Federal Accounting Standards Advisory Board 

Implementation Guide to Statement of Financing in 

Statement of Federal Financial Accounting Standards 7, 

Accounting for Revenue and Other Financing Sources:

Detailed Information on the Statement of Financing

April 2002 
SFFAS 7 IMPLEMENTATION GUIDE 2 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

This implementation guide presents explanations of concepts and 

standards intended to help practice and understanding. In April 2000, the 

American Institute of Certified Public Accountants established the 

hierarchy of accounting principles for Federal government entities (see 

Statement of Auditing Standards 69 and 91 and Office of Management 

and Budget (OMB) Bulletin 01-09, section 1.2) wherein Implementation 

Guides occupy level “D.” However, the financial statement formats 

illustrated in this Implementation Guide are not intended to be 

authoritative. They provide a framework, consistent with and amplifying 

the OMB’s periodic bulletins on the form and content of agency financial 

statements (see OMB Bulletin 01-09), within which individual entities 

have the flexibility to provide useful information. 
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TABLE OF CONTENTS

Page No.

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

Background on the Statement of Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

Basic Construction of the Statement of Financing. . . . . . . . . . . . . . . . . . . . . . . . . . 7 

Budgetary Resources Used to Finance Activities . . . . . . . . . . . . . . . . . . . . . . . . 8

Other Resources Used to Finance Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Resources Which Do Not Finance the Net Cost of Operations . . . . . . . . . . . . 14

Components of Net Cost of Operations Which Do Not 

 Generate or Use Resources in the Reporting Period. . . . . . . . . . . . . . . . . . . 15

Net Cost of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Explanation of Lines on the Illustrative Statement of Financing 

in OMB’s Form and Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 

Resources Used to Finance Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Resources Used to Finance Items Not Part of Net Cost of Operations . . . . . . 21

Components of Net Cost of Operations Not Requiring 

 or Generating Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Net Cost of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Additional Illustrative Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Upward and Downward Credit Program Subsidy Expense 

 Adjustments in the Year of Collection or Payment. . . . . . . . . . . . . . . . . . . 28

Receipt of Basic Credit Program Subsidy or Payment of 

 Negative Subsidy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Amortization of the Allowance for Subsidy for the Interest 

 Differential Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 

Obligations for Items that Decrease Liabilities for Loan Guarantees or 

 Allowances for Subsidy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 

Scrapping, Transfer-out, or Sale of Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . 31

Decrease in Exchange Revenue Receivable from the Public . . . . . . . . . . . . . . 33

Accruing and Collecting Non-federal Receivables for 

 Overpayment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Defaults Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Prior Period Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 

Appendices

Appendix A – Statement of Financing from Bulletin 01-09 . . . . . . . . . . . . . . . . . . . . . . 36

Appendix B – Statement of Net Cost from Bulletin 01-09 . . . . . . . . . . . . . . . . . . . . . . . 38

Appendix C – Statement of Changes in Net Position from Bulletin 01-09 . . . . . . . . . . 39

Appendix D – Statement of Budgetary Resources from Bulletin 01-09 . . . . . . . . . . . . 40

Bibliography. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SFFAS 7 IMPLEMENTATION GUIDE 4 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

I. INTRODUCTION 

1. This implementation guide provides detailed information about the statement of 

financing in the Federal Accounting Standards Advisory Board (FASAB–“The Board”) 

Statement on Federal Financial Accounting Standards (SFFAS) No. 7, Accounting for 

Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and 

Financial Accounting (SFFAS 7). It is organized by the following sections: 

• Background of the statement. 

• Basic construction of the statement. 

• Explanation of lines on the illustrative format of the statement provided by 

the Office of Management and Budget (OMB). 

• Additional illustrative items. 

2. This implementation guide supersedes pars. 72-93 and 122-173 of FASAB’s 

Implementation Guide to Statement of Federal Financial Accounting Standards No. 

7, Accounting for Revenue and Other Financing Sources” (June 1996) (IG7) and 

Special FASAB News Article No. 1 on the Statement of Financing (original, dated 

August 1998, and revised version, dated March 1999). The guide discusses 

concepts and the reporting in general and does not provide the pro forma entries of 

IG7. The United States Standard General Ledger (USSGL) accounts and related pro 

forma entries and case scenarios are available on the Financial Management 

Service (FMS) Web site, www.fms.treas.gov/ussgl. 

Background of the Statement of Financing

3. Prior to the issuance of SFFAS 7 in April 1996, the principal financial statements 

required of federal agencies were a balance sheet and a combined statement of 

operations and changes in net position. The nature and organization of the 

information in the combined statement of operations and changes in net position was 

insufficient to provide information on the cost of federal programs and contained 

numerous vagaries which did not provide readers of the financial statements useful 

information. The Board dealt with this in Statement of Federal Financial Accounting 

Concepts (SFFAC) 2, Entity and Display, and in SFFAS 7 by providing requirements 

for primary information grouped by statements of net cost, changes in net position, 

and custodial activity.1

 

 

1 Federal Accounting Standards Advisory Board, Implementation Guide to Statement of Federal Financial Accounting Standards No. 

7, Accounting for Revenue and Other Financing Sources (June 1996), (Implementation Guide) pars. 7-10, 14-20. 
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4. Because almost no budgetary information was provided in either the balance sheet 

or other new statements, the Board required in SFFAS 7 primary budgetary 

information encompassed in a statement of budgetary resources, which paralleled 

existing information federal agencies provided OMB, but at a higher level of 

reporting. This filled a major gap in the credibility and usefulness of the primary 

financial statements.2

5. In addition, because substantial budgetary information was being required in the 

primary financial statements for the first time, and because the obligation-based 

budgetary information was different in many respects from the proprietary (accrualbased) statements, the Board also prescribed additional primary information to help 

explain the differences between the obligation-based budgetary and accrual-based 

proprietary statements.3

 The Board prescribed a “statement of financing” as the 

vehicle to show the relationship between those two key figures. 

6. The requirements of SFFAS 7 were effective beginning for reporting periods after 

September 30, 1997. The actual format for agency financial statements is prescribed 

by OMB. In its Bulletin 97-01, Form and Content of Agency Financial Statements, 

which was also effective for those same reporting periods, OMB adopted as an 

illustration the condensed statement illustrated in SFFAS 7.4

 The nature of the 

statement can be seen in the organization of that illustration, and is discussed in the 

next section of this report. 

7. Subsequently, in Bulletin 01-09 that replaced Bulletin 97-01 in September 2001, 

OMB issued a more detailed illustration of the statement of financing along the lines 

presented in FASAB’s Special Newsletter No. 1 on the Statement of Financing, which 

had served as an unofficial illustration and detailed narrative of the statement’s 

construction and approaches to its preparation.5

 The lines in the new OMB 

illustration are discussed in a subsequent section of this guide. 

8. Additionally, the USSGL Board has issued increasingly-comprehensive crosswalks 

from budgetary and proprietary Standard General Ledger accounts to the statement 

of financing which, with the other guidance mentioned, has also helped agencies to 

prepare their statement of financing.6

 The final section of this document covers 

some additional reporting situations which may be further useful to agencies in 

preparing the statement of financing. 

 

2 SFFAS 7, pars. 77-82, and Implementation Guide, pars. 68-71. 

3 SFFAS 7, pars. 91-95, and Implementation Guide pars. 72-75. 

4 OMB, Bulletin 97-01, pp. 1-2, 35-37. 

5 Luter, J. Thomas, “The Statement of Financing,” FASAB News (Special Edition 1, August 1, 1998, updated March 1999), pp. 4, 9, 

and 15, and OMB Form and Content (OMB Bulletin 01-09 version), pp. 46-47. 

6 Financial Management Service, U.S. Government Standard General Ledger [SGL] (July 2001), pp. V-51 through V-66. 
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9. Understanding the statement of financing requires a knowledge of not only the 

federal proprietary accounting for assets, liabilities, net position, and components of 

net position, but also of the budgetary accounting for resources and the status of 

those resources as obligated or unobligated. Such knowledge, basic to federal 

accounting and auditing, including the design and maintenance of computer systems 

which organize and store data and generate financial reports, is assumed of the 

readers of this guide. 

10. This guide uses the new OMB Bulletin 01-09 illustrations of the statement of 

financing and other statements to explain the underlying statement of financing 

concepts. The Federal agencies are working with Bulletin 01-09 and the illustrations 

therein and a close adherence to them was deemed essential for this guide. 
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II. BASIC CONSTRUCTION OF THE STATEMENT OF FINANCING 

11. The statement of financing explains the difference between the budgetary net 

obligations and the proprietary net cost of operations by setting forth the items that 

reconcile the two amounts.7

 To understand the statement of financing, it is necessary 

to understand why these two key figures are different. They are different because (1) 

the net cost of operations may be financed by non-budgetary resources; (2) the 

budgetary and non-budgetary resources used by an agency may finance activities 

which are not components of the net cost of operations; and (3) the net cost of 

operations may contain components which do not use or generate resources in the 

current period. 

12. With this in mind, the statement of financing has three major sections which, when 

properly detailed, yield the net cost of operations. A skeleton listing of the sections is 

shown in figure 1, below. 

Figure 1:

SECTIONS OF THE STATEMENT OF FINANCING 

RESOURCES USED TO FINANCE ACTIVITIES

 Budgetary 

 Other 

RESOURCES USED TO FINANCE ITEMS NOT PART OF THE NET 

COST OF OPERATIONS 

 Resources used that involve gross obligations or resources not 

 reported in the Federal budget 

 Those involving recoveries and offsetting collection activity 

COMPONENTS OF NET COST OF OPERATIONS 

WHICH DO NOT GENERATE OR USE RESOURCES 

IN THE REPORTING PERIOD 

 Components requiring or generating resources in future periods 

 Components not requiring or generating resources 

NET COST OF OPERATIONS

 

7 SFFAS 7, par. 92. 
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Budgetary Resources Used to Finance Activities 

13. The first section of the statement of financing is “resources used to Finance 

activities.” Resources include those provided through the Federal budget and those 

not accounted for in the budget, which are designated “other” in the table. 

14. Budgetary resources means “net obligated resources,” as defined in the context of 

the statement of budgetary resources. This is a critical definition for the statement of 

financing. Care must be taken not to confuse this with total resources, e. g., with 

total appropriations received and available, as the statement of financing is not 

concerned with total resources, or restrictions on OMB’s ability to apportion or the 

agency’s ability to allot total resources. A resource does not finance an activity 

unless it is obligated, and, hence, the statement of financing includes only obligated 

resources. Gross obligations – those reported on line 8 of the statement of 

budgetary resources illustrated in OMB Bulletin 01-09 (see Appendix D) – consist of: 

(1) undelivered orders for goods and services or benefits to be provided, both 

with and without advances or prepayments, and 

(2) delivered orders for goods and services or the provision of benefits, both paid 

and still payable.8

15. It should be noted that the amount reported on line 8 of the OMB illustration (see 

Appendix D) is the difference between the beginning and ending balances of 

undelivered and delivered orders. If, for example, the beginning amount of orders 

was $100 and the ending amount was $250, the amount reported as new obligations 

during the period would be the difference, which is $150. Since any component of 

obligations can either increase or decrease during the year, its arithmetic contribution 

to the amount of new obligations for the reporting period could be positive or 

negative, except for delivered orders paid, which cannot be negative.9

16. This is illustrated with the following example. Here, and throughout this guide, small 

numbers are used to simplify illustration and comprehension, and lines may be 

abbreviated or paraphrased to fit reasonably into available space or to better support 

topics discussed. 

 

 

8 See the definitions for “obligated balance” and “obligations” in OMB Circular A-34, Instructions on Budget Execution (November. 3, 

2000), p. 4, and the account definitions for the 4800 and 4900 series of accounts in USSGL, pp. II-52 through II-56. 

9 See, e.g., USSGL, Section V, crosswalk items for line 6, “obligations incurred,” of the Statement of Budgetary Resources, p. V-46. 
SFFAS 7 IMPLEMENTATION GUIDE 9 

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 Component Ending 

Balance

Beginning 

Balance

Change

Undelivered Orders w/o Advance $250 $100 +$150 

Undelivered Orders w/Advance 50 75 - 25 

Delivered Orders Payable 100 150 - 50 

Delivered Orders Paid 500 010 + 500

Total Obligations $900 $325 +$575

17. The amount reported for gross obligations on line 8 of the statement of budgetary 

resources would be $575. The importance of knowing the amount of the computation 

for each individual component, including its arithmetic sign, will become clear in the 

next section, which discusses the lines for the statement of financing illustrated in 

OMB Bulletin 01-09. 

18. The Board prescribed reconciling gross rather than net obligations with net cost of 

operations. Net obligations is defined for most agencies as the difference between 

gross obligations and 

(1) recoveries of prior-year authority not involving cash and 

(2) offsetting collection activity,11 which is comprised of 

• actual cash collections, 

• budgetary accounts receivable (i.e., receivables recognized as budgetary 

resources in the Federal budget), and 

• unfilled customer orders (orders received by an agency to provide goods 

and services to the requesters, both with and without advances, with the 

caveat that in most cases, orders from the public without advances 

cannot be accepted). 

Offsetting collection activity may include more than actual cash collections.12

19. Recoveries of prior-year obligations not involving cash occur when obligations made 

in prior years are cancelled in the current year or are filled in an amount less than 

originally recorded. For example, a purchase order without an advance may be 

placed for, say, $100 in Year A. In Year B, the goods or services ordered are 

received, and the bills are $98. In that case, there is a recovery in Year B of the $2 

difference. Of course, if the order was canceled in Year B, with no goods or services 

received, the entire $100 would be reported as a recovery in Year B. Recoveries of 

prior-year obligations are found in OMB Bulletin 01-09 illustration of the statement of 

 

10 As readers should be aware, the beginning balance of paid delivered orders will always be zero, because the balance of the 

ledger accounts for this are brought to zero at the end of the year in the adjusting and closing processes. (See USSGL, closing entry 

F214, p. III-159.) 

11 This can be seen in OMB Bulletin 01-09 illustration of the statement of financing, lines 1-5, on p. 46. 

12 OMB Circular A-34, p. 4, and USSGL definitions for accounts 4221, 4222, 4225, 4251, and 4252, e.g. (p. II-43). 
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budgetary resources on line 4.13 With respect to recoveries where the availability of 

the funds for future obligation has expired or been canceled, the recovery is offset by 

a withdrawal of funds, which eliminates any difference between net obligations and 

the net cost of operations.14

20. Offsetting collection activity is found in that illustration, as well. Actual cash 

collections are reported in that illustration on line 3(a)1; budgetary accounts 

receivable are reported on line 3(a)2; and unfilled customer orders are reported on 

line 3(b). The OMB illustration labels line 3(a)2 as “receivable from Federal 

sources.”15 This is because that absent legislation to the contrary, receivables from 

the public do not count as budgetary resources and would not be reported on the 

statement of budgetary resources.16

21. A further caveat should be noted in determining the amount of collecting activity from 

federal receivables and from unfilled customer orders. The amount reported on the 

statement of budgetary resources is determined as the change in these items from 

the beginning to the end of the reporting period rather than their balances at the end 

of the period. The OMB illustration indicates in the line caption that the amount for 

unfilled customer orders is the change in the dollar amount of those orders, but it 

does not indicate that for the receivables.17

22. “Offsetting” in the term “offsetting collections” means that the resources generated by 

the collecting activity are added to expenditure accounts18 and hence “offset” gross 

obligations. In a sense, the budgetary cost of an agency is its gross obligations less 

its offsetting collections and distributed offsetting receipts (i.e., the offsetting receipts 

distributed to that agency).19

23. OMB Bulletin 01-09 required one additional item on the statement of financing to be 

included in determining net obligations that had not previously been used. The term 

 

13 OMB Bulletin 01-09, p. 41. 

14 See OMB Circular A-34, Instruction on Budget Execution, section 30, for the treatment of recoveries of prior-year obligations for 

expired accounts. 

15 OMB Bulletin 01-09, p.41. 

16 Note that OMB Bulletin 01-09 captions the line for receivables on the statement of budgetary resources, line 3.b.1, as “receivable 

from federal sources.” This is consistent with the related presentations in the SF-132, “Apportionment and Reapportionment 

Schedule, and SF-133, “Report on Budget Execution and Budgetary Resources,” and related instructions, in OMB Circular A-34, pp. 

57, 73, 99, and 117. 

17 OMB Bulletin 01-09, p. 41. 

18 The budget distinguishes between receipt accounts and expenditure accounts. “Receipts” are collections from the public 

primarily from the exercise of the Government’s sovereign power, e.g., income and payroll taxes. Outlays are disbursed or made 

from expenditure accounts. See OMB Circular A-11, Preparing and Submitting Budget Estimates, section 20 generally, and 

especially section 20.7. 

19 The budget records money collected by Government agencies two different ways. Depending on the nature of the activity 

generating the collection, they are recorded either as (1) receipts, which are compared in total to net outlays; or (2) offsetting

collections or offsetting receipts, which are deducted from gross outlays to produce net outlays. 
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for that item is “offsetting receipts,” which sounds the same as offsetting collections 

but there is a basic difference. Offsetting collections are included in the entity’s 

expenditure accounts and thus are usually available for spending for the purposes of 

the account without further action by Congress. If the law does not authorize 

crediting offsetting collections to an expenditure account, the entity must credit them 

to a receipt account, and they are deemed “offsetting receipts.” Offsetting collections 

are thus deducted from gross budgetary authority and outlays at the expenditure 

account level. Offsetting receipts are usually deducted at the agency-wide level, i.e., 

from the gross budget authority and outlays of the agency that conducts the activity 

generating the receipts, though in a few cases they are deducted at the governmentwide level. 20

24. One example of offsetting receipts is found in federal credit programs under the 

Credit Reform Act of 1990. Under that Act, negative subsidies and downward reestimates of subsidy expense for direct loan and loan guarantee programs are 

deposited by a credit agency to designated miscellaneous receipt accounts (or other 

designated accounts).21 These monies are not available to the agency to use in its 

operations unless specifically authorized by law, but they are associated with the 

agency in the Federal budget. Hence, they constitute “offsetting receipts,” and must 

be deducted from gross obligations of an agency to determine net obligations.22 

25. There are a great many other examples of offsetting receipts, but regardless of their 

source, the key is that they are associated with the collecting agency in the Federal 

budget. Care must be taken not to confuse them with custodial collections, which are 

amounts collected for others and associated with those others in the Federal budget. 

The Internal Revenue Service and Department of Customs make collections of 

income taxes and customs duties, respectively, and they are deposited into 

designated accounts of the Treasury, which are unavailable to either for use in its 

operations. However, these amounts are not associated with the collectors in the 

Federal budget, and do not reduce the budgetary costs of the collectors. Hence, they 

are not offsetting receipts and do not enter the computation of net obligations for the 

collecting entities.23

 

20 OMB Circular A-34, p. 4. Also see Analytical Perspectives in the FY 2003 United States budget series of publications, chapter 5, 

“User Fees and Other Collections,” pages 83-94, and chapter 25, “Budget Systems and Concepts,” pages 432-34 for additional 

information on offsetting collections and offsetting receipts. The purpose of subtracting offsetting collections and offsetting receipts 

from gross outlays rather than adding them to taxes on the receipt side of the budget is to produce budget totals for receipts,

outlays, and budget authority in terms of the amount of resources allocated governmentally, through collective political choice, rather 

than through the market. 

21 In limited instances, deposits are made to special fund receipt accounts rather than to miscellaneous receipts accounts, which 

has different requirements for reporting the fund balance with Treasury. However, these requirements do not affect the statement of 

financing. 

22 OMB Circular A-11, Preparation and Submission of Budget Estimates (July 2001), pp. 296-297, 304-305; OMB Circular A-34, pp. 

175, 177-178; and OMB Bulletin 01-09, pp. 39-43, 46-48. 

23 FASAB Standard 7, pars. 45, 49-63; Implementation Guide to Standard 7, pp. 29-31; and OMB Bulletin 01-09, pp. 53-54. 
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26. Based on this information, the computation of net obligations can be summarized as 

shown in figure 2, below. 

Figure 2: 

COMPUTATION FOR NET OBLIGATIONSa

1. Gross obligations (line 8 of the OMB Bulletin 01-09 Illustration of the 

Statement of Budgetary Resources) 

2. Less recoveries of authority (line 4) 

3. Less offsetting collections of cash (line 3.a.1) 

4. Less the change in budgetary receivablesb

 (line 3.a.2) 

5. Less the change in unfilled customer ordersb

 (line 3.b) 

6. = Net obligations before deducting offsetting receipts, or, said another way, 

Gross obligations less offsetting collections (used in the larger sense of the word 

to mean “offsetting collecting activity, the combination of lines 2, 3, 4, and 5 of 

this table)”c, d

7. Less offsetting receipts 

8. = Net obligations 

 

a

The computations in this table include both the budgetary and non-budgetary 

columns of the statement of budgetary resources. 

b

Note that because these lines are “subtraction lines,” the arithmetic sign used 

would be opposite that for the change in the items. If there were an increase, the 

arithmetic sign would be a minus. If there were a decrease, the arithmetic sign 

would be a plus. 

c

Note that agencies may not have any offsetting receipts. When that is the case, 

line 6 is net obligations.

d

A few agencies also have transfers from trust funds, which is a separate item to 

be deducted in the computation for line 6 and appears on line 3.d on the 

statement of budgetary resources. The line is not indicated here because of its 

limited applicability. 
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27. The net obligations amount constitutes the budgetary resources that finance 

activities in figure 1, and is the budgetary amount that is to be reconciled with the net 

cost of operations on the statement of financing. 

28. A further caveat regarding consolidation may be made here. The statement of 

financing is a consolidated statement. However, in computing net obligations, 

combined amounts, as found on the statement of budgetary resources, rather than 

consolidated amounts are used. Although the Federal budget reports a consolidated 

amount for net obligations, its method of consolidating is to decrease the total

obligations, without elimination for inter-entity transactions, by the total recoveries 

and offsetting collection activity, without elimination for inter-entity transactions. The 

amount of obligations is the same in either case.24

29. Assume, for example, that a reporting entity has two sub-components, A and B. 

Suppose that entity A obligates resources to make a $10 disbursement to B, which 

records the transaction as an offsetting collection. Combined and consolidated 

approaches to reporting this are shown below. 

Combined 

Reporting

Consolidated 

Reporting

Obligated Resources $10 $-0- 

Offsetting Collections (10) -0-

Net Obligated Resources $-0- $-0-

30. Note that under the combined approach, both the obligation and the offsetting 

collection are reported, although they are between components of the same entity. 

Under the consolidated approach, the intra-entity transactions are eliminated. In 

either case, the net obligations (net obligated resources) are the same. OMB Bulletin 

01-09 requires that the combined approach be used for reporting the lines leading to 

net obligated resources on the statement of financing, which makes the statement 

traceable to the Federal budget and to agency information sent to OMB that goes 

into the compilation of the Budget. It also requires that the remainder of the 

statement be consolidated on a “line-by-line” basis.25

Other Resources Used to Finance Activities

31. One of the reasons that the net obligations does not equal the amount of the net cost 

of operations is that there are resources which are not reported in the Federal 

budget which may finance the net cost of operations or other activities of the agency. 

These resources must be included in order to report the total resources from all 

sources that finance activities. 

 

24 OMB Bulletin 01-09, pp. 6, 39-40. 

25 OMB Bulletin 01-09, pp. 6, section 1.8, and 47-50. 
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32. The “other” resources are taken from the “other financing sources” section of the 

statement of changes in net position illustrated in OMB Bulletin 01-09 (see Appendix 

C). That section is comprised of lines 12 through 15, which are designated for 

donations and forfeitures of property (line 12), transfers-in and -out of property from 

one federal agency to another without reimbursement (line 13), financing sources 

imputed for costs of the reporting entity which are absorbed by others (line 14), and 

any additional financing sources which are not reported in the Federal budget (line 

15). Care should be taken to realize that transfers-out would have an arithmetic sign 

of minus in the computation of total “other” resources. Similarly, line 15, which is for 

any additional items not delineated in the illustration, might have some items that 

would have an arithmetic sign of minus. 

33. The combination of the net budgetary resources obligated and the resources not 

reported in the Federal budget constitute the total resources used to finance 

activities on the statement of financing. 

Resources Used to Finance Items not Part of the Net Cost of Operations 

34. Some resources clearly finance the net cost of operations. For example, consider the 

expense for a guard service. There would be obligated budgetary resources for the 

amounts due or paid to the guard service and these amounts would have been 

expensed. Because the obligated resources and the net cost of operations (the 

expense for the guard service) would be the same, there would be nothing to 

reconcile on the statement of financing. 

35. However, not all resources finance the net cost of operations. While the next main 

section of this report, explaining the lines illustrated in the OMB Bulletin 01-09 

illustration for the statement of financing, lists a number of these items, which are 

discussed there, two illustrations will be given here. 

36. The first illustration is the acquisition of $1,000 of property, which is capitalized as an 

asset. Property could be acquired either through the obligation of budgetary 

resources, by donation from the public, or by transfer-in from another federal agency 

without reimbursement. The source of the financing, whether budgetary or nonbudgetary resources, would appear in the first section of the statement of financing 

as a resource used to finance activities. However, the “activity”–the acquisition of the 

property–did not result in expense or exchange revenue, which are the components 

of the net cost of operations. To explain why resources are $1,000, but the net cost 

of operations is zero, there needs to be a listing in the section “resources which do 

not finance the net cost of operations” for acquisition of property. When this is 

entered, the statement of financing then reports resources of $1,000, subtracts 

resources which do not finance the net cost of operations in the amount of $1,000, 

and yields the net cost of operations, zero. 

37. Similarly, items that may involve offsetting collecting activity do not affect the net cost 

of operations. Suppose, for example, that the unfilled customer orders increased by 

$10 during the reporting period. Reviewing figure 2, line 5, this would decrease net 
SFFAS 7 IMPLEMENTATION GUIDE 15 

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Implementation Guide, Statement of Financing

obligated resources by $10, because the change is subtracted. However, the change 

does not affect the net cost of operations, because it has no effect at all on the 

proprietary accounts, unless an advance is received, in which case only the asset 

Fund Balance with Treasury and the liability Advances from Others is recorded. No 

exchange revenue is recognized from the acceptance of an order to provide goods 

and services to the requester. Recognition of revenue would occur only when the 

orders were filled and resulted in a receivable or a cash collection. Hence, the net 

budgetary resources obligated would be -$10, and the net cost of operations would 

be zero. The difference is explained in the section on resources which do not finance 

the net cost of operations, and would be entered as +$10. When this is entered, the 

statement of financing reports resources of -$10, removes resources which do not 

finance the net cost of operations in the amount by adding back the $10, and yields 

the net cost of operations, zero. 

38. If unfilled customer orders had decreased by $10 instead, the statement of financing 

would explain the difference between resources and net cost of operations in the 

same manner. The net obligated budgetary resources would be +$10 in this case, 

because since the change in unfilled customer orders is subtracted from gross 

obligations, the subtraction of the decrease (-$10) results in an arithmetic sign of 

plus. Net cost of operations is still zero, and the $+10 would be removed in the 

section on resources which do not finance the net cost of operations. Resources 

would be +$10; $10 of resources not financing the net cost of operations would be 

subtracted; and this would yield the net cost of operations, zero. 

Components of Net Cost of Operations that Do Not Generate or Use Resources 

in the Reporting Period 

39. Removing from total resources the resources that do not finance the net cost of 

operations leaves the resources that do finance the net cost of operations, but this is 

still not the amount reported for the net cost of operations. This is because some of 

the components of net cost do not use or generate resources in the reporting period. 

 These components can be grouped into two general categories: those that will 

generate or use resources in subsequent reporting periods and those that will not. 

40. The first category can be illustrated through the expense recorded for an accrual to 

increase an agency’s liability for annual leave at the end of the year because 

employees earned more leave than they took. This proprietary transaction increases 

the expense for annual leave benefits and correspondingly increases the annual 

leave liability. However, it has no effect on the budgetary accounts, because 

Congress does not fund annual leave on an accrual basis. It is financed when it is 

taken and the amounts are paid to the employees who took the leave. Thus, 

resources are zero, but the net cost of operations includes the amount of the 

accrued leave. 

41. Assuming an accrual of $10, then, resources would be zero, and the net cost of 

operations would be $10. The difference would be explained by adding $10 in the 

statement of financing section on components of net costs, which do not use 
SFFAS 7 IMPLEMENTATION GUIDE 16 

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Implementation Guide, Statement of Financing

resources and indicating that it was for the increase in the annual leave liability for 

the year. When this is done, resources are zero, components of net costs not using 

resources are $10, and the two together yield the $10 net cost of operations. 

42. The annual leave example was a case in which the expense would be financed in a 

subsequent period. At such time in succeeding years as employees take the leave 

that was accrued, they will be paid for it, and budgetary resources will be obligated 

for that payment. There are other cases, however, where components of net cost of 

operations will not use or generate resources in the current or future periods. 

43. A common example of that is for depreciation on capitalized assets. Suppose that 

the $1,000 of capitalized property acquired in our previous illustration was to be 

depreciated for $100 in the current period. In that case, $100 of depreciation 

expense will be recorded, and the net cost of operations will thus be $100. 

44. There is no budgetary effect of a transaction to record depreciation. An agency’s 

budget is concerned with acquiring assets, not in their subsequent use. Hence, while 

resources will be obligated to acquire capitalized property, no budgetary accounts 

are affected by its subsequent depreciation. Because of this, the depreciation 

transaction would result in resources of zero and net cost of operations of $100. The 

reconciling factor, reported in the section on components of net cost, which do not 

use resources, would be the depreciation of $100. The zero resources plus the $100 

of net cost components not using resources would yield the $100 net cost of 

operations. 

Net Cost of Operations 

45. The net cost of operations must be computed by totaling the statement of financing 

sections on (1) resources, (2) resources which do not finance net cost of operations, 

and (3) components of net cost of operations which do not generate or use 

resources in the reporting period. The amount thus derived must equal the amount 

reported for net cost of operations on the statement of net cost (line 10 of the OMB 

Bulletin 01-09 illustration for that statement – see Appendix B). That same amount 

also appears in the net cost of operations on line 17 of the OMB Bulletin 01-09 

illustration for the statement of changes in net position. 
SFFAS 7 IMPLEMENTATION GUIDE 17 

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Implementation Guide, Statement of Financing

IV. EXPLANATION OF LINES ON THE ILLUSTRATIVE STATEMENT OF FINANCING IN OMB 

BULLETIN 01-09, FORM AND CONTENT

46. The preceding narrative discussed the concepts of the structure of the statement of 

financing. This section expounds on those concepts by explaining how specific lines 

on the statement of financing illustrated in OMB Bulletin 01-09 are used to disclose 

the differences between net obligations (net budgetary resources obligated), and net 

cost of operations. 

47. While the illustration in the OMB Bulletin provides the basis for the discussion in this 

section, the actual format used by an agency need not have exactly the same line 

items or the same words captioning the line items or the headings. However, it must 

contain the major sections to set forth the resources, those resources, which do not 

finance the net cost of operations, and those components of net cost of operations, 

which do not require or generate resources during the reporting period26. The result 

of combining the sections must be the amount of the net cost of operations, with the 

statement then explaining to the reader why the net obligations and the net cost of 

operations are different. 

48. The OMB illustration for the statement of financing is reproduced in Figure 3, below 

(this illustration is also presented in Appendix A).27 The comparative columns are 

omitted for purposes of simplifying the display, as they do not add to the theory 

underlying the statement. Of course, agencies must present comparative information 

in their statements in accordance with time schedules specified in OMB Bulletin 01-

09.28 

 

26 OMB Bulletin 01-09, pp. 6, 15. 

27 OMB Bulletin 01-09, pp. 46-47. 

28 OMB Bulletin 01-09, p. 13. 
SFFAS 7 IMPLEMENTATION GUIDE 18 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

Figure 3: Illustrative Statement of Financing from OMB Bulletin 01-09

(Sections 1 and 2)

Department/Agency/Reporting Entity 

CONSOLIDATED STATEMENT OF FINANCING (Page 1 of 2) 

For the Years Ended September 30, 20x2 and 20x1 

(in dollars/thousands/millions) 

 

Resources Used to Finance Activities: 

Budgetary Resources Obligated 

1. Obligations incurred $ xxx 

 2. Less: Spending authority from offsetting collections & recoveries xxx 

 3. Obligations net of offsetting collections and recoveries xxx 

 4. Less: Offsetting receipts xxx

 5. Net obligations xxx 

 

Other Resources 

 6. Donations and forfeitures of property xxx 

 7. Transfers in/out without reimbursement (+/-) xxx 

 8. Imputed financing from costs absorbed by others xxx 

 9. Other (+/-) xxx

 10. Net other resources used to finance activities xxx

 11. Total resources used to finance activities x,xxx 

 

Resources Used to Finance Items not Part of the Net Cost of Operations 

 12. Change in budgetary resources obligated for goods, 

 services and benefits ordered but not yet provided (+/-) xxx 

 13. Resources that finance expenses recognized in prior periods xxx 

 14. Budgetary offsetting collections and receipts that do not affect net cost 

 of operations 

 14a. Credit program collections which increase liabilities for 

 loan guarantees or allowances for subsidy xxx 

 14b. Other xxx 

 15. Resources that finance the acquisition of assets xxx 

 16. Other resources or adjustments to net obligated resources 

 that do not affect net cost of operations (+/-) xxx

 

 17. Total resources used to finance items not part of the net cost 

 of operations xxx 

 18. Total resources used to finance the net cost of operations x,xxx 
SFFAS 7 IMPLEMENTATION GUIDE 19 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

Figure 3: Illustrative Statement of Financing from OMB Bulletin 01-09

(Section 3)

Department/Agency/Reporting Entity 

CONSOLIDATED STATEMENT OF FINANCING (Page 2 of 2) 

For the Years Ended September 30, 20x2 and 20x1 

(in dollars/thousands/millions) 

Components of the Net Cost of Operations that will not Require 

or Generate Resources in the Current Period: 

 Components Requiring or Generating Resources in Future Periods: 

 19. Increase in annual leave liability xxx 

 20. Increase in environmental and disposal liability xxx 

 21. Upward/Downward re-estimates of credit subsidy expense (+/-) xxx 

 22. Increase in exchange revenue receivable from the public xxx 

 23. Other (+/-) xxx

 24. Total components of net cost of operations that will require or 

 generate resources in future periods xxx 

 Components not Requiring or Generating Resources: 

 25. Depreciation and amortization xxx 

 26. Revaluation of assets or liabilities (+/-) xxx 

 27. Other (+/-) xxx

 28. Total components of net cost of operations that will not require or 

 generate resources xxx

29. Total components of net cost of operations that will not require or 

 generate resources in the current period x,xxx

 30. Net cost of operations $ x,xxx
SFFAS 7 IMPLEMENTATION GUIDE 20 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

Resources Used to Finance Activities 

(Lines 1-11) 

49. Figure 4, below, contains the OMB illustration for the first section of the statement of 

financing, resources used to finance activities. 

Figure 4: 

Resources Used to Fund Activities

Resources Used to Finance Activities: 

 

Budgetary Resources Obligated 

 1. Obligations incurred $ xxx 

 2. Less: Spending authority from offsetting collections and recoveries xxx

 3. Obligations net of offsetting collections and recoveries xxx 

 4. Less: Offsetting receipts xxx

 5. Net obligations xxx 

 

Other Resources 

 6. Donations and forfeitures of property xxx 

 7. Transfers in/out without reimbursement (+/-) xxx 

 8. Imputed financing from costs absorbed by others xxx 

 9. Other (+/-) xxx

 10. Net other resources used to finance activities xxx

 11. Total resources used to finance activities x,xxx 

50. The concepts underlying this section were set forth in paragraphs 11-33 of this guide 

and will not be repeated here. A listing of the lines of the statement of financing and 

the lines of the statements of budgetary resources and of changes in net position to 

which they must correspond are set forth in figure 5. Lines not shown are subtotals 

of other lines.29

Figure 5: 

Correspondence Between Financial Statements 

for Section 1 of the Statement of Financing

Statement of Financing 

line no. 

(see App. A) 

Statement of Budgetary 

Resources line no. 

(see Appendix D) 

Statement of Changes in 

Financial Position line no. 

(see Appendix C) 

1 8 

2 3a + 3b + 3d + 4 

4 16 

6 12 

7 13 

8 14 

9 15 

 

29 OMB Bulletin 01-09, pp. 35, 41-42, 46-47. 
SFFAS 7 IMPLEMENTATION GUIDE 21 

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Implementation Guide, Statement of Financing

51. As can be seen from the table, no additional work is required to prepare the first 

section of the statement of financing. Every figure must already be computed for 

another financial statement. 

Resources Used to Finance Items Not Part of the Net Cost of Operations (Lines 12-17) 

52. Figure 6 reproduces the second section of the statement of financing, “resources 

that do not finance the net cost of operations,” or, said another way, resources used 

to finance items not part of the net cost of operations. 

Figure 6: 

Resources Used to Finance Items not Part of the Net Cost of Operations 

Resources Used to Finance Items not Part of the Net Cost of Operations 

12. Change in budgetary resources obligated for goods, 

 services and benefits ordered but not yet provided (+/-) xxx 

13. Resources that finance expenses recognized in prior periods xxx 

14. Budgetary offsetting collections and receipts that do not affect net cost 

 of operations 

14a. Credit program collections which increase liabilities for loan 

 guarantees or allowances for subsidy xxx 

14b. Other xxx 

15. Resources that finance the acquisition of assets xxx 

16. Other resources or adjustments to net obligated resources that do not 

 affect net cost of operations (+/-) xxx

17. Total resources used to finance items not part of the net cost of operations xxx

18. Total resources used to finance the net cost of operations 

 x,xxx 

53. Line 12 is used to explain the difference between the total resources used to finance 

activities and the net cost of operations because of the change in “budgetary 

resources obligated for goods and services and benefits ordered but not yet 

provided,” i.e., “undelivered orders.” Undelivered orders are part of the gross 

obligations on line 1. However, they do not affect the net cost of operations. If an 

undelivered order is not accompanied by an advance, it does not affect the 

proprietary accounts at all (the mere ordering of goods and services or benefits to be 

provided is not recognized in the proprietary accounts, which require that the goods 

and services be received or the benefits be provided, either through accrual of 

payables or through actual payment, for recognition). If an advance accompanies the 

order, there is a proprietary effect, but not on the net cost of operations, which is the 

difference between expenses and exchange revenues. The advance which may 

accompany an undelivered order would be recorded in the proprietary accounts by 

increasing prepayments, and asset, and decreasing fund balance with Treasury, also 

an asset. No expenses or exchange revenues result from the transaction. 

54. Thus, for a transaction involving the placing of an undelivered order of $100, line 1 

would be $100 and line 30, the net cost of operations, would be zero. The reconciling 
SFFAS 7 IMPLEMENTATION GUIDE 22 

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Implementation Guide, Statement of Financing

factor is the undelivered order, which would be shown as a negative amount on line 

12. This would be the reporting for all increases in undelivered orders during the 

reporting period. 

55. As discussed previously in this guide, the computation of obligations involves the 

change in undelivered orders over the reporting period. If that change were negative 

(i.e. if undelivered orders decreased over the reporting period), reverse signs would 

be required. If there was a $100 decrease in undelivered orders, then, based solely 

on that, line 1 would be -$100 and line 30 would still be $-0-. The reconciling figure 

would be placed as a positive amount on line 12. 

56. Line 13 is used to explain differences in resources and net cost of operations 

caused by expenses, which were accrued in previous periods but paid in the current 

period. Assume, for example, the following information about the annual leave 

liability, which Congress funds on a cash rather than an accrual basis: 

A. Beginning Balance $1,000 

B. Leave Earned 200 

C. Leave Taken 250

D. Ending Balance $ 950

57. For this example, the budget would have recorded obligations of $250 for the leave 

taken. However, the annual leave expense would only be $200. Thus, line 1 would 

show $250, and line 30 would show $200. The difference is accounted for by the 

decrease in the annual leave balance, which is an example of “resources that 

finance expenses recognized in prior periods.” Here, the $250 payment financed all 

of the current year’s accrual, and $50 of accruals in prior years–recorded as 

expenses in those years. The decrease would be shown as a negative $50 placed 

on line 13. 

58. Note that the $50 is theoretically the difference between data elements B and C in 

the list, but the arithmetic is such that the same amount can be determined by taking 

the difference between A and D. When C is greater than B, or, correspondingly, there 

is a decrease from A and D, the reconciling item is a negative amount placed on line 

13. The treatment for situations in which there is an increase in the annual leave 

liability is not parallel. That situation is discussed in conjunction with line 19. This 

same reporting rationale would apply to any liability which Congress funds on a cash 

rather than an accrual basis. 

59. Line 14 either deals with offsetting collections that do not result in reductions of 

expenses or increases in exchange revenues. Line 14a is provided for credit 

program collections, which increase liabilities for loan guarantees (in a loan 

guarantee program) or increase the allowance for subsidy (in a direct loan program) 

placed against credit program assets to reduce them to their present value. The rules 

for credit program accounting involving direct loans or loan guarantees obligated 

after September 30, 1991, the implementation of “credit reform,” are such that certain 

collections which under pre-credit reform rules would be recorded as exchange 
SFFAS 7 IMPLEMENTATION GUIDE 23 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

revenue are instead recorded as increases in the loan guarantee liability or 

allowance for subsidy.30

60. Assume that $10 in application fees is collected in a program under credit reform. 

That collection is recorded in the budgetary accounts as an offsetting collection, and 

would be included in line 2 of the statement of financing. Note that because line 2 is 

a subtraction line, the sign for the collection would be negative. Because the credit 

reform rules would require that the amount be used to increase the loan guarantee 

liability (in a loan guarantee program) or the allowance for subsidy (in a direct loan 

program), the net cost of operations would be unaffected. Hence, the statement of 

financing would show, solely for this transaction, -$10 on line 2 and zero on line 30. 

The reconciling factor of +$10 would be placed on line 14a. (See table below.) 

61. Line 14b would be used for all other transactions which are recorded as offsetting 

collection activity but which do not affect the net cost of operations. One such 

transaction, involving unfilled customer orders, is relatively common and was 

discussed in paragraphs 18-20 of this guide. If there was an increase in unfilled 

customer orders of $10 that would appear as -$10 on line 2 and zero on line 30. The 

reconciling factor would be a +$10 on line 14b. (If it was material, a separate line 

should be shown for it rather than placing it on an “other” line. Generally, material 

items would be so displayed.) If there was a $10 decrease in unfilled customer 

orders, that would appear as a +$10 on line 2 and zero on line 30. The reconciling 

factor would be a -$10 placed on line 14b (or a specific line for unfilled customer 

orders). Remember that because line 2 is a subtraction line, an offsetting collection 

amount is shown as minus if it increased and plus if it decreased. (See table below.) 

62. Line 15 is used for acquisitions of assets–fixed assets, supplies inventory, 

merchandise inventory, and so forth. This was discussed on paragraph 36 of this 

guide. In the case of the $1,000 asset acquired in that example, line 1 would show 

the $1,000 if budgetary resources were obligated to obtain the asset, line 6 if the 

public donated the asset, or line 7 if it was transferred in from another federal agency 

without recourse. Line 30 would be zero, and the reconciling factor would be a -

$1,000 reported on line 15. (See table below.) 

 Application 

Fee 

Unfilled 

Customer 

Orders 

Asset 

Acquisition 

Line 1 $ +1,000 

Line 2 $ -10 $ -10/ +10 

Line 14a +10 

Line 14b +10/ -10 

Line 15 - 1,000

Line 30 $ 0 $ 0/ 0 $ 0 

63. Line 16 is for any other situation not covered in lines 12-15 which is a reconciling 

 

30 SFFAS 2: Accounting for Direct Loans and Loan Guarantees, pars. 22-23, 37-38, and SFFAS No. 18, Amendments to 

Accounting Standards for Direct Loans and Loan Guarantees (May 2000), par. 10 and Appendix B. 
SFFAS 7 IMPLEMENTATION GUIDE 24 

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Implementation Guide, Statement of Financing

item involving a resource which was not used to finance the net cost of operations. 

Line 17 is the combination of lines 13-16, and line 18, while not in section 2 itself, is 

the combination of lines 17 and 11, or stated another way, is the difference between 

section 1 and section 2. Note that line 11 is the total resources used to finance 

activities; line 17 is the total resources used to finance items which did not finance 

the net cost of operations (i.e. did not result in an expense or an exchange revenue); 

and thus, line 18, the difference between 11 and 17, is the amount of resources 

which did finance the net cost of operations. 

Components of the Net Cost of Operations Not Requiring or Generating 

Resources (Lines 19-29) 

64. Figure 7 contains OMB’s lines for the third section of the statement of financing, 

“components of the net cost of operations that will not require or generate resources 

in the current period.” Remember that these components are expenses that do not 

require resources in the current period, and exchange revenues that do not generate 

resources in the current period. As discussed on paragraphs 39-44, these items 

may be divided into two broad categories, those that will require or generate 

resources in subsequent periods and those that will not. OMB has illustrated the 

former with lines 19-24, and the latter with lines 25-28.

Figure 7: 

Expenses and Exchange Revenues Which Do Not 

Require or Use Resources During the Reporting Period 

Components of the Net Cost of Operations that will not Require 

or Generate Resources in the Current Period: 

 Components Requiring or Generating Resources in Future Periods: 

 19. Increase in annual leave liability xxx 

 20. Increase in environmental and disposal liability xxx 

 21. Upward/Downward reestimates of credit subsidy expense (+/-) xxx 

 22. Increase in exchange revenue receivable from the public xxx 

 23. Other (+/-) xxx 

 24. Total components of Net Cost of Operations that will require or 

 generate resources in future periods xxx 

 

 Components not Requiring or Generating Resources:

 25. Depreciation and amortization xxx 

 26. Revaluation of assets or liabilities (+/-) xxx 

 27. Other (+/-) xxx 

 28. Total components of Net Cost of Operations that will not require 

 or generate resources xxx 

 29. Total components of net cost of operations that will not require 

 or generate resources in the current period x,xxx 
SFFAS 7 IMPLEMENTATION GUIDE 25 

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Implementation Guide, Statement of Financing

65. Line 19 is for expenses related to an increase in the liability. This situation was 

discussed in paragraphs 40-42, in which the annual leave liability increased by $10. 

The reporting would involve zero for resources and $10 for the net cost of 

operations. The reconciling factor would be a positive $10 on line 19. Note that a 

situation in which the annual leave liability decreases is handled through line 13. 

Line 20 is exactly the same thing, except that the difference is caused by the liability 

for environmental disposal and cleanup rather than by the annual leave liability. 

Increases in the liability create a reconciling factor on line 20, and decreases on line 

13. 

66. Line 21 is related to credit program accounting under the Credit Reform Act of 1990. 

The Act provides that agencies will get subsidies to cover defaults and other 

situations for direct loans and loan guarantees obligated after September 30, 1991. 

The amount of subsidy is re-estimated each year, and if more subsidy is needed 

than was provided, it is obtained from an appropriation in the next year. If less 

subsidy is needed than was provided previously, the excess amount must be 

deposited to a designated special or miscellaneous receipt in the Treasury in the 

next year. Because accrual accounting recognizes these adjustments in the year to 

which they are due, but budgetary accounting does not recognize them until the 

succeeding year, resources and the net cost of operations disconnect. 

67. Suppose that in Year A, a credit-program agency estimates that its subsidy, including 

interest, was $100 too little–that is, an upward subsidy adjustment, or re-estimate, 

must be made. Because there will be no budgetary recognition until the following 

year, resources are zero. However, the net cost of operations contains the $100 of 

additional, accrued subsidy expense. Thus, line 11 would be zero, and line 30 would 

be $100. The reconciling factor is the subsidy expense, which would be placed as a 

positive amount on line 21. 

68. The treatment for a downward re-estimate is parallel to that for an upward reestimate. Suppose that instead, the agency had a downward subsidy re-estimate of 

$100. In that case, there would still be no budgetary effect, but expenses, and the 

net cost of operations, would have been decreased by the $100. Accordingly, line 11 

would be zero, and line 30 would be -$100. The reconciling item is the downward reestimate, and would be shown as -$100 on line 21. 

69. There is an opposite effect in the subsequent year (Year B in the example), in which 

there is no further effect on the net income from collecting or paying the re-estimated 

amounts, but there is a budgetary effect. The treatment is not parallel, and is 

discussed in the final section of this guide, which covers the effect of selected 

additional transactions on the statement of financing. 

70. Line 22 is for increases in receivables for exchange revenue from the public over the 

reporting period. Absent specific legislation to the contrary, public receivables do not 

count as budgetary resources until they are collected. Hence, the revenue related to 
SFFAS 7 IMPLEMENTATION GUIDE 26 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

accruals of those resources is not reflected in offsetting collection activity at the time 

they are accrued.31

71. Assume that the following data elements are compiled for interest receivable from 

the public in Year A. 

A. Beginning Balance $100 

B. Interest Earned 25 

C. Interest Collected 20

D. Ending Balance $105

72. The budgetary transactions would include recognizing the $20 of interest collected 

as an offsetting collection, and hence line 2 of the statement of financing would be -

$20 (remember that line 2 is a subtraction line, and hence the sign for the $20 of 

collections would be minus). The net cost of operations on line 30 would be -$25, 

however, recognizing the amount of interest earned on an accrual basis. This 

indicates that there is -$5 in net cost of operations that is not reflected in resources–

i.e. that did not generate recognized budgetary resources. The -$5 would be placed 

on line 22. The reconciling item is the difference between B and C, and the arithmetic 

is such that it can also be computed by subtracting A from D, noting that the 

receivable increased. 

73. The situation for a decrease in exchange revenue receivable from the public is not 

parallel. It is discussed in the final section of this guide, which covers the effect of 

selected additional transactions on the statement of financing. 

74. Line 23 is for all other expenses or exchange revenues that do not require or 

generate resources in the current period but will do so in a subsequent period. Line 

24 is the subtotal of lines 19-23. 

75. Line 25 is the first under the section “components [of the net cost of operations] not 

requiring or generating resources” [in the current or future periods]. It is for 

depreciation and its related component, amortization. Depreciation was discussed in 

paragraphs 43-44. In the example, total resources – line 11– would be zero, and the 

net cost of operations, line 30, would be $100. The reconciling factor is the 

depreciation expense, which would be placed as a positive amount on line 25. 

Depreciation expense will not use budgetary resources in the current or future 

periods, because the related resources were used to acquire the equipment – either 

through obligating budgetary resources or from public donations or transfers-in from 

other federal agencies without reimbursement. 

76. Cost of goods sold and the expense for supplies used are additional examples of 

items, which fit into the category of this line. They are treated in exactly the same 

way, as is depreciation, because they relate to an expense for use of assets or the 

allocation of their cost over time, which does not use resources. 

 

31 See paragraph 20 and OMB Bulletin 01-09, p. 41. 
SFFAS 7 IMPLEMENTATION GUIDE 27 

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Implementation Guide, Statement of Financing

77. Line 26 is for situations in which assets or liabilities are revalued, resulting in related 

expenses (losses) or exchange revenues (gains) that do not generate or use 

resources. Assume that an agency has $1,000 of capitalized property on its books, 

and that a physical inventory indicated that only $950 was accounted for. The 

resulting adjustment of $50 would decrease inventory and increase expenses (loss 

from theft, natural disaster, shrinkage, etc.). Thus, resources on line 11 would be 

zero and the net cost of operations on line 30 would be $50. The reconciling factor of 

$50 would be placed as a positive amount on line 26. 

78. The treatment for a situation in which there was more property than expected is 

parallel. Assume that instead of a physical inventory indicating $950, it indicated 

$1,050 of merchandise on hand. In that case, the resources on line 11 would still be 

zero, but the net cost of operations on line 30 would be -$50, reflecting the gain. The 

reconciling factor would be -$50, and would be placed on line 26. 

79. Line 27 is for any expenses or exchange revenues that will not require or generate 

resources in the current or future periods that are not accounted for on lines 25 or 

26, and line 28 is the subtotal for lines 25 through 27. Line 29 is the subtotal of lines 

24 and 28. 

Net Cost of Operations (Line 30) 

80. The final line on the OMB Bulletin 01-09 illustration of the statement of financing is 

Line 30, which is the net cost of operations. This is computed by totaling line 29, the 

total components of net cost of operations that do not require or generate resources 

in the current period, and line 18, the total resources used to finance the net cost of 

operations. When these two lines are totaled, the result must be the net cost of 

operations, which must be the same amount as reported for that figure on line 10 of 

OMB’s illustration for the statement of net cost and line 17 of its illustration of the 

statement of changes in net position. 
SFFAS 7 IMPLEMENTATION GUIDE 28 

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Implementation Guide, Statement of Financing

V. ADDITIONAL ILLUSTRATIVE ITEMS 

81. This section explains how the statement of financing handles some transactions not 

covered in the preceding section of this guide. They were not discussed previously 

because the OMB illustration did not provide specific lines for them or the 

transactions did not integrate well in the preceding section. The transactions are for: 

• Upward and downward credit program subsidy expense adjustments in the year 

of collection or payment; 

• Receipt of basic positive credit program subsidy or payment of negative subsidy; 

• Amortization of the allowance for subsidy for the interest differential component 

of the subsidy; 

• Obligations for Items that decrease liabilities for loan guarantees or allowances 

for subsidy; 

• Scrapping, transfer-out, or sale of fixed assets; 

• Decrease in exchange revenue receivable from the public; 

• Accruing and collecting non-federal receivables for overpayments of expenses; 

• Defaults (bad debts) expense; and 

• Prior period adjustments. 

These transactions were chosen because of questions frequently asked about them, 

and are not intended to be comprehensive. 

Upward and Downward Credit Program Subsidy Expense Adjustments in the Year of 

Collection or Payment 

82. Section IV covered upward and downward adjustments of credit-program subsidy 

expense in the year the adjustments were accrued. In the following year, when 

upward adjustments are collected and downward adjustments are paid to the special 

or miscellaneous receipt account involved, the budget recognizes the collection or 

payment, but there is no further effect on the net cost of operations, which already 

accrued the resulting increase or decrease in subsidy expense in the preceding year. 

83. Assume that an agency accrued a $50 upward re-estimate of subsidy expense in 

Year A. In Year B, the agency would have its program account disburse the $50 to 

its financing account. A discussion of the nature of these accounts is beyond the 

scope of this guide; both accounts are components of the reporting entity. In Year B, 

the program account would obligate the $50, and the financing account would collect 
SFFAS 7 IMPLEMENTATION GUIDE 29 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

it. Line 1 of the statement of financing illustrated by OMB would be $50, and line 2 

would be-$50 for the obligation and collection, respectively, and thus the net 

obligated resources would be zero. Because the subsidy expense adjustment had 

already been accrued in the preceding year, the net cost of operations on line 30 

would also be zero. Hence, there is no reconciling item required. 

84. Assume instead that an agency accrued a $50 downward re-estimate of subsidy 

expense. In Year B, the agency would pay the money to a miscellaneous receipt 

account.32 The financing account, which would make the payment, would record an 

obligation for the payment, which would appear as $50 on line 1 of the OMB 

statement of financing. The collection by the miscellaneous receipt account would 

appear as -$50 on line 4 of the statement as an offsetting receipt. Thus, the net 

obligated resources would be zero. Because the subsidy expense adjustment had 

already been accrued in the preceding year, the net cost of operations on line 30 

would also be zero. Hence, there is no reconciling item required. 

Receipt of Basic Positive Credit Program Subsidy or Payment of Negative Subsidy 

85. A credit program financing account receives basic subsidy (as opposed to reestimated subsidy) from the program account. The program account obligates 

resources and recognizes subsidy expense in the same amount as the obligation. 

The financing account records the offsetting collection from the program account, but 

increases the allowance for subsidy (a contra-asset) or the loan guarantee liability. 

Assume that a credit program’s basic subsidy was $100. To report this, line 1 of the 

OMB illustration for the statement of financing would show the $100 obligation, and 

line 2 would show a -$100 for the offsetting collection, resulting in net resources of 

zero. The subsidy expense of $100 would result in net cost of operations in that 

amount on line 30. 

86. The reconciling item is due to the fact that the collection resulted in an increase in a 

contra asset or a liability instead of a decrease in an expense or an increase in 

exchange revenue. The OMB illustration does not provide a specific line for that, and 

so line 14b, “other budgetary offsetting collections that do not affect net cost of 

operations,” would be used to report the +$100 reconciling item. If the amount were 

material, the reporting entity would include a separate line in its statement of 

financing. 

87. In summary, the statement of financing would report +$100 on line 1, -$100 on line 2, 

+$100 on line 14b, and +$100 on line 30. 

88. Most federal credit programs receive subsidy, as in the preceding example. This may 

be called a “positive subsidy.” However, in some credit programs the present value of 

cash inflows is more than the present value of cash outflows, so they have a 

negative subsidy. When such a program enters into transactions to issue direct 

 

32 Most agencies would pay downward reestimates to a miscellaneous receipt account, but in special circumstances (such as 

mandatory programs) the downward reestimates could be paid to a program account, a special fund receipt account, or a liquidating 

account. 
SFFAS 7 IMPLEMENTATION GUIDE 30 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

loans or to make loan guarantees, it must borrow the amount of the negative subsidy 

and deposit it to its designated miscellaneous receipt account (it will repay the 

borrowing from future cash collections related to the direct loans or loan 

guarantees).33 The deposit is made in the same year that the profit–a negative 

subsidy expense–is recognized. 

89. Assume that a federal credit agency has a $100 negative subsidy. The financing 

account will obligate the $100, and that will appear as +$100 on line 1. The agency 

will record the collection in the miscellaneous receipt account as an offsetting receipt 

of -$100 on line 4. Thus, net obligated resources are zero. The net cost of operations 

on line 30 would be -$100, reflecting negative subsidy expense in that amount. 

90. The reconciling item is due to the fact that the obligation resulted in a net financing 

disbursement by the non-budgetary financing account and a transfer-out of a 

financing source rather than an expense. The OMB illustration does not provide a 

specific line for that, and so line 16, “other resources or adjustments to net obligated 

resources that do not affect net cost of operation” would be used to report the -$100 

reconciling item. If the amount were material, a separate line just for that would be 

included by the agency in its statement of financing. 

91. In summary, the statement of financing would report +$100 on line 1, -$100 on line 4, 

-$100 on line 16, and -$100 on line 30. 

Amortization of the Allowance for Subsidy for the Interest Differential Component of the 

Subsidy 

92. A common trait in many direct loan programs is a subsidy component required 

because the rate of interest charged borrowers is less than what the Treasury must 

pay to borrow money. The agency is paying a higher interest expense on its own 

borrowing from Treasury than the rate it is receiving from the borrower, such that the 

interest expense is higher than the interest income. Because the subsidy is designed 

to compensate the agency for this difference, an amount equal to the difference 

between the interest expense and income is amortized from the allowance for 

subsidy by decreasing the allowance for subsidy and increasing interest income. The 

budgetary accounts, which have already recognized the obligation and offsetting 

collection for subsidy expense, are not affected by the transaction. 

93. Hence, resources on line 11 of the OMB illustration of the statement of financing are 

zero, and the net cost of operations on line 30 is the amount of the amortization. The 

reconciling item would be placed as one of the “depreciation and amortization items” 

on line 25, as a positive amount. If the amount were $10, then line 11 would be $-0-, 

line 25 would be +$10, and line 30 would be +$10. 

 

33 Again, most agencies would pay downward reestimates to a miscellaneous receipt account, but in special circumstances (such 

as mandatory programs) the downward reestimates could be paid to a program account, a special fund receipt account, or a 

liquidating account. 
SFFAS 7 IMPLEMENTATION GUIDE 31 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

94. It is possible, though more unusual, that the amortization is negative, meaning that 

the borrower is charged a greater rate than the government pays to obtain funds. 

The treatment for that is parallel to the treatment for positive amortization. Assume 

that there is negative subsidy amortization of $10 due to the interest differential. In 

that case, resources on line 11 are still $0, but the net cost of operations on line 30 is 

-$10 rather than +$10, because, as there has been more interest income from the 

borrowers than interest expense paid to the Treasury, interest income must be 

decreased by the amortization, increasing the net cost of operations. The reconciling 

factor of -$10 is placed on line 25. 

Obligations for Items that Decrease Liabilities for Loan Guarantees or Allowances for 

Subsidy 

95. Paragraphs 59 and 60 dealt with situations in which offsetting collections increased 

liabilities for loan guarantees or allowance for subsidy related to credit program 

assets. In those cases, budgetary resources were negative, and net costs of 

operations were zero. The reconciling item was the collection made. 

96. A related situation occurs when obligations are placed that decrease liabilities for 

loan guarantees or allowance for subsidy. Assume, for example, that a $100 default 

claim is paid to a third-party lender because a guaranteed loan made by the lender 

defaults. An obligation placed for the $100 payment would appear on line 1. 

Because the transaction would decrease both the asset Fund Balance with Treasury 

and the loan guarantee liability, net cost of operations on line 30 would be zero. The 

Difference is explained by the default payment having been made. OMB Bulletin 01-

09 does not have a separate line for this, and thus the reconciling item would appear 

on -$100 on line 16 in the model, for “other resources not financing the net cost of 

operations.” If it were material, a separate line with an appropriate caption would be 

used. 

Scrapping, Transfer-out, or Sale of Fixed Assets 

97. Sometimes an agency may scrap its fixed assets, transfer them to other agencies 

without reimbursement, or may sell them either for cost or at a gain or loss. Assume 

that an agency has a fixed asset with a book value of $100 and that it disposes of it 

under each of the following scenarios: 

1. Scrapping the asset. 

2. Transferring the asset to another agency without reimbursement 

3. Selling the asset for $100. 

4. Selling the asset for $110. 

5. Selling the asset for $85. 
SFFAS 7 IMPLEMENTATION GUIDE 32 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

98. The treatment for each of these situations on the statement of financing is shown 

below, using key lines on the OMB Bulletin 01-09 illustration for the statement. 

Line Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5

RESOURCES

2. Offsetting 

Collections -$100 -$110 -$85 

7. Transfers-out -$100 

11. Total Resources $-0- -$100 -$100 -$110 -$85

RESOURCES NOT 

FINANCING COSTS

14b. Other Collections 

Not Affecting Costs $100 $100 $85 

16. Other Resources 

Not Financing Costs $100 

EXPENSES NOT REQUIRING RESOURCES 

26. Revaluation of 

Assets $100 $15 

30. Net Cost of 

Operations $100 $-0- $-0- -$10 $15

99. In scenario 1, there were no resources generated by the transaction. The net cost of 

operations was increased by the loss on disposal, and the reconciling item is that 

loss, which, resulting from a revaluation of assets from $100 to $-0-, is reported on 

line 26. (A separate line item for losses on asset disposals could be inserted if the 

amount was material.) 

100. In scenario 2, the transfer out would have been reported on the statement of 

changes in net position and would have reduced financing sources that were not 

reported in the Budget (transfers in would be zero, and transfers-out would be $100, 

resulting in a net reduction of $100). Accordingly, the reduction would appear on line 

7. The net cost of operations was zero, because the transfer-out is not an expense. 

The reconciling item is placed on line 16, an “other” line, because the OMB 

illustration does not have a specific line for it. A discrete line item could be added, if 

the item were material. 

101. In scenario 3, the sale resulted in a collection, making the net resources -$100. 

However, the net cost of operations was zero, because the asset was sold for its 

book value. Since none of the $100 collection resulted in net cost of operations, the 
SFFAS 7 IMPLEMENTATION GUIDE 33 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

reconciling item is on line 14b, an “other” line used because the OMB illustration 

does not provide a specific line. A specific line would be added if the amount were 

material. 

102. Scenario 4 is similar to scenario 3, except that $10 of the $110 collection resulted in 

net cost of operations (a gain of $10, which yielded a negative net cost of operations 

in that amount). The other $100 was a reduction for the asset. Accordingly, the $100 

reconciling item is placed on line 14b. 

103. Scenario 5 is a bit more complicated, in that there are two reconciling items. The $85 

is an offsetting collection, and appears on line 2, while the net cost of operations is 

$15, the amount of the loss on the sale. None of the $85 contributed exchange 

revenues to the net cost of operations, and hence a reconciling item in that amount 

is placed on line 14b. In addition, the $15 loss did not use resources, and hence a 

reconciling item in that amount is placed on line 26. 

Decrease in Exchange Revenue Receivable from the Public

104. The discussion for line 22 in the previous main section of this guide dealt with an 

increase in exchange revenue receivable from the public over the reporting period. 

When the receivable decreases, the reporting is not parallel to that for an increase. 

105. Assume that the following data elements are compiled for interest receivable from 

the public in Year A. 

 

A. Beginning Balance $100 

B. Interest Earned 20 

C. Interest Collected 25

D. Ending Balance $ 95

106. The budgetary accounting will record the $25 of interest paid as an offsetting 

collection, and the proprietary accounting will result in interest revenue of $20. The 

collection will be reported as -$25 on line 2, while the net cost of operations on line 

30 will be -$20. The difference of $5 is a collection that does not affect the net cost of 

operations, and would be reported as a reconciling item of +$5 on line 14b. The $5 

can be computed as the difference between B and C or as the difference between A 

and D, noting that the receivable decreased. 

Accruing and Collecting Non-federal Receivables for Overpayments of Expenses

107. Sometimes, agencies will accidentally overpay a vendor for expenses, and the 

amounts must be collected back. A receivable must be recorded in the proprietary 

accounts for the overpayment, and expenses are decreased accordingly. If the 

receivable is from the public rather than a federal entity, the budget will not recognize 

it as a resource until collected.34 If collection is not made by the end of the year, net 

obligations will differ from net cost of operations. 

 

34 See paragraph 20. 
SFFAS 7 IMPLEMENTATION GUIDE 34 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

108. Assume that a $10 overpayment for expenses was made to a non-federal vendor, 

and a receivable from the vendor was accrued. As of the end of the year, the 

receivable had not been collected. In this case, resources on line 11 are zero, 

because the non-federal receivable cannot be recorded in the budgetary accounts. 

The net cost of operations on line 30 is -$10, because of the decrease in the 

expense. The OMB illustration of the statement of financing does not provide a 

specific line for this, and so line 23, “other components of the net cost of operations 

not requiring or generating resources” would be used to report the -$10 reconciling 

item. If it were material, a separate line would need to be created for it. 

109. If collection of the $10 was then made in a subsequent year, offsetting collections on 

line 2 would be -$10, but the net cost of operations would be zero, because the 

expense had already been reduced in the previous year. Because none of the 

collection affected net cost of operations, the reconciling item would be on line 14b, 

“other collections that do not affect net cost of operations.” If it were material, a 

separate line would need to be created for it. 

Defaults Expense

110. Agencies may reduce their accounts receivable, or their pre-credit reform loans 

receivable to net realizable value by accruing defaults (bad debts) expense. They 

may also accrue an allowance for estimated loan guarantee losses on their precredit reform loan guarantees. Such accruals are not recognized in the Budget, 

because neither resources nor the status of resources is affected by the transaction. 

However, the amount of the expense is part of the net cost of operations. 

111. Assume that an agency accrues $10 of defaults expense at the end of the year. 

Resources on line 11 are zero, and the net cost of operations on line 30 is $10. The 

OMB illustration does not have a specific line for the reconciling factor, which would 

be placed on line 27, “other expenses not requiring resources.” If the amount was 

material, a special line could be inserted in the statement. 

Prior Period Adjustments 

112. “Prior period adjustments” (PPA) is a phrase with a technical meaning in proprietary 

accounting.35 PPAs adjust the opening balance of cumulative results. The term 

does not have the same technical meaning in budgetary accounting. Thus, there is 

a difference between a PPA and an adjustment of prior-period obligations. A PPA 

could be made for any number of things, and may or may not have a budgetary 

impact; and, if there is a budgetary impact, it may or may not affect the statement of 

financing. 

113. For example, with respect to undelivered orders, an upward adjustment of an 

 

35 See SFFAS 21, Reporting Corrections of Errors and Changes in Accounting Principles, Amending SFFAS No. 7, Accounting for Revenue and 

Other Financing Sources. 
SFFAS 7 IMPLEMENTATION GUIDE 35 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

obligation in order to, for example, correct a recording error in a prior fiscal year 

would be a reconciling item on the current year’s statement of financing [obligations 

increase, cost does not increase]. It would affect obligations but not the current year 

net cost of operations. Nor would it affect the prior year net cost of operations and, 

thus, it would not be a PPA in the proprietary system. 

114. To illustrate, the following briefly discusses some possible situations involving 

upward or downward adjustments to receivables and liabilities: 

a. Non-federal receivables. The budgetary system generally does not recognize 

non-federal receivables as resources, so an adjustment of a non-federal 

receivable would not affect net obligations. Hence, there would be nothing to 

report on the statement of financing, as net obligations and net cost of 

operations would both be zero. 

b. Federal receivables—upward adjustment. An upward adjustment of a federal 

receivable, if not collected during the period, would appear as a negative item 

on line 2 of the statement of financing, and there would need to be a 

reconciling item between that and line 30, which would be zero. There is no 

specific line for that item in the OMB Bulletin 01-09 illustration, and so line 16 

would be used. If material, a separate line just for the adjustment should 

appear. (If the receivable were collected in whole or part, the cash collection 

would also feed line 2.) 

c. Federal receivables—downward adjustment. A downward adjustment of a 

federal receivable, if not collected during the year would appear as a positive 

item on line 2 of the statement of financing. The same reconciliation as 

described in “b,” above, would need to be made. Any cash collections would 

also feed line 2. 

d. Unfunded liabilities. Since by definition, the budget does not recognize 

obligations for unfunded liabilities, there would be nothing for the statement of 

financing to report if there was a prior period adjustment up or down, since 

both net obligations and net cost of operations would be zero. 

e. Funded liabilities—upward adjustment. If a funded liability were adjusted 

upward, there would be an obligation placed, which would appear as a 

positive amount on line 1. Line 30 would be zero, and the reconciling item, 

the prior period adjustment, would appear on line 16 (a separate line with an 

appropriate caption would be used if the amount was material). 

f. Funded liabilities—downward adjustment. Same as “e,” except that the 

amount on line 1 would be negative. 
SFFAS 7 IMPLEMENTATION GUIDE 36 

APPENDIX A: STATEMENT OF FINANCING 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

Department/Agency/Reporting Entity 

CONSOLIDATED STATEMENT OF FINANCING (Page 1 of 2) 

For the Years Ended September 30, 20x2 and 20x1 

(in dollars/thousands/millions) 

 20x2 20x1 

Resources Used to Finance Activities: 

Budgetary Resources Obligated 

 1. Obligations incurred $ xxx $ xxx 

 2. Less: Spending authority from offsetting collections and recoveries xxx xxx

 3. Obligations net of offsetting collections and recoveries xxx xxx

 4. Less: Offsetting receipts xxx xxx

 5. Net obligations xxx xxx 

Other Resources 

 6. Donations and forfeitures of property xxx xxx 

 7. Transfers in/out without reimbursement (+/-) xxx xxx 

 8. Imputed financing from costs absorbed by others xxx xxx 

 9. Other (+/-) xxx xxx

 10. Net other resources used to finance activities xxx xxx

11. Total resources used to finance activities x,xxx x,xxx 

Resources Used to Finance Items not Part of the Net Cost of Operations 

12. Change in budgetary resources obligated for goods, 

 services and benefits ordered but not yet provided (+/-) xxx xxx 

13. Resources that fund expenses recognized in prior periods xxx xxx 

14. Budgetary offsetting collections and receipts that do not affect net cost 

 of operations 

14a. Credit program collections which increase liabilities for loan 

 guarantees or allowances for subsidy xxx xxx 

14b. Other xxx xxx 

15. Resources that finance the acquisition of assets xxx xxx 

16. Other resources or adjustments to net obligated resources that do not 

 affect net cost of operations (+/-) xxx xxx

17. Total resources used to finance items not part of the net cost of operations xxx xxx

18. Total resources used to finance the net cost of operations x,xxx x,xxx
SFFAS 7 IMPLEMENTATION GUIDE 37 

APPENDIX A: STATEMENT OF FINANCING 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

Department/Agency/Reporting Entity 

CONSOLIDATED STATEMENT OF FINANCING (Page 2 of 2) 

For the Years Ended September 30, 20x2 and 20x1 

(in dollars/thousands/millions)

 20x2 20x1 

Components of the Net Cost of Operations that will not Require or Generate Resources in the 

Current Period: 

 Components Requiring or Generating Resources in Future Periods: 

 19. Increase in annual leave liability xxx 

xxx 

 20. Increase in environmental and disposal liability xxx 

xxx 

 21. Upward/Downward reestimates of credit subsidy expense (+/-) xxx xxx 

 22. Increase in exchange revenue receivable from the public xxx 

xxx 

 23. Other (+/-) xxx xxx

 24. Total components of Net Cost of Operations that will require or 

 generate resources in future periods xxx xxx 

 Components not Requiring or Generating Resources:

 25. Depreciation and amortization xxx 

xxx 

 26. Revaluation of assets or liabilities (+/-) xxx 

xxx 

 27. Other (+/-) xxx xxx

 28. Total components of Net Cost of Operations that will not require or 

 generate resources xxx xxx

 29. Total components of net cost of operations that will not require or generate resources 

 in the current period x,xxx x,xxx

 30. Net Cost of Operations $ x,xxx $ x,xxx
SFFAS 7 IMPLEMENTATION GUIDE 38 

APPENDIX B: STATEMENT OF NET COST 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

Department/Agency/Reporting Entity 

CONSOLIDATED STATEMENT OF NET COST 

For the years ended September 30, 20x2 and 20x1 

(in dollars/thousands/millions) 

 

 20x2 20x1

Program Costs: 

Program A: 

1. Intragovernmental gross costs $ xxx $ xxx 

2. Less: Intragovernmental earned revenue -xxx -xxx

3. Intragovernmental net costs xxx xxx 

4. Gross costs with the public xxx xxx 

 5. Less: Earned revenues from the public -xxx -xxx

 6. Net costs with the public xxx xxx

 7. Total net cost x,xxx x,xxx 

 Other Programs: 

 Program B: xxx xxx 

 Program C: xxx xxx 

Program D: xxx xxx 

Program E: xxx xxx 

Program F: xxx xxx 

Other programs: xxx xxx

Total Other Program Costs: x,xxx x,xxx 

 

8. Cost not assigned to programs x,xxx x,xxx 

9. Less: Earned revenues not attributed to programs -xxx -xxx

10. Net Cost of Operations $ x,xxx $ x,xxx
SFFAS 7 IMPLEMENTATION GUIDE 39 

APPENDIX C: STATEMENT OF CHANGES IN NET POSITION 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

Department/Agency/Reporting Entity 

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION 

For the years ended September 30, 20x2 and 20x1 

(in dollars/thousands/millions)

 20x2 20x2 20x1 20x1 

 Cumulative Cumulative 

 Results Unexpended Results Unexpended 

 of Operations Appropriations of Operations Appropriations

1. Beginning Balances $ xxx $ xxx $ xxx $ xxx 

2. Prior period adjustments (+/-) xxx xxx xxx xxx

3. Beginning balances, as adjusted xxx xxx xxx xxx 

 Budgetary Financing Sources: 

4. Appropriations received xxx xxx 

5. Appropriations transferred-in/out (+/-) xxx xxx 

6. Other adjustments (rescissions, etc) (+/-) xxx xxx xxx xxx 

7. Appropriations used xxx -xxx xxx -xxx 

8. Nonexchange revenue xxx xxx 

9. Donations and forfeitures of cash 

 and cash equivalents xxx xxx 

10. Transfers-in/out without reimbursement (+/-) xxx xxx 

11. Other budgetary financing sources (+/-) xxx xxx 

Other Financing Sources: 

12. Donations and forfeitures of property xxx xxx 

13. Transfers-in/out without reimbursement (+/-) xxx xxx 

14. Imputed financing from costs absorbed by others xxx xxx 

15. Other (+/-) xxx xxx

16. Total Financing Sources xxx xxx xxx xxx

17. Net Cost of Operations (+/-) xxx xxx

18. Ending Balances $ x,xxx $ x,xxx $ x.xxx $ x,xxx
SFFAS 7 IMPLEMENTATION GUIDE 40 

APPENDIX D: STATEMENT OF BUDGETARY RESOUCES 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

Department/Agency/Reporting Entity 

COMBINED STATEMENT OF BUDGETARY RESOURCES (page 1 of 2) 

For the Years Ended September 30, 20x2 and 20x1 

(in dollars/thousands/millions) 

 20x2 20x2 20x1 20x1 

 Non-Budgetary Non-Budgetary 

 Credit Program Credit Program 

 Budgetary Financing Accounts Budgetary Financing 

Accounts

Budgetary Resources: 

1. Budget authority: 

 1a. Appropriations received $ xxx $ xxx $ xxx $ xxx 

 1b. Borrowing authority xxx xxx xxx xxx 

 1c. Contract authority xxx xxx xxx xxx 

 1d. Net transfers (+/-) xxx xxx xxx xxx 

 1e. Other xxx xxx xxx xxx 

2. Unobligated balance: 

 2a. Beginning of period xxx xxx xxx xxx 

 2b. Net transfers, actual (+/-) xxx xxx xxx xxx 

 2c. Anticipated Transfers balances xxx xxx xxx xxx 

3. Spending authority from offsetting collections: 

 3a. Earned 

 1. Collected xxx xxx xxx xxx 

 2. Receivable from Federal sources xxx xxx xxx xxx 

 3b. Change in unfilled customer orders 

 1. Advance received xxx xxx xxx xxx 

 2. Without advance from Federal sources xxx xxx xxx xxx 

 3c. Anticipated for rest of year, without advances xxx xxx xxx xxx 

 3d. Transfers from trust funds xxx xxx xxx xxx

 3e. Subtotal xxx xxx xxx xxx 

4. Recoveries of prior year obligations xxx xxx xxx xxx

5. Temporarily not available pursuant to Public Law xxx xxx xxx xxx 

6. Permanently not available xxx xxx xxx xxx

7. Total Budgetary Resources $ x,xxx $ x,xxs $ x,xxx $ x,xxx

 
SFFAS 7 IMPLEMENTATION GUIDE 41 

APPENDIX D: STATEMENT OF BUDGETARY RESOUCES 

Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

Department/Agency/Reporting Entity 

COMBINED STATEMENT OF BUDGETARY RESOURCES (page 2 of 2) 

For the Years Ended September 30, 20x2 and 20x1 

(in dollars/thousands/millions) 

 20x2 20x2 20x1 20x1 

 Non-Budgetary Non-Budgetary 

 Credit Program Credit Program 

 Budgetary Financing Accounts Budgetary Financing Accounts

Status of Budgetary Resources: 

8. Obligations incurred: 

 8a. Direct $ xxx $ xxx $ xxx $ xxx 

 8b. Reimbursable xxx xxx xxx xxx

 8c. Subtotal xxx xxx xxx xxx 

9. Unobligated balance: 

 9a. Apportioned xxx xxx xxx xxx 

 9b. Exempt from apportionment xxx xxx xxx xxx 

 9c. Other available xxx xxx xxx xxx 

10. Unobligated balance not available xxx xxx xxx xxx 

11. Total Status of Budgetary Resources x,xxx x,xxx x,xxx x,xxx

Relationship of Obligations to Outlays: 

12. Obligated balance, net, beginning of period xxx xxx xxx xxx 

13. Obligated balance transferred, net (+/-) xxx xxx xxx xxx 

14. Obligated balance, net, end of period: 

 14a. Accounts receivable xxx xxx xxx xxx 

 14b. Unfilled customer orders from Federal sources xxx xxx xxx xxx 

 14c. Undelivered orders xxx xxx xxx xxx 

 14d. Accounts payable xxx xxx xxx xxx 

15. Outlays: 

 15a. Disbursements xxx xxx xxx xxx 

 15b. Collections xxx xxx xxx xxx

 15c. Subtotal xxx xxx xxx xxx 

16. Less: Offsetting receipts xxx xxx xxx xxx

17. Net Outlays $ x,xxx $ x,xxx $ x,xxx $ x,xxx
 Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing 

BIBLIOGRAPHY

Federal Accounting Standards Advisory Board, Implementation Guide to Statement of Federal 

Financial Accounting Standards No. 7: Accounting for Revenue and Other Financing 

Sources (June 1996). 

 , Statement of Federal Financial Accounting Standards No. 2: Accounting 

for Direct Loans and Loan Guarantees (August 23, 1993). 

 , Statement of Federal Financial Accounting Standards No. 7: Accounting 

for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and 

Financial Accounting (April 1996). 

 , Statement of Federal Financial Accounting Standards No. 18: 

Amendments to Accounting Standards for Direct Loans and Loan Guarantees Financial 

Accounting (May 2000). 

Luter, J. Thomas, “The Statement of Financing,” FASAB News (Special Edition 1, August 1, 

1998, updated March 1999). 

Financial Management Service, Government Standard General Ledger (July 2001). 

Office of Management and Budget, Bulletin 01-09: Form and Content of Agency Financial 

Statements (September 25, 2001). 

 , Bulletin 97-01: Formats and Instructions for the Form and Content of 

Agency Financial Statements (October 16, 1996). 

 , Circular A-11: Preparation and Submission of Budget Estimates

 (July 17, 2001). 

 , Circular A-34: Instructions on Budget Execution (November 3, 2000). 

 , Transmittal Letter for OMB Bulletin 01-09 (September 25, 2001). 
Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing

 

FASAB Board Members

David Mosso, Chairman 

Philip T. Calder 

John A. Farrell 

Joseph L. Kull 

James M. Patton 

Robert N. Reid 

 

FASAB Staff

Wendy M. Comes, Executive Director 

Project Staff: 

J. Thomas Luter 

Richard Fontenrose 

 ____________________________________________________ 

Federal Accounting Standards Advisory Board

441 G Street NW 

Suite 6814 

Mailstop 6K17V 

Washington, DC 20548 

Telephone (202) 512-7350 

FAX (202) 512-7366 

www.fasab.gov 

─────────────────────────────────────
 Federal Accounting Standards Advisory Board 

Implementation Guide, Statement of Financing 

FASAB Federal Accounting Standards Advisory Board

U.S. General Accounting Office 

441 G Street, NW, Suite 3B18 

Washington, DC 20548 

Official Business 

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