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Chapter 3400

ACCOUNTING FOR AND REPORTING ON CASH AND INVESTMENTS HELD OUTSIDE OF THE U.S. TREASURY (T/L 608)

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This chapter provides Federal departments and agencies with the Department of the Treasury's (Treasury's) accounting and reporting policies and procedures on cash not deposited in a Treasury General Account (TGA) and investments in non-Federal securities. It also includes guidance on cash and investments held outside of the U.S. Treasury and the requirements for accountable officers who have responsibilities for funds received, certified, disbursed, and held in their custody.

Section 3410-Background

The Treasury, as the Federal Government's financial organization, estimates Federal cash needs; and receives, holds, and disburses funds. The Treasury also provides the accounting and record keeping necessary for overall Federal governmental financial control.

Most of the transactions that Federal agencies report to the Treasury in their appropriation accounts, other funds, and receipt accounts directly relate to the cash operations of the Treasury and the budget receipts and budget outlays of the Federal Government. Therefore, integrated into the Treasury's cashflow system is the budgetary control system that relates every disbursement made and collection received to the authorizing appropriation, fund, or receipt account established by the Treasury in recognition of congressional intentions cited in public laws. Together the cash and interrelated budgetary control systems form the nucleus for the Treasury's central accounting and reporting system.

In summary, an integration of the following enables the Secretary of the U.S. Treasury (herein referred to as the Secretary) to fulfill the responsibility for financial reporting to the President, the Congress, and the public on the operations of the Federal Government:

  • The financial results of congressional appropriation and receipt authorizations;
  • Executive, legislative, and judiciary program agency payments and collections;
  • Federal Reserve Banks (FRBs), domestic and foreign financial institutions, and certain Treasury offices with custodial operations; together with
  • The disbursing and collecting officers' accountability for cash and investments held outside of Treasury accounts.

The Federal Government's interest in cash and investments held outside of Treasury accounts further extends to requiring that the deposits made by Federal agencies in non-Treasury bank accounts be secured by collateral to the extent that the deposits exceed the protection covered by the Federal Deposit Insurance Corporation. For the Treasury requirements with respect to collateral activities, see I TFM 6-9000.

Section 3415-Authority

Under the regulations in 31 U.S.C. § 3302, accountable officers who serve as disbursing and collecting officers of the Federal Government must deposit all their collections into the U.S. Treasury, except as provided by another law. Accountable officers who hold funds outside of the U.S. Treasury can only do so pursuant to specific legislative authority. Similarly, agencies that invest in Treasury and other Federal/non-Federal securities must have their specific authority to do so granted by law.

In accordance with 31 U.S.C. § 3513, the Secretary must prepare reports to inform the President, the Congress, and the public on the financial operations of the Federal Government. In addition, each agency must furnish the Secretary with such reports and information as required to carry out central accounting and reporting responsibilities.

Section 3420-Definition of Terms

Accountable Officer-A Federal Government official, employee, or agent who, on behalf of the United States, receives and maintains public funds, certifies vouchers, or maintains or draws checks upon accounts of the United States, in depositary banks designated by the Secretary.

Adjusted Trial Balance (ATB)-A preclosing list of United States Standard General Ledger (USSGL) account numbers and balances (assets, liabilities, equity, revenue, and expenses) in numerical order prepared at yearend. In the ATB, the sum of all debit balances must equal the sum of all credit balances.

Amounts in Federal Custody-Funds, as authorized through congressional or administrative action, that are subject to the control and accountability of Federal Government agencies and/or their employees, officers, or agents.

Budgetary Funds-Amounts currently included in the Budget of the United States Government or designated by the Office of Management and Budget as belonging in the budget.

Cash Held Outside of the Treasury-Funds under the custodial responsibility of Federal Government agencies and/or their employees, officers, or agents that are deposited in non-TGAs.

Fund Balance with the Treasury Account (FBWT)-FBWT is the aggregate amount of funds on deposit with the Treasury.

FBWT is increased by:

  • Receiving appropriations, re-appropriations, continuing resolutions, appropriation resolutions, and allocations;
    AND
  • Receiving transfers and reimbursements from other agencies.

It also is increased by amounts borrowed from the Treasury, Federal Financing Bank, or other entities, and amounts collected and credited to appropriation or fund accounts.

FBWT is reduced by:

  • Disbursements made to pay liabilities or to purchase assets, goods, and services;
  • Investments in Federal securities (securities issued by Treasury or other Federal Government agencies);
  • Cancellation of expired appropriations;
  • Transfers and reimbursements to other entities or to the Treasury;
    AND
  • Sequestration or rescission of appropriations.

Investments Held Outside of the U.S. Treasury-Investments in Federal and non-Federal securities held in accounts outside of the U.S. Treasury.

Investments in Federal Securities-Investments in securities issued by Treasury or other agencies of the Federal Government.

Investments in Non-Federal Securities-Investments in securities other than those issued by Treasury or other agencies of the Federal Government.

Non-Budgetary Funds-Amounts in Federal custody that are not to be included in the Budget of the United States Government. Examples are amounts held in deposit funds such as Federal payroll withholding for State and local taxes, and the funds of Federal prisoners.

Treasury General Account-An FRB or a depositary institution (domestic or foreign), such as a commercial bank, designated by the Secretary to maintain a demand account in the name of the U.S. Treasury. It is authorized to credit deposits of public moneys and/or to charge Treasury checks/Electronic Funds Transfer and other miscellaneous payments against that account.

United States Government Standard General Ledger (USSGL)-The USSGL, a supplement to the Treasury Financial Manual (TFM), is composed of five major sections: Chart of Accounts, Accounts and Descriptions, Account Transactions, USSGL Attributes, and Crosswalks to Standard External Reports. Agencies use the Chart of Accounts and technical guidance in the USSGL to standardize Federal agency accounting, which supports the standard external reports preparation required by central agencies.

Section 3425-Description of Cash and Investments Held Outside of the U.S. Treasury Categories

Requirements have been developed to maintain and improve accountability control and custodial responsibility over all cash resources entrusted to the Federal Government by taxpayers and other depositing entities. It should be noted, however, that two distinct categories fall within the cash and investments held outside of the U.S. Treasury responsibilities. They include budgetary funds and non-budgetary funds. Both categories are subject to the control and accountability of Federal Government agencies and/or their employees, officers, or agents.

Section 3430-Treasury's Policies on Agencies' Requirements

Treasury requires that agencies develop policies, systems, and procedures to ensure that cash and investment activity in Treasury and non-Treasury accounts is conducted in the following manner:

  • To maintain full accountability and reconciliation control over funds owned by or in the custody of the Federal Government or any Federal Government officer, employee, or agent;
  • To comply with applicable statutes regarding the deposit and/or investment of such funds;
    AND
  • To support Governmentwide collateral, accounting, and reporting requirements, as described in the TFM.

Section 3435-Agencies' Reporting Responsibilities and Requirements

Reporting requirements set forth in this chapter apply to all departments, agencies, and corporations of the Federal Government. It is each agency's responsibility to:

  • Follow the policy and requirements set forth herein;
    AND
  • Incorporate those requirements in its financial system procedures and as part of the overall audit activities.

3435.10-Financial Accounting and Reporting Requirements

Agencies that deposit, hold, and/or invest funds outside of the U.S. Treasury, must record those transactions to specific USSGL accounts and report these amounts in their audited financial statements. In addition, agencies must submit those amounts in their ATBs to the Treasury for inclusion in the audited Financial Report of the United States Government. Access the Financial Management Service (FMS) Web site at www.fms.treas.gov/ussgl for additional information on USSGL accounting and reporting.

3435.20-Central Accounting and Reporting Requirements

The Treasury issues regular and special reports to the President, the Congress, and the public on the sources of Government receipts, the purposes for which public funds are spent, and the Government's overall financial position. In addition, FMS compiles and publishes several reports, including the Monthly Treasury Statement of Receipts and Outlays of the United States Government and the Combined Statement of Receipts, Outlays, and Balances of the U.S. Government, on the cash operations and the budget receipts/outlays of the Federal Government. Policies and procedures in this TFM chapter also ensure that the cash-based publications report on the cash and investments held outside of the U.S. Treasury activities.

The Government On-Line Accounting Link System (GOALS II), i.e. Statement of Transactions/Accountability Reporting, enables the Secretary to fully disclose and report all Federal agencies' cash on hand, cash on deposit with TGAs/non-TGAs, and investments in Federal/non-Federal securities.

3435.30-Federal Account Symbols Requirements

Agencies use account symbols (see Appendix 1) to report on cash and investments held outside of the U.S. Treasury activities and changes in non-Federal securities. They submit data to the Treasury using the following subclasses:

  • Subclass (41) to report cash held outside of the U.S. Treasury, for both budgetary accounts and deposit funds.
  • Subclass (43) to report the change in non-Federal securities (market value).
  • Subclass (44) as a contra account to report budgetary changes and investments in non-Federal securities.

Agencies also report on the cash and investments held outside of the U.S. Treasury activities using existing accountability report line items, current budgetary account symbols, or a deposit fund account, as appropriate. See Appendix 2 for pro forma central accounting and reporting entries typical of most Federal transactions involving cash and investments held outside of the U.S. Treasury.

Section 3440-Reconciling Cash and Investments Held Outside of the U.S. Treasury

Each agency must do the following:

  • Reconcile all transactions involving cash and investments held outside of the U.S. Treasury on a periodic basis, but no less frequently than quarterly.
  • Develop policies, systems, and operating procedures that ensure cash and investment activity reported on the agency's ATB and Statements of Transactions and Accountability as reported to the Treasury, as applicable, reconcile with the agency's accounting records and related statements and reports received from financial institutions.

FMS will report to the Office of the Fiscal Assistant Secretary of Treasury all discrepancies disclosed from periodic reviews and analysis of agencies' reported cash and investments held outside of the U.S. Treasury.

Section 3445-Preparing and Submitting Prescribed Forms and Reports

FMS 224: Statement of Transactions (Classified According to Appropriation, Fund, and Receipt Account; and Related Control Totals)-Those agencies for which Treasury disburses use this form monthly to report to the Treasury their results of operations. See I TFM 2-3300 for guidance on completing the FMS 224.

SF 1218: Statement of Accountability (Foreign Service Account)/FMS 1219: Statement of Accountability/FMS 1220: Statement of Transactions (According to Appropriations, Funds and Receipt Accounts)/SF 1221: Statement of Transactions [According to Appropriations, Funds and Receipt Accounts (Foreign Service Account)]-Those agencies that have authority to issue Treasury checks use these forms monthly to report to the Treasury their results of operations. See I TFM 2-3100 for guidance on completing the SF 1218/FMS 1219/FMS 1220/SF 1221.

ATB-Agencies must transmit electronically preclosing ATBs. See I TFM 2-4000 for guidance on completing and submitting the ATB to the Treasury.


Contacts

Direct inquiries concerning material in this chapter and FMS 224, FMS 1219/1220, and SF 1218/1221 reporting to:

Cash Accounting Division
Financial Management Service
Department of the Treasury
3700 East-West Highway, Room 523D
Hyattsville, MD 20782
Telephone: (202) 874-9810

Direct inquiries concerning the ATB and Federal Agencies' Centralized Trial-Balance System (FACTS I) to:

Financial Reports Division
Financial Management Service
Department of the Treasury
3700 East-West Highway, Room 509B
Hyattsville, MD 20782
Telephone: (202) 874-9910

Direct inquiries concerning the use of subclasses and Treasury Account Symbols to:

Budget Reports Division
Financial Management Service
Department of the Treasury
3700 East-West Highway, Room 518D
Hyattsville, MD 20782
Telephone: (202) 874-9880


APPENDICES LISTING

Appendix No. Form/Title
1 Subclass Descriptions, Cash and Investments Held Outside of the U.S. Treasury
2

Cash and Investments Held Outside of the U.S. Treasury Transaction Guide-Statements of Transactions/Accountability Reporting

Chapter appendices are available only in the PDF version.


Transmittal Letter No. 608

Volume I

To: Heads of Government Departments, Agencies, and Others Concerned

1. Purpose

This transmittal letter releases I TFM 2-3400: Accounting for and Reporting on Cash and Investments Held Outside of the U.S. Treasury. This chapter provides Federal departments and agencies with accounting and reporting policies and procedures on cash not deposited in a Treasury General Account and investments in non-Federal securities. It specifically provides guidance on cash and investments held outside of the U.S. Treasury as they relate to budgetary funds and non-budgetary funds under the Federal Government's custodial responsibility.

2. Background

Over a 2-year period, agencies participated in an advisory group that provided comments on procedures during the developmental stages. The Department of the Treasury (Treasury) also distributed the procedures Governmentwide to solicit feedback from other Federal agencies. Treasury considered all comments on procedures and incorporated them in this release, as appropriate.

Six agencies were identified to act as a pilot for the initial implementation of procedures. They are the Department of Education, the Department of Veterans Affairs, the Federal Bureau of Investigations, the Federal Communications Commission, the Tennessee Valley Authority, and the United States Postal Service. (See paragraph 4 for implementation dates.)

3. Page Changes

Remove
Table of Contents for Volume I
Table of Contents for Part 2

Insert
Table of Contents for Volume I
Table of Contents for Part 2
I TFM 2-3400

4. Effective Implementation Date

For pilot Federal agencies, use October 1, 2002.

For all other Federal agencies, use January 1, 2003.

5. Inquiries

Direct questions concerning this transmittal letter to:

Cash Accounting Division
Financial Management Service
Department of the Treasury
3700 East-West Highway, Room 523D
Hyattsville, MD 20782
Telephone: (202) 874-9810

Date: September 26, 2002



Richard Gregg's Signature
Richard L. Gregg
Commissioner


Announcement No. A-2003-02
March 2003

Subject: Revised I TFM 2-3400, Accounting for and Reporting on Cash and Investments Held Outside of the U.S. Treasury

This announcement informs agencies that I TFM 2-3400 has been amended. The revisions clarify instructions on establishing opening balances of cash and investments held outside of the U.S. Treasury and the reporting of interest, dividends, gains, and losses.

In subsection 3435.30 and Appendix 1: Subclass 45, Offset of Non-Budgetary Funds and Investments, has been eliminated.

In Appendix 2, the following Accounting Events have been modified:

Accounting Event
Revision

(1) - (20)

1. Modified Non-Budgetary accounting events as follows:

  • Increases to the balances of cash and investments are reported as debits in column three of the FMS 224/1220.
  • Decreases to the balances of cash and investments are reported as credits in column three of the FMS 224/1220.

2. Eliminated Subclass 45, Offset of Non-Budgetary Funds and Investments.

(5) - (7) and (11) - (13)

Modified Budgetary accounting events to record transactions effecting Subclass 44, Offset of Change in Non-Federal Securities (Market Value).

(1)

Revised the Note to read:

Note: Treasury Account Symbol (TAS) ##X6### indicates that a deposit fund must be used, unless otherwise directed by Treasury and OMB. Consult I TFM 2-1500 for more information on deposit funds.

(2)

Added the following Note:

Note: If an agency can identify cash being held outside of the U.S. Treasury to a specific prior period, it uses this entry to establish opening balances. Use a paper form FMS 224/1219/1220, dated for that prior period, to report this information and fax it to (202) 874-9966. If an agency cannot identify cash amounts to a specific prior period, it should contact the Department of the Treasury's Cash Accounting Division ((202) 874-9810) for instructions on establishing opening balances.

(6)

Added the following Note:

Note: If an agency can identify investments being held outside of the U.S. Treasury to a specific prior period, it uses this entry to establish opening balances. Use a paper form FMS 224/1219/1220, dated for that prior period, to report this information and fax it to (202) 874-9966. If an agency cannot identify investments to a specific prior period, it should contact the Department of the Treasury's Cash Accounting Division ((202) 874-9810) for instructions on establishing opening balances.

(9)

Revised the Note to read:

Note: For budgetary entries, contact the Budget Reports Division at (202) 874-9880 to request a point designation for use with the TAS to capture interest and dividends.

(11)

Added the following Reminder:

Reminder: Reverse any reported unrealized gains or losses when the security is sold.

(12)

Revised the Note to read:

Note: For budgetary entries, contact the Budget Reports Division at (202) 874-9880 to request a point designation for use with the TAS to capture gains.

(13)

Revised the Note to read:

Note: For budgetary entries, contact the Budget Reports Division at (202) 874-9880 to request a point designation for use with the TAS to capture losses.

Users may access, or download, revised I TFM 2-3400 and appendices, issued under Transmittal Letter No. 608 and dated September 26, 2002, at the following Web site: http://www.fms.treas.gov/tfm/vol1/tl.html. To receive e-mail notification of future TFM updates, users may subscribe to FMS' free e-mail notification service located on the FMS homepage at http://www.fms.treas.gov.

Direct questions concerning this announcement to:

Cash Accounting Division
Financial Management Service
Department of the Treasury
3700 East-West Highway, Room 523D
Hyattsville, MD 20782
Telephone: (202) 874-9810