Prior Period Adjustments Due to Corrections of Errors

Prior Period Adjustments Due to Corrections of Errors – Years Preceding the Prior Year USSGL Board Presentation May 20, 2010

Background n n n Corrections of Errors, as defined by SFFAS No. 21, Reporting Corrections of Errors and Changes in Accounting Principles, are errors in financial statements that are a result of mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared. The Government Accountability Office (GAO), auditors of the Financial Report of the U. S. , have advised the Financial Reports Division to make a clear distinction between corrections of errors that occurred in the earliest year presented, in comparison to corrections errors that occurred in years preceding the prior year. The USSGL Division is proposing three new accounts to capture Corrections of Errors – Years Preceding the Prior Year activity (Effective FY 2011)

Proposed USSGL Accounts n n n 3105 Unexpended Appropriations – Prior Period Adjustments Due to Corrections of Errors – Years Preceding the Prior Year 5705 Expended Appropriations – Prior Period Adjustments Due to Corrections of Errors – Years Preceding the Prior Year 7405 Prior Period Adjustments Due to Corrections of Errors – Years Preceding the Prior Year

3105 Unexpended Appropriations – Prior Period Adjustment Due to Corrections of Errors – Years Preceding the Prior Year n n The amount of net increase or decrease to unexpended appropriations due to errors in years preceding the prior year’s financial statements that resulted from mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared. (Use only when comparative financial statements are being presented. ) Justification: The Financial Reports Division (producers of the Financial Report of the United States) has requested an account to distinguish between corrections of errors for the prior-year in comparison to corrections of errors in years preceding the prioryear.

5705 Expended Appropriations – Prior Period Adjustments Due to Corrections of Errors – Years Preceding the Prior Year n n The amount of net increase or decrease to expended appropriations due to errors in years preceding the prior year’s financial statements that resulted from mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared. (Use only when comparative financial statements are being presented. ) Justification: The Financial Reports Division (producers of the Financial Report of the United States) has requested an account to distinguish between corrections of errors for the prior-year in comparison to corrections of errors in years preceding the prioryear.

7405 Prior Period Adjustments Due to Corrections of Errors – Years Preceding the Prior Year n n The amount of adjustments affecting the cumulative results of operations due to errors in years preceding the prior year’s financial statements that resulted from mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared. (Use only when comparative financial statements are being presented. ) Justification: The Financial Reports Division (producers of the Financial Report of the United States) has requested an account to distinguish between corrections of errors for the prior-year in comparison to corrections of errors in years preceding the prioryear.

Impact on Crosswalks Fiscal Year 2011 USSGL Account Balance Sheet Statement Reclassified of Changes Balance Statement in Net Sheet of Changes Position in Net Position 3105 Lines 32 & 33 Line 19 b Lines 9. 1 & 9. 2 Line 3. 3 5705 Lines 32 & 33 Line 2 b Lines 9. 1 & 9. 2 Line 3. 3 7405 Lines 32 & 33 Line 2 b Lines 9. 1 & 9. 2 Lines 2. 3 & 3. 3

Additional Information n In addition, GAO has requested that FMS’s Financial Reports Division re-align Treasury Financial Manual (TFM) 2 -4700 Appendix 1, Reclassified Statement of Changes in Net Position with the presentation of OMB Circular A 136, as illustrated on the next slide

SCNP A-136 (Agency) Cumulative Results of Operations: Line 1 Beginning Balances (3310) Line 2 Adjustments Line 2 a Changes in Accounting Principles (5709, 7401) Line 2 b Corrections of Errors (5708, 7400, 5705, 7405) Line 3 Beginning Balances, as Adjusted SCNP Reclassified (Financial Report) Current Line 1 Beginning Net Position Balance (3100, 3108, 3109, 3310, 5708, 5709, 7400, 7401) Line 2 Non-Federal Prior Period Adjustments (Not Restated) (7401) Line 3 Federal Prior Period Adjustments (Not Restated) (RC 29) (3109, 5709, 7401) Line 4 Adjusted Beginning Net Position Proposed Unexpended Appropriations: Line 18 Beginning Balances (3100) Line 19 Adjustments Line 19 a Changes in Accounting Principles (3109) Line 19 b Corrections of Errors (3108, 3105) Line 20 Beginning Balances, as Adjusted Line 1 Beginning Net Position Balance (3100, 3310) Line 2 Non-Federal Prior Period Adjustments Line 2. 1 Changes in Accounting Principles (7401) Line 2. 2 Corrections of Errors (7400) Line 2. 3 Corrections of Errors – Years Preceding the Prior Year (7405) Line 3 Federal Prior Period Adjustments Line 3. 1 Change in Accounting Principles (3109, 5709, 7401) Line 3. 2 Corrections of Errors (3108, 5108, 7400) Line 3. 3 Corrections of Errors – Years Preceding the Prior Year (3105, 5705, 7405) Line 4 Adjusted Beginning Net Position Balance

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