**ASSISTED ACQUISITION GUIDANCE**

**EFFECTIVE FISCAL YEAR 2018**

**PREPARED BY:**

**GENERAL LEDGER AND ADVISORY BRANCH**

**BUREAU OF THE FISCAL SERVICE**

**U.S. DEPARTMENT OF THE TREASURY**

**ASSISTED ACQUISITION GUIDANCE**

**Effective Fiscal 2018**

Page 3 of 41                                                                                  December 5, 2017

**Background:**

Assisted acquisitions serve to leverage the aggregate buying power of the Federal Government, enhance efficiency in the reimbursable transaction process, and better meet the need of federal agency missions.  This scenario provides guidance for reporting assisted acquisition activities.

Assisted acquisition is the term used to describe the process by which the buyer uses the contracts and/or contracting services/vehicles of the seller to obtain goods and services from a third-party provider that typically is a non-federal entity. In the process, the seller performs acquisition activities on a buyer's behalf, such as awarding and administering a contract, task order, or delivery order. As the non-federal vendor performs on the contract agreement, the seller incurs costs, including administration fees, and bills the buyer for reimbursement.[footnoteRef:1]  This scenario provides two situations under which assisted acquisitions commonly occur.  The purpose of this scenario is to demonstrate the correct handling of assisted acquisitions to ensure that intragovernmental eliminations are handled correctly on the Financial Report of the U.S. Government (FR) so that revenue and expenses are not overstated.   [1:  TFM 2-4700, Appendix 10, Section 9.2] 

Memorandum accounts are used in this scenario to eliminate intragovernmental asset transactions.  These accounts are    used so that proper intragovernmental eliminations occur and revenue and Cost of Goods Sold (COGS) are not overstated on the FR.  Due to various capitalization thresholds throughout the government and the need to properly eliminate buy/sell transactions involving capitalized assets, the memorandum USSGL accounts are often used as a way to facilitate proper eliminations.  In the case of assisted acquisitions in which the seller (performing agency) expenses the items, as opposed to recognizing inventory, the memorandum accounts with a Fed/Non-Fed Attribute Domain Value of “F” should not be used.

Frequently, capitalization thresholds among different governmental agencies cause elimination issues.  The Federal Accounting Standards Advisory Board (FASAB) believes that capitalization thresholds should be established by federal entities rather than centrally by the FASAB Board.  Because federal entities are diverse in size and in the use of Property, Plant and Equipment (PP&E), entities must consider their own financial and operational conditions in establishing an appropriate capitalization threshold or thresholds.  Once established, this/these threshold(s) should be consistently followed and disclosed in the financial reports.[footnoteRef:2]  Because of these varying thresholds, there can be issues in intragovernmental buy/sell transactions involving capital assets. [2:  FASAB SFFAS No. 6] 

When direct costs are capitalized subsequently to an in-progress product/job or to a completed product/job, these costs should first be reported using the 600000, Expenses, series USSGL accounts.  This will allow agencies to accumulate their cost information, establish audit trails, and allow proper elimination and consolidation at the governmentwide level.  Agencies will offset those amounts using account 661000, “Cost Capitalization Offset,” when the cost is capitalized into an “in-process” or “finished product” asset account.  In this scenario, the seller (performing agency) has expensed a good.  Therefore, the buyer (ordering agency) must first recognize an expense to facilitate eliminating and proper governmentwide reporting and then reclassify this expense to an asset account.

This scenario proposes changes to Account Transaction Codes D514, G120, G122 and G124.  By making these changes, and agencies adhering to the guidance that follows, it will eliminate current intragovernmental elimination issues.

The two assumptions presented in this scenario are:

1. The ordering (buying) agency utilizes the purchasing contract of the performing (selling) agency to buy an asset from a non-federal, third-party vendor.  The ordering agency pays the performing agency, which in turn pays the non-federal vendor for the asset.

2. The ordering agency uses the performing agency’s purchasing contract with a non-federal vendor to purchase an asset.  The ordering agency pays the non-federal vendor directly for the asset.  The ordering agency also pays the performing agency an agency fee.

For illustrative purposes, and to be consistent with OMB Circular No. A-11, this scenario refers to the selling agency as the performing agency and the buying agency as the ordering agency.

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**Modified USSGL Account Transactions (Effective FY 2018)**

**Account Transaction:** D514 To record the reclassification of expenses to “in-process type” asset accounts.

**Comment:** Due to the reconciliation of interagency expenses and revenues, agencies must first record all direct costs to the

                  USSGL account 600000, “Expenses” series and then offset those amounts using the USSGL account 661000, “Cost 

                  Capitalization Offset,” when the costs are capitalized to the appropriate “in-process type”asset account.  Also post USSGL  

                  TC G120, G122 or G124 if using this entry to post to a finished asset account. 

**Justification:** The completed asset accounts need to be added to this transaction because some agencies transfer direct costs directly to the completed asset accounts.

**Budgetary Entry**

****None

**Proprietary Entry**

****Debit   151600   Operating Materials and Supplies in Development

                  Debit   152600   Inventory – Work-in-Process

                  Debit   172000   Construction-in-Progress

                  Debit   173000   Buildings, Improvements, and Renovations

                  Debit   174000   Other Structures and Facilities

                  Debit   175000   Equipment

                  Debit   181000   Assets Under Capital Lease

                  Debit   182000   Leasehold Improvements

                  Debit   183000   Internal-Use Software

                  Debit   183200   Internal-Use Software in Development

                     Credit  660000   Applied Overhead

                     Credit  661000   Cost Capitalization Offset

**Account Transaction:** G120 To record activity for current-year purchases of property, plant, and equipment.

**Comment:** USSGL transactions that reference this transaction: USSGL TCs-B402, B404, B406, B430, B438, B604, C132,  

                 C134, C136, C138, C414, D132, D134, D514, and G124.

**Reference:**  USSGL implementation guidance; Memorandum Accounts for Current-Year Asset Activity - Purchases

**Justification:** A reference to this account transaction was added to D514.  The comment for account transaction G120 needs to be updated to reflect this.

**Budgetary Entry**

****None

**Memorandum Entry**

                  Debit   880200   Purchases of Property, Plant, and Equipment

                     Credit  880100   Offset for Purchases of Assets

**Account Transaction:** G122 To record activity for current-year purchases of inventory and related property.

**Comment:** USSGL transactions that reference this transaction: USSGL TCs-B402, B404, B406, B430, B438, B604, C132, 

                 C134, C136, C138, C414, D132, D134, D514, and G124.

**Justification:** A reference to this account transaction was added to D514.  The comment for account transaction G120 needs to be updated to reflect this.

**Budgetary Entry**

****None

**Memorandum Entry**

                 Debit   880300   Purchases of Inventory and Related Property

                    Credit  880100   Offset for Purchases of Assets

****

**Account Transaction:** G124 To record activity for current-year purchases of other assets not recorded as Property, Plant, and Equipment (USSGL TC-G120), or Inventory and Related Property (USSGL TC-G122).

**Comment:** USSGL transactions that reference this transaction: USSGL TCs-B152, B402, B404, B406, B438, B604, C132, C134, C136, C138, C414, D132, D134, and D514.

**Justification:** A reference to this account transaction was added to D514.  The comment for account transaction G120 needs to be updated to reflect this.

**Budgetary Entry**

****None

**Memorandum Entry**

                  Debit   880400   Purchases of Assets - Other

                     Credit  880100   Offset for Purchases of Assets

****

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

**Assumption 1: The ordering (buying) agency utilizes the purchasing contract of the performing (selling) agency to buy an asset from a non-federal, third-party vendor.  The ordering agency pays the performing agency, which in turn pays the non-federal vendor.**

If funded by direct appropriations, also post:

Also post:

**Pre-Closing Adjusted Trial Balance Period 12:**

**Financial Statements:**

**Reclassified Financial Statements:**

**Assumption 2:  The ordering agency uses the performing agency’s purchasing contract with a non-federal vendor.  The ordering agency pays the non-federal vendor $10,000 directly for the goods.  The ordering agency also pays the performing agency an agency fee of $2,000.**

If funded by direct appropriations, also post:

Also post:

Also Post:

**Pre-Closing Adjusted Trial Balance Period 12:**

**Financial Statements:**

**Reclassified Financial Statements:**