AGA Today
Federal
Accounting Corner:
Budgeting
without Budgetary Accounts
Introduction
Mitch Laine, in his article on
financial management reform in AGA's Summer 2005 Journal of
Government Financial Management, proposed eliminating all budgetary
accounts. These past few months, I've run a series of columns in the
Washington, D.C. Chapter newsletter describing a proprietary-only
posting model. (The newsletters can be viewed at
www.agadc.org, and will end with
the October issue.) This column will summarize the model and the lessons
learned.
Structure
The first thing I noticed was the
considerable redundancy in the current Standard General Ledger (SGL). By
going to an all-proprietary chart of accounts, I eliminated one—and
sometimes two—sets of postings from the most common entries. In order to
capture most of the detail required to produce the current financial
statements, I had to beef up the detail captured in a number of
proprietary accounts (described below). However, as Laine pointed out
in his article, much of the detail in the budgetary accounts is needed
to prepare the Office of Management and Budget's (OMB) Program and
Financing Schedule. This data is usually maintained by budgeters in
spreadsheets, and many agencies are still struggling to capture it
correctly in the SGL accounts. It would be easier to let budgeters
budget without using the SGL and simplify the chart of accounts. If an
agency currently captures this information in their accounting system,
they can move it to a field other than general ledger account.
Cash
The number of budgetary chart of
accounts practically doubled when Treasury split them between cash and
non-cash accounts. This also necessitated adding extra postings to the
disbursement and collection transactions. In my proprietary-only model,
I simply split out cash to capture the information for the SF-224
Statement of Transactions and the Statement of Budgetary Resources
(SBR). So, accounts such as 1020 FBWT – Appropriations – New, 1031 FBWT
– Collections – Prior-Year Refunds, and 1042 FBWT – Disbursements –
Advances all close to 1010 Fund Balance With Treasury – Beginning
Balance. All cash-related budgetary resources were mapped to the
proprietary cash accounts.
Receivables
One major issue was how to handle
anticipated collections and unbilled reimbursements. I decided that the
closest approximation to this in the proprietary accounts was a
contingent receivable, so I added 1370 Anticipated Collections, 1371
Reimbursable Agreements, and 1372 Earned but Unbilled Reimbursements. I
also split out the 1310 receivable account so that 1311 is for vendor
refunds and 1312 is for reimbursements billed. All budgetary resources
not related to cash were mapped to receivable or payable accounts.
Equity
The current equity accounts are
redundant as the data is available in other accounts. So I removed the
current set and replaced them with a series of accounts associated with
budget status. I actually got the idea from audited statements that were
issued years ago, where equity was split between obligated and
unobligated. I split out the equity accounts into authority that is
unavailable (3110), anticipated (3111), unapportioned (3115), available
(3120), reserved (3121), committed (3125) and obligated (3130). In this
way, an appropriation would capture the same information with two
accounts (a debit to cash and credit to equity) as is now captured in
the SGL with four accounts.
Expenditures
I didn't see any reason to distinguish
between obligations and expenditures in the equity accounts, since the
SBR does not make that distinction and besides, that information is
available in the expenses or purchases (I kept the 8802 and 8801
accounts for asset purchases). So, for direct appropriations, balances
remain in 3130 Obligated Authority until annual close, when 6101 Expense
of Appropriated Obligations and 8801 Authority Used for Purchases close
into it. For reimbursable expenditures, the balance in 3130 Obligated
Authority moves to 5201 Revenue from Reimbursable Services Provided.
Fixed Assets
I restored account 3210, which Treasury
got rid of years ago, only I named it Funded Capital. All asset
purchase, depreciation and disposal entries in appropriated funds (and
revolving funds where revenues can exceed expenses) run through that
account instead of 3310 Cumulative Results, in order to agree with the
private sector, where the purchase of an asset has no impact on
cumulative results. For a reimbursable fund, an asset purchase does not
generate revenue, but depreciation does, making the depreciation account
(6103) a funded expense. The obligation balance remains in 3130, and
only gets reduced when depreciation is closed there as part of annual
close, or by a direct entry on disposal of the asset.
Spending Adjustments
I kept spending adjustments, since they
can detect an agency's attempt to reprogram funds without OMB's
consent. However, since I track spending in one equity account (3130
Obligated Authority), I only need two spending adjustment accounts:
3131 Downward Adjustments of Obligations and 3132 Upward Adjustments of
Obligations. Gone is the eight-way split based on delivered versus
undelivered orders, paid versus unpaid and upward versus downward.
Though I do split out cash to separately identify prior-year refunds
(1031), reductions in prior-year advances issued (1037), and
disbursements for prior-year expenditures (1041) to meet Treasury's
reporting requirements.
Conclusion
The SGL that has evolved over the years
is cumbersome and complex. There are reasons it has become so
complex—agencies use the data for a number of different and unrelated
purposes. But now that Treasury is implementing a new governmentwide
accounting system that will add additional fields for capturing
transaction characteristics, perhaps it is time to review the basic
assumptions of the USSGL and see if it could be simplified without
losing functionality. — 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.