D E P A R T M E N T OF THE T R E A S U R Y

AGENCY

FINANCIAL REPORT

FISCAL YEAR 2021
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AGENCY

FINANCIAL REPORT

D E P A R T M E N T OF THE T R E A S U R Y

FISCAL YEAR 2021
FY 2021 AGENCY FINANCIAL REPORT

ABOUT THIS REPORT

Our Agency Financial Report

(AFR) for Fiscal Year (FY) 2021

presents the Department of the

Treasury’s (Treasury,

Department, or our) financial

information in relation to our

mission and the resources

entrusted to us. The AFR also

highlights our priorities,

accomplishments, and challenges implementing programs

that promote conditions for sustaining economic growth

and stability at home and abroad, protecting the integrity

of our nation’s financial system, and effectively managing

the United States (U.S.) government’s finances and

resources. In accordance with the Office of Management

and Budget’s (OMB) Circular A-136, Financial Reporting

Requirements, we produce the following reports: (i) an

AFR issued on November 15, 2021, and (ii) an Annual

Performance Report (APR) submitted with Treasury’s

congressional budget justification, to be issued by

February 1, 2022. The AFR will be available online at

https://home.treasury.gov/about/budget-financial-reportingplanning-and-performance/agency-financial-report. The APR

will be available online at

https://www.treasury.gov/about/budget-performance/Pages/cjindex.aspx.

HOW THIS REPORT IS ORGANIZED

Our AFR provides financial and performance information

for the FY beginning October 1, 2020, and ending on

September 30, 2021, with comparative prior year data,

where appropriate. The AFR demonstrates our

commitment to our mission and accountability to

Congress and the American people. This report presents

Treasury’s operations, accomplishments, and challenges. 

The AFR begins with a message from the Secretary of the

Treasury, Janet L. Yellen. This introduction is followed

by three main sections.

 Part 1: Management’s 

Discussion and Analysis

Provides a high-level overview of

our organizational structure,

strategic framework,

programmatic and financial

performance, and management

assurances related to Treasury’s

internal controls.

Part 2: Financial Section

Begins with a message from the

Acting Assistant Secretary for

Management and Acting Chief

Financial Officer, followed by

the Independent Auditors’

Report, audited financial

statements and notes, and

supplementary information.

Part 3: Other Information

Contains various information

including Management and

Performance Challenges

identified by the Inspectors

General and Management’s

response, along with

information related to tax gap

and tax burden, improper

payments, and other relevant

information.
FY 2018 AGENCY FINANCIAL REPORT

FY 2018 AGENCY FINANCIAL REPORT

FY 2021 AGENCY FINANCIAL REPORT

TABLE OF CONTENTS

MESSAGE FROM THE SECRETARY OF THE TREASURY ........................................................................................................................ 4 

PART 1: MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 

TREASURY AT A GLANCE .................................................................................................................................................................. 9 

ORGANIZATION ............................................................................................................................................................................... 11

TREASURY STRATEGIC MANAGEMENT ....................................................................................................................................... 14 

PERFORMANCE OVERVIEW ........................................................................................................................................................... 17 

ENTERPRISE RISK MANAGEMENT ............................................................................................................................................... 31 

FY 2022 OUTLOOK ....................................................................................................................................................................... 32 

FINANCIAL HIGHLIGHTS – FINANCIAL OVERVIEW ................................................................................................................... 33 

MANAGEMENT ASSURANCES ........................................................................................................................................................ 41 

SYSTEMS, CONTROLS AND LEGAL COMPLIANCE ....................................................................................................................... 42 

PART 2: FINANCIAL SECTION

MESSAGE FROM THE ACTING ASSISTANT SECRETARY FOR MANAGEMENT AND ACTING CHIEF FINANCIAL OFFICER . 49

INSPECTOR GENERAL’S TRANSMITTAL LETTER ....................................................................................................................... 51 

INDEPENDENT AUDITORS’ REPORT ............................................................................................................................................ 53 

MANAGEMENT’S RESPONSE TO INDEPENDENT AUDITORS’ REPORT ..................................................................................... 59

FINANCIAL STATEMENTS .............................................................................................................................................................. 60 

NOTES TO THE FINANCIAL STATEMENTS ................................................................................................................................... 67 

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) ............................................................................................... 183 

PART 3: OTHER INFORMATION (UNAUDITED) 

SECTION A: TAX GAP AND TAX BURDEN................................................................................................................................ 193 

SECTION B: MANAGEMENT CHALLENGES AND TREASURY RESPONSE.............................................................................. 204 

SECTION C: SUMMARY OF FINANCIAL STATEMENT AUDIT AND MANAGEMENT ASSURANCES..................................... 256 

SECTION D: PAYMENT INTEGRITY........................................................................................................................................... 258

SECTION E: CIVIL MONETARY PENALTIES INFLATION ADJUSTMENT ............................................................................... 264 

SECTION F: GRANTS PROGRAMS.............................................................................................................................................. 271 

APPENDIX: GLOSSARY OF ACRONYMS ..................................................................................................................................... 272
4 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MESSAGE FROM THE SECRETARY OF THE TREASURY

MESSAGE FROM THE SECRETARY OF THE TREASURY

M ISSION STATEMENT

Maintain a strong economy and create economic and job opportunities by promoting conditions

that enable economic growth and stability at home and abroad; strengthen national security by

combating threats and protecting the integrity of the financial system; and manage the U.S.

government’s finances and resources effectively.

This year’s Agency Financial Report offers us a dual

opportunity—a chance to take stock of our Department’s

progress in achieving our mission and to look ahead at

our work in Fiscal Year 2022 and beyond.

The past 20 months have been a turbulent chapter in the

lives of so many Americans. Waves of COVID-19 crashed

down across the country. Millions of companies—in fact,

whole industries—approached the brink of collapse. For a 

time, our economic outlook felt fragile, and there was

legitimate worry that we’d slip into a prolonged recession

worse than any in the past century. Fortunately, that did

not happen.

Since the beginning of 2021—and the Biden-Harris

Administration—our economy has changed faster than

any point in recent memory. GDP now exceeds prepandemic levels and we are on track for full employment

by next year. This isn’t to say that our recovery is

without challenges. There are many, including the Delta

variant. Still, we should be optimistic about America’s

medium-term economic outlook.

Our recovery has not happened by default. It is the result

of policy choices, including sweeping relief packages like

The American Rescue Plan, which was enacted last

March. The American Rescue Plan helped businesses reopen safely. It put expanded unemployment benefits and

child tax credits into people’s bank accounts. It provided

billions to local and state governments, allowing them to

fund critical services communities rely on—fire, police,

public education—while funding public health programs.

One recent study projected that the expanded relief

measures kept 50 million Americans from slipping below

the poverty line—and raised 20 million above it. The 

projections suggest that this year poverty rates could hit

the lowest levels on record, especially among children.

Economists search for lessons in our history, and the past

year has provided a crucial one: Bold fiscal policy matters. 

A government that can execute it well matters. Together,

they can improve American lives on a mass scale, and

shift our economic trajectory in a better direction.
DEPARTMENT OF THE TREASURY 5 

MESSAGE FROM THE SECRETARY OF THE TREASURY | FY 2021 AGENCY FINANCIAL REPORT

Now, we need to apply that lesson to another set of

problems.

Long before a single American was infected with COVID19, our economy was suffering beneath the surface. 

During the postwar years, the United States was almost

certainly the best place to start a business or a family. 

But about a generation ago, economists observed a set of

worrying trends. The percentage of prime-age workers

who participated in the labor force started declining. 

Wages diverged. Pay for high-earners increased, while it

stagnated for lower-earners. The racial wealth gap

remained stubbornly persistent. When I started studying

economics in 1963, the average Black family’s wealth was

roughly 15 percent of the average white family’s. Six

decades later, the data point is the same.

At the same time, our investment in the crucial

ingredients for economic growth—education,

infrastructure, childcare—has been declining. Our

funding for them has been on a downward trajectory for 

nearly forty years. In 2019, it was about three-quarters of

what it was in the 1970s.

This is the motivation behind President Biden’s Build

Back Better Agenda. In the same way that ambitious

fiscal policy is accelerating our recovery from the

pandemic, it can start unwinding some of these

destructive trends and spur growth.

This administration’s goal is to change the shape of the

American economy for the better, from the highest-level

data down to the way people experience it every day.

Projections show our policy proposals in areas like

childcare, education, and infrastructure would increase

labor force participation and lift the upper limit on how

productive and prosperous our economy can be. They

would also let parents afford daycare for their kids, begin

the job hunt again, find higher-paying places to work, and

drive on good roads to get there.

To pay for this, we would make our tax system fairer,

leveling the playing field for workers and small business. 

One way is by increasing tax enforcement and closing the

multi-trillion-dollar tax gap that deprives our country of

revenue and allows those at the top to avoid paying what

they owe.

We are now engaged in the most important economic

project in recent history—repairing the broken

foundations of our economy, and building something

stronger and fairer than what came before.

As for our financial performance, I’m very pleased to

report that Treasury has received an unmodified audit

opinion of its consolidated financial statements for Fiscal

Year 2021 and that our financial and performance data

have been validated as complete and reliable.

I would like to thank all of Treasury’s workforce for their

unwavering commitment to work towards a more secure

and prosperous future for all Americans. 

Janet L. Yellen

Secretary of the Treasury

November 15, 2021
 

 

[Page intentionally left blank]
PART 1:

MANAGEMENT’S DISCUSSION 

AND ANALYSIS

(UNAUDITED)

Treasury at a Glance...................................................................9

Organization............................................................................. 11

Treasury Strategic Management............................................. 14

Performance Overview............................................................17

Enterprise Risk Management.................................................. 31

FY 2022 Outlook......................................................................32

Financial Highlights - Financial Overview........................... 33

Management Assurances......................................................... 41

Systems, Controls and Legal Compliance.............................. 42

Treasury at a Glance................................................................ 9 

Organization.......................................................................... 11

Treasury Strategic Management........................................... 14

Performance Overview......................................................... 17

Enterprise Risk Management................................................ 31

FY 2022 Outlook ................................................................... 32

Financial Highlights – Financial Overview.......................... 33

Management Assurances....................................................... 41

Systems, Controls and Legal Compliance............................. 42
 

 
DEPARTMENT OF THE TREASURY 9 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

TREASURY AT A GLANCE

FOUNDATION

After the American Revolution, Congress realized that

funding a war without proper infrastructure and financial

discipline presented an enormous challenge to our

country’s economic stability. Out of the necessity to levy

and collect taxes and manage the U.S. government’s

finances, Congress established the Department of the

Treasury on September 2, 1789. President George

Washington appointed Alexander Hamilton as Treasury’s

first Secretary. Since then, more than 70 Secretaries

have led the Department.

Throughout its history, Treasury served as the foundation

for other federal agencies. For example, the U.S. Postal

Service, U.S. Customs Service, Secret Service, Federal

Law Enforcement Training Center, and U.S. Coast Guard

were all, at one time, under our jurisdiction.

The Treasury building in the late 1800s. The Treasury

building colonnade from the southeast side shows the bustle

of traffic on 15th Street as bicyclists passed in front of the

Treasury building.

U.S. Department of the Treasury building, Washington, D.C. 

TODAY’S TREASURY AND HOW WE SERVE THE

NATION

Treasury remains one of the nation’s premier financial

institutions, responsible for the nation’s debt

management, cash production, disbursement of Social

Security benefit payments, tax collection, and federal

agency financing. We are a trusted policy advisor to the

President, formulating and recommending domestic and

international financial, economic, and tax policies. Our

contributions to policy development shape America’s

economic health and security.

The Department also performs a critical and far-reaching

role in enhancing national security by targeting rogue

regimes, terrorist networks, and other illicit actors. We

do this by deploying the Department’s national security

tools and authorities—including sanctions—to identify,

disrupt, and dismantle national security and foreign

policy threats, while also protecting the U.S. and

international financial system from abuse by illicit actors.
10 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

We also leverage our relationships with our federal

partners and work closely with the private sector to

identify cutting-edge technologies to identify, detect, and

prevent threats to our economic stability.

Furthermore, we work to increase opportunities for small

businesses, which are the backbone of our economy. We

create jobs to improve the well-being of U.S. citizens and

to safeguard and grow our national economy. We also

continue to play a key and influential role in the

government’s service to the American people, adapting to

meet the nation’s needs.

Globally, Treasury represents the U.S. in important

economic forums and international financial institutions,

including the Group of Seven (G7) and the Group of

Twenty (G20), which hold annual summits with heads of

state to discuss global economic and foreign policy issues. 

We hold significant responsibility promoting stability and

growth in the global economy via our leadership roles in

the International Monetary Fund, the World Bank,

regional development banks, and other multilateral

organizations, such as the Financial Stability Board and

the Financial Action Task Force.

Although Treasury evolves to meet the nation’s needs, our

core mission has remained the same since 1789. Today,

with approximately 100,000 employees, we remain

steadfast in our commitment to promote conditions that

enable economic growth and stability at home and abroad,

protect the integrity of the financial system, and

effectively manage the U.S. government’s finances and

resources. We remain the principal steward of the U.S.

economy—collecting revenue, meeting financial

obligations, and financing government operations. 
DEPARTMENT OF THE TREASURY 11 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

ORGANIZATION

Treasury is organized into the Departmental Offices, seven bureaus, and four offices of Inspector General. The

Departmental Offices are primarily responsible for headquarters operations and policy formulation, while the bureaus are

the operating units of the organization.
12 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

DEPARTMENTAL OFFICES

Domestic Finance works to preserve confidence in the U.S.

Treasury securities market, strengthen financial

institutions and markets, and promote access to credit, in

service to long-term economic strength and stability.

Terrorism and Financial Intelligence (TFI) uses unique

policy, intelligence, enforcement, and regulatory tools and

authorities to disrupt and disable terrorists, criminals,

and other national security threats while also

safeguarding the financial system against abuse by illicit

actors.

International Affairs protects economic prosperity and

national security by working to foster a most favorable

external environment for sustained jobs and economic

growth.

Tax Policy develops and implements tax policies and

programs, reviews regulations and rulings to administer

the Internal Revenue Code, provides revenue estimates

for proposals, and receipt estimates for the President’s

Budget.

Economic Policy reports on economic developments and

assists in the determination of appropriate economic

policies. It also reviews and analyzes domestic economic

issues and financial market developments.

The Treasurer of the United States serves as a principal

advisor to the Secretary, including sometimes advising

the Secretary on coinage matters and liaising with the

Federal Reserve.

The Office of Management and Chief Financial Officer

manages the Department’s financial resources and

oversees Treasury-wide programs, including human

capital, organizational performance, enterprise risk

management, information technology, acquisition,

diversity issues, and data.

The Office of Recovery Programs is principally focused on

efficiently establishing and administering Treasury’s

programs to support an equitable and swift recovery from

the economic challenges precipitated by the COVID-19

pandemic. 

 

Other offices within Departmental Offices include

General Counsel, Legislative Affairs, and Public Affairs.
DEPARTMENT OF THE TREASURY 13 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

INSPECTORS GENERAL

 

Four Inspectors General—the Office of Inspector General

(OIG), the Treasury Inspector General for Tax Administration

(TIGTA), the Special Inspector General for the Troubled Asset

Relief Program (SIGTARP), and the Special Inspector General

for Pandemic Recovery—provide independent audits,

investigations, and oversight of Treasury and our

programs.

BUREAUS

The Alcohol and Tobacco Tax and Trade Bureau (TTB)

collects federal excise taxes on alcohol, tobacco, firearms,

and ammunition, while enforcing and administering laws

covering the production, use, and distribution of alcohol

and tobacco products. 

The Bureau of Engraving and Printing (BEP) develops and

produces U.S. currency notes, as well as secure

documents for government use.

The Financial Crimes Enforcement Network (FinCEN)

safeguards the financial system from illicit use, combats

money laundering and its related crimes—including

terrorism—and promotes national security through the

strategic use of financial authorities and the collection,

analysis, and dissemination of financial intelligence.

The Bureau of the Fiscal Service (Fiscal Service) promotes

financial integrity and operational efficiency by operating

the U.S. government’s collections and deposit systems and

providing central payment services to the American public

on behalf of federal agencies. It also manages the

collection of delinquent debt, borrows funds needed to

operate the U.S. government through the sale of

marketable and special-purpose U.S. Treasury securities,

and accounts for the resulting debt. Additionally, it

delivers administrative shared services to federal agencies

and conducts government-wide accounting and reporting. 

The Internal Revenue Service (IRS) determines, assesses,

and collects U.S. tax revenue and helps taxpayers

understand their tax responsibilities, while aiming to

prevent tax-related fraud.

The United States Mint (U.S. Mint) designs, mints, and

issues U.S. circulating coins, as well as numismatic and

bullion coins; in addition to striking Congressional gold

medals and other medals of national significance. It

maintains physical custody and protection of most of the

nation’s gold and silver assets.

The Office of the Comptroller of the Currency (OCC)

charters, regulates, and supervises national banks and

federal savings associations, as well as federal branches

and agencies of foreign banks, to ensure that they operate

in a safe and sound manner, provide fair access to

financial services, treat customers fairly, and comply with

applicable laws and regulations.
14 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

TREASURY STRATEGIC MANAGEMENT

FRAMEWORK

The Government Performance and Results Act (GPRA)

and the GPRA Modernization Act of 2010 require

agencies to identify goals, report progress against targets,

and conduct data-driven reviews. These practices allow

stakeholders within and outside the organization to

assess the organization’s health and impact, while

promoting effective decision-making, and improved

strategy execution and resource allocations. In this spirit,

we developed a strategic framework using best-in-class

organizational performance practices to help achieve our

strategic goals and objectives. 

ORGANIZATIONAL PERFORMANCE REVIEW CYCLE

Our organizational performance reviews provide a regular

forum for open dialogue and coordination between the

bureaus and the Departmental Offices’ management and

leadership. We bring together different perspectives to

set and align priorities, identify and solve problems,

review agency performance, and drive results. The 

performance review cycle integrates statutory

requirements to conduct quarterly reviews of agency

results toward goals, with an annual exercise to validate

our supporting objectives, executed through our Strategic

Objective Annual Review (SOAR) process. We also

integrate portfolio reviews of programs within our

performance review cycle activities, as required by the

Program Management Improvement Accountability Act

(PMIAA). The SOAR process includes analyzing crosscutting performance and identifying a set of strategic

objectives as priority focus areas. In 2019, the

Foundation for Evidence-Based Policy Act was signed into

law to further advance the U.S. government’s evidencebuilding functions. In this fiscal year, we approached the

implementation of the evidence-building requirements by

leveraging our strategic management framework,

including the SOAR, to initiate an agency learning

agenda.

At designated points throughout the fiscal year, we set

annual priorities, evaluate progress against goals and

objectives, discuss new strategies to improve program

outcomes, and align our available funding to maximize

results for the agency. We describe our process and

framework for managing to our strategic objectives and

performance outcomes in Table 1 on the following page. 
DEPARTMENT OF THE TREASURY 15 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

TABLE 1: TREASURY ANNUAL ORGANIZATIONAL PERFORMANCE REVIEW CYCLE Sessions

Fall

(October – November)

Winter

(February – March)

Spring

(April – May)

Summer

(June – July)

Focus

Bureau Performance & 

Priorities 

Strategic Objective Annual

Review (SOAR)

Cross-cutting Risks/Challenges;

Critical Programs 

Budget

Chair

Assistant Secretary for

Management/Performance

Improvement Officer

(ASM/PIO); Strategic Goal

Leads

Strategic Goal Leads ASM/PIO ASM/PIO and Budget

Officer, Strategic Goal

Leads

Goals/Outcomes

• Review prior year’s

performance at the

bureau/office level

• Recognize successes

• Set priorities for year

ahead

• Identify shortfalls/risks;

accountability; assess

organizational health

• Deep dives on select

critical

programs/projects

• Evaluate cross-agency

progress toward

strategic objectives

• Identify strategic

shift/validate Treasury

priorities

• Outline potential topics

for annual review with

OMB

• Confirm list of critical

programs and projects/

check status

• Issue-based sessions: Dive

deep on cross-cutting

issues identified in the

SOAR with relevant

leadership; surface

problems and needed

assistance, identify nearterm improvement

strategies

• Program-based sessions:

check in on critical

programs/projects

identified in the SOAR as

needing a deep dive with

Treasury leadership

attention.

• Connect priorities

to future funding

• Align funding to

performance

impacts and risk

mitigation

• Strengthen IT

acquisition,

budgeting, and

accountability

• Identify

efficiencies and

redundancies in

request

• Update list of

critical

programs/projects

based on budget

requests
16 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2021 PRIORITY AREAS

Table 2 below shows the alignment of our FY 2021 priority areas discussed in the following Performance Overview section to

the major programs as presented in our Consolidated Statements of Net Cost.

TABLE 2: CONSOLIDATED STATEMENTS OF NET COST BY MAJOR PROGRAM ALIGNMENT 

Priority Area FY 2021 Areas of Focus

Economic

Equitable Economic

Growth and

Recovery

Office of Recovery Programs Stand-up/American Rescue Plan Implementation

Equity Assessment

Enhance Child Tax Credit

Combating Climate

Change

Leading Global Commitments/Action

Sustainable Treasury Operations

Security

National Security Sanctions Review

Targeted Financial Measures

Financial System Transparency

Strengthen Cybersecurity

Financial

Financial Stability Resilient Markets

Financial Innovation

Management 

Modernizing

Treasury Operations

Recruit/Retain Diverse and Inclusive Workforce

Work Re-Entry/Future Work Routines

Better Use of Data

Improve Customer Experience

 
DEPARTMENT OF THE TREASURY 17 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

PERFORMANCE OVERVIEW

We carry great responsibility for fostering prosperity and security for the American people, play a critical role in U.S. and

global economies, and continue to make progress in our mission to meet the needs of the nation. The FY 2022 – 2026

Treasury Strategic Plan will chart a course to guide our responsibilities to taxpayers. The following performance overview

reflects the accomplishments and challenges in achieving the goals of equitable economic growth and recovery, national

security, financial stability and resiliency, combating climate change, and modernizing Treasury operations in service to our

country. 

Equitable Economic Growth and Recovery

The COVID-19 pandemic has exacerbated the preexisting inequities in America’s economic system and

created a slowdown in global trade. We must address

systemic issues in the economic system and strengthen

resiliency for all Americans while taking the lead, 

internationally, to partner with foreign countries to

advance ambitious policies for an equitable global

recovery and sustainable growth.

As part of our implementation of the American Rescue

Plan Act of 2021 (ARP), we supported the expansion of

the Child Tax Credit, which will substantially reduce

child poverty by supplementing the earnings of families

receiving the tax credit.

Finally, in FY 2021, we submitted a 200-day Progress

Report on Treasury’s Equity Assessment per Executive

Order 13985, Advancing Racial Equity and Support for 

Underserved Communities, which assessed our ability to

develop policies and programs that deliver resources and

benefits equitably to all.

OFFICE OF RECOVERY PROGRAMS STANDUP/AMERICAN RESCUE PLAN IMPLEMENTATION

The current public health crisis and resulting economic

crisis have devastated the health and economic well-being

of millions of Americans. From big cities to small towns,

Americans—particularly people of color, immigrants, and

low-wage workers—are facing a deep economic crisis. The

ARP, one of the most progressive pieces of legislation in

history, is delivering immediate and direct relief to

families and workers impacted by the COVID-19 crisis

and is building a bridge to an equitable economic

recovery. 

The Office of Recovery Programs, led by the Chief

Recovery Officer, reports to Treasury’s Deputy Secretary,

and is principally focused on efficiently establishing and

administering our programs to support an equitable and

swift recovery from the economic challenges precipitated

by the COVID-19 pandemic. In FY 2021, the Office of

Recovery Programs focused on implementing an effective,

cohesive model for recovery programs to help get relief

distributed quickly and into the hands of those who need

it the most, while ensuring public trust.

Source: Adobe Stock

Office of Recovery Programs Established 

In FY 2021, we established the Office of Recovery

Programs to lead our implementation of economic

relief and recovery programs, including nearly

$420 billion in programs from the American Rescue

Plan Act of 2021 (ARP). The Office of Recovery

Programs also oversees programs authorized

through the Coronavirus Aid, Relief, and Economic

Security Act (CARES Act), and the Consolidated

Appropriations Act, 2021 (CAA).
18 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

We are responsible for managing over $1 trillion in ARP

programs and tax credits and have already distributed

approximately $700 billion. For example, Treasury has

sent over $240 billion in fiscal support to state, territorial,

local, and Tribal governments that is being used to fight

the pandemic and accelerate local economic recovery.

Over 99 percent of currently available State and Local

Fiscal Recovery Funds are in the hands of governments

across the country, which are using these resources not

only to meet immediate pandemic response needs but to

make long-term investments in the recovery, equity, and

prosperity of their local communities.

EQUITY ASSESSMENT

The COVID-19 pandemic has exposed long-standing

disparities in our laws, public policies, and institutions,

which disproportionately affect people of color and

members of underserved communities. As we implement

the ARP, we are working to ensure the economic recovery

includes those who have been historically underserved

and affected by persistent poverty long before the

pandemic. We view this equity assessment as an

opportunity to identify and remove any barriers that

would prevent any member of the American public from

having equal access to our programs and services and

procurement and contracting opportunities, as well as the

nation’s financial systems.

We completed the following activities per Executive Order

13985, Advancing Racial Equity and Support for 

Underserved Communities Through the Federal

Government: 

• Issued a joint video with the Secretary and Deputy

Secretary to announce the kickoff of the Equity

Assessment Process and its intended goals. 

• Provided recommendations on FY 2023 funding levels

for program offices responsible for advancing

diversity, equity, inclusion, and accessibility as part

of the internal Departmental budget process.

• Met with members of the Department of Labor

Equity Review Team to learn more about each

agency’s equity assessment effort. 

• Published a blog post to mark the six-month

anniversary of the ARP and highlight the central role

of equity in programmatic implementation.

• Appointed a Counselor to the Secretary for Racial

Equity.

• Announced the creation of a racial equity advisory

committee to more regularly solicit opinions and

guidance from external racial equity subject matter

experts in our ongoing efforts to advance equity.

• Completed the required 60-Day, 90-Day, and 200-Day

Progress Reports.

Our Equity Assessment Team worked with the IRS,

Office of Tax Policy, Fiscal Service and ORP to develop

ambitious, yet manageable, proposals for the equity

assessment process. We also worked to identify

actionable opportunities to: (1) identify and remove any

barriers that members of underserved communities may

have to our contracting and procurement opportunities;

and (2) improve access to data collection, use, and

sharing, including data disaggregation, which improves

the ability to deliver services more equitably, and better

understand how our programmatic and policy decisions

impact underserved communities.

ENHANCE CHILD TAX CREDIT

Since President Biden signed the ARP in March 2021, the

White House has led a cross-agency effort to ensure the

expanded Child Tax Credit reaches the families who need

it most. The ARP’s expansion of the Child Tax Credit will

substantially reduce child poverty by supplementing the

earnings of families receiving the tax credit. 

Within months, the IRS launched a Non-filer Sign-up

Tool and published step-by-step guides in multiple

languages. Since then, the White House, Treasury, and

the IRS have worked in collaboration with advocacy

groups and public figures to direct consumers to the tool. 

The IRS’s efforts also included public awareness

programs, including free tax preparation days in more

than 30 cities where data showed large pockets of

children in households that do not normally file a tax

return.
DEPARTMENT OF THE TREASURY 19 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

The ARP’s advance payment of the expanded Child Tax

Credit (AdvCTC) presented unique challenges across the

IRS, including resource competition with the information

technology experts needed to deliver the third round of

Economic Impact Payments in parallel with planning and

implementing the AdvCTC. Implementing the new

legislation also challenged the IRS to develop systems,

processes, and procedures quickly. This included

developing and deploying new web tools, implementing

system programming changes, educating IRS employees

on new processes and procedures, creating new taxpayer

letters and notices, and communicating extensively to

taxpayers to ensure they had necessary information. 

The IRS successfully met these challenges in just over

four months following enactment of the ARP. Beginning

in July 2021, eligible families received an advance

payment of up to $300 per month for each child under age

6 and up to $250 per month for each child ages 6 to 17. In

July 2021, the IRS sent roughly $15 billion to families,

which included nearly 60 million eligible children. As of

September 30, 2021, the IRS issued more than $46 billion

AdvCTC payments to over 37.8 million individuals. 

 

Source: Adobe Stock

Expanded Child Tax Credit 

Experts have projected the ARP has the potential

to lift more than five million children out of

poverty in 2021, cutting child poverty by more

than half. The expanded Child Tax Credit is the

largest single contributor to this historic reduction. 

Prior to the expansion by the ARP, lower-income

families often received a smaller Child Tax Credit

than families with higher earnings because the tax

credit was only partially refundable.
20 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

National Security 

An expanding array of transnational threats, continued

instability in weak states, and the malicious use of critical

and emerging technologies by adversaries, present

security concerns for the U.S. that may impact the

integrity of the U.S. financial system, which is

foundational to our national security. As foreign and

domestic actors threaten American economic and national

security, we must apply our tools and strengthen bilateral and multi-lateral partnerships to defeat these

threats and take a leading role in protecting the U.S. and

international financial systems from abuse. In FY 2021,

we leveraged our tools and authorities to combat

malicious actors, strengthened the Anti-Money

Laundering and Combating the Financing of Terrorism

(AML/CFT) regime, advanced reform efforts, ensured

foreign investments in the U.S. did not give rise to

unresolved national security risks, and enhanced

collaboration with allies and partners on investment

screening best practices.

SANCTIONS REVIEW

Sanctions are a key tool for the U.S. government to

address critical national security and foreign policy

threats. For this tool to be effective and fit to purpose for

years to come, the authorities and processes we use to

deploy sanctions should be continuously reviewed and

updated to address emerging challenges. Further, we

must effectively leverage our sanctions workforce across

the Department, addressing recruitment and retention of

high-skilled talent to meet the data and analytical needs

required to support the growing array of work in the

sanctions arena. If we do not commit to using the most

updated analytic and collaborative technologies, we may

not be able to stay abreast of, or effectively respond to,

increasing stakeholder demands. This includes the

ability to analyze complex financial and Bank Secrecy Act

(BSA) data to identify emerging threats, identify new

trends, and support national security events.

To overcome these challenges, we completed a 

comprehensive sanctions review and provided

recommendations designed to promote a warranted,

strategic, and judicious use of sanctions. Our review

found that while sanctions remain an essential and

effective policy tool, they also face new challenges,

including rising risks from new payments systems, the

growing use of digital assets, and cybercriminals, as well

as situations where careful calibration can help limit the

impact of sanctions on the flow of legitimate

humanitarian aid to those in need.

We will also modernize and strengthen internal Treasury,

U.S. government, and international coordination and

engagement on sanctions to enhance effectiveness.

TARGETED FINANCIAL MEASURES

Since the beginning of FY 2020 and continuing through

FY 2021, we have established four new and six modified

sanctions programs. This included the use of tools and

authorities to deter Iran’s nuclear and ballistic missile

program, hindering Iran’s support of global terrorism, and

offsetting efforts to destabilize the Middle East, Burma,

Hong Kong, Venezuela, and others.

On Iran, we targeted terrorist financing and money

laundering activity and imposed a series of sanctions

designed to disrupt Iran’s nuclear program and its ability

to acquire and sell conventional arms. We imposed

sanctions on the Iranian ambassador to Iraq responsible

for coordinating the activity of Iran’s Islamic

Revolutionary Guard Corps Quds Force (IRGC- QF)

throughout Iraq. Additionally, we imposed sanctions on a 

huge network of 150 targets, in addition to metals and

petrochemical companies. Through the Terrorist

Financing Targeting Center’s partnership with seven Gulf

nations, joint sanctions against the Islamic State of Iraq

and Syria, Hizballah, and Iran’s IRGC-QF were

successfully taken.
DEPARTMENT OF THE TREASURY 21 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

Additionally, we applied our tools and authorities against

Venezuela’s Maduro regime to deny the regime revenue

and sanctioned members of the regime for human rights

violations and corruption. We used sanctions to place

pressure on North Korea, including designations focused

on North Korea’s continued supply of unlawful labor to

overseas markets, which is used to generate income in

contravention of United Nations sanctions. We countered

Russian illicit financing by working with foreign partners

and through strategic use of sanctions authorities.

On China, TFI realigned analytic resources to anticipate

and analyze more thoroughly the security threats China

poses and took action to impose costs on China for human

rights abuses in Xinjiang and for undermining Hong

Kong’s autonomy. On Burma, we implemented a new

sanctions regime in response to the Burmese military’s

coup against the democratically elected civilian

government of Burma. In coordination with the issuance

of a new Executive Order 14014, Blocking Property with

Respect to the Situation in Burma, we designated,

pursuant to that Executive Order, approximately 10

individuals and three entities connected to the military

apparatus responsible for the coup. We took the actions

quickly and at the direction of the White House, in

response to violence and suppression of peaceful protests

over the weekend of February 21, 2021.

FINANCIAL SYSTEM TRANSPARENCY

To protect the integrity of markets and of the global

financial framework, we have taken steps to increase

transparency in the domestic and international systems

by strengthening the U.S. AML/CFT regulatory

framework and addressing the proliferation of virtual

currency and new technologies that create potential

vulnerabilities.

Permitting illicit actors to benefit from the stability and

security of the U.S. financial system weakens financial

transparency, distorts markets, and hurts ordinary

Americans. Financial technology is growing and

transforming the landscape of the financial industry,

which is interconnected at a global level. Rapid evolution

and adoption of new technologies can yield economic and

social benefits and also present new potential for illicit

financial activity. 

U.S. financial institutions’ resources may not be leveraged

to their fullest potential. Treasury seeks to enhance

financial institutions’ ability to enhance the effectiveness

of their BSA/AML programs and report robust,

contextual, and timely information on the highest priority

threats to support investigations.

The Anti-Money Laundering Act of 2020 will strengthen

and adapt the U.S. AML/CFT regulatory framework to

collect beneficial ownership information and address

emerging challenges and evolving regulatory

requirements. We will also engage domestic and

international partners to develop and implement financial

transparency standards, enhance anticorruption efforts, 

and expand financial access and inclusion. In addition to

the national AML/CFT priorities we published to inform

risk-based supervision, we will publish a national illicit

finance strategy to address priority threats.

STRENGTHEN CYBERSECURITY

Technology is a core facet of the financial sector’s

functioning and faces an increasingly diverse and

sophisticated array of cyber threats, including from

trusted third parties. As the financial industry and

federal government further rely on information and

operational technology and computer networks, which can

be vulnerable throughout the entire IT supply chain, we

must address our own cybersecurity vulnerabilities and

demonstrate leadership, ensure operational resiliency,

and provide support to external stakeholders. This will

help to ensure that the U.S and global financial system

and Treasury’s infrastructure are hardened against cyber

incidents and our full range of tools is deployed to counter

malicious cyber actions.

Treasury and the financial services sector face increasing

attacks from cyber criminals and state actors attempting

to disrupt operations or steal data from sensitive systems.

The tactics, techniques, and procedures perpetrators of

these incidents use are constantly evolving. There is a 

risk that a successful cyberattack may seriously affect our

operations or the operations of the financial sector more

broadly. A breach of or inability of any of our high-value
22 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

asset systems to execute core functions within established

performance metrics could have nationwide and

international ramifications.

To overcome these challenges, we are engaging domestic

and international partners to enhance sector cyber

hygiene. This includes efforts to improve resilience,

continuity, and emergency preparedness, while also

identifying and addressing technology vulnerabilities,

including the use of third-party service providers. We are

also protecting financial infrastructure by leveraging

existing authorities to detect, deter, and disrupt malicious

cyber activities. Finally, we are upgrading, securing, and

scaling technology resources to effectively support our

current role in national security matters, and in

accordance with the Presidential Executive Order 14028,

Improving the Nation’s Cyber Security.

 
DEPARTMENT OF THE TREASURY 23 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

Financial Stability

The COVID-19 pandemic exposed existing vulnerabilities

in the financial system, especially in the nonbank

financial sector and created stress to global and domestic

economies. To improve financial resiliency ahead of the

next crisis, and reduce associated costs to the economy,

the financial sector must address vulnerabilities in

financial markets through responsible regulatory reforms. 

These reforms include improved liquidity risk

management and adjustments to the financial market

infrastructure in light of changes in technology and

investor demand. 

RESILIENT MARKETS

Treasury and municipal securities markets have evolved

significantly as the industry, regulatory environment,

trading practices and investor demands have changed. 

Some elements have not kept pace, raising risks that

these critical markets are vulnerable to stresses, which

could have significant consequences for economic growth

and financial stability. We can help mitigate

vulnerabilities by supporting developments that improve

the resilience of these markets to stresses and reducing

government borrowing costs over time. With federal,

state, and local government debt now exceeding

$32 trillion, ensuring that these markets remain resilient

and able to support all other priorities outlined in this

plan, including equitable economic growth and addressing

climate change, is a critical component of sound fiscal

policy.

To overcome these challenges, we will evaluate structural

changes in the Treasury securities markets, and put

forward recommendations to make the markets more

resilient to future disruptions, and promote the central

role of U.S. Treasury securities in global finance. We will

also evaluate structural changes in the municipal

securities market and make recommendations to promote

greater efficiency, liquidity, and transparency.

FINANCIAL INNOVATION

Treasury promotes a financial system that delivers

inclusive access to financial services that effectively meet

the needs of market participants, while maintaining

financial stability and market integrity. Emerging

financial technologies have accelerated aspirations for a 

more equitable and inclusive financial system. 

Many innovations in digital finance (e.g., digital assets) 

remain nascent, with both risks and benefits that have

yet to be assessed. Other innovations, such as mobile

money, digital lending, and consumer data analytics, are

relatively more mature and have already demonstrated

the potential to improve the delivery of payments and

other financial services for many Americans. But more

can and should be done to reach those whose financial

needs remain unmet by the financial services sector. 

Expanding access to digital financial services (payments,

credit, saving, insurance) is a key component to

increasing financial inclusion, domestically and

internationally.

We encourage the responsible use of innovative financial

technology, both across the financial sector and in our

own programs, to deliver affordable and secure financial

services that better serve consumers and small

businesses. Keeping pace with private sector

developments in digital finance could help ensure an

informed approach across the federal government to

facilitating a stable and accessible financial system. 

Failing to do so could result in financial regulation

becoming unresponsive to the needs and expectations of

the public.

Similarly, we are improving our own financial activities

by leveraging private sector technology to better execute

federal financial management services, secure U.S.

currency from counterfeiting, and deliver payments to the

public. Our commitment to transition to electronic

payments from physical payments (e.g., checks) has the

potential to advance both our financial inclusion and netzero carbon goal.
24 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

Combating Climate Change 

The U.S. and the world face a climate crisis and a 

narrowing window to act to avoid the worst impacts of

climate change. At the same time, the transition to a lowcarbon economy presents a historic economic opportunity

for the U.S. and global economy. The U.S. federal

government must work alongside our domestic and

international partners to respond ambitiously to tackle

the challenges of climate change, adapt to an already

changing climate, mitigate the risks, and position the

global economy for clean and sustainable growth.

In April 2020, we created a new Climate Hub and

appointed a Climate Counselor to coordinate and lead

efforts to address climate change. The Climate Hub will

focus on the broad range of our climate-related policy

work connected to 1) climate transition finance; 2)

climate-related economic and tax policy; and 3) climaterelated financial risks.

In July 2021, we published the first edition of Climate

Action Plan as a response to Executive Order 14008,

Tackling the Climate Crisis at Home and Abroad. It

focuses on our efforts on a wide range of international and

domestic policy fronts, as well as our management of

facilities, operations, procurements, and financial

investments to bolster adaptation and increase resilience

to the impacts of climate change.

Pursuant to Executive Order 14030, Climate-Related

Financial Risk, we are also supporting the development of

a government-wide Climate-Related Financial Risk

Strategy and engaging with Financial Stability Oversight

Council member agencies to advance efforts to provide

financial regulators, financial institutions, and investors

with the best information and data to measure climaterelated financial risks. The Federal Insurance Office is

also assessing climate-related issues in the supervision of

insurers, as well as further assessing the potential for 

major disruptions of private insurance coverage in U.S.

markets that are particularly vulnerable to climate

change impacts.

LEADING GLOBAL COMMITMENTS/ACTION

Climate change is an economic, financial, humanitarian,

and national security issue. Failure to take swift steps to

address its effects will be devastating to the global

community. Executive Order 14008, Tackling the

Climate Crisis at Home and Abroad, calls for

international engagement to go hand-in-hand with

domestic action to address climate change. In addition,

the EO called for the development of the first-of-its kind

U.S. International Climate Finance Plan, which was

released in April 2021 and outlines a series of actions we

will take to respond to the Executive Order. Recognizing

the potential future effects of climate change, an already

changing climate, and the need to act swiftly, we are reengaging with international partners, both bilaterally and

multilaterally, to act and put the world on a sustainable

climate pathway. 

We will also promote global efforts to phase out public

finance of carbon-intensive fossil fuels by scaling back

support for international investments in carbon-intensive

projects and setting an example by eliminating domestic

subsidies. In August 2021, we issued Fossil Fuel Energy

Guidance for Multilateral Development Banks (MDBs), 

which we advocate for MDB investments prioritizing

Source: Adobe Stock

Climate Action 

In 2021, we joined the Coalition of Finance

Ministers for Climate Action, assumed cochairmanship of the G20 Sustainable Finance

Working Group, and established bilateral

sustainable finance framework discussions with

South Africa, Indonesia, and India.
DEPARTMENT OF THE TREASURY 25 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

clean energy, innovation, and energy efficiency. This will

help achieve a clean and sustainable future consistent

with the development goals of the Paris Agreement. 

Multilateral institutions are invaluable partners to the

pursuit of sustainable, inclusive, and resilient

development. President Biden announced ambitious

climate finance pledges in April and September 2021. To

support the U.S. pledge, we requested in our FY 2022

Budget $1.25 billion for the Green Climate Fund to, in

part, make good on our $2 billion outstanding pledge,

$485 million to support other multilateral climate

initiatives, and increased support for the multilateral

development banks. Looking ahead, we will consider

requesting funds for additional new contributions to the

Green Climate Fund and other initiatives.

SUSTAINABLE TREASURY OPERATIONS

Our mission, facilities, operations, and services are being

impacted by climate disruptions, including global

warming, sea level rise, more intense and frequent major

weather events, and disruptions to energy availability. 

To address these impacts, we must improve mitigation

efforts to reduce our greenhouse gas emissions, while

adapting to a changing environment by making our

facilities, operations, and critical supply chains more

resilient to climate disruptions. We need to improve our

workforces’ knowledge and awareness of climate change,

the science that supports climate policies, and the means

to address the impacts of climate change on our mission

and operations. To combat these challenges, we will use

our purchasing power to reduce greenhouse gas emissions

across our operations.

We will also make our real property portfolio more

resilient to address the impacts of climate change. In FY 

2022, each Bureau will perform an updated facility risk

assessment, update its existing (or identify a new)

adaptation action plan to address the highest risks,

develop a timeline for each of its respective action plans,

and identify any resource requirements. We will

collectively assess common actions across Bureaus to

minimize resources and efforts. The Treasury Operations

Executive Council TOEC working group is already in

place to collaborate on best practices and use common

efforts. 

We will transform our procurement policies and processes

to consistently prioritize climate change considerations in

purchasing decisions. Specific focus will include

developing source selection sustainability evaluation

factors, leveraging strategic sourcing opportunities to

enable cost-effective purchasing of services and products

that support climate adaptation and resilience,

identifying Treasury-wide procurement strategies to

make federal facilities and operations more climate-ready

and resilient, establishing meaningful metrics to track

progress, and prioritizing opportunities to support

disadvantaged communities. 

Finally, we will work to increase climate-change

knowledge and expertise through capability-building

efforts in climate literacy and engagement and, where

applicable, data strategies, coordination, or relevant

process improvement efforts.

In response to Executive Order 14008’s Section 211

Climate Action Plans and Data and Information Products

to Improve Adaptation and Increase Resilience, we

published the first edition of the Treasury Climate Action

Plan, which prioritizes our efforts regarding our facilities

and operations to bolster adaptation and increase

resilience to the impacts of climate change.

Our Bureaus have undertaken many climate adaptative

and resiliency actions, as well as environmental

sustainability and energy management initiatives that

are documented in annual Treasury Sustainability Plans. 

Our Bureaus will develop Bureau Climate Action Plans,

as well as bureau-level climate action assessments and

planning processes with a continual improvement

management tool that is ready for deployment.
26 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

Modernizing Treasury Operations

Modernizing Treasury’s operations is critical to achieving

our mission and strategic priorities. In particular, we will

focus on a narrow set of enterprise-level improvements

that, if made, will improve mission delivery across all

organizations and strategic objectives. These include

building and retaining a workforce that represents the

diverse people and communities we serve, enabling the

work routines of the future to capitalize on the lessons we

learned from the pandemic work environment,

strengthening decision-making through improved use of

data, and increasing trust in government by building

consistent customer experience. In FY 2021, we adopted

strategies to prioritize employee safety during the

pandemic, completed foundational work to both improve

customer experience and promote data-driven decision

making, and had mixed success in modernizing

infrastructures.

RECRUIT/RETAIN DIVERSE AND INCLUSIVE

WORKFORCE

Employment opportunities and leadership roles within

Treasury must represent the American people, including

with respect to race, ethnicity, religion, sex, gender

identity, sexual orientation, age, and disability. In

addition to ensuring we are able to carry out our mission

effectively and equitably, our efforts to become a more

diverse and inclusive organization will also aid in

fostering creativity, innovation, productivity, and higher

levels of employee engagement.

To accomplish this, we need to increase our focus on

developing a diverse pipeline for hiring and promotions

and investing in training and development opportunities

to improve retention and inclusion in our workforce. 

Different levels of funding and varied maturity levels in

strategic human capital management across Treasury

and our bureaus, combined with human resources

challenges in the face of accelerating changes to mission

and skill requirements, could erode our ability to meet

our mission. Investing in recruitment and employee

development, while creating a modernized environment

(physical, virtual, and cultural) that best supports the

workforce, will advance efforts to retain top talent and

enable employees to focus on accomplishing our mission.

To address these challenges, we will employ measures to

reach previously inaccessible talent. We will identify and

mitigate sources of bias in selection and promotion

processes. We will take steps to expand on a culture that

demonstrates leadership commitment to a culture of

inclusion, diversity, equity, and accessibility. Finally, we

will take steps to provide a modern, equitable, and

inclusive work experience. 

WORK RE-ENTRY/FUTURE WORK ROUTINES

The convergence of the COVID-19 pandemic and climate

crisis has resulted in a critical decision point for Treasury

about our immediate and long-term physical needs, such

as facilities and office spaces and IT, as well as our

human capital infrastructure. As the pace of change

accelerates and we play a growing role in responding to

national crises—foreseen and unforeseen—we must

increase our agility, flexibility, and resilience.

How we work together is changing. Failure to support

and empower the workforce will stifle the innovation

needed to transform and meet the evolving needs of our

customers. Technology advances have the potential to

enable a more distributed and diverse workforce that can

access the best talent anywhere, and a more sustainable

and resilient infrastructure. We will also need to evolve

our culture and provide equitable access to best-in-class

tools, training, and facilities. To achieve this integrated

vision, we must modernize our workplace infrastructure

and work routines to meet a “whole person” culture,

maintain competitiveness, and enable a “new normal” for

an engaged and inclusive workforce of the future.
DEPARTMENT OF THE TREASURY 27 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

To overcome these challenges, we will equip the workforce

with the skills, competencies, and flexibility to succeed in

the future. We will transform work routines to meet

changing customer and employee needs by fostering a 

culture of innovation and continuous improvement. 

Finally, we will modernize the physical and virtual

workplace to provide an improved employee experience.

BETTER USE OF DATA

We seek to fully unlock the value of our data for mission,

service, and the public good. The Foundations for

Evidence-based Policymaking Act of 2018 required

agencies to designate a Chief Data Officer, Evaluation

Officer, and Statistical Official, and to assess their data

maturity and capacity for evidence-building. Through

these assessments, we identified many “pockets of

excellence” where evidence generated through research,

evaluation, analysis, and statistical activities is routinely

used to inform decision-making. However, we lack

maturity at the enterprise-level. Silos, inconsistent data

standards, and resource constraints make it difficult to

share data across the department and with other federal

partners.

Our ability to support critical decisions across mission

areas and detect emerging issues with data may be

impeded by a lack of data accessibility and reliability,

inability to successfully use and interpret the data, and/or

capability to process or analyze data. To develop and

maintain a culture where we generate high quality data

products and evidence that are easy to consume and

share, we must strengthen our data infrastructure, data

governance, and analytic capabilities within our

workforce.

To overcome these challenges, we will strengthen our

ability to develop and use high-quality data through

enterprise data governance and by adopting data

standards. We will improve data infrastructure by

modernizing our legacy systems, advancing the use of

secure cloud services, and harnessing new and emerging

technologies. We will also strengthen analytic

capabilities across our workforce by improving data

literacy. Finally, we will advance equity in our programs

and services by increasing access to data that we can use

to assess and measure equity and inform program policy

and decision-making. 

IMPROVE CUSTOMER EXPERIENCE

We provide many critical services to the American

people—from Main Street to Wall Street—and federal

agencies. According to the American Customer

Satisfaction Index, the federal government ranks among

the bottom of all industries in the U.S. in customer

satisfaction.

We are designated as a federal High Impact Service

Provider due to the scale and impact of our public-facing

services. In FY 2021, the IRS processed returns from

225.3 million individuals and businesses and assisted

68.6 million customers on the phone or in person. When

the agency provides a modern, efficient customer

experience, it increases Americans’ trust in government. 

When it develops cumbersome regulations or fails to

deliver programs equitably, it negatively impacts

perceptions of government services.

We must create a culture that focuses on the customer,

leveraging the latest research and modern approaches to

improving customer experience to improve its overall

capabilities and practices. Failure to do so reduces

program effectiveness and disrupts the efforts of other

federal agencies we serve to better serve their customers.

To overcome these challenges, our managers have

launched and communicated a Department-wide

customer experience vision. We will use advanced

analytic tools, research methods, and outreach to better

understand our customers and potential disparate

impacts. We will also create and update annually an

inventory of high-impact services/journeys to enable a 

360-degree view of the customer and prioritize service

improvements across all of our customers. Finally, we

will put the customer at the center of improvements

across high-impact services/journeys using human

centered design and continuous process improvement.
28 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2021 Operational Performance Measures

In FY 2021, we continued to deliver value to our customers, the American taxpayer. Our performance measures present

data on service and operational outcomes for our core programs. Table 3 contains trend information for key measures we use

to assess our performance in core services and operations—programs that are critical to the proper functioning of the U.S.

government. For each measure, we provide definitional information and briefly explain the trend in performance over the

last four years. A full discussion of performance trends for all of our programs is included in the APR.

TABLE 3: SELECT PERFORMANCE MEASURES

Bureau/

Office

Measure FY 18 FY 19 FY 20 FY 21 FY 21 

Target

FY 21

Result vs Target

BEP

Manufacturing costs for currency—

dollar costs per thousand notes

produced 

$47.41 $51.01 $56.19 $61.81 $63.64 Met

This measure calculates the actual manufacturing cost for currency notes, which include direct labor costs, the cost of raw materials used, and

related manufacturing overhead charges. The FY 2021 cost was lower than anticipated due to savings resulting from decreased spoilage, as

well as the recovery of Series 2009 $100 notes through the Single Note Inspection process.

Currency Notes Delivered Returned

Due to Defects—Parts per million .0031 .09 .02 .016 1 Met

This measure incentivizes continuous product quality improvement and reduces defect-driven returns of currency notes by the Federal Reserve

back to BEP. BEP collects and tracks the number of notes by denomination that are returned from the Federal Reserve Banks. The target for

this measure aligns with manufacturing industry quality standards. 

U.S. Mint

Circulating On-Time Delivery—

percentage

100% 100% 100% 100% 97.5% Met

On-time delivery to the Federal Reserve Banks (FRB) is the percentage of total scheduled orders shipped on time to the FRB. The United States

Mint is responsible for providing the Nation's coinage in sufficient quantity to meet the needs of commerce. To accomplish this mission, the

United States Mint must supply coinage in the quantities and timelines specified by the FRB. The FRBis then responsible for distributing coinage

to the commercial banking sector.

Numismatic Sales Units—million units 3.3 4.3 3.4 3.6 3.6 Met

This measure indicates the number of coin products sold to the public from numismatic operations. It quantifies the demand for the Nation's

official numismatic products.

Seignorage per dollar issued $0.37 $0.40 $0.47 $0.37 $0.41 Unmet

Seigniorage per dollar issued is the seigniorage generated from each dollar of circulating coinage face-value shipped to the Federal Reserve

Banks. FY 2021 results fell below the target as a result of a decrease in circulating demand coupled with increased metal costs.

TTB

Percent of permit applications

processed within service standards 71.2% 57.6% 84.1% 92.2% 85% Met

This measure represents the overall rate at which TTB is meeting its annual service standard (75 days for FYs 2018 – 2021) for all original

permit applications and registrations. The measure reflects the efficiency and consistency of TTB’s permitting process and supports effective

communication with industry members as to level of service. In FY 2021, TTB issued 92 percent of applications within its 75-day service

standard, surpassing its 85 percent target. To sustain these improvements, TTB is undertaking process and system enhancements, including

an effort to streamline permit application requirements.

Fiscal Service

Percentage of Treasury Payments

Made Electronically 95.4% 95.6% 96.0% 96.2% 96.1% Met

This measure provides the portion of the total volume of payments that is made electronically. FY 2020 and FY 2021 data does not include

pandemic-related relief payments such as economic impact payments and advance child tax credit payments.

Number of paper checks printed FYTD

(millions) 56.0 54.2 50.5 48.8 49.0 Met

This measure provides the number of payments made via paper checks. FY 2020 and FY 2021 data does not include pandemic-related relief

payments such as economic impact payments and advance child tax credit payments.
DEPARTMENT OF THE TREASURY 29 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

Bureau/

Office

Measure FY 18 FY 19 FY 20 FY 21 FY 21 

Target

FY 21

Result vs Target

IRS

Customer Service Representative

Level of Service (LOS) 75.9% 65.4% 53.1% 18.5% 32% Unmet

This measure represents the number of toll-free callers that either speak to a Customer Service Representative or receive information messages

divided by the total number of attempted calls. In FY 2021 the CSR LOS was 18.5 percent, falling short of the target. New legislation resulted

in added, unplanned demand for the toll-free phone lines. Total Assistor Demand was more than 200 percent higher than in FY 2020 with some

lines seeing increases of more than 2 million calls. Call disconnects were 1,477 percent higher in FY 2021 at 4.1 million compared to 260,000

in FY 2020. Through all of this, IRS was able to answer 3.8 million more calls in FY 2021 than the prior year. IRS continues to monitor demand

in real time, allocating resources and shifting between telephones and paper processing to address demand during times of unprecedented call

volume.

Enterprise Self Assistance

Participation Rate (ESAPR) 82.0% 85.4% 90.6% 92.3% 89% Met

This measure represents the percent where a taxpayer uses one of the IRS’s self-assistance service channels (e.g., automated calls, web services)

versus needing support from an IRS employee (e.g., face-to-face, over the phone, or via paper correspondence). In FY 2021, the ESAPR was 92.3

percent, exceeding the target of 89.0 percent and 1.9 percent higher than the prior year. Compared to FY 2020, total services increased 36.4

percent, self-assisted services increased 38.9 percent, and assisted services rose 12.4 percent.

Timeliness of Critical Individual Filing

Season Tax Products to the Public 59.6% 92.6% 78.4% 92% 85% Met

This measure represents the percentage of Critical Individual Filing Season (CIFS) tax products available to the public seven calendar days

before the official IRS start of the filing season. CIFS tax products include tax forms, schedules, instructions, publications, tax packages, and

certain notices required by numerous filers to prepare a complete and accurate return. The timeliness of CIFS tax products ended the fiscal

year at 92.0 percent, exceeding the FY 2021 target of 85.0 percent. This accomplishment was partially due to the enactment of the P.L. 116-

260, Consolidated Appropriations Act, 2021, which determined the February 12 filing season start date. The legislation provided more time to

meet the annual goal. Additional factors that contributed to exceeding this year’s target include prioritizing work on the release of critical

products; planning for legislative changes to quickly re-prioritize work targeted to critical products impacted by the law; granting of overtime,

credit, and compensatory time during workdays, weekends and holidays; and workload planning and monitoring by management as well as

the efforts of our employees.

FinCEN

Percentage of Domestic Law

Enforcement and Foreign Financial

Intelligence Units finding FINCEN’s

Analytic Products Valuable to the

detection and deterrence of illicit

activity

95% 92% 97% 96% 90% Met

This performance measure tracks what the analytics products are intended to do (e.g., to be useful to a wide range of customers and have

impact, such as identify new leads or provide previously unknown information). In FY 2020, 97 percent found that the analytic products and

research had impact on investigations, meeting the target of 90 percent or above. FinCEN was able to achieve this high level of performance by

continuously improving processes to increase and more rapidly disseminate financial intelligence information reports to a wider audience, by

maintaining the high quality of its reporting through stringent review processes, and by covering issues and topics that meet the operational

and informational demands of its domestic and international stakeholders.

Management

Treasury-wide EVS Satisfaction Index 63% 66% 75% TBD 75% TBD

The Federal Employee Viewpoint Survey (FEVS) is the primary tool that agencies use to measure employee sentiment. Each year, we track and

report on the FEVS Overall Satisfaction Index which comprises three FEVS satisfaction questions. Due to the timing of this year’s survey the FY

2021 FEVS results will not be available until February 2022. 

Percent of Procurement Dollars Spent

of Small Business 42.6% 40.4% 45.0% 39.9% 36% Met

This goal measures the percentage of procurement dollars obligated toward small businesses (or Treasury’s overall small business goal) and

highlights Treasury’s efforts to ensure that small businesses have the maximum practicable opportunity to provide goods and services to the

federal government.
30 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

Bureau/

Office

Measure FY 18 FY 19 FY 20 FY 21 FY 21 

Target

FY 21

Result vs Target

Office of

International

Affairs

Percentage of Committee on Foreign

Investment in the United States (CFIUS) 

Cases Reviewed within Statutory

Timeframes, reported by calendar year

100% 100% 100% TBD 100% TBD

This measure tracks compliance with statutory deadlines for completing national security reviews of transactions notified to the CFIUS to

ensure that the CFIUS process is timely and efficient. Results are reported on a calendar year basis.

Office of

Terrorism and

Financial

Intelligence

Number of New or Modified Sanctions

Programs Established by Executive Order

or Congressional Mandate

5 7 6 7 N/A N/A

This indicator tracks the number of new or modified sanctions programs that must be implemented and enforced. However, the indicator does

not capture the levels of relative complexity for each sanction program or the complexity of individual national security objectives that

sanctions attempt to achieve. We do not set targets for new or modified sanctions programs, since the existence of a sanctions program is not

itself a measure of success.
DEPARTMENT OF THE TREASURY 31 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

ENTERPRISE RISK MANAGEMENT

FRAMEWORK

OMB Circular No. A-123, Management’s Responsibility

for Enterprise Risk Management and Internal Control, 

provides guidance to federal managers to effectively

manage risks to achieve strategic objectives. 

Management, together with the Chief Risk Officer (CRO),

is responsible for establishing a governance structure to

implement a robust process of risk management and

internal control, as well as an enterprise-wide risk profile. 

Successful implementation requires us to establish and

foster an open and transparent culture that encourages

people to communicate information about potential risks

and other concerns that impact our programs and

operations. 

The CRO meets regularly with senior leaders to discuss

top risks to critical programs, systems, projects, and

priorities, including response strategies. The Office of

Risk Management (ORM) also established an Enterprise

Risk Management (ERM) Council, chaired by the Deputy

CRO, which brings together risk managers from each of

our bureaus and policy offices on a bi-monthly basis to

share best practices and discuss risks. ORM works with

the bureaus and policy offices across Treasury to monitor

and annually update our risk profile.

Beyond its work at Treasury, ORM leads an interagency

ERM community of practice including officials from more

than 50 federal agencies. This group grew from ORM’s

efforts to support agencies in their implementation of

ERM, including the July 2016 publication of the

Playbook: Enterprise Risk Management (ERM) for the

U.S. Federal Government. This government-wide

working group meets bi-monthly to discuss common risks

and various methods of implementing the guidelines of

the Circular.

ENTERPRISE RISKS AND CHALLENGES

Through the FY 2021 SOAR and enterprise risk

management process, we identified the following crosscutting operational risks. 

Evolving Cyber Climate: Treasury and the financial

services sector face increasing attacks from cyber

criminals and state actors attempting to disrupt

operations or steal data from sensitive systems. The

tactics, techniques, and procedures perpetrators of these

incidents use are constantly evolving.

Workforce Management: Our mission capability may be

eroded due to operational challenges in human resources,

such as recruitment, training and development, personnel

security, and diversity and inclusion. These challenges

may be intensified when paired with changing mission

and skill requirements.

Data Analytics Capabilities, Sharing, and Infrastructure: 

Our ability to support critical decisions with data may be

negatively affected by a lack of data accessibility and

reliability, inability to successfully use and interpret the

data, or inability to process or analyze data due to

insufficient or aging infrastructure.

Prioritizing Objectives to Effectively Leverage Limited 

Resources: We have many extremely important ongoing

missions and are also at the forefront of several new

initiatives to improve our economy and return it to a 

stable footing. Due to uncertain funding amounts and

timing, new or changing legislative requirements, and

reduced capacity, we may not be agile enough to 

sufficiently balance new initiatives with existing

requirements or projects. 

Significant Disruptions to Operations: We may face

significant disruptions to operations, due to climate

change, natural disasters, terrorist events, pandemics, or

a lapse in appropriations, resulting in our inability to

successfully deliver our mission, constrained progress in

critical areas, and/or challenges for employees,

contractors, customers, and taxpayers. 
32 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

Procurement, Acquisition, and Vendors: We may be

unable to timely acquire necessary products and services,

initiate work under contracts, and effectively monitor

contract execution due to supply chain vulnerabilities

such as supplier risk, single vendors, lost time, and

inefficient contracts. This may result in a failure to

deliver on mission needs.

FY 2022 OUTLOOK

Our FY 2022 – 2026 Strategic Plan will be published in

February 2022. In this plan, we will describe the longterm goals and objectives we aim to achieve during this

Administration, building from the progress made and

challenges identified in FY 2021.

Our FY 2021 SOAR outlined several focus areas that will

shape the development of our future priorities: (1) tax

administration and policy; (2) strategic threat disruption;

(3) cyber resiliency of financial systems and institutions;

(4) resilient government securities markets; and (5)

customer experience practices.

Looking ahead, we will shape our strategic goals around

five key priority areas: (1) promoting equitable economic

growth and recovery; (2) enhancing national security; (3) 

protecting financial stability and resiliency; (4) combating

climate change; and (5) modernizing Treasury operations.

To achieve progress on these priorities, we will continue

to manage the Department’s programs under the CARES

Act, CAA, and ARP. We will also pursue priorities as

described in Executive Order 14008: Tackling the Climate

Crisis at Home and Abroad, Executive Order 14030:

Climate-Related Financial Risk, and Executive Order

13985 Advancing Racial Equity and Support for 

Underserved Communities through the Federal

Government.
DEPARTMENT OF THE TREASURY 33 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

FINANCIAL HIGHLIGHTS – FINANCIAL OVERVIEW

The financial highlights below are an analysis of the

information included in our consolidated financial

statements that appear within Part 2, “Financial Section” 

of this report. Our principal financial statements have

been prepared to report the agency’s financial position, 

and results of operations, pursuant to the requirements of

31 USC 3515(b). These consolidated financial statements

have been prepared from the books and our records in

accordance with federal generally accepted accounting

principles (GAAP) and the formats prescribed by OMB. 

The consolidated financial statements are in addition to

the financial reports used to monitor and control

budgetary resources, which are prepared from the same

books and records. The financial statements are for a 

component of the U.S. government, a sovereign entity.

The chart below presents changes in key financial

statement line items as of and for the fiscal year ended

September 30, 2021 compared to September 30, 2020.

 

Summary Financial Information (dollars in billions) 

2021 2020 $ Change % Change

Total Assets $ 32,591.1 $ 32,200.1 $ 391.0 1.2 %

Total Liabilities $ 31,626.2 $ 31,152.8 $ 473.4 1.5 %

Total Net Position $ 964.9 $ 1,047.3 $ (82.4) (7.9)% 

Total Net Cost of Treasury Operations $ 137.0 $ 128.5 $ 8.5 6.6 %

Federal Debt Interest Costs, Net $ 525.9 $ 473.4 $ 52.5 11.1 %

Other Federal Costs, Net $ 23.6 $ 32.7 $ (9.1) (27.9)% 

GSEs Non-Entity Cost (Revenue), Net $ (112.0) $ 3.2 $ (115.2) 3,600.0% 

COVID-19 Non-Entity Revenue, Net $ (8.9) $ (5.8) $ (3.1) 53.4 % 

Total Net Cost of Treasury Operations and Non-Entity Costs $ 565.3 $ 631.2 $ (65.9) (10.4)% 

Total Budgetary Resources $ 1,550.0 $ 1,805.8 $ (255.8) (14.2)% 

Agency Outlays, Net $ 832.6 $ 718.3 $ 114.3 15.9 %

Net Revenue Received (Custodial) $ 3,100.8 $ 2,863.6 $ 237.2 8.3 %

Financial Overview. Our financial performance as of and

for the fiscal year ended September 30, 2021, reflects

several major trends. Most significantly, we continued to

oversee and implement economic relief and recovery

programs, authorized through the American Rescue Plan

Act of 2021 (ARP), Consolidated Appropriations Act, 2021

(CAA), and the Coronavirus Aid, Relief, and Economic

Security Act (CARES Act) enacted in 2020. We received

over $1 trillion in FY 2021 and approximately $1 trillion

in FY 2020 in authority program funding in response to

the pandemic. During FY 2021 and FY 2020, pursuant to

these three legislations, we had distributed over

$900 billion and $450 billion, respectively, to individuals,

state, territorial, local, and Tribal governments, and

certain businesses to accelerate our nation’s economic

recovery. In FY 2020, we also disbursed $112.5 billion to

the Federal Reserve in support of its emergency programs

to enhance the liquidity of our U.S. financial system. 

The outstanding federal debt, including interest, rose by

$1.5 trillion to $28.6 trillion to finance the U.S.

government’s operations that included support of the

economic relief and recovery efforts. We also incurred a 

liability at September 30, 2021 totaling $217.6 billion in

connection with extraordinary debt management

measures that we took during a delay in raising the

statutory debt limit (referred hereinafter as the “Delay”). 

Specifically, these measures included, among other

things:(i) suspending investments in Treasury debt

securities by the Government Securities Investment Fund

of the Federal Employees’ Retirement System Thrift 

Savings Plan (TSP), Civil Service Retirement and

Disability Trust Fund (Civil Service Fund), and the Postal
34 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

Service Retiree Health Benefits Fund (Postal Benefits

Fund); and (ii) redeeming early a certain amount of

Treasury debt securities held by the Civil Service Fund. 

The $217.6 billion liability reflects our obligation by

statute as of September 30, 2021, to restore to these funds

the accumulated principal balance of Treasury debt

securities bearing the same interest rates and maturity

dates that would have been invested by these funds had

the Delay not occurred (uninvested principal), as well as

pay these funds the related lost interest on the

uninvested principal (refer to Note 16 of the Consolidated

Financial Statements).

Additionally, our “Total Net Cost of Treasury Operations

and Non-Entity Costs” for FY 2021 decreased by

$65.9 billion in fiscal year 2021 primarily stemming from

non-entity activity, including $115.2 billion of higher

revenue from our investments in two GovernmentSponsored Enterprises (GSEs) – the Federal National

Mortgage Association (Fannie Mae) and the Federal

Home Loan Mortgage Corporation (Freddie Mac) – 

pursuant to our Senior Preferred Stock Purchase

Agreements (SPSPAs), as amended (refer to Note 11 of

the Consolidated Financial Statements). This increase in

revenue was partially offset by $47.8 billion of higher

federal debt interest costs which correlates to the increase

in federal debt as mentioned above. 

 

Figure 1: Total Assets, Total Liabilities, and Net Position (in billions) 

Total Assets of $32.6 trillion at September 30, 2021

consist of a receivable due from the General Fund of the

U.S. government (General Fund) of $28.8 trillion, intragovernmental loans and interest receivable of

$1.8 trillion, and fund balance and various other assets, 

which totaled $2.0 trillion (Figure 2). 

Figure 2: FY 2021 Total Assets (Composition)
DEPARTMENT OF THE TREASURY 35 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

The $391.0 billion (or 1.2 percent) increase in total assets

at the end of FY 2021 over the prior year is primarily due

to a $1.7 trillion increase in our receivable, “Due from the

General Fund,” which corresponds to increases in the

following liabilities: (i) a $1.5 trillion increase in federal

debt and interest payable and (ii) a $217.6 billion

additional liability for the restoration of federal debt

principal and interest in connection with the Delay. The

net addition to our liabilities at September 30, 2021

caused a corresponding rise in the “Due from the General

Fund” asset—which represents future funds required

from the General Fund to pay borrowings from the public

and other federal agencies.

Intra-governmental “Loans and Interest Receivable”

represent loans issued primarily by the Fiscal Service to

other federal agencies for their own use or for the

agencies to loan to private sector borrowers whose loans

are guaranteed by the federal agencies. This receivable

grew only moderately by $59.5 billion (or 3.4 percent)

during FY 2021 due to increased borrowings by various

federal agencies—such as Small Business Administration

and Department of Housing and Urban Development—to

fund their programs. 

Other assets include, among other things, “Fund

Balance,” “Taxes Interest, and Other Receivables, Net,”

“COVID-19 Investments, Advances, Receivables, and

Other,” and “Investments in Government Sponsored

Enterprises.” Other assets totaling $2.0 trillion decreased

by $1.4 trillion or (41.1 percent) largely reflecting a 

$1.5 trillion and $270.0 billion decreases in our “Cash,

Foreign Currency, and Other Monetary Assets” and

“Fund Balance,” respectively. Cash, foreign currency, and

other monetary assets represent, among other things,

operating cash balances (held on behalf of the U.S.

government) from federal debt, tax collections, and other

receipts. The $1.5 trillion decrease in operating cash is

the result of ending FY 2020 with a historically high level

of operating cash balance to maintain prudent liquidity in

light of the size and relative uncertainty of COVID-19

related outflows, combined with needing to reduce the

cash balance to well under our prudent policy level at the

end of FY 2021 due to debt ceiling constraints. The 

$270.0 billion decrease in “Fund Balance” is largely due to

a rescission of $478.8 billion in appropriation provided

under the CARES Act to make loans and investments

(refer to Total Budgetary Resources section below). The

decrease in fund balance was, in part, offset by a 

$159.4 billion year-over-year increase in the remaining

fund balance available to primarily make financial

assistance payments to state, territorial, local, and Tribal

governments, pursuant to the COVID-19 legislations. 

The “Taxes, Interest, and Other Receivables, Net”, 

primarily comprised of federal taxes receivable, increased

by $67.0 billion principally because of a two-year deferral

on employers’ portion of FICA Social Security taxes due to

the U.S. government as provided for by the CARES Act

(refer to Note 8 to the Consolidated Financial Statements

entitled Taxes, Interest, and Other Receivables, Net).

Other assets also reflect a $111.6 billion increase in

COVID-19 related assets realized in our response to the

pandemic and economic recovery. The “COVID-19

Investments, Advances, Receivables, and Other,” line

item primarily includes advances paid to state, local,

territorial, and Tribal governments who will administer

future payments to individuals and businesses to cover

eligible costs incurred in connection with financial

assistance recovery programs, along with our investments

and loans made in support of businesses and the U.S.

airline industry. Advances paid to these governments

increased $187.2 billion in FY 2021 primarily pursuant to

the COVID-19 related legislations enacted in FY 2021. 

During FY 2021, we advanced $276.7 billion of financial

assistance to these governments, and estimated that

these governments disbursed $89.5 billion of this funding

to cover eligible expenses (refer to Note 10 within the

Consolidated Financial Statements). COVID-19 related

assets primarily consisted of equity investments in

Special Purpose Vehicles (SPVs) of $25.6 billion and

$107.9 billion as of September 30, 2021 and 2020,

respectively. The decrease in SPV investments is

primarily attributable to an aggregate of $86.1 billion of

our capital contributions that was returned to us by the

Federal Reserve in connection with interim and final

distributions made pursuant to the amended SPV LLC 

Agreements (refer to Note 10 within the Consolidated

Financial Statements). 
36 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

Our “Investments in Government Sponsored Enterprises,”

(GSE Investments) are comprised of the estimated fair

value of our senior preferred stock and warrants to

purchase common stock of two GSEs: Fannie Mae and

Freddie Mac. The value of our investment increased by

$112.0 billion principally due to fair value gains of

$80.1 billion primarily driven by the GSE’s higher

projected cash flows, a decrease in the market value of the

GSE’s other equity securities that comprise its total

equity, and a lower discount rate. The liquidation

preference of our senior preferred stock also increased in

value by $31.8 billion in FY 2021 compared to

$17.4 billion in FY 2020 pursuant to the amended

SPSPAs (refer to Notes 1I and 11 within the Consolidated

Financial Statements).

 

Figure 3: FY 2021 Total Liabilities (Composition)

Total Liabilities of $31.6 trillion at September 30, 2021

principally consist of the federal debt held by the public,

including interest, of $22.3 trillion (Figure 3), which was

mainly issued as Treasury Notes and Bills. Liabilities

also include intra-governmental liabilities totaling

$8.9 trillion (of which $6.2 trillion represent principal and

interest of federal debt in the form of Treasury securities

held by other federal agencies), and various other

liabilities totaling $358.5 billion. Federal debt, including

interest, held by the public and other federal agencies

together totaled $28.6 trillion at the end of FY 2021, an

increase of $1.5 trillion over the prior year. The

$473.4 billion (or 1.5 percent) increase in total liabilities

over the prior year is primarily attributable to the

$1.5 trillion increase in federal debt that was needed to

finance the U.S. government’s operations, including our

financial support of the COVID-19 recovery efforts. An

additional $217.6 billion of the increase is attributable to

a liability incurred as of September 30, 2021 for the

restoration of federal debt principal and interest owed due

to the extraordinary measures we took during the Delay

(refer to Note 16 of the Consolidated Financial

Statements). 

Total liabilities also increased by $112.8 billion due to the

increased allocations of Special Drawing Rights (SDRs). 

The SDR allocations represent permanent resources

issued to the U.S. by the International Monetary Fund

(IMF), which we account for as a liability since the U.S. is

obligated to repay the allocation amount to the IMF under

certain circumstances. During FY 2021, we increased our

commitment to hold additional SDRs to help provide

liquidity to the global economic system in response to the

stress caused by the COVID-19 pandemic.

The increase in total liabilities is, in part, offset by a 

$1.3 trillion decrease in our payable “Due to the General

Fund,” which corresponds primarily to the decreases in

the operating cash balance, as discussed above.

Total Net Position of $964.9 billion at September 30, 2021

represents the combined total of our cumulative results of

operations and unexpended appropriations at the end of

the fiscal year. The $82.4 billion decrease in the net

position at the end of FY 2021 was principally

attributable to a $149.4 billion decrease in appropriations

received in FY 2021 primarily in connection with non-taxrelated pandemic relief programs. 

 
DEPARTMENT OF THE TREASURY 37 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

Figure 4: Net Cost of Treasury Operations and Non-Entity Costs (in billions)

Total Net Cost of Treasury Operations and Non-Entity 

Costs, is presented on our Consolidated Statements of Net

Cost (Figure 4). “Net Cost of Treasury Operations” 

represents the gross costs, net of earned revenues, we

incurred related to our own entity activities comprising

both operating bureaus and Departmental Offices that

are consolidated with the Department. “Net Non-Entity

Costs” represent the gross costs, net of earned revenues,

we incurred on behalf of the U.S. government (or General

Fund), and primarily include “Federal Debt Interest

Costs, Net” (net of interest revenue from loans), “Other

Federal Costs, Net,” “GSE Non-Entity Costs (Revenue), 

Net,” “COVID-19 Non-Entity Revenue, Net,” and other

federal costs and revenues. 

“Total Net Cost of Treasury Operations and Non-Entity

Costs” totaled $565.3 billion and $631.2 billion for 

FY 2021 and FY 2020, respectively, a decrease of

$65.9 billion (or 10.4 percent) over the prior year. Net

costs associated with our entity operations (“Net Cost of

Treasury Operations”) totaled $137.0 billion, an increase

of $8.5 billion year-over-year. As further discussed below,

net costs associated with our non-entity operations (“Net

Non-Entity Costs”) decreased by $74.4 billion year-overyear, primarily driven by an increase in revenue from our

GSE investments, partially offset by higher federal debt

interest costs.

Figure 5 : Net Cost of Treasury Operations by Strategic

Program (in billions)

Net Cost of Treasury Operations is presented on our

Consolidated Statements of Net Cost by strategic

program. There are three main categories of strategic

programs presented—financial, economic, and security—

as well as a management strategic program which is

combined with the financial program due to the

immateriality of the management program (Figure 5). 

Our “Net Cost of Treasury Operations” totaled

$137.0 billion for FY 2021 compared to $128.5 billion for 

FY 2020, an increase of $8.5 billion (or 6.6 percent). This

increase primarily stems from the year-over-year

$10 billion increase in costs recognized for financial

assistance payments made to affected states, local,

territorial, and Tribal governments in response to

COVID-19 (refer to Note 10 of the Consolidated Financial

Statements). 
38 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

Federal Debt Interest Costs, Net (a non-entity cost) 

totaling $525.9 billion for FY 2021 primarily reflect

interest expense on the federal debt, net of interest

income on loans. This net cost increased $52.5 billion (or

11.1 percent) from the prior year, primarily attributable

to an increase in inflation adjustments and an increase in

outstanding debt held by the public.

Other Federal Costs, Net (a non-entity cost) of

$23.6 billion in FY 2021 decreased by $9.1 billion

primarily due to an $8.5 billion decrease in interest

expense incurred on uninvested credit program funds

held on behalf of other federal agencies. The lower cost

was primarily attributable to a decrease in interest

earned by federal agency credit programs across the U.S.

government compared to FY 2020.

GSEs Non-Entity Cost (Revenue), Net (a non-entity cost 

or revenue) is reported as a net revenue totaling

$112.0 billion for FY 2021 compared to net cost of

$3.2 billion reported for FY 2020. GSE non-entity

revenue is driven by fair value changes to our GSE

investments and changes to the liquidation preference of

our GSE senior preferred stock. The $115.2 billion yearover-year change in this line item was driven by a 

$100.7 billion increase in the estimated fair value of our

GSE investments and an increase of $14.5 billion

associated with our senior preferred stock liquidation

preference year-over-year.

Our GSE investments are comprised of the estimated fair 

value of our senior preferred stock and our warrants to

purchase GSE common stock. The increase in our GSE

senior preferred stock fair value is primarily a result of

GSE higher projected cash flows and a decrease in the

market value of GSEs’ other equity securities that

comprise its total equity. This was only partially offset by

a decrease in the fair value of our warrants due to a 

decrease in the market value of GSE common stock. 

Pursuant to amendments to the SPSPAs that, among

other things, increased the GSEs’ capital reserve

amounts, the GSEs will not pay a quarterly dividend until

they achieve their regulatory minimum capital

requirement. We received no cash dividends for the fiscal

years ended September 30, 2021 and 2020 as the GSEs’

had not achieved their capital requirement as of the fiscal

years ended (refer to Note 11 to the Consolidated

Financial Statements).

The liquidation preference of our senior preferred stock

increased in value by $31.8 billion in FY 2021 compared

to $17.4 billion in FY 2020, pursuant to the amended

SPSPA. The GSEs agreed that, at the end of each fiscal

quarter, through and including the capital reserve end

date, our liquidation preference will be increased by an

amount equal to the increase in the GSEs’ net worth

amount, if any, during the immediately prior fiscal

quarter. 

COVID-19 Non-Entity Revenue, Net (a non-entity 

revenue) of $8.9 billion reflects revenue recognized in

FY 2021 for financial instruments received from U.S.

airlines as appropriate compensation to the U.S.

government for the financial support provided to preserve

aviation jobs during the pandemic. As a provision of the

CARES Act in FY 2020, and further extended by the ARP

and CAA, the U.S. government received promissory notes

and common stock warrants valued at $8.9 billion and

$5.8 billion as of September 30, 2021 and 2020,

respectively, for providing $30.7 billion and $28.2 billion,

respectively, of financial support to the aviation industry.
DEPARTMENT OF THE TREASURY 39 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

Figure 6 : Total Budgetary Resources and Agency Outlays, Net (in billions)

Total Budgetary Resources of $1.6 trillion in FY 2021

(Figure 6) decreased by $255.8 billion (or 14.2 percent)

primarily due to a $382.6 billion year-over-year reduction

in appropriations and borrowing authority received to

finance pandemic-related programs. In FY 2021, we

received $473.5 billion and $15.1 billion in appropriations

and borrowing authority, respectively, primarily to make

financial assistance payments to state, territorial, local,

and Tribal governments pursuant to the ARP and CAA. 

This compares to $682.0 billion and $188.7 billion

received in FY 2020 in appropriations and borrowing

authority, respectively, to make direct loans and

investments to assist eligible businesses, states and

municipalities, and to enhance the liquidity of the U.S

financial system. Partially offsetting this decrease in

budgetary resources were $112.8 billion of new resources

we obtained upon the IMF’s allocation to us of new SDRs

in response to the global economic stress caused by the

COVID-19 pandemic. 

During FY 2021, the CAA rescinded $478.8 billion of the

appropriation we received in FY 2020 pursuant to the

CARES Act, which eliminated our ability to make new

loans and investments effective January 9, 2021, and

which prohibited the Federal Reserve from engaging in

further lending or extensions of credit, after

December 31, 2020, through facilities established by the

Federal Reserve under Section 13(3) of the Federal

Reserve Act. Refer to Note 10 to the Consolidated

Financial Statements entitled COVID-19 Investments,

Advances, Receivables, and Other for additional

discussion of the financial impact of the CAA rescission. 

 

Agency Outlays, Net of $832.6 billion were higher in

FY 2021 (Figure 6) by $114.3 billion (or 15.9 percent) 

primarily due to an increase in outlays in the form of

financial assistance payments to state, territorial, local,

and Tribal governments, as well as to the air carrier

industry, in reponse to the COVID pandemic.

Figure 7 : Net Revenue Received (Custodial) (in billions)

Net Revenue Received (Custodial), representing the net

revenue we collected on behalf of the U.S. government,

includes various taxes, primarily income taxes, as well as

user fees, fines and penalties, and other revenue

(Figure 7). Over 90 percent of these revenues (before

refunds) are related to income and social security taxes. 

Net revenue received was $3.1 trillion for FY 2021, an 

increase of $237.2 billion (or 8.3 percent) over the prior

fiscal year. This increase is attributable mainly to an

overall growth in income taxes collections, partially offset 

by increased refunds and other payments issued to

individuals pursuant to the ARP, CAA, and CARES Act to

help stimulate the economy through taxpayer support

payments. In FY 2021 and FY 2020, the IRS disbursed

$625.8 billion and $275.4 billion in taxpayer support to
40 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

eligible recipients in every state and territory and at

foreign addresses (refer to Note 10 to the Consolidated

Financial Statements entitled COVID-19 Investments,

Advances, Receivables, and Other).
DEPARTMENT OF THE TREASURY 41 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

MANAGEMENT ASSURANCES

THE SECRETARY’S ASSURANCE STATEMENT

The Department of the Treasury’s management is

responsible for managing risks and maintaining effective

internal control and financial management systems to

meet the objectives of the Federal Managers’ Financial

Integrity Act (FMFIA). We conducted our assessment of

risk and internal controls in accordance with OMB

Circular A-123, Management’s Responsibility for

Enterprise Risk Management and Internal Control. 

Based on our assessment, we can provide reasonable

assurance that, in accordance with Section 2 of the

FMFIA, Treasury’s internal control over operations,

reporting, and compliance with laws and regulations were

operating effectively as of September 30, 2021. In

addition, we can provide reasonable assurance that, as of

September 30, 2021, we are in substantial conformance

with the federal financial management systems

requirements of Section 4 of the FMFIA, with the

exception of the significant deficiencies related to the

financial management systems at the IRS and Fiscal

Service. 

As a result of the significant deficiencies at the IRS and

Fiscal Service, our financial management systems are not

in substantial compliance with the Federal Financial

Management Improvement Act (FFMIA) as of September

30, 2021. We continue to make progress in remediating

these deficiencies and remain committed to focusing

management’s attention and resources on appropriate

corrective actions. Overall, we continue our efforts to

ensure high standards, minimize internal control

weaknesses, and meet federal financial management

requirements. Additional information on the lack of

compliance can be found in Part 3, Section C, of this

report.

Janet L. Yellen

Secretary of the Treasury

November 15, 2021
42 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

SYSTEMS, CONTROLS AND LEGAL COMPLIANCE

FMFIA

Background

The FMFIA requires executive branch agencies to

establish and maintain internal control and financial

systems to provide reasonable assurance that:

• Obligations and costs comply with applicable laws;

• Funds, property, and other assets are safeguarded

against waste, loss, unauthorized use, or

misappropriation; and

• Revenues and expenditures applicable to agency

operations are properly recorded and accounted for to

permit the preparation of accounts and reliable

financial and statistical reports, and to maintain

accountability over the assets.

OMB Circular A-123 provides the implementing guidance

for FMFIA and defines management’s responsibility for

establishing and assessing internal controls. The 

Circular also requires federal agencies to adhere to the

Government Accountability Office’s (GAO) Standards for 

Internal Control in the Federal Government, and to

evaluate and report on the effectiveness of the

organization’s internal controls to achieve: (1) the

objectives of effective and efficient operations, (2) reliable

reporting for internal and external use, and (3) 

compliance with applicable laws and regulations (FMFIA 

Section 2). Additionally, agencies are required to assess

whether financial management systems comply with

federal financial management systems requirements

(FMFIA Section 4). 

Analysis of Controls

The Secretary relies on the annual assurances of

Treasury’s principal bureaus and offices (components), 

which are supported by a comprehensive risk-based

internal control evaluation plan. This plan includes a 

methodology that identifies and documents key controls

and provides for the assessment and testing of those

controls to provide reasonable assurance that the controls

are designed, implemented, and operating effectively. As

part of the evaluation process, we considered results of

this extensive testing and assessment across the

Department, as well as independent audits conducted by

the OIG and GAO. 

Internal Control over Financial Reporting

In accordance with Appendix A to OMB Circular A-123,

Management of Reporting and Data Integrity Risk, we

also conducted an assessment of Treasury’s internal

controls over financial reporting. Our components

assessed the effectiveness of their internal controls to

support reliable financial reporting through the testing of

the design and operating effectiveness of key internal

controls for material transactions. Based on the results of 

this assessment we can provide reasonable assurance

regarding the effectiveness of our internal control over

financial reporting as of September 30, 2021. 

FFMIA AND FINANCIAL MANAGEMENT SYSTEMS

FFMIA

The FFMIA requires federal agencies to implement and

maintain financial management systems that

substantially comply with federal financial management

systems requirements, applicable federal accounting

standards, and the U.S. Standard General Ledger at the

transaction level. A financial management system

includes an agency’s overall financial operation, reflecting

the people, processes, and technology to capture, classify,

summarize, and report data in a meaningful manner to

support business decisions.

The FFMIA Section 803(c)(1) requires us to make an

annual determination of the agency’s substantial

compliance with Section 803(a) of the Act based on review

of relevant factors. We assess our financial management

systems annually for conformance with the requirements

of OMB Circular A-123, Appendix D, Compliance with the

Federal Financial Management Improvement Act of 1996, 

and other federal financial management system

requirements. Our assessment process includes the use

of the FFMIA Compliance Determination Framework,

(the “Compliance Framework”) in OMB Circular A-123,
DEPARTMENT OF THE TREASURY 43

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

Appendix D, which is a risk and evidence-based

assessment model that leverages existing audits,

evaluations, and reviews that auditors and agency

management already perform. The Compliance

Framework is an outcome-based approach to assessing

FFMIA compliance through a series of financial

management goals that are common to all agencies.

In applying the Compliance Framework, we assess

available information from audit reports and other

relevant and appropriate sources, such as the Federal

Information Security Modernization Act (FISMA) 

compliance activities, to determine whether our financial

management systems substantially comply with FFMIA. 

We also assess improvements and ongoing efforts to

strengthen financial management systems and the impact

of instances of noncompliance on overall financial

management system performance. Based on the results

of our overall assessment, we concluded that our financial

management systems were not substantially compliant

with federal financial management system requirements

as of September 30, 2021, due to significant deficiencies at

the IRS and Fiscal Service.

The IRS has a significant deficiency in internal control

over financial reporting related to its unpaid assessments

and financial reporting systems. Specifically, this

deficiency relates to the IRS’s information system

controls, business process application controls, and

general controls. The IRS worked diligently during FY 

2021 to continue to enhance its Information Technology

(IT) security. The IRS continues to implement a strategy

and assessment process to verify the effectiveness of

internal controls for the financial systems that affect the

financial statements. This assessment supports the IRS’s

overall internal control framework and helps mitigate

deficiencies in the IT environment. 

The Fiscal Service has a significant deficiency in internal

control related to its cash management and debt

management systems. Fiscal Service is fully committed

to enhancing its corrective action plans and focusing its

efforts to meet federal financial management systems

requirements. 

Financial Management Systems

Our financial management systems framework consists of

two foundational components: (1) financial and mixed

systems maintained by Treasury components, and (2) the

Treasury-wide Financial Analysis and Reporting System

(FARS). Our bureaus process and record detailed

financial transactions and submit summary-level data to

the FARS, which maintains the key financial data

necessary for Treasury-wide consolidated financial

reporting. This framework satisfies the financial

operational and reporting needs of our reporting entities,

as well as our internal and external reporting

requirements. The FARS framework plays a key role in

the Department’s efforts to obtain an unmodified audit

opinion.

The FARS includes the following financial applications:

• Treasury Information Executive Repository (TIER) —

a financial data repository used to consolidate and

validate bureau financial data and to support

external financial reporting requirements

• TIER Financial Statements (TFS) — a reporting

application used to produce monthly and annual

financial statements, notes, and other supporting

reports

Our components submit summary-level financial data to

TIER on a monthly basis. The TFS application uses the

bureau data to produce financial statements and report

on a Treasury-wide and component-level basis.

Nineteen of our bureaus and offices use centralized

financial management, budget formulation and

performance management, and IT hosting provided by the

Fiscal Service’s Administrative Resource Center (ARC).

Additionally, the Treasury Executive Office for Asset

Forfeiture (TEOAF) made the decision in February 2021

to migrate to ARC’s shared services in October 2023. This

effort will modernize and update TEOAF’s core financial

management system, procurement system, and related 

support services. The shared service approach enables 

bureaus and offices to have access to core financial

systems without having to maintain separate technical 

and system architectures. ARC also provides 

administrative services in the areas of financial
44 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

management transaction processing, human resources,

procurement, and travel to Treasury’s bureaus and offices

as well as to other federal entities to support core business 

activities. Using shared services reduces the need for 

Treasury to maintain duplicative financial management 

systems, thereby promoting efficiency and cost savings 

while enhancing the quality, timeliness, and accuracy of 

financial management processes. 

Goals and Supporting Strategies

Our financial system goals and supporting strategies

focus on improving, streamlining, and integrating current

bureau financial management systems, as well as the

current FARS applications, in order to support new

financial management requirements and to support datadriven financial decision making by management.

In FY 2021, we continued refining the FARS to meet

evolving priorities, such as implementing single sign-on

functionality and planning for transitioning to cloud 

hosting. Additionally, we continued enhancing our 

business processes related to the reporting of financial

and non-financial award data in accordance with the

Digital Accountability and Transparency Act (P.L. 113–

101) (DATA Act), including updating and adhering to

Treasury’s Data Quality Plan as stipulated by the OMB

Circular A-123, Appendix A guidelines.

In FY 2021, Treasury implemented changes in financial

management systems required by OMB Memorandum M21-20, Promoting Public Trust in the Federal Government

through Effective Implementation of the American Rescue

Plan Act and Stewardship of the Taxpayer Resources

(March 19, 2021), which included tracking and reporting

on American Rescue Plan (ARP) related funding through

the monthly Government-wide Treasury Account Symbol

Adjusted Trial Balance System reporting and to the

DATA Act Broker for display on USAspending.gov.

Treasury continues to focus on financial innovation and 

transformation. In FY 2021, ARC implemented over 16 

Robotic Process Automations (RPAs) to improve

efficiency, timeliness, and quality in its service operations

and business processes, for a total of 80 RPAs, in effect. 

Furthermore, the IRS implemented several changes to its

financial systems in FY 2021 to improve internal controls,

increase transparency, streamline transaction

reconciliation, and automate processes for third party

payments, invoicing, legislative mandates, and tax

withholding postings.

Separately, we continue to make progress with agency 

implementation of G-Invoicing. The G-Invoicing 

initiative focuses on brokering federal buy-sell 

transactions through a new platform that will enable 

more accurate and streamlined financial management by 

trading partners. Treasury, through its workgroup 

consisting of bureau representatives, intends on meeting 

the G-Invoicing deadline of October 1, 2022. 

Along with bureau financial systems, the TIER and TFS 

applications form a unified financial governance solution

that focuses on improving financial processes and 

controls. These systems and applications help to reduce 

operating costs; enable us to provide assurance over

financial data quality; and allow us to ensure that we can

provide timely, transparent, and well controlled financial

information.

We maintain an information security program for our

financial systems consistent with applicable FISMA

requirements, OMB policy and guidance, and National

Institute of Standards and Technology standards and

guidelines. Our systems undergo annual security

assessments, and security weaknesses identified through

those assessments are remediated by developing and

implementing plans of action and milestones. We monitor

bureau conformance with government-wide information

technology security targets and provide roll-up reports

quarterly to OMB. Our compliance with FISMA is

evaluated annually by representatives of the OIG.

OTHER LAWS

During FY 2021, a probable anti-deficiency act violation 

was identified in the Guam World War II claims fund. In 

FY 2020, claims were paid in advance, and in excess, of

approved apportionments and, in FY 2021, claims were 

paid prior to issuance of an apportionment. Other than 

this probable anti-deficiency act violation noted above, we

are not aware of any other violations of the Antideficiency Act.
45

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2021 AGENCY FINANCIAL REPORT

We have received the GAO’s Legal Decision (B-1331093)

with the subject, U.S. Department of the Treasury—Tax 

Return Activities during the Fiscal Year 2019 Lapse in

Appropriations. In the Legal Decision, GAO concluded

that Treasury violated the Anti-deficiency Act when,

during the lapse in appropriations, the Department

incurred obligations to process tax remittances (payments

submitted by individuals) and issued tax refunds. The

Department obtained approval from the OMB in

January 2019 to incur such obligations during a lapse in 

appropriations. On June 8, 2020, OMB formally advised 

Treasury of its conclusion that no ADA violation occurred,

and the Department therefore does not plan to report a 

violation.

IMPROPER PAYMENTS

Background

The Payment Integrity Information Act of 2019 (PIIA)

requires agencies to annually report on all programs and

activities, identify those that may be susceptible to

significant improper payments, estimate annual improper

payments in the susceptible programs and activities, and

report the results of their improper payment activities.

An improper payment is any payment that should not

have been made or that was made in an incorrect amount

(including both overpayments and underpayments). 

Risk Assessments and Results

In FY 2021, we completed a full program inventory and

performed risk assessments to identify programs that

have a significant risk of improper payments. We

perform our assessment of each program on a three-year

rotational schedule, excluding the Earned Income Tax 

Credit (EITC), the American Opportunity Tax Credit

(AOTC), the Additional Child Tax Credit (ACTC) and the

Premium Tax Credit (PTC), using the eleven qualitative

risk factors identified in OMB Circular A-123, Appendix

C. We also performed quantitative risk assessments and

assessed risks related to the amounts of payments

processed relative to the OMB specified threshold

amounts which define programs susceptible to significant

improper payments. As a result of prior risk

assessments, we determined that the EITC, the AOTC,

DEPARTMENT OF THE TREASURY

the ACTC and the PTC were susceptible to significant

improper payments.

The EITC, AOTC, ACTC and PTC are refundable tax

credits that offset income tax owed by taxpayers. If the

credit exceeds the amount of taxes due, the IRS provides

a refund payment to those who qualify. The IRS

estimates that for FY 2021, 27.8% ($19.0 billion) of the

total EITC payments of $68.3 billion were improper. For 

the AOTC, the IRS estimates that for FY 2021, 26.3% 

($1.9 billion) of the total payments of $7.1 billion were

improper. For the ACTC, the IRS estimates that for 

FY 2021, 13.3% ($5.2 billion) of the total payments of

$39.4 billion were improper. The IRS is not reporting an

estimate for FY 2021 for PTC, as further analysis of the

related data is needed. The IRS has a robust enforcement

program for all of its refundable tax credits which consists

of examinations and audits, math error notices, and

document matching. 

We are reporting improper payment estimates for these

three refundable tax credits in accordance with OMB

Circular A-123, Appendix C: Requirements for Payment

Integrity Improvement. However, it is our position that

refundable tax credit refunds that result in overclaims

should not be reported under the improper payments

framework. Rather they are more appropriately

addressed in the Tax Gap (see Part 3, Section A: Tax Gap

and Tax Burden, of this report), which is how we manage

noncompliance. Additional information on refundable tax

credits and improper payment reporting can be found in

Part 3, Section D: Payment Integrity. 

Payment Recapture Audits

The Payment Integrity Information Act of 2019 (PIIA)

requires agencies to conduct payment recapture audits

(also known as recovery audits) for each program and

activity that expends $1 million or more annually, if

conducting such audits would be cost-effective. We

performed the payment recapture activities in accordance

with OMB Circular A-123, Appendix C. Details on our

improper payments and results can be found in on

https://paymentaccuracy.gov/.
46 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

Do Not Pay Business Center and Payment

Integrity Center of Excellence

The Do Not Pay (DNP) Initiative and Fiscal Service’s

DNP Business Center and Payment Integrity Center of

Excellence (PICOE) are chief components of efforts

designed to prevent and detect improper payments to

individuals and entities. The DNP Business Center is

comprised of the DNP Portal and the Data Analytics

Services. The DNP Portal is intended to provide users

with a single-entry point to search eligibility data sources. 

The PICOE is a community of experts facilitated by the

Fiscal Service with a mission to provide government-wide

partnership, guidance, and customer-centric solutions

that aid in the prevention and recovery of improper

payments due to fraud, waste, and abuse. 

In FY 2021, the DNP Business Center received OMB

approval and official designation to add 12 new data sets

to DNP. The DNP Business Center is implementing

these data sets for immediate analytic use. The DNP

Business Center also submitted and received initial

approval (pending designation) to implement the

Electronic Verification of Vital Events Fact of Death

Service from the National Association for Public Health

Statistics and Information Systems as a death data

source in DNP.

In FY 2021, PICOE launched a pilot program called the

Account Verification Service (AVS) that quickly

demonstrated its value with the third round of Economic

Impact Payments. AVS was used in some cases to verify

that a bank account was open and owned by the intended

eligible payee. AVS is also being used for the Federal

Emergency Management Agency’s (FEMA) COVID-19

Funeral Assistance Program and FEMA’s Individuals and

Households Program. 

Treasury is not just a provider of payment integrity

services but also a consumer. Our shared service

provider, the ARC within Fiscal Service, compares our

records in the financial system with payee records in the

DNP System. We review potential matches on an ongoing

basis to prevent improper payments and incorporate a 

pre-award check on potential contractors against the DNP

System. 
FINANCIAL SECTION

Message from the Acting Assistant Secretary 

For Management and Acting Chief

Financial Officer.................................................................49

Inspector General’s Transmittal Letter..................................51

Independent Auditors’ Report................................................ 53

Management’s Response to Independent

Auditors’ Report.................................................................59

Financial Statements...............................................................60

Notes to the Financial Statements......................................... 67

Required Supplementary Information

(Unaudited)........................................................................183

PART 2:

Message from the Acting Assistant Secretary

For Management and Acting Chief

Financial Officer ...............................................................49

Inspector General’s Transmittal Letter ................................. 51

Independent Auditors’ Report...............................................53

Management’s Response to Independent

Auditors’ Report ...............................................................59

Financial Statements .............................................................60

Notes to the Financial Statements ........................................67

Required Supplementary Information

(Unaudited) .....................................................................183
 

 
DEPARTMENT OF THE TREASURY 49 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

MESSAGE FROM THE ACTING ASSISTANT SECRETARY FOR MANAGEMENT

AND ACTING CHIEF FINANCIAL OFFICER

In fiscal year 2021, despite additional challenges brought on as a result of the

pandemic and continued work to implement multiple recovery programs, 

Treasury pursued an aggressive agenda to improve worker safety, increase

diversity, equity and inclusion, and proactively conceive the future of work. We

continued to take a leadership role in tackling some of the government’s most

persistent challenges – eliminating improper payments, modernizing information

technology, improving workforce performance, leveraging data as a strategic asset,

and delivering excellent financial management services.

In fiscal year 2021, we also demonstrated effective fiscal and management

leadership by:

• standing up complex accounting and internal controls in support of economic recovery programs under the

Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Consolidated Appropriations Act, 2021 (CAA),

and the American Rescue Plan Act of 2021 (ARP) and developing formulation models to ensure funding; 

• establishing the Office of Recovery Programs to have a single executive leader to manage economic recovery

programs;

• responding to multiple Executive Orders to identify challenges and develop improvements to increase diversity,

equity, inclusion, and accessibility within the Treasury workforce and among our supplier network;

• refocusing our efforts to respond to climate-related financial risk; and

• receiving an A+ rating for small business programs compliance efforts that met all requirements pertaining to the

Small Business Act Section 15(k). 

We received an unmodified audit opinion on its consolidated financial statements for the 22nd consecutive year. Despite the

complexity of Treasury’s financial systems, we continue to make steady progress toward fully resolving all remaining

deficiencies associated with our internal controls.

As we lead Treasury’s management programs and initiatives, we will continue to ensure that we can deliver our mission

effectively and efficiently and provide the best value to the American people.

J. Trevor Norris Carole Y. Banks

Acting Assistant Secretary for Management Acting Chief Financial Officer

November 15, 2021 November 15, 2021

J. Trevor Norris

Acting Assistant Secretary 

for Management

Carole Y. Banks

Acting Chief Financial

Officer
 

 

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DEPARTMENT OF THE TREASURY 51 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

INSPECTOR GENERAL’S TRANSMITTAL LETTER

DEPARTMENT OF THE TREASURY

WASHINGTON, D. C. 20220

OFFICE OF

INSPECTOR GENERAL

November 15, 2021 

INFORMATION MEMORANDUM FOR SECRETARY YELLEN

FROM: Richard K. Delmar /s/

Acting Inspector General

SUBJECT: Audit of the Department of the Treasury’s Consolidated Financial Statements for 

Fiscal Years 2021 and 2020 

INTRODUCTION

The Chief Financial Officer’s Act, as amended, requires the Department of the Treasury’s (Treasury) 

Inspector General or an independent auditor, as determined by the Inspector General, to audit Treasury’s

consolidated financial statements. We contracted with the certified independent public accounting firm of 

KPMG LLP (KPMG) to audit the consolidated financial statements of Treasury as of September 30, 2021 

and 2020, and for the years then ended. The contract required that the audit be performed in accordance 

with U.S. generally accepted government auditing standards and Office of Management and Budget (OMB) 

Bulletin No. 21-04, Audit Requirements for Federal Financial Statements. 

RESULTS OF INDEPENDENT AUDIT 

In its audit of Treasury, KPMG reported

• the consolidated financial statements were fairly presented, in all material respects, in accordance 

with U.S. generally accepted accounting principles; 

• a significant deficiency in internal control over cash management information systems and a 

significant deficiency in internal control over Federal debt information systems at the Bureau of the 

Fiscal Service, collectively representing a significant deficiency for Treasury as a whole; 

• a significant deficiency in internal control over unpaid tax assessments and a significant deficiency 

in internal control over financial reporting systems at the Internal Revenue Service, collectively 

representing a significant deficiency for Treasury as a whole; 
52 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

• noncompliance with certain requirements of FFMIA related to federal financial management 

systems requirements; and

• no instances of reportable noncompliance with laws, regulations, contracts and grant agreements 

tested. 

EVALUATION OF AUDITORS’ PERFORMANCE

In connection with the contract, we reviewed KPMG’s report and related documentation and inquired of its 

representatives. Our review, as differentiated from an audit in accordance with U.S. generally accepted 

government auditing standards, was not intended to enable us to express, and we do not express, an opinion 

on Treasury’s consolidated financial statements; conclusions about the effectiveness of internal control; 

whether Treasury’s financial management systems substantially complied with FFMIA; and compliance 

with laws, regulations, contracts, and grant agreements. KPMG is responsible for the attached auditor’s 

report dated November 15, 2021, and the conclusions expressed in the report. However, our review 

disclosed no instances where KPMG did not comply, in all material respects, with U.S. generally accepted 

government auditing standards.

I appreciate the courtesy and cooperation extended to KPMG and my staff during the audit. If you wish to 

discuss this report, please contact me at (202) 528-8997 or Deborah L. Harker, Assistant Inspector General 

for Audit, at (202) 486-1420. 

Attachment

cc: J. Trevor Norris

Acting Assistant Secretary for Management

Carole Y. Banks 

Acting Chief Financial Officer 
KPMG LLP

Suite 12000

1801 K Street, NW

Washington, DC 20006

KPMG LLP, a Delaware limited liability partnership and a member firm of 

the KPMG global organization of independent member firms affiliated with 

KPMG International Limited, a private English company limited by guarantee. 

Independent Auditors’ Report 

Acting Inspector General 

Department of the Treasury: 

Report on the Financial Statements 

We have audited the accompanying consolidated financial statements of the Department of the Treasury 

(Department), which comprise the consolidated balance sheets as of September 30, 2021 and 2020, and the 

related consolidated statements of net cost, consolidated statements of changes in net position, combined 

statements of budgetary resources, and statements of custodial activity for the years then ended, and the 

related notes to the consolidated financial statements. 

Management’s Responsibility for the Financial Statements 

Management is responsible for the preparation and fair presentation of these consolidated financial statements 

in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and 

maintenance of internal control relevant to the preparation and fair presentation of consolidated financial 

statements that are free from material misstatement, whether due to fraud or error. 

Auditors’ Responsibility 

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We 

did not audit the financial statements of the Internal Revenue Service (IRS), a component entity of the 

Department, which statements reflect total assets of $318.7 billion and $247.5 billion, net cost of operations of 

$14.8 billion and $13.6 billion before applicable eliminating entries, budgetary resources of $16.6 billion and 

$14.1 billion, and custodial activity of $4,178 billion and $3,585 billion, as of and for the years ended 

September 30, 2021 and 2020, respectively. Those statements were audited by other auditors, whose report 

has been furnished to us, and our opinion, insofar as it relates to the amounts included for IRS, is based solely 

on the report of the other auditors. 

We also did not audit the financial statements of the Office of Financial Stability (OFS) – Troubled Asset Relief 

Program (TARP), a component entity of the Department, which statements reflect total assets of $14.6 billion 

and $15.0 billion, net cost of operations of $388 million and $683 million before applicable eliminating entries, 

and budgetary resources of $210 million and $303 million, as of and for the years ended September 30, 2021 

and 2020, respectively. Those statements were audited by other auditors, whose report has been furnished to 

us, and our opinion, insofar as it relates to the amounts included for OFS-TARP, is based solely on the report of 

the other auditors. 

We conducted our audits in accordance with auditing standards generally accepted in the United States of 

America, in accordance with the standards applicable to financial audits contained in Government Auditing 

Standards issued by the Comptroller General of the United States, and in accordance with Office of 

Management and Budget (OMB) Bulletin No. 21-04, Audit Requirements for Federal Financial Statements. 

Those standards and OMB Bulletin No. 21-04 require that we plan and perform the audit to obtain reasonable 

assurance about whether the consolidated financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 

consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the 

assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud 

53
or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s 

preparation and fair presentation of the consolidated financial statements in order to design audit procedures 

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness 

of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the 

appropriateness of accounting policies used and the reasonableness of significant accounting estimates made 

by management, as well as evaluating the overall presentation of the consolidated financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 

audit opinion. 

Opinion 

In our opinion, based on our audits and the reports of the other auditors, the consolidated financial statements 

referred to above present fairly, in all material respects, the financial position of the Department of the Treasury 

as of September 30, 2021 and 2020, and its net costs, changes in net position, budgetary resources, and 

custodial activity for the years then ended, in accordance with U.S. generally accepted accounting principles. 

Emphasis of Matter 

As discussed in Note 11, the Department is a participant in transactions with certain entities as part of 

significant legislation whose purpose is to assist in stabilizing the financial markets. Also as discussed in Note 

1AB, the U.S. government’s interventions with regards to these entities are not expected to be permanent. 

Furthermore, as discussed in Notes 1V and 11, the value of certain investments and commitments is based on 

estimates. These estimates are inherently subject to substantial uncertainty arising from the likelihood of future 

changes in general economic, regulatory, and market conditions. As such, there will likely be differences 

between the estimated value of these investments and commitments as of September 30, 2021 and 2020, and 

the amounts that may ultimately be realized from these investments or may be required to settle these 

commitments. Such differences may be material and will also affect the ultimate cost of these programs. Our 

opinion is not modified with respect to these matters. 

Other Matters 

Interactive Data 

Management has elected to reference to information on websites or other forms of interactive data outside the 

Agency Financial Report to provide additional information for the users of its consolidated financial statements. 

Such information is not a required part of the basic consolidated financial statements or supplementary 

information required by the Federal Accounting Standards Advisory Board. The information on these websites 

or the other interactive data has not been subjected to any of our auditing procedures and accordingly, we do 

not express an opinion or provide any assurance on it. 

Required Supplementary Information 

U.S. generally accepted accounting principles require that the information in the Management’s Discussion and 

Analysis and Required Supplementary Information sections be presented to supplement the basic consolidated 

financial statements. Such information, although not a part of the basic consolidated financial statements, is 

required by the Federal Accounting Standards Advisory Board, who considers it to be an essential part of 

financial reporting for placing the basic consolidated financial statements in an appropriate operational, 

economic, or historical context. We, and the other auditors, have applied certain limited procedures to the 

required supplementary information in accordance with auditing standards generally accepted in the United 

States of America, which consisted of inquiries of management about the methods of preparing the information 

and comparing the information for consistency with management’s responses to our inquiries, the basic 

consolidated financial statements, and other knowledge we obtained during our audits of the basic consolidated 

financial statements. We do not express an opinion or provide any assurance on the information because the 

limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 

54
Other Information

Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial statements 

as a whole. The Message from the Secretary of the Treasury, the Message from the Acting Assistant Secretary 

for Management and Acting Chief Financial Officer, and the Other Information are presented for purposes of 

additional analysis and are not a required part of the basic consolidated financial statements. Such information 

has not been subjected to the auditing procedures applied in the audits of the basic consolidated financial 

statements and, accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditing Standards

Internal Control over Financial Reporting

In planning and performing our audit of the consolidated financial statements as of and for the year ended 

September 30, 2021, we considered the Department’s internal control over financial reporting (internal control) 

as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of 

expressing our opinion on the consolidated financial statements, but not for the purpose of expressing an 

opinion on the effectiveness of the Department’s internal control. Accordingly, we do not express an opinion on 

the effectiveness of the Department’s internal control. This report includes our consideration of the results of 

the other auditors’ testing of internal control over financial reporting that are reported separately by those other 

auditors. However, this reporting, insofar as it relates to the results of the other auditors, is based solely on the 

reports of the other auditors. We, and the other auditors, did not test all internal controls relevant to operating 

objectives as broadly defined by the Federal Managers’ Financial Integrity Act of 1982.

A deficiency in internal control exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, 

misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in 

internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial 

statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a 

deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet 

important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section 

and was not designed to identify all deficiencies in internal control that might be material weaknesses or 

significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not 

been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control 

that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described 

below, that we consider to be significant deficiencies.

A. Significant Deficiency in Internal Control Over Information Systems at the Bureau of the Fiscal Service

Effective information system controls and security programs over financial systems are essential to

protecting information resources in accordance with OMB Circular No. A-130, Managing Information as a

Strategic Resource. The Bureau of the Fiscal Service (Fiscal Service) relies on many information systems

to manage government-wide cash and the federal debt.

However, Fiscal Service had unresolved control deficiencies related to its general information technology

controls over the government-wide cash and the federal debt information systems as follows:

1. Cash Management Information Systems

Fiscal Service had not fully implemented remediation relative to corrective action plans and, in

situations where Fiscal Service accepted associated risks, did not design and implement compensating

controls to reduce such risks to an acceptable level. The unresolved control deficiencies did not provide

reasonable assurance that: (1) the concept of least privilege is employed to prevent significant security

exposures; (2) accounts were reviewed for compliance with account management requirements and

55
that access to systems is protected against unauthorized modification, loss, or disclosure; (3) 

separated user accounts are disabled and removed in a timely manner; (4) security events are logged 

and monitored, and potential vulnerabilities are investigated and resolved; (5) vulnerabilities identified 

by management were addressed timely; (6) inactive application user accounts are monitored and 

removed timely; (7) application backups are configured by management in accordance with policy; and 

(8) baseline policies and procedures for security configuration controls, including audit logging controls,

were adequately documented and fully implemented for all platforms; (9) a complete and accurate

inventory of information system components is maintained; and (10) incompatible duties are separated

effectively so that users cannot control entire processes. Fiscal Service continues to prioritize the

remediation of unresolved control deficiencies and until these control deficiencies are fully addressed,

there is an increased risk of inadequate security controls in financial systems; unauthorized access to,

modification of, or disclosure of sensitive financial data and programs; and unauthorized changes to

financial systems.

2. Federal Debt Information Systems

Fiscal Service continued to have information system general control deficiencies—primarily unresolved 

control deficiencies from prior audits—related to its federal debt information systems. These control 

deficiencies relate to information system general controls in the areas of security management, access 

controls and configuration management. Fiscal Service made some progress by strengthening 

segregation of duties controls over certain administrator accounts and took steps toward remediating 

other previously reported control deficiencies. However, Fiscal Service continued to have deficiencies 

where known information system vulnerabilities and deviations from baseline security requirements 

were not remediated on a timely basis. Additionally, Fiscal Service’s controls for an information system 

did not properly restrict access to individuals requiring access and documentation describing the 

security architecture of the system needs improvement. Further, control deficiencies within Fiscal 

Service’s change management process continue to exist. 

Recommendation 

Separate reports with additional details and recommendations for corrective action will be provided to Fiscal 

Service management. We recommend that the Acting Assistant Secretary for Management (Acting ASM) and 

Acting Chief Financial Officer (Acting CFO) ensure that Fiscal Service implements requisite corrective actions 

to resolve control deficiencies over its cash management and debt information systems. 

B. Significant Deficiency in Internal Control Over Financial Reporting at the Internal Revenue Service

IRS continued to take steps to improve internal control over financial reporting to ensure reliable and timely 

financial information is obtained, maintained, and reported in accordance with OMB Circular A-123, 

Management’s Responsibility for Enterprise Risk Management and Internal Control. However, the other 

auditors reported significant deficiencies in internal control over unpaid tax assessments and internal 

control over financial reporting systems that we collectively considered as a significant deficiency at the 

Department level. IRS internal control deficiencies are summarized as follows: 

1. Unpaid Tax Assessments

IRS continued to have limitations in the financial systems it uses to account for federal taxes receivable 

and other unpaid assessment balances, as well as other control deficiencies that led to errors in the 

taxpayer accounts. As a result, IRS financial reporting systems did not provide timely, reliable, and 

complete transaction-level financial information necessary to enable IRS to appropriately classify and 

report unpaid assessment balances. As in prior years, IRS used a manually driven statistical estimation 

process to compensate for the effects of its system limitations and other deficiencies on a material 

portion of its federal taxes receivable balance to help ensure that this balance was free of material 

misstatement. During Fiscal Year 2021, IRS recorded adjustments totaling about $18 billion to correct 

the effects of continued errors in its underlying data that IRS identified during its estimation process. 

56
While using this process to determine the material portion of taxes receivable has enabled IRS to 

produce reliable related balance for year-end reporting, it does not provide IRS management with 

readily available, reliable unpaid assessment information on a daily basis throughout the year for 

effectively managing unpaid assessment balances. Further, errors in taxpayer accounts create a 

burden for those taxpayers whose accounts were affected.

2. Financial Reporting Systems

IRS made progress addressing certain previously reported control deficiencies within (1) security

management, (2) patch management, and (3) boundary protection. However, IRS continued to have

unresolved and newly identified control deficiencies related to its business process application controls

and general controls. Specifically, control deficiencies continue to exist concerning (1) improper

configuration of security settings, (2) inadequate implementation of access controls, and (3) inadequate

enforcement of encryption mechanisms to protect systems and data. Continued and consistent

management commitment and attention are essential to addressing existing system deficiencies and

continually improving IRS’s information system security controls.

Recommendation

The other auditors separately provided IRS management a report detailing the conditions identified and their 

recommendations to address the above significant deficiency. We recommend that the Acting ASM and Acting 

CFO ensure that IRS implements corrective actions to resolve the control deficiencies at IRS.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Department’s consolidated financial statements 

as of and for the year ended September 30, 2021 are free from material misstatement, we performed tests of 

its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance 

with which could have a direct and material effect on the consolidated financial statements. However, providing 

an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not 

express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that 

are required to be reported under Government Auditing Standards or OMB Bulletin No. 21-04.

We, and the other auditors, also performed tests of its compliance with certain provisions referred to in 

Section 803(a) of the Federal Financial Management Improvement Act of 1996 (FFMIA). Providing an opinion 

on compliance with FFMIA was not an objective of our audit, and accordingly, we do not express such an 

opinion. The results of our tests and those of other auditors disclosed instances described below, in which the 

Department’s financial management systems did not substantially comply with the Federal financial 

management systems requirements. The results of our tests and those of the other auditors disclosed no 

instances in which the Department’s financial management systems did not substantially comply with 

applicable Federal accounting standards, and the United States Government Standard General Ledger at the 

transaction level.

C. Noncompliance with Federal Financial Management Improvement Act of 1996

The Department’s financial management systems did not substantially comply with the federal financial

management systems requirements. As discussed in finding A and B, the Department had deficiencies in

Fiscal Service’s information systems and IRS’s financial reporting systems. Specifically, the Department did

not consistently design, implement, and operate information system controls and security programs over

these systems in accordance with the federal financial management system requirements.

Recommendation

We, and the other auditors, separately provided IRS and Fiscal Service management with recommendations to 

address the above noncompliance with the federal financial management system requirements. We 

recommend that the Acting ASM and Acting CFO ensure that IRS and Fiscal Service develop and implement 

57
remediation plans outlining actions to be taken to resolve noncompliance with the federal financial management 

system requirements and the resources and responsible organizational units for such planned actions. 

Department’s Response to Findings 

The Department responded in a separate letter immediately following this report that it concurs with the findings 

and recommendations presented in our report. Further, the Department responded that it will take necessary 

corrective actions to address each of the matters identified. The Department’s response was not subjected to 

the auditing procedures applied in the audit of the consolidated financial statements and, accordingly, we 

express no opinion on the response. 

Purpose of the Other Reporting Required by Government Auditing Standards 

The purpose of the communication described in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance and the 

results of that testing, and not to provide an opinion on the effectiveness of the Department’s internal control or 

compliance. Accordingly, this communication is not suitable for any other purpose. 

Washington, DC 

November 15, 2021

58
DEPARTMENT OF THE TREASURY 59 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

MANAGEMENT’S RESPONSE TO INDEPENDENT AUDITORS’ REPORT

November 15, 2021 

KPMG LLP

1801 K Street, NW

Washington, DC 20006 

Ladies and Gentlemen:

On behalf of Secretary Yellen, we are responding to your audit report on the Department of the 

Treasury's fiscal year 2021 consolidated financial statements. Our bureaus and program offices are

proud of the Department's success in achieving an unmodified audit opinion on the Department's

financial statements for the 22nd consecutive year.

The high level of professionalism, technical expertise, and integrity demonstrated by KPMG LLP in

conducting this year's audit contributed greatly to Treasury's successful fiscal year 2021 results. We

also appreciate the expertise and commitment demonstrated by the other organizations involved in the 

audit process -the Office of Inspector General, Government Accountability Office, and the firms that

audited several of our bureaus.

We acknowledge the two significant deficiencies at the Department level, and the one instance of 

noncompliance with laws and regulations described in your report. We agree with your

recommendations and will focus on necessary corrective actions to address each of the issues. 

Overall, we have made strong progress in enhancing our internal control environment. We are very 

proud of our progress and remain committed to ensuring high standards of integrity and transparency in

reporting our financial performance.

 

J. Trevor Norris Carole Y. Banks 

Acting Assistant Secretary for Management Acting Chief Financial Officer
60 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Balance Sheets

As of September 30, 2021 and 2020

(in millions) 2021 2020 

ASSETS

Intra-Governmental 

Fund Balance (Note 2) $ 626,456 $ 896,385 

Loans Receivable:

 Loans and Interest Receivable (Note 3) 1,794,390 1,734,916 

 Advances to Trust Funds (Note 4) 91,378 37,166 

Other Assets:

 Due From the General Fund (Note 4) 28,810,092 27,093,930 

 Accounts Receivable and Other 1,328 1,218 

Total Intra-Governmental 31,323,644 29,763,615 

Other Than Intra-Governmental 

Cash and Other Monetary Assets: 

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) 379,105 1,838,365 

 Gold and Silver Reserves (Note 6) 11,062 11,062 

 Reserve Position in the International Monetary Fund (Note 7) 32,743 31,211 

Accounts Receivable, Net:

 Taxes, Interest, and Other Receivables, Net (Note 8) 304,629 237,590 

Loans Receivable, Net:

 Credit Program Receivables, Net (Note 9) 2,762 3,704 

 Loans and Interest Receivable, Net (Note 7) 944 1,708 

COVID-19 Investments, Advances, Receivables, and Other: (Note 10)

 Investments, Net 26,426 108,433 

 Advances, Net 256,060 68,889 

 Notes and Interest Receivable, Net 13,677 5,320 

 Credit Program Receivables, Net 1,311 1,580 

 Other - 1,619 

Investments in Government Sponsored Enterprises (GSEs) (Note 11) 220,860 108,910 

Investments in Multilateral Development Banks (Note 12) 8,466 8,205 

Other Investments, Net (Note 13) 5,317 5,822 

General Property, Plant, and Equipment, Net (Note 14) 2,996 2,958 

Other Assets 1,070 1,103 

Total Other Than Intra-Governmental 1,267,428 2,436,479 

Total Assets $ 32,591,072 $ 32,200,094 

Heritage Assets (Note 14)

The accompanying notes are an integral part of these financial statements.
DEPARTMENT OF THE TREASURY 61 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Consolidated Balance Sheets

As of September 30, 2021 and 2020

(in millions) 2021 2020 

LIABILITIES 

Intra-Governmental 

Federal Debt and Interest Payable: 

 Federal Debt and Interest Payable (Notes 4 and 16) $ 6,225,208 $ 6,005,252 

 Other Federal Debt and Interest Payable (Note 17) 6,093 7,310 

Other Liabilities:

 Due To the General Fund (Note 4) 2,649,003 3,991,781 

 Liability for Restoration of Federal Debt Principal and Interest (Notes 4 and 16) 60,562 - 

 Other (Note 19) 1,675 726 

Total Intra-Governmental 8,942,541 10,005,069 

Other Than Intra-Governmental 

Federal Debt and Interest Payable (Notes 4 and 16) 22,325,218 21,062,850 

Accounts Payable:

 Refunds Payable (Note 4) 6,249 3,751 

Other Liabilities: 

 Special Drawing Right Certificates Issued to the Federal Reserve (Note 5) 5,200 5,200 

 Allocation of Special Drawing Rights (Note 5) 161,825 49,709 

 Gold Certificates Issued to the Federal Reserve Banks (Note 6) 11,037 11,037 

 D.C. Federal Pension and Judicial Retirement Actuarial Liability (Note 18) 8,010 8,272 

 Liability for Restoration of Federal Debt Principal and Interest (Notes 4 and 16) 157,035 - 

 Other (Note 19) 9,101 6,865 

Total Other Than Intra-Governmental 22,683,675 21,147,684 

Total Liabilities (Note 19) 31,626,216 31,152,753 

Commitments and Contingencies (Note 27)

NET POSITION

Unexpended Appropriations

Funds from Dedicated Collections (Combined) (Note 24) 200 200 

Funds from Other than Dedicated Collections (Combined) 878,410 903,758 

Total Unexpended Appropriations 878,610 903,958 

Cumulative Results of Operations

Funds from Dedicated Collections (Combined) (Note 24) 49,178 48,844 

Funds from Other than Dedicated Collections (Combined) 37,068 94,539 

Total Cumulative Results of Operations 86,246 143,383 

Total Net Position (Note 20) 964,856 1,047,341 

Total Liabilities and Net Position $ 32,591,072 $ 32,200,094 

The accompanying notes are an integral part of these financial statements.
62 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Statements of Net Cost

For the Fiscal Years Ended September 30, 2021 and 2020

(in millions) 2021 2020 

Cost of Treasury Operations: 

Financial Program

Gross Cost $ 5,598 $ 6,187 

Less Earned Revenue (2,856) (3,749) 

Net Program Cost 2,742 2,438 

Economic Program

Gross Cost (Note 10) 148,825 137,590 

Less Earned Revenue (15,300) (12,200) 

Net Program Cost 133,525 125,390 

Security Program

Gross Cost 515 355 

Less Earned Revenue (26) (7) 

Net Program Cost 489 348 

Total Program Gross Costs 154,938 144,132 

Total Program Gross Earned Revenues (18,182) (15,956) 

Total Net Program Cost before Changes in Actuarial Assumptions 136,756 128,176 

(Gain)/Loss on Pension, ORB, or OPEB Assumption Changes 243 311 

Total Net Cost of Treasury Operations (Note 21) 136,999 128,487 

Non-Entity Costs:

Federal Debt Interest 574,594 526,814 

Restoration of Foregone Federal Debt Interest (Note 16) - 116 

Less Interest Revenue from Loans (48,665) (53,561) 

Federal Debt Interest Costs, Net 525,929 473,369 

Accrued Restoration of Foregone Federal Debt Interest (Note 16) 409 - 

Other Federal Costs, Net (Note 21) 23,566 32,749 

GSEs Non-Entity Cost (Revenue), Net (Note 11) (111,950) 3,160 

COVID-19 Non-Entity Revenue, Net (Note 10) (8,937) (5,832) 

Other, Net (721) (690) 

Total Net Non-Entity Costs 428,296 502,756 

Total Net Cost of Treasury Operations and Non-Entity Costs $ 565,295 $ 631,243 

The accompanying notes are an integral part of these financial statements.
DEPARTMENT OF THE TREASURY 63 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Consolidated Statements of Changes in Net Position

For the Fiscal Years Ended September 30, 2021 and 2020

(in millions) 2021 2020 

UNEXPENDED APPROPRIATIONS (Notes 20 and 24)

Beginning Balance $ 903,958 $ 419,596 

Appropriations Received (Note 10) 1,124,489 1,273,854 

Appropriations Transferred In/Out 50 60 

Other Adjustments (Note 10) (488,673) (12,802) 

Appropriations Used (Note 10) (661,214) (776,750) 

Net Change in Unexpended Appropriations (25,348) 484,362 

Total Unexpended Appropriations: Ending Balance 878,610 903,958 

CUMULATIVE RESULTS OF OPERATIONS (Notes 20 and 24)

Beginning Balance 143,383 69,980 

Appropriations Used (Note 10) 661,214 776,750 

Non-Exchange Revenue 441 481 

Donations and Forfeitures of Cash/Equivalent 285 239 

Transfers In/Out Without Reimbursement (644) (187) 

Donation/Forfeiture of Property 185 93 

Accrued Interest and Discount on Debt 22,591 1,505 

Accrued Interest on Restoration of Federal Debt Principal (Note 16) 409 - 

Imputed Financing Sources (Note 21) 762 666 

Transfers to the General Fund and Other (177,085) (74,901) 

Net Cost of Treasury Operations and Non-Entity Costs (565,295) (631,243) 

Net Change in Cumulative Results of Operations (57,137) 73,403 

Cumulative Results of Operations: Ending Balance 86,246 143,383 

Net Position $ 964,856 $ 1,047,341 

The accompanying notes are an integral part of these financial statements.
64 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Combined Statement of Budgetary Resources

For the Fiscal Year Ended September 30, 2021

Non-Budgetary 2021 

(in millions) Budgetary Financing Total 

BUDGETARY RESOURCES

Unobligated balance from prior year budget authority, net

 (discretionary and mandatory) (Note 22) $ 905,903 $ 12,291 $ 918,194 

Appropriations (discretionary and mandatory) (Notes 10 and 20) 605,071 - 605,071 

Borrowing authority (discretionary and mandatory) (Note 22) - 15,008 15,008 

Spending authority from offsetting collections 

 (discretionary and mandatory) 23,140 (11,405) 11,735 

Total Budgetary Resources $ 1,534,114 $ 15,894 $ 1,550,008 

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments (Note 10) $ 1,045,397 $ 15,451 $ 1,060,848 

Unobligated balance, end of year:

 Apportioned, unexpired accounts 443,193 18 443,211 

 Exempt from apportionment, unexpired accounts 1,806 - 1,806 

 Unapportioned, unexpired accounts 43,310 425 43,735 

 Unexpired unobligated balance, end of year 488,309 443 488,752 

 Expired unobligated balance, end of year 408 - 408 

Unobligated balance, end of year 488,717 443 489,160 

Total Status of Budgetary Resources $ 1,534,114 $ 15,894 $ 1,550,008 

OUTLAYS, NET, AND DISBURSEMENTS, NET

Outlays, net (discretionary and mandatory) $ 906,270 $ - $ 906,270 

Distributed offsetting receipts (73,645) - (73,645) 

Agency Outlays, Net (Discretionary and Mandatory) $ 832,625 $ - $ 832,625 

Disbursements, net (mandatory) $ (64,396) $ (64,396) 

The accompanying notes are an integral part of these financial statements.
DEPARTMENT OF THE TREASURY 65 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Combined Statement of Budgetary Resources

For the Fiscal Year Ended September 30, 2020 

Non-Budgetary 2020 

(in millions) Budgetary Financing Total 

BUDGETARY RESOURCES

Unobligated balance from prior year budget authority, net 

 (discretionary and mandatory) (Note 22) $ 319,493 $ 78 $ 319,571 

Appropriations (discretionary and mandatory) (Notes 10 and 20) 1,260,677 - 1,260,677 

Borrowing authority (discretionary and mandatory) (Notes 10 and 22) - 188,664 188,664 

Spending authority from offsetting collections 

 (discretionary and mandatory) 10,466 26,403 36,869 

Total Budgetary Resources $ 1,590,636 $ 215,145 $ 1,805,781 

STATUS OF BUDGETARY RESOURCES 

New obligations and upward adjustments (Note 10) $ 819,600 $ 215,000 $ 1,034,600 

Unobligated balance, end of year: 

 Apportioned, unexpired accounts 747,266 29 747,295 

 Exempt from apportionment, unexpired accounts 1,754 - 1,754 

 Unapportioned, unexpired accounts 21,604 116 21,720 

 Unexpired unobligated balance, end of year 770,624 145 770,769 

 Expired unobligated balance, end of year 412 - 412 

Unobligated balance, end of year 771,036 145 771,181 

Total Status of Budgetary Resources $ 1,590,636 $ 215,145 $ 1,805,781 

OUTLAYS, NET, AND DISBURSEMENTS, NET

Outlays, net (discretionary and mandatory) $ 786,215 $ - $ 786,215 

Distributed offsetting receipts (67,964) - (67,964) 

Agency Outlays, Net (Discretionary and Mandatory) $ 718,251 $ - $ 718,251 

Disbursements, net (mandatory) $ 85,859 $ 85,859 

The accompanying notes are an integral part of these financial statements.
66 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Statements of Custodial Activity

For the Fiscal Years Ended September 30, 2021 and 2020

 

(in millions) 2021 2020 

Sources of Custodial Revenue (Note 23) 

Individual Income and FICA Taxes $ 3,594,002 $ 3,127,540 

Corporate Income Taxes 419,009 263,563 

Estate and Gift Taxes 28,046 18,198 

Excise Taxes 78,534 92,058 

Railroad Retirement Taxes 5,307 5,173 

Unemployment Taxes 6,276 6,282 

Deposit of Earnings, Federal Reserve System 100,054 81,880 

Fines, Penalties, Interest and Other Revenue 7,843 5,453 

Total Revenue Received 4,239,071 3,600,147 

Less Refunds and Other Payments (Note 10) (1,138,267) (736,532) 

Net Revenue Received 3,100,804 2,863,615 

Non-Cash Accrual Adjustment 63,958 90,818 

Total Custodial Revenue 3,164,762 2,954,433 

Disposition of Custodial Revenue (Note 23) 

Amounts Provided to Fund Non-Federal Entities 528 477 

Amounts Provided to Fund the Federal Government 3,100,276 2,863,138 

Non-Cash Accrual Adjustment 63,958 90,818 

Total Disposition of Custodial Revenue 3,164,762 2,954,433 

Net Custodial Revenue $ - $ - 

The accompanying notes are an integral part of these financial statements.
DEPARTMENT OF THE TREASURY 67 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

TABLE OF CONTENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.......................................................................................................................... 68 

2. FUND BALANCE ....................................................................................................................................................................................... 90

3. LOANS AND INTEREST RECEIVABLE – INTRA-GOVERNMENTAL ..................................................................................................... 92

4. DUE FROM THE GENERAL FUND AND DUE TO THE GENERAL FUND ............................................................................................. 94

5. CASH, FOREIGN CURRENCY, AND OTHER MONETARY ASSETS ........................................................................................................ 96

6. GOLD AND SILVER RESERVES, AND GOLD CERTIFICATES ISSUED TO THE FEDERAL RESERVE BANKS .................................... 98

7. RESERVE POSITION IN THE INTERNATIONAL MONETARY FUND AND RELATED LOANS AND INTEREST RECEIVABLE .......... 99

8. TAXES, INTEREST, AND OTHER RECEIVABLES, NET ...................................................................................................................... 100

9. CREDIT PROGRAM RECEIVABLES,NET ............................................................................................................................................ 101

10. COVID-19 INVESTMENTS, ADVANCES, RECEIVABLES, AND OTHER .......................................................................................... 103

11. INVESTMENTS IN GOVERNMENT SPONSORED ENTERPRISES........................................................................................................ 123 

12. INVESTMENTS IN MULTILATERAL DEVELOPMENT BANKS ........................................................................................................... 128

13. OTHER INVESTMENTS, NET ............................................................................................................................................................... 129

14. GENERAL PROPERTY, PLANT, AND EQUIPMENT,NET ................................................................................................................... 131 

15. NON-ENTITY VS. ENTITY ASSETS ...................................................................................................................................................... 133 

16. FEDERAL DEBT AND INTEREST PAYABLE AND RELATED LIABILITIES ....................................................................................... 135 

17. OTHER FEDERAL DEBT AND INTEREST PAYABLE .......................................................................................................................... 139

18. D.C. FEDERAL PENSION AND JUDICIAL RETIREMENT ACTUARIAL LIABILITY ........................................................................... 140 

19. LIABILITIES ........................................................................................................................................................................................... 142 

20. NET POSITION ...................................................................................................................................................................................... 143 

21. CONSOLIDATED STATEMENTS OFNET COST ANDNET COSTS OF TREASURY SUB-ORGANIZATIONS .................................... 144 

22. ADDITIONAL INFORMATION RELATED TO THE COMBINED STATEMENTS OF BUDGETARY RESOURCES ............................... 150 

23. SOURCES AND DISPOSITION OF CUSTODIAL REVENUE .................................................................................................................. 153 

24. FUNDS FROM DEDICATED COLLECTIONS ......................................................................................................................................... 155 

25. RECONCILIATION OFNET COST OF TREASURY OPERATIONS ANDNON-ENTITY COSTS TO AGENCY OUTLAYS, NET ........ 162 

26. SCHEDULE OF FIDUCIARY ACTIVITY ................................................................................................................................................. 165 

27. COMMITMENTS AND CONTINGENCIES .............................................................................................................................................. 166

28. RECLASSIFICATION OF AGENCY FINANCIAL STATEMENTS TO FINANCIAL REPORT

OF THE U.S. GOVERNMENT FORMAT ............................................................................................................................................ 171 

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED – SEE ACCOMPANYING AUDITORS’ REPORT) ................................... 183
68 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. REPORTING ENTITY

The accompanying financial statements include the operations of the Department of the Treasury, one of 24 Chief Financial

Officers (CFO) Act agencies of the Executive Branch of the United States (U.S.) government, and certain custodial activities

the Department manages on behalf of the entire U.S. government. Except where the content clearly indicates otherwise, the

use of the terms “Department,” “Treasury,” “we,” “us,” or “our” refers to the Department of the Treasury, including its

Departmental Offices (DO) and operating bureaus which are further discussed below. The following paragraphs describe the

activities of the reporting entity.

We were established by an Act of Congress approved on September 2, 1789. Many subsequent acts affected our development,

delegating new duties to our charge and establishing the numerous bureaus and divisions that now comprise the

Department. As a major policy advisor to the President, the Secretary of the Treasury (Secretary) has primary responsibility

for formulating and managing the domestic and international tax and financial policies of the U.S. government.

Further, the Secretary is responsible for recommending and implementing U.S. domestic and international economic and

fiscal policy; governing the fiscal operations of the U.S. government; maintaining foreign assets control; managing the

federal debt; collecting income and excise taxes; representing the U.S. on international monetary, trade, and investment

issues; overseeing our overseas operations; and directing the manufacture of coins, currency, and other products for customer

agencies and the public.

Our reporting entities include DO and seven operating bureaus. For financial reporting purposes, DO is composed of:

Community Development Financial Institutions (CDFI) Fund, Office of D.C. Pensions (ODCP), Exchange Stabilization Fund

(ESF), Federal Financing Bank (FFB), Government Sponsored Enterprises (GSEs) Program, International Assistance

Programs (IAP), Office of Financial Research (OFR), Office of Financial Stability (OFS), Office of Inspector General (OIG),

Small Business Lending Fund (SBLF), Special Inspector General for Pandemic Recovery (SIGPR), Special Inspector General

for the Troubled Asset Relief Program (SIGTARP), Treasury Forfeiture Fund (TFF), Treasury Inspector General for Tax 

Administration (TIGTA), and the DO policy offices. 

Our seven operating bureaus are: Bureau of Engraving and Printing (BEP), Bureau of the Fiscal Service (Fiscal Service), 

Financial Crimes Enforcement Network (FinCEN), Internal Revenue Service (IRS), U.S. Mint (Mint), Office of the

Comptroller of the Currency (OCC), and Alcohol and Tobacco Tax and Trade Bureau (TTB). Our consolidated financial

statements reflect the reporting of our entity activities, comprising both our operating bureaus and DO. This includes

appropriations received to conduct our operations and revenue generated from those operations. They also reflect the

reporting of certain non-entity (custodial) functions we perform on behalf of the U.S. government and others. Non-entity

activities include collecting certain federal revenue, servicing the federal debt, disbursing certain federal funds, and

maintaining certain assets and liabilities for the U.S. government (refer to Notes 4 and 15), as well as for other federal

entities. Our reporting entity does not include the General Fund of the U.S. Government (General Fund), which maintains

receipt, disbursement, and appropriation accounts for all federal agencies. 
DEPARTMENT OF THE TREASURY 69 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Following U.S. Generally Accepted Accounting Principles (GAAP) for federal entities, we do not consolidate into our financial

statements the assets, liabilities, or results of operations of any financial organization or commercial entity in which we hold

either a direct or indirect majority equity investment, unless they meet the criteria for consolidation as described in

Statement of Federal Financial Accounting Standards (SFFAS) No. 47, Reporting Entity. We have determined that none of

our significant equity investments meet such criteria for consolidation. SFFAS No. 47 also provides criteria for reporting

“disclosure entities” and “related party” relationships of such significance that it would be misleading to exclude information

about them. Refer to the accounting policy below entitled “Disclosure Entities and Related Parties” for additional

information on Treasury’s “disclosure entities” and “related parties” which are material to our consolidated financial

statements, of significance to the public, or required by SFFAS No. 47.

B. BASIS OF ACCOUNTING AND PRESENTATION

The financial statements have been prepared from our accounting records in conformity with GAAP, and Office of

Management and Budget (OMB) Circular No. A-136, Financial Reporting Requirements, as revised. Accounting principles

generally accepted for federal entities are the standards prescribed by the Federal Accounting Standards Advisory Board

(FASAB). The American Institute of Certified Public Accountants recognizes FASAB as the official accounting standardssetting body for the U.S. government. Certain presentations and disclosures may be modified, if needed, to prevent the

disclosure of classified information. 

These financial statements consist of the Consolidated Balance Sheets, the Consolidated Statements of Net Cost, the

Consolidated Statements of Changes in Net Position, the Combined Statements of Budgetary Resources, and the Statements

of Custodial Activity. The statements and the related notes are prepared in a comparative form to present both fiscal year

(FY) 2021 and 2020 information.

We have eliminated transactions and balances among our entities from the Consolidated Balance Sheets, Consolidated

Statements of Net Cost, and Consolidated Statements of Changes in Net Position. We present the Statements of Budgetary

Resources on a combined basis; therefore, intra-departmental transactions and balances have not been eliminated from these

statements. 

While these financial statements have been prepared from our accounting records primarily in accordance with the formats

prescribed by OMB, these financial statements are in addition to the financial reports used to monitor and control budgetary

resources which are prepared from the same accounting records. 

Intra-governmental assets and liabilities are those due from or to other federal entities. Intra-governmental earned

revenues are collections or accruals of revenue from other federal entities, and intra-governmental costs are payments or

accruals of expenditures to other federal entities.

The financial statements should be read with the recognition that we are a component of the U.S. government, a sovereign

entity and, accordingly, our liabilities not covered by budgetary resources cannot be liquidated without the legislative

enactment of an appropriation, and that the payment of all liabilities other than for contracts can be abrogated by the

sovereign entity. Liabilities represent the probable and measurable future outflow or other sacrifice of resources as a result

of past transactions or events. Liabilities covered by budgetary resources are those liabilities for which Congress has

appropriated funds or funding is otherwise available to pay amounts due. Liabilities not covered by budgetary resources

represent amounts owed in excess of available, congressionally appropriated funds or other amounts, and there is no

certainty that the appropriations will be enacted. Liabilities not requiring budgetary resources are liabilities that have not
70 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

in the past required, nor will in the future, require budgetary resources, e.g., liabilities for clearing accounts, non-fiduciary

deposit funds, custodial collections, and unearned revenue. 

We have reclassified certain FY 2020 activity and balances presented on the financial statements to conform to the

presentation in the current year, the effects of which are immaterial. 

There are numerous acronyms used throughout the notes herein as well as other sections of this Agency Financial Report

(AFR). Refer to the “Glossary of Acronyms” located in the Appendix of this report for a complete listing of these acronyms

and their definitions.

C. FUND BALANCE

“Fund Balance” is the aggregate amount of our accounts with the U.S. government’s central accounts from which we are

authorized to make expenditures and pay liabilities. It is an asset because it represents our claim to the U.S. government’s

resources. “Fund Balance” is not equivalent to unexpended appropriations because it also includes non-appropriated

revolving and enterprise funds, suspense accounts, and custodial funds such as deposit funds, special funds, and trust funds.

D. LOANS AND INTEREST RECEIVABLE

Intra-Governmental

Intra-governmental entity loans and interest receivable from other federal agencies represent the principal and related

interest receivable on loans we issue through FFB. We do not record loan loss allowance for credit reform subsidy costs for 

loans purchased from federal agencies or for guaranteed loans made to non-federal borrowers because those agencies

guarantee the outstanding balances (interest and principal). 

Intra-governmental non-entity loans and interest receivable from other federal agencies represent the principal and related

interest receivable on loans we issue, through the Fiscal Service. We act as an intermediary issuing these loans because the

agencies receiving these loans lend these funds to third parties to carry out various programs of the U.S. government. 

Because of our intermediary role in issuing these loans, we do not record a loan loss allowance related to these non-entity

intra-governmental loans. Instead, the ultimate lender, the federal agency that issued the loans to the public, recognizes

loan loss allowances and subsidy costs. We accrue interest revenue on intra-governmental loans when earned. 

Other Than Intra-Governmental 

Other than intra-governmental (or public) loans and interest receivable include a supplemental borrowing arrangement

between the U.S. and the International Monetary Fund (IMF) (refer to Note 7). These loans are denominated in Special

Drawing Rights (SDRs) and recorded at the equivalent U.S. dollar amount (refer to the accounting policy below entitled 

“Special Drawing Rights”). We periodically adjust the value of these loans, due to fluctuations in the value of the U.S. dollar

with respect to the SDR, to maintain the amount of these loans in dollar terms. We do not record a loan loss allowance for 

these loans as we do not anticipate any defaults on the repayment of these loans. 

The Coronavirus Disease 2019 (COVID-19) notes and interest receivable represent the principal and related interest

receivable on promissory notes received in connection with providing financial assistance to air carriers, cargo air carriers,

and airline contractors to support ongoing employment of their aviation workers under the Coronavirus Aid, Relief, and

Economic Security Act (CARES Act), P.L. 116-136, Consolidated Appropriations Act, 2021 (CAA), P.L. 116-260, and
DEPARTMENT OF THE TREASURY 71 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

American Rescue Plan Act of 2021 (ARP) P.L. 117-2 (refer to Note 10). Interest revenue on the promissory notes is accrued

as earned over the life of the notes. The notes include a Payment-In-Kind (PIK) option in which borrowers may elect to pay

the interest in-kind, capitalizing the interest due to the principal amount of the note, instead of paying the interest in cash. 

We increase the principal balance of the note and reduce interest receivable by the amount of unpaid interest when this PIK 

election is made by borrowers. 

This receivable is an asset of the U.S. government and we are precluded from using the cash proceeds realized from the

financial instruments received. We report the non-entity receivable net of an allowance for loss, which reflects our best

estimate of the amount of credit losses experienced within the existing portfolio of promissory notes, within the “COVID-19:

Notes and Interest Receivable, Net” line of the Consolidated Balance Sheets. We annually assess this estimated credit loss

amount by deriving the fair value of these notes and determining the extent to which credit factors (such as historical loss

experience, delinquencies, and note restructurings) reduced the value of these receivables from their face value to their lower

net realizable value. The fair value of the notes portfolio was derived as the present value of the expected future cash flows

of the notes (including disbursements, repayments, interest, defaults, and recoveries). We recognize the receivable and

related interest as a non-entity exchange transaction within the “COVID-19 Non-Entity Revenue, Net” line of the

Consolidated Statements of Net Cost. This receivable also results in a corresponding increase to “Due To the General Fund.”

E. ADVANCES

Advances to the Unemployment Trust Fund

The General Fund issues advances to the Department of Labor’s (DOL) Unemployment Trust Fund for states to pay

unemployment benefits. The Fiscal Service accounts for the advances issued on behalf of the General Fund. As outlined in

42 United States Code (USC) 1323, Repayable Advances to Federal Unemployment Account, these advances bear an interest

rate that is computed as the average interest rate as of the end of the calendar month preceding the issuance date of the

advance for all interest-bearing obligations of the U.S. that form the public debt, to the nearest lower 1/8 of 1.0 percent. 

Interest on the advances is due on September 30 of each year. These advances are recorded within the “Advances to Trust

Funds” line of the Consolidated Balance Sheets. DOL repays advances when the Secretary, in consultation with the

Secretary of the DOL, determines that the balance in the Unemployment Trust Fund is adequate to allow repayment. 

Advances to the Federal Supplementary Medical Insurance Trust Fund

The General Fund issues advances to the Department of Health and Human Services’ (HHS) Federal Supplementary

Medical Insurance Trust Fund to temporarily replace the reduction in Medicare Part B participants’ premiums. The Fiscal

Service accounts for the advances issued on behalf of the General Fund. As outlined in 42 USC 1395, Prohibition Against

Any Federal Interference, these advances do not bear any interest. These advances are recorded within the “Advances to

Trust Funds” line of the Consolidated Balance Sheets. HHS repays advances over time from amounts collected from certain

participants’ increase in premiums until the balance due reaches zero. 
72 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Advances Related to Financial Assistance Programs

We issue advances to COVID-19 pandemic-related recovery programs directed through state, local, territorial, and Tribal

governments (refer to Note 10). These advances are issued as direct payments for specified use to cover the recipient’s

anticipated qualified incurred costs. These advances are initially recorded within the “COVID-19: Advances, Net” line of the

Consolidated Balance Sheets and subsequently recognized as expense within the “Economic Program” costs on the

Consolidated Statements of Net Cost as the qualified costs are incurred.

F. CASH, FOREIGN CURRENCY, AND OTHER MONETARY ASSETS

Substantially all of our operating cash is non-entity government-wide cash held in depository institutions and Federal

Reserve Bank (FRB) accounts. Agencies deposit funds that are submitted to them directly into either a Federal Reserve

Treasury General Account (TGA) or a local TGA depositary. We transfer the balances in these TGA accounts into the

Federal Reserve Bank of New York’s (FRBNY) TGA throughout the day.

Operating cash of the U.S. government represents balances from tax collections, customs duties, other revenue, federal debt

receipts, and other various receipts, net of cash outflows for budget outlays and other payments held in the FRBs and in

foreign and domestic financial institutions. Outstanding checks net against operating cash until they clear the Federal

Reserve System (FR System). 

The FRBNY maintains the TGA, which functions as the U.S. government’s checking account for deposits and disbursements

of public funds. Cash in the TGA is restricted for government-wide operations.

SDR holdings comprise most of the other monetary assets (refer to the accounting policy below entitled “Special Drawing

Rights”).

G. TAXES, INTEREST, AND OTHER RECEIVABLES, NET

We do not accrue federal taxes receivable, net, and the corresponding liability due to the General Fund, until related tax

returns are filed or assessments are made by the IRS and agreed to by either the taxpayer or the court. Additionally,

prepayments are netted against tax liabilities. We make accruals to reflect penalties and interest on taxes receivable

through the balance sheet date.

Taxes receivable consist of unpaid assessments (taxes and associated penalties and interest) due from taxpayers. The 

existence of a receivable is supported by a taxpayer agreement, such as filing of a tax return without sufficient payment, or a 

court ruling in favor of the IRS. We record an allowance for doubtful accounts to reflect an estimate of the portion of total

taxes receivable deemed to be uncollectible. Taxes receivable also consist of unpaid taxes related to Internal Revenue Code

(IRC) section 965 which requires taxpayers who are shareholders of certain specified foreign corporations to pay a transition

tax on foreign earnings as if those earnings had been repatriated to the United States. IRC 965(h) allows taxpayers to elect

to pay their 965(h) tax on an eight-year installment schedule. Additionally, taxes receivable includes employer’s deferred

share of the Social Security portion of the Federal Insurance Contributions Act (FICA), and the employer’s and employee

representative’s share of the Railroad Retirement Tax (RRTA). Pursuant to the CARES Act, employers are allowed to defer

payment, without penalty, of these portions of FICA and RRTA. 
DEPARTMENT OF THE TREASURY 73 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Compliance assessments are unpaid assessments which neither the taxpayer nor a court has affirmed the taxpayer owes to

the U.S. government. Examples include assessments resulting from an IRS audit or examination in which the taxpayer does

not agree with the results. Write-offs consist of unpaid assessments for which the IRS does not expect further collections due

to factors such as taxpayers’ bankruptcy, insolvency, or death. We do not report compliance assessments and write-offs on

the balance sheet. Statutory provisions require the accounts to be maintained until the statute for collection expires.

H. CREDIT PROGRAM RECEIVABLES, NET

We account for all of our credit program receivables under the provisions of credit reform accounting pursuant to the Federal

Credit Reform Act (FCRA). Credit programs include loans or equity securities associated with our state and local Housing

Finance Agency (HFA) initiative programs, SBLF program, CDFI Fund programs, and the Troubled Asset Relief Program

(TARP) (refer to Note 9). Our credit programs also include loans associated with emergency relief efforts in response to the

COVID-19 pandemic. These COVID-19 related loans are presented separately on the Consolidated Balance Sheets as

“COVID-19: Credit Program Receivables, Net” (refer to Note 10).

To account for our credit program receivables, we apply the accounting provisions of SFFAS No. 2, Accounting for Direct

Loans and Loan Guarantees, as amended. SFFAS No. 2 requires measurement of the asset or liability at the net present

value of the estimated future cash flows. The cash flow estimates for each credit program transaction reflect the actual

structure of the instruments. For each of these instruments, we estimate cash inflows and outflows related to the program

over the estimated term of the instrument. Further, each cash-flow estimate reflects the specific terms and conditions of the

program, technical assumptions regarding the underlying assets, risk of default or other losses, and other factors as

appropriate. The measurement of assets within these programs is primarily derived from inputs which generally represent

market data and, when such data is not available, management’s best estimate of how a market participant would assess the

asset’s inherent risk.

The primary purpose of the FCRA is to measure the cost of federal credit programs, and to place the cost of such credit

programs on a basis equivalent with other federal spending. FCRA requires that the ultimate costs of a credit program be

calculated and the budgetary resources be obtained before incurring the direct loan obligations. To accomplish this, we first

predict or estimate the future performance of direct and guaranteed loans when preparing our annual budget. We reestimate the data used for these budgetary estimates at the fiscal year-end to reflect changes in actual loan performance and

actual interest rates in effect when the loans were issued. The re-estimated data reflect adjustments for market risks, asset

performance, and other key variables and economic factors. We then use the re-estimated data to report the cost of the loans

disbursed under the direct or guaranteed loan program as a program cost on our Consolidated Statements of Net Cost.

Cash flows associated with our credit programs generally include disbursements, repayments, repurchases, fees, recoveries,

interest, dividends, proceeds from sales of instruments, borrowings from Treasury, negative subsidy, and the subsidy cost

received from the program accounts. We draw security-level data and assumptions used as the basis for cash flow model

forecasts and program performance from widely available market sources, as well as information published by investees. 

Key inputs and assumptions to the cash flow forecasts include, but are not limited to:

• Security characteristics such as unpaid principal balance, coupon rate, weighted-average loan age, issued bond balance,

credit rating, maturity date, sinking fund schedules, principal and interest payment schedules, and performance of

underlying collateral; 

• Discount rate;

• Observed market prices;
74 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

• Department actions, as well as changes in legislation;

• Forecast dividend payments, late payments, prepayment rates and default rates;

• Expected escrow conversion and return rates;

• Default and recovery reports published by Moody’s and Standard and Poor’s; 

• Modeled asset prices from third-party market sources.

• Forecast Special Purpose Vehicles (SPVs) disbursements and historical preferred equity repayments

The recorded subsidy cost associated with each of our credit programs represents the difference between disbursed amounts

and the net present value of future cash flows we anticipate receiving. The subsidy allowance, as initially established by the

subsidy cost, takes into consideration projected repayments and defaults, and the projected cost of borrowings. We amortize

the allowance to reflect the difference between projected and actual financing costs. 

Our actions, as well as changes in legislation, may impact estimated future cash flows and related subsidy costs. We

recognize the cost or cost savings of a modification in subsidy costs when the terms of a program are modified. Workouts are

actions taken to maximize repayments of existing credit programs, and the expected effects on cash flows are included in the

original estimate and re-estimates of the subsidy cost. Subsidy costs are also impacted by re-estimates which may occur as a 

result of updates to the original program subsidy cost estimates to reflect actual cash flows experience, as well as changes in

forecasts of estimated future cash flows associated with the credit program.

I. INVESTMENTS

COVID-19: Investments, Net

Pursuant to the CARES Act enacted in FY 2020 in response to the COVID-19 pandemic, we hold equity investments in SPVs

established by the Board of Governors of the Federal Reserve System (Federal Reserve Board or Board) through the Federal

Reserve Bank of New York (FRBNY) and Federal Reserve Bank of Boston (FRBB) for the purpose of enhancing the liquidity

of the U.S. financial system (refer to Note 10). We present these non-federal investment holdings at their fair value within

the “COVID-19: Investments, Net” line of the Consolidated Balance Sheets (see the discussion below on “Fair Value

Measurement.”). We record changes in the valuation of these investments as entity exchange transactions on the

Consolidated Statements of Net Cost. 

Pursuant to the CARES Act, coupled with the CAA and ARP enacted in FY 2021, COVID-19: Investments, Net also consists

of warrants for the purchase of common stock received as compensation from recipients of financial assistance provided to

support ongoing employment of aviation workers during the pandemic (refer to Note 10). The warrants are assets of the U.S.

government and we are precluded from using the cash proceeds realized from the financial instruments received. We

present these non-entity, non-federal investment holdings at their fair value within the “COVID-19: Investments, Net” line

of the Consolidated Balance Sheets (see the discussion below on “Fair Value Measurement.”). These investments and related

fair valuation changes also result in a corresponding “Due To the General Fund” liability, as we hold the investment on

behalf of the General Fund. We report the investment revenue, as well as changes in valuation, as non-entity, exchange

transactions within the “COVID-19 Non-Entity Revenue, Net” line of the Consolidated Statements of Net Cost. 
DEPARTMENT OF THE TREASURY 75 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

The annual valuation as of September 30 of the “COVID-19: Investments, Net” line item also incorporates various forecasts,

projections and cash flow analyses to develop an estimate of the assets’ fair value. The fair value of our SPV preferred equity

investments and common stock warrants that are closely held are estimated based on a discounted cash flow valuation

methodology which calculates the present value of the projected annual cash flows associated with these investments. The 

primary input into our common stock warrants investments that are publicly held is the market value of the underlying

shares of common stock of those warrants. We evaluate the need for adjusting our market-based valuation of these warrants

for the effects, if any, of significant events occurring after the close of the market but before the end of the measurement

date. 

Investments in GSEs

We hold senior preferred stock and warrants for the purchase of common stock of two GSEs: the Federal National Mortgage

Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). We present these non-federal

investment holdings at their fair value (see the discussion below on “Fair Value Measurement.”). We record changes in the

valuation of these investments as non-entity exchange transactions on the Consolidated Statements of Net Cost. We also

record dividends related to these investments as non-entity exchange transactions which are accrued when declared.

The GSE Senior Preferred Stock Purchase Agreements (SPSPAs), which we entered into with each GSE when the GSEs

were placed under conservatorship, require that we increase our investment in the GSEs’ senior preferred stock if, at the end

of any quarter, the Federal Housing Finance Agency (FHFA), acting as the conservator, determines that the liabilities of

either GSE exceed its respective assets. Since funding to the GSEs to pay their excess liabilities is appropriated directly to

us, we report such payments, as needed, as entity expenses within the “Economic Program” on the Consolidated Statements

of Net Cost, and in the line item, “Cumulative Results of Operations,” on the Consolidated Balance Sheets. These payments

also result in an increase to the non-entity investment in the GSEs’ senior preferred stock, with a corresponding increase to

“Due To the General Fund,” as we hold the investment on behalf of the General Fund.

The annual valuation as of September 30 of the preferred stock and warrants incorporates various forecasts, projections and

cash flow analyses to develop an estimate of the assets’ fair value. The value of the senior preferred stock is estimated by

first estimating the fair value of the total equity of each GSE (which, in addition to the senior preferred stock, is comprised of

other equity instruments including common stock, common stock warrants, and junior preferred stock). The fair value of the

total equity is based on a discounted cash flow valuation methodology, whereby the primary input is the present value of the

projected quarterly cash flows to equity holders. The fair value of the GSEs’ other equity instruments is then deducted from

its total equity, with the remainder representing the fair value of the senior preferred stock. The primary input into the

warrants valuation is the market value of the shares of common stock of the GSEs which, along with the junior preferred

stock, are traded on the OTC Bulletin Board. We evaluate the need for adjusting our OTC market-based valuation of the

warrants for the effects, if any, of significant events occurring after the close of the market but before the end of the

measurement date (refer to Note 11). 
76 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Investments in Multilateral Development Banks

On behalf of the U.S., we invest in Multilateral Development Banks (MDBs) to support poverty reduction, private sector

development, transitions to market economies, and sustainable economic growth and development, thereby advancing U.S.

economic, political, and commercial interests abroad. As a participating member country, we provide a portion of the capital

base of the MDBs, through subscriptions to capital, which allows the MDBs to issue loans at market-based rates to middleincome developing countries. These paid-in capital investments are non-marketable equity investments valued at cost on

our Consolidated Balance Sheets.

In addition, on behalf of the U.S., we contribute funding to MDBs to finance grants and extend credit to poor countries at

below market-based interest rates. We report these U.S. contributions, also referred to as “concessional window”

contributions, as an expense within the “Financial Program” on our Consolidated Statements of Net Cost.

Other Investments, Net 

The ESF holds most of our foreign currency investments. We classify the ESF’s other foreign currency denominated assets

and investment securities as either available-for-sale or trading securities recorded at fair value (see the discussion below on

“Fair Value Measurement.”). These holdings are normally invested in interest-bearing securities issued or held through

foreign governments or monetary authorities. We recognize interest on investments, amortization of premiums, and

accretion of discounts on an accrual basis, and amortize or accrete premiums and discounts over the life of the related

investment security as an adjustment to yield using the effective interest method. 

Fair Value Measurement

Fair value is a market-based measurement. For certain assets and liabilities, observable market transactions or market

information may be available. For other assets and liabilities, observable market transactions and market information may

not be available. However, the objective of a fair value measurement in both cases is to estimate the price at which an

orderly transaction to sell an asset or to transfer a liability between market participants at the measurement date occurs

under current market conditions.

When a price for an identical asset or liability is not observable, a reporting entity measures fair value using another

valuation technique that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. 

Because fair value is a market-based measurement, it is measured using the assumptions that market participants would

use when pricing the asset or liability, including assumptions about risk.

The measurement of fair value of an asset or a liability is categorized with different levels of fair value hierarchy as follows:

• Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can

access at the measurement date.

• Level 2—Inputs other than quoted prices included within Level 1 inputs that are observable for the asset or liability,

either directly or indirectly.

• Level 3—Unobservable inputs for the asset or liability.
DEPARTMENT OF THE TREASURY 77 

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The inputs or methodology used for valuing assets and liabilities are not necessarily indicative of the risks associated with

those assets and liabilities. 

J. GENERAL PROPERTY, PLANT, AND EQUIPMENT, NET

General

General property, plant, and equipment (PP&E) is composed of capital assets used in providing goods or services. It also

includes assets acquired through capital leases, which are initially recorded at the amount recognized as a liability for the

capital lease at its inception. PP&E is stated at full cost, including costs related to acquisition, delivery, and installation,

less accumulated depreciation. Major alterations and renovations, including leasehold and land improvements, are

capitalized, while maintenance and repair costs are charged to expense as incurred. Costs for construction projects are

recorded as construction-in-progress until completed and are valued at actual (direct) cost plus applied overhead and other

indirect costs.

Internal-use software encompasses software design, development, and testing of projects adding significant new

functionality and long-term benefits. We accumulate costs for developing internal-use software in work-in-development until

we place a project into service and testing and final acceptances are successfully completed. Once completed, we transfer the

costs to depreciable property.

We lease land and buildings from the General Services Administration (GSA) to conduct most of our operations. We have no

material leases that meet capital lease requirements for financial reporting purposes. GSA charges a standard level user fee

which approximates commercial rental rates for similar properties. 

Our bureaus are diverse both in size and in operating environment. Accordingly, our capitalization policy provides minimum

capitalization thresholds, which generally range from $25,000 to $50,000 for all property categories except for internal-use

software. Minimum capitalization thresholds for internal-use software generally range from $50,000 to $250,000 (except for 

the IRS, for which minimum capitalization thresholds generally range from $10 million to $50 million). We also use a 

capitalization threshold for bulk purchases, which generally ranges from $50,000 to $500,000 for non-manufacturing

bureaus, and $25,000 to $50,000 for manufacturing bureaus. Bureaus determine the individual items that comprise bulk

purchases based on our guidance. 

Depreciation is expensed on a straight-line basis over the estimated useful life of the asset except for leasehold

improvements and capital leases, which are depreciated over the term of the lease or the useful life of the improvement or

asset, whichever is shorter. Service life ranges (2 to 50 years) are wide due to the diversity of our PP&E. We do not

depreciate land, construction-in-progress, and internal-use software in development. We record impairment costs related to

a significant and permanent decline in the service utility of general PP&E and construction-in-progress in the period

incurred. 

Heritage Assets

Heritage assets are of historical significance. Multi-use heritage assets are those heritage assets for which the predominant

use is general government operations. We capitalize all acquisition, reconstruction, and betterment costs for our multi-use

heritage asset buildings as general PP&E, and depreciate these costs over their service life.
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FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

K. FEDERAL DEBT AND INTEREST PAYABLE

We issue federal debt in the form of Treasury securities. This debt relates to monies borrowed from the public and certain

other federal agencies to fund the operations of the U.S. government. We issue certain federal debt at a discount or

premium. We amortize these discounts and premiums over the term of the security using an interest method for all longterm securities and the straight-line method for short-term securities. Interest costs accrue as an expense as incurred and

are reported on the Consolidated Statements of Net Cost as non-entity costs. 

L. REFUNDS PAYABLE

Refunds payable arise in the normal course of tax administration when it is determined that taxpayers have paid more than

the actual taxes they owe. We record amounts concluded to be valid refunds owed to taxpayers as a liability entitled

“Refunds Payable” on the Consolidated Balance Sheets, with a corresponding receivable from the General Fund included in

the line entitled “Due From the General Fund.”

M. SPECIAL DRAWING RIGHTS

The SDR is an international reserve asset created by the IMF to supplement its member countries’ official reserves. Under

its Articles of Agreement, the IMF may allocate SDRs to member countries in proportion to their IMF quotas. Pursuant to

the Special Drawing Rights Act of 1968, as amended, the ESF holds all SDRs allocated to or otherwise acquired by the U.S.

Allocations and Holdings

We record the SDR holdings that are permanent resources to the U.S. as part of “Cash, Foreign Currency, and Other

Monetary Assets,” and we record the SDR allocations as a liability entitled “Allocation of Special Drawing Rights” when the

IMF allocates SDRs to the U.S. The SDR allocations are permanent resources to the U.S. as well, but we account for these

allocations as a liability since the U.S. is obligated to repay the allocation amount to the IMF under specified circumstances. 

Except for the payment of interest and charges on SDR allocations to the U.S., the payment of the U.S. commitment related

to SDR allocations is conditional on the following events in which the U.S. has a substantial or controlling voice: (1)

withdrawal by the U.S. from IMF membership or termination of its position in the SDR Department of the IMF, (2) 

cancellation of the SDRs by the Board of Governors (pursuant to an 85 percent majority decision of the voting power of IMF

members), (3) liquidation of the IMF or (4) liquidation of the SDR Department of the IMF.

SDR holdings increase primarily as a result of IMF SDR allocations. We record SDR transactions as incurred, and include

acquisitions and sales of SDRs, interest received on SDR holdings, interest charges on SDRs allocations, and valuation

adjustments. The U.S. government also receives remuneration in SDRs from the IMF based on claims on the IMF as

represented by the U.S. Reserve Position in the IMF and loans receivable from the supplemental borrowing arrangement. 

We credit remuneration to the ESF, which transfers to the TGA account an equivalent amount of dollars plus nominal

interest. 

On a daily basis, the IMF calculates the value of the SDR using the currency exchange rate in terms of the U.S. dollar from

weighted amounts of each of five freely usable currencies, as defined by the IMF. These currencies are the U.S. dollar, the

European euro, the Japanese yen, the British pound sterling, and the Chinese renminbi. We revalue the U.S. SDR holdings

and allocations from the IMF monthly based on the SDR valuation rate calculated by the IMF, resulting in the recognition of

unrealized gains or losses on revaluation that are reported on the Consolidated Statements of Net Cost.
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Certificates Issued to the Federal Reserve

The Special Drawing Rights Act of 1968, as amended, authorizes the Secretary to issue certificates, not to exceed the value of

SDRs held against the certificates, to the FRBs in return for dollar amounts equal to the face value of certificates issued. We

issue certificates to finance the acquisition of SDRs from other countries or to provide U.S. dollar resources to finance other

ESF operations. Certificates issued are redeemed by us at such times and in such amounts as the Secretary may determine,

and do not bear interest. We report certificates issued to the FRBs at their face value which approximates their carrying

value since, under the terms of the arrangements with the Federal Reserve Board, there is no set repayment date and no

interest accrued while certificates remain outstanding.

N. FEDERAL EMPLOYEE BENEFITS PAYABLE – FECA ACTUARIAL LIABILITY

The Federal Employees’ Compensation Act (FECA) provides income and medical cost protection to covered federal civilian

employees injured on the job, and employees who have incurred a work-related injury or occupational disease. The FECA

program is administered by the DOL, which pays valid claims and subsequently seeks reimbursements from us for these

paid claims. Generally, we reimburse the DOL within two to three years once funds are appropriated. The FECA liability

consists of two components. The first component is based on actual claims paid by the DOL but not yet reimbursed by us. 

The second component is the estimated liability for future workers compensation as a result of past events. We report both

components in “Other Liabilities” on the Consolidated Balance Sheets. These future workers’ compensation estimates are

generated by applying actuarial procedures developed to estimate the liability for FECA benefits. The actuarial liability

estimates for FECA benefits include the expected liability for death, disability, medical, and miscellaneous costs for approved

compensation cases.

O. ANNUAL, SICK, AND OTHER LEAVE

We report annual and compensatory leave earned by our employees, but not yet used, as an accrued liability. We adjust the

accrued balance annually to reflect current pay rates. Any portion of the accrued leave for which funding is not available is

recorded as an unfunded liability as reported in “Other Liabilities” on the Consolidated Balance Sheets. We expense sick

and other leave as taken and do not record a liability for such amounts, because employees do not vest in sick and other

leave benefits. 

P. PENSION COSTS, OTHER RETIREMENT BENEFITS, AND OTHER POST-EMPLOYMENT BENEFITS

Federal Pension Costs, Other Retirement Benefits, and Other Post-Employment Benefits

We recognize the full cost of our employees’ pension benefits, including recognizing imputed cost for the difference between

the estimated service cost and the sum of participants’ pension benefit withholdings and agency contributions. However, the

Office of Personnel Management (OPM) rather than the Department recognizes the assets and liabilities associated with

these benefits. 
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FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Most of our employees hired prior to January 1, 1984 participate in the Civil Service Retirement System (CSRS), and

employees hired between January 1, 1984 and December 31, 1986 are covered under the CSRS Offset System, to which we

contribute 7.0 percent and 7.5 percent of pay for regular and law enforcement employees, respectively. On January 1, 1987,

the Federal Employees’ Retirement System (FERS) went into effect pursuant to the Federal Employees’ Retirement System

Act of 1986, Public Law (P.L.) 99-335. FERS is a three-tiered retirement system consisting of a Basic Benefit Plan, Thrift 

Savings Plan (TSP), and Social Security Benefits. For the FERS Basic Benefit Plan, we contribute between 15.5 percent and

17.3 percent for regular employees, and between 34.0 percent and 35.8 percent for law enforcement officers. The TSP under

FERS is a 401(k)-type savings plan in which we automatically contribute one percent of base pay and match any employee

contributions up to an additional four percent of base pay. For most employees hired after December 31, 1983, we also

contribute the employer’s matching share for Social Security. 

Similar to federal retirement plans, OPM, rather than the Department, reports the assets and liability for future payments

to retired employees who participate in the Federal Employees Health Benefits Program (FEHBP) and Federal Employees

Group Life Insurance (FEGLI) Program. We report the full cost of providing other retirement benefits (ORB). We also

recognize an expense and a liability for other post-employment benefits (OPEB), which includes all types of benefits,

provided to former or inactive (but not retired) employees, their beneficiaries, and covered dependents. Additionally, one of

our bureaus, OCC, separately sponsors a postretirement life insurance benefit plan for current and future retired employees. 

OCC is also a participating employer in the Pentegra Defined Benefit Plan for Financial Institutions, a multiple employer

plan that provides benefits for certain retired employees who meet eligibility requirements. In addition to the TSP, the OCC

sponsors two 401(k) plans. Eligible OFR employees also participate in one of these two plans.

District of Columbia Federal Pension and Judicial Retirement Plans

Pursuant to Title XI of the Balanced Budget Act of 1997, as amended, we became responsible for the District of Columbia

Judicial Retirement and Survivors Annuity Fund (the Judicial Retirement Fund) and the District of Columbia Teachers,

Police Officers, and Firefighters Federal Pension Fund (the D.C. Federal Pension Fund) retirement plans (refer to Note 18). 

The actuarial cost method used to determine costs and actuarial liability for the Judicial Retirement Fund is the Individual

Entry Age Normal Cost Method, which approximates the methodology specified by the Aggregate Entry Age Normal

Actuarial Cost Method. The actuarial cost method used to determine the cost and actuarial liability for the D.C. Federal

Pension Fund is the Projected Unit Credit Cost Method, which recognizes that all service has been fully accrued by

participants and does not generate a normal cost. These methodologies base actuarial liabilities on long-term economic

assumptions. The pension benefit costs incurred by the plans are included on the Consolidated Statements of Net Cost.

Q. COMMITMENTS AND CONTINGENCIES

Through FFB, we make loan commitments with federal agencies, or private sector borrowers with loans guaranteed by

federal agencies, to extend credit for their own use (refer to the accounting policy above entitled “Loans and Interest

Receivable, Intra-Governmental”). We establish loan commitments when FFB and other parties fully execute agreements in

which we become obligated to issue loans pursuant to the terms and conditions within the agreements. We reduce loan

commitments when we issue the loans or when the commitments expire.

On behalf of the U.S., we subscribe to shares of certain MDBs, of which some shares represent capital commitments that are

callable under certain limited circumstances to meet the obligations of the respective MDB. The callable capital

commitments become binding on the U.S. when we issue instruments of commitment subscribing to the U.S. portion of

callable capital. 
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Additionally, on behalf of the U.S., we have established financial commitments through our participation in the IMF through

a quota subscription and a borrowing arrangement that supplements IMF resources. U.S. financial commitments to the IMF

become binding when the U.S. consents to an increase in its participation as an IMF member country, and all other

conditions to the increase have been met. The outstanding financial commitment in the U.S. quota decreases or increases

when the IMF draws upon or repays funding obtained pursuant to a letter of credit established by the U.S. to make domestic

currency available to the IMF as needed. The outstanding financial commitment in the supplemental borrowing

arrangement decrease or increase when the IMF borrows and repays loans under the related supplemental funding

arrangement (refer to Note 7).

In accordance with SFFAS No. 5, Accounting for Liabilities of the Federal Government, we recognize material contingent

liabilities meeting the following criteria:

• A past event or exchange transaction has occurred; 

• A future cash outflow is probable; and

• A future cash outflow is measurable. 

The estimated liability we record is either a specific amount or within a range of amounts. If some amount within the range

is a better estimate than any other amount within the range, that amount is recognized. If no amount within the range is a 

better estimate than any other amount, we recognize the minimum amount in the range, and we disclose the range and a 

description of the nature of the contingency. We follow this policy in recording a contingent liability, if any, related to the

GSE SPSPA program (refer to Note 11), and loss contingencies that may arise from claims, assessments, litigations, fines,

penalties, and other sources (refer to Note 27).

If one or more, but not all, of the above criteria for recognition are met, and there is a reasonable possibility of loss, we will

disclose, if material, the nature of the contingent liability, along with a range of possible loss, if estimable, and a description 

of the nature of the contingency. 

R. REVENUE AND FINANCING SOURCES

Our activities are financed either through exchange revenue we receive from others or through non-exchange revenue and

financing sources (such as appropriations provided by the Congress and penalties, fines, and certain user fees collected). 

User fees primarily include collections from the public for the IRS costs to process installment agreements, letter ruling and

determinations, and income verification. We recognize exchange revenue when earned, i.e., goods are delivered or services

are rendered. We recognize revenue from reimbursable agreements when providing services. We record non-exchange

revenues when received or when accrued due to a legal claim. We recognize appropriations used as financing sources when

related expenses are incurred or assets are purchased. 

We also incur certain costs paid in total or in part by other federal entities, such as pension costs, the FEHBP, and any unreimbursed payments made from the Treasury Judgment Fund on our behalf. We recognize these subsidized costs on the

Consolidated Statements of Net Cost, and we recognize the imputed financing for these costs on the Consolidated

Statements of Changes in Net Position. As a result, there is no effect on net position. We also recognize other non-exchange

financing sources, such as donations and transfers of assets without reimbursements, for the period in which they occurred

on the Consolidated Statements of Changes in Net Position.
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FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

We recognize revenue we receive from disposition of forfeited property as non-exchange revenue on the Consolidated

Statements of Changes in Net Position. We report costs related to the Forfeiture Fund program on the Consolidated

Statements of Net Cost. The TFF is the special fund account for depositing non-tax forfeiture proceeds received pursuant to

laws enforced or administered by law enforcement bureaus that participate in the TFF. We report forfeited property

balances in “Other Assets” on the Consolidated Balance Sheets.

S. CUSTODIAL REVENUES

Non-entity revenue reported on our Statements of Custodial Activity includes cash we collected, primarily from taxes. It

does not include revenue collected by other federal agencies, such as user fees and other receipts, which are remitted for 

general operating purposes of the U.S. government or are dedicated for certain trust funds. We present the Statements of

Custodial Activity on the “modified accrual basis.” We recognize revenues as cash is collected, and record a “non-cash

accrual adjustment” representing the net increase or decrease during the reporting period in net revenue-related assets and

liabilities, mainly taxes receivable. 

T. APPROPRIATIONS AND OTHER BUDGETARY ACTIVITY

Combined Statement of Budgetary Resources Activity

We record appropriations when authorized by legislation. Incurred obligations of appropriations are recorded when we place

orders or sign contracts for goods and services, award a grant, or take other actions that require us to make payments to the

public or another federal entity. Outlays are recorded when disbursements are made. 

Permanent and Indefinite Appropriations

We use permanent and indefinite appropriations to disburse tax refunds, refundable tax credits and related interest. We

recognize refund payment funding as appropriations are used. Permanent indefinite authority for refund activity is

available for an unlimited period of time in the amount necessary to cover the refund and/or credit. We report tax refunds

and credits as a custodial activity of the Department, since they are, in substance, a custodial revenue-related activity

resulting from taxpayer overpayments of their tax liabilities.

We have two permanent and indefinite appropriations related to debt activity. One permanent and indefinite appropriation

is used to pay interest on the public debt securities, and the other is used to redeem securities that are matured, called, or

eligible for early redemption. These accounts are not annual appropriations and do not have refunds. We report debt

redemption appropriations related to our liability on our Consolidated Balance Sheets. We record interest appropriations at

the beginning of the fiscal year and again at mid-year, if necessary, and we return any unused authority to the General Fund

at the end of the fiscal year. Permanent indefinite authority for debt redemptions and related interest is available for an

unlimited period of time.

We also have permanent and indefinite appropriations to fund increases in the projected subsidy costs of credit programs as

determined by the re-estimation process required by the FCRA.
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Additionally, we have other permanent and indefinite appropriations to make certain payments on behalf of the U.S.

government. We receive these appropriations to make payments to the FRB for fiscal services provided, and to the financial

institutions for services provided as financial agents of the U.S. government. They also include appropriations provided to

make other disbursements on behalf of the U.S. government, including payments made to various parties as a result of

certain claims and judgments rendered against the U.S. 

U. INCOME TAXES

As an agency of the U.S. government, we are exempt from all income taxes imposed by any governing body, whether it is a 

federal, state, commonwealth, local, or foreign government.

V. USE OF ESTIMATES

We have made certain estimates and assumptions relating to the reporting of assets, liabilities, revenues, expenses, and the

disclosure of contingent liabilities to prepare our financial statements. Actual results may differ from these estimates. 

Adverse changes in the outlook for the key assumptions underlying management’s estimates may materially affect the

results of our operations, cash flows and/or our financial position in future periods. Transactions subject to estimates

principally include loan and credit program receivables, credit reform subsidy costs, COVID-19 related investments,

investments in GSEs and other non-federal securities and related impairment, tax receivables, loan guarantees,

depreciation, actuarial liabilities, cost and earned revenue allocations, as well as contingencies and any related recognized

liabilities. 

Estimation of such complex and long-duration receivables, investments, and contingencies is subject to uncertainty. It is

possible that new developments will adversely impact the value of receivables, investments, and contingencies, as well as

ultimate amounts we are required to fund. Except as expressly noted herein, we have not revalued or included in our

estimates as of September 30, 2021 the effects of any new developments that may have occurred subsequent to September

30, 2021. 

Credit program receivables are derived using credit reform modeling, which is subject to the use of estimates and forecasts

that have inherent uncertainty. Refer to the accounting policy above entitled “Credit Program Receivables, Net” and Notes 9 

and 10 for additional discussion related to the estimation of credit program receivables. 

Our COVID-19 and GSE investments are estimated based on fair value and changes in these asset valuations, including

impairment. Since the valuation is an annual process, we deem changes in valuation of our equity investments as usual and

recurring. Refer to the accounting policy above entitled “Investments” and Notes 10 and 11 for additional discussion related

to the fair value estimations of the “COVID-19: Investments, Net” and “Investments in Government Sponsored Enterprises.” 

For certain of our liabilities, we perform annual calculations, as of September 30, to assess our need for recording an

estimated liability in accordance with SFFAS No. 5 related to certain liabilities of our CARES Act programs, as well as

liabilities related to our funding commitment to the GSEs under the SPSPAs. 

As stipulated by the CARES Act, excess residual proceeds realized from our SPV capital contributions and direct loans to air

carriers and other related businesses must be remitted to the Federal Old-Age and Survivors Insurance Trust Fund (refer to

Note 10). We estimate and record the net present value of this potential liability, if any, based on the probable future

occurrence of excess cash flows received above the full recovery of our costs associated with these programs. This calculation

is subject to the same sensitivities as those related to our credit reform modeling discussed above. 
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FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Liability to the GSEs recognition is predicated on the probable future occurrence of an excess of liabilities and minimum

capital reserve amounts, as defined, over the assets of either GSE at the end of any reporting quarter. The occurrence of

future GSE deficits, which ultimately determines our liability to the GSEs, is most sensitive to future changes in the housing

price index and, to a lesser extent, future changes in guarantee fees received by the GSEs on single-family mortgages and

interest rates (refer to Note 11). 

Refer to the accounting policy above entitled “Pension Costs, Other Retirement Benefits, and Other Post-Employment

Benefits” and Note 8 for additional discussion related to the estimation of actuarial liabilities and tax receivables,

respectively. 

W. OTHER-THAN-TEMPORARY IMPAIRMENTS

A decline in the market value (either due to credit, price or currency) of any investment below cost that is deemed to be

other-than-temporary is accounted for as an impairment, and the carrying value is reduced to fair value for financial

reporting purposes. To determine whether an impairment is other-than-temporary, we consider whether we have the ability

and intent to hold the investment until a market price recovery, and consider whether evidence indicating that the cost of

the investment is recoverable does outweigh evidence to the contrary.

X. CREDIT, MARKET AND FOREIGN CURRENCY RISK

Credit risk is the potential, no matter how remote, for financial loss from a failure of a borrower or counterparty to perform

in accordance with underlying contractual obligations. We take on possible credit risk when we make direct loans or

guarantees to non-federal entities, provide credits to foreign entities, or become exposed to institutions which engage in

financial transactions with foreign countries (refer to Note 13). Our following programs entail credit risk: monetary assets

held; investments, direct loans and other receivables related to our COVID-19, CDFI, SBLF, and TARP programs, as well as

committed but undisbursed direct loans and/or funding commitments related to our COVID-19 and GSE programs; and GSE

obligations obtained under the HFA initiative (the New Issue Bond Program). 

Our activities generally focus on the underlying problems in the credit markets. We developed these programs, or provided

credit support to the pandemic emergency relief programs of the Federal Reserve Board, to provide credit where borrowers

are not able to get access to credit with reasonable terms and conditions. Because these programs attempt to correct for a 

market imperfection, it can expose us to potential costs and losses. Additional risk of costs and losses could result from

terrorist attacks under the Terrorism Risk Insurance Program. The extent of the risk we assumed is described in more

detail in the notes to the financial statements and, where applicable, is factored into credit reform models and reflected in

fair value measurements (refer to Notes 9, 10, 11, and 27). 

We face certain risks and uncertainties as a result of holding securities denominated in foreign currency. The price of

holdings of such securities may widely fluctuate as a result of volatility in foreign currency markets and changes in real and

perceived credit risk of our counterparties. 

Y. FUNDS FROM DEDICATED COLLECTIONS

We account for revenues and other financing sources for funds from dedicated collections (FDC) separately from other funds. 

Such funds are financed by specifically identified revenues provided to the U.S. government by non-federal sources, often

supplemented by federal and other financing sources, which remain available over time. Statute requires use of these

specifically identified revenues and other financing sources for designated activities, benefits, or purposes. We apply the
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FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

following criteria for purposes of designating funds as dedicated collections: (i) a statute committing the U.S. government to

use specifically identified revenues and/or other financing sources that are originally provided to the U.S. government by a 

non-federal source only for designated activities, benefits, or purposes; (ii) explicit authority for the fund to retain revenues

and/or other financing sources not used in the current period for future use to finance the designated activities, benefits, or

purposes; (iii) a requirement to account for and report on the receipt, use, and retention of the revenues and/or other

financing sources that distinguishes the fund from the U.S. government’s general revenues; and (iv) for funds comprised of

both federal and non-federal sources, such funding is predominantly non-federal, or the non-federal funding is material to

our financial statements.

Z. ALLOCATION TRANSFERS

We are a party to allocation transfers with other federal agencies as both a transferring (parent) entity and/or a receiving

(child) entity. Allocation transfers are legal delegations by one department of its authority to obligate budget authority and

outlay funds to another department. A separate fund account (allocation account) is created in Treasury as a subset of the

parent fund account for tracking and reporting purposes. All allocation transfers of balances are credited to this account,

and subsequent obligations and outlays incurred by the child entity are charged to this allocation account as they execute the

delegated activity on behalf of the parent. Parent federal agencies report both the proprietary and budgetary activity and

the child agency does not report any financial activity related to budget authority allocated from the parent federal agency to

the child federal agency. However, OMB guidance requires Treasury to report the activity when we receive allocation

transfers, as the child, from the Executive Office of the President (See Circular No. A-136, II.3.1, Parent-Child Reporting for 

two exceptions). 

We allocate funds, as the parent, to the Department of Justice (DOJ), DOL, Department of Housing and Urban Development

and HHS. Also, we receive allocation transfers, as the child, from HHS, Department of Transportation, DOJ, and the

Executive Office of the President.

AA. FIDUCIARY ACTIVITIES

Fiduciary activities are the collection or receipt, and the management, protection, accounting, investment, and disposition by

the U.S. government of cash or other assets in which non-federal individuals or entities have an ownership interest that the

U.S. government must uphold. Fiduciary cash and other assets are not assets of the U.S. government. We do not report

these activities in our consolidated financial statements, but instead report them in Note 26. 

AB. DISCLOSURE ENTITIES AND RELATED PARTIES

SFFAS No. 47, Reporting Entity, requires that our consolidated financial statements reflect the balances and activities of

consolidation entities, including Treasury bureaus and other reporting entities, meeting the following “principles for

inclusion” when considered as a whole: (1) the entity is included in the Budget of the United States (also known as the

President’s Budget); (2) the U.S. government holds “majority ownership interest”; (3) the U.S. government has “control with

risk of loss or expectation of benefit”; or (4) it would be misleading to exclude such entity. SFFAS No. 47 also provides

guidance for assessing whether an organization meeting the inclusion principles is reported as a disclosure entity or related

party. 

A disclosure entity exists when we determine that an entity meets any of the following SFFAS No. 47 “inclusion principles”

with respect to the U.S. government but does not meet the characteristics of a “consolidation entity.” Based on SFFAS No.

47 criteria, the Federal Reserve System is considered to be a disclosure entity. Additionally, entities owned and/or controlled
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FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

by the U.S. government as a result of regulatory actions—such as organizations in receivership or conservatorship—or other

U.S. government intervention actions are generally classified as disclosure entities if the relationship with such entities is

not expected to be permanent. 

A related party exists when one party to an established relationship has the ability to exercise significant influence over

another party in making policy decisions. Related parties generally do not meet the SFFAS No. 47 inclusion principles;

however, we report on a relationship that is of such significance that it would be misleading to exclude information about

that entity. Disclosure entities and related parties are not considered components of the consolidated Treasury reporting

entity and, thus, are only disclosed in the notes to our consolidated financial statements. Using the principles prescribed in

SFFAS No. 47, we identified the following disclosure entities and related parties as of September 30, 2021. 

Disclosure Entities

Federal Reserve System

Congress, under the Federal Reserve Act of 1913 (Federal Reserve Act), created the FR System. The FR System includes the

Federal Reserve Board, Federal Reserve Banks (FRB), and the Federal Open Market Committee (FOMC). Collectively, the

FR System serves as the nation’s central bank and is responsible for formulating and conducting monetary policy, issuing

and distributing currency (Federal Reserve Notes), supervising and regulating financial institutions, providing nationwide

payments systems (including large-dollar transfers of funds, automated clearinghouse operations, and check collection),

providing certain financial services to federal agencies and fiscal principals, and serving as the U.S. government’s bank. 

Monetary policy includes actions undertaken by the FR System that influence the availability and cost of money and credit

as a means of helping to promote national economic goals. The FR System also conducts operations in foreign markets in

order to counter disorderly conditions in exchange markets or to meet other needs specified by the FOMC to carry out its

central bank responsibilities. 

While we consult with the FR System on matters affecting the economy and certain financial stabilization activities it is

considered an independent central bank, and the executive branch of the U.S. government does not ratify its decisions. In

accordance with SFFAS No. 47 criteria, the FR Systems’ assets, liabilities, and operations are not consolidated into our

consolidated financial statements; however, we account for and disclose our financial activities with the FR System within

our consolidated financial statements. 

Federal Reserve System Structure 

Federal Reserve Board of Governors 

The Board is an independent regulatory organization governed by seven members appointed by the President and confirmed

by the Senate. The full term of a Board member is 14 years, and the appointments are staggered so that one term expires on

January 31 of each even-numbered year. The Board has a number of supervisory and regulatory responsibilities for 

institutions including, among others, state-chartered banks that are members of the FR System, bank holding companies,

and savings and loan holding companies. In addition, the Board has general supervisory responsibilities for the 12 FRBs,

and issues currency (Federal Reserve Notes) to the FRBs for distribution. No government appropriation is required to

support the operation of the Board. The Board’s budget transactions are not included in the President’s Budget, nor are they

subject to the President’s review because of its unique role in conducting monetary policy. 

 
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Federal Reserve Banks 

The 12 FRBs are chartered under the Federal Reserve Act, which requires each member bank to own the capital stock of its

FRB. Each FRB has a board of directors that exercises supervision and control of each FRB, with three members appointed

by the Board, and six board members elected by their member banks. The FRBs participate in formulating and conducting

monetary policy, distributing currency and coin, and serving as the government’s fiscal agent, as well as the fiscal agent for 

other fiscal principals (i.e. banks, credit unions, saving and loan institutions). Additionally, the FRBs provide short-term

loans to depository institutions and loans to participants in programs or facilities with broad-based eligibility in unusual and

crucial circumstances when approved by the Board and the Secretary of the Treasury. 

We utilize the services of the FRBs to execute a variety of transactions on behalf of the Fiscal Service and the ESF. The 

following are examples of our interaction with the FRBs:

• The FRBs serve as our fiscal agent and depositary, executing banking and other financial transactions on our behalf

(refer to Note 5). We reimburse the FRBs for these services, the cost of which is included on the Consolidated

Statements of Net Costs. 

• The FRBs hold Treasury and other federal securities in the FRBs’ System Open Market Account (SOMA) for the purpose

of conducting monetary policy. 

• The FRBs hold gold certificates issued by the Department in which the certificates are collateralized by gold (refer to

Note 6). 

• The FRBs hold SDR certificates issued by the Department which are collateralized by SDRs (refer to Notes 5 and 7). 

• The FRBs are required by Board policy to transfer their excess earnings to us on behalf of the U.S. government (refer to

Notes 8 and 23). 

Federal Open Market Committee 

The FOMC is comprised of the seven Board members and five of the 12 FRB presidents. FOMC formulates and conducts 

monetary policy primarily through open market operations (the purchase and sale of certain securities in the open market),

the principal tool of national monetary policy. These operations affect the amount of reserve balances available to depository

institutions, thereby influencing overall monetary and credit conditions. 

Federal Reserve System Assets and Liabilities

The FRBs hold Treasury and other securities in the SOMA for the purpose of conducting monetary policy. These assets are

generally subject to the same market conditions as other financial instruments. In the open market, the FR System

purchases and sells Treasury securities as a mechanism for controlling the money supply. 

The FRBs have deposit liabilities with Treasury and depository institutions. The FRBs issue Federal Reserve Notes, the

circulating currency of the U.S., which are collateralized by the Treasury securities and other assets held by the FRBs. 

FRB Residual Earnings Transferred to the Department 

FRBs generate income from interest earned on securities, reimbursable services provided to federal agencies, and the

provision of priced services to depository institutions as specified by the Monetary Control Act of 1980. Although the FRBs

generate earnings from carrying out open market operations, via the earnings on securities held in the SOMA account, their

execution of these operations is for the purpose of accomplishing monetary policy rather than generating earnings. Each

FRB is required by Board policy to transfer to us its residual (or excess) earnings after providing for the cost of operations,
88 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

payment of dividends, and surplus funds not to exceed an FRB’s allocated portion of an aggregate of $6.8 billion for all FRBs,

in accordance with the provisions of the Economic Growth, Regulatory Relief, and Consumer Protection Act (P.L. 115-174). 

FRBs’ residual earnings may vary due to, among other things, changes in the SOMA balance levels that may occur in

conducting monetary policy. Under P.L. 115-174, if an FRB’s earnings for the year are not sufficient to provide for the cost of

operations, payment of dividends, or allocated portion of the $6.8 billion aggregate surplus funds limitation, an FRB will

suspend its payments to us until such earnings become sufficient. The FRB residual earnings of $100.1 billion and $81.9

billion for fiscal years ended September 30, 2021 and 2020, respectively, are reported as custodial revenues on our

Statements of Custodial Activity. They constituted 2.4 percent and 2.3 percent of our total custodial revenues collected in FY 

2021 and 2020, respectively. “Taxes, Interest and Other Receivables, Net” includes a receivable for FRB’s residual earnings

which represents the earnings due to us as of September 30, but not collected by us until after the end of the month (refer to

Note 8). 

FRB-Managed Special Purpose Vehicles – Liquidity Lending Facilities 

In response to the COVID-19 pandemic, we hold equity investments in SPVs established by the Federal Reserve Board

through the FRBNY and FRBB for the purpose of enhancing the liquidity of the U.S. financial system. Our involvement in

these programs represents non-permanent intervention activities designed to help mitigate the economic impacts of the

pandemic. Accordingly, our equity interests in these SPVs meet the SFFAS No. 47 criteria for classifying our SPV

investments as disclosure entities. These entities are not consolidated as part of our consolidated financial statements;

however, the value of our investments in these entities is presented as equity investments on our Consolidated Balance

Sheets (refer to Note 10).

Government Sponsored Enterprises – Fannie Mae and Freddie Mac

During the FY 2008 financial crisis, the U.S. government placed Fannie Mae and Freddie Mac under conservatorship to help

ensure their financial stability. These entities meet the SFFAS No. 47 criteria for disclosure entities as organizations owned

or controlled by the U.S. government as the result of regulatory actions (“such as conservatorship”). Additionally, the U.S.

government’s intervention actions with regards to these GSEs are not expected to be permanent. Accordingly, these entities

are not consolidated as part of our consolidated financial statements; however, the value of our investments in these entities

is presented as equity investments on our Consolidated Balance Sheets (refer to Note 11). 

Related Parties

In accordance with SFFAS No. 47 determination principles, we currently maintain related party relationships with the IMF

and the MDBs. The IMF is an international organization of 190 member countries that works to foster global monetary

cooperation, secure financial stability, sustain economic growth, and reduce poverty around the world. The U.S. government

holds the largest quota subscription of any member. The U.S. quota subscription serves as the key determinant for our 16.5

percent share of voting rights in various IMF decisions for which the U.S. government has a substantial voice. The Secretary

serves as the U.S. Governor to the IMF, and the U.S. Governor nominates and elects the U.S. Executive Director of the IMF,

who is one of 24 directors responsible for exercising voting rights over the strategic direction of the institution.

The U.S. commitment to the IMF is in the form of cash and interest-bearing instruments. Historically, the U.S. has not

experienced a loss to its commitment in the IMF (refer to accounting policies above entitled “Loans and Interest Receivable,”

“Commitments and Contingencies,” “Special Drawing Rights,” and Notes 5 and 7 for a further description of our relationship,

financial risk, and activities with the IMF). 
DEPARTMENT OF THE TREASURY 89 

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Additionally, on behalf of the U.S., we invest in and provide funding to the MDBs to support poverty reduction and promote

sustainable economic growth in developing countries. The MDBs provide financial and technical support by means of

strengthening institutions, providing assistance that addresses the root causes of instability in fragile and conflict-affected 

states, responding to global crises, and fostering economic growth and entrepreneurship. U.S. participation in the MDBs is

in the form of financial contributions used to ensure the effectiveness and impact of the MDBs’ global development agenda. 

The U.S. has voting power in each of the MDBs to which we contribute, ranging from approximately 6 percent to 50 percent

(refer to accounting policies above entitled “Investments,” “Commitments and Contingencies,” and Notes 12 and 27 for a 

further description of our relationship, financial risk, and activities with the MDBs). 
90 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

2. FUND BALANCE

Fund Balance is increased by receiving appropriations, reappropriations, continuing resolutions, appropriation restorations,

and allocations; and when transfers and reimbursements from other federal agencies are received. Fund Balance can also be

increased by amounts borrowed from the Fiscal Service, FFB, other federal entities, and by amounts collected and credited to

appropriation or fund accounts.

Likewise, Fund Balance is reduced when disbursements are made to pay liabilities or to purchase assets, goods, and services;

investments in U.S. securities (securities issued by Fiscal Service or other federal agencies); when expired appropriations are

canceled, transfers and reimbursements to other federal entities or non-federal entities, to the General Fund; and due to

sequestration or rescission of appropriations.

STATUS OF FUND BALANCE 

As of September 30, 2021 and 2020, the status of the fund balance consisted of the following: 

(in millions) 2021 2020 

Unobligated Balance - Available $ 445,017 $ 749,049 

Unobligated Balance - Not Available 44,143 22,132 

Obligated Balance Not Yet Disbursed 175,467 176,989 

Subtotal 664,627 948,170 

Adjustment for ESF (207,601) (84,518) 

Adjustment for Intra-Treasury Investments (9,906) (8,975) 

Adjustment for Borrowing Authority (6,117) (99,676) 

Adjustment for IMF 163,962 120,688 

Adjustment for Authority Unavailable for Obligations 17,188 17,020 

Other Adjustments 4,303 3,676 

Total Status of Fund Balance $ 626,456 $ 896,385 

Portions of the Unobligated Balance Not Available, as shown on the Combined Statement of Budgetary Resources, include

amounts appropriated in prior fiscal years that are not available to fund new obligations. However, we may use such

amounts for upward and downward adjustments for existing obligations in future years. The Obligated Balance Not Yet

Disbursed represent amounts designated for payment of goods and services ordered but not received, or goods and services

received but for which payment has not yet been made. The significant changes in Unobligated Balance Available and

Unobligated Balance Not Available are primarily due to the FY 2021 rescission of our CARES Act appropriation resulting in

our de-obligation of amounts previously obligated in response to the COVID-19 pandemic (refer to Note 10). 

Since the following line items are either a component of Fund Balance or post to budgetary status accounts, the following

adjustments are required to reconcile the budgetary status to the non-budgetary Fund Balance as reported on the

Consolidated Balance Sheets:

• Adjustments for ESF – ESF investments in Treasury securities (which are eliminated on the Consolidated Balance

Sheets), foreign investments, SDR holdings, and related balances that meet the criteria for reporting as part of

budgetary resources are reported on the Combined Statements of Budgetary Resources; however, they are not a 

component of the Fund Balance as they represent invested funds. The change in Adjustments for ESF is primarily due

to $112.8 billion increase in SDR holdings (refer to Note 5), coupled with ESF reinvesting $11.5 billion of returned

capital received from two liquidity facilities into overnight securities (refer to Note 10);
DEPARTMENT OF THE TREASURY 91 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

• Adjustments for Intra-Treasury Investments – Budgetary resources include Treasury security investments; however, we

have moved the money from the Fund Balance to Investments, which we eliminate on the Consolidated Balance Sheets; 

• Adjustments for Borrowing Authority – Borrowing authority is in budgetary status reported on the Combined

Statements of Budgetary Resources but not in the Fund Balance because we have not received the amounts. The

significant decrease in borrowing authority is due to Treasury and the Federal Reserve amending the SPV agreements

in FY 2021, which resulted in the cancellation of the borrowing authority provided to fund our investment in the SPVs

(refer to Note 10); 

• Adjustments for IMF – The funding received through appropriation warrants for IMF is reported as a component of

Fund Balance; however, the IMF transactions are not reported as budgetary resources and uses on the Combined

Statements of Budgetary Resources. The increase reflects a $39.8 billion growth in the New Arrangements to Borrow

(NAB) commitment to the IMF to support the CARES Act (refer to Note 7); and

• Adjustment for Authority Unavailable for Obligations – Resources unavailable for obligations reduced the budgetary

resources reported on the Combined Statements of Budgetary Resources; however, they do not impact the Fund Balance. 

As of September 30, 2021 and 2020, we had no budgetary authority in the Fund Balance that was specifically withheld from

apportionment by the OMB. We hold balances in non-entity funds, such as certain deposit funds (e.g., seized cash), for the

public or for another federal entity, such as the General Fund. Such funds have an offsetting liability equal to the Fund

Balance. Refer to Note 7 regarding restrictions related to the letter of credit held for a portion of the U.S. quota in the IMF. 
92 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

3. LOANS AND INTEREST RECEIVABLE – INTRA-GOVERNMENTAL

ENTITY INTRA-GOVERNMENTAL

Through FFB, we issue loans to federal agencies for the agencies’ own use or for the agencies to loan to private sector

borrowers whose loans are guaranteed by the federal agencies. FFB is a wholly-owned Government corporation that

operates under the general supervision of the Secretary, and has its own broad statutory authority to finance any obligations

that are issued, sold, or guaranteed by federal agencies. For agencies that have the statutory authority to borrow in the

market, but not from Treasury through the Fiscal Service (refer to the Non-Entity Intra-Governmental section below), FFB 

uses its statutory authority to make these loans directly to federal agencies.

FFB also uses its statutory authority to finance direct or indirect federally-guaranteed obligations which, as a matter of longstanding federal credit policy, is the least expensive and most efficient method of financing these credit-risk obligations when

compared to private sector lender financing. When a federal agency has to honor its guarantee because a private-sector

borrower defaults, the federal agency that guaranteed the loan must obtain an appropriation or use other resources to repay

FFB. 

All principal and interest on FFB loans to federal agencies and private-sector borrowers are, or have a commitment to be,

backed by the full faith and credit of the U.S. government. Accordingly, we have not recognized any credit-related losses on

its loans, nor have we recorded an allowance for uncollectible intra-governmental loans. 

As of September 30, 2021 and 2020, entity intra-governmental loans (issued by FFB) and interest receivable consisted of the

following: 

Loans Interest 2021 Loans Interest 2020 

(in millions) Receivable Receivable Total Receivable Receivable Total 

Department of Agriculture $ 48,742 $ 30 $ 48,772 $ 46,652 $ 29 $ 46,681 

Department of Energy 15,904 72 15,976 15,807 74 15,881 

United States Postal Service(1) 11,000 35 11,035 14,000 40 14,040 

Department of Housing & Urban

 Development 2,630 8 2,638 2,364 7 2,371 

Other Agencies 476 2 478 1,833 14 1,847 

Total Entity Intra-Governmental $ 78,752 $ 147 $ 78,899 $ 80,656 $ 164 $ 80,820 

(1) The United States Postal Service (USPS) experienced an operating deficit in both FY 2021 and FY 2020.

We, along with Congress and other stakeholders, are aware of the current and long-term financial issues 

of the USPS. Congress is considering legislative solutions for returning the USPS to financial stability. 
DEPARTMENT OF THE TREASURY 93 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

NON-ENTITY INTRA-GOVERNMENTAL

Through the Fiscal Service, we account for and report on the principal borrowings from and repayments to the General Fund

for various funds managed by other federal agencies, as well as the related interest due to the General Fund. These federal

agencies are statutorily authorized to borrow from the General Fund, through the Fiscal Service, to make loans for a broad

range of purposes, such as education, housing, farming, and small business support. The information below reflect amounts

borrowed under the federal agency’s statutory authorization, and does not include unused available borrowing authority.

The CARES Act authorized the USPS to borrow up to $10.0 billion from the General Fund, through the Fiscal Service, to

fund operating expenses, if it was determined by USPS that it would be unable to fund such expenses due to the COVID-19

pandemic. The CAA amended the CARES Act to relieve the USPS from the requirement to repay any portion of the $10.0

billion borrowing. During FY 2021, the USPS borrowed the authorized amount of $10.0 billion. Also, during FY 2021, in

accordance with the CAA, we wrote-off this borrowing as a non-exchange loss that was recorded within the “Transfers to the

General Fund and Other” line item on the Consolidated Statements of Changes in Net Position. An offsetting other

financing source was recognized with the General Fund as part of the “Transfers to the General Fund and Other” line item

on the Consolidated Statements of Changes in Net Position, therefore there was no impact to Treasury’s overall net position. 

As of September 30, 2021 and 2020, non-entity intra-governmental loans (issued by the Fiscal Service) and interest

receivable that were due to the General Fund consisted of the following:

Loans Interest 2021 Loans Interest 2020 

(in millions) Receivable Receivable Total Receivable Receivable Total 

Department of Education $ 1,221,382 $ - $ 1,221,382 $ 1,249,870 $ - $ 1,249,870 

Small Business Administration 262,655 - 262,655 176,174 - 176,174 

Department of Agriculture 84,049 - 84,049 96,450 - 96,450 

Department of Housing and Urban

 Development 66,289 - 66,289 51,852 - 51,852 

Department of Homeland Security 20,618 - 20,618 20,596 - 20,596 

Department of Transportation 14,753 - 14,753 16,682 - 16,682 

Export Import Bank of the U.S. 14,531 - 14,531 15,388 - 15,388 

US International Development Finance

 Corporation 7,724 - 7,724 4,678 - 4,678 

Department of Energy 6,968 28 6,996 6,632 28 6,660 

Department of Labor 6,353 - 6,353 6,395 1 6,396 

Railroad Retirement Board 4,567 38 4,605 4,384 39 4,423 

Executive Office of the President/

 Security Assistance Accounts 1,652 - 1,652 1,756 - 1,756 

Department of Defense 1,600 - 1,600 1,663 - 1,663 

Other Agencies 2,284 - 2,284 1,508 - 1,508 

Total Non-Entity Intra- 

 Governmental $ 1,715,425 $ 66 $ 1,715,491 $ 1,654,028 $ 68 $ 1,654,096 

Total Intra-Governmental Loans

 and Interest Receivable (Entity 

 and Non-Entity) $ 1,794,177 $ 213 $ 1,794,390 $ 1,734,684 $ 232 $ 1,734,916 
94 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

4. DUE FROM THE GENERAL FUND AND DUE TO THE GENERAL FUND

The General Fund consists of assets and liabilities used to finance the daily and long-term operations of the U.S government,

as a whole. It also includes accounts used in the management of the Budget of the U.S. Government. 

We hold and manage General Fund assets, such as loans and interest receivable, cash, and investments in the GSEs on

behalf of the U.S. government. General Fund assets constitute resources available to meet the operating needs of the U.S.

government. We report these managed assets separately on the Consolidated Balance Sheets, with a corresponding amount

reported as Due To the General Fund that represents a liability to reflect assets we owed to the General Fund. 

General Fund liabilities, primarily federal debt and interest payable and liability for restoration of federal debt principal and

interest, are obligations of the U.S. government. We report these Department-managed liabilities separately on the

Consolidated Balance Sheets, with a corresponding amount reported as Due From the General Fund that represents a 

receivable, or future funds required of the General Fund to repay borrowings from the public and other federal agencies.

As of September 30, 2021 and 2020, the General Fund liabilities we owed exceeded the assets held on behalf of the General

Fund by $26.2 trillion and $23.1 trillion, respectively. This represents the amount needed by the U.S. government, through

a combination of future tax collections and/or continued borrowing from the public and federal agencies to meet its

obligations.

As of September 30, 2021 and 2020, Due From the General Fund included the following non-entity liabilities:

Liabilities Requiring Funding from the General Fund (in millions) 2021 2020 

Federal Debt and Interest Payable - Held by the Public (Note 16) $ 22,325,218 $ 21,062,850 

Federal Debt and Interest Payable - Intra-Governmental (Note 16) 6,225,208 6,005,252 

Liability for Restoration of Federal Debt Principal and Interest - Due to the 

 Public (Note 16) 157,035 - 

Liability for Restoration of Federal Debt Principal and Interest - Intra- 

 Governmental (Note 16) 60,562 - 

Refunds Payable 6,249 3,751 

Adjustment for Eliminated Liabilities 35,820 22,077 

Total Due From the General Fund $ 28,810,092 $ 27,093,930 

The Adjustment for Eliminated Liabilities principally represents investments in U.S. government securities held by our

reporting entities that were eliminated against Federal Debt and Interest Payable Intra-governmental.

 
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FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

As of September 30, 2021 and 2020, Due To the General Fund included the following non-entity assets:

Assets to be Distributed to the General Fund (in millions) 2021 2020 

Fund Balance $ 2,958 $ 2,539 

Loans and Interest Receivable - Intra-Governmental (Note 3) 1,715,491 1,654,096 

Advances to Trust Funds 91,378 37,166 

Cash Due To the General Fund (Held by the Department) (Note 5) 198,396 1,769,916 

Taxes and Other Non-Entity Receivables Due To the General Fund 303,806 237,346 

Credit Reform Downward Subsidy Re-estimates 3,420 13,025 

COVID-19 Investments, Credit Program Receivables, and Other (Note 10)

 Investments, Net 847 487 

 Notes and Interest Receivable, Net 13,677 5,320 

Investments in Government Sponsored Enterprises (Note 11) 220,860 108,910 

Adjustment for Eliminated Assets 96,679 161,647 

Other 1,491 1,329 

Total Due To the General Fund $ 2,649,003 $ 3,991,781 

The assets to be distributed to the General Fund do not represent all of the non-entity assets we manage. Refer to Note 15 for all

of our non-entity assets held.

The Fund Balance reported above represents the non-entity funds we hold on behalf of the General Fund. It is used to

administer programs such as the Presidential Election Campaign and payments for Legal Services Corporation and thus not

available for our general use.

The Advances to Trust Funds consists of Advances to the Unemployment Trust Fund and Advances to the Federal

Supplementary Medical Insurance Trust Fund. The General Fund issues advances to the DOL’s Unemployment Trust Fund

to disburse to states for unemployment benefits. We transfer DOL’s repayment of these advances to the General Fund. The 

Bipartisan Budget Act of 2015 (P.L. 114-74) authorized a transfer from the General Fund to HHS’ Federal Supplementary

Medical Insurance Trust Fund to temporarily replace the reduction in Medicare Part B participants’ premiums. We transfer

HHS’s repayment of these advances to the General Fund. Advances to these two trust funds at September 30, 2021

increased by a combined total of $54.2 billion from the end of the prior fiscal year, of which Advances to the Unemployment

Trust Fund and Advances to the Federal Supplementary Medical Insurance Trust Fund accounted for $19.1 billion and $35.1

billion of this growth, respectively, largely due to increased unemployment claims and Medicare Part B expenditures,

respectively, resulting from the COVID-19 pandemic.

Taxes and Other Non-Entity Receivables Due To the General Fund primarily represents IRS-related federal taxes receivable

(refer to Note 8).

The Adjustment for Eliminated Assets principally represents loans and interest payable owed by our Treasury reporting

entities, which were eliminated against Loans and Interest Receivable Intra-governmental held by the Fiscal Service.
96 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

5. CASH, FOREIGN CURRENCY, AND OTHER MONETARY ASSETS

Cash, Foreign Currency, and Other Monetary Assets held as of September 30, 2021 and 2020 were as follows: 

(in millions) 2021 2020 

Entity: 

Cash $ 113 $ 90 

Foreign Currency and Foreign Currency Denominated Assets 15,669 15,867 

Other Monetary Assets:

 Special Drawing Right Holdings 163,885 51,740 

 U.S. Dollars Held in Cash by the IMF 375 365 

Total Entity 180,042 68,062 

Non-Entity: 

Operating Cash of the U.S. government 198,313 1,769,869 

Foreign Currency 169 134 

Miscellaneous Cash Held by All Treasury Reporting Entities 581 300 

Total Non-Entity 199,063 1,770,303 

Total Cash, Foreign Currency, and Other Monetary Assets $ 379,105 $ 1,838,365 

We hold non-entity operating and other miscellaneous cash due to the General Fund which consisted of the following as of

September 30, 2021 and 2020: 

(in millions) 2021 2020 

Operating Cash - FRB Account $ 215,160 $ 1,781,679 

Outstanding Checks (16,847) (11,810) 

Total Operating Cash of the U.S. government 198,313 1,769,869 

Miscellaneous Cash 92 51 

Subtotal 198,405 1,769,920 

Amounts Due to the Public (9) (4) 

Total Cash Due to the General Fund (Note 4) $ 198,396 $ 1,769,916 

ENTITY

Entity cash, foreign currency, and other monetary assets principally include foreign currency, foreign currency denominated

assets (FCDAs), and SDRs. These assets are valued as of September 30, 2021 and 2020 using current exchange rates plus

accrued interest. 

Foreign Currency and Foreign Currency Denominated Assets 

Foreign currency and FCDAs represent foreign deposit accounts and securities with original maturities of three months or

less which were valued at $15.7 billion and $15.9 billion as of September 30, 2021 and 2020, respectively.

Special Drawing Rights

The SDR is an international reserve asset created by the IMF to supplement existing reserve assets (refer to Note 1M). The 

SDR derives its value as a reserve asset from the commitments of participants to hold and accept SDRs and to honor various

obligations connected with their proper functioning as a reserve asset. The IMF has allocated new SDRs on several

occasions to members participating in the IMF’s SDR department typically in response to the global financial crisis. A 

significant increase occurred in 2021 when we received an additional 79.5 billion SDRs valued at $112.8 billion in response
DEPARTMENT OF THE TREASURY 97 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

to the global economic stress caused by the COVID-19 pandemic (the last increase was in 2009 due to global economic

crisis). Our increased commitment to hold and accept SDRs helps to provide liquidity to the global economic system and

supplement member countries’ official reserves. 

As of September 30, 2021 and 2020, the total amount of SDR holdings of the U.S. (including interest receivable) was the

equivalent of $163.9 billion and $51.7 billion, respectively. As of September 30, 2021 and 2020, the total value of SDR

allocations to the U.S. was the equivalent of $161.8 billion and $49.7 billion, respectively. The outstanding SDR certificates

issued to the Federal Reserve are valued at $5.2 billion which were reported as a liability on the Consolidated Balance

Sheets as of September 30, 2021 and 2020.

NON-ENTITY

We manage the non-entity cash, foreign currency, and other monetary assets which principally included Operating Cash of

the U.S. government. Also included is foreign currency maintained by various U.S. disbursing offices, miscellaneous cash

such as seized monetary instruments, undistributed cash, and offers in compromises which are maintained as a result of our

tax collecting responsibilities. The Operating Cash of the U.S. government declined by $1.6 trillion largely due to Treasury

maintaining an elevated cash balance in FY 2020 to maintain prudent liquidity in light of the size and relative uncertainty of

COVID-19 related outflows. 
98 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

6. GOLD AND SILVER RESERVES, AND GOLD CERTIFICATES ISSUED TO

THE FEDERAL RESERVE BANKS

Through the Mint, we are responsible for safeguarding most of the U.S. government’s gold and all of the silver reserves in

accordance with 31 USC 5117; a smaller portion of the gold is in the custody of the FRBs.

The gold reserves we hold are partially offset by a liability for gold certificates issued by the Secretary to the FRBs at the

statutory rate, as provided in 31 USC 5117. Since 1934, Gold Certificates have been issued in non-definitive or book-entry

form to the FRBs. Our liability incurred by issuing the Gold Certificates, as reported on the Consolidated Balance Sheets, is

limited to the gold we hold at the statutory value. Upon issuance of Gold Certificates to the FRBs, we deposit the proceeds

from the certificates into the operating cash of the U.S. government. All of our certificates issued are payable to the FRBs. 

The Mint also holds 100,000 fine troy ounces (FTO) ($4 million at the statutory carrying value) of gold reserves without

certificates.

The gold and silver bullion reserve (deep storage and working stock) are reported on the consolidated financial statements at

the values stated in 31 USC 5116 – 5117 (statutory rates) which are $ 42.2222 per FTO of gold and no less than

$1.292929292 per FTO of silver. Accordingly, the silver is valued at $1.292929292 per FTO. The market values of the gold

and silver reserves disclosed below are based on the London Gold Fixing. As of September 30, 2021 and 2020, the values of

gold and silver reserves consisted of the following:

2021 

Statutory 2021 

Carrying Market Market 

Statutory Value Rate Per Value

 FTOs Rate (in millions) FTO (in millions)

Gold 248,046,116 $ 42.2222 $ 10,473 $ 1,742.80 $ 432,295 

Gold Held by Federal Reserve Banks 13,452,811 $ 42.2222 568 $ 1,742.80 23,446 

Total Gold 261,498,927 11,041 455,741 

Silver 16,000,000 $ 1.2929 21 $ 21.53 344 

Total Gold and Silver Reserves $ 11,062 $ 456,085 

2020 

Statutory 2020 

Carrying Market Market 

Statutory Value Rate Per Value

 FTOs Rate (in millions) FTO (in millions)

Gold 248,046,116 $ 42.2222 $ 10,473 $ 1,886.90 $ 468,038 

Gold Held by Federal Reserve Banks 13,452,811 $ 42.2222 568 $ 1,886.90 25,384 

Total Gold 261,498,927 11,041 493,422 

Silver 16,000,000 $ 1.2929 21 $ 23.73 380 

Total Gold and Silver Reserves $ 11,062 $ 493,802 
DEPARTMENT OF THE TREASURY 99 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

7. RESERVE POSITION IN THE INTERNATIONAL MONETARY FUND AND

RELATED LOANS AND INTEREST RECEIVABLE

The U.S. participates in the IMF through a quota subscription and a separate borrowing arrangement—the New

Arrangements to Borrow (NAB)—that supplements IMF resources. 

As a result of the Consolidated Appropriations Act, 2016 (P.L. 114-113), we obtained appropriation warrants to cover the full

amount of the commitment made to the IMF and received current indefinite authority to maintain the U.S. dollar equivalent

of the SDR funding commitment levels. The IMF transactions—other than related interest earnings and cost estimates for 

U.S. quota and NAB adjustments—are not reported as budgetary resources and uses on our Combined Statement of

Budgetary Resources. 

RESERVE POSITION IN THE INTERNATIONAL MONETARY FUND

We pay quota subscriptions partly through the transfer of reserve assets, such as foreign currencies or SDRs, which are

international reserve assets created by the IMF, and partly by making domestic currency available as needed through a noninterest-bearing letter of credit. This letter of credit, issued by us and maintained by the FRBNY, represents our available

commitment to the IMF which may be drawn upon by the IMF. 

Transfers to the IMF under the U.S. quota do not result in net budgetary outlays as they constitute an exchange of monetary

assets in which the U.S. receives an equal offsetting claim on the IMF in the form of an increase in the U.S. reserve position

in the IMF. Similarly, when the IMF repays dollars to the U.S., no net budgetary receipt results because the U.S. reserve

position declines concurrently in an equal amount. The U.S. reserve position is an interest-bearing asset like other

international reserve assets held by the U.S., and is available at any time to meet U.S. funding needs.

The U.S. quota is denominated in SDRs. As of September 30, 2021 and 2020, the U.S. quota in the IMF was SDR 83.0

billion. The equivalent U.S. dollar value of the U.S. quota consisted of the following:

(in millions) 2021 2020 

Letter of Credit (1) $ 83,965 $ 85,387 

Reserve Position (2) 32,743 31,211 

Total U.S. Quota in the IMF $ 116,708 $ 116,598 

(1) Letter of Credit amounts are included as part of the “Fund Balance” as reported on the Consolidated Balance Sheets. Amounts also include

approximately 0.25 percent of the U.S. quota held in cash in an IMF account at the FRBNY. 

(2) The Reserve Position amounts are reported as “Reserve Position in the IMF” on the Consolidated Balance Sheets. 

Fluctuations in the value of the U.S. dollar with respect to the SDR result in valuation changes in dollar terms for the U.S.

quota. We periodically adjust this balance to maintain the SDR value of the U.S. quota as required by the IMF Articles of

Agreement. As of September 30, 2021 and 2020, the U.S. quota reflects a net upward adjustment in value of $0.1 billion and

$3.6 billion, respectively, due to the depreciation of the U.S. dollar against the SDR.

LOANS AND INTEREST RECEIVABLE (OTHER THAN COVID-19 RECEIVABLES)

In addition to quota subscriptions, the IMF maintains borrowing arrangements to supplement its resources in order to

forestall or cope with an impairment of the international monetary system when IMF liquidity is low. The U.S. has the

authority to participate in the NAB. When the U.S. transfers funds to the IMF under the NAB, the U.S. receives in

exchange a liquid and interest-bearing claim on the IMF. 
100 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

In accordance with the CARES Act, effective January 1, 2021, U.S. participation in the NAB increased by SDR 28.2 billion. 

Accordingly, the U.S. participation in the NAB as of September 30, 2021 and 2020 was SDR 56.4 billion and SDR 28.2

billion, respectively, which was equivalent to $79.5 billion and $39.7 billion, respectively. As of September 30, 2021 and

2020, under the U.S. NAB arrangement with the IMF, there was $0.9 billion and $1.7 billion, respectively, of U.S. loans

outstanding which were reported as “Loans and Interest Receivable” on the Consolidated Balance Sheets.

8. TAXES, INTEREST, AND OTHER RECEIVABLES, NET

As of September 30, 2021 and 2020, Taxes, Interest, and Other Receivables, Net consisted of the following:

(in millions) 2021 2020 

Non-Entity 

Federal Taxes Receivable, Gross $ 493,275 $ 427,251 

Less Allowance on Taxes Receivable (191,253) (191,246) 

Receivable on FRB Deposits of Earnings 267 162 

Other Receivables 1,662 1,324 

Less Allowance on Other Receivables (137) (134) 

Total Non-Entity (Note 15) 303,814 237,357 

Entity 

Miscellaneous Entity Receivables and Related Interest 815 233 

Total Taxes, Interest, and Other Receivables, Net $ 304,629 $ 237,590 

Federal taxes receivable constitutes the largest portion of these receivables, with IRS-related federal taxes receivable

representing the majority of the balance. IRS federal taxes receivable consists of delinquent tax assessments, penalties, and

interest which were not paid or abated, and which were agreed to by either the taxpayer and IRS, or the courts. These

receivables also include non-delinquent IRC 965(h) amounts and employers’ deferred share of the Social Security portion of

FICA and both the employers’ and employee representatives’ share of the RRTA, as provided for by the CARES Act. The 

growth in the Federal Taxes Receivable, Gross amount is largely due to the inclusion of the FICA amounts, partly offset by a 

reduction in the IRC 965(h) amounts.

Federal taxes receivable is reduced by an allowance for doubtful accounts which we established to represent an estimate for

uncollectible amounts. The portion of taxes receivable estimated to be collectible and the allowance for doubtful accounts are

based on projections of collectability from a statistical sample of taxes receivable (refer to the section entitled Required

Supplementary Information (unaudited) for additional discussion on IRS Federal Taxes Receivable, Net). 

In addition to amounts attributed to taxes, these receivables also include accrued interest income due on funds deposited in

FRBs. We do not establish an allowance for the receivable on deposits of FRB earnings because weekly deposits are required

by the Federal Reserve Act, as amended, and there has been no history of uncollectible accounts.
DEPARTMENT OF THE TREASURY 101 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

9. CREDIT PROGRAM RECEIVABLES, NET

We administer a number of programs designed to stabilize the nation’s financial system and restore the flow of credit to

consumers, businesses, and homeowners. As of September 30, 2021 and 2020, Credit Program Receivables, Net (other than

the COVID-19 Credit Program Receivables, Net) consisted of the following:

(in millions) 2021 2020 

State and Local Housing Finance Agency Program (GSE sponsored) $ 1,416 $ 2,395 

Other (1) 1,346 1,309 

Total $ 2,762 $ 3,704 

(1) Includes CDFI, SBLF, and TARP credit program receivables valued at $1.3 billion, $36 million, and $4 million, respectively, as of

September 30, 2021, and $1.2 billion, $46 million, and $16 million, respectively, as of September 30, 2020. 

STATE AND LOCAL HOUSING FINANCE AGENCY PROGRAM (GSE SPONSORED) 

Under the Housing and Economic Recovery Act of 2008 (HERA), (P.L. 110-289), we, together with the FHFA, Fannie Mae,

and Freddie Mac, created a program in October 2009 to provide support to HFAs. The HFA Program is comprised of the

New Issue Bond Program (NIBP) that is designed to support low mortgage rates and expand resources for low- and middleincome borrowers to purchase or rent homes, making them more affordable over the long term. Under the terms of the

NIBP, we purchased securities of Fannie Mae and Freddie Mac backed by new mortgage revenue bonds issued by HFAs. As

of September 30, 2021 and 2020, the HFA net credit program receivable of $1.4 billion and $2.4 billion, respectively, included

a positive subsidy allowance of $249 million and $395 million, respectively, which reflects our projection that the HFA

program will result in a net cost to us after accounting for repayments, interest, and fees. 

We performed a financial statement re-estimate of the NIBP program’s cost as of September 30, 2021 and 2020. These reestimates resulted in a downward re-estimate, or a decrease in the cost of the program, of $140 million and $174 million as of

September 30, 2021 and 2020, respectively. The downward re-estimates in FY 2021 and 2020 were primarily driven by

higher than estimated principal collections, and a higher prepayment curve used in the projection of future years’ cash flows

as a result of improved economic conditions. 

SUMMARY TABLES

The following tables provide the net composition, subsidy cost, re-estimates, a reconciliation of subsidy cost allowances, and

the components of the subsidy for each of our credit programs for the fiscal years ended September 30, 2021 and 2020. The

tables also include budget subsidy rates pertaining only to the cohorts for the fiscal year presented. These rates cannot be

applied to the direct loans disbursed during the current reporting year to yield the subsidy expense. The subsidy expense for 

new loans reported in FY 2021 and 2020 could result from disbursements of loans from both current year cohorts and prior

year(s) cohorts, and also includes re-estimates. Amounts reported in the line item “Net Credit Program Receivables” are not

necessarily the same as the proceeds that we would expect to receive from selling these assets. 
102 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

2021

(in millions) HFA Other(2) TOTAL

Credit Program Receivables, Net:

 Credit Program Receivables, Gross $ 1,665 $ 1,349 $ 3,014

 Subsidy Cost Allowance (249) (3) (252)

Net Credit Program Receivables $ 1,416 $ 1,346 $ 2,762

New Credit Program Loans Disbursed $ - $ 92 $ 92

Obligations for Loans Not Yet Disbursed $ - $ 413 $ 413

Reconciliation of Subsidy Cost Allowance:

 Balance, Beginning $ 395 $ 3 $ 398

 Subsidy Cost for Disbursements - (3) (3)

 Fees, Interest and Dividend Revenue Received 62 36 98

 Net Proceeds from Sales and Repurchases of Assets

 in Excess (Less than) Cost - (2) (2)

 Subsidy Allowance Amortized (1) (68) (36) (104)

Balance, Ending, Before Re-estimates 389 (2) 387

 Subsidy Re-estimates (140) 5 (135)

Balance, Ending $ 249 $ 3 $ 252

Re-estimates

 Interest on Re-estimate $ (52) $ 18 $ (34)

 Technical/Default Re-estimate (88) (13) (101)

Total Re-estimates – Increase (Decrease) in

 Subsidy Cost $ (140) $ 5 $ (135)

Reconciliation of Subsidy Costs:

 Subsidy Cost for Disbursements $ - $ (3) $ (3)

 Subsidy Re-estimates (140) 5 (135)

Total Credit Program Receivables Subsidy Costs $ (140) $ 2 $ (138)

Administrative Expense $ 1 $ 3 $ 4 

2020

(in millions) HFA Other(3) TOTAL

Credit Program Receivables, Net:

 Credit Program Receivables, Gross $ 2,790 $ 1,312 $ 4,102

 Subsidy Cost Allowance (395) (3) (398)

Net Credit Program Receivables $ 2,395 $ 1,309 $ 3,704

New Credit Program Loans Disbursed $ - $ 171 $ 171

Obligations for Loans Not Yet Disbursed $ - $ 451 $ 451

Reconciliation of Subsidy Cost Allowance:

 Balance, Beginning $ 582 $ 18 $ 600

 Subsidy Cost for Disbursements - (4) (4)

 Fees, Interest, and Dividend Revenue Received 104 34 138

 Net Proceeds from Sales and Repurchases of Assets

 in Excess of (Less than) Cost - (17) (17)

 Subsidy Allowance Amortized (1) (117) (37) (154)

Balance, Ending, Before Re-estimates 569 (6) 563

 Subsidy Re-estimates (174) 9 (165)

Balance, Ending $ 395 $ 3 $ 398

Re-estimates

 Interest on Re-estimate $ (59) $ 17 $ (42)

 Technical/Default Re-estimate (115) (8) (123)

Total Re-estimates – Increase (Decrease) in 

 Subsidy Cost $ (174) $ 9 $ (165)

Reconciliation of Subsidy Costs:

 Subsidy Cost for Disbursements $ - $ (4) $ (4)

 Subsidy Re-estimates (174) 9 (165)

Total Credit Program Receivables Subsidy Costs $ (174) $ 5 $ (169)

Administrative Expense $ 1 $ 3 $ 4 

(1) Amount includes net interest income (expense) on borrowings from the Fiscal Service and financing account balance.

(2) CDFI Financial Assistance Direct Loan Program budget subsidy rates for Interest Differential and for Defaults were 1.28% and 8.21%, respectively.

(3) CDFI Financial Assistance Direct Loan Program budget subsidy rates for Interest Differential and for Defaults were 1.05%, and 8.55%, respectively. 
DEPARTMENT OF THE TREASURY 103 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

10. COVID-19 INVESTMENTS, ADVANCES, RECEIVABLES, AND OTHER

The global spread of the COVID-19, which commenced in early spring of 2020 and continued throughout FY 2021, resulted in

a severe global health and economic crisis. In FY 2020 and FY 2021, Congress took steps to limit the damage the pandemic

in the U.S. caused by passing several key statutes that helped to reduce the financial burden on individuals and their

families, minimize business and employment losses and enhance the liquidity of the U.S. financial system. Additionally, in 

FY 2020, the Federal Reserve Board of Governors (Board) used its emergency-lending authority under Section 13(3) of the

Federal Reserve Act (Section 13(3) hereafter) authorizing the FRBNY and the FRBB to establish liquidity lending facilities

for the purpose of making loans and purchasing debt and commercial paper of eligible entities to support key U.S. financial

markets. We played a critical role in the implementation and support Congress’ and the Board’s actions.

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act),

P.L. 116-136. The CARES Act appropriated $500.0 billion to our Exchange Stabilization Fund (ESF) to make loans, loan

guarantees, or investments through December 31, 2020, to support the Board’s emergency efforts, as well as to provide

financial assistance to certain categories of businesses that incurred losses as a result of COVID-19. The CARES Act also

added appropriations for us to make financial assistance payments of: (i) $32.0 billion to air carriers and contractors to

provide payroll support for the purpose of preserving aviation jobs during the pandemic; and (ii) $150.0 billion to affected

states, local, territorial, and Tribal governments (Coronavirus Relief Fund). Through the IRS’s permanent and indefinite

authority, we obtained $282.0 billion to pay Economic Impact Payments (EIPs) for individuals pursuant to the CARES Act,

and an additional $10.0 billion to fund tax credits associated with the Sick and Family Leave and Employee Retention Tax 

Credits programs, also in accordance with the CARES Act and the Families First Coronavirus Response Act of 2020

(FFCRA). 

On December 27, 2020, the President signed into law the Consolidated Appropriations Act, 2021 (CAA), P.L. 116-260. This

legislation rescinded, upon its enactment, $429.0 billion of the $500.0 billion appropriation provided to Treasury under the

CARES Act, and rescinded the remaining unobligated appropriation of $49.8 billion as of January 9, 2021. The CAA also

provided for a second distribution of EIPs (utilizing an estimated $166.0 billion of IRS’s permanent and indefinite authority)

to individuals, along with various tax breaks for employers, and extended the use of funds from the Coronavirus Relief Fund

from December 30, 2020, to December 31, 2021. The CAA also provided separate appropriations to Treasury for COVID-19

additional emergency funding, including $16.0 billion for a second distribution of payroll support payments to air carriers

and contractors; $25.0 billion to states, local, territorial, and Tribal governments, for their subsequent disbursement of

emergency rental financial assistance payments to eligible households; $9.0 billion for investments in community

development financial institutions (CDFIs) to support low-income and minority communities; $3.0 billion for COVID-19

grants to CDFIs; and $2.0 billion for transportation service providers.

The American Rescue Plan Act of 2021 (ARP), P.L. 117-2, signed into law on March 11, 2021, provided through the IRS’s

permanent and indefinite authority, $421.0 billion as a third distribution of EIPs to individual households and $70.0 billion

in advances for child tax credits. The ARP also extended the use of funds from the CAA’s emergency rental assistance

program from December 31, 2021, to September 30, 2022. The ARP added new appropriations of $350.0 billion for a 

Coronavirus State and Local Recovery Fund, an expanded version of the Coronavirus Relief Fund program under the CARES

Act, for providing financial assistance to state, local, territorial, and Tribal governments. Further added were new

appropriations for programs modeled on certain programs previously created by the CARES Act and the CAA, including

$15.0 billion for a third distribution of payroll support payments to air carriers and contractors, and $21.6 billion for a second
104 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

distribution of emergency rental assistance. The ARP also provided for an additional aggregate of $32.0 billion in new

appropriations to create four other new programs to address continuing pandemic-related crises, including a $10.0 billion

homeowners assistance fund, a $10.0 billion capital projects fund, a $10.0 billion state small business credit initiative fund,

and a $2.0 billion local assistance and Tribal consistency fund.

The tables below summarize our key budgetary resources, as of September 30, 2021 and 2020, by program for each of the

three legislative Acts enacted in response to the COVID-19 pandemic:

Fiscal Year Ended September 30, 2021

(in millions)

Appropriation 

and Other 

Authority (1)

Other 

Adjustments (2)

Less: 

Obligations 

Incurred

Remaining 

Available 

Budgetary 

Resources

ARP Authority

Economic Impact Payments to Individuals $ 421,000 $ (16,697)$ (404,303)$ - 

Advances for Child Tax Credits 70,000 (23,856) (46,144) - 

Other COVID-19 Related Tax Credits 52,286 (42,143) (10,143) - 

Total Taxpayer Support Programs 543,286 (82,696) (460,590) - 

 

Coronavirus State and Local Fiscal Recovery Funds 350,000 - (242,934) 107,066 

Emergency Rental Assistance 21,550 - (8,466) 13,084 

Homeowners Assistance Fund 9,961 - (973) 8,988 

Coronavirus Capital Projects Fund 10,000 - - 10,000 

State Small Business Credit Initiative 10,000 - (6) 9,994 

Local Assistance and Tribal Consistency Fund 2,000 - - 2,000 

Total State, Local, Territorial, and Tribal Programs 403,511 - (252,379) 151,132 

 

Payroll Support to Aviation Workers 15,000 - (14,671) 329 

Total American Industry and Financial Markets Programs 15,000 - (14,671) 329 

Total ARP Authority (3) $ 961,797 $ (82,696)$ (727,640)$ 151,461 

 

CAA Authority

Economic Impact Payments to Individuals $ 166,000 $ (1,229)$ (164,771) $ - 

Total Taxpayer Support Programs 166,000 (1,229) (164,771) - 

 

Emergency Rental Assistance 25,000 - (24,994) 6 

Total State, Local, Territorial and Tribal Programs 25,000 - (24,994) 6 

 

Payroll Support to Aviation Workers 16,000 - (15,683) 317 

Coronavirus Economic Relief for Transportation Services 2,000 - (1,295) 705 

Total American Industry and Financial Markets Programs 18,000 - (16,978) 1,022 

 

Emergency Capital Investment Program 9,000 - (24) 8,976 

CDFI Rapid Response and Economic Impact Programs 3,000 - (1,249) 1,751 

Total CDFI Programs 12,000 - (1,273) 10,727 

Total CAA Authority (3) $ 221,000 $ (1,229)$ (208,016) $ 11,755 

(1) Appropriation and Other Authority includes authority provided by the ARP and CAA which was used to finance emergency relief programs. 

Also included is permanent and indefinite authority used to fund the tax provisions pursuant to these Acts.

(2) Other Adjustments primarily include the return of unused permanent and indefinite authority as of September 30, 2021. To fund certain tax

provision programs that extended beyond September 30, 2021, permanent and indefinite appropriations will be obtained in FY 2022.

(3) Total ARP and CAA Authority does not include amounts related to the Department’s program support and oversight of these programs.
DEPARTMENT OF THE TREASURY 105 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Fiscal Year Ended September 30, 2021

(in millions)

Beginning 

Available 

Budgetary 

Resources

Rescissions and 

Other 

Adjustments (1)

Less: 

Obligations 

Incurred

Remaining 

Available 

Budgetary 

Resources

CARES Act Authority

Economic Impact Payments to Individuals $ - $ 434 $ (434)$ - 

Total Taxpayer Support Programs - 434 (434) - 

Section 13(3) Federal Reserve Programs - Liquidity Facilities 423,835 (423,835) - - 

Direct Loans to Air Carriers and National Security Business 44,301 (42,692) (18) 1,591 

Payroll Support to Aviation Workers 3,794 - (447) 3,347 

Total American Industry and Financial Markets Programs 471,930 (466,527) (465) 4,938 

Total CARES Act Authority (2) $ 471,930 $ (466,093)$ (899)$ 4,938 

(1) Rescissions and Other Adjustments primarily include a total of $478.8 billion of CARES Act appropriation authority that was rescinded

pursuant to the CAA. Partially offsetting this amount was a de-obligation of $12.3 billion that was to be used to fund the subsidy portion of

obligated but undisbursed CARES Act investments and loans. Also includes permanent and indefinite authority obtained in FY 2021 to fund

certain tax provision programs that extended beyond September 30, 2020 pursuant to the CARES Act.

(2) Total CARES Act Authority does not include amounts related to the Department’s program support and oversight of these programs.

Fiscal Year Ended September 30, 2020

(in millions)

Appropriation 

and Other 

Authority (1)

Borrowing 

Authority and 

Other 

Adjustments (2)

Less: 

Obligations 

Incurred

Remaining 

Available 

Budgetary 

Resources

CARES Act Authority

Section 13(3) Federal Reserve Programs - Liquidity Facilities $ 454,000 $ 164,835 $ (195,000) $ 423,835 

Direct Loans to Air Carriers and National Security Business 46,000 13,656 (15,355) 44,301 

Total Investments and Direct Loans 500,000 178,491 (210,355) 468,136 

Payroll Support to Aviation Workers 32,000 - (28,206) 3,794 

Coronavirus Relief Fund 150,000 - (150,000) - 

Total Relief Funding 182,000 - (178,206) 3,794 

Economic Impact Payments for Individuals 282,000 (7,346) (274,654) - 

Sick and Family Leave and Employee Retention Tax Credits 10,000 (9,286) (714) - 

Total Tax Provision 292,000 (16,632) (275,368) - 

Total CARES Act Authority (3) $ 974,000 $ 161,859 $ (663,929) $ 471,930 

(1) Appropriation and Other Authority includes appropriation authority provided by the CARES Act which, together with the ESF’s core authority

under the Gold Reserve Act, was used to finance emergency relief programs. Also included is permanent and indefinite authority used to fund

the tax provision programs pursuant to this Act.

(2) Appropriation Authority (first column) was used to finance the subsidy costs associated with making the investments and direct loans in

accordance with the provisions of FCRA. Borrowing Authority (second column) was used to finance the remainder of the disbursed amounts via

borrowings from Fiscal Service. Other Adjustments primarily include the return of unused permanent and indefinite authority of $16.6 billion

as of September 30, 2020. 

(3) Total CARES Act Authority does not include amounts related to the Department’s program support and oversight of these programs.

 
106 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

TAXPAYER SUPPORT

ECONOMIC IMPACT PAYMENTS FOR INDIVIDUALS

Pursuant to the CARES Act, CAA, and ARP, Treasury, through the IRS, used its permanent and indefinite authority to pay

recovery rebates for individuals (also referred to as the “Economic Impact Payments”). These Acts authorized the IRS to

allow for a tax credit (or rebate) to individuals against their 2020 income taxes (for the CARES Act and CAA) and against

their 2021 income taxes (for the ARP). These EIPs were reduced above certain income limitations per individual tax return. 

The IRS disbursed payments under this provision to eligible recipients in every state and territory and at foreign addresses. 

These outlays were reported as “Refunds and Other Payments” on the Statements of Custodial Activity (refer to Note 23).

A summary of the EIP information and disbursement activity for FY 2021 and FY 2020 by legislative Act is as follows:

Tax Credit (or Rebate) To (amounts in dollars)

Per Individuals

Per Individual 

Filing Jointly

Add'l for Each 

Qualifying Child

FY 2021

Total Disbursed

($ in millions)

FY 2020

Total Disbursed

($ in millions)

CARES Act $ 1,200 $ 2,400 $ 500 $ 434 $ 274,654 

CAA $ 600 $ 1,200 $ 600 $ 164,771 $ - 

ARP $ 1,400 $ 2,800 $ 1,400 $ 404,303 $ - 

ADVANCES FOR CHILD TAX CREDITS

The ARP allows eligible employers to claim refundable tax credits that reimburse them for the cost of providing paid sick and

family leave to their employees due to COVID-19, including leave employees take to receive or recover from COVID-19

vaccinations. The ARP tax credits are available to eligible employers that pay sick and family leave for leave from

April 1, 2021, through September 30, 2021. The ARP also increases the child tax credit from $2,000 to $3,000 for the 2021

tax year only. For the 2021 tax year only, the child tax credit is made fully refundable for taxpayers whose principal

residence for more than one-half of the tax year is in the United States.

OTHER COVID-19 RELATED TAX CREDITS

The Families First Coronavirus Response Act of 2020 (FFCRA) (P.L. 116-127), created the Sick and Paid Family Leave tax

credit. The credit allows employers a payroll credit against the tax imposed on the qualified sick leave and family leave

wages paid in the calendar quarter, with limitations. The CAA extended the Sick and Paid Family Leave from

December 31, 2020, until March 31, 2021.

The CARES Act also authorized eligible employers to claim a credit against applicable employment taxes for an amount

equal to 50 percent of qualified wages of up to $10,000 paid by employers to employees during the COVID-19 crisis. The 

Employee Retention Credit (ERC) is available to employers whose (i) operations were fully or partially suspended, due to a 

COVID-19 related shut-down order, or (ii) gross receipts declined by more than 50 percent when compared to the same

quarter in the prior year. Additionally, the CAA extended the ERC from December 31, 2020, to June 30, 2021.

The ARP also included a Consolidated Omnibus Budget Reconciliation Act (COBRA) tax credit where employers are entitled

to a 100 percent tax credit for subsidizing COBRA on behalf of eligible individuals. The COBRA subsidy period was from

April 1, 2021 to September 30, 2021.
DEPARTMENT OF THE TREASURY 107 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

COVID-19: Refunds and Other Payments 

The IRS used its permanent and indefinite authority to fund the taxpayer support programs as authorized by the CARES

Act, CAA, and ARP. We report this activity within the “Refunds and Other Payments” line of the Statements of Custodial

Activity (also refer to Note 23). EIP outlays and tax credits paid in FY 2021 in connection with the CAA and ARP and in

FY 2020 in connection with the CARES Act were as follows:

(in millions) 2021 2020 

Economic Impact Payments $ 569,508 $ 274,654 

Advances for Child Tax Credits 46,144 - 

Other COVID-19 Related Tax Credits 10,143 714 

Total COVID-19 Related Refunds and Other Payments $ 625,795 $ 275,368 

SUPPORT PROVIDED THROUGH STATE, LOCAL, TERRITORIAL AND TRIBAL GOVERNMENTS

The following is a description of each support program directed through state, local, territorial, and Tribal governments. 

Following these descriptions is a section entitled, “COVID 19: Advances, Net,” which discusses the accounting treatment for 

these programs.

CORONAVIRUS RELIEF FUND

In FY 2020, Treasury established the Coronavirus Relief Fund (CRF) pursuant to the CARES Act to reduce financial

pressure placed upon state, territorial and Tribal governments, and certain eligible units of local governments as a result of

the pandemic. Congress appropriated $150.0 billion to the CRF, of which $8.0 billion was reserved for making payments to

Tribal governments, and $3.0 billion was reserved for making payments to the District of Columbia and U.S. territories, 

including the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, the Commonwealth of the Northern Mariana

Islands, and American Samoa.

We made payments from the CRF to state, local, territorial, and Tribal governments, which the governing bodies use to

specifically cover costs that:

• are necessary expenditures incurred due to COVID–19;

• were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES

Act) for the state or government; and

• were incurred during the period that begins on March 1, 2020, and ends on December 31, 2021 (as extended by the CAA

from December 30, 2020).

Section 601(f)(2) of the Social Security Act (as added by the CARES Act) provides for the Treasury Office of Inspector

General to recoup amounts recipients received from the CRF that have not been used in a manner consistent with Section

601(d) of the Social Security Act. If a recipient does not use funds it received to cover costs that were incurred through

December 31, 2021 (as extended by the CAA from December 30, 2020), those funds must be returned to Treasury and

deposited to the General Fund.

Of the $150.0 billion appropriated in FY 2020 for this program, we disbursed $0.4 billion and $149.5 billion for the fiscal

years ended September 30, 2021 and 2020, respectively. We did not recoup any of the disbursed funds in either year.
108 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS

The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), established in FY 2021 in accordance with the ARP,

provide a combined $350.0 billion, to remain available through December 31, 2024, to state, local, territorial, and Tribal

governments to reduce the fiscal effects stemming from COVID-19, and lay the foundation for a strong and equitable

recovery. Pursuant to the terms of the ARP, we provided assistance to:

• households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality; 

• eligible workers of state, territorial, or Tribal governments by providing them premium pay for performing essential

work during the COVID-19 public health emergency;

• eligible state, local, territorial, and Tribal governments to replace lost revenue and strengthen support for vital public

services and help retain jobs; and

• make necessary investments in water, sewer, or broadband infrastructure.

We allocated the $350.0 billion of appropriations we received as follows: $195.3 billion for states, including the District of

Columbia; $130.2 billion for local governments, including counties, metropolitan cities, and non-entitlement units of local

government; $4.5 billion for territorial governments; and $20.0 billion for Tribal governments. 

We will recoup funds from recipients that fail to comply with the provisions of the statute on specified use of funds, for the

amount in violation. If a recipient does not use funds it received by December 31, 2024, they must return those funds to

Treasury, which we will deposit to the General Fund.

Of the $350.0 billion appropriated in FY 2021 for this program, we disbursed $242.9 billion for the fiscal year ended 

September 30, 2021. We did not recoup any of the disbursed funds in FY 2021.

EMERGENCY RENTAL ASSISTANCE (HOUSING SUPPORT) 

Even as the American economy continues its recovery from the devastating impact of the pandemic, millions of Americans

face deep rental debt and fear evictions and the loss of basic housing security. 

To meet this need, we established two Emergency Rental Assistance (ERA) programs in FY 2021, the first program created

pursuant to the CAA (ERA 1) and a second round under the ARP (ERA 2). The ERA programs make funding available

through state, local, territorial, and Tribal governments. Recipients must use up to 90 percent of the awarded funding to

provide financial assistance to eligible households for rent (and arrears), utilities and home energy costs (and arrears), other

housing costs and housing stability services. The ERA 1 and ERA 2 funding will generally remain available until September

30, 2022, and September 30, 2025, respectively.

We will recoup funds from those recipients that fail to comply with the provisions of the statute on specified use of funds, for 

the amount in violation, and will deposit the recouped funds to the General Fund. 

(in millions)

Appropriations 

Received

Total Disbursed 

FY 2021

Period of 

Availability

CAA (ERA 1) $ 25,000 $ 24,994 9/30/2022 

ARP (ERA 2) 21,550 8,319 9/30/2025 

Total ERA Programs $ 46,550 $ 33,313 
DEPARTMENT OF THE TREASURY 109 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

HOMEOWNER ASSISTANCE FUND

The ARP provided $9.961 billion of appropriated funds to establish the Homeowner Assistance Fund (HAF) to help prevent

homeowner mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services, and displacement of

homeowners experiencing financial hardship after January 21, 2020. Funds from the HAF are being made available through

state, local, territorial, and Tribal governments. Recipients must use the funds for assistance with mortgage payments,

homeowner’s insurance, utility payments, and other specified purposes related to mortgages and housing. This funding will

remain available until September 30, 2025. Of the $9.961 billion appropriated in FY 2021 for this program, we disbursed

$1.0 billion for the fiscal year ended September 30, 2021. We did not recoup any of the disbursed funds in FY 2021. 

CORONAVIRUS CAPITAL PROJECTS FUND

The Coronavirus Capital Projects Fund, established pursuant to the ARP in FY 2021, addresses certain challenges of the

pandemic, especially in rural America and low- and moderate-income communities, helping to ensure that all communities

have access to high-quality, modern infrastructure, including internet access. The ARP provided an appropriation of

$10.0 billion for payments to states, territories, the freely associated states, and Tribal governments to carry out critical

capital projects that directly enable work, education, and health monitoring, including remote options, in response to the

public health emergency. This appropriation will remain available until the funds are fully spent. All disbursements for this

program are anticipated to begin in FY 2022.

STATE SMALL BUSINESS CREDIT INITIATIVE

We established the State Small Business Credit Initiative (SSBCI) program under the ARP to provide $10.0 billion in

appropriated funds to state, territorial, and Tribal governments for small business credit support and investment programs. 

These funds will remain available until expended to provide support to small businesses responding to and recovering from

the economic effects of the COVID-19 pandemic, help businesses owned and controlled by socially and economically

disadvantaged individuals have access to credit and investments, provide technical assistance to help small businesses

applying for various support programs, and to pay reasonable costs of administering this program. This program amends

the SSBCI program we had previously established under the Small Business Jobs Act of 2010. 

The ARP requires all disbursements and remaining obligations to be completed on or before September 30, 2030; any

remaining unexpended amounts as of that date will be rescinded and returned to the General Fund. We did not disburse

any funds for this program for the fiscal year ended September 30, 2021.

LOCAL ASSISTANCE AND TRIBAL CONSISTENCY FUND

The ARP provided us $2.0 billion of appropriated funds to establish a Local Assistance and Tribal Consistency Fund and

make payments to eligible revenue-sharing counties and Tribal governments for any governmental purpose other than a 

lobbying activity. Of the total appropriated amount, the ARP reserved $750 million and $250 million for eligible revenuesharing counties and Tribal governments, respectively. The $2.0 billion of appropriated funds will remain available until

September 30, 2023, with amounts to be obligated for each of fiscal years 2022 and 2023.

COVID-19: Advances Net: 

During FY 2021, we disbursed an aggregate of $277.7 billion in appropriated and obligated funds to states, local, territorial,

and Tribal governments pursuant to the CRF, SLFRF, ERA and HAF programs to cover eligible costs recipients incur in

response to the pandemic. During FY 2020, we disbursed $149.5 billion to states, local, territorial, and Tribal governments
110 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

pursuant to the CRF program. We initially recorded $276.7 billion of the $277.7 billion disbursed in FY 2021 and all of the

$149.5 billion disbursed in FY 2020 as an advance on the Consolidated Balance Sheets. We subsequently recognized

$89.5 billion ($58.4 billion of which related to the CRF disbursements made in FY 2020) and $80.6 billion of this advance as

an expense recorded as “Economic Program” costs on the Consolidated Statements of Net Cost to reflect the estimated

amount of eligible costs incurred by recipients for the fiscal year ended September 30, 2021 and 2020, respectively. We

recorded the remaining $1.0 billion disbursed in FY 2021 as “Economic Program” cost on the Consolidated Statements of Net

Cost for the fiscal year ended September 30, 2021.

SUPPORT TO AMERICAN INDUSTRY AND FINANCIAL MARKETS

INVESTMENTS AND DIRECT LOANS OVERVIEW

In FY 2020, the CARES Act appropriated $500.0 billion to our ESF to fund the credit subsidy costs associated with making

loans, loan guarantees or investments through December 31, 2020 in support of eligible businesses, states and municipalities

that incurred losses as a result of COVID-19. We are authorized by the CARES Act to make such loans, loan guarantees and

other investments that did not, in the aggregate, exceed $500.0 billion, of which up to $46.0 billion was available to make

direct loans and loan guarantees to passenger air carriers and certain related businesses, air cargo carriers, and businesses

critical to maintaining national security, and $454.0 billion (together with any unused amounts from the $46.0 billion) was

available to make loans and loan guarantees to, and investments in, programs or facilities the Board established to provide

liquidity to the financial system that supported lending to eligible businesses, states, or municipalities.

During FY 2020, we disbursed an aggregate of $104.3 billion (comprised of $102.5 billion and $1.8 billion for investments and

direct loans, respectively), which we financed with $19.3 billion of the appropriation to fund the credit subsidy portion and

$85.0 billion of Fiscal Service borrowings. As of September 30, 2020, $480.6 billion of the CARES Act appropriation

remained and was reported in Fund Balance.

In addition to the amounts disbursed during FY 2020, we also had obligated but undisbursed amounts committed as of

September 30, 2020, for future investment and direct loan disbursements totaling $106.0 billion (comprised of $92.5 billion

and $13.5 billion, respectively). Accordingly, when factoring in the obligated but undisbursed amounts committed, our

unobligated budgetary resources available as of September 30, 2020, were $468.1 billion ($480.6 billion remaining

appropriation less $12.5 billion of obligated but undisbursed subsidy). 

The December 27, 2020, enactment of the CAA, among other things, eliminated our ability to make new loans and

investments under the CARES Act effective January 9, 2021, and prohibited the Federal Reserve from engaging in further

lending or extensions of credit, after December 31, 2020, through all but one facility the Federal Reserve established under

Section 13(3) in which Treasury made an investment pursuant to the CARES Act (and after January 8, 2021, for that one

facility). Accordingly, on December 27, 2020, the CAA rescinded $429.0 billion of the $500.0 billion appropriation provided to

Treasury. In accordance with the CAA, an additional $49.8 billion was rescinded on January 9, 2021.

SECTION 13(3) FEDERAL RESERVE PROGRAMS

In FY 2020, the Board, pursuant to its emergency-lending authority under Section 13(3) and Regulation A of the Board,

authorized the FRBNY and FRBB to establish emergency liquidity lending facilities to enhance the liquidity of the U.S.

financial system as a result of the severe global health and economic crisis. The FRBNY and FRBB implemented certain of

the facilities through Special Purpose Vehicles (SPVs) governed by Limited Liability Company (LLC) agreements between

Treasury and the applicable Federal Reserve Bank (FRB). The FRBNY and FRBB established these SPVs for the purpose of
DEPARTMENT OF THE TREASURY 111 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

making loans and purchasing debt and other commercial paper of eligible entities affected by COVID-19. The liquidity

lending facilities established included the: (i) Corporate Credit Facilities LLC (CCF), (ii) Main Street Facilities LLC (MSF), 

(iii) Municipal Liquidity Facility LLC (MLF), (iv) Term Asset-Backed Securities II LLC (TALF), (v) Commercial Paper

Funding Facility II LLC (CPFF), and (vi) Money Market Mutual Fund Liquidity Facility (MMLF).

The SPVs purchased assets and offered loans collateralized by corporate bonds, commercial paper, asset-backed securities,

and municipal debt and loans to certain eligible states, municipalities, businesses and non-profit organizations affected by

COVID-19. The FRBNY and FRBB contributed $10.00 in cash to capitalize each SPV they established. Additionally, the

FRBNY and FRBB made loans to the SPVs, on a recourse basis, to fund the SPVs’ purchase of assets from, or loans to,

eligible U.S. issuers and businesses with certain assets as collateral. As the managing member of each SPV, FRBNY or

FRBB, as applicable, has the exclusive right to manage the business of the SPV and has all powers and rights necessary to

carry out the purposes and business of the SPV.

We provided equity to each SPV in FY 2020 to protect the FRBNY and FRBB from potential losses from financing the

facilities. We provided this protection by committing and contributing capital in the form of cash to the SPVs in exchange for

a preferred equity interest in the SPVs. To the extent the FRBNY and FRBB experience losses, our preferred equity

accounts absorb such losses up to the maximum amounts per the terms of the LLC agreements. As a preferred equity

member, we have no voting, consent, or control rights over the SPV. The managing member and preferred equity member

are the sole members of the SPVs.

Each SPV maintains the proceeds of our equity investment within a preferred equity account. As mutually agreed to by the

applicable FRB and Treasury, 85 percent of the preferred equity cash proceeds of each SPV are permitted to be invested in

interest-bearing, special, non-marketable Treasury securities (refer to Note 16). The remaining 15 percent is retained in

cash or cash-equivalents by the SPV for its cash requirements. Any interest and other proceeds from these investments are

deposited into the preferred equity account.

Under the terms of the LLC agreements, membership interests would not receive periodic or other distributions during the

life of the SPV (except for the interim distribution that occurred on December 29, 2020, as further discussed below). 

Distribution of the SPV’s assets would be made only upon dissolution of the facility, after liabilities and other interests were

paid. Upon dissolution, we will be entitled to an amount equal to the cash balance of the preferred equity account plus

90 percent of the cash balance in all the other accounts of the SPV. The applicable FRB is entitled to 10 percent of the cash

balance in all the other accounts of the SPV. The final distribution amount we receive will be used to repay all costs

associated with our preferred equity investment in the SPV, including the initial subsidy amounts funded by appropriation

and all amounts borrowed from Fiscal Service. In accordance with the CARES Act, any excess amount of the final

distribution after repayment of the appropriations and debt will be deposited into the Federal Old-Age and Survivors

Insurance Trust Fund established under Section 201(a) of the Social Security Act.

During FY 2020, we funded disbursements to all but two of the liquidity lending facilities using, in part, the $454.0 billion of

funds appropriated to the ESF under the CARES Act to provide the subsidy amounts necessary for such disbursements in

accordance with the provisions of FCRA. We funded the remainder of the disbursed amounts by borrowings from Fiscal

Service. For two of the liquidity facilities, CPFF and MMLF, we used the core funds of ESF, which were previously invested

in overnight, nonmarketable U.S. Treasury securities (refer to Note 2) and exempt from apportionment.
112 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

On December 29, 2020, consistent with the CAA, Treasury and the Federal Reserve amended the SPV LLC Agreements for

each of the SPVs funded under the CARES Act. The amended agreements provided for the cancellation, on

December 29, 2020, of Treasury’s undisbursed investment commitments totaling an aggregate of $92.5 billion, and an

interim distribution to Treasury, between December 31, 2020, and January 8, 2021, totaling an aggregate of $62.2 billion,

including to return funds disbursed by Treasury in excess of the purchase price of the assets, loans, and/or loan

participations, as the case may be, within each facility at such time. The aggregate of $62.2 billion of excess funds were

returned to Treasury (through the ESF) on January 5, 2021, for the CCF, TALF, and MLF, and on January 8, 2021, for the

MSF. We used this cash received to repay outstanding debt to the Fiscal Service that was used to finance the non-subsidized

portion of these investment transactions. Further, our canceled commitments in the amount of $92.5 billion were deobligated in FY 2021. Our funds remaining in the SPVs funded under the CARES Act cannot be used for further lending,

asset purchases, or extensions of credit.

During FY 2021, the FRBNY and FRBB dissolved several of the liquidity facilities. The FRBB dissolved the MMLF in

April 2021, and the FRBNY dissolved the CPFF and CCF in June and September 2021, respectively. See below for further

discussion of these transactions.

(in millions)

FY 2020 

Original 

Treasury 

Commitment 

FY 2020 

Disbursements

Available for 

Future 

Disbursement 

9/30/20 

FY 2021 

Canceled 

Commitments 

Available for 

Future 

Disbursement 

9/30/21 

Corporate Credit Facilities LLC (1) $ 75,000 $ (37,500) $ 37,500 $ (37,500) $ - 

Main Street Facilities LLC (1) 75,000 (37,500) 37,500 (37,500) - 

Municipal Liquidity Facility LLC (1) 35,000 (17,500) 17,500 (17,500) - 

Term Asset-Backed Securities II LLC 10,000 (10,000) - - - 

Commercial Paper Funding Facility II LLC 10,000 (10,000) - - - 

Money Market Mutual Fund Liquidity Facility (2) 10,000 (1,500) 8,500 (8,500) - 

Total 13(3) Facilities $ 215,000 $ (114,000) $ 101,000 $ (101,000) $ - 

(1) The undisbursed commitment amount for this facility as of September 30, 2020, was canceled on December 29, 2020 pursuant to the CAA.

(2) The undisbursed commitment amount as of September 30, 2020, was canceled pursuant to the April 12, 2021 dissolution of the MMLF facility.

(in millions)

FY 2020 

Disbursements

Interim 

Distribution

Final 

Dissolution (1)

Remaining 

Outstanding 

Equity 

Contribution 

9/30/21 (2)

Corporate Credit Facilities LLC $ 37,500 $ (23,619) $ (13,881) $ - 

Main Street Facilities LLC 37,500 (20,928) - 16,572 

Municipal Liquidity Facility LLC 17,500 (11,224) - 6,276 

Term Asset-Backed Securities II LLC 10,000 (6,451) - 3,549 

Commercial Paper Funding Facility II LLC 10,000 - (10,000) - 

Money Market Mutual Fund Liquidity Facility 1,500 - (1,500) - 

Total 13(3) Facilities $ 114,000 $ (62,222) $ (25,381) $ 26,397 

(1) These amounts exclude residual amounts received in connection with the dissolution of these facilities. 

(2) These amounts exclude cumulative 9/30/21 fair valuations associated with these assets. See table below for such fair valuations. 

The following is a description of the liquidity lending facilities. Following these descriptions are sections entitled, “COVID

19: Investments, Net” and “COVID 19: Other Assets,” which discuss the accounting treatment for these facilities. 
DEPARTMENT OF THE TREASURY 113 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Corporate Credit Facilities LLC

On April 13, 2020, the FRBNY established the CCF as the SPV to facilitate both the Primary Market Corporate Credit

Facility (PMCCF) and the Secondary Market Corporate Credit Facility (SMCCF) programs in support of providing the flow

of credit to employers through corporate bond and loan issuances. 

The FRBNY loaned to the SPV, on a recourse basis. The PMCCF was intended to purchase qualified bonds from eligible

issuers, and purchased portions of syndicated loans or bonds at issuance, giving issuers access to credit so that they are

better able to maintain business operations and capacity during the period of disruption COVID-19 caused. The SMCCF

supported the flow of credit to employers by providing liquidity to the market for outstanding corporate bonds.

We had initially committed to contribute up to a combined total of $75.0 billion in capital to the single common SPV

supporting both programs. On May 11, 2020, we acquired an equity interest in the SPV by transferring a combination of

CARES Act appropriated and Treasury borrowed funds for an aggregate total of $37.5 billion to the CCF SPV to cover

potential losses FRBNY incurred in connection with this program. On December 29, 2020, Treasury’s undisbursed

investment commitment of $37.5 billion was canceled pursuant to the amended SPV LLC agreement, and excess funds of

$23.6 billion were returned to us on January 5, 2021. We used the proceeds to repay the Treasury borrowed funds. The SPV

ceased purchasing eligible notes on December 31, 2020. The FRBNY sold the credit holdings in the SPV and, on

September 24, 2021, returned to Treasury our remaining outstanding equity contribution of $13.9 billion and $17 million of

interest earnings on special nonmarketable Treasury securities invested within the SPV. Upon final dissolution of the CCF

SPV, which is expected in early FY 2022, we will be entitled to an additional amount equal to 90 percent of the cash balance

in all of the other accounts of the SPV.

Main Street Facilities LLC

On May 18, 2020, the FRBB established the MSF SPV to support lending to small and medium-sized businesses that were in

sound financial condition before the onset of the COVID-19 pandemic and have good post-pandemic prospects. Through

loans from the FRBB, the SPV purchased 95 percent participations in loans originated by eligible lenders, while the lender

retained five percent. Loans issued under the MSF program have a five-year maturity, principal payments are deferred for 

two years, and interest payments are deferred for one year. 

We had initially committed to contribute up to $75.0 billion in capital in the single common SPV in connection with the MSF. 

On June 1, 2020, we acquired an equity interest in the SPV by transferring a combination of CARES Act appropriated and

Treasury borrowed funds for an aggregate total of $37.5 billion to the MSF to cover potential losses incurred by the FRBB in

connection with this program. On December 29, 2020, Treasury’s undisbursed investment commitment of $37.5 billion was

canceled pursuant to the amended SPV LLC agreement, and excess funds of $20.9 billion were returned to us on

January 8, 2021. The SPV ceased purchasing loan participations on January 8, 2021. 

Municipal Liquidity Facility LLC

On May 1, 2020, the FRBNY established the MLF SPV to help state and local governments manage cash flow pressures

while continuing to serve households and businesses in their communities. The FRBNY loaned to the MLF, on a recourse

basis, to allow the facility to purchase short-term notes directly from eligible U.S. states (including the District of Columbia),

counties and cities. 
114 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

We had initially committed to contribute up to $35.0 billion in capital in the MLF SPV. On May 26, 2020, we acquired an

equity interest in the SPV by transferring a combination of CARES Act appropriated and Treasury borrowed funds for an

aggregate total of $17.5 billion to the MLF LLC to cover potential losses incurred by FRBNY in connection with this

program. On December 29, 2020, Treasury’s undisbursed investment commitment of $17.5 billion was canceled pursuant to

the amended SPV LLC agreement, and excess funds of $11.2 billion were returned to us on January 5, 2021. The SPV

ceased purchasing eligible notes on December 31, 2020.

Term Asset-Backed Securities Loan Facility II LLC

FRBNY established the TALF SPV on March 23, 2020, to support the flow of credit to consumers and businesses for 

purposes of stabilizing the U.S. financial system. The TALF facilitated the issuance of asset-backed securities backed by

student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration, commercial mortgages,

and certain other assets. 

On June 16, 2020, we acquired an equity interest in the SPV by committing to and transferring a combination of CARES Act

appropriated and Treasury borrowed funds for an aggregate total of $10.0 billion to the TALF LLC to cover potential losses

incurred by the FRBNY in connection with this program. On January 5, 2021, excess funds of $6.5 billion were returned to

us pursuant to the amended SPV LLC agreement. No new credit extensions were made after December 31, 2020.

Commercial Paper Funding Facility II LLC

On March 30, 2020, the FRBNY established the CPFF SPV to provide liquidity to short-term funding markets by purchasing

three-month unsecured and asset-backed commercial paper directly from eligible issuers. To cover potential losses incurred

by FRBNY in connection with this program, on April 13, 2020, we made a capital contribution in the CPFF SPV by

transferring $10.0 billion of core ESF funds to the SPV in exchange for a preferred equity interest in the SPV. The SPV

ceased purchasing commercial paper on March 31, 2021. Commencing June 29, 2021, and concluding on July 7, 2021, the

FRBNY made final distributions to us of our $10.0 billion capital contribution, $5 million of interest earnings on special

nonmarketable Treasury securities invested within the SPV, and $44 million of residual earnings equivalent to 90 percent of

the cash balance in all the other accounts of the SPV. These cash proceeds were provided to the ESF, which reinvested them

in overnight, nonmarketable U.S. Treasury securities. The CPFF SPV was terminated on July 8, 2021.

Money Market Mutual Fund Liquidity Facility (MMLF) 

The FRBB launched the MMLF on March 23, 2020 to make loans available to eligible financial institutions, on a nonrecourse basis, secured by high-quality assets purchased by the financial institution from money mutual funds. We

committed to provide $10.0 billion of credit support to the MMLF. On May 20, 2020, we transferred an initial $1.5 billion of

the $10.0 billion of committed funds from core ESF funds. The FRBB agreed to pay us a “facility fee” for the use of the

MMLF credit support based on the amount of interest owed by the borrower on each MMLF loan. The FRBB did not make

new credit extensions after March 31, 2021, and FRBB terminated the MMLF. On April 12, 2021, the FRBB returned to the

ESF, through Treasury, its $1.5 billion of contributed capital, along with $134 million of accrued facility fee residual

earnings. Treasury’s undisbursed credit support commitment of $8.5 billion was also canceled on April 12, 2021. 

The following is financial information about the assets held in each of the remaining SPVs as of September 30, 2021 and

2020, which we obtained from the FRB’s Combined Quarterly Financial Reports (unaudited): 
DEPARTMENT OF THE TREASURY 115 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

2021 2020 

(in millions)

Total Assets 

Excluding 

Treasury's 

Equity 

Contribution

Treasury's 

Equity 

Contribution (1)

Total Assets 

Including 

Treasury's 

Equity 

Contribution

Total Assets 

Excluding 

Treasury's 

Equity 

Contribution

Treasury's 

Equity 

Contribution

Total Assets 

Including 

Treasury's 

Equity 

Contribution

Corporate Credit Facilities LLC $ - $ - $ - $ 13,100 $ 37,500 $ 50,600 

Main Street Facilities LLC 13,865 16,586 30,451 2,100 37,500 39,600 

Municipal Liquidity Facility LLC 4,493 6,284 10,777 1,700 17,500 19,200 

Term Asset-Backed Securities II LLC 1,491 3,553 5,044 3,200 10,000 13,200 

Commercial Paper Funding Facility II LLC - - - 59 10,000 10,059 

Total SPV Assets $ 19,849 $ 26,423 $ 46,272 $ 20,159 $ 112,500 $ 132,659 

(1) Amounts include interest earnings on special, non-marketable Treasury securities.

The following section entitled “COVID-19: Investments” is a discussion of our accounting for the credit support we provide to

the FRBs’ liquidity lending facilities, with the exception of the MMLF facility which is discussed under the section entitled

“COVID-19: Other Assets.”

COVID-19: Investments, Net

As of September 30, 2021 and 2020, our preferred equity investments in the SPVs were valued as follows:

COVID-19 Investments in SPVs (in millions)

Gross 

Investments 

As of 9/30/21

Cumulative 

Valuation 

Gain (Loss)

9/30/21 

Fair Value

Main Street Lending Programs (1) $ 16,572 $ (998) $ 15,574 

Municipal Liquidity Facility (1) 6,276 177 6,453 

Term Assets Lending Facility (1) 3,549 3 3,552 

Total COVID-19 Investments in SPVs (2) $ 26,397 $ (818) $ 25,579 

(1) In January 2021, Treasury’s investment in excess of amounts equivalent to the purchase price of the assets held within these

SPVs was returned to Treasury.

(2) This balance excludes $847 million related to our investment in common stock warrants received in connection with our financial

assistance that provided payroll support to aviation workers during the pandemic (refer to the section below entitled “Payroll

Support to Aviation Workers”). 

COVID-19 Investments in SPVs (in millions)

Gross 

Investments 

As of 9/30/20

Cumulative 

Valuation 

Gain (Loss)

9/30/20 

Fair Value

Corporate Credit Facilities $ 37,500 $ (96) $ 37,404 

Main Street Lending Programs 37,500 (4,254) 33,246 

Municipal Liquidity Facility 17,500 (177) 17,323 

Term Assets Lending Facility 10,000 (74) 9,926 

Commercial Paper Funding Facility 10,000 47 10,047 

Total COVID-19 Investments in SPVs (1) $ 112,500 $ (4,554) $ 107,946 

(1) This balance excludes $487 million related to our investment in common stock warrants received in connection with our financial

assistance that provided payroll support to aviation workers during the pandemic (refer to the section below entitled “Payroll

Support to Aviation Workers”). Also, our $1.5 billion funded credit support to the MMLF is included in Other Assets rather than

as an investment (refer to the section below entitled COVID-19 Other Assets.”

 
116 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Budgetary vs. Proprietary Accounting Treatment of SPVs. The CARES Act stipulated that our SPV investment

transactions, to the extent they involved the use of the CARES Act appropriation, be funded in accordance with the

provisions of FCRA. The CARES Act provided up to $454.0 billion of the $500.0 billion in appropriation to finance the

subsidy portion of these transactions, and to borrow from Treasury’s Fiscal Service for the remainder of the financing. 

During FY 2020, we disbursed an aggregate total of $102.5 billion to acquire equity interests in the SPVs, of which

$19.1 billion represented the subsidy portion funded by the CARES Act appropriation, and the remaining $83.4 billion was

funded by Fiscal Service borrowings. We reported the $500.0 billion of subsidy financing made available pursuant to the

CARES Act less the $19.1 billion, or $480.9 billion, within the “Fund Balance” line of the Consolidated Balance Sheet as of

September 30, 2020. In FY 2021, the CAA rescinded $478.8 billion of the $480.9 billion September 30, 2020 appropriation

balance. Of the remaining $2.1 billion, $500 million was used in FY 2021 to fund subsidy costs related to direct loan

disbursements and administrative expenses incurred, leaving $1.6 billion of this appropriation within the “Fund Balance” 

line as of September 30, 2021. We reported these CAA rescissions within the line item “Other Adjustments” on the

Consolidated Statements of Changes in Net Position for the fiscal year ending September 30, 2021. Additionally, in FY 2021,

we and the Federal Reserve amended four of the SPV agreements which resulted in a return of capital to us totaling an

aggregate of $62.2 billion. We used these proceeds to repay outstanding borrowings used to finance the non-subsidized

portion of these investments. For budgetary accounting purposes, we accounted for the initial investment financing in

FY 2020 and subsequent activity in FY 2021 related to these investments pursuant to FCRA guidelines in accordance with

Section 185 of OMB Circular A-11, Preparation, Submission, and Execution of the Budget. 

For proprietary accounting purposes, we accounted for all SPV investments as equity investments at fair value, rather than

as direct loans, as these instruments do not meet the criteria of SFFAS No. 2, Accounting for Direct Loans and Loan

Guarantees. Accordingly, we record changes in the fair value of these investments as realized or unrealized fair value gains

or losses within the “Economic Program Revenue (Cost)” line item of the Consolidated Statements of Net Costs. The

budgetary subsidy cost allowance is based on cash flows discounted using a Treasury rate to determine the subsidy cost and

the proprietary fair value adjustment is based on market interest rates to discount projected cash flows. For the fiscal years

ended September 30, 2021 and 2020, we recorded an unrealized fair value net loss of $0.8 billion and $4.6 billion related to

these investments, respectively.

Fair Value Estimation Factors. In determining the fair value of our SPV equity investments, we use available market pricing

data, market pricing of floating interest-rate swaps, expected loss rates, and contractual instrument terms to estimate

scenario-specific, expected cash flows for the SPVs. For market pricing data, we specifically use: (i) active market prices for

the TALF program that owns publicly traded securities, (ii) Bloomberg estimated prices for the MLF program which owns

securities that do not have active market prices but have estimated prices in Bloomberg, or (iii) market prices for baskets of

comparable publicly traded bonds for the MSF program, based on relevant bond attributes, such as instrument credit rating,

time to maturity, issuer industry, coupon rate, and call provisions. We use contractual instrument terms, active market prices,

expected loss rates and, where applicable, market pricing of floating interest-rate swaps to estimate scenario-specific, expected

cash flows, which are discounted using market-based discount rates. 
DEPARTMENT OF THE TREASURY 117 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

In deriving the fair value of our SPV investments, we relied upon market observed prices for SPV purchased assets and

collateral, market prices for comparable assets, asset valuations performed by third parties, historical asset data, discussions

with subject matter experts within Treasury, and other information pertinent to the valuations. Because the instruments are

not publicly traded, there is no comparable trading information available. The fair valuations rely on Level 3 inputs that

reflect assumptions about the expectations that market participants would use in pricing.

Transfer of Proceeds Upon Dissolution of SPVs. For those SPVs that were funded through a combination of CARES Act

appropriation and Fiscal Service borrowings in accordance with FCRA guidelines, all proceeds that we realize from these

investments upon the dissolution of the SPVs are transferred to us to repay all borrowings and other funding costs incurred

from these investments. In accordance with the CARES Act, we must transfer any remaining excess residual proceeds to the

Federal Old-Age and Survivors Insurance Trust Fund. To the extent that the fair value of the SPV equity investment assets

also incorporate anticipated realization of excess residual proceeds, we record a corresponding liability due to the Federal

Old-Age and Survivors Insurance Trust Fund. We recorded a liability of $222 million as of September 30, 2021; there was no

liability recorded as of September 30, 2020. 

Entity vs. Non-Entity Exchange Transactions. Our SPV preferred equity investments are treated as exchange transactions

in that we received a preferred equity interest in the SPVs in exchange for our capital funding of the liquidity facilities. All

SPV investment assets funded through a combination of CARES Act appropriation and Fiscal Service borrowings, along with

any related income or loss associated with these assets, are treated as entity transactions, with the exception of that portion

of the assets and related income or loss representing the excess residual proceeds that will be remitted to the Federal OldAge and Survivors Insurance Trust Fund, which are treated as non-entity transactions. The SPV equity investment and

MMLF credit support that were funded using the ESF’s core funds, and any related income or loss associated with these

assets, are treated as entity transactions.

COVID-19: Other Assets

Our participation in the MMLF program involved our transferring in FY 2020, $1.5 billion (which was previously invested by

the ESF in overnight federal investments) to a separate deposit account maintained by the FRBNY in the name of the FRBB

(MMLF Account) for the purpose of providing credit support of the MMLF program. Based on the nature of the restrictions

associated with the MMLF Account, we reclassified the $1.5 billion from an overnight investment account to a restricted

cash account as reported in the “COVID-19 – Other Assets” line of the Consolidated Balance Sheets as of

September 30, 2020. As earlier discussed under the MMLF program description, in April 2021, the FRBB dissolved the

MMLF Credit Support Agreement and returned our $1.5 billion of credit support, along with $134 million of accrued facility

fee residual earnings, which the ESF reinvested in overnight federal investments. Our Consolidated Statements of Net Cost

reflect accrued facility fee earnings of $15 million and $119 million for the fiscal years ended September 30, 2021 and 2020,

respectively.
118 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

DIRECT LOANS TO AIR CARRIERS AND OTHER RELATED BUSINESSES

The CARES Act authorized us to make direct loans and loan guarantees to eligible passenger and cargo air carriers and

national security businesses to provide them liquidity for losses incurred as a result of COVID-19. We chose to make only direct

loans under this authorization. Of the $500.0 billion appropriation provided under the CARES Act, up to $46.0 billion was

authorized to be used to fund the subsidy costs associated with making these loans. The CARES Act stipulated that the direct

loans were to be made in accordance with the provisions of FCRA; accordingly, we funded the direct loans using a combination

of the $46.0 billion in authorized appropriations and borrowings from Fiscal Service. We finalized loan agreements for up to

$7.0 billion and $15.4 billion during fiscal years 2021 and 2020, respectively, for which we disbursed an aggregate total of

$858 million and $1.8 billion during fiscal years 2021 and 2020, respectively. As of September 30, 2021, there were no

remaining loan commitments for which future borrowings could be made under the CARES Act.

The CARES Act specified that the Secretary determines the terms and conditions of the loans and stated that the duration of

the loans will be no longer than five years. It also mandated that these loans “shall be at a rate determined based on the risk

and the current average yield on outstanding marketable obligations of the United States of comparable maturity.” As

“financial protection of the Government,” the CARES Act also mandated that we obtain certain financial instruments including,

but not limited to, common stock in the eligible business for the benefit of taxpayers. The following is a discussion of our

accounting related to our direct loans. 

COVID-19: Credit Program Receivables, Net

We present the direct loans as credit program receivables on our Consolidated Balance Sheets. As of September 30, 2021,

the net credit program receivables of the passenger airlines and other related businesses (which includes national security

business, air cargo carriers, ticket agents, and maintenance and repair firms) programs of $594 million and $717 million,

respectively, included a negative subsidy allowance of $213 million and a positive subsidy allowance of $56 million,

respectively. As of September 30, 2020, the net credit program receivables of the passenger airlines and other related

businesses of $1.4 billion and $163 million, included a positive subsidy allowance of $159 million and $85 million,

respectively. The negative or positive subsidies at the end of 2021 and 2020 reflect our projection as of those dates that these

programs would result in net earnings or net cost to us, respectively, after accounting for principal loan repayments,

interest, and fees. Included in these receivables are the projected cash flows associated with the common stock warrants,

common stock shares, and senior debt instruments we received in connection with making these direct loans. 

We performed a financial statement re-estimate of these credit programs costs. The re-estimates performed as of September

30, 2021 resulted in a downward re-estimate or decrease of $415 million and $268 million in the cost of the passenger airline

programs and other related businesses programs, respectively. The FY 2021 re-estimates recorded by Treasury included the

expected Federal Old-Age and Survivors Insurance Trust Fund liabilities for passenger airlines and other related businesses.

These re-estimate results stemmed from lower expected losses for the outstanding investments and collections received

during FY 2021, which included several large prepayments. The re-estimates performed as of September 30, 2020, resulted

in an upward re-estimate, or increase in the cost of the passenger airlines program, of $12 million, and resulted in a 

downward re-estimate, or decrease in the cost of the single other related business program cost, of $29 million. These reestimate results stemmed primarily from the September 30, 2020, market prices which implied higher or lower loss rates

than those we initially estimated in the budget formulation estimate for these programs. 

Our net credit program receivables, including loan principal repayments, interest, fees, and proceeds from common stock sales,

are treated as entity exchange transactions since all such future proceeds realized by Treasury from the net credit program
DEPARTMENT OF THE TREASURY 119 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

receivables will be used by Treasury to repay all of its borrowing and other funding costs incurred from these direct loans. In

accordance with the CARES Act, we must transfer any remaining excess residual proceeds to the Federal Old-Age and

Survivors Insurance Trust Fund. Accordingly, to the extent that our net credit program receivables also incorporate anticipated

realization of excess residual proceeds, we will record a corresponding liability due to the Federal Old-Age and Survivors

Insurance Trust Fund. Hence, our net credit program receivables, including loan principal repayments, interest, fees, and

proceeds from common stock sales are treated as entity transactions, with the exception of any excess residual amounts owed to

this trust fund, which are treated as non-entity transactions. As of September 30, 2021, we recorded a liability of $261 million

due to the Federal Old-Age and Survivors Insurance Trust Fund. As of September 30, 2020, we did not record a liability as

there was a combined net positive subsidy cost of $244 million associated with the passenger airline and national security

business loans, indicating that we had not yet recovered our costs.

PAYROLL SUPPORT TO AVIATION WORKERS

Disruption to economic activity the spread of COVID-19 caused in the early spring of 2020 placed significant pressure on

U.S. airlines and the aviation industry as a whole. The dramatic reduction in the number of flyers resulted in airlines

canceling a large portion of flights and preparing for the layoff of tens of thousands of workers. We established three payroll

support programs (PSPs), the first program created pursuant to the CARES Act (PSP1) in FY 2020, and continued in

FY 2021 through the CAA (PSP2) and ARP (PSP3), with PSP3 only providing additional assistance to those who received

assistance under PSP2. These PSP programs provided for relief to this industry by helping to preserve aviation jobs and

compensate air carrier industry workers. Specifically, the PSPs provided financial assistance to passenger air carriers, cargo

air carriers, and certain contractors to be used exclusively for the continuation of payment of employee salaries, wages, and

benefits. 

Appropriations Received Total Disbursed

(in millions)

Passenger 

Airlines

Cargo 

Carriers Contractors Total FY 2021 FY 2020

CARES (PSP 1) $ 25,000 $ 4,000 $ 3,000 $ 32,000 $ 496 $ 28,141 

CAA (PSP 2) 15,000 - 1,000 16,000 15,676 - 

ARP (PSP 3) 14,000 - 1,000 15,000 14,584 - 

Total PSPs $ 54,000 $ 4,000 $ 5,000 $ 63,000 $ 30,756 $ 28,141 

We entered into Payroll Support Program Agreements (PSPA) with passenger air carriers, cargo air carriers, and aviation

industry contractors. Each agreement specified that the recipient could receive up to a maximum awardable amount equal

to the compensation the recipient paid to its employees for a certain period specified in the relevant Act. Each PSPA 

specified, among other things, the following: (a) the payroll support must be used exclusively for the continuation of payment

of employee salaries, wages, and benefits, (b) the recipient may not conduct an involuntary termination or furlough, with

limited exceptions, of any employee through September 30, 2020, March 31, 2021, and September 30, 2021, pursuant to the

CARES Act, CAA and ARP, respectively, and (c) the recipient may not reduce employee pay rates or benefits through these

dates. For the fiscal years ended September 30, 2021 and 2020, we recorded $30.7 billion and $28.2 billion, respectively, of

financial assistance disbursements under the PSPs as “Economic Program” costs within the Consolidated Statements of Net

Cost.
120 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

The CARES Act further authorized the Secretary to receive warrants, options, preferred stock, debt securities, or other

financial instruments recipients of the PSP issued, which provide appropriate compensation to the federal government for 

the provision of the financial assistance. Pursuant to agreements negotiated between us and the recipients of the financial

assistance, the terms and conditions associated with the financial instruments received include, among other things, the

following:

Promissory Notes – For passenger air carriers, the amount of the promissory note is equal to 30 percent of the payroll

support provided under each program to the recipient over $100 million. For cargo air carriers, the note is equal to

56 percent of the payroll support provided under each program to the recipient over $50 million. For contractors, the

note is equal to 44 percent of the payroll support provided under each program to the recipient over $38 million. In the

event of multiple disbursements to the same recipient under each program, at the time of each disbursement, the

amount of the note and the warrant was increased to reflect the aggregate amount disbursed. We did not receive a note

or a warrant from those recipients who received an aggregate payroll support amount of less than or equal to the

amounts above.

Each note has a maturity date of 10 years from inception. The cash interest rate on the note is one percent per year for 

the first five years, and converts to the Secured Overnight Financing Rate plus two percent per year in the last five

years. Cash interest on the notes is payable semi-annually on March 31 and September 30 of each year beginning on

September 30, 2020, March 31, 2021, and September 30, 2021, for PSP1, PSP2, and PSP3, respectively. For contractors

only, the notes generally also include an option for payment-in-kind interest thereby involving higher rates of interest.

Common Stock Warrants – The warrants provide us with the right to purchase shares of common stock or receive a cash

payment. The number of warrants required is equal to 10 percent of the principal amount of the note issued by the

participant under each program, divided by an exercise price. The warrants are exercisable for a five-year term. In

accordance with the warrant agreement between us and each recipient, we acknowledge the warrants are not registered

under the Securities Act of 1933 and may not be sold without such registration or an exemption. Additionally, the

warrants we receive do not entitle us to any voting rights or other rights of a shareholder before the date of exercise.

As compensation for the financial assistance paid in FY 2021, we received $7.6 billion and $375 million of promissory notes

and warrants, respectively. We received $7.5 billion and $388 million of promissory notes and warrants, respectively, for 

financial assistance paid in FY 2020. The contractors repaid an aggregate of $103 million of promissory notes during

FY 2021. The promissory notes and warrants received as compensation are reported as a notes receivable and an

investment, respectively, on the Consolidated Balance Sheets.

The following provides further discussion of our accounting for the promissory notes and common stock warrants.

COVID-19: Notes and Interest Receivable, Net

As of September 30, 2021 and 2020, our promissory notes totaling $13.7 billion and $5.3 billion, respectively, are presented

net of an allowance for doubtful accounts estimated at $1.4 billion and $2.2 billion, respectively. Interest on the notes is

payable semi-annually on March 31 and September 30 of each year. For the fiscal years ended September 30, 2021 and

2020, we recognized interest revenue of $131 million and $24 million, respectively.
DEPARTMENT OF THE TREASURY 121 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

We treat the promissory notes as exchange transactions as we received them as compensation for financial assistance paid to

air carriers to support ongoing employment of their aviation workers. The notes and related interest receivable also

represent assets of the U.S. government, or non-entity assets, as we are precluded from using any of the cash proceeds

realized from these promissory notes. Accordingly, we reported the initial revenue recognized at the inception of the loans,

and subsequent recognition of related interest revenue, within the “COVID-19 Non-Entity Revenue, Net” line item of the

Consolidated Statements of Net Cost. The recording of this receivable also resulted in a corresponding amount recorded to

the “Due To the General Fund” liability (refer to Note 4). 

COVID-19: Investments, Net

We account for the common stock warrants at fair value, with changes in the fair value of these investments recorded as

realized or unrealized gains or losses within the Consolidated Statements of Net Costs. As of September 30, 2021 and 2020, our

common stock warrants were valued at $847 million and $487 million, respectively, which includes a fair value loss of

$14 million and a fair value gain of $99 million, respectively, recognized for the fiscal years ended September 30, 2021 and 2020,

respectively. 

Our common stock warrants are comprised of those that either give us a right to purchase common shares of publicly traded

or non-publicly traded air carriers. If we obtained the warrants from publicly traded companies, then we determined the fair 

value based on quoted prices of underlying shares in an active market as well as other significant unobservable inputs that

reflect assumptions about the expectations that market participants would use in pricing. If we obtained the warrants from

non-publicly traded companies, then we determined their fair value based only on significant unobservable inputs. As such,

the measurement of our common stock warrants fair value includes Level 3 inputs.

CORONAVIRUS ECONOMIC RELIEF FOR TRANSPORTATION SERVICES

Established under the CAA, we created the Coronavirus Economic Relief for Transportation Services (CERTS) program to

support transportation service providers affected by the COVID-19 pandemic, including motorcoach, school bus, passenger

vessel, and pilot vessel companies.

Under the program, we are providing up to $2.0 billion in grants to eligible companies that certify they have experienced an

annual revenue loss of 25 percent or more as a direct or indirect result of COVID-19. CERTS grant funds are primarily to

cover payroll costs, but may also be used to cover acquisition of services, equipment that includes personal protective

equipment and protection measures from COVID-19 for workers and customers, and continued operations and maintenance

of existing equipment and facilities (i.e., rent, leases, insurance, and interest on regular debt service).

Disbursed funds the recipient does not use for qualified purposes within one year upon receipt of such funds must be

returned to Treasury. Of the $2.0 billion appropriated in FY 2021 for this program, we disbursed $1.3 billion for the fiscal

year ended September 30, 2021, which we reported as “Economic Program” costs within the Consolidated Statements of Net

Cost. This funding will remain available for obligation until December 27, 2023.

Support to American Small Businesses Through CDFIs

EMERGENCY CAPITAL INVESTMENT PROGRAM

Established under the CAA, the Emergency Capital Investment Program was created to encourage low- and moderateincome community financial institutions to augment their efforts to support small businesses and consumers in their

communities. Under this program, we will provide up to $9.0 billion in capital directly to depository institutions (through
122 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

purchases of preferred stock and other financial instruments) from certified CDFIs or minority depository institutions

(MDIs). This funding is intended to be used to, among other things, provide loans, grants, and forbearance for small

businesses, minority-owned businesses, and consumers, especially in low-income and undeserved communities, that may be

disproportionately impacted by the economic effects of the COVID-19 pandemic. We will set aside $2.0 billion for CDFIs and

MDIs with less than $500 million in assets and an additional $2.0 billion for CDFIs and MDIs with less than $2.0 billion in

assets. As of September 30, 2021, we have made no disbursements in connection with this program. This funding will

remain available for obligation until six months after the date on which the national emergency concerning the COVID-19

pandemic is terminated by the President of the U.S. 

CDFI FUND’S RAPID RESPONSE AND ECONOMIC IMPACT PROGRAMS

The CAA also provided $1.25 billion in appropriations to our CDFI Fund which we will use to award CDFIs with grants to

deliver immediate assistance in communities impacted by the COVID-19 pandemic. The CDFI Fund is awarding these funds

through its newly established CDFI Rapid Response Program (CDFI RRP), which is designed to quickly deploy capital to

certified CDFIs through a streamlined application and review process for those specialized organizations that provide

financial services to low-income communities and those that lack access to financing. We disbursed $1.1 billion in grants for 

the fiscal year ended September 30, 2021, which we reported as “Economic Program” costs within the Consolidated

Statements of Net Cost. This funding was available for obligation through September 30, 2021.

In addition to the funding provided for the CDFI RRP, the CAA also appropriated our CDFI Fund with $1.75 billion to

deliver COVID-19 recovery resources to CDFIs to expand financial activity in low- or moderate-income minority communities

and to minorities that have significant unmet capital or financial services needs. The CDFI Fund will make these funds

available to support lending in minority communities through a second emergency funding economic impact program

commencing in FY 2022. This funding will remain available for obligation until expended.

COVID-19 PANDEMIC RELIEF – SUMMARY IMPACT ON THE STATEMENT OF NET COST

For the fiscal years ended September 30, 2021 and 2020, the primary impact of COVID-19 relief efforts as reported within

“Economic Program” costs on our Consolidated Statement of Net Cost were as follows:

(in millions) 2021 2020 

Entity Cost/(Revenue):

Expense Recognition of Support to States, Local, Territorial, and Tribal Governments $ 90,517 $ 80,578 

Section 13(3) SPV Investments - Fair Value (Gain)/Loss, Net (1) (3,802) 4,554 

Section 13(3) Other Assets - MMLF Accrued Facility Fees Revenue (15) (119) 

Direct Loans - Subsidy Costs (675) 243 

Payroll Support to Aviation Workers - Financial Assistance Payments 30,727 28,170 

Coronavirus Economic Relief for Transportation Services 1,295 - 

CDFI Fund’s Rapid Response Program 1,085 - 

Total Net Entity Costs (Economic Program) (Note 21) 119,132 113,426 

Non-Entity Revenue:

Payroll Support for Aviation Workers - Promissory Note Compensation Received (8,577) (5,345) 

Payroll Support for Aviation Workers - Common Stock Warrant Compensation Received (360) (487) 

Total Non-Entity Revenue (8,937) (5,832) 

Total COVID-19 Pandemic Relief Costs, Net $ 110,195 $ 107,594 

(1) For FY 2021, includes realized gains of $17 million and $49 million associated with the dispositions of the CCF and CPFF liquidity lending

facilities, respectively.
DEPARTMENT OF THE TREASURY 123 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

11. INVESTMENTS IN GOVERNMENT SPONSORED ENTERPRISES

Congress established Fannie Mae and Freddie Mac as GSEs to provide stability and increase liquidity in the secondary

mortgage market and to promote access to mortgage credit throughout the nation. A key function of the GSEs is to purchase

mortgages, package those mortgages into securities, which are subsequently sold to investors, and guarantee the timely

payment of principal and interest on these securities.

Congress passed HERA (P.L. 110-289) in July 2008 in response to the financial crisis that year and the increasingly difficult

conditions in the housing market which challenged the soundness and profitability of the GSEs and thereby threatened to

undermine the entire housing market. This act created FHFA, with enhanced regulatory authority over the GSEs, and

provided the Secretary with certain authorities intended to ensure the financial stability of the GSEs, if necessary. In 2008,

FHFA placed the GSEs under conservatorship, and we invested in the GSEs by entering into a Senior Preferred Stock

Purchase Agreement (SPSPA) with each GSE. We took these actions to preserve the GSEs’ assets, ensure a sound and

solvent financial condition, and mitigate systemic risks that contributed to market instability. The purpose of such actions is

to maintain the solvency of the GSEs so they can continue to fulfill their vital roles in the mortgage market while the

Administration and Congress determine what structural changes should be made to the housing finance system. Draws

under the SPSPAs would result in an increased investment in the GSEs as further discussed below.

In return for committing to maintain the GSEs’ solvency by making a quarterly advance of funds to each GSE in an amount

equal to any excess of the GSEs’ total liabilities over its total assets as of the end of the previous quarter, we initially

received from each GSE: (i) 1,000,000 shares of non-voting variable liquidation preference senior preferred stock with a 

liquidation preference value of $1,000 per share, and (ii) a non-transferable warrant for the purchase, at a nominal cost, of

79.9 percent of common stock on a fully-diluted basis. The warrants expire on September 7, 2028. We were entitled to

distributions on our senior preferred stock equal to 10.0 percent per annum fixed rate dividend on the total liquidation

preference (as discussed below). This dividend structure was changed in the third amendment in August 2012 to a variable

equivalent to the GSEs’ positive net worth above a capital reserve amount. The capital reserve amount was initially set at

$3.0 billion for calendar year 2013 and, upon nearing its scheduled decline to zero, was reset at $3.0 billion in calendar year

2017. 

On September 27, 2019, the Department and FHFA amended the SPSPAs to increase the capital reserve amounts of Fannie

Mae and Freddie Mac to $25 billion and $20 billion, respectively. In exchange, our liquidation preference in each GSE was

scheduled to gradually increase up to the adjusted capital reserve amounts based on the quarterly earnings of each GSE. 

On January 14, 2021, the Department and FHFA further amended the SPSPAs to replace the prior variable dividend with

an alternative compensation plan for the Department that permits the GSEs to continue their recapitalization efforts, as

prescribed by the GSE capital framework finalized by FHFA in 2020. Under the amended SPSPAs, each GSE is permitted to

retain capital until the GSE has achieved its regulatory minimum capital requirement, including buffers (i.e., the capital

reserve end date), at which point its cash dividend obligations will resume along with the obligation to pay a periodic

commitment fee. As compensation to Treasury for the replacement of the variable dividend, the liquidation preference of

Treasury’s senior preferred stock in each GSE will increase by the amount of retained capital until each GSE has achieved

its capital reserve end date. 
124 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Additionally, the January 14 amendment, among other things, imposed restrictions on certain GSE business activities,

including purchases of loans backed by investment properties, second homes, and multifamily properties, and on purchases

of loans with multiple high-risk characteristics or for cash consideration. On September 14, 2021, Treasury and FHFA

agreed to suspend certain business activity restrictions added to the SPSPAs by the January 14 amendment while FHFA 

undertakes a review of the extent to which these requirements are redundant or inconsistent with existing FHFA standards,

policies, and directives. The suspension will terminate on the later of one year after September 14, 2021 or six months after

Treasury notifies the GSEs. Upon conclusion of FHFA’s review, we expect FHFA to propose more permanent changes to the

affected covenants, which may include recalibration of the restrictions, or outright termination.

As of September 30, 2021, Treasury’s liquidation preference in Fannie Mae and Freddie Mac increased by $20.9 billion and

$11.0 billion, respectively. As of September 30, 2020, Treasury’s liquidation preference in Fannie Mae and Freddie Mac

increased by $10.8 billion and $6.6 billion, respectively. The GSEs will not pay a quarterly dividend until after the capital

reserve end date. We received no cash dividends for the fiscal year ended September 30, 2021 and 2020, as the GSEs had not

achieved their capital reserve end date as of September 30, 2021, and their positive net worth was below their permitted

capital reserve amounts as of September 30, 2020. 

The SPSPAs, which have no expiration date, require us to disburse funds to either GSE if, at the end of any quarter, the

FHFA determines that the liabilities of either GSE exceed its assets. Draws from the Department under the SPSPAs are

designed to ensure that the GSEs maintain positive net worth, with a fixed maximum amount available to each GSE under

this agreement, established as of December 31, 2012 (refer to the “Contingent Liability to GSEs” section below). Draws

against the funding commitment of the SPSPAs do not result in the issuance of additional shares of senior preferred stock;

instead, they increase the liquidation preference of the initial 1,000,000 shares by the amount of the draw. The combined

cumulative liquidation preference totaled $254 billion and $222 billion as of September 30, 2021 and 2020, respectively. 

There were no payments to the GSEs for the fiscal years ended September 30, 2021 and 2020. 

ACCOUNTING TREATMENT

Entity Transactions― If we estimate a probable contingent liability to the GSEs, we will accrue and report this liability on

our Consolidated Balance Sheets and fund the liability through our direct appropriations. We will report the liability

accrual, if any, at its gross amount as an “entity” cost on our Consolidated Statements of Net Cost, and within the line item,

“Cumulative Results of Operations” on our Consolidated Balance Sheets, without considering the increase in senior preferred

stock liquidation preference/fair value adjustments, and future dividend receipts from the GSEs.

Non-Entity Transactions― If we make actual payments to the GSEs, they will result in increases to the U.S. government’s

liquidation preference in the GSEs’ senior preferred stock, and thus represent General Fund exchange revenue reported on

our Consolidated Statements of Net Cost as “GSEs Non-Entity Revenue, Net.” Changes in the fair valuation of the GSE

preferred stock and common stock warrants, and related dividends received, are General Fund-related costs and revenues

which we report as “GSEs Non-Entity Revenue, Net.”

INVESTMENTS IN GSES 

As of September 30, 2021 and 2020, our investments in the GSEs consisted of the following: 
DEPARTMENT OF THE TREASURY 125 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Gross Cumulative 

Investments Valuation 9/30/21 

GSEs Investments (in millions) As of 9/30/21 Gain/(Loss) Fair Value

Fannie Mae Senior Preferred Stock $ 158,683 $ (38,183) $ 120,500 

Freddie Mac Senior Preferred Stock 94,874 126 95,000 

Fannie Mae Warrants Common Stock 3,104 366 3,470 

Freddie Mac Warrants Common Stock 2,264 (374) 1,890 

Total GSEs Investments $ 258,925 $ (38,065) $ 220,860 

Gross Cumulative 

Investments Valuation 9/30/20 

GSEs Investments (in millions) As of 9/30/20 Gain/(Loss) Fair Value

Fannie Mae Senior Preferred Stock $ 137,815 $ (79,515) $ 58,300 

Freddie Mac Senior Preferred Stock 83,914 (46,014) 37,900 

Fannie Mae Warrants Common Stock 3,104 5,196 8,300 

Freddie Mac Warrants Common Stock 2,264 2,146 4,410 

Total GSEs Investments $ 227,097 $ (118,187) $ 108,910 

SENIOR PREFERRED STOCK AND WARRANTS FOR COMMON STOCK

In determining the fair value of the senior preferred stock and warrants for common stock, we relied on the GSEs’ public

filings and press releases concerning their financial statements, as well as non-public, long-term financial forecasts, monthly

summaries, quarterly credit supplements, independent research regarding preferred stock trading, independent research

regarding the GSEs’ common stock trading on the OTC Bulletin Board, discussions with each of the GSEs and FHFA, and

other information pertinent to the valuations. Because the senior preferred stock is not publicly traded, there is no

comparable trading information available. The fair valuation of the senior preferred stock relies on significant unobservable

inputs that reflect assumptions about the expectations that market participants would use in pricing. 

The fair value of the senior preferred stock considers forecasted cash flows to equity holders and the traded prices of the

other equity securities, including the GSEs’ common stock and junior preferred stock. The fair value of the senior preferred

stock—as measured by unobservable and observable inputs—increased as of September 30, 2021 when compared to

September 30, 2020. The increase primarily is due to higher projected cash flows, a decrease in the market value of the

GSEs’ other equity securities that comprise the GSEs’ total equity, and a lower discount rate (refer to Notes 1I and 1V).

Factors impacting the fair value of the warrants include the nominal exercise price and the large number of potential

exercise shares, the market prices and trading volumes of the underlying common stock September 30, the principal market,

and the market participants. Other factors impacting the fair value include, among other things, the holding period risk

related directly to the assumption of the amount of time that it will take to sell the exercised shares without depressing the

market. The fair value of the warrants—as measured by observable inputs—decreased at the end of FY 2021, when

compared to 2020, primarily due to decreases in the Level 1 fair value measurement of the market price of the underlying

common stock of each GSE.
126 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

CONTINGENT LIABILITY TO GSES

As part of the annual process undertaken by the Department, we prepare a series of long-term financial forecasts to assess, 

as of September 30, the likelihood and magnitude of future draws to be required by the GSEs under the SPSPAs within the

forecast time horizon. We used 25-year financial forecasts prepared through years 2046 and 2045 in assessing if a 

contingent liability was required as of September 30, 2021 and 2020, respectively. If future payments under the SPSPAs are

deemed to be probable within the forecast horizon, and we can reasonably estimate such payment, we will accrue a 

contingent liability to the GSEs to reflect the forecasted equity deficits of the GSEs. We do not discount this accrued

contingent liability, nor do we take into account any of the offsetting dividends that we could receive, as the dividends, if any,

would be owed directly to the General Fund. We will adjust such recorded accruals in subsequent years as new information

develops or circumstances change. 

Based on our annual assessment, we estimated there was no probable future funding draws as of September 30, 2021 and

2020, and thereby accrued no contingent liability. However, as of September 30, 2021, it is reasonably possible that a period

of sustained economic and housing market volatility could potentially cause the GSEs to generate quarterly losses of

sufficient magnitude to result in future funding draws against our funding commitment. Due to challenges quantifying

future market volatility or the timing, magnitude, and likelihood of such events, we could not estimate the total amount of

this reasonably possible future funding liability as of September 30, 2021. There were no payments to the GSEs for the fiscal

year ended September 30, 2021. At September 30, 2021 and 2020, the maximum remaining contractual commitment to the

GSEs for the remaining life of the SPSPAs was $254.1 billion. 

In assessing the need for an estimated contingent liability, we rely on the GSEs’ public filings and press releases, including

their financial statements, monthly business summaries, and quarterly credit supplements, as well as non-public, long-term

financial forecasts, the FHFA House Price Index, discussions with each of the GSEs and FHFA, and other information

pertinent to the liability estimates. The forecasts prepared in assessing the need for an estimated contingent liability as of

September 30, 2021 include two potential scenarios, with varying assumptions regarding the continuation of the GSEs new

business activities, including purchasing mortgage loans and issuing new guaranteed mortgage-backed securities. The 

forecasts as of September 30, 2021, also assumed the maintenance of the GSEs’ retained mortgage portfolios below the

maximum permitted under the amended SPSPAs.

ESTIMATION FACTORS

Our forecasts concerning the GSEs may differ from actual experience. Estimated senior preferred values and future draw

amounts will depend on numerous factors that are difficult to predict including, but not limited to, changes in government

policy with respect to the GSEs, the business cycle, inflation, home prices, unemployment rates, interest rates, changes in

housing preferences, home financing alternatives, availability of debt financing, market rates of guarantee fees, outcomes of

loan refinancings and modifications, new housing programs, and other applicable factors. 

FINANCIAL PERFORMANCE OF THE GSES

The summarized unaudited aggregated financial condition of the GSEs as of September 30, 2021 and 2020, along with their

summarized unaudited aggregated financial operating results for the nine months ended September 30, 2021 and 2020 were

as follows: 
DEPARTMENT OF THE TREASURY 127 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

(in millions) 2021 2020 

Combined Assets

 Investment Securities $ 155,025 $ 216,069 

 Mortgage Loans 6,636,783 5,767,584 

 Other 355,385 335,021 

Total Combined Assets 7,147,193 6,318,674 

Combined Liabilities

 Long-Term Debt 7,029,850 6,201,946 

 Other 49,859 82,144 

Total Combined Liabilities 7,079,709 6,284,090 

Combined Net Equity $ 67,484 $ 34,584 

For the Nine Months Ended September 30 

Combined Net Interest Income $ 34,824 $ 26,898 

Combined (Provision) Benefit for Loan Losses 5,469 (4,359) 

Combined Net Interest Income After (Provision) Benefit for Loan Losses $ 40,293 $ 22,539 

Combined Total Comprehensive Income $ 25,812 $ 12,233 

We obtained this financial information from the GSEs’ quarterly financial reports filed with the Securities and Exchange

Commission. The financial information above excludes certain financial guarantees not directly reflected on the

GSEs’ balance sheets.

GSES NON-ENTITY REVENUE

For the fiscal years ended September 30, 2021 and 2020, GSEs Non-Entity Revenue, Net consisted of the following:

Summary of GSEs Non-Entity Revenue (in millions) 2021 2020 

General Fund Revenue from Increase in Liquidation Preference of GSEs 

 Preferred Stock $ (31,828) $ (17,389) 

Fair Value (Gain)/Loss on GSEs Warrants/Preferred Stock (80,122) 20,549 

Total GSEs Non-Entity Cost (Revenue), Net $ (111,950) $ 3,160 

REGULATORY ENVIRONMENT

To date, Congress has not passed legislation nor has FHFA taken action to end the GSEs’ conservatorships. The GSEs

continue to operate under the direction of FHFA as conservator. 

The Temporary Payroll Tax Cut Continuation Act of 2011 (P.L. 112-78) was funded by an increase of ten basis points in the

GSEs’ guarantee fees (referred to as “the incremental fees”) which began in April 2012, and is effective through September

30, 2021. The incremental fees are remitted to us and not retained by the GSEs and, thus, do not affect the profitability of

the GSEs. For FY 2021 and 2020, the GSEs remitted to us the incremental fees totaling $4.9 billion and $4.2 billion,

respectively, which are reported within the line item entitled “Fines, Penalties, Interest and Other Revenue” on our

Statements of Custodial Activity. 

 
128 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

12. INVESTMENTS IN MULTILATERAL DEVELOPMENT BANKS

As of September 30, 2021 and 2020, Investments in Multilateral Development Banks consisted of the following:

(in millions) 2021 2020 

International Bank for Reconstruction and Development $ 3,264 $ 3,057 

Inter-American Development Bank (1) 2,023 2,023 

Asian Development Bank 991 991 

European Bank for Reconstruction and Development 636 636 

International Finance Corporation 569 569 

African Development Bank 488 434 

North American Development Bank 450 450 

Multilateral Investment Guarantee Agency 45 45 

Total $ 8,466 $ 8,205 

Refer to Note 27 for a description of the additional commitments related to these institutions. 

(1) Includes Inter-American Investment Corporation 
DEPARTMENT OF THE TREASURY 129 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

13. OTHER INVESTMENTS, NET

Other Investments, Net include foreign currency holdings that we typically invest in interest-bearing securities issued or

held through foreign governments or monetary authorities (refer to Note 5). The ESF holds most of our foreign currency

investments. Of the total $5.2 billion fair value of foreign investments (excluding interest receivable) held at September 30,

2021, $0.8 billion will mature within one year, $2.4 billion will mature after one year but before five years, and $2.0 billion

will mature after five years but before ten years. As of September 30, 2021, all of our foreign currency holdings and other

investments were Level 1 fair value measurements. As of September 30, 2020, the majority of our foreign currency holdings

and other investments were Level 1 fair value measurements and $16 million were Level 3 fair value measurements.

As of September 30, 2021 and 2020, Other Investments, Net consisted of the following:

Cost/ Unamortized 9/30/21

Acquisition (Premium)/ Interest Net Unrealized 9/30/21 

(in millions) Value Discount Receivable Investment Gain/(Loss) Fair Value

Investment Type:

Foreign Investments:

 Euro Bonds & Notes $ 4,714 $ 289 $ 45 $ 5,048 $ 211 $ 5,259 

 Japanese Government Bonds 6 - - 6 - 6 

Other Investments 28 - - 28 24 52 

Total Non-Federal $ 4,748 $ 289 $ 45 $ 5,082 $ 235 $ 5,317 

Investment Classification:

Available for Sale - Debt Securities $ 717 $ 26 $ 10 $ 753 $ 49 $ 802 

Held to Maturity:

 Debt Securities 5 - - 5 - 5 

 Equity Securities 23 - - 23 24 47 

Trading - Debt Securities 4,003 263 35 4,301 162 4,463 

Total Non-Federal $ 4,748 $ 289 $ 45 $ 5,082 $ 235 $ 5,317 

Cost/ Unamortized 9/30/20 

Acquisition (Premium)/ Interest Net Unrealized 9/30/20 

(in millions) Value Discount Receivable Investment Gain/(Loss) Fair Value

Investment Type:

Foreign Investments:

 Euro Bonds & Notes $ 4,504 $ 290 $ 53 $ 4,847 $ 437 $ 5,284 

 Japanese Government Bonds 334 - - 334 41 375 

 Other FCDAs 142 - - 142 - 142 

Other Investments 26 - - 26 (5) 21 

Total Non-Federal $ 5,006 $ 290 $ 53 $ 5,349 $ 473 $ 5,822 

Investment Classification:

Available for Sale - Debt Securities $ 1,307 $ 47 $ 15 $ 1,369 $ 127 $ 1,496 

Held to Maturity:

 Debt Securities 6 - - 6 - 6 

 Equity Securities 20 - - 20 (5) 15 

Trading - Debt Securities 3,673 243 38 3,954 351 4,305 

Total Non-Federal $ 5,006 $ 290 $ 53 $ 5,349 $ 473 $ 5,822 
130 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

The following table provides a reconciliation of our investment activity for the fiscal year ended September 30, 2021:

(in millions) 2021 

Beginning Balance $ 5,822 

Valuation Adjustments (238) 

Acquisition of Investments 8,940 

Sale/Repayment of Investments (9,199) 

Change in Accrued Dividend/Interest Income (8)

Ending Balance $ 5,317 
DEPARTMENT OF THE TREASURY 131 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

14. GENERAL PROPERTY, PLANT, AND EQUIPMENT, NET

As of September 30, 2021 and 2020, General Property, Plant, and Equipment, Net consisted of the following:

2021 

Net

Service Accumulated Book

(in millions) Life Cost Depreciation Value

Buildings, Structures and Facilities 3 - 50 years $ 885 $ (567) $ 318 

Furniture, Fixtures and Equipment 2 - 20 years 2,728 (1,964) 764 

Construction-in-Progress N/A 404 - 404 

Land N/A 12 - 12 

Internal-Use Software in Use 2 - 15 years 3,924 (3,036) 888 

Internal-Use Software in Development N/A 470 - 470 

Assets Under Capital Lease 2 - 25 years 32 (20) 12 

Leasehold Improvements 2 - 25 years 399 (271) 128 

Total $ 8,854 $ (5,858) $ 2,996 

2020 

Net

Service Accumulated Book

(in millions) Life Cost Depreciation Value

Buildings, Structures and Facilities 3 - 50 years $ 854 $ (542) $ 312 

Furniture, Fixtures and Equipment 2 - 20 years 2,951 (2,160) 791 

Construction-in-Progress N/A 332 - 332 

Land N/A 12 - 12 

Internal-Use Software in Use 2 - 15 years 3,728 (2,788) 940 

Internal-Use Software in Development N/A 426 - 426 

Assets Under Capital Lease 2 - 25 years 32 (17) 15 

Leasehold Improvements 2 - 25 years 412 (282) 130 

Total $ 8,747 $ (5,789) $ 2,958 

The service life ranges vary significantly due to the diverse nature of PP&E we hold.

The following table provides a reconciliation of total PP&E and accumulated depreciation for the fiscal years ended

September 30, 2021 and 2020:

2021 2020 

Accumulated Net Accumulated Net

(in millions) PP&E Depreciation PP&E PP&E Depreciation PP&E

Balance Beginning of Year $ 8,747 $ (5,789) $ 2,958 $ 8,324 $ (5,454) $ 2,870 

 Capitalized Acquisitions 575 (4) 571 623 (4) 619 

 Dispositions (468) 443 (25) (200) 192 (8) 

 Depreciation Expense - (508) (508) - (523) (523) 

Balance at End of Year $ 8,854 $ (5,858) $ 2,996 $ 8,747 $ (5,789) $ 2,958 
132 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

HERITAGE ASSETS

We have 15 heritage assets, of which five are considered multi-use, for FY 2021 and 2020. The Treasury Complex (Main 

Treasury Building and Annex), declared a national historical landmark in 1972, is treated as a multi-use heritage asset, 

along with the collection of artifacts within, and is expected to be preserved indefinitely. The buildings that house the Mint

in Denver, San Francisco, Fort Knox, and West Point are also multi-use heritage assets and included on the National

Register of Historic Places. Additionally, the Mint maintains heritage assets consisting of four-coin collections and six

collections of historical artifacts. They include various coins produced over the years, furniture and equipment used in

Mint’s facilities, and examples of the coin manufacturing process. These items are collection-type assets that are maintained

for exhibition and are preserved indefinitely because of their historical, cultural, educational, or artistic importance.
DEPARTMENT OF THE TREASURY 133 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

15. NON-ENTITY VS. ENTITY ASSETS 

Non-entity assets are those that we hold and manage on behalf of the General Fund but are not available for our use. The

table below shows our total assets, segregated between non-entity and entity, as of September 30, 2021 and 2020: 

 2021 

(in millions) Non-Entity Entity Total 

Intra-Governmental 

Fund Balance (a) $ 4,203 $ 622,253 $ 626,456 

Loans Receivable:

 Loans and Interest Receivable (Note 3) 1,715,491 78,899 1,794,390 

 Advances to Trust Funds (Note 4) 91,378 - 91,378 

Other Assets:

 Due From the General Fund (Note 4) 28,810,092 - 28,810,092 

 Accounts Receivable and Other 1,290 38 1,328 

Total Intra-Governmental 30,622,454 701,190 31,323,644 

Other Than Intra-Governmental 

Cash and Other Monetary Assets: 

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) 199,063 180,042 379,105 

 Gold and Silver Reserves (Note 6) 11,062 - 11,062 

Accounts Receivable, Net:

 Taxes, Interest, and Other Receivables, Net (Note 8) 303,814 815 304,629 

COVID-19 Investments, Advances, Receivables, and Other: (Note 10)

 Investments, Net 847 25,579 26,426 

 Advances, Net - 256,060 256,060 

 Notes and Interest Receivable, Net 13,677 - 13,677 

 Credit Program Receivables, Net - 1,311 1,311 

Investments in GSEs (Note 11) 220,860 - 220,860 

Other Assets (b) 7 54,291 54,298 

Total Other Than Intra-Governmental 749,330 518,098 1,267,428 

Total Assets $ 31,371,784 $ 1,219,288 $ 32,591,072 

(a) $3.0 billion of the non-entity balance represents assets held on behalf of the General Fund (refer to Note 4).

(b) Other Assets (Entity) include reserve position in the IMF, non-COVID-19 credit program receivables, loans and interest receivable,

other investments, general property, plant, and equipment, and other various assets on the Consolidated Balance Sheets not

separately presented in this table.
134 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

2020

(in millions) Non-Entity Entity Total 

Intra-Governmental 

Fund Balance (c) $ 3,917 $ 892,468 $ 896,385 

Loans Receivable:

 Loans and Interest Receivable (Note 3) 1,654,096 80,820 1,734,916 

 Advances to Trust Funds (Note 4) 37,166 - 37,166 

Other Assets:

 Due From the General Fund (Note 4) 27,093,930 - 27,093,930 

 Accounts Receivable and Other 1,162 56 1,218 

Total Intra-Governmental 28,790,271 973,344 29,763,615 

Other Than Intra-Governmental 

Cash and Other Monetary Assets: 

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) 1,770,303 68,062 1,838,365 

 Gold and Silver Reserves (Note 6) 11,062 - 11,062 

Accounts Receivable, Net:

 Taxes, Interest, and Other Receivables, Net (Note 8) 237,357 233 237,590 

COVID-19 Investments, Advances, Receivables, and Other: 

 Investments, Net 487 107,946 108,433 

 Advances, Net - 68,889 68,889 

 Notes and Interest Receivable, Net 5,320 - 5,320 

 Credit Program Receivables, Net - 1,580 1,580 

 Other - 1,619 1,619 

Investments in GSEs (Note 11) 108,910 - 108,910 

Other Assets (d) 7 54,704 54,711 

Total Other Than Intra-Governmental 2,133,446 303,033 2,436,479 

Total Assets $ 30,923,717 $ 1,276,377 $ 32,200,094 

(c) $2.5 billion of the non-entity balance represents assets held on behalf of the General Fund (refer to Note 4).

(d) Other Assets (Entity) include reserve position in the IMF, non-COVID-19 credit program receivables, loans and interest receivable,

other investments, general property, plant, and equipment, and other various assets on the Consolidated Balance Sheets not separately

presented in this table.
DEPARTMENT OF THE TREASURY 135 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

16. FEDERAL DEBT AND INTEREST PAYABLE AND RELATED LIABILITIES

Treasury is responsible for administering the federal debt on behalf of the U.S. government. The federal debt includes

borrowings from the public as well as borrowings from federal agencies. The federal debt does not include debt issued by

other governmental agencies, such as the Tennessee Valley Authority or Department of Housing and Urban Development.

Debt held by the public primarily represents the amount the U.S. government has borrowed to finance cumulative cash

deficits. In contrast, debt held by other federal agencies, primarily trust funds, represents balances of Treasury securities

held by individual federal agencies with either the authority or the requirement to invest excess receipts in Treasury

securities, with the principal and interest guaranteed by the full faith and credit of the U.S. government.

Federal Debt and Interest Payable as of September 30, 2021 and 2020 was as follows:

Held by Other Federal Agencies (Intra-Governmental) (in millions) 2021 2020 

Beginning Balance $ 5,897,192 $ 5,869,095 

New Borrowings/(Repayments) - Net 207,087 28,097 

Subtotal at Par Value 6,104,279 5,897,192 

Premium/(Discount) 86,081 72,193 

Debt Principal Not Covered by Budgetary Resources (Note 19) 6,190,360 5,969,385 

Interest Payable Covered by Budgetary Resources 34,848 35,867 

Total $ 6,225,208 $ 6,005,252 

Held by the Public (in millions) 2021 2020 

Beginning Balance $ 21,018,952 $ 16,809,092 

New Borrowings - Net of Repayments 1,263,948 4,209,860 

Subtotal at Par Value 22,282,900 21,018,952 

Premium/(Discount) (26,840) (26,702) 

Debt Principal Not Covered by Budgetary Resources (Note 19) 22,256,060 20,992,250 

Interest Payable Covered by Budgetary Resources 69,158 70,600 

Total $ 22,325,218 $ 21,062,850 

FEDERAL DEBT HELD BY OTHER FEDERAL AGENCIES

Certain federal agencies are allowed to invest excess funds in debt securities we issue on behalf of the U.S. government. The

terms and the conditions of debt securities issued allow the U.S. government to meet its cash needs. The vast majority of

debt securities are non-marketable securities issued at par value, but others are issued at market prices and interest rates

that reflect market terms. The average intra-governmental interest rate for debt held by the federal entities, excluding

Treasury Inflation-Protected Securities (TIPS) and Floating Rate Notes (FRNs), for FY 2021 and 2020 was 2.1 percent and

2.3 percent, respectively. The average intra-governmental interest rate on TIPS for FY 2021 and 2020 was 1.1 percent and

1.3 percent, respectively. The average interest rate on FRNs for FY 2021 and 2020 was 0.1 percent and 0.2 percent,

respectively. The average interest rate represents the original issue weighted effective yield on securities outstanding at the

end of the fiscal year.

The federal debt also includes intra-governmental marketable debt securities that certain agencies are permitted to buy and

sell on the open market. The debt held by federal agencies at par value (not including premium/discount or interest payable)

as of September 30, 2021 and 2020 was as follows: 
136 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

(in millions) 2021 2020 

Social Security Administration $ 2,853,817 $ 2,908,423 

Office of Personnel Management 1,036,772 1,074,149 

Department of Defense Agencies 1,334,074 1,197,374 

Department of Health and Human Services 310,928 225,210 

All Other Federal Entities — Consolidated 568,688 492,036 

Total Federal Debt Held by Other Federal Agencies $ 6,104,279 $ 5,897,192 

These amounts do not include intra-departmental debt and related interest that are eliminated from our financial statements.

FEDERAL DEBT HELD BY THE PUBLIC

Federal Debt Held by the Public at par value (not including premium/discount or interest payable) as of September 30, 2021

and 2020 consisted of the following:

Average

Interest 

(at par value in millions) Term Rates 2021 

Marketable: 

Treasury Bills 1 Year or Less 0.1% $ 3,712,952 

Treasury Notes Over 1 Year - 10 Years 1.4% 12,570,463 

Treasury Bonds Over 10 Years 3.1% 3,340,760 

Treasury Inflation-Protected Securities (TIPS) 5 Years or More 0.5% 1,651,998 

Treasury Floating Rate Notes (FRN) 2 Years 0.4% 579,292 

Total Marketable 21,855,465 

Non-Marketable On Demand to Over 40 Years 1.3% 427,435 

Total Federal Debt Held by the Public $ 22,282,900 

Average

Interest 

(at par value in millions) Term Rates 2020 

Marketable: 

Treasury Bills 1 Year or Less 0.2% $ 5,028,127 

Treasury Notes Over 1 Year - 10 Years 1.9% 10,655,969 

Treasury Bonds Over 10 Years 3.5% 2,668,116 

Treasury Inflation-Protected Securities (TIPS) 5 Years or More 0.7% 1,522,418 

Treasury Floating Rate Notes (FRN) 2 Years 0.3% 478,320 

Total Marketable 20,352,950 

Non-Marketable On Demand to Over 40 Years 1.1% 666,002 

Total Federal Debt Held by the Public $ 21,018,952 

We generally issue Treasury bills, notes, bonds, and TIPS to meet the borrowing needs of the U.S. government. We issue

marketable bills at a discount or at par, and pay the par amount of the security upon maturity. The average interest rate on

Treasury bills represents the original issue effective yield on securities outstanding at year end. We issue marketable notes

and bonds as long-term securities that pay semi-annual interest based on the securities’ stated interest rates. We issue

these securities at either par value or at an amount that reflects a discount or premium. The average interest rate on

marketable notes and bonds represents the stated interest rate adjusted by any discount or premium on securities

outstanding at year-end. During FY 2021, Treasury continued to face sizeable borrowing needs as a result of the federal

government’s response to the COVID-19 pandemic. Consequently, we continued to increase auction sizes across all nominal

coupon securities and FRNs through January 2021, with a gradual increase in TIPS issuances throughout FY 2021.
DEPARTMENT OF THE TREASURY 137 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

We also issue TIPS that have interest and redemption payments tied to the Consumer Price Index (CPI) for all Urban

Consumers, a widely used measurement of inflation. We adjust the principal for TIPS daily over the life of the security

based on the CPI for all Urban Consumers. At maturity, TIPS are redeemed at the inflation-adjusted principal amount, or

the original par value, whichever is greater. TIPS pay a semi-annual fixed rate of interest applied to the inflation-adjusted

principal. The average interest rate on TIPS represents the stated interest rate on principal plus inflation, adjusted by any

discount or premium on securities outstanding as of the end of the fiscal year. The inflation-adjusted TIPS principal balance

of federal debt held by the public included inflation of $217.1 billion and $151.0 billion as of September 30, 2021 and 2020,

respectively.

We also issue marketable FRNs which pay interest quarterly based on the interest rate at the time of payment. The interest

rate of FRNs can change over time and is indexed to the highest acceptable discount rate of the most recent 13-week

marketable bill auction. Similar to marketable notes and bonds, we issue these securities at either par value or at an

amount that reflects a discount or premium. The average interest rate on marketable FRNs represents the highest accepted

discount rate of the most recent 13-week marketable auction as of September 30, adjusted by any discount or premium on

securities outstanding as of that date. 

Federal Debt Held by the Public includes federal debt held outside of the U.S. government by individuals, corporations,

FRBs, state and local governments, foreign governments, and central banks. As of September 30, 2021, the FRB’s SOMA

had total holdings of $3.8 trillion which: (i) excluded $1.6 trillion in Treasury securities used in overnight reverse repurchase

transactions, and (ii) excluded a negligible amount lent to dealers and not collateralized by other Treasury securities. As of

September 30, 2020, the FRB’s SOMA had total holdings of $4.1 trillion which: (i) excluded $395.1 billion in Treasury

securities used in overnight reverse repurchase transactions, and (ii) excluded a negligible amount lent to dealers and not

collateralized by other Treasury securities. For the years ended September 30, 2021 and 2020, we incurred interest expense

of $87.1 billion and $64.3 billion, respectively, related to Treasury securities held by the FRBs.

We issue non-marketable securities at either par value or at an amount that reflects a discount or a premium. The average

interest rate on the non-marketable securities represents the original issue weighted effective yield on securities outstanding

as of September 30, 2021 and 2020. Non-marketable securities are issued with a term of on demand out to 40 years. In FY 

2020, we expanded our non-marketable securities to include a new special non-marketable Treasury security, known as a 

Special Purpose Vehicle (SPV) security. We issued these securities to SPVs, which were established by the Federal Reserve

to implement its emergency lending facilities under Section 13(3) of the Federal Reserve Act to respond to the COVID-19

pandemic (refer to Note 10). An SPV security is a demand deposit certificate of indebtedness for which interest accrues daily

and is paid at redemption. The total amount of SPV securities redeemed in FY 2021 was $74 billion, including $22 million in

capitalized interest; there were no issuances of SPV securities FY 2021. As of September 30, 2021 and 2020, the total

amount of SPV securities outstanding was $22 billion and $96 billion, respectively.
138 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

STATUTORY DEBT LIMIT 

The statutory debt limit is the total amount of money that the U.S. government is authorized to borrow to meet its existing

legal obligations, with certain adjustments. Outstanding debt obligations subject to the statutory limit were $28.4 trillion

and $26.9 trillion as of September 30, 2021 and 2020, respectively. Congress has provided us with statutory authority to

take certain extraordinary measures in the event that the public debt nears the statutory debt limit and a delay in raising

the statutory debt limit occurs. These measures authorize us to deviate from our normal debt management operations – 

which include the investment (or non-investment) of trust fund balances in Treasury securities – to avoid exceeding the

statutory debt limit. We undertake these measures to meet the U.S. government’s obligations as they come due without

exceeding the debt limit.

During a period of delay in raising the statutory debt limit, we may undertake the following extraordinary measures: (i) 

suspend new issuances of Treasury securities to the Government Securities Investment Fund (G Fund) of the FERS TSP, the

Civil Service Retirement and Disability Fund (Civil Service Fund), the Postal Service Retiree Health Benefits Fund (Postal

Benefits Fund), and the ESF; (ii) redeem early a certain amount of Treasury securities held by the Civil Service Fund and

Postal Benefit Fund; (iii) suspend new issuances of State and Local Government Series (SLGS) securities; (iv) utilize FFB to

exchange outstanding Treasury securities held by the Civil Service Fund for non-Treasury securities (refer to Note 17); and

(v) issue cash management bills to manage short-term financing needs.

When the period of delay in raising the statutory debt limit ends, we discontinue our use of extraordinary measures and

resume our normal debt management operations. Furthermore, we are required by the relevant statutes to issue to the G 

Fund, along with the OPM-administered Civil Service Fund and Postal Benefits Fund (the OPM funds), Treasury securities

that bear such interest rates and maturity dates necessary to replicate the investments the funds would have held had the

delay not occurred (the unissued securities). In addition, relevant statutes require us to pay these funds the related lost

interest (foregone interest) on the unissued securities. While we may restore the ESF, relevant statutes do not permit us to

pay the ESF interest lost during a period of delay. 

On August 2, 2019, Congress enacted the Bipartisan Budget Act of 2019 (P.L. 116-37) which temporarily suspended the debt

limit through July 31, 2021. In FY 2020, we accrued and paid $116 million of foregone interest owed to the two OPM funds

related to the period of delay in raising the statutory debt limit that occurred from March 4, 2019 through August 1, 2019. 

The foregone interest was reported on the Consolidated Statements of Net Costs within the line item “Restoration of

Foregone Federal Debt Interest.”

A delay in raising the statutory debt limit occurred commencing August 2, 2021 at which time we departed from our normal

debt management operations, which included not issuing federal debt securities to the G-Fund and OPM Fund accounts, to

avoid exceeding the statutory debt limit. On October 14, 2021, Congress enacted Public Law 117-50, which raised the

statutory debt limit by $480 billion, from $28.401 trillion to $28.881 trillion. On October 18, 2021, the Secretary notified

Congress that this increase in the statutory debt limit provided only a temporary reprieve, and that continued use of

extraordinary measures is expected to allow Treasury to meet U.S. government obligations without exceeding the debt limit

through December 3, 2021. 

As of September 30, 2021, we recorded a liability comprised of uninvested principal owed to the G Fund and the OPMadministered Civil Service Fund totaling $217.2 billion, and foregone interest payable to the G Fund and OPM funds for the

period of August 2, 2021 through September 30, 2021 totaling $409 million.
DEPARTMENT OF THE TREASURY 139 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

The liability for the uninvested principal and foregone interest payable as of September 30, 2021 was reported on our

Consolidated Balance Sheets in the line item, “Liability for Restoration of Federal Debt Principal and Interest”, of which

$60.6 billion represented an intra-governmental liability of the combined principal and interest payable to the OPM funds,

and the remaining $157.0 billion represented the principal and interest payable to the G Fund, a public liability. 

Corresponding amounts were reported in the line item “Due From the General Fund” on the Consolidated Balance Sheets for

the total $217.6 billion of uninvested principal and foregone interest owed to the funds as of September 30, 2021 (refer to

Note 4). Additionally, the accrued foregone interest expense totaling $409 million was reported as a non-entity expense

within the line item “Accrued Restoration of Foregone Federal Debt Interest,” on the Consolidated Statements of Net Cost,

with an offsetting amount reported within the line item “Accrued Interest on Restoration of Federal Debt Principal,” on the

Consolidated Statements of Changes in Net Position. 

17. OTHER FEDERAL DEBT AND INTEREST PAYABLE

Through FFB, we have outstanding borrowings and related accrued interest owed to the Civil Service Fund. At September

30, 2021 and 2020, FFB had outstanding borrowings of $6.1 billion and $7.3 billion, inclusive of $40 million and $48 million

of accrued interest payable, respectively. The outstanding borrowings at September 30, 2021 had stated interest rates that

ranged from 2.25 percent to 2.88 percent per annum, and an effective interest rate of 2.60 percent. The outstanding

borrowings at September 30, 2020 had stated interest rates that ranged from 2.25 percent to 2.88 percent per annum, and an

effective interest rate of 2.64 percent. Maturity dates ranged from June 30, 2022 to June 30, 2029 for outstanding

borrowings at September 30, 2021, and from June 30, 2021 to June 30, 2029 for outstanding borrowings at September 30,

2020.

 
140 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

18. D.C. FEDERAL PENSION AND JUDICIAL RETIREMENT ACTUARIAL

LIABILITY

Title XI of the Balanced Budget Act of 1997, as amended, was intended to relieve the D.C. government of the burden of

unfunded pension liabilities transferred to the District by the U.S. government in 1979. To fulfill our responsibility, we

manage two funds ― the District of Columbia Teachers, Police Officers, and Firefighters Federal Pension Fund (the D.C.

Federal Pension Fund) and the District of Columbia Judicial Retirement and Survivors Annuity Fund (the Judicial

Retirement Fund). We are required to make annual amortized payments from the General Fund to the D.C. Federal Pension

Fund and the Judicial Retirement Fund. The D.C. Federal Pension Fund benefit payments relate to creditable service

performed on or before June 30, 1997, while the Judicial Retirement Fund benefit payments relate to all creditable service. 

A reconciliation of the combined actuarial pension liability for the D.C. Federal Pension Fund and the Judicial Retirement

Fund as of September 30, 2021 and 2020 is as follows: 

(in millions) 2021 2020 

Beginning Liability Balance $ 8,272 $ 8,398 

Pension Expense:

Normal Cost 6 5 

Interest on Pension Liability During the Year 72 66 

Actuarial (Gains) Losses During the Year:

From Experience (42) 53 

From Discount Rate Assumption Change 337 383 

From Other Economic Assumption Changes (7) (36) 

From Non-Economic Assumption Changes (83) (44) 

Total Pension Expense 283 427 

Less Amounts Paid (545) (553) 

Ending Liability Balance $ 8,010 $ 8,272 
DEPARTMENT OF THE TREASURY 141 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

D.C. Federal Judicial 2021 

Additional Information ($ in millions): Pension Fund Retirement Fund Total 

Amount Received from the General Fund $ 576 $ 19 $ 595 

Annual Rate of Investment Return Assumption 0.80% - 3.33% 0.80% - 3.33% 

Future Annual Rate of Inflation and Cost-Of- 

 Living Adjustment:

 Police Officers 1.75% N/A

 Firefighters 1.75% N/A

 Teachers 1.68% N/A

 Judicial N/A 1.65% 

Future Annual Rate of Salary Increases:

 Police Officers 2.15% N/A

 Firefighters 2.20% N/A

 Teachers 2.30% N/A

 Judicial N/A 1.04% 

D.C. Federal Judicial 2020 

Additional Information ($ in millions): Pension Fund Retirement Fund Total 

Amount Received from the General Fund $ 540 $ 16 $ 556 

Annual Rate of Investment Return Assumption 0.82% - 3.60% 0.82% - 3.60% 

Future Annual Rate of Inflation and Cost-Of- 

 Living Adjustment:

 Police Officers 1.76% N/A

 Firefighters 1.76% N/A

 Teachers 1.71% N/A

 Judicial N/A 1.52% 

Future Annual Rate of Salary Increases:

 Police Officers 2.15% N/A

 Firefighters 2.20% N/A

 Teachers 2.30% N/A

 Judicial N/A 0.94% 
142 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

19. LIABILITIES

LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

As of September 30, 2021 and 2020, liabilities not covered by budgetary resources consisted of the following: 

(in millions) 2021 2020 

Intra-Governmental Liabilities Not Covered by Budgetary Resources

Federal Debt Principal, Premium/Discount (Note 16) $ 6,190,360 $ 5,969,385 

Liability for Restoration of Federal Debt Principal and Interest (Note 16) 60,562 - 

Other Intra-governmental Liabilities 80 85 

Total Intra-Governmental Liabilities Not Covered by Budgetary Resources 6,251,002 5,969,470 

Federal Debt Principal, Premium/Discount (Note 16) 22,256,060 20,992,250 

Liability for Restoration of Federal Debt Principal and Interest (Note 16) 157,035 - 

Other Liabilities 1,144 1,152 

Total Liabilities Not Covered by Budgetary Resources 28,665,241 26,962,872 

Total Liabilities Covered by or Not Requiring Budgetary Resources 2,960,975 4,189,881 

Total Liabilities $ 31,626,216 $ 31,152,753 

OTHER LIABILITIES

The “Other” line item within “Other Liabilities” displayed on the Consolidated Balance Sheets consists of liabilities that are

covered by, not covered by, and not requiring budgetary resources. The “Other” line item within “Other Liabilities” at

September 30, 2021 and 2020, consisted of the following: 

Non- 2021 Non- 2020 

(in millions) Current Current Total Current Current Total 

Intra-Governmental 

Accounts Payable $ 93 $ - $ 93 $ 112 $ - $ 112 

Unfunded Federal Workers Compensation 

 Program Liability (FECA) 36 41 77 39 44 83 

Other Accrued Liabilities 1,484 21 1,505 510 21 531 

Total Intra-Governmental $ 1,613 $ 62 $ 1,675 $ 661 $ 65 $ 726 

Other Than Intra-Governmental 

Liability for Deposit Funds (Held by the

 U.S. government for Others)

 and Suspense Accounts $ 4,453 $ - $ 4,453 $ 3,056 $ - $ 3,056 

Actuarial Federal Workers Compensation 

 Program Liability (FECA) - 567 567 - 574 574 

Accrued Funded Payroll and Benefits 626 - 626 564 - 564 

Accounts Payable and Other Accrued

 Liabilities 3,354 101 3,455 2,569 102 2,671 

Total Other Than Intra-Governmental $ 8,433 $ 668 $ 9,101 $ 6,189 $ 676 $ 6,865 
DEPARTMENT OF THE TREASURY 143 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

20. NET POSITION

Unexpended Appropriations represents the amount of spending authorized as of year-end that is unliquidated or unobligated

and has not lapsed, been rescinded, or withdrawn. No-year appropriations remain available for obligation until expended. 

Annual appropriations remain available for upward or downward adjustment of obligations until canceled. We report

adjustments related to unexpended appropriations, such as cancellations of expired funds or rescissions, as “Other

Adjustments” on the Consolidated Statements of Changes in Net Position.

Cumulative Results of Operations represents the net results of operations since inception, and includes cumulative amounts

related to investments in capitalized assets and donations and transfers of assets in and out without reimbursement. Also

included as a reduction in Cumulative Results of Operations are accruals for which the related expenses require funding

from future appropriations and assessments. These future funding requirements include, among others: (a) accumulated

annual leave earned but not taken; (b) accrued FECA; (c) credit reform cost re-estimates; (d) unfunded D.C. Federal pension;

and (e) expenses for contingent liabilities.

APPROPRIATIONS RECEIVED

Congress appropriates the amount reported as “Appropriations Received” from the General Fund receipts, such as income

taxes, that are not dedicated by law for a specific purpose. This amount will not necessarily agree with the “Appropriations

(discretionary and mandatory)” amount reported on the Combined Statements of Budgetary Resources because of differences

between proprietary and budgetary accounting concepts and reporting requirements. For example, certain dedicated

receipts are recorded as “Appropriations (discretionary and mandatory)” on the Combined Statements of Budgetary

Resources, but are recognized as exchange or non-exchange revenue (i.e., typically in revolving, special, and non-revolving

trust funds) and reported on the Consolidated Statements of Changes in Net Position in accordance with SFFAS No. 7, 

Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, as

amended.

TRANSFERS TO THE GENERAL FUND AND OTHER

The amount reported as “Transfers to the General Fund and Other” on the Consolidated Statements of Changes in Net

Position under “Other Financing Sources” includes the following for the years ended September 30, 2021 and 2020: 

(in millions) 2021 2020 

Categories of Transfers to the General Fund and Other

Interest Revenue $ (51,222) $ (58,451) 

Downward Re-estimates of Credit Reform Subsidies (4,613) (14,188) 

COVID-19 Non-Entity Revenue (Note 10) (8,937) (5,832) 

Increase in Liquidation Preference of GSEs Preferred Stock and Valuation Changes (Note 11) (111,950) 3,160 

Other (363) 410 

Total $ (177,085) $ (74,901) 
144 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Included in “Transfers to the General Fund and Other” is accrued interest revenue on inter-agency loans held on behalf of

the U.S. government. We report a corresponding amount on the Consolidated Statements of Net Cost under “Non-Entity

Costs: Less Interest Revenue from Loans.” Eliminations between our bureaus reduce the amount reported on the

Consolidated Statements of Net Cost. The credit reform downward re-estimate subsidies transferred to the General Fund is

driven by a change in forecasted future cash flows. Our “COVID-19 Non-Entity Revenue” represents the value of our notes

receivable and common stock warrants received pursuant to Section 4112 of the CARES Act. Also, included is the increase

in liquidation preference and annual valuation adjustment on the GSE Senior Preferred Stock investments. 

21. CONSOLIDATED STATEMENTS OF NET COST AND NET COSTS OF

TREASURY SUB-ORGANIZATIONS

Our Consolidated Statements of Net Cost display information on a consolidated basis. We consist of DO and seven operating

bureaus that we provide supporting schedules for Net Cost in the notes to the financial statements (refer to Note 1). These

supporting schedules provide consolidating information, which fully displays the costs, revenues, and net cost of DO and

each operating bureau.

The classification of sub-organizations has been determined in accordance with SFFAS No. 4, Managerial Cost Accounting

Standards and Concepts which states that the predominant factor is the reporting entity’s organization structure and

existing responsibility components, such as bureaus, administrations, offices, and divisions within a department.

Each sub-organization is responsible for accumulating costs. The assignment of the costs to Department-wide programs is

the result of using the following cost assignment methods: (1) direct costs, (2) cause and effect, and (3) cost allocation.

INTRA-DEPARTMENTAL COSTS/REVENUES

We report intra-departmental costs/revenues resulting from the provision of goods and/or services on a reimbursable basis

among our sub-organizations as costs by providing sub-organizations and as revenues by receiving sub-organizations. We

recognized intra-departmental imputed costs, such as un-reimbursed payments made from the Treasury Judgment Fund on

our behalf, on the Consolidated Statements of Net Cost of $1.3 billion and $0.9 billion during FY 2021 and 2020, respectively. 

Accordingly, we eliminated such costs or revenues in the consolidation process.

INTRA-GOVERNMENTAL COSTS

Intra-governmental costs relate to the source of goods and services we purchased and not to the classification of the related

intra-governmental revenue.

In certain cases, other federal agencies incur costs that are directly identifiable to our operations. In accordance with SFFAS 

No. 4, as amended, we recognize identified costs paid on our behalf by other agencies. The imputed intra-governmental

financing sources we currently recognize include the actual cost of future benefits for the federal pension plans, and the

Federal Employees Health Benefits Program that other federal entities pay on our behalf. We reflect the funding for these

costs as costs on the Consolidated Statements of Net Cost, and as imputed financing sources on the Consolidated Statements

of Changes in Net Position. Costs paid by other agencies on our behalf were $762 million and $666 million for the fiscal

years ended September 30, 2021 and 2020, respectively.
DEPARTMENT OF THE TREASURY 145 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

CONSOLIDATED STATEMENTS OF NET COST PRESENTATION

OMB Circular No. A-136, as revised, requires that the Consolidated Statements of Net Cost present the net cost of

operations by major programs, which may describe an agency’s mission, strategic goals, functions, or other meaningful

grouping. We have presented the gross costs and earned revenues by major program categories aligned with our strategic

goals identified in Treasury’s FY 2018 – 2022 Strategic Plan. The majority of our bureaus’ and reporting entities’ gross costs 

and earned revenues falls within a single program category in the Consolidated Statements of Net Cost. DO allocates gross

costs and earned revenues to multiple programs using a net cost percentage calculation. All of our management offices 

coordinate, on a Treasury-wide basis, their efforts to achieve the Management program-related strategic goals. For financial

statement presentation purposes, we combine the gross costs and earned revenues associated with our Management

program-related goals with those costs and revenues associated with our Financial program-related strategic goals.

Our Consolidated Statements of Net Cost also present interest expense on the federal debt, other federal costs incurred, and

non-entity exchange revenues earned on behalf of the U.S. government. We do not reflect these costs and revenues as net

program costs related to our strategic plan missions. We eliminate these costs in the consolidation process to the extent that

they involve transactions with our sub-organizations. 

Non-entity other federal costs shown on the Consolidated Statements of Net Cost for the fiscal years ended September 30,

2021 and 2020 consisted of the following: 

(in millions) 2021 2020 

Credit Reform Interest on Uninvested Funds (Intra-Governmental) $ 12,617 $ 21,144 

Judgment Claims and Contract Disputes 8,215 7,802 

Resolution Funding Corporation 1,367 2,425 

Corporation for Public Broadcasting 640 540 

All Other Payments 727 838 

Total $ 23,566 $ 32,749 
146 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

21. CONSOLIDATED STATEMENT OF NET COST AND NET COSTS OF

TREASURY SUB-ORGANIZATIONS (IN MILLIONS) 

For Fiscal Year Ended September 30, 2021 

Program Costs

Bureau of

Engraving &

Printing

Bureau of the

Fiscal

Service

Departmental 

Office(a)

Financial 

Crimes 

Enforcement 

Network

Internal 

Revenue 

Service U.S. Mint

FINANCIAL PROGRAM

Gross Cost $ - $ 2,459 $ 5,448 $ - $ - $ - 

Less Earned Revenue - (469) (3,352) - - - 

Net Program Cost - 1,990 2,096 - - - 

ECONOMIC PROGRAM

Gross Cost 945 - 128,657 - 15,447 4,911 

Less Earned Revenue (929) - (7,846) - (624) (5,025) 

Net Program Cost 16 - 120,811 - 14,823 (114) 

SECURITY PROGRAM

Gross Cost - - 516 134 - - 

Less Earned Revenue - - (30) (2) - - 

Net Program Cost - - 486 132 - - 

Total Net Program Cost (Revenue)

 Before Changes in Actuarial

 Assumptions 16 1,990 123,393 132 14,823 (114) 

(Gain)/Loss on Pension, ORB, or OPEB

 Assumption Changes - - 247 - - - 

Total Net Cost of (Revenue From)

 Treasury Operations $ 16 $ 1,990 $ 123,640 $ 132 $ 14,823 $ (114) 

(a) The total $120.8 billion of the Economic Program net costs reported by DO consisted of $122.7 billion of net costs from DO Policy Offices primarily related

to the COVID-19 relief programs: $58.4 billion for Coronavirus Relief Fund, $30.7 billion for Payroll Support to Aviation Workers, $21.0 billion for

Emergency Rental Assistance, $10.2 billion for Coronavirus State and Local Fiscal Recovery Funds, $1.3 billion for Transportation Services Economic 

Relief; and $1.0 billion for Homeowners Assistance Fund (refer to Note 10); and $1.5 billion of net costs from CDFI including $1.1 billion for Rapid

Response Program, partially offset by $3.5 billion of net income from ESF. The remaining net costs consisted of net costs from other DO programs or 

offices. 
DEPARTMENT OF THE TREASURY 147 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

21. CONSOLIDATED STATEMENT OF NET COST AND NET COSTS OF

TREASURY SUB-ORGANIZATIONS (IN MILLIONS) (CON’T): 

For Fiscal Year Ended September 30, 2021 

Program Costs

Office of the 

Comptroller of the 

Currency

Alcohol

and

Tobacco

Tax and

Trade

Bureau 

Combined 

Total Eliminations

2021 

Consolidated

FINANCIAL PROGRAM

Gross Cost $ - $ - $ 7,907 $ 2,309 $ 5,598 

Less Earned Revenue - - (3,821) (965) (2,856) 

Net Program Cost - - 4,086 1,344 2,742 

ECONOMIC PROGRAM

Gross Cost 1,114 132 151,206 2,381 148,825 

Less Earned Revenue (1,145) (7) (15,576) (276) (15,300) 

Net Program Cost (31) 125 135,630 2,105 133,525 

SECURITY PROGRAM

Gross Cost - - 650 135 515 

Less Earned Revenue - - (32) (6) (26) 

Net Program Cost - - 618 129 489 

Total Net Program Cost (Revenue)

 Before Changes in Actuarial

 Assumptions (31) 125 140,334 3,578 136,756 

(Gain)/Loss on Pension, ORB, or OPEB

 Assumption Changes (4) - 243 - 243 

Total Net Cost of (Revenue From)

 Treasury Operations $ (35) $ 125 $ 140,577 $ 3,578 $ 136,999 
148 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

21. CONSOLIDATED STATEMENT OF NET COST AND NET COSTS OF

TREASURY SUB-ORGANIZATIONS (IN MILLIONS) (CON’T): 

For Fiscal Year Ended September 30, 2020 

Program Costs

Bureau of

Engraving &

Printing

Bureau of the

Fiscal

Service

Departmental 

Office(a)

Financial 

Crimes 

Enforcement 

Network

Internal 

Revenue 

Service U.S. Mint

FINANCIAL PROGRAM

Gross Cost $ - $ 2,317 $ 6,233 $ - $ - $ - 

Less Earned Revenue - (518) (4,351) - - - 

Net Program Cost - 1,799 1,882 - - - 

ECONOMIC PROGRAM

Gross Cost 691 - 123,086 - 14,072 3,066 

Less Earned Revenue (773) - (9,302) - (460) (3,067) 

Net Program Cost (82) - 113,784 - 13,612 (1) 

SECURITY PROGRAM

Gross Cost - - 352 128 - - 

Less Earned Revenue - - (11) (1) - - 

Net Program Cost - - 341 127 - - 

Total Net Program Cost (Revenue)

 Before Changes in Actuarial

 Assumptions (82) 1,799 116,007 127 13,612 (1) 

(Gain)/Loss on Pension, ORB, or OPEB

 Assumption Changes - - 303 - - - 

Total Net Cost of (Revenue From)

 Treasury Operations $ (82) $ 1,799 $ 116,310 $ 127 $ 13,612 $ (1) 

(a) The total $113.8 billion of the Economic Program net costs reported by DO consisted of $109.0 billion of net costs from DO Policy Offices primarily related

to the COVID-19 stimulus programs: $80.6 billion for payments made to States, Municipalities and Tribal Organizations as part of Section 5001 of the

CARES Act Relief funding; $28.2 billion for payments made to Air Carriers Worker Support as part of Section 4112 of the CARES Act Relief funding; and

$4.4 billion of net costs from ESF primarily for CARES Act program related costs (refer to Note 10). The remaining net costs consisted of net costs from

other DO programs or offices 
DEPARTMENT OF THE TREASURY 149 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

21. CONSOLIDATED STATEMENT OF NET COST AND NET COSTS OF

TREASURY SUB-ORGANIZATIONS (IN MILLIONS) (CON’T): 

For Fiscal Year Ended September 30, 2020 

Program Costs

Office of the 

Comptroller of the 

Currency

Alcohol

and

Tobacco

Tax and

Trade

Bureau 

Combined 

Total Eliminations

2020 

Consolidated

FINANCIAL PROGRAM

Gross Cost $ - $ - $ 8,550 $ 2,363 $ 6,187 

Less Earned Revenue - - (4,869) (1,120) (3,749) 

Net Program Cost - - 3,681 1,243 2,438 

ECONOMIC PROGRAM

Gross Cost 1,079 128 142,122 4,532 137,590 

Less Earned Revenue (1,095) (7) (14,704) (2,504) (12,200) 

Net Program Cost (16) 121 127,418 2,028 125,390 

SECURITY PROGRAM

Gross Cost - - 480 125 355 

Less Earned Revenue - - (12) (5) (7) 

Net Program Cost - - 468 120 348 

Total Net Program Cost (Revenue)

 Before Changes in Actuarial

 Assumptions (16) 121 131,567 3,391 128,176 

(Gain)/Loss on Pension, ORB, or OPEB

 Assumption Changes 8 - 311 - 311 

Total Net Cost of (Revenue From)

 Treasury Operations $ (8) $ 121 $ 131,878 $ 3,391 $ 128,487 
150 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

22. ADDITIONAL INFORMATION RELATED TO THE COMBINED 

STATEMENTS OF BUDGETARY RESOURCES

NET ADJUSTMENTS TO UNOBLIGATED BALANCE, BROUGHT FORWARD, OCTOBER 1 

Net adjustments to unobligated balance, brought forward, October 1 as of September 30, 2021 and 2020 consisted of the

following: 

(in millions) 2021 2020 

Unobligated Balance, Brought Forward From Prior Year $ 771,181 $ 315,349 

Adjustments to Budgetary Resources Made During Current Year

 Downward Adjustments of Prior Year Undelivered Orders 126,845 994 

 Downward Adjustments of Prior Year Delivered Orders 2,712 539 

 Other Adjustments 17,456 2,689 

Unobligated Balance From Prior Year Budgetary Authority, Net

 (Discretionary and Mandatory) $ 918,194 $ 319,571 

The increase in Unobligated Balance, Brought Forward From Prior Year is primarily the result of the carryforward into FY 

2021 of the unobligated portion of the $500.0 billion CARES Act appropriation received in FY 2020. The increase in

Downward Adjustments of Prior Year Undelivered Orders is driven by undisbursed SPV investment and direct loan

commitments which were de-obligated pursuant to the CAA in December 2020 (refer to Note 10), as well as direct loan

repayments and commitment expirations in FY 2021. The increase in Other Adjustments is primarily driven by the IMF

making a general allocation of SDRs to the U.S. government valued at $112.8 billion, increasing our balance in SDR

holdings, and a corresponding increase in SDR allocations (refer to Note 5). The increase is partially offset by borrowing

authority withdrawn due to the CAA which eliminated Treasury’s ability to make new loans and investments under the

CARES Act and resulted in a rescission of CARES Act appropriated funding (refer to Note 10).

UNDELIVERED ORDERS

Undelivered orders represent goods and services ordered and obligated which have not been received. This includes any

orders for which we have paid in advance, but for which delivery or performance has not yet occurred. The increase in

Undelivered Orders - Paid as of September 30, 2021, resulted primarily from obligations incurred totaling $256.1 billion

related to advance payments made to support states, local, territorial, and Tribal governments in response to the COVID-19

pandemic (refer to Note 10). The decrease in Undelivered Orders - Unpaid as of September 30, 2021, primarily resulted from

the de-obligation on December 27, 2020 of undisbursed but previously committed CARES Act funds totaling $106.0 billion

(refer to Note 10). Undelivered orders as of September 30, 2021 and 2020 consisted of the following: 

2021 2020 

(in millions) Federal Non-Federal Total Federal Non-Federal Total 

Paid $ 16 $ 256,075 $ 256,091 $ 8 $ 68,900 $ 68,908 

Unpaid 609 5,889 6,498 13,036 120,484 133,520 

Undelivered Orders at the End of the Year $ 625 $ 261,964 $ 262,589 $ 13,044 $ 189,384 $ 202,428 

CONTRIBUTED CAPITAL

Contributed capital represents the current year authority and prior year balances of amounts actually transferred through

non-expenditure transfers to miscellaneous receipt accounts of the General Fund to repay a portion of a capital investment
DEPARTMENT OF THE TREASURY 151 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

or transfer seigniorage and numismatic profits (refer to Note 20). We did not have any contributed capital for the fiscal

years ended September 30, 2021 and 2020.

TERMS OF BORROWING AUTHORITY USED

Several of our programs have authority to borrow under the FCRA, as amended. The FCRA provides indefinite borrowing

authority to financing accounts to fund the unsubsidized portion of direct loans and to satisfy obligations in the event the

financing account’s resources are insufficient. OMB Circular No. A-11 defines repayment requirements. Interest expense

due is calculated based on the beginning balance of borrowings outstanding and the borrowings/repayments activity that

occurred during the fiscal year. Undisbursed Departmental borrowings earn interest at the same rate as the financing

account pays on its debt owed to the Fiscal Service. In the event that principal and interest collections exceed the interest

expense due, we receive the excess payment. If principal and interest do not exceed interest expense due, we will borrow the

difference. We make periodic principal repayments based on the analysis of cash balances and future disbursement needs. 

All interest on borrowings is due on September 30. Interest rates on FCRA borrowings range from 0.80 percent to 5.83

percent.

AVAILABLE BORROWING

The available borrowing authority and related changes in available borrowing authority as of and for the fiscal years ended

September 30, 2021 and 2020 are shown below: 

(in millions) 2021 2020 

Beginning Balance $ 99,676 $ 6,248 

Current Authority(1) 15,008 188,664 

Borrowing Authority Withdrawn (93,318) (43) 

Borrowing Authority Converted to Cash (15,249) (95,193) 

Ending Balance $ 6,117 $ 99,676 

(1) The significant decrease in borrowing authority is related to the COVID-19 pandemic (refer to Note 10).

RECONCILIATION OF THE PRESIDENT’S BUDGET

The Budget of the United States (also known as the President’s Budget), with actual numbers for FY 2021, was not

published at the time that these financial statements were issued. The FY 2023 President’s Budget is expected to be

published by OMB in February 2022, and will be available from the U.S. Government Publishing Office. The following chart

displays the differences between the Combined Statement of Budgetary Resources (SBR) in the FY 2020 AFR and the actual

FY 2020 balances included in the FY 2022 President’s Budget.
152 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Reconciliation of FY 2020 Combined Statement of Budgetary Resources

to the FY 2022 President’s Budget

New

Obligations Outlays (net Distributed

Budgetary and Upward of offsetting Offsetting Net

(in millions) Resources Adjustments collections) Receipts Outlays 

Combined Statement of Budgetary Resources (SBR) Amounts - $ 1,805,781 $ 1,034,600 $ 786,215 $ (67,964) $ 718,251 

IRS non-entity tax credit payments and other outlays not in SBR (1) 446,010 446,010 436,797 - 436,797 

Tax and Trade Bureau (TTB) non-entity collections for Puerto Rico not in SBR 471 471 471 - 471 

Expired funds in SBR (507) - - - - 

Non-Treasury offsetting receipts - - - (21) (21) 

Non-Budgetary Financing Disbursements, net - - 85,859 - 85,859 

Other 3 3 (3) - (3) 

President's Budget Amounts $ 2,251,758 $ 1,481,084 $ 1,309,339 $ (67,985) $ 1,241,354 

(1) These are primarily Economic Impact Payments, Refundable Premium Tax Credit, Refundable Earned Income Tax Credit, and Child Tax Credit,

reported with refunds as custodial activities in our financial statements and thus are not reported as budgetary resources.

LEGAL ARRANGEMENTS AFFECTING USE OF UNOBLIGATED BALANCES

The use of unobligated balances is restricted based on annual legislation requirements or enabling authorities. Funds are

presumed to be available for only one fiscal year unless otherwise noted in the annual appropriation language. Unobligated

balances in unexpired Treasury account fund symbols are available in the next fiscal year for new obligations unless some

restrictions have been placed on those funds by law. In those situations, the restricted funding will be temporarily

unavailable until such time as the reasons for the restriction have been satisfied or legislation has been enacted to remove

the restriction.

Amounts in expired Treasury account fund symbols are not available for new obligations, but may be used to make

adjustments to reflect, and make disbursements to liquidate, obligations that were created before the budgetary authority

expired.

 
DEPARTMENT OF THE TREASURY 153 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

23. SOURCES AND DISPOSITION OF CUSTODIAL REVENUE 

We collect the majority of federal revenue from income and excise taxes. The table below shows collection activity, by

revenue type and tax year, for the fiscal years ended September 30, 2021 and 2020: 

Tax Year

Pre- 2021 

(in millions) 2021 2020 2019 2019 Collections

Individual Income and FICA Taxes $ 2,283,050 $ 1,231,838 $ 43,803 $ 35,311 $ 3,594,002 

Corporate Income Taxes 254,782 130,508 4,270 29,449 419,009 

Estate and Gift Taxes 1,523 21,074 2,673 2,776 28,046 

Excise Taxes 58,413 19,569 220 332 78,534 

Railroad Retirement Taxes 4,167 1,140 - - 5,307 

Unemployment Taxes 4,415 1,709 7 145 6,276 

Fines, Penalties, Interest & Other Revenue - 

 Tax Related 644 1 - 1 646 

Tax Related Revenue Received 2,606,994 1,405,839 50,973 68,014 4,131,820 

Deposit of Earnings, Federal Reserve System 77,000 23,054 - - 100,054 

Fines, Penalties, Interest & Other Revenue - 

 Non-Tax Related 5,894 1,303 - - 7,197 

Non-Tax Related Revenue Received 82,894 24,357 - - 107,251 

Total Revenue Received $ 2,689,888 $ 1,430,196 $ 50,973 $ 68,014 $ 4,239,071 

Less Amounts Collected for Non-Federal Entities 528 

Total $ 4,238,543 

Tax Year

 Pre- 2020 

(in millions) 2020 2019 2018 2018 Collections

Individual Income and FICA Taxes $ 1,947,888 $ 1,118,473 $ 33,689 $ 27,490 $ 3,127,540 

Corporate Income Taxes 152,005 89,037 9,932 12,589 263,563 

Estate and Gift Taxes 2,578 11,805 2,066 1,749 18,198 

Excise Taxes 68,084 23,601 143 230 92,058 

Railroad Retirement Taxes 3,848 1,323 1 1 5,173 

Unemployment Taxes 4,350 1,827 18 87 6,282 

Fines, Penalties, Interest & Other Revenue - 

 Tax Related 253 1 - - 254 

Tax Related Revenue Received 2,179,006 1,246,067 45,849 42,146 3,513,068 

Deposit of Earnings, Federal Reserve System 66,877 15,003 - - 81,880 

Fines, Penalties, Interest & Other Revenue - 

 Non-Tax Related 4,170 1,029 - - 5,199 

Non-Tax Related Revenue Received 71,047 16,032 - - 87,079 

Total Revenue Received $ 2,250,053 $ 1,262,099 $ 45,849 $ 42,146 $ 3,600,147 

Less Amounts Collected for Non-Federal Entities 477 

Total $ 3,599,670 
154 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

AMOUNTS PROVIDED TO FUND THE U.S. GOVERNMENT 

For the fiscal years ended September 30, 2021 and 2020, collections of custodial revenue transferred to other federal entities

were as follows: 

(in millions) 2021 2020 

General Fund $ 3,098,877 $ 2,862,273 

Other Federal Agencies 1,399 865 

Total $ 3,100,276 $ 2,863,138 

FEDERAL TAX REFUNDS AND OTHER PAYMENTS 

Federal tax refunds and other payments include amounts paid to taxpayers who have paid more than the actual taxes they

owe, as well as payments for various refundable tax credits. The CARES Act, CAA, and ARP included provisions to help

stimulate the economy through economic impact payments (including recovery rebate credits) (refer to Note 10). In FY 2021

and 2020, the IRS disbursed $569.5 billion and $274.7 billion, respectively, of payments to eligible taxpayers based upon the

criteria in each Act. Refunds and other payments, by revenue type and tax year, were as follows for the years ended

September 30, 2021 and 2020: 

Tax Year

2021 

Pre- Refunds/

(in millions) 2021 2020 2019 2019 Payments 

Individual Income and FICA Taxes $ 533,300 $ 496,896 $ 38,336 $ 12,652 $ 1,081,184 

Corporate Income Taxes 3,886 6,358 13,730 29,113 53,087 

Estate and Gift Taxes - 154 507 288 949 

Excise Taxes 617 1,829 198 213 2,857 

Railroad Retirement Taxes - 22 (1) 24 45 

Unemployment Taxes - 77 31 36 144 

Fines, Penalties, Interest & Other Revenue - - - 1 1 

Total $ 537,803 $ 505,336 $ 52,801 $ 42,327 $ 1,138,267 

Tax Year

2020 

Pre- Refunds/

(in millions) 2020 2019 2018 2018 Payments 

Individual Income and FICA Taxes $ 335,586 $ 299,269 $ 31,040 $ 7,455 $ 673,350 

Corporate Income Taxes 3,986 13,975 20,151 21,313 59,425 

Estate and Gift Taxes - 52 316 242 610 

Excise Taxes 387 1,813 338 338 2,876 

Railroad Retirement Taxes - 3 - 137 140 

Unemployment Taxes - 70 23 37 130 

Fines, Penalties, Interest & Other Revenue - - 1 - 1 

Total $ 339,959 $ 315,182 $ 51,869 $ 29,522 $ 736,532 
DEPARTMENT OF THE TREASURY 155 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

24. FUNDS FROM DEDICATED COLLECTIONS

The ESF represents the majority of our FDC activities. In addition, such funds managed by BEP, Mint, and OCC (our nonappropriated bureaus) and certain funds managed by the IRS are public enterprise (or revolving) funds and receive no

appropriations from the Congress. Fiscal Service, DO, IRS, OFR, TFF, and the CDFI Fund manage other miscellaneous

FDCs.

The following is a list of FDCs and a brief description of the purpose, accounting, and uses of these funds.

Bureau Fund Code Fund Title/Description

Exchange Stabilization Fund (ESF)

ESF 020X4444 Exchange Stabilization Fund

Public Enterprise/Revolving Funds

BEP 020X4502 Bureau of Engraving and Printing Fund

Mint 020X4159 United States Mint Public Enterprise Fund

OCC 020X8413 Assessment Funds

IRS 020X4413 Federal Tax Lien Revolving Fund

Other FDC Funds

Fiscal Service 020X5080 Gifts to Reduce Public Debt

Fiscal Service 020X5081 Presidential Election Campaign

Fiscal Service 020X8625 Gulf Coast Restoration Trust Fund

Fiscal Service 020X8902 Esther Cattell Schmitt Gift Fund

Fiscal Service 5805585001 Travel Promotion Fund, Corp for Travel Promotion

Fiscal Service 580X5585 Travel Promotion Fund, Corp for Travel Promotion

Fiscal Service 020X5581 HOPE Reserve Fund

Fiscal Service 0205445002 Debt Collection Special Fund

Fiscal Service 0205445003 Debt Collection Special Fund

Fiscal Service 020X5445 Debt Collection Special Fund

Fiscal Service 0205/65445 Debt Collection Special Fund

Fiscal Service 0206/75445 Debt Collection Special Fund

Fiscal Service 0207/85445 Debt Collection Special Fund

Fiscal Service 0208/95445 Debt Collection Special Fund

Fiscal Service 0209/05445 Debt Collection Special Fund

Fiscal Service 0200/15445 Debt Collection Special Fund

Fiscal Service 020X5680 Guam World War II Claims Fund

Fiscal Service 0205680001 Taxes, Duties and Fees, Guam World War II Claims Fund

DO 020X8790 Gifts and Bequests Trust Fund

IRS 020X5510 Private Collection Agency Program

IRS 020X5433 Informant Reimbursement

IRS 020X5622 Special Compliance Personnel Program Account

OFR 020X5590 Financial Research Fund

TFF 020X5697 Treasury Forfeiture Fund

CDFI 020X8524 Capital Magnet Fund
156 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Pursuant to the legal authority found in Section 10 of the Gold Reserve Act of 1934, as amended, the Secretary, with the

approval of the President, through the ESF, may deal in gold, foreign exchange, and other instruments of credit and

securities the Secretary considers necessary, consistent with U.S. obligations in the IMF on orderly exchange arrangements

and a stable system of exchange rates. The ESF accounts for and reports its holdings to the Fiscal Service on the Standard

Form 224, “Statement of Transactions,” and provides other reports to Congress. Interest on SDRs in the IMF, investments

in Treasury securities, and investments in foreign currency assets are the ESF’s primary sources of revenue. The ESF’s

earnings and realized gains on foreign currency assets represent inflows of resources to the government, and the interest

revenues earned from Treasury securities are the result of intra-departmental flows.

The BEP, Mint, OCC, and IRS operate “public enterprise/revolving funds” to account for all or some of their respective

revenues and expenses. 31 USC 5142 established the Bureau of Engraving and Printing Fund for BEP to account for

revenue and expenses related to the production of currency and other federal security documents. P.L. 104-52 (31 USC 5136)

established the Public Enterprise Fund for the Mint to account for all revenue and expenses related to the production and

sale of numismatic products and circulating coinage. Revenues and other financing sources at the Mint are mainly from the

sale of numismatic and bullion products and the sale of circulating coins to the FRB system. These revenues represent

inflows of resources to the government. 12 USC 16, 481 and 482 established the Assessment Funds for OCC. Revenue and

financing sources are from the bank assessments for the oversight of the national banks, federal savings associations, and

federal branches and agencies of foreign banks. These non-appropriated funds contribute to the inflows of resources to the

government to specifically fund these entities’ operations. 26 USC 7810 established the Federal Tax Lien Revolving Fund to

account for revenue and expenses from the sale of property foreclosed upon by a holder of a lien. Such revenue represents

inflows of resources to the U.S. government. There are minimal transactions with other government agencies.

There are other FDCs at several of our bureaus, such as donations to the Presidential Election Campaign Fund, gifts to

reduce the public debt, and other enforcement related activities. Public laws and the U.S. Code established and authorized

the use of these funds. Sources of revenues and other financing sources include contributions, cash and property forfeited in

enforcement activities, public donations, and other allocations, all which represent inflows to the government.

INTRA-GOVERNMENTAL INVESTMENTS IN TREASURY SECURITIES

The U.S. government does not set aside assets to pay future benefits or other expenditures associated with FDCs. Our

bureaus and other federal agencies invest some of the funds that they collect from the public, if they have the statutory

authority to do so, in Treasury securities. The Fiscal Service collects cash and makes deposits in the General Fund, which is

then available for general government purposes.

When our bureaus or other federal agencies redeem these securities to make expenditures, the government finances those

redemptions out of accumulated cash balances, by collecting taxes or other receipts, by borrowing from the public, or by

curtailing expenditures. This is the same way that the government finances all other expenditures.

The securities are an asset to our bureaus and other federal agencies and a liability of the General Fund. Because our

bureaus and other federal agencies are parts of the U.S. government, these assets and liabilities offset each other from the

standpoint of the government as a whole. For this reason, they do not represent an asset or a liability in the U.S.

government-wide financial statements.
DEPARTMENT OF THE TREASURY 157 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Our financial statements do not display the balances related to the investments made by our bureaus because the bureaus

are subcomponents of the Department. However, the General Fund remains liable to the Fiscal Service for the invested

balances and the Fiscal Service remains liable to the investing bureaus (refer to Note 4).
158 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Summary Information for Funds from Dedicated Collections

as of and for the Fiscal Year Ended September 30, 2021

 Public

 Exchange Enterprise/

Stabilization Revolving Other FDC Combined

(in millions) Fund Funds Funds FDC Funds

ASSETS

Intra-Governmental: 

Fund Balance $ - $ 1,647 $ 1,672 $ 3,319 

Investments, Net 22,837 2,103 3,748 28,688 

Other Assets:

 Accounts Receivable and Other - 5 - 5 

Total Intra-Governmental 22,837 3,755 5,420 32,012 

Other Than Intra-Governmental

Cash and Other Monetary Assets: 

 Cash, Foreign Currency, and Other Monetary Assets 179,554 - 100 179,654 

Accounts Receivable, Net:

 Taxes, Interest, and Other Receivables, Net - 122 219 341 

Other Investments, Net 5,265 5 - 5,270 

General Property, Plant, and Equipment, Net - 898 23 921 

Other Assets - 902 161 1,063 

Total Other Than Intra-Governmental 184,819 1,927 503 187,249 

Total Assets $ 207,656 $ 5,682 $ 5,923 $ 219,261 

LIABILITIES 

Intra-Governmental 

Other Liabilities:

 Due To the General Fund $ - $ - $ 893 $ 893 

 Other - 34 848 882 

Total Intra-Governmental - 34 1,741 1,775 

Other Than Intra-Governmental 

Other Liabilities: 

 Special Drawing Right Certificates Issued to the Federal Reserve 5,200 - - 5,200 

 Allocation of Special Drawing Rights 161,825 - - 161,825 

 Other 11 760 312 1,083 

Total Other Than Intra-Governmental 167,036 760 312 168,108 

Total Liabilities 167,036 794 2,053 169,883 

Net Position

Unexpended Appropriations 200 - - 200 

Cumulative Results of Operations 40,420 4,888 3,870 49,178 

Total Liabilities and Net Position $ 207,656 $ 5,682 $ 5,923 $ 219,261 
DEPARTMENT OF THE TREASURY 159 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Summary Information for Funds from Dedicated Collections

as of and for the Fiscal Year Ended September 30, 2021

 Public

 Exchange Enterprise/

Stabilization Revolving Other FDC Combined

(in millions) Fund Funds Funds FDC Funds

Statement of Net Cost

Gross Cost $ 8,230 $ 6,970 $ 955 $ 16,155 

Less: Earned Revenue (7,523) (7,098) (272) (14,893) 

Gains/Losses on Pension, ORB, or OPEB Assumption Changes - (4) - (4) 

Total Net Cost of (Revenue From) Operations $ 707 $ (132) $ 683 $ 1,258 

Statement of Changes in Net Position

Cumulative Results of Operations:

Beginning Balance $ 41,127 $ 4,407 $ 3,310 $ 48,844 

Total Financing Sources - 349 1,243 1,592 

Revenue From (Net Cost of) Operations (707) 132 (683) (1,258) 

Change in Net Position (707) 481 560 334 

Ending Balance $ 40,420 $ 4,888 $ 3,870 $ 49,178 
160 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Summary Information for Funds from Dedicated Collections

as of and for the Fiscal Year Ended September 30, 2020

 Public

 Exchange Enterprise/

 Stabilization Revolving Other FDC Combined

(in millions) Fund Funds Funds FDC Funds

ASSETS

Intra-Governmental 

Fund Balance $ - $ 1,226 $ 1,408 $ 2,634 

Investments, Net 11,170 1,995 2,982 16,147 

Other Assets:

 Accounts Receivable and Other - 6 - 6 

Total Intra-Governmental Assets 11,170 3,227 4,390 18,787 

Other Than Intra-Governmental 

Cash and Other Monetary Assets: 

 Cash, Foreign Currency, and Other Monetary Assets 67,607 - 78 67,685 

Accounts Receivable, Net:

 Taxes, Interest, and Other Receivables, Net - 79 146 225 

COVID-19 Investments, Advances, Receivables, and Other: 

 Investments, Net 10,047 - - 10,047 

 Other 1,619 - - 1,619 

Other Investments, Net 5,801 5 - 5,806 

General Property, Plant, and Equipment, Net - 809 27 836 

Other Assets - 1,005 89 1,094 

Total Other Than Intra-Governmental 85,074 1,898 340 87,312 

Total Assets $ 96,244 $ 5,125 $ 4,730 $ 106,099 

LIABILITIES 

Intra-Governmental 

Federal Debt and Interest Payable: 

Other Liabilities:

 Due To the General Fund $ - $ - $ 919 $ 919 

 Other - 31 362 393 

Total Intra-Governmental - 31 1,281 1,312 

Other Than Intra-Governmental 

Other Liabilities: 

 Special Drawing Right Certificates Issued to the Federal Reserve 5,200 - - 5,200 

 Allocation of Special Drawing Rights 49,709 - - 49,709 

 Other 8 687 139 834 

Total Other Than Intra-Governmental 54,917 687 139 55,743 

Total Liabilities 54,917 718 1,420 57,055 

Net Position

Unexpended Appropriations 200 - - 200 

Cumulative Results of Operations 41,127 4,407 3,310 48,844 

Total Liabilities and Net Position $ 96,244 $ 5,125 $ 4,730 $ 106,099 
DEPARTMENT OF THE TREASURY 161 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Summary Information for Funds from Dedicated Collections

as of and for the Fiscal Year Ended September 30, 2020

 Public

 Exchange Enterprise/

 Stabilization Revolving Other FDC Combined

(in millions) Fund Funds Funds FDC Funds

Statement of Net Cost

Gross Cost $ 5,464 $ 4,836 $ 911 $ 11,211 

Less: Earned Revenue (6,890) (4,935) (293) (12,118) 

Gains/Losses on Pension, ORB, or OPEB Assumption Changes - 8 - 8 

Total Net Cost of (Revenue From) Operations $ (1,426)$ (91) $ 618 $ (899) 

Statement of Changes in Net Position

Cumulative Results of Operations:

Beginning Balance $ 39,701 $ 3,745 $ 2,905 $ 46,351 

Total Financing Sources - 571 1,023 1,594 

Revenue From (Net Cost of) Operations 1,426 91 (618) 899 

Change in Net Position 1,426 662 405 2,493 

Ending Balance $ 41,127 $ 4,407 $ 3,310 $ 48,844 
162 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

25. RECONCILIATION OF NET COST OF TREASURY OPERATIONS AND

NON-ENTITY COSTS TO AGENCY OUTLAYS, NET

The Reconciliation of Net Cost of Treasury Operations and Non-Entity Costs (referred to as “Net Cost” for purposes of this

note) to Agency Outlays, Net (referred to as “Net Outlays” for purposes of this note) depicts the difference between

proprietary information and budgetary accounting information. Proprietary financial accounting information is intended to

depict the U.S. government’s financial operations and financial position presented on an accrual basis in accordance with

GAAP, which includes the recognition of assets and liabilities for which collections and payments, respectively, have or have

not been made. In contrast, budgetary accounting information is used for planning and control purposes, and includes net

outlays that reflect both the receipt and use of cash, as well as reporting of the federal deficit. “Agency Outlays, Net” also

includes $69.2 billion and $70.6 billion of interest accrued on outstanding public debt as of September 30, 2021 and 2020,

respectively; as well as $9.3 billion and $37.0 billion of net amortization of discounts on outstanding public debt as of

September 30, 2021 and 2020, respectively. These amounts represent non-cash outlays that have not yet been disbursed. 

The reconciliation of Net Cost (presented on an accrual basis) and Net Outlays (presented on a budgetary basis) reflects the

relationship between proprietary accounting and budgetary information. The reconciliation serves not only to identify costs

paid in the past and those that will be paid in the future, but also to assure integrity between financial and budgetary

accounting. The following is a description of principal transactions that result in differences between our proprietary net

costs and budgetary net outlays:

• Sale of Investments – Represents both the dissolution of the Commercial Paper Funding Facility II LLC (refer to Note

10) and the sale of foreign bonds and other currency investments (refer to Note 13). 

• Non-Entity Activity – Represents activity related to assets that we hold and manage on behalf of the General Fund but

are not available for our use. This activity was removed from Net Cost through inclusion of change in asset activity,

however, has no impact on either Net Cost or Net Outlays and must be included as an Other Reconciling Item.

• Accrued Liabilities on Federal Debt – Represents, among other things, accrued interest and discount on federal debt

that has been recorded by Fiscal Service and only impacts the Statement of Changes in Net Position. This activity was

removed from Net Cost through inclusion of change in liability activity, however, has no impact on either Net Cost or

Net Outlays and must be included as an Other Reconciling Item.

• Intradepartmental Eliminations – Represents intra-agency activity that is included in our Net Outlays, which is

presented on a combined basis. As we report Net Cost on a consolidated basis, this intra-agency activity is excluded. To 

reconcile between combined and consolidated amounts, we must remove intra-agency transactions and only present

activity with other federal agencies and with the public.
DEPARTMENT OF THE TREASURY 163 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

For the fiscal years ended September 30, 2021 and 2020, the Reconciliation of Net Cost of Treasury Operations and NonEntity Costs to Agency Outlays, Net consisted of the following:

(in millions)

IntraGovernmental

Other Than 

IntraGovernmental 2021 Total

Total Net Cost of Treasury Operations and Non-Entity Costs $ 148,680 $ 416,615 $ 565,295

Components of Net Operating Cost Not Part of Budgetary Outlays:

 Liquidation Preference of GSEs Preferred Stock and Valuation Changes (Notes 11 and 20) - 111,950 111,950

 Property, Plant, and Equipment Depreciation Expense and Disposals (Note 14) - (533) (533)

 Unrealized Valuation (Loss) on Investments - (284) (284)

 Unrealized Valuation Gain on Special Drawing Rights - 1,792 1,792

 Year-end Credit Reform Subsidy Accrual Re-Estimates - (9,125) (9,125)

Increase/(Decrease) in Assets:

 Loans and Interest Receivable (Notes 3 and 7) 59,474 (764) 58,710

 Advances to Trust Funds (Note 4) 54,212 - 54,212

 Due From the General Fund (Note 4) 1,716,162 - 1,716,162

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) - (1,460,334) (1,460,334)

 Taxes, Interest, and Other Receivables, Net (entity activity only) (Note 8) - 582 582

 COVID-19 Advances (Note 10) - 187,171 187,171

 COVID-19 Notes and Interest Receivable (Note 10) - 8,357 8,357

 COVID-19 Other Assets (Note 10) - (119) (119)

 Other Assets 110 220 330

(Increase)/Decrease in Liabilities:

 Federal Debt and Interest Payable (Notes 4 and 16) (219,956) (1,262,368) (1,482,324)

 Liability for Restoration of Federal Debt Principal and Interest (Notes 4 and 16) (60,562) (157,035) (217,597)

 Due To the General Fund - Excludes Custodial Liability Activity (Note 4) 1,409,682 - 1,409,682

 Allocation of Special Drawing Rights (Note 5) - (112,834) (112,834)

 Refunds Payable (Note 4) - (2,498) (2,498)

 Other Liabilities (Note 19) 268 (1,974) (1,706)

Other Financing Sources:

 Imputed Costs (762) - (762)

Total Components of Net Operating Cost Not Part of Budgetary Outlays 2,958,628 (2,697,796) 260,832

Components of Budgetary Outlays That Are Not Part of Net Cost

 Acquisition of Property, Plant and Equipment (Note 14) - 571 571

 Acquisition of Investments - 9,300 9,300

 Sale of Investments - (19,199) (19,199)

 Sale of COVID-19 Other Assets (Note 10) - (1,500) (1,500)

Other Financing Sources:

 Transfers (In)/Out Without Reimbursement 644 - 644

Total Components of Budgetary Outlays That Are Not Part of Net Cost 644 (10,828) (10,184)

Other Reconciling Items

 Distributed Offsetting Receipts - (73,645) (73,645)

 Non-Entity Activity 177,828 - 177,828

 Accrued Liabilities on Federal Debt (12,300) - (12,300)

 Other Reconciling Items 455 2,228 2,683

 Intradepartmental Eliminations (77,884) - (77,884)

Total Other Reconciling Items 88,099 (71,417) 16,682

Agency Outlays, Net $ 3,196,051 $ (2,363,426)$ 832,625
164 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

(in millions)

IntraGovernmental

Other Than 

IntraGovernmental 2020 Total

Total Net Cost of Treasury Operations and Non-Entity Costs $ 124,221 $ 507,022 $ 631,243

Components of Net Operating Cost Not Part of Budgetary Outlays:

 Net Valuation Adjustments on COVID-19 Investments and Direct Loans - 13,320 13,320

 Net Unrealized Loss on Investments in GSEs - (3,160) (3,160)

 Year-end credit reform accrual subsidy re-estimates 2 1,181 1,183

 Property, Plant, and Equipment Depreciation - (415) (415)

 Other - (63) (63)

Increase/(Decrease) in Assets Not Affecting Net Outlays:

 COVID-19 Notes and Interest Receivable - 5,320 5,320

 Accounts Receivable 210 10 220

 Loans Receivable - (538) (538)

 Other Assets 51 1,568 1,619

(Increase)/Decrease in Liabilities Not Affecting Net Outlays:

 Interest Payable (2,949) - (2,949)

 Other Liabilities 95 (1,662) (1,567)

Other Financing Sources:

 Imputed Financing Sources (666) - (666)

 Transfers Out (In) Without Reimbursement 187 - 187

 Other Financing Sources (130) - (130)

Total Components of Net Operating Cost Not Part of Net Outlays (3,200) 15,561 12,361

Components of Net Outlays That Are Not Part of Net Cost 

 COVID-19 CPFF SPV Investments - 10,000 10,000

 COVID-19 Other Assets - 1,500 1,500

 CARES Act Section 5001 Advances - 68,889 68,889

 GSEs Guarantee Fee Collections - (4,238) (4,238)

 Acquisition of Capital Assets - 213 213

 Other (1,563) (154) (1,717)

Total Components of Net Outlays That Are Not Part of Net Cost (1,563) 76,210 74,647

Agency Outlays, Net $ 119,458 $ 598,793 $ 718,251
DEPARTMENT OF THE TREASURY 165 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

26. SCHEDULE OF FIDUCIARY ACTIVITY

We have identified the following 21 funds as meeting the criteria for fiduciary activity. Details of the funds are provided

below.

Bureau Fund Code Authority Fund Title/Description

Fiscal Service 020X6133 31 USC 1322 Payment of Unclaimed Monies

BEP 020X6513.013 31 USC 5119 Mutilated Currency Claims Funds

Fiscal Service 020X6045 31 USC 3328 Proceeds, Payments of Unpaid Checks

Fiscal Service 020X6048 31 USC 3329, 3330 Proceeds of Withheld Foreign Checks

Fiscal Service 020015X6078 50 APP. USC 2012 War Claims Fund, Foreign Claims Settlement Commission

Fiscal Service 020X6092 31 USC 1321 Debt Management Operations

Fiscal Service 020X6104 22 USC 1627 Albanian Claims Fund, Treasury

Fiscal Service 020X6210 22 USC 1623 Iraq Claims Settlement Fund

Fiscal Service 020X6309 22 USC 1627(a) Libyan Claims Settlement Fund

Fiscal Service 020X6312 22 USC 1627 Iranian Claims Settlement Fund

Fiscal Service 020X6314 22 USC 1644g German Democrat Settlement Fund

Fiscal Service 020X6315 22 USC 1645h Vietnam Claims Settlement Fund

Fiscal Service 020X6501.018 31 USC 3513 Small Escrow Amounts

Fiscal Service 020X6720 31 USC 3513 Small Difference Account for Deposit and Check Adjustments

Fiscal Service 020X6830 104 Stat. 1061 Net Interest Payments to/from State

Fiscal Service 020X6999 31 USC 3513 Accounts Payable, Check Issue Underdrafts

Fiscal Service 020X6317.001 22 USC 2431 Belize Escrow, Debt Reduction

IRS 020X6737 90 Stat. 269-270 Internal Revenue Collections for Northern Mariana Island

IRS 020X6738 31 USC 3513 Coverover Withholdings-U.S. Virgin Islands

IRS 020X6740 31 USC 3515 Coverover Withholdings-Guam

IRS 020X6741 31 USC 3513 Coverover Withholdings-American Samoa

“Payment of Unclaimed Monies” is a fund authorized by 31 USC 1322, permitting the Fiscal Service to collect unclaimed

monies on behalf of the public. Our other fiduciary activities as listed above are included in All Other Fiduciary Funds.

Schedule of Fiduciary Activity

2021 2020 

Payment of All Payment of All

Unclaimed Other Total Unclaimed Other Total 

Monies Fiduciary Fiduciary Monies Fiduciary Fiduciary

(in millions) Fund Funds Funds Fund Funds Funds

Fiduciary Net Assets, Beginning of

 the Year $ 855 $ 150 $ 1,005 $ 803 $ 166 $ 969 

Increases:

 Contributions to Fiduciary Net Assets 43 5,734 5,777 52 5,109 5,161 

 Investment earnings - - - - 1 1 

Total Increases 43 5,734 5,777 52 5,110 5,162 

Decreases:

 Disbursements to and on behalf

 of beneficiaries (8) (5,730) (5,738) - (5,126) (5,126) 

Total Decreases (8) (5,730) (5,738) - (5,126) (5,126) 

Net Increase (Decrease) in

 Fiduciary Assets 35 4 39 52 (16) 36 

Fiduciary Net Assets, End of Year $ 890 $ 154 $ 1,044 $ 855 $ 150 $ 1,005 
166 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Schedule of Fiduciary Net Assets

2021 2020 

Payment of All Payment of All

Unclaimed Other Total Unclaimed Other Total 

Monies Fiduciary Fiduciary Monies Fiduciary Fiduciary

(in millions) Fund Funds Funds Fund Funds Funds

Fiduciary Net Assets

Cash and Cash Equivalents

 Fund Balance with Treasury $ 890 $ 153 $ 1,043 $ 855 $ 146 $ 1,001 

Investments

 Investments in Treasury Securities - 1 1 - 4 4 

Total Fiduciary Assets 890 154 1,044 855 150 1,005 

Total Fiduciary Net Assets $ 890 $ 154 $ 1,044 $ 855 $ 150 $ 1,005 

27. COMMITMENTS AND CONTINGENCIES

LEGAL CONTINGENCIES

We are a party in various administrative proceedings, legal actions, and claims, which may ultimately result in settlements

or decisions adverse to the U.S. government. These contingent liabilities arise in the normal course of operations, and their

ultimate disposition is unknown. We disclose contingent liabilities where the conditions for liability recognition have not

been met and the likelihood of unfavorable outcome is more than remote. We do not accrue for possible losses related to

cases where we cannot estimate the potential loss or the likelihood of an unfavorable outcome is less than probable.

In some cases, a portion of any loss that may occur may be paid by our Judgment Fund, which is separate from our operating

resources. For cases related to the Contract Disputes Act of 1978 (P.L. 95-563) and awards under federal anti-discrimination

and whistle-blower protection acts, we must reimburse the Judgment Fund from future appropriations.

In the opinion of our management and legal counsel, based on information available as of the date of this report, the

expected outcome of other legal actions, individually or in the aggregate, will not have a materially adverse effect on our

consolidated financial statements, except for the pending legal actions described below which may have a materially adverse

impact on our consolidated financial statements depending on the outcomes of the cases.

Pending Legal Actions

• Tribal Trust Fund Cases: Native American tribes have filed numerous cases in the U.S. District Courts seeking a 

declaration that the U.S. has not provided the tribes with a full and complete accounting of their trust funds, and also

seeking an order requiring the U.S. government to provide such an accounting. In addition, there are a number of other

related cases seeking damages in the U.S. Court of Federal Claims, that do not name us as a defendant. The U.S.

government is currently in discussion with counsel representing most of the remaining plaintiff tribes with tribal trust

fund cases pending against the U. S. about the feasibility of an out-of-court settlement. Plaintiff tribes in several of the

pending cases have chosen to pursue active litigation, rather than settlement discussion, and the U.S. government is

litigating those cases vigorously. We are unable to determine the likelihood of an unfavorable outcome or an estimate of

potential loss at this time.

• GSE Related Cases: A number of cases were filed in the U.S. Court of Federal Claims and U.S. District Courts in which

the plaintiffs allege, among other things, that the U.S. government took their property, breached contractual rights of
DEPARTMENT OF THE TREASURY 167 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

preferred and common stockholders, and breached fiduciary duties when the third amendments to the SPSPAs between

us and each GSE were executed in August 2012 (refer to Note 11). One case also alleges that the U.S. government took

plaintiffs’ property and contractual rights when the GSEs were placed into conservatorship and entered into the SPSPAs

with us in September 2008. In the U.S. Court of Federal Claims, the plaintiffs seek just compensation and other

damages from the U.S. government. With respect to certain cases pending before the U.S. Court of Federal Claims, the

U.S. government’s motion to dismiss was granted with respect to certain claims and denied with respect to certain other

claims. The parties have appealed, and the appeals are still pending. In the U.S. District Courts, the plaintiffs seek to

set aside the third amendments to the SPSPAs as well as damages, and in some cases a declaration that the FHFA’s

structure violates the separation of powers. A case in the U.S. District Court for the Southern District of Texas was

dismissed by that District Court; and the Fifth Circuit Court of Appeals affirmed dismissal of all claims against the

Department but allowed one claim against the FHFA to proceed. In June 2021, the Supreme Court dismissed the

plaintiffs’ claim that FHFA lacked statutory authority to enter into the Third Amendment; held that the FHFA director

could be removed at will by the President; and held that the statutory limitation that the FHFA director can only be

removed for cause is an unconstitutional violation of separation of powers but does not invalidate the Third

Amendments. The Court also left open the possibility that the plaintiffs may be entitled to retrospective relief if the

unconstitutional provision inflicted “compensable harm,” and further proceedings are anticipated in the lower court. A 

case in the U.S. District Court for the District of Minnesota was dismissed, and the Eighth Circuit Court of Appeals

affirmed in part and reversed in part. Specifically, the Eighth Circuit affirmed with respect to plaintiffs' Appointments

Clause and nondelegation doctrine claims; and it reversed the dismissal of the separation-of-powers claim and remanded

to the district court to determine if the shareholders suffered “compensable harm” and are entitled to “retrospective

relief.” A case in the U.S. District Court for the Western District of Michigan was dismissed, and an appeal is pending. 

A case in the Eastern District of Pennsylvania remains in litigation, and a motion to dismiss is pending. We are unable

to determine the likelihood of an unfavorable outcome or an estimate of potential loss in these cases at this time.

• Adam Steele, Brittany Montrois, and Joseph Henchman v. United States: The plaintiffs filed a class claim in the U.S.

District Court for the District of Columbia seeking refunds of all user fees paid, plus interest, to obtain a preparer tax

identification number (PTIN). Additionally, the plaintiffs seek to force us to cease charging a user fee to obtain a PTIN

and asking for more information than is necessary to issue a PTIN. On June 1, 2017, the U.S. District Court for the

District of Columbia found for the plaintiffs in the previously mentioned matters, and the U.S. government appealed. In

March 2019, the U.S. Court of Appeals for the District of Columbia Circuit reversed the lower court’s opinion and

determined that we are entitled to charge a PTIN user fee. The case was remanded back to the lower court to determine

whether the amount of the fees previously charged was appropriate. As of September 30, 2021, the Department has

determined the likelihood of an unfavorable outcome as reasonably possible and estimated a potential loss within a 

range of $0 to $288 million.

• American Recovery and Reinvestment Tax Act of 2009 (ARRA) Cases: A number of cases were filed in the U.S. Court of

Federal Claims alleging that the U.S. government violated statutory and regulatory mandates to make proper payments

to plaintiffs under ARRA, Section 1603, for having placed certain energy properties into service. As of September 30,

2021 and 2020, we have determined there is a reasonably possible likelihood of an unfavorable outcome in some of the

cases totaling approximately $324 million. On October 28, 2016, the U.S. Court of Federal Claims entered judgment

against the U. S. in the amount of $207 million in one of the cases. The U.S. government appealed the judgment, and on

July 27, 2018, the Federal Circuit reversed the trial court’s decision, vacated judgment, and remanded the case to the
168 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

U.S. Court of Federal Claims for reassignment to a new judge. The case remains in litigation. Additional cases with

alleged damages of approximately $117 million have been filed and remain in litigation. 

• State of Texas et. al. v. United States: A case was filed in the U.S. District Court for the Northern District of Texas in

which various states allege, among other things, that the payments of the Affordable Care Act’s Health Insurance

Provider Fee (HIPF) imposed on “covered entities,” is unlawfully applied to states. Although the states themselves are

not covered entities, payments that were made to for-profit Medicaid managed care organizations that entered into

contracts with the states are covered entities subject to the HIPF. Therefore, the managed care organizations structured

their coverage rates for each state to account for the fee. The case is being stayed pending the resolution of a similar

case currently pending with the Fifth Circuit Court of Appeals, where the plaintiffs filed a petition for writ of certiorari

on September 16, 2021. We are unable to determine the likelihood of an unfavorable outcome or an estimate of potential

loss at this time. 

• U.S. Victims of State Sponsored Terrorism Fund (USVSST) Related Cases: A civil suit and a class action complaint

were filed in the U.S. District Court for the District of Columbia seeking to determine if legislation passed in November

2019 is retroactive to December 2015, when the USVSST was created. The November 2019 legislation increased the

mandatory percentage of deposits into the USVSST fund from eligible civil forfeitures, fines, and penalties from 50

percent to 75 percent, payable to victims on a pro rata basis. As of September 30, 2021, the Department has

determined the likelihood of an unfavorable outcome is reasonably possible and estimates a potential loss of $228 million

as the Treasury portion at this time. 

• Keough et al. v. United States et al.: A case was filed in the U.S. District Court for the District of Massachusetts seeking

to determine if the fees Treasury charges agencies in its Cross-Servicing program related to the collection of delinquent

debt are unlawful. We are unable to determine the likelihood of an unfavorable outcome or an estimate of potential loss

at this time. 

• Indiana Municipal Power Agency et al. v. United States et al.: A case was filed in the U.S. Court of Federal Claims

seeking amounts equal to alleged underpayments of direct cash payments made since the beginning of 2013, under the

Build America Bond program associated with ARRA. We are unable to determine the likelihood of an unfavorable

outcome or an estimate of potential loss at this time. 

• Other Legal Actions: We are also involved in employment related legal actions (e.g., matters alleging discrimination and

other claims before federal courts, the Equal Employment Opportunity Commission, and the Merit Systems Protection

Board) for which an unfavorable outcome is reasonably possible, but for which an estimate of potential loss cannot be

determined at this time. We do not expect that these cases will have a material adverse effect on our consolidated

financial position or results. 
DEPARTMENT OF THE TREASURY 169 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

OTHER COMMITMENTS AND CONTINGENCIES

Loan Commitments 

Through the FFB, we make loan commitments with federal agencies, or private sector borrowers with loans guaranteed by

federal agencies, to extend them credit for their own use (refer to Notes 1Q and 3). As of September 30, 2021 and 2020, we

had remaining loan commitments totaling $40.7 billion and $35.9 billion, respectively.

In addition to the loan commitments, the FFB has agreements with agencies that permit FFB to issue loans up to amounts

authorized in those agencies’ annual program appropriations. The FFB also has agreements with the Federal Deposit

Insurance Corporation and the Farm Credit System Insurance Corporation that permit FFB to issue loans up to a specified

amount of $100 billion and $10 billion, respectively. 

Multilateral Development Banks

On behalf of the U.S., we have subscribed to shares of certain MDBs, of which some shares represent capital commitments

that are callable under certain limited circumstances to meet the obligations of the respective MDB. There has never been,

nor is there anticipated, a call on the U.S. commitment for these subscriptions. As of September 30, 2021 and 2020, U.S.

callable capital in MDBs was as follows:

 

(in millions) 2021 2020 

Inter-American Development Bank $ 49,181 $ 49,181 

International Bank for Reconstruction and Development 46,363 44,942 

Asian Development Bank 18,702 18,702 

African Development Bank 6,464 5,608 

European Bank for Reconstruction and Development 3,055 3,055 

North American Development Bank 1,530 1,530 

Multilateral Investment Guarantee Agency(1) 315 315 

Total $ 125,610 $ 123,333 

(1) Both FY 2021 and 2020 include commitments of $22 million for the undisbursed portion of the subscription to paid-in capital

investments. 

Terrorism Risk Insurance Program

Congress originally enacted the Terrorism Risk Insurance Act in November 2002, to address market disruptions resulting

from terrorist attacks on September 11, 2001. Most recently, the Terrorism Risk Insurance Program Reauthorization Act of

2019 (P.L. 116-94) extended the Terrorism Risk Insurance Program (TRIP) until December 31, 2027. The TRIP helps to

ensure available and affordable commercial property and casualty insurance for terrorism risk, and simultaneously allows

private markets to stabilize. The authority to pay claims under the TRIP is activated when the Secretary (in consultation

with the Secretary of the Department of Homeland Security and the Attorney General of the United States) certifies an “act

of terrorism.” In the event of certification of an “act of terrorism,” insurers may be eligible to receive reimbursement from

the U.S. government for associated insured losses – assuming an aggregate insured loss threshold (“program trigger”) has

been reached – once a particular insurer has satisfied its designated deductible amount. For calendar years 2021 and 2020,

the program trigger amount was $200 million. Insured losses above insurer deductibles will be shared between insurance

companies and the U.S. government. The TRIP includes both mandatory and discretionary authority for Treasury to recoup

federal payments made under the TRIP through policyholder surcharges under certain circumstances, and contains
170 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

provisions designed to manage litigation arising from or relating to a certified act of terrorism. There were no claims under

the TRIP as of September 30, 2021 or 2020.

Exchange Stabilization Agreement

The North American Framework Agreement (NAFA), which we signed in 1994 and renew annually, is implemented by

Treasury through the Exchange Stabilization Agreement (ESA) with Mexico. Treasury, through the ESF, offers Mexico a 

swap line with drawings contingent on certain conditions being met. Effective November 30, 2018, an amended and restated

ESA increased the potential size of the swap line from $3.0 billion to $9.0 billion. The amounts and terms (including the

assured source of repayment) of any swap arrangement under the NAFA and/or the ESA will have to be negotiated and

agreed to before any actual drawing can occur. There were no drawings outstanding on the ESF swap line as of September

30, 2021 and 2020. 

Housing Programs Under TARP 

We design housing programs under TARP to provide stability for both the housing market and homeowners. These

programs assist homeowners who are experiencing financial hardships to remain in their homes until their financial position

improves or they relocate to a more sustainable living situation, and to obtain other assistance designed to prevent

foreclosures. As of September 30, 2021 and 2020, we had committed up to $32.6 billion for these programs. Outstanding

commitments totaled $1.2 billion and $1.7 billion as of September 30, 2021 and 2020, respectively. For FY 2021 and 2020, 

payments made on behalf of the housing programs under TARP totaled $479 million and $760 million, respectively, reported

within the Financial Program on our Consolidated Statements of Net Cost. 

 
DEPARTMENT OF THE TREASURY 171 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

28. RECLASSIFICATION OF AGENCY FINANCIAL STATEMENTS TO

FINANCIAL REPORT OF THE U.S. GOVERNMENT FORMAT

To prepare the Financial Report of the U.S. Government (Financial Report), federal agencies submit to Fiscal Service a trial

balance containing financial statement account ending balances and activity. Fiscal Service uses this trial balance

information to reclassify agencies’ account balances and activity in a manner that conforms to the format of the financial

statement presentation in the Financial Report. Our reclassified financial statements—including the Reclassified Balance

Sheet, Reclassified Statement of Net Cost, and Reclassified Statement of Operations and Changes in Net Position—are

accessed using the Government-wide Treasury Account Symbol Adjusted Trial Balance System. Fiscal Service eliminates all

intragovernmental balances and activity between federal agencies in generating the Financial Report consolidated financial

statements. This note depicts how our AFR consolidated financial statements are adjusted to derive the Financial Report

reclassified financial statements prior to the elimination of intragovernmental balances and prior to the aggregation of

repeated Financial Report line items. A copy of the FY 2020 Financial Report can be found on the Fiscal Service website and

a copy of the FY 2021 Financial Report will be posted to the site as soon as it is released.
172 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Balance Sheet 

As of September 30, 2021

AFR Financial Statement Line

Amounts

(in millions)

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with 

Eliminations)

Eliminations 

between 

Dedicated 

and All Other

Total 

(in millions) Reclassified Financial Statement Line

ASSETS

Intra-Governmental 

Fund Balance $ 626,456 $ 3,319 $ - $ 623,137 $ - $ 626,456 Fund Balance with Treasury

Investments, Net - 28,683 - - 28,683 - Federal Investments

5 - - 5 - Interest Receivable - Investments

 Total Investments, Net - 28,688 - - 28,688 - Total 

Loans Receivable:

 Loans and Interest Receivable 1,794,390 - - 1,794,177 - 1,794,177 Loans Receivable 

- - 213 - 213 

Interest Receivable - Loans and Not Otherwise 

Classified

 Total Loans and Interest Receivable 1,794,390 - - 1,794,390 - 1,794,390 Total 

 Advances to Trust Funds 91,378 - - 91,312 - 91,312 Loans Receivable 

- - 66 - 66 

Interest Receivable - Loans and Not Otherwise 

Classified

 Total Advances to Trust Funds 91,378 - - 91,378 - 91,378 Total 

Other Assets:

 Due From the General Fund 28,810,092 - - 28,810,092 - 28,810,092 Other Assets 

 Accounts Receivable and Other 1,328 3 - 1,311 2 1,312 Accounts Receivable, Net

- - 28 28 - Transfers Receivable

2 - 14 - 16 Advances and Prepayments

 Total Accounts Receivable and Other 1,328 5 - 1,353 30 1,328 Total 

Total Intra-Governmental 31,323,644 32,012 - 31,320,350 28,718 31,323,644 Total Intra-governmental Assets

Other Than Intra-Governmental 

Cash and Other Monetary Assets: 

 Cash, Foreign Currency, and Other Monetary 

Assets 379,105 179,654 - 199,451 - 379,105 Cash and Other Monetary Assets 

 Gold and Silver Reserves 11,062 - - 11,062 - 11,062 Cash and Other Monetary Assets 

 Reserve Position in the International Monetary 

Fund 32,743 - - 32,743 - 32,743 Cash and Other Monetary Assets 
DEPARTMENT OF THE TREASURY 173 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Consolidated Balance Sheet 

As of September 30, 2021

AFR Financial Statement Line

Amounts

(in millions)

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with 

Eliminations)

Eliminations 

between 

Dedicated 

and All Other

Total 

(in millions) Reclassified Financial Statement Line

Accounts Receivable, Net:

 Taxes, Interest, and Other Receivables, Net 304,629 341 - 304,288 - 304,629 Accounts Receivable, Net

Loans Receivable, Net:

 Credit Program Receivables, Net 2,762 - - 2,762 - 2,762 Loans Receivable, Net

 Loans and Interest Receivable, Net 944 - - 944 - 944 Loans Receivable, Net

COVID-19 Investments, Advances, Receivables, and 

Other: 

 Investments, Net 26,426 - - 26,426 - 26,426 Investments, Net

 Advances, Net 256,060 - - 256,060 - 256,060 Advances and Prepayments

 Notes and Interest Receivable, Net 13,677 - - 13,677 - 13,677 Loans Receivable, Net

 Credit Program Receivables, Net 1,311 - - 1,311 - 1,311 Loans Receivable, Net

Investments in Government Sponsored Enterprises 

(GSEs) 220,860 - - 220,860 - 220,860 Investments in Government Sponsored Enterprises 

Investments in Multilateral Development Banks 8,466 - - 8,466 - 8,466 Other Assets

Other Investments, Net 5,317 5,270 - 47 - 5,317 Investments, Net

General Property, Plant, and Equipment, Net 2,996 921 - 2,075 - 2,996 General Property, Plant, and Equipment, Net

Other Assets 1,070 1,058 - - - 1,058 Inventory and Related Property, Net

5 - 7 - 12 Advances and Prepayments

 Total Other Assets 1,070 1,063 - 7 - 1,070 Total 

Total Other Than Intra-Governmental 1,267,428 187,249 - 1,080,179 - 1,267,428 Total With the Public

Total Assets $ 32,591,072 $ 219,261 $ - $ 32,400,529 $ 28,718 $ 32,591,072 Total Assets 

LIABILITIES 

Intra-Governmental 

Federal Debt and Interest Payable: 

 Federal Debt and Interest Payable $ 6,225,208 $ - $ - $ 6,219,044 $ 28,683 $ 6,190,361 Federal Debt

- - 34,852 5 34,847 Interest Payable - Debt

 Total Federal Debt and Interest Payable 6,225,208 - - 6,253,896 28,688 6,225,208 Total 
174 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Balance Sheet 

As of September 30, 2021

AFR Financial Statement Line

Amounts

(in millions)

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with 

Eliminations)

Eliminations 

between 

Dedicated 

and All Other

Total 

(in millions) Reclassified Financial Statement Line

 Other Federal Debt and Interest Payable 6,093 - - 6,053 - 6,053 Federal Debt

- - 40 - 40 Interest Payable - Debt

 Total Other Federal Debt and Interest Payable 6,093 - - 6,093 - 6,093 Total 

Other Liabilities:

 Due To the General Fund 2,649,003 893 - 2,648,110 - 2,649,003 

Liability to the General Fund for Custodial and Other NonEntity Assets

 Liability for Restoration of Federal Debt 

Principal and Interest 60,562 - - 60,562 - 60,562 Accounts Payable

 Other 1,675 30 - 184 - 214 Benefit Program Contributions Payable 

29 - 579 6 602 Accounts Payable

822 - - 28 794 Transfers Payable 

- - 32 - 32 Advances from Others and Deferred Revenue

1 - 28 - 29 Other Liabilities (without Reciprocals)

- - 4 - 4 

Liability to Agency Other Than the General Fund for 

Custodial and Other Non-Entity Assets

 Total Other 1,675 882 - 827 34 1,675 Total 

Total Intra-Governmental 8,942,541 1,775 - 8,969,488 28,722 8,942,541 Total Intra-Governmental 

Other Than Intra-Governmental 

Federal Debt and Interest Payable 22,325,218 - - 22,325,218 - 22,325,218 Federal Debt and Interest Payable 

Accounts Payable:

 Refunds Payable 6,249 - - 6,249 - 6,249 Accounts Payable
DEPARTMENT OF THE TREASURY 175 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Consolidated Balance Sheet 

As of September 30, 2021

AFR Financial Statement Line

Amounts

(in millions)

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with 

Eliminations)

Eliminations 

between 

Dedicated 

and All Other

Total 

(in millions) Reclassified Financial Statement Line

Other Liabilities: 

 Special Drawing Right Certificates Issued to the 

Federal Reserve 

5,200 5,200 - - - 5,200 Other Liabilities

 Allocation of Special Drawing Rights 161,825 161,825 - - - 161,825 Other Liabilities

 Gold Certificates Issued to the Federal Reserve 

Banks 

11,037 - - 11,037 - 11,037 Other Liabilities

 D.C. Federal Pension and Judicial Retirement 

Actuarial Liability 

8,010 - - 8,010 - 8,010 Other Liabilities

 Liability for Restoration of Federal Debt 

Principal and Interest 

157,035 - - 157,035 - 157,035 Other Liabilities

 Other 9,101 202 - 894 - 1,096 Accounts Payable 

206 - 1,151 - 1,357 Federal Employee and Veteran Benefits Payable

448 - 23 - 471 Advances from Others and Deferred Revenue

227 - 5,950 - 6,177 Other Liabilities

 Total Other 9,101 1,083 - 8,018 - 9,101 Total 

Total Other Than Intra-Governmental 22,683,675 168,108 - 22,515,567 - 22,683,675 Total With the Public

Total Liabilities 31,626,216 169,883 - 31,485,055 28,722 31,626,216 Total Liabilities

NET POSITION

Unexpended Appropriations

Funds from Dedicated Collections (Combined) 200 200 - - - 200 Unexpended Appropriations - Funds from Dedicated 

Collections (Combined)

Funds from Other than Dedicated Collections 

(Combined) 

878,410 - - 878,410 - 878,410 Unexpended Appropriations - Funds from Other than 

Dedicated Collections (Combined)

Cumulative Results of Operations

Funds from Dedicated Collections (Combined) 49,178 49,178 - - - 49,178 Cumulative Results of Operations - Funds from Dedicated 

Collections (Combined)

Funds from Other than Dedicated Collections 

(Combined) 

37,068 - - 37,068 - 37,068 Cumulative Results of Operations - Funds from Other than 

Dedicated Collections (Combined)

Total Net Position (Combined Totals) 964,856 49,378 - 915,478 - 964,856 Total Net Position

Total Liabilities and Net Position $ 32,591,072 $ 219,261 $ - $ 32,400,533 $ 28,722 $ 32,591,072 Total Liabilities and Net Position
176 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Statement of Net Cost

For the Fiscal Year Ended September 30, 2021

AFR Financial Statement Line

Amounts

(in millions)

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with 

Eliminations)

Eliminations 

between 

Dedicated 

and All Other

Total 

(in millions) Reclassified Financial Statement Line

Cost of Treasury Operations: 

Total Program Gross Costs $ 154,938 $ 15,287 $ - $ 134,089 $ - $ 149,376 Non-Federal Gross Costs

Intra-governmental Costs

252 - 2,002 - 2,254 Benefit Program Costs

80 - 682 - 762 Imputed Costs

410 (1) 1,590 200 1,801 Buy/Sell Cost

- - 183 - 183 Federal Securities Interest Expense

- - 12 - 12 Borrowing Losses

16 - 534 - 550 Other Expenses (without Reciprocals) 

758 (1) 5,003 200 5,562 Total Intra-governmental Costs

Total Program Gross Costs 154,938 16,045 (1) 139,092 200 154,938 Total 

Total Program Gross Earned Revenues (18,182) (14,694) - (861) - (15,555) Non-Federal Earned Revenue

Intra-governmental Revenue

(48) (1) (565) (192) (420) Buy/Sell Revenue

(28) - - (28) - 

Federal Securities Interest Revenue Including Associated 

Gains and Losses 

- - (1,948) - (1,948) Borrowing and Other Interest Revenue

- - (149) - (149) Borrowing Gains

(110) - - - (110)

Collections Transferred in to a TAS Other Than the General 

Fund of the U.S. Government - Exchange

(186) (1) (2,662) (220) (2,627) Total Intra-governmental Earned Revenue

Total Program Gross Earned Revenues (18,182) (14,880) (1) (3,523) (220) (18,182) Total 

(Gain)/Loss on Pension, ORB, or OPEB Assumption 

Changes 243 (4) - 247 - 243 Non-Federal Gross Costs

Total Net Cost of Treasury Operations 136,999 1,161 (2) 135,816 (20) 136,999 Total 
DEPARTMENT OF THE TREASURY 177 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Consolidated Statement of Net Cost

For the Fiscal Year Ended September 30, 2021

AFR Financial Statement Line

Amounts

(in millions)

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with 

Eliminations)

Eliminations 

between 

Dedicated 

and All Other

Total 

(in millions) Reclassified Financial Statement Line

Non-Entity Costs:

Federal Debt Interest $ 574,594 $ - $ - $ 391,989 $ - $ 391,989 Interest on Debt Held by the Public (Non-Federal)

- - 182,638 33 182,605 Federal Securities Interest Expense (Federal)

 Total Federal Debt Interest 574,594 - - 574,627 33 574,594 Total 

Less Interest Revenue from Loans (48,665) - - (48,665) - (48,665) Borrowing and Other Interest Revenue (Federal)

Accrued Restoration of Foregone Federal Debt 

Interest 409 - - 339 - 339 Non-Federal Gross Costs

- - 70 - 70 Buy/Sell Cost (Federal)

 Total Accrued Restoration of Foregone Federal 

Debt Interest 409 - - 409 - 409 Total 

Other Federal Costs, Net 23,566 62 - 11,010 - 11,072 Non-Federal Gross Costs

- Intra-governmental Costs

- - 157 - 157 Buy/Sell Cost

- - 12,618 - 12,618 Borrowing and Other Interest Expenses

- - 12,775 - 12,775 Total Intra-governmental Costs

(13) - - - (13) Non-Federal Earned Revenue

- - (268) - (268) Buy/Sell Revenue (Federal)

 Total Other Federal Costs, Net 23,566 49 - 23,517 - 23,566 Total 

GSEs Non-Entity Cost (Revenue), Net (111,950) - - (111,950) - (111,950) Non-Federal Earned Revenue
178 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Statement of Net Cost

For the Fiscal Year Ended September 30, 2021

AFR Financial Statement Line

Amounts

(in millions)

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with 

Eliminations)

Eliminations 

between 

Dedicated 

and All Other

Total 

(in millions) Reclassified Financial Statement Line

COVID-19 Non-Entity Revenue, Net (8,937) - - (631) - (631) Non-Federal Gross Costs

- - (8,306) - (8,306) Non-Federal Earned Revenue

 Total COVID-19 Non-Entity Revenue, Net (8,937) - - (8,937) - (8,937) Total 

Other, Net (721) 48 - 1 - 49 Non-Federal Gross Costs

- - (770) - (770) Buy/Sell Revenue (Federal)

 Total Other, Net (721) 48 - (769) - (721) Total 

Total Net Non-Entity Costs 428,296 97 - 428,232 33 428,296 Total 

26 - 804,159 - 804,185 Non-Federal Gross Costs(1)

Total Net Cost of Treasury Operations and NonEntity Costs 565,295 1,284 (2) 1,368,207 13 1,369,480 Total Net Cost (1)

(1) Includes income tax credits of $804.2 billion, which are reported on the Treasury Statement of Custodial Activity within the “Less Refunds and Other Payments” line item. These costs are reported as part of net cost on the reclassified

financial statements for the purpose of presenting these costs in the manner presented in the Financial Report.
DEPARTMENT OF THE TREASURY 179 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Consolidated Statement of Changes in Net Position and Statement of Custodial Activity

For the Fiscal Year Ended September 30, 2021

AFR Financial Statement Line

Amounts (in 

millions)

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with 

Eliminations)

Eliminations 

between 

Dedicated 

and All Other

Total 

(in millions) Reclassified Financial Statement Line

STATEMENT OF CHANGES IN NET POSITION

UNEXPENDED APPROPRIATIONS

Beginning Balance $ 903,958 $ 200 $ - $ 903,758 $ - $ 903,958 Net Position, Beginning of Period

Appropriations Received 1,124,489 - - 1,124,489 - 1,124,489 Appropriations Received as adjusted

Appropriations Transferred In/Out 50 - - 50 - 50 

Non-Expenditure Transfers-In of Unexpended 

Appropriations and Financing Sources

Other Adjustments (488,673) - - (488,673) - (488,673) Appropriations Received as adjusted

Appropriations Used (661,214) - - (661,214) - (661,214) Appropriations Used

Net Change in Unexpended Appropriations (25,348) - - (25,348) - (25,348) Total

Total Unexpended Appropriations: Ending 

Balance 878,610 200 - 878,410 - 878,610 Total 

CUMULATIVE RESULTS OF OPERATIONS

Beginning Balance 143,383 48,844 - 94,539 - 143,383 Net Position, Beginning of Period

Appropriations Used 661,214 - - 661,214 - 661,214 Appropriations Expended

Non-Exchange Revenue 441 414 - - - 414 

Collections Transferred Into a TAS Other Than the General 

Fund of the U.S. Government

24 - - - 24 Individual Income Tax and Tax Withholdings

- - 2 - 2 Other Taxes and Receipts

5 - - 4 1 

Federal Securities Interest Revenue Including Associated 

Gains and Losses (Non-Exchange)

 Total Non-Exchange Revenue 441 443 - 2 4 441 Total

Donations and Forfeitures of Cash/Equivalent 285 285 - - - 285 Other Taxes and Receipts
180 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Statement of Changes in Net Position and Statement of Custodial Activity

For the Fiscal Year Ended September 30, 2021

AFR Financial Statement Line

Amounts (in 

millions)

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with 

Eliminations)

Eliminations 

between 

Dedicated 

and All Other

Total 

(in millions) Reclassified Financial Statement Line

Transfers In/Out Without Reimbursement (644) 69 69 - - - 

Appropriation of Unavailable Special or Trust Fund 

Receipts Transfers-In

(69) (69) - - - 

Appropriation of Unavailable Special or Trust Fund 

Receipts Transfers-Out

173 173 1 1 - 

Non-expenditure Transfers-In of Unexpended 

Appropriations and Financing Sources

(126) (125) - (1) - 

Non-expenditure Transfers-Out of Unexpended 

Appropriations and Financing Sources

458 - 62 53 467 Expenditure Transfers-In of Financing Sources

(681) - - (53) (628) Expenditure Transfers-Out of Financing Sources

(75) - - (75) - 

Non-expenditure Transfers-Out of Financing Sources - 

Capital Transfers

3,916 3,916 - - - Transfers-In Without Reimbursement

(3,915) (3,915) (483) - (483) Transfers-Out Without Reimbursement

 Total Transfers In/Out Without Reimbursement (644) (250) 49 (420) (75) (644) Total

Donation/Forfeiture of Property 185 185 - - - 185 Other Taxes and Receipts

Accrued Interest and Discount on Debt 22,591 - - 22,591 - 22,591 

Other Non-Budgetary Financing Sources for Debt 

Accruals/Amortization

Accrued Interest on Restoration of Federal Debt 

Principal 409 - - 409 - 409 

Other Non-Budgetary Financing Sources for Debt 

Accruals/Amortization

Imputed Financing Sources 762 80 - 682 - 762 Imputed Financing Sources
DEPARTMENT OF THE TREASURY 181 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Consolidated Statement of Changes in Net Position and Statement of Custodial Activity

For the Fiscal Year Ended September 30, 2021

AFR Financial Statement Line

Amounts (in 

millions)

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with 

Eliminations)

Eliminations 

between 

Dedicated 

and All Other

Total 

(in millions) Reclassified Financial Statement Line

Transfers to the General Fund and Other (177,085) - - 538 - 538 

Accrual for Non-Entity Amounts to be Collected and 

Transferred to the General Fund of the U.S. Government

47 - (178,621) - (178,574) Non-Entity Collections Transferred to the General Fund

(1) - 21 - 20 Other Financing Sources with Budgetary Impact

- - 10,000 - 10,000 

Other Non-Budgetary Financing Sources for Debt 

Accruals/Amortization

- - (10,000) - (10,000) Borrowings Losses

2 - (1) - 1 Other Non-Budgetary Financing Sources

801 - 129 - 930 Other Taxes and Receipts

 Total Transfers to the General Fund and Other (177,085) 849 - (177,934) - (177,085) Total

Net Cost of Treasury Operations and Non-Entity 

Costs (565,295) (1,284) 2 (1,368,208) (14) (1,369,480) Net Cost of Operations(2)

Net Change in Cumulative Results of Operations (57,137) 308 51 (861,664) (85) (861,322) Total

Cumulative Results of Operations: Ending 

Balance $ 86,246 $ 49,152 $ 51 $ (767,125) $ (85) $ (717,939) Total 

STATEMENT OF CUSTODIAL ACTIVITY

Sources of Custodial Revenue

Individual Income and FICA Taxes $ 3,594,002 $ 26 $ - $ 3,593,976 $ - $ 3,594,002 Individual Income Tax and Tax Withholdings

Corporate Income Taxes 419,009 - - 419,009 - 419,009 Corporation Income Taxes

Estate and Gift Taxes 28,046 - - 28,046 - 28,046 Estate and Gift Taxes

Excise Taxes 78,534 - - 78,534 - 78,534 Excise Taxes

Railroad Retirement Taxes 5,307 - - 5,307 - 5,307 Other Taxes and Receipts

Unemployment Taxes 6,276 - - 6,276 - 6,276 Unemployment Taxes

Deposit of Earnings, Federal Reserve System 100,054 - - 100,054 - 100,054 Other Taxes and Receipts

Fines, Penalties, Interest and Other Revenue 7,843 - - 7,841 - 7,841 Other Taxes and Receipts

- - 2 - 2 Borrowing and Other Interest Revenue

 Total Fines, Penalties, Interest and Other 

Revenue 7,843 - - 7,843 - 7,843 Total

(2) Includes income tax credits of $804.2 billion, which are reported on the Treasury Statement of Custodial Activity within the “Less Refunds and Other Payments” line item. These tax credits are reported as part of net cost on the

reclassified financial statements for the purpose of presenting these costs in the manner presented in the Financial Report.
182 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Statement of Changes in Net Position and Statement of Custodial Activity

For the Fiscal Year Ended September 30, 2021

AFR Financial Statement Line

Amounts (in 

millions)

Dedicated 

Collections 

Combined

Dedicated 

Collections 

Eliminations

All Other 

Amounts 

(with 

Eliminations)

Eliminations 

between 

Dedicated 

and All Other

Total 

(in millions) Reclassified Financial Statement Line

Less Refunds and Other Payments (1,138,267) - - (300,949) - (300,949) Individual Income Tax and Tax Withholdings

- - (29,207) - (29,207) Corporation Income Taxes

- - (142) - (142) Unemployment Taxes

- - (2,841) - (2,841) Excise Taxes

- - (906) - (906) Estate and Gift Taxes

- - (37) - (37) Other Taxes and Receipts

 Total Less Refunds and Other Payments (1,138,267) - - (334,082) - (334,082) Total

Non-Cash Accrual Adjustment 63,958 - - 66,439 - 66,439 Other Taxes and Receipts

- - 17 - 17 Excise Taxes

- - (2,498) - (2,498) 

Accrual for Non-Entity Amounts to be Collected and 

Transferred to the General Fund of the U.S. Gov't

 Total Non-Cash Accrual Adjustment 63,958 - - 63,958 - 63,958 Total

Disposition of Custodial Revenue

Amounts Provided to Fund Non-Federal Entities (528) - - (528) - (528) Other Taxes and Receipts

Amounts Provided to Fund the Federal 

Government (3,100,276) - - (3,098,877) - (3,098,877) Non-Entity Collections Transferred to the General Fund

- - (1,399) (1,399) 

Collections Transferred to a TAS Other Than the General 

Fund of the U.S. Government

 Total Amounts Provided to Fund the Federal 

Government (3,100,276) - - (3,100,276) - (3,100,276) Total

Non-Cash Accrual Adjustment (63,958) - - (63,961) - (63,961) 

Accrual for Non-Entity Amounts to be Collected and 

Transferred to the General Fund of the U.S. Gov't

- - 3 - 3 

Accrual of Collections Yet to be Transferred to a TAS Other 

Than the General Fund of the U.S. Gov't

 Total Non-Cash Accrual Adjustment (63,958) - - (63,958) - (63,958) Total

Total Statement of Changes in Net Position and 

Statement of Custodial Activity $ 964,856 $ 49,378 $ 51 $ 915,444 $ (85) $ 964,856 

Total Reclassified Statement of Changes in Operations 

and Net Position
DEPARTMENT OF THE TREASURY 183 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED – SEE ACCOMPANYING

AUDITORS’ REPORT) 

INTRODUCTION

This section provides the Required Supplementary Information as prescribed by accounting standards.

OTHER CLAIMS FOR REFUNDS

We estimated that $2.5 billion and $3.3 billion as of September 30, 2021 and 2020, respectively, may be payable as other

claims for tax refunds. This estimate represents amounts (principal and interest) that we may pay for claims pending

judicial review by the federal courts or internally, by Appeals. In FY 2021, the total estimated payout (including principal

and interest) for claims pending judicial review by the federal courts and appeals courts is $1.5 billion and $1.0 billion,

respectively. In FY 2020, the total estimated payout (including principal and interest) for claims pending judicial review by

the federal courts and appeals courts was $1.6 billion and $1.7 billion, respectively. To the extent judgments against the

government in these cases prompt other similarly situated taxpayers to file similar refund claims, these amounts could

become significantly greater.

IRS FEDERAL TAXES RECEIVABLE, NET

In accordance with SFFAS No. 7, some unpaid tax assessments do not meet the criteria for financial statement recognition. 

Internal Revenue Code (IRC) 6201 authorizes and requires us to make inquiries, determinations, and assessments of all

taxes which taxpayers have not duly paid (including interest, additions to the tax, and assessable penalties) under the law. 

Unpaid assessments result from taxpayers filing returns without sufficient payment, as well as from tax compliance

programs such as examination, under-reporter, substitute for return, and combined annual wage reporting. We also have

authority to abate the paid or unpaid portion of an assessed tax, interest, and penalty. Abatements occur for a number of

reasons and are a normal part of the tax administration process. Abatements may result in claims for refunds or a reduction

of the unpaid assessed amount.

Under federal accounting standards, we consider unpaid assessments agreed to by the taxpayer or the court federal taxes

receivable. We consider assessments not agreed to by taxpayer or the court compliance assessments. Due to the lack of

agreement, these compliance assessments are less likely to have future collection potential than those unpaid assessments

that we consider federal taxes receivable.

We call assessments with little or no future collection potential write-offs. Write-offs principally consist of amounts owed by

deceased, bankrupt, or defunct taxpayers. Write-offs have little or no future collection potential, but statutory provisions

require that we maintain these assessments until the statute for collection expires.

Although we do not consider compliance assessments and write-offs receivables under federal accounting standards, they

represent legally enforceable claims of the U.S. government. 

The components of the total unpaid assessments at September 30, 2021 and 2020, were as follows: 
184

DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

(in millions) 2021 2020 

Total Unpaid Assessments $ 658,000 $ 596,000 

Less Compliance Assessments (80,000) (74,000) 

Write Offs (85,000) (95,000) 

Gross Federal Taxes Receivable 493,000 427,000 

Less Allowance for Doubtful Accounts (191,000) (191,000) 

Federal Taxes Receivables, Net $ 302,000 $ 236,000 

Total unpaid assessments include $249 billion of non-delinquent taxes receivable, including $143 billion of non-delinquent

IRC 965(h) tax which is collectible based on the type of taxpayer and the financial assistance of large dollar businesses. The 

non-delinquent IRC 965 (h) component refers to taxpayers who elected to pay their IRC 965(h) tax on an eight year

installment schedule. The remaining balance is related to Social Security tax deferral under the CARES Act, which contains

a provision for employers to defer the employer’s share of the Social Security portion of FICA, and the employer and

employee representative’s share of the RRTA. The deferred amount is due in two installments with 50 percent due by

December 31, 2021 and the remaining amount by December 31, 2022.

To eliminate double counting, the compliance assessments reported above exclude trust fund recovery penalties assessed

against officers and directors of businesses involved in the non-remittance of federal taxes withheld from their employees. 

The penalties totaled $1.2 billion and $1.4 billion as of September 30, 2021 and 2020, respectively. We report the related

unpaid assessments of those businesses as taxes receivable or write-offs, but we may also recover portions of those

businesses’ unpaid assessments from any and all individual officers and directors against whom we assess a trust fund

recovery penalty.

ALCOHOL AND TOBACCO TAX AND TRADE BUREAU

As an agent of the U.S. government and as authorized by 26 USC, the TTB collects excise taxes from alcohol, tobacco,

firearms, and ammunition industries. In addition, the TTB collects special occupational taxes from certain tobacco

businesses. During FY 2021 and 2020, TTB collected approximately $20.3 billion and $20.0 billion in taxes, interest, and

other revenues, respectively. TTB also collects Federal excise taxes on certain articles produced in Puerto Rico and the

Virgin Islands, and imported into the U.S. In accordance with 26 USC 7652, such taxes collected on rum imported into the

U.S. are “covered over” or paid into the treasuries of Puerto Rico and the Virgin Islands.

TTB remits substantially all of the taxes collected, net of related refund disbursements, to the General Fund. We further

distribute this revenue to Federal agencies in accordance with various laws and regulations. The firearms and ammunition

excise taxes are an exception. TTB remits those revenues to the Fish and Wildlife Restoration Fund under provisions of the

Pittman-Robertson Act of 1937.
DEPARTMENT OF THE TREASURY 185 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

DEFERRED MAINTENANCE AND REPAIRS

In FY 2021 and 2020, we had no material amounts of deferred maintenance and repair costs to report on vehicles, buildings,

heritage assets, and structures we owned.

Deferred maintenance and repairs applies to owned PP&E. Deferred maintenance and repairs are maintenance and repair 

activity that we had not performed when it should have been, or scheduled to be, and put off or delayed for a future period. 

We define maintenance and repairs as the act of keeping capitalized assets in an “acceptable condition” to serve their

required mission. It includes preventive maintenance, normal repairs, replacement of parts and structural components, and

other activities needed to preserve the asset so that it continues to provide acceptable services and achieves its expected

useful life. Deferred maintenance and repairs excludes activities aimed at expanding the capacity or significantly upgrading

the assets to a different form than it was originally intended (i.e., activities related to capitalized improvements,

modernization, and/or restoration).

Logistic personnel use condition assessment surveys and/or the total life-cycle cost methods to determine if there are any

deferred maintenance and repairs needed to keep an asset in acceptable operating condition. We use periodic condition

assessments, physical inspections, and review of manufacturing and engineering specifications, work orders, and building

and other structure logistics reports under these methodologies. 

STATEMENT OF BUDGETARY RESOURCES DISAGGREGATED BY TREASURY REPORTING ENTITY

The following tables provide the Statement of Budgetary Resources for the fiscal years ended September 30, 2021 and 2020

disaggregated by Treasury reporting entity rather than by Treasury major budget account, since we manage our budget at

the reporting entity level. 
186

DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Fiscal Year 2021 Combining Statement of Budgetary Resources Disaggregated

by Sub-organization Accounts

Bureau of Bureau of Fin. Crimes Internal

Engraving & the Fiscal Departmental Enforcement Revenue

(in millions): Printing Service Offices (a) Network Service

BUDGETARY RESOURCES

Unobligated balance from prior year budget authority, net

 (discretionary and mandatory) $ 754 $ 1,915 $ 911,615 $ 35 $ 1,583

Appropriations (discretionary and mandatory) - 588,905 1,015 127 14,900

Borrowing authority (discretionary and mandatory) - - 15,008 - - 

Spending authority from offsetting collections 

 (discretionary and mandatory) 1,098 315 3,690 9 151

Total Budgetary Resources $ 1,852 $ 591,135 $ 931,328 $ 171 $ 16,634

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments $ 1,249 $ 589,326 $ 449,777 $ 145 $ 14,074

Unobligated balance, end of year:

 Apportioned, unexpired accounts 462 1,704 437,837 21 2,296

 Exempt from apportionment, unexpired accounts - 3 77 - 7 

 Unapportioned, unexpired accounts 141 90 43,501 - 3 

 Unexpired unobligated balance, end of year 603 1,797 481,415 21 2,306

 Expired unobligated balance, end of year - 12 136 5 254

Unobligated balance, end of year 603 1,809 481,551 26 2,560

Total Status of Budgetary Resources $ 1,852 $ 591,135 $ 931,328 $ 171 $ 16,634

OUTLAYS, NET, AND DISBURSEMENTS, NET

Outlays, net (discretionary and mandatory) $ 70 $ 588,357 $ 304,892 $ 137 $ 13,290

Distributed offsetting receipts - (51,762) (20,396) - (1,487)

Agency Outlays, Net (Discretionary and Mandatory) $ 70 $ 536,595 $ 284,496 $ 137 $ 11,803

Disbursements, net (mandatory) $ - $ - $ (64,396)$ - $ - 

(a) Of the $931 billion of Total Budgetary Resources for DO, ESF, GSE, and OAS had $173 billion, $254 billion, and

$14 billion, respectively. The remainder is spread throughout other offices.
DEPARTMENT OF THE TREASURY 187 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Fiscal Year 2021 Combining Statement of Budgetary Resources Disaggregated

by Sub-organization Accounts

Alcohol

and

Office of the Tobacco

Comptroller Tax and

of the Trade Non- 

(in millions): U. S. Mint Currency Bureau Budgetary Budgetary

BUDGETARY RESOURCES

Unobligated balance from prior year budget authority, net

 (discretionary and mandatory) $ 618 $ 1,665 $ 9 $ 905,903 $ 12,291

Appropriations (discretionary and mandatory) - - 124 605,071 - 

Borrowing authority (discretionary and mandatory) - - - - 15,008

Spending authority from offsetting collections 

 (discretionary and mandatory) 5,298 1,166 8 23,140 (11,405)

Total Budgetary Resources $ 5,916 $ 2,831 $ 141 $ 1,534,114 $ 15,894

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments $ 5,030 $ 1,112 $ 135 $ 1,045,397 $ 15,451

Unobligated balance, end of year:

 Apportioned, unexpired accounts 886 - 5 443,193 18

 Exempt from apportionment, unexpired accounts - 1,719 - 1,806 - 

 Unapportioned, unexpired accounts - - - 43,310 425

 Unexpired unobligated balance, end of year 886 1,719 5 488,309 443

 Expired unobligated balance, end of year - - 1 408 - 

Unobligated balance, end of year 886 1,719 6 488,717 443

Total Status of Budgetary Resources $ 5,916 $ 2,831 $ 141 $ 1,534,114 $ 15,894

OUTLAYS, NET, AND DISBURSEMENTS, NET

Outlays, net (discretionary and mandatory) $ (481)$ (115)$ 120 $ 906,270 $ - 

Distributed offsetting receipts - - - (73,645) - 

Agency Outlays, Net (Discretionary and Mandatory) $ (481)$ (115)$ 120 $ 832,625 $ - 

Disbursements, net (mandatory) $ - $ - $ - $ (64,396)
188

DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Fiscal Year 2020 Combining Statement of Budgetary Resources Disaggregated

by Sub-organization Accounts

Bureau of Bureau of Fin. Crimes Internal

Engraving & the Fiscal Departmental Enforcement Revenue

(in millions): Printing Service Offices (a) Network Service

BUDGETARY RESOURCES

Unobligated balance from prior year budget authority, net $ 582 $ 1,686 $ 313,936 $ 31 $ 1,172

Appropriations (discretionary and mandatory) - 560,753 686,970 126 12,708

Borrowing authority (discretionary and mandatory) - - 188,664 - - 

Spending authority from offsetting collections 

 (discretionary and mandatory) 1,045 314 30,686 2 185

Total Budgetary Resources $ 1,627 $ 562,753 $ 1,220,256 $ 159 $ 14,065

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments $ 879 $ 560,942 $ 455,325 $ 125 $ 12,670

Unobligated balance, end of year:

 Apportioned, unexpired accounts 584 1,669 743,336 30 1,077

 Exempt from apportionment, unexpired accounts - 5 86 - 7 

 Unapportioned, unexpired accounts 164 117 21,364 - 70

 Unexpired unobligated balance, end of year 748 1,791 764,786 30 1,154

 Expired unobligated balance, end of year - 20 145 4 241

Unobligated balance, end of year 748 1,811 764,931 34 1,395

Total Status of Budgetary Resources $ 1,627 $ 562,753 $ 1,220,256 $ 159 $ 14,065

OUTLAYS, NET, AND DISBURSEMENTS, NET

Outlays, net (discretionary and mandatory) $ 75 $ 561,109 $ 212,795 $ 120 $ 12,171

Distributed offsetting receipts - (60,689) (6,460) (3) (812)

Agency Outlays, Net (Discretionary and Mandatory) $ 75 $ 500,420 $ 206,335 $ 117 $ 11,359

Disbursements, net (mandatory) $ - $ - $ 85,859 $ - $ - 

(a) Of the $1,220 billion of Total Budgetary Resources for DO, ESF, GSE, and OAS had $758 billion, $254 billion, 

and $14 billion, respectively. The remainder is spread throughout other offices. 
DEPARTMENT OF THE TREASURY 189 

FINANCIAL SECTION | FY 2021 AGENCY FINANCIAL REPORT

Fiscal Year 2020 Combining Statement of Budgetary Resources Disaggregated

by Sub-organization Accounts

Alcohol

and

Office of the Tobacco

Comptroller Tax and

of the Trade Non- 

(in millions): U. S. Mint Currency Bureau Budgetary Budgetary

BUDGETARY RESOURCES

Unobligated balance from prior year budget authority, net $ 487 $ 1,669 $ 8 $ 319,493 $ 78

Appropriations (discretionary and mandatory) - - 120 1,260,677 - 

Borrowing authority (discretionary and mandatory) - - - - 188,664

Spending authority from offsetting collections 

 (discretionary and mandatory) 3,574 1,056 7 10,466 26,403

Total Budgetary Resources $ 4,061 $ 2,725 $ 135 $ 1,590,636 $ 215,145

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments $ 3,462 $ 1,069 $ 128 $ 819,600 $ 215,000

Unobligated balance, end of year:

 Apportioned, unexpired accounts 594 - 5 747,266 29

 Exempt from apportionment, unexpired accounts - 1,656 - 1,754 - 

 Unapportioned, unexpired accounts 5 - - 21,604 116

 Unexpired unobligated balance, end of year 599 1,656 5 770,624 145

 Expired unobligated balance, end of year - - 2 412 - 

Unobligated balance, end of year 599 1,656 7 771,036 145

Total Status of Budgetary Resources $ 4,061 $ 2,725 $ 135 $ 1,590,636 $ 215,145

OUTLAYS, NET, AND DISBURSEMENTS, NET

Outlays, net (discretionary and mandatory) $ (159)$ (16)$ 120 $ 786,215 $ - 

Distributed offsetting receipts - - - (67,964) - 

Agency Outlays, Net (Discretionary and Mandatory) $ (159)$ (16)$ 120 $ 718,251 $ - 

Disbursements, net (mandatory) $ - $ - $ - $ 85,859
 

 

[Page intentionally left blank]
PART 3:

OTHER INFORMATION

(UNAUDITED)

SECTION A: TAX GAP AND TAX BURDEN............................. 193

SECTION B: MANAGEMENT CHALLENGES AND

TREASURY RESPONSE.................................................. 204

SECTION C: SUMMARY OF FINANCIAL STATEMENT

AUDIT AND MANAGEMENT ASSURANCES ...................... 256

SECTION D: PAYMENT INTEGRITY ..................................... 258

SECTION E: CIVIL MONETARY PENALTIES............................ 264

SECTION F: GRANTS PROGRAMS....................................... 271

APPENDIX: GLOSSARY OF ACRONYMS................................ 272
 

 
DEPARTMENT OF THE TREASURY 193 

OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

SECTION A: TAX GAP AND TAX BURDEN

TAX GAP

The gross tax gap is the difference between the amount of tax the law imposes and what taxpayers actually pay on time. The

tax gap provides an estimate of the level of overall non-compliance and voluntary compliance during the relevant tax periods

and under the Internal Revenue Code (IRC) provisions in effect at the time. Tax gap estimates provide the Internal Revenue

Service (IRS) with periodic appraisals about the nature and extent of noncompliance for use in formulating tax

administration strategies. 

Measuring and reporting on taxpayer compliance related to various tax provisions is inherently complex and challenging. As

a result, the IRS develops estimates of the tax gap in order to measure overall compliance with the current tax system. The

IRS also undertakes analyses of compliance behavior with respect to specific tax provisions, such as refundable and non

refundable tax credits. The IRS enforcement strategies and legislative proposals are influenced by its National Research

Program (NRP), which involves conducting detailed audits of a statistically representative sample of taxpayers to estimate

compliance with individual income tax provisions, and provides data on misreporting on voluntarily filed returns. To provide

greater reliability and precision of the compliance estimates, the IRS groups multiple years of data together. This results in

a timing difference between the time period from which the IRS generates the reported data and issues the report. 

Misreporting can be in favor of the taxpayer or the government, although estimates indicate that the majority of

misreporting is due to tax underreporting. Underreporting can manifest as either underpayments of the liability due at the

time the taxpayer files the return, claiming and receiving an excessive refund, or a combination of both.

Tax Gap Estimates

The IRS prepares the tax gap estimates periodically, depending on the availability of the NRP data to produce such

estimates. In fiscal year (FY) 2019, the IRS released new estimates covering the tax year (TY) 2011 – 2013 timeframe.1 The 

following is a brief overview of these estimates. A more in-depth discussion of the tax gap is available on the IRS website at:

• Federal Tax Compliance Research: Tax Gap Estimates for Tax Years 2011 – 2013 (https://www.irs.gov/pub/irspdf/p1415.pdf); and

• Understanding the Latest Tax Gap Estimates and Overall Taxpayer Compliance

(https://www.irs.gov/newsroom/understanding-the-latest-tax-gap-estimates-and-overall-taxpayer-compliance).

The gross tax gap is the amount of tax liability that is not paid voluntarily and on time. The average annual estimated gross

tax gap for the TY 2011 – 2013 timeframe is $441 billion. The net tax gap is the gross tax gap less tax that will be

subsequently paid, either paid voluntarily but late, or collected as a result of IRS administrative and enforcement activities. 

In effect, the net tax gap is the portion of the gross tax gap that will not be paid. We estimate that $60 billion of the gross

tax gap will eventually be paid, resulting in a net tax gap of $381 billion.

1 The tax gap estimates released in FY 2019 are the most recent estimates available.
194 DEPARTMENT OF THE TREASURY

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The tax gap structure separates noncompliance into components by the type of tax and source of noncompliance. The three

primary sources of noncompliance that result in payment of less than the tax owed are: (i) the non-filing tax gap, which is

the tax not paid on time by those who do not file required returns on time; (ii) the underreporting tax gap which is the net

understatement of tax on timely filed returns; and (iii) the underpayment tax gap, which is the amount of tax reported on

timely filed returns that is not paid on time. These components comprise $39 billion, $352 billion, and $50 billion,

respectively, of the $441 billion estimated annual average gross tax gap. We also group the gross tax gap estimates by type

of tax. The estimated gross tax gap for individual income tax, corporate income tax, employment tax, and estate and excise

tax is $314 billion, $42 billion, $81 billion, and $3 billion, respectively. These estimates below are excerpted from the

schematic representation of the estimates, known as the tax gap “map” from the Tax Gap Estimates for Tax Years 2011 – 

2013 publication.

TAX GAP MAP: TAX GAP ESTIMATES FOR TAX YEARS 2011 – 2013 (EXCERPT) ($ IN BILLIONS)

Source: Federal Tax Compliance Research: Tax Gap Estimates for Tax Years 2011 - 2013

# - No estimate.

The percentage reported is the share of enforced and other late payments from the four different types of taxes.

The estimates are the annual averages for the TY 2011 – 2013 timeframe.

[1] Includes adjustments, deductions, and exemptions.

[2] Includes the Alternative Minimum Tax and taxes reported in the “Other Taxes” section of the Form 1040 except for self-employment tax and unreported Social Security

and Medicare tax (which are included in the employment tax gap estimates).

[3] Is the difference between (1) the estimate of the individual income tax underreporting tax gap where underreported tax is calculated based on all misreporting

combined and (2) the estimate of the individual income tax underreporting tax gap based on the sum of the tax gaps associated with each line item where the line item tax

gap is calculated based on the misreporting of that item only. There may be differences if the marginal tax rates are different in these two situations.

[4] Self-employment tax only.

Note: Individual amounts do not add to totals due to rounding.
DEPARTMENT OF THE TREASURY 195 

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Tax Gap Estimation Methodology

Estimating the tax gap is inherently challenging and requires assessing alternative methods, assumptions, and data sources. 

There is no single approach for estimating all the components of the tax gap. Each approach to estimating the tax gap is

subject to non-sampling error. Furthermore, the component estimates that are based on statistical samples are also subject

to sampling error. The uncertainty of the estimates is not readily captured by standard errors that typically accompany

estimates based on sample data. For that reason, standard errors, confidence intervals, and statistical comparisons across

years are not reported.

These estimates reflect an estimated average compliance rate and associated average annual tax gap for the TY 2011 – 2013

timeframe. The IRS estimates tax gap using a three-year timeframe to provide greater reliability and precision on the

estimates. For individual income tax compliance, the IRS uses pooled data from several tax years to estimate the tax gap

because the aggregated data provides more information upon which to base estimates of individual income tax

underreporting, categorized by sources of noncompliance. The individual income tax NRP reporting compliance studies are

the foundation for the individual income tax underreporting tax gap estimates. The methodology incorporates additional

data and analytical techniques designed to account for income that is not detected by the NRP audits. The IRS audits tax

returns to produce the compliance estimates for the individual income tax underreporting tax gap estimate. Since the

individual income tax underreporting estimate is derived from actual compliance data obtained through the audit of tax

returns, there is a resulting mismatch between the latest tax year and the period from which the estimates are calculated. 

Individual Income Tax Underreporting Tax Gap Estimates for Tax Years 2011–2013 

The estimates in the table below provide a breakout of the components of the individual income tax underreporting tax gap,

the largest single contributor to the gross tax gap. For each income component, the table shows the component’s share of the

individual income tax underreporting tax gap. The table also shows each component’s share of the gross tax gap. Business

income accounts for 45 percent of the total individual income tax underreporting tax gap for TY 2011 – 2013. This primarily

consists of nonfarm proprietor income which accounts for 28 percent; flow-through income (partnerships, S corporations, and

estates and trusts), which accounts for eight percent; rent and royalty income, which accounts for seven percent; and farm

income, which accounts for two percent.
196 DEPARTMENT OF THE TREASURY

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INDIVIDUAL INCOME TAX UNDERREPORTING TAX GAP BY SOURCE: TAX YEARS 2011–2013 (1)

($ IN BILLIONS) 

Tax Line Item Amount

Tax Return Line Items Tax Gap

Share of Gross Tax 

Gap 

Share of Individual 

Income Tax 

Underreporting 

Tax Gap

Net Misreporting 

Percentage (2)

Gross Tax Gap $ 441 100% N/A N/A

Individual Income Tax Underreporting Tax Gap $ 245 56% 100% 18% 

Items Subject to Substantial Information Reporting and 

Withholding $ 9 2% 4% 1% 

Wages, salaries, tips $ 9 2% 4% 1% 

Items Subject to Substantial Information Reporting $ 12 3% 5% 5% 

Interest income (3) (3) (3) 1% 

Dividend income $ 1 (3) 1% 5% 

State income tax refunds $ 1 (3) (3) 12% 

Pension & annuities $ 5 1% 2% 3% 

Unemployment Compensation (3) (3) (3) 7% 

Taxable Social Security benefits $ 4 1% 2% 11% 

Items Subject to Some Information Reporting $ 36 8% 15% 17% 

Partnership, S-Corp, Estate & Trust, etc. $ 19 4% 8% 11% 

Alimony income (4) (4) (4) (4)

Capital Gains(5) $ 17 4% 7% 23% 

Short-term Capital Gains $ 7 2% 3% 24% 

Long-Term Capital Gains $ 10 2% 4% 15% 

Items Subject to Little or No Information Reporting $ 109 25% 45% 55% 

Form 4797 income $ 2 1% 1% 36% 

Other income $ 16 4% 6% 42% 

Nonfarm proprietor income $ 68 15% 28% 56% 

Farm income $ 6 1% 2% 62% 

Rents and royalties $ 17 4% 7% 51% 

Other Taxes $ 1 (3) 1% 3% 

Unallocated Marginal Effects $ 10 2% 4% N/A

Income Offsets (Adjustments, Deductions, Exemptions) $ 20 4% 8% 5% 

Total Tax Credits $ 42 10% 17% 38% 

Filing Status $ 5 1% 2% N/A (1) The estimates are the annual averages for the TY 2011 – 2013 timeframe.

(2) The net misreporting percentage is the net misreported amount divided by the sum of the absolute values of the amounts that should have been reported, expressed as a 

percentage.

(3) Less than 0.5 percent or $0.5 billion.

(4) Estimate is based on very small sample size. Estimated tax gap is less than $0.5 billion and Net Misreporting Percentage is less than 0.5percent.

(5) The TY 2008 – 2010 Net Misreporting Percentage for capital gains was incorrectly reported as 27 percent. The correct Net Misreporting Percentage for TY 2008 – 2010

was 21 percent.

Note: Individual amounts may not add to total due to rounding.

Individual Income Tax Credits

The IRS is responsible for administering 21 refundable and nonrefundable individual income tax credits. Total tax credits

account for 17 percent of the individual income tax underreporting tax gap. The Earned Income Tax Credit (EITC), 

American Opportunity Tax Credit (AOTC), and Additional Child Tax Credit (ACTC) are three of the most widely claimed
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OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

refundable tax credits. EITC accounts for 11 percent of the individual income tax underreporting tax gap, followed by the

refundable and non-refundable Child Tax Credit (CTC) (three percent), and the refundable and non-refundable education

credits which includes AOTC (two percent). 

INDIVIDUAL INCOME TAX UNDERREPORTING TAX GAP ESTIMATES FOR TAX CREDITS: TY 2011 – 2013 ($ IN

BILLIONS) (1)

Tax Return Line Items Tax Gap Share of Gross Tax Gap

Share of Individual 

Income Tax 

Underreporting Tax 

Gap 

Gross Tax Gap $441 100% N/A

Individual Income Tax Underreporting Tax Gap $245 56% 100% 

Total Credits $42 10% 17% 

Earned Income Tax Credit $27 6% 11% 

Education Credits (Including AOTC) $5 1% 2% 

Child Tax Credit and Additional Child Tax Credit $9 2% 3% 

All Other Credits $1 (2) 1% (1) The estimates are the annual averages for the TY 2011 – 2013 timeframe.

(2) Less than 0.5 percent.

Note: Individual amounts may not add to total due to rounding.

Earned Income Tax Credit 

Congress enacted the EITC in 1975 through the Tax Reduction Act (Public Law (P.L.) 94-12), as a temporary anti-poverty

measure to offset inflation and rising Social Security payroll taxes. In addition to encouraging work and reducing

dependence on cash welfare, the credit was also viewed as a means to encourage economic growth in the face of the 1974

recession and rising food and energy prices. 1 Since then, the EITC has undergone numerous legislative changes, most

notably by the Revenue Act of 1978, which made the EITC a permanent refundable tax credit. Congress believed the EITC

would be an effective way to provide financial assistance to working families, with or without children, who might otherwise

rely on government subsidized welfare payments. For TY 2018, more than 26 million taxpayers received almost $65 billion

in EITCs, making the EITC one of the largest need-tested anti-poverty programs that provides cash benefits.2 

American Opportunity Tax Credit

Education tax credits have generally been intended to provide federal financial assistance to students from middle-income

families who may not benefit from other forms of traditional student aid.3 Congress enacted the AOTC as part of the

American Recovery and Reinvestment Act of 2009 (P.L. 111-5) to replace the Hope Credit and to expand the education tax

credit to lower and upper-income students. The AOTC is a partially refundable tax credit that provides financial assistance

to taxpayers (or their children) with qualified educational expenses who are pursuing a higher education. Like other

education tax credits, the AOTC was enacted with the goal of making higher education more affordable. 

1 Congressional Research Report, The Earned Income Tax Credit (EITC): A Brief Legislative History, March 20, 2018. 2 Congressional Research Report, The Earned Income Tax Credit (EITC): How it Works and Who Receives It, Updated January 12, 2021. 3 Congressional Research Report, The American Opportunity Tax Credit: Overview, Analysis, and Policy Options, Updated June 4, 2018.
198 DEPARTMENT OF THE TREASURY

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Additional Child Tax Credit

Congress enacted the CTC to help ease the financial burdens for families with children as part of P.L. 105-34, the Taxpayer

Relief Act of 1997. If the CTC exceeds the tax liability, taxpayers may receive some or all of the credit as a refund, known as

the Additional Child Tax Credit. Various legislative changes over the past 20 years have made significant changes to the

CTC, which have expanded it from a generally nonrefundable credit available only to the middle and upper-middle class, to a 

partially refundable credit that more low-income families are eligible to claim. Notably, the Tax Cuts and Jobs Act of 2017

(P.L. 115-97) doubled the CTC, increased the amount that could be claimed as a refund, and allowed it to include more

upper-middle class families.

Relationship of Tax Compliance Estimation to Improper Payments

The Payment Integrity Improvement Act (PIIA) requires additional reporting requirements for payment programs that are

determined to be susceptible to significant improper payments. The focus of PIIA, as well as related guidance issued by the

Office of Management and Budget (OMB), is on implementing internal controls to prevent and detect improper payments. 

PIIA does not take into consideration all aspects of administering tax provisions in a system that relies heavily on voluntary

reporting. In keeping with PIIA requirements, the IRS reports risk assessments for refundable tax credits, as well as

improper payment (i.e., overclaim) estimates for the EITC, AOTC, and ACTC (refer to Part 3, Section D: Payment Integrity, 

of this report).

The IRS follows the practice of conducting risk assessments largely because refundable tax credits may result in a payment

to the taxpayer in excess of tax liability. It can be challenging to distinguish between the portion of a credit that offsets an

individual tax liability versus the portion that is refundable. Determining the impact of a refundable tax credit depends on

multiple variables, including other return elements and information the taxpayer provides, some of which are unrelated to

the refundable tax credit in question. 

The same features of the tax system and taxpayer behaviors that create the compliance problems with refundable tax credits

also create the risk of noncompliance with other tax provisions. Several credits passed into law by Congress to promote

social and economic objectives (e.g., assisting particular groups of individuals or businesses) have eligibility rules that are

often complex and lead to high overclaim rates.

Tax refunds, which constitute a transfer of cash from the federal government to a taxpayer, are an integral part of the tax

system as a whole. The IRS tax gap estimation measures compliance with the current tax system and always includes

noncompliance with refundable and nonrefundable tax credits. Whether a tax credit results in a refund instead of a 

reduction in tax liability depends on all of the taxpayers' characteristics, such as income, deductions, and other credits

claimed, and is not simply driven by the credit itself.

The IRS’s risk assessments on refundable tax credits have consistently concluded that overclaims are not rooted in internal

control deficiencies, but instead are due to the complexities of verifying eligibility, including unavailability of relevant thirdparty data, for refundable tax credits within the time periods prescribed by the tax system. Therefore, as we further explain

in Part 3, Section D, it is our position that refundable tax credit overclaims resulting in payment errors should not be

reported under the improper payments framework. Rather, errors in taxpayer claims for credits are more appropriately

included in analysis of tax compliance.
DEPARTMENT OF THE TREASURY 199 

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Refundable Tax Credits and the Challenges of Compliance 

Refundable tax credits generally have different eligibility rules, often relating to personal family and living arrangements,

which determine eligibility. Complexity in the form of differing rules is a contributor to tax credit errors. Additionally, these

credits are difficult for the IRS to verify due to the lack of available, relevant third-party data. 

Eligibility rules for refundable tax credits contribute to the compliance burden for taxpayers and administrative costs for the

IRS. These rules differ by credit and are often complex because they must address complicated family relationships and

residency arrangements to determine eligibility. The relatively high overclaim error rates for these credits are a result, in

part, of this complexity. The lack of third-party data to verify eligibility requirements for these refundable credits also

complicates the ability of the IRS to administer these credits. Such data may not exist, may be unreliable or inaccurate, or

may be reported to the IRS too late to be useful during tax return processing. The IRS also has limited authority to correct

mismatches at filing and must use audits to correct errors, which increases taxpayer burden. The IRS continually looks for 

complete and accurate data sources to verify eligibility for claimed refundable credits in order to reduce the burden on

compliant taxpayers.

Faced with the complexities of claiming certain refundable credits, many potential credit recipients seek help filing their tax

returns from paid preparers. Fifty percent of taxpayers claiming refundable credits use paid preparers. Unenrolled return

preparers, who prepare a significant number of EITC returns, are not subject to the same level of training and certification

requirements as other tax professionals and have higher error rates for EITC returns than taxpayers who prepare their own

returns or who hire enrolled return preparers. 

The IRS has a responsibility to detect and address errors and misreporting on tax returns, including those claiming the

refundable credits. The IRS frequently enhances filters and other detection tools to improve the accuracy of tax returns and

reduce taxpayer burden, but in some instances, enforcement activities must take place. The IRS rejects millions of

electronically filed returns claiming refundable credits for a variety of reasons, such as missing forms, incorrect Social

Security numbers (SSNs), or if another taxpayer has claimed the same child. Most taxpayers can correct their electronic

returns and successfully re-file with little burden. In some cases, a taxpayer must print and submit a paper return,

resulting in refund delays. Despite the compliance burden and costs to the government associated with these refundable tax

credits, the burden to taxpayers may be lower than with other payment or benefit programs. For example, tax credit

recipients can self-certify eligibility; they do not need to meet with caseworkers, nor submit upfront documentation as is

required with some direct service anti-poverty programs, such as Supplemental Security Income or Temporary Assistance for 

Needy Families. 

The IRS may initiate a correspondence audit if it identifies, through its scoring and selection process, potential

noncompliance with eligibility requirements. The IRS conducts most refundable credit audits before it issues a refund, 

meaning the IRS holds the credit refund until the taxpayer substantiates eligibility. The IRS sends a letter to the taxpayer

requesting documentation showing that the taxpayer meets credit eligibility requirements. In addition to the refund delay,

taxpayers face the burden of gathering and sending in the requested information. In FY 2021, the IRS conducted 179,848

refundable credit exams, the majority through correspondence audits. 

Sustained annual budget reductions at the IRS have heightened the importance of determining how best to allocate finite,

declining resources to ensure the IRS can still meet agency-wide strategic goals of increasing taxpayer compliance, using

resources more efficiently, and minimizing taxpayer burden.
200 DEPARTMENT OF THE TREASURY

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TAX BURDEN

The IRC creates the basis for a progressive tax system that applies higher rates of taxation to progressively higher levels of

income. The amount of taxable income can be adjusted through the application of exemptions and deductions, which will

influence the amount of taxes taxpayers owe. In addition, many taxpayers qualify for one or more refundable tax credits,

which collectively have a significant impact on tax administration, federal tax revenues, and refund payments.

The IRS measures tax liability by income level for individuals, and by revenue and assets for corporations. Using these data,

it is possible to illustrate how tax liability rises with increases in Adjusted Gross Income (AGI) for individuals (Figures 1.1

and 1.2 and Table 1). Similar data for corporations shows the tax burden based on the percentage of taxable income (Figure

2 and Table 2). This information is the most recent data available for individuals (TY 2019) and corporations (TY 2018). 
DEPARTMENT OF THE TREASURY 201 

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INDIVIDUAL INCOME TAX LIABILITY

FIGURE 1.1: AVERAGE AGI REPORTED AND AVERAGE INDIVIDUAL INCOME TAX LIABILITY FOR TY 2019

FIGURE 1.2: INDIVIDUAL INCOME TAX LIABILITY AS A PERCENTAGE OF AGI FOR TY 2019

$7,683 $22,336

$39,181 $71,234

$136,574 $286,491

$1,464,540

$13 $523 $1,808 $5,305 $15,176 $47,800

$371,372

Under $15,000 $15,000 to

under $30,000

$30,000 to

under $50,000

$50,000 to

under $100,000

$100,000 to

under $200,000

$200,000 to

under $500,000

$500,000

or more

Average AGI per return Average income tax per return

0.2%

2.3%

4.6%

7.4%

11.1%

16.7%

25.4%

Under $15,000 $15,000 to

under $30,000

$30,000 to

under $50,000

$50,000 to

under $100,000

$100,000 to

under $200,000

$200,000 to

under $500,000

$500,000

or more
202 DEPARTMENT OF THE TREASURY

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TABLE 1: INDIVIDUAL INCOME TAX DATA BY AGI FOR TY 2019

Average

Average AGI Income tax Income tax

Adjusted Gross Number of Total per return per return as a

Income taxable returns AGI income tax (in whole (in whole) percentage

(AGI) (in thousands) (in millions) (in millions) dollars) dollars) of AGI

Under $15,000 30,881 $ 237,255 $ 391 $ 7,683 $ 13 0.2% 

$15,000 under 

$30,000 28,823 643,794 15,069 22,336 523 2.3% 

$30,000 under 

$50,000 28,594 1,120,332 51,692 39,181 1,808 4.6% 

$50,000 under 

$100,000 36,357 2,589,840 192,888 71,234 5,305 7.4% 

$100,000 under 

$200,000 21,998 3,004,364 333,838 136,574 15,176 11.1% 

$200,000 under 

$500,000 7,298 2,090,809 348,843 286,491 47,800 16.7% 

$500,000 or more 1,719 2,517,544 638,389 1,464,540 371,372 25.4% 

Total 155,670 $ 12,203,938 $ 1,581,110 

All negative AGI under $15,000 are treated as zero-dollar amount.
DEPARTMENT OF THE TREASURY 203 

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CORPORATION TAX LIABILITY

FIGURE 2: CORPORATION TAX LIABILITY AS A PERCENTAGE OF TAXABLE INCOME FOR TY 2018

TABLE 2: CORPORATION TAX DATA BY TOTAL ASSETS FOR TY 2018

Total Assets Income subject to tax Total income tax after credits Percentage of income tax 

(in thousands) (in millions) (in millions) after credits to taxable income

Zero Assets $ 55,884 $ 11,595 20.7% 

$1 under $500 7,829 1,569 20.0% 

$500 under $1,000 4,829 956 19.8% 

$1,000 under $5,000 17,223 3,496 20.3% 

$5,000 under $10,000 10,086 2,016 20.0% 

$10,000 under $25,000 19,143 3,805 19.9% 

$25,000 under $50,000 14,385 2,812 19.5% 

$50,000 under $100,000 16,854 3,294 19.5% 

$100,000 under $250,000 25,808 4,773 18.5% 

$250,000 under $500,000 26,192 4,679 17.9% 

$500,000 under $2,500,000 126,275 20,836 16.5% 

$2,500,000 or more 1,632,171 184,856 11.3% 

Total $ 1,956,679 $ 244,687 

20.7% 20.0% 19.8% 20.3% 20.0% 19.9% 19.5% 19.5% 18.5% 17.9%

16.5%

11.3%

Zero

Assets

$1

to under

$500

$500

to under

$1,000

$1,000

to under

$5,000

$5,000

to under

$10,000

$10,000

to under

$25,000

$25,000

to under

$50,000

$50,000

to under

$100,000

$100,000

to under

$250,000

$250,000

to under

$500,000

$500,000

to under

$2,500,000

$2,500,000

or more
204 DEPARTMENT OF THE TREASURY

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SECTION B: MANAGEMENT CHALLENGES AND TREASURY RESPONSE

In accordance with the Reports Consolidation Act of 2000, the Inspectors General are required to identify specific

management and performance challenges we face. At the end of each fiscal year, the Treasury Office of Inspector General

(OIG) and Treasury Inspector General for Tax Administration (TIGTA) send an update of these management challenges to

the Secretary of the Treasury (hereafter referred to as “Secretary”) and cite any new challenges for the upcoming fiscal year. 

The Special Inspector General for the Troubled Asset Relief Program (SIGTARP) identifies their management or

performance challenges for the Office of Financial Stability (OFS) separately in their quarterly report to Congress. This 

section contains the OIG and TIGTA identified management and performance challenges and management’s response.

 
DEPARTMENT OF THE TREASURY 205 

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OFFICE OF

INSPECTOR GENERAL

DEPARTMENT OF THE TREASURY

WASHINGTON, D.C. 20220

TREASURY INSPECTOR GENERAL MANAGEMENT CHALLENGES

October 14, 2021 

INFORMATION MEMORANDUM FOR SECRETARY YELLEN

FROM: Richard K. Delmar /s/

Deputy Inspector General

SUBJECT: Management and Performance Challenges Facing the 

Department of the Treasury (OIG-CA-22-002) 

In accordance with the Reports Consolidation Act of 2000, we are providing you with our perspective on 

the most serious management and performance challenges facing the Department of the Treasury

(hereinafter Treasury or the Department). In this year’s memorandum, my office is reporting six challenges,

one of which is new and reports on the challenges faced with the transition of the new Administration in

filling key senior leadership positions and the rise of new initiatives. As shown below, five challenges are

repeated and updated from last year to include Treasury’s continued role in combatting the economic fallout 

of the Coronavirus Disease 2019 (COVID-19) global pandemic at the forefront of the Nation, as well as its

impacts on related workforce and work streams.

• COVID-19 Pandemic Relief (Repeat)

• Transition of New Administration (New)

• Cyber Threats (Repeat)

• Anti-Money Laundering/ Terrorist Financing and Bank Secrecy Act Enforcement (Repeat)

• Efforts to Promote Spending Transparency and to Prevent and Detect Improper Payments (Repeat)

• Information Technology Acquisition and Project Management (Repeat)

In addition to the above challenges, we are reporting our concerns about the following matters: (1) the coin

redemption program at the United States Mint (2) managerial cost accounting, and (3) internal control 

matters at the Bureau of Engraving and Printing. 

We identified challenges and concerns based on the threat they pose to Treasury’s mission and

stakeholders’ interests. We also acknowledge the Department’s accomplishments and efforts over the past

year to address critical matters as noted within each challenge. That said, the COVID-19 pandemic has

caused a global health emergency and an ensuing economic crisis that Treasury has been tackling. 

Furthermore, with the enactment of new legislation, Treasury will continue to provide financial assistance to

the transportation industry and to all 50 States, units of local government, U.S. Territories, and Tribal

governments for the foreseeable future. As noted throughout this memorandum, Treasury will need to

continue to act swiftly, and in some cases, draw on its existing resources to meet the recent economic needs.
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We are available to discuss our views on the management and performance challenges and the other matters

expressed in this memorandum in more detail. 

cc: Trevor Norris

Acting Assistant Secretary for Management
DEPARTMENT OF THE TREASURY 207 

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Challenge 1: COVID-19 Pandemic Relief (Repeat)

The Coronavirus Disease 2019 (COVID-19) pandemic continues to affect the health and economic stability

of communities worldwide. Since reporting this challenge last year, more than 37 million people have been

infected with reported deaths of more than 684,000 in the United States as of this writing.1 In the early

stages of the COVID-19 outbreak in March 2020, Congress passed three key pieces of legislation in

succession to address the public health crisis and the economic fallout affecting individuals, businesses, and

many industry sectors. The Coronavirus Preparedness and Response Supplemental Appropriation Act of 

2020, signed into law on March 6, 2020, authorized $8.3 billion in emergency funding to address health and

medical care. 2 Shortly thereafter, the Families First Coronavirus Response Act was enacted on March 18, 

2020, which provided approximately $104 billion to address the financial stress of individuals and

households.3 The Coronavirus Aid, Relief, and Economic Security Act (CARES Act)4 passed on March 27, 

2020. The CARES Act provided over $2.4 trillion in health and economic relief to hospitals and healthcare

providers, individuals and households, businesses and employees, as well as, states, local and tribal

governments, and federal agencies, among others. As the public health crisis continued into late 2020 and

the new year, Congress legislated additional relief in passing the Consolidated Appropriations Act, 20215

(CAA, 2021) on December 27, 2020, and the American Rescue Plan Act of 20216 (ARP) on March 11, 

2021. These laws provided another $900 billion and $1.9 trillion of economic stimulus, respectively.

As reported in my prior memorandum, the Department of the Treasury (hereinafter Treasury or the

Department) has been instrumental to the implementation of economic relief provisions of the CARES Act.

Since then, Treasury’s responsibilities and workloads have expanded enormously as several CARES Act

provisions were extended under CAA, 2021 and ARP in addition to new programs being established within

Treasury. As such, pandemic recovery programs and provisions of the CARES Act, CAA, 2021, and ARP

within the oversight purview of my office are extensive and include programs that support transportation 

industry workers; renters and homeowners; and state, local, territorial, and tribal government entities

through direct financial assistance. 

Financial Assistance for Air Carrier Worker Support and Other Transportation Service Providers

Air Carrier Worker Support 

To maintain pay and benefits of airline industry workers, Treasury implemented the Air Carrier Worker

Support Program provisions of the CARES Act that authorized up to $32 billion of direct financial

assistance for passenger air carriers ($25 billion), cargo air carriers ($4 billion), and contractors ($3 billion).

Financial assistance is to ensure the continuation of workers’ payroll and benefits with the stipulation that

employees are not involuntarily furloughed and do not receive reductions in pay and benefits. Using

existing resources and contractor support, Treasury quickly stood up the Payroll Support Program (PSP1)

and made direct payments of $28.6 billion to 613 applicants as of February 24, 2021. Financial support for

air carrier workers was extended twice by CAA, 2021 and ARP which provided additional assistance to

passenger air carriers and contractors up to $15 billion and $14 billion, respectively. Using the mechanisms

to establish PSP1, Treasury implemented PSP2 and PSP3 to make corresponding payments. As of this

writing, Treasury disbursed $15.6 billion to 518 applicants under PSP2 and $14.6 billion to 482 applicants

under PSP3.

1 CDC COVID Data Tracker. 2 Public Law 116-123 (March 6, 2020). 3 Public Law 116-127 (March 18, 2020). 4 Public Law 116-136 (March 27, 2020). 5 Public Law 116-260 (December 27, 2020). 6 Public Law 117-2 (March 11, 2021).
208 DEPARTMENT OF THE TREASURY

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As you are aware, the CARES Act and CAA, 2021 require my office to audit the certifications of sworn

financial data submitted to Treasury by passenger and cargo carriers that do not report financial information

to the Department of Transportation (referred to as non-241 carriers) and contractors. Additionally, CAA,

2021 requires that my office audit contractors’ certifications of insufficient funds under the PSP1 to recall

employees involuntarily between March 27, 2020 and January 4, 2021. Treasury has authority to waive the 

requirement for a contractor to recall employees if the contractor certifies that it will have insufficient funds 

remaining under PSP1 to keep recalled employees employed for more than two weeks upon returning to

work. My office will continue audits of PSP1 recipients’ certifications and initiate audits of certifications

submitted by PSP2 recipients in fiscal year 2022. My office was not mandated to audit the applicants’

certifications to receive PSP3 payments authorized under ARP. However, Treasury disbursed financial

assistance to passenger air carriers and contractors based on information submitted by recipients on their

PSP2 certifications, which we will audit. That said, my office plans to assess Treasury’s calculation of 

award amounts under PSP3 and Treasury’s post monitoring of recipients under PSP1, PSP2, and PSP3. It is

incumbent upon the Department to implement and maintain strong internal controls over recipients’

compliance with signed terms and conditions for receiving financial assistance. That is, Treasury’s

compliance monitoring function is essential to ensuring that recipients use funds for the continuation of 

salaries and benefits as intended. 

Coronavirus Economic Relief for Transportation Services

Congress expanded financial support to non-air carrier transportation service providers under the 

Coronavirus Economic Relief for Transportation Services (CERTS) provisions of CAA, 2021. Treasury

established the CERTS Program that provides $2 billion in non-competitive grants to eligible companies

that certify revenue loss of 25 percent or more due to the COVID-19 pandemic. In consultation with the 

Department of Transportation, Treasury provided initial guidelines on May 6, 2021, that included among 

other things, the priority use of funds must be for payroll, although operating expenses and debt accrued to

maintain payroll are eligible uses. To be a qualifying transportation provider, an applicant must demonstrate 

eligibility as a motor coach, school bus, passenger vessel, or pilotage vessel transportation service. It is

expected that up to 5,000 service providers will apply for support. While Treasury has acted swiftly to

establish CERTS Program requirements, ongoing administration of grants and monitoring recipient

compliance with grant agreements will be challenging with an expected recipient pool in the thousands. 

Although there is no mandate directing my office to audit CERT recipients, we plan to monitor and audit 

Treasury’s administration of the program. 

Financial Assistance to State, Local, Tribal, and U.S. Territorial Governments 

Coronavirus Relief Fund 

The $150 billion Coronavirus Relief Fund (CRF), established under Title VI of the Social Security Act, as

amended by Title V of the CARES Act, continues to be a large endeavor for both the Department and my

office. The Department disbursed direct payments to States, units of local government, the District of

Columbia, U.S. Territories, and Tribal governments. Disbursement of funds was a complicated undertaking 

given the number of recipients at varying levels of government and other payment requirements of the 

CARES Act. That is, payments to States and local units of government were formula-driven and based on 

the 2019 U.S. Census, while other payments were based on consultations with the Department of the 

Interior and Tribal governments and other information obtained by the Department. As you are aware, the 

CARES Act created a unique challenge in distinguishing between the programmatic administrative

responsibility for payments made from the CRF and the Treasury Office of Inspector General’s (OIG)

independent oversight. Although Treasury was authorized to make payments, the CARES Act assigned

Treasury OIG with responsibility for monitoring and oversight of the receipt, disbursement, and use of 

funds. Additionally, my office was given authority to recoup funds if it is determined that recipients fail to
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comply with uses of funds for COVID-19 related costs under Section 601 (d), “Uses of Funds,” of the 

Social Security Act, as amended.7 

Given the direct oversight authorities of the Treasury OIG, the Department did not establish an

administrative program to ensure recipient compliance. Recipients were not bound to detailed terms and

conditions for the receipt of funds, which we reported in our first audit of CRF regarding the lack of terms

and conditions and accountability and transparency of funds.8 While this is unusual for a federal agency that

administers financial assistance programs, Treasury officials have committed to supporting our oversight 

role for ensuring transparency, accountability, and adherence to all statutory requirements and will continue 

to collaborate with us to ensure compliance by recipients. This continued collaboration has been critical for

overseeing such a large and widely dispersed recipient population given the ongoing challenges of defining 

and interpreting eligible uses of CRF proceeds. That said, it is crucial that the Department maintain its

fundamental role to clarify its policy9 over the uses of funds when interpretation matters arise. As recipients

are still in the process of using these funds, we anticipate that questions will continue to arise that will

require interpretation. In addition, the litigation over the eligibility of Alaskan Native Corporations (ANC)

for receiving CRF payments settled in the ANCs’ favor in June 2021. Treasury must make payments to

ANCs from the nearly $533 million of CRF proceeds set aside until a court ruling was made. ANCs will

have a short window to use funds by the December 31, 2021 deadline. We anticipate that eligible use 

questions will arise regarding ANCs’ use of their CRF proceeds. Providing as much clarity as possible over 

allowable uses is essential for ensuring recipients understand the compliance requirements and are

accountable and transparent in how they report uses of funds. My office has received over 200 complaints

regarding recipient, and in some instances sub-recipient, uses of CRF proceeds that require continued 

collaboration between our offices.

As part of my office’s monitoring and oversight function, we established a portal using GrantSolutions10 for

recipients to report their uses of funds on a quarterly basis that started in September 2020. The data received

is reviewed and approved by my office prior to being extracted for display on the Pandemic Response 

Accountability Committee11 (PRAC) website (https://pandemicoversight.gov).12 CAA, 2021 extended the 

covered period for recipients to use CRF payments through December 30, 2021, and now requires funding 

agencies under Division A of the CARES Act to report recipient obligation and expenditure data required

under sections 15010 and 15011 of CARES Act Division B. This transferred the CRF recipient reporting 

responsibility to Treasury. While the responsibility is Treasury’s, we continue to administer the 

GrantSolutions portal under an Economy Act Agreement. As of this writing, my office received and

reviewed recipient data comprised of approximately $139 billion in cumulative obligations and $132 billion

in cumulative expenditures covering the period of March 1, 2020 through June 30, 2021, that was exported

to the PRAC for public display. 

Coronavirus State and Local Fiscal Recovery Funds 

While disbursing CRF payments was an enormous undertaking for the Department, the Coronavirus State 

and Local Fiscal Recovery Funds provisions of ARP require Treasury to disburse another $362 billion to

State, Local, Territorial, and Tribal governments under the Coronavirus State Fiscal Recovery Fund ($219.8 

7 Section 601 (d), Use of Funds, to cover only those costs of the State, Tribal government, or unit of local government that (1) are necessary expenditures incurred

due to the public health emergency with respect to COVID–19; (2) were not accounted for in the budget most recently approved as of the date of enactment of this

section for the State or government; and (3) were incurred during the period that begins on March 1, 2020, and ends on

December 31, 2021, as extended by the CAA, 2021. 8 OIG, Interim Audit Update–Coronavirus Relief Fund Recipient Reporting (OIG-20-036; May 27, 2020). 9 Coronavirus Relief Fund Guidance for State, Territorial, Local, and Tribal Governments Federal Register, Vol. 86, No. 10; January 15, 2021). 10 GrantSolutions is a grant program management Federal Shared service provider under the U.S. Department of Health and Human Services. 11 The PRAC, created within the Council of Inspectors General on Integrity and Efficiency, is comprised of Inspectors General of agencies involved in the

COVID-19 response to include Treasury OIG, Treasury Inspector General for Tax Administration, and the Special Inspector General for Pandemic Recovery

(SIGPR).

12 Of the 939 recipients of CRF payments, 861 recipients meet the threshold for receiving large covered funds of $150,000 or more.
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billion) and the Coronavirus Local Fiscal Recovery Fund ($130.2 billion) (together referred to as SLFRF),

Coronavirus Capital Projects Fund (CCPF)($10 billion), and Local Assistance and Tribal Consistency Fund 

(CTCF) ($2 billion).

To tackle the $350 billion of SLFRF, Treasury established allocation methodologies, and the Interim Final

Rule establishing program requirements to include the uses of funds. Unlike the CRF, recipients may now 

use funds for a variety of needs to include revenue replacement. Treasury has disbursed approximately 

$205 billion as of this writing through non-competitive grants. Administering SLFRF will pose challenges

given the volume of recipients that Treasury must oversee that include all 50 States, U.S. Territories, Tribal

governments, local government recipients with population sizes of 250,000 or more, and approximately 

30,000 non-entitlement units of local governments. Treasury must establish a compliance monitoring

function to ensure recipient compliance with uses of funds requirements, as well as mechanisms to capture 

recipient obligation and expenditure data.

As of September 2021, Treasury developed allocation methodologies and guidance for distributing up to

$10 billion of CCPF as noncompetitive grants to States, U.S. Territories, and Tribal governments, to address

infrastructure challenges, such as reliable internet that low to moderate income and rural communities have 

experienced during the COVID-19 pandemic.13 Treasury also began accepting applications through its 

application submission portal from States and U.S. Territories in September 2021 and plans to open the 

portal to Tribal governments beginning October 2021. Although Treasury has developed CCPF program

requirements and a means to apply for funds, recipient compliance and reporting requirements are still

forthcoming. Treasury will need to develop these requirements expeditiously so that they are incorporated

into the terms and conditions of CCPF grant agreements.

Under the CTCF, Treasury was appropriated an additional $2 billion for fiscal years 2022 and 2023, for

COVID-19 assistance payments to eligible revenue sharing counties and Tribes. Eligibility for counties (to

include parishes and boroughs) is based on poverty rates, household income, land values, unemployment 

rates, and other economic indicators, over a 20-year period ending September 30, 2021. Tribal government 

eligibility is based on economic conditions of each Tribe. Funds under the CTCF may be used for any 

governmental purpose other than lobbying. 

With the overlap of recipients of CRF, SLFRF, CCPF, and CTCF, we expect that there will be confusion 

between the uses of funds requirements, and reporting mechanisms for recipients that may be a challenge

going forward. Given the volume of recipients and varying requirements under these programs, Treasury

will need to ensure that there are sufficient resources for the remaining distribution of funds and ongoing 

monitoring of recipient reporting and compliance with terms and conditions for funds received.

Furthermore, with the level of funding under both CRF and SLFRF, Treasury may now have cognizance 

over many local governments.14

Emergency Rental Assistance and Homeowner Assistance Fund 

To provide assistance to vulnerable households at risk of housing instability, Congress established two

Emergency Rental Assistance (ERA) Programs and a Homeowner’s Assistance Fund (HAF) availing over 

13 https://www.govinfo.gov/content/pkg/FR-2021-05-17/pdf/2021-10283.pdf. 14 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §200.513 Responsibilities .(a)(1) Cognizant agency for

audit responsibilities. A non-federal entity expending more than $50 million a year in federal awards must have a cognizant agency for audit. The designated

cognizant agency for audit must be the federal awarding agency that provides the predominant amount of funding directly (direct funding) (as listed on the

Schedule of expenditures of federal awards, see §200.510(b)) to a non-federal entity unless OMB designates a specific cognizant agency for audit. When the

direct funding represents less than 25 percent of the total expenditures (as direct and subawards) by the non-federal entity, then the federal agency with the

predominant amount of total funding is the designated cognizant agency for audit. (https://www.ecfr.gov/cgibin/retrieveECFR?gp=&SID=e78c6acc3819f56b44027416dc151015&mc=true&n=sp2.1.200.f&r=SUBPART&ty=HTML#se2.1.200_1513).
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$56 billion to households in need. Division N, Title V, Subtitle A, of CAA, 2021, created the initial ERA

Program (ERA1) and ARP created a supplemental ERA Program (ERA2) and HAF.

According to CAA, 2021, Treasury established ERA1 to provide up to $25 billion in assistance to

States (including Washington, DC), US Territories, Tribal governments (with a provision for the 

Department of Hawaiian Home Lands), and units of local government with populations of 200,000 or 

greater. ERA1 funds are to be available for eligible renter households negatively impacted by the COVID19 pandemic to pay for rent, utilities, and other housing-related expenses and arrears. Under ERA1, an

eligible household may receive funds for up to a 12 month period unless the grantee determines an

extension is necessary to ensure housing stability for the household; then funds may be made available for

up to 15 total months. Additionally, ARP extended ERA1 funds’ availability until September 30, 2022. 

Treasury has sent payments of ERA1 funds to government recipients, provided guidance on fund usage, and

set up a Portal where recipients are to report on their spending. 

CAA, 2021 requires that my office conduct monitoring and oversight of the receipt, disbursement, and use 

of ERA1 funds. We will conduct our oversight with audits of Treasury’s (1) establishment and

implementation of the program, (2) payments of funds, and (3) guidance and management over the program. 

We will use the data reported in Treasury’s ERA Portal to inform our monitoring function; thus, it is

imperative that Treasury ensures recipients’ compliance to Treasury ERA guidance when reporting to

Treasury’s ERA Portal. My office is also authorized to require repayment of funds to Treasury when we

determine a recipient failed to comply with ERA1 requirements.

ARP authorized an additional $21.55 billion of ERA funds to remain available until September 30, 2027, 

referred to as ERA2. Similar to ERA1, ERA2 provides funding for eligible renter households’ rent, utilities,

and other housing-related expenses and arrears, but does not include Tribal governments as eligible

grantees. Instead, ERA2 earmarks $2.5 billion specifically for high-need grantees which are eligible

grantees in jurisdictions with a high number of very low-income renter households. ARP designates that an

eligible household may receive ERA for up to 18 total months (this includes ERA1 and ERA2 funding). 

Treasury has provided ERA2 guidance and allocated funds for the state, territory, and local government 

recipients. My office is tasked with oversight of the program and will conduct our ERA2 oversight with a 

similar methodology to our ERA1 oversight. 

ARP also created HAF which authorized $9.961 billion to prevent mortgage delinquencies, defaults, 

foreclosures, loss of utility services, and displacement by covering mortgage-related expenses, utility

expenses, and arrears for homeowners experiencing financial hardship after January 21, 2020. HAF

provides funds for States (including the District of Columbia and Puerto Rico), Tribal governments 

(including the Department of Hawaiian Home Lands), Guam, American Samoa, the U.S. Virgin Islands, and

the Commonwealth of the Northern Mariana Islands. The funds are available until September 30, 2025. 

Treasury has provided guidance to HAF participants and allocated funds for each state and territory

recipient based on homeowner need. ARP mandates that my office provide oversight of the funds which

will include audits of Treasury’s (1) establishment and implementation of the fund, (2) payments of funds, 

and (3) guidance and management over the program. 

Both the ERA programs and HAF require that Treasury provides guidance to supplement the statutes that

created the programs. While Treasury has issued relevant guidance for each of the programs, it is essential

its program offices continue to be responsive to recipients to clarify guidance and to provide insight into the 

eligible uses of the funds Treasury distributed. Clear and timely guidance and responsiveness to recipient

questions are also critical in enabling program recipients to administer their programs and disperse funds to

households in need without delay.
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State Small Business Credit Initiative

The State Small Business Credit Initiative (SSBCI), which was originally created in the Small Business Jobs 

Act of 2010 to increase availability of credit for small businesses, ended in 2017. However, Section 3301 of 

ARP reauthorized SSBCI and provided $10 billion in funding for the program. Under SSBCI, participating

States, U.S. Territories, and Tribal governments may obtain funding for programs that partner with private 

lenders to extend credit to small businesses. Such programs may include those that finance loan loss 

reserves, and those that provide loan insurance, loan guaranties, venture capital funds, and collateral

support. States, U.S. Territories, and Tribal governments who apply for SSBCI must provide Treasury with

plans for using their funding allocations for review and approval and report quarterly and annually on 

results. Treasury will distribute funds in three different tranches over 10 years.

Additionally, ARP modified SSBCI in a number of ways including the following set-asides: (1) $500 

million in allocations to Tribal governments in proportions determined appropriate by the Secretary of the 

Treasury; (2) $1.5 billion in allocation to States, U.S. Territories, and Tribal governments for business 

enterprises owned and controlled by socially and economically-disadvantaged individuals (SEDI); (3) $1 

billion to be allocated as an incentive for States, U.S. Territories, and Tribal governments that demonstrate

robust support for SEDI businesses; (4) $500 million to be allocated to very small businesses with fewer

than 10 employees; and (5) $500 million to provide technical assistance to certain businesses applying for

SSBCI or other state or federal programs that support small businesses.

Primary oversight of the use of SSBCI funds is the responsibility of the participating State, U.S. Territory or 

Tribal government. The participants are responsible for providing Treasury with quarterly assurances that

their programs approved for SSBCI funding are in compliance with program requirements. However, 

Treasury will face challenges in holding participants accountable for the proper use of funds as it has not 

clearly defined the oversight obligations of the States, U.S. Territories, and Tribal governments or specified

minimum standards for determining whether participants have fulfilled their oversight responsibilities. In

the past, Treasury has also not required participating states to collect and review compliance assurances

made by lenders and borrowers or defined what constitutes a material adverse change in a state's financial or 

operational condition that must be reported to Treasury. As a result, Treasury may have difficulty finding 

recipients to be in default of program requirements and holding recipients accountable.

Community Development Investment Programs15

Emergency Capital Investment Program

Authorized under CAA, 2021, Treasury established the Emergency Capital Investment Program (ECIP) to

provide up to $9 billion in capital to low-to-moderate income community financial institutions that support 

small businesses and consumers. Under ECIP, certified community development financial institutions

(CDFI) and minority depository institutions may provide loans, grants, and forbearance for small

businesses, minority-owned businesses, and consumers in communities disproportionately impacted by the 

COVID-19 pandemic. Treasury was to begin accepting applications for investments on January 26, 2021, 

but did not establish initial program application materials and guidance requirements until March 2021. The

application portal opened on March 4, 2021. Since that time, Treasury has experienced challenges in fully

implementing ECIP. In April 2021 Treasury extended the initial application deadline from May 7, 2021 to

July 6, 2021. Then, on July 1, 2021, Treasury had to extend the application window again, pending 

additional guidance. On August 11, 2021, Treasury issued additional guidance and announced an

15 Treasury OIG is required to submit to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing,

and Urban Affairs of the Senate, and the Secretary of the Treasury, not less frequently than 2 times per year, a report relating to the oversight provided

including any recommendations for improvements to the Community Development Investment programs.
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application deadline of September 1, 2021; after which, Treasury plans to begin making investment 

decisions within 120 days. Because of the demands for resources within the Office of Recovery Programs,

Treasury may experience further delays and challenges administering the ECIP.

CDFI Rapid Response Program 

CAA, 2021 also authorized $3 billion to the CDFI Fund to deliver immediate assistance to low-income

communities through competitive grants to CDFIs. The CDFI Rapid Response Program (RRP) was

established to award $1.25 billion in fiscal year 2021. Treasury officials developed application guidance,

leveraging the existing CDFI Fund and Native CDFI programs. In June 2021, Treasury awarded

$1.25 billion to 863 institutions, including 58 CDFIs, which serve Native communities. It will be more

challenging for the CDFI Fund to establish the Emergency Support and Minority Lending Program in fiscal

year 2022 to deliver the remaining $1.75 billion reserved for low- or moderate-income minority

communities. The program introduces a new requirement to make $1.2 billion available for awards to

minority lending institutions. CDFI Fund officials acknowledged that it would take time to develop a 

compliant program. At the same time, the CDFI Fund must monitor the CDFI RRP award recipients for use 

of funds compliance, while administering several other non-pandemic grant programs. 

Accountability and Transparency

Over the past year, Treasury accomplished much in helping to alleviate hardships of families and industry 

sectors to include delivering more than $400 billion of Economic Impact Payments under ARP to workers

and households through the Internal Revenue Service (IRS) and Bureau of the Fiscal Service (Fiscal

Service). Through the IRS, Treasury helps to protect workers and jobs through the Employee Retention Tax

Credit and Payroll Tax Deferral authorized by the CARES Act. Treasury also assisted the Small Business 

Administration in carrying out the Paycheck Protection Program and the Economic Injury Disaster Loans 

authorized by the CARES Act to support payroll, benefits, and other operating costs of small businesses.

Under the Emergency Relief and Taxpayer Protections (commonly referred to as Section 4003), Treasury

was authorized to make loans, loan guarantees, and other investments to eligible businesses, states, and 

municipalities. The Emergency Relief and Taxpayer Protections provisions also authorized the 

establishment of the Special Inspector General for Pandemic Recovery (SIGPR) within Treasury to oversee

loans, loan guarantees, and other investments provided by Treasury. Although some of the aforementioned

CARES Act provisions do not fall under the oversight jurisdiction of my office, the payment work streams

and mechanisms administered by the Fiscal Service do. 

In the context of this overarching challenge, we recognize the breadth and scope of Treasury’s

responsibilities as it impacts programs, operations, and activities regardless of jurisdictional oversight 

boundaries. Along with administering and delivering economic relief, Treasury must manage the 

unprecedented oversight that pandemic relief funding is subject to. In addition to my office’s ongoing work

on pandemic programs, Treasury is subject to a number of additional oversight bodies. As mentioned above, 

SIGPR was created to oversee loans, loan guarantees, and other investments provided by Treasury16 and

must report to congress quarterly on SIGPR’s activities and Treasury’s loan programs. A Congressional 

Oversight Commission was established to report to Congress on Treasury’s and the Federal Reserve

Board’s implementation activities under Title IV, Subtitle A, “Coronavirus Economic Stabilization Act of 

2020.” Moreover, the commission is required to report every 30 days on the use of contractors and

administration of loan programs, the impact of programs on the Nation’s financial wellbeing, whether

required disclosures of the CARES Act provide market transparency, and the effectiveness of maximizing

16 SIGPR terminates five years after enactment of the CARES Act (March 27, 2025).
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benefits and minimizing costs to taxpayers, among other things.17 Furthermore, the Government 

Accountability Office (GAO) has ongoing work evaluating the federal response to the COVID-19 pandemic

and the effects of the pandemic on federal programs and operations. 

Treasury is also accountable for providing transparency over the expenditure of pandemic relief funds. 

Many reporting requirements of sections 15010 and 15011 of the CARES Act were extended under the 

CAA, 2021, PRAC amendments. Most notably, Treasury is responsible for reporting obligations and

expenditures of large covered funds (over $150,000) to the PRAC. While my office continues to collect and

report CRF data to the PRAC under an agreement with the Department as noted above, Treasury is

responsible for reporting expenditures of its other pandemic relief programs. Furthermore, Treasury must 

provide public reports quarterly on the use of funds under its ERA program. The Department must balance

its ongoing response to the financial impacts of the public health emergency with its responsibility to

stakeholders for reporting and transparency.

While the COVID-19 pandemic continues, Treasury must persevere in navigating this challenging time.

Treasury has leveraged its existing workforce, hired contractors, and obtained detailees from other Federal

agencies to address the demands of the new programs created by pandemic legislation. Going forward,

Treasury may experience difficulties in balancing its new responsibilities and workloads while managing

several ongoing challenges as described throughout this memorandum. While I am hopeful that fiscal year

2022 will see an end to the horrific fallout that the COVID-19 pandemic has had on our nation, I am also

mindful that both short-term and long-term challenges lay ahead for both Treasury and my office.

17 The Congressional Oversight Commission issued its fourteenth report on June 30, 2021 (https://coc.senate.gov/sites/default/files/2021-

06/June%20Report%20Final.pdf).
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Challenge 2: Transition of New Administration (New)

As characteristic with incoming Presidential Administrations, the Departmental Offices, and Treasury

bureaus and agencies are challenged with filling and transitioning numerous key senior leadership positions, 

as well as implementing new executive orders and White House initiatives. As of this writing, 17 senior 

leadership positions are vacant including, among others, the Undersecretary for International Affairs, the 

Undersecretary for Terrorism and Financial Intelligence, the Comptroller of the Currency, the General

Counsel, and the Inspector General. Also of note, are Executive Orders (EO) 13985, Advancing Racial

Equity and Support for Underserved Communities Through the Federal Government; 18 EO 13988, 

Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation; 19 EO

14031, Advancing Equity, Justice, and Opportunity for Asian Americans, Native Hawaiians, and Pacific

Islanders’; 20 and EO 14035, Diversity, Equity, Inclusion, and Accessibility in the Federal Workforce.21 EO

13985, establishes policy to pursue a comprehensive approach to advancing equity for all, including people 

of color and others who have been historically underserved, marginalized, and adversely affected by

persistent poverty and inequality. EO 13988, seeks to prevent and combat discrimination on the basis of 

gender identity or sexual orientation, and to fully enforce Title VII and other laws that prohibit 

discrimination on the basis of gender identity or sexual orientation. EO 14031, seeks to address and confront 

racism, xenophobia, and intolerance. To further advance equity within the Federal Government, EO 14035 

establishes policy to cultivate a workforce that draws from the full diversity of the Nation. 

Additionally, the White House introduced EO 14008, Tackling the Climate Crisis at Home and Abroad, to

ensure climate considerations are an essential element of U.S. foreign policy and national security. The

Secretary of State and the Secretary of the Treasury will lead several efforts related to EO 14008 in

coordination with the Special Presidential Envoy for Climate. Furthermore, the White House introduced EO

14030, Climate-Related Financial Risk which aims to: (a) advance consistent, clear, intelligible,

comparable, and accurate disclosure of climate-related financial risk, including both physical and transition

risks; (b) mitigate that risk and its drivers, while accounting for and addressing disparate impacts on 

disadvantaged communities and communities of color and spurring the creation of well-paying jobs; and

(c) achieve the Administration’s target of a net-zero emissions economy by no later than 2050. The

Secretary of the Treasury, as the Chair of the Financial Stability Oversight Council, will lead several efforts

related to EO 14030. 

While Treasury continues transitioning key senior leadership positions and implementing these and other 

new initiatives and programs going into fiscal year 2022, other previously reported uncertainties have yet to

be resolved. In addition to working through the unforeseen challenges presented by the COVID-19 

pandemic discussed in Challenge 1, Treasury must also operate in the repeated cycle of budget and debt 

ceiling stopgaps. As conveyed in prior years’ memoranda, a long-term solution has yet to be found. On

August 2, 2019, the President signed the Bipartisan Budget Act of 2019, which suspended the statutory debt 

limit through July 31, 2021.22 This legislation offered a temporary solution to allow Congress to resolve 

unfinished business when it comes to the Nation’s debt, and address long-term sustainability of large

programs. 

18 Executive Order 13985, Advancing Racial Equity and Support for Underserved Communities Through the Federal Government (January 20, 2021). 19 Executive Order 13988, Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation (January 20, 2021). 20 Executive Order 14031, Advancing Equity, Justice, and Opportunity for Asian Americans, Native Hawaiians, and Pacific Islanders (May 28, 2021). 21 Executive Order 14035, Diversity, Equity, Inclusion, and Accessibility in the Federal Workforce (June 25, 2021).
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On May 5, 2021, Treasury released its Quarterly Refunding Statement which noted that substantial COVID19 related uncertainty about receipts and outlays create difficulty in estimating how long extraordinary 

measures, if invoked, will last. Additionally, although not included as a top open recommendation in its

June 2021 letter to the Department,23 GAO raised concerns to Congress in its July 2015 report 24 with the

approach to managing the federal debt limit and its impact on Treasury’s borrowing costs and the need for

alternative approaches. With that said, Fiscal Service has ongoing communication with the Department,

particularly the Office of Fiscal Projections (OFP). OFP provides Treasury decision‐makers with

information on current and predicted cash balances. As the Federal Government's financial manager, Fiscal

Service plays a unique role in ensuring that OFP has current and accurate federal financial data.

The debt ceiling suspension ended on July 31, 2021, resulting in it being reinstated to $28.4 trillion on

August 1, 2021. As you are aware, Treasury began employing certain extraordinary measures to prevent the 

United States from defaulting on its obligations, as there is still no clear plan for averting default later this

year.25 On July 30, 2021, Treasury suspended sales of securities that help states and municipalities invest 

bond proceeds. On October 12, 2021, as a short-term measure, Congress acted to extend the debt limit by 

$480 billion to $28.9 trillion until early December 2021. With that said, Congress will need to act to raise or 

suspend the limit again to prevent default. 

Dealing with the transition of key senior leadership positions, new initiatives, additional workloads, and

other critical matters such as the budget and debt ceiling stopgaps during the COVID-19 pandemic

continues to be more challenging than usual. The impact of this challenge and the uncertainties require the 

Department to continue to focus its resources on programs that are in the highest need to citizens and/or 

where there is a unique federal role. It is essential that new initiatives, programs, and reforms be managed

and communicated effectively for achieving performance and accountability. 

22 Public Law 116-37 (August 2, 2019). 23 GAO, Priority Open Recommendations: Department of the Treasury (June 16, 2021). 24 GAO, Debt Limit: Market Response to Recent Impasses Underscores Need to Consider Alternative Approaches (GAO-15-476; July 9, 2015). 25 Extraordinary measures have been taken in the past. Specifically, the U.S. debt limit was reinstated at $22 trillion on March 2, 2019. At that time, Treasury

immediately implemented extraordinary measures to prevent the United States from defaulting on its obligations. Measures included (1) suspending State and

Local Government Series securities sales, (2) declaring a “debt issuance suspension period” which suspended additional investments in the Civil Service

Retirement and Disability Fund and Postal Retiree Health Benefits Fund, and (3) suspending investment in the Government Securities Investment Fund of the

Federal Employees’ Retirement System Thrift Savings Plan. In July 2019, Treasury informed Congress that these extraordinary measures would be exhausted

before September 2019.
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Challenge 3: Cyber Threats (Repeat)

Cybersecurity is a long-standing and serious challenge facing the Nation. A reliable critical infrastructure,

including information systems and networks, is vital to our national security and economic stability. Cyber 

threats remain a persistent concern as Treasury’s information systems are critical to the core functions of 

government and the Nation’s financial infrastructure, along with the financial sector it oversees. The cyber

threats continue to evolve and become more sophisticated, subtle, and easier to perform, which poses 

ongoing challenges for Treasury to fortify and safeguard its internal systems and operations while

modernizing and maintaining them. While managing known risks is an ongoing challenge, Treasury must 

also be ready to reinforce and/or redirect cybersecurity efforts when unforeseen events occur such as the 

COVID-19 pandemic and the more recent SolarWinds attack.26

Attackers frequently exploit vulnerable networks or systems in a string of trusted connections to gain access

to government systems. Organized hacking groups leverage published and unpublished vulnerabilities and

vary their methods to make attacks hard to detect and even harder to prevent. Criminal groups and nationstates are constantly seeking to steal information; commit fraud; disrupt, degrade, or deny access to 

information systems; or infiltrate information systems and maintain a presence to enable future actions.

Through cyber information sharing, federal agencies are better prepared to thwart potential attacks to the 

cyber infrastructure of the Federal government and the financial sector that it serves. In its 2021 high risk

list published biennially, again GAO reported the Nations’ cybersecurity as a government-wide issue.27

Long-standing cyber threats pose increased risks to networks and information systems during the ongoing 

COVID-19 global health pandemic as more opportunities are available for bad actors to stage cyber-attacks.

As the tools used to perpetrate cyber-attacks become easier to use and more widespread, less technological

knowledge and fewer resources are needed to launch successful attacks of increasing sophistication. Such

attacks include distributed denial of service, phishing or whaling, fraudulent wire payments, malicious spam

(malspam), ransomware, and compromise of supply chains (both hardware and software). The COVID -19 

pandemic has shifted the federal workforce to a primarily telework status which has provided attackers with

more possibilities to disrupt services. Increased network traffic from remote sources provides cover for

attackers to blend in with the federal workforce and launch cyber assaults. Attackers may take advantage of 

the increased demand for information on COVID-19 by crafting highly attractive phishing, whaling, and

malspam attacks that are more likely to succeed by luring workers in with promises of information related

to COVID-19. These opportunities may allow hackers to launch a denial of service attack upon a network

that can prevent remote workers from performing their duties and disrupt operations. Furthermore,

information systems and its users are at heightened risk of COVID-19 related exploitation such as stimulus

check scams, tax-fraud schemes, and fraudulent coronavirus testing kit scams, among other things. 

There is continuing concern over foreign adversaries creating and exploiting vulnerabilities in the Nation’s 

supply chain for information and communication technology and services as evidenced by the SolarWinds 

attack that affected many federal agencies and private sector companies. Executive Order 13873, Securing 

the Information and Communications Technology and Services Supply Chain, was issued on May 15, 2019, 

to secure the supply technology and services chain by banning the import, use, or sale of technology or 

services designed, developed, manufactured, or supplied from persons or companies that are owned or 

26 The SolarWinds attack, reported in December 2020, was a supply chain attack that used the update mechanism for legitimate software to distribute malicious

software.

27 GAO, High-Risk Series, Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas

(GAO-21-119SP: March 2020).
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controlled by governments defined as hostile to the United States.28 On May 11, 2021, this Executive Order

was extended again for 1 year.29 There are risks that Treasury’s systems and resources already in use,

including critical infrastructure, contain components from sources that have yet to be designated as threats.

Once a source is designated as such, repairs and/or upgrades of key system components may no longer be 

available. Therefore, there is risk of disruption of critical operations. The Department will need to monitor 

developments in this area closely and plan for the possibility that its current supply chain may no longer be 

available. Furthermore, Executive Order 14028, Improving the Nation’s Cybersecurity, issued on May 12, 

2021, calls for federal agencies to update existing plans to prioritize resources for adoption and use of cloud 

technology and to adopt a zero-trust architecture, 30 among other things. In response to our prior year

memorandum, Treasury reported that Fiscal Service continues to modify current contracts to include clauses

in support of Executive Order 13873, by requiring all solicitations to adhere to Treasury’s security

requirements and leveraging the Federal Risk and Authorization Management Program31 to accelerate the 

authorization of cloud-based systems and services. Treasury needs to prioritize cloud adoption and zerotrust architecture among its other component bureaus and offices. As mentioned above, Treasury

management must be mindful that the efforts to secure Treasury’s supply chain may hamper cloud adoption 

and the implementation of zero-trust architecture.

We continue to remind the Department that, in addition to Treasury’s own networks and systems,

management must be cognizant of, and mitigate, the risks posed by attacks made against other federal and

non-federal agencies and Treasury contractors and subcontractors. Increased threats and risks posed to thirdparties’ networks and systems due to the opportunities that extended telework provides to potential attackers

also poses increased risks to Treasury’s networks and systems. Treasury frequently enters into

interconnection agreements with other federal, state, and local agencies, and service providers to conduct its

business. Management must exercise due care when authorizing such internetwork connections and verify

that third parties comply with federal policies and standards including any guidance issued to address new

and/or expanded threats and risks. Management is also challenged with ensuring that critical data and

information maintained by third-party cloud service providers are properly protected. There have been

ongoing issues related to management of cloud systems reported in four consecutive Federal Information 

Security Modernization Act of 2014 32 audits (fiscal years 2015, 2016, 2017, and 2018) with some 

recommendations not implemented by the fiscal years 2019 and 2020 audits. 

Treasury is looked upon to provide effective leadership to financial institutions in particular, and the 

financial sector in general, to strengthen awareness and preparedness against cyber threats to the Nation’s 

critical infrastructure. As such, effective public-private coordination is essential to the Nation’s financial

and national security. In this regard, The Office of Critical Infrastructure Protection and Compliance Policy

coordinates Treasury’s efforts to enhance the security and resilience of the financial services sector critical

infrastructure and reduce operational risk including risks associated with cybersecurity. Given the stress that

the global COVID-19 pandemic continues to place on financial institutions and the financial sector as a 

whole, it is important that the Department monitors cyber risks in these areas. That said, Treasury and other 

federal agencies have yet to fully implement the National Institute of Standards and Technology (NIST)

guidance to assist federal agencies in managing cybersecurity risks.33 In 2018, GAO had reported that the 

28 Executive Order 13873, Securing the Information and Communications Technology and Services Supply Chain

(May 15, 2019). 29 Notice on the Continuation of the National Emergency with Respect to Securing the Information and Communications Technology and Services Supply Chain

(May 11, 2021). 30 Zero-trust architecture is a method of designing a system in which all actions are presumed dangerous until reasonably proven otherwise, thereby reducing the

chance of a successful attack causing further damage. 31 The Federal Risk and Authorization Management Program is a government-wide program that provides a standardized approach to security assessment,

authorization, and continuous monitoring for cloud products and services. 32 Public Law 113-283 (December 18, 2014). 33 NIST, Framework for Improving Critical Infrastructure Cybersecurity (Version 1.0, February 12, 2014; superseded by Version 1.1; April 16, 2018).
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extent of adoption of the NIST framework by critical infrastructure sectors was unknown since agencies

were not measuring framework implementation. With respect to Treasury, GAO had recommended that

steps be taken to consult with respective sector partners to develop methods for determining the level and

type of adoption by entities across the financial services sector. In its June 16, 2021 letter34 regarding its top 

open recommendations, GAO noted that Treasury had established ongoing initiatives such as developing 

common terminology for cyber terms, but had not developed methods to determine the level and type of 

framework adoption; the recommendation remained open. GAO acknowledged that Treasury had developed 

a cybersecurity risk management strategy, which included key elements identified in federal guidance and

established a process for conducting an organization-wide cybersecurity risk assessment.

The Department continues to report progress in its risk-based approach to cybersecurity by establishing the 

Enterprise Cyber Risk Management program to manage vulnerabilities and threats that can cause disruption 

in the delivery of services. In response to our prior year memorandum, the Department reported that it

created a centralized Risk Reporting Analytical Cybersecurity System, and developed the Supply Chain

Risk Management program for cybersecurity in fiscal year 2020. Treasury also reported prior progress in

risk management by identifying High Value Assets,35 and examining the security architectures of systems

and performing risk and vulnerability assessments. While addressing increases in cyber threats during the 

COVID-19 global pandemic, Treasury will need to continue to balance cybersecurity demands while

modernizing and maintaining Information Technology (IT) systems. To this end, Treasury must ensure that

cyber security is fully integrated into its IT investment decisions as discussed in challenge 6. 

34 GAO, Treasury Priority Recommendations (GAO-21-549PR; June 16, 2021) 35 High Value Assets are assets, information systems information, and data for which an unauthorized access, use, disclosure, disruption, modification, or

destruction could cause a significant impact to the U S.’ national security interests, foreign relations, economy, or to the public confidence, civil liberties, or public

health and safety.
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Challenge 4: Anti-Money Laundering/Terrorist Financing and Bank Secrecy Act

Enforcement (Repeat)

Over the past year, the Office of Terrorism and Financial Intelligence (TFI) has remained dedicated to

countering the ability of financial networks that support terrorists, organized transnational crime, weapons 

of mass destruction proliferators, and other threats to international security through intelligence analysis,

sanctions, and international private-sector cooperation. As previously reported, identifying, disrupting, and

dismantling the financial networks that support rogue regimes, terrorist organizations, transnational criminal

organizations, and other threats to the national security of the United States and our allies continues to be 

challenging as TFI’s role to counter these financial networks and threats has grown because its economic

authorities are key tools to carry out U.S. policy. Additionally, criminals and other bad actors evolve and

continue to develop more sophisticated money laundering methods in an attempt to avoid detection. 

TFI’s authorities are key tools in implementing U.S. policy to pressure foreign countries and regimes, such

as Russia, through the use of designations and economic sanctions. TFI has significantly increased sanctions 

against Russia related to malign activities and human rights violations. TFI’s counter-terrorism designations 

disrupt the financial networks that support terrorist organizations. Disrupting terrorist financing depends on 

a whole-of-government approach and requires collaboration and coordination within Treasury and with 

other federal agencies. Collaboration and coordination are key to successfully identifying and disrupting all

of these financial networks and meeting TFI’s mission. This effort requires effective and efficient working 

relationships among components within TFI and the Intelligence Community. In an effort to effectively

implement U.S. policy and disrupt these financial networks, officials stated that TFI is moving towards a 

more collaborative approach to achieve its mission. Given the criticality of Treasury’s mission and its role

to carry out U.S. policy, we continue to consider anti-money laundering and combating terrorist financing 

programs and operations as inherently high-risk.

Data security and information sharing are challenges for the Financial Crimes Enforcement Network

(FinCEN), which has experienced unauthorized disclosures of Bank Secrecy Act information. FinCEN is

required to maintain a highly secure database for financial institutions to report suspicious activity. FinCEN

has previously identified that the success of that system depends on the financial sector’s confidence that

those reports are adequately protected, but data breaches threaten to undermine that confidence. FinCEN is

also required to maintain a government-wide data access service to make information available and useful 

to federal, state, local, and foreign law enforcement agencies and appropriate regulators and to support 

intelligence and counterintelligence activities and anti-money laundering initiatives. The challenge for 

FinCEN is to ensure the Bank Secrecy Act data remains secure in order to maintain the confidence of the 

financial sector while meeting the access needs of law enforcement, regulatory, and intelligence partners. 
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Challenge 5: Efforts to Promote Spending Transparency and to Prevent and Detect

Improper Payments (Repeat)

Given the broad implications and critical roles assigned to Treasury by the Digital Accountability and

Transparency Act of 2014 (DATA Act), we note the renewed challenges facing the Department given the 

need to ensure transparency to the taxpayer and other stakeholders on the use of funds distributed under 

economic relief packages enacted to address individuals and industry sectors impacted by the COVID-19 

global pandemic. As noted in Challenge 1, over the past year, Treasury delivered more than $400 billion of 

Economic Impact Payments under ARP to workers and households through IRS and Fiscal Service.

Treasury is also accountable for providing transparency over the expenditure of pandemic relief funds. 

DATA Act reporting is seen as one of the means to ensure transparency into the use of federal funds related

to COVID-19 expenditures. In it April 2020 memorandum, Implementation Guidance for Supplemental 

Funding Provided in Response to the Coronavirus Disease 2019 (COVID-19)36 the Office of Management

and Budget (OMB) requires that agencies leverage existing financial accountability and transparency

mechanisms. In part, OMB requires (1) tracking of COVID-19 expenditures with usage of a Disaster

Emergency Fund Code; (2) reporting financial assistance recipient information within two weeks of 

issuance, with the exception of loans; and (3) reporting outlay information at the financial award transaction

level. As discussed in Challenge 1, many reporting requirements of sections 15010 and 15011 of the 

CARES Act were extended under the CAA, 2021, PRAC amendments. Furthermore, Treasury must provide 

public reports quarterly on the use of funds under its Emergency Rental Assistance program, among others. 

With that said, the Department must balance its ongoing response to the financial impacts of the public 

health emergency with its responsibility to respond to oversight bodies and stakeholders. 

36 OMB M-20-21, Implementation Guidance for Supplemental Funding Provided in Response to the Coronavirus Disease 2019 (April 10, 2020).
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To further enhance transparency, Treasury has devoted significant resources and leveraged existing

financial reporting systems to promote spending transparency and use of federal financial data in order to

strengthen Government-wide decision-making. Treasury has also shifted from quarterly to monthly 

reporting and certification of data beginning with the period ending June 2020, and has added a program

activity attribute beginning with the first quarter of fiscal year 2021. The speed in which supplemental 

funding was distributed created new data management needs for Treasury along with labor intensive 

ingestion of data associated with the application for, and issuance of, economic relief. The rapid delivery of 

funds within short timeframes may create opportunities and risks for illicit activity by anyone attempting to

misuse or abuse funds that were intended for COVID-19 relief. Considering the challenges and risks

associated with ensuring economic relief is deployed and used for intended purposes, Treasury should 

continue to address reporting and data quality issues noted in DATA Act audits and intensify efforts to

reduce improper payments.

Given the data-centric aspects of the Foundations for Evidence-Based Policymaking Act of 2018 37

(Evidence Act), it is critical that data is of high quality to be useful. In accordance with the Evidence Act

and OMB’s M-19-23,38 the Department is implementing Government-wide reforms for making data

accessible and useful for decision-making. Under Title I of the Evidence Act, also known as Federal

Evidence Building Activities, federal agencies, among other things, must submit annually to Congress and

OMB, an evidence-building plan for identifying and addressing policy questions relevant to programs, 

policies, and regulations. Under Title II of the Evidence Act, also known as the Open, Public, Electronic,

and Necessary Government Data Act or the “OPEN Government Data Act,” Federal agencies must develop 

a strategic information resources management plan that includes, among other things, an open data plan that

requires agencies to develop processes and procedures making data collection mechanisms created on or 

after enactment available in an open format. The strategic information resources management plan and open 

data plan must be updated annually and made publicly available on agency websites. Federal agencies must 

also develop and maintain a data inventory to be included in the Federal Data Catalog39 (www.Data.gov) 

developed and maintained by the General Services Administration.

37 Public Law 115-435; (January 14, 2019). 38 OMB M-19-23, Phase 1 Implementation of the Foundations for Evidence-Based Policymaking Act of 2018: Learning Agendas, Personnel, and Planning

Guidance.

39 A single public interface on-line as a point of entry for sharing data assets with the public.
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Since the law was enacted, Treasury leveraged the Department-wide Strategic Objective Annual Review

that the Office of Strategic Planning and Performance Improvement leads to collaboratively identify a 

preliminary set of research questions as a primary means of gathering relevant policy questions for each of 

the Department’s strategic objectives. Treasury has worked with Treasury’s Federally Funded Research

Development Center40 to identify existing research efforts that align closely with the Department’s research

priorities. Under Phase 1 of its implementation efforts, Treasury’s Assistant Secretary for Management 

established an Office of the Chief Data Officer and appointed an interim Chief Data Officer and interim

Deputy Chief Data Officer. The Chief Data Officer’s goals are to ensure data is used as a strategic asset,

increase use of data in decision-making and evidence building, and increase coordination of data collection

and use. Prior to the enactment of the Evidence Act, Treasury had already started developing a data

governance framework in alignment with Evidence Act Title II requirements. At that time, Treasury’s

Deputy Chief Financial Officer began a Data Governance and Analytics project designed to identify a data

governance structure, develop standards, and increase the department’s analytic capabilities through 

infrastructure and visualization improvements. Since that time, the Executive Steering Committee, which

includes the Deputy Chief Financial Officer, Chief Information Officer (CIO), and the Office of Strategic

Planning and Performance Improvement, was expanded to include Treasury’s designated Statistical Official

and the Deputy Assistant Secretary for Privacy, Transparency, and Records. Currently, this group is

developing recommendations for the mission and goals of the Data Governance Body, along with

recommendations for initial broader membership. 

Detect Improper Payments

In light of the continuing government-wide problem with improper payments (estimated at $206.4 billion or 

3 percent of all program outlays for fiscal year 2020),41 the federal agencies intensified efforts to reduce

improper payments in major federal programs. The Do Not Pay (DNP) Initiative and Fiscal Service’s DNP

Business Center are chief components of efforts designed to prevent and detect improper payments to

individuals and entities.

The DNP Business Center is comprised of the DNP Portal and the Data Analytics Services. The DNP Portal

is intended to provide users with a single entry point to search data sources such as the Social Security

Administration’s (SSA) publicly available Death Master File, the Department of Health and Human Service

Office of Inspector General’s List of Excluded Individuals/Entities, the General Services Administration’s

System for Award Management, and Treasury’s Debt Check Database. However, as we reported in

November 2014, the effectiveness of the DNP Business Center as a tool to prevent and detect improper 

payments is hindered because the center does not have access to, among other things, SSA’s full death

data.42 Since our May 2016 report, that challenge continues to exist in obtaining better death information.43

In October 2016, GAO reported that restrictions on the center’s access to SSA’s full death data remained in

place.44 In June 2020, GAO issued its initial report examining key actions the Federal Government has

taken to address the COVID-19 pandemic and evolving lessons learned relevant to the Nation’s response to

the pandemic. In its report, GAO recommended that Congress take legislative action to provide Treasury

with access to the SSA’s full set of death records, and require that Treasury use it, to help reduce improper 

payments.45 Subsequently, the DNP Business Center received temporary access to SSA’s full death data to

support Economic Impact Payment screening for deceased individuals. 

40 Federally Funded Research and Development Centers are unique organizations that assist the Federal Government with scientific research and analysis, among

other things. Treasury engaged MITRE Corporation as the agency’s Federally Funded Research Development Center.
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In response to the Federal Improper Payments Coordination Act of 2015,

46 Fiscal Service entered into

agreements with the Department of Defense and the Department of State in 2016 to incorporate death data

collected by these agencies into the DNP Business Center Working System, which began receiving data in

September 2017. In November 2017, OMB designated six additional databases for inclusion in the DNP

Business Center Working System to help agencies address a broader range of improper payments beyond 

what can be detected through DNP Business Center's previously existing data sources.47 Moreover, in May

2021, OMB designated 12 additional databases for inclusion in the DNP Business Center Working 

System.48 There have also been legislative proposals in January 2017, February 2017, February 2018, and

May 2019 to obtain authorization to use both the SSA's full death file as well as the National Directory of 

New Hires.49 Furthermore, Fiscal Service included legislative proposals in its fiscal year 2021 budget 

justification that included, among other things, that Treasury is granted access to SSA’s full Death Master

File for purposes of administering the DNP Business Center and preventing, identifying, and recovering

improper payments for federal agencies and federally funded state programs. In December 2020, CAA,

2021 authorized the DNP Business Center access to SSA’s full death data for a 3-year period beginning in

December 2023. Given that the access is only temporary, Fiscal Service will continue encouraging Congress 

to renew the temporary access or provide permanent access. 

In addition to the Do Not Pay Portal, the DNP Data Analytics Service supports agencies’ efforts to identify

and prevent improper payments. The DNP Data Analytics Service identifies trends and patterns in agency

payment and other information that may be indicative of improper payments. The results of these analyses

are provided to agencies at no cost for further study so they can prevent future improper payments. We

assessed the services provided to agencies by the DNP Data Analytics Service and found that performance

metrics developed by Fiscal Service to measure the effectiveness of the DNP Data Analytics Service need to

be strengthened.50 

Altogether, the DNP Business Center works to identify and prevent improper payments in federally funded 

programs by providing access to relevant data and analytic services. Fiscal Service plans to leverage the 

DNP Initiative to assist programs making certain pandemic payments in the identification and prevention of 

improper payments and will continue to seek additional ways to improve improper payment prevention and

detection. In this regard, the DNP Business Center has worked with Federal Communications Commission,

41 National Aeronautics and Space Administration OIG, NASA’s Compliance with the Payment Integrity Information Act of Fiscal Year 2020 (IG-21-020; May 18,

2021), percentage based on total Government outlays of 6.6 billion (https://www.fiscal.treasury.gov/files/reports-statements/mts/mts0920.pdf). 42 OIG, Fiscal Service Successfully Established the Do Not Pay Business Center But Challenges Remain

(OIG-15-006; November 6, 2014). 43 OIG, Fiscal Service Faces Challenges in Obtaining Better Death Information for the Do Not Pay Business

Center, but Alternatives Exist (OIG-16-042; May 18, 2016). 44 GAO, Improper Payments, Strategy and Additional Actions Needed to Help Ensure Agencies Use the Do Not Pay Working System as Intended (GAO-17-15;

October 14, 2016). 45 GAO, COVID-19: Opportunities to Improve Federal Response and Recovery Efforts (GAO-20-625; June 25, 2020). 46 Public Law 114-109 (December 18, 2015). 47 The following databases were added: (1) Treasury’s Office of Foreign Assets Control’s Specially Designated National list, (2) the General Services

Administration’s System for Award Management, (3) the IRS’ Automatic Revocation of Exemption List, (4) the IRS’ Exempt Organizations Select Check, (5) the

IRS’ e-Postcard database, and (6) commercial database American InfoSource Deceased Data. 48 The following databases were added: (1) the United States Postal Service Delivery Sequence File, (2) the Census Bureau Federal Audit Clearinghouse, (3) the

DNP Agency Adjudication Data, (4) Fiscal Service’s Payments, Claims, and Enhanced Reconciliation database, (5) Bureau of Prisons Incarceration Data,

(6) DATA Act data, (7) Census Bureau’s American Communities Survey Annual State and County Data Profiles, (8) Veterans Affairs’ Beneficiary Identification

Records Locator Service, (9) Department of Agriculture’s National Disqualified List, (10) Center for Medicare and Medicaid Services National Plan and Provider

Enumeration System, (11) IRS Statistics of Income Annual Individual Income Tax ZIP Code Data, and (12) the U.S. Securities and Exchange Commission’s

Electronic Data Gathering, Analysis, and Retrieval System. 49 The National Directory of New Hires is a national database of wage and employment information operated by the Federal Office of Child Support Enforcement.

The Federal Office of Child Support Enforcement uses the National Directory of New Hires primarily to assist states administering programs that improve States’

abilities to locate parents, establish paternity, and collect child support. The information in this database is only available to authorized persons or entities for

authorized purposes. 50 OIG, Performance Metric Policy Needed for the Fiscal Service Do Not Pay Business Center’s Data Analytics Services (OIG-20-025; January 28, 2020).
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the IRS, the Small Business Administration, and the Small Business Administration’s Office of Inspector 

General to match certain pandemic payments against DNP’s data sets to help prevent and identify improper 

payments. Fiscal Service also meets regularly with the PRAC, GAO, and other stakeholders to obtain 

feedback about COVID-19 spending data to ensure that the data is available for oversight entities.

With its potential to reduce improper payments, the DNP Business Center is a major and important 

undertaking by Treasury and critical to ensuring COVID-19 economic support funds are properly spent. As

part of our ongoing audit work in this area, we will continue to monitor the steps taken by Fiscal Service to

improve the effectiveness of the DNP Business Center.

Challenge 6: Information Technology Acquisition and Project Management (Repeat) 

The Federal Information Technology Acquisition Reform Act (FITARA), enacted in December 2014, was

the first major overhaul of federal IT management since the passage of the Clinger-Cohen Act of 1996 51

which was designed to improve the Federal Government’s acquisition and management of its resources to

include IT investment. Among other things, it expanded the involvement of CIOs of federal agencies in IT

decision making, including annual and multi-year planning, programming, budgeting, execution, reporting, 

management, governance, and oversight functions.52 FITARA is intended to improve how federal agencies

acquire and manage IT, as well as enable Congress to monitor progress and hold federal agencies

accountable for reducing duplication and achieving cost savings. FITARA includes specific requirements 

related to seven areas: (1) the federal data center consolidation initiative, (2) enhanced transparency and

improved risk management, (3) agency CIO authority enhancements, (4) portfolio review, (5) expansion of 

training and use of IT acquisition cadres, (6) government-wide software purchasing, and (7) maximizing the 

benefit of the federal strategic sourcing initiative. 

While FITARA is intended for agencies to better manage their IT investments, implementation continues to

be a government-wide challenge. Since February 2015, GAO has included the management of IT

acquisitions and operations on its high-risk list as cost overruns and schedule delays impact mission related

outcomes government-wide.53 In its March 2021 high risk report, GAO acknowledged that the Federal

Government has undertaken numerous initiatives to better manage the more than $90 billion that is invested

annually in IT. However, GAO reported that more needed to be done to improve overall management of IT

acquisitions and operations. In general, federal agencies had not (1) modified their practices to fully address

the role of the CIO, (2) documented modernization plans or included key best practice elements in the plans, 

(3) taken further action to reduce duplicative IT contracts, and (4) implemented the remaining 400 open 

recommendations related to management of IT acquisitions and operations. For example, 21 of the 24 major

federal agencies, still have not implemented IT management policies that fully addressed the role of their

CIOs consistent with federal laws and OMB’s FITARA guidance. The guidance covers, among other things, 

enhancing the authority of federal CIOs and ensuring that program staff have the necessary knowledge and

skills to effectively acquire IT. In addition, progress in establishing key IT workforce planning processes is

also lacking. GAO also noted that the General Service Administration and OMB had fewer funds available

than anticipated to award to new projects for replacing aging IT systems.54 Furthermore, GAO

51 Public Law 104-106 (February 10, 1996). 52 Public Law 113-291 (December 19, 2014). 53 GAO, High- Risk Series, An Update (GAO-15-290; February 11, 2015). 54 GAO, High-Risk Series, Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas (GAO-21-119SP: March 2020).
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recommended that, in general, agencies needed to improve CIOs’ authorities, enhance transparency and

improve risk management of IT investments, and consolidate federal data centers.55 

The House Oversight and Reform Committee worked with GAO to develop a scorecard to assess federal

agencies’ efforts in implementing FITARA by assigning a grade from A to F based on self-reported data at

the agency level. Agencies are scored on areas of CIO authority enhancements, transparency and risk

management, portfolio review, data optimization, software licensing, and modernizing government 

technology. Since the first scorecard was issued in November 2015, Treasury’s overall FITARA score has

wavered between a D- and a B. More recently, in December 2020, Treasury received a B for its FITARA

implementation efforts, and remained a B in July 2021. Areas needing most improvement were enhanced

transparency and risk management (i.e. IT investment risk), improved cybersecurity, and agency CIO

authority enhancements. Furthermore, the FITARA Enhancement Act of 201756 extended the sunset date for

full implementation of the data center optimization requirements of FITARA from October 1, 2018 to

October 1, 2020. As reported in the December 2020 scorecard, Treasury scored an A in this area after

meeting its remaining targets, including virtualization and advanced energy metering.

In fiscal year 2021, Treasury reported approximately $2 billion in non-IRS IT investment, which is expected

to increase in fiscal year 2022. Given this sizable investment, we are reporting the Department’s IT

acquisition and project management as an ongoing management and performance challenge distinct from

challenge 3 that addresses cybersecurity concerns. Treasury’s non-IRS bureaus reported 23 major IT

investments. Treasury’s CIO assessed 19 IT investments as having moderately low or low risk to

accomplishing their goals. One project, Pay.gov, did not include a ranking. The remaining three IT

investments, which reside at Fiscal Service, were assessed as having medium risk57 to accomplishing their

goals:

• Electronic Federal Tax Payment System,58

• Post Payment Services, and

• Wholesale Securities Services (WSS).

During fiscal year 2021, some projects within the Electronic Federal Tax Payment System, WSS and Post 

Payment Services, specifically the Payment Information View of Transactions (PIVOT) were behind 

schedule and over budget. Although projects identified with medium overall risk in cost and scheduling 

require special attention from the highest level of agency management, they are not necessarily at risk for

failure. We plan to initiate an audit of these IT acquisitions. Overall, 82 percent of Treasury’s total IT

projects were on schedule and 58 percent were within budget. During fiscal year 2021, Treasury spent 36 

percent of its total IT spending on 42 major investments. A major WSS investment includes the Treasury

Automated Auction Processing System (TAAPS), used by Fiscal Service for the announcement, auction,

and issuance of marketable Treasury bills, notes, bonds, Treasury inflation-protected securities, and floating

rate notes. In fiscal year 2017, Fiscal Service started a multi-year project to modernize the TAAPS

application software and associated technology components to ensure that critical auction processes

continue to work flawlessly, remain secure, and operate without service disruptions. However, in January 

2020, Fiscal Service terminated its TAAPS application software project due to contractor delays and other 

55 GAO, High-Risk Series, Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas

(GAO-21-119SP: March 2021). 56 Public Law 115-88 (November 21, 2017). 57 IT Dashboard, “the Agency CIO rates each investment based on his/her judgment using a set of pre-established criteria. As a rule the evaluation should reflect

the CIO’s assessment of risk and the investment’s ability to accomplish goals.” Evaluation ratings are based on a five-point risk scale as follows: 5=low risk, 4=

moderately low risk, 3= medium risk, 2= moderately high risk, and 1=high risk. 58 Renamed Tax Collections Services in fiscal year 2021.
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challenges involving (1) application code quality issues; (2) project leadership that did not include sufficient

IT support; and (3) governance bodies relying on representations that the project was succeeding, despite

some warning signs. It was not until third party reviews were conducted that the full extent of the project’s

challenges became clear. In fiscal year 2021, Fiscal Service will complete the Financing Modernization 

Discovery Phase to determine which approach to take to move forward with the Financing Modernization 

effort. Financing Modernization is a multi-year program dedicated to creating a modernized financing

operations system, which will align with Treasury's strategic priorities and long-term business requirements.

An ongoing initiative to manage and monitor IT investments includes the government-wide adoption of the 

Technology Business Management (TBM) framework as reported in the fiscal year 2018 President’s

Management Agenda: Modernizing Government for the 21st Century (March 20, 2018). The goal is to

improve outcomes through federal IT spending transparency with the adoption of TBM government-wide

by fiscal year 2022. TBM is expected to improve IT spending data accountability and transparency,

empowering agency executive suite leadership from across the enterprise to drive mission value and

improve customer experience through technology. The TBM framework consists of layers that represent

different views into IT costs and performance, enabling greater transparency into the true cost of IT and its

value to the business. Fiscal Service’s financial community was trained on TBM and has reduced

uncategorized IT spending, or spending that is not categorized into standard IT buckets, by 60 percent. In

early fiscal year 2021, Fiscal Service expects to see further reductions in IT portfolio spending. 

Non-IT related acquisitions also require attention to ensure timely delivery and minimization of cost

overruns for achieving cost savings. The Program Management Improvement Accountability Act of 2015, 

P.L. 114-264, was intended to improve program and project management practices across the Federal

Government. Similar to IT projects, other major acquisitions need to be monitored so that the project goals 

are met in a timely manner and costs are not allowed to significantly exceed established budgets. 

The Bureau of Engraving and Printing (BEP) project to replace its Washington, DC facility with a new 

facility is estimated to cost $1.25 billion. BEP is conducting a suitability assessment of the parcel of land

transferred from U.S. Department of Agriculture to Treasury in Beltsville, Maryland with the support from

the U.S. Army Corps of Engineers for the design review, construction, and contract administration for the 

new facility. In fiscal year 2021, BEP has initiated early site development construction activities estimated

at $34 million and is challenged with several issues including potential ecological, water, public health and

safety, traffic and other effects associated with the proposed construction. Until the estimated completion of 

the facility in 2025, BEP will need to ensure it employs effective project oversight for preparation of the 

land, construction of the building, purchase of equipment and machinery, and employment of a workforce to

produce the new family of secure notes and maintain confidence in U.S. currency.
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Other Matters of Concern

Although we are not reporting these as management and performance challenges, we are highlighting three

areas of concern: (1) coin redemption, (2) managerial cost accounting, and (3) internal control at BEP. 

Coin Redemption 

As reported in prior years, the United States Mint (Mint) continues to address internal control issues to

ensure the integrity of U.S. coinage in its coin redemption program. The Mint has since made progress

in addressing the risk of accepting genuine coins through its redemption program with such actions as

considering the establishment of limited quantities accepted into the program, scrutinizing the sources of 

the coins, and enhancing its examination of coins being accepted into the program. As the Mint finalizes

policies and procedures and recommences its program, we will continue to monitor the implementation

of these controls to ensure they are sufficient to properly safeguard U.S. coinage.

Managerial Cost Accounting 

Managerial cost accounting continues to be a fundamental part of a financial performance management

system. It involves the accumulation and analysis of financial and nonfinancial data, resulting in the 

allocation of costs to organizational pursuits, such as performance goals, programs, activities, and

outputs. We have reported concerns that were identified in our audit of the Departmental Offices’ Office

of Budget and Travel (OBT) controls over its overhead59 process and compliance with the Economy 

Act.60 Specifically, we identified internal control weaknesses within OBT’s overhead process and

composite methodology used during fiscal years 2015 through 2018 to charge reimbursable customers. 

That is, OBT’s methodology to accumulate, allocate, and charge overhead costs to reimbursable 

customers was not appropriate and consistently followed and the salaries and expenses directly charged

to reimbursable customers through the composite methodology lacked adequate support. Therefore, we

also concluded that OBT violated the Economy Act and potentially augmented its fiscal year 2015 

appropriation by recovering indirect costs in excess of actual costs from reimbursable customers. These

concerns, in turn, could also potentially be violations of the Anti-deficiency Act. 

In response to our concerns, OBT management implemented a new overhead process beginning with

fiscal year 2019 and subsequently hired a consultant to review and improve the process. After

implementing a new process, OBT management made further changes to the overhead process for fiscal

year 2020. Additionally, based on the consultant’s recent report, OBT management implemented a 

number of the consultant’s recommendations to improve the process going forward, which we plan to

review during our ongoing audit. 

59 Overhead, also known as indirect costs, include items that are commonly recognized as elements of cost that may not have resulted in direct expenditures

related to a product, activity, or project. It covers the cost of administrative expenses associated with financial management, human resources, information

technology, general counsel and other support costs that are allocated to products, activities, or projects based on an established methodology. 60 Public Law 73-2 (March 20, 1933).
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Internal Control Issues at BEP

Internal control is a process put in place by management to safeguard assets, promote accountability, 

and increase efficiency and effectiveness of operations. It helps an entity report reliable information 

about its operations and comply with applicable laws and regulations. The fiscal year 2020 BEP

financial statement audit identified 12 deficiencies in internal control.61 Although the number of 

deficiencies in internal control identified decreased from 22 in fiscal year 2019 to 12 in fiscal year 2020, 

three of the deficiencies were collectively reported as a significant deficiency related to information

technology controls. The remaining nine deficiencies related to journal entries; financial reporting; 

inventory; and property, plant, and equipment were reported in a management letter.62 Six of the prior 

year’s deficiencies were re-issued in fiscal year 2020. While we are reporting this as a concern, it should 

be noted that as part of the fiscal year 2020 financial statement audit, the independent auditors issued an

unmodified opinion on the effectiveness of BEP’s internal controls over financial reporting. 

The control issues identified continue to be attributed to resource constraints, employee turnover, and

increased workloads for key accounting personnel. BEP continues its efforts to address the deficiencies

noted during the audits and has hired external contractors to assist with the remediation of the 

deficiencies, provide financial support services, and to assist with conducting internal control reviews in

accordance with OMB Circular A-123. In addition, BEP has hired additional personnel in key positions 

responsible for the issues noted. My office will continue to monitor BEP’s progress in strengthening its

financial management and reporting process. 

As another matter, my office has an ongoing corrective action verification of recommendations related

to a 2013 audit report that identified numerous deficiencies in BEP’s contracting practices.63 While this

verification is nearing completion, we noted that contract file management continued to be a systemic

issue at BEP as evidenced by our follow-up work and other third-party assessments of BEP’s

acquisitions program conducted from December 2014 through March 2018. We expect to issue our 

verification audit in early fiscal year 2022. Given our concerns, we initiated an audit of BEP’s transition

from hard copy contract files to an electronic filing system beginning in fiscal year 2016 and plan to

issue an audit report in fiscal year 2022. 

 

61 OIG, Audit of the Bureau of Engraving and Printing’s Financial Statements for Fiscal Years 2020 and 2019 (OIG-21-022; February 12, 2021). 62 OIG, Management Letter for the Audit of the Bureau of Engraving and Printing’s Financial Statements for Fiscal Years 2020 and 2019 (OIG-21-023, February

12, 2021). 63 OIG, BEP’s Administration of the Burson-Marsteller Public Education Awareness Contract Was Deficient (OIG-13-046; August 13, 2013).
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TREASURY MANAGEMENT RESPONSE TO OFFICE OF THE INSPECTOR GENERAL (OIG) IDENTIFIED

CHALLENGES

OIG Challenge 1: COVID-19 Pandemic Relief: The Coronavirus Disease 2019 (COVID-19) pandemic continues to affect the

health and economic stability of communities worldwide. Since initially reporting this challenge more than 44 million people

have been infected and more than 722,000 people have died of COVID-19 in the United States. In the early stages of the

COVID-19 outbreak, Congress passed the Coronavirus Preparedness and Response Supplemental Appropriation Act of 2020,

the Families First Coronavirus Response Act, and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). As

the public health crisis continued into late 2020 and 2021, Congress legislated additional relief in passing the Consolidated

Appropriations Act, 2021 (CAA, 2021) and the American Rescue Plan Act of 2021 (ARP). These laws provided another $900

billion and $1.9 trillion of economic stimulus, respectively.

We have been instrumental to the effective and efficient implementation of economic relief provisions of the CARES Act,

CAA, 2021, and ARP. Pandemic recovery programs and provisions within the oversight purview of the Office of Recovery

Programs (ORP) are extensive and include programs that support transportation industry workers; renters and

homeowners; and state, local, territorial, and Tribal government entities through direct financial assistance. Each program

plays a vital role in ensuring that Americans receive immediate economic relief and that businesses, and state and local

governments can weather the resulting economic challenges the COVID-19 pandemic creates in the years to come.

We continue to focus on successful implementation of these critical economic recovery programs. The structure that the

newly formed ORP is building to deliver the funds made available through these new programs promotes knowledge sharing

across programs and strong relationship-building with state, local and Tribal governments. It emphasizes that Treasury

must have a cohesive relationship with the entities that are directly implementing programs. In the six months following

the passage of the ARP, we delivered more than $450 billion directly to families, helping them put food on the table, care for 

their children, and stay in their homes. In addition, we have sent more than $240 billion in fiscal support to state,

territorial, local, and Tribal governments that is being used to fight the pandemic and accelerate local economic recovery. 

For businesses, ARP provided aid in the form of an additional $7 billion for forgivable Paycheck Protection Program loans,

tens of billions in aid for the hardest hit industries like airlines, and critical tax credits that rewarded businesses for keeping

employees on the payroll while offering them paid leave to care for sick loved ones or receive the vaccine.

We executed these programs with unprecedented speed and have managed these challenges with unprecedented

transparency. Our website contains a wealth of information about each of the programs we administer, including program

rules and guidance; forms and agreements; and reports about the entities that received funds, the amounts they received,

and the terms governing those arrangements. We report data on financial assistance payments to USAspending.gov,

routinely respond to information requests from multiple oversight bodies, and respond to letters and information requests

from members of Congress.

We are ensuring effective program delivery by coordinating with other federal offices and through implementing centralized,

consistent applicant reporting and compliance frameworks to facilitate efficient and equitable program outcomes, identify

issues, and ensure appropriate remediation. Through every step of program design, delivery, and monitoring, we remain

focused on building recovery programs that will spur investment and equity for the road ahead.
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OIG Challenge 2: Transition of New Administration (NEW): As characteristic with incoming Presidential Administrations,

the Departmental Offices, and Treasury bureaus and agencies are challenged with filling and transitioning numerous key

senior leadership positions, as well as implementing new executive orders and White House initiatives. Of note are

Executive Orders (EO) 13985, Advancing Racial Equity and Support for Underserved Communities Through the Federal

Government; EO 13988, Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation;

EO 14031, Advancing Equity, Justice, and Opportunity for Asian Americans, Native Hawaiians, and Pacific Islanders’; EO

14035, Diversity, Equity, Inclusion, and Accessibility in the Federal Workforce; EO 14008, Tackling the Climate Crisis at

Home and Abroad; and EO 14030, Climate-Related Financial Risk.

Treasury began preparations for a potential transition in July 2020 as required by the Presidential Transition Act. This 

includes identifying career staff to serve in an acting capacity until the selection (and if required confirmation) of appointees. 

The Deputy Assistant Secretary for Human Resources (DASHR) took steps, including aligning existing staff resources and

details, to ensure the timely onboarding of key leadership positions as soon as individuals were appointed. 

DASHR also works closely with Treasury senior leaders to assess the human capital needs of priority initiatives such as

racial inequality, climate change, and pandemic recovery. We develop comprehensive short- and long-term staffing 

strategies to mitigate human capital risks and close talent gaps through realigning and deploying existing staff and

recruiting and hiring new staff to support these initiatives. The Assistant Secretary for Management has also adopted a best

practice of establishing integrated project teams with all internal stakeholders to quickly resolve management challenges

during the standup of high priority initiatives.

While the new Administration has, as noted above, issued a significant number of executive orders, many of these align with

the priorities of the Secretary. As we develop our 2022-2026 Agency Strategic Plan, we have integrated many of these

actions into the draft goals, objectives, and priority projects. Aligning these actions with the upcoming strategic plan allows

us to focus existing program resources on achieving these outcomes. The Office of Strategic Planning and Performance

Improvement and DASHR have collaborated to incorporate the new draft strategic goals into FY 2022 performance plans,

aligning individual employee performance with these priorities.

We have commenced a number of initiatives to implement several of the new Administration’s EOs. EO 13985, establishes

policy to pursue a comprehensive approach to advancing equity for all, including people of color and others who have been

historically underserved, marginalized, and adversely affected by persistent poverty and inequality. To implement the

requirements under EO 13985, we assembled an Equity Review Team in accordance with the White House requirements to

provide input and support for the Treasury-wide equity assessment efforts under the EO. The team represents a majority of

offices and bureaus and a range of roles, from management to policy to civil rights to public affairs. The drivers of this effort 

are the Office of Civil Rights and Diversity (OCRD) as project manager, the Office of Strategic Planning and Performance

Improvement (OSPPI), the Office of Minority and Women Inclusion (OMWI), and the Office of the Secretary/Deputy

Secretary. We also developed a Project Charter and Plan that incorporated Office of Management and Budget’s (OMB)

guidance, described the proposed team structure, and proposed a timeline to ensure timely completion of objectives. To 

determine what programs and policies the team will review for the equity assessment, we asked the head of each bureau to

propose one to three high-priority and high-impact programs or policies within their purview that were assessed at a 

meeting of the bureau deputies at the end of March. 
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In April, the Deputy Secretary hosted the Equity Review Steering Committee Kickoff meeting, during which he shared his

goals and priorities as they relate to our equity assessment efforts. Thereafter, our bureaus refined their proposals to

incorporate or align with the Deputy Secretary’s priorities, and members from the Equity Review Project Team met with the

OMB Equity Review Team and confirmed that our focus for the equity assessment was aligned with the intent of the

EO. The Equity Review Project Team then worked with the bureaus to refine the scope of the proposals and identified the

following focus areas for the equity assessment: Tax Payment Implementation; Tax Policy Research; Treasury Offset 

Program; and Departmental Offices (DO)-led American Rescue Plan (ARP) programs. As a result of the Equity Review Team

efforts, we have timely submitted our 60-, 90-, and 200-Day Progress Reports to OMB and are scheduled to submit our OneYear Action Plan on or before the January 20, 2022 deadline date. 

Similar to the requirements in EO 13985, we formed a cross-functional team of senior executives and managers from offices 

across the Department to implement the requirements in EO 14035. OCRD and OMWI led the efforts, with guidance from

senior advisors from the Office of the Secretary and Deputy Secretary. The team worked with our bureaus to ensure we

completed and submitted the required Survey on Best Practices and Agency Self-Assessment by the required due

dates. Based on the bureau responses, we met the deadline to complete and submit the survey and self-assessment to

OMB. We are currently waiting for the Office of Personnel Management to issue a new government-wide diversity and

inclusion strategic plan to start our implementation efforts as required by the EO. 

To implement President Biden’s policy in EO 13988, we developed a plan to carry out the EO’s requirements within 100 days

of the date of the order. To timely meet this requirement, each bureau and Departmental Office “reviewed all existing

orders, regulations, guidance documents, policies, programs, or other agency actions (“agency actions”) that: (i) were

promulgated or are administered by the agency under Title VII or any other statute or regulation that prohibits sex

discrimination, including any that relate to the agency’s own compliance with such statutes or regulations; and (ii) are or

may be inconsistent with policy set forth in section 1 of the EO.” Based on the above review, the head of each bureau and

Departmental Office provided OCRD a memorandum that listed: (1) agency actions that they reviewed pursuant to the

order; (2) a list of actions that they revised, suspended, rescinded, and/or newly promulgated to fully implement the statutes

that prohibit sex discrimination and policy stated in section 1 of the order; and (3) any other actions the agency took to fully

implement the requirements in the EO. OCRD consolidated the bureaus’ information to develop and timely submit to OMB

one Department-wide action plan to fully ensure implementation of the Administration’s policy. 

To meet the requirements for the President’s agenda under EO 14031, during National Asian American Heritage Month in

May, the Treasury Secretary distributed to all our employees a personal message that addressed and confronted racism,

xenophobia, and intolerance. The message focused on (1) the rising tide of hate against Asian Americans in this country; (2) 

zero tolerance of all acts of violence or disrespect against the Asian community; and (3) the availability of a Treasury

employee resource group for employees called Treasury’s Asian Pacific American (TAPA) Employee Resource Group. 

In May, TAPA sponsored a presentation on Asian American and Pacific Islander (AAPI) History, Anti-AAPI Discrimination,

and Introduction to Bystander Intervention Training presented by Asian Americans Advancing Justice. Additionally, on

May 28, 2021, OCRD, IRS, and TAPA, sponsored the Treasury’s observance of the Asian American and Native

Hawaiian/Pacific Islander Heritage Month where the Secretary provided opening remarks and participated on a panel with

other Treasury leaders to address the increasing tide of hateful acts against AAPI communities as a result of the COVID

pandemic. The panel also provided a discussion on the unique challenges and opportunities for AAPI members within

Treasury to seek career development and advancement. TAPA also produced and released five articles throughout the

month of May. Topics for these articles focused on: the benefits of allyship, steps to allyship, the importance of educating

ourselves on marginalized groups and how you contribute to the marginalization or discrimination of these groups, listening
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to colleagues who are members of the marginalized groups, and advocating to elevating the voices of those who are

marginalized. 

Additionally, OMWI sponsored a presentation, Unmasking Anti-Asian Violence, Xenophobia, and Bias. This training

focused on violence, hate crimes, and harassment against Asians and those of Asian descent which has risen significantly

within the past year in the United States. It offered Treasury employees a conversation with Dr. Steve L. Robbins, the

founder of S.L. Robbins and Associates, as he focused on the many of the issues surrounding these incidents against Asian

Americans. The event was sponsored jointly by the Offices of Minority and Women Inclusion in the eight federal financial

agencies. 

Taken together, the two Executive Orders on climate change (EO 14008 and 14030) instruct the Secretary of the Treasury to

lead or co-lead efforts across a wide range of areas that span domestic and international policy; to consult with other agency

heads on additional steps where Treasury can provide valuable expertise; and to engage in several interagency working

groups or task forces. In response to the two executive orders on climate change, we have undertaken several new

workstreams across the Offices of Domestic Finance, Economic Policy, International Affairs, and Management and

Administration. Some of these workstreams will culminate with the production of discrete deliverables, including multiple

reports, while others will continue on an ongoing basis. Our Climate Hub, which was established in April 2020, is providing

coordination both internally and externally with the White House and other agencies as the large and wide-ranging body of

climate-related work continues.

OIG Challenge 3: Cyber Threats: Cybersecurity is a long-standing and serious challenge facing the Nation. A reliable

critical infrastructure, including information systems and networks, is vital to our national security and economic stability. 

Cyber threats remain a persistent concern as Treasury’s information systems are critical to the core functions of government

and the Nation’s financial infrastructure, along with the financial sector it oversees. The cyber threats continue to evolve

and become more sophisticated, subtle, and easier to perform, which poses ongoing challenges for Treasury to fortify and

safeguard its internal systems and operations while modernizing and maintaining them. While managing known risks is an

ongoing challenge, Treasury must also be ready to reinforce and/or redirect cybersecurity efforts when unforeseen events

occur such as the COVID-19 pandemic and the more recent SolarWinds attack.

For FY 2021, we maintained an overall rating of “Managing Risk” on the OMB Cybersecurity Risk Management Assessment

and achieved a rating of “Managing Risk” across all RMA categories: Identify, Protect, Detect, Respond & Recover for the

first time. The “Managing Risk” score is the highest assessment rating out of three ratings that include “At Risk” and “High

Risk”. In addition to the RMA score improvement, we achieved or exceeded cross agency priority goal targets in nine of 10

areas and continues to make progress with the Office of the Inspector General (OIG) FISMA audit. For FY 2021, three of our

largest bureaus sustained Level 4 maturity scores.

Treasury Cybersecurity matured the Enterprise Cyber Risk Management (ECRM) program by enhancing the risk

assessment process to identify compliance items separately from cybersecurity risk reporting and continuing to grow the

Supply Chain Risk Management (SCMR) program. In FY 2021, the ECRM program managed threat advisories for

27 critical or high severity vulnerabilities, and the SCRM program completed several risk assessments.

Additionally, Treasury Cybersecurity executed responses to six Emergency Directives. The High Value Asset program

completed one Risk and Vulnerability Assessment (RVA) for a bureau critical system and one High Value Asset (HVA)

Assessment in FY 2021 and successfully closed seven High/Critical/Major HVA assessment findings from seven different

HVAs. These findings were associated with Network Segmentation, Personally Identifiable Information Disclosure,
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Cleartext Password Disclosure, Audit Management, Continuous Monitoring and Boundary Protection. Additionally,

Treasury Cybersecurity created enhanced risk profiles for all 19 Departmental HVAs. This allows our senior leadership

greater visibility into the risks associated with our most critical systems by incorporating multiple metrics, including the

application of common FY 2021 Treasury RVA/Security Architecture Review assessment findings, to these systems to

identify if protection measures have been proactively put in place.

Treasury’s Shared Services Security Operations Center (TSSSOC) continued to advance its approach to using automation

against internal and external data sets for refining, de-conflicting, and streamlining its approach to signature and behavioral

anomaly detection solutions. TSSSOC automated indicator-based detection to consolidate alerts from multiple sources into a 

single highly contextual event as a system information and event management (SIEM) alert to the 24/7 Operations team.

The Bureau of the Fiscal Service (Fiscal Service) continues to take several steps to address cyber threats. Some successes

and ongoing efforts include modifying current contracts to include clauses in support of the Executive Order on Securing the

Information and Communications Technology and Services Supply Chain, requiring all solicitations to adhere to our security

requirements, and leveraging FedRAMP to accelerate the authorization of cloud-based systems and services. Fiscal Service

also works closely with public and private organization to ensure that the latest threat intelligence information is available

to the bureau for risk-based decision making.

OIG Challenge 4: Anti-Money Laundering/Terrorist Financing and Bank Secrecy Act Enforcement: Over the past year, the

Office of Terrorism and Financial Intelligence (TFI) has remained dedicated to countering the ability of financial networks

that support terrorists, organized transnational crime, weapons of mass destruction proliferators, and other threats to

international security through intelligence analysis, sanctions, and international private-sector cooperation. As previously

reported, identifying, disrupting, and dismantling the financial networks that support rogue regimes, terrorist organizations,

transnational criminal organizations, and other threats to the national security of the United States and our allies continues

to be challenging as TFI’s role to counter these financial networks and threats has grown because its economic authorities

are key tools to carry out U.S. policy. Additionally, criminals and other bad actors evolve and continue to develop more

sophisticated money laundering methods in an attempt to avoid detection.

FinCEN continues to prioritize efforts to maintain unclassified systems at the stringent FISMA high levels of security and is

coordinating cybersecurity actions with OCIO by implementing Department of Homeland Security Continuous Diagnostics 

and Mitigation (CDM), Treasury High Value Asset activities as identified, and Executive Order 14028, Improving the

Nation’s Cybersecurity, initiatives according to plan. In addition, in FY 2021, FinCEN completed penetration testing of

mission critical systems to include BSA Electronic Filing, Egmont Secure Web, Secure Information Sharing System, and

FinCEN’s BSA Portal, which serves as the gateway to external user access to BSA information.

FinCEN also conducts inquiries into instances of unauthorized disclosures of BSA data committed by financial industry

personnel and authorized users of the BSA database. FinCEN works with affected parties and personnel to secure the

information, limit any damage the release of such information causes, and ensures the affected parties and personnel

implement appropriate remedial actions. The bureau also refers any matters under the purview of Treasury’s OIG,

including those involving potential criminal conduct to Treasury’s OIG.
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OIG Challenge 5: Efforts to Promote Spending Transparency and to Prevent and Detect Improper Payments: Given the

broad implications and critical roles assigned to Treasury by the Digital Accountability and Transparency Act of 2014 (DATA 

Act), we note the renewed challenges facing the Department given the need to ensure transparency to the taxpayer and other

stakeholders on the use of funds distributed under economic relief packages enacted to address individuals and industry

sectors impacted by the COVID-19 global pandemic. As noted in Challenge 1, over the past year, Treasury delivered more

than $400 billion of Economic Impact Payments under ARP to workers and households through IRS and Fiscal Service.

Treasury is also accountable for providing transparency over the expenditure of pandemic relief funds.

In the third and final mandated OIG audit of our data quality, we received an overall “Excellent” quality rating regarding

our data reported on USAspending.gov for the third quarter of FY 2020 under the DATA Act. At the consolidated level, the

OIG concluded our data is accurate, complete, and timely. Receiving this top rating represents our commitment to ensuring

high quality data integrity and transparency in support of the users of this information. The audit identified further

recommendations to improve our data quality; while we concur with our auditors, we do not believe these recommendations

detract from our high quality rating or impact reliability and usability of our data. We continued to expand upon our

commitment to transparency in reporting of financial assistance paid to American taxpayers and businesses in response to

the COVID- 19 pandemic pursuant to the CAA, 2021 and the ARP. Our compliance with OMB Memorandum M-21-20,

Promoting Public Trust in the Federal Government through Effective Implementation of the American Rescue Plan Act and

Stewardship of the Taxpayer Resources in March 2021 provided for strong alignment and transparency with OMB and other

oversight entities in implementing of our relief programs. Our attentiveness to the stand-up and external reporting of

financial activity related to our economic recovery programs should provide confidence to the public regarding the

stewardship of their dollars.

To further enhance spending transparency to citizens, FiscalData.Treasury.gov continued to add high value datasets. This 

website provides citizens with centralized access through a modern user experience to our financial data that Fiscal Service

publishes. Since the initial launch in 2020, an additional 19 high-value datasets were added, bringing the total number to

37. In addition, Fiscal Service released the DATA Act Information Model Schema 2.1 (DAIMS 2.1), which provided technical

guidance to agencies for improvements that will increase data quality thorough reporting of more information, such as

outlays, better linking to financial assistance and support for the unique entity identifier in the DATA Act Broker for display

on USAspending.gov.

In FY 2021, the Do Not Pay Business Center (DNP) also received OMB approval and official designation to add 12 new data

sets to Do Not Pay. DNP is implementing these data sets for immediate analytic use. Do Not Pay also submitted and

received initial approval (pending designation) to implement the Electronic Verification of Vital Events (EVVE) Fact of

Death (FOD) Service from the National Association for Public Health Statistics & Information Systems’ (NAPHSIS) as a 

death data source in DNP. Through the joint efforts of the Do Not Pay Business Center (DNP) and the Payment Integrity

Center of Excellence (PICOE), Fiscal Service has been able to identify $8.3 billion in potential improper payments and stop

or impact a total of $228.5 million in improper payments in FY 2021. The figures reflect information available at the time of

the response, but do not yet reflect the complete year.

In FY 2021, PICOE launched a pilot program Account Verification Service (AVS) that quickly demonstrated the value of the

service for the third round of Economic Impact Payments. We used AVS to verify that a bank account is open and owned by

the intended eligible payee. We are also using AVS for FEMA’s COVID-19 Funeral Assistance Program and, FEMA

Individuals and Households Program. In FY 2021, we prevented improper payment of $171.2 million as a result of AVS.
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PICOE also procured the EVVE FOD Service from NAPHSIS as part of a pilot. EVVE provides authoritative verification by

matching against U.S. birth and death certificate databases. PICOE is currently partnered with FEMA’s COVID-19 Funeral

Assistance program to support applicant and decedent identity and eligibility determinations in support of the identification

and prevention of improper payments.

OIG Challenge 6: Information Technology Acquisition and Project Management: The Federal Information Technology

Acquisition Reform Act (FITARA), enacted in December 2014, was the first major overhaul of federal IT management since

the passage of the Clinger-Cohen Act of 1996 (P. L. 104-106) which was designed to improve the Federal Government’s

acquisition and management of its resources to include IT investment. In fiscal year 2021, Treasury reported approximately

$2 billion in non-IRS IT investment, which is expected to increase in fiscal year 2022. Given this sizable investment, we are

reporting the Department’s IT acquisition and project management as an ongoing management and performance challenge. 

The Bureau of Engraving and Printing (BEP) project to replace its Washington, DC facility with a new facility in 2025. BEP

will need to ensure it employs effective project oversight for preparation of the land, construction of the building, purchase of

equipment and machinery, and employment of a workforce to produce the new family of secure notes and maintain

confidence in U.S. currency.

In FY 2021, we continued to move forward with our Technology Business Management (TBM) efforts. Most significantly, we

awarded a contract to deploy a department-wide TBM platform and are in the early stage of implementing the platform. In

conjunction with starting the deployment of the department-wide TBM platform, we have been working to further improve

the breadth and depth of our enterprise IT acquisition management practices. Specifically, our Office of the Chief

Information Officer is working with the Office of the Procurement Executive (OPE) to:

• build a repository of multi-year IT acquisition data to identify opportunities to improve our use of enterprise

acquisition vehicles;

• implement a dashboard of key IT acquisition related metrics to improve transparency into our IT acquisition

portfolio;

• develop department-wide policies to review and provide oversight of cyber related IT acquisitions; and

• build processes and governance models to better enable IT Supply Chain Risk Management (in alignment with the

May 12, 2021 Executive Order on Improving the Nation’s Cybersecurity)

Lastly, in FY 2021 we implemented a project management competency model to assist with identifying where skills gaps

exist. Once we identify the gaps, we will address them through training and performance monitoring. 

During FY 2021, we also assessed 19 IT investments as having moderately low or low risk to accomplishing their goals. 

Three of these investments, Electronic Federal Tax Payment System (EFTPS), Post Payment Services (PPS), and Wholesale

Securities Services (WSS), which reside at Fiscal Service, were found to have medium risk to accomplishing their goals. The

PPS successfully completed internal parallel testing to demonstrate PIVOT’s ability to receive, process, load, and reconcile

check payments and select post payment transactions (e.g., checks returned as undeliverable by USPS). PIVOT will replace

legacy post payment applications, most notably the Treasury Check Information System (TCIS) and Payments, Claims and

Enhanced Reconciliation (PACER). The WSS delivered a sustainable TAAPS Modernization Strategy, collaborated with

FRB-Kansas City to complete the discovery phase activities for the new Financing Modernization Project including

producing the full Approach, Scope, and Plan for Implementation, implemented a new 508 compliance testing tool, and

successfully deployed 10 enhancement releases in the TAAPS system with zero defects. In addition, the EFTPS 

implemented application platform interface functions.
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In FY 2021, Fiscal Service established two projects; (1) a Solution Lifecycle Policy (SLC) and supporting standards to codify

the strategic objectives, purpose, and requirements for ensuring technology planning and program management are

occurring consistently across the enterprise and, (2) a cross-functional enterprise priority project to improve program and

project management. The SLC directs all IT efforts to follow a disciplined SLC approach, be dispositioned on our Technology

Roadmap, and use enterprise or low code solutions where possible, while using incremental development practices. 

Assurance and compliance will be monitored through the existing governance process which is co-led by the Bureau CIO and

CFO. The cross-functional enterprise project is a 3-phased project that consolidates planned IT Portfolio Enhancements that

support FITARA and the Program Management Improvement and Accountability Act (PMIAA) requirements. As this

process matures it is expected to fully integrate strategic and human capital planning, risk management, governance,

budget, performance and program and project management, and evaluation.

Although the Project Management Challenge is identified as a “repeat,” it is a newly identified challenge for the BEP. We

agree this large-scale effort presents a challenge but are confident that we have implemented the appropriate controls and

governance structure to ensure the project will be successful. The BEP has obtained and dedicated an appropriate level of

resources to manage this effort including using the significant experience and expertise of the United States Army Corp of

Engineers (USACE) as our primary oversight agent. The BEP has also established and staffed a dedicated Project

Management Office (PMO), which is led by a dedicated project executive. Working in tandem, the PMO and USACE will

ensure effective project oversight of land preparation, building construction, equipment and machinery purchase, and

employment of a workforce at the new facility. We are confident that the new modernized facility will better position BEP in

meeting U.S. Currency Program challenges of today, and those well into the future.

Matters of Concern

OIG Concern 1: Coin Redemption: The Mint’s internal control issues related to safeguarding and ensuring the integrity of

U.S. coinage is a concern.

The OIG notes the Mint’s progress in addressing the coin redemption risks. Under the authority of 31 U.S.C § 5120, the

Mint in consultation with Treasury and OMB has submitted a 60-day comment period with the Notice of Proposed

Rulemaking to limit submission quantities and international sources. The Mint is conducting a detailed review of the public

comments with the objective of ensuring the integrity of U.S. coinage. A final Notice of Proposed Rulemaking is forthcoming.

The Mint developed its internal evaluation and authentication of coins with a scientific Anti-Counterfeiting Branch and a 

state-of-the-art lab. To support the increased program risk controls, the Mint is hiring additional staff and contracting

services to manage the background investigations, applications, receiving, processing, melts, payments, and records

management. The principal means to reduce the risk of fraud is the lower submission limits coupled with lab authentication

at the Philadelphia Mint.

The Mint continues its collaborative engagements with the OIG leading up to the final regulation changes to the program

and the Mint Director’s decision to restart the program. With the restart of the program, the Mint will conduct internal

audits of the program’s procedures and processes to safeguard U.S. coinage.

OIG Concern 2: Managerial Cost Accounting: Managerial cost accounting is a fundamental part of a financial performance

management system. It involves the accumulation and analysis of financial and nonfinancial data, resulting in the

allocation of costs to organizational results. The OIG has concerns related to internal control weaknesses identified within

Departmental Offices’ overhead allocation process used to charge reimbursable customers.
238 DEPARTMENT OF THE TREASURY

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The OIG has provided input in recent years raising concerns about the overhead allocation methodology in our Departmental

Offices. In response, Treasury hired an independent third party to evaluate the methodology used in the FY 2020 overhead

billing. That assessment was completed on August 27, 2020. While the vendor provided a few areas for improvement and

maturity of the methodology, there was no finding that the FY 2020 methodology was invalid, inappropriate or

unreasonable. In fact, the difference between the original methodology and the revisions the vendor recommended reflects a 

net difference of 0.15 percent, or approximately $3,000. Treasury implemented the recommendations of the vendor as part of

the annual reconciliation process in FY 2020, and has continued to use this methodology for FY 2021.

OIG Concern 3: Internal Control Issues at BEP: The fiscal year 2020 BEP financial statement audit identified 12

deficiencies in internal control (OIG-21-022). Although the number of deficiencies in internal control identified decreased from

22 in fiscal year 2019 to 12 in fiscal year 2020, three of the deficiencies were collectively reported as a significant deficiency

related to information technology controls. While we are reporting this as a concern, it should be noted that as part of the

fiscal year 2020 financial statement audit, the independent auditors issued an unmodified opinion on the effectiveness of

BEP’s internal controls over financial reporting.

In FY 2020, KPMG issued an unmodified opinion on BEP’s internal controls over financial reporting. In addition, BEP

undergoes independent audits which includes reviewing internal controls in connection with the two International

Organization for Standardization (ISO) certifications (ISO 9001:2015 and ISO 14001:2015) which BEP maintains. The ISO

audits also found no non-conformances, further evidence of our effective internal controls. However, we concur there is

opportunity for improving our management controls. The BEP has moved forward aggressively to address “management

letter” items our external auditor, KPMG, LLC, noted. For example, BEP has strengthened its financial management team

and has addressed challenges resulting from staff turnover. Recently BEP filled key positions such as staff accountants,

division managers and a Budget Officer and has continued using contractor support to remediate any remaining

management letter items.

Regarding the corrective action verification (CAV) of recommendations related to a 2013 audit report on BEP’s contracting

practices, to date the verification fieldwork has validated that BEP effectively closed the majority of the recommendations

from the 2013 report. With respect to contract file management, for all contracting actions, BEP performs quality control

reviews to ensure the contract file contains all required documentation in accordance with the Federal Acquisition

Regulations and the Department of Treasury Acquisition Procedures. Additionally, subsequent to the scope of the CAV of

the 2013 report and after the period covered by the OIG’s current audit of BEP’s transition from hard copy to an electronic

contract filing system, in FY 2020 BEP put a new management team in place who is charged with governance of BEP

procurement activities. The new team has taken corrective actions and continues to implement processes to address the

challenges the OIG noted with respect to the completeness of contract files.
DEPARTMENT OF THE TREASURY 239 

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TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION MANAGEMENT CHALLENGES

 

 October 14, 2021

MEMORANDUM FOR SECRETARY YELLEN 

FROM: J. Russell George

Inspector General

SUBJECT: Management and Performance Challenges Facing the Internal Revenue

Service for Fiscal Year 2022 

The Reports Consolidation Act of 20001 requires that the Treasury Inspector General for Tax

Administration (TIGTA) summarize, for inclusion in the annual Department of the Treasury Agency

Financial Report, its perspective on the most serious management and performance challenges

confronting the Internal Revenue Service (IRS).

Each year, TIGTA evaluates IRS programs, operations, and management functions 

to identify the most vulnerable areas in the Nation’s tax system. For Fiscal Year (FY) 2022, the

IRS’s top management and performance challenges, in order of priority, are:

1. Administration of Tax Law Changes and Pandemic Relief Benefits;

2. Enhancing Security of Taxpayer Data and Protection of IRS Resources;

3. Improving Tax Reporting and Payment Compliance to Reduce the Tax Gap;

4. Modernizing IRS Operations;

5. Improving Customer Service and the Taxpayer Experience;

6. Addressing Emerging Threats to Tax Administration;

7. Reducing Fraudulent Claims and Improper Payments; 

8. Increasing International Tax Compliance;

9. Protecting Taxpayer Rights; and

10.Human Capital.

1 31 U.S.C. § 3516(d) (2006).

DEPARTMENT OF THE TREASURY

WASHINGTON, D.C. 20005

 Inspector General

 For Tax

 Administration
240 DEPARTMENT OF THE TREASURY

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The following information detailing the management and performance challenges is being

provided to promote the economy, efficiency, and effectiveness of the IRS’s administration of the

Nation’s tax laws.

ADMINISTRATION OF TAX LAW CHANGES AND PANDEMIC RELIEF BENEFITS

The IRS’s operations were significantly impacted by the Coronavirus Disease 2019 (COVID-19)

pandemic. Although the Tax Processing Centers were open for the 2021 Filing Season, the IRS

was not always able to operate at full capacity due to social distancing requirements. As such,

the IRS was unable to perform many of its essential functions. The backlog of individual tax

returns and other types of taxpayer account work nearly doubled when compared to the 2020

Filing Season. For example, as of August 16, 2021, the IRS reported having approximately 11

million paper tax returns waiting to be processed and approximately 9.6 million cases in other key 

tax processing functions that still needed to be addressed. At about the same time in 2020, the

IRS reported having more than 4.8 million tax returns waiting to be processed and about

5.4 million cases in other key tax processing functions that still needed to be addressed. The

backlog of returns, correspondence, and other types of work has, and will continue to have, a 

significant impact on the associated taxpayers.

The pandemic also resulted in numerous legislative changes that impacted tax administration. 

Most recently, the American Rescue Plan Act of 2021 (ARP),2 enacted on March 11, 2021,

includes approximately $1.9 trillion in economic relief and stimulus to address the continuing

impact of the COVID-19 pandemic on the economy, public health, State and local governments,

individuals, and businesses. It also contains numerous tax-related provisions intended to provide

relief to individuals and businesses. This legislation creates a third Recovery Rebate Credit

(RRC) of up to $1,400 per eligible individual to be applied toward income earned during Tax Year

(TY) 2021. The legislation directs the IRS to make advance payments of the RRC as soon as

possible, but not later than December 31, 2021. The IRS began issuing the RRC payments on

March 11, 2021, the same day the ARP Act was enacted. As of June 3, 2021, the IRS reports

issuing more than 163 million advance payments totaling nearly $390 billion for the third round of

the RRC.

Another key provision in the ARP Act is the expanded Child Tax Credit. Determining eligibility for,

and the amount of, the Child Tax Credit is a complex process. Available tax data may reflect

children who qualify for the credit in prior tax years but do not qualify in the current tax year. The

IRS will have to continually adjust the Child Tax Credit advance payments as updated information

is obtained from taxpayers.

2 Pub. L. No. 117-2, 135 Stat. 4.
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A number of the provisions contained in pandemic legislation required the IRS to take steps to

implement such legislation while in the midst of its 2020 and 2021 annual tax filing seasons. The

tax filing season is a critical time for the IRS because this is when most individuals file their

income tax returns and contact the IRS if they have questions about specific tax laws or filing

procedures. The extensive actions the IRS must undertake to implement tax legislation will

continue to be challenging when tax law changes are enacted close to, or after, the start of the

annual filing season. Additional legislative developments related to tax reform and tax policy will

continue to present challenges for the IRS.

ENHANCING SECURITY OF TAXPAYER DATA AND PROTECTION OF IRS RESOURCES

The IRS is responsible for safeguarding a vast amount of sensitive financial and personal data. 

IRS systems withstand approximately 1.4 billion cyberattacks annually (including denial-of-service 

attacks, unsuccessful intrusion attempts, probes or scans, and other unauthorized connectivity

attempts). Many of these attempts are sophisticated in nature or represent advanced, persistent

threats.3

On July 1, 2019, Congress enacted the Taxpayer First Act4 and amended the Internal Revenue

Code to give the IRS the authority to disclose certain return information for the purpose of

cybersecurity and the prevention of identity theft tax refund fraud. The IRS decided to leverage

the Security Summit5 to disclose return information related to refund fraud schemes to State tax

agencies and industry partners. However, TIGTA reported that additional policies, procedures,

and actions are needed to improve the effectiveness of security over the sharing and storing of

the data.6 In addition, opportunities exist to enhance controls and ensure consistency in applying

policies for accessing the shared data.

Further, the Taxpayer First Act contained provisions to modernize the IRS’s Income Verification

Express Service (IVES) program7 and increase taxpayer protections. However, TIGTA found that

some key processes are not operating as intended to ensure that taxpayers authorize the release

of their tax transcripts.8 IVES program management did not conduct compliance reviews in FY

2019 to ensure that participants completed the required client certifications. These certifications

are important because they validate the identity of clients that ultimately receive the transcripts. 

The IRS also did not conduct sufficient suitability checks on 577 IVES participants that were

“grandfathered” into the program in February 2016 when management implemented the suitability

checks. 

Additionally, the IRS continues to digitize many of the previously paper processes, which

generates targets of opportunity for malicious actors around the globe. Each new system created,

while potentially improving the experience of the taxpayer, also enables new ways to subvert,

misuse, manipulate, and disrupt the IRS’s ability to administer the Federal tax system. Numerous

Government agencies also rely on tax information to administer public benefits, which sets the

stage for downstream effects on other Government benefit programs when IRS systems are

successfully exploited.

In June 2021, Pro Publica released data it claimed to be from the tax returns of thousands of

individuals, covering more than 15 years. The protection of taxpayer data will continue to be a top

priority for the IRS as it tries to leverage technology to be responsive to taxpayers’ needs for its

services, while minimizing the risks from cyberattacks and insider threats.

IMPROVING TAX REPORTING AND PAYMENT COMPLIANCE TO REDUCE THE TAX GAP 
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One of the IRS’s key responsibilities is to ensure that taxpayers comply with the tax law. 

Sustaining and improving taxpayer compliance is important because small declines in compliance

cost the Nation billions of dollars in lost revenue and shift the tax burden away from those who do

not pay their taxes onto those who pay their taxes on time every year.

According to the IRS, high-income nonfilers, although fewer in number, contribute to the majority

of the nonfiler Tax Gap. High-income taxpayers generally have more opportunities to engage in

planning to avoid taxes. In March 2021, TIGTA reported that the IRS could more effectively

prioritize high-income taxpayers who owe delinquent taxes.9 Specifically, TIGTA identified

approximately 685,000 taxpayers with adjusted gross income of $200,000 or more that owed a 

combined total of $38.5 billion as of May 14, 2019. TIGTA also found that revenue officer staffing

does not always align with locations where the greatest number of high-income cases are located. 

While TIGTA recognizes that resources are limited, hiring or reallocating resources to work 

high-income cases in these areas could lead to higher collection potential and increased revenue.

Prior to FY 2018, the IRS had a High Income High Wealth strategy focusing on 

high-income taxpayers whose total positive income was at least $200,000 on Form 1040, U.S.

Individual Income Tax Return.

10 However, TIGTA reported that the majority (73 percent) of the

individual returns closed using the strategy for FYs 2015 through 2017 had total positive income

of less than $200,000.11 After disbanding the High Income High Wealth strategy, the IRS focused

instead on using the less productive Discriminant Function strategy12 resulting in $121.5 million in

potential lost assessments for FYs 2018 and 2019.

3 Written testimony of Charles Rettig, Commissioner, Internal Revenue Service, On the IRS Budget and Current Operations, Senate Appropriations

Committee, Subcommittee on Financial Services and General Government (May 15, 2019). 4 Pub. L. No. 116-25, 133 Stat. 981 (2019). 5 The IRS formed the Security Summit with representatives from State Departments of Revenue, the Chief Executive Officers of leading tax

preparation firms, software developers, and payroll and tax financial product processors. The Security Summit’s primary mission is to assist in the

fight against the filing of fraudulent tax returns and protect taxpayers from identity theft tax refund fraud. 6 TIGTA, Report No. 2021-25-025, Taxpayer First Act: Data Security in the Identity Theft Tax Refund Fraud Information Sharing and Analysis

Center (May 2021).

7 Once accepted in the IVES Program, participants such as banks and financial institutions can submit requests, on behalf of their clients, to obtain

tax transcripts for individuals and businesses. 8 TIGTA, Report No. 2021-45-017, Additional Security Processes Are Needed to Prevent Unauthorized Release of Tax Information Through the

Income Verification Express Service Program (Feb. 2021). 9 TIGTA, Report No. 2021-30-015, High-Income Taxpayers Who Owe Delinquent Taxes Could Be More Effectively Prioritized (Mar. 2021). 10 Total positive income is the sum of all positive incomes shown for the various sources of income reported on the individual income tax return

and, therefore, excludes losses. 11 TIGTA, Report No. 2021-30-041, The IRS Continued Compliance Efforts for High-Income Taxpayers After Disbanding the High Income High

Wealth Strategy, but With Less Effective Outcomes (July 2021). 12 The Discriminant Function examination strategy contains returns selected based on algorithms. The results of the IRS’s National Research

Program strategy examinations are used to update the algorithms.
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TIGTA also reported that for TY 2017 numerous business and individual nonfiler taxpayers with

Form 1099-K, Payment Card and Third Party Network Transactions, income were not identified

and cases were not created by the IRS’s nonfiler programs, and in other cases, they were

identified but not worked by the IRS.13 Specifically, TIGTA identified 314,586 business taxpayers

with $335.5 billion in Form 1099-K income that appeared to have a filing obligation, but were not

identified as nonfilers by the IRS.

Further, the growth of peer-to-peer payment applications has greatly enhanced the flow and

transfer of funds between users on virtual platforms, making it easier and cheaper to send

payments from one person to another. However, the technology presents additional tax

compliance challenges in that the payments are not always reported to the IRS and can be hard

to detect during an IRS examination.14

MODERNIZING IRS OPERATIONS

The IRS relies extensively on computerized systems to support its financial and mission-related

operations. The IRS requested $305 million for the modernization effort in its FY 2022 budget

request, an increase of $82 million or approximately 37 percent from the FY 2021 enacted budget. 

Successful modernization of systems and the development and implementation of new

information technology applications are critical to meeting the IRS’s evolving business needs and

enhancing services provided to taxpayers. The reliance on legacy systems and its use of

outdated programming languages pose significant risks to the IRS’s ability to deliver its mission. 

Modernizing the IRS’s computer systems has been a persistent challenge for many years and will

likely remain a challenge for the foreseeable future.15

For example, the IRS uses more than 60 different legacy case management systems that widely

vary in complexity, size, and customization to support tax administration. In January 2015, the

IRS formally established the Enterprise Case Management (ECM) program to provide an

enterprise solution to perform case management functions utilizing a Department of the Treasury

Cloud platform, thus reducing long-term costs and increasing operational efficiency, innovation,

and security. However, TIGTA reported that the ECM program has not finalized its agile

development methodology.16 The program is implementing a mixture of two different agile

configurations and trying to strike a balance between implementing the recommended roles while

minimizing unnecessary overhead. In addition, the benefits of the ECM program are defined in

broad terms and will make it difficult for leadership to manage continuous implementation of

processes over a long period of time, identify tradeoffs in competing priorities, and evaluate

success.17

Ineffective security controls to protect IRS systems and data could have a significant effect on a 

broad array of Government operations and assets. Without effective security controls, computer

systems are vulnerable to human errors or actions committed with malicious intent. Server

virtualization18 is now an established standard for enterprise information technology infrastructure

13 TIGTA, Report No. 2021-30-002, Billions in Potential Taxes Went Unaddressed From Unfiled Returns and Underreported Income by Taxpayers

That Received Form 1099-K Income (Dec. 2020). 14 TIGTA, Report No. 2021-30-022, The Internal Revenue Service Faces Challenges in

Addressing the Growth of Peer-to-Peer Payment Application Use (Apr. 2021). 15 TIGTA, Report No. 2021-20-001, Annual Assessment of the Internal Revenue Service’s Information Technology Program for Fiscal Year 2020

(Oct. 2020). 16 IRS guidance characterizes agile development as having iterative product development and delivery. Regular testing intervals, customer

involvement, and continuous product delivery allow for feedback throughout the development process. 17 TIGTA, Report No. 2021-20-059, Enterprise Case Management Deployed Its Initial Release, but Process Improvements Are Needed for Future

Releases (Sept. 2021). 18 Virtualization is the simulation of the software and hardware upon which other software runs. This simulated environment is called a virtual

machine.
244 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | OTHER INFORMATION

in data centers and cloud services as it provides better utilization of hardware resources, reduces

physical space required, and reduces power consumption and administrative overhead. As a 

result, the IRS concluded that its diverse and widely deployed server infrastructure would benefit

from a consolidation and virtualization project. TIGTA reported that the IRS is performing security

scans of the virtual host infrastructure platform.19 However, the IRS inventory system does not

accurately reflect all of the virtual host infrastructure platform servers. For example, virtual host

servers were uncategorized and incorrectly recorded. Protecting critical assets and infrastructure

helps reduce the risk of internal and external attacks on IRS assets that could potentially expose

taxpayer data and information.

IMPROVING CUSTOMER SERVICE AND THE TAXPAYER EXPERIENCE

The 2021 Filing Season began later than normal, on February 12, 2021. The later start was

needed to update the IRS’s processing systems. On March 17, 2021, the Department of the

Treasury extended the income tax filing due date to May 17, 2021. Backlogs of unprocessed tax

returns and other types of tax account work that affected the previous filing season now continue

into the 2021 Filing Season. The inability to timely address these backlogs will continue to have a 

significant impact on the associated taxpayers.

Contributing to the IRS’s inability to address backlogs is the significant shortfall in its hiring of

personnel needed for their Submission Processing functions as well as the closure of its Tax

Processing Site in Fresno, California. The IRS also continues to take steps to protect the health

and safety of its employees working in its Tax Processing Centers; as a result, it was not always

able to operate at full capacity due to social distancing requirements. These requirements include

limiting close contact with other employees and maintaining a physical distance of at least six feet

in an effort to reduce the spread of COVID-19. Finally, while much of the IRS’s workforce

continues to telework, the work performed at the IRS’s Tax Processing Centers is not conducive

to a remote telework environment. This work includes receiving, sorting, and distributing of mail

and processing of paper tax returns, which requires manually inputting information from tax

returns into IRS systems, correcting errors, and corresponding with the taxpayer, when needed.

In an effort to restore customer service options to taxpayers the IRS accelerated the

implementation of several new initiatives it had been testing and expanded the use of existing

technologies and capabilities.20 However, while the majority of customer service assistance 

options are now available to taxpayers, the previous closures are a contributing factor to

increased demand on the IRS and its inability to provide quality customer service. For example,

the IRS reported 321.4 million visits to IRS.gov for the 2020 Filing Season as of March 6, 2020. In

comparison, as of March 5, 2021, the IRS reported 555.7 million visits to IRS.gov this filing

season, which is an increase of 72.9 percent. However, as of March 5, 2021, the IRS only

provided a 27.3 percent Level of Service on its toll-free customer service lines. In comparison to

the same timeframe in March 2020, the IRS reported a 68 percent Level of Service. 

19 TIGTA, Report No. 2021-20-024, Improvements Are Needed for the Virtual Host Infrastructure Platform (June 2021). 20 TIGTA, Report No. 2021-46-029, Assessment of the Effects of the Coronavirus Pandemic on Customer Service Operations (Apr. 2021).
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The Taxpayer First Act included provisions for the IRS to develop a comprehensive customer

service strategy to better serve taxpayers. In response, the IRS developed the taxpayer

experience strategy. According to the Commissioner of Internal Revenue, the taxpayer

experience strategy is designed to improve a taxpayer’s experience with the IRS through

expanded digital services, increased multilingual services, and an increased presence in hard-toreach, historically underserved communities.21 This law also requires the IRS to develop an

organizational redesign strategy that prioritizes the taxpayer experience to ensure that taxpayers

can easily and readily receive the help they need.

ADDRESSING EMERGING THREATS TO TAX ADMINISTRATION

Identity theft tax refund fraud involves the use of another person’s name and Taxpayer

Identification Number22 to file a fraudulent tax return reporting false income and withholding in an

effort to receive a fraudulent tax refund. The IRS recognized that the Economic Impact Payments

(EIP) created a new risk for tax-related identity theft. In response, the IRS developed specific

filters to identify potentially fraudulent filings. Once a return was identified as potentially

fraudulent, it was sent to an IRS team for review. As of December 31, 2020, the IRS identified

528,388 questionable tax returns associated with the EIP for review and determined that 46,111

tax returns were fraudulent.

Illicit actors may also file false individual international tax returns in order to obtain refunds. 

TIGTA evaluated IRS processes to identify and prevent potentially fraudulent individual

international tax returns and identified areas for improvement.23 Specifically, the IRS does not

have sufficient processes in place to identify potentially fraudulent individual international tax

returns at the time these returns are filed. TIGTA’s review of TY 2018 tax returns identified 8,332

international tax returns with potentially erroneous or fraudulent refunds totaling nearly $20.6

million that were not identified by the IRS.

21 Written testimony of Charles Rettig, Commissioner, Internal Revenue Service, The IRS’s Fiscal Year 2022 Budget, Senate Finance Committee

(June 8, 2021). 22 A nine-digit number assigned to taxpayers for identification purposes. Depending upon the nature of the taxpayer, it can be an Employer

Identification Number, a Social Security Number, or an Individual Taxpayer Identification Number. 23 TIGTA, Report No. 2021-40-057, Improvements Are Needed to Identify Potentially Fraudulent Individual International Tax Returns During

Processing (Sept. 2021).
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Identity theft not only affects individuals, it can also affect businesses. The IRS defines business

identity theft as creating, using, or attempting to use businesses’ information without authority to

obtain tax benefits. The IRS continues to take actions to improve its detection of business

identity theft, including expanding the number of identity theft filters from 35 in Processing 

Year 2018 to 84 in Processing Year 2020. However, continued expansion of detection

capabilities, to include other business return types, is needed. For example, TIGTA found that 36

business return types with refunds issued totaling $10.5 billion in Processing Year 2019 were not

evaluated for potential identity theft.24

Preventing refund fraud associated with prisoners’ Social Security Numbers is also a challenge

for tax administration. The IRS implemented corrective actions in response to concerns raised in

a TIGTA report issued in July 2017.25 However, in April 2021, TIGTA reported that the IRS could

take additional actions to expand its participation in the Blue Bag Program, a program in which

the IRS partners with the Federal Bureau of Prisons and State Departments of Corrections to

identify potentially fraudulent tax returns and refunds.26

TIGTA works closely with the IRS to identify, investigate, and combat threats to tax

administration. After passage of the Coronavirus Aid, Relief, and Economic Security Act 

(CARES),27 TIGTA observed an increase in related illicit scams and schemes with various

objectives, such as manipulation of IRS online applications, theft of EIPs, and efforts to steal

sensitive taxpayer information. Because the IRS used the same distribution methodology for

ARP Act payments as it did for CARES Act payments, TIGTA estimates that a similar amount of

theft will occur. 

TIGTA plays a key role in protecting IRS employees. Threats and assaults directed at IRS

employees, facilities, and infrastructure impede the effective and safe administration of the

Federal tax system and the IRS’s ability to collect tax revenue. In the last several years, threats

directed at the IRS have remained the second largest component of TIGTA’s Office of

Investigations’ work. Recent incidents involving taxpayers who threatened or assaulted IRS

employees underscore the dangers that these employees face.

REDUCING FRAUDULENT CLAIMS AND IMPROPER PAYMENTS

The Office of Management and Budget describes an improper payment as any payment that

should not have been made, was made in an incorrect amount, or was made to an ineligible

recipient. The Improper Payments Information Act of 200228 requires Federal agencies, including

the IRS, to estimate the amount of improper payments and report to Congress annually on the

causes of, and the steps taken to, reduce improper payments. The Earned Income Tax Credit

(EITC) has been identified as a high-risk program; therefore, the IRS must include the rate and

amount of improper payments for the EITC program in the Department of the Treasury’s annual

Agency Financial Report.

In FY 2020, the Office of Management and Budget determined that the EITC, Additional Child Tax

Credit (ACTC), and American Opportunity Tax Credit are also high-priority programs that are

susceptible to significant improper payments.29 The IRS estimates it issued approximately

24 TIGTA, Report No. 2021-40-004, Refinement and Expansion of Filters to Include Additional Business Returns Will Continue to Improve Business

Identity Theft Detection Efforts (Oct. 2020). 25 TIGTA, Report No. 2017-40-041, Actions Need to Be Taken to Ensure Compliance With Prisoner Reporting Requirements and Improve

Identification of Prisoner Returns (July 2017). 26 TIGTA, Report No. 2021-40-027, Actions Were Taken to Improve the Identification of Prisoner Tax Returns (Apr. 2021). 27 Pub. L. No. 116-136, 134 Stat. 281 (2020). 28 Pub. L. No. 107-300, 116 Stat. 2350 (2018). 29 TIGTA, Report No. 2021-40-036, Improper Payment Rates for Refundable Tax Credits Remain High (May 2021).
DEPARTMENT OF THE TREASURY 247 

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$22.8 billion in potentially improper EITC, ACTC, and American Opportunity Tax Credit in

FY 2020. This represents a significant loss to both the Federal Government and taxpayers.

The IRS did not calculate the dollar amount and percentage rate of improper payments for

another high-risk program – the Net Premium Tax Credit.30 IRS management stopped working on

this calculation, citing delays stemming from significant demands placed on the Department of the

Treasury and the IRS in connection with the COVID-19 pandemic as well as delays working with

the Department of Health and Human Services and the Centers for Medicare and Medicaid

Services to develop a joint methodology for assessing improper payment risk for the Premium Tax

Credit.

Further, the passage of the ARP Act temporarily expands the Child and Dependent Care Credit. 

Beginning on January 1, 2021, the credit is fully refundable and the amount of the credit and the

income phase-out limits have significantly increased. The unintended consequence of refundable

credits is that they can result in the issuance of improper payments and can be the targets of

unscrupulous individuals. TIGTA is planning to conduct several audits evaluating the IRS’s

implementation of this credit.

INCREASING INTERNATIONAL TAX COMPLIANCE

Complexity and change in the international tax environment require that the IRS collaborate with

tax administrations of foreign countries to enforce compliance. The IRS has not developed a 

reliable estimate of the international tax gap. The Tax Gap is estimated using statistics from the

IRS’s National Research Program data that does not measure international noncompliance.31 

The IRS must continue to focus significant efforts on global tax cooperation and tax administration

practices that can prevent and resolve disputes among countries to increase certainty for

taxpayers. International agreements and tax law changes are important, but the Department of

the Treasury and the IRS should follow through to ensure that these efforts achieve their intended

results. 

The Foreign Account Tax Compliance Act (FATCA) was designed to establish reporting

requirements for U.S. citizens with foreign accounts, with significant penalties if foreign accounts

were not reported.32 It was estimated that revenue from the FATCA would be $8.7 billion from

FYs 2010 to 2020. While initial enforcement-related complications involved data reliability issues,

more recent problems are related to the fact that the Department of the Treasury and the IRS

have delayed the requirement for Foreign Financial Intermediaries (FFI) to require that U.S.

citizens provide Social Security Numbers when establishing accounts and the FFIs to provide that

information to the United States so the IRS can match compliance information it has with

information that the FFIs have.

With the rising number of taxpayers giving up or abandoning their U.S. citizenship or resident

status, it is important that the IRS has controls in place to enforce the tax provisions applicable to

expatriates. Since enactment of the Heroes Earnings Assistance and Relief Tax Act of 2008,33

the number of taxpayers expatriating increased significantly from Calendar Year 2008 to Calendar

30 Eligible taxpayers can choose to receive the Advanced Premium Tax Credit (APTC), which helps cover the cost of their health insurance

premiums. When taxpayers prepare their tax return, they must reconcile the APTC with the amount of the Premium Tax Credit that they are

allowed to claim. Taxpayers whose Premium Tax Credit exceeds their APTC have a Net Premium Tax Credit, which reduces their tax liability and,

if more than the tax liability, results in a refundable tax credit. 31 TIGTA, Report No. 2009-IE-R001, A Combination of Legislative Actions and Increased IRS Capability and Capacity Are Required to Reduce the

Multi-Billion Dollar U.S. International Tax Gap (Jan. 2009). 32 Pub. L. No. 111-147, Subtitle A, 124 Stat 97 (codified in scattered sections of 26 U.S.C.). TIGTA, Report No. 2018-30-040, Despite Spending

Nearly $380 Million, the Internal Revenue Service Is Still Not Prepared to Enforce Compliance With the Foreign Account Tax Compliance Act (July

2018).

33 Pub. L. No. 110-245 (2008). 
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Year 2018 (from a total of 312 in 2008 to 3,974 in 2018). During the same period, TIGTA found

that the IRS did not have a centralized compliance effort aimed at enforcing the expatriate rules.34

In addition, TIGTA reported that the IRS currently has no processes and procedures 

in place to ensure the legitimacy of certain international tax returns at the time returns are filed.35 

Specifically, TIGTA identified 130,448 international tax returns in which individuals reduced or

eliminated the Federal income tax paid on nearly $2 billion in income.

PROTECTING TAXPAYER RIGHTS

The IRS must balance tax compliance activities to enforce the tax code while at the same time

upholding taxpayer rights. The IRS continues to dedicate significant resources and attention to

complying with the taxpayer rights provisions of the IRS Restructuring and Reform Act of 1998.36

The IRS Restructuring and Reform Act of 1998 requires TIGTA to audit certain taxpayer rights

provisions and report whether the IRS complied with those provisions. While overall compliance

has improved, TIGTA continues to identify areas in which the IRS can improve. For example,

TIGTA evaluated whether the IRS followed the joint return disclosure requirements on collection

information requests and determined that disclosure requirements were not followed in 26 of 124

Accounts Management customer service representatives’ history files and three of 20 Field

Assistance individual taxpayer advisory specialists’ history files in the Wage and Investment

Division.37 Also, during the review of the IRS’s compliance with the prohibition against

designating taxpayers as Illegal Tax Protesters or similar designations, TIGTA found that IRS

employees used these designations on some taxpayer accounts.38

TIGTA also evaluated the IRS’s compliance with provisions of the law that restrict the direct

contact of taxpayers who are represented. TIGTA found that in 18 of the 75 cases reviewed,

taxpayer rights were potentially infringed upon because the IRS did not send notices and letters to

authorized representatives as required.39 Of the 75 cases reviewed, a power of attorney was

authorized to receive notices in 50 of these cases. When projected to the overall population of

4,349 examinations in which taxpayers had an authorized representative, the IRS potentially

negatively impacted taxpayer rights for 1,043 taxpayer accounts in regards to representative

notice and letter requirements.

Additionally, Collection Due Process hearing provisions are designed to give taxpayers an

opportunity for an independent review to ensure that the levy action that has been proposed or the

Notice of Federal Tax Lien that has been filed is warranted and appropriate. Similar to prior

audits, TIGTA identified processing errors in 16 of 81 sampled taxpayer cases.40 Processing 

errors related to proper classification of hearing requests and incorrect Collection Statute

Expiration Dates on the taxpayer’s accounts. For example, taxpayer accounts had errors due to

incorrectly input Collection Statute Expiration Date suspension start and stop dates. In some

cases, the IRS incorrectly extended the time period, allowing the IRS additional time to collect 

delinquent taxes.

34 TIGTA, Report No. 2020-30-071, More Enforcement and a Centralized Compliance Effort Are Required for Expatriation Provisions (Sept. 2020). 35 TIGTA, Report No. 2021-40-057, Improvements Are Needed to Identify Potentially Fraudulent Individual International Tax Returns During

Processing (Sept. 2021). 36 Pub. L. No. 105-206, 112 Stat. 685 (codified as amended in scattered sections of 2, 5, 16, 19, 22, 23, 26, 31, 38, and 49 U.S.C.). 37 TIGTA, Report No. 2021-30-050, Fiscal Year 2021 Statutory Review of Disclosure of Collection Activity With Respect to Joint Returns (Aug.

2021).

38 TIGTA, Report No. 2021-30-048, Fiscal Year 2021 Statutory Audit of Compliance With Legal Guidelines Prohibiting the Use of Illegal Tax

Protester and Similar Designations (Aug. 2021). 39 TIGTA, Report No. 2021-30-054, Fiscal Year 2021 Statutory Review of Restrictions on Directly Contacting Represented Taxpayers (Aug. 2021). 40 TIGTA, Report No. 2021-10-049, Review of the Independent Office of Appeals Collection Due Process Program (Aug. 2021).
DEPARTMENT OF THE TREASURY 249 

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HUMAN CAPITAL

Human capital is the Federal Government’s most critical asset. At a time when the IRS is taking

on such new challenges as the implementation of pandemic relief for taxpayers, the recruitment of

new employees and retention of existing employees are critical to ensuring the maintenance of a 

quality workforce capable of meeting the needs of the American public.

Between FY 2010 and FY 2020, the IRS lost more than 33,000 full-time personnel, which included

nearly 13,400 key enforcement personnel.41 In addition, TIGTA reported that the IRS continues to

experience challenges hiring and retaining an adequate workforce to meet its workload demands

at Tax Processing Centers.42 For example, the IRS’s Submission Processing function was only

able to reach 59 percent of its hiring goals during the 2021 Filing Season. Although the IRS has

several initiatives underway to help address its hiring shortages, these initiatives may not

successfully mitigate the hiring challenges as anticipated. We remain concerned about the IRS’s

continued challenges in hiring sufficient staff needed to work backlog inventory and process tax

returns at the same time. The inability of the IRS to hire sufficient staff could further affect

taxpayers awaiting refunds and additional Recovery Rebate Credits claimed on TY 2020 returns.

The IRS’s FY 2022 budget request includes a net staffing increase of approximately 12 percent,

or 8,493 direct Full-Time Equivalents, as compared to FY 2021.43 Although increased funding

would assist the IRS in replacing employees lost through attrition, 

on-boarding, training, and assimilating large numbers of employees will create its own challenges

for the IRS.

41 IRS, Management’s Discussion and Analysis, Fiscal Year 2020. 42 TIGTA, Report No. 2021-40-038, Interim Results of the 2021 Filing Season (May 2021). 43 Full-Time Equivalents are a measure of labor hours in which one Full-Time Equivalent is equal to eight hours multiplied by the number of

compensable days in a particular fiscal year.
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In addition, the IRS was faced with unprecedented human capital-related challenges due to the

COVID-19 pandemic. In March 2020, the IRS directed all employees, except those performing

mission-critical functions that could not be performed remotely, to vacate IRS worksites and work

from home or an alternate location. The IRS initially placed nearly 35,000 employees on paid

Weather and Safety Leave because the employees could not work in an IRS facility or telework.44 

In response to the pandemic, the IRS steadily increased telework participation, and in July 2020

reopened IRS facilities to some employees. Between March 2020 and September 2020, the IRS

distributed nearly 19,000 laptops to employees to allow them to perform their jobs remotely. By

September 2020, over 60,000 employees teleworked at least a portion of their work schedule,

while approximately 25,000 employees worked at least a portion of their time from an IRS facility.

As the IRS reopened its facilities to mission essential functions and non-portable work, it faced

additional challenges.45 As of June 30, 2021, nearly 4,200 IRS employees reported having tested

positive for COVID-19. IRS data show that approximately 47 percent of these employees

reported to an IRS facility during the 14 days preceding a positive test result.

In March 2021, TIGTA completed unannounced site visits to eight IRS campuses. Overall, TIGTA

found that the IRS had implemented its COVID-19 guidance; however, we observed instances of

noncompliance with health and safety guidance at all eight facilities, including guidance pertaining

to mask and social distancing requirements. The IRS will continue to face challenges as it

balances the completion of its mission with the health and safety of its employees.

CONCLUSION

This memorandum is provided as our annual summary of the most serious major management

and performance challenges confronting the IRS in FY 2022. TIGTA’s Fiscal Year 2022 Annual

Audit Plan and Fiscal Year 2022 Inspections and Evaluations Program Plan contain our proposed

reviews. If you have any questions or wish to discuss our views on the challenges in greater

detail, please contact me at (202) 622-6500.

cc: Deputy Secretary of the Treasury

Acting Assistant Secretary for Management

Deputy Chief Financial Officer

Commissioner of Internal Revenue

44 Weather and Safety Leave is a form of administrative leave permitted when an agency determines that safety-related conditions prevent

employees from safely traveling to or safely performing work at an approved location or telework site. 45 TIGTA, Report No. 2021-16-073, Steps Were Taken to Protect Employee Health and Safety, but Additional Efforts Are Needed to Ensure

Compliance With Federal Guidelines During Pandemics (Sept. 2021).
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IRS MANAGEMENT RESPONSE TO TIGTA IDENTIFIED CHALLENGES 

TIGTA Challenge 1: Administration of Tax Law Changes and Pandemic Relief Funds: The IRS’s operations were

significantly impacted by the Coronavirus Disease 2019 (COVID-19) pandemic. The extensive actions the IRS must

undertake to implement tax legislation will continue to be challenging when tax law changes are enacted close to, or after,

the start of the annual filing season. 

The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 , signed into law on December 27, 2020,

authorized a second round of Economic Impact Payments (EIP 2). This legislation required that the second round of

payments be issued by January 15, 2021. The IRS was prepared for and delivered the majority of EIP 2 in just two days

following the enactment. In addition, the American Rescue Plan Act of 2021 (ARP), signed into law on March 11,

2021,authorized a third round of EIPs (EIP 3). The IRS began issuing these payments on March 12, 2021. In FY 2021, the

IRS, in coordination with Fiscal Service, issued EIP 2 and 3 payments worth more than $800 billion.

TIGTA Challenge 2: Enhancing Security of Taxpayer Data and Protection of IRS Resources: The IRS must complete

improvements to its public-facing applications to ensure that taxpayers who want access to IRS’s online services have

verified their identities and can securely access IRS resources. In addition, the IRS must ensure that taxpayer data is secure

from internal and external threats. 

In FY 2021, the IRS updated and remediated the critical and high-risk vulnerabilities identified on the servers that store

federal tax information (FTI) and backup servers used to transmit FTI to the Trusted Third Parties by installing appropriate

updates.

One of the updates include the Income Verification Express Service Program (IVES). Once accepted into IVES, participants,

such as banks and financial institutions, can submit requests to obtain tax transcripts on behalf of their clients. To mitigate

the risk of releasing taxpayers’ information to unauthorized individuals, the IRS revised Form 4506-C, Request for 

Transcript of Tax Return, to update cautionary language for instructing taxpayers to complete third-party information

before signing, to include a clear indication of electronically signed forms and to include a line for client information if a 

client is requesting a transcript on behalf of an IVES participant. The IRS will complete their certifications and determine

who is eligible to use e-signatures within the IVES program.

The IRS is developing Enterprise File Storage software to include a listing of authorized e-signature users that the IRS will

maintain and review annually to ensure program compliance. The IRS will issue clear guidance to IVES participants to

articulate the requirements of the annual independent audit report for electronic signature usage. In FY 2022, the IRS will

finalize the IVES online system project schedule and costing estimates, making any adjustments to the user fee as

necessary. The IRS will identify and allocate sufficient resources to the IVES program to timely complete the annual

compliance reviews, summarizing the results of the compliance reviews after each fiscal year. The IRS will continue to

perform tax compliance checks on IVES participants and investigate an automated solution for performing continuous tax

compliance. The IRS will perform suitability checks on the 319 IVES participants TIGTA identified.

TIGTA Challenge 3: Improving Tax Reporting and Payment Compliance to Reduce the Tax Gap: Improving taxpayers’

compliance with the tax law to reduce the Tax Gap remains a serious and persistent challenge.

The gross tax gap is the estimated difference between the amount of the tax that taxpayers should pay, and the amount

taxpayers pay voluntarily and on time. High-income nonfilers (HINF) contribute to the majority of the nonfiler tax gap.
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The IRS’s primary objective in selecting returns for examination is to promote the highest degree of compliance. To address

the nonfiler tax gap, an Executive Steering Committee (ESC) provides oversight of nonfiler program performance and

strategic planning, which also ensures coordination across multiple business functions. Additional steps to strengthen the

ESC by adding the director of the Fraud Enforcement Office as well as revision to the charter is ongoing.

Over the last few years, the IRS shifted resources to focus on Abusive Transactions and Technical Issues projects, which

involve high-income individuals. This includes areas of greater noncompliance, such as syndicated conservation easements,

micro-captive insurance transactions, research and experimentation credits, and virtual currency. In addition, the IRS

initiated a Compliance Initiative Project to ensure that the IRS continues to maintain a high rate of audit coverage of

taxpayers at the highest income categories.

The IRS received approval to update the Business Masterfile (BMF) Start Date criteria rules for business nonfilers. This 

will ensure all potential nonfiler forms and returns are made available for further examination or assessment. The updated

BMF Start Date criteria rules are to be delivered in FY 2022. In addition, the IRS is creating a definition of high-income

business nonfilers as well as a compliance strategy to work unfiled returns and underreported Form 1099-K, Merchant Card

and Third-Party Network Payments, income. The IRS has initiated a research project in FY 2022 to determine if a HighIncome Nonfiler (HINF) definition can be applied to BMF nonfilers by identifying similarities or patterns with potential

nonfiler cases and prior nonfiler audit results.

The IRS prioritizes high-income nonfilers in our Individual Masterfile case creation nonfiler identification process. The IRS

has issued instructions to Collection’s Nonfiler Inventory and Analysis staff to ensure that 100 percent of HINF cases are

included in the return delinquency program case starts, which places these cases into the work stream. The IRS also

updated the Collection automated substitute for return program to prioritize high liability cases. The IRS’s Collection case

management program continues to place a high priority on high-income nonfilers when selecting case inventory for revenue

officers. Field Collection managers assign high priority HINF cases to revenue officers from an inventory (queue) of cases

selected for potential compliance action. IRS revenue officers are highly trained civil enforcement officers, adept at

investigating the most complex collection cases, including HINF.

Currently, the IRS has less than 2,000 revenue officers, the lowest number of field collection personnel since the 1970’s, and

more than 100,000 collection cases in active inventory. Furthermore, the IRS has classified roughly 85 percent of the

inventory as high priority cases, many of which involve delinquent business employment taxes. In addition, the IRS has

more than 1.5 million collection cases awaiting assignment, 500,000 of which are considered high priority. Additional

resources would better enable Collection to assign the highest priority HINF cases to revenue officers to address these

taxpayers’ noncompliance.

The Peer-to-Peer (P2P) payment application has created some challenges for the IRS particularly because usage has grown

exponentially over the years, in replacing traditional mobile banking applications. The largest challenge is attributable to

the lack of compliance with the filing requirement of the Form 1099-K, Payment Card and Third-Party Network

Transactions and PSP applications. The ARP changed the threshold for reporting significantly. The ARP requires reporting

by third party settlement organizations of a gross amount of $600 or more paid to a single payee in a calendar year, effective

for calendar years beginning after December 31, 2021. As a result of the new legislation, the IRS will receive Form 1099-K 

for a majority of the individuals receiving payment via P2P applications. This will allow the IRS to identify areas of

noncompliance either through our Automated Underreporter program or during an examination. The IRS is actively

developing guidance for examiners to reinforce the requirement to complete the minimum income probe for all examinations, 

which includes addressing the taxpayer’s internet use and e-commerce income activity.

 
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TIGTA Challenge 4: Modernizing IRS Operations: Successful modernization of systems and the development and

implementation of new information technology applications are critical to meeting the IRS’s evolving business needs and

enhancing services provided to taxpayers. Modernizing the IRS’s computer systems has been a persistent challenge for 

many years and will likely remain a challenge for the foreseeable future. These legacy systems carry significant risks,

including increased cybersecurity threats and maintenance costs.

IRS’s Enterprise Case Management program’s (ECM) goal is to provide an enterprise solution to perform case management

functions using a Treasury Cloud2 platform, thus reducing long-term costs and increasing operational efficiency, innovation,

and security. The IRS has several process improvements planned for future ECM releases. First, the IRS is implementing a 

combination of two Scaled Agile Environment (SAFe) configurations to strike a balance between implementing the

recommended roles and configurations, while minimizing unnecessary overhead. The IRS will document its current SAFe

implementation and perform a SAFe competency assessment for the associated core competencies. Additionally, the IRS will

establish an initial set of quantifiable metrics to enable traceability of progress from planning through decommissioning,

recognizing that quantifiable metrics are not static, and updates are necessary throughout ECM implementation. The IRS is

also standing up an Accessibility Advocate function to work with the existing IT Information Resources Accessibility

Program to reduce the number of Section 508 defects in future releases and improve the user experience.

Server virtualization is a standard for enterprise information technology infrastructure in data centers and cloud services as

it provides better utilization of hardware resources, reduces physical space required, and reduces power consumption and

administrative overhead.

The IRS has identified several improvements for the virtual host infrastructure platform. First, the IRS will remediate

critical and high-risk vulnerabilities in the virtual host infrastructure platform by priority and within the required IRM

timeframes. Additionally, the IRS will ensure remediation of configuration issues for Windows and Linux platform servers

using the new Continuous Diagnostics and Mitigation (CDM) tool and correct defects in that tool. The IRS will identify and

implement a tool to perform automated configuration scanning of the VMware ESXi platform in accordance with CDM

guidance and will ensure remediation of configuration issues for Windows and Linux platform servers using the new CDM

tool by VMWare once the new tools are in place. The IRS will also finalize, approve, and implement a Platform Audit Plan 

for the virtual host infrastructure platform, implement automated audit logging and monitoring, and establish a review

process for VMware servers in the virtual host infrastructure platform.

TIGTA Challenge 5: Improving Customer Service and the Taxpayer Experience: Filing season delays and tax return

backlogs will continue to have a significant impact on taxpayers. The significant shortfall in its hiring of personnel needed

for their Submission Processing functions as well as the closure of its Tax Processing Site in Fresno, California contributes to

the IRS’s inability to address backlogs.

The IRS took unprecedented actions in response to the COVID-19 pandemic to protect the health and safety of its employees

and taxpayers during the 2020 filing season. To restore services to taxpayers as quickly as possible, the IRS accelerated the

implementation of several customer service options it had been testing and expanded the use of existing technologies and

capabilities.

The IRS provided resources and guidance to ensure Volunteer Income Tax Assistance (VITA) and Tax Counseling for the

Elderly (TCE) sites were equipped with the necessary tools to prepare accurate current and prior year returns.

The IRS also developed and timely delivered outreach messages to inform taxpayers about traditional VITA, TCE,

Facilitated Self Assistance, Virtual VITA, and the Free File program to partners, in addition to a postcard initiative in which

it mailed postcards with helpful links to Free File and assistance with finding VITA locations to 2.5 million taxpayers.
254 DEPARTMENT OF THE TREASURY

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In addition, the IRS developed Publication 5450, 2021 VITA/TCE Site Operations to provide outreach and additional

guidance to partners about tax return preparation alternatives. Finally, the IRS identified outreach priorities for delivery to

partners with a focus on topics that are determined critical and beneficial.

TIGTA Challenge 6: Addressing Emerging Threats to Tax Administration: Because fraud patterns are constantly evolving,

the IRS needs to continuously adapt its processes to detect and prevent tax scams involving identity theft and fraudulent

filing of tax returns, including international returns.

The IRS continues efforts to protect tax revenue by implementing processes to identify and prevent tax fraud by prisoners

and individuals who use prisoners’ Social Security numbers to file fraudulent tax returns. In addition, the IRS revised the

Internal Revenue Manual on General Agreement on Tariffs and Trade Procedures to include revised procedures that

facilitate the timely identification of questionable tax returns, where refunds are appropriately frozen, and the returns are

referred for treatment.

The IRS also created 34 business filters to evaluate employment tax returns for potential identity theft. These additional

filters resulted in a monetary benefit (funds put to better use) of more than $248 million.

The IRS efforts to protect tax revenue continues into FY 2022 and beyond, including strengthening system filters, sampling

Advance Child Tax Credit claims on international tax returns, providing training for tax examiners and sampling potentially

erroneous international tax returns that received the American Opportunity Tax Credit. In addition, the IRS will conduct

an analysis to determine the effectiveness of using estimated payments that post to the taxpayer's account in the filtering

process for the Form 1041 business IDT filters.

TIGTA Challenge 7: Reducing Fraudulent Claims and Improper Payments: IRS faces ongoing challenges to significantly

reduce the improper payments from refundable credits.

Although error rates for EITC, ACTC, and AOTC remain high, the IRS attributes these refundable tax credit overclaims to

their statutory design and the complexity taxpayers face when self-certifying eligibility for the refundable tax credits and not

to internal control weaknesses, financial management deficiencies, or reporting failures.

The following are barriers to reducing refundable tax credit improper payments: complexity and lack of data to verify

statutory eligibility requirements, lack of correctable error authority, high turnover of eligible taxpayers, unscrupulous

and/or incompetent tax return preparers, and fraud.

TIGTA Challenge 8: Increasing International Tax Compliance: Complexity and change in the international tax

environment require that the IRS collaborate with tax administrations of foreign countries to enforce compliance. The IRS

must continue to focus significant efforts on global tax cooperation and tax administration practices that can prevent and

resolve disputes among countries to increase certainty for foreign persons subject to U.S. taxes on U.S. source income.

Efforts to combat underreporting related to U.S. holders of foreign accounts and to foreign financial institutions are ongoing,

where Form 8966, Foreign Account Tax Compliance Act Report (FATCA) and Form 8938, Statement of Foreign Financial

Assets, data will be systemically matched to identify non-filers. The IRS is developing a data product to automate risk

assessments across the FATCA filing population. The compliance initiative to address error notices and unresolved recordlevel errors, including follow-up procedures, will improve the accuracy of data in FATCA reports.
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The IRS plans to update internal revenue code to remove any outdated language, develop procedures on when and what

forms to complete, develop data fields to the expatriate database to best evaluate tax compliance and develop procedures for

inputting and correcting data that is erroneously input by expatriates.

TIGTA Challenge 9: Protecting Taxpayer Rights: The IRS must balance its tax compliance activities against the rights of

taxpayers to receive fair and equitable treatment.

Congress enacted the prohibition against the use of the term “Illegal Tax Protester” and similar designations due to a 

concern that some taxpayers were being permanently labeled as Illegal Tax Protesters even though they had subsequently

become compliant with the tax laws.

To more clearly direct employees to the appropriate guidance on what collection activities may and may not be disclosed to

taxpayers who jointly filed returns, the IRS will update Internal Revenue Manuals (IRM), to reference and link to the IRM

where the disclosure criteria is found. Linking to the source information, rather than duplicating it across multiple IRM

sections complies with IRM standards and ensures consistency in published guidance.

In addition, the IRS will provide disclosure training in the FY 2022 Critical Filing Season Readiness Training.

TIGTA Challenge 10: Human Capital: IRS continues to experience challenges hiring and retaining an adequate workforce

to meet its workload demands. 

The IRS is executing the actions in its Pandemic Incident Management Plan for the protection of the health and safety of its

employees during the COVID-19 pandemic. The COVID-19 pandemic continues to affect the IRS’s ability to perform its

responsibilities of processing tax returns. The pandemic also threatens the health and safety of IRS employees. As such, the

IRS has had to continue to balance the achievement of its mission with the health and safety of its employees.

The IRS updated existing guidance clarifying the leave options, reminded employees of the current mask wearing

requirements, and updated (or replaced) signage where needed. The IRS updated its Pandemic Incident Management Plan 

to encourage leaders to implement measures, such as spot checks, to help ensure that employees follow the federal

government and IRS policies and guidance in response to emergency conditions.
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SECTION C: SUMMARY OF FINANCIAL STATEMENT AUDIT AND

MANAGEMENT ASSURANCES

The following tables summarize the results of Treasury’s financial statement audit, as well as management’s assurances

regarding conformance with the Federal Managers’ Financial Integrity Act of 1982 (FMFIA) and compliance with the

Federal Financial Management Improvement Act of 1996 (FFMIA). 

SUMMARY OF FINANCIAL STATEMENT AUDIT

Audit Opinion: Unmodified

Restatement: No

Beginning Ending

Material Weakness Balance New Resolved Consolidated Balance 

Total Material Weaknesses 0 0 0 0 0 

SUMMARY OF MANAGEMENT ASSURANCES

EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING (FMFIA SECTION 2)

Statement of Assurance: Unmodified

Beginning Ending

Material Weakness Balance New Resolved Consolidated Reassessed Balance 

Total Material Weaknesses 0 0 0 0 0 0 

EFFECTIVENESS OF INTERNAL CONTROL OVER OPERATIONS (FMFIA SECTION 2)

Statement of Assurance: Unmodified

Beginning Ending

Material Weakness Balance New Resolved Consolidated Reassessed Balance 

Total Material Weaknesses 0 0 0 0 0 0 

CONFORMANCE WITH FMFIA SECTION 4 

Statement of Assurance: Federal systems conform, except for instances of nonconformance with financial management system

requirements

Beginning Ending

NonConformances Balance New Resolved Consolidated Reassessed Balance 

Fiscal Service's Cash Management 

Information Systems 1 1 0 0 0 0 1 

Fiscal Service's Federal Debt Information 

Systems 1 1 0 0 0 0 1 

IRS's Unpaid Tax Assessments 1 1 0 0 0 0 1 

IRS's Financial Reporting Systems 1 1 0 0 0 0 1 

Total nonconformances 4 0 0 0 0 4 

1 Refer to Independent Auditors’ Report in Part 2 of this report.
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COMPLIANCE WITH FFMIA SECTION 803(a) 

Agency Auditor

1. Federal Financial Management System Requirements Lack of compliance noted Lack of compliance noted

2. Applicable Federal Accounting Standards No lack of compliance noted No lack of compliance noted

3. U.S. Standard General Ledger (USSGL) at Transaction Level No lack of compliance noted No lack of compliance noted

FMFIA AND FFMIA REQUIREMENTS

The FMFIA requires agencies to establish and maintain internal control to ensure that federal programs operate efficiently,

effectively, and in compliance with laws and regulations. The Secretary must evaluate and report annually on (a) whether

there is reasonable assurance that the Agency’s controls are achieving their intended objectives, and (b) material weaknesses

in the Agency’s controls (FMFIA Section 2). Additionally, the Secretary must evaluate and report separately on whether the

Agency’s financial management systems comply with government-wide requirements (FMFIA Section 4). The FFMIA 

requires agencies to implement and maintain financial management systems that substantially comply with federal

financial management systems requirements, applicable federal accounting standards, and the USSGL at the transaction

level. The requirements of the FMFIA serve as an umbrella under which other reviews, evaluations, and audits should be

coordinated and considered to support management’s assertion about the effectiveness of internal control over operations,

reporting, and compliance with laws and regulations.

As of September 30, 2021, we had no material weaknesses under Section 2 or Section 4 of the FMFIA. However, we have

four instances of non-conformance with the federal financial management systems requirements of Section 4 of the FMFIA. 

These instances of nonconformance also constitute a lack of compliance with federal financial management system

requirements, as reported above under FFMIA Section 803(a). 

Fiscal Service has two nonconformances related to the deficiencies in its cash management and federal debt management

information systems. The IRS has two instances of nonconformance related to the deficiencies in unpaid tax assessments

and financial reporting systems. Refer to the section in Part 1 entitled Systems, Controls and Legal Compliance and the

section in Part 2 entitled Independent Auditors’ Report for additional information on the nonconformance issues.
258 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | OTHER INFORMATION

SECTION D: PAYMENT INTEGRITY

We currently report erroneous payments for refundable tax credits (RTCs) within this section in accordance with the

improper payment reporting requirements of the Payment Integrity Information Act of 2019 (PIIA) and OMB Circular A123, Appendix C, Requirements for Payment Integrity Improvement (OMB Appendix C) as well as part of the tax gap

estimate program (see Part 3, Section A: Tax Gap and Tax Burden). However, we have long held that these RTCs are not

“payments” as intended under the improper payments legislation but are more appropriately addressed in the tax gap

estimate. Erroneous payments for RTCs are more appropriately referred to as “overclaims.” As such, we report error rates

as outlined in the PIIA and OMB Appendix C, for three refundable tax credits1—the EITC, AOTC, and ACTC—which have

error rates similar in concept to “significant improper payments.” Current and prior year Payment Integrity information can

now be accessed at https://paymentaccuracy.gov/. 

As discussed below, the root cause of the errors in the EITC, AOTC, and ACTC RTCs, is not the result of internal control

deficiencies and, as such, the IRS has continuously deployed costly enforcement tools to lower the error rate. Deployment of

these enforcement tools has had minimal impact on lowering the error rate. Between FY 2006 and FY 2021, Treasury’s error

rates for EITC have ranged from 22.8 percent to 27.7 percent. As such, we have long held that focusing enforcement

resources on the larger tax gap is a more efficient and cost-effective way to minimize the tax gap and maximize tax

collections. We continue to support the reporting of RTC errors as part of the tax gap estimate as a better reflection of how

the IRS approaches taxpayer compliance relative to the U.S. tax system.

Notwithstanding the above discussion, and as noted previously, these RTCs are not “payments” as intended under the

improper payments legislation, as the tax system is a collection system rather than a payment system. Whereas a payment

system is generally designed to implement internal controls that provide for appropriate verification and validation prior to

payments being made, the statutory structure and design for administering refundable tax credit refunds prevents the IRS

from verifying or validating such amounts prior to making a refund. Consequently, refundable tax credit errors are not the

result of internal control weaknesses that we can remediate internally but are, in fact, the result of factors beyond our

control under current law and existing authority. Even if we could obtain legislative changes and invest in additional

resources and verification solutions that would ultimately reduce errors, the benefits derived would be marginal relative to

the cost of doing so. As such, it is our position that refundable tax credit refunds that result in errors should not be reported

under the improper payments framework. Rather they are more appropriately addressed in the tax gap estimate, which is

how we manage noncompliance. The following provides an in-depth discussion of the factors presented in this summary.

RTC CLAIMS SHOULD NOT BE CONSIDERED PAYMENTS

RTC refunds are a fundamental part of the U.S. income tax system, and only result when a taxpayer’s liability is reduced

below zero. We believe that RTC refunds are not true “payments” as intended by the improper payment statute. PIIA (P.L. 

116-117) defines a payment as “any transfer or commitment for future transfer of federal funds, such as cash, securities,

loans, loan guarantees, and insurance subsidies to any non-federal person or entity, that is made by a federal agency, a 

federal contractor, a federal grantee, or a governmental or other organization administering a federal program or activity.”

Tax refunds are reimbursements of amounts taxpayers overpay and are not considered “payments” as intended by improper

payment statutes. Similarly, the Internal Revenue Code (IRC) also considers RTC refunds to be amounts overpaid, stating

that if the RTC amount allowed exceeds the tax imposed, the excess amount of RTC should be considered an overpayment. 

As such, since there is no basis to distinguish between tax refunds from RTC refunds, our position is that RTC refunds

1 In FY 2019, net Premium Tax Credits (PTC) was determined to be susceptible to significant improper payments due to the volume of overclaims. 

However, Treasury notified OMB that it will delay the annual reporting of improper payments for PTC for FY 2021. The notification was made

pursuant to OMB’s June 17, 2020 memorandum, Risk Based Financial Audits and Reporting Activities in Response to COVID-19, which OMB issued

in response to the significant new demands placed upon agencies in connection with implementing the CARES Act and other COVID-19 related

programs.
DEPARTMENT OF THE TREASURY 259 

OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

should also not be considered a “payment” and accordingly, we do not consider RTC errors to be improper payments as

intended by PIIA. RTCs are an inherent part of the tax system which relies heavily on voluntary reporting. Payment

systems are generally designed to provide for appropriate verification and validation that payments are authorized, paid to

the right entity, and paid in the correct amount. Inherent in these payment systems is the reliance on this verification and

validation before the IRS makes payment. By contrast, the U.S. income tax system is fundamentally different from a 

payment program in numerous and significant ways. The tax system is a collection system in which the individual taxpayer

self-certifies information the taxpayer used to calculate income tax withholdings. Tax filers then voluntarily declare the

amount of tax liability due and pay any remaining balances or request that any excess amounts withheld be refunded. The 

IRS issues refunds primarily on the basis of the tax return as submitted. 

Furthermore, treating the outlay portion of tax credits as payments ignores the interrelated nature of other components of

the tax system and provides no additional information that would help the IRS or Treasury address RTC errors. Continuing

to report outlays as payments could lead to inefficient and skewed application of limited enforcement resources whereas the

IRS’ tax gap estimate and enterprise risk management (ERM) framework better equip the IRS to analyze and address

noncompliance throughout the federal tax system.

INTERNAL CONTROL ISSUES ARE NOT THE ROOT CAUSE OF RTC ERRORS

PIIA’s enactment was intended to reduce the U.S. government’s wasteful

spending by increasing agencies’ accountability for preventing and

recovering improper payments. Improper payment reporting requirements

link the reduction of improper payment rates with agency efforts to

establish or enhance internal controls for ensuring payments are accurately

calculated and made to the correct recipient. OMB Appendix C states that

agencies should approach improper payments with an internal control

framework that is integrated with ERM for 

purposes of managing payment integrity risk and reducing improper

payment rates. However, as we have determined repeatedly through

qualitative risk assessments, RTC errors are not primarily rooted in

internal control deficiencies, but instead are the result of factors beyond our

control such as the statutory design of the RTCs, the complexity of the

eligibility requirements, the reliance on taxpayers’ self-certification of the

accuracy of their returns, and the lack of third-party data for verification. 

A challenging distinction of RTC errors as compared to other programs is

the lack of an application process that would allow the IRS to pre-qualify

the taxpayer for RTCs, as is the case with most healthcare and other

benefits, Social Security payments, veterans’ compensation, and so on. The

tax code relies on taxpayer ex post self-certification as opposed to a preapproval screening process. Databases including all

the third-party data the IRS needs for independent verification do not exist and would present a substantial privacy

challenge to construct. Government Accountability Office (GAO) and TIGTA audits have concluded that RTC errors are

largely due to the statutory design and complexity of the RTC programs, and not internal control weaknesses, financial

management deficiencies, or reporting failures as PIIA guidelines are intended to address. To learn more about the RTCs

and the challenges of compliance, see Part 3, Section A: Tax Gap and Tax Burden.

QUOTEINSPECTOR.COM

Primary Causes of RTC Errors

• Complex statutory eligibility rules 

• Inability to verify taxpayer-provided 

information prior to refunding due to 

lack of independent data sources

• Lack of correctable error authority 

• Statutory requirement to issue tax 

refunds within 45 days of the filing 

deadline without paying interest
260 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | OTHER INFORMATION

UNIQUE CHALLENGES IN VALIDATING RTCS

Much of the information necessary to validate the accuracy of an RTC claim before issuing a tax refund is not

comprehensively available in any U.S. government database. The IRS runs various automated checks of certain data on a 

tax return before paying a refund but is otherwise limited in its ability to question and correct the taxpayer’s claim. The IRS

must deploy a variety of costly enforcement tools, including audits, to verify the information on the tax return prior to paying

tax refunds or collecting any tax due. As a result, the IRS allocates a disproportionate amount of its enforcement resources

to audit returns that claim one or more RTCs. This creates several problems. Because lower-income taxpayers make up the

majority of those claiming RTCs, they are subjected to a disproportionate number of audits (RTC claimants are audited

about three times the rate of other taxpayers). Since lower-income taxpayers make up a significant portion of taxpayers

claiming RTCs, auditing these taxpayers can lead to a negative perception of the IRS’s treatment of taxpayers. This runs

counter to the IRS’s mission of fairness to all. Finally, the U.S. government may incur interest costs by delaying the

issuance of refunds to taxpayers. As a result of not processing these returns until an audit is completed, we conservatively

estimate the U.S. government will incur an additional interest expense annually ranging from $20.8 million to $41.6 million

for delayed refunds of accurate returns.

More than 50 percent of taxpayers claiming refundable tax credits use paid preparers. Preparer education and outreach are

major components of the IRS’s overall strategy to address the tax gap and to reduce errors. The IRS’s education and

outreach efforts seek to inform preparers about the availability of the credits and about the eligibility requirements that

taypayers must meet to claim the credits. The IRS uses many communication vehicles to send important and useful

messages to the return preparer community. Table 1 highlights other tax administration strategies.
DEPARTMENT OF THE TREASURY 261 

OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

TABLE 1: 

Other Tax Administration Strategies

Nationwide Tax Forum The annual tax forum offers three full days of seminars with the latest news

from the IRS leadership and experts. More than 16,000 preparers attended the

seminars at the 2020 Nationwide Tax Forums that covered RTC topics. More

than 8,230 preparers attended the webinar “Keys to Mastering Due Diligence

and What to Expect During a Due Diligence Audit”, and nearly 7,830 preparers

attended webinar, “Be Tax Ready: Understanding Rules for Due Diligence and

the Child Tax Credit and the Earned Income Tax Credit Under the American

Rescue Plan Act of 2021.”

Interactive Due Diligence 

Training Module

The training module on IRS.gov covers the technical aspects of the due diligence

requirements. In FY 2021, nearly 12,860 preparers received a certificate of

completion.

Tax Preparer Toolkit The Tax Preparer Toolkit on IRS.gov has resources to assist tax return

preparers with the EITC, ACTC, AOTC, as well as other credits and tax

benefits.

Software Developers 

Working Group

The IRS meets with members of tax preparation companies and software

industry representatives to identify software enhancements that can help

reduce errors made by taxpayers and paid preparers and to assist paid

preparers in meeting their due diligence requirements.

Due Diligence Webinars The IRS hosts discussions and provides instructions and demonstrations over

the internet. In FY 2021, nearly 5,580 preparers attended a virtual webinar on

due diligence requirements as part of the IRS’s annual campaign, “Get Ready

for Taxes”.

Tax Preparer Alerts Alerts on IRS.gov provide return preparers with updated news and information

on key refundable credit and return filing topics.

Refundable Credits 

Summit

In FY 2021, the IRS held its annual summit to provide a forum for interested

internal and external stakeholders to discuss opportunities to reduce improper

payments, ease taxpayer burden, and mitigate compliance risks. An additional

summit was held to discuss administering the advance child tax credit

provisions in the ARP.

The Protecting Americans from Tax Hikes Act of 2015 (PATH Act; P.L. 114-113) directly affects the IRS’s tax administration

of RTCs. The PATH Act made several legislative changes that altered the tax filing and refund experience of many

taxpayers. Most significantly, starting with the 2017 filing season, the PATH Act added certain provisions that gives the

IRS additional time to prevent errors associated with EITC and ACTC:

• allows the IRS to hold taxpayers’ refunds until February 15 of the filing year on returns claiming EITC and/or ACTC as

directed in Section 201(b), using the time to identify fraudulent returns; and
262 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | OTHER INFORMATION

• rejects amended and late filed original returns taxpayers file retroactively claiming EITC for any prior year in which he

or she did not have a valid Social Security number as directed in Section 204.

Further improving the integrity of RTC programs will take actions beyond our control. We have proposed various legislative

changes over the years aimed at providing more effective tools for managing RTCs. For FY 2022, the Administration

included the following proposals in its Budget submission:

• implement multi-year program integrity allocation adjustments and provide mandatory funding to the IRS to

expand enforcement and compliance activities, enhance information technology capacity, and strengthen taxpayer

service; 

• increase oversight of paid tax return preparers to help promote high quality services and improve voluntary

compliance; and

• increase penalties on “ghost preparers”—i.e., preparers who receive service payments but fail to identify themselves

on the taxpayers’ returns—and increase the limitations period during which the penalty may be assessed.

These statutory changes may help reduce RTC errors to some degree. However, a meaningful reduction in the estimated

error rate is unlikely without independent data sources through which the IRS can verify taxpayer-provided information and

additional time and resources for the IRS to address any issues identified. 

REDUCING RTC ERRORS DIVERTS VALUABLE RESOURCES FROM OTHER TAX GAP ELEMENTS

Compliance with the improper payment legislation and OMB reporting guidance requires reducing each program’s improper

payment rate to 10 percent or less. Due to the limited IRS resources, the amount of revenue protected and collected through

the current level of enforcement activities on RTC returns is small relative to the estimated amount of RTC errors. In a 

FY 2020 study to reduce error rates to less than 10 percent, to meet PIIA compliance standards, the IRS estimated that it

would need additional or reallocated resources of $2.5 billion, equal to nearly half the IRS’s current total enforcement

budget, to audit 4.2 million additional RTC returns in the pre-refund environment. If the IRS were to reallocate enforcement

resources to be compliant with PIIA, a substantial loss in enforcement revenue, estimated at $6.4 billion, would result

because the IRS would have to divert resources from programs with higher returns and tax gap elements to audits of RTC

returns. Moreover, such enforcement actions would place substantial burden on low-income taxpayers through increased

audits and delayed refunds, violating the IRS requirement to enforce the tax law with integrity and fairness. To meet OMB’s

metric of reducing the improper payment rate to 10 percent or less for FY 2021, RTC programs would need to reduce

erroneous payments by $14.7 billion, based on FY 2021 estimates. Table 2 illustrates this data.

TABLE 2: 

RTC Claims and Improper Payments, FY 2021 (dollars in billions) 

Reduction of Improper 

Payments to 10% of claims 

value (dollars in billions)

Program Claims

Improper 

Payments 

Improper 

Payment Rate

10% of 

claims value

Reduction 

needed for ≤ 

10% 

EITC $68.3 $19.0 27.8% $6.8 $12.2 

ACTC 39.4 5.2 13.3% 3.9 1.3 

AOTC 7.1 1.9 26.3% 0.7 1.2 

Total $114.8 $26.1 22.7 *(1) $11.4 $14.7 

(1) Total Erroneous claims ÷ Total RTC Program ($26.1 ÷ $114.8).
DEPARTMENT OF THE TREASURY 263 

OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

The current improper payment statutory framework does not consider

recoveries of improper payments as reductions to the error rate. 

Therefore, remediation efforts would need to be preventative in

nature, which creates challenges given the tax framework and the

need to process returns timely or incur interest payment obligations. 

Accordingly, all enforcement activity would need to be in the prerefund environment to be counted as a reduction of errors. The 

control activities specific to reducing the improper payment rate to

less than 10 percent are the same as those being deployed to reduce

the RTC portion of the tax gap: additional audits, system buildouts or

enhancements (upgrades), increased outreach, third party databases

to verify taxpayer data, and others. The IRS would have to increase

these control activities significantly in an entirely pre-refund

environment to reduce the erroneous RTC payments, which would

come with highly diminishing returns. 

The error rate for EITC has averaged 24.9 percent from FY 2006 to FY 

2021 despite the on-going base enforcement and EITC compliance strategies. This rate excludes funds recovered through

post-refund enforcement activity, because improper payment reporting does not take into account recoveries after the

refunds are issued. As discussed, reducing RTC errors to meet the improper payment rate of 10 percent would divert

valuable resources from other tax gap elements. In FY 2021 introduced the concept of “tolerable improper payment rate.” A 

tolerable rate is defined by OMB as, “the improper payment and unknown payment estimate achieved with a balance of

payment integrity risk and processes to mitigate that risk.” During FY 2022, we will determine whether the refundable tax

credit errors have reached a tolerable rate.

The estimated improper payment rate for the EITC was 27.8 percent in FY 2021, which is not statistically different from the

estimated rate of 23.5 percent for FY 2020. The estimated improper payment rate for the ACTC was 13.3 percent in FY 

2021, which is not statistically different from the estimated rate of 11.5 percent for FY 2020. The FY 2021 estimated rates

fall within sample precision margins of +/- 2.46 percent and +/- 2.31 percent. The wider sample precision margins are the

result of a reduction in the number of returns sampled that was necessitated by the significant reduction in the IRS’s budget

over the last decade along with the resulting decrease in the IRS’s examination staff. 

The initial TY 2017 NRP Individual Income Tax Reporting Compliance sample, upon which the FY 2021 estimates are

based, was designed to include the original sample of 11,466 returns, a 20 percent decrease compared to prior study

years. Over the last decade, the IRS’s budget has decreased by more than 20 percent, and IRS Enforcement Full-Time

Equivalents dropped by 32 percent. Due to the continued decline in enforcement staff, the IRS further reduced the sample to

4,000 returns, which were drawn from the original sample; these returns are representative of the entire sampling frame,

including returns that did not claim RTCs subject to improper payments reporting. The differences in the point estimates

are not statistically significant because the FY 2020 estimates fall within the wider FY 2021 statistical margin of error. 

Accordingly, one cannot conclude that the true population estimated improper payment rates for ACTC and EITC has

changed based upon these samples. The margin of error for the refundable AOTC remained about the same as prior years

due to improvements in the sample design for TY 2017.

 

DEPARTMENT OF THE TREASURY

Estimated Errors Have Remained Steady 

Despite Efforts to Reduce Error Rates 

EITC estimated error rates have ranged from

22.8 percent to 27.8 percent between FY 2006

and FY 2021, with an average annual error

rate estimate of 24.9 percent.
264 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | OTHER INFORMATION

SECTION E: CIVIL MONETARY PENALTIES INFLATION ADJUSTMENT

The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Act) amended the Federal Civil

Penalties Inflation Adjustment Act of 1990 (Inflation Adjustment Act), to improve the effectiveness of civil monetary

penalties (CMPs) and to maintain their deterrent effect. The 2015 Act requires agencies to annually adjust the level of civil

monetary penalties for inflation and report annually in AFRs. The 2015 Act requires that agencies make annual inflation

adjustments based on annual OMB guidance and publish the latest penalty levels in the Federal Register no later than

January 15 each year. The Inflation Adjustment Act and the 2015 Act exclude penalties under the IRC and the Tariff Act of

1930. The table below depicts the covered CMPs that are under our purview.

 

Statutory Authority Penalty (Name or

Description)

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation)

Current Penalty 

Level ($

Amount or

Range)(1)

Sub-Agency

Bureau/

Entity 

Location for Penalty 

Update Details

50 USC App. 16(b)(1) 

Trading with the Enemy Act,

Section 16(b)

Sanctions violation 1917 2021 $91,816

DO (Office of

Foreign Assets

Control

(OFAC)) 

86 Federal Register

14534 (March 17, 

2021)

https://www.govinfo.g

ov/content/pkg/FR2021-03-17/pdf/2021-

05506.pdf

50 USC 1705 

International Emergency

Economic Powers Act, Section

206

Sanctions violation 1977 2021 

The greater of

$311,562 or

twice the value

of the

underlying

transaction

DO (OFAC) Same as above

18 USC 2339B(b) 

Antiterrorism and Effective

Death Penalty Act of 1996

Sanctions violation 1996 2021

The greater of

$82,244 or twice

the amount of

which a financial

institution was

required to

retain

possession or

control

DO (OFAC) Same as above

21 USC 1906(b) 

Foreign Narcotics Kingpin

Designation Act, Section 807

Sanctions violation 1999 2021 $1,548,075 DO (OFAC) Same as above

19 USC 3901-3913 

Clean Diamond Trade Act Sanctions violation 2003 2021 $14,074 DO (OFAC) Same as above

50 USC 1701 - 1706 

International Emergency

Economic Powers Act

Failure to furnish

information pursuant to 31 

CFR 501.602 irrespective of

whether any other violation

is alleged

2008 2021 $24,046 DO (OFAC) Same as above
DEPARTMENT OF THE TREASURY 265 

OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

Statutory Authority Penalty (Name or

Description)

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation)

Current Penalty 

Level ($

Amount or

Range)(1)

Sub-Agency

Bureau/

Entity 

Location for Penalty 

Update Details

50 USC 1701 - 1706 

International Emergency

Economic Powers Act

Failure to furnish

information pursuant to 31 

CFR 501.602 where OFAC

has reason to believe that

the apparent violation(s)

involves a transaction(s)

valued at greater than

$500,000, irrespective of

whether any other violation

is alleged

2008 2021 $60,115 DO (OFAC) Same as above 

50 USC 1701 - 1706 

International Emergency

Economic Powers Act

Late filing of a required

report, whether set forth in

regulations or in a specific

license, if filed within the

first 30 days after the report

is due

2008 2021 $3,005 DO (OFAC) Same as above

50 USC 1701 - 1706 

International Emergency

Economic Powers Act

Late filing of a required

report, whether set forth in

regulations or in a specific

license, if filed more than

30 days after the report is

due

2008 2021 $6,012 DO (OFAC) Same as above

50 USC 1701 - 1706 

International Emergency

Economic Powers Act

Late filing of a required

report, whether set forth in

regulations or in a specific

license, if the report relates

to blocked assets, an

additional CMP for every 30 

days that the report is

overdue, up to five years

2008 2021 $1,203 DO (OFAC) Same as above

50 USC 1701 - 1706 

International Emergency

Economic Powers Act

Failure to maintain records

in conformance with the

requirements of OFAC’s

regulations or of a specific

license

2008 2021 $60,226 DO (OFAC) Same as above

15 USC 6701 note 

Terrorism Risk Insurance Act, as

amended

Civil Penalty 2002 2021 $1,436,220

DO (Federal

Insurance

Office)

86 Federal Register

12537 (March 4, 2021) 

https://www.govinfo.g

ov/content/pkg/FR2021-03-04/pdf/2021-

04377.pdf 

12 USC 1829b(j) 

Bank Secrecy Act, as amended

Recordkeeping Violations

for Funds Transfers 1988 2021 $21,663 FinCEN

86 Federal Register

7348 (January 28, 

2021)

https://www.govinfo.g

ov/content/pkg/FR2021-01-28/pdf/2021-

01919.pdf

12 USC 1955 

Bank Secrecy Act, as amended

Willful/Grossly Negligent

Recordkeeping Violations 1988 2021 $21,663 FinCEN Same as above

31 USC 5318(k)(3)(C) 

Bank Secrecy Act, as amended

Failure to Terminate

Correspondent Relationship

with Foreign Bank

2001 2021 $14,653 FinCEN Same as above

31 USC 5321(a)(1) 

Bank Secrecy Act, as amended

General Civil Penalty

Provision for Willful 1986 2021 $59,017 to$236,071 FinCEN Same as above
266 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | OTHER INFORMATION

Statutory Authority Penalty (Name or

Description)

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation)

Current Penalty 

Level ($

Amount or

Range)(1)

Sub-Agency

Bureau/

Entity 

Location for Penalty 

Update Details

Violations of Bank Secrecy 

Act Requirements 

31 USC 5321(a)(5)(B)(i) 

Bank Secrecy Act, as amended

Foreign Financial Agency

Transaction - Non-Willful

Violation of Transaction

2004 2021 $13,640 FinCEN Same as above

31 USC 5321(a)(5)(C)(i)(l) 

Bank Secrecy Act, as amended

Foreign Financial Agency

Transaction - Willful

Violation of Transaction

2004 2021 $136,399 FinCEN Same as above

31 USC 5321(a)(6)(A) 

Bank Secrecy Act, as amended

Negligent Violation by

Financial Institution or NonFinancial Trade or Business1986 2021 $1,180 FinCEN Same as above

31 USC 5321(a)(6)(B) 

Bank Secrecy Act, as amended

Pattern of Negligent Activity

by Financial Institution or

Non-Financial Trade or

Business 

1992 2021 $91,816 FinCEN Same as above

31 USC 5321(a)(7) 

Bank Secrecy Act, as amended

Violation of Certain Due

Diligence Requirements, 

Prohibition on

Correspondent Accounts for

Shell Banks, and Special

Measures

2001 2021 $1,465,309 FinCEN Same as above

31 USC 5330(e) 

Bank Secrecy Act, as amended

Civil Penalty for Failure to

Register as Money

Transmitting Business 

1994 2021 $8,708 FinCEN Same as above

12 USC 93(b) 

Section 5239(b) of the Revised

Statutes

Tier 1 Violation of Various

Provisions of the National

Bank Act

1978 2021 $10,366 OCC 

85 Federal Register

86795 (December 31, 

2020) 

https://www.govinfo.g

ov/content/pkg/FR2020-12-31/pdf/2020-

28942.pdf

12 USC 93(b) 

Section 5239(b) of the Revised

Statutes

Tier 2 Violation of Various

Provisions of the National

Bank Act

1978 2021 $51,827 OCC Same as above

12 USC 93(b) 

Section 5239(b) of the Revised

Statutes

Tier 3 Violation of Various

Provisions of the National

Bank Act

1978 2021 $2,073,133 OCC Same as above

12 USC 164 

Section 5213 of the Revised

Statutes

Tier 1 Violation of Reporting

Requirements 1869(2) 2021 $4,146 OCC Same as above

12 USC 164 

Section 5213 of the Revised

Statutes

Tier 2 Violation of Reporting

Requirements 1869(2) 2021 $41,463 OCC Same as above

12 USC 164 

Section 5213 of the Revised

Statutes

Tier 3 Violation of Reporting

Requirements 1869(2) 2021 $2,073,133 OCC Same as above

12 USC 481 

Section 5240 of the Revised

Statutes

Refusal of Affiliate to

Cooperate in Examination

(National Banks) 

1864(2) 2021 $10,366 OCC Same as above

12 USC 504 

Section 29 of the Revised

Statutes

Tier 1 Violation of Various

Provisions of the Federal

Reserve Act

1978 2021 $10,366 OCC Same as above
DEPARTMENT OF THE TREASURY 267 

OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

Statutory Authority Penalty (Name or

Description)

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation)

Current Penalty 

Level ($

Amount or

Range)(1)

Sub-Agency

Bureau/

Entity 

Location for Penalty 

Update Details

12 USC 504 

Section 29 of the Revised

Statutes

Tier 2 Violation of Various

Provisions of the Federal

Reserve Act

1978 2021 $51,827 OCC Same as above

12 USC 504 

Section 29 of the Revised

Statutes

Tier 3 Violation of Various

Provisions of the Federal

Reserve Act

1978 2021 $2,073,133 OCC Same as above

12 USC 1817(j)(16) 

Section 7(j)(16) of the Federal

Deposit Insurance Act

Tier 1 Violation of Change in

Bank Control Act 1978 2021 $10,366 OCC Same as above

12 USC 1817(j)(16) 

Section 7(j)(16) of the Federal

Deposit Insurance Act

Tier 2 Violation of Change in

Bank Control Act 1978 2021 $51,827 OCC Same as above

12 USC 1817(j)(16) 

Section 7(j)(16) of the Federal

Deposit Insurance Act

Tier 3 Violation of Change in

Bank Control Act 1978 2021 $2,073,133 OCC Same as above

12 USC 1818(i)(2) 

Section 8(i)(2) of the Federal

Deposit Insurance Act

Tier 1 Violation of Law,

Unsafe or Unsound

Practice, or Breach of

Fiduciary Duty

1978 2021 $10,366 OCC Same as above

12 USC 1818(i)(2) 

Section 8(i)(2) of the Federal

Deposit Insurance Act

Tier 2 Violation of Law,

Unsafe or Unsound

Practice, or Breach of

Fiduciary Duty

1978 2021 $51,827 OCC Same as above

12 USC 1818(i)(2) 

Section 8(i)(2) of the Federal

Deposit Insurance Act

Tier 3 Violation of Law,

Unsafe or Unsound

Practice, or Breach of

Fiduciary Duty

1978 2021 $2,073,133 OCC Same as above

12 USC 1820(k)(6)(A)(ii) 

Section 10(k)(6)(A)(ii) of the

Federal Deposit Insurance Act

Violation of PostEmployment Restrictions 2004 2021 $341,000 OCC Same as above

12 USC 1832(c) 

Section 2 of Public Law 93-100

Violation of Withdrawals by

Negotiable or Transferable

Instrument for Transfers to

Third Parties (National

Banks) 

1973 2021 $3,011 OCC Same as above

12 USC 1832(c) 

Section 2 of Public Law 93-100

Violation of Withdrawals by

Negotiable or Transferable

Instrument for Transfers to

Third Parties (Federal

Savings Associations)

1973 2021 $2,737 OCC Same as above

12 USC 1884 

Section 5 of the Bank

Protection Act of 1968

Violation of the Bank

Protection Act 1968 2021 $301 OCC Same as above

12 USC 1972(2)(F) 

Section 106(b)(2)(F) of the Bank

Holding Company Act

Amendments of 1970

Tier 1 Violation of AntiTying Provisions Regarding

Correspondent Accounts,

Unsafe or Unsound

Practices, or Breach of

Fiduciary Duty

1978 2021 $10,366 OCC Same as above
268 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | OTHER INFORMATION

Statutory Authority Penalty (Name or

Description)

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation)

Current Penalty 

Level ($

Amount or

Range)(1)

Sub-Agency

Bureau/

Entity 

Location for Penalty 

Update Details

12 USC 1972(2)(F) 

Section 106(b)(2)(F) of the Bank

Holding Company Act

Amendments of 1970

Tier 2 Violation of AntiTying Provisions Regarding

Correspondent Accounts,

Unsafe or Unsound

Practices, or Breach of

Fiduciary Duty

1978 2021 $51,827 OCC Same as above

12 USC 1972(2)(F) 

Section 106(b)(2)(F) of the Bank

Holding Company Act

Amendments of 1970

Tier 3 Violation of AntiTying Provisions Regarding

Correspondent Accounts,

Unsafe or Unsound

Practices, or Breach of

Fiduciary Duty

1978 2021 $2,073,133 OCC Same as above

12 USC 3110(a) 

Section 16(a) of the

International Banking Act of

1978

Violation of Various

Provisions of the

International Banking Act

(Federal Branches and

Agencies)

1991 2021 $47,378 OCC Same as above

12 USC 3110(c) 

Section 16(c) of the

International Banking Act of

1978

Tier 1 Violation of Reporting

Requirements of the

International Banking Act

(Federal Branches and

Agencies)

1991 2021 $3,791 OCC Same as above

12 USC 3110(c) 

Section 16(c) of the

International Banking Act of

1978

Tier 2 Violation of Reporting

Requirements of the

International Banking Act

(Federal Branches and

Agencies)

1991 2021 $37,901 OCC Same as above

12 USC 3110(c) 

Section 16(c) of the

International Banking Act of

1978

Tier 3 Violation of Reporting

Requirements of the

International Banking Act

(Federal Branches and

Agencies)

1991 2021 $1,895,095 OCC Same as above

12 USC 3909(d)(1) 

Section 910(d)(1) of the

International Lending

Supervision Act of 1983

Violation of International

Lending Supervision Act 1983 2021 $2,579 OCC Same as above

15 USC 78u-2(b) 

Section 21B(b) of the Securities

Exchange Act of 1934

Tier 1 (natural person)

Violation of Various

Provisions of the Securities

Act, the Securities Exchange

Act, the Investment

Company Act, or the

Investment Advisers Act

1990 2021 $9,753 OCC Same as above

15 USC 78u-2(b) 

Section 21B(b) of the Securities

Exchange Act of 1934

Tier 1 (other person)

Violation of Various

Provisions of the Securities

Act, the Securities Exchange

Act, the Investment

Company Act, or the

Investment Advisers Act

1990 2021 $97,523 OCC Same as above

15 USC 78u-2(b) 

Section 21B(b) of the Securities

Exchange Act of 1934

Tier 2 (natural person)

Violation of Various

Provisions of the Securities

Act, the Securities Exchange

Act, the Investment

1990 2021 $97,523 OCC Same as above
DEPARTMENT OF THE TREASURY 269 

OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

Statutory Authority Penalty (Name or

Description)

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation)

Current Penalty 

Level ($

Amount or

Range)(1)

Sub-Agency

Bureau/

Entity 

Location for Penalty 

Update Details

Company Act, or the

Investment Advisers Act

15 USC 78u-2(b) 

Section 21B(b) of the Securities

Exchange Act of 1934

Tier 2 (other person)

Violation of Various

Provisions of the Securities

Act, the Securities Exchange

Act, the Investment

Company Act, or the

Investment Advisers Act

1990 2021 $487,616 OCC Same as above

15 USC 78u-2(b) 

Section 21B(b) of the Securities

Exchange Act of 1934

Tier 3 (natural person)

Violation of Various

Provisions of the Securities

Act, the Securities Exchange

Act, the Investment

Company Act, or the

Investment Advisers Act

1990 2021 $195,047 OCC Same as above

15 USC 78u-2(b) 

Section 21B(b) of the Securities

Exchange Act of 1934

Tier 3 (other person)

Violation of Various

Provisions of the Securities

Act, the Securities Exchange

Act, the Investment

Company Act, or the

Investment Advisers Act

1990 2021 $975,230 OCC Same as above

15 USC 1639e(k) 

Section 129E(k) of the Truth in

Lending Act

First Violation - Violation of

Appraisal Independence

Requirements

2010 2021 $11,906 OCC Same as above

15 USC 1639e(k) 

Section 129E(k) of the Truth in

Lending Act

Subsequent Violations - 

Violation of Appraisal

Independence

Requirements

2010 2021 $23,811 OCC Same as above

42 USC 4012a(f)(5) 

Section 102(f)(5) of the Flood

Disaster Protection Act of 1973

Flood Insurance 1994 2021 $2,252 OCC Same as above

12 USC 1464(v) 

Section 5(v) of the Home

Owners' Loan Act

Tier 1 Reports of Condition - 

Savings Associations 1989 2021 $4,146 OCC Same as above

12 USC 1464(v) 

Section 5(v) of the Home

Owners' Loan Act

Tier 2 Reports of Condition - 

Savings Associations 1989 2021 $41,463 OCC Same as above

12 USC 1464(v) 

Section 5(v) of the Home

Owners' Loan Act

Tier 3 Reports of Condition - 

Savings Associations 1989 2021 $2,073,133 OCC Same as above

12 USC 1467(d) 

Section 9(d) of the Home

Owners' Loan Act

Refusal of Affiliate to

Cooperate in Examination 1989 2021 $10,366 OCC Same as above

12 USC 1467a(r) 

Section 10(r) of the Home

Owners' Loan Act

Tier 1 Late/Inaccurate

Reports (Savings and Loans) 1989 2021 $4,146 OCC Same as above
270 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | OTHER INFORMATION

Statutory Authority Penalty (Name or

Description)

Year 

Enacted 

Latest Year of

Adjustment (via

Statute or

Regulation)

Current Penalty 

Level ($

Amount or

Range)(1)

Sub-Agency

Bureau/

Entity 

Location for Penalty 

Update Details

12 USC 1467a(r) 

Section 10(r) of the Home

Owners' Loan Act

Tier 2 Late/Inaccurate

Reports (Savings and Loans) 1989 2021 $41,463 OCC Same as above

12 USC 1467a(r) 

Section 10(r) of the Home

Owners' Loan Act

Tier 3 Late/Inaccurate

Reports (Savings and Loans) 1989 2021 $2,073,133 OCC Same as above

27 USC 218 

Federal Alcohol Administration

Act, as amended; Section 207 

of the Alcohol Beverage

Labeling Act of 1988, P.L. 100-

690 

Violation 1988 2021 $21,663 TTB

86 Federal Register

22867 (April 30, 2021)

https://www.govinfo.g

ov/content/pkg/FR2021-04-30/pdf/2021-

08863.pdf 

31 USC 333 

Prohibition of Misuse of

Department of the Treasury

Names, Symbols, etc.

Misuse of Treasury name or

symbol 1994 2021 $8,212 DepartmentWide

86 Federal Register

12537 (March 4, 2021) 

https://www.govinfo.g

ov/content/pkg/FR2021-03-04/pdf/2021-

04377.pdf 

31 USC 333 

Prohibition of Misuse of

Department of the Treasury

Names, Symbols, etc.

Misuse of Treasury name or

symbol in broadcast or

telecast

1994 2021 $41,056 Department

Wide Same as above

31 USC 3802 

Program Fraud Civil Remedies

Act

Program Fraud Civil

Remedies Act 1986 2021 $8,212 DepartmentWide Same as above

(1) Current penalty level amounts represent the maximum penalty amounts.

(2) For purposes of calculating the appropriate inflation factor, OMB’s guidance issued February 24, 2016 uses the calendar year 1914 CMP CatchUp Adjustment Multiplier for all penalties enacted prior to 1914. 
DEPARTMENT OF THE TREASURY 271 

OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

SECTION F: GRANTS PROGRAMS

The summary table below shows the total number and balances of federal grants and cooperative agreements that we

awarded for which closeout has not yet occurred and the period of performance has elapsed by more than two years.

CATEGORY 2-3 Years 3-5 Years More than 5 Years 

Number of Grants/Cooperative Agreements with Zero Dollar

Balances 19 49 - 

Number of Grants/Cooperative Agreements with Undisbursed

Balances 6 7 - 

Total Amount of Undisbursed Balances $ 143,310.00 $ 522,001.09 $ - 

We made good progress over the past year in closing out awards. The number of grants and cooperative agreements with

period of performance over two years has declined from 369 in FY 2020 to 81 in FY 2021. Grant recipients have not correctly

completed and submitted all progress reporting forms and financial forms in the Payment Management System which

continues to be a challenge preventing closeout of awards. Other factors include competing priorities, employee turnover,

and challenges associated with integrating a new grants management system. The program offices are reviewing closeout

procedures and are dedicated to closing out the remaining accounts in FY 2022.

 
272 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | OTHER INFORMATION

APPENDIX: GLOSSARY OF ACRONYMS

Abbreviation Description 

2015 Act Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 

AAPI Asian American and Pacific Islander

ACTC Additional Child Tax Credit 

AFR Agency Financial Report

AGI Adjusted Gross Income

AML/CFT Anti-Money Laundering and Combating the Financing of Terrorism

ANC Alaskan Native Corporations

AOTC American Opportunity Tax Credit

APG Agency Priority Goal

APR Annual Performance Report

ARC Administrative Resource Center

ARP American Rescue Plan Act of 2021

ARRA American Recovery and Reinvestment Tax Act of 2009

ASM Assistant Secretary for Management

AVS Account Verification Service

BEP Bureau of Engraving and Printing

BMF Business Masterfile

BSA Bank Secrecy Act

CAA Consolidated Appropriations Act, 2021

CARES Act Coronavirus Aid, Relief, and Economic Security Act

CAV Corrective Action Verification

CCF Corporate Credit Facilities, LLC

CCPF Coronavirus Capital Projects Fund

CDFI Community Development Financial Institutions

CDFI RRP CDFI Rapid Response Program

CDM Continuous Diagnostics and Mitigation

CERTS Coronavirus Economic Relief for Transportation Services

CFIUS Committee on Foreign Investment in the United States

CFO Chief Financial Officer

CIFS Critical Individual Filing Season

CIO Chief Information Officer

Civil Service Fund Civil Service Retirement and Disability Trust Fund

CMP Civil Monetary Penalties

Compliance Framework FFMIA Compliance Determination Framework

COVID-19 Coronavirus Disease 2019

CPFF Commercial Paper Funding Facility II LLC 

CPI Consumer Price Index

CRF Coronavirus Relief Fund

CRO Chief Risk Officer 

CSLF Coronavirus State and Local Fiscal Recovery Funds
DEPARTMENT OF THE TREASURY 273 

OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

Abbreviation Description 

CSRS Civil Service Retirement System

CTC Child Tax Credit

CTCF Local Assistance and Tribal Consistency Fund

D.C. District of Columbia

D.C. Federal Pension Fund D.C. Teachers’, Police Officers’, and Firefighters’ Federal Pension Fund

DAIMS DATA Act Information Model Schema

DASHR/CHCO Office of the Deputy Assistant Secretary for Human Resources and Chief Human

Capital Officer

DATA Act Digital Accountability and Transparency Act

DNP Do Not Pay 

DO Departmental Offices

DOJ Department of Justice

DOL Department of Labor

ECIP Emergency Capital Investment Program

ECM Enterprise Case Management

ECRM Enterprise Cyber Risk Management Program

EFTPS Electronic Federal Tax Payment System

EIP Economic Impact Payment

EITC Earned Income Tax Credit

EO Executive Order

ERA Emergency Rental Assistance

ERM Enterprise Risk Management 

ESA Exchange Stabilization Agreement

ESC Executive Steering Committee

ESF Exchange Stabilization Fund

Evidence Act Foundations for Evidence-Based Policymaking Act of 2018

Fannie Mae Federal National Mortgage Association

FARS Financial Analysis and Reporting System

FASAB Federal Accounting Standards Advisory Board

FATCA Foreign Account Tax Compliance Act

FCDA Foreign Currency Denominated Assets

FCRA Federal Credit Reform Act

FDC Funds from Dedicated Collections

FDIC Federal Deposit Insurance Corporation

FECA Federal Employees’ Compensation Act

Federal Reserve Board or Board Federal Reserve Board of Governors

FEGLI Federal Employees Group Life Insurance

FEHBP Federal Employees Health Benefits Program

FERS Federal Employees’ Retirement System

FEVS Federal Employee Viewpoint Survey

FFB Federal Financing Bank

FFI Foreign Financial Intermediaries

FFRCA Families First Coronavirus Response Act of 2020
274 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | OTHER INFORMATION

Abbreviation Description 

FFMIA Federal Financial Management Improvement Act of 1996

FHFA Federal Housing Finance Agency

FICA Federal Insurance Contributions Act

Financial Report Financial Report of the U.S. Government

FinCEN Financial Crimes Enforcement Network

Fiscal Service Bureau of the Fiscal Service

FISMA Federal Information Security Management Act

FITARA Federal Information Technology Acquisition Reform Act

FMFIA Federal Managers’ Financial Integrity Act

FOD Fact of Death

FOMC Federal Open Market Committee

FR System Federal Reserve System

FRB Federal Reserve Bank

FRBB Federal Reserve Bank of Boston

FRBNY Federal Reserve Bank of New York

Freddie Mac Federal Home Loan Mortgage Corporation

FRN Floating Rate Note

FTI Federal Tax Information

FTO Fine Troy Ounce

FY Fiscal Year

G Fund Government Securities Investment Fund

G-7 Group of Seven 

G20 Group of 20

GAAP Generally Accepted Accounting Principles

GAO U.S. Government Accountability Office

GDP Gross Domestic Product

General Fund General Fund of the U.S. Government

GPRA Government Performance and Results Act of 1993

GSA General Services Administration

GSE Government Sponsored Enterprise

HAF Homeowner Assistance Fund

HERA Housing and Economic Recovery Act

HFA Housing Finance Agency

HHS Department of Health and Human Services

HINF High-Income Nonfiler

HIPF Health Insurance Provider Fee

HVA High Value Assets

IAP International Assistance Programs

IMF International Monetary Fund

Inflation Adjustment Act Federal Civil Penalties Inflation Adjustment Act of 1990 

IPERA Improper Payments Elimination and Recovery Act 

IPERIA Improper Payments Elimination and Recovery Act Improvement Act of 2012
DEPARTMENT OF THE TREASURY 275 

OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

Abbreviation Description 

IPIA Improper Payments Information Act of 2002

IRC Internal Revenue Code

IRGC-QF Iran Islamic Revolutionary Guard Quds Force

IRS Internal Revenue Service

ISO International Organization for Standardization

IT Information Technology

Judicial Retirement Fund District of Columbia Judicial Retirement and Survivors’ Annuity Fund

LLC Limited Liability Company

LOS Level of Service

MALSPAM Malicious Spam

MDB Multilateral Development Bank

MDI Minority Deposit Institution

MLF Municipal Liquidity Facility LLC 

MMLF Money Market Mutual Fund Liquidity Facility

MSF Main Street Facilities LLC 

NAB New Arrangements to Borrow

NAFA North American Framework Agreement

NAPHSIS National Association for Public Health Statistics & Information Systems

NIBP New Issue Bond Program

NIST National Institute of Standards and Technology

NRP National Research Program

OAS International Assistance Programs

OBT Office of Budget and Travel

OCC Office of the Comptroller of the Currency

OCRD Office of Civil Rights and Diversity

ODCP Office of D.C. Pensions

OFAC Office of Foreign Assets Control

OFP Office of Fiscal Projections

OFR Office of Financial Research

OFS Office of Financial Stability

OIG Office of the Inspector General

OMB Office of Management and Budget

OMWI Office of Minority and Women Inclusion

OPE Office of the Procurement Executive

OPEB Other Post-Employment Benefits

OPM Office of Personnel Management

OPM Funds Civil Service Fund and Postal Benefits Fund

ORB Other Retirement Benefits

ORM Office of Risk Management 

ORP Office of Recovery Programs

OSPPI Office of Strategic Planning and Performance Improvement

OTA Office of Technical Assistance
276 DEPARTMENT OF THE TREASURY

FY 2021 AGENCY FINANCIAL REPORT | OTHER INFORMATION

Abbreviation Description 

OTC Over-the-Counter

P.L. Public Law 

P2P Peer-to-Peer

PATH Act Protecting Americans from Tax Hikes Act

PICoE Payment Integrity Center of Excellence

PIIA Payment Integrity Information Act of 2019

PIK Payment-in-Kind

PIO Performance Improvement Officer

PIVOT Payment Information View of Transactions

PMCCF Primary Market Corporate Credit Facility

PMIAA Program Management Improvement Accountability Act

PMO Project Management Office 

Postal Benefits Fund Postal Service Retiree Health Benefits Fund

PP&E Property, Plant, and Equipment

PPS Post Payment Services

PRAC Pandemic Response Accountability Committee

PSP Payroll Support Program

PSPA Payroll Support Program Agreement

PTC Premium Tax Credit

PTIN Preparer Tax Identification Number

RPA Robotic Process Automation

RRC Recovery Rebate Credit

RRTA Railroad Retirement Tax 

RTC Refundable Tax Credits

RVA Risk and Vulnerability Assessment

SAFe Scaled Agile Environment

SBLF Small Business Lending Fund

SBR Statement of Budgetary Resources

SCRM Supply Chain Risk Management Program

SDR Special Drawing Rights

Secret Service United States Secret Service

Secretary Secretary of the Treasury

SEDI Socially and Economically-Disadvantaged Individuals

SFFAS Statement of Federal Financial Accounting Standards

SIEM Security Information and Event Management

SIGPR Special Inspector General for Pandemic Recovery

SIGTARP Special Inspector General for the Troubled Asset Relief Program

SLC Solution Lifestyle Policy

SLFRF Coronavirus State and Local Fiscal Recovery Funds 

SLGS State and Local Government Series

SMCCF Secondary Market Corporate Credit Facility

SOAR Strategic Objective Annual Review
DEPARTMENT OF THE TREASURY 277 

OTHER INFORMATION | FY 2021 AGENCY FINANCIAL REPORT

Abbreviation Description 

SOMA System Open Market Account

SPSPA Senior Preferred Stock Purchase Agreements

SPV Special Purpose Vehicle

SSA Social Security Administration

SSBCI State Small Business Credit Initiative

SSN Social Security Number

TAAPS Treasury Automated Auction Processing System

TALF Term Asset-Backed Securities II LLC 

TAPA Treasury Asian Pacific American Employee Resource Group

TARP Troubled Asset Relief Program

TBM Technology Business Management

TCE Tax Counseling for the Elderly

TEOAF Treasury Executive Office of Asset Forfeiture

TFF Treasury Forfeiture Fund

TFI Terrorism and Financial Intelligence

TFS TIER Financial Statements

TGA Treasury General Account

TIER Treasury Information Executive Repository

TIGTA Treasury Inspector General for Tax Administration

TIPS Treasury Inflation-Protected Securities

TRIP Terrorism Risk Insurance Program

TSP Thrift Savings Plan

TSSSOC Treasury Shared Services Security Operations Center

TTB Alcohol and Tobacco Tax and Trade Bureau

TY Tax Year

U.S. United States

U.S. Mint United States Mint

USACE United States Army Corps of Engineers

USC United States Code

USPS United States Postal Service

USSGL United States Standard General Ledger

USVSST United States Victims of State Sponsored Terrorism Fund

VITA Volunteer Income Tax Assistance

WSS Wholesale Securities Services
 

 

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