AGA Today
Federal Accounting Corner
Decoding the Statement of Custodial
Activity
The Statement of Custodial Activity
(SCA) is pretty straightforward until you try and map it to Standard
General Ledger (SGL) accounts. Most agencies don't need to prepare it,
since it must be material to the agency's operations (although a
footnote is required if they are not material). Custodial activity can
be defined functionally as Treasury General Fund (GF) Receipts that are
not reported on the Statement of Net Cost or Statement of Changes in Net
Position. Common examples include taxes and interest revenue from
delinquent accounts receivable.
Purpose
Sometimes federal agencies act as
agents of the U.S. Treasury. Agencies make a number of special types of
deposits that they are not allowed to keep, which instead go into
Treasury's General Fund (GF). Since the agency knows how and why these
were collected, Treasury relies on the agency to report the revenue on
the SCA. Agencies also declare to Treasury the type of deposit being
made by assigning it the proper Treasury Account Fund Symbol.
Revenue Activity
The top section (lines 1-10) of the SCA
list the types of revenue. The first 7 lines list types of collections
(line 8 is the total). Line 1 through 6 are six different types of
taxes, so they are all mapped to account 5800 Tax Revenue Collected. If
an agency collects more than one of these types of taxes (Individual
Income and FICA/SECA Taxes, Corporate Income Taxes, Excise Taxes, Estate
and Gift Taxes, Federal Unemployment Taxes, and Custom Duties), they
need to use a subaccount, fund, or some other data element to
distinguish them.
All other collections go into line 7.
This is tricky because revenue accruals and write-offs can get mixed in,
and we only want cash collected. The revenue accounts include Interest
(5310, 5311, 5312), Penalties, Fines, and Administrative Fees (5320),
Donations (5600), Taxes (5800 not listed above), and Miscellaneous
(5900). If an agency does not accrue revenue, then they can simply use
those revenue accounts. If the agency uses subaccounts to distinguish
collected versus accrued (for example, 5320.01 for Penalties collected
and 5320.02 for Penalties receivable, just as the SGL uses 5800 for tax
collections and 5801 for taxes accrued), then they can just use the
collected subaccounts. Otherwise, the agency must net against the
revenue account any change in the associated receivable account (1310,
1340 and 1360). Note that account 1325 Taxes Receivable is not used
since that account is associated with 5801 and we are only looking at
account 5800. This is further complicated if the agency writes bad debts
off, since this will decrease the receivable when funds are not
collected. To calculate collections where there are write-offs, take the
net credit balance of the associated revenue, contra-revenue, receivable
and contra-receivable (for example, for penalties, net the change in
balances of accounts 5320, 5329, 1360 and 1369, where credits show up as
positive and debits as negative). Alternatively, an agency could set up
special subaccounts for 1010 Fund Balance with Treasury to facilitate
reporting custodial revenue collections. Line 8 is simply the sum of
lines 1-7.
The accrued revenue net of
contra-revenue appears on line 9. For taxes, this is the accrued tax
account 5801 net of tax contra-revenue 5809. For other types of revenue,
it is the change in net receivables (the receivable and contra-
receivable accounts), and also any refunds still payable. If an agency
does not accrue revenue, then this line should be zero. If the agency
separates out accruals with a subaccount, then they could use that plus
contra-revenue here instead of net receivables. The accounts payable
(2110) should only be associated with custodial revenue, so the agency
must limit the entries picked up based on fund, subaccount or some other
data element. Since line 10 is equal to the sum of lines 8 and 9, and
also is supposed to equal the net of all revenue and contra-revenue
accounts, one could back into the value of line 9 by taking the net of
all revenue and contra-revenue accounts and subtracting the balance of
line 8.
Disposition
In the next section, the agency
declares what has been done with the custodial revenue: line 11 shows
what has been transferred to others, such as the General Fund, line 12
shows what is yet to be transferred, including what has only been
accrued, and line 13 shows refunds and amounts scheduled for payment but
not yet disbursed. The accounting models published by Treasury show that
account 2980 Custodial Liability is credited when custodial revenue is
accrued or collected, and this amount is reduced only when the funds are
withdrawn by Treasury. Only if the agency transfers the collection to
another fund or agency on their SF224 is account 2980 bypassed, and
account 5998 Custodial Collections Transferred Out to a Treasury Account
Symbol Other Than the General Fund of the Treasury is debited instead.
When 2980 is posted for an accrual, account 5991 Accrued Collections for
Others is debited, and when 2980 is posted for a collection, account
5990 Collections for Others is debited.
The only way to directly calculate line
11 Transferred to Others is to use a special cash subaccount for the
transfer, or use account 5998, which is only posted when the transfer
takes place (if it is not going to the GF). Otherwise, if Treasury has
withdrawn all of the agency’s collections the agency can calculate that
amount as the balance of account 5990. If the withdrawal is not equal to
collections for any reason, then the agency must calculate the
withdrawal as total accrued and collected (balances of accounts 5990 and
5991) less what hasn’t been given to Treasury (account 2980 Custodial
Liability). This means that 2980 should show what has yet to be
transferred, which is line 12. However, if all collections have been
transferred, then the 2980 balance would equal what has only been
accrued, which is account 5991 (except that a receivable recorded in a
prior fiscal year would have its balance sitting in 3310 Cumulative
Results and not 5991). Tracking refunds in line 13 may also be
difficult, except for taxes, which have their own refund account 5890
(not to mention, tax refunds generally use a different Treasury Symbol
so that is another way to distinguish them).
Line 14 Retained by the Reporting
Entity is calculated as line 10 less lines 11, 12 and 13. However, the
only amounts that should be retained are those transferred to another
fund of the agency, which would be shown in account 5998. If the agency
does not transfer all that was collected, the amount reported has to be
backed into, or shown as the cash balance of those funds that are only
used for such collections. Line 15 is just a proof of the formula that
sources = uses, and should always be zero.
Conclusion
The SCA is a short statement that only
some agencies must prepare, but its preparation does require some
planning and mapping out of data elements such as fund, revenue source
or subaccount. — 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.