" ·~ 

\, 

·>- -~ 

.1989 Consolidated Financial Statements 

I 

Prepared and Published by the 

FINANCIAL MANAGEMENT SERVICE 

Department, of the Treasury -

• 

Prototype 

" 
THE FINANCIAL MANAGEMENT SERVICE 

DEPARTMENT OF THE TREASURY 

• 

The mission of the Financial Management Service 

is to improve the quality of Governmentjinancial 

management. Our commitment and our responsibility 

is to help our Government customers achieve 

success. We do this by linking program and 

financial management objectives, and by providing 

financial services, information, advice, and 

assistance to oil~ customers. We serve taxpayers,' 

the Treasury Department, Federal program 

agencies, and Government policy makers. 

J 
CONSOLIDATED FINANCIAL STATEMENTS 

of the 

United States Government '"' ,.,,,,,, ,,,,,, ",I,, ,,.,,,,,,,,, 

.Fi.seal Year 1989 

Prepared and Published by the 

FINANCIAL MANAGEMENT SERVICE 
! 

f 

Contents 

Secretary's Statement 3 

Comptroller General's Statement 4 

Introduction 5 

Financial Highlights 7 

Consolidated Financial Statements 

Financial. Position 11 

Operations 12 

Changes in Financial Position 13 

Receipts and Outlays 14 

Reconciliation of Accrual Operating Results 

to the Cash Basis Budget 15 

Notes to Financial Statements 17 

Independent Auditors' Report 26 

Supplemental Tables 

Summary of Accounts and Loans Receivable 

Due From the Public 27 

Federal Debt 29 

Commitments and Contingencies 31 

Additions to Non-Federal Economic Resources 33 

Estimates for Tax Expenditures in the 

Income Tax 35 

Open-ended Programs and Fixed Costs 36 

Federal Obligations 37 

For sale by lb: Suporinh:ndont of Documents, U.S. Govommc:nt Printing Offioo 

Washington, D.C. 20402 

f 

) 
Statement of the Secretary of the Treasury 

The Department of the Treasury is pleased to present this set of Consolidated Financial Statements prepared by the Financial Management Service. These statements provide summary information on the financial condition and operations of the Federal 

Government. 

The financial information in these reports originates in program agency accounting 

systems across Government. While substantial progress has been made in recent years 

to replace the most obsolete systems, much remains to be done to improve the remaining 

systems. The great majority of program agency systems now report based on the U.S. 

Government's Standard General Ledger. Almost all program agencies can now report via 

telecommunications to Treasury's computers. All new systems under development now 

have access to the Federal Government's Core Systems Requirements, issued just last 

year. These successes are improving the quality of financial data provided by the 

agencies. 

Three additional actions now underway should complete the task of modernizing the 

Government's financial systems and reporting capabilities. First, a Presidential Management by Objective goal has been established to complete the integration of modernized 

program agency systems with the central systems at Treasury and 0MB. Second, the 

Chief Financial Officers Council is preparing an implementation plan to complete this action across Government. Third, Executive Branch agencies are moving toward audited annual statements. Several Departments have already taken that step and the improved financial data is incorporated in these reports. With the completion of these actions, we will 

reach our goal, a Federal financial management program noted for both quality service 

and fiscal responsibility. 

Nicholas F. Brady 

... actions now underway should 

complete the task of modernizing 

the Government's financial systems 

and reporting capabilities. 

3 
4 

Statement of the Comptroller General 

of the United States 

The prototype consolidated financial statements in this document illustrate how information about the financial condition and operations of the federal government might be 

presented to better inform the Congress, federal executives and the public at large. As 

such, they represent progress in establishing accurate and complete financial information 

about government-wide activities. 

When financial data from individual departments and agencies can withstand audit, it 

will be possible to prepare consolidated statements that accurately measure the magnitude of federal assets, liabilities, commitments and contingencies, as well as the cost of 

government operations and programs. Because accurate information is essential to building and maintaining public trust in the financial operations of the government, the General 

Accounting Office has strongly supported publication of consolidated financial statements 

that can withstand an audit. This is a goal we hope to see accomplished as a part of 

broader financial reforms that are essential throughout the federal government. 

The attached consolidated statements are based on financial data furnished to Treasury by government departments, agencies and corporations. While the Treasury Department has improved their format and presentation, these statements remain neither accurate nor complete. 

Only about a third of the government's outlays have been subjected to an independent audit. Those audits which have been completed show repeated instances of inadequate accounting systems, poor internal controls, and unreliable data, all of which limit the 

accuracy of the information provided to Treasury. For example, GAO's audits over the 

past year of the Air Force and the Federal Housing Administration have disclosed major 

errors, often amounting to several billion dollars, in the financial data. We expect to find 

similar problems in other agencies and military services which have yet to undergo financial audits. On the other hand, our experience has shown that audits frequently lead to 

development of better accounting systems, controls and improved accuracy of financial 

data reported to Treasury in subsequent years. 

In the final analysis, major reform in the area of financial management is essential if 

Treasury's plan to present a set of complete consolidated financial statements is to 

succeed. A key to this effort is the enactment of legislation that would include: 

• Appointment of a Chief Financial Officer for the United States, as well as CFOs 

within major agencies and departments. These officials would be charged with modernization of accounting systems and the strengthening of internal controls throughout the 

government. 

• A requirement for the preparation and audit of annual financial statements by all 

major agencies, to be carried out in accordance with appropriate accounting standards, 

and 

• The establishment of a system of reports to the Congress to facilitate congressional 

oversight. 

I look forward to the day when the federal government's consolidated financial statements are no longer prototypes. Then, GAO would be able to report that the consolidated 

financial statements published by Treasury fairly present the financial condition and the 

results of operations of the federal government. With such information, taxpayers will have 

a true picture of how their money is being spent. Only then will the Congress and officials 

of the executive !)ranch have the information they need on the implications and consequences of their economic policy decisions. 

Charles A. Bowsher 
Introduction 

This year's report incorporates the results of continuing 

efforts to accumulate higher 

quality program data. Consequently, the Financial Management Service (FMS) is able to 

provide more reliable financial 

information in the accompanying statements. 

Departr:nents and agencies 

using the Government's standard general ledger as a nucleus 

contribute to this progress. Their 

support makes it possible for 

FMS to more fully respond to 

data user requirements through 

the application of its electronic 

network, meeting key analytical 

needs. Along these lines, FMS 

is committed to meeting the financial challenges it faces by 

actively improving the quality of 

Government financial 

management. 

Highlights of the 1989 statements include: 

• Agencies which ·have approximately 37 percent of the 

reported assets in 1989 have 

been audited in the past 5 

years. 

• Coverage of efforts by agencies to prepare complete annual 

reports has been expanded. 

The process review begun 

last year by the independent 

CPA firm Price Waterhouse resumed in 1989. This involves 

primarily an examination of 

FMS' procedures for accumulating and summarizing information submitted by departments 

and agencies. 

5 

... to provide more 

reliable financial 

information. 

;. 
FINANCIAL HIGHLIGHTS 

Revenues and expenses 

The following graphs show revenues and expenses for fiscal years 1987 through 1989, and the major 

categories of revenues by source and expenses by agency for fiscal 1989. Certain revenue amounts have been 

reported on the accrual basis and differ from those reported on the cash basis. The data supporting the graph of 

expenses by agency are also reported on the accrual basis and differ from those reported on the cash basis. 

$ 

B 

I 

L 

L 

I 

0 

N 

s 

1250 

1200 

1150 

1100 

1050 

1000 

950 

TOTALREVENUESANDTOTALEXPENSES 

FISCAL YEARS 1987-89 

1987 1988 

Revenues Expenses 

1989 

7 
8 

Revenues and expenses 

FISCAL YEAR 1989 

MAJOR SOURCES OF REVENUES 

Social Insurance Taxes 

and Contributions 

33% 

Corporate Income Taxes 

g>A, 

Individual Income Taxes 

41 % 

Business-Type 

Operations 

g>A, 

Other 

8% 

MAJOR CATEGORIES OF EXPENSES 

Health and Human Services 

Social Security Administration 

17% 

Health and Human Services 

Except Social Security 

11% 

Independent 

Agencies 

12% 

Department 

of Defense 

26% 
Major categories of assets 

Assets are resources owned by the Federal Government that are available to pay liabilities or provide 

public services in the future. The following chart is derived from the Statement of Financial Position and depicts 

the major categories of assets for FY 1989 as a percent of total assets. The components for each of these major 

categories are contained in Notes to Financial Statements. 

MAJOR CATEGORIES OF ASSETS 

$1,210.0 billion 

Cash and Other Monetary Assets 

Receivables 

Inventories 

Property and Equipment 

Investments and Other Assets 

0 10 

Assets, liabilities, and accumulated position 

20 

Percent 

30 40 

The following graph depicts the assets, liabilities, and accumulated position reported in the Statement of 

Financial Position for fiscal years 1987 through 1989. 

$ 

B 

I 

L 

L 

I 

0 

N 

s 

4000 

3000 

2000 

1000 

0 

-1000 

-2000 

-3000 

TOTAL ASSETS, TOTAL LIABILITIES, AND 

ACCUMULATED POSITION, FY 1987-89 

1987 1988 1989 

D Assets • Liabilities D Accumulated Position 

9 
10 

Sources of funds provided and applied 

The charts below have been derived from the Statement of Operations and the Statement of Changes in 

Financial Position for fiscal 1989. 

FUNDS PROVIDED FROM 

Individual Income Taxes 

Corporate Income Taxes 

Social Insurance Taxes 

and Contributions 

OtherTaxes 

Government Business-Type 

Operations 

Borrowing from the Public 

Increase in Liabilities 

0 

11% 

10 20 

Percent 

FUNDS APPLIED TO 

Purchase of Property and Equipment 

Increase in Inventories 

Increase in Accounts and 

Loans Receivable 

Department of Defense Expenses 

Non-Defense Operating Expenses 

Interest on Debt 

Held by the Public 

0 10 20 

24% 

30 

Percent 

35% 

28% 

30 40 

52% 

40 50 60 
CONSOLIDATED FINANCIA I, STATEMENTS 

United States Government Consolidated Statement 

of Financial Position as of September 30, 1989 and 1988 

($ billions) 

Assets 

Cash. 

Other monetary assets ..... . ............... . 

Accounts receivable, net of allowances. 

Inventories, net. 

Loans receivable, net of allowances ................ . .... ..... . . . 

Property, plant and equipment, net of accumulated depreciation . 

Investments in international organizations. 

Deferred retirement costs 

Other assets .. 

Total assets 

Liabilities 

Accounts payable .. 

Interest payable .. .. ...... . 

Accrued payroll and benefits .. ... . .. .... .. . . ... .. . . . .. . .. . . .. ...... .. . . .... . 

Unearned revenue ... .. . . 

Debt issued under financing authority . 

Pensions and actuarial liabilities . 

Other liabilities . 

Total liabilities ......................................................... . 

Accumulated position ................................................... . 

The accompanying notes are an integral part of this statement. 

1989 

41.0 

124.6 

87.9 

227.7 

175.2 

463.6 

23.7 

21.0 

45.3 

1,210.0 

163.7 

41.4 

12.5 

23.2 

2,188.8 

1,235.5 

112.2 

3,777.3 

11 

1988 

44.4 

133.4 

73.3 

212.5 

181 .0 

437.1 

22.3 

20.8 

51.6 

1,176.4 

173.2 

34.6 

11 .9 

22.1 

2,050.0 

1,212.9 

81.5 

3,586.2 
12 

United States Government Consolidated Statement 

of Operations for the Years Ended September 30, 1989 and 1988 

($ billions) 

Revenues 

Levied under the Government's sovereign power 

Individual income taxes ..... . 

Corporate income taxes ............. . 

Social insurance taxeG and contributions. • .• ....... 

Excise taxes. . . . .... . . . ............ . 

Estate and gift taxes . . . . . . . . . . . . . . . . . . , ........ ... ............. . .. . 

Customs duties 

Miscellaneous .. . 

Earned through Government business-type operations 

Sale of goods and services ..... . , . . . . . . . . . . .. ...... . . .. .. . 

Interest. . . .... ..... .. . . . .... . ...... . ....... ... .. . ... . . . 

Other ...... . ...... . ... . ....... . . . ........ .. . ...... . . ......... . . . 

Total revenues ...................... .... , .. ..... .... ... .............. . 

Expenses by agency 

Legislative branch . .... . .. .. . ....... . . ............ ........ . . ... . . ..... . . 

Judicial branch .... . .... . .. . .... ..... .... ... ........ .. . ... ... .. . . ...... . 

Executive branch 

Executive Office of the President ... ........... . ....... . . . .. .. ....... . ... . 

Funds appropriated to the President . . ..... .... . ...... .. . .. . ....... ... ... . 

Departments 

Agriculture .. .. . ......... . .. .. .. ..... .. . . . . . ........ ............. . . 

Commerce . .. .. .. . ..... . .. . . ... .. . . .. . ... ... .. .. . . ... .... . .. . ... . . 

Defense. ..... . . .. .. . .... . .. . .. . ........... .. ........ .. . . .. . 

Education ..... .. ........... .. ... ... . ................ .. .... . .. ... . . 

Energy . . ... .. . . . . . ..... . .... . . . ............. . .... ....... .... . 

Health and Human Services 

Social Security . . . ... .. . 

Other ............. . . . . .. . . 

I lousing and Urban Dcvolopment ...... .. ... , . .......... . . 

Interior . ................ . 

Justice . ... . ... . . ..... . . . ....... . ................ ....... ... • .... .. 

Labor . . . . . . ... . . . ... . .. . .... . ................. . ...... . . . .. ..... . . 

State . . ...... . . . .. .. . ... . . ... . ... . ... .... . . .......... ..... . . 

Transportation .. . ........ .. . . .. . . .. .. . . . ........ . ........... . . . ... . 

Treasury 

Interest on debt held by the public . .... . ........................... .. . 

Other . . . . . . . . . . . . . . . . . . . .. .. ......... .... ...•......... 

Veterans Atta1rs . 

Independent 'il(JAnrip5 . . . . 

Total expenses ..•..•........••••..................•...........••.•••.. 

Excess of expenses over revenues ...............................•••••••. 

The accompanying notes are an integral part of this statement. 

1989 1988 

445.7 401.2 

103.3 94.5 

359.4 334.3 

34.4 35.2 

8.7 7.6 

16.3 15.4 

23.0 20.0 

990.8 908.2 

73.7 82.2 

10.7 11 .9 

12.6 36.9 

1,087.8 1,039.2 

1.6 1.5 

1.3 1.2 

.1 .1 

18.3 19.6 

43.7 62.2 

3.2 2.1 

322.0 292.2 

16.5 17.0 

16.1 15.3 

215.2 211.6 

137.0 127.2 

19.8 21.4 

8.1 5.1 

6.9 3.9 

23.8 24.5 

4.8 3.2 

25.1 24.3 

185.3 168.9 

16.3 12.4 

26.7 29.1 

145.5 1~9.0 

1,237.3 1,171.8 

-149.5 -132.6 
United States Government Consolidateo Statement 

of Changes in Financial Position as of September 30, 1989 and 1988 

('f; h.il!JC1ns) 

Funds provided 

Total revenues ........ . 

Rorrowina frnm the public 

Decrease in receivables 

Decrease in miscellaneou s assets . . . . ..... . . .. .... . . .. ... . ......... . 

Increase in liabilities. . . . . . . . 

Toli:il funds provided . .. ............................ .. ... . ........ ... ........... ... ....... . 

Funds .ippliPrl 

Total expenses ... .. . 

Less accruals for: 

Depreciation . . . ................. . .. .. .. . ... ... .. .. . . . .. . ... . . .. ... . 

Pension and payroll benefits . . . . . . . . . . . . . . . . . . . . . ... . . 

Interest . 

Bad debts ......... .. .. . . . 

Car.h usod in opcrationc. . ........................ . . . . . . ... .... . . . . 

Purchase of property and equipment (n et of caloc of $7.5 in 1080 ond $12.2 in 1900) ..... .......... . . 

Increase in inventories .... . ... . 

Increase in accounts and loans roccivablo 

Increase ,n miscellaneous assets .. 

Total funds appl1Pt1 .. ...... ... ..........•.•..•.••...•.... , .......•.................•.. .. .. 

Net increase/decrease(-) in cash and monetary assets . 

Change in valuation of gold at market value ........ . 

Cash and monetary assets at beginning ot year . 

Cash and monetary assets at end of year . .... .. ....... . ....... . 

The accompanyinq notes are an inteqral part of this statement. 

13 

1909 1988 

1,087.8 1,039.2 

138.8 161.9 

8.1 

4.7 

52.3 38.1 

1,283.G 1,247.3 

1,237.3 1,171 .8 

49.5 44.5 

3.3 7.8 

3.6 6.5 

21 .5 17.8 

I, 150.4 1,095.2 

104.4 100.2 

15.2 30.4 

8.8 

14.3 

1,207.0 1,240.1 

-4.2 7.2 

-8.0 -162 

177.8 106.0 

165.6 177.0 
14 

United States Government Concolidated Statement 

of Receipts and Outlays as of September 30, 1989 and 1988 

($ billions) 

1989 1988 

Actual 1 Budget 2 

1/9 

Budget 3 

7/18 

Actual Budget 4 

2/ 18 

Budget 5 

7/28 

Budget receipts 

Individual income taxes . 

Corporation income taxes ..... .... ....... . . 

Social insurance taxes and contributions .... . . . 

Excise taxes . . . . . . . . . . . . . . . . . . . . . . . .... . 

Estate and gift taxes .. . .. ......... ... . ... . . 

Customs duties ........... .. . . . ........ . . 

Miscellaneous receipts .. .............. . . . . . 

Total budget receipts .. .................. . 

Budget outlays 

Legislative branch .......... . ... . . ... .... . 

Judicial branch ... .. . . ... ....... . . . . . .. . . . 

Executive Office of the President. ......... .. . 

runds appropriated to tho Procidont .. , , . , . . . . 

Departments 

Agriculture ... . .. . . . . .. . .. .... . .. . .. .. . 

Commerce ..... . .. . . . . . .. . . ... .. . . . .. . 

Defense .. . . .. .. . . . . .. . ... ... ........ . 

Education ............ . ........ .. ..... . 

Energy ...................... .. .. .. . . . 

Health and Human Services .... ..... . ... . 

HouGing and Urban Dovolopmont .. , . , , • , . . 

Interior ............................. . . 

Justice .... . . .. . .. . . ...... . ......... . . 

Labor . . .. . . ... .. .. . ... ............ .. . 

State ... .. . . 

Transportation ..... . .... . ..... .. . ..... . 

Treasury .......... . .... . .. . .......... . 

Veterans Affairs . .. ... . .. . .......... ... . 

Independent agencies ..... ......... . ..... . 

Undistributed offsetting receipts .. . ... . .. . .. . . 

445.7 

103.3 

359.4 

34.4 

8.7 

16.3 

23.0 

990.8 

2.1 

1.5 

.1 

'13 

48.4 

2.6 

318.3 

21 .6 

11 .4 

399.8 

19.8 

5.3 

6.2 

22.7 

3.7 

26.7 

230.6 

30.0 

77.0 

-89.2 

Total budget outlays..................... 1,142.9 

Total budget deficit...................... -152.1 ---

1 The outlay and deficit figures differ from the FY 1991 Budget, released by the Office of Management and Budget on Jan. 29, 1990, 

by a net of $128 million mainly due to revisions in data following the 

release of th e Final September 1989 Monthly Treasury Statement of 

Receipts and Outlays of the U.S. Government. 

2 FY 1990 Budget of the U.S. Government, released by the Office of 

Management and Budget on Jan. 9, 1989. 

425.2 

107.0 

363.9 

34.0 

7.8 

16.3 

21.4 

975.6 

2.2 

1.5 

.1 

56 

52.1 

2.8 

313.2 

20.8 

11 .4 

401.5 

20.4 

5.5 

6.0 

22.8 

3.6 

27.1 

227.7 

29.2 

71.5 

-87.9 

-161.5 

445.3 

105.8 

361 .5 

34.1 

8.5 

17.2 

23.4 

995.8 

2.2 

1.5 

.1 

S5 

51.4 

2.8 

316.1 

21.3 

11.4 

401.1 

::>O ;> 

5.5 

6.1 

22.6 

3.7 

27.0 

230.5 

30.3 

73.1 

-88.3 

-148.3 

401 .2 

94.5 

334.3 

35.2 

7.6 

15.4 

20.0 

908.2 

1.9 

1.3 

.1 

73 

44.0 

2.3 

304.0 

18.2 

11 .2 

373.2 

19.0 

5.1 

5.4 

21.9 

3.4 

26.4 

201 .6 

29.2 

66.3 

-78.5 

-155.1 

393.4 

105.6 

331 .5 

35.3 

7.6 

16.4 

19.4 

909.2 

1.9 

1.4 

.1 

5.2 

50.7 

2.5 

299.6 

18.8 

10.5 

375.1 

18.6 

5.4 

5.2 

22.0 

3.3 

26.3 

198.9 

27.6 

60.5 

-77.7 

-146.7 

405.2 

93.4 

335.0 

34.7 

7.6 

17.1 

20.4 

913.4 

1.9 

1.4 

.1 

9.4 

46.9 

2.5 

299.6 

19.0 

10.9 

374.6 

19 5 

5.4 

5.2 

22.0 

3.3 

26.1 

202.3 

28.8 

65.6 

-78.7 

-152.4 

3 Midsession review of the FY 1990 Budget, released by the Office of 

Management and Budget on July 18, 1989. 

4 FY 1989 Budget of the U.S. Government, released by the Office of 

Management and Budget on Feb. 18, 1988. 

5 Midsession review of the FY 1989 Budget, released by the Office of 

Management and Budget on July 28, 1988. 
United States Government Consolidated Statement 

of Reconciliation of Accrual Operating Results to the 

Cash Basis Budget as of September 30, 1989 and 1988 

($ billions) 

Expenses over revenues (current period results on accrual basis) .. . ............. . 

Additions 

Property and equipment (net of sales of $7.5 in 1989 and $12.2 in 1988) ........ . .. . 

Net loan disbursements .. . .. ..... .. ...... .... .... .......... ..... . . ..... . . . 

Seigniorage . ... ........... . .. . .... ... . . . ................... . .. ..... .. . . 

Total additions . . ...... . ............................ . . . .. ... ........ . .. . 

Deductions 

Increase or decrease(-) in actuarial liabilities .. ........... .... . ... . . ... . . .... . 

Increase or decrease(-) in allowances ... . .... .... .. . ....... ..... . . ... . ..... . 

Depreciation expense ........ .... .... .... .. .. . . .... . ...... .. ..... . ...... . 

Other: 

Net accrual adjustments .......... . ..... .. . ..... .. . .... . . ... . . . . . , . , .•.. 

Net agency accrual adjustments .... .. .. . . . . .. ... ... ..... . ............... . 

Total deductions .................. , ......... . . ......... . , .. .. . .. ...... . 

Reported budget outlays over receipts (cash basis) .. ........... ................ . 

The accompanying notes are Rn integral part of this statement. 

15 

1989 1988 

1'19.5 132.G 

104.4 100.2 

4.4 -8.0 

.6 .5 -- --- 109.4 92.7 -- ---

22.6 -4 1.9 

·10.7 -9.6 

49.5 44.5 

74.9 50.7 

·29.5 26.5 -- --- 106.8 70.2 -- ---

152.1 155.1 -- = 
17 

NOTES TO FINANCIAL STATEMENTS 

1. Summary of significant accounting policies 

Reporting entities 

The Consolidated Financial Statements include 

the legislative, judicial, and executive branches and 

federally chartered corporations. 

Significant intragovernmental transactions were 

eliminated in consolidation. 

The Federal Reserve banks are excluded because 

they operate independently from the U.S. Government 

and are owned by member banks through the issuance of stock. Certain congressional activities are 

also excluded as are Government-sponsored enterprises such as the Federal land banks because they 

are privately owned. 

Basis of accounting policies 

The data presented in this report are unaudited. 

The Consolidated Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) applicable to the Federal 

Government in line with Title 2 of the GAO Policy and 

Procedures Manual for Guidance of Federal Agencies. 

The Statements of Financial Position, Operations, and 

Changes in Financial Position are presented on the 

accrual basis of accounting. The Statement of 

Receipts and Outlays displays the budget deficit on a 

cash basis. The Statement of Reconciliation of Accrual 

Operating Results to the Cash Basis Budget presents 

a reconciliation of the budget deficit on the cash basis 

to the operating results on the accrual·basis. Statements have been restated to reflect subsequent 

changes to the prior-year financial information which 

now appropriately reflect tax revenues net of refunds. 

(See notes 13 and 14.) 

Principal financial statements 

These consist of a Statement of Financial Position, a Statement of Operations, a Statement of 

Changes in Financial Position, a Statement of 

Receipts and Outlays, and a Statement of Reconciliation of Accrual Operating Results to the Cash Basis 

Budget. 

Fiscal year 

The fiscal year of the U.S. Government ends on 

September 30. 

Sources of information 

The fiscal 1989 Statement of Financial Position 

and the Statement of Operations have been compiled 

from agency reports required by I TFM 2-4100, Federal Agencies' Financial Reports. The Statement of 

Receipts and Outlays has been taken from the 

Monthly Treasury Statement. Certain adjustments 

have been made to supplement information supplied 

by the agencies such as other monetary assets, unearned revenue, depreciation, other assets, pensions 

and actuarial liabilities, other liabilities,_ and allowance 

for losses. 

2. Cash 

This represents balances of tax collections, customs duties, other revenues, miscellaneous receipts, 

public debt receipts, and a variety of other receipts 

maintained in accounts at Federal Reserve banks and 

branches as well as in the U.S. Treasury tax and loan 

accounts. The Federal Reserve banks and branches 

act as fiscal agents for the Government by reporting 

this information on a daily basis. The tax and loan accounts refer to accounts of special depositaries in 

which the proceeds of certain tax payments and public 

debt sales are held until the funds are needed at the 

Federal Reserve banks and branches to meet cash 

disbursements from Treasury's general account. 

Accounting for outlays is on the basis of checks 

issued and cash payments made; therefore, "Other 

liabilities" is credited for checks issued, until they are 

cleared through the Federal Reserve banks .. 
18 

3. Other monetary assets (consist of the Items 

summarized below) 

Sept. 30, Sept. 30, 

Gold (at market value of $367.00 per ounce as 

of Sept. 30, 1989, and $397. 75 as of Sept. 

~100~ .......................... . 

Special drawing rights .................. . 

U.S. reserve position in the International 

Monetary Fund ...................... . 

Accountability for cash and other assets 

held outside the Treasury ............. . 

Other U.S. Treasury monetary assets ...... . 

Nonpurchased foreign currencies ......... . 

Gold 

1989 1988 

($ billions) 

96.2 104.2 

9.5 

8.8 

8.1 

1.7 

.3 

9.1 

9.4 

8.8 

1.6 

.3 

124.6 133.4 

Gold is valued at market. The market value has 

been used for FY 1989 and for FY -1988. The market 

value represents the price reported for gold on the 

London fixing, and is based on 262,061,692.577 and 

262,005,370.106 fine troy ounces as of September 30, 

1989 and 1988, respectively (as reported by the 

Treasury general ledger). The statutory price of gold is 

$42.2222 per ounce. 

One of the accounting issues being studied by 

GAO is h~y., refined precious metals including gold 

should be valued in the Consolidated Statement of Financial. Position. Valuing gold at market value is in accordance with acceptable accounting principles and is 

consistent with the current preliminary GAO position. 

International Monetary Fund special drawing rights 

The value is based on a weighted average of exchange rates for the currencies of selected member 

countries. The value of a special drawing right was 

$1.27981 and $1.29039 as of September 30, 1989 

and 1988, respectively. 

Accountability tor caoh and other aoooto hold outside 

the Treasury 

This item is composed of amounts held by Government collecting and disbursing officers, agencies' 

,< 

undeposited collections, and unconfirmed deposits including cash transfers. 

4. Accounts and loans receivable 

All receivables in the Statement of Financial Position are shown net of allowances for losses. 

Summary of net accounts and loans receivable 1 

Accounts 

receivable 

Loans 

receivable 

1989 1988 1989 1988 

Beginning balance, Oct. 1 ..... 73.3 

Additions to receivables .... 115.5 

Repayments and reclassifications ................ -71.9 

Amounts written off ........ -29.0 

Ending balance, Sept. 30 ...... 87.9 

1 Excludes intragovernmental receivables. 

5. Inventories 

Operating consumables ............. . 

Product or service components ....... . 

Stockpiled materials ................ . 

Other ........................... . 

($ billions) 

67.6 

90.7 

-77.4 

-7.6 

73.3 

= 

Sept. 30, 

1989 

181.0 194.8 

38.0 31.1 

-39.0 -24.3 

-4.8 -20.6 

175.2 181.0 

Sept. 30, 

1988 

($ billions) 

135.2 129.9 

48.6 46.1 

38.5 32.7 

5.4 3.8 

227.7 212.5 

Product or service components contain amounts 

reported in goods-for-sale, work-in-process, and raw 

materials. Agencies have reported inventory totals net 

of allowance accounts, where appropriate. 

Agencies diccloccd their costing method for inventory totals. The first-in-first-out valuation method was 

used more often than moving or weighted averages or 

last-in-first-out valuations. However, the Department of 

Defense used the moving average valuation more 

'ti ,1 

,) 

111 

I\ 

l 
often than weighted average or last-in-first-out or firstin-first-out valuations. Several agencies reported estimated inventory amounts. 

INVENTORIES BY MAJOR AGENCY 

$ BILLIONS 

200 --------------, 

150 

100 

50 

• 1989 

1988 

0 ....__.__ 

· Defense Energy Agriculture Other 

6. Property, plant and equipment 

Sept. 30, 

1989 

Sept. 30, 

1988 

($ billions) 

Structures, facilities and leasehold 

improvements .. 184.2 169.9 

Military equipment . .... . .......... . 468.7 415.1 

Equipment. . . . . . . . . . .. ... .. . . 67.7 68.6 

Construction-in-progress .. ... .... .. . 63.7 58.1 

Land ... . .... . .. . ........ . . . ... . 12.4 11 .7 

Other ... . . . .. .. ... . . . . ... .. . . .. . 17.6 14.9 

814.3 738.3 

Less accumulated depreciation .. .. 350.6 301.2 

463.7 437.1 

"Other" includes ADP software, assets under capital lease, and other fixed assets that have been capitalized. The amounts shown for fiscal 1989 and 1988 

are reported at cost. 

Land purchased by the Federal Government is 

valued at cost. The land acquired through donation, 

exchange, bequest, forfeiture, or judicial process is 

estimated at amounts the Government would have 

19 

paid if purchased at the date of acquisition. 

Pending the outcome of a General Accounting Office study to determine how land and natural resources should be valued, no value has been assigned to the Outer Continental Shelf and other offshore lands. More than 662 million acres of public domain land have been assigned a minimal value of $1 

per acre, and are included in the total land amount. 

Depreciation accounting is encouraged for all 

depreciable fixed assets, but only business-type operations are required to report depreciation on their 

financial statements. 

The accumulated depreciation shown in the Statement of Financial Position is estimated using the 

straight-line method applied to the total of reported 

depreciable assets. The useful lives applied to each 

classification of asset are : 

Buildings . . . . . . . . . . . . . . . . . 50 years 

Structures and facilities . . . . . . 21 years 

Ships and service craft . . . . . . 13 years 

Industrial plant equipment . . . . 13 years 

All other assets . . . . . . . . . . . . 13 years 

The amounts of accumulated depreciation reported by Federal agencies on their statements for 

business-type operations amounted to $40.3 billion 

and $33. 7 billion for fiscal 1989 and 1988, on assets 

of $143.5 billion and $99.9 billion for fiscal 1989 and 

1988, respectively. The straight-line depreciation 

method is used more often for overall fixed assets. 

Capitalization policies varied greatly with thresholds in 

the ranges of $500 to $5,000. 

7. Investments In International organizations 

This item represents the Government's investment 

in international organizations. Some of the larger organizations are the : 

International Bank for Reconstruction and 

Development (World Bank) 

International Development Association 

Inter-American Development Bank 

Asian Development Fund 

African Development Bank 
20 

8. Other assets 

Other assets reported are summarized in the following table, by agency. 

Sept. 30, 

1989 

Sept. 30, 

1988 

($ billions) 

Funds appropriated to the President . . .... . 7.6 8.3 

Federal Deposit Insurance Corp.--

Federal Savings and Loan Insurance 

Corp., resolution fund . .. . . . . ..... . . . 7.9 7.9 

Bank insurance fund . . ..... . ... .. .. . . 4.7 4.0 

Defense ....... . .... . .. .. . ... .. .... . . 4.5 8.1 

Agriculture. . . . . . . . . .. . .. . ... ..... . 2.0 3.5 

Tennessee Valley Authority ... . 3.4 2.8 

Other .. ... . .. . .. . . .. . . .. .. ......... . 15.2 17.0 

Total . .. . . .. . . . .. . .. . . . 45.3 51 .6 

9. Unearned revenue 

Unearned revenue is summarized in the following 

table, by agency. 

Sept. 30, 

1989 

Sept. 30, 

1988 

($ billions) 

Funds appropriated to the President ..... 

Housing and Urban Development 

U.S. Postal Service . .. .. . .. . . . ... . ... . 

Agriculture . . . . . .. . .. ......•. 

Energy ... . . . . . .... . . . .. . . . . ... . .. . 

Interior .... . . .. . . . . . . . . . . .. .. . .. .. . 

Other .. .. ... . . . ......•.. . ..... . .. . . 

Total .. .. .. . .. .. . .... .. . ... . . . 

11 .6 

6.3 

1.8 

.9 

.8 

1.8 

23.2 

1 o. Debt Issued under financing authority 

11.2 

5.6 

1.7 

1.2 

1.1 

1.3 

22.1 

The amount of Federal debt outstanding is reported net of unamortized premiums and discounts. 

The amounts reported for fiscal years 1989 and 1988 

reflect a reduction for intragovernmental holdings of 

$692.3 billion and $566.9 billion, respectively. 

Sept. 30, 1989 

Average 

interest 

rate 

(percent) 

Public debt 

Marketable .......... . . 9.043 

Nonmarketable .. ... .. .. 7.826 

Other ....... . ... .. . ... 8.999 

Total ........... .... 

Agency debt 

Housing and Urban Development. ............ . .. . 

Federal Deposit Insurance 

Corporation : 

Bank insurance fund .... 

Federal Savings and Loan 

Insurance Corp., resolution 

fund . . .. .......... . 

Tennessee Valley Authority 

U.S. Postal Service . . .. . . 

Miscellaneous . ........ . 

Total ...... ...... . 

Federal debt held by the public 

Current period ..... . . .. . 

Prior period .. . ...... . 

Net increase . 

Total 

debt 

($ bil.) 

1,859.4 

284.6 

21 .1 

2,165.1 

.3 

3.1 

18.6 

1.4 

.3 

23.7 

2,188.8 

2,050.0 

138.8 

11. Pensions and actuarial liabilities 

Sept. 30, 1988 

Average 

interest 

rate 

(percent) 

8.770 

7.861 

8.830 

Total 

debt 

($ bil.) 

1,774.0 

263.3 

.3 

2,037.6 

.9 

9.7 

1.4 

.3 

.1 

12.4 

2,050.0 

1,888.1 

161 .9 

The Federal Government administers over 40 

pension plans. The largest are those administered by 

the Office of Personnel Management for civilian employees and the Department of Defense for military 

personnel. These plans comprise over 96 percent of 

the pension liability reported at September 30, 1989. 

The majority of the pension plans are defined benefit 

plans. 

The accounting for accrued pension, retirement, 

disability plans and annuities is subject to several different assumptions, definitions, and methods of calculation. Each of the major plans is summarized in the 

following. 
Sept. 30, 

1989 

Sept. 30, 

1988 

($ billions) 

Pensions--accumulated benefits obligation 

Civilian employees (CSRS and 

FERS) . . . . . . . . . . . . . . . . . . . . . . . 586.3 

Military personnel. . . . . . . . . . . . . . . . . 446.3 

Other pension plans. . . . . . . . . . . . . . . 21.0 

Subtotal . . . . . . . . . . . . . . . . . . . . . . 1,053.6 

Actuarial liabilities 

Veterans compensation. . . . . . . . . . . . . 135.2 

Federal employees compensation. . . . 21.2 

Other benefits . . . . . . . . . . . . . . . . . . . 25.5 

Total......................... ~ 

Civilian employees and military personnel 

548.1 

457.1 

20.0 

1,025.2 

139.9 

21.5 

26.3 

~ 

The latest available information for civilian employees and military personnel pensions is as of September 30, 1988. For fiscal 1988, data from fiscal 

1987 were used. 

Pension expense for the various Federal pension 

plans is calculated for budgetary purposes by a variety 

of actuarial funding methods. For financial reporting 

purpose·s, Federal pension plans report their accumulated benefit obligation (ABO) pursuant to directions 

developed by the General Accounting Office and the 

Office of Management and Budget under the provisions of Public Law 95-595. The ABO is calculated 

with the "unit credit" actuarial cost method, and is substantially similar to the ABO reported by pension plans 

pursuant to Financial Accounting Standards Board 

Statement No. 35. The ABO is recognized as a liability 

in the Consolidated Statement of Financial Position of 

the United States. Most Federal pension plans are 

funded with obligations issued by the U.S. Treasury as 

expense is recognized pursuant to the actuarial 

method specified by the governing law. These plan 

assets (Treasury bonds or other debt), being obligations of the United States, are eliminated from these 

consolidated statements. Hence, within these statements, periodic pension cost for the Government as a 

whole is, in effect, the change in the accumulated 

benefit obligations. 

Veterans compensation 

Veterans Affairs has a future liability for benefits 

expected to be paid in future fiscal periods and, if applicable, to veterans' survivors who have met or are 

expected to meet defined eligibility criteria. 

21 

The future liability for compensation and pension 

benefits represents the present value, using a 9.0-

percent discount rate, of projected annual benefit payments. Projected benefit payments are based on assumed cost-of-living increases ranging from 3.6 percent to 4.7 percent for 1990 to 1994 and 3.3 percent 

to 4.0 percent thereafter. In addition, the mortality and 

accession rates used are based on trends in the current veteran population. 

This calculation was not based on an independent 

actuarial study, and thus there is a risk that the assumptions and methods underlying it may not be 

reflective of actual economic and demographic trends 

affecting veterans. 

The present value of the estimated future liability 

for compensation and pension benefits payable for the 

next 5 fiscal years and thereafter is as follows: 

($ billions) 

1990..... . . . . . . . . . . . . . . . . . . . . . 14.0 

1991 . . . . . . . . . . . . . . . . . . . . . . . . . . 12.7 

1992.......................... 11.4 

1993. . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 

1994.. . . . . . . . . . . . . . . . . . . . . . . . . 9.5 

Thereafter. . . . . . . . . . . . . . . . . . . . . . 77.2 

Total........................ 135.2 

Federal employees compensation 

This amount represents the estimated future costs 

for injuries incurred to date for approved Federal 

Employees' Compensation Act cases. 

Other pension plans 

Other annual pension reports received from plans 

covered by Public Law 95-595 are reported in the 

same manner as military personnel and civilian employees described above. 

Because railroad retirement operates similarly to 

Social Security (see Note 16), railroad retirement has 
22 

been eliminated from other pension plans for FY 1989 

and retroactively for FYs 1988 and 1987 pending pertinent changes to GAO's title 2 standards. The cumulative adjustment amounted to $51.5 billion. 

Other benefits 

Other benefits consist of various items the Government is responsible for such as life insurance and 

health benefits for veterans and Federal employees. 

Thrift Savings Plan 

The Thrift Savings Plan is a retirement savings 

and investment plan for Federal employees authorized 

by Congress in the Federal Employees· Retirement 

System Act of 1986. It is a defined contribution plan 

eligible to employees covered under the Civil Service 

Retirement System (CSRS) and the Federal Employees Retirement System (FERS). The plan offers both 

FERS and CSRS employees tax deferral advantages. 

FERS employees may contribute up to 1 O percent of 

basic pay per pay period to the plan; CSRS employees may contribute up to 5 percent of basic pay per 

pay period. Total individual's contributions could not 

exceed $7,627 in 1989. The plan was started in April 

1987 and as of September 30, 1989, the total invested 

was $4.3 billion, mainly in U.S. Government nonmarketable certificates.which is included in debt issued under financing authority in the Statement of Financial Position. The amounts invested in either the 

Common Stock Index or the Fixed Income Funds are 

less than $100 million, respectively. 

12. Other liabilities 

Other liabilities reported are summarized in the 

following table, by agency. 

Sept. 30, · Sept. 30, 

1989 1988 

($ billions) 

Treasury ............................. . 56.2 34.8 

Federal Deposit Insurance Corp.: 

FDIC--bank insurance fund ............ . 2.8 4.5 

Federal Savings and Loan Insurance 

Corp.--resolution fund .............. . 20.7 25.6 

Labor ............................... . 14.3 .1 

Housing and Urban Development ......... . 5.6 .4 

Tennessee Valley Authority .............. . 2.8 3.0 

Defense ............................. . 1.1 4.9 

Interior .............................. . 1.6 . 3.2 

Other ............................... . 7.1 5.0 

Total ............................. . 112.2 81.5 

13. Accumulated position 

($ billions) 

Accumulated position beginning of 

period, Oct. 1, 1987 . . . . . . . . . . . . . . . . . . . -2,289.4 

Cumulative effect of error in debt issued 

under financing authority . . . . . . . . . . . . . . . 18.2 

Cumulative effect of accounting 

policy change . . . . . . . . . . . . . . . . . . . . . . . 10.2 

Accumulated position beginning of period, 

revised. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2,261.0 

Prior-period results as originally 

reported, Sept. 30, 1988 . . . . . . . . . . . . . . . -147.0 

Adjustments for: 

Change in accounts receivable . . . . . . . . . . 2.7 

Change in advances and prepayments . . . . -8.9 

Change in loans receivable . . . . . . . . . . . . . 1.2 

Change in other assets . . . . . . . . . . . . . . . . -3.0 

Change in accounts payable . . . . . . . . . . . . -72.3 

Cumulative effect of error in debt issued 

under financing authority . . . . . . . . . . . . . -20.4 

Change in other liabilities. . . . . . . . . . . . . . . 81.2 

Change in pensions and actuarial 

liabilities adjusted for cumulative 

accounting policy change. . . . . . . . . . . . . 33.9 

Prior-period results restated, Sept. 30, 1988.. -132.6 

Change in market value of gold ........... . -16.2 

Accumulated position end of 

period, Sept. 30, 1988 ................ . -2,409.8 

Current period results, Sept. 30, 1989 ...... . -149.5 

Change in market value of gold ........... . -8.0 · 

Accumulated position end of period, 

Sept. 30, 1989 ...................... . 
The accumulated position represents the excess of 

liabilities over assets. It has been restated to reflect 

prior-period adjustments identified in the above table. 

14. Prior-period adjustments and reclassifications 

The Consolidated Financial Statements include, in 

fiscal 1989, adjustments to prior years' figures, which 

were necessary due to changes in interpreting financial information, and accounting policy concerning the 

deletion of railroad retirement pension in the fiscal 

1988 statements. The changes concerned the following accounts: accounts receivable, advances and 

prepayments, other assets, loans receivable, accounts 

payable, pensions and actuarial liabilities, debt issued 

under financing authority, and other liabilities. After adjustments, a net increase of $14.4 billior, affected the 

accumulated position for fiscal 1988. 

In addition to these adjustments, amounts shown 

in the Statement of Operations were reclassified and 

adjusted to provide for more accurate amounts within 

each category and to enhance presentation. 

Two categories reported separately in the Statement of ·Financial Position in 1988 have been reclassified into other assets for 1989. They are advances 

and prepayments and investments. Two categories 

which were previously included in the statement have 

been broken out this year to provide more clarity. They 

are investments in international organizations and 

deferred retirement costs. 

15. Leases 

Federal agencies were first required to provide financial information about lease commitments in 1986. 

Agencies are attempting to accumulate the desired 

lease information that is required. At September 30, 

1989, the future aggregate minimum rental commitments for capital leases and noncancelable operating 

leases were: 

23 

Operating Capital 

leases leases 

($ billions) 

Years ending Sept. 30,-

1990 .............................. . 1.3 2.4 

1991 .............................. . 1.1 1.1 

1992 .............................. . .8 .1 

1993 ................. · ... · · · · · · · · · · .7 .1 

1994 ..................... · · · · · · · · · · .5 

Thereafter .................... . 1.3 1.0 

Total minimum lease payments ...... . 5.7 4.7 

The majority of these lease commitments relate to 

building and office space rental. The current and 

long-term portions of lease costs are included in accounts payable and other liabilities, respectively. lntragovernmental leasing transactions have not been 

eliminated or identified due to a lack of information. 

Lease revenues identified on the agency statements were negligible. 

16. Social Security 

No liability for Social Security is included in the 

Statement of Financial Position, but the program is included in the list of open-ended programs and fixed 

costs (page 36). For purposes of disclosure, however, 

the total unfunded actuarial liability is determined annually. As of September 30, 1989, this liability was 

$6,077.5 billion. (As of September 30, 1988, this 

liability was $5,739.6 billion.) This liability represents 

the present value of the projected excess of future 

· benefit payments to present participants over the contribution still to be made by the same group and their 

employers on their behalf. If Social Security were accounted for as if it were a pension plan, a portion of 

the unfunded actuarial liability would be recognized for 

financial reporting purposes. Such an amount has not 

been presented in these financial statements. 

The Congress and the trustees of the funds prepare estimates based on a different financing method 

they .regard as more appropriate for social insurance 

programs. The following actuarial amounts are calculated on the assumption that future workers will be 

covered by the program as they enter the labor force. 
24 

Sept. 30, Sept. 30, 

Actuarial liabilities ..................... . 

Actuarial assets ....................... . 

Actuarial surplus or deficit(-) ............. . 

17. Contingencies 

1989 1988 

($ billions) 

16,493.2 15,480.0 

15,643.7 14,816.0 

-849.5 -664.0 

A contingent liability is a liability involving uncertainty as to a possible loss to the Government that will 

be resolved when one or more future events occur or 

fail to occur. If the future event or events are likely to 

occur and the amounts can be reasonably estimated, 

the liabilities are reported in the Statement of Financial 

Position under "Other liabilities." Contingencies within 

the Federal Government result from a number of 

sources including loan and credit guarantees, insurance programs, and unadjudicated claims. 

The following table shows the contingent liabilities 

reported in the Statement of Financial Position for 

losses that are likely to occur and the maximum risk of 

exposure that the Government has without regard to 

probability of occurrence and without deduction for existing and contingent assets which would be availabl~ 

to offset potential losses. 

Sept. 30, 1989 Sept. 30, 1988 

Maxi- Maximum Liabil- mum Liabilrisk ity risk ity 

($ billions) 

Insurance in force ....... 4,130.2 94.5 3,975.2 19.4 

Government loan and 

credit guarantees ...... 580.8 6.8 555.2 1.6 

Unadjudicated claims ..... 1 366.9 1 365.5 

Other contingencies ...... 228.8 - 198.8 --101.3 21.0 = 

1 Includes $304 billion due to litigation against the Dept. of Energy. 

The administration has provided a range for the 

total cost of protecting deposits in insolvent thrift institutions at $89 billion to $132 billion in present value 

terms. This range reflects an increased estimated cost 

of $16-$59 billion from the original cost estimate of 

$73 billion. At this time, the administration believes 

that there are too many unknown factors to provide a 

single estimate of the ultimate cost. The cost estimate 

includes $50 billion provided by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 

(FIRREA) for the thrifts resolved during 1989-92 and 

the $23 billion that will be available to replenish the 

savings association insurance fund during the 8 years 

after 1992. 

The $50 billion provided by FIRREA included 

$18.2 billion in appropriations, $1.2 billion from the industry, and $30 billion from bond issuances by the 

Resolution Funding Corporation. FIRREA also provided $40 billion for payment of prior commitments 

from the old Federal Savings and Loan Insurance Corporation (FSLIC) fund. It appears that the cost associated with these commitments may be higher than 

originally estimated. However, a more accurate total 

cost figure for the old FSLIC commitments .is not currently available. 

The Department of Energy recognizes a contingent liability as of September 30, 1989, of about $19 

billion for environmental cleanup through fiscal 1995. 

Of that amount, $2 billion has been appropriated for 

1990. The Department has established a goal to 

achieve cleanup within 30 years and annually update 

a 5-year plan to establish a public reviewed agenda 

for compliance and cleanup against which progress 

will be measured. This plan, which includes projections through 1995, does not authorize departmental 

budgetary resources beyond those already appropriated for such activities by the Congress. Liabilities beyond those cited above cannot be reasonably estimated at this time. 

18. Audited financial statements 

A review showed that agencies which have approximately 37 percent of the reported assets in 1989 

have been audited in the past 5 years. As this percent 

increases, the quality of the data used to prepare this 

report will improve proportionally as will the usefulness 

of the results in making financial decisions. A recap of 

activity from agencies audited is provided below and 

identifies those organizations reviewed. 

l 
Agencies or departments audited in whole or in substantial part consisted of the following : 

Agriculture Veterans Affairs 

Energy Environmental Protection Agency 

Housing and Urban Development General Services Administration 

Health and Human Services Government Printing Office 

Labor Independent agencies 

Treasury 

Financial Quality Performance Measures 

STATUS OF ENTITIES AUDITED 

NUMBER 

AUDITED UNAUDITED 

STATUS OF ENTITIES AUDITED 

ASSETS 

$ 

B 

800 

700 

600 

I 500 

L 400 L 

I 

0 

300 

N 200 

s 

100 

0 u.._ ____ __ ....L_ _____ ___J,, 

AUDITED UNAUDITED 

25 
26 

Statement of Price Waterhouse 

Director, Accounting Group 

Financial Management Service of the U.S. Treasury Department 

We are pleased to have had the opportunity to consult with the Treasury Department regarding its process for preparing the 1989 Prototype U.S. Government Consolidated Financial Statements (Consolidated Financial Statements). The 

process involves accumulating and consolidating financial information submitted by all of the departments and agencies 

that conduct and administer the Federal government's programs. At your request we have ( 1) read the sections of the 

Treasury Financial Manual and related Bulletins that govern preparation of the Consolidated Financial Statements, (2) 

reviewed the bases of Treasury's adjustments of information submitted by departments and agencies, (3) reviewed 

Treasury's procedures for identifying all entities to be included in the Consolidated Financial Statements, (4) reviewed 

Treasury's procedures for accumulating and summarizing information submitted by departments and agencies and (5) 

reviewed Treasury's efforts to compare submitted information with other Treasury data, 0MB data, GAO reports, and reports of independent accountants and consultants. The following is a summary of our more important observations concerning matters which continue to require resolution in the Consolidated Financial Statement preparation process. 

The preparation of Consolidated Financial Statements is an important step in Treasury's efforts to improve the 

reliability and usefulness of the government wide financial information. Nevertheless, we believe it is necessary to recognize that the current preparation process requires a number of significant refinements before the resulting Consolidated 

Financial Statements can be viewed as providing reliable financial information and the "Prototype" description removed. 

Improving the process will involve (1) obtaining more accurate financial information from the departments and agencies, 

(2) improving some of Treasury's accumulation and report preparation practices, and (3) resolving a number of important 

accounting and reporting issues. The following is a discussion of the most significant matters which should receive your 

attention. 

Accuracy 

In recent years the financial information of an increasing number of departments and agencies 

from which the Consolidated Financial Statements are prepared has been subjected to either an internal or external independent audit or review process. Such audits and reviews provide increased assurance that the information submitted is reliable and prepared in accordance with applicable accounting principles. Accordingly, the Treasury should develop, in concert with department Inspectors General and internal auditors, the GAO, and external auditors, a comprehensive financial data review 

requirement. 

Accumulation 

Treasury's accumulation and summarization process, while detecting many errors, does not 

identify all significant errors which a more comprehensive review process would identify and correct. 

In other cases, as a result of incomplete reporting instructions, it is necessary for Treasury to make 

significant adjustments for amounts omitted from agency reports. The process also requires many 

adjustments of agency submitted information, some of which is not accompanied by adequate supporting documentation. Lastly, there is a need for refinement of the procedures to permit more accurate allocation of consolidating adjustments to reported departmental expenses; expanded reporting of 

grant and loan commitments and guarantees; and appropriate application of generally accepted reporting standards for outstanding checks. 

Accounting and Reporting 

There continue to be a number of important accounting and reporting issues studied by GAO, 

0MB, Treasury, and others, the resolution of which could have a significant effect on the Consolidated 

Financial Statements. For example, the extent to which actual and budget data is reported and reconciled, whether military hardware should be capitalized and depreciated, the accounting and reporting 

for public domain, and whether Social Security liabilities should be recorded in the Consolidated Financial Statements must each be resolved. In addition there is a need to further refine and, where 

appropriate, expand financial statement reporting and disclosures. 

We recognize that these areas are not entirely within Treasury's direct control. Resolving issues associated with the 

quality of submitted final information and other important issues will involve a concerted effort by the entire Federal government financial management community. Nevertheless, resolution of these matters is essential to improving the reliability 

and usefulness of the Consolidated Financial Statements. We did not audit or review the Consolidated Financial Statements in accordance with generally accepted auditing standards, and accordingly, we do not express an opinion or any j;_"JJ..."'Z:••~pe U.S. Go,emm,ot Coosondatod F;oaoci~ Statomeots o, '"' of ;1s rompooeots. 

Office of Government Services 

Washington, D.C. 

July 13, 1990 
SUPPLEMENTAL TABLES 

SUMMARY OF ACCOUNTS AND LOANS RECEIVABLE DUE 

FROM THE PUBLIC 

27 

Total accounts receivable amounted to $98.5 billion in FY 1989, an increase of $0.4 billion over FY 1988. 

Total loans receivable am6unted to $211.8 billion in FY 1989, a decrease of $2.3 billion from FY 1988. Graphically depicted below are summaries by selected agencies of accounts and loans receivable data. 

ACCOUNTS RECEIVABLE 

$98.5 billion 

Treasury 

Agriculture 

Energy 

Health and 

Human Services 

Other 

0 10 20 30 40 50 60 70 

Percent 

Agriculture 

Funds Appropriated 

to the President 

Housing and 

Urban Development 

Treasury 

Other 

LOANS RECEIVABLE 

$211.8 billion 

0 5 10 15 20 25 30 35 40 45 50 55 

Percent 

The Debt Collection Act of 1982 (31 U.S.C. 3719) requires the Director of the Office of Management and 

Budget, in consultation with the Secretary of the Treasury and the Comptroller General of the United States, to 

establish regulations requiring each agency with outstanding debts to prepare and transmit to 0MB and the 

Treasury a report which summarizes the status of accounts and loans receivable managed by each agency. 

These receivables result from a wide range of Federal activities including tax assessments; sale of Government 

services such as satellite launchings; sale of Government goods such as natural resources from Federal lands; 

overpayments to annuitants; and various loan programs such as student and housing loans. The data in the reports will enable the Federal Government to improve collection activity. 

The amounts in the graphs and the following tables have been summarized from the Report on Accounts 

and Loans Receivable Due from the Public (SF 220-9). This schedule reflects all receivables reported by Federal 

agencies. 
28 

Accounts and Loans Receivable by Agency 

{$ billions) 

Legislative branch .................. . . ... .. ... . .... . . . 

Executive branch 

Funds appropriated to the President .. .. .. . .. . .. . . . ... . . 

Departments 

Agriculture .. . ....... . ........ .. .... . .... . .... . . . 

Commerce ..... .. . . . .... ..... ..... . ... .. . ...... . 

Defense .................................. . .... . 

Education ............... . ... . ...... . . ... . ... . . . 

Energy ...... .. ... . ............. . .. . . .. .. .. .. . . . 

Health and Human Services .. .. .. .. . ...... . ... . . .. . 

Housing and Urban Development. . .. .. . . . ... . ..... . . 

Interior . .. .. . . ... .. . .. . . . . .... ... .. .... . . .. .... . 

Justice . . . .. . ....... . ... .. ... .. ..... . .. . . .. . ... . 

Labor ....... . ...... . .... . .... . ... .... . . .. .... . . 

State ......... . .. ....... . ... .. . . . . . .. . . . ...... . 

Transportation .. . .... . ........ .. ..... . .. .. .. . . . . . 

Treasury ..................... . . . . . .. .. . . .. ... . . 

Veterans Affairs ........... . ... . . .. . .... . . .. .. ... . 

Other independent agencies .... .. . . . . . .. . ....... .. .. . 

Gross receivables . . ........ . .......... . ...... . . . . 

Less allowances for losses ............... . .... . .. . . 

Net receivables due from the public .. .. .... ..... .. . . . 

Accounts receivable 

1989 

1.3 

11 .0 

.1 

1.6 

.6 

2.5 

4.2 

.4 

2.4 

1.6 1 4.9 

.1 2 62.9 

1.1 

3.8 

98.5 

10.6 

87.9 

1988 

1.5 

10.9 

.1 

1.7 

.5 

4.3 

3.2 

1.2 

2.2 

.8 1 4.3 

.1 2

61.0 

3.0 

3.3 

98.1 

24.8 

73.3 

Loans receivable 

1989 1988 

24.2 24.5 

112.2 117.5 

.5 .6 

1.7 1.8 

7.9 7.0 

.1 

.8 .8 

14.1 13.4 

.3 .2 

1 .8 1 1.2 

1.4 1.7 

13.6 19.0 

4.6 2.2 

29.7 24.1 

211.8 214.1 

3 36.6 33.1 

175.2 181 .0 

Aging Schedule of Accounts and Loans Receivable as of September 30, 1989 

Delinquent 

1-30 days . . .. ... . .. ..... . . .. .. ... . ...... . . . .. . .. . 

31 -60 days . ..... . .. . . . ....... . .. . . .. ... ..... .. .. . 

61-90 days ......... . ....... . .. . . . . .. . . ... .... . .. . 

91-180 days . . . .... . . . ... ... .... . . . .. .... . . . . .. . . . 

181-360 days . ............. .. ... .. .. . . ... ... .. . . . . 

Over 360 days . . .... . .. . . .... . ... . . ... . . .... .. .. . . 

Total delinquent ......... . ............ . . ... .. ... . 

Not delinquent ........... . ........ . ... . ... .. . . ... ... . 

Noncurrent receivables . . . . . . .. . . . .. ... . . ..... . .. . .. . . . 

Total gross receivables . .... . . . .. . . . . .. ..... . . . .. .. . . 

• Less than $50 million. 1 Labor Department accounts and loans receivable were increased 

by $4.2 billion and $0.8 billion, respectively, in FY 1989 and $2. 7 

billion and $1 .2 billion, respectively , in FY 1988 to correct 

understatement. 

2 Totals reported by the Internal Revenue Service for gross delinAccounts Percent Loans Percent 

receivable delinquent receivable delinquent 

{$ bil.) {$ bil.) 

6.0 7.9 0.5 1.8 

2.8 3.7 .4 1.4 

2.6 3.4 .4 1.4 

9.4 12.4 1.0 3.6 

9.7 12.7 5.0 17.8 

45.6 59.9 20.8 74.0 

76.1 100.0 28.1 100.0 

13.9 26.4 

8.5 157.3 

98.5 211 .8 

quent taxes for fiscal 1989 and 1988 were $61 .0 billion and $56.6 

billion, respectively . 3 The allowance for losses on loans receivable has been increased 

by $4.8 billion on Export-Import Bank to reflect future losses. 
29 

FEDERAL DEBT 

Total Federal debt held by the public amounted to $2,188.8 billion in FY 1989, an increase of $138.8 billion from FY 1988. This chart has been presented to graphically show the increase in Federal debt and the interest expense. 

FEDERAL DEBT HELD BY THE PUBLIC INTEREST EXPENSE 

FY 1985-89 FY 1985-89 

2500 $ 190 

$ 

B 2000 B 180 

I I 

L 1500 L 170 

L L 

I 1000 I 160 

0 0 

N 500 N 

s 150 

s 0 

1985 1986 1987 1988 1989 1985 1986 1987 1988 1989 

The two debt tables which follow reflect information on the borrowing of the Federal Government needed 

to finance the Government's operations. These tables support the balance sheet caption, "Debt issued under financing authority," which is shown net of intragovernmental holdings and unamortized premium or discount. lntragovernmental holdings represent that portion of the total Federal debt held by Federal entities, including the 

major trust funds . 

The distribution of 1989 and 1988 net debt from the public by major type of securities is graphically 

depicted. 

NET DEBT BY TYPE OF SECURITIES 

1200 

1000 

$ 

( NOTES ) B 

800 I 

L 

600 L 

I 

400 0 

( BILLS N 

200 s 

BONDS 

0 

1989 1988 
30 

Summary of Public Debt Outstanding as of September 30, 1989 and 1988 1 

1989 1988 

Marketable 

Bills .... . .. ...... . ..• . ... . .......... . . . .. . · · · · • · · · · · · · · · · · · · · 

Notes . . . .. . . . . . . .. ............. . ... . . . . . .. . . .. . ... . .. .. . .. . . . 

Bonds . .. . .. . .. . .. . .. . . • ... ....... . . . ... ... . . . . .. ..... .. . . . . . . 

Nonmarketable 

Foreign government series . .. . .. .. .... . . ............... . . ...... . . 

Government account series .. . . . . . . . . .. . . . .. . .. . . . ....... . . . .. . . . . 

U.S. savings bonds .. . ........ . . . . . . ... . ... . . . ... . . . ........... . 

Other . . .. . . . .. . .. . ..... .. . .. . ..... . .. . .. . ..... .. ..... . 

Other .... 

Total. .. . . . .. . .... . ................ . ..................... . . . 

1 Administered by the Bureau of the Public Debt, Department of 

the Treasury. 

2 Net of intragovernmental holdings of $692.3 billion and $566.9 billion, 

respectively, and net of unamortized premiums or discounts. 

Types of marketable securities 

Bills--Short-term obligations issued with a term of 1 year or less. 

Average Total 

Interest debt 

rate ($ bil.) 

(percent) 

8.527 394.5 

8.901 1,129.3 

10.077 335.6 

9.043 1,859.4 

8.170 6.8 

9.401 4.8 

7.032 114.0 

8.333 159.0 

7.826 284.6 

8.999 21 .1 

8.999 21.1 

2 2,165.1 

Notes--Medium-term obligations issued with a term of at least 1 year, but not more than 1 O years. 

Bonds--Long-term obligations of more than 10 years. 

Average 

interest 

rate 

(percent) 

7.329 

8.848 

10.220 

8.770 

7.498 

9.523 

7.076 

8.409 

7.861 

8.830 

8.830 

Summary of Agency Debt Outstanding as of September 30, 1989 and 1988 

($ billions) 

Housing and Urban Development . .. .. . .... ... .. . . . . . ..... ....... . .. . ...... . . 

Federal Deposit Insurance Corporation 

Bank insurance fund . . . .. .. . . . .. . ... .. ... .. ....... . ....... . . . .... ...... . 

Federal Savings and Loan Insurance Corporation , resolution fund ..... .. ... .. ... . . 

Tennessee Valley Authority ................ . . 

U.S. Postal Service . .. ... ... . ... . ... . .. .. . . . ... .. ...... . .. . ... . .. . . . .... . . 

Miscellaneous . . .... . . .. .... . . .. . . .... . . . ........ ..... .... .. .. . ..... . . .. . 

Total. .............. . .......... . ............ . ......... . ............ . 

1989 

0.3 

3.1 

18.6 

1.4 

.3 

23.7 

Total 

debt 

($ bll.) 

389.0 

1,086.1 

298.9 

1,774.0 

6.3 

2.8 

106.2 

148.0 

263.3 

.3 

.3 

2 2,037.6 

1988 

0.9 

9.7 

1.4 

.3 

.1 

12.4 
31 

COMMITMENTS AND CONTINGENCIES 

Commitments are long-term contracts for which appropriations have not been provided by the Congress 

and undelivered orders which represent obligations. 

A contingency is a liability involving uncertainty as to a possible loss to the Government that will be resolved when one or more future events occur or fail to occur. If the future event or events are likely to occur and 

the amounts can be reasonably estimated, the liabilities are reported in the Statement of Financial Position under 

"Other liabilities." Contingencies within the Federal Government result from a number of sources including loan 

and credit guarantees, insurance programs, and unadjudicated claims. 

In FY 1989, total commitments amounted to $536.1 billion and total contingencies amounted to $5,306.7 

billion. Total contingencies represent the maximum risk of exposure without regard to probability of occurrence 

and without deduction for existing and contingent assets which would be available to offset potential losses. The 

charts below show the percentage distribution of 1989 commitments and contingencies by source category. 

Undelivered Orders 

Long-Term Contracts 

0 

Insurance in Force 

Gov't Loan and 

Credit Guarantees 

Unadjudicated Claims 

and Other Contingencies 

COMMITMENTS 

$536.1 billion 

3% 

20 40 60 80 

Percent 

CONTINGENCIES 

(Maximum Risk) 

$5,306.7 billion 

0 20 40 60 

Percent 

100 

80 

The table that follows shows commitments and contingencies by type. For contingencies, the maximum 

risk that the Government is exposed to is shown. 
32 

Commitments and Contingencies 

of the United States Government 

for the Years Ended September 30, 1989 and 1988 

($ billions) 

Commitments 

Long-term contracts 

Tennessee Valley Authority .. ........ .. ... . ...... . .......... . . . ... .. ... ... ... .. ..... . ... . . . 

Defense .. .. . . . . ... ... . ....... ... .......• . . . .............. . . . ... . . .. . .. ..... . . .. .. ... . . 

General Services Administration ..... . ........ .. ....... .. .. ..... .. .. .. .. . . .... ... ....... . . . . 

U.S. Postal Service ............. . .... . . ...... ........ . .. ....... .... . .. ..... .. . ...... .. . . . 

Energy . ..... . . ... ..... . ... •... ... .... .. . ... ... ... . . . ..... ........ . ........... . .. . .. ... 

Other .... . ..... ..... . . . . . . . . . .. . . . .... . . .... . .. . .. . .... . . .. .... ... ..... . . ... • • • • . •. • • • 

Subtotal .... . . . . . . . ....... .. ...... ........ . . . . . .. ... . . . ..... .. .... . . . . ... . ... .. . .. .. . . 

Undelivered orders 

Housing and Urban Development ......•... . . ... . . ... .. .. ..... . .. .. .... .... . ... . . ........... 

Defense .... . . ... . .... ... . . . .. .. .. ..... . .......... . .. . ........ . .............. • • • • • •. • • • 

Funds appropriated to the President . .. . ................... •.• .. . .......•... . ... . ..•... .. .. .. 

Transportation ... ... . ........... .. .. ...... ...... ... .. . . . . .. ... ....... . ....... .. . .. . . .. . . 

Health and Human Services .... ... . ...... . ... . ...... . . . . . .. .... . ................ . .. .... . . . 

Other .. .. . .. . . . .. .... ... . . . ... .. ............. • • • • • • • • • • • · · · • · · · · · · · · · · · · · · · · · · · · · · · · · · Subtotal . .. . . . ... . ... . . . . ... .. . . . . . . .. ... .. . .. . . .. . ... . . .. . . .. . . . . . .. . . . ... . . . . . . . . . . 

Total commitments . . ... . . .. . . ... . ... .. .. . .. . .. . .. . . .... . .... . .. . . . . . . .. .. . . . ... .. . . . . 

Maximum risk exposure for contingencies 

Government loan and credit guarantees 

Housing .... . ..... . ............................ • • • • • • • • • • • • • • · • · · • · • · · · · · · · · · · · · · · · · · · · 

Veterans benefits ... . ........ . ............................ . ..... . .... • ................... 

Education .... . . .. .. . ... . . . .. ... .. .... . . ... ... . .... .. .... .. . .. .. .. ... •• ••• •• ••• • • • ••• • •· 

Farm ownership and rural development. .. . . . . . . .... ...... . ....... .. ................. . .. . .... . 

Other .......... . .. . ... . .. . ... .. .. .. . . . .... . .. • • • • • · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 

Subtotal . .. . .................. . ........ . .. . . . . . ... . . . . ..... . ... ... ... .. . ... .. . . .. . ... . 

Insurance in force 

Federal Deposit Insurance Corporation : 

Bank insurance fund . . . . . . . . .... . ... . . .. . . .. ... . . . ............. . .... . ........ .. . . .... . . . 

Savings association insurance fund . ...... . ... . ..... . ............. . .... . .... . .. . . . . . . . . ... . 

Pension Benefit Guaranty Corporation . ... .. .. . . .. . .... ...... .. . .. . . . . ..... .. . . . .. . .. . . . . .. . . . 

Transportation .. .. .. . . ..... . . .. . .. . .......... • .................. • ........ ... . .. . .. 

Federal Emergency Management Agency .... ... ..... ..... . ........ . . . . .. .... ... .. .. ..... .. . . . 

National Credit Union Administration .. . .... .. .. . .... . . . . . . .. . ..................... .. . .. .. . .. . 

Other .. . .......... . . . ..............•.•..•.. • ..................•...... .... .. . ..... . . .... 

Subtotal .. . . . .. ... .......... . .....•..... .. • .. . ... . .... .. ......... .... ... . .... . . . ... .. . 

Unadjudicated claims 

Energy ... .. . . .. .. . . ... .. .. ... .. . ..... . .. .. . . ... . . . . ..... . . .. .. . . .. . . . .. . . .. . . .. .... . . . 

Transportation . . . ..... . .. . .. .. . ....... . ................ .... .... . . ....... . ... . .. . ..... .. . 

Other .. . . .. . . . . .. .... .... . .. ... . ....•..•..• .. . . . . .. .. . .. ... ..•....•.. . ....... . . . ...•.. 

Subtotal .. .. .. .. . . . ... . .. ... . .. ...... ... ...... . . . .... . .. . . .. • . . ... ... . ........ . ...•.. 

Other contingencies 

Housing and Urban Development . .. .. ........ . .. ... ... . ..... . .. . ....... ... .. .. . ... . . .. .. . . . 

Treasury (IRS--returns processing) ..... . ... ... .. . . . . .. .. ... .. .. .. . .. . . . ... .. . . .. . .. . . .. .... . 

Veterans Affairs .. .. . . .. . ... .. ....... . . . .. .. . . . . .. . . .. .... .. . . .................. . . . ..... . 

Multilateral development banks .. .. ......... .. .. . . . .. . .. ..... . ..... . .... ... ......... .. ... . . . 

Other . .... . . .................. . . .. . . ... . .. . . . .. ... . .. ... . .. . . . . . .... . . . . .. ... . . . . . .. . . 

Subtotal ... . ... . . .. . . .. . . . . . . . . . . .. . .... .. . . . .. . . .... . .... . .. . . .. . .. . . . . . . . ... ... .. . . . 

Total . ........ .. ... . ..... . .. . ........ . . . ... . . ................ . . . ..... . .... .. . . .. . . . 

Amounts outstanding 

1989 1988 

4.9 5.7 

2.8 5.5 

3.4 3.0 

1.9 1.9 

.2 .4 

.9 .8 

14. 1 17.3 

192.6 195.1 

143.8 167.6 

39.3 36.2 

37.7 33.4 

33.9 31 .8 

74.7 61.0 

522.0 525.1 

536. 1 542.4 

359.4 1 340.5 

65.3 65.2 

58.6 53.1 

21 .3 10.1 

76.2 86.3 

580.8 555.2 

1,750.3 1,682.8 

950.0 972.5 

819.7 2 755.5 

220.7 201 .8 

182.7 168.8 

161.9 157.3 

44.9 36.5 

4,130.2 3 3,975.2 

304.4 304.2 

39.3 39.6 

23.2 21 .7 

366.9 365.5 

166.5 4 177.7 

34.1 

11 .6 10.1 

6.5 4.3 

10.1 6.7 

228.8 198.8 

5,306.7 5,094.7 

1 Government loan and credit guarantees for 1988 was revised for 

housing. 2 Insurance in force for 1988 was revised to include Pension Benefit 

Guaranty Corporation . 

Regulatory Commission due to expiration of a section on indemnity 

on nuclear plants in Price-Anderson Act. 4 Other contingencies for 1988 was revised for Housing and Urban 

Development. 3 Insurance in force for 1988 was revised by $72.5 billion for Nuclear 
33 

ADDITIONS TO NON-FEDERAL ECONOMIC RESOURCES 

The following chart indicates the ways in which the Government uses its resources to add to the physical 

and human resources of the Nation without acquiring physical assets. 

ADDITIONS TO NON-FEDERAL ECONOMIC RESOURCES, FISCAL 1989 

Total: $77.3 billion 

dditions to State, Local, and Private Assets 

Educatio 

II Other 

Education-Income Suppo 

6% 

cience and Engineering 

11% 

The table which follows shows the amounts of these expenditures. Some of these investment-type expenditures, while not adding to the Federal assets, add to the assets of State and local governments or private 

institutions, and all enhance the future productivity of the Nation. 

Additions to State, local, and private assets include construction grants for highways, hospitals, and airports, subsidies to the merchant fleet, and conservation projects, which increase the value of private farmland 

and water resources. Other developmental expenditures reflect current Federal expenditures and grants which 

will benefit the Nation in future years by increasing productivity or well-being. These include research and development costs and education and training. 
34 

Additions to Non-Federal 

Economic Resources 

for the Years Ended September 30, 1989 and 1988 

($ billions) 

Additions to State, local, and private assets 

Community and regional development. . ...... . . ... . . . .. ... .. . . . .... . . .... .. . . .. . . .. .... .. . . . .. . . .. . 

Environment . .. . . .. . . .. . . . .. ..... .. ... . . . ..... .. ... . . .. .. .. ... ... ... . . .. . . . ..... . . .... .. . . . . . . 

Transportation 

Highways and mass transit. .. . . . . ....... .. .•.........•....• . ...•.. . . . ..•... . .. . ...•.. . .. . ... . . 

Rail and air . . . . .......... . . ... ... . . . . .. . . ......... .. . ... ....... . . .. . . . . ....... . .. .. . . .. . .. . 

Other .... . .. . ........ . . . . . ... . . ... ... ... ..... ... . .. ...... . .. . . . .. . ...... .. . . ......... . . . . . .. . 

Total additions ...... . . . .......... . . . . . ..... .. ... . . . . . . . . .. . .... .. . .. ..... .. .. . .. . ..... .. . .. . 

Other developmental expenditures 

Agriculture ... . .. . ........ . . . .. .. . . .. .... .... .... ... . .. .... ... . .. .. ...... .. .. . . . ............. . 

Conservation . . .. .... .. .... .... ... .. ..... .... .... .. .. . . . . . ... .. . . .. . . ... . .. ...... .. . . ... . . ... . 

Economic development . ...... . . . .. . . . .. . ... .. . . ... .... . ...... . . . . ....... . ............. . . .. .... . 

Education . . . .... . .. . . .... .. . .. . .. , ..... . ...... ... .. . . .. . .•.• . ... . ... . . . . . .. . .... .• . . . .. . .... . 

Education-income support ..... .. ... . .. . .... . . . .. .. .... .............. . ...... . .. . .. . .. • . .. .. . ..... 

Environment .. . ........... . .. . . .. .... . . . . .. . .... . .... .... ...... ... .. . . . . .. .. ..... .. .. ... .. . .. . 

Health .... . ...................... . .. • .. . .... . ............. .. . . ...... . ... .... .. . .. . . .. .. . .. . . . 

Science and engineering ............ . ..• ... .... .. ......•....•.... . ....•.. . . . ....... . .. ... . . .... . 

Training . .. . .. . ... .. . .. . . . .. . . ... ..... . . . . . . . . . .... . . . ...... .. . . . .. . .. ......... . ...... . . . .... . 

Transportation ... . .. .. . .. ... .. . .. .. . . .. . . ... . . .... .. . .... ... .... . . .. .... .. . . . .. . .. . ..... . ... . . 

Other .. .. .......... .. .. . .... . ....... . . .. . . . .. .... .. .... . ... . . . . . ........ ...... ... . .. . .. . .. . . . 

Total developmental expenditures .. . ..... . .. . .... . ....................... .... ..... .. . ... . ... . . . 

Total investment outlays .. . .... . . .... . . . . . . . . . . . ........ . .. . .. . . . .. . ... ... . . .. .. .. . ...... . .. . 

Source: Budget of the United States Government, Fiscal Year 1991. 

1989 1988 

3.8 4.0 

3.1 2.8 

16.1 16.1 

1.1 .8 

.4 .3 

24.5 24.0 

.9 1.0 

2.5 2.9 

.4 

18.9 16.2 

4.3 4.1 

2.5 .3 

8.7 8.1 

8.4 7.1 

3.8 3.8 

1.9 .3 

.9 .8 

52.8 45.0 

77.3 69.0 
35 

ESTIMATES FOR TAX EXPENDITURES IN THE INCOME TAX 

The following table is designed to show the revenue losses attributable to tax law provisions that allow special exclusions, exemptions, or deductions from gross income or provide special credits, tax rates, or deferrals. The schedule shows the approximate cost of tax 

benefits. 

Revenue loss estimates do not take into account the additional resources, if any, that would be required to provide the same after-tax 

incentives if the expenditure program were administered as a direct outlay rather than through the tax system. These revenue loss estimates 

are not equivalent to estimates of the increase in Federal receipts that would result from the repeal of tax.expenditure provisions. 

Some minor distortions may have occurred since data presented have been condensed for purposes of this report. For further 1989 

information, refer to Budget of the United States Government, Fiscal Year 1991, "Estimates for Tax Expenditures in the Income Tax," table C-1. 

For 1988 refer to "Special Analysis G: Tax Expenditures" in Special Analyses, Budget of the United States Government, Fiscal Year 1990. In 

addition, further information concerning revenues and expenses can be found in "Federal Transactions in the National Income and Product Accounts," Budget of the United States Government, Fiscal Year 1991. 

Income exclusions 

Fiscal Years 1989 and 1988 

($ billions) 

Capital gains at death ....................................................................... . 

Disability and retirement benefits (private) ....................................................... . 

Social Security benefits ...................................................................... . 

Education allowances (scholarships and GI benefits) .............................................. . 

Foreign earnings and investment incentives (income earned abroad) .................................. . 

Interest and dividends (State and local bonds and debt, and life insurance) ............................. . 

Medical care and insurance (employer premiums paid) ............................................. . 

Payroll benefits and allowances (group life, accident, and unemployment) .............................. . 

Other (age 55 or over credit on home sales) ..................................................... . 

Income deferrals 

Interest on U.S. saving bonds ................................................................. . 

Real estate (home sales) .................................................................... . 

Foreign earnings (foreign sales corporations) .................................................... . 

Other deferrals 

Taxes (shipping companies) ................. : ................................................ . 

Deductions and credits 

Agriculture related (capital outlays and gains on certain income) ..................................... . 

Contributions (charitable and political) .......................................................... . 

Earned income ............................................................................ . 

Employee stock ownership plans (funded through investment and tax credits) ........................... . 

Excess bad debt reserves (financial institutions) .................................................. . 

Exemptions (credit unions) ................................................................... . 

Foreign earnings (corporations doing business in U.S. possessions) .................................. . 

Interest (mortgage and consumer) ............................................................. . 

Investments (commercial capital gains, credits, other investment incentives, construction period 

interest, and expensing developmental costs) ................................................... . 

Medical .................................................................................. . 

Mining and timber (capital gains treatment of royalties and certain income) ............................. . 

Old-age, disability, and other personal exemptions ................................................ . 

Other (deductions of motor carrier rights, certain adoption expenses, and energy credit for intercity buses) .... . 

Property damages and losses (casualty losses) .................................................. . 

State and local property tax and other taxes ..................................................... . 

Work incentives (employment credits under work programs) and dependent care ........................ . 

Accelerated depreciation (rental housing, buildings other than rental housing, and machinery and equipment) .. . 

* Less than $50 million. 

Estimated amount 

of revenue loss 

1989 1988 

12.3 11.5 

56.0 60.f 

18.8 17.4 

.7 1.3 

3.2 4.3 

23.2 26.6 

32.6 30.1 

5.5 4.9 

3.2 6.2 

1.0 .9 

12.0 4.0 

.5 .1 

.1 .2 

.5 .5 

11.1 13.5 

1.5 1.0 

.7 .4 

.1 

.4 .2 

1.9 1.8 

38.1 40.3 

5.6 14.1 

2.7 2.0 

1.1 

1.3 2.2 

1.5 

.1 .3 

28.6 27.4 

3.0 3.7 

37.5 24.4 
36 

OPEN-ENDED PROGRAMS AND FIXED COSTS 

The Government commits itself to provide services by passing laws that make spending mandatory. 

Since a significant amount of future spending is fixed by law, it is very probable that the Government will pay for 

these programs in future years. Listed below are the programs for fiscal years 1989 and 1988 th,at can be terminated only if the laws are changed. For further information, refer to "Historical Tables" in the Budget of the 

United States Government, Fiscal Year 1991. 

Payments for individuals 

Open-ended Programs and Fixed Costs, Fiscal Years 1989 and 1988 

($ billions) 

Social Security and railroad retirement ........................................................ . 

Federal employees' retirement insurance ...................................................... . 

Unemployment assistance ....................................... · ........................... . 

Assistance to students ..................................................................... . 

Food and nutrition assistance ............................................................... . 

All other· ................................................................................ . 

Medical care ............................................................................. . 

Public-assistance-related programs ........................................................... . 

Housing assistance ....................................................................... . 

Net interest ................................................................................ . 

General revenue sharing ..................................................................... . 

Farm price supports ......................................................................... . 

Other open-ended programs and fixed-costs ...................................................... . 

Total ............................................................................... . 

• $50 million or less. 

1989 1988 

234.2 220.3 

62.1 59.3 

14.2 13.8 

10.8 3.9 

21.1 4.3 

3.3 2.9 

141.6 114.7 

32.1 28.8 

14.7 13.8 

534.1 461.8 

169.1 151.7 

11.6 12.2 

7.1 8.7 

721.9 634.4 

I 

1

I 

I 

1

1' 

LL 

I 

I 

f 

, L

,: 

I 

I 

I, 
37 

FEDERAL OBLIGATIONS 

"Obligations" are the basis on which the use of funds is controlled in the Federal Government. They 

are recorded at the point at which the Government makes a firm commitment to acquire goods or services and 

are the first of the four key events--order, delivery, payment, and consumption--which characterize the acquisition 

and use of resources. In general, they consist of orders placed, contracts awarded, services received, and similar 

transactions requiring the disbursement of money. All intragovernmental items have been eliminated. 

The obligational stage of Government transactions is a strategic point in gauging the impact of the 

Government's operations on the national economy, since it frequently represents for business firms the Government's commitment which stimulates business investment, including inventory purchases and employment of 

labor. Disbursements may not occur for months after the Government places its order, but the order itself usually 

causes immediate pressure on the private economy. 

For more detail refer to the Treasury Bulletin, March 1990. 

Gross Obligations of the Federal Government by Object Class, as of Sept. 30, 1989 and 1988 

($ millions) 

1989 1988 

Personal services and benefits 

Personnel compensation ................................................................... . 144,314 139,751 

Personnel benefits ........................................................................ . 9,305 8,499 

Benefits for former personnel ................................................................ . 865 1,395 

Contractual services and supplies 

Travel and transportation of persons .......................................................... . 5,412 5,112 

Transportation of things .................................................................... . 7,595 7,124 

Rent, communications, and utilities ........................................................... . 11,736 11,273 

Printing and reproduction ................................................................... . 1,039 330 

Other services ........................................................................... . 137,370 138,121 

Supplies and materials .............. .- ...................................................... . 57,563 63,148 

Acquisition of capital assets 

Equipment .............................................................................. . 57,215 74,846 

Lands and structures ...................................................................... . 20,529 17,319 

Investments and loans ..................................................................... . 17,681 32,032 

Grants and fixed charges 

Grants, subsidies, and contributions ........................... -............................... . 207,958 192,008 

Insurance claims and indemnities ............................................................ . 405,761 394,660 

Interest and dividends ..... : ............................................................... . 195,551 188,000 

Refunds ................................................................................ . 769 871 

Other 

Unvouchered ............................................................................ . 97 108 

Undistributed U.S. obligations ............................................................... . 11,598 9,734 

Gross obligations incurred ................................................................. . 1,292,358 1,284,331 
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