2011   Financial Report of the United States Government

Financial Statements

Reconciliations of Net Operating Cost and Unified Budget Deficit

These statements reconcile the results of operations (net operating cost) on the Statements of Operations and Changes in Net Position to the unified budget deficit. The premise of the reconciliation is that the accrual and budgetary accounting bases share transaction data.

Receipts and outlays in the budget are measured primarily on a cash basis and differ from the accrual basis of accounting used in the Financial Report. Refer to Note 1.B—Basis of Accounting and Revenue Recognition for details. These statements begin with the net results of operations (net operating cost), where operating revenues are reported on a modified cash basis of accounting and the net cost of Government operations on an accrual basis of accounting and reports activities where the bases of accounting for the components of net operating cost and the unified budget deficit differ.

Components of Net Operating Cost Not Part of the Budget Deficit

This information includes the operating components, such as the changes in benefits payable for veterans, military and civilian employees, the environmental liabilities, and depreciation expense not included in the budget results.

Components of the Budget Deficit Not Part of Net Operating Cost

This information includes the budget components, such as capitalized fixed assets which are recorded as outlays in the budget when purchased, and reflected in net operating cost through depreciation expense over the useful life of the asset and increases in other assets that are not included in the operating results.

United States Government
Reconciliations of Net Operating Cost and Unified Budget Deficit
for the Years Ended September 30, 2011, and 2010
(In billions of dollars)
Net operating cost (1,312.6) (2,080.3)
Components of Net Operating Cost Not Part of the Budget Deficit:
Increase in Liability for Military Employee Benefits (Note 15):
  Increase in military pension liabilities 98.6 85.6
  (Decrease)/increase in military health liabilities (62.4) 78.9
  (Decrease) in other military benefits (1.2) (0.3)
  Increase in liability for military employee benefits 35.0 164.2
Increase in liability for veteran's compensation (Note 15): 58.9 223.8
(Decrease)/increase in liabilities for civilian employee benefits (Note 15):
  (Decrease)/increase in civilian pension liabilities  (13.2) 103.5
  (Decrease)/increase in civilian health liabilities (13.0) 3.3
  Increase in other civilian benefits 4.2 8.3
 (Decrease)/increase in liabilities for civilian employee benefits (22.0) 115.1
Increase/(decrease) in environmental and disposal liabilities (Note 16):
  Increase/(decrease) in Energy's environmental and disposal liabilities 0.4 (17.5)
 Increase/(decrease) in all others' environmental and disposal liabilities 2.4 (3.0)
  Increase/(decrease) in environmental and disposal liabilities 2.8 (20.5)
Depreciation expense 68.4 57.5
Property, plant, and equipment disposals and revaluations (4.6) (9.8)
Increase in benefits due and payable 6.7 3.5
(Decrease)/increase in insurance and guarantee program liabilities (13.9) 9.4
Increase in other liabilities 10.5 62.4
Seigniorage and sale of gold - (0.4)
(Decrease) in accounts payable (9.5) (0.3)
(Increase) in net accounts and taxes receivable (11.7) (7.1)
TARP yearend upward/(downward) re-estimate 23.3 (23.6)
Decrease in Non-TARP Investments in American International Group,
Inc. due to valuation losses
9.9 2.7
(Decrease)/increase in liabilities to Government-sponsored enterprises (43.7) 268.0
(Decrease)/increase in valuation loss on investments in Government-
sponsored enterprises
(3.0) 8.1
Components of the budget deficit that are not part of net operating cost:
Capitalized Fixed Assets:
  Department of Defense (51.3) (59.4)
  All other agencies (36.4) (33.1)
    Total capitalized fixed assets (87.7) (92.5)
Effect of prior year TARP downward re-estimate 23.6 110.0
(Increase) in inventory (9.9) (1.6)
(Increase) in investments in Government-Sponsored Enterprises (20.8) (52.6)
(Increase) in debt and equity securities (0.8) (5.8)
Decrease/(increase) in other assets 4.0 (24.7)
Credit reform and other loan activities (10.5) 8.0
All other reconciling items 9.0 (7.6)
Unified budget deficit (1,298.6) (1,294.1)

The accompanying notes are an integral part of these financial statements.

Last Updated:  February 16, 2012