P. 16-4

Federal agency financial statements were illustrated but not discussed in detail in this chapter. Nevertheless, despite some unusual terminology, they are readily understandable.

Examine the following financial statements, which are condensed versions of those of a federal agency responsible for collecting taxes and duties and transferring them to the Treasury.

Statement of Custodial Activity for Year Ended September 30 (in millions)
Tax revenues for others
Collections	$ 4,900
Increase in taxes receivable	200
Total revenues for others	$5,100
Disposition of revenues
Amounts transferred to the treasury	$4,800
Increase in amounts to be transferred	300
Total disposition of revenues	$5,100
Net custodial activity	$ 0
Statement of Net Cost for Year Ended September 30 (in millions)
Personnel costs	$ 300
Other costs	500
Net cost of operations	$ 800
Statement of Net Changes in Net Position for Year Ended September 30 (in millions)
Financing sourcesappropriations used	$ 775
Less: net cost of operations	800
Net results of operations	$ (25)
Increase in unexpended appropriations	125
Increase in net position	$ 100
Net position, beginning of year	450
Net position, end of year	$ 550

Balance Sheet as of September 30 (in millions)
Assets
Fund balance with treasury	$ 125
Taxes receivable	615
Plant, equipment, and other assets (net of accumulated depreciation)	285
Total assets	$1,025
Liabilities
Custodial liability	$450
Other liabilities	25
Total liabilities	$ 475
Net position
Unexpended appropriations	$ 125
Cumulative results of operations	425
Total net position	$ 550
Total liabilities and net position	$1,025

Statement of Budgetary Resources for Year Ended September 30 (in millions)
Budgetary resources made available
Current appropriations	$ 900
Status of budgetary resources
Obligations incurred	$ 775
Unobligated balance not available (expired allotments)	125
Total, status of budgetary resources	$ 900
Outlays
Obligations incurred	$ 775
Add: obligated fund balance and accounts payable, beginning of year	70
Deduct: obligated fund balance and accounts payable, end of year	(60)
Total outlays	$ 785

Statement of Financing for Year Ended September 30 (in millions)
Obligations and nonbudgetary resources
Obligations incurred	$ 775
Increase in goods and services ordered but not yet received	(5)
Costs capitalized on the balance sheet and not expensed
Acquisition of capital assets	(10)
Expenses that do not require budgetary resources
Depreciation	40
Net cost of operations	$ 800

1. How much did the agency actually collect in taxes? How much did it submit to the Treasury? How much did it owe the Treasury at yearend for both taxes collected and taxes receivable (i.e., its custodial liability per the balance sheet)? How much did it owe at the beginning of the year?
2. How much did it cost the agency to carry out its activities during the year?
3. Of its operating costs, how much was financed by federally appropriated funds?
4. What was the total amount that the agency was appropriated during the year? What was the balance that was not used? Is this amount available for immediate use by the agency? If not, why not? Did the agency have a balance in unexpended appropriations at the start of the year? How can you tell?
5. What was the total amount of goods and services ordered by the agency during the year? How much of goods or services was received (including amounts ordered in the previous year but received in the current year)? How much was paid for?
6. Per the statement of financing, the agency ordered $775 of goods and services (obligations incurred), but the net cost of operations per both the statement of financing and the statement of net cost is $800. How can the net cost of operations exceed the amount of goods and services ordered? Explain and account for the differences.