Date: September 11, 1995

To: Bob Bramlett

From: Judy Yuran, Chairman

SGL Issues Resolution Committee

Subject: Issues Resolution Committee Comments on Revenue ED 

Thank you for the opportunity to comment on the Revenue exposure

draft. The following comments were developed by the Issues

Resolution Committee of the Standard General Ledger Board.

Members of the IRC are very concerned with the cost benefit of

implementation of many aspects of this and other FASAB standards. 

Implementation will require much reprogramming of agencies’

systems to capture data in the prescribed way and for creation of

new reporting modules. Costs for teaching the new accounting

concepts to employees at all levels will also be incurred. 

Additionally, the standards continue to depart from accounting

taught in the nation’s schools which lengthen the learning curve

of the graduates hired into Federal service. Finally, many folks

are wondering if the changes which may certainly work will

actually improve the data enough to warrant the effort.

Custodial Statement

What is considered material on the custodial statement? Do you

intend for agencies to report interest, penalties and

administrative charges collected on delinquent debts and

deposited into the Treasury General Fund on this statement? Are

employer contributions to Thrift Savings, Retirement and Health

Benefits considered custodial activity for the employing agency?

Uncollectible Amounts

We believe that netting accrued revenue with uncollectible

amounts is inappropriate. Netting the two amounts will

understate the amount of revenue actually earned. Even with

respect to IRS tax collections, when a tax is levied, it is

earned through the government’s sovereign power to tax the

citizenry.

Additionally, by not recording bad debt expense, representing

uncollectible amounts on the face of the statement, you lose an

important performance measurement tool for debt collection

activity. Finally, how can we record an allowance for doubtful

accounts as a reduction to accounts receivable on the balance

sheet without an offsetting bad debt expense on the Statement of
Net Cost?

Volume 1, paragraph 35. The last sentence change "recognizing

the appropriation" to "reducing the appropriation."

Volume 1, paragraphs 47 & 120. These paragraphs state that the

standards for exchange revenue are not applicable to direct loans

and loan guarantees under credit reform. However, Volume 2,

paragraph 30 states that interest on direct loans under credit

reform is exchange revenue. Please, specify what credit reform

revenue is exchange revenue in Volume 1 paragraphs 47 & 120.

Volume 1, paragraph 193. The matching concept as defined in GAAP

matches periodic revenue earned with expenses. The federal

government in many cases does not earn revenue but receives

appropriated funds to cover expenses. We understand the FASAB

desire to match “appropriated capital used” with “appropriated

funds expended” in the same period. However, the term "net

results of operations" used in the “Statement of Changes in Net

Position” has a specific definition in GAAP that indicates

expenses are netted against revenue to show a profit or loss. We

suggest changing the line item “Net results of Operations" to

"Excess/shortage of Net Costs over Financing Sources Provided in

the Current Period." 

Volume 2, paragraph 30. This paragraph is inconsistent with

FASAB standard 2. Suggest second sentence change: Delete “two

parts”: and “and amortized interest...passage of time.” Also,

delete the complete 3rd sentence.

Thank you again for the opportunity to comment. Please feel free

to call me on (202)874-6308 if you’d like to discuss these

comments or need additional information.