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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Agency Year-End USAS Adjustments and AFR Checklist
Step 1 – General Cleanup

Ensure that cash cleanup, profile review, interfund/interagency activity cleanup and other procedures are performed by Aug. 31.

  1. Complete profile review and cleanup. For more information, see the USAS Profile Review and Cleanup Procedures (FPP A.031).
  2. Determine if the correct COBJs for state and federal pass-throughs were used.
  3. Eliminate system clearing. System clearing GL 9999 and basis conversion GL 9992 must equal zero at the D23 fund level. Review balances using FMQuery–SIRS report DR115 — Review System Clearing (formerly CR118), located in the AFR Desk Review menu.
  4. Clear default funds.
  5. Clear IT file (transactions in error) before Aug. 31, 20CY, as well as those payments that post to cash in state treasury (CIST). For more information, see the USAS Profile Review and Cleanup Procedures (FPP A.031).
  6. Clean up all interfund/interagency activity (pass-throughs, transfers and due from/due to).
  7. Correct any balances in funds where the appropriated fund was incorrectly changed during the year.
  8. Verify beginning 20CY GAAP balances tie in USAS to the beginning balances in the LTLN web application for long-term liabilities, the CANSS web application for capital assets and the ACFR web application for cash. Compare prior year ending fund and net position balances to the DAFR8581 report.
  9. Reconcile and adjust all operating statement line items in USAS to match at the GAAP source/object level. The Comptroller Object Profile (D10) screen displays the GAAP source/object level the COBJ rolls into. The GAAP Source/Object Profile (D08) screen provides a description of the GAAP source/object level. When adjusting operating statement activity with generic T-codes, it is acceptable to use a COBJ that rolls up to the correct GAAP source/object at both the fund financial statement (FFS) and government-wide financial statement (GWFS) level. For example, a single COBJ that looks up licenses, fees and permits may be used for all COBJs described as licenses, fees and permits. Refer to Appendix C, Appendix D, Appendix E and Appendix F for COBJ roll-ups.

Agency Year-End USAS Adjustments and AFR Checklist
Step 2 – Review USAS Balances

Review USAS balances and record corrections to ensure that the balances are as accurate as possible.

Order USAS reports or use FMQuery–SIRS to verify balances. See Ordering USAS Financial Reports for information on ordering reports to determine the levels of each, the structure in USAS and to analyze other reports. Perform any necessary corrections (such as expenditure/revenue reclassifications and movement of expenditures/revenues) to the correct fund.

  1. Review USAS security access and begin processing requests if necessary.
  2. Order the DAFR8580 or use FMQuery–SIRS to verify that:
    1. Appropriated fund 0001 does not report cash in state treasury (CIST). If there is CIST for appropriated fund 0001, make an adjustment to reclassify CIST to:
      • Legislative cash (GL 0048) offset by legislative appropriations (GL 9000) if it belongs in FT01
        –OR–
      • Shared cash (GL 0047) offset by due from agency 902 (GL 0284) if it is reported in FT09
    2. Components of receivables are reported on separate lines (such as federal, other intergovernmental, interest and dividends, accounts, taxes and other).
    3. Accounts receivable – Other (GL 0238) are only used for immaterial amounts (< 5% of total receivables) unless disclosed in Note 1. Review balances by using FMQuery–SIRS report DR103 — Review Other Receivables (BS,SNA-8580) located in the AFR Desk Review menu.
    4. Receivables – Other (GL 0270) is only used for immaterial amounts (< 5% of total receivables) unless disclosed in Note 1. Review balances by using FMQuery–SIRS report DR103 — Review Other Receivables (BS,SNA-8580) located in the AFR Desk Review menu.
    5. Report components of payables on separate lines (such as federal, other intergovernmental, interest and dividends, accounts, taxes and other).
    6. Payables – Other (GL 1150 and 1450) are only used for immaterial amounts (< 5% of total payables) unless disclosed in Note 1. Review balances by using FMQuery–SIRS report DR105 — Review Other Payables (BS,SNA-8580) located in the AFR Desk Review menu
    7. Assets – Other (GL 0385 and 0432) are only used for immaterial amounts (<5% of total assets) unless disclosed in Note 1. Review balances by using FMQuery–SIRS report DR104 — Review Other Assets (BS,SNA-8580) located in the AFR Desk Review menu.
    8. Do not report funds held for others (GL 1149) in governmental fund types. Review balances by using FMQuery–SIRS report DR106 — Review Funds Held For Others (BS,SNA-8580) located in the AFR Desk Review menu.
    9. The general fund is the only fund allowed to report a negative (debit) unassigned fund balance amount.
    10. In all other governmental funds (including GR-Dedicated funds) if the amount of assets to be reported as nonspendable, restricted or committed fund balance exceeds the overall fund balance, report the excess amount as a negative unassigned fund balance. Do not report negative (debit) nonspendable, restricted or committed fund balances.
    11. Do not report a negative assigned fund balance. An assigned fund balance allocation does not, under any circumstance, result in a negative (debit) unassigned fund balance.

      Note: For items i, j and k above, review fund balances using the following FMQuery–SIRS reports located in the AFR Desk Review menu:

      • DR110 — Review Fund Balances at the GAAP Fund Level (BS,SNA-8580)
      • DR111 — Review Fund Balance at the D23 Fund Level (BS,SNA-8580)
    12. Restricted net position must not be negative (must not have a debit balance). Review balances by using the following FMQuery–SIRS reports located in the AFR Desk Review menu:
      • DR108 — Review Restricted Net Assets at the GAAP Fund Level (BS,SNA-8580)
      • DR109 — Review Restricted Net Assets at the D23 Fund Level (BS,SNA-8580)
  3. Order the DAFR8590 and DAFR8600 or use FMQuery–SIRS to verify that account balances tie to agency’s financial statements.

    If proprietary funds report an extraordinary gain or loss, research to see if it is for early extinguishment of debt. If so, work with a financial reporting analyst to reclassify it to interest expense.

  4. Order the DAFR8585 or DAFR8605 or use FMQuery–SIRS to verify that:
    1. For appropriated fund 0001 and appropriated fund 0882, there is no CIST in FT09. Review balances by using FMQuery–SIRS report DR501 — Review Cash In State Treasury — Agency Funds (BS,SNA-8580) located in the AFR Desk Review menu.
    2. For fund(s) used as clearing accounts (usually fund 0900), the portion of the fund balances that belongs to other funds is not reported in agency fund type 09. For more information, see the Reclassifying Material Cash Balances That Remain in Suspense Fund FT09 at Fiscal Year-End – Category I section in Common USAS Entries for Agency Funds. Review balances by using FMQuery–SIRS report DR502 — Review Suspense Fund — Agency Funds (BS,SNA-8580) located in the AFR Desk Review menu.
    3. For funds 0807, 0942 and 0980, accounts receivable and funds held for others have been eliminated if the two GL account balances exactly offset each other. Report any CIST in these two funds. For more information, see the Eliminating Accounts Receivable and Funds Held for Others in an Agency Fund – Category I section in Common USAS Entries for Agency Funds. Review balances by using FMQuery–SIRS report DR503 — Review Acnt Rec & Funds For Other (BalanceSheet-8580) located in the AFR Desk Review menu.
    4. For funds 0899, 0979, 9010, 9011 and 9012, all CIST GL account balances have been eliminated. These funds are reported entirely by agency 902, similar to reporting of activity in GAAP fund 0882. For more information, see the Eliminating Activity in GAAP Fund 0882 on the Agency AFR and Reporting the Activity on Agency 902’s AFR – Category II section in Common USAS Entries for Agency Funds. Review balances by using FMQuery–SIRS report DR504 — Review Cash In State Treasury — Agency Funds (BS,SNA-8580) located in the AFR Desk Review menu.
  5. Order the DAFR8581 or use FMQuery–SIRS to verify that:
    1. All operating statement line items match at the GAAP source/object level in USAS. The Comptroller Object Profile (D10) screen displays the government-wide GAAP source/object level the COBJ rolls to. The GAAP Source/Object Profile (D08) screen provides a description of the GWFS GAAP source/object. Review the roll-up to the government-wide level of all operating statement line items.
    2. Revenue rolling to program revenue (charges for services, operating grants and contributions, and capital grants and contributions) and general revenue (taxes, etc.) are in the correct categories.
    3. Eliminate system clearing. System clearing GL 9999 and basis conversion GL 9992 must equal zero at the D23 fund level. Review balances by using FMQuery–SIRS report DR115 — Review System Clearing (formerly CR118) located in the AFR Desk Review menu.
  6. Order the DAFR8580 or use FMQuery–SIRS to verify that:
    1. Agency funds do not contain fund balances since assets offset liabilities. Review balances by using FMQuery–SIRS report DR505 — Review Leg Cash and Fund Balance in Agency Funds (BS,SNA-8580) located in the AFR Desk Review menu.
  7. Review agency funds to ensure that all activity nets to $0 at the GAAP source/object level and the GAAP fund level. If activity does not net to zero, research and make appropriate corrections. Review balances by using FMQuery–SIRS report DR506 — Review OS Activity (formerly CR122) located in the AFR Desk Review menu.
  8. Order the DAFR8910 or use FMQuery–SIRS interagency/interfund activity option to ensure there are no missing AGL numbers (NPs – no posts) on any transaction.
  9. Review negative revenue and expenditure balances using the following FMQuery–SIRS reports located in the AFR Desk Review menu:
    • DR201 — Review Negative Revenues – Determine if the negative revenue amounts require reclassification. For reversing entries of prior fiscal year transactions, negative values may be appropriate.
    • DR202 — Review Negative Expenditures – Determine if the negative expenditure amounts require reclassification. For reversing entries of prior fiscal year transactions, negative values may be appropriate.
  10. Ensure there are no back-out not applicable (BONA) revenues or expenditures at the GAAP source/object level and determine if a USAS correction is needed using the following FMQuery–SIRS reports located in the AFR Desk Review menu.
    • DR203 — BONA – Governmental Fund Types (formerly CR116)
    • DR204 — BONA – Proprietary Fund Types (formerly CR117)
    • DR205 — BONA – Fiduciary Fund Types (formerly CR124)
  11. Post any necessary expenditure, revenue or transfer corrections by Aug. 31, 20CY.
  12. Ensure petty cash amounts are correctly reported as cash on hand or cash in bank and that balance sheet amounts match the authorized amount of the petty cash fund. Post any petty cash corrections according to Travel Advance Account and Petty Cash Account (APS 010) (FPP A.044) and Accounting for Uncollectible Accounts (APS 027) (FPP C.001).
  13. Ensure the balance in GL 2303 – Non-spendable for loans, contracts and receivables is equal to the total of the balances by using FMQuery–SIRS report DR114 — Review Fund Balance for Long-Term Receivables (formerly CR106) located in the AFR Desk Review menu:
    • GL 0306 – NC Interfund Receivable
    • GL 0462 – NC Restricted Loans and Contracts
    • GL 0466 – NC Loans and Contracts
    • GL 0467 – NC Other Receivables
    • GL 0476 – NC Taxes Receivable
    • GL 0477 – NC Federal Receivables
  14. Compare the fund balances on the operating statement to the fund balances in the balance sheet using the CR_111S report included in the AFR Ad Hoc Review Reports transmission. Difference must be zero for each GAAP fund.

Agency Year-End USAS Adjustments and AFR Checklist
Step 3 – Investments

Enter investments information compiled through fiscal year-end (Aug. 31) into USAS before Sept. 14.

  1. Ensure investments as of fiscal year-end are correctly reflected in USAS by GL account and appropriated fund. Post investments to the applicable investment GL account that reflects if the investment is current or non-current. For more information, see Note 3 – Deposits, Investments and Repurchase Agreements.
  2. Submit a copy of the agency’s Note 3 from its published AFR. The required format is a Microsoft Word document with the header information (agency name/number and Note number/name) sent as an attachment to frs@cpa.texas.gov.
  3. Ensure the deposits and investments information submitted through the DINSS web application ties to the submitted Microsoft Word document of the agency’s Note 3 from its published AFR.

Agency Year-End USAS Adjustments and AFR Checklist
Step 4 – Interagency Activity

Coordinate amounts and make entries into USAS for interagency activity with other agencies before Sept. 26.

The majority of the data entry for interagency activity (due from/due to, transfer in/transfer out and state and federal grant pass-throughs) is done using the RTI process. Use the DAFR8910 Interfund/Interagency Activity report or FMQuery–SIRS interagency/interfund activity report to verify these types of activity.

  1. Coordinate interagency activity with other agencies and make entries in USAS. Written verification of coordination is no longer required.
  2. Verify the DAFR8910 or FMQuery–SIRS interagency/interfund activity report has the correct interfund/interagency balances and ensure “no post” AGLs are cleared or corrected.
  3. Review pass through activity balances using the following FMQuery–SIRS reports located in the AFR Desk Review menu:
    • PT101 — Federal Pass Through Activity by General Ledger Account
    • PT102 — Federal Pass Through Activity by AGL
    • PT201 — State Pass Through Activity by General Ledger Account
    • PT202 — State Pass Through Activity by AGL
  4. Enter shared cash entries to make the CIST (GL 0045) plus legislative cash (GL 0048 used for APPD fund 0001) or shared cash (GL 0047–all APPD funds other than 0001) equal the USAS Cash Control Summary Inquiry (57) screen. Do not report CIST in the AFR for an appropriated fund for which the agency is not the controlling agency.
  5. Eliminate legislative transfers within the same GAAP fund and GAAP fund type at the D23 (agency fund) level. AGLs must also be entered at the D23 (agency) fund level for eliminations between D23 funds within the same GAAP fund and GAAP fund type.

Agency Year-End USAS Adjustments and AFR Checklist
Step 5 – Binding Encumbrance and Payables

Enter Binding Encumbrance and Payables Information into USAS by Oct. 30.

Enter cash expenditures for appropriated local funds and binding encumbrance and payable information into USAS according to Encumbrance Report and Lapsing of Appropriations (APS 018) (FPP A.019), with attention to expenditure portions. GL 5600 can be mapped in ABEST for locally funded appropriations.

Record information by strategy and COBJ either directly or during cost allocation. For more information on procedures or specific T-codes to use, see Local Fund Expenditures, Accounts Payable and Binding Encumbrances.

  1. Enter accounts payable. Reversing entries have the current system date.
  2. Enter encumbrances. Reversing entries have the current system date.
  3. Enter appropriated local fund expenditure and payable information.
  4. Perform all steps of cost allocation on the administrative cost pools (if applicable).

Agency Year-End USAS Adjustments and AFR Checklist
Step 6 – General Revenue Reconciliation

Complete and certify the General Revenue Reconciliation by Nov. 1.

For submission instructions, see GR Reconciliation.

  1. Verify the Difference between Calc I and Calc II row equals zero for each column. If the difference is not zero, verify calculation II and change the spreadsheet if necessary (this may require USAS entries). When verifying calculation II, use GR query 201A and the Appropriation Record Inquiry (62) screen.
  2. Ensure the Computed Legislative Appropriations for Balance Sheet (asset balance 8/31) row in calculation II matches the balance sheet/statement of net position balance in legislative appropriations (GL 9000). If it does not match, adjust GL 9000 in USAS to equal the calculation II amount and include any corrections made in step 1.
  3. Ensure the following operating statement line items equal the GR reconciliation. If they do not agree, determine if additional budget corrections are needed or make adjustments to the related COBJs.
    1. GAAP source/object 0005 – Original Appropriations ties to the Total Original Appropriation Revenue row
    2. GAAP source/object 0006 – Additional Appropriations ties to the Total Additional Legislative Appropriation Revenue row – verify payroll benefits tie by line item
    3. GAAP source/object 0600 – Appropriations Lapsed ties to the Committed Appropriations Lapsed row (including any SORM lapse)
    4. GAAP source/object 0578 – Legislative Financing Sources (legislative transfers in) ties to the Committed Budget Transfers In row and GAAP source/object 0591 – Legislative Financing Uses (legislative transfers out) ties to the Committed Budget Transfers Out row.

      Note: In USAS, agencies must eliminate legislative transfers in/out within the same agency, GAAP fund and GAAP fund type. View the detail on the GR Reconciliation web application to obtain the AGL information.

    5. Research GR restatements that use COBJ 3897 for appropriate accounting treatment since there is not a restatement line item on the GR Reconciliation web application.
  4. Ensure the Computed Legislative Appropriations for Balance Sheet (asset balance 8/31) row in column B row 55, (direct strategy) ties to the GR201A report.
  5. Ensure the BRP Appropriation (line 200600) in column H (BRP) ties to expenditures on the GR202 report.
  6. Ensure the Computed Legislative Appropriations for Balance Sheet (asset balance 8/31) row in column H row 55 (BRP) ties to the GR202A report (appropriated fund 0001).
  7. Ensure the Total Net Change in Cash (lines 600200 through 600500) in column K (amount as adjusted) ties to the GR204 report.
  8. Ensure the Payroll-Related Revenue (lines 200100 through 200500) in columns C through G ties to the GR206 report (expended column).
  9. Ensure the ending balances for the Payroll-Related Benefits in calculation II ties to the respective 62 screens for all open AYs.
  10. Ensure the ending balances in column J in calculation II ties to the fund balances on the 62 screens for unappropriated strategies.
  11. Certify the GR Reconciliation web application.

Agency Year-End USAS Adjustments and AFR Checklist
Step 7 – Statement of Cash Flows

Each agency with enterprise funds (FT05) and internal service funds (FT06) must enter and certify the statement of cash flows (SOCF) information in the Agency Cash Flow Reporting (ACFR) web application (even if there is no activity) by Nov. 20.

  1. Submit a copy of the agency’s SOCF from its published AFR. The required format is a Microsoft Word document with the header information (agency name/number and document title) sent as an attachment to frs@cpa.texas.gov.
  2. Verify that the SOCF submitted through the ACFR web application ties to the submitted copy of the agency’s SOCF from its published AFR.
  3. Use the SOCF Reconciliation template for each GAAP fund when the SOCF submitted through the ACFR web application does not tie to the agency’s SOCF from its published AFR. Send an email with the SOCF Reconciliation template as an attachment to frs@cpa.texas.gov.

    Note: Screen prints from the ACFR web application will not be accepted in lieu of the required copy of the SOCF from the agency’s published AFR.

  4. Do not report paid-on-behalf payroll-related costs (such as retirement, insurance and unemployment) and the related additional appropriated revenues in USAS or in the ACFR web application. These amounts can only be reported of the agency’s SOCF from its published AFR.
  5. Verify that the Cash Flows from Operating Activities section of the ACFR web application only includes amounts from providing services and producing and delivering goods. Also verify that Proceeds from Loan Programs and Payments for Loans Provided only includes program loan activity. For more information, see Cash Flows from Operating Activities.
  6. Do not include amounts to acquire, construct or improve capital assets in the Cash Flows from Noncapital Financing Activities section of the ACFR web application. Also, do not include program loan amounts in the Proceeds from Loan Programs section.
  7. Verify that the Cash Flows from Capital and Related Financing Activities section of the ACFR web application only includes amounts to acquire and dispose of capital assets, borrow money to acquire, construct or improve capital assets and to repay the principal and interest amounts.
  8. Ensure the Cash Flows from Investing Activities section of the ACFR web application only includes amounts to make and collect loans (except program loans) and to acquire and dispose of debt or equity instruments.
  9. Ensure that the Net Cash Provided (Used) by Operating Activities in the Reconciliation section of the ACFR web application ties to the Net Cash Provided (Used) by Operating Activities in the Cash Flows from Operating Activities section.
  10. Ensure that the Pension Expense row in the Reconciliation section of the ACFR web application, ties to COBJ 7036 – Pension Expense Proprietary.
  11. Ensure that the Borrowing Under Capital Lease Purchase row in the Non-Cash Transactions section of the ACFR web application, ties to Note 5’s addition column for capital lease obligations submitted through the LTLN web application.
  12. Ensure the ACFR web application does not contain positive payments or negative proceeds.
  13. Review balances using the following FMQuery–SIRS reports (located in the AFR Desk Review menu):
    • DR300 — Review Cash Flow Stmt (BS,SNA-8580)
      Cash and Cash Equivalents — September 1 20PY must tie to the prior fiscal years’ ending balance published in the CAFR. Record any differences as a restatement in USAS and in the Restatements row of the ACFR web application. Contact your financial reporting analyst for prior fiscal years’ ending balance questions.
    • DR301 — Review Cash Flow Stmt (BS,SNA-8580)
      Verify that the Cash and Cash Equivalents, August 31, 20CY in the ACFR web application ties to the current fiscal years’ ending balance reported on the statement of net position — proprietary funds.
    • DR302 — Review Operating Income (Loss) (StmtOfChangesAssetsLiab-8600)
      Verify that the Operating Income (Loss) in the ACFR web application tie to operating income (loss) on the statement of revenues, expenses and changes in net position — proprietary funds.
    • DR303 — Review Bad Debt Expense (StmtofChangesAssetsLiab-8600)
      Verify that the Bad Debt Expense in the ACFR web application ties to bad debt expense on the statement of revenues, expenses and changes in net position — proprietary funds (except for universities). Bad debt expense is never a negative number.
    • DR304 — Review Depreciation Expense (StmtOfChangesAssetsLiab-8600)
      Verify that the Depreciation and Amortization in the ACFR web application ties to depreciation and amortization on the statement of revenues, expenses and changes in net position — proprietary funds.
    • DR305 — Review Change FV Investment (StmtOfChangesAssetsLiab-8600)
      Verify that the Net Change in Fair Value of Investments in the ACFR web application ties to the net total of the following COBJs:
      • 3838 — Net Inc/Dec Fair Val-Non-Oper Rev-Op G&C
      • 3844 — Net Inc/Dec Fair Valu Inv Non-Op Pledged
      • 3845 — Net Inc/Dec Fair Value Inv Oper Pledged
      • 3872 — Net Inc/Dec Fair Valu-Oper Rev-Noncash
      • 3899 — Net Inc/Dec Fair Value-Gen(Non-Prgm)

Note: Agencies with variances between the Net Change in Fair Value of Investments in the ACFR web application and the total operating statement’s COBJs (listed above) must submit the SOCF Reconciliation template as an attachment in an email to frs@cpa.texas.gov with an explanation of the variances.

Agency Year-End USAS Adjustments and AFR Checklist
Step 8 – Notes to the Financial Statements

Notes to the Financial Statements – Complete and Submit by Nov. 20

  1. Format all applicable notes in Microsoft Word documents with each note in a separate document — include the note number, note name, agency number and agency name as a header on each note. Submit each note as separate attachments in an email to frs@cpa.texas.gov. If a note contains a table, include the table in the Word document, rather than as a separate Excel or other database application file.
  2. Submit all schedules in Microsoft Excel format (as applicable) sent via email to frs@cpa.texas.gov:
    • Bond schedules 2A–2F
    • Pension schedules 5A–5D (administering agencies only)
  3. Submit via AFR web applications (as applicable) in addition to a copy of the agency’s notes from its published AFR with each note as a separate attachment in an email to frs@cpa.texas.gov:
    • Agency Cash Flow Reporting (ACFR)
    • Bond Reporting System (BRS)
    • Capital Asset Note Submission System (CANSS)
    • Component Unit and Related Organizations (CURO)
    • Deposit and Investment Note Submission System (DINSS)
    • Derivatives Note Submission System (DRNSS)
    • General Revenue Reconciliation (GR)
    • Lease Note Submission System (LNSS)
    • Long-Term Liability Note (LTLN)
    • Restatement Note Submission System (RNSS)
    • Schedule of Expenditures of Federal Awards (SEFA)
    • State Grant Pass-Through Reporting (SPTR)
    • All agencies are required to submit a certification within each and every web application (even if there is no activity) by the applicable due dates
    • Notes submitted through the applicable web application must tie to the submitted copy of the agency’s notes from its published AFR.

      Note: Screen prints from the applicable web application will not be accepted in lieu of the required copy from the agency’s published AFR.

Note 1 – Significant Accounting Polices

  1. Include descriptions of only the fund type and funds actually used by the agency. Also include a reference to component units, if applicable.

Note 2 – Capital Assets (Submitted Through the CANSS Web Application)

  1. For each category of capital assets, the SPA amounts tie to the CANSS certified amounts as well as the USAS capital asset GL and COBJ amounts.
  2. The following CANSS columns match each category of capital asset to both the balance sheet/statement of net position and the operating statement:
    1. Beginning Balance column equals PY ending balances.
    2. Adjustments column equals restatements COBJ 3891. Agencies with restatements other than capital assets reported in FT05 or FT15 must provide a breakdown of the items that make up the restatement amount in Note 14.
    3. Completed CIP column nets to zero having no effect on the operating statement.
    4. Inc-Int’agy Trans column equals the sum of:
      • COBJ 3843 – increase in net assets due to interagency transfer of capital assets
      • Accumulated depreciation
      • Accumulated amortization
    5. Dec-Int’agy Trans column equals the sum of:
      • COBJ 7858 – decrease in net assets due to interagency transfer of capital assets
      • Accumulated depreciation
      • Accumulated amortization

      Note: The net increase of an interagency capital asset transfer must match the net decrease of an interagency capital asset transfer transaction. Agencies using local depreciation and amortization calculations must record the same amount agreed upon during the interagency transfer of capital assets. For more information on capital asset transfers, see Recording Interagency Transfers of Capital Assets.

    6. Additions column equals the sum of:
      • Total capital outlay plus capital donations or capital contributions
      • Accumulated depreciation equals total depreciation expense
      • Accumulated amortization equals total amortization expense

      Note: Capital asset additions for FT05 may not match the CANSS “Additions” column.

    7. Deletions column equals the sum of:
      • Net of proceeds from the sale of capital assets and any gain or loss on the sale of capital assets (COBJ 3834)
      • Accumulated depreciation
      • Accumulated amortization
    8. Ending Balance column for each category of capital asset equals USAS capital asset GL and COBJ amounts
  3. Depreciation expense is recorded in USAS with COBJs 7936, 7937, 7938 and 7939.
  4. Amortization expense is recorded in USAS with COBJs 7877, 7878 and 7879.

Verify the balance is zero at the GAAP source/object level using the DR206 – Review Govt-Wide Basis Conversion report located in the FMQuery–SIRS AFR Desk Review menu for the following:

  1. The sum of capital outlay for all governmental fund types net to zero with the sum of capital outlay presented in basis conversion FT11.
  2. Proceeds from the sale of capital assets nets to zero between governmental fund types and FT11.

    Note: Depreciation and amortization will not tie to SPA for those agencies opting to use local calculation methods instead of SPA calculated values.

  3. Disclose the following information (as required by GASB 62, paragraph 22) in the CANSS web application with respect to interest costs for qualifying assets for business-type and component unit activities:
    • For a fiscal year in which no interest cost is capitalized, disclose the amount of interest costs incurred and charged to expense during the fiscal year.
    • For a fiscal year in which some interest cost is capitalized, disclose the total amount of interest costs incurred during the fiscal year and the amount thereof that has been capitalized.
  4. Disclose the following information (as required by GASB 62, paragraph 280) for non-monetary transactions that occurred during the fiscal year in the Other Text box of the CANSS web application:
    • Nature of the non-monetary transactions (include a breakdown by capital asset type and COBJ)
    • Basis of accounting for the assets exchanged

      –AND–

    • Gains or losses recognized on those exchanges

Note 3 – Deposits, Investments & Repurchase Agreements (Submitted Through the AFR web applications)

  1. If the agency has cash in bank or investments (current or non-current), Note 3 is required.
  2. Cash in bank per the AFR balance sheet/statement of net position agrees to the cash in bank carrying amount disclosed in Note 3 with separate disclosure for discrete component units (if applicable).
  3. For cash in bank, report the total bank balance and the carrying amount in Note 3.
  4. Verify that the investment portion of Note 3 includes the fair value in total and by level of input (as required by GASB 72).
  5. Verify the total of current and non-current investments per the AFR balance sheet/statement of net position agree to the total of the investments table in Note 3 with separate disclosure for discrete component units, if applicable.
  6. If there are investments to which GASB 31 applies, include a line item on the statement of revenues, expenses and changes in fund balance titled net increase/decrease in fair value of investments for all fund types.
  7. The following must be entered in DINSS in addition to being disclosed in the AFR Note 3:
    1. Cash in bank carry amount
    2. Cash in bank balance
    3. Deposit custodial credit risk
    4. Deposit foreign currency risk
    5. Investment fair value in total and by level of input (as required by GASB 72)
    6. Investment custodial credit risk
    7. Investment foreign currency risk
    8. Investment credit risk S&P
    9. Investment securities lending collateral pool fair value in total and by level of input (as required by GASB 72)
    10. Investments recorded at net asset value summarized by strategy with associated redemption period, redemption frequency and unfunded commitments (as required by GASB 72).
  8. After reconciling Note 3 to the respective data entered in DINSS, submit a copy of the agency’s Note 3 from its published AFR. The required format is a Microsoft Word document with the header information (agency name/number and Note number/name) sent as an attachment to frs@cpa.texas.gov.

Note 4 – Short-term Liabilities

  1. Include the purpose for the short-term debt.
  2. Include a separate table for component units (if applicable) in the same format as the Note 4 Sample table shown for governmental activities.

Note 5 – Long-Term Liabilities (Submitted through the LTLN web application)

  1. Verify balances in LTLN tie to FMQuery–SIRS – long-term liabilities option.
  2. Verify each line item of LTLN (for example, loans and notes payable) ties to the AFR balance sheet/statement of net position. Changes in debt balances are presented.
  3. Verify debt service requirements for notes payable are presented for five years, and five-year increments thereafter, for both principal and interest amounts.
  4. Verify the principal amount for the first year of the debt service notes payable and capital lease obligations (as disclosed in Note 8) is equal to the amount due within one year for the notes payable and capital lease obligations categories.
  5. Ensure text includes description of claims & judgments, pollution remediation obligations, notes and loans payable (or any other category if applicable) to support required disclosure.
  6. Ensure that all long-term liabilities are split between due within one year and due in more than one year.
  7. Submit a copy of the agency’s Note 5 from its published AFR. The required format is a Microsoft Word document with the header information (agency name/number and Note number/name) sent as an attachment to frs@cpa.texas.gov.

Note 6 – Bonded Indebtedness (Submitted through both BRS Web Application and AFR closing package)

  1. Note 6 is required if the agency has bonds payable.
  2. Primary bond information is collected through BRS and must agree with information reported in Note 6 and in the following support schedules:
  3. Verify BRS is certified.
  4. List bonds separately by individual series with a description of each outstanding issue.
  5. Verify the bonds outstanding amount reconciles to the bonds payable for general obligation bonds and revenue bonds per the statement of net position, balance sheet, Schedule 2B, BRS and USAS.
  6. The following are required as they relate to the agency:
    1. Debt service requirements (principal and interest payments) must be in agreement for each of the five fiscal years following the current fiscal year and in five-year increments reported thereafter until maturity.
    2. Report governmental activity bond refundings in their entirety in the agency’s operating statement and Note 6.
    3. Report advance refunding of bonds during the reporting period and disclose the difference between cash flows of old and new debt and the economic gain/(loss) resulting from the refunding
    4. Disclose general obligation bonds authorized (but unissued) at fiscal year-end.
    5. Disclose pledged future revenues for all bond issues for which one or more agency revenue streams are pledged.
    6. Report demand bond outstanding balances and all related letters of credit, standby purchase agreements, takeout agreements or other reacquisition provisions.
    7. Disclose interest rate swaps and their estimated effect on future fiscal years debt service.
    8. GASB 65 no longer nets gain/loss on bond refunding against bonds payable. Report unamortized gain/loss balances as deferred inflows of resources or deferred outflows of resources.

Note: Constitutional appropriation bonds are identified as general obligation bonds.

Note 7 – Derivative Instruments (Submitted through the DRNSS web application)

  1. Note 7 is required if the agency has investment and/or hedging derivative instruments.
  2. All derivative instruments on the summary of derivative activity table must be aggregated by type (for example, receive-fixed or pay-fixed interest rate swaps, basis swaps, futures contracts) within each of the two categories, hedging and investment derivative instruments.
  3. The summary of derivative activity table must include the following aggregated by type:
    1. Notional amount
    2. Changes in fair value during the reporting period and the classification on the financial statements where those changes in fair value are reported
    3. Fair values as of the end of the fiscal year and the classification on the financial statements where those fair values are reported
    4. Fair values of derivative instruments reclassified from a hedging derivative instrument to an investment derivative instrument
  4. For business-type activities and fiduciary funds, verify the total fair value in the summary of derivative activity table ties to USAS:
    1. Hedging derivative assets tie to the following GL accounts:
      • 0170 – CA Hedging Derivative Instrument Assets
      • 0481 – NC Hedging Derivative Instrument Assets
    2. Hedging derivative liabilities tie to the following GL accounts:
      • 1143 – CA Hedging Derivative Instrument Liabilities
      • 1471 – NC Hedging Derivative Instrument Liabilities
    3. Investment derivative instruments tie to the following GL accounts:
      • 0059 – CA ST Inv – Derivative Instruments
      • 0105 – NC Inv – Derivative Instruments
  5. For governmental activities, verify the total fair value in the summary of derivative activity table ties to USAS:
    1. Hedging derivative assets tie to the following GL accounts:
      • 0570 – BC CA Hedging Derivative Instrument Assets
      • 0781 – BC NC Hedging Derivative Instrument Assets
    2. Hedging derivative liabilities tie to the following GL accounts:
      • 1543 – BC CA Hedging Derivative Instrument Liabilities
      • 1971 – BC NC Hedging Derivative Instrument Liabilities
    3. Investment derivative instruments tie to the following GL accounts:
      • 0559 – BC CA Inv – Derivative Instruments
      • 0705 – BC NC Inv – Derivative Instruments
  6. Verify the ineffective hedging derivatives that were reclassified to investment derivatives in the DINSS web application are marked as such.
  7. Verify the disclosures for the deferral amount reported within the investment revenue for the reclassification of investment derivatives. Disclosures are also required for the following:
    1. Fair Value Measurement
      • Market Approach
      • Cost Approach
      • Income Approach
    2. Fair Value Hierarchy
      • Level 1
      • Level 2
      • Level 3
  8. Submit a copy of the agency’s Note 7 from its published AFR. The required format is a Microsoft Word document with the header information (agency name/number and Note number/name) sent as an attachment to frs@cpa.texas.gov.

Note 8 – Leases

  1. Present value of capital leases ties to capital lease obligation amount on balance sheet/statement of net position. Future minimum lease payments are presented for five fiscal years and five-year increments thereafter for both principal and interest amounts.
    1. Debt service information is submitted through the LNSS web application in the Capital Lease Debt Service left navigation menus.
    2. Provide a listing of capital assets under lease by major assets class and accumulated depreciation in total, for any fund type with a capital lease obligation greater than zero.
  2. For operating lease obligations, disclose:
    1. General leasing arrangements
    2. Current year costs reported in the financial statements for rents paid or due under operating leases
    3. Minimum future noncancelable sublease rentals
    4. Minimum future lease payments for noncancelable leases of more than one year for each of the next five fiscal years and five-year increments thereafter
    5. Total contingent rental payments for the fiscal year
  3. For operating lease rentals, disclose:
    1. General leasing arrangements
    2. Cost and carrying amount of leased assets by major assets class and accumulated depreciation in total
    3. Minimum future lease rentals for noncancelable leases of more than one year for each of the next five fiscal years and thereafter in five-year increments
    4. Total contingent rentals for the fiscal year
    5. Total current year income
  4. Submit a copy of the agency’s Note 8 from its published AFR. The required format is a Microsoft Word document with the header information (agency name/number and Note number/name) sent as an attachment to frs@cpa.texas.gov.

Note 9 – Pension Plans

  1. Agencies issuing an independent audited AFR are required to prepare Note 9 in compliance with GASB 68, GASB 73 and GASB 82.
  2. Agencies that administer pension plans (ERS, TRS and TESRS) are required to prepare Note 9 in compliance with GASB 67 and provide GASB 68, GASB 73 and GASB 82 information separately to the Comptroller’s Financial Reporting Section submitted via email to frs@cpa.texas.gov.
  3. University system offices and independent universities that administer the Optional Retirement Program (ORP) must disclose the amounts contributed by members and by the employer for the program.

Note 10 – Deferred Compensation

  1. Only agencies that administer deferred compensation plans (UT, A&M, ERS and TSAHC) are required to prepare Note 10, disclosing information such as plan description, legal basis for the plan, provisions for the plan balances and the state’s liability.

Note 11 – Post-Employment Health Care and Life Insurance Benefits (UT, A&M, ERS and TRS only)

  1. Only agencies that administer post-employment health care and life insurance benefits (ERS, TRS, UT and A&M) are required to prepare Note 11 in compliance with GASB 45 and GASB 74.

Note 12 – Interfund Balances/Activities

  1. Note 12 is required for interfund receivables (GL 0279)/payables (GL 1049).
  2. Interfund receivables (GL 0279) and interfund payables (GL 1049) balances per Note 12 tie to balance sheet/statement of net position.
  3. Interfund receivables and interfund payables include agency and fund information in Note 12.

Note 13 – Continuance Subject to Review

  1. Note 13 is required if the agency is subject to the Texas Sunset Act or there is substantial doubt of the agency’s ability to continue as a going concern.

Note 14 – Adjustments to Fund Balance/Net Position

  1. Note 14 is required if the agency has a restatement on the financial statements.
  2. Ensure the note clearly states the reason and amount for each restatement. This is extremely important for general revenue (fund 0001) restatements made for prior year appropriation activity.

    Note: This information is used in the formula for determining if the agency has correctly stated legislative appropriations on the financial statements.

  3. Ensure the restatement amount in USAS equals the restatement amounts in all of the applicable web applications.

Note 15 – Contingencies and Commitments

  1. Note 15 is required if agency has material disclosures for contingent liabilities.

Note 16 – Subsequent Events

  1. Note 16 is required if the agency has subsequent events.

Note 17 – Risk Management

  1. Disclose types of risk, how the risk is handled, insurance coverage, participation in a risk pool and the risk retained (if applicable).

Note 18 – Management’s Discussion and Analysis

  1. Disclose that material changes in net position, revenues and expenses, etc. (if any).
  2. Include descriptions of currently known facts, conditions or decisions that could affect the availability of fund resources.
  3. Include descriptions of significant capital asset and long-term liability activity including:
    • Commitments made for capital expenditures
    • Changes in credit ratings and debt limitations that may affect financing of planned activities

Note 19 – The Financial Reporting Entity (Submitted through the CURO web application)

  1. Disclose information about component units, related organizations, joint ventures, jointly governed organizations and related parties as they relate to the agency.
  2. Submit a copy of the agency’s Note 19 from its published AFR. The required format is a Microsoft Word document with the header information (agency name/number and Note number/name) sent as an attachment to frs@cpa.texas.gov.

Note 20 – Stewardship, Compliance & Accountability

  1. Disclose items such as deficit fund balances/net position, material violations of finance-related legal or contractual provisions and changes in accounting principles (this list is not all-inclusive).

Note 22 – Donor Restricted Endowments

  1. Note 22 is required if the agency has endowments restricted by a donor’s stipulation.
  2. Explain various from prior year-end for expendable and nonexpendable balances.

Note 23 – Extraordinary and Special Items

  1. Disclose any special and/or extraordinary items regardless of the amount.

Note 24 – Disaggregation of Receivable and Payable Balances

  1. Disclose any receivable or payable balances that may be obscured by aggregation in their reporting on the face of the financial statements.
  2. Disclose if there are significant receivable balances not expected to be collected within the next fiscal year.

Review current or non-current receivables or payables amounts with the following FMQuery–SIRS reports located in the AFR Desk Review menu:

  • DR103 — Review Other Receivables (BS,SNA-8580)
  • DR105 — Review Other Payables (BS,SNA-8580)

Note 25 – Termination Benefits

  1. Disclose information regarding the liabilities and expenses that result from voluntary and involuntary terminations (such as cash payments, healthcare coverage, career counseling and outplacement services).

Note 26 – Segment Information

  1. Disclose segment information for enterprise funds (if applicable).

Note 27 – Service Concession Arrangements

  1. Disclose the following information for service concession arrangements (if applicable):
    1. A general description of the arrangement in effect during the reporting period (including management’s objectives for entering into it) and the status of the project during the construction period (if applicable).
    2. The nature and amounts of assets, liabilities, and deferred inflows of resources related to a service concession arrangement that is recognized in the financial statements.
    3. The nature and extent of rights retained by the transferor or granted to the governmental operator under the arrangement.

Note 28 – Deferred Outflows of Resources and Deferred Inflows of Resources

  1. Disclose deferred outflows of resources and deferred inflows of resources related to the following (if applicable).

Note 29 – Trouble Debt Restructuring

  1. Disclose trouble debt restructuring information (if applicable).

Note 30 – Non-Exchange Financial Guarantees

  1. Disclose non-exchange financial guarantees (if applicable).

Note 31 – Tax Abatements

  1. Disclose tax abatements that reduce the reporting agency’s tax revenues.

Note 32 – Fund Balances

  1. Explain why (cite the covenant, provision, federal requirement or court order) any governmental fund is classified as anything other than its default fund classification.

Agency Year-End USAS Adjustments and AFR Checklist
Step 9 – Supplementary Schedules

Supplementary Schedules – Complete by Nov. 20 (except Schedule of Expenditures of Federal Awards, which must be completed by Nov.1.)

Schedule of Expenditures of Federal Awards

Agencies complete this schedule through the SEFA web application. For more information, see Pass-Through Activity.

  1. Verify the amount reported as federal revenue and federal pass-through revenue in SEFA Note 2 reconciliation ties to the federal revenue and federal pass-through revenue line items on the operating statement.
  2. Do not report pass-through amounts to or from non-state entities in SEFA. For a list of agencies, see the Texas Comptroller Manual of Accounts.
  3. Ensure federal pass-through revenues on the operating statement ties to the amount reported as pass-through from other agencies in SEFA. Review at the agency and fund (AGL) level.
  4. Ensure federal pass-through expenditures on the operating statement ties to the amount reported as pass-through to other agencies in SEFA. Review at the agency and fund (AGL) level.
  5. Ensure federal pass-through revenues/expenditures in FMQuery–SIRS for interagency/interfund activity for the agency ties to SEFA.

Schedule of State Grant Pass-Throughs To/From Agencies

Agencies complete this schedule through the SPTR web application. For more information, see Pass-Through Activity.

  1. Do not report pass-through amounts to or from non-state entities in SPTR. For a list of agencies, see the Texas Comptroller Manual of Accounts.
  2. Ensure state grant pass-through revenues on the operating statement ties to the amount reported as pass-through from other agencies in SPTR. Review at the agency and fund (AGL) level.
  3. Ensure state grant pass-through expenditures on the operating statement ties to the amount reported as pass-through to other agencies in SPTR. Review at the agency and fund (AGL) level.
  4. Ensure state grant pass-through revenues/expenditures in FMQuery–SIRS interagency/interfund activity for the agency ties to SPTR.

Schedules 2A through 2F – Supplementary Bond Information

For information about Schedules 2A through 2F, see Note 6.

Agency Year-End USAS Adjustments and AFR Checklist
Step 10 – Analyze USAS Reports

Analyze USAS reports to determine necessary AFR entries, calculate revenue accruals and adjust USAS as necessary before Nov. 20.

  1. Enter accrued revenues, accounts receivable and all local fund revenues including accruals. For more information, see Receivables/Accrued Revenues.
  2. Enter net change in consumable inventory balances. For more information, see Inventories Review balances using FMQuery–SIRS report DR112 — Review Fund Balance for Consumable and Merchandise Inventories (formerly CR103) located in the AFR Desk Review menu.
  3. Enter net change in prepaid items. For more information, see Prepaid Items. Review balances using FMQuery–SIRS report DR113 — Review Fund Balance for Prepaid Items (formerly CR105) located in the AFR Desk Review menu.
  4. Enter any other adjustments to the operating statement.
  5. Allocate fund balance/net position if appropriate. For more information, see Allocation of Fund Balance or Net Position.
  6. Enter any other necessary adjustments to balance sheet accounts.

Agency Year-End USAS Adjustments and AFR Checklist
Step 11 – Review USAS Information

Analyze and verify adjusted USAS information before Nov. 20.

Reorder the DAFR financial reports or use FMQuery–SIRS to verify AFR entries are correct.

  1. Review the reports for accuracy and compare to supporting documentation.
  2. Eliminate system clearing. System clearing GL 9999 and basis conversion GL 9992 must equal zero at the D23 fund level. Review balances using FMQuery–SIRS report DR115 — Review System Clearing (formerly CR118) located in the AFR Desk Review menu.
  3. Analyze and adjust for any remaining discrepancies. Reverify balances if any other adjustments are made.
  4. Verify that all fiscal 20CY effective dated transactions clear the IT File.
  5. Ensure ending fund balance/net position is the same on the operating statement and the balance sheet.
  6. Ensure assets equal liabilities for agency D23 funds that roll-up to FT09 (GAAP agency funds).
  7. Ensure operating statement activity for agency D23 funds that roll-up to FT09 (GAAP agency funds) nets to zero at the GAAP source/object level in USAS.

Agency Year-End USAS Adjustments and AFR Checklist
Step 12 – Verify DAFRs and Complete AFR

Verify financial statements DAFRs and submit AFR package by Nov 20.

Complete the AFR according to the reporting requirements and internal procedures for your agency by Nov. 20.

  1. Clear IT file of any transaction with an effective date prior to Sept. 1, 20CY.
  2. Ensure flux analysis is complete and ready to submit with the AFR. Look on FMQuery–SIRS under USAS financial reports for the fluctuation analysis and explain any variances on the following reports (do not need to provide fluctuation analysis for revenue/expense income summary or backout – not applicable [BONA]):
    1. Balance sheet fluctuation
    2. Changes in net position fluctuation by GAAP fund
    3. Operating statement fluctuation
    4. Operating statement fluctuation by GAAP fund-basis conversion
    5. Proprietary operating statement fluctuation
Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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