1

Please use the following two slides as a template for your

presentation at NES.

Federal Property Accountability: From the Law to the General

Ledger

Steven F. Holland, CPPMSr. Property Manager

Booz | Allen | Hamilton

2

I. Become familiar with public laws and federal regulations requiring property management and accountability

II. Understand the federal accounting requirements for Plant, Property and Equipment (PP&E)

III. Recognize the front-end aspects of the property life cycle from Acquisition through Receiving until the property record is established and how assets are tied to the Finance general ledger

Let’s just have fun and learn from each other along the journey!

Objectives

Welcome!

3

• Public Laws

• Congressional Budget Process

• Federal Regulations governing Personal Property Management

• Agency Policy

• Front-End of the Property Management Lifecycle

• Accounting

• U.S. Government Standard General Ledger

• Sources and Links

Agenda

4

• Budget Accounting Act of 1921

• Economy Act of 1932

• Federal Property and Administrative Services Act of 1949

• Federal Manager’s Financial Integrity Act of 1982

• Government Performance Results Act of 1932

• Chief Financial Officer’s Act of 1990

• Clinger-Cohen Act of 1996

• Federal Financial Management Improvement Act of 1996

• Accountability of Tax Dollars Act of 2002

(Just a bit of that detail stuff ya’ gotta worry about)

Public Laws

5

• Created the Bureau of the Budget

• Requires the President to submit a budget proposal every fiscal year

• Established the General Accounting Office (GAO) (now known as the General Accountability Office)

Budget and Accounting Act of 1921

6

• Consolidated the federal personal and non-personal property affairs under one organization

• Effectively started today’s world of accountability

• Created the General Services Administration

• Instituted the Office of the Administrator of General Services Administration

• Allows agency heads to deviate and supplement the FMR

Federal Property and Administrative Services Act of 1949

7

• Authority - The United States Constitution

• Agency Budget Formation and Submission

• Congressional Review

• Authorization Bills

– Authority to carry out various programs and functions

• Appropriation Bills

– Authority to spend money

Congressional Budget Process

8

• Power of the “purse strings” vests with Congress

• Budget and Accounting Act of 1921 requires President to submit a budget by beginning of February each year

• Congress must agree or resolve disagreements prior to the beginning of the fiscal year, Oct 1st.

Congressional Budget Process (Cont’d)

9

• Federal regulations governing Personal Property Management are:

– Federal Property Management Regulation (FPMR), Title 41, Code of Federal Regulations, Chapter 101 (41 CFR § 101)

– Federal Management Regulation (FMR), Title 41, Code of Federal Regulations, Chapter 102 (41 CFR § 102)

Federal Regulations

10

Agency PolicyAgency Policy

• 41 CFR § 102-2.40 allows for each agency head to expand the FMR to meet it’s respective mission

• Each agency is unique, therefore it’s property requirements maybe different

• Agency property management regulations may not detract from basic FMR…still must meet minimum accountability standards

• There in lies a large portion of the confusion associated with administering a Property Management program within the Federal government today

11

Acquisition Background & Objectives

Acquisition (Determination of

Need)

Acquisition Cycle

Procurement

Plan of Action

Receipt

Acquisition Management

Process

Acquisition Planning

Front-End of the Property Mgmt Lifecycle

Records

12

• Acquisition

– Acquisition Process The process of acquiring quality products and

services to satisfy user needs (e.g., mission capability, and operational support) in a timely manner and at a fair and reasonable price

– Acquisition Strategy A developed roadmap from program initiation

through post-production support

Front-End of the Property Mgmt Lifecycle

13

Front-End of the Property Mgmt Lifecycle

• Acquisition

– Acquisition Goals Minimizing Time and Cost

Linking program decisions to accomplishments in:

o Development

o System Acquisition

o Initial Production

o Testing and Lifecycle Support

Tailoring strategy to meet specific program needs

14

• Acquisition Planning

– Begins as soon as the need is identified

– Provides the overall strategy for accomplishing and managing the acquisition

– Formally documents approach in filling the need, optimizing resources and satisfying policy requirements for the acquisition

Front-End of the Property Mgmt Lifecycle

15

Front-End of the Property Mgmt Lifecycle

• Acquisition Plan

– Addresses all aspects of a major system acquisition:

Technical

Business

Management

Significant considerations that control the acquisition

– Agency Planners must address two key areas:

Acquisition Background & Objectives

Plan of Action

16

• Acquisition Background and Objectives

– Provides rationale and justification for the proposed acquisition

– Eight elements involved are:

Statement of Need

Applicable Conditions

Costs

Capability or Performance

Front-End of the Property Mgmt Lifecycle

Delivery/Performance Period

Tradeoffs

Risks

Acquisition Streamlining

17

• Plan of Action Sources Competition Source Selection Procedures Acquisition Considerations Budgeting and Funding Product or Service Descriptions Priorities Allocations and Allotments Contractor versus Government

Performance Inherently Governmental Functions

Make or Buy Test & Evaluation Logistics Considerations Government-

Furnished Property Government-Furnished

Information Security Considerations Contract Admin & Fed

Laws Acquisition Cycle

Milestones Identifying Acquisition

Plan Participants

Front-End of the Property Mgmt Lifecycle

18

Front-End of the Property Mgmt Lifecycle

Contract Preparation, Review and Clearance

Beginning & Completing Negotiations

Evaluation of Proposals, Audits and Field Reports

Solicitation Issued

Synopsis Issued

CONTRACT AWARD

Acquisition Plan Approval #1 JUST GOTTA

HAVE ITStatement of Work

Specifications

Data Requirements

Completion of Acquisition Package Preparations

Purchase Requisition

Justification for other than Full & Open Competition

1

2

3

4

5

6

7

8

9

10

11

12

13

13 Milestones To Achieve Contract Award

19

Front-End of the Property Mgmt Lifecycle

• Acquisition Management Process

– Starts with the User identifying the need

– Transcends into a Material Development Decision before the Material Solution Analysis

– 5 Phase Process:

1) Material Solution Analysis

2) Technology Development

3) Engineering & Manufacturing Development

4) Production & Deployment

5) Operations & Support

20

• Acquisition Management Process (Cont’d)– 3 Milestone Review Points within the 5 phases:

A) Pre-Systems Acquisition

B) Program Initiation

C) Systems Acquisition between Eng. & Mfg. Dev. and Production and Deployment

Front-End of the Property Mgmt Lifecycle

1 2 3 4 5

21

Front-End of the Property Mgmt Lifecycle

• Procurement– Agency Acquisition Regulations

Published in the Federal Register and codified under Title 48

Agency Head may implement federal regulations through a FAR supplement

May include agency policies, procedures, contract clauses, solicitation provisions, and forms

Agencies must not repeat, paraphrase, or restate material or include language that conflicts with the FAR

22

• Procurement– Agency Acquisition Manual

Establishes uniform internal operating acquisition procedures that implement or supplement the FAR

Agency manuals are divided into 9 sub-chapters and conform to the FAR:

Front-End of the Property Mgmt Lifecycle

A. Make or BuyB. Competition and Acquisition

PlanningC. Contracting Methods and

Contract TypesD. Socioeconomic ProgramsE. General Contracting

Requirements

F. Special Categories of Contracting

G. Contract ManagementH. Clauses and Forms (Property)I. Special Contracting Programs

23

Front-End of the Property Mgmt Lifecycle

• Receiving– Delivery and Acceptance

Carrier physically delivers the property to your receiving facility

Carrier obtains receiving person’s signature on behalf of the agency

– Inspection Four stages:

o Check for any visual damage at deliveryo Check for any concealed or packaging-related

damageso QA performs higher-level inspection for

acceptance

o Affix property identification tag to identify owner

24

Front-End of the Property Mgmt Lifecycle

• Receiving (Cont’d)– Documentation

Complete documentation is essential in establishing accountability during the receiving process

Quantities, model or part numbers, and serial numbers are matched against the vendor’s invoice or shipping document

Receiving reports are prepared or information is recorded in the receiving system after reconciliation of quantity, condition and any discrepancies (e.g., overages, shortages, incorrect items, damaged items) noted during receiving inspection

25

Front-End of the Property Mgmt Lifecycle

• Receiving (Cont’d)– Confirmation of Receipt to Procurement & Finance

Receiving reports and vendor documentation TOGETHER confirm receipt

This documentation is distributed to Accounts Payable, Procurement, Property Management and Inventory Control so the vendor can be paid and agency records can be established

– Property Identification and Classification Property Management uses Receiving reports and

vendor documentation as source documentation to establish accountable property records

Property identification starts the Property Management lifecycle

26

Front-End of the Property Mgmt Lifecycle

• Receiving (Cont’d)– Records

It is essential that property records are established in the Agency’s Property Management System (The system of record) promptly upon receipt and the property is identified

The newly created property record is the first step that establishes accountability and ties the asset to the Agency’s general ledger

– Internal Routing and Distribution

After the property is received, inspected and accepted, it is routed and distributed internally to the requestor, or placed in storage pending distribution

27

Accounting• Capitalization

– Capitalization thresholds for Property, Plant & Equipment (PP&E) are established by each agency and for each type of personal property

– Agencies must consider the size, volume and range of acquisition costs, financial and operational conditions, and asset useful life before establishing capitalization thresholds

– General equipment has a useful life of 2 years, where as vessels over 65 ft. have a 30 year useful life

– Capitalization threshold can vary from $25,000 up to $1M, depending on the agency’s financial policies and asset types

28

Accounting• Depreciation

– PP&E is depreciated over its useful life using the straight-line method

• SFFAS No. 6 – Property, Plant and Equipment (PP&E)

– The accounting standard for all Federal government PP&E

– PP&E is defined as: Tangible assets that have an estimated useful life of 2 years or more; are not intended for sale in the ordinary course of business; and are intended to be used or available for use by the entity

29

Accounting

• Object Classes – OMB A11 Section 83, Schedule 0– Five major object classes:

10 Personal compensation and benefits

20 Contractual services and supplies

30 Acquisition of assets

40 Grants and fixed charges

90 Other

– Two sub-object classes that further define assets:

31.0 Equipment

32.0 Land and structures

30

Accounting

• Sub-Object Classes– Sub-object classes are defined by each agency to

categorize financial transactionsExample: GE-31-22-00, Network Servers)

GE = General Expense Sub Object Class 31-22 = Network ServersObject Class 31 = Equipment

– Correct object classification is critical to financial accounting

– Inaccurate classifications must be corrected before the invoice is paid.

31

Accounting

• Sub-Object Classes (Cont’d)– Sub-object class listing (Sample):

GE-31-00-00 Equipment

GE-31-01-00 Mobile/Portable Radios

GE-31-02-00 Office Equipment (Non-Capitalized)

GE-31-03-00 All Other Equipment (Non-Capitalized)

GE-31-04-00 Intrusion Detection Equipment (Non-Capitalized)

GE-31-06-00 Computer - Mainframe (Capitalized)

GE-31-08-00 Computer – Mainframe (Non-Capitalized)

GE-31-10-00 Computer – Desktop

GE-31-12-00 Computer – Laptop

GE-31-14-00 Computer – Handheld

32

Accounting

• Sub-Object Classes (Cont’d)– Sub-object class listing (Sample):

GE-31-15-00 Software (Capitalized)

GE-31-16-00 Software (Non-Capitalized)

GE-31-17-00 Internal Use Software (Capitalized)

GE-31-18-00 ADP Equipment (Capitalized)

GE-31-19-00 Internal Use Software (Non-Capitalized)

GE-31-20-00 Peripheral Devices

GE-31-22-00 Network Servers (Capitalized)

GE-31-24-00 Network Servers (Non-Capitalized)

GE-31-26-00 Network-Related Equipment (Capitalized)

GE-31-28-00 ADP Equipment (Non-Capitalized)

33

Accounting

• Sub-Object Classes (Cont’d)– Sub-object class listing (Sample):

GE-31-29-00 Network-related Equipment (Non-Capitalized)

GE-31-30-00 Computer Security Equipment (Capitalized)

GE-31-32-00 Computer Security Equipment (Non-Capitalized)

GE-31-34-00 Special Purpose IT Equipment (Capitalized)

GE-31-36-00 Special Purpose IT Equipment (Non-Capitalized)

GE-31-38-00 Video Teleconferencing Equipment (Capitalized)

GE-31-40-00 Video Teleconferencing Equipment (Non-Capitalized)

GE-31-42-00 Electric Power Supply/Distr. Primary/Backup (Capitalized)

GE-31-44-00 Electric Power Supply/Distr. Primary/Backup (Non-Capitalized)

GE-31-46-00 Test Equipment (Capitalized)

34

Accounting

• Sub-Object Classes (Cont’d)– Sub-object class listing (Sample):

GE-31-48-00 Test Equipment (Non-Capitalized)

GE-31-60-00 Installation of Office Equipment (Capitalized)

GE-31-61-00 Installation of ADP Equipment (Capitalized)

GE-31-62-00 Installation of Radio Equipment (Capitalized)

GE-31-64-00 Installation of Other Equipment (Capitalized)

GE-31-65-00 Installation of Intrusion Detection Equipment (Capitalized)

GE-31-66-00 Boats (Capitalized)

GE-31-67-00 Boats (Non-Capitalized)

GE-31-68-00 Passenger Vehicles (Non-Capitalized)

GE-31-69-00 Non-Passenger Vehicles (Non-Capitalized)

35

Accounting• Sub-Object Classes (Cont’d)

– Sub-object class listing (Sample):GE-31-70-00 Passenger Vehicles (Capitalized)

GE-31-71-00 Non-Passenger Vehicles (Capitalized)

GE-31-72-00 Aircraft (Capitalized)

GE-31-73-00 Other Wireless Communication Equipment

GE-31-74-00 Office Equipment (Capitalized)

GE-31-75-00 All Other Equipment (Capitalized)

GE-31-76-00 Construction of Radio Equipment (Capitalized)

GE-31-77-00 Intrusion Detection Equipment (Capitalized)

GE-31-78-00 Construction of Intrusion Detection Equipment (Capitalized)

GE-31-80-00 Construction of Radio Equipment (Non-Capitalized)

GE-31-81-00 Construction of Intrusion Detection Equip. (Non-Capitalized)

36

Accounting• Key Aspects of Accounting for Property

– Establishing and nurturing relationships with Finance professionals

– Working together to demonstrate existence and completeness and looking at what each other has and needs

– Recording accurate and complete asset data based on vendor invoices

– Performing floor-to-record and record-to-floor checks to validate if the records DO match the assets on the floor

– Foster Together Everyone Achieves More (TEAM) attitudes between Property and Financial Managers

37

U.S. Standard General Ledger• Chart of Accounts

– A uniform chart of accounts within the Federal Government used in standardizing agency accounting

– 8 Categories of Accounts 1000 Assets 2000 Liabilities 3000 Net Position 4000 Budgetary 5000 Revenue and Other Financing

Sources 6000 Expense 7000 Gains / Losses / Miscellaneous Items 8000 Memorandum

38

U.S. Standard General Ledger• Chart of Accounts

– 10 Key General Ledger Accounts for Property Managers 1511 Operating Materials and Supplies Held

for Use 1512 Operating Materials and Supplies Held in

Reserve 1514 Operating Materials and Supplies for

Repair 1525 Inventory – Raw Materials 1526 Inventory – Work-in-Process 1527 Inventory – Finished Goods 1711 Land and Land Rights 1740 Other Structures and Facilities 1750 Equipment 1830 Internal Use Software

39

Sources and Links• Public Laws

– Budget and Accounting Act of 1921

– Economy Act of 1932

– Federal Property and Administrative Services Act of 1949 (The Act)

– Federal Manager’s Financial Integrity Act (FMFIA) of 1982

– Government Performance Results Act (GPRA) of 1993

– Chief Financial Officer’s (CFO) Act of 1990

– Clinger-Cohen Act of 1996, Pub. L. 104-106, Division E

– Federal Financial Management Improvement Act (FMFIA) of 1996

– Accountability of Tax Dollars Act of 2002

40

Sources and Links• OMB Circulars– OMB Circular No. A-11, “Preparation, Submission, and

Execution of the Budget.”– OMB Circular No. A-11, “Preparation, Submission, and

Execution of the Budget”, Appendix B, “Budgetary Treatment of Lease-Purchases and Leases of Capital Assets.”

– OMB Circular No. A-76, Revised, “Performance of Commercial Activities.”

– OMB Circular No. A-87, “Cost Principles for State, Local, and Indian Tribal Governments” (See 2 CFR § 225).

– OMB Circular A-94, “Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs."

– OMB Circular No. A-102, “Grants and Cooperative Agreements with State and Local Governments.”

41

Sources and Links• OMB Circulars– OMB Circular No. A-110, “Uniform Administrative

Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations” (See 2 CFR § 215).

– OMB Circular No. A-122, “Cost Principles for Non-Profit Organizations” (See 2 CFR § 230).

– OMB Circular No. A-123, Revised, “Management’s Responsibility for Internal Control.”

– OMB Circular No. A-126, Revised, “Improving the Management and Use of Government Aircraft.”

– OMB Circular A-133, “Audits of States, Local Governments, and Non-Profit Organizations.”

– OMB Circular No. A-136, “Financial Reporting Requirements.”

42

Sources and Links• Federal Accounting Standards Advisory

Board (FASAB) Statements– FASAB Handbook of Federal Accounting Standards and Other

Pronouncements, As Amended (2011).

– Statement of Federal Financial Accounting Standards No. 3, “Accounting for Inventory and Related Property” (1993).

– Statement of Federal Financial Accounting Standards No. 6, “Accounting for Property, Plant, and Equipment” (1996).

– Statement of Federal Financial Accounting Standards No. 8, “Supplementary Stewardship Reporting” (1996).

– Statement of Federal Financial Accounting Standards No. 10, “Accounting for Internal Use Software” (1998).

43

Sources and Links• Federal Accounting Standards Advisory

Board (FASAB) Statements– Statement of Federal Financial Accounting Standards

No. 11, “Amendments to Accounting for Property, Plant, and Equipment – Definitional Changes” (1998).

– Statement of Federal Financial Accounting Standards No. 16, “Amendments to Accounting for Property, Plant and Equipment – Measurement and Reporting for Multi-Use Heritage Assets: Amending SFFAS 6 and SFFAS 8 Accounting for Property, Plant, and Equipment and Supplementary Stewardship Reporting” (1999).

– Statement of Federal Financial Accounting Standards No. 35, “Estimating the Historical Cost of General Property, Plant, and Equipment: Amending Statements of Federal Financial Accounting Standards 6 and 23” (2009).

44

Sources and Links• United States Standard General Ledger

– U.S. Department of Treasury, Financial Management Service

45

Questions ?

46

BiographySteven F. Holland, CPPMMr. Holland’s career in property and logistics management spans over three decades as a contractor employee and consultant to the Federal government. He has supported several federal Asset Management projects for the Department of Homeland Security, Environmental Protection Agency, and the Intelligence Community in applying experience and industry leading practices into project deliverables. Mr. Holland has authored and co-authored several property policy manuals, procedures and plans involving personal property management and fleet management.

Mr. Holland’s credentials include a Business Administration degree, concentration in Acquisition and Contract Management, from Strayer University, and NPMA CPPM certification with studies in both federal and contract property disciplines. He has been an active member of the National Property Management Association since 1987. Mr. Holland is currently serving as a Co-Director of the NPMA Conference Series Planning Committee (CSPC) and has been involved in planning the NPMA National Education Seminars since 2007. He is a current member of the NOVA Chapter and has been a member of the NPMA since 1988.

Mr. Holland is a Lead Associate within Booz Allen Hamilton’s Cloud Analytics team. Please note that the opinions offered in this presentation are those of the writer and that the writer is not speaking on behalf of Booz Allen Hamilton.