AGA Today
Federal
Accounting Corner
by Simcha Kuritzky, CGFM CPA
Parsimonious Accounting Codes
Introduction
In an attempt to reduce the
need for customization, the Financial Systems Integration Office of the
Office of Management and Budget (FSIO of OMB) just released an exposure
draft on a Common Governmentwide Accounting Classification (CGAC)
system. The current GCAC proposal accepts without question that all
FACTS codes are necessary. If we are really serious about meaningful
standardization, we need to take a hard look at what codes we have and
if they really are needed.
Code Evolution
On the first day, Treasury
made SGL Accounts, and they were good. On the second day, Treasury made
the Federal/Nonfederal attribute, and thought it was good until they
tried to eliminate interagency transactions in FACTS I. So on the third
day, Treasury made a two-digit Trading Partner, but that helped only a
little. On the fourth day, Treasury made a four-digit Trading Partner.
On the fifth day, Treasury threatened to add Trading Fund Group
(effectively a six- or eight-digit Trading Partner), and we haven't
gotten to day six yet. What all this means is that the
Federal/Nonfederal attribute is of little use now that we have Trading
Partner, but no one has tried to eliminate it.
Conflating Fields
Some fields are interrelated
and could be combined with little difficulty. One example concerns the
Authority Type and Advance Flag attributes in FACTS II. One of the
Authority Types is D for Advance Appropriation, while Advance Flag can
be P for Prior Year, F for Future Year or X for inapplicable. Why not
instead use Authority Types of D for Advance in Prior Year, add F for
Advance from Future Year, and eliminate the Advance Flag? Perhaps we
could fold Borrowing Source in as well (which only has 3 possible
values), since B for Borrowing Authority is also one of the Authority
Types.
Old-Fashioned Budgeting
Budgets used to be based on
cash. While agencies are now required to do accrual accounting, agency
budgets are generally considered spent when the obligation (order) is
incurred. However, some of the reporting requirements are still based on
cash. In particular, the budgetary cash spending accounts (4802, 4902,
4908, 4982) must declare if they are disbursing old-year money or
new-year money with the Year of Budget Authority (YBA) attribute. This
antiquated approach is difficult for accountants to deal with, since
no-year funds carry over into the new year's budget and are often
apportioned, allotted, and spent as one pot of money. Perhaps OMB can
eliminate the YBA attribute and the cash reporting requirement in the
name of accrual accounting.
Using the Big Picture
An SGL trial balance assumes
one is using the SGL accounting model. Since debits must equal credits,
often the information required from an attribute is available from the
SGL account posted on the other side of the entry. So if OMB really
needs to know whether old or new funds were disbursed (using the YBA
attribute), they can add carryover (account 4201) to collected
recoveries (4872 and 4972) to get the maximum old-year authority, and if
disbursements is more than that, then that is the old-year amount that
was disbursed, and if disbursements is less than that, then all
disbursements were of old-year authority.
Similarly, the amount of
reimbursable expenditures incurred is equal to the change in balances
for 4251 and 4252 Reimbursements and Other Income Earned – Receivable
and – Collected. Many years ago, the SGL used account 4241 and 4242 for
Unfilled Customer Orders Unpaid and Paid, and this account had the same
balance as reimbursable undelivered orders (the 48xx series). It would
be easier to revive the 424x accounts and use the balances of accounts
4241 through 4252 to determine reimbursable obligations than to split
out the 4800 and 4900 series of accounts into reimbursable and direct
via the Reimbursable attribute.
Conclusion
As Ralph Waldo Emerson once
said, "a foolish consistency is the hobgoblin of little minds." There
are many benefits to consistency and standardization that CGAC can
yield. The yield will be even greater, though, if we take this
opportunity to reassess the many SGL attributes and eliminate or combine
those that are superfluous.
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.