University of Pittsburgh Department of Monitoring Analysis

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DEPARTMENT OF MONITORING
Please prepare all journal entires and statements for each Task. Line item title options are provided for you in
alphabetical order – not necessarily in the order in which they are needed. Please feel free to format column
width, add rows/columns, etc and to use formulas as needed.
Line Items Menu
Accounts Payable
Accumulated Depreciation – Equipment
Accumulated Depreciation – Furniture
Allotment – Realized Resources
Allowance for Bad Debt
Apportionment (or Apportionment-Available)
Appropriations Used
Bad Debt Expense
Benefits Expense
Delivered Orders – Paid
Delivered Orders – Unpaid
Depreciation Expense
Disbursements In Transit
Equipment
Exchange Revenue
Fund Balance With Treasury
Furniture
Imputed Financing Source
Liability for Litigation
Miscellaneous Expense – Litigation
Nonentity Accounts Receivable
Other Appropriations Realized
Rent Expense
Rent Expense
Salaries Expense
Supply Expense
Supply Expense
Unapportioned Authority – Available
Undelivered Orders – Unpaid
Unexpended Appropriations
T-Accounts/Worksheets
provided for you in
to format column
s/Worksheets
DEPARTMENT OF MONITORING
Task 1 – Appropriations Received
Line Items Menu
Accounts Payable
Accumulated Depreciation – Equipment
Accumulated Depreciation – Furniture
Allotment – Realized Resources
Allowance for Bad Debt
Apportionment (or Apportionment-Available)
Appropriations Used
Bad Debt Expense
Benefits Expense
Delivered Orders – Paid
Delivered Orders – Unpaid
Depreciation Expense
Disbursements In Transit
Equipment
Exchange Revenue
Fund Balance With Treasury
Furniture
Imputed Financing Source
Liability for Litigation
Miscellaneous Expense – Litigation
Nonentity Accounts Receivable
Other Appropriations Realized
Rent Expense
Rent Expense
Supply Expense
Supply Expense
Unapportioned Authority – Available
Undelivered Orders – Unpaid
Unexpended Appropriations
B
B
P
Journal Entires
Please include brief description of event to which the entry applies
and indicate “B” for Budgetary entry or “P” for Proprietary.
Please do NOT combine Budetary and Proprietary entries.
Amounts
Other Appropriations Realized
Unapportioned Authority
(To record appropriation of funds by congress)
$ 28.650.000
unapportioned authority
apportionment
(To record apportionment of funds by OMB)
$ 8.000.000
Receipt of an appropriation warrant
fund balance with treasury
unexpended Appropriations
(To record receipt of an appropriation warrant)
$ 28.650.000
$ 8.000.000
$ 28.650.000
$ 28.650.000
USE CELL REFERENCE FORMULAS FOR LINE ITEM AMOUNTS
Department of Monitoring
October 1, 201X
Balance Sheet
Assets
Fund bulance with treasury
Total assets
liabilities
Net position
Unexpended Appropriations
Toatal liabilities and Net position
$ 28.650.000
$
28.650.000
$0
$ 28.650.000
$28.650.000
Statement of Budgetary Resources
Budgetary resources
other appropriations realized
spending authority from offsetting collections
Total budgetary resources
$ 28.650.000
$0
status of budgetary resources
Apportioned
Unapportioned aythority
Total status of budgetary resources
$ 8.000.000
$ 20.650.000
Relationship of obligations to outlays
obligations ,Beginning balance
obligations ending balance
Total outlays
$
28.650.000
$
28.650.000
$0
$0
$0
DEPARTMENT OF MONITORING
Task 2 – First Quarter Activity
Line Items Menu
Accounts Payable
Accumulated Depreciation – Equipment
Accumulated Depreciation – Furniture
Allotment – Realized Resources
Allowance for Bad Debt
Apportionment (or Apportionment-Available)
Appropriations Used
Bad Debt Expense
Benefits Expense
Delivered Orders – Paid
Delivered Orders – Unpaid
Depreciation Expense
Disbursements In Transit
Equipment
Exchange Revenue
Fund Balance With Treasury
Furniture
Imputed Financing Source
Liability for Litigation
Miscellaneous Expense – Litigation
Nonentity Accounts Receivable
Other Appropriations Realized
Rent Expense
Rent Expense
Salaries Expense
Supply Expense
Supply Expense
Unapportioned Authority – Available
Undelivered Orders – Unpaid
Unexpended Appropriations
B
B
B
P
p
B
p
p
B
p
-19
Journal Entires
Please include brief description of event to which the entry applies
and indicate “B” for Budgetary entry or “P” for Proprietary.
Please do NOT combine Budetary and Proprietary entries.
Amounts
Apportionment
$
Allotment – Realized resources
(To record allotment of funds to finance first quarter activities at headquaters)
8.000.000
Allotment – realized resources
undelivered orders – unpaid
(To obligate funds for supplies ordered but not delivered)
$
12.000
undelivered orders – unpaid
delivered orders – unpaid
(To record receipts of supplies)
$
10.000
supply expense
accounts payable
(To record receipts of supplies accounted for under the purchase method)
$
10.000
Unexpended Apprpriations
Appropriations used
(To record use of appropriations to finance purchase of supplies)
$
10.000
Undelivered orders – Unpaid
$
2.000
Allotments – realized resources
(To de-obligate the portion of the original estimated obligation that was not needed to fund in the final invoice)
Accounts payable
Disbursements in Transit
(To record request to Treasury to pay an accounts payable)
$
10.000
Disbursements in Transit
Fund balance in Treasury
(To reduce fund balance with treasury for outlays made)
$
10.000
Delivered orders – unpaid
$
10.000
Delivered orders – paid
(To reflect the obligation as paid)
salaries expense
$
400.000
Benefits expense
$
88.000
Rent expense
$
25.000
Imputed financing source
(To recognize the cost of resources provided by other entities for salaries,benefits and rent)
USE CELL REFERENCE FORMULAS FOR LINE ITEM AMOUNTS
Department of Monitoring
Balance Sheet
as of December 31, 201X
Amounts
Assets
Fund balance with treasury
Total assets
Liabilities
$
8.000.000
$
12.000
$
10.000
$
10.000
$
10.000
$
to fund in the final invoice)
2.000
$
10.000
$
10.000
Net position
Unexpended appropriations
cumulative resources of operations
Total liabilities and Net position
$ 28.640.000
$
10.000
$
513.000
E FORMULAS FOR LINE ITEM AMOUNTS
partment of Monitoring
Balance Sheet
of December 31, 201X
$
28.640.000
Statement of Net Costs
for the period ending December 31, 201X
Costs not Attributable to Programs
Less: Exchange revenue
Net cost of operations
$0
$
28.640.000
$0
$28.640.000
Statement of Changes in Net Position
as of December 31, 201X
net cost of operations
Appropriations Used
Imputed Financing
Net Results of Operations
Unexpended Appropriations:
Budgetary Financing Sources
Other Appropriations Realized
Expnded Appropriatons
Ending Balance
Statement of Budgetary Resources
as of December 31, 201X
Budgetary Resources:
Other Appropriations Realized
Spending authority from offsetting collections
Total Budgetary Resouces
Status of Budgetary Resources
Delivers Order – Paid
Apportioned
Unapportioned Authority
Total Status of Budgetary Resources
Relationship of Obligations to Outlays
Obligations, Beginning Balance
Obligations, Ending Balance
Total Outlays
$
$
$
$
523.000
$0
523.000
523.000
$10.000
513.000
0
$
$
$
28.650.000
10.000
28.640.000
$
$
$
28.650.000,00
28.650.000,00
$
$
$
$
10.000
7.990.000
20.650.000
28.650.000
$
$
$
10.000,00
10.000,00
$523,000 from above
Appropriations Used ($10,000)
Imputed Financing ($513,000)
Net Results of Operations $0
Unexpended Appropriations:
Budgetary Financing Sources
Other Appropriations Realized $28650,000
Expnded Appropriatons $10,000 ($10,000)
Ending Balance
$28,640,000
$28650,000
0 ($10,000)
DEPARTMENT OF MONITORING
Task 3 – Remainder of Year Activity
Line Items Menu
Accounts Payable
Accumulated Depreciation – Equipment
Accumulated Depreciation – Furniture
Allotment – Realized Resources
Allowance for Bad Debt
Apportionment (or Apportionment-Available)
Appropriations Used
Bad Debt Expense
Benefits Expense
Delivered Orders – Paid
Delivered Orders – Unpaid
Depreciation Expense
Disbursements In Transit
Equipment
Exchange Revenue
Fund Balance With Treasury
Furniture
Imputed Financing Source
Liability for Litigation
Miscellaneous Expense – Litigation
Nonentity Accounts Receivable
Other Appropriations Realized
Rent Expense
Rent Expense
Salaries Expense
Supply Expense
Supply Expense
Unapportioned Authority – Available
Undelivered Orders – Unpaid
Unexpended Appropriations
Journal Entires
Please include brief description of event to which the entry applies
and indicate “B” for Budgetary entry or “P” for Proprietary.
Please do NOT combine Budetary and Proprietary entries.
Amounts
USE CELL REFERENCE FORMULAS FOR LINE ITEM AMOUNTS
Department of Monitoring
BALANCE SHEET
as of September 30, 201X
Department of Monitoring
STATEMENT OF NET COSTS
for the Year Ending September 30, 201X
Department of Monitoring – September 30, 201X
STATEMENT OF CHANGES IN NET POSITION
as of September 30, 201X
STATEMENT OF BUDGETARY RESOURCES
as of September 30, 201X
SECTION Ill: Chapter 6
III-173
Section III, Chapter 6
CHAPTER 6
Federal Financial Accounting Standards — Case Study
Learning Objectives
The financial accounting standards addressed in Chapter 5 will be reviewed by
applying them to a fictitious federal department (Case Study).
After completing this chapter, you should be able to:
•
make basic journal entries needed to prepare principal financial
statements.
AGA Study Guide 2, 2016 Edition
SECTION III: Chapter 6
III-174
Case Study —
Department of Monitoring
Authorizing legislation
first year appropriations
Overview of Case Study
This illustration begins with the creation of the U.S. Department of Monitoring
(Monitoring). The U.S. Department of Monitoring’s primary mission is to monitor
growth and regulation of two facets of the nation’s economy—high-speed Internet
access and wireless communications. To that end, the Department is authorized
to operate two agencies—High Speed Agency and Wireless Agency. The
Department provides broad administrative and policy support to the two
agencies.
The authorizing legislation, which created the Department, allows it to:
1. Establish the two agencies and lease space for department and agency
operations;
2. Chaierhigh speed internet and wireless communications service
providers a oenee to o set
ating costs
3. Hire 250 full-time equivalent staff;
4. Contract for web support and telephone services; and
5. Establish an advisory committee to offer advice on research, and issue
reports regarding growth and regulation of the industries.
The aforementioned provider fee is authorized as a means of covering the cost of
operations. Fees collected are considered offsetting receipts for budgetary
purposes. In this case, Congress does not grant spending authority to the
Department. That is, while Monitoring collects the fees, and the fees are intended
AGA Study Guide 2, 2016 Edition
SECTION III: Chapter 6
III-175
to cover the Department’s costs, Congress directs it to transfer those fees to the
general fund of the U.S. Treasury.
Monitoring is granted an appropriation to cover its obligations for the year. It may
incur obligations equal to the appropriated funds, without regard to the collection
of fees. For the first year of operations, appropriations are made for:
1. Salaries and benefits of $22 million;
2. Leasing office space at $4 million;
3. Travel funds for advisory board members of $25,000;
4. Equipment purchases of $375,000;
5. Furniture purchases of $500,000;
6. Supplies of $50,000; and
7. Web support and telephone services of $1.7 million.
These appropriations remain available during the fiscal year. New appropriations
must be provided for obligations to be incurred after the end of the fiscal year.
AGA Study Guide 2, 2016 Edition
SECTION III: Chapter 6
III-176
Revenue and Other Financing
Sources
fees
exchange revenues
Accounting for Revenue and Other Financing Sources
At the outset, our illustrative department has two identified sources of financing
—exchange revenues and appropriations. The authorized fees that the
Department collects from the monitored industries are classified as exchange
revenues.
Federal accounting standards provide that regulatory user fees are exchange
revenue. This classification is made because (1) the government may incur costs
in order to regulate an identifiable entity for the benefit of the general public or
some other group and (2) the revenue charged is closely related to the cost of
operations of the entity.1 In our case, the Department is charged with monitoring
activity—one component of regulation—and we will consider fees to be an
exchange revenue.
We do not provide budgetary entries for the exchange revenue since in this case,
for simplicity, we have noted that the exchange revenue is being treated as
offsetting receipts, rather than offsetting collections. 2
The appropriations provided to Monitoring are a financing source and will be
used to illustrate both budgetary and proprietary accounting.
For further assistance in classifying revenues, Statement of Federal Financial Accounting
Standards (SFFAS) 7, Accounting for Revenue and Other Financing Sources, Appendix B
provides extensive examples of classifications.
1
2
Offsetting collections are those collections that an agency can spend without further legislation.
Such collections are credited to expenditure accounts so that the agency can make additional
expenditures. Offsetting receipts are not available to be spent by the agency and are deposited in
receipt accounts, which reduce the government‘s overall deficit or increase its surplus.
AGA Study Guide 2, 2016 Edition
Department of Monitoring (DoM)
For TASK 1 – Initial Funding (DUE THURSDAY, MAY 16)
•
•
Read Overview – pp. 2: III-173-176, including footnotes
Additional Information:
o Appropriations bills are passed for the fiscal year – DoM receives a Treasury
warrant for $28.65 million. Appropriation covers:
§ Salaries and Benefits: $22 million
§ Leasing Office Space: $4 million
§ Travel funds for Board Members: $25,000
§ Equipment Purchases: $375,000
§ Supplies: $50,000
§ Web Support/Telephone Services: $1.7 million
o OMB apportions $8 million to cover equipment and furniture purchases and @
25 percent of routine operating funds.
TASK 1: Prepare Journal Entries, Balance Sheet, Statement of Budgetary Resources covering
initial funding for DoM (DUE THURSDAY, MAY 16)
For TASK 2 – First Quarter Activity: (DUE THURSDAY, MAY 16)
•
•
Working out of borrowed office space, employees detailed (loaned) from existing
agencies begin hiring departmental staff. First quarter operations focus on planning and
budgeting, hiring key personnel for Department and its two agencies, and searching for
office space.
Activity:
o An allotment is issued making the full apportionment from TASK 1 available for
central operations.
o A team of 20 detailed employees is working out of another agency’s offices
(rented space).
§ Estimated rental space cost = $25,000/quarter.
§ Quarterly salary of detailed staff =$400,000
§ Staff members are detailed and space is made available without
reimbursement for the first quarter.
§ Federal benefit rate is 22 percent. This rate includes current and postretirement benefits. Employing entities are required to reimburse OPM
for benefits at rate of 17.33 percent.
§ Supplies are ordered for $12,000. (use “Purchases Method”)
• Supplies are received and only cost $10,000 due to a pricing error
by the ordering clerk. Payment is made during the first quarter.
TASK 2: Prepare Journal Entries, Balance Sheet, Statement of Net Cost, Statement of Changes
in Net Position, and Statement of Budgetary Resources for 1st Quarter (ending 12/31/201X)
(DUE THURSDAY, JUNE 7)
For TASK 3: Activities for rest of year (remaining three quarters): (DUE THURSDAY, MAY 23)
1. DoM hires staff and moves into new office space.
2. Remaining funds are apportioned.
3. Allotment is issued, making full apportionment available for central operations.
4. All detailed staff return to their home agencies on the morning of the 1st day of the 2nd
quarter, and new DoM staff hires begin work on the morning of the 1st day of the 2nd
quarter.
a. Salary expense for remainder of year = $18 million.
b. Federal benefit rate = 22%. This rate includes current and post-retirement
benefits. Employing entities are required to reimburse OPM for benefits @ rate
of 17.33%. (DoM pays OPM $3.12 million for benefits).
5. DoM leases office space on month-to-month basis until headquarters is built. Quarterly
rent of $1 million is due at beginning of each quarter. This is considered an operating
lease (see Box 3-6-1 on p. 2:III-184)
6. Supplies are ordered for $40,000. Supplies are received shortly before end of year and
cost $40,000. Payment is made during the year.
7. Equipment is purchased for $375,000. Expected useful life = 5 years, no residual value.
Delivery and payment occur during the year.
8. Furniture is purchased for $400,000. Expected useful life = 8 years, no residual value.
Delivery occurs during the year, but not payment.
a. Furniture purchases normally involve small items that are likely to be under the entity’s
capitalization threshold (and therefore expensed rather than depreciated). In this case,
we assume a few expensive items each of which is over the capitalization threshold.
9. Fee schedule established. Invoices for $32 million submitted to companies. During the
year, industry experienced negative growth, management believes some companies will
be declared bankrupt, resulting in an estimated 10 percent of billings not being paid.
10. One of the detailed employees files a grievance against the Department, because he
was not hired for a permanent, higher-level position. DoM General Counsel believes
that it is probable that DoM will lose the case and estimates the award to $250,000.
11. Cost-finding techniques were used to make the following cost assignments to the two
agencies: Each agency has two programs – (1) Industry Monitoring (allocated program
costs of $10,000,000 for each of the two agencies) and (2) Revenue Collection (balance).
• For simplicity – assume orders are received immediately. In practice, most orders would
be handled in the manner illustrated for supplies in quarter one.
• In summary, DoM entered into the following obligations:
Salaries
$18,000,000
Benefits
3,120,000
Rent
3,000,000
Supplies
40,000
Equipment
375,000
Furniture
400,000
TOTAL
$24,935,000
TASK 3: Prepare Journal Entries, Balance Sheet, Statement of Net Cost, Statement of Changes
in Net Position, and Statement of Budgetary Resources for year ending 9/30/201Y)
Please read the following instructions carefully. For Part 1 of this case study, you
prepared journal entries and statements for initial funding and the 1st quarter, For Part
2, you will prepare journal entries and financial statements reflecting activity for the
remainder of the year. As required for Part 1, you will replicate the journal entries and
related statements for the Department of Monitoring Case Study (quarters 2, 3, 4, and
year-end) found in CGFM Study Guide Volume 2, pp. III-175-193. You may/should
review these pages as much as you would like in advance of completing the exercise,
but please complete the journal entries and statements ON YOUR OWN. I would also
highly recommend reviewing the preceding/related material in the Study Guide as well
as the lecture videos.
For Part 2, please START with your CORRECTED spreadsheet from Part 1, and then
prepare the journal entries and related statements quarters 2, 3, and 4 (pp III-186193). When you are ready to begin both exercises, please refer ONLY to the attached
Case Study document – which reproduces the Study Guide content, but without the
journal entries, statements, etc. Please prepare these entries and statements in the
attached Excel file – again, using ONLY the pdf document for reference. Also – please
prepare your financial statements ONLY by using formulas back to the corresponding
journal entries (and formulas to derive totals). DO NOT hard-enter any numbers in your
statements. If done correctly, you should be able to construct your statements from a
combination of your journal entries. I have provided a listing of all of the possible
journal entry titles and created a very basic template. You do the rest.
Please attempt this without help from the Guide once you have studied the Guide
solution, and refer to the CGFM materials only afterwards for validation. Please submit
your pre-validated Excel file to me to complete the assignment. Please correct your
Part 1 entries/statements after viewing the case study review video materials and before
submitting Part 2 during Week 4. You are welcome to work together on this, but I
expect each individual to submit their own spreadsheet file. I am looking for a good
faith effort to create the entries and statements.
The Excel file contains 4 tabs – Tab 1 lists the journal entry titles and provides space for
t-accounts, or whatever you want to use as worksheets. These are not required for
submission, but could be useful in determining partial credit. Tabs 2, 3, and 4 align with
the major components of the case study – where you will provide journal entries and
statements for each. These are required. Please read the instructions carefully. You
are welcome to format (e.g. ,add/delete columns/rows, adjust column/row size, etc as
you see fit (just don’t inadvertently delete any of the potential line item titles, which I
have provided at each tab for easy reference.

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Federal Accounting

DEPARTMENT OF MONITORING

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