Note 2. Reporting Improvements
In 2003 and 2002, the Department implemented revised financial statement reporting requirements and new Statement of Federal Financial Accounting Standards (SFFAS). None of the changes had a material effect on the Department's financial position or results of operations.
On September 25, 2001, OMB issued Bulletin 01-09 (Bulletin), Form and Content of Agency Financial Statements. This Bulletin provides guidance for preparing agency financial statements and supersedes OMB Bulletin No. 97-01, Form and Content of Agency Financial Statements, as amended. It contains significant changes. The requirements contained in the Bulletin are phased in beginning with FY 2001, are effective in their entirety for the preparation of financial statements for fiscal years beginning after September 30, 2001 (i.e., FY 2002 and beyond), and significantly affect how the Department reports on its programs.
The major changes required by the Bulletin for FYs 2002 and beyond reporting are as follows.
Integrated Reporting. Combined performance and accountability reports that present both performance and financial reports are required for FY 2002 and beyond.
Accelerated Reporting. For FY 2003 and FY 2002, performance and accountability reports must be submitted to OMB and the Congress by February 1.
Budget Integration. The Statement of Budgetary Resources is revised to improve the linkage between this statement and the Budget of the United States Government.
Financial Statement Formats. Significant changes in labeling and formatting of line items on the Statement of Changes in Net Position, Statement of Budgetary Resources, and Statement of Financing are effective to facilitate an understanding of the flow of information between statements. Labeling and formatting of line items on the Balance Sheet are streamlined to improve usefulness to readers of the financial statements.
Comparative Reporting. The preparation of comparative financial statements is required for FYs 2003 and beyond. FY 2003 is the first year for which comparative Statements of Changes in Net Position, Budgetary Resources, and Financing (and related footnotes) are presented. Also, information presented in the Financial Highlights Section of the Management Discussion and Analysis, Required Supplementary Stewardship Information and Required Supplementary Information are presented on a comparative basis when the information is meaningful to the user of the financial report.
Interim Financial Reporting. Beginning in FY 2003, unaudited financial statements are required to be prepared and submitted to OMB on a quarterly basis (i.e., December 31, March 31, and June 30) no later than 45 days after the end of the reporting period. The Department met this requirement for FY 2003 by submitting timely interim statements for each required quarter.
The Statement of Net Cost for FY 2003 and 2002 is presented differently from last year's report. Specifically, the Department presents net cost by strategic goal which is conistent with OMB Bulletin 01-09, and explained more fully in Note 18 to the financial statements.
The Department implements SFFASs when they become effective. No new SFFASs were implemented during FY 2003. For FY 2002, the Department adopted SFFAS No 21, Reporting Corrections of Errors and Changes in Accounting Principles, which became effective for FY 2002. SFFAS No. 21 amends SFFAS No. 7. SFFAS No. 7 did not allow reporting entities, when presenting prior period financial statements for comparative purposes, to restate prior period financial statements to show the effect of accounting errors. SFFAS No. 21 requires that when material errors are discovered in prior period financial statements, all statements presented must be restated to correct the error.
Changes to be Implemented
As indicated above, the requirements contained in OMB Bulletin 01-09 are effective in their entirety for the preparation of financial statements for fiscal years 2002 and beyond. Future significant changes that the Department will implement are as follows.
Accelerated Reporting. For FY 2004, OMB is accelerating further the due dates for performance and accountability reports. Performance and accountability reports for FY 2004 must be submitted to OMB and the Congress by November 15, 2004. The Department is making progress towards meeting this requirement for FY 2004, as evidenced by the issuance of this FY 2003 performance and accountability report well in advance of last year's release date.
Interim Financial Reporting. Beginning with the second quarter for FY 2004, the due date for quarterly statements will accelerate to no later than 21 days after the end of each quarter.