Budget and Accrual Reconciliation Project
FASAB Contact: Grace Wu, WuG@fasab.gov, 202-512-7377
|Request for Comment||Comment Letters||Final Pronouncement|
|Budget and Accrual Reconciliation (PDF)||Comment Letters||Budget and Accrual Reconciliation (PDF)|
SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, requires information to explain the differences between budgetary and financial accounting information. Currently, a reconciliation of obligations incurred and net cost is presented as a note. A July 2012 AGA research report (Government-wide Financial Reporting) suggested improvements in processes as well as standards. They stated “Our research indicated interest in the Unified Budget Deficit not only on the budgetary basis but also on the accrual basis and, more important, the reasons for the differences between the two perspectives.”
The current note disclosure provided by component reporting entities has been criticized as too complex and not useful. The budgetary integrity reporting objective includes helping the reader understand how information on the use of budgetary resources relates to information on the costs of program operations and whether information on the status of budgetary resources is consistent with other accounting information on assets and liabilities. This objective is met at the government-wide level (GWA) by a financial statement reconciling the difference between consolidated net operating costs on an accrual basis to the unified budget deficit. At the component reporting entity level, there is no direct reconciliation from the audited accrual data to budgetary data (as presented on the statement of budgetary resources). Instead, component reporting entities reconcile the total of obligations and nonbudgetary resources to net cost. The obligation data used in the reconciliation does not link directly to the statement of budgetary resources.
The current reconciliation of obligation data at the component reporting entity level but outlay data at the GWA level may add unnecessary complexity for the user to understand budgetary reporting. In addition, there is a need to support the GWA reconciliation by restructuring the component reporting entity disclosures to support the GWA financial statement and focusing reporting on lower levels of aggregation to increase informational value and usefulness.
Through this project the Board will explore what information a component reporting entity reconciliation aligned with the GWA statement could provide. And are there alternative presentations that better relate with budgetary and accrual data and would articulate other financial statements.
- SFFAS 7: Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting
- SFFAS 24: Selected Standards for the Consolidated Financial Report of the United States Government (PDF)
- FASAB’s Implementation Guide to Statement of Financing in Statement of Federal Financial Accounting Standards 7, Accounting for Revenue and Other Financing Sources: Detailed Information on the Statement of Financing. April 2002.
- Treasury’s Financial Manual (TFM), chapter 4700, Agency Reporting Requirements for the Financial Report of the United States Government
- Office of Management and Budget (OMB)’s A-136 Financial Reporting Requirements
HISTORY OF BOARD DELIBERATIONS
June 21-22, 2017 Board Meeting
After the April 23, 2017, Board meeting, staff provided an updated budget and accrual reconciliation (BAR) format to the nine agencies that had expressed concern about the breakdown during the ED comment period. This new format included the Department of the Treasury’s (Treasury) updated, detailed account-level guidance with a breakdown of Intragovernmental and With the Public. At the June 22, 2017, Board meeting, members reviewed responses from six agencies that responded. All respondents preferred this updated format after piloting both the format and the guidance. Because the updated BAR format addressed some of the concerns from the agencies, it will be included as an illustration in Statement of Federal Financial Accounting Concepts 2, Entity and Display, as amended by the Statement.
Members also agreed to clarifying that the BAR breakdown format is a concept illustration, so it is not a requirement for the new Statement.
Based on the above comments, an updated pre-ballot will be provided to the members for review prior to moving to the ballot stage before the next Board meeting.
Issue Papers for June 2017 – Tab E (PDF)
April 26-27, 2017 Board Meeting
At the April 27, 2017, Board meeting, members discussed responses to the ED titled Budget and Accrual Reconciliation (BAR), the suggested edits to the ED based upon comments received, and staff recommendations. Nearly all the respondents agreed with the proposal to replace the Statement of Finance with the BAR. The respondents generally agreed to present the BAR as a footnote with an accompanying narrative disclosure. However, a number of respondents raised concerns and suggested edits on the effective date, the early adoption of the standards, and the restatement of comparative prior period information. In addition, respondents were concerned about the breakdown of the Intragovernmental and With the Public in the proposed BAR format. The Board approved staff’s recommendation to change the effective date to September 30, 2018, with early adoption permitted. The Board also approved staff’s recommendation that only one year’s worth of data be presented in the first year of implementation, with a two-year comparative presentation in the second year of implementation.
Representatives from the Department of Commerce and the Department of the Treasury’s (Treasury) Bureau of Fiscal Service (Fiscal Service) presented their agency’s view on the potential impacts of the breakdown of the Intragovernmental and With the Public in the proposed BAR format. Members considered both the agencies and Treasury’s positions and the fact that the current Government-wide Treasury Account Symbol Adjusted Trial Balance System and USSGL do not support the Outlays’ breakdown. Therefore, the Board is exploring a format without the breakdown for the budgetary net outlays number, keeping the remaining breakdown numbers above the net outlays line item where the numbers may come from the balance sheet and net cost statement directly. The Board requested Fiscal Service to update the BAR crosswalk instruction with a detailed breakdown and then bring the new format, along the updated crosswalk, to the nine agencies who have concerns about the breakdown. These agencies can test the new format and provide feedback.
Based on this feedback and the comments from members during the Board meeting, staff will modify the ED and proceed to the pre-ballot stage.
February 22, 2017
This project was not discussed at the February 2017 meeting.
December 19-20, 2016
At the December Board meeting, the Board discussed edits to a ballot exposure draft (ED) on a Statement of budget and accrual reconciliation (BAR). Members agreed to add a requirement to restate comparative prior period information with this Statement. On December 21, 2016, the Board released for comment the proposed BAR Statement and requested comments on the ED by March 14, 2017.
The Board encourages respondents to provide responses to the questions raised and the reasons for their positions. The ED and the specific questions raised are available at the FASAB website in PDF and Word format, respectively (http://www.fasab.gov/documents-for-comment/).
Issue Paper for December 2016 – Tab D (PDF)
October 19-20, 2016 Board Meeting
At the October 19, 2016, Board meeting, staff and task force members debriefed the Board on the new budget to accrual (BAR) format and the second run pilot results. After the August Board meeting, an additional seven federal agencies joined the six pilot agencies engaging in the new BAR pilot process. With the assistance of the first draft crosswalk instruction, a majority of the agencies completed their reconciliation in one month—a quick turn-around time with insignificant unreconciled differences. The second run agencies reported similar positive feedback. Both pilot results provide strong support for the issuance of the BAR exposure draft (ED).
The Board members discussed their comments on the draft ED. Members concurred on the BAR ED being effective for periods beginning after September 30, 2017, with early adoption permitted. This assumes Treasury’s work on the crosswalk is completed in time. Respondents to the ED will be asked to provide feedback on the proposed timing during the ED comment period.
Staff will update the draft BAR ED based on the discussion. An edited version of the draft ED will be provided to members before the December meeting with the expectation to be able to discuss the pre-ballot ED at the December meeting. If the members have any remaining technical concerns to discuss, the pre-ballot will be delayed until after the December meeting.
Issue Paper for October 2016 – Tab 8
August 24-25, 2016 Board Meeting
The budget to accrual reconciliation (BAR) working group developed a new budget and accrual reconciliation format that would reconcile net cost to net outlays and replace the current Statement of Financing (SOF) note.
Some of the members of the working group presented to the Board the following topics:
- The background of the new BAR format (NBAR) development
- The advantages and disadvantages of the NBAR compared to the SOF
- The placement of the NBAR
- The detailed sample of the NBAR with an agency sample
- The proposed NBAR survey results
- A sample Department of the Treasury crosswalk on the proposed new format
After examining the research results and evaluating six pilot agencies’ positive feedback on the NBAR, the BAR working group recommended the following:
- The NBAR should replace the current SOF note to reduce its complexity, provide more usefulness to the user, and support the government-wide net cost to budget deficit reconciliation. The new format aligns the agency reporting with government-wide reporting. This reconciles net cost to the unified budget surplus (or deficit) as required by SFFAS 24. It will provide agency-level support to the government-wide reconciliation.
- The suggested placement for the NBAR is a financial statement note.
- There is a need to update the current standards to reflect the changes brought by the NBAR.
The Board discussed the proposal, including where the new reconciliation would reside, how revenue amounts could be reconciled, and the possibility of adding additional pilot agencies to gain more experience on the NBAR. The Board reacted positively to the new format and supported continued development.
Issue Paper for August 2016 – Tab B
June 29-30, 2016 Board Meeting
At the June Board meeting, staff presented to the Board the budget and accrual reconciliation working group’s research on the Statement of Financing note (SOF). The Board concurred with the working group that the current format is not very useful and overly complex. As such, the task force should research alternative presentation formats.
The Board directed staff to consider the following characteristics when judging the alternative format’s effectiveness:
- Ease of preparation
- Ability to support the government-wide’s net cost to budget deficit reconciliation
Members of the working group explained some of the challenges in preparing and auditing the reconciliations from the net cost amounts to the budget deficit, or the net obligation amounts. Some of the challenges include the complexity of the budget process and the differences in terminology. The working group will continue developing a meaningful format and crosswalk for the reconciliation.
Issue Paper for June 2016 – Tab E
February 24-25, 2016 Board Meeting
During the Three-Year Plan review and pursuant to earlier project discussions, the Board members approved the proposed project plan and discussed the potential implementation timeline which may affect Treasury’s update on its year-end closing package requirement.