October 2003 

Dear Colleague: 

In July 2001, the U.S. General Accounting Office (GAO) and the President’s Council on 

Integrity and Efficiency (PCIE) issued the GAO/PCIE Financial Audit Manual (FAM). In 

April 2003, we issued an update to the FAM. The FAM provides guidance for performing 

financial statement audits of federal entities. The FAM is a key tool for enhancing 

accountability over taxpayer-provided resources. 

GAO and the PCIE are committed to keeping the FAM current. With this goal in mind, we 

are now requesting comments on an exposure draft that will revise the Checklist for 

Reports Prepared Under the CFO Act (CFO Checklist). This update will replace the 

current CFO Checklist in the FAM Volume II, Section 1004. Once finalized, the updated 

CFO Checklist will be designated in the FAM Volume II at section 1050. 

The exposure draft of the CFO Checklist can be accessed at either the GAO web site 

(www.gao.gov) or the PCIE web site (www.ignet.gov/pande/audit.html). Instructions for 

providing comments on the draft CFO Checklist are attached and can also be found at the 

GAO and PCIE web sites. Please include the rationale for any comments offered so that 

we may fully understand the need for any modifications. The due date for comments is 

December 5, 2003. 

You may address questions to either Mary Mohiyuddin (GAO, 202-512-3087, 

mohiyuddinm@gao.gov) or Curtis Crider (PCIE, 202-208-5724, Curtis_Crider@oig.doi.gov). 

We appreciate your attention to this very important project. 

Jeffrey C. Steinhoff The Honorable Gregory H. Friedman 

Managing Director Chair, President’s Council on Integrity 

U.S. General Accounting Office and Efficiency Audit Committee 

Attachment 
Exposure Draft 


Checklist for Reports Prepared Under CFO Act – Revised 2003, 


Section 1050, Volume II of Joint GAO/PCIE Financial Audit Manual (FAM) 


Instructions for Comment 


We welcome comments from everyone. GAO and the PCIE encourage the widest possible distribution 

of the exposure draft of the FAM update. 

Agency inspectors general should encourage their independent public accounting firms to review and 

comment. 

Please e-mail comments with detailed rationale to FAM_Comments@oig.doi.gov. Also include your 

name, agency name, phone number, and e-mail address. 

If you have questions, you may contact: 

• Mary A. Mohiyuddin (GAO, 202-512-3087, mohiyuddinm@gao.gov) 

• Curtis Crider (PCIE, 202-208-5724, Curtis_Crider@oig.doi.gov) 
United States General Accounting Office 

President’s Council on Integrity and Efficiency 

GAO/PCIE 


FINANCIAL AUDIT MANUAL 

Checklist for Reports Prepared 

Under the CFO Act – Revised 2003 

Exposure Draft 

GAO-04-44G October 2003 
Reporting 1050 – CFO Act Checklist 

Contents 

Abbreviations 2 

Sections 

I Overview 3 

II General Items Related to the Financial Statements 6 

III Balance Sheet 13 

IV Statement of Net Cost 104 

V Statement of Changes in Net Position 148 

VI Statement of Budgetary Resources 161 

VII Statement of Financing 171 

VIII Statement of Custodial Activity 181 

IX Notes to Financial Statements (Significant Accounting Policies) 191 

X Supplementary Information 193 

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Abbreviations 

AcSEC Accounting Standards Executive Committee 

AICPA American Institute of Certified Public Accountants 

CFO Act Chief Financial Officers Act of 1990 

COTS commercial off-the-shelf 

CSRS Civil Service Retirement System

FASAB Federal Accounting Standards Advisory Board 

FASB Financial Accounting Standards Board 

FDIC Federal Deposit Insurance Corporation 

FERS Federal Employees Retirement System 

FFMIA Federal Financial Management Improvement Act of 1996 

FHA Federal Housing Administration 

FIFO first-in, first-out 

FY fiscal year 

GAAP Generally Accepted Accounting Principles 

GDP gross domestic product 

GMRA Government Management and Reform Act of 1994 

GPRA Government Performance and Results Act of 1993 

HI Hospital Insurance (Medicare Part A) 

IMF International Monetary Fund 

Imple. Guide Implementation Guide 

IRS Internal Revenue Service 

LIFO last-in, first-out 

MD&A Management’s Discussion and Analysis

MRS Military Retirement System 

NRV net realizable value 

OASDI Old Age, Survivors, and Disability Insurance (Social Security) 

OMB Office of Management and Budget 

OPEB Other Postemployment Benefits 

ORB Other Retirement Benefits 

PP&E Property, Plant, and Equipment

RRB Railroad Retirement Benefits 

RSI Required Supplementary Information 

RSSI Required Supplementary Stewardship Information 

SFAS Statement of Financial Accounting Standards 

SFFAC Statements of Federal Financial Accounting Concepts

SFFAS Statements of Federal Financial Accounting Standards

SGL U.S. Government Standard General Ledger 

SMI Supplementary Medical Insurance (Medicare Part B) 

SOP Statement of Position 

TVA Tennessee Valley Authority

UI unemployment insurance 

UTF Unemployment Trust Fund

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Section I Overview 

Introduction 

The Chief Financial Officers (CFO) Act of 1990 and the Government Management and Reform Act of 1994 

require, among other mandates, that agencies’ chief financial officers submit annual reports to their agency 

heads and to the Office of Management and Budget (OMB). These annual reports are to contain audited 

financial statements of their agencies. The financial statements are to be presented in accordance with 

generally accepted accounting principles (GAAP).1 

This checklist is being issued to assist agencies in preparing these statements and auditors in auditing them. 

Use of this checklist is not a requirement. Rather, it is intended to help provide for a systematic, organized, 

and structured approach to preparing or reviewing agency financial statements. Furthermore, it should be 

noted that, while the questions contained in the checklist are taken from authoritative sources, the checklist 

itself is not authoritative, nor is it a comprehensive guide. Preparers and auditors should also consult financial 

management regulations for the individual agencies, as the regulations may have specific guidance when the 

standards allow alternatives or management flexibility. 

Checklist Organization 

The checklist has 10 sections: an overview section, a section related to general items in the financial 

statements, a section for each of the six financial statements, and two additional sections. The six sections 

reflecting the financial statements are organized by the line items in financial statements to allow the user to 

proceed through each statement from the beginning to the end. The final two sections cover (1) disclosures in 

the notes to the financial statements related to significant accounting policies and (2) required supplementary 

stewardship information and required supplementary information. 

Since the financial statements are interrelated, some questions concerning line items in one financial 

statement may also pertain to line items in another statement. For example, the questions covering loans 

receivable in the balance sheet section may also deal with matters related to interest income and subsidy 

expense appearing in the statements of financing and net cost sections. Because of these relationships, our 

general organizational approach aggregates related information so that questions on related line items 

appearing in more than one financial statement are covered only in the first financial statement section in 

which the line item appears. For example, questions concerning interest income and subsidy expense would 

appear only in the balance sheet section. Similarly, questions related to the notes to the financial statements 

section would also appear only under the line item of the initial financial statement. 

1

The American Institute of Certified Public Accountants recognizes the federal accounting standards promulgated by the Federal Accounting 

Standards Advisory Board (FASAB) as generally accepted accounting principles. 

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Except for sections I, II, VI, and IX, the first page of each section contains a list showing the number of 

questions in the section. This checklist has 784 questions as follows. 

General Items Related to the Financial Statements 24 

Balance Sheet 354 

Statement of Net Cost 178 

Statement of Changes in Net Position 40 

Statement of Budgetary Resources 27 

Statement of Financing 27 

Statement of Custodial Activity 27 

Notes to Financial Statements (Significant 

Accounting Policies) 5 

Supplementary Information 102 

Authoritative Guidance 

Each question in this guide is referenced to a source. The sources cited are (1) the Statements of Federal 

Financial Accounting Standards (SFFAS) and (2) OMB Bulletin 01-09, Form and Content of Agency 

Financial Statements. 

FASAB statements include Statements of Federal Financial Accounting Concepts (SFFAC) and Statements of 

Federal Financial Accounting Standards (SFFAS). The three approved accounting concept statements are #1 

Objectives of Federal Financial Reporting, 1993, #2 Entity and Display, 1995, and #3 Management’s 

Discussion and Analysis, 1999. The 23 SFFAS standards2

 covered in this checklist are: 

1. Accounting for Selected Assets and Liabilities, 1993. 

2. Accounting for Direct Loans and Loan Guarantees, 1993. 

3. Accounting for Inventory and Related Property, 1993. 

4. Managerial Cost Accounting Concepts and Standards, 1995. 

5. Accounting for Liabilities of the Federal Government, 1995. 

6. Accounting for Property, Plant, and Equipment, 1995. 

7. Accounting for Revenue and Other Financing Sources, 1996. 

8. Supplementary Stewardship Reporting, 1996. 

9. Deferral of the Effective Date of Managerial Cost Accounting Standards for the Federal 

Government in SFFAS No. 4, 1997. 

10. Accounting for Internal Use Software, 1998. 

11. Amendments to Accounting for Property, Plant, and Equipment - Definitional Changes, 1998.3 

12. Recognition of Contingent Liabilities Arising from Litigation, 1998. 

13. Deferral of Paragraph 65.2 – Material Revenue-Related Transactions Disclosures, 1999. 

14. Amendments to Deferred Maintenance Reporting, 1999. 

15. Management’s Discussion and Analysis, 1999. 

16. Amendments to Accounting for Property, Plant, and Equipment – Measurement and Reporting 

for Multi-Use Heritage Assets, 1999. 

17. Accounting for Social Insurance, 1999. 

2

FASAB promulgates accounting standards after considering the financial and budgetary information needs of Congress, executive agencies, other 

users of federal financial information, and comments from the public. 3

SFFAS 11 was rescinded in its entirety by SFFAS 23. 

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18. Amendments to Accounting Standards For Direct Loans and Loans Guarantees, 2000. 

19. Technical Amendments to Accounting Standards for Direct Loans and Loan Guarantees, 2001. 

20. Elimination of Certain Disclosures Related to Tax Revenue Transactions by the 

Internal Revenue Service, Customs and Others, 2001. 

21. Reporting Corrections of Errors and Changes in Accounting Principles, 2001. 

22. Change in Certain Requirements for Reconciling Obligations and Net Cost of Operations, 2001. 

23. Eliminating the Category National Defense Property, Plant, and Equipment, 2003. 

SFFAC 4, Intended Audience and Qualitative Characteristic for the Consolidated Financial Report of the 

United States Government, and SFFAS 24, Selected Standards for the Consolidated Financial Report of the 

United States Government, are not covered in this checklist, as this checklist is intended for use at the agency 

reporting level, and is not to be used for the financial report of the U.S. government. 

Subsequent to updating this checklist, FASAB issued SFFAS 25, Reclassification of Stewardship 

Responsibilities and Eliminating the Current Services Assessment. The principal effect of SFFAS 25 is to 

present certain social insurance information4

 as a basic financial statement rather than as Required 

Supplementary Stewardship Information (RSSI), effective for fiscal year 2005. This main revision is not 

taken into consideration with this CFO checklist update, and will be considered in the next update of the CFO 

checklist. However, the elimination of current services assessment information and reclassifying risk 

assumed information from RSSI to Required Supplementary Information (RSI), effective for fiscal year 2003 

are covered in this checklist. 

SFFAS 7 Implementation Guide to Accounting for Revenue and Other Financing Sources, 1996, is also 

covered in this checklist. OMB Bulletin 01-09 provides the detailed requirements for the form and content of 

agency financial statements. 

How to Use This Guide 

To the right of each question are two columns. The first column provides for a “yes,” “no,” or “N/A” (not 

applicable) answer to each question. The second column provides for an explanation of the answer to each 

question. A “yes” answer should indicate that the financial statements contain the information asked by the 

question. For each “yes” answer, the explanation column should include the page number or location in the 

financial statements where the information can be found. Also, any other information pertinent to the 

question and the response should be provided in the explanation column. 

An “N/A” answer might indicate that the question does not apply to the federal entity. For example, most 

federal agencies do not administer loan, loan guarantee, or loan insurance programs and, therefore, do not 

have credit program receivables and related property. Consequently, the questions on these receivables, 

property, and subsidies would not apply. A simple explanation indicating that the reporting entity does not 

administer loan programs would appear in the explanation column of the first question in the series. 

A “no” answer indicates that the information asked for in the question is not included in the financial 

statements, notes, or supplementary information, respectively. The explanation column should describe in 

sufficient detail why the information is not included. The questions in the checklist are worded such that in 

virtually all instances, a no response, would indicate a particular area or certain information is not presented in 

accordance with the FASAB approved statements and OMB Bulletin 01-09. 

4

The information required by paragraphs 27(3) and 32(3) of SFFAS 17 shall be presented as a basic financial statement. 

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Section II 

General Items Related to the Financial Statements

There are 24 questions in this section. All the questions relate to the overall financial statements and are not 

further divided into categories. 

General Items (1 – 24) 

Yes, 

No, 

or 

N/A 

Explanation 

1. Does the entity's annual financial statement consist of 

the following items? 

a. management’s discussion and analysis (MD&A) of 

the reporting entity 

b. basic statements and related notes 

c. required supplementary stewardship information 

(RSSI) 

d. required supplementary information (RSI) 

e. other accompanying information (OAI) that provides 

users of the financial statements with a better 

understanding of the entity’s programs and the 

extent to which program objectives are achieved 

(OMB Bulletin 01-09, p. 4, section 1.5) 

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Section II 

General Items Related to the Financial Statements

General Items (1 – 24) 

Yes, 

No, 

or 

N/A 

Explanation 

2. Do the basic statements include? 

a. Balance Sheet 

b. Statement of Net Cost 

c. Statement of Changes in Net Position 

d. Statement of Budgetary Resources 

e. Statement of Financing 

f. Statement of Custodial Activity 

(OMB Bulletin 01-09, pp. 4 & 5, section 1.5) 

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Section II 

General Items Related to the Financial Statements

General Items (1 – 24) 

Yes, 

No, 

or 

N/A 

Explanation 

3. Does the entity use the following hierarchy as its sources 

of guidance in preparing its financial statements? 

a. FASAB Statements and Interpretations as well as 

American Institute of Certified Public Accountants 

(AICPA) and Financial Accounting Standards Board 

(FASB) pronouncements if made applicable to federal 

government entities by a FASAB Statement or 

Interpretation 

b. FASAB technical bulletins and, if specifically made 

applicable to federal government entities by AICPA and 

cleared by FASAB, AICPA Industry Audit and 

Accounting Guides and AICPA Statements of Position 

c. AICPA Accounting Standards Executive Committee 

(AcSEC) Practice Bulletins if specifically made 

applicable to federal government entities and cleared by 

FASAB, as well as Technical Releases of the Accounting 

and Auditing Policy Committee of FASAB 

d. Implementation guides published by FASAB staff and 

practices that are widely recognized and prevalent in the 

federal government 

e. In the absence of a pronouncement covered by federal 

Generally Accepted Accounting Principles (GAAP) or 

another source of established accounting principles, other 

accounting literature, depending on its relevance in the 

circumstances.5 (OMB Bulletin 01-09, p. 2, section 1.2 & 

p. 13, section 2.1, item B) 

4. Does the entity present comparative information and 

related footnote disclosures for the current year and prior 

year for the six basic financial statements, and MD&A? 

(OMB Bulletin 01-09, p. 5, section 1.6 & p. 13, 

section 2.1, item F) 

5

Other accounting literature includes for example, FASAB Concept Statements; Governmental Accounting Standards Board (GASB) 

Statements, Interpretations, Technical Bulletins, and Concept Statements; and AICPA Issue Papers. 

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Section II 

General Items Related to the Financial Statements

General Items (1 – 24) 

Yes, 

No, 

or 

N/A 

Explanation 

5. Does the entity present comparative information in the 

RSSI and RSI when the information would be 

meaningful to the user of the financial report? 

(OMB Bulletin 01-09, p. 5, section 1.6) 

6. Has the agency prepared quarterly interim unaudited 

financial statements,6

 without footnotes for itself and for 

each of its major components within 45 days after the 

end of the quarter and submitted them to OMB’s Office 

of Federal Financial Management and the agency’s 

Resource Management Office? (OMB Bulletin 01-09, 

p. 14, section 2.1, item G) 

7. Do the quarterly interim statements include full accruals 

and are intra-entity transactions eliminated? 

(OMB Bulletin 01-09, p. 14, section 2.1, item G) 

8. Are these interim statements prepared on a comparative 

basis?7 (OMB Bulletin 01-09, p. 14, section 2.1, 

item G) 

9. To the extent that information is not available on a 

quarterly basis, has the entity developed reliable, 

alternative means of estimating quarterly amounts and 

balances? (OMB Bulletin 01-09, p. 14, section 2.1, 

item G) 

6

Quarterly statements may be limited to a balance sheet, statement of net cost, and statement of budgetary resources; MD&A, RSSI, and RSI are not 

required for quarterly reporting. 7

That is, interim financial statements comparative for the year-to-date ending March 31, 2003 for fiscal year 2003 and for fiscal year 2004 comparative 

for the year to date ending December 31, 2003, March 31, 2004, and June 30, 2004. 

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Section II 

General Items Related to the Financial Statements

General Items (1 – 24) 

Yes, 

No, 

or 

N/A 

Explanation 

10. When an entity presents disaggregated information for 

component organizations, does the total column for the 

entity as a whole reflect consolidated totals net of intraentity transactions, except for the Statement of 

Budgetary Resources, which is presented on a combined 

basis? (OMB Bulletin 01-09, p. 14, section 2.1, item H) 

When a reporting entity presents its financial statements in a single column format, the 

statements are referred to as consolidated statements. With the exception of the Statement of 

Budgetary Resources, financial statements that use a multicolumn format to present information 

on an entity’s major components or lines of business as well as the consolidated amounts are 

referred to as consolidating statements. (OMB Bulletin 01-09, p. 14, section 2.1, item H) 

11. Are intra-entity transactions needed to arrive at the 

consolidated amounts presented in a column on the face 

of the consolidating statements? (OMB Bulletin 01-09, 

p. 14, item H) 

12. Has the entity provided assurance of the following? 

a. information in the financial statements is presented 

in accordance with federal GAAP 

b. the underlying records fully support the information 

(OMB Bulletin 01-09, p. 14, section 2.1, item J) 

13. Does the reporting entity include franchise funds and 

other intragovernmental support revolving funds among 

the activities covered by its financial statements? 

(OMB Bulletin 01-09, p. 15, section 2.1, item K & 

p. 113, section 11.6) 

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Section II 

General Items Related to the Financial Statements

General Items (1 – 24) 

Yes, 

No, 

or 

N/A 

Explanation 

14. If information about the assets, liabilities, costs, and 

revenues of these franchise funds and intragovernmental 

support revolving funds are not separately reported on 

the entity’s basic financial statements, then is condensed 

information reported as required supplemental 

information in accordance with the applicable SFFASs 

and required segment information? 

(OMB Bulletin 01-09, p. 15, section 2.1, item K & 

p. 113, section 11.6) 

15. Does the entity report its assets, liabilities, and net 

position by the lines displayed in the illustrative Balance 

Sheet and Statement of Changes in Net Position in OMB 

Bulletin 01-09? (OMB Bulletin 01-09, p.15, section 2.1, 

item L) 

16. If the entity aggregates such illustrated line items in 

reporting at the departmental level, is the composition of 

the aggregated line items disclosed? 

(OMB Bulletin 01-09, p.15, section 2.1, item L) 

17. Conversely, if the entity disaggregates such line items in 

its departmental statements, does the entity report or 

disclose the total of the disaggregated line items? 

(OMB Bulletin 01-09, p.15, section 2.1, item L) 

18. Are line items, which are immaterial but related in 

nature, combined? 

(OMB Bulletin 01-09, p. 15, section 2.1, item M) 

19. Are discrete balances of an immaterial amount 

designated as “other?” 

(OMB Bulletin 01-09, p. 15, section 2.1, item M)” 

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Section II 

General Items Related to the Financial Statements

General Items (1 – 24) 

Yes, 

No, 

or 

N/A 

Explanation 

20. If not, are these material balances separately reported 

and designated by name? (OMB Bulletin 01-09, p. 15, 

section 2.1, items M & N) 

21. Are the statement line items, footnotes, and lines or 

columns in footnotes that do not apply or are not 

informative for the reporting entity excluded? 

(OMB Bulletin 01-09, p. 15, section 2.1, item O) 

22. Do schedule totals presented in the footnotes, in support 

of amounts presented in financial statements, agree with 

the amounts presented in the body of the financial 

statements? (OMB Bulletin 01-09, p. 15, section 2.1, 

item P) 

23. When presenting dollar amounts in the statements and 

the notes, does the entity do the following? 

a. round dollar amounts to the nearest whole dollar, 

thousand, or million based upon informative value 

to the reporting entity 

b. maintain the chosen rounding level throughout the 

financial statements and footnotes 

c. ensure that individual line items add up to the totals 

by adjusting the line items for the differences 

created by the rounding process rather than adjusting 

column totals (OMB Bulletin 01-09, p. 16, 

section 2.1, item Q) 

24. Are footnotes sequentially numbered? 

(OMB Bulletin 01-09, p. 16, section 2.1, item S) 

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Section III 

Balance Sheet 

The questions related to the balance sheet are contained under 23 line items. The question numbers related to 

each line item follow. 

Question umber n s 

General items 

Assets 

1. Fund Balance with Treasury 

2. Investments 

3. Accounts Receivable (Net) 

4. Interest Receivable (Net)

5. Credit Program Receivables 

6. Cash and Other Monetary Assets

7. Inventory and Related Property 

8. Operating Materials and Supplies 

9. Stockpile Materials 

10. Seized Property 

11. Forfeited Property 

12. Goods Held Under Price Support and 

Stabilization Programs 

13. General Property, Plant, and Equipment (Net) 

14. Software 

15. Other Assets 

Liabilities 

16. Liabilities in General

17. Accounts Payable and Interest Payable

18. Liabilities for Loan Guarantees 

19. Lease Liabilities 

20. Federal Debt and Related Interest 

21. Pensions, Other Retirement Benefits, and 

Postemployment Benefits 

22. Other Liabilities 

Net Position 

23. Unexpended Appropriations and Cumulative 

Results of Operations 

1 - 6 

7 - 22 

23 - 32 

33 - 49 

50 - 54 

55 - 96 

97 - 102 

103 - 125 

126 - 137 

138 - 150 

151 - 158 

159 - 172 

173 - 186 

187 - 233 

234 - 262 

263 - 268 

269 - 272 

273 - 280 

281 - 294 

295 - 299 

300 - 310 

311 - 318 

319 - 352 

353 - 354 

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Section III 

Balance Sheet 

General Items (1 - 6) 

Yes, 

No, 

or 

N/A 

Explanation 

The Balance Sheet presents, as of a specific time, amounts of future economic benefits 

owned or managed by the reporting entity exclusive of items subject to stewardship 

reporting (assets), amounts owed by the entity (liabilities), and amounts that comprise the 

difference (net position). (SFFAC 2, par. 57; OMB Bulletin 01-09, p. 17, section 3.1) 

1. Are entity and nonentity assets combined on the face of 

the balance sheet?8 (OMB Bulletin 01-09, p. 17, 

section 3.1 and p. 19, section 3.3) 

2. Are the amounts and types of nonentity assets disclosed 

in a note to the financial statements? 

(OMB Bulletin 01-09, p. 17, section 3.1; p. 19, 

section 3.3; p. 56, section 9.2) 

Liabilities covered by budgetary resources are liabilities covered by realized budgetary 

resources as of the balance sheet date. Budgetary resources encompass not only new 

budget authority but also other resources available to cover liabilities for specified 

purposes in a given year. Available budgetary resources include (1) new budget 

authority, (2) unobligated balances of budgetary resources at the beginning of the year or 

net transfers of prior year balances during the year, (3) spending authority from offsetting 

collections (credited to an appropriation or fund account), and (4) recoveries of 

unexpired budget authority through downward adjustments of prior year obligations. 

Liabilities are considered covered by budgetary resources if they are to be funded by 

permanent indefinite appropriations or borrowing authority, which have been enacted 

and signed into law as of the balance sheet date, provided that the resources may be 

apportioned by OMB without further action by the Congress and without a contingency 

having to be met first. (OMB Bulletin 01-09, p. 24, section 3.4) 

3. Are liabilities covered by budgetary resources and 

liabilities not covered by budgetary resources combined 

on the face of the balance sheet? (OMB Bulletin 01-09, 

p. 17, section 3.1, p. 24, section 3.4) 

8

Entity assets are assets that the reporting entity has authority to use in its operations. Nonentity assets are assets that are held by an entity but are not 

available to the entity, for example, income tax receivables. (OMB Bulletin 01-09, p. 19, section 3.3). 

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Section III 

Balance Sheet 

General Items (1 - 6) 

Yes, 

No, 

or 

N/A 

Explanation 

4. Are liabilities not covered by budgetary resources 

disclosed in a note to the financial statements? 

(OMB Bulletin 01-09, p. 17, section 3.1 & pp. 78 & 79, 

section 9.12) 

5. Does the Balance Sheet display assets, liabilities, and 

net position? (OMB Bulletin 01-09, p. 18, section 3.2) 

Intragovernmental assets arise from transactions among federal entities. 

Intragovernmental assets represent claims of a federal entity against other federal 

entities. Intragovernmental liabilities are claims against the reporting entity by other 

federal entities. (OMB Bulletin 01-09, p. 19, section 3.3; p. 24, section 3.4) 

6. Are intragovernmental assets and liabilities reported 

separately from transactions with non-federal entities, 

including the Federal Reserve and government 

sponsored enterprises?9 (OMB Bulletin 01-09, p. 19, 

section 3.3 & p. 24, section 3.4) 

9

Government sponsored enterprises are federally chartered but privately owned and operated entities. 

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Section III 

Balance Sheet 

Assets 

Fund Balance with Treasury (7 – 22) 

Yes, 

No, 

or 

N/A 

Explanation 

A federal entity's fund balance with the Treasury is the aggregate amount of 

funds in the entity's accounts with Treasury for which the entity is authorized 

to make expenditures and pay liabilities. Fund balance with Treasury includes 

clearing account balances and the dollar equivalent of foreign currency 

account balances. From the reporting entity's perspective, a fund balance with 

Treasury is an asset. From the perspective of the federal government as a 

whole, the fund balance is neither an asset nor a liability; it instead represents 

a commitment to make resources available to federal departments, agencies, 

programs, and other entities. (SFFAS 1, par. 31 & 32) 

7. Is the fund balance with Treasury reported as an 

intragovernmental asset? (SFFAS 1, par. 31; 

OMB Bulletin 01-09, p. 18, section 3.2) 

8. Are amounts disclosed as fund balances in deposit, 

suspense, and clearing accounts that are not available to 

finance entity activities reported as nonentity assets? 

(OMB Bulletin 01-09, p. 19, section 3.3) 

9. Are foreign currency account balances reported on the 

balance sheet translated into U.S. dollars at exchange 

rates determined by the Treasury and effective at the 

financial reporting date? (SFFAS 1, par. 32; 

OMB Bulletin 01-09, p. 19, section 3.3) 

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Section III 

Balance Sheet 

Assets 

Fund Balance with Treasury (7 – 22) 

Yes, 

No, 

or 

N/A 

Explanation 

10. Does the entity's fund balance with Treasury also 

include the following? 

a. clearing account balances 

b. balances for direct loan and loan guarantee activities 

held in the credit reform program, financing, and 

liquidating accounts 

c. funds actually borrowed from Treasury under 

statutory authority 

d. the dollar equivalent of foreign currency account 

balances (SFFAS 1, par. 32 & 35) 

11. Does the entity’s fund balance with Treasury exclude 

contract authority10 or unused authority to borrow? 

(SFFAS 1, par. 34) 

12. Does the entity record an increase in its fund balance 

with Treasury when it does at least one of the following? 

a. receives appropriations, reappropriations, continuing 

resolutions, appropriation restorations, and 

allocations 

b. receives transfers and reimbursements from other 

agencies 

c. borrows from the Treasury, Federal Financing Bank, 

or other entities 

d. collects and credits amounts to its appropriations or 

fund accounts that the entity is authorized to spend 

or use to offset its expenditures (SFFAS 1, par. 33) 

10Contract authority is a statutory authority under which contracts or other obligations may be entered into prior to receiving an appropriation for the 

payment of obligations. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 17 
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Section III 

Balance Sheet 

Assets 

Fund Balance with Treasury (7 – 22) 

Yes, 

No, 

or 

N/A 

Explanation 

13. Does the entity record a decrease in its fund balance 

with Treasury when each of the following occurs? 

a. disbursements are made to pay liabilities or to 

purchase assets, goods, and services 

b. investments are made in U.S. securities 

c. expired appropriations are canceled 

d. transfers and reimbursements are made to other 

entities or to the Treasury 

e. appropriations are sequestered or rescinded 

(SFFAS 1, par. 36) 

14. Does the entity distinguish funds within fund balance 

with Treasury as the obligated balance not yet 

disbursed11 and the unobligated balance12 in a note to the 

financial statements? (SFFAS 1, par. 37; 

OMB Bulletin 01-09, p. 57, section 9.3, item B) 

15. Are fund balances that agencies were authorized to use 

disclosed by fund type (e.g., trust funds, revolving 

funds, appropriated funds, other fund types)? 

(OMB Bulletin 01-09, pp. 56 & 57, section 9.3, item A) 

16. Are any restrictions on unobligated balances related to 

future use disclosed? (SFFAS 1, par. 38; 

OMB Bulletin 01-09, p. 57, section 9.3, item B) 

17. Does the entity explain any discrepancies between fund 

balance with Treasury in its general ledger accounts and 

the balance in the Treasury’s accounts and explain the 

causes of the discrepancies in footnotes to the financial 

statements?13 (SFFAS 1, par. 39; OMB Bulletin 01-09, 

p. 57, section 9.3, item C) 

11The obligated balance not yet disbursed is the amount of funds against which budgetary obligations have been incurred, but disbursements have not 

been made. 12The unobligated balance is the amount of funds available to the entity against which no claims have been recorded. (SFFAS 1, par. 38) 13Discrepancies due to time lag should be reconciled and discrepancies due to error should be corrected when financial reports are prepared. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 18 
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Section III 

Balance Sheet 

Assets 

Fund Balance with Treasury (7 – 22) 

Yes, 

No, 

or 

N/A 

Explanation 

18. Does the entity disclose any other information necessary 

for understanding the nature of the fund balances, 

including information on unused funds in expired 

appropriations that are returned to Treasury at the end of 

a fiscal year? (SFFAS 1, par. 39; OMB Bulletin 01-09, 

p. 57, section 9.3, item C) 

19. Are balances in deposit accounts, such as collections 

pending litigation or funds being held by the entity in 

the capacity of a banker or agent for others, disclosed 

under “other fund types?” (OMB Bulletin 01-09, p. 57, 

section 9.3, item A) 

20. If, however, any of the balances under “other fund 

types” are material, are they listed separately? 

(OMB Bulletin 01-09, p. 57, section 9.3, item A) 

21. Is other information necessary for understanding the 

nature of the fund balances with Treasury disclosed? 

(OMB Bulletin 01-09, p.57, section 9.3, item C) 

22. Are unexpended appropriations recognized as capital 

and included under funds with Treasury when they are 

made available for apportionment? (SFFAS 7, par. 71) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 19 
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Section III 

Balance Sheet 

Assets 

Investments (23 - 32) 

Yes, 

No, 

or 

N/A 

Explanation 

Investments in federal (i.e., treasury) securities include (1) nonmarketable par value 

Treasury securities, (2) market-based Treasury securities expected to be held to 

maturity, (3) marketable Treasury securities expected to be held to maturity, and (4) 

securities issued by other federal entities. Nonfederal securities include those 

issued by state and local governments, private corporations, and governmentsponsored enterprises. (SFFAS 1, par. 62; OMB Bulletin 01-09, p. 20, section 3.3) 

23. Are investments in federal securities reported separately 

from investments in nonfederal securities? 

(SFFAS 1, par. 67; OMB Bulletin 01-09, p. 20, section 3.3) 

24. Are investments in federal securities initially recorded and 

reported at their acquisition cost or amortized acquisition 

cost (less an allowance for losses, if any)? 

(SFFAS 1, par. 68 & 69; OMB Bulletin 01-09, p. 20, 

section 3.3) 

25. Are investments in federal securities acquired in exchange 

for nonmonetary assets recognized at the fair market value 

of either the securities acquired or the assets given up, 

whichever is more definitively determinable? 

(SFFAS 1, par. 68) 

26. Subsequent to acquisition, are investments in federal 

securities reported at their carrying amount (i.e., acquisition 

cost) adjusted for amortized premium or discount? 

(SFFAS 1, par. 70-71; OMB Bulletin 01-09, pp. 59 & 60, 

section 9.5) 

27. Is the interest method (i.e., effective interest rate multiplied 

by the carrying amount) used in amortizing the premium or 

discount over the life of the treasury security? 

(SFFAS 1, par. 71) 

28. Is the market value of market-based and marketable 

securities disclosed? (SFFAS 1, par. 72; 

OMB Bulletin 01-09, pp. 59 & 60, section 9.5) 

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Section III 

Balance Sheet 

Assets 

Investments (23 - 32) 

Yes, 

No, 

or 

N/A 

Explanation 

29. Are investments grouped by type of security, such as 

marketable or market-based Treasury securities? 

(SFFAS 1, par. 72) 

30. Are investment securities, which are initially expected to be 

held to maturity, reclassified as securities available for sale 

or early redemption, if significant unforeseeable 

circumstances cause a change in the entity’s intent or 

ability to hold these securities to maturity? 

(SFFAS 1, par. 72 & 73; OMB Bulletin 01-09, pp. 59 & 60, 

section 9.5) 

31. If so, is the market value of such securities disclosed? 

(SFFAS 1, par. 72 & 73; OMB Bulletin 01-09, pp. 59 & 60, 

section 9.5) 

32. Does the entity disclose any other information relative to 

understanding the nature of reported investments, such as 

permanent impairments? (OMB Bulletin 01-09, p. 60, 

section 9.5, item B) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 21 
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Section III 

Balance Sheet 

Assets 

Accounts Receivable (Net) (33 - 49) 

Yes, 

No, 

or 

N/A 

Explanation 

33. Is a receivable recognized when a federal entity establishes 

a claim to cash or other assets against other entities based 

on legal provisions or when goods or services are provided? 

(SFFAS 1, par. 41) 

34. If the exact amount of a receivable is unknown, is a 

reasonable estimate made? (SFFAS 1, par. 41) 

35. Are receivables from federal entities reported as 

intragovernmental receivables, and reported separately 

from receivables from nonfederal entities? 

(SFFAS 1, par. 42; OMB Bulletin 01-09, p. 19, section 3.3) 

Entity receivables are amounts due from other federal or nonfederal entities that 

the federal entity is authorized by law to include in its obligational authority or to 

offset its expenditures and liabilities upon collection. Nonentity receivables are 

amounts that the entity is to collect on behalf of the federal government or other 

entities, and the entity is not authorized to spend. (SFFAS 1, par. 43) 

36. Are receivables not available to an entity disclosed in a note 

to the financial statements as nonentity assets, separate 

from receivables available to the entity? 

(SFFAS 1, par. 43; OMB Bulletin 01-09, p. 19, section 3.3 

& p. 56, section 9.2) 

37. Are losses on receivables recognized when it is more likely 

than not (greater than a 50 percent chance of occurrence) 

that the receivables will not be totally collected? 

(SFFAS 1, par. 44) 

38. Is an allowance for estimated uncollectible amounts 

recognized to reduce the gross amount of receivables to 

their net realizable value, and is this allowance reestimated 

on each annual financial reporting date and when 

information indicates that the latest estimate is no longer 

correct? (SFFAS 1, par. 45) 

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Section III 

Balance Sheet 

Assets 

Accounts Receivable (Net) (33 - 49) 

Yes, 

No, 

or 

N/A 

Explanation 

39. Is an allowance for uncollectible amounts based on an 

analysis of both individual accounts receivable and groups 

of accounts receivable as prescribed by the standards? 

(SFFAS 1, par. 47-51; SFFAS 7, par. 56) 

40. Are accounts that represent significant amounts 

individually analyzed to determine the loss allowance? 

(SFFAS 1, par. 47) 

41. Is the loss estimation for individual accounts based on the 

following? 

a. debtor's ability to pay 

b. debtor's payment record and willingness to pay 

c. probable recovery of amounts from secondary sources 

including liens, garnishments, cross collections, and 

other applicable collection tools (SFFAS 1, par. 47) 

42. If information is not available to make a reliable assessment 

of losses on an individual account basis or if the nature of 

the receivables does not lend itself to individual account 

analysis, are the potential losses assessed on a group basis? 

(SFFAS 1, par. 48) 

43. If potential losses are assessed on a group basis, are the 

receivables separated into groups of homogeneous accounts 

with similar risk characteristics? (SFFAS 1, par. 49-51) 

44. Does the reporting entity disclose the following? 

a. major categories of accounts receivable by amount and 

type 

b. methodology used to estimate the allowance for 

uncollectible amounts 

c. dollar amount of the allowance for uncollectible 

accounts (SFFAS 1, par. 52; OMB Bulletin 01-09, 

p. 60, section 9.6) 

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Section III 

Balance Sheet 

Assets 

Accounts Receivable (Net) (33 - 49) 

Yes, 

No, 

or 

N/A 

Explanation 

45. Is an account receivable arising from a nonexchange 

transaction recognized when a collecting entity establishes 

a specifically identifiable, measurable, and legally 

enforceable claim to cash or other assets through its 

established assessment processes to the extent the amount is 

measurable? (SFFAS 7, par. 53, footnote 9, 61-63) 

46. Are assessments recognized as accounts receivable if an 

enforceable claim for taxes and duties exists in the 

following instances? 

a. tax returns filed by the taxpayer without sufficient 

payment 

b. customs documents filed by the importer without 

sufficient payment 

c. taxpayer agreements to assessments at the conclusion of 

an audit or to substitute for a tax return (or importer 

agreements to supplemental assessments) 

d. court actions determining an assessment 

e. taxpayer (or importer) agreements to pay an assessment 

on an installment plan 

f. receivables determined to be currently not collectible, 

but with future collection potential (SFFAS 7, par. 53, 

54, 170, & 171) 

47. Is an inter-entity receivable recognized when (1) a legally 

enforceable claim exists between a collecting entity and a 

recipient entity for the transfer or repayment of taxes or 

duties and (2) payment of such a claim is probable and 

measurable? (SFFAS 7, par. 60) 

Compliance assessments are proposed assessments by the collecting entity in 

definitive amounts, but with which the taxpayer (or importer) still has the right 

to disagree or object. (SFFAS 7, par. 55.1) 

Preassessment works-in-process are assessments not yet officially asserted by 

the collecting entity that are subject to a taxpayer’s right to conference in 

response to initial information notices. (SFFAS 7, par. 55.2) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 24 
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Section III 

Balance Sheet 

Assets 

Accounts Receivable (Net) (33 - 49) 

Yes, 

No, 

or 

N/A 

Explanation 

48. Do nonexchange-related accounts receivable for taxes and 

duties exclude the following? 

a. amounts received or due with tax returns received after 

the close of the reporting period 

b. compliance assessments 

c. preassessment work-in-process (SFFAS 7, par. 54) 

49. Are compliance assessments reclassified and recognized as 

account receivables in the following instances? 

a. if the taxpayer files an amended tax return 

b. when customs’ protest or retention period lapses 

c. when court action or an appeal finally determines the 

assessment 

d. if taxpayer (or importer) agrees to pay currently or 

through an installment agreement 

e. if an offer in compromise is accepted 

(SFFAS 7, par. 55.1 & 178-180) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 25 
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Section III 

Balance Sheet 

Assets 

Interest Receivable (Net) (50 – 54) 

Yes, 

No, 

or 

N/A 

Explanation 

50. Is interest receivable recognized for the amount of interest 

income earned but not received for the accounting period, 

including interest earned on investments in interest-bearing 

securities? (SFFAS 1, par. 53; OMB Bulletin 01-09, 

pp. 20 & 21, section 3.3) 

51. Is interest receivable also recognized on outstanding 

accounts receivable and other U.S. government claims 

against persons and entities in accordance with provisions 

in 31 U.S.C. 3717, Interest and Penalty Claims?

14 

(SFFAS 1, par. 53) 

52. Does interest receivable exclude interest on accounts 

receivable or investments that are determined to be 

uncollectible unless the entity actually collects interest? 

(SFFAS 1, par. 54; OMB Bulletin 01-09, pp. 20 & 21, 

section 3.3) 

53. Is interest accrued on uncollectible accounts receivable not 

disclosed until (1) the interest payment requirement has 

been waived by the federal government or (2) the related 

debt has been written off? (SFFAS 1, par. 55) 

54. Is interest receivable from federal entities accounted for 

and reported separately from interest receivable from the 

public? (SFFAS 1, par. 56) 

14See also Federal Claims Collection Standards, 4 CFR Part 103 par. 102.13) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 26 
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Section III 

Balance Sheet 

Assets 

Credit Program Receivables (55 – 96) 

Yes, 

No, 

or 

N/A 

Explanation 

The Federal Credit Reform Act of 1990, as amended, divides loans and loan 

guarantees into two groups: pre-1992 and post-1991. Pre-1992 refers to direct 

loan obligations or loan guarantee commitments made prior to fiscal year 1992; 

post-1991 refers to direct loan obligations or loan guarantee commitments made 

after fiscal year 1991.15 (OMB Bulletin 01-09, p. 68, section 9.8, item A) 

55. Is interest receivable related to pre-1992 and post-1991 

direct loans and acquired defaulted guaranteed loans 

reported as a component of credit program receivables 

and related foreclosed property? (OMB Bulletin 01-09, 

p 21, section 3.3) 

56. Are credit program receivables considered an entity asset 

if at least one of the following criteria is met? 

a. The entity has the authority to determine the use of 

the funds collected. 

b. The entity is legally obligated to use the funds to 

meet entity obligations (e.g., loans payable to 

Treasury). (OMB Bulletin 01-09, p. 21, section 3.3) 

57. If a loan guarantee program, which guarantees a loan, is 

generating a negative subsidy and the lender has not 

disbursed the loan as of the balance sheet date, does the 

entity record and include this amount as part of the total 

undelivered orders?16 (OMB Bulletin 01-09, p. 21, 

section 3.3) 

58. Are special fund receipt accounts for negative subsidies 

and downward subsidy reestimates included in the credit 

reporting entity’s financial statements? 

(OMB Bulletin 01-09, p. 21, section 3.3) 

15Section 506 (a) of the Federal Credit Reform Act, as amended, exempts the credit activities of certain agencies, such as the Federal Deposit Insurance 

Corporation (FDIC) and the Tennessee Valley Authority (TVA). These agencies can report in accordance with other requirements. 16Undelivered orders are the value of goods and services ordered and obligated but not yet received. The term is synonymous with unliquidated 

obligations. (The Federal Budget Politics, Policy, Process; copyright 1995 by Allen Schick; p. 216) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 27 
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Section III 

Balance Sheet 

Assets 

Credit Program Receivables (55 – 96) 

Yes, 

No, 

or 

N/A 

Explanation 

59. Are any assets in these special receipt fund accounts 

shown as nonentity assets that are offset by 

intragovernmental liabilities covered by budgetary 

resources? (OMB Bulletin 01-09, p. 21, section 3.3) 

60. Does the entity disclose that direct loan obligations and 

loan guarantee commitments made after fiscal year 1991, 

and the resulting direct loans or loan guarantees, are 

governed by the Federal Credit Reform Act of 1990, as 

amended? (OMB Bulletin 01-09, p. 68, section 9.8, 

instruction A) 

61. Are loan amounts broken out by group (pre-1992 and 

post-1991) and loan program and disclosed in a note to 

the financial statements? (OMB Bulletin 01-09, pp. 61 & 

70, section 9.8, items B & C) 

62. Do the notes disclose other relevant and appropriate 

information related to direct loans and loan guarantees 

including the following? 

a. description of the characteristics of the loan program 

b. commitments to guarantee 

c. management’s method for accruing interest revenue 

and recording interest receivable 

d. management's policy for accruing interest on 

nonperforming loans (OMB Bulletin 01-09, p. 69, 

section 9.8) 

For post-1991direct loans and guarantees, a subsidy expense is recognized in the year 

they are disbursed. For pre-1992 direct loans and guarantees, a loss and liability 

need not be recognized until it is more likely than not that a loan (either direct or 

guaranteed) will go into default. (SFFAS 2, par. 24 & 39) 

63. Are post-1991 direct loans disbursed and outstanding 

recognized as assets at the present value (discounted at a 

comparable Treasury rate) of their estimated net cash 

inflows? (SFFAS 2, par. 22 & app. B, part I A) 

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Section III 

Balance Sheet 

Assets 

Credit Program Receivables (55 – 96) 

Yes, 

No, 

or 

N/A 

Explanation 

64. Is the difference between the outstanding principal of 

post-1991 direct loans and the present value of their net 

cash inflows recognized as a subsidy cost allowance? 

(SFFAS 2, par. 22 & app. B, part I A) 

65. When post-1991 guaranteed loans default, is the value of 

the assets related to defaulted guaranteed loans 

receivable17 included in the reported credit program 

receivables? (OMB Bulletin 01-09, p. 64 & 72, 

section 9.8, item I) 

66. When post-1991 direct loans are written off, is the unpaid 

principal removed from unpaid loans receivable and 

charged against the allowance for subsidy costs? 

(SFFAS 2, par. 61) 

67. Are the following components of the assets that are 

related to post-1991 direct and defaulted guaranteed loans 

receivable disclosed by loan program? 

a. loans receivable, gross, or defaulted guaranteed loans 

receivable, gross 

b. interest receivable 

c. estimated net realizable value of foreclosed property 

d. allowance for subsidy costs (present value) 

e. value of assets related to direct loans or defaulted 

guaranteed loans receivable, net 

(OMB Bulletin 01-09, pp. 61, 64, 70, & 72, 

section 9.8, items C & I) 

17That is, the sum of (1) defaulted guaranteed loans receivable gross, (2) interest receivable, and (3) foreclosed property, less the allowance for subsidy 

cost at present value. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 29 
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Section III 

Balance Sheet 

Assets 

Credit Program Receivables (55 - 96) 

Pre-1992 Direct Loans 

Yes, 

No, 

or 

N/A 

Explanation 

68. Are losses of pre-1992 direct loans obligated recognized 

(and a corresponding allowance amount set up) when it is 

more likely than not that the direct loans will not be 

totally collected? (SFFAS 2, par. 39 & app. B, part II A) 

69. Are allowances for uncollectible pre-1992 loans 

reestimated each year? (SFFAS 2, par. 39) 

70. Are the following components of assets related to pre1992 direct loans receivable disclosed by loan program? 

a. loans receivable, gross 

b. interest receivable 

c. foreclosed property 

d. present value allowance18 (if the present value 

method is used) 

e. allowance for loan losses19 (if the allowance-for-loss 

method is used) (OMB Bulletin 01-09, pp. 61 & 70, 

section 9.8 item B) 

18Under the present value method, the nominal amount of the direct loans is reduced by an allowance equal to the difference between the nominal 

amount and the present value of the expected net cash flows from the loans. (OMB Bulletin 01-09, p. 68, section 9.8, 4th par.) 19Under the allowance-for-loss method, the nominal amount of the direct loans is reduced by an allowance for uncollectible amounts. (OMB Bulletin 

01-09, p. 68, section 9.8, 4th par.) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 30 
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Section III 

Balance Sheet 

Assets 

Credit Program Receivables (55 - 96) 

Pre-1992 Direct Loans 

Yes, 

No, 

or 

N/A 

Explanation 

71. Are the following components of defaulted guaranteed 

loans from pre-1992 guarantees disclosed by loan 

program? 

a. defaulted guaranteed loans receivable, gross 

b. interest receivable 

c. the estimated net realizable value of related 

foreclosed property 

d. the present value allowance (if the present value 

method is used) 

e. the allowance for loan losses (if the allowance for 

loss method is used) 

f. value of assets related to defaulted guaranteed loans 

receivable, net of the respective allowance 

(OMB Bulletin 01-09, pp. 64 & 72, section 9.8, 

item H) 

A loan modification is a federal government action that directly or indirectly 

alters the estimated subsidy cost and the present value of outstanding direct 

loans or the liability of loan guarantees. A direct modification changes the 

subsidy cost by altering the terms of existing contracts or through the sale of 

direct loans. An indirect modification changes the subsidy costs by altering the 

way loans and loan guarantees are administered. A modification does not 

include subsidy cost reestimates, routine administrative workouts of troubled 

loans, and other actions permitted within existing contract terms. 

(SFFAS 2, par. 41-44) 

72. When post-1991 loans are modified, is their existing 

book value changed to an amount equal to the present 

value of the loans' net cash inflows that are projected 

under the modified terms from the time of the 

modification to the loans' maturity and discounted at the 

original rate? (SFFAS 2, par. 46 & app. B, part I D (4)) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 31 
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Section III 

Balance Sheet 

Assets 

Credit Program Receivables (55 - 96) 

Pre-1992 Direct Loans 

Yes, 

No, 

or 

N/A 

Explanation 

73. When pre-1992 loans are directly modified do they meet 

the following conditions? 

a. They are transferred from the liquidating account to a 

financing account. 

b. Their book value is recorded at their postmodification value. 

(SFFAS 2, par. 47 & app. B, part II B (4)) 

74. Are subsequent (direct) modifications of pre-1992 loans 

treated as a modification of post-1991 loans? 

(SFFAS 2, par. 47) 

75. When pre-1992 loans are indirectly modified do they 

meet the following conditions? 

a. They are kept in a liquidating account. 

b. Their bad debt allowance is reassessed and adjusted 

to reflect amounts that would not be collected due to 

the modification. (SFFAS 2, par. 47) 

76. Does the entity disclose the following by program in the 

notes to the financial statements? 

a. the nature of the modification of direct loans or loan 

guarantees 

b. the discount rate used in calculating the modification 

expense 

c. the basis for recognizing a gain or loss related to the 

modification (SFFAS 2, par. 56; OMB Bulletin 01-

09, p. 69, section 9.8, 5th par.) 

77. When post-1991 and pre-1992 loans are sold, is the sale 

treated as a direct modification if the agency did not 

assume sales proceeds in the cash flow estimates for the 

initial subsidy calculation? (SFFAS 2, par. 53 & App. B, 

Part I F, footnote 23) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 32 
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Section III 

Balance Sheet 

Assets 

Credit Program Receivables (55 - 96) 

Pre-1992 Direct Loans 

Yes, 

No, 

or 

N/A 

Explanation 

78. Does the agency disclose the expectation that proceeds 

from the sale of its loans will differ from the reported 

face value of the loans or the value of their related assets? 

(OMB Bulletin 01-09, p. 69, section 9.8, 1st par.) 

Foreclosed property is any asset, which is assumed to be held for sale, that is received in 

satisfaction of a loan receivable or as a result of payment of a claim under a guaranteed or 

insured loan (excluding commodities acquired under price support programs). Pre-1992 

foreclosed property refers to property associated with direct loans obligated or loan guarantees 

committed before October 1, 1991. Post-1991 foreclosed property refers to property associated 

with direct loans obligated or loan guarantees committed after September 30, 1991. 

(SFFAS 3, par. 79 & 80) 

79. Is post-1991 foreclosed property valued at the net present 

value of the projected future cash flows associated with 

the property? (SFFAS 3, par. 81; OMB Bulletin 01-09, 

p. 70, section 9.8, item C) 

80. Is pre-1992 foreclosed property recorded at cost and 

adjusted to the lower of cost or net realizable value with 

any difference between cost and net realizable value 

carried in a valuation allowance? (SFFAS 3, par. 81) 

81. In determining net present value, does the projection of 

future cash flows include estimates of the following? 

a. sales proceeds 

b. rent, management expense, and repair costs during 

the holding period 

c. selling expense (i.e., advertising and commissions) 

(SFFAS No. 3, par. 82) 

82. In estimating sales proceeds for projecting the future cash 

flows associated with the property in determining net 

present value, has the entity considered its historical 

experience in selling property as well as the nature of the 

sale? (SFFAS 3, par. 82) 

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Section III 

Balance Sheet 

Assets 

Credit Program Receivables (55 - 96) 

Pre-1992 Direct Loans 

Yes, 

No, 

or 

N/A 

Explanation 

83. Were the estimated future cash flows of post-1991 

foreclosed property or acquired loans discounted at the 

original (or Treasury) discount rate in effect at the time 

the underlying loan or guarantee was granted? 

(SFFAS 2, par. 57& 59; SFFAS 3, par. 83; SFFAS 19, 

par. 7(e)) 

84. Is the net present value of post-1991 foreclosed property 

adjusted periodically to recognize both changes in the 

expected future cash flows and accrual of interest due to 

the passage of time? (SFFAS 3, par. 84) 

85. Are any adjustments in the carrying amounts of post1991 foreclosed property included in the presentation of 

"interest income" and the reestimate of "subsidy 

expense?" (SFFAS 3, par. 84) 

86. For post-1991 foreclosed property, are the following 

true? 

a. Third party claims are recorded at their net present 

value at the time of the foreclosure, using the same 

discount rate that applies to related foreclosed 

property. 

b. Any periodic changes in net present value of the 

claim are reflected in "interest income" and "subsidy 

expense." (SFFAS 3, par. 87) 

87. Are receipts or disbursements associated with acquiring 

and holding post-1991 foreclosed property charged or 

credited to foreclosed property? (SFFAS 3, par. 88) 

88. When the entity acquires foreclosed assets in full or 

partial settlement of post-1991 direct loans or guarantees, 

is the present value of the government's claim against the 

borrowers reduced by the amount settled as a result of the 

foreclosure? (SFFAS 2, par. 60) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 34 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Credit Program Receivables (55 - 96) 

Pre-1992 Direct Loans 

Yes, 

No, 

or 

N/A 

Explanation 

89. If a lender, debtor, or other third party has a legitimate 

claim to a post-1991 foreclosed asset, is the net present 

value of the estimated claim recognized as a special 

contra-valuation allowance? (SFFAS 2, par. 58; 

SFFAS 3, par. 87) 

90. Is pre-1992 foreclosed property recorded at cost and 

adjusted, if necessary, to the lower of cost or net 

realizable value? (SFFAS 3, par. 81 & 85) 

91. Is the net realizable value based on an estimate of the 

market value of the property adjusted for any expected 

losses consistent with historical experience, abnormal 

market conditions, and time limitations as well as any 

other costs of the sale? (SFFAS 3, par. 85 & 86) 

92. Is the estimate of market value based on one of the 

following criteria? 

a. the market value of the property if an active market 

exists 

b. the market value of similar properties if no active 

market exists 

c. a reasonable forecast of expected cash flows adjusted 

for estimates of all holding costs, including any cost 

of capital (SFFAS 3, par. 85) 

93. For pre-1992 foreclosed property, are third-party claims 

recorded at the expected amount of cash required to settle 

the claims? (SFFAS 3, par. 87) 

94. If foreclosed property is not sold but placed into 

operation, is the asset removed from foreclosed property? 

(SFFAS 3, par. 90) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 35 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Credit Program Receivables (55 - 96) 

Pre-1992 Direct Loans 

Yes, 

No, 

or 

N/A 

Explanation 

95. If reimbursement for the transfer of assets from one 

program to another is made, are the proceeds from the 

transfer treated in the same manner as a sale to a third 

party? (SFFAS 3, par. 90) 

96. When the government acquires foreclosed assets in full or 

partial settlement of a direct or guaranteed loan (pre-1992 

and post-1991), is the following information disclosed? 

a. valuation basis for foreclosed property 

b. changes from prior-year's accounting methods, if any 

c. restrictions on the use/disposal of property 

d. balances by categories (i.e., pre-1992 and post-1991 

foreclosed property) 

e. number of properties held and average holding period 

by type or category 

f. number of properties for which foreclosure 

proceedings are in process at the end of the period 

(SFFAS 3, par. 91; OMB Bulletin 01-09, pp. 69 & 

70, section 9.8) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 36 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Cash and Other Monetary Assets (97 – 102) 

Yes, 

No, 

or 

N/A 

Explanation 

Cash (including imprest funds) consists of: coins, paper currency, readily negotiable 

instruments (such as checks, money orders, and bank drafts), demand deposits, and 

foreign currencies stated in U.S. dollars at the exchange rate on the financial statement 

date. (SFFAS 1, par. 27; OMB Bulletin 01-09, p. 20, section 3.3) 

Other monetary assets consist of other items such as gold, special drawing rights, and 

U.S. reserves in the International Monetary Fund (IMF). (OMB Bulletin 01-09, p. 20, 

section 3.3 & p.57, section 9.4, item C) 

97. Are the components of cash and other monetary assets 

disclosed and described in a note to the financial 

statements? (OMB Bulletin 01-09, p. 20, section 3.3 & 

pp. 57 & 58, section 9.4) 

Entity cash is the amount of cash that the reporting entity holds and is authorized by law to 

spend. Nonentity cash is the cash that a federal entity collects and holds on behalf of the U.S. 

government or other entities. In some instances the entity deposits cash in its accounts in a 

fiduciary capacity for the U.S. Treasury or other entities. (SFFAS 1, par. 28 & 29) 

98. Does cash available for agency use include petty cash 

and cash held in revolving funds that will not be 

transferred to the general fund? (OMB Bulletin 01-09, 

p.58, section 9.4, instruction E) 

99. Is nonentity cash disclosed in the notes to the financial 

statements, separately from entity cash? 

(SFFAS 1, par. 29; OMB Bulletin 01-09, p. 17, 

section 3.1, p. 19, section 3.3, & pp. 57-58, section 9.4) 

100. If cash is restricted,20 is the nature and reason disclosed? 

(SFFAS 1, par. 30; OMB Bulletin 01-09, p. 56, 

section 9.2 & p. 58, section 9.4) 

20Nonentity cash is always restricted. Restricted cash also includes cash held in escrow to pay property taxes and insurance related to property 

associated with defaulted loans. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 37 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Cash and Other Monetary Assets (97 – 102) 

Yes, 

No, 

or 

N/A 

Explanation 

101. Does the entity disclose any restrictions on the use or 

conversion of cash denominated in foreign currencies 

and the significant effects, if any, of changes in the 

exchange rate on the entity’s financial position that occur 

after the end of the reporting period but before the 

issuance of financial statements? (OMB Bulletin 01-09, 

p. 58, section 9.4) 

102. Is other information on cash and other monetary assets 

disclosed, as appropriate, such as the valuation rate of 

gold? (OMB Bulletin 01-09, p. 58, section 9.4) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 38 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Inventory and Related Property (103 – 125) 

Yes, 

No, 

or 

N/A 

Explanation 

Inventory is tangible personal property that is (1) held for sale including raw 

materials and work in process, (2) in process of production for sale, or (3) to be 

consumed in the production of goods for sale or in the provision of services for a fee. 

Inventory does not include other assets held for sale such as (1) stockpile materials, 

(2) seized and forfeited property, (3) foreclosed property, and (4) goods held under 

price support and stabilization programs. (SFFAS 3, par. 1; OMB Bulletin 01-09, 

p. 21, section 3.3) 

103. Is inventory valued at historical cost, latest acquisition 

cost, or net realizable value? (SFFAS 3, par. 20 & 26) 

104. If inventory is valued at historical cost, does that cost 

include the purchase amount and all other costs, such as 

transportation and production costs, incurred to bring the 

inventory into its current condition and location? 

(SFFAS 3, par. 21) 

105. Are abnormal costs, such as excessive handling or 

rework costs, charged to operations for the period? 

(SFFAS 3, par. 21) 

106. Is donated inventory valued at its fair value at the time of 

donation? (SFFAS 3, par. 21) 

107. Is inventory acquired through exchange of nonmonetary 

assets (e.g., barter) valued at the fair value of the asset 

received at the time of the exchange? (SFFAS 3, par. 21) 

108. For inventory acquired through exchange of 

nonmonetary assets, is any difference between the 

recorded amount of the asset surrendered and the fair 

value of the asset received recognized as a gain or loss? 

(SFFAS 3, par 21) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 39 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Inventory and Related Property (103 – 125) 

Yes, 

No, 

or 

N/A 

Explanation 

109. Are one of the following historical cost flow assumptions 

used to value inventory? 

a. first-in, first out (FIFO) 

b. weighted average 

c. moving average 

d. any other valuation method (such as a standard cost 

system) whose results reasonably approximate “a,” 

“b,” or “c” above (SFFAS 3, par. 22) 

110. If the latest acquisition cost method of inventory 

valuation is used, is the latest invoice price (actual cost) 

applied to all like units held, including those acquired 

through donation or nonmonetary exchange? 

(SFFAS 3, par. 23) 

111. Under the latest acquisition cost method, is the inventory 

revalued periodically (or at least by the end of the fiscal 

year)?21 (SFFAS 3, par. 23) 

112. If unrealized holding gains/losses are recognized, is an 

allowance account established to capture these 

gains/losses? (SFFAS 3, par. 24) 

113. Is the ending balance of this [gain/loss] allowance 

account the cumulative difference between the historical 

cost, based on estimated or actual valuation, and the 

latest acquisition cost of ending inventory? 

(SFFAS 3, par. 24) 

114. Is the balance for the gain/loss account adjusted each 

time the inventory balance is adjusted? 

(SFFAS 3, par. 24) 

21Revaluation results in recognition of unrealized holding gains/losses in the ending inventory value. Upon adjustment for unrealized holding 

gains/losses, the latest acquisition cost method then results in an approximation of historical cost. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 40 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Inventory and Related Property (103 – 125) 

Yes, 

No, 

or 

N/A 

Explanation 

115. Is the adjustment necessary to bring the allowance to the 

appropriate balance a component of the cost of goods 

sold as computed under the latest acquisition cost 

method?22 (SFFAS 3, par. 24 & 25) 

116. If the latest acquisition cost method is used to value 

inventory, is the reported cost of goods sold adjusted by 

the difference between the beginning and ending 

unrealized holding gains and losses? 

(SFFAS 3, par. 24 & 25) 

117. If inventory is valued at net realizable value, does it meet 

the following criteria? 

a. There is an inability to determine approximate cost. 

b. There is immediate marketability at quoted prices. 

c. There is unit interchangeability (e.g., petroleum 

reserves). (SFFAS 3, par. 26) 

118. Are inventory stocks, which are maintained because they 

are not readily available in the market or because there is 

more than a remote chance that they will eventually be 

needed, classified as inventory held in reserve for future 

sale, and reported in one of the following manners? 

a. included in the inventory line item on the face of the 

financial statements with separate disclosure in the 

footnotes 

b. shown as a separate line item on the face of the 

financial statements (SFFAS 3, par. 27) 

22Cost of goods sold under the latest acquisition cost method equals (1) beginning inventory at beginning-of-the period latest acquisition cost, less: 

beginning allowance for unrealized holding gains/losses, plus: actual purchases; and (2) resulting cost of goods available for sale, less: ending 

inventory at end-of-the period latest acquisition cost, plus: ending allowance for unrealized holding gains/losses. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 41 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Inventory and Related Property (103 – 125) 

Yes, 

No, 

or 

N/A 

Explanation 

119. Is inventory identified as excess, obsolete, or 

unserviceable reported in one of the following manners? 

a. included in the inventory line item on the face of the 

financial statements with separate disclosures in the 

footnotes 

b. shown as a separate line item on the face of the 

financial statements (SFFAS 3, par. 29; 

OMB Bulletin 01-09, p. 74, section 9.9) 

120. Is excess, obsolete, and unserviceable inventory valued 

at its expected net realizable value? (SFFAS 3 par. 30) 

121. When inventory is declared excess, obsolete, or 

unserviceable is the difference between the carrying 

amount and the expected net realizable value recognized 

as a loss (or gain)? (SFFAS 3, par. 30) 

122. For excess, obsolete, or unserviceable inventory, are any 

subsequent adjustments to the inventory’s net realizable 

value or any loss (or gain) upon disposal recognized as 

losses (or gains)? (SFFAS 3, par. 30) 

123. When inventory is held for repair, is it valued using one 

of the following methods? 

a. the allowance method (valued at the same value as a 

serviceable item and a contra-asset repair allowance 

account is established 

b. the direct method (valued at the same value as a 

serviceable item less estimated repair costs) 

(SFFAS 3, par. 32 & 33) 

124. If inventory is transferred to “inventory held for repair,” 

are estimated prior period repair costs either credited to 

the repair allowance (under the repair allowance method) 

or to the inventory account (under the direct method) and 

reported as an adjustment to equity? (SFFAS 3, par. 34) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 42 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Inventory and Related Property (103 – 125) 

Yes, 

No, 

or 

N/A 

Explanation 

125. Does the entity disclose the following about its 

inventory? 

a. the general composition 

b. the basis for determining inventory values (including 

the valuation method and any cost flow assumptions) 

c. changes from prior years’ accounting methods, if any 

d. balances for each of the following categories of 

inventory (unless otherwise presented on the 

financial statements): 

i. inventory held for current sale 

ii. inventory held in reserve for future use 

iii. excess, obsolete, and unserviceable inventory 

iv. inventory held for repair 

e. the difference between the carrying amount of the 

inventory before identification as excess, obsolete, or 

unserviceable, and its expected net realizable value 

f. restriction on the sale of inventory 

g. the decision criteria for categorizing inventory 

h. changes in the criteria for categorizing inventory 

(SFFAS 3, par. 18, 27-29, 31, 32 & 35; 

OMB Bulletin 01-09, pp. 74 & 75, section 9.9) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 43 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Operating Materials and Supplies (126 - 137) 

Yes, 

No, 

or 

N/A 

Explanation 

Operating materials and supplies are tangible personal property to be consumed in 

normal operations. Excluded are (1) goods that have been acquired to construct real 

property and equipment for the entity’s use (2) stockpile materials, (3) goods held 

under price stabilization programs, (4) foreclosed property, (5) seized and forfeited 

property, and (6) inventory. (SFFAS 3, par. 36 & OMB Bulletin 01-09, p.21, 

section 3.3) 

126. Are operating materials and supplies recognized and 

reported as assets when produced or purchased? 

(SFFAS 3, par. 38) 

127. Are operating materials and supplies valued at historical 

cost, including all appropriate purchase and production 

costs incurred to bring the items to their current 

condition and location? (SFFAS 3, par. 42-43) 

128. Are donated operating materials and supplies valued at 

their fair value at the time of donation? 

(SFFAS 3, par. 43) 

129. Are operating materials and supplies acquired through 

exchange of nonmonetary assets (e.g., barter) valued at 

the fair value of the asset received at the time of the 

exchange? (SFFAS 3, par. 43) 

130. Are operating materials and supplies acquired through 

exchange of nonmonetary assets (e.g., barter) valued at 

the fair value of the asset received at the time of 

exchange, and is any difference between the recorded 

amount of the asset surrendered and the fair value of the 

asset received recognized as a gain or loss? 

(SFFAS 3, par. 43) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 44 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Operating Materials and Supplies (126 - 137) 

Yes, 

No, 

or 

N/A 

Explanation 

131. Is one of the following historical cost flow assumptions 

used to value ending operating materials and supplies 

under the consumption method? 

a. first-in, first-out (FIFO) 

b. weighted average 

c. moving average 

d. any other valuation method (such as a standard cost 

system) whose results reasonably approximate “a,” 

“b,” or “c” (SFFAS 3, par. 42 & 44) 

132. Are operating materials and supplies stocks, which are 

maintained because they are not readily available in the 

market or because there is more than a remote chance 

that they will eventually be needed (although not 

necessarily in the normal course of operations), classified 

as operating materials and supplies held in reserve for 

future use, and reported in one of the following manners? 

a. included in the operating materials and supplies line 

item on the face of the financial statements with 

separate disclosure in the footnotes 

b. shown as a separate line item on the face of the 

financial statements (SFFAS 3, par. 45) 

133. Are operating materials and supplies identified as excess, 

obsolete, or unserviceable reported in one of the 

following manners? 

a. included in the operating materials and supplies line 

item on the face of the financial statements with 

separate disclosure in the footnotes 

b. shown as a separate line item on the face of the 

financial statements (SFFAS 3, par. 47) 

134. Are excess, obsolete, and unserviceable operating 

materials and supplies valued at their estimated net 

realizable value? (SFFAS 3, par. 48) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 45 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Operating Materials and Supplies (126 - 137) 

Yes, 

No, 

or 

N/A 

Explanation 

135. When operating materials and supplies are declared 

excess, obsolete, or unserviceable is the difference 

between the carrying amount before identification as 

excess, obsolete, or unserviceable and the estimated net 

realizable value recognized as a loss (or gain)? 

(SFFAS 3, par. 48) 

136. For excess, obsolete, or unserviceable operating 

materials and supplies, are any subsequent adjustments to 

the operating materials and supplies’ estimated net 

realizable value or any loss (or gain) upon disposal 

recognized as losses (or gains)? (SFFAS 3, par. 48) 

137. Does the entity disclose the following information about 

its operating materials and supplies? 

a. general composition 

b. basis for valuation (including valuation method and 

any cost flow assumptions) 

c. change from prior years’ accounting methods, if any 

d. balances in each operating material and supply 

category23 

e. the difference between the carrying amount of the 

operating materials and supplies before identification 

as excess, obsolete, or unserviceable and their 

estimated net realizable value 

f. restrictions on the use of materials and supplies, if 

any 

g. decision criteria for identifying each category to 

which material and supplies are assigned 

h. changes in the criteria for identifying the category to 

which the operating materials and supplies are 

assigned (SFFAS 3, par. 36, 37, 45-47, 49, & 50; 

OMB Bulletin 01-09, p. 75, section 9.9) 

23Major categories of operating materials and supplies include (1) items held for use; (2) items held in reserve for future uses; and (3) excess, obsolete, 

and unserviceable items. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 46 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Stockpile Materials (138-150) 

Yes, 

No, 

or 

N/A 

Explanation 

Stockpile materials are strategic and critical materials held due to statutory 

requirements for use in national defense, conservation, or national emergencies. Not 

included under this category are (1) items held for sale or use in normal operations, 

(2) items held for use in the event of an agency’s operating emergency or 

contingency, and (3) materials acquired to support market prices. 

(SFFAS 3, par. 51 & OMB Bulletin 01-09, p. 21, section 3.3) 

138. Are stockpile materials recognized and reported as assets 

when acquired (i.e., recognized as assets using the 

consumption method)? (SFFAS 3, par. 52) 

139. If the contract between the buyer and seller of the 

stockpile materials is silent regarding passage of the title, 

is title assumed to pass upon delivery of the goods? 

(SFFAS 3, par. 52) 

140. Are stockpile materials valued at historical cost, 

including all appropriate purchase, transportation, and 

production costs incurred to bring the items to their 

current condition and location? (SFFAS 3, par. 53) 

141. Are abnormal costs, such as excessive handling or 

rework costs, charged to operations for the period? 

(SFFAS 3, par. 53) 

142. Is one of the following historical cost flow assumptions 

used to value stockpile materials under the consumption 

method? 

a. first-in, first-out (FIFO) 

b. weighted average 

c. moving average 

d. any other valuation method (such as a standard cost 

system) whose results reasonably approximate “a,” 

“b,” or “c” (SFFAS 3, par. 52 & 53) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 47 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Stockpile Materials (138-150) 

Yes, 

No, 

or 

N/A 

Explanation 

143. If stockpile materials have either suffered a permanent 

decline in value to an amount below cost or have become 

damaged or decayed, has their value been reduced to 

expected net realizable value? (SFFAS 3, par. 54) 

144. Is the resultant decline in value recognized as a loss or 

expense in the period in which it occurs? 

(SFFAS 3, par. 54) 

145. When stockpile materials are authorized to be sold, are 

those materials disclosed as stockpile materials held for 

sale? (SFFAS 3, par. 55) 

146. Are the stockpile materials authorized for sale valued 

using the same basis used before they were authorized 

for sale? (SFFAS 3, par. 55) 

147. Is any difference between the carrying amount of the 

stockpile materials held for sale and their estimated 

selling price disclosed? (SFFAS 3, par. 55) 

148. If stockpile materials are sold, is the cost removed from 

stockpile materials and reported as a cost of goods sold? 

(SFFAS 3, par. 55) 

149. Is any gain (or loss) from the sale of stockpile materials 

recognized as a gain (or loss) at that time? 

(SFFAS 3, par. 55) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 48 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Stockpile Materials (138-150) 

Yes, 

No, 

or 

N/A 

Explanation 

150. Does the entity disclose the following information about 

its stockpile materials? 

a. general composition 

b. basis for valuing stockpile materials, including 

valuation method and any cost flow assumptions 

c. changes from prior year’s accounting methods, if any 

d. restrictions on the use of the material 

e. balances in each category of stockpile material (i.e., 

stockpile materials and stockpile materials held for 

sale) 

f. decision criteria for grouping stockpile material as 

held for sale 

g. changes in criteria for categorizing stockpile 

materials as held for sale (SFFAS 3, par. 56; 

OMB Bulletin 01-09, pp. 75 & 76, section 9.9) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 49 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Seized Property (151 - 158) 

Yes, 

No, 

or 

N/A 

Explanation 

Seized property includes monetary instruments, real property, and tangible personal 

property belonging to others in actual or constructive possession of the custodial 

agency. This includes illegal drugs, contraband, and counterfeit items seized by 

authorized law enforcement agencies (SFFAS 3, par. 59; OMB Bulletin 01-09, p. 22, 

section 3.3) 

There may be as many as three government entities involved with seized property: (1) 

the seizing agency, (2) the custodial agency, and (3) another agency with a “central 

fund” set up for financial recordkeeping of seizure activities. (SFFAS 3, par. 57) 

151. If the central fund is other than the seizing or custodial 

entity, does the custodial entity maintain sufficient 

internal records to carry out its stewardship 

responsibility? (SFFAS 3, par. 60) 

152. If monetary instruments are seized, are seized assets 

recognized at market value of the monetary instruments, 

and a corresponding liability equal to the seized asset 

value established? (SFFAS 3, par. 61 & 65; 

OMB Bulletin 01-09, p. 22, section 3.3) 

153. Is the existence of seized property other than monetary 

instruments disclosed in a note to the statements and 

accounted for in the entity’s property management 

records? (SFFAS 3, par. 62) 

154. Is seized property valued at its market value when seized 

(or as soon thereafter as reasonably possible if the market 

value cannot be readily determined)? (SFFAS 3, par. 63) 

155. If no active market exists for the property in the general 

area in which it was seized, is a value in the principle 

market nearest the place of seizure used? 

(SFFAS 3, par. 63) 

156. Is the valuation of property seized under the Internal 

Revenue Code based on the taxpayer’s equity (market 

value less any third-party liens)? (SFFAS 3, par. 64) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 50 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Seized Property (151 - 158) 

Yes, 

No, 

or 

N/A 

Explanation 

157. Does the entity disclose the type of seized property in its 

custody and include the following information? 

a. explanation of what constitutes a seizure and a 

general description of the composition of seized 

property 

b. valuation method(s) 

c. changes from prior years’ accounting methods, if any 

d. analysis of change in seized property (including 

dollar value and number of seized properties) that are 

i. on hand at the beginning of the year, 

ii. seized during the year, 

iii. disposed of during the year, and 

iv. on hand at the end of the year, as well as 

known liens or other claims against the property 

(SFFAS 3, par. 66; OMB Bulletin 01-09, p. 22, 

section 3.3; p. 76, section 9.9) 

158. Does the entity also disclose the method of disposal of 

seized property, if material? (SFFAS 3, par. 66; 

OMB Bulletin 01-09, p. 76, section 9.9) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 51 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Forfeited property (159 - 172) 

Yes, 

No, 

Or 

N/A 

Explanation 

Forfeited property consists of (a) property (i.e., monetary instruments, intangible 

property, real property, and tangible personal property) acquired through forfeiture 

proceedings, (b) property acquired to satisfy a tax liability, and (c) unclaimed and 

abandoned merchandise. (SFFAS 3, par. 67 & 68 & OMB Bulletin 01-09, p. 22, 

section 3.3) 

159. When a forfeiture judgment is obtained for seized 

monetary instruments: 

a. Are they reclassified as forfeited monetary 

instruments at the current market value? 

b. Is revenue recognized in an amount equal to the 

value of the monetary asset? 

c. Is the liability associated with the seized monetary 

instrument classification removed? 

(SFFAS 3, par. 69) 

160. When a forfeiture judgment is obtained for real, tangible, 

and intangible property: 

a. Is the property recorded as an asset at its fair value at 

the time of forfeiture? 

b. Is an allowance account (contra-asset account) 

established for liens or claims from third party 

claimants against forfeited property? 

c. Is offsetting deferred revenue recognized? 

(SFFAS 3, par. 70) 

161. For forfeited property that cannot be sold due to legal 

restrictions, but may be either donated or destroyed, does 

the entity in lieu of recognizing financial value make the 

required disclosures concerning the composition, 

valuation, and disposition of the property? 

(SFFAS 3, par. 71 & 78) 

162. Is revenue from the sale of forfeited property recognized 

when sold? (SFFAS 3, par. 72) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 52 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Forfeited property (159 - 172) 

Yes, 

No, 

Or 

N/A 

Explanation 

Forfeited property not held for sale may be placed into official use, transferred to another federal 

agency, distributed to a state or local law enforcement agency, or distributed to a foreign 

government. (SFFAS 3, par. 73) 

163. When a determination is made that forfeited property 

will not be held for sale, but distributed in one of the 

manners described above, is the property reclassified as 

forfeited property held for donation or use? 

(SFFAS 3, par. 74) 

164. Is revenue associated with property not disposes of 

through sale recognized upon approval of distribution 

and the previously established deferred revenue 

reversed? (SFFAS 3, par. 74) 

165. Is a distinction maintained in the entity’s accounting 

reports between revenue arising from the sale of forfeited 

property and revenue arising from forfeited property 

being transferred, donated, or placed into official use? 

(SFFAS 3, par. 72–75 & Table 1) 

166. Is property acquired by the government to satisfy a 

taxpayer’s liability recorded when title to the property 

passes to the federal government, and is a credit made to 

the related account receivable? (SFFAS 3, par. 76) 

167. Is the property acquired in satisfaction of a taxpayer’s 

liability valued at its market value less any third party 

liens? (SFFAS 3, par. 76) 

168. Upon sale of forfeited property acquired in satisfaction of 

a taxpayer’s liability, is revenue recognized in the 

amount of the sale proceeds, and are the property and 

third party liens removed from the accounts? 

(SFFAS 3, par. 76) 

169. Is unclaimed and abandoned merchandise recorded with 

an offsetting deferred revenue when statutory and/or 

regulatory requirements for forfeiture have been met? 

(SFFAS 3, par. 77) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 53 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Forfeited property (159 - 172) 

Yes, 

No, 

Or 

N/A 

Explanation 

170. Is unclaimed and abandoned merchandise valued at its 

market value? (SFFAS 3, par. 77) 

171. Upon the sale of unclaimed and abandoned merchandise, 

is revenue recognized in the amount of the sale proceeds, 

and the merchandise and the deferred revenue removed 

from the accounts? (SFFAS 3, par. 77) 

172. Does the entity disclose the following information about 

forfeited property? 

a. composition of the property 

b. valuation method(s) 

c. restrictions on the use or disposition of forfeited 

property 

d. changes from prior year’s accounting methods, if 

any 

e. analysis of the changes in forfeited property by 

dollar amount and number of forfeitures that 

includes: 

i. forfeitures on hand at the beginning of the 

year 

ii. additions 

iii. disposals and method of disposition 

iv. forfeitures on hand at the end of the year 

f. if available, an estimate of the value of property or 

funds to be distributed to other federal, state, and 

local agencies in future reporting periods (SFFAS 3, 

par. 78; OMB Bulletin 01-09, p. 76, section 9.9) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 54 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Goods Held Under Price Support 

and Stabilization Programs (173 – 186) 

Yes, 

No, 

or 

N/A 

Explanation 

Goods acquired under price support and stabilization programs (i.e., commodities) 

are items of commerce or trade (usually farm commodities) having an exchange 

value. Producers of the goods (1) are either given nonrecourse loans under which 

they can, at their option, repay the loan with interest or surrender their commodity 

pledged as collateral for the loan or (2) may enter into purchase agreements that 

allow the producer of the option to sell commodities to the government (the 

Commodity Credit Corporation) at the price support rate. (SFFAS 3, par. 92, 93, & 

94) 

173. Are nonrecourse loans recognized as assets when the 

loan principal is disbursed and recorded at the amount of 

the loan principal? (SFFAS 3, par. 96) 

174. Is interest accrued on nonrecourse loans? 

(SFFAS 3, par. 96) 

175. When the entity has entered into a purchase agreement 

and there is an expected loss: 

a. Is a loss24 recognized if it is probable that a loss has 

been incurred on purchase agreements outstanding 

and the amount of the loss can be reasonably 

measured? 

b. Is a corresponding liability recognized? 

(SFFAS 3, par. 97 & 103) 

176. If the contingent loss arising from a purchase agreement 

is not recognized because it is less than probable or is not 

reasonably measurable, is the contingent loss disclosed if 

it is at least “reasonably possible that a loss may occur?” 

(SFFAS 3, par. 98) 

177. When commodities are acquired to satisfy a nonrecourse 

loan or purchase agreement, are they recognized and 

reported as assets at the lower of cost or net realizable 

value? (SFFAS 3, par. 99 & 104) 

24The loss amount is the difference between the contract price and the net realizable value of the commodities. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 55 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Goods Held Under Price Support 

and Stabilization Programs (173 – 186) 

Yes, 

No, 

or 

N/A 

Explanation 

178. When commodities acquired to satisfy the terms of a 

nonrecourse loan or purchase agreement are sold: 

a. Are revenues recognized? 

b. Is the carrying amount of the commodities removed 

from the asset account and reported as a cost of 

goods sold? (SFFAS 3, par. 100) 

179. When commodities are held for purposes other than sale, 

is the carrying amount reported as an expense and 

removed from the commodity asset account upon 

transfer? (SFFAS 3, par. 101) 

180. Are all nonrecourse loans recorded at their face amounts, 

and is a valuation allowance set up to recognize losses on 

such loans when it is “more likely than not” (i.e., more 

than a 50 percent chance) that loans will not be totally 

collected? (SFFAS 3, par. 102) 

181. Is this allowance reestimated on each financial reporting 

date? (SFFAS 3, par. 102) 

182. Does the cost for the commodities acquired through a 

nonrecourse loan settlement include the following 

amounts? 

a. loan principal (excluding interest) 

b. processing and packaging costs incurred after 

acquisition 

c. other costs (e.g., transportation) incurred in taking 

title to the commodity (SFFAS 3, par. 105) 

183. Does the cost for commodities acquired though a 

purchase agreement include the following amounts? 

a. the unit price agreed upon in the purchase agreement 

multiplied by the number of units purchased 

b. other costs incurred in taking title to the commodity 

(SFFAS 3, par. 106) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 56 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Goods Held Under Price Support 

and Stabilization Programs (173 – 186) 

Yes, 

No, 

or 

N/A 

Explanation 

184. Is any adjustment necessary to reduce the carrying 

amount of the acquired commodities to the lower of cost 

or net realizable value recognized as a loss on farm price 

support in the current period and recorded in a 

commodity valuation allowance? (SFFAS 3, par. 107) 

185. Are recoveries of losses recognized up to the point of any 

previously recognized losses on the commodities, and is 

the commodity valuation allowance reduced accordingly 

in the current period? (SFFAS 3, par. 107) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 57 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Goods Held Under Price Support 

and Stabilization Programs (173 – 186) 

Yes, 

No, 

or 

N/A 

Explanation 

186. Is the following information related to goods held under 

price support and stabilization programs disclosed? 

a. basis for valuing commodities including valuation 

method and cost flow assumptions (e.g., FIFO, 

weighted average, moving average, specific 

identification) 

b. changes from prior years’ accounting methods, if any 

c. restrictions on the use, disposal, or sale of 

commodities 

d. analysis of the changes in dollar amount and volume 

of commodities, including those 

i. on hand at the beginning of the year 

ii. acquired during the year 

iii. disposed of during the year by method of 

disposition 

iv. on hand at the end of the year 

v. on hand at year’s end and estimated to be 

donated or transferred during the coming 

period 

vi. received as a result of surrender of collateral 

related to nonrecourse loans outstanding 

vii. dollar value and volume of purchase 

agreement commitments (SFFAS 3, par. 108 

& 109; OMB Bulletin 01-09, pp. 76 & 77, 

section 9.9) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 58 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

General property, plant, and equipment (PP&E) are any property, plant, and 

equipment used in providing goods or services. (SFFAS 6, par. 23) 

187. Has the entity established, disclosed, and consistently 

followed appropriate capitalization thresholds for 

property, plant, and equipment (PP&E) suitable to its 

financial and operational conditions? (SFFAS 6, par. 13) 

188. Does the entity follow a policy that ensures its PP&E 

consists of tangible assets, including land, that meet the 

following criteria? 

a. have estimated useful lives of 2 years or more 

b. are not intended for sale in the ordinary course of 

operations 

c. are acquired or constructed with the intention of 

being used or being available for use by the entity 

(SFFAS 6, par. 17) 

189. Does PP&E also consist of the following items? 

a. assets acquired through capital leases, including 

leasehold improvements 

b. property owned by the reporting entity in the hands 

of others (e.g., state and local governments, colleges 

and universities, federal contractors) 

c. land rights (SFFAS 6, par. 18) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 59 
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Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

Capital leases are leases that transfer substantially all the benefits and risks of 

ownership to the lessee. Operating leases are leases in which the federal entity 

does not assume the risks of ownership of PP&E. Multiyear service contracts 

and multiyear purchase agreements for expendable commodities are not capital 

leases. (SFFAS 6, par. 20, footnote 22; SFFAS 5, par. 43) 

190. Does the entity classify a lease as a capital lease if at its 

inception the lease meets one or more of the following 

criteria? 

a. the lease transfers ownership of the property to the 

lessee by the end of the lease term 

b. the lease contains an option to purchase the leased 

property at a bargain price 

c. the lease term is equal to or greater than 75 percent 

of the estimated economic life of the lease property, 

and the beginning of the lease term does not fall 

within the last 25 percent of the total estimated 

economic life of the property 

d. the present value of rental and other minimum lease 

payments, excluding that portion of the payments 

representing executory cost, equals or exceeds 90 

percent of the fair value of the leased property, and 

the beginning of the lease terms does not fall within 

the last 25 percent of the total estimated economic 

life of the property (SFFAS 6, par. 20; SFFAS 5, 

par. 43 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 60 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

191. Does the general PP&E asset line item exclude the 

following items? 

a. items held in anticipation of physical consumption 

such as operating materials and supplies 

b. items the federal entity has a reversionary interest in 

c. heritage assets (except multiuse heritage assets)25 

d. stewardship land (i.e., land not included in general 

PP&E) (SFFAS 6, par. 19, 21, 57, 58, & 68; 

SFFAS 16, par. 6) 

192. In determining the level at which the entity categorizes 

its PP&E, has the entity considered the following 

factors? 

a. the cost of maintaining different accounting methods 

for property and the usefulness of the information 

b. the diversity of the PP&E (e.g., useful lives, value, 

alternative uses) 

c. the programs being served by the PP&E 

d. future disposition of the PP&E 

(SFFAS 6, par. 22) 

25Multiuse heritage assets are heritage assets used predominately in general government operations (e.g., the main Treasury building, which is used as 

an office building). 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 61 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

193. Does the entity categorize an asset under general PP&E 

if it has one or more of the following characteristics? 

a. it could be used for alternative purposes (e.g., by 

other federal programs, state or local governments, 

nongovernmental entities) but is used to produce 

goods or services or to support the mission of the 

entity 

b. it is used for business-type activities26 

c. it is used by entities in activities whose costs can be 

compared to those of other entities performing 

similar activities (e.g., federal hospital services in 

comparison to other hospitals) (SFFAS 6, par. 23; 

OMB Bulletin 01-09, p. 22, section 3.3) 

194. Is PP&E of entities operating as business-type activities 

categorized as general PP&E whether or not it meets the 

definition of other PP&E categories (e.g., heritage 

assets)? (SFFAS 6, par. 24; OMB Bulletin 01-09, p. 22, 

section 3.3) 

195. Are land and land rights specifically acquired for or in 

connection with other general PP&E included in general 

PP&E? (SFFAS 6, par. 25; OMB Bulletin 01-09, 

p. 22 & 23, section 3.3) 

196. Is all general PP&E recorded at cost? 

(SFFAS 6, par. 26) 

26A business-type activity is defined as a significantly self-sustaining activity that finances its continuing cycle of operations through the collection of 

exchange revenue. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 62 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

197. Does the cost of general PP&E include all costs incurred 

to bring the PP&E to a form and location suitable for its 

intended use, such as the following? 

a. amounts paid to vendors 

b. transportation charges to the point of initial use 

c. handling and storage costs 

d. labor and other direct or indirect production costs 

(for assets produced or constructed) 

e. costs of engineering, architectural, and other outside 

services for designs, plans, specifications, and 

surveys 

f. acquisition and preparation costs of buildings and 

other facilities 

g. an appropriate share of the cost of the equipment and 

facilities used in construction work 

h. fixed equipment and related installation costs 

required for activities in a building or facility 

i. direct costs of inspection, supervision, and 

administration of construction contracts and 

construction work 

j. legal and recording fees and damage claims 

k. fair value of facilities and equipment donated to the 

government 

l.material amounts of interest costs paid 

(SFFAS 6, par. 26) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 63 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

198. Is the cost of general PP&E acquired under a capital 

lease equal to the amount recognized as a liability27 for 

the capital lease at its inception? (SFFAS 6, par. 29) 

199. Is the cost of general PP&E acquired through donation, 

will, or judicial process, excluding forfeiture, capitalized 

at estimated fair value at the time acquired by the 

government? (SFFAS 6, par. 30) 

200. Is general PP&E transferred from other federal entities 

capitalized at the book value recorded by the transferring 

entity? (SFFAS 6, par. 31) 

201. Is general PP&E transferred from other federal entities 

capitalized at the fair value at the time of the transfer, if 

the receiving entity cannot reasonably ascertain the book 

value of the PP&E being transferred? 

(SFFAS 6, par. 31) 

202. If general PP&E is acquired through exchange between a 

federal entity and a nonfederal entity, is it capitalized at 

the fair value of the PP&E surrendered at the time of the 

exchange? (SFFAS 6, par. 32) 

203. If general PP&E is acquired through exchange between a 

federal entity and a nonfederal entity and the fair value of 

the PP&E is more readily determinable than that of the 

PP&E surrendered, is the acquired general PP&E 

capitalized at it’s fair value? (SFFAS 6, par. 32) 

204. If general PP&E is acquired through exchange between a 

federal entity and a nonfederal entity and neither the fair 

value of the PP&E acquired or surrendered is 

determinable, is the acquired general PP&E capitalized at 

the book value of the PP&E surrendered? 

(SFFAS 6, par. 32) 

27The liability is the net present value of lease payments unless the net present value of the lease payments exceeds the fair value of the asset, in which 

case the amount recorded as the liability would be the fair value of the asset. (SFFAS 5, par. 44) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 64 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

205. If cash is included in an exchange of general PP&E 

between a federal entity and a nonfederal entity, is the 

cost of PP&E acquired increased by the amount of cash 

surrendered or decreased by the amount of cash 

received? (SFFAS 6, par. 32) 

206. For general PP&E acquired through exchange between a 

federal entity and a nonfederal entity, is any difference 

between the net recorded amount of the PP&E 

surrendered and the cost of the PP&E acquired 

recognized as a gain or loss? (SFFAS 6, par. 32) 

207. Is PP&E recognized when title passes to the acquiring 

entity or when PP&E is delivered to the entity or to an 

agent of the entity? (SFFAS 6, par. 34) 

208. If general PP&E is under construction, is it recorded as 

construction work in process until it is placed into 

service and transferred to general PP&E? 

(SFFAS 6, par. 34) 

Depreciation expense is calculated through the systematic and rational allocation of the 

cost of general PP&E, less its estimated salvage or residual value over its estimated 

useful life. (SFFAS 6, par. 35, OMB Bulletin 01-09, p. 23, section 3.3) 

209. Is depreciation expense recognized on all general PP&E, 

except land and land rights of unlimited duration? 

(SFFAS 6, par. 35) 

210. Do estimates of useful life of general PP&E consider 

such factors as physical wear and tear and technological 

change? (SFFAS 6, par. 35) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 65 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

211. Are changes in estimated useful life or salvage and 

residual value of general PP&E accounted for in the 

period of change and future periods? (SFFAS 6, par. 35) 

212. Is the depreciation method systematic, rational, and best 

reflective of the use of the PP&E, including the use of a 

composite or a group methodology28 whereby the costs 

of PP&E are allocated using the same allocation rate? 

(SFFAS 6, par. 35; SFFAS 23, par. 9(f)) 

213. Are depreciation and amortization expenses accumulated 

in contra-asset accounts? (SFFAS 6, par. 36) 

214. Are costs that either extend the useful life of existing 

general PP&E or enlarge or improve its capacity 

capitalized and depreciated/amortized over the remaining 

useful life of the asset? (SFFAS 6, par. 37) 

215. When general PP&E is disposed of, retired, or removed 

from service, is the asset removed from the asset 

accounts along with the associated accumulated 

depreciation/amortization? (SFFAS 6, par. 38) 

216. Are the differences between the book value of the PP&E 

and the amounts realized, recognized as a gain or loss in 

the period that the general PP&E is disposed of, retired 

or removed from service? (SFFAS 6, par. 38) 

217. Is general PP&E removed from general PP&E accounts 

along with associated accumulated 

depreciation/amortization if prior to disposal, retirement, 

or removal from service, it no longer provides service in 

the operations of the entity? (SFFAS 6, par. 39) 

28The composite methodology is a method of calculating depreciation that applies a single average rate to a number of heterogeneous assets that have 

dissimilar characteristics and service lives. The group methodology is a method of calculating depreciation that applies a single, average rate to a 

number of homogenous assets having similar characteristics and service lives. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 66 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

218. Is such PP& E that has been removed from the asset 

accounts recorded in an appropriate asset account at its 

expected net realizable value? (SFFAS 6, par. 39) 

219. Is any difference in the book value and its expected net 

realizable value of the about-to-be disposed, retired, or 

removal-from-service PP&E recognized as a gain or loss 

in the period of adjustment? (SFFAS 6, par. 39) 

220. Is the expected net realizable value of such PP&E assets 

adjusted at the end of each accounting period, and are 

any further adjustments in value recognized as a gain or 

loss? (SFFAS 6, par. 39) 

221. If historical cost information for existing general PP&E 

has not been maintained, are cost estimates based on 

either of the following costs? 

a. the cost of similar assets at the time of acquisition 

b. the current cost of similar assets discounted for 

inflation since the time of acquisition 

(SFFAS 6, par. 40) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 67 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

222. For general PP&E previously considered national 

defense PP&E, is the initial capitalization amount for 

these assets the initial historical cost for the items 

including any major improvements or modifications? 

(SFFAS 23, par. 10) 

223. For general PP&E previously considered national 

defense PP&E where obtaining initial historical cost is 

not practical, is estimated historical cost used, based on 

one of the following alternatives? 

a. current replacement cost of similar items, deflated 

through the use of price-level indexes to the 

acquisition year or estimated acquisition year if the 

actual year is unknown 

b. other information indicating amount expended, such 

as budget, appropriation, or engineering documents 

and other reports reflecting amounts expended 

c. other reasonable approaches for estimating historical 

cost29 (SFFAS 23, par. 12 & 13) 

224. For general PP&E previously considered national 

defense PP&E that was in service upon implementation 

of SFFAS 23, are cleanup cost liabilities adjusted as 

needed?30 (SFFAS 23, par. 15) 

29For example, the latest acquisition cost may be substituted for current replacement cost in some situations. 30This adjustment may be needed because the Department of Defense may have already recognized the total estimated cleanup costs as a liability and 

expense for some military equipment (per paragraph 101 of SFFAS 6). 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 68 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

225. Is accumulated depreciation/amortization recorded based 

on one of the following methods? 

a. the estimated cost of the PP&E and the number of 

years the PP&E has been in use relative to its 

estimated useful life 

b. the PP&E’s estimated net remaining cost31 and the 

depreciation/amortization charged over the 

remaining life based on that net remaining cost 

c. a composite or a group methodology whereby the 

costs of PP&E are allocated using the same 

allocation rate (SFFAS 6, par. 41; 

SFFAS 23, par. 9(f)) 

226. If general PP&E would have been substantially 

depreciated or amortized had it been recorded upon 

acquisition, does the entity weigh materiality and costbenefit in considering either of the following 

alternatives? 

a. record only improvements made during the period 

beyond the initial expected useful life of general 

PP&E 

b. make an aggregate entry for whole classes of PP&E 

(e.g., entire facilities rather than a building-bybuilding estimate). (SFFAS 6, par. 42) 

227. In recording existing general PP&E, is the difference in 

amounts added to asset and contra-accounts credited (or 

charged) to the net position of the entity, with the amount 

of the adjustment shown as a “prior period adjustment” 

in the Statement of Changes in Net Position? 

(SFFAS 6, par. 43) 

31Net remaining cost is the original cost of the asset less any accumulated depreciation/amortization to date (i.e., book value). 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 69 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

228. In recording existing general PP&E previously identified 

as national defense PP&E, is the difference in amounts 

added to asset and contra accounts reported as a “change 

in accounting principle” and reflected as an adjustment to 

the beginning balance of cumulative results of operations 

in the statement of changes in net position, for the period 

the change is made? (SFFAS 23, par. 10 & 16) 

229. Does the entity make the following minimum disclosures 

about its general PP&E? 

a. the cost, associated accumulated depreciation, and 

book value by major class (e.g., building and 

structures, fixtures, equipment) 

b. the estimated useful lives for each major class 

c. the method(s) of depreciation for each major class 

d. capitalization threshold(s) including any changes in 

thresholds(s) during the period 

e. restrictions on the use or convertibility of general 

PP&E (SFFAS 6, par. 45; OMB Bulletin 01-09, 

p. 77, section 9.10) 

Property, plant, and equipment are classified as heritage assets if they have (1) 

historical or natural significance; (2) cultural, educational, or artistic importance; 

or (3) significant architectural characteristic. (SFFAS 6, par. 57) 

Multiuse heritage assets are heritage assets that are predominately used in general 

government operations (e.g., buildings such as the main Treasury building, which is used as 

an office building). (SFFAS 16, par. 6; OMB Bulletin 01-09, p. 23, section 3.3) 

230. If the predominant use of the heritage asset(s) is in 

general government operations, is the acquisition, 

betterment, or reconstruction of the asset(s) capitalized as 

general PP&E and depreciated over its useful life? 

(SFFAS 16, par. 6 & 9; OMB Bulletin 01-09, p. 23, 

section 3.3; p. 98, section 10.2A) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 70 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

General Property, Plant, & Equipment (Net) 

(187 – 233) 

Yes, 

No, 

or 

N/A 

Explanation 

231. Does the entity also include a footnote disclosure 

explaining that “physical quantity” information for the 

multiuse heritage assets is included in supplemental 

stewardship reporting for heritage assets? (SFFAS 16, 

par. 9; OMB Bulletin 01-09, p. 23, section 3.3; p. 98, 

section 10.2A) 

232. Are multiuse heritage assets acquired through donation 

or devise recognized as general PP&E at the assets’ fair 

value? (SFFAS 16, par. 11) 

233. For multiuse heritage assets acquired through donation or 

devise, are the assets fair value also recognized as 

“nonexchange revenue,” as defined in SFFAS 7? 

(SFFAS No. 16, par. 11) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 71 
Reporting 1050 – CFO Act Checklist 

Section III 

Balance Sheet 

Assets 

Software (234 – 262) 

Yes, 

No, 

or 

N/A 

Explanation 

Software includes the application and operating system programs, procedures, 

rules, and any associated documentation pertaining to the operation of a 

computer system or program. 

“Internal use software” is software that is purchased from commercial vendors 

“off the shelf,” internally developed, or contractor-developed solely to meet the 

entity’s internal or operational needs. (SFFAS 10, par. 8) 

234. Does the entity capitalize the cost of software when 

such software meets the following criteria? 

a. specifically identifiable 

b. determinate life of 2 years or more 

c. not intended for sale in the ordinary course of 

operations 

d. acquired or developed with the intention of being 

used by the entity 

e. meets the criteria for general property, plant, and 

equipment in that it is used in providing goods and 

services (SFFAS 6, par. 17 & SFFAS 10, par. 15 

& 38) 

235. Does the capitalized cost of internally developed 

software include the full cost (i.e., direct and indirect 

costs) incurred during the software development stage? 

(SFFAS 10, par. 16) 

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Section III 

Balance Sheet 

Assets 

Software (234 – 262) 

Yes, 

No, 

or 

N/A 

Explanation 

236. Are capitalized internally developed software 

development costs limited to costs incurred after the 

following steps have been taken? 

a. management authorizes and commits to a computer 

software project and believes that it is more likely 

than not that the project will be completed and the 

software will be used to perform the intended 

function with an estimated service life of 2 years or 

more 

b. the conceptual formulation, design, and testing of 

possible software project alternatives (i.e., 

preliminary design stage) have been completed. 

(SFFAS 10, par. 16) 

237. Do software capitalization costs include costs for new 

software32 and documentation manuals? (SFFAS 10, 

par. 17) 

238. Do the capitalized costs for commercial off-the-shelf 

(COTS) software include the amount paid to the 

vendor? (SFFAS 10, par. 18) 

239. Do the capitalized costs for contractor-developed 

software include the amount paid to a contractor to 

design, program, install, and implement the software? 

(SFFAS 10, par. 18) 

240. Does the entity capitalize material internal costs 

incurred to implement the COTS or contractordeveloped software and otherwise make it ready for 

use? (SFFAS 10, par. 18) 

32Examples of costs for new software are salaries of programmers, systems analysts, project managers, and administrative personnel; associated 

employee benefits; outside consultants’ fees; rent; and supplies. 

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Section III 

Balance Sheet 

Assets 

Software (234 – 262) 

Yes, 

No, 

or 

N/A 

Explanation 

241. Does the entity expense as incurred all data conversion 

costs for internally developed, contractor-developed, or 

COTS software as well as the cost to develop or obtain 

software that allows for access or conversion of existing 

data to the new software? (SFFAS 10, par. 19) 

242. Does the entity expense costs incurred after the 

completion of final acceptance testing? (SFFAS 10, 

par. 20) 

243. Does the entity treat software that serves both internal 

uses and stewardship purposes33 as internal use software 

and capitalize it to the extent such software meets 

criteria for general PP&E? (SFFAS 10, par. 21) 

244. Is computer software that is integrated into and 

necessary to operate general PP&E,34 rather than 

perform an application, considered part of the PP&E of 

which it is an integral part, and is it capitalized and 

depreciated accordingly? (SFFAS 10, par. 22) 

245. If the entity purchased software as part of a package of 

products and services, does it use a reasonable estimate 

of the relative fair value of the individual elements in 

allocating the cost as capitalizable or noncapitalizable 

(i.e., expense) elements? (SFFAS 10, par. 23) 

246. If the entity purchased software as part of a package of 

products and services, does it expense software costs 

that are not susceptible to allocation between 

maintenance and relatively minor enhancements? 

(SFFAS 10, par. 23) 

33Software that serves both internal uses and stewardship purposes is referred to as multiuse software. An example is a global positioning system used 

in connection with national defense activities and general operating activities and services. 34For example, such software could include software necessary to operate airport radar and computer operated lathes. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 74 
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Section III 

Balance Sheet 

Assets 

Software (234 – 262) 

Yes, 

No, 

or 

N/A 

Explanation 

247. Has the entity established capitalization thresholds for 

its internal-use software including bulk purchases of 

software programs and modules or components of a 

total software system? (SFFAS 10, par. 24) 

248. Does the entity capitalize the acquisition cost of 

enhancements to existing internal-use software, as well 

as related modules, when it is more likely than not that 

they will result in significant additional capabilities? 

(SFFAS 10, par. 25) 

249. Does the entity expense, in the period incurred, the cost 

of minor enhancements resulting from ongoing systems 

maintenance as well as the purchase of enhanced 

versions of software for a minimal charge? 

(SFFAS 10, par. 26) 

250. Are costs incurred solely to repair a design flaw or to 

perform minor upgrades that may extend the useful life 

of the software without adding capabilities expensed? 

(SFFAS 10, par. 27) 

251. Does the entity recognize a loss upon impairment of 

computer software if either of these 

postimplementation/operational conditions apply? 

a. the software is no longer expected to provide 

substantive service potential and will be removed 

from service 

b. a significant reduction occurs in the capabilities, 

functions, or uses of the software (or module 

thereof) (SFFAS 10, par. 28 & 29) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 75 
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Section III 

Balance Sheet 

Assets 

Software (234 – 262) 

Yes, 

No, 

or 

N/A 

Explanation 

252. If impaired software is to remain in use, is the loss due 

to impairment measured as the difference between the 

book value and either of the following amounts? 

a. the cost to acquire software that would perform 

similar remaining functions (i.e., unimpaired 

functions) 

b. the portion of book value attributable to the 

remaining functional elements of the software 

(SFFAS 10, par. 29) 

253. If the loss due to impairment cannot be determined, is 

the book value of the software amortized over the 

remaining useful life of the software? 

(SFFAS 10, par. 29) 

254. If impaired software is to be removed from use, is the 

loss due to impairment measured as the difference 

between the book value and any net realizable value 

(NRV)? (SFFAS 10, par. 30) 

255. In situations of impaired software to be removed from 

use, does the entity transfer the NRV, if any, to an 

appropriate asset account until such time as the software 

is disposed of and the NRV realized? 

(SFFAS 10, par. 30) 

256. If the entity’s managers conclude that it is no longer 

“more likely than not” that developmental software or a 

module thereof will be completed and placed in service, 

is the accumulated book value or the balance in a work 

in process account, if applicable, reduced to reflect the 

expected NRV and a loss recognized? 

(SFFAS 10, par. 31) 

257. Does the entity amortize capitalized internal use 

software systematically and rationally over the 

estimated useful life of the software? 

(SFFAS 10, par. 32) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 76 
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Section III 

Balance Sheet 

Assets 

Software (234 – 262) 

Yes, 

No, 

or 

N/A 

Explanation 

258. Does amortization of each module or component of a 

software project begin when that module or component 

has been successfully tested? (SFFAS 10, par. 33) 

259. If the use of a module is dependent on the completion of 

another module(s), does the amortization begin only 

when both that module and the other module(s) have 

successfully completed testing? (SFFAS 10, par. 33) 

260. Are additions to the book value or changes in useful life 

of capitalized software treated prospectively (i.e., 

during the period of change and future periods only) 

when the software is amortized? (SFFAS 10, par. 34) 

261. When the entity replaces existing internal-use software 

with new software, is the unamortized cost of the old 

software expensed when the new software has 

successfully completed testing? (SFFAS 10, par. 34) 

262. Does the entity disclose, if material, the following 

information regarding its capitalized software? 

a. the cost, associated amortization, and book value 

b. the estimated useful life for each major class of 

software 

c. the method(s) of amortization (SFFAS 10, par. 35; 

SFFAS 6, par. 45) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 77 
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Section III 

Balance Sheet 

Assets 

Other Assets (263 – 268) 

Yes, 

No, 

or 

N/A 

Explanation 

263. Does the entity include under the “other” assets category 

assets that are not reported in a separate category on the 

face of the balance sheet? (OMB Bulletin 01-09, p. 23, 

section 3.3) 

264. Are other assets listed and described in a note to the 

financial statements and broken out by major 

homogenous components and intragovernmental versus 

other (nonfederal) entity assets)? (OMB Bulletin 01-09, 

p. 78, section 9.11) 

Advances are cash outlays made by a federal entity to its employees, contractors, 

grantees, or others to cover the recipient’s anticipated expenses or as advance 

payments for the costs of goods and services acquired by an entity. (SFFAS 1, 

par. 57 & OMB Bulletin 01-09, p. 23, section 3.3) 

Prepayments are payments made by a federal entity to cover certain periodic 

expenses before those expenses are incurred (SFFAS 1, par. 58; 

OMB Bulletin 01-09, p. 23, section 3.3) 

Progress payments on work in progress are not included in advances and 

prepayments (OMB Bulletin 01-09, p. 23, section 3.3) 

265. Are advances and prepayments recorded as assets and 

disclosed in the notes to the financial statements? 

(SFFAS 1, par. 59; OMB Bulletin 01-09, p. 23, 

section 3.3) 

266. Are amounts of advances or prepayments that are subject 

to a refund transferred to accounts receivable? 

(SFFAS 1, par. 59) 

267. Are advances and prepayments paid out reported 

separately as assets and not netted against the liability for 

advances and prepayments that the entity received? 

(SFFAS 1, par. 60) 

268. Are advances and prepayments that are made to federal 

entities accounted for and reported separately from those 

made to nonfederal entities? (SFFAS 1, par. 61) 

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Section III 

Balance Sheet 

Liabilities 

Liabilities in General (269 – 272) 

Yes, 

No, 

or 

N/A 

Explanation 

Liabilities of the federal agencies are reported under two major categories: (1) 

liabilities covered by budgetary resources35 and (2) liabilities not covered by 

budgetary resources.36 Within each of these two categories, liabilities are classified 

as (1) intragovernmental liabilities, which are amounts owed to other federal entities 

or (2) governmental liabilities, which are amounts owed to nonfederal entities by the 

federal government or an entity within the federal government. (SFFAS 1, par. 21; 

SFFAS 5, footnote 1 in summary; OMB Bulletin 01-09, p. 24, section 3.4 & pp. 78 & 

79, section 9.12) 

269. Are liabilities covered by budgetary resources and 

liabilities not covered by budgetary resources combined 

on the face of the balance sheet? (OMB Bulletin 01-09, 

p. 17, section 3.1, p. 24, section 3.4 & pp. 78 & 79, 

section 9.12) 

35Liabilities covered by budgetary resources are liabilities covered by realized budgetary resources as of the balance sheet date. Budgetary resources 

include (1) new budget authority, (2) unobligated balances of budgetary resources at the beginning of the year or net transfers of prior year balances 

during the year, (3) spending authority from offsetting collections (credited to an appropriation or fund account), (4) recoveries of unexpired budget 

authority through downward adjustments of prior year obligations, and (5) permanent indefinite appropriations or borrowing authority, which have 

been enacted and signed into law as of the balance sheet date, provided that the resources may be apportioned by OMB without further action by the 

Congress and without a contingency having to be met. 36Liabilities not covered by budgetary resources are liabilities for which congressional action is needed before budgetary resources can be provided. 

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Section III 

Balance Sheet 

Liabilities 

Liabilities in General (269 – 272) 

Yes, 

No, 

or 

N/A 

Explanation 

270. Are the amounts and types of liabilities not covered by 

budgetary resources disclosed? (SFFAS1, par. 80 & 86; 

OMB Bulletin 01-09, p. 17, section 3.1 & p. 24, 

section 3.4) 

271. Does the federal entity recognize a liability for 

probable37 and measurable38 future outflows or other 

sacrifices of resources arising from one or more of the 

following events? 

a. past exchange transactions 

b. government-related events, such as a federal entity 

accidentally causing damage to private property 

c. government-acknowledged events, such as natural 

disasters, for which the government has taken 

formal responsibility for the related costs 

d. nonexchange transactions that, according to current 

law and applicable policy, are unpaid amounts due 

as of the reporting date (SFFAS 5, par. 19–34; 

OMB Bulletin 01-09, p. 23, section 3.4) 

272. Are liabilities recognized when incurred regardless of 

whether they are covered by available budgetary 

resources (including those liabilities related to 

appropriations canceled under “M” account legislation)? 

(OMB Bulletin 01-09, p. 24, section 3.4) 

37Probable refers to that which can be reasonably expected or is believed to be more likely than not on the basis of available evidence or logic. 

However, in the context of assessing the outcome of matters of pending or threatened litigation and unasserted claims and recognizing an associated 

liability, “probable” refers to that which is likely, not to that which is “more likely than not.” 38Measurable refers to that which can be quantified in monetary units with sufficient reliability to be reasonably estimable. 

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Section III 

Balance Sheet 

Liabilities 

Accounts Payable and 

Interest Payable (273 – 280) 

Yes, 

No, 

or 

N/A 

Explanation 

Accounts payable are amounts owed by a federal entity for goods and services 

received from, progress in contract performance made by, and rents due to other 

entities. (SFFAS 1, par. 74; OMB Bulletin 01-09, p. 24, section 3.4) 

273. Do accounts payable exclude amounts related to 

ongoing continuous expenses, such as salary and related 

benefits expense, which are classified as other current 

liabilities? (SFFAS 1, par. 75) 

274. Are (intragovernmental) accounts payable owed to other 

federal agencies reported separately from those owed to 

the public? (SFFAS 1, par. 76; OMB Bulletin 01-09, 

p. 18, section 3.2 & p. 24, section 3.4) 

275. When an entity accepts title to goods, whether the goods 

are delivered or in transit, does the entity recognize a 

liability for the unpaid cost of goods? 

(SFFAS 1, par. 77) 

276. If invoices for goods, for which the entity has accepted 

the title, are not available, does the entity estimate the 

amount owed? (SFFAS 1, par. 77) 

277. For facilities or equipment constructed or manufactured 

by contractors or grantees according to agreements or 

contract specifications, are amounts recorded as payable 

based on an estimate of work completed under the 

contract or the agreement in accordance with the federal 

entity's engineering and management evaluation of 

actual performance progress and incurred costs? 

(SFFAS 1, par. 78 & 79) 

278. Does the entity disclose accounts payable not covered 

by budgetary resources? (SFFAS 1, par. 80; 

OMB Bulletin 01-09, p. 24, section 3.4; p. 78, 

section 9.12) 

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Section III 

Balance Sheet 

Liabilities 

Accounts Payable and 

Interest Payable (273 – 280) 

Yes, 

No, 

or 

N/A 

Explanation 

279. Is interest incurred but unpaid on borrowed funds, late 

payments, and refunds recognized as interest payable 

and reported as a liability at the end of each period? 

(SFFAS 1, par. 81; OMB Bulletin 01-09, p. 24, 

section 3.4) 

280. Is interest payable to federal entities reported separately 

from interest payable to the public? (SFFAS 1, par. 82) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 82 
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Section III 

Balance Sheet 

Liabilities 

Liabilities for Loan Guarantees (281 – 294) 

Yes, 

No, 

or 

N/A 

Explanation 

A loan guarantee is any guarantee, insurance (but not deposit insurance), or other 

pledge with respect to the payment of all or part of the principal or interest on any 

debt obligation of a nonfederal borrower to a nonfederal lender. (SFFAS 2, app. C) 

The Federal Credit Reform Act of 1990 requires federal entities to estimate and 

budget for the costs arising from default of guaranteed loans made after fiscal year 

(FY) 1991 (i.e., post 1991). (SFFAS 2, par. 7) 

281. Is the present value of estimated net cash outflows from 

post-1991 (i.e., committed after September 30, 1991) 

loan guarantees recognized as a liability? (SFFAS 2, 

par. 7 & 23) 

282. Does the entity disclose by loan program the face value 

of guaranteed loans outstanding and the amount of 

outstanding principal guaranteed? (SFFAS 2, par. 23; 

OMB Bulletin 01-09, pp. 60, 65, & 72, section 9.8, 

item J) 

283. Does the entity disclose by loan program the estimated 

liabilities39 arising from post-1991 loan guarantees? 

(OMB Bulletin 01-09, pp. 60, 61, 65, & 72, section 9.8, 

item K) 

284. Is a liability for a pre-1992 (i.e., committed before 

October 1, 1991) loan guarantee recognized when it is 

more likely than not that the loan guarantee will require 

a future cash outflow to pay a default claim? (SFFAS 2, 

par. 39 & app. B, part IV A) 

285. Does the entity disclose by loan program the estimated 

liabilities arising from pre-1992 loan guarantees? 

(OMB Bulletin 01-09, p. 25, section 3.4; pp. 60 & 72, 

section 9.8, item K) 

39The present value of the estimated net cash flows (outflows less inflows) to be paid by the entity arising from loan guarantees. 

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Section III 

Balance Sheet 

Liabilities 

Liabilities for Loan Guarantees (281 – 294) 

Yes, 

No, 

or 

N/A 

Explanation 

286. Are the liabilities for the pre-1992 loan guarantees 

reestimated each year as of the date of the financial 

statements? (SFFAS 2, par. 39) 

287. Does the entity disclose, by loan program, whether pre1992 loan guarantees are reported on a present-value 

basis40 or under the allowance-for-loss method?41 

(OMB Bulletin 01-09, p. 68, section 9.8, item A, 

4th par.) 

288. When the total loan guarantee liability for all of the 

credit programs is negative, is this reported as an asset? 

(OMB Bulletin 01-09, p. 25, section 3.4) 

289. If loan guarantee liability is the result of both positive 

and negative amounts of the various components, is the 

total shown as a liability, and are the negative 

components (of the loan guarantee liability) disclosed? 

(OMB Bulletin 01-09, p. 25, section 3.4) 

290. When post-1991 loan guarantees are modified, is the 

existing book value of the related liability changed to an 

amount equal to the present value of net cash outflows 

that are projected under the modified terms from the 

time of the modification to the loan’s maturity, and 

discounted at the original discount rate?42 (SFFAS 2, 

par. 50 & app. B, part III D(4); SFFAS 19, par. 7(d)) 

40Under the present-value method, the liability for loan guarantees is the present value of the expected net cash outflows due to the loan guarantees. 41Under the allowance-for-loss method, the liability for loan guarantees is the amount the agency estimates will more likely than not require future 

cash outflow to pay default claims. 42The original discount rate is the rate that was originally used to calculate the present value of the liability when the guaranteed loans were disbursed, 

after adjusting for the interest rate reestimate. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 84 
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Section III 

Balance Sheet 

Liabilities 

Liabilities for Loan Guarantees (281 – 294) 

Yes, 

No, 

or 

N/A 

Explanation 

291. When pre-1992 loan guarantees are directly modified, 

does the following occur? 

a. the loan guarantees are transferred from the 

liquidating account to a financing account 

b. the existing book value of the liability of the 

modified loan guarantees is changed to an amount 

equal to their postmodification liability (i.e., the 

present value of the net cash outflows under 

postmodification terms discounted at the current 

Treasury rate) (SFFAS 2, par. 51 & app. B, part IV 

B (2) & (4)) 

292. When pre-1992 loan guarantees are indirectly modified, 

does the following occur? 

a. The loan guarantees are kept in a liquidating 

account. 

b. The related liability is reassessed and adjusted to 

reflect any change in the liability resulting from the 

modification. (SFFAS 2, par. 51) 

293. Are subsequent modifications of pre-1992 loan 

guarantees treated as modifications of post-1991 loan 

guarantees? (SFFAS 2, par. 51) 

294. If a post-1991 or pre-1992 loan is sold with a recourse 

provision, is the present value (discounted at the 

Treasury rate in effect at the time of the sale) of the 

estimated losses recognized as a subsidy expense and a 

loan guarantee liability? (SFFAS 2, par. 54 & app. B, 

part I F(3)) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 85 
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Section III 

Balance Sheet 

Liabilities 

Lease Liabilities (295 – 299) 

Yes, 

No, 

or 

N/A 

Explanation 

Capital leases are leases that transfer substantially all of the benefits and risks of 

ownership to the lessee. (SFFAS 5, par. 43) 

295. Is the amount recorded by the lessee as a liability under 

a capital lease arrangement the present value of rental 

and other minimum lease payments (excluding 

executory costs) during the lease term? 

(SFFAS 5, par. 44) 

296. If the present value of the rental and other minimum 

lease payments during the lease term exceeds the fair 

value of the leased property, is the liability recorded as 

the fair value43 of the property at the inception of the 

lease? (SFFAS 5, par. 44) 

297. Does the entity use the applicable Treasury borrowing 

rate to determine the discount rate charged on a capital 

lease unless both of the following apply? 

a. It is practicable for the lessee to learn the implicit 

rate computed by the lessor. 

b. The implicit rate is less than the Treasury borrowing 

rate. (SFFAS 5, par. 45) 

298. During the lease term, is each minimum lease payment 

allocated between a reduction of the obligation and 

interest expense so as to produce a constant periodic 

rate of interest on the remaining balance of the liability? 

(SFFAS 5, par. 46) 

43Fair value is the price for which an asset could be bought or sold in an arm’s-length transaction between unrelated parties. Roman L. Well and 

Patrick C. O’Brien, Accounting: The Language of Business, 9th ed. (Sun Lakes, Arizona: Thomas Horton and Daughters, 1994). 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 86 
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Section III 

Balance Sheet 

Liabilities 

Lease Liabilities (295 – 299) 

Yes, 

No, 

or 

N/A 

Explanation 

299. Does the entity disclose, in a note to the financial 

statements, the following information about its capital 

leases? 

a. gross amounts of assets under capital lease by major 

asset category 

b. description of the lease arrangements, for example, 

future funding commitments, lease terms, renewal 

options, escalation clauses, restrictions, 

amortization periods 

c. future payments due, by major asset category, and 

deductions for imputed interest and executory costs 

for all noncancelable leases with terms longer than 

1 year 

d. a breakout of portions of the capital lease liability 

covered by budgetary resources and not covered by 

budgetary resources (OMB Bulletin 01-09, 

p. 84-85, section 9.17) 

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Section III 

Balance Sheet 

Liabilities 

Federal Debt and Related Interest 

(300 – 310) 

Yes, 

No, 

or 

N/A 

Explanation 

Debts are amounts borrowed from the Treasury, the Federal Financing Bank, other 

federal agencies, or the public under general or special financing authority such as 

Treasury bills, notes, bonds, and Federal Housing Administration (FHA) debentures. 

(SFFAS 5, par. 47; OMB Bulletin 01-09, p. 25, section 3.4) 

300. Does the entity accounting for federal debt identify the 

amount of the outstanding debt liability at any given 

time and the related interest cost for each accounting 

period? (SFFAS 5, par. 48) 

301. Are fixed-value securities with known redemption or 

maturity amounts at time of issue valued at their 

original face (par) value net of any unamortized 

discount or premium? (SFFAS 5, par. 50) 

302. For fixed-value securities, is either the straight line or 

interest method44 of discount or premium amortization 

used in the following cases? 

a. short-term securities with a maturity of 1 year or 

less 

b. longer term securities, where the difference between 

the amount of amortization under the interest and 

straight-line methods is immaterial 

(SFFAS 5, par. 50) 

303. For fixed-value securities, is the interest method used 

for amortizing any discount or premium on all cases 

other than those described in the previous question? 

(SFFAS 5, par. 51) 

304. If the entity has issued variable value securities of 

unknown redemption or maturity values, are they 

appraised at their original value and periodically 

revalued on the basis of the regulations or offering 

language? (SFFAS 5, par. 52) 

44The interest method for amortizing a bond premium or discount reduces the discount or premium by the difference between the effective interest and 

stated interest on the bond. (SFFAS 1, app B, tables 1 & 2) 

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Section III 

Balance Sheet 

Liabilities 

Federal Debt and Related Interest 

(300 – 310) 

Yes, 

No, 

or 

N/A 

Explanation 

305. Are old currencies issued by the federal government and 

not yet redeemed or written off identified as a 

noninterest bearing federal debt liability at face value? 

(SFFAS 5, par. 55) 

306. Is all debt owed to Treasury, the Federal Financing 

Bank, or other federal agencies reported under 

intragovernmental liabilities on the balance sheet and 

disclosed by category? (OMB Bulletin 01-09, p. 18 & 

pp. 79-80, section 9.13) 

307. Are the beginning balances, net borrowings, and ending 

balances of debt disclosed by the following categories? 

a. total Treasury debt (reported by the Treasury 

Department only) broken out by government 

accounts and debt held by the public 

b. total agency debt issued under special financing 

authority (e.g., Federal Housing Administration 

(FHA) debentures and Tennessee Valley Authority 

(TVA) bonds) broken out by debt held by 

government accounts and debt held by the public 

c. other debt broken out by debt owed to the Treasury, 

debt owed to the Federal Financing Bank, and debt 

owed to other federal agencies 

(OMB Bulletin 01-09, pp. 79 & 80, section 9.13) 

308. Is all debt owed to the public reported and disclosed as 

such? (OMB Bulletin 01-09, p. 18 & pp. 79-80, 

section 9.13) 

309. Are the names of the agencies disclosed, other than 

Treasury or the Federal Financing Bank, to which 

intragovernmental debt is owed, and are the amounts 

disclosed? (OMB Bulletin 01-09, p. 80, section 9.13) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 89 
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Section III 

Balance Sheet 

Liabilities 

Federal Debt and Related Interest 

(300 – 310) 

Yes, 

No, 

or 

N/A 

Explanation 

310. Is other information relative to debt disclosed (e.g., 

redemption or call of debt owed to the public before 

maturity dates, write-offs of debts owed to Treasury or 

the Federal Financing Bank)? (OMB Bulletin 01-09, 

p. 80, section 9.13) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 90 
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Section III 

Balance Sheet 

Liabilities 

Pensions, Other Retirement Benefits, and 

Postemployment Benefits (311 - 318) 

Yes, 

No, 

or 

N/A 

Explanation 

Federal employee and veterans benefits include the actuarial portion of pensions, 

other retirement benefits, and other postemployment benefits. They do not include 

liabilities related to ongoing continuous expenses such as employees’ accrued salary, 

accrued annual leave, unpaid portions of employee benefits, and other benefits that 

are currently due. These items are reported under the “other liabilities” line item. 

(SFFAS 1, par. 83 & 84; SFFAS 5, par. 56; OMB Bulletin 01-09, p. 25, section 3.4) 

In the context of accounting for pensions, other retirement benefits (ORB), and other 

postemployment benefits, the “administrative entity” manages and accounts for the 

pension or other employee plan, while the “employer entity” employs federal 

workers and generates employee costs, for which it would typically receive a salary 

and expense appropriation. (SFFAS 5, par. 57, footnote 38) 

The “aggregate entry age normal” actuarial cost method is one under which the 

expenses or liabilities arising from the actuarial present value of projected pension 

benefits are allocated on a level basis over the earnings or the service of the group 

between entry age and assumed exit ages. The portion of the actuarial present value 

allocated to a valuation year is called “normal cost.” (SFFAS 5, par. 64) 

311. Is the aggregate entry age normal actuarial cost method 

used to calculate, for the administrative entity financial 

statements, the liabilities arising from pension and ORB 

expenses? (SFFAS 5, par. 64 & 82) 

312. If other actuarial cost methods are used because the 

results are not materially different, does the entity 

provide an explanation why aggregate entry age normal 

is not used? (SFFAS 5, par. 64 & 82) 

313. Does the administrative entity disclose the assumptions 

used to calculate the liability for pensions, other 

retirement benefits, and other postemployment benefits? 

(SFFAS 5, par. 67 & 83; OMB Bulletin 01-09, p. 25, 

section 3.4; p. 80, section 9.14) 

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Section III 

Balance Sheet 

Liabilities 

Pensions, Other Retirement Benefits, and 

Postemployment Benefits (311 - 318) 

Yes, 

No, 

or 

N/A 

Explanation 

314. If the assumptions for a pension plan differ from the 

assumptions used by the three primary plans—Civil 

Service Retirement System (CSRS), Federal Employees 

Retirement System (FERS), and Military Retirement 

System (MRS)—does the administrative entity 

disclose how and why the assumptions differ from those 

of the primary plans? (SFFAS 5, par. 67; 

OMB Bulletin 01-09, p. 80, section 9.14) 

315. Does the administrative entity report pension and ORB 

assets separately from liabilities as opposed to netting 

them out? (SFFAS 5, par. 68 & 85) 

316. Does the administrative entity carry pension and ORB 

assets at their acquisition cost, adjusted for 

amortization, if appropriate? (SFFAS 5, par. 68 & 85) 

317. Does the administrative entity disclose the market value 

of pension and ORB investments in market-based and 

marketable securities? (SFFAS 5, par. 68 & 85) 

318. Does the employer entity recognize the long-term other 

postemployment benefits liability as the present value of 

future payments discounted at the Treasury borrowing 

rate for securities of similar maturity? 

(SFFAS 5, par. 95) 

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Section III 

Balance Sheet 

Liabilities 

Other Liabilities (319 – 352) 

Yes, 

No, 

or 

N/A 

Explanation 

Unless they are reported separately, other liabilities cover liabilities not recognized 

in other categories. They may include, but are not limited to: capital leases, 

insurance, advances and prepayments, deposit funds held in escrow, accrued 

liabilities related to ongoing continuous expenses such as federal employee salaries 

and accrued employee annual leave, and estimated losses for claims and other 

contingencies. Claims and other contingencies include indemnity agreements, 

adjudicated claims, and commitments to international institutions. 

(SFFAS 1, par. 83-86; OMB Bulletin 01-09, p. 26, section 3.4) 

319. Does the entity separately report items within other 

liabilities if the amounts are material? 

(OMB Bulletin 01-09, p. 26, section 3.4) 

320. Do all federal insurance and guarantee programs (except 

social insurance and loan guarantee programs) 

recognize a liability for unpaid claims incurred resulting 

from insured events that have occurred as of the 

reporting date? (SFFAS 5, par. 104; 

OMB Bulletin 01-09, p. 26, section 3.4) 

321. Do federal insurance programs accrue a contingent 

liability when an existing condition, situation, or set of 

circumstances involving uncertainty as to possible loss 

exists, and when the following conditions apply? 

a. the uncertainty will be resolved when one or more 

probable future events occur or fail to occur. 

b. future outflow or other sacrifice of resources is 

probable and measurable. (SFFAS 5, par. 104 & 

108; OMB Bulletin 01-09, pp. 26 & 27, section 3.4) 

322. Does the entity also recognize a liability for future life 

insurance policy benefits (such as death or disability)? 

(SFFAS 5, par. 104; OMB Bulletin 01-09, p. 27, 

section 3.4) 

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Section III 

Balance Sheet 

Liabilities 

Other Liabilities (319 – 352) 

Yes, 

No, 

or 

N/A 

Explanation 

323. When insurance payments and losses extend beyond the 

current year, does the liability at the end of the year 

represent net losses calculated on a present-value basis 

to reflect the time value of money? (SFFAS 5, par. 109) 

324. Does the entity report under “required supplementary 

information” (RSI) the major assumptions and “risks 

assumed” (i.e., the present value of unpaid expected 

losses net of associated premiums based on risk inherent 

in the insurance or guarantee coverage) for all 

sponsored insurance programs (except for social 

insurance, life insurance, and loan guarantee programs)? 

(SFFAS 5, par. 105 & 106; SFFAS 25, par. 4) 

325. Does the entity also report under RSI the indicators of 

the range of uncertainty around insurance-related 

estimates and sensitivity of the estimates to changes in 

major assumptions? (SFFAS 5, par. 114; SFFAS 25, 

par.4) 

The liability for future policy benefits is the present value of future outflows to be 

paid to (or on behalf of) policyholders, less the present value of future related 

premiums. In general, for whole life policies, the liability for future policy benefits 

should be no less than the cash surrender value that accrues to the benefit of the 

policyholder. (SFFAS 5, par. 116) 

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Section III 

Balance Sheet 

Liabilities 

Other Liabilities (319 – 352) 

Yes, 

No, 

or 

N/A 

Explanation 

326. Are liabilities for future benefits of whole life insurance 

policies reported and disclosed in accordance with 

private sector standards (i.e., Financial Accounting 

Standards Board (FASB) Statement of Accounting 

Standards (SFAS) 60, 97, & 120; American Institute of 

Certified Public Accountants (AICPA) Statement of 

Position (SOP) 95-1)? (SFFAS 5, par. 117; 

OMB Bulletin 01-09, p. 85, section 9.18) 

327. Does the liability for future benefits relating to 

participating life insurance contracts equal the sum of 

the following amounts? 

a. the net level premium reserve for death and 

endowment policy benefits 

b. liability for terminal dividends and 

c. any premium deficiency45 (SFFAS 5, par. 118 & 

120) 

328. Has the entity made an assessment to compare the 

liability for future policy benefits using actuarial 

assumptions applicable at the time the contract was 

made (contract assumptions) with the liability for future 

policy benefits using assumptions that consider the 

following factors? 

a. current economic conditions (i.e., current and 

expected investments and expected long-term 

yields) 

b. experience (i.e., mortality, morbidity, and 

termination rates) (SFFAS 5, par. 119) 

45A premium deficiency occurs if the liability for future policy benefits using current conditions exceeds the liability for future policy benefits using 

contract conditions. 

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Section III 

Balance Sheet 

Liabilities 

Other Liabilities (319 – 352) 

Yes, 

No, 

or 

N/A 

Explanation 

329. Does the entity separately disclose the components46 of 

the liability for future policy benefits of whole life 

insurance contracts along with a description of each 

amount and explanation of its projected use and any 

other potential uses? (SFFAS 5, par. 121; 

OMB Bulletin 01-09, p. 85, section 9.18) 

330. Does the reporting entity disclose and break out the 

following items? 

a. the portion of other liabilities covered by budgetary 

resources and the portion not covered by budgetary 

resources 

b. the portion of other liabilities payable to federal 

entities (i.e., intragovernmental liabilities) and the 

portion payable to nonfederal entities 

c. the portion of other liabilities that are noncurrent 

and the portion that are current (SFFAS 1, par. 85 

& 86; OMB Bulletin 01-09, pp. 78 & 79, 

section 9.l2 & pp. 81 & 82, section 9.16) 

331. Does the agency record “unearned revenue” as a 

liability if it requests advances or progress payments 

prior to receipt of cash, and it records the amounts? 

(SFFAS 7, par. 37) 

332. Are amounts payable for refunds, refund offsets,47 and 

drawbacks48 recognized as liabilities when measurable 

and legally payable under established processes of the 

collecting entity? (SFFAS 7, par. 57) 

46The net-level premium reserve for a death and endowment policy and the liability for terminal dividends. 47Refund offsets are amounts withheld from refunds on behalf of other agencies. (OMB Circular No. A-129 (revised), app. A, Part V, section 2.c.i. (1) 

)

48Drawbacks are refunds payable on all or part of duties paid on imported goods that are subsequently exported or destroyed. (SFFAS 7, app. C, 

glossary) 

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Section III 

Balance Sheet 

Liabilities 

Other Liabilities (319 – 352) 

Yes, 

No, 

or 

N/A 

Explanation 

333. Do amounts payable for refunds include refund claims 

filed by the taxpayer when the government has 

determined the amount refundable and identified the 

payee? (SFFAS 7, par. 57) 

334. Are amounts payable for refunds with respect to returns 

or claims filed as of the end of the reporting period 

included in accounts payable for refunds if they do not 

require specific approval before payment? (SFFAS 7, 

par. 57) 

335. For claims filed for refunds where specific 

administrative actions are required before payments can 

be made, are the amounts excluded from being 

recognized as a liability if the required administrative 

actions are not yet complete as of the close of the 

reporting period, even if reasonably estimable? 

(SFFAS 7, par. 58.1) 

336. Are unasserted claims for refunds by taxpayers or 

importers, such as unfiled claims for refunds or 

drawbacks for which no claim has been filed, excluded 

from being recognized as a liability, even if reasonably 

estimable? (SFFAS 7, par. 58.2) 

337. Are amounts voluntarily made as deposits, such as those 

made to stop the accrual of interest or those made 

pending settlements and judgments, separately 

recognized as deposit liabilities? (SFFAS 7, par. 59) 

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Section III 

Balance Sheet 

Liabilities 

Other Liabilities (319 – 352) 

Yes, 

No, 

or 

N/A 

Explanation 

A loss contingency is an existing condition, situation, or set of circumstances 

involving uncertainty as to possible loss to an entity. The uncertainty should 

ultimately be resolved when one or more future events occur or fail to occur. 

(SFFAS 5, par. 35; OMB Bulletin 01-09, pp. 85 & 86, section 9.19) 

338. Does the entity recognize estimated losses for claims or 

other contingencies if all of the following conditions 

apply? 

a. a past event or exchange transaction has occurred 

b. a future outflow or other sacrifice of resources is 

probable49 

c. the future outflow or sacrifice of resources is 

measurable (e.g., the federal entity’s management 

determines an estimated settlement amount). 

(SFFAS 5, par. 38; SFFAS 6, par. 91; SFFAS 12, 

par. 10 & 11; OMB Bulletin 01-09, p. 26, 

section 3.4) 

339. When determining an estimated contingent liability, if 

some amount within a range of amounts is a better 

estimate than any other amount within the range, is that 

amount recognized? (SFFAS 5, par. 39) 

49In the context of pending or threatened litigation, “probable” is taken to mean “likely;” otherwise, “probable” refers to that which is believed to be 

more “likely than not” or can be reasonably expected. 

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Section III 

Balance Sheet 

Liabilities 

Other Liabilities (319 – 352) 

Yes, 

No, 

or 

N/A 

Explanation 

340. When determining an estimated contingent liability, if 

no amount within a range of amounts is a better estimate 

than any other amount, does the entity recognize a 

minimum amount in the range and disclose a description 

of the nature of the contingency? (SFFAS 5, par. 39) 

341. If any one of the conditions for recognizing a contingent 

liability is not met and there is at least a “reasonable 

possibility”

 50 that a loss or additional loss may be 

incurred, does the entity disclose the nature of the 

contingency51 and one of the following? 

a. an estimate of the possible liability 

b. an estimate of the range of the possible liability 

c. a statement that such an estimate cannot be made 

(SFFAS 5, par. 36, 38, 40, & 41) 

342. If information about remote contingencies, or related to 

remote contingencies, is included in general purpose 

federal financial reports,52 is the information labeled to 

avoid the misleading implication that there is more than 

a remote chance of a loss of that amount? 

(SFFAS 5, par. 42) 

50The chance of a future event occurring is less than “probable” but more than “remote.” 51Examples of claims or other contingencies include (1) indemnity agreements-reimbursements due to licenses or contractors for losses incurred in 

support of federal activities; (2) adjudicated claims (i.e., claims against the federal government that are in the process of judicial proceedings); and (3) 

commitments to international institutions-payment due to international institutions. 52An example of information related to a remote contingency would be the total face amount of insurance and guarantees in force. 

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Section III 

Balance Sheet 

Liabilities 

Other Liabilities (319 – 352) 

Yes, 

No, 

or 

N/A 

Explanation 

343. Does the entity disclose the following related to 

commitments and contingencies? 

a. an estimate of obligations related to canceled 

appropriations for which the reporting entity has a 

contractual commitment for payment 

b. amounts for contractual arrangements that may 

require future financial obligations 

(OMB Bulletin 01-09, p. 27, section 3.4 & 

pp. 85 & 86, section 9.19) 

344. If material, does the entity separately recognize a 

contingent liability for environmental clean-up costs53 

for PP&E if the following criteria apply? 

a. they are related to a past transaction or event 

b. the related costs are probable and measurable 

(SFFAS 5, par. 38 & SFFAS 6, par. 91-93; 

OMB Bulletin 01-09, pp. 25 & 26, section 3.4) 

345. When clean-up costs are paid, are the payments 

recognized as a reduction in the liability for clean-up 

costs? (SFFAS 6, par. 100) 

346. If clean-up costs have not been previously recognized, 

is a liability recognized for the portion of the estimated 

total clean-up cost that is attributable to either the 

portion of the physical capacity used or the portion of 

the estimated useful life that has passed since the PP&E 

was placed into service? (SFFAS 6, par. 104-106) 

347. Are any subsequent changes (made in periods following 

implementation) in estimated total clean-up cost 

immediately expensed (if costs are to be recovered 

though user charges) and reflected in the related liability 

balance? (SFFAS 6, par. 104) 

53Clean-up costs are the costs of removing, containing, and/ or disposing of (1) hazardous waste from property, or (2) material and/or property that 

consists of hazardous waste at permanent or temporary closure or shutdown of associated PP&E. (SFFAS 6, par. 85) 

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Section III 

Balance Sheet 

Liabilities 

Other Liabilities (319 – 352) 

Yes, 

No, 

or 

N/A 

Explanation 

348. When clean-up costs are recognized for the first time, is 

the offsetting charge for any liability for clean-up costs 

shown as a “prior-period adjustment?” 

(SFFAS 6, par. 105; SFFAS 21, par. 13) 

349. Are the amounts of prior-period adjustments arising 

from belated recognition of clean-up costs and liabilities 

disclosed and, if possible, are amounts associated with 

current and prior periods noted? (SFFAS 6, par. 105; 

SFFAS 21, par. 13) 

350. Does the entity also disclose the following information 

related to clean-up costs? 

a. the sources (i.e., applicable laws and regulations) of 

clean-up requirements 

b. the method for assigning estimated total clean-up 

costs to current operating periods (e.g., physical 

capacity versus passage of time) 

c. the unrecognized portion of estimated total clean-up 

costs associated with PP&E 

d. the material changes in total estimated clean-up 

costs due to changes in laws, technology, or plans 

e. the portion of change in an estimate that relates to 

prior-period operations 

f. the nature of estimates and the disclosure of 

information regarding possible changes due to 

inflation, deflation, technology, or applicable laws 

and regulations (SFFAS 6, par. 107-111; 

OMB Bulletin 01-09, p. 81, section 9.15) 

Social insurance programs provide for the maintenance and distribution of incomes 

and medical benefits during periods of unemployment, disability, and retirement. 

These programs are Social Security, Medicare, Railroad Retirement Benefits, Black 

Lung Benefits, and Unemployment Insurance. Expense and liability recognition for 

these programs is the same for both the consolidated governmentwide entity and for 

the component entities. (SFFAS 17, par. 2,4, 14, 15, 19, 30, & app. D, glossary) 

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Section III 

Balance Sheet 

Liabilities 

Other Liabilities (319 – 352) 

Yes, 

No, 

or 

N/A 

Explanation 

351. Does the entity recognize a liability for social insurance 

benefits due and payable including claims incurred but 

not reported? (SFFAS 17, par. 22) 

352. Does the liability for unemployment insurance include 

the following amounts? 

a. amounts due to states and territories for benefits 

they have paid to beneficiaries but for which they 

have not withdrawn funds from the federal 

unemployment trust fund (UTF) as of the fiscal year 

end 

b. estimated amounts to be withdrawn from UTF and 

benefits paid by states and territories after fiscal 

year end for compensatory days occurring prior to 

fiscal year end (SFFAS 17, par. 23) 

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Section III 

Balance Sheet 

Net Position 

Unexpended Appropriations & Cumulative Results of 

Operations (353 – 354) 

Yes, 

No, 

or 

N/A 

Explanation 

353. Does the line item “unexpended appropriations” include 

both the portion of the entity’s appropriation 

represented by undelivered orders and unobligated 

balances? (OMB Bulletin 01-09, p. 27, section 3.5) 

354. Does the line item “cumulative results of operations” 

include the following items? 

a. the net results of operations since inception 

b. the cumulative amount of prior-period adjustments 

c. the cumulative amount of donations and transfers of 

assets in and out without reimbursement 

(OMB Bulletin 01-09, p. 27, section 3.5) 

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Section IV Statement of Net Cost 

The questions related to the Statement of Net Cost are presented under three general captions and 12 sections. 

The question numbers related to each caption and section identified below. 

Question Numbers 

Cost Accounting in General 

1. Overall Requirements 1-13 

2. Responsibility Segments 14-18 

3. Full Cost 19-26 

4. Interentity Costs 27-32 

5. Costing Methodology 33-39 

Revenues 40-61

Costs 

6. Pensions and Other Retirement and 

Postemployement Benefits 62-89 

7. Inventory, Materials, Supplies, and Commodities 90-98 

8. Property, Plant, and Equipment 99-115 

9. Clean-up Costs 116-124 

10. Interest 125-126 

11. Insurance and Subsidies 127-130 

12. Credit Programs 131-178 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Overall Requirements (1 – 13) 

Yes, 

No, 

or 

N/A 

Explanation 

The Statement of Net Cost is designed to show separately the components of the net 

cost of the reporting entity's operations for the period. The statement and any related 

supporting schedules classify revenue and cost information by suborganization or 

responsibility segment. (OMB Bulletin 01-09, p. 28, section 4.1) 

Managerial cost accounting is the process of accumulating, measuring, analyzing, 

interpreting, and reporting cost information useful to both internal and external 

groups concerned with the way in which the organization uses, accounts for, 

safeguards, and controls its resources to meet its objectives. (SFFAS 4, par. 42) 

A cost accounting "system" is a continuous and systematic cost accounting process 

that may be designed to accumulate and assign costs to a variety of objects routinely 

or as desired by management. (SFFAS 4, par. 74) 

Cost finding is a method for determining the cost of producing goods or services 

using appropriate procedures, for example, special cost studies or analyses. 

(SFFAS 4, par. 76) 

1. Are net costs reported for the entity as a whole and for 

its suborganizations54 and major programs? 

(OMB Bulletin 01-09, p. 28, section 4.1) 

2. Does the entity present responsibility segments that 

align directly with the major goals and outputs described 

in the entity’s strategic and performance plans, required 

by the Government Performance and Results Act of 

1993 (GPRA)? (SFFAS 4, par. 69; 

OMB Bulletin 01-09, p. 28, section 4.1) 

54Suborganizations are considered to be generally equivalent to responsibility segments 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Overall Requirements (1 – 13) 

Yes, 

No, 

or 

N/A 

Explanation 

3. In its Statement of Net Cost, does the entity show the 

following? 

a. the gross cost of goods and services provided to 

federal government agencies (intragovernmental) 

b. the gross cost of goods, services, transfers, and 

grants provided to the public 

c. related exchange revenues 

d. excess of costs over exchange revenues (net 

program costs) 

e. costs that cannot be assigned to specific programs or 

outputs 

f. the exchange revenues that cannot be attrinuted to 

specific programs and outputs (SFFAS 7, par. 43 & 

44; OMB Bulletin 01-09, pp. 28 & 29, section 4.1 & 

p. 30, section 4.2) 

4. Are the costs related to the production of goods and 

services provided to other programs (intragovernmental) 

reported separately from the costs of goods, services, 

transfers, and grants provided to the public? 

(OMB Bulletin 01-09, p. 31, section 4.3) 

5. Are costs related to the production of outputs reported 

separately from costs that are not related to the 

production outputs (i.e., nonproduction costs)? 

(OMB Bulletin 01-09, p. 31, section 4.3) 

6. Are costs that cannot be directly traced or assigned on a 

cause-and-effect basis, or reasonably allocated to 

segments and their outputs and programs reported on the 

Statement of Net Cost as “Costs not assigned to 

programs?” (SFFAS 4, par. 92; OMB Bulletin 01-09, 

p. 32, section 4.6) 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Overall Requirements (1 – 13) 

Yes, 

No, 

or 

N/A 

Explanation 

7. Has the entity established appropriate procedures and 

practices to enable the consistent and regular collection, 

measurement, accumulation, analysis, interpretation, and 

communication of cost information? 

(SFFAS 4, par. 68-70) 

8. As a means of providing cost information in an efficient 

and reliable manner on a continuing basis, does the 

reporting entity regularly accumulate and report the 

costs of its activities either by means of cost accounting 

systems or cost finding techniques? 

(SFFAS 4, par. 68-70) 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Overall Requirements (1 – 13) 

Yes, 

No, 

or 

N/A 

Explanation 

9. Does the reporting entity's cost accounting system or 

cost finding technique, at a minimum, do the following? 

a. collect cost information by responsibility segments 

identified by management 

b. define outputs for each responsibility segment 

c. measure the full cost (including the cost of goods or 

services provided by other entities) of outputs so 

that total operational costs and total unit costs of 

outputs can be determined 

d. use a costing methodology (e.g., activity-based, job 

order, standard costing) that is appropriate for 

management’s needs and the operating environment 

e. provide information needed to determine and report 

service efforts and accomplishments and 

information necessary to meet the requirements of 

GPRA (or interface with a system that provides such 

information) 

f. report cost information in a timely manner and on a 

regular basis consistent with the needs of 

management and budgetary and financial reporting 

requirements 

g. rely on the United States Standard General Ledger 

as a basis for integrating its cost information with its 

general financial accounting capability 

h. supply cost data precise enough to provide reliable 

and useful information to internal and external users 

in making evaluations or decisions but also avoid 

unnecessary precision and refinement of data 

i. accommodate management’s special cost 

information needs (SFFAS 4, par. 71) 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Overall Requirements (1 – 13) 

Yes, 

No, 

or 

N/A 

Explanation 

10. Are all managerial cost accounting activities, processes, 

and procedures documented? (SFFAS 4, par. 71) 

11. In determining the appropriate detail for its cost 

accounting processes and procedures, has the reporting 

entity considered the following? 

a. nature of its operations 

b. the precision desired and needed in cost 

information 

c. the practicality of data collection and processing 

d. the availability of electronic data-handling facilities 

e. the cost of installing, operating, and maintaining the 

cost accounting processes 

f. any specific information needs of management 

(SFFAS 4, par. 72) 

12. Has the entity used similar or compatible cost 

accounting processes throughout its component units? 

(SFFAS 4, par. 73) 

13. Does the line item “net cost of operations,” as reported 

on the Statement of Net Cost, agree with the line items 

of the same name that are reported on the Statement of 

Changes in Net Position and Statement of Financing? 

(OMB Bulletin 01-09, p. 38, section 5.6 & p. 51, 

section 7.7) 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Responsibility Segments (14 – 18) 

Yes, 

No, 

or 

N/A 

Explanation 

A responsibility segment is a component of a reporting entity that is responsible for 

carrying out a mission, conducting a major line of activity, or producing one or a 

group of related products or services. (SFFAS 4, par. 78) 

14. Has the management of the reporting entity defined and 

established responsibility segments? (SFFAS 4, par. 77) 

15. Does management designate or establish responsibility 

segments based on the following? 

a. the entity’s organizational structure 

b. its lines of responsibility and missions 

c. its output (goods or services it delivers) 

d. budget accounts and funding authorities (SFFAS 4, 

par. 86) 

16. For each responsibility segment, does the entity do the 

following? 

a. define and accumulate outputs and, if feasible, 

quantify each type of output in units 

b. accumulate costs and quantitative units of resources 

consumed in producing the outputs 

c. assign costs to outputs and calculate the cost per unit 

of each type of output 

d. establish cost centers within responsibility segments, 

as needed (SFFAS 4, par. 79 & 88) 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Responsibility Segments (14 – 18) 

Yes, 

No, 

or 

N/A 

Explanation 

17. Does the reporting entity include supporting schedules 

in the notes to the financial statements if the 

suborganization’s summary information provided in the 

Statement of Net Cost does not fully display the 

suborganization’s major programs and activities? 

(OMB Bulletin 01-09, pp. 88-90, section 9.21) 

18. Does the reporting entity disclose gross cost and earned 

revenue,55 by budget functional classification? 

(OMB Bulletin 01-09, p. 91, section 9.25) 

55Gross cost and earned revenue should be net of intra-entity transactions (consolidated). 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Full Cost (19 – 26) 

Yes, 

No, 

or 

N/A 

Explanation 

Full cost is the sum of all costs that contribute to an output and includes direct and 

indirect costs regardless of funding sources. It also includes the costs of supporting 

services provided by other responsibility segments or entities. (SFFAS 4, par. 89) 

Output is any product or service generated from the consumption of resources. 

(SFFAS 4, par. 89) 

Direct costs are costs that can be specifically identified with an output. (SFFAS 4, 

par. 90) 

Indirect costs are costs of resources that are jointly or commonly used to produce two 

or more types of outputs, but are not specifically identifiable with any of the outputs. 

(SFFAS 4, par. 91) 

19. Does the reporting entity include all direct costs in the 

full cost of outputs? (SFFAS 4, par. 90) 

20. Does the reporting entity also include the following in the 

full cost of outputs? 

a. indirect costs incurred within a responsibility 

segment 

b. the costs of support services that a responsibility 

segment receives from other segments or entities 

(SFFAS 4, par. 91, 122, & 123) 

21. Are the costs of employee benefits56 included as part of 

the cost of outputs? (SFFAS 4, par. 93-97) 

22. Are the costs of other postemployment benefits reported 

as expenses for the period during which a future outflow 

or other sacrifice of resources is probable and measurable 

on the basis of an event occurring on or before the 

accounting date? (SFFAS 4, par. 96-97) 

23. Are the full costs of transfer payments for welfare, 

insurance, grants, and other public assistance programs 

separately identified from the costs of operating such 

programs? (SFFAS 4, par. 98-101; OMB Bulletin 01-09, 

pp. 30-32, section 4.3) 

56These include health and life insurance, pension, and other retirement benefits, but not other postemployment benefits. 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Full Cost (19 – 26) 

Yes, 

No, 

or 

N/A 

Explanation 

24. Is depreciation expense incurred by responsibility 

segments on general PP&E included in the full costs of 

the goods and services that the segments produce? 

(SFFAS 4, par. 102) 

25. Are the costs of acquiring or constructing heritage assets 

excluded from the full cost of goods and services and 

treated as a program cost57 or period expense? (SFFAS 4, 

par. 103) 

26. Are nonproduction costs incurred by responsibility 

segments, such as reorganization costs and nonrecurring 

clean-up costs resulting from facility abandonment, 

excluded from the full cost of outputs and treated as 

current-period expenses? (SFFAS 4, par. 104) 

57Acquisition costs of heritage assets are part of the costs of the entity or the program that makes the property acquisitions. 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Interentity Costs (27 – 32) 

Yes, 

No, 

or 

NA 

Explanation 

Within the federal government, some reporting entities rely on other federal entities 

to help them achieve their missions.Often, this involves support services, but may 

include the provision of goods. The reporting entity generally must account for the 

full cost of goods or services provided to or received from other federal entities. 

(SFFAS 4, par. 105-108) 

27. Does the reporting entity include in its Statement of Net 

Cost the full costs of goods and services received from 

other federal entities? (SFFAS 4, par. 105) 

28. Does the entity providing goods or services to another 

reporting entity recognize in its accounting records, as 

well as disclose to the receiving entity, the full cost of 

goods and services provided? (SFFAS 4, par. 108) 

29. Is recognition of interentity costs that are not fully 

reimbursed limited to material items based on an 

assessment of the importance of the individual 

interentity transaction in light of the following factors? 

a. significance to the entity 

b. directness of relationship to the entity’s operations 

c. identifiability (SFFAS 4, par. 112) 

30. Are the costs of broad, general support services provided 

by a federal entity to other federal entities excluded from 

the costs of the recipient entity unless such services are 

integral to the receiving entity (e.g., Treasury checkwriting services provided for the Social Security 

Administration)? (SFFAS 4, par. 112) 

31. If the receiving entity cannot get complete information 

on the full cost of goods or services provided by another 

reporting entity, does the receiving entity use a 

reasonable estimate of the cost of the goods or services 

received or the market value of the goods or services 

received if an estimate of the cost cannot be made? 

(SFFAS 4, par. 109) 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Interentity Costs (27 – 32) 

Yes, 

No, 

or 

NA 

Explanation 

32. Are interentity expenses and financing sources 

eliminated for any consolidated financial statements 

covering both entities? (SFFAS 4, par. 109) 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Costing Methodology (33 – 39) 

Yes, 

No, 

or 

N/A 

Explanation 

Cost accumulation is the process of collecting cost data in an organized way by 

responsibility segment. (SFFAS 4, par. 117) 

Cost assignment is a process that identifies accumulated costs with reporting periods 

and cost objects. Three methods of cost assignment are direct tracing, cause and 

effect, and allocating costs on a reasonable and consistent basis. 

(SFFAS 4, par. 120) 

Cost object or cost objective is an activity, output, or item the cost of which is to be 

measured. (SFFAS 4, par. 121) 

Entities are not required to use a particular costing system or costing methodology, 

but the costing system or methodology used should be appropriate to the entity's 

operating environment and used consistently. Four examples of acceptable (but not 

necessarily mutually exclusive) costing methodologies are activity-based costing, job 

order costing, process costing, and standard costing. (SFFAS 4, par. 144-147) 

33. Is the entity's accounting system capable of identifying 

costs with responsibility segments? (SFFAS 4, par. 118) 

34. Are the costs of resources consumed by responsibility 

segments classified by type of resource, such as costs of 

employees, materials, capital, utilities, and rent? 

(SFFAS 4, par. 119) 

35. Are data on the quantity of units (e.g., staff days, gallons 

of gasoline consumed) related to the various cost 

categories maintained, when appropriate and feasible? 

(SFFAS 4, par. 119) 

36. Are costs assigned to outputs using the methods in the 

following order of preference? 

a. directly tracing costs used in the production of an 

output, wherever economically feasible58 

b. assigning costs on a cause-and-effect basis 

c. allocating costs on a reasonable and consistent basis 

(SFFAS 4, par. 124) 

58A method is economically feasible if the benefits resulting from implementing the method outweigh its costs. 

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Section IV Statement of Net Cost 

Cost Accounting in General 

Costing Methodology (33 – 39) 

Yes, 

No, 

or 

N/A 

Explanation 

37. For cost allocation purposes, do indirect costs assigned 

to a given cost pool have similar characteristics? 

(SFFAS 4, par. 136) 

38. Are common costs59 assigned to activities either on a 

cause-and-effect basis, if feasible, or through reasonable 

allocations? (SFFAS 4, par. 140) 

39. Are the full costing methodologies that are most 

appropriate to a segment's operating environment used 

and consistently followed, and any changes made 

documented and explained? (SFFAS 4, par. 145 & 146) 

59Common costs refers to the costs of maintaining and operating facilities and other resources that cannot be directly traced to any of the activities or 

outputs that share resources. 

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Section IV Statement of Net Cost 

Revenues (40-61) 

Yes, 

No, 

or 

N/A 

Explanation 

Revenues are inflows of resources that the government demands, earns, or receives 

by donation. Revenue comes from two sources: exchange transactions and 

nonexchange transactions. (SFFAS 7, par. 30) 

Exchange (or earned) revenues arise when a government entity provides goods or 

services to the public or to another government entity for a price. (SFFAS 7, par. 30; 

OMB Bulletin 01-09, p. 32, section 4.4) 

Nonexchange revenues arise primarily from the government’s power to demand 

payments from the public (e.g., taxes, duties, fines), and also include donations. 

(SFFAS 7, par. 30) 

The net cost of a program is the difference between its gross costs and related 

exchange revenues. (OMB Bulletin 01-09, p. 32, section 4.5) 

The net cost of operations by a reporting entity consists of gross cost incurred by the 

reporting entity less any exchange revenue earned from its activities. 

(OMB Bulletin 01-09, p. 28, section 4.1 & p. 33, section 4.8) 

40. Are earned revenues deducted from the full cost of 

outputs or outcomes, if practical, to determine their net 

costs? (SFFAS 7, par. 43; OMB Bulletin 01-09, p. 32, 

section 4.4) 

41. Is the net amount of gains (or losses) subtracted from (or 

added to) the gross cost to determine net cost of 

operations and programs? (SFFAS 7, par. 44; 

OMB Bulletin 01-09, p. 28, section 4.1) 

42. Is earned revenue that is insignificant or cannot be 

attributed to particular outputs or programs reported 

separately as a deduction in arriving at the net cost of 

operations of the suborganization or reporting entity as a 

whole? (SFFAS 7, par. 44; OMB Bulletin 01-09, p. 30, 

section 4.2 & p. 33, section 4.7) 

43. Are nonexchange revenues and other financing sources 

excluded from calculating net cost of operations for the 

reporting entity? (SFFAS 7, par. 44) 

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Section IV Statement of Net Cost 

Revenues (40-61) 

Yes, 

No, 

or 

N/A 

Explanation 

44. If the entity incurs virtually no cost in connection with 

earning exchange revenue, is such revenue not 

recognized in the Statement of Net Cost, but shown as a 

financing source on the Statement of Changes in Net 

Position or (if appropriate) Statement of Custodial 

Activity? (SFFAS 7, par. 45) 

45. Is any portion of exchange revenue that cannot be 

retained by the entity reported as a transfer-out on the 

Statement of Changes in Net Position? 

(OMB Bulletin 01-09, p. 32, section 4.4) 

46. Does a reporting entity that provides goods or services 

to the public or other government entity disclose the 

following in a note or narrative? 

a. a pricing policy that differs from the full cost or 

market pricing guidance set forth in OMB Circular 

No. A-25 and the possible effect on demand and 

revenue if prices were raised to reflect the market or 

full cost 

b. exchange transactions with the public in which 

prices are set by law or executive order and are not 

based on full cost or market price, or the possible 

effect on demand and revenue if prices were raised 

to reflect the market or full cost 

c. the nature of intragovernmental exchange 

transactions in which goods or services are provided 

free or at less than full cost and the reasons for 

disparities between billing (if any) and full cost 

d. the full amount of any expected loss when specific 

goods or services are provided or made to order 

under a contract and a loss is both probable and 

measurable (SFFAS 7, par. 46 & 47) 

47. Is collected custodial nonexchange revenue that is 

legally retained by the collecting entity as 

reimbursement for the cost of collection, recognized as 

exchange revenue in determining the collecting entity's 

net cost of operations? (SFFAS 7, par. 60.3; 

OMB Bulletin 01-09, p. 52, section 8.1) 

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Section IV Statement of Net Cost 

Revenues (40-61) 

Yes, 

No, 

or 

N/A 

Explanation 

48. Is revenue received from the public or other government 

entity in return for providing goods or services 

recognized and reported in the Statement of Net Cost as 

exchange revenue? (SFFAS 7, par. 34; 

OMB Bulletin 01-09, p. 32, section 4.4) 

49. If an exchange transaction is likely to be unusual or 

nonrecurring for a particular entity, is a gain or loss 

recognized rather than a revenue or expense? (SFFAS 7, 

par. 35) 

50. Is exchange revenue recognized when services are 

performed for transactions in which services are 

provided to the public or another government entity? 

(SFFAS 7, par. 34 & 36(a)) 

51. If specific goods or services are made to order under 

terms of a contract, is exchange revenue (and any 

probable loss) recognized in proportion to estimated 

total cost when goods and services are acquired to fulfill 

the contract? (SFFAS 7, par. 36(b)) 

52. When goods are kept in inventory so that they are 

available to customers when ordered, is exchange 

revenue recognized when the goods are delivered to the 

customer? (SFFAS 7, par. 36(c)) 

53. If services are rendered continuously or the right to use 

an asset extends continually over time, is exchange 

revenue recognized in proportion to the passage of time 

or the use of the asset? (SFFAS 7, par. 36(d)) 

54. Is interest received on intragovernmental loans 

recognized as exchange revenue if the source of 

borrowed funds is predominately exchange revenue? 

(SFFAS 7, par. 36(d)) 

55. When an asset other than inventory is sold, is any gain 

(or loss) recognized when the asset is delivered to the 

purchaser? (SFFAS 7, par. 36(e)) 

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Section IV Statement of Net Cost 

Revenues (40-61) 

Yes, 

No, 

or 

N/A 

Explanation 

56. When advance fees or payments are received, such as for 

large-scale, long-term projects, is revenue recognized 

only as the cost of providing the corresponding goods 

and services is incurred? (SFFAS 7, par. 37) 

57. Is the measurement of revenue from exchange 

transactions based on the actual price received or 

receivable under established pricing arrangements? 

(SFFAS 7, par. 38) 

58. To the extent that realization of the full amount of 

exchange revenue is not probable due to credit losses 

(caused by the failure of the debtor to pay the 

established or negotiated price), is an expense 

recognized and the allowance for bad debts increased, if 

the bad debts can be reasonably estimated? (SFFAS 7, 

par. 40) 

59. If the realization of the full amount of exchange revenue 

is not probable for reasons apart from credit losses (e.g., 

returns and allowances), is a provision made to reduce 

the recognized revenue (if amounts can be reasonably 

estimated), with the provision recognized as a revenue 

adjustment? (SFFAS 7, par. 41) 

60. Is exchange revenue recognized regardless of whether 

the entity retains the revenue for its own use or transfers 

it to other entities? (SFFAS 7, par. 43) 

61. Is exchange revenue broken out by major category and 

linked, where possible, to the net costs of related 

outputs, programs, organizations, or suborganizations in 

the Statement of Net Cost? (SFFAS 7, par. 43; 

OMB Bulletin 01-09, p. 32, section 4.4) 

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Section IV Statement of Net Cost 

Costs 

Pensions and Other Retirement and 

Postemployment Benefits (62 – 89) 

Yes, 

No, 

or 

N/A 

Explanation 

Pension benefits include all retirement, disability, and survivor benefits financed 

through a pension plan, including unfunded pension plans. Required federal 

payments to social insurance plans (i.e., Social Security and Medicare) and matching 

federal payments to defined contribution pension plans are also considered to be 

plan expenses. (SFFAS 5, par. 61) 

Costs of pensions and other retirement benefits (ORB), whether they are paid for in 

part or in total by other governmental entities, are included in the costs of program 

outputs. (SFFAS 4, par. 95)) 

Recognition of other postemployment benefits (OPEB) is linked to the occurrence of 

an OPEB event rather than the production of an output. OPEB costs are generally 

treated as period expenses. Special-purpose cost studies may distribute OPEB costs 

over a number of prior years to determine the cost of outputs OPEB recipients helped 

produce. (SFFAS 4, par. 96 & 97) 

In accounting for pensions, ORB, and OPEB, the “administrative entity,” typically 

manages and accounts for the related assets and liabilities. The “employer entity” 

accounts for the related costs of pensions, ORB, and OPEB. For these costs the 

employer entity receives a salary and expense appropriation, imputes a financing 

source, or both. (SFFAS 5, par. 57, footnote 38) 

The “aggregate entry age normal” actuarial cost method is one under which the 

expenses or liabilities arising from the actuarial present value of projected pension 

benefits are allocated on a level basis over the earnings or the service of the group 

between entry age and assumed exit ages. The portion of the actuarial present value 

of pension plan and benefits and expenses that is allocated to a valuation year is 

called “normal cost.” (SFFAS 5, par. 64) 

62. Are pensions and ORB recognized as expenses at the 

time the employee’s services are rendered? 

(SFFAS 5, par. 59) 

63. Are postemployment benefits recognized as expenses at 

the time the accountable event occurs? 

(SFFAS 5, par. 59) 

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Section IV Statement of Net Cost 

Costs 

Pensions and Other Retirement and 

Postemployment Benefits (62 – 89) 

Yes, 

No, 

or 

N/A 

Explanation 

64. Is the "aggregate entry age normal" actuarial cost 

method (or other actuarial cost method, if the results are 

not materially different and an explanation is provided) 

used to calculate pension expense, the liability for the 

administrative entity financial statements, and the 

expense for the employer entity financial statements? 

(SFFAS 5, par. 64) 

65. When using the "aggregate entry age normal" actuarial 

cost method, does the entity allocate pension expenses 

on the basis of a level percentage of earnings? 

(SFFAS 5, par. 64) 

66. Does the administrative entity base its actuarial 

assumptions for pension plans on the experience of the 

covered groups, long-term trends, and guidance of the 

Actuarial Standards Board? (SFFAS 5, par. 65) 

67. Does the administrative entity base its interest rate 

assumptions on the estimated long-term investment 

yield for the pension plan or, if the plan is not being 

funded, on some other appropriate long-term assumption 

(e.g., the federal long-term borrowing rate)? 

(SFFAS 5, par. 66) 

68. Does the administrative entity disclose the assumptions 

used to calculate pension benefit expenses? 

(SFFAS 5, par. 67) 

69. When a new pension plan is initiated or current one 

amended, does the administrative entity recognize all 

past and prior service costs60 or gains immediately, 

without amortization? (SFFAS 5, par. 69 & 70) 

70. Does the administrative entity recognize actuarial gains 

and losses61 immediately, without amortization? 

(SFFAS 5, par. 69 &70) 

60Past service costs result from retroactive benefits granted when a new plan is initiated. Prior service costs result from retroactive benefits granted in 

a plan amendment. 61Actuarial gains and losses are changes in the balance of the pension liability that result from (1) deviations between actual experience and the 

actuarial assumptions used or (2) changes in actuarial assumptions. 

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Section IV Statement of Net Cost 

Costs 

Pensions and Other Retirement and 

Postemployment Benefits (62 – 89) 

Yes, 

No, 

or 

N/A 

Explanation 

71. Does the administrative entity report a pension expense 

for the net of the following components, with disclosure 

of the individual components? 

a. normal cost 

b. interest on pension liability during the period 

c. prior (and past) service cost from plan amendments 

(or the initiation of a new plan) during the period, if 

any 

d. actuarial gains or losses (including any gains or 

losses due to a change in the medical inflation rate 

assumption) during the period, if any (SFFAS 5, 

par. 72; OMB Bulletin 01-09, p. 80, section 9.14) 

72. Does the administrative entity report pension plan 

revenue for the sum of contributions from the following 

entities? 

a. the employer 

b. its employees62 

c. interest on the plan's investments 

(SFFAS 5, par. 73 & 78) 

73. In the financial report, does the employer entity 

recognize a pension expense that equals the service cost 

(normal cost) for its employees for the accounting 

period, less the amount contributed by the employees, if 

any? (SFFAS 5, par. 74) 

74. Is the employer entity's pension expense balanced by 

(1) a decrease to its “fund balance with Treasury” for the 

amount of its contribution to the pension plan, if any; 

and if this does not equal the full pension expense, by 

(2) an increase to an account representing an 

intragovernmental financing source (e.g., “imputed 

financing- expenses paid by other agencies.” 

(SFFAS 5, par. 75) 

62The administrative entity may also receive financing from the general fund to cover prior service or other costs for which contributions were not 

provided by the employer or employee. 

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Section IV Statement of Net Cost 

Costs 

Pensions and Other Retirement and 

Postemployment Benefits (62 – 89) 

Yes, 

No, 

or 

N/A 

Explanation 

75. If the employer entity is also the administrative entity, 

does it also report the liability63 and recognize the 

expense for all components of the pension plan's cost? 

(SFFAS 5, par. 71 & 76) 

ORB includes all retirement benefits other than pension benefits. The predominant 

ORB expense in the federal government is retirement health benefits. 

(SFFAS 5, par. 58 & 79) 

76. Is the "aggregate entry age normal" actuarial cost 

method (or other actuarial cost method, if the results are 

not materially different and an explanation is provided) 

used to calculate the ORB expense and liability for the 

administrative entity financial statements and the 

expense for the employer entity financial statements? 

(SFFAS 5, par. 82) 

77. Are expenses and other liabilities attributable to ORB 

expenses allocated based on the service rendered by 

each employee? (SFFAS 5, par. 82) 

78. Do the amounts calculated for financial reports prepared 

for ORB plans reflect the following? 

a. general actuarial and economic assumptions that are 

consistent with those used for pensions 

b. a health care cost trend assumption that is consistent 

with Medicare projections or other authoritative 

sources appropriate for the population covered by 

the plan (SFFAS 5, par. 83) 

79. Does the administrative entity discount the projected 

ORB costs at the rate of expected return of plan assets, if 

the plan is being funded, or on some other long-term 

assumptions (e.g., the long-term federal government 

borrowing rate) for unfunded plans? (SFFAS 5, par. 83) 

63The liability is the actuarial present value of all future benefits, based on projected salaries and total projected service, less the actuarial present value 

of future normal cost contributions that would be made for and by the employees under the plan. 

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Section IV Statement of Net Cost 

Costs 

Pensions and Other Retirement and 

Postemployment Benefits (62 – 89) 

Yes, 

No, 

or 

N/A 

Explanation 

80. Does the administrative entity disclose the assumptions 

used to calculate projected ORB costs? 

(SFFAS 5, par. 83) 

81. Is the accrual period for ORB based on the expected 

retirement age rather than the age when the employee 

first becomes eligible for retirement benefits? 

(SFFAS 5, par. 84) 

82. When a new ORB plan is initiated or current one 

amended, does the administrative entity recognize all 

past and prior service costs or gains immediately, 

without amortization? (SFFAS 5, par. 86 & 87) 

83. Does the administrative entity recognize all actuarial 

gains and losses from changes in the ORB liability 

immediately, without amortization? 

(SFFAS 5, par. 86 & 87) 

84. Does the administrative entity report an ORB expense 

(e.g., health insurance) for the net of the following 

components with disclosure of the individual 

components? 

a. normal cost 

b. interest on the ORB liability during the period 

c. prior (and past) service cost from plan amendments 

(or the initiation of a new plan) during the period, if 

any 

d. any gains/losses due to a change in the medical 

inflation rate assumption 

e. other actuarial gains or losses during the period, if 

any (SFFAS 5, par. 88; OMB Bulletin 01-09, p. 80, 

section 9.14) 

85. Does the administrative entity report ORB revenue for 

the sum of contributions from the employer entity and 

its employees? (SFFAS 5, par. 89) 

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Section IV Statement of Net Cost 

Costs 

Pensions and Other Retirement and 

Postemployment Benefits (62 – 89) 

Yes, 

No, 

or 

N/A 

Explanation 

86. In the financial report, does the employer entity 

recognize ORB expenses equal to the service cost 

(normal cost) for its employees for the accounting 

period, less the amount contributed by the employees, if 

any? (SFFAS 5, par. 90) 

87. Is the employer entity's ORB expense balanced by 

either of the following? 

a. a decrease to its “fund balance with Treasury” for 

the amount of its contribution to the ORB plan, if 

any 

b. an increase to an account representing an 

intragovernmental imputed financing source (e.g., 

“imputed financing-expenses paid by other entities”) 

(SFFAS 5, par. 91) 

88. If the employer entity is also the administrative entity, 

does it also report the liability64 and recognize the 

expense for all components of the ORB's cost? 

(SFFAS 5, par. 88 & 92) 

OPEB are provided to former or inactive employees, beneficiaries, and covered 

dependents outside pension or ORB plans. Postemployment benefits can include 

salary continuation, severance benefits, counseling and training, continuation of 

health care or other benefits, unemployment workers' compensation, and veterans’ 

disability compensation benefits paid by the employer. (SFFAS 4, par. 96; SFFAS 5, 

par. 57 & 94) 

89. Does the employer recognize an expense and a liability 

for OPEB when a future outflow or other sacrifice of 

resources is probable (i.e., more likely than not) and 

measurable? (SFFAS 5, par. 95) 

64The liability is the actuarial present value of all future benefits less the actuarial present value of future normal cost contributions that would be made 

for and by the employees under the plan. (SFFAS 5, par. 88) 

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Section IV Statement of Net Cost 

Costs 

Inventory, Materials, Supplies, 

and Commodities (90 – 98) 

Yes, 

No, 

or 

N/A 

Explanation 

90. Upon sale or use of inventory, is the related expense 

recognized and the cost of those goods removed from 

the inventory asset account? (SFFAS 3, par. 19) 

91. To arrive at the historical cost of ending inventory and 

cost of goods sold, is one of the following cost flow 

assumptions used? 

a. first-in, first-out 

b. weighted average 

c. moving average 

d. any other valuation method (such as a standard cost 

system) whose results reasonably approximate one 

of the above historical cost methods 

(SFFAS 3, par. 22) 

92. Are operating materials and supplies expensed using the 

consumption method (i.e., reported as an operating 

expense as they are issued to the end user for 

consumption in normal operations)? 

(SFFAS 3, par. 38 & 39) 

93. Are operating materials and supplies expensed upon 

purchase (purchase method) if they meet one of the 

following attributes? 

a. they are of insignificant amounts 

b. they are in the hands of the end user for use in 

normal operations 

c. it is not cost beneficial to apply the consumption 

method (SFFAS 3, par. 40 & 41) 

94. Are inventory and operating materials and supplies 

acquired through a nonmonetary exchange valued at the 

fair value of the items received at the time of the 

exchange, and is the difference between the fair value of 

the acquired items and the recorded amount surrendered 

reported as a gain or loss? (SFFAS 3, par. 21 & 43) 

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Section IV Statement of Net Cost 

Costs 

Inventory, Materials, Supplies, 

and Commodities (90 – 98) 

Yes, 

No, 

or 

N/A 

Explanation 

95. Are abnormal costs associated with inventory and 

operating materials and supplies, such as excessive 

handling or rework costs, charged to operations of the 

period? (SFFAS 3, par. 21 & 43) 

96. Are any unrealized gains or losses resulting from 

periodic revaluations of inventory captured in a 

designated allowance account? (SFFAS 3, par. 23 & 24) 

97. Is the cost of stockpile materials removed from the 

corresponding asset account and reported as an 

operating expense when issued for use or sale? 

(SFFAS 3, par. 52) 

98. Are abnormal costs of stockpile materials, such as 

excessive handling and rework costs, expensed in 

current operations? (SFFAS 3, par. 53) 

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Section IV Statement of Net Cost 

Costs 

Property, Plant, and Equipment (99 – 115) 

Yes, 

No, 

or 

N/A 

Explanation 

A common expense related to PP&E that is included in the Statement of Net Cost is 

depreciation. Other PP&E-related expenses that are reported in the Statement of 

Net Cost include all current cost of acquiring and maintaining stewardship land and 

heritage assets (other than multiuse heritage assets.) (SFFAS 6, par. 35, & 69; 

SFFAS 16, par. 8) 

Depreciation expense is calculated through systematic and rational allocation of the 

cost of PP&E, less its estimated salvage or residual value, over its estimated useful 

life. A composite or group methodology,65 whereby the costs of PP&E are allocated 

using the same allocation rate, is permissible. (SFFAS 6, par. 35; SFFAS 23, par. 9, 

item f) 

99. Is depreciation expense recognized on all general 

PP&E? (SFFAS 6, par. 35) 

100. If historical cost information has not been maintained for 

existing PP&E, does the entity depreciate or amortize 

the estimated net remaining cost over its remaining 

useful life in a systematic and rational manner? 

(SFFAS 6, par. 35, 40, & 41) 

101. In an exchange transaction with a nonfederal entity, is 

the difference between the book value (i.e., cost less 

accumulated depreciation) of PP&E surrendered and the 

cost of PP&E acquired66 recognized as either a gain or a 

loss? (SFFAS 6, par. 32) 

102. In the event that cash consideration is included in the 

exchange transaction with a non federal entity, is the 

cost of PP&E acquired either increased by the amount of 

cash consideration surrendered or decreased by the 

amount of cash consideration received? 

(SFFAS 6, par. 32) 

65The composite methodology is a method of calculating depreciation that applies a single average rate to a number of heterogeneous assets that have 

dissimilar characteristics and service lives. The group methodology is a method of calculating depreciation that applies a single, average rate to a 

number of homogeneous assets having similar characteristics and service lives. 66The cost of the PP&E acquired is recorded at the cost of the PP&E surrendered net of any accumulated depreciation or amortization when the fair 

value of the PP&E surrendered or acquired is not determinable. 

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Section IV Statement of Net Cost 

Costs 

Property, Plant, and Equipment (99 – 115) 

Yes, 

No, 

or 

N/A 

Explanation 

103. When assets have been removed from PP&E in 

anticipation of disposal, retirement, or removal from 

service, has the entity stopped recording depreciation 

and amortization expenses for such assets? 

(SFFAS 6, par. 38 & 39) 

104. For general PP&E that is disposed of, retired or removed 

from service, is any difference between the book value 

of the PP&E and amounts realized recognized as a gain 

or a loss in the period of disposal, retirement, or removal 

from service? (SFFAS 6, par. 38) 

105. For PP&E assets removed from general PP&E accounts 

prior to disposal, retirement or removal from service, is 

the expected net realizable value of these assets adjusted 

at the end of each accounting period, and is any 

adjustment made recognized as either a gain or loss? 

(SFFAS 6, par. 39) 

106. Are costs to acquire, improve, reconstruct, or renovate 

heritage assets, other than multiuse heritage assets, 

recognized and reported separately on the Statement of 

Net Cost for the period in which the costs are incurred? 

(SFFAS 16, par. 8; OMB Bulletin 01-09, pp. 31 & 32, 

section 4.3 & p. 91, section 9.22) 

107. Do the recognized costs of heritage assets also include 

all costs incurred during the period to bring the items to 

their current condition at its initial location? 

(SFFAS 16, par. 8) 

108. Are amounts for heritage assets or stewardship land 

acquired through donation or devise excluded from the 

calculation of net cost? (SFFAS 8, par.79; 

SFFAS 16, par. 10; OMB Bulletin 01-09, p. 91, 

section 9.23) 

109. Is the fair value, if known and material, of heritage assets 

acquired through donation or devise disclosed in notes to 

the financial statements in the year received? (SFFAS 16, 

par. 10; OMB Bulletin 01-09, p. 91, section 9.23) 

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Section IV Statement of Net Cost 

Costs 

Property, Plant, and Equipment (99 – 115) 

Yes, 

No, 

or 

N/A 

Explanation 

110. If the fair value of donated or bequeathed heritage assets is 

not known or reasonably estimable, is information as to 

the type and quantity of assets received disclosed in the 

notes to the financial statements in the year received? 

(SFFAS 16, par. 10; OMB Bulletin 01-09, p. 91, 

section 9.23) 

111. Are costs to acquire, as well as costs incurred to bring the 

stewardship land to its current condition or prepare it for 

its intended use, recognized as a cost of the period 

incurred and disclosed as “Cost of Stewardship Land?” 

(SFFAS 6, par. 69 & 73; SFFAS 8, par. 77 & 119; 

OMB Bulletin 01-09, p. 91, section 9.22) 

112. Is the fair value, if known and material, of stewardship 

land acquired through donation or devise disclosed in 

notes to the Statement of Net Cost in the year received? 

(SFFAS 6, par. 71; OMB Bulletin 01-09, p. 91, 

section 9.23) 

113. If the fair value of donated or willed stewardship land is 

not estimable, is information as to the type and quantity of 

assets received disclosed in notes to the Statement of Net 

Cost in the year received, if material? (SFFAS 6, par. 71; 

OMB Bulletin 01-09, p. 91, section 9.23) 

114. If land included in PP&E is transferred to another 

federal entity to be used as stewardship land, is the cost 

to the receiving entity of the transferred land recognized 

at the book value on the transferring entity’s books? 

(SFFAS 6, par. 72) 

115. If the receiving entity does not know the book value of 

the transferred land, is the transfer disclosed in the notes 

to the Statement of Net Cost, if material? 

(SFFAS 6, par. 72) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 132
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Section IV Statement of Net Cost 

Costs 

Clean-up Costs (116 – 124) 

Yes, 

No, 

or 

N/A 

Explanation 

Clean-up costs are the costs of removing, containing, and/or disposing of (1) 

hazardous waste from property or (2) material and/or property that consists of 

hazardous waste upon permanent or temporary closure or shutdown of associated 

PP&E. Clean-up costs may include, but are not limited to, decontamination, 

decommissioning, site restoration, site monitoring, closure, and postclosure costs. 

(SFFAS 6, par. 85 & 87) 

116. When PP&E is placed into service, does the entity 

estimate the associated clean-up costs? 

(SFFAS 6, par. 94) 

117. In estimating clean-up costs and liability, has the entity 

considered the following? 

a. the level of restoration to be performed 

b. current legal and regulatory requirements 

c. current technology 

d. current costs (i.e., amount that would be paid if all 

goods and services included in the clean-up estimate 

were acquired in the current period) 

(SFFAS 6, par. 95) 

118. Are estimated clean-up costs periodically revised to 

account for material changes due to inflation or deflation 

and changes in regulations, plans, and/or technology? 

(SFFAS 6, par. 96) 

119. When PP&E is placed into service, does the entity 

recognize cleanup costs during each period that general 

PP&E is in operation, in a systematic and rational 

manner based on one of the following methods? 

a. based on the physical capacity of the PP&E, (e.g., 

expected usable landfill area) 

b. if physical capacity is not applicable or estimable, 

based on the estimated useful life of the associated 

PP&E (SFFAS 6, par. 97) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 133
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Section IV Statement of Net Cost 

Costs 

Clean-up Costs (116 – 124) 

Yes, 

No, 

or 

N/A 

Explanation 

120. Does recognition of the cleanup costs and the 

accumulation of the related liability begin on the date 

that the associated PP&E is placed into service, continue 

in each period that operation continues, and end when 

the PP&E ceases operation? (SFFAS 6, par. 98) 

121. If clean-up costs are reestimated, are the cumulative 

effects of changes in total estimated cleanup costs 

related to current and past operations of PP&E 

immediately recognized as an expense and is the 

corresponding liability adjusted? (SFFAS 6, par. 99) 

122. When stewardship PP&E is placed into service, does the 

entity expense the total estimated clean-up costs and 

establish a liability in the period the asset is placed into 

service? (SFFAS 6, par. 101) 

123. If clean-up costs for stewardship PP&E are reestimated, 

are any adjustments to the liability associated with 

clean-up costs expensed in the period of the change in 

estimate? (SFFAS 6, par. 102) 

124. Does the entity disclose the following related to cleanup 

costs? 

a. the applicable laws and regulations covering cleanup requirements 

b. the method for assigning estimated total clean-up 

costs to current operating periods (e.g., physical 

capacity versus passage of time) 

c. the unrecognized portion of estimated total clean-up 

costs for clean-up costs associated with PP&E 

d. material changes in total estimated clean-up costs 

due to changes in laws, technology, or plans, as well 

as the portion of the change in clean-up cost 

estimates that relates to prior-period operations 

e. the nature of estimates and information regarding 

possible changes due to inflation, deflation, 

technology, or applicable laws and regulations 

(SFFAS 6, par. 107-111) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 134
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Section IV Statement of Net Cost 

Costs 

Interest (125 –126) 

Yes, 

No, 

or 

N/A 

Explanation 

Interest incurred results from borrowing funds from Treasury, Federal Financing 

Bank, other federal entities, or the public. Interest also should be recorded on late 

payment of bills by the federal entity and on refunds. (SFFAS 1, par. 81) 

Interest costs are generally related to securities and other debt instruments issued by 

the U.S. Treasury or other federal agencies. (SFFAS 5, par. 47-48) 

125. Does the related interest cost of federal debt include the 

following? 

a. the accrued (prorated) share of the nominal interest 

incurred during the accounting period 

b. the amortized discounts or premiums for each 

accounting period for fixed value securities 

c. the amount of change in the current value for the 

accounting period for variable value securities 

(SFFAS 5, par. 53) 

126. If securities are retired before maturity, is the difference 

between the reacquisition price and net carrying value 

of the extinguished debt recognized in the period of 

extinguishment as a gain or loss? (SFFAS 5, par. 54) 

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Section IV Statement of Net Cost 

Costs 

Insurance and Subsidies (127 –130) 

Yes, 

No, 

or 

N/A 

Explanation 

Federal insurance and guarantee programs are established to assume risks that 

private sector entities are unwilling or unable to assume or to subsidize the provision 

of insurance to achieve social objectives. For life insurance, a premium deficiency 

occurs if the liability for future policy benefits using current conditions exceeds the 

liability for future policy benefits using contract conditions. (SFFAS 5, par. 97 & 

120) 

127. If an insured event has occurred as of the financial 

statement reporting date, has the federal entity 

recognized an expense for all claims incurred during the 

period, including, when appropriate, those incurred but 

not reported and contingencies that meet the criteria for 

recognition? (SFFAS 5, par. 104 & 109) 

128. Are changes in estimates of claim cost resulting from (1) 

the present value calculations, (2) the continuous review 

process, and (3) differences between the estimates and 

actual payments for claims, recognized as charges 

against operations of the period in which the estimates 

are changed or payments are made? 

(SFFAS 5, par. 109) 

129. If the liability for future [life insurance] policy benefits 

using current conditions exceeds the liability for future 

policy benefits under contract conditions (resulting in a 

premium deficiency), is the difference recognized as a 

charge to operations in the current period? 

(SFFAS 5, par. 120) 

130. Does the entity recognize an expense for social 

insurance67 benefits paid during the reporting period plus 

any increase (or less any decrease) in the liability for 

social insurance benefits due and payable to or on behalf 

of beneficiaries, from the end of the prior period to the 

end of the current period? (SFFAS 17, par. 22) 

67Social insurance programs include Social Security, Medicare, Railroad Retirement, and Black Lung Benefits. 

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Section IV Statement of Net Cost 

Costs 

Credit Programs (131 – 178) 

Yes, 

No, 

or 

N/A 

Explanation 

In accordance with the Federal Credit Reform Act of 1990, as amended, a subsidy 

expense is recognized for direct or guaranteed loans disbursed during the fiscal year. 

The amount of the subsidy expense equals the present value of estimated cash 

outflows over the life of the loans minus the present value of the estimated cash 

inflows. The discount rate used to calculate the present value is the average interest 

rate on marketable Treasury securities of similar maturity to the cash flows of the 

direct loan or loan guarantee for which the estimate is being made. 

(SFFAS 2, par. 6, 7, 24, 30, & 31; SFFAS 19, par. 6 & 7) 

131. For post-1991 direct or loan guarantee programs, is the 

present value of estimated cash outflows over the life of 

the loans minus the present value of estimated cash 

inflows discounted at the interest rate of marketable 

Treasury securities with similar maturity to the cash 

flows? (SFFAS 2, par. 24; SFFAS 19, par. 6) 

132. For post-1991 direct or loan guarantee programs, are the 

net present values recognized as expense in the year the 

loan is disbursed? (SFFAS 2, par. 24; SFFAS 19, par. 6) 

133. Are the following components of estimated subsidy 

costs (and offsetting receipts) of post-1991 loans and 

guarantees separately recognized? 

a. interest subsidy costs68 

b. default costs69 

c. present value of fees and other collections 

d. other subsidy costs (SFFAS 2, par. 25-29) 

68The interest subsidy cost of direct loans is the excess of the amount of the loans disbursed over the present value of the interest and principal 

payments required by loan contracts discounted at the applicable Treasury rate; for loan guarantees it is the present value of estimated interest 

supplement payments. 69The default cost of direct loans or loan guarantees is measured at the present value of projected payment delinquencies and omissions minus 

projected net recoveries. 

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Section IV Statement of Net Cost 

Costs 

Credit Programs (131 – 178) 

Yes, 

No, 

or 

N/A 

Explanation 

134. Is the subsidy cost allowance for post-1991 direct loans 

amortized using the interest method? 70 

(SFFAS 2, par. 30, 31, and app. B, part I B (2); 

SFFAS 19, par. 7(a)) 

135. If the effective interest for post-1991 direct loans is less 

than the nominal interest, is the subsidy cost allowance 

increased by the difference and recognized as a 

reduction in interest income? (SFFAS 2, par. 30 & 

app. B, part I B (2); SFFAS 19, par. 7(a)) 

136. If the effective interest for post-1991 direct loans is 

greater than the nominal interest, is the subsidy cost 

allowance decreased by the difference and recognized as 

an increase in interest income? 

(SFFAS 2, par. 30 & app. B, part I B (2); SFFAS 19, 

par. 7(a)) 

137. Is interest accrued and compounded on the liabilities of 

post-1991 loan guarantees at the interest rate that was 

originally used to calculate the present value of the loan 

guarantee liabilities when the guaranteed loans were 

disbursed, after adjusting for the interest reestimate? 

(SFFAS 2, par. 31 & app. B, part III B (2); SFFAS 19, 

par. 7(b)) 

138. Is the interest accrued and compounded on the liabilities 

of post-1991 loan guarantees recognized as an interest 

expense? (SFFAS 2, par. 31 & app. B, part III B (2)) 

70Under the interest method, the amortized amount is the difference between the nominal interest (face amount of loan times stated interest) and 

effective interest (present value of loan times discount rate). The effective interest rate is the average interest rate of marketable Treasury securities 

with similar maturity that was used to calculate the present value of the direct loans when the direct loans were disbursed, after adjusting for the 

interest rate reestimate. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 138 
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Section IV Statement of Net Cost 

Costs 

Credit Programs (131 – 178) 

Yes, 

No, 

or 

N/A 

Explanation 

Two kinds of reestimates for the subsidy cost allowance for outstanding direct loans 

and the liability for outstanding loan guarantees are (1) interest rate 

reestimates and (2) technical/default reestimates. An interest rate reestimate is due 

to a change in the interest rates from those that were assumed in budget preparation 

and used in calculating the subsidy expense to the interest rates that are prevailing 

during the periods in which the direct or guaranteed loans are disbursed. A 

technical/default reestimate is due to changes in projected cash flows of outstanding 

direct loans and loan guarantees after reevaluating the underlying assumptions and 

other factors (except for interest rate reestimates) that affect cash flow projections as 

of the financial statement date. (SFFAS 18, par. 9) 

139. Does the entity measure and disclose reestimates of 

allowances for subsidy costs of post-1991 loans and 

liabilities for guarantees in two components separately, 

specifically: the interest rate reestimate and the 

technical/default reestimate? (SFFAS 18, par. 9) 

140. Is any increase (or decrease) in the subsidy cost 

allowance of post-1991 direct loans or loan guarantee 

liabilities resulting from the interest rate and technical 

/default reestimates recognized as a subsidy expense (or 

a reduction in subsidy expense) and disclosed 

separatetly by component? (SFFAS 2, par. 32; 

SFFAS 18, par. 9; OMB Bulletin 01-09, pp. 62 & 71, 

section 9.8, item E2 & pp. 66 & 73, section 9.8, item L2) 

141. If the assumed interest rates used in calculating the 

subsidy expenses for cohorts71 from which direct or 

guaranteed loans are disbursed differ from the rates 

prevailing at the time of the loan disbursement, is an 

interest rate reestimate for those cohorts made as of the 

date of the financial statements? (SFFAS 18, par. 9 (A)) 

142. Do technical/default reestimates take into consideration 

all factors that may have affected various components of 

projected cash flows, including defaults, delinquencies, 

recoveries, and prepayments? (SFFAS 18, par. 9 (B)) 

71Cohort, as it is used here, is a budget term that refers to all direct loans or loan guarantees of a program for which a subsidy appropriation is provided 

for a given fiscal year, even if disbursements occur in subsequent years. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 139 
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Section IV Statement of Net Cost 

Costs 

Credit Programs (131 – 178) 

Yes, 

No, 

or 

N/A 

Explanation 

143. Are technical/default reestimates made each year as of 

the date of the financial statements? 

(SFFAS 18, par. 9 (B)) 

144. In a note to the financial statement, does the entity 

display a reconciliation between the beginning and 

ending balances of the following? 

a. the subsidy cost allowances for outstanding direct 

loans 

b. the liability for outstanding loan guarantees reported 

in the entity’s balance sheet (SFFAS 18, par. 10) 

145. Does the reconciliation of beginning and ending subsidy 

cost allowances and loan guarantee liability balances 

include changes in the following? 

a. interest subsidy costs, default costs, fees and other 

collections, and other subsidy costs 

b. interest rate and technical/default reestimates 

c. other adjustments (SFFAS 2, par. 25-29; SFFAS 18, 

par. 10) 

146. For direct loans, do other adjustments include loan 

modifications, fees received, loans written off, 

foreclosed property or other recoveries acquired, and 

subsidy allowance amortization? (SFFAS 18, par. 10) 

147. For loan guarantees, do other adjustments include loan 

guarantee modifications, fees received, interest 

supplements paid, claim payments made to lenders, 

foreclosed property or other recoveries acquired, and 

interest accumulated on the loan guarantee liability? 

(SFFAS 18, par. 10) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 140
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Section IV Statement of Net Cost 

Costs 

Credit Programs (131 – 178) 

Yes, 

No, 

or 

N/A 

Explanation 

148. In its notes to the financial statements, does the entity 

include a description of the characteristics of the 

program it administers, including the following? 

a. the total amount of direct or guaranteed loans 

disbursed for the current and preceding reporting 

years 

b. interest subsidy costs, default costs, fees and other 

collections, and other subsidy costs 

c. interest rate and technical/default reestimates 

(SFFAS 18, par. 11 (A)) 

149. Does the reporting entity disclose, at the program level, 

the subsidy rates72 for direct loans and loan guarantees in 

the current year’s budget for the current year’s cohorts, 

the following items? 

a. total subsidy cost 

b. interest subsidy costs 

c. default costs (net of recoveries) 

d. fees and other collections 

e. other costs (SFFAS 18, par. 11 (B)) 

150. If the entity uses trend data to display significant 

fluctuations in subsidy rates, are these data accompanied 

by an analysis that explains the underlying causes for the 

fluctuations? (SFFAS 18, par. 11 (B)) 

151. Does the reporting entity disclose, discuss, and explain 

events and changes in economic conditions, other risk 

factors, legislation, credit policies,73 and subsidy 

estimation methodologies and assumptions that have had 

a significant and measurable effect on subsidy rates, 

subsidy expenses, and subsidy reestimates? 

(SFFAS 18, par. 11 (C)) 

72The subsidy rate is the dollar amount of the subsidy component as a percentage of the direct loans or loan guarantees obligated in the cohort. 73Changes in legislation or credit policies include, for example, changes in borrowers’ eligibility, the levels of fees or interest rates charged to 

borrowers, the maturity terms of loans, and the percentage of private loans that are guaranteed. 

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Section IV Statement of Net Cost 

Costs 

Credit Programs (131 – 178) 

Yes, 

No, 

or 

N/A 

Explanation 

152. Does the disclosure and discussion also include events 

and changes that have occurred and are more likely than 

not to have a significant impact, but whose effects are 

not measurable at the reporting date? 

(SFFAS 18, par. 11 (C)) 

153. Are default costs estimated and periodically reestimated 

for each post-1991 loan and loan guarantee program on 

the basis of separate cohorts and risk categories? 

(SFFAS 2, par. 33) 

154. In estimating default costs, has the entity considered the 

following factors? 

a. loan performance experience 

b. the current and forecasted international, national, 

or regional economic conditions that may affect 

the performance of the loans 

c. financial and other relevant characteristics of 

borrowers 

d. the value of collateral to loan balance 

e. changes in recoverable value of collateral 

f. newly developed events that could affect the loans' 

performance 

g. improvements in methods to reestimate defaults 

(SFFAS 2, par. 34) 

155. In estimating and reestimating future default costs for 

each group, cohort, and risk category of loan and 

guarantee, has the agency used a systematic 

methodology based on actual historical experience? 

(SFFAS 2, par. 35 & 36) 

156. Is interest (at the discount rate in effect when the loans 

were first disbursed) accrued on post-1991 direct loans, 

including amortized interest, recognized as interest 

income? (SFFAS 2, par. 37 & app. B, part I B (2) & C) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 142
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Section IV Statement of Net Cost 

Costs 

Credit Programs (131 – 178) 

Yes, 

No, 

or 

N/A 

Explanation 

157. Is interest (at the original discount rate) accrued on debt 

to the Treasury arising from post-1991 direct loans 

recognized as interest expense? (SFFAS 2, par. 37 & 

app. B, part I B (2) & C) 

158. Is interest (at the discount rate in effect when the loans 

were first disbursed) accrued on liability of post-1991 

loan guarantees recognized as interest expense? 

(SFFAS 2, par. 37 & app. B, part III B (2) & C) 

159. Is interest (at the original discount rate) due from the 

Treasury on uninvested funds associated with post-1991 

loan guarantee liabilities recognized as interest income? 

(SFFAS 2, par. 37 & app. B, part III B (2) & C) 

160. Are costs for administering credit activities (such as 

salaries, legal fees, and servicing) incurred in support of 

direct loan and guaranteed loan programs recognized as 

administrative expenses and not included in direct loan 

and loan guarantee subsidy costs? (SFFAS 2, par. 38) 

161. Are administrative expenses for loans and guarantees 

broken out and disclosed by program, if material? 

(OMB Bulletin 01-09, p. 67 & 74, section 9.8, item O) 

162. Are losses (as well as valuation allowances and 

corresponding liabilities) of direct loans obligated and 

loan guarantees committed before October 1, 1991, 

recognized when it is more likely than not that the direct 

loans will not be totally collected or that the loan 

guarantees will require a future cash outflow to pay 

default claims? (SFFAS 2, par. 39) 

Foreclosed properties are assets received in satisfaction of a loan receivable or as a 

result of payment of a claim under a guaranteed or insured loan (excluding commodities 

acquired under price support programs.) All properties included in foreclosed property 

are assumed to be held for sale. Pre-1992 foreclosed property refers to property 

associated with direct loans obligated or loan guarantees committed before October 1, 

1991. Post-1991 foreclosed property refers to property associated with direct loans 

obligated or loan guarantees committed after September 30, 1991. 

(SFFAS 3, par. 79 & 80) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 143
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Section IV Statement of Net Cost 

Costs 

Credit Programs (131 – 178) 

Yes, 

No, 

or 

N/A 

Explanation 

163. If, at the time of the foreclosure, the expected net 

realizable value of pre-1992 foreclosed property is less 

than the cost (i.e., the carrying amount of the loan, or for 

a loan guarantee, the amount of the claim paid), is the 

loss charged to operations and tracked in a valuation 

allowance account? (SFFAS 3, par. 86) 

164. If the pre-1992 foreclosed asset's net realizable value 

subsequently increases or decreases, does the entity 

credit or charge this amount to results of operations and 

adjust the valuation allowance? (SFFAS 3, par. 86) 

165. Upon sale of foreclosed property, is any difference 

between the net carrying amount of foreclosed property 

and the net proceeds of the sale recognized as a 

component of operating results? (SFFAS 3, par. 89) 

166. For post-1991 foreclosed property, is interest income 

accrued from the previous periodic adjustment in the 

carrying amount up to the sale date? (SFFAS 3, par. 89) 

167. For post-1991 foreclosed property, is the resulting 

difference between the adjusted carrying amount and the 

net sales proceeds recognized as a reestimate of “subsidy 

expense?” (SFFAS 3, par. 89) 

168. For pre-1992 foreclosed property, is the difference 

between the adjusted carrying amount and net sales 

proceeds recognized as a gain or a loss on the sale of 

foreclosed property? (SFFAS 3, par. 89) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 144
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Section IV Statement of Net Cost 

Costs 

Credit Programs (131 – 178) 

Yes, 

No, 

or 

N/A 

Explanation 

The term modification, as it applies to direct loans and loan guarantees, means a 

federal government action, including new legislation or administrative action, that 

directly or indirectly alters the estimated subsidy cost and the present value of 

outstanding direct loans, or the liability of loan guarantees. The cost of the 

modification is the excess of the premodification value of a direct loan (or 

postmodification liability of loan guarantees) over the postmodification value of a 

direct loan (or premodification liability of loan guarantees), both of which have been 

discounted at the Treasury rate in effect when the modification occurred. (SFFAS 2, 

par. 41; SFFAS 2, par. 45, notes 3 & 4 & par. 49, notes 6 & 7; SFFAS 19, par. 6) 

The book value of the loan or guarantee is discounted at the Treasury rate originally 

used to calculate the present value of the direct loan or loan guarantee liability when 

the loan was originally disbursed. (SFFAS 2, par. 48 & 50, app. B parts I D (4 & 5), 

II B (4), III B (4), & IV B (4)) 

The sale of post-1991 and pre-1992 direct loans is treated as a direct modification of 

the loans sold if the sale proceeds were not included in the cash flows estimates for 

the initial subsidy calculation. The cost of modification is determined on the basis of 

the premodification value of the loans sold. However, if sale proceeds were included 

in the cash flow estimates for the initial subsidy calculation, the effect of the loan sale 

on the cost of the program is recognized in the reestimates. (SFFAS 2, par. 53, 

Appendix B. par 1F) 

169. If pre-1992 or post-1991 direct loans are modified, is the 

excess of the premodification value74 over the 

postmodification value75 recognized as a modification 

expense? (SFFAS 2, par. 45 & app. B, parts I D (1-3) & 

II B (1-3)) 

170. If the cost of modifying pre-1992 or post-1991 loans is 

greater than the decrease in the loans' book value, is the 

difference recognized as a gain?76 (SFFAS 2, par. 48 & 

app. B, parts I D (4 & 5) & II B (4 & 5)) 

74This is the present value of the net cash inflows estimated under premodification terms discounted at the current Treasury rate. 75This is the present value of the net cash inflows estimated under postmodification terms discounted at the current Treasury rate. 76A gain from a modification occurs when the cost of a modification is greater than the decrease in book value of a direct loan (or increase in the 

liability of a loan guarantee). (SFFAS 2, par. 46, 48 note 5, 50, & 52 note 8; SFFAS 19, par. 7) 

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Section IV Statement of Net Cost 

Costs 

Credit Programs (131 – 178) 

Yes, 

No, 

or 

N/A 

Explanation 

171. If the cost of modifying pre-1992 or post-1991 loans is 

less than the decrease in the loans' book value, is the 

difference recognized as a loss?77 (SFFAS 2, par. 48 & 

app. B, parts I D (4 & 5), & part II B (4 & 5)) 

172. If pre-1992 or post-1991 loan guarantees are modified, 

is the excess of the postmodification liability78 over the 

premodification liability79 recognized as a modification 

expense? (SFFAS 2, par. 49 & app. B, parts III D (1-3), 

& IV B (1-3)) 

173. If the cost of modifying pre-1992 or post-1991 loan 

guarantees is greater than the increase in the book value 

of the related loan guarantee liabilities, is the difference 

recognized as a gain? (SFFAS 2, par. 52 & app. B, 

parts III D (4 & 5), & IV B (5)) 

174. If the cost of modifying pre-1992 or post-1991 loan 

guarantees is less than the increase of the related loan 

guarantee liabilities, is the difference recognized as a 

loss? (SFFAS 2, par. 52 & app. B, parts III D (4 & 5) & 

IV B (5)) 

175. If the premodification value of post-1991 and pre-1992 

loans sold80 exceeds the net proceeds from the sale, is 

the excess treated as the cost of modification and 

recognized as a modification expense? 

(SFFAS 2, par. 45 & 53 & app. B, part I F (1)) 

176. If a loan is sold with recourse, is the present value of 

estimated losses under the recourse or guarantee 

obligations recognized as a subsidy expense and as a 

loan guarantee liability? (SFFAS 2, par. 54) 

77A loss from a modification occurs when the cost of a modification is less than the decrease in book value of a direct loan (or increase in the liability 

of a loan guarantee) that was discounted at the Treasury rate in effect when the loan was made. (SFFAS 2, par. 46, 48 note 5, 50, & 52 note 8; SFFAS 

19, par. 17) 78This is the present value of the net cash flows under postmodification terms discounted at the current Treasury rate. 79This is the present value of the net cash flows under premodification terms discounted at the current Treasury rate. 80This is the present value of the loans’ net cash inflows discounted at the current discount rate. 

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Section IV Statement of Net Cost 

Costs 

Credit Programs (131 – 178) 

Yes, 

No, 

or 

N/A 

Explanation 

177. If the modification expense arising from a loan sale is 

greater than the book value loss, is the difference 

recognized as a gain? (SFFAS 2, par. 55 & app. B, 

part I F (2)) 

178. If the modification expense arising from a loan sale is 

less than the book value loss, is the difference 

recognized as a loss? (SFFAS 2, par. 55 & app. B, 

part I F (2)) 

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Section V Statement of Changes in Net Position 

The 40 questions in this section are related to the Statement of Changes in Net Position 

Question Numbers 

1. General 1 - 6 

2. Budgetary Financing Sources 7 - 23 

3. Other Financing Sources 24 - 40

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Section V Statement of Changes in Net Position 

General (1 – 6) 

Yes, 

No, 

or 

N/A 

Explanation 

The Statement of Changes in Net Position reports the change in net position during 

the reporting period. Net position is affected by changes to its two components: 

Cumulative Results of Operations and Unexpended Appropriations. They are broken 

out into two separate columns in the Statement of Changes in Net Position. 

(OMB Bulletin 01-09, pp. 34 & 35, sections 5.1 & 5.2) 

1. Do the ending balances of the two main components of 

this statement, Cumulative Results of Operations and 

Unexpended Appropriations, agree with to line items of 

the same names in the “net position” section of the 

balance sheet? (OMB Bulletin 01-09, p. 18, section 3.2, 

pp. 34 & 35, sections 5.1 & 5.2, p. 38, section 5.7) 

2. Do beginning balances of Cumulative Results of 

Operations and Unexpended Appropriations agree with 

the amounts reported as net position on the prior year’s 

balance sheet? (OMB Bulletin 01-09, p. 35, section 5.3) 

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Section V Statement of Changes in Net Position 

General (1 – 6) 

Yes, 

No, 

or 

N/A 

Explanation 

3. Are “beginning balances, as adjusted,” equal to the sum 

of the beginning balances of net position as reported on 

the prior year’s balance sheet, and prior period 

adjustments? (OMB Bulletin 01-09, p. 36, section 5.3) 

4. When errors81 are discovered after the issuance of 

financial statements, and if the financial statements would 

be materially misstated absent correction of the errors, 

are the corrections made as follows in the statement of 

changes in net position? 

a. If only the current period statement is presented, the 

cumulative effect of correcting the error is reported 

as a prior period adjustment to the beginning balance 

of the cumulative results of operations. 

b. If comparative financial statements are presented, 

individual amounts on the financial statements are 

corrected in the earliest affected period presented. 

c. If the earliest period presented in the comparative 

financial statements is not the period in which the 

error occurred and the cumulative effect is 

attributable to prior periods, the cumulative effect is 

reported as a prior period adjustment to the beginning 

balance of cumulative results of operations in the 

statement of net position for the earliest period 

presented. (SFFAS 21, par. 10 & 11) 

81Errors in financial statements result from mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts 

that existed at the time the financial statements were prepared. 

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Section V Statement of Changes in Net Position 

General (1 – 6) 

Yes, 

No, 

or 

N/A 

Explanation 

5. Is the nature of an error in previously issued financial 

statements and the effect of its correction on relevant 

balances disclosed? (SFFAS 21, par. 10 (c)) 

6. If changes in accounting principles82 would have resulted 

in a change to prior period financial statements, are they 

handled in the following manner? 

a. the cumulative effect of the change on prior periods 

is reported as a “change in accounting principle” and 

reported as an adjustment to the beginning balance of 

the cumulative results of operations in the Statement 

of Changes in Net Position for the period that the 

change is made 

b. prior period financial statements presented for 

comparative purposes are presented as previously 

reported 

c. the nature of the changes in accounting principle and 

its effect on relevant balances are disclosed in the 

current period83 (SFFAS 21, par. 12 & 13; 

SFFAS 23, par. 17 & 18) 

82A change in accounting principle is a change from one generally accepted accounting principle to another one that can be justified as preferable; this 

would also include changes occasioned by the adoption of new federal accounting standards. 83Financial statements of subsequent periods need not repeat the disclosure. 

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Section V Statement of Changes in Net Position 

Budgetary Financing Sources (7 – 23) 

Yes, 

No, 

or 

N/A 

Explanation 

The section, “Budgetary Financing Sources,” displays financing sources and 

nonexchange revenue that are also budgetary resources, or adjustments to these 

resources, as reported on the Statement of Budgetary Resources and defined as such 

by OMB Circular No. A-11, Part 484 “Instructions on Budget Execution,” as 

amended. (OMB Bulletin 01-09, p. 36, section 5.4) 

7. Do budgetary “appropriations received”85 reported under 

“Budgetary Financing Sources” agree with the amount 

reported on the line item “appropriations received” in the 

Statement of Budgetary Resources? 

(OMB Bulletin 01-09, p. 36, section 5.4) 

8. Are unexpended appropriations reduced as appropriations 

are used? (SFFAS 7, par. 71) 

9. Are unexpended appropriations adjusted for other 

changes in budgetary resources, such as rescissions and 

transfers? (SFFAS 7, par. 71) 

10. Do “appropriations transferred in/out (+/-)” equal the 

amount of appropriations received in the current or prior 

year(s) that have been transferred in or out during the 

current reporting year? (OMB Bulletin 01-09, p. 36, 

section 5.4) 

11. Do “other adjustments86 (rescissions, etc.) (+/-)” include 

adjustments to either cumulative results of operations or 

unexpended appropriations? (OMB Bulletin 01-09, p. 36, 

section 5.4) 

84OMB Circular A-11 superceded OMB Circular A-34 in June 2002 and was revised on July 25, 2003. 85Appropriations received do not include appropriated dedicated and earmarked receipts. Dedicated and earmarked receipts are accounted for as either 

exchange or nonexchange revenue in accordance with SFFAS No. 7) 86Some examples of adjustments include rescissions of appropriations and cancellations of expired appropriation expenditure accounts, which would 

also be included in line 6, “Permanently not Available” on the Statement of Budgetary Resources. 

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Section V Statement of Changes in Net Position 

Budgetary Financing Sources (7 – 23) 

Yes, 

No, 

or 

N/A 

Explanation 

12. Are appropriations used by collecting entities to provide 

refunds of monies deposited to Treasury and trust funds 

reported under “other adjustments (rescissions, etc.) 

(+/-)” rather than as an “appropriations used?” 

(OMB Bulletin 01-09, p. 36, section 5.4) 

13. Are "appropriations used" recognized as a financing 

source when goods and services are received or when 

benefits and grants are provided?87 (SFFAS 7, par. 72; 

OMB Bulletin 01-09, p. 36, section 5.4) 

14. Is the amount of appropriations used subtracted from 

unexpended appropriations and added to cumulative 

results of operations for a net zero effect on net position 

as a whole? (OMB Bulletin 01-09, p. 36, section 5.4) 

15. Do “appropriations88 used” exclude the following? 

a. undelivered orders 

b. unobligated appropriations 

c. dedicated tax receipts, earmarked receipts, and 

donations89 (OMB Bulletin 01-09, p. 36, section 5.4) 

16. Is nonexchange revenue recognized as a financing source 

(and not as a deduction in determining the net cost of 

operations)? (SFFAS 7, par. 60) 

87This is true whether the goods, services, and benefits are payable or paid as of the reporting date and whether the appropriations are used for items 

that are expensed or capitalized. 88Appropriations used does not increase net position. It is subtracted from “unexpended appropriations” and added to “cumulative results of 

operations,” which are line items on the balance sheet. 89Those financing sources are reported as either exchange or nonexchange revenue. 

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Section V Statement of Changes in Net Position 

Budgetary Financing Sources (7 – 23) 

Yes, 

No, 

or 

N/A 

Explanation 

17. Does the entity recognize nonexchange revenues, such as 

taxes, if it is legally entitled to the revenue? (SFFAS 7, 

par. 48 & 49) 

18. Is nonexchange revenue recognized when the 

government's claim to resources can be characterized as 

follows? 

a. specifically identifiable 

b. legally enforceable 

c. reasonably estimable 

d. more likely than not collectable (SFFAS 7, par. 48) 

19. Is revenue recognized by the recipient entities the sum of 

the following? 

a. cash or cash equivalents transferred to them by the 

collecting entities 

b. the net change in any related interentity balances 

between the collecting and the receiving entities (i.e., 

the amount to be transferred to the recipient entities 

from the collecting entity or vice versa) 

(SFFAS 7, par. 60) 

20. Do “donations and forfeitures of cash and cash 

equivalents” include voluntary gifts and involuntary 

forfeitures of resources to the federal government by 

nonfederal entities? (OMB Bulletin 01-09, p. 37, 

section 5.4) 

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Section V Statement of Changes in Net Position 

Budgetary Financing Sources (7 – 23) 

Yes, 

No, 

or 

N/A 

Explanation 

21. Do “transfers-in/out without reimbursement (+/-)” under 

“budgetary financing sources” include intragovernmental 

nonappropriated90 balance transfers in or out during the 

current reporting year? (OMB Bulletin 01-09, p. 37, 

section 5.4) 

22. Is exchange revenue (included in calculating an entity’s 

net cost of operations) required to be transferred to the 

Treasury or another federal entity recognized as a transfer 

out? (OMB Bulletin 01-09, p. 37, section 5.4) 

23. Do “other budgetary financing sources” include other 

financing sources that affect budgetary resources that 

have not been covered by the preceding questions? 

(OMB Bulletin 01-09, p. 37, section 5.4) 

90Nonappropriated balances include financing sources and revenue not reported as unexpended appropriations. 

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Section V Statement of Changes in Net Position 

Other Financing Sources (24 – 40) 

Yes, 

No, 

or 

N/A 

Explanation 

“Other financing sources,” displays financing sources and nonexchange revenue that do not 

represent budgetary resources as reported on the Statement of Budgetary Resources and defined as 

such by OMB Circular No. A-11, Part 4 (OMB Bulletin 01-09, p. 37, section 5.5) 

24. Do the items reported in the “other financing sources” 

section equal the amounts reported as similar line items 

in the “other resources”

91 section on the Statement of 

Financing? (OMB Bulletin 01-09, p. 35, section 5.2, 

pp. 37 & 38, section 5.5, p. 46, section 7.2 & p. 48, 

section 7.3) 

25. Is revenue arising from donations of property measured at 

the estimated fair value of the contribution at the time of 

the donation? (SFFAS 6, par. 30; SFFAS 7, par. 62, 

OMB Bulletin 01-09, p. 37, section 5.5) 

91Other resources increase net position but are not budgetary resources as reported on the “Statement of Budgetary Resources or defined as such in 

OMB Circular No. A-11, Part 4. OMB Circular A-11 superceded OMB Circular A-34 in June 2002 and was revised on July 25, 2003. 

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Section V Statement of Changes in Net Position 

Other Financing Sources (24 – 40) 

Yes, 

No, 

or 

N/A 

Explanation 

26. Are transferred assets recorded at the book value of the 

transferring entity, or, if the receiving entity does not 

know the book value, is the asset recorded at its estimated 

fair value as of the date of the transfer? (SFFAS 7, 

par. 74; OMB Bulletin 01-09, p. 37, section 5.5) 

27. When assets92 are transferred in or out by entities without 

reimbursement: 

a. Does the receiving entity recognize the transfer-in as 

an increase in financing sources in its statement of 

net position? 

b. Does the transferring entity recognize the transfer out 

as a decrease in financing sources in its statement of 

changes in net position? (SFFAS 7, par. 74, 

OMB Bulletin 01-09, p. 37, section 5.5) 

92This amount includes intragovernmental transfers in to or out of capitalized assets during the current reporting year. 

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Section V Statement of Changes in Net Position 

Other Financing Sources (24 – 40) 

Yes, 

No, 

or 

N/A 

Explanation 

28. Does the reporting entity recognize an imputed financing 

source for costs funded through other federal entities as 

well as nonreimbursed costs of goods and services 

provided by other federal entities? (SFFAS 4, par. 109; 

SFFAS 7, par. 73; OMB Bulletin 01-09, p. 37, 

section 5.5) 

29. Do imputed financing costs reported on the Statement of 

Changes in Net Position equal the amount of imputed 

financing costs as reported on the statement of net cost? 

(OMB Bulletin 01-09, p. 37, section 5.5) 

30. Do “other financing sources” include other financing 

sources that do not represent budgetary resources and that 

have not been covered by the preceding questions (i.e., 

nos. 23-28)? (OMB Bulletin 01-09, p. 38, section 5.5) 

31. Is exchange revenue transferred to another government 

entity or to the Treasury recognized as a "transfer out" in 

determining the net results of operations? 

(SFFAS 7, par. 75) 

32. Is a gain93 from the modification94 of post-1991 loans 

reported as a reduction in financing source and paid to the 

Treasury as a "modification adjustment transfer?" 

(SFFAS 2, par. 48, & app. B, part I D (5)) 

93The excess of the cost of the modification over the decrease in loan book value discounted at the Treasury rate. 

94A modification means a federal government action, including new legislation or administration action, which directly or indirectly alters 

the estimated subsidy cost and present value of outstanding loans or the liability of loan guarantees. (SFFAS 2, par. 41) 

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Section V Statement of Changes in Net Position 

Other Financing Sources (24 – 40) 

Yes, 

No, 

or 

N/A 

Explanation 

33. Is a loss95 from the modification of post-1991 loans 

reported as a financing source when the reporting entity 

receives from the Treasury a "modification adjustment 

transfer?" (SFFAS 2, par. 48 & app. B, part I D (5)) 

34. Is a gain96 resulting from a modification of post-1991 

loan guarantees reported as a reduction in financing 

source and paid to the Treasury as a "modification 

adjustment transfer?" (SFFAS 2, par. 52 & app. B, 

part III D (5)) 

35. Is a loss97 resulting from a modification of post-1991 loan 

guarantees reported as a financing source when the 

reporting entity receives from the Treasury a 

"modification adjustment transfer" to offset the 

difference? (SFFAS 2, par. 52 & app. B, part III D (5)) 

36. Is a gain on the sale of a post-1991 loan reported as a 

reduction in financing source and paid to the Treasury as 

a "modification adjustment transfer?" (SFFAS 2, par. 55 

& app. B, part I F (2)) 

37. Is a loss on the sale of a post-1991 loan reported as a 

financing source when the reporting entity receives from 

the Treasury a “modification adjustment transfer?” 

(SFFAS 2, par. 55 & app. B, part I F (2)) 

95The excess of the decrease in loan book value, discounted at the Treasury rate, over the cost of the modification. 96The excess of the cost of the modification over the increase in liability discounted at the Treasury rate. 97The excess of the increase in liability, discounted at the Treasury rate, over the cost of the modification. 

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Section V Statement of Changes in Net Position 

Other Financing Sources (24 – 40) 

Yes, 

No, 

or 

N/A 

Explanation 

38. Does the amount “net cost of operations” reported under 

cumulative results of operations agree with “net cost of 

operations” as reported on the Statement of Net Cost and 

Statement of Financing? (OMB Bulletin 01-09, p. 38, 

section 5.6 & p. 51, section 7.7) 

39. Is the difference between the net cost of operations and 

the sum of the financing sources (i.e., budgetary and 

other) equal to the ending balance of net position as it 

relates to the cumulative results of operations? 

(OMB Bulletin 01-09, p. 38, section 5.6) 

40. Do the ending balances of the cumulative results of 

operations and unexpended appropriations agree with the 

amounts reported as net position on the current year’s 

balance sheet? (OMB Bulletin 01-09, p. 38, section 5.7) 

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Section VI Statement of Budgetary Resources 

The 27 questions in this section concern the Statement of Budgetary Resources. 

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Section VI Statement of Budgetary Resources 

Statement of Budgetary Resources 

(1–27) 

Yes, 

No, 

or 

N/A 

Explanation 

The budget is the primary financial planning and control tool of the government. The 

Statement of Budgetary Resources and the related disclosures provide information 

about how budgetary resources were made available as well as their status at the end 

of the period. It is the only financial statement exclusively derived from an entity’s 

budgetary general ledger, prepared in accordance with budgetary accounting rules, 

which are incorporated into Generally Accepted Accounting Principles (GAAP) for 

the federal government. (SFFAS 7, par. 77; OMB Bulletin 01-09, 

p. 39, section 6.1) 

1. Is the recognition and measurement of budgetary 

information reported on the Statement of Budgetary 

Resources (SBR) based on budget terminology, 

definitions, and guidance in OMB Circular A-11,98 

Preparation, Submission and Execution of the Budget, 

(July 2003)? (SFFAS 7, par. 78; OMB Bulletin 01-09, 

p. 39, section 6.1) 

2. Is information on the SBR consistent with budget 

execution information reported on the Report on Budget 

Execution and Budgetary Resources (SF 133) and with 

information reported in the Budget of the United States 

Government? (OMB Bulletin 01-09, p. 39, section 6.1) 

3. Does the entity disclose and explain any material 

differences between comparable information contained in 

the three reports (i.e., SBR, SF 133 and the Budget of the 

United States Government)? (OMB Bulletin 01-09, p. 6, 

section 1.7 & p. 39, section 6.1) 

4. Is budgetary information aggregated for purposes of the 

Statement of Budgetary Resources disaggregated99 for 

each of the reporting entity’s major budget accounts and 

presented as required supplementary information? 

(SFFAS 7, par. 78; OMB Bulletin 01-09, p. 112, 

section 11.4) 

98OMB Circular A-11 superceded OMB Circular A-34 in June 2002 and was revised on July 25, 2003. 99Small budgetary accounts may be aggregated. 

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Section VI Statement of Budgetary Resources 

Statement of Budgetary Resources 

(1–27) 

Yes, 

No, 

or 

N/A 

Explanation 

5. Do the major accounts and the aggregate of small budget 

accounts agree, in total, with the amounts reported on the 

face of the Statement of Budgetary Resources? 

(OMB Bulletin 01-09, p. 112, section 11.4) 

6. Is the budgetary information in the SBR presented on a 

combined basis that is consistent with the aggregate of 

the account-level information presented on the SF 133s? 

(OMB Bulletin 01-09, p. 39, section 6.2) 

7. Are nonbudgetary credit financing accounts reported 

separately from the budgetary accounts? 

(OMB Bulletin 01-09, p. 40, section 6.3) 

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Section VI Statement of Budgetary Resources 

Statement of Budgetary Resources 

(1–27) 

Yes, 

No, 

or 

N/A 

Explanation 

8. Does the entity include in its SBR the following under 

“Budgetary Resources”? 

a. budget authority, including if applicable 

i. appropriations received 

ii. borrowing authority 

iii. contract authority 

iv. net transfers (+/-) 

v. other 

b. unobligated balances, including if applicable 

i. beginning of period balances 

ii. net transfers, actual (+/-) 

iii. anticipated transfer balances 

c. spending authority from offsetting collections, 

including, if applicable 

i. earned authority that is collected and/or 

receivable from federal services 

ii. changes in unfilled customer orders that are 

advance(s) received, and/or without 

advance(s) from federal sources 

iii. anticipated collections for the rest of the year 

without advances 

iv. transfers from trust funds 

d. recoveries of prior year obligations 

e. budgetary resources temporarily not available 

pursuant to public law 

f. budgetary resources permanently not available 

(OMB Bulletin 01-09, p. 41, section, 6.4; SFFAS 7, 

par. 77) 

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Section VI Statement of Budgetary Resources 

Statement of Budgetary Resources 

(1–27) 

Yes, 

No, 

or 

N/A 

Explanation 

9. Do the budgetary resources reported in this section agree 

with the total budgetary resources reported for all of the 

budget accounts on the year-end SF 133? 

(OMB Bulletin 01-09, p. 42, section 6.5) 

10. Does the line item “appropriations received”100 reported 

on the SBR equal the amount reported as “appropriations 

received” on the Statement of Changes in Net Position? 

(OMB Bulletin 01-09, p. 36, section 5.4 & p. 43, 

section 6.5) 

11. Does the line item entitled “permanently not available” 

on the SBR include items reported under “other 

adjustments (rescissions, etc.)” on the Statement of 

Changes in Net Position? (OMB Bulletin 01-09, p. 36, 

section 5.4 & p. 43, section 6.5) 

12. Does the entity include the following under “Status of 

Budgetary Resources” on the SBR? 

a. obligations incurred that are 

i. direct and/or 

ii. reimbursable 

b. unobligated balance(s) that are 

i. apportioned 

ii. exempt from apportionment 

iii. otherwise available 

c. unobligated balance(s) not available 

(OMB Bulletin 01-09, p. 42, section 6.4; SFFAS 7, 

par. 77) 

13. Does the total amount displayed for the “status of 

budgetary resources” section of the SBR equal “total 

budgetary resources” available to the reporting entity as 

of the reporting date? (OMB Bulletin 01-09, p. 43, 

section 6.6) 

100Appropriations received do not include appropriated, dedicated and earmarked receipts. Dedicated and earmarked receipts, typically in special and 

nonrevolving trust funds, are accounted for as either exchange or nonexchange revenue in accordance with SFFAS No. 7. 

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Section VI Statement of Budgetary Resources 

Statement of Budgetary Resources 

(1–27) 

Yes, 

No, 

or 

N/A 

Explanation 

14. Does the status of budgetary resources reported on the 

SBR agree with the total status reported for each budget 

account on the year-end SF 133? (OMB Bulletin 01-09, 

p. 43, section 6.6) 

15. Does the entity’s SBR include the following under 

“Relationship of Obligations to Outlays?” 

a. obligated balance, net, beginning of period 

b. obligated balance transferred, net (+/-) 

c. obigated balance, net, end of period that are 

i. accounts receivable 

ii. unfilled customer orders from federal sources 

iii. undelivered orders 

iv. accounts payable 

d. outlays that are 

i. disbursements 

ii. collections 

e. less, if applicable, offsetting receipts101 

(OMB Bulletin 01-09, p. 40, section 6.3 & p. 42, 

section 6.4) 

16. Do the outlays102 reported in “Relationship of Obligations 

to Outlays” section agree with the agency outlay totals 

reported in the Budget of the United States 

Government?

103 (OMB Bulletin 01-09, p. 43, section 6.7) 

101Offsetting receipts offset budget authority and outlays at the agency level in the Budget of the United States Government, but are not reflected in 

budget execution reports (SF 133s), which provide account-level information only. Since the SBR is an agencywide report, offsetting receipts must be 

included to reconcile to information in the Budget of the United States Government. 102Outlays consist of disbursements net of offsetting collections. 103That is, do the outlays agree with the aggregate of the outlays for accounts within the Budget of the United States Government? 

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Section VI Statement of Budgetary Resources 

Statement of Budgetary Resources 

(1–27) 

Yes, 

No, 

or 

N/A 

Explanation 

17. Do the outlays also agree with the aggregate of outlays 

reported on the year-end SF 133 for all budget accounts, 

including nonbudgetary financing accounts and the 

disbursements and collections reported to Treasury on a 

monthly basis

104 as per OMB Circular A-11?105 

(OMB Bulletin 01-09, p. 43, section 6.7) 

Offsetting receipts are collections that are credited to general fund, special fund, or trust 

fund receipt accounts and that offset gross outlays. Unlike offsetting collections, which 

are credited to expenditure accounts and offset outlays at the account level, offsetting 

receipts are credited to receipt accounts and offset outlays at the agency or 

governmentwide level. 

Offsetting receipts may be distributed or undistributed to agencies. Distributed offsetting 

receipts offset the outlays of the agency, while undistributed offsetting receipts offset 

governmentwide outlays. Distributed offsetting receipts typically offset the outlays of the 

agency that conducts the activity, generating the receipts and the subfunction to which the 

activity is assigned. Offsetting receipts are composed of proprietary receipts from the 

public, receipts from intragovernmental transactions, and offsetting governmental 

receipts. (OMB Bulletin 01-09, pp. 43 & 44, section 6.7) 

18. Does the line item “offsetting receipts” on the SBR 

include all distributed offsetting receipts for the 

agency?106 (OMB Bulletin 01-09, p. 44, section 6.7) 

19. Does the agency include the following receipt accounts 

from the Treasury Annual Report Appendix, Part 4, Other 

Information/Receipts by Department, in the SBR? 

a. Proprietary Receipts from the Public 

b. Intrabudgetary Receipts Deducted by Agencies 

c. Offsetting Governmental Receipts 

(OMB Bulletin 01-09, p. 44, section 6.7) 

104Agencies report their disbursements and collections using the SF 224, Statement of Transactions; SF 1219, Statement of Accountability; and SF 

1220, Statement of Transactions. 105OMB Circular A-11 superceded OMB Circular A-34 in June 2002 and was revised on July 25, 2003. 106A list of distributed offsetting receipt accounts can be found in the Treasury Annual Report Appendix, Part 4, Other Information. 

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Section VI Statement of Budgetary Resources 

Statement of Budgetary Resources 

(1–27) 

Yes, 

No, 

or 

N/A 

Explanation 

20. Is the amount of distributed offsetting receipts reported in 

SBR the aggregate of cash collected in these receipt 

accounts and reported to Treasury on a monthly basis?107 

(OMB Bulletin 01-09, p. 44, section 6.7) 

21. Does the amount of offsetting receipts that are distributed 

to agencies and reported on the SBR agree with the 

deductions for offsetting receipts as reported in the 

Budget of the United States Government, if available by 

the time the financial statements must be finalized and 

submitted? (OMB Bulletin 01-09, p. 44, section 6.7) 

22. Are undistributed offsetting receipts, which are credited 

to governmentwide outlay totals, excluded from the 

SBR? (OMB Bulletin 01-09, p. 44, section 6.7) 

23. Do the net outlays in the SBR agree with the net 

outlays

108 as reported in the Budget of the United States 

Government, if available by the time the financial 

statements must be finalized and submitted? 

(OMB Bulletin 01-09, p. 44, section 6.7) 

24. Does the entity disclose the amount of direct and 

reimbursable obligations incurred against amounts 

apportioned under category109 “A,” “B,” and “exempt 

from apportionment”? (OMB Bulletin 01-09, p. 93, 

section 9.27) 

107Agencies use the SF 224, Statement of Transactions; SF 1219, Statement of Accountability; and SF 1220, Statement of Transactions. 108Net outlays are equal to gross outlays less offsetting collections and receipts. 109Apportionment categories are to be determined in accordance with guidance provided in OMB Circular A-11, Part 4, Instructions on Budget 

Execution, which superceded Circular A-34. 

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Section VI Statement of Budgetary Resources 

Statement of Budgetary Resources 

(1–27) 

Yes, 

No, 

or 

N/A 

Explanation 

25. Does the disclosure of the amount of direct and 

reimbursable obligations incurred against amounts 

apportioned under category110 “A,” “B,” and “exempt 

from apportionment” agree with the aggregate of the 

related information as reported on the agency’s year-end 

SF 133, and the amounts reported under direct and 

reimbursable obligations incurred, reported on the SBR? 

(OMB Bulletin 01-09, p. 93, section 9.27) 

26. Does the entity disclose the following information related 

to the status of budgetary resources? 

a. the amount of budgetary resources obligated for 

undelivered orders at the end of the period 

b. available borrowing and contract authority at the end 

of the period 

c. repayment requirements, financing sources for 

repayment, and other terms of borrowing authority 

used 

d. amounts adjusted to “budgetary resources available at 

the beginning of the year,” during the reporting 

period, as well as an explanation of the adjustments 

e. existence, purpose, and availability of permanent, 

indefinite appropriations 

f. information about legal arrangements affecting the 

use of unobligated balances of budget authority, such 

as time limits, purpose, and obligation limitations 

g. explanations of any material differences between the 

budgetary resources reported in the SBR and "actual" 

amounts in the Budget of the United States 

Government 

h. the amount of unfunded liabilities, and an explanation 

that includes identification of balance sheet 

components, when unfunded liabilities do not equal 

the total financing sources yet to be provided 

i. the amount of any capital infusion received during the 

reporting period (SFFAS 7, par. 79 & 209-212; 

OMB Bulletin 01-09, p. 93 & 94, sections 9.27-9.34) 

110Apportionment categories are to be determined in accordance with guidance provided in OMB Circular A-11, Part 4 Instructions on Budget 

Execution, which superceded Circular A-34. 

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Section VI Statement of Budgetary Resources 

Statement of Budgetary Resources 

(1–27) 

Yes, 

No, 

or 

N/A 

Explanation 

27. In order to ensure consistency between the information 

presented in the SBR and the Budget of the United States 

Government, does the entity do the following? 

a. post all known audit adjustments to the Federal 

Agencies Centralized Trial-balance System II (FACTS 

II) during the window of time specified for posting 

corrections to the budget information 

b. post all known audit adjustments to OMB’s MAX A11 budget preparation system during the time frames 

provided by OMB (OMB Bulletin 01-09, pp. 5 & 6, 

section 1.7) 

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Section VII Statement of Financing 

The 27 questions in this section are related to the Statement of Financing. 

Question Numbers 

1. Resources Used to Finance Activities 1-8 

2. Resources Used to Finance Items Not Part of 9-14 

the Net Cost of Operations 

3. Components of the Net Cost of Operations that 15-24

Will Not Require or Generate Resources in the 

Current Period Resources 

4. Disclosure Items 25-27

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Section VII Statement of Financing 

Resources Used to Finance Activities (1 – 8) 

Yes, 

No, 

or 

N/A 

Explanation 

The Statement of Financing is the bridge between an entity’s budgetary and 

financial (i.e., proprietary) accounting. The Statement of Financing articulates the 

relationship between net obligations derived from an entity’s budgetary accounts 

and net cost of operations derived from the entity’s proprietary accounts by 

identifying and explaining key differences between the two numbers. 

Most entity transactions are recorded in both budgetary and proprietary accounts. 

However, because different accounting bases are used for budgetary and 

proprietary accounting, some transactions may appear in only one set of accounts 

(e.g., accrual of environmental and disposal liabilities, which is recorded only in the 

proprietary records). Furthermore, not all obligations or offsetting collections may 

result in expenses or exchange revenue (e.g., purchase of a building is capitalized 

on the balance sheet in the proprietary accounts but obligated and outlayed in the 

budgetary accounts). 

The statement is structured to first identify total resources used by an entity during 

the period (budgetary and other) and then make adjustments to the resources based 

upon how they were used to finance net obligations or net cost. Budgetary 

resources reported in this statement are those resources as defined in OMB Circular 

No. A-11111and are also reported on the Statement of Budgetary Resources. Other 

resources reported in this statement are also reflected in the Statement of Changes 

in Net Position. (OMB Bulletin 01-09, p. 45, section 7.1; SFFAS 7, par. 80 & 95) 

The section “Resources Used to Finance Activities” reflects the budgetary resources 

obligated and other resources that are used to finance the activities of the agency. The 

obligations of budgetary resources are net of offsetting collections, recoveries, and offsetting 

receipts. The other resources are financing sources that increase net position but are not 

budgetary resources. Every line item in this section is mirrored on either the Statement of 

Budgetary Resources or the Statement of Changes in Financial Position. 

(OMB Bulletin 01-09, p. 47, section 7.3) 

111OMB Circular No. A-11, Part 4, Instructions on Budget Execution, has superceded OMB Circular No A-34. 

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Section VII Statement of Financing 

Resources Used to Finance Activities (1 – 8) 

Yes, 

No, 

or 

N/A 

Explanation 

1. Is the budgetary information used to calculate net 

obligations112 in the “Resources Used to Finance 

Activities” section of the Consolidated Statement of 

Financing, presented on a combined basis113 to enable 

agreement with similar amounts reported on the 

Statement of Budgetary Resources? 

(OMB Bulletin 01-09, p. 6, section 1.8 & p. 46, 

section 7.1) 

2. Does the amount reported as “obligations incurred” 

equal the obligations incurred114 line item as reported 

on the Statement of Budgetary Resources, and does 

this include all budget accounts, including 

nonbudgetary financing accounts? 

(OMB Bulletin 01-09,p. 47, section 7.3) 

3. Does the line item “less: spending authority from 

offsetting115 collections and recoveries”116 agree with 

the spending authority from offsetting collections and 

recoveries as reported on the Statement of Budgetary 

Resources, and does this include all budget accounts, 

including nonbudgetary financing accounts? 

(OMB Bulletin 01-09, p. 47, section 7.3) 

4. Is “Obligations net of offsetting collections and 

recoveries” equal to the difference between 

“obligations incurred” and “spending authority from 

offsetting collections and recoveries?” 

(OMB Bulletin 01-09, p. 48, section 7.3) 

112The budgetary information includes the line items (1) “ obligations incurred,” (2) “Less: spending authority from offsetting collections and 

recoveries,” (3) “obligations net of offsetting collections and recoveries,” and 4) “less: offsetting receipts.” 113A combined basis means the aggregation of account-level information as opposed to a consolidation that implies the elimination of inter-account 

transactions. 

114This is not to be confused with total budgetary resources; e.g., with total appropriations received and available, as the statement of financing is not 

concerned with total resources or restrictions on OMB’s ability to apportion or the agency’s ability to allot total resources. (SFFAS 7 Implementation 

Guide (April 2002), par. 14) 115“Offsetting” in the term “offsetting collections” means that the resources generated by the collecting activity are added to the expenditure accounts 

and hence “offset” gross obligations. (SFFAS 7 Implementation Guide (April 2002), par. 22) 116Recoveries are budgetary resources that offset obligations on the Statement of Budgetary Resources, but are not a proprietary financing source used 

to offset costs on the Statement of Net Cost. (OMB Bulletin 01-09, p. 49, section 7.4) 

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Section VII Statement of Financing 

Resources Used to Finance Activities (1 – 8) 

Yes, 

No, 

or 

N/A 

Explanation 

5. Does the amount reported as “less: offsetting receipts” 

equal the offsetting receipts117 line item as reported on 

the Statement of Budgetary Resources? 

(OMB Bulletin 01-09, p. 48, section 7.3) 

6. Do “net obligations”118 equal the difference between 

“obligations net of offsetting collections and 

recoveries” and “offsetting receipts?” 

(OMB Bulletin 01-09, p. 48, section 7.3) 

7. Does the entity’s Statement of Financing include other 

nonbudgetary resources used to finance activities, and 

do the line item amounts as reported on the Statement 

of Financing equal the following corresponding line 

item amounts reported as “other financing sources” on 

the Statement of Changes in Net Position? 

a. donations and forfeitures of property 

b. transfers in/out without reimbursement 

c. imputed financing from costs absorbed by others 

d. other (OMB Bulletin 01-09, p. 48, section 7.3) 

8. Is “total resources used to finance activities” equal to 

the sum of net obligations119 and net other 

(nonbudgetary) resources used to finance activities? 

(OMB Bulletin 01-09, p. 46, section 7.2) 

117Offsetting receipts differ from “offsetting collections.” Offsetting collections are included in the entity’s expenditure account and thus are usually 

available for spending for the purposes of the account without further action by Congress. (SFFAS 7 Implementation Guide (April 2002), par. 23) 118Net obligations reflect obligations incurred net of offsetting collections, recoveries, and offsetting receipts. 119One of the reasons that net obligations does not equal the amount of the net cost of operations is that there are resources that are not reported in the 

Budget of the United States Government that may finance the net cost of operations or other activities of the agency. 

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Section VII Statement of Financing 

Resources Used to Finance Items Not Part of the Net Cost 

of Operations (9 – 14) 

Yes, 

No, 

or 

N/A 

Explanation 

The section, “Resources Used to Finance Items Not Part of the Net Cost of Operations,” in 

the Statement of Financing adjusts total resources used to finance the activities of the 

entity to account for items that were included in net obligations and other resources, but 

which were not part of the net cost of operations. This section would include items in which 

the expense was recognized in a prior period but the budgetary resource and obligation 

are recognized in the current period (e.g., upward/downward reestimates of subsidy 

expense accrued in the prior period but obligated in the current period). It would also 

include budgetary resources and obligations recognized in the current period that do not 

affect the net cost of operations (e.g., the acquisition of assets reflected in net obligations 

but not in net cost of operations for the period). (OMB Bulletin 01-09, p. 48, section 7.4) 

9. Does the line item, “change in budgetary resources 

obligated for goods, services, and benefits ordered but 

not yet provided (+/-),”120 reflect undelivered orders, 

or adjustments thereof, that are included in net 

obligations, but which are not part of the net cost of 

operations? (OMB Bulletin 01-09, p. 48, section 7.4) 

10. Does the line item, “resources that fund expenses 

recognized in prior periods,”121 reflect the obligation 

of resources that were part of the net cost of 

operations in a prior period? (OMB Bulletin 01-09, 

p. 48, section 7.4) 

120This line item is used to explain the difference between the total resources used to finance activities and the net cost of operations because of the 

change in “budgetary resources obligated for goods, services, and benefits ordered but not yet provided,” i.e., “undelivered orders.” Undelivered 

orders are part of “obligations incurred,” but they do not affect the net cost of operations. Thus, for a transaction involving the placing a $100 

undelivered order, obligations incurred would increase by $100 but would be shown as a negative or a reduction to total resources used to finance 

activities. (SFFAS 7 Implementation Guide (April 2002), par. 53-55) 121This line item is used to explain differences in resources and net cost of operations caused by expenses, which were accrued in previous periods but 

paid in the current period. If, for example, the amount of annual leave taken or obligated was worth $250 but the amount of annual leave earned (i.e., 

expensed) for the period was $200, the difference of $50 between obligation and expense would be shown as a negative. (SFFAS 7 Implementation 

Guide (April 2002), par. 56-58) 

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Section VII Statement of Financing 

Resources Used to Finance Items Not Part of the Net Cost 

of Operations (9 – 14) 

Yes, 

No, 

or 

N/A 

Explanation 

11. Do the line items included under “budgetary offsetting 

collections and receipts that do not affect net cost of 

operations” reflect offsetting collections and 

receipts122 that are not reported as exchange revenue in 

the Statement of Net Cost? (OMB Bulletin 01-09, 

pp. 48 & 49, section 7.4) 

12. Does the line item, “resources that finance the 

acquisition of assets,” reflect budgetary resources 

obligated123 that are not expenses as reported on the 

Statement of Net Cost? (OMB Bulletin 01-09, p. 49, 

section 7.4) 

13. Does the agency include under the line item, “Other 

resources or adjustments to net obligated resources 

that do not affect net cost of operations,” activities124 

not otherwise classified under the line items in this 

section of the Statement of Financing? 

(OMB Bulletin 01-09, p. 49, section 7.4) 

14. Does the line item, “total resources used to finance the 

net cost of operations,” consist of the difference 

between the line items “total resources used to finance 

activities” and “total resources used to finance items 

not part of the net cost of operations?” 

(OMB Bulletin 01-09, p. 46, section 7.2 & p. 48, 

section 7.4) 

122Examples of offsetting collections and receipts that are not exchange revenue are (1) collections of subsidy expenses for post –1991 credit 

programs, (2) collections of exchange revenue receivable from the public, and (3) advances (i.e., unfilled customer orders) for work not performed, 

with the caveat that in most cases, orders from the public without advances cannot be accepted. This line item is usually shown as a positive, the 

opposite (i.e., negative) of what is included under the line item, “less: spending authority from offsetting collections and recoveries,” unless there is a 

net decrease in unfilled customer orders. (SFFAS 7 Implementation Guide (April 2002), par. 59-61) 123An example of this activity is the purchase of capital assets. (SFFAS 7 Implementation Guide (April 2002), par. 62) 124This activity may include noncash recoveries of prior year obligations. Recoveries are budgetary resources that offset obligations on the Statement 

of Budgetary Resources, but which are not a proprietary financing source used to offset costs on the Statement of Net Cost. 

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Section VII Statement of Financing 

Components of the Net Cost of Operations that Will Not 

Require or Generate Resources in the Current Period 

Resources (15 – 24) 

Yes, 

No, 

or 

N/A 

Explanation 

The section, “Components of the Net Cost of Operations that will not Require or Generate 

Resources in the Current Period,” identifies (1) items that are recognized as a component 

of the net cost of operations (i.e., current period expenses and exchange revenues) for 

which budgetary resources (and related obligations) will not be provided (or incurred) 

until a subsequent period and (2) items (i.e., current period expenses) that are recognized 

as a part of the net cost of operations for the period but will not generate or require the use 

of resources in the current period. (OMB Bulletin 01-09, p. 49, section 7.5 & p. 50, 

section 7.6) 

15. Does the line item, “increase in annual leave liability,” 

include the expense related to the increase125 in annual 

leave liability for which the budgetary resources will 

be provided in a subsequent period? 

(OMB Bulletin 01-09, p. 50, section 7.5) 

16. Does the line item, “increase in environmental and 

disposal liability,” include the expense related to the 

increase in environmental and disposal liability for 

which the budgetary resources will be provided in a 

subsequent period? 

(OMB Bulletin 01-09, p. 50, section 7.5) 

17. Does the line item “upward/downward reestimates of 

credit subsidy expense (+/-),” include the expense 

recognized as a result of an upward(+) or downward(-) 

reestimate of credit program subsidy cost for which 

budgetary resources (or obligations) will be provided 

(or incurred) in a subsequent period?

126 

(OMB Bulletin 01-09, p. 50, section 7.5) 

125An increase in annual leave liability has no effect on budgetary accounts, because it is not funded on an accrual basis. It is financed when it is taken 

and the amounts are paid to employees who took the leave. Thus, budgetary resources are zero, but the net cost of operations includes the amount of 

accrued leave. (SFFAS 7 Implementation Guide (April 2002), par. 40) 126The Credit Reform Act of 1990, as amended, provides that agencies will receive subsidies to cover defaults and other situations for direct loans and 

loan guarantees obligated after September 30, 1991. (SFFAS 7 Implementation Guide (April 2002), par. 66) 

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Section VII Statement of Financing 

Components of the Net Cost of Operations that Will Not 

Require or Generate Resources in the Current Period 

Resources (15 – 24) 

Yes, 

No, 

or 

N/A 

Explanation 

18. Are these credit subsidy reestimates reflected as 

liabilities covered by budgetary resources?127 

(OMB Bulletin 01-09, p. 50, section 7.5) 

19. Does the line item, “increase in exchange revenue 

receivable from the public,” include exchange revenue 

recognized as a component128 of the net cost of 

operations for the period? (OMB Bulletin 01-09, 

p. 50, section 7.5) 

20. Does the entity report as “other” under the section 

“Components Requiring or Generating Resources in 

Future Periods,” all other expenses and exchange 

revenue not specifically mentioned in the preceding 

questions that do not require or generate resources in 

the current period but will do so in a subsequent 

period? (OMB Bulletin 01-09, p. 50, section 7.5) 

21. Does the line item, “depreciation and amortization,” 

reflect the current period usage of assets129 or 

amortization of liabilities130 for which budgetary 

resources were obligated in a prior period? 

(OMB Bulletin 01-09, p. 50, section 7.6) 

22. Does the line item, “revaluation of assets and 

liabilities,” include gains and losses recognized131 

during the revaluation of assets or liabilities? 

(OMB Bulletin 01-09, p. 50, section 7.6;) 

127Budget authority to fund reestimates is permanent and indefinite and no further congressional action is needed to provide the resources. 128Absent specific legislation to the contrary, public receivables do not count as budgetary resources until they are collected. Hence, the revenue 

related to accruals of those resources is not reflected in offsetting collection activity at the time they are accrued. (SFFAS 7 Implementation Guide 

(April 2002) par. 70) 129Budgetary resources are obligated when the asset is acquired, not when it is depreciated or used up. No budgetary resources are used when an asset 

is depreciated. (SFFAS Implementation Guide, par. 44) 130Budgetary resources are obligated when an allowance (i.e., liability or contra-asset) for a subsidy is set up, and as the estimated expenses are 

realized the allowance account is amortized. The budgetary accounts, which have already recognized the obligation and offsetting collection for 

subsidy expense, are not affected by the transaction. (SFFAS 7 Implementation Guide (April 2002), par. 92) 131Gains are shown as a negative; losses are shown as a positive. 

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Section VII Statement of Financing 

Components of the Net Cost of Operations that Will Not 

Require or Generate Resources in the Current Period 

Resources (15 – 24) 

Yes, 

No, 

or 

N/A 

Explanation 

23. Does the entity report as “other” under the section 

“components not requiring or generating resources,” 

all other expenses132 and exchange revenue not 

specifically mentioned in the preceding questions that 

will not require or generate resources in the current or 

future periods? 

(OMB Bulletin 01-09, p. 50, section 7.5) 

24. Does the sum of the line items “total resources used to 

finance net cost of operations” and “total components 

of net cost of operations that will not require or 

generate resources in the current period” agree with 

the net cost of operations as reported in the Statement 

of Net Cost as well as the Statement of Changes in Net 

Position? (OMB Bulletin 01-09, p. 51, section 7.7) 

132An example of this would be default expenses of pre-credit reform (or pre 1992) loans. 

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Section VII Statement of Financing 

Disclosure Items (25 – 27) 

Yes, 

No, 

or 

N/A 

Explanation 

25. Has the entity identified and explained in a note to the 

financial statements the relationship between amounts 

reported as “liabilities not covered by budgetary 

resources” reported on the Balance Sheet and amounts 

reported as “components requiring or generating 

resources in future periods” on the Statement of 

Financing? (OMB Bulletin 01-09, p. 94, section 9.35) 

When budget authority and other resources are allocated to another agency or bureau,133 

the parent (transferor of the appropriation) should report the activity in its financial 

statements unless the allocation transfer is material to the child’s (recipient of the transfer) 

financial statements. If the allocation transfer is material to the child’s financial 

statements, the child entity should report the activity relating to the allocation in all of its 

financial statements, except the Statement of Budgetary Resources (SBR). In this case, the 

parent entity should continue to report the appropriation and the related budgetary activity 

in its SBR. It is the responsibility of the parent to ensure that the reporting to Treasury, 

through FACTS I, is consistent with the presentation in the financial statements. 

(OMB Bulletin 01-09, p. 94, section 9.36) 

26. When the child entity reports material allocation 

transfers in its Statement of Net Cost, do both the 

parent and the child report a reconciling item on their 

respective Statements of Financing? 

(OMB Bulletin 01-09, p. 95, section 9.36) 

27. Do both parent and child entities provide a general 

description of the funds transferred or received, 

including the nature and purpose of the transfer and 

any additional details deemed necessary? 

(OMB Bulletin 01-09, p. 95, section 9.36) 

133See OMB Circular A-11, sections 20.4 (l) and 71.6 

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Section VIII Statement of Custodial Activity 

The 28 questions in this section are related to the Statement of Custodial Activity. 

Question Numbers 

1. General 1-2 

2. Sources of Collections 3-10 

3. Disposition of Collections 11-15 

4. Disclosures 16-19 

5. Dedicated Collections and 20-27 

Other Accompanying Information 

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Section VIII Statement of Custodial Activity 

General Items (1 – 2) 

Yes, 

No, 

or 

N/A 

Explanation 

Entities that collect nonexchange revenue for the General Fund of the Treasury, a 

trust fund, or other recipient entities account for the sources and disposition of these 

collections in a Statement of Custodial Activity. (OMB Bulletin 01-09, p. 52, 

section 8.1) 

1. If some of the nonexchange revenue is transferred to 

others and some of the nonexchange revenue is retained 

as a reimbursement for the costs of collection, are the 

transferred amounts reported on the Statement of 

Custodial Activity, and are the retained amounts reported 

on the Statement of Net Cost? 

(OMB Bulletin 01-09, p. 52, section 8.1) 

2. If the entity collects exchange revenue (e.g., rents and 

royalties) on behalf of other entities and recognizes 

virtually no costs in connection with earning that 

revenue, does the entity account for it as a custodial 

activity? (SFFAS 7, par. 45) 

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Section VIII Statement of Custodial Activity 

Sources of Collections (3 – 10) 

Yes, 

No, 

or 

N/A 

Explanation 

3. Are the following transactions recognized as taxes and 

other nonexchange revenues from the public? 

a. individual and corporate income taxes, social 

insurance taxes and contributions, excise taxes, 

estate and gift taxes, and customs duties 

b. social insurance taxes and contributions paid by 

federal employees 

c. deposits by states for unemployment trust funds 

d. user fees and harbor maintenance trust fund 

payments 

e. customs service fees 

f. deposits of earnings from the Federal Reserve 

System 

g. donations, except types of PP&E that are expensed 

h. fines and penalties 

i. penalties due to delinquent taxes in connection with 

custodial activity 

j. forfeitures (SFFAS 7, par. 49; SFFAS 7, 

Appendix B, par. 242 - 264) 

4. Does the collecting entity measure taxes and duties on a 

cash basis and then modify that with an accrual 

adjustment to determine the amount of revenue to be 

recognized? (SFFAS 7, par. 49 & 52; 

OMB Bulletin 01-09, p. 54, section 8.3) 

5. Except for deposits, are cash collections134 based on 

amounts actually received during the fiscal period 

including withholdings, estimated payments, final 

payments, and collections of receivables? (SFFAS 7, 

par. 50 & 59) 

134Cash collections include any amounts paid in advance of due dates unless they are deposits. Deposits are amounts voluntarily paid to reporting 

entities, such as those made to stop the accrual of interest or those made pending settlements and judgments. Such Deposits are separately recognized 

as deposit liabilities. 

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Section VIII Statement of Custodial Activity 

Sources of Collections (3 – 10) 

Yes, 

No, 

or 

N/A 

Explanation 

6. Are the components of cash collections classified by 

source and nature of collection, such as by type of tax or 

duty? (OMB Bulletin 01-09, pp. 53 & 54, section 8.3) 

7. Are cash refunds of nonexchange revenue based on 

refunds of taxes and duties during the period? 

(SFFAS 7, par. 51) 

8. Do cash refunds of nonexchange revenue for taxes and 

duties include refund offsets135 and drawbacks?136 

(SFFAS 7, par. 51) 

9. Are cash refunds, if material in relation to gross 

collections, disclosed separately by component in the 

notes to the financial statement? 

(OMB Bulletin 01-09, p.54, section 8.3) 

10. Are accrual adjustments,137 if material in relation to 

gross collections, disclosed separately in the notes to the 

financial statement? (SFFAS 7, par. 52; 

OMB Bulletin 01-09, p. 54, section 8.3) 

135Refund offsets are amounts withheld from refunds on behalf of other agencies and paid to such agencies. 136Drawbacks are refunds of duties paid on imported goods that are subsequently exported or destroyed. 137Accrual adjustments, which modify the net of cash collections and refunds to determine the amount of revenue recognized, are the net increases or 

decreases during the reporting period in accounts receivable, allowance for uncollectable accounts, and accounts payable for refunds. 

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Section VIII Statement of Custodial Activity 

Disposition of Collections (11 – 15) 

Yes, 

No, 

or 

N/A 

Explanation 

11. Do the amounts transferred to others, reported in the 

“disposition of collections” section, identify the specific 

agencies to which collections were transferred and the 

amounts transferred? (OMB Bulletin 01-09, p. 53, 

section 8.2 & p. 54, section 8.4) 

12. Does the collecting entity report the change in liability 

for accrued and collected revenue yet to be transferred? 

(OMB Bulletin 01-09, p. 53, section 8.2 & p. 54, 

section 8.4) 

13. Are the amounts of refunds and other payments made 

reported separately in the “disposition of collections” 

section of the Statement of Custodial Activity? 

(OMB Bulletin 01-09, p. 53, section 8.2 & p. 54, 

section 8.4) 

14. Are collections retained by the entity separately reported 

as exchange revenue in the Statement of Net Cost and 

treated as a disposition of collections revenue in the 

statement of custodial activity? (OMB Bulletin 01-09, 

p. 52, section 8.1, p. 53, section 8.2. & p. 54, 

section 8.4) 

15. In the Statement of Custodial Activity, do total sources 

of collections equal total disposition of collections 

(revenue) so that the net custodial activity is zero? 

(OMB Bulletin 01-09, p. 54, section 8.5) 

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Section VIII Statement of Custodial Activity 

Disclosures (16 – 19) 

Yes, 

No, 

or 

N/A 

Explanation 

16. If custodial revenues are immaterial and incidental to the 

entity’s primary mission and are not reported separately 

on the Statement of Custodial Activity, are the sources 

and amounts of the collections and amounts to be 

distributed to others disclosed? (OMB Bulletin 01-09, 

p. 52, section 8.1 & p. 95, section 9.37) 

17. Does the collecting entity disclose and explain the 

following information? 

a. the basis of accounting when application of the 

general rule for recognizing nonexchange revenue 

(i.e., specifically identifiable, legally enforceable, 

and reasonably estimable) results in a modified cash 

basis of accounting 

b. the specific potential accruals that are not made as a 

result of using the modified cash basis accounting 

c. the practical and inherent limitations affecting the 

accrual of taxes and duties 

d. the use of accrual-based accounting, if applicable 

(SFFAS 7, par.48 & 64) 

18. Do entities that collect taxes and duties disclose the 

following information in a note or narrative? 

a. basis of accounting 

b. factors affecting the collectibility and timing of 

taxes and other nonexchange revenues 

c. cash collections and refunds by tax year and type of 

tax for the reporting period (SFFAS 7, par. 65.1 & 

65.3; OMB Bulletin 01-09, p. 95, section 9.38) 

19. If trust fund revenues are not recorded in accordance 

with applicable law, do the collecting and recipient 

entities disclose the reasons? (SFFAS 7, par. 66) 

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Section VIII Statement of Custodial Activity 

Dedicated Collections and Other Accompanying 

Information (20 – 27) 

Yes, 

No, 

or 

N/A 

Explanation 

Dedicated collections are funds held with the expectation that they will be held for 

and applied to the purposes for which the funds were dedicated. Such funds include 

all funds within the budget classified as trust funds, those funds within the budget that 

are classified as “special funds” but that are similar in nature to trust funds, and 

those funds within the federal universe (inside or outside the budget) that are 

fiduciary in nature. (SFFAS 7, par. 83; OMB Bulletin 01-09, p. 95, section 9.39) 

20. Does the management of a reporting entity identify, 

track, and disclose the receipts and expenditures of 

dedicated trust funds, "special funds," and fiduciary or 

deposit funds (both inside and outside the budget) for 

which it is responsible? (SFFAS 7, par. 83; 

OMB Bulletin 01-09, pp. 95 & 96, section 9.39) 

21. Does management provide separate financial 

information about these dedicated funds if they are 

material to the reporting entity, the beneficiary, or the 

contributors? (SFFAS 7, par. 84; OMB Bulletin 01-09, 

pp. 95 & 96, section 9.39) 

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Section VIII Statement of Custodial Activity 

Dedicated Collections and Other Accompanying 

Information (20 – 27) 

Yes, 

No, 

or 

N/A 

Explanation 

22. Is the following information reported for individual 

funds that account for dedicated collections? 

a. a description of each fund’s purpose, how the 

administrative entity accounts for and reports the 

fund, and its authority to use those collections 

b. the sources of revenue or other financing for the 

period and an explanation of the extent to which 

they are inflows of resources to the government or 

the result of intragovernmental flows 

c. condensed information about assets and liabilities 

showing investments in Treasury securities, other 

assets, liabilities due and payable to beneficiaries, 

other liabilities, and fund balance 

d. condensed information on net cost and changes to 

fund balance showing revenues by type (exchange 

or nonexchange), program expenses, other expenses, 

other financing sources, and other changes in fund 

balance 

e. the amounts of any revenues—other financing 

sources or costs attributable to the fund under 

accounting standards—that are not legally allowable 

as credits or charges to the fund (SFFAS 7, par. 85; 

OMB Bulletin 01-09, pp. 95 & 96, section 9.39) 

23. If revenues, other financing sources, or costs (such as 

item "e" of the previous question) are associated with 

but not legally allowable to a fund, does the larger 

reporting entity of which the fund is a component 

recognize them? (SFFAS 7, par. 86; 

OMB Bulletin 01-09, p. 96, section 9.39) 

24. If more than one reporting entity is responsible for 

carrying out a program financed with dedicated 

collections, does the entity with the largest share of the 

activity take responsibility for reporting all revenues, 

other financing sources, assets, liabilities, and costs of 

the fund? (SFFAS 7, par. 87) 

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Section VIII Statement of Custodial Activity 

Dedicated Collections and Other Accompanying 

Information (20 – 27) 

Yes, 

No, 

or 

N/A 

Explanation 

25. If information on actual collections is not currently 

available from the collecting entity, do the trust funds 

that are legally entitled to receive only excise taxes that 

are actually collected by the collecting entity recognize 

revenue from excise taxes on the basis of assessments in 

lieu of excise taxes actually collected? (SFFAS 7, 

par. 60.1) 

26. Is the amount of revenue accrued and recognized by the 

social security trust fund based on the best available 

information (i.e., on the basis of the higher of the 

amount of Internal Revenue Service (IRS) assessments 

or the amounts actually reported by employers to Social 

Security)? (SFFAS 7, par. 60.2) 

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Section VIII Statement of Custodial Activity 

Dedicated Collections and Other Accompanying 

Information (20 – 27) 

Yes, 

No, 

or 

N/A 

Explanation 

27. Does the collecting entity report the following as other 

accompanying information? 

a. income tax burden borne by different classes of 

taxpayers and the effects of tax rates, deductions, 

credits, etc. (required of IRS) 

b. available information on the size of the tax gap, 

including 

i. explicit definitions of the estimated amounts 

reported (e.g., whether the tax gap includes 

estimates on illegally earned income) 

ii. appropriate explanations of the limited 

reliability of the estimates 

iii. cross references to portions of the tax gap due 

from identified noncompliant taxpayers and 

importers 

c. appropriate explanations and qualifications, if 

information about tax expenditures related to entity 

programs is present 

d. a description of the basis for the estimates and 

appropriate cautionary language about reliability, if 

information about estimated directed flows of 

resources related to an entity’s programs is 

presented (SFFAS 7, par. 69.1 - 69.4; 

OMB Bulletin 01-09, p. 114 section 12.3 & p. 115, 

section 12.4) 

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Section IX Notes to Financial Statements 

The five questions in this section concern the disclosure of significant accounting policies. 

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Section IX Notes to Financial Statements 

Note to Financial Statements 

(1 - 5) 

Yes, 

No, 

Or 

N/A 

Explanation 

1. Is a description of the reporting entity presented in the 

disclosure of significant accounting policies, along with 

identification of the entity’s major components? 

(OMB Bulletin 01-09, p. 55, section 9.1) 

2. Does the entity identify and describe accounting 

principles it follows, and methods of applying those 

principles in a note to the financial statements? 

(OMB Bulletin 01-09, p. 55, section 9.1) 

3. Does the entity's disclosure of its accounting policies 

include its rationale for the valuation, recognition, and 

allocation of assets, liabilities, expenses, revenues, and 

other financing sources? (OMB Bulletin 01-09, p. 55, 

section 9.1) 

4. Does the entity disclose any significant changes in its 

composition or manner in which it aggregates 

information for financial reporting purposes? 

(OMB Bulletin 01-09, p. 55, section 9.1) 

5. If changes in the composition of the reporting entity or 

manner in which the reporting entity aggregates 

information for financial reporting purposes, in effect, 

result in a new reporting entity, has the entity restated 

financial statements for all prior periods presented to 

correspond to the changes? (OMB Bulletin 01-09, 

pp. 55 & 56, section 9.1) 

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Section X Supplementary Information 

The questions related to the Supplementary Information are organized in the following nine categories. 

Question Numbers 

1. Required Supplementary Stewardship Information: 

Property, Plant, & Equipment 1–14 

2. Required Supplementary Stewardship Information: 

Stewardship Investments 15–42 

3. Required Supplementary Information: 

Risk-Assumed Information 43 

4. Required Supplementary Information: 

Custodial Activity 44–45 

5. Required Supplementary Information: 

Segment Information 46–47 

6. Required Supplementary Information 

Management’s Discussion and Analysis 48-61 

7. Required Supplementary Information: 

Deferred Maintenance 62-65 

8. Required Supplementary Information: 

Intragovernmental Amounts 66–78 

9. Required Supplementary Stewardship Information: 

Social Insurance138 79–102 

138For periods beginning after September 30, 2004, the information required by paragraphs 27(3) and 32(3) of SFFAS 17 shall be presented as a basic 

financial statement rather than as RSSI. Other information required by SFFAS 17 shall be presented as RSI, except to the extent that the preparer 

elects to include some or all of that information in notes that are presented as an integral part of the basic financial statements (SFFAS 25, par. 6 & 7) 

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Section X Supplementary Information 

Required Supplementary Stewardship Information: 

Property, Plant, and Equipment (1 – 14) 

Yes, 

No, 

or 

N/A 

Explanation 

Stewardship reporting requires the federal government to report on its stewardship 

over certain resources entrusted to it and certain responsibilities assumed by it that 

cannot be measured in traditional financial reports. These resources and 

responsibilities do not meet the criteria for assets and liabilities that are required to 

be reported in the financial statements, but are important to understanding the 

operations and financial condition of the federal government at the date of the 

financial statements and in subsequent periods. 

Stewardship PP&E consists of items whose physical properties resemble those of 

general PP&E traditionally capitalized in financial statements. However, because of 

the nature of these assets, valuation may be difficult, and matching costs with specific 

periods would not be meaningful. 

Stewardship PP&E includes: 

- heritage assets, such as federal monuments and memorials, that are of historical, 

natural, cultural, educational, architectural, or artistic significance and 

- stewardship land, such as national forests and parks that have not been acquired 

for or in connection with general PP&E. (SFFAS 8, par.7-11 & 17; 

OMB Bulletin 01-09, p. 97 section 10.1 and p. 98, section, 10.2) 

1. Except for multi-use heritage assets in which the 

predominant use of the asset is in general government 

operations, are heritage assets reported as Required 

Supplementary Stewardship Information (RSSI) 

accompanying the financial statements rather than as 

asset amounts on the balance sheet? (SFFAS 8, par.43; 

OMB Bulletin 01-09, p. 23, section 3.3 & p. 98, 

section 10.2A) 

2. Are heritage assets (including multiuse heritage assets) 

reported in RSSI in terms of physical units rather than in 

terms of cost, fair value, or other monetary values? 

(SFFAS 8, par. 46; SFFAS 16, par.9; 

OMB Bulletin 01-09, p. 23, section 3.3 & p. 98, 

section 10.2A) 

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Section X Supplementary Information 

Required Supplementary Stewardship Information: 

Property, Plant, and Equipment (1 – 14) 

Yes, 

No, 

or 

N/A 

Explanation 

3. Does the reporting entity provide relevant RSSI in the 

financial statements, such as the following information 

about its heritage assets? 

a. a description of each major category of heritage asset 

and whether it is collectible or noncollectible 

b. a description of the methods of acquisition and 

withdrawal of heritage assets 

c. an accounting for the physical units by major 

category including: 

i. beginning balances 

ii. additions 

iii. withdrawals 

iv. ending balances 

d. a description of the condition of the assets unless it is 

already reported in deferred maintenance 

information included elsewhere in the report, in 

which case a reference to the information will 

suffice 

e. a reference to deferred maintenance information, if 

deferred maintenance is reported for the assets 

(SFFAS 8, par. 50, SFFAS 14, par. 10-11; 

OMB Bulletin 01-09, pp. 99-100, section 10.2D) 

4. Are federal land139 and land rights owned by the federal 

government and not acquired for or in connection with 

other general PP&E reported as stewardship land in the 

RSSI of the financial statements? (SFFAS 6, par. 66-68, 

SFFAS 8, par. 74) 

5. Is stewardship land quantified and reported in terms of 

physical units (e.g., acres) in the RSSI rather than in 

monetary values? (SFFAS 8, par. 75; 

OMB Bulletin 01-09, p. 99, section 10.2C) 

139Land is defined as the solid part of the surface of the earth. Excluded from the definition of land are materials beneath the surface (i.e., depletable 

resources such as mineral deposits and petroleum), the space above the surface (i.e., renewable resources such as timber), and the outer-continental 

shelf resources. 

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Section X Supplementary Information 

Required Supplementary Stewardship Information: 

Property, Plant, and Equipment (1 – 14) 

Yes, 

No, 

or 

N/A 

Explanation 

6. Is the cost of a structure acquired with stewardship land 

that is to be used in operations included in the 

acquisition cost of the land if one of the following 

conditions applies? 

a. the structure’s value is insignificant compared to the 

value of the land 

b. the structure has little or no inherent value 

c. the structure is merely a byproduct of the acquisition 

of the land (SFFAS 6, par. 70) 

7. If a significant structure acquired with stewardship land 

has an operating use (e.g., a recently constructed hotel or 

employee-housing block), is its cost segregated from the 

cost of the stewardship land acquired and capitalized as 

general PP&E? (SFFAS 6, par. 70; SFFAS 8, par. 78) 

8. If the fair value of stewardship land acquired through 

donation or devise is known and material, is it disclosed 

in the notes to the financial statements? (SFFAS 6, 

par. 71; SFFAS 8, par. 79) 

9. If the fair value of the stewardship land acquired through 

donation or devise is not estimable, is information as to 

the type and quantity of the assets disclosed? (SFFAS 6, 

par. 71; SFFAS 8, par. 79) 

10. Is the cost of stewardship land transferred from another 

federal entity recorded at the book value of the land on 

the transferring entity’s books? (SFFAS 6, par. 72) 

11. If stewardship land is transferred from another federal 

entity, and the receiving entity does not know its book 

value, is the transfer disclosed in the notes if material? 

(SFFAS 6, par. 72) 

12. Are all transfers of stewardship land disclosed in the 

notes if material? (SFFAS 6, par. 72) 

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Section X Supplementary Information 

Required Supplementary Stewardship Information: 

Property, Plant, and Equipment (1 – 14) 

Yes, 

No, 

or 

N/A 

Explanation 

13. Is acquisition cost of stewardship land recorded in the 

following manner? 

a. recognized as a cost in the period incurred 

b. include all costs incurred to bring the stewardship 

land to its intended use, current condition, and 

location (including razing a building) 

c. disclosed140 as “cost of stewardship land” (SFFAS 6, 

par. 69 & 73, SFFAS 8, par. 80) 

14. With regard to stewardship land, does the reporting 

entity include in its RSSI the following information? 

a. a description, by principal organization, significant 

holdings of stewardship land by category of major 

use141 

b. a description of the methods of acquisition and 

withdrawal of stewardship land 

c. an accounting for physical units by major category 

including: 

i. beginning balance 

ii. additions 

iii. withdrawals 

iv. ending balance 

d. the condition of the stewardship land, unless it is 

already reported elsewhere in the report (in which 

case a reference to the information will suffice) 

e. a reference to the applicable information if deferred 

maintenance is reported for the assets. (SFFAS 6, 

par. 69 & 73; SFFAS 8, par. 80 & 81; SFFAS 14, 

par. 10 & 11; OMB Bulletin 01-09, pp. 99 & 100, 

section 10.2D) 

140Disclosure shall be either on the face of the statement of net cost or in footnotes, depending on the materiality of the amounts and the need to 

distinguish such amounts from other costs relating to measures of outputs or outcomes of the reporting entity. 141Where parcels of stewardship land have more than one use, the predominant use of the land shall be considered the major use. 

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Section X Supplementary Information 

Required Supplementary Stewardship Information: 

Stewardship Investments (15 – 42) 

Yes, 

No, 

or 

N/A 

Explanation 

Stewardship investments are substantial investments made by the federal government 

for the benefit of the nation. When incurred, they are treated as expenses in 

calculating net cost, but they are also separately reported as RSSI to highlight the 

extent of investments that are made for long-term benefit. (SFFAS 8, par. 12) 

Stewardship investments include: 

- nonfederal physical property: federally financed (but not federally owned) 

purchases, construction, or major renovation of physical property owned by 

state and local governments, including major additions, alterations, and 

replacements, the purchase of major equipment; and the purchase or 

improvement of other physical assets.142 

- human capital: expenses incurred for programs for education and training of the 

public143 that are intended to increase or maintain national productive capacity 

and that produce outputs and outcomes that provide evidence of maintaining or 

increasing national productive capacity. 

- research & development: expenses incurred to support the search for new or 

refined knowledge and ideas and for the application or use of such knowledge 

and ideas for the development of new or improved products and processes with 

the expectation of maintaining or increasing national productive capacity or 

yielding other future benefits. (SFFAS 8, par. 12, 83, 89, 90, & 96; 

OMB Bulletin 01-09, p. 100, section 10.3) 

15. Are nonfederal physical property investments reported 

in nominal dollars on the basis of "expenses incurred" 

and measured on the same basis of accounting used for 

financial statement purposes, including appropriate 

accrual adjustments, general and administrative 

overhead, and costs of facilities? (SFFAS 8, par. 84) 

16. Are investments in nonfederal physical property and 

related cash grants recognized and reported as expenses 

in arriving at the net cost of operations? (SFFAS 8, 

par. 85; OMB Bulletin 01-09, p. 100, section 10.3A) 

142Grants for maintenance and operations are not considered investments in nonfederal physical property. 143The definition excludes education and training expensed for federal civilian and military personnel. 

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Section X Supplementary Information 

Required Supplementary Stewardship Information: 

Stewardship Investments (15 – 42) 

Yes, 

No, 

or 

N/A 

Explanation 

17. Are expenses incurred for nonfederal physical property 

program costs, contracts, or grants with split 

purposes144 reported in RSSI on the basis of a logical 

allocation? (SFFAS 8, par. 86) 

18. If an allocation of such program costs, etc. is not 

feasible, is the investment reported on the basis of the 

predominant application of the expenses incurred? 

(SFFAS 8, par. 86) 

19. Does the reporting entity provide in its RSSI a dollar 

amount and a narrative description of its investment in 

nonfederal physical property for the year being reported 

on as well as at least the preceding 4 years? (SFFAS 8, 

par. 87; OMB Bulletin 01-09, p. 100, section 10.3A & 

p. 102, section 10.3D) 

20. Is expense or outlay data for investments in nonfederal 

physical property reported at a meaningful category or 

level (e.g., by major program or department)? 

(SFFAS 8, par. 87; OMB Bulletin 01-09, p. 102, 

section 10.3D) 

21. Does the reporting entity also include in its RSSI a 

description of federally owned physical property 

transferred to state and local governments for the year 

being reported on as well as at least the preceding 4 

years? (SFFAS 8, par. 87; OMB Bulletin 01-09, p. 102, 

section 10.3D) 

22. If expense data for the purchase of PP&E for state and 

local governments for the year being reported on and 

for the preceding 4 years are not available, does the 

entity report outlay data, if available? (SFFAS 8, 

par. 87; OMB Bulletin 01-09, p. 102, section 10.3D) 

144An example of an investment with a split purpose is a grant issued to a state to construct segments of the National Highway System and to conduct 

highway research. 

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Section X Supplementary Information 

Required Supplementary Stewardship Information: 

Stewardship Investments (15 – 42) 

Yes, 

No, 

or 

N/A 

Explanation 

23. If neither historical expense nor outlay data are 

available ion stewardship investments for the year 

being reported on and the preceding 4 years, does the 

entity report expense data for the current reporting year 

and such other years, as available? (SFFAS 8, par. 87; 

OMB Bulletin 01-09, p. 102, section 10.3D) 

24. Are investments in human capital reported in nominal 

dollars on the basis of "expenses incurred" and 

measured on the same basis of accounting used for 

financial statement purposes, including appropriate 

accrual adjustments, general and administrative 

overhead, and costs of facilities? (SFFAS 8, par. 91) 

25. Are expenses incurred for human capital program costs, 

contracts, or grants with split purposes145 reported in 

RSSI on the basis of a logical allocation? (SFFAS 8, 

par. 92) 

26. If an allocation of such program costs, etc. is not 

feasible, is the investment reported on the basis of the 

predominant application of the expenses incurred? 

(SFFAS 8, par. 92) 

27. Does the entity link its investments in human capital to 

outcomes that can be described in financial, economic, 

or quantitative terms? (SFFAS 8, par. 93) 

28. If outcome data are not available, does the reporting 

entity report output data that best provide indications of 

the intended program outcomes? (SFFAS 8, par. 93) 

29. Does the reporting entity include in its RSSI the dollar 

amount and a narrative description of its investment in 

human capital for the year being reported on as well as 

the preceding 4 years? (SFFAS 8, par. 94; 

OMB Bulletin 01-09, p. 101, section 10.3B) 

145An example of an investment with a split purpose is a grant issued to a teaching hospital for both medical education and medical research. 

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Section X Supplementary Information 

Required Supplementary Stewardship Information: 

Stewardship Investments (15 – 42) 

Yes, 

No, 

or 

N/A 

Explanation 

30. If expense data for the investments in human capital for 

the year being reported and for the preceding 4 years 

are not available, does the entity report outlay data, if 

available? (SFFAS 8, par. 94; OMB Bulletin 01-09, 

p. 102, section 10.3D) 

31. If neither historical expense nor outlay data for the 

investments in human capital are available for the year 

being reported on and the preceding 4 years, does the 

entity report expense data for the current reporting year 

and such other years, as available? (SFFAS 8, par. 94; 

OMB Bulletin 01-09, p. 102, section 10.3D) 

32. Is expense or outlay data for investments in human 

capital reported at a meaningful category or level (e.g., 

by major program or department)? (SFFAS 8, par. 94) 

33. Is the investment in research and development reported 

in nominal dollars on the basis of "expenses incurred" 

and measured on the same basis of accounting used for 

financial statement purposes, including appropriate 

accrual adjustments, general and administrative 

overhead, and costs of facilities? (SFFAS 8, par. 97) 

34. Are expenses incurred for research and development 

program costs, contracts, or grants with split 

purposes146 reported in RSSI on the basis of a logical 

allocation? (SFFAS 8, par. 98) 

35. If an allocation of such program costs, etc. is not 

feasible, is the investment reported on the basis of the 

predominant application of the expenses incurred? 

(SFFAS 8, par. 98) 

146An example of an investment with a split purpose is a grant issued to a teaching hospital to perform both medical education and 

medical research. 

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Section X Supplementary Information 

Required Supplementary Stewardship Information: 

Stewardship Investments (15 – 42) 

Yes, 

No, 

or 

N/A 

Explanation 

36. Does the entity link its investments in research and 

development to program outcome data via a narrative 

discussion of the major results achieved by the program 

during the year, along the following lines? 

a. basic research, which refers to an identification of 

any major new discoveries that were made during 

the year 

b. applied research, which refers to an identification 

of any major new applications that were developed 

during the year 

c. development, which refers to the progress of major 

developmental projects including the results with 

respect to projects completed or otherwise 

terminated during the year and the status of 

projects that will continue (SFFAS 8, par. 99) 

37. If outcome data are not available, does the reporting 

entity use output data147 that best provide indications of 

the intended program outcomes? (SFFAS 8, par. 99) 

38. Does the reporting entity include in its RSSI the dollar 

amount and a narrative description of its investment in 

major research and development programs for the year 

being reported on as well as the preceding 4 years? 

(SFFAS 8, par. 100; OMB Bulletin 01-09, p. 101, 

section 10.3C & p. 102, section 10.3D) 

39. If expense data for the investments in research and 

development for the year being reported and for the 

preceding 4 years are not available, does the entity 

report outlay data, if available? (SFFAS 8, par. 100; 

OMB Bulletin 01-09, p. 102, section 10.3D) 

147In research and development programs, output data might consist of a number of new projects initiated, or the number of projects continued, 

completed, or terminated. It also might consist of quantitative measures such as publication counts, citation counts, patent counts, or scientific and 

engineering personnel funded. 

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Section X Supplementary Information 

Required Supplementary Stewardship Information: 

Stewardship Investments (15 – 42) 

Yes, 

No, 

or 

N/A 

Explanation 

40. If neither historical expense nor outlay data are 

available for the year being reported on and the 

preceding 4 years, does the entity report expense data 

for the current year and such other years as available? 

(SFFAS 8, par. 100; OMB Bulletin 01-09, p. 102, 

section 10.3D) 

41. Is expense or outlay data for investments in research 

and development reported at a meaningful category or 

level (e.g., by major program or department)? 

(SFFAS 8, par. 100; OMB Bulletin 01-09, p. 102, 

section 10.3D) 

42. Does the entity report in its RSSI the amounts of 

significant contributions from state, local, private, and 

other sources to its investments in nonfederal physical 

property, human capital, and research and 

development?148 (SFFAS 8, par. 88, 95, & 101) 

148This reporting is encouraged, but is not required. 

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Section X Supplementary Information 

Required Supplementary Information: 

Risk-Assumed Information (43) 

Yes, 

No, 

or 

N/A 

Explanation 

Risk-assumed information is generally measured by the present value of unpaid 

expected losses net of associated premiums based on the risk inherent in the 

insurance or guarantee coverage in force. (SFFAS 5, par. 105 & 106; 

OMB Bulletin 01-09, p.103, section 10.4A) 

43. Does the entity include as Required Supplementary 

Information (RSI) the current amount and periodic 

changes of "risk assumed" arising from insurance and 

guarantee programs? (SFFAS 5, par. 105, 106, 110; 

SFFAS 25, par. 2; OMB Bulletin 01-09, p. 103, 

section 10.4A) 

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Section X Supplementary Information 

Required Supplementary Information: 

Custodial Activity (44 – 45) 

Yes, 

No, 

or 

N/A 

Explanation 

44. Do entities that collect taxes and duties provide the 

following supplementary information relating to their 

potential revenue and custodial responsibilities? 

a. the estimated realizable value, as of the end of the 

reporting period, of compliance assessments and, if 

reasonably estimable, pre-assessment work in 

process, based on management’s best estimate that is 

appropriately identified as to their reliability 

b. if reasonably estimable, other claims for refunds not 

yet accrued but likely to be paid when administrative 

action is complete, based on management’s best 

estimates 

c. amount of assessments defined as written-off (i.e., no 

further collection potential) that continues to be 

statutorily collectable 

d. amounts by which trust funds may be overfunded or 

underfunded in comparison with the requirements of 

the law, if reasonably estimable (SFFAS 7, 

par. 67.1-67.4; OMB Bulletin 01-09, pp.112-113, 

section 11.5) 

45. If the entity receiving funds from the collecting entity is 

itself a trust fund, does it provide as supplementary 

information amounts by which related trust funds may be 

overfunded or underfunded in comparison with the 

requirements of the law, if reasonably estimable? 

(SFFAS 7, par. 67.4, 68; OMB Bulletin 01-09, p. 113, 

section 11.5) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 205
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Section X Supplementary Information 

Required Supplementary Information: 

Segment Information (46 – 47) 

Yes, 

No, 

or 

N/A 

Explanation 

46. Do all franchise and other intragovernmental support 

revolving funds report the following supplementary 

information? 

a. a brief description of the services provided by the 

fund and the identity of the fund's major customers 

(i.e., organizations that account for more than 15 

percent of the fund's revenues) 

b. a summary for the reporting period, by product or line 

of business, including the following items 

i. the full cost of goods and services provided 

ii. the related exchange revenues 

iii. the excess of full costs over exchange 

revenues (OMB Bulletin 01-09, p. 113, 

section 11.6) 

47. If a franchise fund or other intragovernmental support 

revolving fund is not separately reported on the entity's 

principal statements, does the entity report as 

supplementary information a summary of the fund's 

assets, liabilities, and net position that includes the 

following items as of the reporting date? 

a. fund balance 

b. accounts receivable 

c. property, plant, and equipment 

d. other assets 

e. liabilities due and payable for goods and services 

received 

f. deferred revenues 

g. other liabilities 

h. cumulative results of operations 

(OMB Bulletin 01-09, p. 113, section 11.6) 

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Section X Supplementary Information 

Required Supplementary Information: 

Management’s Discussion and Analysis (48 – 61) 

Yes, 

No, 

or 

N/A 

Explanation 

48. Does the entity include as RSI a section devoted to 

management discussion and analysis (MD&A) of the 

financial statements and related information? 

(SFFAS 15, par. 1; SFFAC 3, par. 1 & 2; 

OMB Bulletin 01-09, p. 105, section 11.1) 

49. In general, does the MD&A provide a clear, concise, and 

balanced description of the reporting entity and its 

mission, activities, program and financial performance, 

systems, controls, legal compliance, financial position, 

and financial condition? (SFFAS 15, par. 1; SFFAC 3, 

par. 1; OMB Bulletin 01-09, p. 105, section 11.1) 

50. Does the MD&A, at a minimum, contain sections that 

address the following items concerning the entity? 

a. mission and organizational structure 

b. performance goals, objectives, and results 

c. financial statements 

d. systems, controls, and legal compliance 

e. forward-looking information, either as a separate 

section of MD&A or incorporated with the sections 

listed above 

f. important problems that need to be addressed and 

action taken or planned, either as a separate section 

of the MD&A or incorporated with the sections 

listed above (SFFAS 15, par. 2-4; 

OMB Bulletin 01-09, pp. 105 & 106, section 11.1A) 

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Section X Supplementary Information 

Required Supplementary Information: 

Management’s Discussion and Analysis (48 – 61) 

Yes, 

No, 

or 

N/A 

Explanation 

51. Does the MD&A limit itself to the most important 

matters that could, for example, have the following 

impact? 

a. lead to significant actions or proposals by top 

management of the reporting unit 

b. be significant to the managing, budgeting, and 

oversight functions of Congress and the 

administration 

c. significantly affect the judgment of citizens about 

the efficiency and effectiveness of their federal 

government (SFFAS 15, par. 5 & 6) 

52. Does the MD&A section on the entity’s mission and 

organizational structure contain a brief description of the 

mission(s) of the entity and its related organizational 

structure, that is consistent with the entity’s strategic 

plan? (OMB Bulletin 01-09, p. 106, section 11.1B) 

53. Are the entity’s programs and financial results expressed 

in terms of objective and relevant measures that disclose 

the extent to which its programs are achieving their 

intended objectives? (OMB Bulletin 01-09, p. 106, 

section 11.1C) 

54. Has the entity attempted to develop and report objective 

measures that provide information about the cost 

effectiveness of programs? (OMB Bulletin 01-09, 

pp. 106 & 107, section 11.1C) 

55. Are the performance measures presented in the MD&A 

consistent with the measures previously included in the 

budget and planning documents? (OMB Bulletin 01-09, 

p. 107, section 11.1C) 

56. Does the entity explain what needs to be done and what 

is planned to improve financial or program 

performance? (OMB Bulletin 01-09, p. 107, 

section 11.1C) 

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Section X Supplementary Information 

Required Supplementary Information: 

Management’s Discussion and Analysis (48 – 61) 

Yes, 

No, 

or 

N/A 

Explanation 

57. Does the entity’s discussion of performance goals, 

objectives, and results indicate the extent to which its 

programs are achieving their intended goals and 

objectives, and are these clearly linked to cost categories 

(responsibility segments) featured in the Statement of 

Net Cost? (OMB Bulletin 01-09, p. 106, section 11.1C) 

58. Does the MD&A section on the entity’s performance 

goals, objectives, and results also provide the following 

information? 

a. a discussion of the strategies and resources the 

agency uses to achieve its performance goals 

b. a clear picture of planned and actual performance 

c. an explanation of the procedures that management 

has designed and followed to provide reasonable 

assurance that reported performance information 

is relevant and reliable 

d. an explanation of performance trends 

e. an evaluation of the significance of underlying 

factors that may have affected the reported 

performance (OMB Bulletin 01-09, p. 106, 

section 11.1C) 

59. In reporting on the status of systems and internal 

controls that support preparation of the financial 

statements, performance information, and compliance 

with applicable laws, does the entity describe material 

problems revealed by audits or otherwise known to 

management as well as corrective actions taken or 

planned? (OMB Bulletin 01-09, p. 107, section 11.1E) 

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Section X Supplementary Information 

Required Supplementary Information: 

Management’s Discussion and Analysis (48 – 61) 

Yes, 

No, 

or 

N/A 

Explanation 

60. Does the entity’s discussion of the possible future effects 

of existing events and conditions include at least the 

following information? 

a. demographic characteristics 

b. claims 

c. deferred maintenance 

d. commitments 

e. major unfunded liabilities (OMB Bulletin 01-09, 

p. 108, section 11.1F) 

61. Does the entity note the following in the section on 

limitations of the Financial Statements? 

a. the principal financial statements have been 

prepared to report the financial position and results 

of operations of the entity, pursuant to the 

requirements of 31 U.S.C. 3515(b) 

b. while the statements have been prepared from the 

books and records of the entity in accordance GAAP 

for federal entities and the formats prescribed by 

OMB, the statements are in addition to the financial 

reports used to monitor and control budgetary 

resources which are prepared from the same books 

and records 

c. the statements should be read with the realization 

that they are for a component of the U.S. 

government (OMB Bulletin 01-09, p. 108, 

section 11.1G) 

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Section X Supplementary Information 

Required Supplementary Information 

Deferred Maintenance (62 –65) 

Yes, 

No, 

or 

N/A 

Explanation 

Maintenance is the act of keeping fixed assets in acceptable condition. Maintenance 

includes preventive maintenance, normal repairs, replacement of parts and structural 

components, and other activities needed to preserve the asset so that it continues to 

provide acceptable services and achieves its expected life. 

Maintenance excludes activities aimed at expanding the capacity of an asset or 

otherwise upgrading it to serve needs different from, or significantly greater than, 

originally intended. 

Deferred maintenance is maintenance that was not performed when it should have been, or 

was scheduled to be, and that, therefore, is put off or delayed for a future period. (SFFAS 6, 

par. 77 & 78) 

62. Does the entity report under required supplementary 

information the following information for each major 

category of its PP&E (i.e., general PP&E, heritage assets, 

and stewardship land)? 

a. the identity (e.g., building, equipment, land) of each 

major class of asset for which maintenance was 

deferred 

b. the method of measuring deferred maintenance 

(SFFAS 6, par. 83; SFFAS 14, par. 1; 

OMB Bulletin 01-09, pp. 108-109, section 11.2) 

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Section X Supplementary Information 

Required Supplementary Information 

Deferred Maintenance (62 –65) 

Yes, 

No, 

or 

N/A 

Explanation 

Amounts reported for deferred maintenance may be measured using condition assessment 

surveys or life-cycle cost forecasts. 

Condition assessment surveys are periodic inspections of PP&E, based on generally 

accepted and consistently applied methods, to determine PP&E’s current condition and 

the estimated cost to correct any deficiencies. (SFFAS 6, par. 81) 

Life-cycle costing is an acquisition or procurement technique that considers operating, 

maintenance, and other costs in addition to the acquisition cost of assets. 

(SFFAS 6, par. 82) 

63. If the condition assessment survey method is used to 

measure deferred maintenance, is the following 

information presented for each major class of PP&E in 

supplementary information? 

a. a description of requirements or standards for 

acceptable operating condition 

b. any changes in the condition requirements or 

standards 

c. asset condition and a range estimate of the dollar 

amount of maintenance needed to return it to its 

acceptable operating condition (SFFAS 6, par. 83) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 212
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Section X Supplementary Information 

Required Supplementary Information 

Deferred Maintenance (62 –65) 

Yes, 

No, 

or 

N/A 

Explanation 

64. If the total life cycle cost method is used to measure 

deferred maintenance, is the following information 

presented for each major class of PP&E? 

a. the original date of the maintenance forecast and an 

explanation for any changes to the forecast 

b. prior-year balance of the cumulative deferred 

maintenance amount 

c. the dollar amount of maintenance that was defined by 

the professionals who designed, built, or managed the 

PP&E as required maintenance for the reporting 

period 

d. the dollar amount of maintenance actually performed 

during the period 

e. the difference between the forecast and actual 

maintenance 

f. any adjustments to the scheduled amounts deemed 

necessary by the managers of the PP&E 

g. the ending cumulative balance for the reporting 

period for each major class of asset experiencing 

deferred maintenance (SFFAS 6, par. 83) 

65. If management elects to break out deferred maintenance 

by critical and noncritical amounts needed to bring each 

class of asset to its acceptable operating condition, does it 

also include its definition of these categories? (SFFAS 6, 

par. 84) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 213
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Section X Supplementary Information 

Required Supplementary Information: 

Intragovernmental Amounts (66 – 78) 

Yes, 

No, 

or 

N/A 

Explanation 

Intragovernmental amounts represent transactions between federal entities included 

in the Financial Report of the United States Government. These transactions include 

activities with federal CFO Act and non-CFO Act entities as identified in the 

Treasury Financial Manual. (OMB Bulletin 01-09, p.109, section 11.3) 

66. Does the entity report, as required supplementary 

information and intragovernmental amounts, the 

following items? 

a. assets 

b. liabilities 

c. nonexchange revenue 

d. for certain reporting entities, earned revenue from 

trade (buy/sell) transactions along with the gross 

cost to generate such revenue (OMB Bulletin 01-09, 

p. 109, section 11.3) 

67. Does the entity report intragovernmental assets, 

liabilities, and earned revenue from trade transactions 

and nonexchange revenue by trading partner (i.e., 

reciprocal federal entity)? (OMB Bulletin 01-09, p. 109, 

section 11.3) 

68. Does the entity report intragovernmental gross cost to 

generate earned revenue from trade transactions by 

budget functional classification? (OMB Bulletin 01-09, 

p. 109, section 11.3) 

69. Do intragovernmental asset and liability categories 

reported as required supplementary information agree 

with the intragovernmental asset and line items reported 

on the balance sheet? (OMB Bulletin 01-09, p. 109, 

section 11.3) 

70. Are transactions with components of federal departments 

and agencies (e.g., Forest Service of the USDA) not 

reported separately, but included in the activity reported 

for the federal department or agency? 

(OMB Bulletin 01-09, p. 109, section 11.3) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 214
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Section X Supplementary Information 

Required Supplementary Information: 

Intragovernmental Amounts (66 – 78) 

Yes, 

No, 

or 

N/A 

Explanation 

71. Are all intragovernmental amounts net of intra-entity 

transactions? (OMB Bulletin 01-09, p. 109, 

section 11.3) 

72. Does the entity reconcile intragovernmental asset, 

liability, and revenue amounts with its trading partners at 

least quarterly? (OMB Bulletin 01-09, pp. 109 & 110, 

section 11.3) 

73. Do intragovernmental assets and liabilities reported as 

required supplementary information (RSI) agree with the 

intragovernmental asset and liability line items and totals 

on the reporting entity’s consolidated agencywide 

balance sheet? (OMB Bulletin 01-09, pp. 110 & 111, 

section 11.3) 

74. For each intragovernmental asset and liability line item 

on the consolidated agencywide balance sheet, does the 

entity identify in the supplementary information the 

trading partner balances that make up the line item?

149 

(OMB Bulletin 01-09, pp. 110 & 111, section 11.3) 

75. If intragovernmental transactions with a trading partner 

are material in one asset or liability category but 

immaterial in another category, does the entity report 

transactions with the trading partner for each category? 

(OMB Bulletin 01-09, pp. 110 & 111, section 11.3) 

76. If the entity has total intragovernmental earned revenues 

from trade transactions (net of intra-entity activity) of 

greater than $500 million, does it report such 

intragovernmental revenues by trading partner? 

(OMB Bulletin 01-09, p. 111, section 11.3) 

149Reporting entities may aggregate trading partners whose individual totals for a particular asset category collectively comprise less than 20 percent of 

the total asset line item category. 

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Section X Supplementary Information 

Required Supplementary Information: 

Intragovernmental Amounts (66 – 78) 

Yes, 

No, 

or 

N/A 

Explanation 

77. If the entity reports intragovernmental earned revenues, 

does it also report, by budget functional classification, 

the gross cost of goods, services, and other transactions 

that generated the intragovernmental earned revenues?150 

(OMB Bulletin 01-09, p. 111, section 11.3) 

78. Does the entity report, by trading partner, 

intragovernmental nonexchange revenues transferred in 

and out? (OMB Bulletin 01-09, p. 112, section 11.3) 

150The costs that generate intragovernmental earned revenues may not be intragovernmental in and of themselves. For example, if the General Services 

Administration (GSA) sells pencils to Agency A, GSA would report the revenue earned by selling the pencils to Agency A (intragovernmental) and 

report the cost of purchasing those pencils from Vendor B (public) by budget functional classification. 

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Section X Supplementary Information 

Required Supplementary Stewardship 

Information 

Social Insurance Programs (79 – 102) 

Yes, 

No, 

or 

N/A 

Explanation 

Social insurance programs covered by SFFAS 17, Accounting for Social Insurance, 

have the following five common characteristics. 

a. financing from participants or their employers 

b. eligibility from taxes or fees paid and time worked in covered employment 

c. benefits not directly related to taxes or fees paid 

d. benefits prescribed in law 

e. programs intended for the general public 

The following social insurance programs are specifically covered by SFFAS 17. 

a. Old-Age, Survivors, and Disability Insurance (OASDI, i.e., Social Security) 

b. Hospital Insurance (HI or Medicare Part A) and Supplementary Medical 

Insurance (SMI or Medicare Part B) 

c. Railroad Retirement Benefits (RRB) 

d. Black Lung Benefits 

e. Unemployment Insurance (UI. (SFFAS 17, par. 14 &, 15; OMB Bulletin 01-09, 

pp.103 & 104, section 10.4B) 

79. In general, does the entity responsible for a given social 

insurance program provide a clear and concise 

description of the program including its financing, 

calculation of benefits, and actuarial status151 as required 

supplementary stewardship information? (SFFAS 17, 

par. 24; OMB Bulletin 01-09, p.104, section 10.B) 

80. Does this description include the following information? 

a. discussion of the long-term sustainability and 

financial condition of the program 

b. an illustration and explanation of the long-term trends 

revealed in the data (SFFAS 17, par. 24; 

OMB Bulletin 01-09, p.104, section 10.B) 

151This is the status of a program based on statistical calculations and actuarial assumptions about future economic, demographic, and other conditions 

and events. 

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Section X Supplementary Information 

Required Supplementary Stewardship 

Information 

Social Insurance Programs (79 – 102) 

Yes, 

No, 

or 

N/A 

Explanation 

81. Does the reporting entity describe statutory or other 

material changes, and implications thereof, affecting the 

program after the current fiscal year? (SFFAS 17, 

par. 24) 

82. Are projections and estimates based on the entity’s best 

estimates of demographic and economic assumptions? 

(SFFAS 17, par. 25) 

83. Does the entity disclose significant assumptions used in 

making estimates and projections? (SFFAS 17, par. 25) 

84. Are all projections and estimates made as of a date (i.e., 

the valuation date) as close to the end of the fiscal year 

(i.e., current year) being reported on as possible and no 

more than 1 year prior to the end of the current year? 

(SFFAS 17, par. 26) 

85. Does the entity consistently follow this valuation date 

from year to year? (SFFAS 17, par. 26) 

86. Does information on the financial and actuarial status of 

the social insurance programs include actuarial 

projections that are indicative of long-term sustainability 

and show the annual cash flows in nominal dollars for 

current and future participants? (SFFAS 17, par. 27 (1)) 

87. Are the actuarial projections of cash flow amounts 

reported for at least every fifth year in the projection 

period? (SFFAS 17, par. 27 (1) (a)) 

88. Does the cash flow information show the following 

amounts? 

a. total cash inflow from all sources (i.e., by and on 

behalf of participants) less net interest on 

intragovernmental borrowing and lending 

b. total cash outflow (SFFAS 17, par. 27 (1) (a)) 

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Section X Supplementary Information 

Required Supplementary Stewardship 

Information 

Social Insurance Programs (79 – 102) 

Yes, 

No, 

or 

N/A 

Explanation 

89. Does the narrative accompanying the cash flow data 

include identification of any year or years during the 

projection period when cash outflow exceeds cash inflow, 

with and without interest on intragovernmental borrowing 

or lending (the “cross-over points”)? (SFFAS 17, 

par. 27 (1) (a)) 

90. Does the narrative provide an explanation of the 

significance of the cash flow “cross-over points” where 

cash outflows begin exceeding cash inflows? 

(SFFAS 17, par. 27 (1) (a) & 32 (1) (a)) 

91. Do the cash flow projections (net of interest on 

intragovernmental borrowing/lending) for Social Security 

and Medicare Part A include an estimate of cash flows as 

a percentage of taxable payroll? (SFFAS 17, 

par. 27 (1) (b)) 

92. Do the cash flow projections (net of interest on 

intragovernmental borrowing/lending) for Social Security 

and Medicare (Parts A & B) include an estimate of cash 

flows as a percentage of gross domestic product? 

(SFFAS 17, par. 27 (1) (b)) 

93. For Social Security and Medicare, Part A programs, does 

the entity’s cash flow information show its estimate of 

the ratio of the number of contributors to the number of 

beneficiaries during the same projection period as for 

cash flow projections? (SFFAS 17, par. 27 (2)) 

94. At a minimum, is the ratio of contributors to beneficiaries 

for Social Security and Medicare, Part A reported for the 

beginning and end of the projection period? (SFFAS 17, 

par. 27 (2)) 

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Section X Supplementary Information 

Required Supplementary Stewardship 

Information 

Social Insurance Programs (79 – 102) 

Yes, 

No, 

or 

N/A 

Explanation 

95. For all enumerated social insurance programs except 

Unemployment Insurance (UI), does the responsible 

entity present a statement of actuarial present values of 

the following items?

152 

a. all future expenditures during the projection period 

related to benefit payments 

i. to or on behalf of current participants who 

have not yet attained retirement age 

ii. to or on behalf of current participants who 

have attained retirement age 

iii. to or on behalf of those who are expected to 

become plan participants 

b. all future contributions and tax income (from taxation 

of benefits) during the projection period 

i. from or on behalf of current participants who 

have not yet attained retirement age 

ii. from or on behalf of current participants who 

have attained retirement age 

iii. from or on behalf of those who are expected 

to become plan participants 

c. cash flow during the projection period153 (SFFAS 17, 

par. 27 (3) (a)–(g); OMB Bulletin 01-09, p. 104, 

section 10.4B) 

96. With the exception of Unemployment Insurance (UI), 

does the entity disclose the accumulated excess of all past 

cash receipts, including interest on investments, over all 

cash disbursements within the social insurance program 

represented by the fund balance at the valuation date?154 

(SFFAS 17, par. 27 (3) (h)) 

152For periods beginning after September 30, 2004 this information shall be presented as a basic financial statement rather than as a component of 

RSSI (SFFAS 25, par. 6 & 7) 153Cash flow during the projection period is derived from subtracting the actuarial present value of future contributions and tax income during the 

projection period (95b above) from the actuarial present value of future expenditures for the projection period (95a above). 154ibid. 

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Section X Supplementary Information 

Required Supplementary Stewardship 

Information 

Social Insurance Programs (79 – 102) 

Yes, 

No, 

or 

N/A 

Explanation 

97. Does the entity also disclose how it calculated the 

actuarial net present value of future benefits and 

contributions from or on behalf of current participants of 

all social insurance programs except UI?155 (SFFAS 17, 

par. 27 (3) (i)) 

98. If available, does the entity provide estimates of the 

actuarial present values and fund balances of the social 

insurance programs (except UI) under its purview for 

each of the 4 preceding years?156 

(SFFAS 17, par. 27 (3) (j)) 

99. For all social insurance programs except UI, does the 

responsible entity illustrate the sensitivity of the 

projections of cash flows and actuarial present values to 

changes in the most significant individual assumptions? 

(SFFAS 17, par. 27 (4) (a)) 

100. At a minimum, do the Social Security and Medicare 

programs analyze assumptions regarding the following 

factors? 

a. birth and death rates 

b. net immigration 

c. real wage differential 

d. real interest rate (SFFAS 17, par. 27 (4) (a)) 

101. Does the sensitivity analysis for UI programs show the 

effects of increasing the unemployment rate as follows? 

a. by approximately one percentage point 

b. to a level sufficient to put stress on the system (e.g., 

to simulate the largest recession occurring within the 

last 25 years) (SFFAS 17, par. 27 (4) (b); 

OMB Bulletin 01-09, p. 104, section 10.4B) 

155ibid. 156ibid. 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 221 
Reporting 1050 – CFO Act Checklist 

Section X Supplementary Information 

Required Supplementary Stewardship 

Information 

Social Insurance Programs (79 – 102) 

Yes, 

No, 

or 

N/A 

Explanation 

102. Does information on the UI program provide a state-bystate analysis illustrating the relative solvency of 

individual state programs, including the ratio of each 

state’s current accumulated fund balance to a year’s 

projected benefit payments based on the highest level of 

annual benefit payments experienced by that state over 

the last 20 years? (SFFAS 17, par. 27 (5); 

OMB Bulletin 01-09, p.104, section 10.4B) 

October 2003 GAO-04-44G – CFO Checklist – Revised 2003 – Exposure Draft Page 222