Department of Commerce Bruce Henshel    (3HSV)

I am personally strongly supportive of creating 2 separate reconciliations to replace the SOF. I can suggest various wording changes at a later time, but I am addressing the overall effort of this new proposal here.    (3HSE)

I believe that the 1st reconciliation of Total Financing Sources per SCNP to Total Budgetary Resources per SBR adds significant value to the reader. Typically, these two balances are signficantly different because, in large part, a) Earned (goods or services have been provided, i.e. proprietary revenue) Spending Author from Offsetting Collections goes to the SNC; and b) Unearned (goods or services have NOT been provided, i.e. NO proprietary revenue recognized) does not appear in the SCNP nor SNC. Of course, there are other various reconciling items such as Anticipated amounts in the SBR during the quarters not in the SCNP, etc. In conclusion, I think its important to show the reconciliation of Total Financing Sources - proprietary to Total Budgetary Resources - budgetary, and this is a very fundamental reconciliation that can help readers better understand the financial statements - both proprietary and budgetary and the differences between the two of them.    (3HSF)

I believe that the 2nd reconciliation of Net Obligations to Net Cost of Operations is more focused now under the current proposal, versus the way the Stmt of Financing previously presented this reconciliation. (The Stmt of Financing currently requires that Other Resources (non-budgetary) per the SCNP be added in the 1st section, then reconciled out in subsequent sections since it does not affect Net Cost of Operations. This is a major distraction of the Net Obligations to Net Cost of Operations reconciliation.) Accordingly, I believe that this 2nd reconciliation is a great idea to present the 2nd reconciliation by itself, in a straigtht-forward manner. Essentially, the reconciliation of Net Obligations to Net Cost of Operations is much more easily presented, focused, and more understandable,    (3HSG)

Basically, I believe the above discussed two reconciliations are distinct and separate. It seems to me that a idea worht discussing and pursuing would be to add these reconciliations to the footnotes (which would still be audited), and may make more sense as footnote reconciliations supporting the SNC, SCNP, and SBR, rather than a separate principal statement presenting some kind of new information, which it is not. Essentially, these new reconciliations provide supporting information to link and reconcile various statements together, but do not provide new information that is worthy of a principal statement. With regard to the idea of adding these two reconciliations as footnotes, one idea would be to add the 1st reconciliation as a footnote to the SCNP and SBR, and the 2nd reconciliation as a footnote to the SNC and SBR.    (3HSH)

If the group wants to include these two reconcilations as a principal Statement of Financing, I can see why the proposal adds line 14 to flow from the first reconcilation to the second reconciliation, and it is mathematically correct. However, it appears to me that this line 14 is really a distraction from the purpose of providing two separate and distinct reconciliations that serve two different purposes. I believe it that does not serve a useful purpose, and actually serves as a major distraction, to have line 14. One will have to think about why line 14 is there, how it relates to the 1st reconcilation and the 2nd reconciliation and why, and what its purpose. This distracts from presenting two separate reconciliations that are very useful.    (3HSI)

Also, you will have to carefully review whether the new two reconciliations meet the FASAB SFFAS requirements for the SOF, and, if not, what to do about that.    (3HSJ)

Thanks so much for the opportunity to comment.    (3HSK)

Internal Revenue Service Loius Malfait    (3HSW)

I used the SOF template that Don Geiger e mailed us this week and modified it a little bit. I changed a few titles and rearranged some of the line items. I completed the SOF template with IRS data (in millions) for both FY05 and FY06 and was able to tie to the net cost of operations. The administrative accounting branch of the IRS mainly reports on appropriated funds and a couple special fund receipt accounts.    (3HSL)

Let me know if you have any questions. IRS Template v01    (3HSM)

Social Security Administration Judy Twitty    (3HSX)

Attached is SSA's December Consolidated SOF in the new template format. The numbers work, but the reconciling items are not limited to specific lines from the SCNP or the SBR. They also include adjustments for specific SGL accounts, and in some cases, the reconciling SGL accounts are necessary for one program, but not for others.    (3HSN)

I see where the template is taking the Total Resources and subtracting the Unobligated Balances to determine the Obligations. This gives a starting point for reconciling SBR Obligations with the SNC.    (3HSO)

I'm sorry, but I don't see where presenting this information, along with all of the additional reconciliations, on the SOF helps to clarify the information on the SOF for the readers. It seems it is especially confusing since the additional reconciling items between the Total Financing Sources on the SCNP and the Total Resources on the SBR are not the same over all programs, even within the same agency.    (3HSP)

SSA SSA Template V01    (3HSQ)

Small Business Administration Babara Clark    (3HSY)

SOF Team:    (3HSR)

I completed the template for the SBA with no issues. We have appropriated funds and credit reform financing funds. No accruals of reestimates show for 1st quarter, but they would work fine in the current format. However, I find that we essentially retype the entire resources section of the SBR at the top of the SOF (less appropriations, which comes in from the SCNP financing sources line) using this template, which seems repetitive and unnecessary. Since most agencies have less going on in the SCNP, maybe we could consider starting with Total Budgetary Resources (from the SBR), adjusting for SCNP items, adjusting for unobligated balance. Versus the template now starting with the SCNP Total Financing Sources and then adding in the entire SBR. Just a thought. To be continued….    (3HSS)

U. S. Small Business Administration no template attached    (3HST)

Department of Agriculture Kevin Close    (3HSZ)

I filled in the new SOF template for USDA attached.    (3HT0)

Why are expenses recognized in prior periods reported as items not shown on the SBR? Using annual leave as an example, if leave taken (obligations) exceeded leave earned (expense) for the period, then expenses recognized in prior periods would be shown on the SBR, i.e. obligations. I think this line item would be better placed as an item not shown on the SNC.    (3HT1)

For line item ordered but not yet provided, you may want to add (Change in undelivered orders).    (3HT2)

I don't think the reconciliation of total financing sources to total budgetary resources makes the SOF easier to understand for the lay person. I think we should keep the current format improved by the addition of certain lines, e.g. change in unfilled customer orders and the modification of certain line item descriptions, e.g. change in undelivered orders.    (3HT3)

USDA Template V01    (3HT4)

Department of Health and Human Service Paul Weinberger    (3HT5)

CMS Comments on Proposed Statement of Financing Format    (3HT6)

Overall, we are not convinced that the proposed format for the Statement of Financing (SOF) is an improvement over the existing format. One motive behind the change seems to be the need to tie total financing sources from the Statement of Changes in Net Position (SCNP) to budgetary resources on the SBR. Another appears to be to make SOF descriptions more user-friendly. We have concerns about both objectives and believe that much more work is required before the format of the SOF can be changed.    (3HT7)

Reconciliation of Total Financing Sources to Total Budgetary Resources    (3HT8)

It’s fairly easy to reconcile financing sources to budgetary resources for general fund appropriations. Essentially, appropriations received should be identical on the SCNP and SBR. Recoveries and spending authority from offsetting collections are easy enough to identify. However, for our Payments to the Health Care Trust Funds, we had to insert “Permanently Not Available” under “Adjustments for Items not shown on the SCNP, shown on the SBR”; also, we used the amount from “Other Adjustments” from the SCNP for Line 12, “Other – Nonexchange Transactions,” which might not be intended for this line. Our Program Management is financed primarily out of the Medicare HI and SMI trust funds (reported on “Spending Authority from Offsetting Collections”). For Program Management, we had to insert a row, “Transfers in/out without reimbursement” under “Items not shown on the SBR.” This transfer-out is CMS’ prorated share of UFMS which appears on Line 7 of the current Statement of Financing. (The A-136 work group must have used an uncomplicated example as a model.)    (3HT9)

As the A-136 work group certainly realizes, trust funds are quite different from appropriations. CMS’ trust funds are financed by taxes, premiums, interest revenue and expenditure transfers from the general fund. There is no simple path between financing sources and budgetary resources. There are at least two major obstacles: (1) certain components of financing sources are accrued amounts (interest on trust fund investments, Railroad Retirement Board interchange) whereas the SBR’s Appropriations reflects cash receipts reported by Treasury’s Bureau of Public Debt and (2) HI and SMI premium cash collections as well as Medicare contractors’ refunds on overpayments—each reported on the SBR—are not included on the SCNP at all. Rather, these receipts (along with accrued premium revenue) are captured on the Statement of Net Cost. Thus, in order to reconcile, we have to segregate the accrued from the received portions for certain revenues and identify the exchange revenues versus nonexchange revenues. These 2 obstacles are related to adjustments that would have to be made to SGL 4114 which crosswalks to the SBR’s Appropriations. The reconciling item is not simply SGL 4114 but pieces of the SGL 4114. Similarly, the trust funds’ financing sources also includes “transfers-out,” again, at mostly accrued amounts. These transactions are not reflected in the SBR’s budgetary resources they are included in the Status of Budgetary Resources section of the SBR. Obviously, the crosswalk for transferred-in/out will have to be very specific as to cash vs accrued amounts and as to which kinds of transactions to include or exclude. The entire transfer-in/out line of the SCNP is not the reconciling item but pieces of that line. In addition, there is another reconciling item for the SBRs Appropriatons. SGL 4384 Ending-Beginning (Temporary reduction returned by appropriation) is an item on the SBR but not the SCNP. After considerable effort, we still haven’t been able to complete reformatted statements for our trust funds.    (3HTA)

Yet, despite all of these problems, we were able to prepare a CMS consolidated statement when we picked up only the SCNP’s Appropriations Received for Line 1 “Total Financing Sources.” Of course, this required a huge reconciling item in Line 8 “Other - Budgetary Resources,” representing exchange and nonexchange cash revenues. Furthermore, we left blank the entire “Adjustment for Items not shown on the SBR, shown on the SCNP” section. We’re sure this is not what the work group has in mind.    (3HTB)

Reconciliation of Budgetary Obligations to Net Cost of Operations    (3HTC)

The underlying logic of the current Statement of Financing is easier to grasp than that of the proposed draft. That is, as clearly stated in the descriptions for each section of the present version, given net obligations incurred (from the SBR), deduct those budgetary resources used in the period that have no impact on net cost, then, add period costs that do not use or require budgetary resources to arrive at net cost of operations. The proposed SOF obtains the same end, but not in such a logical subtract/add fashion. Simply stating items not on the SBR (SNC) doesn’t convey why certain transactions are included or excluded.    (3HTD)

We have specific concerns about the following lines:    (3HTE)

For Line 20, “Expenses recognized in Prior Period” under “Items not shown on the SBR”: wouldn’t unfunded expenses recognized in the prior period (a contingent liability) that is obligated and paid in the current period show up in the SBR?    (3HTF)

For Line 25, “Exchange Revenue Reported on Net Cost” (Line 22 of the current SOF): Does “exchange” need to be in the description? Most of our public receivables relate to Medicare contractors’ overpayments to providers which are nonexchange transactions.    (3HTG)

no template attached    (3HTH)

== Department of Interior - Fish & Wildlife - Julie Ehrlichman    (3HTW)

Here is DOI-FWS's detail analysis of the FY2007 SOF v01 proposal, and what we need in order for the crosswalk to work for us.    (3HTX)

If you have any questions when reviewing the attached, please call me.    (3HTY)

These are the same crosswalk "tweakings" that DOI-FWS has to do with the current SOF crosswalk.    (3HTZ)

DOI-FWS v01 tempalte    (3HU0)