DoD Financial Management Regulation Volume 6B, Chapter …

DoD Financial Management Regulation

Volume 6B, Chapter 13 January 2002

SUMMARY OF MAJOR CHANGES TO DOD 7000.14-R, VOLUME 6B, CHAPTER 13 "ADJUSTMENTS, ELIMINATIONS, AND OTHER SPECIAL INTRAGOVERNMENTAL RECONCILIATION PROCEDURES"

Substantive revisions are denoted by a preceding the section, paragraph, table, or figure that includes the revision

PARA EXPLANATION OF CHANGE/REVISION

PURPOSE

Chapter 13

Revised terminology to improve communication of the adjustment and elimination requirements. Also, guidance identifies the alternative process to be used when the auditors can substantiate a Component's intragovernmental balances.

Revised

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DoD Financial Management Regulation TABLE OF CONTENTS

Volume 6B, Chapter 13 January 2002

ADJUSTMENTS, ELIMINATIONS, AND OTHER SPECIAL INTRAGOVERNMENTAL RECONCILIATION PROCEDURES

1301 General 1302 Instructions for the Preparation of The Statement of Changes in Net Position

1302 Background 1303 Levels of Intragovnermental Trading Partners 1304 Aggregation and Exchange of Intra-Department of Defense Trading Partner Data on the Sale Of Goods and Services 1305 Intra-DoD Seller/Buyer Accrual Adjustment Calculation 1306 Recording Buyer Side Departmental Level Intra-DoD Transaction Balance Adjustments 1307 Intragovernmental Fiduciary Transactions 1308 Transfers-In and Transfers-Out 1309 Prior Period Adjustments 1310 Intragovernmental Capitalized Purchases 1311 Reconciliation with Level 1 Trading Partners 1312 Eliminiation of Budgetary Accounts (4000 Series Accounts) 1313 Trading Partner Codes 1314 Accounts to be Eliminated 1315 Other Transactions

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DoD Financial Management Regulation CHAPTER 13

Volume 6B, Chapter 13 January 2002

ADJUSTMENTS, ELIMINATIONS, AND OTHER SPECIAL INTRAGOVERNMENTAL RECONCILIATION PROCEDURES

1301 GENERAL

130101.

This chapter provides format, content, and instruction for: (A) the

preparation and presentation of worksheets in support of trading partner exchange of data,

(B) eliminations for the Department of Defense (DoD) annual financial statements, and

(C) providing elimination information for use in the preparation of the government-wide

financial statements.

130102.

For the most part, the Department's accounting systems were designed

and implemented prior to the establishment of the requirement to eliminate intragovernmental

transactions. These accounting systems do not capture trading partner information at the

transaction level. Therefore, current systems cannot produce the data necessary for

reconciliations between buyers and sellers. Additionally, the problem of accurately identifying,

summarizing, and eliminating all intragovernmental transactions by customers is a federal

government-wide problem. Currently, several groups have been established to develop a

solution for the entire federal government. Therefore, this chapter provides interim policies and

procedures to be used until required systems and process improvements can be implemented.

1302 BACKGROUND

130201.

All DoD reporting entities are required to report and eliminate

intragovernmental account balances (proprietary accounts for fiscal year (FY) 2001) in the

FY 2001 annual financial statements. Intragovernmental account balances can be classified by

type and level. The type of transaction refers to the nature of the accounting event that resulted

in the transaction. See paragraph 130203, below, for further discussion on types of transactions.

The level of the transaction refers to the nature of the trading partner involved. See section

1303, below, for further discussion on the levels of intragovernmental trading partners. The

objective of eliminating intragovernmental account balances is to offset the effect of transactions

between: (A) a DoD reporting entity and other federal agencies, (B) DoD reporting entities, and

(C) organizations within a DoD reporting entity. The requirement to record elimination entries

during the preparation of the Statement of Budgetary Resources and Statement of Financing has

been delayed. In previous years, the Defense Finance and Accounting Service (DFAS) and the

other DoD Components have used information from the DoD entity making sales or providing

services ("seller-side") to another DoD entity, or to another federal agency, that is the recipient

and purchaser of those goods or services ("buyer-side") as the basis for reporting

intragovernmental balances. It was presumed that the amounts of intragovernmental accounts

receivable, revenue, and advances from others (unearned revenue) reported by the seller are

more accurate, and that the corresponding amounts reported by the buyer for intragovernmental

accounts payable, expenses, advances, and assets (where the information is available) must be

adjusted to match the seller records.

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DoD Financial Management Regulation

Volume 6B, Chapter 13 January 2002

130202.

For FY 2001 reporting, eliminating entries again shall be based on the

information provided by the seller/service provider unless a waiver is obtained. See section

130403, below, for waiver requirements. This chapter provides information regarding the data

that is required for FY 2001 annual financial reporting and the steps the DoD Components and

DoD accounting centers (DFAS Centers and United States Army Corps of Engineers?Finance

Center (USACE?FC)) must take to collect, review, and adjust summary level trading partner

data prior to eliminating the effect of intragovernmental transactions. This guidance also

includes examples of basic journal entries that should be made at the departmental level to: (A)

record adjustments for unrecorded buyer-side transactions needed to match seller performance,

and (B) eliminate the effects of intragovernmental transactions.

130203.

The transactions for which intragovernmental transaction data shall be

collected can be divided into four groups: sales of goods and services to federal reporting

entities, intragovernmental fiduciary transactions, transfers-in (out) and prior period adjustment.

A. Sales of Goods and Services to Federal Reporting Entities. The revenues and expenses that result from transactions with other federal reporting entities must be identified and reported. See section 1303 of this volume for further guidance.

B. Intragovernmental Fiduciary Transactions. These transactions are specific transactions with other federal agencies which have been identified by the Department of the Treasury, Financial Management Service. These transactions include: investments in federal securities issued by the Treasury Department, Bureau of Public Debt; borrowings from the U. S. Treasury and the Federal Financing Bank; transactions with the Department of Labor relating to the Federal Employees' Compensation Act; and transactions with the Office of Personnel Management relating to employee benefit programs. See section 1307 of this volume for further guidance.

C. Transfers-In (Out). Transfers-in and out involve the transfer of assets between federal reporting entities. Statement of Federal Financial Accounting Standard (SFFAS) No. 7, "Concepts for Reconciling Budgetary and Financial Accounting" requires that transfers of assets should be recorded at the book value of the transferring entity. Accordingly, intragovernmental transfers-in of the receiving entity must be reconciled to intragovernmental transfers-out of the transferring entity and adjustments recorded to post any unrecorded amounts. Additional guidance on treatment of transfers-in and transfers-out is provided in section 1308 of this volume.

D. Prior Period Adjustments. Prior period adjustments involve corrections of errors and accounting changes with retroactive effect, including those occasioned by the adoption of new federal financial accounting standards, and must be recognized and measured under applicable standards. Occasionally, prior period adjustments may involve another federal reporting entity. Additional guidance on treatment of prior period adjustments is specified in section 1309 of this volume.

130204. follows in Table 13-1.

A summary of the FY 2001 intragovernmental elimination process

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DoD Financial Management Regulation

Volume 6B, Chapter 13 January 2002

Steps

1. After allocating undistributed collections and disbursements between public and federal receivables, the DoD accounting centers input Seller-side information for level 2 and 3 transactions (including Transfer-out information) into the Defense Departmental Reporting System ? Audited Financial Statements (DDRS-AFS).

Required Action

For FY 2001 financial statements, the DoD reporting entities shall exchange summarized trading partner data via DDRS-AFS and according to instructions sent out by the DFAS-Arlington. The DoD accounting centers will reconcile summary level account balances using the procedures outlined in sections 1304 and 1305 of this volume.

Presentation - Where Data is Displayed

The worksheets and documents used to prepare DDRS-AFS input provide support for the financial statements reporting process and shall be maintained by the accounting office.

2. The DoD accounting centers post summary level Buyer-side accruals of unrecorded portion of reimbursable related balances.

For FY 2001, use the summary level adjustments to the buyer-side records outlined in section 1306 of this volume.

These are supporting worksheets and journal vouchers that shall be maintained by the accounting office.

3. The DoD accounting centers report intragovernmental fiduciary balances with other federal agencies to the DFAS-Arlington. The DFAS-Arlington reports these balances to other federal agencies.

Reference document: "Intragovernmental Fiduciary Transactions Accounting Guide," as updated by the "Federal Intragovernmental Accounting Transactions Policies and Procedures Guide" (Website address at: )

For FY 2001 financial statements, the DoD reporting entities report intragovernmental fiduciary transaction balances to the DFASArlington. The DFAS-Arlington reports these balances to four federal entities as described in section 1307 of this volume.

These are specific material intragovernmental transaction balances with the Bureau of the Public Debt, Borrowings from Treasury, Department of Labor, and the Office of Personnel Management. The documentation will be maintained by the accounting office.

4. The DoD accounting centers identify elimination amounts required for the eliminations column of the consolidating DoD stand-alone entity financial statements (e.g., Army General Funds) and supporting schedules (e.g., Active Army Consolidating Statements).

Using the DDRS-AFS trial balance data base with trading partner attributes, prepare entity and supporting schedule statements, including level 3 elimination data at the applicable level of consolidation (e.g., Army General Fund Consolidating Statements, Active Army Consolidating statements, and Navy appropriation group consolidating statements).

Table 13-1

Elimination amounts are displayed in the eliminations columns of the entity and supporting schedule Consolidating Balance Sheet, Consolidating Statement of Net Cost, and the Consolidating Statement of Changes in Net Position.

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