1. The CPA Profession’s Call for Federal Fiscal Responsibility
What's at Stake?
The CPA Profession’s Call for Federal Fiscal Responsibility

2. The role of CPAs
Serve as trusted advisors to a variety of organizations
Help businesses and individuals achieve strong financial standing
Protect the public interest
Explain complex financial issues
CPAs are trusted advisers to a variety organizations
CPAs help businesses and organizations achieve strong financial standing.
CPAs protect the public interest and help the public understand complex financial issues.

3. Today Overview of the federal budget
Insights into the federal financial statements
Nation’s deficit reality
Today, I will provide an overview of the federal budget and insight into the financial statements as prepared by the US Department of the Treasury.
You don’t need to be a CPA to understand the implications of these financial statements and the tangible impact the information contained within its pages will have on our future and generations to come.

4. Federal budget Establishes the fiscal goals envisioned by Congress
Measured on a cash basis
Tool to help guide spending decisions
The President, in accordance with the “Budget and Accounting Act of 1921” must submit a budget to Congress each year.
The budget is measured on a cash basis. 
Congress uses the budget as a tool to help guide the House and the Senate appropriators with their spending decisions by setting a top-line allocation. 
The budget shows what is bought and paid for in a given year.  

5. Federal financial statements
Record of what has actually happened
Prepared on an accrual basis
Provide information about longer-term implications
Greater insight into the fiscal health of this country can be garnered from understanding the financial statements, which are a record of what has actually happened. 
The financial statements are prepared on an accrual basis, like all other public companies and many state and local governments. Because of that, financial statements provide significant information about the longer-term implications of the government’s operations. 

6. Cash Budget Compared to Financial Statement Loss
(Most up to date info available)
Source: A Citizen’s Guide to the 2016 Financial Report of the U.S. Government

7. Congressional Budget Office “CBO” Budget Deficit
2016 Budget Deficit Actual
$587 billion
2017 Budget Deficit Estimate
$559 billion
2017 to 2026 Cumulative Budget Deficit Estimate
$8.6 trillion
2016 is the 1st increase in the annual deficit estimate since 2009
Source: CBO Budget Deficit Estimate

8. Just How Much is a Trillion?
One trillion is $1,000,000,000,000
A million seconds is 11 ½ days, a billion seconds is 32 years, a trillion seconds is 32 thousand years
Source: “Numb and number: Is trillion the new billion?” by Christine Romans CNN’s American Morning, 2009

9. Expenses exceeded revenue by $1.1 trillion
Revenue = $3.3 trillion
Expenses = $4.4 trillion
2016 Operations
The financial statements report the revenue and expenses and assets and liabilities of the US government.
The most recent financial report, for the fiscal year ended September 30th, 2016, showed that while the majority of revenue – 2.9 trillion dollars – came from taxes, the government ran a net operating loss, where expenses exceeded revenues by 1,047 billion dollars.
Note to speaker:
Revenue = $3.3T
Expenses = $4.4T
Net operating loss = $1.1T
Expenses exceeded revenue by $1.1 trillion

10. 2016 Revenues (most up to date info)
Individual income tax and payroll tax with holdings 78%
Corporate Income Tax %
Other %
Other revenues include excise, unemployment and customs duties.
Source: A Citizen’s Guide to the 2016 Financial Report of the U.S. Government

11. 2016 Expenses (Most up to date info)
Source: A Citizen’s Guide to the 2016 Financial Report of the U.S. Government

12. Liabilities= $22.8 trillion Accumulated net deficit= $19.3 trillion
2016 Balance Sheet
Assets= $3.5 trillion
Liabilities= $22.8 trillion
Accumulated net deficit= $19.3 trillion
The financial report also shows that the US Government had:
assets of 3.5 trillion dollars
liabilities of 22.8 trillion dollars
for a net accumulated deficit of 19.3 trillion dollars.
This deficit is a result of spending more over the years than the U.S. government has taken in and puts an incredible strain on the US economy.

13. What We Own and What We Owe
Assets:
$1.3 trillion in loans receivable primarily student loans
$980 billion in PPE
Source: A Citizen’s Guide to the 2016 Financial Report of the U.S. Government

14. U.S. financial statements differ from other organizations
Prepared using standards of the Federal Accounting Standards Advisory Board (FASAB)
U.S. government’s balance sheet does not include obligations for Social Security and Medicare
Included as footnote disclosure only (not reflected as liabilities on face of financial statements)
New FASAB Reporting Entity Standard, is effective for periods after September 30, 2017
Will require consolidation of Government Sponsored Enterprises (“GSE’s”) like the Federal Reserve, Fannie Mae and Freddie Mac
The federal financial statements different from those used by other organizations.
Typically, obligations or liabilities are shown on the face of financial statements.
That isn’t true with Social Security and Medicare.
They're footnote disclosures and are not reflected as liabilities on the face of the balance sheet.
New Reporting Entity Standard
SFFAS 47 establishes principles to identify organizations for which elected officials are accountable. The Statement also guides preparers of government-wide general purpose federal financial report GPFFRs in determining what organizations to report upon, whether such organizations are considered “consolidation entities” or “disclosure entities,” and what information should be presented about those organizations. The Statement also requires information to be provided about related party relationships of such significance that it would be misleading to exclude information. SFFAS 47 is effective for periods beginning after September 30, 2017 and early implementation is not permitted. It is anticipated that central agencies will determine if there is a need for coordinated guidance to ensure government-wide consistency.
Federal Reserve Liabilities at September 30, 2015 $4.4 trillion
At December 31, 2007 before quantitative easing $877 billion

15. Social Security and Medicare Future Expenditures in Excess of Future Revenues (Closed Group) (9/30)
Dollars - Trillions
Social Security and Medicare obligations are not reflected as liabilities under FASAB standards but are a footnote disclosure.
75 year present value of expenditures in excess of pay roll tax receipts.
Closed Group reflects only current participants.

16. U.S. Government Accountability Office Independent Auditor’s Report
Source: U.S. Government Accountability Office 2016 Independent Auditor’s Report

17. U. S. Liabilities and Obligations Compared to U. S
U.S. Liabilities and Obligations Compared to U.S. Household Net Worth (as of September 30, 2016) $
Closed group social insurance
obligations ($65 trillion)
Dollars in Trillions
Household Net Worth ($90 trillion)
U.S. Liabilities ($23 trillion)
Liabilities & Social Insurance(1)
Household Net Worth(2)
Sources: 1) 2016 Financial Report of the U.S. Government; 2) Federal Reserve, Flow of Funds Accounts of the United States

18. What’s next Visit: aicpa.org/WhatsAtStake
Watch What’s at Stake: The CPA Profession’s Call for Federal Fiscal Responsibility
Policymakers: read the Financial Report of the U.S. Government
Citizens: read A Citizen’s Guide to the Fiscal Year 2016 Financial Report of the U.S. Government
Join the public dialogue to make the county’s fiscal health a national priority
To learn more and engage in this important issue:
Visit:
Watch What’s at Stake: The CPA Profession on Federal Financial Responsibility
I recommend that policymakers read the Financial Report of the US Government and that citizen read A Citizen’s Guide to the Fiscal Year 2012 Financial Report of the U.S. Government
Finally, everyone should in a public dialogue to make the country’s fiscal health a national priority.
The CPA profession stands ready to support this effort in any way we can. Thank you.

19. (Optional)
(Add information about what you, your firm and/or your state society is doing in this area)

20. Thank you