August 22, 2002

PRIOR PERIOD ADJUSTMENTS

1

Occasionally, financial statements require adjustments for events that occurred in previous periods or for changes in accounting principles. 

Statement of Federal Financial Accounting Standards (SFFAS) number 7, Revenue and Other Financing Sources, addresses such changes, 

which are prior period adjustments. These changes are limited to corrections of errors and changes with retroactive effect1. The standard 

states the “...adjustments should be recognized as a change in cumulative results of operations....”1 Further, “prior period financial 

statements should not be restated for prior period adjustments recognized in the current period.” When financial statements containing 

material accounting errors are presented on a comparative basis, the auditors would have to qualify their opinion and the information is 

confusing to readers of the statements. In SFFAS number 21, Reporting Corrections of Errors and Changes in Accounting Principles, the 

Federal Accounting Standards Advisory Board (FASAB) amended its position. “...Reporting entities are required to restate prior period 

financial statements for material errors discovered in the current period, if such statements are provided for comparative purposes, and if the 

effect would be material to the financial statements of either period.”2 Prior period financial statements should not be restated for changes in 

accounting principles unless otherwise directed by the new accounting standard.

This document provides guidance for recording transactions related to adjustments of a prior period financial activity. The transactions are 

related to the following:

• Changes in accounting principle;

• Corrections of material errors requiring financial statement restatement; and,

• Corrections of non-material errors that do not require financial statement restatement.

Approved USSGL Accounts

3108 Unexpended Appropriations – Prior-Period Adjustments – Restated

5708 Expended Appropriations – Prior-Period Adjustments – Restated

5709 Expended Appropriations – Prior-Period Adjustments – Not Restated

7401 Prior-Period Adjustments - Restated

Changes to Existing USSGL Accounts

3109 Unexpended Appropriations – Prior-Period Adjustments – Not Restated

7400 Prior-Period Adjustments – Not Restated

Note: All USSGL accounts noted above crosswalk to line 2 of the current Statement of Changes in Net Position.

 

1

 SFFAS No. 7, Revenue and Other Financing Sources, paragraph no. 76

2

 SFFAS No. 21, Reporting Corrections of Errors and Changes in Accounting Principles, paragraph no. 5
August 22, 2002

PRIOR PERIOD ADJUSTMENTS

2

Pre-Closing Trial Balance – 2000:

USSGL Account Debit Credit

1010 Fund Balance w/ Treasury 10,000

1310 Accounts Receivable, Federal 2,000

2110 Accounts Payable 1,000

3100 Unexpended Appropriations 9,000

3310 Cumulative Results 0

5100 Revenue from Services Provided 2,000

5700 Expended Appropriation 1,000

6100 Operating/Program Expenses 1,000

4201 Total Actual Resources – Collected 10,000

4251 Reimbursements and Other Income

Earned Receivable 2,000

4901 Delivered Orders – Obligations, Unpaid 1,000

4450 Unapportioned Authority 11,000

Total 25,000 25,000

Post-Closing Trial Balance – 2000:

USSGL Account Debit Credit

1010 Fund Balance w/ Treasury 10,000

1310 Accounts Receivable, Federal 2,000

2110 Accounts Payable 1,000

3100 Unexpended Appropriations 9,000

3310 Cumulative Results 2,000

4201 Total Actual Resources – Collected 10,000

4251 Reimbursements and Other Income

Earned Receivable 2,000

4901 Delivered Orders – Obligations, Unpaid 1,000

4450 Unapportioned Authority 11,000

Total 24,000 24,000
August 22, 2002

PRIOR PERIOD ADJUSTMENTS

3

FY 2001:

Financial Event Accounting Transaction

Agency allots the unobligated balance

carried forward.

Dr. 4450 Unapportioned Authority 11000

 Cr. 4610 Allotment-Realized Resources 11000

Expenses were found to be

understated during FY 2000 by $ 2000.

This is material and requires

restatement.

Dr. 4610 Allotments-Realized Resources 2000

 Cr. 4981 Up Adj. of PY Undel. Orders,Obligations-Unpaid 2000

Dr. 7401 Prior Period Adjustment-Restated 2000

 Cr. 2110 Accounts Payable 2000

Dr. 3108 Unexpended Appropriations- 2000

 “Prior Period Adjustment-Restated”

 Cr. 5708 Expended Appropriations- Prior Period Adjustments-

 Restated 2000

Expenses were found to be

understated during FY 2000 by $100.

This amount is immaterial and does not

require restatement.

Dr. 4610 Allotments-Realized Resources 100

 Cr. 4981 Up Adj. Of PY Obligations-Unpaid 100

Dr. 6100 Operating/Program Expenses 100

 Cr. 2110 Accounts Payable 100

Dr. 3107 Unexpended Appropriations-Used 100

 Cr. 5700 Expended Appropriations 100

Change in accounting principle3

(Accounting principle change involves

revenue recognition only)

Dr. 4251 Reimbursements and Other Income-Rec. 200

 Cr. 4450 Unapportioned Authority 200

Dr. 1310 Accounts Receivable, Fed 200

 Cr. 7400 Prior Period Adjustments-Not Restated 200

Change in accounting principle4

(Accounting principle change involves

an adjustment to unexpended

appropriations only)

Dr. 4610 Allotments-Realized Resources 100

 Cr. 4981 Up Adj. Of PY Obligations-Unpaid 100

Dr. 3109 Unexpended Appropriations-“Prior 100

 Period Adjustments-Not Restated”

 Cr. 5709 Expended Appropriations- Prior Period Adjustments-

 Not Restated 100

Dr. 7400 Prior Period Adjustments-Not Restated 100

 Cr. 2110 Accounts Payable 100

Pre-Closing Trial Balance – 2001:

USSGL Account Debit Credit

1010 Fund Balance w/ Treasury 10,000

1310 Accounts Receivable, Federal 2,200

 

3

For illustration purposes only.

4

For illustration purposes only.
August 22, 2002

PRIOR PERIOD ADJUSTMENTS

4

2110 Accounts Payable 3,200

3100 Unexpended Appropriations 9,000

3107 Unexpended Appropriations-Used 100

3108 Unexpended Appropriations-“Prior

 Period Adjustments-Restated”

2,000

3109 Unexpended Appropriations-“Prior

 Period Adjustments-Not Restated”

100

5700 Expended Appropriations 100

5709 Expended Appropriation-Prior Period

Adjustments-Not Restated

100

3310 Cumulative Results of Operation 2,000

5708 Expended Appropriation-Prior Period

Adjustments-Restated

2,000

6100 Program/Operating Expenses 100

7400 Prior Period Adjustment-Not Restated 100

7401 Prior Period Adjustment-Restated 2,000

4201 Total Actual Resources – Collected 10,000

4251 Reimbursements and Other Income

Earned Receivable

2,200

4450 Unapportioned Authority 200

4610 Allotment-Realized Resources 8,800

4901 Delivered Orders - Obligations, Unpaid 1,000

4981 Upward Adjustment of Prior Year

Undelivered Orders - Obligations, Unpaid

2,200

Total 28,700 28,700
August 22, 2002

PRIOR PERIOD ADJUSTMENTS

5

Closing Entries

Close revenues, expenses and other

financing sources

Dr. 5708 Expended Appropriation-Restated 2000

 5709 Expended Appropriation-Restated 100

 5700 Expended Appropriation 100

 Cr. 6100 Operating/Program Expenses 100

 3310 Cumulative Results of Operations 2100

Close prior period adjustment accounts

to cumulative results of operations.

Dr. 3310 Cumulative Results of Operations 1900

Dr. 7400 Prior Period Adjustment-Not Restated 100

 Cr. 7401 Prior Period Adjustment-Restated 2000

Close prior period adjustment accounts

and unexpended appropriation used

accounts to unexpended

appropriations-cumulative.

Dr. 3100 Unexpended Appropriations 2200

 Cr. 3107 Unexpended Appropriations-Used 100

 3108 Unexpended Appropriations-“Prior

 Period Adjustments-Restated” 2000

 3109 Unexpended Appropriations-“Prior

 Period Adjustments-Not Restated” 100

Close budgetary obligation account Dr. 4981 Up Adj. Of PY Obligations-Unpaid 2200

 Cr. 4901 Delivered Orders, Obligations-Unpaid 2200

Close budgetary resource account Dr. 4610 Allotment-Realized Resources 8800

 Cr. 4450 Unapportioned Authority 8800
August 22, 2002

PRIOR PERIOD ADJUSTMENTS

6

Post-Closing Trial Balance – 2001:

USSGL Account Debit Credit

1010 Fund Balance w/ Treasury 10,000

1310 Accounts Receivable, Federal 2,200

2110 Accounts Payable 3,200

3100 Unexpended Appropriations 6,800

3310 Cumulative Results of Operation 2,200

4201 Total Actual Resources – Collected 10,000

4251 Reimbursements and Other Income

Earned Receivable

2,200

4450 Unapportioned Authority 9,000

4901 Delivered Orders, Obligations, Unpaid 3,200

Total 24,400 24,400
August 22, 2002

PRIOR PERIOD ADJUSTMENTS

7

FINANCIAL STATEMENTS

BALANCE SHEET 2001 2000 2000

(Restated)

1A1 Fund Balance with Treasury (1010E) 10,000 10,000 10,000

1A2 Accounts Receivable (1310E, Fed) 2,200 2,000 2,000

2 Total Assets 12,200 12,000 12,000

3A1 Accounts Payable (2110 E, Fed) 3,200 3,000 1,000

4 Total Liabilities 3,200 3.000 1,000

6A Unexpended Appropriations (3100E) 6,800 7,000 9,000

6B Cumulative Results of Operations (3310E) 2,200 2,000 2,000

7 Total Net Position 9,000 9,000 11,000

8 Total Liabilities and Net Position 12,200 12,000 12,000

Statement of Net Cost

1C Total Cost (6100E) 100 3,000 1,000

Less: Earned Revenue (2,000) (2,000)

4 Net Cost of Operations 100 1,000 (1,000)
August 22, 2002

PRIOR PERIOD ADJUSTMENTS

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Statement of Changes in Net Position (FY 2001)

Cum Results Unexp Approp

(3310) (3100)

1 Beginning Balances 2,000 9,000

2 Prior Period Adjustments-Restated

 (7401E, 3108E, 5708E) (2,000)

 Beginning Balances 2,000 7,000

 (After restatement)

 Prior Period Adjustments-Not Restated

 (7400E, 3109E, 5709E) 200 ( 100)

3 Beginning Balances, As adjusted 2,200 6,900

7 Appropriations Used (5700E, 3107E) 100 (100)

16 Total Financing Sources (Calc 6..15) 100 (100)

17 Net Cost of Operations 100

Ending Balances (Calc 3+16-17) 2,200 6,800
August 22, 2002

PRIOR PERIOD ADJUSTMENTS

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Statement of Changes in Net Position (2000 Restated)

Cum Results Unexp Approp

 (3310) (3100)

Beginning Balances 0 0

Prior Period Adjustments

Beginning Balances, As Adjusted 0 0

Appropriations Received (3101E) 10,000

Appropriations Used (3107/5700) 3,000 (3,000)

Total Financing Sources 3,000 (3,000)

Net Cost of Operations 1,000

Ending Balances 2,000 7,000

Statement of Changes in Net Position (2000)

Cum Results Unexp Approp

 (3310) (3100)

Beginning Balances 0 0

Prior Period Adjustments

Beginning Balances, As Adjusted 0 0

Appropriations Received 10,000

Appropriations Used 1,000 (1,000)

Total Financing Sources 1,000 9,000

Net Cost of Operations (1,000)

Ending Balances 2,000 9,000
August 22, 2002

PRIOR PERIOD ADJUSTMENTS

10

SF 133 Statement of Budget Execution and Budgetary Resources (2001)

2A Unobligated Balance, Beg. of Period 11,000

 (4201B, 4251B, 4901E)

3A2 Spending Authority from Offsetting Coll

Receivable (4251E-B) 200

7 Total Budgetary Resources 11,200

8A1 Obligations Incurred (4901E-B, 4981) 2,100

9A1 Unobligated Balance, Currently Available 8,900

(4610E)

10D Unobligated Balances Not Avail-Other 200

(4450E)

11 Total Status of Resources 11,200

12 Obligated Balance, Beg. (4251B, 4901B) (1,000)

13 Obligated Balance, Net Transfer 0

14 Obligated Balance, End

 14A Accounts Receivable (4251E) 2,200

 14D Accounts Payable (4901E) 2,000

15A Gross Disbursement 0

15B Offsetting Collections 0

Please note: The SF 133 is not restated for FY 2000.
August 22, 2002

PRIOR PERIOD ADJUSTMENTS

11

Statement of Financing (2001)

1 Obligations Incurred (4901E-B, 4981) 2,200

2 Less: Spending Authority from Offsetting

Collections (4251E-B) 200

3 Obligations Net of Offsetting Collections 2,000

16 Other Resource or Adjustments

(7400E, 7401E) (1,900)

30 Net Cost of Operations 100

Statement of Financing (2000 Restated)

1 Obligations Incurred (4901E-B, 4891E) 3,000

2 Less: Spending Authority from Offsetting

2 Less: Spending Authority from Offsetting

Collections (4251E-B) 2,000

3 Obligations Net of Offsetting Collections 1,000

16 Other Resource or Adjustments

30 Net Cost of Operations 1,000