U.S. Government Aircraft Cost Accounting Guide

4/11/2002

Office of Governmentwide Policy

U.S. Government Aircraft Cost Accounting Guide

Developed by The Interagency Committee for Aviation Policy

and the General Services Administration Aircraft Management Policy Division Office of Transportation and Personal Property

1800 F Street, NW, Washington, DC 20405 (202) 208-4101 or 0519

Revised November 2002

Table of Contents

Chapter 1.0 Introduction

Chapter 2.0 Government Aircraft Cost Accounting Requirements 2.1 Reporting Government Aircraft Costs 2.1.1 Federal Aviation Interactive Reporting System (FAIRS) 2.1.2 Federal Agencies'Accounting Systems 2.2 Accounting for Government Aircraft Costs (OMB Circular A-126) 2.1.1 Justifying Use of Aircraft to Support Travel 2.1.2 Recovering the Cost of Operations When Appropriate 2.1.3 Determining Aircraft Program Cost-Effectiveness 2.3 Justifying Acquisition and In-House Operation of Aircraft (OMB Circular A-76) 2.4 Federal Government Aircraft Cost Elements

Chapter 3.0 3.1 3.2 3.3 3.4

3.5 3.6

A Standard Government Aircraft Cost Accounting System, Based on a `Chart of Accounts' Federal Standard General Ledger System (SGL) (Chart of Accounts) 3.1.1 Collection of Statistical Data Setting Up the Chart of Accounts 3.2.1 Sample Chart of Accounts Expanding and Changing the Chart of Accounts 3.3.1 Expansion of Account Numbering System 3.3.2 Spacing of Accounts Maximizing Accounting Flexibility by Expanding the

Chart of Accounts 3.4.1 Accounting for Costs by Aircraft 3.4.2 Accounting for Costs by Object Class Codes 3.4.3 Accounting for Costs by Work Order Number 3.4.4 Other Possibilities Sample Chart of Accounts Definitions (Based on Federal Government Cost Elements) CAG Correlation Matrix

Appendix A Accounting Overview Appendix B Forms Appendix C Reports Appendix D FAIRS Data Element Definitions Appendix E OMB Circular A-126 Cost Element Definitions Appendix F OMB Circular A-76 Cost Element Definitions Appendix G U.S. Standard General Ledger Chart of Accounts Appendix H Additional Sources of Information

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1.0 INTRODUCTION

The purpose of this U.S. Government Aircraft Cost Accounting Guide (CAG) is two-fold: ? ? To assist Federal agencies in implementing an accounting system to collect,

analyze, and report cost data related to operating aircraft. ? ? To give agencies direction on how to employ the cost data they collect to justify the

use of aircraft to support travel, recover the cost of operating aircraft on behalf of others, justify the acquisition and in-house operation of aircraft, and determine aircraft program cost-effectiveness, as required by 41 Code of Federal Regulations 102-33 and mandated by Office of Management and Budget (OMB) Circulars A-126 and A-76. If properly implemented, the cost accounting system described in this guide can become a valuable tool to help aviation managers make sound decisions for acquiring, managing, and disposing of aircraft.

This CAG adopts widely accepted aviation cost accounting practices and incorporates guidance contained in Attachments A and B of OMB Circular A-126 (revised May 1992). An accounting system developed following the guidance in this CAG will enable Federal agencies to report to the Federal Aviation Interactive Reporting System (FAIRS), do the calculations necessary to comply with other direction in 41 Code of Federal Regulations 102-33 and OMB Circulars A-126 and A-76, and produce financial statements (balance sheets, income/expense statements, and cash flow statements) as well as various management reports.

In addition, this CAG shows how the financial information generated by the proposed accounting system would correlate with the U.S. Government's existing Object Class Code system of budgeting as well as with the U.S. Government Standard General Ledger (SGL) System of accounting.

Intended users of this guide include aviation managers in Federal agencies, as well as accounting, finance, and acquisition personnel of any Federal agency that operates aircraft in support of its assigned function. To implement the accounting system described in this CAG will require the use of trained financial and accounting personnel. This guide is therefore designed to do the following:

? ? Assist Federal managers in understanding and complying with the required processes,

? ? Give guidance to Federal finance and accounting personnel in establishing and operating the accounting system, and

? ? Facilitate communication between program management, accounting, and finance staffs by establishing a common base of understanding.

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2.0 GOVERNMENT AIRCRAFT COST ACCOUNTING REQUIREMENTS

OMB Circular A-126 directs the General Services Administration (GSA) and the Federal agencies to minimize costs and improve the management and use of Government aviation resources. The circular prescribes cost accounting guidance that Federal agencies must follow in acquiring, managing, and disposing of aircraft.

Also through Circular A-126, OMB has charged GSA with specific responsibilities: ? ? Operating a Government-wide aircraft management information system, ? ? Developing generic aircraft information systems standards and software, ? ? Providing technical assistance to agencies in establishing automated aircraft

information and cost accounting systems and conducting the cost analyses required by Circular A-126, ? ? Providing statistical reports and studies related to the information collected through the Government-wide management information system.

In 41 Code of Federal Regulations 102-33, "Management of Government Aircraft,"GSA (with advice from the Federal agencies) has codified the direction contained in OMB Circular A-126. 41 CFR 102-33 directs Federal agencies to report cost information through the Federal Aviation Interactive Reporting System (FAIRS).

OMB Circular A-76, "Performance of Commercial Activities,"directs Federal agencies to compare the costs of owning and operating aircraft with the costs of hiring aircraft as commercial aviation services (CAS).

2.1 Reporting Government Aircraft Costs

2.1.1 Federal Aviation Interactive Reporting System (FAIRS)

To comply with direction in OMB Circular A-126, GSA has developed the Federal Aviation Interactive Reporting System (FAIRS) to collect and analyze data on the inventories, cost, and usage of Government aircraft. Government aircraft are (1) Federal aircraft (i.e., owned, borrowed, loaned, or bailed) or are (2) aircraft hired as commercial aviation services (CAS) (i.e., leased, lease-purchased, rented, chartered, hired under full service contracts, or hired under inter-service support agreements).

The Federal agencies that are members of the Interagency Committee for Aviation Policy (ICAP) worked closely with GSA to develop the data elements, functional specifications, and business rules for FAIRS. FAIRS is a highly secure, Internet-based system that consists of a basic application for entering and approving data, an Oracle database to store the data, and a powerful query tool that allows users to retrieve and analyze data from the database.

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Through the basic FAIRS application, agencies report on their Federal aircraft inventories and the cost, missions, and flying hours (i.e., hours flown) of their Federal aircraft as well as the cost, missions, and flying hours of aircraft they hire as commercial aviation services (CAS). The FAIRS business rules establish the frequency and format for this reporting.

FAIRS cost data elements are defined in Appendix D. The Cost Accounting Guide (CAG) Correlation Matrix on page 24-A shows the relationships among the elements as defined in FAIRS, Circulars A-76 and A-126, and the Chart of Accounts.

2.1.2 Federal Agencies'Accounting Systems

The quality of the data collected in FAIRS is a direct reflection of the quality of the reporting agencies'cost accounting and statistical data gathering. To report to FAIRS accurately and completely, Federal agencies need their own accounting systems that can track costs by model, tail number, location, and contract assignment. They need accounting systems that are based on standard accounting principles and concepts and that are automated to facilitate handling the large quantities of data involved. The model accounting system described in this guide incorporates standard accounting practices, is applicable to any Government organization because it is based on the U.S. Government Standard General Ledger System (SGL), and should fulfill agencies' needs for reporting and management information.

Central to any accounting system is the use of a set of definitions for financial elements and a Chart of Accounts that groups and assigns a number to each asset, liability, cost element, and sub-element. The elements are selected and defined by each operator in such a way that they: ? ? Cover all areas of asset, liability, owner's equity, expense, and revenue for that

operator, ? ? Can be collected without undue difficulty by that operator, ? ? Provide the basis for generating the required reports in the required format.

This guide recommends a set of Federal Government Aircraft Cost Elements (see Section 2.4), a standard Chart of Accounts (see Section 3.2.1) and shows how that Chart of Accounts can be expanded as required for different types of operations. The guide also identifies how agencies can obtain needed data through the use of standard forms (see Appendix C). The forms are also available in Excel format for incorporation in a digital data collection system.

Because no two aviation operations are identical, this guide focuses on underlying principles, and the model system based on these principles can be adapted. The concepts and approaches are applicable to any sized operation regardless of how many aircraft, operating locations, and contracts are involved. Management and accounting personnel will have to work together to adapt the system described in this

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