1001 Overview

This chapter contains the Department of Veterans Affairs’ (VA) financial policies regarding recognition and reporting of other liabilities.

Key points covered in this chapter include:

• VA will separately disclose funded and unfunded other liabilities within intragovernmental and other than intragovernmental other liabilities in the notes to the financial statements; and
• VA will comply with Office of Management and Budget (OMB) Circular A-136 and the Federal Accounting Standards Advisory Board (FASAB) standards when reporting other liabilities.

1002 Revisions

Section	Revision	Office	Reason for Change	Effective Date
1003	Update definitions to support SFFAS 54	OFP	SFFAS 54	March 2024
100501	Add guidance on SFFAS 54	OFP	SFFAS 54	March 2024
100503	Add guidance on how lease liability will be recorded	OFP	SFFAS 54	March 2024
1006	Update references for lease guidance	OFP	SFFAS 54	March 2024
Appendix A	Added prior policy revisions as Appendix A	OFP	Required by policy format guidance	March  2024

For a complete listing of previous policy revisions, see Appendix A.

1003 Definitions

Intragovernmental liabilities – Debts owed to other federal entities. Examples of which may include Federal Credit Reform Act subsidy re-estimates, general fund receipt account (GFRA) liabilities, Federal Employees’ Compensation Act (FECA) liabilities, other employee benefits, and future funded expenses.

Liability – A probable future outflow or other sacrifice of resources as a result of past transactions or events.

Liabilities Covered by Budgetary Resources – Liabilities incurred that are covered by realized budgetary resources as of the Balance Sheet date. Budgetary resources include: (1) new budget authority; (2) unobligated balances of budgetary resources at the beginning of the year or net transfers of prior year balances during the year; (3) spending authority from offsetting collections (credited to an appropriation or fund account); and (4) recoveries of unexpired budget authority through downward adjustments.

Liabilities Not Covered by Budgetary Resources – Liabilities incurred for which revenues or other sources of funds necessary to pay the liabilities have not been made available through congressional appropriations or current earnings of the reporting entity. Beginning in fiscal year 2024, this amount will include lease liabilities for which budgetary resources have not yet been provided.

Other Liabilities – Title given to liabilities not reported in a separate line item on the face of the consolidated balance sheet, which includes all liabilities that are immaterial to the agency and not reported elsewhere. Other liabilities may include liabilities related to, but not limited to, leases, advances and prepayments, deposit fund amounts held in escrow, and accrued liabilities related to ongoing continuous expenses such as federal employee salaries and accrued employee annual leave. Other liabilities also cover adjudicated losses due to litigation, claims, and contingencies.

Other than intragovernmental liabilities – Debts owed to non-federal entities. Examples of which may include accrued annual leave, accrued salaries and benefits, accrued payables, accrued grant liabilities, contingent legal liabilities, lease liability, unearned lease revenue, and deposit and clearing account liabilities.

1004 Roles and Responsibilities

Under Secretaries, Assistant Secretaries, and Other Key Officials are responsible for ensuring compliance with the policies outlined in this chapter.

Administration and Staff Office CFOs, and Fiscal Officers are primarily responsible for recording and reporting other liabilities under their jurisdiction as well as, assisting in the preparation of VA’s quarterly and year-end financial statements and accompanying notes.

Financial Services Center (FSC) is responsible for recording accrued liabilities for workers compensation, annual leave, salaries and benefits, and other employee benefits.

Veterans Benefits Administration (VBA) is responsible for returning any excess cash subsidy in the financing account based on subsidy re-estimates to Treasury and will record and report any excess funds (plus interest) not returned.

1005 Policies

100501 General Policies

1. VA will properly record and account for other liabilities in VA’s accounting system and report these liabilities in VA’s Agency Financial Report (AFR).
2. VA will report other liabilities in two categories on the face of its consolidated balance sheet in accordance with OMB Circular A-136, and Standard Federal Financial Accounting Standard (SFFAS) 1 and 5. The two categories are:
   1. Intragovernmental other liabilities (i.e., liabilities arising from other federal entities’ claims against VA); and
   2. Other than intragovernmental other liabilities (i.e., liabilities arising from nonfederal entities’ claims against VA).
3. In accordance with OMB Circular A-136, VA will disclose in the notes to the financial statements the nature (e.g., type and amount) of the liabilities that are covered and not covered by budgetary resources.
4. In accordance with OMB Circular A-136, VA will disclose a lease liability as part of other than intragovernmental other liabilities when a lease meets the criteria contained in SFFAS 54 and VA’s materiality threshold. For additional information, refer to Volume V, Chapter 11 – Accounting for Leases.
5. VA will separately disclose intragovernmental and other than intragovernmental other liabilities in the notes to the financial statements.
6. VA will separately disclose funded and unfunded other liabilities within intragovernmental and other than intragovernmental other liabilities. Funded liabilities are generally considered to be current liabilities. Unfunded liabilities represent future financial commitments that are currently not funded and considered non-current.

100502 Intragovernmental Other Liabilities

1. Veteran Benefits Administration (VBA) will return any excess cash subsidy in the financing account based on subsidy re-estimates to Treasury. VBA will record and report any excess funds (plus interest) not returned to Treasury by end of the accounting period as a part of intragovernmental other liabilities. For detailed policies regarding VA’s borrowing from Treasury, refer to Volume VI, Chapter 5 – Treasury Debt Borrowing.
2. VA returns funds collected to Treasury’s GFRA and will not use them for obligations and expenditures, unless authorized by law. VA will record and report collections not returned to Treasury by the end of an accounting period as a GFRA liability under the intragovernmental other liabilities. Refer to Volume II, Chapter 2D – General Fund Receipt Account for detailed policies related to GFRA.
3. FSC will record the accrued liabilities for FECA and Other Employee Benefits, which represent money owed by VA to the Department of Labor (DOL) and the Office of Personnel Management (OPM). This type of liability is a part of VA’s intragovernmental other liabilities.
4. The Contract Dispute Act (CDA) requires VA to reimburse Treasury for claims involving contract disputes. FSC will record the amount not covered by current budgetary resources in the CDA Future Fund Expense Account, as an item under intragovernmental other liabilities. See Volume VI, Chapter 20 – Judgment Fund, for detailed policies regarding the process.
5. VA will account for and report any advances received in the Supply Fund and Franchise Fund as a part of intragovernmental other liabilities. See Volume II, Chapter 10A – Supply Fund and Chapter 10B – Franchise Fund, for detailed policies guiding the two funds.

100503 Other than Intragovernmental Other Liabilities

1. FSC will recognize a liability for the accrued cost of employee annual leave that has been earned but not yet taken. VA will record and report the liability as a part of VA’s other than intragovernmental other liabilities. See Volume VI, Chapter 7 – Federal Employees’ and Veterans’ Benefits Liability, which contains policies for VA employees’ annual leave.
2. FSC will accrue liabilities for VA’s share of the cost for employee benefits such as, retirement, life insurance, and payroll taxes. VA will record and report these liabilities as a part of the other than intragovernmental other liabilities. See Volume VI, Chapter 11 – Employees’ Accrued Salaries and Benefits, for policy guidance related to VA’s liabilities of accrued salaries and benefits.
3. VA will use deposit fund accounts and clearing (suspense) accounts to hold remittances until proper disposition can be made. VA will record and report these non-government monies held by VA as “Deposit and Clearing Account Liability” as a part of other than intragovernmental other liabilities. See Volume II, Chapter 2C – Clearing (Suspense) and Deposit Funds, for policy guidance related to deposit and clearing accounts.
4. VA will recognize contingencies as contingent liabilities in accordance with recognition criteria promogulated by FASAB SFFAS 1 and 5. VA will record and report contingent liabilities as an item under other than intragovernmental other liabilities. Contingent liabilities are disclosed in both other liabilities and commitments and contingencies. See Volume VI, Chapter 21 – Contingent Liabilities, for policies related to contingencies and contingent liabilities.
5. VA will group liabilities not required to be reported separately and report these liabilities as “Other” in the other than intragovernmental other liabilities section. These liabilities include, but are not limited to, liabilities arising from contract holdbacks, advances received from non-federal entity, Veterans Canteen Service (VCS) unredeemed coupons, and lease liabilities. Details about each of these liabilities are discussed below:
   1. VA will withhold funds from contract progress payments for various reasons as permitted by the Federal Acquisition Regulation (FAR) Part 52.
   2. VBA will receive collections of prepaid interest on direct loans or loans guaranteed and will record and report these advance payments as a part of other than intragovernmental other liabilities.
   3. VA will recognize a liability upon the sale of VCS coupons, which will be recorded and reported as a part of VA’s other than intragovernmental other liabilities. The amounts received from the sale will be transferred to the VCS revolving fund account. For additional information on unredeemed VCS coupon, refer to Volume VI, Chapter 13 – redeemed Coupons – Veterans Canteen Service.
   4. VA will recognize lease liabilities and record and report these liabilities as a part of other than intragovernmental other liabilities.

1006 Authorities and References

• OMB Circular A-136, Financial Reporting Requirements – Revised
• Treasury Financial Manual USSGL
• Federal Accounting Standards Advisory Board
  • SFFAS 1, Accounting for Selected Assets and Liabilities
  • SFFAS 5, Accounting for Liabilities of The Federal Government
  • SFFAS 54, Leases
  • SFFAS 58, Deferral of the Effective Date of SFFAS 54, Leases
  • SFFAS 60, Omnibus Amendments 2021: Leases-Related Topics
  • SFFAS 61: Omnibus Amendments 2023: Leases-Related Topics II
  • SFFAS 62: Transitional Amendment to SFFAS 54
  • Technical Release 20, Implementation Guidance for Leases
  • Technical Release 21, Omnibus Technical Release Amendments 2022: Conforming Amendments
• Office of Financial Policy
  • Volume II, Chapter 2C – Clearing (Suspense) and Deposit Funds
  • Volume II, Chapter 2D – General Fund Receipt Account
  • Volume II, Chapter 10A – Supply Fund
  • Volume II, Chapter 10B – Franchise Fund
  • Volume V, Chapter 11 – Accounting for Leases
  • Volume VI, Chapter 5 – Treasury Debt Borrowing
  • Volume VI, Chapter 7 – Federal Employees’ and Veterans’ Benefits Liability
  • Volume VI, Chapter 11 – Employees’ Accrued Salaries and Benefits
  • Volume VI, Chapter 13 – Unredeemed Coupons – Veterans Canteen Service
  • Volume VI, Chapter 20 – Judgment Fund
  • Volume VI, Chapter 21 – Contingent Liabilities

1007 Rescissions

VA Financial Policy, Volume VI, Chapter 10 – Other Liabilities, October 2019.

1008 Policy Approval

This policy was approved by the VA Chief Financial Officers’ Council on March 26, 2024.

Appendix A: Prior Policy Revisions

Section	Revision	Office	Reason for Change	Effective Date
Various	Full review	OFP	Provide relevant guidance to report other liabilities on VA’s Agency Financial Report	July 2023
1005	Updated policy statements	OFP	Align to A-136 guidance for note section on ‘Other Liabilities’	July  2023
Various	Reformatted to new policy format and completed five-year review	OFP	Reorganize chapter layout	October 2019
1005 Policies	Updated policy statements	OFP	Properly reflect VA’s current accounting and recognition of other liabilities	October 2019