Download Accounting for the Government`s Social Insurance Obligations

Country Report
U.S.A.
Public Sector Accruals Symposium
Organization of Economic Cooperation
& Development
March 3-4, 2008
R. Scott Bell
United States of America, Department of the Treasury
Senior Staff Accountant
FY 2007 Accomplishments

For the 3rd year in a row, all major agencies completed their
audits within 45 days of fiscal year-end (17 November).
• Of the 24 major Federal agencies, 19 received clean opinions, one
more than FY 2006
• The total number of material weaknesses government-wide declined from
41 to 39 (>35% decrease since 2001)
• 13 agencies earned a clean audit opinion with no material
weaknesses (including Justice, Energy, USAID).

The Government issued its consolidated financial report on
time by 15 December.

For the first time, the Government earned an unqualified
audit opinion on its Statement of Social Insurance.

For the first time, the Government issued a ‘Citizens Guide
to the Financial Report of the U.S. Government’.
Where We Are
The Nation By the Numbers
billions of dollars
2005
Gross Costs
Total Taxes and Other Revenues
Net Operating Cost
$ (3,174.6) $
$ 2,185.5 $
$ (760.2) $
Assets
Less: Liabilities, comprised of:
$ 1,447.9
Federal Debt held by the Public
Federal Employee & Veteran Benefits
Other Liabilities
Total Liabilities
Net Position (Assets Net of Liabilities)
$
$
$
$
(4,624.2) $
(4,491.8) $
(798.8) $
2006
2007
(3,127.7) $
2,440.8 $
(449.5) $
(3,157.3)
2,627.3
(275.5)
1,496.5
$
(4,867.5) $
(4,679.0) $
(866.4) $
1,581.1
(5,077.7)
(4,769.1)
(940.1)
$ (9,914.8) $ (10,412.9) $ (10,786.9)
$ (8,466.9) $ (8,916.4) $ (9,205.8)
Social Insurance Exposures (not included on the balance sheet):
Closed Group (current participants)
Open Group (current + future participants)
$
$
(40,038) $
(35,689) $
(44,147) $
(38,851) $
(45,062)
(40,948)
(247.7) $
(162.8)
Budget Results
Unified Budget Deficit
$
(318.6) $
What Came In &
What Went Out
In - Revenues
Out - Costs
U.S. Government Accruals
2007 Unified
Budget Deficit
$163 billion
$90.1b
+
Unfunded
postemployment
benefits
+
$24.7b
Increase in:
Environmental Liabilities;
Net Capitalized Fixed Assets;
Other
$36.8b
Increase in
Environmental
Liabilities
=
$(13.5b)
Capitalized Fixed
Assets, net of
Depreciation
2007 Net Cost
$275.5 billion
An Unsustainable Fiscal Path
Key Dates

2006: Medicare benefits exceed
taxes.

2017: Social Security benefits
exceed taxes.

2019: Full Medicare benefits can
not be paid.

2040: Debt levels exceed WW II
historical high.

2041: Full SSA benefits cannot be
paid.

2080: Costs will = 3 X revenues.
What Does this Mean?
Historical & Projected U.S. Revenue and Cost as % of GDP
What Does This Mean?
Historical & Projected U.S. Debt Held by the Public as % of GDP
Social Insurance Accounting
& Sustainability Reporting

Debate continues:
• How should the Federal Government account for its social
insurance obligations?
• To what extent should the Government recognize a social
insurance liability on its balance sheet?

Short-Term Focus on Sustainability Reporting
• Get the message out.
• Contemplating multiple options.
• Conventional / unconventional reporting methods.
• Communicating intergenerational equity.
Find Out More
U.S. Department of the Treasury
http://www.fms.treas.gov/fr/index.html
Office of Management and Budget
http://www.whitehouse.gov/omb/financial/reports/fy08_5yr_plan.pdf
Government Accountability Office
http://www.gao.gov/financial/fy2007financialreport.html
Federal Accounting Standards Advisory Board
www.fasab.gov