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TFM Volume I Table of Contents
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TFM Transmittal Letters|
TFM Volume I Table of Contents
This chapter prescribes Treasury reporting instructions for Federal credit program agencies. These instructions apply to all direct loan and loan guarantee programs, except those specifically excluded by the Federal Credit Reform Act of 1990, Sections 502 and 506.
According to the Budget and Accounting Procedures Act of 1950 (31 U.S.C. 3513a), Section 114:
Refer to Office of Management and Budget (OMB) Circular No. A-11 for a detailed explanation of terminology and budget instructions. OMB Circular No. A-11 is available at http://www.whitehouse.gov/omb/circulars/a11/current_year/a11_toc.html.
For new credit programs, the agency must send the Financial Management Service (FMS) a written request to establish Treasury Account Symbols (TAS) for loan financing accounts and general fund receipt accounts, or special fund receipt accounts mandated by the Federal Credit Reform Act of 1990 (see the Contacts page). In addition, OMB approval is required before establishing TAS for special fund receipt accounts. All written requests submitted to FMS must include a program name, direct or guaranteed loan specification, the legislative authority for establishing a TAS, and any TAS previously recorded by OMB. For general information on Federal Account Symbols and Titles (FAST), refer to the FAST Book supplement (http://www.fms.treas.gov/fastbook) to Volume I of the Treasury Financial Manual (TFM).
FMS automatically establishes program accounts when a law enacts appropriations for credit subsidy costs and administrative expenses. These accounts are usually general fund Treasury Appropriation Fund Symbols (TAFS) from the series 0000-3899 funded by annual-year appropriations.
All credit programs require financing accounts. Direct loans and loan guarantees require separate financing accounts even if a single program account receives the appropriation for the subsidy costs of both. FMS usually establishes financing TAFS as revolving funds in the public enterprise fund group series 4000-4499.
These accounts collect either negative subsidy receipts or downward reestimates for direct and guaranteed loan programs. These receipt TAS are in the series 27XX.001 for negative subsidy receipts, and series 27XX.003 for downward reestimates. A two-digit agency code (AC) that is unique for each agency's programs precedes both TAS (for instance, AC-27XX.001 and AC-27XX.003).
These accounts collect negative subsidy receipts and downward reestimates for certain loan programs. FMS classifies these receipts in the special fund receipt TAS series 53XX.001 for negative subsidy receipts, and series 53XX.003 for downward reestimates of the subsidy. A two-digit agency code precedes both TAS (for instance, AC-53XX.001 and AC-53XX.003).
Most loan programs use general fund receipt TAS. Agencies should contact OMB to determine whether the program should use a special fund or general fund receipt TAS.
Agencies make interest payments to Treasury using miscellaneous receipt TAS 1499 preceded by each agency's two-digit agency code (for instance, AC-1499). FMS automatically establishes these miscellaneous receipt accounts.
FMS establishes accounts with subclass codes when an agency sends FMS a written request (see the Contacts page) to establish direct and guaranteed loan financing accounts.
Subclass codes must precede agencies' TAS for certain transactions [for instance, (95) ACX4200, (85) ACX4200, and (65) ACX4200)]. Agencies must use TAS with subclass codes as follows:
The interest rates for credit reform subsidy calculations, budget execution, borrowings, uninvested funds, and working capital balances are available through the OMB contact with primary responsibility for the account. OMB distributes the actual annual interest rates approximately 10 business days before fiscal yearend, September 30.
Each cohort has its own specific interest rate used to earn or pay interest, referred to as a cohort interest rate.
For cohorts dated between 1992-2000, agencies must calculate a weighted average interest rate, based on:
For 2001 and subsequent cohorts, agencies must calculate a single effective rate based on:
The OMB Credit Subsidy Calculator 2 (CSC2) calculates the cohort interest rate.
Most agencies will recalculate the weighted average interest rate or single effective rate only after 90 percent of the dollar volume of direct or guaranteed loans has been disbursed. However, the agency may recalculate the weighted average interest rate or single effective rate at the end of any fiscal year during which disbursements were made.
Agencies must use the disbursement-weighted average interest rate or single effective rate for subsidy and reestimate calculations, borrowings, and interest on uninvested funds. For further detail on interest payments to Treasury and interest on uninvested funds, refer to subsection 4635.20 and Section 4640, respectively. Direct inquiries concerning this subsection to OMB (see the Contacts page).
The Federal Credit Reform Act of 1990 provides financing accounts with indefinite authority to borrow from Treasury. BPD's Federal Borrowings Branch (FBB) administers the Federal borrowings program (see the Contacts page). Annually, agencies do the following:
If an agency has insufficient funds to make an annual interest payment to Treasury at yearend, it should initiate an additional borrowing on the last business day of the fiscal year, which alleviates the recalculation of the interest payment due to Treasury and the amount of interest on uninvested funds.
Balances of borrowed but undisbursed funds earn interest. Treasury uses the same rate for both the interest paid on borrowed funds and the interest earned on uninvested funds (refer to subsection 4630.10).
Agencies may carry forward amounts of borrowed but undisbursed funds exceeding working capital requirements being held in financing accounts to the next fiscal year only if they are disbursing loans from the cohort. When the cohort interest rate is reset (generally once per cohort after the cohort is 90 percent or more disbursed), agencies must reset the interest rate on any amount carried forward to equal the interest rate applicable to the next fiscal year. Agencies may use these balances in future years (subsequent to the year of the original obligation) only to partially finance the disbursement of loans in the same cohort for which the borrowing was originally made.
After the agency has disbursed all the loans in the cohort, it must repay Treasury to reduce any balance held in the financing account exceeding working capital needs on the last business day of the fiscal year. However, if excess funds exist at any time, the agency may make an early repayment of principal.
The maturity date for the borrowing from Treasury is based on the time period used in the subsidy calculation, not the contractual term of the agency's or private lender's loan to the borrower. The period of time used for the subsidy calculation normally exceeds the contractual term of the loan to the borrower. Borrowings from Treasury mature on September 30 of the estimated final year of the cohort. If the estimated final date of the cohort is other than September 30, the associated borrowing from Treasury matures on the following September 30.
When a cohort has finished borrowing to make disbursements, an agency may consolidate all the borrowings from Treasury related to that cohort to obtain a single maturity date. All borrowings from Treasury should mature on the final year of the cohort; however, if a cohort contains borrowings with multiple maturity dates, the agency can request a consolidation. The agency should send a letter requesting the consolidation to BPD's Federal Borrowings Branch (FBB) by the last business day of the fiscal year when the cohort finished disbursing its loans. The letter must include the balances and maturity dates to be consolidated and the new maturity date for the related borrowings. The new maturity date must remain within the original maturity interval established for the cohort. An agency may prepay all or part of a borrowing from Treasury without penalty.
Agencies report transactions to FBB through the GWA System for both borrowings from and repayments of principal to Treasury. By October 20 of the current fiscal year, agencies should submit an initial borrowing transaction through the GWA System with their current fiscal year borrowing estimate. They should submit any additional borrowings by the last business day of the month in which they need the funds.
All borrowings from Treasury are effective on October 1 of the current fiscal year, regardless of when the agency actually borrowed the funds, except for funds borrowed at the end of the fiscal year to make an annual interest payment. Borrowings for annual interest payments are effective September 30. For repayments, the effective date equals the date of repayment.
Borrowings from Treasury and repayments to Treasury are processed as nonexpenditure transfers (NETs). All transactions must be "agency certified" by 3 p.m. eastern standard time to be processed the same day.
When submitting a transaction, the agency must include the following on the Supplemental Worksheet:
The agency also should prepare a consolidated transaction for a single TAS.
For information regarding access requests and passwords, visit the GWA Web site at http://www.fms.treas.gov/gwa.
Once the requesting agency has certified a borrowing or repayment transaction, the transaction becomes available for FBB review. FBB reviews the transaction and approves or rejects it based on the accuracy of the data. If the transaction is approved, the transaction will be posted to STAR (FMS's central accounting system) and its status updated. If the transaction is rejected, it is returned to the agency for correction.
Agencies must use the most current version of tools available through the OMB examiner with primary responsibility for the account to calculate interest paid to Treasury. Agencies must e-mail the supporting interest payment calculations to FBB (see the Contacts page) on or before the day the interest payment is paid via the Intra-governmental Payment and Collection (IPAC) System.
Annually, by the last business day of the fiscal year, Treasury requires payment of interest for each financing account through IPAC using Agency Location Code 20-55-0865. Agencies also are required to enter TAS and Business Event Type Code (BETC) information when submitting IPAC interest payments to FBB for interest on borrowings. Refer to TFM Volume I, Part 6, Chapter 4000, for additional IPAC guidance.
On the paying agency's FMS 224, report the TAFS from which the money is being withdrawn. The amount of this transaction must equal the amount that was transmitted through IPAC. Since BPD's Federal Borrowings Branch (FBB) is a GWA Reporter, the amount received via IPAC will be reported automatically to the receipt account on FBB's FMS 224 based on the TAS and BETCs.
Agencies must audit their accounts and maintain adequate records to support any loan transactions and accrued interest computations submitted to FBB for payment. They should have these records readily available for internal auditors, Treasury, and Government Accountability Office (GAO) auditors, if necessary.
Uninvested funds in the financing account consist of Fund Balance With Treasury from borrowings and/or offsetting collections that have not been disbursed. Because agencies earn and pay interest on the fund balance at the same interest rate, there is zero net effect for borrowing early and on an estimated basis. Agencies should not net the interest earned on uninvested funds against interest expense at yearend. Agencies must report the interest revenue and expense separately. For further detail on interest income and expense, refer to OMB Circular No. A-11 (http://www.whitehouse.gov/omb).
A loan guarantee financing account accumulates uninvested funds as offsetting collections for the following reasons:
A direct loan financing account accumulates uninvested funds as offsetting collections primarily for two reasons:
Agencies must use the most current version of tools available through the OMB contact with primary responsibility for the account to calculate interest earned on uninvested funds.
To receive interest on uninvested funds, agencies do the following:
Treasury processes warrants for definite appropriations of subsidy and administrative expenses enacted by the Congress.
The Federal Credit Reform Act of 1990 authorizes two different indefinite appropriations. First, the program accounts have indefinite authority to cover subsidy reestimates. Second, liquidating accounts have indefinite authority for payment of outstanding obligations that cannot be funded by another source. Agencies must submit a written request to FMS (see the Contacts page) to obtain funds authorized by these indefinite authorities. An OMB-approved SF 132: Apportionment and Reapportionment Schedule, must accompany each request. After reviewing the requisite materials, FMS processes a warrant for the requested amount.
The following subsections describe collections and disbursements of each credit account TAS; however, only sample transactions, as recorded on Section I of the FMS 224, are provided. Agencies must submit a balanced FMS 224 document to Treasury with Sections II and III completed. Refer to TFM Volume I, Part 2, Chapter 3300, for guidance.
The program account receives either a current definite, current indefinite, or permanent indefinite appropriation by warrant that provides budget authority to pay administrative expenses and subsidy costs. When a direct loan or guaranteed loan is disbursed, or executes a positive subsidy modification or upward reestimate, the program account pays a subsidy to that financing account.
The program account may pay administrative expenses directly or may pay them to another TAFS (such as, salaries and expenses) on a reimbursable basis. For example, if the program account TAFS (ACFY1234) directly pays administrative expenses of $3,000, the agency uses column 3 of the FMS 224 to record the disbursement. However, if administrative expenses in the program account TAFS are paid on a reimbursable basis, the transaction appears as an expenditure transfer from the program account TAFS to the receiving account TAFS. The agency then uses column 3 of the FMS 224 to record the outlay from the program account TAFS (ACFY1234), and it uses column 2 to record the offsetting collection in the receiving account TAFS (ACFY0100) (see Appendix 1).
Agencies may not pay any administrative expenses from the financing account.
See examples of subsidy payments in the financing account transactions subsections below.
The direct loan financing account records all cashflows associated with direct loan obligations. See the following subsections for examples of these transactions.
The program account TAFS pays the subsidy amount to the financing account TAFS for the following:
For example, if the financing account TAFS (ACX4200) receives subsidy from the program account TAFS (ACFY1234) of $2,000, the agency records on the FMS 224:
Note: The subclass code "65" precedes the financing account TAFS for this transaction on the FMS 224 (see Appendix 2).
The financing account borrows to finance the unsubsidized balance of the loan disbursement to non-Federal borrowers. Agencies may borrow funds in advance of expected collections for the negative subsidy amount. They process the borrowing from Treasury through the GWA System.
The collections from non-Federal sources by the financing account TAFS consist of:
These offsetting collections include inflows from non-Federal sources only; they do not include inflows from Federal sources. For example, if the financing account TAFS (ACX4200) receives fees, principal, and interest from the public, and other miscellaneous receipts of $4,000, the agency records collections in column 2 of the FMS 224 (see Appendix 2).
The agency must calculate interest earnings, and FMS must verify the interest calculations. The agency reports interest earnings to FMS's Credit Accounting Branch through IPAC. FMS reports the earnings on Treasury's FMS 224.
Agencies process the repayment of principal borrowed through the GWA System. They process interest payments through IPAC and record the amount on the FMS 224. For example, if the financing account TAFS (ACX4200) pays interest on borrowings of $2,000, the agency records the payment of interest in column 3 of the FMS 224. Since BPD's Federal Borrowings Branch (FBB) is a GWA Reporter, the amount received via IPAC will be reported automatically to the receipt account on FBB's FMS 224 based on the TAS and BETCs. The agency's two-digit agency code precedes the Treasury receipt TAS 1499 (see Appendix 2).
After the agency makes a valid contract with a non-Federal borrower, it disburses the loan from the direct loan financing account TAFS. For example, an agency disburses a $3,000 loan from the financing account TAFS (ACX4200) to a non-Federal borrower. It records the loan disbursement in column 3 of the FMS 224 (see Appendix 2).
When the Government modifies a pre-1992 direct loan, the direct loan becomes subject to credit reform accounting. The agency transfers the direct loan asset from the liquidating account TAFS to the direct loan financing account TAFS and makes a one-time adjusting payment between the TAFS. The agency records all subsequent cashflows related to the loan in the financing account TAFS.
For example, if an agency transfers a pre-1992 direct loan with a net present value of $2,000 from a liquidating account TAFS (ACX4203) to the financing account TAFS (ACX4200), it makes a one-time adjusting payment of $2,000 from the financing account to the liquidating account. The agency records on the FMS 224 (see Appendix 2):
For modifications of post-1991 loans, see OMB Circular No. A-11.
If the estimated subsidy is negative, the agency pays an amount equal to the negative subsidy from the financing account TAFS to a general fund receipt TAS (AC27XX.001) for that program when the direct loan is disbursed. If a subsidy reestimate for a cohort is downward, the agency records the amount of the reestimate and interest on the reestimate and pays an amount equal to the downward reestimate and interest on the reestimate to a different general fund receipt TAS (AC27XX.003).
For example, if the agency pays an amount equal to the negative subsidy of $3,000 from the financing account TAFS (ACX4200) to a Treasury general fund receipt TAS (AC27XX.001), the agency records on the FMS 224 (see Appendix 2):
Agencies record all cashflows associated with loan guarantee commitments in the guaranteed loan financing account TAFS. This TAFS provides a reserve to pay default claims on loan guarantees (and in some cases to pay interest supplements).
The agency pays the subsidy amount from the program account TAFS into the financing account TAFS for the following:
For example, if the financing account TAFS (ACX4201) receives subsidy from the program account TAFS (ACFY1234) of $2,000, the agency records on the FMS 224:
Note: The subclass code "65" precedes the financing account TAFS for this transaction on the FMS 224 (see Appendix 3).
Agencies may borrow funds to meet default claims in excess of the loan guarantee financing account's cash balance, negative subsidy in advance of expected collections from the public, or downward subsidy reestimates. Agencies process the borrowing from Treasury through the GWA System.
Agencies record collections from non-Federal sources in the financing account TAFS of the following:
These collections are inflows from non-Federal sources only; they do not include inflows from Federal sources. For example, if an agency collects $4,000 in loan origination and other fees associated with loan guarantees in the financing account TAFS (ACX4201), it records the collections in column 2 of the FMS 224 (see Appendix 3).
The agency must calculate interest on uninvested funds, and FMS must verify the interest calculations. The agency reports the interest earnings to FMS's Credit Accounting Branch through IPAC. FMS reports the earnings on Treasury's FMS 224.
Agencies process a repayment of principal borrowed through the GWA System. They process the interest payment through IPAC and record the payment on the FMS 224. For example, if the financing account pays $2,000 interest on borrowings from Treasury, record the interest payment from the financing account TAFS (ACX4201) in column 3 of the FMS 224. Since BPD's Federal Borrowings Branch (FBB) is a GWA Reporter, the amount received via IPAC will be reported automatically to the receipt account on FBB's FMS 224 based on the TAS and BETCs. The Treasury receipt TAS is 1499 preceded by the agency's two-digit agency code (see Appendix 3).
If a loan guarantee is in default, the agency pays the defaulted loan claim of the non-Federal lender from the financing account. For example, if the agency disburses $2,000 from the financing account TAFS (ACX4201) to the non-Federal lender for defaulted loans, it records the loan claim payment in column 3 of the FMS 224 (see Appendix 3).
As part of the loan guarantee contract, the non-Federal lender may require that the agency provide an interest supplement. The agency records these interest supplement payments in the financing account and disburses them to non-Federal lenders. For example, if an agency pays $2,000 in interest supplements from the financing account TAFS (ACX4201) to the non-Federal lender, it records the disbursement in column 3 of the FMS 224 (see Appendix 3).
When the Government modifies a pre-1992 loan guarantee, the loan guarantee becomes subject to credit reform accounting. The agency transfers the guarantee liability from the liquidating account to the financing account. It makes a one-time adjusting payment from the liquidating account TAFS to the financing account TAFS to acquire the guarantee liability. The agency records all subsequent cashflows related to the loan guarantee in the financing account TAFS.
For example, if an agency transfers a pre-1992 loan guarantee with a pre-modification net present value of $2,000 from the liquidating account to the financing account, it makes a one-time adjusting payment of $2,000 from the liquidating account TAFS (ACX4203) to the financing account TAFS (ACX4201). The agency records on the FMS 224 (see Appendix 3):
For modifications of post-1991 loan guarantees, see OMB Circular No. A-11.
If the estimated subsidy is negative, the agency pays an amount equal to the negative subsidy from the financing account TAFS to a general fund receipt TAS (AC27XX.001) for that program when the non-Federal lender disburses the guaranteed loan. If a subsidy reestimate for a cohort is downward, the agency records the amount of the reestimate and interest on the reestimate and pays an amount equal to the downward reestimate and interest on the reestimate to a different general fund receipt TAS (AC27XX.003).
For example, if the agency pays an amount equal to the negative subsidy of $3,000 from the financing account TAFS (ACX4200) to a Treasury general fund receipt TAS (AC27XX.001), the agency records on the FMS 224 (see Appendix 3):
An agency records disbursements and collections resulting from pre-1992 direct loan obligations and loan guarantee commitments in the liquidating account TAFS. Credit Reform did not change the treatment of transactions for pre-1992 direct loans and loan guarantees. If there are excess collections in this account, see subsection 4650.40a.
If the liquidating account TAFS receives collections exceeding the account obligations during each fiscal year, the agency returns the excess collections to Treasury through the GWA NET application as a capital transfer as soon as practical after the close of the fiscal year. It returns the excess collections to the miscellaneous receipt TAS 2814 preceded by the agency's two-digit agency code.
For borrowings from Treasury, repayments to Treasury, and interest payments to Treasury:
Federal Borrowings Branch
Office of Public Debt Accounting
Bureau of the Public Debt
200 3rd Street HB-113
P.O. Box 396
Parkersburg, WV 26106-0396
Telephone: 304-480-7488
Fax: 304-480-5176
E-mail: borrowings@bpd.treas.gov
Web site: http://www.treasurydirect.gov/govt/apps/tbp/tbp.htm
For credit account transactions and accounts with subclass codes:
Budget Reports Division
Financial and Budget Reports Directorate
Governmentwide Accounting
Financial Management Service
Department of the Treasury
Prince George's Metro Center II, Room 518D
3700 East-West Highway
Hyattsville, MD 20782
Telephone: 202-874-9880
For credit account symbols and appropriations:
Budget Control Team
Budget Reports Division
Financial and Budget Reports Directorate
Governmentwide Accounting
Financial Management Service
Department of the Treasury
Prince George's Metro Center II, Room 5D07
3700 East-West Highway
Hyattsville, MD 20782
Telephone: 202-874-9950
For interest on uninvested funds:
Credit Accounting Branch
Comptroller Directorate
Management
Financial Management Service
Department of the Treasury
Prince George's Metro Center II, Room 6D51
3700 East-West Highway
Hyattsville, MD 20782
Telephone: 202-874-8740
E-mail: credit.accounting@fms.treas.gov
For actual annual interest rates:
Budget Analysis Branch
Budget Analysis and Systems Division
Office of Management and Budget
NEOB, Room 6002
725 17th Street, NW.
Washington, DC 20503
Telephone: 202-395-3945
Appendix No. |
Form | Title | |
1 |
FMS 224 | Statement of Transactions - Program Account | |
2 |
FMS 224 | Statement of Transactions - Financing Account-Direct Loans | |
3 |
FMS 224 | Statement of Transactions - Financing Account-Guaranteed Loans |
Chapter appendices are only available in the PDF version.
1. Purpose
This transmittal letter releases revisions to I TFM 2-4600: Treasury Reporting Instructions for Credit Reform Legislation. This chapter prescribes the Department of the Treasury's (Treasury's) reporting instructions for Federal credit program agencies. These instructions apply to all direct loan and loan guarantee programs, except those specifically excluded by the Federal Credit Reform Act of 1990, Sections 502 and 506. The Bureau of the Public Debt performs the borrowings from Treasury.
2. Page Changes
Remove
Table of Contents for Part 2 (T/L 644)
I TFM 2-4600 (T/L 612)
Insert
Table of Contents for Part 2
I TFM 2-4600
3. Effective Date
This transmittal letter is effective immediately.
4. Inquiries
Direct questions concerning this transmittal letter to:
Federal Borrowings Branch
Office of Public Debt Accounting
Bureau of the Public Debt
200 3rd Street HB-113
P.O. Box 396
Parkersburg, WV 26106-0396
Telephone: 304-480-7488
Fax: 304-480-5176
E-mail: borrowings@bpd.treas.gov
Web site: http://www.treasurydirect.gov/govt/apps/tbp/tbp.htm
Date: June 26, 2008
Judith R. Tillman
Commissioner
