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United States Government 

Consolidated 

Financial 

Statements 

l Prototype Report 
This report is a prototype for an annual recurring report on the financial condition 

of the U.S. Government. It is an attempt to apply the principles of business 

accounting to the business of government. 

The perception of government in this country is so heavily focused on political 

processes and social objectives that the financial dimension of government is often 

obscured. The fact is, nonetheless, that all governments are financial entities. Their 

ability to achieve their social objectives depends greatly upon their financial health. 

Like the institutions that make up the other two great economic sectors of our 

Nation-business firms and households-governments conduct their business by 

acquiring and using economic resources, goods and services. They raise money 

through revenues and borrowings to acquire the resources needed to provide 

governmental services. Of the resources acquired, some are consumed currently 

and some are set aside for future use-to generate future revenues or services. 

Governments also make commitments to provide benefits in the futurecommitments that do not have to be financed currently but which must be financed 

eventually. 

Like business firms and households, governments cari live within their means or 

they can become overextendP-d and have difficulty paying the bills. Unless all of the 

financial transactions and events affecting a governmental entity are recorded, 

sorted out between what is applicable to current operations and what to future 

operations, and brought together in a reasonably simple accounting report, the 

average citizen, or even the financial expert, cannot hope to make an informed 

judgment about the financial health of the government. This prototype report is a 

first step in the design of a financial report with the express purpose of facilitating 

such judgments. 

1 
Traditional governmental fin,ancial reports seldom provide a simple overview of 

what a government owns and what it owes or an explanation of how it got where it 

is. They concentrate primarily on the matter of compliance with specific legislative 

authorizations. Compliance. reporting is an essential function of governmental 

accounting and nothing in this report is intended to substitute for it. But events of 

the last few years, particularly the rising and seemingly uncontrollable Federal 

deficits and the financial crises in major cities and states, point to the need for a 

new perspective-:--one that looks at a g~vernment as a total financial entity and 

describes its financial condition in plain language and plain accounting. 

The democratic process works best when the citizenry is well informed. Financial 

analysis is not the forte of the average citizen. But as with most technical subjects, 

the basics are well within the grasp of the citizen if the jargon is stripped away, the 

details are condensed to fundamentals, and the financial profile is based on 

common accounting concepts. 

We have turned to business-type accounting for displaying the finances of 

government because it is the most widely known and understood system of 

measuring financial activity. Although government purposes are different from 

business purposes, financial activities and financial control are basically the same. 

Government is not in business to make a profit and therefore an excess of 

government revenue or expense does not have the same meaning as corporate 

profit or loss. It does have meaning, however, for tax policy, expenditure control, 

debt management, and for the economic goals of containing inflation and fostering 

high employment. The fiscal responsibility of public management can be judged in 

relation to those goals, just as the fiscal responsibility of corporate management 

can be judged in relation to profit goals, liquidity objectives, debt-equity balance, 

and so on. In other words, measuring profit is only one purpose of business 

accounting. It serves a wide variety of other management needs of which the most 

important is reporting on the accountability of management for the resources 

entrusted to its stewardship. That need is the same whether the accounting is to 

stockholders, creditors, or taxpayers. 

Among the objectives of this type of financial report are these: (1) To provide the 

general public, which does not have ready access to detailed information, with a 

resource for obtaining information about the financial condition and operations of 

the government; (2) to provide information about past events and decisions that will 

be useful for assessing their economic results and future implications; (3) to 

provide information for evaluating and predicting the government's ability to raise 

revenues and acquire resources required for future years; and ( 4) to provide 

information for evaluating the effectiveness of past spending decisions. 

Early this year, I invited a distinguished group of accountants, economists, and 

business people to serve on an advisory committee to help the Treasury develop a 

set of financial statements for the Federal Government that would carry out the 

ideas expressed in the foregoing paragraphs. This committee is heavily involved in 

studying a number of the complex issues. I believed that it would be useful, without waiting for the resolution of those issues, to go ahead with the publication of 

triis prototype report in order to expose the basic concept and approach to the 

general public. Public reaction will help to shape future reports in _the most useful 

mold. I would emphasize that these prototype statements are in conventional 

formats. There has not been time to experiment with new concepts and formats as 

many have suggested. However, nothing in this prototype represerits a 

commitment to any matter of form or content. I earnestly solicit advice_ from anyone 

on ways that it might be improved. 

2 
It is my hope that as these statements evolve in the next few years, they will 

enable a more penetrating and realistic assessment of proposed programs and a 

better evaluation of the effect of government on the nation's economy. This 

prototype $tatement is a beginning at developing an anchor to which a great 

number of more detailed financial·reports and concepts can be tied. 

If the figures in this report raise questions, we will have begun to achieve our 

basic purpose. The business of government is to respond to the needs of the 

·country in diverse social and economic ways that do not always reduce to easily 

measurable dollar figures on a financial statement. Nevertheless, political 

processes have financial results, and the discipline of periodic disclosure can be 

useful in evaluating our future courses of action. An understanding of the financial 

health and strength of the government is vital to the governed. 

3 

WILLIAM E. SIMON 

Secretary of the Treasury 
COMPTROLLER GENERAL OF THE UNITED STATES 

WASHINGTON, D.C. 201M8 

OCT 6 1976 

The Honorable 

Tne Secretary of the Treasury 

Dear Mr. Secretary: 

The need for better accountability and good financial 

reporting extends to all forms of governments--Federal, 

State, and local. At the Federal level, the extensive 

use of deficit financing and the increase in pension 

liabilities have accentuated the need for the Federal 

Go~ernment to provide better overall financial reports 

that clearly show, the Congress and the public, the major 

-aspects of its financial position and operations. Consequently, 

we endorse the concept that comprehensive, periodic 

financial statements covering the full range of Government 

activities be prepared in brief, easily understandable 

form, and.we support the Treasury's effort to prepare 

such statements. 

Although we endorse the concept of comprehensive 

financial statements covering Governmental f-inancial 

activities, we believe the enclosed statements 

must be consider~d a first attempt and that before fully 

satisfactory financial statements can be prepared many 

aspects of presenting information and determining 

appropriate amounts for assets and liabililties require 

further study. ~hese include: 

--Changing statement formats and simplifying 

language so the statem~nts will be easier for 

the public to understand. 

--Valuing assets such as land, buildings, and 

defense we~pons systems appropriately; many such 

assets are carried at no value or at outdated cost 

figures that are virtually meaningless. 

--MaKing sure that the amounts shown for pension 

liabilities are a fair presentation of actual 

liabilities. 

--Determining whether it.is appropriate to depreciate 

all.·assets; particularly such assets as ships and 

aircraf1;. 

--Accruing taxes receivable properly. 
, These are just some of the aspects we believe 

need to be considered further in preparing subsequent 

statements. A full listing of such aspects would be 

substantially longer. 

As noted above, these statements are preliminary; 

we have not examined or audi.ted them. Accordingly, we 

are not expressing an opinion on wnether they fairly present 

tne financial condition and results of Government operations 

for the periods of time they cover. 

Although many aspects of these statements require 

further study and significant changes, we believe 

these preliminary statements will highlight some of the 

critical financial problems that should be addressed 

in making them a permanent part of Government financial 

reporting. We are pleased tnat the Federal Government 

is taking a leading role in promoting more comprehensive 

financial reporting by Government entities, 

Comptroller General 

of the United States 
UNITED STATES GOVERNMENT 

Consolidated Statement of Financial Position 

June 30, 1975 and 1974 

[Amounts in billions] 

Assets · 

1975 1974 

Amount % Assets Amount % Assets 

Cash and Monetary Assets: 

Cash and cash equivalents ....................................... $ 12.8 

Other monetary assets (Note 1) .·. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2 

29.0 

Receivables (net of allowances): 

Accounts ....................................................... . 5.5 

Taxes (Note 2) ................................................. . 11.8 

Loans (Note 3) ............. : ................................... . 82.7 

100.0 

-- Inventories, at cost (I\Jote 4): 

· Military and strategic systems supplies ..................... . 33.5 

Stockpiled materials and commodities ............................ . 11.6 

Other materials and supplies .................................... . 12.2 --

57.3 -- Property an~ Equipment, at cost: 

Land (~ote 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0 

Buildings, structures and facilities (Note 6) ·. . . . . . . . . . . . . . . . . . . . . . . . . 92.1 

Strategic and tactical military assets (Note 7) . . . . . . . . . . . . . . . . . . . . . . 126.6 

Nonmilitary equipment (Note 7) ...... ·............................. 41.1 

Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8.0 

Other... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 --

286.9 

Less-Accumulated depreciation (Note 8) ................... . . . . . 136.5 

3.6 $ 14.7 4.5 

4.6 14.9 4.5 

8.2 29.6 9.0 

1.6 

3.3 

2~.3 

28.2 

9.4 

3.3 

3.4 

16.1 

2.0 

. 26.0 

35.6 

11.6 

5.1 

.6 

80.9 

38.5 

5.5 1.7 

15.0 4.6 

64.5 19.7 

85.0 26.0 

28.0 8.6 

11.5 3.5 

11 .1 3.3 

50.6 15.4 

6.6 2.0 

88.5 27.0 

119.9 36.7 

39.7 12.1 

19.3 , . 5.9 

2.1 .6 --

276.1 84.3 

128.9 39.3 

150.4 42.4 147.2 45.0 

Deferred Charges and Other Assets 18.0 5.1 15.0 4.6 

~ 100.0 $327.4 100.0 

6 
-~·. 

Liabilities and Equity 

Federal Debt (Note 9): 

Gross debt outstanding .......................................... . 

Less-lntragovernmental holdings: 

Trust funds .................................................. . 

Other ........................................................ . 

Debt outstanding with the public 

Less-Unamortized discount 

Payables: 

Accounts 

Interest, annual leave and other .................................. . 

Unearned revenue .............................................. . 

Retirement and Disability Benefits (Note 10): 

Civil Service ................................................... . 

Military ......................................................... . 

Veterans ....................................................... . 

Accrued Social Security (Note 11) ................................ . 

Other Liabilities .... · ............................................... . 

Contingencies (Note 12) .......................................... . 

Total Liabilities ......................... : ............. . 

Less-Excess of Liabilities Over Assets .............................. . 

1975 1974 

Amount % Assets Amount % Assets 

$544.1 153.4 $486.2 148.5 

137.3 38.7 129.7 39.6 

9.9 2.8 10.4 3.2 

396.9 111.9 346.1 105.7 

2.5 .7 2.5 .8 

394.4 111.2 343.6 104.9 

35.9 10.1 32.5 9.9 

11.0 3.1 9.2 2.8 

_ _:...8_:....3 2.4 -~6_.7 2.1 

55.2 15.6 48.4 14.8 

118.0 33.3 108.0 33.0 

96.6 27.2 80.4 24.6 

117.3 33.0 111.0 33.9 

331.9 93.5 299.4 91.5 

499.5 140.8 416.0 127.1 

39.4 11 .1 33.6 10.2 

1,320.4 372.2 - 1, 1 41.0 348.5 

965.7 272.2 813.6 248.5 -- --

$354.7 100.0 $327.4 100.0 

The accompanying notes to financial statements and schedules are an integral part of this statement. 

7 
UNITED STATES GOVERNMENT 

Consolidated Statement of Operations 

for the Years Ended June 30, 1975 and 1974 

[Amounts in billions] 

1975 1974 

Amount % Revenues Amount % Revenues 

Revenues: 

Individual income taxes ....................... . 

Social security and unemployment taxes 

and retirement contributions .............................. . 

Corporate income taxes .................................... . 

Excise taxes .............................................. . 

Estate and gift taxes .................................. . 

Outer continental shelf rents and royalties .................. . 

Other ..................................................... . 

Total revenues .............................. . 

Expenses (including transfer payments): 

National defense: 

Military personnel ..................................... . 

Operations and maintenance ............................. . 

Research and development . . . . . . . . . . . . ............... . 

Depreciation (Note 8) .................................... . 

Other ................................................... . 

Other operating expenses 

Grants-in-aid, primarily to State 

and local governments ................. . 

Transfer payments to individuals: 

Income security, including retirement, 

unemployment and social security payments made ....... . 

Health care .......................................... . 

Vetf -;.,~s benefits and services ...................... . 

Other. . . . . . . . . . . . . . . . . . ........................ . 

Noncash provisions for retirement 

and disability benefits: 

Social security (Note 11) ............................... . 

Civil service, military and veterans (Note 10) .......... . 

Interest expense (net of interest income) ..................... . 

Total expenses .................................. . 

Excess of expenses over revenues ...................... . 

$122.4 

86.4 

37.5 

16.6 

4.6 

2.4 

11 .7 

281.6 

24.9 

29.8 

8.9 

7.7 

1.6 --

72.9 

45.8 

48.3 

97.2 

14.6 

12.7 

3.0 

127.5 

83.4 

32.5 

115.9 

23.3 

433.7 

$152.1 

43.5 

30.7 

13.3 

5.9 

1.6 

.9 

4.1 

100.0 

8.8 

10.6 

3.2 

2.7 

.6 

25.9 

16.3 

17.2 

34.5 

5.2 

4.5 

1 .1 --

45.3 

29.6 

11 .5 

41.1 --

8.3 

154.1 

54.1 

$119.0 

76.8 

40.7 

16.8 

5.0 

6.8 

10.8 

275.9 

23.7 

27.7 

8.6 

11 .1 

1.4 

72.5 

42.0 

41.5 

69.4 

11.3 

10.4 

6.9 

98.0 

75.1 

20.5 

95.6 

21.5 

371.1 --

$95.2 

43.2 

27.9 

14.7 

6.1 

1.8 

2.4 

3.9 

100.0 

8.6 

10.1 

3.1 

4.0 

.4 

26.2 

15.3 

15.1 

25.2 

4.0 

3.8 

2.5 --

35.5 

-27.2 

7.4 --

34.6 

7.7 

134.4 

34.4 

The accompanying notes to financial statements and schedules are an integral part of this statement. 

8 
UNITED STATES GOVERNMENT 

Effect of Including the Federal Reserve in the 

Consolidated Statement of Financial Position 

June 30, 1975 

[Amounts in billions] 

Excluding Including 

Assets. 

Cash and monetary assets ........................................ . 

/ Receivables ...................................................... . 

Inventories ....................................................... . 

Property and equipment - net of 

accumulated depreciation ....................................... . 

Deferred charges and other assets ................................. . 

Liabilities and Equity 

Federal debt - net of Federal Reserve .............................. . 

Federal Reserve Notes outstanding ................................. . 

Deposits of member banks of the Federal 

Reserve System ................................................ . 

Other Federal Reserve liabilities .................................... . 

Payables, accounts, interest, leave, and other ....................... . 

Other Government liabilities ................................... : ... . 

Retirement and disability benefits ..................... .' ............. . 

Accrued social security ........................................... . 

Excess of liabilities over assets .................................... . 

Federal Federal 

Reserve Changes· . Reserve 

$ 29.0 

100.0 

57.3 

150.4 

18.0 

$354.7 

$394.4 

55.3 

39.4 

331.8 

499.5 

(965.7) 

$354.7 

$ (.9) 

.3 

.3 

2.5 --

$ 2.2 

$(85.0) 

70.9 

25.8 

2.4 

(.9) 

( 11 .6) 

.6 

$ 2.2 

$ 28.1 

100.3 

57.3 

150.7 

20.5 

$356.9 

$309.4 

70.9 

25.8 

2.4 

54.4 

27.8 

131 8 

499.5 

(965.1) 

$356.9 

* Changes due to the Federal Reserve are based on figures provided m the Board's annual report as of 

December 31, 1974. 

9 
UNITED STATES GOVERNMENT 

Reconciliation Schedule of Accrual Operating Results to 

the Budget Deficit 

for the Year Ended June 30, 1975 

[Amounts in billions] 

Reported Budget Outlays over Receipts ................ . $ 43.6 

· Additions: 

Noncash provisions for retirement 

and disability benefits .......................... . $115.9 

Depreciation .................................... . 7.7 

Net expenses of Off-budget Agencies ............. . 9.5 

133.1 

176.7 

Deductions: 

Capital outlays .................................. . 19.7 

Net effect of accrual adjustments ................. . 4.3 

Seigniorage ............................... . .6 

24.6 -- Excess of expenses over revenues 

per Consolidated Statement of Operations $152.1 

10 
INTRODUCTORY STATEMENT TO FOOTNOTES 

As is· true of accounting in other types of 

economic entities, governmental accounting exists 

for the purpose of providing complete· and accurate 

financial information, in proper form and on a timely 

basis, to those responsible for, and concerned with, 

the operations of governmental units and agencies. 

Some of the potential user groups interested in the 

financial information produced by the Federal 

Government include the general public, investo'rs 

and investment bankers, such individuals as accountants, financial analysts, economists, and 

political scientists and other governments. 

While the Federal Government presently prepares 

many types oi statements for specialized users, 

these Federal Consolidated Financial Statements 

have been prepared to serve the common needs of 

a variety of users, with emphasis on the general 

public to help promote understanding of the overall 

financial condition of the Federal Government. The 

statements are primarily historical in that information 

about events that have taken place provide the basis 

for our reporting. No projections concerning future 

events have been made except where otherwise 

noted. 

The sources used in developing the statements 

were predominantly Treasury publications supplemented by reports from both the civilian and military 

sectors of the Federal Government. For the most 

part, these publications and reports are a product of 

the agencies' accounting systems, which, by law, 

must conform in all material respects to the 

accounting principles, standards and related requirements prescribed by the Comptroller General of 

the United States. The maintenance of accounts on 

the accrual basis is a basic requirement tor all 

Federal agencies. The accrual basis of accounting 

consists of recognizing in the books and records of 

account the significant and accountable aspects of 

financial transactions or events as they occur. Under 

this basis, the accounting system provides a current 

11 

systematic record of changes in assets, liabilities, 

and sources of funds growing out of the incurrence 

of obligations, expenditures, and costs and expenses; the earning of revenue; the receipt and 

disbursement _of cash; and other financial transactions. 

This basis of accounting provides more information than the cash basis alone, under which financial 

transactions are recorded in the accounts only when 

cash is received .or disbursed. It also provides more 

information than the obligation basis alone, under 

which financial transactions involving use of funds 

are recorded in the accounts primarily when 

obligations are incurred. 

The accompanying financial statements include 

the accounts of all significant agencies and funds 

included in the Unified Budget of the United States 

Government. Agencies like the U.S. Postal Service, 

the Export-Import Bank of the United States, and the 

Federal Financing Bank which are classified as "offbudget" (not included in the budget) have been 

included in the financial statements because they 

clearly are within the scope of Government operations. Government-sponsored enterprises such as 

Federal Land Banks have been excluded because 

they are privately owned. We have also excluded the 

financial results of the Federal Reserve System from 

the principal statements, but show the effect of 

including the Federal Reserve in a supplemental 

table to show the interrelationships due to (1) the 

amount of Federal debt held, (2) gold pledged to 

FRB's in return for Treasury demand deposits, (3) 

annual transfer of net income to Treasury, and ( 4) in 

the event of liquidation, after return of capital to 

member banks, residual assets would go to 

Treasury. Intra-governmental assets, liabilities, a_nd 

revenue/expense items have been eliminated in 

consolidation. Amounts reflected are as of June 30, 

1975, and 197 4. 
NOTES TO FINANCIAL STATEMENTS 

1. Other Monetary Assets 

This category includes the following items: Gold 

which has been recorded at the official rate of 

$42.22 per ounce established by law-$11.6 billion; 

Special Drawing Rights which are an international 

reserve asset-$2.4 billion; and the United States 

reserve position with the International Monetary 

Fund-$2.2 billion. 

2. Taxes Receivable 

The total for taxes receivable ir:icludes $6.4 billion 

(net) for delinquent taxes owed and $5.4 billion of 

accrued corporate taxes receivable as of June 30, 

1975: the comparable amounts as of June 30. 197 4. 

were $5.0 billion and $10.0 billion, respectively. No 

accrual has been made for individual income taxes 

because of the payroll withholding system. Also, 

assessed tax deficiencies pending settlement have 

not been included in receivables because the 

ultimate settlement value is indeterminable. 

3. Loans Receivable 

Interest rates and loan repayment terms vary 

considerably for outstanding loans, with rates 

varying to 1 2 percent and terms from as short as 90 

days to well over 40 years. The longer terms and 

lower rates generally apply to loans to foreign 

governments. Outstanding balances and allowances 

for losses have been recorded as reported by 

various le_nding agencies. No attempt has been 

made to evaluate collectability or the adequacy of 

the allowances for losses. 

4. Inventories 

Inventories include nondepreciable personal 

property and are generally stated at cost. The major 

components of inventory are summarized below. 

Classification 

Military and strategic supplies: 

Ammunition .... · ..................... . 

Materials related to missile, air and 

weapons systems 

Repair parts for weapons and vehicles 

Excess materials awaiting disposition .. 

Miscellaneous 

Stockpiled materials and commodities: 

· Nuclear materials .. 

Metals and like materials . 

Helium 

(Billions) 

1975 1974 

$11.9 $9.4 

12.5 11.3 

2.6 2.5 

2.3 2.4 

4.2 2.4 

33.5 28.0 

7.1 6.6 

4.0 4.4 

.5 .5 

11.6 11.5 

12 

Other materials and supplies: 

Department of Defense: 

Electric, industrial and petroleum 

supplies 3.8 4.1 

Clothing, subsistence and general 

supplies . . . . . . . . . . . 2.6 1.9 

Excess materials awaiting disposition . 2.0 2.2 

Miscellaneous .7 .5 

9.1 8.7 

Other agencies . 3.1 2.4 

12.2 11.1 

$57.3 $50.6 

The inventory accounts do not include the 

weapons stockpile of Energy Research and Development Administration, since the extent of this 

inventory is classified information. 

5. Land 

Land owned by the Federal Government as of 

June 30, 1975, is summarized below by predominant 

usage. 

Usage 

Forest _and wildlife .. 

Grazing ........ . 

Parks and historic sites 

Alaska oil and gas reserves 

Military (except airfields) 

Flood control and navigation . 

Reclamation and irrigation . 

Industrial 

Airfields 

Power development and distribution 

Other ........ . 

Outside United States . 

Acres Cost 

(Millions) (Millions) 

502.3 $589 

164.0 26 

25.3 618 

23.0 

18.1 

8.0 

7.0 

2.9 

2.3 

1.5 

6.0 

334 

3,381 

313 

206 

199 

273 

933 

760.4 6,872 

.6 152 

761.0 $7,024 

The Government owns approximately 33.5 per-· 

cent of the total acreage of the United States, or 

760.4 million acres (of which 352 million acres are 

located in Alaska). This total includes 704 million 

acres of public domain land. The Outer Continental 

Shelf and other offshore lands are not included. 

Cost represents the price paid by the Government, 

except that the cost of land acquired through 

donation, exchange, bequest, forfeiture, or judicial 

process is estimated at amounts the Government 

would have paid if purchased at the date of 

acquisition. The 704 million acres of public domain 

land are not included: however, in 1972 a committee 

of the House of Representatives estimated the value 

of the land to be $29.9 billion. 
6. Buildings, Structures and Facilities 

This category includes all real property owned by 

the Federal Government except land. The annual 

rental of real property leased amounts to $0.6 billion 

annually. Approximately $41 billion of the total at 

June 30, 1975, and $36 billion at June 30, 197 4, 

reflects the acquisiton cost of buildings, whereas the 

balance includes the costs of acquiring or erecting 

dams, utility systems, monuments, roads, and 

bridges. The following table summarizes the buildings, structures, and facilities reported. 

Air Force 

Army: 

Agency or department 

Corps of Engineers 

Other. 

Navy . 

Interior 

Tennessee Valley Authority . 

Energy Research and Development 

Administration ....................... . 

Agriculture ............................ . 

National Aeronautics and Space 

Administration ....................... . 

General Services Administration . 

Other. 

7. Depreciable Personal Property 

(Billions). 

1975 1974 

$17.1 $16.7 

14.9 14.3 

12.6 12.1 

12.6 12.2 

9.2 9.0 

5.6 4.8 

7.1 4.2 

3.2 3.0 

2.6 2.5 

2.4 2.4 

4.8 7.3 

$92.1 $88.5 

Depreciable personal property has been divided 

into two categories. Assets are recorded at acquisition cost and include only those which are currently 

in use or in usable condition. The major components 

of each category are summarized below. 

Classification 

U.S. Strategic and Tactical military assets: 

Aircraft and related equipment . 

Ships and service craft . 

Combat and tactical vehicles 

Missiles and related equipment 

Weapons 

Other (primarily ground support) 

U.S. Nonmilitary equipment: 

Department of Defense: 

Industrial plant equipment 

Communication and electronics . 

Vehicles . 

Other. 

(Billions) 

1975 1974 

$51.6 

38.0 

17.8 

10.6 

3.9 

4.7 

$126.6 

$13.9 

49 

2.4 

1.1 

22.3 

$51.0 

36.3 

16.9 

9.7 

1.1 

4.9 

$119.9 

$14.0 

4.1 

2.2 

1 .4 

21.7 

Energy Research and Development 

Administration ..................... . 

Maritime Administration .............. . 

Tennessee Valley Authority.· . 

U.S. Postal Service 

Other agencies . 

8. Depreciation 

6.0 

1.6 

1.4 

1.4 

8.4 

$41.1 

5.8 

1.5 

1.4 

1.2 

8.1 

$39.7 

Most Government agencies do not depreciate 

property and equipment. Accumulated depreciation 

as of June 30, 1975 and 197 4, for such agencies 

was estimated, on a straight line basis, based on 

available information. Reported amounts were used 

for those agencies; e.g., TVA and Postal Service, 

which do depreciate property and equipment. The 

useful lives for each classification of asset are as 

follows: Buildings, structures and facilities - 50 years; 

Ships and service craft - 30 years; Industrial plant 

equipment - 20 years; All other depreciable assets -

10 years. 

9. Federal Debt 

The gross amount of Federal debt outstanding at 

June 30, 1975, and June 30, 1974, consisted of the 

securities summarized below. 

Type of security 

Marketable: 

Treasury bills 

Treasury notes ... 

Treasury bonds 

Nonmarketable: 

U.S. Savings bonds . 

Foreign series 

Government account series (special 

issues related to specific funds) . 

Other. 

Total Treasury obligations 

Agency securities 

(Billions) 

1975 1974 

$128.6 $105.0 

150.2 128.4 

36.8 33.2 

315.6 2666 

65.5 61 9 

23.2 25.0 

124.2 115.4 

4.7 53 --

533.2 474.2 

10.9 12.0 

$544.1 $486.2 

Maturities of the outstanding marketable securi-

. ties are reflected in the following tables. 

13 

Due WithinOne year 

One to five years 

Five to ten years 

I en to twenty years 

Twenty years or longer . 

(Billions) 

1975 1974 

$164.0 $139.9 

101.9 77.2 

26.8 27.0 

14.5 17.4 

8.4 5.1 

$315.6 $266.6 
The gross amount of Federal debt outstanding has 

been reduced by the holdings of entities included in 

the Consolidated Financial Statements. The largest 

such reduction reflects the holdings of Government 

trust funds. Significant trust fund holdings of Federal 

debt securities are summarized below. 

(Billions) 

Trust fund 

Social Security Administration: 

Federal old-age and survivors' insurance 

Federal disability insurance 

Federal hospital insurance . . .. 

Federal supplementary medical insurance 

Civil Service Commission: 

Civil service retirement and disability 

Other. 

Department of Labor-unemployment . 

Department of Transportation: 

Highway 

Other ....... . 

Veterans Administration .. 

Federal Deposit Insurance Corporation 

Other .. 

1975 

$39.9 

8.1 

9.8 

1 .4 --

59.2 

38.6 

2.0 

40.6 

7.2 

9.6 

1.9 

11.5 

8.1 --

6.2 

4.5 

$137.3 

1974 

$37.7 

8.2 

7.9 

1.2 --

55.0 

34.3 

1.7 --

36.0 

12.1 

7.6 

.9 --

8.5 

7.u --

5.8 

4.7 --

$129.7 

Of the debt outstanding with the public as of June 

30, 1975, and June 30, 1974, approximately $66.0 

billion and $57.7 billion, respectively, was held by 

foreign and international investors. 

10. Retirement and Disability Benefits 

Liabilities for military retirement benefits and for 

retirement and disability benefits provided under 

Civil Service have been recorded based on the 

estimated present values of vested benefits. These 

were derived from the actuarially computed present 

values of future benefits (as computed by the 

agencies involved with administering the various 

plans) less the present values of future employee 

contributions. 

The liability for Veterans Administration benefits 

represents the computed present value of annual 

benefit payments, which have been estimated by the 

Veterans Administration to the year 2000. The 

noncash provisions for retirement and disability 

benefits of $32.5 billion for 1975 and $20.5 billion for 

197 4 represent the combined changes in liabilities 

for civil service, military retirement and veterans 

benefits between years. 

14 

Liabilities for several other Government plans 

providing future benefits were not included at this 

time, since it has not been determined whether the 

total liabilities for such plans would be significant in 

relation to amounts shown. 

11. Accrued Social Security 

Estimates for social security give consideration to 

contributions (taxes) and benefits for the next 75 

years. As of June 30, 1975, the projected excess of 

benefits over contributions, on a present value basis, 

for present participants over the next 75 years is 

$2.7 trillion. The full accrued liability on a level cost 

basis as it would be computed for a private pension 

plan is estimated to be in the $3-4 trillion range 

Only a portion of the full liability is shown in the 

Statement of Financial Position, $499 billion for 1975 

and $416 billion for 197 4. These amounts represent 

an approximate application of the Accounting 

Principles Board's Opinion No. 8, using a 30-year 

amortization period. The Treasury's Advisory Committee is considering the appropriate disclosure for 

future reports. 

The noncash provisions for social security of 

$75.1 billion in 197 4 and $83.4 billion in 1975, in the 

Consolidated Statement of Operations, represents 

changes in the social security· accrual between 

years. 

12. Contingencies 

Several Government agencies insure businesses 

and individuals against various risks. The amount of 

insurance coverage in force, representing the 

maximum contingent exposure of the Government, 

is summarized below as of June 30, 1975. 

Nat_ure of Coverage 

Federal Deposit Insurance Corporation 

Federal Savings and Loan Insurance Corporation . 

Housing and Urban Development-Riot Insurance 

Nuclear Regulatory Commission 

(Formerly Atomic Energy Commission) . 

Other. 

(Billions) 

$549.0 

257.0 

450.0 

59.0 

166.0 

$1,481.0 

The Government also guarantees loans made to 

businesses and individuals by non-Government 

enterprises. These guarantees become liabilities of 

the Government only when the Government is 

required to honor its guarantees. Loan guarantees in 

force at June 30, 1975, are summarized below. 
Guarantees related to 

Federal Housing Administration 

Veterans Administration 

Farm Credit Administration 

Federal Home Loan Bank Board 

Federal National Mortgage Association 

Other. 

Amount 

Outstanding 

(Billions) 

$98.6 

27.9 

28.8 

25.6 

29.1 

40.4 

$250.4 

The·Gevemment·-also commits •itself to p·rovide 

services by passing laws which make spending 

mandatory. It should be noted that some of these 

programs are included in the Consolidated Financial 

Statements. Examples include social security and 

other benefit programs and some contractual 

obligations which have already been accrued. 

However, the point is that a significant amount of 

future spending is fixed by law. Therefore, it is very 

probable that the Government will pay for these 

programs in future years. The list below shows 

15 

programs for Fiscal Year 1975 which cannot be 

stopped until a law is changed. 

Social security and railroad retirement 

Federal employees' retirement and insurance .... 

Unemployment assistance ........ . 

Veterans benefits 

M_ec;_jic_ar_e,aqd.,Medicaid ., ... 

Housing payments . . . . ............. . 

Public assistance and related programs 

Subtotal, payments for individuals .. 

Net interest 

General revenue sharing 

Other open-ended programs and fixed costs 

Total, open-ended programs and fixed costs 

Outlays from prior-year contracts and obligations .. 

Total, relatively uncontrollable costs 

Relatively controllable outlays .. 

Undistributed employer share, employee retirement 

Total budget outlays 

(Billions) 

$68.4 

13.3 

14.0 

12.4 

'2·1:6 

2.1 

16.9 

148.7 

23.3 

G.1 

8.7 

186.8 

50.7 

237.5 

91.1 

~) 

$324.6 
Advisory Committee on Federal Consolidated Financial Statements 

The role of the advisory committee is to provide 

advice ·on a number of issues confronting the 

Treasury in the preparation of consolidated financial 

statements for the U.S. Government. While the 

Treasury's initial prototype statement is in production, the advisory committee will be considering, in 

detail, a number of technical issues; namely, 

objectives to be served by the statements, format of 

the stqtements, and accounting and reporting for 

pensions, commitments, and contingencies. It is 

expected that their views on these issues will be 

incorporated in subsequent publications of these 

statements. In the interim, Treasury considers it 

worthwhile to expose for comment the accompanying statements which represent one of the statement 

formats currently being considered by the advisory 

committee. The Treasury acknowledges the support 

and continuing assistance from the members of the 

Committee: 

Mr, Harvey Kapnick, CPA 

Dr. Wilton Anderson, CPA 

Mr. John Biegler, CPA 

Mr. Ivan Bull, CPA 

Dr. Joe J. Cramer, Jr., CPA 

Mr. Nathan Cutler 

Dr. Sidney Davidson, CPA 

Mr. Samuel A. Derieux, CPA 

Dr. Solomon Fabricant 

Mr. Gaylord Freeman 

Mrs. Carol Loomis 

Dr. Robert K. Mautz, CPA 

Dr. Charles L. Schultze. 

Honorable Elmer Staats 

Mrs. Julia M. Walsh 

Dr. George A. Staubus 

Chairman, Arthur Andersen & Co. 

Chairman of Advisory Committee on Federal Consolidated Financial Statements 

Head of Accounting Department, Oklahoma State University 

Past President of American Accounting Association 

Senior Partner, Price Waterhouse & Co. 

President of the Board of Trustees, Financial Accounting Foundation 

Managing Partner of McGladrey, Hansen, Dunn & Co. 

Chairman of the Board of American Institute of Certified Public Accountants 

Faculty Resident, Arthur Andersen & Co. 

Professor, Department of Accounting, Arthur Andersen Fellow, The Pennsylvania State 

University 

Executive Vice President, Association of Government Accountants 

Former Director of Audits, Department of Transportation 

Director of Business Research, University of Chicago 

Past President of American Accounting Association 

Partner, Derieux, Baker, Thompson and Whitt 

Past President of American Institute of Certified Public Accountants 

Member of Senior Research Stall, National Bureau of Economic Research 

Former Consultant to General Accounting Office 

Honorary Chairman of the Board, First National Bank of Chicago 

Former Consultant to the Secretary of the Treasury 

Member of Board of Editors, Fortune_ Magazine 

Author of the article "An Annual Report for the Federal Government", 1973 

Partner, Ernst & Ernst 

Member of Cost Accounting Standards Board 

Senior Fellow, Brookings Institution 

Former _Director, Bureau of the Budget (now 0MB) 

Comptroller General of the United Sta,tes 

Vice Chairman of the Board, Ferris & Co. 

Director, U.S. Chamber of Commerce 

Director of Research and Technical Activities, Financial Accounting Standards Board 

An observer at Committee meetings 

16 
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CONSOLIDATED FINANCIAL STATEMENTS 

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