FORMATS AND INSTRUCTIONS
FOR THE
FORM AND CONTENT OF THE
FINANCIAL STATEMENTS OF THE U.S. GOVERNMENT

TABLE OF CONTENTS

INTRODUCTION AND SUMMARY
Purpose
Effective Date
Reporting Entity
Content of Financial Statements

INSTRUCTIONS FOR THE OVERVIEW

BALANCE SHEET FORMAT

INSTRUCTIONS FOR THE BALANCE SHEET

STATEMENT OF NET COST FORMAT

INSTRUCTIONS FOR THE STATEMENT OF NET COST

STATEMENT OF CHANGES IN NET POSITION FORMAT

INSTRUCTIONS FOR THE STATEMENT OF CHANGES IN NET POSITION

NOTES TO THE FINANCIAL STATEMENTS
Summary of Significant Accounting Policies (Note 1)
Cash and Other Monetary Assets (Note 2)
Loans Receivable and Loan Guarantee Liabilities (Note 3)
Taxes Receivable (Note 4)
Inventories and Related Property (Note 5)
General Property, Plant, and Equipment (Note 6)
Other Assets (Note 7)
Accounts Payable (Note 8)
Federal Debt Securities Held by the Public (Note 9)
Employee and Veteran Benefits (Note 10)
Insurance Liabilities (Note 11)
Environmental Liabilities (Note 12)
Benefits Due and Payable (Note 13)
Other Liabilities (Note 14)
Commitments and Contingencies (Note 15)
Deferred Maintenance (Note 16)
Prior Period Adjustments (Note 17)
Dedicated Collections (Note 18)

REQUIRED SUPPLEMENTARY INFORMATION
Social Insurance
Reconciliation of the Change in Net Position to the Surplus or Deficit for the
Year on the Budgetary Basis
Instructions for the Reconciliation of the Change in Net Position to the Surplus
or Deficit for the Year on the Budgetary Basis

INTRODUCTION AND SUMMARY

I. Purpose. OMB Bulletin No. 97-01, Form and Content of Agency Financial Statements, and this document define the form and content for financial statements of the Executive Branch of the United States Government, as required by 31 U.S.C. 331 (e)(1).

The bases for this guidance are the concepts and standards contained in the Statements of Federal Financial Accounting Concepts (SFFACs) and Statements of Federal Financial Accounting Standards (SFFASs) recommended by the Federal Accounting Standards Advisory Board (FASAB) and approved by the Secretary of the Treasury, the Director of the Office of Management and Budget (OMB) and the Comptroller General as of the date of this document.

II. Effective Date. The provisions herein are effective beginning with the financial statements for the fiscal year ending September 30, 1997.

There are three standards that are effective for fiscal years beginning after September 30, 1997, which are not reflected in this document. They are: Accounting for Property, Plant, and Equipment (PP&E); Accounting for Revenue and Other Financing Sources; and Supplementary Stewardship Reporting. These standards address items such as:

• Stewardship PP&E and related disclosures
• Deferred maintenance
• Cost of stewardship PP&E
• Stewardship investment disclosures
• Cumulative cash collections and refunds by tax year and type of tax
• Current services assessment
• Dedicated collections.

With respect to social insurance, the information to be reported in the financial statements of the U.S. Government has not yet been determined. Accordingly, information currently provided by the Social Security Administration either in its annual financial statements or its Annual Report of the Board of Trustees shall be displayed in the Required Supplementary Information section.

III. Reporting Entity. Guidance for determining what constitutes the reporting entity for the U. S. Government can be found in SFFAC No. 2, Entity and Display. SFFAC No. 2 includes two types of criteria for determining which components are to be included in the financial statements of the U.S. Government. The first is the conclusive criterion, i.e., an inherent conclusion that for financial reporting purposes, any organization meeting this criterion is part of a specified larger entity. Appearance in the Budget of the United States Government (the Budget) section currently entitled Federal Programs by Agency and Account is a conclusive criterion. Any organization, program or budget account, including off-budget accounts and government corporations, shall be considered part of the Federal Government, as well as part of the executive department or agency with which it appears.

There may be rare exceptions to the application of the conclusive criterion, e.g., the Indian Tribal Trust funds administered by the Department of the Interior. These funds are included in the Budget so they appear to meet the conclusive criterion. However, the funds belong to the individual Indians or Indian tribes and are not assets of the Federal Government. Therefore, they are not to be included in the U.S. Government's Balance Sheet, Statement of Net Cost, and Statement of Changes in Financial Position. However, they are to be disclosed in the Notes to the Financial Statements.

The second type of criterion is the indicative criterion. The indicative criteria described below should be considered in the aggregate when determining which components to include in the U.S. Government's financial statement.

• It exercises any sovereign power of the Federal Government to carry out Federal functions.
• It is owned by the Federal Government.
• It is subject to the direct or continuing administrative control of an executive department or agency.
• It carries out Federal missions and objectives.
• It determines the outcome or disposition of matters affecting the recipients of services that the Federal Government provides.
• It has a fiduciary relationship with an executive department or agency.
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The Federal Reserve System, i.e., the Board of Governors of the Federal Reserve System and the Federal Reserve Banks, could be considered as functioning consistent with the indicative criterion. However, organizations and functions pertaining to monetary policy are traditionally separate from and independent of the other central government organizations and functions. Therefore, the Federal Reserve System is not considered part of the governmentwide reporting entity.

IV. Content of Financial Statements. The Financial Statements of the U.S. Government shall be composed of:

(1) Overview of the reporting entity (Management's Discussion and Analysis)
(2) Principal statements and related notes
(3) Required supplementary information.

The principal statements shall include:

(1) Balance Sheet
(2) Statement of Net Cost
(3) Statement of Changes in Net Position.

This document provides a detailed description and instructions for the content of the Financial Statements of the U.S. Government. Except as defined below, the accounts and functions used in each principal statement are defined in OMB Bulletin No. 97-01, Form and Content of Agency Financial Statements.

INSTRUCTIONS FOR THE OVERVIEW (Management's Discussion and Analysis)

The financial statements of the U.S. Government shall include a brief narrative overview. The overview should:

• Summarize and explain material information in the financial statements that addresses the objectives of Federal financial reporting, as defined in SFFAC No. 1, Objectives of Federal Financial Reporting. Adhering to the concepts in SFFAC No. 1 provides report users with information to help them assess the Federal Government's accountability and performance.
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• Discuss the financial position, results of operations, and the principal missions represented by the functions presented on the Statement of Net Cost. The description of the financial position of the Federal Government reflected in the balance sheet should explain the concept of "net position" and what net position represents.
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• Include a statement advising readers that individual agency financial statements are available and should be consulted for more detailed information.
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• Include a statement advising readers about the availability of other related publications, such as the Budget of the United States Government, the Treasury Bulletin, the Monthly Treasury Statement of Receipts and Outlays of the United States Government, and actuarial reports for various social insurance and employee pension programs.
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• Discuss deferred maintenance in accordance with SFFAS No. 6, Accounting for Property, Plant, and Equipment.
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• Explain that the basis of accounting used to prepare the financial statements differs from that used to prepare the Federal Budget. The major differences between the two bases of accounting should be described, and readers should be referred to the Required Supplemental Information section of the report for a reconciliation of the change in net position and the reported surplus or deficit for the year on the budgetary basis.

CONSOLIDATED FINANCIAL STATEMENTS
OF THE UNITED STATES GOVERNMENT
BALANCE SHEET

As of September 30, 19xx

ASSETS

LIABILITIES AND NET POSITION

Liabilities

_________________________

The accompanying notes are an integral part of these statements.

INSTRUCTIONS FOR THE BALANCE SHEET

The Balance Sheet presents, as of a specific time, amounts of future economic benefits (assets) owned by the U.S. Government exclusive of items subject to stewardship reporting, amounts owed by the Federal Government (liabilities), and net position which represents the difference between assets and liabilities. The balance sheet should be preceded by a brief narrative that:

• Describes the purpose of a balance sheet and what it includes and what it does not include (e.g., long term social insurance responsibilities, deferred maintenance, and the power to tax)
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• Defines the terms used in the statement

• Describes the pending changes in standards relating to property, plant, and equipment
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• Addresses items which are under consideration by FASAB and may be reported in the future (E.g., natural resources, social insurance).

Except for the accounts described below, the definitions of other balance sheet accounts are presented in OMB Bulletin 97-01, Form and Content of Agency Financial Statements.

Cash and Other Monetary Assets. Cash resources and all other monetary assets. Cash consists of: (a) the amount of U.S. Treasury Balances held at the Federal Reserve banks; (b) the amount of U.S. Treasury Balances in special depositaries that hold the proceeds of certain tax payments, known as the U.S. Treasury tax and loan note accounts; and (c) funds held outside of Treasury and the Federal Reserve banks by authorized fiscal officers or agents.

Other monetary assets consist of: (1) International Monetary Assets which represent (a) special drawing rights, (b) the U.S. reserve position in the International Monetary Fund, (c) foreign currency, and other monetary assets denominated in foreign currency, which for accounting purposes shall be translated into U.S. dollars at the exchange rate on the balance sheet date, and (2) Domestic Monetary Assets which represent gold, funds held by Federal Government's collecting and disbursing officers, funds held by agencies, undeposited collections, unconfirmed deposits, and cash transfers.

Taxes Receivable, Net. The amount of unpaid individual, corporate, employment, estate, and other taxes, and customs duties net of the allowance for uncollectible amounts.

Other Assets. Report in this category any assets not included in any of the other categories described above.

Employee and Veterans' Benefits. Separately report the actuarially determined liabilities for the following:

• Federal employee pension and disability benefits
• Federal employee health care benefits
• Veterans' disability compensation and other benefits.
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Benefits Due and Payable. This amount represents benefits due and payable as of the balance sheet date for social security, Medicare, Medicaid, unemployment, and other entitlement programs.

Commitments and Contingencies. Commitments are long-term contractual agreements entered into by the federal government, such as operating leases and undelivered orders, which become liabilities when required actions or conditions under the agreements have occurred.

Contingencies are uncertain losses that do not meet liability recognition. (If amounts do meet liability recognition, they are reported in their related liability account.) They include losses that are probable but the amounts are not reasonably measurable or losses that are reasonably possible.

Other Liabilities. This item covers liabilities that are not recognized in specific categories. This includes (but is not limited to): unearned revenue, deposit fund amounts held in escrow, and liabilities related to ongoing continuous expenses such as employees' salary and accrued employee annual leave.

NET POSITION. Net position is the difference between assets and liabilities recorded for accounting purposes.

CONSOLIDATED FINANCIAL STATEMENTS
OF THE UNITED STATES GOVERNMENT
STATEMENT OF NET COST

for the Year Ended September 30, 19xx

NATIONAL DEFENSE:

HUMAN RESOURCES:

PHYSICAL RESOURCES:

NET INTEREST:

OTHER FUNCTIONS:

_____________________________
The accompanying notes are an integral part of these statements.

INSTRUCTIONS FOR THE STATEMENT OF NET COST

The Statement of Net Cost is designed to show separately by major functions the components of gross cost, revenues earned, and the net cost of the U.S. Government's operations for the period. The Statement of Net Cost should be preceded by a brief narrative that describes the purpose of the statement, defines the terms used in the statement, and provides any other information, such as a discussion of deferred maintenance, that would make the statement more understandable. The narrative should include a brief description of each of the major functions displayed in the statement, the principal activities or programs that comprise the function, and the primary agencies responsible for executing the functions. The functions in the Statement of Net Cost are the same functions in the Budget except that the income security function in the Budget includes Federal employee retirement and disability costs. These costs are allocated to the major functions in the Statement of Net Cost and accordingly will not be discussed as part of this function.

Gross Cost. See definition of Program Costs in OMB Bulletin 97-01, Form and Content of Agency Financial Statements.

CONSOLIDATED FINANCIAL STATEMENTS
OF THE UNITED STATES GOVERNMENT
STATEMENT OF CHANGES IN NET POSITION

for the Year Ended September 30, 19xx

Less:

Financing Sources from Non-exchange Revenues:
..Income taxes:

..Employment taxes:

..Other taxes and other governmental receipts:

_________________________

The accompanying notes are an integral part of these statements.

INSTRUCTIONS FOR THE STATEMENT OF CHANGES IN NET POSITION

The Statement of Changes in Net Position should be preceded by a brief narrative that describes the purpose of the statement, defines the terms used in the statement, and provides any other information that would make the statement more understandable.

The Statement of Changes in Net Position reports the beginning net position, the items which caused the net position to change during the reporting period, and the ending net position.

Other Earned Revenue. Revenue where there is no direct association with costs incurred on the Statement of Changes in Net Cost.

NOTES TO THE FINANCIAL STATEMENTS

The following notes and instructions describe the disclosures required for the U.S. Government's consolidated financial statements. These disclosures are based on the disclosure requirements contained in the SFFASs. To the extent possible, charts and graphs should be used to display the characteristics and composition of amounts disclosed in the notes. All references to "agency" or "agencies" means major agency or agencies with respect to the items reported.

Note 1. Summary of Significant Accounting Policies.

This note should describe what is and what is not included in the consolidated Financial Statements of the Federal Government. The basis of accounting used in the preparation of the statements should be described.

The note should also summarize the accounting principles and methods of applying those principles that management has concluded are the most appropriate for presenting fairly the entity's significant assets, liabilities, net cost of operations, and changes in net position. In general, the note should encompass important judgments as to the valuation, recognition, and allocation of assets, liabilities, expenses, revenues and other financing sources. Disclosures of accounting policies should not duplicate details presented elsewhere as part of the notes to the financial statements.

At a minimum, the following specific items should be addressed in the summary of significant accounting policies:

• Inventory and related property
• Property, plant, and equipment
• Direct loans and loan guarantees
• Retirement programs and other post-employment benefits
• Social insurance
• Environmental liabilities
• Contingencies
• Deferred maintenance.

Note 2. Cash and Other Monetary Assets.

This note should identify the holdings of cash and other monetary assets and describe the elements that make up this line item. These include:

• Cash. This represents: (a) the amount of U.S. Treasury Balances held at the Federal Reserve banks; (b) the amount of U.S. Treasury balances in special depositaries that hold the proceeds of certain tax payments, known as the U.S. Treasury tax and loan note accounts; and, (c) funds held outside of Treasury and the Federal Reserve banks by authorized fiscal officers or agents.
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• Gold. Gold shall be valued at market as of the reporting date. The market value represents the price reported for gold on the London Fixing rate, and is based on fine troy ounces as of September 30, 1997.
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• International Monetary Assets. This amount represents: (a) special drawing rights, (b) the U.S. reserve position in the International Monetary Fund, and (c) foreign currency and other monetary assets denominated in foreign currency.
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• Domestic Monetary Assets. This amount represents funds held by the Federal Government's collecting and disbursing officers, funds held by agencies, undeposited collections, unconfirmed deposits, and cash transfers.
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Note 3. Loans Receivable and Loan Guarantee Liabilities.

This note should include the following:

• Amount of notes receivable gross, including interest, the related allowance for losses and allowance for subsidy, and the net receivable amount by type for direct loans and acquired defaulted guaranteed loans
• A description of the nature of the loans receivable for each type (e.g., student loans, housing loans, etc.)
• An explanation of the type of loans guaranteed by the Federal Government
• A summary that discloses, by type, the face value of the loans, the loan amount guaranteed, and the loan guarantee liability.
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Note 4. Taxes Receivable.

This note should disclose the gross amount, allowance, and net amount of taxes receivable by type of tax (including customs duties).

Note 5. Inventories and Related Property.

This note should include the following:

• An explanation of each of the categories
• The dollar value by category (e.g., stockpiled materials, operating materials and supplies, seized property, etc.).
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Note 6. General Property, Plant, and Equipment.

This note should include the following:

• A description of each of the categories of general PP&E
• The cost, accumulated depreciation, and book value of each category of general PP&E.
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7. Other Assets.

This note should describe the components of other assets and the dollar value of each component.

Note 8. Accounts Payable.

This note should include accounts payable balances by function.

Note 9. Federal Debt Securities Held by the Public.

This note should include:

• Definitions and amounts of gross Federal debt, debt held by the public, debt held by government accounts, public debt (Treasury debt), and agency debt
• A discussion of debt held by government accounts (intra-governmental debt) and the meaning thereof
• The amounts of debt held by government accounts by major fund
• The statutory debt limit.
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Note 10. Employee and Veterans Benefits.

This note should include:

• The types of Federal actuarial liabilities and the related amounts
• A description of Federal employee pension and disability benefit programs, Federal employee health care benefit programs, and veterans' disability compensation and pensions.
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Note 11. Insurance Liabilities.

This note should include:

• A description of the various Federal insurance programs
• A schedule of the liabilities for each of the various Federal insurance programs.
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Note 12. Environmental Liabilities.

This note should include:

• An explanation of the Federal Government's environmental liabilities
• For each agency: (1) the range of estimated liability, (2) the actual liability as of the balance sheet date, (3) the remediation expense for each fiscal year covered by the financial statements, and (4) a description of the major types of contamination.
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Note 13. Benefits Due and Payable.

This note should include:

• A narrative description of the benefits programs
• The amount of benefits due and payable classified by type of benefit.
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Note 14. Other Liabilities.

This note should include:

• A description of the components of other liabilities
• The dollar value of the liabilities for each component.
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Note 15. Commitments and Contingencies.

This note should include:

• A description of the Federal Government's commitments and contingencies by type
• The amount of commitments by type
• The amount of contingencies by type, where reasonably measurable.
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Note 16. Deferred Maintenance.

This note should include:

• The identification of the types of assets, by agency, for which maintenance was deferred
• The amount of deferred maintenance, by agency and by type of asset.
• A discussion of the methods used to measure deferred maintenance.
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The information described above is to be disclosed for general PP&E beginning with financial statements prepared for the fiscal year ending September 30, 1998. Earlier implementation is encouraged.

Note 17. Prior Period Adjustments.

This note should explain any prior period adjustments.

Note 18. Dedicated Collections

The following information should be disclosed for the Federal Government's principal funds financed with dedicated collections that are held for later use to accomplish the fund's purpose. The principal funds include: the Federal old age and survivors insurance trust fund, Federal disability insurance trust fund, Federal hospital insurance trust fund, Federal supplementary medical insurance trust fund, the unemployment trust fund, the hazardous substance superfund, the highway trust fund, the airport and airway trust fund, the civil service retirement and disability trust fund, the military retirement fund, and the Indian trust funds.

The following information should be reported for each of the funds described above.

• A description of the fund's purpose
• The sources of revenue
• Condensed information showing receipts, outlays, and investments in Treasury securities.

REQUIRED SUPPLEMENTARY INFORMATION

Information included in this section of the report shall be considered "Required Supplementary Information" (RSI) as that term is used by the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB) in accounting standards and by the General Accounting Office (GAO) and the American Institute of Certified Public Accountants (AICPA) in auditing standards.

Social Insurance. Display the following information currently provided by the Social Security Administration either in its annual financial statements or its Annual Report of the Board of Trustees:

A. Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI)

• Actuarial estimates of the present value (PV) of contributions for Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) for 75 years
• Actuarial estimates of the PV of expenditures for OASI and DI for 75 years
• Actuarial estimates of the PV of excess contributions over expenditures for OASI and DI for 75 years
• Net assets of the trust funds as of the balance sheet date
• Assumptions used to calculate estimates
• Estimated date when the funds assets will be exhausted.

B. Medicare Part A - display information similar to OASI and DI.

C. Medicare Part B

• Total trust fund assets as of the balance sheet date
• Total unpaid benefits as of the balance sheet date
• Excess of trust fund assets over unpaid benefits as of the balance sheet date.

CONSOLIDATED FINANCIAL STATEMENTS
OF THE UNITED STATES GOVERNMENT
RECONCILIATION OF THE CHANGES IN NET POSITION
TO THE SURPLUS OR DEFICIT FOR THE YEAR ON THE BUDGETARY BASIS

For the Year Ended September 30, 19xx

Increase (decrease ) in net position due to timing and other differences
..in the recognition or measurement of revenue

Increase (decrease ) in net position due to timing and other differences

Increase (decrease ) in net position due to non-recurring items:

INSTRUCTIONS FOR THE RECONCILIATION OF
THE CHANGES IN NET POSITION TO THE SURPLUS OR DEFICIT FOR THE
YEAR ON THE BUDGETARY BASIS

Accrual based information used to arrive at the change in net position on the financial statements differs from the cash based receipt and outlay information used to calculate the Federal Budget surplus or deficit. The differences are due to timing differences in the recognition of revenues and costs. This schedule is designed to reconcile these amounts and highlight the items that comprise the difference. The budget surplus or deficit, receipts, and outlays used in this reconciliation should be those amounts published in the President's Budget for the last completed fiscal year.

Change in Net Position. This amount is the amount reported on the Statement of Changes in Net Position.

Increase or (Decrease) in Net Position Due to Timing and Other Differences in the Recognition or Measurement of Revenue. This amount is arrived at by comparing the amount of exchange and non-exchange revenue reported on the Statement of Net Cost and the Statement of Changes in Net Position with the receipts reported in the Budget for similar items.

Increase or (Decrease) in Net Position Due to Timing and Other Differences in the Recognition or Measurement of Costs. This amount is arrived at by comparing the costs reported on the Statement of Net Costs with the outlays for corresponding categories reported in the Budget.

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