AGA Today
Federal Accounting Corner
Anticipating Recoveries
Recoveries of obligations, which can
result from canceling old-year orders or closing an order when
processing a payment for an invoice that is for less than the original
obligation, are treated as new funding authority by OMB. On the
Statement of Budgetary Resources (SBR), they are reported on line 2, and
generally must be apportioned before used. Collections of refunds
against prior-year payments should also be apportioned, but are reported
on line 3D1a of the SBR.
Apportioning in Advance
Some agencies anticipate their
recoveries, and OMB apportions these anticipated amounts in advance of
them being realized. This allows the agency to allocate and allot these
funds at the beginning of the year. The budget system must ensure that
the agency cannot spend these allotments until funds are recovered.
Currently, there are two different
postings for anticipations: one for paid recoveries and one for unpaid.
The Standard General Leger's (SGL) anticipation and apportionment
entries are:
Debit 4310
Anticipated Recoveries of Prior-Year Obligations [A138]
Debit 4060
Anticipated Collections From Non-Federal Sources [A140]
Debit 4070
Anticipated Collections From Federal Sources [A140]
Credit
4590 Apportionments Unavailable - Anticipated Resources [A118]
Credit
4630 Funds Not Available for Commitment/Obligation [A138, A140]
While transaction A140 specifies it is
not for refunds, no entry is given for anticipating refunds and C132
which records the collection of refunds does list accounts 4060 and 4070
as potential credit accounts. So the intention of the SGL Board is not
clear. Given the difficulty of determining, at the beginning of the
year, how much recoveries will be due to refunds from other federal
agencies (SGL account 4070), how much from refunds from the public
(4060), and how much from reducing obligations (4310); and on top of
that, when recording the actual recovery, having to determine which of
three accounts to credit, it seems best to record all anticipated
recoveries in account 4310 (which is reported on SBR line 2), so there
is only one account to reverse when recoveries actually do occur. No
guidance is given for when to use account 4630 and when to use 4590, but
it seems likely that if OMB apportions the anticipated recoveries,
account 4590 should be used and otherwise 4630 should be used. When
recording the actual recovery, it is also necessary to debit the
unavailable status account (4590 or 4630) and credit the available
account (generally 4610 if the funds are apportioned and 4620 if they
are not subject to apportionment). The budget system should then make
the recovery available for spending.
Recording Actual Recoveries
Another issue arises when actual
recoveries exceed anticipations. The easiest course of action is to go
back to OMB and get approval to increase anticipations, since that would
leave the posting model intact. Failing that, it is necessary to change
how actual recoveries post, so they follow the logic for unanticipated
recoveries and do not cause accounts such as 4060, 4070 or 4310 to have
unnatural credit balances or accounts 4590 or 4630 to have unnatural
debits (per SGL transactions C132, D110 and D134, unanticipated
recoveries should credit 4450 Unapportioned Authority).
Many agencies avoid these issues by
asking for apportionments only after the recoveries occur. For most
agencies, the amounts involved are not so significant that they can't
await OMB action. The SGL Board has mapped credit balances of 4060,
4070, and 4310 to SBR line 10C, as if the unnatural balance had already
been moved to 4450 or 4630.
Conclusion
When anticipating recoveries, one must
decide which types of recoveries are anticipated and post to the
appropriate account. Then one must ensure that actual recoveries reduce
the balance in the proper account (if some funds don't anticipate
recoveries but have them anyway, they must use a different posting from
those funds that do anticipate). One must also check periodically to see
if actual recoveries exceed anticipated and then either increase the
anticipation, or change the posting model to the unanticipated model
(credit 4450 if subject to apportionment or 4620 if not). —Simcha
Kuritzky, CGFM, CPA
This column is provided as part of a
free exchange of ideas in federal accounting, and is not reviewed
substantively before publication. Please send all comments, queries or
corrections to
Simcha.Kuritzky@CGIFederal.com.