August 22, 2002

**PRIOR PERIOD ADJUSTMENTS**

Occasionally, financial statements require adjustments for events that occurred in previous periods or for changes in accounting principles.  Statement of Federal Financial Accounting Standards (SFFAS) number 7, Revenue and Other Financing Sources, addresses such changes, which are prior period adjustments.  These changes are limited to corrections of errors and changes with retroactive effect.  The standard states the “...adjustments should be recognized as a change in cumulative results of operations....”1  Further, “prior period financial statements should not be restated for prior period adjustments recognized in the current period.” When financial statements containing material accounting errors are presented on a comparative basis, the auditors would have to qualify their opinion and the information is confusing to readers of the statements. In SFFAS number 21, Reporting Corrections of Errors and Changes in Accounting Principles, the Federal Accounting Standards Advisory Board (FASAB) amended its position.  “...Reporting entities are required to restate prior period financial statements for material errors discovered in the current period, if such statements are provided for comparative purposes, and if the effect would be material to the financial statements of either period.”2  Prior period financial statements should not be restated for changes in accounting principles unless otherwise directed by the new accounting standard.

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

· Changes in accounting principle;

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

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

##### Approved USSGL Accounts

## 3108   Unexpended Appropriations – Prior-Period Adjustments – Restated

5708   Expended Appropriations – Prior-Period Adjustments – Restated

###### 5709   Expended Appropriations – Prior-Period Adjustments – Not Restated

7401   Prior-Period Adjustments - Restated

###### Changes to Existing USSGL Accounts

3109  Unexpended Appropriations – Prior-Period Adjustments – **Not Restated**

7400 Prior-Period Adjustments – **Not Restated**

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

**Pre-Closing Trial Balance – 2000:**

## Post-Closing Trial Balance – 2000:

**FY 2001:**

## Pre-Closing Trial Balance – 2001:

**Closing Entries**

## Post-Closing Trial Balance – 2001:

### FINANCIAL STATEMENTS

### BALANCE SHEET200120002000

(Restated)

1A1 Fund Balance with Treasury  (1010E)10,00010,00010,000

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

2 Total Assets12,20012,00012,000

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

4 Total Liabilities  3,200             3.000  1,000

6A Unexpended Appropriations (3100E) 6,8007,000  9,000

6B Cumulative Results of Operations (3310E)               2,2002,000  2,000 

7 Total Net Position 9,0009,000 11,000

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

### Statement of Net Cost

1C Total Cost (6100E)      1003,0001,000

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

4 Net Cost of Operations      1001,000          (1,000)

### Statement of Changes in Net Position (FY 2001)

**Cum ResultsUnexp Approp**

(3310) **(3100)**

## 1 Beginning Balances  2,000    9,000

2 Prior Period Adjustments-Restated

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

   Beginning Balances                        2,000    7,000

  (After restatement)

 Prior Period Adjustments-Not Restated

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

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

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

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

17 Net Cost of Operations       100

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

**Statement of Changes in Net Position (2000 Restated)**

**Cum ResultsUnexp Approp**

**(3310)   (3100)**

## Beginning Balances         00

Prior Period Adjustments 

Beginning Balances, As Adjusted                                0                                0

Appropriations Received (3101E)                                   10,000

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

Total Financing Sources    3,000    (3,000)

Net Cost of Operations    1,000

Ending Balances    2,000    7,000

### Statement of Changes in Net Position (2000)

**Cum ResultsUnexp Approp**

**(3310)   (3100)**

## Beginning Balances         0            0

Prior Period Adjustments 

## Beginning Balances, As Adjusted                                0            0

## Appropriations Received   10,000

Appropriations Used  1,000    (1,000)

Total Financing Sources  1,000                            9,000

Net Cost of Operations   (1,000)

Ending Balances    2,000      9,000

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

## 2A Unobligated Balance, Beg. of Period11,000

       (4201B, 4251B, 4901E)

## 3A2 Spending Authority from Offsetting Coll

Receivable (4251E-B)     200

7 Total Budgetary Resources11,200

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

9A1 Unobligated Balance, Currently Available   8,900

(4610E)

10D Unobligated Balances Not Avail-Other      200

(4450E)

11 Total Status of Resources11,200

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

13 Obligated Balance, Net Transfer      0

14 Obligated Balance, End

  14A Accounts Receivable(4251E)  2,200

  14D Accounts Payable (4901E)  2,000

15A Gross Disbursement0

15B Offsetting Collections0

**Please note:  The SF 133 is not restated for FY 2000.**

Statement of Financing (2001)

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

2 Less:  Spending Authority from Offsetting

Collections (4251E-B)    200

3 Obligations Net of Offsetting Collections 2,000

16 Other Resource or Adjustments 

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

30 Net Cost of Operations                                                 100

### Statement of Financing (2000 Restated)

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

2 Less:  Spending Authority from Offsetting

2 Less:  Spending Authority from Offsetting

Collections (4251E-B)2,000

3 Obligations Net of Offsetting Collections1,000

16 Other Resource or Adjustments 

30 Net Cost of Operations1,000

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

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

3 For illustration purposes only.

4 For illustration purposes only.

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