Federal Investments Seminar

1. Federal Investments Seminar INVESTMENT/BORROWING/ FEDERAL CREDIT REFORM SUBCOMMITTEEPresented By:BILL FLEMING MAY 17, 2005

2. BACKGROUND • Subcommittee set up to address intragovernmental differences for the following Reciprocal Categories (RCPs): Investments • FMS developed this plan “to sufficiently identify and track intragovernmental material differences reported to FMS by the Federal Program Agencies (FPAs)”.

3. Background (continued) Borrowing

4. Background (continued) • Current members include: • Ella Hughes-Bailey - Treasury FMS • Richard Bennett - EPA • Stephanie Brown - Treasury - BPD • Susan.Chapman - Treasury - BPD • Scott Chayette - DOE • Trina Cook - Treasury - BPD • Dan Decena – Treasury/ office of the fiscal assistant secretary • William Fleming - Education • Veronica Freeman - DOL • Jeanne Johnson-Education OCFO • Gail Matthews - Education OCFO • Eileen Parlow - FASAB • Sheldonna Proctor - EPA • Keith Rake - Treasury - BPD • Wendy Stover-HUD • Hayward Trapps -Treasury FMS • Kristina Kaminski - SSA • Letha, Holliday - SSA

5. Future Actions • Recruit additional members from agencies affected by investment/borrowing issues • Review Intragovernmental Fiduciary Confirmation System (IFCS) reports for agencies with differences below current studies threshold to determine source of differences. • Classify into groups already defined • Discuss specific agency situations with BPD/FFB and agency personnel • Produce narrative explaining differences by agencies

6. Future Actions (continued) • Detail current and future corrective actions • Government-wide • Individual agency

7. Current Conclusions • Bring Accounting Methodologies into Agreement • Accounting for Premiums and Discounts (Effective Interest, Level Yield, Straight Line, Etc.) • Zero Coupon Bonds Amortization Methodology (Effective Interest vs. Mark-to-Market) • BPD staff reviewed the problem and issued a recommendation • Treasury is currently reviewing the paper • OMB Mediation Process for Unresolved Differences

8. Current Conclusions – (continued) • Timing Differences • Quarterly Borrowing Differences - Encourage agencies to accrue interest expense/payables at least quarterly (possibly using BPD accruals as the basis of the entry) • Need to examine year-end cutoffs

9. Current Conclusions – (continued) • Deposit Funds • Researching Accounting Guidance • Recommend changes to allow such investments to be coded as non-federal • Recommend that additional Deposit Fund guidance be added to the Fiduciary Business Rules

10. Current Conclusions – (continued) • Alleviating Accounting/Coding Errors • Largest class of differences • Probably the easiest to materially reduce • For most agencies, federal balances for the subject SGL accounts are almost exclusively Treasury (TP 20). • Adequate information exists through IFCS and FedInvest.com and other BPD reports available to trading partners • FACTS I file is simple and can be edited manually if necessary • IFCS/FACTS I/Quarterly “F” file assistance is readily available from Treasury • Need to address quality control issues at individual agencies

11. Current Conclusions – (continued) • Alleviating Accounting/Coding Errors (continued) • Send special report to FACTS I/ ”F”/GFRS preparer before transmission showing expected balances by SGL, Fund, and trading partner. • IRAS provides feedback on IRAS/IFCS differences after the fact • Close BPD/FFB IFCS window before quarterly “F” file windows to allow for additional oversight before reporting (IFCS window does close before the FACTS I window at year end.