 36(c))
        53. If services are rendered continuously or the
         right to use an asset extends continually over
    time, is exchange revenue recognized in proportion
        to the passage of time or the use of the asset?
                     (SFFAS 7, par. 36(d))
         54. Is interest received on intragovernmental
    loans recognized as exchange revenue if the source
          of borrowed funds is predominately exchange
                 revenue? (SFFAS 7, par. 36(d))
    55. When an asset other than inventory is sold, is
        any gain (or loss) recognized when the asset is
    delivered to the purchaser? (SFFAS 7, par. 36(e))

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                            Section IV Statement of Net Cost

                        Revenues (40-61)                  Yes, No, or Explanation
                                                              N/A
    56. When advance fees or payments are received,
    such as for large-scale, long-term projects, is
    revenue recognized only as the cost of providing
    the corresponding goods and services is incurred?
    (SFFAS 7, par. 37)
        57. Is the measurement of revenue from exchange
    transactions based on the actual price received or
    receivable under established pricing arrangements?
                       (SFFAS 7, par. 38)
    58. To the extent that realization of the full
    amount of exchange revenue is not probable due to
    credit losses (caused by the failure of the debtor
    to pay the established or negotiated price), is an
    expense recognized and the allowance for bad debts
    increased, if the bad debts can be reasonably
    estimated? (SFFAS 7, par. 40)
    59. If the realization of the full amount of
    exchange revenue is not probable for reasons apart
    from credit losses (e.g., returns and allowances),
    is a provision made to reduce the recognized
    revenue (if amounts can be reasonably estimated),
    with the provision recognized as a revenue
    adjustment? (SFFAS 7, par. 41)
    60. Is exchange revenue recognized regardless of
    whether the entity retains the revenue for its own
    use or transfers it to other entities? (SFFAS 7,
    par. 43)
    61. Is exchange revenue broken out by major
    category and linked, where possible, to the net
    costs of related outputs, programs, organizations,
    or suborganizations in the Statement of Net Cost?
    (SFFAS 7, par. 43; OMB Bulletin 01-09, p. 32,
    section 4.4)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 121

                            Section IV Statement of Net Cost

    Costs Pensions and Other Retirement
        and Postemployment Benefits (62 -     Yes, No, or N/A      Explanation
                       89)
    Pension benefits include all retirement, disability, and survivor benefits
    financed through a pension plan, including unfunded pension plans.
    Required federal payments to social insurance plans (i.e., Social Security
    and Medicare) and matching federal payments to defined contribution
    pension plans are also considered to be plan expenses. (SFFAS 5, par. 61)
    Costs of pensions and other retirement benefits (ORB), whether they are
    paid for in part or in total by other governmental entities, are included
    in the costs of program outputs. (SFFAS 4, par. 95)) Recognition of other
    postemployment benefits (OPEB) is linked to the occurrence of an OPEB
    event rather than the production of an output. OPEB costs are generally
    treated as period expenses. Special-purpose cost studies may distribute
    OPEB costs over a number of prior years to determine the cost of outputs
    OPEB recipients helped produce. (SFFAS 4, par. 96 & 97) In accounting for
    pensions, ORB, and OPEB, the "administrative entity," typically manages
    and accounts for the related assets and liabilities. The "employer entity"
    accounts for the related costs of pensions, ORB, and OPEB. For these costs
    the employer entity receives a salary and expense appropriation, imputes a
    financing source, or both. (SFFAS 5, par. 57, footnote 38) The "aggregate
    entry age normal" actuarial cost method is one under which the expenses or
    liabilities arising from the actuarial present value of projected pension
    benefits are allocated on a level basis over the earnings or the service
    of the group between entry age and assumed exit ages. The portion of the
    actuarial present value of pension plan and benefits and expenses that is
    allocated to a valuation year is called "normal cost." (SFFAS 5, par. 64)
    62. Are pensions and ORB recognized
           as expenses at the time the
        employee's services are rendered?
               (SFFAS 5, par. 59)
         63. Are postemployment benefits
    recognized as expenses at the time
          the accountable event occurs?
               (SFFAS 5, par. 59)

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    Section IV Statement of Net Cost

            Costs Pensions and Other Retirement and       Yes, No, or Explanation
               Postemployment Benefits (62 - 89)              N/A
    64. Is the "aggregate entry age normal" actuarial
    cost method (or other actuarial cost method, if
    the results are not materially different and an
    explanation is provided) used to calculate pension
    expense, the liability for the administrative
    entity financial statements, and the expense for
    the employer entity financial statements? (SFFAS
    5, par. 64)
        65. When using the "aggregate entry age normal"
        actuarial cost method, does the entity allocate
            pension expenses on the basis of a level
           percentage of earnings? (SFFAS 5, par. 64)
          66. Does the administrative entity base its
         actuarial assumptions for pension plans on the
          experience of the covered groups, long-term
        trends, and guidance of the Actuarial Standards
                   Board? (SFFAS 5, par. 65)
    67. Does the administrative entity base its
    interest rate assumptions on the estimated
    long-term investment yield for the pension plan
    or, if the plan is not being funded, on some other
    appropriate long-term assumption (e.g., the
    federal long-term borrowing rate)? (SFFAS 5, par.
    66)
        68. Does the administrative entity disclose the
         assumptions used to calculate pension benefit
                  expenses? (SFFAS 5, par. 67)
          69. When a new pension plan is initiated or
          current one amended, does the administrative
          entity recognize all past and prior service
             costs60 or gains immediately, without
             amortization? (SFFAS 5, par. 69 & 70)
    70. Does the administrative entity recognize
    actuarial gains and losses61 immediately, without
    amortization? (SFFAS 5, par. 69 &70)

    60Past service costs result from retroactive benefits granted when a new
    plan is initiated. Prior service costs result from retroactive benefits
    granted in a plan amendment.

    61Actuarial gains and losses are changes in the balance of the pension
    liability that result from (1) deviations between actual experience and
    the actuarial assumptions used or (2) changes in actuarial assumptions.

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    Section IV Statement of Net Cost

            Costs Pensions and Other Retirement and       Yes, No, or Explanation
               Postemployment Benefits (62 - 89)              N/A
    71. Does the administrative entity report a
    pension expense for the net of the following
    components, with disclosure of the individual
    components? a. normal cost b. interest on pension
    liability during the period c. prior (and past)
    service cost from plan amendments (or the
    initiation of a new plan) during the period, if
    any d. actuarial gains or losses (including any
    gains or losses due to a change in the medical
    inflation rate assumption) during the period, if
    any (SFFAS 5, par. 72; OMB Bulletin 01-09, p. 80,
    section 9.14)
    72. Does the administrative entity report pension
    plan revenue for the sum of contributions from the
           following entities? a. the employer b. its
    employees62 c. interest on the plan's investments
                    (SFFAS 5, par. 73 & 78)
    73. In the financial report, does the employer
    entity recognize a pension expense that equals the
    service cost (normal cost) for its employees for
    the accounting period, less the amount contributed
    by the employees, if any? (SFFAS 5, par. 74)
    74. Is the employer entity's pension expense
    balanced by (1) a decrease to its "fund balance
    with Treasury" for the amount of its contribution
    to the pension plan, if any; and if this does not
    equal the full pension expense, by (2) an increase
    to an account representing an intragovernmental
    financing source (e.g., "imputed financing-
    expenses paid by other agencies." (SFFAS 5, par.
    75)

    62The administrative entity may also receive financing from the general
    fund to cover prior service or other costs for which contributions were
    not provided by the employer or employee.

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    Section IV Statement of Net Cost

            Costs Pensions and Other Retirement and       Yes, No, or Explanation
               Postemployment Benefits (62 - 89)              N/A
             75. If the employer entity is also the
         administrative entity, does it also report the
         liability63 and recognize the expense for all
        components of the pension plan's cost? (SFFAS 5,
                         par. 71 & 76)
    ORB includes all retirement benefits other than pension benefits. The
    predominant ORB expense in the federal government is retirement health
    benefits. (SFFAS 5, par. 58 & 79)
    76. Is the "aggregate entry age normal" actuarial
    cost method (or other actuarial cost method, if
    the results are not materially different and an
    explanation is provided) used to calculate the ORB
    expense and liability for the administrative
    entity financial statements and the expense for
    the employer entity financial statements? (SFFAS
    5, par. 82)
             77. Are expenses and other liabilities
        attributable to ORB expenses allocated based on
        the service rendered by each employee? (SFFAS 5,
                            par. 82)
    78. Do the amounts calculated for financial
    reports prepared for ORB plans reflect the
    following? a. general actuarial and economic
    assumptions that are consistent with those used
    for pensions b. a health care cost trend
    assumption that is consistent with Medicare
    projections or other authoritative sources
    appropriate for the population covered by the plan
    (SFFAS 5, par. 83)
    79. Does the administrative entity discount the
    projected ORB costs at the rate of expected return
    of plan assets, if the plan is being funded, or on
    some other long-term assumptions (e.g., the
    long-term federal government borrowing rate) for
    unfunded plans? (SFFAS 5, par. 83)

    63The liability is the actuarial present value of all future benefits,
    based on projected salaries and total projected service, less the
    actuarial present value of future normal cost contributions that would be
    made for and by the employees under the plan.

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                            Section IV Statement of Net Cost

            Costs Pensions and Other Retirement and       Yes, No, or Explanation
               Postemployment Benefits (62 - 89)              N/A
        80. Does the administrative entity disclose the
    assumptions used to calculate projected ORB costs?
                       (SFFAS 5, par. 83)
         81. Is the accrual period for ORB based on the
        expected retirement age rather than the age when
    the employee first becomes eligible for retirement
                  benefits? (SFFAS 5, par. 84)
        82. When a new ORB plan is initiated or current
          one amended, does the administrative entity
         recognize all past and prior service costs or
    gains immediately, without amortization? (SFFAS 5,
                         par. 86 & 87)
        83. Does the administrative entity recognize all
    actuarial gains and losses from changes in the ORB
          liability immediately, without amortization?
                    (SFFAS 5, par. 86 & 87)
    84. Does the administrative entity report an ORB
    expense (e.g., health insurance) for the net of
    the following components with disclosure of the
    individual components? a. normal cost b. interest
    on the ORB liability during the period c. prior
    (and past) service cost from plan amendments (or
    the initiation of a new plan) during the period,
    if any d. any gains/losses due to a change in the
    medical inflation rate assumption e. other
    actuarial gains or losses during the period, if
    any (SFFAS 5, par. 88; OMB Bulletin 01-09, p. 80,
    section 9.14)
         85. Does the administrative entity report ORB
         revenue for the sum of contributions from the
    employer entity and its employees? (SFFAS 5, par.
                              89)

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    Section IV Statement of Net Cost

          Costs Pensions and Other Retirement and     Yes, No, or    Explanation
             Postemployment Benefits (62 - 89)            N/A
    86. In the financial report, does the
    employer entity recognize ORB expenses equal
    to the service cost (normal cost) for its
    employees for the accounting period, less the
    amount contributed by the employees, if any?
    (SFFAS 5, par. 90)
    87. Is the employer entity's ORB expense
    balanced by either of the following? a. a
    decrease to its "fund balance with Treasury"
    for the amount of its contribution to the ORB
    plan, if any b. an increase to an account
    representing an intragovernmental imputed
    financing source (e.g., "imputed
    financing-expenses paid by other entities")
    (SFFAS 5, par. 91)
          88. If the employer entity is also the
        administrative entity, does it also report
    the liability64 and recognize the expense for
        all components of the ORB's cost? (SFFAS 5,
                       par. 88 & 92)
    OPEB are provided to former or inactive employees, beneficiaries, and
    covered dependents outside pension or ORB plans. Postemployment benefits
    can include salary continuation, severance benefits, counseling and
    training, continuation of health care or other benefits, unemployment
    workers' compensation, and veterans' disability compensation benefits paid
    by the employer. (SFFAS 4, par. 96; SFFAS 5, par. 57 & 94)
        89. Does the employer recognize an expense
          and a liability for OPEB when a future
        outflow or other sacrifice of resources is
         probable (i.e., more likely than not) and
              measurable? (SFFAS 5, par. 95)

    64The liability is the actuarial present value of all future benefits less
    the actuarial present value of future normal cost contributions that would
    be made for and by the employees under the plan. (SFFAS 5, par. 88)

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                            Section IV Statement of Net Cost

         Costs Inventory, Materials, Supplies, and    Yes, No, or N/A Explanation
                   Commodities (90 - 98)
         90. Upon sale or use of inventory, is the
         related expense recognized and the cost of
        those goods removed from the inventory asset
                account? (SFFAS 3, par. 19)
    91. To arrive at the historical cost of ending
    inventory and cost of goods sold, is one of
    the following cost flow assumptions used? a.
    first-in, first-out b. weighted average c.
    moving average d. any other valuation method
    (such as a standard cost system) whose results
    reasonably approximate one of the above
    historical cost methods (SFFAS 3, par. 22)
    92. Are operating materials and supplies
    expensed using the consumption method (i.e.,
    reported as an operating expense as they are
    issued to the end user for consumption in
    normal operations)? (SFFAS 3, par. 38 & 39)
          93. Are operating materials and supplies
        expensed upon purchase (purchase method) if
    they meet one of the following attributes? a.
    they are of insignificant amounts b. they are
    in the hands of the end user for use in normal
         operations c. it is not cost beneficial to
    apply the consumption method (SFFAS 3, par. 40
                           & 41)
    94. Are inventory and operating materials and
    supplies acquired through a nonmonetary
    exchange valued at the fair value of the items
    received at the time of the exchange, and is
    the difference between the fair value of the
    acquired items and the recorded amount
    surrendered reported as a gain or loss? (SFFAS
    3, par. 21 & 43)

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                            Section IV Statement of Net Cost

         Costs Inventory, Materials, Supplies, and    Yes, No, or N/A Explanation
                   Commodities (90 - 98)
           95. Are abnormal costs associated with
           inventory and operating materials and
    supplies, such as excessive handling or rework
        costs, charged to operations of the period?
                  (SFFAS 3, par. 21 & 43)
    96. Are any unrealized gains or losses
    resulting from periodic revaluations of
    inventory captured in a designated allowance
    account? (SFFAS 3, par. 23 & 24)
    97. Is the cost of stockpile materials removed
          from the corresponding asset account and
        reported as an operating expense when issued
            for use or sale? (SFFAS 3, par. 52)
    98. Are abnormal costs of stockpile materials,
        such as excessive handling and rework costs,
    expensed in current operations? (SFFAS 3, par.
                            53)

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    Section IV Statement of Net Cost

        Costs Property, Plant, and Equipment     Yes, No, or N/A    Explanation
                     (99 - 115)
    A common expense related to PP&E that is included in the Statement of Net
    Cost is depreciation. Other PP&E-related expenses that are reported in the
    Statement of Net Cost include all current cost of acquiring and
    maintaining stewardship land and heritage assets (other than multiuse
    heritage assets.) (SFFAS 6, par. 35, & 69; SFFAS 16, par. 8) Depreciation
    expense is calculated through systematic and rational allocation of the
    cost of PP&E, less its estimated salvage or residual value, over its
    estimated useful life. A composite or group methodology,65 whereby the
    costs of PP&E are allocated using the same allocation rate, is
    permissible. (SFFAS 6, par. 35; SFFAS 23, par. 9, item f)
    99. Is depreciation expense recognized
    on all general PP&E? (SFFAS 6, par. 35)
    100. If historical cost information has
    not been maintained for existing PP&E,
    does the entity depreciate or amortize
    the estimated net remaining cost over
    its remaining useful life in a
    systematic and rational manner? (SFFAS
    6, par. 35, 40, & 41)
    101. In an exchange transaction with a
    nonfederal entity, is the difference
    between the book value (i.e., cost less
    accumulated depreciation) of PP&E
    surrendered and the cost of PP&E
    acquired66 recognized as either a gain
    or a loss? (SFFAS 6, par. 32)
    102. In the event that cash
    consideration is included in the
    exchange transaction with a non federal
    entity, is the cost of PP&E acquired
    either increased by the amount of cash
    consideration surrendered or decreased
    by the amount of cash consideration
    received? (SFFAS 6, par. 32)

    65The composite methodology is a method of calculating depreciation that
    applies a single average rate to a number of heterogeneous assets that
    have dissimilar characteristics and service lives. The group methodology
    is a method of calculating depreciation that applies a single, average
    rate to a number of homogeneous assets having similar characteristics and
    service lives.

    66The cost of the PP&E acquired is recorded at the cost of the PP&E
    surrendered net of any accumulated depreciation or amortization when the
    fair value of the PP&E surrendered or acquired is not determinable.

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                            Section IV Statement of Net Cost

         Costs Property, Plant, and Equipment (99 -   Yes, No, or N/A Explanation
                            115)
        103. When assets have been removed from PP&E
        in anticipation of disposal, retirement, or
        removal from service, has the entity stopped
          recording depreciation and amortization
    expenses for such assets? (SFFAS 6, par. 38 &
                            39)
    104. For general PP&E that is disposed of,
    retired or removed from service, is any
    difference between the book value of the PP&E
    and amounts realized recognized as a gain or a
    loss in the period of disposal, retirement, or
    removal from service? (SFFAS 6, par. 38)
    105. For PP&E assets removed from general PP&E
    accounts prior to disposal, retirement or
    removal from service, is the expected net
    realizable value of these assets adjusted at
    the end of each accounting period, and is any
    adjustment made recognized as either a gain or
    loss? (SFFAS 6, par. 39)
            106. Are costs to acquire, improve,
         reconstruct, or renovate heritage assets,
            other than multiuse heritage assets,
         recognized and reported separately on the
    Statement of Net Cost for the period in which
    the costs are incurred? (SFFAS 16, par. 8; OMB
    Bulletin 01-09, pp. 31 & 32, section 4.3 & p.
                     91, section 9.22)
          107. Do the recognized costs of heritage
    assets also include all costs incurred during
    the period to bring the items to their current
    condition at its initial location? (SFFAS 16,
                          par. 8)
          108. Are amounts for heritage assets or
    stewardship land acquired through donation or
        devise excluded from the calculation of net
    cost? (SFFAS 8, par.79; SFFAS 16, par. 10; OMB
            Bulletin 01-09, p. 91, section 9.23)
    109. Is the fair value, if known and material,
    of heritage assets acquired through donation
    or devise disclosed in notes to the financial
    statements in the year received? (SFFAS 16,
    par. 10; OMB Bulletin 01-09, p. 91, section
    9.23)

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                            Section IV Statement of Net Cost

         Costs Property, Plant, and Equipment (99 -   Yes, No, or N/A Explanation
                            115)
    110. If the fair value of donated or
    bequeathed heritage assets is not known or
    reasonably estimable, is information as to the
    type and quantity of assets received disclosed
    in the notes to the financial statements in
    the year received? (SFFAS 16, par. 10; OMB
    Bulletin 01-09, p. 91, section 9.23)
        111. Are costs to acquire, as well as costs
    incurred to bring the stewardship land to its
          current condition or prepare it for its
         intended use, recognized as a cost of the
         period incurred and disclosed as "Cost of
         Stewardship Land?" (SFFAS 6, par. 69 & 73;
    SFFAS 8, par. 77 & 119; OMB Bulletin 01-09, p.
                     91, section 9.22)
    112. Is the fair value, if known and material,
    of stewardship land acquired through donation
    or devise disclosed in notes to the Statement
        of Net Cost in the year received? (SFFAS 6,
        par. 71; OMB Bulletin 01-09, p. 91, section
                           9.23)
    113. If the fair value of donated or willed
    stewardship land is not estimable, is
    information as to the type and quantity of
    assets received disclosed in notes to the
    Statement of Net Cost in the year received, if
    material? (SFFAS 6, par. 71; OMB Bulletin
    01-09, p. 91, section 9.23)
    114. If land included in PP&E is transferred
    to another federal entity to be used as
    stewardship land, is the cost to the receiving
    entity of the transferred land recognized at
    the book value on the transferring entity's
    books? (SFFAS 6, par. 72)
    115. If the receiving entity does not know the
    book value of the transferred land, is the
    transfer disclosed in the notes to the
    Statement of Net Cost, if material? (SFFAS 6,
    par. 72)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 132

                            Section IV Statement of Net Cost

              Costs Clean-up Costs (116 - 124)        Yes, No, or N/A Explanation
    Clean-up costs are the costs of removing, containing, and/or disposing of
    (1) hazardous waste from property or (2) material and/or property that
    consists of hazardous waste upon permanent or temporary closure or
    shutdown of associated PP&E. Clean-up costs may include, but are not
    limited to, decontamination, decommissioning, site restoration, site
    monitoring, closure, and postclosure costs. (SFFAS 6, par. 85 & 87)
        116. When PP&E is placed into service, does
        the entity estimate the associated clean-up
                 costs? (SFFAS 6, par. 94)
    117. In estimating clean-up costs and
    liability, has the entity considered the
    following? a. the level of restoration to be
    performed b. current legal and regulatory
    requirements c. current technology d. current
    costs (i.e., amount that would be paid if all
    goods and services included in the clean-up
    estimate were acquired in the current period)
    (SFFAS 6, par. 95)
    118. Are estimated clean-up costs periodically
    revised to account for material changes due to
    inflation or deflation and changes in
    regulations, plans, and/or technology? (SFFAS
    6, par. 96)
        119. When PP&E is placed into service, does
    the entity recognize cleanup costs during each
    period that general PP&E is in operation, in a
    systematic and rational manner based on one of
           the following methods? a. based on the
    physical capacity of the PP&E, (e.g., expected
    usable landfill area) b. if physical capacity
        is not applicable or estimable, based on the
        estimated useful life of the associated PP&E
                     (SFFAS 6, par. 97)

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                            Section IV Statement of Net Cost

              Costs Clean-up Costs (116 - 124)        Yes, No, or N/A Explanation
    120. Does recognition of the cleanup costs and
    the accumulation of the related liability
    begin on the date that the associated PP&E is
    placed into service, continue in each period
    that operation continues, and end when the
    PP&E ceases operation? (SFFAS 6, par. 98)
        121. If clean-up costs are reestimated, are
         the cumulative effects of changes in total
    estimated cleanup costs related to current and
    past operations of PP&E immediately recognized
           as an expense and is the corresponding
           liability adjusted? (SFFAS 6, par. 99)
    122. When stewardship PP&E is placed into
    service, does the entity expense the total
    estimated clean-up costs and establish a
    liability in the period the asset is placed
    into service? (SFFAS 6, par. 101)
        123. If clean-up costs for stewardship PP&E
        are reestimated, are any adjustments to the
          liability associated with clean-up costs
          expensed in the period of the change in
               estimate? (SFFAS 6, par. 102)
    124. Does the entity disclose the following
    related to cleanup costs? a. the applicable
    laws and regulations covering clean-up
    requirements b. the method for assigning
    estimated total clean-up costs to current
    operating periods (e.g., physical capacity
    versus passage of time) c. the unrecognized
    portion of estimated total clean-up costs for
    clean-up costs associated with PP&E d.
    material changes in total estimated clean-up
    costs due to changes in laws, technology, or
    plans, as well as the portion of the change in
    clean-up cost estimates that relates to
    prior-period operations e. the nature of
    estimates and information regarding possible
    changes due to inflation, deflation,
    technology, or applicable laws and regulations
    (SFFAS 6, par. 107-111)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 134

                            Section IV Statement of Net Cost

                   Costs Interest (125 -126)             Yes, No, or  Explanation
                                                             N/A
    Interest incurred results from borrowing funds from Treasury, Federal
    Financing Bank, other federal entities, or the public. Interest also
    should be recorded on late payment of bills by the federal entity and on
    refunds. (SFFAS 1, par. 81) Interest costs are generally related to
    securities and other debt instruments issued by the U.S. Treasury or other
    federal agencies. (SFFAS 5, par. 47-48)
    125. Does the related interest cost of federal
    debt include the following? a. the accrued
    (prorated) share of the nominal interest incurred
    during the accounting period b. the amortized
    discounts or premiums for each accounting period
    for fixed value securities c. the amount of
    change in the current value for the accounting
    period for variable value securities (SFFAS 5,
    par. 53)
    126. If securities are retired before maturity,
    is the difference between the reacquisition price
    and net carrying value of the extinguished debt
    recognized in the period of extinguishment as a
    gain or loss? (SFFAS 5, par. 54)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 135

                            Section IV Statement of Net Cost

         Costs Insurance and Subsidies (127 -130)    Yes, No, or    Explanation
                                                         N/A
    Federal insurance and guarantee programs are established to assume risks
    that private sector entities are unwilling or unable to assume or to
    subsidize the provision of insurance to achieve social objectives. For
    life insurance, a premium deficiency occurs if the liability for future
    policy benefits using current conditions exceeds the liability for future
    policy benefits using contract conditions. (SFFAS 5, par. 97 & 120)
    127. If an insured event has occurred as of
    the financial statement reporting date, has
    the federal entity recognized an expense for
    all claims incurred during the period,
    including, when appropriate, those incurred
    but not reported and contingencies that meet
    the criteria for recognition? (SFFAS 5, par.
    104 & 109)
    128. Are changes in estimates of claim cost
    resulting from (1) the present value
    calculations, (2) the continuous review
    process, and (3) differences between the
    estimates and actual payments for claims,
    recognized as charges against operations of
    the period in which the estimates are
    changed or payments are made? (SFFAS 5, par.
    109)
          129. If the liability for future [life
         insurance] policy benefits using current
    conditions exceeds the liability for future
        policy benefits under contract conditions
    (resulting in a premium deficiency), is the
           difference recognized as a charge to
    operations in the current period? (SFFAS 5,
                        par. 120)
    130. Does the entity recognize an expense
    for social insurance67 benefits paid during
    the reporting period plus any increase (or
    less any decrease) in the liability for
    social insurance benefits due and payable to
    or on behalf of beneficiaries, from the end
    of the prior period to the end of the
    current period? (SFFAS 17, par. 22)

    67Social insurance programs include Social Security, Medicare, Railroad
    Retirement, and Black Lung Benefits.

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    Section IV Statement of Net Cost

          Costs Credit Programs (131 - 178)      Yes, No, or N/A    Explanation
    In accordance with the Federal Credit Reform Act of 1990, as amended, a
    subsidy expense is recognized for direct or guaranteed loans disbursed
    during the fiscal year. The amount of the subsidy expense equals the
    present value of estimated cash outflows over the life of the loans minus
    the present value of the estimated cash inflows. The discount rate used to
    calculate the present value is the average interest rate on marketable
    Treasury securities of similar maturity to the cash flows of the direct
    loan or loan guarantee for which the estimate is being made. (SFFAS 2,
    par. 6, 7, 24, 30, & 31; SFFAS 19, par. 6 & 7)
          131. For post-1991 direct or loan
         guarantee programs, is the present
        value of estimated cash outflows over
    the life of the loans minus the present
           value of estimated cash inflows
         discounted at the interest rate of
         marketable Treasury securities with
         similar maturity to the cash flows?
        (SFFAS 2, par. 24; SFFAS 19, par. 6)
    132. For post-1991 direct or loan
    guarantee programs, are the net present
    values recognized as expense in the
    year the loan is disbursed? (SFFAS 2,
    par. 24; SFFAS 19, par. 6)
        133. Are the following components of
    estimated subsidy costs (and offsetting
          receipts) of post-1991 loans and
        guarantees separately recognized? a.
         interest subsidy costs68 b. default
        costs69 c. present value of fees and
         other collections d. other subsidy
             costs (SFFAS 2, par. 25-29)

    68The interest subsidy cost of direct loans is the excess of the amount of
    the loans disbursed over the present value of the interest and principal
    payments required by loan contracts discounted at the applicable Treasury
    rate; for loan guarantees it is the present value of estimated interest
    supplement payments.

    69The default cost of direct loans or loan guarantees is measured at the
    present value of projected payment delinquencies and omissions minus
    projected net recoveries.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 137

    Section IV Statement of Net Cost

             Costs Credit Programs (131 - 178)        Yes, No, or N/A Explanation
           134. Is the subsidy cost allowance for
         post-1991 direct loans amortized using the
    interest method? 70 (SFFAS 2, par. 30, 31, and
         app. B, part I B (2); SFFAS 19, par. 7(a))
        135. If the effective interest for post-1991
           direct loans is less than the nominal
          interest, is the subsidy cost allowance
    increased by the difference and recognized as
    a reduction in interest income? (SFFAS 2, par.
         30 & app. B, part I B (2); SFFAS 19, par.
                           7(a))
    136. If the effective interest for post-1991
    direct loans is greater than the nominal
    interest, is the subsidy cost allowance
    decreased by the difference and recognized as
    an increase in interest income? (SFFAS 2, par.
    30 & app. B, part I B (2); SFFAS 19, par.
    7(a))
    137. Is interest accrued and compounded on the
        liabilities of post-1991 loan guarantees at
    the interest rate that was originally used to
          calculate the present value of the loan
         guarantee liabilities when the guaranteed
    loans were disbursed, after adjusting for the
    interest reestimate? (SFFAS 2, par. 31 & app.
          B, part III B (2); SFFAS 19, par. 7(b))
    138. Is the interest accrued and compounded on
    the liabilities of post-1991 loan guarantees
    recognized as an interest expense? (SFFAS 2,
    par. 31 & app. B, part III B (2))

    70Under the interest method, the amortized amount is the difference
    between the nominal interest (face amount of loan times stated interest)
    and effective interest (present value of loan times discount rate). The
    effective interest rate is the average interest rate of marketable
    Treasury securities with similar maturity that was used to calculate the
    present value of the direct loans when the direct loans were disbursed,
    after adjusting for the interest rate reestimate.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 138

    Section IV Statement of Net Cost

            Costs Credit Programs (131 - 178)      Yes, No, or N/A  Explanation
    Two kinds of reestimates for the subsidy cost allowance for outstanding
    direct loans and the liability for outstanding loan guarantees are (1)
    interest rate reestimates and (2) technical/default reestimates. An
    interest rate reestimate is due to a change in the interest rates from
    those that were assumed in budget preparation and used in calculating the
    subsidy expense to the interest rates that are prevailing during the
    periods in which the direct or guaranteed loans are disbursed. A
    technical/default reestimate is due to changes in projected cash flows of
    outstanding direct loans and loan guarantees after reevaluating the
    underlying assumptions and other factors (except for interest rate
    reestimates) that affect cash flow projections as of the financial
    statement date. (SFFAS 18, par. 9)
        139. Does the entity measure and disclose
    reestimates of allowances for subsidy costs
         of post-1991 loans and liabilities for
        guarantees in two components separately,
    specifically: the interest rate reestimate
          and the technical/default reestimate?
                   (SFFAS 18, par. 9)
    140. Is any increase (or decrease) in the
    subsidy cost allowance of post-1991 direct
    loans or loan guarantee liabilities
    resulting from the interest rate and
    technical /default reestimates recognized
    as a subsidy expense (or a reduction in
    subsidy expense) and disclosed separatetly
    by component? (SFFAS 2, par. 32; SFFAS 18,
    par. 9; OMB Bulletin 01-09, pp. 62 & 71,
    section 9.8, item E2 & pp. 66 & 73, section
    9.8, item L2)
    141. If the assumed interest rates used in
    calculating the subsidy expenses for
    cohorts71 from which direct or guaranteed
    loans are disbursed differ from the rates
    prevailing at the time of the loan
    disbursement, is an interest rate
    reestimate for those cohorts made as of the
    date of the financial statements? (SFFAS
    18, par. 9 (A))
    142. Do technical/default reestimates take
    into consideration all factors that may
    have affected various components of
    projected cash flows, including defaults,
    delinquencies, recoveries, and prepayments?
    (SFFAS 18, par. 9 (B))

    71Cohort, as it is used here, is a budget term that refers to all direct
    loans or loan guarantees of a program for which a subsidy appropriation is
    provided for a given fiscal year, even if disbursements occur in
    subsequent years.

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                            Section IV Statement of Net Cost

               Costs Credit Programs (131 - 178)          Yes, No, or Explanation
                                                              N/A
        143. Are technical/default reestimates made each
        year as of the date of the financial statements?
                     (SFFAS 18, par. 9 (B))
    144. In a note to the financial statement, does
    the entity display a reconciliation between the
    beginning and ending balances of the following? a.
    the subsidy cost allowances for outstanding direct
    loans b. the liability for outstanding loan
    guarantees reported in the entity's balance sheet
    (SFFAS 18, par. 10)
    145. Does the reconciliation of beginning and
    ending subsidy cost allowances and loan guarantee
    liability balances include changes in the
    following? a. interest subsidy costs, default
    costs, fees and other collections, and other
    subsidy costs b. interest rate and
    technical/default reestimates c. other adjustments
    (SFFAS 2, par. 25-29; SFFAS 18, par. 10)
          146. For direct loans, do other adjustments
        include loan modifications, fees received, loans
           written off, foreclosed property or other
           recoveries acquired, and subsidy allowance
               amortization? (SFFAS 18, par. 10)
         147. For loan guarantees, do other adjustments
           include loan guarantee modifications, fees
           received, interest supplements paid, claim
        payments made to lenders, foreclosed property or
            other recoveries acquired, and interest
          accumulated on the loan guarantee liability?
                      (SFFAS 18, par. 10)

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    Section IV Statement of Net Cost

               Costs Credit Programs (131 - 178)          Yes, No, or Explanation
                                                              N/A
         148. In its notes to the financial statements,
          does the entity include a description of the
         characteristics of the program it administers,
        including the following? a. the total amount of
          direct or guaranteed loans disbursed for the
    current and preceding reporting years b. interest
          subsidy costs, default costs, fees and other
        collections, and other subsidy costs c. interest
    rate and technical/default reestimates (SFFAS 18,
                          par. 11 (A))
    149. Does the reporting entity disclose, at the
    program level, the subsidy rates72 for direct
    loans and loan guarantees in the current year's
    budget for the current year's cohorts, the
    following items? a. total subsidy cost b. interest
    subsidy costs c. default costs (net of recoveries)
    d. fees and other collections e. other costs
    (SFFAS 18, par. 11 (B))
    150. If the entity uses trend data to display
    significant fluctuations in subsidy rates, are
    these data accompanied by an analysis that
    explains the underlying causes for the
    fluctuations? (SFFAS 18, par. 11 (B))
    151. Does the reporting entity disclose, discuss,
    and explain events and changes in economic
    conditions, other risk factors, legislation,
    credit policies,73 and subsidy estimation
    methodologies and assumptions that have had a
    significant and measurable effect on subsidy
    rates, subsidy expenses, and subsidy reestimates?
    (SFFAS 18, par. 11 (C))

    72The subsidy rate is the dollar amount of the subsidy component as a
    percentage of the direct loans or loan guarantees obligated in the cohort.

    73Changes in legislation or credit policies include, for example, changes
    in borrowers' eligibility, the levels of fees or interest rates charged to
    borrowers, the maturity terms of loans, and the percentage of private
    loans that are guaranteed.

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 141

                            Section IV Statement of Net Cost

               Costs Credit Programs (131 - 178)          Yes, No, or Explanation
                                                              N/A
    152. Does the disclosure and discussion also
    include events and changes that have occurred and
    are more likely than not to have a significant
    impact, but whose effects are not measurable at
    the reporting date? (SFFAS 18, par. 11 (C))
    153. Are default costs estimated and periodically
    reestimated for each post-1991 loan and loan
    guarantee program on the basis of separate cohorts
    and risk categories? (SFFAS 2, par. 33)
    154. In estimating default costs, has the entity
    considered the following factors? a. loan
    performance experience b. the current and
    forecasted international, national, or regional
    economic conditions that may affect the
    performance of the loans c. financial and other
    relevant characteristics of borrowers d. the value
    of collateral to loan balance e. changes in
    recoverable value of collateral f. newly developed
    events that could affect the loans' performance g.
    improvements in methods to reestimate defaults
    (SFFAS 2, par. 34)
    155. In estimating and reestimating future default
    costs for each group, cohort, and risk category of
           loan and guarantee, has the agency used a
    systematic methodology based on actual historical
              experience? (SFFAS 2, par. 35 & 36)
        156. Is interest (at the discount rate in effect
        when the loans were first disbursed) accrued on
          post-1991 direct loans, including amortized
    interest, recognized as interest income? (SFFAS 2,
              par. 37 & app. B, part I B (2) & C)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 142

                            Section IV Statement of Net Cost

           Costs Credit Programs (131 - 178)      Yes, No, or N/A   Explanation
    157. Is interest (at the original discount
         rate) accrued on debt to the Treasury
          arising from post-1991 direct loans
    recognized as interest expense? (SFFAS 2,
          par. 37 & app. B, part I B (2) & C)
    158. Is interest (at the discount rate in
            effect when the loans were first
           disbursed) accrued on liability of
        post-1991 loan guarantees recognized as
    interest expense? (SFFAS 2, par. 37 & app.
                 B, part III B (2) & C)
    159. Is interest (at the original discount
    rate) due from the Treasury on uninvested
    funds associated with post-1991 loan
    guarantee liabilities recognized as
    interest income? (SFFAS 2, par. 37 & app.
    B, part III B (2) & C)
    160. Are costs for administering credit
    activities (such as salaries, legal fees,
    and servicing) incurred in support of
    direct loan and guaranteed loan programs
    recognized as administrative expenses and
    not included in direct loan and loan
    guarantee subsidy costs? (SFFAS 2, par.
    38)
    161. Are administrative expenses for loans
    and guarantees broken out and disclosed by
    program, if material? (OMB Bulletin 01-09,
            p. 67 & 74, section 9.8, item O)
    162. Are losses (as well as valuation
    allowances and corresponding liabilities)
    of direct loans obligated and loan
    guarantees committed before October 1,
    1991, recognized when it is more likely
    than not that the direct loans will not be
    totally collected or that the loan
    guarantees will require a future cash
    outflow to pay default claims? (SFFAS 2,
    par. 39)
              Foreclosed properties are assets received in satisfaction of a loan
            receivable or as a result of payment of a claim under a guaranteed or
                 insured loan (excluding commodities acquired under price support
         programs.) All properties included in foreclosed property are assumed to
                be held for sale. Pre-1992 foreclosed property refers to property
    associated with direct loans obligated or loan guarantees committed before
                October 1, 1991. Post-1991 foreclosed property refers to property
        associated with direct loans obligated or loan guarantees committed after
                                      September 30, 1991. (SFFAS 3, par. 79 & 80)

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                            Section IV Statement of Net Cost

             Costs Credit Programs (131 - 178)        Yes, No, or N/A Explanation
    163. If, at the time of the foreclosure, the
    expected net realizable value of pre-1992
    foreclosed property is less than the cost
    (i.e., the carrying amount of the loan, or for
    a loan guarantee, the amount of the claim
    paid), is the loss charged to operations and
    tracked in a valuation allowance account?
    (SFFAS 3, par. 86)
        164. If the pre-1992 foreclosed asset's net
         realizable value subsequently increases or
        decreases, does the entity credit or charge
          this amount to results of operations and
    adjust the valuation allowance? (SFFAS 3, par.
                            86)
    165. Upon sale of foreclosed property, is any
    difference between the net carrying amount of
        foreclosed property and the net proceeds of
           the sale recognized as a component of
           operating results? (SFFAS 3, par. 89)
    166. For post-1991 foreclosed property, is
    interest income accrued from the previous
    periodic adjustment in the carrying amount up
    to the sale date? (SFFAS 3, par. 89)
    167. For post-1991 foreclosed property, is the
    resulting difference between the adjusted
    carrying amount and the net sales proceeds
    recognized as a reestimate of "subsidy
    expense?" (SFFAS 3, par. 89)
    168. For pre-1992 foreclosed property, is the
          difference between the adjusted carrying
    amount and net sales proceeds recognized as a
          gain or a loss on the sale of foreclosed
                property? (SFFAS 3, par. 89)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 144

    Section IV Statement of Net Cost

         Costs Credit Programs (131 - 178)      Yes, No, or N/A     Explanation
    The term modification, as it applies to direct loans and loan guarantees,
    means a federal government action, including new legislation or
    administrative action, that directly or indirectly alters the estimated
    subsidy cost and the present value of outstanding direct loans, or the
    liability of loan guarantees. The cost of the modification is the excess
    of the premodification value of a direct loan (or postmodification
    liability of loan guarantees) over the postmodification value of a direct
    loan (or premodification liability of loan guarantees), both of which have
    been discounted at the Treasury rate in effect when the modification
    occurred. (SFFAS 2, par. 41; SFFAS 2, par. 45, notes 3 & 4 & par. 49,
    notes 6 & 7; SFFAS 19, par. 6) The book value of the loan or guarantee is
    discounted at the Treasury rate originally used to calculate the present
    value of the direct loan or loan guarantee liability when the loan was
    originally disbursed. (SFFAS 2, par. 48 & 50, app. B parts I D (4 & 5), II
    B (4), III B (4), & IV B (4)) The sale of post-1991 and pre-1992 direct
    loans is treated as a direct modification of the loans sold if the sale
    proceeds were not included in the cash flows estimates for the initial
    subsidy calculation. The cost of modification is determined on the basis
    of the premodification value of the loans sold. However, if sale proceeds
    were included in the cash flow estimates for the initial subsidy
    calculation, the effect of the loan sale on the cost of the program is
    recognized in the reestimates. (SFFAS 2, par. 53, Appendix B. par 1F)
    169. If pre-1992 or post-1991 direct
    loans are modified, is the excess of
    the premodification value74 over the
    postmodification value75 recognized as
    a modification expense? (SFFAS 2, par.
    45 & app. B, parts I D (1-3) & II B
    (1-3))
    170. If the cost of modifying pre-1992
    or post-1991 loans is greater than the
    decrease in the loans' book value, is
    the difference recognized as a gain?76
    (SFFAS 2, par. 48 & app. B, parts I D
              (4 & 5) & II B (4 & 5))

    74This is the present value of the net cash inflows estimated under
    premodification terms discounted at the current Treasury rate.

    75This is the present value of the net cash inflows estimated under
    postmodification terms discounted at the current Treasury rate.

    76A gain from a modification occurs when the cost of a modification is
    greater than the decrease in book value of a direct loan (or increase in
    the liability of a loan guarantee). (SFFAS 2, par. 46, 48 note 5, 50, & 52
    note 8; SFFAS 19, par. 7)

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    Section IV Statement of Net Cost

               Costs Credit Programs (131 - 178)          Yes, No, or Explanation
                                                              N/A
           171. If the cost of modifying pre-1992 or
        post-1991 loans is less than the decrease in the
    loans' book value, is the difference recognized as
    a loss?77 (SFFAS 2, par. 48 & app. B, parts I D (4
                   & 5), & part II B (4 & 5))
    172. If pre-1992 or post-1991 loan guarantees are
    modified, is the excess of the postmodification
    liability78 over the premodification liability79
    recognized as a modification expense? (SFFAS 2,
    par. 49 & app. B, parts III D (1-3), & IV B (1-3))
           173. If the cost of modifying pre-1992 or
         post-1991 loan guarantees is greater than the
         increase in the book value of the related loan
            guarantee liabilities, is the difference
    recognized as a gain? (SFFAS 2, par. 52 & app. B,
                parts III D (4 & 5), & IV B (5))
    174. If the cost of modifying pre-1992 or
    post-1991 loan guarantees is less than the
    increase of the related loan guarantee
    liabilities, is the difference recognized as a
    loss? (SFFAS 2, par. 52 & app. B, parts III D (4 &
    5) & IV B (5))
    175. If the premodification value of post-1991 and
         pre-1992 loans sold80 exceeds the net proceeds
        from the sale, is the excess treated as the cost
        of modification and recognized as a modification
    expense? (SFFAS 2, par. 45 & 53 & app. B, part I F
                              (1))
          176. If a loan is sold with recourse, is the
          present value of estimated losses under the
    recourse or guarantee obligations recognized as a
    subsidy expense and as a loan guarantee liability?
                       (SFFAS 2, par. 54)

    77A loss from a modification occurs when the cost of a modification is
    less than the decrease in book value of a direct loan (or increase in the
    liability of a loan guarantee) that was discounted at the Treasury rate in
    effect when the loan was made. (SFFAS 2, par. 46, 48 note 5, 50, & 52 note
    8; SFFAS 19, par. 17)

    78This is the present value of the net cash flows under postmodification
    terms discounted at the current Treasury rate.

    79This is the present value of the net cash flows under premodification
    terms discounted at the current Treasury rate.

    80This is the present value of the loans' net cash inflows discounted at
    the current discount rate.

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    Page 146

                            Section IV Statement of Net Cost

             Costs Credit Programs (131 - 178)        Yes, No, or N/A Explanation
    177. If the modification expense arising from
         a loan sale is greater than the book value
    loss, is the difference recognized as a gain?
         (SFFAS 2, par. 55 & app. B, part I F (2))
    178. If the modification expense arising from
    a loan sale is less than the book value loss,
    is the difference recognized as a loss? (SFFAS
             2, par. 55 & app. B, part I F (2))

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 147

    Section V Statement of Changes in Net Position

    The 40 questions in this section are related to the Statement of Changes
    in Net Position Question Numbers

    1. General 1 -6

    2. Budgetary Financing Sources 7 - 23

    3. Other Financing Sources 24 -40

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                     Section V Statement of Changes in Net Position

                      General (1 - 6)                  Yes, No, or   Explanation
                                                           N/A
    The Statement of Changes in Net Position reports the change in net
    position during the reporting period. Net position is affected by changes
    to its two components: Cumulative Results of Operations and Unexpended
    Appropriations. They are broken out into two separate columns in the
    Statement of Changes in Net Position. (OMB Bulletin 01-09, pp. 34 & 35,
    sections 5.1 & 5.2)
         1. Do the ending balances of the two main
          components of this statement, Cumulative
            Results of Operations and Unexpended
        Appropriations, agree with to line items of
        the same names in the "net position" section
    of the balance sheet? (OMB Bulletin 01-09, p.
        18, section 3.2, pp. 34 & 35, sections 5.1 &
                  5.2, p. 38, section 5.7)
    2. Do beginning balances of Cumulative Results
        of Operations and Unexpended Appropriations
           agree with the amounts reported as net
        position on the prior year's balance sheet?
          (OMB Bulletin 01-09, p. 35, section 5.3)

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                     Section V Statement of Changes in Net Position

                      General (1 - 6)                 Yes, No, or N/A Explanation
         3. Are "beginning balances, as adjusted,"
    equal to the sum of the beginning balances of
        net position as reported on the prior year's
        balance sheet, and prior period adjustments?
          (OMB Bulletin 01-09, p. 36, section 5.3)
    4. When errors81 are discovered after the
    issuance of financial statements, and if the
    financial statements would be materially
    misstated absent correction of the errors, are
    the corrections made as follows in the
    statement of changes in net position? a. If
    only the current period statement is
    presented, the cumulative effect of correcting
    the error is reported as a prior period
    adjustment to the beginning balance of the
    cumulative results of operations. b. If
    comparative financial statements are
    presented, individual amounts on the financial
    statements are corrected in the earliest
    affected period presented. c. If the earliest
    period presented in the comparative financial
    statements is not the period in which the
    error occurred and the cumulative effect is
    attributable to prior periods, the cumulative
    effect is reported as a prior period
    adjustment to the beginning balance of
    cumulative results of operations in the
    statement of net position for the earliest
    period presented. (SFFAS 21, par. 10 & 11)

    81Errors in financial statements result from mathematical mistakes,
    mistakes in the application of accounting principles, or oversight or
    misuse of facts that existed at the time the financial statements were
    prepared.

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                     Section V Statement of Changes in Net Position

                      General (1 - 6)                 Yes, No, or N/A Explanation
         5. Is the nature of an error in previously
    issued financial statements and the effect of
    its correction on relevant balances disclosed?
                  (SFFAS 21, par. 10 (c))
    6. If changes in accounting principles82 would
    have resulted in a change to prior period
    financial statements, are they handled in the
    following manner? a. the cumulative effect of
    the change on prior periods is reported as a
    "change in accounting principle" and reported
    as an adjustment to the beginning balance of
    the cumulative results of operations in the
    Statement of Changes in Net Position for the
    period that the change is made b. prior period
    financial statements presented for comparative
    purposes are presented as previously reported
    c. the nature of the changes in accounting
    principle and its effect on relevant balances
    are disclosed in the current period83 (SFFAS
    21, par. 12 & 13; SFFAS 23, par. 17 & 18)

    82A change in accounting principle is a change from one generally accepted
    accounting principle to another one that can be justified as preferable;
    this would also include changes occasioned by the adoption of new federal
    accounting standards.

    83Financial statements of subsequent periods need not repeat the
    disclosure.

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    Page 151

                     Section V Statement of Changes in Net Position

          Budgetary Financing Sources (7 - 23)     Yes, No, or N/A  Explanation
    The section, "Budgetary Financing Sources," displays financing sources and
    nonexchange revenue that are also budgetary resources, or adjustments to
    these resources, as reported on the Statement of Budgetary Resources and
    defined as such by OMB Circular No. A-11, Part 484 "Instructions on Budget
    Execution," as amended. (OMB Bulletin 01-09, p. 36, section 5.4)
    7. Do budgetary "appropriations received"85
    reported under "Budgetary Financing
    Sources" agree with the amount reported on
    the line item "appropriations received" in
    the Statement of Budgetary Resources? (OMB
    Bulletin 01-09, p. 36, section 5.4)
    8. Are unexpended appropriations reduced as
    appropriations are used? (SFFAS 7, par. 71)
        9. Are unexpended appropriations adjusted
        for other changes in budgetary resources,
        such as rescissions and transfers? (SFFAS
                       7, par. 71)
        10. Do "appropriations transferred in/out
        (+/-)" equal the amount of appropriations
        received in the current or prior year(s)
    that have been transferred in or out during
        the current reporting year? (OMB Bulletin
               01-09, p. 36, section 5.4)
    11. Do "other adjustments86 (rescissions,
    etc.) (+/-)" include adjustments to either
    cumulative results of operations or
    unexpended appropriations? (OMB Bulletin
    01-09, p. 36, section 5.4)

    84OMB Circular A-11 superceded OMB Circular A-34 in June 2002 and was
    revised on July 25, 2003.

    85Appropriations received do not include appropriated dedicated and
    earmarked receipts. Dedicated and earmarked receipts are accounted for as
    either exchange or nonexchange revenue in accordance with SFFAS No. 7)

    86Some examples of adjustments include rescissions of appropriations and
    cancellations of expired appropriation expenditure accounts, which would
    also be included in line 6, "Permanently not Available" on the Statement
    of Budgetary Resources.

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                     Section V Statement of Changes in Net Position

              Budgetary Financing Sources (7 - 23)        Yes, No, or Explanation
                                                              N/A
    12. Are appropriations used by collecting entities
    to provide refunds of monies deposited to Treasury
    and trust funds reported under "other adjustments
          (rescissions, etc.) (+/-)" rather than as an
    "appropriations used?" (OMB Bulletin 01-09, p. 36,
                          section 5.4)
         13. Are "appropriations used" recognized as a
          financing source when goods and services are
            received or when benefits and grants are
    provided?87 (SFFAS 7, par. 72; OMB Bulletin 01-09,
                      p. 36, section 5.4)
            14. Is the amount of appropriations used
         subtracted from unexpended appropriations and
        added to cumulative results of operations for a
        net zero effect on net position as a whole? (OMB
              Bulletin 01-09, p. 36, section 5.4)
    15. Do "appropriations88 used" exclude the
    following? a. undelivered orders b. unobligated
    appropriations c. dedicated tax receipts,
    earmarked receipts, and donations89 (OMB Bulletin
    01-09, p. 36, section 5.4)
    16. Is nonexchange revenue recognized as a
    financing source (and not as a deduction in
    determining the net cost of operations)? (SFFAS 7,
    par. 60)

    87This is true whether the goods, services, and benefits are payable or
    paid as of the reporting date and whether the appropriations are used for
    items that are expensed or capitalized.

    88Appropriations used does not increase net position. It is subtracted
    from "unexpended appropriations" and added to "cumulative results of
    operations," which are line items on the balance sheet.

    89Those financing sources are reported as either exchange or nonexchange
    revenue.

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                     Section V Statement of Changes in Net Position

            Budgetary Financing Sources (7 - 23)      Yes, No, or N/A Explanation
    17. Does the entity recognize nonexchange
    revenues, such as taxes, if it is legally
    entitled to the revenue? (SFFAS 7, par. 48 &
    49)
    18. Is nonexchange revenue recognized when the
           government's claim to resources can be
         characterized as follows? a. specifically
           identifiable b. legally enforceable c.
        reasonably estimable d. more likely than not
               collectable (SFFAS 7, par. 48)
    19. Is revenue recognized by the recipient
    entities the sum of the following? a. cash or
    cash equivalents transferred to them by the
    collecting entities b. the net change in any
    related interentity balances between the
    collecting and the receiving entities (i.e.,
    the amount to be transferred to the recipient
    entities from the collecting entity or vice
    versa) (SFFAS 7, par. 60)
    20. Do "donations and forfeitures of cash and
    cash equivalents" include voluntary gifts and
        involuntary forfeitures of resources to the
         federal government by nonfederal entities?
          (OMB Bulletin 01-09, p. 37, section 5.4)

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    Section V Statement of Changes in Net Position

              Budgetary Financing Sources (7 - 23)        Yes, No, or Explanation
                                                              N/A
    21. Do "transfers-in/out without reimbursement
    (+/-)" under "budgetary financing sources" include
    intragovernmental nonappropriated90 balance
    transfers in or out during the current reporting
    year? (OMB Bulletin 01-09, p. 37, section 5.4)
    22. Is exchange revenue (included in calculating
    an entity's net cost of operations) required to be
    transferred to the Treasury or another federal
    entity recognized as a transfer out? (OMB Bulletin
    01-09, p. 37, section 5.4)
    23. Do "other budgetary financing sources" include
         other financing sources that affect budgetary
          resources that have not been covered by the
        preceding questions? (OMB Bulletin 01-09, p. 37,
                          section 5.4)

    90Nonappropriated balances include financing sources and revenue not
    reported as unexpended appropriations.

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                     Section V Statement of Changes in Net Position

             Other Financing Sources (24 - 40)        Yes, No, or N/A Explanation
            "Other financing sources," displays financing sources and nonexchange
             revenue that do not represent budgetary resources as reported on the
         Statement of Budgetary Resources and defined as such by OMB Circular No.
                            A-11, Part 4 (OMB Bulletin 01-09, p. 37, section 5.5)
          24. Do the items reported in the "other
        financing sources" section equal the amounts
        reported as similar line items in the "other
          resources"91 section on the Statement of
    Financing? (OMB Bulletin 01-09, p. 35, section
    5.2, pp. 37 & 38, section 5.5, p. 46, section
                 7.2 & p. 48, section 7.3)
    25. Is revenue arising from donations of
    property measured at the estimated fair value
    of the contribution at the time of the
    donation? (SFFAS 6, par. 30; SFFAS 7, par. 62,
    OMB Bulletin 01-09, p. 37, section 5.5)

    91Other resources increase net position but are not budgetary resources as
    reported on the "Statement of Budgetary Resources or defined as such in
    OMB Circular No. A-11, Part 4. OMB Circular A-11 superceded OMB Circular
    A-34 in June 2002 and was revised on July 25, 2003.

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    Section V Statement of Changes in Net Position

               Other Financing Sources (24 - 40)          Yes, No, or Explanation
                                                              N/A
    26. Are transferred assets recorded at the book
    value of the transferring entity, or, if the
    receiving entity does not know the book value, is
    the asset recorded at its estimated fair value as
    of the date of the transfer? (SFFAS 7, par. 74;
    OMB Bulletin 01-09, p. 37, section 5.5)
    27. When assets92 are transferred in or out by
    entities without reimbursement: a. Does the
    receiving entity recognize the transfer-in as an
    increase in financing sources in its statement of
    net position? b. Does the transferring entity
    recognize the transfer out as a decrease in
    financing sources in its statement of changes in
    net position? (SFFAS 7, par. 74, OMB Bulletin
    01-09, p. 37, section 5.5)

    92This amount includes intragovernmental transfers in to or out of
    capitalized assets during the current reporting year.

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                     Section V Statement of Changes in Net Position

               Other Financing Sources (24 - 40)          Yes, No, or Explanation
                                                              N/A
    28. Does the reporting entity recognize an imputed
        financing source for costs funded through other
    federal entities as well as nonreimbursed costs of
          goods and services provided by other federal
        entities? (SFFAS 4, par. 109; SFFAS 7, par. 73;
            OMB Bulletin 01-09, p. 37, section 5.5)
         29. Do imputed financing costs reported on the
         Statement of Changes in Net Position equal the
        amount of imputed financing costs as reported on
    the statement of net cost? (OMB Bulletin 01-09, p.
                        37, section 5.5)
    30. Do "other financing sources" include other
    financing sources that do not represent budgetary
    resources and that have not been covered by the
    preceding questions (i.e., nos. 23-28)? (OMB
    Bulletin 01-09, p. 38, section 5.5)
         31. Is exchange revenue transferred to another
    government entity or to the Treasury recognized as
    a "transfer out" in determining the net results of
                 operations? (SFFAS 7, par. 75)
    32. Is a gain93 from the modification94 of
    post-1991 loans reported as a reduction in
    financing source and paid to the Treasury as a
    "modification adjustment transfer?" (SFFAS 2, par.
    48, & app. B, part I D (5))

    93The excess of the cost of the modification over the decrease in loan
    book value discounted at the Treasury rate.

    94A modification means a federal government action, including new
    legislation or administration action, which directly or indirectly alters
    the estimated subsidy cost and present value of outstanding loans or the
    liability of loan guarantees. (SFFAS 2, par. 41)

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    Section V Statement of Changes in Net Position

             Other Financing Sources (24 - 40)        Yes, No, or N/A Explanation
          33. Is a loss95 from the modification of
    post-1991 loans reported as a financing source
        when the reporting entity receives from the
    Treasury a "modification adjustment transfer?"
         (SFFAS 2, par. 48 & app. B, part I D (5))
    34. Is a gain96 resulting from a modification
         of post-1991 loan guarantees reported as a
    reduction in financing source and paid to the
           Treasury as a "modification adjustment
        transfer?" (SFFAS 2, par. 52 & app. B, part
                         III D (5))
    35. Is a loss97 resulting from a modification
    of post-1991 loan guarantees reported as a
    financing source when the reporting entity
    receives from the Treasury a "modification
    adjustment transfer" to offset the difference?
    (SFFAS 2, par. 52 & app. B, part III D (5))
    36. Is a gain on the sale of a post-1991 loan
    reported as a reduction in financing source
    and paid to the Treasury as a "modification
    adjustment transfer?" (SFFAS 2, par. 55 & app.
    B, part I F (2))
    37. Is a loss on the sale of a post-1991 loan
          reported as a financing source when the
    reporting entity receives from the Treasury a
    "modification adjustment transfer?" (SFFAS 2,
              par. 55 & app. B, part I F (2))

    95The excess of the decrease in loan book value, discounted at the
    Treasury rate, over the cost of the modification. 96The excess of the cost
    of the modification over the increase in liability discounted at the
    Treasury rate. 97The excess of the increase in liability, discounted at
    the Treasury rate, over the cost of the modification.

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                     Section V Statement of Changes in Net Position

               Other Financing Sources (24 - 40)          Yes, No, or Explanation
                                                              N/A
    38. Does the amount "net cost of operations"
    reported under cumulative results of operations
    agree with "net cost of operations" as reported on
    the Statement of Net Cost and Statement of
    Financing? (OMB Bulletin 01-09, p. 38, section 5.6
    & p. 51, section 7.7)
         39. Is the difference between the net cost of
        operations and the sum of the financing sources
        (i.e., budgetary and other) equal to the ending
          balance of net position as it relates to the
        cumulative results of operations? (OMB Bulletin
                   01-09, p. 38, section 5.6)
    40. Do the ending balances of the cumulative
    results of operations and unexpended
    appropriations agree with the amounts reported as
    net position on the current year's balance sheet?
    (OMB Bulletin 01-09, p. 38, section 5.7)

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    Section VI Statement of Budgetary Resources

    The 27 questions in this section concern the Statement of Budgetary
    Resources.

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                      Section VI Statement of Budgetary Resources

        Statement of Budgetary Resources (1-27)   Yes, No, or N/A   Explanation
    The budget is the primary financial planning and control tool of the
    government. The Statement of Budgetary Resources and the related
    disclosures provide information about how budgetary resources were made
    available as well as their status at the end of the period. It is the only
    financial statement exclusively derived from an entity's budgetary general
    ledger, prepared in accordance with budgetary accounting rules, which are
    incorporated into Generally Accepted Accounting Principles (GAAP) for the
    federal government. (SFFAS 7, par. 77; OMB Bulletin 01-09, p. 39, section
    6.1)
        1. Is the recognition and measurement of
         budgetary information reported on the
         Statement of Budgetary Resources (SBR)
    based on budget terminology, definitions,
          and guidance in OMB Circular A-11,98
        Preparation, Submission and Execution of
        the Budget, (July 2003)? (SFFAS 7, par.
         78; OMB Bulletin 01-09, p. 39, section
                          6.1)
    2. Is information on the SBR consistent
    with budget execution information reported
    on the Report on Budget Execution and
    Budgetary Resources (SF 133) and with
    information reported in the Budget of the
    United States Government? (OMB Bulletin
    01-09, p. 39, section 6.1)
    3. Does the entity disclose and explain
    any material differences between
    comparable information contained in the
    three reports (i.e., SBR, SF 133 and the
    Budget of the United States Government)?
    (OMB Bulletin 01-09, p. 6, section 1.7 &
    p. 39, section 6.1)
    4. Is budgetary information aggregated for
         purposes of the Statement of Budgetary
    Resources disaggregated99 for each of the
        reporting entity's major budget accounts
        and presented as required supplementary
          information? (SFFAS 7, par. 78; OMB
         Bulletin 01-09, p. 112, section 11.4)

    98OMB Circular A-11 superceded OMB Circular A-34 in June 2002 and was
    revised on July 25, 2003. 99Small budgetary accounts may be aggregated.

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                      Section VI Statement of Budgetary Resources

          Statement of Budgetary Resources (1-27)     Yes, No, or N/A Explanation
    5. Do the major accounts and the aggregate of
    small budget accounts agree, in total, with
    the amounts reported on the face of the
    Statement of Budgetary Resources? (OMB
    Bulletin 01-09, p. 112, section 11.4)
         6. Is the budgetary information in the SBR
           presented on a combined basis that is
            consistent with the aggregate of the
    account-level information presented on the SF
    133s? (OMB Bulletin 01-09, p. 39, section 6.2)
    7. Are nonbudgetary credit financing accounts
           reported separately from the budgetary
    accounts? (OMB Bulletin 01-09, p. 40, section
                            6.3)

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                      Section VI Statement of Budgetary Resources

            Statement of Budgetary Resources (1-27)       Yes, No, or Explanation
                                                              N/A
           8. Does the entity include in its SBR the
        following under "Budgetary Resources"? a. budget
             authority, including if applicable i.
        appropriations received ii. borrowing authority
    iii. contract authority iv. net transfers (+/-) v.
          other b. unobligated balances, including if
    applicable i. beginning of period balances ii. net
    transfers, actual (+/-) iii. anticipated transfer
         balances c. spending authority from offsetting
        collections, including, if applicable i. earned
    authority that is collected and/or receivable from
    federal services ii. changes in unfilled customer
          orders that are advance(s) received, and/or
          without advance(s) from federal sources iii.
        anticipated collections for the rest of the year
    without advances iv. transfers from trust funds d.
    recoveries of prior year obligations e. budgetary
        resources temporarily not available pursuant to
    public law f. budgetary resources permanently not
         available (OMB Bulletin 01-09, p. 41, section,
                     6.4; SFFAS 7, par. 77)

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                      Section VI Statement of Budgetary Resources

            Statement of Budgetary Resources (1-27)       Yes, No, or Explanation
                                                              N/A
         9. Do the budgetary resources reported in this
        section agree with the total budgetary resources
         reported for all of the budget accounts on the
          year-end SF 133? (OMB Bulletin 01-09, p. 42,
                          section 6.5)
    10. Does the line item "appropriations
    received"100 reported on the SBR equal the amount
    reported as "appropriations received" on the
    Statement of Changes in Net Position? (OMB
    Bulletin 01-09, p. 36, section 5.4 & p. 43,
    section 6.5)
        11. Does the line item entitled "permanently not
    available" on the SBR include items reported under
         "other adjustments (rescissions, etc.)" on the
           Statement of Changes in Net Position? (OMB
          Bulletin 01-09, p. 36, section 5.4 & p. 43,
                          section 6.5)
        12. Does the entity include the following under
         "Status of Budgetary Resources" on the SBR? a.
    obligations incurred that are i. direct and/or ii.
    reimbursable b. unobligated balance(s) that are i.
         apportioned ii. exempt from apportionment iii.
    otherwise available c. unobligated balance(s) not
    available (OMB Bulletin 01-09, p. 42, section 6.4;
                       SFFAS 7, par. 77)
          13. Does the total amount displayed for the
    "status of budgetary resources" section of the SBR
    equal "total budgetary resources" available to the
        reporting entity as of the reporting date? (OMB
              Bulletin 01-09, p. 43, section 6.6)

    100Appropriations received do not include appropriated, dedicated and
    earmarked receipts. Dedicated and earmarked receipts, typically in special
    and nonrevolving trust funds, are accounted for as either exchange or
    nonexchange revenue in accordance with SFFAS No. 7.

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                      Section VI Statement of Budgetary Resources

            Statement of Budgetary Resources (1-27)       Yes, No, or Explanation
                                                              N/A
           14. Does the status of budgetary resources
        reported on the SBR agree with the total status
        reported for each budget account on the year-end
        SF 133? (OMB Bulletin 01-09, p. 43, section 6.6)
    15. Does the entity's SBR include the following
    under "Relationship of Obligations to Outlays?" a.
    obligated balance, net, beginning of period b.
    obligated balance transferred, net (+/-) c.
    obigated balance, net, end of period that are i.
    accounts receivable ii. unfilled customer orders
    from federal sources iii. undelivered orders iv.
    accounts payable d. outlays that are i.
    disbursements ii. collections e. less, if
    applicable, offsetting receipts101 (OMB Bulletin
    01-09, p. 40, section 6.3 & p. 42, section 6.4)
    16. Do the outlays102 reported in "Relationship of
    Obligations to Outlays" section agree with the
    agency outlay totals reported in the Budget of the
    United States Government?103 (OMB Bulletin 01-09,
    p. 43, section 6.7)

     101Offsetting receipts offset budget authority and outlays at the agency level
        in the Budget of the United States Government, but are not reflected in

    budget execution reports (SF 133s), which provide account-level
    information only. Since the SBR is an agencywide report, offsetting
    receipts must be

    included to reconcile to information in the Budget of the United States
    Government.

    102Outlays consist of disbursements net of offsetting collections.

    103That is, do the outlays agree with the aggregate of the outlays for
    accounts within the Budget of the United States Government?

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                      Section VI Statement of Budgetary Resources

        Statement of Budgetary Resources (1-27)   Yes, No, or N/A   Explanation
         17. Do the outlays also agree with the
          aggregate of outlays reported on the
        year-end SF 133 for all budget accounts,
    including nonbudgetary financing accounts
         and the disbursements and collections
    reported to Treasury on a monthly basis104
    as per OMB Circular A-11?105 (OMB Bulletin
               01-09, p. 43, section 6.7)
           Offsetting receipts are collections that are credited to general fund,
               special fund, or trust fund receipt accounts and that offset gross
        outlays. Unlike offsetting collections, which are credited to expenditure
        accounts and offset outlays at the account level, offsetting receipts are
                 credited to receipt accounts and offset outlays at the agency or
                  governmentwide level. Offsetting receipts may be distributed or
            undistributed to agencies. Distributed offsetting receipts offset the
            outlays of the agency, while undistributed offsetting receipts offset
         governmentwide outlays. Distributed offsetting receipts typically offset
             the outlays of the agency that conducts the activity, generating the
    receipts and the subfunction to which the activity is assigned. Offsetting
          receipts are composed of proprietary receipts from the public, receipts
    from intragovernmental transactions, and offsetting governmental receipts.
                                   (OMB Bulletin 01-09, pp. 43 & 44, section 6.7)
           18. Does the line item "offsetting
            receipts" on the SBR include all
        distributed offsetting receipts for the
         agency?106 (OMB Bulletin 01-09, p. 44,
                      section 6.7)
    19. Does the agency include the following
    receipt accounts from the Treasury Annual
    Report Appendix, Part 4, Other
    Information/Receipts by Department, in the
    SBR? a. Proprietary Receipts from the
    Public b. Intrabudgetary Receipts Deducted
    by Agencies c. Offsetting Governmental
    Receipts (OMB Bulletin 01-09, p. 44,
    section 6.7)

    104Agencies report their disbursements and collections using the SF 224,
    Statement of Transactions; SF 1219, Statement of Accountability; and SF
    1220, Statement of Transactions.

    105OMB Circular A-11 superceded OMB Circular A-34 in June 2002 and was
    revised on July 25, 2003.

    106A list of distributed offsetting receipt accounts can be found in the
    Treasury Annual Report Appendix, Part 4, Other Information.

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                      Section VI Statement of Budgetary Resources

            Statement of Budgetary Resources (1-27)       Yes, No, or Explanation
                                                              N/A
    20. Is the amount of distributed offsetting
    receipts reported in SBR the aggregate of cash
    collected in these receipt accounts and reported
    to Treasury on a monthly basis?107 (OMB Bulletin
    01-09, p. 44, section 6.7)
    21. Does the amount of offsetting receipts that
    are distributed to agencies and reported on the
    SBR agree with the deductions for offsetting
    receipts as reported in the Budget of the United
    States Government, if available by the time the
    financial statements must be finalized and
    submitted? (OMB Bulletin 01-09, p. 44, section
    6.7)
        22. Are undistributed offsetting receipts, which
         are credited to governmentwide outlay totals,
    excluded from the SBR? (OMB Bulletin 01-09, p. 44,
                          section 6.7)
        23. Do the net outlays in the SBR agree with the
        net outlays108 as reported in the Budget of the
    United States Government, if available by the time
         the financial statements must be finalized and
         submitted? (OMB Bulletin 01-09, p. 44, section
                              6.7)
    24. Does the entity disclose the amount of direct
         and reimbursable obligations incurred against
        amounts apportioned under category109 "A," "B,"
         and "exempt from apportionment"? (OMB Bulletin
                  01-09, p. 93, section 9.27)

    107Agencies use the SF 224, Statement of Transactions; SF 1219, Statement
    of Accountability; and SF 1220, Statement of Transactions.

    108Net outlays are equal to gross outlays less offsetting collections and
    receipts.

    109Apportionment categories are to be determined in accordance with
    guidance provided in OMB Circular A-11, Part 4, Instructions on Budget
    Execution, which superceded Circular A-34.

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                      Section VI Statement of Budgetary Resources

            Statement of Budgetary Resources (1-27)       Yes, No, or Explanation
                                                              N/A
        25. Does the disclosure of the amount of direct
         and reimbursable obligations incurred against
        amounts apportioned under category110 "A," "B,"
         and "exempt from apportionment" agree with the
        aggregate of the related information as reported
        on the agency's year-end SF 133, and the amounts
    reported under direct and reimbursable obligations
          incurred, reported on the SBR? (OMB Bulletin
                  01-09, p. 93, section 9.27)
    26. Does the entity disclose the following
    information related to the status of budgetary
    resources? a. the amount of budgetary resources
    obligated for undelivered orders at the end of the
    period b. available borrowing and contract
    authority at the end of the period c. repayment
    requirements, financing sources for repayment, and
    other terms of borrowing authority used d. amounts
    adjusted to "budgetary resources available at the
    beginning of the year," during the reporting
    period, as well as an explanation of the
    adjustments e. existence, purpose, and
    availability of permanent, indefinite
    appropriations f. information about legal
    arrangements affecting the use of unobligated
    balances of budget authority, such as time limits,
    purpose, and obligation limitations g.
    explanations of any material differences between
    the budgetary resources reported in the SBR and
    "actual" amounts in the Budget of the United
    States Government h. the amount of unfunded
    liabilities, and an explanation that includes
    identification of balance sheet components, when
    unfunded liabilities do not equal the total
    financing sources yet to be provided i. the amount
    of any capital infusion received during the
    reporting period (SFFAS 7, par. 79 & 209-212; OMB
    Bulletin 01-09, p. 93 & 94, sections 9.27-9.34)

    110Apportionment categories are to be determined in accordance with
    guidance provided in OMB Circular A-11, Part 4 Instructions on Budget
    Execution, which superceded Circular A-34.

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                      Section VI Statement of Budgetary Resources

          Statement of Budgetary Resources (1-27)     Yes, No, or N/A Explanation
    27. In order to ensure consistency between the
    information presented in the SBR and the
    Budget of the United States Government, does
    the entity do the following? a. post all known
    audit adjustments to the Federal Agencies
    Centralized Trial-balance System II (FACTS II)
    during the window of time specified for
    posting corrections to the budget information
    b. post all known audit adjustments to OMB's
    MAX A-11 budget preparation system during the
    time frames provided by OMB (OMB Bulletin
    01-09, pp. 5 & 6, section 1.7)

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                           Section VII Statement of Financing

    The 27 questions in this section are related to the Statement of
    Financing.

    Question Numbers

    1. Resources Used to Finance Activities 1-8

    2. 	Resources Used to Finance Items Not Part of 9-14
    the Net Cost of Operations

    3. Components of the Net Cost of Operations that 15-24

    Will Not Require or Generate Resources in the Current Period Resources

    4. Disclosure Items 25-27

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                           Section VII Statement of Financing

          Resources Used to Finance        Yes, No, or N/A        Explanation
              Activities (1 - 8)
    The Statement of Financing is the bridge between an entity's budgetary and
             financial (i.e., proprietary) accounting. The Statement of Financing
             articulates the relationship between net obligations derived from an
          entity's budgetary accounts and net cost of operations derived from the
                  entity's proprietary accounts by identifying and explaining key
    differences between the two numbers. Most entity transactions are recorded
           in both budgetary and proprietary accounts. However, because different
         accounting bases are used for budgetary and proprietary accounting, some
            transactions may appear in only one set of accounts (e.g., accrual of
            environmental and disposal liabilities, which is recorded only in the
             proprietary records). Furthermore, not all obligations or offsetting
        collections may result in expenses or exchange revenue (e.g., purchase of
    a building is capitalized on the balance sheet in the proprietary accounts
          but obligated and outlayed in the budgetary accounts). The statement is
        structured to first identify total resources used by an entity during the
          period (budgetary and other) and then make adjustments to the resources
            based upon how they were used to finance net obligations or net cost.
            Budgetary resources reported in this statement are those resources as
        defined in OMB Circular No. A-11111and are also reported on the Statement
           of Budgetary Resources. Other resources reported in this statement are
        also reflected in the Statement of Changes in Net Position. (OMB Bulletin
         01-09, p. 45, section 7.1; SFFAS 7, par. 80 & 95) The section "Resources
    Used to Finance Activities" reflects the budgetary resources obligated and
    other resources that are used to finance the activities of the agency. The
            obligations of budgetary resources are net of offsetting collections,
           recoveries, and offsetting receipts. The other resources are financing
        sources that increase net position but are not budgetary resources. Every
    line item in this section is mirrored on either the Statement of Budgetary
    Resources or the Statement of Changes in Financial Position. (OMB Bulletin
                                                       01-09, p. 47, section 7.3)

    111OMB Circular No. A-11, Part 4, Instructions on Budget Execution, has
    superceded OMB Circular No A-34.

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    Section VII Statement of Financing

          Resources Used to Finance Activities (1 - 8)    Yes, No, or Explanation
                                                              N/A
    1. Is the budgetary information used to calculate
    net obligations112 in the "Resources Used to
    Finance Activities" section of the Consolidated
    Statement of Financing, presented on a combined
    basis113 to enable agreement with similar amounts
    reported on the Statement of Budgetary Resources?
    (OMB Bulletin 01-09, p. 6, section 1.8 & p. 46,
    section 7.1)
          2. Does the amount reported as "obligations
        incurred" equal the obligations incurred114 line
         item as reported on the Statement of Budgetary
          Resources, and does this include all budget
           accounts, including nonbudgetary financing
    accounts? (OMB Bulletin 01-09,p. 47, section 7.3)
    3. Does the line item "less: spending authority
    from offsetting115 collections and recoveries"116
    agree with the spending authority from offsetting
    collections and recoveries as reported on the
    Statement of Budgetary Resources, and does this
    include all budget accounts, including
    nonbudgetary financing accounts? (OMB Bulletin
    01-09, p. 47, section 7.3)
        4. Is "Obligations net of offsetting collections
        and recoveries" equal to the difference between
         "obligations incurred" and "spending authority
    from offsetting collections and recoveries?" (OMB
              Bulletin 01-09, p. 48, section 7.3)

    112The budgetary information includes the line items (1) " obligations
    incurred," (2) "Less: spending authority from offsetting collections and
    recoveries," (3) "obligations net of offsetting collections and
    recoveries," and 4) "less: offsetting receipts."

    113A combined basis means the aggregation of account-level information as
    opposed to a consolidation that implies the elimination of inter-account
    transactions.

    114This is not to be confused with total budgetary resources; e.g., with
    total appropriations received and available, as the statement of financing
    is not concerned with total resources or restrictions on OMB's ability to
    apportion or the agency's ability to allot total resources. (SFFAS 7
    Implementation Guide (April 2002), par. 14)

    115"Offsetting" in the term "offsetting collections" means that the
    resources generated by the collecting activity are added to the
    expenditure accounts and hence "offset" gross obligations. (SFFAS 7
    Implementation Guide (April 2002), par. 22)

    116Recoveries are budgetary resources that offset obligations on the
    Statement of Budgetary Resources, but are not a proprietary financing
    source used to offset costs on the Statement of Net Cost. (OMB Bulletin
    01-09, p. 49, section 7.4)

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    Section VII Statement of Financing

          Resources Used to Finance Activities (1 - 8)    Yes, No, or Explanation
                                                              N/A
    5. Does the amount reported as "less: offsetting
    receipts" equal the offsetting receipts117 line
    item as reported on the Statement of Budgetary
    Resources? (OMB Bulletin 01-09, p. 48, section
    7.3)
        6. Do "net obligations"118 equal the difference
    between "obligations net of offsetting collections
        and recoveries" and "offsetting receipts?" (OMB
              Bulletin 01-09, p. 48, section 7.3)
    7. Does the entity's Statement of Financing
    include other nonbudgetary resources used to
    finance activities, and do the line item amounts
    as reported on the Statement of Financing equal
    the following corresponding line item amounts
    reported as "other financing sources" on the
    Statement of Changes in Net Position? a. donations
    and forfeitures of property b. transfers in/out
    without reimbursement c. imputed financing from
    costs absorbed by others d. other (OMB Bulletin
    01-09, p. 48, section 7.3)
    8. Is "total resources used to finance activities"
         equal to the sum of net obligations119 and net
         other (nonbudgetary) resources used to finance
        activities? (OMB Bulletin 01-09, p. 46, section
                              7.2)

    117Offsetting receipts differ from "offsetting collections." Offsetting
    collections are included in the entity's expenditure account and thus are
    usually available for spending for the purposes of the account without
    further action by Congress. (SFFAS 7 Implementation Guide (April 2002),
    par. 23)

    118Net obligations reflect obligations incurred net of offsetting
    collections, recoveries, and offsetting receipts.

    119One of the reasons that net obligations does not equal the amount of
    the net cost of operations is that there are resources that are not
    reported in the Budget of the United States Government that may finance
    the net cost of operations or other activities of the agency.

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    Section VII Statement of Financing

    Resources Used to Finance Items Not
    Part of the Net Cost of Operations (9    Yes, No, or N/A     Explanation
    - 14)
        The section, "Resources Used to Finance Items Not Part of the Net Cost of
    Operations," in the Statement of Financing adjusts total resources used to
              finance the activities of the entity to account for items that were
         included in net obligations and other resources, but which were not part
         of the net cost of operations. This section would include items in which
          the expense was recognized in a prior period but the budgetary resource
    and obligation are recognized in the current period (e.g., upward/downward
         reestimates of subsidy expense accrued in the prior period but obligated
            in the current period). It would also include budgetary resources and
          obligations recognized in the current period that do not affect the net
             cost of operations (e.g., the acquisition of assets reflected in net
              obligations but not in net cost of operations for the period). (OMB
                                              Bulletin 01-09, p. 48, section 7.4)
    9. Does the line item, "change in
    budgetary resources obligated for
    goods, services, and benefits ordered
    but not yet provided (+/-),"120
    reflect undelivered orders, or
    adjustments thereof, that are included
    in net obligations, but which are not
    part of the net cost of operations?
    (OMB Bulletin 01-09, p. 48, section
    7.4)
         10. Does the line item, "resources
    that fund expenses recognized in prior
    periods,"121 reflect the obligation of
        resources that were part of the net
    cost of operations in a prior period?
        (OMB Bulletin 01-09, p. 48, section
                        7.4)

    120This line item is used to explain the difference between the total
    resources used to finance activities and the net cost of operations
    because of the change in "budgetary resources obligated for goods,
    services, and benefits ordered but not yet provided," i.e., "undelivered
    orders." Undelivered orders are part of "obligations incurred," but they
    do not affect the net cost of operations. Thus, for a transaction
    involving the placing a $100 undelivered order, obligations incurred would
    increase by $100 but would be shown as a negative or a reduction to total
    resources used to finance activities. (SFFAS 7 Implementation Guide (April
    2002), par. 53-55)

    121This line item is used to explain differences in resources and net cost
    of operations caused by expenses, which were accrued in previous periods
    but paid in the current period. If, for example, the amount of annual
    leave taken or obligated was worth $250 but the amount of annual leave
    earned (i.e., expensed) for the period was $200, the difference of $50
    between obligation and expense would be shown as a negative. (SFFAS 7
    Implementation Guide (April 2002), par. 56-58)

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    Section VII Statement of Financing

    Resources Used to Finance Items Not Part of    Yes, No, or N/A Explanation
    the Net Cost of Operations (9 - 14)
    11. Do the line items included under
    "budgetary offsetting collections and receipts
    that do not affect net cost of operations"
    reflect offsetting collections and receipts122
    that are not reported as exchange revenue in
    the Statement of Net Cost? (OMB Bulletin
    01-09, pp. 48 & 49, section 7.4)
          12. Does the line item, "resources that
        finance the acquisition of assets," reflect
    budgetary resources obligated123 that are not
        expenses as reported on the Statement of Net
    Cost? (OMB Bulletin 01-09, p. 49, section 7.4)
         13. Does the agency include under the line
        item, "Other resources or adjustments to net
         obligated resources that do not affect net
           cost of operations," activities124 not
        otherwise classified under the line items in
        this section of the Statement of Financing?
          (OMB Bulletin 01-09, p. 49, section 7.4)
    14. Does the line item, "total resources used
    to finance the net cost of operations,"
    consist of the difference between the line
    items "total resources used to finance
    activities" and "total resources used to
    finance items not part of the net cost of
    operations?" (OMB Bulletin 01-09, p. 46,
    section 7.2 & p. 48, section 7.4)

    122Examples of offsetting collections and receipts that are not exchange
    revenue are (1) collections of subsidy expenses for post -1991 credit
    programs, (2) collections of exchange revenue receivable from the public,
    and (3) advances (i.e., unfilled customer orders) for work not performed,
    with the caveat that in most cases, orders from the public without
    advances cannot be accepted. This line item is usually shown as a
    positive, the opposite (i.e., negative) of what is included under the line
    item, "less: spending authority from offsetting collections and
    recoveries," unless there is a net decrease in unfilled customer orders.
    (SFFAS 7 Implementation Guide (April 2002), par. 59-61)

    123An example of this activity is the purchase of capital assets. (SFFAS 7
    Implementation Guide (April 2002), par. 62)

    124This activity may include noncash recoveries of prior year obligations.
    Recoveries are budgetary resources that offset obligations on the
    Statement of Budgetary Resources, but which are not a proprietary
    financing source used to offset costs on the Statement of Net Cost.

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    Section VII Statement of Financing

        Components of the Net Cost of Operations
           that Will Not Require or Generate      Yes, No, or N/A   Explanation
    Resources in the Current Period Resources
                       (15 - 24)
             The section, "Components of the Net Cost of Operations that will not
    Require or Generate Resources in the Current Period," identifies (1) items
          that are recognized as a component of the net cost of operations (i.e.,
               current period expenses and exchange revenues) for which budgetary
           resources (and related obligations) will not be provided (or incurred)
          until a subsequent period and (2) items (i.e., current period expenses)
    that are recognized as a part of the net cost of operations for the period
             but will not generate or require the use of resources in the current
            period. (OMB Bulletin 01-09, p. 49, section 7.5 & p. 50, section 7.6)
    15. Does the line item, "increase in
    annual leave liability," include the
    expense related to the increase125 in
    annual leave liability for which the
    budgetary resources will be provided in a
    subsequent period? (OMB Bulletin 01-09, p.
    50, section 7.5)
          16. Does the line item, "increase in
         environmental and disposal liability,"
           include the expense related to the
         increase in environmental and disposal
           liability for which the budgetary
    resources will be provided in a subsequent
          period? (OMB Bulletin 01-09, p. 50,
                      section 7.5)
    17. Does the line item "upward/downward
    reestimates of credit subsidy expense
    (+/-)," include the expense recognized as
    a result of an upward(+) or downward(-)
    reestimate of credit program subsidy cost
    for which budgetary resources (or
    obligations) will be provided (or
    incurred) in a subsequent period?126 (OMB
    Bulletin 01-09, p. 50, section 7.5)

    125An increase in annual leave liability has no effect on budgetary
    accounts, because it is not funded on an accrual basis. It is financed
    when it is taken and the amounts are paid to employees who took the leave.
    Thus, budgetary resources are zero, but the net cost of operations
    includes the amount of accrued leave. (SFFAS 7 Implementation Guide (April
    2002), par. 40)

    126The Credit Reform Act of 1990, as amended, provides that agencies will
    receive subsidies to cover defaults and other situations for direct loans
    and loan guarantees obligated after September 30, 1991. (SFFAS 7
    Implementation Guide (April 2002), par. 66)

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    Section VII Statement of Financing

    Components of the Net Cost of Operations that Will Yes, No, or
        Not Require or Generate Resources in the Current      N/A     Explanation
                   Period Resources (15 - 24)
    18. Are these credit subsidy reestimates reflected
    as liabilities covered by budgetary resources?127
            (OMB Bulletin 01-09, p. 50, section 7.5)
    19. Does the line item, "increase in exchange
    revenue receivable from the public," include
    exchange revenue recognized as a component128 of
    the net cost of operations for the period? (OMB
    Bulletin 01-09, p. 50, section 7.5)
        20. Does the entity report as "other" under the
          section "Components Requiring or Generating
        Resources in Future Periods," all other expenses
    and exchange revenue not specifically mentioned in
         the preceding questions that do not require or
    generate resources in the current period but will
    do so in a subsequent period? (OMB Bulletin 01-09,
                      p. 50, section 7.5)
           21. Does the line item, "depreciation and
    amortization," reflect the current period usage of
        assets129 or amortization of liabilities130 for
         which budgetary resources were obligated in a
    prior period? (OMB Bulletin 01-09, p. 50, section
                              7.6)
    22. Does the line item, "revaluation of assets and
             liabilities," include gains and losses
    recognized131 during the revaluation of assets or
        liabilities? (OMB Bulletin 01-09, p. 50, section
                             7.6;)

    127Budget authority to fund reestimates is permanent and indefinite and no
    further congressional action is needed to provide the resources.

    128Absent specific legislation to the contrary, public receivables do not
    count as budgetary resources until they are collected. Hence, the revenue
    related to accruals of those resources is not reflected in offsetting
    collection activity at the time they are accrued. (SFFAS 7 Implementation
    Guide (April 2002) par. 70)

    129Budgetary resources are obligated when the asset is acquired, not when
    it is depreciated or used up. No budgetary resources are used when an
    asset is depreciated. (SFFAS Implementation Guide, par. 44)

    130Budgetary resources are obligated when an allowance (i.e., liability or
    contra-asset) for a subsidy is set up, and as the estimated expenses are
    realized the allowance account is amortized. The budgetary accounts, which
    have already recognized the obligation and offsetting collection for
    subsidy expense, are not affected by the transaction. (SFFAS 7
    Implementation Guide (April 2002), par. 92)

    131Gains are shown as a negative; losses are shown as a positive.

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    Section VII Statement of Financing

    Components of the Net Cost of Operations that
    Will Not Require or Generate Resources in the  Yes, No, or N/A Explanation
             Current Period Resources (15 - 24)
    23. Does the entity report as "other" under
    the section "components not requiring or
    generating resources," all other expenses132
    and exchange revenue not specifically
    mentioned in the preceding questions that will
    not require or generate resources in the
    current or future periods? (OMB Bulletin
    01-09, p. 50, section 7.5)
    24. Does the sum of the line items "total
    resources used to finance net cost of
    operations" and "total components of net cost
    of operations that will not require or
    generate resources in the current period"
    agree with the net cost of operations as
    reported in the Statement of Net Cost as well
    as the Statement of Changes in Net Position?
    (OMB Bulletin 01-09, p. 51, section 7.7)

      132An example of this would be default expenses of pre-credit reform (or pre
                                      1992) loans.

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                           Section VII Statement of Financing

             Disclosure Items (25 - 27)         Yes, No, or N/A     Explanation
    25. Has the entity identified and
    explained in a note to the financial
    statements the relationship between
    amounts reported as "liabilities not
    covered by budgetary resources"
    reported on the Balance Sheet and
    amounts reported as "components
    requiring or generating resources in
    future periods" on the Statement of
    Financing? (OMB Bulletin 01-09, p. 94,
    section 9.35)
        When budget authority and other resources are allocated to another agency
         or bureau,133 the parent (transferor of the appropriation) should report
    the activity in its financial statements unless the allocation transfer is
        material to the child's (recipient of the transfer) financial statements.
                  If the allocation transfer is material to the child's financial
          statements, the child entity should report the activity relating to the
           allocation in all of its financial statements, except the Statement of
    Budgetary Resources (SBR). In this case, the parent entity should continue
    to report the appropriation and the related budgetary activity in its SBR.
           It is the responsibility of the parent to ensure that the reporting to
            Treasury, through FACTS I, is consistent with the presentation in the
                  financial statements. (OMB Bulletin 01-09, p. 94, section 9.36)
    26. When the child entity reports
    material allocation transfers in its
    Statement of Net Cost, do both the
    parent and the child report a
    reconciling item on their respective
    Statements of Financing? (OMB Bulletin
    01-09, p. 95, section 9.36)
    27. Do both parent and child entities
        provide a general description of the
           funds transferred or received,
        including the nature and purpose of
          the transfer and any additional
           details deemed necessary? (OMB
        Bulletin 01-09, p. 95, section 9.36)

    133See OMB Circular A-11, sections 20.4 (l) and 71.6

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                      Section VIII Statement of Custodial Activity

    The 28 questions in this section are related to the Statement of Custodial
    Activity.

    Question Numbers

    1. General 1-2

    2. Sources of Collections 3-10

    3. Disposition of Collections 11-15

    4. Disclosures 16-19

    5.	Dedicated Collections and 20-27
    Other Accompanying Information

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    Page 181

                      Section VIII Statement of Custodial Activity

                   General Items (1 - 2)              Yes, No, or N/A Explanation
    Entities that collect nonexchange revenue for the General Fund of the
    Treasury, a trust fund, or other recipient entities account for the
    sources and disposition of these collections in a Statement of Custodial
    Activity. (OMB Bulletin 01-09, p. 52, section 8.1)
    1. If some of the nonexchange revenue is
    transferred to others and some of the
    nonexchange revenue is retained as a
    reimbursement for the costs of collection, are
    the transferred amounts reported on the
    Statement of Custodial Activity, and are the
    retained amounts reported on the Statement of
    Net Cost? (OMB Bulletin 01-09, p. 52, section
    8.1)
         2. If the entity collects exchange revenue
    (e.g., rents and royalties) on behalf of other
    entities and recognizes virtually no costs in
    connection with earning that revenue, does the
    entity account for it as a custodial activity?
                     (SFFAS 7, par. 45)

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                      Section VIII Statement of Custodial Activity

                Sources of Collections (3 - 10)           Yes, No, or Explanation
                                                              N/A
        3. Are the following transactions recognized as
         taxes and other nonexchange revenues from the
    public? a. individual and corporate income taxes,
        social insurance taxes and contributions, excise
        taxes, estate and gift taxes, and customs duties
        b. social insurance taxes and contributions paid
         by federal employees c. deposits by states for
        unemployment trust funds d. user fees and harbor
    maintenance trust fund payments e. customs service
         fees f. deposits of earnings from the Federal
    Reserve System g. donations, except types of PP&E
          that are expensed h. fines and penalties i.
        penalties due to delinquent taxes in connection
        with custodial activity j. forfeitures (SFFAS 7,
          par. 49; SFFAS 7, Appendix B, par. 242 -264)
        4. Does the collecting entity measure taxes and
        duties on a cash basis and then modify that with
        an accrual adjustment to determine the amount of
    revenue to be recognized? (SFFAS 7, par. 49 & 52;
            OMB Bulletin 01-09, p. 54, section 8.3)
        5. Except for deposits, are cash collections134
         based on amounts actually received during the
        fiscal period including withholdings, estimated
          payments, final payments, and collections of
              receivables? (SFFAS 7, par. 50 & 59)

    134Cash collections include any amounts paid in advance of due dates
    unless they are deposits. Deposits are amounts voluntarily paid to
    reporting entities, such as those made to stop the accrual of interest or
    those made pending settlements and judgments. Such Deposits are separately
    recognized as deposit liabilities.

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                      Section VIII Statement of Custodial Activity

                Sources of Collections (3 - 10)           Yes, No, or Explanation
                                                              N/A
    6. Are the components of cash collections
    classified by source and nature of collection,
    such as by type of tax or duty? (OMB Bulletin
    01-09, pp. 53 & 54, section 8.3)
        7. Are cash refunds of nonexchange revenue based
    on refunds of taxes and duties during the period?
                       (SFFAS 7, par. 51)
         8. Do cash refunds of nonexchange revenue for
         taxes and duties include refund offsets135 and
                drawbacks?136 (SFFAS 7, par. 51)
        9. Are cash refunds, if material in relation to
           gross collections, disclosed separately by
    component in the notes to the financial statement?
            (OMB Bulletin 01-09, p.54, section 8.3)
    10. Are accrual adjustments,137 if material in
    relation to gross collections, disclosed
    separately in the notes to the financial
    statement? (SFFAS 7, par. 52; OMB Bulletin 01-09,
    p. 54, section 8.3)

    135Refund offsets are amounts withheld from refunds on behalf of other
    agencies and paid to such agencies.

    136Drawbacks are refunds of duties paid on imported goods that are
    subsequently exported or destroyed.

    137Accrual adjustments, which modify the net of cash collections and
    refunds to determine the amount of revenue recognized, are the net
    increases or decreases during the reporting period in accounts receivable,
    allowance for uncollectable accounts, and accounts payable for refunds.

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                      Section VIII Statement of Custodial Activity

            Disposition of Collections (11 - 15)      Yes, No, or N/A Explanation
    11. Do the amounts transferred to others,
    reported in the "disposition of collections"
    section, identify the specific agencies to
    which collections were transferred and the
    amounts transferred? (OMB Bulletin 01-09, p.
    53, section 8.2 & p. 54, section 8.4)
         12. Does the collecting entity report the
    change in liability for accrued and collected
        revenue yet to be transferred? (OMB Bulletin
         01-09, p. 53, section 8.2 & p. 54, section
                            8.4)
          13. Are the amounts of refunds and other
          payments made reported separately in the
        "disposition of collections" section of the
    Statement of Custodial Activity? (OMB Bulletin
         01-09, p. 53, section 8.2 & p. 54, section
                            8.4)
    14. Are collections retained by the entity
    separately reported as exchange revenue in the
    Statement of Net Cost and treated as a
    disposition of collections revenue in the
    statement of custodial activity? (OMB Bulletin
    01-09, p. 52, section 8.1, p. 53, section 8.2.
    & p. 54, section 8.4)
    15. In the Statement of Custodial Activity, do
          total sources of collections equal total
        disposition of collections (revenue) so that
          the net custodial activity is zero? (OMB
            Bulletin 01-09, p. 54, section 8.5)

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                      Section VIII Statement of Custodial Activity

                     Disclosures (16 - 19)                Yes, No, or Explanation
                                                              N/A
    16. If custodial revenues are immaterial and
    incidental to the entity's primary mission and are
    not reported separately on the Statement of
    Custodial Activity, are the sources and amounts of
    the collections and amounts to be distributed to
    others disclosed? (OMB Bulletin 01-09, p. 52,
    section 8.1 & p. 95, section 9.37)
    17. Does the collecting entity disclose and
    explain the following information? a. the basis of
    accounting when application of the general rule
    for recognizing nonexchange revenue (i.e.,
    specifically identifiable, legally enforceable,
    and reasonably estimable) results in a modified
    cash basis of accounting b. the specific potential
    accruals that are not made as a result of using
    the modified cash basis accounting c. the
    practical and inherent limitations affecting the
    accrual of taxes and duties d. the use of
    accrual-based accounting, if applicable (SFFAS 7,
    par.48 & 64)
    18. Do entities that collect taxes and duties
    disclose the following information in a note or
    narrative? a. basis of accounting b. factors
    affecting the collectibility and timing of taxes
    and other nonexchange revenues c. cash collections
    and refunds by tax year and type of tax for the
    reporting period (SFFAS 7, par. 65.1 & 65.3; OMB
    Bulletin 01-09, p. 95, section 9.38)
         19. If trust fund revenues are not recorded in
    accordance with applicable law, do the collecting
          and recipient entities disclose the reasons?
                       (SFFAS 7, par. 66)

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                      Section VIII Statement of Custodial Activity

            Dedicated Collections and Other       Yes, No, or N/A   Explanation
           Accompanying Information (20 - 27)
    Dedicated collections are funds held with the expectation that they will
    be held for and applied to the purposes for which the funds were
    dedicated. Such funds include all funds within the budget classified as
    trust funds, those funds within the budget that are classified as "special
    funds" but that are similar in nature to trust funds, and those funds
    within the federal universe (inside or outside the budget) that are
    fiduciary in nature. (SFFAS 7, par. 83; OMB Bulletin 01-09, p. 95, section
    9.39)
         20. Does the management of a reporting
        entity identify, track, and disclose the
         receipts and expenditures of dedicated
           trust funds, "special funds," and
        fiduciary or deposit funds (both inside
        and outside the budget) for which it is
          responsible? (SFFAS 7, par. 83; OMB
    Bulletin 01-09, pp. 95 & 96, section 9.39)
          21. Does management provide separate
           financial information about these
        dedicated funds if they are material to
    the reporting entity, the beneficiary, or
        the contributors? (SFFAS 7, par. 84; OMB
    Bulletin 01-09, pp. 95 & 96, section 9.39)

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                      Section VIII Statement of Custodial Activity

          Dedicated Collections and Other Accompanying    Yes, No, or Explanation
                     Information (20 - 27)                    N/A
    22. Is the following information reported for
    individual funds that account for dedicated
    collections? a. a description of each fund's
    purpose, how the administrative entity accounts
    for and reports the fund, and its authority to use
    those collections b. the sources of revenue or
    other financing for the period and an explanation
    of the extent to which they are inflows of
    resources to the government or the result of
    intragovernmental flows c. condensed information
    about assets and liabilities showing investments
    in Treasury securities, other assets, liabilities
    due and payable to beneficiaries, other
    liabilities, and fund balance d. condensed
    information on net cost and changes to fund
    balance showing revenues by type (exchange or
    nonexchange), program expenses, other expenses,
    other financing sources, and other changes in fund
    balance e. the amounts of any revenues-other
    financing sources or costs attributable to the
    fund under accounting standards-that are not
    legally allowable as credits or charges to the
    fund (SFFAS 7, par. 85; OMB Bulletin 01-09, pp. 95
    & 96, section 9.39)
    23. If revenues, other financing sources, or costs
        (such as item "e" of the previous question) are
         associated with but not legally allowable to a
        fund, does the larger reporting entity of which
    the fund is a component recognize them? (SFFAS 7,
    par. 86; OMB Bulletin 01-09, p. 96, section 9.39)
            24. If more than one reporting entity is
        responsible for carrying out a program financed
        with dedicated collections, does the entity with
             the largest share of the activity take
        responsibility for reporting all revenues, other
    financing sources, assets, liabilities, and costs
                of the fund? (SFFAS 7, par. 87)

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                      Section VIII Statement of Custodial Activity

        Dedicated Collections and Other Accompanying  Yes, No, or N/A Explanation
                   Information (20 - 27)
    25. If information on actual collections is
    not currently available from the collecting
    entity, do the trust funds that are legally
    entitled to receive only excise taxes that are
    actually collected by the collecting entity
    recognize revenue from excise taxes on the
    basis of assessments in lieu of excise taxes
    actually collected? (SFFAS 7, par. 60.1)
          26. Is the amount of revenue accrued and
        recognized by the social security trust fund
    based on the best available information (i.e.,
        on the basis of the higher of the amount of
    Internal Revenue Service (IRS) assessments or
    the amounts actually reported by employers to
           Social Security)? (SFFAS 7, par. 60.2)

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                      Section VIII Statement of Custodial Activity

          Dedicated Collections and Other Accompanying    Yes, No, or Explanation
                     Information (20 - 27)                    N/A
    27. Does the collecting entity report the
    following as other accompanying information? a.
    income tax burden borne by different classes of
    taxpayers and the effects of tax rates,
    deductions, credits, etc. (required of IRS) b.
    available information on the size of the tax gap,
    including i. explicit definitions of the estimated
    amounts reported (e.g., whether the tax gap
    includes estimates on illegally earned income) ii.
    appropriate explanations of the limited
    reliability of the estimates iii. cross references
    to portions of the tax gap due from identified
    noncompliant taxpayers and importers c.
    appropriate explanations and qualifications, if
    information about tax expenditures related to
    entity programs is present d. a description of the
    basis for the estimates and appropriate cautionary
    language about reliability, if information about
    estimated directed flows of resources related to
    an entity's programs is presented (SFFAS 7, par.
    69.1 -69.4; OMB Bulletin 01-09, p. 114 section
    12.3 & p. 115, section 12.4)

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    Reporting 1050 - CFO Act Checklist

                        Section IX Notes to Financial Statements

    The five questions in this section concern the disclosure of significant
    accounting policies.

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    Reporting 1050 - CFO Act Checklist

                        Section IX Notes to Financial Statements

                                                          Yes, No, Or Explanation
              Note to Financial Statements (1 - 5)            N/A
          1. Is a description of the reporting entity
           presented in the disclosure of significant
    accounting policies, along with identification of
          the entity's major components? (OMB Bulletin
                   01-09, p. 55, section 9.1)
            2. Does the entity identify and describe
        accounting principles it follows, and methods of
           applying those principles in a note to the
    financial statements? (OMB Bulletin 01-09, p. 55,
                          section 9.1)
    3. Does the entity's disclosure of its accounting
    policies include its rationale for the valuation,
             recognition, and allocation of assets,
           liabilities, expenses, revenues, and other
         financing sources? (OMB Bulletin 01-09, p. 55,
                          section 9.1)
          4. Does the entity disclose any significant
        changes in its composition or manner in which it
         aggregates information for financial reporting
    purposes? (OMB Bulletin 01-09, p. 55, section 9.1)
    5. If changes in the composition of the reporting
         entity or manner in which the reporting entity
         aggregates information for financial reporting
         purposes, in effect, result in a new reporting
           entity, has the entity restated financial
         statements for all prior periods presented to
        correspond to the changes? (OMB Bulletin 01-09,
                   pp. 55 & 56, section 9.1)

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    Section X Supplementary Information

    The questions related to the Supplementary Information are organized in
    the following nine categories. Question Numbers

    1. 	Required Supplementary Stewardship Information: Property, Plant, &
    Equipment 1-14

    2. 	Required Supplementary Stewardship Information: Stewardship
    Investments 15-42

    3. 	Required Supplementary Information: Risk-Assumed Information 43

    4. 	Required Supplementary Information: Custodial Activity 44-45

    5. 	Required Supplementary Information: Segment Information 46-47

    6. 	Required Supplementary Information Management's Discussion and
    Analysis 48-61

    7. 	Required Supplementary Information: Deferred Maintenance 62-65

    8. 	Required Supplementary Information: Intragovernmental Amounts 66-78

    9. 	Required Supplementary Stewardship Information: Social Insurance138
    79-102

    138For periods beginning after September 30, 2004, the information
    required by paragraphs 27(3) and 32(3) of SFFAS 17 shall be presented as a
    basic financial statement rather than as RSSI. Other information required
    by SFFAS 17 shall be presented as RSI, except to the extent that the
    preparer elects to include some or all of that information in notes that
    are presented as an integral part of the basic financial statements (SFFAS
    25, par. 6 & 7)

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    Page 193

                          Section X Supplementary Information

         Required Supplementary Stewardship
         Information: Property, Plant, and      Yes, No, or N/A     Explanation
                 Equipment (1 - 14)
    Stewardship reporting requires the federal government to report on its
    stewardship over certain resources entrusted to it and certain
    responsibilities assumed by it that cannot be measured in traditional
    financial reports. These resources and responsibilities do not meet the
    criteria for assets and liabilities that are required to be reported in
    the financial statements, but are important to understanding the
    operations and financial condition of the federal government at the date
    of the financial statements and in subsequent periods. Stewardship PP&E
    consists of items whose physical properties resemble those of general PP&E
    traditionally capitalized in financial statements. However, because of the
    nature of these assets, valuation may be difficult, and matching costs
    with specific periods would not be meaningful. Stewardship PP&E includes:
    -heritage assets, such as federal monuments and memorials, that are of
    historical, natural, cultural, educational, architectural, or artistic
    significance and -stewardship land, such as national forests and parks
    that have not been acquired for or in connection with general PP&E. (SFFAS
    8, par.7-11 & 17; OMB Bulletin 01-09, p. 97 section 10.1 and p. 98,
    section, 10.2)
          1. Except for multi-use heritage
    assets in which the predominant use of
         the asset is in general government
          operations, are heritage assets
         reported as Required Supplementary
           Stewardship Information (RSSI)
    accompanying the financial statements
        rather than as asset amounts on the
        balance sheet? (SFFAS 8, par.43; OMB
        Bulletin 01-09, p. 23, section 3.3 &
               p. 98, section 10.2A)
    2. Are heritage assets (including
    multiuse heritage assets) reported in
    RSSI in terms of physical units rather
    than in terms of cost, fair value, or
    other monetary values? (SFFAS 8, par.
    46; SFFAS 16, par.9; OMB Bulletin
    01-09, p. 23, section 3.3 & p. 98,
    section 10.2A)

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    Section X Supplementary Information

        Required Supplementary Stewardship Information:   Yes, No, or Explanation
            Property, Plant, and Equipment (1 - 14)           N/A
    3. Does the reporting entity provide relevant RSSI
    in the financial statements, such as the following
    information about its heritage assets? a. a
    description of each major category of heritage
    asset and whether it is collectible or
    noncollectible b. a description of the methods of
    acquisition and withdrawal of heritage assets c.
    an accounting for the physical units by major
    category including: i. beginning balances ii.
    additions iii. withdrawals iv. ending balances d.
    a description of the condition of the assets
    unless it is already reported in deferred
    maintenance information included elsewhere in the
    report, in which case a reference to the
    information will suffice e. a reference to
    deferred maintenance information, if deferred
    maintenance is reported for the assets (SFFAS 8,
    par. 50, SFFAS 14, par. 10-11; OMB Bulletin 01-09,
    pp. 99-100, section 10.2D)
    4. Are federal land139 and land rights owned by
    the federal government and not acquired for or in
    connection with other general PP&E reported as
    stewardship land in the RSSI of the financial
    statements? (SFFAS 6, par. 66-68, SFFAS 8, par.
    74)
    5. Is stewardship land quantified and reported in
    terms of physical units (e.g., acres) in the RSSI
    rather than in monetary values? (SFFAS 8, par. 75;
           OMB Bulletin 01-09, p. 99, section 10.2C)

    139Land is defined as the solid part of the surface of the earth. Excluded
    from the definition of land are materials beneath the surface (i.e.,
    depletable resources such as mineral deposits and petroleum), the space
    above the surface (i.e., renewable resources such as timber), and the
    outer-continental shelf resources.

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    Page 195

                          Section X Supplementary Information

        Required Supplementary Stewardship Information:   Yes, No, or Explanation
            Property, Plant, and Equipment (1 - 14)           N/A
    6. Is the cost of a structure acquired with
    stewardship land that is to be used in operations
    included in the acquisition cost of the land if
    one of the following conditions applies? a. the
    structure's value is insignificant compared to the
    value of the land b. the structure has little or
    no inherent value c. the structure is merely a
    byproduct of the acquisition of the land (SFFAS 6,
    par. 70)
    7. If a significant structure acquired with
    stewardship land has an operating use (e.g., a
    recently constructed hotel or employee-housing
    block), is its cost segregated from the cost of
    the stewardship land acquired and capitalized as
    general PP&E? (SFFAS 6, par. 70; SFFAS 8, par. 78)
    8. If the fair value of stewardship land acquired
    through donation or devise is known and material,
    is it disclosed in the notes to the financial
    statements? (SFFAS 6, par. 71; SFFAS 8, par. 79)
    9. If the fair value of the stewardship land
    acquired through donation or devise is not
    estimable, is information as to the type and
    quantity of the assets disclosed? (SFFAS 6, par.
    71; SFFAS 8, par. 79)
        10. Is the cost of stewardship land transferred
        from another federal entity recorded at the book
         value of the land on the transferring entity's
                   books? (SFFAS 6, par. 72)
          11. If stewardship land is transferred from
        another federal entity, and the receiving entity
         does not know its book value, is the transfer
    disclosed in the notes if material? (SFFAS 6, par.
                              72)
           12. Are all transfers of stewardship land
    disclosed in the notes if material? (SFFAS 6, par.
                              72)

    October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 196

    Section X Supplementary Information

             Required Supplementary Stewardship
    Information: Property, Plant, and Equipment (1 Yes, No, or N/A Explanation
                           - 14)
    13. Is acquisition cost of stewardship land
    recorded in the following manner? a.
    recognized as a cost in the period incurred b.
    include all costs incurred to bring the
    stewardship land to its intended use, current
    condition, and location (including razing a
    building) c. disclosed140 as "cost of
    stewardship land" (SFFAS 6, par. 69 & 73,
    SFFAS 8, par. 80)
    14. With regard to stewardship land, does the
          reporting entity include in its RSSI the
        following information? a. a description, by
        principal organization, significant holdings
          of stewardship land by category of major
         use141 b. a description of the methods of
    acquisition and withdrawal of stewardship land
        c. an accounting for physical units by major
        category including: i. beginning balance ii.
    additions iii. withdrawals iv. ending balance
         d. the condition of the stewardship land,
    unless it is already reported elsewhere in the
          report (in which case a reference to the
        information will suffice) e. a reference to
           the applicable information if deferred
    maintenance is reported for the assets. (SFFAS
    6, par. 69 & 73; SFFAS 8, par. 80 & 81; SFFAS
    14, par. 10 & 11; OMB Bulletin 01-09, pp. 99 &
                    100, section 10.2D)

    140Disclosure shall be either on the face of the statement of net cost or
    in footnotes, depending on the materiality of the amounts and the need to
    distinguish such amounts from other costs relating to measures of outputs
    or outcomes of the reporting entity.

    141Where parcels of stewardship land have more than one use, the
    predominant use of the land shall be considered the major use.

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    Section X Supplementary Information

         Required Supplementary Stewardship
        Information: Stewardship Investments    Yes, No, or N/A     Explanation
                     (15 - 42)
    Stewardship investments are substantial investments made by the federal
    government for the benefit of the nation. When incurred, they are treated
    as expenses in calculating net cost, but they are also separately reported
    as RSSI to highlight the extent of investments that are made for long-term
    benefit. (SFFAS 8, par. 12) Stewardship investments include: -nonfederal
    physical property: federally financed (but not federally owned) purchases,
    construction, or major renovation of physical property owned by state and
    local governments, including major additions, alterations, and
    replacements, the purchase of major equipment; and the purchase or
    improvement of other physical assets.142 -human capital: expenses incurred
    for programs for education and training of the public143 that are intended
    to increase or maintain national productive capacity and that produce
    outputs and outcomes that provide evidence of maintaining or increasing
    national productive capacity. -research & development: expenses incurred
    to support the search for new or refined knowledge and ideas and for the
    application or use of such knowledge and ideas for the development of new
    or improved products and processes with the expectation of maintaining or
    increasing national productive capacity or yielding other future benefits.
    (SFFAS 8, par. 12, 83, 89, 90, & 96; OMB Bulletin 01-09, p. 100, section
    10.3)
    15. Are nonfederal physical property
    investments reported in nominal
    dollars on the basis of "expenses
    incurred" and measured on the same
    basis of accounting used for financial
    statement purposes, including
    appropriate accrual adjustments,
    general and administrative overhead,
    and costs of facilities? (SFFAS 8,
    par. 84)
    16. Are investments in nonfederal
    physical property and related cash
    grants recognized and reported as
    expenses in arriving at the net cost
    of operations? (SFFAS 8, par. 85; OMB
    Bulletin 01-09, p. 100, section 10.3A)

    142Grants for maintenance and operations are not considered investments in
    nonfederal physical property. 143The definition excludes education and
    training expensed for federal civilian and military personnel.

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                          Section X Supplementary Information

             Required Supplementary Stewardship       Yes, No, or N/A Explanation
    Information: Stewardship Investments (15 - 42)
    17. Are expenses incurred for nonfederal
    physical property program costs, contracts, or
    grants with split purposes144 reported in RSSI
    on the basis of a logical allocation? (SFFAS
    8, par. 86)
        18. If an allocation of such program costs,
          etc. is not feasible, is the investment
          reported on the basis of the predominant
        application of the expenses incurred? (SFFAS
                        8, par. 86)
    19. Does the reporting entity provide in its
    RSSI a dollar amount and a narrative
    description of its investment in nonfederal
    physical property for the year being reported
    on as well as at least the preceding 4 years?
    (SFFAS 8, par. 87; OMB Bulletin 01-09, p. 100,
    section 10.3A & p. 102, section 10.3D)
    20. Is expense or outlay data for investments
    in nonfederal physical property reported at a
    meaningful category or level (e.g., by major
    program or department)? (SFFAS 8, par. 87; OMB
    Bulletin 01-09, p. 102, section 10.3D)
    21. Does the reporting entity also include in
    its RSSI a description of federally owned
    physical property transferred to state and
    local governments for the year being reported
    on as well as at least the preceding 4 years?
    (SFFAS 8, par. 87; OMB Bulletin 01-09, p. 102,
    section 10.3D)
        22. If expense data for the purchase of PP&E
        for state and local governments for the year
         being reported on and for the preceding 4
          years are not available, does the entity
        report outlay data, if available? (SFFAS 8,
        par. 87; OMB Bulletin 01-09, p. 102, section
                           10.3D)

    144An example of an investment with a split purpose is a grant issued to a
    state to construct segments of the National Highway System and to conduct
    highway research.

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    Page 199

                          Section X Supplementary Information

        Required Supplementary Stewardship Information:   Yes, No, or Explanation
               Stewardship Investments (15 - 42)              N/A
    23. If neither historical expense nor outlay data
    are available ion stewardship investments for the
    year being reported on and the preceding 4 years,
    does the entity report expense data for the
    current reporting year and such other years, as
    available? (SFFAS 8, par. 87; OMB Bulletin 01-09,
    p. 102, section 10.3D)
        24. Are investments in human capital reported in
           nominal dollars on the basis of "expenses
          incurred" and measured on the same basis of
    accounting used for financial statement purposes,
    including appropriate accrual adjustments, general
           and administrative overhead, and costs of
                 facilities? (SFFAS 8, par. 91)
    25. Are expenses incurred for human capital
    program costs, contracts, or grants with split
    purposes145 reported in RSSI on the basis of a
    logical allocation? (SFFAS 8, par. 92)
        26. If an allocation of such program costs, etc.
    is not feasible, is the investment reported on the
          basis of the predominant application of the
             expenses incurred? (SFFAS 8, par. 92)
    27. Does the entity link its investments in human
    capital to outcomes that can be described in
    financial, economic, or quantitative terms? (SFFAS
    8, par. 93)
    28. If outcome data are not available, does the
    reporting entity report output data that best
    provide indications of the intended program
    outcomes? (SFFAS 8, par. 93)
    29. Does the reporting entity include in its RSSI
    the dollar amount and a narrative description of
    its investment in human capital for the year being
    reported on as well as the preceding 4 years?
    (SFFAS 8, par. 94; OMB Bulletin 01-09, p. 101,
    section 10.3B)

    145An example of an investment with a split purpose is a grant issued to a
           teaching hospital for both medical education and medical research.

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                          Section X Supplementary Information

        Required Supplementary Stewardship Information:   Yes, No, or Explanation
               Stewardship Investments (15 - 42)              N/A
    30. If expense data for the investments in human
    capital for the year being reported and for the
    preceding 4 years are not available, does the
    entity report outlay data, if available? (SFFAS 8,
    par. 94; OMB Bulletin 01-09, p. 102, section
    10.3D)
    31. If neither historical expense nor outlay data
    for the investments in human capital are available
    for the year being reported on and the preceding 4
    years, does the entity report expense data for the
    current reporting year and such other years, as
    available? (SFFAS 8, par. 94; OMB Bulletin 01-09,
    p. 102, section 10.3D)
    32. Is expense or outlay data for investments in
    human capital reported at a meaningful category or
    level (e.g., by major program or department)?
    (SFFAS 8, par. 94)
    33. Is the investment in research and development
    reported in nominal dollars on the basis of
    "expenses incurred" and measured on the same basis
    of accounting used for financial statement
    purposes, including appropriate accrual
    adjustments, general and administrative overhead,
    and costs of facilities? (SFFAS 8, par. 97)
           34. Are expenses incurred for research and
        development program costs, contracts, or grants
         with split purposes146 reported in RSSI on the
    basis of a logical allocation? (SFFAS 8, par. 98)
        35. If an allocation of such program costs, etc.
    is not feasible, is the investment reported on the
          basis of the predominant application of the
             expenses incurred? (SFFAS 8, par. 98)

    146An example of an investment with a split purpose is a grant issued to a
    teaching hospital to perform both medical education and medical research.

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    Section X Supplementary Information

        Required Supplementary Stewardship Information:   Yes, No, or Explanation
               Stewardship Investments (15 - 42)              N/A
    36. Does the entity link its investments in
    research and development to program outcome data
    via a narrative discussion of the major results
    achieved by the program during the year, along the
    following lines? a. basic research, which refers
    to an identification of any major new discoveries
    that were made during the year b. applied
    research, which refers to an identification of any
    major new applications that were developed during
    the year c. development, which refers to the
    progress of major developmental projects including
    the results with respect to projects completed or
    otherwise terminated during the year and the
    status of projects that will continue (SFFAS 8,
    par. 99)
    37. If outcome data are not available, does the
    reporting entity use output data147 that best
    provide indications of the intended program
    outcomes? (SFFAS 8, par. 99)
    38. Does the reporting entity include in its RSSI
    the dollar amount and a narrative description of
    its investment in major research and development
    programs for the year being reported on as well as
    the preceding 4 years? (SFFAS 8, par. 100; OMB
    Bulletin 01-09, p. 101, section 10.3C & p. 102,
    section 10.3D)
           39. If expense data for the investments in
          research and development for the year being
         reported and for the preceding 4 years are not
    available, does the entity report outlay data, if
    available? (SFFAS 8, par. 100; OMB Bulletin 01-09,
                     p. 102, section 10.3D)

    147In research and development programs, output data might consist of a
    number of new projects initiated, or the number of projects continued,
    completed, or terminated. It also might consist of quantitative measures
    such as publication counts, citation counts, patent counts, or scientific
    and engineering personnel funded.

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                          Section X Supplementary Information

        Required Supplementary Stewardship Information:   Yes, No, or Explanation
               Stewardship Investments (15 - 42)              N/A
    40. If neither historical expense nor outlay data
        are available for the year being reported on and
         the preceding 4 years, does the entity report
        expense data for the current year and such other
          years as available? (SFFAS 8, par. 100; OMB
             Bulletin 01-09, p. 102, section 10.3D)
        41. Is expense or outlay data for investments in
    research and development reported at a meaningful
          category or level (e.g., by major program or
         department)? (SFFAS 8, par. 100; OMB Bulletin
                 01-09, p. 102, section 10.3D)
    42. Does the entity report in its RSSI the amounts
        of significant contributions from state, local,
        private, and other sources to its investments in
        nonfederal physical property, human capital, and
        research and development?148 (SFFAS 8, par. 88,
                           95, & 101)

    148This reporting is encouraged, but is not required.

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                          Section X Supplementary Information

            Required Supplementary Information:                       Explanation
               Risk-Assumed Information (43)          Yes, No, or N/A
         Risk-assumed information is generally measured by the present value of
          unpaid expected losses net of associated premiums based on the risk
        inherent in the insurance or guarantee coverage in force. (SFFAS 5, par.
                  105 & 106; OMB Bulletin 01-09, p.103, section 10.4A)
          43. Does the entity include as Required
        Supplementary Information (RSI) the current
    amount and periodic changes of "risk assumed"
    arising from insurance and guarantee programs?
        (SFFAS 5, par. 105, 106, 110; SFFAS 25, par.
    2; OMB Bulletin 01-09, p. 103, section 10.4A)

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                          Section X Supplementary Information

         Required Supplementary Information: Custodial    Yes, No, or Explanation
                       Activity (44 - 45)                     N/A
    44. Do entities that collect taxes and duties
    provide the following supplementary information
    relating to their potential revenue and custodial
    responsibilities? a. the estimated realizable
    value, as of the end of the reporting period, of
    compliance assessments and, if reasonably
    estimable, pre-assessment work in process, based
    on management's best estimate that is
    appropriately identified as to their reliability
    b. if reasonably estimable, other claims for
    refunds not yet accrued but likely to be paid when
    administrative action is complete, based on
    management's best estimates c. amount of
    assessments defined as written-off (i.e., no
    further collection potential) that continues to be
    statutorily collectable d. amounts by which trust
    funds may be overfunded or underfunded in
    comparison with the requirements of the law, if
    reasonably estimable (SFFAS 7, par. 67.1-67.4; OMB
    Bulletin 01-09, pp.112-113, section 11.5)
    45. If the entity receiving funds from the
    collecting entity is itself a trust fund, does it
    provide as supplementary information amounts by
    which related trust funds may be overfunded or
    underfunded in comparison with the requirements of
    the law, if reasonably estimable? (SFFAS 7, par.
    67.4, 68; OMB Bulletin 01-09, p. 113, section
    11.5)

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                          Section X Supplementary Information

          Required Supplementary Information: Segment     Yes, No, or Explanation
                     Information (46 - 47)                    N/A
    46. Do all franchise and other intragovernmental
    support revolving funds report the following
    supplementary information? a. a brief description
    of the services provided by the fund and the
    identity of the fund's major customers (i.e.,
    organizations that account for more than 15
    percent of the fund's revenues) b. a summary for
    the reporting period, by product or line of
    business, including the following items i. the
    full cost of goods and services provided ii. the
    related exchange revenues iii. the excess of full
    costs over exchange revenues (OMB Bulletin 01-09,
    p. 113, section 11.6)
    47. If a franchise fund or other intragovernmental
    support revolving fund is not separately reported
         on the entity's principal statements, does the
          entity report as supplementary information a
    summary of the fund's assets, liabilities, and net
        position that includes the following items as of
        the reporting date? a. fund balance b. accounts
        receivable c. property, plant, and equipment d.
        other assets e. liabilities due and payable for
        goods and services received f. deferred revenues
         g. other liabilities h. cumulative results of
        operations (OMB Bulletin 01-09, p. 113, section
                             11.6)

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                          Section X Supplementary Information

        Required Supplementary Information: Management's  Yes, No, or Explanation
               Discussion and Analysis (48 - 61)              N/A
          48. Does the entity include as RSI a section
         devoted to management discussion and analysis
         (MD&A) of the financial statements and related
    information? (SFFAS 15, par. 1; SFFAC 3, par. 1 &
          2; OMB Bulletin 01-09, p. 105, section 11.1)
    49. In general, does the MD&A provide a clear,
    concise, and balanced description of the reporting
    entity and its mission, activities, program and
    financial performance, systems, controls, legal
    compliance, financial position, and financial
    condition? (SFFAS 15, par. 1; SFFAC 3, par. 1; OMB
    Bulletin 01-09, p. 105, section 11.1)
    50. Does the MD&A, at a minimum, contain sections
    that address the following items concerning the
    entity? a. mission and organizational structure b.
    performance goals, objectives, and results c.
    financial statements d. systems, controls, and
    legal compliance e. forward-looking information,
    either as a separate section of MD&A or
    incorporated with the sections listed above f.
    important problems that need to be addressed and
    action taken or planned, either as a separate
    section of the MD&A or incorporated with the
    sections listed above (SFFAS 15, par. 2-4; OMB
    Bulletin 01-09, pp. 105 & 106, section 11.1A)

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                          Section X Supplementary Information

        Required Supplementary Information: Management's  Yes, No, or Explanation
               Discussion and Analysis (48 - 61)              N/A
           51. Does the MD&A limit itself to the most
        important matters that could, for example, have
          the following impact? a. lead to significant
         actions or proposals by top management of the
    reporting unit b. be significant to the managing,
    budgeting, and oversight functions of Congress and
         the administration c. significantly affect the
         judgment of citizens about the efficiency and
        effectiveness of their federal government (SFFAS
                        15, par. 5 & 6)
    52. Does the MD&A section on the entity's mission
    and organizational structure contain a brief
    description of the mission(s) of the entity and
    its related organizational structure, that is
    consistent with the entity's strategic plan? (OMB
    Bulletin 01-09, p. 106, section 11.1B)
    53. Are the entity's programs and financial
    results expressed in terms of objective and
    relevant measures that disclose the extent to
    which its programs are achieving their intended
    objectives? (OMB Bulletin 01-09, p. 106, section
    11.1C)
    54. Has the entity attempted to develop and report
    objective measures that provide information about
    the cost effectiveness of programs? (OMB Bulletin
    01-09, pp. 106 & 107, section 11.1C)
    55. Are the performance measures presented in the
    MD&A consistent with the measures previously
    included in the budget and planning documents?
    (OMB Bulletin 01-09, p. 107, section 11.1C)
    56. Does the entity explain what needs to be done
    and what is planned to improve financial or
    program performance? (OMB Bulletin 01-09, p. 107,
    section 11.1C)

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                          Section X Supplementary Information

        Required Supplementary Information: Management's  Yes, No, or Explanation
               Discussion and Analysis (48 - 61)              N/A
    57. Does the entity's discussion of performance
    goals, objectives, and results indicate the extent
    to which its programs are achieving their intended
    goals and objectives, and are these clearly linked
    to cost categories (responsibility segments)
    featured in the Statement of Net Cost? (OMB
    Bulletin 01-09, p. 106, section 11.1C)
    58. Does the MD&A section on the entity's
    performance goals, objectives, and results also
    provide the following information? a. a discussion
    of the strategies and resources the agency uses to
    achieve its performance goals b. a clear picture
    of planned and actual performance c. an
    explanation of the procedures that management has
    designed and followed to provide reasonable
    assurance that reported performance information is
    relevant and reliable d. an explanation of
    performance trends e. an evaluation of the
    significance of underlying factors that may have
    affected the reported performance (OMB Bulletin
    01-09, p. 106, section 11.1C)
         59. In reporting on the status of systems and
    internal controls that support preparation of the
    financial statements, performance information, and
        compliance with applicable laws, does the entity
        describe material problems revealed by audits or
            otherwise known to management as well as
    corrective actions taken or planned? (OMB Bulletin
                 01-09, p. 107, section 11.1E)

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                          Section X Supplementary Information

        Required Supplementary Information: Management's  Yes, No, or Explanation
               Discussion and Analysis (48 - 61)              N/A
    60. Does the entity's discussion of the possible
    future effects of existing events and conditions
    include at least the following information? a.
    demographic characteristics b. claims c. deferred
    maintenance d. commitments e. major unfunded
    liabilities (OMB Bulletin 01-09, p. 108, section
    11.1F)
    61. Does the entity note the following in the
    section on limitations of the Financial
    Statements? a. the principal financial statements
    have been prepared to report the financial
    position and results of operations of the entity,
    pursuant to the requirements of 31 U.S.C. 3515(b)
    b. while the statements have been prepared from
    the books and records of the entity in accordance
    GAAP for federal entities and the formats
    prescribed by OMB, the statements are in addition
    to the financial reports used to monitor and
    control budgetary resources which are prepared
    from the same books and records c. the statements
    should be read with the realization that they are
    for a component of the U.S. government (OMB
    Bulletin 01-09, p. 108, section 11.1G)

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                          Section X Supplementary Information

           Required Supplementary Information     Yes, No, or N/A   Explanation
             Deferred Maintenance (62 -65)
          Maintenance is the act of keeping fixed assets in acceptable condition.
         Maintenance includes preventive maintenance, normal repairs, replacement
               of parts and structural components, and other activities needed to
    preserve the asset so that it continues to provide acceptable services and
             achieves its expected life. Maintenance excludes activities aimed at
            expanding the capacity of an asset or otherwise upgrading it to serve
        needs different from, or significantly greater than, originally intended.
        Deferred maintenance is maintenance that was not performed when it should
            have been, or was scheduled to be, and that, therefore, is put off or
                             delayed for a future period. (SFFAS 6, par. 77 & 78)
    62. Does the entity report under required
    supplementary information the following
    information for each major category of its
    PP&E (i.e., general PP&E, heritage assets,
    and stewardship land)? a. the identity
    (e.g., building, equipment, land) of each
    major class of asset for which maintenance
    was deferred b. the method of measuring
    deferred maintenance (SFFAS 6, par. 83;
    SFFAS 14, par. 1; OMB Bulletin 01-09, pp.
    108-109, section 11.2)

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                          Section X Supplementary Information

    Required Supplementary Information Deferred   Yes, No, or    Explanation
                   Maintenance (62 -65)                  N/A
        Amounts reported for deferred maintenance may be measured using condition
            assessment surveys or life-cycle cost forecasts. Condition assessment
        surveys are periodic inspections of PP&E, based on generally accepted and
          consistently applied methods, to determine PP&E's current condition and
               the estimated cost to correct any deficiencies. (SFFAS 6, par. 81)
               Life-cycle costing is an acquisition or procurement technique that
             considers operating, maintenance, and other costs in addition to the
                                   acquisition cost of assets. (SFFAS 6, par. 82)
          63. If the condition assessment survey
            method is used to measure deferred
        maintenance, is the following information
        presented for each major class of PP&E in
    supplementary information? a. a description
    of requirements or standards for acceptable
        operating condition b. any changes in the
    condition requirements or standards c. asset
    condition and a range estimate of the dollar
    amount of maintenance needed to return it to
    its acceptable operating condition (SFFAS 6,
                         par. 83)

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                          Section X Supplementary Information

        Required Supplementary Information Deferred   Yes, No, or N/A Explanation
                    Maintenance (62 -65)
    64. If the total life cycle cost method is
    used to measure deferred maintenance, is the
    following information presented for each major
    class of PP&E? a. the original date of the
    maintenance forecast and an explanation for
    any changes to the forecast b. prior-year
    balance of the cumulative deferred maintenance
    amount c. the dollar amount of maintenance
    that was defined by the professionals who
    designed, built, or managed the PP&E as
    required maintenance for the reporting period
    d. the dollar amount of maintenance actually
    performed during the period e. the difference
    between the forecast and actual maintenance f.
    any adjustments to the scheduled amounts
    deemed necessary by the managers of the PP&E
    g. the ending cumulative balance for the
    reporting period for each major class of asset
    experiencing deferred maintenance (SFFAS 6,
    par. 83)
    65. If management elects to break out deferred
    maintenance by critical and noncritical
    amounts needed to bring each class of asset to
    its acceptable operating condition, does it
    also include its definition of these
    categories? (SFFAS 6, par. 84)

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                          Section X Supplementary Information

              Required Supplementary Information:        Yes, No, or  Explanation
              Intragovernmental Amounts (66 - 78)            N/A
    Intragovernmental amounts represent transactions between federal entities
    included in the Financial Report of the United States Government. These
    transactions include activities with federal CFO Act and non-CFO Act
    entities as identified in the Treasury Financial Manual. (OMB Bulletin
    01-09, p.109, section 11.3)
    66. Does the entity report, as required
    supplementary information and intragovernmental
    amounts, the following items? a. assets b.
    liabilities c. nonexchange revenue d. for certain
    reporting entities, earned revenue from trade
    (buy/sell) transactions along with the gross cost
    to generate such revenue (OMB Bulletin 01-09, p.
    109, section 11.3)
    67. Does the entity report intragovernmental
    assets, liabilities, and earned revenue from
    trade transactions and nonexchange revenue by
    trading partner (i.e., reciprocal federal
    entity)? (OMB Bulletin 01-09, p. 109, section
    11.3)
    68. Does the entity report intragovernmental
    gross cost to generate earned revenue from trade
    transactions by budget functional classification?
    (OMB Bulletin 01-09, p. 109, section 11.3)
    69. Do intragovernmental asset and liability
    categories reported as required supplementary
    information agree with the intragovernmental
    asset and line items reported on the balance
    sheet? (OMB Bulletin 01-09, p. 109, section 11.3)
    70. Are transactions with components of federal
    departments and agencies (e.g., Forest Service of
    the USDA) not reported separately, but included
    in the activity reported for the federal
    department or agency? (OMB Bulletin 01-09, p.
    109, section 11.3)

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    Section X Supplementary Information

              Required Supplementary Information:         Yes, No, or Explanation
              Intragovernmental Amounts (66 - 78)             N/A
          71. Are all intragovernmental amounts net of
    intra-entity transactions? (OMB Bulletin 01-09, p.
                       109, section 11.3)
    72. Does the entity reconcile intragovernmental
    asset, liability, and revenue amounts with its
    trading partners at least quarterly? (OMB Bulletin
    01-09, pp. 109 & 110, section 11.3)
    73. Do intragovernmental assets and liabilities
    reported as required supplementary information
    (RSI) agree with the intragovernmental asset and
    liability line items and totals on the reporting
    entity's consolidated agencywide balance sheet?
    (OMB Bulletin 01-09, pp. 110 & 111, section 11.3)
    74. For each intragovernmental asset and liability
        line item on the consolidated agencywide balance
             sheet, does the entity identify in the
         supplementary information the trading partner
          balances that make up the line item?149 (OMB
          Bulletin 01-09, pp. 110 & 111, section 11.3)
          75. If intragovernmental transactions with a
          trading partner are material in one asset or
          liability category but immaterial in another
    category, does the entity report transactions with
          the trading partner for each category? (OMB
          Bulletin 01-09, pp. 110 & 111, section 11.3)
    76. If the entity has total intragovernmental
    earned revenues from trade transactions (net of
    intra-entity activity) of greater than $500
    million, does it report such intragovernmental
    revenues by trading partner? (OMB Bulletin 01-09,
    p. 111, section 11.3)

    149Reporting entities may aggregate trading partners whose individual
    totals for a particular asset category collectively comprise less than 20
    percent of the total asset line item category.

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    Page 215

    Section X Supplementary Information

              Required Supplementary Information:         Yes, No, or Explanation
              Intragovernmental Amounts (66 - 78)             N/A
    77. If the entity reports intragovernmental earned
    revenues, does it also report, by budget
    functional classification, the gross cost of
    goods, services, and other transactions that
    generated the intragovernmental earned
    revenues?150 (OMB Bulletin 01-09, p. 111, section
    11.3)
        78. Does the entity report, by trading partner,
    intragovernmental nonexchange revenues transferred
        in and out? (OMB Bulletin 01-09, p. 112, section
                             11.3)

    150The costs that generate intragovernmental earned revenues may not be
    intragovernmental in and of themselves. For example, if the General
    Services Administration (GSA) sells pencils to Agency A, GSA would report
    the revenue earned by selling the pencils to Agency A (intragovernmental)
    and report the cost of purchasing those pencils from Vendor B (public) by
    budget functional classification.

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    Page 216

                          Section X Supplementary Information

          Required Supplementary Stewardship
        Information Social Insurance Programs    Yes, No, or N/A    Explanation
                      (79 - 102)
    Social insurance programs covered by SFFAS 17, Accounting for Social
    Insurance, have the following five common characteristics. a. financing
    from participants or their employers b. eligibility from taxes or fees
    paid and time worked in covered employment c. benefits not directly
    related to taxes or fees paid d. benefits prescribed in law e. programs
    intended for the general public The following social insurance programs
    are specifically covered by SFFAS 17. a. Old-Age, Survivors, and
    Disability Insurance (OASDI, i.e., Social Security) b. Hospital Insurance
    (HI or Medicare Part A) and Supplementary Medical Insurance (SMI or
    Medicare Part B) c. Railroad Retirement Benefits (RRB) d. Black Lung
    Benefits e. Unemployment Insurance (UI. (SFFAS 17, par. 14 &, 15; OMB
    Bulletin 01-09, pp.103 & 104, section 10.4B)
           79. In general, does the entity
    responsible for a given social insurance
         program provide a clear and concise
    description of the program including its
    financing, calculation of benefits, and
           actuarial status151 as required
        supplementary stewardship information?
    (SFFAS 17, par. 24; OMB Bulletin 01-09,
                 p.104, section 10.B)
    80. Does this description include the
    following information? a. discussion of
    the long-term sustainability and
    financial condition of the program b. an
    illustration and explanation of the
    long-term trends revealed in the data
    (SFFAS 17, par. 24; OMB Bulletin 01-09,
    p.104, section 10.B)

    151This is the status of a program based on statistical calculations and
    actuarial assumptions about future economic, demographic, and other
    conditions and events.

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    Page 217

                          Section X Supplementary Information

         Required Supplementary Stewardship Information   Yes, No, or Explanation
              Social Insurance Programs (79 - 102)            N/A
        81. Does the reporting entity describe statutory
          or other material changes, and implications
        thereof, affecting the program after the current
                fiscal year? (SFFAS 17, par. 24)
         82. Are projections and estimates based on the
           entity's best estimates of demographic and
           economic assumptions? (SFFAS 17, par. 25)
            83. Does the entity disclose significant
            assumptions used in making estimates and
                projections? (SFFAS 17, par. 25)
    84. Are all projections and estimates made as of a
        date (i.e., the valuation date) as close to the
    end of the fiscal year (i.e., current year) being
        reported on as possible and no more than 1 year
        prior to the end of the current year? (SFFAS 17,
                            par. 26)
          85. Does the entity consistently follow this
    valuation date from year to year? (SFFAS 17, par.
                              26)
           86. Does information on the financial and
    actuarial status of the social insurance programs
    include actuarial projections that are indicative
        of long-term sustainability and show the annual
         cash flows in nominal dollars for current and
          future participants? (SFFAS 17, par. 27 (1))
         87. Are the actuarial projections of cash flow
    amounts reported for at least every fifth year in
    the projection period? (SFFAS 17, par. 27 (1) (a))
          88. Does the cash flow information show the
        following amounts? a. total cash inflow from all
        sources (i.e., by and on behalf of participants)
        less net interest on intragovernmental borrowing
    and lending b. total cash outflow (SFFAS 17, par.
                          27 (1) (a))

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                          Section X Supplementary Information

         Required Supplementary Stewardship Information   Yes, No, or Explanation
              Social Insurance Programs (79 - 102)            N/A
    89. Does the narrative accompanying the cash flow
    data include identification of any year or years
    during the projection period when cash outflow
    exceeds cash inflow, with and without interest on
    intragovernmental borrowing or lending (the
    "cross-over points")? (SFFAS 17, par. 27 (1) (a))
        90. Does the narrative provide an explanation of
         the significance of the cash flow "cross-over
        points" where cash outflows begin exceeding cash
    inflows? (SFFAS 17, par. 27 (1) (a) & 32 (1) (a))
    91. Do the cash flow projections (net of interest
    on intragovernmental borrowing/lending) for Social
    Security and Medicare Part A include an estimate
    of cash flows as a percentage of taxable payroll?
    (SFFAS 17, par. 27 (1) (b))
    92. Do the cash flow projections (net of interest
    on intragovernmental borrowing/lending) for Social
    Security and Medicare (Parts A & B) include an
    estimate of cash flows as a percentage of gross
    domestic product? (SFFAS 17, par. 27 (1) (b))
    93. For Social Security and Medicare, Part A
    programs, does the entity's cash flow information
    show its estimate of the ratio of the number of
    contributors to the number of beneficiaries during
    the same projection period as for cash flow
    projections? (SFFAS 17, par. 27 (2))
    94. At a minimum, is the ratio of contributors to
    beneficiaries for Social Security and Medicare,
    Part A reported for the beginning and end of the
    projection period? (SFFAS 17, par. 27 (2))

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    Section X Supplementary Information

    Required Supplementary Stewardship Information Yes, No, or N/A Explanation
            Social Insurance Programs (79 - 102)
    95. For all enumerated social insurance
    programs except Unemployment Insurance (UI),
    does the responsible entity present a
    statement of actuarial present values of the
    following items?152 a. all future expenditures
    during the projection period related to
    benefit payments i. to or on behalf of current
    participants who have not yet attained
    retirement age ii. to or on behalf of current
    participants who have attained retirement age
    iii. to or on behalf of those who are expected
    to become plan participants b. all future
    contributions and tax income (from taxation of
    benefits) during the projection period i. from
    or on behalf of current participants who have
    not yet attained retirement age ii. from or on
    behalf of current participants who have
    attained retirement age iii. from or on behalf
    of those who are expected to become plan
    participants c. cash flow during the
    projection period153 (SFFAS 17, par. 27 (3)
    (a)-(g); OMB Bulletin 01-09, p. 104, section
    10.4B)
    96. With the exception of Unemployment
    Insurance (UI), does the entity disclose the
    accumulated excess of all past cash receipts,
    including interest on investments, over all
    cash disbursements within the social insurance
    program represented by the fund balance at the
    valuation date?154 (SFFAS 17, par. 27 (3) (h))

    152For periods beginning after September 30, 2004 this information shall
    be presented as a basic financial statement rather than as a component of
    RSSI (SFFAS 25, par. 6 & 7)

    153Cash flow during the projection period is derived from subtracting the
    actuarial present value of future contributions and tax income during the
    projection period (95b above) from the actuarial present value of future
    expenditures for the projection period (95a above).

    154ibid.

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                          Section X Supplementary Information

    Required Supplementary Stewardship Information Yes, No, or N/A Explanation
            Social Insurance Programs (79 - 102)
          97. Does the entity also disclose how it
    calculated the actuarial net present value of
        future benefits and contributions from or on
        behalf of current participants of all social
        insurance programs except UI?155 (SFFAS 17,
                      par. 27 (3) (i))
         98. If available, does the entity provide
    estimates of the actuarial present values and
    fund balances of the social insurance programs
    (except UI) under its purview for each of the
        4 preceding years?156 (SFFAS 17, par. 27 (3)
                            (j))
        99. For all social insurance programs except
    UI, does the responsible entity illustrate the
        sensitivity of the projections of cash flows
    and actuarial present values to changes in the
          most significant individual assumptions?
                (SFFAS 17, par. 27 (4) (a))
    100. At a minimum, do the Social Security and
           Medicare programs analyze assumptions
    regarding the following factors? a. birth and
        death rates b. net immigration c. real wage
    differential d. real interest rate (SFFAS 17,
                      par. 27 (4) (a))
         101. Does the sensitivity analysis for UI
        programs show the effects of increasing the
            unemployment rate as follows? a. by
         approximately one percentage point b. to a
        level sufficient to put stress on the system
          (e.g., to simulate the largest recession
    occurring within the last 25 years) (SFFAS 17,
        par. 27 (4) (b); OMB Bulletin 01-09, p. 104,
                       section 10.4B)

                                   155ibid. 156ibid.

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                          Section X Supplementary Information

         Required Supplementary Stewardship Information   Yes, No, or Explanation
              Social Insurance Programs (79 - 102)            N/A
    102. Does information on the UI program provide a
    state-by-state analysis illustrating the relative
        solvency of individual state programs, including
    the ratio of each state's current accumulated fund
         balance to a year's projected benefit payments
          based on the highest level of annual benefit
        payments experienced by that state over the last
         20 years? (SFFAS 17, par. 27 (5); OMB Bulletin
                  01-09, p.104, section 10.4B)

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