Reconciling and Reconciling and Eliminating Eliminating

Intragovernmental Intragovernmental Activity/BalancesActivity/Balances

2005 Federal Investment 2005 Federal Investment SeminarSeminar

May 17, 2005May 17, 2005

Presented by: Lena LewisPresented by: Lena Lewis

Financial Management Service,Financial Management Service,

Governmentwide AccountingGovernmentwide Accounting

Topics of Discussion

Intragovernmental Impact on Governmentwide Audit IFCS – Intragovernmental Fiduciary Confirmation System IRAS – Intragovernmental Reporting & Analysis System Intragovernmental Reporting Process Performance Measures Intragovernmental Authority IFCS Key Dates Websites Contact Information Questions

Intragovernmental Impact on Intragovernmental Impact on Governmentwide AuditGovernmentwide Audit

Material Weakness cited by the Material Weakness cited by the Government Accountability Office (GAO):Government Accountability Office (GAO): FMS is not able to fully eliminate FMS is not able to fully eliminate

intragovernmental activity in the preparation intragovernmental activity in the preparation of the Financial Report of the U.S. Government of the Financial Report of the U.S. Government (FR).(FR).

Impact of Agencies Intragovernmental Impact of Agencies Intragovernmental Reconciliation on the Financial Report:Reconciliation on the Financial Report: Assurance that FR is not viewed as possible Assurance that FR is not viewed as possible

material misstatement.material misstatement. Meaningful eliminations.Meaningful eliminations.

Intragovernmental Fiduciary Intragovernmental Fiduciary Confirmation System (IFCS)Confirmation System (IFCS)

GOALS II Internet ApplicationGOALS II Internet Application

Official confirmation system for federal agencies Official confirmation system for federal agencies that engage in that engage in fiduciaryfiduciary intragovernmental intragovernmental transactions.transactions.

Agencies are required to confirm and reconcile the Agencies are required to confirm and reconcile the following transactions:following transactions: Investments with BPDInvestments with BPD Borrowings with BPD and FFBBorrowings with BPD and FFB FECA transactions with DOLFECA transactions with DOL Employee Benefit Program transactions with OPMEmployee Benefit Program transactions with OPM

IFCS AccessIFCS Access

Enterprise System Access Request Form Enterprise System Access Request Form (ESAAS) located at: (ESAAS) located at: www.fms.treas.gov/goalswww.fms.treas.gov/goals

Rules of Behavior must be signed and returned Rules of Behavior must be signed and returned to FMS.to FMS.

Select Select OneOne Role and provide a back-up for all Role and provide a back-up for all roles.roles.

Fax ESAAS form and Rules of Behavior to Sheila Fax ESAAS form and Rules of Behavior to Sheila Miller or Lena Lewis at (202) 874-9907.Miller or Lena Lewis at (202) 874-9907.

IFCS Roles & FunctionsIFCS Roles & Functions Department AdministratorDepartment Administrator: assigns fund symbols to confirmation users; : assigns fund symbols to confirmation users;

view/print forms and reportsview/print forms and reports

Department UserDepartment User: read-only access: read-only access

Confirmation UserConfirmation User: edit/view/print confirmation form (assigned only): edit/view/print confirmation form (assigned only)

Fiduciary UserFiduciary User: read-only access (fiduciary agency only): read-only access (fiduciary agency only)

Governmentwide UserGovernmentwide User: FMS & GAO access only: FMS & GAO access only

Dept Admin/Confirmation UserDept Admin/Confirmation User: assigns fund symbols to confirmation users, : assigns fund symbols to confirmation users, view/print forms and reports, edit/view/print confirmation forms (assigned view/print forms and reports, edit/view/print confirmation forms (assigned only)only)

Dept User/Confirmation UserDept User/Confirmation User: edit/view/print confirmation forms (assigned : edit/view/print confirmation forms (assigned department only)department only)

Dept Admin/Fiduciary UserDept Admin/Fiduciary User: assigns fund symbols to confirmation users; : assigns fund symbols to confirmation users; view/print forms and reports (fiduciary agency only)view/print forms and reports (fiduciary agency only)

IFCS User RecertificationIFCS User Recertification

Annual process to re-verify Annual process to re-verify each IFCS user's need for access and the level of that access.

A recertification form with accompanying instructions is sent to each user's supervisor via email. The form is completed by indicating either "continued" access or "revoke" access for the specified user's role in the system. The recertification form must be signed by the supervisor and faxed to FMS by the designated due date.

All IFCS users will need to be recertified by May 2005.

Intragovernmental Reporting Intragovernmental Reporting and Analysis System (IRAS)and Analysis System (IRAS)

Microsoft Access database software Microsoft Access database software application used as a application used as a tooltool to facilitate to facilitate reconciliation between reporting agency reconciliation between reporting agency and its trading partners.and its trading partners.

Developed to conduct detail analysis to Developed to conduct detail analysis to the fund group level, and to synthesize the fund group level, and to synthesize quarterly intragovernmental trial balance quarterly intragovernmental trial balance data extracts, IFCS, and GFRS data.data extracts, IFCS, and GFRS data.

IRAS CapabilitiesIRAS Capabilities Isolates intragovernmental activity by reciprocal Isolates intragovernmental activity by reciprocal

category, trading partner, and USSGL account.category, trading partner, and USSGL account.

Compares federal agencies quarterly Compares federal agencies quarterly intragovernmental trial balance extracts to IFCS intragovernmental trial balance extracts to IFCS confirmations and Closing Package reporting.confirmations and Closing Package reporting.

Generates reports at the detail and summary Generates reports at the detail and summary levels for submission to 35 CFO/Non-CFO levels for submission to 35 CFO/Non-CFO agencies, in order to facilitate reconciliation at agencies, in order to facilitate reconciliation at the reporting level.the reporting level.

Reciprocal Categories for Reciprocal Categories for Fiduciary TransactionsFiduciary Transactions

Reciprocal Reciprocal CategoryCategory

DescriptionDescription Accounting Accounting ImpactImpact

0101 Investments in Investments in Treasury/BPD Treasury/BPD

SecuritiesSecurities

Assets/Liabilities Assets/Liabilities related to Principle, related to Principle, Discount, Premium, Discount, Premium, Amortization, DebtAmortization, Debt

0202 Interest on Interest on Investments (BPD) Investments (BPD)

with Treasurywith Treasury

Assets/Liabilities Assets/Liabilities related to Interest related to Interest

Receivable/PayableReceivable/Payable

0303 Interest on Interest on Investments (BPD) Investments (BPD)

with Treasurywith Treasury

Revenue/ExpenseRevenue/Expense

Gains/LossesGains/Losses

0505 Interest on Interest on Borrowings (BPD & Borrowings (BPD & FFB) with TreasuryFFB) with Treasury

Revenue/ExpenseRevenue/Expense

0606 Federal BorrowingsFederal Borrowings Gains/LossesGains/Losses

Reciprocal Categories for Reciprocal Categories for Fiduciary Transactions Fiduciary Transactions

(cont.)(cont.)Reciprocal Reciprocal CategoryCategory

DescriptionDescription Accounting Accounting ImpactImpact

1717 BPD/FFB BPD/FFB Borrowings from Borrowings from

TreasuryTreasury

Asset/Liabilities Asset/Liabilities related to Loans related to Loans

Receivable/PayableReceivable/Payable

2121 Employee Benefits: Employee Benefits:

Labor – FECALabor – FECA

OPM – Health, Life, OPM – Health, Life, RetirementRetirement

Assets/Liabilities Assets/Liabilities related to Benefits related to Benefits Receivable/PayableReceivable/Payable

2626 Employee Benefits: Employee Benefits:

Labor – FECALabor – FECA

OPM – Health, Life, OPM – Health, Life, RetirementRetirement

Revenue/Expense Revenue/Expense related to related to

Employee BenefitsEmployee Benefits

Intragovernmental Reporting Intragovernmental Reporting ProcessProcess

IFCS confirmations (quarterly)IFCS confirmations (quarterly) Agency “F” transaction files Agency “F” transaction files

(quarterly)(quarterly) IRAS Reports (quarterly & year-end)IRAS Reports (quarterly & year-end) CFO Representations (year-end)CFO Representations (year-end) IG Agreed-Upon Procedures (year-IG Agreed-Upon Procedures (year-

end)end)

IFCS Confirmation ProcessIFCS Confirmation Process Central Fiduciary Agencies submit files to FMS Central Fiduciary Agencies submit files to FMS quarterlyquarterly

(BPD, FFB, DOL, OPM).(BPD, FFB, DOL, OPM).

System Administrators upload fiduciary files into IFCS.System Administrators upload fiduciary files into IFCS.

Agencies are able to confirm balances within a designated Agencies are able to confirm balances within a designated time period.time period.

Explanations must be provided for all differencesExplanations must be provided for all differences Accounting ErrorAccounting Error Timing DifferenceTiming Difference Accounting MethodologyAccounting Methodology UnknownUnknown Rounding DifferenceRounding Difference Confirmed ReportingConfirmed Reporting

Accounting Methodology Accounting Methodology Differences for BPD Differences for BPD

InvestmentsInvestments OMB Business Rules state that “BPD and trading partner OMB Business Rules state that “BPD and trading partner

agencies will use the agencies will use the effective interest methodeffective interest method for for amortization on market-based notes, bonds, and zero-amortization on market-based notes, bonds, and zero-coupon bond securitiescoupon bond securities. BPD and the trading partner . BPD and the trading partner agencies will use the agencies will use the straight-line method for market-based straight-line method for market-based billsbills.”.”

Provisions:Provisions: Amortization of market-based premiums to call dateAmortization of market-based premiums to call date Held-to-maturity vs. Available-for-saleHeld-to-maturity vs. Available-for-sale Inventory Relief Method for redemptions prior to maturityInventory Relief Method for redemptions prior to maturity

Differences in accounting methodology for investments is a Differences in accounting methodology for investments is a reporting/reconciliation issue for BPD and Federal Agencies.reporting/reconciliation issue for BPD and Federal Agencies.

Agency “F” Transaction Files Agency “F” Transaction Files Quarterly submission of intragovernmental balances for all Quarterly submission of intragovernmental balances for all

proprietary USSGL accounts (proprietary USSGL accounts (onlyonly transactions with the Federal transactions with the Federal “F” attribute) .“F” attribute) .

Agencies derive intragovernmental balances directly from their Agencies derive intragovernmental balances directly from their departmental trial balances used as the basis for constructing departmental trial balances used as the basis for constructing quarterly unaudited financial statements for OMB.quarterly unaudited financial statements for OMB.

Text or Excel File FormatText or Excel File Format

Elements of Text/Excel File:Elements of Text/Excel File: Department Code (2-digit)Department Code (2-digit) Bureau Code (2-digit)Bureau Code (2-digit) Fund Group (4-digit)Fund Group (4-digit) USSGL AccountUSSGL Account Federal “F” AttributeFederal “F” Attribute Trading Partner (2-digit)Trading Partner (2-digit) Dollar AmountDollar Amount Exchange “X” or Nonexchange “T” AttributeExchange “X” or Nonexchange “T” Attribute Duplicate Partner Code Identifier (DPCI)Duplicate Partner Code Identifier (DPCI)

IRAS ReportsIRAS Reports

Generated from agency “F” transaction files:Generated from agency “F” transaction files: Intragovernmental Activity Detail ReportIntragovernmental Activity Detail Report Intragovernmental Activity Summary ReportIntragovernmental Activity Summary Report Intragovernmental Reciprocal Category Detail ReportIntragovernmental Reciprocal Category Detail Report Intragovernmental Reciprocal Category Summary ReportIntragovernmental Reciprocal Category Summary Report Quarterly Data vs. IFCS Agency Benefits Report Quarterly Data vs. IFCS Funds (Investments &

Borrowings) Report Material Differences/Status of Disposition Certification Intragovernmental Comparative Explanations of

Differences Report Intragovernmental Closing Package vs. Fourth Quarter

Submission Comparative Data Report (only at year-end)

CFO Representations CFO Representations

Chief Financial Officer (CFO) provides Chief Financial Officer (CFO) provides responses to representations for each responses to representations for each intragovernmental issue cited on the intragovernmental issue cited on the representation form.representation form.

Elements of CFO Representation:Elements of CFO Representation: Consistency between agency audited financial Consistency between agency audited financial

statements and Closing Package data.statements and Closing Package data. Closing Package reconciliation with trading partner, Closing Package reconciliation with trading partner,

by reciprocal category.by reciprocal category. Explanation of Closing Package Material Differences.Explanation of Closing Package Material Differences.

IG Agreed-Upon Procedures IG Agreed-Upon Procedures

Inspector General (IG) uses the Agreed-Upon Inspector General (IG) uses the Agreed-Upon Procedures to assist with accounting for and Procedures to assist with accounting for and eliminating intragovernmental activity & balances in eliminating intragovernmental activity & balances in the preparation of agency and Governmentwide the preparation of agency and Governmentwide financial statements.financial statements.

Elements of IG Agreed-Upon Procedures:Elements of IG Agreed-Upon Procedures: Attest to all elements of representations from CFO.Attest to all elements of representations from CFO. Compare IRAS (Closing Package) data to subsidiary records.Compare IRAS (Closing Package) data to subsidiary records. Test reconciliation of material intragovernmental Test reconciliation of material intragovernmental

activity/balances with trading partners.activity/balances with trading partners. Test intragovernmental controls for financial reporting.Test intragovernmental controls for financial reporting.

IG must perform the procedures regardless of audit IG must perform the procedures regardless of audit opinion on agency’s financial statements.opinion on agency’s financial statements.

Performance MeasuresPerformance Measures

Annually, FMS reviews reporting efficiency of Annually, FMS reviews reporting efficiency of federal agencies and provides feedback to the federal agencies and provides feedback to the agency CFO & IG on their performance.agency CFO & IG on their performance.

IFCS Performance Indicator: Reconciliation of IFCS Performance Indicator: Reconciliation of Unexplained DifferencesUnexplained Differences ElementElement: 4: 4thth Qtr unexplained difference is less than 10% of Qtr unexplained difference is less than 10% of

agency’s IFCS reporting total for each central fiduciary agency’s IFCS reporting total for each central fiduciary agency.agency.

Overall ResultsOverall Results: 30 agencies in compliance (86%): 30 agencies in compliance (86%)5 agencies non-compliance (14%)5 agencies non-compliance (14%)

Differences with BPD Investments/Borrowings were Differences with BPD Investments/Borrowings were all explained.all explained.

Intragovernmental AuthorityIntragovernmental Authority

FASAB StandardsFASAB Standards OMB Bulletin 01-09 (Form & Content)OMB Bulletin 01-09 (Form & Content) OMB Business Rules (Memo # M-03-01)OMB Business Rules (Memo # M-03-01) Treasury Financial Manual (TFM) Treasury Financial Manual (TFM)

Vol I, Part 2, Chapter 4700Vol I, Part 2, Chapter 4700 Federal Intragovernmental Accounting Federal Intragovernmental Accounting

Policies GuidePolicies Guide

IFCS Key DatesIFCS Key Dates

33rdrd Quarter, FY 2005 Quarter, FY 2005

IFCS Opens:IFCS Opens: 7/11/057/11/05

IFCS Closes:IFCS Closes: 7/25/057/25/05

44thth Quarter, FY 2005 Quarter, FY 2005

IFCS Opens:IFCS Opens: 10/7/0510/7/05

IFCS Closes:IFCS Closes: 10/19/0510/19/05

WebsitesWebsites

IFCS:

http://fmsapps.treas.gov/ias

Intragovernmental:

http://fms.treas.gov/irri/index.html

ContactsContacts

IFCS System AdministratorsIFCS System Administrators Lena LewisLena Lewis 202-874-9232202-874-9232

Lena.Lewis@fms.treas.govLena.Lewis@fms.treas.gov

Sheila MillerSheila Miller 202-874-8305202-874-8305Sheila.Miller@fms.treas.govSheila.Miller@fms.treas.gov

IRAS/Treasury Intragovernmental LiaisonIRAS/Treasury Intragovernmental Liaison Benjamin SussmanBenjamin Sussman 202-874-9898202-874-9898

Benjamin.Sussman@fms.treas.govBenjamin.Sussman@fms.treas.gov

Intragovernmental Team LeaderIntragovernmental Team Leader Ella Hughes-BaileyElla Hughes-Bailey 202-874-6389202-874-6389

Ella.Hughes-Bailey@fms.treas.govElla.Hughes-Bailey@fms.treas.gov

QUESTIONS?QUESTIONS?