accruals september 2009. accrual accounting: it’s the law ! 31 u.s.c. 3512 mandates accrual...
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Accruals
September 2009
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Accrual Accounting: It’s the Law !
• 31 U.S.C. 3512 mandates accrual accounting for all Federal Agencies.
• FMFIA of 1982 requires reports of non-compliance.
• CFO Act, GPRA, GMRA, etc.• FASAB Standards & Concepts• Audited Financial Statements
(OMB Directed)
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Prior Financial Audit Finding:
“Some accounts payable and related expenses are overstated, and some are not accrued at year-end.”
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If a good/service was received as of
September 30, 2009
11:59:59 PMIt’s an Accrual
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If a good/service was NOT received as of
September 30, 2009
It’s an Undelivered Order (UDO)
Both (Accruals & UDOs) are considered Obligations
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Understanding the Difference
Budget versus Accounting
Undelivered Orders
+ Accruals
+ Disbursements
= Total Obligations
+ Accruals
+ Disbursements
= Total Costs
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So what does all this mean?
Do I have to do accruals for everything?
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Object Class 11xx and 12xx: Personnel Comp & Benefits
- Accruals computed by CBS system based on prior pay period
- Finance Office enters NOAA-wide accruals
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Object Class 41xx:Grants and Subsidies
- Finance Office and the Grants Management Division do these accruals
To States,To States,
Universities,Universities,
& Others& Others
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To accrue or not to accrue,
that is the question.
William Shakespeare
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Recording Accruals
• Receiving Reports• Invoice• Performance Reports• Use Estimates from
COTR, Contractor, and/or Company
• Prior Month, Qtr., Year• UDO Amount• Use Common Sense
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Examples of Accruals - #1
1. NOAA contracts with Santa to hire his employee, Bernard Elf, to work from January 1 to December 31.
2. Bernard Elf is paid $12,000 annually.3. Santa doesn’t bill NOAA until the next
year.
What is the accrual amount as ofSeptember 30?
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Examples of Accruals - #1
$12,000 / 12 months = $1,000 a month
$1,000 x 9 months = $9,000
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Examples of Accruals - #2
1. NOAA contracts with Lakadasical Billing Company to count dolphins in the Atlantic Ocean from January 1 to December 31.
2. NOAA pays them $5,000 a week.3. Lakadasical’s last invoice was dated
August 17 and NOAA paid it.
What is the accrual amount as of
September 30?
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Examples of Accruals - #2
$5,000 week x 6 weeks = $30,000
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Examples of Accruals - #3
1. NOAA contracts with Seymour Skies to monitor weather in Climate, Kansas, from October 1 – September 30. He has to submit quarterly progress reports.
2. He is paid $24,000 annually.3. His last progress report was paid and was
through June 30.
What is the accrual amount as ofSeptember 30?
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Examples of Accruals - #3
$24,000 annually / 4 quarters = $6,000
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Examples of Accruals - #4
1. NOAA contracts with Billsontime Scuba Services (BSS) to check out damage to a reef in Florida.
2. All of BSS’s bills have been paid except one.
3. The only unpaid bill is for the month of September for $20,000.
What is the accrual amount as ofSeptember 30?
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Examples of Accruals - #4
$20,000
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Line/Staff Offices responsibilities...
The Period of Performance
must be identified clearly
on Contracts,
Purchase Orders,
and Interagency Agreements.
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Line/Staff Offices responsibilities...
Contact Person on Purchase Orders
and Interagency Agreements
is the person responsible
for estimating the accrual.
The COTR on Contracts
is the person responsible
for estimating the accrual.
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Line/Staff Offices responsibilities...
The Contact People on
Purchase Orders,
Interagency Agreements,
and Contracts
should know how to
estimate an accrual.
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Line/Staff Offices responsibilities...
The contact person must
give us a written explanation
of how he/she
estimated the accrual.
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Finance Office responsibilities...
We will continue to emphasize
the importance of accruals
in the Year End Closing
Instructions memo. http://www.corporateservices.noaa.gov/~finance/FOAOD.html
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August 2009
Finance Office created the AP504D Undelivered Orders Over a Specified Amount Report for the
Line/Staff Offices to use to identify documents by FMC that may need to be accrued.