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11
Country ReportCountry ReportU.S.A.U.S.A.
Public Sector Accruals SymposiumPublic Sector Accruals Symposium
Organization of Economic Cooperation & Development Organization of Economic Cooperation & Development
March 3-4, 2009March 3-4, 2009
Nancy Fleetwood
United States of America, Department of the Treasury Deputy Assistant Secretary – Accounting Policy
22
The U.S. - The BasicsThe U.S. - The Basics PopulationPopulation – 306 million – 306 million 2009 Outlays2009 Outlays: $3.1t; Receipts: $2.7t : $3.1t; Receipts: $2.7t
• Unified Budget Deficit: $455bUnified Budget Deficit: $455b
• Net Cost: Net Cost: $1t$1t
National DebtNational Debt (as of 9/30/08): $10t (as of 9/30/08): $10t• Public Debt:$5.8tPublic Debt:$5.8t
• Intragovernmental: $4.2tIntragovernmental: $4.2t
Hundreds of agenciesHundreds of agencies. . • 35 Reporting entity agencies35 Reporting entity agencies
Fiscal YearFiscal Year: October 1 – September 30: October 1 – September 30 Audit opinionAudit opinion disclaimer for more than a decade. disclaimer for more than a decade.
33
FY 2008 AccomplishmentsFY 2008 Accomplishments For the 4For the 4thth year in a row, all CFO Act agencies completed their year in a row, all CFO Act agencies completed their
audits within 45 days of fiscal year-end (audits within 45 days of fiscal year-end (November 15thNovember 15th).).
• 21/24 major Federal agencies received 21/24 major Federal agencies received clean audit opinionsclean audit opinions, (FY07 - 19), (FY07 - 19)
• For the 5For the 5thth consecutive year, the consecutive year, the totaltotal number of number of material weaknessesmaterial weaknesses government-wide government-wide declineddeclined (from 39 to 32 during FY 2008).(from 39 to 32 during FY 2008).
• 14 agencies14 agencies earned a clean audit opinion earned a clean audit opinion with nowith no material weaknesses material weaknesses (including the Departments of Commerce, Education, Energy, HUD, Justice, (including the Departments of Commerce, Education, Energy, HUD, Justice, Labor, State, and Transportation). Labor, State, and Transportation).
The Government issued its consolidated financial report on time The Government issued its consolidated financial report on time by by December 15December 15thth..
For theFor the 22ndnd consecutive year consecutive year, the Government: , the Government:
• earned an unqualified audit opinion on its Statement of Social earned an unqualified audit opinion on its Statement of Social Insurance.Insurance.
• issued a ‘Citizen’s Guide’ to the Financial Report of the U.S. issued a ‘Citizen’s Guide’ to the Financial Report of the U.S. Government’.Government’.
44
Key IssuesKey Issues Current Financial Current Financial
Position and Position and ConditionCondition
Market Market Stabilization & Stabilization & RecoveryRecovery
Social Insurance Social Insurance & Sustainability& Sustainability
55
A Year of A Year of Unprecedented ChangeUnprecedented Change
66
$51.1bOther
Budget Deficit vs. Net CostBudget Deficit vs. Net Cost2008 Unified
Budget Deficit$454.8 billion
$549.8bChange in unfunded
postemployment benefit estimates
+
$(46.6b)Decrease in
Capitalized Fixed Assets, net of Depreciation =
2008 Net Cost$1,009.1 billion
+
$4.5bNet Increase in:
Environmental Liabilities; Net Capitalized Fixed Assets;
Other
$110bChange in DoD
estimates
$339bChange in VA
estimates
$100bChange in
OPM estimates
77
What Came In & What Came In & What Went OutWhat Went Out
In Out
88
What We Own & What We Own & What We OweWhat We Owe
AssetsAssets $1.97 trillion$1.97 trillion Mostly Property Plant Mostly Property Plant
&Equipment&Equipment Other (off-balance Other (off-balance
sheet) sheet) • Stewardship Land Stewardship Land
(national parks, (national parks, forests)forests)
• Heritage Assets Heritage Assets (national memorials, (national memorials, historic structures)historic structures)
Liabilities
$-
$1,000.0
$2,000.0
$3,000.0
$4,000.0
$5,000.0
$6,000.0
Do
llars
in B
illio
ns
Liabilities by Type
Other Liabilities
Environmental &disposalliabilities
Fed employee &veteran benefitspayable
Federal debtsecurities heldby the public
99
Market Stabilization & RecoveryMarket Stabilization & RecoveryHousing & Housing & Economic Economic
Recovery Act Recovery Act (HERA)(HERA)
Emergency Emergency Economic Economic
Stabilization Stabilization Act Act (EESA)(EESA)
Troubled Troubled Assets Assets Relief Relief
Program Program (TARP)(TARP)
Only a small fraction of activity impacted the FY 2008 statements.
Assets LiabilitiesInvestment: preferred stock warrants from Government Sponsored Enterprises (GSEs)
7.0$
Supplementary Financing Program:Treasury borrows $300b and deposits with Federal Reserve.
Keepwell' liability to Freddie Mac 13.8$
Loan Receivable - MBS purchase 3.3$
Dollars in BillionsTransactions impacting the FY 2008 financial statements
300.0$ 300.0$
American Recovery and Reinvestment Act American Recovery and Reinvestment Act (ARRA)(ARRA)
1010
Market Stabilization & RecoveryMarket Stabilization & RecoveryReporting ChallengesReporting Challenges
TransparencyTransparency
• Cost / BenefitCost / Benefit
Accounting for transactions and eventsAccounting for transactions and events
• Credit Reform.Credit Reform.
• ConsolidationConsolidation
Impact of American Recovery and Impact of American Recovery and Reinvestment ActReinvestment Act ( (ARRA)ARRA)
1111
Social Insurance: Social Insurance: An Issue Now & in the FutureAn Issue Now & in the Future
Historical & Projected U.S. Revenue and Cost as % of GDP
Current Trends Are Not Sustainable(as a percent of GDP)
---
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Per
cen
t o
f G
DP
Net Interest
OtherGovernment
Medicaid
Medicare
Social Security
Total Revenues
Debt held by the Public(as a percent of GDP)
0
100
200
300
400
500
600
700
1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080
Per
cen
t o
f G
DP
WWII 109% of GDP
Historical & Projected U.S. Debt Held by the Public as % of GDP
Under current conditions, actuaries estimate that Under current conditions, actuaries estimate that there will be a social insurance shortfall of there will be a social insurance shortfall of $43t$43t..• 75-year estimate of future benefit expenditures net of 75-year estimate of future benefit expenditures net of
contributions.contributions.
1212
The Clock is TickingThe Clock is Ticking
1313
We Still Have Work To DoWe Still Have Work To Do
'Harmonizing Entries': 2003-2008
$24.5
$4.1
$(29.8)
$(3.4)
$11.0$6.7
$(30.0)
$(20.0)
$(10.0)
$-
$10.0
$20.0
$30.0
2003 2004 2005 2006 2007 2008
Fiscal Year
bil
lio
ns
of
do
llar
s
'PLUG'
Material Weaknesses:
1. DoD Accounting Issues
2. Accounting for/Reconciliation of Intragovernmental Activity and Balances
• FMS must ‘PLUG’ a “harmonizing” entry (i.e., ‘PLUG’) into the equity reported on the Statement of Changes in Net Position to balance.
3. Preparation of Consolidated Financial Statements
For the 12th Consecutive Year, GAO issued a disclaimer of opinion on the Financial Report of the U.S. Government.
1414
Major InitiativesMajor Initiatives
Governmentwide Governmentwide Accounting and Accounting and
Reporting Reporting Modernization Project Modernization Project
(GWA)(GWA)
Financial Information Financial Information Reporting Reporting
Standardization Standardization
(FIRST)(FIRST)
Payment Application Payment Application Modernization Modernization
(PAM)(PAM)
Collections and Collections and Cash Management Cash Management
ModernizationModernization
(CCMM)(CCMM)
Common Governmentwide Accounting Classification
(CGAC)
1515
On the HorizonOn the Horizon We must have a clean audit opinion on the We must have a clean audit opinion on the
Governmentwide financial statements.Governmentwide financial statements.
• Continue to build on agency audit successes.Continue to build on agency audit successes.
• Continue to pursue systems and structure initiatives to Continue to pursue systems and structure initiatives to resolve governmentwide material weaknesses.resolve governmentwide material weaknesses.
Financial reporting needs to be relevant to decision-Financial reporting needs to be relevant to decision-makers.makers.
• Build on success of ‘Citizen’s Guide’Build on success of ‘Citizen’s Guide’
Ready to address the reporting challenges of the Ready to address the reporting challenges of the economic recovery effort.economic recovery effort.
• Credit ReformCredit Reform
• TransparencyTransparency
1616
Find Out MoreFind Out More
U.S. Department of the TreasuryU.S. Department of the Treasury
http://www.fms.treas.gov/fr/index.htmlhttp://www.fms.treas.gov/fr/index.html
Office of Management and BudgetOffice of Management and Budget
http://www.whitehouse.gov/omb/financial/reports/fy08_5yr_plan.pdfhttp://www.whitehouse.gov/omb/financial/reports/fy08_5yr_plan.pdf
Government Accountability OfficeGovernment Accountability Office
http://www.gao.gov/financial/fy2008financialreport.htmlhttp://www.gao.gov/financial/fy2008financialreport.html
Federal Accounting Standards Advisory BoardFederal Accounting Standards Advisory Board
www.fasab.govwww.fasab.gov
1717
QUESTIONSQUESTIONS
"We might hope to see the finances of the Union as clear and intelligible as a merchant's books, so that every member of Congress and every man
of any mind in the Union should be able to comprehend them, to investigate abuses, and consequently to control them."
President Thomas Jefferson to Treasury Secretary Albert Gallatin, 1802