1.35.15 Annual Close Guidelines

Manual Transmittal

July 20, 2015

Purpose

(1) This transmits revised IRM 1.35.15, Financial Accounting, Annual Close Guidelines.

Material Changes

(1) IRM 1.35.15.1, Overview, updated to specify the type of year-end process.

(2) IRM 1.35.15.2, Background, updated to specify the type of audit opinion and to include revenue accounting information.

(3) IRM 1.35.15.3, Authorities, removed reference to Information Technology Management Reform Act of 1996, Public Law 104-106, because it was not relevant to IRM content and updated title of Federal Information Security Management Act, Public Law 107-347; to E-Government Act of 2002.

(4) IRM 1.35.15.4, Related Resources, updated reference to OMB Circular No. A-127, Financial Management Systems, because it has been rescinded and moved to Appendix D to OMB Circular No. 123, Compliance with the Federal Financial Management Improvement Act of 1996; updated reference of IRM 1.32.6, Purchase Card Program Handbook, to IRM 1.35.4, Purchase Card Program; and added references to IRM 3.17.63, Redesigned Revenue Accounting Control System and IRM 3.17.64, Accounting Control General Ledger Policies and Procedures.

(5) IRM 1.35.15.5, Definitions, added definitions for Integrated Financial System (IFS) and Redesigned Revenue Accounting Control System (RRACS), and updated definition for Non-Procurement Action.

(6) IRM 1.35.15.6, Acronyms, updated chart to add Bureau of the Fiscal Service, Redesigned Revenue Accounting Control System (RRACS), and replaced Federal Agencies' Centralized Trial Balance System (FACTS) with Governmentwide Treasury Account Symbol Adjusted Trial Balance System (GTAS).

(7) IRM 1.35.15.7, Responsibilities, updated Chief Financial Officer (CFO) office names and added and updated office responsibilities.

(8) IRM 135.15.8.1(1)(2), Midyear/Spend Plan Review, updated to reflect current purpose of Midyear/Spend Plan review.

(9) IRM 1.35.15.8.2 (1)(2), Current Year Targets and Approvals, updated to reflect current process.

(10) IRM 1.35.15.9, Recording Financial Transactions, updated type of transaction and specified time zone.

(11) IRM 1.35.15.10, Obligations, moved information relating to year-end payroll accrual to IRM 1.35.15.18.4, Year-end Payroll Accruals.

(12) IRM 1.35.15.10.1.1, Purchase Cards, updated to reflect current process.

(13) IRM 1.35.15.10.2.1(2), Miscellaneous Programs, added Treasury Franchise Fund to list of programs that use Form 2785, Requisition/Obligations Estimate Adjustment Notice.

(14) IRM 1.35.15.10.2.1(3), Miscellaneous Programs, added Federal Telecommunication Services (FTS) to list of programs that use Form 2785, Requisition/Obligations Estimate Adjustment Notice, and removed Furniture Fedstrips, because it is no longer used.

(15) IRM 1.35.15.10.4, Treasury Executive Office Asset Forfeiture Funds, added to include Treasury Executive Office Asset Forfeiture Funds information.

(16) IRM 1.35.15.14(2), Reimbursable Agreements, updated to reflect current categories of reimbursable agreements.

(17) IRM 1.35.15.15.6, Earned Income Tax Credit, updated office name from Return Integrity and Correspondence Services to Return Integrity and Compliance Services.

(18) IRM 1.35.15.15.7(3), Payroll, updated to reflect current process.

(19) IRM 1.35.15.15.8.3(2), Accounting Code Change at Payment Level, updated to reflect current process.

(20) IRM 1.35.15.15.9, Travel and Relocation, updated email address from *CFO BFC Travel Authorizations and Accounting Codes to *CFO BFC Travel Authorizations and Accting Codes.

(21) IRM 1.35.15.15.9.2(4), Errors Found for Open Obligations and Fully Expensed Obligations, updated to reflect current process.

(22) IRM 1.35.15.17, Canceling Appropriations, updated to reflect current process.

(23) IRM 1.35.15.18.1(3), Major Contract Accruals, updated to reflect current accrual process.

(24) IRM 1.35.15.18.2(1), Specifically-Identified Accruals, updated chart to delete Treasury Franchise Fund, since it is no longer an accrual.

(25) IRM 1.35.15.18.4(2), Year-end Payroll Accruals, updated to add additional information related to year-end accrual.

(26) IRM 1.35.15.19(1), Other Entries, updated report name from Asset Forfeiture Report to Asset Forfeiture Tracking and Retrieval System Report.

(27) IRM 1.35.15.20, Mock Systems Testing, updated to reflect current Mocks 1,2, and 3 processes.

(28) IRM 1.35.15.24 (2), Reports and Certifications to Treasury, updated chart to remove FACTS I, FACTS II, and Financial Management Service (FMS) 2108 and to add Governmentwide Treasury Account Symbol (GTAS) and Central Accounting Reporting System (CARS). Also updated FMS 224 to Bureau of the Fiscal Service, Classification Transactions and Accountability (CTA), Section 1, Statement of Transactions.

(29) IRM 1.35.15.25, Financial Statements, updated name of financial reports, CFO office names, and current process.

(30) This revision includes changes throughout the document for the following:

  1. Updated the Chief Financial Officer office names.

  2. Updated to reflect change in system from GovTrip to Concur.

  3. Updated Financial Management Service to Bureau of the Fiscal Service.

  4. Updated Financial Management Service (FMS) 224 to Bureau of the Fiscal Service Classification Transactions and Accountability (CTA), Section 1, Statement of Transactions.

  5. Updated to reflect change to the program name and process from Working Capital Fund to Treasury Franchise Fund.

  6. Updated to reflect change in system from Federal Agencies' Centralized Trial Balance System (FACTS) I and II to Governmentwide Treasury Account Symbol (GTAS).

  7. Updated reference to IRM 1.32.6, Purchase Card Program Handbook, to IRM 1.35.4, Purchase Card Program.

  8. Updated Year-end Memorandum to FM Year-end Close Guidance.

  9. Added minor editorial changes.

Effect on Other Documents

IRM 1.35.15, dated June 18, 2013, is superseded.

Audience

All Operating Divisions and Functions.

Effective Date

(07-20-2015)

Robin L. Canady
Chief Financial Officer

Overview

  1. This Internal Revenue Manual (IRM) contains the Annual Close Guidelines to assist business units and operating divisions through the fiscal year-end closing process.

  2. The Chief Financial Officer (CFO), Financial Management (FM) Unit, Financial Management Policy Office, develops and maintains this IRM.

Background

  1. These guidelines provide the policies and procedures for the Internal Revenue Service (IRS) annual fiscal year-end close. While the CFO is responsible for producing auditable financial statements, a successful annual close and an unmodified audit opinion depend upon the actions of all managers and staff throughout the year.

  2. In order for the IRS administrative financial statements to be materially accurate and fairly state the IRS assets, liabilities, net position, net costs, changes in net position, and budgetary resources as of and for the fiscal year ended on September 30, they need to reflect all income earned and expenses incurred for the applicable fiscal years. The Integrated Financial System (IFS) is designed to capture transactional data, which is then accumulated into the financial statements. Transactions that are not captured in IFS must be accounted for manually through accruals and year-end closing adjustments.

  3. Supplementing these guidelines is the FM Year-end Close Guidance, with attachments, issued each year. The following attachments provide guidance specific to the year-end process:

    1. Year-end Travel Cutoff Dates.

    2. FY 20XX Year-end Responsibilities and Cutoff Dates.

    3. Closing of Budget Fiscal Year 20XX Appropriations.

  4. The FM Year-end Close Guidance and attachments are available on the CFO website.

  5. The Redesigned Revenue Accounting Control System (RRACS) records and reports all revenue accounting transactions and financial data processed from all IRS automated and manual tax systems. RRACS tracks financial data from receipt of the tax return to payment of outstanding taxes or refund issuance. Other financial data is recorded such as photocopy fees and installment agreement user fees. Data is entered into the system primarily at the Submission Processing Centers. The database is maintained at the Detroit Computing Center and consists of general ledger accounts and a variety of internal records used for balancing and reporting. Information detailing the revenue accounting closing processes can be found in IRM 3.17.63, Redesigned Revenue Accounting Control System and IRM 3.17.64, Accounting Control General Ledger Policies and Procedures.

Authorities

  1. Chief Financial Officers Act of 1990, Pub. L. No. 101-576.

  2. Federal Managers’ Financial Integrity Act of 1982 (FMFIA), Pub. L. No. 97-255.

  3. Government Management Reform Act of 1994 (GMRA), Pub. L. No. 103-356.

  4. Federal Financial Management Improvement Act of 1996 (FFMIA), Pub. L. No. 104-208.

  5. Government Performance and Results Act of 1993 (GPRA), Pub. L. No. 103-62.

  6. Accountability of Tax Dollars Act of 2002 (ATDA), Pub. L. No. 107-289.

  7. E-Government Act of 2002 (FISMA), Pub. L. No. 107-347.

Related Resources

  1. Office of Management and Budget (OMB) Circular No. A-11, Preparation, Submission and Execution of the Budget.

  2. OMB Circular A-123, Management's Responsibility for Internal Control.

  3. Appendix D to OMB Circular No. 123, Compliance with the Federal Financial Management Improvement Act of 1996.

  4. OMB Circular A-134, Financial Accounting Principles and Standards.

  5. OMB Circular No. A-136, Financial Reporting Requirements.

  6. Federal Accounting Standards Advisory Board (FASAB) Statements of Federal Accounting Concepts and Standards.

  7. Government Accountability Office's (GAO) Principles of Federal Appropriations Law(Red Book).

  8. IRM 1.33.3, Reimbursable Operating Guidelines.

  9. IRM 1.33.4, Financial Operating Guidelines.

  10. IRM 1.35.4, Purchase Card Program.

  11. IRS Financial Management Codes Handbook.

  12. IRM 3.17.63, Redesigned Revenue Accounting Control System.

  13. IRM 3.17.64, Accounting Control General Ledger Policies and Procedures.

Definitions

  1. In these guidelines, the terms below have the following meanings:

    1. Acceptance - Acknowledgment by an authorized Government official that goods received and/or services rendered conform to the contract requirements.

    2. Accounts Payable - A liability to pay an organization or entity for goods and/or services that the IRS has received and accepted.

    3. Accounting Period - A length of time, usually a month, in which transactions are posted into IFS. The IRS defines its accounting periods to correspond to a fiscal month and a fiscal year. For example, accounting period 01 corresponds to October of the fiscal year and accounting period 12 corresponds to September of the fiscal year.

    4. Accrued Expense - An expense incurred for which the goods and/or services have been consumed but receipt has not been recorded.

    5. Budget Fiscal Year - A fiscal year for which Congress authorized and appropriated funds.

    6. Capital Asset - An asset including land, structures, equipment, and intellectual property (including software) that has an estimated useful life of greater than two years.

    7. Commitment - An administrative reservation of funds prior to obligation of funds. Typically, commitments are created by a purchase requisition.

    8. Financial Plan - A statement of intent to consume resources needed for accomplishing a mission during a period, typically a fiscal year. In addition to stating the resources to be consumed, the plan also states any available supplemental resources, such as user fees or reimbursements, to be used.

    9. Financial Plan Manager (FPM) - The official responsible for day-to-day operations of monitoring and controlling a Financial Plan’s funds in the execution phase of the budget cycle.

    10. Integrated Financial System (IFS) - The IRS official administrative financial management system.

    11. Non-Procurement Action - An action not requiring a contract signed by a warranted contracting officer. In this type of action, the desired goods and/or services are acquired via other means. For example, an authorized purchase cardholder may procure goods whose cost is less than the micro-purchase threshold. Other means of non-procurement action include a reimbursable work authorization (RWA), security work authorization (SWA), Standard Form (SF) 182, Authorization, Agreement and Certification of Training, or Form 2785, Requisition/Obligation Estimate Adjustment Notice.

    12. Obligation - A binding agreement that may result in outlays, immediately or in the future. Budgetary resources must be available before obligations can be legally incurred.

    13. Receipt - An acknowledgment that the Government received the goods and/or services.

    14. Redesigned Revenue Accounting Control System (RRACS) - The IRS automated system used to provide accounting control for all revenue accounting transactions.

    15. Separation of Duties - A key internal control concept under which no single individual has complete control over a financial transaction from beginning to end. Examples include separating the responsibility for receiving checks from posting them in a financial system; making purchases with the purchase card, approving purchases and paying the vendor; and entering an obligation and recording the receipt and acceptance of goods and/or services received under that obligation.

    16. Spend Plan - A statement of intent to use both labor and non-labor resources, supplemented with an explanation of expected anomalies and funding challenges; an analysis, by age, of unliquidated commitments and obligations pending final action; proposed budget realignments; and a confirmation of spending, by budget activity category (BAC), using both "multi-year" and "no-year" funds.

    17. Travel Authorization - An electronic or written document submitted for approval to authorize official travel.

    18. Travel Obligation - An obligation resulting from a travel authorization. However, unlike other obligations, the Government is not bound to complete the acquisition. Funds are reserved for the purpose of the prescribed trip.

    19. Undelivered Order - An order for which the goods and/or services have not been received.

    20. Unliquidated Obligation - An obligation for which a portion or all of the goods and/or services have yet to be received.

Acronyms

  1. The following chart contains acronyms that are used throughout this IRM.

    ACRONYM DESCRIPTION
    AINFC Automated Interface to the National Finance Center
    AUC Aging Unliquidated Commitments
    AUO Aging Unliquidated Obligations
    AWSS Agency-Wide Shared Services
    BFC Beckley Finance Center
    CARS Central Accounting Reporting System
    CLIN Contract Line Item Number
    EITC Earned Income Tax Credit
    FASAB Federal Accounting Standards Advisory Board
    FBWT Fund Balance with Treasury
    Fiscal Service Bureau of the Fiscal Service
    FM Financial Management
    FPM Financial Plan Manager
    GAO Government Accountability Office
    GLAC General Ledger Account
    GRAS Government Relocation Accounting System
    GTAS Governmentwide Treasury Account Symbol Adjusted Trial Balance System
    IFS Integrated Financial System
    IPAC Intra-governmental Payment and Collection
    IPS Integrated Procurement System
    NFC National Finance Center
    RRACS Redesigned Revenue Accounting Control System
    SGL Standard General Ledger
    SNC Statement of Net Cost
    TEP Transaction by Eliminations
    TIER Treasury Information Executive Repository

Responsibilities

  1. This section provides responsibilities for:

    1. Chief Financial Officer.

    2. Associate Chief Financial Officer for Financial Management.

    3. Director, Beckley Finance Center.

    4. Director, Financial Management Policy Office.

    5. Director, Financial Reports Office.

    6. Director, Financial Management Systems Office.

    7. Deputy Associate Chief Financial Officer for Financial Management.

    8. Director, Revenue Oversight and Support Office.

    9. Director, Revenue Accounting Office.

    10. Associate Chief Financial Officer for Corporate Budget.

    11. Director, Office of Procurement, Agency-Wide Shared Services.

    12. Division Finance Officers.

    13. Business Unit Year-end Coordinator.

Chief Financial Officer

  1. The Chief Financial Officer (CFO) is responsible for:

    1. Ensuring that the IRS financial statements are materially accurate and fairly state the IRS assets, liabilities, net position, net costs, changes in net position, budgetary resources, and custodial activity as of and for the fiscal year ending September 30.

    2. Overseeing policies, procedures, standards, and controls for IRS financial processes and systems.

    3. Preparing financial reports for external stakeholders.

Associate Chief Financial Officer for Financial Management

  1. The Associate Chief Financial Officer (ACFO) for Financial Management (FM) is responsible for:

    1. Ensuring IRS compliance with administrative financial reporting requirements, including preparation of the annual financial statements.

    2. Preparing and issuing revenue (custodial) financial statements/information.

    3. Ensuring proper financial management and reporting of the custodial assets received by the IRS and reported to Treasury and other Federal agencies.

    4. Coordinating the annual financial statement audit with GAO.

    5. Accounting for all tax revenue receipt/refund activities and managing/reporting unpaid assessments (taxes receivable).

    6. Establishing and maintaining accounting policy and procedures for internal accounting operations and financial reporting.

    7. Establishing accounting and financial management processes and procedures for business units and offices. These processes and procedures support the compilation of the quarterly and annual financial statements.

    8. Directly managing the quarterly and annual financial statements.

    9. Consolidating the annual financial statements for both administrative and custodial accounts.

    10. Issuing detailed year-end close guidelines and deadlines.

Director, Beckley Finance Center

  1. The Director, Beckley Finance Center (BFC), is responsible for:

    1. Coordinating fiscal and calendar year-end activities for BFC.

    2. Managing the transactional close process, including developing specific guidelines and procedures to be followed by the business units in preparation for the annual close.

    3. Hosting year-end conference calls with business units to discuss tasks, issues, and timelines for the year-end close.

    4. Preparing the year-end calendar to communicate the timing of tasks to be performed by the business units.

    5. Processing and recording transactions including, but not limited to, those related to travel, accounts payable, reimbursable projects, interagency agreements, and deobligation requests.

    6. Reviewing transaction activity and related error diagnostic messages, including those pertaining to obligation reversals, receivables, payment reversals, advances, invoices, and interagency payment activity.

    7. Providing guidance and assistance to business units for review of unliquidated commitments and obligations and for reviewing the business units’ submissions of the analyzed transactions.

    8. Preparing analytical and/or accrual work papers in support of general ledger balances including the proposal of accruals, account adjustments, or reclassifications, as necessary.

    9. Preparing reports for both internal and external use, to include, but not limited to, the Bureau of the Fiscal Service, Classification Transactions and Accountability (CTA), Section I, Statement of Transactions; the Prompt Payment Report; and the Treasury Report on Receivables.

    10. Producing and reconciling the Statement of Net Cost (SNC).

Director, Financial Management Policy Office

  1. The Director, Financial Management Policy Office (FMP), is responsible for:

    1. Publishing the annual close requirements and deadlines.

    2. Providing clarifying guidance and assistance on accounting policy matters.

    3. Assisting managers and other employees in interpreting and applying policies.

Director, Financial Reports Office

  1. The Director, Financial Reports Office (FR), is responsible for:

    1. Preparing the IRS quarterly and annual financial statements and monthly trial balances for administrative accounts.

    2. Consolidating the annual financial statements for administrative and revenue accounts; including notes to the financial statements, other information, and required supplementary information.

    3. Preparing and recording entries for contingent liabilities.

    4. Establishing accrual methodology for payroll and non-payroll expenses.

    5. Preparing analytical and/or accrual work papers in support of general ledger balances including the proposal of accruals, account adjustments, or reclassifications, as necessary.

    6. Reviewing and approving all work papers and/or analysis developed in support of administrative general ledger balances, as well as related entries.

    7. Coordinating and monitoring the clearance of accounts for canceling appropriations.

    8. Working with Corporate Budget and Procurement to monitor achievement of the IRS-wide goal of 92% of non-labor budget obligated by the end of August.

    9. Performing the final review of the SNC, including the allocation of costs and exchange revenue, as prepared by the Financial Management Systems Office.

    10. Preparing, analyzing, reviewing, and submitting annual, quarterly, and monthly financial reports and certifications to Treasury, including, but not limited to, Treasury Information Executive Repository (TIER) and Agency Financial Report (AFR) deliverables.

    11. Managing year-end system access and postings through controlling the opening and closing of adjustment periods.

    12. Facilitating the reporting of financial data to the Federal Highway Administration.

    13. Facilitating the reporting of financial data to the Department of Health and Human Services (DHHS) for the Affordable Care Administration (ACA) fund.

    14. Preparing, reviewing, and submitting provided by the client (PBC) deliverables to the Government Accountability Office (GAO) in support of the financial statement audit.

    15. Preparing, reviewing, and submitting OMB Circular A-123 PBC deliverables to Corporate Planning and Internal Control.

    16. Posting year-end canceling fund adjustments in the Central Accounting Reporting System (CARS) to officially close the canceling funds.

    17. Confirming year-end closing balances in CARS.

    18. Certifying year-end balances in the Governmentwide Treasury Account Symbol Adjusted Trial Balance System (GTAS).

Director, Financial Management Systems Office

  1. The Director, Financial Management Systems Office (FMS), is responsible for:

    1. Documenting and communicating detailed daily system processing schedules.

    2. Processing payroll and related accruals and transactions in accordance with IRS policies and procedures.

    3. Developing, defining, implementing, and maintaining a financial system project plan for the annual close.

    4. Developing, maintaining, and executing the annual system closeout and new year system reset process.

    5. Ensuring all accounts properly close with no negative balances at year-end.

    6. Conducting mock systems testing to ensure the proper closing of all accounts.

    7. Running and reconciling the cost allocation cycles.

    8. Producing and reconciling the SNC.

Deputy Associate Chief Financial Officer for Financial Management

  1. The Deputy ACFO for FM is responsible for:

    1. Accounting for all tax revenue receipt/refund activities and managing/reporting unpaid assessments (tax receivable).

    2. Preparing custodial financial statement/information.

    3. Ensuring proper financial management and reporting of the custodial assets received by the IRS and reported to Treasury and other Federal agencies.

    4. Establishing and maintaining custodial accounting policies and procedures.

Director, Revenue Oversight and Support Office

  1. The Director, Revenue Oversight and Support Office, is responsible for establishing policies and procedures related to segmenting the inventory of unpaid assessments for financial and performance reporting, and overseeing the certification of excise tax refunds and trust funds.

Director, Revenue Accounting Office

  1. The Director, Revenue Accounting Office (RA), is responsible for:

    1. Preparing the Statement of Custodial Activity, the custodial portion of the Balance Sheet, associated notes, required supplementary information, other information, and information for the Management's Discussion and Analysis.

    2. Providing guidance, policies, procedures, and coordinating the necessary steps to properly report and perform the audit of tax revenue and refunds for the IRS.

    3. Issuing procedures and directives to support financial reporting activities.

    4. Preparing, analyzing, reviewing, and delivering monthly and quarterly financial reports to Treasury and OMB.

Associate Chief Financial Officer for Corporate Budget

  1. The Associate Chief Financial Officer (ACFO) for Corporate Budget (CB) is responsible for:

    1. Coordinating year-end close issues with FM and the Office of Procurement, developing and issuing guidance, and monitoring and controlling spending.

    2. Issuing budget guidance to the business units, such as guidance relevant to the year-end process.

    3. Monitoring and tracking reimbursable earnings and assisting with year-end closing of reimbursable projects.

    4. Interpreting Office of Management and Budget (OMB) budgetary and financial reporting changes for the coming fiscal year into system requirements.

    5. Providing FM with documentation of year-end adjustments to appropriated authority, reimbursements, and user fees (for example, SF 1151, Nonexpenditure Transfer Authorization, and SF 132, Apportionment and Reapportionment Schedule).

    6. Determining the amount of Federal Highway unobligated authority and undisbursed cash to be withdrawn by the Federal Highway Administration.

    7. Coordinating with Procurement to develop a joint memo that sets out third and fourth quarter commitment and obligation goals for business units for the fiscal year.

    8. Working simultaneously with Procurement and FM to monitor and maintain oversight of business unit and IRS-wide commitment and obligation statuses to ensure compliance with the goals of 100% of procurement actions committed by July 31, 92% of non-labor budget obligated by August 31 (91% for labor), and 99.7 % of expiring budget obligated by September 30.

    9. Reviewing the year-end canceling fund adjustments posted by the Financial Reports Office in CARS to officially close the canceling funds and ensure the canceled budget authority is correct.

Director, Office of Procurement, Agency-Wide Shared Services

  1. The Director, Office of Procurement, Agency-Wide Shared Services (AWSS), is responsible for:

    1. Issuing an information transmittal on annual acquisition planning dates.

    2. Issuing deadlines, in conjunction with the CFO, for submitting requisitions that allow ample time for the annual close.

    3. Issuing advance payment authorization to cover the year-end blackout period.

    4. Administrating reviews, providing guidance, monitoring, and tracking of open awards with liquidation of balances deemed to no longer be valid.

    5. Awarding actionable requests received through the Integrated Procurement System (IPS) to support the obligation goal to have 92% of all expiring non-labor funds and 91% of all expiring labor funds obligated by August 31.

    6. Reviewing, approving, or rejecting requests for September obligations that exceed the established threshold.

    7. Providing staff, support, and system availability for interfaced transactions, through the last interface on September 30.

Division Finance Officers

  1. The Division Finance Officers (DFOs) and their business units are responsible for:

    1. Managing their funds in accordance with sound, prudent, and lawful financial management practices.

    2. Establishing and monitoring annual financial plans.

    3. Designating business unit year-end coordinators.

    4. Developing year-end action plans that identify tasks specific to the business unit, along with assigning due dates, and designating responsible parties.

    5. Establishing procedures and enforcing compliance to ensure the validity and appropriateness of commitments and obligations. These procedures shall ensure that: commitments and obligations are accurate and properly documented; any invalid commitments and obligations are promptly liquidated; and, the unliquidated commitment and obligation reviews are completed and submitted in accordance with requirements.

    6. Attesting, on behalf of their management, to the accuracy of open commitments and obligations at year-end.

    7. Submitting estimated obligations to FM.

    8. Submitting all required documents to FM, including, but not limited to, invoices, telephone bills, labor adjustments/estimates, and investigative advances reports.

    9. Performing all appropriate actions related to reimbursable agreements.

    10. Complying with all prescribed year-end close deadlines.

Business Unit Year-end Coordinators

  1. The business unit year-end coordinators are responsible for assisting the DFOs in the tasks stated above and participating in year-end conference calls.

Spend Plan

  1. Each business unit, under the direction of the Financial Plan Manager, prepares a spend plan. This plan enables management to monitor its actual financial performance in relation to its spend plan.

Midyear/Spend Plan Review

  1. After the close of the second quarter, CB conducts a Midyear/Spend Plan Review with each business unit to assess the financial position of the organization for internal and external stakeholders. This Midyear/Spend Plan Review process is an opportunity for business units to review financial performance for the October through March timeframe and to evaluate the April through September projections. This review ensures that the business unit is spending at a rate that will achieve the final spending targets.

  2. The Midyear/Spend Plan Review:

    1. Evaluates the status of spending to ensure timely obligation of funds, per CFO and Procurement guidance.

    2. Identifies potential unfunded needs and surpluses.

    3. Identifies potential base shortfalls that can be corrected in the multiyear planning process.

    4. Promotes timely posting of reimbursables.

    5. Provides necessary information for the Department of the Treasury (Treasury) Midyear Review.

    6. Finalizes the spend plans.

  3. After a complete analysis of the spend plans, the business unit and/or CB adjusts the plans as necessary.

  4. Business units are required to meet commitment and obligation targets established jointly by the CFO and Procurement. Each business unit must record requisitions and the resulting obligations timely in IFS and follow the approved spend plan.

  5. Additional information on managing spend plans, including realigning funds, is provided in IRM 1.33.4, Financial Operating Guidelines.

Current Year Targets

  1. The IRS should have 100% of procurement actions committed by July 31, 92% of non-labor budget obligated by August 31 (91% for labor), and 99.7% of expiring budget obligated by September 30. The Office of Procurement, in conjunction with Corporate Budget, is responsible for communicating these targets, tracking target progress, and reporting target results. The IRS should have 92% of all expiring non-labor funds and 91% of all expiring labor funds obligated by August 31, based on year-end obligations. Obligations can be recorded or modified through September 30 of each fiscal year.

  2. The Office of Procurement is responsible for reviewing, certifying, and managing targeted open obligation balances to pursue further reductions in open obligations by fiscal year-end and to validate those that remain. The Aging Unliquidated Commitments (AUC) reports generated by BFC assist in this process.

Recording Financial Transactions

  1. Correctly recording all actual and estimated fiscal year financial transactions ensures that the IRS presents its financial statements fairly in all material respects, and that its financial statements are in conformity with United States generally accepted accounting principles. This includes:

    1. Posting all obligations timely and accurately. The authority to incur obligations for a fiscal year (except for "no-year" funds and "multi-year" funds with at least one year remaining) expires at midnight, Eastern Daylight Time (EDT), on September 30.

    2. Recording the receipt and acceptance of goods and/or services promptly.

    3. Processing pending invoices where receipt and acceptance has been recorded.

    4. Estimating accruals to ensure that the IRS recognizes unpaid expenses.

    5. Closing out accounts properly to ensure that account balances are correct.

  2. These activities are discussed below and also in the references provided in IRM 1.35.15.2(3), Background.

Obligations

  1. IFS records obligations through the following interfaces and manual entries:

    1. Automated interface between IPS and IFS. In these cases, the business unit has entered a commitment, and the commitment or the subsequent obligation has passed into IFS via the interface.

    2. Manual entry directly into IFS. In this case, the commitment is not automatically recorded in IPS.

    3. Automated interface between Concur and IFS or the Government Relocation and Accounting System (GRAS) and IFS. IFS performs these interfaces daily. This applies to travel and relocation-related transactions only.

Integrated Procurement System

  1. To ensure that obligations posted in the Integrated Procurement System (IPS) are recorded in IFS at the close of the fiscal year, FM institutes special IPS and IFS interface transmissions. Information pertaining to requisitions and obligations stored in IPS is transmitted daily, on workdays, to IFS. On September 30, or the last working day in the fiscal year should September 30 fall on the weekend, five transmissions from IPS to IFS occur, generally at 10:00 a.m., 1:00 p.m., 3:00 p.m., 6:00 p.m., and 9:00 p.m., EDT.

Purchase Cards
  1. An approved and funded IPS requisition is required in advance of each purchase made with a purchase card. Once the business unit enters and approves the requisition, the FPM "funds" it before the requisition is transmitted to IFS to establish the commitment.

  2. Business units must log purchases into the Purchase Card Module and reference the appropriate requisition by close of business on September 30 to establish payment authority. Only those purchases recorded in order logs remain open as commitments in the Purchase Card Module after September 30. All other commitments established in IFS are reversed.

  3. After October 1, IFS uses the accounting string information from the unliquidated purchase card module transactions for the preceding fiscal year for the obligation and payment.

  4. Additional information on purchase cards can be found in IRM 1.35.4, Purchase Card Program.

Manually-Entered Obligations

  1. This section provides year-end information specific to unique programs that require manual entry.

Miscellaneous Programs
  1. Due to the need to develop more precise estimates of account balances as of September 30, FM needs additional time to review manual entry transactions for completeness and to exercise quality control measures at year-end. To ensure ample review time at year-end, FM prescribes earlier than usual cutoff dates for submitting documents. These cutoff dates are issued in the FM Year-end Close Guidance.

  2. For the programs listed in the chart below, the business unit enters the commitment in IPS and is required to monitor commitment amounts to ensure that they are sufficient to cover anticipated needs through the fiscal year-end. FM manually records the obligation in IFS, using the associated documentation listed below. The business unit uses this same documentation to transmit any changes in the obligation amount.

    Program or Activity Documentation
    Administrative Summons Form 2785, Requisition/Obligation Estimate Adjustment Notice
    Attorney Fees
    Disclosure of Information - Administrative Claims
    Foreign Service
    Government Bills of Lading/Internal Revenue Bills of Lading
    Government Printing Office
    Motor Pool
    Sales/Seizures
    Settlement Agreements
    Tax Lien Fees
    Telephones
    Treasury Franchise Fund
    Imprest Fund for Investigative Purposes Form 2785, Requisition/Obligation Estimate Adjustment Notice or Reconciliation Purchase Worksheet
    Security Work Authorizations Federal Protective Service (FPS) 57(T), Security Work Authorization
    Reimbursable Work Authorizations General Services Administration (GSA) Form 2957, Reimbursable Work Authorization
    Personal Property Claims PG 1334 Worksheet (printout from IPS)
    Representation Fund
    Torts
    Training (no credit cards or convenience checks) SF 182, Authorization, Agreement and Certification of Training
  3. For the programs listed in the chart below, there is no commitment recorded in IPS to draw down funds in IFS. FM must manually record the obligation using the forms listed below. The business unit uses these same forms to transmit changes in the obligation amount.

    Program or Activity Documentation
    Foreign Service *Form 2785, Requisition/Obligation Estimate Adjustment Notice
    Consolidated American Payroll Processing System (CAPPS)
    GSA Autos
    Postage
    Rent
    Unemployment Compensation for Federal Employees (UCFE)
    Federal Telecommunication Services (FTS)
    Federal Tax Lien Revolving Fund (FTLRF) *Memo request

    Note:

    *Funds are obligated from the accounting string.

Blanket Purchase Agreements
  1. The Blanket Purchase Agreement (BPA) is a simplified method of filling anticipated repetitive needs for supplies and services by establishing "charge accounts" with qualified sources. The BPAs are normally limited to local business establishments from which numerous individual purchases will likely be made during a specified time period.

  2. During a BPA period of performance, each IRS employee who is authorized to place calls against the BPA maintains a call log to record each service request and the dollar amount. Depending upon business unit procedures, the authorized caller either references the call to a bulk-funded commitment or records a commitment in IPS corresponding to the dollar value of each call. At the end of a month, the authorized caller must submit a copy of the funded call log to FM to record the obligation in IFS.

  3. FM establishes special procedures for the submission of the call logs annually. These procedures generally require authorized callers to submit interim call logs in August, with projections for anticipated calls through the end of the fiscal year. FM publishes the specific dates in the FM Year-end Close Guidance.

Travel and Relocation

  1. Travel obligations represent travel that has been authorized, but not yet vouchered. Therefore, it is especially important that travelers:

    1. Enter or request new authorizations for travel that will be taken before the end of the fiscal year so these dollar amounts can be obligated.

    2. File vouchers timely so unneeded travel amounts can be deobligated.

  2. FM publishes year-end deadlines for the manual and electronic submission of travel authorizations and travel vouchers annually, including those for long-term taxable travel and relocation, in the FM Year-end Close Guidance. Business units need to comply with these deadlines so that travel can continue without interruption. Business units may not submit requests for manual authorizations or advances to circumvent the requirements associated with automated systems; nor may offices request manual advances for individuals who can obtain advances by using their travel cards.

Treasury Executive Office Asset Forfeiture Funds

  1. Treasury Executive Office Asset Forfeiture Funds (TEOAF) obligation activity (awards or modifications) for the Mandatory, Super Surplus and Secretary Enforcement programs must be processed in IPS and interfaced to IFS no later than close of business on September 26 to assure proper elimination cut-off with the IRS’ trading partner. The affected funds end in 09R3D and 09F3D.

Receipt and/or Acceptance

  1. In order to accurately estimate the accounts payable liability as of September 30, timely notices of receipt and/or acceptance are crucial. Inappropriate or overstated receipt and/or acceptance must be corrected in IPS, which then interfaces with and updates IFS to properly state the liability. FM must receive receipt and/or acceptance by the date specified in the FM Year-end Close Guidance. Notification is to be performed as follows:

    1. Electronic: All valid electronic receipt and/or acceptance data must be input as soon as possible, but no later than the date specified in the FM Year-end Close Guidance.

    2. Manual: All invoices and related receipt and acceptance documents for manual obligations (Forms 2785, BPA logs, etc.) must be forwarded to FM no later than the dates specified in the FM Year-end Close Guidance.

Invoices and Payments

  1. In order to facilitate year-end processing, it is helpful if business units and/or vendors submit invoices for goods and/or services that were obtained during the fiscal year to FM before the accounting records are closed. FM publishes specific dates for the submission of invoices for the fiscal year annually in the FM Year-end Close Guidance.

Commercial Transactions

  1. Generally, each contract contains specific language that governs invoicing procedures. Business units should not make requests directly to the vendor that differ from the invoicing terms in the contract. The Contracting Officer (CO) contacts the vendor to request changes in invoicing frequency.

Intra-governmental Transactions

  1. Generally, Federal agencies use the Intra-governmental Payment and Collection (IPAC) system to record fees between agencies. FM records expenses and credits associated with IPAC transactions in a suspense account when acceptance has not taken place. At year-end, it is particularly important that business units certify that both receipt and acceptance of goods and/or services have taken place to minimize the number and dollar value of transactions in the suspense account at the end of each fiscal year.

Eliminating Intra-departmental Transactions

  1. Each Department of the Treasury bureau and office reports the transactions that it has with other Treasury bureaus, trading partners, and offices. To avoid duplicating these transactions in its own "Cabinet-level" financial statements, Treasury instructs its subordinate bureaus and offices to reconcile their transactions with one another. The Intra-Agency Transaction by Eliminations (TEP) report is the primary source of information available to FM to reconcile intra-departmental transactions. TEP is an on-line report in the Treasury Information Executive Repository (TIER) system, which displays elimination differences using Standard General Ledger (SGL) data submitted to Treasury by each Treasury Trading Partner (TP). FM submits the SGL data via TIER.

  2. FM conducts quarterly reconciliations with each TP that has reciprocal SGL balances reported on the TEP report. For the third quarter, June 30th "dry run" reconciliation, FM is required to provide explanations to the Treasury Office of Financial Reporting and Policy (FRP) for differences above the threshold established by Treasury. For the year-end reconciliation, balance differences must be reconciled and/or adjusted to bring the TP balance differences below the threshold established by Treasury.

  3. Bureaus must perform intra-departmental elimination reconciliations through September 30 and submit required reports by the due dates provided in the Intra-Departmental Transaction Policy Guidance issued annually by Treasury.

Commitment and Obligation Reviews

  1. Commitments set aside funds for future obligations and represent a resource management tool to draw down budget availability. Obligations are legally binding agreements created by awards, contracts, or purchase orders. Business units and/or Procurement enter the values of the negotiated agreements (obligations) into IFS prior to the beginning of work. Obligations draw down (liquidate) commitments. Expenditures draw down (liquidate) obligations.

  2. Timely management of commitments and obligations enables the IRS to maximize its financial resources. FM provides the Aging Unliquidated Commitments (AUC) and the Aging Unliquidated Obligations (AUO) reports to the business units and Procurement on predetermined dates. Business units and Procurement review, annotate, certify, and return the reports to FM by the prescribed due date. The reviews ensure the legitimacy, accuracy, and accountability of open balances with respect to timely consumption. Business units and/or Procurement must take immediate action to liquidate invalid commitments and obligations and exercise diligent oversight to ensure those items determined valid become expenditures.

  3. Since all current year open commitments and obligations draw down available budgets, amounts decommitted or deobligated become available for funding other items during the fiscal year.

Aging Unliquidated Commitments

  1. The Aging Unliquidated Commitments (AUC) report serves as a useful tool in monitoring open commitment balances. It also helps the FPM ensure the flow of resources from commitments to obligations. Commitments decrease the available budget when posted to the general ledger. Business units must continue to monitor the open commitment balances to ensure that these balances are at an appropriate level to cover future obligations for the fiscal year.

  2. The AUC review requires business units to review and validate selected OQ-Other Requisitions, CQ -Purchase Card Requisitions, and PQ-Procurement Requisitions commitments older than a predetermined date. The specific criteria used to select transactions for review vary annually, but take into consideration the age of the open commitment.

  3. To accommodate fourth quarter requirements, year-end, and the 99.7% obligation goal, business units must review AUC reports more frequently as September 30 nears. This is critical to ensure that valid commitments either become obligations by September 30, or are liquidated if not needed. Business units must liquidate invalid commitments to maximize budgetary potential as obligation authority against open commitments ends at midnight, EDT, on September 30.

Aging Unliquidated Obligations

  1. The Aging Unliquidated Obligations (AUO) report serves as a useful tool in monitoring open obligations. When business units and Procurement determine that an AUO balance is overstated and will not be expended, they must modify the obligation to reflect accurate amounts. The AUO reviews include the review of outstanding travel transactions.

  2. Of particular focus in the AUO review process are at-risk obligations. The established criteria for at-risk obligations consist of the following:

    1. No activity over a predetermined period of time.

    2. The period of performance has expired.

    3. The open obligation balance exceeds a predetermined percentage of the total contract line item’s (CLIN) highest obligation amount, if cost reimbursable.

  3. Once FM identifies the at-risk obligations, it sends the lists of obligations to the business units and Procurement. FM continually works with Procurement and the business units to determine if the questionable obligations are reasonable, as extenuating circumstances may justify prolonged periods of inactivity. If not, FM works with Procurement and the business units to cancel or modify obligations, as appropriate.

  4. FM runs summary queries detailing the total dollars still outstanding for inactive obligations on a monthly basis. These summary queries enable the Associate CFO for FM to monitor the progress of corrective actions regarding the at-risk obligations.

  5. For those obligations pertaining to cost reimbursement projects, FM establishes a reasonable dollar tolerance for each CLIN. These tolerance limits are indicated on the AUO report. Program managers keep obligation CLINs open within the tolerance limits until completion of all contract audits and the corresponding vendor payments have been made.

Reimbursable Agreements

  1. A reimbursable agreement is a signed agreement between the IRS and an outside customer that sets out the terms and conditions under which the reimbursable work arrangement will be performed.

  2. Reimbursable agreements fall into the following categories:

    1. Federal Government (non-Treasury).

    2. Non-Federal, State, local, and foreign government.

    3. Intra-departmental (Treasury/Bureau).

    Note:

    Non-Federal, State, local, and foreign government agreements are frequently paid in advance. Federal Government agreements are usually monthly billing arrangements.

  3. The Business Unit Budget Office Reimbursable Coordinator, Business Unit Project Coordinator, and FPM are responsible for ensuring the projects proceed in accordance with the provisions of the reimbursable agreement. Year-end procedures for closing reimbursable agreements should begin no later than mid-June of each year. At the end of the year, in accounting period 12, the Business Unit Project Coordinator and FPM will review the reimbursable activity for the year and estimate the amount of work completed through September that has not been charged or recognized as revenue. The Business Unit Budget Office Reimbursable Coordinator will record the estimated reimbursable earnings on SF-FV50, Schedule of Reimbursable Project Earnings. Business units and FM must post all adjustments and earnings by the dates specified in the FM Year-end Close Guidance.

  4. Additional guidance on reimbursable agreements can be found in IRM 1.33.3, Reimbursable Operating Guidelines, and on the Chief Financial Officer and Corporate Budget websites.

Accounting Code Changes

  1. The validity and accuracy of the IRS financial reports depend on the correct use of accounting codes. Business units may process accounting code changes, in coordination with BFC, when they post erroneous accounting string information (for example, fund, cost center, functional area, material group) to IFS. Accounting code change errors must meet certain requirements to determine if the change is necessary. IRM 1.35.15.15.1, Dollar Threshold, and IRM 1.35.15.15.2, Other Criteria, detail these requirements.

  2. Business units should report accounting code changes as they are identified throughout the year by submitting a request to BFC via email at *CFO BFC Electronic Obligations or *CFO BFC Electronic EV for labor-related changes.

  3. The IRS uses trading partners, derived from general ledger (GL) accounts, to trace intra-governmental transactions wherein one agency provides goods and services to another. Business units can process multiple GL accounts that infer the same trading partner in the same document. However, IFS cannot process expense transfer documents for accounting code changes that reference more than one unique trading partner.

  4. Business units must correct all identified accounting code changes before September 30 to reflect the correct fund center/financial plan status at fiscal year-end. Business units must report errors identified during September to FM by the accounting code change request date detailed in the FM Year-end Close Guidance to ensure that FM will have sufficient time to make the changes prior to year-end.

  5. There are separate accounting code change rules for Earned Income Tax Credit, payroll, purchasing, and travel and relocation transactions. IRM 1.35.15.15.6, Earned Income Tax Credit; IRM 1.35.15.15.7, Payroll; IRM 1.35.15.15.8, Purchasing; and IRM 1.35.15.15.9, Travel and Relocation, discuss these rules.

Dollar Threshold

  1. Business units can process accounting code changes to requisitions that have activity at the obligation, receipt and/or acceptance, or payment level if the dollar amount of the change per requisition is greater than $100,000. In addition to the exception criteria detailed below, business units can process changes of $100,000 or less for labor costs detailed in IRM 1.33.4.9.1.8.2, Charging Labor Costs, General.

  2. Exceptions to the dollar threshold include accounting code change requests which, if not processed, would (1) cause a payee to receive an incorrect Form 1099; (2) result in erroneous appropriation accounting; or (3) result in a violation of legislation, regulation, or internal or external reporting requirements. If the business unit identifies any accounting code changes that are exceptions to the dollar threshold; the business unit must process the account code change, regardless of the dollar amount.

  3. Refer to the Z_TAXCODE table in IFS or the IRS Financial Management Codes Handbook to determine if a change affects taxability.

Other Criteria

  1. In addition to meeting the dollar threshold, business units can only process accounting code changes related to any of the following major accounting attributes:

    1. Fund.

    2. Cost Center - the first four digits of the cost center must change.

    3. Functional Area.

    4. Material Group - the first two digits of the Commitment Item/Budget Object Class (BOC) Code must change.

    5. Internal Order.

  2. Business units cannot process changes relating to any other accounting attributes, regardless of the dollar amount.

Accounting Code Changes Related to Prior Year Obligations and Expenses

  1. Business units process accounting code changes for prior year open obligations, when business units have posted no expenses. Accounting code changes to prior year open obligations are handled the same way as accounting code changes for current year obligations. These accounting code changes must be in accordance with the requirements in IRM 1.35.15.15.1, Dollar Threshold, and IRM 1.35.15.15.2, Other Criteria.

  2. Business units are permitted to process change requests for prior year expenses on an exception basis. The IRS has already reported these expenses in the prior year's audited financial statements. Business units can process these accounting code changes after obtaining permission from the Financial Reports Office.

Accounting Code Changes Related to Office of Management and Budget Directives

  1. Business units will process all accounting code changes related to OMB directives.

Accounting Code Changes Related to a Continuing Resolution

  1. Business units may process accounting code changes that result from differences between how the IRS funded an activity during a continuing resolution and the actual budget in the same manner as all other accounting code changes. The dollar threshold and other limitations will apply. Exceptions to any limitations will be addressed on a case-by-case basis.

Earned Income Tax Credit

  1. The Earned Income Tax Credit (EITC) is a refundable credit created in 1975 to offset the impact of Social Security taxes on low-income families encouraging them to seek employment rather than welfare. The IRS established the Return Integrity and Compliance Services (RICS), Refundable Credits Administration, to ensure refund compliance. Since the EITC program has been decentralized, all staffing issues are controlled by each business unit's Commissioner.

  2. Prior to FY 2005, EITC had its own direct fund (appropriation) to which business units could charge expenses. Beginning with FY 2005, EITC no longer had its own fund and the IRS allocated budgeted dollars for EITC to specific funds for Taxpayer Services, Enforcement, and Operations Support. Business units use sub-funds associated with each of these funds to track EITC expenses separately. See IRM 1.35.15.15.6(7) for the Home Fund and EITC Sub-Fund listing.

  3. Business units should charge all EITC non-payroll expenses against the appropriate EITC sub-fund. If expenses are erroneously charged against another fund, business units should follow the standard process for accounting code changes, including the relevant dollar thresholds. The handling of payroll expenses related to EITC is an exception to the standard procedure. No dollar threshold or other limitations have been set for payroll-related charges.

  4. Business units should also charge all EITC payroll expenses against the appropriate EITC sub-fund. However, in many cases business units cannot separate the portion of payroll expense attributable to EITC from payroll expenses related to other work done by the business unit, so both EITC and non-EITC labor and benefits expenses are initially charged to the business unit's home fund. Business units determine the portion of payroll expense attributable to EITC each month based on a pre-defined methodology maintained by the business units.

  5. Budget analysts in the business units create expense transfer entries to move the EITC payroll-related expenses from the home fund to the appropriate EITC sub-fund. Before moving expenses, the budget analyst should verify that sufficient resources have been moved from the home fund to the sub-fund to cover the transfer.

  6. The budget analysts must also use the accounting string from the original payroll interface transaction whenever possible, changing only the fund.

  7. The Home Funds and corresponding EITC Sub-Funds are as follows:

    Home Fund EITC Sub-fund
    XXXX0912D XXXX09E2D
    XXXX0913D XXXX0917D
    XXXX0919D XXXX09E9D
  8. Once all lines on the expense transfer are entered and the budget analyst has reviewed them for accuracy, the budget analyst “parks” (saves without posting) the transaction. The budget analyst must then complete the standard EV Payroll Worksheet from the Beckley Finance Center (BFC) website and email it to BFC at *CFO BFC Electronic EV. Business units use the EV Payroll Worksheet for all EV type transactions processed by BFC. It is imperative that the budget analysts review the EV Payroll Worksheet and validate that it matches exactly with the data entered into IFS before forwarding it to BFC.

  9. Additional details on creating an EITC payroll expense transfer document in IFS, can be found on the IFS website.

  10. Additional information concerning EITC procedures can be found in IRM 1.33.4, Financial Operating Guidelines.

Payroll

  1. Payroll data enters IFS through the Automated Interface to the National Finance Center (AINFC) and through manual entries. Business units should post payroll data entering IFS to the appropriate accounting string. However, in cases where business units post data to an erroneous accounting string, business units can make accounting code changes. No dollar threshold or other limitations have been set for payroll-related changes.

  2. Budget analysts in the business units are responsible for creating entries to make payroll-related accounting code changes. All payroll-related accounting code changes that are determined to be necessary will use expense transfer transactions with document type EV to correct the erroneous charges. When entering the expense transfer transactions with document type EV for payroll, the budget analyst must enter the full accounting string (cost center, functional area, general ledger code, etc.) where the original payroll expenses were charged.

  3. Once all lines on the expense transfer are entered and the budget analyst has reviewed them for accuracy, the budget analyst "parks" (saves without posting) the transaction in IFS. The budget analyst must then complete the standard EV Payroll Worksheet from the BFC website, sign the EV document, and email it to *CFO BFC Electronic EV. It is imperative that budget analysts review the EV Payroll Worksheet and validate that it matches exactly with the data entered into IFS before forwarding it to BFC. The FV-50 transaction is set up to ensure that the amounts on the credit side of the ledger must match exactly with the amounts on the debit side of the ledger. If they do not match, the transaction cannot be saved in IFS.

  4. BFC will review the expense transfer document to ensure that the information in the expense transfer transaction with a document type EV (expenditure voucher) matches the EV Payroll Worksheet and that the transaction nets to zero. If there is a discrepancy between the parked expense transfer transaction and the submitted EV Payroll Worksheet, BFC will return the EV Payroll Worksheet to the originating business unit for correction before completing the transaction. Additionally, if the expense transfer transaction references a non-payroll GL account, BFC will send the expense transfer document back to the business unit and the business unit will not be able to process the transaction. If unsure of accounts or amounts utilized, contact the Financial Reports Office for clarification. If BFC identifies no errors, BFC will process the expense transfer transaction with document type EV.

Purchasing

  1. When a business unit determines that a purchase-related accounting code change needs to be made, the business unit must submit a request to BFC via email at *CFO BFC Electronic Obligations to process the accounting code changes. Business units must furnish suitable documentary evidence explaining the reason for the change. In cases requiring a fund change, BFC may require additional documentation. BFC will ensure that documentation is adequate and complete before making any changes.

  2. The method of processing purchasing-related accounting code changes will vary depending on where in the purchasing sequence of events the business unit identified the error. The purchasing sequence of events has four distinct phases or levels:

    1. Requisition Level - Business unit recorded the requisition in IPS which interfaced with IFS, but no obligation exists.

    2. Obligation Level - Business unit created the obligation in IPS, but has not input receipt and/or acceptance.

    3. Receipt and Acceptance Level - Business unit recorded receipt and/or acceptance in IPS which interfaced with IFS.

    4. Payment Level - BFC disbursed payment to vendor.

  3. BFC involvement is required to process all purchase-related accounting code changes, except those at the requisition level.

Accounting Code Change at Requisition Level
  1. When the business unit identifies an error at the requisition level, the business unit can process the accounting code change with generally no BFC involvement. To correct the error, the business unit updates the accounting string in IPS as soon as the business unit discovers the error. The business unit should make changes for all errors found, regardless of the dollar amount.

Accounting Code Change at Obligation or Receipt and/or Acceptance Level
  1. When the business unit identifies an error at the obligation or receipt and/or acceptance level, BFC and the business unit will process accounting code changes that meet the dollar threshold or other criteria detailed in IRM 1.35.15.15.1, Dollar Threshold, and IRM 1.35.15.15.2, Other Criteria.

  2. To correct the error, BFC reverses the obligated line(s) and any receipt and/or acceptance line(s) in IFS, reflecting the inaccurate accounting string. The business unit updates the accounting string for the requisition in IPS. The IFS interface updates the accounting string data for the requisition. BFC accesses the updated requisition in IFS and reestablishes the obligated line(s) and any receipt and/or acceptance line(s) in IFS.

Accounting Code Change at Payment Level
  1. When the business unit identifies an accounting code error at the payment level, BFC and the business unit will process accounting code changes that meet the dollar threshold or other criteria detailed in IRM 1.35.15.15.1, Dollar Threshold, and IRM 1.35.15.15.2, Other Criteria.

  2. To correct the error, BFC reverses the obligated line(s), receipt and/or acceptance line(s) and any payment activity reflecting the inaccurate accounting string. The business unit updates the accounting string for the requisition in IPS. Once the business unit updates the accounting string information in IPS and it interfaces with IFS, BFC must reestablish the obligation, receipt and/or acceptance, and payment records, as well as perform a Classification Transactions and Accountability (CTA) adjustment to update any changes in fund to Treasury.

Travel and Relocation

  1. When a business unit determines that a travel or relocation accounting code change needs to be made, the business unit must submit a request to BFC via email at *CFO BFC Travel Authorizations and Accting Codes to process the accounting code changes. The method of handling accounting code changes will vary depending on whether the transaction is at the authorization/obligation or voucher/payment stage.

Error Found at Authorization/Obligation Level
  1. Business units usually process accounting code changes found at the authorization/obligation stage with no BFC involvement.

  2. Travelers should make every effort to enter requests in Concur using the correct accounting string information. The approving official needs to carefully review all authorizations to ensure that the traveler has entered the appropriate accounting string. This is especially important if the travel relates to work done for another office because the traveler will need to change the accounting string information in Concur to reflect that of the authorizing office.

  3. Travelers, with manager approval, can amend erroneous accounting string information found at the authorization/obligation stage within Concur, if the traveler has not submitted vouchers for that particular authorization/obligation. Modifying the authorization/obligation in Concur will zero out the incorrect accounting code lines in IFS and obligate the corrected accounting code lines without creating a new obligation document in IFS.

  4. For manually-entered authorization/obligation accounting string errors, the business unit plan manager must email an SV form from the BFC website to *CFO BFC Travel Authorizations and Accting Codes. The BFC Travel Analyst will approve the change request and forward the change to a technician who will make the accounting code change directly in IFS.

  5. For relocation, BFC processes all GRAS (Government Relocation Accounting System) transaction entries and accounting code changes. The business unit plan manager must email an SV form from the BFC website to *CFO BFC Travel Authorizations and Accting Codes or contact the assigned relocation coordinator. The BFC Relocation Analyst will approve the change request and forward the change to a BFC technician who will make the accounting code change in GRAS for interface into IFS.

  6. BFC will only make accounting code changes when the dollar amount of the obligation is $500 or more. See IRM 1.35.15.15.1(2), Dollar Threshold, for exceptions to this dollar threshold.

Errors Found for Open Obligations and Fully Expensed Obligations
  1. BFC uses the IFS reversal process to make all accounting code changes that extend beyond the obligation level and that meet the dollar threshold. The IFS reversal process consists of unique steps that reverse an erroneous accounting transaction in IFS and properly post a corrected transaction within each module. The IFS reversal process ensures that IFS reports display accurate data.

  2. BFC cannot make changes in GRAS to expensed relocation items. BFC cannot make accounting code changes in Concur to expensed items. Consequently, if BFC makes a change to an accounting code after the expense has been vouchered, the reports in Concur will not reflect any of the accounting code changes made. Business units should use the IFS travel reports to evaluate and correct travel data that reflects any potential accounting code changes.

  3. For Concur-related and manually-entered authorization/obligation accounting string errors, the business unit plan manager must email a SV form from the BFC website to *CFO BFC Travel Authorizations and Accting Codes. The BFC travel analyst will approve the change request and forward the change to a technician. The technician will make the accounting code change directly in IFS.

  4. BFC will only make accounting code changes related to the expensed portion of open obligations or fully expensed obligations when the dollar amount of the obligation is $500 or more. See IRM 1.35.15.15.1(2), Dollar Threshold, for exceptions to this dollar threshold.

  5. BFC will only make accounting code changes to relocation obligations if there have been no expenditures against the obligation or modifications to the original authorization.

Funds Control at Year-end

  1. IFS has a "funds control" feature that prevents users from recording an obligation that would cause a budgetary accounting string to exceed its allocated funds. This feature applies to accounting strings that specify an appropriation, a financial plan, and a functional area. However, more detailed accounting strings that reference office codes, object classes, and sub-object classes are not controlled by this feature. As a result, at year-end, IFS generally reports negative fund balances for some of these more detailed accounting strings along with fund surpluses for others. FM takes corrective measures throughout the fiscal year to restore these balances to zero by year-end.

Canceling Appropriations

  1. Annual appropriations "expire" at the end of the fiscal year for which they were enacted. Agencies may record certain types of transactions against "expired" accounts for five years after expiration. Transactions that may be recorded include obligation decreases and cancellations; obligation increases that are not the result of new work or project scope changes; and the receipt and acceptance of goods and/or services. After this five-year period, the accounts "cancel" with no further transactions allowed, including the payment of an invoice against which a receipt and acceptance has been recorded. For example, annual appropriations and "multi-year" appropriations that expired on September 30, 2006, are canceled on September 30, 2011.

  2. In July of each fiscal year, business units should prepare for closing the transactions for canceling fiscal year appropriations. A detailed review of unliquidated obligations for the canceling fiscal year is necessary to determine if a vendor is likely to bill for goods and/or services ordered.

  3. Invoices received after a fiscal year appropriation is canceled are paid out of the current year’s appropriations. However, no more than one percent of the current year appropriation is available to cover canceled year obligations. The payment itself cannot exceed the balance that had remained on the initial obligation before it was deobligated.

  4. The IFS year-end closing process includes the automatic reversal of accounts payable, obligations, and accounts receivable against canceling year appropriations. This involves the following steps:

    1. Reversing unpaid invoices and receipt and/or acceptance, and moving the balances to unliquidated obligations, as appropriate.

    2. Deobligating unliquidated obligations.

    3. Transferring receivables to the General Fund Receipt Account - Canceled Receivables.

  5. The transaction entitled "Close Commitments" is run during the year-end closing process. Upon completion of the "Close Commitments" process, FM reviews the trial balance for canceling funds and prepares and posts entries as needed, based on the balances in the impacted funds.

  6. FM prepares and records entries to clear remaining proprietary account balances for the appropriations being canceled. Budgetary accounts are adjusted to reflect all Total Resources as canceled appropriations.

  7. FM posts year-end canceling adjustments in CARS to officially close the canceling funds. Corporate Budget reviews the posting to ensure the canceled budget authority is correct. The report is forwarded to BFC to assist with FBWT reconciliations.

Estimating Accruals

  1. Certain types of expenses are incurred but not yet processed in IFS by year-end. These expenses must be estimated. The estimates of accrued expenses are classified into four components:

    1. Major Contract Accruals.

    2. Specifically-Identified Accruals.

    3. Percentage-Estimated Accruals.

    4. Payroll Accruals.

Major Contract Accruals

  1. Due to the dollar amounts involved and the corresponding risks to the financial statements in the event of misstatement, FM has initiated a separate and distinct process to accurately reflect the accrued liabilities for IRS major contracts. FM performs this process annually.

  2. FM selects the major contracts based on a multi-factor analysis which considers certain contract characteristics, such as current year-to-date expenditures and open obligation balances as of a specific date. FM submits the selected major contracts to Procurement. Once Procurement concurs, FM selects individual task orders for confirmation based upon open obligation balances as of June 30.

  3. For each major commercial contract, FM drafts a confirmation letter to the vendor, requesting an estimate of cumulative earned revenue as of September 30. Procurement sends the confirmation letter to the vendor via email or regular mail.

  4. Concurrently, FM completes a review of each selected vendor’s contract and billing files, as well as cumulative contract payments. FM computes its own estimate of cumulative earned revenue as of September 30 for each major contract and compares its estimate to the estimate submitted by the vendor. If the two estimates differ by less than $500,000, FM accepts the vendor's estimate as the basis for determining the accrued expense on that contract.

  5. Conversely, if the two estimates differ by more than $500,000, FM expands the scope of its field work pertaining to that contract. FM then performs additional procedures such as discussions with the CO, Contracting Officer's Representative (COR), FM Major Contract Accrual Coordinator, and vendor personnel until a consensus on a final estimate is achieved.

  6. Once FM has completed this analysis, it provides any additional guidance necessary to calculate the year-end acccrual.

Specifically-Identified Accruals

  1. FM has identified a number of expense classifications which are more easily analyzed on a specific basis because of their similarities. FM refers to these expense classifications as "specifically-identified expenses" and accrues these expenses on an "as needed" basis:

    Expense Accrual Methodology Based On:
    Federal Employees Compensation Act (FECA) Account - Unfunded An analysis of historical unfunded FECA Chargeback Reports (excluding amounts to be funded in the current fiscal year) to develop a cumulative estimate. The methodology utilized allows the estimate to be adjusted every three months based upon actual costs. FM adjusts this accrual in TIER to agree to the actual cost information provided by the Bureau of the Fiscal Service at each quarter end, as well as in final true-up at year-end.
    Federal Employees Compensation Act (FECA) Account - Actuarial An analysis of two years of historical actuarial data to develop an estimated ending accrual balance for the current year-end. The difference between the beginning accrual balance and the estimated ending accrual balance is amortized evenly throughout the year. FM adjusts this accrual in IFS to match the actual liability information provided by Treasury at year-end.
    Imputed Costs - Bureau of the Fiscal Service The accrual estimate is a combination of Bureau of the Fiscal Service's year to date actual and projected costs. This estimate is reduced by anticipated offsets.
    Imputed Costs - Health, Life, and Pension Imputed Office of Personnel Management (OPM) health, life, and pension costs are recorded monthly based on an annual year-to-date accrual using numerous cost factors (as provided by OPM) multiplied by actual payroll data such as salaries, head counts, and annual salaries (via Statistical Analysis System (SAS) and/or Business Warehouse (BW) reports).
    Postage An analysis of two years of historical data to develop a year-to-date cost estimate. This estimate is reduced by current year paid expenses which results in the accrual amount.
    Unemployment Compensation for Federal Employees (UCFE) An analysis of two years of historical data to develop quarterly cost patterns which are further refined into monthly estimates. The accrual is based on the monthly estimates for all months that are unpaid as of the accrual date.
    Unfunded Annual Leave The most current Leave Report received from the National Finance Center.
    Judgment Fund The dollar amount of judgment fund claims received less claims paid for a specified time period in the Bureau of the Fiscal Service Judgment Fund Received/Paid Report.

Percentage-Estimated Accruals

  1. FM uses a percentage-estimated accrual methodology to develop a year-end estimated liability for expenses that occur during the year, but are not recorded as transactions prior to the close of the fiscal year. This accrual methodology excludes items accounted for in the major contracts accrual, specifically-identified expense accruals, and payroll expense-related accruals.

  2. Each fiscal year, FM identifies expenses recorded by accounting group in the first eight months of the current fiscal year that should have been recorded in the prior fiscal year. FM divides these amounts by the prior fiscal year’s recorded expenses through mid-September to develop a percentage ratio of unrecorded expenses. FM then applies an average of the three most recent fiscal years’ percentage ratio of unrecorded expenses to the year-to-date recorded expenses as of mid-September for all transactions except: major contracts (excluded), specifically-identified expenses (zero percent), and payroll expenses (excluded).

  3. In addition, FM reviews the reasonableness of the prior fiscal year-end accruals by comparing the recorded accrual by accounting group to the actual expenses recorded by accounting group for the first eight months of the current fiscal year that relate to the prior fiscal year. FM researches and documents any significant differences as to the cause and appropriateness.

Year-end Payroll Accruals

  1. The U.S. Department of Agriculture National Finance Center, via the AINFC, transmits payroll data to IFS. Using this data, IFS generates a basic payroll estimate (excluding cash awards, overtime, terminal leave, retention bonuses, and gainsharing awards) that is used to prorate the remaining workdays of the month and establish a monthly payroll accrual. At the end of the fiscal year, the system will generate an accrual on September 1 for the remaining workdays of the fiscal year. This accrual will be adjusted as subsequent pay period actuals are processed during September. In addition, the last pay period that is processed in September will contain an accrual for overtime and terminal leave.

  2. The AINFC automatically records a payroll accrual in IFS to ensure that sufficient funds are reserved to cover the payroll disbursement in full. Since September 30 rarely falls exactly at the end of a pay period, the Associate CFO for FM advises AWSS on how NFC should split the payroll for the last pay period of the fiscal year. AWSS coordinates with Treasury and NFC to determine how NFC will record the pay.

  3. FM provides the business units with supplemental instructions clarifying how year-end payroll accruals and/or adjustments are recorded in IFS.

  4. The methodology used for the monthly accrual applies to the annual accrual, except for certain transaction types (including cash awards, overtime, and terminal leave). Because the AINFC payroll process uses a "straight time" accrual, this process cannot anticipate special circumstances such as significant amounts of cash awards, overtime, terminal leave, retention bonuses, or gainsharing awards earned and remaining unpaid in September. FM provides guidance to the business units to adjust the accruals for the following:

    1. Cash Awards - In September, management designates the funds necessary to pay cash awards to employees. There are two cash award files. One is for active employees and one is for separated employees. These awards are normally paid prior to year-end and require no accrual. FM will monitor the posting of both award files and if either cannot be processed before year-end, FM will obtain a list of awardees (containing amounts and necessary accounting strings) from the IRS Human Capital Office (HCO) and record an accrual for both the unpaid award amount and the related employer payroll taxes.

    2. Overtime - IFS develops an accrual based on the last disbursed payroll in September. After the last actual pay period is processed, business units will have the opportunity to adjust the system-generated accruals.

    3. Terminal Leave - Terminal leave is accumulated annual leave that remains unused and unpaid at year-end for separated employees. IFS develops this accrual using the last disbursed payroll in September. The business units may adjust the "straight time" accrual based on their knowledge of actual terminal leave payable to their separated employees.

    4. Retention Bonuses/Gainsharing Awards - IFS does not generate an accrual for retention bonuses or gainsharing awards. Each business unit is responsible for determining whether a payroll labor accrual or adjustment is necessary.

Other Entries

  1. In addition to the accrual entries, FM makes a number of adjusting entries on an "as needed" basis. The following chart lists the type of transaction and the associated adjustment:

    Type of Transaction Adjustment
    Seized Property/Special Money Balance is adjusted to equal the balance disclosed on the Asset Forfeiture Tracking and Retrieval System Report (AFTRAK).
    Depreciation Balance is adjusted to recognize depreciation for a capitalized asset.
    Fund Balance with Treasury (FBWT) adjusted to the Central Accounting Reporting System (CARS) Account Statement Balance is adjusted to equal the balance recorded and disclosed by Treasury. (This is a TIER adjustment, not made in IFS).
    Letter Rulings Balance is adjusted to equal the balance recorded in CARS.
    Suspense Reclassification Balance is adjusted to reclassify transactions from the suspense account to the proper account.
    Property, Plant, and Equipment (PPE) Balances are adjusted to record asset additions that were recorded as expenses, reclassify asset balances that were recorded incorrectly, and to record assets acquired through capital lease.
    Capital Lease Liability and Capital Lease Interest Accrual Balances are established to record new capital lease liabilities. Payments against lease liabilities are reclassified from expense to the capital lease liability. Interest is accrued and posted to the liability and expense accounts.
    Appropriated Special Fund Receipts Income Balances for user fees are adjusted to reflect actual amounts received. At year-end, the balance is adjusted to equal the balance in CARS. (This can be a TIER and/or IFS adjustment).
    Appropriation and Balance Transfers Balances are adjusted to reflect the transfer of funds between Treasury Fund Symbols.
    Accounts Receivable Write-Off Balance is adjusted to remove an account receivable from the books when it is determined to be uncollectible.
  2. At year-end, FM makes the following adjusting entries:

    Type of Transaction Adjustment
    Allowance for Doubtful Accounts Balance is adjusted to increase or decrease the allowance for uncollectible accounts.
    Contingent Liabilities Balance is adjusted based on legal representation letters.
    Intra-governmental and Departmental Eliminations Through coordination with Treasury and other Federal Trading Partners, intra-governmental balances are researched as necessary and adjusted to reflect applicable account balances as agreed upon with the Trading Partner.
    Property, Plant, and Equipment (PPE) Asset Disposals The asset balances are reduced, the corresponding accumulated depreciation is reduced, and the gain or loss is posted.
    Canceled Appropriations’ Balances Prior to Cancellation Capitalized asset balances in canceling year appropriations are transferred to a "no-year " appropriation.
    Account Receivables are reversed and established in the General Fund Receipt Account – Canceled Receivables Fund.
    Accounts Payable are reversed for any amounts that will not be paid by year-end.
    Undelivered Orders are deobligated.
    Canceling Appropriations FBWT is adjusted to zero. Expired Authority is closed to Canceled Authority.
    General Fund Receipt Accounts - Closing Adjustments Liability accounts for collections are adjusted to equal the cash collected. The liability accounts are closed against FBWT.
    Treasury Forfeiture Fund Balance is adjusted to reclassify transactions from the revenue account to the transfer-in account.

Mock Systems Testing

  1. Annually, FM establishes a mock systems testing schedule that details the activities, timeframes, and responsible individuals. Mock systems testing, planning, and preparation takes place in May. Actual testing takes place generally in June through September.

  2. Mock systems testing, performed in a test environment, is intended to ensure all year-end transactions will post completely and accurately in IFS when the year-end close is completed. These mock systems tests also are used to identify date and other issues that may need to be resolved before the actual year-end close.

  3. Mock 1 and Mock 2 are full year-end tests. Based on identified issues, a contingency Mock 3 will take place and will be an abbreviated test. The mock systems testing cycle continues until FM identifies no new or outstanding issues.

  4. Mock 1 and Mock 2 testing covers the activities that FM performs during the year-end close including:

    1. Environmental/technical build.

    2. Execution of activities and entries performed for year-end close.

    3. Execution of system processes in funds management to roll-up budget and reflect the proper status of resources.

    4. Execution of system processes to close general ledger account balances and carry forward beginning balances into the new fiscal year.

  5. Mock 3 testing is based on issues identified in Mock 1 and Mock 2. Mock 3 includes the execution of significant system year-end jobs and environmental/technical build.

Automated Close Process

  1. IFS automatically performs many of the functions required for fiscal year-end closing. The IFS year-end close process includes the following system-generated entries:

    1. Close revenue and expenses to the cumulative results of operations (net position).

    2. Close budgetary accounts relating to appropriations, transfers, and collections to calculate total actual resources.

    3. Close budgetary accounts relating to outlays, refunds, and anticipated amounts to calculate expired/carryover authority.

  2. In addition, IFS:

    1. Performs a reversal of canceled funds that are beyond the statutory period.

    2. Prepares for the new fiscal year by performing processes such as rolling over reference data and "no-year" and "multi-year" authority.

  3. IFS generates carryover entries to carry forward unobligated budget authority for "no-year" and open "multi-year" funds for reapportionment in the new fiscal year. The following balances are brought forward to the new fiscal year:

    1. Balance sheet accounts (assets, liabilities, equity).

    2. Unliquidated obligations.

    3. Undelivered orders.

    4. Uncollected earned reimbursements.

    5. Unpaid expenses.

    6. Delivered orders unpaid.

    7. Unfilled customer orders.

    8. Available balances.

    9. Actual resources.

Verifying Trial Balance Reports

  1. This subsection discusses both the pre-close and post-close trial balances, as well as the beginning balances for the new fiscal year.

Accounting Period Description

  1. Although September 30 is the last day of the fiscal year and signals the end of accounting period 12, there are additional accounting periods used by FM for designated processes required to closeout a fiscal year, produce the financial statements, and open the next fiscal year.

  2. Accounting period 13 is used for closing entries affecting the Fund Balance with Treasury. Accounting period 14 is used for closing entries pertaining to fixed assets. Accounting period 15 is used for GAO adjustments. Accounting periods 15 and 16 are used for preparing the pre-close and post-close trial balances, respectively, as discussed in IRM 1.35.15.22.2, Pre-Close and Post-Close Trial Balances at Year-end, and IRM 1.35.15.22.3, Beginning Balances of the New Fiscal Year.

Pre-Close and Post-Close Trial Balances at Year-end

  1. To verify the pre-close and post-close trial balances, FM must analyze IFS-generated trial balance reports for accounting periods 15 and 16, respectively. After all transactions are posted for the fiscal year and the year-end closing process has been executed, trial balance reports are generated from IFS for further analysis by FM.

  2. FM summarizes the period 15 and period 16 trial balances by general ledger account (GLAC) and fund and compares the account balances for the respective periods to determine if the correct closing entries occurred and were completed in accordance with the Bureau of the Fiscal Service prescribed closing rules for SGL accounts (see the Closing Accounts Quick Reference Chart found on Treasury’s Standard General Ledger website). The Closing Accounts Quick Reference Chart indicates the proprietary revenue and expense accounts which close to the cumulative results of operations account, as well as those accounts that remain open with carry-forward balances for the new fiscal year. Additionally, the comparison enables FM to determine if the budgetary accounts were closed appropriately based on their status as unexpired, expired, or canceled appropriations.

  3. The comparison of the period 15 and period 16 trial balances are reviewed to ensure no differences exist. FM researches and resolves any differences noted to ensure:

    1. No problems occurred during IFS closing.

    2. No subsequent entries have posted that might erroneously affect the period 00 opening balances.

  4. Identified issues are documented and submitted to management for review and resolution.

  5. Once FM has resolved all issues and has re-executed the closing routine, if necessary, FM compares the period 15 and period 16 trial balances to confirm the corrections were made successfully and no issues remain.

  6. The quality control process described above is used for two different sets of IFS trial balances:

    1. An all-inclusive set of trial balances including all funds maintained by the IRS.

    2. Although these funds are not included for financial reporting, the IRS has fiduciary responsibility for accurately reporting their financial accounting.

Beginning Balances for the New Fiscal Year

  1. Following IFS close at year-end, FM verifies the accuracy of the October 1 beginning balances as described in IRM 1.35.15.21, Automated Close Process. IFS utilizes an automated closing process in period 16 to close automatically the applicable proprietary and budgetary accounts.

  2. After all applicable proprietary and budgetary accounts have been closed, trial balance reports are generated from IFS for further analysis by FM.

  3. FM summarizes the period 16 and period 00 trial balances by SGL account and Treasury Symbol and compares the account balances for the respective periods to determine if IFS brought the correct balances forward.

  4. The comparison of the period 16 and period 00 trial balances are reviewed to ensure no differences exist. FM researches and resolves any differences noted to ensure that:

    1. No problems occurred during IFS close.

    2. No subsequent entries have posted to IFS that might erroneously affect the period 00 opening balances.

  5. Identified issues are documented and submitted to management for review and resolution.

  6. Once FM has resolved all issues and re-executed the closing routine, if necessary, FM again compares the period 16 and period 00 trial balances to confirm that corrections were made successfully and that no issues remain.

  7. The quality control process described above is used for two different sets of IFS trial balances:

    1. An all-inclusive set of trial balances including all funds maintained by the IRS.

    2. A specific set of trial balances which omits certain funds that are not included in the financial statements issued to the public. Although these funds are not included for financial reporting, the IRS is still responsible for their accurate accounting. These funds are reviewed in the same manner as any externally reported funds.

New Fiscal Year Budget Load

  1. In early September, Corporate Budget, in collaboration with the Financial Management Systems Office, enters the new fiscal year budget into IFS. Corporate Budget accomplishes this by using an automated budget upload process and manual data entry procedures.

  2. Depending on when Congress approves the IRS appropriations, the initial budget upload may contain approved appropriated amounts or it may reflect planned activity as it appears in Plan Development.

  3. Existing balances of "no-year" and "multi-year" funds are systemically carried forward at the beginning of the new fiscal year to ensure funds are available for open obligations and to incur new obligations.

Reports and Certifications to Treasury

  1. FM prepares various reports and certifications monthly, quarterly, and annually. FM uses some of these reports and certifications to prepare the consolidated Servicewide reports and certifications for Treasury and other external users. FM also uses these reports and certifications to monitor the IRS financial management activities throughout the fiscal year.

  2. The following chart lists the reports and certifications and their reporting frequency:

    Report and Certification Reporting Frequency
    Bureau of the Fiscal Service, CTA Section 1, Statement of Transactions Monthly
    Prompt Payment Report Monthly
    Three-Day Close TIER Submissions Monthly (except for Period 01)
    Treasury Report on Receivables Quarterly
    Reconciliation of Net Cost of Operations to Budget (Disclosure) Quarterly
    AFR Note Disclosures Second, Third, and Fourth Quarters
    TIER Resubmission Any periods required by Treasury
    Governmentwide Treasury Account Symbol (GTAS) Any periods required by the Bureau of the Fiscal Service
    Central Accounting Reporting System (CARS) Year-end Closing Verification Annually
    GTAS Certification on Year-end Data Annually
    Suspense Certifications Annually
    Treasury Report on Receivables Certification Annually

Financial Statements

  1. Detailed guidance on the form and content of the agency’s financial statements can be found in OMB Circular No. A-136, Financial Reporting Requirements.

  2. At year-end, the IRS prepares the following financial statements:

    1. Balance Sheet.

    2. Statement of Net Cost.

    3. Statement of Changes in Net Position.

    4. Statement of Budgetary Resources.

    5. Statement of Custodial Activity.

  3. In addition to the financial statements, the IRS prepares:

    1. Notes to the Financial Statements.

    2. Required Supplementary Information.

    3. Other Information.

  4. FM accounts for the appropriations made to carry out IRS tax collection efforts and for the gross amount of taxes collected, refunds paid, and unpaid taxes. FM provides the amounts for the line items in the financial statements and the notes to the financial statements, required supplementary information, and other information. FM is also responsible for consolidating the line items into the financial statements.

  5. The CFO has overall responsibility for compiling the IRS financial statements and disclosures. Specific organizational responsibility for each report is indicated below.

    Name of Report Lead Role
    FM, specifically the Financial Reports Office FM, specifically the Revenue Oversight and Support Office/ Revenue Accounting Office
    Balance Sheet X
    Statement of Net Cost X
    Statement of Changes in Net Position X
    Statement of Budgetary Resources X
    Statement of Custodial Activity X
    Notes to the Financial Statements X
    Required Supplementary Information X
    Other Information X