/ 

CONSOLIDATED 

FINANCIAL ST A TEMENTS 

of -the United States Government 

Fiscal Year 1986 

Prototype 

... Treasury's commitment to full disclosure 

of financia°J information to the public .. 

PREPARED BY FINANCIAL MANAGEMENT SERVICE 

J 
CONTENTS 

Secretary's Letter iii 

Comptroller General's Letter v 

Introduction 1 

Financial Highlights 5 

Consolidated Financial Statements 9 

Notes to Financial Statements 17 . 

Supplemental Tables 27 

User Survey 35 

For sale by the Superint.endent of Documents, U.S. Government Printing Office 

Washington, D.C. 20402 
• 

THE SECRETARY OF THE TREASURY 

WASHINGTON 

June 24, 1987 

Statement of the 

Secretary of the Treasury 

The Department of the Treasury is pleased to present these 

Consolidated Financial Statements, an annual effort begun more than 

a decade ago to apply the principles of business accounting to the 

business of government. Although the changes in this year's report 

are not pronounced, we have taken a major step to improve the process by using information for the Statement of Financial Position 

derived directly from agency financial systems. 

We would like to thank all Federal agencies for accommodating our 

new reporting requirements. Those requirements .are consistent with 

the new U.S. Government Standard General Ledger chart of accounts 

issued by 0MB in September 1986. Once all agencies have implemented the Standard General Ledger, financial reporting will be more 

consistent and uniform. 

As part of the President's Management Improvement Program, this 

Administration intends to consolidate and modernize Federal agency 

financial systems. Treasury, under a Memorandum of Understanding 

with 0MB, will oversee the upgrading of those systems. In an 

atmosphere of cooperation and shared responsibility, we look 

forward to working with agencies to implement the improvements 

nece·ssary to effectively manage the Government's resources. These 

financial statements will be one barometer of how well we do. 

Beginning with ihis year's report, we are disclosing additional 

information about the amounts in the statements as well as those 

accounts for which disclosures need to be expanded. We are working 

with the agencies to resolve curient accounting and reporting 

issues and to ensure shared responsibility for future reporting 

.improvements. We invite you, the reader, to join us in this effort 

by completing the user survey form included in this issue. 

a~- -.4~<<< 

/__~_---- o/6,l-i ~ 

James A. Baker, III 

iii 
Comptroller General 

of the United States . 

Washington, D.C. 20548 

June 24, 1987 

STATEMENT OF THE UNITED STATES 

GENERAL ACCOUNTING OFFICE 

One of the most critical issues facing our federal 

government today is the need for sound financial 

management. The federal government is perhaps the single 

largest entity in the world in terms of dollars of assets 

owned by it, liabilities owed by it, revenues raised by 

it, and amounts spent by it. Sound financial management 

of the federal government finances is dependent upon 

modern financial systems which contain and report reliable 

information. 

This consolidated financial report is intended to include 

summary information about the financial condition and 

operations of the federal government as a whole, as 

opposed to segments of it, that is not available elsewhere 

in a single succinct document. It is supplementary to the 

information contained in budget documents. These 

consolidated statements are intended to disclose the 

magnitude of the government's assets (e.g., inventories 

and fixed assets), liabilities (e.g., disability claims 

and the size of the public debt), and the full cost of 

operations (e.g., pension, guarantee, and insurance costs) 

not fully disclosed in the budget. 

Although this report is a prototype, it is a step towards 

a goal we strongly support--the annual publication of 

formal consolidated financial statements of the United 

States Government which can sustain the scrutiny of an 

independent audit. Achieving this goal will be a 

significant milestone towards building strong viable 

financial management systems that will serve the needs of 

government and help restore public confidence in the 

management of the government. 

Although improvements have been and are being made, much 

still remains to be done to produce formal consolidated 

statements that can be audited. Our limited audit work 

has indicated that some of the numbers in these 

consolidated statements can be more fairly stated; for 

example, accounts and loans receivable and related 

allowances for uncollectable loans and accounts as well as 

the estimated losses on loan guarantees and insurance 

programs are, we believe, significantly understated. 

V 
Also, we believe pr6perty arid equipment is understated by 

material amounts. 

Regardless of the. current shortcomings, however; these 

consolidated financial st~tements are an important st~p 

towards improving financial management.· Th~ General 

Accounting Office (GAO) as well as others ~ave made a wide 

range of r'ecommendations which 'are currently being 

considered by the executive branch and the Congress. 

Also, this past year GAO, Treasury, and the Office of 

Management and Budget (0MB) issued a joint statement of 

commitment towards improved financial management through 

shared responsibility. · 

we: at GAO arec•-~ornrnitted to achieving the goal of audited 

_consolidated federal financial statements and we are 

working with the Treasury and 0MB to help make it a 

reality in the near future. 

As with earlier reports of this nature, we have not 

audited the accompanying statements and accordingly, we do 

not express _an opinion on them. 

~~-B wsher 

Comptroller General 

of the United ·states 

VI 
Introduction -

In line with revisions to requirements and procedures for preparation of agency business-type financial statements, the preparation methodology of the Consolidated Financial Statements has been revised 

for fiscal 1986. Most significantly, the agency Reports on Fin·ancial Position (TFS 220) have been used as 

the primary source for the Consolidated Statement of Financial Position. · 

The total of all agency TFS 220. reports have been reviewed for material reporting variances from prior 

year totals and obvious intragovernmental transactions eliminated. Selected amounts from the Treasury 

general ledger have been added for accounts not maintained by program agencies. The Notes to Financial 

Statements disclose significant adjustments made to accounts during consolidation as well as gaps in data 

and accounting issues still under study. Fiscal 1985 totals have been .realigned to the fiscal 1986 format, 

but they have not been restated to reflect the changes in accounting,_and reporting principles because the 

information needed to do so was not available. 

Federal agencies also reported more information disclosing agency accounting policy and greater detail 

supporting amounts in their financial statements. Many agencies experienced difficulty in providing the full 

amount of additional financial information required, but_ reported that agency systems were being modified 

for future reporting periods. Where the information was able to be summarized, it has been included in the 

Notes to Financial Statements. 

The agency data in this report have not been compared with any other reports submitted to the Treasury, 

nor have they been traced to source documents within the agency. In the past, instances have occurred 

where the underlying data and systems have had problems which affected the reliability of agency financial 

reports. In addition, revisions to certain financial reporting requirements which were implemented for fiscal 

1986 reports have caused systemic delays within agencies creating gaps in information due to the Treasury 

on November 15, 1986. Missing data remain outstanding despite aggressive followup action initiated by the 

Treasury. Sign.ificant omissions have been disclosed in the Notes to Financial Statements. 

The Consolidated Statements of Operations and Changes in Financial Position have been calculated 

as in prior years. Changes in sources have been disclosed in the statements as well as in the supplemental 

tables. 

A user survey has been placed at the end of the report. The response from readers of the report will 

be used to guide the future development of the content and form of the report. 

1 
Financial 

·Highlights 
FINANCIAL HIGHLIGHTS 

Revenues and expenses 

The following graphs show revenues and expenses for fiscal years 1976 through 1986, and the major 

categories of revenues by ~ource and expenses by function for FY 1986. These amounts, taken from the 

Statement of Operations, have been calculated on an accrual basis and differ from those reported on the 

cash basis in other reports. The data supporting the graph of expenses by function have been estimated 

based on Treasury totals of budget outlays by function. 

MAJOR SOURCES OF REVENUES 

Individual Income laxes 

__.......,~-r- $1.77. 

Social Insur. ·taxes & contrib. _ 

30.7'1: 

TOTAL REVENUES AND TOTAL EXPENSES 

FY 1976-86 

Revenues $ BIWONS ~~~ 1 200 ---,------------------, 

1976 1978 1980 1982 1984 1986 

Corporate Income taxes __J 

6.87. 

L- Business-type operations 

16.57. 

MAJOR EXPENSES BY FUNCTION 

National defense ____J 

34.2% 

5 

Socio! security and medicare 

;-- 33.7% . 

.......__ Income security 

15.1% 
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 1986 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 

Inventories 

18.2% 

Total: $1,015.8 billion 

Receivables 

~ 22.7% 

Cash and other monetary assets 

--- 9.0% 

Property and equipment __/ 

29.2% 

'--- Investments.and other assets 

20.9% 

Assets, liabilities, and accumulated position 

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

of Financial Position for fiscal years 1982 through 1986. Accumulated position, the excess of liabilities over 

assets, is shown below the base line to emphasize Federal equity claims or interests in assets. 

TOTAL ASSETS, TOTAL LIABILITIES AND ACCUMULATED POSmON 

FY 1982-86 

4000 $ BILLIONS ~ssets •Liabilities ~Accumulated 

position 

2000 

-2000-

-4000-'------------------' 

1982 1983 1984 1985 1986 

6 
Sources and uses of funds 

The charts below have been derived from the Statement of Changes in Financial Position for FY 1986 

·.and show the resources provided during the period and the uses to which they were put. This'statement 

is not intended to substitute for either the Statement of Financial Position or the Statement of Operations; 

instead, it presents additional useful information not included in those reports. 

Other sources of funds include depreciation, 2.4 percent; provision for accrued pension, retirement, 

and disability plans, 1.0 percent; increase in liabilities, 2.4 percent; and decrease in inventories, 1.1 percent. 

Spending on Government programs includes interest on the public debt, 14.1 percent. 

SOURCES OF FUNDS 

\, ,". 

Taxes and other levies 

51.2% -----:-i 

Other Government operations ___,,,,,,,, 10.7% · 

_ Other 

6.9% 

'-- Sale of property and equipment 14.4% I 

Net Increase in borrowing _J 16.9% 

USES OF FUNDS 

Spending on Government programs 78.9% ------...,_ 

7 
Consolidated 

Financial 

Statements 
United States Government Consolidated Statement 

of Financial Position as of September 30, 1986 and 1985 

1986 1985 

Assets ($ billions) 

Cash .............................................................. . 

Other monetary assets (Note 2) ........................................ . 

Accounts receivable, net of allowances for losses of $13.8 in 1986 and $16.3 in 1985 

(Note 3) .......................................................... . 

Advances and prepayments ........................................... . 

Inventories (Note 4) .................................................. . 

Investments, net of premiums, discounts, and allowances for losses (Note 5) .. . 

Loans receivable, net of allowances for losses of $23.0 in 1986 and $7.2 in 1985 

(Note 6) .......................................................... . 

Property, plant and equipment, net of accumulated depreciation of $284.2 in 1986 

and $315.3 in 1985 (Note 7) ......................................... . 

Other assets (Note 8) ................................................ . 

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

Liabilities and Accumulated Position 

Accounts payable 

Interest payable .........................................•............ 

Accrued payroll and benefits and unfunded annual leave ................... . 

Unearned revenue ................................................... . 

Debt issued under borrowing authority (Note 9) ........................... . 

Actuarial liabilities (Note 10) ........................................... . 

Other liabilities (Note 11) ............................................. . 

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

Accumulated position end of period (Note 12) ............................ . 

Total. .............................. ' .......................... . 

The accompanying notes are an integral part of this statement. 

11 

31.4 

59.8 

68.6 

17.2 

185.3 

3.9 

144.6 

296.9 

208.1 

1,015.8 

86.2 

29.9 

11.4 

41.2 

1,740.6 

1,232.9 

173.2 

3,315.4 

-2,299.6 

1,015.8 

17.1 

47.5 

64.0 

7.0 

200.5 

139.6 

343.0 

130.7 

949.4 

105.3 

26.7 

5.6 

41.4 

1,498.8 

1,218.7 

128.7 

3,025.2 

-2,075.8 

949.4 
United States Government 

Consolidated Statement Of Operations 

for the Years Ended September 30, 1986 and 1985 

1986 

Revenues 

Levied under the Government's sovereign power 

Individual income taxes ........................................... . 349.0 

Corporate income taxes ........................................... . 63.0 

Social insurance taxes and contributions ............................. . 283.9 

Excise taxes ....•................................................. 32.9 

Estate and gift taxes ............................................. . 7.0 

Customs duties ............................................ . 13.3 

Miscellaneous ........................... : ....................... . 24.1 

773.2 

Earned through Government business-type operations 

Sale of goods and services ........................................ . 30.9 

Interest ........................................................ . 83.7 

~hm .......................................................... . 38.4 

Total revenues ............................................... . 926.2 

Expenses by agency 

Legislative branch ................................................. . 1.4 

Judicial branch .................................................... . 0.9 

Executive branch 

Office of the President ............................................ . 23.5 

Departments 

Agriculture .................................................... . 74.9 

Commerce .................................................... . 1.9 

Defense ...................................................... . 318.9 

Education .................................................... . 15.3 

Energy ....................................................... . 14.9 

Health and Human Services ..................................... . 119.3 

Housing and Urban Development ................................. . 22.1 

Interior . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................... . 8.0 

Justice ....................................................... . 3.3 

Labor ............ , ......................................... . 19.9 

State ........................................................ . 2.4 

Transportation ................................................. . 43.1 

Treasury: Interest .............................................. . 156.6 

~hm ............................................ . 7.3 

Independent agencies ................. . 316.3 

Total expenses ...................... . 1,150.0 

Current period results ................................... . -223.8 

The accompanying notes are an integral part of this statement. 

12 

1985 

($ billions) 

334.6 

70.7 

265.2 

36.0 

6.4 

12.1 

11.8 

736.8 

32.0 

66.0 

62.8 

897.6 

1.3 

0.8 

22.3 

88.6 

2.2 

323.8 

14.5 

17.1 

113.5 

47.8 

10.0 

3.6 

20.2 

2.4 

40.4 

148.1 

10.0 

278.9 

1,145.5 

-247.9 
II~ 

I 

I~ 

_l 

Budget receipts 

United States Government 

Consolidated Statement of Receipts and Outlays 

and Reconciliation of Accrual Operating Results 

to the Cash Basis Budget 

as of September 30, 1986 and 1985 

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 ..................................... . 

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 .............................................. - - - - - - - - - -

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

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

Total budget outlays ............................................ . 

Total budget deficit ..... '!'-....................................... . 

13 

1986 1985 

($ billions) 

349.0 334.6 

63.1 61.3 

283.9 265.2 

32.9 36.0 

7.0 6.4 

13.3 12.1 

19.9 18.5 

769.1 734.1 

1.7 1.6 

1.0 1.0 

0.1 0.1 

11.4 12.1 

58.7 55.5 

2.1 2.2 

286.1 264.2 

17.7 16.7 

11.0 10.6 

333.9 315.5 

14.1 28.7 

4.8 4.8 

3.8 3.6 

24.1 23.9 

2.9 2.6 

27.4 25.0 

176.2 165.0 

74.9 71.9 

-62.1 -59.0 

989.8 946.0 

-220.7 -211.9 
Reconciliation of Accrual ~Operating Results 

. to the Cash Basis Budget , , · 

as of September 30, 1 ~86 and· 1985_ 

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

Deduct: 

· Other accrual adjustments ........................ : ................ . 

Increase in actuarial liabilities for pension, retirement, and disability plans .. 

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

Add: 

Capital outlays ................................... . 

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

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

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

14 

1986 

· 223.8 

90.2 

14.2 

34.9 

124.6 

11.2 

0.4 

220.7 

($ billions) 

1985 

247:9 

133.8 

8.1 

40.4 

117.8 

28.0 

0.5 

211.9 
J 

] 

Uses of funds: 

United States Government Consolidated Statement 

of Changes in Financial Position 

for the Year Ended September 30, 1986 

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

Charges not requiring cash in current period: 

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

Provision for accrued pension, retirement, and disability plans ................................... . 

Increase in liabilities ...................................................................... . 

($ billions) 

223.8 

-34.9 

-14.2 

-34.~ 

Cash used in operations........................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140.5 

Purchase of property and equipment ........................................................ . 

Increase in receivaqles .................................................................... . 

Increase in other assets ................................................................... . 

Total uses of funds ..................................................................... . 

Sources of funds: 

Borrowing from the public ................................................................... . 

Sale of pr.operty and equipment .............................................................. . 

Decrease in inventories ..................................................................... . 

Total sources of funds .................................................................. . 

Decrease in cash and monetary reserves ........................................................ . 

Cash and monetary reserves at beginning of year ................................................. . 

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

The accompanying notes are an integral part of this statement. 

15 

195.2 

19.8 

81.2 

436.7 

241.8 

206.3 

15.2 

463.3 

-26.6 

64.6 

91.2 
I 

) 

'' 

Notes to Financial 

Statements 
Notes to Financial Statements 

1. Summary of general accounting policies 

Principal financial statements.-These consist of a Statement of Financial Position, a Statement of 

Operations, and a Statement of Changes in Financial Position. Because of their developmental nature, only 

the most significant changes are disclosed in the Notes. · 

Principles of consolidation.-The statements include the accounts of all significant agencies and funds 

included in the budget of the U.S. Government. All former off-budget agencies are now presented on-budget. 

The Federal old-age and survivors insurance and the Federal disability insurance trust funds, now classified 

as off-budget, have been included in the statements because they are clearly within the scope of Government 

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

are privately owned. Significant intragovernmental transactions of an identifiable nature were eliminated in 

consolidation. 

Fiscal year.-The fiscal year of the U.S. Government ends on September 30. 

Reclassification and adjustment-For comparability, certain fiscal 1985 data are reclassified where 

appropriate to conform to the financial statement presentation for fiscal 1986. 

Change in sources.-The fiscal 1986 Statement of Financial Position has been compiled from agency 

reports ::,ubmitted in response to I TFM 2-4100, Federal Agencies' Financial Reports. Selected amounts from 

the Treasury general ledger have been added. In prior years, separate sources and estimates of missing 

amounts were used in preparing the statements. The Notes to Financial Statements disclose changes in 

data and sources as well as necessary estimates for the Statement of· Financial Position. The Statement 

of Operations and Statement of Changes in Financial Position have been calculated as in prior years. 

2. Other monetar.y assets 

Gold (monetized at the statutory price of 

$42.22 per ounce) ..................... . 

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

U.S. reserve position in the International 

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

Accountability for cash and other assets held 

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

Convertible foreign currencies (at market 

value) ............................... . 

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

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

3. Accounts receivable 

Sept. _30, 

1986 

Sept. 30, 

1985 

($ billions) 

11.1 11.1 

8.3 6.8 

11.9 11.7 

9.4 7.3 

16.8 8.7 

1.8 1.3 

0.5 0.6 

59.8 47.5 

All receivables are reported net of reported allowances for losses. Totals reported by the Internal 

Revenue Service for delinquent taxes receivable for fiscal 1986 and 1985 were $37. 7 billion and $36.1 billion, 

respectively. An amount for corporate taxes receivable was not available for fiscal 1986. The amount included 

in fiscal 1985 was $3.7 billion. 

19 
A change in sources for accounts receivable from the Report on Accounts and Loans Receivable Due 

From the Public to the Report on Financial Position has created the following differences in the totals for 

fiscal 1986 and 1985. Other receivables, not included in fiscal 1985 totals, have been reclassified by the 

agencies into accounts or loans receivable totals. Total other receivables and allowances for losses for fiscal 

1985 were $18.4 billion and $3.6 billion, respectively. 

The fiscal 1985 accounts receivable amount has been restated to reflect the elimination of $30.8 billion 

of receivables due from Government agencies. 

The allowances for losses have been recorded as reported. by the agencies. They are presumed to 

be understated and are under study. 

4. , . Inventories 

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

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

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

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

Sept. 30, 

1986 

Sept. 30, 

1985 

($ billions) 

121.0 98.4 

84.6 

17.5 

19.4 

43.1 

1.8 

185.3 200.5 

Product or service components contain amounts reported in goods-for-sale, work-in-process, and raw 

materials in prior years. Agencies have reported inventory totals net of allowance accounts, where appropriate. 

The inventory accounts do not include the weapons stockpile because the extent of this inventory 

is classified. Totals for the Department of Defense for fiscal 1986 and 1985 were $140.7 billion and $129.9 

billion, respectively. 

Agencies disclosed 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. Several agencies reported 

estimated inventory amounts. 

Few agencies reported restrictions on the use of their inventories. Of those reporting restrictions, most 

indicated that use was limited to agency operations or program activities. 

5. Investments 

The amount for fiscal 1986 represents agency investments in non-Federal securities and other 

investments and is reported net of applicable premiums, discounts, and allowances for losses. 

The reporting distinction allowing the identification of non-Federal investments was not available in 

fiscal 1985. 

6. Loans receivable 

All receivables are reported net of reported allowances for losses. The allowances for losses have 

been recorded as reported by'the agencies. They are presumed t_o be understated and are under study. 

20 
A change in sources for loans receivable from the Report on Accounts and Loans Receivable Due 

From the Public to the Report on Financial Position has created the following differences in the totals for 

fiscal 1986 and 1985. Other receivables, not included in fiscal 1985 totals, have been reclassified by the 

agencies into accounts or loans receivable totals. Total other receivables and allowances for losses for fiscal 

1985 were $18.4 billion and $3.6 billion, respectively. 

Loans receivable due from Federal agencies were reported separately in fiscal 1986 reports and have 

been eliminated from the total. Loans receivable of $153.5 billion reported by the Federal Financing Bank 

were eliminated from the fiscal 1985 amount. Other loans receivable due from Federal agencies which were 

unable to be identified are presumed to be included in the fiscal 1985 amount. 

7. Property, plant and equipment 

Sept. 30, 

1986 

Sept. 30, 

1985 

Structures, facilities and leasehold 

improvements ........................ . 

($ billions) 

143.8 156.7 

352.4 

93.7 

38.2 

13.5 

Military equipment ...................... . 313.3 

Equipment ............................. . 57.5 

Construction in progress ................. . 41.8 

Land : ................................ . 10.5 

Other .................................. . 14.2 3.8 

581.1 658.3 

Other assets include ADP software, assets under capital lease, and other unidentified assets. The 

amounts shown for fiscal 1986 are net of depreciation recorded by the agencies. 

Land is valued at the cost paid by the Government. The land acquired through donation, exchange, 

bequest, forfeiture, or judicial process is estimated at amounts the Government would have paid if purchased 

at the date of acquisition. 

Pending the study of valuation methods, the Outer Continental Shelf and other offshore lands and 

more than 662 million acres of public domain land have not been included. In prior years, the Department 

of the Interior reported an estimated value of $4.3 billion for public domain lands although these lands have 

no recorded cost. Interior believes that any estimate of the value of these lands would be highly subjective 

and unreliable because there is no feasible method available for reasonably estimating their current value. 

Depreciation accounting is encouraged for all Federal functions and activities. Meanwhile, only businesstype operations such as revolving and industrial funds and activities which recover costs from reimbursements 

or user charges 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, structures and facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 years 

Ships and service craft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 years 

Industrial plant equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 years 

All other depreciable assets ......... • ........................... 10 years 

The amount of accumulated depreciation reported by Federal agencies in their financial statements 

for fiscal 1986 and 1985 were $22. 7 billion and $32. 7 billion, respectively. The straight-line depreciation method 

was selected more often for all classifications of assets. 

21 
Most agencies reported the valuation basis for fixed ·assets was cost. Capitalization policies varied 

greatly with thresholds of $5,000 and $1,000 selected most often. 

Agencies provided information about the range of service life assigned to asset categories. The majority 

of agencies assigned a range of 3-5 years or 6-10 years to ADP software. The ranges selected most often 

for equipment were 6-10 years followed by 3-5 years. Agencies reported the greatest diversity in their selection 

of ranges for structures and facilities with an equal distribution among the ranges of 6-1 O years, 16-20 years, 

and greater than 25 years. 

Agencies provided the following information about property not subject to depreciation: 

Fully depreciated assets ...................................... . 

Nondepreciable assets ........................................ . 

Value of property not in use ................................... . 

8. Other- assets 

($ billions) 

260.8 

19.9 

1.7 

Agencies reported amounts in other assets which were not included in any previous asset classification. 

Identification of the type of assets included in this category support the presumption that this amount is 

overstated by amounts which should be reclassified to other asset categories such as receivables, advances, 

and property, plant and equipment. 

. Much work remains to be done to encourage proper reporting in this category for fiscal 1987. While 

deferred charges or prepaid expenses were classified correctly by many agencies, ether items identified 

as notes or noncurrent receivables, seized or acquired property, and materials and supplies need to be 

reviewed. 

Miscellaneous asset accounts from the Treasury general ledger have been added to this category. 

9. Debt issued under borrowing authority 

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

amounts reported for fiscal years 1986 and 1985 reflect a reduction for intragovernmental holdings of $383.9 

billion and $318.1 billion, respectively. 

Agencies also reported $8.8 billion of other debt which is included in the fiscal 1986 amount. Amounts 

in this account have not been reviewed to reclassify any possible intragovernmental transactions. 

10. Actuarial liabilities. 

The accounting tor accrued pension, retirement, and disability plans is subject to several different 

assumptions, definitions, and methods of calculation. Each of the major plans is summarized below. 

Military personnel ....................... . 

Civilian employees ...................... . 

Veterans compensation .................. . 

Federal employees compensation .......... . 

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

22 

Sept. 30, 

1986 

Sept. 30, 

1985 

($ billions) 

440.6 440.6 

563.0 

184.5 

563.0 

185.3 

12.7 

31.3 

1,232.9 

11.9 

18.7 

1,218.7 
·• 

Military personnel and civilian employees: The liabilities under these two plans represent a major portion 

of the total unfunded liability which is to be reported under Public Law 95-595. The accrued pension liabilities 

at September 30 represent the actuarial present value of the accumulated plan benefits and have been 

calculated in accordance with instructions developed jointly by the General Accounting Office and the Office 

of Management and Budget under the provisions of Public Law. 95-595. 

The actuarial liabilities as of September 30, 1986, were not reported for either plan. September 30, 

1985, amounts have been used for fiscal 1986 also. In the past, estimates were inserted when the Department 

of Defense and the Office of Personnel Management did not provide current calculations of the actuarial 

liability. Because both agencies reported prior-year amounts in their fiscal 1986 reports, these amounts have 

not been replaced with Treasury estimates. 

Veterans compensation: This amount represents the value of projected annual benefit payments. The 

amount is calculated by projecting for a 20-year period the 7-year estimates of total cases and estimated 

pension and compensation costs provided by the Veterans Administration. 

In financial statements prepared by the Veterans Administration, an estimated future liability for 

compensation and pension benefits of $142.5 billion was disclosed in the notes. This calculation was actuarially 

computed but excluded certain demographic assumptions which will be used in future computations. No 

final decision has been made as to how this future liability will be presented in the agency's financial statements. 

Federal employees compensation: This amount represents the estimated future costs 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. 

11. Other liabilities 

Agencies reported amounts in other liabilities which were not included in any previous liability 

classification. Contingent liabilities for guarantee and insurance programs, formerly a separate account in 

the Statement of Financial Position, is included in this account. 

Miscellaneous liability accounts from the Treasury general ledger have been added to this category. 

Amounts contained in other liabilities will be reviewed to encourage full disclosure and correct 

classi.fication for fiscal 1987 reporting. 

12. Accumulated position 

Accumulated position beginning of period ... . 

Current period results ................... . 

Accumulated position end of period . : ...... . 

Sept. 30, 

1986 

Sept. 30, 

1985 

($ billions) 

2,075.8 1,827.9 

247.9 

2,075.8 

223.8 

2,299.6 

Current period results for fiscal 1986 does not include the increase in the accrued actuarial liability 

for the military personnel and civilian employees pension plans. Current period expense for both plans is 

included. 

23 
13. Leases 

Federal agencies were required to provide financial information about lease co~mitments for the first 

time in fiscal 1986. Several agencies noted they were not yet able to accumulate lease information.from 

their accounting systems or report estimated amounts. The majority of leases were identified as bui~ding 

and office space rental. The amounts reported are summarized below: · 

. · ..... 

Lease costs where the agency is ·the lessee 

Year 1 .............................. . 

Year 2 ......... : .................... . 

Year 3 ............................ 1 ••• 

Year 4 .............................. . 

Year 5 ....................... ·.· ..... . 

Beyond 5 years ....................... . 

Lease revenues where the agency is the lessor 

Year 1 .............................. . 

Year 2 .............................. . 

Year 3 .............................. . 

Year 4 .............................. . 

Year 5 .... ' ............. -............. . 

Beyond 5 years ....................... . 

*Less than $50 million. 

Operating 

leases 

($ billions} 

4.1 

2.8 

2.6 

2.5 

2.6 

7.5 

22.1 

* 

* 

* 

0.2 

0.3 

Capital 

leases 

1.9 

* 

* 

* 

* 

0.9 

2.9 

* 

* 

* 

* 

* 

The current and long-term portions of lease costs are included in accounts payable and other liabilities, 

respectively. The lease revenues are included in the current and noncurrent portions of accounts receivable. 

The information reported does not allow intragovernmental leasing transactions to be eliminated in 

consolidation. 

14. Social security 

In prior years, liability equalling the amortized portion of the unfunded liability for the social security 

program was included on the Statement of Financial Position. The unfunded liability is determined annually 

and tho change ic amortized ovor a 30 yoar period. Ac of Soptombor 30, 1 D86, tho unfunded liability for social 

security was $5,393.5 billion of which $2,232.6 billion was recorded through amortization. The amounts for 

September 30, 1985, were $4,647.4 billion and $2,059.8 billion, respectively. The liability represents the present 

value of the projected excess of future benefit payments to present participants over the contributions still 

to be made by the same group and their employers for the next 75 years. This liability has been reclassified 

as a conti~gent liability and may be found in the supplemental table, Commitments and Contingencies. 

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 actuarial amounts below are calculated 

on the assumption that future young workers will be covered by the program as they enter the labor force. 

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

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

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

24 

Sept. 30, 

1986 

Sept. 30, 

~985 

($ billions} · 

14,468.0 12,328.9 

14,125.4 12,060.1 

-342.6 -268.8 

' 'I 

' 
I. 

15. Contingencies 

Several Government agencies insure businesses and individuals against various types of risks. The 

amount of insurance coverage in force, representing the maximum risk exposure to the Government, is 

$2,988.2 billion as of September 30, 1986. 

The Government also guarantees loans by non-Government enterprises to businesses and individuals. 

These guarantees become liabilities of the Government only when it is required to honor its guarantees. 

Loan guarantees in force at September 30, 1986, are $831.5 billion. 

/' '"~ J I 

25 
Supplemental 

Tables 
SUMMARY OF ACCOUNTS AND LOANS RECEIVABLE DUE 

FROM THE PUBLIC 

Total accounts receivable amounted to $95.9 billion in FY 1986, an increase of $0.3 pillion over FY 

1985. Total loans receivable amounted to $267.9 billion in FY 1986, a decrease of $20.2 billion from FY 1985. 

Graphically depicted below are summaries by agency of accounts and loans receivable data. Treasury 

accounts receivable includes IRS, 49.6 percent. 

ACCOUNTS RECEIVABLE 

Total: $95.9 billion 

Treasury 

52.3% ~ ----""7"""':----

LOANS RECEIVABLE 

Agriculture 

51.0% ~ 

Education 

4.5% 

Total: $267.9 billion 

Housing & Urban Develop. __J 

10.4% 

Funds App. to the Pres. 

----- 8.1% 

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 stwdent 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 do not agree with the totals reported in the Statement of Financial Position due to different sources. These amounts have been summarized from the Report 

on Accounts and Loans Receivable Due from the Public. This schedule reflects all receivables reported by 

Federal agencies including other and off-budget receivables. The distinction allowing identification and elimination of Federal transactions from this source was not available. 

29 
Accounts and Loans Receivable by Agency 

($ billions) 

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

Executive branch 

Funds appropriated to th_e President .......... . 

Departments 

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

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

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

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

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

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

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

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

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

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

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

Transportation ........................... · 

Treasury ...................... • • • • • · · · · · 

Veterans Administration .................... . 

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

Off-budget agencies ....................... . 

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

Less taxes receivable, allowances, and 

intragovernmental transfers .............. . 

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

Accounts receivable 

1986 

1.4 

8.8 

0.1 

1.3 

0.7 

2.1 

2.8 

3.0 

1.9 

0.4 

5.3 

0.7 

50.2 

1.9 

15.3 

95.9 

-27.3 

68.6 

1985 

1.1 

7.9 

0.2 

1.3 

0.8 

3.0 

3.0 

1.8 

1.7 

0.3 

6.9 

0.7 

44.9 

1.8 

13.9 

6.3 

95.6 

-31.6 

64.0 

Loans receivable 

1986 1985 

21.7 20.9 

136.5 24.9 

0.8 0.9 

12.1 11.1 

0.6 0.6 

27.9 27.3 

0.5 0.6 

3.0 2.2 

36.5 3.2 

2.5 2.7 

25.8· 28.6 

165.1 

267.9 288.1 

-123.3 -148.5 

144.6 139.6 

-- --

Summary of Gross Accounts and Loans Receivable 

Accounts Percent Loans Percent 

receivabie of total receivable of total 

Beginning balance, September 30, 1985 ......... 90.9 94.8 257.1 96.0 

New receivables .......................... 83.0 86.6 46.8 17.5 

Repayments and reclassifications .. ···, ....... -75.9 -79.1 -34.7 -13.0 

Amounts written off ....................... -2.1 -2.3 -1.3 -0.5 

Ending balance September 30, 1986 ............ 95.9 100.0 267.9 100.0 

-- -- -- --

Aging Schedule of Accounts and Loans Receivable as of September 30, 1986 

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

Delinquent 

1-30 days ........................ ·.: .... . 

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

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

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

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

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

Total delinquent .. , .................... . 

Noncurrent receivables ................. : ..... . 

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

• Less than $50 million. 

Accounts 

receivable 

16.5 

5.0 

2.8 

2.9 

7.0 

7.9 

27.4 

53.0 

26.4 

95.9 

30 

Percent 

of total 

17.2 

5.3 

2.9 

3.0 

7.3 

8.2 

28.6 

55.3 

27.5 

100.0 

Loans 

receivable 

28.2 

0.2 

0.2 

0.3 

0.8 

2.8 

10.9 

15.2 

224.5 

267.9 

Percent 

of total 

10.5 

0.1 

0. \ 

0.1 

0.3 

1.0 

4.1 

5.7 

83.8 

100.0 
' l 

'· 

FEDERAL DEBT 

Total net borrowing from the public amounted to $1,749.1 billion in FY 1986, an increase of $250.3 

billion from FY 1985. This chart has been presented to graphically show the increase in net borrowing from 

the public. 

NET BORROWING FROM THE PUBLIC 

WITH INTEREST EXPENSE, FY 1976-86 

$BILLIONS 2000-.-------------------~ 

1500 

Net borrowing from the public 

1000 Int.mt GpanH 

1m. ..... ,Ao.2 

lm .... , .. Al.9 

1971 ........ Sl.2 

1971 .. ,, ... M.9 

_ 1980 ....... .59.lil 

1981 ........ 78., 

1182 ........ 87.7 

UUSl. ••.••• 10111.4 

11u ....... t2a ... 

188.5. ...... Ma.2 

-1sa11 .•••..• 1,s.1 

0 -+----~-- --r------,------,------1 

1976 1978 1980 1982 1984 1986 

The Federal Debt schedule which follows reflects information on the borrowing of the Federal Government needed to finance the Government's operations. This schedule supports the balance sheet caption, 

"Debt issued under borrowing 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 1986 net borrowing from the public 

by major source category is graphically _depicted. 

NET BORROWING BY MAJOR SOURCE CATEGORY 

• BIiis 

0 Notes 

D Bonds 

1121 Nonmorketoble 

D Other 

$ BILLIONS 1000-,------------------, 

500 

1986 1985 

31 

I 
Federal Debt as. of September 30, 1986 ,, • • II(" • ..,., =' 

Marketable 

Bills ............................. ····················· 

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

Bonds ................. " .... : ......................... . 

Non marketable 

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

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

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

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

Other ,,. 

Agency series ......................... • ........ . 

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

Net borrowing from the public 

Average· 

interest 

rate 

(percent) 

6.324 

10.034 

10.639 

8.999 

7.683 

6.958 

7.268 

5.794 

6.925 

6.212 

11.906 

9.074 

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

Prior period .......................................... • ........... ·,· ... . 

Net increase ........................................................... . 

32 

Total debt 

1986 

($ billions) 

403.4 

894.8 

236.9 

1,535.1 

4.1 

0.8 

85.6 

102.8 

193.3 

3.1 

17.6 

20.7 

1,749.1 

1,498.8 

250.3 

1985 · 

'-

375.6 

774.8 

194.5 

1,344.9 ' l I 

I 1 

6.6 '.1 

0.9 

77.0 

64.2 

148.7 

3.2 

2.0 

5.2 

1,498.8 

1,299.5 

199.3 

~ j 

I 

J 

., 

·1 

. /. 

I 

l 

,·'I• I l :; "f )• I 

I 

I 

} 
'• 

I 

~ 

\ 

COMMITMENTS AND CONTINGENCIES 

In FY 1986, total commitments amounted to $321.0 billion and total contingencies amounted to $6, 149.9 

billion, The charts below show tho poroont::igo dictribution of 1086 commitments and contingencies by source 

category. Other contingencies include social security benefits, 36.3 percent. 

· Undelivered orders 

85.8% 

COMMITMENTS 

' 

Total: $321.0 billion 

---.....__ Long-term contracts 

14.2% 

CONTINGENT LIABILITIES 

Insurance In fon:e 

48.6% 

Unadfudlcated clalms __/ 

1.2% 

Total: $6,149.9 billion 

Government loans & cradll guarantees ,,,....-13.5% 

The table that follows shows two basic types of information: the maximum potential liabilities (commitments) and the anticipated liabilities (contingencies) which it is reasonably certain, based on experience 

and other factors, will occur. The anticipated liabilities are the equivalent to allowances for losses. 

A commitment represents an obligation to pay for goods or services upon delivery under a contractual 

arrangement. Commitments shown in the table are represented by long-term contracts for which appropriations have not yet been provided by the Congress, and undelivered orders represent obligations of currently 

available appropriations. 

A contingency represents a possible exposure to a liability depending upon the outcome of uncertain 

future events or circumstances. Contingencies are stated in terms of the maximum risk exposure without 

regard to existing contingent assets which would be available to offset potential losses. The actuarial liability 

for future social security benefits, previously disclosed on the balance sheet, has been included with other 

contingencies because the probability that these payments will be continued is high. "Contingent liabilities" 

represents the anticipated liability and is included in the balance sheet item "Other liabilities." 

33 
Commitments and Contingencies of the ~nited States Government 

as of September 30, 1986 

($ billions) 

Commitments 

Long-term contracts 

Defense ............. • ...................................... , ....................... . 

General Services Administration .............. : ... , .................................. · .. . 

Tennessee Valley Authority ..... , .................................. · ................... . 

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

Other ................................................................... : ......... . 

Subtotal .................... : ................... : .... ·. · ............ , ............... . 

Undelivered orders 

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

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

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

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

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

Other agencies ............................................................ • ......... . 

Subtotal ............ , ............................................................ . 

Total commitments 

Contingencies 

Government loan and credit guarantees 

Hoo~~---························································· 

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

Veterans benefits .................................................... . 

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

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

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

Insurance in force 

Federal Deposit Insurance Corporation .................................. . 

Federal Savings and Loan Insurance Corp ................................ . 

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

Nuclear Regulatory Commission ....................................... . 

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

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

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

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

Unadjudicated claims 

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

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

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

Subtotal .................... · ..................................... . 

Other contingencies 

Veterans benefits .................................................... . 

Social security benefits ............................................... . 

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

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

Total contingencies .............................................. . 

Total contingent liabilities 

• Less than $50 million. 

34 

Contingent 

liability 

(Max. risk 

exposure) 

552.9 

72.8 

63.5 

47.1 

95.2 

831.5 

.1,526.2 

873.0 

148.5 

72.5 

130.7 

174.9 

62.4 

2,988.2 

13.6 

40.9 

17.3 

71.8 · 

f3.8 

2,232.6 

12.0 

2,258.4 

6,149.9 

Amounts 

outstanding 

6.3 

2.6 

7.2 

27.9 

1,7 

45.7 

26.0 

158.4 

11.5 

7.7 

25.4 

46,3 

275.3 

321.0 

• Contingent 

liabilities 

0.1 

0.4 

0.5 

6.3 

0.6 

6.9 

7.4 

\ 

! . 

, 

l 

l 

j 

.j 

A 
I• 

I 

,. 

' 

.. : USER SURVEY 

Consolidated Financial Statements 

The Department of the Treasury maintains an interest in seeing that user needs are responsibly 

addressed as it periodically evaluates the content and form of the CFS. Your answers to the following questions will provide valuable information which could be the impetus for future data enhancements. 

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of Accrual Operating Results to the Cash Basis 

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· 15. Notes to Financial Statements. 

16. Supplemental tables. 

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2 

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2 

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17. My primary interest in the CFS is- 18. My work may be classified as 

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