Non-Federal, Non-Entity Fund Balance with Treasury

FASAB Contact, Melissa Batchelor, batchelorm@fasab.gov, 202-512-5976

Technical Clarifications of Existing Standards (TCES) Project Description:

Members of the Board and the federal financial management community have expressed a general concern that federal entity resources are increasingly constrained. Some believe the Board should evaluate existing requirements and eliminate any unnecessary requirements. When appropriate, the Board explores opportunities to engage with the community on changes to existing standards and areas where clarification may be needed.

TCES addresses requests for guidance that align with the above goals and provide benefits that clearly exceed costs. To accomplish these goals, ongoing efforts may include providing additional forums for preparers, auditors, and users to identify requirements they believe are unnecessary and where clarification may be needed (this can be accomplished through an open-ended written request for input or round table discussions). The Board will assess requests against the reporting objectives. The Board may address these requests through the appropriate level of GAAP guidance.

Non-Federal, Non-Entity Fund Balance With Treasury Project Objective:

As part of the TCES project, this sub-project resolves ambiguity regarding the presentation of non-federal non-entity Fund Balance with Treasury as it relates to paragraph 31 of SFFAS 1, Accounting for Selected Assets and Liabilities.

The objective is to respond to a request for guidance from several stakeholders by issuing clarifying guidance regarding how monies received in deposit funds from non-federal sources in anticipation of an order should be reported and presented on the financial statements when the non-entity funds are held in deposit in the General Fund of the U.S. Government.

HISTORY OF BOARD DELIBERATIONS:

August 26-27, 2020

At the August 2020 Board meeting, the Board considered a draft Interpretation titled Clarification of Non-Federal Non-entity FBWT Classification (SFFAS 1 Paragraph 31): An Interpretation of SFFAS 1 and SFFAS 31. The purpose of the Interpretation is to clarify ambiguity regarding the presentation of non-federal non-entity Fund Balance with Treasury (FBWT). The request for guidance relates to how monies received in deposit funds from non-federal sources in anticipation of an order (that is, an advance) should be presented (that is, classification between intragovernmental and governmental) on component entity financial statements.

The proposed Interpretation would clarify the classification as intragovernmental by explaining that the standards do not define the phrase “other non-federal non-entity FBWT.” The inclusion was intended to provide for similar treatment of activities that are comparable with fiduciary activity but that had not been identified specifically in SFFAS 31. The Board did not intend to require similar treatment for activities that were explicitly excluded (as with unearned revenue) from the provisions of SFFAS 31. 

Staff shared the draft Interpretation with the reporting entities that had originally submitted the technically inquiry along with their respective office of inspector general and independent public accounting firms for comment. The responses indicated the draft Interpretation would clarify SFFAS 1 and resolve the issue.

One comment received from the parties was whether the Board considered either defining the term “other nonfederal non-entity FBWT” in the future, providing examples, or deleting the reference from SFFAS 1. Staff noted this would not be within the scope of an Interpretation. Further, FASAB staff identified potential examples. However, staff considered whether this may be an area the Board would want to gain feedback on during the exposure draft process and offered an option to include a question for respondents in the exposure draft to identify items that may fall into this category. The Board determined that including a question to seek feedback on other examples was not necessary.

The Board members discussed the timing of the issuance of the draft Interpretation and noted that, because of FASAB’s due process, the timeline could not be expedited to meet the fiscal year 2020 year end reporting.. The Board agreed it was appropriate to continue with the usual process. 

All Board members were agreeable to the staff recommendation for the proposed Iinterpretation, Clarification of Non-Federal Non-entity FBWT Classification (SFFAS 1 Paragraph 31): An Interpretation of SFFAS 1 and SFFAS 31. Staff will present an updated draft at the October 2020 board meeting.

Briefing materials – TAB B