OFFICE OF MANAGEMENT AND BUDGET Interpretation Numbers 1 and 2 related to |
Debit | Expense |
Credit | Liability -- Legal claims |
Once the claim is either settled or a court judgment is assessed against the Federal entity and the Judgment Fund is determined to be the appropriate source for payment of the claim, the liability should be removed and an other financing source recognized. If the Judgment Fund is responsible for only a portion of the claim or settlement, the imputed financing source amount would only reflect that amount paid by the Judgment Fund on behalf of the Federal entity.
Entry #2:
Debit | Liability -- Legal claims |
Credit | Imputed Financing Source -- Expenses Paid by Other Entities8 |
Treasury Judgment Fund entries:
The claim is either settled or a court judgment is assessed and the Judgment Fund is determined to be the appropriate source for payment. Entry #3:
Debit | Expenses Paid for Other Entities8 |
Credit | Cash or Fund Balance with Treasury |
1 See paragraph 39 in SFFAS No. 5 for the complete discussion on "Estimating Contingent Liabilities."
2 See paragraph 73 in SFFAS No. 7 for the complete discussion on "Financing Imputed for Cost Subsidies."
3 In most cases this determination involves DOJ.
4 A contingency is an existing condition, situation or set of circumstances involving uncertainty as to possible gain or loss to an entity. The uncertainty will ultimately be resolved when one or more future events occur or fail to occur. Resolution of the uncertainty may confirm a gain or loss.
5 See paragraogs 35 - 42 in SFFAS No. 5 for the complete discussion on "Contingencies."
6 See paragraphs 89 - 104 and 105 - 115 in SFFAS No. 4 for the complete discussion on "Full Cost" and "Inter-entity Costs," respectively.
7 Actual journal entries are under the authority of the Standard General Ledger.
8 According to SFFAS No. 4, the imputed financing source and expenses paid for other entities amounts would be eliminated at the consolidation level.