Frequently Asked Questions

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This section is intended to be a simplified explanation of the complex and highly specialized area of Government budgeting and accounting. Detailed guidance is provided through the Government Accountability Office (GAO), Office of Management and Budget, and the Department of the Treasury.

  1. Why does GSA prepare an agency financial report?
  2. What are the key parts of an AFR?
  3. Why does GSA prepare an agency financial report?
  4. What are the key parts of an AFR?
  5. Does GSA follow generally accepted accounting principles (GAAP)?
  6. How do you read a balance sheet?
  7. How do you read a statement of net cost?
  8. What is a statement of changes in net position?
  9. What is a statement of budgetary resources?
  10. What are cumulative results of operations?
  11. What are appropriations?
  12. What are outlays?
  1. Why does GSA prepare an agency financial report?

    The Chief Financial Officer Act of 1990 requires GSA to prepare annual reports containing audited financial statements and performance reporting. The Office of Management and Budget provides detailed guidance regarding the contents and formats to be used for these annual reports. Following that guidance, GSA prepares this Agency Financial Report (AFR) and a separate Agency Performance Report (APR).

  2. What are the key parts of an AFR?

    Agency financial reports can be daunting to read and understand. You will be relieved to learn that you can get a big picture understanding of an organization by reviewing the following parts of the AFR:

    • The Auditors' report tells you whether the financial statements are materially correct in accordance with Generally Accepted Accounting Principles (GAAP).
    • Financial statements are where you find the actual financial results for the year and include:
    • the balance sheet,
    • the statement of net cost,
    • the statement of changes in net position, and
    • the statement of budgetary resources.
    • Notes to the financial statements provide additional details and context concerning the numbers reported.
    • The management’s discussion and analysis section is where agency leadership provides general background about the agency, including the organizational structure, the missions and activities of our major programs financial and performance results and identifies factors that may affect the agency’s operations. It is important to note that this section of the AFR is not audited by the independent auditors.
    • Other information is where you can find other relevant information about the agency, including the agency's compliance with laws and regulations. This section of the AFR is also not audited by the independent auditors.
  3. Why are Government financial statements different from commercial companies?

    With the unique missions and purpose of the Federal Government, financial reporting focuses on elements such a stewardship over assets, responsibilities for various liabilities, the cost of program activities, and the budgetary control process. One difference between commercial companies and Federal agencies is that the Federal agencies do not exist to generate profit. In fact, most Federal activities do not generate revenues to fund program operations, and and instead depend upon Authorization and Appropriation acts. According to GAO, the objectives of Federal financial reports are for agencies to demonstrate their accountability, provide useful information, and help internal users of financial information to improve the Government's management. Federal Government financial statement readers should bear in mind that our goal is to demonstrate good financial stewardship over the assets entrusted to us, whereas private industry financial statement users may have an interest in investing in a company and want assurances that the information provided is timely, accurate, and can be relied upon.

  4. Does GSA follow generally accepted accounting principles (GAAP)?

    Yes, GSA follows the requirements of GAAP for Federal financial reporting. The Federal Accounting Standards Advisory Board is designated by the American Institute of Certified Public Accountants as the source of GAAP for Federal reporting entities, and issues the accounting standards and principles for the United States Government.

  5. How do you read a balance sheet?

    The balance sheet shows the agency's assets and liabilities at a fixed point in time. Most of the terms on the balance sheet are familiar to users of financial statements, (e.g. assets — such as accounts receivable, property, and equipment — and liabilities — such as accounts payable and actuarial liability). On a Federal balance sheet, there is one unique term: “Fund Balance with Treasury.” Akin to bank accounts, the fund balances represent the amount of funding in the agency's accounts within the U.S. Treasury that is available to spend for the purposes for which the funds were approved by Congress.

  6. How do you read a statement of net cost?

    The statement of net cost shows the results of operations for the major business areas of GSA. It begins with the revenue line and subtracts various expenses to arrive at net cost. A commercial company would call this type of document an income statement. As a reflection that most Federal programs generate little to no resources on their own, expenses are offset by revenues to determine the net cost for the agency.

  7. What is a statement of changes in net position?

    The statement of changes in net position is similar to a statement of changes in equity for a commercial firm. The statement reflects the impact that changes in assets and liabilities have on the financial position of each fund. During FY 2019, GSA generated additional results from operations, received appropriations, used appropriations, and transferred funds to (or from) the Treasury and other Federal agencies.

  8. What is a statement of budgetary resources?

    The statement of budgetary resources is unique to the Federal Government, displaying the key components of the budgetary control process. The statement shows the various sources of budgetary authority and resources provided to fund agency activities. Private industry has no similar statement or set of requirements to establish and control budgets in this manner.

  9. What are unobligated balances?

    The unobligated balance is the portion of total budget authority provided as financial resources, where no actions have been taken to spend or obligate funding to pay for goods or services, nor bind the Government to pay liabilities. Limitations in laws also create further categorization of unobligated balances into amounts being “available” to spend on new obligations, “unavailable” due to various limitations, or “expired” and no longer available for new obligations

    Congress often provides agencies with funds to obligate or spend in one fiscal year (starting October 1 and ending September 30). These funds are referred to a one-year appropriation account, and the budget authority expires and can no longer be used to incur new obligations after September 30 of the year the appropriation was made.

    Congress may also provide agencies with authority to obligate funds over 2 or more years, referred to as multiyear funds or may not limit the amount of time funding remains available, known as no year funds.

  10. What are cumulative results of operations?

    Cumulative results of operations are a component of net position on balance sheets representing the historical total for a fund, summing revenues, expenses, gains, losses, transfers of assets and liabilities from other agencies, and other financing sources provided to a fund since its inception. It is similar in concept to retained earnings for a commercial firm.

  11. What are appropriations?

    Appropriation means a provision of law (not necessarily in an appropriations act) authorizing the expenditure of funds for a given purpose. For a more detailed explanation of appropriations the reader may access OMB's guidance document, Circular A-111.

  12. What are outlays?

    An outlay means a payment to liquidate an obligation (other than the repayment of debt principal or other disbursements that are "means of financing" transactions). Outlays generally are equal to cash disbursements but also are recorded for cash-equivalent transactions, such as the issuance of debentures to pay insurance claims, and in a few cases are recorded on an accrual basis such as interest on public issues of the public debt. Outlays are a primary measure of Government spending.

1 Circular A-11 can be found on line at

Last Reviewed: 2021-02-01