Federal trust funds are managed by either a Federal program agency or by
BPD on behalf of an agency. The managing entities make the investment
decisions. The Secretary of the Treasury administers the investment
programs for Federal accounts authorized by law to invest in U.S.
Government interest-bearing obligations. Treasury's role is twofold: 1)
to act as executor of investment decisions directed by Federal program
agencies (for agency-managed trust funds) and 2) to maintain the role of
managing trustee (for Treasury-managed trust funds), wherein Treasury
makes and executes investment decisions for certain funds. BPD
administers these two mission-critical functions. Scenario IV applies to
both agency-managed and Treasury-managed trust funds. The entity that
manages the fund, which would be either the agency or BPD acting on
behalf of the agency, records the transactions outlined herein.

Federal trust fund receipts can be invested in various types of
securities, but appropriate authorization is required. Trust fund
investments are primarily in public debt securities, issued by BPD, with
maturities suitable to meet the needs of the fund. Investments in public
debt securities are treated as an exchange of an asset. Scenario IV
addresses these types of investments. A small number of trust funds are
authorized to invest in non-Federal securities (securities held outside
of the Government). Investments in non-Federal securities are treated as
a purchase of an asset, rather than as an exchange of an asset. An
obligation and an outlay must be recorded for the purchase. Investments
in non-Federal securities are less common, and therefore are not covered
in this scenario. Even fewer trust funds are authorized to invest in
agency securities, whereby one agency purchases securities issued by
another agency. This type of investment, which is also uncommon in the
Federal Government, requires specific authorization and is not covered
in this scenario. Refer to OMB Circular A-34 for additional reporting
guidance, and to the USSGL Web site for guidance on accounting for
agency securities.

For trust funds managed by Federal program agencies (e.g., Civil Service
Retirement and Disability Trust Fund), program agencies are responsible
for determining the amounts to be invested and the terms of the
investments. Agencies also are responsible for calling BPD with specific
investment/redemption orders and reporting investment activity via the
SF 224: Statement of Transactions, FACTS I, FACTS II (SF 133, FMS 2108,
P&F), and on the agency financial statements.

For trust funds managed by BPD (e.g., Federal Old-Age and Survivors
Insurance Trust Fund, Unemployment Trust Fund), BPD is responsible for
administering and monitoring the daily activities of the managed trust
funds for receipts, investments, redemptions, and interest calculations.
Unlike agency-managed trust funds, BPD reports the investment activity
via the SF 224 for the trust funds it manages. BPD also reports the
appropriate investment figures through FACTS II and provides the same
information to the agency responsible for FACTS I reporting and the
agency financial statements.

This scenario is specific to trust funds, and illustrates basic
investment transactions. For additional transactions and reporting
requirements, refer to OMB Circulars A-34 and A-11; TFM Volume I

Part 2 - Chapter 4300: Intragovernmental Fiduciary Transactions
Accounting Guide; TFM Volume I Part 2 - Chapter 4300, T/L 587: Reporting
Instructions for Accounts Invested in Department of the Treasury
Securities; and additional individualized scenarios developed by the
USSGL staff (located on the USSGL Web site).

#### Scenario Assumptions

The following assumptions apply to Scenario IV:

-   Receipts of this trust fund consist of predominantly non-exchange
    revenue. Therefore, the interest earned on investments is classified
    as non-exchange. For guidance on interest classified as exchange,
    refer to SFFAS #7, Accounting for Revenue and Other Financing
    Sources, paragraphs 306-308.

-   The programs of the investing entity are not subject to
    apportionment. Refer to Section III, Accounting Transactions, of TFM
    S2-01-02 (as updated) for comprehensive transactions that include
    accounting for programs that are subject to apportionment.

1.  **To record the collection of tax receipts that are deposited into a
    trust fund**

> **receipt account. The receipts are automatically credited to the
> corresponding expenditure account, whereby they can be invested.**[^1]
> **(TC A186)**
>
> ***Budgetary***
>
> 4114 Appropriated Trust or Special Fund Receipts 1,000,000
>
> 4620 Unobligated Funds Not Subject to Apportionment 1,000,000
>
> ***Proprietary***
>
> 1010 Fund Balance With Treasury 1,000,000
>
> 5800 Tax Revenue Collected 1,000,000

**2. To record the immediate investment of the receipts in U.S. Treasury
Security A issued by the Bureau of Public Debt. The security has a par
value of \$1,000,000 and was purchased at a *discount* of \$200,000. (TC
B128)**

***Budgetary***

None

> ***Proprietary***
>
> 1610 Investments in U.S. Treasury Securities Issued
>
> by Public Debt 1,000,000
>
> 1611 Discount on U.S. Treasury Securities Issued
>
> by Public Debt 200,000
>
> 1010 Fund Balance With Treasury 800,000

**3. To record the collection of additional receipts that are deposited
into the trust fund receipt account. The receipts are automatically
credited to the corresponding expenditure account, whereby they can be
invested. (TC A186)**

> ***Budgetary***
>
> 4114 Appropriated Trust or Special Fund Receipts 5,000,000
>
> 4620 Unobligated Funds Not Subject to Apportionment 5,000,000
>
> ***Proprietary***
>
> 1010 Fund Balance With Treasury 5,000,000
>
> 5800 Tax Revenue Collected 5,000,000

**4. To record the immediate investment of the receipts in U.S. Treasury
Security B issued by the Bureau of Public Debt. The security has a par
value of \$5,000,000 and was purchased for a *premium* of \$10,000. (TC
B126)**

> ***Budgetary***
>
> 4620 Unobligated Funds Not Subject to Apportionment 10,000
>
> 4114 Appropriated Trust or Special Fund Receipts 10,000

***Proprietary***

> 1610 Investments in U.S. Treasury Securities Issued
>
> by Public Debt 5,000,000
>
> 1612 Premium on U.S. Treasury Securities Issued
>
> by Public Debt 10,000
>
> 1010 Fund Balance With Treasury 5,010,000

**5. To record accrued interest receivable for Securities A and B.
Budgetary resources are not recorded until interest is collected. (TC
C215)**

> ***Budgetary***
>
> None

***Proprietary***

> 1340 Interest Receivable 101,000
>
> 5310 Interest Revenue 101,000

**6. To record the maturity of Security A.**

> **A. To record the amortization of the discount. (TC D510)**
>
> ***Budgetary***
>
> None
>
> ***Proprietary***
>
> 1613 Amortization of Discount and Premium on U.S. Treasury
>
> Securities Issued by Public Debt 200,000
>
> 5310 Interest Revenue 200,000

**B. To record the redemption. (TC C124)**

> ***Budgetary***
>
> 4114 Appropriated Trust or Special Fund Receipts 200,000
>
> 4620 Unobligated Funds Not Subject to Apportionment 200,000
>
> ***Proprietary***
>
> 1010 Fund Balance With Treasury 1,000,000
>
> 1610 Investments in U.S. Treasury Securities Issued
>
> by Public Debt 1,000,000
>
> 1611 Discount on U.S. Treasury Securities Issued
>
> by Public Debt 200,000
>
> 1613 Amortization of Discount and Premium on U.S. Treasury
>
> Securities Issued by Public Debt 200,000

**7. To record the obligation and disbursement of funds to non-Federal
recipients. Investments redeemed in the previous transaction are enough
to cover disbursement needs. (TC B107)**

> ***Budgetary***
>
> 4620 Unobligated Funds Not Subject to Apportionment 12,000
>
> 4902 Delivered Orders - Obligations, Paid 12,000
>
> ***Proprietary***
>
> 6100 Operating Expenses/Program Costs 12,000

1010 Fund Balance With Treasury 12,000

**8. To record the maturity of Security B.**

> **A. To record the collection of interest deposited into the trust
> fund receipt account. (TC A196)**
>
> ***Budgetary***
>
> 4114 Appropriated Trust or Special Fund Receipts 100,000
>
> 4620 Unobligated Funds Not Subject to Apportionment 100,000
>
> ***Proprietary***
>
> 1010 Fund Balance With Treasury 100,000
>
> 1340 Interest Receivable 100,000
>
> **B. To record the amortization of the premium. (TC D510)**
>
> ***Budgetary***
>
> None
>
> ***Proprietary***
>
> 5310 Interest Revenue 10,000
>
> 1613 Amortization of Discount and Premium on U.S. Treasury
>
> Securities Issued by Public Debt 10,000
>
> **C. To record the redemption. Budgetary resources were previously
> reduced for premium at the time of purchase. (TC C122)**
>
> ***Budgetary***
>
> None
>
> ***Proprietary***
>
> 1010 Fund Balance With Treasury 5,000,000
>
> 1610 Investments in U.S. Treasury Securities Issued
>
> by Public Debt 5,000,000
>
> 1613 Amortization of Discount and Premium on U.S. Treasury
>
> Securities Issued by Public Debt 10,000
>
> 1612 Premium on U.S. Treasury Securities Issued
>
> by Public Debt 10,000

**9. To record the collection of additional receipts that are deposited
into the trust fund receipt account. The receipts are automatically
credited to the corresponding expenditure account, whereby they can be
invested. (TC A186)**

> ***Budgetary***
>
> 4114 Appropriated Trust or Special Fund Receipts 500,000
>
> 4620 Unobligated Funds Not Subject to Apportionment 500,000
>
> ***Proprietary***
>
> 1010 Fund Balance With Treasury 500,000
>
> 5800 Tax Revenue Collected 500,000

**10. To record the immediate investment of the receipts in U.S.
Treasury Security C issued by the Bureau of Public Debt. The security
has a par value of \$500,000 and was purchased at a *discount* of
\$40,000. (TC B128)**

***Budgetary***

None

> ***Proprietary***
>
> 1610 Investments in U.S. Treasury Securities Issued
>
> by Public Debt 500,000
>
> 1611 Discount on U.S. Treasury Securities Issued
>
> by Public Debt 40,000
>
> 1010 Fund Balance With Treasury 460,000

**11. To record the amortization of the discount for Security C. (TC
D510)**

> ***[Budgetary]{.underline}***

None

> ***Proprietary***
>
> 1613 Amortization of Discount and Premium on U.S. Treasury
>
> Securities Issued by Public Debt 10,000
>
> 5310 Interest Revenue 10,000

*Note: For those trust funds with receipts that are limited to the
year=s obligations, an adjusting entry is required. Follow the guidance
in Scenario II: Trust Fund Balances Precluded from Obligation for
treatment of unobligated balances.*

**Budgetary Pre-Closing Adjusted Trial Balance (FACTS II ATB):**

  ---------------- --------------------------- ---------------------------
  4114             6,790,000                   

  4620                                         6,778,000

  4902                                         12,000

                   6,790,000                   6,790,000
  ---------------- --------------------------- ---------------------------

**Budgetary Closing Entries:**

**C1. To record the consolidation of actual net-funded resources. (TC
F204)**

4201 Total Actual Resources - Collected 6,790,000

> 4114 Appropriated Trust or Special Fund Receipts 6,790,000

**C2. To record the closing of Expended Authority - Paid. (TC F214)**

4902 Delivered Orders - Obligations, Paid 12,000

> 4201 Total Actual Resources - Collected 12,000

**Budgetary Post-Closing Trial Balance:**

  ---------------- --------------------------- ---------------------------
  4201             6,778,000                   

  4620                                         6,778,000

                   6,778,000                   6,778,000
  ---------------- --------------------------- ---------------------------

**Proprietary Pre-Closing Trial Balance (FACTS I Trial Balance):**

  ---------------- --------------------------- ---------------------------
  1010             6,318,000                   

  1340             1,000                       

  1610             500,000                     

  1611                                         40,000

  1613             10,000                      

  5310                                         301,000

  5800                                         6,500,000

  6100             12,000                      

                   6,841,000                   6,841,000
  ---------------- --------------------------- ---------------------------

**Proprietary Closing Entries:**

**C1. To record the closing of revenues and expenses to cumulative
results of operations. (TC F228)**

5310 Interest Revenue 301,000

5800 Tax Revenue Collected 6,500,000

**3310 Cumulative Results of Operations 6,789,000**

> 6100 Operating Expenses/Program Costs 12,000

**Proprietary Post-Closing Trial Balance:**

  ---------------- --------------------------- ---------------------------
  1010             6,318,000                   

  1340             1,000                       

  1610             500,000                     

  1611                                         40,000

  1613             10,000                      

  3310                                         6,789,000

                   6,829,000                   6,829,000
  ---------------- --------------------------- ---------------------------

**SF 133: Report on Budget Execution and Budgetary Resources (Quarter
4):**

1A Appropriations (4114E) 6,790,000

2A Unobligated Balance Brought Forward

3 Spending Authority from Offsetting Collections

5.  Temporarily Not Available Pursuant to Public Law

**7 Total Budgetary Resources 6,790,000**

8A1 Obligations Incurred, Direct

8A3 Obligations Incurred, Direct, Not Subject to Apportionment (4902E)
12,000

9 Unobligated Balances Available (4620E) [6,778,000]{.underline}

11. **Total Status of Budgetary Resources 6,790,000**

12\. Obligated Balance, Net as of October 1

13\. Obligated Balance Transferred, Net

14\. Obligated Balance, Net, End of Period

15A. Disbursements (4902E) 12,000

**FMS 2108: Year-end Closing Statement:**

Column 5 Post-Closing Unexpended Balance (1010E) 6,318,000

Column 6 Other Authorizations (1610E, 1611E) 460,000

Column 11 Unobligated Balance (4620E) 6,778,000

**Program and Financing Schedule (P&F):**

**Obligations by Program Activity**

1000 Total new obligations (4902E) 12,000

**Budgetary Resources Available for Obligation**

2140 Unobligated balance available, start of year 0

2200 New budget authority(gross) (sum 4000 to 6990) 6,790,000

2395 Total new obligations (-) (from line 1000) (12,000)

2499 Unobligated balance carried forward, end of year (4620E) 6,778,000

**New Budgetary Authority (Gross), Detail**

4026 Appropriation (trust fund, definite) (4114E) 6,790,000

7000 Total new budget authority (gross) (4114E) 6,790,000

**Memorandum Entries**

9201 Total investments, start of year (par) (1610B) 0

9202 Total investments, end of year (par) (1610E) 500,000

**OMB Form and Content Statements**

+-----------------------------------------------------------------------+
| **Balance Sheet**                                                     |
|                                                                       |
| ASSETS                                                                |
|                                                                       |
| 1A1 Fund Balance With Treasury (1010E) 6,318,000                      |
|                                                                       |
| 1A4 Investments (1340E, 1610E, 1611E, 1613E) 471,000                  |
|                                                                       |
| LIABILITIES and NET POSITION                                          |
|                                                                       |
| 6B Cumulative Results of Operations (3310E) 6,789,000                 |
+-----------------------------------------------------------------------+
| **Statement of Net Cost**                                             |
|                                                                       |
| 1 Program Costs - Public - Production (6100E) 12,000                  |
|                                                                       |
| 1D Less Earned Revenue 0[^2]                                          |
|                                                                       |
| 4 Net Cost of Operations (calculation) 12,000                         |
+-----------------------------------------------------------------------+
| **Statement of Changes in Net Position**                              |
|                                                                       |
| 1 Net Cost of Operations 12,000                                       |
|                                                                       |
| 2B Taxes (and other nonexchange revenue) (5310E, 5800E) 6,801,000     |
|                                                                       |
| 9 Net Position - End of Period (calculation 2-1) 6,789,000            |
+-----------------------------------------------------------------------+

**OMB Form and Content Statements (continued)**

+-----------------------------------------------------------------------+
| **Statement of Budgetary Resources**                                  |
|                                                                       |
| 1A Budget Authority - Appropriations (4114E) 6,790,000                |
|                                                                       |
| **5 Total Budgetary Resources 6,790,000**                             |
|                                                                       |
| 6 Obligations Incurred (4902E) 12,000                                 |
|                                                                       |
| 7B Unobligated - Exempt from Apportionment (4620E) 6,778,000          |
|                                                                       |
| **9 Total Status of Budgetary Resources 6,790,000**                   |
|                                                                       |
| 10\. Obligations Incurred (4902E) 12,000                              |
+-----------------------------------------------------------------------+
| ##### **Statement of Financing**                                      |
|                                                                       |
| 1.  Obligations and Nonbudgetary Resources (4902E) 12,000             |
|                                                                       |
| 2.  Resources That Do Not Fund Net Cost of Operations 0               |
|                                                                       |
| 3 Components of Costs of Operations That Do Not Require               |
|                                                                       |
| or Generate Resources 0                                               |
|                                                                       |
| 4.  Financing Sources Yet to be Provided 0                            |
|                                                                       |
| 5 Net Cost of Operations 12,000                                       |
+-----------------------------------------------------------------------+

## 

## 

[^1]: The transactions in this scenario combine the activity of the
    receipt and expenditure accounts into one. The receipt-expenditure
    account relationship is described in more detail in the Introduction
    of the Guide.

[^2]: For most trust funds, invested balances are derived predominantly
    from earmarked taxes and other non-exchange revenue. Accordingly,
    the interest earned is classified as non-exchange, thus **not**
    deducted from the gross cost of operations. For those trust funds,
    however, where the main source of balances consist of exchange
    revenue (e.g. Civil Service Retirement and Disability fund), the
    interest shall be classified as exchange, and thus deducted from the
    gross cost of operations. (See SFFAS #7, &306-308).