Date: September 11, 1995

To: Bob Bramlett

From: Judy Yuran, Chairman

SGL Issues Resolution Committee

Subject: Issues Resolution Committee Comments on Revenue ED

Thank you for the opportunity to comment on the Revenue exposure draft.
The following comments were developed by the Issues Resolution Committee
of the Standard General Ledger Board.

Members of the IRC are very concerned with the cost benefit of
implementation of many aspects of this and other FASAB standards.
Implementation will require much reprogramming of agencies' systems to
capture data in the prescribed way and for creation of new reporting
modules. Costs for teaching the new accounting concepts to employees at
all levels will also be incurred. Additionally, the standards continue
to depart from accounting taught in the nation's schools which lengthen
the learning curve of the graduates hired into Federal service. Finally,
many folks are wondering if the changes which may certainly work will
actually improve the data enough to warrant the effort.

**Custodial Statement**

What is considered material on the custodial statement? Do you intend
for agencies to report interest, penalties and administrative charges
collected on delinquent debts and deposited into the Treasury General
Fund on this statement? Are employer contributions to Thrift Savings,
Retirement and Health Benefits considered custodial activity for the
employing agency?

**Uncollectible Amounts**

We believe that netting accrued revenue with uncollectible amounts is
inappropriate. Netting the two amounts will understate the amount of
revenue actually earned. Even with respect to IRS tax collections, when
a tax is levied, it is earned through the government's sovereign power
to tax the citizenry.

Additionally, by not recording bad debt expense, representing
uncollectible amounts on the face of the statement, you lose an
important performance measurement tool for debt collection activity.
Finally, how can we record an allowance for doubtful accounts as a
reduction to accounts receivable on the balance sheet without an
offsetting bad debt expense on the Statement of Net Cost?

**Volume 1, paragraph 35.** The last sentence change \"recognizing the
appropriation\" to \"reducing the appropriation.\"

**Volume 1, paragraphs 47 & 120**. These paragraphs state that the
standards for exchange revenue are not applicable to direct loans and
loan guarantees under credit reform. However, Volume 2, paragraph 30
states that interest on direct loans under credit reform is exchange
revenue. Please, specify what credit reform revenue is exchange revenue
in Volume 1 paragraphs 47 & 120.

**Volume 1, paragraph 193.** The matching concept as defined in GAAP
matches periodic revenue earned with expenses. The federal government in
many cases does not earn revenue but receives appropriated funds to
cover expenses. We understand the FASAB desire to match "appropriated
capital used" with "appropriated funds expended" in the same period.
However, the term \"net results of operations\" used in the "Statement
of Changes in Net Position" has a specific definition in GAAP that
indicates expenses are netted against revenue to show a profit or loss.
We suggest changing the line item "Net results of Operations\" to
\"Excess/shortage of Net Costs over Financing Sources Provided in the
Current Period.\"

**Volume 2, paragraph 30.** This paragraph is inconsistent with FASAB
standard 2. Suggest second sentence change: Delete "two parts": and "and
amortized interest\...passage of time." Also, delete the complete 3rd
sentence.

Thank you again for the opportunity to comment. Please feel free to call
me on (202)874-6308 if you'd like to discuss these comments or need
additional information.