**Non-Credit Reform Borrowings From The Department Of The Treasury**

**With Capitalized Interest**

**Non-Credit Reform Borrowings From The Department Of The Treasury**

**With Capitalized Interest**

**Effective Fiscal 2012**

**PREPARED BY:**

**UNITED STATES STANDARD GENERAL LEDGER DIVISION**

**ACCOUNTING SYSTEMS AND STANDARDS DIRECTORATE**

**GOVERNMENTWIDE ACCOUNTING**

**BUREAU of the FISCAL SERVICE**

**Overview**

The need exists for a new accounting scenario that accounts for the disposition of borrowings with capitalized interest, and achieves greater consistency in the accounting and reporting for non-credit reform agencies that borrow from the Bureau of the Fiscal Service (Fiscal Service) and must borrow to repay interest. This is particularly the situation for the following non-credit reform agencies:  the Bureau of the Fiscal Service (Fiscal Service), the Federal Financing Bank (FFB), the Commodity Credit Corporation, and the Department of Homeland Security (FEMA). 

This scenario illustrates the proper mechanisms that should be used in the capitalization of interest process, namely, the Governmentwide Accounting (GWA) Non-Expenditure Transfer (NET) Borrowings application for borrowings and repayments, and the Intagovernmental Payment and Collection system (IPAC) for regular interest payments. Because capitalized interest takes on the characteristics of loan principal and is tracked separately from regular interest on loans receivable, a GWA NET transaction is used to borrow to pay the interest, an IPAC transaction is used to pay the interest, and a GWA NET transaction is used to repay the capitalized interest.

The scenario that follows illustrates transactions to be recorded for the disposition of borrowings for capitalized interest. The scenario is illustrative of a non-credit reform Treasury Account Symbol (TAS) with mandatory borrowing authority that borrows from the Fiscal Service. The Fiscal Service TAS involved is a General Fund Receipt Account (GFRA).

This scenario follows USSGL TFM S2 11-02 (September 2011), Part 2: Fiscal 2012 Reporting.

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

**BEGINNING TRIAL BALANCES**

1.To record borrowing authority, and anticipated collections from non-Federal sources.

2.To record budget authority apportioned and available for allotment ($10,500), and budget authority apportioned but not available for use until realized ($5,000).

3.To record the allotment of authority.

4.To record the drawing of cash to fund borrowing authority from the Fiscal Service, and to record the establishment of loans receivable and a non-custodial liability. This is accomplished via SF 1151: Nonexpenditure Transfer in the GWA NET Borrowings system.

5.To record the accrual of interest expenses incurred by the Non-Credit Reform TAS, and to record the accrual of interest revenue associated with USSGL account 2985 that is to be collected by the Bureau of the Fiscal Service and deposited directly into a Treasury Account Symbol that does not have budget authority. 

6.To record the drawing of cash to fund borrowing authority from the Fiscal Service in order to pay interest in Transaction #7, since the  Non-Credit Reform TAS is unable to make the interest payment. The receivable/payable is established as capitalized loan interest. This is accomplished via SF 1151: Nonexpenditure transfer in the GWA NET Borrowings system.

7.To record the payment of accrued interest related to the payable and receivable established in transaction #5, pertaining to the amount borrowed in transaction #4. This is accomplished via IPAC.

8.To record the accrual of interest expenses incurred (Non-Credit Reform TAS), and accrued revenue from Federal sources (Fiscal Service). This represents interest expense pertaining to the amount borrowed in transaction #6.

9.To record the repayment of capitalized loan interest (principal), at par, from the borrowing established in transaction #6. This is accomplished via SF 1151: Nonexpenditure Transfer in the GWA NET Borrowings system.

10.To record the receipt of previously anticipated collections, and the realization of previously anticipated and apportioned authority. 

11.To record the repayment of principal on the original borrowing (non-capitalized), the related payment of interest, and the possible gain or loss resulting from the early repayment of the loan. The total amount of fund balance (USSGL 1010) moved from the Non-Credit Reform TAS to repay the loan is $11,100. That amount is credited directly to a GFR account by Fiscal   

            Service.

11a.To record the principal repayment of the loan to the Fiscal Service for the original borrowing established in transaction #4. This is accomplished via SF 1151: Nonexpenditure Transfer in the GWA NET Borrowings system.

11b.To record the payment of accrued interest payable/receivable. This regular interest payment is accomplished via IPAC.

11c.To record a loss for the Non-Credit Reform TAS and a gain for Fiscal Service. This is accomplished via IPAC. (A gain or loss results, for example, when repayments are made prior to maturity.)

11d.To record a gain for the Non-Credit Reform TAS and a gain for Fiscal Service. This is accomplished via IPAC. (A gain or loss results, for example, when repayments are made prior to maturity.)

**(NOTE**: Transaction #11d is included here for illustrative purposes only, in the event of a resulting gain.)

12.To record adjustments for anticipated resources not realized. 

**PRECLOSING ADJUSTED TRIAL BALANCES**

**Closing entries**

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

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

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

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

17.To record the closing of revenues and expenses to cumulative results of operations. 

18.To record the closing of gains, losses and miscellaneous items into cumulative results of operations. 

**POST-CLOSING TRIAL BALANCES**

# Budgetary Reports

� The amount of fund balance (USSGL 1010) that is moved from the Non-Credit Reform TAS to repay the loan is $11,100. That amount is credited directly to a GFR account.

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