# Presentation: 103231

## Federal Investments Seminar

-  INVESTMENT/BORROWING/
- FEDERAL CREDIT REFORM
- SUBCOMMITTEEPresented By:BILL FLEMING
- MAY 17, 2005

## BACKGROUND

- Subcommittee set up to address intragovernmental differences for the following Reciprocal Categories (RCPs):
- Investments
- FMS developed this plan “to sufficiently identify and track intragovernmental material differences reported to FMS by the Federal Program Agencies (FPAs)”.

| Reciprocal Category Number | Reciprocal Category Name | Treasury SGL Accounts | Partner SGL Accounts |
| --- | --- | --- | --- |
| RCP 1
 | Securities Issued by Federal Agencies Under General & Special Authority | 25**
 | 16**
 |
| RCP 2
 | Federal Interest Receivable/Federal Interest Payable | 2140 | 1340
1349
 |
| RCP 3
 | Exchange Interest Revenue & Expenses, Gains & losses on Federal Investments | 6320
7211
7280 | 5311
5318
7111
7180 |

## Background (continued)

- Borrowing

| Reciprocal Category Number | Reciprocal Category Name
 | Treasury SGL Accounts | Partner SGL Accounts |
| --- | --- | --- | --- |
| RCP 2
 | Federal Interest Receivable/Federal Interest Payable | 2140 | 1340
1349
 |
| RCP 5 | Revenue and Expense on Federal Borrowings | 5310
5312
5317
5319 | 6310
6330 |
| RCP 6
 | Gains and Losses on Federal Borrowings  | 7112
7212 | 7190
7290 |
| RCP 17
 | Federal Loans Receivable/Federal Loans Payable | 1350
1359
 | 2510
2520
2590 |

## Background (continued)

- Current members include:
- Ella Hughes-Bailey - Treasury FMS
- Richard Bennett - EPA
- Stephanie Brown - Treasury - BPD
- Susan.Chapman - Treasury - BPD
- Scott Chayette -  DOE
- Trina Cook - Treasury - BPD
- Dan Decena – Treasury/ office of the fiscal assistant secretary
- William Fleming - Education
- Veronica Freeman - DOL
- Jeanne Johnson-Education OCFO
- Gail Matthews - Education OCFO
- Eileen Parlow - FASAB
- Sheldonna Proctor - EPA
- Keith Rake - Treasury - BPD
- Wendy Stover-HUD
- Hayward Trapps -Treasury FMS
- Kristina Kaminski - SSA
- Letha, Holliday - SSA

## Future Actions

- Recruit additional members from agencies affected by investment/borrowing issues
- Review Intragovernmental Fiduciary Confirmation System (IFCS) reports for agencies with differences below current studies threshold to determine source of differences.
- Classify into groups already defined
- Discuss specific agency situations with BPD/FFB and agency personnel
- Produce narrative explaining differences by agencies

## Future Actions (continued)

- Detail current and future corrective actions
- Government-wide
- Individual agency

## Current Conclusions

- Bring Accounting Methodologies into Agreement
- Accounting for Premiums and Discounts (Effective Interest, Level Yield, Straight Line, Etc.)
- Zero Coupon Bonds Amortization Methodology (Effective Interest vs. Mark-to-Market)
- BPD staff reviewed the problem and issued a recommendation
- Treasury is currently reviewing the paper
- OMB Mediation Process for Unresolved Differences

## Current Conclusions – (continued)

- Timing Differences
- Quarterly Borrowing Differences - Encourage agencies to accrue interest expense/payables at least quarterly (possibly using BPD accruals as the basis of the entry)
-  Need to examine year-end cutoffs

## Current Conclusions – (continued)

- Deposit Funds
- Researching Accounting Guidance
- Recommend changes to allow such investments to be coded as non-federal
- Recommend that additional Deposit Fund guidance be added to the Fiduciary Business Rules

## Current Conclusions – (continued)

- Alleviating Accounting/Coding Errors
- Largest class of differences
- Probably the easiest to materially reduce
- For most agencies, federal balances for the subject SGL accounts are almost exclusively Treasury (TP 20).
- Adequate information exists through IFCS and FedInvest.com and other BPD reports available to trading partners
- FACTS I file is simple and can be edited manually if necessary
- IFCS/FACTS I/Quarterly “F” file assistance is readily available from Treasury
- Need to address quality control issues at individual agencies

## Current Conclusions – (continued)

- Alleviating Accounting/Coding Errors (continued)
- Send special report to FACTS I/ ”F”/GFRS preparer before transmission showing expected balances by SGL, Fund, and trading partner.
- IRAS provides feedback on IRAS/IFCS differences after the fact
- Close BPD/FFB IFCS window before quarterly “F” file windows to allow for additional oversight before reporting  (IFCS window does close before the FACTS I window at year end.