U.S. Geological Survey Instructional Memorandum
No. APS 2003-04
Issuance Date: March 12, 2003
Expiration Date: September 30, 2003
Archive Date: January 21, 2009
Subject: Fiscal Year (FY) 2003 Revised Procedures for In-kind Services in the Water Resources Cooperative Program
Instructions: IM replaced by the Financial Operating Procedures Handbook, Chapter 4 Agreements Used to Accept Funds, Section 4 States, Counties, Municipalities, U.S. Territories and Tribal Governments, 13 Direct State Services.
The U.S. Geological Survey (USGS) cannot pay for more than 50 percent of the costs of cooperative work carried out under the authority of 43 U.S.C. 50. The Water Resources Cooperative program operates under the authority of this statute.
The U.S. Geological Survey includes in the non-Federal, or cooperator's share of cooperative work the value of services provided by the cooperating agency. The USGS refers to such services as in-kind services or direct services. They are in-kind services because no cash changes hands.
For FY 2003, USGS will track the value of in-kind services differently. The purpose of this instructional memorandum is to explain how USGS organizations shall adjust accounting entries for in-kind services provided by cooperating agencies in FY 2002 and to explain how USGS organizations shall track in-kind services provided by cooperating agencies in FY 2003.
Before FY 2003, USGS entered direct services into Federal Financial System (FFS) as funding and had expenditures applied to the funding. To document the value of services received, cost centers sent Direct Services (DS) vouchers to the Office of Financial Management (OFM) using Object Class 252G or 255C. Office of Financial Management processed the DS vouchers as cash receipt (CR) documents that were recorded in the USGS Financial Statements as both cash received and expenses incurred. During the year-end closeout process, cost centers that had not sent the DS vouchers to OFM accrued an expense equal to the value of the services received.
After the FY end closeout, OFM adjusted the Water Resources reimbursable income for the DS vouchers that had been received. Direct services were treated as a reimbursement in FFS and the adjustment at year-end was to Water Resources reimbursable income.
Audit Identified Material Weakness
Since cash was not actually received, processing of DS vouchers in this fashion overstated USGS expenses and cash balances on the Financial Statements and became an audit issue. The auditors have stated that the practice is not acceptable. As a result, OFM can no longer process DS vouchers through CR documents.
FY 2002 Action Required
Office of Financial Management adjusted the Water Resources reimbursable income based on DS vouchers received as of FY 2002 closeout. Those cost centers that had not sent DS vouchers to OFM by the cut-off date entered accruals (8C documents) into FFS. The servicing Fiscal Services office shall reduce the accruals to zero and decrease the FY 2002 agreement by the same amount no later than June 30, 2003. Doing so will not affect closing balances for reporting purposes for FY 2002.
FY 2003 Process for DS Vouchers
For projects in the Water Resources Cooperative Program, cost centers will complete the DS vouchers as in the past, but will send the signed vouchers to the servicing Fiscal Services office. The Fiscal Services offices will keep the signed copy of the DS voucher with the appropriate reimbursable agreement. At year-end closeout, no accruals will be made in FFS for DS vouchers.
Cost centers will include the value of in-kind services in reimbursable agreements entered in BASIS+. Doing so will allow USGS to track the value of in-kind services and calculate properly the cooperator's share of the costs of a cooperative project carried out under the authority of 43 U.S.C. 50. Cost centers will enter the value of in-kind services on the Master Agreement, Agreement Allocation, and FY Funding Details screens in BASIS+. Although the value of in-kind services is included in the total customer funding shown in BASIS+, it is not included in the funding shown in FFS.
Chief, Office of Administrative Policy and Services