AGA Today
Federal Accounting Corner: Pro-Forma Transaction Formats
Background
Treasury's Standard General
Ledger (SGL) condenses a lot of information into a small space. One of
the problems with deciding how to format a pro forma transaction is that
every accounting system has its own way of loading posting models and
what is convenient for one system is convoluted for another.
Simple Entry
Here is an excerpt of a sample entry from the SGL
transaction listing that is unambiguous:
A116 To record budgetary authority
apportioned by the Office of Management and Budget (OMB) and available
for allotment.
Budgetary Entry
Debit 4450 Unapportioned Authority
Credit 4510 Apportionments
The only option is to debit
4450 and credit 4510. There are also simple compound entries with one
debit-credit pair each for the budget and proprietary accounts.
Complex Entry
Below is a complex entry.
There are multiple debit and credit accounts, and the person or system
posting the entry must determine which one debit and one credit account
is appropriate under the circumstances:
A140 To record
anticipated collections other than refunds.
Budgetary Entry
Debit 4060 Anticipated Collections From Non-Federal Sources
Debit 4070 Anticipated Collections From Federal Sources
Credit 4450 Unapportioned Authority
Credit 4630 Funds Not Available for Commitment/Obligation
This is actually the smallest
example I could find; some entries have dozens of optional accounts.
This transaction could be posted four different ways: 4060 / 4450, 4070
/ 4450, 4060 / 4630 and 4070 / 4630. The one performing the posting has
to know the funding source and whether the anticipated funds are
available to determine which combination is appropriate.
Closing Entry
One exception to this rule is
the closing entry. Originally, these entries were hard to read because
all accounts were simply listed and the reader had to figure out which
was closing to which. Now the SGL bolds the account being closed into,
so all the other accounts are posted for the opposite of their ending
balance.
F206 To record the
closing of fiscal-year contract authority.
Budgetary Entry
Debit 4132 Substitution of Contract Authority
Debit 4133 Decreases to Indefinite Contract Authority
Debit 4134 Contract Authority Withdrawn
Debit 4135 Contract Authority Liquidated
Debit 4139 Contract Authority Carried Forward
Debit 4392 Permanent Reduction - New Budget Authority
Debit 4393 Permanent Reduction - Prior-Year Balances
Credit 4131 Current-Year Contract Authority Realized
Credit 4139 Contract Authority Carried Forward
The only difficulty here is
that 4139 is listed as both a debit and a credit. Other closing entries
list some closing accounts (such as 4831) as both a debit and a credit.
It would make more sense to abandon the debit-credit format and simply
list which accounts close to which. FMS recently posted just such a
listing on their SGL website (the Closing Accounts Quick Reference
Chart).
Multi-Posting Entry
Another exception is the
multi-posting entry. I find these hard to interpret. In case studies
this format presents no difficulties because a specific dollar amount is
assigned to each account. However, when there are no amounts, I feel pro
forma entries should always be listed as debit-credit pairs where there
is one debit and one credit for the same amount.
C161
To record an adjustment to loans and interest receivable based on
acquired collateral property without recourse. Use only for pre-Credit
Reform.
Proprietary Entry
Debit 1551 Foreclosed Property
Debit 7210 Losses on Disposition of Assets - Other
Credit 1340 Interest Receivable
Credit 1350 Loans Receivable
Credit 7110 Gains on Disposition of Assets - Other
In this entry, a loan with
interest is liquidated with the foreclosure of property, resulting in a
gain or loss. It is not intuitively obvious how this is to be posted. I
would prefer a series like this:
C161
To record an adjustment to loans and interest receivable based on
acquired collateral property without recourse. Use only for pre-Credit
Reform.
Proprietary Entry A (Post for the balance of the loan)
Debit 1551 Foreclosed Property
Credit 1350 Loans Receivable
Proprietary Entry B (Post for the balance of the interest
receivable)
Debit 1551 Foreclosed Property
Credit 1340 Interest Receivable
Proprietary Entry C (Post for the
difference between receivable balances and market value if the market
value is higher)
Debit 1551 Foreclosed Property
Credit 7110 Gains on Disposition of Assets - Other
Proprietary Entry D (Post for the
difference between receivable balances and market value if the market
value is lower)
Debit 7210 Losses on Disposition of Assets - Other
Credit 1551 Foreclosed Property
Entries A and B are required
(although one of those balances could be zero), while entries C and D
are mutually exclusive. This listing is unambiguous. Technically,
entries C and D could be combined because only one debit and one credit
account will be posted to, but I think it looks awkward:
Proprietary Entry C (Post for the
difference between receivable balances and market value)
Debit 7210 Losses on Disposition of Assets – Other
Debit 1551 Foreclosed Property
Credit 1551 Foreclosed Property
Credit 7110 Gains on Disposition of Assets - Other
I chose to use account 1551
as the link between all the entries because it is the one account that
would always be posted. Another way to format it would be to use a
stand-in account and post each one for its proper value. If the stand-in
account has a balance at the end, then one or more of the entries was
posted for the wrong amount or not posted at all. Using 0000 Suspense as
the stand-in, this can be given in a tabular format as follows (I leave
off the account names because they are given above):
|
Debit |
Credit |
Amount |
|
0000 |
1350 |
Balance of loan being
foreclosed |
|
0000 |
1340 |
Balance of interest
receivable on loan being foreclosed |
|
1551 |
0000 |
Market value of
foreclosed property |
|
0000 |
7110 |
Property market value
less balance of loan and receivable (must be positive) |
|
7210 |
0000 |
Balance of loan and
receivable less property market value (must be positive) |
Conclusion
An exhaustive list of all
possible postings is too cumbersome to be useful. Some means of
combining postings together is necessary when writing pro forma
transactions. However, one should not sacrifice clarity. Where the
amount posted may vary by account, I feel it is best to have one set of
posting accounts for each amount. —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.