Non-Federal, Non-Entity Fund Balance with Treasury
FASAB Contact: Melissa Batchelor, batchelorm@fasab.gov, 202-512-5976
| Request for Comment | Due Date | Word Version of questions for Respondents | Comment Letters | Final Pronouncements |
|---|---|---|---|---|
| Clarification of Non-federal Non-entity FBWT Classification (SFFAS 1, Paragraph 31): An Interpretation of SFFAS 1 and SFFAS 31 (PDF) | January 6, 2021 | Word Version of Questions for Respondents (Download) | Comment Letters | Clarification of Non-federal Non-entity FBWT Classification (SFFAS 1, Paragraph 31): An Interpretation of SFFAS 1 and SFFAS 31 (PDF) |
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:
May 10, 2021
On May 10, 2021, FASAB issued Interpretation 10, Clarification of Non-federal Non-entity FBWT Classification (SFFAS 1, Paragraph 31): An Interpretation of SFFAS 1 and SFFAS 31. Interpretation 10 clarifies the classification and presentation of non-federal non-entity Fund Balance with Treasury (FBWT) in paragraph 31 of Statement of Federal Financial Accounting Standards (SFFAS) 1, Accounting for Selected Assets and Liabilities. Specifically, Interpretation 10 clarifies that non-federal non-entity amounts received for unfilled orders (including amounts a customer advances for orders that may be placed in the future or deposits made as part of a bid or settlement process) and deposited into the General Fund of the U.S. Government should be reported as an intragovernmental asset by the component reporting entity.
Interpretation 10 is available at https://fasab.gov/accounting-standards/.
February 23, 2021
At the February 2021 Board meeting, the Board considered the comment letters, staff analysis, and staff’s recommendations on the proposed Interpretation Clarification of Non-federal Non-entity FBWT Classification (SFFAS 1, Paragraph 31): An Interpretation of SFFAS 1 and SFFAS 31.
FASAB released the exposure draft on October 29, 2020, and requested comments by January 6, 2021. FASAB received 16 comment letters, and respondents agreed with the proposed guidance that non-federal non-entity amounts received for unfilled orders that are reflected in FBWT should be reported as an intragovernmental asset of the component reporting entity. No respondents disagreed with the proposal and there had only been one suggested edit by a respondent.
Prior to the meeting, a majority of members had indicated they were prepared to move to a pre-ballot Interpretation. Staff prepared a pre-ballot marked version for review at the meeting. The Board agreed to the pre-ballot edits at the February 2021 meeting.
The Board agreed to move forward to a ballot of the proposed Interpretation Clarification of Non-federal Non-entity FBWT Classification (SFFAS 1, Paragraph 31): An Interpretation of SFFAS 1 and SFFAS 31.
Following the February meeting, staff provided a ballot and the proposed Interpretation electronically for the Board to review. The Board approved the Interpretation and the Interpretation was submitted to the members representing the sponsor agencies for 45 days. If within the 45 days none of the members object, then the Interpretation will be published by FASAB.
Briefing materials – TAB D
Oct 21-22, 2020
At the October meeting, the Board considered a ballot draft Interpretation, Clarification of Non-Federal Non-entity FBWT Classification (SFFAS 1 Paragraph 31): An Interpretation of SFFAS 1 and SFFAS 31 and on October 29, 2020, the exposure draft was released for comment.
The proposed Interpretation would clarify the classification and presentation of non-federal non-entity Fund Balance with Treasury (FBWT). Specifically, the guidance would address how amounts 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.
Statement of Federal Financial Accounting Standards (SFFAS) 1, Accounting for Selected Assets and Liabilities, paragraph 31 was amended by SFFAS 31, Accounting for Fiduciary Activities, in an effort to clarify the definition and reporting for fiduciary amounts on deposit in the U.S. Treasury and to distinguish fiduciary FBWT from federal component entities’ FBWT. While making this distinction, the amendment added the phrase “other non-federal non-entity FBWT.” The Board acknowledges the standards do not define the phrase “other non-federal non-entity FBWT,” and the added phrase contributed to the lack of clarity regarding classification and presentation of non-federal non-entity FBWT. The proposed Interpretation would clarify the classification by explaining that the inclusion of “other non-federal non-entity FBWT” in paragraph 31 of SFFAS 1 was intended to provide for similar treatment of activities that were comparable with fiduciary activity but that had not been identified specifically in SFFAS 31. The proposed Interpretation would clarify that the Board did not intend to require similar treatment for activities that were explicitly excluded from the provisions of SFFAS 31.
Although amounts received in deposit accounts may come from non-federal non-entity sources for unfilled orders, these amounts do not qualify as fiduciary activity because SFFAS 31 specifically excludes unearned revenue from fiduciary activity reporting. Therefore, it would be inconsistent to apply the phrase “other non-federal non-entity” to unearned revenue, including amounts received from non-federal sources for unfilled orders. Hence, non-federal non-entity amounts received for unfilled orders that are reflected in FBWT should be reported as an intragovernmental asset of the component reporting entity.
The Board requests comments on the exposure draft (ED) by January 6, 2021. Respondents are encouraged to provide the reasons for their positions. The ED and the specific question raised are available on the FASAB website in PDF and Microsoft Word format, respectively (https://www.fasab.gov/documents-for-comment/).
Briefing materials – Tab C
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