1 Country Report U.S.A. Public Sector Accruals Symposium Organization of Economic Cooperation & Development March 3-4, 2009 Nancy Fleetwood United States of America, Department of the Treasury Deputy Assistant Secretary – Accounting Policy

2 The U.S. - The Basics Population – 306 million Population – 306 million 2009 Outlays: $3.1t; Receipts: $2.7t 2009 Outlays: $3.1t; Receipts: $2.7t Unified Budget Deficit: $455bUnified Budget Deficit: $455b Net Cost: $1tNet Cost: $1t National Debt (as of 9/30/08): $10t National Debt (as of 9/30/08): $10t Public Debt:$5.8tPublic Debt:$5.8t Intragovernmental: $4.2tIntragovernmental: $4.2t Hundreds of agencies. Hundreds of agencies. 35 Reporting entity agencies35 Reporting entity agencies Fiscal Year: October 1 – September 30 Fiscal Year: October 1 – September 30 Audit opinion disclaimer for more than a decade. Audit opinion disclaimer for more than a decade.

3 FY 2008 Accomplishments For the 4 th year in a row, all CFO Act agencies completed their audits within 45 days of fiscal year-end (November 15th). For the 4 th year in a row, all CFO Act agencies completed their audits within 45 days of fiscal year-end (November 15th). 21/24 major Federal agencies received clean audit opinions, (FY )21/24 major Federal agencies received clean audit opinions, (FY ) For the 5 th consecutive year, the total number of material weaknesses government-wide declined (from 39 to 32 during FY 2008).For the 5 th consecutive year, the total number of material weaknesses government-wide declined (from 39 to 32 during FY 2008). 14 agencies earned a clean audit opinion with no material weaknesses (including the Departments of Commerce, Education, Energy, HUD, Justice, Labor, State, and Transportation).14 agencies earned a clean audit opinion with no material weaknesses (including the Departments of Commerce, Education, Energy, HUD, Justice, Labor, State, and Transportation). The Government issued its consolidated financial report on time by December 15 th. The Government issued its consolidated financial report on time by December 15 th. For the 2 nd consecutive year, the Government: For the 2 nd consecutive year, the Government: earned an unqualified audit opinion on its Statement of Social Insurance.earned an unqualified audit opinion on its Statement of Social Insurance. issued a ‘Citizen’s Guide’ to the Financial Report of the U.S. Government’.issued a ‘Citizen’s Guide’ to the Financial Report of the U.S. Government’.

4 Key Issues Current Financial Position and Condition Current Financial Position and Condition Market Stabilization & Recovery Market Stabilization & Recovery Social Insurance & Sustainability Social Insurance & Sustainability

5 A Year of Unprecedented Change

6 $51.1b Other Budget Deficit vs. Net Cost 2008 Unified Budget Deficit $454.8 billion $549.8b Change in unfunded postemployment benefit estimates + $(46.6b) Decrease in Capitalized Fixed Assets, net of Depreciation = 2008 Net Cost $1,009.1 billion + $4.5b Net Increase in: Environmental Liabilities; Net Capitalized Fixed Assets; Other $110b Change in DoD estimates $339b Change in VA estimates $100b Change in OPM estimates

7 What Came In & What Went Out InOut

8 What We Own & What We Owe Assets $1.97 trillion $1.97 trillion Mostly Property Plant &Equipment Mostly Property Plant &Equipment Other (off-balance sheet) Other (off-balance sheet) Stewardship Land (national parks, forests)Stewardship Land (national parks, forests) Heritage Assets (national memorials, historic structures)Heritage Assets (national memorials, historic structures) Liabilities

9 Market Stabilization & Recovery Housing & Economic Recovery Act (HERA) Emergency Economic Stabilization Act (EESA) Troubled Assets Relief Program (TARP) Only a small fraction of activity impacted the FY 2008 statements. American Recovery and Reinvestment Act (ARRA)

10 Market Stabilization & Recovery Reporting Challenges Transparency Transparency Cost / Benefit Accounting for transactions and events Accounting for transactions and events Credit Reform. Consolidation Impact of American Recovery and Reinvestment Act ( ARRA) Impact of American Recovery and Reinvestment Act ( ARRA)

11 Social Insurance: An Issue Now & in the Future Historical & Projected U.S. Revenue and Cost as % of GDP Historical & Projected U.S. Debt Held by the Public as % of GDP Under current conditions, actuaries estimate that there will be a social insurance shortfall of $43t. Under current conditions, actuaries estimate that there will be a social insurance shortfall of $43t. 75-year estimate of future benefit expenditures net of contributions.75-year estimate of future benefit expenditures net of contributions.

12 The Clock is Ticking

13 We Still Have Work To Do Material Weaknesses: 1. DoD Accounting Issues 2.Accounting for/Reconciliation of Intragovernmental Activity and Balances FMS must ‘PLUG’ a “harmonizing” entry (i.e., ‘PLUG’) into the equity reported on the Statement of Changes in Net Position to balance. 3.Preparation of Consolidated Financial Statements For the 12 th Consecutive Year, GAO issued a disclaimer of opinion on the Financial Report of the U.S. Government.

14 Major Initiatives Governmentwide Accounting and Reporting Modernization Project (GWA) Financial Information Reporting Standardization (FIRST) Payment Application Modernization (PAM) Collections and Cash Management Modernization (CCMM) Common Governmentwide Accounting Classification (CGAC)

15 On the Horizon We must have a clean audit opinion on the Governmentwide financial statements. We must have a clean audit opinion on the Governmentwide financial statements. Continue to build on agency audit successes.Continue to build on agency audit successes. Continue to pursue systems and structure initiatives to resolve governmentwide material weaknesses.Continue to pursue systems and structure initiatives to resolve governmentwide material weaknesses. Financial reporting needs to be relevant to decision- makers. Financial reporting needs to be relevant to decision- makers. Build on success of ‘Citizen’s Guide’Build on success of ‘Citizen’s Guide’ Ready to address the reporting challenges of the economic recovery effort. Ready to address the reporting challenges of the economic recovery effort. Credit ReformCredit Reform TransparencyTransparency

16 Find Out More U.S. Department of the Treasury Office of Management and Budget Government Accountability Office Federal Accounting Standards Advisory Board

17 QUESTIONS