######### FINAL DRAFT GUIDE FOR BASIC ACCOUNTING AND REPORTING

**FOR LOAN GUARANTEE PROGRAMS**

**WITHOUT COLLATERAL**

**IN FEDERAL CREDIT PROGRAM**

## July 2004

**PREPARED BY:**

**UNITED STATES STANDARD GENERAL LEDGER DIVISION**

**ACCOUNTING SYSTEMS AND STANDARDS DIRECTORATE**

**GOVERNMENTWIDE ACCOUNTING**

**FINANCIAL MANAGEMENT SERVICE**

**U.S. DEPARTMENT OF TREASURY**

Version History

  ------------ ------------- -----------------------------------------------
  **Version\   **Date**      **Description of Change**
  Number**                   

  1.0          03/14/06      Corrected memorandum entries for Transaction
                             1-6, 1-9, 1-17. 88XX transactions were
                             transposed.

                             
  ------------ ------------- -----------------------------------------------

## TABLE OF CONTENTS

[OVERVIEW 2](#overview)

[CONCEPTUAL FRAMEWORK 6](#conceptual-framework)

[ACCOUNT TABLES 7](#account-tables)

[TRANSACTIONS YEAR 1 16](#transactions-year-1)

[FINANCIAL STATEMENTS YEAR 1 39](#financial-statements-year-1)

[TRANSACTIONS YEAR 2 49](#transactions-year-2)

[FINANCIAL STATEMENTS YEAR 2 56](#financial-statements-year-2)

[APPENDIX 1: ACCOUNTING FOR MANDATORY LOAN GUARANTEE PROGRAMS
62](#appendix-1-accounting-for-mandatory-loan-guarantee-programs)

[APPENDIX 2: ACCOUNTING FOR DOWNWARD RE-ESTIMATESIN DISCRETIONARY AND
MANDATORY LOAN GUARANTEE PROGRAMS
68](#appendix-2-accounting-for-downward-re-estimatesin-discretionary-and-mandatory-loan-guarantee-programs)

[APPENDIX 3: REFERENCES 83](#appendix-3-references)

# OVERVIEW

This guide is designed for those who:

-   Formulate and execute Federal credit program budgets, including
    accounting for assets, liabilities, net position, income, and
    expenses, and budgetary resources;

-   Prepare agency financial statements;

-   Audit the agency financial statements;

-   Manage or provide service to participants in loan guarantee
    programs;

-   Design and maintain computer systems for financial programs;

-   Instruct others in basic accounting and reporting for loan guarantee
    programs without collateral.

The guide is illustrative, rather than authoritative, and is categorized
as "other accounting literature" in the hierarchy of accounting
principles for Federal entities.[^1] It supersedes the original and
subsequent loan guarantee scenarios. Users may download the guide from
the Financial Management Service (FMS) Web site at
www.fms.treas.gov/ussgl.

In order to understand and gain the most from the guide, users must have
a working knowledge of the following:

-   Budgetary and proprietary accounting, reporting, and terminology;

-   The United States Government Standard General Ledger (USSGL)
    accounts for basic annual operating appropriations and revolving
    funds; AND

```{=html}
<!-- -->
```
-   The Credit Reform Act and other requirements established by the Act;

-   The concepts of Federal credit program accounting and reporting,
    fund structures, and terminology.

This guide is a study in accounting and reporting for a discretionary
loan guarantee program under the Federal Credit Reform Act of 1990, as
amended, for loan guarantees obligated after September 30, 1991. Loan
guarantees are any guarantee, insurance, or other pledge for the payment
of all or a part of the principal or interest on any debt obligation of
a non-Federal borrower to a non-Federal lender, except for the insurance
of deposits, shares, or other withdrawals in financial institutions.
Loans that are financed by the Federal Financing Board pursuant to
agency loan guarantee authority are treated as direct loans rather than
loan guarantees.[^2]

Transactions are presented over a 1-year period (fiscal year 1) for a
fictitious Federal agency with a single loan guarantee program with no
risk categories. Transactions for fiscal year 2 show the disposition of
the re-estimated subsidy accrued in fiscal year 1. Common transactions
and reports are covered in addition to transactions unique to Federal
credit program accounting. However, since accounting for accruals and
undelivered orders with advances are not unique to credit reform
accounting, they are not presented. In addition, transactions involving
collateral are excluded, since they are covered in a separate guide.
Entries are made in general journal form, using USSGL accounts, and are
summarized in trial balances for each year.

The transactions covered are:

-   Formulation, apportionment, and allotment of the budget;

-   Receipt of subsidy and administrative expense appropriations;

-   Payment of administrative expenses;[^3]

-   Commitment to make loan guarantees;

-   Transfer of subsidy from the program to the financing fund;

-   Collection of guarantee fees;

-   Payment of interest supplements;

-   Payment of default claims

-   Assuming defaulted guaranteed loans and interest for direct
    collection

-   Collection of loan principal and interest on defaulted guaranteed
    loans;

-   Modification of guarantee terms, with resulting adjustment to
    program level;

-   Collection of interest from Treasury;

-   Accrual of interest from borrowers;

-   Writeoff of bad debts without receiving collateral;

-   Recording the interest accumulation factor on the loan guarantee
    liability and loan assets;

-   Recording of data on guaranteed loans supplied by third-party
    lenders;

-   Accrual and receipt or disbursement of upward subsidy re-estimates
    and related interest; AND

```{=html}
<!-- -->
```
-   Closing entries.

While financing funds may borrow money if there is not enough Fund
Balance With Treasury to meet requirements for disbursements, in
general, financing funds obtain money for disbursements primarily from:

-   Offsetting collections, including those from the program fund (for
    basic and upward re-estimated subsidy);

-   Treasury (for interest); AND

```{=html}
<!-- -->
```
-   Non-Federal sources (such as guarantee fees from program
    participants or collections of defaulted guaranteed loan principal
    and interest from borrowers). For borrowing authority transactions,
    see the Direct Loan Guide.[^4]

The yearend agency reports are listed below:

-   Balance Sheet;

-   Statement of Net Cost;

-   Statement of Changes in Net Position;

-   Statement of Budgetary Resources;

-   Statement of Financing;

-   FMS 2108: Yearend Closing Statement;

-   Program and Financing Schedule; AND

```{=html}
<!-- -->
```
-   Credit Program Footnote (including the Schedule of Changes in the
    Allowance for Subsidy).

An SF 132: Apportionment and Reapportionment Schedule report is
furnished at the beginning of each year.

This guide includes three appendices. Appendix 1 discusses basic
differences encountered in mandatory programs. Appendix 2 provides the
recording and reporting for downward reestimates of subsidy for both a
discretionary and a mandatory program. Appendix 3 provides a listing of
key references related to credit program accounting. If the references
change, this document will be updated accordingly and published on the
FMS Web site at www.fms.treas.gov/ussgl.

Users may send questions to the FMS Web site at www.fms.treas.gov/GL by
using the online USSGL Issue Form. This Web site also provides a list of
the USSGL representatives and their telephone numbers. Users may contact
the Director, USSGL Division, FMS, for information through the Lotus
e-mail system.

# CONCEPTUAL FRAMEWORK

This guide uses numbers and titles for USSGL accounts. When necessary,
titles for USSGL accounts are expanded by using brackets to capture,
clarify, or add specific information, for illustrative purposes only.
For example, administrative expense, "\[Administrative Expense\]" is
included after the title for USSGL 6100 account, "Operating
Expenses/Program Costs." In the same manner, for interest supplement
expense, "\[Interest Supplement\]," is included after the title for the
USSGL 6100 account. The USSGL Supplement, Section II, contains
definitions for USSGL accounts.

Entries are in general journal form, using USSGL accounts, and are
summarized in trial balances for each year. Note that the financing fund
is used only in the transactions for Post-Credit Reform scenarios, and
the liquidating fund is used only in the transactions for Pre-Credit
Reform scenarios.

USSGL accounts that, by themselves, do not directly provide the
reporting that is illustrated, are supplemented with additional detail.
The entries made and the method chosen to illustrate the detail provide
only one-way of accounting. Agencies may have other ways of structuring
their ledgers and making journal entries to accomplish the same result.

# ACCOUNT TABLES

The following tables identify the accounts used in the guide to record
transactions and prepare reports. Since the transactions are not
comprehensive, the tables do not contain all accounts that agencies may
use in day-to-day activities.

+-----------------------------------------------------------------------+
| **PROGRAM FUND BUDGETARY ACCOUNTS**                                   |
|                                                                       |
| **RESOURCES**                                                         |
|                                                                       |
| [Anticipated]{.underline}                                             |
|                                                                       |
| 4120 Appropriations Anticipated - Indefinite                          |
|                                                                       |
| [Realized]{.underline}                                                |
|                                                                       |
| 4115 Loan Subsidy Appropriation                                       |
|                                                                       |
| 4117 Loan Administrative Expense Appropriation                        |
|                                                                       |
| 4118 Reestimated Loan Subsidy Appropriation                           |
|                                                                       |
| 4201 Total Actual Resources-Collected                                 |
|                                                                       |
| **STATUS OF RESOURCES**                                               |
|                                                                       |
| > [Unobligated]{.underline}                                           |
| >                                                                     |
| > 4450 Unapportioned Authority                                        |
| >                                                                     |
| > 4510 Apportionments                                                 |
| >                                                                     |
| > 4590 Apportionments Unavailable - Anticipated Resources             |
| >                                                                     |
| > 4610 Allotments - Realized Resources                                |
| >                                                                     |
| > 4650 Allotments - Expired Authority                                 |
| >                                                                     |
| > [Obligated]{.underline}                                             |
| >                                                                     |
| > 4801 Undelivered Orders -- Obligations, Unpaid                      |
| >                                                                     |
| > 4902 Delivered Orders -- Obligations, Paid \[Re-estimated Subsidy   |
| > and Interest\]                                                      |
| >                                                                     |
| > 4902 Delivered Orders -- Obligations, Paid \[Other\]                |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| **PROGRAM FUND PROPRIETARY ACCOUNTS**                                 |
|                                                                       |
| **ASSETS**                                                            |
|                                                                       |
| 1010 Fund Balance With Treasury                                       |
|                                                                       |
| 1310 Accounts Receivable Subsidy Receivable From Financing Fund       |
|                                                                       |
| **LIABILITIES**                                                       |
|                                                                       |
| 2170 Subsidy Payable to Financing Account                             |
|                                                                       |
| **NET POSITION**                                                      |
|                                                                       |
| 3100 Unexpended Appropriations - Cumulative                           |
|                                                                       |
| 3101 Unexpended Appropriations -- Appropriations Received             |
|                                                                       |
| 3107 Unexpended Appropriations - Used                                 |
|                                                                       |
| 3310 Cumulative Results of Operations                                 |
|                                                                       |
| **FINANCING SOURCES**                                                 |
|                                                                       |
| 5700 Expended Appropriations                                          |
|                                                                       |
| **EXPENSES**                                                          |
|                                                                       |
| 6100 Operating Expenses/Program Costs \[Administrative Expense\]      |
|                                                                       |
| 6100 Operating Expenses/Program Costs \[Basic and Modified Subsidy\]  |
|                                                                       |
| 6800 Future Funded Expenses \[Subsidy Re-estimate -- Technical\][^5]  |
|                                                                       |
| 6800 Future Funded Expenses \[Subsidy Re-estimate - Interest Rate\]   |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| **FINANCING FUND BUDGETARY ACCOUNTS**                                 |
|                                                                       |
| **RESOURCES**                                                         |
|                                                                       |
| [Anticipated]{.underline}                                             |
|                                                                       |
| 4060 Anticipated Collections From Non-Federal Sources                 |
|                                                                       |
| 4070 Anticipated Collections From Federal Sources                     |
|                                                                       |
| > [Realized]{.underline}                                              |
| >                                                                     |
| > 4201 Total Actual Resources - Collected                             |
| >                                                                     |
| > 4221 Unfilled Customer Orders Without Advance                       |
| >                                                                     |
| > 4261 Actual Collection of Business-Type Fees                        |
| >                                                                     |
| > 4262 Actual Collection of Loan Principal                            |
| >                                                                     |
| > 4263 Actual Collection of Loan Interest                             |
| >                                                                     |
| > 4271 Actual Program Fund Subsidy Collected                          |
| >                                                                     |
| > 4273 Interest Collected From Treasury                               |
|                                                                       |
| **STATUS OF RESOURCES**                                               |
|                                                                       |
| > [Unobligated]{.underline}                                           |
| >                                                                     |
| > 4450 Unapportioned Authority                                        |
| >                                                                     |
| > 4510 Apportionments                                                 |
| >                                                                     |
| > 4590 Apportionments Unavailable - Anticipated Resources             |
| >                                                                     |
| > 4610 Allotments - Realized Resources                                |
|                                                                       |
| [Obligated]{.underline}                                               |
|                                                                       |
| 4801 Undelivered Orders -- Obligations, Unpaid                        |
|                                                                       |
| 4902 Delivered Orders -- Obligations, Paid \[Other\]                  |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| **FINANCING FUND PROPRIETARY ACCOUNTS**                               |
|                                                                       |
| **ASSETS**                                                            |
|                                                                       |
| 1010 Fund Balance With Treasury                                       |
|                                                                       |
| 1310 Accounts Receivable \[Subsidy Receivable From Program Fund\]     |
|                                                                       |
| \*1340 Interest Receivable \[Defaulted Guaranteed Loans\]             |
|                                                                       |
| 1350 Loans Receivable \[Defaulted Guaranteed\]                        |
|                                                                       |
| 1399 Allowance for Subsidy \[Defaulted Guaranteed Loan Assets\]       |
|                                                                       |
| **LIABILITIES**                                                       |
|                                                                       |
| 2180 Loan Guarantee Liability                                         |
|                                                                       |
| 2190 Other Accrued Liabilities \[Subsidy Payable to Misc. Receipt     |
| Account\]                                                             |
|                                                                       |
| 2190 Other Accrued Liabilities \[Subsidy Payable to Program Fund\]    |
|                                                                       |
| **NET POSITION**                                                      |
|                                                                       |
| [^6]3310 Cumulative Results of Operations                             |
|                                                                       |
| **FINANCING SOURCES**                                                 |
|                                                                       |
| [^7]5312 Interest Revenue -- Loans Receivable/Uninvested Funds        |
| \[Treasury\]                                                          |
|                                                                       |
| 5730 Financing Sources Transferred Out Without Reimbursement          |
| \[Non-Budgetary\]                                                     |
|                                                                       |
| **EXPENSES**                                                          |
|                                                                       |
| 6330 Other Interest Expenses \[Interest Accumulation Factor on        |
| Present Value of Loan Guarantee Liability\]                           |
|                                                                       |
| 6790 Other Expenses Not Requiring Budgetary Resources \[Interest      |
| Accumulation Factor on Present Value of Assets\]                      |
|                                                                       |
| \*It may be necessary for Agencies to separately report Credit Reform |
| loans receivable, interest receivable, foreclosed property and the    |
| related allowance for subsidy between those related to direct loans   |
| and those related to loan guarantees. Agencies may do this by using   |
| fund symbols or attributes associated with the USSGL accounts         |
| involved. This guide provides the basic USSGL accounts involved, and  |
| uses brackets to add information to the titles for the USSGL          |
| accounts.                                                             |
+-----------------------------------------------------------------------+
| **FINANCING FUND MEMORANDUM ACCOUNTS**                                |
|                                                                       |
| **FOR THE LOAN GUARANTEE LEVEL AND STATUS**                           |
|                                                                       |
| **Accounts and Normal Balances**                                      |
|                                                                       |
| 8010 Guaranteed Loan Level (Normal Balance Dr.)                       |
|                                                                       |
| 8015 Guaranteed Loan Level - Unapportioned (Cr.)                      |
|                                                                       |
| 8020 Guaranteed Loan Level - Apportioned (Cr.)\*                      |
|                                                                       |
| 8040 Guaranteed Loan Level - Used Authority (Cr.)                     |
|                                                                       |
| 8045 Guaranteed Loan Level - Unused Authority (Cr.)                   |
|                                                                       |
| **Conceptual Framework**                                              |
|                                                                       |
| Pre-closing equation: 8010 = 8015 + 8020 + 8040 + 8045.               |
|                                                                       |
| Post-closing equation: 8010 = 8040 + 8045                             |
|                                                                       |
| \*While there are reporting requirements for agencies to track only   |
| the amount of the guaranteed loan level that is apportioned or        |
| unapportioned, the USSGL reserves three accounts 8025, 8030, and 8035 |
| for agencies to track the status in more detail for committed and     |
| obligated amounts. This guide uses only the minimum number of         |
| accounts needed.                                                      |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| ## FINANCING FUND MEMORANDUM ACCOUNTS                                 |
|                                                                       |
| **TO REPORT ACTIVITY IN THE LOAN GUARANTEE LIABILITY**                |
|                                                                       |
| [Beginning and Contra Balances]{.underline} [Normal                   |
| Balance]{.underline}                                                  |
|                                                                       |
| 9XXA Loan Guarantee Liability - Beginning Balance Dr. (negative) or   |
| Cr. (positive)                                                        |
|                                                                       |
| 9XXB Loan Guarantee Liability - Contra Dr. (positive) or Cr.          |
| (negative)                                                            |
|                                                                       |
| [Basic Subsidy]{.underline}                                           |
|                                                                       |
| 9XXC Loan Guarantee Liability - Basic Subsidy Expense - Interest      |
| Supplements Cr.                                                       |
|                                                                       |
| 9XXD Loan Guarantee Liability - Basic Subsidy Expense - Defaults Cr.  |
|                                                                       |
| 9XXE Loan Guarantee Liability - Basic Subsidy Expense - Fees and      |
| Other Collections Dr.                                                 |
|                                                                       |
| [Adjustments]{.underline}                                             |
|                                                                       |
| 9XXF Loan Guarantee Liability - Adj - Guarantee Modifications Dr.     |
| (Downward) or Cr. (Upwd)                                              |
|                                                                       |
| 9XXG Loan Guarantee Liability - Adj - Fees Received Cr.               |
|                                                                       |
| 9XXH Loan Guarantee Liability - Adj - Interest Supplements Paid Dr.   |
|                                                                       |
| 9XXI Loan Guarantee Liability - Adj - Foreclosed Property and Loans   |
| Acquired Cr.                                                          |
|                                                                       |
| 9XXJ Loan Guarantee Liability - Adj - Claim Payments to Lenders Dr.   |
|                                                                       |
| 9XXK Loan Guarantee Liability - Adj - Interest Accumulation Dr.       |
| (negative) or Cr. (positive)                                          |
|                                                                       |
| [Re-estimates]{.underline}                                            |
|                                                                       |
| 9XXL Loan Guarantee Liability - Subsidy Re-estimates - Int. . Rate    |
| Dr. (Dnwd) or Cr. (Upwd)                                              |
|                                                                       |
| 9XXM Loan Guarantee Liability - Subsidy Re-estimates - Other Dr.      |
| (Dnwd) or Cr. (Upwd)                                                  |
|                                                                       |
| **Conceptual Framework**                                              |
|                                                                       |
| Pre-closing: 9XXA+ 9XXC+ 9XXF+9XXL = 9XXB                             |
|                                                                       |
| Post-closing: 9XXA = 9XXB                                             |
|                                                                       |
| Note: These accounts assist in the detailing activity in account      |
| 2180, Loan Guarantee Liability, and are used to produce the schedule  |
| of changes in the liability. These accounts are not in the USSGL      |
| chart of accounts. Since there is no requirement to report comparably |
| detailed activity in USSGL account 1399 related to defaulted          |
| guaranteed loans (as opposed to USSGL account 1399 related to direct  |
| loans), no accounts or transactions are provided for it in Foreclosed |
| Property Guide.                                                       |
+-----------------------------------------------------------------------+

LOAN GUARANTEE PROGRAMS

**FISCAL YEAR 1**

The loan guarantee Agency has been authorized to guarantee loans
beginning in fiscal year 1. It has authority to guarantee 100 percent of
the principal and related interest of \$100,000 in loans. The agency has
a single, discretionary loan guarantee program with no risk
categories.[^8] For fiscal year 1, Congress has authorized annual
appropriations for basic subsidy, modified subsidy, and administrative
expenses and provided that the program is subject to the Credit Reform
Act of 1990, as amended.

# 

## TRANSACTIONS TO BE RECORDED IN THE PROGRAM FUND

1.  The agency's subsidy model indicated that, for the \$100,000 of loan
    guarantees, a 21.5 percent subsidy was indicated as follows:

> • Present value of expected defaults is 20 percent, or \$20,000;
>
> • Present value of guarantee fees to be collected is \$500 (all
> anticipated this year), or --(.5) percent; and
>
> • Present value of interest supplements to be paid to third-party
> lenders as loans are guaranteed, to buy down interest rates, is 2
> percent or \$2,000.

2.  The agency has appropriated administrative expenses for fiscal year
    1 in the amount of \$5,000.

3.  The agency estimates the following financing fund collections for
    the year:

> • \$21,500 of subsidy from the program fund;
>
> • \$1,200 of interest from Treasury on unused balances in the
> financing fund;
>
> • \$510[^9] for program participants for guarantee fees; and
>
> • \$50 for principal and \$200 for interest on defaulted guaranteed
> loans.

4.  The agency expects to use financing fund resources as follows:

> • \$3,500 for payment of default claims; and
>
> • \$2,000 for payment of interest supplements.

Based on the above information the agency has prepared the following
requests for apportionment:

Loan Guarantee Agency

**SF 132 Apportionment/Reapportionment Schedule**

######## Fiscal Year 1

######### Program Level 

######### Guaranteed Loan Level

Current Year: 100,000

**Budgetary Resources** **Program Fund Financing Fund**

Budget authority:

1A. Appropriations [26,500]{.underline}

3C. Anticipated for rest of year without advance [23,460]{.underline}

7\. Total budgetary resources 26,500 23,460

**Application of Budgetary Resources**

Budget authority:

Category B:

8B1. Direct loan subsidy 21,500

8B1. Defaults 3,500

8B2. Administrative expense 5,000

8B2. Interest supplements 2,000

11\. Unapportioned balance of revolving fund [17,960]{.underline}

12\. Total budgetary resources 26,500 23,460

# TRANSACTIONS YEAR 1

1.  **To record enactment of appropriation.** *(TC A104, A142, E102)*

*[Program Fund]{.underline}*

4115 Loan Subsidy Appropriation 21,500

4117 Loan Administrative Expense Appropriation 5,000

4450 Unapportioned Authority 26,500

1010 Fund Balance With Treasury 26,500

3101 Unexpended Appropriations -- Appropriations Received 26,500

##### [Financing Fund]{.underline}

4060 Anticipated Collections from Non-Federal Sources 760

4070 Anticipated Collections from Federal Sources 22,700

4450 Unapportioned Authority 23,460

##### [Memorandum Accounts - Loan Guarantee Level]{.underline}[^10]

8010 Guaranteed Loan Level 100,000

8015 Guaranteed Loan Level - Unapportioned 100,000

2.  **OMB approved the agency's request for apportionment, and the
    agency recorded the apportionment.** *(TC A116, A116CR, A118CR,
    E104)*

##### [Program Fund]{.underline}

4450 Unapportioned Authority 26,500

4510 Apportionments 26,500

##### [Financing Fund]{.underline}[^11]

4450 Unapportioned Authority 5,500

4590 Apportionments Unavailable - Anticipated Resources 5,500

##### [Memorandum Accounts - Loan Guarantee Level]{.underline} 

#### 8015 Guaranteed Loan Level - Unapportioned 100,000

8020 Guaranteed Loan Level - Apportioned 100,000

**1-3 Issued a blanket authorization to allot anticipated resources as
they were realized, not to exceed the amount of the apportionment**.
*(TC A120)*

*[Program Fund]{.underline}*

4510 Apportionments 26,500

4610 Allotments - Realized Resources 26,500

*[Financing Fund]{.underline}*

None (there are no realized resources to allot. All resources are
anticipated.)[^12]

**1-4. The agency paid administrative expenses of \$4,950. It placed no
undelivered orders nor made accruals before payment.** *(TC B106, B134)*

*[Program Fund]{.underline}*

4610 Allotments - Realized Resources 4,950

4902 Delivered Orders -- Obligations, Paid \[Other\] 4,950

6100 Operating Expenses/Program Costs \[Administrative Expenses\] 4,950

1010 Fund Balance With Treasury 4,950

3107 Unexpended Appropriations - Used 4,950

5700 Expended Appropriations 4,950

**1-5. The agency agreed to make \$90,000 in guarantees, subject to the
third-party lenders and their borrowers meeting conditions placed on
them.** *(TC B204R, new, A122, E106)*

**Obligated subsidy to be transferred to financing fund.**

*[Program Fund]{.underline}*[^13]

4610 Allotments - Realized Resources 19,350

######  4801 Undelivered Orders -- Obligations, Unpaid 19,350

To recognize the subsidy to be transferred from the program fund.

##### [Financing Fund]{.underline}

4221 Unfilled Customer Orders Without Advance 19,350

4070 Anticipated Collections From Federal Sources 19,350

**To record allotment.**[^14]

4590 Apportionments Unavailable - Anticipated Resources 5,500

4610 Allotments - Realized Resources 5,500

*[Memorandum Accounts - Loan Guarantee Level]{.underline}*

8020 Guaranteed Loan Level - Apportioned 90,000

8040 Guaranteed Loan Level -- Used Authority 90,000

**1-6. Third-party lenders disbursed \$87,000 of the guaranteed loans,
and the agency transferred subsidy from the program to the financing
fund.** *(A146, B134, C104, E108)*

**To record payment of subsidy to financing fund.**

*[Program Fund]{.underline}*[^15]

4801 Undelivered Orders -- Obligations, Unpaid 18,705

4902 Delivered Orders -- Obligations, Paid \[Other\] 18,705

#### 6100 Operating Expenses/Program Costs

####  \[Basic and Modified Subsidy Expense\] 18,705

1010 Fund Balance With Treasury 18,705

3107 Unexpended Appropriations - Used 18,705

5700 Expended Appropriations 18,705

*[Financing Fund]{.underline}*[^16]

4271 Actual Program Fund Subsidy Collected 18,705

######  4221 Unfilled Customer Orders Without Advance 18,705

#### 1010 Fund Balance With Treasury 18,705

2180 Loan Guarantee Liability 18,705

*[Memorandum Accounts - Loans Disbursed]{.underline}*

8050 Guaranteed Loan Principal Outstanding 87,000

8053 Guaranteed Loan New Disbursements by Lender 87,000

*[Memorandum Accounts - Loan Guarantee Liability (LGL)
Activity]{.underline}*[^17]

9XXB LGL - Contra 18,705

9XXE LGL - Basic Subsidy - Fees & Other Coll. 435

######  9XXC LGL - Basic Subsidy - Interest Supplements. 1,740

######  9XXD LGL - Basic Subsidy - Defaults 17,400

**1-7. The agency collected fees of \$480 from the program participants
as a condition of making the guarantees.** (C117)

**To record collection of fees.**

*[Financing Fund]{.underline}*

#### 4261 Actual Collection of Business-Type Fees 480

######  4060 Anticipated Collections from Non-Federal Sources 480

1010 Fund Balance With Treasury 480

> 2180 Loan Guarantee Liability 480

*[Memorandum Accounts - Loan Guarantee Liability (LGL)
Activity]{.underline}*

#### 9XXB LGL - Contra 480

######  9XXG LGL - Adjustments - Fees Received 480

**1-8. The agency paid interest supplements of \$1,940 to the third
party-lenders. It had made no previous accrual.** (TC B104)

*[Financing Fund]{.underline}*

#### 4610 Allotments - Realized Resources 1,940

4902 Delivered Orders -- Obligations, Paid \[Other\] 1,940

2180 Loan Guarantee Liability 1,940

1010 Fund Balance With Treasury 1,940

*[Memorandum Accounts - Loan Guarantee Liability (LGL)
Activity]{.underline}*

#### 9XXH LGL - Adjustments - Interest Supplements Paid 1,940

9XXB LGL - Contra 1,940

***\*\*\*\*\*Though separated here for purposes of illustration,
agencies would normally record transactions 1-6 - 1-8
simultaneously.\*\*\*\*\*\****

**1-9. The agency paid third-party lender claims of \$3,500 for
defaulted loan principal.** *(B104, E110)*

##### [Financing Fund]{.underline}

4610 Allotments -- Realized Resources 3,500

4902 Delivered Orders -- Obligations, Paid \[Other\] 3,500

#### 2180 Loan Guarantee Liability 3,500

1010 Fund Balance with Treasury 3,500

*[Memorandum Accounts - Loans Disbursed]{.underline}*

8065 Guaranteed Loan Collections, Defaults, and Adjustments 3,500

####  8050 Guaranteed Loan Principal Outstanding 3,500

*[Memorandum Accounts - Loan Guarantee Liability (LGL)
Activity]{.underline}*

9XXJ LGL - Adjustments - Claim Payments to Lenders 3,500

9XXB LGL - Contra 3,500

**1-10. The agency acquired receivables for loans of \$3,500 and
interest of \$1,250 in conjunction with the defaults. The agency will
attempt to collect this money directly from the borrowers. The present
value of cash flows related to the loans is estimated to be \$3,000.**
*(TC C220)*

**To establish accounts receivable for defaulted loan.**

*[Financing Fund]{.underline}*[^18]

1340 Interest Receivable \[Defaulted Guaranteed Loans\] 1,250

1350 Loans Receivable \[Defaulted Guaranteed Loans\] 3,500

1399 Allow. for Subs. \[Defaulted Guaranteed Loans\] 1,750

2180 Loan Guarantee Liability 3,000

*[Memorandum Accounts - Loan Guarantee Liability (LGL)
Activity]{.underline}*

9XXB LGL - Contra 3,000

######  9XXI LGL - Adj - Foreclosed Property and Loans Acquired 3,000

\* \* \* \* \* Though separated here for illustrative purposes, agencies
would normally record transactions 1-9 and 1-10 simultaneously. \* \* \*
\* \*

**1-11. The agency collected principal of \$40 and interest of \$200
were collected on the loans acquired in transaction 1-10.** *(TC C109)*

*[Financing Fund]{.underline}*[^19]

4262 Actual Collection of Loan Principal 40

4263 Actual Collection of Loan Interest 200

4060 Anticipated Collections From Non-federal Sources 240

> 1010 Fund Balance With Treasury 240

1340 Interest Receivable \[Defaulted Guaranteed Loans\] 200

> 1350 Loans Receivable \[Defaulted Guaranteed\] 40

**1-12. After consultation and agreement with OMB, the agency decided to
exercise a clause in the program's legislation allowing it to modify the
terms of some of the guarantees because of economic downtrends, reducing
the present value of those guarantees by \$1,000.**[^20] **The agency
transferred \$1,000 from the program fund to the financing fund and
reduced the authorized loan guarantee level from \$100,000 to
\$95,349.**[^21]

**The agency submitted a new request for apportionment (SF-132) for the
financing fund, showing the reduced loan guarantee level, and OMB
approved it.**[^22]**^,^ Since the agency had already apportioned
subsidy monies in the program fund, a new request for apportionment of
program fund resources is not required.**

**Loan Guarantee Agency**

**SF 132 Apportionment/Reapportionment Schedule**

**Fiscal Year 1**

######### Program Level 

> **Guaranteed Loan Level**
>
> Current Year: 95,349

+--------------------------------------------------+-------------------+
| Budgetary Resources                              | Financing Fund    |
+--------------------------------------------------+-------------------+
| **Budget authority:**                            | 19,425            |
|                                                  |                   |
| Spending authority from offsetting collections   | [4                |
| (gross):                                         | ,035]{.underline} |
|                                                  |                   |
| 3A1. Receivable from Federal source              | 23,460            |
|                                                  |                   |
| 3C. Anticipated for rest of year without advance |                   |
|                                                  |                   |
| 7\. Total budgetary resources                    |                   |
+--------------------------------------------------+-------------------+
| Application of Budgetary Resources               | Financing Fund    |
+--------------------------------------------------+-------------------+
| **Budget authority:**                            | 3,500             |
|                                                  |                   |
| Category B:                                      | 2,000             |
|                                                  |                   |
| 8B1. Defaults                                    | [17               |
|                                                  | ,960]{.underline} |
| 8B2. Interest supplements                        |                   |
|                                                  | 23,460            |
| 11\. Unapportioned balance of revolving fund     |                   |
|                                                  |                   |
| 12\. Total budgetary resources                   |                   |
+--------------------------------------------------+-------------------+

-   *OMB Circular No. A-11, (June 2003) Section 185.20, Capital
    transfers and redemption of debt (line 6C) are not obligations and
    therefore do not need to be apportioned on line 8. However, you do
    need to plan for repayments and show your estimated debt repayments
    as a negative on line 6C when you submit your SF 132.*

-   *OMB Circular No. A-11, (June 2003) Section 185.19, for financing
    accounts, additional interest payment amounts to Treasury (i.e.
    amounts exceeding your estimate on the most recent approved
    apportionment) are automatically apportioned.*

*\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--*

**1-12. Transactions for 1--12** *(B104, B106, C104, B134)*

**To transfer funds to financing funds for modification.**

*[Program Fund]{.underline}*

#### 4610 Allotments - Realized Resources 1,000

4902 Delivered Orders -- Obligations, Paid \[Other\] 1,000

6100 Operating Expenses/Program Costs

> \[Basic and Modified Subsidy Expense\] 1,000

1010 Fund Balance With Treasury 1,000

3107 Unexpended Appropriations - Used 1,000

5700 Expended Appropriations 1,000

To record collection from program fund.

*[Financing Fund]{.underline}*

4271 Actual Program Fund Subsidy Collected 1,000

4070 Anticipated Collections From Federal Sources 1,000

1010 Fund Balance With Treasury 1,000

2180 Loan Guarantee Liability 1,000

*[Memorandum Accounts - Loan Guarantee Liability (LGL)
Activity]{.underline}*

9XXB LGL - Contra 1,000

9XXF LGL - Adj - Guarantee Modifications 1,000

*[Memorandum Accounts - Loan Guarantee Level]{.underline}*[^23]

8020 Loan Guarantee Level - Apportioned 4,651

8010 Guaranteed Loan Level 4,651

**1-13. Treasury credited \$1,160 to the financing fund for interest the
fund earned on its unused Fund Balance With Treasury during the year.**
(C109)

*[Financing Fund]{.underline}*

4273 Interest Collected From Treasury 1,160

4070 Anticipated Collections from Federal Sources 1,160

1010 Fund Balance With Treasury 1,160

5312 Interest Revenue -- Loans Receivable/Uninvested Funds \[Treasury\]
1,160

\- - - - - - - - - - - - - - - - - - - -

Trial balances for the agency are shown on the following pages, with
each trial balance a single column netting to zero. For all trial
balances presented in this guide, "N/A" indicates that the account is
not applicable to the fund. The chart of accounts for each trial balance
is found in the previous section on "conceptual framework".

## TRIAL BALANCE

**(TRANSACTIONS 1-1 THROUGH 1-13)**

**Accounts Program Fund Financing Fund**

[*Budgetary* *Dr./(Cr.) Dr./(Cr.)*]{.underline}

4060 N/A 40

4070 N/A 1,190

4115 21,500 N/A

4117 5,000 N/A

4221 N/A 645

4261 N/A 480

4262 N/A 40

4263 N/A 200

4271 N/A 19,705

4273 N/A 1,160

4450 0 (17,960)

4610 (1,200) (60)

4801 (645) 0

4902 [(24,655)]{.underline} [(5,440)]{.underline}

> **\$ 0 \$ 0**

**TRIAL BALANCE**

**(TRANSACTIONS 1-1 THROUGH 1-13)**

**Accounts Program Fund Financing Fund**

[*Proprietary* *Dr./(Cr.) Dr./(Cr.)*]{.underline}

1010 1,845 16,145

1340 N/A 1,050

1350 N/A 3,460

1399 N/A (1,750)

2180 N/A (17,745)

3101 (26,500) N/A

3107 24,655 N/A

5312 N/A (1,160)

5700 (24,655) N/A

6100\[Admin.\] 4,950 N/A

6100\[Mod. Sub.\] [19,705]{.underline} [N/A]{.underline}

> **\$ 0 \$ 0**

*Loan Guarantee Level (Financing Fund Only) Loans Disbursed (Financing
Fund Only)*

*Memorandum Accounts [Dr./(Cr.)]{.underline} Memorandum Accounts
[Dr./(Cr.)]{.underline}*

> 8010 \$95,349 8050 \$83,500
>
> 8020 (5,349) 8053 (87,000)
>
> 8040 [(90,000)]{.underline} 8065 [3,500]{.underline}
>
> **\$ 0 \$ 0**

*Loan Guarantee Liability Activity (Financing Fund Only)*

*Memorandum Accounts [Dr./(Cr.)]{.underline}*

> 9XXB 17,745
>
> 9XXC (1,740)
>
> 9XXD (17,400)
>
> 9XXE 435
>
> 9XXF (1,000)
>
> 9XXG (480)
>
> 9XXH 1,940
>
> 9XXI (3,000)
>
> 9XXJ [3,500]{.underline}
>
> **\$ 0**

**TRANSACTIONS (CONTINUED)**

1-14. The agency accrued loan interest of \$5 on the defaulted
guaranteed loan principal[^24]*. (C220)*

*[Financing Fund]{.underline}*

1340 Interest Receivable \[Defaulted Guaranteed Loans\] 5

1399 Allowance for Subsidy 5

**1-15. The agency determined that it could not collect \$10 of loan
principal and \$20 of loan interest and wrote off the
receivables.**[^25] (D210)

##### 

##### [Financing Fund]{.underline}

1399 Allow. for Subsidy \[Defaulted Guar. Loan Assets 30

1340 Interest Receivable \[Defaulted Guaranteed Loans\] 20

1350 Loans Receivable \[Defaulted Guaranteed\] 10

**1-16. The agency accrued interest of \$1,180 on its loan guarantee
liability and \$20 on the present value of its loans. *Note: The
interest accumulation factor***[^26] ***must net to the amount of
interest income received from Treasury--\$1,160 (see transaction
1-13).*** (D366 & D516)

*[Financing Fund]{.underline}*

1399 Allowance for Subs. \[Defaulted Guar. Loan Assets\] 20

6790 Other Expenses Not Requiring Budgetary Resources

\[Interest Accumulation Factor on Present Value of Assets\] 20

6330 Other Interest Expenses

\[Interest Accumulation Factor on Present Value of LGL\] 1,180

2180 Loan Guarantee Liability 1,180

*[Memorandum Accounts - Loan Guarantee Liability (LGL)
Activity]{.underline}*

#### 9XXB LGL - Contra 1,180

9XXK LGL - Adj - Interest Accumulation 1,180

**1-17. Third-party lenders reported that they had collected \$10,000 on
guaranteed loans in the cohort.** (E110)

*[Memorandum Accounts for Loans Disbursed]{.underline}*

8065 Guaranteed Loan Collections, Defaults, and Adjustments 10,000

8050 Guaranteed Loan Principal Outstanding 10,000

**1-18. At year-end the agency determined that an upward technical
subsidy expense re-estimate related to the loan guarantee liability of
\$42 was required (including interest). In addition, it determined that
a downward technical subsidy re-estimate of \$6 was required (including
interest) for the receivables. Thus, there is a net technical upward
adjustment of \$36 required. There also was a downward interest rate
re-estimate of \$12 for the loan guarantee liability and \$1 on the
allowance for subsidy.** (B324, B324R, C228)

*[Program Fund]{.underline}*

6800 Future Funded Expenses

\[Subsidy Expense - Re-estimates -- Technical\] 36

2170 Subsidy Payable to Financing Account 23

6800 Future Funded Expenses

\[Subsidy Expense - Re-estimates - Interest Rate\] 13

*[Financing Fund]{.underline}*

#### 1310 Accounts Receivable

> \[Subsidy Receivable from Program Fund\] 23

1399 Allow. for Subs. \[Defaulted Guar. Loans Rec.\] 7

2180 Loan Guarantee Liability 30

*[Memorandum Accounts - Loan Guarantee Liability (LGL)
Activity]{.underline}*

9XXB LGL - Contra 30

9XXL LGL - Subsidy Re-estimates - Interest Rate 12

9XXM LGL - Subsidy Re-estimates - Other 42

*Per OMB Circular No. A-11 (2003), Section 185.6(F), all increases or
decreases in subsidy cost for different risk categories within the same
cohort will be netted against each other. No such netting can occur
between cohorts*.[^27]

**[PRE-CLOSING ENTRIES]{.underline}**

**To close anticipated resources** *(TC F112)*

*[Financing Fund Budgetary]{.underline}*

#### 4450 Unapportioned Authority 1,230

4060 Anticipated Collections from Non-Federal Sources 40

4070 Anticipated Collections from Federal Sources 1,190

## FISCAL YEAR 1 PRE-CLOSING TRIAL BALANCE

**Accounts Program Fund Financing Fund**

[*Budgetary* *Dr./(Cr.) Dr./(Cr.)*]{.underline}

4115 21,500 N/A

4117 5,000 N/A

4221 N/A 645

4261 N/A 480

4262 N/A 40

4263 N/A 200

4271 N/A 19,705

4273 N/A 1,160

4450 0 (16,730)

4590 N/A 0

4610 (1,200) (60)

4801 (645) 0

4902 \[Other\] [(24,655)]{.underline} [(5,440)]{.underline}

> **\$ 0 \$ 0**

## FISCAL YEAR 1 PRE-CLOSING TRIAL BALANCE (Continued)

**Accounts Program Fund Financing Fund**

[*Proprietary* *Dr./(Cr.) Dr./(Cr.)*]{.underline}

1010 \$ 1,845 \$16,145

1310 \[Subsidy Recv.\] N/A 23

1340 N/A 1,035

1350 N/A 3,450

1399 N/A (1,698)

2170 (23) N/A

2180 N/A (18,955)

3101 (26,500) N/A

3107 24,655 N/A

5312 \[Treasury\] N/A (1,160)

5700 (24,655) N/A

6100 \[Admin.\] 4,950 N/A

6100 \[Subsidy\] 19,705 N/A

6330 \[Int. on PV Assets\] N/A (20)

6790 \[Int. on PV LGL\] N/A 1,180

6800 \[Subs. Reest. Tech.\] 36 0

6800 \[Subs. Reest. Int.\] [(13)]{.underline} [0]{.underline}

> **\$ 0 \$ 0**

## 

## FISCAL YEAR 1 PRE-CLOSING TRIAL BALANCE (Continued)

*Loan Guarantee Level (Financing Fund Only)*

*Memorandum Accounts [Dr./(Cr.)]{.underline}*

8010 \$95,349

8015 0

8020 (5,349)

8040 (90,000)

8045 [0]{.underline}

> **\$ 0**

*Loans Disbursed (Financing Fund Only)*

*Memorandum Accounts [Dr./(Cr.)]{.underline}*

8050 \$73,500

8053 (87,000)

8065 13,500

8070 [0]{.underline}

> **\$ 0**

*Loan Guarantee Liability Activity (Financing Fund Only)*

*Memorandum Accounts [Dr./(Cr.)]{.underline}*

9XXB \$18,955

9XXC (1,740)

9XXD (17,400)

9XXE 435

9XXF (1,000)

9XXG (480)

9XXH 1,940

9XXI (3,000)

9XXJ 3,500

9XXK (1,180)

9XXL 12

9XXM [(42)]{.underline}

> **\$ 0**

**1-19 The agency made closing entries.**

*[Program Fund Budgetary]{.underline}*

[To consolidate net cash resources]{.underline} *(F214, F204)*

4902 Delivered Orders -- Obligations, Paid 24,655

4201 Total Actual Resources -- Collected 1,845

4115 Loan Subsidy Appropriation 21,500

4117 Loan Administrative Expense Appropriation 5,000

[To close unobligated authority]{.underline} *(F210)*

#### 4610 Allotments - Realized Resources 1,200

4650 Allotments - Expired Authority 1,200

*Program Fund Proprietary*

[To close financing sources and expenses (]{.underline}*F228)*

5700 Expended Appropriations 24,655

3310 Cumulative Results of Operations 23

#### 6800 Future Funded Expenses 

\[Re-estimated Subsidy Expense - Interest Rate\] 13

6100 Operating Expenses/Program Costs

\[Administrative Expenses\] 4,950

6100 Operating Expenses/Program Costs

\[Basic and Modified Subsidy Expense\] 19,705

6800 Future Funded Expenses

\[Re-estimated Subsidy Expense -- Technical\] 36

[To consolidate unexpended appropriations (]{.underline}*F233)*

3101 Unexpended Appropriations -- App. Received 26,500

3100 Unexpended Appropriations - Cumulative 1,845

3107 Unexpended Appropriations - Used 24,655

*[Financing Fund Budgetary]{.underline}*

[To consolidate net cash resources]{.underline} *(F214, F204)*

4902 Delivered Orders -- Obligations, Paid 5,440

4201 Total Actual Resources - Collected 16,145

4261 Actual Collection of Business-Type Fees 480

4262 Actual Collection of Loan Principal 40

4263 Actual Collection of Loan Interest 200

4271 Actual Program Fund Subsidy Collected 19,705

4273 Interest Collected From Treasury 1,160

[To close unobligated authority]{.underline} *(F210)*

4610 Allotments - Realized Resources 60

4450 Unapportioned Authority 60

*[Financing Fund Proprietary]{.underline}*

[To close financing sources and expenses]{.underline} *(F228)*[^28]

5312 Interest Revenue --

####  Loans Receivable/Uninvested Funds \[Treasury\] 1,160

6330 Other Interest Expenses

\[Interest Accumulation Factor on PV of Loan Assets\] 20

6790 Other Expenses Not Requiring Budgetary Resources

\[Interest Accumulation Factor on PV of LGL\] 1,180

*[Memorandum Accounts - Loan Guarantee Level]{.underline} (F236)*

8020 Guaranteed Loan Level - Apportioned 5,349

8045 Guaranteed Loan Level - Unused Authority 5,349

*[Memorandum Accounts - Loans Disbursed]{.underline} (F238 & F239)*

8053 Guaranteed Loans New Disbursements by Lenders 87,000

8070 Guaranteed Loan Cumulative. Disbursements by Lenders 87,000

8070 Guaranteed Loan Cumulative. Disbursements by Lenders 13,500

8065 Guaranteed Loans Collections, Defaults, and Adjustments 13,500

*[Memorandum Accounts--Loan Guarantee Liability (LGL)
Activity]{.underline}*

9XXC LGL - Basic Subsidy Expense - Interest Supplements 1,740

9XXD LGL - Basic Subsidy Expense - Defaults 17,400

9XXF LGL - Adjustments - Guarantee Modifications 1,000

9XXG LGL - Adjustments - Fees Received 480

9XXI LGL - Adj.- Foreclosed Property and Loans Acquired 3,000

9XXK LGL - Adjustments - Interest Accumulation 1,180

9XXM LGL - Subsidy Re-estimates - Other (Technical) 42

######  9XXA LGL - Cumulative 18,955

9XXE LGL - Basic Subsidy Expense - Fees and Other Collections 435

9XXH LGL - Adjustments - Interest Supplements Paid 1,940

9XXJ A/S - Adjustments - Claim Payments to Lenders 3,500

9XXL A/S - Subsidy Re-estimates - Interest Rate 12

## 

## YEAR 1 POST-CLOSING TRIAL BALANCE

**Accounts Program Fund Financing Fund**

[*Budgetary* *Dr./(Cr.) Dr./(Cr.)*]{.underline}

4115 \$ 0 N/A

4201 1,845 16,145

4221 N/A 645

4450 0 (16,790)

4650 (1,200) N/A

4801 [(645)]{.underline} [0]{.underline}

> **\$ 0** **\$ 0**

**Accounts Program Fund Financing Fund**

[*Proprietary* *Dr./(Cr.) Dr./(Cr.)*]{.underline}

1010 \$ 1,845 \$16,145

1310\[Subs. Recv\] N/A 23

1340 N/A 1,035

1350 N/A 3,450

1399 N/A (1,698)

2170 (23) N/A

2180 N/A (18,955)

3100 (1,845) N/A

3310 [23]{.underline} [0]{.underline}

> **\$ 0** **\$ 0**

**YEAR 1 POST-CLOSING TRIAL BALANCE (Continued)**

*Loan Guarantee Level (Financing Fund Only)*

*[Memorandum Accounts Dr./(Cr.)]{.underline}*

8010 \$95,349

8015 0

8020 0

8040 (90,000)

8045 [(5,349)]{.underline}

> \$ 0

*Loans Disbursed (Financing Fund Only)*

*[Memorandum Accounts Dr./(Cr.)]{.underline}*

8050 \$73,500

8053 0

8065

8070 [(73,500)]{.underline}

\$ 0

*Loan Guarantee Liability Activity (Financing Fund Only)*

*[Memorandum Accounts Dr./(Cr.)]{.underline}*

9XXA \$(18,955)

9XXB [18,955]{.underline}

> \$ 0

# FINANCIAL STATEMENTS YEAR 1

**Loan Guarantee Agency**

**Balance Sheet**

**September 30, FY-1**

  ------------------------------- --------------------- ---------------------- ----------------------
                                  Program Fund          Financing Fund         Total

  Assets                                                                       

  Intragovernmental                                                            

  1\. Fund Balance With Treasury  1,845                 16,145                 17,990
  (1010)                                                                       

  3\. Accounts receivable (1310)                        23                     23

  4\. Loan receivables (1340,                           [2,787]{.underline}    [2,787]{.underline}
  1350, 1399)                                                                  

  15\. Total assets               1,845                 18,955                 20,800

                                                                               

  Liabilities                                                                  

  16\. Accounts payable (2170)    23                                           23

  21\. Loan guarantee liability                         [18,955]{.underline}   [18,955]{.underline}
  (2180)                                                                       

  27\. Total liabilities          23                    18,955                 18,978

                                                                               

  Net Position                                                                 

  29\. Unexpended appropriations  1,845                                        1,845
  (3100)                                                                       

  30\. Cum. results of operations \(23\)                                       \(23\)
  (3310)                                                                       

  31\. Total net position         [1,822]{.underline}   [0]{.underline}        [1,822]{.underline}

  32\. Total liabilities and net  1,845                 18,955                 20,800
  position                                                                     

                                                                               
  ------------------------------- --------------------- ---------------------- ----------------------

**Loan Guarantee Agency**

**Statement of Net Cost**

**for Fiscal Year Ended September 30, FY-1**

+---------------------------------------+---------+---------+---------+
|                                       | #       | ##      | #####   |
|                                       | ##### P | #### Fi | # Total |
|                                       | rogram  | nancing |         |
|                                       |         |         |         |
|                                       | ####    | #####   |         |
|                                       | ## Fund | #  Fund |         |
+---------------------------------------+---------+---------+---------+
| Program Costs                         |         |         |         |
+---------------------------------------+---------+---------+---------+
|                                       |         |         |         |
+---------------------------------------+---------+---------+---------+
| 4\. Gross costs with the public       | 24,678  | 1,160   | 25,838  |
| (6100,6330,6790, 6800)                |         |         |         |
+---------------------------------------+---------+---------+---------+
| 5\. Less: Earned revenues from the    |         | 1,160   | 1,160   |
| public (5312)                         |         |         |         |
+---------------------------------------+---------+---------+---------+
| 6\. Net cots with the public          | 24,678  | 0       | 24,678  |
+---------------------------------------+---------+---------+---------+
| 7\. Total net cost                    | [24,67  | [       | [24,67  |
|                                       | 8]{.und | 0]{.und | 8]{.und |
|                                       | erline} | erline} | erline} |
+---------------------------------------+---------+---------+---------+
| 10\. Net cost of operations           | 24,678  | 0       | 24,678  |
+---------------------------------------+---------+---------+---------+

**Loan Guarantee Agency**

**Statement of Changes in Net Position**

**for Fiscal Year Ended September 30, FY-1**

  ---------------- ---------------------- ----------------- ------------------------ ------------ --------------------- ---------------------- -----------------
                   [Program                                 [Financing                            [Total]{.underline}                          
                   Fund]{.underline}                        Fund]{.underline}[^29]                                                             

                   Cumulative Results of  Unexpended        Cumulative Results of    Unexpended                         Cumulative Results of  Unexpended
                   Operations             Approp.           Operations               Approp.                            Operations             Approp.

  1\. Beginning                                                                                                         0                      0
  balances                                                                                                                                     

  4\.                                     26,500                                                                                               26,500
  Appropriations                                                                                                                               
  received (3101)                                                                                                                              

  7\.              24,655                 (24,655)                                                                      24,655                 (24,655)
  Appropriations                                                                                                                               
  used (3107,5700)                                                                                                                             

  16\. Total       24,655                 1,845                                                                                                
  financing                                                                                                                                    
  sources                                                                                                                                      

  17\. Net cost of [24,678]{.underline}   [-]{.underline}                                                               [24,678]{.underline}   [-]{.underline}
  operations                                                                                                                                   

  18\. Ending      \(23\)                 1,845                                                                         \(23\)                 1,845
  balances                                                                                                                                     
  ---------------- ---------------------- ----------------- ------------------------ ------------ --------------------- ---------------------- -----------------

## Loan Guarantee Agency

**Statement of Budgetary Resources**

**for Fiscal Year Ended September 30, FY-1**

> Non-budgetary
>
> [Budgetary]{.underline} [Financing Account]{.underline}
> [Total]{.underline}

**Budgetary Resources**

1A. Appropriations (4115E,4117E) 26,500 26,500

3\. Spending authority from

offsetting collection activity (+) :

A1. Earned: Collected

(4261E, 4262E, 4263E, 4271E, 4273E) 21,585 21,585

B2. Change in unfilled customer orders

without advance from Federal sources (4221E) [645]{.underline}
[645]{.underline}

7\. Total resources \$26,500 \$22,230 \$48,730

######### Status of Budgetary Resources

8\. Obligation incurred: 25,300 5,440 30,740

9\. Unobligated balance,

> A1. Balance, currently available (4610) 1,200 60 1,260

10\. Unobligated balance not available:

D.  Other (4450) [16,730]{.underline} [16,730]{.underline}

11\. Total status of resources \$26,500 \$22,230 \$48,730

######### 

######### Relationship of 

**Obligations to Outlays:**

14\. Obligated balance, net, end of period:

B. Unfilled customers from

Federal sources (4221E). (645) (645)

C. Undelivered orders (4801E) 645 645

15\. Outlays:

A. Disbursements (-)(4902E) \$24,655 5,440 30,095

B. Collections (+)

(4261E - 4263E, 4271E and 4272E) (21,585) (21,585)

17\. Net Outlays 24,655 (16,145) 8,510

**Loan Guarantee Agency**

**Statement of Financing**

**for Fiscal Year Ended September 30, FY-1**

+---------------------------------------------+-------+-------+------+
|                                             | **Pr  | *     | *    |
|                                             | ogram | *Fina | *Tot |
|                                             | F     | ncing | al** |
|                                             | und** | F     |      |
|                                             |       | und** |      |
+---------------------------------------------+-------+-------+------+
| **Resources Used to Finance Activities:**   |       |       |      |
|                                             |       |       |      |
| ######### Budgetary Resources Obligated     |       |       |      |
+---------------------------------------------+-------+-------+------+
| 1\. Obligations incurred (4801 E-B, 4902E)  | 2     | 5,440 | 30   |
|                                             | 5,300 |       | ,740 |
+---------------------------------------------+-------+-------+------+
| 2\. Less Spending authority from offsetting |       | (22   | (22, |
| collections and recoveries (4221E, 4261E,   |       | ,230) | 230) |
| 4262E, 4263E, 4271E, 4273E)                 |       |       |      |
+---------------------------------------------+-------+-------+------+
| 3\. Obligations net of offsetting           | 2     | (16   | 8    |
| collections and recoveries (1-2)            | 5,300 | ,790) | ,510 |
+---------------------------------------------+-------+-------+------+
| 5\. Net obligations (3..4)                  | 2     | (16   | 8    |
|                                             | 5,300 | ,790) | ,510 |
+---------------------------------------------+-------+-------+------+
| 11\. Total resources used to finance        | 2     | (16   | 8    |
| activities                                  | 5,300 | ,790) | ,510 |
+---------------------------------------------+-------+-------+------+
|                                             |       |       |      |
+---------------------------------------------+-------+-------+------+
| **Resources Used to Finance Items not a     |       |       |      |
| Part of Net Cost of Operations:**           |       |       |      |
+---------------------------------------------+-------+-------+------+
| 12\. Change in budgetary resources          | 645   | \(    | 0    |
| obligated for goods, services and benefits  |       | 645\) |      |
| ordered but not yet provided (4801 E-B,     |       |       |      |
| 4221E)                                      |       |       |      |
+---------------------------------------------+-------+-------+------+
| 14\. Budgetary offsetting collections and   |       |       |      |
| receipts that do not effect the Net cost of |       |       |      |
| operations                                  |       |       |      |
+---------------------------------------------+-------+-------+------+
| 14A. Credit program collections that        |       | (21   | (21, |
| increase liabilities for loan guarantees or |       | ,585) | 585) |
| allowances for subsidy (4261E, 4262E,       |       |       |      |
| 4271E, 4273E)                               |       |       |      |
+---------------------------------------------+-------+-------+------+
| 15\. Resources that finance the acquisition |       | 5,440 | 5    |
| of assets or liquidations of liabilities    |       |       | ,440 |
| (4902(loan portion))                        |       |       |      |
+---------------------------------------------+-------+-------+------+
| 17\. Total resources used to finance items  | 645   | (16   | (16, |
| not a part of net cost of operations        |       | ,790) | 145) |
| (12...16)                                   |       |       |      |
+---------------------------------------------+-------+-------+------+
| 18\. Total resources used to finance the    | 2     | 0     | 24   |
| net cost of operations (11-17)              | 4,655 |       | ,655 |
+---------------------------------------------+-------+-------+------+
|                                             |       |       |      |
+---------------------------------------------+-------+-------+------+
| **Components of Net Cost of Operations That |       |       |      |
| Will Not Require or Generate Resources in   |       |       |      |
| the Current Period:**                       |       |       |      |
+---------------------------------------------+-------+-------+------+
| 21\. Upward/downward re-estimates of credit | 23    |       | 23   |
| expenses (6800E)                            |       |       |      |
+---------------------------------------------+-------+-------+------+
| 22\. Increase in exchange revenue           |       |       |      |
| receivable from public\                     |       |       |      |
| (1340 accrued amount)                       |       |       |      |
+---------------------------------------------+-------+-------+------+
| 24\. Total components of net cost of        | 23    |       | 23   |
| operations that will or generate resources  |       |       |      |
| in the future period                        |       |       |      |
+---------------------------------------------+-------+-------+------+
| 28\. Total components of net of cost of     | 0     |       | 0    |
| operation that will not require or generate |       |       |      |
| resources in the current period (25..27)    |       |       |      |
+---------------------------------------------+-------+-------+------+
| 29\. Total components of net cost of        | [     |       | [23] |
| operations that will require or generate    | 23]{. |       | {.un |
| resources in the current period (24 + 28)   | under |       | derl |
|                                             | line} |       | ine} |
+---------------------------------------------+-------+-------+------+
| 30\. Net Cost of Operation (18 + 29)        | 2     |       | 24   |
|                                             | 4,678 |       | ,678 |
+---------------------------------------------+-------+-------+------+

[]{.mark}

[]{.mark}

**Loan Guarantee Agency**

Year End Closing Statement (2108)

**September 30, FY-1**

***[Indefinite Borrowing Authority -- Financing Account]{.underline}***

Column 5 Adjustments (1010) 16,145

Column 8 Unfilled customer orders 645

Column 11 Unobligated balance (4610 & 4450) 16,790

***[Program Account]{.underline}***

Column 5 Post closing unexpended balance (1010 E) 1,845

Column 9 Undelivered orders and contracts (4801 E) 645

Column 11 Unobligated balance (CALC 5+6+7+8-9-10) 1,200

Also equals (4610 E) 1,200

BUDGET PROGRAM AND FINANCING SCHEDULE PRIOR-YEAR ACTUAL COLUMN FOR YEAR
1 REPORTING

#########  Program Financing

**Fund Fund**

**OBLIGATIONS BY PROGRAM ACTIVITY**

1000 Total new obligations (4801 E-B, 4902E) 25,300 5,440

**BUDGETARY RESOURCES AVAILABLE FOR OBLIGATION**

2200 New budget authority, (gross) 26,500 22,230

2395 Total new obligations (25,300) (5,440)

2398 Unobligated balance expiring or withdrawn (4610E) 1,200

2440 Unobligated balance carried forward, end of year (4450E, 4610E)
16,790

**NEW BUDGET AUTHORITY (GROSS), DETAIL**

4000 Appropriation (4115E & 4117) 26,500

6800 Spending authority for offsetting collections (4261E, 4262E, 4263E,
4271E, 4273E) 21,585

6810 Change in unfilled customer payments from federal sources (4221E)
645

6890 Spending authority for offsetting collections (total discretionary)
22,230

7000 Total new budget authority (Gross) 26,500 22,230

**CHANGE IN OBLIGATED BALANCES**

7310 Total new obligations 25,300 5,440

7320 Total outlays (gross) (4902E) 24,655 5,440

7440 Obligated balance, end of year (4801E) 645

######### OUTLAYS (GROSS), DETAIL

8690 Outlays from new discretionary authority (4902E) 24,655 5,440

**NET BUDGET AUTHORITY AND OUTLAYS**

8900 Budget authority (net) 26,500 22,230

9000 Outlays (net) 24,655 5,440

> **Loan Guarantee Agency**
>
> **Note 8: Credit Program Note**[^30]
>
> **September 30, FY-1**

I. Defaulted Guaranteed Loans from Post -- 1991 Guarantees:

Loans receivable, gross (1350) 3,450

Interest receivable (1340) [1,035]{.underline}

Less allowance for subsidy (1399) [(1,698)]{.underline}

Value of assets related to loan receivables, net \$2,787

**J. Guaranteed Loans Outstanding:**

**J1. Guaranteed Loans Outstanding:**

Outstanding loan principal (8050) \$73,500

Guaranteed loan principal (8050) \$73,500[^31]

**J2. New Guaranteed Loans Disbursed:**

Outstanding loan principal (8053) \$87,000

J3. New Loans Disbursed:

Outstanding loan principal (8053) \$87,000

**K. Liability for Loan Guarantees:**

**K1. Liability for Loan Guarantees**

Post 1991 Loan guarantees, liability (2180) \$18,955

**L Subsidy Expense for Loan Guarantees by Program and Component:**

**L1. Subsidy Expense for New Loan Guarantees**

Interest differential (9XXC) 1,740

Defaults (9XXD) 17,400

Fees (9XXE) [(435)]{.underline}

Total \$18,705

**L2. Modifications and Reestimates:**

Total modifications (9XXF) 1,000

Interest rate (6800) (13)

Technical (6800) [36]{.underline}

Total re-estimates 1,023

**L3. Total Loan Guarantee Subsidy Expense** \$19,728

**M. Composition of Subsidy Rate:**[^32]

*(From budget model)*

> *Component* *Percent*
>
> Defaults 20.0
>
> Interest supplements 2.0
>
> Fees [(0.5)]{.underline}
>
> Total 21.5

**N. Reconciliation of Beginning and Ending Balances of Allowance for
Subsidized Costs**[^33]

> Beginning balance of loan guarantee liability, October 1 \$ 0
>
> Add: subsidy expense for guaranteed loans
>
> disbursed during the reporting years by component:

a.  Interest supplement costs (9XXC) 1,740

b.  Default costs (net of recoveries) (9XXD) 17,400

c.  Fees and other collections (9XXE) [(435)]{.underline}

Total of the above subsidy expense components \$18,705

> Adjustments:

a.  Loan guarantee modifications (9XXF) 1,000

b.  Fees received (9XXG) 480

c.  Interest supplements used (9XXH) (1,940)

d.  Foreclosed property and loans acquired (9XXI) 3,000

e.  Claim payment to lenders (9XXJ) (3,500)

f.  Interest accumulation on liability balance (9XXK)
    [1,180]{.underline}

> Ending balance of the loan guarantee liability before reestimates
> [220]{.underline}
>
> Add or subtract subsidy reestimates by component:

a.  Interest reestimate rate (9XXL) (12)

b.  Technical/default reestimate [42]{.underline}

> Total of the above reestimate components [30]{.underline}

Ending balance of the loan guarantee liability \$18,955

O. Administrative Expense:

> Loan guarantee programs (6100) \$4,950[^34]

**FISCAL YEAR 2**

In fiscal year 1, the agency accrued an upward adjustment of subsidy
expense. Although the expense was recognized in fiscal year 1, budgetary
resources to fund it were not provided until the following year, fiscal
year 2. The examples of transactions for this year are limited to those
relating to the disposition of the upward subsidy re-estimate accrued at
the end of the preceding year. Appendix 2, discusses the accrual and
disposition for a downward re-estimate, and the related reporting for
that in the year of accrual and the year of disposition.

Normally, in the second fiscal year, there would be transactions for a
new cohort of loans. The accounting for the old and new cohort should be
separated. The basic transactions are the same for the second cohort for
fiscal year 1 for the first cohort. Transactions, in the next year, for
the first cohort would be similar, except there are no new loans. Loans
obligated but not disbursed at the end of fiscal year 1 would be
disbursed, and transactions subsequent to disbursement would be similar
to fiscal year 1.

# 

# 

# TRANSACTIONS YEAR 2

1.  **The agency prepared a request for apportionment for \$23 of
    appropriations in the program fund to be transferred to the
    financing fund. It will use the apportionment to repay principal on
    the debt to Treasury. It prepared a request for the financing fund.
    The SF-132 constituting the request is shown on the next page.**
    *(TC A104, A140)*

**To record enactment of appropriations.**

*[Program Fund]{.underline}*[^35]

4118 Re-estimated Loan Subsidy Appropriation 23

4450 Unapportioned Authority 23

1010 Fund Balance With Treasury 23

######  3101 Unexpended Appropriations - Received 23

*[Financing Fund]{.underline}*

4070 Anticipated Collections from Federal Sources 23

4450 Unapportioned Authority 23

Loan Guarantee Agency

**SF 132 Apportionment/Reapportionment Schedule**

######## Fiscal Year 2

**Budgetary Resources** **Program Fund Financing Fund**

**Budget authority:**

1E. Other 23

2A. Brought forward, Oct.1 1,200 16,790

3C. Anticipated for rest of year without advance [23]{.underline}

7\. Total budgetary resources 1,223 16,813

**Application of Budgetary Resources**

Budget authority:

Category B:

8B1.Direct loan subsidy 1,223

11\. Unapportioned Balance [16,813]{.underline}

12\. Total budgetary resources 1,223 16,813

**2-2. OMB approved and authorized both requests for
apportionment.**[^36] (TC A116)

*[Program Fund]{.underline}*

4450 Unapportioned Authority 23

4510 Apportionments 23

*[Financing Fund]{.underline}*

No entry[^37]

**2-3. To record allotment of authority.** (TC A120)

*[Program Fund]{.underline}*

4510 Apportionments 23

4610 Allotments - Realized Resources 23

*[Financing Fund]{.underline}*

No entry

**2-4. The agency transferred the re-estimated subsidy from the program
fund to the financing fund.** (TC A150, B105, B134, C104)

*[Program Fund]{.underline}*

4610 Allotments - Realized Resources 23

4902 Delivered Orders -- Obligations,\
Paid \[Re-est. Subsidy and Interest\] 23

To record reclassification of future funded expenses.

6100 Operating Expense/Program Costs 23

6800 Future Funded Expense 23

2170 Subsidy Payable to Financing Account 23

1010 Fund Balance With Treasury 23

3107 Unexpended Appropriations - Used 23

5700 Expended Appropriations 23

*[Financing Fund]{.underline}*

4271Actual Program Fund Subsidy Collected 23

4070 Anticipated Collections from Federal Sources 23

1010 Fund Balance With Treasury 23

1310 Accounts Receivable

> \[Subsidy Receivable from Program Fund\] 23

## 

## FISCAL YEAR 2 PRE-CLOSING TRIAL BALANCE

**Accounts Program Fund Financing Fund**

[*Budgetary* *Dr./(Cr.) Dr./(Cr.)*]{.underline}

4118 23 N/A

4201 1,845 16,145

4221 N/A 645

4271 N/A 23

4450 0 (16,813)

4650 (1,200) N/A

4801 (645) 0

4902\[Reest. Sub. Int\] [(23)]{.underline} [0]{.underline}

> **\$ 0** **\$ 0**

**Accounts Program Fund Financing Fund**

[*Proprietary* *Dr./(Cr.) Dr./(Cr.)*]{.underline}

1010 \$ 1,845 \$16,168

1340 N/A 1,035

1350 N/A 3,450

1399 N/A (1,698)

2170 0 N/A

2180 N/A (18,955)

3100 (1,845) N/A

3101 (23) N/A

3107 23 N/A

3310 23 0

5700 (23) N/A

6100 23 N/A

6800 [(23)]{.underline} [N/A]{.underline}

> **\$ 0** **\$ 0**

## FISCAL YEAR 2 PRE-CLOSING TRIAL BALANCE

*Loan Guarantee Level (Financing Fund Only)*

*[Memorandum Accounts Dr./(Cr.)]{.underline}*

8010 \$95,349

8015 0

8020 0

8040 (90,000)

8045 [(5,349)]{.underline}

> \$ 0

*Loans Disbursed (Financing Fund Only)*

*[Memorandum Accounts Dr./(Cr.)]{.underline}*

8050 \$73,500

8053 0

8065

8070 [(73,500)]{.underline}

\$ 0

*Loan Guarantee Liability Activity*

*(Financing Fund Only)*

*[Memorandum Accounts Dr./(Cr.)]{.underline}*

9XXA \$(18,955)

9XXB [18,955]{.underline}

> \$ 0

**2-5. The agency made closing entries.** (TC F214, F228, F233, F204)

*[Program Fund Budgetary]{.underline}*

*[To consolidate net cash resources]{.underline} (TC F214, F204)*

4902 Delivered Orders -- Obligations, Paid\
\[Re-est. Subsidy and Interest\] 23

4118 Reestimated Loan Subsidy Appropriation 23

*[Program Fund Proprietary]{.underline}*

*[To close financing sources and expenses]{.underline} (TC F228)*

6800 Future Funded Expenses 23

5700 Expended Appropriations 23

3310 Cumulative Results of Operations 23

6100 Operating Expenses/Program./Costs

3101 Unexpended Appropriations -- Approp. Received 23

3107 Unexpended Appropriations - Used 23

*[Financing Fund]{.underline}*[^38]

*[To consolidate net cash resources]{.underline} (TC F204)*

4201 Total Actual Resources - Collected 23

4271 Actual Program Fund Subsidy Collected 23

**FISCAL YEAR 2 POST-CLOSING TRIAL BALANCE**

**Accounts Program Fund Financing Fund**

[*Budgetary* *Dr./(Cr.) Dr./(Cr.)*]{.underline}

4201 1,845 16,168

4221 N/A 645

4450 0 (16,813)

4650 (1,200) N/A

4801 [(645)]{.underline} [0]{.underline}

> \$ 0 \$ 0

## 

## 

## FISCAL YEAR 2 POST-CLOSING TRIAL BALANCE (Continued)

**Accounts Program Fund Financing Fund**

[*Proprietary* *Dr./(Cr.) Dr./(Cr.)*]{.underline}

1010 \$ 1,845 \$16,168

1340 N/A 1,035

1350 N/A 3,450

1399 N/A (1,698)

2170 0 N/A

2180 N/A (18,955)

3100 (1,845) N/A

> \$ 0 \$ 0

*Loan Guarantee Level (Financing Fund Only) Loans Disbursed (Financing
Fund Only)*

*[Memorandum Accounts Dr./(Cr.)]{.underline} [Memorandum Accounts
Dr./(Cr.)]{.underline}*

8010 \$95,349 8050 \$73,500

8015 0 8053 0

8020 0 8065

8040 (90,000) 8070 [(73,500)]{.underline}

8045 [(5,349)]{.underline} \$ 0

> \$ 0

*Loan Guarantee Liability Activity*

*(Financing Fund Only)*

*[Memorandum Accounts Dr./(Cr.)]{.underline}*

9XXA \$(18,955)

9XXB [18,955]{.underline}

\$ 0

# FINANCIAL STATEMENTS YEAR 2

Since the net cost is zero, the statement is not presented.

**Loan Guarantee Agency**

**Balance Sheet**

**September 30, FY-2**

  ------------------------------- --------------------- ---------------------- ----------------------
                                  Program Fund          Financing Fund         Total

  Assets                                                                       

  Intragovernmental                                                            

  1\. Fund balance with treasury  1,845                 16,168                 18,013
  (1010)                                                                       

  4\. Loans receivable (1340,                           [2,787]{.underline}    [2,787]{.underline}
  1350, 1399)                                                                  

  6\. Total intragovernmental     [1,845]{.underline}   [18,955]{.underline}   [20,800]{.underline}

  15\. Total assets               1,845                 18,955                 20,800

                                                                               

  Liabilities                                                                  

  21\. Loan guarantee liability                         18,955                 18,955
  (2180)                                                                       

  27\. Total liabilities                                18,955                 18,955

                                                                               

  Net Position                                                                 

  29\. Unexpended appropriations  1,845                                        1,845
  (3100)                                                                       

  30\. Cum. results of operations                                              
  (3310)                                                                       

  31\. Total net position         [1,845]{.underline}   [-]{.underline}        [1,845]{.underline}

  32\. Total liabilities and net  1,845                 18,955                 20,800
  position                                                                     
  ------------------------------- --------------------- ---------------------- ----------------------

[]{.mark}

[]{.mark}

**Loan Guarantee Agency**

**Statement of Changes in Net Position**

**for Fiscal Year Ended September 30, FY-2**

  -- ---------------- ------------------- ----------------- ------------------- ------------ --------------------- ----------------- -----------------
                      [Program                              [Financing                       [Total]{.underline}                     
                      Fund]{.underline}                     Fund]{.underline}                                                        

                      Cumulative Results  Unexpended        Cumulative Results  Unexpended                         Cumulative        Unexpended
                      of Operations       Approp.           of Operations       Approp.                            Results of        Approp.
                                                                                                                   Operations        

     1\. Beginning    \(23\)              1,845                                                                    \(23\)            1,845
     balances                                                                                                                        

     4\.                                  23                                                                                         23
     Appropriations                                                                                                                  
     received (3101)                                                                                                                 

     7\.              23                  \(23\)                                                                   23                \(23\)
     Appropriations                                                                                                                  
     used (3107,5700)                                                                                                                

     17\. Net cost of [0]{.underline}     [-]{.underline}                                                          [0]{.underline}   [-]{.underline}
     operations                                                                                                                      

     18\. Ending      0                   1,845                                                                    0                 1,845
     balances                                                                                                                        
  -- ---------------- ------------------- ----------------- ------------------- ------------ --------------------- ----------------- -----------------

[]{.mark}

[]{.mark}

[]{.mark}

**Loan Guarantee Agency**

**Statement of Budgetary Resources**

**For Fiscal Year Ended September 30, FY-2**

> Non-budgetary
>
> [Budgetary]{.underline} [Financing Account]{.underline}
> [Total]{.underline}

**Budgetary Resources**

1A. Appropriations (4118E) 23 0 23

2A. Beginning of period

(4201E, 4221E, 4801E) [1,200]{.underline} 16,790 [18,013]{.underline}

3A. Spending authority from\
Offsetting Collections: Earned

(4271E) [23]{.underline}

7\. Total budgetary resources \$1,223 \$16,813 \$18,036

**Status of Budgetary Resources**

8\. Obligation incurred:

A1. Direct (4801E-B, 4902) 23 23

10\. Balance not available:

D. Other (4650E, 4450E) [1,200]{.underline} [16,813]{.underline}
[18,013]{.underline}

11\. Total status of budgetary resources \$1,223 \$16,813 \$18,036

**Relationship of**

**Obligations to Outlays:**

12\. Obligations balance, beg (4801E/4221E) 645 645

14B. Unfilled cust orders

from Federal sources (4221E) (645) (645)

###### 14C. Undelivered orders (4801E) 645 645

15\. Outlays:

15A. Disbursements (-)(4902E) 23 23

15B. Collections (+) (4271E) (23) (23)

17\. Net Outlays 23 (23) 0

> []{.mark}

**Loan Guarantee Agency**

**Statement of Financing**

**for Fiscal Year Ended September 30, FY-2**

[]{.mark}

+----------------------------------------------+-------+-------+------+
|                                              | **Pr  | *     | *    |
|                                              | ogram | *Fina | *Tot |
|                                              | F     | ncing | al** |
|                                              | und** | F     |      |
|                                              |       | und** |      |
+----------------------------------------------+-------+-------+------+
| **Resources Used to Finance Activities:**    |       |       |      |
|                                              |       |       |      |
| **Budgetary Resources Obligated**            |       |       |      |
+----------------------------------------------+-------+-------+------+
| 1\. Obligations incurred (4801 E-B, 4902E)   | 23    | 0     | 23   |
+----------------------------------------------+-------+-------+------+
| 2\. Less Spending authority from offsetting  |       | \     | \(   |
| collections and recoveries (4221E-B, 4261E,  |       | (23\) | 23\) |
| 4262E, 4263E, 4271E, 4273E)                  |       |       |      |
+----------------------------------------------+-------+-------+------+
| 3\. Obligations net of offsetting            | 23    | \     | 0    |
| collections and recoveries (1..2)            |       | (23\) |      |
+----------------------------------------------+-------+-------+------+
| 5\. Net obligations (3..4)                   | 23    | \     | 0    |
|                                              |       | (23\) |      |
+----------------------------------------------+-------+-------+------+
| 11\. Total resources used to finance         | 23    | \     | 0    |
| activities                                   |       | (23\) |      |
+----------------------------------------------+-------+-------+------+
| []{.mark}                                    |       |       |      |
+----------------------------------------------+-------+-------+------+
| **Resources Used to Finance Items not a Part |       |       |      |
| of Net Cost of Operations:**                 |       |       |      |
+----------------------------------------------+-------+-------+------+
| 12\. Change in budgetary resources obligated |       | \(0\) | \    |
| for goods, services and benefits ordered but |       |       | (0\) |
| not yet provided ( 4221E)                    |       |       |      |
+----------------------------------------------+-------+-------+------+
| 13\. Resources that Fund Expenses Recognized | 23    |       | 23   |
| in Prior Periods. (2170 or 6800)             |       |       |      |
+----------------------------------------------+-------+-------+------+
| 14A. Credit program collections that         |       | \     | \(   |
| increase liabilities for loan guarantees or  |       | (23\) | 23\) |
| allowances for subsidy ( 4271E)              |       |       |      |
+----------------------------------------------+-------+-------+------+
| 17\. Total resources used to finance items   | 23    | \     | 0    |
| not a part of net cost of operations (12..   |       | (23\) |      |
| 16)                                          |       |       |      |
+----------------------------------------------+-------+-------+------+
| 18\. Total resources used to finance the net | 0     | 0     | 0    |
| cost of operations (11-17)                   |       |       |      |
+----------------------------------------------+-------+-------+------+
| []{.mark}                                    |       |       |      |
+----------------------------------------------+-------+-------+------+
| 30\. Net Cost of Operation (18 + 29)         | 0     | 0     | 0    |
+----------------------------------------------+-------+-------+------+

[]{.mark}

[]{.mark}

[]{.mark}

**Loan Guarantee Agency**

FMS 2108 Year End Closing Statement

**September 30, FY-2**

***[Financing Account]{.underline}***

Column 5 Postclosing Unexpended Balance (1010E) 16,168

Column 8 Unfilled Customer Orders (4221E) 645

Column 11 Unobligated Balance (4450) (16,813)

***[Program Account]{.underline}***

Column 5 Postclosing Unexpended Balance (1010 E) 1,845

Column 9 Undelivered Orders and Contracts (4801 E) 645

Column 11 Unobligated Balance (4650) (1,200)

[]{.mark}

[]{.mark}

[]{.mark}

[]{.mark}

## LOAN GUARANTEE AGENCY

**BUDGET PROGRAM AND FINANCING (P&F) SCHEDULE PRIOR-YEAR ACTUAL COLUMN
FOR YEAR 2 REPORTING**

**Program Financing**

#########  Fund Fund

**OBLIGATIONS BY PROGRAM ACTIVITY**

1000 Total new obligations (4902E) 23

**BUDGETARY RESOURCES AVAILABLE FOR OBLIGATION**

2140 Unobligated balance carried forward 16,790

2200 New budget authority, (gross) 23 23

2390 Total budgetary resources available for obligation 23 16,813

2395 Total new obligations (23)

2440 Unobligated balance carried forward, end of year (4450E) 16,813

**NEW BUDGET AUTHORITY (GROSS), DETAIL**

4000 Appropriation (4118E) 23

6800 Spending authority from offsetting collections (4271E) 23

7000 Total new budget authority (Gross) 23 23

**CHANGE IN OBLIGATED BALANCES**

7240 Obligated balance, start of year (4801B, 4221B) 645 (645)

7310 Total new obligations 23

7320 Total outlays (gross) (4902E) 23

7440 Obligated balance, end of year (4221E) (645)

**OUTLAYS (GROSS), DETAIL**

8690 Outlays from discretionary balances (4902E) 23

**NET BUDGET AUTHORITY AND OUTLAYS**

8900 Budget authority (net) 23 23

9000 Outlays (net) 23

# APPENDIX 1: ACCOUNTING FOR MANDATORY LOAN GUARANTEE PROGRAMS

## INTRODUCTION

The scenarios presented in this guide were for common transactions
undertaken by a discretionary loan guarantee program. This appendix
discusses two key differences between discretionary and mandatory loan
guarantee programs, and shows how the entries in the guide would differ
for a mandatory program with typical funding characteristics.

## BASIC DIFFERENCES BETWEEN DISCRETIONARY AND MANDATORY PROGRAMS

In a discretionary program, Congress sets a funding level, and program
agencies make loans up to the amount that can be supported from subsidy
in their program fund. Usually, annual or multi-year appropriations
provide program fund subsidy, although Congress can give no-year
(permanent indefinite) appropriations should it choose to do so.

Annual appropriation authority expires at the end of the fiscal year
that it funds, and multi-year appropriations expire at the end of the
last year of their period of availability. For example, appropriations
good for three years expire at the end of the third year funded.
Agencies cannot place any new obligations against expired authority,
generally, they have five years after the date of expiration to fill
obligations and pay liabilities before both the obligated and
unobligated authority is canceled and cannot be used for any purposes.
Congress sometimes provides for different periods of expiration.[^39]

The government also operates mandatory (entitlement) loan guarantee
programs, in which Congress usually authorizes permanent indefinite
appropriations for subsidy. If the amount of subsidy requested by
qualified loan applicants, who meet the program criteria established by
Congress, exceeds the subsidy monies by drawing additional
appropriations. Congress may mandate that the agency concur with the
additional funding or may place a cap on the total funding. These
no-year appropriations do not have a date of expiration, and agencies
may use unobligated subsidy appropriation authority as long funded as
the programs remain authorized by the Congress.

Congress may provide appropriations for administrative expenses that
have annual, multi-year, or no-year expiration. Most commonly, both
discretionary and mandatory loan guarantee programs have annual
administrative expense appropriations. Thus, no differences in
accounting for administrative expenses will be presented. However,
multi-year administrative expense appropriations in other than the last
year covered, and no-year administrative expense appropriations, would
be accounted for in the same manner as will be shown for no-year
appropriations of subsidy authority.

Another difference between discretionary and mandatory loan guarantee
programs is that when downward adjustments to subsidy are called for
during the subsidy re-estimation process to properly value loan
guarantees at the estimated value of their cash-flows, discretionary
programs must generally return the excess money in their financing fund
to Treasury by transferring it to a designated miscellaneous receipt
account. Mandatory programs generally may recycle this excess by
transferring it back to their program account. While these are the
typical situations, Congress may also provide do the following:

-   Provide for recycling of downward reestimates for a discretionary
    program; or

-   Provide that agencies cannot recycle downward re-estimates in a
    mandatory program and must return them to Treasury.

Recording and reporting downward reestimates of subsidy for both a
discretionary and a mandatory program is discussed in Appendix 2 (recall
that the agency in the guide illustrated accrual and disposition of an
upward adjustment).

Both discretionary and mandatory loan guarantee programs generally have
the same transactions. Agencies must formulate budgetary resources,
apportioned by OMB, and allot and account for them as follows:

-   Making loans based on a combination of program fund subsidy and
    financing fund borrowing from Treasury;

-   Making collections from Federal and non-Federal sources and using
    the collections to repay the principal and interest on the loan from
    Treasury;

-   Reestimating to determine the present value of the loans and
    interest receivable and adjusting the accounts as required;

-   Closing the books at yearend; and so forth.

Where there are differences in the type of subsidy appropriations
provided and disposition of downward re-estimates, the journal entries
to record the same transaction usually will differ as well. The next
section discusses those differences.

**DIFFERENCES IN JOURNAL ENTRIES**

**FOR MANDATORY PROGRAMS**

The transactions illustrated for the discretionary loan guarantee
program guide are virtually the same as those be undertaken in a
mandatory program. However, four of the journal entries would be
different. The transactions involved, and the budgetary and proprietary
entries a mandatory program with no-year subsidy authority, but with the
same amount of funding and other parameters as the discretionary
program, would make are set forth below.[^40] Note that only certain
entries in fiscal year 1 are affected. There would be no change from the
discretionary program entries in fiscal year 2.

Changes from entries illustrated for the discretionary program are
highlighted in bold type. For each transaction presented, only the fund
entities (including memorandum accounts) for which there is a change are
presented. If a fund entity (including memorandum accounts) present for
a transaction in the discretionary program guide is not present in the
transactions illustrated below, a mandatory program would make the same
entries for those fund entities. A discussion of changes follows the
revised entries for each transaction.

**1-1. The agency prepares the budget formulation.** (TC A102, A104)

*[Program Fund]{.underline}*

**4120 Appropriations Anticipated - Indefinite 21,500**

4117 Loan Administrative Expense Appropriation 5,000

4450 Unapportioned Authority 26,500

1010 Fund Balance With Treasury **5,000**

######  3101 Unexpended Appropriations - Received **5,000**

##### **Explanation of difference**

Because the program fund has permanent indefinite authority for its
subsidy, agencies must anticipate the amount of the appropriations they
will receive in order to prepare the budget formulation. The agency
normally will not realize the appropriations until OMB has approved the
amount. Accordingly, the agency must make two changes in the program
fund entry. First, it uses the account for anticipated appropriations,
4120, instead of the account for realized subsidy appropriations, 4115.
Second, because the subsidy money is not realized at this point, it
records only the amount of the administrative expense appropriation,
which is an annual appropriation, as the amount of Fund Balance With
Treasury. . Note that there is no change for the financing fund or
memorandum account entries.

1-2. OMB approved the agency's requests for apportionment without
change, and the agency recorded the apportionment. (A104, A116)

*[Program Fund]{.underline}*

**4115 Loan subsidy Appropriation 21,500**

**4120 Appropriations Anticipated - Indefinite 21,500**

**4450 Unapportioned Authority 26,500**

**4510 Apportionments 26,500**

**1010 Fund Balance With Treasury 21,500**

#########  3101 Unexpended Appropriations - Received 21,500

***Explanation of Difference***

There are two differences here. First, because the subsidy appropriation
was anticipated and not realized until OMB concurred with the amount,
the agency makes an entry to realize the appropriation. Second, along
with the realization, the agency must record the related Fund Balance
With Treasury. Note that the combination of entries 1-1 and 1-2 yields
the same account balances for both the discretionary and mandatory
programs.

**1-12. After consultation and agreement with OMB, the agency decided to
exercise a clause in the program's legislation allowing it to modify the
terms of some of the guarantees because of economic downtrends. This
reduced the present value of those guarantees by \$1,000.**[^41] **The
agency transferred the \$1,000 from the program fund to the financing
fund~~, and the authorized loan guarantee level was~~** ~~reduced from
\$100,000 to \$95,349. A new request for apportionment (SF-132) for the
financing fund, showing the reduced loan guarantee level, was submitted
to and approved by OMB.~~

*~~Memorandum Accounts - Loan Guarantee Level~~*

~~8020 Loan Guarantee Level - Apportioned 4,651~~

~~8010 Guaranteed Loan Level 4,651~~

***Explanation of Difference***

Here the basic transaction is the same--the agency is making
modifications to loan guarantee terms that cost the government \$1,000.
However, some of the related procedures are different. In the
discretionary program, the agency had to reduce the loan guarantee
level. This was because the subsidy appropriation was annual, so the
agency had to use subsidy to modify loan guarantees and could not use
the subsidy to making new guarantees (recall that an agency can only
make the amount of loan guarantees that its subsidy monies can support).

In a mandatory program in which an agency can draw additional monies,
with OMB approval, from a permanent indefinite appropriation, there is
no need to reduce the program level. The agency can recover the \$1,000
subsidy by drawing an additional \$1,000 from the appropriation subsidy.
This is not illustrated because, we know from the discretionary program
guide, the agency did not use the full amount of subsidy, even reduced
by the \$1,000 used for modifications, to make loans. However, the
agency would not make the entry to reduce the loan level, unless OMB
directed the agency to reduce it.

## TRIAL BALANCES AND FINANCIAL STATEMENTS

Pre- and post-closing trial balances, financial statements, and the
quantitative portion of the credit program note for the mandatory
program would be the same as for the discretionary program for both
fiscal years, with the exception that the guaranteed loan level probably
would remain at \$100,000 instead of having been reduced to \$95,349.
The pre-closing trial balance of memorandum accounts for the loan
guarantee level would thus be:

Memorandum Accounts--Loan Guarantee Level (Financing Fund Only)

8010 **\$100,000**

8015 -0-

8020 **(10,000)**

8040 (90,000)

8045 [-0-]{.underline}

\$ -0-

The closing entry for these accounts would be:

1-19 The agency made the following closing entries.

##### [Memorandum Accounts - Loan Guarantee Level]{.underline} (F234)

8020 Guaranteed Loan Level - Apportioned **10,000**

8045 Guaranteed Loan Level - Unused Authority **10,000**

And the post-closing trial balance would be:

*[Memorandum Accounts--Loan Guarantee Level (Financing Fund
Only)]{.underline}*

8010 **\$100,000**

8015 -0-

8020 -0-

8040 (90,000)

8045 **[(10,000)]{.underline}**

> \$ 0

Narrative descriptions about funding and loan levels authorized would be
different, but are not illustrated for either program. (The narrative
about program level and nature of subsidy funding would be different,
because the program loan level was reduced in the discretionary program
but not in the mandatory program, and the subsidy appropriation in the
mandatory program was no-year authority, as opposed to annual authority
in the discretionary case.)

# APPENDIX 2: ACCOUNTING FOR DOWNWARD RE-ESTIMATESIN DISCRETIONARY AND MANDATORY LOAN GUARANTEE PROGRAMS

## INTRODUCTION

The nature of downward subsidy re-estimates for loans and interest
receivable is the same for both discretionary and mandatory loan
guarantee programs. In both cases, the present value of the receivables
is understated at yearend, meaning that the agency:

-   Collected more subsidy money than necessary to fund future net cash
    outflows;

-   Must adjust the value of the receivables accordingly; and

-   Must relinquish the excess subsidy amount from the financing fund.

Like the upward subsidy re-estimates, the agency must make an accrual
for the adjustment to subsidy expense at yearend, but will make the
actual transfer of cash in the following year.

The difference in the accounting between the two types of programs is
that normally, the agency must transfer the excess subsidy monies in the
discretionary program's financing fund, with interest, to a designated
miscellaneous receipt fund in the Treasury general fund. However, the
excess in the mandatory program and transfer it to the program fund.

The following sections illustrate accounting and reporting for a
downward subsidy re-estimate. For purposes of the illustration, the same
figures are used as in the upward r-estimate, except that the reestimate
will be downward. The re-estimate components are:[^42]

> 2180 1399
>
> Loan Guarantee Allowance
>
> [Liability for Subsidy Total]{.underline}

Technical Re-estimate -\$42 +\$6 -\$36

Interest-rate Re-estimate [+\$12]{.underline} [+\$1]{.underline}
[+\$13]{.underline}

Total -\$30 +\$7 **-\$23**

Note that it is the total re-estimate to subsidy expense of -\$23 that
denotes the transaction as a downward re-estimate.[^43] It makes no
difference whether the individual technical and interest rate
re-estimates for any account or in total are positive or negative; only
the total for the entire re-estimate, which is bolded in the table,
determines the direction of re-estimate. There is no separate accounting
for individual upward or downward components; some accounting is for an
upward re-estimate and some is for a downward re-estimate. The
accounting is based solely on the total re-estimate.

## DISCRETIONARY PROGRAM

The entries to accrue the downward re-estimate described in the
preceding section in a discretionary program are shown below. Note that,
unlike for an upward re-estimate, the program fund is not involved.

## Fiscal Year 1

**1. To record the technical re-estimate.** (D366)

*[Financing Fund]{.underline}*

2180 Loan Guarantee Liability 42

6800 Future Funded Expenses

\[Subsidy Expense Re-estimate -- Technical\] 36

######  1399 Allowance for Subsidy \[Defaulted Guar. Loans\] 6

**2. To record the interest rate re-estimate.** (D366)

6800 Future Funded Expenses

\[Subsidy Expense Re-estimate -- Technical\] 13

2180 Loan Guarantee Liability 12

1399 Allowance for Subsidy \[Defaulted Guar. Loans\] 1

**3. To accrue the transfer-out to the misc. receipt fund**

5730 Financing Sources Transfer. Out Without Reimbursement 23

2190 Other Accrued Liabilities \[Subsidy Payable to Misc. Receipt Fund\]
23

***Explanation of entries***:

The first entry adjusts the present value of the loan guarantee
liability and the allowance for subsidy for the technical re-estimate;
the second does so for the interest rate re-estimate. The agency could
combine the two entries into a single entry, but both entries are shown
separately here for purposes of clarity. The third entry accrues the
payable to the miscellaneous receipt fund that will result in Fund
Balance With Treasury transferred from the financing fund to the
miscellaneous receipt fund in Year 2. As with upward adjustments, the
budget rules are that the actual cash transfer will not take place until
the following year. Hence, the accrual is made in year 1, and the
payment is made in year 2.

*[Memorandum Accounts--Loan Guarantee Liability (LGL)
Activity]{.underline}*

9XXM A/S - Subsidy Re-estimates - Technical 42

9XXL A/S - Subsidy Re-estimates - Interest Rate 12

9XXB Loan Guarantee Liability 30

***Explanation of entry***:

This entry compiles the effect of the proprietary entries shown just
before it on the loan guarantee liability. There is no requirement to
report the effect on the allowance for subsidy in a loan guarantee
program.

######### Miscellaneous Receipt Fund

1310 Accounts Receivable \[from Credit Agency Financing Fund\] 23

> 5720 Financing Sources Transferred In Without
>
> Reimbursement 23

***Financial Statement Effects***

The effect of the proprietary entries on the financial statements and
credit program note is as follows:

• The net debit to account 2180 would reduce that account in the credit
program note, and would reduce the value of the loan guarantee liability
on the Balance Sheet.

• The net credit to account 1399 would increase the credit program
assets in the credit program note and their value on the Balance Sheet.

• The net credit to accounts 6800 \[Subsidy Expense Re-estimate --
Technical\] and 6800\[Subsidy Expense Re-estimate -- Interest Rate\]
would reduce subsidy expense and the net cost of operations, yielding,
solely for this transaction, a net cost of operations of -\$23.

• The statement of budgetary resources would not be affected, because
there are no budgetary entries made for the accrual of downward
re-estimates.

• The statements of changes in net position and of financing, solely for
the downward re-estimate transactions in year 1, are shown below. Note
that on the statement of financing, the handling of accrued downward
re-estimates is not symmetrical to the handling of accrued upward
re-estimates in a discretionary program.

## FINANCIAL STATEMENTS

## 

## STATEMENT OF CHANGES IN NET POSITION

**DISCRETIONARY PROGRAM**

**(Resulting From Downward Re-estimate Transactions in Fiscal Year 1)**

> **Cumulative Results Unexpended**
>
> **of Operations**[^44] **Approp.** [^45]

1\. Balance October 1 (3310B) \$0

13\. Transfers-in/out without reimbursement (5730) 23

17\. Net cost of operations [(23)]{.underline}

18 Ending balance September 30 \$0

## 

## STATEMENT OF FINANCING

**DISCRETIONARY PROGRAM**

**(Resulting From Downward Re-estimate Transactions in Year 1)**

**Resources Used To Finance Activities:**

1.  Transfers in/out without reimbursement

> (Accrued transfers-out of downward subsidy re-estimate)
> [\$(23)]{.underline}

30\. Net cost of operations \$(23)

Credit Program Note:

The effect of the memorandum account entries would be primarily on the
credit program note. The same amounts as for the upward re-estimate
would be shown in sections E and G of the note, but the algebraic signs
would be reversed. The same amounts as for the upward re-estimate would
be shown in sections L and N of the note, but the algebraic signs would
be reversed.

## Fiscal Year 2

In year 2, the agency would transfer cash to satisfy the liability to
the miscellaneous receipt fund from the credit agency's financing fund.
The following entries would be required.

##### [Financing Fund]{.underline}

**4. To obtain an apportionment**[^46] (TC A116)

4450 Unapportioned Authority 23

4510 Apportionments 23

**5. To allot the apportionment** (TC A120)

4510 Apportionments 23

4610 Allotments - Realized Resources 23

6.  **To reclassify amount unfunded (re-estimate) to funded.**

6800 Future Funded Expenses

\[Subsidy Expense Re-estimate -- Technical\] 23

6199 Adjustments to Subsidy Expense 23

**7. To transfer the money** (TC B106, B110)

4610 Allotments - Realized Resources 23

4902 Delivered Orders -- Obligations, Paid\
\[Re-est. subsidy and interest\] 23

2190 Other Accrued Liabilities \[Subsidy Payable to Misc. Receipt
Acct.\] 23

1010 Fund Balance With Treasury 23

######### Miscellaneous Receipt Fund

1010 Fund Balance With Treasury 23

1310 Accounts Receivable \[from Credit Agency Financing Fund\] 23

***Financial Statement Effects***

The proprietary entry to transfer the money would of course reduce the
liability and the Fund Balance With Treasury on the balance sheet. There
would be no effect on either the statements of net cost or of changes in
net position.

The statements of budgetary resources and of financing would appear as
shown below (for these transactions only).

**STATEMENT OF BUDGETARY RESOURCES**

**DISCRETIONARY PROGRAM**

**(Resulting From Downward Re-estimate Transactions in Fiscal Year 2)**

> Budgetary Non-Budgetary
>
> Resources

Unobligated balance forward \$ -0- \$23

**Status of Budgetary Resources**

8\. Obligations incurred (4902) \$ 0 \$23

**Relationship of Obligations to Outlays**

Outlays

15A. Disbursements (4902) 0 \$23

16\. Distributed offsetting receipts 23

17\. Net outlays \$23 \$23

**STATEMENT OF FINANCING**

**DISCRETIONARY PROGRAM**

**(Resulting from Downward Re-estimate Transactions in Fiscal Year 2)**

**Budgetary Resources Obligated**

1\. Obligations incurred (4902) 23

4\. Less Offsetting receipts [23]{.underline}

5\. Net obligations 0

7\. Transfers in/out without reimbursement (5730) [(23)]{.underline}

11\. Total resources used to finance activities [(23)]{.underline}

**Resources Used to Finance Items Not a Part of the Net Cost of
Operations**

16\. Other (5730) [(23)]{.underline}

17\. Total resources used to finance items not a part of net cost 0

30\. Net cost of operations \$ 0

## MANDATORY PROGRAM

In both a mandatory and a discretionary program, a downward re-estimate
is caused by the present value of loan assets on the books being less
than the present value of their cash flows, or the loan guarantee
liability being more than the liability of its cash flows, in net for
the two. Accordingly, agencies must adjust the value on the books to the
computed present value at the balance sheet date, and must remove the
excess subsidy money collected[^47] from the financing fund. Unlike a
discretionary program, however, agencies generally give back the excess
subsidy in a mandatory program to the program fund for reuse rather than
transferring to a Treasury miscellaneous receipt fund.

As in a discretionary program, agencies make the adjustment of the
present value of the receivables and the accrual of the payable to
transfer the funds is made at the end of the year to which the
re-estimate applies, with no effect on the budgetary accounts. Then, in
the next year, they transfer the monies out of the financing fund, and
recognize the monies in the budgetary accounts. The entries to
accomplish this in a mandatory program are shown below, using the same
parameters as for the discretionary program discussed in the preceding
section.

## Fiscal Year 1

1\. To record receivable from Financing Fund.

*[Program Fund]{.underline}*

1310 Accounts Receivable\
\[Re-estimated Subsidy Receivable from Financing Fund\] 23

5720 Financing Sources Transfer In Without Reimb. 23

***Explanation of entry:***

This entry accrues the receivable as a non-budgetary transfer-in from
the financing fund.

**2. To record the technical re-estimate.** (D366)

*[Financing Fund]{.underline}*

#### 2180 Loan Guarantee Liability 42

6800 Future Funded Expenses

\[Subsidy Expense Re-estimate -- Technical\] 36

1399 Allowance for Subsidy \[Defaulted Guar. Loans\] 6

**3. To record the interest rate re-estimate.** (D366)

6800 Future Funded Expenses

\[Subsidy Expense Re-estimate - Interest Rate\] 13

2180 Loan Guarantee Liability 12

1399 Allowance for Subsidy \[Defaulted Guar. Loans\] 1

**4. To accrue the transfer-out to the program fund**

5730 Financing Sources Transfer Out Without Reimbursement 23

2190 Other Accrued Liabilities

\[Subsidy Payable to Program Fund\] 23

***Explanation of entries***:

The first entry adjusts the present value of the loan guarantee
liability and the allowance for subsidy for the technical re-estimate;
the second does so for the interest rate re-estimate. The agency could
combine the two entries into a single entry, but both entries are shown
separately here for purposes of clarity. The third entry accrues the
payable to the program fund that will result in Fund Balance With
Treasury transferred from the financing fund to the program fund in year
2. As with upward adjustments, the budget rules are that the actual cash
transfer will not take place until the following year. Hence, the
accrual is made in year 1, and the payment is made in year 2.

*[Memorandum Accounts--Loan Guarantee Liability (LGL)
Activity]{.underline}*

9XXM A/S - Subsidy Re-estimates - Technical 42

9XXL A/S - Subsidy Re-estimates - Interest Rate 12

9XXB Loan Guarantee Liability 30

***Explanation of entry***:

This entry compiles the effect of the proprietary entries shown just
before it on the loan guarantee liability. There is no requirement to
report the effect on the allowance for subsidy in a loan guarantee
program.

*[Financial Statement Effects]{.underline}*

The effect of the proprietary entries on the financial statements and
credit program note is as follows:

• The net debit to account 2180 would reduce that account in the credit
program note, and would reduce the value of the loan guarantee liability
on the Balance Sheet.

• The net credit to account 1399 would increase the credit program
assets in the credit program note and their value on the Balance Sheet.

• The net credit to accounts 6800\[Subsidy Re-estimate -- Technical\]
and 6800\[Subsidy Re-estimate -- Interest Rate\] would reduce subsidy
expense and the net cost of operations, yielding, solely for this
transaction, a net cost of operations of -\$23.

• Accounts 1310\[Subsidy Receivable from Financing Fund\] and 2190
\[Subsidy Payable to Program Fund\] would be eliminated against each
other in the consolidation process and would not appear on the Balance
Sheet. Similarly, accounts 5720 and 5730 would be eliminated, and would
not appear on the Statement of Changes in Net Position or on the
Statement of Financing.

• The Statement of Budgetary Resources would not be affected, because
there are no budgetary entries made for the accrual of downward
re-estimates.

• The Statements of Changes in Net Position and of Financing, solely for
the downward re-estimate transactions in year 1, are shown below. Note
that on the Statement of Financing, the handling of accrued downward
re-estimates is not symmetrical to the handling of accrued upward
re-estimates in a discretionary program.

**FINANCIAL STATEMENTS**

## INFORMATION FOR CONSOLIDATING THE

**CUMULATIVE RESULTS OF OPERATIONS COLUMN**

**FOR THE STATEMENT OF CHANGES IN NET POSITION**

**MANDATORY PROGRAM**

**(Resulting From Downward Re-estimate Transactions in Year 1)**

> **Cumulative Results**
>
> **[of Operations]{.underline}**
>
> **Program Financing**
>
> **[Fund Fund Total]{.underline}**

1\. Beginning balance October 1 (3310B) 0[^48] 0[^49] 0

13\. Transfers in/out without

reimbursements (5720/5730) 23 [(23)]{.underline} 0

17\. Net cost of operations [0]{.underline} [23]{.underline}[^50]
[23]{.underline}

18\. Ending balance September 30 \$ 23 \$ 0 \$23

**STATEMENT OF FINANCING**

**MANDATORY PROGRAM**

**(Resulting From Downward Re-estimate Transactions in Year 1)**

**Resources Used to Finance Activities** \$ -0-[^51]

**Components of Net Cost of Operations That Will Not Require or
Generate\
Resources in the Current Period:**

21\. Upward/downward re-estimates of credit subsidy expense (6800)
[(23)]{.underline}

30\. Net cost of operations \$(23)

The effect of the memorandum account entries would be primarily on the
credit program note. The same amounts as for the upward re-estimate in
the case would be shown in sections L and N of the note, but the
algebraic signs would be reversed.

## FISCAL YEAR 2

**5. To anticipate the collection from the financing fund.** (A140)

*[Program Fund]{.underline}*

4070 Anticipated Collections from Federal Sources 23

4450 Unapportioned Authority 23

**6. To receive an apportionment for the collection.** (A118)

4450 Unapportioned Authority 23

4590 Apportionments Unavailable - Anticipated Resources 23

**7. To collect the receivable from the financing fund**[^52]**.**
(C104)

4271 Actual Program Fund Subsidy Collected 23

4070 Anticipated Collections from Federal Sources 23

1010 Fund Balance With Treasury 23

1310 Accounts Receivable\
\[Re-estimated Subsidy Receivable from Financing Fund\] 23

**8. To receive the apportionment of the beginning unobligated balance
of resources**[^53]**.** (A116)

*[Financing Fund]{.underline}*

4450 Unapportioned Authority 23

4510 Apportionments 23

**9. To allot the apportionment.** (A120)

4510 Apportionments 23

4610 Allotments - Realized Resources 23

**10. To transfer the money to the program fund.** (B204 and B110)

4610 Allotments - Realized Resources 23

4902 Delivered Orders -- Obligations, Paid:\
\[Subsidy and Interest Re-estimates\] 23

2190 Other Accrued Liabilities

\[Re-estimated Subsidy Payable to Program Fund\] 23

1010 Fund Balance With Treasury 23

***Effect on Financial Statements***

The proprietary entries to transfer the money would have no effect on
the consolidated balance sheet, but would increase fund balance with
Treasury and reduce the receivable from the financing fund in the
program fund, and would reduce both fund balance with Treasury and the
payable to the program fund in the financing fund. There would be no
effect on either the statements of net cost or of changes in net
position.

The statements of budgetary resources and of financing would appear as
shown below (for these transactions only):

## STATEMENT OF BUDGETARY RESOURCES

**MANDATORY PROGRAM**

**(Resulting From Downward Re-estimate Transactions in Year 2)**

> Budgetary Non-Budgetary
>
> Resources

######### Budgetary Resources

2\. Unobligated Balance Forward \$ 0[^54] \$23

3\. Spending authority from offsetting\
collections (4271) [23]{.underline} [0]{.underline}

7\. Total budgetary resources 23 23

**Status of Budgetary Resources**

8\. Obligations incurred (4902) \$ 0 \$23

10\. Unobligated unavailable (4450) [23]{.underline} [0]{.underline}

11\. Total status of budgetary resources \$23 \$23

**Relationship of Obligations to Outlays**

15\. Outlays

15A. Disbursements (4902) 0 \$23

15B. Collections (4271) (23)

17\. Net Outlays (23) 23

**STATEMENT OF FINANCING**

**MANDATORY PROGRAM**

**(Resulting From Downward Re-estimate Transactions in Year 2)**

**Budgetary Resources Obligated**

1\. Obligations incurred (4902) \$23

2\. Less Offsetting collections [(23)]{.underline}

3\. Obligations net of offsetting collections \$0

**Resources Which Did Not Finance Net Cost of Operations**

13\. Resources that fund expenses recognized

in prior periods (Collection of downward subsidy re-estimate)(2190) (23)

15\. Resources that finance the acquisition of assets (4902)
[23]{.underline}

total resources not financing costs [0]{.underline}

30\. Net cost of operations \$ 0

# APPENDIX 3: REFERENCES

This appendix lists some key references and Web sites for readers who
want to obtain additional information.

**OFFICE OF MANAGEMENT AND BUDGET**

-   OMB Bulletin 01-09, *Form and Content of Agency Financial Statements
    for Audit*

-   OMB Circular A-11, *Preparation, Submission, and Execution of the
    Budget*

-   OMB Credit Model

>  OMB Publications Office at (202) 395-7332
>
>  Office of Federal Financial Management (202) 395-3993
>
>  Web site: www.whitehouse.gov/omb

**FEDERAL ACCOUNTING STANDARDS ADVISORY BOARD**

Statement of Federal Financial Accounting Standards (SFFAS) No. 1,
*Selected Assets and Liabilities*

-   SFFAS No. 2, *Accounting for Direct Loans and Loan Guarantees*

-   SFFAS No. 3, *Inventory and Related Property*

-   SFFAS No. 7, *Accounting for Revenue and Other Financing Sources*
    (including related implementation guide)

-   SFFAS No. 18, *Amendments to Accounting Standards for Direct Loans
    and Loan Guarantees*

-   SFFAS No. 19, *Technical Amendments to Accounting Standards for
    Direct Loans and Loan Guarantees*

-   Statement of Federal Financial Accounting Concepts No. 2, *Entity
    and Display* (as amended by SFFAS No. 7)

Accounting and Auditing Policy Committee, Technical Release No. 3:
*Preparing and Auditing Direct Loan and Loan Guarantee Subsidies Under
the Federal Credit Reform Act*

-   FASAB Staff at (202) 512-7350

-   Web site: www.fasab.gov

**TREASURY FINANCIAL MANAGEMENT SERVICE**

-   *U.S. Government Standard General Ledger* (codified in *Treasury
    Financial Manual*)

-   *Budgetary Accounting in the Federal Government*

-   Illustrative Cases in Accounting for Credit Programs (USSGL
    Division)

-   Present Value Monograph

-   USSGL Division (Office of Financial Management, Treasury) at (202)
    874-9980

[^1]: See §1.2, p.2, *Form and Content of Agency Financial Statements,*
    OMB Budget Bulletin 01-09, dated September 2001.

[^2]: OMB Circular No. A-11 (2003), Section 185.3(m)

[^3]: *The illustration is for the payment of administrative expenses
    without prior obligation through undelivered orders or accounts
    payable. Though administrative expenses will usually be obligated
    before payment, there is nothing about the transactions unique to
    credit program accounting, and they are not shown.*

[^4]: Borrowing Authority transactions are not covered in this guide
    because it is covered in the Direct Loan Guide, where borrowing from
    Treasury is standard.

[^5]: This relates to upward re-estimates.

[^6]: This account must be zero after closing because the financing fund
    cannot have a net cost of operations or net position. OMB A-11,
    Section 185, Exhibit E illustrates that the financing is designed to
    break even and thus have a zero results of operations. If the
    subsidy amount is material, a payable to transfer it to a designated
    miscellaneous receipt fund is accrued. If it is immaterial, a
    receivable from the program fund is accrued for the deficiency.

[^7]: Account 5312 \[Borrowers\] was used in the direct loans case for
    interest income received from borrowers. Interest income on
    defaulted guaranteed loans assumed for direct collection is
    accounted for differently and does not involve 5312 \[Borrowers\],
    which is not shown in the chart of accounts.

[^8]: Programs that have risk categories must maintain separate
    financing fund accounting for each risk category. While annual
    appropriations for basic and modified subsidy, which are common in
    discretionary loan guarantee programs, are illustrated, some
    programs may have multi-year or permanent indefinite appropriations
    provided for these purposes in their underlying legislation.
    Accounting for these types of appropriations is essentially the same
    as it would be for basic operating appropriations or revolving fund.

[^9]: Note that this is higher than the \$500 of fees in the subsidy
    model, because \$500 is the present value of the fees, and \$510 is
    the actual amount of fees expected to be collected.

[^10]: Although the agency is guaranteeing 100 percent of the loans made
    by third-party lenders, Federal budget rules provide that the 100
    percent figure would still be used as the loan level even if the
    guarantee was for less than 100 percent. The figure also would be
    100 percent of principal only even if defaulted interest was
    guaranteed as well. See OMB Circular A-11, Preparation, Submission
    and Execution of the Budget (June 2003), §185.11(c).

[^11]: \$5,500 needed to pay defaults and interest supplements, \$3,500
    and \$2,000 is apportioned.

[^12]: Note that in accordance with §121.7 of OMB Circular A-11, only
    realized resources may be obligated.

[^13]: \$90,000 in loan commitments x 21.5 percent subsidy = \$19,350.

[^14]: Note that the unfilled customer order from the program fund
    constitutes a realized resource. Only the \$5,500 apportioned in
    transaction 1-2 can be allotted.

[^15]: \$87,000 in guaranteed loans disbursed x the 21.5 percent subsidy
    rate = \$18,705.

[^16]: Note that no additional allotment is made, because the full
    \$5,500 that OMB apportioned was allotted in transaction 1-5.

[^17]: Per the subsidy model discussed in the guide agency parameters,
    the dollar amounts are computed by multiplying the \$87,000 in loans
    disbursed x 20 percent for the default component, 2 percent for the
    interest differential,-(.5) percent for the fees, and 21.5 percent
    for the total.

[^18]: Interest receivable amount may also be combined with 1350 instead
    of being separated between 1340 and 1350.

[^19]: If interest receivable at the time of default had been recorded
    as part of loans receivable, the entire \$240 would be credited to
    1350. See transaction 1-10.

[^20]: Before making the modifications, the agency must be certain that
    it has sufficient unobligated resources for subsidy in the program
    fund. In this guide, the amount of unobligated resources, as
    represented by allotments related to the subsidy, amounted to
    \$2,150 (\$21,500 from transaction 1-3 less \$19,350 from
    transaction 1-5).

[^21]: The subsidy rate for fiscal year 1 is 21.5 percent. The original
    subsidy authorized to support \$100,000 in loan guarantees was
    \$21,500. The remaining subsidy, after the modification, is
    \$20,500. This \$20,500 will support the making of only \$95,349 in
    new loans (\$20,500/.215).

[^22]: The transaction assumes that because the original and modified
    subsidy transactions occurred in such close proximity, the actual
    Treasury interest rate at the time of the modification is the same
    as the cohort rate. See OMB Circular A-11, §§185.3(s) and 185.7 for
    additional information. A more comprehensive modification
    transaction is illustrated in the separate guide on pre-credit
    Reform accounting. Note that whereas at the start of the fiscal
    year, all collections were anticipated on line 3(c), the actual
    collections to date just before the modification now appear on line
    3(a)1, with those still anticipated on line 3(c).

[^23]: Original loan level, \$100,000, less revised loan level, \$95,349
    = \$4,651.

[^24]: Note that unlike in direct loan programs, interest income accrued
    on defaulted guaranteed loans receivable is credited to the
    allowance for subsidy account, whether collectible or not.
    Similarly, interest income collected without first being accrued
    also would be credited to allowance for subsidy account.

[^25]: This determination of uncollectibility would be made only after
    attempting to collect the receivables under provisions of the
    Federal Debt Collection Act.

[^26]: The FCRA requires that the rates for discounting cashflows,
    financing account borrowing, and financing account interest earnings
    be identical and based on the Treasury rate in effect during the
    period of loan disbursement. If your loans disburse in segments over
    several years, several interest rates will be applicable to an
    individual loan or group of loans. The correct interest rates are
    provided for you in the OMB Credit Subsidy Calculator available form
    your OMB representative.

    For loan guarantee financing accounts, the interest rate for cash
    accumulations related to each loan guarantee is determined by the
    date that the commercial lender disburses the loan being guaranteed.
    Because commercial lenders may not report to you in a timely manner,
    you can use an estimated fourth quarter amount for disbursements and
    collections when you report to Treasury a the end of the fiscal
    year, adjusting this estimate as actual lender data is accumulated.

[^27]: Breakout of #1-18 (for clarity); Per OMB Circular No. A-11
    (2003), Section 185.6(F), all increases or decreases in subsidy cost
    for different risk categories within the same cohort will be netted
    against each other. No such netting can occur between cohorts.

    At year-end it was determined that an upward technical subsidy
    expense re-estimate related to the loan guarantee liability of \$42
    was required (including interest). *(B324, C228)*

    [Program Fund]{.underline}

    6800 Future Funded Expenses

    \[Subsidy Expense - Re-estimates -- Technical\] 42

    2170 Subsidy Payable to Financing Account 42

    [Financing Fund]{.underline}

    #### 1310 Accounts Receivable

    > \[Subsidy Receivable from Program Fund\] 42

    2180 Loan Guarantee Liability 42

    [Memorandum Accounts - Loan Guarantee Liability (LGL)
    Activity]{.underline}

    9XXB LGL - Contra 42

    9XXM LGL - Subsidy Re-estimates - Other 42

    In addition, it was determined that a downward technical subsidy
    re-estimate of \$6 was required (including interest) for the
    receivables. *(B324R, C228)*

    [Program Fund]{.underline}

    2170 Subsidy Payable to Financing Account 6

    6800 Future Funded Expenses

    \[Subsidy Expense - Re-estimates -- Technical\] 6

    [Financing Fund]{.underline}

    1399 Allow. for Subs. \[Defaulted Guar. Loans Rec.\] 6

    ####  1310 Accounts Receivable

    > \[Subsidy Receivable from Program Fund\] 6

    There was also a downward interest rate re-estimate of \$12 for the
    loan guarantee liability and \$1 on the allowance for subsidy.
    *(C228, B324R)*

    [Program Fund]{.underline}

    2170 Subsidy Payable to Financing Account 12

    6800 Future Funded Expenses

    \[Subsidy Expense - Re-estimates - Interest Rate\] 12

    [Financing Fund]{.underline}

    2180 Loan Guarantee Liability 12

    1399 Allow. for Subs. \[Defaulted Guar. Loans Rec.\] 1

    ####  1310 Accounts Receivable

    > \[Subsidy Receivable from Program Fund\] 13

    [Memorandum Accounts - Loan Guarantee Liability (LGL)
    Activity]{.underline}

    9XXL LGL - Subsidy Re-estimates - Interest Rate 12

    9XXB LGL - Contra 12

    \*\*\*\*Note: that there is a net technical upward adjustment of
    \$36. These transactions is recorded simultaneously, but shown here
    separately for clarity.\*\*\*\*

[^28]: Note that the cumulative results of operations from this activity
    are zero. The financing fund cannot have a net position after
    closing. Assets must equal liabilities.

[^29]: Note that the column for unexpended appropriations would not be
    applicable, because the financing fund does not have appropriations.
    Of course, in an actual agency situation, the statement would
    reflect both the program and financing fund transactions for the
    year, and hence, both columns would appear.

[^30]: The information presented here is for the applicable sections of
    note 8 in OMB's Bulletin 01-09, Form and Content of Agency Financial
    Statements for loan guarantee programs, which can be quantified.

[^31]: Because the agency guaranteed 100 percent of the loans, both the
    principal outstanding and the amount guaranteed are the same.

[^32]: This information is obtained from the subsidy model.

[^33]: The information called for contains a repeat of the detail in
    Section E, Subsidy Expense for Direct Loan by Program and Component.
    The example provided here summarizes the information rather than
    repeating the detail.

[^34]: Since the agency operates only a loan guarantee program, and the
    administrative expense is already set forth in the Statement of Net
    Cost, Section O could be omitted in the guide. It is provided here
    for illustrative purposes only.

[^35]: Note that this is a permanent indefinite appropriation, as
    opposed to the annual appropriation for basic and modified subsidy
    that used in fiscal year 1. OMB states that a permanent indefinite
    appropriation is anticipated and can only be realized with OMB
    approval, at which time the Fund Balance With Treasury also is
    recognized. Therefore, there is no entry to Fund Balance With
    Treasury recorded.

[^36]: For enacted legislation other than an appropriation act, as in
    this case an indefinite appropriation, provides budget authority in
    the form of an appropriation, agencies must submit a letter to
    Treasury requesting the appropriation (warrant). See TFM 2030.10.

[^37]: Although OMB would apportion resources to the financing fund for
    paying interest supplements and defaults, the transactions and
    reports in this section of the guide are limited to the disposition
    of the re-estimated subsidy accrued at the end of fiscal year 1.

[^38]: Note that there are no closing entries required for the financing
    fund, because there were no transactions involving financing sources
    or expenses.

[^39]: The legislation providing for this is Public Law 101-510, a
    separate part of the Defense Appropriation Act of 1990, applying
    more broadly to most Federal agencies. The USSGL Board has published
    a document entitled Budgetary Accounting in the Federal Government
    that is available through its Web site at
    [www.fms.treas.gov/USSGL/bag.html.]{.underline}

[^40]: It is important to note these assumptions, because they form the
    basis for changes to be discussed. It is possible that variations,
    even within the assumptions, could exist and that entries could
    differ still further. For example, OMB might decide on a lesser
    amount of subsidy funding than the agency anticipated in its request
    and if needed, increase the amount later (see transactions 1-1 and
    1-2). The more specific assumption in this appendix is that the
    nature of transactions and amounts between the discretionary and
    mandatory programs is the same.

[^41]: Before making the modifications, the agency must be certain that
    it has sufficient unobligated resources for subsidy in the program
    fund. In this guide, the amount of unobligated resources, as
    represented by allotments related to the subsidy, amounted to
    \$2,150 (\$21,500 from transaction 1-3 less \$19,350 from
    transaction 1-5).

[^42]: The direct loan guide's readership may notice that the components
    of the re-estimate were further separated into principal and
    interest, and they were accounted for in that detail via the
    memorandum accounts for the allowance for subsidy activity so that
    the interest could be separately reported to OMB in its Schedule P,
    "Program and Financing Schedule." This was doable using the
    allowance for subsidy activity memorandum accounts because there was
    only one group of accounts being adjusted for the re-estimate--the
    loan asset accounts, adjusted by changing the value of the allowance
    for subsidy. However, in a loan guarantee program, there is an
    adjustment both to the allowance for subsidy and to the loan
    guarantee liability, and there is no requirement to separately
    report the adjustment to the allowance for subsidy in a loan
    guarantee program. Hence, using memorandum accounts for both the
    principal and interest portions of the technical or interest rate
    re-estimate amounts could not be computed from only the memorandum
    accounts for the loan guarantee liability activity accounts, since
    they would not include that breakout for the allowance for subsidy.
    Accordingly, agencies would either have to further break out their
    series 6800 accounts (Future-funded Expenses) for this, or manually
    insert the information into Schedule P, based on information from
    the subsidy model.

[^43]: Per OMB Circular No. A-11 (2003), Section 185.6(F), all increases
    or decreases in subsidy cost for different risk categories within
    the same cohort will be netted against each other. No such netting
    can occur between cohorts.

[^44]: Remember that the financing fund cannot have a balance in
    cumulative results of operations after closing. Hence, the beginning
    balance of cumulative results of operations must be zero.

    Note that the requirement for net position to be zero after closing
    does not mean that there cannot be a net cost of operations. The
    requirement is that all accounts, which close to cumulative results
    of operations, must net to zero. In this guide, there is a negative
    expense account balance, resulting in a net cost of operations of
    -\$23; and there is a non-budgetary transfer out of that same
    amount.

[^45]: Note that the column for unexpended appropriations would not be
    applicable, because the financing fund does not have appropriations.
    Of course, in an actual agency situation, the statement would
    reflect both the program and financing fund transactions for the
    year, and hence, both columns would appear.

[^46]: Note that the excess monies would already have been collected in
    fiscal year 1. Hence, they would be part of the unobligated balance
    of resources forward and would reside as part of the balance of
    account 4450 at the beginning of fiscal year 2.

[^47]: If the present value of the cash flows is greater than expected,
    less subsidy is needed.

[^48]: A balance of zero is assumed for purposes of illustrations. In an
    actual situation, the beginning balance of account 3310 in the
    program fund would be used.

[^49]: Remember that the financing fund cannot have a balance in
    cumulative results of operations after closing. Hence, the beginning
    balance of cumulative results of operations must be zero.

[^50]: Note that because the net cost of operations is negative, meaning
    that there is, in essence, a "profit" generated by the negative
    subsidy expense, the amount increases cumulative results of
    operations.

    Note that the requirement for net position to be zero after closing
    does not mean that there cannot be a net cost of operations. The
    requirement is that all accounts that close to cumulative results of
    operations must net to zero. In this guide, there is a negative
    expense account balance, resulting in a net cost of operations of
    -\$23; and there is a non-budgetary transfer out of that same
    amount.

[^51]: This is zero because (1) there are no budgetary resources, and
    (2) the non-budgetary transfers-in and -out canceled to zero in the
    consolidation process.

[^52]: The collection could also be allotted at this time by making the
    entry:

    > 4590 Apportionments Unavailable - Anticipated Resources 23
    >
    > 4610 Allotments - Realized Resources 23

[^53]: Note that the excess subsidy monies would already have been
    collected in fiscal year 1. Hence, they would be part of the
    unobligated balance of resources forward and would reside as part of
    the balance of account 4450 at the beginning of fiscal year 2.

[^54]: The program's fund beginning unobligated balance of resources of
    zero is assumed for illustrative purposes. In an actual situation,
    the beginning amount in 4450 would be inserted.