EXPOSURE DRAFT - 7/19/2012 i
EXPOSURE DRAFT - 7/19/2012 ii

Table of Contents

Table of Contents.................................................................................................................................ii

Table of Figures...................................................................................................................................iv

Listed Abbreviations............................................................................................................................ v

Foreword.............................................................................................................................................vii

Introduction.......................................................................................................................................1-1

1.1. Background ..............................................................................................................1-1

1.2. Purpose and Scope of This Document....................................................................1-3

1.3. Standard Federal Financial Business Processes Within Context of Core

Requirements........................................................................................................................1-5

1.4. Summary of Standard Business Process Initiatives..............................................1-6

2 Funds Management Processes.............................................................................................2-1

2.1 Budget Authority Process........................................................................................2-1

2.1.1 Budgetary Resources...............................................................................................2-1

2.1.2 Record Application of Budgetary Resources (Apportionment) ..........................2-1

2.2 Funds Distribution...................................................................................................2-1

2.2.1 Allotment Distribution.............................................................................................2-1

2.2.1.1 Allotment for (Direct) Non-Anticipated, Non-Reimbursable Funding...............2-1

2.2.1.2 Allotment for Anticipated Reimbursable Funding ...............................................2-1

2.2.1.3 Allotment for Anticipated Non-Reimbursable Funding.......................................2-1

2.2.2 Sub-Allotment Distribution.....................................................................................2-1

2.2.3 Lower Level Distribution ........................................................................................2-1

2.3 Funds Management Process....................................................................................2-1

2.3.1 Establishing Commitments and Obligations for Goods and Services.................2-1

2.3.2 Establishing Obligations Not Requiring Commitment.........................................2-1

2.3.3 Funds Check Prior to Obligation ...........................................................................2-1

2.3.4 Unexpired Funds Validation and Verification......................................................2-1

2.3.5 Expired Funds Validation and Verification ..........................................................2-1

3 Payment Management Processes ........................................................................................3-1

3.1 Receipt and Acceptance of Goods...........................................................................3-1

3.2 Receipt and Acceptance of Services .......................................................................3-1

3.3 Accounts Payable and Invoicing Processes............................................................3-1

3.3.1 Invoice Entry ............................................................................................................3-1

3.3.2 Invoice Processing....................................................................................................3-1

3.3.3 Credit Memo.............................................................................................................3-1

3.4 Disbursements..........................................................................................................3-1
EXPOSURE DRAFT - 7/19/2012 iii

3.4.1 Disbursements – Bulk Files (ACH/EFT, CCD, CCD+, CTX, and Checks)........3-1

3.4.2 Disbursements – Small Volume and Same or Next Day Payments.....................3-1

3.5 Returned Payments – ACH, Check, Same Day.....................................................3-1

3.6 Data Objects and Data Elements............................................................................3-1

4 Receivables Management Processes ...................................................................................4-1

4.1 Establish Accounts Receivable Due From The Public..........................................4-6

4.2 Analyze Accounts Receivable................................................................................4-11

4.3 Billing ......................................................................................................................4-20

4.4 Collection of Receipts ............................................................................................4-22

4.5 Application of Receipts..........................................................................................4-27

4.6 Dunning...................................................................................................................4-36

4.7 Allowance for Loss on Accounts Receivable........................................................4-44

4.8 Write-off of Accounts Receivable .........................................................................4-47

4.9 Issue Credit Memo.................................................................................................4-52

4.10 Return of a Financial Instrument.........................................................................4-56

4.11 Waiver of Interest, Administrative Costs, and Penalties ...................................4-59

4.12 Installment Plans....................................................................................................4-62

5 Reimbursable Management Processes ...............................................................................5-1

6 Reports Management Processes..........................................................................................6-1

Appendix A – Standard Federal Financial Business Process Vision and Business Approach .A-1

Appendix B – Standard Federal Financial Business Process Controlled Vocabulary ..............B-1

Appendix C – Business Process Flowcharts, Symbols, and Definitions......................................C-1

Appendix D – Table of Core Financial System Requirements ....................................................D-1

Appendix E – Financial Management Laws and Regulations..................................................... E-1

Appendix F - Contributors.............................................................................................................. F-1
EXPOSURE DRAFT - 7/19/2012 iv

Table of Figures

Figure 1-1: Standard Federal Financial Business Process Vision/Approach..............................1-4

Figure 1-2: System Functions ..........................................................................................................1-5

Figure 1-3: Summary of Standard Business Process Relationships.............................................1-7
EXPOSURE DRAFT - 7/19/2012 v

Listed Abbreviations

ACH Automated Clearing House

ALC Agency Location Code

BETC Business Event Type Code

BRM Business Reference Model

BFELoB Budget Formulation and Execution Line of Business

CCD Cash Concentration Disbursement

CCD+ Cash Concentration Disbursement Plus Addendum

CCLR Claims Collection Litigation Report

CCR Central Contractor Registry

CFO Chief Financial Officer

CFR Code of Federal Regulations

CIO Chief Information Officer

CO Certifying Officer

COR Contracting Officer’s Representative

COTR Contracting Officer’s Technical Representative

CVFR Current Value of Funds Rate

CFSR Core Financial System Requirements

CPIC Capital Planning and Investment Control

CTX Corporate Trade Exchange

DCIA Debt Collection Improvement Act of 1996

DEO Data Entry Operator

DUNS Dun and Bradstreet Number

EDI Electronic Data Interchange

EFT Electronic Funds Transfer

FAR Federal Acquisition Regulation

FASAB Federal Accounting Standards Advisory Board

FBWT Fund Balance With Treasury

FEA Federal Enterprise Architecture

FEAF Federal Enterprise Architecture Framework

FFMIA Federal Financial Management Improvement Act of 1996

FFMSR Federal Financial Management Systems Requirements

FISMA Federal Information Security Management Act of 2002

FMS Financial Management Service

FOMF Financial Organization Master File

FSIO Financial Systems Integration Office

GAO Government Accountability Office
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GPRA Government Performance and Results Act of 1993

ID Identification

IDD International Direct Deposit

IPAC Intra-Governmental Payment and Collection

IPP Internet Payment Platform

IRM Information Resource Management

IT Information Technology

JFMIP Joint Financial Management Improvement Program

NACHA National Automated Clearing House Association

NIST National Institute of Standards and Technology

OCR Optical Character Recognition

OFFM Office of Federal Financial Management (OMB)

OMB Office of Management and Budget

PMA President’s Management Agenda

PMD Payment Management Disbursing

PO Purchase Order

PPA Prompt Payment Act

PPD Prearranged Payment and Deposit

PPD+ Prearranged Payment and Deposit Plus Addendum

RTN Routing Transit Number

SFFAS Statement of Federal Financial Accounting Standards

SPS Secure Payment System

SFFBP Standard Federal Financial Business Processes

TROR Treasury Report on Receivables and Debt Collection Activities

TAFS Treasury Appropriation Fund Symbol

TAS Treasury Account Symbol

TOP Treasury Offset Program

TPA Trading Partner Agreement

TFM Treasury Financial Manual

USSGL U.S. Standard General Ledger
EXPOSURE DRAFT - 7/19/2012 vii

Foreword

To meet the objectives of the Federal Financial Management Improvement Act of 1996 and OMB

Circular A-127, Federal agencies must improve the cost, quality, and performance of Federal

financial management systems by leveraging common standards, shared solutions, and implementing

other government-wide reforms that foster efficiencies in Federal financial operations. Critical to

these efforts is the definition and implementation of standard business processes for core financial

management functions across government. Through standardization, Federal entities are better

positioned to implement lower cost, lower risk, and higher performing financial management

solutions.

The Standard Federal Financial Business Processes (SFFBP) Document is designed to standardize

common financial business activities and processes to ensure that financial managers assess

programs and make decisions with timely and accurate data. This publication was developed for the

Federal financial community, vendors who support financial management system implementations,

and contractors of financial management system products in full cooperation with the Chief Financial

Officer (CFO) Act Agencies, and other contributors.

Financial Systems Integration Office

The Financial Systems Integration Office (FSIO) within the General Services Administration

(GSA) supports government-wide financial management activities. FSIO is the successor

organization to the Joint Financial Management Improvement Program (JFMIP), authorized under

the Administrative Procedures Act of 1950. In December 2004, Program Management office roles

and responsibilities of JFMIP were modified and transferred to FSIO. OMB and the Chief

Financial Officers Council, working closely with the Federal financial management community,

established FSIO to manage:

Core financial systems requirements development, testing and product certification;

Priority projects supporting the Federal financial community; and

Outreach through an annual financial management conference and other related activities.

For more information, visit the FSIO website at http://www.fsio.gov
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Introduction

1.1. BACKGROUND

Over the years, the Federal government has committed significant resources toward implementing

Federal financial management systems that meet its needs for timely, useful, and reliable financial

information. Agencies are making progress, but additional improvement is needed. To facilitate the

move toward modern financial systems, standardizing financial management was identified as one of

several government-wide initiatives to improve the management of the Federal government.

The financial management standardization initiative leverages shared solutions and technology

investments across government by integrating agency operations and information technology

investments by normalizing the underlying business processes of Federal agencies. OMB Circular A127 prescribes policies and standards for executive departments and agencies to follow in managing

financial management systems. A core financial system within the financial management system

must be commercial off-the-shelf and certified by the Financial Systems Integration Office (FSIO).

Previously, agencies had to implement systems that had been certified by FSIO as meeting the Core

Financial System Requirements, but could configure those systems to support their agency-specific

business processes. In the future, the certification process will include both the Core Financial

Systems Requirements and the Standard Financial Processes (as defined in this document). Shared

Service Providers will subsequently implement the FISO tested and certified software which will

include CGAC and the standard business processes and will be released as the Federal configuration.

One of the measures of success for this initiative is to implement financial management processes

and systems that comply with the Federal Financial Management Improvement Act of 1996

(FFMIA). FFMIA requires that agency systems comply with: Federal financial management system

requirements, applicable accounting standards, and U.S. Standard General Ledger at the transaction

level.

In the short term, the standardization effort will help agencies:

 Promote a universal understanding of standard government financial business processes.

Establishing standard financial business processes for Federal agencies promotes a uniform way

of doing the government’s financial business. The defined processes and data no longer will vary

from agency to agency or system to system. Use of standard financial business processes reduces

training and start-up time for agency financial personnel transferring from on agency to another.

Standard processes make it easier for mangers to determine where controls need to be placed or

implemented in the processing of accounting events.

 Incorporate best business practices. A number of agencies are in the process of moving from

bureau-level systems to enterprise-wide systems. Each implementation begins with a task of

defining the processes used within the agency. Standard business processes provide a uniform

framework, reduce the burden of making decisions on how to conduct business, and facilitates

the implementation process. In the long term, standardization will:

 Aid in the evolution of financial management throughout the Federal government. There is a

logical sequence of steps to an overall standardization strategy for Federal financial management

that includes common business processes, data definitions, and accounting codes. The standard

government financial business processes are building blocks to a future state that will take a

number of years to implement.
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 Mitigate the risks associated with system implementation by providing a uniform starting point

for configuration. FSIO certified vendors will provide a Core Financial System (CFS) that not

only incorporates the Standard Financial Processes (as defined in this document), but also

includes the system configuration that was used to complete and pass the certification test. This

pre-configured software will significantly reduce the time and effort it takes an Agency to

implement the CFS, as well as minimize the risk of an incorrect configuration that could result in

the inoperability of the CFS.

 Ease the transition when an agency moves to a new financial management system or shared

service provider. Considerable effort is usually dedicated to defining business processes when

an agency moves to a new CFS. The Standard Financial Processes establishes uniform

procedures that will be used across the Federal government. The use of these standard processes

will significantly reduce the amount of process mapping and training that will be required when

migrating to a new CFS.

 Facilitate data exchange among an agency’s financial systems. The standard business processes

are an integral step towards establishing standard data exchanges (interfaces) between an

Agency’s Financial Management System, which contains the CFS, and an agency’s Mixed

Systems (feeder systems). An additional benefit of the standard business process is

establishment of standard data exchanges (interfaces) between an Agency’s Financial

Management System and the Central Agencies for external regulatory reporting, e.g., Treasury

FMS.

The Standard Business Processes Document encompasses applicable established financial standards

used in the Federal Government. The policy and governance for classifying the financial effects of

the government’s business operations are as follows:

 Office of Management and Budget (OMB), including the Office of Federal Financial

Management (OFFM), Circulars, Bulletins and Memorandums

 Department of the Treasury, Treasury Financial Manual (TFM), including the United States

Standard General Ledger (USSGL) and Managing Federal Receivables Manual

 Financial Systems Integration Office (FSIO) on behalf of the FSIO Transformation Team, a

working-group of the Chief Financial Officers (CFO) Council, Core Financial Systems

Requirements Document

 Federal Accounting Standards Advisory Board (FASAB), Statements of Federal Financial

Accounting Standards (SFFAS) and Concepts, Implementation Guides

 General Accountability Office (GAO) Auditing Standards

Policies, procedures, and requirements detailed in authoritative guidance are not repeated in this

document, rather they are cited as they apply to specific steps within the processes.
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1.2. PURPOSE AND SCOPE OF THIS DOCUMENT

This document presents government-wide common processes and activities, standard business rules,

data exchanges for core financial business processes. Standardizing business processes across the

Federal government identifies opportunities to streamline processes and unify work across the

agencies and within the Federal government’s financial management domain. The outcome will be a

more citizen-centered, customer-focused government that maximizes technology investments to

better achieve mission outcomes.

The Standard Business Processes include:

 Sequenced activities for core business processes

 Business rules governing the process steps

 Data elements and definitions related to these business processes (e.g., information contained on

an obligation – document source, document number, item number, price per item)

 Relationships among the data elements as they exist in the actual business activities

The Standard Business Processes document is intended for use by the Federal financial management

community to provide guidance for implementing efficient business processes that are consistent

throughout the Federal government. Primary users will include accountants, budget analysts,

financial and program staff, software vendors, and contractors who support financial management

system implementations.
EXPOSURE DRAFT - 7/19/2012 1-4

This document supports the financial management standardization vision as part of the

standardization foundation, as highlighted in the following diagram.

Figure 1-1: Standard Federal Financial Business Process Vision/Approach

The subsequent chapters in this document describe the business process flows for core financial

business processes, the associated business rules, along with representative USSGL pro-forma entries

for the process described. The document will also provide the standard data elements and business

rules for the harmonized exchange of data between the common administrative systems (e.g., Grants,

Acquisitions, Travel, and Payroll) and the core financial system.

Appendices include the financial management standardization vision and approach to developing

Standard Business Processes, a “controlled vocabulary” of standard terms and definitions used in this

document, a list of relevant laws and regulations affecting Federal financial management and

standard business processes, and acknowledgement of those who contributed to this document.
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1.3. STANDARD FEDERAL FINANCIAL BUSINESS

PROCESSES WITHIN CONTEXT OF CORE

REQUIREMENTS

Among the Federal Financial Management System Requirement (FFMSR) documents is the Core

Financial System Requirements. It sets forth requirements for the core functions that must be

supported in all core Federal financial management systems. The core system functions are as

follows:

Figure 1-2: System Functions

Core financial systems provide specific functional capabilities necessary for managing a general

ledger, controlling spending, making payments, managing receivables, measuring costs, reconciling

the agency’s Fund Balance with Treasury, and reporting in the Federal environment.

The financial management standardization effort has identified the following business processes for

standardization:

 Funds Management

 Payment Management

 Receivables Management

 Reporting

 Reimbursables (which actually crosses all of the above processes)
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1.4. SUMMARY OF STANDARD BUSINESS PROCESS

INITIATIVES

The financial management standardization effort includes four business processes: Funds

Management, Payment Management, Receivables Management, and Reimbursable Management.

The business processes are presented in chapters which depict their respective processes in

flowcharts. Following each flowchart are descriptions of the processes, steps and related business

rules. The standard process steps reflect best practices in an electronic environment, sound internal

controls, and compliance with Office of Federal Financial Management (OFFM) Core Financial

System Requirements (CFSR).

The chapters of the financial management standardization business process document are described

as follows:

 Funds Management. This chapter includes processes related to the establishment of budgetary

authority, funds distribution and funds control. The Funds Management processes describe

include recording of the Apportionment and Reapportionment Request (SF 132) and assist

agencies in complying with all applicable financial management statutes, regulations, and

requirements. In addition, the steps outlined provide standard processes for ensuring effective

Funds Control policy.

 Payment Management. This chapter includes processes from requisition to payment for

commercial contracts and small acquisitions disbursed by Treasury. Best practices include, but

are not limited to: electronic processing, information routing, review and approval, and

separation of duties. In addition, the standard processes included ensure effective cash

management.

 Receivables Management. The Receivables Management processes were developed in

accordance with Treasury’s Managing Federal Receivables guidance. The chapter includes

processes from establishment of a receivable due from the public to the application of receipts.

Best practices include, but are not limited to: cost effective debt collection and performance

measures. In addition, the standard processes included ensure: customer responsiveness and

effective cash management.

 Reimbursable Management. Development of this chapter is not completed. It will be included in

a future release. Note: This process contains elements of the Funds Management, Payment

Management and Receivables Management processes.

 Reporting. This chapter is not yet developed, and will be included in a future release. The

format of this chapter has not been determined.
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The diagram below depicts Payment Management, Receivables Management, and Reimbursable

Management as processes within the core financial system under the parameters of Funds Control

that are facilitated through the use of the Common Government-wide Accounting classification

structure. Reporting is used throughout the core financial system to provide management with

accurate and timely information needed to support business decisions, financial statements and

effective program operation.

Figure 1-3: Summary of Standard Business Process Relationships

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart
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2 Funds Management Processes

2.1 BUDGET AUTHORITY PROCESS

2.1.1 BUDGETARY RESOURCES

2.1.2 RECORD APPLICATION OF BUDGETARY RESOURCES (APPORTIONMENT)

2.2 FUNDS DISTRIBUTION

2.2.1 ALLOTMENT DISTRIBUTION

2.2.1.1 ALLOTMENT FOR (DIRECT) NON-ANTICIPATED, NON-REIMBURSABLE FUNDING

2.2.1.2 ALLOTMENT FOR ANTICIPATED REIMBURSABLE FUNDING

2.2.1.3 ALLOTMENT FOR ANTICIPATED NON-REIMBURSABLE FUNDING

2.2.2 SUB-ALLOTMENT DISTRIBUTION

2.2.3 LOWER LEVEL DISTRIBUTION

2.3 FUNDS MANAGEMENT PROCESS

2.3.1 ESTABLISHING COMMITMENTS AND OBLIGATIONS FOR GOODS AND SERVICES

2.3.2 ESTABLISHING OBLIGATIONS NOT REQUIRING COMMITMENT

2.3.3 FUNDS CHECK PRIOR TO OBLIGATION

2.3.4 UNEXPIRED FUNDS VALIDATION AND VERIFICATION

2.3.5 EXPIRED FUNDS VALIDATION AND VERIFICATION

Under Review with the Funds Management Chapter currently released as an Exposure Draft
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3 Payment Management Processes

3.1 RECEIPT AND ACCEPTANCE OF GOODS

3.2 RECEIPT AND ACCEPTANCE OF SERVICES

3.3 ACCOUNTS PAYABLE AND INVOICING PROCESSES

3.3.1 INVOICE ENTRY

3.3.2 INVOICE PROCESSING

3.3.3 CREDIT MEMO

3.4 DISBURSEMENTS

3.4.1 DISBURSEMENTS – BULK FILES (ACH/EFT, CCD, CCD+, CTX, AND CHECKS)

3.4.2 DISBURSEMENTS – SMALL VOLUME AND SAME OR NEXT DAY PAYMENTS

3.5 RETURNED PAYMENTS – ACH, CHECK, SAME DAY

3.6 DATA OBJECTS AND DATA ELEMENTS

Under Review with the Payment Management Chapter currently released as an Exposure Draft
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4 Receivables Management Processes

Included herein are best practice business processes for administering and managing receivables due from

the public, excluding reimbursable activity; which GAO’s Glossary of Terms Used in the Federal Budget

Process defines as, “(1) sums received by agencies as a payments for commodities sold or services furnished

either to the public or to another government account and (2) are authorized by law to be credited directly to

specific appropriation and fund accounts. Reimbursements between two accounts for goods or services are

usually expenditure transactions/transfers” (84). The standard business process for Reimbursable

Management will be included and released in Chapter five.

The benefits of effective Receivables Management include:

 Improved revenue recognition;

 Improved cash flow;

 Reduced loss due to bad debts; and

 Lower administrative cost in the entire revenue cycle.

The Receivables Management process flowcharts and corresponding step descriptions and business rules

were developed in accordance with Treasury's Managing Federal Receivables guidance. Other applicable

guidance for Receivables Management includes the Treasury Financial Manual, Core Financial System

Requirements (those applicable to Receivables Management), the Debt Collection Improvement Act,

applicable OMB Circulars, applicable IRS regulations, and the Claims Collections Litigation Report. In most

instances, where specific rules apply to a process step, the applicable guidance is referenced.

The Receivables Management processes detailed in this chapter are:

 RM 4.1 – Establish Accounts Receivable Due From the Public. This section describes the steps

agencies should follow in order to create or edit customer information within the Core Financial

System. Proper internal controls, separation of duties, and appropriate levels of review and approval

for the establishment of accounts receivable are addressed.

 RM 4.2 – Analyze Accounts Receivable. This section describes the process of analyzing accounts

receivable for the purpose of determining age, status, and collection probability by specific account in

order to facilitate effective management of the account.

 RM 4.3 – Billing. This section provides the procedures to generate a bill. Bills are created based on

agency-specific business rules and are generated automatically based on established billing

frequency.

 RM 4.4 – Collection of Receipts. This section provides for the controlling and receiving of monies

collected on associated debts, and recording to the general ledger.

 RM 4.5 – Application of Receipts. This section describes the process for the application of monies

collected.

 RM 4.6 – Dunning. This section provides the procedures for the dunning process which is an integral

part of an agency’s due diligence for the pursuit of delinquent debt collection. The purpose of this

process is to inform the customer of their responsibilities to the Agency as well as protect the

agencies’ rights to that debt. Dunning communications also inform the customer of the consequences
EXPOSURE DRAFT - 7/19/2012 4-2

for non-compliance with the payment terms and/or revisions to those terms in the form of interest,

administrative costs, and penalties, where applicable.

 RM 4.7 – Allowance for Loss on Accounts Receivable. This section provides the procedures which

an agency uses to project its debt losses. The allowance calculation is used for financial statement

presentation purposes, in addition to and also for, internal management decisions on agency-specific

debt collection policy and procedures.

 RM 4.8 – Write-off of Accounts Receivable. This section provides the process to determine whether

an account should be written off, perform the write-off and determine subsequent action. Subsequent

action can be to actively or passively pursue collection on the debt, close-out the debt (and obtain

FMS or DOJ approval for close out where applicable), report cancellation of debt to the IRS, and

notify the customer/debtor of cancellation.

 RM 4.9 – Issue Credit Memo. This section provides the procedures to determine appropriate action in

the event of overpayments, returns, or adjustments to customer accounts. Note: agencies may: issue a

refund, apply excess amounts received to open receivables, or offset the next scheduled receivable.

 RM 4.10 – Return of a Financial Instrument. This section provides procedures to determine

appropriate action in the event the agency receives a returned financial instrument. Examples of

returned financial instruments are non sufficient funds, closed customer/debtor accounts, stop

payment, and disputed credit or debit charges.

 RM 4.11 – Waiver of Interest, Administrative Costs, and Penalties. This section provides procedures

to process waivers of interest, administrative costs, and penalties. Procedures to identify delinquent

customer accounts and the criteria to determine waivers are discussed.

 RM 4.12 – Installment Plans. This section provides procedures to offer installment plans for debts

represented by valid inability to pay claims. This section also provides for the transmission of an

agreement to the customer/debtor, agency determination of customer acceptance or non-acceptance

processes, and the appropriate general ledger entries.

The steps within the above processes are depicted in flowcharts. Following each flowchart are descriptions of

the processes and steps and related business rules. These steps reflect best practices in an electronic

environment, sound internal controls, and compliance with Office of Federal Financial Management (OFFM)

Core Financial System Requirements (CFSR).

Included in the scope, from the billing perspective, of this chapter are the following:

 Employee Overpayments

 Vendor Overpayments

 Relocation

 Judgments (Accident Claims)

 Fines

 Penalties

 Employee Training Reimbursement

 Non-Sufficient Funds

 Non-Reimbursable Sale of Goods or Services (User Fees)
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 Sharing Agreements

 Employee Travel (Advances) (to be used only on an exception basis)

Included in the scope, from the collections perspective, of this chapter are the following:

 Billed Receivables

 Concession Rents

 Unbilled Overpayments

 Treasury and DOJ Cross-Servicing

 Agency Debt Management

 Interest

 Penalties

 Asset Sales

 Administrative Wage Garnishment

 Sale of Goods and Services

 Application Fees

 Industrial Funding Fees

 Freedom of Information Act

 Miscellaneous Receipts

 User Fees

 Auction Receipts

 Rebates

 Sharing Agreements

Excluded from the scope of this chapter are the following:

 Reimbursable Activity

 Transactions in Foreign Currency

 Non-Monetary Transactions

 Non-Monetary Exchange Transactions

 Investments

 Leases

 Program Overpayments Not Processed in the Core Financial System

 Trust Fund Programs

 IPAC Transactions
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 Credit Reform (Including Direct and Guaranteed Loans)

 Grants

 Gifts

 Department of Justice Debt Management

 Benefit Overpayments

 Tax Receivables and Duties

 Donations

 Administrative Offsets with Accounts Payable
EXPOSURE DRAFT - 7/19/2012 4-5

The following flowchart depicts the sequence and inter-relationship of the Receivables Management

Processes:

Summary of Receivable Management

Receivable Management Processes

Establish Accounts

Receivable Due

From the Public

1

Analyze

Accounts

Receivable

2

Dunning

7

Billing

3

Delinquent

Current

Analyze

Accounts

Receivable

8

Installment Plan

9

Write-Off Of

Accounts

Receivable

10

Installment

Plan

Waiver of Interest,

Administrative

Costs, and

Penalties

13

Analyze

Accounts

Receivable

12

Collection of

Receipts

4

Application of

Receipts

5

Return of a

Financial

Instrument

6

Received a

Returned

Financial

Instrument

Return From a Customer Not Previously Established

Allowance for

Doubtful Accounts

14

Update Accounts

Receivable

Balances/Status

Issue Credit

Memo

11

Analyze

Accounts

Receivable

15

Adjustment

To Account

Not Required

Adjustment

To Account

Required

Update Accounts

Receivable

Balances/Status

Return From a Previously Established Customer

Received Acceptable Payment

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart
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4.1 ESTABLISH ACCOUNTS RECEIVABLE DUE FROM THE

PUBLIC

This section presents the steps for establishing accounts receivables due from the public. The steps in the

flowchart include the submission of accounts receivable requests; the creation, review, and validation of

customer information; and establishing a receivable in the Core Financial System.

RM 4.1 – Establish Accounts Receivable Due From the Public

Flowchart

RM 4.1 Establish Accounts Receivable Due From the Public

Finance Business Unit

Accounts

Receivable

Request

RM 4.1.2

Is Information

Complete?

RM 4.1.3

Resolve Issue

RM 4.1.6

Reject Receivable

Request

RM 4.1.4

No

Yes

Customer

Exists/Valid

in Customer File?

RM 4.1.7

Record

Receivable

Information

RM 4.1.9

To RM

4.2.2,

4.3.1

Business Unit or Finance

Prepares Accounts

Receivable Request

RM 4.1.1

No

Advise the

Appropriate Official

of the Rejected

Accounts

Receivable

Request

RM 4.1.5

Create/Update

Customer Record

RM 4.1.8

Review

Receivable

Information

RM 4.1.10

Receivable

Approved?

RM 4.1.11

Yes

No

Receivable

is Recorded

in General

Ledger

RM 4.1.12

From RM

4.10.3

Yes

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-7

The Receivables Management Establish Accounts Receivable process steps are described as follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.1.1 Business Unit

or Finance

Prepares

Accounts

Receivable

Request

A triggering event (e.g.,

sale of goods or services,

change in status of an

advance) occurs creating

the need for a receivable to

be established in the Core

Financial System. The

request could represent the

need to establish a single

receivable or multiple

receivables.

An image of the documentation

supporting the receivable request

shall be maintained in electronic or

hard copy form, as applicable.

In an electronic environment, the

request information is entered or

interfaced to the Core Financial

System at the time the request is

prepared.

RM 4.1.2 Accounts

Receivable

Request

The Accounts Receivable

request contains the

necessary information to

establish a receivable. This

information will be

maintained throughout the

life of a receivable to

include verifying,

reviewing and capturing

vendor or customer

information, performing

calculations, and initial

generation of bills as

applicable.

The Business Unit or Finance

provides, at a minimum, the

following required data elements to

establish a receivable, as applicable:

 Receivable Type (sale of goods

or services, overpayments,

unused advances subject to

refund, fees, and fines)

 Dates of Performance

 Customer Information

 Terms

 Item Type to be Billed

 Amounts to be Billed

 CGAC Data

 Bill Date (actual effective date of

billing)

 Customer P.O. Number

 Description of Goods and/or

Services

 Unit of measure and quantity

The Business Unit or Finance,

depending on the origination point

for the request, maintains

documentation to support the billing

request.

RM 4.1.3 Is Information

Complete?

Review A/R request

Information for

completeness.

Verify that the minimum required

data elements are provided (see RM

RMB-04
EXPOSURE DRAFT - 7/19/2012 4-8

Step ID Step Name Step Description Business Rules CFSR Req.

step 4.1.2).

RM 4.1.4 Reject

Receivable

Request

Return request for accounts

receivable to applicable

functional area for

additional

information/authorization.

Missing information is identified and

upon review, it is noted that the

request is incomplete.

The Agency should track the status

of rejected receivable requests.

RM 4.1.5 Advise the

Appropriate

Official of the

Rejected

Accounts

Receivable

Request

Advisement of the rejected

accounts receivable request

is generated and routed to

applicable responsible

parties.

Advisement of the rejected accounts

receivable request is sent to the

appropriate official.

The advisement will specify the

missing information or actions

required, on the part of the originator,

to prepare a complete and valid

request (see business rule for step

4.1.2 for the list of data elements

required to establish a receivable).

RM 4.1.6 Resolve Issue The responsible Business

Unit/Finance corrects the

document by providing

valid data elements needed

to complete the receivable

request.

RM 4.1.7 Customer

Exists/Valid in

Customer File?

The Core Financial System

checks whether a complete

customer record exists in

the Customer File and that

data matches between the

accounts receivable request

and the customer record.

A customer record must be

maintained for each entity that owes

the agency a debt. (e.g., contractors,

employees).

RM 4.1.8 Create/ Update

Customer

Record

If a customer record does

not exist, the record is

created.

Data on the receivable

request is compared to data

in the agency customer

database. If information

does not match, correct the

customer information as

appropriate.

Agencies must implement procedures

for proper segregation of duties

between the person creating a

customer record and the person

creating a receivable record.

RMA-01

RMA-02

RMA-03

RMA-04

RMA-05

RMA-06

RMA-07

RM 4.1.9 Record

Receivable

Information

Record information

required to establish a

receivable. (See RM 4.1.2

business rule for list of

minimum required data

The Core Financial System validates

that data meets required formats and

other applicable tests of validity.

Information must be captured to

RMB-01

RMB-03

RMB-04
EXPOSURE DRAFT - 7/19/2012 4-9

Step ID Step Name Step Description Business Rules CFSR Req.

elements.)

The recorded data populates

the detailed subsidiary

record and is used to

populate the general ledger

accounts receivable record.

Note: See RM 4.1.12 for

the recording of the

receivable to the general

ledger.

detail multiple customers/debtors

who are liable for an agency accounts

receivable.

Processes and procedures for

establishing a receivable include

verifying, reviewing and capturing

receivable and customer information,

and performing calculations for

receivable balances at the line item

level as well as in total.

RM 4.1.10 Review

Receivable

Information

The established accounts

receivable is reviewed and

validated by the designated

individual(s).

The receivable is reviewed to ensure

the data entered into the Core

Financial System matches the

accounts receivable supporting

documentation.

Agencies must establish and

implement policies and procedures

incorporating sound internal controls

to allow for appropriate levels of

review prior to the establishment of a

receivable. Note: Not all receivables

are required to be reviewed. Agency

policies and procedures (including

thresholds) should govern the need

for the review of a receivable.

RM 4.1.11 Receivable

Approved?

A receivable record is

approved prior to recording

in the General Ledger.

RM 4.1.12 Receivable is

Recorded in

General Ledger

Record General Ledger

entries to reflect that all

receivable data has been

processed along with other

pertinent financial

information needed to

update the General Ledger.

Updating the General

Ledger includes recording

the accounting event as

debit and credit entries to

both proprietary and

budgetary General Ledger

accounts.

An agency must record entries for

receivables that have yet to be billed.

Agency policies and procedures

should determine the frequency in

which actions are performed.

The entries are recorded using the

United States Standard General

Ledger (USSGL) Account

Transaction Listing provided in the

TFM. Examples include, but are not

limited to, the following transaction

codes from the current TFM:

TFM-C420 To record accrued

revenue from non-Federal sources

other than for reimbursable

agreements, non-revolving trust
EXPOSURE DRAFT - 7/19/2012 4-10

Step ID Step Name Step Description Business Rules CFSR Req.

funds, special funds, and custodial

activity.

TFM C422 To record accrued

revenue from Federal or non-Federal

sources for non-revolving trust funds

and special funds.

TFM-C644 To record a receivable

from a non-Federal entity for the sale

or disposition of assets other than

personal properties and investments.
EXPOSURE DRAFT - 7/19/2012 4-11

4.2 Analyze Accounts Receivable

The section presents the business flow to analyze a receivable due from the public, determine its status, and

decide on applicable actions to be taken to resolve an issue and/or adjust a balance. After the receivable is

created, the analysis process commences and is ongoing. The process for performing analysis of outstanding

receivable balances includes receivables represented by individual subsidiary level accounts, general ledger

accounts (primarily account 1300 series), and those transaction records used to update the accounts, as

needed. The analysis process assumes that the accounts and records are in a current status and triggers a

range of business events aimed at furthering the collection, fair-valuation and/or resolution of the outstanding

balances, in accordance with Federal management guidance and compliance requirements.

As a result of due diligence analysis, the agency will pursue a particular course of action. The Debt

Collection Act of 1982, as amended by the Debt Collection Improvement Act (DCIA) of 1996, sets forth the

authority for the collection of non-tax debt. Regulations and guidance developed to implement this act

provide a full range of techniques for collection including demand letters, internal salary offset,

administrative wage garnishment, private collection agencies, litigation, Treasury cross-servicing, and the

Treasury Offset Program (TOP), which provides, among other collection tools, tax refund offset and

centralized salary offset. The Federal Claims Collection Standard section on Compromise, waiver, or

disposition under other statutes not precluded, notes that Agency laws and regulations specifically applicable

to claims collection activities take precedence over the general government-wide standards.

The following flowchart provides key steps in the processes used by Agencies to maintain and analyze

accounts receivable; the flowchart represents an iterative process. External sources and other processes such

as collections, hearing requests and bankruptcies could affect the status, action taken or disposition of the

receivable and consequently affect the Dunning and Write-Off processes. Many of the business rules

included below are from Treasury’s Managing Federal Receivables guidance, which can be found at

(http://www.fms.treas.gov/debt/Guidance_MFR.html).
EXPOSURE DRAFT - 7/19/2012 4-12

RM 4.2 – Analyze Accounts Receivable Flowchart

RM 4.2 Analyze Accounts Receivable

Finance

Account Status Change

from External Source

RM 4.2.1

From RM

4.1.12, 4.3.4, 4.5.16,

4.5.17, 4.6.21, 4.6.23,

4.8.2, 4.8.4, 4.8.5,

4.9.12, 4.10.4, 4.11.2,

4.11.3

Evaluate Status of

Account

RM 4.2.4

Manually Update

Accounts

Receivable

Balances/Status

RM 4.2.2

Updated

Accounts

Receivable

Balances/

Status

RM 4.2.3

Minimum Due

Process

Requirements

RM 4.2.6

Non-Centralized

Administrative

Offset?

RM 4.2.10

Wage Garnishment?

RM 4.2.13

Notify Legal

Function ?

RM 4.2.16

Refer for

Collection?

RM 4.2.19

Installment

Agreement?

RM 4.2.7

Refer for

Collection

RM 4.2.20

Notify Legal

Function

RM 4.2.17

Implement Wage

Garnishment

RM 4.2.14

Implement NonCentralized

Administrative

Offset

RM 4.2.11

NonCentralized

Administrative

Offset

RM 4.2.12

Wage

Garnishment

RM 4.2.15

Notification

to Legal

Function

RM 4.2.18

Referral of

Debt

RM 4.2.21

No No No

Yes Yes Yes Yes

Yes Yes Yes Yes

From RM

4.6.17,

4.6.22

To RM

4.6.1,

4.3.1

From RM

4.6.5,

4.6.10,

4.6.16

Response From

Debtor/Customer?

RM 4.2.5

Yes

No

Adjustment to

Account Required?

RM 4.2.22

Prepare

Adjustment to

Account

RM 4.2.23

No Yes

To RM

4.8.1

To RM

4.7.1,

4.11.1

No

From RM

4.6.17,

4.6.18,

4.6.22

Compromise

Agreement?

RM 4.2.8

Compromise

Agreement

RM 4.2.9

To RM

4.12.2

From RM

4.12.2,

4.12.3

Yes

No

No

Yes

To RM

4.9.1

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-13

The Receivables Management Analyze Accounts Receivable process steps are described as follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.2.1 Account Status

Change from

External Source

Entities external to the

Agency may

send/transmit/communicate

changes in status applicable

to agency accounts

receivable.

Examples where external

sources initiate the process

are bankruptcy and a

novation due to sale of a

company.

Changes to the status of outstanding

receivables received from external

sources must be in accordance with

Federal management guidance and

compliance requirements, and agency

policies and procedures. Agency

Financial Management operations are

responsible for reviewing proposed

status changes to customer accounts,

executing such changes, and

resolving conflicts where applicable

in accordance with agency policies

and procedures.

RM 4.2.2 Manually

Update

Accounts

Receivable

Balances/Status

Accounts receivable

balances and status are

updated based on inputs

originating either internally

or externally to the agency.

Accounts receivable balances and

status are updated to reflect

adjustments and descriptions for each

adjustment.

Receivable adjustment may include:

 Late payment interest;

 Penalties;

 Administrative charges;

 Dunning referral dates; and

 Collection data.

Record applicable transactions to the

general ledger and subsidiary ledger

to reflect the change in accounts

receivable balances/status.

RMB-02

RMC-01

RMC-02

RMC-03

RMC-04

RMC-05

RMC-16

RMC-18

RMD-01

RMD-02

RMD-04

RMD-06

RM 4.2.3 Updated

Accounts

Receivable

Balances/ Status

Updated accounts

receivable balances/status

result from the process of

applying updates.

Best practice is to review the status of

accounts receivable balances on a

periodic basis. The review may

include accounts receivable amounts,

collection percentages, AR days

outstanding and a comparison to

agency or industry standards.

RM 4.2.4 Evaluate Status

of Account

Analysis and evaluation of

the status of the accounts

receivable is to determine

the need for scheduling the

billing of unbilled

receivables, the status of the

outstanding account balance

as current and adequate, or

in arrears, as well as,

Identify delinquent debts on accounts

based on aging of debts. Each

account must be evaluated based on

criteria from government-wide

regulations as well as agency debt

collection regulations.

The date of delinquency is the due

date. A debt becomes delinquent

RMC-08

RMC-09

RMC-20

RMD-11
EXPOSURE DRAFT - 7/19/2012 4-14

Step ID Step Name Step Description Business Rules CFSR Req.

eligibility for dunning

and/or reporting to credit

bureaus.

when payment is not made by the due

date or the end of a pre-determined

“grace period”.

Each delinquent account is evaluated

for eligibility for dunning.

Generally, when a debtor files for

bankruptcy protection, an agency is

prohibited from pursuing further

collection action while the

bankruptcy is pending.

The Debt Collection Information Act

(DCIA) requires Federal agencies to

report to credit bureaus information

on all delinquent consumer debts.

RM 4.2.5 Response from

Debtor/

Customer?

Agencies monitor responses

from customers to dunning

letters, communications on

installment agreements, and

other applicable

communications regarding

debt owed the Agency.

An agency must provide appropriate

guidelines and training to its

employees whose duties include

contacting debtors.

Within 20 days after the payment due

date or at the end of any grace period

contractually established, the agency

should contact the debtor, by letter or

phone, in an attempt to resolve the

non-payment.

It is essential that the agency continue

to document all agency contacts with

a debtor and actions taken to enforce

collection in order to protect the

government's interests. An agency’s

automated systems may be used to

document contacts with the debtor

and other debt collection activities so

long as the manner in which the

information is retained is sufficient

for evidentiary purposes in a court or

administrative proceeding.

An agency should take action to

recover a debt from secondary

debtors (co-borrowers or guarantors)

when it becomes apparent that the

primary debtor cannot or will not

repay a debt. The agency should

employ the same debt collection

techniques and tools in pursuing

secondary debtors as it uses for
EXPOSURE DRAFT - 7/19/2012 4-15

Step ID Step Name Step Description Business Rules CFSR Req.

primary debtors.

An agency should consider using

digital imaging as a way to maintain

copies of debt collection

documentation.

RM 4.2.6 Minimum Due

Process

Requirements

Due process requirements

are performed for each

customer responding to

dunning letters.

In the context of Federal debt

collection, the constitutional right of

“due process” requires an agency to

provide debtors with notice of, and

the opportunity to dispute, a debt or

intended debt collection action.

Notice must include the amount and

type of debt owed, and the actions to

be taken by an agency to collect the

debt, such as adding interest and late

charges, offset or garnishment, and

credit bureau reporting.

An agency should provide a customer

an opportunity to dispute the debt or

the adverse collection action to be

taken. At a minimum, the customer

should have the opportunity to

challenge (1) the existence of all or

part of the debt, and/or (2) whether

the agency has met the statutory or

regulatory prerequisites for using the

collection action mentioned in the

notice.

The minimum “due process” required

is generally established by the

statutes that authorize the use of a

specific debt collection tool or by

implementing regulations. Treasury’s

Managing Federal Receivables

guidance provides more information

on the notices and opportunities to be

provided to a debtor.

RM 4.2.7 Installment

Agreement?

An official installment

agreement is considered

Whenever possible, an agency should

attempt to collect an overdue debt in

a single lump sum. In the event that

the debtor claims financial inability

to repay the debt in a single lump

sum, the Agency may consider

collecting the overdue debt in

installments.

RMB-23
EXPOSURE DRAFT - 7/19/2012 4-16

Step ID Step Name Step Description Business Rules CFSR Req.

The agency must determine whether

the terms of a proposed installment

agreement are viable. There must be

a strong likelihood the

customer/debtor will comply with the

terms of the agreement.

RM 4.2.8 Compromise

Agreement?

An agency may consider

entering into a compromise

agreement with a

customer/debtor.

A compromise may be considered

(but is not required) when one or

more of the following criteria apply:

 the debtor is unable to pay the

debt within a reasonable time

period,

 the agency is unable to enforce

collection within a reasonable

time period.

 the cost of collection does not

justify enforced collection of the

full amount

 there is real doubt concerning the

government's ability to prove its

case in court.

The agency must determine whether

the terms of a proposed compromise

agreement are viable. There must be

a strong likelihood the

customer/debtor will comply with the

terms of the agreement.

Using the Claims Collection

Litigation Report, an agency must

refer compromise proposals where

the principal amount of the debt

exceeds $100,000 (or such larger

amount as may be determined by the

Attorney General) to the Department

of Justice (DOJ) for its concurrence

in the compromise. DOJ has

delegated to the Financial

Management Service (FMS) the

authority to compromise a debt with

a principal amount of $500,000 or

less when the debt is being serviced

by FMS in its cross-servicing

program.

The Federal Claims Collections
EXPOSURE DRAFT - 7/19/2012 4-17

Step ID Step Name Step Description Business Rules CFSR Req.

Standards note that agency laws and

regulations specifically applicable to

claims collection activities take

precedence over the governmentwide standards.

RM 4.2.9 Compromise

Agreement

An agency performs

procedures to implement a

compromise agreement if

applicable.

An agency should only compromise a

debt when it has exhausted all other

debt collection tools and further

pursuit of collection is not cost

effective.

RM 4.2.10 NonCentralized

Administrative

Offset?

An agency considers

whether to perform noncentralized administrative

offset procedures.

An agency may request that another

agency offset a Federal payment to

satisfy a debt. This type of offset is

known as “non-centralized

administrative offset.” Another type

of non-centralized administrative

offset occurs when the payment

agency is the same as the creditor

agency, referred to as “internal

offset.” Non-centralized offset can be

used for internal offset, or when the

payment to be offset is not processed

through the TOP or the creditor

agency is unable to meet the 60-day

notice requirement for debt

submission to TOP but is otherwise

able to comply with the due process

prerequisites for offset.

RM 4.2.11 Implement NonCentralized

Administrative

Offset

An agency performs

procedures to implement a

non-centralized

administrative offset as

applicable.

Examples of circumstances for which

non-centralized offset would be

appropriate include internal offset

and the offset of contractor payments

when the creditor agency is the same

as the payment agency; collection of

travel advances and training expenses

through a Federal employee’s pay,

retirement or other amounts due;

offset of future retirement pay; and

offset of Federal salary pay when

offset is not available through TOP.

RM 4.2.12 NonCentralized

Administrative

Offset

An official non-centralized

administrative offset is

documented.
EXPOSURE DRAFT - 7/19/2012 4-18

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.2.13 Wage

Garnishment?

An agency considers

whether to perform

administrative wage

garnishment procedures.

The DCIA authorizes an Agency to

collect a delinquent debt by

administrative garnishment of the pay

of a delinquent debtor who is

employed by any organization,

business, state or local government,

or other entity other than a Federal

agency. No court order is required.

RM 4.2.14 Implement

Wage

Garnishment

An agency performs

procedures to implement

wage garnishment as

applicable.

For guidance on administrative wage

garnishment implementation

procedures or administrative wage

garnishment itself, refer to Treasury’s

Managing Federal Receivables,

which provides information on the

notices and opportunities to be

provided to a debtor. See also

business rule for 4.2.15.

RM 4.2.15 Wage

Garnishment

An official wage

garnishment is documented.

For guidance related to the

procedures surrounding the official

wage garnishment documentation

refer to FMS wage garnishment

regulations and Treasury’s Managing

Federal Receivables which provides

information on the notices and

opportunities to be provided to a

debtor.

RM 4.2.16 Notify Legal

Function?

An agency determines

whether the applicable legal

functions should be notified

to evaluate or act on

applicable legal issues.

Based on agency polices and

procedures, debt and supporting

documentation is forwarded to the

applicable legal function, either intraagency or external to the agency.

Unless an agency has specific

statutory authority to litigate its own

debts, it must refer debts to DOJ for

litigation, including bankruptcy

litigation. For additional guidance on

referring debts to DOJ for litigation

refer to Treasury’s Managing Federal

Receivables. This guidance also

includes criteria that restrict an

agency from referring debt to DOJ

for litigation.

RM 4.2.17 Notify Legal

Function

An agency performs

procedures to notify the

When referring a debt to DOJ for

litigation, an agency must provide a
EXPOSURE DRAFT - 7/19/2012 4-19

Step ID Step Name Step Description Business Rules CFSR Req.

applicable legal functions

(internal or external to the

agency as applicable) and

provide applicable facts and

documentation.

fully completed Claims Collection

Litigation Report (CCLR). For

required information to be included

on the CCLR refer to Treasury’s

Managing Federal Receivables.

RM 4.2.18 Notification to

Legal Function

An official notification to

the legal function is made

which includes

documentation of the issue

with the applicable account

receivable.

In the case of debt being referred to

DOJ for litigation, a completed

CCLR with supporting

documentation is generated by the

agency.

RM 4.2.19 Refer for

Collection?

The Agency determines

whether to refer debt to

Treasury FMS for

collection.

For guidance on referral to the FMS

for cross-servicing and/or to the

Treasury Offset Program see

Treasury's Managing Federal

Receivables. The guidance provides

debt referral eligibility criteria as well

as eligibility exceptions.

RM 4.2.20 Refer for

Collection

The Agency refers the debt

to Treasury FMS.

For guidance on referral to the FMS

for cross-servicing and/or to the

Treasury Offset Program see

Treasury's Managing Federal

Receivables and/or the Debt

Collection Improvement act. The

guidance provides debt referral

eligibility criteria as well as

exceptions for eligibility.

The agency must generate a

delinquent debt referral file for

transmission to Treasury in

accordance with the DCIA.

RMC-15

RM 4.2.21 Referral of Debt The agency generates

documentation supporting

the debt being transferred to

Treasury FMS.

RM 4.2.22 Adjustment to

Account

Required?

Based on review of an

account receivable, the

agency determines whether

an adjustment to the

balance/status of the

account is required.

RM 4.2.23 Prepare

Adjustment to

Account

As applicable, the agency

prepares an adjustment to

the balance/status of the

account receivable.

Proper segregation of duties must be

followed when adjusting an accounts

receivable balance.
EXPOSURE DRAFT - 7/19/2012 4-20

4.3 BILLING

Bills are created based on agency-specific business rules and are generated automatically based on

established billing frequency. Included are steps to determine billing requirements and generate and send a

bill to a customer/debtor.

RM 4.3 – Billing Flowchart

Business Unit Finance

Customer /

Debtor

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-21

The Receivables Management Billing process steps are described as follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.3.1 Determine

Billing

Requirements

Determine the billing

requirements using the

customer information and

receivable data.

Based on the customer and receivable

record information, determine the

method (electronic or paper) of

billing to be used.

RM 4.3.2 Determine

Amount to be

Billed

The amount to be billed is

determined.

Before an agency bills, it will need to

consider discounts, shipping charges,

partial payments, and other

adjustments applicable to the

transaction.

RM 4.3.3 Generate Bill Generate demand for

payment that includes bill

number, account number,

debtor information, amount

owed, payment terms and

conditions (including the

remittance instructions) and

payment due date.

Additional bill information should

include account number, payment

terms and conditions, customer

purchase order number, lock box

information, and description of goods

and/or services or other basis for the

debt.

The bill should include or reference

applicable standards upon which any

interest, penalties or administrative

charges will be based, rights under

Federal Claims Collection Standards,

the date by which the debtor must

make payment to avoid late charges

and enforced collection, the name,

address and phone number of a point

of contact the customer/debtor may

speak with regarding the bill and

remedies the agency will use to

enforce payment of debts.

RMB-06

RMB-11

RMB-12

RMB-13

RMB-15

RMB-16

RMB-17

RMB-09

RMB-10

RMB-14

RMB-24

RM 4.3.4 Send Bill to

Customer

The agency requests

payment from the

customer/debtor.

The billing document is sent in

electronic or hard-copy format,

depending on the method agreed to

by the customer.

RM 4.3.5 Customer/Debtor

Receives Billing

Document

A billing document

representing a record of

claim is received by the

debtor/customer.
EXPOSURE DRAFT - 7/19/2012 4-22

4.4 COLLECTION OF RECEIPTS

The following flowchart provides key steps in the processes agencies use to control, and record information

for monies received. The steps depicted in the functional lanes for Treasury and Financial Institutions are

included to provide general information on processes currently under development, in 2008, by Treasury.

The intent is not to provide detail on how those procedures will function, but rather to provide background

for the flow of data that will be received by agencies.

RM 4.4 – Collection of Receipts Flowchart

Financial

Institutions

Agency Treasury

Customers/

Debtors

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-23

The Receivables Management Collection of Receipts process steps are described as follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.4.1 Remitter

Submits

Credit/Debit

Card Transaction

to Agency?

The remitter initiates

payment to the Agency by

using a credit or debit card.

RM 4.4.2 Agency

Transmits Credit

or Debit Card

Transaction for

Authorization

The agency accepts payment

via a credit or debit card and

sends information to a

designated Financial

Institution (FI) for

authorization.

Based on its arrangement with a

financial institution, an agency

performs applicable settlement

procedures for transactions

transmitted.

Settlement refers to the accounting

process recording the respective debit

and credit positions of the two parties

involved in a transfer of funds.

RMD-01

RM 4.4.3 FI Receives

Request for

Authorization

The designated FI processes

the transactions

electronically.

RM 4.4.4 Transaction

Authorized?

The FI authorizes or

declines the transaction

request.

RM 4.4.5 Transaction

Declined

Agency receives notice from

FI that a transaction has

been declined.

RM 4.4.6 Agency

Receives

Credit/Debit

Card

Information

The agency receives the

transaction authorization

number, date received, and

partial credit card account

number, as applicable, from

the FI.

RM 4.4.7 Remitter

Submits Cash/

Check to

Agency

A remitter pays the agency

directly with cash or a

check.

RM 4.4.8 Agency

Receives Cash,

Checks, and

Prepares Control

Logs

Finance receives a payment

in the form of cash or check

and logs the information for

tracking and internal control

purposes.

In accordance with common control

activities common to all agencies, key

duties and responsibilities need to be

divided or segregated among different

people to reduce the risk of error or

fraud. This should include separating

the responsibilities for authorizing

transactions, processing and recording

them, reviewing the transactions, and

handling any related assets. No one

individual should control all key
EXPOSURE DRAFT - 7/19/2012 4-24

Step ID Step Name Step Description Business Rules CFSR Req.

aspects of a transaction or event.

Cash and checks received at the

agency should, at a minimum, be

deposited daily. Agencies must design

and implement policies and

procedures incorporating sound

internal controls to safeguard and

account for collections that cannot be

deposited by the end of each day.

Such undeposited collections must be

included in applicable financial

reports.

RM 4.4.9 Remitter

Submits Cash/

Check or

Electronic

Payment via FI

A remitter submits cash,

check, or initiates an

electronic transaction

through applicable FI

channels.

Payments involving electronic and

cash equivalents include transactions

initiated by phone, Internet/Web,

electronic check, and Fedwire

transactions.

Agencies may manually process hard

copy checks, utilize the Paper Check

Conversion process, or other approved

automated process.

RM 4.4.10 FI Transmits

Transaction

The applicable financial

institution(s) (including

Federal Reserve Bank (FRB)

as applicable) receives,

processes, and transmits the

transactions electronically.

Program and financial data

are received by FIs which

were initially remitted

through various mechanisms

including over the counter,

Web page, mail, electronic

terminal, electronic file,

phone, etc.

Transactions must be validated and

processed in a timely manner. Agency

policies and procedures will define

frequency in which actions are

performed.

RM 4.4.11 Agency Deposits

Cash, Checks

Designated agency

personnel prepare deposit

tickets (SF215) for cash and

checks received and make

deposits to the designated

financial institution.

Agencies must record and maintain

sufficient supporting documentation

for each deposit to support the

application of receipts to customer

subsidiary records and the general

ledger.

RM 4.4.12 Settle

Transactions

Settlement occurs at both

financial institutions and

FRBs acting on behalf of

Settlement results in a deposit at the

applicable institution.
EXPOSURE DRAFT - 7/19/2012 4-25

Step ID Step Name Step Description Business Rules CFSR Req.

Treasury.

RM 4.4.13 Treasury

Populates the

Data Repository

Treasury makes collections

data available to agencies by

populating the Transaction

Reporting System (TRS)

data repository.

Treasury will use the (TRS) as a

centralized repository of detailed

collection transaction information. It

will provide a single touch point from

which an Agency can obtain

transaction data and standard reports,

integrating information across all

collections channels and settlement

mechanisms.

RM 4.4.14 Concentrate

Collections

The deposit data for the

funds from Commercial FIs

and the FRBs are

concentrated and recorded in

the Treasury General

Account (TGA) Fund.

Concentration is performed by

applicable systems at FRBs and/or

commercial FIs.

Concentration moves funds from an

account that settles the transactions to

the Treasury General Account Fund at

the Federal Reserve Bank of New

York.

RM 4.4.15 Agency

Downloads

Treasury Data

The agency downloads

Treasury collections data,

including both summary and

detailed transaction records.

The TRS data includes Treasury

confirmations of deposit tickets and

credit/debit card transactions as well

as all other transactions processed by

Treasury.

RM 4.4.16 Agency

Reconciles Cash,

Checks,

Credit/Debit

Card

Information to

Treasury Data

Treasury records of agency

deposits are reconciled by

the Agency to its records of

deposits made.

The TRS data, which will be available

daily, is used to confirm Treasury

received and recorded the

transactions. A timing difference may

occur between the time the agency

records the collection and the time the

collection is reflected in TRS.

Agencies must reconcile their records

of deposits to Treasury records of

deposits on a periodic basis. These

reconciliation procedures must be

performed until un-reconciled items

are resolved. All resolutions should be

made on a timely basis.

RM 4.4.17 Treasury

Collects

Delinquent Debt

Treasury or the DOJ

transmits data to the agency

for collections of delinquent

debt with the public

collected on behalf of the

agency.

RM 4.4.18 Agency The agency receives Best practice is to record collections
EXPOSURE DRAFT - 7/19/2012 4-26

Step ID Step Name Step Description Business Rules CFSR Req.

Receives

Receipts Data on

Delinquent Debt

With the Public

collections and receipts data

from Treasury, via IPAC, on

delinquent debt with the

public.

data to reflect the current status of the

bill.
EXPOSURE DRAFT - 7/19/2012 4-27

4.5 APPLICATION OF RECEIPTS

Receipts should be recorded as quickly as possible. Application of receipts may be supported by information from

the impacted business area to support timely and accurate posting. This chapter addresses four general ledger

recording scenarios for receipts:

 unapplied collections;

 receipts against a customer account but not against a specific bill;

 receipts against a customer account and a specific bill; and

 receipts applied against Treasury’s general fund.

Receipts are recorded regardless of whether they are associated with transactions previously established as a

receivable. The following flowchart provides key steps in the processes agencies use to process and record

receipts information to customer/debtor accounts and the general ledger.

RM 4.5 – Application of Receipts Flowchart

RM 4.5 Application of Receipts

Finance

Differentiate Data for

Collections Initially

Processed at Agency

from Collections Initially

Processed at Treasury

RM 4.5.3

Collections

Data Initially

Processed at

Agency

RM 4.5.1

Pre-Process

Collection

Transactions

RM 4.5.4

Transactions

from

Treasury

Data

Repository

RM 4.5.2

From RM

4.4.15

From RM

4.4.6,

4.4.10,

4.4.18

Duplicate File?

RM 4.5.5

Reject File

RM 4.5.6

Transaction

Processable?

RM 4.5.7

Transaction

in Error

RM 4.5.8

Research and

Correct

Transaction in

Error

RM 4.5.9

Duplicate

Transaction?

RM 4.5.11

Reject Transaction

RM 4.5.12

Collection Data

Contains Customer

Account ?

RM 4.5.14

Collection

Against a

Receivable?

RM 4.5.15

Collection is

Recorded in

Customer

Account and

General Ledger

RM 4.5.16

Identified

Collection is

Recorded to

Specific Bill and

General Ledger

RM 4.5.17

No No

Yes

Yes

No

Unapplied

Collection is

Recorded in

General

Ledger

RM 4.5.20

Research

Unmatched

Transactions

RM 4.5.21

Is

Supporting

Information

Available?

RM 4.5.22 Document

Disposition of

Receipt

RM 4.5.27

Evaluate

Supporting

Information

RM 4.5.23

General Fund

Receipt is

Recorded in

General Ledger

RM 4.5.28

Is Further

Research

Warranted?

RM 4.5.25

Request

Supporting

Information

RM 4.5.26

Collection

Issue Resolved?

RM 4.5.24

No

Yes

No

Transactions

Processed in

CFS

RM 4.5.10

Yes

Yes

Yes

No

Collection

on a Receivable?

RM 4.5.13

Yes

Transaction

Data Complete

and Valid?

RM 4.5.18

Collection is

Recorded in

General

Ledger

RM 4.5.19

No

Yes

No

Yes

No

No

To RM

4.2.2

Resolved

Item is a Collection

on a Bill ?

RM 4.5.29

Yes

Yes

To RM

4.5.19

No

From RM

4.5.29

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-28

The Receivables Management Application of Receipts process steps are described as follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.5.1 Collections

Data Initially

Processed at

Agency

This data represents

remittances made directly

to the agency.

Collection data must be captured and

recorded.

RMD-01

RM 4.5.2 Transactions

from Treasury

Data Repository

This data has been

downloaded and sorted by

transaction type and

includes both remittance

information originally

received directly by the

agency as well as

remittance information

originally received at

Treasury.

RM 4.5.3 Differentiate

Data for

Collections

Initially

Processed at

Agency from

Collections

Initially

Processed at

Treasury

Finance determines

whether transactions from

TRS were initially

processed by the agency or

initially processed at

Treasury.

Prior to processing Treasury data in

Core Financial System, the agency

applies edit checks to each collection

transaction from TRS to determine

whether it was initially processed by

the agency and then submitted to

Treasury. For example, cash, checks,

and credit/debit card transactions

originally submitted directly to the

agency would have already been

recorded in the customer/debtor

subsidiary records and the general

ledger. The TRS data is used to

confirm Treasury received and

recorded the transactions one or

more days after the agency has

received and recorded the

collections.

TLD-05

RM 4.5.4 Pre-Process

Collection

Transactions

Each file of transactions

downloaded from TRS and

other sources is subjected

to edit and validity checks

prior to being processed in

Core Financial System.

Edit and validity checks are applied

to each transaction file to determine

whether required data has been

provided and whether the file is a

duplicate which has already been

processed by the agency. Automated

checks are applied to validate such

specifications as the file layout,

number of fields, validity of

applicable fields, completeness, and

header and trailer records.

Key data required can include

customer number, invoice number

and associated amounts, Treasury

TLD-02

TLD-03

TLD-05
EXPOSURE DRAFT - 7/19/2012 4-29

Step ID Step Name Step Description Business Rules CFSR Req.

Account Symbol (TAS), Treasury

Appropriation Fund Symbol (TAFS),

Agency Location Code (ALC), and

other applicable Agency information.

RM 4.5.5 Duplicate File? Based on the results of edit

and validity checks, the

Agency determines whether

the files from Treasury or

other sources represent

duplicate files previously

processed by the agency.

Agencies should evaluate internal

controls and determine whether they

are adequate for preventing the

loading of a duplicate file into the

Core Financial System. Agencies

must implement procedures to

readily identify duplicate files prior

to loading such files to the Core

Financial System.

TLD-05

RM 4.5.6 Reject File A duplicate file is rejected

and not processed.

Agencies should develop and

implement applicable internal

controls to prevent processing of

duplicate files.

TLD-04

TLD-06

RM 4.5.7 Transaction

Processable?

Transactions lacking data in

required fields are not

processable.

Agencies must implement data

validity checks to identify

transaction record fields with

incomplete or invalid data prior to

loading such data to the Core

Financial System.

TLD-05

RM 4.5.8 Transaction in

Error

The Core Financial System

generates a file of

transactions considered to

be in error status because

one or more key required

fields (e.g., customer

number, organization code)

lack valid data.

Transaction record fields with

incomplete or invalid data result in a

transaction being categorized as an

error.

TLD-04

TLD-06

RM 4.5.9 Research and

Correct

Transaction in

Error

The agency researches and

corrects/completes data for

transactions in error.

Collection transactions in error must

be corrected/edited to enable

processing of those transactions in

the Core Financial System.

TLD-04

TLD-05

RM 4.5.10 Transactions

Processed in

Core Financial

System

Transactions are processed

in the Core Financial

System.

Agencies should develop appropriate

internal controls and related

procedures to enable accurate and

complete processing of transactions

in the Core Financial System.

TLD-01

TLD-03

TLD-04

RM 4.5.11 Duplicate

Transaction?

Based on the results of edit

and validity checks, the

Core Financial System

determines whether

individual transactions

Key data fields are validated to

identify duplicate transactions.

SMB-06
EXPOSURE DRAFT - 7/19/2012 4-30

Step ID Step Name Step Description Business Rules CFSR Req.

represent duplicates of

transactions already

processed in the Core

Financial System.

RM 4.5.12 Reject

Transaction

Duplicate transactions are

rejected by the Core

Financial System.

A report should be generated to track

rejected transactions. Agencies

should implement procedures to

research and correct the cause of

such duplicate transactions.

RM 4.5.13 Collection

against a

Receivable?

The Core Financial System

determines whether the

collection pertains to an

account receivable or

represents a collection for

which there is not an

existing account receivable.

For collections against receivables,

an agency must reference the

receivable document and update

customer records and related billing

information.

For collections without receivables,

an agency must record collections

with corresponding revenues,

expenditure reductions,

advance/prepayment reclassifications

or other offsets.

Examples of collections without

receivables include over the counter

purchase, early payment, etc.

RMD-02

RMD-03

RM 4.5.14 Collection Data

Contains

Customer

Account?

Determine whether the

collection data includes a

valid customer account.

Compare the customer account in the

transaction record to the customer

accounts established as described in

section RM 4.1.

RM 4.5.15 Collection

Against a

Receivable?

Determine whether the

collection transaction

includes the necessary data

to be recorded to a specific

invoice on a customer

account.

Apply data checks to determine

whether the agency invoice number

is present or can be determined from

other applicable information such as

a purchase order.

RM 4.5.16 Collection is

Recorded in

Customer

Account and

General Ledger

The collection is recorded

in the customer account.

The entries are recorded in the

general ledger using the USSGL

Account Transaction Listing

provided in the TFM. Examples

include, but are not limited to, the

following transaction codes from the

current TFM:

TFM C109 To record the receipt of

previously anticipated collections.

TFM C138 To record the collection

of refunds receivable for assets
EXPOSURE DRAFT - 7/19/2012 4-31

Step ID Step Name Step Description Business Rules CFSR Req.

purchased or expenses incurred in

the current year that create budgetary

resources when collected.

TFM C414 To record refund

receivables from non-Federal sources

for assets or expenses that do not

create budgetary resources until

collected.

TFM C640 To record the proceeds

from commodities sold.

TFM C646 To record the sale or

disposition of assets other than

personal properties and investments.

For guidance on applying payments

against delinquent debt, see

Treasury's Managing Federal

Receivables and the Federal Claims

Collections Standards. This guidance

particularly illustrates the order in

which the payment is applied against

delinquent debt classes and also

provides exceptions to that

application order.
EXPOSURE DRAFT - 7/19/2012 4-32

RM 4.5.17 Identified

Collection is

Recorded to

Specific Bill in

General Ledger

Transactions that pass all

edit and validity checks are

applied to a specific

customer/debtor bill as well

as the General Ledger.

The entries are recorded using the

USSGL Account Transaction Listing

provided in the TFM. Examples

include, but are not limited to, the

following transaction codes from the

current TFM:

TFM C109 To record the receipt of

previously anticipated collections.

TFM C138 To record the collection

of refunds receivable for assets

purchased or expenses incurred in

the current year that create budgetary

resources when collected.

TFM C414 To record refund

receivables from non-Federal sources

for assets or expenses that do not

create budgetary resources until

collected.

TFM C640 To record the proceeds

from commodities sold.

TFM C646 To record the sale or

disposition of assets other than

personal properties and investments.

Agencies would also record the

collection of delinquent debts that

have been written-off, closed out or

waived. Treasury's Managing

Federal Receivables provides

guidance to allow agencies to

develop procedures for the pursuit of

collection after classification of debt

into a write off/currently not

collectable status.

RMD-02

RMD-04

RMD-06

RMD-07

RM 4.5.18 Transaction

Data Complete

and Valid?

For collections not on an

existing account receivable,

the Core Financial System

determines whether the

transaction data is complete

and valid.

The Core Financial System applies

edit and validity checks to determine

if the collections data provided is

sufficient to record applicable entries

to the General Ledger. General

Ledger accounts that may be affected

by a transaction involving a

collection are revenues,

expenditures, advances/prepayments,

or other offsets.
EXPOSURE DRAFT - 7/19/2012 4-33

RM 4.5.19 Collection is

Recorded in

General Ledger

Collections are recorded to

applicable accounts.

The entries are recorded using the

USSGL Account Transaction Listing

provided in the TFM. Examples

include, but are not limited to, the

following transaction codes from the

current TFM:

TFM C640 To record the proceeds

from commodities sold.

TFM C646 To record the sale or

disposition of assets other than

personal properties and investments.

RM 4.5.20 Unapplied

Collection is

Recorded in

General Ledger

Collection transactions

lacking key information

required to be applied to

customer accounts and/or

revenue accounts are

recorded as unapplied

collections in the General

Ledger.

Agencies record unapplied

collections to applicable accounts as

permitted under Treasury guidance.

The entries are recorded using the

USSGL Account Transaction Listing

provided in the TFM. Examples

include, but are not limited to, the

following transaction codes from the

current TFM:

TFM C108 To record the receipts

reported into deposit funds and

clearing accounts.

TFM C152 To record unapplied

receipts into fund symbols that

require budgetary reporting.

RM 4.5.21 Research

Unmatched

Transactions

The agency researches

transactions that are not

matched to a

customer/debtor account or

other valid collection type.

Agencies must monitor the status of

each unapplied collection. Such

monitoring can include aging reports,

tracking of types of collections, data

queries, etc.

RM 4.5.22 Is Supporting

Information

Available?

Finance determines

whether sufficient

supporting information is

available to research and

resolve unapplied

collections.

Agencies design and implement

workflow processes in and around

the CFSR that move information on

unapplied collections to appropriate

areas for research and resolution.

RM 4.5.23 Evaluate

Supporting

Information

Supporting information

received is evaluated to

determine if sufficient

information exists to

properly identify and apply

collection transactions.

Finance monitors and evaluates the

responses to information requests

related to unapplied collections.
EXPOSURE DRAFT - 7/19/2012 4-34

RM 4.5.24 Collection Issue

Resolved?

If sufficient information has

been received and input to

collection transaction

records, Finance records

the transactions to the

General Ledger as

identified collections.

Previous entries to record

unapplied collections are

reversed.

RM 4.5.25 Is Further

Research

Warranted?

If the unidentified

collection issue is not

resolved, Finance

determines whether further

research efforts are

warranted.

Cost effective efforts should

continue if an agency determines that

such efforts have some potential to

result in resolution of the collection

issue.

Agencies may use discretion in

determining threshold amounts

below which it is not considered cost

effective to continue efforts to

resolve the collection issue.

RM 4.5.26 Request

Supporting

Information

Request information from

the business unit

(functional area) that can

assist in properly

identifying the collection

transactions.

RM 4.5.27 Document

Disposition of

Receipt

Further research is not

warranted to resolve the

unidentified.

The decision not to perform further

research should be reviewed,

approved, and documented by a

supervisor.

Agencies should monitor and

maintain records of collections that

will not be applied and will be

recorded as miscellaneous receipts to

the Treasury general fund.

RM 4.5.28 General Fund

Receipt is

Recorded in

General Ledger

Reverse the entry originally

recorded as an unapplied

collection and record the

collection to a

miscellaneous receipts

account within the general

fund of the Treasury.

The entries are recorded using the

USSGL Account Transaction Listing

logic provided in the TFM.

Examples include, but are not limited

to, the following transaction code

from the current TFM:

TFM C141 To record the collection

of custodial revenue from a nonFederal source that is deposited to a

miscellaneous receipt account.
EXPOSURE DRAFT - 7/19/2012 4-35

RM 4.5.29 Resolved Item

is a Collection

on a Bill?

If the resolved item

represents a collection on a

specific bill on a customer

account, it is recorded to

the customer account

receivable and the general

ledger. If the resolved item

represents a collection for

which an accounts

receivable was not

applicable, the applicable

entries to revenues,

expenditures,

advances/prepayments, or

other offsets are recorded in

the general ledger
EXPOSURE DRAFT - 7/19/2012 4-36

4.6 DUNNING

Dunning is the process of communicating with customers to ensure the collection of eligible (delinquent)

accounts receivable. Except in rare circumstances, Treasury’s Managing Federal Receivables provides that

no more than two dunning letters should be sent. The additional intervals described in this process allow an

agency the option of sending more than two dunning letters, if needed. Dunning is integral to an agencies’

due diligence prior to referral to FedDebt (FMS). The following flowchart provides key steps in the

processes agencies use to perform dunning procedures on eligible customer/debtor accounts.

RM 4.6 – Dunning Flowchart

RM 4.6 Dunning

Customer /

Debtor

Finance

Dunning

Letter

Interval 1

RM 4.6.5

Apply

Interest

RM 4.6.2

Apply

Administrative

Costs

RM 4.6.8

Dunning Interval 1

Eligible?

RM 4.6.1

Dunning Interval 4

Eligible?

RM 4.6.18

Dunning Interval 3

Eligible?

RM 4.6.11

Dunning Interval 2

Eligible?

RM 4.6.6

Yes

Generate

Dunning Letter

for Interval 1

RM 4.6.4

Apply

Interest

RM 4.6.7

Generate Dunning

Letter

for Interval 2

RM 4.6.9

Generate Dunning

Letter for

Interval 3

RM 4.6.15

Apply

Interest

RM 4.6.12

Apply

Administrative

Costs

RM 4.6.13

Apply

Penalty

RM 4.6.14

Apply

Interest

RM 4.6.19

Apply

Administrative

Costs

RM 4.6.20

Apply

Penalty

RM 4.6.21

Dunning

Letter

Interval 2

RM

4.6.10

Dunning

Letter

Interval 3

RM

4.6.16

Yes

No

No

Yes

Yes

To RM

4.2.19

Debt Eligible for

Referral?

RM 4.6.17

Debt Eligible for

Referral?

RM 4.6.22

Yes

Yes

No

From RM

4.2.4

To RM

4.2.5

To RM

4.2.6

No

No

Transaction

is Recorded

in General

Ledger

RM 4.6.23

To RM

4.6.23

To RM

4.6.23

From RM

4.6.2, 4.6.3, 4.6.7,

4.6.8, 4.6.12, 4.6.13,

4.6.14, 4.6.19, 4.6.20,

4.6.21

To RM

4.2.2

Apply

Administrative

Costs

RM 4.6.3

No

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-37

The Receivables Management Dunning process steps are described as follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.6.1 Dunning

Interval 1

Eligible?

Each account receivable is

regularly evaluated to

determine if it is delinquent

and therefore eligible for

dunning.

An eligible account receivable is

dunned at the first applicable and

subsequent time intervals. Accounts

are dunned at periodic intervals (e.g.,

30-day intervals).

Delinquent accounts should be

dunned based on Federal statutes

such as the Debt Collection Act of

1982 and the Debt Collection

Improvement Act of 1996, Federal

regulations on debt collection, such

as the Federal Claims Collection

Standards, government-wide debt

collection guidance such as OMB

Circular A-129 and Treasury’s

Managing Federal Receivables, and,

in addition to, agency policies and

procedures.

RM 4.6.2 Apply Interest Interest is calculated and

applied to the account as of

the end date of Interval 1.

Calculate and record late payment

interest based on Treasury's Current

Value of Funds Rate (CVFR) unless

otherwise specified by the agency.

Best practice for applying interest to

delinquent debts is to assess interest

based on the original invoice date.

For additionally guidance on

applying interest to delinquent debts,

see Treasury’s Managing Federal

Receivables and the Debt Collection

Act of 1982.

RMC-01

RMC-02

RM 4.6.3 Apply

Administrative

Costs

Administrative Costs are

applied at Dunning Interval

1.

Calculate and record administrative

costs in accordance with agency

policy and procedures.

For guidance on assessment and

application of fees, incurred as a

result of debt collection activity on

delinquent debts, see Treasury's

Managing Federal Receivables.

RMC-03
EXPOSURE DRAFT - 7/19/2012 4-38

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.6.4 Generate

Dunning Letter

for Interval 1

A Dunning Letter is

generated and sent to the

customer/debtor.

The dunning letter is sent via

electronic media or in hard copy, as

appropriate for the customer/debtor.

RMC-06

RMC-07

RMB-20

RM 4.6.5 Dunning Letter

Interval 1

A dunning letter is the

output from Step 4.

The dunning letter should describe

the status of the debt as overdue and

include: names/titles of debtor or

responsible parties, amount owed,

remittance terms and conditions and

applicable payment due date. Terms

and conditions must include actions

that can be taken to collect the

outstanding debt.

RM 4.6.6 Dunning

Interval 2

Eligible?

The account is due for

dunning at Interval 2 if it

remains delinquent and has

already been dunned at

Interval 1.

The following business rules repeat

those in step RM 4.6.1:

An eligible account receivable is

dunned at the first applicable and

subsequent time intervals. Accounts

are dunned at periodic intervals (e.g.,

30-day intervals).

Delinquent accounts should be

dunned based on Federal statutes

such as the Debt Collection Act of

1982 and the Debt Collection

Improvement Act of 1996, Federal

regulations on debt collection, such

as the Federal Claims Collection

Standards, government-wide debt

collection guidance such as OMB

Circular A-129 and Treasury’s

Managing Federal Receivables, and,

in addition to, agency policies and

procedures.

RM 4.6.7 Apply Interest Interest is calculated and

applied to the account as of

the end date of Interval 2.

The following business rules repeat

those in step RM 4.6.2:

Calculate and record late payment

interest based on Treasury's Current

Value of Funds Rate (CVFR) unless

otherwise specified by the agency.

Best practice for applying interest to

delinquent debts is to assess interest

based on the original invoice date.

For additional guidance on applying
EXPOSURE DRAFT - 7/19/2012 4-39

Step ID Step Name Step Description Business Rules CFSR Req.

interest to delinquent debts, see

Treasury’s Managing Federal

Receivables and the Debt Collection

Act of 1982.

RM 4.6.8 Apply

Administrative

Costs

Administrative costs are

applied at Dunning Interval

2.

The following business rules repeat

those in step RM 4.6.3:

Calculate and record administrative

costs in accordance with agency

policy and procedures.

For guidance on assessment and

application of fees, incurred as a

result of debt collection activity on

delinquent debts, see Treasury's

Managing Federal Receivables.

RM 4.6.9 Generate

Dunning Letter

for Interval 2

A dunning letter is

generated.

The following business rule repeats

the business rule in step RM 4.6.4:

The dunning letter is sent via

electronic media or in hard copy, as

appropriate for the customer/debtor.

RM 4.6.10 Dunning Letter

Interval 2

The output from the

previous step is a dunning

letter.

The following business rule repeats

the business rule in step RM 4.6.5:

The dunning letter should describe

the status of the debt as overdue and

include: names/titles of debtor or

responsible parties, amount owed,

remittance terms and conditions and

applicable payment due date. Terms

and conditions must include actions

that can be taken to collect the

outstanding debt.

RM 4.6.11 Dunning

Interval 3

Eligible?

The account is due for

dunning at Interval 3 if it

remains delinquent and has

already been dunned at

Intervals 1 and 2.

See Business Rules at RM 4.6.1.

As stated in Treasury's Managing

Federal Receivables guidance, no

more than two dunning letters should

be sent, except in rare circumstances.

The additional intervals described in

this process allow an agency the

option of sending more than 2

dunning letters, if warranted.
EXPOSURE DRAFT - 7/19/2012 4-40

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.6.12 Apply Interest Interest is calculated and

applied to the account as of

the end date of Interval 3.

The following business rules repeat

those in step RM 4.6.2:

Calculate and record late payment

interest based on Treasury's Current

Value of Funds Rate (CVFR) unless

otherwise specified by the agency.

Best practice for applying interest to

delinquent debts is to assess interest

based on the original invoice date.

For additional guidance on applying

interest to delinquent debts, see

Treasury’s Managing Federal

Receivables and the Debt Collection

Act of 1982.

RM4.6.13 Apply

Administrative

Costs

Administrative costs are

applied at Dunning Interval

3.

The following business rules repeat

those in step RM 4.6.3:

Calculate and record administrative

costs in accordance with agency

policy and procedures.

For guidance on assessment and

application of fees, incurred as a

result of debt collection activity on

delinquent debts, see Treasury's

Managing Federal Receivables.

RM 4.6.14 Apply Penalty Penalty amounts are

calculated and applied to the

account as of the end date of

Interval 3.

As stated in Treasury's Managing

Federal Receivables guidance,

penalties discourage delinquencies

and encourage early payment of the

delinquent debt in full. As set by

statute, the penalty to be assessed to a

delinquent debt is an amount not to

exceed 6% per year. An Agency

should not charge a penalty of less

than 6% without a compelling reason.

Accruing from the date of

delinquency, the penalty charge is

assessed on any portion of a debt that

is outstanding for more than 90 days,

including any interest and

administrative costs not to exceed 6%

per year.
EXPOSURE DRAFT - 7/19/2012 4-41

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.6.15 Generate

Dunning Letter

for Interval 3

A dunning letter is

generated.

The following business rule repeats

the business rule in step RM 4.6.4:

The dunning letter is sent via

electronic media or in hard copy, as

appropriate for the customer/debtor

RM 4.6.16 Dunning Letter

Interval 3

The output from the

previous step is a dunning

letter.

The following business rule repeats

the business rule in step RM 4.6.5:

The dunning letter should describe

the status of the debt as overdue and

include: names/titles of debtor or

responsible parties, amount owed,

remittance terms and conditions and

applicable payment due date. Terms

and conditions must include actions

that can be taken to collect the

outstanding debt.

RM 4.6.17 Debt Eligible

for Referral?

The agency determines

whether the debt is eligible

for referral to Treasury.

The following business rule repeats

the business rule in step RM 4.2.19:

For guidance on referral to the FMS

for cross-servicing and/or to the

Treasury Offset Program see

Treasury's Managing Federal

Receivables. The guidance provides

debt referral eligibility criteria as well

as eligibility exceptions.

RM 4.6.18 Dunning

Interval 4

Eligible?

The account is due for

dunning at Interval 4 if it

remains delinquent and has

already been dunned at

intervals 3 and earlier.

As stated in Treasury's Managing

Federal Receivables guidance, no

more than two dunning letters should

be sent, except in rare circumstances.

The additional intervals described in

this process allow an agency the

option of sending more than 2

dunning letters, if warranted.

The following business rules repeat

those in step RM 4.6.1:

An eligible account receivable is

dunned at the first applicable and

subsequent time intervals. Accounts

are dunned at periodic intervals (e.g.,

30-day intervals).

Delinquent accounts should be

dunned based on Federal statutes

such as the Debt Collection Act of

1982 and the Debt Collection
EXPOSURE DRAFT - 7/19/2012 4-42

Step ID Step Name Step Description Business Rules CFSR Req.

Improvement Act of 1996, Federal

regulations on debt collection, such

as the Federal Claims Collection

Standards, government-wide debt

collection guidance such as OMB

Circular A-129 and Treasury’s

Managing Federal Receivables, and,

in addition to, agency policies and

procedures.

RM 4.6.19 Apply Interest Interest is calculated and

applied to the account as of

the end date of Interval 4.

The following business rules repeat

those in step RM 4.6.2:

Calculate and record late payment

interest based on Treasury's Current

Value of Funds Rate (CVFR) unless

otherwise specified by the agency.

Best practice for applying interest to

delinquent debts is to assess interest

based on the original invoice date.

For additional guidance on applying

interest to delinquent debts, see

Treasury’s Managing Federal

Receivables and the Debt Collection

Act of 1982.

RM 4.6.20 Apply

Administrative

Costs

Administrative costs are

applied at Dunning

Interval 4.

The following business rules repeat

those in step RM 4.6.8:

Calculate and record administrative

costs in accordance with agency

policy and procedures.

For guidance on assessment and

application of fees, incurred as a

result of debt collection activity on

delinquent debts, see Treasury's

Managing Federal Receivables.

RM 4.6.21 Apply Penalty Penalties are calculated and

applied to the account as of

the end date of Interval 4.

The following business rules repeats

the business rule in step RM 4.6.14:

As stated in Treasury's Managing

Federal Receivables guidance,

penalties discourage delinquencies

and encourage early payment of the

delinquent debt in full. As set by

statute, the penalty to be assessed to a

delinquent debt is an amount not to

exceed 6% per year. An agency

should not charge a penalty of less

than 6% without a compelling reason.
EXPOSURE DRAFT - 7/19/2012 4-43

Step ID Step Name Step Description Business Rules CFSR Req.

Accruing from the date of

delinquency, the penalty charge is

assessed on any portion of a debt that

is outstanding for more than 90 days,

including any interest and

administrative costs not to exceed 6%

per year.

RM 4.6.22 Debt Eligible

for Referral?

The agency determines

whether the debt is eligible

for referral to Treasury.

The following business rule repeats

the business rule in step RM 4.2.19:

For guidance on referral to the FMS

for cross-servicing and/or to the

Treasury Offset Program, see

Treasury's Managing Federal

Receivables. The guidance provides

debt referral eligibility criteria as well

as eligibility exceptions.

RM 4.6.23 Transaction is

Recorded in

General Ledger

Applicable entries are

recorded to apply interest,

fees, and penalties to

applicable customer

accounts within the General

Ledger.

The entries are recorded using the

USSGL Account Transaction Listing

in the TFM. Examples include, but

are not limited to, the following

transaction codes from the current

TFM:

TFM C434 To record the accrual of

custodial interest revenue that is

collected by an agency to be

deposited directly into a Treasury

miscellaneous receipts account.

TFM C436 To record the accrual of

custodial penalties and administrative

fees revenue that is collected by an

agency to be deposited directly into a

Treasury miscellaneous receipts

account.
EXPOSURE DRAFT - 7/19/2012 4-44

4.7 ALLOWANCE FOR LOSS ON ACCOUNTS RECEIVABLE

An agency shall recognize and record its projected debt losses by setting up allowance accounts, such as an

allowance for doubtful accounts. The agency should establish the amounts in the allowance accounts based

on portfolio condition and composition, historical experiences with losses, and actual write-offs taken in the

preceding year or groups of years. The calculation can be performed at agency discretion; however, in

practice, the calculation is generally only done for financial statement preparation.

The following flowchart provides key steps in the processes agencies use to determine and record an

allowance for loss on accounts receivable. The allowance for loss on accounts receivable process includes

the aging of accounts receivables to determine the period of time outstanding for all receivable balances, the

calculation of the allowance for loss on accounts receivable based on Agency-defined criteria, review and

approval of the calculated allowance, and subsequent entries made to the General Ledger.

RM 4.7 – Allowance for Loss on Accounts Receivable

Flowchart

Finance

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-45

The Receivables Management Allowance for Loss on Accounts Receivable process steps are described as

follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.7.1 Aged Accounts

Receivable

Summary

Balance

The initial input to the

process is an aged

summary of balances of

accounts receivable

outstanding for designated

periods of time.

Agencies shall age receivables

balances on a periodic basis by

calculating the length of time

accounts have been outstanding

since the due dates.

RM 4.7.2 Calculate

Allowance for

Loss on

Accounts

Receivable

An estimate is made of

receivables that are

expected to be

uncollectible.

As stated in Statement of Federal

Financial Accounting Standard 1?

(SFFAS 1), losses should be

recognized when there is more than

a 50% chance of loss occurrence. A

systematic methodology should be

used to measure losses based on

analysis of both individual accounts

and a group of accounts as a whole.

Specific customer receivable

balances representing significant

amounts should be individually

analyzed. Group analysis should be

based on groups separated into

homogeneous accounts with similar

risk characteristics.

The allowance for loss is calculated

periodically for accounting purposes

and financial statement reporting. A

significant fluctuation in the

allowance calculation, from period

to period, may impact accounting

operations.

Treasury's Managing Federal

Receivables guidance states that an

agency should establish amounts in

the allowance accounts based on any

one of the following:

 Portfolio condition and

composition

 Historical experience with losses

 Actual write-offs taken in the

preceding year or groups of

years.

RM 4.7.3 Review

Calculated

Agency supervisory

personnel review the

calculated allowance.

The calculated allowance should be

reviewed by supervisory personnel

with knowledge of the outstanding
EXPOSURE DRAFT - 7/19/2012 4-46

Step ID Step Name Step Description Business Rules CFSR Req.

Allowance accounts receivable balances.

RM 4.7.4 Calculated

Allowance

Approved?

Agency supervisory

personnel approve or

disapprove the calculated

allowance.

The calculated allowance should be

approved by supervisory personnel,

other than personnel calculating the

proposed allowance, with

knowledge of the outstanding

accounts receivable balances.

RM 4.7.5 Resolve Issue Issues identified by

supervisory personnel are

addressed and applicable

action(s) taken to

recalculate the estimate of

allowance for loss on

accounts receivable.

RM 4.7.6 Allowance is

Recorded in

General Ledger

Applicable entries are

recorded to the allowance

for loss on accounts

Receivable account within

the General Ledger.

The entries are recorded using the

USSGL Account Transaction

Listing provided in the TFM.

Examples include, but are not

limited to, the following transaction

codes from the current TFM:

TFM D402 To record an allowance

for a reduction in revenue from nonFederal sources when realization is

not probable (less likely than not).

TFM D404 To record the estimated

allowance for bad debts related to

non-credit-reform receivables.
EXPOSURE DRAFT - 7/19/2012 4-47

4.8 WRITE-OFF OF ACCOUNTS RECEIVABLE

Write-off of a debt is an accounting action that results in reporting the debt/receivable as having no value on

the agency’s financial and management reports. Per OMB Circular No. A-129, write-offs must further be

classified into two separate and distinct categories as currently not collectible or close-out. Currently not

collectible debts are those which the agency intends to continue cost effective debt collection action. Closed

out debts are those that are prohibited from further debt collection action or the agency does not plan to take

any further collection action on the debt. The following organizations should follow IRS 1099-C guidelines

and agency policy regarding the issuance of a 1099-C when closing out debts; a department, a court or

administrative court, an agency instrumentality involved in the executive, judicial, or legislative branches of

the government, including government corporations.

The following flowchart provides key steps in the process for writing off accounts receivable. Included are

steps to analyze debt for write-off, record general ledger entries, classify debt according to collection status,

obtain required approval for actions, close out debt, and notify the Internal Revenue Service (IRS) about

canceled debt as applicable.

RM 4.8 – Write-off of Accounts Receivable

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-48

The Receivables Management Write-off of Accounts Receivable process steps are described as follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.8.1 Analyze Debt

for Write-off

Agency personnel review

each debt eligible for writeoff to determine whether it

should be written off and

consider whether it should

be classified as currently not

collectible or close-out.

Agencies must identify receivables

that may be eligible for write-off.

Selection criteria include:

 Delinquent debt age category

 Customer type

 Receivable type

As described in Treasury's Managing

Federal Receivables guidance and

OMB Circular A-129, each

delinquent debt due to the

government must be reviewed to

determine whether it has value for

accounting purposes.

Guidance also states that generally,

write-off is mandatory for debts

delinquent more than two years,

unless documented and justified to

OMB in consultation with Treasury.

In those cases where material

collections can be documented to

occur after two years, debt cannot be

written off until the estimated

collections become immaterial.

RMC-10

RM 4.8.2 Debt to Be

Written Off?

Based on analysis

performed, a decision is

made whether to write-off

debt.

RM 4.8.3 The Write-off

of Debt Is

Reviewed and

Approved.

Appropriate personnel

within the agency reviews

and approves the write-off

of the debt.

Agencies should design and

implement internal control

procedures for management review

and approval of decisions to write-off

debt.

RM 4.8.4 Write-off Debt The debt is written off for

accounting purposes.

Recording the write-off of

receivables includes the reversal of

applicable interest, penalties, and

administrative charges.

Writing off a debt does not assume

the debt is closed out. Debt collection

efforts related to accounts that have

been written off are not subject to the

same limitations as a debt that has

been closed out.

RMC-11
EXPOSURE DRAFT - 7/19/2012 4-49

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.8.5 Record the

Write-off in

General Ledger

Entries are recorded to

applicable accounts in the

general ledger to reflect the

write-off of debt including

the reversal of applicable

interest, penalties, and

administrative charges.

The entries are recorded using the

USSGL Account Transaction Listing

provided in the TFM. Examples

include, but are not limited to, the

following transaction codes from the

current TFM:

TFM D406 To record the write-off of

penalties, fines, and administrative

fees receivable.

TFM D408 To record the write-off of

accounts receivable.

TFM D416 To record the write-off of

interest receivable.

RM 4.8.6 Determine

Whether to

Continue

Collection

Efforts

The agency performs

analysis to determine

whether collection efforts

should continue after writeoff.

Treasury's Managing Federal

Receivables guidance states that cost

effective collection efforts should

continue if an agency determines that

continued collection efforts have

some potential to result in

collections. Specific criteria are cited

to be taken into account when

deciding whether to terminate

collection efforts.

Agencies may use discretion in

determining threshold amounts below

which it is not considered cost

effective to continue collection

efforts.

RM 4.8.7 Continue

Collection

Efforts?

The agency decides whether

to continue collection efforts

on the delinquent debt.

The agency continues collection

efforts if it plans to take future

actions (either active or passive) and

such actions are not prohibited (e.g.,

a debtor is released from liability in a

bankruptcy).

RM 4.8.8 Classify Debt as

Currently Not

Collectible.

Debt is classified as

currently Not collectible if

collection efforts are to

continue after write-off.

According to Treasury's Managing

Federal Receivables guidance, if the

agency determines cost effective

collection efforts should continue

after write-off, the debt is classified

as currently not collectible.

RMC-12

RM 4.8.9 Continue

Collection

Collection efforts continue

once debt is classified as

currently not collectible.

Data on written-off receivables in

currently not collectible status must

RMC-13
EXPOSURE DRAFT - 7/19/2012 4-50

Step ID Step Name Step Description Business Rules CFSR Req.

Efforts be maintained.

Collection activities continue for debt

classified as currently not collectible.

Collection activities include

procedures performed at the Agency

as well as activities performed by

other entities once debt has been

referred to FMS for cross-servicing

or TOP or to DOJ for litigation. The

agency must periodically evaluate the

status of debt and consider whether to

discontinue collection efforts and

close-out the debt.

RM 4.8.10 Continue

Collection

Efforts?

The agency determines

whether to continue

collection efforts.

Evaluation of the status of debt and

estimated success of collection

efforts to determine whether

collection efforts should continue

must be performed on a regular basis.

Such evaluation is performed at the

agency whether debt is held at the

agency or has been referred to other

entities.

RM 4.8.11 Approval

Required for

Termination of

Collection

Action?

The agency determines

whether approval from DOJ

or FMS may be required

prior to termination of

collection actions for an

accounts receivable.

Except for agencies having

independent statutory authority, DOJ

concurrence is required, as

applicable, when an agency suspends

or terminates collections action on

debts over $100,000 (principal only).

DOJ has delegated to FMS the

authority to approve termination of

collection action on a debt with a

principal amount of $500,000 or less

when the debt is being serviced by

FMS in its cross-servicing program.

RM 4.8.12 Request for

Approval of

Termination of

Collection

Action.

The agency generates a

request for termination of

collection action.

A decision to terminate collection of

a debt must be approved by an

appropriate managerial official.

Proper segregation of duties must be

maintained between the requestor and

approver of the action to terminate.

Concurrence is requested by

submitting a completed Claims

Collection Litigation Report (CCLR)

to the DOJ. See Appendix 10 of

Managing Federal Receivables for

details on preparing a CCLR.
EXPOSURE DRAFT - 7/19/2012 4-51

Step ID Step Name Step Description Business Rules CFSR Req.

RM4.8.13 Request for

Termination of

Collection

Action to DOJ

or FMS

The request for termination

of collection action is

communicated to DOJ or

FMS, as applicable.

RM4.8.14 Approval

Granted?

DOJ/FMS either approves or

denies the request for

termination of collection

action.

RM 4.8.15 Close-out Debt The debt is closed out. Treasury's Managing Federal

Receivables guidance states that once

the agency determines that collection

action is legally barred or is no longer

cost effective, the debt should be

classified as a close-out.

RM 4.8.16 Report

Cancellation of

Debt to IRS?

The agency determines

whether the debt must be

reported to the IRS as

potential income.

Agencies must follow statutory

guidelines and IRS 1099-C

instructions concerning cancellation

of debt and must report cancellation

of debt in the amount of $600 or

greater. Agencies may decide not to

report debts less than $600 that were

cancelled in a calendar year. See IRS

instructions and Managing Federal

Receivables for additional

information on 1099-C reporting.

RM 4.8.17 Generate

Cancellation of

Debt

Notification

The agency or the entity to

which debt has been referred

generates Form 1099-C,

“Cancellation of Debt” and

sends it to the

customer/debtor and the

IRS.

Once a 1099-C has been issued an

agency must cease collection efforts.

RMC-21

RM 4.8.18 Cancellation of

Debt

Form 1099-C is received by

the customer/debtor.
EXPOSURE DRAFT - 7/19/2012 4-52

4.9 ISSUE CREDIT MEMO

The purpose of a credit memo is to determine the action an agency will take in response to triggering events

such as overpayments, return of goods, or adjustment related to services provided from a debtor. The agency

must determine whether or not to apply the amount to an open receivable, offset the next scheduled

receivable, or process a refund to the specific customer.

The following flowchart provides key steps in the process for issuing a credit memo on an established

account receivable. Included are steps to request and prepare a credit memo, adjust an accounts receivable

balance, and generate and send the credit memo.

RM 4.9 – Issue Credit Memo Flowchart

RM 4.9 Issue Credit Memo

Business Unit

Customer /

Debtor

Finance

Business Unit or

Finance Prepares

Request for Credit

Memo

RM 4.9.1

Determine

Appropriate Action

on Credit Memo

RM 4.9.5

Credit

Memo

RM 4.9.13

Request for

Credit

Memo

RM 4.9.4

Credit

Memo is

Recorded in

General

Ledger

RM 4.9.12

Send/Transmit

Credit Memo

RM 4.9.14

Customer/

Debtor

Receives

Credit

Memo

RM 4.9.15

Authorize

Request for Credit

Memo?

RM 4.9.2

Reject Credit

Memo Request

RM 4.9.3

Apply to Open

Receivable?

RM 4.9.6

Offset Next

Receivable?

RM 4.9.7

Evaluate for

Refund

RM 4.9.8

No

Credit Memo

Approved?

RM 4.9.9

No

Yes Yes

To Payment

Process

RM 4.9.11

Yes

Refund to be

Processed?

RM 4.9.10

Yes No

Yes

To RM

4.2.2

No No

From

RM

4.2.23

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-53

The Receivables Management Issue Credit Memo process steps are described as follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.9.1 Business Unit

or Finance

Prepares

Request for

Credit Memo

A triggering event occurs

creating the need for a

credit memo to be issued to

a customer/debtor.

Examples of such

triggering events include an

overpayment from a

customer/debtor, return of

goods, or adjustment

related to services

provided.

An image of the documentation

supporting the credit memo request

shall be maintained in electronic or

hard copy form as applicable.

In an electronic environment, the

request information is entered or

interfaced to the Core Financial

System at the time the request is

prepared.

RM 4.9.2 Authorize

Request for

Credit Memo?

The request for a credit

memo is reviewed and the

document is authorized or

rejected.

The review of credit memo request

should be performed by applicable

supervisory personnel in either the

business unit or Finance separate

from the preparer of the request.

Supervisory personnel must review

applicable supporting documentation

to evaluate the request for a credit

memo.

RM 4.9.3 Reject Credit

Memo Request

The credit memo request is

rejected.

Complete and sufficient supporting

documentation must be provided or

supervisory personnel reject the

credit memo.

RM 4.9.4 Request for

Credit Memo

A document is generated to

request a credit memo.

RM 4.9.5 Determine

Appropriate

Action on

Credit Memo

Finance personnel review

supporting documentation

and any applicable accounts

receivable history to

determine the proper

actions needed to apply the

credit memo.

RM 4.9.6 Apply to Open

Receivable?

If the customer/debtor owes

funds to the agency on open

accounts receivable

balances, Finance personnel

determine whether to apply

the credit memo to an

applicable open balance.

Finance should apply credit memos

to open accounts receivable balances

owed by the customer/debtor.
EXPOSURE DRAFT - 7/19/2012 4-54

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.9.7 Offset Next

Receivable?

Finance personnel

determine whether to hold

the credit memo in order to

offset the amount the

agency would bill on a

future receivable from the

customer/debtor.

Finance personnel review the

customer/debtor’s account history to

determine whether the Agency

should apply the credit memo by

offsetting it against the amount of an

expected future receivable from the

customer/debtor.

RM 4.9.8 Evaluate for

Refund

Finance determines

whether to refund the

amount of the credit memo

by disbursing funds to the

customer/debtor.

Generally, if the agency is not

carrying an open receivable for the

customer/debtor and the customer

account history does not warrant

holding the credit memo to apply to a

future receivable, the funds should

be disbursed.

RM 4.9.9 Credit Memo

Approved?

The credit memo is

approved or rejected in the

Core Financial System.

An individual other than the preparer

will approve or reject the credit

memo.

RM 4.9.10 Refund to be

Processed?

Based on prior evaluations,

Finance determines

whether a refund is to be

processed on the credit

memo.

RM 4.9.11 To Payment

Process

If a refund is to be

processed, the credit memo

is forwarded to the payment

process within Finance.

Finance must apply a funds check to

determine that applicable funds are

available to pay the refund.

RM 4.9.12 Credit Memo is

Recorded in

General Ledger

Accounts receivable

customer/debtor balances

and statuses (at the lowest

appropriate level) are

adjusted and updated to

reflect the credit memo.

Once the credit memo has

been entered into the

system and approved by

appropriate personnel, it is

recorded in the General

Ledger.

The entries are recorded to the

General Ledger using the USSGL

Account Transaction Listing

provided in the TFM. The applicable

entry is recorded based on the entry

originally made to record the

receivable balance.

The agency must establish processes

and procedures to offset the

disbursement against the credit

memo.

RM 4.9.13 Credit Memo A credit memo document is

generated.

RM 4.9.14 Send/Transmit

Credit Memo

Finance sends/transmits the

credit memo to the

customer/debtor.

The credit memo is sent in electronic

or hard-copy format, depending on

the method agreed to by the

customer.
EXPOSURE DRAFT - 7/19/2012 4-55

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.9.15 Customer/

Debtor

Receives Credit

Memo

The credit memo is

received by the

customer/debtor.
EXPOSURE DRAFT - 7/19/2012 4-56

4.10 RETURN OF A FINANCIAL INSTRUMENT

Although returned financial instruments have minimal impact on the accounts receivable balance, they must

be given their due diligence as the potential for uncollectible amounts can increase over time. Examples of

returned financial instruments include non-sufficient funds, closed customer/debtor accounts, stop payments,

and disputed credit or debit charges. The cost of pursuing collection on immaterial amounts resulting from

returned financial instruments can hinder an agencies overall financial management effectiveness. An

agency's business process for returned financial instruments may also help to identify chronic returns from

the same customers which can serve to support a change in agency policy or relationship with their

customers.

The following flowchart provides key steps in the process to be followed when an agency receives notice of

returned financial instruments for a customer/debtor. Included are steps to evaluate and record a returned

item, and notify or bill the customer/debtor as applicable.

RM 4.10 – Return of a Financial Instrument Flowchart

Customer/

Debtor

Finance Treasury

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-57

The Receivables Management Returned Items process steps are described as follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.10.1 Sends/

Transmits

Notice of

Returned

Financial

Instruments

Treasury or the applicable

FI sends/transmits a

returned financial

instruments notice to the

Agency on the account of a

customer/debtor.

RM 4.10.2 Notice of

Returned

Financial

Instruments

A returned financial

instrument notice is

received by the Agency.

RM 4.10.3 Returned

Financial

Instruments

Applicable to a

Previously

Established

Customer/

Debtor

Account?

Finance determines

whether the returned

financial instruments notice

is applicable to an existing

customer/debtor account in

the Core Financial System.

If the Core Financial System does

not have an existing account for the

customer/debtor, an account

receivable must be established, as

described in RM 4.1.

RM 4.10.4 Record

Adjustment to

Customer/

Debtor Account

and General

Ledger

The customer/debtor

account is adjusted to

reflect the returned

financial instruments

notice, and the new balance

is reflected in the General

Ledger.

The original bill is reopened in the

Core Financial System and

collections activities resumed. The

original date of the bill is used for

the purpose of calculating interest

due the agency on delinquent

payments.

The entries are recorded to the

General Ledger using the USSGL

Account Transaction Listing

provided in the TFM. The applicable

entry is recorded based on the entry

originally made to record the

receivable balance.

RMB-20

RM 4.10.5 Send

(Electronically

or Manually)

Message to

Business Unit

A message describing the

returned financial

instrument notice is sent to

the business unit which

conducted business with the

customer/debtor.

The agency should implement

procedures to enable timely

notification of business units about

customer/debtors for which returned

instrument notices have been

received. Business units should have

procedures to suspend services to

customer/debtors in such a case.
EXPOSURE DRAFT - 7/19/2012 4-58

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.10.6 Send/Transmit

Customer

Notification

Finance sends/transmits the

customer notification to the

customer/debtor.

The customer notification is sent in

electronic or hard-copy format,

depending on the method agreed to

by the customer.

RM 4.10.7 Customer

Notification

The notification is received

by the customer/debtor.
EXPOSURE DRAFT - 7/19/2012 4-59

4.11 WAIVER OF INTEREST, ADMINISTRATIVE COSTS, AND

PENALTIES

The Federal Claims Collection Standard section that covers waivers states that agency laws and regulations

specifically applicable to claims collection activities take precedence over the general government-wide

standards. Flexibility needs to be built into the systems, procedures, and reporting to allow for exceptions to

the standard business processes and reporting models.

The following flowchart provides key steps in the process to be followed when an agency determines

whether to issue a waiver of interest, administrative costs, or penalties that have been applied on a delinquent

account.

RM 4.11 – Waiver of Interest, Administrative Costs, and

Penalties Flowchart

Finance

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-60

The Receivables Management Waiver of Interest, Administrative Costs, and Penalties process steps are

described as follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.11.1 Interest,

Administrative

Costs, and

Penalties

The initial input to the

process is records of

customer/debtor accounts

which have been assessed

interest and/or

administrative costs and/or

penalties.

RM 4.11.2 Should a

Waiver Be

Granted?

The Agency evaluates

whether interest and/or

administrative costs and/or

penalties should be waived

on a customer/debtor

account.

Treasury's Managing Federal

Receivables guidance states that the

Agency is required to waive interest

and administrative costs on a debt

paid within 30 days of the date of

delinquency. A waiver may be in

whole or in part for each separate

type of charge. For write-off of

principal and/or interest,

administrative costs, and penalties

see section 4.8 above. The agency

has discretion to waive interest,

penalties, and administrative costs in

accordance with its regulations,

either (1) pursuant to a compromise

or settlement agreement, or (2) when

collection of these charges is against

equity and good conscience or is not

in the best interests of the United

States. For example, a waiver may be

appropriate when an agency cannot

conduct a hearing within the

statutorily required time frame (e.g.,

60 days for salary offset).

The Federal Claims Collections

Standards note that agency laws and

regulations specifically applicable to

claims collection activities take

precedence over the governmentwide standards.

RM 4.11.3 Process and

Document

Application of

Waiver

The agency processes a

waiver of interest and/or

administrative costs and/or

penalties on a

customer/debtor account in

the Core Financial System.

Supporting information and

supervisory approvals for waiving

interest and/or administrative costs

and/or penalties must be documented

and maintained.

RMC-11

RMC-13
EXPOSURE DRAFT - 7/19/2012 4-61

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.11.4 Waiver is

Recorded in

General Ledger

The waiver transaction is

recorded to the General

Ledger.

The entries are recorded to the

General Ledger using the USSGL

Account Transaction Listing

provided in the TFM. Applicable

entries are recorded based on earlier

entries to record interest,

administrative costs, and penalties.
EXPOSURE DRAFT - 7/19/2012 4-62

4.12 INSTALLMENT PLANS

An Installment plan is a supplemental debt collection tool available to agencies. They allow for the agency to

collect the debt over time. Installment plans should only be offered to customers who present valid inability

to pay claims and offered to those customers prior to offset or administrative wage garnishment. An agency

should attempt to collect as large an initial payment as possible and the agreement should be drafted with the

intent to collect the entire debt in three years or less. Any installment agreement should be drafted with the

best interest of the agency in collecting the debt and should not in any way compromise its right to that debt.

The agreement should contain sufficient terms such that the agency’s rights to collect the debt are not

compromised.

The following flowchart provides key steps in the process for entering into an installment agreement with a

customer/debtor. Included are steps for determining eligibility for an installment plan, performing financial

due diligence, and establishing accounts receivable for an installment agreement.

RM 4.12 – Installment Plans Flowchart

RM 4.12 Installment Plans

Finance

Customer/

Debtor

Yes Yes Yes

No

No

Yes

Approval of Agency

Official?

RM 4.12.5

Notification of

Customer/

Debtor

Inability to

Pay Claim

RM 4.12.1

Receive Claim

of Inability to Pay?

RM 4.12.2

From RM

4.2.7

To RM

4.3.1

Establish

Receivable for

Installment

Agreement

RM 4.12.9

Prepare/Send

Installment

Agreement

RM 4.12.6

Financial Due

Diligence

RM 4.12.4

To RM

4.2.10

Customer

Accepts?

RM 4.12.8

Debt Eligible

for Installment

Agreement?

RM 4.12.3

Installment

Agreement

RM 4.12.7

No

No

See Appendix C – Business Process Flowcharts, Symbols, and Definitions for an enlarged version of the flowchart.
EXPOSURE DRAFT - 7/19/2012 4-63

The Receivables Management Installment Plans process steps are described as follows:

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.12.1 Notification of

Customer/

Debtor Inability

to Pay Claim

Customer/debtor notifies

the appropriate agency

office of inability to pay

current amount due.

RM 4.12.2 Receive Claim

of Inability to

Pay?

Finance determines

whether customer/debtor

provided sufficient

notification of inability to

pay.

In the event that the customer/debtor

claims financial inability to repay the

debt in a single lump sum, the

agency may consider collecting the

debt in installments.

Before using certain collection

remedies, such as offset and

administrative wage garnishment, an

agency should provide a debtor with

the opportunity to enter into a

reasonable repayment agreement.

Based on the result of analysis of

accounts receivable history for the

customer/debtor, agencies may

consider an installment agreement.

RM 4.12.3 Debt Eligible

for Installment

Agreement?

Finance determines if the

debt is eligible for an

installment agreement.

Agency policies and procedures

should define criteria for the types

and amounts of debts for which the

agency will consider entering into an

installment agreement.

RM 4.12.4 Financial Due

Diligence

The agency conducts

procedures to determine the

validity of the

customer/debtor’s claim of

inability to pay in a lump

sum.

Prior to entering into an installment

agreement, an agency should verify

the debtor's claim of inability to

repay in a lump sum. Examples of

documentation agencies may use

are financial reports and credit

reports. Additionally, an agency

should enter into such agreements

only when there is evidence the

debtor has:

 Shown willingness to abide by

the terms of the agreement,

including the repayment

schedule; and

 Ability to make the agreedupon payments.
EXPOSURE DRAFT - 7/19/2012 4-64

Step ID Step Name Step Description Business Rules CFSR Req.

RM 4.12.5 Approval of

Agency

Official?

A designated agency

official approves or

disapproves an installment

agreement to collect the

customer’s debt.

The agency official reviews the

results of the installment due

diligence and eligibility

determination procedures to

determine if an installment

agreement should be approved.

RM 4.12.6 Prepare/Send

Installment

Agreement

Finance prepares and sends

the approved installment

agreement to the customer.

The installment agreement is sent to

the customer/debtor in electronic or

hard-copy format.

RM 4.12.7 Installment

Agreement

Customer receives the

installment agreement.

RM 4.12.8 Customer

Accepts?

Customer accepts or fails to

accept the terms of the

installment agreement.

RM 4.12.9 Establish

Receivable for

Installment

Agreement

Finance establishes an

accounts receivable

according to the terms of

the installment agreement.

In establishing the installment

agreement in the Core Financial

System, Finance must:

 Close out the original invoice(s);

 Establish a new unbilled

receivable referencing the prior

invoice(s) which have been

closed, and

 Include applicable terms of the

installment agreement to enable

the Core Financial System to

generate a payment schedule

which includes billing and

payment due dates.

RMB-21

RMB-22
EXPOSURE DRAFT - 7/19/2012 5-1

5 Reimbursable Management Processes

This Section will be Part of a Future Standard Business Process Release.
EXPOSURE DRAFT - 7/19/2012 6-1

6 Reports Management Processes

This Section will be Part of a Future Standard Business Process Release.
EXPOSURE DRAFT - 7/19/2012 A-1

Appendix A – Standard Federal Financial Business Process

Vision and Business Approach

Standard Federal Financial Business Process Vision

The Standard Federal Financial Business Process (SFFBP) Vision is to improve the cost, quality, and

performance of financial management systems by leveraging shared services solutions and implementing

government-wide reforms that foster efficiencies in Federal financial operations. The Office of Management

and Budget (OMB) is the executive sponsor for the SFFBP initiative. The Financial Systems Integration

Office (FSIO) has direct responsibility for completing priority projects under the SFFBP. This document was

prepared by FSIO in coordination with the Chief Financial Officers Council’s FSIO Oversight

Transformation Team.

The SFFBP vision is built upon precepts that begin with standardization and transparency of forming the

base for government financial improvement. To begin this improvement process, the SFFBP established the

following “work streams” to begin addressing and defining standardization and transparency for financial

operations:

1. Performance Measures: To develop performance measures (cost, quality, and timeliness) to assess the

performance of financial services offered by a financial services organization.

2. Standard Business Processes: To develop data specifications and business rules for core financial

management functions (e.g., funds management, payments, receipts, and reporting) to be adopted by all

Federal agencies.

3. Common Government-wide Accounting Code Structure: To develop a common accounting structure

used government-wide that includes an applicable set of definitions and the layout to which Federal

agencies’ new financial systems must adhere.

Under the FSIO structure, the SFFBP activities are lead by agency-sponsored teams working collaboratively

with the broad Federal financial community. This community includes Federal financial policy

organizations and organizations representing the financial community stakeholders.

Standard Federal Financial Business Process

Approach

The SFFBP work stream follows a standard approach in the development of each business process area. The

SFFBP was developed through a collaborative effort of the Federal financial management community. The

project objectives were to:

 Define the objectives of standard business process

 Document the current business processes used within the 24 Chief Financial Officer Act

Agencies (the “as-is” environment)

 Determine which business processes should be included in the standard business process.

The SFFBP project was divided into four phases:

1. Project initiation

2. Development of SFFBP vision and draft proposal

3. Validation of the SFFBP

4. Issuance of an exposure draft of the proposed Standard Business Processes.
EXPOSURE DRAFT - 7/19/2012 A-2

During the initial phase of the project, the sponsors were engaged to help ensure that expectations were

known, the project approach was acceptable, and requirements for government participation were defined.

The second phase established the vision for Standard Business Processes that defined the objectives of

developing a standard structure and its contribution to the goals of the SFFBP initiative.

During the third phase, the draft proposal was refined and validated with three key stakeholder groups:

 Representatives of the 24 Chief Financial Officers Act Agencies

 Vendors of financial management systems

 Federal shared service providers.

From April through August 2006, FSIO conducted a number of workshops with program agencies and

vendors to address payments and receipts, funds management, and reporting.

During the final phase of the project, the team began to develop the Financial Management Systems

Standard Business Processes for U.S. Government Agencies document. This version is an exposure draft to

be used to solicit further comment from the Federal financial management community before the SFFBP for

Receivables Management is adopted.
EXPOSURE DRAFT - 7/19/2012 B-1

Appendix B – Standard Federal Financial Business Process

Controlled Vocabulary

Term Definition Source1

Accounting

Classification

A subset of the agency financial information

classification. The accounting classification structure

provides a means for categorizing financial

information along several dimensions as needed to

support financial management and reporting functions.

The data elements an agency includes in its accounting

classification structure will depend in part on the

implementation strategy for the USSGL, data

aggregation requirements for preparation of financial

statements under the CFO Act, appropriation structure,

and other reporting and management needs of the

agency.

FSIO Financial

System

Requirements;

Multiple sources

Accrual The term “accrual” is used in this document to refer to

an accounting transaction to record expenses that have

been incurred or revenues that have been earned

without regard to when cash is received or disbursed.

Online

Accounting

Dictionary

http://www.acco

untingcoach.com

/accountingterms/accounting

-

dictionary/#accr

ual%20type%20

adjusting%20ent

ry

Accrual Accounting A system of accounting in which revenues are

recorded when earned and expenses are recorded

when goods are received or services are performed,

even though the actual receipt of revenues and

payment for goods or services may occur, in whole or

in part, at a different time.

GAO: Glossary

of Terms Used

in the Federal

Budget Process

http://www.gao.

gov/new.items/d

05734sp.pdf

Accrual Accounting

Basis

The basis whereby transactions and events are

recognized when they occur, regardless of when cash

is received or paid.

GAO: Glossary

of Terms Used

in the Federal

Budget Process

http://www.gao.

gov/new.items/d

05734sp.pdf

1

Sources are provided if available; otherwise, the term definition was developed for clarification of terminology.
EXPOSURE DRAFT - 7/19/2012 B-2

Term Definition Source1

Administrative

(Internal) Offsets

with Accounts

Payable

Money held by the Government for a person or entity

in order to satisfy a debt that the person or entity owes.

Treasury’s

Managing

Federal

Receivables

http://fms.treas.g

ov/debt/Guidanc

e_MFR.html

Administrative

Wage Garnishment

A process whereby a Federal agency issues a wage

garnishment order to a delinquent debtor’s nonFederal employer. No court order is required. The

employer withholds amounts from the

employee’s wages in compliance with the order and

pays those amounts to the Federal creditor agency to

which the employee owes a debt.

Online

Accounting

Dictionary

http://www.acco

untingcoach.com

/accountingterms/accounting

-

dictionary/accou

nting-termsI.html

Agency The term “Agency” means any executive department,

military department, government corporation,

government-controlled corporation, other

establishment in the executive branch of the Federal

Government, or any independent regulatory agency.

Within the Executive Office of the President, the term

includes only OMB and the Office of Administration.

OMB Circular

A-130,

Transmittal

Memorandum

#4, Management

of Federal

Information

Resources

(11/28/2000)

Agency Debt

Management

The complete credit process which is composed of

four phases; credit extension, account servicing,

delinquent debt collection, and termination/writeoff/close-out/discharge of indebtedness.

Treasury’s

Managing

Federal

Receivables

http://www.fms.t

reas.gov/debt/M

FR/Glossary.pdf

Allotment A subdivision of an apportionment made by an

agency.

OMB Circular

A-11,

Preparation,

Submission and

Execution of the

Budget (6/30/06)

Application Fees Receivables resulting from the processing of

applications submitted by parties wishing to

participate in a government offered program or service

for which applications are necessary for participation

in exchange for a fee.
EXPOSURE DRAFT - 7/19/2012 B-3

Term Definition Source1

Apportionment A distribution made by OMB of amounts available for

obligation in an appropriation or fund account into

amounts available for specified time periods, program,

activities, projects, objects, or any combinations of

these. The apportioned amount limits the obligations

that may be incurred. An apportionment may be

further subdivided by an agency into allotments,

suballotments, and allocations.

OMB Circular

A-11,

Preparation,

Submission and

Execution of the

Budget (6/30/06)

Appropriation A provision of law (not necessarily an appropriations

act) authorizing the expenditure of funds for a given

purpose. Usually, but not always, an appropriation

provides budget authority.

OMB Circular

A-11,

Preparation,

Submission and

Execution of the

Budget (6/30/06)

Asset Sales The dollar amount of proceeds realized from the sale

of a loan or debt including collections from sales of

secured property.

Financial

Management

Service: A

bureau of the

Department of

the United States

Treasury

https://www.fms

.treas.gov/debt/

Wkbktest3.htm

Auction Receipts Fees assessed to government sponsored auction

attendees to recoup the costs associated with the

auction to benefit the federal agency or program in the

form of reducing a surplus of goods.

Award Document The term “Award Document” is used to represent the

applicable instrument used by an agency to enter into

a contractual arrangement with a provider of goods

and/or services.

FSIO Payments

Management

Focus Group

Benefit

Overpayments

Benefit payments, paid by Federal agencies, to entities

or individuals, in excess of the amount prescribed by

specific guidance governing the specific benefit type

for which the payment was made.

Billed Receivables An amount owed the Government by an individual,

organization, or other entity to satisfy a debt or claim

where the government has communicated to the debtor

the terms of the debt or claim in the form of a bill.

Treasury’s

Managing

Federal

Receivables

http://www.fms.t

reas.gov/debt/M

FR/Glossary.pdf
EXPOSURE DRAFT - 7/19/2012 B-4

Term Definition Source1

Budget The Budget of the United States Government setting

forth the President’s comprehensive financial plan for

allocating resources. The Government uses the budget

system to allocate resources among its major functions

and individual programs. The budget process has three

main phases: formulation, congressional action on the

budget, and execution.

FASAB

Statement of

Federal

Financial

Accounting

Standards No.

24

Budget Authority The authority provided by law to incur financial

obligations that will result in outlays. Specific forms

of budget authority include appropriations, borrowing

authority, contract authority, and spending authority

from offsetting collections.

OMB Circular

A-11,

Preparation,

Submission and

Execution of the

Budget (6/30/06)

Budget Execution Includes Funds Control and provides features to

record, distribute, and control budget authority and

spending in accordance with the provisions of OMB

Circular A-11, Part 4, and Instructions on Budget

Execution. Budget execution provides the ability to

track the effects of financial events on the sources and

uses of budgetary resources authorized by the

President and Congress. Its primary purpose is to

ensure that spending does not exceed funds

appropriated or authorized.

OMB Circular

A-11,

Preparation,

Submission and

Execution of the

Budget (6/30/06)

Budget Formulation During this phase of the budget cycle, the Executive

Branch prepares the President’s budget. OMB and the

Federal Agencies begin preparing the next budget

almost as soon as the President has sent the last one to

Congress. OMB officially starts the process by

sending planning guidance to Executive Branch

Agencies in the spring. The President completes this

phase by sending the budget to Congress on the first

Monday in February, as specified in law, although

occasionally Presidents have sent it later for various

reasons.

OMB Circular

A-11,

Preparation,

Submission and

Execution of the

Budget (6/30/06)

Business Unit For the purpose of this document, business unit refers

to any program or administrative office/unit other than

Finance or Acquisition units.

Carryover Funding collected in one fiscal year that was not

obligated and is available to be used to meet

requirements in the next fiscal year.

Treasury

Directive: 31-04

http://www.treas

.gov/regs/td31-

04.htm
EXPOSURE DRAFT - 7/19/2012 B-5

Term Definition Source1

Commitment A commitment is an administrative reservation of

funds that have not yet been obligated. Agencies use

commitment accounts for the internal control of

budgetary resources and to help prevent unauthorized

use of available resources.

OMB Circular

A-11,

Preparation,

Submission and

Execution of the

Budget

(6/30/2006)

Concentration Moves funds from an account that settles the

transactions to the Treasury General Account Fund at

the Federal Reserve Bank of New York.

Treasury

Financial

Management

Service

Concession Rents Receivables resulting from an agreement between the

agency and a party where the agency extends the use

of agency property for the party to conduct a function

or business in return for a fee.

Core Financial

System

A core financial management system supports both the

key financial management business processes of an

agency as well as the financial aspects of non-financial

management business processes (e.g., Acquisitions,

Budget Planning, Payroll, Property, Grants, and

Travel). Financial management business processes of

an agency are defined as:

 Budget and Finance

 Accounting

 Collections and Receivables

 Payments

 Assets and Liabilities

 Reporting and Information

The above processes are further defined in the Office

of Federal Financial Management (OFFM) Core

Financial Systems Requirements.

OMB Circular

A-127, Financial

Management

Systems (Draft)

Credit Reform The purposes of the Credit Reform Act of 1990, are

to:

(1) measure more accurately the costs of Federal credit

programs;

(2) place the cost of credit programs on a budgetary

basis equivalent to other Federal spending;

(3) encourage the delivery of benefits in the form most

appropriate to the needs of beneficiaries; and

(4) improve the allocation of resources among credit

programs and between credit and other spending

programs.

United States

Code: 2 U.S.C. §

661

http://www.gpoa

ccess.gov/uscod

e/index.html
EXPOSURE DRAFT - 7/19/2012 B-6

Term Definition Source1

Department of

Justice Debt

Management

The Department of Justice manages government-wide

debt through the use of the Debt Management Module

(DMM) which contains records of payments and

administrative offsets of funds received and disbursed

by the Department of Justice resulting from the

litigation and enforced collection of civil and criminal

debts owed to the United States.

Justice

Management

Division: A

division of the

United States

Department of

Justice

http://www.usdo

j.gov/jmd/foia/j

mddcdms.htm

Disbursements Amounts paid out by Federal agencies during the

fiscal year. This term is used interchangeably with the

term outlay.

TFM,

Supplement to

Volume I, Fund

Balance with

Treasury

Reconciliation

Procedures

(10/4/2002)

Document Line Document line represents contract or subcontract line

items on a commitment obligation or payment

document.

Donations Gift of assets to a Federal agency, or component thereof. The item donated is recorded at its fair market

value on the donation date. The donor does not have

an owner's interest as a result of the donation.

Employee

Overpayments

Receivables resulting from employee receipts of funds

in excess of the actual cost.

Employee Training

Reimbursement

Receivables resulting from government-sponsored

training in exchange for a fee from attendees.

Employee Travel

(Advances)

Receivables resulting from the advance to employees

to cover employee travel expenses not to exceed the

obligation amount.

Enterprise

Architecture

A strategic information asset base that defines the

business, information necessary to operate the

business, technologies necessary to support the

business operations, and transitional processes for

implementing new technologies in response to the

changing needs of the business.

Federal

Enterprise

Architecture

Framework,

V.1.1, Federal

CIO Council,

September 1999
EXPOSURE DRAFT - 7/19/2012 B-7

Term Definition Source1

Federal Enterprise

Architecture

To facilitate efforts to transform the Federal

Government to one that is citizen-centered, resultsoriented, and market-based, the Office of Management

and Budget (OMB) is developing the Federal

Enterprise Architecture (FEA), a business-based

framework for Government-wide improvement.

The FEA is being constructed through a collection of

interrelated “reference models” designed to facilitate

cross-agency analysis and the identification of

duplicative investments, gaps, and opportunities for

collaboration within and across Federal agencies.

Federal

Enterprise

Architecture

Program

Management

Office

Federal Enterprise

Architecture

Business Reference

Model (BRM)

The BRM is a function-driven framework for

describing the lines of business and internal functions

performed by the Federal Government independent of

the agencies that perform them. The BRM serves as

the business layer of the Federal Enterprise

Architecture (FEA). It provides a foundation on which

the applications, data, and technology layers of the

FEA are developed. Agency Capital Asset Plans

(Exhibit 300s) will be mapped against this framework

to identify opportunities for cross-agency

collaboration and potential system redundancies.

OMB Circular

A-11, Preparing,

Executing, and

Submitting the

Budget

Federal Enterprise

Architecture

Framework

The Federal Enterprise Architecture Framework

(FEAF) provides an organized structure and a

collection of common terms by which Federal

segments can integrate their respective architectures

into the Federal Enterprise Architecture.

Federal

Enterprise

Architecture

Framework,

V.1.1, Federal

CIO Council,

September 1999

Federal Payment Any payment made by an agency. The term includes,

but is not limited to: (1) Federal wage, salary, and

retirement payments; (2) vendor and expense

reimbursement payments; (3) benefit payments; and

(4) miscellaneous payments including, but not limited

to, interagency payments, grants, loans, fees, principal,

interest, and other payments related to United States

marketable and non-marketable securities,

overpayment reimbursements, and payments under

Federal insurance or guarantee programs for loans.

Treasury Green

Book

Financial

Accounting

A branch of accounting. The most noteworthy

interpretations or classifications are those about which

data pertain to the past and which pertain to the future.

In other words, financial accounting is largely

concerned with assigning the value of past

transactions to appropriate time periods.

FASAB, SFFAS

No. 1:

Objectives of

Federal

Financial

Reporting
EXPOSURE DRAFT - 7/19/2012 B-8

Term Definition Source1

Financial Event Any occurrence having financial consequences to the

Federal Government related to the receipt of

appropriations or other financial resources; acquisition

of goods or services; payments or collections;

recognition of guarantees, benefits to be provided, or

other potential liabilities; or other reportable financial

activities.

OMB Circular

A-127, Financial

Management

Systems

(07/23/1993)

Financial

Management

Systems

Financial systems and the financial portions of mixed

systems necessary to support financial management,

including manual or automated processes, procedures,

controls, hardware, software, and support personnel.

Financial systems include an information system,

comprised of one or more applications, that is used for

(1) collecting, processing, maintaining, transmitting or

reporting data about financial events; (2) supporting

financial or budgeting activities; (3) accumulating and

reporting cost information; or (4) supporting the

preparation of financial statements.

Federal

Financial

Management

Improvement

Act (FFMIA),

OMB Circular

A-127, Financial

Management

Systems

(07/23/1993)

Financial System A financial system supports the financial management

business processes required in an agency to track

financial events to provide financial information that

is significant to the financial management of the

agency and is used for the preparation of agency

financial statements. A financial system encompasses

both automated and manual processes, procedures,

internal controls, and a data repository and may

include multiple applications that are integrated

through a common database or are electronically

interfaced, as necessary, to meet defined data and

processing requirements to record financial events.

These core applications directly support the financial

management business processes of an agency.

.

OMB Circular

A-127, Financial

Management

Systems (Draft)

Fines Applied amounts on accounts and loans receivable due

to the delinquency of a debt or non-compliance with

terms of a pre-existing agreement.

United States

Standard

General Ledger

http://www.fms.t

reas.gov/ussgl/in

dex.html

Freedom of

Information Act of

Allows any person to request access to Federal agency

records or information. Federal agencies are required

to disclose records upon receipt of a written request,

except for records that are protected from disclosure

by nine exemptions or three exclusions in the Act.

United States

Code: 5 U.S.C. §

552

http://www.gpoa

ccess.gov/uscod

e/index.html

Gifts Assets given to Federal agencies in cash or other form

for which the Federal entity has no future obligation to

the individual or entity, relative to the gift.
EXPOSURE DRAFT - 7/19/2012 B-9

Term Definition Source1

Grants A federal financial assistance award making payment

in cash or in kind for a specified purpose.

GAO: Glossary

of Terms Used

in the Federal

Budget Process

http://www.gao.

gov/new.items/d

05734sp.pdf

Industrial Funding

Fees

The Industrial Funding Fee (IFF) reimburses the

General Services Administration (GSA) for the costs

of operating Federal Supply Schedules program and

recoups its operating costs from ordering activities.

The IFF has been added by the Government to the

contract price and is reflected in the total amount

charged to the ordering activities.

General Services

Administration,

http://www.gsa.

gov

Information Security The protection of information and information systems

from unauthorized access, use, disclosure, disruption,

modification, or destruction in order to provide:

(1) integrity, which means guarding against improper

information modification or destruction, and includes

ensuring information non-repudiation and authenticity;

(2) confidentiality, which means preserving authorized

restrictions on access and disclosure, including means

for protecting personal privacy and proprietary

information; and (3) availability, which means

ensuring timely and reliable access to and use of

information.

Federal

Information

Security

Management

Act of 2002

Information System A discrete set of information technology, data, and

related resources, such as personnel, hardware,

software, and associated information technology

services organized for the collection, processing,

maintenance, use, sharing, dissemination, or

disposition of information.

OMB Circular

A-11,

Preparation,

Submission and

Execution of the

Budget (6/30/06)

Information

Technology

Any equipment, or interconnected system(s) or

subsystem(s) of equipment, that is used in the

automatic acquisition, storage, manipulation,

management, movement, control, display, switching,

interchange, transmission, or reception of data or

information by the agency.

FAR 2.101

Interest A sum paid or calculated for the use of capital. Treasury’s

Managing

Federal

Receivables

http://www.fms.t

reas.gov/debt/M

FR/Glossary.pdf
EXPOSURE DRAFT - 7/19/2012 B-10

Term Definition Source1

Internal Control A subset of management controls are the internal

controls used to assure that there is prevention or

timely detection of unauthorized acquisition, use, or

disposition of the entity’s assets.

OMB Circular

A-123,

Management’s

Responsibility

for Internal

Control

(Effective

beginning with

Fiscal Year

2006) (Revised

12/21/2004)

Internal Control over

Financial Reporting

Process for assessing the effectiveness of an entity’s

internal control over financial reporting.

OMB Circular

A-123,

Management’s

Responsibility

for Internal

Control,

Appendix A

(Revised

12/21/2004)

Intra-Governmental

Payment and

Collections

Intra-Governmental Payment and Collection (IPAC)

System is comprised of three interrelated subsystems:

(1) the IPAC application that processes IntraGovernmental Federal funds transfers between

Agencies, (2) the Retirement and Insurance Transfer

System (RITS) that processes retirement and health

insurance payments by Federal agencies to the Office

of Personnel Management (OPM), and (3) the

Treasury Receivable Accounting and Collection

System (TRACS) that processes check disbursement

data returned to Federal Agencies for which Treasury

has disbursing authority.

Treasury

Financial

Manual

Investments The long-term asset category of a classified balance

sheet which appears immediately after the current

assets. Listed in this category would be a bond sinking

fund, funds held for construction, the cash surrender

value of a life insurance policy owned by the

company, and long-term investments in stocks and

bonds.

Online

Accounting

Dictionary

http://www.acco

untingcoach.com

/accountingterms/accounting

-

dictionary/accou

nting-termsI.html
EXPOSURE DRAFT - 7/19/2012 B-11

Term Definition Source1

IPAC Transaction A transaction processed through a Treasury-based

system for which Federal Program Agencies (FPA)

the intra-governmental transfer of funds, with

descriptive data from one FPA to another.

Financial

Management

Service: A

bureau of the

Department of

the Unites States

Treasury

http://www.fms.t

reas.gov/goals/ip

ac/index.html

Judgments

(Accident Claims)

Amounts owed to the agency resulting from a

judgment, in the agencies favor, entitling them to

receipt of funds resulting from an external party’s noncompliance with a pre-existing agreement and/or

negligence.

Leases A legal agreement to pay rent to the lessor for a stated

period of time. Sometimes the lease is in substance a

purchase of an asset and a financing arrangement. For

example, if a company agrees to lease a forklift truck

for 60 months and the agreement cannot be canceled

without purchasing the asset, it is possible the

arrangement is more than a mere rental of equipment.

Online

Accounting

Dictionary

http://www.acco

untingcoach.com

/accountingterms/accounting

-

dictionary/accou

nting-termsI.html

Loans Financial assets created by the Government by

providing money, goods or services directly or

indirectly to the beneficiary entities, which entails a

contractual right to receive back the moneys (or

equivalents) along with interest

thereon, if any, as per terms and conditions of the loan

agreements.

Government

Accounting

Standards

Advisory Board

Publication:

Accounting

Standards for the

Union

Government and

the State

Governments,

Exposure Draft

6, Issued March

30, 2007.

http://www.gasa

b.gov.in/pdf/Exp

osure%20Draft

%206%20%20L

oans%20and%2

0Advances%20

Made%20by%2

0Governments.p

df
EXPOSURE DRAFT - 7/19/2012 B-12

Term Definition Source1

Management

Controls

Management controls are the organization, policies,

and procedures used by Agencies to reasonably ensure

that (1) programs achieve their intended results; (2)

resources are used consistent with Agency mission;

(3) programs and resources are protected from waste,

fraud, and mismanagement; (4) laws and regulations

are followed; and (5) reliable and timely information

is obtained, maintained, reported, and used for

decision making.

Management controls, in the broadest sense, include

the plan of organization, methods, and procedures

adopted by management to ensure that its goals are

met. Management controls include processes for

planning, organizing, directing, and controlling

program operations.

OMB Circular

A-123,

Management’s

Responsibility

for Internal

Control

(Effective

beginning with

Fiscal Year

2006) (Revised

12/21/2004)

Managerial Cost

Accounting

Managerial cost accounting should be a fundamental

part of the financial management system and, to the

extent practicable, should be integrated with other

parts of the system. Managerial costing should use a

basis of accounting, recognition, and measurement

appropriate for the intended purpose. Cost information

developed for different purposes should be drawn

from a common data source, and output reports should

be reconcilable to each other

FASAB, SFFAS

No. 4:

Managerial Cost

Accounting

Standards and

Concepts

Miscellaneous

Receipts

Funds received that cannot be identified to a particular

Federal program.

Non Reimbursable

Sale of Goods or

Services (User Fees)

Sale of goods or services where the basis of the

exchange is not governed by a reimbursable

agreement or trading partner transaction.

Non-Monetary

Exchange

Transactions

An exchange between parties for goods received,

services rendered, or other activity in accordance with

a pre-existing agreement where an exchange of

anything other than currency is the basis for payment.

Non-Monetary

Transactions

Transactions not involving the exchange of currency.

Non-Sufficient

Funds Checks

Payments in the form of check not processed by a

financial institution when the payment amount is in

excess of the payee’s account balance at the time of

the financial institution’s payment processing activity.

Outlay Outlay means a payment to liquidate an obligation

(other than the repayment of debt principal). Outlays

generally are equal to cash disbursements but also are

recorded for cash-equivalent transactions, such as the

subsidy cost of direct loans and loan guarantees, and

interest accrued on public issues of the public debt.

Outlays are the measure of Government spending.

OMB Circular

A-11,

Preparation,

Submission and

Execution of the

Budget (6/30/06)
EXPOSURE DRAFT - 7/19/2012 B-13

Term Definition Source1

Payee A person, corporation, or other public or private entity

that is authorized to receive a Federal payment from

an agency.

Payment A government disbursement of monies to any payee,

including vendors, employees, private citizens, state,

or local and foreign governments in accordance with

Contract terms. The payment management function

consists of the following processes: payee information

maintenance, payment warehousing, payment

execution, and payment confirmation and follow-up.

Treasury

Financial

Manual

Penalties A charge assessed on delinquent debts to discourage

delinquencies and encourage early payment of the

delinquent debt in full.

Treasury’s

Managing

Federal

Receivables

http://www.fms.t

reas.gov/debt/M

FR/Glossary.pdf

Program Generally defined as an organized set of activities

directed toward a common purpose or goal,

undertaken or proposed by an agency in order to carry

out its responsibilities. In practice, however, the term

has many uses and thus does not have a well-defined,

standard meaning in the legislative process. It is used

to describe an agency’s mission, programs, functions,

activities, services, projects, and processes.

A Glossary of

Terms Used in

the Federal

Budget Process

(GAO 09/2005)

Program

Overpayments Not

Processed in the

Core Financial

System

Payment expected by a specific program, from a

program beneficiary, in excess of original cost not yet

processed in the Core Financial System.

Rebates Refunds resulting from a purchase of goods.

Reimbursable

Activity

A sum (1) that is received by an agency as a payment

for commodities sold or services furnished either to

the public or to another government account and (2)

that is authorized by law to be credited directly to

specific appropriation and fund accounts.

Reimbursements between two accounts for goods or

services are usually expenditure transactions/transfers.

GAO: Glossary

of Terms Used

in the Federal

Budget Process

http://www.gao.

gov/new.items/d

05734sp.pdf

Relocation Receivables resulting from employee receipts of funds

in excess of actual cost of relocating employees or

employees not fulfilling the requirements of the

agreement where they would be subject to payback the

original amount paid by the agency.
EXPOSURE DRAFT - 7/19/2012 B-14

Term Definition Source1

Sale of Goods and

Services

A revenue account that reports the sales of

merchandise. Sales are reported in the accounting

period in which title to the merchandise was

transferred from the seller to the buyer.

Online

Accounting

Dictionary

http://www.acco

untingcoach.com

/accountingterms/accounting

-

dictionary/accou

nting-termsI.html

Settlement Settlement refers to the accounting process recording

the respective debit and credit positions of the two

parties involved in a transfer of funds.

Funds are available for use and may be drawn at any

time afterward. Funds transferred through Fed Wire

are available for use at the time the transfer occurs,

and are settled by adjusting the reserve account

balances of the sending and receiving banks. Checks,

automated clearinghouse transfers, and other payments

between banks are settled on a provisional basis,

because the possibility exists that the person initiating

the transfer of funds may not have sufficient funds to

cover the payment, or the payment cannot be

processed for various reasons.

Treasury

Financial

Management

Service

Shared Services Shared services are a bringing together of functions

that are frequently duplicated across component

Agencies and delivering these services more

efficiently and with a customer service orientation. It

is the focus on the customer service aspect of the

process that distinguishes the shared services model

from the concept of consolidation. The focus is on the

customers because they demand the best quality,

timely, accurate, and reliable product(s) attainable.

Sharing services leads to the elimination of

redundancies. The concurrent redesign of accounting

processes, organizations, and supporting systems leads

to radical improvements in time, cost, quality, and

user satisfaction in regard to the service provided.

Sharing Agreements

(Billing)

An agreement established between two or more parties

for the purpose of sharing the use of an asset.

Sharing Agreements

(Collections)

An agreement established between two or more parties

for the purpose of sharing the use of an asset.
EXPOSURE DRAFT - 7/19/2012 B-15

Term Definition Source1

Single Integrated

Financial

Management System

A unified set of financial systems and the financial

portions of mixed systems (e.g., Acquisition)

encompassing the software, hardware, personnel,

processes (manual and automated), procedures,

controls, and data necessary to carry out financial

management functions, manage the financial

operations of the agency, and report on the agency’s

financial status to central agencies, Congress, and the

public.

OMB Circular

A-127, Financial

Management

Systems

(07/23/1993)

Tax Receivables and

Duties

Amounts of identifiable, measurable, and legally

enforceable taxes due from entities.

United States

Standard

General Ledger

http://www.fms.t

reas.gov/ussgl/in

dex.html

Transactions in

Foreign Currency

Monies distributed to a U.S. government agency that

must be converted to the U.S. dollar equivalent using

the current United States Treasury’s reporting rates of

exchange.

Financial

Management

Service: A

bureau of the

Department of

the United States

Treasury

http://www.fms.t

reas.gov/intn.ht

ml

Treasury and DOJ

Cross-Servicing

The process whereby agencies refer delinquent

Federal non-tax debts to FMS or DOJ for collection.

FMS or DOJ apply a variety of collection tools once

agencies refer their debts.

Treasury’s

Managing

Federal

Receivables

http://www.fms.t

reas.gov/debt/M

FR/Glossary.pdf

Treasury Debt

Management

A Program sponsored by the United States

Department of Treasury, Debt Management Services

(DMS), is to improve the quality of the Federal

government's financial management by increasing the

collection of delinquent debt owed to the government,

by providing debt management services to all Federal

agencies, and by protecting the financial interests of

the American taxpayer. DMS also develops and

implements government-wide debt management

policies.

Financial

Management

Service: A

bureau of the

Department of

the United States

Treasury

http://www.fms.t

reas.gov/debt/in

dex.html

Treasury Financial

Manual

The manual issued by the Financial Management

Service containing procedures to be observed by all

Agencies, Federal Reserve Banks, and financial

institutions with respect to payments, collections,

central accounting, financial reporting, and other

government-wide fiscal responsibilities of the

Treasury.

Green Book,

Glossary
EXPOSURE DRAFT - 7/19/2012 B-16

Term Definition Source1

Trust Fund

Programs

Trust funds are those designated by law as such,

whereby receipts are earmarked for spending on

specific purposes. Trust funds are established to carry

out purposes of a trust agreement or statute.

United States

Standard

General Ledger,

Federal Trust

Fund

Accounting

Guide.

http://www.fms.t

reas.gov/ussgl/tf

guide.html

Unbilled

Overpayments

Receivables resulting from an agency payment to a

party in excess of the actual cost where the agency has

not yet communicated, in the form of a bill, the excess

payment to the party.

United States

Standard General

Ledger (USSGL)

A uniform list of accounts that support transactions

that standardizes Federal agency accounting and

supports the preparation of standard external reports.

The U.S. Government Standard General Ledger Chart

of Accounts (1) provides control over all financial

transactions and resource balances, (2) satisfies basic

reporting requirements of OMB and Treasury, and

(3) integrates proprietary and budgetary accounting.

Treasury

Financial

Manual,

Volume I

User Fees Fees which the service or program beneficiary pays

for the cost of the services received, or the burden

imposed on the program in the form of a fee.

USSGL Account An account within the uniform chart of accounts used

by Federal agencies to record budgetary and

proprietary accounting transactions.

Volume I, U.S.

Government

Standard

General Ledger

(Uniform Chart

of Accounts

08/2006)

Vendor

Overpayments

Receivables resulting from vendor receipts of funds in

excess of the actual cost.
EXPOSURE DRAFT - 7/19/2012 C-1

Appendix C – Business Process Flowcharts, Symbols, and

Definitions

Flowchart Symbols Defined:

Process – This symbol represents a process or action step.

Decision – This symbol indicates a question or branch in the process flow.

Data – This symbol represents electronic input to and/or outputs from a process.

Connector – This symbol indicates a jump from one point to another in a process flow.

Terminator – This symbol indicates that the current process flow is ending at this point and is part of

a separate process flow.
EXPOSURE DRAFT - 7/19/2012 C-2

Data Transmission – This symbol indicates the transfer of data to an external location. This symbol is

used with a dashed connector line when the recipient is not depicted on the flowchart.
EXPOSURE DRAFT - 7/19/2012 C-3
EXPOSURE DRAFT - 7/19/2012 C-4
EXPOSURE DRAFT - 7/19/2012 C-5
EXPOSURE DRAFT - 7/19/2012 C-6
EXPOSURE DRAFT - 7/19/2012 C-7
EXPOSURE DRAFT - 7/19/2012 C-8
EXPOSURE DRAFT - 7/19/2012 C-9
EXPOSURE DRAFT - 7/19/2012 C-10
EXPOSURE DRAFT - 7/19/2012 C-11
EXPOSURE DRAFT - 7/19/2012 C-12
EXPOSURE DRAFT - 7/19/2012 C-13
EXPOSURE DRAFT - 7/19/2012 C-14
EXPOSURE DRAFT - 7/19/2012 C-15
EXPOSURE DRAFT - 7/19/2012 C-16

R

M

4.12 Installm

ent Plans

Yes Yes Yes

No

No

Yes

Approval of Agency

Official?

RM 4.12.5

Notification of

Customer/

Debtor

Inability to

Pay Claim

RM 4.12.1

Receive Claim

of Inability to Pay?

RM 4.12.2

From RM

4.2.7

To RM

4.3.1

Establish

Receivable for

Installment

Agreement

RM 4.12.9

Prepare/Send

Installment

Agreement

RM 4.12.6

Financial Due

Diligence

RM 4.12.4

To RM

4.2.10

Customer

Accepts?

RM 4.12.8

Debt Eligible

for Installment

Agreement?

RM 4.12.3

Installment

Agreement

RM 4.12.7

No

No
EXPOSURE DRAFT - 7/19/2012 D-1

Appendix D – Table of Core Financial System Requirements

Requirement

Number Title

RM 4.1 Establish

Non-Federal

Accounts ReceviableRM 4.2 Analyze Accounts ReceivableRM 4.3 BillingRM 4.4 Collection of ReceiptsRM 4.5 Application of ReceiptsRM 4.6 DunningRm 4.7 Allowance for Loss onAccounts ReceivableRM 4.8 Write-off of AccountsReceivableRM 4.9 Returned ItemsRM 4.10 Non Sufficient FundsRM 4.11 Waiver of Interest,Administrative Costs, and

Penalties

RM 4.12 Installment Agreements

RMA - 01 Customer Information X

RMA - 02 Validate Customer TINs X

RMA - 03 Customer Query X

RMA - 04 Customer File History X

RMA - 05 Customer History Query X

RMA - 06 Criteria for Deactivating Customers X

RMA - 07 Customer Deactivation Edit X

RMB - 01 Record Receivables X

RMB - 02 Receivable Adjustments X

RMB - 03 Receivable Type X

RMB - 04 Receivable Document Data X

RMB - 06 Non-Reimbursable Billings X

RMB - 09 Scheduled Billings X

RMB - 10 Billings to third-party payers X

RMB - 11 Bill Types X

RMB - 12 Bill Data X

RMB - 13 Additional Bill Data X

RMB - 14 Bill Forms X

RMB - 15 Derive Bill Data X

RMB - 16 Bill Number and Date X

RMB - 17 Consolidating Receivables X

RMB - 20 Returned Checks X X

RMB - 21 Reschedule Receivables X

RMB - 22 Multiple Rescheduling X

RMB - 23 Amortization Schedule X

RMB - 24 Customer Account Statements X

RMC - 01 Assessing Interest X X

RMC - 02 Interest Assessment Rate X X

RMC - 03 Penalties and Administrative Charges X X

RMC - 04 Accounting Classification of Receivables X

RMC - 05 Interest on Referred Debt X

RMC - 06 Dunning Notices X

RMC - 07 Dunning Notice Text X

RMC - 08 Accounts Receivable Aging Report X

RMC - 09 Accounts Receivable Aging Query X

RMC - 10 Receivables Eligible for Write-off X

RMC - 11 Waivers and Write-offs X X

RMC - 12 Classify Write-offs X

RMC - 13 Waived and Written-off Receivables X X

RMC - 15 Delinquent Debt Referral File X

RMC - 16 Receivable Updates X

RMC - 18 Delinquent Debt Categories X

RMC - 20 Customer Receivables Query X

RMC - 21 IRS Form 1099-C X
EXPOSURE DRAFT - 7/19/2012 D-2

Requirement

Number Title

RM 4.1 Establish Non-FederalAccounts ReceviableRM 4.2 Analyze Accounts ReceivableRM 4.3 BillingRM 4.4 Collection of ReceiptsRM 4.5 Application of ReceiptsRM 4.6 DunningRm 4.7 Allowance for Loss on AccountsReceivableRM 4.8 Write-off of AccountsReceivableRM 4.9 Returned ItemsRM 4.10 Non Sufficient FundsRM 4.11 Waiver of Interest,Administrative Costs, and PenaltiesRM 4.12 Installment Agreements

RMD - 01 Collection Data X X X

RMD - 02 Collections Against Receivables X X

RMD - 03 Collections Without Receivables X

RMD - 04 Order for Applying Collections X X

RMD - 06 Collections of Overpayments X X

RMD - 07 Collections of Advance Payments X

RMD - 11 Collections Query X

SMB-06 Duplicate Documents X

TLD - 01 Application Program Interface X

TLD - 02 API Record Layouts X

TLD - 03 API Transaction Validation X

TLD - 04 API Transaction Suspension X

TLD - 05 API Processing Controls X

TLD - 06 API Generated Error Notices X

RMA Customer Information Maintenance Process

RMB Receivables and Billing Process

RMC Debt Management Process

RMD Collections and Offsets Process

SMB Document and Trasfer Control Process

TLD Interoperability

Legend

Requirement Type ID
EXPOSURE DRAFT - 7/19/2012 E-1

Appendix E – Financial Management Laws and Regulations

Federal Statutes:

Appropriations Law

Fundamental, long-standing statutes deal with the appropriation of monies to agencies from

Congress, including the appropriate use and control of these monies. These statutes deal with the

purpose, amount, and time of appropriations, as well as the availability of the associated monies. The

following summary provides specific citations to these statutes, their common names, and their

requirements.

Federal Managers’ Financial Integrity Act of 1982

The Federal Managers’ Financial Integrity Act (FMFIA) of 1982 amended the Accounting and

Auditing Act of 1950 to require ongoing evaluations and reports of the adequacy of the systems of

internal accounting and administrative control of each executive agency. FMFIA is comprised of two

parts. OMB Circular A-123, Management’s Responsibility for Internal Control (Effective beginning

with Fiscal Year 2006) (Revised 12/21/2004), is the primary vehicle for implementing FMFIA in the

executive branch and describes internal control requirements. Agencies are also required to report

annually on whether the agency accounting system complies with OMB A-127.

The FMFIA requires agency heads to establish controls that reasonably ensure:

 Obligations and costs are in compliance with applicable law

 Funds, property, and other assets are safeguarded against waste, loss, unauthorized use or

misappropriation

 Revenues and expenditures are properly recorded and accounted for.

(OMB revised Circular A-123 in 1995 to incorporate ideas from subsequent management legislation,

such as the Chief Financial Officers Act.) The circular provides guidance on improving the

accountability and effectiveness of Federal programs and operations by establishing and reporting on

management controls.

Chief Financial Officers Act of 1990 and Government Management Reform Act of 1994

The Chief Financial Officers (CFO) Act of 1990 laid the foundation for significant financial

management reform in the Federal Government. The Act emphasizes strong financial leadership,

improved systems of accounting, financial management and internal control, and reliable financial

information. A key element of the Act is the requirement for Federal agencies to produce audited

financial statements. The Government Management Reform Act (GMRA) expanded financial

statement audit coverage to include department-wide and Government-wide audited financial

statements.

The CFO Act mandates three actions:

 Strong financial management leadership: The CFO Act established, in OMB, the Deputy

Director for Management and the Office of Federal Financial Management, and created

chief financial officer positions in major agencies to provide financial management

direction.

 Enhanced financial management systems: The CFO Act mandates that agency CFOs

develop and maintain agency financial management systems that comply with applicable

accounting principles, standards, and requirements; internal control standards; and

requirements of OMB and Treasury; and
EXPOSURE DRAFT - 7/19/2012 E-2

 Improved financial information: by requiring agency CFOs to maintain systems that

report cost information, integrate accounting and budgeting, and systematically measure

performance, the CFO Act emphasizes improved reliability and usefulness of agency

financial information. Most importantly, the CFO Act requires that financial statements

be prepared and audited.

Government Performance and Results Act of 1993

The Government Performance and Results Act (GPRA) of 1993 holds Federal agencies accountable

for achieving program results and requires them to identify missions, set goals, measure

performance, and report on their accomplishments.

Under GPRA, each Federal agency must develop and submit a multiyear strategic plan, which

contains the agency’s mission statements and long-term strategic goals. Agencies must also submit

annual performance plans, which include performance goals linked to the budget and indicators of

how performance will be measured. Annual performance reports, also required under the Act,

provide information on the extent to which the agency met its annual performance goals.

Federal Financial Management Improvement Act of 1996

The Federal Financial Management Improvement Act (FFMIA) of 1996 requires agencies to

implement and maintain systems that substantially comply with (1) Federal accounting standards,

(2) the United States Government Standard General Ledger (USSGL) at the transaction level, and

(3) Federal financial management systems requirements. In addition, the FFMIA requires agencies’

auditors to report whether agency systems comply with FFMIA’s systems requirements. Agencies

that determine their systems do not substantially comply must develop and submit remediation plans

to OMB.

To comply with Federal financial management system requirements, OMB implementation guidance

requires that systems meet the Circular A-127 requirements, JFMIP’s Federal Financial Management

Systems Requirements, and Circular A-130, Appendix III.

Debt Collection Act of 1982 and Debt Collection Improvement Act of 1996

The Debt Collection Improvement Act (DCIA) is an extension of the Debt Collection Act. The

purpose of these Acts is to require proper collection of debts, to authorize the compromise or

suspension of some debts, and to authorize the use of certain collection tools that are available in the

private sector. The use of electronic payment and offset methods is required.

Federal Information Security Management Act (FISMA) of 2002 (Public Law 107-347, Title III)

The FISMA reiterates security requirements contained in existing OMB policies and in Federal laws

such as the Computer Security Act of 1987, the Paper Reduction Act of 1995, and Clinger-Cohen

Act of 1996. The Act mandates that Federal agencies implement an information security program and

designate a senior information security officer. FISMA also established evaluation and reporting

requirements that requires each agency to report any significant deficiencies and an information

security policy, procedure, or practice. If relating to financial management systems as a lack of

substantial compliance with FFMIA.

Reports Consolidation Act of 2000

This Act gives OMB the authority to combine financial reports to the President and Congress that

contains performance and accountability information.
EXPOSURE DRAFT - 7/19/2012 E-3

Clinger-Cohen Act (CCA) –- The Information Technology Management Reform Act of 1996

This Act provides that the Government information technology shop be operated exactly as an

efficient and profitable business would be operated. Acquisition, planning, and management of

technology must be treated as a “capital investment.” While the law is complex, all consumers of

hardware and software in the Department should be aware of the Chief Information Officer’s

leadership in implementing this statute.

Regulatory Guidance:

OMB Circular A-11, Preparation, Submission and Execution of the Budget (6/30/06), Preparation,

Submission and Execution of the Budget (6/30/06), Preparing, Submitting, and Executing the Budget

(Revised 7/25/2003)

OMB made major revisions to A-11 that merged the budget formulation and execution guidance to

reinforce the requirement for agencies to integrate budget and performance and to improve the

quality of their financial information. In addition, A-11 contains new guidance on managing physical

and financial assets.

OMB Circular A-25, User Charges

The Circular:

 Establishes Federal policy regarding fees assessed for Government services and for sale

or use of Government goods or resources

 Provides information on the scope and types of activities subject to user charges and on

the basis upon which user charges are to be set

 Provides guidance for agency implementation of charges and the disposition of

collections.

OMB Circular A-123, Management’s Responsibility for Internal Control (Effective beginning with

Fiscal Year 2006) (Revised 12/21/2004), Management Accountability and Control (or Successor

Documents) (6/21/1995)

This Circular, which is the primary OMB guidance for FMFIA, is described in the section that relates

to that act.

Prompt Payment Final Rule (Formerly OMB Circular A-125, Prompt Payment) (9/29/1999)

The Final Rule, the primary OMB guidance for PPA, is described in the section related to the specific

act.

OMB Circular A-127, Financial Management Systems (07/23/1993), Financial Management Systems

(or Successor Documents) (7/23/1993)

This circular augments FFMIA by specifically mandating that Federal Agencies implement

integrated core accounting and financial management systems. To be fully integrated, the system

must address:

 Standard data classification (both data and format)

 Common processes for handling similar accounting events

 Consistent internal control mechanisms

 Elimination of duplicate transaction entry.

Circular A-127 also prescribes policies and standards for agencies to follow in developing, operating,

evaluating, and reporting on financial management systems generally. It incorporates, by reference,
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Circulars A-123 and A-130, as well as all federal financial management systems requirements

published by JFMIP.

OMB Circular A-129, Managing Federal Credit Programs (11/2000)

This Circular prescribes policies and procedures for justifying, designing, and managing Federal

credit programs, and for collecting non-tax receivables. It sets principles for designing credit

programs, including:

 Preparation and review of legislation and regulations

 Budgeting for the costs of credit programs and minimizing unintended costs to the

Government

 Improving the efficiency and effectiveness of Federal credit programs.

Circular A-129 also sets standards for extending credit, managing lenders participating in

Government guaranteed loan programs, servicing credit and non-tax receivables, and collecting

delinquent debt.

OMB Circular A-130, Management of Federal Information Resources (11/28/2000)

OMB re-issued Circular A-130 in revised form in December 2000 as Transmittal Memorandum

No. 4. The expanded version of A-130 provides guidance on the Paperwork Reduction Act, the

Clinger-Cohen Act, the CFO Act, and others. This includes the requirement for all electronic

systems, including financial management systems, to have a defined association with the agency’s

enterprise architecture.

The Circular provides specific guidance on collecting and managing information and records

management, including:

 Electronic information collection

 Provision of information to the public

 Information dissemination systems

 Information safeguards.

It further mandates agencies to establish a capital planning and investment control process (CPIC)

that links information technology investments to improved mission performance. The CPIC also

establishes the links among agency processes including strategic planning, IT planning, enterprise

architecture integration, performance planning, financial management planning pursuant to the Chief

Financial Officers Act of 1990, and budget formulation and execution. Specifically, sections of A130 cover these four areas:

 Capital planning and investment control processes must be followed and documented

by all agencies. These processes, stemming from Clinger-Cohen, must integrate IRM

strategic and performance plans, financial management plans, the agency’s IT enterprise

architecture, and its budget. The agency’s process for capital planning and investment

control should include an IRM strategic plan, an IT capital plan, and an IT investment

portfolio as described in OMB Circular A-11, Preparation, Submission and Execution of

the Budget (6/30/06), Preparation, Submission and Execution of the Budget (6/30/06), the

annual budget circular.

 Enterprise architecture framework and planning processes require an agency to

document (and submit to OMB its current and target IT architecture and related support

strategies, transition roadmaps, and IT and security standards, as well as a summary of

the information services used throughout the Agency. The enterprise architecture

framework anticipated by A-130 is driven by the business needs of the agency and is
EXPOSURE DRAFT - 7/19/2012 E-5

composed of layers complying with the Federal Enterprise Architecture Framework

(FEAF) developed by the CIO Council.

2

 Ensuring security in information systems is accomplished by explicitly incorporating

security into the enterprise architecture and life-cycle planning for systems, and ensuring

that security supports the agency’s business operations. The agency’s security plan must

comply with the procedures and policies outlined in Appendix III to A-130, Security of

Federal Automated Information Resources; the Federal Information Security

Management Act (Public Law 107-347); Title III; and guidance provided by the National

Institute of Standards and Technology (NIST). Independent advice and comment on the

security plan must be solicited prior to the plan’s implementation.

 Information technology acquisition requires the use of adequate competition in

contracting, allocating risk between the government and the contractor, and maximizing

the return on investment. Major information systems should be structured into useful

segments with narrow scope and brief duration. Off-the-shelf software should be used

unless analysis clearly documents other approaches are more effective.

Statements of Federal Financial Accounting Standards

The FASAB was created in 1990 to develop and recommend Statements of Federal Financial

Accounting Standards (SFFASs) for use by the Federal Government. The growing body of SFFAS

issued by FASAB is considered to be generally accepted accounting principles for Federal

Government entities.

The accounting standards that have resulted from FASAB’s work are central to effectively meeting

financial management improvement goals of the CFO Act and other legislation. In particular,

FASAB’s standards for managerial cost accounting, as described in SFFAS 4, are a primary source

of guidance. This and other FASAB standards foster financial information and reporting that is

understandable, relevant, and reliable concerning the financial position, activities, and results of

operations for the Federal Government and its departments and agencies. Furthermore, the standards

prescribe accounting systems and internal control that help demonstrate that Federal programs are

conducted in compliance with laws and regulations.

2 The FEAF layers describe and link business processes, information flows, applications, data descriptions and

relationships, and technology infrastructure.
EXPOSURE DRAFT - 7/19/2012 F-1

Appendix F - Contributors

Table F-1 lists the individuals who contributed to development of the Receivables Management

Standard Business Process.

Table F-1. Contributors

Organization Name

Office of Management and Budget Joanne Choi

Kim Farrington

Adam Goldberg

Department of Commerce Karen McBride

Department of Defense William Chip (Defense Finance and Accounting Service)

Greg Gayer (Defense Finance and Accounting Service)

Nello Lavorini (Business Transformation Agency)

Department of Education Sylvester Osineme

Department of Housing and Urban

Development

Rhea Riso

Department of Transportation Jamie Cottrell (Federal Aviation Administration)

Ed Ramos (Department of Transportation)

Department of the Treasury Yvette Dunbar (Bureau of Public Debt)

Holden Hogue (Financial Management Service)

Thomas Kobielus (Financial Management Service)

Debbie Schiller (Bureau of Public Debt)

Greg Till (Financial Management Service)

Department of Veterans Affairs Eric Teal

Environmental Protection Agency Valerie Chun

Anita Jones

Federal Communications

Commission

Regina Dorsey

General Services Administration Susan Fischer

Terry Gricher

Social Security Administration Mark Graham

Ron Hallameyer

Lynn Spruill

Financial Systems Integration Office

(formerly JFMIP)

Dianne Copeland

Dale Miller

Program Office Support (KPMG) Constance Herron

David Fitz

Robert Frank

Ryan Patalune