The FY 2012 Financial Report of the U.S. Government

1. The FY 2012 Financial Report of theU.S. Government Scott Bell Office of the Fiscal Assistant Secretary U.S. Department of the Treasury AGA – WV Joint Meeting May 14, 2013

3. Citizen’s Guide Key Issues • Current Financial Position and Condition (Traditional) • Social Insurance & Sustainability (Non-Traditional)

4. Financial Report of the U.S. Government & Citizen’s Guide Treasury Office of the Fiscal Assistant Secretary Analysis Bureau of Fiscal Service (Treasury) Audit Government Accountability Office Office of Management and Budget (OMB) Fiscal Projections Agencies reclassify financial information into common format for consolidation 35 Significant Reporting Entities. 115 Other Reporting Entities Agency Performance & Accountability Report Annual Financial Report Agency Performance & Accountability Report Annual Financial Report Agency Performance & Accountability Report Annual Financial Report Audit Inspector General Contract Audit Inspector General Contract Audit Inspector General Contract

5. Comparing Cost and Deficit

6. What Came In & What Went Out Total FY 2012 Taxes & Other Revenues: $2.5t Gross Cost: $3.9t - Earned Revenue $350.9b +/- Assumption Loss/Gain $320.2b Net Cost: $3.8t - Taxes / Other Revenue $2.5t Net Operating Cost: $1.3t

7. What We Own & What We Owe • Off-balance sheet resources of the U.S. Government (not intended to be used to meet obligations): • Stewardship Land (e.g., National parks) and Heritage Assets (e.g., monuments) (Note 27) • Stewardship Investments in (1) Non-Federal Physical Property (e.g., interstate, national highways); (2) Human Capital (e.g., job-training, employment programs); and (3) Research and Development (e.g., NIH, DoD, NASA). • Natural Resources (oil/gas royalties Required Supplementary Information through 2015, then “basic”). • Government’s power to tax

8. Statement of Social Insurance • Net present value: projected expenditures and receipts: • “Open” vs. “Closed” Group • Audit Disclaimer - “…significant uncertainties…primarily related to the achievement of projected reductions in Medicare cost growth…prevented us from expressing an opinion on those statements.” • Statement of Changes in Social Insurance

9. A Broader Perspective –Fiscal Sustainability • What is Fiscal Sustainability? • Debt/GDP stable over the long term. • Look at ALL revenues and spending. • Broader focus than SOSI. KEY ASSUMPTIONS Current Law/Policy Projections, NOT Predictions

10. Pieces of the Puzzle

11. Effect on the Debt “Blessed are the young, for they shall inherit the National debt.” --- Herbert Hoover

13. FY 2012 Audit Results • Agency Audits - 31 of 35 significant reporting agencies (21 of 24 CFO Act agencies) received clean audit opinions. • Qualified: Deptof Homeland Security, U.S. Agency for International Development (USAID) • Disclaimer: DoD Railroad Retirement Board (RRB). • Governmentwide Audit – Disclaimer (16th consecutive year) • DoD accounting weaknesses • Intragovernmental Balances and Transactions • Compilation / Consolidation Process

14. “To state the facts frankly is not to despair the future nor indict the past. The prudent heir takes careful inventory of his legacies and gives a faithful accounting to those whom he owes an obligation of trust.” - John F. Kennedy

15. Find Out More! http://www.fms.treas.gov/finrep12/fr_index_new.html http://www.whitehouse.gov/omb/ www.gao.gov scott.bell@treasury.gov