# Presentation: 267451

## Treasury’s Borrowings Program

- Non-Credit Reform Program
- Stephanie Blair
- Accountant, Federal Borrowings Branch
- April 12, 2007

**Notes:**
Welcome – Introduction 

Informal

Interactive

Stop with questions – benefit more

## Summary of Presentation

- Program Overview
- Standardizing Loan Agreements
- Intragovernmental Eliminations
- Fiscal Year End Reminders

**Notes:**
Presentation won’t take long . . . I only have 4 topics to cover. 

## Slide 3

**Notes:**
FBB manages a total of 78 funds - 16 NCR. 

That means the other 80% are not special like each of you. They are mandated into following the FCRA of 1990

Each agreement is unique and has special characteristics. 

We assign a fund manager and assistant to each program. 

Funds are rotated annually or as needed to provide cross training.

## Non-Credit Reform Balances

| 
Agency | Balance Outstanding
(millions) | 
Percent |
| --- | --- | --- |
| FEMA, National Flood Insurance |  $17,335 | 32% |
| Federal Financing Bank |  $14,420 | 27% |
| Commodity Credit Corporation |  $11,074 | 21% |
| Railroad Retirement Board |  $  4,284 |   8% |
| Rural Electrification & Telephone |  $  3,115 |   6% |
| Bonneville Power Administration |  $  2,417 |   5% |
| Remaining 10 Funds |  $     602 |   1% |
| Total Loans Outstanding |  $53,247 |  |

- As of February 28, 2007

**Notes:**
NCR funds account for 81% of loans outstanding
As of 12/31 7,276 Loans 

23% of the balance outstanding is NCR = $53 Billion in principal 

In the 1st QTR FY 2007 Processed 16,348 NCRTransactions
Majority of which belong to FFB

## Non-Credit Reform Balances

- Principal Balance Outstanding as of February 28, 2007

**Notes:**
Nt’l Flood has exceeded FFB’s balance due to Hurricanes Katrina & Rita 

Enough Stats. Let’s move on to real issue. 

Quick number count - 16 unique funds assigned a primary & assistant manager 
3 accountants, 1 team lead, 1 manager, and 1 staff accountant at a Borrowings Conference
Who’s doing the work back in WV?  

Well hopefully the majority of you are at the conference this week and not trying to exhaust our limited resources back in WV. 

## Standardizing Agreements

**Notes:**
A project to standardize agreements is underway to assist our co-workers and our customers.  We would like to standardize the agreements similar to the way the FCRA of 1990 standardized the other 80% of our loans.

Then any member of the Borrowings branch would be able to quickly find the relevant section within the agreement. 

This would save time and resources and provide speedier customer service.

By now you might be wondering who’s the unfortunate ones left in WV – well let’s take a look at an org chart for the Borrowings Branch.

## Division of Accounting Operations

- Veronica Lowther, Director (Acting)

- Federal Borrowings Branch
- Crystal Hanna, Manager

- Jill Reeves, Team Lead

- Dorothy Dicks, Staff Accountant

- Stephanie Blair, Accountant
- Carol Brooks, Accountant
- Adam Charlton, Accountant
- Gale Daggett, Accountant
- Milissia Morris, Accountant
- Tabitha Linch, Accountant

**Notes:**
Hopefully today will help you be able to put a face with some of these names. 

## Federal Borrowings Branch

- Dorothy Dicks

- Jill
- Reeves

- Stephanie Blair

- Gale Daggett

- Carol Brooks

- Milissia Morris

- Crystal Hanna

- Adam Charlton

**Notes:**
You may notice that Tabitha is not in our picture.  That’s because she’s our newest hire & will begin with our branch on Monday.   

Our next slide illustrates is a quick review with some basic accounting put into practice. 

For those in the room who are not accountants – don’t worry – this will be basic.

## Basic Accounting 

- 16 Non Credit Reform Funds

-  4 Funds per Accountant per Year

- 16 / 4  =  ?????

-  4 Years to Learn All the Funds

- Q:

- A:

**Notes:**
We have 16 NCR funds

Each accountant is assigned on average as primary mgr 4 funds per year. 

16 funds  / 4 a year = 4 years to be cross trained & knowledgeable on all the funds

Now some of you may be thinking wait a minute – if you’re primary on 4 you are also assistant on 4 so technically couldn’t you be cross trained in 2 years.  Well yes – but that is still a long time.

Just one more reason to standardize our loans.

## Standard Language

- Borrowing Authority
- Interest Calculations
- Interest Accruals
- Interest Payments & Credits
- Miscellaneous

**Notes:**
Our goal is to develop a standard loan agreement that can be used for all funds.  The sequence and the items outlined would be the same. Within each section the agency would have the ability to customize. 

Currently some agreements are 2 paragraphs and others are well over 30 pages. We’d like to find a happy medium. 

For example Section III might deal with interest accruals. Any member of the Borrowings branch would quickly know where to find information related to the interest calculation when the agency calls with a question.  We also receive inquiries from the Departmental Offices & others.  

We’d like to include the following items in each agreement.  Some sections may not be applicable such as offset credits but would still be included with a sentence stating that the fund does not have this option. 

## Borrowing Authority

- Title of Act & Date Enacted
- Public Law
- Fund Name
- Borrowing Limit (if any)
- Expiration Date (if any)

**Notes:**
This list includes examples of what we’d like to list in the borrowing authority section of the loan agreement.  

## Interest Calculations

- Fixed vs Variable Rate
- Calculating Late Payments
- Capitalized Interest
- FFB
- CCC
- Bond Ratings
- Computation of Rate

**Notes:**
The method of calculating interest is probably one of the most diverse aspects of our non-credit reform programs.  There are many different options and the methodology should be clearly spelled out in the loan agreement.  

Again, not all of these would apply to each fund (for instance capitalized interest).  All agreements would have the section or sub-section but only FFB & CCC would have details. The others would be N/A.   

The computation of the interest rate for each fund is different.  Some rates are fixed for the life of the loan while others change monthly, quarterly, or annually. 

Speaking of interest rates leads right into accrual methods – our next slide.

## Interest Accruals

- Timing
- Day of Deposit
- Day of Withdrawal
- Methods
- Actual / 360
- Actual / 365
- Actual / Actual
- Other Misc.

**Notes:**
The Federal Borrowings Branch uses software called Invest One to handle our automated reporting needs. You’ll be learning more about IO in our next session with Gale or Adam. 

IO offers a wide variety of industry std accrual options. I’ve listed some of the most common ones.  

The language of the loan establishes when interest will begin accruing such as on the day of issue or the next business day. 

Obviously IO has many options. However, a few of our funds are so unique in deviating from industry standard that we have to account for them outside of IO.  Until recently, several funds were not IO due to special calculations for leap year.  

Choosing the right accrual method is similar to shopping for a new vehicle. Sometimes we have to experiment or ‘test drive’ a method for an interest payment period to determine which one calculates to the penny correctly to avoid rounding adjustments. 

The accrual method is significant to the Federal Government as a whole.  The way we accrue interest and the way the agency accrues interest often creates intragovernmental eliminations that we will talk a little more about later. 

## Interest Payments & Credits

- Consistency
- Monthly
- Quarterly
- Semi-Annually
- Annually
- Provide Supporting Documentation by 1 p.m. EST on the Last Business Day of the Month

**Notes:**
Interest is paid throughout the year depending on the fund.  

Interest Payments must be received by 3 p.m. on the day the payment is due.  

Several programs receive interest offset credits on a monthly basis. This reimburses the agency for funds that are borrowed but not yet disbursed. 

The calculation varies with each fund using their average daily or monthly cash balance during the month.  Although these credits are given monthly; some agencies report this information to us quarterly or semi-annually and the credit is applied retroactively.

This is not in accordance to GAAP.  We are not properly matching revenue and expenses to the same accounting period.  

It is imperative that we receive the supporting documentation for these interest offset credits by 1 p.m. on the last business day of each month.  This will allow us time to review for accuracy and enter into our system to be included with our monthly financial reporting.  The actual interest payment via IPAC is due by 3 p.m. 

FYI -    Treasury’s Policy Staff would like to remove all occurrences of the offset credits. Agencies would then borrow as needed to operate.  Ideally, authority would be given for those who do not already have authorization to invest in Government Account Series.  Basically, the current accounting method is against Treasury policy because if agencies are asking for credits then they are borrowing when they don’t really need the money.

## Miscellaneous

- Prepaying without Penalty
- Right to Assignment
- Amending MOU
- Exhibits or Attachments

**Notes:**
I’ve highlighted the major areas the Borrowings Branch is looking to standardize.  This slide covers a few of the other minor misc items we’d like to address in each loan agreement.  

One item not listed that has come up recently is how to handle late payments. For instance, what if an agency cannot pay their interest on interest payment date?  Do they get an extension? Do they have to pay additional interest? Do they have authority to borrow to pay interest like Credit Reform funds?  

As you can imagine this will be an ongoing process with much involvement from all parties. Items being considered are ease of use by the agency, uniformity for our branch, and legal aspects such as wording for the Chief Counsel office.  

Milissia Morris & Dorothy is currently working on a project to draft up a standardized agreement form layout.

I’m sure you’ll be hearing from her in the future about updating your agreements. And of course if this really excites you and you cannot wait to get started on this joint project Milissia is looking for volunteers.  

## Summary of Presentation

- Program Overview
- Standardizing Loan Agreements
- Intragovernmental Eliminations
- Fiscal Year End Reminders

**Notes:**
We just finished the biggest topic for today’s presentation.

Any q’s or comments?

2 topics left which shouldn’t take long.  

## Intragovernmental Eliminations

- Required Quarterly Reporting
- Major Difference: Accrual Method

**Notes:**
The next open reporting window is upon us.  Be sure to enter the balance you have on your books before April 20th. 

Currently Adam Charlton is the accountant responsible & I’m the backup so if you have any questions give one of us a call. 

And don’t worry about the deadline to report sneaking up on you because Adam will be sending friendly reminders to those agencies who have not yet reported. 

While the majority of our reporting differences are related to different methods of calculating interest, all of you are special in that a lot of your differences are for other reasons such as in this example which is related to interest offset credits. 

If a difference exists such as in this example we will send a spreadsheet for you to fill out and return explaining the reason for the difference.  

## Reconciliation of Differences

- Reports Available Online to Assist www.treasurydirect.gov/govt/reports/tbp/tbp.htm

**Agency needs to fill in all the fields in**** blue**

**Notes:**
Here’s a glance at the spreadsheet which I’m sure some of you have seen before. For those who haven’t – it’s all about pairing accounts such as interest receivable & interest payable.  

The amounts must match within the government & be eliminated.

We’d like to work with each agency to begin reporting our accruals the same way to eliminate these differences. 

We’ve already started by providing monthly reports on our website to assist in this process.

## Borrowings Website

- www.treasurydirect.gov/govt/apps/tbp/tbp.htm

**Notes:**
Our website changed in February so if you had it bookmarked & haven’t been out there recently you’ll want to take note of our new web address. 

All the same information is available as before but the layout has changed to Bureau and Treasury uniformity standards.  

## Monthly Balances Reports

- Choose a Month

**Notes:**
Reports are published monthly on the 1st workday for the previous month.

Historical reports are available also and are very useful at quarter end and fiscal year end to assist in reconciliations. 

## Online Report Selection

- Detailed Fund Specific Report

- Summary General Ledger Report

- Addt’l Info:How to Use the Reports

**Notes:**
Today’s example takes a look at the reports at the close of the 1st Quarter. This allows you to see how the numbers relate to our intragovermental eliminations. 

Two separate reports are available: the detailed balances and the summary balances. 

For additional information on how to use the detailed balances report click on the ‘Get help with report data’ hyperlink.

We’ll look at the detail and how it relates to IFCS for reporting purposes. 

## Detail Principal & Accrued Interest Report for December 2006

**$183,666,140.13**
_**-      $110,978.58**_
**$183,555,161.55**

- BPD Interest Receivable Reported in IFCS

**Notes:**
The first half of the report illustrates the principal outstanding on loans yet to mature and the related accrued interest.

The bottom section shows other principal and/or accrued interest such as overdue principal of matured loans or overdue interest. In this example the interest offset credits that have been applied for the current accounting period are shown.  

Netting the totals from each section will equal the totals found in IFCS. 

## Interest Credit documentation was not received timely resulting in a reconciling issue and improper recording of revenues and expenses.  

- Interest Credit documentation was not received timely resulting in a reconciling issue and improper recording of revenues and expenses.

- Detail Principal & Accrued Interest Report for January 2007

**Notes:**
Waiting to report and send interest offset credits & interest payments until the following month causes reconciling and elimination issues as seen in this example.  

As previously mentioned, this is not in accordance with the rules of matching or consistency.  

I want to elaborate on the explanation of differences in this example.  To clarify BPD did not receive the interest credit documentation timely thus it was not included on our books for the close of the 1st quarter. 

When we received the documentation on Jan 18th the credit was recorded in our books.  Since the agency keeps their books open for reporting longer than we do they were able to include this amount on their books for the month of December.

Thus the disconnect and the importance of timeliness. 

These differences are reported to FMS who monitor the government’s accounts. 

## Year End GWA Transactions

- Certify Borrowing & Repayment Transactions for September 30th

- _No Later than 3 p.m. EST on Friday, September 28__th_

**Notes:**
Just a reminder – this year the last day of the fiscal year falls on a Sunday.

## Year End Interest Payments & Credits

- Deadline is Friday Sept. 28th
- Interest Credit Supporting Documentation is due by 1 p.m.
- Interest Payment via IPAC is due by 3 p.m.
- Options
- Estimate Cash Balances for Sept 28th – 30th and Adjust with October or
- Receive Credit through Sept 28th based upon Actual Cash Balances and Include Sept 29th-30th with October Credit

**Notes:**
For those agencies who report monthly credits on a quarterly or semi-annual basis, please provide the documentation as soon as it becomes available.  

For instance, if you send your documentation quarterly. On Wed Sept 26th you should send us the calculations for July and Aug.  

You would then have until Friday at 1 p.m. to send the documentation for the month of September and the interest payment via IPAC is due by 3 p.m.

Since Sept 30th falls on a weekend we are giving each agency the option of either: estimating their cash balances for Friday, Saturday, and Sunday or closing the interest credit calculation period early on Thursday the 27th.  

Adjustments can be made with the October interest credit regardless of which method the agency chooses. 

## Certified Interest Rates

- www.treasurydirect.gov/govt/apps/tbp/tbp.htm

**Notes:**
Another page of interest on our web site is the Treasury Certified Interest Rates. 

We publish many annual rates – 8 tables in all.  These vary from Public Health,the Small Reclamation Project, Army Corps of Engineers & other specific legislation and are used by various departments.  

## Annual Interest Rates

- www.treasurydirect.gov/govt/rates/tcir/tcir_opdirannual.htm#table8b

**Notes:**
This example shows the fiscal year rate for CCC & TVA (two of our NCR).

## Questions

**Notes:**
That’s it.

## Address:   Department of the Treasury

**Address:  **** **Department of the Treasury
-                 Bureau of the Public Debt
- 		    Federal Borrowings Branch
- 		   Room H113
- 	            P.O. Box 396
- 	            Parkersburg, WV 26106-0396
**Phone:    304-480-7488**
**Fax:        304-480-5176**
**E-mail:    borrowings@bpd.treas.gov**

## We would like to invite you and other members of your agency to visit the Federal Borrowings Branch at the Bureau of the Public Debt in Parkersburg, WV