## ACCOUNTING PRINCIPLES AND STANDARDS HANDBOOK

# CHAPTER 11. FEES AND REVENUES

# Section 1.0 General

This chapter presents standards to account for inflows of resources from
revenue and other financing sources. It provides standards for
classifying, recognizing, and measuring resource inflows. This chapter
also prescribes policies and procedures for establishing and imposing
user fees for services or products which the Department of Commerce
provides to non-Federal recipients. The requirements for user fees apply
to any activity involving the provision of a service or thing of value
to non-Federal recipients for which a fee, royalty, rent, or other
charge is imposed. Additionally, this chapter establishes guidelines for
work provided to other Federal, state, and local governments.

# Section 2.0 Authority

The following authorities address the accounting for fees and revenues:

a.  [FASAB Statement of Federal Financial Accounting Standard (SFFAS)
    7,](http://www.fasab.gov/pdffiles/codification_report2007.pdf)
    "Accounting for Revenue and Other Financing Sources and Concepts for
    Reconciling Budgetary and Financial Accounting;"

b.  [FASAB SFFAS 7 -- Implementation Guide (April 2002) \[amends June
    1996 SFFAS 7 -- Implementation
    Guide;"](http://www.fasab.gov/pdffiles/codification_report2007.pdf)

c.  [FASAB SFFAS 7 -- Implementation Guide (June
    1996);"](http://www.fasab.gov/pdffiles/codification_report2007.pdf)

d.  FASAB Statements of Federal Financial Accounting Concepts (SFFAC):

-   [SFFAC 1 -- "Objectives of Federal Financial
    Reporting;"](http://www.fasab.gov/pdffiles/codification_report2007.pdf)
    and

-   [SFFAC 5 -- "Definitions of Elements and Basic Recognition Criteria
    for Accrual-Basis Financial
    Statements."](http://www.fasab.gov/concepts.html)

e.  [OMB Circular A-136, "Financial Reporting
    Requirements---Revised."](http://www.whitehouse.gov/omb/circulars/index.html)

> f\. DOC [Credit and Debt Management Operating Standards and Procedures
> Handbook](http://www.osec.doc.gov/ofm/credit/cover.htm), Chapter 5,
> "Procedures for Loans and Loan Guarantees Pre-Award Evaluation;"
>
> g\. Title V of the Independent Office Appropriations Act of 1952 ([31
> U.S.C.
> 9701](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t29t32+2191+0++()  AND ((31) ADJ USC)%3ACITE AND (USC w%2F10 (9701))%3ACITE         )),
> "Fees and Charges for Government Services and Things of Value;"

h.  [OMB Circular A --
    25](http://www.whitehouse.gov/omb/circulars/index.html) Revised,
    "User Charges;"

i.  [OMB Circular A --
    136](http://www.whitehouse.gov/omb/circulars/index.html), "Financial
    Reporting Requirements;" and

> j\. [Chief Financial Officers Act of
> 1990](http://govinfo.library.unt.edu/npr/library/misc/cfo.html) ([31
> U.S.C.
> 902](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t29t32+1751+0++()  AND ((31) ADJ USC)%3ACITE AND (USC w%2F10 (902))%3ACITE         )).

When considering whether to institute user fees administratively, heads
of operating units or their designee shall review all sources of
statutory authority that may authorize implementation of such fees. When
there are statutory prohibitions or limitations, the head of the
operating unit or their designee shall review activities and recommend
legislative changes, when appropriate, pursuant to [OMB Circular
A-19](http://www.whitehouse.gov/omb/circulars/index.html), "Legislative
Coordination and Clearance."

See Exhibit 1 for specific statutory authorities limited to certain
organizations, programs, and functions. In determining which statutory
authority applies, the heads of operating units or their designee should
consult with the [Office of the Assistant General Counsel for
Administration](http://www.ogc.doc.gov/admin_main.html). Legal advice
for new legislation is obtained from the [Office of the Assistant
General Counsel for Legislation and
Regulation](http://www.ogc.doc.gov/legis_reg_main.html).

The head of the operating unit or their designee shall be responsible
for reviewing and approving the products/services the operating unit
provides, determining whether special benefits are provided to
individual recipients, and reviewing and approving the charges needed to
recover the full costs of providing the products/services. The head of
the operating unit or their designee is also responsible for complying
with [15 U.S.C.
1526](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+1745+0++()  AND ((15) ADJ USC)%3ACITE AND (USC w%2F10 (1526))%3ACITE         ),
which provides that all payments for work performed under [15 U.S.C.
1525](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+1744+0++()  A)
shall be deposited in a separate account which may be used to pay
directly the costs of the work or services, to repay or make advances to
appropriations or funds which bear the costs, or to refund excess funds
when necessary.

The heads of operating units shall be responsible for ensuring that
standard costing practices, including costing methodologies for
determining user fees, are consistent with FASAB standards and
Departmental policies.

# Section 3.0 Revenue and Other Financing Sources

> .01 [Exchange Revenue]{.underline}
>
> Exchange revenue and gains are inflows of resources to a Government
> entity that the entity has earned. They arise from exchange
> transactions, which occur when each party to the transaction
> sacrifices value and receives value in return. That is, exchange
> revenue arises when a Government entity provides something of value to
> the public or another Government entity at a price. Revenue from
> exchange transactions should be recognized when goods or services are
> provided to the public or another Government entity at a price. When a
> transaction with the public or another Government entity at a price is
> unusual or nonrecurring, a gain or loss should be recognized rather
> than revenue or expense to differentiate such transactions. Revenue
> from specific types of exchange transactions should be recognized as
> follows:
>
> a\. When services are provided to the public or another Government
> entity (except for specific services produced to order under a
> contract), revenue should be recognized when the services are
> performed.
>
> b\. When specific goods are made to order under a contract (either
> short- or long-term), or specific services are produced to order under
> a contract (either short- or long-term), revenue should be recognized
> in proportion to estimated total cost when goods and services are
> acquired to fulfill the contract. If a loss is probable (more likely
> than not), revenue should continue to be recognized in proportion to
> the estimated total cost and costs should continue to be recognized
> when goods and services are acquired to fulfill the contract. Thus,
> the loss should be recognized in proportion to total cost over the
> life of the contract.[^1]
>
> c\. When goods are kept in inventory so that they are available to
> customers when ordered, revenue should be recognized when the goods
> are delivered to the customer.
>
> d\. When services are rendered continuously over time or the right to
> use an asset extends continuously over time, such as the use of
> borrowed money or the rental of space in a building, the revenue
> should be recognized in proportion to the passage of time or the use
> of the asset.
>
> e\. When an asset other than inventory is sold, any gain (or loss)
> should be recognized when the asset is delivered to the purchaser.
>
> When advance fees or payments are received, revenue should not be
> recognized until costs are incurred from providing the goods and
> services (regardless of whether the fee or payment is refundable). An
> increase in cash and an increase in liabilities, such as "unearned
> revenue," should be recorded when the cash is received. "Unearned
> revenue" should also be recorded if an agency requests advances or
> progress payments prior to the receipt of cash and records the amount.
>
> The measurement basis for revenue from exchange transactions should be
> the actual price that is received or receivable under the established
> pricing arrangements. When cash has not yet been received at the time
> revenue is recognized, a receivable should be recorded. An appropriate
> allowance for estimated bad debts should be established. To the extent
> that realization of the full amount of revenue is not probable due to
> credit losses (caused by the failure of the debtor to pay the
> established or negotiated price), an expense should be recognized and
> the allowance for bad debts increased if the bad debts can be
> reasonably estimated.[^2] The amount of the bad debt expense should be
> separately shown. To the extent that realization of the full amount of
> revenue is not probable due to returns, allowances, price
> re-determinations, or other reasons apart from credit losses, the
> revenue that is recognized should be reduced by separate provisions if
> the amounts can be reasonably estimated. The amounts of such
> provisions should be reflected as revenue adjustments, rather than
> costs of operations, and should be separately shown.
>
> Under exceptional circumstances, such as rents and royalties on the
> Outer Continental Shelf, an entity recognizes virtually no costs
> (either during the current period or during past periods) in
> connection with earning revenue that it collects. If this situation
> applies, bureaus should refer to [SFFAS No.
> 7](http://www.fasab.gov/pdffiles/codification_report2007.pdf),
> "Accounting for Revenue and Other Financing Sources and Concepts for
> Reconciling Budgetary and Financial Accounting," for specific
> guidance.
>
> .02 [Non-exchange Revenue]{.underline}
>
> a\. The General Standard: Non-exchange revenues are inflows of
> resources that the Government demands or receives by donation. Such
> revenue should be recognized when a specifically identifiable, legally
> enforceable claim to resources arises, to the extent that collection
> is probable (more likely than not) and the amount is reasonably
> estimable. Non-exchange revenue should be measured by the collecting
> entities, but should be recognized by the entities legally entitled to
> the revenue (the recipient entities).
>
> b\. Taxes and Duties should be measured on the cash basis, and the
> cash basis amount(s) should be shown in conjunction with the accrual
> amounts recognized. The source and disposition of revenue from taxes,
> duties, and related fines, penalties and interest should be measured
> by the collecting entities in a manner that enables reporting of (1)
> cash collections, refunds, and the "accrual adjustment" necessary to
> determine the total revenue; and (2) cash or cash equivalents
> transferred to each of the recipient entities and the revenue amounts
> to be recognized by each of them. If any bureaus collect material
> amounts of taxes or duties, they should refer to [SFFAS No.
> 7](http://www.fasab.gov/pdffiles/codification_report2007.pdf),
> "Accounting for Revenue and Other Financing Sources and Concepts for
> Reconciling Budgetary and Financial Accounting," for specific
> guidance.
>
> c\. Fines and Penalties are monetary requirements imposed on those who
> violate laws or administrative rules. They may be imposed by the
> entities collecting taxes and duties, or by other government entities.
> The time when a claim to resources arises will depend on the nature of
> the fine and the associated legal and administrative processes. Some
> examples of conditions that, depending on the circumstances, could
> establish a legally enforceable and measurable claim include (1) the
> date by which an individual may contest a court summons expires, (2)
> the offender pays the fine before a court date, or (3) the court
> imposes the fine. An allowance for uncollectible accounts should be
> recognized as a revenue adjustment. The allowance should reduce the
> gross amount of the receivable and revenue to its net realizable
> value, based on the criterion that losses should be recognized to the
> extent it is probable (more likely than not) that some or all of the
> receivables will not be totally collected.
>
> Civil monetary penalties (CMPs) include non-criminal monetary
> penalties, fines, or other sanctions assessed by a Federal agency
> pursuant to Federal law, as a result of an administrative action or
> proceeding or a civil action in the Federal courts, and for which law
> establishes a specific dollar value or maximum value. Civil penalties
> that are strictly variable or percentage based\--without a specific
> maximum value\--are not CMPs. Civil monetary penalties will be
> separately recorded and identifiable in the bureau's chart of
> accounts. (See the Department's [Cash Management Policies and
> Procedures Handbook](http://www.osec.doc.gov/ofm/cash/cover.htm),
> Appendix I, Civil Monetary Penalties.)

d\. Donations are contributions to the Government, i.e., voluntary gifts
of resources to a Government entity by a non-Federal entity. Donations
may be financial resources, such as cash or securities, or nonfinancial
resources such as land or buildings.

> Revenue arising from donations should be recognized for those inflows
> of resources which meet recognition criteria for assets, and should be
> measured at the estimated fair value of the contribution. (See Chapter
> 16, "Gifts & Bequests" of this
> [Handbook](http://www.osec.doc.gov/ofm/acctg/cover.htm) for further
> guidance.)
>
> .03 [Other Financing Sources]{.underline}
>
> Financing sources, other than exchange and non-exchange revenues, that
> provide inflows of resources that increase results of operations
> during the reporting period include appropriations used, transfers of
> assets from other Government entities, and financing imputed with
> respect to any cost subsidies. This standard provides guidance for
> accounting for the corresponding financing source that is reported in
> such cases. Financing outflows may result from transfers of the
> reporting entity's assets to other Government entities or from
> exchange revenues earned by the entity but required to be transferred
> to the General Fund or another Government entity. Unexpended
> appropriations are recognized separately in determining net position
> but are not financing sources until used.

a.  Appropriations:

    1.  Unexpended Appropriations. Appropriations, until used, are not a
        financing source. They should be recognized in capital as
        "unexpended appropriations" (and among assets as "funds with
        Treasury") when made available for apportionment, even if a
        Treasury Warrant has not yet been received, or the amount has
        not been fully apportioned. Unexpended appropriations should be
        reduced for appropriations used and adjusted for other changes
        in budgetary resources, such as rescissions and transfers. The
        net increase or decrease in unexpended appropriations for the
        period should be recognized as a change in net position of the
        entity.

    2.  Appropriations Used. When used, appropriations should be
        recognized as a financing source in determining net results of
        operations. Appropriations are used in operations when goods and
        services are received or benefits and grants are provided. Goods
        and services (including amounts capitalized) are considered
        received when a liability is established. Benefits are
        considered to be provided when the related liability is
        established. Grants are considered to be provided when grantees
        meet the requirements that allow them to use the grants.[^3]

> b\. Imputed Financing Sources from Cost Absorbed by Others: Government
> entities often receive goods and services from other Government
> entities without reimbursing the providing entity for all the related
> costs. In addition, Government entities often incur costs, such as for
> pensions, that are paid in total or in part by other entities. These
> constitute subsidized costs to be recognized by the receiving entity
> to the extent required by other accounting standards. An imputed
> financing source from cost absorbed by others (financing source
> reported on the Statement of Changes in Net Position) should be
> recognized equal to the imputed cost. This offsets any effect of
> imputed cost (reported as a cost on the Statement of Net Cost) on net
> results of operations for the period. For example, an imputed
> financing source from cost absorbed by others is recognized when the
> Treasury Judgment Fund pays in whole or in part the court judgments
> and settlement agreements negotiated by the Justice Department on
> behalf of agencies, as well as certain types of administrative
> awards.[^4] (See Chapter 12 section 7.0, "Inter-Entity Costs."
>
> c\. Transfers of Assets: An intra-governmental transfer of cash or
> other capitalized asset without reimbursement changes the resources
> available to both the receiving entity and the transferring entity.
> The receiving entity should recognize a transfer-in as an additional
> financing source in its result of operations for the period.
> Similarly, the transferring entity should recognize the transfer-out
> as a decrease in its result of operations. The value recorded should
> be the transferring entity's book value of the asset. If the receiving
> entity does not know the book value, the asset should be recorded at
> its estimated fair value as of the date of transfer.
>
> To the extent that a Government entity's exchange revenue included in
> calculating net cost of operations is required to be transferred to
> the Treasury or other Government entity, the amount should be
> recognized as a transfer-out in determining the net result of
> operations. [SFFAS No.
> 7](http://www.fasab.gov/pdffiles/codification_report2007.pdf),
> Appendix B, "Guidance for the Classification of Transactions,"
> provides authoritative guidance for determining which transactions
> should be classified as exchange transactions and which should be
> classified as nonexchange transactions or other financing sources.

[Section 4.0 User Fees (Also, see Chapter 12 section 7.0, "Inter-Entity
Costs.")]{.underline}

> .01 [Determinations of User Fees]{.underline}
>
> a\. Bureaus shall be in compliance with [OMB Circular
> A-25](http://www.whitehouse.gov/omb/circulars/index.html), "User
> Charges,"
>
> b\. Full Cost: The cost of activities performed will be determined in
> accordance with Chapter 12, Section 5.0 -- "Full Cost", of this
> [Handbook](http://www.osec.doc.gov/ofm/acctg/cover.htm). Accordingly,
> the accounting records shall be the official source of such cost
> determinations. The legal or administrative basis for exception to
> full cost recovery shall be reflected in the accounting records.
> Exceptions to full cost recovery are defined in Chapter 12, Section
> 6.07 -- "Exceptions" of this
> [Handbook](http://www.osec.doc.gov/ofm/acctg/cover.htm). Full cost
> shall include all direct and indirect costs of providing a property,
> resource, or service.

c.  Pricing Policy:

> Operating units shall:
>
> 1\. Require all non-Federal applicants to make payment in advance of,
> or simultaneously with, the rendering of goods or services unless
> appropriations and authority are provided in advance to allow
> reimbursable services.
>
> 2\. Set user fees as rates rather than fixed dollar amounts, when
> possible, to adjust for changes in costs to the Government or changes
> in market prices of the goods, resources, or services provided.
>
> 3\. Establish a simple schedule of fees for licensing, registration,
> and related activities, by classifying the various types of actions
> into similar groups. Where there is little variation in the cost of an
> action of a given type, a uniform fee scale shall be established.
> Where there is a wide variation in the cost of an action, a graduated
> fee scale may be used.
>
> 4\. Establish a uniform schedule of charges for like products or
> services, e.g., maps and charts. Price schedules shall be set for each
> similar group of products or services rather than setting prices on an
> individual item basis. As a general rule, user fees must be based on
> the full costs associated with producing goods or services. However,
> in certain instances when there is a substantial competitive demand
> for a good or service, or in instances when it is necessary to achieve
> a balance in the demand and supply of such goods or services, user
> fees need not be limited to the recovery of full cost. In such
> instances, net revenues may be obtained.
>
> When a substantial competitive demand exists for a good or service,
> user fees shall be determined using commercial practices, (e.g., by
> competitive bidding). User fees should be adjusted appropriately to
> reflect demand, level of service, and quality of the good or service.
>
> When a substantial competitive demand does not exist for a good or
> service, but it becomes necessary to balance public demand with
> existing supply, user fees may be adjusted so there will be neither a
> shortage nor a surplus. If operating units maintain dated or obsolete
> inventory items held for sale, prices may be set in order to deplete
> excess stock.
>
> Bureaus shall assess and appropriately record loan applications,
> origination, and guarantee fees on direct loans and loan guarantees
> provided by the Department. Such fees shall be consistent with
> statutory prohibitions and requirements of the loan program enabling
> legislation (see Chapter 5 of the Department's [Credit and Debt
> Management Operating Standards and Procedures
> Handbook](http://www.osec.doc.gov/ofm/credit/cover.htm)).
>
> .02 [Documentation]{.underline}
>
> Costs upon which user fees are based must be reflected in the bureau's
> accounting records. Records must be maintained of the service or
> activity subject to user fees; the benefits provided to recipients;
> exceptions to the pricing policy; and information used to establish
> charges and specific methods used to determine them. Predetermined
> rates shall be established when feasible, particularly in cash sales
> programs. Where such rates are used, the bureaus shall document the
> following:
>
> a\. The basis for establishing the rate;
>
> b\. The method of recording and controlling variances between costs
> and billings; and
>
> c\. Periodic evaluation of material variances and adjustments.
>
> .03 [Collection and Disposition of Receipts]{.underline}
>
> Every effort should be made to keep the costs of collection to a
> minimum. Operating units are to ensure that the requirements of [OMB
> Circular A-123](http://www.whitehouse.gov/omb/circulars/index.html),
> "Management's Responsibility for Internal Control" are applied to
> collection activities.
>
> Unless otherwise prescribed by statute, user fees collected to recover
> costs or collected in excess of full cost shall be credited to the
> general fund of the Treasury as miscellaneous receipts. Exceptions to
> this general policy may be made when statutory authorities germane to
> certain organizations, programs, and functions otherwise address the
> disposition of user fee receipts. In such cases, user fee collections
> shall be handled in accordance with the specific provisions of those
> Acts.
>
> .04 [Biennial Review and Modification of Fee Amounts]{.underline}
>
> User fees charged by operating units for the lease, purchase, or use
> of its goods, services, and resources are to be periodically revised
> to reflect increases in costs, except when such fees are established
> by statute or through contract negotiations and competitive bids. In
> those instances when user fees are material, such fees shall be
> modified on an on-going basis to reflect inflationary cost increases
> so as to recover the cost to the Government of providing goods and
> services.
>
> In compliance with the [Chief Financial Officer
> Act](http://www.gao.gov/special.pubs/af12194.pdf) and [OMB Circular
> A-25](http://www.whitehouse.gov/omb/circulars/index.html), "User
> Charges," operating units are to review biennially all fees,
> royalties, rents, and other charges imposed by the agency for goods
> and services rendered, and other items of value. As part of this
> review, operating units are to make recommendations on revising each
> fee charged to reflect costs incurred by the operating unit for
> providing services and products to the public or other government
> (including Federal) agencies. Operating units should consider
> including conditions in multi-year contracts which allow for
> adjustments to user fees based on biennial reviews. (See Section 6.0
> -- "Special Pricing Considerations," below, of this Handbook for
> further guidance.)

#  

# Section 5.0 Accountability for Dedicated Collections

NOTE: This section does not apply to funds meeting the definition of
earmarked funds. See Section 6.0 -- "Accountability for Earmarked Funds"
below for guidance on these funds.

A reporting entity may be responsible for funds financed with dedicated
collections that are held for later use to accomplish the fund's
purpose. Some of these are held in a fiduciary capacity. Special
accountability is required for the sake of the taxpayers or other
contributors who make payments to the fund with the expectation that the
collections will be used for the purposes for which they were dedicated,
and for the sake of those who expect to benefit from the fund's future
expenditures. Such funds include all funds within the budget classified
as trust funds, those funds within the budget that are classified as
"special funds" but that are similar in nature to trust funds, and those
funds within the Federal universe (inside or outside the budget) that
are fiduciary in nature. Management should, therefore, identify those
special funds that are similar in nature to trust funds and those funds
inside and outside the budget that are fiduciary in nature.
Identification of funds that are similar in nature to trust funds is a
judgmental matter; management is best qualified to make this judgment.

Separate financial information about these dedicated collections should
be provided if they are material either to the reporting entity or to
the beneficiary or contributors. The separate information may be
reported on the face of the entity's general purpose financial
statements, or the information may be disclosed in the notes to the
financial statements.

When not material to the reporting entity, this information may be
provided separately in special reports to the contributors and
beneficiaries (or their representatives) rather than separately in the
reporting entity's general purpose financial statements or notes
thereto.

> .01 [Reporting for Dedicated Collections]{.underline}
>
> The following information, at a minimum, should be reported for
> individual funds that account for dedicated collections
>
> a\. A description of each fund's purpose, how the administrative
> entity accounts for and reports the fund, and its authority to use
> those collections.
>
> b\. The sources of revenue or other financing for the period and an
> explanation of the extent to which they are inflows of resources to
> the Government or the result of intragovernmental flows.
>
> c\. Condensed information about assets and liabilities showing
> investments in Treasury securities, other assets, liabilities due and
> payable to beneficiaries, other liabilities, and fund balance.
>
> d\. Condensed information on net cost and changes to fund balance
> showing revenues by type (exchange/nonexchange), program expenses,
> other expenses, other financing sources, and other changes in fund
> balance.
>
> e\. Any revenues, other financing sources, or costs attributable to
> the fund under accounting standards, but not legally allowable as
> credits or charges to the fund.
>
> .02 [Special Reports]{.underline}
>
> When the above information is provided separately in special reports,
> the financial information required in (c) and (d) above should be
> combined for all such funds and the information described as "amounts
> for immaterial funds not presented separately in this general purpose
> report." The law may require the accounting for a fund to be done in a
> particular way. The disclosures called for by item (e) are required if
> the fund's recognition requirements, as determined by law, are
> contrary to applicable accounting standards with respect to certain
> revenue, other financing sources, or costs.
>
> If more than one reporting entity is responsible for carrying out the
> program financed with the dedicated collections, then the entity with
> the largest share of the activity should be responsible for reporting
> all revenues, other financing sources, assets, liabilities, and costs
> of the fund.

# Section 6.0 Accountability for Earmarked Funds

> .01 [Definition]{.underline}
>
> Earmarked funds are financed by specifically identified revenues,
> often supplemented by other financing sources, which remain available
> over time. These specifically identified revenues and other financing
> sources are required by statute to be used for designated activities,
> benefits or purposes and must be accounted for separately from the
> Government's general revenues. The three required criteria for an
> earmarked fund are:

a.  A statute committing the Federal Government to use specifically
    identified revenues and other financing sources only for designated
    activities, benefits or purposes;

b.  Explicit authority for the earmarked funds to retain revenues and
    other financing sources not used in the current period for the
    future benefit of the designated activities, benefits, or purposes;
    and

c.  A requirement to account for and report on the receipt, use, and
    retention of the revenues and other financing sources that
    distinguishes the earmarked fund from the Government's general
    revenues.

> .02 [Reporting of Earmarked Funds]{.underline}

a.  Financial Statement Reporting Requirements

> Earmarked non-exchange revenue and other financing sources, including
> appropriations, and net cost of operations should be shown separately
> on the Statement of Changes in Net Position. Also, the portion of
> cumulative results of operations attributable to earmarked funds
> should be shown separately on both the Statement of Changes in Net
> Position and the Balance Sheet. [SFFAS No.
> 27](http://www.fasab.gov/pdffiles/codification_report2007.pdf),
> "Identifying and Reporting Earmarked Funds" does not require earmarked
> funds to be separately shown on the Statement of Net Cost. (See [SFFAS
> No. 27](http://www.fasab.gov/pdffiles/codification_report2007.pdf)
> Appendix C: "Pro Forma Illustrations" for examples of accounting
> entries and financial reporting.)
>
> Most earmarked revenues and other financing sources are in the basic
> financial statements of the entity carrying out the program and
> responsible for administration of the fund. If more than one component
> entity is responsible for carrying out the program financed with
> earmarked revenues and other financing sources, and the separate
> portions of the program can be clearly identified with a responsible
> component entity, then each component entity should report its portion
> in accordance with the requirements of this standard. If separate
> portions cannot be identified, the component entity with program
> management responsibility should report the fund.[^5]

b.  Disclosure

> A bureau should disclose all earmarked funds for which it has program
> management responsibility by either a list, by official title, or a
> statement indicating where the information can be obtained. An
> earmarked fund should not be characterized as a "trust" in financial
> statements. (The use of the term "trust fund" is acceptable only in
> the fund's official title.)
>
> The following information should be disclosed for individual earmarked
> funds. An exception is provided for component entities having numerous
> individual earmarked funds. The following information should be
> disclosed for selected individual earmarked funds and in aggregate for
> all remaining earmarked funds:
>
> 1\. Condensed information about assets and liabilities showing
> investments in Treasury securities, other assets, liabilities due and
> payable, other liabilities, cumulative results of operations and net
> position.
>
> 2\. Condensed information on gross cost, exchange revenue, net cost,
> nonexchange revenues and other financing sources, and change in net
> position.
>
> The information required by this section for earmarked funds may be
> presented separately on the face of the entity's basic financial
> statements or disclosed in the accompanying notes. Information for
> funds not presented individually may be aggregated, but must be
> provided even if the aggregate total is immaterial. The total
> cumulative results of operations shown in the note disclosure should
> agree with the cumulative results of operations for earmarked funds
> shown on the face of the component entity's basic financial
> statements.
>
> The following information should be disclosed for each individually
> reported earmarked fund, or portion thereof, for which a component
> entity has program management responsibility.
>
> 1\. A description of each fund's purpose, how the entity accounts for
> and reports the fund, and its authority to use those revenues and
> other financing sources.
>
> 2\. The sources of revenue or other financing for the period and an
> explanation of the extent to which they are inflows of resources to
> the Government or the result of intragovernmental flows.
>
> 3\. Any change in legislation during or subsequent to the reporting
> period and before the issuance of the financial statements that
> significantly changes the purpose of the fund or that redirects a
> material portion of the accumulated balance.

For further information on Earmarked Funds, see [SFFAS No.
27](http://www.fasab.gov/pdffiles/codification_report2007.pdf),
"Identifying and Reporting Earmarked Funds."

# 

# 

# 

# 

# 

#  

# Section 7.0 Special Pricing Considerations

In select instances, there are statutory prohibitions against imposing
user fees. Operating units must be aware of these prohibitions. In
certain other instances, pricing policies have been established by OMB
or by the Department for particular goods or services rendered to the
public, including Department employees and State and local governments.
Where an [OMB
Circular](http://www.whitehouse.gov/omb/circulars/index.html) or
[Department Administrative Order
(DAO)](http://204.193.232.34/cgi-bin/doit.cgi?218:112:3eb15f1e718b93c9ebc50aa33d7fb33c5cb4dfbf76d4c5a1bc04d84ccdf32bb3:2)
provides guidance on a specific user charge area, the guidance of that
Circular or DAO shall take precedence over the requirements of this
chapter.

Examples of such related guidance include the following:

a.  Policies on setting rental rates for Government furnished quarters
    and facilities occupied by employees are prescribed in [OMB Circular
    A-45](http://www.whitehouse.gov/omb/circulars/index.html), "Rental
    and Construction of Government Quarters," as amended.

b.  Policies on setting prices for food, fuel, and other subsistence
    supplies sold to employees through commissaries operated by the
    Department, are prescribed in [DAO
    217-4](http://204.193.232.34/cgi-bin/doit.cgi?204:112:6ff8312bf7526fe61fd68e2b73f71cafa5a33e5d8b571b5ec114b491d9f17dd1:181),
    "Establishment and Operation of Commissaries."

c.  Policies on costs of distributing information products and services
    are prescribed in [OMB Circular
    A-130](http://www.whitehouse.gov/omb/circulars/index.html),
    "Management of Federal Information Resources."

d.  Policies on providing services to State and local governments are
    prescribed in [OMB Circular
    A-97](http://www.whitehouse.gov/omb/circulars/index.html), "Rules
    and Regulations Permitting Federal Agencies to Provide Specialized
    or Technical Services for State and Local Units of Government under
    Title III of the Intergovernmental Cooperation Act of 1968."

Operating units should be aware that even though other authority may
exist for limiting the imposition of user fees, there may be instances
when circumstances or situations surrounding the sale of goods or
services require that Departmental user fees apply. More specifically,
where operating units provide custom tailored information services to
specific individuals or groups, full cost recovery is appropriate. For
example, if an agency prepares special tabulations or similar services
from its databases in answer to a specific request from the public,
costs associated with fulfilling the request would be charged, and the
requestor should be so informed before the work begins.

The head of each operating unit or designee, after obtaining legal
advice from the Office of the Assistant General Counsel for
Administration, may make exceptions to Section 4.0 --

"User Fees," above, of this Handbook, if the provision of a free service
is an appropriate courtesy to a foreign government or international
organization; or comparable fees are set on a reciprocal basis with a
foreign country.

The head of each operating unit or designee may recommend to the Chief
Financial Officer that the Department seek an OMB exception to the
general policy when the cost of collecting the fees would be an unduly
large part of the fee for the activity; or any other condition exists
which, in the opinion of the head of the operating unit or designee,
justifies an exception.

The legal or administrative basis for exception shall be documented in
the accounting records. All exceptions to full cost recovery should be
supported by documentation for audit purposes.

# Section 8.0 Interagency and Other Special Agreements

Interagency and other special agreements are mechanisms being used by
parties entering into a relationship to formally agree to share
information, provide needed services, or coordinate their programs to
optimize the benefits from each party's efforts. Generally, the
statement of work for other Federal, state, or local governments is
established by a Memorandum of Understanding (MOU) or Memorandum of
Agreement (MOA) between DOC and the parties requesting the goods or
services.

> .01 [Type of Agreements]{.underline}
>
> The following are the five major types of agreements for work provided
> to other Federal, state, and local agencies:

a.  Collateral Agreements which are agreements of mutual interest that
    do not commit funds;

b.  Cooperative Research and Development Agreements (CRADA) which
    authorize Federal agencies to enter into cooperative research and
    development to promote technology transfer, and to improve access to
    science and technology;

c.  Joint Project Agreements which permit a Federal agency to engage on
    an equitable basis in joint projects or perform services on matters
    of mutual interest for commercial organizations, non-profit
    organizations, or public organizations and agencies;

d.  Operating Unit Special Agreements which may allow an operating unit
    latitude in a specific area. This type of agreement requires
    commitment of funds and is usually related to the mission of the
    operating unit; and

e.  Reimbursable Agreements in which an agency provides goods or
    services on a cost reimbursable basis.

> Specific guidelines for these agreements are provided in the DOC
> [Interagency and Other Special Agreements
> Handbook](http://oamweb.osec.doc.gov/CAPPS_InteragencyAgreements.html)
> issued by the Office of Acquisition Management (OAM).
>
> .02 [Costing]{.underline}
>
> The full cost recovery standard applies to these agreements. See
> Chapter 12, Section 5.0 -- "Full Cost" of this
> [Handbook](http://www.osec.doc.gov/ofm/acctg/cover.htm) for more
> information. Separate projects shall be established for each agreement
> and costs shall be accumulated in accordance with the regular cost
> accounting techniques used by the primary organization units. Cost
> accumulation shall be consistent and should facilitate billing as
> provided for in these standards. Separate projects shall be
> established to collect the costs of activities billed through standard
> or other predetermined rates for specific units of output. The
> projects shall define the activity clearly so that all costs can be
> accumulated and unit costs of items sold or cost of services provided
> can be determined. The project description also shall describe the
> method of allocating over and under variances between costs and
> revenues.
>
> .03 [Waiver of Payments]{.underline}
>
> Payment by a non-profit research or other Federal, state, or local
> agency for its share of the costs may be waived under conditions set
> forth in Chapter 12, Section 6.07"Exceptions" of this
> [Handbook](http://www.osec.doc.gov/ofm/acctg/cover.htm).
>
> The head of the operating unit or designee, acting with the advice of
> the operating units Chief Financial Officer, will determine the
> appropriate portion of the project's costs to be waived. A waiver of
> cost must be obtained before signing any agreement to perform the
> joint project and before beginning work on the project. The legal or
> administrative basis for exception to full cost recovery shall be
> documented in the accounting records.
>
> .04 [Deposit of Receipts]{.underline}
>
> All receipts for work or services performed for other Government
> agencies under Section 601 of the Economy Act shall be deposited:
>
> a\. In the case of advance payments to special working funds; or
>
> b\. In the case of payments other than advance payments, to the
> appropriation or funds against which charges have been made pursuant
> to any such order, or such other fund as may be necessary until an
> appropriate determination can be made. All receipts for furnishing
> specialized or technical services authorized under Title III of the
> Intergovernmental Cooperation Act may be deposited in appropriations
> or funds from which the cost of providing such services has been paid
> or is to be charged.

**Exhibit 1**

User Charge Statutory Authorities Limited to Certain Organizations,
Programs, and Functions

[13 U.S.C.
8](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+12+0++()  AND ((13) ADJ USC)%3ACITE AND (USC w%2F10 (8))%3ACITE         )
authorizes services available through Bureau of the Census and the
receipt of funds to pay directly the costs of the work or to repay
appropriations charged with such costs.

[15 U.S.C.
275a](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+1016+0++()  AND ((15) ADJ USC)%3ACITE AND (USC w%2F10 (275a))%3ACITE         )
and [15 U.S.C.
278b](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+1023+0++()  AND ((15) ADJ USC)%3ACITE AND (USC w%2F10 (278b))%3ACITE         )
are the basic authorities for the National Institute of Standards and
Technology to charge for its services and deposit receipts to the
Working Capital Fund. These authorities provide that the Secretary shall
charge for services performed under the authority of [15 U.S.C.
273](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+1013+0++()  A);
that the appropriation or fund bearing the cost of the service may be
reimbursed; and that the fund may be credited with advances and
reimbursements, including receipts from non-Federal sources.

[15 U.S.C.
1152](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+1552+0++()  AND ((15) ADJ USC)%3ACITE AND (USC w%2F10 (1152))%3ACITE         )
and [15 U.S.C.
1153](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+1553+0++()  A)
authorize the Secretary to maintain a clearinghouse for the collection
and dissemination of scientific, technical, and engineering information
and to establish a schedule of fees and charges which will make these
services and functions self-sustaining.

[33 U.S.C.
883e](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t33t36+724+0++()  AND ((33) ADJ USC)%3ACITE AND (USC w%2F10 (883e))%3ACITE         )
authorizes the Secretary to enter cooperative agreements with, and to
receive and expend funds made available by, States or subdivisions
thereof, public or private organizations, and individuals for certain
authorized surveys and investigations or for performing related
surveying and mapping activities, including special purpose maps, and
for the preparation and publication of the results.

[49 U.S.C.
47302](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t49t50+1186+0++()  AND ((49) ADJ USC)%3ACITE AND (USC w%2F10 (47302))%3ACITE         )
authorizes the acceptance of funds from foreign governments and
international organizations for use of facilities and performance of
services specified in the statute.

[44 U.S.C.
1307](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t43t44+1608+0++()  AND ((44) ADJ USC)%3ACITE AND (USC w%2F10 (1307))%3ACITE         )
authorizes the sale of nautical and aeronautical products created or
published by NOAA.

[35 U.S.C.
41](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t33t36+1423+1++(patents)  AND (USC w%2F10 (41))%3ACITE         )
authorizes fees for the filing of applications and the issuance of
patents, and for all other processing, services, or materials relating
to patents.

[15 U.S.C.
1113](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+1516+0++()  AND ((15) ADJ USC)%3ACITE AND (USC w%2F10 (1113))%3ACITE         )
authorizes fees for the filing and processing of applications and for
the registration of trademarks, and for all other services performed by,
and materials furnished by, the Patent and Trademark Office related to
trademarks and other marks.

[5 U.S.C.
552](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t05t08+26+0++()  AND ((5) ADJ USC)%3ACITE AND (USC w%2F10 (552))%3ACITE         )
authorizes recovery of only the direct costs of search, duplication, or
review, depending upon various conditions, for information which the
Department is required to make available to the public.

[15 U.S.C.
4912](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+2551+0++()  AND ((15) ADJ USC)%3ACITE AND (USC w%2F10 (4912))%3ACITE         )
authorizes the Secretary to charge reasonable fees consistent with [5
U.S.C.
552](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t05t08+26+0++()  AND ((5) ADJ USC)%3ACITE AND (USC w%2F10 (552))%3ACITE         )
for services and access to information maintained as part of the
National Trade Data Bank.

[15 U.S.C.
4051(e)](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+2433+0++()  AND ((15) ADJ USC)%3ACITE AND (USC w%2F10 (4051))%3ACITE         )
authorizes the Secretary, in carrying out any export promotion program,
to receive fees for the printing, distribution, and sale of documents,
and the acceptance of private notices and advertisements, under
specified circumstances.

[15 U.S.C.
1534](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t13t16+1754+0++()  AND ((15) ADJ USC)%3ACITE AND (USC w%2F10 (1534))%3ACITE         )
authorizes assessing fees, based on fair market value, for access to
environmental data, and information and products derived therefrom,
collected or archived by NOAA.

[22 U.S.C.
2455(f)](http://uscode.house.gov/uscode-cgi/fastweb.exe?getdoc+uscview+t21t25+2413+0++()  AND ((22) ADJ USC)%3ACITE AND (USC w%2F10 (2455))%3ACITE         )
incorporated into the International Trade Administration's appropriation
and the Bureau of Export Administration's appropriation, authorizes
acceptance of contributions, which are considered user fees in certain
cases.

[^1]: This standard is an exception to the general principle of [SFFAS
    No. 5](http://www.fasab.gov/pdffiles/codification_report2007.pdf),
    "Accounting for Liabilities of the Federal Government," which but
    for this exception, would require a loss on a contract to be
    recognized at the time when expected costs exceeded expected
    revenue. However, the expected loss must be disclosed.

[^2]: [SFFAS No.
    1](http://www.fasab.gov/pdffiles/codification_report2007.pdf),
    "Accounting for Selected Assets and Liabilities," paragraphs 40-52,
    is the standard for estimating bad debts. The standard is further
    explained in SFFAS No.1's Basis for Conclusions, paragraphs 116-133.

[^3]: FASAB plans to undertake a project on accounting for grants.

[^4]: Paragraph 4, [FASAB Interpretation No.
    2](http://www.fasab.gov/pdffiles/2006_vol1.pdf), "Accounting for
    Treasury Judgment Fund Transactions."

[^5]: To determine program management/accounting responsibility,
    agencies should consider the legislation authorizing the program;
    the Memorandum of Understanding that establishes responsibilities;
    and the provisions of [SFFAC
    2](http://www.fasab.gov/pdffiles/codification_report2007.pdf),
    "Entity and Display," as amended by [SFFAS
    27](http://www.fasab.gov/pdffiles/codification_report2007.pdf),
    "Identifying and Reporting Earmarked Funds."