###### FINAL DRAFT GUIDE FOR BASIC ACCOUNTING AND REPORTING

**FOR LOAN GUARANTEE PROGRAMS**

**WITHOUT COLLATERAL**

**IN FEDERAL CREDIT PROGRAM**

**March 2013**

**PREPARED BY:**

**CREDIT REFORM SUBCOMMITEE AND**

**UNITED STATES STANDARD GENERAL LEDGER ADVISORY DIVISION**

**GOVERNMENTWIDE ACCOUNTING**

**FINANCIAL MANAGEMENT SERVICE**

**U.S. DEPARTMENT OF TREASURY**

## TABLE OF CONTENTS

3OVERVIEW

6CONCEPTUAL FRAMEWORK

7ACCOUNT TABLES

15TRANSACTIONS YEAR 1

34FINANCIAL STATEMENTS YEAR 1

45TRANSACTIONS YEAR 2

70FINANCIAL STATEMENTS YEAR 2

83APPENDIX 1:  ACCOUNTING FOR MANDATORY LOAN GUARANTEE PROGRAMS

89APPENDIX 2:  ACCOUNTING FOR DOWNWARD RE-ESTIMATESIN DISCRETIONARY AND MANDATORY LOAN GUARANTEE PROGRAMS

90APPENDIX 3: REFERENCES

# Version History

# OVERVIEW

This guide is designed for those who:

· Formulate and execute Federal credit program budgets, including accounting for assets, liabilities, net position, income, and expenses, and budgetary resources;

· Prepare agency financial statements;

· Audit the agency financial statements;

· Manage or provide service to participants in loan guarantee programs;

· Design and maintain computer systems for financial programs;

· Instruct others in basic accounting and reporting for loan guarantee programs without collateral.

The guide is illustrative, rather than authoritative, and is categorized as “other accounting literature” in the hierarchy of accounting principles for Federal entities.  It supersedes the original and subsequent loan guarantee scenarios.  Users may download the guide from the Financial Management Service (FMS) Web site at www.fms.treas.gov/ussgl.

In order to understand and gain the most from the guide, users must have a working knowledge of the following:

· Budgetary and proprietary accounting, reporting, and terminology;

· The United States Government Standard General Ledger (USSGL) accounts for basic annual operating appropriations and revolving funds; and

· The Credit Reform Act and other requirements established by the Act; 

· The concepts of Federal credit program accounting and reporting, fund structures, and terminology.  

This guide is a study in accounting and reporting for a discretionary loan guarantee program under the Federal Credit Reform Act of 1990, as amended, for loan guarantees obligated after September 30, 1991.  Loan guarantees are any guarantee, insurance, or other pledge for the payment of all or a part of the principal or interest on any debt obligation of a non-Federal borrower to a non-Federal lender, except for the insurance of deposits, shares, or other withdrawals in financial institutions.  Loans that are financed by the Federal Financing Board pursuant to agency loan guarantee authority are treated as direct loans rather than loan guarantees.  

Transactions are presented over a 3-year period for a fictitious Federal agency with a single annual loan guarantee program with no risk categories.  Transactions for fiscal year 2 show the disposition of the upward re-estimated subsidy accrued in fiscal year 1, as well as additional transactions to demonstrate the use of cohorts, borrowing authority, negative subsidy rates, and interest accruals in relation to inter-governmental eliminations and downward re-estimates.  Transactions for fiscal year 3 show the disposition of the downward re-estimated subsidy accrued in fiscal year 2 and repayment of debt.  Common transactions and reports are covered in addition to transactions unique to Federal credit program accounting.  However, since accounting for certain accruals and undelivered orders with advances are not unique to credit reform accounting, they are not presented.  In addition, transactions involving collateral are excluded, since they are covered in a separate guide.  Entries are made in general journal form, using USSGL accounts, and are summarized in trial balances for each year.  

The transactions covered are:

· Formulation, apportionment, and allotment of the budget;

· Receipt of subsidy and administrative expense appropriations;

· Payment of administrative expenses;

· Commitment to make loan guarantees;

· Transfer of subsidy from the program to the financing fund;

· Transfer of negative subsidy from the financing fund to the general fund

· Collection of guarantee fees;

· Payment of interest supplements;

· Payment of default claims

· Assuming defaulted guaranteed loans and interest for direct collection

· Collection of loan principal and interest on defaulted guaranteed loans;

· Modification of guarantee terms, with resulting adjustment to program level;

· Collection of interest from Treasury;

· Accrual of interest from borrowers;

· Accrual of inter-governmental interest;

· Write-off of bad debts without receiving collateral;

· Recording the interest accumulation factor on the loan guarantee liability and loan assets;

· Recording of data on guaranteed loans supplied by third-party lenders;

· Accrual, receipt and disbursement of upward and downward subsidy re-estimates and related interest; and

· Closing entries.

While financing funds may borrow money if there is not enough Fund Balance With Treasury to meet requirements for disbursements, in general, financing funds obtain money for disbursements primarily from:

· Offsetting collections, including those from the program fund (for basic and upward re-estimated subsidy);

· Treasury (for interest); and

· Non-Federal sources (such as guarantee fees from program participants or collections of defaulted guaranteed loan principal and interest from borrowers). 

The yearend agency reports are listed below:

· Balance Sheet;

· Statement of Net Cost;

· Statement of Changes in Net Position;

· Statement of Budgetary Resources;

· FMS 2108:  Yearend Closing Statement;

· Financing Footnote

· Fund Balance with Treasury Footnote

· Program and Financing Schedule; and

· Credit Program Footnote (including the Schedule of Changes in the Allowance for Subsidy).

An SF 132:  Apportionment and Reapportionment Schedule report is furnished at the beginning of each year. These SF132s represent single year funding of subsidy.  

This guide includes three appendices.  Appendix 1 discusses basic differences encountered in mandatory programs.  Appendix 2 provides examples and differences encountered in multi-year and no-year funding of subsidy.  Appendix 3 provides a listing of key references related to credit program accounting.  If the references change, this document will be updated accordingly and published on the FMS Web site at www.fms.treas.gov/ussgl.  

Users may send questions to the FMS Web site at www.fms.treas.gov/ussgl/form-issues.html by using the online USSGL Issue Form.  This Web site also provides a list of the USSGL representatives and their telephone numbers.  

# CONCEPTUAL FRAMEWORK

This guide uses numbers and titles for USSGL accounts.  When necessary, titles for USSGL accounts are expanded by using brackets to capture, clarify, or add specific information, for illustrative purposes only. For example, administrative expense, “[Administrative Expense]” is included after the title for USSGL 610000 account, “Operating Expenses/Program Costs.” In the same manner, for interest supplement expense, “[Interest Supplement],” is included after the title for the USSGL 610000 account.  The USSGL Supplement, Section II, contains definitions for USSGL accounts.

Entries are in general journal form, using USSGL accounts, and are summarized in trial balances for each year. Note that the financing fund is used only in the transactions for Post-Credit Reform scenarios, and the liquidating fund is used only in the transactions for Pre-Credit Reform scenarios.

USSGL accounts that, by themselves, do not directly provide the reporting that is illustrated, are supplemented with additional detail. The entries made and the method chosen to illustrate the detail provide only one-way of accounting. Agencies may have other ways of structuring their ledgers and making journal entries to accomplish the same result.

# ACCOUNT TABLES

The following tables identify the accounts used in the guide to record transactions and prepare reports.  Since the transactions are not comprehensive, the tables do not contain all accounts that agencies may use in day-to-day activities.

**LOAN GUARANTEE PROGRAMS**

**FISCAL YEAR 1**

The loan guarantee Agency has been authorized to guarantee loans beginning in fiscal year 1.  It has authority to guarantee 80 percent of the principal and related interest of $100,000 in loans.  The agency has a single, discretionary loan guarantee program with no risk categories. For fiscal year 1, Congress has authorized annual appropriations for basic subsidy, modified subsidy, and administrative expenses and provided that the program is subject to the Credit Reform Act of 1990, as amended.

## TRANSACTIONS TO BE RECORDED

1. The agency’s subsidy model indicated that, for the $100,000 of loan guarantees, a 21.5 

percent subsidy was indicated as follows: 

•Present value of expected defaults is 20 percent, or $20,000;

•Present value of guarantee fees to be collected is (.5) percent or $500 (all anticipated this year), and

•Present value of interest supplements to be paid to third-party lenders as loans are guaranteed, to buy down interest rates, is 2 percent or $2,000.  

2. The agency has appropriated administrative expenses for fiscal year 1 in the amount of $5,000.  

3. The agency estimates the following financing fund collections for the year:

•$21,500 of subsidy from the program fund;

•$1,200 of interest from Treasury on unused balances in the financing fund; 

•$510 for program participants for guarantee fees; and

•$50 for principal and $200 for interest on defaulted guaranteed loans.

4. The agency expects to use financing fund resources as follows:

•$3,500 for payment of default claims (80% Guarantee of $4,375 Default); and 

•$2,000 for payment of interest supplements.

Based on the above information the agency has prepared the following requests for apportionment:

# Loan Guarantee Agency

**SF 132 Apportionment/Reapportionment Schedule**

###### Fiscal Year 1

**Budgetary Resources****Program Fund  Financing Fund**

**Budget authority:**

1100   Appropriations          26,500

1840   Anticipated for rest of year without advance           23,460

1920   Total budgetary resources         26,50023,460

**Application of Budgetary Resources**

Budget authority:

Category B:

6011   Direct loan subsidy        21,500

6012   Defaults3,500

6013   Administrative expense        5,000

6014   Interest supplements2,000

6182   Unapportioned balance of revolving fund       17,960

6190   Total budgetary resources      26,50023,460

8100Program Level, Current Year100,000

8211Guarantee Loan Program100,000

# TRANSACTIONS YEAR 1

1-1. **To record enactment of appropriation.***(TC A104, A140, G102)*

*Program Fund*

411500 Loan Subsidy Appropriation21,500

411700 Loan Administrative Expense Appropriation5,000

    445000 Unapportioned Authority26,500

101000 Fund Balance With Treasury26,500

    310100 Unexpended Appropriations – Appropriations Received26,500

##### Financing Fund

406000 Anticipated Collections from Non-Federal Sources760

407000 Anticipated Collections from Federal Sources22,700

    445000 Unapportioned Authority23,460

##### Memorandum Accounts - Loan Guarantee Level

801000 Guaranteed Loan Level100,000

    801500 Guaranteed Loan Level - Unapportioned100,000

1-2. **OMB approved the agency’s request for apportionment, and the agency recorded the apportionment.***(TC A116, A118R, G104)*

##### Program Fund

445000 Unapportioned Authority26,500

    451000 Apportionments26,500

##### Financing Fund

445000 Unapportioned Authority5,500

    459000 Apportionments - Anticipated Resources                                                      5,500- Programs Subject to Apportionments

##### Memorandum Accounts - Loan Guarantee Level  

#### 801500 Guaranteed Loan Level - Unapportioned100,000

    802000 Guaranteed Loan Level - Apportioned100,000

**1-3 Issued a blanket authorization to allot anticipated resources as they were realized, not to exceed the amount of the apportionment**.  *(TC A120)*

*Program Fund*

451000 Apportionments    26,500

    461000 Allotments - Realized Resources26,500

*Financing Fund*

None (there are no realized resources to allot.  All resources are anticipated.)

**1-4. The agency paid administrative expenses of $4,950.  It placed no undelivered orders nor made accruals before payment.***(TC B106, B134)*

*Program Fund*

461000 Allotments - Realized Resources4,950

   490200 Delivered Orders – Obligations, Paid [Other]4,950

610000 Operating Expenses/Program Costs [Administrative Expenses]4,950

    101000 Fund Balance With Treasury4,950

310700 Unexpended Appropriations - Used4,950

    570000 Expended Appropriations4,950

**1-5 The agency agreed to make $90,000 in guarantees, subject to the third-party lenders and their borrowers meeting conditions placed on them.***(TC B306, C101, A122, G106)*

**Obligated subsidy to be transferred to financing fund.**

*Program Fund*

461000 Allotments - Realized Resources19,350

######     480100 Undelivered Orders – Obligations, Unpaid19,350

**To recognize the subsidy to be transferred from the program fund.**

##### Financing Fund

422100 Unfilled Customer Orders Without Advance  19,350

    407000 Anticipated Collections From Federal Sources19,350

**To record allotment of realized subsidy.**

459000 Apportionments - Anticipated Resources    5,500              - Programs Subject to Apportionments

    461000 Allotments - Realized Resources5,500

*Memorandum Accounts - Loan Guarantee Level*

802000 Guaranteed Loan Level – Apportioned90,000

   804000 Guaranteed Loan Level – Used Authority90,000

**1-6.  Third-party lenders disbursed $87,000 of the guaranteed loans, and the agency transferred subsidy from the program to the financing fund.***(A146, B134, C103, G108)*

**To record payment of subsidy to financing fund.**

*Program Fund*

480100 Undelivered Orders – Obligations, Unpaid18,705

   490200 Delivered Orders – Obligations, Paid [Other]18,705

#### 610000 Operating Expenses/Program Costs

####           [Basic and Modified Subsidy Expense]18,705

    101000 Fund Balance With Treasury18,705

310700 Unexpended Appropriations - Used18,705

    57000 Expended Appropriations18,705

*Financing Fund*

427100 Actual Program Fund Subsidy Collected18,705

######    422100 Unfilled Customer Orders Without Advance18,705

#### 101000 Fund Balance With Treasury18,705

   218000 Loan Guarantee Liability18,705

*Memorandum Accounts - Loans Disbursed*

805000 Guaranteed Loan Principal Outstanding87,000

   805300 Guaranteed Loan New Loan Disbursements by Lender87,000

**1-7.  The agency collected fees of $480 from the program participants as a condition of making the guarantees.**(C117)

**To record collection of fees.**

*Financing Fund*

#### 426100 Actual Collection of Business-Type Fees480

######    406000 Anticipated Collections from Non-Federal Sources480

101000 Fund Balance With Treasury480

   218000 Loan Guarantee Liability480

**1-8.  The agency paid interest supplements of $1,940 to the third party-lenders.  It had made no previous accrual.**(TC B104)

*Financing Fund*

#### 461000 Allotments - Realized Resources1,940

490200 Delivered Orders – Obligations, Paid [Other]1,940

218000 Loan Guarantee Liability1,940

   101000 Fund Balance With Treasury1,940

********Though separated here for purposes of illustration, agencies would normally record transactions 1-6 - 1-8 simultaneously.*********

**1-9.  The agency paid third-party lender claims of $3,500 to honor 80% guarantee of $4,375 of defaulted loan principal.***(B104, G110)*

##### Financing Fund

461000 Allotments – Realized Resources3,500

   490200 Delivered Orders – Obligations, Paid [Other]3,500

#### 218000 Loan Guarantee Liability3,500

   101000 Fund Balance with Treasury3,500

*Memorandum Accounts - Loans Disbursed*

#### 806500 Guaranteed Loan Collections, Defaults, and Adjustments4,375

   805000 Guaranteed Loan Principal Outstanding4,375

**1-10.  The agency acquired receivables for loans of $3,500 and interest of $1,250 in conjunction with the defaults.  The agency will attempt to collect this money directly from the borrowers.  The present value of cash flows related to the loans is estimated to be $3,000.***(TC C428)*

**To establish accounts receivable for defaulted loan.**

*Financing Fund*

134100 Interest Receivable -Loans [Defaulted Guaranteed Loans]1,250

135000 Loans Receivable [Defaulted Guaranteed Loans]3,500

   139900 Allow. for Subs. [Defaulted Guaranteed Loans]1,750

   218000 Loan Guarantee Liability3,000

*** * * * * Though separated here for illustrative purposes, agencies would normally record transactions 1-9 and 1-10 simultaneously.  * * * * ***

**1-11.  The agency collected principal of $40 and interest of $200 were collected on the loans acquired in transaction 1-10.***(TC C109)*

*Financing Fund*

426200 Actual Collection of Loan Principal40

426300 Actual Collection of Loan Interest200

   406000 Anticipated Collections From Non-federal Sources240

101000 Fund Balance With Treasury240

       134100 Interest Receivable - Loans [Defaulted Guaranteed Loans]200

   135000 Loans Receivable [Defaulted Guaranteed]40

**1-12. After consultation and agreement with OMB, the agency decided to exercise a clause in the program’s legislation allowing it to modify the terms of some of the guarantees because of economic downtrends, reducing the present value of those guarantees by $1,000.****The agency transferred $1,000 from the program fund to the financing fund and reduced the authorized loan guarantee level from $100,000 to $95,349.****The agency also calculated a modification adjustment transfer of $10.**

**The agency submitted a new request for apportionment (SF-132) for the financing fund, showing the reduced loan guarantee level, and OMB approved it., Since the agency had already apportioned subsidy monies in the program fund, a new request for apportionment of program fund resources is not required.**

**Loan Guarantee Agency**

**SF 132 Apportionment/Reapportionment Schedule**

**Fiscal Year 1**

**1-12.  Transactions for 1–12***(A102, A202, A204, B106, B134, C103, G102R & G104R)*

**To transfer funds to financing funds for modification.**

*Program Fund*

#### 461000 Allotments - Realized Resources1,000

   490200 Delivered Orders – Obligations, Paid [Other]1,000

610000 Operating Expenses/Program Costs

[Basic and Modified Subsidy Expense]1,000

   101000 Fund Balance With Treasury1,000

310700 Unexpended Appropriations - Used1,000

    570000 Expended Appropriations1,000

**To record new SF132 entry**

*Financing Fund*

412000 Anticipated Indefinite Appropriation      10

  445000 Unapportioned Authority     10

**To record warrant received for modification adjustment transfer**

*Program Fund*

729000 Other Losses

    57910000 Adjustment to Financing Sources – Credit Reform

*Financing Fund*

412500 Loan Modification Adjustment Transfer      10

  412000 Anticipated Indefinite Appropriation     10

101000 Fund Balance with Treasury     10

  310100 Unexpended Appropriations - Received     10

579100 Adjustment to Financing Sources – Credit Reform     10

  218000 Loan Guarantee Liability     10

310700 Unexpended Appropriations – Used     10

   570000 Expended Appropriations     10

**To record collection from program fund.**

*Financing Fund*

427100 Actual Program Fund Subsidy Collected1,000

   407000 Anticipated Collections From Federal Sources1,000

101000 Fund Balance With Treasury1,000

    218000 Loan Guarantee Liability1,000

*Memorandum Accounts - Loan Guarantee Level*

802000 Loan Guarantee Level - Apportioned4,651

   801000 Guaranteed Loan Level4,651

**1-13.  Treasury credited $1,160 to the financing fund for interest the fund earned on its unused Fund Balance With Treasury during the year.**(C109)

*Financing Fund*

427300 Interest Collected From Treasury1,160

   407000 Anticipated Collections from Federal Sources1,160

101000 Fund Balance With Treasury1,160

   531200 Interest Revenue – Loans Receivable/Uninvested Funds 1,160

**1-14.  The agency accrued loan interest of $5 on the defaulted guaranteed loan principal***.  (C435)*

*Financing Fund*

134100 Interest Receivable- Loans [Defaulted Guaranteed Loans]5

   139900 Allowance for Subsidy5

**1-15.  The agency determined that it could not collect $10 of loan principal and $20 of loan interest and wrote off the receivables.*******(D414)*

##### Financing Fund

139900 Allow. for Subsidy [Defaulted Guar. Loan Assets30

   134100 Interest Receivable -Loans20

   135000 Loans Receivable [Defaulted Guaranteed]10

**1-16.  The agency accrued interest of $1,180 on its loan guarantee liability and $20 on the present value of its loans.  *Note:  The interest accumulation factor must net to the amount of interest income received from Treasury–$1,160 (see transaction 1-13).****(E118 and E122)*

*Financing Fund*

139900 Allowance for Subs. [Defaulted Guar. Loan Assets]    20

   531300 Interest Revenue – Subsidy Amortization     20

634000 Interest Exp Accrual on Liability for Loan Guarantee 1,180

   218000 Loan Guarantee Liability1,180

**1-17.  Third-party lenders reported that they had collected $10,000 on guaranteed loans in the cohort.***(G110)*

*Memorandum Accounts for Loans Disbursed*

806500 Guaranteed Loan Collections, Defaults, and Adjustments10,000

  805000 Guaranteed Loan Principal Outstanding10,000

**1-18.  At year-end the agency determined that an upward subsidy expense re-estimate related to the loan guarantee liability of $23 was required.  Since the loans were over 90% disbursed an interest rate re-estimate is required as well as a technical re-estimate.  The breakdown was as follows:***(B420, C438)*

Interest Rate Reestimate (13)

Technical Reestimate 33

Interest on Technical Reestimate   3

Total Reestimate23

*Program Fund*

680000 Future Funded Expenses

[Subsidy Expense - Re-estimates – Technical]36

   217000 Subsidy Payable to Financing Account23

   680000 Future Funded Expenses

[Subsidy Expense - Re-estimates - Interest Rate]13

*Financing Fund*

#### 131000 Accounts Receivable

[Subsidy Receivable from Program Fund]23

139900 Allow. for Subs. [Defaulted Guar. Loans Rec.]  7

   218000 Loan Guarantee Liability30

In requesting SF132 and in President’s budget the Interest Rate Re-estimate and Technical Re-estimate are added together.  If this amount is positive in total, it is an upward re-estimate.  The interest is looked at by itself and includes any financing account adjustments.  If this amount is positive in total, it is an upward re-estimate.  If either of the pieces are negative, that piece is a downward re-estimate (See year 2 for downward re-estimate entries)

**PRE-CLOSING ENTRIES**

**To close anticipated resources***(TC F112)*

*Financing Fund Budgetary*

#### 4450 Unapportioned Authority1,230

   4060 Anticipated Collections from Non-Federal Sources     40

   4070 Anticipated Collections from Federal Sources1,190

## FISCAL YEAR 1 PRE-CLOSING TRIAL BALANCE

## 

## FISCAL YEAR 1 PRE-CLOSING TRIAL BALANCE (Continued)

## FISCAL YEAR 1 PRE-CLOSING TRIAL BALANCE (Continued)

*Loan Guarantee Level (Financing Fund Only)*

*Memorandum AccountsDr./(Cr.)*

801000$95,349

801500           0

802000  (5,349)

804000(90,000)

804500           0

**$         0**

*Loans Disbursed (Financing Fund Only)*

*Memorandum AccountsDr./(Cr.)*

805000$72,625

  805300   (87,000)

 806500   14,375

 807000             0

**$           0**

**1-19 The agency made closing entries.**

*Program Fund Budgetary*

To consolidate net cash resources *(F302, F314)*

490200 Delivered Orders – Obligations, Paid24,655

420100 Total Actual Resources – Collected  1,845

   411500 Loan Subsidy Appropriation21,500

   411700 Loan Administrative Expense Appropriation  5,000

To close unobligated authority *(F312)*

#### 461000 Allotments - Realized Resources  1,200

   465000 Allotments - Expired Authority  1,200

*Program Fund Proprietary*

To close financing sources and expenses (*F336)*

570000 Expended Appropriations 24,655

579100 Adjustments to Financing Sources       10

331000 Cumulative Results of Operations       23

#### 680000 Future Funded Expenses

[Re-estimated Subsidy Expense - Interest Rate]       13

   610000 Operating Expenses/Program Costs

    [Administrative Expenses]  4,950

   610000 Operating Expenses/Program Costs

   [Basic and Modified Subsidy Expense]19,705

   680000 Future Funded Expenses

   [Re-estimated Subsidy Expense – Technical]       36

   729000 Other Losses       10

To consolidate unexpended appropriations (*F342)*

310100 Unexpended Appropriations – App. Received26,500

   310000 Unexpended Appropriations - Cumulative  1,845

   310700 Unexpended Appropriations - Used24,655

*Financing Fund Budgetary*

To consolidate net cash resources *(F302, F314)*

490200 Delivered Orders – Obligations, Paid  5,440

420100 Total  Actual Resources - Collected            16,145

   426100 Actual Collection of Business-Type Fees     480

   426200 Actual Collection of Loan Principal       40

   426300 Actual Collection of Loan Interest     200

   427100 Actual Program Fund Subsidy Collected19,705

   427300 Interest Collected From Treasury  1,160

To close unobligated authority *(F308)*

461000 Allotments - Realized Resources          60

   445000 Unapportioned Authority            60

*Financing Fund Proprietary*

To close financing sources and expenses *(F336)*

531200 Interest Revenue – 

#### Loans Receivable/Uninvested Funds  [Treasury]            1,160

531300 Interest Revenue – Subsidy Amortization   20

570000 Expended Appropriations                10

   634000 Interest Exp Accrual on Liability for Loan Guarantee

[Interest Accumulation Factor on PV of LGL]  1,180

  579100 Adjustments to Financing Sources                  10

To consolidate unexpeneded appropriations *(F342)*

310100 Unexpended Appropriations – Appropriations Received10

310700 Unexpended Appropriations – Used           10

*Memorandum Accounts - Loan Guarantee Level (F346, F352)*

802000 Guaranteed Loan Level - Apportioned  5,349

   804500 Guaranteed Loan Level - Unused Authority  5,349

804500 Guaranteed Loan Level – Unused Authority  5,349

    801000 Guaranteed Loan Level             5,349

*Memorandum Accounts - Loans Disbursed (F348R & F350R)*

805300 Guaranteed Loans New Disbursements by Lenders87,000

   807000 Guaranteed Loan Cumulative.  Disbursements by Lenders            87,000

807000 Guaranteed Loan Cumulative.  Disbursements by Lenders14,375

   806500 Guaranteed Loans Collections, Defaults, and Adjustments            14,375

## YEAR 1 POST-CLOSING TRIAL BALANCE

**AccountsProgram FundFinancing Fund**

*Budgetary**Dr./(Cr.)Dr./(Cr.)*

411500$        0   N/A

420100   1,84516,155

422100     N/A     645

445000          0          (16,800)

465000  (1,200)   N/A

480100     (645)         0

**$         0****$       0**

**AccountsProgram FundFinancing Fund**

*Proprietary**Dr./(Cr.)Dr./(Cr.)*

101000$  1,845$16,155

131000[Subs. Recv.]     N/A         23

134100     N/A    1,035

135000     N/A    3,450

139900     N/A  (1,698)

217000      (23)     N/A

218000      N/A(18,965)

310000  (1,845)     N/A

331000         23           0

**$         0****$         0**

**YEAR 1 POST-CLOSING TRIAL BALANCE (Continued)**

*Loan Guarantee Level (Financing Fund Only)*

*Memorandum AccountsDr./(Cr.)*

801000$90,000

801500           0

802000           0

804000(90,000)

     804500                0

 $         0

*Loans Disbursed (Financing Fund Only)*

*Memorandum AccountsDr./(Cr.)*

805000$72,625

805300                0

      806500                   0

  807000   (72,625)

    $    0

# FINANCIAL STATEMENTS YEAR 1

**Loan Guarantee Agency**

**Balance Sheet**

**September 30, FY-1**

**Loan Guarantee Agency**

**Statement of Net Cost**

**for Fiscal Year Ended September 30, FY-1**

**Loan Guarantee Agency**

**Statement of Changes in Net Position**

**for Fiscal Year Ended September 30, FY-1**

## Loan Guarantee Agency

**Statement of Budgetary Resources**

**for Fiscal Year Ended September 30, FY-1**

            Non-budgetary

BudgetaryFinancing AccountTotal

**Budgetary Resources**

1290 Appropriations (411500E,411700E,                

412500E)  26,500        1026,510

1890  Spending authority from 

     offsetting collections (426100,426200,

       426300,427100,427300,422100E-422100B)  22,23022,230

1910  Total resources                           $26,500$22,240$48,740

###### Status of Budgetary Resources

2190  Obligation incurred (480100E-480100B,

       490100E-490100B, 490200E)             25,300                5,440             30,740

2204  Apportioned (461000E)                                   1,200                                 60   1,260

2404 Unapportioned (445000E)                          16,74016,740

2500   Total status of resources           $26,500$22,240           $48,740

**Change in Obligated Balance**

3000 Unpaid Obligation Brought Forward            0                        0          0

3010 Uncollected customer payment from

             Federal Sources, Brought Forward      0               0  

3015Obligated Balance, Start of Year                    0                                   0             0

3032 Obligations Incurred25,300               5,440                        30,740

3040 Outlays:   (-)(490200E)             24,655    5,44030,095

3052 Change in uncollected customer pay-

            ments from Federal Sources (422100E-

422100B)      (645)    (645)

3090 Unpaid Obligation, End of Year     645                                   645

3091 Uncollected customer payment from

             Federal Sources, End of Year     (645)    (645)

3100 Obligated Balance, End of Year (net)     645     (645)         0

4175 Budget Authority                                  26,500                            22,240                       48,740  

4177 Offsetting Collections                                                                (21,585)           (21,585)

4178 Change in Unfilled Cust Ord                                                         ( 645)                           (645)

4180 Budget Authority Net                            26,500                                  10                        26,510              

4185  Outlay Gross                                         24,655                            5,440                          30,095   

4187 Offsetting Collections                                                                (21,585)                       (21,585)   

4190 Net Outlays                                            24,655                        (16,145)    8,510

**Loan Guarantee Agency**

**Year End Closing Statement (2108)**

**September 30, FY-1**

***Indefinite Borrowing Authority – Financing Account***

Column 5 Adjustments (101000)16,155

Column 8 Unfilled customer orders 645

Column 11 Unobligated balance (461000 & 445000)16,800

***Program Account***

Column 5 Post closing unexpended balance (101000 E)     1,845

Column 9 Undelivered orders and contracts (48010 E)        645

Column 11 Unobligated balance (CALC 5+6+7+8-9-10)     1,200

Also equals (461000 E)     1,200

**Loan Guarantee Agency**

**Financing Footnote**

**for Fiscal Year Ended September 30, FY-1**

**Loan Guarantee Agency**

**Fund Balance with Treasury Footnote**

**for Fiscal Year Ended September 30, FY-1**

**Loan Guarantee Agency**

**Note 8:  Credit Program Note**

**September 30, FY-1**

**I.  Defaulted Guaranteed Loans from Post – 1991 Guarantees:**

Loans receivable, gross (135000)  3,450

Interest receivable (134100)  1,035

Less allowance for subsidy (139900)(1,698)

Value of assets related to loan receivables, net$2,787

**J. Guaranteed Loans Outstanding:**

**J1.  Guaranteed Loans Outstanding:**

****Outstanding loan principal (805000)$72,625

      Guaranteed loan principal (805000* gtd %)$58,100

**J2.  New Guaranteed Loans Disbursed:**

      Outstanding loan principal (805300)$87,000

      Guaranteed loan principal (805300 * gtd %)$69,600

**K.  Liability for Loan Guarantees:**

**K1.  Liability for Loan Guarantees**

        Post 1991 Loan guarantees, liability (218000)$18,965

**L Subsidy Expense for Loan Guarantees by Program and Component:**

**L1.  Subsidy Expense for New Loan Guarantees**

       Interest differential     1,740

       Defaults     17,400

       Fees      (435)

      Total $18,705

**L2.  Modifications and Reestimates:**

Total modifications    1,000

Interest rate (680000)       (13)

Technical (680000)        36

Total re-estimates     1,023

**L3.  Total Loan Guarantee Subsidy Expense**

**(equals 610000 + 680000 for subsidy & modification)**$19,728

**M.  Composition of Subsidy Rate:**

*(From budget model)*

*Component**Percent*

Defaults20.0

Interest supplements  2.0

Fees (0.5)

   Total21.5

**N.  Reconciliation of Beginning and Ending Balances of Allowance for Subsidized Costs**

Beginning balance of loan guarantee liability, October 1$         0

Add:  subsidy expense for guaranteed loans 

disbursed during the reporting years by component:

a. Interest supplement costs    1,740

b. Default costs (net of recoveries)  17,400

c. Fees and other collections     (435)

Total of the above subsidy expense components$18,705

Adjustments:

a. Loan guarantee modifications      1,000

b. Fees received (426100)                   480

c. Interest supplements used                                       (1,940)

d. Foreclosed property and loans acquired                3,000

e. Claim payment to lenders              (3,500)

f. Interest accumulation on liability balance (634000)                1,180

g. Other (modification adjustment transfer)         10

Ending balance of the loan guarantee liability before reestimates  18,935

Add or subtract subsidy reestimates by component:

a. Interest reestimate rateprorated based 1399&2180 pieces       (17)

b. Technical/default reestimate prorated based 1399&2180 pieces 47

Total of the above reestimate components 30

Ending balance of the loan guarantee liability            $18,965

**O.  Administrative Expense:**

Loan guarantee programs (610000)               $4,950

**BUDGET PROGRAM AND FINANCING SCHEDULE PRIOR-YEAR ACTUAL COLUMN FOR YEAR 1 REPORTING**

######      Program     Financing

**Fund       Fund**

0702 Loan Guarantee Subsidy      19,350       0

0704 Loan Guarantee Modification        1,000       0

0709 Administrative Expenses        4,950       0

0711 Default Claim Payments on Principal   0           3,500

0715 Interest Supplement   01,940

0900 Total New Obligations      25,3005,440

1000 Unobligated Balance Brought Forward               0                          0

1100 Appropriation - Discretionary                                                         26,500       0

1160 Appropriation – Discretionary (total)      26,500       0

1200 Appropriation – Mandatory   0     10

1260 Appropriation – Mandatory (total)   0     10

1800 Mandatory Spending Authority Collected                                                0                 21,585

1801 Change in uncollected customer payments from Federal   0   645

1850 Mandatory Spending Authority from offsetting collections (total)   0          22,230

1930 Total Budgetary Resources       26,500          22,240

1940 Unobligated Balance Expiring                                                           1,200       0

1941 Unobligated Balance Unexpiring                                                                                16,800

**Change in Obligated Balance**

3000 Obligated balance, net, Beginning of period:   0       0

3010 Obligations Incurred, Unexpired accounts                                              25,300   5,440

3020 Outlays (gross)      (24,655)           (5,440)

3050 Unpaid obligations, end of year645       0

3060 Uncollected customer payments from Federal, beginning  0        0

3070 Change in uncollected customer payments from Federal, unexpired  0    645

3090 Uncollected customer payments from Federal, end of year  0    645

3100 Obligated Balance, start of year                                      0        0

3200 Obligated Balance, end of year          645                            0

4000 Budget Authority discretionary, gross     26,500        0

4010 Outlays new discretionary authority     24,655        0

4020 Total discretionary outlays, gross     24,655        0

4070 Budget Authority discretionary, net     26,500        0

4080 Outlays discretionary, net     24,655        0

4090 Budget Authority mandatory, gross  0           22,240

4110 Total Outlays, mandatory, gross  0             5,440

4120 Offsetting collections, federal sources   0          (19,705)

4122 Offsetting collections, Interest on uninvested funds  0(1,160)

4123 Offsetting collections, non-federal sources  0   (720)

4130 Offsets against gross budgetary authority and outlays  0          (21,585)

4140 Change in uncollected customer payments from Federal sources  0   (645)

4150 Additional offsets against budgetary authority only  0   (645)

4160 Budgetary Authority mandatory, net  0      10

4170 Outlays net, mandatory  0          (16,145)

4180 Budget Authority Net                                                                     26,500                           10

4190 Outlays, Net     24,655          (16,145)

**FISCAL YEAR 2**

In fiscal year 1, the agency accrued an upward adjustment of subsidy expense.  Although the expense was recognized in fiscal year 1, budgetary resources to fund it were not provided until the following year, fiscal year 2.  The examples of transactions for the second year dispose of the upward subsidy re-estimate accrued at the end of the preceding year.   Additionally, in order to provide a more realistic understanding of the complexities of accounting for guaranteed loans, new transactions for negative subsidy are introduced and borrowing authority issues are presented.  At the end of year 2 a downward reestimate will be included.   

By adding new authority in year two the concept of Cohorts is introduced.  See A-11 for additional insights into the implications of Cohorts.  

Other transactions included in year one would recur in year 2 and subsequent years.  These transactions have not been included because they provide limited additional value to the case study.

# TRANSACTIONS YEAR 2

The agency received one year legislative authority to guarantee 75 percent of the principal and related interest of $100,000 of loans.  The transactions for these loans will be related to Cohort 2.  The previous year’s loans will be Cohort 1.

1.  The agency’s subsidy model indicated that, for the $100,000 of loan guarantees, a (5.0) percent subsidy was indicated as follows (all cohort 2):

· Present value of expected defaults is 3.46 percent, or $3,460

· Present value of guarantee fees to be collected is (8.46) percent or $8,460 (to be collected during life of loan)

· No interest supplements as interest rates are low

2.  The agency has appropriated administrative expenses for fiscal year 2 in the amount of $10,000.  (There are no cohorts in the program fund.)

3.  The agency receives approval for upward re-estimates by OMB for $25.  This is an increase of $2 from what was estimated at the end of the fiscal year (all cohort 1)

4.  The agency estimates the following financing fund transactions for the year:

· $1,000 for guarantee fees (cohort 2)

· $5,000 in negative subsidy (cohort 2)

· $45,000 in defaults (cohort 1)

· $25 in upward re-estimate collections (cohort 1)

· $500 in interest expense on debt (cohort 1)

· $115 in interest expense on debt (cohort 2)

· $250 in interest income on uninvested cash (cohort 1)

· $60 in interest income on uninvested cash (cohort 2)

# Loan Guarantee Agency

**SF 132 Apportionment/Reapportionment Schedule**

###### Fiscal Year 2

**Budgetary Resources****Program Fund  Financing Fund**

**Budget authority:**

1000 Brought forward, Oct.1      16,800

1100 Appropriation- Definite, Discretionary           10,000

1250 Anticipated Appropriation – Indefinite, Mandatory           25

1400 Borrowing Authority – Mandatory 32,790

1840 Anticipated Spending Authority                                      1,335

1920 Total budgetary resources                10.02550,925

**Application of Budgetary Resources**

Budget authority:

Category B:

6012 Administrative Expense              10,000

6013 Reestimate                                                                          25

6014 Negative Subsidy             5,000

6015 Default Claims           45,000

6016 Treasury Interest    615

6182 Unapportioned Balance                            310

6190 Total budgetary resources                                  10,02550,925

8100 Loan Guarantee Program Level        100,000

8211 Loan Guarantee Program Negative Sub Program          100,000

**2-1 OMB approved and authorized both requests for apportionment.******

**To record SF132***(A102, A104, A116, A118, A140, A152, G102,)*

*Program Fund - Year 2*

411700 Loan Administrative Expense Appropriation      10,000

412000 Anticipated Indefinite Appropriations 25

    445000 Unapportioned Authority                     10,025

445000 Unapportioned Authority      10,025

    4510000 Apportionments          10,000

    4590000 Apportionments – Anticipated     25

101000 Fund Balance With Treasury      10,000

     310100 Unexpended Appropriations – Appropriation Received          10,000

*Financing FundCohort 1*

407000 Anticipated Collections from Federal Sources         275

414100 Current-Year Borrowing Authority Realized    28,735

   445000 Unapportioned Authority     28,700

445000 Unapportioned Authority    45,500

   451000 Apportionments    45,225

   459000 Apportionments – Anticipated         275

*Financing Fund - Cohort  2*

406000 Anticipated Collections from Non-Federal Sources     1,000

407000 Anticipated Collections from Federal Sources          60

414100 Current-Year Borrowing Authority Realized     4,055

   445000   Unapportioned Authority     5,115

445000 Unapportioned Authority     5,115

   451000 Apportionments     4,055

   459000 Apportionments – Anticipated     1,060

801000 Guaranteed Loan Level  100,000

    801500 Guaranteed Loan Level – Unapportioned 100,000

801500 Guaranteed Loan Level – Unapportioned   100,000

   802000 Guaranteed Loan Level – Apportioned                                           100,000

**2-2 To record warrants received for re-estimate (A104).**

*Program Fund - Year 2*

411800 Re-estimated Loan Subsidy Appropriation25

   412000 Unapportioned Authority25

459000 Apportionments – Anticipated25

    451000 Apportionments25

101000 Fund Balance With Treasury25

######    310100 Unexpended Appropriations - Received25

**2-3.  To record allotment of authority.**(TC A120)

*Program Fund- Year 2*

451000 Apportionments     10,025

   461000 Allotments - Realized Resources     10,025

*Financing Fund – Cohort Year 1*

451000 Apportionments     45,225

   461000 Allotments - Realized Resources     45,225

*Financing Fund – Cohort Year 2*

451000 Apportionments      4,055

   461000 Allotments - Realized Resources      4,055

**2-4. The agency transferred the re-estimated subsidy from the program fund to the financing fund. The reestimate for the prior year was for $23.  Since the reestimate for the President’s Budget increased it by $2, the incremental amount was recorded in the current year as an adjustment to the Guarantee Liability. The unfunded expense of $23 was reversed from the Program Fund for Year 1 and the actual funded expense of $25 is recorded in the unexpired program fund which funds the reestimate from current reestimate appropriation.**(B420R, B106, C103)

*Program Fund - Year 1*

217000 Subsidy Payable to Financing Account23

680000 Future Funded Expense23

*Program Fund - Year 2*

461000 Allotments - Realized Resources25

   490200 Delivered Orders – Obligations,Paid [Re-est. Subsidy and Interest]25

To record reclassification of future funded expenses.

610000 Operating Expense/Program Costs25

   101000 Fund Balance With Treasury25

310700 Unexpended Appropriations - Used25

   570000 Expended Appropriations 25

*Financing Fund - Cohort 1*

427100 Actual Program Fund Subsidy Collected25

   407000 Anticipated Collections from Federal Sources25

101000 Fund Balance With Treasury25

   131000 Accounts Receivable

[Subsidy Receivable from Program Fund]23

    21800 Loan Guarantee Liability  2

459000 Apportionments - Anticipated Resources 

           - Programs Subject to Apportionment25

    461000 Allotments25

**2-5. The agency makes an expenditure transfer of administrative expense reimbursement to its S&E fund***(B107)*

*Program Fund – Year 2*

461000 Allotments - Realized Resources10,000

  490200 Delivered Orders - Obligations, Paid10,000

610000 Operating Expenses/Program Costs10,000

   101000 Fund Balance With Treasury10,000

310700 Unexpended Appropriations - Used10,000

   570000 Expended Appropriations 10,000

**2-6 Agency converts $28,735 of borrowing authority to cash.***(A156)*****

*Financing Fund - Cohort 1*

414800 Resources Realized From Borrowing Authority28,735

     414500 Borrowing Authority Converted to Cash28,735

101000 Fund Balance With Treasury28,735

    251000 Principal Payable to the Bureau of the Public Debt28,735

**2-7 Agency pays 35,000 to honor 80% guarantee of 43,750 of defaulted principal funded by borrowing authority.***(B104, G110)*

*Financing Fund - Cohort 1*

461000 Allotments - Realized Resources                                         35,000

   490200 Delivered Orders - Obligations, Paid                                                        35,000

218000 Loan Guarantee Liability                                                     35,000

   101000 Fund Balance With Treasury                                                                     35,000

*Memorandum Accounts - Loans Disbursed*

#### 806500 Guaranteed Loan Collections, Defaults, and Adjustments43,750

   805000 Guaranteed Loan Principal Outstanding43,750

**2-8.  The agency acquired receivables for loans of $35,000 and interest of $1,250 in conjunction with the defaults.  The agency will attempt to collect this money directly from the borrowers.  The present value of cash flows related to the loans is estimated to be $30,000.***(TC C428)*

**To establish accounts receivable for defaulted loan.**

*Financing Fund – Cohort 1*

134100 Interest Receivable -Loans [Defaulted Guaranteed Loans]  1,250

135000 Loans Receivable [Defaulted Guaranteed Loans]35,000

   139900 Allow. for Subs. [Defaulted Guaranteed Loans]           6,250

   218000 Loan Guarantee Liability         30,000

**2-9 Agency makes a commitment for loan guarantees of $80,000 with a negative subsidy of $4,000.  The agency is guaranteeing 75% of the loan.  Negative Subsidy is funded with borrowing authority.  Collection of guarantee fee also made at this time**

*Financing Fund - Cohort 2*

101000 Fund Balance With Treasury  800

    218000 Loan Guarantee Liability   800

426100 Collection of fees  800

    406000 Anticipated Collections – Non-Federal   800

459000 Apportionments – Anticipated  800

    461000 Allotments – Realized Resources   800

461000 Allotments – Realized Resources           4,000

    480100 Undelivered Orders – Negative Subsidy4,000

802000  Guaranteed Loan Level Apportioned          80,000

     804000 Guaranteed Loan Level – Used Authority           80,000

**2-10 Third party lenders notified agency of disbursing $2,000 of Cohort 1 loans and $60,000 of Cohort 2 loans**

*Program Fund – Year 1*

480100 Undelivered Orders – Unpaid  430

    490200 Delivered Orders – Paid   430

610000 Program Expense – Subsidy  430

    101000 Fund Balance With Treasury   430

310700 Unexpended Appropriations – Used  430

    570000 Expended Appropriations   430

*Program Fund – Year 2*

579100 Adjustment to Financing Sources    3,000

    619900 Adjustment to Subsidy Expense3,000

*Financing Fund – Cohort 1*

427100 Actual Subsidy Collections             430

    422100 Unfilled Customer Order   430

101000 Fund Balance with Treasury         430

    218000 Loan Guarantee Liability   430

805000 Guaranteed Loan Principal Outstanding   2,000

    805300 Guaranteed Loan New Disbursements2,000

*Financing Fund – Cohort 2*

414800 Resources Realized from Borrowing Authority2,200

    414500 Borrowing Authority Converted to Cash2,200

101000 Fund Balance with Treasury2,200

    251000 Debt Outstanding2,200

480100 Undelivered Orders – Negative Subsidy   3,000

    490200 Delivered Orders – Negative Subsidy3,000

218000 Loan Guarantee Liability   3,000

    579100 Adjustments to Financing Sources3,000

577600 Non-budgetary Financing Sources Trans Out3,000

    101000 Fund Balance with Treasury3,000

805000 Guaranteed Loan Principal Outstanding           60,000

    805300 Guaranteed Loan New Disbursements          60,000

*Miscellaneous Receipt Account (negative subsidy TAFS)*

101000 Fund Balance With Treasury3,000

    577500 Non-budgetary Financing Sources Trans In3,000

599300 Offset to Non-Entity Collections Stmt of NP3,000

    298500 Liability for Non-Entity Assets473,000

**2-11 Agency accrues interest on Fund Balance with Treasury for November reporting period.  Per TFM accruals on Fund Balance with Treasury takes the prior year paid amounts and prorates by number of months.  September reporting period is when amounts will be converted to actual interest.  Therefore there will only be an accrual for cohort 1**

*Financing Fund – Cohort 1*

428300  Interest Receviable from Treasury    193

    407000 Anticipated Collections from Federal Sources   193

459000 Apportionments – Anticipated     193

    461000 Allotments – Realized Resources   193

134000 Interest Receivable – Uninvested Cash     193

    531200 Interest Revenue – Loans/Uninvested   193

**2-12 Agency accrues interest on debt outstanding from BPD for November using BPDs reports.  There will be an accrual for both cohorts and interest rates can be different**

*Financing Fund – Cohort 1*

631000 Interest Expense    83

    214100 Interest Payable83

461000 Allotments – Resources Realized    83

    490100 Delivered Orders – Unpaid83

*Financing Fund – Cohort 2*

631000 Interest Expense    10

    214100 Interest Payable10

461000 Allotments – Resources Realized    10

    490100 Delivered Orders – Unpaid10

**2-13 Agency is notified by cohort 1 borrowers that the remaining amounts of the loan are no longer needed.  Agency cancels remaining commitment and deobligates remaining subsidy**

*Program Fund – Year 1*

487100 Downward Adjustment Prior Year Undelivered215

    465000 Expired Authority  215

*Financing Fund – Cohort 1*

461000 Allotments – Realized Resources215

    422100 Unfilled Customer Order215

804000 Guaranteed Loan Level- Used Authority        1,000

    802000 Guaranteed Loan Level        1,000

**2-14 After consultation and agreement with OMB, the agency decided to exercise a clause in the program’s legislation allowing it to modify the terms of cohort 1 guarantees.  The modification caused a savings for the program of $1,000 and a modification adjustment transfer of $30**

**The agency submitted a new request for apportionment (SF-132) for the financing fund.**

**Loan Guarantee Agency**

**SF 132 Apportionment/Reapportionment Schedule**

**Fiscal Year 2**

***SF132 entries***

*Financing Fund – Cohort 1*

461000 Allotments                    4,000

     445000 Unapportioned Authority       4,000

445000 Unapportioned Authority      30

    404700 Anticipated Transfers to General Fund Current Year Auth            30

After approved SF132 is received, SF1151 request transferring modification adjustment transfer from financing fund to treasury general fund (TAS xxx2814, where xxx is agency id) at the same time payment is made to the general fund (agency’s negative subsidy account).

***Modification Savings***

*Program Fund – Year 2*

579100 Adjustments to Financing Sources1,000

    619900 Adjustments to Subsidy Expense       1,000

*Financing Fund – Cohort 1*

218000 Loan Guarantee Liability1,000

    101000 Fund Balance With Treasury       1,000

577600 Nonbudgetary Financing Sources Transfers Out1,000

    579100 Adjustments to Financing Sources       1,000

461000 Allotments1,000

    49020000 Delivered Orders-Paid       1,000

*Miscellaneous Receipt Account (negative subsidy TAS)*

1010000 Fund Balance With Treasury1,000

    577500 Nonbudgetary Financing Sources Transfers In       1,000

599300 Offset to Non-Entity Collections1,000

    298500 Liability for Non-Entity Assets not report on SOC        1,000

***Modification Adjustment Transfer***

*Program Fund – Year 2*

579100 Adjustments to Financing Sources    30

    719000 Other Gains30

*Financing Fund – Cohort 1*

218000 Loan Guarantee Liability     30

    101000 Fund Balance With Treasury            30

576600 Nonexpenditure Financing Sources Transfers Out Capital Transfer     30

    579100 Adjustments to Financing Sources            30

404700 Anticipated Transfers to General Fund     30

    415100 Actual Capital Transfers to General Fund Current Year30

*Miscellaneous Receipt Account (xx2814 TAS)*

1010000 Fund Balance With Treasury     30

    575600 Nonexpenditure Financing Sources Transfers In Capital Transfer             30

599300 Offset to Non-Entity Collections     30

    298500 Liability for Non-Entity Assets not report on SOC             30

**2-15 Year-end interest earned on Cash and interest expense to BPD calculated using Financing Account Interest Calculator (FAIC) as follows.  Cohort 1 earned $323 and expense $500; Cohort 2 $62 and expense $85**

*Financing Fund – Cohort 1*

101000 Fund Balance With Treasury  323

    134000 Interest Receivable193

    531200 Interest Income130

427300 Interest Collected From Treasury  323

    428300 Interest Receivable From Treasury193

    407000 Anticipated Federal Collections130

459000 Anticipated Apportionments   57

    461000 Allotments57

214100 Interest Payable83

631000 Interest Expense          417

    101000 Fund Balance with Treasury          500

461000 Allotments         417 

    490100 Delivered Orders – Unpaid           83

    490200 Delivered Orders – Paid          500

*Financing Fund – Cohort 2*

101000 Fund Balance With Treasury  85

    531200 Interest Income  85

427300 Interest Collected From Treasury  85

    407000 Anticipated Federal Collections  85

459000 Anticipated Apportionments  85

    461000 Allotments  85

214100 Interest Payable10

631000 Interest Expense            52

    101000 Fund Balance with Treasury             62

461000 Allotments            52 

    490100 Delivered Orders – Unpaid            10

    490200 Delivered Orders – Paid             62

**2-16 Agency determines that there will no further obligations. Agency returns borrowing converted to cash and not obligated for cohort 1 and reduces borrowing authority for cohort 2 as required in A-11. Calculations below are based on timing**

*Financing Fund – Cohort 1*

Cash beginning of year  16,155

Upward reestimate                         25

Default payment                    (35,000)

Subsidy collected               430

Modification & adjustment                    (1,030)

Interest Income  323

Interest Expense(500)

Borrowings needed for payment   18,820       600             177

Total Borrowings used 19,597

Total Borrowings converted    28,735

Return 9,138 excess borrowings converted to cash

461000 Allotments – Realized Resources  4,785

445000 Unapportioned Authority  4,353

      414200 Actual Repayments of Borrowing Authority Converted                              9,138

251000 Principal Payable to the Bureau of the Public Debt                   9,138

    101000 Fund Balance With Treasury                                                                          9,138

*Financing Fund – Cohort 2*

Negative Subsidy Obligations4,000

Less:  Fees collected  (800)

Interest Income85

Interest Expense           (62)

Borrowing Authority needed              3,200           (23)

Total Borrowing Authority needed     3,177

Borrowing Authority provided            4,055

Withdraw 878 of borrowing authority

461000 Allotments – Realized Resources       878

      414300 Current year decreases to borrowing authority                                    878

**2-17 The modeling team reestimated the cost for Cohort year 1 and 2.  There was a technical downward reestimate for year 2 of 50 and technical upward for year one of 20.  There was no interest reestimate.  Cohorts are accounted for separately in the financing funds.  Budgetary information is reported in FACTS II/GTAS by Cohort in fourth quarter (required for fourth, but can be more often).  (B420, C147, C438, D146, D147, D148, E604)**

Cohort 1(Cohort only exists in Financing Fund)

*Program Fund Year 2*

680000 Future Funded Expenses

[Subsidy Expense - Re-estimates – Technical]20

   217000 Subsidy Payable to Financing Account20

*Financing Fund Cohort 1*

#### 131000 Accounts Receivable

[Subsidy Receivable from Program Fund]20

   218000 Loan Guarantee Liability20

Cohort 2 (Cohort only exists in Financing Fund)

*Program Fund  - Year 2*

579100 Adjustment to Financing Sources

 – Downward Reestimate or Negative Subsidy50

   680000 Future Funded Expenses

[Subsidy Expense - Re-estimates – Technical]50

*Financing Fund – Cohort 2*

218000 Loan Guarantee Liability50

      579100 Adjustment to Financing Sources

 – Downward Reestimate or Negative Subsidy50

577600 Nonbudgetary Financing Sources Transferred Out50

   299000 Other Liabilities Without Budgetary Obligations50

*Miscellaneous Receipts Fund (Downward Reestimate TAS)*

131000  Accounts Receivable50

   577500 Nonbudgetary  Financing 

Sources Transferred In50

599400  Offset to Non-entity Collections            50

   298500  Liability for Non-Entity Assets Not

 Reported on the Statement of Custodial Activity50

**2-18 The agency accrued interest on its loan guarantee liability and on the present value of its loans.***(E118 and E122)*

*Financing Fund – Cohort 1*

139900 Allowance for Subs. [Defaulted Guar. Loan Assets]   293

   531300 Interest Revenue – Subsidy Amortization    293

634000 Interest Exp Accrual on Liability for Loan Guarantee   116

   218000 Loan Guarantee Liability   116

*Financing Fund – Cohort 2*

634000 Interest Exp Accrual on Liability for Loan Guarantee     23

   218000 Loan Guarantee Liability   23

**Pre-Closing Entries**

**Financing Fund – Cohort 1**

407000 Anticipated Federal Collections          73

    445000 Unapportioned Authority73

**Financing Fund – Cohort 2**

407000 Anticipated Federal Collections         25

459000 Anticipated Apportionments       175

    406000 Anticipated Non-Federal Collections         200

**Miscellaneous Receipts Fund Downward Reestimate**

298500  Liability for Non-Entity Assets Not

 Reported on the Statement of Custodial Activity      4,000

    101000 Fund Balance w Treasury      4,000

**Miscellaneous Receipts Fund Other Repayments of Investments and Recoveries (xxx2814)**

298500  Liability for Non-Entity Assets Not

 Reported on the Statement of Custodial Activity          30

    101000 Fund Balance w Treasury          30

## FISCAL YEAR 2 PRE-CLOSING TRIAL BALANCE

**Program Fund**

**AccountsYear 1Year 2Total**

**(Expired)(Unexpired**

**During Year2)**

*Budgetary**Dr./(Cr.)            Dr./(Cr)                    Dr./(Cr.)*

411700 10,00010,000

411800        25       25

4201001,845  1,845

465000(1415)(1,415)

480100  (215)   (215)

487100   215     215

490200 Admin(10,000)          (10,000)

490200 Subsidy                        (430)               (430)

490200 Reestimate       (25)                           (25)

**$         0****$       0$       0**

**Accounts          Year 1                Year 2                      Total**

*Proprietary**Dr./(Cr.)     Dr./Cr                    Dr./(Cr.)*

101000 1,415   1,415

217000        (20)       (20)

310000(1,845)   (1,845)

310100   (10,025) (10,025)

310700     430    10,025   10,455

331000       23          23

570000    (430)   (10,025) (10,455)

579100       4,080     4,080

610000 Admin     10,000                       10,000

610000 Subsidy     430            25                            455

619900       (4,000)                      (4,000)

680000 Technical     (36)           (30)        (66)

680000 Interest                       13         13

719000             (30)        (30)

**$        0****$         0  $      0**

## FISCAL YEAR 2 PRE-CLOSING TRIAL BALANCE

**Financing Fund**

**AccountsYear 1Year 2Total**

**CohortCohort**

*Budgetary**Dr./(Cr.)            Dr./(Cr)                    Dr./(Cr.)*

41410028,735  4,05532,790 

414200(9,138) (9,138)

414300    (878)    (878)

414500            (28,735) (2,200)           (30,935)

414800 28,735  2,200 30,935

415100      (30)      (30)

42010016,155 16,155

426100     800      800

427100     455               455

427300     323       85      408

480100 Negative Sub (1,000) (1,000)

490200 Defaulted Gty(35,000)           (35,000)

490200 Treas Interest     (500)      (62)    (562)

490200 Modification  (1,000)             (1,000)

490200 Negative Sub   (3,000) (3,000)

**$            0****$       0$        0**

**Financing Fund**

**Accounts          Year 1                Year 2                      Total**

**CohortCohort**

*Proprietary**Dr./(Cr.)     Dr./Cr                    Dr./(Cr.)*

101000           23           23

131000        20           20

134100   2,285       2,285

135000 38,450     38,450

139900  (7,655)     (7,655)

218000(13,503)       2,227   (11,276)

251000(19,597)     (2,200)   (21,797)

299000                      (50)          (50)

531200      (323)          (85)        (408)

531300      (293)        (293)

576600         30           30

577600    1,000      3,050                           4,050

579100   (1,030)      (3,050)                 (4,080)

631000       500           62         562

634000       116           23         139

**$          0****$         0  $         0**

## FISCAL YEAR 2 PRE-CLOSING TRIAL BALANCE

**Miscellaneous Receipt Account**

131000      50

298500         (50)

575600     (30)

577500(4,050)

599300  4,030

599400       50

## FISCAL YEAR 2 PRE-CLOSING TRIAL BALANCE

*Loan Guarantee Level (Financing Fund Only)*

Cohort 1    Cohort 2Total

*Memorandum Accounts Dr./(Cr)                     Dr./(Cr)  Dr./(Cr.)*

801000$89,000$100,000$189,000

802000   (20,000)   (20,000)

804000(89,000)   (80,000) (169,000)

$         0$           0$            0

*Loans Disbursed (Financing Fund Only)*

Cohort 1         Cohort 2Total

*Memorandum Accounts Dr./(Cr)                    Dr./(Cr.)                       Dr./(Cr.)*

805000$30,875    60,000       $90,875

805300   (2,000)   (60,000)        (62,000)

806500  43,750 0         43,750)

807000 (72,625)             0 (72,625)

$            0$            0$           0

**2-19.  The agency made closing entries.**(TC F214, F228, F233, F204)

*Program Fund  - Year 1*

310000 Unexpended Appropriations          430

310700 Unexpended Appropriations – Used          430

570000 Expended Appropriations           430

 610000 Operating Expenses/Program./Costs          430

680000 Future Funded Expenses23

331000 Cumulative Results of Operations23

490200 Delivered Orders         430

420100 Total Resources          430

480100 Undelivered Orders         215

487100 Downward Adjustment of Undelivered Orders          215

*Program Fund - Year 2*

5700 Expended Appropriations     10,025

6100 Operating Expenses/Program./Costs     10,025

331000 Cumulative Results of Operation                                         20

619900 Adjustments to Subsidy Expense      4,000

680000 Future Funded Expenses           30

719000 Other Gains           30

579100 Adjustments to Financing Sources       4,080

310100 Unexpended Appropriations – Approp. Received     10,025

310700 Unexpended Appropriations - Used      10,025

490200 Delivered Orders     10,025

411700 Loan Administrative Appropriation      10,000

411800 Reestimated Appropriation             25

*Financing Fund – Cohort 1*

531200 Interest Revenue - Loans           323

531300 Interest Revenue – Subs Amort           293

576600 Nonexpenditure Transfers Out             30

577600 Nonbudgetary Transfers Out        1,000

579100 Adjustments to Financing Sours        1,030

631000 Interest Expense - Debt                       500

634000 Interest Expense – Gtd Liability           116

414500 Borrowing Authority Converted to Cash     28,735

414100 Borrowing Authority     28,735

414200 Actual Repayment of Borrowing Auth Convert       9,138

414800 Resources Realized from Borrowing Auth    28,735

415100 Actual Capital Transfers            30

420100 Total Actual Resources - Collected        16,155

427100 Actual Program Fund Subsidy Collected         455

427300 Interest Collected from Treasury         323

490200 Delivered Orders    36,500

805300 Guaranteed Loan New Disbursements      2,000

806500 Guaranteed Loan Collections, Defaults, Adjustments   43,750

807000 Guaranteed Loan Cumulative    41,750

*Financing Fund – Cohort 2*

531200 Interest Revenue - Loans             85

577600 Nonbudgetary Transfers Out      3,050

579100 Adjustments to Financing Sours        3,050

631000 Interest Expense - Debt                       62

634000 Interest Expense – Gtd Liability           23

414100 Borrowing Authority      4,055

414300 Current-Year Decreases of Indef Borrow Auth         878

414500 Borrowing Authority Converted to Cash       2,200

414900 Borrowing Authority Carried Forward          977

414800 Resources Realized from Borrowing Auth      2,200

420100 Total Actual Resources - Collected            23

426100 Actual Collection of Business Type Fees         800

427300 Interest Collected from Treasury           85

490200 Delivered Orders       3,062

802000 Guaranteed Loan Level – Apportioned    20,000

804500 Guaranteed Loan Level – Unused Authority      20,000

805300 Guaranteed Loan New Disbursements    60,000

807000 Guaranteed Loan Cumulative               60,000

*Miscellaneous Receipt Accounts*

575600 Nonexpenditure Transfer In         30

577500 Nonbudgetary Transfer In    4,050

599300 Offset to Non-Entity Collections    4,080

**FISCAL YEAR 2 POST-CLOSING TRIAL BALANCE**

**AccountsProgram FundFinancing Fund**

*Budgetary**Dr./(Cr.)Dr./(Cr.)*

     414900    0         977

     420100         1,415           23

     465000       (1,415)     N/A

     480100   0    (1,000)

      $       0$        0

## FISCAL YEAR 2 POST-CLOSING TRIAL BALANCE (Continued)

**AccountsProgram FundFinancing FundMisc Rec**

*Proprietary**Dr./(Cr.)Dr./(Cr.)   Dr./(Cr.)*

   101000    $  1,415$           23  

   131000             20          50

   134100        2,285

   135000      38,450

   139900       (7,655)

   217000            (20)     

   218000     (11,276)

   251000           (21,797)

   298500        (50)

   299000            (50)

   310000      (1,415)     

   331000             20     

$       0$   0    $    0

*Loan Guarantee Level (Financing Fund Only)Loans Disbursed (Financing Fund Only)*

*Memorandum AccountsDr./(Cr.)Memorandum AccountsDr./(Cr.)*

801000$189,000    805000$90,875

804000 (169,000)    807000 (90,875)

804500   (20,000)$         0

$          0

# FINANCIAL STATEMENTS YEAR 2

**Loan Guarantee Agency**

**Balance Sheet**

**September 30, FY-2**

**Loan Guarantee Agency**

**Statement of Net Cost**

**for Fiscal Year Ended September 30, FY-2**

**Loan Guarantee Agency**

**Statement of Changes in Net Position**

**for Fiscal Year Ended September 30, FY-2**

**Loan Guarantee Agency**

**Statement of Budgetary Resources**

**For Fiscal Year Ended September 30, FY-2**

            Non-budgetary

BudgetaryFinancing AccountTotal

**Budgetary Resources**

1000 Beginning of period

(420100B, 422100B, 480100B)     1,200  16,800  18,000

1021 Recoveries of prior year obligations

       (487100E)          215       215

1290 Appropriations

(411700E, 411800E)    10,025           0  10,025

1490 Borrowing Authority

      (414100E, 414200E, 414300E)  22,774   22,774

1890  Spending authority 

(415100E, 426100E, 4271E, 427300E, 422100E)0        988        988                        

1910  Total budgetary resources$11,440$40,562 $52,002

**Status of Budgetary Resources**

2190  Obligation incurred:

     A1. Direct (4801E-B, 4902)  10,025  40,562    50,587

2404 Balance not available:

      D.  Other  (4650E, 4450E)    1,415            0    1,415

2500 Total status of budgetary resources$11,440$40,562 $52,002

**Relationship of**

**Obligations to Outlays:**

3000 Obligations balance, beg (4801B) 645645

3010 Unfilled cust orders 

         from Federal sources (4221B)(645)(645)

###### 3015 Obligated balance, SOY   645                     (645)       0

###### 3032 Obligations Incurred                                10,025                 40,562                         50,587

###### 3040 Outlays                                                    (10,455)                (39,562)                      (50,017)

###### 3052 Change in unfilled customer orders                      645  645

###### 3082 Recoveries of prior year obligations            (215) (215)

###### 3090 Obligated balance, EOY                   1,000                           1,000

###### 3100 Obligated Balance (net)                                                    1,000                           1,000

4175 Budget Authority   10,025              23,762              33,787

###### 4177 Offsetting Collections                  (1,663)                         (1,663) 

4178 Change in uncollected customer pay      645       645

4180 Budget Authority Net                              10,025                       22,744                          32,769

4185 Outlay Gross                                                     10,455                       39,562                         50,017

4187 Offsetting Collections (+)              (1.663)                         (1,663)

4190 Net Outlays                                              10,455                       37,899                          48,354

4200 Distributed Offsetting Receipts

       Collected amounts (599300E)                       (4,030)                               (4,030)

4210 Agency Outlays                                          6,425                      37,899                           44,324

**Loan Guarantee Agency**

**Statement of Financing**

**for Fiscal Year Ended September 30, FY-2**

**Fund Balance with Treasury Footnote**

**for Fiscal Year Ended September 30, FY-2**

**Loan Guarantee Agency**

**Note 8:  Credit Program Note**

**September 30, FY-2**

**I.  Defaulted Guaranteed Loans from Post – 1991 Guarantees:**

Loans receivable, gross (135000)  38,450

Interest receivable (134100)    2,285

Less allowance for subsidy (139900)   (7,655)

Value of assets related to loan receivables, net$33,080

**J. Guaranteed Loans Outstanding:**

**J1.  Guaranteed Loans Outstanding:**

****Outstanding loan principal (805000)$90,875

      Guaranteed loan principal (805000 x gtd %)$69,700

**J2.  New Guaranteed Loans Disbursed:**

      Outstanding loan principal (805300)$62,000

      Guaranteed loan principal (805300 * gtd %)$46,600

**K.  Liability for Loan Guarantees:**

**K1.  Liability for Loan Guarantees**

        Post 1991 Loan guarantees, liability (218000)$11,276

**L Subsidy Expense for Loan Guarantees by Program and Component:**

**L1.  Subsidy Expense for New Loan Guarantees**

       Interest Supplements         40

       Defaults      2,476

       Fees   (5,086)

      Total   (2,570)

**L2.  Modifications and Reestimates:**

Total modifications    (1,000)

Technical (680000,61000)         (28)

Total re-estimates and modifications                    (1,028)

**L3.  Total Loan Guarantee Subsidy Expense**

**(equals 610000 + 680000 for subsidy & modification)**(3,598)

**M.  Composition of Subsidy Rate:**

*(From budget model)*

*Component**Percent*

Defaults3.46

Fees           (8.46)

   Total           (5.00)

**N.  Reconciliation of Beginning and Ending Balances of Allowance for Subsidized Costs**

Beginning balance of loan guarantee liability, October 1$ 18,965

Add:  subsidy expense for guaranteed loans 

disbursed during the reporting years by component:

d. Interest supplement costs         40

e. Default costs (net of recoveries)    2,476

f. Fees and other collections   (5,086)

Total of the above subsidy expense components $(2,570)

Adjustments:

h. Loan guarantee modifications     (1,000)

i. Fees received (426100)                   800

j. Interest supplements used                                       

k. Foreclosed property and loans acquired               30,000

l. Claim payment to lenders             (35,000)

m. Interest accumulation on liability balance (634000)                    139

n. Other (modification adjustment transfer)         (30)

Ending balance of the loan guarantee liability before reestimates   11,304

Add or subtract subsidy reestimates by component:

c. Technical/default reestimate  (28)

Total of the above reestimate components (28)

Ending balance of the loan guarantee liability            $11,276

**O.  Administrative Expense:**

Loan guarantee programs (610000)              $10,000

**BUDGET PROGRAM AND FINANCING SCHEDULE PRIOR-YEAR ACTUAL COLUMN FOR YEAR 2 REPORTING**

######      Program     Financing

**Fund       Fund**

0707 Reestimates on Guarantee Loan Subsidy 25       0

0709 Administrative Expenses      10,000       0

0711 Default Claim Payments on Principal   0          35,000

0713 Payments of Interest to Treasury   0               562

0740 Negative Subsidy Obligations   04,000

0741 Modification Savings   01,000

0900 Total New Obligations      10,025          40,562

1000 Unobligated Balance Brought Forward               0                 16,800

1100 Appropriation - Discretionary                                                         10,000       0

1160 Appropriation – Discretionary (total)      10,000       0

1200 Appropriation – Mandatory 25     10

1260 Appropriation – Mandatory (total) 25     10

1400 Mandatory Borrowing Authority   0          31,912

1421 Mandatory Borrowing Authority applied to repay debt   0           (9,138)

1440 Mandatory Borrowing Authority (total)               0          22,774

1800 Mandatory Spending Authority Collected                                               0                    1,663

1801 Change in uncollected customer payments from Federal               0  (645)

1820 Capital transfer of offsetting collections to general fund   0    (30)

1850 Mandatory Spending Authority from offsetting collections (total)   0               988

1900 Budgetary authority total (discretionary & mandatory)      10,025          23,762

1930 Total Budgetary Resources      10,025          40,562

1940 Unobligated Balance Expiring   0

1941 Unobligated Balance Unexpiring                                                                                         0

**Change in Obligated Balance**

3000 Obligated balance, net, Beginning of period:                          645       0

3010 Obligations Incurred, Unexpired accounts                                              10,025 40,562

3020 Outlays (gross)      (10,455)         (39,562)

3041 Recoveries of unpaid prior year obligations, expired funds           (215)

3050 Unpaid obligations, end of year    0            1,000  

3060 Uncollected customer payments from Federal, beginning  0    645

3070 Change in uncollected customer payments from Federal, unexpired  0   (645)

3090 Uncollected customer payments from Federal, end of year  0        0

3100 Obligated Balance, start of year                                  645        0

3200 Obligated Balance, end of year              0                            0

4000 Budget Authority discretionary, gross     10,000        0

4010 Outlays from new discretionary authority     10,000        0

4011 Outlays from discretionary balances          430

4020 Total discretionary outlays, gross     10,430        0

4070 Budget Authority discretionary, net     10,000        0

4080 Outlays discretionary, net     10,430        0

4090 Budget Authority mandatory, gross25           23,762

4100 Outlays from new mandatory authority25

4110 Total Outlays, mandatory, gross25           39,562

4120 Offsetting collections, federal sources  0               (455)

4122 Offsetting collections, Interest on uninvested funds  0   (408)

4123 Offsetting collections, non-federal sources  0   (800)

4130 Offsets against gross budgetary authority and outlays  0            (1,663)

4140 Change in uncollected customer payments from Federal sources  0    645

4150 Additional offsets against budgetary authority only  0    645

4160 Budgetary Authority mandatory, net25           22,744

4170 Outlays net, mandatory25           37,899

4180 Budget Authority Net                                                                     10,025                    22,744

4190 Outlays, Net     10,455            37,899

**FISCAL YEAR 3**

This fiscal year will only deal with the liquidating of the downward re-estimates and repayment of debt.  All other items have been addressed in previous fiscal years.  No financial statements or footnotes will be prepared for this fiscal year.

OMB approved the downward re-estimate of $50 on cohort 2.  Since there is no carry forward authority, the cohort will need to borrow to pay the downward re-estimate

The loan on cohort 1 is expected to repay $10,000.  This collection will be used to 

# Loan Guarantee Agency

**SF 132 Apportionment/Reapportionment Schedule**

###### Fiscal Year 3

**Budgetary Resources****Financing Fund**

**Budget authority:**

1000 Brought forward, Oct.1           0

1400 Borrowing Authority – Mandatory        50

1840 Anticipated Spending Authority                                     10,000

1842 Anticipated Redemption of Debt                                                 (2,000)

1920 Total budgetary resources                                8,050

**Application of Budgetary Resources**

Budget authority:

Category B:

6012 Payment to Receipt Account                    50

6013 Treasury Interest                  340

6182 Unapportioned Balance               7,660

6190 Total budgetary resources                                                   8,050

**3-1 Agency receives approved SF132 reflecting downward re-estimate amounts.  Along with the budgetary authority, the agency allots, obligates and pays the downward re-estimate to the miscellaneous receipt account**

*Financing Fund – Cohort 2*

To record borrowing authority and obligate (See previous entries for apportionment and allotment entries)

41410050

48010050

See year2 for borrowing entries as they are the same no matter what the agency is borrowing for

To pay downward re-estimate

*Financing Fund – Cohort 2*

48010050

49020050

29900050

10100050

*Program Fund*

68000050

61990050

*Miscellaneous Receipt*

10100050

13100050

59940050

59930050

**3-2 Agency receives SF132 showing anticipated repayments of debt.*Note:  SF132 is not required to show repayments of debt, but A-11 suggests including if known.***

*Financing Fund – Cohort 1*

4450002,000

4047002,000

See year1 for anticipated collections and actual collection entries and year2 for interest payments on debt

**3-3 At year end agency determines that it has excess cash of $1,000.  This amount will not be needed for future defaults and the agency repays treasury debt.**

*Financing Fund – Cohort 1*

4047001,000

4146001,000

2510001,000

1010001,000

# APPENDIX 1: ACCOUNTING FOR MANDATORY LOAN GUARANTEE PROGRAMS

## INTRODUCTION

The scenarios presented in this guide were for common transactions undertaken by a discretionary loan guarantee program.  This appendix discusses two key differences between discretionary and mandatory loan guarantee programs, and shows how the entries in the guide would differ for a mandatory program with typical funding characteristics.

## BASIC DIFFERENCES BETWEEN DISCRETIONARY AND MANDATORY PROGRAMS

In a discretionary program, Congress sets a funding level, and program agencies make loans up to the amount that can be supported from subsidy in their program fund.  Usually, annual or multi-year appropriations provide program fund subsidy, although Congress can give no-year (permanent indefinite) appropriations should it choose to do so.  

Annual appropriation authority expires at the end of the fiscal year that it funds, and multi-year appropriations expire at the end of the last year of their period of availability.  For example, appropriations good for three years expire at the end of the third year funded.  Agencies cannot place any new obligations against expired authority, generally, they have five years after the date of expiration to fill obligations and pay liabilities before both the obligated and unobligated authority is canceled and cannot be used for any purposes.  Congress sometimes provides for different periods of expiration.

The government also operates mandatory (entitlement) loan guarantee programs, in which Congress usually authorizes permanent indefinite appropriations for subsidy.  If the amount of subsidy requested by qualified loan applicants, who meet the program criteria established by Congress, exceeds the subsidy monies by drawing additional appropriations.  Congress may mandate that the agency concur with the additional funding or may place a cap on the total funding.  These no-year appropriations do not have a date of expiration, and agencies may use unobligated subsidy appropriation authority as long funded as the programs remain authorized by the Congress.

Congress may provide appropriations for administrative expenses that have annual, multi-year, or no-year expiration.  Most commonly, both discretionary and mandatory loan guarantee programs have annual administrative expense appropriations.  Thus, no differences in accounting for administrative expenses will be presented.  However, multi-year administrative expense appropriations in other than the last year covered, and no-year administrative expense appropriations, would be accounted for in the same manner as will be shown for no-year appropriations of subsidy authority.

Another difference between discretionary and mandatory loan guarantee programs is that when downward adjustments to subsidy are called for during the subsidy re-estimation process to properly value loan guarantees at the estimated value of their cash-flows, discretionary programs must generally return the excess money in their financing fund to Treasury by transferring it to a designated miscellaneous receipt account.  Mandatory programs generally may recycle this excess by transferring it back to their program account.  While these are the typical situations, Congress may also provide do the following:

· Provide for recycling of downward reestimates for a discretionary program; or

· Provide that agencies cannot recycle downward re-estimates in a mandatory program  and must return them to Treasury. 

Recording and reporting downward reestimates of subsidy for both a discretionary and a mandatory program is discussed in Appendix 2 (recall that the agency in the guide illustrated accrual and disposition of an upward adjustment).

Both discretionary and mandatory loan guarantee programs generally have the same transactions.  Agencies must formulate budgetary resources, apportioned by OMB, and allot and account for them as follows:

· Making loans based on a combination of program fund subsidy and financing fund borrowing from Treasury; 

· Making collections from Federal and non-Federal sources and using the collections to repay the principal and interest on the loan from Treasury;

· Reestimating to determine the present value of the loans and interest receivable and adjusting the accounts as required; 

· Closing the books at yearend; and so forth.  

Where there are differences in the type of subsidy appropriations provided and disposition of downward re-estimates, the journal entries to record the same transaction usually will differ as well.  The next section discusses those differences.

**DIFFERENCES IN JOURNAL ENTRIES**

**FOR MANDATORY PROGRAMS**

The transactions illustrated for the discretionary loan guarantee program guide are virtually the same as those are undertaken in a mandatory program.  However, four of the journal entries would be different.  The transactions involved, and the budgetary and proprietary entries a mandatory program with no-year subsidy authority, but with the same amount of funding and other parameters as the discretionary program, would make are set forth below. Note that only certain entries in fiscal year 1 are affected.  There would be no change from the discretionary program entries in fiscal year 2.

Changes from entries illustrated for the discretionary program are highlighted in bold type.  For each transaction presented, only the fund entities (including memorandum accounts) for which there is a change are presented.  If a fund entity (including memorandum accounts) present for a transaction in the discretionary program guide is not present in the transactions illustrated below, a mandatory program would make the same entries for those fund entities.  A discussion of changes follows the revised entries for each transaction.  

**1-1.  The agency prepares the budget formulation.**(TC A102, A104)

*Program Fund*

**4120 Anticipated Indefinite Appropriations21,500**

4117 Loan Administrative Expense Appropriation   5,000

    4450 Unapportioned Authority26,500

1010 Fund Balance With Treasury**5,000**

######     3101 Unexpended Appropriations - Received  5,000

##### Explanation of difference

Because the program fund has permanent indefinite authority for its subsidy, agencies must anticipate the amount of the appropriations they will receive in order to prepare the budget formulation.  The agency normally will not realize the appropriations until OMB has approved the amount.  Accordingly, the agency must make two changes in the program fund entry.  First, it uses the account for anticipated appropriations, 4120, instead of the account for realized subsidy appropriations, 4115.  Second, because the subsidy money is not realized at this point, it records only the amount of the administrative expense appropriation, which is an annual appropriation, as the amount of Fund Balance With Treasury. .  Note that there is no change for the financing fund or memorandum account entries.

**1-2.  OMB approved the agency’s requests for apportionment without change, and the agency recorded the apportionment.**(A104, A116)

*Program Fund*

**4115 Loan subsidy Appropriation21,500**

**4120 Anticipated Indefinite Appropriations21,500**

**4450 Unapportioned Authority26,500**

**4510 Apportionments26,500**

**1010 Fund Balance With Treasury21,500**

######     3101 Unexpended Appropriations - Received21,500

***Explanation of Difference***

There are two differences here.  First, because the subsidy appropriation was anticipated and not realized until OMB concurred with the amount, the agency makes an entry to realize the appropriation.  Second, along with the realization, the agency must record the related Fund Balance With Treasury.  Note that the combination of entries 1-1 and 1-2 yields the same account balances for both the discretionary and mandatory programs.

**1-12.  After consultation and agreement with OMB, the agency decided to exercise a clause in the program’s legislation allowing it to modify the terms of some of the guarantees because of economic downtrends. This reduced the present value of those guarantees by $1,000. The agency transferred the $1,000 from the program fund to the financing fund~~, and the authorized loan guarantee level was~~**~~reduced from $100,000 to $95,349.  A new request for apportionment (SF-132) for the financing fund, showing the reduced loan guarantee level, was submitted to and approved by OMB.~~

*~~Memorandum Accounts - Loan Guarantee Level~~*

~~8020 Loan Guarantee Level - Apportioned4,651~~

~~8010 Guaranteed Loan Level4,651~~

***Explanation of Difference***

Here the basic transaction is the same–the agency is making modifications to loan guarantee terms that cost the government $1,000.  However, some of the related procedures are different.  In the discretionary program, the agency had to reduce the loan guarantee level.  This was because the subsidy appropriation was annual, so the agency had to use subsidy to modify loan guarantees and  could not use the subsidy to making new guarantees (recall that an agency can only make the amount of loan guarantees that its subsidy monies can support).  

In a mandatory program in which an agency can draw additional monies, with OMB approval, from a permanent indefinite appropriation, there is no need to reduce the program level.  The agency can recover the $1,000 subsidy by drawing an additional $1,000 from the appropriation subsidy. This is not illustrated because, we know from the discretionary program guide, the agency did not use the full amount of subsidy, even reduced by the $1,000 used for modifications, to make loans.  However, the agency would not make the entry to reduce the loan level, unless OMB directed the agency to reduce it.

## TRIAL BALANCES AND FINANCIAL STATEMENTS

Pre- and post-closing trial balances, financial statements, and the quantitative portion of the credit program note for the mandatory program would be the same as for the discretionary program for both fiscal years, with the exception that the guaranteed loan level probably would remain at $100,000 instead of having been reduced to $95,349.  The pre-closing trial balance of memorandum accounts for the loan guarantee level would thus be:

Memorandum Accounts–Loan Guarantee Level (Financing Fund Only)

8010**$100,000**

8015                            -0-

8020                  **(10,000)**

8040                  (90,000)

8045                           -0-

$   -0-

The closing entry for these accounts would be:

**1-19 The agency made the following closing entries.**

##### Memorandum Accounts - Loan Guarantee Level (F234)

8020 Guaranteed Loan Level - Apportioned**10,000**

   8045 Guaranteed Loan Level - Unused Authority**10,000**

And the post-closing trial balance would be:

*Memorandum Accounts–Loan Guarantee Level (Financing Fund Only)*

8010**$100,000**

8015     -0-

8020     -0-

8040 (90,000)

8045**(10,000)**

$         0

Narrative descriptions about funding and loan levels authorized would be different, but are not illustrated for either program.  (The narrative about program level and nature of subsidy funding would be different, because the program loan level was reduced in the discretionary program but not in the mandatory program, and the subsidy appropriation in the mandatory program was no-year authority, as opposed to annual authority in the discretionary case.)

# APPENDIX 2: 

# APPENDIX 3: REFERENCES

This appendix lists some key references and Web sites for readers who want to obtain additional information.

**OFFICE OF MANAGEMENT AND BUDGET**

· OMB Bulletin 01-09, *Form and Content of Agency Financial Statements for Audit*

· OMB Circular A-11, *Preparation, Submission, and Execution of the Budget*

· OMB Credit Model

OMB Publications Office at (202) 395-7332

Office of Federal Financial Management (202) 395-3993

Web site: www.whitehouse.gov/omb 

**FEDERAL ACCOUNTING STANDARDS ADVISORY BOARD**

Statement of Federal Financial Accounting Standards (SFFAS) No. 1, *Selected Assets and Liabilities*

· SFFAS No. 2, *Accounting for Direct Loans and Loan Guarantees*

· SFFAS No. 3, *Inventory and Related Property*

· SFFAS No. 7, *Accounting for Revenue and Other Financing Sources* (including related implementation guide) 

· SFFAS No. 18, *Amendments to Accounting Standards for Direct Loans and Loan Guarantees*

· SFFAS No. 19, *Technical Amendments to Accounting Standards for Direct Loans and Loan Guarantees*

· Statement of Federal Financial Accounting Concepts No. 2, *Entity and Display* (as amended by SFFAS No. 7)

Accounting and Auditing Policy Committee, Technical Release No. 3: *Preparing and Auditing Direct Loan and Loan Guarantee Subsidies Under the Federal Credit Reform Act*

· FASAB Staff at (202) 512-7350

· Web site: www.fasab.gov

**TREASURY FINANCIAL MANAGEMENT SERVICE**

· *U.S. Government Standard General Ledger* (codified in *Treasury Financial Manual*)

· *Budgetary Accounting in the Federal Government*

· Illustrative Cases in Accounting for Credit Programs (USSGL Division)

· Present Value Monograph

· USSGL Division (Office of Financial Management, Treasury) at (202) 874-9980

· *OMB Circular No. A-11, (June 2003November 2011) Section 185.20, Capital transfers and redemption of debt (line 6C1022 or 1820) are not obligations and therefore do not need to be apportioned on line 8.60??   However, you do need to plan for repayments and show your estimated debt repayments as a negative on line 6C 1022 if funded from prior year balances or 1820 if funded from current year spending authority when you submit your SF 132**.*

*OMB Circular No. A-11, (November*

· *2011) Section 185.19, for financing accounts, additional interest payment amounts to Treasury (i.e.  amounts exceeding your estimate on the most recent approved apportionment) are automatically apportioned.*

· The permutations to credit reform accounting for loan guarantees are endless.  In future iterations of the case study, additional years and transactions could be added to build upon what is presented here.

�See §II.4, Instructions for Annual Financial Statements, OMB Circular A-136.

�OMB Circular No. A-11, Section 185.3(e)

�The illustration is for the payment of administrative expenses without prior obligation through undelivered orders or accounts payable.  Though administrative expenses will usually be obligated before payment, there is nothing about the transactions unique to credit program accounting, and they are not shown.

�This relates to downward re-estimates and negative subsidies.

�This relates to upward re-estimates.

�Cumulative Results of Operations must be zero after closing because the financing fund cannot have a net cost of operations or net position.  Under FCR the net cost is captured in the program fund, so cumulative results of operations is always zero. OMB A-11, Section 185, Exhibit E illustrates that the financing fund is designed to break even and thus have a zero results of operations. 

�Programs that have risk categories must maintain separate financing fund accounting for each risk category.  While annual appropriations for basic and modified subsidy, which are common in discretionary loan guarantee programs, are illustrated, some programs may have multi-year or permanent indefinite appropriations provided for these purposes in their underlying legislation.  Accounting for these types of appropriations is essentially the same as it would be for basic operating appropriations or revolving fund.  See Appendix 2 for examples.

�Note that this is higher than the $500 of fees in the subsidy model, because $500 is the present value of the fees, and $510 is the actual amount of fees expected to be collected.

� OMB Circular A-11 Exhibits 185N through 185U shows examples of various SF132s

� Note that these entries maybe done as two separate steps as warrant and signing of appropriations bill do not always coincide.

�Although the agency is guaranteeing 80 percent of the loans made by third-party lenders, Federal budget rules provide that the 100 percent figure would still be used as the loan level even if the guarantee was for less than 100 percent.  The figure also would be 100 percent of principal only even if defaulted interest was guaranteed as well.  See OMB Circular A-11, Preparation, Submission and Execution of the Budget (June 2003), §185.11(c).

�$5,500 needed to pay defaults and interest supplements, $3,500 and $2,000 is apportioned.  

�Note that in accordance with §145.6 of OMB Circular A-11, only realized resources may be obligated.  

�$90,000 in loan commitments x 21.5 percent subsidy = $19,350.

�Note that the unfilled customer order from the program fund constitutes a realized resource.  Only the $5,500 apportioned in transaction 1-2 can be allotted.  Also note that there is no cash related to this authority at this time.  If a disbursement needed to be made prior to the cash being received, borrowing authority would need to be used to make the disbursement.  See year 2 for an example.

�$87,000 in guaranteed loans disbursed x the 21.5 percent subsidy rate = $18,705.

�Note that no additional allotment is made, because the full $5,500 that OMB apportioned was allotted in transaction 1-5.

� The present value of defaulted guaranteed loans and remaining guaranteed loans must be split.  This can be done on agency determined schedule but at a minimum, year end.

�If interest receivable at the time of default had been recorded as part of loans receivable, the entire $240 would be credited to 135000.  See transaction 1-10.  Note – the principal and interest breakdown are for illustration purposes only.  According to the Debt Collection Improvement Act (DCIA), unless there is some other contractual agreement, the payments must be applied to penalties, administrative costs, additional interest, financing interest and finally principal.  If DCIA was applied in this example, no principal would be paid as there is a balance $1,250 in interest.

�Before making the modifications, the agency must be certain that it has sufficient unobligated resources for subsidy in the program fund.  In this guide, the amount of unobligated resources, as represented by allotments related to the subsidy, amounted to $2,150 ($21,500 from transaction 1-3 less $19,350 from transaction 1-5).

�The subsidy rate for fiscal year 1 is 21.5 percent.  The original subsidy authorized to support $100,000 in loan guarantees was $21,500.  The remaining subsidy, after the modification, is $20,500.  This $20,500 will support the making of only $95,349 in new loans ($20,500/.215).  

� For FY 2012 – use 579000 for 310100 and do not do the 310700/570000 entry.  The correction for FY 2013 is needed to properly reflect warrants in the intergovernmental elimination process.

�Original loan level, $100,000, less revised loan level, $95,349 = $4,651.

�Note that unlike in direct loan programs, interest income accrued on defaulted guaranteed loans receivable is credited to the allowance for subsidy account, whether collectible or not.  Similarly, interest income collected without first being accrued also would be credited to allowance for subsidy account.

�This determination of uncollectibility would be made only after attempting to collect the receivables under provisions of the DCIA.

� The FCRA requires that the rates for discounting cashflows, financing account borrowing, and financing account interest earnings be identical and based on the Treasury rate in effect during the period of loan disbursement.  If your loans disburse in segments over several years, several interest rates will be applicable to an individual loan or group of loans.  The correct interest rates are provided for you in the OMB Credit Subsidy Calculator available from your OMB representative.

For loan guarantee financing accounts, the interest rate for cash accumulations related to each loan guarantee is determined by the date that the commercial lender disburses the loan being guaranteed.  Because commercial lenders may not report to you in a timely manner, you can use an estimated fourth quarter amount for disbursements and collections when you report to Treasury at the end of the fiscal year, adjusting this estimate as actual lender data is accumulated.

� The interest rate re-estimate is a reporting requirement for the credit supplement of the President’s budget and the credit footnote of the agencies statements.  Agencies may have other ways of tracking the breakdown than what is presented here.

� The agency must determine the present value breakdown between the defaulted guarantee loan and the remaining guarantees outstanding as only a total re-estimate is calculated and approved by OMB.

�Note that the cumulative results of operations from this activity are zero.  The financing fund cannot have a net position after closing.  Assets must equal liabilities.

� Since loan authority was available only for one year, there are no unused amounts to carry forward

� Note that the column for unexpended appropriations would normally not be applicable, because the financing fund does not have appropriations.  However, positive modification adjustment transfers are indefinite appropriated funding. 

� Statement of Budgetary Resources is a combined report.  Inter-entity eliminations are not allowed.

� Note:  Footnotes are not supported by the USSGL crosswalks.

� Note:  Footnotes are not supported by the USSGL crosswalks.

�The information presented here is for the applicable sections of note 8 Direct Loans and Loan Guarantees, Non-Federal Borrowers in OMB’s Circular A-136, Financial Reporting Requirements .  A reconciliation of subsidy cost allowance for guaranteed defaults is not required in A-136 so it is not presented; however, some organizations present it for consistency with the presentation of direct loans.

�   The components of some of the disclosure in the Credit Program note cannot be derived from the standard USSGL accounts.

�This information is obtained from the subsidy model.

� Since the agency operates only a loan guarantee program, and the administrative expense is already set forth in the Statement of Net Cost, Section O could be omitted in the guide.  It is provided here for illustrative purposes only.

� Financing funds are not required to breakdown outlays by New and Balance authority

� OMB Circular No. A-11, Section 185.19, for financing accounts, additional interest payment amounts to Treasury (i.e.  Amounts exceeding your estimate on the most recent approved apportionment) are automatically apportioned.

� There should be no unobligated balances remaining if borrowing authority for a cohort is being used unless there is a timing issue where the authority/cash is received after the obligation/disbursement needs to be made.  As is the case with the interest on uninvested cash.

� Indefinite appropriations are not available until warrant is processed.  Per §2025.10, of the TFM, the requirement to request

appropriations by letter includes Indefinite appropriations—Appropriations of an unspecified amount of money.

� Unobligated balance carryforward and borrowing authority are available for apportionment. 

�  Borrowing authority is available for apportionment.

� Agencies may borrow an estimated amount or on as needed basis

� Original subsidy rate for each cohort must be used in calculating subsidy transfer amount – Cohort 1 2,000 x 21.5% = 430.  Cohort 2 60,000 x (5%) = 3,000.  Note – Since one cohort cannot pay for another cohort’s obligation, there is not enough cash in Cohort 2 to cover the negative subsidy payment.  Only cash is $800 in fees collected.  Therefore, the borrowing authority must be converted to cash.

� These SGLs are always Federal with trading partner 099

� The original subsidy rate is used in determining the amount of subsidy to de-obligate with the commitment cancelation.

� Amount of unfilled order cancelation could have been anticipated in the SF132 in which case the amount would debit 407000.

� Amounts could come from prior year balances if there is enough remaining to cover.  In that instance the amounts would be shown on line 1042.

� Reduce allotments 5,000 for reduction in estimated defaults and increase $1, 000 for modification.  Net reduction of $4,000

� Use 404800 if funds are anticipated from prior year authority

� Use 404800/415200 if funds from paid from prior year authority

� Cohort 1 – 30,875 x 80% = 24,700 Cohort 2 – 60,000 x 75% = 45,000

�  Cohort 1 – 2,000 x 80% = 1,600 Cohort 2 – 60,000 x 75% = 45,000

� For the program fund only the unexpired fund is reported on lines 0700 to 1941

� Financing funds are not required to breakdown outlays by New and Balance authority

�The legislation providing for this is Public Law 101-510, a separate part of the Defense Appropriation Act of 1990, applying more broadly to most Federal agencies.  The USSGL Board has published a document entitled Budgetary Accounting in the Federal Government that is available through its Web site at www.fms.treas.gov/USSGL/bag.html.  

�It is important to note these assumptions, because they form the basis for changes to be discussed.  It is possible that variations, even within the assumptions, could exist and that entries could differ still further.  For example, OMB might decide on a lesser amount of subsidy funding than the agency anticipated in its request and if needed, increase the amount later (see transactions 1-1 and 1-2).  The more specific assumption in this appendix is that the nature of transactions and amounts between the discretionary and mandatory programs is the same.

�Before making the modifications, the agency must be certain that it has sufficient unobligated resources for subsidy in the program fund.  In this guide, the amount of unobligated resources, as represented by allotments related to the subsidy, amounted to $2,150 ($21,500 from transaction 1-3 less $19,350 from transaction 1-5).

�To be consistent with the way all costs are in the program fund, I believe the M.A.T. costs should also be in the program fund and we need to request a title change for this account

�To be consistent with the way all costs are in the program fund, I believe the M.A.T. costs should also be in the program fund and we need to request a title change for this account

�The transactions listed are the financing fund as well

�Changed section to a better section regarding this issue

�Moved to be consistent with year 1 presentation

�Didn’t see it

�Didn’t see it

�F302

�F302

�Don’t know where these numbers came from?

�Didn’t see

�Didn’t see

�Didn’t see

�Didn’t see

�Not sure where these numbers are coming from?

�Not sure where these numbers are coming from

�F346

�

�To be moved to SF132 with borrowing authority.  Currently SF132 does not exist.