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

**FOR DIRECT LOAN PROGRAMS**

**WITHOUT COLLATERAL**

**IN FEDERAL CREDIT PROGRAM**

### **October 2004**

**PREPARED BY:**

**UNITED STATES STANDARD GENERAL LEDGER DIVISION**

**ACCOUNTING SYSTEMS AND STANDARDS DIRECTORATE**

**GOVERNMENTWIDE ACCOUNTING**

**FINANCIAL MANAGEMENT SERVICE**

**U.S. DEPARTMENT OF TREASURY**

**TABLE OF CONTENTS**

[OVERVIEW 3](#overview)

[CONCEPTUAL FRAMEWORK 6](#conceptual-framework)

[ACCOUNT TABLES 7](#account-tables)

[TRANSACTIONS - YEAR 1 14](#transactions---year-1)

[FINANCIAL STATEMENTS 41](#financial-statements)

[TRANSACTIONS -- YEAR 2 50](#transactions-year-2)

[FINANCIAL STATEMENTS 59](#financial-statements-1)

[APPENDIX 1: ACCOUNTING FOR MANDATORY DIRECT LOAN PROGRAMS
65](#appendix-1-accounting-for-mandatory-direct-loan-programs)

[APPENDIX 2: ACCOUNTING FOR DOWNWARD RE-ESTIMATES IN DISCRETIONARY AND
MANDATORY DIRECT LOAN PROGRAMS
72](#appendix-2-accounting-for-downward-re-estimates-in-discretionary-and-mandatory-direct-loan-programs)

[APPENDIX 3: REFERENCES 85](#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 direct loan scenarios. Users may download the guide from the
Financial Management Service (FMS) Web site at
www.fms.treas.gov/ussgl/creditreform.

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

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-   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
direct loan program under the Federal Credit Reform Act of 1990, as
amended, for direct loan obligated after September 30, 1991. Direct
loans are disbursements of funds by the Government to a non-federal
borrower under a contract that requires repayment of such funds with or
without interest.[^2]

Transactions are presented over a 1-year period (fiscal year 1) for a
fictitious Federal agency with a single direct loan 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 shown are:

-   Formulation, apportionment, and allotment of the budget;

-   Receipt of subsidy and administrative expense appropriations;

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

-   Borrowing from Treasury and repayment of loans and interest;

-   Disbursement of loans to program participants and collection of
    principal and interest from them;

-   Disbursement of administrative expenses;[^3]

-   Modification of loan terms, with resulting adjustment to program
    levels and return of excess borrowing from Treasury and reduction of
    borrowing authority;

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

-   Accrual of collectible and uncollectible interest from borrowers;

-   Amortization of allowance for subsidy;

-   Write-off of bad debts without receiving collateral; and

-   Closing entries.

The yearend agency reports presented 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

-   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 USED**                              |
|                                                                       |
| **RESOURCES**                                                         |
|                                                                       |
| > [Anticipated]{.underline}                                           |
| >                                                                     |
| > 4120 Appropriations Anticipated - Indefinite                        |
| >                                                                     |
| > [Realized]{.underline}                                              |
| >                                                                     |
| > 4115 Loan Subsidy Appropriation                                     |
| >                                                                     |
| > 4117 Loan Administrative Expense Appropriation                      |
| >                                                                     |
| > 4118 Re-estimated Loan Subsidy Appropriation - Indefinite -         |
| > Permanent                                                           |
| >                                                                     |
| > 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 USED**                            |
|                                                                       |
| **ASSETS**                                                            |
|                                                                       |
| 1010 Fund Balance with Treasury                                       |
|                                                                       |
| **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 \[Subsidy Re-estimate\][^4]               |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| **FINANCING FUND BUDGETARY ACCOUNTS USED**                            |
|                                                                       |
| **RESOURCES**                                                         |
|                                                                       |
| > [Anticipated]{.underline}                                           |
| >                                                                     |
| > 4060 Anticipated Collections from Non-Federal Sources               |
| >                                                                     |
| > 4070 Anticipated Collections from Federal Sources                   |
| >                                                                     |
| > [Realized]{.underline}                                              |
| >                                                                     |
| > 4141 Current-Year Borrowing Authority Realized                      |
| >                                                                     |
| > 4201 Total Actual Resources - Collected                             |
| >                                                                     |
| > 4221 Unfilled Customer Orders Without Advance                       |
| >                                                                     |
| > 4261 Actual Collections of Business-Type Fees                       |
| >                                                                     |
| > 4262 Actual Collections of Loan Principal                           |
| >                                                                     |
| > 4263 Actual Collections of Loan Interest                            |
| >                                                                     |
| > 4271 Actual Program Fund Subsidy Collected                          |
| >                                                                     |
| > 4273 Interest Collected from Treasury                               |
| >                                                                     |
| > [Anticipated Contra Resources]{.underline}                          |
| >                                                                     |
| > 4047 Anticipated Transfers to the General Fund of the Treasury      |
| >                                                                     |
| > [Realized Contra Resources]{.underline}                             |
| >                                                                     |
| > 4143 Reductions of Borrowing Authority                              |
| >                                                                     |
| > 4146 Actual Repayments of Debt, Current-Year Authority              |
| >                                                                     |
| > [Other]{.underline}                                                 |
| >                                                                     |
| > 4145 Borrowing Authority Converted to Cash                          |
| >                                                                     |
| > 4148 Resources Realized from Borrowing Authority                    |
| >                                                                     |
| > 4149 Borrowing Authority Carried Forward                            |
+-----------------------------------------------------------------------+
| **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 \[Loans Made\]           |
| >                                                                     |
| > 4902 Delivered Orders -- Obligations, Paid \[Other\]                |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| **FINANCING FUND PROPRIETARY ACCOUNTS USED**                          |
|                                                                       |
| **ASSETS**                                                            |
|                                                                       |
| 1010 Fund Balance with Treasury                                       |
|                                                                       |
| 1310 Accounts Receivable \[Subsidy Receivable from Program Account\]  |
|                                                                       |
| 1350 Loans Receivable                                                 |
|                                                                       |
| 1399 Allowance for Subsidy                                            |
|                                                                       |
| **LIABILITIES**                                                       |
|                                                                       |
| 2190 Other Accrued Liabilities \[Downward Re-estimate Payable to      |
| Misc. Receipt Account\]                                               |
|                                                                       |
| 2320 Deferred Credits \[Interest Deemed to be Uncollectible\]         |
|                                                                       |
| 2510 Principal Payable to the Bureau of the Public Debt               |
|                                                                       |
| **NET POSITION**                                                      |
|                                                                       |
| 3310 Cumulative Results of Operations[^5]                             |
|                                                                       |
| **FINANCING SOURCES**                                                 |
|                                                                       |
| 5312 Interest Revenue -- Loans Receivable/Uninvested Balances         |
| \[Borrowers\]                                                         |
|                                                                       |
| 5312 Interest Revenue - Loans Receivable/Uninvested Balances          |
| \[Treasury\]                                                          |
|                                                                       |
| 5310 Interest Revenue - Other \[Amortization of Subsidy\]             |
|                                                                       |
| 5730 Financing Sources Transferred Out Without Reimbursement          |
| \[Non-Budgetary\]                                                     |
|                                                                       |
| **EXPENSES**                                                          |
|                                                                       |
| 6310 Interest Expenses on Borrowing from the Bureau of the Public     |
| Debt and/or the Federal Financing Bank                                |
|                                                                       |
| 6800 Future Funded Expenses \[Subsidy Re-estimate\][^6]               |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| **FINANCING FUND MEMORANDUM ACCOUNTS USED**                           |
|                                                                       |
| **TO REPORT ACTIVITY IN THE ALLOWANCE FOR SUBSIDY**[^7]               |
|                                                                       |
| [Beginning and Contra Balances]{.underline} [Normal                   |
| Balance]{.underline}                                                  |
|                                                                       |
| 9XAA Allowance for Subsidy - Beginning Balance Dr. (negative) or Cr.  |
| (positive)                                                            |
|                                                                       |
| 9XAB Allowance for Subsidy - Contra Dr. (positive) or Cr. (negative)  |
|                                                                       |
| [Basic Subsidy]{.underline}                                           |
|                                                                       |
| 9XAD Allowance for Subsidy - Basic Subsidy Expense - Interest         |
| Differential Cr.                                                      |
|                                                                       |
| 9XAE Allowance for Subsidy - Basic Subsidy Expense - Defaults Cr.     |
|                                                                       |
| 9XAF Allowance for Subsidy - Basic Subsidy Expense - Fees and Other   |
| Collections Dr.                                                       |
|                                                                       |
| [Adjustments]{.underline}                                             |
|                                                                       |
| 9XAG Allowance for Subsidy - Adj - Loan Modifications Dr. (Dwnwd) or  |
| Cr. (Upwd)                                                            |
|                                                                       |
| 9XAH Allowance for Subsidy - Adj - Fees Received Cr.                  |
|                                                                       |
| 9XAI Allowance for Subsidy - Adj - Loan Principal Written Off Dr.     |
|                                                                       |
| 9XAJ Allowance for Subsidy - Adj - Interest Written Off Dr.           |
|                                                                       |
| 9XAK Allowance for Subsidy - Adj - Amortization to Interest Dr.       |
| (positive) or Cr. (negative)                                          |
|                                                                       |
| [Re-estimates]{.underline}                                            |
|                                                                       |
| 9XAL Allowance for Subsidy - Subsidy Re-estimates - Int. Rate Dr.     |
| (Dnwd) or Cr. (Upwd)                                                  |
|                                                                       |
| 9XAM Allowance for Subsidy - Subs. Re-est. - Technical - Prin. Dr.    |
| (Dnwd) or Cr. (Upwd)                                                  |
|                                                                       |
| 9XAN Allowance for Subsidy - Subs. Re-est. - Technical - Int. Dr.     |
| (Dnwd) or Cr. (Upwd)                                                  |
+-----------------------------------------------------------------------+

### **DIRECT LOANS**

### 

### **YEAR 1**

The Direct Loan Agency has been authorized to make loans beginning in
fiscal year 1. The agency has a single, discretionary direct loan
program with no risk categories.[^8] The Congress has authorized annual
appropriations[^9] for basic subsidy, modified subsidy, and
administrative expenses; permanent indefinite appropriations for upward
re-estimates of subsidy, with related interest; and permanent indefinite
borrowing authority for the unsubsidized portion of loans made. The
agency's authorizing legislation makes it subject to the Credit Reform
Act of 1990, as amended. An authorized agency official provides blanket
allotment authority for all realized resources, as they are realized, up
to the amount apportioned by OMB.

The agency borrows the full amount it expects to need at the beginning
of the year, and gives back the amount it has not obligated at the end
of the year. All collections are used to repay principal and interest on
its Treasury loans.

The agency has authority to obligate \$100,000 in loans in fiscal year
1, for which the subsidy model shows a 21.5 percent subsidy rate,
comprised of:

> • Defaults, 20 percent; 20.0
>
> • Interest differential,[^10] 2 percent; and 2.0
>
> • Fees, (.5) percent. (.5)

-   Administrative expenses for Year 1 have been authorized in the
    amount of \$5,000, and loans are to be funded with (1) monies
    received from the appropriation subsidy and (2) borrowing from
    Treasury for the remainder.

-   It is expected that \$11,000 of loan principal and \$500 of loan
    interest will be received in Year 1, and that Treasury principal of
    \$11,300 will be repaid, plus interest of \$700 (total \$12,000).

-   Current, definite appropriations, permanent indefinite borrowing
    authority, and authorization for the appropriate collections are
    authorized in the legislation.

The agency prepared the following request for apportionment (SF 132):

Direct Loan Agency

**SF 132 Apportionment/Reapportionment Schedule**

######## Fiscal Year 1

**Program Loan Level Authorized: 100,000**

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

**Budget authority:**

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

1B. Borrowing authority 78,500

3C. Anticipated for rest of year without advance 33,500

6F. Anticipated rest of year [(11,300)]{.underline}

7\. Total budgetary resources 26,500 100,700

**Application of Budgetary Resources**

Budget authority:

Category B:

8B1. Direct loan subsidy 21,500 100,000

8B2. Administrative expense [5,000]{.underline}

8B2. Interest to Treasury [700]{.underline}

12\. Total budgetary resources 26,500 100,700

# TRANSACTIONS - YEAR 1

**1.1 To record the enactment of appropriations.** *(TC A104*, A140,
A142, A152*)*[^11]

### *Program Fund*

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*

4060 Anticipated Collections from Non-Federal Sources 12,000

4070 Anticipated Collections from Federal Sources 21,500

4141 Current Year Borrowing Authority Realized 78,500

4047 Anticipated Transfers to Treasury 11,300

4450 Unapportioned Authority 100,700

**1-2. The agency's requests for apportionment were approved by OMB
without change, and the apportionment was recorded.** (TC A116, A118

*Program Fund*

4450 Unapportioned Authority 26,500

4510 Apportionments 26,500

*Financing Fund*

4450 Unapportioned Authority 100,700

4510 Apportionments \[of realized resources\] 78,500

4590 Apportionments Unavailable - Anticipated Resources 22,200

**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*

4510 Apportionments 26,500

4610 Allotments - Realized Resources 26,500

*Financing Fund*

4510 Apportionments \[of realized resources\] 78,500

4610 Allotments - Realized Resources 78,500

**1-4. Borrowed from the Bureau of the Public Debt (BPD) the full amount
required to make the authorized \$100,000 in loans.** (TC A156)

*Financing Fund*

4148 Resources Realized from Borrowing Authority 78,500

4145 Borrowing Authority Converted to Cash 78,500

1010 Fund Balance with Treasury 78,500

2510 Principal Payable to the Bureau of the Public Debt 78,500

**1-5. Paid administrative expenses of \$4,950. No undelivered orders
were placed or accruals made before payment.** (TC B106, B134)[^12]

### *Program Fund*

4610 Allotments - Realized Resources 4,950

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

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

1010 Fund Balance with Treasury 4,950

3107 Unexpended Appropriations - Appropriations Used 4,950

5700 Financing Sources from Appropriations 4,950

**1-6. Agreed to make \$90,000 of loans, subject to the loan applicants
meeting conditions placed on them**. (TC B204CR, C101, A122, B204)

### *Program Fund*

4610 Allotments - Realized Resources 19,350[^13]

4801 Undelivered Orders - Unpaid 19,350

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

*Financing Fund*

4221 Unfilled Customer Orders without Advance 19,350[^14]

4070 Anticipated Collections from Federal Sources 19,350

To record allotment. [^15]

4590 Apportionments Unavailable - Anticipated Resources 19,350

4610 Allotments - Realized Resources 19,350

4610 Allotments - Realized Resources 90,000

4801 Undelivered Orders - Unpaid 90,000[^16]

**1-7. Applicants for \$87,000 of the \$90,000 of loan commitments met
the conditions for making the loans. Subsidy was transferred from the
program fund to the financing fund, and the loans were disbursed to the
applicants.**[^17] **Applicants for the remaining \$3,000 of loans have
not yet met the conditions.** (TC A146, B134,new, C206)

*Program Fund*

4801 Undelivered Orders - Unpaid 18,705[^18]

4902 Delivered Orders Paid \[Other\] 18,705[^19]

6100 Operating Expenses/Program Costs

\[Basic & Modified Subsidy Expense\] 18,705

1010 Fund Balance with Treasury 18,705

3107 Unexpended Appropriations - Appropriations Used 18,705

5700 Financing Sources from Appropriations 18,705

*Financing Fund*

[To collect the subsidy]{.underline}

4271 Actual Program Fund Subsidy Collected 18,705

4221 Unfilled Customer Orders Without Advance 18,705[^20]

(New Transaction)

1010 Fund Balance with Treasury 18,705

1399 Allowance for Subsidy 18,705[^21]

[To disburse the loans]{.underline}

4801 Undelivered Orders - Unpaid 87,000

4902 Delivered Orders - Paid \[Loans Made\] 87,000

1350 Loans Receivable 87,000

1010 Fund Balance with Treasury 87,000

*Memorandum Accounts - Allowance for Subsidy (A/S)*[^22]

9XAB A/S - Contra 18,705

9XAF A/S - Basic Subsidy - Fees & Other Coll. 435

9XAD A/S - Basic Subsidy - Int. Differential 1,740

9XAE A/S - Basic Subs. - Defaults 17,400

**[Collections from borrowers during the year were as
follows:]{.underline}**

**• Application fees, \$480**[^23]

**• Loan principal, \$10,000**

**• Loan interest, \$500**

**1-8. To record the receipt of previously anticipated collections.**
(C109 and A122)

*Financing Fund*

4261 Actual Collection of Business-Type Fees 480

4262 Actual Collection of Loan Principal 10,000

4263 Actual Collection of Loan Interest 500

4060 Anticipated Collections from Non-Federal Sources 10,980

1010 Fund Balance with Treasury 10,980

1399 Allowance for Subsidy 480

1350 Loans Receivable 10,000

5312 Interest Revenue -- Loans Receivable/

> Uninvested Balances \[Borrowers\] 500

4590 Apportionments Unavailable - Anticipated Resources 2,850[^24]

4610 Allotments - Realized Resources 2,850

*Memorandum Accounts - Allowance for Subsidy (A/S)*

9XAB A/S - Contra 480

9XAH A/S - Adjustments - Fees Received 480

**1-9. The collections received were paid to BPD. \$700 was for interest
on the agency loan from BPD, and \$10,280 was for
principal.**[^25]**^,^**

***1-9a To record principal repayments to Treasury and the Federal
Financing Bank.*** (B-120)

### *Financing Fund*

4047 Anticipated Transfers to the General Fund of the Treasury 10,280

4146[^26] Actual Repayments of Debt, Current-Year Authority 10,280

2510 Principal Payable to the Bureau of the Public Debt 10,280

1010 Fund Balance with Treasury 10,280

***1-9b To record payment of interest not previously accrued.** (B-109)*

4610 Allotments - Realized Resources 700

4902 Delivered Orders - Paid \[Other\] 700

6310 Interest Expenses on Borrowing From the\
Bureau of Public Debt and/or the Federal Financing Bank 700

1010 Fund Balance with Treasury 700

**1-10 After consultation and agreement with OMB, the agency decided to
modify the terms of loans for some borrowers, reducing the present value
of those loans by \$1,000.**[^27] **Noting that this would require
\$1,000 of subsidy to be transferred from the program to the financing
fund, and because that \$1,000 had originally been apportioned for use
in making new loans rather than modifying existing ones, the agency
submitted a revised request for apportionment to allow the monies to be
paid to Treasury and to reduce the amount of subsidy apportioned for
direct loans. The authorized loan level was reduced from \$100,000 to
\$95,349**[^28] **In addition, since the new loan level required only
\$74,849**[^29] **in borrowing authority, and \$78,500 of borrowing
authority had been provided for the program, the authority, and OMB's
apportionment of it, was reduced by the difference of \$3,651.**

**The resulting revised request for apportionment, which OMB approved,
is illustrated following the entries below.**[^30] (A148)

*Financing Fund*

4610 Allotments - Realized Resources 4,651[^31]

4047 Anticipated Transfers to the General Fund of the Treasury 1,000

4143 Actual Reductions of Borrowing Authority 3,651[^32]

**Direct Loan Agency**

**SF 132 Apportionment/Reapportionment Schedule**

**Fiscal Year 1**

+--------------------------------------------------+-------------------+
| **Program Loan Level:** \$95,349                 | Financing Fund    |
|                                                  |                   |
| **Budgetary Resources**                          |                   |
+--------------------------------------------------+-------------------+
| **Budget authority:**                            | 78,500            |
|                                                  |                   |
| 1B. Borrowing authority                          | 29,685            |
|                                                  |                   |
| Spending authority from offsetting collections   | 645               |
| (gross):                                         |                   |
|                                                  | 3,170             |
| 3A1. Earned Collected                            |                   |
|                                                  | (10,280)          |
| 3B2. Change in unfilled Customer Orders w/o      |                   |
| advance                                          | ( 3,651)          |
|                                                  |                   |
| 3C. Anticipated for rest of year without advance | [(                |
|                                                  | 2,                |
| Permanently not available:                       | 020)]{.underline} |
|                                                  |                   |
| 6C. Capital transfers and redemption of debt (-) | 96,049            |
|                                                  |                   |
| 6D. Other authority withdrawn (-)                |                   |
|                                                  |                   |
| 6F. Anticipated rest of year (-)                 |                   |
|                                                  |                   |
| 7\. Total budgetary resources                    |                   |
+--------------------------------------------------+-------------------+
| Application of Budgetary Resources               | Financing Fund    |
+--------------------------------------------------+-------------------+
| **Budget authority:**                            | 95,349            |
|                                                  |                   |
| Category B:                                      | [700]{.underline} |
|                                                  |                   |
| 8A2. Direct loan subsidy cost                    | 96,049            |
|                                                  |                   |
| 8A2. Interest payment to Treasury                |                   |
|                                                  |                   |
| 11\. Total status of budgetary resources         |                   |
+--------------------------------------------------+-------------------+

-   *OMB A-11, 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 A-11, 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.*

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

1-11 The agency modified the terms of the loans, as discussed in the
previous transaction. The present value of these modifications decreased
the present value of the loans by \$1,000, requiring additional subsidy
from the program fund, which was transferred to the financing fund.

***1-11a To record the payment of subsidy to financing fund.*** (B102 &
B134)

*Program Fund*

4610 Allotments - Realized Resources 1,000

4902 Delivered Orders -- 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 - Appropriations Used 1,000

5700 Financing Sources from Appropriations 1,000

**1-11b To record the collection of subsidy for loan modification costs
in the financing fund.** (C104)

### *Financing Fund*

4271 Actual Program Fund Subsidy Collected 1,000

4070 Anticipated Collections from Federal Sources 1,000

1010 Fund Balance with Treasury 1,000

1399 Allowance for Subsidy 1,000[^33]

*Memorandum Accounts - Allowance for Subsidy (A/S)*

9XAB A/S - Contra 1000

9XAG A/S - Adjustments - Loan Modifications[^34] 1,000

The \$1,000 of collections for the subsidy modifications was used to
repay principal on the debt to BPD.

**1-12 To record principal repayments to Treasury and the Federal
Financing Bank via nonexpenditure transfers that was previously
anticipated.** (B120)

*Financing Fund*

4047 Anticipated Transfers to the General Fund of the Treasury 1,000

4146 Actual Repayments of Debt, Current-Year Authority 1,000

2510 Principal Payable to the Bureau of the Public Debt 1,000

1010 Fund Balance with Treasury 1,000

The agency returned to BPD \$3,651 it had borrowed in transaction 1-4 in
excess of the new borrowing authority resulting from the modification in
transaction 1-10.

**1-13 To record the return of excess borrowing to BPD as a result of
the modification.** (A156R)

*Financing Fund*

4145 Borrowing authority Converted to Cash 3,651

4148 Resources Realized from Borrowing Authority 3,651

2510 Principal Payable to Treasury 3,651

1010 fund Balance with Treasury 3,651

*[Note]{.underline}: Although separated for ease of illustration in the
case, transactions 1-10 through 1-13 should be occur simultaneously*

1-14 Treasury credited \$15 to the financing fund for interest the fund
earned on its unused Fund Balance with Treasury during the year.[^35]

**To record receipt of previously anticipated collections.** (C109)

*Financing Fund*

4273 Actual Interest Collected from Treasury 15[^36]

4070 Anticipated Collections from Federal Sources 15

1010 Fund Balance with Treasury 15

5312 Interest Revenue - Loans Receivable/Uninvested Balances
\[Treasury\] 15

**1-15 The interest collected from Treasury was used to pay principal on
the agency's loan from Treasury.**

**To record principal repayment to Treasury Federal Financing Bank via
nonexpenditure transfers that were previously anticipated.** (B-120)

*Financing Fund*

4047 Anticipated Transfers to the General Fund of the Treasury 15

4146 Actual Repayments of Debt, Current-Year Authority 15

2510 Principal Payable to the Bureau of the Public Debt 15

1010 Fund Balance with Treasury 15

**TRIAL BALANCES**

Trial balances for the agency as of this point 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 in which column it
appears. The chart of accounts for each trial balance is found in the
"conceptual framework" section of this guide.

**(TRANSACTIONS 1-1 THROUGH 1-15 ONLY)**

**Accounts Program Fund Financing Fund**

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

4047 N/A \$(1,005)

4060 N/A 1,020

4070 N/A 1,135

4115 21,500 N/A

4117 5,000 N/A

4141 N/A 78,500

4143 N/A (3,651)

4145 N/A (74,849)

4146 N/A (11,295)

4148 N/A 74,849

4221 N/A 645

4261 N/A 480

4262 N/A 10,000

4263 N/A 500

4271 N/A 19,705

4273 N/A 15

4450 0 0

4510 0 0

4590 N/A 0

4610 (1,200) (5,349)

4801 (645) (3,000)

4902 \[Loans Made\] N/A (87,000)

4902 \[Other\] [(24,655)]{.underline} [(700)]{.underline}

> \$ 0 \$ 0

**TRIAL BALANCE (Continued)**

**(TRANSACTIONS 1-1 THROUGH 1-15 ONLY)**

**Accounts Program Fund Financing Fund**

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

1010 1,845 6,554

1350 N/A 77,000

1399 N/A (20,185)

2510 N/A (63,554)

3101 (26,500) N/A

3107 24,655 N/A

5312 \[Borrowers\] N/A (500)

5312 \[Treasury\] N/A (15)

5700 (24,655) N/A

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

6100 \[Basic and Mod. Sub.\] 19,705 N/A

6310 [N/A]{.underline} [700]{.underline}

> \$ 0 \$ 0

*Allowance for Subsidy (Financing Fund Only)*

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

9XAA 0

9XAB 20,185

9XAD (1,740)

9XAE (17,400)

9XAF 435

9XAG (1,000)

9XAH [(480)]{.underline}

> \$ 0

**TRANSACTIONS**

**YEAR 1 (CONTINUED)**

**1-16. Interest of \$55 was accrued as receivable on the loans. Of
that, \$50 was related to loans, which were still performing, and \$5 to
loans, which were not performing.** (C216)[^37]

*Financing Fund*[^38]

1340 Interest Receivable: Accrued 55

5312 Interest Revenue -- Loans Receivable/

Univested Funds \[Borrowers\] 50

2320 Deferred Credits: Interest \[Deemed to be Uncollectible\] 5

**1-17. The allowance for subsidy was amortized. (**D512)

*Financing Fund*

1399 Allowance for Subsidy 135[^39]

5310 Interest Revenue **--** Other **\[**Amortization of Subsidy\] 135

*Memorandum Accounts - Allowance for Subsidy (A/S)*

9XAK A/S - Adjustments - Amortization to Interest 135

9XAB A/S - Contra 135

**1-18. As no further loans were disbursed during the year, the unneeded
monies borrowed from Treasury were returned.** (A148, A156R)[^40]

*Financing Fund*

4610 Allotments - Realized Resources[^41] 4199[^42]

4143 Actual Reductions of Borrowing Authority 4199

4145 Borrowing Authority Converted to Cash 4,199

4148 Resources Realized from Borrowing Authority 4,199

2510 Principal Payable to the Bureau of the Public Debt 4,199

1010 Fund Balance with Treasury 4,199

**1-19. The agency determined that \$10 of loan principal and \$20 of
loan interest could not be collected, and wrote the receivables off.**
(D210)[^43]

*Financing Fund*

1399 Allowance for Subsidy 30

1340 Interest Receivable 20

1350 Loans Receivable 10

*Memorandum Accounts - Allowance for Subsidy (A/S)*

9XAI A/S - Adjustments - Loan Principal Written Off 10

9XAJ A/S - Adjustments - Loan Interest Written Off 20

9XAB A/S - Contra 30

**1-20. Subsidy analysis at year-end** **indicated that an additional
subsidy of \$440 was needed. This included \$15 of interest. The
"technical" re-estimate (including interest) was \$445, and the interest
re-estimate was -\$5.** (B324, C228)[^44]

*Program Fund*

6800 Future Funded Expenses \[Re-estimated Subsidy Expense\] 440

2170 Subsidy Payable to Financing Account 440

*Financing Fund*

1310 Accounts Receivable

\[Subsidy Receivable from Program Account\] 440

1399 Allowance for Subsidy 440

*Memorandum Accounts - Allowance for Subsidy (A/S)*[^45]

9XAB A/S - Contra 440

9XAL A/S - Subs Re-est. Interest Rate 5

9XAM A/S - SubsRe-estTechnical - Principal 430

9XAN A/S - SubsRe-estTechnical - Interest 15

**PRE-CLOSING TRIAL BALANCES**

(All Transactions)

**Accounts Program Fund Financing Fund**

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

4047 N/A (1,005)

4060 N/A 1,020

4070 N/A 1,135

4115 21,500 N/A

4117 5,000 N/A

4141 N/A 78,500

4143 N/A (7,850)

4145 N/A (70,650)

4146 N/A (11,295)

4148 N/A 70,650

4221 N/A 645

4261 N/A 480

4262 N/A 10,000

4263 N/A 500

4271 N/A 19,705

4273 N/A 15

4450 0 0

4510 0 0

4590 N/A 0

4610 (1,200) (1,150)

4650 0 N/A

4801 (645) (3,000)

4902\[Loans Made\] N/A (87,000)

4902 \[Re-est. Sub and Int\] 0 0

4902 \[Other\] [(24,655)]{.underline} [(700)]{.underline}

> \$ 0 \$ 0

PRE-CLOSING TRIAL BALANCE (Continued)

**Accounts Program Fund Financing Fund**

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

1010 1,845 2,355

1310 N/A 440

1340 N/A 35

1350 N/A 76,990

1399 N/A (20,460)

2170 (440) N/A

2190 N/A 0

2320 N/A (5)

2510 N/A (59,355)

3100 0 N/A

3101 (26,500) N/A

3107 24,655 N/A

3310 0 0

5312 \[Borrowers\] N/A (550)

5312 \[Treasury\] N/A (15)

5310 \[Amort. Sub.\] N/A (135)

5700 (24,655) N/A

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

6100 \[Basic and Mod. Sub.\] 19,705 N/A

6310 N/A 700

6800\[Sub. Rest.\] [440]{.underline} [0]{.underline}

> \$ 0 \$ 0

PRE-CLOSING TRIAL BALANCE (Continued)

*Allowance for Subsidy (Financing Fund Only)*

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

9XAB 20,460

9XAD (1,740)

9XAE (17,400)

9XAF 435

9XAG (1,000)

9XAH (480)

9XAI 10

9XAJ 20

9XAK 135

9XAL 5

9XAM (430)

9XAN [(15)]{.underline}

> \$ 0

**CLOSING ENTRIES**

**1-21 Closing entries were made.** (F204, F214, F212, F228, F233, F112,
F114, F208, F210)

*Program Fund Budgetary*

[To consolidate net cash resources]{.underline}

4902 Delivered Orders Paid \[Other\] 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}

4610 Allotments - Realized Resources 1,200

4650 Allotments - Expired Authority 1,200

*Program Fund - Proprietary*

[To close financing sources and expenses]{.underline}

5700 Financing Sources from Appropriations Used 24,655

3310 Cumulative Results of Operations 440

6100 Operating Expense/Program Costs

\[Administrative Expenses\] 4,950

6100 Operating Expense/Program Costs

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

6800 Future Funded Expenses

\[Re-estimated Subsidy Expense\] 440

[To consolidate unexpended appropriations]{.underline}

3101 Unexpended Appropriations -\
Appropriations Received 26,500

3100 Unexpended Appropriations - Cumulative 1,845

3107 Unexpended Appropriations - Appropriations Used 24,655

*Financing Fund - Budgetary*

[To close anticipated resources]{.underline}[^46]

4047 Anticipated Transfers to the\
General Fund of the Treasury 1,005

4450 Unapportioned Authority 1,150

4060 Anticipated Collections from Non-Federal Sources 1,020

4070 Anticipated Collections from Federal Sources 1,135

[To consolidate obligated borrowing authority carried
forward]{.underline}[^47]

4143 Actual Reductions to Borrowing Authority 7,850

4145 Borrowing Authority Converted to Cash 70,650

4141 Current-Year Borrowing Authority Realized 78,500

[To consolidate net cash resources]{.underline}

4902 Delivered Orders - Paid \[Loans Made\] 87,000

4902 Delivered Orders - Paid \[Other\] 700

4146 Actual Repayments of Debt, Current-Year Authority 11,295

4201 Total Actual Resources - Collected 2,355

4148 Resources Realized from Borrowing Authority 70,650

4261 Actual Collection of Fees 480

4262 Actual Collection of Loan Principal 10,000

4263 Actual Collection of Loan Interest 500

4271 Actual Program Fund Subsidy Collected 19,705

4273 Actual Interest Collected from Treasury 15

[To close unobligated authority]{.underline}

4610 Allotments - Realized Resources 1,150

4450 Unapportioned Authority 1,150

*Financing Fund Proprietary*

[To close financing sources and expenses]{.underline}[^48]

5312 Interest Revenue --

Loans Receivable/Uninvested Balances \[Borrowers\] 550

5312 Interest Revenue --

Loans Receivable/Uninvested Balances \[Treasury\] 15

5310 Interest Revenue - Other \[Amortization of Subsidy\] 135

6310 Interest Expenses on Borrowing from Treasury 700

*Memorandum Accounts--Allowance for Subsidy (A/S) (Financing Fund Only)*

[To close allowance for subsidy accounts.]{.underline}

9XAD A/S - Basic Subsidy Expense - Interest Differential 1,740

9XAE A/S - Basic Subsidy Expense - Defaults 17,400

9XAG A/S - Adjustments - Loan Modifications 1,000

9XAH A/S - Adjustments - Fees Received 480

9XAM A/S - Subsidy Re-estimates - Technical - Principal 430

9XAN A/S - Subsidy re-estimates - Technical - Interest 15

9XAA A/S - Cumulative 20,460

9XAF A/S - Basic Subsidy Expense - Fees and Other Collections 435

9XAI A/S - Adjustments - Loan Principal Written Off 10

9XAJ A/S - Adjustments - Loan Interest Written Off 20

9XAK A/S - Adjustments - Amortization to Interest 135

9XAL A/S - Subsidy Re-estimates - Interest Rate 5

**POST-CLOSING TRIAL BALANCE**

**Accounts Program Fund Financing Fund**

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

4047 N/A 0

4060 N/A 0

4070 N/A 0

4115 0 N/A

4117 0 N/A

4118 0 N/A

4120 0 N/A

4141 N/A 0

4143 N/A 0

4145 N/A 0

4146 N/A 0

4148 N/A 0

4201 1,845 2,355

4221 N/A 645

4261 N/A 0

4262 N/A 0

4263 N/A 0

4271 N/A 0

4273 N/A 0

4450 0 0

4510 0 0

4590 N/A 0

4610 0 0

4650 (1,200) N/A

4801 (645) (3,000)

4902\[Loans Made\] N/A 0

4902\[Re-est. Sub and Int\] 0 0

4902\[Other\] [0]{.underline} [0]{.underline}

> \$ 0 \$ 0

POST-CLOSING TRIAL BALANCE (Continued)

**Accounts Program Fund Financing Fund**

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

1010 \$ 1,845 \$ 2,355

1310 N/A 440

1340 N/A 35

1350 N/A 76,990

1399 N/A (20,460)

2170 (440) N/A

2190 N/A 0

2320 N/A (5)

2510 N/A (59,355)

3100 (1,845) N/A

3101 0 N/A

3107 0 N/A

3310 440 0

5312 \[Borrowers\] N/A 0

5312 \[Treasury\] N/A 0

5310 \[Amort. Sub.\] N/A 0

5700 0 N/A

6100 \[Admin.\] 0 N/A

6100 \[Basic and Mod. Sub.\] 0 N/A

6310 N/A 0

6800 \[Sub. Reest.\] [0]{.underline} [0]{.underline}

> \$ 0 \$ 0

POST-CLOSING TRIAL BALANCE (Continued)

*Allowance for Subsidy (Financing Fund Only)*

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

9XAA \$(20,460)

9XAB 20,460

9XAD 0

9XAE 0

9XAF 0

9XAG 0

9XAH 0

9XAI 0

9XAJ 0

9XAK 0

9XAL 0

9XAM 0

9XAN [0]{.underline}

> \$ 0

# FINANCIAL STATEMENTS

**Direct Loan Agency**

**Balance Sheet**

**September 30, FY-1**

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

  Assets                                                                       

  Intragovernmental                                                            

  1\. Fund Balance with Treasury  1,845                 2,355                  4,200
  (1010)                                                                       

  6\. Total intragovernmental     1,845                 2,355                  4,200

  9\. Acconts Receivables (1310)                        440                    

  11\. Loans Receivable and                             [57,005]{.underline}   [57,005]{.underline}
  Related Foreclosed Property                                                  
  (1340, 1350, 1399)                                                           

  15\. Total Assets               1,845                 59,360                 61,205

  Liabilities                                                                  

  Intragovernmental                                                            

  16\. Accounts Payable (2170)    440                                          

  17\. Debt (2510)                                      59,355                 59,355

  19\. Total intragovernmental                          59,355                 59,355

  26\. Other (2320)               [-]{.underline}       [5]{.underline}        [445]{.underline}

  27\. Total Liabilities          440                   59,360                 59,800

                                                                               

  Net Position                                                                 

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

  30\. Cumulative results of      [(440)]{.underline}                          [(440)]{.underline}
  operations (3310)                                                            

  31\. Total net position         [1,405]{.underline}   [0]{.underline}        [1,405]{.underline}

  32\. Total liabilities and net  1,845                 59,360                 61,205
  position                                                                     
  ------------------------------- --------------------- ---------------------- ----------------------

**Direct Loan Agency**

**Statement of Net Cost**

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

+--------------------------------------+---------+---------+----------+
|                                      | #####   | ######  | ####     |
|                                      | # Progr | Financi | ## Total |
|                                      | am Fund | ng Fund |          |
+--------------------------------------+---------+---------+----------+
| Program Costs                        |         |         |          |
+--------------------------------------+---------+---------+----------+
| 1\. Intragovernmental Gross Costs    |         | 700     | 700      |
|                                      |         |         |          |
| Interest on loans from               |         |         |          |
| Treasury(6310)                       |         |         |          |
+--------------------------------------+---------+---------+----------+
| 2\. Less: Intragovernmental earned   |         | 15      | 15       |
| revenue                              |         |         |          |
|                                      |         |         |          |
| (5312\[Treasury\])                   |         |         |          |
+--------------------------------------+---------+---------+----------+
| 3\. Intragovernmental net costs      |         | 685     | 685      |
+--------------------------------------+---------+---------+----------+
| 4\. Gross Costs with the Public      | 25,095  |         | 25,095   |
|                                      |         |         |          |
| Administrative Fees \$4,950 (6100)   |         |         |          |
|                                      |         |         |          |
| Subsidy \$20,145 (6100 and 6800 )    |         |         |          |
+--------------------------------------+---------+---------+----------+
| 5\. Less: Earned revenues from the   |         | 685     | 685      |
| public                               |         |         |          |
|                                      |         |         |          |
| (5312 \[Borrowers\] and 5310)        |         |         |          |
+--------------------------------------+---------+---------+----------+
| 6\. Net cost with the public         | 25,095  | \(685\) | 24,410   |
+--------------------------------------+---------+---------+----------+
| 7\. Total Net Cost                   | 25,095  | 0-      | 25,095   |
+--------------------------------------+---------+---------+----------+
| 10\. Net Cost of Operations          | 25,095  | 0       | 25,095   |
+--------------------------------------+---------+---------+----------+

**Direct Loan Agency**

**Statement of Changes in Net Position**

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

+-------------+-------+---------+--------+---------+---+-------+---------+
|             | [Pr   |         | [Fin   |         |   | [Tot  |         |
|             | ogram |         | ancing |         |   | al]{. |         |
|             | Fu    |         | Fund]  |         |   | under |         |
|             | nd]{. |         | {.unde |         |   | line} |         |
|             | under |         | rline} |         |   |       |         |
|             | line} |         |        |         |   |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
|             | Cumul | Une     | Cumu   | Une     | C |       | Une     |
|             | ative | xpended | lative | xpended | u |       | xpended |
|             | Re    | Appropr | R      | Appropr | m |       | Appropr |
|             | sults | iations | esults | iations | u |       | iations |
|             | of    |         | of     |         | l |       |         |
|             | Opera |         | Oper   |         | a |       |         |
|             | tions |         | ations |         | t |       |         |
|             |       |         |        |         | i |       |         |
|             |       |         |        |         | v |       |         |
|             |       |         |        |         | e |       |         |
|             |       |         |        |         | R |       |         |
|             |       |         |        |         | e |       |         |
|             |       |         |        |         | s |       |         |
|             |       |         |        |         | u |       |         |
|             |       |         |        |         | l |       |         |
|             |       |         |        |         | t |       |         |
|             |       |         |        |         | s |       |         |
|             |       |         |        |         | o |       |         |
|             |       |         |        |         | f |       |         |
|             |       |         |        |         | O |       |         |
|             |       |         |        |         | p |       |         |
|             |       |         |        |         | e |       |         |
|             |       |         |        |         | r |       |         |
|             |       |         |        |         | a |       |         |
|             |       |         |        |         | t |       |         |
|             |       |         |        |         | i |       |         |
|             |       |         |        |         | o |       |         |
|             |       |         |        |         | n |       |         |
|             |       |         |        |         | s |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
| 1\.         |       |         |        |         |   |       |         |
| Beginning   |       |         |        |         |   |       |         |
| balances    |       |         |        |         |   |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
| 4\.         |       | 26,500  |        |         |   |       | 26,500  |
| App         |       |         |        |         |   |       |         |
| ropriations |       |         |        |         |   |       |         |
| Received    |       |         |        |         |   |       |         |
|             |       |         |        |         |   |       |         |
| \(3101\)    |       |         |        |         |   |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
| 7\.         | 2     | (       |        |         | 2 |       | (       |
| App         | 4,655 | 24,655) |        |         | 4 |       | 24,655) |
| ropriations |       |         |        |         | , |       |         |
| Used        |       |         |        |         | 6 |       |         |
| (3107,5700) |       |         |        |         | 5 |       |         |
|             |       |         |        |         | 5 |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
| 17\. Net    | [25,0 | [       |        |         | [ |       | [       |
| Cost of     | 95]{. | -]{.und |        |         | 2 |       | -]{.und |
| Operations  | under | erline} |        |         | 5 |       | erline} |
|             | line} |         |        |         | , |       |         |
|             |       |         |        |         | 0 |       |         |
|             |       |         |        |         | 9 |       |         |
|             |       |         |        |         | 5 |       |         |
|             |       |         |        |         | ] |       |         |
|             |       |         |        |         | { |       |         |
|             |       |         |        |         | . |       |         |
|             |       |         |        |         | u |       |         |
|             |       |         |        |         | n |       |         |
|             |       |         |        |         | d |       |         |
|             |       |         |        |         | e |       |         |
|             |       |         |        |         | r |       |         |
|             |       |         |        |         | l |       |         |
|             |       |         |        |         | i |       |         |
|             |       |         |        |         | n |       |         |
|             |       |         |        |         | e |       |         |
|             |       |         |        |         | } |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
| 18\. Ending | \(    | 1,845   |        |         | \ |       | 1,845   |
| Balances    | 440\) |         |        |         | ( |       |         |
|             |       |         |        |         | 4 |       |         |
|             |       |         |        |         | 4 |       |         |
|             |       |         |        |         | 0 |       |         |
|             |       |         |        |         | \ |       |         |
|             |       |         |        |         | ) |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+

**Direct Loan Agency**

**Statement of Budgetary Resources**

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

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

**Resources**

1A. Appropriations (4115E, 4117E) 26,500 0 26,500

1B. Borrowing Authority (4141E) 0 78,500 78,500

3A1.Collected (4261E -- 4263, 4271E, 4273E) 30,700 30,700

3B. Change in Unfilled Customer Orders (4221E) 645 645

3C. Anticipated For Rest of Yet,

Without Advance (4060, 4070) 2,155 2,155

6C. Capital Transfers and Redempt. of Debt (-)

(4146E) (11,295) (11,295)

6D. Other Authority Withdrawn (4143) (7,850) (7,850)

6F. Anticipated For the Rest of Year (4047) [(1,005)]{.underline}
[(1,005)]{.underline}

Total Resources \$26,500 \$ 91,850 \$118,350

**Status of Resources**

8\. Obligation Incurred (4801, 4902) \$25,300 \$90,700 \$116,000

### 9A1. Apportioned, Balance Currently 

Available (4610E; ) [1,200]{.underline} [1,150]{.underline}
[2,350]{.underline}

11\. Total Status of Resources \$26,500 \$91,850 \$118,350

**Relationship of**

**Obligations to Outlays:**

14B. Unfilled Cust. Orders From. 0 645 645

Federal Sources (4221E)

14C. Undelivered Orders (4801). 645 3,000 3,645

15A. Disbursements (-) (4902E) \$24,655 \$ 87,700 \$112,355

15B. Collections (+) 0 (30,700) (30,700)

(4261E to 4263E, 4271E and 4272E)

**Direct Loan Agency**

**Statement of Financing**

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

+------------------------------------------------+------+-------+-----+
|                                                | *    | *     | **T |
|                                                | *Pro | *Fina | ota |
|                                                | gram | ncing | l** |
|                                                | Fu   | F     |     |
|                                                | nd** | und** |     |
+------------------------------------------------+------+-------+-----+
| **Resources Used to Finance Activities:**      |      |       |     |
|                                                |      |       |     |
| **Budgetary Resources Obligated**              |      |       |     |
+------------------------------------------------+------+-------+-----+
| 1\. Obligations incurred (4801 E-B, 4902E)     | 25   | 9     | 1   |
|                                                | ,300 | 0,700 | 16, |
|                                                |      |       | 000 |
+------------------------------------------------+------+-------+-----+
| 2\. Less Spending Authority from Offsetting    |      | (31   | (3  |
| Collections and Recoveries (4221E, 4261E,      |      | ,345) | 1,3 |
| 4262E, 4263E, 4271E, 4273E)                    |      |       | 45) |
+------------------------------------------------+------+-------+-----+
| 3\. Obligations Net of Offsetting Collections  | 25   | 5     | 84, |
| and Recoveries (1..2)                          | ,300 | 9,355 | 655 |
+------------------------------------------------+------+-------+-----+
| 5\. Net Obligations (3..4)                     | 25   | 5     | 84, |
|                                                | ,300 | 9,355 | 655 |
+------------------------------------------------+------+-------+-----+
| 11\. Total Resources Used to Finance           | 25   | 5     | 84, |
| Activities                                     | ,300 | 9,355 | 655 |
+------------------------------------------------+------+-------+-----+
|                                                |      |       |     |
+------------------------------------------------+------+-------+-----+
| **Resources Used to Finance Items not a Part   |      |       |     |
| of Net Cost of Operations:**                   |      |       |     |
+------------------------------------------------+------+-------+-----+
| 12\. Change in Budgetary Resources Obligated   | 645  | 2,355 | 3,  |
| for Goods, Services and Benefits Ordered But   |      |       | 000 |
| 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 Increase  |      | (30   | (3  |
| Liabilities for Loan Guarantees or Allowances  |      | ,185) | 0,1 |
| for Subsidy (4261E, 4262E, 4271E)              |      |       | 85) |
+------------------------------------------------+------+-------+-----+
| 15\. Resources that Finance the Acquisition of |      | 8     | 87, |
| Assets or Liquidations of Liabilities          |      | 7,000 | 000 |
| (4902(Loan Portion))                           |      |       |     |
+------------------------------------------------+------+-------+-----+
| 17\. Total Resources Used to Finance Items Not | 645  | 5     | 59, |
| a Part of Net Cost of Operations (12..16)      |      | 9,170 | 815 |
+------------------------------------------------+------+-------+-----+
| 18\. Total Resources Used to Finance the Net   | 24   | 185   | 24, |
| Cost of Operations (11-17)                     | ,655 |       | 840 |
+------------------------------------------------+------+-------+-----+
|                                                |      |       |     |
+------------------------------------------------+------+-------+-----+
| **Components of Net Cost of Operations That    |      |       |     |
| Will Not Require or Generate Resources in the  |      |       |     |
| Current Period:**                              |      |       |     |
+------------------------------------------------+------+-------+-----+
| 21\. Upward/Downward Re-estimates of Credit    | 440  |       | 440 |
| Expenses (6800E)                               |      |       |     |
+------------------------------------------------+------+-------+-----+
| 22\. Increase in Exchange Revenue Receivable   |      | \     | \(5 |
| from Public\                                   |      | (50\) | 0\) |
| (1340 accrued amount)                          |      |       |     |
+------------------------------------------------+------+-------+-----+
| 24\. Total Components of Net Cost of           | 440  | \     | 390 |
| Operations That Will or Generate Resources in  |      | (50\) |     |
| the Future Period                              |      |       |     |
+------------------------------------------------+------+-------+-----+
| 25\. Depreciation and Amortization (1399       |      | \(    | \   |
| accrued amount)                                |      | 135\) | (13 |
|                                                |      |       | 5\) |
+------------------------------------------------+------+-------+-----+
| 28\. Total Components of Net of Cost of        |      | \(    | \   |
| Operation That Will Not Require or Generate    |      | 135\) | (13 |
| Resources in the Current Period (25..27)       |      |       | 5\) |
+------------------------------------------------+------+-------+-----+
| 29\. Total Components of Net Cost of           | 440  | \(    | 255 |
| Operations That Will Require or Generate       |      | 185\) |     |
| Resources in the Current Period (24 + 28)      |      |       |     |
+------------------------------------------------+------+-------+-----+
| 30\. Net Cost of Operation (18 + 29)           | 25   | 0     | 25, |
|                                                | ,095 |       | 095 |
+------------------------------------------------+------+-------+-----+

**Direct Loan Agency**

Year End Closing Statement (2108)

**September 30, FY-1**

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

Column 3 Increases (4141) 78,500

Column 4 Borrowings (4145) 70,650

Column 5 Adjustments (4143) 7,850

Column 6 (Calc 2+3-4-5) 0

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

Column 4 Unobligated and Obligated Balance Withdrawn/Canceled 0

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

Column 6 Other Authorization 0

Column 7 Reimbursements Earned and Refunds 0

Column 8 Unfilled Customer Orders 0

Column 9 Undelivered Orders and Contracts (4801 E) 645

Column 10 Accounts Payable and Other Liabilities 0

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**

**OBLIGATIONS BY PROGRAM ACTIVITY**

1000 Total New Obligations (4801 E-B, 4902E) 25,300 90,700

**BUDGETARY RESOURCES AVAILABLE FOR OBLIGATION**

2200 New Budget Authority, (gross) 26,500 90,055

2395 Total new obligations (25,300) (90,700)

2398 Unobligated balance expiring or withdrawn (4610E) (1,200) (1,150)

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

4000 Appropriation (4115E & 4117) 26,500

4047 Portion applied to repay debt (4146) (11,295)

4300 Appropriation (total) 26,500 (11,295)

4700 Authority to Borrow (+) 70,650

6800 Offsetting collections (gross) 30,700

6810 Change in uncollected customer payments from Federal Sources 645

7000 Total New Budget Authority (Gross) 26,500 90,700

**CHANGE IN OBLIGATED BALANCES**

7310 Total new obligations 25,300 90,700

7320 Total Outlays (gross) (4902E) 24,655 87,700

7410 Change in uncollected customer payments from Federal Sources 645

7440 Obligated Balance, end of year (4221E) 645 3,000

**OUTLAYS (GROSS), DETAIL**

8690 Outlays from new discretionary authority (4902E) 24,655 87,700

**OFFSETS**

8800 Federal Sources (19,705)

8825 Interest on univested funds (15)

8840 Non-Federal sources (10,980)

8890 Total offsetting collections (30,700)

**NET BUDGET AUTHORITY AND OUTLAYS**

8900 Budget Authority (net) 26,500 59,355

9000 Outlays (net) 24,655 57,000

**Direct Loan Agency**

**Credit Program Note (Form and Content Note 8)**[^49]

**September 30, FY-1**

**2C. Composition of Credit Program Assets**

Loans Receivable (1350) \$76,990

Interest Receivable (1340) [35]{.underline}

Gross Credit Program Assets \$77,025

Less Allowance for Subsidy (1399) [(20,460)]{.underline}

Value of Assets Related to Direct Loans \$56,565

**D. Loans disbursed**, (4902) \$87,000

**E Composition of Subsidy Expense (direct loans disbursed in Year 1)**

*Basic Subsidy:*

Defaults (9XAE) \$17,400

Interest Differential (9XAD) 1,740

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

Total \$18,705

*Subsidy Modifications* (9XAG) 1,000

*Subsidy Re-estimates:*

Technical (9XAM & (9XAN) \$445

Interest Rate (9XAL) [(5)]{.underline}

[440]{.underline}

Total Subsidy Expense \$20,145

**F. Composition of Subsidy Rate**[^50]

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

Interest differential, 2%; defaults, 20%; fees -.5%; total 21.5% (all
from budget model).

**G. Reconciliation of Beginning and Ending Balances of Allowance for
Subsidized Costs**[^51]

> Balance October 1 \$ 0
>
> Basic Subsidy Expense (Section E) 18,705
>
> Adjustments:
>
> Subsidy for Loan Modifications (Section E) \$1,000
>
> Fees Received (9XAH)\] 480
>
> Loans and Interest Written Off (9XAI & 9XAJ) (30)
>
> Amortization to Interest (9XAK) [(135)]{.underline}
>
> Total [1,315]{.underline}
>
> Balance September 30 Before Re-estimate 20,020
>
> Subsidy Re-estimate (Section E) [440]{.underline}
>
> Balance September 30 After Re-estimate \$20,460

**O. Admin. Exp., Direct Loan Programs**, (6100Admin.)\] \$4,950[^52]

### **YEAR 2**

In fiscal year 1, an upward adjustment of subsidy expense was accrued,
in accordance with the requirements of SFFAS No. 2, *Accounting for
Direct Loans and Loan Guarantees*. Although the expense was recognized
in fiscal year 1, the year to which it applies, the Credit Reform Act
specifies that budgetary resources to fund it are not provided until the
following year\--fiscal year 2. This section provides journal entries to
obtain and apply those budgetary resources in fiscal year 2, and the
related reporting at year-end

During fiscal year 2, there would be transactions for a new cohort of
loans, and accounting would need to be separated between the two.
However, the basic transactions would be the same for the second cohort
as was already illustrated for fiscal year 1 for the first cohort.
Transactions for cohort 1 would be similar, except that no new loans
would be made. Rather, loans obligated, but not disbursed at the end of
fiscal year 1 would be disbursed, and transactions subsequent to
disbursement would be basically the same as already illustrated for
fiscal year 1. The 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.

# TRANSACTIONS -- YEAR 2

2-1. A request for apportionment was prepared for \$440 of
appropriations in the program fund to be transferred to the financing
fund, which will use it to repay principal on the debt to Treasury.
Another request was prepared for the financing fund. The SF-132\'s
constituting the request is shown on the next page.

***2-1a To record the enactment of the appropriations.** (A104)*

*Program Fund*

4118 Re-est. Loan Subsidy Approp. - Indefinite - Permanent[^53] 440

4450 Unapportioned Authority 440

1010 Fund Balance with Treasury 440

3101 Unexpended Appropriations - Appropriations Received 440

***2-1b To record anticipated collections and anticipated
non-expenditure payments to Treasury.** (A140 & A142)*

*Financing Fund*

4070 Anticipated Collections from Federal Sources 440

4047 Anticipated Transfers to the General Fund of the Treasury 440

Direct Loan Agency

**SF 132 Apportionment/Reapportionment Schedule**

**Fiscal Year 2**

Budgetary Resources

Program Financing

**Budget authority:**

1A. Appropriations 440

Spending authority from offsetting collections (gross):

3C. Anticipated for rest of year without advance 440

Permanently not available:

6C. Capital transfers and redemption of debt (-) (440)

7\. Total budgetary resources 440 0

Application of Budgetary Resources

**Budget authority:**

Category B:

8B1. Direct loan subsidy [440]{.underline}

11\. Total status of budgetary resources 440 0

**2-2. OMB approved both requests for apportionment and authorized
recognition of the permanent indefinite appropriation in that amount.**
(A116)

### *Program Fund*

4450 Unapportioned Authority 440

4510 Apportionments 440

*Financing Fund*

No entry[^54]

**2-3. Agency recorded allotment of authority.** (A120**)**

*Program Fund*

4510 Apportionments 440

4610 Allotments - Realized Resources 440

*Financing Fund*

No entry[^55]

2-4. The re-estimated subsidy was transferred from the program fund to
the financing fund.

***2-4a To record the re-estimated subsidy payable in the program
account.** (A150)*

### *Program Fund*

4610 Allotments -- Realized Resources 440

4801 Undelivered Orders -- Obligations, Unpaid 440

***2-4b To record the disbursement of subsidy from the program fund to
the financing fund when the loan is disbursed.** (B105 & B134)*

4801 Undelivered Orders -- Obligations, Unpaid 440

4902 Delivered Orders -- Obligations, Paid

\[Re-estimated Subsidy and Interest\] 440

2170 Subsidy Payable to the Financing Account 440

1010 Fund Balance With Treasury 440

3107 Unexpended Appropriations - Appropriations Used 440

5700 Financing Sources From Appropriations Used 440

[To record the reclassification of unfunded expenses.]{.underline}

6100 Operating Expenses/Program Costs 440

6800 Future Funded Expenses \[Re-estimated Subsidy Expense\] 440

***2-4c To record collection of subsidy for an upward re-estimate costs
in the financing account.** (C104)*

*Financing Fund*

4271 Actual Program Fund Subsidy Collected 440

4070 Anticipated Collections from Federal Sources 440

1010 Fund Balance with Treasury 440

1310 Accounts Receivable

\[Subsidy Receivable from Program Account\] 440

*2-5* The financing fund used the subsidy collected to repay principal
on its loan from Treasury.

***To record principal repayments to Treasury the Federal Financing Bank
via non-expenditure transfers that was previously anticipated.** (B120)*

*Financing Fund*

4047 Anticipated Transfers to the General Fund of the Treasury 440

4146 Actual Repayments of Debt, Current-Year Authority 440

2510 Principal Payable to the Bureau of the Public Debt 440

1010 Fund Balance with Treasury 440

**PRE-CLOSING TRIAL BALANCE**

**Accounts Program Fund Financing Fund**

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

4047 N/A 0

4060 N/A 0

4070 N/A 0

4115 0 N/A

4117 0 N/A

4118 440 N/A

4120 0 N/A

4141 N/A 0

4143 N/A 0

4145 N/A 0

4146 N/A (440)

4148 N/A 0

4201 1,845 2,355

4221 N/A 645

4261 N/A 0

4262 N/A 0

4263 N/A 0

4271 N/A 440

4273 N/A 0

4450 0 0

4510 0 0

4590 N/A 0

4610 0 0

4650 (1,200) N/A

4801 (645) (3,000)

4902\[Loans\] N/A 0

4902\[Re-est. Sub\] (440) 0

4902\[Other\] [0]{.underline} [0]{.underline}

> \$ 0 \$ 0

**PRE-CLOSING TRIAL BALANCE (Continued)**

**Accounts Program Fund Financing Fund**

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

1010 1,845 2,355

1310\[Sub. Recv.\] N/A 0

1340 N/A 35

1350 N/A 76,990

1399 N/A (20,460)

2170 0 N/A

2190 N/A 0

2320 N/A (5)

2510 N/A (58,915)

3100 (1,845) N/A

3101 (440) N/A

3107 440 N/A

3310 440 0

5312\[Borrowers\] N/A 0

5312\[Treasury\] N/A 0

5310\[Amor. Sub.\] N/A 0

5700 (440) N/A

6100\[Admin\] 0 N/A

6100\[Basic Sub.\] 440 N/A

6310 N/A 0

6800\[Sub. Rest.\] [(440)]{.underline} [0]{.underline}

> \$ 0 \$ 0

**CLOSING ENTRIES**

**2-6. Closing entries were made.** (F204, F214, F212, F228, F233, F112,
F114, F208, F210)

[To record the closing of expended authority paid and record the
consolidation of actual net---funded resources for withdrawn funds.
(F214 & F204)]{.underline}

*Program Fund*

4902 Delivered Orders Paid \[Re-est. Subsidy and Interest\] 440

4118 Re-estimated Loan Subsidy Appropr. -- Indef. - Permanent 440

[To record the closing of revenue, expenses, and other financing sources
accounts to cumulative results of operations. (F228)]{.underline}

6800 Future Funded Expenses 440

5700 Financing Sources from Appropriations 440

3310 Cumulative Results of Operations 440

6100 Operating Expenses/Program Costs 440

[To record closing of fiscal-year activity to unexpended appropriations.
(F233)]{.underline}

3101 Unexpended Appropriations - Appropriations Received 440

3107 Unexpended Appropriations - Appropriations Used 440

*Financing Fund*[^56]

4146 Actual Repayments of Debt, Current-Year Authority 440

4271 Actual Program Fund Subsidy Collected 440

**POST-CLOSING TRIAL BALANCE**

**Accounts Program Fund Financing Fund**

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

4047 N/A \$ 0

4060 N/A 0

4070 N/A 0

4115 \$ 0 N/A

4117 0 N/A

4118 0 N/A

4120 0 N/A

4141 N/A 0

4143 N/A 0

4145 N/A 0

4146 N/A 0

4148 N/A 0

4201 1,845 2,355

4221 N/A 645

4261 N/A 0

4262 N/A 0

4263 N/A 0

4271 N/A 0

4273 N/A 0

4450 0 0

4510 0 0

4590 N/A 0

4610 0 0

4650 (1,200) N/A

4801 (645) (3,000)

4902\[Loans Made\] N/A 0

4902\[Subsidy\] 0 0

4902\[Other\] [0]{.underline} [0]{.underline}

> \$ 0 \$ 0

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

**Accounts Program Fund Financing Fund**

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

1010 \$ 1,845 \$ 2,355

1310\[Sub. Recv.\] N/A 0

1340 N/A 35

1350 N/A 76,990

1399 N/A (20,460)

2170 0 N/A

2190 N/A 0

2320 N/A (5)

2510 N/A (58,915)

3100 (1,845) N/A

3101 0 N/A

3107 0 N/A

3310 0 0

5312\[Borrowers\] N/A 0

5312\[Treasury\] N/A 0

5310\[Amort. Sub.\] N/A 0

5700 0 N/A

6100\[Admin.\] 0 N/A

6100\[Basic Sub.\] 0 N/A

6310 N/A 0

6800\[Sub. Recv.\] [0]{.underline} [0]{.underline}

\$ 0 \$ 0

# FINANCIAL STATEMENTS

**Direct Loan Agency**

**Balance Sheet**

**September 30, FY-2**

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

  Assets                                                                       

  Intragovernmental                                                            

  1\. Fund Balance with Treasury  1,845                 2,355                  4,200
  (1010)                                                                       

  6\. Total intragovernmental     1,845                 2,355                  4,200

  11\. Loans Receivable and                             [56,565]{.underline}   [56,565]{.underline}
  Related Foreclosed Property                                                  
  (1340, 1350, 1399)                                                           

  15\. Total Assets               1,845                 58,920                 60,765

                                                                               

  Liabilities                                                                  

  Intragovernmental                                                            

  17\. Debt (2510)                                      58,915                 58,915

  19\. Total intragovernmental                          58,915                 58,915

  26\. Other (2320)                                     5                      5

  27\. Total Liabilities          0                     [58,920]{.underline}   [58,920]{.underline}

                                                                               

  Net Position                                                                 

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

  30\. Cumulative results of      0                                            0
  operations (3310)                                                            

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

  32\. Total liabilities and net  1,845                 58,920                 60,765
  position                                                                     

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

**Direct Loan Agency**

**Statement of Net Cost**

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

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

  7\. Total Net Cost                   0                   0                   0

  10\. Net Cost of Operations          0                   0                   0
  ------------------------------------ ------------------- ------------------- ---------------------

**Direct Loan Agency**

**Statement of Changes in Net Position**

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

+-------------+-------+---------+--------+---------+---+-------+---------+
|             | [Pr   |         | [Fin   |         |   | [Tot  |         |
|             | ogram |         | ancing |         |   | al]{. |         |
|             | Fu    |         | Fund]  |         |   | under |         |
|             | nd]{. |         | {.unde |         |   | line} |         |
|             | under |         | rline} |         |   |       |         |
|             | line} |         |        |         |   |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
|             | Cumul | Une     | Cumu   | Une     | C |       | Une     |
|             | ative | xpended | lative | xpended | u |       | xpended |
|             | Re    | Appropr | R      | Appropr | m |       | Appropr |
|             | sults | iations | esults | iations | u |       | iations |
|             | of    |         | of     |         | l |       |         |
|             | Opera |         | Oper   |         | a |       |         |
|             | tions |         | ations |         | t |       |         |
|             |       |         |        |         | i |       |         |
|             |       |         |        |         | v |       |         |
|             |       |         |        |         | e |       |         |
|             |       |         |        |         | R |       |         |
|             |       |         |        |         | e |       |         |
|             |       |         |        |         | s |       |         |
|             |       |         |        |         | u |       |         |
|             |       |         |        |         | l |       |         |
|             |       |         |        |         | t |       |         |
|             |       |         |        |         | s |       |         |
|             |       |         |        |         | o |       |         |
|             |       |         |        |         | f |       |         |
|             |       |         |        |         | O |       |         |
|             |       |         |        |         | p |       |         |
|             |       |         |        |         | e |       |         |
|             |       |         |        |         | r |       |         |
|             |       |         |        |         | a |       |         |
|             |       |         |        |         | t |       |         |
|             |       |         |        |         | i |       |         |
|             |       |         |        |         | o |       |         |
|             |       |         |        |         | n |       |         |
|             |       |         |        |         | s |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
| 1\.         | \(    | 1,845   |        |         | \ |       | 1,845   |
| Beginning   | 440\) |         |        |         | ( |       |         |
| balances    |       |         |        |         | 4 |       |         |
|             |       |         |        |         | 4 |       |         |
|             |       |         |        |         | 0 |       |         |
|             |       |         |        |         | \ |       |         |
|             |       |         |        |         | ) |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
| 4\.         |       | 440     |        |         |   |       | 440     |
| App         |       |         |        |         |   |       |         |
| ropriations |       |         |        |         |   |       |         |
| Received    |       |         |        |         |   |       |         |
|             |       |         |        |         |   |       |         |
| \(3101\)    |       |         |        |         |   |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
| 7\.         | 440   | \(440\) |        |         | 4 |       | \(440\) |
| App         |       |         |        |         | 4 |       |         |
| ropriations |       |         |        |         | 0 |       |         |
| Used        |       |         |        |         |   |       |         |
| (3107,5700) |       |         |        |         |   |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
| 17\. Net    | [0]{. |         |        |         | [ |       |         |
| Cost of     | under |         |        |         | 0 |       |         |
| Operations  | line} |         |        |         | ] |       |         |
|             |       |         |        |         | { |       |         |
|             |       |         |        |         | . |       |         |
|             |       |         |        |         | u |       |         |
|             |       |         |        |         | n |       |         |
|             |       |         |        |         | d |       |         |
|             |       |         |        |         | e |       |         |
|             |       |         |        |         | r |       |         |
|             |       |         |        |         | l |       |         |
|             |       |         |        |         | i |       |         |
|             |       |         |        |         | n |       |         |
|             |       |         |        |         | e |       |         |
|             |       |         |        |         | } |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+
| 18\. Ending | 0     | 1,845   |        |         | 0 |       | 1,845   |
| Balances    |       |         |        |         |   |       |         |
+-------------+-------+---------+--------+---------+---+-------+---------+

**Direct Loan Agency**

**Statement of Budgetary Resources**

**For Fiscal Year Ended September 30, FY2**

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

**Resources**

1A. Appropriations (4118E) 440 0 440

2A. Unobligated Balance Forward\
(4201B, 4221B, 4801B) 1,200 1,200

3\. Spending Authority from

> Offsetting Collection Activity (+) :(4271E) 440 440

6\. Capital Transfers and Redempt. of Debt (-)\
(4146E) [(440)]{.underline} [(440)]{.underline}

7\. Total Resources \$ 1,640 0 \$ 1,640

**Status of Resources**

8\. Obligation Incurred(4801, 4902) \$440 0 \$440

### 10D. Unobligated Other (4650) [1,200]{.underline} [0]{.underline} [1,200]{.underline}

11\. Status Resources \$ 1,640 0 \$ 1,640

**Relationship of**

**Obligations to Outlays:**

12\. Obligated Balance, Net as of Oct.1 (645) 645 -

14B. Unfilled Cust. Orders From. 0 645 645

Federal Sources (4221E)

14C. Undelivered Orders (4801E) 645 3,000 3,645

15A. Disbursements (-)(4902E) 440 0 440

15B. Collections (+)(4271E) 0 (440) (440)

**Direct Loan Agency**

**Statement of Financing**

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

+------------------------------------------------+------+-------+-----+
|                                                | *    | *     | **T |
|                                                | *Pro | *Fina | ota |
|                                                | gram | ncing | l** |
|                                                | Fu   | F     |     |
|                                                | nd** | und** |     |
+------------------------------------------------+------+-------+-----+
| **Resources Used to Finance Activities:**      |      |       |     |
|                                                |      |       |     |
| **Budgetary Resources Obligated**              |      |       |     |
+------------------------------------------------+------+-------+-----+
| 1\. Obligations incurred (4801 E-B, 4902E)     | 440  | 0     | 440 |
+------------------------------------------------+------+-------+-----+
| 2\. Less Spending Authority from Offsetting    |      | \(    | \   |
| Collections and Recoveries (4271E)             |      | 440\) | (44 |
|                                                |      |       | 0\) |
+------------------------------------------------+------+-------+-----+
| 3\. Obligations Net of Offsetting Collections  | 440  | \(    | 0   |
| and Recoveries (1..2)                          |      | 440\) |     |
+------------------------------------------------+------+-------+-----+
| 5\. Net Obligations (3..4)                     | 440  | \(    | 0   |
|                                                |      | 440\) |     |
+------------------------------------------------+------+-------+-----+
| 11\. Total Resources Used to Finance           | 440  | \(    | 0   |
| Activities                                     |      | 440\) |     |
+------------------------------------------------+------+-------+-----+
|                                                | 440  |       |     |
+------------------------------------------------+------+-------+-----+
| **Resources Used to Finance Items not a Part   |      |       |     |
| of Net Cost of Operations:**                   |      |       |     |
+------------------------------------------------+------+-------+-----+
| 13\. Resources That Fund Expenses in Prior     | 440  |       | 440 |
| Periods                                        |      |       |     |
+------------------------------------------------+------+-------+-----+
| 14\. Budgetary Offsetting Collections and      |      |       |     |
| Receipts That Do Not Effect the Net Cost of    |      |       |     |
| Operations                                     |      |       |     |
+------------------------------------------------+------+-------+-----+
| 14A. Credit Program Collections That Increase  |      | \(    | \   |
| Liabilities for Loan Guarantees or Allowances  |      | 440\) | (44 |
| for Subsidy (4271E)                            |      |       | 0\) |
+------------------------------------------------+------+-------+-----+
| 17\. Total Resources Used to Finance Items Not | 440  | \(    | 0   |
| a Part of Net Cost of Operations (12..16)      |      | 440\) |     |
+------------------------------------------------+------+-------+-----+
| 18\. Total Resources Used to Finance the Net   |      | 0     | 0   |
| Cost of Operations (11-17)                     |      |       |     |
+------------------------------------------------+------+-------+-----+
|                                                |      |       |     |
+------------------------------------------------+------+-------+-----+
| **Components of Net Cost of Operations That    |      |       |     |
| Will Not Require or Generate Resources in the  |      |       |     |
| Current Period:**                              |      |       |     |
+------------------------------------------------+------+-------+-----+
| 29\. Total Components of Net Cost of           |      |       |     |
| Operations That Will Require or Generate       |      |       |     |
| Resources in the Current Period (24 + 28)      |      |       |     |
+------------------------------------------------+------+-------+-----+
| 30\. Net Cost of Operation (18 + 29)           |      | 0     | 0   |
+------------------------------------------------+------+-------+-----+

**Direct Loan Agency**

**Year End Closing Statement (2108)**

**September 30, FY-2**

## Indefinite Borrowing Authority -- Financing Account

Column 3 Increases (4141) 0

Column 4 Borrowings (4145) 0

Column 5 Adjustments (4143) 0

Column 6 (Calc 2+3-4-5) 0

## Program Account

Column 4 Unobligated and Obligated Balance Withdrawn/Canceled 0

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

Column 6 Other Authorization 0

Column 7 Reimbursements Earned and Refunds 0

Column 8 Unfilled Customer Orders 0

Column 9 Undelivered Orders and Contracts (4801 E) 645

Column 10 Accounts Payable and Other Liabilities 0

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

Also equals (4650 E) 1,200

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

**Program Financing**

**OBLIGATIONS BY PROGRAM ACTIVITY**

1000 Total New Obligations (4801 E-B, 4902E) 440

**BUDGETARY RESOURCES AVAILABLE FOR OBLIGATION**

2140 Unobligated balance carried forward, start of year 1,200

2200 New Budget Authority, (gross) 440

2390 Total budgetary resources available for obligation

2395 Total new obligations (440)

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

4000 Appropriation (4118) 440

4047 Portion applied to repay debt (-) (440)

6800 Spending Authority from offsetting collections 440

7000 Total New Budget Authority (Gross) 440

**CHANGE IN OBLIGATED BALANCES**

7240 Obligated balance, start of year 645 2,355

7310 Total new obligations 440

7320 Total Outlays (gross) (4902E) 440

7440 Obligated Balance, end of year (4221E, 4801E) 645 2,355

**OUTLAYS (GROSS), DETAIL**

8693 Outlays from discretionary balances (4902E) 440

8700 Total Outlays (gross) (-) (4902E) 440

**OFFSETS**

8800 Federal Sources (440)

**NET BUDGET AUTHORITY AND OUTLAYS**

8900 Budget Authority (net) 440 (440)

9000 Outlays (net) 440 (440)

# APPENDIX 1: ACCOUNTING FOR MANDATORY DIRECT LOAN PROGRAMS

**INTRODUCTION**

The case presented in the body of this document was for common
transactions undertaken by a discretionary direct loan program. This
appendix discusses basic differences between discretionary and mandatory
direct loan programs, and shows how the prior entries in this 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. Program fund subsidy is usually provided by
annual or multi-year appropriations, although no-year (permanent
indefinite) appropriations can be given by the Congress should they
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. No new
obligations may be placed against expired authority, and agencies
generally 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.[^57]

The government also operates mandatory (entitlement) direct loan
programs, in which Congress usually authorizes permanent indefinite
appropriations for subsidy. If there are a sufficient number of
applicants who meet criteria established by Congress for the program
that the subsidy is insufficient to support the loans, additional
subsidy monies are normally provided by drawing additional
appropriations. The Congress may set rules in which it must concur with
the additional funding, or it may place a cap on the total funding.
These no-year appropriations do not have a date of expiration, and
unobligated subsidy appropriation authority may be used as long as the
programs they fund remain authorized by the Congress.

Congress may provide appropriations for administrative expenses that
have annual, multi-year, or no-year expiration. It is probably most
common for both discretionary and mandatory direct loan programs to 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 direct loan
programs is that when downward adjustments to subsidy are called for
during the subsidy re-estimation process to properly value direct loans
at the estimated value of their cash flows, discretionary programs must
generally return the excess money in their financing fund to the
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 provide for recycling of downward
re-estimates for a discretionary program, or may provide that downward
re-estimates in a mandatory program cannot be recycled, and must be
returned to Treasury. Recording and reporting downward re-estimates of
subsidy for both a discretionary and a mandatory program is discussed in
Appendix 2 to this document (recall that the agency in the body of this
document illustrated accrual and disposition of an upward adjustment).

Both discretionary and mandatory direct loan programs generally have the
same transactions. Budgetary resources must be formulated, apportioned
by OMB, and allotted by the agency; loans are made based on a
combination of program fund subsidy and financing fund borrowing from
Treasury; collections from federal and non-federal sources are made and
used to repay principal and interest on the loan from Treasury;
re-estimates to determine the present value of the loans and interest
receivable and adjust the accounts to reflect it must be made; the books
must be closed at year-end; 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 will
usually differ as well. The next section discusses those differences.

**DIFFERENCES IN JOURNAL ENTRIES FOR MANDATORY PROGRAMS**

The transactions illustrated for the discretionary direct loan program
in the body of this document are virtually the same as those that would
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.[^58] 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 were 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 budget formulation was prepared. (A102, A104)

*Program Fund*

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

4117 Loan Administrative Expense Appropriation

\- Definite - Current 5,000

4450 Unapportioned Authority 26,500

1010 Fund Balance with Treasury 5,000

3101 Unexpended Appropriations - Appropriations Received 5,000

**Explanation of difference**

Because the program fund has permanent indefinite authority for its
subsidy, formulation of the budget calls for the amount of the
appropriations to be received to first be anticipated. The
appropriations will normally not be realized until OMB has approved the
amount. Accordingly, two changes must be made in the program fund entry.
First, the account for anticipated appropriations, 4120, is used instead
of the account for realized subsidy appropriations, 4115. Second,
because the subsidy money is not realized at this point, the amount of
Fund Balance with Treasury recorded is only the amount of the
administrative expense appropriation, which is an annual appropriation.
Note that there is no change for the financing fund or memorandum
account entries.

1-2. The agency's requests for apportionment were approved by OMB
without change, and the apportionment was recorded. (A102, A104)

*Program Fund*

**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 - Appropriations Received** 21,500

***Explanation of Difference***

There are two differences here. First, because the subsidy appropriation
was first anticipated and not realized until OMB concurred in the
amount, an entry to realize the appropriation is made. Second, along
with the realization, the related fund balance with Treasury must be
recorded. Note that the combination of entries 1-1 and 1-2 yields the
same account balances for both the discretionary and mandatory programs.

**1-10. After consultation and agreement with OMB, the agency decided to
modify the terms of loans for some borrowers, reducing the present value
of those loans by \$1,000~~.~~ (A148)**

### Financing Fund

4610 Allotments - Realized Resources 1,000

4047 Anticipated Transfers to the General Fund of the Treasury 1,000

***Explanation of Difference***

The basic transaction is the same, the agency is making modifications to
loan terms which cost the government \$1,000. However, some of the
related procedures are different. In the discretionary program, the loan
level had to be reduced, and the related borrowing authority had to be
reduced as well. This was because since the subsidy appropriation was
annual, having to use subsidy to modify loans meant that the subsidy was
not available to use in making loans (recall that an agency can only
make the amount of loans which its subsidy monies can support).

In a mandatory program, in which additional monies can, with OMB
approval, be drawn from a permanent indefinite appropriation, there is
no need to reduce the program level. The \$1,000 of subsidy could be
recovered by drawing an additional \$1,000 from the appropriation
subsidy. The drawing of it is not made here, because in this case, we
know from the discretionary program case that the full amount of
subsidy, even reduced by the \$1,000 used for modifications, was not
used to make loans.

Note that the \$1,000 of additional subsidy to be collected would need
to be paid on the Treasury loan, and hence the allotments, which would
otherwise have been used to make loans, must be decreased, and the
amount of anticipated payments on the loan must be increased, by the
amount.

If the mandatory agency were to replenish its subsidy, it would first
make the request of OMB and, if OMB concurred, would realize additional
appropriation authority and receive monies from Treasury[^59]. Such
request would probably be made later in the year if the demand for loans
was greater than the subsidy would support, which is not the situation
in the case.

*Explanation of Difference*

In conjunction with the change to entry 1-10, this entry would not be
made--indeed; the transaction would not be undertaken--because there
would be no need to reduce borrowing authority. If, later in the year,
the demand for loans was such that more subsidy was needed to make loans
than was available in the program fund, the program fund would obtain
additional subsidy from its permanent indefinite appropriation and use
it, in conjunction with the existing borrowing authority, to make
additional loans. If the borrowing authority was also insufficient,
additional authority would be realized, since it, too, is permanent
indefinite authority.[^60]

1-18. As no further loans were disbursed during the year, the unneeded
monies borrowed from Treasury were returned. (A148, A156)

*Financing Fund*

4610 Allotments - Realized Resources 7,850

4143 Actual Reductions of Borrowing Authority 7,850

4145 Borrowing Authority Converted to Cash 7,850

4148 Resources Realized from Borrowing Authority 7,850

2510 Principal Payable to the Bureau of the Public Debt 7,850

1010 Fund Balance with Treasury 7,850

*Explanation of Differences*

At the end of the year, the agency had obligated \$90,000 for loans
receivable, consisting of \$19,350 (21.5 percent) to be funded by
subsidy, and \$78,750 to be funded by borrowing from Treasury. The
remaining \$10,000, which was not obligated, would have been funded by
\$2,150 from subsidy and \$7,850 from borrowing authority. The subsidy
money can be reused, but budget rules call for unobligated monies
borrowed to be returned to Treasury, and borrowing authority to be
reduced accordingly. The borrowing authority will be reauthorized in the
next year in the amount necessary to fund the direct loans to be
made.[^61]

**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. Narrative descriptions about funding and about 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-ESTIMATES IN DISCRETIONARY AND MANDATORY DIRECT LOAN PROGRAMS

**INTRODUCTION**

The nature of downward subsidy re-estimates for loans and interest
receivable is the same for both discretionary and mandatory direct loan
programs. In both cases, the present value of the receivables is
understated at year-end, meaning that more subsidy money was collected
than is necessary to fund future net cash outflows; the value of the
receivables must be adjusted accordingly; and the financing fund must
relinquish the excess subsidy amount. A SF-132 Apportionment and
Reapportionment Schedule has to be done.[^62] And like the upward
subsidy re-estimates, an accrual for the adjustment to subsidy expense
must be made at year-end, with the actual transfer of cash to be made in
the following year.

The difference in the accounting between the two types of programs is
that normally, the discretionary program's financing fund must transfer
the excess subsidy monies, with interest, to a designated miscellaneous
receipt fund in the Treasury general fund. The mandatory program usually
can recycle the excess, 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 were used for the upward re-estimate in the case,
except that the re-estimate will be considered to be downward. Hence,
the re-estimate components will be: downward technical re-estimate
(principal portion), re-estimate of \$430; downward technical
re-estimate (interest portion), \$15; and upward interest re-estimate,
\$5.[^63] The first section following will cover handling of the
downward re-estimate for a discretionary program, and the second will
cover it for a mandatory program.

**DISCRETIONARY PROGRAM**

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

Fiscal Year 1

*Financing Fund*

1399 Allowance for Subsidy 440

6800 Future Funded Expenses \[Subsidy Re-estimate\] 440

5730 Financing Sources Transf. Out Without Reimbursement 440

2190 Other Accrued Liabilities\]

Downward Re-estimate Payable to Misc. Rec. Fund\] 440

The first entry increases the present value of the receivables, and the
second entry accrues the transfer-out to the miscellaneous receipt fund.
As with upward adjustments, the budget rules are that the actual cash
transfer will not take place until the following year.

*Memorandum Accounts--Allowance for Subsidy (A/S)*

9XAM A/S - Subsidy Re-estimates - Technical - Principal 430

9XAN A/S - Subsidy Re-estimates - Technical - Interest 15

9XAL A/S - Subsidy Re-estimates - Interest Rate 5

9XAB Allowance for Subsidy - Contra 440

*Financial Statement Effects*

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

• The debit to account 1399 would reduce that account in the credit
program note, and would reduce the value of credit program assets on the
balance sheet.

• The credit to account 6800 \[subsidy Re-estimate\] would reduce
subsidy expense and the net cost of operations, yielding, solely for
this transaction, a net cost of operations of -\$440.

• 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.

**CUMULATIVE RESULTS OF OPERATIONS COLUMN**

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

**DISCRETIONARY PROGRAM**

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

> **Cumulative Results**

**[of Operations]{.underline}**[^64]

> **Program Financing**
>
> **[Fund Fund Total]{.underline}**

1\. Beginning Balance October 1 (3310B) 0[^65] 0[^66] 0

13\. Transfers In/Out Without

Reimbursements (5720/5730) 440 [440]{.underline} 0

17\. Net Cost of Operations [0]{.underline} [440]{.underline}[^67]
[440]{.underline}

18\. Ending Balance September 30 \$ 440 \$ 0 \$440

**STATEMENT OF FINANCING**

**DISCRETIONARY PROGRAM**

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

**Resources Used to Finance Activities** \$ -0-

7\. Transfers In/Out Without Reimbursement(5730) 440

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

30\. Net Cost of Operations \$440

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.

*Caveat--FACTS I*

When a credit agency with a downward subsidy re-estimate payable to the
miscellaneous receipt fund reports its trial balance of proprietary
accounts to Treasury via the Federal Agency Centralized Trial Balance
System (FACTS--FACTS I for the proprietary accounts), it will of course
include account 2190A, representing that liability. The miscellaneous
receipt fund does not belong to the agency, however, it is maintained by
the agency. The agency will perform the elimination between the credit
agency payable and the miscellaneous receipt account receivable for
purposes of compiling their agency-wide financial statements and for the
government-wide financial statements. The agency will reflect the
miscellaneous receipt fund as non-entity.

Accordingly, agencies will include in their FACTS I transmission the
following two accounts for a downward re-estimate (the amount from the
example in this section:

> **Miscellaneous Receipt Fund**
>
> 1310 Accounts Receivable \[from Credit Agency Financing Fund\][^68]
> \$440
>
> 5720 Financing Sources Transferred in Without Reimbursement 440.

Information on requirements for FACTS I transmissions can be found via
the web site [www.fms.treas.gov/factsi]{.underline}.

**FISCAL YEAR 2**

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

**1. To obtain an apportionment. (A116)**[^69]

*Financing Fund*

4450 Unapportioned Authority 440

4510 Apportionments 440

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

4510 Apportionments 440

4610 Allotments - Realized Resources 440

**3. To transfer the money. (B106, B134)**

4610 Allotments - Realized Resources 440

4902 Delivered Orders - Paid \[Re-est. Subsidy and Interest\] 440

2190 Other Accured Liabilites

\[Downward Re-estimate Payable to Misc. Rec. Fund\] 440

1010 Fund Balance with Treasury 440

[To record the reclassification of unfunded expenses.]{.underline}

6800 Future Funded Expenses \[Re-estimated Subsidy Expense\] 440

6199 Adjustments to Subsidy Expense 440

***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 Year 2)**

> Budgetary Non-Budgetary
>
> Resources

Unobligated Balance Forward \$ -0- \$440

**Status of Budgetary Resources**

8\. Obligations Incurred (4902) \$ -0- \$440

**Relationship of Obligations to Outlays**

Outlays

15\. Disbursements (4902) \$ 0 \$440

*Components of Net Outlays:*

Disbursements (4902) \$ 0 \$440

Offsetting Collections [0]{.underline} [0]{.underline}

Net Outlays Before Offsetting Receipts \$ 0 \$440

Deposits to Miscellaneous Receipt Fund [(440)]{.underline}
[0]{.underline} [^70]

Net Outlays After Offsetting Receipts \$(440) \$440

**STATEMENT OF FINANCING**

**DISCRETIONARY PROGRAM**

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

**Budgetary Resources Obligated**

1\. Obligations Incurred (4902) 440

4\. Less Offsetting Receipts [440]{.underline}

5\. Net Obligations 0

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

13\. Resources that Fund Expenses of Prior Periods (2190) (440)

15\. Resources That Finance the Acquisition of Assets\
(Receipt of downward subsidy re-estimate) (4902) [440]{.underline}[^71]

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 receivables on the books being less
than the present value of their cash flows. Accordingly, the value on
the books must be adjusted upward, and the excess subsidy money
collected[^72] must be removed from the financing fund. Unlike a
discretionary program, however, the excess subsidy is generally given
back to the program fund to be reused rather than being transferred to a
miscellaneous receipt fund of the Treasury.

As in a discretionary program, 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, the monies are
transferred out of the financing fund, and are recognized in the
budgetary accounts. The entries to accomplish this in a mandatory
program are set forth below, using the same parameters as for the
discretionary program discussed in the preceding section.

**Fiscal Year 1**

*Program Fund*

1310 Accounts Receivable

\[Re-estimated Subsidy Receivable from Financing Fund\] 440

5720 Financing Sources Trans. In Without Reimb. (Non-budgetary) 440

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

*Financing Fund*

1399 Allowance for Subsidy 440

6800 Future Funded Expenses

\[Re-estimated Subsidy Expense\] 440

5730 Financing Sources Trans. Out Without Reimb. (Non-budgetary) 440

2190 Other Accrued Liabilites

\[Re-estimated Subsidy Payable to Program Fund\] 440

The first entry increases the present value of the receivables and
decreases the subsidy expense. The second entry accrues the payable as a
non-budgetary transfer-out to the program fund.

*Memorandum Accounts--Allowance for Subsidy (A/S)*

9XAM A/S - Subsidy Re-estimates - Technical - Principal 430

9XAN A/S - Subsidy Re-estimates - Technical - Interest 15

9XAL A/S - Subsidy Re-estimates - Interest Rate 5

> 9XAB Allowance for Subsidy - Contra 440

Note that this is the same entry as for the discretionary program. It
merely details the composition of the \$440 debit to account 1399 in the
financing fund.

***Financial Statement Effects***

The effects of the proprietary entries on the year 1 financial
statements are as follows:

• The debit to account 1399 would reduce that account in the credit
program note, and would reduce the value of credit program assets on the
balance sheet. Note that the program fund's receivable from the
financing fund and the financing fund's payable to the program fund
would be eliminated in the financial statement consolidation process.

• The credit to account 6800\[Subsidy Re-estimate\] would reduce subsidy
expense and the net cost of operations, yielding, solely for this
transaction, a net cost of operations of -\$440.

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

• The statement of changes in net position for the downward subsidy
re-estimate transactions, which relate only to cumulative results of
operations, is the consolidated column shown for that statement
immediately after this list. Note that the program fund's accrued
transfer-in from the financing fund would be eliminated against the
financing fund's accrued transfer-out in the consolidation process, and
neither a transfer-in nor a transfer-out would appear. The illustration
shows the program fund and financing fund components of the statement so
that the reader can more easily see how the consolidated statement is
derived.

• The statement of financing is illustrated following the statement of
changes in net position.

## 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[^73] 0[^74] 0

13\. Transfers In/Out Without

Reimbursements (5720/5730) 440 [(440)]{.underline} [^75]^,^ 0

17\. Net Cost of Operations [0]{.underline} [440]{.underline}
[440]{.underline}

18\. Ending Balance September 30 \$ 440 \$ 0 \$440

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 E and G of the note, but the
algebraic signs would be reversed.

**Fiscal Year 2**

*Program Fund*

**1. To anticipate the collection from the financing fund**

4070 Anticipated Collections from Federal Sources 440

4450 Unapportioned Authority 440

**2. To receive an apportionment for the collection**

4450 Unapportioned Authority 440

4590 Apportionments Unavailable - Anticipated Resources 440

**3. To collect the receivable from the financing fund**[^76]

4271 Actual Collection of Subsidy 440

4070 Anticipated Collections from Federal Sources 440

1010 Fund Balance with Treasury 440

1310 Accounts Receivable

\[Re-estimated Subsidy Receivable from Financing Fund\] 440

*Financing Fund*

**4. To receive the apportionment of the beginning unobligated balance
of resources**[^77]

4450 Unapportioned Authority 440

4510 Apportionments 440

**5. To allot the apportionment**

4510 Apportionments 440

4610 Allotments - Realized Resources 440

**6. To transfer the money to the program fund**

4610 Allotments - Realized Resources 440

4902 Delivered Orders -- Paid \[Subsidy Re-estimates and Interest\] 440

2190 Other Accrued Liabilities

\[Re-estimated Subsidy Payable to Program Fund\] 440

1010 Fund Balance with Treasury 440

***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

Unobligated Balance Forward \$ -0- \$440

**Status of Budgetary Resources**

8\. Obligations Incurred (4902) \$ -0- \$440

**Relationship of Obligations to Outlays**

Outlays

15\. Disbursements (4902) \$ 0 \$440

*Components of Net Outlays:*

Disbursements (4902) \$ 0 \$440

Offsetting Collections [0]{.underline} [0]{.underline}

Net Outlays Before Offsetting Receipts \$ 0 \$440

Deposits to Miscellaneous Receipt Fund [(440)]{.underline}
[0]{.underline} [^78]

Net Outlays After Offsetting Receipts \$(440) \$440

# 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
>
>  Website: 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

-   Website: 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 Staff)

-   TFM Chapter 2-4600 Treasury Reporting Instructions for Credit Reform
    Legislation

-   Present Value Monograph

    -   USSGL Staff (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 (2004), Section 185.3(d)

[^3]: The illustration is for 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 hence, prior obligations are not shown.

[^4]: This relates to upward re-estimates. The comparable account for
    downward re-estimates is in the financing fund. This case
    illustrates use of the accounts for upward re-estimates. Appendix 2
    illustrates use of the account for downward re-estimates.

[^5]: This account must be zero after closing. OMB A-11, Section 185,
    Exhibit E, the financing is designed to break even and thus have a
    zero results of operations. If the subsidy money is too great, a
    payable to transfer it to a designated miscellaneous receipt fund is
    accrued. If it is too little, a receivable from the program fund is
    accrued for the deficiency. The accounting is such that financing
    sources must equal expenses, and assets must equal liabilities.

[^6]: This relates to downward re-estimates. See appendix 2 for
    illustration of its use.

[^7]: These accounts are for detailing activity in account 1399
    Allowance for Subsidy and are used to produce the Schedule for
    Reconciling Subsidy Cost Allowance Balances per FASAB #18 and for
    certain items on the statement of financing. Because these accounts
    are proposed at this writing and are not yet contained in the USSGL,
    their normal balance--debit (dr.) or credit (cr.)--is given. The
    list of accounts here is a partial one, containing only those
    accounts that are used in the case.

[^8]: Programs, which have risk categories, must maintain separate
    financing fund accounting for each risk category.

[^9]: While annual appropriations for basic and modified subsidy, which
    are common in discretionary direct loan programs, are illustrated in
    the case, 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 funds, which had them.

[^10]: This is the difference between interest charged borrowers and
    interest the agency must pay to Treasury on loans to make the
    borrowing.

[^11]: Annual appropriations are considered realized based on the
    underlying legislation. Agencies that have multi-year appropriations
    in other than their final year, or permanent indefinite
    appropriations, would normally need to anticipate their
    appropriations prior to realizing them.

[^12]: Typically in standard federal accounting, undelivered orders
    (4800) would be placed with vendors to acquire the goods, and the
    invoices would be accrued as payable (4901) before they were paid:
    however, in credit programs those particular accounting events do
    not exist. As a result, we will not illustrate those particular
    transactions in the case study because they are not necessary.

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

[^14]: OMB A-11, Section 185.25, states that for direct loan financing
    account include the subsidy cost payment obligated in the program
    account but not yet paid on line 3B2, Spending authority from
    offsetting collections, Change in unfilled customer orders, Without
    advance from Federal sources.

[^15]: Note that the unfilled customer order from the program fund
    constitutes a realized resource (OMB Bulletin A-11, Section 185.11).

[^16]: The \$90,000 is the amount of the loans agreed upon, but not yet
    finalized. It represents a combination of the \$19,350 subsidy plus
    \$70,650 (\$90,000 x the unsubsidized rate of 78.5 percent) of
    borrowing authority.

[^17]: Although separate procedures would be involved to transfer the
    monies and to disburse the loans, they both should be performed
    simultaneously.

[^18]: \$87,000 in loans made x 21.5 percent subsidy = \$18,705.

[^19]: Per OMB A-11, section 185.26, Just before a loan is disbursed
    from the financing account, pay the financing account and include
    the subsidy cost payment on line 15A, Disbursements and reduce the
    amount of loans payable from line 14C, Obligated balance,
    Undelivered orders, of the SF 133, Report on Budget Execution.

[^20]: Per OMB A-11, section 185.26. When subsidy cost payment is
    received from the program account, reduce line 3B2, without advance
    from Federal sources, and increase line 3A1, Collected.

[^21]: This allowance for "subsidized costs" reduces the gross loans
    receivable of \$87,000 to its present value of \$68,295 (\$87,000 x
    the 78.5 percent unsubsidized cost rate).

[^22]: Per the subsidy model discussed in the case agency parameters,
    the dollar amounts are computed by multiplying the \$87,000 in loans
    disbursed x 20% for the default component, 2% for the interest
    differential, -.5 percent for the fees, and 21.5% for the total.

[^23]: Though all collections from federal sources are recorded together
    for purposes of the case, the application fees would probably be
    collected in conjunction with making the loans. They would normally
    be one of the conditions that applicants would have to meet. Some
    programs may collect fees from borrowers each year, in addition to
    principal and interest.

[^24]: Note that balance of account 4590 is \$2,850 just before this
    transaction. The account cannot go below zero. At the point that it
    reaches zero, no additional allotments of anticipated resources,
    which become realized, are made. The \$2,850 shown in the entry
    brings the account balance to zero.

[^25]: In a direct loan financing fund, offsetting collections other
    than basic subsidy from the program fund, which is used to make
    loans, is normally paid to BPD for interest and to reduce the loan
    principal. Exceptions are made when monies are needed for other
    purposes, such as to repair or maintain foreclosed property on
    defaulted loans, which is not included in this guide.

    Note that it is an OMB requirement that the repayment of principal
    to Treasury is a non-expenditure transaction (i.e. it does not count
    as obligations or outlays), whereas payment of interest on debt to
    Treasury is an expenditure transaction (it does count). Section
    20.6, indicates that agencies should not record outlays for the
    repayment of debt principal, because borrowings and the repayment of
    debt principal are treated as a means of financing.

[^26]: If prior year authority was available, USSGL account 4147, Actual
    Repayments of Debt, Prior-Year Balances, would be used.

[^27]: Before making the modifications, the agency must be certain that
    it has sufficient unobligated resources for subsidy in the program
    fund. In this case, 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 1-6).

[^28]: The subsidy rate for Year 1 is 21.5%. The original subsidy
    authorized to support \$100,000 in loans was \$\$21,500. The
    remaining subsidy, after the modification, was \$20,500. This
    \$20,500 will support the making of only \$95,349 in new loans
    (\$20,500/. 215).

[^29]: The loan level of \$95,349 is provided via subsidy of 21.5
    percent (see previous footnote) and borrowing of 78.5 percent. The
    borrowing authority required to support \$95,349 of loans is
    \$74,849 (computed as \$95,349 x .785, or as \$95,349 less the
    subsidy, computed in the preceding note, of \$20,500).

[^30]: Note that the form is also updated for actual transactions, which
    have occurred, such that actual offsetting collections are shown on
    line 3a, with line 3c reduced accordingly, and actual payments to
    the Bureau of the Public Debt are shown on line 6c, with line 6f
    reduced accordingly.

[^31]: Note that since the authority had been allotted in transaction
    1-3, the reduction is to allotments rather than to apportionments.
    This excess borrowing is repaid to Treasury in transaction 1-13.

[^32]: \$100,000 originally apportioned, less the new loan level of
    \$95,349, = \$4,651. Note that if the agency desired to keep the
    \$100,000 figure and separately store the \$4,651, it would have to
    add an account, probably using accounts in the series designated
    "reserved for agency use." If an account was added, it, instead of
    8010, would be credited in the entry.

[^33]: Note that the effect of this is to decrease the present value of
    the loans receivable by \$1,000.

[^34]: If agencies wanted to separate upward from downward
    modifications, they could use an account in the 8120 series reserved
    for agency use to do so.

[^35]: This entry would not be applicable, if an agency does not borrow
    all of its authority at the beginning of the year. Instead the
    agency would post a debit tot 4450, Unapportioned Authority and a
    credit to 4143, Decreases to Indefinite Borrowing Authority. (A148)

[^36]: Recall that transaction 1-8 brought account 4590 to zero. Hence,
    this subsequent collection of anticipated resources is not allotted.
    It is expected to be used to repay principal on agency borrowing
    from Treasury.

[^37]: Agencies establish their own criteria for when notes are not
    "performing"--i.e., when borrowers are considered to no longer be
    paying on their loan principal and interest, at which point the
    loans may be sent to Treasury or the Justice Department for
    collection.

[^38]: Note that there is no budgetary entry here. This is because
    receivables from the public are generally not recognized in the
    Federal Budget until they are collected.

[^39]: Interest expense, \$700, less interest income, \$565, = amount to
    amortize, \$135. This entry can be either debited or credited based
    upon the interest income or interest expense.

[^40]: As noted in footnote #35, this entry would not be applicable, if
    an agency does not borrow all of its authority at the beginning of
    the year. Instead the agency would post a debit tot 4450,
    Unapportioned Authority and a credit to 4143, Decreases to
    Indefinite Borrowing Authority. (A148)

[^41]: Note that the full amount of borrowing authority was allotted in
    transaction 1-3. Accordingly, this entry reduces those allotments,
    as well as the borrowing authority.

[^42]: The amount of borrowing authority just before this transaction is
    \$74,849, as calculated by subtracting account 4143, \$3,651, from
    account 4141, \$78,500. Note that this is also the amount reflected
    in both accounts 4145 and 4148. The amount of borrowing authority
    required is based on the \$90,000 of direct loans obligated.
    Multiplying \$90,000 by the percentage of loans that are not
    subsidized, 78.5 percent (100 percent minus the subsidized portion
    of 21.5 percent), yields the amount of borrowing authority required
    for the program for Year 1-- \$70,650. The difference between
    borrowing authority before this transaction, \$74,849, and the
    amount required, \$70,650, is \$4,199. Borrowing authority must be
    reduced by that amount and, since borrowing from Treasury was made,
    the monies must be returned.

[^43]: This determination of uncollectibility would be made only after
    attempting to collect the receivables under provisions of the
    Federal Debt Collection Act.

[^44]: The concepts underlying these re-estimates are discussed in SFFAS
    No. 18, *Amendments to Accounting Standards for Direct Loans and
    Loan Guarantees in SFFAS No. 2.* Note that there are no budgetary
    entries made, because, in accordance with the Federal Credit Reform
    Act, the budget will not recognize this transaction until Year 2.

[^45]: If agencies wished to break these out between upward and downward
    re-estimate, they could do so using accounts in the 8130 series
    reserved for agency use.

[^46]: Account 4590 is zero before closing, and hence is not in this
    closing entry. Note, however, that if it had a balance, it would
    also be debited for that balance in the entry.

[^47]: Note that there is no borrowing authority carried forward,
    because the entire amount of net borrowing authority (account 4141,
    \$78,000, less account 4143, \$7,850, or \$70,650) was used to
    borrow money from Treasury, as shown by account 4145, which is
    \$70,650.

[^48]: Note that cumulative results of operations from this activity are
    zero. The financing fund cannot have a net position after closing.
    Assets must equal liabilities.

[^49]: 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 direct loan programs, which can be
    quantified. Narrative information, which is also required, is not
    presented. The information is displayed as simple as possible for
    ease of reading. Agencies can format the information with more
    elaborate template if they wish

[^50]: This information would be obtained from the subsidy model rather
    than from account balances.

[^51]: The information called for contains a repeat of the detail in
    Section E. The illustration provided here summarizes the information
    rather than repeating the detail. Agencies may repeat the detail if
    they wish, using the crosswalks for related parts of Section E.

[^52]: Since the agency operates only a direct loan program, and the
    administrative expense is already set forth in the statement of net
    cost, Section O could be omitted in the case

[^53]: Note that this is a permanent indefinite appropriation, as
    opposed to the annual appropriation for basic and modified subsidy
    that was seen in Year 1. Under OMB budget rules, a permanent
    indefinite appropriation is anticipated and only realized when OMB
    authorizes it use, at which time the fund balance with Treasury is
    also recognized. Hence there is no entry to fund balance with
    Treasury recorded in the entry to request the apportionment.

[^54]: Note that there is no apportionment of resources, since the \$440
    expected to be collected is going to be returned to Treasury. Hence,
    there is no apportionment to record. The approved SF-132 will
    nonetheless be kept to evidence OMB's approval of the collection and
    payment to Treasury.

[^55]: Because there is no apportionment of resources (see previous
    footnote), there is no allotment of them.

[^56]: Note that there are no closing entries required for the financing
    fund, because there were no transactions involving financing sources
    or expenses.

[^57]: The legislation providing for this is P.L. 101-510, which is a
    separate part of the Defense Appropriation Act of 1990, applying
    more broadly to most federal agencies. The U.S. USSGL Board has
    published a document entitled *Budgetary Accounting in the Federal
    Government* which is available through its website at
    [www.fms.gov/ussgl.]{.underline}

[^58]: It is important to note that 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.

[^59]: To make the request to replenish the subsidy now of OMB, the
    agency would prepare this entry in its program fund and submit an
    SF-132 to OMB:

    4120 Appropriations Anticipated - Indefinite 1,000

    4450 Unapportioned Authority 1,000

    Then, when OMB approved the request, the agency would make these
    entries to record the apportionment:

    4115 Loan Subsidy Appropriation 1,000

    4120 Appropriations Anticipated - Indefinite 1,000

    1010 Fund Balance with Treasury 1,000

    3101 Unexpended Appropriations - Appropriations Received 1,000

    A related SF-132 would be prepared for the financing fund to
    increase its anticipated federal collections by \$1,000. The
    financing fund entries relating to anticipated federal collections
    in entries 1-1 and 1-2 would be made to request and receive the
    apportionment, respectively.

[^60]: The borrowing authority in a discretionary direct loan program is
    also permanent indefinite, but if the subsidy money was annual
    authority, which could not be augmented without additional action by
    the Congress, borrowing authority could not be increased to make
    more loans. Even if a discretionary program had unobligated
    borrowing authority, if the amount of unobligated subsidy money was
    (say) zero, none of the borrowing authority could be used to fund
    new loans unless Congress authorized additional subsidy
    appropriations.

[^61]: Borrowing authority may also be authorized for situations in
    which the financing fund does not have enough money for its
    non-lending functions, even considering federal and non-federal
    collections. These other functions could include such things as
    repayment of interest to Treasury and expenses related to the
    repair, maintenance, rental, and sale of collateral property. In the
    case presented, the financing fund had collections sufficient to
    repay interest on its debt to Treasury, and collateral property
    transactions, which are the subject of a separate case, are not part
    of the scope of this case. Financing fund entries related to
    borrowing authority and actual borrowing from Treasury in a
    subsequent year would be the same as in year 1, except for the
    amounts, which would be different.

[^62]: OMB Circular A-11, Section 185.18 Do amounts for a downward
    reestimate (and the interest on the reestimate) need to be
    apportioned?

[^63]: .OMB Circular A-11, Section 185.6 (f) Reestimate
    increases/decreases. All increases or decreases in subsidy cost for
    different risk categories within the same cohort will be netted
    against each other; that is, risk categories which require increased
    subsidies may first draw on the excess from any risk categories
    within the cohort where the reestimate shows a subsidy decreases. No
    such netting may occur between cohorts.

[^64]: 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.

[^65]: 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. SFFAS No.
    2, paragraph 24 'The amount of the subsidy expense equals the
    present value of estimated cash outflows over the life of the loans
    minus the present value of estimated cash inflows, discounted at the
    interest rate of marketable Treasury securities with a similar
    maturity term, applicable to the period during which the loans are
    disbursed.

[^66]: 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.

[^67]: 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 case, there is a
    negative expense account balance, resulting in a net cost of
    operations of -\$440; and there is a non-budgetary transfer out of
    that same amount.

[^68]: This specific account receivable is not in the USSGL at this
    writing. Presumably, account 1310, "Accounts Receivable," would be
    used.

[^69]: Note that the excess monies would already have been collected in
    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 Year 2.

[^70]: Although the deposit is to the miscellaneous receipt fund, the
    crosswalk is to a financing fund account. This is because the
    miscellaneous receipt fund is a Treasury entity, even though it is
    associated with the credit agency in the Federal Budget and the
    credit agency does not make budgetary entries to the fund.
    Accordingly, the account crosswalked, which the credit agency would
    have available in its budgetary trial balance for the financing
    fund, is 4902 in that fund. Note that this represents the obligation
    that resulted in the deposit being made to the miscellaneous receipt
    fund.

[^71]: Although the deposit is to the miscellaneous receipt fund, the
    crosswalk is to a financing fund account. This is because the
    miscellaneous receipt fund is a Treasury entity, even though it is
    associated with the credit agency in the Federal Budget and the
    credit agency does not make budgetary entries to the fund.
    Accordingly, the account crosswalked, which the credit agency would
    have available in its budgetary trial balance for the financing
    fund, is 4902\[Re-estimated Subsidy and Interest\] in that fund.
    Note that this represents the obligation that resulted in the
    deposit being made to the miscellaneous receipt fund.

[^72]: If the present value of the cash flows is greater than expected,
    less subsidy is needed.

[^73]: 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.

[^74]: 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.

[^75]: 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, which close to
    cumulative results of operations, must net to zero. In this case,
    there is a negative expense account balance, resulting in a net cost
    of operations of -\$440; and there is a non-budgetary transfer out
    of that same amount.

[^76]: The collection could also be allotted at this time by making the
    entry:

    > 4590 Apportionments Unavailable - Anticipated Resources 440
    >
    > 4610 Allotments - Realized Resources 440

[^77]: Note that the excess subsidy monies would already have been
    collected in 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 Year 2.

[^78]: Although the deposit is to the miscellaneous receipt fund, the
    crosswalk is to a financing fund account. This is because the
    miscellaneous receipt fund is a Treasury entity, even though it is
    associated with the credit agency in the Federal Budget and the
    credit agency does not make budgetary entries to the fund.
    Accordingly, the account crosswalked, which the credit agency would
    have available in its budgetary trial balance for the financing
    fund, is 4902\[Other\] in that fund. Note that this represents the
    obligation that resulted in the deposit being made to the
    miscellaneous receipt fund.