Association of Government Accountants

1. Association of Government Accountants 2004 Financial Report of the United States Government

2. Presentation Summary • Process of the Financial Report of the United States (FR) • Why Change? • Developing a Solution • Changes in the process • Closing Package: effective for Fiscal Year (FY) 2004 • Closing Package Requirement • Government Financial Reporting System (GFRS) • Reporting Overview • Tentative key dates for FY 2004 • Audit Opinion for Closing Package • Intragovernmental Management Control Plan

3. Why Change? The General Accounting Office (GAO) has stated the Account Groupings Worksheet (AGW) process is unauditable. The Financial Report of the United States Government (FR) consolidation process has been plagued by three on-going material weaknesses: Reporting Inconsistencies Elimination of Intragovernmental Balances Reconciling Operating Results with Budget Results (currently outside of the scope of the Closing Package) :

4. Developing a Solution An inter-agency group from Treasury, Financial Management Services (FMS), Office of Management and Budget (OMB) and GAO convened to resolve these longstanding process findings: Consistency – Start with agencies audited financial statement numbers and provide proof of changes in Net Position Eliminations – Balanced elimination entries

5. Changes in the Reporting Process • The AGWs are no longer required in FY 2004 and beyond. • FACTS Notes are no longer included as part of FACTS I in FY 2004 and beyond. • The Business Line reporting entity is no longer required in FY 2004. • Reporting dates are greatly accelerated.

6. Closing Package: Effective for FY 04

7. Closing Package Requirements • The Closing Package is a prescribed format of financial statements needed to prepare the FR. • All line items and amounts on agency’s comparative, audited, consolidated, department-level Balance Sheets, Statements of Net Cost, Statements of Changes in Net Position/Income Statement, and the Statement or Note on Custodial Activity (if applicable) are to be reclassified to the closing package financial statements formats. • Intragovernmental line items are to be listed by trading partner, and amount.

8. Closing Package Requirements-Cont’d • Footnotes reporting are required by the reclassified Balance Sheet line items and other footnote in the FR. • Other information not contained in primary FR financial statements and footnotes will be disclosed to meet Federal GAAP disclosure requirements. • Preclosing Adjusted Trial Balances submissions are still required from agencies via FACTS I. • New audit procedures will be required. • Government Financial Reporting System (GFRS) is being developed to collect the Closing Package.

9. What is GFRS? • GFRS is Internet based application used to aid in the preparation of the Financial Report of the United States Government (FR). • Role-based application • Application will interface w/ FACTS I

10. Reporting Overview GFRS --Module 1 Financial StatementsTemplates • Every line item on the audited financial • statements must be exactly as reported • on the published financial statements

11. Reporting Overview - Cont’d GFRS -- Module 2 Agency Audited Financial Statements • Verifying agencies manually enter their audited • financial statement data by line item description for • each distinct financial statement in closing package.

12. Reporting Overview - Cont’d GFRS -- Module 3 Reclassify Financial Statements to the Closing Package Formats • The closing package line items will be dictated by: • Line items published in the FR. • Reciprocal Intragovernmental categories.

13. Reporting Overview – Cont’d Enter Financial Statement SGL Logic Transmit FACTS I ATBs Agencies must provide SGL logic for each line item of their financial statements.

14. Reporting Overview - Cont’d GFRS -- Module 4 Identify Intragovernmental Transaction Partners • Enter the trading partner information for each • line item in the reclassified financial statements • that are identified as Intragovernmental

15. Reporting Overview - Cont’d GFRS – Module 5 Non-verifying Agency Trading Partner (TP) Identification • Data is retrieved from the ATB data submitted via FACTS I. • A read-only module that displays the Intragovernmental TP for all Federal Line items.

16. Reporting Overview - Cont’d GFRS – Module 6 Enter Note Information • A standard set of Notes must be provided for consolidation in the FR. • Many agencies will have to produce two sets of Notes, if they differ from the standard required by the Closing Package.

17. Reporting Overview - Cont’d GFRS – Module 7 Enter Other Information • Stewardship information • Deferred maintenance • Prior period adjustments • Dedicated collections • Commitments and contingencies

18. Reporting Overview – Cont’d GFRS – Module 8 CFO Approval and IG Audit Coverage Audit

19. Audit Opinion for Closing Package • Joint effort of Treasury, OMB, selected agency IGs and President’s Council on Integrity and Efficiency (PCIE). • Provide reasonable assurance in the special-purpose financial statements accompany with NOTES, in accordance with GAS & FASAB. • Amend OMB Audit requirement for Federal financial Statements for the FR Closing Package special purpose financial reports by OMB.

20. Intragovernmental Management Control • In coordination with OMB, GAO, and PCIE audit subcommittee. • Address a material weakness cited by GAO in the FR. • Federal entities are at risk of misstating financial reporting from FR cited by GMRA. • Effective the quarter ending March 31, 2004.

21. Intragovernmental Management Control Closing Package Data GFRS Agency’s Audited Financial Statements/ Federal Line by TP Audit Opinion on Special Purpose Financial Reports IRAS Qrtly Status of Disposition Certification CFO Representation Intragovernmental AUP

22. Intragovernmental Management Control—Cont’d FMS Reporting Role and Responsibilities • Generate reports via the Intragovernmental Reporting and Analysis system (IRAS)

23. Intragovernmental Management Control—Cont’d Federal Program Agencies (FPAs) and CFOs are required to submit: Quarterly Intragovernmental activities Quarterly Status of Disposition Certification Closing Package Module 4 CFO Representation based on Intragovernemental material differences identified by FMS related To Closing Package reporting to FMS, GAO, and their FPAs/IGs

24. Tentative Key Dates • FY’03 Data Input – June 01 – Aug 6, 2004 • FY’04 GFRS Module 1 Opens Sept 7, 2004 • FY’04 GFRS Modules 2-12 Open October 01, 2004 • Due date for Agency Reporting – November 18, 2004 (Including CFO Approval & IG Opinion)