AGA Today

Federal Accounting Corner    

Integrating the General Ledger

The U.S. Standard General Ledger (SGL) has always had a split personality, or perhaps it might be better to say that the budgetary and proprietary accounts are twins that sometimes act closely in concert and other times act with total independence. I have described, in a number of articles, the relationships between proprietary and budgetary balances, and even assisted Treasury with developing elimination groups. Now Treasury's Financial Management Service (FMS) has new initiatives to better integrate these two parts of the SGL.

Tying It All Together

The aforementioned elimination groups were designed specifically to help with intragovernmental eliminations. However, even transactions with the public need to be shown consistently in both the budgetary and proprietary accounts. So FMS has just introduced tie-points. Currently there are 20 tie-points, and fully half of them relate budgetary to proprietary accounts. They tie together budgetary and proprietary cash, accounts payable, expenditures (to expenses/purchases and to appropriations used), advances (in and out), receivables, exchange collections, appropriations received and net position. The other tie-points ensure that proprietary accounts balance, there is no activity in 3100, 3310 or 4201, beginning balances equal last year's post-close balances, and anticipated resources equal statuses in the budgetary accounts.  Agencies should download the tie-points spreadsheet from the FMS website and throw in their actual balances now, so there are no surprises in October when they put together their financial statements. As time permits, agencies should also apply these tests to their posting models, to see if any entries could cause problems in the future.

Just the FACTS

First there was FACTS I for the proprietary accounts, used to generate the Consolidated Report. Then there was FACTS II, to assist in preparing agency/departmental Statement of Budgetary Resources and reconcile cash. Now FMS is planning on merging these two trial balances together so there is only one submission for all SGL accounts. This is not a new experiment. Treasury has used a similar system called TIER (Treasury Information Executive Reporting system) for its own bureaus for more than a decade. The implementation should be smoother than the original rollout of FACTS or FACTS II.  Combining the two submissions into one will save time and effort in the future.

Refinements

Among the many proposed changes to the SGL for FY07 is one to help tie liabilities in the proprietary accounts to delivered orders in the budgetary: When Other Liabilities are recorded, account 2190 is to be used only if there is a budgetary impact (that is, when 4901 or a related account is also posted), and 2990 when there is no budgetary impact.  I have long advocated using separate general ledger accounts for different accounting models, so I heartily endorse this change  I also hope FMS will look into doing the same for 1310 Accounts Receivable.

Conclusion

This year, the SGL turns 20. While it has enabled many agencies to improve accounting practices and financial management, we still have a way to go. Consolidating interfaces and better integrating existing SGL accounts will help move us forward. — by 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.