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Financial Statements & Accounting Data. TMA Office of the Chief Financial Officer (OCFO) Management Control & Financial Studies Division. Outline . Financial Statement Reporting Requirement Legacy Accounting Systems Medical Accounts Receivable (A/R). Fiscal Management Requirements.

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Financial Statements & Accounting Data

TMA Office of the Chief Financial Officer (OCFO)

Management Control & Financial Studies Division


Outline
Outline

  • Financial Statement Reporting Requirement

  • Legacy Accounting Systems

  • Medical Accounts Receivable (A/R)


Fiscal Management Requirements

  • CFO Act of 1990: Integrated Financial Management (FM) systems supporting DoD accounting needs are key to effective financial management

  • Federal Financial Management Improvement Act (FFMIA) of 1996: All Federal agencies to comply

    • Implement/maintain systems that meet Federal FM system requirements (Joint Financial Management Improvement Program (JFMIP))

    • Support Federal accounting standards (Federal Accounting Standards Advisory Board (FASAB))

    • Apply US Standard General Ledger (USSGL) at the transaction level


Financial statements
Financial Statements

MHS Financial Statement Reporting Entities (FSREs)

MHS

MERHCF 1

DHP 3

MILCON 3

TRICARE Mgmt.

Activity (TMA)

Service Medical

Activity (SMA)

TMA - FOD

TMA – CRM 1

TMA-USUHS 2

SMA – Army

(MEDCOM) 4

(USACE) 5

SMA – Navy

(BUMED) 4

(NAVFAC) 5

SMA – Air Force

(AFMS) 4

(USAFE) 5

MERHCF: Medicare-Eligible Retiree Health Care Fund

DHP: Defense Health Program Appropriation

MILCON: Military Construction Appropriation

FOD: Financial Operations Division

CRM: Contract Resource Management

USUHS: Uniformed Services University

MEDCOM: Army Medical Command

BUMED: Navy Bureau of Medicine and Surgery

AFMS: Air Force Medical Service

USACE: U.S. Army Corps of Engineers

NAVFAC: Naval Facilities Engineering Command

USAFE: U.S. Air Forces in Europe

(1) Under Audit

(2) All Proprietary Statements Validation Through Examination In Process

(3) Includes American Recovery and

Reinvestment Act (ARRA) Funding

(4) Executes DHP Funds

(5) Executes MILCON Funds



Accounting system acronyms
Accounting System Acronyms

CUFS– College and University Financial System

DAI– Defense Agency Initiative

DEAMS– Defense Enterprise Accounting and Management System

FSRE– Financial Statement Reporting Entities

GAFS-R– General Accounting Financial System - Revised

GFEBS– General Fund Enterprise Business System

STANFINS– Standard Army Finance Information System

STARS-FL– Standard Accounting and Reporting System - Field Level

TMA– TRICARE Management Activity

USUHS– Uniformed Services University of the Health Sciences

WAAS– Washington Headquarters Services (WHS) Allotment Accounting System


Fiscal Management Requirements

  • Office of Management & Budget (OMB)

    • Use commercial off-the-shelf (COTS) JFMIP-certified software for replacement of core FM systems (OMB Circular A-127)

  • New Service FM COTS are JFMIP-certified

    • Army – General Fund Enterprise Business System (GFEBS)

      • SAP COTS

    • Navy – Navy Enterprise Resource Planning (ERP)

      • Oracle COTS

    • Air Force – Defense Enterprise Accounting and Management System (DEAMS)

      • Oracle COTS


What is SFIS?

  • Standard Financial Information Structure (SFIS)

    • A comprehensive, standard “business language” that defines financial information that supports all DoD-wide budget, cost/performance management, and external reporting requirements

    • SFIS is NOT an IT system

    • http://www.defenselink.mil/dbt/sfis_resources.html


Financial statements1
Financial Statements

FSRE Structure Challenges

TMA clear chain of command and organizational structure

MERHCF actuarial and accounting information

SMA components have two lines of authority (command and control, and finance business rules) vs dollar flow. Face issues related to MILDEP priorities vs fund flow priorities: financial impact, accounting system, financial business rules


Financial statements2
Financial Statements

FSRE Structure Challenges (continued)

Solution: single accounting system with common business rules and chain of command simplifies, streamlines the financial statement, financial reporting, financial performance reporting


Budget execution o m as of 30 june 2010
Budget Execution - O&MAs of 30 June 2010


Budget execution o m as of 30 june 20101
Budget Execution - O&MAs of 30 June 2010




Budget execution rdt e as of 30 june 2010
Budget Execution – RDT&EAs of 30 June 2010


Budget execution rdt e as of 30 june 20101
Budget Execution – RDT&EAs of 30 June 2010






Budget execution performance procurement as of 30 june 2010
Budget Execution Performance – Procurement As of 30 June 2010


Budget execution performance procurement as of 30 june 20101
Budget Execution Performance –Procurement As of 30 June 2010


Financial metrics
Financial Metrics

  • Monthly Reporting, History and Measures

    • Accounts Receivable (A/R) Public debt > 30 days at Sep 30, 2009 (Red Metric)

      • SMA-Army ($22.5 million)

    • A/R Intragovernmental Debt > 30 days at Sep 30, 2009 (Red Metric)

      • SMA-Army ($17.7 million)

      • SMA Navy ($17.3 million)

  • SMA A/R increased dramatically in 1st Qtr FY 2010 when recording begins


DoD References

  • DoD Financial Management Regulation (FMR), Volume 4, Chapter 3, “Receivables” dated November 2009

  • DoD Financial Management Regulation (FMR), Volume 6B, Chapter 10, “Notes to Financial Statements” dated September 2008

  • Located at OSD (Comptroller) Web site:

    • http://www.defenselink.mil/comptroller/fmr/


Accounts Receivable (A/R)

  • Two types of A/R in governmental accounting

    • Intra-governmental (e.g., Coast Guard, VA)

      • Expect to get paid 100% of Billed Amount

      • Disputes regarding claims against other federal agencies (e.g., Coast Guard, VA) are to be resolved per Code of Federal Regulations 4 CFR 101

    • Public (civilian emergencies, TPC)

      • Need to establish an allowance for bad debt

  • MTFs may be reporting collections to higher headquarters but what data is reported regarding outstanding and aged (e.g., >30 days, >120 days) Medical A/R?


Third party collections
Third Party Collections

  • Total Third Party Collections (TPC) Billings were in FY 2009 were $496.0 million

  • Total TPC Collections in FY 2009 were $240.7 million

  • How much is really being written off as uncollectible, and how much is still on the books as Medical A/R?


Medical services account msa
Medical Services Account (MSA)

  • Combination of both Intra-governmental A/R (e.g., Coast Guard, VA) and Public A/R (e.g., civilian emergencies)

  • Total MSA amount collected for medical care provided in MTFs for FY 2009 was $151 million


Medical affirmative claims mac
Medical Affirmative Claims (MAC)

  • Medical Affirmative Claims (MAC) A/R is all Public A/R (e.g., insurance companies, liable individuals)

  • Total amount collected for medical care provided in MTFs for FY 2009 was $15 million


Doubtful Accounts & Write-offs

  • FMR guidance states:

  • The accounting office shall establish an allowance fordoubtful debt, which shall provide for reducing gross receivables by the amount of the estimated loss to their net realizable value

  • A write-off occurs when an agency official determines, after using all appropriate collection tools, that is it more than 50% likely that a debt is uncollectible


Service Financial Statements

  • A/R are reported on the annual audited financial statements

  • Service Financial Statements located at OSD(Comptroller) Web site:

    • http://www.dod.mil/comptroller/cfs/fy2009.html


Accounts receivable policy
Accounts Receivable - Policy

  • Accounts Receivable Policy Memorandum (with attachment)

    • Policy signed on May 8, 2008

  • Purpose

    • Establish policy for the recognition (“as rendered”), classification, recording, aging, collection, disposition and reporting of accounts receivable in order to improve the accuracy of financial statements

    • Compliance with DoD’s Financial Management Regulation (FMR) and Generally Accepted Accounting Principles (GAAP)


Accounts receivable policy con t
Accounts Receivable – Policy (con’t)

  • Implementation Date

    • 1 October 2009 (for FY 2010 reporting purposes)

  • Title 10 United States Code, Chapter 55, Section 1095

    • This policy does not modify the ability of the Services to use monies collected in the fiscal year collected10 U.S.C. 1095(g) reads as follows: "Amounts collected under this section from a third-party payer or under any other provision of law from any other payer for health care services provided at or through a facility of the uniformed services shall be credited to the appropriation supporting the maintenance and operation of the facility and shall not be taken into consideration in establishing the operating budget of the facility."


Financial metrics sma
Financial Metrics - SMA

  • Implementation of Medical A/R Policy in 1st Quarter of FY 2010 had a large impact

    • Accounts Receivable (A/R) Public Debt > 30 days at July 31, 2010 (Red Metric)

      • SMA-Army ($213.9 million),

      • SMA-Navy ($5.6 million)

      • SMA-Air Force ($ 78.0 million)

    • Total reported Medical A/R was $527.9 million


Financial metrics tma
Financial Metrics -TMA

  • Implementation of MARR A/R in 4th Quarter of FY 2009 had a large impact

    • Accounts Receivable (A/R) Public debt > 30 days at Mar 31, 2010 (Red Metric)

      • TMA-CRM ($175.0 million)


Management of accounts receivable
Management of Accounts Receivable

  • Revenue Recognition

    • All Defense Health Program (DHP) funded activities will recognize and record a receivable when it establishes a claim based on goods or services provided (“as rendered”)

    • Financial statements have two A/R classifications:

      • Intragovernmental and Nonfederal (public)

      • Debt Management (Debt Collection Improvement Act (DCIA)

    • Working with OUSD(C) to potentially add language to the FMR to better clarify medical debt and when to “turn-it over” to DFAS


Management of accounts receivable continued
Management of Accounts Receivable (continued)

  • Proprietary vs. Budgetary

    • Recommended accounting entries are: Debit USSGL 1310 (Accounts Receivable) and credit USSGL 6790 (Other Expenses Not Requiring Budgetary Resources)

    • This will ensure a correct financial statement entry without the potential for a appropriation violation and maintain USC 1095 flexibility


Accounts receivable revenue recognition
Accounts Receivable - Revenue Recognition

  • All Defense Health Program (DHP) funded activities will recognize and record a receivable when it establishes a claim based on goods or services provided (“as rendered”)

  • There are two classifications of accounts receivables:

    • Intragovernmental

    • Nonfederal


Accounts receivable going forward
Accounts Receivable - Going Forward

  • Accuracy in reporting

    • Accounts receivable reports will be better than what we have now

    • Reports will include aging data

    • Visibility of all accounts (including TPC accounts receivable older than prior year 2)

  • Will become more accurate as procedures, systems and data collection become more standardized

  • Central reporting will improve as funded systems change request have been submitted to:

    • “Push” accounts receivable data from TPOCS and CHCS/AHLTA (both MSA and inpatient TPC), and

    • Calculate interest in both MSA and TPOCS


Accounts receivable going forward1
Accounts Receivable - Going Forward

  • Do not want to impact ability for billing contractors to develop and/or use their own billing management system

  • Possibility of accounts marked as transferred in MSA, but documentation never forwarded to the Defense Finance and Accounting Services (DFAS) Support Center

  • Some joint ventures are generating Department of Veterans Affairs bills on Excel spread sheets


Accounting system going forward
Accounting System – Going Forward

  • SMA Audit Committee will work with the SMA – Army, SMA – Navy, and SMA – Air Force to establish procedures for recording AR

  • Provide your UBO Service Manager and Service RM monthly AR data in the following categories:

    • Intragovernmental

      • MSA, TPOCS, Unbilled, changes to Allowance

    • Nonfederal

      • MSA, TPOCS, Unbilled, changes to Allowance


Accounts receivable service points of contact
Accounts Receivable Service Points of Contact

  • Army –

  • Navy –

  • Air Force –


Outline1
Outline

  • Financial Statement Reporting Requirement

  • Legacy Accounting Systems

  • Medical Accounts Receivable (A/R)


Questions
Questions?

TMA OCFO/MC&FS


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