Budgeting and Accounting: Making the Connection

Phil Davidson

ASMC PDI | June 2017

Overview

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• Identify the connections between budgeting and accounting

• Recognize budget and accounting terminology

• Track budgetary and proprietary accounting transactions through the budget execution process

• Identify the U.S. Government Standard General Ledger account structure

• Relate budget obligations to DOD assets, liabilities, and expenses

• Identify unfunded budget requirements from accounting reports

• Improve budget estimating with accounting information

Connections (or links) between budgeting and accounting are called out by this image:

Making the Connection

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Federal Budget Process

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What Is a Budget?

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• “No money shall be drawn from the Treasury

but in Consequence of Appropriations made

by Law.”

• A regular Statement and Account of the

receipts and Expenditures of all public

Money shall be published from time to time.”

U.S. Constitution, Article I Section 9

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What Do We Budget For?

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Payments, Reports,

Vouchers, etc.

Federal Budget Process

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• OMB issues Circular A-11 and other important

policy guidance for both accounting and

budgeting

OMB Circular A-11: Preparation, Submission, and Execution of the Budget

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• Per DOD FMR Volumes 2A and 2B, Budget

Formulation includes:

• Planning

• Programming

• Budgeting

• Per DOD FMR Volume 3, Budget Execution is

separate and standalone

PPBE: Planning, Programming, Budgeting, and Execution

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Congressional Budget Process

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DOD Budget Timeline

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• 12 passed each year by Congress

• Provide budget authority and general

provisions

• Address both budgeting and accounting

issues

Appropriation Acts

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Introduction to Federal Accounting

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Accounting Cycle

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• The five events involve both accounting and budgeting

Accounting Cycle (continued)

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Hierarchy of Generally Accepted Accounting Principles

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AICPA: American Institute for Certified Public Accountants

AAPC: Accounting and Auditing Policy Committee

FASAB: Federal Accounting Standards Advisory Board

FASB: Financial Accounting Standards Board

U.S. Standard General Ledger (USSGL) Chart of Accounts

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Budgetary and Proprietary Accounting

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Budgetary Accounting with the USSGL

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Budgetary Accounting Process

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• President signs appropriation act

• Budgetary accounting starts with receipt of the

appropriation

• Proprietary accounting starts with receipt of

the Appropriation Warrant from the Treasury

Department

Link Between Budgeting and Accounting Starts Early

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Budgetary Accounting Process: Example

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Reimbursable Accounting Process

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• The five events involve both accounting and budgeting

Accounting Cycle (continued)

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Proprietary Accounting Equation

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Proprietary Accounting with the USSGL

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Integrated Accounting Process

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Normal Balances

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Accrual Basis of Accounting

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Federal Financial Reporting

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Accrual Basis of Accounting

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• Federal financial statements include both

budgeting and accounting information,

providing another important connection

Principal Statements

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• Statement of Net Cost

• Statement of Changes in Net Position

• Balance Sheet

• Statement of Budgetary Resources

• Statement of Custodial Activity

• Statement of Social Insurance

• Statement of Changes in Social Insurance

Amounts

DOD Principal Statements

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• Statement of Net Cost

• Statement of Changes

in Net Position

• Balance Sheet

• Statement of Budgetary

Resources

Statement of Budgetary Resources

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• Focuses on budgetary resources and the

status of those resources

• Includes outlays

• Relates to both budgeting and accounting

processes

Budgeting and Accountingwill always be linked.

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Q&A

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