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).
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 14
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 16
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 17
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 19
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 20
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 21
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 22
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 23
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 24
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 28
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.)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
Page 30
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))
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 31
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 32
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 33
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 34
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 35
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 36
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 37
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 38
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 39
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 40
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 41
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 42
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 43
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 44
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 45
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 47
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 48
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 49
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 50
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 51
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 52
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 53
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 54
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 55
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 56
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 57
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 58
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 59
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
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 60
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).
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 62
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 63
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 65
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 66
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 67
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).
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 69
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 70
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 72
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 73
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 75
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 76
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 77
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 78
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 79
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 80
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 81
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 82
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 83
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
Page 84
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))
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 85
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).
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 86
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 87
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 89
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 90
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 91
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 92
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 93
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 94
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 95
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 97
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 98
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 99
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 100
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 101
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 102
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
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 105
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 106
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 107
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 108
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 110
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 112
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)
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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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 118
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 119
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))
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 120
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 122
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
Page 123
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 124
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
Page 125
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 126
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
Page 127
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 128
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 129
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
Page 130
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 131
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 133
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 136
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
Page 139
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 140
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 143
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 145
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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))
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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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Page 174
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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Page 176
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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Page 183
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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Page 184
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)
October 2003 GAO-04-44G - CFO Checklist -Revised 2003 - Exposure Draft Page 186
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)
October 2003 GAO-04-44G - CFO Checklist -Revised 2003 - Exposure Draft Page 187
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)
October 2003 GAO-04-44G - CFO Checklist -Revised 2003 - Exposure Draft Page 188
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)
October 2003 GAO-04-44G - CFO Checklist -Revised 2003 - Exposure Draft Page 189
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)
October 2003 GAO-04-44G - CFO Checklist -Revised 2003 - Exposure Draft Page 190
Reporting 1050 - CFO Act Checklist
Section IX Notes to Financial Statements
The five questions in this section concern the disclosure of significant
accounting policies.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 191
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 192
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 194
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 197
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 198
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 201
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 203
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 204
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 205
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.
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft
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))
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 219
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)
October 2003 GAO-04-44G - CFO Checklist - Revised 2003 - Exposure Draft Page 222
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