**Reduction of Prior Year Unobligated Indefinite Borrowing Authority**

**Prior Year Adjustments (Budgetary Reporting)**

**Reduction of Prior Year Unobligated Indefinite Borrowing Authority**

**Prior Year Adjustments (Budgetary Reporting)**

**Effective Fiscal 2013**

**PREPARED BY:**

**BUREAU OF THE FISCAL SERVICE**

**Overview**

Federal agencies that have recorded indefinite borrowing authority (whether exercised or not) are directed by the following guidance: OMB Circular No. A-11 (Part 5, Section 185.32; Part 1, Section 20; Section 82; Appendix F): the 1967 Report of the President’s Commission on Budget Concepts: GAO’s 2005 “A Glossary of Terms Used in the Federal Budget Process” to reduce the amount of indefinite borrowing authority that is not needed to cover obligations by September 30th of each fiscal year.  If agencies follow the guidance, the end of year unobligated balance will be zero.  However, instances have occurred where agencies have exercised indefinite borrowing authority but failed to obligate it as of September 30th of a given fiscal year.  Therefore, this scenario was developed to direct agencies on how to reduce unobligated indefinite borrowing authority after September 30th if they have neglected to follow the policy set forth in the guidance listed within this paragraph.  

The scenario that follows illustrates the transactions and effective dates to be recorded and used to reduce the indefinite borrowing authority after September 30th of a given fiscal year.  The scenario is illustrative of a Treasury Account Symbol (TAS) that borrows from Treasury’s Bureau of the Fiscal Service (Fiscal Service).  The transactions are required by both the Department of the Treasury and Office of Management and Budget (OMB) for agencies that failed to reduce their exercised indefinite borrowing authority that is unobligated as of yearend.  The scenario assumes a 0% loan interest rate.

This scenario uses the following United States Standard General Ledger accounts:

**Listing of USSGL Accounts Used in This Scenario**

**BEGINNING TRIAL BALANCES**

1.  To record indefinite borrowing authority.

 2.  To record indefinite borrowing authority apportioned and available for allotment.

3.  To record the allotment of indefinite borrowing authority.

4.  To record the drawing of cash to fund borrowing authority from Fiscal Service and to record the establishment of loans receivable and non-custodial liability. This is accomplished via SF 1151: Nonexpenditure Transfer (NET) in the Central Accounting Reporting System (CARS) NET Borrowings system.

5.  To record a current-year undelivered order without an advance in a program subject to apportionment.

6.  To record the disbursement of loans.

**NOTE:**  Transactions # 7 and # 8 illustrate the entries that agencies should record on or before September 30th to return any unobligated indefinite borrowing authority.  These transactions are included for informational purposes only.  The remainder of the scenario assumes that these transactions did not occur.

7.  To record the reduction of unobligated balances for indefinite borrowing authority at year end. 

8.  To record the return of principal to Treasury/Fiscal Service for the $10,000 of unobligated indefinite borrowing authority.  This is accomplished via SF 1151: NET in the CARS NET Borrowings system.

**PRECLOSING ADJUSTED TRIAL BALANCES**

**Closing entries**

9.  To record the consolidation of actual net-funded resources.  

10.  To record the closing of fiscal-year borrowing authority.  

11.  To record the closing of unobligated balances to unapportioned authority for unexpired multi-year and no-year funds.

12.  To record the closing of paid delivered orders to total actual resources.  

**POST-CLOSING TRIAL BALANCES**

# Budgetary Reports

# Year 1

**Year 1**

**Year 1**

**Year 1**

**Year 1**

**Year 1**

**BEGINNING TRIAL BALANCES**

**After September 30**

If an agency appropriately recorded transactions #7 and #8, then transactions #13 and #14 would not be required to be recorded.  In the event that transactions #7 and #8 were not recorded as of September 30, then transactions #13 and #14 are required to be recorded.

13.  To record the prior-year budgetary adjustment for the return of unobligated indefinite borrowing authority.  Note:  This prior-year budgetary adjustment transaction is unique to this specific scenario.  It is required to reduce the amount of unobligated balance brought forward which was derived from indefinite borrowing authority.  Agency representatives should consult with their management and auditors for any possible impact on their agency financial statements.

14.  To record the principal repayment to Treasury/Fiscal Service for the $10,000 of unobligated indefinite borrowing authority that was converted to cash and not properly returned on or before September 30th as a current-year transaction.  This is accomplished via SF 1151: NET in the CARS NET Borrowings system.  Note:  This prior-year budgetary adjustment transaction is unique to this specific scenario.  Due to the effects of transaction #13, this additional transaction is required to reduce and align the indefinite borrowing authority exercised and converted to cash.  Agency representatives should consult with their management and auditors for any possible impact on their agency financial statements.

**PRECLOSING ADJUSTED TRIAL BALANCES**

**Closing entries**

15.  To record the consolidation of actual net-funded resources.  

16.  To record the closing of fiscal-year borrowing authority.  

**POST-CLOSING TRIAL BALANCES**

# Budgetary Reports

**Year 2**

**Year 2**

**Year 2**

**Year 2**

**Year 2**

**Year 2**

**Note:**  Budgetary and financial statement requirements for reporting differ from one another.  For budgetary reporting, materiality thresholds do not apply, whereas for financial statement reporting, materiality thresholds do apply.  Due to the immateriality of the ending balance in USSGL account 4143, it is presented on line 1490 on the Statement of Budgetary Resources and on line 1020 on the SF133/P&F.

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S2 13-012 of 27June 2013