Federal Financials 101

Federal Financials 101 Assistant CommandantFor Resources RDML K. Taylor | DHS CFO Brief | 25 JAN 2010

What Happens to the Funds? OMB Apportionment SF-132 7 Different Appropriations 23 Different AFCs Funds Distribution Execution 6 Different PPAs Public Law Authorization Appropriation

Public Law • An Appropriations Bill is passed by Congress and signed by the President • A Treasury Warrant is received via the SF-132 that authorizes obligation authority and allows payments for designated purposes

What Happens to the Funds? OMB Apportionment SF-132 7 Different Appropriations 23 Different AFCs Funds Distribution Execution 6 Different PPAs Public Law Appropriation

Appropriations – Coast Guard Funding Structure • Environmental Compliance and Response (EC&R) • Reserve Training (RT) • Acquisition, Construction, and Improvements (AC&I) • Alteration of Bridges (AB) • Research, Development, Test, and Evaluation (RDT&E) • Retired Pay (RP) • Operating Expenses (OE)

Fund Types

There are 7 Different Appropriations • Environmental Compliance and Response (EC&R) • No year funding • Used to carry out EC&R functions under Title 14 U.S. Code, Chapter 19 • Reserve Training (RT) • 1 year funding • Can be used for the following: • Necessary expenses of the CG Reserve, as authorized by law • Operations and maintenance (O&M) of the reserve program • Personnel and training costs • Equipment and services

There are 7 Different Appropriations (Continued) • Acquisition, Construction, and Improvements (AC&I) • Multi-year funding (funds available for 1, 3, or 5 years…has been 2 in the past as well) • Used for necessary expenses of acquisition, construction, renovation, and improvement of AtoN, shore facilities, vessels, and aircraft, including equipment related thereto; and maintenance, rehabilitation, lease and operation of facilities and equipment, as authorized by law

There are 7 Different Appropriations (Continued) • Alteration of Bridges (AB) • No year funding • For necessary expenses for alteration or removal of obstructive bridges • Research, Development, Test, and Evaluation (RDT&E) • No year funding • For necessary expenses for applied scientific research, development, test, and evaluation, and for maintenance, rehabilitation, lease and operation of facilities and equipment, as authorized by law • Retired Pay (RP) • One year funding • For retired pay….

There are 7 Different Appropriations (Continued) • Operating Expenses (OE) • One year funding is primarily used for personnel costs, operation and maintenance • Applicable to construction in a very limited capacity • Earmarks: • $1,204M shall be for defense-related activities (not current #s) • $3K (not to exceed) shall be for reception and representation expenses (not current #s)

What Happens to the Funds? OMB Apportionment SF-132 7 Different Appropriations 6 Different PPAs 23 Different AFCs Funds Distribution Execution Public Law Appropriation

Fund Types

Apportionment • An apportionment is a plan, approved by OMB, to spend resources provided by one of the annual appropriations acts, a supplemental appropriations act, a continuing resolution or a permanent law • Coast Guard prepares an apportionment request (via SF-132) detailing how funds will be spent. OMB then approves the apportionment request • The receipt of an apportionment provides the authority to begin the obligation and expenditure process

Coast Guard Funding StructureOperating Expenses – PPA’s • OE expenses fall into one of 6 PPAs (Program, Project and Activities): • PPA 1 – Military Pay & Benefits – AFC 01, 20, 57 • PPA 2 – Civilian Pay & Benefits – AFC 08 • PPA 3 – Training & Recruiting – AFC 56, 34 • PPA 4 – Operating & Maintenance – AFC 30 • PPA 5 – Central Accounts – AFC 36 • PPA 6 – Depot-Level Maintenance – AFC 41, 42, 43, 45 By dividing the funding by PPA, Coast Guard is able to establish self-imposed fences for budgeting.

23 Different Allotment Fund Control Codes (AFCs) • Allotment Fund Control Code (AFC) – represent a breakdown of OE and RT administrative operating targets for specified purposes: • AFC 01 – Military Pay • AFC 08 – Civilian Pay • AFC 20 – Permanent Change of Station • AFC 30 – Operating and Maintenance • AFC 34 – Recruitment and Education • AFC 36 – Centrally Managed Accounts • AFC 38 – Industrial Support Activity Revolving Fund • AFC 40 – Chief of Staff Administrative • AFC 41 – Aeronautical Engineering • AFC 42 – Command, Control, Communications and Electronics • AFC 43 – Civil Engineering • AFC 45 – Naval Engineering

23 Different Allotment Fund Control Codes (AFCs) • AFC 56 – Training • AFC 57 – Medical • AFC-72 – Retired Pay • AFC 75 – Reimbursable / Refund Program • AFC 77 – Reimbursable Execution Accounts • AFC 80 – Reimbursements • AFC 88 – Reimbursement for Special Purposes • AFC 90 – Reserve Training Program Expenses • AFC 94 – Reserve Reimbursable Program • AFC 97 – Reserve Refund Program • AFC 98 – Civilian Pay Reserve • Reference: Financial Resource Management Manual (FRMM) • COMDTINST M7100.3 (series)

Funds Distribution Obligate Commit Expend Award Create and Approve PR Certify and Pay Invoices

What Happens to the Funds? OMB Apportionment SF-132 7 Different Appropriations 6 Different PPAs 23 Different AFCs Funds Distribution Execution Public Law Appropriation

Execution of Funds • CG Has Six (6) General Ledgers • FINCEN • ALC • SFLC • PPC (2) • Academy • Invoices are Certified & Paid, U.S Treasury Disburses Funds

Budgetary Accounting • Governmental • Begin with continuing resolution or approved appropriations • Take starting budget • Account for the reimbursements, rescissions, and supplementals • Track your obligations & undelivered orders • At the end of the year, show all: • Budget Expenditures • Commitments • Obligations • UDOs

Proprietary Accounting • Proprietary • “Normal” Accounting you learned in school • Assets = Liabilities + Retained Earnings • Profit-oriented, always balances • Take starting $ at beginning of FY, record expenses, use it to make more $$ at end of FY • Federal Proprietary • Assets = Liabilities + Net Position • Not Profit-oriented. Rather, it’s Accountability Oriented • Take starting $ at beginning of FY (near zero), have expenses, have some plusses & minuses, and end up with near-zero at the end of the FY

General Ledger Accounts • 1000 – Assets • 2000 – Liabilities • 3000 – Net Position • 4000 – Budgetary • 5000 – Revenue and Other Financing Sources • 6000 – Expenses • 7000 – Gains/Losses/Miscellaneous Items • 8000 – Memorandum

Financial Statements • Federal Reports • SF-133: Report on Budget Execution and Budgetary Resources • FMS 210: Yearend Closing Statement • Financial Statements • Balance Sheet • Statement of Net Cost • Statement of Changes in Net Position • Statement of Budgetary Resources • Statement of Custodial Activity • Statement of Financing

Balance Sheet • The balance sheet presents, as of a specific time: • Amounts of future economic benefits owned or managed by the reporting entity exclusive of items subject to stewardship reporting (assets), • Amounts owed by the entity (liabilities), and • Amounts which comprise the difference (net position) • The balance sheet presents assets available for use by the reporting entity (entity assets) separately from those managed by the reporting entity but not available for use in its operations (non-entity assets). • The balance sheet also separately presents • Liabilities covered by budgetary resources and • Liabilities not covered by budgetary resources • Source: OMB Bulletin 97-01

Statement of Net Costs • The Statement of Net Cost is designed to show separately the components of the net cost of the reporting entity's operations for the period • The statement and any related supporting schedules classify revenue and cost information by: • sub-organization or • responsibility segment (OMB Bull. 97- 01 as amended (Jan.7, 2000) , p. 27)

Statement of Changes in Net Position • The Statement of Changes in Net Position reports • The net position from the prior fiscal year, • Those items which caused net position to change during the reporting period, such as reimbursements and expenditures ,and • The ending net position • The entity should display information on the Statement of Changes in Net Position organized by • Responsibility segment, • Component, or • Otherwise in the same manner as was done for the Statement of Net Cost • Source: OMB Bulletin 97-01

Statement of Budgetary Resources • The Statement of Budgetary Resources (SBR) and the related disclosures provide information about how the resources were made available as well as their status at the end of the period • The format of the SBR is based on the SF-133 • The SBR should be prepared by reporting entities whose financing comes wholly or partially from budgetary resources • Monitoring of budget execution is at the individual account level • Accordingly, budgetary information aggregated for the Statement of Budgetary Resources should be: • disaggregated for each of the reporting entity's major budget accounts and • presented as supplementary information. • Small budget accounts may be aggregated

Statement of Financing The Statement of Financing explains the difference between the budgetary net obligations and the proprietary net cost of operations by setting forth the items that reconcile the two amounts In order to understand these differences, information is needed to reconcile financial (proprietary) net cost of operations with obligations of budget authority This reconciliation also insures that there is a proper relationship between proprietary and budgetary accounts in the reporting entity's financial management system The Statement of Financing is designed to report those differences and facilitate the reconciliation Source: OMB Bulletin 01-09

Statement of Custodial Activity (SCA) Sometimes federal agencies act as agents of the U.S. Treasury. Agencies make a number of special types of deposits that they are not allowed to keep, which instead go into Treasury's General Fund (GF). For example, the Coast Guard levies fines for unsafe boating (Boating While Intoxicated) and deposits those receipts into the GF Since the agency knows how and why these were collected, Treasury relies on the agency to report the revenue on the SCA Agencies also declare to Treasury the type of deposit being made by assigning it the proper Treasury Account Fund Symbol Source: http://www.agacgfm.org/publications/agatoday/091007/federal.aspx

Summary Public Law Laws enacted by Congress to provide legal guidance and oversight to the federal financials process Appropriation Money set aside by formal action for a specific use Program, Project and Activities. The level of appropriations detail specified in the appropriations act or accompanying report for the relevant fiscal year covering each account, including earmarks and directives, or, for accounts and items not included in appropriations acts, as specified in the program and financing schedules in the FY 2001 President's budget. PPA Apportionment Distribution or allotment of proper shares AFC Allotment Fund Code Funds Distribution Expending budgetary funds through the process of commitment, obligation and expenditure Execution The process of receiving the invoice, certification and schedule of payment of funds and disbursement of funds from the U.S. Treasury

Federal Financials 101