Department Of Defense Agency Financial Report 2007 - Section 2: Financial Information Page 63
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82Section 2: Financial Information
Department of Defense Agency Financial Report 2007
75
Intragovernmental costs and revenues represent transactions made between two reporting entities within the Federal
Government. Public costs and revenues are exchange transactions made between the reporting entity and a nonfederal
entity.
The Department’s systems do not track intragovernmental transactions by customer at the transaction level. Buyer-side
expenses are adjusted to agree with internal seller-side revenues. Expenses are generally adjusted by reclassifying amounts
between federal and nonfederal expenses.
The SNC presents information based on budgetary obligation, disbursement, and collection transactions. Amounts are
adjusted for accruals based on data from nonfinancial feeder systems for major items such as payroll expenses, accounts
payable, and environmental liabilities. The General Fund data is generally derived from budgetary transactions (obligations,
disbursements, and collections) from nonfinancial systems, and accruals made for major items. While Working Capital
Funds generally record transactions on an accrual basis, the systems do not always capture actual costs in a timely manner.
The majority of the Department’s accounting systems do not capture information relative to heritage assets separately and
distinctly from normal operations. Where it was able to identify the cost of acquiring, constructing, improving, reconstructing
or renovating heritage assets, the Department has identified $2.0 million for the fiscal year.
Note 19. Disclosures Related to the Statement of Changes in Net Position
As of September 30
2007
2006 Restated
Cumulative Results of
Unexpended
Cumulative Results of
Unexpended
(amounts in millions)
Operations
Appropriations
Operations
Appropriations
Prior Period Adjustments Increases (Decreases) to Net Position Beginning Balance
Changes in Accounting Standards
$
(4,230.9)
$
3,745.5
$
0.0
$
0.0
Errors and Omissions in Prior Year
Accounting Reports
0.0
0.0
(8,034.3)
(0.5)
Total Prior Period Adjustments
(4,230.9)
3,745.5
(8,034.3)
(0.5)
Imputed Financing
Civilian CSRS/FERS Retirement
1,429.4
0.0
1,553.8
0.0
Civilian Health
2,784.7
0.0
2,646.5
0.0
Civilian Life Insurance
8.4
0.0
26.1
0.0
Judgment Fund
198.8
0.0
183.2
0.0
Total Imputed Financing
$
4,421.3
$
0.0
$
4,409.6
$
0.0
The Department recognized a net prior period adjustment of ($485.4) million in FY 2007 and restated cumulative results
of operations by ($4.2) billion and unexpended appropriations by $3.7 billion. The adjustment relates to a change in
reporting parent/child allocation transfers, and is presented as a change in accounting principle. The change affects the
Balance Sheet and the Statement of Changes in Net Position. Parent/child reporting is intended to consolidate the complete
financial reporting of delegated activities and funds within the parent’s financial statements for overall performance reporting.
In accordance with Office of Management and Budget (OMB) Circular A-136, “Financial Reporting Requirements,” the
Department, as the parent agency, reports the financial activity carried out by the child agencies who received transfer
appropriations from the Department. When the Department performs as the child, it does not report any information
relating to transfer appropriations received from other agencies except for Treasury-Managed Trust funds and funds for which
the Executive Office of the President (EOP) is the parent. The OMB Circular A-136 makes exceptions for these transfer
appropriations. The Department includes transfer appropriations received from the EOP whereby the EOP is the parent. The
EOP delegates authority to the Department for foreign military sales, and the Department reports the related activity in its
financial statements on behalf of the EOP.
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