Debt Forgiveness Appropriation versus No Appropriation

SPECIAL AND NON-REVOLVING TRUST FUND EXPENDITURE ACCOUNTS WITH BORROWING AUTHORITY (NO APPROPRIATION WARRANT)

**Debt Forgiveness Appropriation versus No Appropriation**

**Effective Fiscal Year 2018**

**Prepared By:**

**General Ledger Advisory Branch**

**Bureau of the Fiscal Service**

**Department of the Treasury**

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**NOTE**:  This scenario follows USSGL TFM Bulletin No. 2018-05****

**Background**

On occasion, Congress enacts into Public Law an appropriation for the forgiveness of debt.  When that occurs, the Department of Treasury processes a Treasury warrant, and subsequently, the receiving entity must repay the debt back to the Bureau of the Fiscal Service. This may occur in general funds, revolving funds, special funds, and trust funds (revolving and non-revolving).  This activity does not currently occur in credit reform accounts.  

Appropriation language for the forgiveness of debt is different than the typical appropriation language provided by Congress. Forgiveness of debt appropriation do not provide new budgetary resources from which to obligate.  Instead, the budget authority granted is immediately used to repay the debt, resulting in zero budgetary resources.  

When appropriations are enacted pertaining to borrowings by special or non-revolving trust funds, a Treasury appropriation warrant will be processed into a specific agency general fund expenditure account, and then subsequently transferred to the applicable special or non-revolving trust fund expenditure account. 

In addition, there have been instances where a Public Law is enacted for the forgiveness of debt without receiving an appropriation.  A negative surplus warrant is processed when the legislation doesn’t explicitly state that there is an appropriation received for the debt forgiveness.  

Debt Forgiveness with an Appropriation Warrant

· Refer to Attachment A for a scenario addressing general and revolving fund expenditure accounts with borrowing authority (Appropriation Warrant)

· Refer to Attachment B for a scenario addressing special and non-revolving trust funds with borrowing authority (Appropriation Warrant)

Debt Forgiveness without an Appropriation Warrant

· Refer to Attachment C for a scenario addressing general and revolving fund expenditure accounts with borrowing authority (No Appropriation - Negative Surplus Warrant)

· Refer to Attachment D for a scenario addressing special and non-revolving trust funds with borrowing authority (No Appropriation - Negative Surplus Warrant)

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**NEW USSGL ACCOUNT FOR FISCAL 2018**: 

**Account Number**: 	411601**Account Title**: 	Debt Forgiveness – Cancellation of Debt Adjustments**Normal Balance**: 	Debit

**Definition**: The amount of adjustment to budgetary resources where Congress provides the legal authority to cancel outstanding debt.

**Justification**:  A new USSGL account is needed to capture and distinguish a unique form of an adjustment to budgetary resources that cancels outstanding debt.

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Attachment A

Debt Forgiveness Appropriation versus No Appropriation:

General and Revolving Fund Expenditure Accounts

With Borrowing Authority (Appropriation Warrant)

**Debt Forgiveness Appropriation versus No Appropriation**

                                                                                                   Page 7 of 82                                              DRAFT IRC Handout 7-12-2018

**Attachment A – General and Revolving Fund Expenditure Accounts with Borrowing Authority**

**Scenario Assumptions**

· The Budget Enforcement Act (BEA) category for illustration purposes is Discretionary.

· The Revolving Fund Expenditure Account Treasury Account Symbol (TAS) displayed is:

· 70X4000, “Revolving Fund Expenditure account” 

· TAS 70X4000 is a not a dedicated collection fund

· TAS 70X4000 has definite borrowing authority

· The beginning trial balances carry forward balances of borrowing authority (unobligated) and outstanding debt.

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**Listing of USSGL Accounts Used in This Scenario (Attachment A)**

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**Illustrative Transactions**

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**Closing Entries**

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**SF 133: STATEMENT OF BUDGETARY EXECUTION AND BUDGETARY RESOURCES and SCHEDULE P: BUDGET PROGRAM AND FINANCING SCHEDULE**

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Debt Forgiveness Appropriation versus No Appropriation

GENERAL AND REVOLVING 	FUND EXPENDITURE ACCOUNTS WITH BORROWING AUTHORITY (APPROPRIATION WARRANT)

Attachment A                                                                                  Page 21 of 82                                         DRAFT IRC Handout 7-12-2018

Attachment B

Debt Forgiveness Appropriation versus No Appropriation:

Special and Non-Revolving Trust Fund Expenditure Accounts

With Borrowing Authority (Appropriation Warrant)

Attachment B                                                                                Page 25 of 82                                          DRAFT IRC Handout 7-12-2018

**Attachment B – Special or Non-Revolving Trust Fund Expenditure Accounts with Borrowing Authority**

**Background**

When appropriations are enacted pertaining to borrowings by special or non-revolving trust funds, a Treasury appropriation warrant will be processed into a specific agency general fund expenditure account, and then subsequently transferred to the applicable special or non-revolving trust fund expenditure account. This general fund expenditure account is sometimes referred to as a “feeder” account.  Although the concept of feeder accounts has been predominantly phased out, it still exists for debt forgiveness situations.  Prior to the activity occurring, the agency must request that Treasury establish the proper general fund expenditure account and special or trust fund available receipt account pertaining to the enacted legislation.

**Scenario Assumptions**

· This example illustrates an agency General Fund Expenditure Account Treasury Account Symbol (TAS) 12X0001, and Trust Fund Expenditure TAS 12X8000.  (Available Trust Fund Receipt Account TAS 12X8000.00X is not shown in this illustration, because USSGL presentations involving ‘available’ trust fund receipt and expenditure accounts are combined and shown in the expenditure account only.)

· TAS 12X0001 and 12X8000 are not dedicated collection funds

· TAS 12X0001 and 12X8000 has definite borrowing authority

· The Budget Enforcement Act (BEA) category for illustration purposes is Discretionary.

· The beginning trial balances of the agency general fund are zero.  

· The beginning trial balances of the agency trust fund expenditure account carry forward balances of borrowing authority (unobligated) and outstanding debt.

**Listing of USSGL Accounts Used in This Scenario (Attachment B)**

**Illustrative Transactions**

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**Closing Entries**

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**SF 133: STATEMENT OF BUDGETARY EXECUTION AND BUDGETARY RESOURCES and SCHEDULE P: BUDGET PROGRAM AND FINANCING SCHEDULE**

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Debt Forgiveness Appropriation versus No Appropriation

SPECIAL AND NON-REVOLVING TRUST FUND EXPENDITURE ACCOUNTS WITH BORROWING AUTHORITY (APPROPRIATION WARRANT)

Attachment B                                                                                  Page 45 of 82                                        DRAFT IRC Handout 7-12-2018

Attachment C

Debt Forgiveness Appropriation versus No Appropriation:

General and Revolving Fund Expenditure Accounts

With Borrowing Authority (No Appropriation - Negative Surplus Warrant)

Attachment C                                                                                  Page 46 of 82                                       DRAFT IRC Handout 7-12-2018

**Attachment C – General and Revolving Fund Expenditure Accounts with Borrowing Authority**

**Scenario Assumptions**

· The Budget Enforcement Act (BEA) category for illustration purposes is Discretionary.

· The Revolving Fund Expenditure Account Treasury Account Symbol (TAS) displayed is:

· 70X4000, “Revolving Fund Expenditure account”

· TAS 70X4000 is a not a dedicated collection fund

· TAS 70X4000 has definite borrowing authority

· The beginning trial balances carry forward balances of borrowing authority (unobligated) and outstanding debt.

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**Listing of USSGL Accounts Used in This Scenario (Attachment C)**

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**Illustrative Transactions**

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**Closing Entries**

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**SF 133: STATEMENT OF BUDGETARY EXECUTION AND BUDGETARY RESOURCES and SCHEDULE P: BUDGET PROGRAM AND FINANCING SCHEDULE**

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Debt Forgiveness Appropriation versus No Appropriation

GENERAL AND REVOLVING 	FUND EXPENDITURE ACCOUNTS WITH BORROWING AUTHORITY (NO APPROPRIATION WARRANT)

Attachment C                                                                                  Page 63 of 82                                           DRAFT IRC Handout 7-12-2018

Attachment D

Debt Forgiveness Appropriation versus No Appropriation:

Special and Non-Revolving Trust Fund Expenditure Accounts

With Borrowing Authority (No Appropriation - Negative Surplus Warrant)

Attachment D                                                                                  Page 64 of 82                                          DRAFT IRC Handout 7-12-2018

**Attachment D – Special or Non-Revolving Trust Fund Expenditure Accounts with Borrowing Authority**

**Background**

When cancellation of debt is enacted pertaining to borrowings by special or non-revolving trust funds, a Treasury negative surplus warrant will be processed into a specific agency general fund expenditure account, and then subsequently transferred to the applicable special or non-revolving trust fund expenditure account. This general fund expenditure account is sometimes referred to as a “feeder” account.  Although the concept of feeder accounts has been predominantly phased out, it still exists for debt forgiveness situations.  

**Scenario Assumptions**

· This example illustrates an agency General Fund Expenditure Account Treasury Account Symbol (TAS) 12X0001, and Trust Fund Expenditure TAS 12X8000.  (Available Trust Fund Receipt Account TAS 12X8000.00X is not shown in this illustration, because USSGL presentations involving ‘available’ trust fund receipt and expenditure accounts are combined and shown in the expenditure account only.)

· TAS 12X0001 and 12X8000 are not dedicated collection funds.

· TAS 12X0001 and 12X8000 has definite borrowing authority. 

· The Budget Enforcement Act (BEA) category for illustration purposes is Discretionary.

· The beginning trial balances of the agency general fund are zero.  

· The beginning trial balances of the agency trust fund expenditure account carry forward balances of borrowing authority (unobligated) and outstanding debt.

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**Listing of USSGL Accounts Used in This Scenario (Attachment D)**

**Illustrative Transactions**

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**Closing Entries**

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**SF 133: STATEMENT OF BUDGETARY EXECUTION AND BUDGETARY RESOURCES and SCHEDULE P: BUDGET PROGRAM AND FINANCING SCHEDULE**

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Attachment D                                                                                  Page 65 of 82                                          DRAFT IRC Handout 7-12-2018