# Presentation: 436479

## WHAT IS NEW WITH INTRAGOVERNMENTAL

**WHAT IS NEW WITH INTRAGOVERNMENTAL**

- Presentation to:
- Federal Financial Management Conference
- March 11, 2008

## What’s the Problem?

**What’s the Problem?**

- To eliminate the material weakness: “The Federal Government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies.”

## HOW BIG IS IT?

**HOW BIG IS IT?**

_**Statistics – IPAC:**_
**In the FR for FY 2007, to make the financial statements balance, and labeled as “Other – Unmatched transactions and balances” in the statements, Treasury recorded a net decrease of $6.7 billion to the Statement of Operations and Changes in Net Position.  For FY 2006 they recorded an $11 billion decrease.**
**Almost 1 million Intragovernmental transactions were processed through IPAC in FY 2007.**
**Those transactions totaled approximately $63 trillion dollars (fiduciary AND non-fiduciary).**
**Revised counts and balances (eliminating the Bureau of Public debt which is the largest portion of fiduciary transactions) are 865 thousand transactions and $531 billion dollars.**

## Topics of Discussion

**Topics of Discussion**

**Intragovernmental Transactions **
**Impact of Intragovernmental Transactions on the Financial Report**
**Governmentwide Intragovernmental Out of Balance**
**Treasury Initiatives to Resolve Intragovernmental Differences**
**Other Treasury Actions**
**Fiscal Year 2008 YearEnd Intragovernmental Key Dates**
**Reminders**

## Intragovernmental Transactions

**Intragovernmental Transactions**

- Business activities occurring within or between Federal agencies.
***Fiduciary Categories***
- Investments in Treasury Securities with Bureau of the Public Debt (BPD)
- Borrowings from Treasury (Bureau of the Public Debt and Federal Financing Bank (FFB))
- Federal Employees Compensation Act (FECA) Transactions with Department of Labor (DOL)
- Employee Benefit Program Transactions with Office of Personnel Management (OPM)
***Non-Fiduciary Categories***
- Transfers
- Buy/Sell
- Imputed Financing Source/Cost
- General Fund

**Resolving Intragovernmental Transactions Continues to be a difficult challenge**

## Impact of Intragovernmental Transactions on the Financial Report (FR)

**Impact of Intragovernmental Transactions on the Financial Report (FR)**

- Prevents the FR from receiving an unqualified audit opinion because unreconciled intragovernmental transactions are still a material weakness at the Governmentwide level.
- Causes financial statements to be Out-of-Balance because numerous agencies did _**NOT**_ fully reconcile with their trading Partners, and contributes to the amount of unreconciled transactions.

## Governmentwide Intragovernmental Out of Balance

**Governmentwide Intragovernmental ****Out of Balance**

- 				              _**Fiscal Year 2006**_***	***       _**Fiscal Year 2007**_
- Buy/Sell and Transfers		$38 billion*******	****      **$42 billion***	**
- Fiduciary Trading Partners	$30 billion*******	****      **$16 billion*
- General Fund 		$20 billion	      $30 billion
- Contribute to the $11 billion (net) “plug” in *Statement of Operations and Changes in Net Position *for Fiscal Year 2006 reporting.
- Contribute to the $6.7 billion (net) “plug” in *Statement of Operations and Changes in Net Position *for Fiscal Year 2007 reporting.

_***Amounts are in absolute value**_

## Treasury Initiatives to Resolve Intragovernmental Differences

**Treasury Initiatives to Resolve Intragovernmental Differences**

| Intragovernmental Fiduciary Confirmation System (IFCS) | System became operational in 2001 to assist agencies in confirming and reconciling balances for fiduciary transactions (largest dollars). |
| --- | --- |
| Intragovernmental Reporting and Analysis System (IRAS) | Tool developed in 2002 to provide data to agencies on “F” transactions. Assists agencies with effort to reconcile fiduciary and non-fiduciary transactions. |
| Intragovernmental Eliminations Taskforce (IGET) | Meets periodically to discuss intragovernmental issues, quarterly and yearend reporting requirements, and share best practices. |
| Closing Package Note Disclosure | Financial Management Service (FMS) required the intragovernmental balances by trading partner to be audited within the Closing Package beginning with fiscal year 2006 reporting. |
| Use of Central Accounting Data (UCAD) | Improves interagency eliminations by providing agencies with a tool to reconcile transactions and balances directly to Treasury’s Central Accounting Data. Addresses reporting inconsistencies by comparing with Treasury’s Central Accounting Data. |

## Intragovernmental Fiduciary Confirmation System (IFCS)

**Intragovernmental Fiduciary Confirmation System (IFCS)**

- Internet application and official confirmation system for Federal agencies that engage in _fiduciary_ intragovernmental transactions.
- Agencies are required to confirm and reconcile, on a quarterly basis, the following transactions:
- Investments in Treasury Securities with BPD
- Borrowings from Treasury (BPD and FFB)
- FECA transactions with DOL
- Employee Benefit Program transactions with OPM

## Intragovernmental Reportingand Analysis System (IRAS)

**Intragovernmental Reporting****and Analysis System (IRAS)**

**IRAS Methodology**
- Uploads data files (quarterly intragovernmental trial balance extracts, Quarterly IFCS, FACTS I, and Closing Package information) in a Relational Database Software Application, supported by Structured Query Language (SQL), using Visual Basic Protocol.
- Generates reports and data queries by activating various parameters (e.g., reporting agency, trading partner, reciprocal category, United States Standard General Ledger (USSGL)), fund group within a quick-access, user-friendly environment).  Also, generates reports for access through GFRS to 35 CFO/Non-CFO agencies to facilitate reconciliation at the reporting level.
- Federal transaction files are required quarterly and at yearend, in two standard formats per TFM 2-4700.

## Quarterly Intragovernmental Activity Reports

**Quarterly Intragovernmental Activity Reports**

- Intragovernmental activity reports are available for agencies to access on Discoverer Viewer via Governmentwide Financial Report System (GFRS).
- Compares amounts between reporting agency and trading partner.
- Facilitates further reconciliation.
- CFOs complete material differences/status of disposition certification and additional explanation form.
- FMS prepares and sends out to agencies their comparative explanation of difference reports, which allow auditors to focus on inconsistent reporting agency and trading partner explanation of differences.

## Quarterly Intragovernmental Activity Reports, Cont’d

**Quarterly Intragovernmental Activity Reports, *****Cont’d***

| Detail by Trading Partner |
| --- |
| Summary by Trading Partner |
| Detail by Reciprocal Category |
| Summary by Reciprocal Category |
| Fiduciary Quarterly Data vs. IFCS Agency Benefits Report |
| Fiduciary Quarterly Data vs. IFCS Comparison Report |
| Material Differences/Status of Disposition Certification |
| General Fund Detail Report |
| Comparative Status of Disposition Certification Report |

## Other Treasury Actions

**Other Treasury Actions**

- “Confirmed” and “Unknown” Reporting Differences
- Material Differences explained as “_confirmed reporting_” by both the reporting agency and its trading partner must be resolved by the next reporting period. Also, material differences explained as “unknown” must be resolved by the next reporting period.
- If reporting differences cannot be resolved by the _end of the third quarter_, fiscal year 2008, CFOs from the respective agencies will be required to provide FMS a “_plan of action_” to address _unresolved material “confirmed reporting” and/or “unknown reporting” differences._
- Fiduciary work group (started in 2007)
- Other reciprocal category work group (to begin in 2008)

## Other Treasury Actions, Cont’d

**Other Treasury Actions, *****Cont’d***

- Use of Central Accounting Data (UCAD)
_**Purpose**_
- To improve interagency eliminations by providing agencies with a tool to reconcile transactions and balances directly to Treasury’s Central Accounting Data (authoritative data)
- 					_**Benefit**_
- To address the following reporting inconsistencies:
- Agency financial statements vs. agency monthly reporting to Treasury
- Agency financial statement data not consistent with USSGL by matching with the authoritative data (one-to-one relationship from Central Accounting System to yearend financial reporting)

## Fiscal Year 2008 Year-End IntragovernmentalKey Dates

**Fiscal Year 2008 Year-End Intragovernmental****Key Dates**

| Intragovernmental YearEnd Timeline |  |
| --- | --- |
| 11/15/2008
COB (6pm EST) | CFO approval of the closing package is due for the verifying agencies. |
| 11/17/2008
COB (6pm EST) | IGs opine on the Closing Package, including Trading Partner Note (Module 4) in GFRS. |
| 11/21/2008 | Verifying agencies generate Intragovernmental Reporting and Analysis System (IRAS) reports based on the Closing Package data using Discoverer viewer via GFRS. |
| 11/26/2008 | CFOs deliver a report containing CFO representations for intragovernmental activity and balances with the completed Closing Package material differences/status of disposition certification reports to the agency IG, FMS, and GAO. |
| 11/28/2008 | FMS provides intragovernmental comparative Closing Package explanations of differences report to CFOs and IGs. |

- DRAFT

**Due Date**

## Reminders

**Reminders**

- Submit all quarterly “F” files in a timely manner and in the standard formats.
- Communicate and reconcile with trading partners on a quarterly basis.
- Use FMS tools (IRAS, IFCS, IGET) to identify and resolve intragovernmental differences.
- Use UCAD to facilitate reconciliations.
- Resolve differences at the agency level to improve consolidated financial information at the Governmentwide level.
- Adhere to due dates.

## How to Solve it? 

**How to Solve it?**

- Improved reporting/visibility, and accountability
- Business process improvement
- Technology

## Improved Reporting / Visibility

**Improved Reporting / Visibility**

- CFO Council
- Intra-governmental Dispute Resolution Committee
- “Watchlist”

## CFO Council

**CFO Council**

- Revised Intragovernmental Business Rules (published in Treasury Financial Manual)
- Exploring process improvements such as standard template for Inter-agency agreements
- Exploring possible IT solutions

## Intra-governmental Dispute Resolution

**Intra-governmental ****Dispute Resolution**

- Intra-governmental Dispute Resolution Committee
- Imbalances material to one agency
- Arbitration by peers – accounting and financial reporting differences

## The “Watchlist”

**The “Watchlist”**

- Contribute to material government-wide imbalances
- Focus on “00” Unidentified trading partner and imbalances between agency pairings
- Meet with Agency CFO, OMB, and Treasury

## Business Process Improvements

**Business Process Improvements**

- Tracking transactions from the outset through settlement
- Establish an  agreement (IAA) with business partner
- Record obligation in the accounting system
- Record  expenses and revenues in the accounting system
- Record disbursements/collections and match to obligation
- Intragovernmental must following accrual accounting methods

## TECHNOLOGY

**TECHNOLOGY**

- IPAC is the base technology
- System used for disbursements and collections
- Can it be used to create discipline around obligations and accruals?
- Reviewing products
- Government
- Dept of Treasury’s Material Differences report
- Trading Partner ad hoc reports
- Non-government
- Systems, e.g., DoD’s IVAN project
- External information

## TECHNOLOGY

**TECHNOLOGY**

- Need to set requirements
- Formal agreement between Trading Partners
- Specify agreement number, appropriations, period of performance, etc
- Establish  whether there will be an advance of funds
- Establish performance methodologies
- Record obligation in the accounting systems
- Record advances correctly
- Upon performance, record revenues/expenses in the accounting system
- Record disbursements and collections
- Match  to obligations
- Reject IPACs only when not compliant with the agreement

## Contact/Questions

**Contact/Questions**

- http://www.fms.treas.gov

**Directorate**
- Faye McCreary
- 202-874-9874
- Faye.McCreary@fms.treas.gov
**Director of Financial Reports Division**
- Karen Hunter
- 202-874-8058
- Karen.Hunter@fms.treas.gov

## Q & A

**Q & A**