AGA Today
Federal
Accounting Corner
Cumulative Accounts
Treasury has set up the Standard General Ledger (SGL) and posting logic
for their own purposes, primarily to prepare financial statements for
the federal government as a whole. Many agencies have reporting or
control needs that require significantly different posting logic. The
trick is to come up with a chart of accounts and posting model that
meets the agency's needs but does not unduly hamper the preparation of
SGL-based reports.
Spending Example
Spending—that is commitments, obligations and expenditures—have to occur
at the lowest level for which there is funds control. I know allotment
managers and their superiors who would like to get spending reports
directly out of the trial balance. They want to know how much is
available, spent including commitments, and spent excluding commitments.
The available is generally the balance of 4610 Allotments - Realized
Resources, which is already on the trial balance. However, to get
spending (without commitments), they have to add up 4801, 4802, 4901 and
4902. In an expired fund, they have to also include 4871, 4872, 4881,
4882, 4971, 4972, 4981 and 4982. Then they have to add 4700 to get the
spending with commitments. Before adopting the SGL, these managers had
accounts that gave them the number directly, without adding several of
them together.
Because
these cumulative accounts would almost triple the spending balances, the
only way to get the budgetary accounts to support them is to clutter up
the chart of accounts with the cumulative account and an offset account,
such as 4710 Cumulative Commitments and 4711 Cumulative Commitments
Offset. A more parsimonious approach to meet this need is to use
statistical accounts. The agency could set up 9470 Cumulative
Commitments and 9480 Cumulative Obligations. If the accounting system
does not support single-sided entries for statistical accounts, then the
agency also has to set up an offset account, say 9400 Spending Offset.
The
commitment entries would include debit 9470 (credit 9400 if needed) in
addition to the SGL posting, for example, debit 4610 credit 4700. The
obligation entries would include debit 9470 and 9480 (credit 9400 if
needed) in addition to the SGL posting, for example, debit 4610 credit
4801. Not all entries that post to the SGL spending accounts need to
post to these statistical accounts. For example, issuing an advance that
includes the entry debit 4801 credit 4802 has no effect on cumulative
obligations, as does an entry to expend an obligation with debit 4801
credit 4901. An entry to obligate commitments (debit 4700 credit 4801)
or expend commitments (debit 4700 credit 4901) would require a posting
to 9480 but not to 9470.
To check
that the balance in these statistical accounts are proper, they can be
merged with the balances of 4700 through 4982 (for 9470) or 4801 through
4982 (for 9480). Since the statistical accounts have normal debit
balances and the spending accounts (in toto) have normal credit
balances, the merged balance should be zero. This test would have to be
performed at the same budget level as the managers who use the
statistical accounts.
Cash
Example
Similar to the above example, some agencies want their managers to look
at the whole trial balance, and not just their budget. Proprietary
accounts like advances (1410) and cash disbursed (1010) can normally be
picked up, since the documents that record them have the entire
accounting distribution. However, the apportionment and allotment
documents don't post cash, so managers can't see what their actual cash
balance is. To address this, some agencies have added cash and equity to
the lower-level budget postings.
One
approach would be to break 1010 Fund Balance with Treasury down by
budget level:
1010.1
Appropriated Cash
1010.2
Apportioned Cash
1010.3
Allotted Cash
1010.4
Suballotted Cash
A
similar breakout is needed for the 3101 account on the equity side. Now,
if the postings just include the cash and equity for their level (for
example, if the Apportionment debits 1010.02 and credits 3101.02 after
the Appropriation debited 1010.01 and credited 3101.01), then cash and
equity balances would become inflated. However, if each level backs out
the postings for the level above it (for example, if the suballotment
debits 1010.04 and 3101.03, and credits 1010.03 and 3101.04), then most
cash will show a net zero balance. If the trial balance selects only the
appropriate cash account (an allotment manager just sees 1010.03), then
the upper levels will all show zero balances once their funds have been
distributed to the lower levels. If the system shows all accounts for a
given accounting distribution, then the balance sheet for the
organization is going to show the cash and equity into that level equal
to the cash and equity backed out from the level above, for a net of
zero. The trial balance report would have to select based on both
accounting distribution and GL account to provide meaningful data.
However,
statistical accounts can be used to simplify the issue, since they do
not require backing out the previous postings. The statistical accounts
could be set up as follows:
|
9101 |
Apportioned Cash |
9311 |
Apportioned Appropriations Received |
|
9102 |
Allotted Cash |
9312 |
Allotted Appropriations Received |
|
9103 |
Suballotted Cash |
9313 |
Suballotted Appropriations Received |
There's
no need to record appropriated cash, since the warrant is recorded at
that level in the SGL. Each lower level would only post its own
accounts; there's no need to back out the previous level. For example,
the suballotment would debit 9104 and credit 9314 in addition to the
regular budgetary posting. Because both cash and equity are being
carried down to the lower budget levels, there is no need for
single-sided postings as there was in the spending example.
Conclusion
Statistical general ledger accounts can be used to combine balances from
several SGL accounts or to assign them simultaneously to several
different accounting distributions. Since debits do not have to equal
credits for statistical accounts, there is no need to come up with
convoluted posting logic to prevent account balances from being doubled
or tripled as they cumulate or duplicate data posted to other accounts.
—by Simcha Kuritzky, CGFM, CPA
This column is provided as part of a
free exchange of ideas in federal accounting, and is not reviewed
substantively before publication. Please send all comments, queries, or
corrections to Simcha.Kuritzky@CGIFederal.com