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I: 

CONSOLIDATED 

FINANCIAL ST A TEMENTS 

-of the United States Government 

Fiscal Year 198S 

Prototype 

-... Treasury's commitment to full disclosure . . 

of financial information to the public. . . 
CONTENTS 

Secretary's Letter I I I 

Comptroller General's Letter V 

Introduction 1 

Financial Highlights 3 

Consolidated Financial Statements 9 

Notes to Financial Statements 17· 

Supplemental Tables 23 

For sale by the Superintendent of Documents, U.S. Government Printing Office 

Washington, D.C. 20402 
THE SECRETARY OF THE TREASURY 

WASHINGTON 

July 1, 1986 

Statement of the 

Secretary of the Treasury 

The Department of the Treasury is pleased to present these 

Consolidated Financial Statements disclosing information on the 

financial condition of the Federal Government for the fiscal year 

1985. They have been prepared in conformity with generally 

accepted accounting principles (GAAP) but remain a prototype 

document because GAAP reports are not prepared by all Federal 

agencies. The statements underline the Treasury's commitment to 

full disclosure of financial information to the public. In 

recent years, several Federal agencies have developed 

consolidated GAAP statements, but the Federal sector still trails 

the progress of State and local governments--at least 25 States 

now prepare GAAP-based financial statements. 

The renewed emphasis within the Federal Government on improving 

financial management systems has produced additional agency 

systems capable of reporting under GAAP, and their progress 

should be seen in the FY 1986 statements. We expect to have a 

redesigned Governmentwide accounting and reporting system in 

place for the FY 1987 statements. Other Federal projects 

include OMB's development of a standardized general ledger to 

bring consistency to accounting within all agencies and the 

efforts to expand use of generic systems and off-the-shelf 

software. 

Improvement in the quality and the timeliness of source data will 

make the Consolidated Financial Statements a more reliable and 

useful document in the future. We hope that these statements 

will enhance public understanding of the complex issues involved 

in managing the Government's financial resources. 

One major change in this year's report involves the reclassification of the social security liability for future benefit 

payments as a contingent liability. This liability, previously 

included on the Statement of Financial Position, may now be 

found in the section on Commitments and Contingencies. 

ili 
Comptroller General 

of the United States 

Washington, D.C. 20548 

July 1, 1986 

STATEMENT OF THE UNITED STATES 

GENERAL ACCOUNTING OFFICE 

The need for sound financial management is one of the most critical 

issues facing the federal government today. With annual spending now 

exceeding 1 trillion dollars and current budget deficits of over 

$200 billion, the federal government must develop modern financial 

management systems. These systems are necessary for efficient and 

effective decision making about the size and affordability of 

government programs artd for producing financial reports which 

accurately portray the government's operations and financial 

condition. 

This consolidated financial report provides useful information, that 

is not available elsewhere, about the financial condition and 

operations of the federal government as a whole; it is supplementary 

to information contained in budget documents. The consolidated 

statements disclose the magnitude of the government's assets and 

future claims on government resources not fully disclosed in the 

budget. This includes information on the government's inventories and 

fixed assets as well as its pension liabilities, and the size of the 

public debt. 

The amount of liability for social security benefits, which had been 

included in the Statement of Financial Position in previous 

consolidated financial reports, has been eliminated by Treasury from 

the Statement in this report and included in a footnote instead. 

Social security benefits is the single largest liability of the 

federal government. In 1985 ·the liability amounted to over 2 trillion 

dollars and would have represented about 40 percent of total 

liabilities had it been reported in the Statement of Financial 

Position. At present we are not sure whether social security should 

be a liability or only disclosed in a footnote. The nature of social 

security is perhaps the most contentious issue in federal financial 

reporting and is currently under study to determine how best to report 

it in the consolidated financial statements . 

. Although this report is ·a prototype, it is a step toward a goal we 

strongly support--the annual publication of formal consolidated 

financial statements of the United States government which can sustain 

the scrutiny of an independent audit. Achieving this goal will be a 

significant milestone towards building strong viable financial 

management systems that will serve the needs of government and help 

restore public confidence in the management of the government. 

Agency ,summary level statements, along with additional supplemental 

information, form the basis for preparing this consolidated report. 

Our ultimate objective is to establish credibility of the financial 

V 
statements and to be able to audit t_heD;l and render a favorable opinion 

on their fair presentation. To achieve this objective, however, we 

will first audit the underlying agency statements. We have begun this 

process with pilot audits at selected major federal agencies. t. ' • •' . 

,., •:·.We are ·convinced that the need for such an audit is .critical since it 

· would give assurance that the information is reliable as well as 

:·.:'' ·· adding •discipline to the overall financial management· systems·, 

£including the underlyingreports needed to manage government 

programs. Our limited audit work has indicated_ that. some of the 

numbers in these consolidated statements can be more fairly stated. A 

!)fi · · primary example of ,this is the receivables and related allowances in· 

the,, consolidated statement of financial position. Based on the work 

we have done, we believe the-allowance for losses is-substantially 

·unders·tated resulting in a significant overstatement of net. ,. 

,-~ 

. ·•receivables and a significant understatement of the costs of the 

related programs. Likewise, we believe the estimated losses·on loan 

guarantees and insurance is significantly understated. 

~ •, . 

.. • 'Regardless of the current shortcomings, these consolidated financial 

• ·:..· ·, 'statements are critical to. improving financial management. They are 

·ithe underpinning for budget and management reports and encourage 

agencies to improve their ·underlying systems. Although improvements 

have been and are being made, much still remains to be done to produce 

formal consolidated statements that can be audited. Currently, the 

Department of the Treasury estimates certain amounts contained in the 

accompanying statements based on available data. One of the major 

improvements undertaken by the Treasury, however, has been the 

development of a new governmental accounting and reporting system 

which will facilitate the preparation of the financial statements when 

it becomes operational, primarily in the consolidation of information 

received from agencies that the Treasury has estimated for this year's 

statements. 

Treasury also intends to further improve the formats and presentation 

of the consolidated financial report. We at GAO are committed to 

achieving the goal of audited consolidated federal financial 

statements and we are working with the Treasury and the Office of 

Management and Budget to help make it a reality in the near future. 

We are particularly interested in further revisions planned for the 

formats and presentation of the statements and will work closely with 

Treasury in this endeavor. 

As with earlier reports ~f this nature, we have not audited the 

accompanying statements and accordingly, we do not e~press an opinion , .. on them. 

Charles A. Bowsher 

Comptroller General 

of the United States 

VI 
INTRODUCTION 

The reformatting of the Consolidated Financial Statements, begun in the FY 1984 report to more 

closely approximate corporate annual reports to stockholders, has been continued in the FY 1985 CFS. ·Five 

supplemental tab!es, Flow of Funds Projections, Financial Statements of the U.S. Government Restated for 

General Price-Level Changes, Effect of Individual· and Corporate Tax Benefits on Federal Revenues, 

Additions to Non-Federal Economic Resources, and Federal Facts and Figures, have been eliminated 

because these tables were derived entirely from other published reports. For the convenience of the reader, 

the sources of information for these tables have been listed at the end of the report. 

The Financial Highlights and Supplemental Tables have been prepared from data contained in the 

CFS and are intended to expand significant items in the statements. The reconciliation of accrual operating 

rAsults to the cash deficit has been augmented by the addition of a summary of cash basis receipts and 

outlays to better contrast the different results produced by each accounting method. Throughout the CFS, 

the graphic representations of data have been improved to provide a pictorial overview of data relationships 

which the user may explore in greater detail in the statements. 

''.-.; 

The detail of line items in the Statement of Financial Position is now contained in Notes to F·inancial 

Statements, and the Statement of Operations presents only expenses by agency which now mak~s .tt,e CFS 

format consistent with other Treasury reports. With the exception of the reclassification of the accrued 

actuarial liability for future social security benefit payments from a balance sheet liability to a contingent 

liability, the statements and the methodology used to prepare them remain unchanged. r .. _.; 

. I 

'1 
Financial 

Highlights 
FINANCIAL HIGHLIGHTS 

Revenues and expenses 

The following graphs show revenues and expenses for fiscal years 1975 through 1985, and the major 

categories of revenues by source and expenses by function for fiscal year 1985. These amounts, taken from 

the Statement of Operations, have been calculated on an accrual basis and differ from those. reported on the 

cash basis in other reports. The data supporting the graph of expenses by function has been estimated 

based on calculated amounts in prior years. 

TOTAL REVENUES AND TOTAL EXPENSES 

FY 1975-85 

T otol revenues 

l l OO ($ BIWONS) 

1000 

900 

800 

700 

600 

500 

400 

JOO 

200 

100 

/ 

Total expenses 

/ 

/ 

/ DEFICIT 

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 

MAJOR SOURCES OF REVENUES 

Social insurance taxe 

and contributions: 30% 

Individual income taxes: 36.9% 

ther: 7.3% 

Corporate income 

taxes: 7.9% 

Business-type operations: 18% MAJOR EXPENSES BY FUNCTION 

Interest: 16% 

National defense: 24% 

5 
••• 

Major categorie_s of assets 

· Ass.ets are resources owned by the Fede~al Government that are available to pay liabilities or provide 

public .. services in the future. The following chart is derived from the Statement of Financial Posi~ion and 

depicts the major categories of assets for FY 1985. as a percent of total assets. The components for each of 

these major categories are contained in Notes to Financial Statements. · 

MAJOR CATEGORIES OF ASSETS 

Receivables: 31 % 

Cash and monetary 

reserves: 6.2% 

Deferred charges and 

other assets: 12.5% 

Inventories: 1 7. 7% 

Total: $1,047.9 billion 

Assets, liabilities, and accumulated position 

The following graph depicts the assets, liabilities, and accumulated position reported in the Statement 

of Financial Position for fiscal years 1981 through 1985. Accumulated position, the excess of liabilities over 

assets, is shown below the base line to emphasize Federal equity claims or interests in assets. I 

TOTAL ASSETS, TOTAL LIABILITIES, 

AND ACCUMULATED POSITION 

FY 1981-85 

3500\A.'"'""""'------------------, 

3000 

2500 

2000 

1500 

1000 

500 

0 f--L ......... '-'"_-L..J........,~-----'--'-""'-'"--L-L""'m....---' .................. ----i 

-500 

-1000 

-1500 

-2000 

-2500'------------------~ 

1981 1982 1983 1984 1985 

6 
Sources and uses of funds 

The charts below have been derived from the Statement of Changes in Financial Position for FY 1985 

and show the resources provided during the period and the uses to which they were put. This statement is 

not intende~ to substitute for either the Statement of Financial Position or the Statement of Operations; 

instead, it pr~sents additional useful information not included in those reports. 

SOURCES OF FUNDS 

Taxes and other levies: 56. 9% 

Net increase in 

borrowing: 15.4% 

Other Government 

operations: 12.5% 

Depreciation: 3.1 X 

Pr9yision for accrued 

retirement and disability plans: 3.2% 

Sale. of propertv and 

equipment: 4. i % 

Increase in liabilities: 4.8% 

USES OF FUNDS 

Spending on Government 

~

rograms: 83.8% 

ncludes interest on 

he Public Debt: 13.6%) 

7 

Increase in 

receivables: 1 .8% 

Increase in deterred cnaraes 2 4w anu otner assets: . ,. 

Increase in 

inventories: 2.6% 

Purchase of propert__y and equipment: 9.5% 

j.' 

.·~ 
Consolidated 

Financial 

Statements 
United States Government Consolidated Statement 

of Financial Position as of September 30, 1985 and 1984 

Assets 1985 1984 

($ billions) 

Cash and monetary reserves (Note 2) .................................................... . 64.6 72.8 

Receivables, net of allowances for losses of $16.3 in 1985 and $11.6 in 1984 

(Note 3) ......................................................................................... . 324.4 301.4 

Inventories, at cost (Note 4) ................................................................. . 185.5 151.4 

Property and equipment, at cost less accumulated depreciation of $313.4 in 

1985 and $299.5 in 1984 (Notes 5 and 6) ............................................ . 342.7 312.1 

Deferred charges and other assets ........................................................ . 130.7 99.6 

Total ......................................................................................... . 1,047.9 937.3 

Liabilities and Accumulated Position 

Accounts payable ............................................................................... . 163.E? 161.5 

Unearned revenue ................. :-:._. ......................................................... . 41.4. 31.8 

Borrowing from the public (Note 7) ........................................................ . 1,498.8 1,299.5 

Accrued pension, retirement, and disability plans (Note 8) .......................... .. 1,252.0 1,210.3 

Social security (Note 9) ....................................................................... . 

Contingent liabilities for guarantee and insurance programs (Note 1 O) ............ . 8.7 · 3.5 

Other liabilities ................................................................................... . 103.8 58.5 

Total liabilities .............................................................................. . 3,068.3 2,765.1 

Accumulated position end of period (Note 11) .......................................... . -2,020.4 -1,827.8 

Total ......................................................................................... . 1,047.9 937.3 

The accompanying notes are an integral part of this statement. 

11 
United States Government , 

Consolidated Statement of Operations 

for. ,the Years Ended September 30, 1985 and 1984 ' .... ~ .. 

1985 

Revenues 

Levied under the Government's sovereign power 

Individual income taxes .................................................................. . 330.9 

Corporate income taxes ................................................ , ................ . 70.7 

Social insurance taxes and contributions ........................................... . 268.8 

Excise taxes ................................................................................ . 35.9 

Estate and gift taxes ..................................................................... . 6.4 

Customs duties ............................................................................ . 12.0 

Miscellaneous .............................................................................. . 10.9 

735.6 

Earned through Government business-type operations 

Sale of goods and services ............................................................ . 32.1 

Interest ...................................................................................... . 75.5 

Other ......................................................................................... . 53.9 

Total revenues ...................................................................... . 897.1 

Expenses by agency 

Legislative branch ............................................................................ . 1.2 

Judicial branch ................................................................................ . 0.7 

Executive branch 

Office of the President .................................................................. . 17.9 

Departments 

Agriculture ................................................ : .............................. . 66.5 

Commerce ............................................................................... . 2.1 

Defense .................................................................................. . 300.8 

Education ................................................................................ . 13.0 

Energy .................................................................................... . 15.6 

Health and Human Services ........................................................ . 242.3 

Housing and Urban Development .................................................. . 30.6 

Interior ... · ................................................................................. . 8.4 

Justice .................................................................................... . 3.4 

Labor ...................................................................................... . 18.5 

State ...................................................................................... . 2.3 

Transportation ........................................................................... . 39.7 

Treasury: Interest ............................ · .......................................... . 148.2 

Other ......................................................................... . 7.8 

Independent agencies ................................................................. . 170.6 

Total expenses ...................................................................... . 1,089.7 

Current period results .......................................................... . . -192.6 

The accompanying notes are an integral part of this statement. 

12 

1984 

($ billions) 

296.0 

62.3 

241.9 

37.4 

6.0 

11.4 

16.4 

671.4 

33.5 

61.0 

64.6 

830.5 

1.3 

0.7 

17.5 

50.4 

1.9 

247.2 

12.8 

13.5 

235.8 

23.4 

9.8 

3.2 

19.9 

2.2 

36.8 

129.0 

7.1 

158.3 

970.8 

-140.3 
I 

,, 

audget receipts 

United States Government 

Consolidated Statement of Receipts and Outlays 

and Reconciliation of Accrual Operating Results 

to the Cash Basis Budget 

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

Corporation income taxes ................................................................. .. 

Social insurance taxes and contributions ............................................. .. 

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

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

Customs duties ............................................................................... . 

Miscellaneous receipts ...................................................................... . 

Total budget receipts ................................................................. . 

Budget outlays 

Legislative branch ........................................................................... .. 

Judicial branch ............................................................................... .. 

Executive Office of the President ....................................................... .. 

Funds appropriated to the President .................................................... . 

Departments 

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

Commerce .................................................................................. . 

Defense ..................................................................................... . 

Education ................................................................................... . 

Energy ...................................................................................... .. 

Health and Human Services .......................................................... .. 

Housing and Urban Development .................................................... .. 

Interior ....................................................................................... . 

Justice ....................................................................................... . 

Labor ......................................................................................... . 

State ......................................................................................... . 

Transportation .............................................................................. . 

Treasury ..................................................................................... . 

Independent agencies ............................................................... : .... . 

Undistributed offsetting receipts ....................................................... . 

Total budget outlays ...................... ·.·· ......................................... . 

Total budget deficit .................................................................... . 

Total deficit of off-budget entities ................................................. . 

Total deficit .............................................................................. . 

13 

1985 1984 

($ billions) 

330.9 296.0 

61.3 56.9 

268.8 241.9 

35.9 37.4 

6.4 6.0 

12.1 11.3 

18.6 17.0 

734.0 666.5 

1.6 1.6 

1.0 0.9 

0.1 0.1 

11.3 8.5 

49.6 3i'..4 

2.1 1.9 

262.9 240.4 

16.7 15.5 

10.2 8.3 

315.6 292.3 

28.7 16.5 

4.8 5.0 

3.5 3.2 

23.9 24.5 

2.6 2.4 

25.1 24.0 

165.0 141.0 

71.1 70.7 

-59.0 -52.4 

936.8 841.8 

-202.8 -175.3 

-9.1 -10.0 

-211.9 -185.3 
Reconciliation of Accrual Operating Results 

to the Cash Basis Budget 

as of September 30; 1985 and 1984 

Expenses over revenues (current period results on accrual basis) ................. . 

Deduct: 

Net expenses of off-budget agencies ..................................... _ .............. . 

Increase in actuarial liabilities for pension, retirement," and disability plans .... . 

Depreciation ................................................................................... . 

Change in contingent liabilities for guarantee and insurance programs ........ . 

Other accrual adjustments ................................................................. . 

Add: 

Capital outlays ................................................................................ . 

Net loan disbursements .................................................................... . 

Seigniorage .................................................................................... . 

Reported budget outlays over receipts (cash basis) ................................... . 

14 

1985 1984 

($•billions) 

192.6 140.3 

12.5 10.0 

41.7 1.1 

40.1 37.8 

5.1 1.1 

24.5 24.1 

118.4 102.3 

15.2 6.3 

0.5 0.5 

202.8 175.3 
United States Government Consolidated Statement 

of Changes in Financial Position 

for the Years Ended September 30, 1985 and 1984 

1985 

Cash and monetary reserves beginning of period ...................................... . 72.8 

Sources of funds: 

Taxes and other levies ..................................................................... . 735.6 

Other Government operations ............................................................. . 161.5 

Net increase in borrowing ................................................................. . 199.4 

Depreciation ................................................................................... . 40.1 

Provision for accrued pension, retirement, and disability plans ................... . 41.6 

Sale· of property and equipment ......................................................... . 52.4 

Increase in liabilities ......................................................................... . 62.2 

Total sources of funds .................................................................. . 1,365.6 

Uses of funds: 

Spending on Government programs ..................................................... . 1,089.7 

Purchase of property and equipment ................................................... . 123.0 

Increase in receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...................................... . 23.0 

Increase in inventories ...................................................................... . 34.1 

Increase in deferred charges and other assets ...................................... . 31.2 

Total uses of funds ...................................................................... . 1,301.0 

Cash and monetary reserves end of period .............................................. . 64.6 

The accompanying notes are an integral part of this statement. 

15 

1984 

($ billions) 

79.7 

671.4 

159.1 

169.1 

37.8 

1.1 

37.6 

24.3 

1,180.1 

970.8 

99.6. 

15.5 

8.0 

13.4 

1,101.3 

72.8 
Notes to Financial 

Statements 
Notes to Financial Statements 

1. Summary of general accounting policies 

Principal financial statements.-These consist of a Statement of Financial Position, a Statement of 

Operations, and a Statement of Changes in Financial Position. Because of their developmental nature, only 

the most significant changes in format are disclosed in the Notes. 

Principles of consolidation.-The statements include the accounts of all significant agencies and 

funds included in the budget of the U.S. Government. Agencies such as the U.S. Postal Service and the 

Federal Financing Bank, classified as off-budget (not included in calculating the budget surplus or deficit), 

have also been included in the statements because they are wholly owned and are clearly within the scope 

of Government operations. Government-sponsored enterprises such as the Federal land banks are excluded 

because they are privately owned. Significant intragovernmental transactions of an identifiable nature were 

eliminated in consolidation. 

Estimates of source data.-Because actual amounts as of September 30, 1985, were not available, 

the Statement of Financial Position contains certain estimated amounts. The amounts have been estimated 

by calculating a simple average of the change in reported amounts for the fiscal year$ 1982, 1983, and 1984. 

In instances where the estimate is the basis for generating subsequent amounts (e.g., accumulated 

depreciation is derived from amounts for property and equipment), the subsequent amounts should also 

be considered estimates. 

Fiscal year.-The fiscal year of the U.S. Government ends on September 30. 

Reclassification and adjustment-For comparability, certain fiscal 1984 data are reclassified where 

appropriate to conform to the financial statement presentation for fiscal 1985. 

2. Cash and monetary reserves 

Operating cash in the Treasury .................. . 

International monetary reserves: 

Gold (monetized at the statutory price of 

$42.22 per ounce) .............................. . 

Special· drawing rights ............................ . 

U.S. reserve position in the International 

Monetary Fund ................................... . 

Other cash: 

Accountability for cash and other assets 

held outside the Treasury ..................... . 

Convertible foreign currencies (at market 

value) ............................................... . 

Other U.S. Treasury monetary assets ........... . 

Nonpurchased foreign currencies ................. . 

19 

Sept. 30, 

1985 

Sept. 30, 

1984 

($ billions) 

17.1 

11.1 

6.8 

11.7 

7.3 

8.7 

1.3 

0.6 

64.6 

30.4 

11.1 

5.6 

11.6 

6.5 

6.0 

0.9 

0.7 

72.8 
3. Receivables_ 

Accounts receivable ................................. . 

Accrued taxes receivable ........................... . 

Loans receivable ..................................... . 

Advances and prepayments ....................... . 

f ' 

Sept. 30, , . 

1985 

Sept. 30; . 1984 . 

($ billions) 

. 24.8 31.9 . 

39.6 30.2. 

253.0 

7.0 

324.4 

229.1 

10.2 

301.4 

""t' 

All receivables are shown net of reported allowances for losses. The September 30, 1985, total for 

taxes receivable represents $36.1 billion for delinquent taxes and $3.5 billion for accrued corporate taxes. 

Outstanding loans and allowances have been recorded as reported by the various lending agencies. 

The allowances for losses are presumed to be understated and they are under study. 

4. Inventories 

Goods for sale ........................................ . 

Work in process ...................................... . 

Raw materials .................... : ................. , .. . 

Materials and supplies for Government use ... . 

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

Sept. 30, 

1985 

Sept. 30, 

1984 

($ billions) 

64.5 

2.6 

17.5 

83.4 

17.5 

185.5 

35.6 

2.4 · 

15.8 

81.1 

16.5 

151.4 

Inventories include nondepreciable personal property and are stated at cost. The inventory accounts 

do not include the weapons stockpile since the extent of this inventory is classified. Totals for the 

Department of Defense for fiscal 1985 and 1984 were $129.8 billion and $109.6 billion, respectively. 

5. Property and equipment 

Land ..................................................... . 

Buildings, structures, and facilities ............... . 

Military hardware ..................................... . 

Equipment .............................................. . 

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

Leasehold improvements ........................... . 

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

Sept. 30, 

1985 

Sept. 30, 

1984 

($ billions) 

14.8 10.3 

137.0 

330.2 

88.6 

37.5 

2.2 

153.7 

350.2 

92.9 

38.4 

2.3 

3.8 5.8 

656.1 611.6 

Land is valued at the cost paid by the Government. The cost of land acquired through donation, 

exchange, bequest, forfeiture, or judicial process is estimated by the General Services Administration · at 

am~unts the Government would have paid if purchased at the date_ of acquisition. Pending the study of 

valuation methods, the Outer Continental Shelf and other offshore lands and the 655. 7 million acres of public 

domain land have not been included. 

20 

~I 

J 

1 

t 
') \ 

Buildings, structures, and facilities include all real property owned by the Federal Government except . 

land. The amounts for the Department of Defense for fiscal years 1985 and 1984 are $60.8 billion and $58.5 

billion, respectively. 

Military hardware and equipment are recorded at acquisition cost and include only depreciable 

property currently in use or in usable condition. 

6. Accumulated depreciation 

Most Government agencies do not calculate depreciation on property and equipment; therefore, 

accumulated depreciation is estimated on a straightline basis, from available information. The useful lives 

applied to each classification of asset are: 

,· 

Buildings, structures, and facilities ... : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 years 

Ships and service craft ...................................................... : . . . . . . . . 30 years 

Industrial plant equipment ................................... , ... : ............. ~ ...... : 20 years 

All other depreciable assets ........ ~.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 O years 

7. Borrowing from the public 

The amount of Federal debt outstanding is reported net of unamortized premiums and discounts. The 

amounts reported for fiscal years 1985 and 1984 reflect a reduction for intragovernmental holdings of $318.1 

billion and $264.7 billion, respectively. As of September 30, 1985, approximately 14.0 percent was held by 

foreign and international investors. 

8. Accrued pension, retirement, and disability plans 

The accounting for accrued pension, retirement, and disability plans is subject to several different 

assumptions, definitions, and methods of calculation. Each of the major plans is summarized below. 

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

Civilian employees ................................... . 

Veterans compensation ............................. . 

Federal employees compensation ................ . 

Other pension plans ................................. . 

Sept. 30, 

1985 

Sept. 30, 

1984 

($ billions) 

437.1 422.3 '> 

537.0 1 

221.8 

561.2 

223.7 

11.9 

18.1 

1,252.0 

11.3 

17.9 

1,210.3 

·· Military personnel and civilian employees: The liabilities under these two pension plans represent a 

major portion of the total unfunded liability which is to be reported under Public Law 95-595. In prior years, 

the accrued pension liabilities at September 30 represented the actuarial present value of accumulated plan 

benefits and were calculated in accordance with instructions developed jointly by the General Accounting 

Office and the Office of Management and Budget under the provisions of Public Law 95-595. 

The actuarial liabilities as of September 30, 1985, were not available for either plan and have been 

estimated in accordance with the methodology· outlined in Note 1. 

Veterans: compensation: Represents the present value of projected' annual. benefit payments. . ' \. 

Federal employees compensation: Represents estimated future costs ·for approved Federal 

Employees Compensation Act cases. 
Other annual pension reports received from plans covered by Public Law 95-595 are reported in the 

same manner as military personnel and civilian employees described above. 

9. Social security 

In prior years, a liability equalling the amortized portion of the unfunded liability for the social security 

program was included on the Statement of Financial Position. The unfunded liability is determined annually 

and the change is amortized over a 30-year period. As. of September 30, 1985, the unfunded liability for 

social security was $4,647.4 billior:, of which _$2,059.8 billion was recorded through amortization. The 

amounts for September 30, 1984, were $4,207.7 billion and $1,911.8 billion, respectively. The liability 

represents the present value of the projected excess of future benefit payments to present participants over 

the contributions still to be made by the same group and their employers 'tor the next 75 years. This liability 

has been reclassified as a contingent liability and may be found in the supplemental table, Commitments and 

Contingencies. 

The Congress and the trustees of the funds prepare estimates based on a different financing method 

they regard as more appropriate for social insurance programs. The actuarial amounts below are calculated 

on the assumption that future young workers will b·e. covered by the program as they enter the labor force. 

Actuarial liabilities ............... : .................... . 

Actuarial assets ....................................... . 

Actuarial surplus (or deficit) ........................ . 

Sept. 30, 

1985 

Sept. 30, 

1984 

($ billions) 

12,328.9 11,655.8 

12,060.1 11,693.2 

-268.8 37.4 

10. Contingent liabilities for guarantee and insurance programs I 

A number of agencies do not make any provision for estimated loss on loan guarantees and 

insurance, while others provide minimal estimates of losses. 

11. Accumulated position 

Accumulated position beginning of period ...... . 

Current period results ............................... . 

Accumulated position end of period ............. . 

Sept. 30, 

1985 

Sept. 30, 

1984 

($ billions) 

-1,827.8 -1,687.5 

-192.6 -140.3 

-2,020.4 -1,827.8 

The accumulated positions as of September 30,. 1984 and 1985, have been restated to reflect the 

elimination of the actuarial liability for future social security benefits and the associated noncash provision for 

the increase in the liability between years. 

12. Contingencies 

Several Go,vernment agencies insure businesses and individuals against various types of risks. The 

amount of insurance coverage in force, representing the maximum risk exposure to the Government, is 

$2,659.1 billion as of September 30, 1985. 

The Government also guarantees loans by non-Government enterprises to businesses and 

individuals. These guarantees become liabilities of the Government only when it is required to honor its 

guarantees. Loan guarantees in force at September 30, 1985, are $668. 7 billion. 

22 
I " 

Supplemental 

Tables 

I "' ~ •• , .- ! : .. '! ... f .I , 1•, • '.• •• 

' I 

". ,

,\. •'

I i i* 

:4 .... r> 
·" 

SUMMARY OF ACCOUNTS AND LOANS RECEIVABLE DUE FROM THE PUBLIC 

Total accounts receivable amounted to $77.2 billion in FY 1985, an increase of $13.7 billion from FY 

1984. Total loans receivable amounted to $288.1 billion in FY 1985, an increase of $27.0 billion from FY 

1985. Graphically depicted below are summaries by agency of accounts and loans receivable data. 

ACCOUNTS RECEIVABLE 

Treasury: 57.4% 

(includes IRS: 56.3%) 

ff-budget: 8% 

Agriculture: 9.1 % 

Total: $77.2 billion LOANS RECEIVABLE 

Off-budget: 57.3% 

(includes FFB: 53.3%) .,,;n?7?,-

Education: 3.9% 

·Funds appropriated to 

the President: 7 .3% 

Housing and Urban Development: 9.5% 

Total: $288.1 billion 

The Debt Collection Act of 1982 (31 U.S.C. 3719) requires the Director of the Office of Management 

and Budget, in consultation with the Secretary of the Treasury and the Comptroller General of the United 

States, to establish regulations requiring each agency with outstanding debts to prepare and transmit to 

0MB and the Treasury a report which summarizes the status of accounts and loans receivable managed by 

each agency . .These receivables result from a wide range of Federal activities including tax assessments; 

sale of Government services such as satellite launchings; sale of Government goods such as natural 

resources from Federai lands; overpayments to annuitants; and various loan programs such as student and 

housing loans. The data in the reports will enable the Federal Government to improve collection activity. 

The table which follows supports the balance.sheet receivables, "Accounts receivable" and "Loans 

receivable'' which are shown net of allowances, taxes receivable, and intragovernmental holdings. The 

information in the table is based on data submitted by Federal agencies to the Treasury and published 

annually in the Treasury Bulletin. · 

25 
Accounts and Loans Receivable By Agency 

($ bllllons) · 

Legislative branch .......................................... . 

Executive branch 

Funds appropriated to the President .............. .. 

Departments 

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

Commerce ............................................. . 

Defense ......................... · ........................ . 

Education ........................................... : ... . 

Energy .................................................. . 

Health and Human Services ...................... .. 

Housing and Urban Development ............... .. 

Interior .................................................. . 

Justice .................................................. . 

Labor .................................................... . 

State .................................................... . 

Transportation ......................................... . 

Treasury ................................................ . 

Veterans Administration ................................ . 

Other independent agencies .......................... . 

Off-budget agencies .................................... . 

Gross receivables .................................... . 

Less taxes receivable, allowances, and 

intragovernmental transfers ...................... . 

Net receivables due from the public ........... .. 

Accounts receivable 

1985 

1.0 

7.0 

0.2 

0.8 

0.4 

1.8 

2.4 

1.8 

0.4 

6.9 

44.3 

1.0 

3.0 

6.2 

77.2 

-52.4 

24.8 

1984 

0.6 

6.6 

0.7 

0.7 

0.6 

2.7 

0.9 

0.4 

10.4 

0.1 

31.0 

1.0 

2.9 

4.9 

63.5 

-31.6 

31.9 

Loans receivable 

1985 

20.9 

24.9 

0.9 

11.1 

0.6 

27.3 

0.6 

2.2 

3.2 

2.7 

28.6 

165.1 

288.1 

-35.1 

253.0 

1984 

20.5 

20.0 

0.9 

10.6 

0.7 

14.0 

0.5 

1.9 

3.3 

2.6 

29.8 

156.3 

261.1 

-32.0 

229.1 

Summary of Gross Accounts and Loans Receivable as of September 30, 1985 

Accounts Percent Loans Percent 

receivable of total receivable of Total 

Beginning balance, September 30, 1984 .............. 63.5 82.3 261.1 90.6 

New receivables ....................................... 76.6 99.2 96.7 33.6 

Repayments and reclassifications ................. -61.5 -79.7 -68.5 -23.8 

Amounts written off ................................... -1.4 -1.8 -1.2 -0.4 

'Ending balance, September 30, 1985 .................. 77.2 100.0 288.1 100.0 

Aging Schedule of Accounts and Loans Receivable as of September 30, 1985 

Not delinquent .............................................. . 

Delinquent 

1-30 days .............................................. . 

31-90 days ............................................. . 

91-180 days ........................................... . 

181-360 days .......................................... . 

Over 360 days ........................................ . 

Total delinquent ...... .-............................ . 

Noncurrent receivables .................................... . 

Total gross receivables ............................... .. 

• Less than $50 million. 

Accounts 

receivable 

31.6 

3.6 

4.5 

8.5 

7.6 

21.4 

45.6 

77.2 

26. 

Percent 

of total 

41.0 

4.6 

5.8 

11.0 

9.9 

27.7 

59.0 

100.0 

Loans Percent 

receivable of Total 

30.3 10.5 

0.3 0.1 

0.5 0.2 

0.8 0.3 

1.2 0.4 

7.1 2.4 

9.9 3.4 

247.9 86.1 --

288.1 100.0 

\,, 

.1 

I 

t 

I 
FEDERAL DEBT 

Total net borrowing from the public amounted to $1,498.8 billion in FY 1985, an increase of $199.3 

billion from FY 1984. This chart· has been presented to graphically show the increase in net borrowing from 

the public. 

NET BORROWING FROM THE PUBLIC 

WITH INTEREST EXPENSE 

FY 1975-85 

1 600 (S BIWONS) 

1400 

1200 

1000 

Net borrowing from the public Interest expense 

800 1975 ........ 32.7 

1976 ........ 46.2 

1977 ........ 41.9 

600 1978 ........ 39.2 

1979 ........ 48.9 

400 1980 ........ 59.9 

1981 ........ 78.4 

1982 ........ 97.7 

200 1983 ...... 108.4 

1984 ...... 129.0 

1985 ...... 148.2 

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 

The Federal Debt schedule which follows reflects information on the borrowing of the Federal 

Government needed to finance the Government's operations. This schedule directly supports the balance 

sheet caption, '' Borrowjng from the public,'' . which is shown net of intragovernmental holdings and 

unamortized premium or discount. lntragovernmental holdings represent that portion of the total Federal 

debt held by Federal entities, including the major trust funds. The distribution of 1985 net borrowing from the 

public by major source category is graphically depicted. 

27. 

., 

., 
Federal Debt as of September 30, 1985 

Marketable 

Bills ............................................................... . 

Notes ............................................................. . 

Bonds ............................................................ . 

Non marketable 

Foreign government series .......... : ........................ . 

Government account series ................................. . 

U.S. savings bonds ........................................... . 

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

Other 

Agency series ................................................. .. 

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

Net borrowing from the public 

Average 

Interest 

rate 

(percent) 

8.113 

11.303 

11.022 

10.146 

8.797 

7.507 

· 7.210 

5.867 

7.345 

5.615 

5.615 

Current period ............... _..,· ......... : .................... , ........................... . 

Prior period ................................................................ : .............. . 

Net increase ............................. ; ................................................ .. 

Total debt .. ,, ' 

1985 1984 

($ billions) 

375.6. 345.6 

774.8 660.5 

194.5 152.8 

1,344.9 1,158.9 

6.6 8.9 

0.9 1.0 

77.0 72.8 

64.2 41.8 

148.7 124.5 

3.2 3.4 

2.0 12.7 

5.2 16.1 

1,498.8 1,299.5 

1,299.5 1,130.4 

199.3 169.1 

NET BORROWING BY MAJOR SOURCE CATEGORY 

700 

e00 

e00 

400 

300 

200 

100 

0 

Bills Notes 

P722VZ)f 

1see 

Bonds 

KXXXXXX>4 

.J 

28 

Nonmar-ketable 

r@@@@B 

1984 

Other-

,t ••.!! 

I :.~ 

• \ . . ' ! • 

l 

I. 

I 
C.OMMITMENTS AND CONTINGENCIES •· • ,· ·,.: • < 

In FY 1985, total commitments amounted to $472.1 billion and total contingencies amounted to 

$5,448.1 billion. The charts below show the percentage distribution of 1985 commitments and contingencies 

by source category. · 

Undelivered 

orders: 97.1 % 

COMMITMENTS 

Total: $472.1 billion 

ong-term 

contro.::ts: 2. 9% 

CONTINGENT LIABILITIES 

(Maximum risk exposure) . . 

Othljr contingencies: 38.27. 

lincludes social security 

benefits: 37.87.) 

Total: $5,448.'1 billio~ 

avemment loans 

and credit 

guarantees: 12.37. 

The table that follows shows two basic types of information: the maximum potential liabilities 

(commitments) and the anticipated liabilities (contingencies) which it is reasonably certain, based on 

experience and other factors, will occur. The anticipated liabilities are the equivalent fo allowances for 

losses. 

A commitment represents an obligation to pay for goods or services upon delivery under a contractual 

arrangement. Commitments shown in the· table are represented by long-term contracts for which 

appropriations have not yet been p.rovided by the Congress, and .unde!ivered orders represent obligations of 

currently available appropriations. · · 

A contingency represents a possible exposure to a liability depending upon the outcome of uncertain 

future events or circumstances. Contingencies are stated in terms of the maximum risk exposure without 

regard to existing contingent assets which would be available to offset potential losses. The actuarial liability 

for future social security benefits, previously disclosed on the balance sheet, has been included with other 

contingencies because the probability that these payments will be be continued is high. ''Contingent 

liabilities" supports the balance sheet liability "Contingent liabilities for guarantee and insurance programs" 

and represents the anticipated liability. 

29 

p .: 
Commitments and Contingencies of the United States Government 

as of September 30, 1985 

, · ($ bllllons) 

Commitments 

Long-term contracts 

Defense .................................................................................................................. . 

General Services Administration ................................................................................... . 

Tennessee Valley Authority ......................................................................................... . 

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

Subtotal ...................................................... ·.· ........................................................ . 

Undelivered orders 

Funds appropriated to the President ............................................................................ .. 

Defense ....................................... , .......................................................................... . 

Health and Human Services ........... : ..................... : ..................... : ................................ . 

Housing and Urban Development ................. .-............................................................... . 

Transportation ................................................... : ...................................................... . 

Other agencies ......................................................................................................... . 

Off-budget agencies .................................................................................................. . 

Subtotal ............................................................................................................... . 

Total commitments .............................................................................................. . 

Contingencies 

Government loan and credit guarantees 

Housing ........................................................................................ . 

Farm ownership and rural development.. .......... , ................................... . 

Veterans benefits ............................................ _. .............................. .. 

Education ...................................................................................... . 

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

Subtotal ..................................................................................... . 

Insurance in force 

Federal Deposit Insurance Corp .......................................................... . 

Federal Savings and Loan Insurance Corp ........................................... .. 

Federal Emergency Management Agency ............................................. . 

Nuclear Regulatory Commission .......................................................... . 

National Credit Union Administration .................................................... . 

Transportation ................................................................................ . 

Other ................. · ........................................................................... . 

Subtotal ..................................................................................... . 

Unadjudicated claims 

Energy ...................................................... ·.,.: . :~: ............................. . 

Transportation ................................................................................ . 

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

Subtotal ............................................... : ..................................... . 

Other contingencies 

Veterans benefits .............................................................................. .. 

Social security benefits .............................. : ......................................... . 

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

Subtotal ..................................................................................... . 

Total contingencies .................. : ............................................... .. 

Total contingent liabilities ............................................................ .. 

• Less than $50 million. 

30 

Contingent 

llablllty 

(Max. risk 

exposure) 

426.9 

73.5 

60.3 

43.7 

64.3 

668.7 

1,400.5 

723.3 

129.1 

70.5 

103.0 

183.0 

49.7 

2,659.1 

11.3 

11.1 

15.2 

37.6 

13.9 

2,059.7 

9.1 

2,082.7 

5,448.1 

Amounts 

outstanding 

3.0 

2.9 

5.2 

2.5 

13.6 

36.9 

89.5 

. 23.2 

210.2 

34.1 

59.6 

5.0 

458.5 

472.1 

( 

Contingent 

liabilities 

0.4 

4.7 

0.4 

5.5 

2.3 

0.9 

3.2 

8.7 

l 

l 

I. 

I 

·1 
SOURCES OF DISCONTINUED TABLES 

The supplemental tables listed below have been discontinued. Data may be found in other 

Government publications as indicated. 

Flow of Funds Projections 

This table presented actual and projected cash receipts and outlays for a 5-year period and reflected 

what could happen to cash basis revenues and expenditures considering certain basic assumptions 

reflected in the budget. The information may be found in the Historical Tables, Budget of the United States 

Government, Fiscal Year 1987, Tables 2.1 and 3.3. 

Financial Statements of the U.S. Government Restated for General Price-Level Changes 

This table restated the .historical values contained in the Statement of Financial Position and 

Statement of Operations to account for changes in the general purchasing power of the dollar and provided 

comparability between years by equating all dollar values to the current level of purchasing power. The 

preparation of this information has been discontinued until the accounting profession agrees upon the utility 

of such statements and an appropriate and consistent methodology to be employed. An overview of the 

accounting-for-inflation theory as well as the current conversion factors calculated by the Bureau of Labor 

Statistics, Department of Labor, may be found in the Financial Accounting Standards Board, Statement No. 

33, Financial Reporting and Changing Prices (FAS 82 and all updates), and the Consumer Price Index for All 

Urban Consumers (CPI-U), respectively. 

Effect of Individual and Corporate Tax Benefits on Federal Revenues 

This table presented the approximate cost of tax benefits. It showed revenue losses attributed to tax 

law provisions that made allowances for income exclusions, income deferrals, exemptions or deductions 

from gross income, and special tax rates or deferrals. The information may be found inthe Special Analyses, 

Budget of the United States Government, Fiscal Year 1987, Table G-2. 

Additions to Non-Federal Economic Resources 

This 3-year table showed how the Government used its resources to add to the Nation's physical and 

human resources in order to enhance productivity and to increase the assets of private institutions or State 

and local governments. This information may be found in the Special Analyses, Budget of the United States 

Government, Fiscal Year 1987, Tables D-5, D-7, D-8, and K-2. 

Federal Facts and Figures 

This table provided benchmarks to use in making comparisons and identifying relationships between 

the financial statements and tables. Information on personal income, employment, GNP and CPI-U may be 

found in the Survey of Current Business prepared by the Bureau of Economic Analysis, U.S. Department of 

Commerce. Estimates of population may be found_in the Statistical Abstract of the United States, prepared 

by the Bureau of the Census, U.S. Department of Commerce. Gross Federal debt information may be found 

in the Treasury Bulletin, Table FD-1, prepared by Financial Management Service, Department of the 

Treasury. Information on the number of taxpayers and the amount of income taxes paid may be found in IRS 

Advanced Data, 1984 Individual Income Tax Returns, Table 1. Borrowing from the public, interest, and 

expense information may be found in the Statement of Financial Position and the Statement of Operations 

within this report. ·