Financial Statements & Accounting Data

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Financial Statements Accounting Data
TMA Office of the Chief Financial Officer
(OCFO) Management Control Financial Studies
Division
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Outline

• Financial Statement Reporting Requirement
• Legacy Accounting Systems
• Medical Accounts Receivable (A/R)

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Fiscal Management Requirements

• CFO Act of 1990 Integrated Financial Management
  (FM) systems supporting DoD accounting needs are
  key to effective financial management
• Federal Financial Management Improvement Act
  (FFMIA) of 1996 All Federal agencies to comply
• Implement/maintain systems that meet Federal FM
  system requirements (Joint Financial Management
  Improvement Program (JFMIP))
• Support Federal accounting standards (Federal
  Accounting Standards Advisory Board (FASAB))
• Apply US Standard General Ledger (USSGL) at the
  transaction level

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Financial Statements

• MHS Financial Statement Reporting Entities
  (FSREs)

MHS
MERHCF 1
DHP 3
MILCON 3
TRICARE Mgmt. Activity (TMA)
Service Medical Activity (SMA)
TMA - FOD
TMA CRM 1
TMA-USUHS 2
SMA Army (MEDCOM) 4 (USACE) 5
SMA Navy (BUMED) 4 (NAVFAC) 5
SMA Air Force (AFMS) 4 (USAFE) 5
MERHCF Medicare-Eligible Retiree Health Care
Fund DHP Defense Health Program
Appropriation MILCON Military Construction
Appropriation FOD Financial Operations
Division CRM Contract Resource Management USUHS
Uniformed Services University MEDCOM Army
Medical Command BUMED Navy Bureau of Medicine
and Surgery AFMS Air Force Medical
Service USACE U.S. Army Corps of
Engineers NAVFAC Naval Facilities Engineering
Command USAFE U.S. Air Forces in Europe
(1) Under Audit (2) All Proprietary Statements
Validation Through Examination In Process (3)
Includes American Recovery and Reinvestment Act
(ARRA) Funding (4) Executes DHP Funds (5)
Executes MILCON Funds
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• Accounting Data

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Accounting System Acronyms

• CUFS College and University Financial System
• DAI Defense Agency Initiative
• DEAMS Defense Enterprise Accounting and
  Management System
• FSRE Financial Statement Reporting Entities
• GAFS-R General Accounting Financial System -
  Revised
• GFEBS General Fund Enterprise Business System
• STANFINS Standard Army Finance Information
  System
• STARS-FL Standard Accounting and Reporting
  System - Field Level
• TMA TRICARE Management Activity
• USUHS Uniformed Services University of the
  Health Sciences
• WAAS Washington Headquarters Services (WHS)
  Allotment Accounting System

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Fiscal Management Requirements

• Office of Management Budget (OMB)
• Use commercial off-the-shelf (COTS)
  JFMIP-certified software for replacement of core
  FM systems (OMB Circular A-127)
• New Service FM COTS are JFMIP-certified
• Army General Fund Enterprise Business System
  (GFEBS)
• SAP COTS
• Navy Navy Enterprise Resource Planning (ERP)
• Oracle COTS
• Air Force Defense Enterprise Accounting and
  Management System (DEAMS)
• Oracle COTS

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What is SFIS?

• Standard Financial Information Structure (SFIS)
• A comprehensive, standard business language
  that defines financial information that supports
  all DoD-wide budget, cost/performance management,
  and external reporting requirements
• SFIS is NOT an IT system
• http//www.defenselink.mil/dbt/sfis_resources.html

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Financial Statements

• FSRE Structure Challenges
• TMA clear chain of command and organizational
  structure
• MERHCF actuarial and accounting information
• SMA components have two lines of authority
  (command and control, and finance business rules)
  vs dollar flow. Face issues related to MILDEP
  priorities vs fund flow priorities financial
  impact, accounting system, financial business
  rules

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Financial Statements

• FSRE Structure Challenges (continued)
• Solution single accounting system with common
  business rules and chain of command simplifies,
  streamlines the financial statement, financial
  reporting, financial performance reporting

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Budget Execution - OMAs of 30 June 2010
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Budget Execution - OMAs of 30 June 2010
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Budget Execution Performance-OMAs of 30 June
2010
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Budget Execution Performance-OMAs of 30 June
2010
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Budget Execution RDTEAs of 30 June 2010
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Budget Execution RDTEAs of 30 June 2010
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Budget Execution Performance-RDTEAs of 30 June
2010
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Budget Execution Performance-RDTEAs of 30 June
2010
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Budget Execution - ProcurementAs of 30 June 2010
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Budget Execution Procurement As of 30 June 2010
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Budget Execution Performance Procurement As
of 30 June 2010
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Budget Execution Performance Procurement As of
30 June 2010
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Financial Metrics

• Monthly Reporting, History and Measures
• Accounts Receivable (A/R) Public debt gt 30 days
  at Sep 30, 2009 (Red Metric)
• SMA-Army (22.5 million)
• A/R Intragovernmental Debt gt 30 days at Sep 30,
  2009 (Red Metric)
• SMA-Army (17.7 million)
• SMA Navy (17.3 million)
• SMA A/R increased dramatically in 1st Qtr FY 2010
  when recording begins

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DoD References

• DoD Financial Management Regulation (FMR), Volume
  4, Chapter 3, Receivables dated November 2009
• DoD Financial Management Regulation (FMR), Volume
  6B, Chapter 10, Notes to Financial Statements
  dated September 2008
• Located at OSD (Comptroller) Web site
• http//www.defenselink.mil/comptroller/fmr/

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Accounts Receivable (A/R)

• Two types of A/R in governmental accounting
• Intra-governmental (e.g., Coast Guard, VA)
• Expect to get paid 100 of Billed Amount
• Disputes regarding claims against other federal
  agencies (e.g., Coast Guard, VA) are to be
  resolved per Code of Federal Regulations
  4 CFR 101
• Public (civilian emergencies, TPC)
• Need to establish an allowance for bad debt
• MTFs may be reporting collections to higher
  headquarters but what data is reported regarding
  outstanding and aged (e.g., gt30 days, gt120 days)
  Medical A/R?

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Third Party Collections

• Total Third Party Collections (TPC) Billings were
  in FY 2009 were 496.0 million
• Total TPC Collections in FY 2009 were
  240.7 million
• How much is really being written off as
  uncollectible, and how much is still on the books
  as Medical A/R?

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Medical Services Account (MSA)

• Combination of both Intra-governmental A/R (e.g.,
  Coast Guard, VA) and Public A/R (e.g., civilian
  emergencies)
• Total MSA amount collected for medical care
  provided in MTFs for FY 2009 was 151 million

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Medical Affirmative Claims (MAC)

• Medical Affirmative Claims (MAC) A/R is all
  Public A/R (e.g., insurance companies, liable
  individuals)
• Total amount collected for medical care provided
  in MTFs for FY 2009 was 15 million

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Doubtful Accounts Write-offs

• FMR guidance states
• The accounting office shall establish an
  allowance for doubtful debt, which shall provide
  for reducing gross receivables by the amount of
  the estimated loss to their net realizable value
• A write-off occurs when an agency official
  determines, after using all appropriate
  collection tools, that is it more than 50 likely
  that a debt is uncollectible

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Service Financial Statements

• A/R are reported on the annual audited financial
  statements
• Service Financial Statements located at
  OSD(Comptroller) Web site
• http//www.dod.mil/comptroller/cfs/fy2009.html

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Accounts Receivable - Policy

• Accounts Receivable Policy Memorandum (with
  attachment)
• Policy signed on May 8, 2008
• Purpose
• Establish policy for the recognition (as
  rendered), classification, recording, aging,
  collection, disposition and reporting of accounts
  receivable in order to improve the accuracy of
  financial statements
• Compliance with DoDs Financial Management
  Regulation (FMR) and Generally Accepted
  Accounting Principles (GAAP)

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Accounts Receivable Policy (cont)

• Implementation Date
• 1 October 2009 (for FY 2010 reporting purposes)
• Title 10 United States Code, Chapter 55, Section
  1095
• This policy does not modify the ability of the
  Services to use monies collected in the fiscal
  year collected10 U.S.C. 1095(g) reads as
  follows "Amounts collected under this section
  from a third-party payer or under any other
  provision of law from any other payer for health
  care services provided at or through a facility
  of the uniformed services shall be credited to
  the appropriation supporting the maintenance and
  operation of the facility and shall not be taken
  into consideration in establishing the operating
  budget of the facility."

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Financial Metrics - SMA

• Implementation of Medical A/R Policy in 1st
  Quarter of FY 2010 had a large impact
• Accounts Receivable (A/R) Public Debt gt 30 days
  at July 31, 2010 (Red Metric)
• SMA-Army (213.9 million),
• SMA-Navy (5.6 million)
• SMA-Air Force ( 78.0 million)
• Total reported Medical A/R was 527.9 million

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Financial Metrics -TMA

• Implementation of MARR A/R in 4th Quarter of FY
  2009 had a large impact
• Accounts Receivable (A/R) Public debt gt 30 days
  at Mar 31, 2010 (Red Metric)
• TMA-CRM (175.0 million)

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Management of Accounts Receivable

• Revenue Recognition
• All Defense Health Program (DHP) funded
  activities will recognize and record a receivable
  when it establishes a claim based on goods or
  services provided (as rendered)
• Financial statements have two A/R
  classifications
• Intragovernmental and Nonfederal (public)
• Debt Management (Debt Collection Improvement Act
  (DCIA)
• Working with OUSD(C) to potentially add language
  to the FMR to better clarify medical debt and
  when to turn-it over to DFAS

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Management of Accounts Receivable (continued)

• Proprietary vs. Budgetary
• Recommended accounting entries are Debit USSGL
  1310 (Accounts Receivable) and credit USSGL 6790
  (Other Expenses Not Requiring Budgetary
  Resources)
• This will ensure a correct financial statement
  entry without the potential for a appropriation
  violation and maintain USC 1095 flexibility

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Accounts Receivable - Revenue Recognition

• All Defense Health Program (DHP) funded
  activities will recognize and record a receivable
  when it establishes a claim based on goods or
  services provided (as rendered)
• There are two classifications of accounts
  receivables
• Intragovernmental
• Nonfederal

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Accounts Receivable - Going Forward

• Accuracy in reporting
• Accounts receivable reports will be better than
  what we have now
• Reports will include aging data
• Visibility of all accounts (including TPC
  accounts receivable older than prior year 2)
• Will become more accurate as procedures, systems
  and data collection become more standardized
• Central reporting will improve as funded systems
  change request have been submitted to
• Push accounts receivable data from TPOCS and
  CHCS/AHLTA (both MSA and inpatient TPC), and
• Calculate interest in both MSA and TPOCS

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Accounts Receivable - Going Forward

• Do not want to impact ability for billing
  contractors to develop and/or use their own
  billing management system
• Possibility of accounts marked as transferred in
  MSA, but documentation never forwarded to the
  Defense Finance and Accounting Services (DFAS)
  Support Center
• Some joint ventures are generating Department of
  Veterans Affairs bills on Excel spread sheets

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Accounting System Going Forward

• SMA Audit Committee will work with the SMA
  Army, SMA Navy, and SMA Air Force to
  establish procedures for recording AR
• Provide your UBO Service Manager and Service RM
  monthly AR data in the following categories
• Intragovernmental
• MSA, TPOCS, Unbilled, changes to Allowance
• Nonfederal
• MSA, TPOCS, Unbilled, changes to Allowance

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Accounts Receivable Service Points of Contact

• Army
• Navy
• Air Force

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Outline

• Financial Statement Reporting Requirement
• Legacy Accounting Systems
• Medical Accounts Receivable (A/R)

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Questions?

• TMA OCFO/MCFS