Department of the Treasury 

Agency Financial Report 


FY 2022 AGENCY FINANCIAL REPORT

ABOUT THIS REPORT

Our Agency Financial Report

(AFR) for Fiscal Year (FY) 2022

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, 2022, and (ii) an Annual

Performance Report (APR) submitted with Treasury’s

congressional budget justification, to be issued by

February 1, 2023. 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, 2021, and ending on

September 30, 2022, 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 2022 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............................................................................................................................................................ 34

CLIMATE-RELATED RISKS AND CHALLENGES........................................................................................................................................ 35

FY 2023 STRATEGIC OUTLOOK .............................................................................................................................................................. 36

FINANCIAL HIGHLIGHTS – FINANCIAL OVERVIEW................................................................................................................................ 37

MANAGEMENT ASSURANCES .................................................................................................................................................................... 44

SYSTEMS, CONTROLS AND LEGAL COMPLIANCE.................................................................................................................................... 45 

PART 2: FINANCIAL SECTION

MESSAGE FROM THE ACTING ASSISTANT SECRETARY FOR MANAGEMENT AND ACTING CHIEF FINANCIAL OFFICER.............. 51

INSPECTOR GENERAL’S TRANSMITTAL LETTER.................................................................................................................................... 53 

INDEPENDENT AUDITORS’ REPORT......................................................................................................................................................... 55

MANAGEMENT’S RESPONSE TO INDEPENDENT AUDITORS’ REPORT ................................................................................................. 61

FINANCIAL STATEMENTS........................................................................................................................................................................... 62

NOTES TO THE FINANCIAL STATEMENTS ............................................................................................................................................... 70

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED).............................................................................................................173 

PART 3: OTHER INFORMATION (UNAUDITED) 

SECTION A: SUMMARY OF FINANCIAL STATEMENT AUDIT AND MANAGEMENT ASSURANCES ..................................................183

SECTION B: TAX GAP AND TAX BURDEN.............................................................................................................................................185

SECTION C: MANAGEMENT AND PERFORMANCE CHALLENGES AND TREASURY RESPONSE.......................................................197

SECTION D: PAYMENT INTEGRITY ........................................................................................................................................................245

SECTION E: CIVIL MONETARY PENALTIES INFLATION ADJUSTMENT.............................................................................................252

SECTION F: GRANTS PROGRAMS ........................................................................................................................................................... 259

SECTION G: CLIMATE-RELATED FINANCIAL RISK ..............................................................................................................................260 

APPENDIX: GLOSSARY OF ACRONYMS ..................................................................................................................................................261
4 DEPARTMENT OF THE TREASURY

FY 2022 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 provides an

opportunity to reflect upon the Department’s progress in

achieving our mission as we look forward to the work

ahead in Fiscal Year 2023 and beyond. 

In last year’s report, I detailed the swift and effective 

policy actions this Administration took in response to

COVID-19 to rescue our economy from the pandemic,

including the American Rescue Plan. This year I’m

pleased to discuss the forward-looking economic agenda

that this Administration has signed into law.

The pandemic highlighted longstanding structural issues

that were weighing our economy down: sluggish

productivity growth; soaring inequality, with profound 

disparities by race and geography; vulnerabilities to

supply chain shocks; and the growing impacts of climate

change.

Over the past year, the Biden Administration has

advanced an ambitious economic plan to tackle these

structural issues.

The Bipartisan Infrastructure Law is boosting our 

productive capacity by providing a historic surge in

funding for America’s transportation system that will

have reverberating economic benefits throughout our 

economy. More efficient movement of goods means fewer 

costly supply-chain disruptions. Better transportation

can connect workers to more training opportunities and

higher-productivity jobs.

The CHIPS and Science Act is strengthening our

resilience to global shocks by investing in semiconductor

research and development, chip fabrication, and

workforce training. We are already seeing an impact—in

October 2022, two large chip manufacturers announced

up to $120 billion in investment in chip production and

other advanced technologies in New York.

The Inflation Reduction Act is tackling the climate crisis

head-on while also creating greater fairness in the

economy. The law incentivizes businesses to invest in
DEPARTMENT OF THE TREASURY 5 

MESSAGE FROM THE SECRETARY OF THE TREASURY | FY 2022 AGENCY FINANCIAL REPORT

low-income communities and historic energy 

communities, like those dependent on coal, and is

expected to create more than one million good-paying,

high-quality jobs with strong labor protections.

At the same time, it’s providing much-needed funding for 

the IRS to deliver tangible improvements to the taxpayer

experience and to help tackle the tax gap—the amount of 

money that is owed but not paid to the IRS. This gap is

estimated at $7 trillion over the next decade and is

disproportionately concentrated among high earners. 

Current resource constraints have meant these highearning evaders are rarely audited—increasing the

burden of government funding and economic investment

on working and middle-class families who are doing

everything right. Combined with the corporate tax

reforms in the law, this IRS funding also represents some

of the most significant steps we’ve taken in recent years

to build a fairer and more effective tax system.

Taken collectively, this trifecta of legislation that the

President has signed into law over the past year—the

Bipartisan Infrastructure Law, the CHIPS and Science

Act, and the Inflation Reduction Act—constitute among

the most important economic investments we’ve ever

made in putting working families on surer footing and

building a fairer and more inclusive economy.

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 2022. Based on our internal evaluation, our 

financial and performance data have been validated as

complete and reliable.

We know there are serious challenges ahead. Inflation is

too high and it remains our Administration’s top priority

to rein it in. But our progress thus far shows the

resilience of the American people and our economy. We

have experienced among the strongest recoveries of any

major economy. And we’ve made a generational

investment to expand our economic capacity and build an

inclusive economy. I believe that we can navigate

through this current moment as well.

Janet L. Yellen

Secretary of the Treasury

November 15, 2022
 

 

[Page intentionally left blank]
 

 

 

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

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

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

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

Enterprise Risk Management................................................ 34

Climate-Related Risks and Challenges................................. 35

FY 2023 Strategic Outlook.................................................... 36

Financial Highlights – Financial Overview.......................... 37

Management Assurances....................................................... 44

Systems, Controls and Legal Compliance............................. 45
 

 
DEPARTMENT OF THE TREASURY 9 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 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 is 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.

We also perform 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 our 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 2022 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

develop strategies 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. 

Through our efforts to enhance economic growth and

promote access to credit, we support job creation 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, 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.

While Treasury adapts to meet the changing needs of our

nation, our core mission remains unchanged 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,

to protect the integrity of the financial system, and to

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

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

economy by collecting revenue, meeting financial

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

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 AGENCY FINANCIAL REPORT

ORGANIZATION

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

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

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

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

DEPARTMENTAL OFFICES

Domestic Finance works to support equitable and

sustainable economic growth and financial stability

through policies that increase the resilience of financial

institutions and markets, and which increase access to

credit for small businesses and low-to-moderate income

communities. It focuses on Treasury Department activities

in the areas of financial institutions, federal and municipal

debt finance, financial regulation, and capital markets.

Terrorism and Financial Intelligence 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, and 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 coordinating Tribal

relations across the Department, directly overseeing the

U.S. Mint, the Bureau of Engraving and Printing, 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, and

data.

The Office of Recovery Programs principally focuses on 

efficiently administering Treasury’s programs to support

an equitable and swift recovery from the economic

challenges precipitated by the COVID-19 pandemic. 

The Office of Diversity, Equity, Inclusion, and Accessibility

serves as a center of excellence to modernize the

Department's overall diversity, equity, inclusion, and

accessibility (DEIA) strategy, and drives cohesive 

implementation and accountability across the

Department. 

 

 

Other offices within Departmental Offices include

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

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 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 and strikes, 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.
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FY 2022 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 improving the

execution of its strategies and resource allocations. In

this spirit, we developed a 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. We review

agency results quarterly to measure progress on our 

goals. Also, as required by the Program Management

Improvement Accountability Act (PMIAA), we integrate

portfolio reviews of programs within our performance

review cycle activities. Through our Strategic Objective

Annual Review (SOAR) process, we conduct an annual

exercise to validate our supporting objectives as well as

analyze performance results across Treasury components 

to identify a set of strategic objectives as priority focus 

areas for the following year. In 2019, the Foundation for 

Evidence-Based Policy Act was signed into law to further

advance the U.S. government’s evidence-building

functions. In this past fiscal year, we continue to

implement the evidence-building requirements by

leveraging our strategic management framework, 

including the SOAR, and to discuss the agency’s evidence 

building efforts and learning agenda. 

At designated points throughout the fiscal year, we assess

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 2022 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 Organizational 

Health & Priorities

Strategic Objective Annual

Review (SOAR)

Cross-cutting Risks/Challenges;

Critical Programs/Projects

Budget; “Vitals” Check

for Critical Program

and Projects

Chair

Deputy Secretary, 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

• Evaluate cross-agency

progress toward

strategic objectives

(including progress of

critical programs and

projects)

• Identify/validate

Treasury priorities

and/or strategic shifts

• Outline potential topics

for annual review with

OMB

• Issue-based sessions: Dive

deep on cross-cutting

issues identified in the

SOAR, identify near-term

improvement strategies 

• Program-based sessions:

check in on critical

programs/projects 

identified in the SOAR that

need Treasury Leadership

attention

• Align funding to

performance

impacts and risk

mitigation

• Strengthen IT

acquisition,

budgeting, and

accountability,

budgeting, and

accountability

• Check in (vitals

check) on critical

program/project

health and update

list of critical

programs/projects
16 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2022 – 2026 STRATEGIC FRAMEWORK

The strategic framework provides the foundation for the Department’s FY 2022 – 2026 strategic goals and objectives and

FY 2022 – 2023 Agency Priority Goals (APGs), which align to specific objectives. All bureaus and offices align their

programs and performance within this framework. Our updated goals and objectives are reflected below.

Strategic Goals Strategic Objectives/APGs

Contributing

Bureaus/Offices

Goal 1: Promote

Equitable Economic

Growth and

Recovery

1.1: Tax Administration and Policy 

1.2: Global Economic Leadership

1.3: Economically Resilient Communities

1.4: Resilient Housing Market

IRS

Tax Policy

TTB

Economic Policy

International Affairs

Office of Small and

Disadvantaged

Business Utilization

Office of

Management

ORP

Domestic Finance

Goal 2: Enhance

National Security

2.1: Cyber Resiliency of Financial Systems and Institutions

2.2: Economic Measures to Advance National Security

2.3: Modernize Sanctions Regime

2.4: Transparency in the Financial System

Aligned APG: Promoting Transparency in the Financial System

Office of

Management

All Bureaus/Offices

Goal 3: Protect

Financial Stability

and Resiliency

3.1: Financial System Vulnerabilities

3.2: Resilient Treasury and Municipal Securities Markets

3.3: Financial Innovation

Aligned APG: Improving the Payment Experience

Domestic Finance

International Affairs

Economic Policy

OCC

TFI

FinCEN

Fiscal Service

U. S. Mint

BEP

IRS

Tax Policy

Goal 4: Combat

Climate Change

4.1: Global Climate Commitment and Leadership

4.2: Climate Incentives and Investment

4.3: Climate-Related Financial Risks

4.4: Sustainable Treasury Operations

Aligned APG: Increasing Treasury Sustainability

Office of

Management

OCC

All Bureaus/Offices

Goal 5: Modernize

Treasury Operations

5.1: Recruit and Retain a Diverse and Inclusive Workforce

5.2: Future Work Routines 

5.3: Better Use of Data

5.4: Customer Experience Practices 

All Office and

Bureaus, led by the

Office of

Management

 
DEPARTMENT OF THE TREASURY 17 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 AGENCY FINANCIAL REPORT

PERFORMANCE OVERVIEW

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

the U.S. economy and globally to meet the needs of the nation. The Treasury Strategic Plan 2022 – 2026 charts a course to

guide our responsibilities to the public. The following performance overview reflects our accomplishments and challenges in

the goal areas of strengthening equitable economic growth, enhancing national security, protecting financial stability,

combatting climate change, and modernizing our operations in service to the country. 

Goal 1: Promote Equitable Economic Growth and Recovery

Treasury plays a central role in addressing systemic

issues in the financial system and strengthening economic

resiliency for all Americans, while taking the lead in

partnering with foreign countries to promote global

recovery and sustainable growth. We have four strategic

objectives under the goal of promoting equitable economic 

growth and recovery. 

Our first strategic objective—assessed as an area of 

noteworthy progress and focus area for improvement in

our FY 2022 SOAR process—concentrates on the fair and

impartial administration of the tax code through a more

efficient tax system. Our second strategic objective under

this goal relates to global economic leadership, aiming to

restore U.S. leadership in multilateral forums and foster 

cooperation with our international partners to strengthen

the global economy, while promoting sustainable and

inclusive growth. Our third strategic objective—assessed

as an area of noteworthy progress in our FY 2022 SOAR

process—focuses on promoting equitable financial

recovery and addressing systemic inequities to prepare

the country to be more resilient for future challenges. 

Lastly, our fourth strategic objective under this goal

relates to our partnership with the Department of 

Housing and Urban Development (HUD) and other 

federal agencies to develop a stable and resilient housing

market. 

TAX ADMINISTRATION AND POLICY

In FY 2022, the Office of Tax Policy (OTP) published

guidance and regulations to clarify the U.S. tax code and

improve taxpayer compliance. Notable regulation

changes include:

• guidance implementing the No Surprises Act, 

providing important protections for health plan

participants from surprise medical bills; 

• proposed regulations addressing the “family glitch” to

extend eligibility to families for the Affordable Care

Act’s premium tax credit; and

• finalized regulations and a sub-regulatory guidance

providing needed certainty for taxpayers regarding

the availability of foreign tax credits for certain

Puerto Rico taxes.

From July 2021 to December 2021, the OTP worked with

IRS colleagues to disburse more than $94 billion in

monthly Child Tax Credit payments to families, with over 

61 million children receiving the benefit. In addition to

helping implement the American Rescue Plan Act of 2021

(ARP), the OTP staff collaborated with OMB and

Congress to influence passage of the Inflation Reduction

Act (IRA).

The IRS recognizes the importance of identifying and

addressing the most egregious non-compliant taxpayers. 

During FY 2022, the IRS continued to detect and pursue

high-income nonfilers to maintain confidence in the tax

system. 
18 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

In FY 2022, the IRS further enabled customer callback

technology on 15 additional phone applications for a total

of 31 deployments in its call centers. The IRS also

expanded its Taxpayer Digital Communications

functionality, which allows taxpayers to securely

exchange information and messages with the IRS. In

FY 2022, the IRS made large strides to provide quality

and accessible services by enhancing the taxpayer

experience through developing and deploying artificial

intelligence powered voice and chat bots, as well as new 

online account features allowing individual taxpayers to

view their personalized tax information and transact with

the IRS via self-service. 

The IRS’s Integrated Modernization Business Plan,

released in 2019 and revised in 2022, builds on significant

achievements and reflects an expanded view of 

requirements needed to modernize the IRS technology 

environment. The IRS made considerable progress in

executing on deliverables throughout the first three years

of the modernization plan, delivering more than 50

capabilities in FY 2022. 

The IRS has begun implementing requirements under the

IRA, which gives the IRS the resources to ensure that it

enforces tax laws fairly and delivers quality level of 

taxpayer services.

Further, in support of fair and impartial administration

of the tax code, the TTB continues to modernize tax

administration to improve taxpayer compliance by

incorporating data analytics to quickly detect and address

missed filings to ensure fair competition. In FY 2022, the

TTB implemented a new import claims refund program to

ensure U.S. importers have access to the tax benefits 

provided under the new Craft Beverage Modernization

Act provisions taking effect on January 1, 2023. This new

program will be the first major release associated with

the IT modernization effort—called myTTB—which aims

to create an integrated online filing experience for TTB 

taxpayers. 

GLOBAL ECONOMIC LEADERSHIP

Over the past two years, the global economy faced two

major disruptions related to the Coronavirus Disease of 

2019 (COVID-19) pandemic and Russia’s ongoing war in

Ukraine. The Office of International Affairs (IA) is

leading work with our partners to mitigate the impact

from Russia’s war in Ukraine on energy and food security. 

The IA bolstered our role in the global community to

tackle urgent challenges—including global shortages in

key goods, as well as volatility in food, fuel, and fertilizer

prices—working to improve the overall global economy. 

In FY 2022, we also took efforts to position multilateral

development banks to better address a growing number of 

global challenges, including climate change, pandemics,

and international conflict. 

As part of an overall global effort to tackle food insecurity,

the U.S. committed around $10 billion in FY 2022 to

deliver food to those who are facing starvation and to

build long-term resilience to food shortages. In May 2022,

we worked closely with International Financial

Institutions (IFI) to issue and commit to implementing

the IFI Action Plan to Address Food Insecurity. 

Source: Adobe Stock

IRS Electronic Filing 

During the 2022 filing season, the IRS received 139

million individual returns, of which 133 million (96

percent) were filed electronically. This is a 22

percent increase in electronically filed returns

compared to the 2021 filing season. Of the total 

individual refunds, 94.6 percent were issued via

direct deposit, which is an increase of 16.9 percent

compared to the same time last year. 
DEPARTMENT OF THE TREASURY 19 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 AGENCY FINANCIAL REPORT

In FY 2022, we continued to modernize our trade

relationships and supply chains to make them more

resilient to global shocks, including impacts from the

weaponization of trade as a tool of geopolitical coercion. 

Strengthening trade relationships with U.S. allies via

“friend-shoring” is our approach to advancing trade that

is free, fair, and secure. 

Separately, in the spirit of global economic leadership, we

generated a historic agreement among 137 countries to

restabilize the international tax system by reallocating

taxing rights and establishing a global minimum tax. We

also successfully completed the first U.S. tax treaty

negotiations since the Tax Cuts and Jobs Act by

concluding negotiations with Croatia on a new tax treaty. 

ECONOMICALLY RESILIENT COMMUNITIES

We are not only addressing the impact of COVID-19, but

also addressing systemic inequities to strengthen the

economy and prepare the country to be more resilient for 

future challenges. The Office of Recovery Programs

(ORP) significantly increased capacity over the past year

to fulfill its mission to lead our implementation of 

economic recovery programs, including nearly $420 billion

from the ARP. Over multiple fiscal years, ORP has built

a strong foundation to serve over 35,000 recipients across

the nation, through ten programs that support

economically disadvantaged small businesses,

households, communities, and individuals. 

We deployed more than $18 billion to support missiondriven lending and investments for low- and moderateincome borrowers, small businesses, communities of color, 

and rural areas. We supported pandemic response

through the $350 billion State and Local Fiscal Recovery 

Fund (SLFRF)—the first program in federal history to

provide fiscal relief to states, localities, and tribes

regardless of size. As of FY 2022, recipients reported 

committing $16 billion to address water, sewer, and

broadband infrastructure, and $4.8 billion to assist small

businesses. 

TTB facilitated small business growth and innovation by

delivering timely service to U.S. breweries, wineries, and

distilleries, and issued more than 90 percent of new 

permits and alcohol beverage formula and label approvals

within targeted service standards. 

Fiscal Service’s Financial Management Quality Service

Management Office (FM QSMO) made significant strides

toward establishing its Marketplace for use by federal 

agencies. Fiscal Service is supporting diversity and

equity in the marketplace by being inclusive in vendor 

outreach, offering consultations to interested vendors, and

collaborating with agencies to support equitable selection

from diverse providers in the marketplace. The QSMO

Marketplace will include standards-based solutions and

services from commercial vendors, federal shared service

providers, and Fiscal Service centralized services. 

RESILIENT HOUSING MARKET

In FY 2022, we deployed a range of tools to support the

housing stability of millions of households, including

implementing dedicated programs for struggling renters

and homeowners, while supporting flexibility in how state

and local governments use funds to increase housing

supply.

Source: Adobe Stock

Supporting Tribal Government Communities 

The SLFRF program also provided funding for over

3,000 projects and services in Tribal government

communities. Tribes utilized SLFRF funds to 

expand the system of healthcare in Indian Country,

to create innovative programs to recover the tribal 

economy, and to find resilient solutions for 

inadequate infrastructure. 
20 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

In FY 2022, the $46 billion Emergency Rental Assistance

Program (ERA) made more than seven million unique

household payments to renters at risk of eviction, keeping 

eviction rates on average below pre-pandemic levels. We

developed innovative approaches to achieve these goals,

including developing a reallocation program to increase

utilization of funds, removing potential barriers to eligible

individuals receiving rental support, and encouraging

ERA grantees to use best practices for eviction

prevention. 

The $10 billion Homeowner Assistance Fund (HAF) —

through a plan review process that prioritized best

practices—is using lessons from the Great Recession 

mortgage crisis to target assistance for borrowers in

greatest need, including the leveraging of humancentered design and partnering with other agencies to

urge servicers to pause foreclosure on HAF applicants.

Through March 31, 2022, recipients committed more than

$12 billion from SLFRF to meet housing needs, including

more than $4 billion to support affordable housing

development and preservation. We also made targeted

enhancements to regulatory flexibility in SLFRF and the

Low-Income Housing Tax Credit to support housing

production and affordability. 
DEPARTMENT OF THE TREASURY 21 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 AGENCY FINANCIAL REPORT

GOAL 1: KEY PERFORMANCE DATA HIGHLIGHTS

Measure

(Responsible Bureau/Office)

FY 19 FY 20 FY 21 FY 22 FY 22 

Target Result vs Target

Customer Service Representative Level of

Service (CSR LOS) (IRS)1 65.4% 53.1% 18.5% 17.4% 30% Unmet

Timeliness of Critical Individual Filing Season

Tax Products (IRS)2 92.6% 78.4% 92% 96.4% 89% Exceeded

Percentage of Permit Applications Processed

within Service Standards (TTB)3 57.6% 84.1% 92.2% 91.2% 85.0% Exceeded

Engagement of Partner Countries in

Programs – 5 point scale (International

Affairs) 4

3.6 3.3 3.6 3.5 3.6 Unmet

Enterprise Self-Assistance Participation Rate

(ESAPR) (IRS)5 85.4% 90.6% 92.3% 93.9% 91.0% Exceeded

Percent of Procurement Dollars Spent on

Small Business (Management)6 40.4% 45.0% 39.9% 37.6% 39% Unmet

Explanation of Results 1CSR LOS was 17.4 percent which was 41.9 percent below plan of 30 percent. IRS reduced the campus phone staffing to a minimal

amount to focus on reducing the paper inventory. Phone Demand through September of 81.3 million was 32 percent lower than

prior year of 119.9 million. The Primary Abandoned Call Rate of 18.2 percent is 21 percent lower compared to last year during

the same time frame. The IRS will continue to monitor demand in real time and the resources allocated down to the half hour

enabling us to regularly shift staff between telephones and paper processing to address demand. With the receipt of funding

from the IRA, the IRS plans to deliver a higher level of service in FY 2023. 

2Timeliness of Critical Individual Filing Season (CIFS) Tax Products to the Public of 96.4 percent is 8.3 percent above the plan of 89 

percent. 81 of 84 CIFS tax products were available to the public timely. Critical tax product timeliness is regarded as tax products

that are made available to the public seven calendar days before the official IRS start of the (individual) filing season. To achieve

and exceed the target, the IRS prioritized work on the release of critical products, especially forms and instructions, approved

overtime, credit, and compensatory time during workdays, weekends, and holidays; and monitored workload planning. 3This measure represents the overall rate at which TTB is meeting its annual service standard (75 days for FYs 2019 – 2022) 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 regarding TTB’s level of service. In FY 2022, TTB issued more than

91 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. 

4Measures the degree to which foreign counterparts are engaging proactively and constructively with OTA advisors, at the

working and policy levels. Counterpart engagement is both a key outcome of OTA efforts to structure and execute effective

technical assistance projects that support host country ownership. The result for FY 2022 is 3.5, a reduction of 0.1 from FY 2022 

target of 3.6. 

5The Enterprise Self-Assistance Participation Rate of 93.9 percent was 3.2 percent higher than plan of 91.0 percent. In FY 2022 

total self-assisted services 1.5 billion was around 29 percent higher than FY 2021 of 1.2 billion, total assisted services of 97.5 

million was 0.1 percent lower than FY 2021 of 97.6 million, and total services were 1.6 billion which is around 27 percent higher

than prior year of 1.3 billion. Beginning in 2022, ESAPR included Business Masterfile numbers in the installment agreements,

OPAs, electronic payments and paper payments for a more inclusive metric. 6This 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. Treasury fell short of meeting its FY 2022 small business goal of 39 

percent. However, Treasury overperformed and exceeded the socio-economic small business goals. 

 
22 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

Goal 2: Enhance National Security

We must continue to apply national security tools and

strengthen bilateral and multilateral partnerships to

confront the expanding array of transnational threats,

issues contributing to the instability of weak states, and

the malicious use of emerging technologies by

adversaries. 

Under this goal, our first strategic objective centers on 

hardening the U.S. and global financial system and our 

infrastructure against cyber incidents. Our second 

strategic objective—assessed as an area of noteworthy 

progress and focus area for improvement in our FY 2022

SOAR process—is to strengthen U.S. national security

through a secure economy, by applying our authorities

and tools to ensure that we address threats to U.S.

national security and strategic interests posed by criminal

elements, foreign adversaries, and certain foreign 

investments. 

The third strategic objective focuses on modernizing

sanctions as a policy tool to effectively address emerging

threats, strengthening use of sanctions across the

Department, and deploying the most updated analytic

and collaborative tools. Our fourth strategic objective—

assessed as a focus area for improvement in our FY 2022

SOAR process—emphasizes the integrity of markets and

the global financial framework through increased

transparency in domestic and international financial

systems to aid the detection of illicit financial activity.

CYBER RESILIENCY OF FINANCIAL SYSTEMS AND

INSTITUTIONS

As declared in Presidential Policy Directive 21, Critical

Infrastructure Security and Resilience, Treasury is the

Sector Risk Management Agency for the financial services 

sector and is responsible for advancing coordinated

national efforts to strengthen and maintain secure, 

functioning, and resilient critical infrastructure. 

In FY 2022, we took steps to strengthen cyber resiliency,

including communicating to the sector indicators of: (1)

compromise, (2) activities of malicious cyber actors, (3)

third-party risks, and (4) possible mitigation and

remediation efforts. Furthermore, we streamlined our 

incident coordination processes to quickly inform our

leadership of cybersecurity impacts to our networks and

to the financial sector. We also continued to perform 

routine vulnerability and security architecture

assessments to identify cyber deficiencies and develop 

corrective measures for our critical assets that provide

underlying mission-essential support for financial-related

systems. 

We made significant strides in FY 2022 to strengthen our 

assets and systems against cyber incidents, while

reviewing resiliency and contingency plans, which

ultimately underscores a more proactive and resilient

enterprise security posture at Treasury. Similarly, in

December 2021, we orchestrated response efforts to

strategically and comprehensively address the Apache

Log4J vulnerability in our systems, which involved

coordinating short- and long-term approaches to address

the vulnerability across multiple technology components 

and varied technology environments. 

We and our component bureaus also instituted

communication channels with the broader financial

services sector to collaborate and identify opportunities to

streamline processes, and raise situational awareness of 

the continuously evolving threat landscape. 

ECONOMIC MEASURES TO ADVANCE NATIONAL

SECURITY

Terrorism and Financial Intelligence (TFI) counters the

ability of financial networks that support terrorists,

transnational organized crime, weapons of mass

destruction proliferators, and other threats to

international security through intelligence analysis,

sanctions, and international private-sector cooperation. 

TFI’s authorities, such as economic sanctions, are key 

tools in implementing U.S. foreign policy to pressure

foreign countries and regimes, such as Russia. TFI also

continues to maintain similar efforts that target malign

activity emanating from China, North Korea, Syria, and

other countries that threaten national security. 
DEPARTMENT OF THE TREASURY 23 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 AGENCY FINANCIAL REPORT

The IA, in its role as chair of the Committee on Foreign 

Investment in the United States (CFIUS), reviewed a 

record number of transactions in FY 2022, and took 

important and necessary measures to safeguard national

security. CFIUS also continues to proactively identify a 

growing number of potential non-notified transactions,

while handling increasingly complex transactions,

particularly those involving data firms. 

MODERNIZE SANCTIONS REGIME

As part of modernizing the use of sanctions as a policy

tool, TFI is implementing a new Sanctions Economic

Analysis Unit under a newly designated Chief Sanctions

Economist. The unit is charged with developing economic

and financial policy analyses to inform the design and

implementation of sanctions policy and targeting options

under existing or proposed authorities. 

In addition, the unit will provide a globally consistent

approach to economic and financial policy analyses to

better inform how we design and implement sanctions

and develop as a center of excellence for analyses on the

effectiveness of sanctions. This includes providing firmand industry-specific analyses of potential collateral

effects of proposed sanctions to identify issues that may

be appropriate to mitigate, including issues related to

U.S. persons, in connection with our sanction actions. 

TRANSPARENCY IN THE FINANCIAL SYSTEM

One of the most effective ways to deter criminals and to

stem the harms that flow from their actions—including

harm to American citizens and our financial system—is to

follow the criminals’ money, expose criminal activity, and

prevent networks from benefiting from the enormous 

power of our economy and the financial system. Through

the Promoting Transparency in the Financial System

APG, we are working to establish a robust regulatory

framework to ensure we receive timely information on the

highest priority threats and combat criminals’ misuse of 

companies. 

To combat these illicit efforts, TFI, through FinCEN,

undertook efforts to modernize the Bank Secrecy Act and

develop new beneficial ownership related regulations and

guidance to better safeguard the U.S. financial system

and protect the pocketbooks of Americans. 

The Beneficial Ownership Information (BOI) is a key 

component of our broader efforts to protect the U.S.

financial system from abuse by criminals and illicit

actors. The rollout of the final BOI reporting rule is a key

milestone in our efforts to implement the Corporate

Transparency Act (CTA), which advances the U.S.

Strategy on Countering Corruption, and prevents the

proceeds of corruption and illicit finance from

compromising the integrity of the U.S. financial system. 

The final BOI reporting rule and the CTA more broadly

will help ensure that money launderers, tax evaders,

criminals, and other illicit actors cannot hide their illgotten gains in the U.S. with anonymity and impunity. 

Source: Adobe Stock

Increased Sanctions Against Russia 

TFI has significantly increased sanctions against

Russia related to its actions against Ukraine over

the past year and continues to economically

sanction Russia.
24 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

GOAL 2: KEY PERFORMANCE DATA HIGHLIGHTS

Measure

(Responsible Bureau/Office)

FY 19 FY 20 FY 21 FY 22 FY 22 

Target Result vs Target

Percentage of CFIUS Cases Reviewed within

Statutory Timeframes, reported by calendar

year (International Affairs)1

100% 100% 100% TBD 100% TBD

Number of New or Modified Sanctions

Programs Established by Executive Order or

Congressional Mandate (TFI)2

7 6 7 7 N/A N/A 

Explanation of Results

1This 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. We report results on a calendar year basis, at which time the

comparison can be made of actual results verses target. 

2This indicator tracks the number of new or modified sanctions programs that we 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 25 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 AGENCY FINANCIAL REPORT

Goal 3: Protect Financial Stability and Resiliency

We continued to promote a more resilient financial

system through coordination with U.S. financial

regulators and international partners. The Financial

Stability Oversight Council (FSOC) is chaired by

Secretary Yellen and charged with identifying risks to the

financial stability of the U.S. The FSOC advanced its

four priority policy areas, deepening its capacity to

monitor risks to the financial system: (1) nonbank

financial intermediation, (2) Treasury market resilience,

(3) climate-related financial risk, and (4) digital assets. 

We also advanced efforts to enhance the resilience of the

Treasury market and to facilitate the climate transition

with state and local governments. 

We play a critical role in improving financial resiliency

and addressing vulnerabilities in core financial markets.

The first strategic objective—assessed as an area of 

noteworthy progress in our FY 2022 SOAR process—

focuses on our role in monitoring and addressing domestic

and international financial risks. The second objective is

to improve the resilience of critical government securities

to markets to minimize borrowing costs over time and

support the critical roles that these safe assets play in a 

global financial system. The third strategic objective—

assessed as a focus area for improvement in our FY 2022

SOAR process—centers on promoting a financial system

that delivers inclusive financial services, by way of 

expanding access to digital financial services, and

encouraging the responsible use of innovative financial

technology. 

FINANCIAL SYSTEM VULNERABILITIES

As part of the FSOC’s efforts to address risks posed by

nonbank financial intermediaries, we and other FSOC

members evaluated risks hedge funds, open-end funds,

and money market funds pose. The FSOC began work to

establish an interagency risk monitoring system for hedge

funds and considered potential options to mitigate

associated risks. On climate-related financial risk, the

FSOC published its Report on Climate-Related Financial

Risk in FY 2022, which identified climate change as an

emerging risk to financial stability. The FSOC continued

its work to identify emerging broader vulnerabilities to

the financial system through its monthly interagency

staff-level Systemic Risk Committee meetings, as well as

through recommendations to address those vulnerabilities

published in December 2021 in its annual report. 

Through our participation at the Financial Stability

Board (FSB), we advanced work to address these

vulnerabilities internationally, including by shaping

policy proposals to enhance money market fund

resilience, promoting progress under the FSB Roadmap

for Addressing Climate-related Financial Risks, and

contributing to a proposed framework for the

international regulation of digital asset activities. 

The Office of Financial Research (OFR)—which is charged

with looking across the financial system to collect and

standardize financial data, monitor and analyze risks,

and perform research and analysis related to financial

stability—supported the FSOC’s assessment of financial

stability risks and advanced long-term research towards

the goal of promoting and maintaining financial stability. 

RESILIENT TREASURY AND MUNICIPAL

SECURITIES MARKETS

In FY 2022, the Office of Debt Management, along with

the Office of State and Local Finance, have been 

instrumental in enhancing the resilience of the debt

market. The Office of Debt Management continued to

work in collaboration with the Inter-Agency Working

Group (IAWG) on Treasury Market Surveillance—

comprised of staff from Treasury, the Board of Governors

of the Federal Reserve System, the Federal Reserve Bank

of New York, the U.S. Securities and Exchange

Commission, and the Commodity Futures Trading

Commission—on various workstreams. The IAWG

published a staff progress report and hosted the annual

Treasury Market Conference in November 2021, and

IAWG member agencies continued to make progress on 

these objectives throughout the year. In September 2022,

we published a fact sheet highlighting 12 key 

accomplishments from this year and will issue another 

staff progress report before the next annual conference in

November 2022. 
26 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

In March 2022, the Office of State and Local Finance

convened a roundtable on climate transition among

Treasury, federal and regulatory partners, and state and

local government representatives. The participants

considered policy issues and best practices for funding

and financing the transition to a net-zero economy,

including disclosure of climate-related financial risks to

investors. 

FINANCIAL INNOVATION

In November 2021, the President’s Working Group on 

Financial Markets, joined by the Federal Deposit 

Insurance Corporation and the Office of the Comptroller

of the Currency, published a report on stablecoins, which

are a type of digital asset with the potential to become 

widely used for payments. The report identified potential

risks of continued growth in stablecoin markets and

usage, absent appropriate regulation, and contained

recommendations related to digital assets, which

similarly built upon on our work in international forums, 

including the FSB. 

We collaborated with FSB members on two reports 

related to digital assets regulation, including (1) the

FSB’s revised High-Level Principles on the Regulation,

Oversight, and Supervision of Global Stablecoin

Arrangements, and (2) the report on the Regulation,

Supervision and Oversight of Crypto-Asset Activities and

Markets. Recommendations from these reports are

intended to be flexible, so that they can be easily

incorporated into a wide variety of regulatory frameworks

and for any type of crypto-asset activities that may pose

risks to financial stability. 

In March 2022, President Biden convened experts from 

across the Administration to ensure a coordinated and

comprehensive approach to digital assets policy, and

charged us with a leadership role in this work. In March

2022, Executive Order (EO) 14067, Ensuring Responsible

Development of Digital Assets, established the following

policy objectives with respect to digital assets: (1) protect 

consumers, investors, and businesses in the U.S.; (2)

protect U.S. and global financial stability and mitigate

systemic risk; (3) mitigate the illicit finance and national

security risks posed by misuse of digital assets; (4)

reinforce U.S. leadership in the global financial system

and in technological and economic competitiveness,

including through the responsible development of 

payment innovations and digital assets; (5) promote

access to safe and affordable financial services; and (6)

support technological advances that promote responsible

development and use of digital assets. 

In July 2022, we and the interagency partners delivered 

to the President the Framework for International

Engagement on Digital Assets, which outlines a U.S.

government-wide approach to promoting the responsible

development of digital assets globally. The framework is

intended to ensure that, with respect to the development 

of digital assets, we: (1) respect America’s core democratic

values; (2) protect consumers, investors, and businesses; 

(3) preserve appropriate global financial system

connectivity and platform and architecture

interoperability; and (4) maintain the safety and

soundness of the global financial system and

international monetary system. The framework calls for 

us to amplify and expand international work on digital

assets through forums and international financial

institutions, including at the G7 and FSB. The 

framework also encourages the U.S. to identify where it

Source: Adobe Stock

Digital Currency 

In FY 2022, we participated in the development of 

the G7’s Public Policy Principles for Retail Central

Bank Digital Currencies (CBDC) report, which set

out a common set of considerations on the public

policy implications of CBDC, reflecting the shared

and enduring values of the G7 on transparency,

the rule of law, and sound economic governance. 
DEPARTMENT OF THE TREASURY 27 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 AGENCY FINANCIAL REPORT

can strengthen existing regional and bilateral

engagements and, where appropriate, ramp up

engagement with new partners to achieve our objectives 

with respect to digital assets. 

Also as charged by EO 14067, in September 2022, we

published a report on the future of the U.S. money and

payments systems, in which Treasury encourages

continued work on innovations to promote a system that

is more competitive, efficient, and inclusive, and that also

helps maintain and build on the U.S.’ global financial

leadership. The report recommends advancing policy and

technical work on a potential U.S. CBDC, so that the U.S.

is prepared if a CBDC is determined to be in the nation’s

interest. We also published a report on the implications

of digital assets for consumers, investors and businesses,

and laid out a detailed action plan to prevent digital

assets from being used for financial crimes, such as

money laundering and terrorism financing. In October 

2022, the FSOC released a report on potential financial

stability risks, and recommended steps to address gaps in

the regulation of digital assets in the United States. 

Separately, financial innovation can be seen with our

focus on addressing counterfeiting. As of FY 2022,

counterfeiting is an increasingly important issue for the

Bureau of Engraving and Printing (BEP) and the U.S.

Mint. To combat increasingly sophisticated counterfeiting

threats, related to U.S. currency notes, the BEP, the

Federal Reserve Board, and the U.S. Secret Service

continue to collaborate extensively on redesigning notes 

to make counterfeiting more difficult. In FY 2022, the

BEP successfully executed the first of many large-scale

testing activities, which included security features 

approved by the Secretary and a new tactile feature for 

the visually impaired. Extensive, ongoing testing and

factory trials will lead to a planned rollout of redesigned 

U.S. currency notes beginning in 2026 with the targeted

issuance of the new $10 design. 

Similarly, the Anti Counterfeit Division at the U.S. Mint

is actively working on characterizing coins in circulation

and evaluating scanning methods for high-speed detection

of counterfeit coins. We are also exploring image

registration for coins using surface morphology, which

could potentially be used for validating U.S. Mint coinage. 

Related to financial innovation and in support of the

Improving the Payment Experience APG, Fiscal Service

collaborated with top check-producing federal agencies

(such as the Social Security Administration and the IRS)

to improve the payment experience, reduce the number of 

check payments, and promote the benefits of increasing

electronic payments. To promote inclusion, Fiscal Service

is leveraging the Treasury-sponsored Direct Express debit

card program to deliver payments to unbanked and

underserved Americans. Additionally, Fiscal Service

initiated an evaluation to understand how we can

improve the delivery of government payments to hard-toreach populations. 

Moreover, in FY 2022, Fiscal Service developed a working

blockchain prototype to explore how blockchain

technology can improve the transparency and reporting of 

federal grant payments. Under the Joint Financial

Management Improvement Program, Fiscal Service and

the Government Accountability Office collaborated to

successfully connect the first multi-agency blockchain in

the federal government. Learnings from this

collaboration will help other agencies understand the

benefits and impacts of a multi-agency blockchain for

various use cases. 

Lastly, with the announcement of new Series I United

States Savings Bond interest rates, Fiscal Service

witnessed unprecedented demand for Series I savings

bonds and a surge in call and case volumes. Fiscal

Service executed a number of steps to respond to

customers and focused on providing a positive customer

experience, including: (1) adding resources to the call

center, (2) updating to the website and phone menus to

provide answers to common questions, and (3) developing 

system enhancements to better enable customers to

complete transactions without requiring customer service

support. 
28 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

GOAL 3: KEY PERFORMANCE DATA HIGHLIGHTS 

Measure

(Responsible Bureau/Office)

FY 19 FY 20 FY 21 FY 22 FY 22 

Target Result vs Target

Dollar Amount (in billions) of Delinquent

Debt Collected through All Tools (Fiscal

Service)1

$9.65 $10.68 $5.04 $5.52 $5.26 Exceeded

Percentage of Treasury Payments Made

Electronically (Fiscal Service)2 95.6% 96.0% 96.2% 96.4% 96.4% Pending

Percentage of Total Federal Government

Receipts Settled Electronically (Fiscal

Service)3

98.4% 99.0% 99.6% 99.8% 99.0% Exceeded

Number of Paper Checks Printed Fiscal Year

to Date (millions) (Fiscal Service)4 54.2 50.5 48.8 45.7 45.7 Pending

Explanation of Results 1This measure provides the total amount of delinquent debt collected, in billions, through debt collection tools Fiscal Service

operates. FY 2020 totals include collection of $3.4 billion from Economic Impact Payments to satisfy delinquent child support. 

Several state and federal creditor agencies suspended collection activity beginning in April 2020 due to economic concerns

around COVID-19. 2This measure provides the portion of the total volume of electronic payments. FY 2020, FY 2021, and FY 2022 data does not

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

2022 final actual is pending.

3This measure provides the percentage of total federal government revenue collection dollars settled electronically. 

4This measure provides the number of payments made via paper checks. This measure provides the number of payments made

via paper checks. FY 2020, FY 2021, and FY 2022 data does not include pandemic-related relief payments such as economic

impact payments and advance child tax credit payments. The FY 2022 final actual is pending.
DEPARTMENT OF THE TREASURY 29 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 AGENCY FINANCIAL REPORT

Goal 4: Combat Climate Change

We work ambitiously with domestic and international

partners to emphatically respond to the challenges of 

climate change, including taking action to adapt to an

already changing climate. With our partners, we work on 

mitigating risks associated with climate change and

strive toward positioning the global economy for a clean

and sustainable future. Our work in this area will

strengthen the country’s energy security and enhance the

country’s competitiveness in the clean energy economy.

Of the four strategic objectives for achieving this goal, the

first is to demonstrate global leadership through reengagement with international partners to put the world

on a sustainable climate pathway. The second strategic

objective—assessed as a focus area of improvement in our

FY 2022 SOAR process—aims to promote the flow of 

capital towards clean and renewable investments,

creating a more resilient and climate-forward economy. 

The third strategic objective focuses on identifying and

mitigating climate-related financial risks through

improved approaches to measure, monitor, and address

climate impacts. The fourth strategic objective focuses on

our efforts to reduce greenhouse gas emissions, increase

resiliency of our facilities and operations, and increase

climate change knowledge and expertise within Treasury.

GLOBAL CLIMATE COMMITMENT AND

LEADERSHIP

We elevated U.S. leadership in global climate action

through leadership roles in multilateral forums. We are

pressing the World Bank and other development banks to

raise their climate ambitions while pursuing existing

development priorities.

In October 2022, we signed a loan agreement for the

Clean Technology Fund (CTF)—a multilateral trust fund

that helps to scale up low carbon technologies in

developing countries. This contribution made good on the

U.S.’s pledge to support the CTF’s Accelerating Coal

Transition Investment Program made at the 2021 G7

Summit alongside G7 partners. CTF will use the loan to

support U.S. climate commitments, including Just Energy

Transition Partnerships. 

CLIMATE INCENTIVES AND INVESTMENT

In FY 2022, we worked with stakeholders, Congress and

other agencies to develop proposals to use tax incentives

to encourage individuals and businesses to invest in

renewable energy and transmission, expand usage of 

household clean energy and energy efficient technologies, 

and drive meaningful reductions in carbon emissions.

CLIMATE-RELATED FINANCIAL RISKS

The FSOC and its members made considerable progress

in advancing the recommendations identified in its

October 2021 Report on Climate-Related Financial Risk, 

including significant actions members took to address

climate related capacity building, disclosures, data, and

risk assessments. The FSOC also established a new stafflevel interagency committee to serve as a coordinating

body to share information, facilitate the development of 

common approaches and standards, and foster 

communication across the FSOC members. Lastly, the

OFR conducted a data and analytics hub pilot to help the

FSOC assess climate-related risks to financial stability.

Source: Adobe Stock

Inflation Reduction Act (IRA) 

In August 2022, Congress passed, and the 

President signed into law the IRA, which makes the 

largest investment in addressing climate change in

our nation’s history. Of the IRA’s total $369 billion

climate investment, $270 billion will be delivered

via tax incentives, putting us at the forefront of 

implementing this historic legislation. 
30 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

SUSTAINABLE TREASURY OPERATIONS

Executive Order 14008, Tackling the Climate Crisis at

Home and Abroad directs federal agencies to develop a 

Climate Action Plan (CAP) to assess and combat climaterelated vulnerabilities. In collaboration with the National

Oceanic and Atmospheric Administration, we are

developing a climate literacy curriculum that will provide

basic education on the causes and effects of climate

change, alongside strategies for building Departmentwide

resiliency. Through the Increasing Treasury

Sustainability APG, we are working to model best practices

in sustainable operations, supporting the Department’s key

role in the whole-of-government effort to manage climaterelated risks and enable the transition to a net-zero emissions

economy. 

Resilience-building efforts are focused on the main

priority action areas identified in the CAP, such as

financial investment, real property weatherization, and

procurement. Activities in the CAP action areas include

the incorporation of climate risk considerations in our 

retrofitting and new construction efforts, as well as

purchasing of renewable energy credits and energysavings performance contracts, which are critical to

meeting the Administration’s requirements to convert our

operations to cleaner sources of electricity. 

Other major projects to strengthen climate resiliency

include:

• expanding the IRS’s presence in Puerto Rico, which

will not only mitigate service disruptions from 

extreme weather, but also create jobs and allow for 

increased taxpayer access to bilingual services; 

• constructing a new, weather-resilient production

facility in Maryland for BEP, which will greatly

reduce operational risks associated with the current

older Washington, D.C., facility; and 

• weatherizing and updating the Main Treasury

building’s exterior façade, deterring water damage

through extensive repair and restoration work. 

To provide more quantitative strategic planning support

for adapting to and building resilience against climaterelated concerns, we considered our growing need for

ready access to a central repository of climate data

(quantitative, machine-readable information) in multiple

formats (shapefiles, excel tables, csv files), as well as data

analysts and subject matter experts who can understand

and use the data to better propose and support policy

decisions.

GOAL 4: KEY PERFORMANCE DATA HIGHLIGHTS

Measure

(Responsible Bureau/Office)

FY 19 FY 20 FY 21 FY 22 FY 22 

Target Result vs Target

Treasury-wide Footprint (Thousands of

Square Feet) (Management)1 33,209 32,517 32,006 TBD 31,948 TBD

Explanation of Results

1The actual FY 2022 square footage of Treasury-wide real property is not available until December 2022, at which time the

comparison can be made of actual results versus target.
DEPARTMENT OF THE TREASURY 31 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 AGENCY FINANCIAL REPORT

Goal 5: Modernize Treasury Operations

Modernizing our operations is critical to achieving our

mission and accomplishing our strategic priorities, which

begins with making enterprise-wide improvements. Our

first strategic objective under this goal—assessed as a 

focus area for improvement in our FY 2022 SOAR

process—is intended to help us become a more diverse

and inclusive workforce. The second strategic objective

focuses on modernizing our workplace infrastructure and

work routines to increase our agility, flexibility, and

resilience. The third strategic objective—assessed as a 

focus area for improvement in our FY 2022 SOAR

process—centers on improving Treasury’s data maturity

and capacity for evidence building. Our fourth strategic

objective is to create a customer-focused culture,

leveraging approaches to improving customer experience 

and simultaneously our overall capabilities and practices.

RECRUIT AND RETAIN A DIVERSE AND INCLUSIVE 

WORKFORCE

In FY 2022, we established the Office of Diversity, Equity,

Inclusion, and Accessibility (ODEIA), which will serve as

a center of excellence to modernize our overall DEIA

strategy and drive cohesive implementation and

accountability across the departmental offices and

bureaus. The new structure allows for a more significant,

more concentrated, and dedicated focus on civil rights

compliance and mitigation, as well as DEIA-related

accountability, competencies, and transparency. 

In addition, ODEIA is championing organizational

cultural change to move the agency into a more equitable

organization through developing policy and innovative

approaches. These policies are designed to ensure that

families, businesses, and neighborhoods historically

excluded from economic opportunities or that experienced 

persistent poverty are fully included in the nation's

economic recovery and future growth.

The ODEIA centralizes four essential functions:

• carrying out policy analysis on how we can unlock the

unrealized potential of marginalized communities; 

• developing a workforce that reflects the diversity of 

the nation; 

• ensuring fair and equitable business utilization; and 

• guaranteeing compliance with civil rights laws and

regulations. 

We made a few changes to improve our ability to

modernize our approach to DEIA. First, we developed a 

Treasury-wide expansion of the Office of Minority and

Women Inclusion (OMWI) (that does not duplicate or 

override the efforts of the Office of the Comptroller of the

Currency's OMWI). We combined the OMWI with the

Office of Civil Rights and Equal Employment

Opportunity, formerly known as the Departmental

Office's Office of Civil Rights and Diversity. Additionally,

ODEIA is adding a new component – the Equity Hub. 

This new office will focus on economic analysis and public

policy as it relates to how we ensure DEIA is a focal point

for reaching and providing services and resources to the

public. 

We implemented an internal DEIA Issuance System,

through which we issue Equal Employment Opportunity,

civil rights, diversity and inclusion, and equity guidance

or policies to our workforce. We also published the first

DEIA Strategic Plan to guide our work into the future. 

Furthermore, ODEIA has implemented a number of new 

initiatives to improve our focus on diversity and inclusion

in hiring and recruitment including contracting with the

Professional Diversity Network to specifically target a 

more diverse applicant pool for our vacancies. We rolled

out the new DEI Learning Journey in Integrated Talent 

Management System to help managers and employees 

better understand what it means to embrace diversity

and inclusion. We also obtained support and resources to

establish a recruitment program and developed a 

retention program to identify ways to retain current

employees, which we will implement across Treasury. 

Finally, we incorporated new performance standards into

all Senior Executive Service performance plan to focus 

leadership on their role in this expanded vision for 

DEIA. 
32 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

In addition to ODEIA efforts, the IRS also obtained Direct

Hire Authority (DHA) through the Office of Personnel 

Management (OPM) and the Consolidated Appropriations

Act of 2022 to reach a broader applicant pool and reduce

the number of days to hire. Through these authorities,

the IRS can hire tax examiners, clerks, customer service

representatives and critical operations support personnel. 

The OPM DHA allows 10,000 new hires through

December 2023 and is limited to the Submission

Processing and Accounts Management functions in the

IRS’s Wage & Investment organization. The DHA 

granted under the Consolidated Appropriations Act of 

2022 allowed unlimited hires through September 30,

2022, in support of backlog reduction.

FUTURE WORK ROUTINES

We displayed outstanding engagement across leadership

and with the workforce to protect employee health and

safety during the pandemic, while navigating re-entry of 

employees to the physical workplace. The Treasury

COVID-19 Coordination Team, established in response to

Executive Order 13991, Protecting the Federal Workforce 

and Requiring Mask-Wearing, continues to oversee the

implementation of a comprehensive, science-based

COVID-19 workplace safety plan. 

We leveraged information technology tools to: (1) simplify

vaccination status reporting, (2) centralize information

resources regarding re-entry, (3) enable staff to reserve

"hoteling" spaces for remote workers, and (4) provide

access to training and Human Resources forms required

for remote work. We began planning for the gradual

increase in employees reporting to the physical workplace

in early FY 2022, and successfully completed our re-entry

by August 2022. To support the workforce post re-entry,

we offered new flexible work arrangements and remote

work, deployed improved collaboration technologies for 

hybrid teams, and tested new approaches to space

configurations and sharing.

BETTER USE OF DATA

We made good progress in formulating an initial data

infrastructure strategy designed to maximize the value of 

data for delivering improved business outcomes. This

strategy leverages the Foundations for Evidence-Based

Policymaking Act of 2018 (Evidence Act) and key 

elements of the Federal Data Strategy to promote data

sharing and use, further enabling enterprise investments

in evidence building activities. Through this work, we are

better positioned to leverage our newly created data

inventory to improve enterprise visibility into our key 

data assets, which accelerates opportunities to turn data

into insights for addressing Administration and Treasury

leadership priorities. Enterprise-wide engagement has

enabled us to reach consensus on several key multi-year

priorities aligned to critical management initiatives in our 

Strategic Plan. 

Source: Adobe Stock

Professional Diversity Network 

Our new partnership with the Professional

Diversity Network strengthens our focus on

diversity hiring by intentionally matching Treasury

job announcements with a broad range of diverse

groups including People of Color, LGBTQ+,

Veterans, People with Disabilities and many

others. This combined with the new DEIA Learning

Journey, provides managers with training to

promote hiring from a more diverse candidate

pool. This training also supports managers and 

employee awareness about inclusion to ensure we

are cultivating a culture that embraces the

diversity of new and current Treasury employees.
DEPARTMENT OF THE TREASURY 33 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 AGENCY FINANCIAL REPORT

Similarly, Fiscal Service is committed to modernizing the

publication of Fiscal Service data. Fiscal Service

continued to make progress on FiscalData.treasury.gov,

migrating a total of 39 datasets to the site and

establishing continuous data feeds with eight existing

datasets. 

CUSTOMER EXPERIENCE PRACTICES

We have a responsibility to manage customer experience 

and improve service delivery using leading practices and

a human centered approach. Due to the large customer

base and high impact of those served by our programs, in 

FY 2022, OMB identified Treasury as a High Impact

Service Provider (HISP), designating the Community

Development Financial Institutions Fund and Fiscal

Service’s Direct Express programs as High Impact

Services. In addition, the IRS continues to be designated

as an HISP. 

In May 2022, we launched a customer experience (CX)

Community of Practice that brings together CX leaders 

and practitioners from across Treasury to build a 

customer-centric culture, foster collaboration, and share

CX best practices and knowledge. Several of our offices 

have established dedicated CX teams, including a 

Taxpayer Experience Office at the IRS and the Office of 

the Chief Customer Officer at Fiscal Service. 

GOAL 5: KEY PERFORMANCE DATA HIGHLIGHTS

Measure

(Responsible Bureau/Office)

FY 19 FY 20 FY 21 FY 22 FY 22 

Target Result vs Target

Percentage of Aged Hardware (IRS)1 31.0% 16.0% 9.3% 7.1% 20% Exceeds

Treasury-wide EVS Satisfaction Index

(Management)2 65% 71% 67% 65% 67% Unmet

Explanation of Results

1The percent of aged hardware was 7.1 percent which exceeded the 20 percent target for FY 2022. The major driver in

exceeding this goal was the focus on hardware selections and timely refresh implementations. For FY 2023, IRS will continue

with standard operations and review options for process improvements.

2The 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. 
34 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

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

personnel 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 originated from 

ORM’s efforts to support agencies in their implementation

of ERM, including the July 2016 publication of the

Playbook: Enterprise Risk Management for the U.S.

Federal Government. This government-wide working

group meets bimonthly to discuss common risks and

various methods of implementing the guidelines of the

circular.

RISKS AND CHALLENGES

Through the FY 2022 SOAR and enterprise risk

management process, we identified the following crosscutting operational risks. 

Evolving Cyber Climate: We and the financial services

sector face increasing attacks from criminal and nationstate threat actors attempting to disrupt operations or 

steal data from sensitive systems. The tactics,

techniques, and procedures that these threat actors

employ are constantly evolving.

Human Resources: Our mission capability and capacity

may be eroded due to operational challenges in human

resources, such as in the areas of recruitment, training

and development, personnel security, and diversity and

inclusion. These challenges may be intensified when 

paired with changing mission and skill requirements.

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. Due to lack of administrative

funding for the ORP programs, we were forced to curtail

the operations of our contact center, which provided vital

support to recovery program recipients.

Data and Evidence: Infrastructure, Analytics 

Capabilities, and Sharing: Insufficient or aging IT

infrastructure, lack of data accessibility and reliability, or 

inability to successfully use and interpret data may

deteriorate our decision-making ability in critical mission

areas.

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. This may impact our ability to

successfully deliver on our mission, constrain our progress

in critical work areas, and create challenges for 

employees, contractors, customers, and taxpayers.
DEPARTMENT OF THE TREASURY 35 

MANAGEMENT’S DISCUSSION AND ANALYSIS | FY 2022 AGENCY FINANCIAL REPORT

Procurement, Acquisition, and Vendors: Our ability to

achieve mission outcomes through procuring high-quality

goods and services may be negatively affected by the everincreasing complex burden layered on the procurement

environment and the decline of available acquisition

program management skillsets.

CLIMATE-RELATED RISKS AND CHALLENGES

We issue broad guidelines rather than overly restrictive

instructions for conducting climate risk assessments as

we have diverse missions and operations. These 

guidelines included, but were not limited to, key factors 

such as flooding, heat, and extreme weather (e.g.,

hurricanes). Additionally, climate change presents 

challenges through supply chain disruptions, since

extreme weather events in other areas of the world may

affect production of critical materials that we need to

complete our mission. Such disruptions may be similar to

the supply chain shortage experienced during the COVID19 pandemic. While we have several efforts under way to

address these risks across the Department, a significant

gap exists in the need for a central repository of climate, 

data, as well as data analysts and subject matter experts 

who can understand and use the data to propose and

support policy decisions. 
36 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | MANAGEMENT’S DISCUSSION AND ANALYSIS

FY 2023 STRATEGIC OUTLOOK

In March 2022, we published our FY 2022 – 2026

Strategic Plan, which describes the long-term goals and

objectives we aim to achieve during this Administration,

building from the progress we made and the challenges

we identified.

Our FY 2022 SOAR outlined several critical leadership

actions in the following priority areas for the coming year:

(1) transparency in the financial system; (2) financial

innovation; (3) climate incentives and investment; (4)

diverse and inclusive workforce; and (5) better use of 

data.

Looking ahead, we will make progress in these areas and

other key priorities through several targeted initiatives:

• implement the Transparency in the Financial System

APG, establishing a robust regulatory framework to

ensure timely information on the highest priority

threats to combat criminals’ misuse of companies

(Goal 2: Enhance National Security); 

• support legislative proposals that advance payment

integrity and financial management innovation

programs (Goal 3: Protect Financial Stability and

Resiliency); 

• implement tax incentives for climate-friendly

investments and energy security tax credits for 

manufacturing as authorized by the IRA (Goal 4:

Combat Climate Change); 

• implement the Equity Action Plan, consistent with

Executive Order 13985: Advancing Racial Equity and

Support for Underserved Communities through the

Federal Government, which outlines how we are

building the infrastructure necessary to identify and

reduce barriers to equal opportunity and to help

ensure that our programs and services better reach

historically underserved communities. The standingup of the ODEIA helped develop and drive DEIA

strategy across Treasury (Goal 5: Modernize

Treasury Operations); and

• prioritize recommended actions in our EvidenceBuilding Capacity Assessment to help inform

investment and resource alignment decisions and

determine how we can best coordinate to address

gaps in evidence building and use (Goal 5: Modernize

Treasury Operations). 

In addition, we will work diligently to support

implementation of the IRA, legislation that takes a 

critical step toward correcting the two-tiered tax system

to ensure large corporations and high-income earners

cannot avoid paying the taxes they owe, as well as

making operational improvements to enhance taxpayer

experience. 

The IRA also addresses climate change, putting Treasury

at the forefront of implementing this historic legislation. 

We have begun work on implementation, which will be a 

priority over the coming year as many of the law’s

provisions take effect in FY 2023.
FY 2018 AGENCY FINANCIAL REPORT

FY 2018 AGENCY FINANCIAL REPORT

DEPARTMENT OF THE TREASURY 37 

FY 2022 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, 2022 compared to September 30, 2021.

 

Summary Financial Information (dollars in billions) 

2022 2021 $ Change % Change

Total Assets $ 34,846.9 $ 32,591.1 $ 2,255.8 6.9 %

Total Liabilities $ 33,991.1 $ 31,626.2 $ 2,364.9 7.4 %

Total Net Position $ 855.8 $ 964.9 $ (109.1) (11.3)% 

Total Net Cost of Treasury Operations $ 186.8 $ 137.0 $ 49.8 36.4 %

Federal Debt Interest Costs, Net $ 675.9 $ 525.9 $ 150.0 28.5 %

Other Federal Costs, Net $ 17.2 $ 23.6 $ (6.4) (27.2)% 

GSEs Non-Entity Cost (Revenue), Net $ (2.9) $ (112.0) $ 109.1 (97.4)% 

COVID-19 Non-Entity Cost (Revenue), Net $ 1.9 $ (8.9) $ 10.8 (121.3)% 

Total Net Cost of Treasury Operations and Non-Entity Costs $ 878.1 $ 565.3 $ 312.8 55.3 %

Total Budgetary Resources $ 1,341.8 $ 1,550.0 $ (208.2) (13.4)% 

Agency Outlays, Net $ 828.2 $ 832.6 $ (4.4) (0.5)% 

Net Revenue Received (Custodial) $ 4,392.5 $ 3,100.8 $ 1,291.7 41.6 %

Financial Overview. Our financial performance as of and

for the fiscal year ended September 30, 2022, 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. During

FY 2022 and FY 2021, pursuant to these three

legislations, we had distributed over $214 billion and

$900 billion, respectively, to individuals, state, territorial,

local, and Tribal governments, and certain businesses to

accelerate our nation’s economic recovery (refer to Note 10

of the Consolidated Financial Statements). 

The outstanding federal debt, including interest, rose by

$2.5 trillion, to $31.0 trillion, to finance the U.S.

government’s operations that included support of the

economic relief and recovery efforts. 

Additionally, our “Total Net Cost of Treasury Operations

and Non-Entity Costs” for FY 2022 increased by $312.8

billion in fiscal year 2022 primarily stemming from nonentity activity, including $147.6 billion of higher federal 

debt interest costs, corresponding to the increase in

federal debt as mentioned above, along with a $109.1

billion decrease in revenue from our investments in two

Government-Sponsored Enterprises (GSEs) – the Federal 

National Mortgage Association (Fannie Mae) and the

Federal Home Loan Mortgage Corporation (Freddie Mac)
38 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT

– pursuant to our Senior Preferred Stock Purchase

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

the Consolidated Financial Statements).

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

Total Assets of $34.8 trillion at September 30, 2022

consist of a receivable due from the General Fund of the

U.S. government (General Fund) of $31.1 trillion, intragovernmental loans and interest receivable of $1.6

trillion, and fund balance and various other assets

totaling $2.1 trillion (Figure 2). 

Figure 2: FY 2022 Total Assets (Composition)

The $2.3 trillion (or 6.9 percent) increase in total assets at

the end of FY 2022 over the prior year is primarily due to

a $2.3 trillion increase in our receivable, “Due from the

General Fund,” which corresponds to a $2.5 trillion

increase in federal debt and interest payable. The “Due

from the General Fund” asset 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

decreased by $182.5 billion (or 10.2 percent) during 2022

due to lower borrowings from the Department of the

Education, partially offset by increased borrowings by

various federal agencies—such as Small Business

Administration and Department of Housing and Urban

Development—to fund their programs. 

Other assets primarily include “Fund Balance,” “Cash,

Foreign Currency, and Other Monetary Assets,” “Taxes

Interest, and Other Receivables, Net,” “Advances and

Prepayments”, and “Investments in Government

Sponsored Enterprises.” Other assets totaling $2.1

trillion increased by $183.9 billion or (9.3 percent), largely

reflecting a $405.0 billion increase in our “Cash, Foreign 

89.1%

4.7%

6.2%

Due from the General Fund

Intragovernmental Loans and Interest Receivable

Other Assets
FY 2018 AGENCY FINANCIAL REPORT

FY 2018 AGENCY FINANCIAL REPORT

DEPARTMENT OF THE TREASURY 39 

FY 2022 AGENCY FINANCIAL REPORT

Currency, and Other Monetary Assets,” offset by

decreases in “Fund Balance,” “Taxes, Interest, and Other

Receivables, Net,” “Advances to Trust Funds,” and

“Advances and Prepayments”. 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 $418.7 billion increase in operating cash is

largely due to the 2021 debt ceiling constraints, which

forced us to maintain a significantly lower operating cash

balance during FY 2021. When the debt ceiling was

increased in December 2021, we were able to bring the

operating cash balance back to its 1-week prudent policy

level (refer to Note 5 to the Consolidated Financial

Statements entitled “Cash, Foreign Currency, and Other

Monetary Assets”). 

The $71.9 billion decrease in “Fund Balance” reflects 

additional disbursements made in FY 2022 in support of 

our COVID-19 financial assistance programs. 

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

primarily comprised of federal taxes receivable, decreased

by $66.6 billion principally due to FY 2021 payments on 

the employer portion of the Federal Insurance

Contributions Act (FICA) Social Security taxes owed to

us, which had been deferred for two-years pursuant to the

CARES Act (refer to Note 8 to the Consolidated Financial

Statements entitled Taxes, Interest, and Other

Receivables, Net).

Other assets also reflect decreases of $44.1 billion in

“Advances to Trust Funds” and $30.9 billion in “Advances

and Prepayments,” respectively. The decrease in

Advances to Trust Funds is a result of states and HHS 

repaying their outstanding borrowings from the

Unemployment Trust Fund and Federal Supplementary

Medical Insurance Trust Fund, respectively, to the

General Fund (refer to Note 3 within the Consolidated

Financial Statements). The decrease in “Advances and

Prepayments” represents additional liquidation of 

advances paid to state, local, territorial, and Tribal

governments pursuant to the COVID-19 related

legislations enacted during FY 2021 and FY 2020 (refer to

Note 10 within the Consolidated Financial Statements).

Figure 3: FY 2022 Total Liabilities (Composition)

Total Liabilities of $34.0 trillion at September 30, 2022

principally consist of the federal debt held by the public,

including interest, of $24.3 trillion (Figure 3), which was

mainly issued as Treasury Notes, Bonds, and Bills. 

Liabilities also include intra-governmental liabilities

totaling $9.5 trillion (of which $6.7 trillion represent 

principal and interest of federal debt in the form of 

Treasury securities held by other federal agencies), and

various other liabilities totaling $189.9 billion. Federal 

debt, including interest, held by the public and other 

federal agencies together totaled $31.0 trillion at the end 

of FY 2022, an increase of $2.5 trillion over the prior year. 

This increase in the federal debt accounts for the $2.4

billion (or 7.4 percent) increase in total liabilities over the

prior year. Federal debt is needed to finance the U.S.

government’s operations, including our continued

financial support of the COVID-19 recovery efforts. 

Total Net Position of $855.8 billion at September 30, 2022

represents the combined total of our cumulative results of

operations and unexpended appropriations at the end of 

the fiscal year. The $109.1 billion decrease in the net 

position at the end of FY 2022 was principally

attributable to a $322.0 billion decrease in appropriations

received in FY 2022 as the prior year included

appropriations received pursuant to CAA and ARP in

connection with implementing pandemic relief programs. 
40 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT

This decrease was partially offset by an increase in

appropriations used primarily in connection with

financing the interest charges on the public debt and

disbursements under the pandemic relief program.

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” represents 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 $878.1 billion and $565.3 billion for FY 

2022 and FY 2021, respectively, an increase of $312.8

billion (or 55.3 percent) over the prior year. Net costs

associated with our entity operations (“Net Cost of 

Treasury Operations”) increased $49.8 billion year-overyear primarily as a result of increased costs associated

with our pandemic relief programs. Net costs associated

with our non-entity operations (“Net Non-Entity Costs”)

also increased by $263.0 billion year-over-year, primarily

driven by a combination of $147.6 billion of higher federal 

debt interest costs and $109.1 billion of decreased revenue

from our GSE investments.

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 based on the costs

and revenues associated with three major program

segments for achieving Treasury’s mission—Financial,

Economic, and Security (Figure 5). The following is a 

description of each program segment as it relates to our 

mission.
FY 2018 AGENCY FINANCIAL REPORT

FY 2018 AGENCY FINANCIAL REPORT

DEPARTMENT OF THE TREASURY 41 

FY 2022 AGENCY FINANCIAL REPORT

Table 2: Program Segments by Treasury Mission

Program

Segments Treasury Mission

Financial

Program

Managing the government’s finances and

resources effectively, protecting the integrity of

financial systems that are critical to the nation’s

financial infrastructure, and fostering improved

governance in financial institutions

Economic

Program

Promoting economic prosperity and maintaining

stability, encouraging sustainable and global

economic growth

Security

Program

Enhancing national security by implementing

economic sanctions against foreign threats to the

U.S., identifying and targeting the financial support

networks of national security threats, and

improving the safeguards of the financial systems

Our “Net Cost of Treasury Operations” totaled $186.8

billion for FY 2022 compared to $137.0 billion for FY 

2021, an increase of $49.8 billion (or 36.3 percent). This

increase primarily stems from the year-over-year $43.3

billion net increase in costs associated with COVID-19

pandemic relief efforts (refer to Note 10 of the

Consolidated Financial Statements). 

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

totaling $675.9 billion for FY 2022 primarily reflect 

interest expense on the federal debt, net of interest

income on loans. This net cost increased $150.0 billion (or 

28.5 percent) from the prior year, primarily attributable

to an increase in inflation adjustments, an increase in

interest rates, and an increase in outstanding debt held

by the public.

Other Federal Costs, Net (a non-entity cost) of $17.2

billion in FY 2022 decreased by $6.4 billion from the prior

year primarily due to decreased Court of Claims judgment

expenses for payments to health insurance companies

related to the Affordable Care Act. 

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

or revenue) is reported as a net revenue totaling $2.9

billion and $112.0 billion for FY 2022 and FY 2021,

respectively. 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 asset value of our GSE investments grew slightly by

$2.9 billion in FY 2022 compared to 2021, reflecting a fair

value loss in our senior preferred stock and warrants of 

$27.9 billion in FY 2022, which was more than offset by a 

$30.8 billion growth in the liquidation preference of the

senior preferred stock. The FY 2022 $27.9 billion fair

value loss when compared to the $80.1 billion fair value

gain in the prior year, resulted in a year-over-year loss of 

$108.0 billion as reflected in the current fiscal year’s net 

costs of non-entity operations. The $108.0 billion yearover-year fair value loss, coupled with a $1.1 billion yearover-year decrease in our senior preferred stock

liquidation preference (discussed below), resulted in a 

total $109.1 billion year-over-year change in this line. 

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, 2022 and 2021 as the GSEs’

had not achieved their capital requirement as of the fiscal

years ended (refer to Note 11 to the Consolidated

Financial Statements).

As compensation to Treasury for the replacement of the

dividend, the SPSPA amendments call for the liquidation

preference of the GSEs’ senior preferred stock to increase

by a specified amount until each GSE has achieved its

capital reserve requirement. The liquidation preference

of our senior preferred stock increased in value by $30.7

billion in FY 2022 compared to $31.8 billion in FY 2021,

pursuant to the amended SPSPA, which had the effect of 

increasing the year-over-year net costs of non-entity

operations by $1.1 billion. 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. 

 
42 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT

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

revenue) primarily reflects fair value losses or gains

recognized on financial instruments received from U.S.

airlines in FY 2020 and 2021 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 CAA and ARP in FY 2021,

the U.S. government received promissory notes and

common stock warrants for providing financial support to

the aviation industry. We recognized a fair value loss of 

$1.9 billion in FY 2022 compared to an $8.9 billion fair

value gain in FY 2021 on these instruments.

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

Total Budgetary Resources of $1.3 trillion in FY 2022

(Figure 6) decreased by $208.2 billion (or 13.4 percent), 

primarily due to a $428.7 billion year-over-year reduction

in unobligated balances brought forward from the prior

years, partially offset by a $229.3 billion increase in

appropriations. 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. 

The $229.3 billion increase in appropriations stems

primiarly from a $156.3 billion year-over-year increase in

new resources required to finance the increased public

debt (including increased inflation adjustments and

avergae interest rates), and $77.9 billion of new resources 

received to implement the provisions of the Inflation

Reduction Act (IRA) which was passed into law in August

2022. The IRA authorizes the IRS to offer tax incentives

for climate-friendly investments.

Agency Outlays, Net of $828.2 billion were slightly lower 

in FY 2022 (Figure 6) by $4.4 billion (or 0.5 percent)

primarily due to a year-over-year decrease in outlays in

the form of financial assistance payments to states,

territorial, local, and Tribal governments, as well as to

the air carrier industry, in response to the COVID

pandemic. This was mostly offset by an increase in

federal debt interest costs as discussed above.

Figure 7 : Net Revenue Received (Custodial) (in billions)
FY 2018 AGENCY FINANCIAL REPORT

FY 2018 AGENCY FINANCIAL REPORT

DEPARTMENT OF THE TREASURY 43 

FY 2022 AGENCY FINANCIAL REPORT

Net Revenue Received (Custodial), representing the net 

revenue we collect 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 $4.4 trillion for FY 2022, an increase of $1.3

trillion (or 41.6 percent) over the prior fiscal year. This

increase is attributable mainly to an overall growth in

income tax collections, primarily from individuals and

corporations, coupled with decreased tax refunds and

other payments that we issued to individuals in the prior 

fiscal year pursuant to the ARP, CAA, and CARES Act to

help stimulate the economy through taxpayer support

payments. In FY 2022 and FY 2021, the IRS disbursed

$89.2 billion and $625.8 billion in taxpayer support to

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).
44 DEPARTMENT OF THE TREASURY

FY 2022 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, 2022. In

addition, we can provide reasonable assurance that, as of 

September 30, 2022, 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, 2022. However, we were successful this year in

downgrading a major component of one of our significant

deficiencies, related to the Fiscal Service’s debt

management systems.

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

systems requirements. Additional information on the

lack of compliance can be found in Part 3, Section A, of 

this report. 

Janet L. Yellen

Secretary of the Treasury

November 15, 2022
FY 2018 AGENCY FINANCIAL REPORT

FY 2018 AGENCY FINANCIAL REPORT

DEPARTMENT OF THE TREASURY 45 

FY 2022 AGENCY FINANCIAL REPORT

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 our

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 OMB Circular A-123, Appendix A,

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 testing 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, 2022. 

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.

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 a 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. 
46 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT

Our assessment process includes the use of the FFMIA 

Compliance Determination Framework, (the “Compliance

Framework”) in OMB Circular A-123, 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, 2022, 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

2022 to continue to enhance its 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 systems. During

FY 2022, we were successful in downgrading a major

component of the long-standing significant deficiency 

related to Fiscal Service’s 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 our 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

our 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; and

• 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 monthly. The TFS application uses the bureau data

to produce financial statements and report on a Treasurywide 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). 

The shared service approach enables bureaus and offices 

to access core financial systems without maintaining

separate technical and system architectures. ARC also

provides administrative services in the areas of financial
FY 2018 AGENCY FINANCIAL REPORT

FY 2018 AGENCY FINANCIAL REPORT

DEPARTMENT OF THE TREASURY 47 

FY 2022 AGENCY FINANCIAL REPORT

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, to support new financial

management requirements and to support data-driven

financial decision making by management. In FY 2022, 

we performed assessment activities related to potentially

modernizing and replacing certain FARS applications.

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 we remediate security weaknesses we

identify through those assessments 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. Representatives of the OIG evaluate

our compliance with FISMA annually. 

We continue to focus on financial innovation and

transformation. For example, in FY 2022, we worked 

toward mandating bureaus that broker buy/sell

transactions use of the government-wide G-Invoicing

solution to reduce intragovernmental differences. During

FY 2022, we continued to partner closely with federal 

agencies and system vendors to encourage them to adopt

G-Invoicing and ensure overall readiness for mandate

compliance. In FY 2022, ARC implemented more than 17

Robotic Process Automations (RPAs) to improve

efficiency, timeliness, and quality in its service operations

and business processes, for a total of 101 RPAs

implemented to date.

OTHER LAWS

In May 2022, we reported three violations of the

Antideficiency Act (ADA) to the President, the President 

of the Senate, the Speaker of the House of 

Representatives, and the Comptroller General, in

accordance with 31 U.S.C. § 1517(b). The three violations

occurred in our Guam World War II Claims Fund, in the

amounts of $3,478,000.00, $2,086,472.33, and

$2,078,541.12, and occurred between March 2020 and

January 2021. All three instances were the result of 

obligations exceeding the applicable apportionment, 

although one also resulted in expenditures exceeding the

apportionment. The violations occurred because the

Guam claims program has a unique statutory

requirement for certification of payments. Specifically,

because the Guam claimants are assured of receiving 100

percent of their awards upon the Department of Justice’s

Foreign Claims Settlement Commission’s (the

“Commission”) certification of the claim to the Fiscal

Service, the obligations occur at the time of the

Commission’s certifications. The Commission and the

Fiscal Service were unaware of the timing of the

obligations in the Guam claims programs and therefore 

lacked appropriate processes and controls to prevent

obligations and expenditures from exceeding related

apportionments. After identifying these violations, the

Fiscal Service took prompt action to establish appropriate

processes and controls to ensure that such violations will

not recur.
48 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT

Other than the three related violations noted above, we

are not aware of any other violations of the ADA. 

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 2022, 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

net Premium Tax Credit (PTC), using the eleven 

qualitative risk factors identified in OMB Circular A-123,

Appendix C, Requirements for Payment integrity

Improvement. We 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,

the ACTC and the net PTC were susceptible to significant

improper payments.

The EITC, AOTC, ACTC and net PTC are refundable tax

credits that offset income tax taxpayers owe. 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 2022, 31.6 percent ($18.2 billion) of the total

EITC payments of $57.5 billion were improper. For the

AOTC, the IRS estimates that for FY 2022, 36.1 percent

($2.0 billion) of the total payments of $5.6 billion were 

improper. For the ACTC, the IRS estimates that for FY 

2022, 15.8 percent ($5.2 billion) of the total payments of 

$32.8 billion were improper. For Net PTC, the IRS

estimates that for FY 2022, 27.4 percent ($578.0 million)

of the total payments of $2.1 billion were improper. The

IRS has a robust enforcement program for its refundable

tax credits which consist of examinations and audits,

math error notices, and document matching. 

We are reporting improper payment estimates for these

four 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 B: 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 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 at

https://paymentaccuracy.gov/.
Message from the Acting Assistant Secretary

For Management and Deputy Chief 

Financial Officer ...............................................................51

Inspector General’s Transmittal Letter ................................. 53

Independent Auditors’ Report...............................................55

Management’s Response to Independent

Auditors’ Report ...............................................................61

Financial Statements .............................................................62

Notes to the Financial Statements ........................................70

Required Supplementary Information

(Unaudited) .....................................................................173
 

 
DEPARTMENT OF THE TREASURY 51 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

MESSAGE FROM THE ACTING ASSISTANT SECRETARY FOR MANAGEMENT

AND DEPUTY CHIEF FINANCIAL OFFICER

In fiscal year 2022, Treasury pursued an aggressive set of initiatives to manage

the Department more efficiently and implement the President’s Management

Agenda. Treasury took a leadership role in undertaking some of the

government’s most persistent challenges: continue improving workplace safety

and planning for our future workspace as we hopefully move towards a postpandemic environment; further promoting diversity, equity, inclusion, and

accessibility; eliminating improper payments; modernizing information

technology, improving workforce performance, leveraging data as a strategic

asset, and delivering excellent financial management services.

In fiscal year 2022, we also demonstrated effective fiscal and management leadership by: 

• establishing or refining complex accounting and internal controls in support of ongoing economic recovery programs

created under the Coronavirus Aid, Relief, and Economic Security Act of 2020, Consolidated Appropriations Act,

2021, and the American Rescue Plan Act of 2021; 

• improving our data infrastructure through establishing a data literacy framework to further support Financial Data

Transparency Act data standardization efforts; 

• developing Treasury’s Climate Action Plan, which includes assessing our financial investments in property and the

procurement of renewable energy credits and energy-savings performance contracts; 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 our consolidated financial statements for the 23rd consecutive year. We were 

successful this past year in downgrading a major component of our significant deficiency related to the Bureau of the Fiscal

Service’s debt management systems. Despite the complexity of Treasury’s financial systems, we continue to make steady

progress toward fully resolving all remaining deficiencies associated with our systems.

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. 

Anna Canfield Roth Carole Y. Banks 

Acting Assistant Secretary for Management Deputy Chief Financial Officer

November 15, 2022 November 15, 2022

Anna Canfield Roth

Acting Assistant Secretary 

for Management

Carole Y. Banks

Deputy Chief Financial

Officer 
 

 

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DEPARTMENT OF THE TREASURY 53 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

INSPECTOR GENERAL’S TRANSMITTAL LETTER

DEPARTMENT OF THE TREASURY

WASHINGTON, D. C. 20220

OFFICE OF

INSPECTOR GENERAL November 15, 2022 

INFORMATION MEMORANDUM FOR SECRETARY YELLEN

FROM: Richard K. Delmar /s/

Deputy Inspector General

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

Fiscal Years 2022 and 2021 

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 a certified independent public accounting firm of 

KPMG LLP (KPMG) to audit the consolidated financial statements of Treasury as of September 30, 2022 

and 2021, 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. 22-01, 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 systems at the Bureau of the Fiscal 

Service, 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; 

• 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. 
54 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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, 2022, 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: Anna Canfield Roth 

 Acting Assistant Secretary for Management

Carole Y. Banks 

Deputy Chief Financial Officer 
Independent Auditors’ Report

Deputy Inspector General

Department of the Treasury:

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of the Department of the Treasury (Department), which 

comprise the consolidated balance sheets as of September 30, 2022 and 2021, and the related consolidated

statements of net costs, consolidated statements of changes in net position, statements of custodial activity,

and combined statements of budgetary resources for the years then ended, and the related notes to the 

consolidated financial statements.

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

financial statements present fairly, in all material respects, the financial position of the Department as of 

September 30, 2022 and 2021, 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.

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

Department, which statements reflect total assets constituting 0.95 percent and 0.98 percent, respectively, of

the Department’s consolidated total assets at September 30, 2022 and 2021; net costs of operations 

constituting 7.55 percent and 9.78 percent, respectively, of the Department’s consolidated net costs of 

operations for the years then ended; budgetary resources constituting 7.11 percent and 1.07 percent, 

respectively, of the Department’s combined budgetary resources for the years then ended; and custodial 

revenue constituting 96.93 percent and 95.97 percent, respectively, of the Department’s total custodial revenue 

for the years then ended. 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 constituting 

0.04 percent and 0.04 percent, respectively, of the Department’s consolidated total assets at September 30,

2022 and 2021; net costs of operations constituting 0.12 percent and 0.28 percent, respectively, of the 

Department’s consolidated net costs of operations for the years then ended; and budgetary resources 

constituting 0.01 percent and 0.01 percent, respectively, of the Department’s combined budgetary resources for 

the years then ended. 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.

Basis for Opinion

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

America (GAAS), the standards applicable to financial audits contained in Government Auditing Standards, 

issued by the Comptroller General of the United States, and Office of Management and Budget (OMB) Bulletin 

No. 22-01, Audit Requirements for Federal Financial Statements. Our responsibilities under those standards

and OMB Bulletin No. 22-01 are further described in the Auditors’ Responsibilities for the Audit of the

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. 

55
Consolidated Financial Statements section of our report. We are required to be independent of the Department 

and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to 

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

for our audit opinion. 

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, 2022 and 2021, 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 Matter - 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 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. 

Responsibilities of Management for the Consolidated Financial Statements 

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

accordance with U.S. generally accepted accounting principles, and for 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’ Responsibilities for the Audit of the Consolidated Financial Statements 

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a 

whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that 

includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and 

therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing 

Standards, and OMB Bulletin No. 22-01 will always detect a material misstatement when it exists. The risk of 

not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud 

may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 

Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, 

they would influence the judgment made by a reasonable user based on the consolidated financial statements. 

In performing an audit in accordance with GAAS, Government Auditing Standards, and OMB Bulletin 

No. 22-01, we: 

• Exercise professional judgment and maintain professional skepticism throughout the audit.

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether

due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures

include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated

financial statements.

56
• Obtain an understanding of internal control relevant to the audit 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 Department’s internal control. Accordingly, no such opinion is expressed.

• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting

estimates made by management, as well as evaluate the overall presentation of the consolidated financial

statements.

We are required to communicate with those charged with governance regarding, among other matters, the 

planned scope and timing of the audit, significant audit findings, and certain internal control related matters that 

we identified during the audit. 

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 is the responsibility of management and, 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 GAAS, 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, and the other auditors’ inquiries, the basic consolidated 

financial statements, and other knowledge we, and the other auditors, 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. 

Other Information 

Management is responsible for the other information included in the Agency Financial Report. The other 

information comprises the Message from the Secretary of the Treasury, the Message from the Acting Assistant 

Secretary for Management and Deputy Chief Financial Officer, and the Other Information but does not include 

the consolidated financial statements and our auditors’ report thereon. Our opinion on the consolidated financial 

statements does not cover the other information, and we do not express an opinion or any form of assurance 

thereon. 

In connection with our audit of the consolidated financial statements, our responsibility is to read the other 

information and consider whether a material inconsistency exists between the other information and the 

consolidated financial statements, or the other information otherwise appears to be materially misstated. If, 

based on the work performed, we conclude that an uncorrected material misstatement of the other information 

exists, we are required to describe it in our report. 

Report on Internal Control Over Financial Reporting 

This report includes our consideration of the results of the other auditors’ testing of internal control over 

financial reporting that are reported on separately by those other auditors. However, this report, insofar as it 

relates to the results of the other auditors, is based solely on the reports of the other auditors. 

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

September 30, 2022, 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 

57
the effectiveness of the Department’s internal control. 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 were not 

identified. Given these limitations, during our audit we and the other auditors did not identify any deficiencies in 

internal control that we consider to be material weaknesses. We and the other auditors identified certain 

deficiencies in internal control, described below, that we consider to be significant deficiencies. 

A. Significant Deficiency in Internal Control over Cash Management 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.

While Fiscal Service remediated several control deficiencies identified in prior audits, Fiscal Service had 

unresolved control deficiencies primarily related to its general information technology controls over the 

government-wide cash management systems as follows: 

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 that access to

systems is protected against unauthorized modification, loss, or disclosure; (3) security events are logged,

monitored, investigated and resolved; (4) baseline policies and procedures for security configuration

controls were adequately documented and fully implemented for all platforms; (5) a complete and accurate

inventory of information system components is maintained; and (6) 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.

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 

Deputy Chief Financial Officer (DCFO) ensure that Fiscal Service implements requisite corrective actions to 

resolve control deficiencies over its cash management systems. 

58
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

During fiscal year 2022, the systems IRS uses to account for federal taxes receivable and other unpaid 

assessment balances continued to have limitations, as well as other control deficiencies that led to errors in 

taxpayer accounts. Because of these deficiencies, IRS’s systems were unable to provide the 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 2022, IRS recorded adjustments totaling about $18.5 billion to correct the 

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

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

reliable related balances 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 continued to have control deficiencies, primarily unresolved control deficiencies identified in prior 

audits, related to general controls. IRS mitigated the potential effect of the identified control deficiencies 

primarily through compensating controls that management has designed to detect potential misstatements 

on the financial statements. Nevertheless, these deficiencies increase the risk of unauthorized access to, 

modification of, or disclosure of sensitive financial and taxpayer data and disruption of critical operations 

and are therefore important enough to merit the attention of those charged with governance of IRS.

IRS made progress addressing certain information security control deficiencies. For example, IRS 

addressed deficiencies in (1) the identification and authentication of user and service accounts, (2) certain 

configuration settings, and (3) security management. However, deficiencies continue to exist within 

encryption and improper configuration of security settings. While IRS has expressed its intent to address 

unresolved deficiencies in fiscal year 2023, continued and consistent management commitment and 

attention are essential to addressing existing 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 DCFO

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

Report on Compliance and Other Matters

This report includes our consideration of the results of the other auditors’ testing of compliance and other 

matters that are reported on separately by those other auditors. However, this report, insofar as it relates to the 

results of the other auditors, is based solely on the reports of the other auditors.

59
As part of obtaining reasonable assurance about whether the Department’s consolidated financial statements 

as of and for the year ended September 30, 2022 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 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 and those of the other auditors disclosed no instances of noncompliance or 

other matters that are required to be reported under Government Auditing Standards or OMB Bulletin 

No. 22-01.

We also performed tests of the Department’s 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 the 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 DCFO ensure that IRS and Fiscal Service develop and implement 

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

Government Auditing Standards requires the auditor to perform limited procedures on the Department’s 

response to the findings identified in our audit and described previously. The Department’s response to the 

findings is included in a separate letter immediately following this report. The Department’s response was not 

subjected to the other auditing procedures applied in the audit of the consolidated financial statements and, 

accordingly, we express no opinion on the response.

Purpose of the Reporting Required by Government Auditing Standards

The purpose of the communication described in the Report on Internal Control Over Financial Reporting and 

the Report on Compliance and Other Matters sections 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, 2022

60
DEPARTMENT OF THE TREASURY 61 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

MANAGEMENT’S RESPONSE TO INDEPENDENT AUDITORS’ REPORT

November 15, 2022 

KPMG LLP

1801 K Street, NW

Washington, DC 20006 

To Whom This May Concern: 

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

Treasury's fiscal year 2022 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 23rd 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 2022 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 continue our focus on necessary corrective actions to address each of the

issues.

Overall, we have made strong progress in enhancing our internal control environment. This year, we were

successful in downgrading a major component of one of our significant deficiencies related to the Bureau of 

the Fiscal Service’s debt management systems. We are very proud of our progress and remain committed to

ensuring high standards of integrity and transparency in reporting our financial performance.

 

Anna Canfield Roth Carole Y. Banks 

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

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Balance Sheets

As of September 30, 2022 and 2021

(in millions) 2022 2021 

ASSETS

Intra-Governmental

Fund Balance (Note 2) $ 554,590 $ 626,456 

Loans Receivable: 

 Loans and Interest Receivable (Note 3) 1,611,875 1,794,390 

 Advances to Trust Funds (Note 3) 47,298 91,378 

Other Assets: 

 Due From the General Fund (Note 4) 31,064,578 28,810,092 

 Other (Note 15) 1,370 1,328 

Total Intra-Governmental 33,279,711 31,323,644 

Other Than Intra-Governmental 

Cash and Other Monetary Assets: 

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) 784,073 379,105 

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

 Reserve Position in the International Monetary Fund (Note 7) 31,334 32,743 

Accounts Receivable, Net: 

 Taxes, Interest, and Other Receivables, Net (Note 8) 238,027 304,629 

Loans Receivable, Net: 

 Loans and Interest Receivable, Net (Notes 7 and 10) 12,072 14,621 

 Credit Program Receivables, Net (Notes 9 and 10) 3,415 4,073 

Advances and Prepayments (Note 10) 225,180 256,072 

Investments in Government Sponsored Enterprises (GSEs) (Note 11) 223,720 220,860 

Investments in Special Purpose Vehicles (Note 10) 17,835 25,579 

Other Investments:

 Investments in Multilateral Development Banks (Note 12) 8,727 8,466 

 Other, Net (Notes 10 and 13) 6,799 6,164 

General Property, Plant, and Equipment, Net (Note 14) 3,072 2,996 

Other Assets (Note 15) 1,867 1,058 

Total Other Than Intra-Governmental 1,567,183 1,267,428 

Total Assets $ 34,846,894 $ 32,591,072 

Heritage Assets (Note 14)

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

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Consolidated Balance Sheets

As of September 30, 2022 and 2021

(in millions) 2022 2021 

LIABILITIES 

Intra-Governmental 

Federal Debt and Interest Payable: 

 Federal Debt and Interest Payable (Notes 4 and 16) $ 6,717,361 $ 6,225,208 

 Other Federal Debt and Interest Payable (Note 17) 4,878 6,093 

Other Liabilities: 

 Due To the General Fund (Note 4) 2,768,781 2,649,003 

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

 Other (Note 19) 1,551 1,675 

Total Intra-Governmental 9,492,571 8,942,541 

Other Than Intra-Governmental 

Federal Debt and Interest Payable (Notes 4 and 16) 24,308,695 22,325,218 

Accounts Payable: 

 Refunds Payable (Note 4) 6,961 6,249 

 Other Payables 1,402 1,096 

Other Liabilities: 

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

 Allocation of Special Drawing Rights (Note 5) 147,009 161,825 

 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) 8,461 8,010 

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

 Other (Note 19) 9,776 8,005 

Total Other Than Intra-Governmental 24,498,541 22,683,675 

Total Liabilities (Note 19) 33,991,112 31,626,216 

Commitments and Contingencies (Note 27)

NET POSITION

Unexpended Appropriations

Funds from Dedicated Collections (Note 24) 200 200 

Funds from Other than Dedicated Collections 785,761 878,410 

Total Unexpended Appropriations 785,961 878,610 

Cumulative Results of Operations

Funds from Dedicated Collections (Note 24) 45,259 49,178 

Funds from Other than Dedicated Collections 24,562 37,068 

Total Cumulative Results of Operations 69,821 86,246 

Total Net Position (Note 20) 855,782 964,856 

Total Liabilities and Net Position $ 34,846,894 $ 32,591,072 

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

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Statements of Net Cost

For the Fiscal Years Ended September 30, 2022 and 2021

(in millions) 2022 2021 

COST OF TREASURY OPERATIONS:

Financial Program

Gross Cost $ 25,708 $ 24,716 

Less Earned Revenue (10,511) (10,464) 

Net Program Cost 15,197 14,252 

Economic Program

Gross Cost (Note 10) 190,762 129,707 

Less Earned Revenue (20,173) (7,692) 

Net Program Cost 170,589 122,015 

Security Program

Gross Cost 548 515 

Less Earned Revenue (28) (26) 

Net Program Cost 520 489 

Total Program Gross Costs 217,018 154,938 

Total Program Earned Revenues (30,712) (18,182) 

Total Net Program Cost before Changes in Actuarial Assumptions 186,306 136,756 

Loss on Pension, ORB, or OPEB Assumption Changes 519 243 

Total Net Cost of Treasury Operations (Note 21) 186,825 136,999 

NON-ENTITY COSTS:

Federal Debt Interest 722,233 574,594 

Restoration of Foregone Federal Debt Interest (Note 16) 726 - 

Less Interest Revenue from Loans (47,064) (48,665) 

Federal Debt Interest Costs, Net 675,895 525,929 

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

Other Federal Costs, Net (Note 21) 17,180 23,566 

GSEs Non-Entity Revenue, Net (Note 11) (2,860) (111,950) 

COVID-19 Non-Entity Cost (Revenue), Net (Note 10) 1,945 (8,937) 

Other, Net (858) (721) 

Total Net Non-Entity Costs 691,302 428,296 

Total Net Cost of Treasury Operations and Non-Entity Costs $ 878,127 $ 565,295 

The accompanying notes are an integral part of these financial statements.
DEPARTMENT OF THE TREASURY 65 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Consolidated Statement of Changes in Net Position

For the Fiscal Year Ended September 30, 2022

Consolidated Consolidated

Funds from Funds from Other

Dedicated than Dedicated 2022 

(in millions) Collections Collections Eliminations Total 

UNEXPENDED APPROPRIATIONS (Notes 20 and 24)

Beginning Balance $ 200 $ 878,410 $ - $ 878,610 

Appropriations Received (Note 10) - 802,456 - 802,456 

Appropriations Transferred In/Out - 200 - 200 

Other Adjustments (Note 10) - (18,236) - (18,236) 

Appropriations Used (Note 10) - (877,069) - (877,069) 

Net Change in Unexpended Appropriations - (92,649) - (92,649) 

Total Unexpended Appropriations 200 785,761 - 785,961 

CUMULATIVE RESULTS OF OPERATIONS (Notes 20 and 24) 

Beginning Balance 49,178 37,068 - 86,246 

Appropriations Used (Note 10) - 877,069 - 877,069 

Non-Exchange Revenue 453 (1) (41) 411 

Donations and Forfeitures of Cash/Equivalent 721 - - 721 

Transfers In/Out Without Reimbursement (691) 547 (3) (147) 

Donation/Forfeiture of Property 172 - - 172 

Accrued Interest and Discount on Debt - 38,873 - 38,873 

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

Imputed Financing Sources (Note 21) 71 709 - 780 

Transfers to the General Fund and Other 554 (56,322) - (55,768) 

Net Cost of Treasury Operations and Non-Entity Costs (5,199) (872,972) 44 (878,127) 

Net Change in Cumulative Results of Operations (3,919) (12,506) - (16,425) 

Total Cumulative Results of Operations 45,259 24,562 - 69,821 

Net Position $ 45,459 $ 810,323 $ - $ 855,782 

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

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Statement of Changes in Net Position

For the Fiscal Year Ended September 30, 2021

Consolidated Consolidated

Funds from Funds from Other

Dedicated than Dedicated 2021 

(in millions) Collections Collections Eliminations Total 

UNEXPENDED APPROPRIATIONS (Notes 20 and 24)

Beginning Balance $ 200 $ 903,758 $ - $ 903,958 

Appropriations Received (Note 10) - 1,124,489 - 1,124,489 

Appropriations Transferred In/Out - 50 - 50 

Other Adjustments (Note 10) - (488,673) - (488,673) 

Appropriations Used (Note 10) - (661,214) - (661,214) 

Net Change in Unexpended Appropriations - (25,348) - (25,348) 

Total Unexpended Appropriations 200 878,410 - 878,610 

CUMULATIVE RESULTS OF OPERATIONS (Notes 20 and 24) 

Beginning Balance 48,844 94,539 - 143,383 

Appropriations Used (Note 10) - 661,214 - 661,214 

Non-Exchange Revenue 443 2 (4) 441 

Donations and Forfeitures of Cash/Equivalent 285 - - 285 

Transfers In/Out Without Reimbursement (250) (394) - (644) 

Donation/Forfeiture of Property 185 - - 185 

Accrued Interest and Discount on Debt - 22,591 - 22,591 

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

Imputed Financing Sources (Note 21) 80 682 - 762 

Transfers to the General Fund and Other 849 (177,934) - (177,085) 

Net Cost of Treasury Operations and Non-Entity Costs (1,258) (564,041) 4 (565,295) 

Net Change in Cumulative Results of Operations 334 (57,471) - (57,137) 

Total Cumulative Results of Operations 49,178 37,068 - 86,246 

Net Position $ 49,378 $ 915,478 $ - $ 964,856 

The accompanying notes are an integral part of these financial statements.
DEPARTMENT OF THE TREASURY 67 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Combined Statement of Budgetary Resources

For the Fiscal Year Ended September 30, 2022

Non-Budgetary 2022 

(in millions) Budgetary Financing Total 

BUDGETARY RESOURCES

Unobligated balance from prior year budget authority, net

 (discretionary and mandatory) (Note 22) $ 489,225 $ 313 $ 489,538 

Appropriations (discretionary and mandatory) (Notes 10 and 20) 834,390 - 834,390 

Borrowing authority (discretionary and mandatory) - 5,463 5,463 

Spending authority from offsetting collections 

 (discretionary and mandatory) 11,571 834 12,405 

Total Budgetary Resources $ 1,335,186 $ 6,610 $ 1,341,796 

STATUS OF BUDGETARY RESOURCES

New obligations and upward adjustments (Note 10) $ 930,261 $ 6,316 $ 936,577 

Unobligated balance, end of year:

 Apportioned, unexpired accounts 306,461 216 306,677 

 Exempt from apportionment, unexpired accounts 1,935 - 1,935 

 Unapportioned, unexpired accounts 95,808 78 95,886 

 Unexpired unobligated balance, end of year 404,204 294 404,498 

 Expired unobligated balance, end of year 721 - 721 

Unobligated balance, end of year 404,925 294 405,219 

Total Status of Budgetary Resources $ 1,335,186 $ 6,610 $ 1,341,796 

OUTLAYS, NET, AND DISBURSEMENTS, NET

Outlays, net (discretionary and mandatory) $ 893,311 $ - $ 893,311 

Distributed offsetting receipts (65,142) - (65,142) 

Agency Outlays, Net (Discretionary and Mandatory) $ 828,169 $ - $ 828,169 

Disbursements, net (mandatory) $ (4,722) $ (4,722) 

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

FY 2022 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) - 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 69 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Statements of Custodial Activity

For the Fiscal Years Ended September 30, 2022 and 2021

 

(in millions) 2022 2021 

SOURCES OF CUSTODIAL REVENUE (Note 23)

Individual Income and FICA Taxes $ 4,308,098 $ 3,594,002 

Corporate Income Taxes 475,871 419,009 

Estate and Gift Taxes 33,355 28,046 

Excise Taxes 90,240 78,534 

Railroad Retirement Taxes 6,148 5,307 

Unemployment Taxes 7,046 6,276 

Deposit of Earnings, Federal Reserve System 106,675 100,054 

Fines, Penalties, Interest and Other Revenue 7,305 7,843 

Total Revenue Received 5,034,738 4,239,071 

Less Refunds and Other Payments (Note 10) (642,230) (1,138,267) 

Net Revenue Received 4,392,508 3,100,804 

Non-Cash Accrual Adjustment (66,747) 63,958 

Total Custodial Revenue 4,325,761 3,164,762 

DISPOSITION OF CUSTODIAL REVENUE (Note 23)

Amounts Provided to Fund Non-Federal Entities 421 528 

Amounts Provided to Fund the Federal Government 4,392,087 3,100,276 

Non-Cash Accrual Adjustment (66,747) 63,958 

Total Disposition of Custodial Revenue 4,325,761 3,164,762 

Net Custodial Revenue $ - $ - 

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

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

NOTES TO THE FINANCIAL STATEMENTS

TABLE OF CONTENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES .........................................................................................................................71

2. FUND BALANCE.......................................................................................................................................................................................93

3. LOANS AND INTEREST RECEIVABLE – INTRA-GOVERNMENTAL.....................................................................................................95

4. DUE FROM THE GENERAL FUND AND DUE TO THE GENERAL FUND.............................................................................................98

5. CASH, FOREIGN CURRENCY, AND OTHER MONETARY ASSETS.....................................................................................................100

6. GOLD AND SILVER RESERVES, AND GOLD CERTIFICATES ISSUED TO THE FEDERAL RESERVE BANKS ................................. 102

7. RESERVE POSITION IN THE INTERNATIONAL MONETARY FUND AND RELATED LOANS AND INTEREST RECEIVABLE.......103

8. TAXES, INTEREST, AND OTHER RECEIVABLES, NET ......................................................................................................................104

9. CREDIT PROGRAM RECEIVABLES, NET ............................................................................................................................................105

10. COVID-19 INVESTMENTS, ADVANCES, RECEIVABLES, AND OTHER..........................................................................................106

11. INVESTMENTS IN GOVERNMENT SPONSORED ENTERPRISES........................................................................................................124

12. INVESTMENTS IN MULTILATERAL DEVELOPMENT BANKS ...........................................................................................................129

13. OTHER INVESTMENTS, NET ...............................................................................................................................................................130

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 OF NET COST AND NET 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 OF NET COST OF TREASURY OPERATIONS AND NON-ENTITY COSTS TO AGENCY OUTLAYS, NET.........161

26. SCHEDULE OF FIDUCIARY ACTIVITY .................................................................................................................................................164

27. COMMITMENTS AND CONTINGENCIES ..............................................................................................................................................165

28. RECLASSIFICATION OF AGENCY FINANCIAL STATEMENTS TO FINANCIAL REPORT

OF THE U.S. GOVERNMENT FORMAT............................................................................................................................................169

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED – SEE ACCOMPANYING AUDITORS’ REPORT) ...................................173
DEPARTMENT OF THE TREASURY 71 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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), 

Office of Recovery Programs (ORP), 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. 
72 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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) 2022 and 2021 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 we use 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 
DEPARTMENT OF THE TREASURY 73 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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 2021 activity and balances presented on the financial statements to conform to the

presentation in the current year. In FY 2022, we changed the classification of certain of our reporting entities’ program

gross costs and earned revenues as reported on the Consolidated Statements of Net Cost to better align them based on their

core function and responsibility. We reclassified corresponding gross costs and earned revenues reported for the prior fiscal

year to conform to the current year’s presentation (refer to Note 21). Furthermore, in FY 2022, we changed the presentation

of the Consolidated Balance Sheets in accordance with revisions in OMB Circular No. A-136. We reclassified corresponding

balances reported for the prior fiscal year 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 RECEIVABLE – INTRA-GOVERNMENTAL

Loans and Interest Receivable

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. 
74 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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. 

E. 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. 

Foreign currency and Foreign Currency Denominated Assets (FCDAs) represent foreign deposit accounts and securities with

original maturities of three months.

Special Drawing Rights (SDR) holdings comprise most of the other monetary assets (refer to the accounting policy below 

entitled “Special Drawing Rights”).

F. TAXES, INTEREST, AND OTHER RECEIVABLES, NET

We do not accrue federal taxes receivable, net, and the corresponding liability due to the General Fund, until the taxpayer

files related tax returns, or the IRS makes assessments and either the taxpayer or the court agrees to them. Additionally,

prepayments are netted against tax liabilities. We make accruals to reflect penalties and interest on taxes receivable

through the balance sheet date.
DEPARTMENT OF THE TREASURY 75 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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 U.S.. 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. 

Compliance assessments are unpaid assessments that 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. 

G. LOANS RECEIVABLE, NET – OTHER THAN INTRA-GOVERNMENTAL

Loans and Interest Receivable, Net 

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 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, P.L. 116-136 (CARES Act), Consolidated Appropriations Act, 2021, P.L. 116-260 (CAA), and

American Rescue Plan Act of 2021, P.L. 117-2 (ARP) (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 

borrowers make this PIK election. 

This receivable is an asset of the U.S. government, and we are precluded from using the cash proceeds realized from the

financial instruments we receive. 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 “Loans 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. We derived the fair value of the notes portfolio as the present value of the expected future cash flows of the
76 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 Cost (Revenue), Net” line of the

Consolidated Statements of Net Cost. This receivable also results in a corresponding increase to “Due To the General Fund.”

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. 

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 we use 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;

• department actions, as well as changes in legislation;

• forecast dividend payments, late payments, prepayment rates and default rates;

• forward interest rates; 
DEPARTMENT OF THE TREASURY 77 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

• historical prepayments;

• option adjusted spread;

• default and recovery reports Moody’s and Standard and Poor’s publish; 

• modeled asset prices from third-party market sources; and

• forecast and historical Special Purpose Vehicles (SPVs) 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.

H. ADVANCES AND PREPAYMENTS

We issue advances to COVID-19 pandemic-related recovery financial assistance 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 when disbursed within the

“Advances and Prepayments” 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.

I. INVESTMENTS

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.
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FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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. We estimate the value of the senior preferred stock 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). We base the fair

value of the total equity 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 Market. 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). 

Investments in Special Purpose Vehicles 

Pursuant to the CARES Act enacted in FY 2020 in response to the COVID-19 pandemic, we hold preferred equity

investments in SPVs the Board of Governors of the Federal Reserve System (Federal Reserve Board or Board) established

through the Federal Reserve Bank of New York (FRBNY) and Federal Reserve Bank of Boston (FRBB) to enhance the

liquidity of the U.S. financial system (refer to Note 10). 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 entity

exchange transactions on the Consolidated Statements of Net Cost. 

The annual valuation of these investments as of September 30 incorporates various forecasts, projections and cash flow 

analyses to develop an estimate of the assets’ fair value. We estimate the fair value of our SPV preferred equity investments 

based on a discounted cash flow valuation methodology which calculates the present value of the projected annual cash flows 

associated with these investments. 

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.
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FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Other Investments, Net 

In connection with our Emergency Capital Investment Program established pursuant to the FY 2021 enactment of the CAA,

we hold preferred stock and subordinate debt we received in exchange for our capital disbursed to low- and moderate-income

community financial institutions to augment their efforts to support small businesses and consumers in their communities

(refer to Notes 10 and 13). 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 entity exchange transactions on the

Consolidated Statements of Net Cost. We recognize preferred stock dividend income when declared and interest income on 

subordinate debt when earned.

In connection with other emergency relief programs established in response to the COVID-19 pandemic, we also hold

warrants for the purchase of common stock we 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 we received. We

present these non-entity, non-federal investment holdings at their fair value (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 these investments 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 Cost (Revenue), Net” line of 

the Consolidated Statements of Net Cost. 

The annual valuation as of September 30 of the preferred stock, subordinate debt, and common stock warrants incorporates

various forecasts, projections and cash flow analyses to develop an estimate of the assets’ fair value. We estimate the fair

value of our preferred stock, and subordinate debt 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

preferred stock is dividend rates; our subordinate debt primarily incorporates interest rates and percentage of deferred 

interest payments (interest deferral rates). Both our preferred stock and subordinate debt inputs include redemption rates,

annual qualified lending growth rates, issuer credit scores, and market yield discount rates. 

We estimate the fair value of our common stock warrants that are closely held 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.

The ESF holds most of our foreign currency investments (refer to Note 13). We present the ESF’s foreign currency

denominated assets and investment securities 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. 
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FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 relevant observable inputs and minimizes 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.

The inputs or methodology we use 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 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. We capitalize major alterations and renovations, including leasehold and land

improvements, while we charge maintenance and repair costs to expense as incurred. We record costs for construction

projects as construction-in-progress until completed and value the costs 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 we successfully complete testing and final acceptances. 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. 
DEPARTMENT OF THE TREASURY 81 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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. 

We expense depreciation on a straight-line basis over the estimated useful life of the asset except for leasehold improvements

and capital leases, which we depreciate over the term of the lease or the useful life of the improvement or asset, whichever is

shorter. Service life ranges (two 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.

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. We accrue interest costs as an expense as incurred

and report the costs 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 we determine 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 the IMF created 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.
82 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 because 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.

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. We redeem certificates issued at such times and in such amounts as the Secretary may determine. The 

certificates 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.
DEPARTMENT OF THE TREASURY 83 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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 DOL

adminsters the FECA program, 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 the DOL paid but which we have not yet reimbursed. The second

component is the estimated liability for future workers compensation as a result of past events. We report both components

in the “Other” line item within “Other Liabilities” on the Consolidated Balance Sheets. DOL generates these future workers’

compensation estimates 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 employees earn, but have 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 the “Other” line item within “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. 

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 16.6 percent and

18.4 percent for regular employees, and between 35.8 percent and 37.6 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. 
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FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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, the OCC

administers 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 we use 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 we use to determine the cost and actuarial liability for the D.C.

Federal Pension Fund is the Projected Unit Credit Cost Method, which recognizes that participants have fully accrued all

service and does not generate a normal cost. These methodologies base actuarial liabilities on long-term economic 

assumptions. The pension benefit costs the plans incur 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. 

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 it 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 decreases or increases when the IMF borrows and repays loans under the related supplemental funding

arrangement (refer to Note 7). 
DEPARTMENT OF THE TREASURY 85 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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, we recognize that amount. 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 we meet one or more, but not all, of the above criteria for recognition, 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

We finance our activities either through exchange revenue we receive from others or through non-exchange revenue and

financing sources (such as appropriations the Congress provides and penalties, fines, and certain user fees we collect). 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 we earn it, i.e., we delivered goods or 

rendered services. We recognize revenue from reimbursable agreements when providing services. We record non-exchange

revenues when we receive them or when we accrue revenues due to a legal claim. We recognize appropriations used as

financing sources when we incur related expenses or purchase assets. 

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. 

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 we receive pursuant

to laws law enforcement bureaus that participate in the TFF enforce or administer. We report forfeited property balances in

other than intra-governmental “Other Assets” on the Consolidated Balance Sheets.
86 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 other federal agencies collect, 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 we collect cash, 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. We record incurred obligations of appropriations 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. We record outlays when we make disbursements. 

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 we use appropriations. 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. We use one permanent and indefinite

appropriation to pay interest on the public debt securities, and use the other 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 the FCRA requires.

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 any governing body imposes, whether it is a 

federal, state, commonwealth, local, or foreign government.
DEPARTMENT OF THE TREASURY 87 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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 our financial position in future periods. Transactions subject to estimates

principally include our GSE and other non-federal investment holdings, loan and credit program receivables, credit reform 

subsidy costs, tax receivables, impairment to any of our investments and 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, 2022, the effects of any new developments that may have occurred subsequent to September 

30, 2022. 

We derive credit program receivables 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. 

We estimate our non-federal investment holdings 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 fair value estimations.” 

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, we must remit excess residual proceeds we realize from our SPV capital contributions and

direct loans to air carriers and other related businesses 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 we discuss above. 

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 the GSEs receive 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. 
88 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

W. OTHER-THAN-TEMPORARY IMPAIRMENTS

We account for 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 as an impairment, and reduce the carrying value 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 outweighs 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 that engage in

financial transactions with foreign countries (refer to Note 13). The 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 funding commitments related to our COVID-19 and GSE programs; and GSE

direct loans receivable 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. We describe the extent of the risk we assumed in more detail

in the notes to the financial statements and, where applicable, we factor it into credit reform models and reflect it 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 that we use these

specifically identified revenues and other financing sources for designated activities, benefits, or purposes. We apply the

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.
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FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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. We credit all allocation transfers of balances to this account, and

charge subsequent obligations and outlays the child entity incurs 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 DOL and HHS. Also, we receive allocation transfers, as the child, from HHS, 

Department of Justice (DOJ), the Department of Transportation, Agency for International Development, 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 we report an organization meeting the inclusion principles 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 the U.S. government

owns and/or controls 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
90 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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, 2022. 

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 the FR System undertakes 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. 

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. 
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FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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 we issue in which the certificates are collateralized by gold (refer to Note 6). 

• The FRBs hold SDR certificates we issue 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 by

providing 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,

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 William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year

2021 (P.L. 116-283). 

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. 116-283, if an FRB’s earnings for the year are not sufficient to provide for the cost of 

operations, dividend payments, 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 $106.7 billion and $100.1

billion for fiscal years ended September 30, 2022 and 2021, respectively, are reported as custodial revenues on our

Statements of Custodial Activity. They constituted 2.1 percent and 2.4 percent of our total custodial revenues collected in FY 

2022 and 2021, respectively. “Taxes, Interest and Other Receivables, Net” includes a receivable for FRB’s residual earnings
92 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 the Federal Reserve Board established through

the FRBNY and FRBB to enhance 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 Receivable, Net – Other

Than Intra-Governmental,” “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). 

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 six 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). 
DEPARTMENT OF THE TREASURY 93 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

2. FUND BALANCE 

Fund Balance increases when we receive appropriations, reappropriations, continuing resolutions, appropriation

restorations, and allocations; and when we receive transfers and reimbursements from other federal agencies. 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 we make disbursements 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 made to other federal entities, non-federal entities, or the General Fund; and due to

sequestration or rescission of appropriations.

STATUS OF FUND BALANCE 

As of September 30, 2022 and 2021, the status of the fund balance consisted of the following: 

(in millions) 2022 2021 

Unobligated Balance - Available $ 308,612 $ 445,017 

Unobligated Balance - Not Available 96,607 44,143 

Obligated Balance Not Yet Disbursed 181,515 175,467 

Subtotal 586,734 664,627 

Adjustment for ESF (188,154) (207,601) 

Adjustment for Intra-Treasury Investments (10,481) (9,906) 

Adjustment for Borrowing Authority (7,180) (6,117) 

Adjustment for IMF 150,041 163,962 

Adjustment for Authority Unavailable for Obligations 17,371 17,188 

Other Adjustments 6,259 4,303 

Total Status of Fund Balance $ 554,590 $ 626,456 

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 we ordered but have not received, or goods and

services we received but for which payment has not yet been made. The decline in Unobligated Balance - Available is

primarily due to the reduction in COVID-19 relief funding (refer to Note 10). The increase in Unobligated Balance - Not

Available is primarily due to additional funding provided by the Inflation Reduction Act (IRA). In August 2022, Congress

passed, and the President signed into law the IRA, which, among other things, addresses climate change by providing tax

incentives. 

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. 
94 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

• 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. 

• Adjustments for IMF – We report the funding we receive through appropriation warrants for IMF quota subscription

and borrowing arrangement as a component of Fund Balance; however, we do not report the IMF transactions as

budgetary resources and uses on the Combined Statements of Budgetary Resources (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, 2022 and 2021, 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. 
DEPARTMENT OF THE TREASURY 95 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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 federal agencies issue, sell, or guarantee. 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 

long-standing 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 privatesector 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, 2022 and 2021, entity intra-governmental loans (issued by FFB) and interest receivable consisted of the

following: 

Loans Interest 2022 Loans Interest 2021 

(in millions) Receivable Receivable Total Receivable Receivable Total 

Department of Agriculture $ 51,814 $ 30 $ 51,844 $ 48,742 $ 30 $ 48,772 

Department of Energy 15,449 73 15,522 15,904 72 15,976 

United States Postal Service(1) 10,000 39 10,039 11,000 35 11,035 

Department of Housing & Urban

 Development 2,716 8 2,724 2,630 8 2,638 

Other Agencies 623 3 626 476 2 478 

Total Entity Intra-Governmental $ 80,602 $ 153 $ 80,755 $ 78,752 $ 147 $ 78,899 

(1) The United States Postal Service (USPS) has experienced an operating deficit in the past fiscal years, including FY 2021. On April 6, 

2022, the President signed the Postal Service Reform Act of 2022 (“PSRA”), enacted as Public Law 117-108. The objective of this

legislation is to return the USPS to a sound financial position. We, along with Congress and other stakeholders, will continue

monitoring the USPS progress towards this objective. 
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FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 other federal agencies manage, 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.

As of September 30, 2022 and 2021, 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 2022 Loans Interest 2021 

(in millions) Receivable Receivable Total Receivable Receivable Total 

Department of Education $ 905,076 $ - $ 905,076 $ 1,221,382 $ - $ 1,221,382 

Small Business Administration 362,801 - 362,801 262,655 - 262,655 

Department of Housing and Urban 93,585 - 93,585 66,289 - 66,289 

Development

Department of Agriculture 87,342 - 87,342 84,049 - 84,049 

Department of Homeland Security 20,533 - 20,533 20,618 - 20,618 

Department of Transportation 16,066 - 16,066 14,753 - 14,753 

Export Import Bank of the U.S. 13,501 - 13,501 14,531 - 14,531 

US International Development Finance

 Corporation 8,965 - 8,965 7,724 - 7,724 

Department of Labor 6,557 - 6,557 6,353 - 6,353 

Department of Energy 6,442 31 6,473 6,968 28 6,996 

Railroad Retirement Board 4,418 35 4,453 4,567 38 4,605 

Department of Defense 1,598 - 1,598 1,600 - 1,600 

Environmental Protection Agency 1,557 - 1,557 747 - 747 

Executive Office of the President

 Security Assistance Accounts 1,022 1,022 1,652 1,652 

Other Agencies 1,591 - 1,591 1,537 - 1,537 

Total Non-Entity Intra- 

 Governmental $ 1,531,054 $ 66 $ 1,531,120 $ 1,715,425 $ 66 $ 1,715,491 

Total Intra-Governmental Loans

 and Interest Receivable (Entity 

 and Non-Entity) $ 1,611,656 $ 219 $ 1,611,875 $ 1,794,177 $ 213 $ 1,794,390 
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FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

ADVANCES TO TRUST FUNDS

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. 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 DOL’s and HHS’s repayment of these advances to the General Fund.

As of September 30, 2022 and 2021, Advances to Trust Funds consisted of the following:

Loans Interest 2022 Loans Interest 2021 

(in millions) Receivable Receivable Total Receivable Receivable Total 

Advances to the Unemployment Trust $ 39,500 $ 51 $ 39,551 $ 55,000 $ 66 $ 55,066 

Advances to the Federal Supplementary 

 Medical Insurance Trust Fund 7,747 - 7,747 36,312 - 36,312 

Total Advances to Trust Funds $ 47,247 $ 51 $ 47,298 $ 91,312 $ 66 $ 91,378 

Advances to these two trust funds decreased by a combined total of $44.1 billion from the end of the prior fiscal year, largely

due to states and HHS repaying their outstanding borrowings from the Unemployment Trust Fund and Federal 

Supplementary Medical Insurance Trust Fund, respectively, to the General Fund.

 
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FY 2022 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, 2022 and 2021, the General Fund liabilities we owed exceeded the assets we hold on behalf of the

General Fund by $28.3 trillion and $26.2 trillion, respectively. This represents the amount the U.S. government needs, 

through a combination of future tax collections or continued borrowing from the public and federal agencies to meet its

obligations.

As of September 30, 2022 and 2021, Due From the General Fund included the following non-entity liabilities:

Liabilities Requiring Funding from the General Fund (in millions) 2022 2021 

Federal Debt and Interest Payable - Held by the Public (Note 16) $ 24,308,695 $ 22,325,218 

Federal Debt and Interest Payable - Intra-Governmental (Note 16) 6,717,361 6,225,208 

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 6,961 6,249 

Adjustment for Eliminated Liabilities 31,561 35,820 

Total Due From the General Fund $ 31,064,578 $ 28,810,092 

The Adjustment for Eliminated Liabilities principally represents investments in U.S. government securities our reporting

entities hold that were eliminated against Federal Debt and Interest Payable Intra-governmental.

 
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FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

As of September 30, 2022 and 2021, Due To the General Fund included the following non-entity assets:

Assets to be Distributed to the General Fund (in millions) 2022 2021 

Fund Balance $ 3,147 $ 2,958 

Loans and Interest Receivable - Intra-Governmental (Note 3) 1,531,120 1,715,491 

Advances to Trust Funds (Note 3) 47,298 91,378 

Cash Due To the General Fund (Held by the Department) (Note 5) 617,114 198,396 

Taxes and Other Non-Entity Receivables Due To the General Fund 237,763 303,806 

Credit Reform Downward Subsidy Re-estimates 84 3,420 

Loans and Interest Receivable, Net (Note 10) 11,585 13,684 

Common Stock Warrant Investments (Notes 10 and 13) 493 847 

Investments in Government Sponsored Enterprises (Note 11) 223,720 220,860 

Adjustment for Eliminated Assets 94,977 96,679 

Other 1,480 1,484 

Total Due To the General Fund $ 2,768,781 $ 2,649,003 

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. We use it to

administer programs such as the Presidential Election Campaign and payments for Legal Services Corporation and thus it is

not available for our general use.

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 our Treasury reporting entities owe, 

which were eliminated against Loans and Interest Receivable Intra-governmental the Fiscal Service holds.
100 DEPARTMENT OF THE TREASURY

FY 2022 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, 2022 and 2021 were as follows: 

(in millions) 2022 2021 

Entity: 

Cash $ 25 $ 113 

Foreign Currency and Foreign Currency Denominated Assets 12,816 15,669 

Other Monetary Assets:

 Special Drawing Right Holdings 153,596 163,885 

 U.S. Dollars Held in Cash by the IMF 319 375 

Total Entity 166,756 180,042 

Non-Entity: 

Operating Cash of the U.S. government 617,013 198,313 

Foreign Currency 144 169 

Miscellaneous Cash Held by All Treasury Reporting Entities 160 581 

Total Non-Entity 617,317 199,063 

Total Cash, Foreign Currency, and Other Monetary Assets $ 784,073 $ 379,105 

We hold non-entity operating and other miscellaneous cash due to the General Fund which consisted of the following as of 

September 30, 2022 and 2021: 

(in millions) 2022 2021 

Operating Cash - FRB Account $ 635,994 $ 215,160 

Outstanding Checks (18,981) (16,847) 

Total Operating Cash of the U.S. government 617,013 198,313 

Miscellaneous Cash 110 92 

Subtotal 617,123 198,405 

Amounts Due to the Public (9) (9) 

Total Cash Due to the General Fund (Note 4) $ 617,114 $ 198,396 

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, 2022 and 2021 using current exchange rates plus

accrued interest. 

Special Drawing Rights

The SDR is an international reserve asset the IMF created 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

to the global economic stress the COVID-19 pandemic caused (the last increase was in 2009 due to the global economic 

crisis). During FY 2022, we purchased an additional 3.3 billion SDRs valued at $4.5 billion from 10 IMF participants. Our

increased commitment to hold and accept SDRs helps to provide liquidity to the global economic system and supplement

member countries’ official reserves. 
DEPARTMENT OF THE TREASURY 101 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

As of September 30, 2022 and 2021, the total amount of SDR holdings of the U.S. (including interest receivable) was the

equivalent of $153.6 billion and $163.9 billion, respectively. As of September 30, 2022 and 2021, the total value of SDR

allocations to the U.S. was the equivalent of $147.0 billion and $161.8 billion, respectively. The outstanding SDR certificates

issued to the Federal Reserve are valued at $5.2 billion which we reported as a liability on the Consolidated Balance Sheets 

as of September 30, 2022 and 2021.

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 increased by $418.7 billion at September 30, 2022

compared to the end of the prior fiscal year largely due to Treasury investment and borrowing policy decisions to manage the

balance and timing of the government’s cash position. During FY 2021, the debt ceiling constraints forced us to maintain a 

significantly lower operating cash balance. When the debt ceiling was increased in December 2021, we were able to bring

the operating cash balance back to its 1-week prudent policy level. 
102 DEPARTMENT OF THE TREASURY

FY 2022 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 the Secretary issued to the FRBs at the

statutory rate, as provided in 31 USC 5117. Since 1934, we have issued Gold Certificates 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 U.S. Mint and the FRBs hold the gold and silver bullion reserves. We report these reserves 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 we disclose below are based on the London Gold Fixing. As of September 30, 2022 and 2021, the

values of gold and silver reserves consisted of the following:

2022 

Statutory 2022 

Carrying Market Market 

Statutory Value Rate Per Value 

 FTOs Rate (in millions) FTO (in millions)

Gold Held by U.S. Mint 248,046,116 $ 42.2222 $ 10,473 $ 1,671.75 $ 414,671 

Gold Held by Federal Reserve Banks 13,452,811 $ 42.2222 568 $ 1,671.75 22,490 

Total Gold 261,498,927 11,041 437,161 

Silver 16,000,000 $ 1.2929 21 $ 19.02 304 

Total Gold and Silver Reserves $ 11,062 $ 437,465 

2021 

Statutory 2021 

Carrying Market Market 

Statutory Value Rate Per Value 

 FTOs Rate (in millions) FTO (in millions)

Gold Held by U.S. Mint 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 
DEPARTMENT OF THE TREASURY 103 

FINANCIAL SECTION | FY 2022 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 the IMF created—and partly by making domestic currency available as needed through a noninterest-bearing letter of credit. This letter of credit, which we issue and the FRBNY maintains, 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 the U.S. holds, and is available at any time to meet U.S. funding needs.

The U.S. quota is denominated in SDRs. As of September 30, 2022 and 2021, 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) 2022 2021 

Letter of Credit (1) $ 74,708 $ 83,965 

Reserve Position (2) 31,334 32,743 

Total U.S. Quota in the IMF $ 106,042 $ 116,708 

(1) We include Letter of Credit amounts 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) We report the Reserve Position amounts 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, 2022 and 2021, the U.S. quota reflects a net downward adjustment in value of $10.7 billion

and a net upward adjustment in value of $0.1 billion, respectively, due to the appreciation and depreciation of the U.S. dollar

against the SDR, respectively.

IMF LOANS AND INTEREST RECEIVABLE

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
104 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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. 

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, 2022 and 2021 was SDR 56.4 billion, which was

equivalent to $72.2 billion and $79.5 billion, respectively. As of September 30, 2022 and 2021, under the U.S. NAB

arrangement with the IMF, there was $0.5 billion and $0.9 billion, respectively, of U.S. loans outstanding, which we reported 

as “Loans and Interest Receivable, Net” on the Consolidated Balance Sheets. There was $0.4 billion in principal repayments

during FY 2022.

8. TAXES, INTEREST, AND OTHER RECEIVABLES, NET

As of September 30, 2022 and 2021, Taxes, Interest, and Other Receivables, Net consisted of the following:

(in millions) 2022 2021 

Non-Entity

Federal Taxes Receivable, Gross $ 437,271 $ 493,275 

Less Allowance on Taxes Receivable (201,200) (191,253) 

Receivable on FRB Deposits of Earnings 7 267 

Other Receivables 1,814 1,662 

Less Allowance on Other Receivables (113) (137) 

Total Non-Entity (Note 15) 237,779 303,814 

Entity 

Miscellaneous Entity Receivables and Related Interest 248 815 

Total Taxes, Interest, and Other Receivables, Net $ 238,027 $ 304,629 

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 Railroad Retirement Tax (RRTA), as provided for 

by the CARES Act. The decrease in the net federal taxes receivable amount is largely due to payments received for these

deferrals.

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 105 

FINANCIAL SECTION | FY 2022 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, 2022 and 2021, Credit Program Receivables, Net (including

our Credit Program Receivables associated with our COVID-19 programs, which are discussed in Note 10) consisted of the

following:

(in millions) 2022 2021 

State and Local Housing Finance Agency Program (GSE sponsored) $ 1,083 $ 1,416 

Direct Loans to Air Carriers and Other Related Businesses (Note 10) 1,046 1,311 

Other(1) 1,286 1,346 

$ 3,415 $ 4,073 

(1) Includes CDFI, SBLF, and TARP credit program receivables valued at $1.2 billion, $36 million, and $3 million, respectively, as of

September 30, 2022, and $1.3 billion, $36 million, and $4 million, respectively, as of September 30, 2021. 

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 HFAs issued. As of 

September 30, 2022 and 2021, the HFA net credit program receivable of $1.1 billion and $1.4 billion, respectively, included a 

positive subsidy allowance of $184 million and $249 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, 2022 and 2021. These reestimates resulted in a downward re-estimate, or a decrease in the cost of the program, of $55 million and $140 million as of 

September 30, 2022 and 2021, respectively. The downward re-estimates in FY 2022 and 2021 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. 

 
106 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 and

FY 2022, 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, including the Coronavirus Aid, Relief, and

Economic Security Act, P.L. 116-136 (CARES Act), the Consolidated Appropriations Act, 2021, P.L. 116-260 (CAA), and the

American Rescue Plan Act of 2021, P.L. 117-2 (ARP). The relief funding these legislative Acts provided helped reduce the

financial burden on individuals and their families, minimized business and employment losses, and enhanced the liquidity of 

the U.S. financial system.

The tables below summarize our key budgetary resources, as of September 30, 2022 and 2021, for each Treasury program

established under the three legislative Acts enacted in response to the COVID-19 pandemic:
DEPARTMENT OF THE TREASURY 107 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Fiscal Year Ended September 30, 2022

(in millions)

Beginning 

Available 

Budgetary 

Resources

Rescissions and 

Other 

Adjustments (1)

Less: 

Obligations 

Incurred

Remaining 

Available 

Budgetary 

Resources

ARP Authority

Economic Impact Payments to Individuals $ - $ 10,534 $ (10,534) $ - 

Advances for Child Tax Credits - 46,649 (46,649) - 

Other COVID-19 Related Tax Credits - 29,470 (29,470) - 

Total Taxpayer Support Programs - 86,653 (86,653) - 

Coronavirus State and Local Fiscal Recovery Funds 107,066 - (107,000) 66 

Emergency Rental Assistance 13,084 - (12,690) 394 

Homeowners Assistance Fund 8,988 - (8,959) 29 

Coronavirus Capital Projects Fund 10,000 - (9,873) 127 

State Small Business Credit Initiative 9,994 (100) (4,370) 5,524 

Local Assistance and Tribal Consistency Fund 2,000 - (2,000) - 

Total State, Local, Territorial, and Tribal Programs 151,132 (100) (144,892) 6,140 

Payroll Support to Aviation Workers 329 - 29 358 

Total American Industry and Financial Markets Programs 329 - 29 358 

Total ARP Authority (2) $ 151,461 $ 86,553 $ (231,516) $ 6,498 

CAA Authority

Economic Impact Payments to Individuals $ - $ 2,721 $ (2,721) $ - 

Total Taxpayer Support Programs - 2,721 (2,721) - 

Emergency Rental Assistance 6 - 20 26 

Total State, Local, Territorial and Tribal Programs 6 - 20 26 

Payroll Support to Aviation Workers 317 (200) 16 133 

Coronavirus Economic Relief for Transportation Services 705 - (689) 16 

Total American Industry and Financial Markets Programs 1,022 (200) (673) 149 

Emergency Capital Investment Program 8,976 - (8,298) 678 

CDFI Rapid Response and Equitable Recovery Programs 1,751 (2) (2) 1,747 

Total CDFI Programs 10,727 (2) (8,300) 2,425 

Total CAA Authority (2) $ 11,755 $ 2,519 $ (11,674) $ 2,600 

(1) Rescissions and Other Adjustments primarily include permanent and indefinite authority obtained as of September 30, 2022, to fund certain tax

provision programs that extended beyond September 30, 2021. We will obtain permanent and indefinite appropriations in FY 2023 to fund

certain tax provision programs that extend beyond September 30, 2022. 

(2) Total ARP and CAA Authority does not include amounts related to the Department’s program support and oversight of these programs.
108 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Fiscal Year Ended September 30, 2022

(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 $ - $ (147) $ 147 $ - 

Total Taxpayer Support Programs - (147) 147 - 

Direct Loans to Air Carriers and National Security Business 1,591 (1,363) - 228 

Payroll Support to Aviation Workers 3,347 (3,000) 22 369 

Total American Industry and Financial Markets Programs 4,938 (4,363) 22 597 

Total CARES Act Authority (2) $ 4,938 $ (4,510) $ 169 $ 597 

(1) Rescissions and Other Adjustments primarily includes a $3.0 billion rescission of CARES Act authority related to the Payroll Support to

Aviation Workers program, and a $1.4 billion rescission of CARES Act authority related to the Direct Loans to Air Carriers and National

Security Business pursuant to the IIJA. 

(2) Total CARES Act Authority does not include amounts related to the Department’s program support and oversight of these programs.
DEPARTMENT OF THE TREASURY 109 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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 Equitable Recovery 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 we 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 was 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.
110 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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.

 

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. 

We reported these outlays as “Refunds and Other Payments” on the Statements of Custodial Activity (refer to Note 23).

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 were available to eligible employers that paid sick and family leave for leave from 

April 1, 2021, through September 30, 2021. The ARP also increased 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 was made fully refundable for taxpayers whose principal

residence for more than one-half of the tax year was in the United States.

OTHER RELATED TAX CREDITS

The Families First Coronavirus Response Act of 2020 (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, to

March 31, 2021.
DEPARTMENT OF THE TREASURY 111 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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 employers paid 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.

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 2022 and 2021 were as follows:

(in millions) 2022 2021 

Economic Impact Payments $ 13,108 $ 569,508 

Advances for Child Tax Credits 46,649 46,144 

Other COVID-19 Related Tax Credits 29,470 10,143 

Total COVID-19 Related Refunds and Other Payments $ 89,227 $ 625,795 

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 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 eligible jurisdictions assistance to support:

• 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;

• vital public services and help retain jobs and to replace lost state, local, territorial, and Tribal government revenue; 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. 
112 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 obligate funds 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 have disbursed an aggregate total of $348.9 billion

through September 30, 2022, of which $106.0 billion and $242.9 billion were disbursed during the fiscal years ended 

September 30, 2022 and 2021, respectively.

EMERGENCY RENTAL ASSISTANCE (HOUSING SUPPORT) 

Even as the American economy recovered from the devastating impact of the pandemic, millions of Americans faced 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 funding expired on September 30, 2022, and the ERA 2 funding will

generally remain available until September 30, 2025.

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 2022

Total Disbursed 

FY 2021

CAA (ERA 1) $ 25,000 $ - $ 24,994 

ARP (ERA 2) 21,550 9,767 8,319 

Total ERA Programs $ 46,550 $ 9,767 $ 33,313 

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 have

disbursed an aggregate total of $9.6 billion through September 30, 2022, of which $8.6 billion and $1.0 billion were disbursed

during the fiscal years ended September 30, 2022 and 2021, respectively.
DEPARTMENT OF THE TREASURY 113 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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. We commenced

disbursements under this program in FY 2022 for which we disbursed $31 million during the fiscal year ended 

September 30, 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 socially and economically disadvantaged individuals own 

and control 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 commenced 

disbursements under this program in FY 2022 for which we disbursed $1.3 billion during the fiscal year ended September 30,

2022.

LOCAL ASSISTANCE AND TRIBAL CONSISTENCY FUND

The ARP provided us $2.0 billion of appropriated funds to establish the 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. We commenced disbursements

under this program in FY 2022, for which we disbursed $59 million during the fiscal year ended September 30, 2022.

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 for payments to state, local, territorial, and Tribal

governments, to cover expenditures incurred due to COVID–19 during the period beginning March 1, 2020, through

December 31, 2021 (as extended by the CAA from December 30, 2020). We disbursed an aggregate total of $149.9 billion

between fiscal years 2020 and 2021. Any remaining amounts are reserved for administrative disbursements or 

disbursement pending litigation as of September 30, 2022.
114 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Advances and Prepayments: 

During FY 2022 and FY 2021, we disbursed an aggregate total of $125.8 billion and $277.7 billion, respectively, in

appropriated and obligated funds to state, local, territorial, and Tribal governments related to the programs discussed above

to cover eligible costs that recipients incurred in response to the pandemic. Of the aggregate amounts disbursed, we initially

recorded $115.8 billion and $276.7 billion as an advance during FY 2022 and FY 2021, respectively, within the line item

“Advances and Prepayments” on the Consolidated Balance Sheets, and recorded the remaining $10.0 billion and $1.0 billion

disbursed in FY 2022 and FY 2021, respectively, as “Economic Program” costs on the Consolidated Statements of Net Cost. 

We subsequently recognized $146.6 billion and $89.5 billion of this advance as an expense which were recorded as “Economic

Program” costs on the Consolidated Statements of Net Cost for the fiscal years ended September 30, 2022 and 2021,

respectively, to reflect the estimated amount of eligible costs incurred during those years by recipients. 

SUPPORT TO AMERICAN INDUSTRY AND FINANCIAL MARKETS

INVESTMENTS AND DIRECT LOANS OVERVIEW

In FY 2020, the CARES Act appropriated $500.0 billion to our Exchange Stabilization Fund 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. 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) and Regulation A of the Board, authorizing the Federal Reserve Bank of New York (FRBNY) and Federal Reserve 

Bank of Boston (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.

During FY 2020, we disbursed an aggregate total of $104.3 billion (comprised of $102.5 billion and $1.8 billion for 

investments and direct loans, respectively), which we financed with a combination of $19.3 billion of appropriations to fund

the credit subsidy portion and $85.0 billion of Fiscal Service borrowings. The enactment of the CAA on December 27, 2020,

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. Further, on November 15, 2021, the

Infrastructure Investment and Jobs Act (P.L. 117-58) rescinded an additional $1.4 billion of the remaining appropriation. 

The remaining appropriation as of September 30, 2022, is $228 million.

SECTION 13(3) FEDERAL RESERVE PROGRAMS

In FY 2020, pursuant to its emergency-lending authority under Section 13(3), the FRBNY and FRBB implemented certain

emergency lending 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 to make loans and purchase debt and other commercial paper of eligible entities affected by COVID-19. 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 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,
DEPARTMENT OF THE TREASURY 115 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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.

In FY 2020, we disbursed an aggregate total of $102.5 billion in equity to the SPVs (and committed to future disbursements

of an additional $92.5 billion) 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 SPVs. The managing member and preferred equity member are the sole members

of the SPVs.

Under the initial 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 pursuant to the amendments to the LLC 

agreements, 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. We will use the final

distribution amount we receive 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.

In December 2020, 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, at that time, of Treasury’s undisbursed investment

commitments totaling an aggregate of $92.5 billion, which we de-obligated in FY 2021. The amendment also provided for 

interim distributions to Treasury, received in FY 2021, totaling an aggregate of $62.2 billion. In November 2021, Treasury

and the Federal Reserve further amended the SPV LLC Agreements which provided for additional interim distributions to

Treasury, received in November 2021 and May 2022, totaling an aggregate of $8.5 billion. The interim distributions to

Treasury in both FY 2022 and FY 2021 represent the amounts by which funds that were contributed by Treasury to each

facility (and earnings thereon) exceeded the purchase price of the assets, loans, and/or loan participations, as the case may

be, within each facility at such time. We used this cash we received to repay outstanding debt to the Fiscal Service that we 

used to finance the non-subsidized portion of these investment transactions. Future interim distributions will take place in

November and May of each fiscal year in accordance with the terms of the most recent amended agreements. We cannot use

our funds remaining in the SPVs funded under the CARES Act for further lending, asset purchases, or extensions of credit.

(in millions)

Outstanding 

Equity 

Contribution 

9/30/21 

FY 2022 

Interim 

Distribution

FY 2022 

Final 

Dissolution

Remaining 

Outstanding 

Equity 

Contribution 

9/30/22 (1)

Main Street Facilities LLC $ 16,572 $ (2,681) $ - $ 13,891 

Municipal Liquidity Facility LLC 6,276 (3,381) - 2,895 

Term Asset-Backed Securities II LLC 3,549 (2,395) - 1,154 

Total 13(3) Facilities $ 26,397 $ (8,457) $ - $ 17,940 

(1) These amounts exclude cumulative 9/30/22 fair valuations associated with these assets. See table below for such fair valuations.
116 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

(in millions)

Outstanding 

Equity 

Contribution 

9/30/20 

FY 2021 

Interim 

Distribution

FY 2021

Final 

Dissolution (1)

Remaining 

Outstanding 

Equity 

Contribution 

9/30/21 (2)

Corporate Credit Facilities LLC (3) $ 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 (3) 10,000 - (10,000) - 

Money Market Mutual Fund Liquidity Facility (3) 1,500 - (1,500) - 

Total 13(3) Facilities $ 114,000 $ (62,222) $ (25,381) $ 26,397 

(1) These amounts exclude residual amounts we 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.

(3) The FRBNY or FRBB established these liquidity facilities in FY 2020. During FY 2021, the facilities ceased making loans and

extending credit and capital contributions (and earnings thereon) were returned to Treasury. The Commercial Paper and

Money Market facilities were dissolved in FY 2021 and the Corporate Credit Facility was dissolved in FY 2022. 

The following is a description of the remaining liquidity lending facilities. Following these descriptions is a section entitled,

“Investments in Special Purpose Vehicles” which discusses the accounting treatment for these facilities. 

Main Street Facilities LLC

On May 18, 2020, the FRBB established the Main Street Facilities LLC (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. The SPV ceased purchasing

loan participations on January 8, 2021. 

Municipal Liquidity Facility LLC

On May 1, 2020, the FRBNY established the Municipal Liquidity Facility LLC (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. The SPV ceased purchasing eligible notes on 

December 31, 2020.

Term Asset-Backed Securities Loan Facility II LLC

FRBNY established the Term Asset-Backed Securities Loan Facility II LLC (TALF) SPV on March 23, 2020, to support the

flow of credit to consumers and businesses to stabilize the U.S. financial system. The TALF facilitated the issuance of assetbacked securities backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business

Administration, commercial mortgages, and certain other assets. No new credit extensions were made after 

December 31, 2020.
DEPARTMENT OF THE TREASURY 117 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Investments in Special Purpose Vehicles 

As of September 30, 2022 and 2021, our preferred equity investments in the SPVs were valued as follows:

Investments in SPVs (in millions)

Gross 

Investments 

As of 9/30/22

Cumulative 

Valuation 

Gain (Loss)

9/30/22 

Fair Value

Main Street Facilities LLC (1) $ 13,891 $ (200) $ 13,691 

Municipal Liquidity Facility LLC (1) 2,895 44 2,939 

Term Asset-Backed Securities II LLC (1) 1,154 51 1,205 

Total Investments in SPVs $ 17,940 $ (105) $ 17,835 

(1) In FY 2022, Treasury received interim distributions equivalent to the amount by which its initial capital contribution to the facility (and

earnings thereon) exceeded the purchase price of the assets held within these SPVs. 

Investments in SPVs (in millions)

Gross 

Investments 

As of 9/30/21

Cumulative 

Valuation 

Gain (Loss)

9/30/21 

Fair Value

Main Street Facilities LLC (1) $ 16,572 $ (998) $ 15,574 

Municipal Liquidity Facility LLC (1) 6,276 177 6,453 

Term Asset-Backed Securities II LLC (1) 3,549 3 3,552 

Total Investments in SPVs $ 26,397 $ (818) $ 25,579 

(1) In FY 2021, Treasury received interim distributions equivalent to the amount by which its initial capital contribution to the facility (and

earnings thereon) exceeded the purchase price of the assets held within these SPVs.

 

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. For budgetary accounting purposes, we accounted for the initial investment financing and subsequent

activity 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 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” on the Consolidated Statements of Net Cost. 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, 2022 and 2021, we recorded

an unrealized fair value net gain of $0.7 billion and $3.8 billion related to these investments, respectively.

Fair Value Estimation Factors. In determining the fair value of our SPV investments, we use available market pricing data,

forward interest rates, expected loss rates, historical prepayment 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, historical prepayment rates, and, where applicable, forward interest rates, to estimate scenario-specific,

expected cash flows, which are discounted using market-based discount rates. 
118 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 we 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 investment assets also

incorporates anticipated realization of excess residual proceeds, we record a corresponding liability due to the Federal OldAge and Survivors Insurance Trust Fund. We recorded a liability of $186 million and $222 million as of September 30, 2022

and 2021, respectively. 

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. 

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 they incurred as a result of COVID-19. We chose to make only

direct loans under this authorization. We disbursed an aggregate total of $2.7 billion between fiscal years 2020 and 2021, of

which we disbursed $858 million in FY 2021. As of September 30, 2022 and 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. 
DEPARTMENT OF THE TREASURY 119 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Credit Program Receivables, Net 

We present the direct loans as credit program receivables on our Consolidated Balance Sheets. As of September 30, 2022,

the net credit program receivables of the passenger airlines and other related businesses programs of $358 million and

$688 million, respectively, included a negative subsidy allowance of $123 million and a positive subsidy allowance of 

$91 million, respectively. The other related businesses include national security, air cargo carriers, ticket agents, and

maintenance and repair businesses. As of September 30, 2021, the net credit program receivables of the passenger airlines

and other related businesses of $594 million and $717 million, respectively, included a negative subsidy allowance of 

$213 million and a positive subsidy allowance of $56 million, respectively. The negative or positive subsidies at the end of 

fiscal years 2022 and 2021 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 we performed as of 

September 30, 2022 resulted in a upward re-estimate, or an increase of $79 million, and a downward re-estimate, or a 

decrease of $1 million, in the cost of the passenger airline programs and other related businesses programs, respectively. 

The upward re-estimate primarily stemmed from a decline in the value of warrants we hold. The downward re-estimate

stemmed from lower expected losses for outstanding investments, which is partially offset by a decline in the value of equity

we hold. The re-estimates we performed as of September 30, 2021, resulted in a downward re-estimate, or a decrease of 

$415 million and $268 million, in the cost of the passenger airline programs and other related businesses programs,

respectively. This re-estimate stemmed from lower expected losses for the outstanding investments and collections we

received during FY 2021, which included several large prepayments. The FY 2022 and FY 2021 re-estimates we recorded

included the expected Federal Old-Age and Survivors Insurance Trust Fund liabilities for passenger airlines and other 

related businesses. 

We treat our net credit program receivables, including loan principal repayments, interest, fees, and proceeds from common

stock sales, as entity exchange transactions since we will use all such future proceeds we realize from the net credit program

receivables to repay all of our borrowing and other funding costs we incur 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, 2022 and 2021, we recorded a liability of $184 million and $261 million,

respectively, due to the Federal Old-Age and Survivors Insurance Trust Fund. 
120 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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. 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. 

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. For the fiscal years

ended September 30, 2022 and 2021, we recorded $21 million and $30.7 billion, respectively, of financial assistance

disbursements under the PSPs as “Economic Program” costs on the Consolidated Statements of Net Cost. 

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 

providing the financial assistance. 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 no promissory notes and warrants during the

period ended September 30, 2022. The contractors repaid an aggregate total of $351 million and $103 million of promissory

notes during fiscal years 2022 and 2021, respectively. We report the promissory notes and warrants we received as

compensation within “Loans and Interest Receivable, Net” and “Other Investments, Net,” respectively, on the Consolidated

Balance Sheets. 

The following provides further discussion of our accounting for the promissory notes and common stock warrants.

Loans and Interest Receivable, Net 

We present our promissory notes totaling $11.6 billion and $13.7 billion as of September 30, 2022 and 2021, respectively, net 

of an allowance for doubtful accounts estimated at $3.2 billion and $1.4 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, 2022 and 2021, we

recognized interest revenue of $166 million and $131 million, respectively.

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 Cost (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).
DEPARTMENT OF THE TREASURY 121 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Other 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 Cost. As of September 30, 2022 and 2021, our

common stock warrants were valued at $493 million and $847 million, respectively, which includes a fair value loss of

$354 million and $14 million, respectively, recognized for the fiscal years ended September 30, 2022 and 2021, respectively. 

Our common stock warrants are comprised of those that give us a right to purchase common shares of either 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 provided up to $2.0 billion in grants to eligible companies that certified they had experienced an

annual revenue loss of 25 percent or more as a direct or indirect result of COVID-19. CERTS grant funds primarily 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).

A recipient who does not use disbursed funds for qualified purposes within one year upon receipt of such funds must return

the funds to Treasury. Of the $2.0 billion appropriated in FY 2021 for this program, we disbursed $688 million and

$1.3 billion during the fiscal years ended September 30, 2022 and 2021, respectively, which we reported as “Economic

Program” costs on the Consolidated Statements of Net Cost. 

SUPPORT TO AMERICAN SMALL BUSINESSES THROUGH CDFIS

EMERGENCY CAPITAL INVESTMENT PROGRAM

Established under the CAA, the Emergency Capital Investment Program encourages low- and moderate-income community

financial institutions to augment their efforts to support small businesses and consumers in their communities. Under this

program, we are providing up to $9.0 billion in capital directly to depository institutions through purchases of preferred stock

or subordinated debt 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. We commenced disbursements under this

program in FY 2022. As of September 30, 2022, we have disbursed $8.3 billion in connection with this program. This

funding will remain available for obligation until six months after the date on which the President of the U.S. terminates the

national emergency concerning the COVID-19 pandemic.
122 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

With the permission of the institution, we may transfer or sell the interest in the capital investment for no consideration or 

for a de minimis amount to a mission-aligned nonprofit affiliate of an applicant that is an insured community development 

financial institution. We will transfer all cash proceeds we receive in connection with these investments, including dividend

and payments, and proceeds from the sale of the investments, to the CDFI Fund—a Treasury component—to be used to

provide financial and technical assistance pursuant to the Community Development Banking and Financial Institutions Act

of 1994.

We account for the preferred stock and subordinated debt investments at fair value, with changes in the fair value of these

investments recorded as realized or unrealized gains or losses within the “Economic Program” on the Consolidated 

Statements of Net Cost. As the incentives and other conditions of our capital investments result in more favorable terms

than available to the CDFIs and MDIs from private investors and more favorable terms compared to investment pricing

available in the conventional financial markets, their fair values are less than the amounts we paid at acquisition. As of 

September 30, 2022, our preferred stock and subordinated debt investments were valued at $2.5 billion, which includes a fair

value loss of $5.8 billion recognized for the fiscal year ended September 30, 2022.

CDFI FUND’S RAPID RESPONSE AND EQUITABLE RECOVERY PROGRAMS

The CAA also provided $1.25 billion in appropriations to our CDFI Fund, which awarded CDFIs with grants to deliver

immediate assistance in communities impacted by the COVID-19 pandemic. The CDFI Fund awarded these funds through

its newly established CDFI Rapid Response Program (CDFI RRP), which was 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 $108 million and $1.1 billion in

grants for the fiscal years ended September 30, 2022 and 2021, respectively, which we reported as “Economic Program” costs

on 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 its newly established Equitable Recovery Program

commencing in FY 2023. 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, 2022 and 2021, the primary impact of COVID-19 relief efforts reported as

“Economic Program” costs on the Consolidated Statements of Net Cost were as follows: 
DEPARTMENT OF THE TREASURY 123 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

(in millions) 2022 2021 

Entity Cost/(Revenue):

Expense Recognition of Support to States, Local, Territorial, and Tribal Governments $ 156,360 $ 90,517 

Emergency Capital Investment Program - Fair Value Loss 5,848 - 

Section 13(3) SPV Investments - Fair Value Gain (1) (715) (3,802) 

Payroll Support to Aviation Workers - Financial Assistance Payments 21 30,727 

Coronavirus Economic Relief for Transportation Services Payments 686 1,295 

CDFI Fund's Rapid Response and Equitable Recovery Programs Payments 110 1,085 

Other 125 (690) 

Total Net Entity Costs (Economic Program) (Note 21) 162,435 119,132 

Non-Entity Cost/(Revenue):

Payroll Support for Aviation Workers - Promissory Note Compensation 1,591 (8,577) 

Payroll Support for Aviation Workers - Common Stock Warrant Compensation 354 (360) 

Total Non-Entity Cost/(Revenue) 1,945 (8,937) 

Total COVID-19 Pandemic Relief Costs, Net $ 164,380 $ 110,195 

(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.

 
124 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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). In the third amendment in August 2012, this dividend structure was changed 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. 
DEPARTMENT OF THE TREASURY 125 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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 

entered into letter agreements 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. Under the letter agreements, the suspension will terminate six months

after Treasury notifies the GSEs. As of September 30, 2022, Treasury has not provided notice to the GSEs to terminate the

suspension.

As of September 30, 2022, Treasury’s liquidation preference in Fannie Mae and Freddie Mac increased by $19.1 billion and

$11.7 billion, respectively. 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. 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, 2022 and 2021, as the GSEs had not 

achieved their capital reserve end date as of September 30, 2022. 

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 $284 billion and $254 billion as of September 30, 2022 and 2021, respectively. 

There were no payments to the GSEs for the fiscal years ended September 30, 2022 and 2021. 

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, 2022 and 2021, our investments in the GSEs consisted of the following: 
126 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Gross Cumulative 

Investments Valuation 9/30/22 

GSEs Investments (in millions) As of 9/30/22 Gain/(Loss) Fair Value

Fannie Mae Senior Preferred Stock $ 177,746 $ (62,046) $ 115,700 

Freddie Mac Senior Preferred Stock 106,572 (2,072) 104,500 

Fannie Mae Warrants Common Stock 3,104 (854) 2,250 

Freddie Mac Warrants Common Stock 2,264 (994) 1,270 

Total GSEs Investments $ 289,686 $ (65,966) $ 223,720 

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 

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 Market, 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 Level 3 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 GSE’s 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, 2022, when compared to

September 30, 2021. Freddie Mac’s senior preferred stock drove this increase primarily due to higher projected cash flows 

and a decrease in the market value of Freddie Mac’s other equity securities that comprise its total equity (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 as of 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 2022, when 

compared to 2021, primarily due to decreases in the Level 1 fair value measurement of the market price of the underlying

common stock of each GSE.
DEPARTMENT OF THE TREASURY 127 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

CONTINGENT LIABILITY TO GSES

As part of the annual process, 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 2047 and 2046 in assessing if a contingent liability was required

as of September 30, 2022 and 2021, 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, 2022 and

2021, and thereby accrued no contingent liability. However, as of September 30, 2022, 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, 2022. There were no payments to the GSEs for the fiscal

year ended September 30, 2022. At September 30, 2022 and 2021, 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, 2022 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, 2022, 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. 

GSES NON-ENTITY REVENUE

For the fiscal years ended September 30, 2022 and 2021, GSEs Non-Entity Revenue, Net consisted of the following:

Summary of GSEs Non-Entity Revenue (in millions) 2022 2021 

General Fund Revenue from Increase in Liquidation Preference of GSEs 

 Preferred Stock $ (30,761) $ (31,828) 

Fair Value Loss/(Gain) on GSEs Warrants/Preferred Stock 27,901 (80,122) 

Total GSEs Non-Entity Revenue, Net $ (2,860) $ (111,950) 
128 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 extended by the Infrastructure

Investment and Jobs Act of 2021 (P.L. 117-58) through September 30, 2032. 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 2022 and 2021, the GSEs remitted to us

the incremental fees totaling $5.8 billion and $4.9 billion, respectively, which are reported within the line item entitled

“Fines, Penalties, Interest and Other Revenue” on our Statements of Custodial Activity. 

 
DEPARTMENT OF THE TREASURY 129 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

12. INVESTMENTS IN MULTILATERAL DEVELOPMENT BANKS

As of September 30, 2022 and 2021, Investments in Multilateral Development Banks consisted of the following:

(in millions) 2022 2021 

International Bank for Reconstruction and Development $ 3,470 $ 3,264 

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 543 488 

North American Development Bank 450 450 

Multilateral Investment Guarantee Agency 45 45 

Total $ 8,727 $ 8,466 

Refer to Note 27 for a description of the additional commitments related to these institutions. (1) Includes Inter-American Investment Corporation 
130 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 $3.8 billion fair value of foreign investments (excluding interest receivable) held at September 30,

2022, $0.3 billion will mature within one year, $2.4 billion will mature after one year but before five years, and $1.1 billion

will mature after five years but before ten years. 

Other Investments, Net also include non-federal investment holdings acquired pursuant to the establishment of emergency

relief programs in response to the COVID-19 pandemic, including investments as of September 30, 2022, of $2.5 billion in

preferred stock and subordinated debt pursuant to the Emergency Capital Investment Program, and $0.5 billion of common

stock warrants for the Payroll Support to Aviation Workers Program (refer to Note 10).

The table below presents the fair value measurements hierarchy classification by investment type:

Fair Value Measurement of Other Investments, Net as of September 30, 2022

Investment Type (in millions) Level 1 Level 2 Level 3 Total 

Foreign Investments $ 3,796 $ - $ - $ 3,796 

COVID-19 Investments (Note 10) - - 2,945 2,945 

Other Investments 58 - - 58 

Total Fair Value Measurements $ 3,854 $ - $ 2,945 $ 6,799 

Fair Value Measurements of Other Investments, Net as of September 30, 2021

Investment Type (in millions) Level 1 Level 2 Level 3 Total 

Foreign Investments $ 5,265 $ - $ - $ 5,265 

COVID-19 Investments (Note 10) - - 847 847 

Other Investments 52 - - 52 

Total Fair Value Measurements $ 5,317 $ - $ 847 $ 6,164 

The following table provides a roll forward of our investment balances for the fiscal years ended September 30, 2022 and

2021:

(in millions) 2022 2021 

Beginning Balance $ 6,164 $ 6,309 

Acquisition of Investments(1) 21,343 9,315 

Sale/Repayment of Investments (12,208) (9,199) 

Valuation Adjustments(2) (7,436) (253) 

(Loss)/Gain on Sales/Dispositions (943) - 

Change in Accrued Dividend/Interest Income and Other (121) (8) 

Ending Balance $ 6,799 $ 6,164 

(1) The significant increase in acquisition of investments includes $8.3 billion of investments related to the

Emergency Capital Investment Program. The remaining increase in acquisition of investments and the

increase in sale/repayment of investments are primarily related to foreign investments activity.

(2) Valuation adjustments of $5.8 billion in the fiscal year ended September 30, 2022 represent fair value

losses on investments purchased under the Emergency Capital Investment Program. No investment

purchases under this program occurred in the fiscal year ended September 30, 2021 (refer to Note 10). 

 
DEPARTMENT OF THE TREASURY 131 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

14. GENERAL PROPERTY, PLANT, AND EQUIPMENT, NET

As of September 30, 2022 and 2021, General Property, Plant, and Equipment, Net consisted of the following:

2022 

Net

Service Accumulated Book

(in millions) Life Cost Depreciation Value 

Buildings, Structures and Facilities 3 - 50 years $ 1,040 $ (597) $ 443 

Furniture, Fixtures and Equipment 2 - 20 years 2,671 (1,972) 699 

Construction-in-Progress N/A 377 - 377 

Land N/A 12 - 12 

Internal-Use Software in Use 2 - 15 years 3,968 (3,223) 745 

Internal-Use Software in Development N/A 612 - 612 

Assets Under Capital Lease 2 - 25 years 32 (24) 8 

Leasehold Improvements 2 - 25 years 446 (270) 176 

Total $ 9,158 $ (6,086) $ 3,072 

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 

The service life ranges vary significantly due to the diverse nature of PP&E we hold.
132 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

The following table provides a reconciliation of total PP&E and accumulated depreciation for the fiscal years ended

September 30, 2022 and 2021:

2022 2021 

Accumulated Net Accumulated Net

(in millions) PP&E Depreciation PP&E PP&E Depreciation PP&E

Balance Beginning of Year $ 8,854 $ (5,858) $ 2,996 $ 8,747 $ (5,789) $ 2,958 

 Capitalized Acquisitions 597 - 597 575 (4) 571 

 Dispositions (293) 286 (7) (468) 443 (25) 

 Depreciation Expense - (514) (514) - (508) (508) 

Balance at End of Year $ 9,158 $ (6,086) $ 3,072 $ 8,854 $ (5,858) $ 2,996 

HERITAGE ASSETS

We have 15 heritage assets, of which five are considered multi-use, for FY 2022 and 2021. 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 2022 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, 2022 and 2021: 

 2022 

(in millions) Non-Entity Entity Total 

Intra-Governmental

Fund Balance (Note 2)(a) $ 5,888 $ 548,702 $ 554,590 

Loans Receivable: (Note 3)

 Loans and Interest Receivable 1,531,120 80,755 1,611,875 

 Advances to Trust Funds 47,298 - 47,298 

Other Assets:

 Due From the General Fund (Note 4) 31,064,578 - 31,064,578 

 Other (b) 1,311 59 1,370 

Total Intra-Governmental 32,650,195 629,516 33,279,711 

Other Than Intra-Governmental 

Cash and Other Monetary Assets: 

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) 617,317 166,756 784,073 

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

 Reserve Position in the International Monetary Fund (Note 7) - 31,334 31,334 

Accounts Receivable, Net:

 Taxes, Interest, and Other Receivables, Net (Note 8) 237,779 248 238,027 

Loans Receivable, Net:

 Loans and Interest Receivable, Net (Notes 7 and 10) 11,585 487 12,072 

 Credit Program Receivables, Net (Notes 9 and 10) - 3,415 3,415 

Advances and Prepayments (Note 10) - 225,180 225,180 

Investments in GSEs (Note 11) 223,720 - 223,720 

Investments in Special Purpose Vehicles (Note 10) - 17,835 17,835 

Other Investments:

 Investments in Multilateral Development Banks (Note 12) - 8,727 8,727 

 Other, Net (Notes 10 and 13) 493 6,306 6,799 

General Property, Plant, and Equipment, Net (Note 14) - 3,072 3,072 

Other Assets (c) - 1,867 1,867 

Total Other Than Intra-Governmental 1,101,956 465,227 1,567,183 

Total Assets $ 33,752,151 $ 1,094,743 $ 34,846,894 

(a) $3.1 billion of the non-entity balance represents assets held on behalf of the General Fund (refer to Note 4).

(b) Consists of accounts receivable, net and advances and prepayments totaling $1.3 billion and $37 million, respectively.

(c) Consists of inventory and related property.
134 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

2021

(in millions) Non-Entity Entity Total 

Intra-Governmental

Fund Balance (Note 2)(d) $ 4,203 $ 622,253 $ 626,456 

Loans Receivable: (Note 3)

 Loans and Interest Receivable 1,715,491 78,899 1,794,390 

 Advances to Trust Funds 91,378 - 91,378 

Other Assets:

 Due From the General Fund (Note 4) 28,810,092 - 28,810,092 

 Other (e) 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 

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

Accounts Receivable, Net:

 Taxes, Interest, and Other Receivables, Net (Note 8) 303,814 815 304,629 

Loans Receivable, Net:

 Loans and Interest Receivable, Net (Notes 7 and 10) 13,684 937 14,621 

 Credit Program Receivables, Net (Notes 9 and 10) - 4,073 4,073 

Advances and Prepayments (Note 10) - 256,072 256,072 

Investments in GSEs (Note 11) 220,860 - 220,860 

Investments in Special Purpose Vehicles (Note 10) - 25,579 25,579 

Other Investments:

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

 Other, Net (Notes 10 and 13) 847 5,317 6,164 

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

Other Assets (f) - 1,058 1,058 

Total Other Than Intra-Governmental 749,330 518,098 1,267,428 

Total Assets $ 31,371,784 $ 1,219,288 $ 32,591,072 

(d) $3.0 billion of the non-entity balance represents assets held on behalf of the General Fund (refer to Note 4).

(e) Consists of accounts receivable, net and advances and prepayments totaling $1.3 billion and $16 million, respectively.

(f) Consists of inventory and related property.

 
DEPARTMENT OF THE TREASURY 135 

FINANCIAL SECTION | FY 2022 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 other 

governmental agencies issue, including 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, 2022 and 2021 is as follows:

Held by Other Federal Agencies (Intra-Governmental) (in millions) 2022 2021 

Beginning Balance $ 6,104,279 $ 5,897,192 

New Borrowings/(Repayments) - Net 489,048 207,087 

Subtotal at Par Value 6,593,327 6,104,279 

Premium/(Discount) 88,757 86,081 

Debt Principal Not Covered by Budgetary Resources (Note 19) 6,682,084 6,190,360 

Interest Payable Covered by Budgetary Resources 35,277 34,848 

Total $ 6,717,361 $ 6,225,208 

Held by the Public (in millions) 2022 2021 

Beginning Balance $ 22,282,900 $ 21,018,952 

New Borrowings - Net of Repayments 2,016,293 1,263,948 

Subtotal at Par Value 24,299,193 22,282,900 

Premium/(Discount) (71,681) (26,840) 

Debt Principal Not Covered by Budgetary Resources (Note 19) 24,227,512 22,256,060 

Interest Payable Covered by Budgetary Resources 81,183 69,158 

Total $ 24,308,695 $ 22,325,218 

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 we issue 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 2022 and 2021 was 2.3 percent and

2.1 percent, respectively. The average intra-governmental interest rate on TIPS for FY 2022 and 2021 was 1.0 percent and

1.1 percent, respectively. The average interest rate on FRNs for FY 2022 and 2021 was 3.0 percent and 0.1 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 federal agencies held at par value (not including premium/discount or interest payable) as

of September 30, 2022 and 2021 is as follows: 
136 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

(in millions) 2022 2021 

Social Security Administration $ 2,838,279 $ 2,853,817 

Office of Personnel Management 1,120,736 1,036,772 

Department of Defense Agencies 1,528,954 1,334,074 

Department of Health and Human Services 349,663 310,928 

All Other Federal Entities — Consolidated 755,695 568,688 

Total Federal Debt Held by Other Federal Agencies $ 6,593,327 $ 6,104,279 

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, 2022

and 2021 consisted of the following:

Average 

Interest

(at par value in millions) Term Rates 2022 

Marketable: 

Treasury Bills 1 Year or Less 2.5% $ 3,643,675 

Treasury Notes Over 1 Year - 10 Years 1.6% 13,696,488 

Treasury Bonds Over 10 Years 3.0% 3,867,672 

Treasury Inflation-Protected Securities (TIPS) 5 Years or More 0.5% 1,839,843 

Treasury Floating Rate Notes (FRN) 2 Years 3.3% 625,897 

Total Marketable 23,673,575 

Non-Marketable On Demand to Over 40 Years 2.7% 625,618 

Total Federal Debt Held by the Public $ 24,299,193 

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 

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. 
DEPARTMENT OF THE TREASURY 137 

FINANCIAL SECTION | FY 2022 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 $336.1 billion and $217.1 billion as of September 30, 2022 and 2021,

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, 2022, the FRB’s SOMA

had total holdings of $2.7 trillion which: (i) excluded $2.9 trillion in Treasury securities used in overnight reverse repurchase

transactions, and (ii) includes a net of $3.7 billion held by the FRB as collateral for securities lending activities. 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 $1.4 billion lent to dealers and not 

collateralized by other Treasury securities. For the years ended September 30, 2022 and 2021, we incurred interest expense

of $114.7 billion and $87.1 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, 2022 and 2021. 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 2022 and FY 2021 was $7.0 billion and $73.4

billion, respectively; including $122 million and $22 million in capitalized interest, respectively. There were no issuances of 

SPV securities in fiscal years 2022 and 2021. As of September 30, 2022 and 2021, the total amount of SPV securities

outstanding was $15.4 billion and $22.3 billion, respectively.
138 DEPARTMENT OF THE TREASURY

FY 2022 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 $30.9 trillion

and $28.4 trillion as of September 30, 2022 and 2021, 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 using 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. 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 P.L. 117-50, 

raising 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. On December 16, 2021, Congress enacted P.L. 117-73, raising the debt limit by $2.5 trillion, from 

$28.881 trillion to $31.381 trillion. On December 16, 2021, we restored uninvested principal totaling $326.7 billion, of which

$262.0 billion was restored to the G Fund and $64.7 billion was restored to the OPM administered Civil Service Fund. We

also restored foregone interest totaling $1.1 billion, of which $812.3 million was restored to the G Fund on the next interest

payment date of December 17, 2021, and $322.4 million was restored to the OPM funds on the next semi-annual interest 

payment date of December 31, 2021.
DEPARTMENT OF THE TREASURY 139 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Of the $1.1 billion of foregone interest we paid in FY 2022, we reported $726 million in FY 2022 as a current year, non-entity

expense within the line item “Restoration of Foregone Federal Debt Interest,” and reported $409 million in FY 2021 as an

accrued non-entity expense within the line item “Accrued Restoration of Foregone Federal Debt Interest” on our 

Consolidated Statements of Net Cost. In FY 2022, we reversed the $409 million of the FY 2021 accrued foregone interest

within the line item “Accrued Interest on Restoration of Federal Debt Principal,” on the Consolidated Statements of Changes

in Net Position. 

Since the delay in raising the statutory debt limit did not end until December 16, 2021, none of the uninvested principal and

foregone interest payable as of result of the extraordinary measures had been restored to the G Fund and the OPM Funds as

of September 30, 2021. Accordingly, we recorded a liability as of September 30, 2021, totaling $217.6 billion, comprised of 

uninvested principal owed to the G Fund and the OPM administered 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.

We reported the liability for the uninvested principal and foregone interest payable as of September 30, 2021, 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. We

reported corresponding amounts 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, we reported the accrued foregone interest expense totaling $409 million 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, 2022 and 2021, FFB had outstanding borrowings of $4.9 billion and $6.1 billion, inclusive of $31 million and $40 million

of accrued interest payable, respectively. The outstanding borrowings at September 30, 2022, had stated interest rates that

ranged from 2.25 percent to 2.88 percent per annum, and an effective interest rate of 2.53 percent. 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. Maturity dates ranged from June 30, 2023, to June 30, 2029, for outstanding

borrowings at September 30, 2022, and from June 30, 2022, to June 30, 2029, for outstanding borrowings at September 30,

2021.

 
140 DEPARTMENT OF THE TREASURY

FY 2022 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, 2022 and 2021 is as follows: 

(in millions) 2022 2021 

Beginning Liability Balance $ 8,010 $ 8,272 

Pension Expense:

Normal Cost 7 6 

Interest on Pension Liability During the Year 67 72 

Actuarial (Gains) Losses During the Year:

From Experience 384 (42) 

From Discount Rate Assumption Change 194 337 

From Other Economic Assumption Changes 326 (7) 

From Non-Economic Assumption Changes 28 (83) 

Total Pension Expense 1,006 283 

Less Amounts Paid (555) (545) 

Ending Liability Balance $ 8,461 $ 8,010 
DEPARTMENT OF THE TREASURY 141 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

D.C. Federal Judicial 2022 

Additional Information ($ in millions): Pension Fund Retirement Fund Total 

Amount Received from the General Fund $ 540 $ 19 $ 559 

Annual Rate of Investment Return Assumption 0.87% - 3.21% 0.87% - 3.21%

Future Annual Rate of Inflation and Cost-Of- 

 Living Adjustment:

 Police Officers 2.15% N/A

 Firefighters 2.15% N/A

 Teachers 2.14% N/A

 Judicial N/A 1.88% 

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 1.26% 

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%
142 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

19. LIABILITIES

LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

As of September 30, 2022 and 2021, liabilities not covered by budgetary resources consisted of the following: 

(in millions) 2022 2021 

Intra-Governmental Liabilities Not Covered by Budgetary Resources

Federal Debt Principal, Premium/Discount (Note 16) $ 6,682,084 $ 6,190,360 

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

Other Intra-Governmental Liabilities 75 80 

Total Intra-Governmental Liabilities Not Covered by Budgetary Resources 6,682,159 6,251,002 

Federal Debt Principal, Premium/Discount (Note 16) 24,227,512 22,256,060 

Other Payables 5 6 

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

Other Liabilities 1,078 1,138 

Total Liabilities Not Covered by Budgetary Resources 30,910,754 28,665,241 

Total Liabilities Covered by or Not Requiring Budgetary Resources 3,080,358 2,960,975 

Total Liabilities $ 33,991,112 $ 31,626,216 

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, 2022 and 2021, consisted of the following: 

Non- 2022 Non- 2021 

(in millions) Current Current Total Current Current Total 

Intra-Governmental

Accounts Payable $ 855 $ - $ 855 $ 887 $ - $ 887 

Advances From Others and Deferred Revenue 27 - 27 32 - 32 

Other Accrued Liabilities 611 58 669 694 62 756 

Total Intra-Governmental $ 1,493 $ 58 $ 1,551 $ 1,613 $ 62 $ 1,675 

Other Than Intra-Governmental 

Federal Employee Benefits Payable $ 29 $ 592 $ 621 $ 22 $ 665 $ 687 

Unfunded Leave 648 1 649 668 1 669 

Advances From Others and Deferred Revenue 1,164 - 1,164 471 - 471 

Accrued Funded Payroll and Leave 664 - 664 604 - 604 

Other Liabilities Without Related Budgetary Obligations 316 28 344 660 - 660 

Other Liabilities With Related Budgetary Obligations 604 - 604 458 - 458 

Liability for Non-Fiduciary Deposit Funds 

 and Clearing Accounts 5,729 - 5,729 4,453 - 4,453 

Other Accrued Liabilities - 1 1 1 2 3 

Total Other Than Intra-Governmental $ 9,154 $ 622 $ 9,776 $ 7,337 $ 668 $ 8,005 
DEPARTMENT OF THE TREASURY 143 

FINANCIAL SECTION | FY 2022 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 includes the following for the years ended September 30, 2022 and 2021: 

(in millions) 2022 2021 

Categories of Transfers to the General Fund and Other

Interest Revenue $ (49,204) $ (51,222) 

U.S. Quota in the IMF - Valuation (Downward)/Upward Adjustment (3,177) 10 

Increase in Liquidation Preference of GSEs Preferred Stock and Valuation Changes (Note 11) (2,860) (111,950) 

Downward Re-estimates of Credit Reform Subsidies (1,349) (4,613) 

COVID-19 Non-Entity Cost/(Revenue) (Note 10) 1,945 (8,937) 

Other (1,123) (373) 

Total $ (55,768) $ (177,085) 
144 DEPARTMENT OF THE TREASURY

FY 2022 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. Also included are unrealized gains and losses recognized on the U.S. Quota in the IMF

due to SDR exchange rate fluctuation. Additionally, there is the increase in liquidation preference in the GSE Senior

Preferred Stock investments and annual valuation adjustment. The credit reform downward re-estimate subsidies

transferred to the General Fund is driven by a change in forecasted future cash flows. Also, our “COVID-19 Non-Entity Cost

(Revenue)” relates to notes receivable and common stock warrants received pursuant to the CARES Act, CAA, and ARP. 

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 Departmental Offices 

(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 from providing goods and/or services on a reimbursable basis among our suborganizations as costs by providing sub-organizations and as revenues by receiving sub-organizations. We recognized intradepartmental imputed costs, such as un-reimbursed payments made from the Treasury Judgment Fund on our behalf, on the

Consolidated Statements of Net Cost of $1.4 billion and $1.3 billion during FY 2022 and 2021, 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 other agencies pay on our behalf were $780 million and $762 million for the fiscal years

ended September 30, 2022 and 2021, respectively.
DEPARTMENT OF THE TREASURY 145 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

CONSOLIDATED STATEMENTS OF NET COST PRESENTATION

Basis of Presentation and Prior Year Reclassification 

On our Consolidated Statements of Net Cost, we present the net cost of operations by major programs. Specifically, we

present our gross costs and earned revenues by three major program categories aligned with Treasury’s mission: (i)

Financial program – our mission of managing the government’s finances and resources effectively, protecting the integrity of 

financial systems that are critical to the nation’s financial infrastructure, and fostering improved governance in financial

institutions; (ii) Economic program – our mission of promoting economic prosperity and maintaining stability, encouraging

sustainable and global economic growth; and (iii) Security program – our mission of enhancing national security by

implementing economic sanctions against foreign threats to the U.S., identifying and targeting the financial support

networks of national security threats, and improving the safeguards of the financial systems. We assign each of our bureaus

and reporting entities to one of the above three program categories based on their major function and core mission

responsibility. Our bureaus’ and reporting entities’ gross costs and earned revenues fall within a single program category in

the Consolidated Statements of Net Cost, with the exception of DO for which we allocate gross costs and earned revenues to

multiple programs using a net cost percentage calculation. 

Prior to FY 2022, we presented the gross costs and earned revenues by major program categories aligned with Treasury’s

Strategic Plan. In FY 2022, for comparative purposes, we reclassified the FY 2021 gross costs and earned revenues for 

certain bureaus and reporting entities to conform to the current year’s presentation of such costs and revenues. 

Reclassifications made to the FY 2021 Consolidated Statement of Net Cost primarily included $14.8 billion of IRS program

net costs (gross costs net of revenues, before eliminations), which were reclassified from the Economic to the Financial

program category. We also reclassified $1.6 billion of International Assistance Programs’ net costs (included in DO) from the

Financial to the Economic program category, as well as other reclassifications totaling $0.2 billion. On an aggregated basis

(after $1.5 billion of eliminations reclassification), for FY 2021, total consolidated net cost of the Economic program category

decreased by $11.5 billion and total consolidated net cost of the Financial program category increased by $11.5 billion as a 

result of this reclassification.

Non-Entity Costs and Revenues

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 present these costs and revenues separately

from the net cost of Treasury operations. 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,

2022 and 2021 consisted of the following: 

(in millions) 2022 2021 

Credit Reform Interest on Uninvested Funds (Intra-Governmental) $ 12,699 $ 12,617 

Judgment Claims and Contract Disputes 2,170 8,215 

Resolution Funding Corporation 920 1,367 

Legal Services Corporation 529 465 

Corporation for Public Broadcasting 485 640 

All Other Payments 377 262 

Total $ 17,180 $ 23,566 
146 DEPARTMENT OF THE TREASURY

FY 2022 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, 2022 

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 $ 874 $ 2,562 $ 4,175 $ - $ 16,201 $ 4,857 

Less Earned Revenue (1,012) (476) (3,497) - (534) (5,006) 

Net Program Cost (138) 2,086 678 - 15,667 (149) 

ECONOMIC PROGRAM

Gross Cost - - 191,038 - - - 

Less Earned Revenue - - (20,348) - - - 

Net Program Cost - - 170,690 - - - 

SECURITY PROGRAM

Gross Cost - - 538 154 - - 

Less Earned Revenue - - (35) (2) - - 

Net Program Cost - - 503 152 - - 

Total Net Program Cost (Revenue)

 Before Changes in Actuarial

 Assumptions (138) 2,086 171,871 152 15,667 (149) 

(Gain)/Loss on Pension, ORB, or OPEB

 Assumption Changes - - 548 - - - 

Total Net Cost of (Revenue From)

 Treasury Operations $ (138) $ 2,086 $ 172,419 $ 152 $ 15,667 $ (149) 

(a) The total $170.7 billion of the Economic Program net costs DO reported consisted of $163.0 billion of net costs from ORP: $122.1 billion for Coronavirus

State and Local Fiscal Recovery Funds, $13.3 billion for Emergency Rental Assistance, $10.9 billion for Coronavirus Relief Fund, $8.6 billion for

Homeowners Assistance Fund, $5.9 billion for Emergency Capital Investment Program, $1.3 billion for State Small Business Credit Initiative, and $0.9

billion for other COVID-19 relief programs (refer to Note 10); $4.2 billion of net costs from ESF; and $2.5 billion from IAP. The remaining net costs

consisted of net costs from other DO programs or offices. 
DEPARTMENT OF THE TREASURY 147 

FINANCIAL SECTION | FY 2022 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, 2022 

Program Costs

Office of the 

Comptroller of the 

Currency

Alcohol

and 

Tobacco

Tax and

Trade

Bureau 

Combined 

Total Eliminations

2022 

Consolidated

FINANCIAL PROGRAM

Gross Cost $ 1,135 $ - $ 29,804 $ 4,096 $ 25,708 

Less Earned Revenue (1,205) - (11,730) (1,219) (10,511) 

Net Program Cost (70) - 18,074 2,877 15,197 

ECONOMIC PROGRAM

Gross Cost - 137 191,175 413 190,762 

Less Earned Revenue - (8) (20,356) (183) (20,173) 

Net Program Cost - 129 170,819 230 170,589 

SECURITY PROGRAM

Gross Cost - - 692 144 548 

Less Earned Revenue - - (37) (9) (28) 

Net Program Cost - - 655 135 520 

Total Net Program Cost (Revenue)

 Before Changes in Actuarial

 Assumptions (70) 129 189,548 3,242 186,306 

(Gain)/Loss on Pension, ORB, or OPEB

 Assumption Changes (29) - 519 - 519 

Total Net Cost of (Revenue From)

 Treasury Operations $ (99) $ 129 $ 190,067 $ 3,242 $ 186,825 
148 DEPARTMENT OF THE TREASURY

FY 2022 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, 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 $ 945 $ 2,459 $ 3,722 $ - $ 15,447 $ 4,911 

Less Earned Revenue (929) (469) (3,351) - (624) (5,025) 

Net Program Cost 16 1,990 371 - 14,823 (114) 

ECONOMIC PROGRAM

Gross Cost - - 130,383 - - - 

Less Earned Revenue - - (7,847) - - - 

Net Program Cost - - 122,536 - - - 

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 $122.5 billion of the Economic Program net costs DO reported 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); $1.5 billion of net costs from CDFI including $1.1 billion for Rapid Response Program; and $1.6

billion of net costs from IAP; 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 149 

FINANCIAL SECTION | FY 2022 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 $ 1,114 $ - $ 28,598 $ 3,882 $ 24,716 

Less Earned Revenue (1,145) - (11,543) (1,079) (10,464) 

Net Program Cost (31) - 17,055 2,803 14,252 

ECONOMIC PROGRAM

Gross Cost - 132 130,515 808 129,707 

Less Earned Revenue - (7) (7,854) (162) (7,692) 

Net Program Cost - 125 122,661 646 122,015 

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 
150 DEPARTMENT OF THE TREASURY

FY 2022 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, 2022 and 2021 consisted of the

following: 

(in millions) 2022 2021 

Unobligated Balance, Brought Forward From Prior Year $ 489,160 $ 771,181 

Adjustments to Budgetary Resources Made During Current Year

 Downward Adjustments of Prior Year Undelivered Orders 1,329 126,845 

 Downward Adjustments of Prior Year Delivered Orders 19,123 2,712 

 Other Adjustments (20,074) 17,456 

Unobligated Balance From Prior Year Budgetary Authority, Net

 (Discretionary and Mandatory) $ 489,538 $ 918,194 

The decrease in Unobligated Balance, Brought Forward From Prior Year Budgetary Authority, Net is primarily the result of 

FY 2021 activity related to a $478.8 billion CARES Act appropriation rescission in FY 2021 pursuant to the CAA (refer to

Note 10) and a $112.8 billion IMF allocation to us of new SDRs during FY 2021 (refer to Note 5). These FY 2021 reductions

in unobligated balances was partially offset by the effects of $168.2 billion of unobligated ARP, CAA, and CARES Act

resources carried forward from FY 2021 (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 decrease in

Undelivered Orders - Paid as of September 30, 2022, primarily reflects the use of COVID-19 financial assistance by

recipients for covered eligible costs incurred in response to the pandemic (refer to Note 10). The increase in Undelivered

Orders - Unpaid as of September 30, 2022, primarily reflects the amounts associated with those COVID-19 financial

assistance programs that had not yet fully commenced program disbursements as of September 30, 2022 (refer to Note 10). 

Undelivered orders as of September 30, 2022 and 2021 consisted of the following: 

2022 2021 

(in millions) Federal Non-Federal Total Federal Non-Federal Total 

Paid $ 38 $ 225,181 $ 225,219 $ 16 $ 256,075 $ 256,091 

Unpaid 830 26,416 27,246 609 5,889 6,498 

Undelivered Orders at the End of the Year $ 868 $ 251,597 $ 252,465 $ 625 $ 261,964 $ 262,589 

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 2022 AGENCY FINANCIAL REPORT

or transfer seigniorage and numismatic profits. Contributed capital for the fiscal year ended September 30, 2022, was $114

million. We did not have any contributed capital for the fiscal year ended September 30, 2021.

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. We calculate

interest expense due 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 0.54 percent to 5.50

percent.

AVAILABLE BORROWING

The available borrowing authority and related changes in available borrowing authority as of and for the fiscal years ended 

September 30, 2022 and 2021 are shown below: 

(in millions) 2022 2021 

Beginning Balance $ 6,117 $ 99,676 

Current Authority(1) 5,513 15,008 

Borrowing Authority Withdrawn (59) (93,318) 

Borrowing Authority Converted to Cash (4,391) (15,249) 

Ending Balance $ 7,180 6,117 

(1) The significant decrease in borrowing authority is primarily related to the expiration of authority to make loans and investments in accordance with the

CARES Act (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 2022, was not 

published at the time that these financial statements were issued. We expect OMB to publish the FY 2024 President’s 

Budget in February 2023, 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 2021 AFR and the actual FY 2021

balances included in the FY 2023 President’s Budget.
152 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Reconciliation of FY 2021 Combined Statement of Budgetary Resources

to the FY 2023 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 $ 1,550,008 $ 1,060,848 $ 906,270 $ (73,645) $ 832,625 

IRS non-entity tax credit payments and other outlays not in SBR (1) 808,260 808,260 804,173 - 804,173 

Tax and Trade Bureau (TTB) non-entity collections for Puerto Rico not in SBR 520 520 520 - 520 

Expired funds in SBR (535) - - - - 

Non-Treasury offsetting receipts - - - (33) (33) 

Non-Budgetary Financing Disbursements, net(2) - - (64,396) - (64,396) 

Other (12) (6) 4 - 4 

President's Budget Amounts $ 2,358,241 $ 1,869,622 $ 1,646,571 $ (73,678) $ 1,572,893 

(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. (2) These are credit reform financing account net outlays. The SBR excludes gross disbursements and offsetting collections from credit financing

accounts.

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 2022 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, 2022 and 2021: 

Tax Year

Pre- 2022 

(in millions) 2022 2021 2020 2020 Collections

Individual Income and FICA Taxes $ 2,495,597 $ 1,679,952 $ 99,529 $ 33,020 $ 4,308,098 

Corporate Income Taxes 294,023 156,609 3,428 21,811 475,871 

Estate and Gift Taxes 2,310 25,840 1,785 3,420 33,355 

Excise Taxes 69,930 19,916 36 358 90,240 

Railroad Retirement Taxes 4,417 1,341 389 1 6,148 

Unemployment Taxes 4,799 2,050 22 175 7,046 

Fines, Penalties, Interest & Other Revenue - 

 Tax Related 320 1 - 1 322 

Tax Related Revenue Received 2,871,396 1,885,709 105,189 58,786 4,921,080 

Deposit of Earnings, Federal Reserve System 79,961 26,714 - - 106,675 

Fines, Penalties, Interest & Other Revenue - 

 Non-Tax Related 5,599 1,384 - - 6,983 

Non-Tax Related Revenue Received 85,560 28,098 - - 113,658 

Total Revenue Received $ 2,956,956 $ 1,913,807 $ 105,189 $ 58,786 $ 5,034,738 

Less Amounts Collected for Non-Federal Entities 421 

Total $ 5,034,317 

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 
154 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

AMOUNTS PROVIDED TO FUND THE U.S. GOVERNMENT 

For the fiscal years ended September 30, 2022 and 2021, collections of custodial revenue transferred to other federal entities

were as follows: 

(in millions) 2022 2021 

General Fund $ 4,390,703 $ 3,098,877 

Other Federal Agencies 1,384 1,399 

Total $ 4,392,087 $ 3,100,276 

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 2022

and 2021, the IRS disbursed $13.1 billion and $569.5 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, 2022 and 2021: 

Tax Year

2022 

Pre- Refunds/

(in millions) 2022 2021 2020 2020 Payments 

Individual Income and FICA Taxes $ 85,825 $ 418,527 $ 63,548 $ 15,433 $ 583,333 

Corporate Income Taxes 4,378 12,267 6,047 32,919 55,611 

Estate and Gift Taxes 1 10 589 248 848 

Excise Taxes 540 921 425 389 2,275 

Railroad Retirement Taxes - 45 (16) - 29 

Unemployment Taxes - 73 13 47 133 

Fines, Penalties, Interest & Other Revenue - - - 1 1 

Total $ 90,744 $ 431,843 $ 70,606 $ 49,037 $ 642,230 

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 
DEPARTMENT OF THE TREASURY 155 

FINANCIAL SECTION | FY 2022 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/Trust Revolving 

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 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 Agent 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

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
156 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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.

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).
DEPARTMENT OF THE TREASURY 157 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Summary Information for Funds from Dedicated Collections

 as of and for the Fiscal Year Ended September 30, 2022

(in millions)

Exchange 

Stabilization 

Fund

Public 

Enterprise/ 

Revolving/ 

Trust 

Revolving 

Funds

Other FDC 

Funds

Combined

FDC Funds

Eliminations 

between

FDC Funds

Consolidated

FDC Funds

ASSETS

Intra-Governmental:

Fund Balance $ - $ 1,587 $ 1,821 $ 3,408 $ - $ 3,408 

Investments, Net 18,401 2,225 4,143 24,769 - 24,769 

Other Assets - 4 - 4 - 4 

Total Intra-Governmental 18,401 3,816 5,964 28,181 - 28,181 

Other Than Intra-Governmental 

Cash, Foreign Currency, and Other Monetary Assets 166,412 - 12 166,424 - 166,424 

Taxes, Interest, and Other Receivables, Net - 113 126 239 - 239 

Advances and Prepayments - 2 - 2 - 2 

Other Investments, Net 3,796 20 - 3,816 - 3,816 

General Property, Plant, and Equipment, Net - 993 20 1,013 - 1,013 

Other Assets - 1,026 842 1,868 - 1,868 

Total Other Than Intra-Governmental 170,208 2,154 1,000 173,362 - 173,362 

Total Assets $ 188,609 $ 5,970 $ 6,964 $ 201,543 $ - $ 201,543 

LIABILITIES 

Intra-Governmental

Due To the General Fund $ - $ - $ 728 $ 728 $ - $ 728 

Other - 33 848 881 - 881 

Total Intra-Governmental - 33 1,576 1,609 - 1,609 

Other Than Intra-Governmental 

Other Payables 404 137 76 617 - 617 

Special Drawing Right Certificates Issued to the Federal 

Reserve 5,200 - - 5,200 - 5,200 

Allocation of Special Drawing Rights 147,009 - - 147,009 - 147,009 

Other - 674 975 1,649 - 1,649 

Total Other Than Intra-Governmental 152,613 811 1,051 154,475 - 154,475 

Total Liabilities 152,613 844 2,627 156,084 - 156,084 

Net Position

Unexpended Appropriations 200 - - 200 - 200 

Cumulative Results of Operations 35,796 5,126 4,337 45,259 - 45,259 

Total Liabilities and Net Position $ 188,609 $ 5,970 $ 6,964 $ 201,543 $ - $ 201,543 
158 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Summary Information for Funds from Dedicated Collections

 as of and for the Fiscal Year Ended September 30, 2022

(in millions)

Exchange 

Stabilization 

Fund

Public 

Enterprise/ 

Revolving/ 

Trust 

Revolving 

Funds

Other FDC 

Funds

Combined

FDC Funds

Eliminations 

between

FDC Funds

Consolidated

FDC Funds

Statement of Net Cost

Gross Cost $ 24,750 $ 6,865 $ 1,346 $ 32,961 $ - $ 32,961 

Less: Earned Revenue (20,126) (7,223) (384) (27,733) - (27,733) 

Gains/Losses on Pension, ORB, or OPEB Assumption - (29) - (29) - (29) 

Total Net Cost of (Revenue From) Operations $ 4,624 $ (387)$ 962 $ 5,199 $ - $ 5,199 

Statement of Changes in Net Position

Cumulative Results of Operations:

Beginning Balance $ 40,420 $ 4,888 $ 3,870 $ 49,178 $ - $ 49,178 

Individual Income Tax - - 21 21 - 21 

Intra-Governmental Non-Exchange Revenue - - 432 432 - 432 

Donations and Forfeitures of Cash/Equivalent - - 721 721 - 721 

Transfers In/Out Without Reimbursement (95) (114) (482) (691) - (691) 

Donation/Forfeiture of Property - - 172 172 - 172 

Imputed Financing Sources - 64 7 71 - 71 

Transfers to the General Fund and Other 95 (99) 558 554 - 554 

Net Revenue (Cost) of Operations (4,624) 387 (962) (5,199) - (5,199) 

Net Change in Cumulative Results of Operations (4,624) 238 467 (3,919) - (3,919) 

Ending Balance $ 35,796 $ 5,126 $ 4,337 $ 45,259 $ - $ 45,259 
DEPARTMENT OF THE TREASURY 159 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Summary Information for Funds from Dedicated Collections

 as of and for the Fiscal Year Ended September 30, 2021

(in millions)

Exchange 

Stabilization 

Fund

Public 

Enterprise/ 

Revolving/ 

Trust 

Revolving 

Funds

Other FDC 

Funds

Combined

FDC Funds

Eliminations 

between

FDC Funds

Consolidated

FDC Funds

ASSETS

Intra-Governmental:

Fund Balance $ - $ 1,647 $ 1,672 $ 3,319 $ - $ 3,319 

Investments, Net 22,837 2,103 3,748 28,688 - 28,688 

Other Assets - 5 - 5 - 5 

Total Intra-Governmental 22,837 3,755 5,420 32,012 - 32,012 

Other Than Intra-Governmental 

Cash, Foreign Currency, and Other Monetary Assets 179,554 - 100 179,654 - 179,654 

Taxes, Interest, and Other Receivables, Net - 122 219 341 - 341 

Other Investments, Net 5,265 5 - 5,270 - 5,270 

General Property, Plant, and Equipment, Net - 898 23 921 - 921 

Other Assets - 902 161 1,063 - 1,063 

Total Other Than Intra-Governmental 184,819 1,927 503 187,249 - 187,249 

Total Assets $ 207,656 $ 5,682 $ 5,923 $ 219,261 $ - $ 219,261 

LIABILITIES 

Intra-Governmental

Due To the General Fund $ - $ - $ 893 $ 893 $ - $ 893 

Other - 34 848 882 - 882 

Total Intra-Governmental - 34 1,741 1,775 - 1,775 

Other Than Intra-Governmental 

Other Payables 11 79 112 202 - 202 

Special Drawing Right Certificates Issued to the Federal 

Reserve 5,200 - - 5,200 - 5,200 

Allocation of Special Drawing Rights 161,825 - - 161,825 - 161,825 

Other - 681 200 881 - 881 

Total Other Than Intra-Governmental 167,036 760 312 168,108 - 168,108 

Total Liabilities 167,036 794 2,053 169,883 - 169,883 

Net Position

Unexpended Appropriations 200 - - 200 - 200 

Cumulative Results of Operations 40,420 4,888 3,870 49,178 - 49,178 

Total Liabilities and Net Position $ 207,656 $ 5,682 $ 5,923 $ 219,261 $ - $ 219,261 
160 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Summary Information for Funds from Dedicated Collections

 as of and for the Fiscal Year Ended September 30, 2021

(in millions)

Exchange 

Stabilization 

Fund

Public 

Enterprise/ 

Revolving/ 

Trust 

Revolving 

Funds

Other FDC 

Funds

Combined

FDC Funds

Eliminations 

between

FDC Funds

Consolidated

FDC Funds

Statement of Net Cost

Gross Cost $ 8,230 $ 6,970 $ 955 $ 16,155 $ - $ 16,155 

Less: Earned Revenue (7,523) (7,098) (272) (14,893) - (14,893) 

Gains/Losses on Pension, ORB, or OPEB Assumption - (4) - (4) - (4) 

Total Net Cost of (Revenue From) Operations $ 707 $ (132)$ 683 $ 1,258 $ - $ 1,258 

Statement of Changes in Net Position

Cumulative Results of Operations:

Beginning Balance $ 41,127 $ 4,407 $ 3,310 $ 48,844 $ - $ 48,844 

Individual Income Tax - - 24 24 - 24 

Intra-Governmental Non-Exchange Revenue - - 419 419 - 419 

Donations and Forfeitures of Cash/Equivalent - - 285 285 - 285 

Transfers In/Out Without Reimbursement (23) - (227) (250) - (250) 

Donation/Forfeiture of Property - - 185 185 - 185 

Imputed Financing Sources - 74 6 80 - 80 

Transfers to the General Fund and Other 23 275 551 849 - 849 

Net Revenue (Cost) of Operations (707) 132 (683) (1,258) - (1,258) 

Net Change in Cumulative Results of Operations (707) 481 560 334 - 334 

Ending Balance $ 40,420 $ 4,888 $ 3,870 $ 49,178 $ - $ 49,178 
DEPARTMENT OF THE TREASURY 161 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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, we use budgetary accounting information for planning and control purposes, and it 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 $81.2 billion and $69.2 billion of interest accrued on outstanding public debt as of September 30, 2022 and 2021,

respectively; as well as $28.7 billion and $9.3 billion of net amortization of discounts on outstanding public debt as of 

September 30, 2022 and 2021, 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:

• 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. We removed this activity from Net Cost through inclusion of change in asset activity,

however, it 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. We removed this

activity Net Cost through inclusion of change in liability activity, however, it 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, we exclude this intra-agency activity. 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.
162 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

For the fiscal years ended September 30, 2022 and 2021, 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 2022 Total

Total Net Cost of Treasury Operations and Non-Entity Costs $ 194,394 $ 683,733 $ 878,127

Components of Net Operating Cost Not Part of Budgetary Outlays:

 Liquidation Preference of GSEs Preferred Stock and Valuation Changes (Notes 11 and 20) - 2,860 2,860

 Property, Plant, and Equipment Depreciation Expense and Disposals (Note 14) - (521) (521)

 Unrealized Valuation (Loss) on Special Drawing Rights - (473) (473)

 Unrealized Valuation (Loss) and Sales/Dispositions (Loss) on Investments (Note 13) - (8,379) (8,379)

 Year-End Credit Reform Subsidy Accrual Re-Estimates - (804) (804)

 Adjustments to Prior Year Credit Reform Re-Estimates accrual - 1,163 1,163

Increase/(Decrease) in Assets:

 Loans and Interest Receivable (Notes 3, 7, and 10) (182,515) (2,549) (185,064)

 Advances to Trust Funds (Note 3) (44,080) - (44,080)

 Due From the General Fund (Note 4) 2,254,486 - 2,254,486

 Cash, Foreign Currency, and Other Monetary Assets (Note 5) - 420,257 420,257

 Advances and Prepayments (Note 10) - (30,892) (30,892)

 Other Assets 42 382 424

(Increase)/Decrease in Liabilities:

 Federal Debt and Interest Payable (Notes 4 and 16) (492,153) (1,983,477) (2,475,630)

 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) (185,470) - (185,470)

 Other Liabilities 1,339 (3,240) (1,901)

Other Financing Sources:

 Imputed Costs (780) - (780)

Total Components of Net Operating Cost Not Part of Budgetary Outlays 1,411,431 (1,448,638) (37,207)

Components of Budgetary Outlays That Are Not Part of Net Cost:

 Acquisition of Property, Plant and Equipment (Note 14) - 597 597

 Acquisition of Other Investments, Net (Note 13) - 21,343 21,343

 Sale/Repayment of Other Investments, Net (Note 13) - (12,208) (12,208)

Other Financing Sources:

 Transfers (In)/Out Without Reimbursement 147 - 147

Total Components of Budgetary Outlays That Are Not Part of Net Cost 147 9,732 9,879

Other Reconciling Items:

 Distributed Offsetting Receipts - (65,142) (65,142)

 Non-Entity Activity 53,405 - 53,405

 Accrued Liabilities on Federal Debt (4,882) - (4,882)

 Other 781 (1,476) (695)

 Intradepartmental Eliminations (5,316) - (5,316)

Total Other Reconciling Items 43,988 (66,618) (22,630)

Agency Outlays, Net $ 1,649,960 $ (821,791)$ 828,169
DEPARTMENT OF THE TREASURY 163 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

(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 3) 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 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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

2022 2021 

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 $ 890 $ 154 $ 1,044 $ 855 $ 150 $ 1,005 

Increases:

 Contributions to Fiduciary Net Assets 84 1,096 1,180 43 5,734 5,777 

Total Increases 84 1,096 1,180 43 5,734 5,777 

Decreases:

 Disbursements to and on behalf

 of beneficiaries - (1,106) (1,106) (8) (5,730) (5,738) 

Total Decreases - (1,106) (1,106) (8) (5,730) (5,738) 

Net Increase (Decrease) in

 Fiduciary Assets 84 (10) 74 35 4 39 

Fiduciary Net Assets, End of Year $ 974 $ 144 $ 1,118 $ 890 $ 154 $ 1,044 
DEPARTMENT OF THE TREASURY 165 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Schedule of Fiduciary Net Assets

2022 2021 

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

Fund Balance with Treasury $ 974 $ 143 $ 1,117 $ 890 $ 153 $ 1,043 

Investments in Treasury Securities - 1 1 - 1 1 

Total Fiduciary Assets 974 144 1,118 890 154 1,044 

Total Fiduciary Net Assets $ 974 $ 144 $ 1,118 $ 890 $ 154 $ 1,044 

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 Treasury 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 

preferred and common stockholders, and breached fiduciary duties when the third amendments to the SPSPAs between 
166 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

us and each GSE were executed in August 2012 (refer to Note 11). 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 U.S. Court of Appeals for the Federal Circuit dismissed all of the

claims. Certain plaintiffs filed petitions for a writ of certiorari with the Supreme Court. 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 an injunction

that (i) results in changes to Treasury’s liquidation preference, or (ii) converts Treasury’s senior preferred stock to

common stock. Following the Supreme Court’s decision in June 2021, the Court left open the possibility that the

plaintiffs may be entitled to retrospective relief if the unconstitutional provision inflicted “compensable harm”. The 

Fifth and Eighth Circuit Courts of Appeal remanded cases to the U.S. District Court for the Southern District of Texas

and the U.S. District Court for the District of Minnesota, where plaintiffs filed amended complaints and motions to

dismiss are pending. The Sixth Circuit Court of Appeals remanded a case to the U.S. District Court for the Western 

District of Michigan to determine if the unconstitutional provision inflicted “compensable harm.” 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 IRS 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 IRS is 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, 2022, the Department has

determined the likelihood of an unfavorable outcome as reasonably possible and estimated a potential loss within a 

range of $0 to $230 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. 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 U.S. Court of Federal Claims for reassignment to a new judge. 

The case remains in litigation. As of September 30, 2022 and 2021, we have determined there is a reasonably possible

likelihood of an unfavorable outcome in some of the cases totaling approximately $265 million and $324 million,

respectively. 

• 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. 

• Johnathan Dinh, et. al. v. United Sates: A purported class action lawsuit on behalf of certain bondholders was filed in

the U.S. Court of Federal Claims seeking to determine if the enactment of the Puerto Rico Oversight, Management, and
DEPARTMENT OF THE TREASURY 167 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Economic Stability Act, brought about the taking of the principal and interest due to them, as well as the destruction of 

their lien on the fund that secured the bonds. 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. 

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, 2022 and 2021, we

had remaining loan commitments totaling $34.7 billion and $40.7 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, 2022 and 2021, U.S.

callable capital in MDBs was as follows:

 

(in millions) 2022 2021 

Inter-American Development Bank $ 49,181 $ 49,181 

International Bank for Reconstruction and Development 47,785 46,363 

Asian Development Bank 18,701 18,702 

African Development Bank 7,321 6,464 

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 $ 127,888 $ 125,610 

(1) Both FY 2022 and 2021 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
168 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

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 2022 and 2021,

the program trigger amount was $200 million. Insurance companies and the U.S. government will share insured losses

above insurer deductibles. 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 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, 2022 or 2021.

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, 2022 and 2021. 

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, 2022 and 2021, we had committed up to $32.6 billion for these programs. Outstanding

commitments totaled $0.9 billion and $1.2 billion as of September 30, 2022 and 2021, respectively. For FY 2022 and 2021, 

payments made on behalf of the housing programs under TARP totaled $334 million and $479 million, respectively, reported 

within the Financial Program on our Consolidated Statements of Net Cost. 

 
DEPARTMENT OF THE TREASURY 169 

FINANCIAL SECTION | FY 2022 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 statement includes the Reclassified Statement of 

Net Cost, that is 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 Statements of Net Cost is 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 2021 Financial Report can be found on the Fiscal

Service website and a copy of the FY 2022 Financial Report will be posted to the site as soon as it is released.
170 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Statement of Net Cost

For the Fiscal Year Ended September 30, 2022

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 $ 217,018 $ 31,817 $ - $ 179,594 $ - $ 211,411 Non-Federal Gross Costs

Intra-governmental Costs

267 - 2,136 - 2,403 Benefit Program Costs

71 - 709 - 780 Imputed Costs

422 1 1,492 219 1,694 Buy/Sell Cost

52 - 1 - 53 Purchase of Assets 

- - 149 - 149 Federal Securities Interest Expense

- - 6 - 6 Borrowing Losses

17 - 558 - 575 Other Expenses (without Reciprocals) 

(52) - (1) - (53) Purchase of Assets Offset

777 1 5,050 219 5,607 Total Intra-governmental Costs

Total Program Gross Costs 217,018 32,594 1 184,644 219 217,018 Total 

Total Program Earned Revenues (30,712) (27,322) - (837) - (28,159) Non-Federal Earned Revenue

Intra-governmental Revenue

(50) - (591) (215) (426) Buy/Sell Revenue

(164) - - (164) - 

Federal Securities Interest Revenue Including Associated 

Gains and Losses 

- - (2,050) - (2,050) Borrowing and Other Interest Revenue

- - (13) - (13) Borrowing Gains

(64) - - - (64) 

Collections Transferred in to a TAS Other Than the General 

Fund of the U.S. Government - Exchange

(278) - (2,654) (379) (2,553) Total Intra-governmental Earned Revenue

Total Program Earned Revenues (30,712) (27,600) - (3,491) (379) (30,712) Total 

Loss on Pension, ORB, or OPEB Assumption 

Changes 519 (29) - 548 - 519 Non-Federal Gross Costs

Total Net Cost of Treasury Operations 186,825 4,965 1 181,701 (160) 186,825 Total 
DEPARTMENT OF THE TREASURY 171 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Consolidated Statement of Net Cost

For the Fiscal Year Ended September 30, 2022

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 $ 722,233 $ - $ - $ 495,721 $ - $ 495,721 Interest on Debt Held by the Public (Non-Federal)

- - 226,714 202 226,512 Federal Securities Interest Expense (Federal)

 Total Federal Debt Interest 722,233 - - 722,435 202 722,233 Total 

Restoration of Foregone Federal Debt Interest 726 - - (339) - (339) Non-Federal Gross Costs

- - 812 - 812 Interest on Debt Held by the Public (Non-Federal)

Intra-governmental Costs

- - (70) - (70) Buy/Sell Cost

- - 323 - 323 Federal Securities Interest Expense (Federal)

- - 253 - 253 Total Intra-governmental Costs

 Total Restoration of Foregone Federal Debt 

Interest 726 - - 726 - 726 Total 

Less Interest Revenue from Loans (47,064) - - (47,064) - (47,064) Borrowing and Other Interest Revenue (Federal)

Other Federal Costs, Net 17,180 321 - 4,451 - 4,772 Non-Federal Gross Costs

Intra-governmental Costs

- - 118 - 118 Buy/Sell Cost

- - 12,699 - 12,699 Borrowing and Other Interest Expenses

- - 12,817 - 12,817 Total Intra-governmental Costs

(132) - - - (132) Non-Federal Earned Revenue

- - (277) - (277) Buy/Sell Revenue (Federal)

 Total Other Federal Costs, Net 17,180 189 - 16,991 - 17,180 Total 
172 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Consolidated Statement of Net Cost

For the Fiscal Year Ended September 30, 2022 

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

GSEs Non-Entity Revenue, Net (2,860) - - (2,860) - (2,860) Non-Federal Earned Revenue

COVID-19 Non-Entity Cost (Revenue), Net 1,945 - - 2,124 - 2,124 Non-Federal Gross Costs

- - (179) - (179) Non-Federal Earned Revenue

 Total COVID-19 Non-Entity Cost (Revenue), Net 1,945 - - 1,945 - 1,945 Total 

Other, Net (858) 46 - 1 - 47 Non-Federal Gross Costs

- - (4) - (4) Non-Federal Earned Revenue

- - (901) - (901) Buy/Sell Revenue (Federal)

 Total Other, Net (858) 46 - (904) - (858) Total 

Total Net Non-Entity Costs 691,302 235 - 691,269 202 691,302 Total 

27 - 338,243 - 338,270 Non-Federal Gross Costs(1)

Total Net Cost of Treasury Operations and NonEntity Costs $ 878,127 $ 5,227 $ 1 $ 1,211,213 $ 42 $ 1,216,397 Total Net Cost (1)

(1) Includes income tax credits of $338.3 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 173 

FINANCIAL SECTION | FY 2022 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 $3.4 billion and $2.5 billion as of September 30, 2022 and 2021, 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 2022, the total estimated payout (including principal

and interest) for claims pending judicial review by the federal courts and appeals courts is $2.1 billion and $1.3 billion,

respectively. In FY 2021, the total estimated payout (including principal and interest) for claims pending judicial review by

the federal courts and appeals courts was $1.5 billion and $1.0 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 that 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, 2022 and 2021, were as follows: 
174 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

(in millions) 2022 2021 

Total Unpaid Assessments $ 602,000 $ 658,000 

Less Compliance Assessments (88,000) (80,000) 

Write-Offs (77,000) (85,000) 

Gross Federal Taxes Receivable 437,000 493,000 

Less Allowance for Doubtful Accounts (201,000) (191,000) 

Federal Taxes Receivable, Net $ 236,000 $ 302,000 

Total unpaid assessments include $182 billion of non-delinquent taxes receivable, including $135 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 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 $1.1 billion and $1.2 billion as of September 30, 2022 and 2021, 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 2022 and 2021, TTB collected approximately $19.6 billion and $20.3 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.

DEFERRED MAINTENANCE AND REPAIRS

In FY 2022 and 2021, 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
DEPARTMENT OF THE TREASURY 175 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

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.

LAND

We hold land for BEP and Mint operational use in the production of U.S. currency and circulating coins. 

The estimated land acreage for operational use as of September 30, 2022, was as follows:

(in acreage) 2022 

Beginning Balance 175 

Increase in land for operational use 104 

Total Land 279 

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, 2022 and 2021

disaggregated by Treasury reporting entity rather than by Treasury major budget account, since we manage our budget at

the reporting entity level. 
176 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | FINANCIAL SECTION

Fiscal Year 2022 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) $ 610 $ 1,910 $ 481,367 $ 29 $ 2,694

Appropriations (discretionary and mandatory) - 738,997 2,536 202 92,527

Borrowing authority (discretionary and mandatory) - - 5,463 - - 

Spending authority from offsetting collections 

 (discretionary and mandatory) 1,253 321 4,515 24 154

Total Budgetary Resources $ 1,863 $ 741,228 $ 493,881 $ 255 $ 95,375

STATUS OF BUDGETARY RESOURCES 

New obligations and upward adjustments $ 1,038 $ 739,482 $ 174,836 $ 180 $ 14,569

Unobligated balance, end of year: 

 Apportioned, unexpired accounts 704 1,636 269,422 72 34,338

 Exempt from apportionment, unexpired accounts - 4 90 - 7 

 Unapportioned, unexpired accounts 121 93 49,095 - 46,196

 Unexpired unobligated balance, end of year 825 1,733 318,607 72 80,541

 Expired unobligated balance, end of year - 13 438 3 265

Unobligated balance, end of year 825 1,746 319,045 75 80,806

Total Status of Budgetary Resources $ 1,863 $ 741,228 $ 493,881 $ 255 $ 95,375

OUTLAYS, NET, AND DISBURSEMENTS, NET 

Outlays, net (discretionary and mandatory) $ (39) $ 739,117 $ 140,249 $ 143 $ 13,855

Distributed offsetting receipts - (52,374) (12,192) - (576)

Agency Outlays, Net (Discretionary and Mandatory) $ (39)$ 686,743 $ 128,057 $ 143 $ 13,279

Disbursements, net (mandatory) $ - $ - $ (4,722) $ - $ - 

(a) Of the $494 billion of Total Budgetary Resources for DO, ORP, GSE, ESF and OAS had $166 billion, $254 billion, $41 billion and

$16 billion, respectively. The remainder is spread throughout other offices. 
DEPARTMENT OF THE TREASURY 177 

FINANCIAL SECTION | FY 2022 AGENCY FINANCIAL REPORT

Fiscal Year 2022 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) $ 1,182 $ 1,738 $ 8 $ 489,225 $ 313

Appropriations (discretionary and mandatory) - - 128 834,390 - 

Borrowing authority (discretionary and mandatory) - - - - 5,463

Spending authority from offsetting collections 

 (discretionary and mandatory) 4,905 1,224 9 11,571 834

Total Budgetary Resources $ 6,087 $ 2,962 $ 145 $ 1,335,186 $ 6,610

STATUS OF BUDGETARY RESOURCES 

New obligations and upward adjustments $ 5,206 $ 1,128 $ 138 $ 930,261 $ 6,316

Unobligated balance, end of year: 

 Apportioned, unexpired accounts 500 - 5 306,461 216

 Exempt from apportionment, unexpired accounts - 1,834 - 1,935 - 

 Unapportioned, unexpired accounts 381 - - 95,808 78

 Unexpired unobligated balance, end of year 881 1,834 5 404,204 294

 Expired unobligated balance, end of year - - 2 721 - 

Unobligated balance, end of year 881 1,834 7 404,925 294

Total Status of Budgetary Resources $ 6,087 $ 2,962 $ 145 $ 1,335,186 $ 6,610

OUTLAYS, NET, AND DISBURSEMENTS, NET 

Outlays, net (discretionary and mandatory) $ (18) $ (123) $ 127 $ 893,311 $ - 

Distributed offsetting receipts - - - (65,142) - 

Agency Outlays, Net (Discretionary and Mandatory) $ (18) $ (123) $ 127 $ 828,169 $ - 

Disbursements, net (mandatory) $ - $ - $ - $ (4,722)
178 DEPARTMENT OF THE TREASURY

FY 2022 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 179 

FINANCIAL SECTION | FY 2022 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)
 

 

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SECTION A: MANAGEMENT AND PERFORMANCE CHALLENGES AND

TREASURY RESPONSE.................................................. 183

SECTION B: TAX GAP AND TAX BURDEN............................. 185

SECTION C: SUMMARY OF FINANCIAL STATEMENT

AUDIT AND MANAGEMENT ASSURANCES ...................... 197

SECTION D: PAYMENT INTEGRITY ..................................... 245

SECTION E: CIVIL MONETARY PENALTIES............................ 252

SECTION F: GRANTS PROGRAMS....................................... 259

SECTION G: CLIMATE-RELATED FINANCIAL RISK ................... 260

APPENDIX: GLOSSARY OF ACRONYMS ................................ 261
 

 
DEPARTMENT OF THE TREASURY 183 

OTHER INFORMATION | FY 2022 AGENCY FINANCIAL REPORT

SECTION A: 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 1 0 0 0 

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 1 0 0 3 

1 Refer to Independent Auditors’ Report in Part 2 of this report. 
184 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | OTHER INFORMATION

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 controls 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, 2022, we had no material weaknesses under Section 2 or Section 4 of the FMFIA. However, we have

three instances of non-conformance with the federal financial management systems requirements of Section 4 of the FMFIA 

down from four instances in FY 2021. In FY 2022, we were successful in downgrading a major component of one of our 

significant deficiencies, related to the Bureau of the Fiscal Service’s debt management systems, which resolved the related

nonconformance. These remaining three 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 one nonconformance related to the deficiencies in its cash 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. 
DEPARTMENT OF THE TREASURY 185 

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SECTION B: 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 nonrefundable 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 associated with tax underreporting. Underreporting can manifest as either understatements of the liability

due at the time the taxpayer files the return, the taxpayer 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 for those components of the tax gap that depend on the NRP. In October 2022, the IRS released new estimates

covering the tax year (TY) 2014 – 2016 timeframe. 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 2014 – 2016 (https://www.irs.gov/pub/irspdf/p1415.pdf); and

• News Release: IRS updates tax gap estimates; new data points the way toward enhancing taxpayer service,

compliance efforts (https://www.irs.gov/newsroom/irs-updates-tax-gap-estimates-new-data-points-the-way-towardenhancing-taxpayer-service-compliance-efforts). 

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 2014 – 2016 timeframe is $496 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 $68 billion of the gross

tax gap will eventually be paid, resulting in a net tax gap of $428 billion.
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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 nonfiling 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, $398 billion, and $59 billion,

respectively, of the $496 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 $357 billion, $41 billion, $93 billion, and $5 billion, respectively. The estimates below are excerpted from a schematic

representation, known as the tax gap “map” from the Tax Gap Estimates for Tax Years 2014 – 2016 publication.

TAX GAP MAP: TAX GAP ESTIMATES FOR TAX YEARS 2014 – 2016 (EXCERPT) ($ IN BILLIONS)

Notes: 

*Totals include Excise Tax

# - No estimate

Detail may not add to totals due to rounding. 

(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) 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.

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.
DEPARTMENT OF THE TREASURY 187 

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These estimates reflect an estimated average compliance rate and associated average annual tax gap for the TY 2014 – 2016

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 underreporting tax gap related to individual income taxes. Since this

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 2014 – 2016 

The estimates in the table below provide a breakout of the components of the individual income tax underreporting tax gap,

which is 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 47 percent of the total individual income tax underreporting tax gap for TY 2014 – 2016. 

This primarily consists of nonfarm proprietor income, which accounts for 29 percent; flow-through income (partnerships, S 

corporations, and estates and trusts), which accounts for nine percent; rent and royalty income which accounts for seven 

percent; and farm income, which accounts for two percent.
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INDIVIDUAL INCOME TAX UNDERREPORTING TAX GAP BY SOURCE: TAX YEARS 2014–2016 (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 $ 496 100% N/A N/A

Individual Income Tax Underreporting Tax Gap $ 278 56% 100% 17% 

Items Subject to Substantial Information Reporting and 

Withholding $ 7 1% 2% 1% 

Wages, salaries, tips $ 7 1% 2% 1% 

Items Subject to Substantial Information Reporting $ 15 3% 5% 6% 

Interest income 1 (3) (3) 4% 

Dividend income $ 1 (3) (3) 4% 

State income tax refunds $ 1 (3) (3) 9% 

Pension & annuities $ 7 1% 2% 4% 

Unemployment Compensation (3) (3) (3) 12% 

Taxable Social Security benefits $ 6 1% 2% 13% 

Items Subject to Some Information Reporting $ 43 9% 15% 15% 

Partnership, S-Corp, Estate & Trust, etc. $ 25 5% 9% 12% 

Alimony income (4) (4) (4) (4)

Capital Gains $ 18 4% 6% 18% 

Short-term Capital Gains $ 6 1% 2% 17% 

Long-Term Capital Gains $ 12 2% 4% 16% 

Items Subject to Little or No Information Reporting $ 126 25% 45% 55% 

Form 4797 income $ 4 1% 1% 35% 

Other income $ 16 3% 6% 42% 

Nonfarm proprietor income $ 80 16% 29% 57% 

Farm income $ 5 1% 2% 64% 

Rents and royalties $ 21 4% 7% 53% 

Other Taxes $ 4 1% 1% 6% 

Unallocated Marginal Effects $ 11 2% 4% N/A

Income Offsets (Adjustments, Deductions, Exemptions) $ 25 5% 9% 6% 

Total Tax Credits $ 42 9% 15% 38% 

Filing Status $ 5 1% 2% N/A (1) The estimates are the annual averages for the TY 2014 – 2016 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 5 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 non-refundable individual income tax credits, including the

Earned Income Tax Credit (EITC), American Opportunity Tax Credit (AOTC), and Additional Child Tax Credit (ACTC). 

Total tax credits account for 15 percent of the individual income tax underreporting tax gap. EITC accounts for 10 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 (two percent). 
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INDIVIDUAL INCOME TAX UNDERREPORTING TAX GAP ESTIMATES FOR TAX CREDITS: TY 2014 – 2016 ($ 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 $ 496 100% N/A

Individual Income Tax Underreporting Tax Gap $ 278 56% 100% 

Total Credits $ 42 9% 15% 

Earned Income Tax Credit $ 28 6% 10% 

Education Credits (Including AOTC) $ 5 1% 2% 

Child Tax Credit and Additional Child Tax Credit $ 8 2% 3% 

All Other Credits $ 2 (2) 1% (1) The estimates are the annual averages for the TY 2014 – 2016 timeframe.

(2) Less than 0.5 percent.

Note: Individual amounts may not add to total due to rounding.

Earned Income Tax Credit (EITC)

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 (AOTC)

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. 

Additional Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC) 

Congress enacted the CTC to help ease the financial burdens for families with children as part of the Taxpayer Relief Act of 

1997 (P.L. 105-34). If the CTC exceeds the tax liability, taxpayers may receive some or all of the credit as a refund, known as

the ACTC. Various legislative changes over the past 20 years have made significant changes to the CTC, which have

expanded it from a generally non-refundable 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.

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.
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Tax Gap Projections for Tax Years 2017-2019

The IRS included average annual tax gap projections for the TY 2017-2019 timeframe in its most recent release of tax gap

estimates. The tax gap projections are available for more recent years than are tax gap estimates, but tax gap projections 

rely more heavily on assumptions because less data is available in these years.

As shown in the table, the average annual gross tax gap is projected to be $540 billion for TY 2017-2019. The projection of 

enforced and other late payments is $70 billion, which yields a net tax gap projection of $470 billion. The projections of the

gross tax gap components for nonfiling, underreporting, and underpayment for the TY 2017-2019 timeframe are $41 billion,

$433 billion, and $66 billion respectively.

TAX GAP PROJECTIONS BY COMPONENT: TAX YEARS 2017-2019 ($ IN BILLIONS)

Tax Gap Component TY 2017-2019

Share of Gross Tax

Gap

Estimated Total True Tax $3,621

Gross Tax Gap $540 100%

Voluntary Compliance Rate 85.1%

Enforced and Other Late Payments $70 6%

Net Tax Gap $470 1%

Net Compliance Rate 87.0% 2%

Nonfiling Tax Gap $41 8%

Individual Income Tax $33 6%

Self-Employment Tax $7 1%

Estate Tax [3] [2]

Underreporting Tax Gap $433 80%

Individual Income Tax $304 56%

Corporation Income Tax $37 7%

Small Corporations (assets under $10M) $15 3%

Large Corporations (assets of $10M or more) $22 4%

Employment Tax $91 17%

Self-Employment Tax $58 11%

Uncollected Social Security and Medicare Tax [3] [2]

FICA and FUTA Tax $32 6%

Estate Tax $1 [2]

Underpayment Tax Gap $66 12%

Individual Income Tax $53 10%

Corporation Income Tax $6 1%

Employment Tax $4 1%

Estate Tax $3 1%

Excise Tax [3] [2]

1) The projections are the annual averages for the TY 2017 – 2019 timeframe.

(2) Less than 0.5 percent.

(3) Less than $0.5 billion.

Note: Individual amounts may not add to total due to rounding.
DEPARTMENT OF THE TREASURY 191 

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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, ACTC and net PTC (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 enacted 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 process measures compliance with the current tax system and always

includes noncompliance with refundable and non-refundable 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. 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 as RTCs are not “payments” as intended under the improper payments legislation. A 

payment system is generally designed to implement internal controls that provide for appropriate verification and validation

prior to payments being made; however, 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, 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. Therefore, errors in taxpayer claims for credits are more appropriately

included in the analysis of tax compliance.

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 and relevant third-party data. 
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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. In some cases, due also in part to the complex rules, overclaims by an ineligible taxpayer could go to

another family member who is eligible for, but fails to claim, the credit. The lack of third-party data to verify eligibility

requirements for these refundable credits complicates the ability of the IRS to administer the 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. 50 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 with the Supplemental Security Income or Temporary 

Assistance for Needy Families programs. Increasing pre-refund screening for eligibility would increase the administrative

costs for refundable tax credits and may discourage eligible taxpayers from claiming the credits. 

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 2022, the IRS conducted 310,081

refundable credit exams, the majority through correspondence audits..
DEPARTMENT OF THE TREASURY 193 

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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 2020) and corporations (TY 2019). 
194 DEPARTMENT OF THE TREASURY

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INDIVIDUAL INCOME TAX LIABILITY

FIGURE 1.1: AVERAGE AGI REPORTED AND AVERAGE INDIVIDUAL INCOME TAX LIABILITY FOR TY 2020

FIGURE 1.2: INDIVIDUAL INCOME TAX LIABILITY AS A PERCENTAGE OF AGI FOR TY 2020
DEPARTMENT OF THE TREASURY 195 

OTHER INFORMATION | FY 2022 AGENCY FINANCIAL REPORT

TABLE 1: INDIVIDUAL INCOME TAX DATA BY AGI FOR TY 2020

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 31,045 $ 232,112 $ 491 $ 7,477 $ 16 0.2% 

$15,000 under 

$30,000 29,265 655,347 12,849 22,394 439 2.0% 

$30,000 under 

$50,000 29,930 1,173,046 50,346 39,193 1,682 4.3% 

$50,000 under 

$100,000 36,983 2,635,417 192,163 71,260 5,196 7.3% 

$100,000 under 

$200,000 22,415 3,060,066 334,648 136,519 14,930 10.9% 

$200,000 under 

$500,000 7,615 2,187,229 366,794 287,226 48,167 16.8% 

$500,000 or more 1,845 2,923,397 753,251 1,584,497 408,266 25.8% 

Total 159,098 $ 12,866,614 $ 1,710,542 

All negative AGI under $15,000 are treated as zero-dollar amount.
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CORPORATION TAX LIABILITY

FIGURE 2: CORPORATION TAX LIABILITY AS A PERCENTAGE OF TAXABLE INCOME FOR TY 2019

TABLE 2: CORPORATION TAX DATA BY TOTAL ASSETS FOR TY 2019

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 $ 26,676 $ 5,240 19.6% 

$1 under $500 8,235 1,669 20.0% 

$500 under $1,000 5,279 1,080 20.5% 

$1,000 under $5,000 18,004 3,629 20.2% 

$5,000 under $10,000 11,642 2,281 19.6% 

$10,000 under $25,000 15,884 3,122 19.7% 

$25,000 under $50,000 14,549 2,821 19.4% 

$50,000 under $100,000 16,588 3,166 19.1% 

$100,000 under $250,000 25,381 4,781 18.8% 

$250,000 under $500,000 25,573 4,652 18.2% 

$500,000 under $2,500,000 111,437 19,156 17.2% 

$2,500,000 or more 1,453,939 205,533 14.1% 

Total $ 1,733,187 $ 257,130 
DEPARTMENT OF THE TREASURY 197 

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SECTION C: MANAGEMENT AND PERFORMANCE 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 its 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.

 
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OFFICE OF

INSPECTOR GENERAL

DEPARTMENT OF THE TREASURY

WASHINGTON, D.C. 20220

TREASURY INSPECTOR GENERAL MANAGEMENT CHALLENGES

October 14, 2022 

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-23-002) 

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 (herein

“Treasury” or “the Department”). In this year’s memorandum, my office is reporting five challenges, one of 

which is new and reports on the challenges faced with implementing climate initiatives. As shown below, 

four 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, as well as its impacts

on related workforce and workstreams.

• COVID-19 Pandemic Relief (Repeat)

• Cyber Threats (Repeat)

• Anti-Money Laundering/ Terrorist Financing and Bank Secrecy Act Enforcement (Repeat)

• Information Technology Acquisition and Project Management (Repeat)

• Climate Initiatives Risk (New)

In addition to the above challenges, we are reporting a concern about regulating digital assets. 

We identified challenges and a concern 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 caused a 

global health emergency and economic crisis that Treasury continues to tackle. Furthermore, 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 draw on its existing resources to meet

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: Anna Canfield Roth

Acting Assistant Secretary for Management 
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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. In the early stages of the COVID-19 outbreak, Congress passed 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. 1 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.2 The Coronavirus Aid, Relief, and Economic Security Act (CARES Act)3 passed on March 27, 

2020 and 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 2021, Congress 

legislated additional relief in passing the Consolidated Appropriations Act, 20214 (CAA, 2021) on 

December 27, 2020, and the American Rescue Plan Act of 20215 (ARP) on March 11, 2021. These laws

provided another $900 billion and $1.9 trillion of economic stimulus, respectively. 

The Department of the Treasury (hereinafter Treasury or the Department) has been instrumental to the 

implementation of economic relief provisions of the CARES Act, CAA, 2021, and ARP. As a result,

Treasury’s responsibilities and workloads expanded enormously. Treasury is tasked with disbursing over 

$655 billion6 in aid to more than 35,000 recipients, including state, local, territorial, and tribal government 

entities, in a relatively short period of time and with limited staffing. The Department is challenged with (1) 

filling and transitioning key leadership positions for pandemic programs not fully established, (2) quickly 

establishing internal controls, guidance, and methodologies for monitoring, reporting, and oversight of 

funds disbursed, (3) data collection, quality, and reliability, and (4) lack of funding to sustain operations. In

addition, Treasury must carry the administrative and monitoring responsibilities in its new role resolving 

Single Audit findings and potentially serving as cognizant agency for a significant number of entities 7 under 

the Office of Management and Budget’s (OMB) Uniform Administrative Requirements, Cost Principles,

and Audit Requirements for Federal Awards. 8 

Because of Treasury’s expanded responsibilities and workloads, 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. The pandemic 

programs Treasury is responsible for and their challenges are discussed below.

1 Public Law 116-123 (March 6, 2020). 2 Public Law 116-127 (March 18, 2020). 3 Public Law 116-136 (March 27, 2020). 4 Public Law 116-260 (December 27, 2020). 5 Public Law 117-2 (March 11, 2021). 6 Amount excludes Economic Impact Payments distributed by the Internal Revenue Service and support to small businesses under the Paycheck 

Protection Program administered by the Small Business Administration. 7 Single Audit Act of 1984 (P.L 98-502; October 19, 1984), as amended by the Single Audit Act Amendments of 1996 (P.L 104-156; July 5, 1996). 8 https://www.ecfr.gov/current/title-2/part-200
DEPARTMENT OF THE TREASURY 201 

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Financial Assistance Programs - Air Carrier Worker Support and Other Transportation Services

Payroll Support Programs 

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 $63 billion of direct financial

assistance for passenger air carriers, cargo air carriers, and contractors. Using existing resources and

contractor support, Treasury quickly stood up the Payroll Support Program (PSP1) and made direct

payments of approximately $28.6 billion to 611 applicants as of April 7, 2022. 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 $16 billion and 

$15 billion, respectively. Using the mechanisms that established PSP1, Treasury implemented the Payroll 

Support Program Extension (PSP2) and the Payroll Support Program 3 (PSP3) to make corresponding 

payments. As of July 27, 2022, Treasury disbursed approximately $15.6 billion to 489 applicants under 

PSP2 and $14.6 billion to 484 applicants under PSP3.

My office will continue audits of PSP1 recipients’ certifications and initiate audits of certifications

submitted by PSP2 recipients in fiscal year 2023. My office is 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-award 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. Treasury disbursed approximately $1.97 billion to 1,464 recipients as of

May 20, 2022. It is incumbent upon the Department to establish and maintain strong internal controls over 

recipients’ compliance with grant agreements. 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 Programs - State, Local, U.S. Territorial, and Tribal 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 the entire $150 billion in 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. As you are aware, the CARES Act created a unique challenge in

distinguishing between the programmatic administrative responsibility for payments made from the CRF
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and the Treasury Office of Inspector General’s (OIG) independent oversight. Although Treasury is

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 has authority to recoup 

funds if it is determined that recipients fail to comply with uses of funds for COVID-19 related costs under 

Section 601 (d), “Uses of Funds,” of the Social Security Act, as amended.9 

The Department also has a fundamental role to clarify its policy10 over the uses of funds when interpretation

matters arise. As recipients are still in the process of reporting on and closing out their awards, we anticipate

that questions will continue to arise that will require interpretation. Providing as much clarity as possible 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 300 complaints regarding 

recipient, and in some instances sub-recipient, uses of CRF proceeds that require continued collaboration 

between the Department and my office.

Coronavirus State and Local Fiscal Recovery Funds 

The Coronavirus State and Local Fiscal Recovery Funds provisions of ARP provide state, local, U.S.

territorial, and tribal governments another $350 billion under the Coronavirus State Fiscal Recovery Fund 

and the Coronavirus Local Fiscal Recovery Fund (together referred to as SLFRF); $10 billion under the 

Coronavirus Capital Projects Fund (CPF); and $2 billion under the Local Assistance and Tribal Consistency

Fund (LATCF).

SLFRF

As of August 2022, Treasury has disbursed approximately $349.9 billion of the $350 billion SLFRF

through non-competitive direct assistance to over 35,000 direct recipients, including approximately 

26,000 Non-Entitlement Units (NEU) of Local Governments that received funding through a state or 

U.S. territory. Administering SLFRF poses 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 26,000 NEUs. States and U.S. territories were

required to establish a process for NEUs to provide pre-pandemic budget and other critical information

and documentation before distributing funds. In addition to the volume of NEUs for Treasury to

oversee, reconciliation between states’ and U.S. territories’ disbursements to NEUs and recipient

performance reporting may be challenging. That is, performance reporting for NEU funding is the

responsibility of the NEUs and not the states and U.S. territories where accountability for the 

disbursement of funds resides. Furthermore, due to increased pandemic funding many NEUs are now 

required to have a Single Audit or alternate compliance examination engagement over which Treasury

may have agency cognizance as detailed below related to challenges with Treasury’s ongoing 

compliance monitoring of SLFRF recipients and related administrative issues.

While Treasury has built a portal within Salesforce11 for recipient communication and reporting, there

are still challenges obtaining sufficient quality data from SLFRF recipients. Treasury allows for lengthy 

narrative responses as part of the data collection that may be more cumbersome to review and lack

critical data details. Confirming data quality and timely providing data to the public and oversight 

community has been challenging for Treasury. To effectively administer and monitor SLFRF recipients’

compliance, Treasury must have access to sufficient data that accurately reflects how recipients have 

9 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. 10 Coronavirus Relief Fund Guidance for State, Territorial, Local, and Tribal Governments Federal Register, Vol. 86, No. 10; January 15, 2021. 11 Salesforce is a cloud-based customer- relationship management software platform.
DEPARTMENT OF THE TREASURY 203 

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expended SLFRF awards. As Treasury continues to receive quarterly and annual reports on SLFRF

recipients’ uses of funds, it is critical that Treasury continues to refine mechanisms to ensure the data is

complete, accurate, reliable, and transparent in reflecting how recipients have expended SLFRF awards. 

Treasury management has expressed difficulty finding the staff needed to administer and monitor the

SLFRF program. The Office of Recovery Programs had a number of key leadership positions that were

either vacant or temporarily staffed throughout fiscal year 2022. As discussed in more detail under the 

accountability and transparency section below, Treasury faces future funding challenges to support the 

Office of Recovery operations, to include ongoing administration of the SLFRF program and recipient 

monitoring. 

CPF

As of September 2022, Treasury awarded $1.4 billion to 13 states12 from the $10 billion of CPF

available to address infrastructure challenges, such as reliable internet, that low to moderate income and 

rural communities have experienced during the COVID-19 pandemic. Although Treasury issued

recipient reporting guidance for states, U.S. territories, and Freely Associated States in August 2022, 

Treasury still needs to inform eligible tribal government recipients of their reporting obligations to

provide full accountability and transparency as to how CPF awards are used. To do this, Treasury needs 

to begin collecting sufficient and accurate CPF data. 

LATCF

Treasury has been delayed in standing up the LATCF program, which was appropriated $2 billion for 

fiscal years 2022 and 2023 to make COVID-19 assistance payments to eligible revenue sharing counties 

and Tribes. Treasury issued LATCF guidance, including general reporting requirements to eligible

recipients, and as of September 30, 2022, both tribal governments and revenue counties are able to apply 

for funds. Now, Treasury will need to prepare for the collection of sufficient and accurate LATCF data 

for monitoring recipients’ compliance with the program. 

With the overlap of recipients of CRF, SLFRF, CPF, and LATCF, we expect that there will be confusion 

between the uses of funds requirements, and reporting mechanisms that may be a challenge for recipients

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 have agency cognizance 

over many smaller local governments (particularly NEUs) and tribal governments now required to have a 

Single Audit for the first time. To minimize recipient burden, Treasury developed alternate reporting 

requirements for smaller SLFRF recipients, which would otherwise be subject to Single Audit. In the

Compliance Supplement for 2022, Treasury provides the option of an alternate compliance examination

engagement for SLFRF recipients meeting certain eligibility requirements. Treasury has been working with

OMB and the audit community to find a solution for receiving these reports as the Federal Audit 

Clearinghouse (FAC) was not designed to collect non-audit products. Treasury plans to collect these reports 

directly for fiscal year 2021 compliance examinations, and is continuing to work with the FAC to receive

these reports for fiscal year 2022, which is expected to begin as soon as October 2022. While the alternative

compliance examination engagement addresses the burden to these smaller government entities and 

auditors, Single Audit and alternative compliance examination procedures may be new to thousands of 

SLFRF recipients, so there will be much more guidance and oversight required of Treasury in its

cognizance role and related to the Compliance Supplement. Treasury must be prepared to use results of 

12 Treasury announced awards for Louisiana, New Hampshire, Virginia, West Virginia, Kansas, Maine, Maryland, Minnesota, Arkansas, Connecticut, 

Indiana, Nebraska, and North Dakota.
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Single Audits and alternate compliance examinations as part of its compliance monitoring of recipients and 

will need the appropriate level of staffing to address these issues on such a large scale. As discussed in more

detail under the accountability and transparency section below, Treasury is evaluating whether it will have 

cognizance over thousands of non-federal recipients of SLFRF and its impact as it faces budget shortfalls in

fiscal year 2023 to carry out its ongoing administration and monitoring of SLFRF recipients.

Emergency Rental Assistance and Homeowner Assistance Programs 

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 

$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.

ERA1

Treasury established ERA1 and as of September 30, 2022, disbursed $24.93 billion of the $25 billion

appropriated by CAA, 2021. The $24.93 billion was disbursed to states (including Washington, DC),

U.S. 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 to pay for rent, utilities, and other

housing-related expenses and arrears through September 30, 2022. In addition to disbursing the funds, 

Treasury provided guidance on ERA1 fund usage and set up a Portal where government 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.

ERA2

For ERA2, as of June 30, 2022, Treasury disbursed $21.51 billion of the $21.55 billion appropriated in

ARP. 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.

ERA2 funds are to remain available until September 30, 2027. Treasury has also provided ERA2

guidance 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. 

 

HAF

ARP also created HAF 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. As of August 2022, Treasury has disbursed more

than $9.5 billion of the $9.9 billion authorized to 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 and Treasury provided guidance on HAF. 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.
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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 disburse funds to households in

need without delay. 

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. 

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 comply 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 Programs13

Emergency Capital Investment Program

As authorized under CAA, 2021, Treasury has invested $8.26 billion in 161 Community Development 

Financial Institutions (CDFI) and Minority Deposit Institutions of the $9 million available under the

Emergency Capital Investment Program (ECIP), providing capital to low-to-moderate income community

financial institutions that support small businesses and consumers. Treasury has experienced challenges in

fully implementing ECIP. As reported in our audit of ECIP’s implementation, Treasury had not completed

key documentation, such as policies and procedures to include a post-investment compliance and 

monitoring plan to fully implement and administer investments. 14 With investments now underway, it is

more imperative that Treasury develop and implement policies and procedures to govern its post–

13 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. 14 OIG, Audit of Treasury’s Implementation of the Emergency Capital Investment Program (OIG-22-028; March 8, 2022)
206 DEPARTMENT OF THE TREASURY

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investment activities. Because of the demands for resources within the Office of Recovery Programs, 

Treasury may continue to experience further delays and challenges administering the ECIP.

CDFI Rapid Response Program 

Treasury has disbursed $1.19 billion of the $3 billion, authorized under the CAA, 2021, under the CDFI

Fund Rapid Response Program (CDFI RRP), to deliver immediate assistance to low-income communities

through competitive grants to CDFIs. However, as we reported in our audit of the CDFI RRP

implementation,15 the CDFI Fund did not include the award term and condition for integrity and performance

matters in its assistance agreement template. CDFI Fund stated this was rectified before the agreements

were signed. We will confirm that CDFI Fund included the required language in the executed assistance

agreements with CDFI RRP grant recipients as part of our ongoing mandated audits of the CDFI RRP. 

CDFI Equitable Recovery Program 

The CDFI Fund is delayed in awarding the remaining $1.75 billion of the $3 billion authorized under CAA,

2021 for the CDFI Fund Equitable Recovery Program (CDFI ERP). Awards granted under ERP are

intended for low- or moderate-income minority communities that have significant unmet capital or financial

services needs, and were disproportionately impacted by the COVID-19 pandemic. This program will be 

more challenging for the CDFI Fund to administer in fiscal year 2023 because of unique and complex

program materials for the application process and award administration needed to address program policy 

priorities in order to meet the statutory intent. In addition, CDFI Fund plans to implement designation of

minority lending institutions as defined under the CAA, 2021 separately from the award of ERP funds and 

will begin in fiscal year 2023. 

Accountability and Transparency

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. As noted above, Treasury is evaluating

whether it will have cognizance over thousands of non-federal recipients of SLFRF and be required to carry

out a larger administrative and monitoring role to ensure compliance under OMB’s Uniform Administrative

Requirements, Cost Principles, and Audit Requirements for Federal Awards.Among its responsibilities as a 

Federal awarding agency, Treasury must follow-up on audit findings to ensure that recipients take

appropriate and timely corrective action and issue management decision letters.16 Many recipients are

smaller governments, which for the first time are subject to Single Audit or the alternative compliance 

examination available to eligible recipients meeting eligibility requirements. Regardless of cognizance,

Treasury will have to work with recipients to resolve Single Audit and alternative compliance examination

findings specific to each of its pandemic relief programs. Given the anticipated budget short-falls as noted 

below, carrying out this level of oversight of thousands of recipients will be very challenging for Treasury.

15 OIG, Audit of the Community Development Financial Institutions Fund’s Implementation of the CDFI Rapid Response Program (OIG-22-023; December 21,

2021).

16 2 CFR § 200.521, “The management decision must clearly state whether or not the audit finding is sustained, the reasons for the decision, and the

expected auditee action to repay disallowed costs, make financial adjustments, or take other action. If the auditee has not completed corrective action, a 

timetable for follow-up should be given...” (https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-F/subject-groupECFR4424206eaecf751/section-200.521)
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In addition to my office’s ongoing work on pandemic programs, Treasury is subject to additional 

Congressional oversight bodies, the Special Inspector General for Pandemic Recovery17 (SIGPR), the

Government Accountability Office (GAO), and the Pandemic Response Accountability Committee (PRAC).

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. As noted above, data collection

and quality are still challenges for Treasury under the various pandemic programs. 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 economic fallout of COVID-19 pandemic continues, Treasury must persevere in navigating this

challenging time. While Treasury has leveraged its existing workforce, hired contractors, and obtained 

detailees from other Federal agencies to address the demands of the pandemic programs, it faces future 

funding challenges to carry out its expansive administrative and compliance monitoring role. Treasury

projected an administrative funding shortfall of $35 million to continue compliance activities over SLFRF

and ERA recipients in its Congressional Budget Justification and Annual Performance Plan and Report for 

FY 2023.18 Treasury requested “Administrative Funding Transfer Authority” to move appropriated

administrative funding amounts from one pandemic program to another to cover the anticipated shortfall.

Without this flexibility, Treasury estimated that funds to administer the SLFRF program will run out by 

mid-fiscal year 2023 and early fiscal 2024 for ERA, causing further shortages in resources. Treasury is proactively working to reduce spending across the board on SLFRF and other impacted programs, as well as in

central service areas to extend essential operations, but this may not be enough to carry out the large-scale

compliance monitoring responsibilities in the event Congress does not approve the “Administrative Funding 

Transfer Authority” timely. On September 23, 2022 Treasury notified recipients of funding constraints

impacting Treasury’s ability to provide ongoing administrative support and monitoring of funds distributed 

under SLFRF, CPF, ERA, HAF, and LATCF. Treasury advised that a number of functions will be halted or 

reduced, such as recipient monitoring and reporting, if its request for administrative funding flexibility is

not provided. Given the adverse impacts of Treasury’s planned measures, my office expressed concerns to

Congress, most notably to the reduction of recipient monitoring and reporting, in a letter dated October 3, 

2022. We stressed that Treasury’s funding constraints jeopardize accountability and transparency of more

than $400 billion distributed to thousands of recipients of SLFRF, CPF, ERA, HAF, and LATCF. In

addition, we highlighted the cascading effect of Treasury’s reduced recipient monitoring and reporting on 

oversight functions performed by my office and the PRAC as we depend on Treasury obtaining quality data 

from recipients on uses of pandemic funds. 

Going forward, Treasury may experience difficulties in balancing its ongoing pandemic oversight 

responsibilities and workloads while managing several ongoing challenges as described throughout this

memorandum. While I am hopeful that fiscal year 2023 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 SIGPR was authorized under the CARES Act to oversee loans, loan guarantees, and other investments provided by Treasury and must report to 

congress quarterly on the SIGPR’s activities and Treasury’s loan programs. SIGPR terminates five years after enactment of the CARES Act (March 27,

2025).

18 https://home.treasury.gov/system/files/266/07A.-COVID-FY-2023-CJ.pdf
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Challenge 2: Cyber Threats (Repeat)

Cybersecurity remains a long-standing and serious challenge facing the Nation as reported by GAO as a 

government-wide issue in its 2021 high- risk list published biennially.19 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. As cyber 

threats continue to evolve and become more sophisticated, subtle, and easier to perform, Treasury must 

fortify and safeguard its internal systems and operations while modernizing and maintaining them. Although 

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, the recent conflict in

the Ukraine, 20 the 2020 SolarWinds attack,21 or when serious flaws are discovered in software or systems,

such as Log4J22 and VMWare,23 that allow for remote administrative-level access.24

Threat actors 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 nation-states 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 information sharing, federal agencies are better prepared to thwart potential attacks to the

cyber infrastructure of the Federal government and the financial sector. 

The tools used to perpetrate cyber-attacks continue to become easier to use and more widespread, lowering

the technological knowledge and resources needed to launch successful attacks of increasing sophistication.

Such attacks include distributed denial of service, phishing, fraudulent wire payments, business email

compromise, malicious spam (malspam), ransomware, and compromise of supply chains (both hardware 

and software). While the federal workforce shifts from a primarily telework status to a hybrid work

environment, Treasury must remain cognizant of the increased risk profile a remote workforce, which

provides threat actors with a broader attack surface. Increased network traffic from remote sources provides 

cover for attackers to blend in with the federal workforce and launch cyber assaults. These opportunities 

may allow threat actors to launch a denial of service attack upon a network that can prevent remote workers 

from performing their duties and disrupt operations. 

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 2020 

SolarWinds attack that affected many federal agencies and private sector companies. Executive Order (EO)

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

19 GAO, High-Risk Series, Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas (GAO-21-119SP: March 2021). 20 A joint Cybersecurity Advisory was issued by the Cybersecurity and Infrastructure Security Agency to “warn organizations that Russia’s invasion of

Ukraine could expose organizations both within and beyond the region to increased malicious cyber activity. This activity may occur as a response to the

unprecedented economic costs imposed on Russia as well as materiel support provided by the United States and U.S. allies and partners.” (Alert (AA22-

110A) Russian State-Sponsored and Criminal Cyber Threats to Critical Infrastructure; April 20, 2022) 21 The SolarWinds attack, reported in December 2020, was a supply chain attack that used the update mechanism for legitimate software to distribute 

malicious software.

22 Log4j is software used by other software to enable logging of selected events upon a system. 23 VMWare, Inc. provides a variety of software tools to manage virtual or cloud environments. 24 Cybersecurity and Infrastructure Security Agency, Emergency Directive 22-02 Mitigate Apache Log4J Vulnerability (April 8, 2022), Emergency Directive 

22-03 Mitigate VMWare Vulnerabilities (May 18, 2022).
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owned or controlled by governments defined as hostile to the United States.25 On May 12, 2022, this EO was

extended again for 1 year.26 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 continue to monitor

developments in this area closely and plan for the possibility that its current supply chain may no longer be 

available. 

Furthermore, EO 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,27 among other things. To achieve the goals outlined in EO 14028, OMB

issued M-22-09, Moving the U.S. Government Toward Zero Trust Cybersecurity Principles28 to provide the 

strategy for achieving a zero-trust architecture, and requires agencies to meet specific cybersecurity

standards and objectives by the end of fiscal year 2024. OMB also issued M-22-18, Enhancing the Security

of the Software Supply Chain through Secure Software Development Practices29 to use only software that

complies with secure software development standards. 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. In response to our prior year memorandum, Treasury reported the 

Enterprise Cyber Risk Management program enhanced the risk assessment process to identify compliance

items separately from cybersecurity risk reporting, and continued to grow the Supply Chain Risk

Management program. 

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 third

parties’ 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. Issues related to

management of cloud systems were reported in four consecutive Federal Information Security

Modernization Act of 2014 30 audits (fiscal years 2015, 2016, 2017, and 2018), with one repeat

recommendation, related to third-party cloud service providers demonstrating FISMA compliance,

remaining unimplemented as of fiscal year 2022. 

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

25 EO 13873, Securing the Information and Communications Technology and Services Supply Chain 

(May 15, 2019). 26 Notice on the Continuation of the National Emergency with Respect to Securing the Information and Communications Technology and Services Supply 

Chain (May 12, 2022). 27 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. 28 OMB M-22-09, Moving the U.S. Government Toward Zero Trust Cybersecurity Principles (January 26, 2022), (https://www.whitehouse.gov/wpcontent/uploads/2022/01/M-22-09.pdf). 29 OMB M-22-18, Enhancing the Security of the Software Supply Chain through Secure Software Development Practices (September 14, 2022),

(https://www.whitehouse.gov/wp-content/uploads/2022/09/M-22-18.pdf). 30 Public Law 113-283 (December 18, 2014).
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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 and the conflict in Ukraine place on financial institutions and the financial

sector, 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.31 In 2018, GAO had reported that the 

extent of adoption of the NIST framework by critical infrastructure sectors was unknown since agencies

were not measuring framework implementation.32 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 May 10, 2022 letter33 regarding its top 

open recommendations, GAO acknowledged that Treasury had developed a cybersecurity profile for the 

sector that maps the NIST Cybersecurity Framework's (CSF) five core functions34 to existing regulations 

and guidance for financial services entities, but had not developed methods to determine the level and type 

of framework adoption; the recommendation remained open. 

The Department continues to report progress in managing risk as Treasury obtained an overall rating of 

“Managing Risk” across all NIST CSF categories (Identify, Protect, Detect, Respond and Recover) on the

OMB Cybersecurity Risk Management Assessment for the first time in fiscal year 2021. Treasury also

reported the creation of enhanced risk profiles to allow senior leadership greater visibility into the risks for 

all Departmental High Value Assets. 35 While addressing increases in cyber threats, Treasury will need to

continue to balance cybersecurity demands while maintaining and modernizing Information Technology 

(IT) systems. To this end, Treasury must ensure that cybersecurity is fully integrated into its IT investment

decisions as discussed in Challenge 4. 

31 NIST, Framework for Improving Critical Infrastructure Cybersecurity (Version 1.0, February 12, 2014; superseded by Version 1.1; April 16, 2018). 32 GAO, Critical Infrastructure Protection: Additional Actions Are Essential for Assessing Cybersecurity Framework Adoption (GAO-18-211; February 18,

2018)

33 GAO, Priority Open Recommendations: Department of the Treasury (GAO-22-105633; May 10, 2022) 34 The NIST Cybersecurity Framework functions include: Identify, Protect, Detect, Respond and Recover. 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 3: 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 these networks continue to be challenging as TFI’s 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, by using designations and economic sanctions. TFI has significantly increased sanctions against 

Russia related to its actions against Ukraine and other malign activities. 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 privacy and information sharing are challenges for the Financial Crimes Enforcement Network

(FinCEN), which has experienced unauthorized disclosures of Bank Secrecy Act (BSA) information.

FinCEN is required to maintain a highly secure database for financial institutions to report BSA

information. 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. The challenge for FinCEN is to ensure the BSA information remains secure in order to maintain

the confidence of the financial sector, while meeting the access needs of law enforcement, regulatory, and 

intelligence partners. FinCEN also faces an additional challenge, to develop and implement a new secure

database for small businesses to report their beneficial ownership information, as required by the Corporate 

Transparency Act.36 However, FinCEN does not expect to implement the database until January 2024. 

36 Public Law 116-283 (January 1, 2021).
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Challenge 4: 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 37

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 Chief Information Officers

(CIO) of federal agencies in IT decision making, including annual and multi-year planning, programming, 

budgeting, execution, reporting, management, governance, and oversight functions.38 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.39 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 Services Administration and OMB had fewer funds available

than anticipated to award to new projects for replacing aging IT systems.40 Furthermore, GAO

recommended that, in general, agencies needed to improve CIOs’ authorities, enhance transparency and 

improve risk management of IT investments, and consolidate federal data centers.41 

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 2021, Treasury received a B for its FITARA

implementation efforts, and dropped to a C in July 2022. Areas needing most improvement were enhanced

transparency and risk management (i.e. IT investment risk), improved cybersecurity, and agency CIO

authority enhancements. The latest scorecard features seven grading categories – down from eight

categories on the December 2021 scorecard due to the sunsetting of the data center optimization category. 
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As of March 16, 2022, Treasury reported that approximately $2.56 billion was spent on major IT

investments, which is expected to increase in fiscal year 2023. 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 2 that addresses cybersecurity concerns. Treasury’s bureaus 

reported 48 major IT investments. Treasury’s CIO assessed 46 IT investments as having moderately low or 

low risk to accomplishing their goals. Two IT investments, which reside at the Bureau of the Fiscal Service

(Fiscal Service), were assessed as having medium risk42 to accomplishing their goals:

• Post Payment Services, and

• Debt Collection Services (DCS).

Projects identified with medium overall risk in cost and scheduling require special attention from the 

highest level of agency management. During fiscal year 2022, some projects within DCS were behind 

schedule and over budget. Treasury also identified projects within DCS as having a high risk to

accomplishing their goals. In June 2022, Treasury reported that Fiscal Service has conducted internal “chat

stats” to address project schedule variances for both Post Payment Services and DCS. Treasury is also

meeting about one project within the Post Payment Services investment to prepare an updated plan and 

integrated master schedule to address prior schedule and cost variances. Overall, approximately 91 percent

of Treasury’s total IT projects were on schedule and approximately 78 percent were within budget. As of 

March 16, 2022, approximately 43 percent of Treasury’s total IT spending is on 48 major investments.

Another major investment of note, Treasury’s Wholesale Securities Services (WSS), includes the Financing 

Modernization project, a multi-year program to modernize the debt financing system to align with

Treasury's strategic priorities and long-term business requirements. This modernization will include 

development of a new system to support operations, meet customer expectations, become current with

existing technologies, manage technical debt, and improve the delivery of secure, flexible, and resilient

financing services. Fiscal Service expects to complete the project’s network connectivity design by the first

quarter of fiscal year 2023.

37 Public Law 104-106 (February 10, 1996). 38 Public Law 113-291 (December 19, 2014). 39 GAO, High- Risk Series, An Update (GAO-15-290; February 11, 2015). 40 GAO, High-Risk Series, Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas (GAO-21-119SP: March 2020). 41 GAO, High-Risk Series, Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas

(GAO-21-119SP: March 2021). 42 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.
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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 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. 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. Fiscal Service’s

financial community was trained on TBM and has eliminated all uncategorized IT spending, or spending 

that is not categorized into standard IT buckets but are continuing efforts on maturity of that data.

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 2016, 

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 was estimated to cost $1.25 billion. However, this cost estimate will be updated to better reflect

supply chain and industry labor limitations as well as further analysis of project cost. The Board of 

Governors of the Federal Reserve System (Board) requested a project management assessment be 

conducted by MITRE Corporation with specific reporting around costs, schedule, and change management.

43 This report had several recommendations, and BEP has worked with the Board to address them. BEP has 

resumed the design and engineering work for the new facility. In fiscal year 2022, BEP continued site

preparation for construction of the new building. Until the estimated completion of the facility in 2027, 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.

43 In 2016, BEP provided its Western Currency Facility expansion plans to the Board. According to Board officials, the Board’s role is to reimburse 

expenses related to the Western Currency Facility expansion, which did not require a formal approval request or cost justifications from BEP for

initiating the expansion.
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Challenge 5: Climate Initiatives Risk (New)

In January 2021, EO 14008, Tackling the Climate Crisis at Home and Abroad, identified the immediate

need for comprehensive action to address the catastrophic impacts of climate change. EO 14008 emphasizes

that U.S. leadership, and that of federal departments and agencies, will be required to significantly enhance 

global action and achieve the necessary policy outcomes on climate change. Furthermore, in May 2021, 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 (FSOC),

will lead several efforts related to EO 14030. Taken together, these two EOs place an emphasis on ensuring 

climate change is at the forefront of U.S. foreign policy and national security; establishing a governmentwide approach to the climate crisis; and bolstering the resiliency of our communities, States, Tribes,

territories, and financial institutions to position the United States to lead the global economy to a more

prosperous and sustainable future. Treasury will play a significant role working with other federal agencies,

foreign governments, and international financial institutions to stimulate global action on addressing climate

change, environmental justice, and climate change-created economic and financial crises. In 2021, Treasury

created a new Climate Hub and appointed a Climate Counselor to coordinate and lead many of its efforts to

address climate change. The Treasury Climate Hub will coordinate and enhance existing climate-related

activities by utilizing the tools, capabilities, and expertise from across the Department – including officials

from Domestic Finance, Economic Policy, International Affairs, and Tax Policy. With a view of all

Treasury climate initiatives, the Hub will enable Treasury to prioritize climate action. 

As stated in its July 2021 Climate Action Plan, Treasury anticipates that climate change will continue to be 

a significant global challenge and that aspects of its mission and operations will be impacted by global 

warming, sea level rise, increased intensity and frequency of major weather events, and impacts on energy 

availability. To manage the process of climate change adaptation and resilience within Treasury’s

operations and its facilities, the Department has developed a comprehensive management framework, in

accordance with the Interim Instructions for Preparing Draft Climate Action Plans under EO 14008. 

Treasury’s Departmental Offices and operating bureaus will continually assess changing conditions and 

scientific understanding of climate change to adjust policies, programs, and activities to improve resilience

and adaptation. Treasury’s Climate Action Plan establishes the following five priority actions to strengthen 

and build upon Treasury’s climate resilience and adaptive capabilities: (1) rebuilding programs and 

capabilities that may have atrophied or stagnated in recent years; (2) addressing climate change impacts and 

vulnerabilities across the range of Departmental operations, including administrative, manufacturing, and 

law enforcement activities; (3) ensuring a climate-focused approach to managing Treasury’s real property 

portfolio footprint; (4) enabling procurement management to fully consider climate change realities; and (5)

providing, measuring, and accounting for a financial investment approach appropriate to the Department’s

climate objectives.
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Treasury is also engaged in the Administration’s domestic efforts through its role as a leading banking 

regulator, with the Office of the Comptroller of the Currency (OCC), and its responsibilities within FSOC.

Internationally, Treasury represents the United States at the G7 and G20, at the Financial Stability Board, 

and other institutions and forums such as the International Monetary Fund. In October 2021, FSOC issued

its Report on Climate-Related Financial Risk, as mandated by EO 14030. In it, FSOC details the activities

of each member to date to address climate-related financial risk, including Treasury, the Office of Financial 

Research, the Federal Insurance Office, and OCC. The report highlights challenges in efforts to

comprehensively understand and address climate-related financial risk. Those challenges include the types 

and quality of available data and measurement tools, the ability to assess climate-related financial risks and 

vulnerabilities, and how best to incorporate these risks into management practices and supervisory 

expectations as appropriate. FSOC concluded the report with thirty-five recommendations. Many, if not 

most, apply to the Department, the Office of Financial Research, the Federal Insurance Office, and OCC. It

will be important that each recommendation be addressed not only timely, but collectively with the other 

FSOC members to ensure a cohesive response.

Furthermore, OCC has implemented multiple initiatives to address climate change and climate-related

financial risk. They have partnered with other Federal banking regulators to work collaboratively in

understanding the risks and development of climate-related risk management. OCC has also engaged with

international groups to share best practices. Internally, OCC established a Climate Risk Implementation

Committee chaired by a Climate Change Risk Officer to assess climate risks and advise management on 

OCC policy, banking supervision, and research. These collaborations will continue to be important in

developing a common understanding of climate-related financial risks and their impact to ensure the 

continued safety and soundness of the banking system. OCC also continues to work with FSOC and other 

member agencies to understand the broader implications of climate-related financial risks and their potential 

impact on financial stability. 
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Other Matter of Concern

Although we are not reporting digital assets as a management and performance challenge, we are

highlighting it as an area of concern. 

Use of digital assets, including cryptocurrencies, stablecoins, and in some countries, central bank digital 

currency (CBDC), has grown significantly over the past several years. As of September 15, 2022, digital 

assets reached a combined market capitalization of over $1 trillion, up from approximately $14 billion in

late 2016 but down from $3 trillion during November of 2021.44 

Treasury supports responsible innovation and seeks to maximize the gains from this new technology while

protecting against possible risks to consumers, financial stability, and illicit finance. In the absence of 

sufficient oversight and regulatory safeguards, the increase in use of digital assets could pose risks to

consumers, investors, and the broader financial system. 

In March 2022, President Biden convened experts from across the Administration to ensure a coordinated 

and comprehensive approach to digital assets policy and charged Treasury with a leadership role in this

work. EO 14067, Ensuring Responsible Development of Digital Assets, establishes the following policy 

objectives with respect to digital assets: (1) protect consumers, investors, and businesses in the United

States; (2) protect the United States and global financial stability and mitigate systemic risk; (3) mitigate the 

illicit finance and national security risks posed by misuse of digital assets; (4) reinforce United States

leadership in the global financial system and in technological and economic competitiveness, including 

through the responsible development of payment innovations and digital assets; (5) promote access to safe

and affordable financial services; and (6) support technological advances that promote responsible 

development and use of digital assets.

In September 2022, Treasury published a report on the future of the U.S. money and payments systems, in

which Treasury encourages continued work on innovations to promote a system that is more competitive,

efficient, and inclusive – and that also helps maintain and build on the United States’ global financial 

leadership.45 The report recommends advancing policy and technical work on a potential U.S. CBDC, so

that the United States is prepared if a CBDC is determined to be in the national interest. Treasury also

published a report on the implications of digital assets for consumers, investors and businesses, laid out a 

detailed Action Plan to prevent digital assets from being used for financial crimes, such as money 

laundering and terrorism financing, and sent a framework to the President for international engagement on 

digital asset issues. In October 2022, FSOC released a report on potential financial stability risks, and 

recommended steps to address gaps in the regulation of digital assets in the United States.46

Following the publication of these reports, Treasury has a number of responsibilities, including participating

in an interagency working group regarding a potential central bank digital currency and working with other

agencies to prepare resources for consumers. The Office of Domestic Finance, Office of Terrorism and 

Financial Intelligence, and Office of International Affairs will be primarily driving this work, in

coordination with other parts of Treasury and the interagency, as appropriate. 

44 Please click on the following link for current market capitalization information: Cryptocurrency Prices, Charts, and Crypto Market Cap | CoinGecko 45 Treasury Report, The Future of Money and Payments: Report Pursuant to Section 4(b) of Executive Order 14067 (September 2022). 46 Financial Stability Oversight Council. Report on Digital Asset Financial Stability Risks and Oversight (October 2022).
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TREASURY MANAGEMENT RESPONSE TO THE OFFICE OF 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. The Department has been instrumental in implementing the 

economic relief provisions of the Coronavirus Aid, Relief and Economic Safety (CARES) Act, the Consolidated Appropriations 

Act (CAA), 2021, and the American Rescue Plan Act (ARP). As a result, Treasury’s responsibilities and workloads expanded 

enormously. Because of this, the Department faced challenges in (1) filling and transitioning key leadership positions for 

pandemic programs, (2) establishing internal controls, guidance, and methodologies for monitoring, reporting, and 

overseeing funds disbursed, (3) data collection, quality, and reliability, and (4) lack of funding to sustain operations. In 

addition, Treasury must carry the administrative and monitoring responsibilities in its new role in resolving Single Audits, 

including potentially serving as cognizant agency for a significant number of entities1 under the Office of Management and 

Budget’s (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.1 

 

Management Response: As the nation continues to recover from the COVID-19 pandemic, we remain instrumental to

successful implementation of key CARES Act, CAA, and ARP programs that are designed to support communities,

households and small businesses. In response to the size, scope and complexity of these efforts, we created the Office of 

Recovery Programs (ORP). Since we established the office in April 2021, ORP built a strong foundation to serve more than

35,000 recipients across the nation, through 10 different programs that support economically disadvantaged small

businesses, households, communities, and individuals. ORP significantly increased capacity over the past year to fulfill its

mission to lead Treasury’s implementation of over $600 billion in economic recovery programs, including the American

Rescue Plan. ORP onboarded over 100 current employees and cumulatively over 175 staff (including detailees), across

policy, reporting, recipient monitoring, compliance, and other key functions.

In contrast to the ad hoc approach to program implementation that characterized the initial period of CARES Act

implementation, creating and building ORP allows Treasury to put in place processes that support responsible, effective 

service delivery, including:

• more robust communication and engagement with recipients, particularly smaller entities with less experience

working with the federal government;

• a focus on equity and access embedded into all programs, including through innovative approaches for outreach,

documentation, and data collection;

• the ability to monitor and adjust programs on an ongoing basis using data through the sharing of best practices and

other resources, including updated guidance in programs like the Emergency Rental Assistance Programs (ERA)

and State and Local Fiscal Recovery Fund (SLFRF); and

• a strategic data-centric approach to monitoring, compliance, and audit resolution and remediation that focuses on 

areas of greatest risk in a resource-constrained environment.

1 https://www.ecfr.gov/current/title-2/part-200
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Supported by the robust infrastructure that ORP developed, the CARES Act, CAA, and ARP programs made significant

impacts on leading the federal government’s approach to the economic recovery. Together, these programs helped build an

infrastructure that promotes economic resilience through equitable, effective, and accountable recovery assistance. For 

example:

• SLFRF is the first program of its kind to provide economic relief to states, localities, and tribes of all sizes. This

program provided flexible funding that allowed communities to put the funds where they were needed most for 

relief, including support for housing, water, broadband infrastructure, and small business. We have taken

unprecedented efforts to help deploy these funds to over 30,000 recipients.

• ERA provided over seven million payments to households at risk of eviction while helping to keep the average

number of eviction filings since the expiration of federal eviction moratoria below historic averages, contrary to the

eviction tsunami many predicted. At the same time, the program helped build a national infrastructure for eviction

prevention, including lasting initiatives that will continue to help prevent evictions even as funds are ultimately

exhausted.

• By September 2022, the Emergency Capital Investment Program (ECIP) deployed over $8.28 billion of investments

in 162 community development financial institutions and minority development institutions to support community

development. 

• The State Small Business Credit Initiative (SSBCI) approved a majority of state and territorial plans as it obligates

up to $10 billion for small business capital access. These plans support small businesses through a range of

programs that are intended to provide up to $10 of private capital for every $1 of SSBCI capital invested, including

through equity investments and small business loans.

• ORP developed a strong foundation for agency wide support for tribes through its Tribal Policy and Engagement

Team, providing the groundwork for a new department-level office called the Office of Tribal and Native Affairs. 

• Through the Coronavirus Economic Relief for Transportation Services Program, the Payroll Support Program, and

the Airline Loan Program, ORP deployed critical assistance to help companies maintain payrolls and the nation

maintain capacity for airline and critical transportation services while building robust reporting, compliance, and

recipient monitoring structures.

ORP made this significant progress in the last year, as programs established guidance, allocated funds, signed award

agreements, and issued the bulk of payments. In addition, ORP employed innovative approaches to making the most use of 

available resources and minimized administrative burden where appropriate while promoting program integrity. For 

example, in SLFRF, we created a multi-tier reporting structure to provide balance in our collection of high-quality data,

while being sensitive to administrative burden especially among lower-capacity recipients. Furthermore, in several

programs, such as ERA and the Homeowners Assistance Fund (HAF), we prioritized building dedicated outreach teams that

are tasked with working with grantees to share promising practices and answer grantee questions; including by explaining

guidance through website updates, emails, webinars, and calls. With limited resources in these programs, these same teams

continue to provide support for ongoing program administration.
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However, significant work remains to complete successful implementation with monitoring and oversight until awards are

fully closed out. This includes building and maintaining additional capacity to conduct audit resolution for new recipients

receiving Single Audits for the first time. Proper oversight is critical for us to maintain accountability over funds and spot

emerging risks, as well as for recipients wanting to avoid reputational risk from findings and who seek the prompt resolution

of findings. This work will extend at least a year after each program ends. In addition, we continue to provide information

to grantees to maximize clarity and administrability in programs that are disbursing funds. 

Further, we are facing constraints that will put our ability to continue this level of support to recipients at risk. The greatest

impact is likely to be felt by the smallest jurisdictions and Tribal governments, which often rely on more in-depth

engagement with Treasury. Congress appropriated funding to Treasury to administer recovery programs, and some

programs were given more than enough funding to cover their operations. But in the case of several other programs, the

available funding is insufficient to allow us to maintain current levels of administrative support. These programs with

insufficient funding include the SLFRF, the Coronavirus Capital Projects Fund, the ERA, the HAF, and the Local Assistance

and Tribal Consistency Fund programs. 

We continue to work with Congress to seek flexibilities in the use of administrative funds across programs, which would

preserve our ability to provide support without impacting operations. These changes would not require Congress to

appropriate any additional funds , but instead would permit us to repurpose some funds from other pandemic programs that

are in later stages of implementation to ARP programs with significant outstanding needs. However, pending those changes,

these funding shortfalls will have a significant impact on our ability to provide support to recipients of its programs. In

October 2022, for example, we closed our call center support, and we are in the process of other changes, including reducing

our reporting and recipient monitoring footprint while slowing our responses to incoming questions from jurisdictions,

among other impacts. Beyond these preliminary steps, without the necessary funding flexibility, we will have to undertake

more significant steps to reduce staffing and service in the weeks ahead.

In addition, as part of the CAA, the Community Development Financial Institutions Fund (CDFI) received supplemental

appropriations for the Rapid Response Program (RRP) and the Economic Recovery Program (ERP). The RRP had a FY 2021

statutory deadline of September 30, 2021 to obligate funding, and therefore received priority in terms of existing staffing,

time, and attention. By contrast, the ERP funding retains no statutory deadline for obligating funds and the funds do not 

expire. However, for the ERP program, new staff needed to be hired—the hiring process began in February 2021 and was

not completed until October 2021—and applications could not be completed until we made final decisions about key program

design elements. The CDFI Fund released the ERP Notice of Funding Availability on June 23, 2022. The applications are

under review and we will make awards in early 2023.

Separately, although no federal funding will be associated with a Minority Lending Institution (MLI) designation at this

time, the CDFI Fund seeks to implement the designation for those CDFIs that wish to be recognized for their high levels of 

service and accountability to minority populations, as well as to identify any unique barriers CDFIs experience in providing

access to capital.

On July 28, 2022, the CDFI Fund published a Request for Public Comment related to this MLI designation. Through this

RFC, the CDFI Fund seeks feedback from the public on certain aspects of the criteria and process the CDFI Fund will use to

designate a CDFI as an MLI. The CDFI Fund also seeks any additional information beyond these questions that members of 

the public believe would assist the CDFI Fund in establishing policies and procedures related to MLI designation. The CDFI

Fund will consider the feedback received through this RFC prior to establishing a final definition and MLI designation.
DEPARTMENT OF THE TREASURY 221 

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OIG Challenge 2 Cyber Threats: Cybersecurity remains a long-standing and serious challenge facing the nation as reported 

by GAO as a government-wide issue in its 2021 high- risk list published biennially.2 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. In addition, 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 cyber threats continue to evolve and become more sophisticated, subtle, and easier to perform, 

Treasury must fortify and safeguard its internal systems and operations while modernizing and maintaining them. Given 

the stress that the global COVID-19 pandemic and the conflict in Ukraine place on financial institutions and the financial 

sector, it is important that the Department monitors cyber risks in these areas as well. Treasury must also be ready to 

reinforce and redirect cybersecurity efforts when unforeseen events occur.

Management Response: While cybersecurity remains a long-standing and serious challenge, we continue, as part of our 

broader cybersecurity strategy, to transition duplicative, decentralized, cybersecurity services to shared enterprise

capabilities. This drives not only operational efficiencies but also enables our stakeholders to obtain robust services with

defined outcomes at competitive costs, all while helping develop a common operating environment to increase agility to

respond to high-velocity threats. Additionally, the Office of Terrorism and Financial Intelligence (TFI) monitors the

cybersecurity infrastructure of the high-side classified network for any hostile intrusion attempts or potential data breaches. 

Under TFI, the Office of Intelligence and Analysis (OIA) fulfills these responsibilities in its Cyber Security and Support and

Technology Divisions. 

In response to the data breach of the federal government using SolarWinds software in 20203, Treasury implemented

numerous changes to improve its ability to identify and detect, protect from, respond to, and recover from significant

cybersecurity threats or incidents. These broadly include:

• increasing the stringency of protections around our electronic mail systems, which were a deliberate target of the

threat actors behind the 2020 incident;

• expanding enterprise security operations capabilities to increase the level of observability of potentially malicious

activity in Treasury operating environments;

• leveraging outside equities (both government and commercial) to routinely perform independent assessments

(penetration testing, threat hunting) of our cybersecurity posture, with a focus on confirming/denying the existence

of ongoing intrusion activity; and

• focusing network defense efforts on High Value Assets, which are information systems that directly support our 

mission essential functions and often contain our most sensitive information.

In addition, we have made strategic investments in evolving our cybersecurity infrastructure to mitigate risks associated

with the modern threat landscape, transitioning to a “zero trust” approach that conjoins devices with multi-factor 

authentication, supported by strong encryption, to form the basis for systems access and authorization. These investments

are directly aligned to Executive Order (EO) 14028, Improving the Nations Cybersecurity.

4

2 GAO, High-Risk Series, Dedicated Leadership Needed to Address Limited Progress in Most High-Risk Areas 

(GAO-21-119SP: March 2021). 3 https://www.cisa.gov/uscert/ncas/current-activity/2020/12/13/active-exploitation-solarwinds-software 4 https://www.whitehouse.gov/briefing-room/presidential-actions/2021/05/12/executive-order-on-improving-the-nations-cybersecurity/
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The Office of Cybersecurity and Critical Infrastructure Protection (OCCIP) continues to advocate that the financial services

sector adopt the National Institute of Standards and Technology (NIST) Cybersecurity Framework and the included

Financial Sector Profile. We continue to work with private sector and regulatory partners to identify how adoption of the

framework could be quantifiably measured. OCCIP hosted a widely attended virtual outreach session for small- to mid-sized

financial firms that enabled NIST to receive sector input regarding the upcoming revisions to the Framework. OCCIP

continues to work with the sector to improve the Financial Sector Profile with actionable and specific best practices that

enhances the value to the sector, while increasing the likelihood that the financial sector adopt the profile.

Recognizing the impact of supply chain risks, the Bureau of the Fiscal Service implemented processes to maintain

inventories of software in use on systems and embedded into custom developed code. These processes allowed us to quickly

identify instances of impacted software during incidents such as the Log4j supply chain risk event in 2021 and support

ongoing updates to the Cybersecurity and Infrastructure Security Agency’s Known Exploitable Vulnerability catalog. This

quick identification of impacted assets during the Log4j event enabled the remediation of 23 custom-coded applications

within a two-week period, thus mitigating risks of the supply chain threat. 

The Fiscal Service also integrated threat intelligence and attack surface assessments into its ongoing continuous monitoring

processes. By understanding the vulnerabilities present in systems and tactics, and the techniques and procedures threat

actors who may target our systems use, we can use risk-based decision making and approach cybersecurity investments

strategically and tactically, improving both protection against attacks and optimizing processes for detection, response, and

recovery.

Lastly, the Fiscal Service has begun the Security Fusion Center (SFC) initiative, which is operationalizing a centralized,

intelligence-driven decision-making entity to correlate and enrich technical and non-technical threat information for 

actionable insights. The SFC enables us to proactively identify, contain, mitigate, and recover from security-related

incidents, and identify vulnerabilities and weaknesses upstream to apply countermeasures before exploits occur. This is

achieved by formalizing a centralized risk-identification approach that integrates Cyber Threat Intelligence, Attack Surface

Assessment, Advanced Threat Hunt, Vulnerability Management, and related mission support efforts such as asset

protection, infrastructure management, emergency, and security programs to provide a comprehensive, real-time, and

historical perspective on contextualized threats facing the Fiscal Service. This effort is building the foundation for 

managing, curating, and delivering enterprise-wide situational awareness to inform threat and risk-based mitigation

decisions, reducing the time to identify and respond to events and issues, and improving internal and external SFC

stakeholder collaboration, communication, and operational efficiency. 

OIG Challenge 3-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 criminals 

and other bad actors evolve and continue to develop more sophisticated money laundering methods in an attempt to avoid 

detection, identifying, disrupting, and dismantling these 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. In addition, the Financial Crimes and Enforcement Network (FinCEN) faces the 

challenge of ensuring the Bank Secrecy Act (BSA) information remains secure to maintain the confidence of the financial 

sector, while meeting the access needs of law enforcement, regulatory, and intelligence partners, and to develop and 

implement a new secure database for small businesses to report their beneficial ownership information, as required by the 

Corporate Transparency Act.
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Management Response: TFI continues to lead Treasury’s efforts formulating and coordinating policies for anti-money

laundering and combatting the financing of terrorism (AML/CFT) in addition to developing strategies to deploy the full range

of financial authorities to combat national security threats. To achieve this end, TFI employs a highly collaborative

approach among its components to ensure we establish and implement AML/CFT programs that meet the Administration’s

goals. 

FinCEN continues to prioritize efforts to maintain our unclassified systems at the stringent Federal Information System

Modernization Act (FISMA) high levels of security, and take all steps required to conform with our security standards and

programs. While FinCEN had unauthorized disclosures of sensitive data three years ago, which it pursued aggressively, it

has since had no known system breaches that compromised BSA data. 

In FY 2022, FinCEN published the Beneficial Ownership Reporting Notice of Proposed Rulemaking (NPRM), and then spent

several months reviewing the extensive comments we received. These comments informed the final Beneficial Ownership

Reporting Rule, which was published in the Federal Register on September 30, 2022. Following the Reporting Rule, FinCEN

is on track to publish the Access Rule NPRM—which seeks to govern access to Beneficial Ownership Information (BOI) by

law enforcement, national security agencies, and financial institutions—and issue a final rule in FY 2023. The third and

final necessary beneficial ownership regulation is a revised Customer Due Diligence regulation, which is on schedule per

timelines provided in the Corporate Transparency Act. The President’s FY 2023 budget for FinCEN requests an increase of 

$49 million and 45 full-time equivalent staff to further support FinCEN’s important efforts to implement the Anti-Money 

Laundering and Corporate Transparency Acts.

OIG Challenge 4-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 Information 

Technology (IT) management since the passage of the Clinger-Cohen Act of 1996, 

5 which was designed to improve the 

federal government’s acquisition and management of its resources to include IT investments. Among other things, it 

expanded of Chief Information Officers (CIO) of federal agencies involvement in IT decision making, including annual and 

multi-year planning, programming, budgeting, execution, reporting, management, governance, and oversight functions.6 

While FITARA is intended for agencies to better manage their IT investments, implementation continues to be a 

government-wide challenge. 

Management Response: As enshrined in the Federal Information Technology Acquisition Reform Act (FITARA), which

Congress passed in December 2014, and later memorialized in OMB Memorandum M-15-14: Management and Oversight of 

Federal Information Technology, the Treasury Chief Information Officer (CIO) is required to review and approve all our 

information technology acquisitions. Prior to FITARA, IT acquisitions largely rested with each departmental component. 

This has provided us the opportunity to evolve and further develop shared services, optimize technology spending through

centralized capabilities, eliminating duplicate common platforms, using service providers for commodity technology services,

and generally obtaining services at competitive price points. As we look to the future, particularly with the recent passage of 

the Inflation Reduction Act, which provides a windfall of funding to the IRS for modernization, using enterprise services will

become all the more important.

5 Public Law 104-106 (February 10, 1996). 6 Public Law 113-291 (December 19, 2014). 
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In addition to the progress we made in IT-related acquisitions and project management, the Bureau of Engraving and

Printing (BEP) has implemented formal project governance and a change management structure for replacing its

Washington, D.C. facility. The BEP effectively responded to the recommendations cited in the MITRE Corporation report on 

reporting on costs, schedule, and change management, to the satisfaction of the Federal Reserve Board (FRB) and has

resumed the design and engineering work for the new facility. In September 2022, the U.S. Army Corps of Engineers

(USACE), working in coordination with BEP, awarded a contract to finish 100 percent of the design, architect, and

engineering work for the DC Replacement Facility (DCRF). The BEP anticipates completing the design by the end of FY 

2023 and anticipates that USACE will award a contract for and commence construction of the DCRF during FY 2024. The 

current schedule anticipates the DCRF construction will be completed by calendar year 2027.

In FY 2022, the Fiscal Service also improved transparency of IT and non-IT program and project performance through

establishing and implementing a pilot of the Program Management Improvement Accountability Act (PMIAA) framework. 

The framework includes policy; standards; a formalized process designed to identify issues and risks and assist with the

formulation of actionable recommendations to improve program or project outcomes; and a Governance Enterprise

Marketplace tool, enabling full integration of enterprise planning, governance, enterprise architecture, and IT portfolio

financials to ensure appropriate investment lifecycle management and business value-outcomes. We produce an executive

dashboard monthly, as a single source of truth to report on the performance of the Fiscal Service’s projects, presenting trendover-time views of individual project performance on scope, cost, schedule, efficiency, and quality, along with calculated

project health scores and self-assessed stakeholder ratings. In support of our PMIAA program, the Fiscal Service is working

to improve program and project management (P/PM) workforce capabilities through targeted training and development 

based on PMIAA P/PM workforce competency assessment results.

Additionally, the Fiscal Services’ Financing Modernization (FinMod) project completed the Scaled Agile Framework (SAFe) 

training to prepare the team to deliver a modernized system using a new development methodology. The SAFe method

guides the agile development progress and communication events. FinMod has adopted SAFe to establish project guidelines

for defining the high-level product roadmap, defining targets for program increments, and conducting review sessions to

evaluate project efficiency and effectiveness. A key aspect of SAFe implementation was the creation of an architectural

runway that provided a smooth transition to the development phase of the project. The runway is an important part of our 

planning and will continue throughout agile development lifecycle.

The Fiscal Service continues to make significant progress implementing the Technology Business Management Framework 

(TBM), including improving both data maturity and automation. The Fiscal Service was the first Treasury bureau to

implement Apptio, the new Treasury enterprise TBM solution, in May 2022. This initial implementation resulted in access

to federal IT financials, labor, and acquisition reports. TBM is expected to improve IT spending data accountability and

transparency, empowering agency executive leadership to drive mission value and improve customer experience through

technology. Data maturity metrics are in place and improving. Going forward, the Fiscal Service will continue to mature

the use of TBM. 

OIG Challenge 5-Climate Initiatives Risk (NEW): In January 2021, EO 14008, Tackling the Climate Crisis at Home and 

Abroad, identified the immediate need for comprehensive action to address the catastrophic impacts of climate change. EO 

14008 emphasizes that U.S. leadership, and that of federal departments and agencies, will be required to significantly 

enhance global action and achieve the necessary policy outcomes on climate change. Treasury will play a significant role 

working with other federal agencies, foreign governments, and international financial institutions to stimulate global action 

on addressing climate change, environmental justice, and climate change-created economic and financial crises. In 2021, 

Treasury created a new Climate Hub and appointed a Climate Counselor to coordinate and lead many of its efforts to 

address climate change.
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Management Response: The Financial Stability Oversight Council (FSOC), of which the Secretary serves as its chair,

published its Report on Climate-Related Financial Risk in October 2021. Since the publication of that report, FSOC and its

member agencies have made considerable progress in advancing the report’s recommendations, including significant actions

to address capacity building, disclosure, data, and assessment and mitigation of risks. The FSOC also established a new 

staff-level interagency committee to serve as a coordinating body to share information, facilitate the development of common

approaches and standards, and foster communication across FSOC members. Additionally, our Office of Financial Research

conducted a data and analytics hub pilot to help FSOC assess climate-related risks to financial stability. Specific progress

across FSOC members can be reviewed in the FSOC’s July 2022 biannual update on climate-related financial risk efforts.

In line with EO 14030, Climate-Related Financial Risk, the Federal Insurance Office recently issued a request for public

comments on a proposed collection of data from property and casualty insurers regarding current and historical

underwriting data on homeowners’ insurance. More information on this request can be reviewed here.

In FY 2022, the Office of the Comptroller of the Currency (OCC) issued “Principles for Climate-Related Financial Risk

Management for Large Banks” for public feedback and completed the range of practice review of the large banks on their

management of climate-related financial risks. In addition, OCC started climate risk management reviews of banks with

over $100 billion in total consolidated assets to develop in depth understanding of these banks’ practices on a wide range of

areas related to climate risk management such as corporate governance, reporting, metrics, data, risk identification and

management, and scenario analysis. OCC is currently engaged in an interagency effort with the FRB and the Federal 

Deposit Insurance Corporation to provide guidance on climate-related financial risk management.

In line with EO 14008, Tackling the Climate Crisis at Home and Abroad, we have has helped to renew U.S. leadership on 

international climate finance and increased global climate ambition. In 2021, for example, we helped launch the first U.S.

International Climate Finance Plan; developed new policies to phase out international financing of unabated fossil fuels at

the multilateral development banks; helped launch a multilateral framework (Just Energy Transition Partnership, or JETP) 

with South Africa to accelerate its transition to a clean energy future; negotiated a landmark agreement ending support for 

coal-fired power generation export credits at the Organization for Economic Cooperation and Development (OECD); and cochaired the development of a Sustainable Finance Roadmap for the Group of 20 (G20). This year, we have continued to

support increased global ambition on climate change. For example, we continue to work extensively with those Multilateral

Development Banks in which the U.S. is a major shareholder to discuss how to scale climate finance and how to increase

work on adaptation and resilience; we are leading the development of a new JETP with Indonesia, we continue to co-chair

the G20 Sustainable Finance Working Group; and Treasury signed a $950 million dollar loan agreement for the Clean

Technology Fund (CTF), a multilateral trust fund which helps to scale up low carbon technologies in developing countries. 

In collaboration with National Oceanic and Atmospheric Administration, we are developing a climate literacy curriculum

that will provide basic education on the causes and effects of climate change, alongside strategies for building resilience

throughout the Department. Resilience-building will focus on the main priority action areas identified in the Climate Action

Plan, such as financial investment, real property weatherization, and procurement. Examples include incorporation of 

climate risk considerations in our retrofitting and new construction efforts. Additionally, purchasing renewable energy 

credits and energy-savings performance contracts will be critical in meeting the administration’s requirements to convert our 

operations to cleaner sources of electricity in the coming years and reduce reliance on the fossil-fuel energy market.
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A major project includes operational fortification through the planned investments to expand and support the IRS’s presence

in Puerto Rico. Due to its geographic location, the island is particularly vulnerable to disruption from hurricanes, which

cause widespread destruction and impose a disproportionate economic, environmental, and public health burden on the

American citizens living there. This investment is expected to not only mitigate the risk of damages from extreme weather 

events, but also to create jobs and allow for increased taxpayer access to bilingual services. An estimated 2,000 new federal 

positions will be created on the island, which has a median household income of less than $21,000 (or 32 percent of the U.S.

median household income). Thus, it is both an operational win and a crucial step forward toward equity.

Further examples of operational resilience-building include the BEP’s construction of a new, weather-resilient production

facility in Maryland, greatly reducing operational risks associated with the current older Washington D.C. facility. 

Additionally, the Main Treasury building is undergoing extensive repair and restoration work to weatherize and update its

exterior façade, preventing water intrusion. Expansion of telework capabilities will allow the workforce to continue essential

functions if the Main Treasury building is catastrophically impacted by a climate-related event such as major flooding or 

power disruptions.

Because our bureaus have diverse missions and operations, Departmental Offices issued broad guidelines rather than overly 

restrictive instructions for conducting climate risk assessments. However, to provide more quantitative strategic planning

support for adaptation and resilience of its facilities, we have considered the growing need for ready access to a central

repository of climate-related data (quantitative, machine-readable information) in multiple formats, as well as data analysts

and subject matter experts who can understand and use the data to propose and support operational decisions. Closing this

data and personnel gap will not only allow for more effective adaptation efforts of operations, but also help achieve goals set

for the other priority action areas in the CAP, particularly financial investment and policy.

Other Matter of Concern

Digital Assets (NEW)-Use of digital assets, including cryptocurrencies, stablecoins, and in some countries, central bank 

digital currency, has grown significantly over the past several years. The U.S. has an interest in responsible financial 

innovation and technological advances, but must protect its consumers, investors, and businesses. Additionally, it must 

protect the U.S. and global financial stability, mitigating systemic risk in the absence of sufficient oversight. 

Management Response: Treasury has been charged with a leadership role to ensure a coordinated and comprehensive

approach to digital assets policy. Treasury supports responsible innovation and seeks to maximize the gains from new 

technology while protecting against possible risks to consumers, financial stability, and illicit finance. These efforts will

include:

• The Office of Domestic Finance, along with the Office of General Counsel and Legislative Affairs, will identify

potential legislative changes necessary to mitigate consumer protection and financial stability risks of digital assets.

• As appropriate, the Office of Domestic Finance and other offices across Treasury will support our efforts to promote

greater coordination among U.S. regulatory agencies on issues related to digital assets. 

• In work following from the reports Treasury published in 2022 as charged by EO 14067, Ensuring Responsible

Development of Digital Assets, Treasury will:
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o Participate in an interagency working group to support the advancement of policy and technical work on a 

potential U.S. Central Bank Digital Currency (CBDC), so that the United States is prepared if a CBDC is

determined to be in the national interest. This work will be led by the Office of Domestic Finance. 

o Collaborate with other agencies to prepare resources for consumers and retail investors related to

participation in the digital asset market. This work will be led by the Office of Domestic Finance.

o Continue collaborating with international partners regarding digital asset opportunities and risks. This

work will be led by the Office of International Affairs.

o Continue to monitor illicit finance risks related to digital assets. This work will be led by the Office of

Terrorism and Financial Intelligence.

• OCC has established a process pursuant to OCC Interpretive Letter #11797 for banks intending to launch cryptoasset products and services to obtain a prior written supervisory non-objection.

• FinCEN will address select high-risk issues in the evolving digital asset domain through rulemakings and

interpretive guidance.

• OCC is working to improve interagency information sharing and coordination, including with the other federal 

banking agencies, the FSOC, market regulators and state supervisors along with continued internal capacity

building, which includes working groups, written internal guidance/exams, and procedures/training initiatives.

 

7 https://www.occ.gov/topics/charters-and-licensing/interpretations-and-actions/2021/int1179.pdf 
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TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION MANAGEMENT CHALLENGES

U.S. DEPARTMENT OF THE TREASURY

 WASHINGTON, D.C. 20024 

 

 TREASURY INSPECTOR GENERAL

 FOR TAX ADMINISTRATION

October 13, 2022

MEMORANDUM FOR SECRETARY YELLEN

FROM: J. Russell George 

Inspector General

SUBJECT: Management and Performance Challenges Facing the 

Internal Revenue Service for Fiscal Year 2023

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) 2023, the passage of

the Inflation Reduction Act of 20222 (IRA) will provide the IRS with approximately $79 billion in funding that

will remain available through the end of FY 2031. This funding supplements the IRS’s annual

appropriations. In addition, the IRA contains numerous tax provisions. It will be a significant challenge for

the IRS to administer these provisions and effectively use the additional funding to address the challenges

of improving taxpayer service, modernizing outdated technological infrastructure, and increasing equity in

the tax system through added enforcement actions. 

1 31 U.S.C. § 3516(d) (2006). 2 Pub. L. No. 117-169.
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As in years past, the IRS must balance its tax compliance activities against the rights of taxpayers to receive

fair and equitable treatment. Protecting taxpayer rights, such as the right to be informed, the right to 

quality service, the right to challenge the IRS’s position and be heard, and the right to privacy and

confidentiality, are interconnected with the management and performance challenges outlined in this

memorandum. In addition, as required by the IRS Restructuring and Reform Act of 1998,3 TIGTA performs

audits of certain taxpayer rights provisions and reports whether the IRS complied with those provisions. 

However, we are mindful of the IRS’s need to protect the rights of taxpayers in all of our oversight work.

For FY 2023, we have identified the IRS’s top management and performance challenges as:

• Improving Taxpayer Service;

• Protecting Taxpayer Data and IRS Resources;

• Modernizing IRS Operations;

• Administering Tax Law Changes;

• Increasing Domestic and International Tax Compliance and Enforcement; and

• Reducing Tax Fraud and Improper Payments.

Although not listed separately, human capital is also a significant concern and it affects the IRS’s ability to

address the above challenges. It remains a serious, underlying issue with 

wide-ranging implications for both the IRS and taxpayers. At a time when the IRS is taking on new

challenges, such as implementation of the IRA, 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. 

The following information detailing the management and performance challenges is provided to promote

the economy, efficiency, and effectiveness of the IRS’s administration of the Nation’s tax laws.

IMPROVING TAXPAYER SERVICE

As the IRS prepares for the 2023 Filing Season, it continues to struggle with eliminating the backlog of

unprocessed tax returns and other types of tax account work from prior filing seasons. The pandemic,

pandemic-related tax law changes, and significant staffing shortages hampered the IRS’s efforts to address

the backlog inventories, resulting in millions of tax returns not being timely processed, refunds not being

timely issued, the Federal Government paying interest on delayed refunds, and taxpayers not timely

receiving assistance with their tax account issues. As of August 12, 2022, the IRS had more than 14 million

individual and business paper returns waiting to be processed. 

3 Pub. L. No. 105-206, 112 Stat. 685 (codified as amended in scattered sections of Titles 2, 5, 16, 19, 22, 23, 26, 31, 38, and 49 U.S.C.).
230 DEPARTMENT OF THE TREASURY

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Figure 1: Status of Paper Returns Waiting to Be Processed as of August 12, 2022

Category

Returns

Individual Business Unspecified Total

Received in Calendar Year 2021 0 135,240 0 135,240

Received in Calendar Year 2022 7,560,022 6,531,163 259,754 14,350,939

Totals 7,560,022 6,666,403 259,754 14,486,179

Source: IRS Submission Processing Weekly Inventory Report, as of August 12, 2022.

The IRS Accounts Management function, which is responsible for assisting individual and business

taxpayers with tax law and tax account inquiries, including making adjustments to taxpayer accounts, is also

dealing with correspondence backlogs. The IRS requires taxpayers to use written correspondence as the 

primary method when responding to an IRS notice or letter; however, TIGTA reported that the IRS has not

taken any significant actions to address the continued lack of quality customer service it offers taxpayers

corresponding with the IRS.4

In addition to the processing delays, during the 2022 Filing Season, the IRS saw the number of calls

answered and Level of Service (i.e., how many of those who call are able to speak to a Customer Service

Representative) for its toll-free telephone lines decline, and wait times increase. Figure 2 shows a 

comparison for Calendar Years 2021 and 2022.

4 TIGTA, Report No. 2022-46-027, Program and Organizational Changes Are Needed to Address the Continued Inadequate Tax

Account Assistance Provided to Taxpayers (Mar. 2022).
DEPARTMENT OF THE TREASURY 231 

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Figure 2: Toll-Free Performance Statistics for Calendar Years 2021 and 2022

Performance Statistics

Calendar Year 

2021 2022

Assistor Calls Answered 15,400,000 7,783,000

Level of Service 16.4% 14.1%

Average Speed of Answer (Minutes) 20 30

Level of Access5 23.8% 28.0%

Source: IRS management information reports (as of August 14, 2021, for Calendar

Year 2021 and as of August 13, 2022, for Calendar Year 2022). 

Significant staffing shortages have hampered the IRS’s efforts to address the backlog inventories and

provide the level of customer service expected by taxpayers. Demand for IRS toll-free telephone assistance

has increased each year since November 2018, which directly correlates with the increase in tax law

changes in recent years, including the tax law changes related to the pandemic. However, TIGTA reported

that many Accounts Management employees split their time between working Accounts Management

cases and answering IRS toll-free telephone calls.6

 

To address the backlogs and staffing shortages, the IRS announced its Get Healthy Plan on March 10, 2022. 

The Get Healthy Plan is an effort to return the IRS to pre-pandemic inventory levels by the end of Calendar

Year 2022. As shown in Figure 1, as of August 12, 2022, the IRS had processed all of the individual paper

tax returns received in 2021. While this is a step in the right direction, the IRS still has a significant backlog

of returns received during the 2022 Filing Season that needs to be worked. Additionally, as the IRS

develops and deploys more automated tools for taxpayers, it will need to ensure that the tools are

operating as intended and improving the quality of its customer service.

In the IRS’s Strategic Plan FY 2022-2026,

7 providing quality and accessible services to enhance the taxpayer

experience is the IRS’s top strategic goal. The IRS notes in its plan that it will continue to be challenged to 

meet this goal due to insufficient funding, a shrinking workforce, hiring difficulties, and reliance on paper

processes. The passage of the IRA will provide the IRS with an additional $3.2 billion through FY 2031 to 

improve customer service, representing a 9 percent increase over current budget projections.

8

5 A TIGTA calculated telephone measure determined by taking the sum of all assistor and automated calls answered divided by the

total number of call attempts made while the various toll-free help lines are open. The hours each 

toll-free help line are open vary by line. 6 TIGTA, Report No. 2022-46-027, Program and Organizational Changes Are Needed to Address the Continued Inadequate Tax

Account Assistance Provided to Taxpayers (Mar. 2022). 7 Strategic Plan FY 2022-2026, IRS Pub. 3744 (Rev. 7-2022). 8 Congressional Research Service, IRS-Related Funding in the Inflation Reduction Act (Updated August 9, 2022).
232 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | OTHER INFORMATION

PROTECTING TAXPAYER DATA AND IRS RESOURCES 

The trillions of dollars that flow through the IRS each year make it an attractive target for criminals who

want to exploit the tax system for personal gain. The proliferation of stolen Personally Identifiable

Information poses a significant threat to tax administration by making it difficult for the IRS to distinguish

legitimate taxpayers from fraudsters. Tax-related scams, and the methods used to perpetrate them, are

continually changing and require constant monitoring by the IRS. The IRS’s ability to continuously monitor

and improve its approach to taxpayer authentication is a critical step in defending the agency against

evolving cyber threats and fraud schemes and in protecting trillions of taxpayer dollars. According to the 

Commissioner of Internal Revenue, the IRS was experiencing just over 1 million cyberattacks per day in

2017. Currently, the IRS sustains more than 1.5 billion attacks each year.9

Security controls provide a range of safeguards and countermeasures for organizations and information

systems to protect information during processing, while in storage, and during transmission. However,

TIGTA reported that the IRS’s mainframe computer platforms did not satisfy the minimum mainframe

security requirements in several key areas, which can have serious adverse effects on tax administration and

the protection of taxpayer data.10 The failure to timely remediate high-risk and medium-risk security

vulnerabilities could compromise the security posture of the mainframe platform and could lead to 

unauthorized accesses, increased vulnerability to attacks, and unauthorized data sharing, all of which

compromise the integrity, confidentiality, and availability of the platform. 

In addition, the failure to resolve or track existing computer vulnerabilities compromises the security

posture of an organization, potentially exposing taxpayer data and information to unnecessary risks. 

Vulnerability scanners are commonly used in organizations to identify known vulnerabilities on hosts and

networks and on commonly used operating systems and applications. Scanning tools can proactively

identify vulnerabilities, provide a fast and easy way to measure exposure, identify out-of-date software

versions, validate compliance with an organizational security policy, and generate alerts and reports about

identified vulnerabilities. In December 2021, TIGTA reported that the IRS does not effectively oversee

vulnerability remediation across the enterprise.11 For example, the IRS did not verify or monitor the 

remediation efforts for all vulnerabilities or consistently track and report vulnerability remediation metrics. 

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. For the 2022 Filing Season, the IRS initially required taxpayers to use a 

third-party service, ID.me, to help authenticate individuals creating online accounts by using facial

recognition to verify their identity. The IRS adopted the technology as a way to enhance the security of

taxpayer information. However, in response to privacy concerns related to taxpayers providing biometric

data to a private company, the IRS announced in February 2022 that taxpayers could sign up for IRS online

accounts with ID.me without the use of any biometric data. In addition, the IRS stated that it would shift

from ID.me to the General Services Administration's Login.gov identity authentication service after the 

current tax filing season. 

9 Testimony of Charles P. Rettig, Commissioner of Internal Revenue, On the Filing Season and the IRS Budget, House

Appropriations Committee, Subcommittee on Financial Services and General Government (May 18, 2022). 10 TIGTA, Report No. 2022-20-050, Mainframe Platform Configuration Compliance Controls Need Improvement (Sept. 2022). 11 TIGTA, Report No. 2022-20-006, Vulnerability Scanning and Remediation Processes Need Improvement (Dec. 2021).
DEPARTMENT OF THE TREASURY 233 

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IRS systems are often prime targets that are exploited both internally and externally in an effort to steal

taxpayer data. Individuals constantly attempt to corrupt or impede tax administration through the 

manipulation and the unauthorized access of IRS systems. The IRS continually works with application

developers and third-party contractors who assist in the taxpayer identity verification process known as the 

Secure Access Digital Identity initiative. This program is an effort to be compliant with new Federal

mandates and regulations governing the protection of Personally Identifiable Information. 

In addition to safeguarding taxpayer data, the IRS also faces the daunting task of protecting its employees

and facilities. Recent incidents involving taxpayers who threatened or assaulted IRS employees underscore

the dangers that these employees face. As reported by the IRS, threat-related reports have rapidly

increased. TIGTA attributes this to the increased presence of IRS personnel returning to the office, as well

as recent legislation that directly impacts the IRS. After passage of the IRA, threats directed at the IRS and

its employees increased. As a result, the Commissioner of Internal Revenue announced efforts to perform a 

comprehensive review of existing IRS safety and security measures. 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. 

Funding provided to the IRS by the IRA is expected to significantly increase IRS staffing levels over the 

course of the next 10 years. As a result, the IRS should anticipate the potential for increased employee

misconduct allegations. The IRA also includes funding for the IRS to study the cost and feasibility of

creating a free direct e-file program, which would expand the overall scope and control of the current IRS

Free File Program. The implementation of such a system will create additional avenues for malicious actors

looking to exploit the IRS network and its online portals.

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. The IRS uses different legacy case management systems that vary widely in

complexity, size, and customization to support tax administration. Modernization is necessary to deliver

efficient taxpayer services and enforcement with enhanced user experiences. Modernizing the IRS’s

computer systems has been a persistent challenge for many years and will likely remain a challenge for the 

foreseeable future.12

According to the Commissioner of Internal Revenue, delays in updating the IRS’s information technology

system have resulted in the IRS’s continued use of certain paper-based processes.13 These paper processes

can result in significant delays, contributing to IRS backlogs and limiting taxpayers’ ability to know the 

status of their cases. The Commissioner testified that this will continue to present challenges because the 

IRS has not sustained sufficient multi-year investment for information technology modernization. As part

of the IRA, the IRS will receive an additional $4.7 billion for modernization efforts through FY 2031,

representing a 153 percent increase over current budget projections. 

12 TIGTA, Report No. 2022-20-005, Annual Assessment of the IRS’s Information Technology Program for Fiscal Year 2021 (Dec.

2021).

13 Written testimony of Charles P. Rettig, Commissioner of Internal Revenue, On the Filing Season and IRS Operations, House

Oversight and Reform Committee, Subcommittee on Government Operations (April 21, 2022).
234 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | OTHER INFORMATION

One of the most complex modernization programs in the Federal Government is the IRS’s Customer

Account Data Engine 2 (CADE 2) Program, which involves major changes to core IRS tax processing

systems. One of the goals of CADE 2 is to reengineer core components of the Individual Master File. The

IRS currently has a project that is converting lines of legacy code to a modern software language. The code

conversion is a major milestone towards retiring the Individual Master File. TIGTA reported that the IRS has

taken steps to improve the process for estimating the development time required to convert the lines of

code and that the IRS’s methodology is consistent with industry best practices.14 However, due to 

completing an extensive analysis to account for the project’s complexity and capturing all required work,

the IRS determined in September 2019 that the development end date for the project should be moved 

from August 2021 to September 2022. In August 2020, the IRS extended the development end date again

from September 2022 to April 2023. 

TIGTA reported that more effective program management would help the IRS coordinate information

technology investments in a cost-effective and efficient manner. Specifically, the Next Generation

Infrastructure program is part of the IRS Integrated Modernization Business Plan that emphasizes

modernizing core tax administration systems, operations, and cybersecurity to improve the taxpayer

experience. The Plan is a road map for achieving necessary modernization of systems and taxpayer services

in two three-year phases that are comprised of a series of discrete projects and programs. Although TIGTA

determined the IRS implemented several capabilities of the Next Generation Infrastructure program in

Calendar Years 2019 and 2020, no clear or comprehensive program management structure was established. 

This decentralized approach makes it difficult to determine ultimate responsibility and accountability over

the Next Generation Infrastructure program.15

Successful modernization of systems and the development and implementation of new information

technology applications will continue to be a critical challenge for the IRS to meet its evolving business

needs and enhance services provided to taxpayers.

ADMINISTERING TAX LAW CHANGES

One of the continuing challenges the IRS faces each year in processing tax returns is the implementation of

new tax law changes as well as changes resulting from expired tax provisions. Legislative actions

generating the changes often occur late in the year, shortly before the filing season begins. The recently

passed IRA includes numerous tax provisions, including the creation of a corporate alternative minimum tax 

and tax incentives for companies and consumers who make cleaner energy choices. This will require the 

IRS to act quickly to assess the change and determine the necessary actions to ensure that all legislative

requirements are satisfied. These actions may require revisions to various tax forms, instructions, and

publications, as well as reprogramming computer systems to ensure that tax returns are accurately

processed based on the changes. Errors in the IRS’s tax return processing systems may delay tax refunds,

affect the accuracy of taxpayer accounts, or result in incorrect taxpayer notices. 

14 TIGTA, Report No. 2022-25-029, The Individual Tax Processing Engine Project’s Estimation Methodology Aligns with Best

Practices and the Project Addressed the Independent Verification and Validation Recommendations (Mar. 2022). 15 TIGTA, Report No. 2022-20-001, Some Next Generation Information Technology Infrastructure Capabilities Were Implemented,

but Program Management Improvements Are Needed (Nov. 2021).
DEPARTMENT OF THE TREASURY 235 

OTHER INFORMATION | FY 2022 AGENCY FINANCIAL REPORT

The primary legislation affecting the 2022 Filing Season was the American Rescue Plan Act of 2021

(ARPA),

16 signed into law on March 11, 2021, which included approximately $1.9 trillion in economic relief

and stimulus to address the continuing impact of the pandemic on the economy, public health, State and

local governments, individuals, and businesses. It also contained numerous tax-related provisions

intended to provide relief to individuals and businesses. The ARPA modified several credits, including the 

Child and Dependent Care Credit (CDCC) and Child Tax Credit (CTC), as well as creating a third Recovery

Rebate Credit. 

One key provision in the ARPA is the expanded CTC. Determining eligibility for and the amount of the CTC

is a complex process. As of March 2, 2022, the IRS processed more than 14.9 million tax returns claiming

$82.7 billion in CTCs, of which $33.7 billion was paid in advance. This required a significant undertaking on

the IRS’s part as it needed to develop processes and procedures to determine eligibility, compute advance

payment amounts, and develop an online portal and nonelectronic assistance options for taxpayers to 

provide the IRS with updates to key information used to compute the advance payment amounts. 

TIGTA reported that the IRS established controls to track advance CTC updates and detect potentially

fraudulent tax returns.17 Although the IRS also developed a process to identify discrepancies between the 

advance payments reported on the tax return and advance payments recorded on the taxpayer’s account,

the process did not account for undelivered checks. In these situations, taxpayers do not receive their

payments and need to work with the IRS, after filing their tax returns, to recover them. TIGTA

recommended that the IRS develop a process to continue to proactively identify and correct accounts with

undelivered advance CTCs that post to accounts after the IRS processes the Tax Year 2021 tax return.

In addition to legislative changes, the IRS must frequently issue additional guidance to taxpayers on

emerging trends that impact tax administration, such as cryptocurrencies and gig work. Expanding access

to information about new or expiring tax legislation is a critical step in improving voluntary compliance. In

the IRS’s Strategic Plan FY 2022-2026, the IRS noted that it needs to engage with more segments of the 

population, like those with limited English proficiency, that face unique challenges in accessing the

information, forms, or services they need. 

INCREASING DOMESTIC AND INTERNATIONAL TAX COMPLIANCE AND ENFORCEMENT

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 from those who do not pay their taxes to those who pay

their taxes on time every year. If the IRS can increase the rate of voluntary compliance, it can reduce the 

Tax Gap. The Tax Gap is defined as the difference between the estimated amount taxpayers owe and the 

amount they voluntarily and timely pay for a tax year.

However, the IRS has indicated that insufficient funding remains a constraint to address its operations.18 

Specifically, the Commissioner of Internal Revenue indicated the IRS’s budget has decreased by more than

15 percent in real dollars over the past decade. Because of this decrease, the IRS indicates its staffing is

close to 1974 levels. Over the next six years, the IRS estimates it will need to hire 52,000 employees just to 

16 Pub. L. No. 117-2, 135 Stat 4 (codified in scattered sections of Titles 7, 12, 15, 19, 20, 26, 29, 42, and 45 U.S.C.). 17 TIGTA, Report No. 2022-47-042, American Rescue Plan Act: Assessment of the Child Tax Credit Update Portal’s Capabilities and

Related Processes (July 2022). 18 Testimony of Charles P. Rettig, Commissioner of Internal Revenue, On the Filing Season and the IRS Budget, Senate Finance

Committee (April 7, 2022).
236 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | OTHER INFORMATION

maintain its current staffing levels.19 As part of the IRA, the IRS will receive an additional $45.7 billion for

enforcement activities through FY 2031, representing a 69 percent increase over current budget

projections. Although increased funding will assist the IRS in replacing employees lost through attrition, 

onboarding, training, and assimilating large numbers of employees will create its own challenges for the 

IRS. 

The IRS’s research shows that examinations have a strong positive impact on voluntary compliance.20 

Comparing FYs 2016 and 2020, there were 55 percent fewer correspondence examinations and 59 percent

fewer field examinations conducted in FY 2020.21 The decrease in staffing within the Examination functions

has contributed to the decline in examinations. Specifically, the number of Examination staff decreased

9.9 percent from 10,101 in FY 2017 to 9,116 in FY 2020. The trending decline in enforcement activity is

likely causing growth in the overall Tax Gap as taxpayers are less likely to be subject to an examination. 

While examinations have declined over the years, the Secretary of the Treasury has directed that any

additional resources not be used to increase the share of small business or households below the 

$400,000 threshold that are audited relative to historical levels. 

The IRS will continue to be challenged to enforce international tax compliance. U.S. taxpayers, regardless of

whether they live in the U.S. or abroad, are required to report and pay applicable taxes on worldwide

income to the IRS, including income from offshore accounts and other assets. While taxpayers can hold

offshore accounts for a number of legitimate reasons, some taxpayers have used such accounts to hide

income and evade taxes, and 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.22 Complexity and change in the international tax environment will

continue to challenge the IRS in enforcing compliance in this area. 

The Foreign Account Tax Compliance Act (FATCA) was intended to reduce tax evasion by creating greater

transparency and accountability with respect to offshore accounts and other assets held by U.S. taxpayers.23 

However, TIGTA reported that due to resource limitations, the IRS has significantly departed from its

original comprehensive FATCA Compliance Roadmap in favor of a more limited compliance effort.24 

Continued emphasis by the IRS will be necessary to address offshore tax noncompliance.

To ensure confidence in the tax system, American taxpayers expect that everyone pays their Federal tax

obligations. This includes entities receiving the benefits of contracts and grants from the Federal

Government. Starting with the Consolidated and Further Continuing Appropriations Act, 2015,25 Congress

now prohibits Federal agencies from using appropriated funds to award a contract or grant to a 

corporation that owes any amount of delinquent Federal tax, unless suspension or debarment is

considered. Congress provided the IRS $30 million to establish an application through which entities could

request from the IRS a certification that the entity did or did not owe seriously delinquent taxes. 

19 Testimony of Charles P. Rettig, Commissioner of Internal Revenue, On the Filing Season and the IRS Budget, House

Appropriations Committee, Subcommittee on Financial Services and General Government (May 18, 2022). 20 IRS, The Impact of the IRS on Voluntary Tax Compliance: Preliminary Empirical Results (Nov. 2002). 21 TIGTA, Report No. 2022-30-033, Trends in Compliance Activities Through Fiscal Year 2020 (May 2022). 22 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). 23 Pub. L. No. 111-147, Subtitle A, 124 Stat 97 (2010) (codified in scattered sections of 26 U.S.C.). 24 TIGTA, Report No. 2022-30-019, Additional Actions Are Needed to Address Non-Filing and Non-Reporting Compliance Under

the Foreign Account Tax Compliance Act (Apr. 2022). 25 Pub. L. No. 113-235, 128 Stat. 2130 (2014).
DEPARTMENT OF THE TREASURY 237 

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However, TIGTA reported that Federal agencies across the Government awarded contracts and grants to 

entities that owed millions in delinquent Federal taxes.26 Between October 2018 and December 2019, the 

Federal Government awarded 2.1 million Federal contracts and grants to more than 83,000 awardees. Of 

these, 3,040 contractors received almost $10.2 billion in Federal contracts while owing $621.8 million in

delinquent Federal taxes. Figure 3 depicts the amounts of contracts and grants the Federal Government

awarded to entities with delinquent taxes between October 2018 and December 2019.

Figure 3: Federal Contracts and Grants

Awarded to Entities With Delinquent Taxes

Source: TIGTA analysis of entity data from the System for Award Management, contracts data from

the Federal Procurement Data System, grants data from USAspending.gov, and tax data from the

IRS’s Transaction Category Reports.

Increasing voluntary taxpayer compliance and reducing the Tax Gap will remain a persistent challenge

facing the IRS. As such, the IRS will need to stay committed to a strong, visible, and robust tax enforcement

presence to support voluntary compliance and protect the integrity of the tax system.

26 TIGTA, Report No. 2022-10-066, Reliance on Self-Certifications Resulted in Federal Agencies Awarding Contracts and Grants to

Entities With Delinquent Federal Taxes; However, the IRS Is Making Progress on Establishing the Federal Contractor Tax Check

(Sept. 2022).
238 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | OTHER INFORMATION

REDUCING TAX FRAUD AND IMPROPER PAYMENTS

Identity theft tax refund fraud involves the use of another person’s name and Taxpayer Identification

Number27 to file a fraudulent tax return reporting false income and withholding in an effort to receive a 

fraudulent tax refund. The IRS continues to increase the number of fraudulent tax returns detected and

stopped from entering the tax processing system (i.e., rejecting e-filed tax returns and preventing paper tax

returns from posting).28 For the 2022 Filing Season, the IRS used 168 filters to identify potential identity

theft tax returns and prevent the issuance of fraudulent refunds. In comparison, the IRS used 155 filters for

the 2021 Filing Season. These filters incorporate criteria based on characteristics of confirmed identity theft

tax returns, including amounts claimed for income and withholding, filing requirements, prisoner status,

taxpayer age, and filing history. Tax returns identified by these filters are held during processing until the 

IRS can verify the taxpayer’s identity. 

Identity theft not only affects individuals, it can also affect businesses. The IRS defines business identity

theft as creating, using, or attempting to use a business’s information without authority to obtain tax

benefits. The IRS continues to improve and expand its detection capabilities to include additional types of

business tax returns. During Processing Year 2021, the IRS used 84 selection filters to identify business tax

returns claiming refunds for potential fraud. These filters identified and selected for review 62,096 business

returns as potentially fraudulent. 

However, TIGTA’s assessment of the IRS’s efforts to combat business identity theft and assist these types of

victims identified that efforts can be improved if the IRS adopts successful taxpayer detection and

assistance options, similar to what it provides to individual taxpayers. These include developing clustering

filters for business identity theft detection and expanding Identity Protection Personal Identification

Numbers to business taxpayers.29

In addition, TIGTA continues to find that IRS processes and procedures do not ensure that Individual

Taxpayer Identification Numbers (ITIN) are issued only to individuals who have a Federal income tax need.30 

An ITIN is a tax processing number issued by the IRS for certain resident and nonresident aliens, their

spouses, and their dependents who are not eligible to obtain a Social Security Number from the Social

Security Administration. Only individuals who have a valid filing requirement, who are filing a return to 

claim a refund, or who are claiming reduced withholding under an applicable income tax treaty are eligible

to receive an ITIN. TIGTA made several recommendations to improve administration of the ITIN program,

such as ensuring that the IRS receives complete data extracts for identifying ITIN applications with

duplicate entity information or supporting documents, regularly identifying and addressing retroactive

claims that were processed incorrectly, and updating programming to systemically identify and deactivate

all ITINs when required. 

27 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. 28 TIGTA, Report No. 2022-40-035, Interim Results of the 2022 Filing Season (May 2022). 29 TIGTA, Report No. 2022-40-041, Successful Detection and Assistance Processes Used to Combat Individual Identity Theft Should

Be Implemented for Business Identity Theft (July 2022). 30 TIGTA, Report No. 2022-40-013, Administration of the Individual Taxpayer Identification Number Program (Jan. 2022).
DEPARTMENT OF THE TREASURY 239 

OTHER INFORMATION | FY 2022 AGENCY FINANCIAL REPORT

The IRS continues to work diligently to combat various scams designed to steal taxpayers’ money or

personal information. Compiled annually, the IRS’s “Dirty Dozen” lists a variety of common scams that

taxpayers may encounter. In 2022, the IRS added pandemic–related scams to its list. These scams involve

the theft of a person’s money and identity with bogus e-mails, social media posts, and unexpected

telephone calls, among other things. The scams can take a variety of forms, including using

unemployment information and fake job offers to steal money and information from people. All of these

efforts can lead to sensitive personal information being stolen, with scammers using it to try filing a 

fraudulent tax return as well as harming victims in other ways. 

Improper payments (i.e., payments that should not have been made, were made in an incorrect amount, or

were made to an ineligible recipient) continue to be a challenge facing the IRS. TIGTA found that the IRS

inaccurately assessed the risk for the U.S. Coronavirus Economic Impact Payment program as not

susceptible to improper payments despite reports issued by TIGTA suggesting otherwise.31 

In addition, the IRS continues not to be in compliance with the goal of reducing the overall improper

payment rate for the Earned Income Tax Credit (EITC), the Additional Child Tax Credit (ACTC), and the 

American Opportunity Tax Credit (AOTC) to less than 10 percent. The IRS estimates it issued approximately

$26.1 billion in potentially improper EITC, ACTC, and AOTC payments in FY 2021. As shown below, this

represents a significant loss to the Federal Government: 

• EITC – The IRS estimates 28 percent ($19.0 billion) of the total EITC payments of $68.3 billion were

improper.

• ACTC – The IRS estimates 13 percent ($5.2 billion) of the total ACTC payments of $39.4 billion were

improper.

• AOTC – The IRS estimates 26 percent ($1.9 billion) of the total AOTC payments of $7.1 billion were

improper.

Further, the passage of the ARPA temporarily expands the CDCC. 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’s review of nearly 6.3 million Tax Year 2019 tax returns that received the CDCC identified a number of

weaknesses in the controls over the processing of CDCC claims.32 Although IRS management agreed to 

take actions to address some of these processing weaknesses, the IRS is not taking actions to address all

deficiencies identified by TIGTA. This includes not taking the steps needed to ensure that requirements to 

claim the CDCC are met at the time tax returns are processed. In addition, the IRS is not taking actions to 

update its filing instructions and publications to provide additional guidance to taxpayers or revising

programming and processes to identify potentially erroneous CDCC claims. As a result, the IRS may

potentially allow improper payments associated with erroneous CDCC claims.

31 TIGTA, Report No. 2022-40-037, Programs Susceptible to Improper Payments Are Not Adequately Assessed and Reported (May

2022).

32 TIGTA, Report No. 2022-47-023, American Rescue Plan Act: Assessment of Processes to Identify and Address Improper Child and

Dependent Care Credit Claims (Mar. 2022).
240 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | OTHER INFORMATION

CONCLUSION

This memorandum is provided as our annual summary of the most serious major management and

performance challenges confronting the IRS in FY 2023. TIGTA’s Fiscal Year 2023 Annual Audit Plan and

Fiscal Year 2023 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
DEPARTMENT OF THE TREASURY 241 

OTHER INFORMATION | FY 2022 AGENCY FINANCIAL REPORT

IRS MANAGEMENT RESPONSE TO TIGTA IDENTIFIED CHALLENGES 

The IRS appreciates TIGTA's management and performance challenges as valuable feedback to improving administrative

processes and accomplishing our mission. Currently, the IRS is moving quickly to begin implementing the Inflation

Reduction Act (IRA) signed into law in August 2022, which provides the resources needed to address many of the issues

addressed in TIGTA’s report. The IRA funding will help provide resources for tax enforcement, taxpayer service and

technology. The funding will also ensure that a steady flow of resources will be in place to protect the nation’s future

revenue needs. Many of the employee gains will occur in future years of the IRS plan, and we will continue to focus on 

retaining existing employees to share knowledge and help train new staff. The IRS created a new centralized IRA

Transformation & Implementation Office which will oversee the implementation of all IRS -related provisions in the IRA.

TIGTA Challenge 1: Improving Taxpayer Service

In FY 2022, the IRS took aggressive actions to address challenges related to pandemic recovery and new tax laws that led to

an unprecedented amount of unprocessed tax returns and correspondence that contributed to an extraordinarily high level of 

call volumes and related taxpayer inquiries. To improve the overall level of customer service and processing of tax returns, 

we implemented mandatory overtime, increased access to online self-service tools, and deployed surge teams, consisting of 

employees with relevant experience from other operations, to work on reducing inventory levels.

The IRS obtained direct hiring authority through OPM and the Consolidated Appropriations Act of 2022 to reach a broader

applicant pool and reduce the number of days to hire. We used these authorities to hire personnel, such as tax examiners,

clerks, customer service representatives and critical operations support positions.

The IRS also deployed technology to aid in processing returns and improving the toll-free experience, to include:

• deploying an automated tool to process many of the Error Resolution System cases;

• expanding voicebot options to help taxpayers with general payment and notice questions, to get answers quickly and

avoid waiting; and

• expanding customer callback, which saved taxpayers over 3.4 million hours of hold time in FY 2022.

The IRS will continue to pursue technology to improve paper processing and the toll-free experience, and will continue to

evaluate processes for improvement, including the appropriate resources and staffing allocation.

TIGTA Challenge 2: Protecting Taxpayer Data and IRS Resources

The IRS is committed to improving information technology configuration compliance controls and making significant

progress in FY 2023. The IRS will:

• continue to address additional improvements to mainframe platform configuration compliance controls in several

key areas, including logical partition configuration compliance controls, vulnerability age tracking and remediation,

and compliance with required checklists; and

• implement a monitoring process for all production z/Series Operating System (z/OS ) logical partitions and formalize

the checklist adjudication process for z/OS to align with the current process for Tier II devices.

In FY 2022, the IRS took the following critical steps to improve the overall effectiveness of vulnerability remediation:
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• We established a forum for sharing across the agency to ensure rightful ownership of the remediation responsibility

to address security risk management issues within required timeframes. Identified owners will continue performing 

weekly scans for vulnerabilities and prioritizing the remediation of those identified vulnerabilities based on a risk

model formula. For vulnerabilities exceeding remediation time frames, the IRS will remedy the vulnerabilities

and/or create a Plan of Action and Milestones or Risk-Based Decisions to establish prioritization for the remediation

of vulnerabilities.

• We implemented a process to ensure we properly communicate network updates related to vulnerability scanning.

• We deployed enterprise vulnerability scanning tool agents to ensure that we complete privileged access scans on 

required devices to determine the full extent of vulnerabilities affecting the installed operating systems and

applications.

• We revised current guidance on conducting periodic reviews of the scanning exception list to ensure we properly

document vulnerability scanning exceptions and add devices lacking the required documentation to the

vulnerability scanning footprint.

TIGTA Challenge 3: Administering Tax Law Changes

The IRS implemented controls to track advance Child Tax Credit (CTC) updates and detect potentially fraudulent tax

returns. A TIGTA review shows an accuracy rate of 98 percent on these payments. To address undelivered checks, the IRS

updated programming to generate a new internal account transcript when a taxpayer returns an advance CTC payment (or 

Economic Impact Payment) after the tax return is posted. This allows the IRS to proactively adjust the account without the

taxpayer having to contact the IRS. We updated our website to ensure accuracies in information on the CTC and Credit for 

Other Dependents.

The IRS is committed to improve the tax system and to serve taxpayers, ensuring they have a positive experience when 

interacting with the IRS. In FY 2022, the IRS released Form 1040 in Spanish, completed the conversion of 34 Spanish notice

inserts to Braille, text, audio and large print, and converted Form 1040 and its main schedules, Form 1040 NR , Form 1040

SR , Form W-4 and six IRS publications into Spanish Braille, text and large print. The IRS also developed a new Schedule

LEP (Limited English Proficiency) for taxpayers to indicate their preferred contact language other than English.

TIGTA Challenge 4: Modernizing IRS Operations

The nation’s tax system has changed significantly since the IRS was established more than 150 years ago, and over time, the

agency harnessed the opportunity to leverage technology and provide services the public needs to fulfill their tax obligations. 

The IRS continues to implement modernization efforts to improve the taxpayer experience by modernizing core tax

administration systems, IRS operations, and cybersecurity. In FY 2022, the IRS published the IT Strategic Plan FY 2022-

2026, which is structured to address key factors, such as meeting the public’s expectations, simplifying the existing IRS

technology base, adopting emerging technology trends, staying ahead of cybersecurity threats, continually driving the

adoption of new ways of working, complying with federal mandates and guidelines, and supporting the workforce with

advanced technology training to enhance their skills. Technology innovation and the multi-year funding required to

modernize the legacy systems and technology at the IRS will be critical to improving the taxpayer experience and protecting

the integrity of our nation’s tax system.
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The IRS is building the foundation to become a digital-first agency with the ability to unlock the power of data, adapt to

evolving taxpayer expectations, and create innovative tools to match the pace of change throughout the technology 

landscape. The IRS will transform with automated digital workflows, real-time access to impactful data, and intelligently

automated submission reviews, all of which take the foundational modernization steps to support this future vision. The IRS

will also continue to make progress toward quickly implementing tax law changes and responses to legislation and

mandates, which requires an increasingly agile organization.

TIGTA Challenge 5: Increasing Domestic and International Tax Compliance and Enforcement

The IRS develops and implements international compliance workstreams for the many groups of taxpayers, including U.S.

citizens living or working abroad or in a U.S. Territory, U.S. citizens or resident aliens who hold income producing assets in

a foreign country or claim the foreign earned income exclusion or foreign tax credit, and permanent residents and nonresident aliens who have a U.S. filing requirement. In addition, the Foreign Payments Practice and Automatic Exchange of 

Information operation interacts with and monitors a variety of entities and individuals who have reporting and payment

requirements under Chapter 3 (Withholding of Tax on Nonresident Aliens and Foreign Corporations) and Chapter 4 (Taxes 

to Enforce Reporting on Certain Foreign Accounts) of the Internal Revenue Code and collaborates with treaty partners in

automatically exchanging data used for tax compliance purposes. Some of the workstreams include Virtual Currency,

Offshore Service Providers, Section 965 for Individuals, Voluntary Disclosures, Offshore Private Banking, Form 1042

Compliance, and Foreign Account Tax Compliance Act (FATCA) Filing Accuracy campaigns. Since the start of the campaign

compliance program, IRS has initiated over 70 compliance campaigns.

Processing information under the FATCA and identifying individual offshore and foreign financial entity noncompliance

remain a resource intensive undertaking. FATCA is an information reporting regime designed to encourage reporting of 

foreign bank and brokerage accounts of U.S. persons and closely held entities. As such, FATCA is a data source that is

woven into the IRS ’s enforcement framework throughout the organization. The IRS will continue to increase analytics

around comparing submissions it receives on Form 8938, Statement of Specified Foreign Financial Assets, that U.S. persons 

file, and Form 8966, FATCA Report, that foreign financial institutions file to identify both substantial discrepancies in

individual reporting and individuals potentially failing to report their foreign financial accounts or not providing appropriate

customer information to their foreign financial institution.

The IRS implemented a multi-pronged compliance approach around this analysis, which includes the issuance of soft letters,

education letters, civil and criminal examinations, penalty consideration when appropriate, termination of the Global

Intermediary Identification Numbers for foreign financial institutions, and a Horizontal Scan Project geared towards 

emerging tax risks and trends in FATCA compliance.

The IRS is ensuring its compliance workforce is well prepared to examine complex tax returns, especially those with offshore 

compliance and transfer pricing issues, through a continued emphasis on training and knowledge sharing. The IRS has

faced challenges in hiring revenue agents who specialize in cross border tax issues. Because of this and the relatively few 

numbers of specialists in this and other international areas, the IRS ’s hiring challenges have impacted the ability to enforce

international tax compliance. In providing directives to the IRS on the implementation of the IRA, Secretary Yellen

emphasizes the priority to hire and invest in training employees for identifying the most complex tax evasion schemes.
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The IRS continues to prioritize development of its cross-functional Federal Contractor Tax Check System (FCTCS). Its

FCTCS working group is coordinating with Treasury and the OMB to resolve legislative and regulatory requirements

necessary to obtain approval for further development, deployment and use. The FCTCS technology solution is on track for a 

foundational release in November 2022, which will automate the rules that perform a tax check at the request of 

authenticated business taxpayers and has the capability of identifying whether a business has a seriously delinquent tax

debt pursuant to legislative mandate of the Consolidated Appropriations Act. The IRS technology solution satisfies the

requirements of the Act and Congressional intent and can be implemented without further legislative changes or any

dependence on updates to the System for Award Management by the General Services Administration.

TIGTA Challenge 6: Reducing Tax Fraud and Improper Payments

Reducing improper payments continues to be a top priority for the IRS. The IRS improper payment strategy is to intervene

early to ensure compliance with the law. In FY 2022, the IRS addressed improper payments through its compliance

programs as well as expansive outreach and education efforts to taxpayers and preparers. Programs that contribute to the

IRS ’s strategy of identifying and reducing improper refund claims associated with various refundable tax credits include

examinations, math error notices, document matching, utilizing two- and ten-year bans, identity theft and fraud, criminal

investigations, and soft notices.

To reduce improper payments and protect taxpayers from tax-related identity theft, the IRS included Form 8849, Claim for 

Refund of Excise Taxes, in the 2021 Business Identity Theft Risk Assessment. The IRS is currently conducting an analysis

to determine the feasibility of assigning Identity Protection Personal Identification Numbers (IP PINs) to business taxpayers

since it presents numerous challenges that are not associated with the assignment of IP PINs to individual taxpayers.

The IRS will also evaluate various common tax return characteristics to determine if clustering filters should be developed 

for business tax returns and will explore opportunities to reduce improper payments while promoting the availability of 

refundable credits to eligible taxpayers.

The IRS continues to improve processes associated with erroneous Child and Dependent Care Credit (CDCC) claims. For 

Processing Year 2022, the IRS developed a compliance filter to identify tax returns claiming CDCC for an adult dependent 

who may not be disabled for possible post-refund treatment. Also, returns that claim the CDCC for further review per the

duplicate TIN process when any child has been claimed as a dependent by more than one taxpayer.

For tax year 2021, the IRS revised the Instructions for Form 2441, Child and Dependent Care Expenses, by adding a caution

paragraph to address the issue of potentially ineligible individuals being listed as qualifying individuals. Further, to better

educate taxpayers, the IRS added examples to Publication 503, Child and Dependent Care Expenses, to help clarify the

requirements for qualifying care and expenses.

For tax year 2022, the IRS will revise Form 2441 by adding a checkbox to indicate whether a taxpayer or their spouse was a 

student or disabled during the tax year and they intend to enter deemed income on Form 2441. Form 2441 will also include

a new question to identify disabled individuals. Once adequate data is available, the IRS will assess the effectiveness of 

these changes and evaluate the population of returns with couples who filed using the Married Filing Separately status on at

least one of the tax returns and claimed more than the maximum amount of the credit per family.

The IRS will work with the Office of Tax Policy to identify issues with CDCC for consideration of legislative changes.
DEPARTMENT OF THE TREASURY 245 

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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 B: 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 claims 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 four1 refundable tax credits—the EITC, AOTC, ACTC, and net PTC—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, ACTC, and net PTC 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 2022,

our error rates for EITC have ranged from 22.8 percent to 31.6 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, 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 costs. As such, it is our 

position that RTC 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

The 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. 

The 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 

by the taxpayer, 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 and RTC refunds, our 

1 In FY 2021, the IRS US Coronavirus Payments and IRS US Coronavirus Refundable Credits were determined to be susceptible to significant

improper payments through the risk assessment process. However, Treasury notified OMB in August 2022 that we will not be reporting improper

payment estimates for these programs due to the limitations inherent in quantifying the improper payment amount and rate of short-term COVID-19

programs.
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position is that RTC refunds 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 paying entity 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

The 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 we accurately calculate

payments and make them to the correct recipient. The OMB Appendix C 

also 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; instead, they 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

generally the lack of an application process that would allow the IRS to prequalify 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 containing 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 Inspector General for Tax

Administration audits have concluded that RTC errors are largely due to the statutory design and complexity of the RTC

programs, 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 B: 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
DEPARTMENT OF THE TREASURY 247 

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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

taxpayers 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.
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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 8,300 preparers attended the

seminar entitled Looking to Tax Year 2022: American Rescue Plan Tax Changes

to the Earned Income Tax Credit and Other Child-Related Credits at the 2022

virtual Nationwide Tax Forums. 

Interactive Due Diligence 

Training Module

The training module on IRS.gov covers the technical aspects of the due diligence

requirements. In FY 2022, more than 10,400 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 taxpayers and paid preparers make 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 2022, nearly 900 preparers attended the virtual webinar on 

due diligence requirements entitled Keys to Mastering Due Diligence

Requirements and What to Expect During a Due Diligence Audit.

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 2022, 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. The IRS held

an additional summit to discuss administering the advance child tax credit

provisions in the American Rescue Plan.

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 2023, the Administration

included the following proposals in its Budget submission:

• Expand and increase Penalties for Return Preparation and E-filing - The proposal would increase and expand the

IRS’s authority to address noncompliance or inappropriate behavior by paid tax return preparers and e-file

providers. First, it would increase the penalty amounts that apply to paid tax return preparers for willful, reckless 

or unreasonable understatements, as well as for forms of noncompliance that do not involve an understatement of 

tax. Second, the proposal would establish new penalties for the appropriation of Preparer Tax Identification

Numbers (PTINs) and Electronic Filing Identification Numbers (EFINs) and for failing to disclose the use of a paid

tax return preparer. Third, the proposal would increase the limitations period during which the penalty for a 

failure to furnish the preparer’s identifying number may be assessed from three years to six years. Fourth, the
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proposal would clarify the Secretary’s authority to regulate the conduct and suitability of persons who participate in

the authorized e-file program, including setting standards and imposing sanctions to protect the integrity of the efile program. 

• Increase Oversight of Paid Tax Return Preparers - The proposal would amend Title 31, U.S. Code (Money and

Finance) to provide the Secretary with explicit authority to regulate all paid preparers of federal tax returns,

including by establishing mandatory minimum competency standards.

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. In an 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 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 2022, RTC programs would need to reduce erroneous payments by

$16.2 billion), based on FY 2022 estimates. Table 2 illustrates this data.

TABLE 2:

RTC Claims and Improper Payments, TY 20201 (dollars in billions) 

Reduction of Improper 

Payments to 10% of claims 

value 

Program Claims Improper Payments

Improper 

Payment Rate

10% of 

claims value

Reduction 

needed for ≤ 

10% 

EITC $57.5 $18.2 31.6% 5.7 $12.5 

ACTC 32.8 5.2 15.8% 3.3 1.9 

AOTC 5.6 2.0 36.1% 0.6 1.4 

net PTC3 2.1 0.6 27.4% 0.2 0.4 

Total $98.0 $26.0 26.5% 2 $9.8 $16.2 

(1) In FY 2022, Treasury begins reporting improper payment amounts and rates on a tax year basis rather than fiscal year basis. For FY 2022,

Treasury is reporting on claims and improper payments associated with tax year 2020 tax returns filed in 2021 and 2022. 

(2) Total improper payments ÷ Total RTC claims ($26.0 ÷ $98.0).

(3) Includes amounts for federal and state exchanges.
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The Patient Protection and Affordable Care Act (PPACA) established the Health Insurance Marketplace through which

qualified individuals and qualified employers can purchase health insurance coverage. The Premium Tax Credit (PTC) is a 

refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased

through the Marketplace. PTC can be paid in advance directly to the consumer’s Qualified Health Plan insurer. Consumers

then claim the premium tax credit on the federal tax returns, reconciling the credit allowed with any advance payments

made throughout the year. The PTC program is operationally divided between the Department of Health and Human

Services (HHS) and Treasury. The HHS, through the Centers for Medicare & Medicaid Services (CMS), administers advance

payments to insurance providers on behalf of applicants/taxpayers through the federally facilitated exchange. These 

payments are referred to as advance payments of the Premium Tax Credit (advance PTC or APTC). Treasury and the IRS

administer the federal income tax return process where a tax credit (repayment or zero are other possibilities) is based on 

reconciliation of APTC amounts with final allowable PTC determined in tax filing. Payment of this credit is referred to as

net PTC. As PTCs have been determined to be susceptible to significant improper payments, we collaborated with HHS to

develop a joint methodology for reporting improper payment information for PTC.

We report net PTC for both the federal and state exchanges in our improper payment table within our Agency Financial

Report (AFR) (see Table 2 above). HHS reports APTC in its improper payment table within its AFR2. Both departments

disclose the combined advance and net PTC rates in their AFRs. To satisfy reporting to OMB and PaymentAccuracy.gov

requirements, CMS reports disbursements/outlays, estimated error rate, and other data for APTC. The IRS similarly

reports estimated overclaims and error rate for net PTC. The combined advance and net PTC rates are for informational

purposes only and will not be included in either Department’s overall improper payment rate and will not be reported to

PaymentAccuracy.gov. For Tax Year 2020, CMS reported APTC outlays of $41.3 billion and improper payments of $255.8

million. For Tax Year 2020, IRS reported net PTC claims of $1.2 billion and improper payments of $342.1 million. The 

combined APTC and net PTC improper payment estimate is $597.9 million out of $42.5 billion total Premium Tax Credit

outlays/claims, or 1.4 percent.3 

2 Please also see the Fiscal year 2022 U.S. Department of Health and Human Services Agency Financial Report for more information.

3 The combined APTC and net PTC improper payment amounts in this paragraph reflects payment amounts for taxpayers using the federal exchange

only.
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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 pre-refund 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 25.3 percent from FY 2006 to FY 

2022 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.

The estimated improper payment rate for the EITC was 31.6 percent in

FY 2022, which is not statistically different from the estimated rate of 

27.8 percent for FY 2021. The estimated improper payment rate for the ACTC was 15.8 percent in FY 2022, which is not 

statistically different from the estimated rate of 13.3 percent for FY 2021. The FY 2022 estimated rates for EITC and ACTC

fall within sample precision margins of +/- 5.83 percent and +/- 5.09 percent, respectively. 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 IRS designed the initial TY 2018 NRP Individual Income Tax Reporting Compliance sample, upon which the FY 2022

estimates are based, to include the original sample of 11,080 returns, a 20 percent decrease compared to study years prior to

the TY 2016 NRP sample. Due to a 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 EITC and ACTC

point estimates are not statistically significant because the FY 2021 estimates fall within the wider FY 2022 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 designs for TY 2017 (+/- 5.51 percent) and TY 2018 (+/- 6.18 percent). 

Although the FY 2022 estimated AOTC improper payment rate (based on data from the TY 2018 NRP sample) and the FY 

2021 estimated refundable AOTC improper payment rate (based on data from the TY 2017 NRP sample) are technically

statistically significantly different, we cannot conclude that the improper payment rates are actually different because of 

changes in the NRP classification and examination procedures beginning with the TY 2018 NRP study that impacted

examinations of refundable AOTC.

 

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 31.6 percent between FY 2006 and FY 2022,

with an average annual error rate estimate of 25.3

percent.
252 DEPARTMENT OF THE TREASURY

FY 2022 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 

CMPs 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 2022 $97,529

DO (Office of

Foreign Assets

Control

(OFAC)) 

87 Federal Register

7369 (February 9, 

2022)

https://www.govinfo.g

ov/content/pkg/FR2022-02-09/pdf/2022-

02736.pdf

50 USC 1705 

International Emergency

Economic Powers Act, Section

206

Sanctions violation 1977 2022 

The greater of

$330,947 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 2022

The greater of

$87,361 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 2022 $1,644,396 DO (OFAC) Same as above

19 USC 3901-3913 

Clean Diamond Trade Act Sanctions violation 2003 2022 $14,950 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 2022 $25,542 DO (OFAC) Same as above
DEPARTMENT OF THE TREASURY 253 

OTHER INFORMATION | FY 2022 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 2022 $63,855 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 2022 $3,192 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 2022 $6,386 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 2022 $1,278 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 2022 $63,973 DO (OFAC) Same as above

15 USC 6701 note 

Terrorism Risk Insurance Act, as

amended

Civil Penalty 2002 20213 $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 2022 $23,011 FinCEN

87 Federal Register

3433 (January 24,

2022)

https://www.govinfo.g

ov/content/pkg/FR2022-01-24/pdf/2022-

01284.pdf

12 USC 1955 

Bank Secrecy Act, as amended

Willful/Grossly Negligent

Recordkeeping Violations 1988 2022 $23,011 FinCEN Same as above

31 USC 5318(k)(3)(C) 

Bank Secrecy Act, as amended

Failure to Terminate

Correspondent Relationship

with Foreign Bank

2001 2022 $15,565 FinCEN Same as above

31 USC 5321(a)(1) 

Bank Secrecy Act, as amended

General Civil Penalty

Provision for Willful 1986 2022 $62,689 to$250,759 FinCEN Same as above
254 DEPARTMENT OF THE TREASURY

FY 2022 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 2022 $14,489 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 2022 $144,886 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 2022 $1,253 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 2022 $97,529 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 2022 $1,556,481 FinCEN Same as above

31 USC 5330(e) 

Bank Secrecy Act, as amended

Civil Penalty for Failure to

Register as Money

Transmitting Business 

1994 2022 $9,250 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 2022 $11,011 OCC

87 Federal Register

1657 (January 12, 

2022) 

https://www.govinfo.g

ov/content/pkg/FR2022-01-12/pdf/2022-

00109.pdf

12 USC 93(b) 

Section 5239(b) of the Revised

Statutes

Tier 2 Violation of Various

Provisions of the National

Bank Act

1978 2022 $55,052 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 2022 $2,202,123 OCC Same as above

12 USC 164 

Section 5213 of the Revised

Statutes

Tier 1 Violation of Reporting

Requirements 1869(2) 2022 $4,404 OCC Same as above

12 USC 164 

Section 5213 of the Revised

Statutes

Tier 2 Violation of Reporting

Requirements 1869(2) 2022 $44,043 OCC Same as above

12 USC 164 

Section 5213 of the Revised

Statutes

Tier 3 Violation of Reporting

Requirements 1869(2) 2022 $2,202,123 OCC Same as above

12 USC 481 

Section 5240 of the Revised

Statutes

Refusal of Affiliate to

Cooperate in Examination

(National Banks) 

1864(2) 2022 $11,011 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 2022 $11,011 OCC Same as above
DEPARTMENT OF THE TREASURY 255 

OTHER INFORMATION | FY 2022 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 2022 $55,052 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 2022 $2,202,123 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 2022 $11,011 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 2022 $55,052 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 2022 $2,202,123 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 2022 $11,011 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 2022 $55,052 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 2022 $2,202,123 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 2022 $362,217 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 2022 $3,198 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 2022 $2,907 OCC Same as above

12 USC 1884 

Section 5 of the Bank

Protection Act of 1968

Violation of the Bank

Protection Act 1968 2022 $320 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 2022 $11,011 OCC Same as above
256 DEPARTMENT OF THE TREASURY

FY 2022 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 2022 $55,052 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 2022 $2,202,123 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 2022 $50,326 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 2022 $4,027 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 2022 $40,259 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 2022 $2,013,008 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 2022 $2,739 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 2022 $10,360 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 2022 $103,591 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 2022 $103,591 OCC Same as above
DEPARTMENT OF THE TREASURY 257 

OTHER INFORMATION | FY 2022 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 2022 $517,955 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 2022 $207,183 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 2022 $1,035,909 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 2022 $12,647 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 2022 $25,293 OCC Same as above

42 USC 4012a(f)(5) 

Section 102(f)(5) of the Flood

Disaster Protection Act of 1973

Flood Insurance 1994 2022 $2,392 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 2022 $4,404 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 2022 $44,043 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 2022 $2,202,123 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 2022 $11,011 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 2022 $4,404 OCC Same as above
258 DEPARTMENT OF THE TREASURY

FY 2022 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 2022 $44,043 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 2022 $2,202,123 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 2022 $22,979 TTB

87 Federal Register

8947 (February 17, 

2022)

https://www.govinfo.g

ov/content/pkg/FR2022-02-17/pdf/2022-

03410.pdf

31 USC 333 

Prohibition of Misuse of

Department of the Treasury

Names, Symbols, etc.

Misuse of Treasury name or

symbol 1994 20213 $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 20213 $41,056 Department

Wide Same as above

31 USC 3802 

Program Fraud Civil Remedies

Act

Program Fraud Civil

Remedies Act 1986 20213 $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. 

(3) The regulation for the inflation adjustment to this CMP will be updated in 2023.
DEPARTMENT OF THE TREASURY 259 

OTHER INFORMATION | FY 2022 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 4-5 Years More than 5 Years

Number of Grants/Cooperative Agreements with Zero Dollar

Balances 195 3 - 

Number of Grants/Cooperative Agreements with Undisbursed

Balances 43 2 - 

Total Amount of Undisbursed Balances $ 745,929 $ 34,713 $ - 

These awards are with the IRS Low Income Tax Clinics (LITC) program and the Volunteer Income Tax Assistance (VITA)

program. The IRS continues making the closeout of awards a priority every fiscal year. Due to the two-year cycle of the

VITA grants, the IRS did see an increase in the number of grants and cooperative agreements with period of performance

over two years from 81 in FY 2021 to 243 in FY 2022. Grant recipients not correctly completing and submitting all progress

reporting forms and financial forms in the Payment Management System, competing priorities, employee turnover, and

integrating a new grants management system continue to be challenges preventing closeout of awards. The program offices 

are reviewing closeout procedures and are dedicated to closing out the remaining accounts in FY 2023.

 
260 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | OTHER INFORMATION

SECTION G: CLIMATE-RELATED FINANCIAL RISK

Treasury is committed to using our broad and far-reaching policy influence to lead and support Executive Order 14008,

Tackling the Climate Crisis at Home and Abroad. We will play a significant role working with other federal agencies, foreign 

governments, and international financial institutions to stimulate global action on addressing climate change,

environmental justice, and working to prevent climate change-created economic and financial crises.

Our latest Climate Action Plan can be found on our website: https://home.treasury.gov/about/budget-financial-reportingplanning-and-performance/climate-action-plan.

 
DEPARTMENT OF THE TREASURY 261 

OTHER INFORMATION | FY 2022 AGENCY FINANCIAL REPORT

APPENDIX: GLOSSARY OF ACRONYMS

Abbreviation Description 

2015 Act Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015

ACTC Additional Child Tax Credit

AFR Agency Financial Report

AGI Adjusted Gross Income

AML/CFT Anti-Money Laundering and Combating the Financing of Terrorism

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

BEP Bureau of Engraving and Printing

BSA Bank Secrecy Act

CAA Consolidated Appropriations Act, 2021

CARES Act Coronavirus Aid, Relief, and Economic Security Act

CCF Corporate Credit Facilities, LLC

CDFI Community Development Financial Institutions

CDFI RRP CDFI Rapid Response Program

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

CPF Coronavirus Capital Projects Fund

CPFF Commercial Paper Funding Facility II LLC

CPI Consumer Price Index

CRF Coronavirus Relief Fund

CRO Chief Risk Officer

CSRS Civil Service Retirement System

CTC Child Tax Credit

D.C. District of Columbia

D.C. Federal Pension Fund D.C. Teachers’, Police Officers’, and Firefighters’ Federal Pension Fund

DEIA Diversity, Equity, Inclusion, and Accessibility

DO Departmental Offices

DOJ Department of Justice
262 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | OTHER INFORMATION

Abbreviation Description 

DOL Department of Labor

ECIP Emergency Capital Investment Program 

EIP Economic Impact Payment 

EITC Earned Income Tax Credit

EO Executive Order

ERA Emergency Rental Assistance

ERM Enterprise Risk Management 

ESA Exchange Stabilization Agreement 

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

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

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

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

FTO Fine Troy Ounce

FY Fiscal Year
DEPARTMENT OF THE TREASURY 263 

OTHER INFORMATION | FY 2022 AGENCY FINANCIAL REPORT

Abbreviation Description 

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 

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

IAP International Assistance Programs

IMF International Monetary Fund

Inflation Adjustment Act Federal Civil Penalties Inflation Adjustment Act of 1990 

IRA Inflation Reduction Act

IRC Internal Revenue Code

IRS Internal Revenue Service

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 

NIBP New Issue Bond Program 

NIST National Institute of Standards and Technology 

NRP National Research Program

OAS International Assistance Programs

OCC Office of the Comptroller of the Currency

OCRD Office of Civil Rights and Diversity

ODCP Office of D.C. Pensions 

ODEIA Office of Diversity, Equity, Inclusion, and Accessibility

OFAC Office of Foreign Assets Control

OFR Office of Financial Research
264 DEPARTMENT OF THE TREASURY

FY 2022 AGENCY FINANCIAL REPORT | OTHER INFORMATION

Abbreviation Description 

OFS Office of Financial Stability

OIG Office of the Inspector General

OMB Office of Management and Budget

OMWI Office of Minority and Women Inclusion

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

P.L. Public Law

PIIA Payment Integrity Information Act of 2019

PIK Payment-in-Kind

PIO Performance Improvement Officer 

PMIAA Program Management Improvement Accountability Act

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

SBLF Small Business Lending Fund

SBR Statement of Budgetary Resources 

SDR Special Drawing Rights

Secretary Secretary of the Treasury

SEDI Socially and Economically-Disadvantaged Individuals

SFFAS Statement of Federal Financial Accounting Standards

SIGPR Special Inspector General for Pandemic Recovery 

SIGTARP Special Inspector General for the Troubled Asset Relief Program

SLFRF Coronavirus State and Local Fiscal Recovery Funds

SLGS State and Local Government Series 

SOAR Strategic Objective Annual Review

SOMA System Open Market Account

SPSPA Senior Preferred Stock Purchase Agreements

SPV Special Purpose Vehicle

SSBCI State Small Business Credit Initiative
DEPARTMENT OF THE TREASURY 265 

OTHER INFORMATION | FY 2022 AGENCY FINANCIAL REPORT

Abbreviation Description 

SSN Social Security Number

TALF Term Asset-Backed Securities II LLC 

TARP Troubled Asset Relief Program

TBM Technology Business Management

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

TTB Alcohol and Tobacco Tax and Trade Bureau

TY Tax Year

U.S. United States

U.S. Mint United States Mint

USC United States Code

USPS United States Postal Service

USSGL United States Standard General Ledger 

VITA Volunteer Income Tax Assistance

WSS Wholesale Securities Services
 

 

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