Types of Transactions Reported in CARS Classification Transactions and Accountability (CTA)

As we look to implement a revamped method for agencies to report reclassifications to CARS, allowing Treasury to trace the transaction from initiation through the recording in financial reports, it is important we work to establish common reclassification terms.  In doing so, the CRM team is updating current guidance and creating new specific guidance for reclassification reporting and account statement reconciliation.

To start this process, the CRM team found that it is important to define the different types of transactions reported in CTA.  In the current CARS CTA environment, the following transactions are intermingled which prevents Treasury from identifying what is being reported.  In the future, Fiscal Service will enhance CARS to segregate these transactions.

Reclassification: reporting a correction (reversal and restatement) to a Treasury Account Symbol (TAS) or Business Event Type Code (BETC) on a cash originating transaction (source transactions: Collection Information Repository (CIR), Payment Information Repository (PIR), Intragovernmental Payment and Collection (IPAC), Treasury Disbursing Office (TDO) Payments) that was reported to an ALC. Reclassifications are directly related¹ to source transactions. 

Treasury is requesting federal entities not to use reclassification as a means to move activity/balances around.   Reclassifications are used to correct a TAS or BETC on an originating source transaction that was reported incorrectly with the wrong TAS or BETC.  Federal entities’  responsibility is to reconcile and identify what the differences are between the agency and CARS account statement and to have supporting documentation for any changes (reclassifications) reported to CARS, including an explanation for the changes.

Reclassification has 3 parts, sometimes referred to as the 3 Rs, (1) what was reported, (2) reversal, and (3) restatement.

1. What was reported is the originating source transaction reported to CARS that  identified by the agency to correct the TAS or BETC.
2. Reversal is the first part of the reclassification, a transaction that is reversing what was reported on the originating source transaction.  Report the reversal transaction using the same TAS and the opposing BETC that was reported on the originating source transaction.  Refer to Treasury’s BETC Guidance document to ensure the correct reversal BETC is used.
3. Restatement is the second part of the reclassification, a transaction that is restating the originating transaction with the correct TAS or BETC.

IntraALC Transfer:  an accounting cash event of transferring funds that is internal to the agency in the same ALC, that does not take place with a payment or collection.  IntraALC transfers are indirectly related² to source transactions.

InterALC Transfer: an accounting cash event of transferring funds from one ALC to another ALC, either in the same agency or a different agency, that does not take place with a payment or collection.  InterALC transfers indirectly related² to source transactions.

Transfers have 2 parts, (1) transfers to and (2) transfers from.

Non-Cash: an accounting non-cash event that is not related to cash held in the Treasury General Account (TGA), but is needed for Treasury reporting, i.e. Monthly Treasury Statement (MTS) reporting. For example, Federal Debt’s accruals and amortization transactions are reported on the MTS in the current accounting period, but the related cash payment takes place in a future accounting period.  For the current period reporting, one side of the accrual/amortization transaction post to the MTS and the other side of the transaction does not and offsets so there is zero impact to cash.

Subsidy Transfers: when a direct loan or guaranteed loan is disbursed, or executes a positive subsidy modification or upward re-estimate, the program account pays a subsidy to that financing account. The program account pays the subsidy amount to the financing account for the following: post-1991 direct loans, upward re-estimates and interest on the re-estimates, or modifications of any direct loans.

There are 4 types of subsidy transfers:

1. Subsidy Payment: when a direct loan or guaranteed loan is disbursed, or executes a positive subsidy modification or upward re-estimate, the program account pays a subsidy to that financing account. The program account pays the subsidy amount to the financing account for the following: post-1991 direct loans, upward re-estimates and interest on the re-estimates, or modifications of any direct loans.
2. Upward Re-estimate: indicates that insufficient funds were paid to the financing account, so the increase (plus interest on re-estimates) is paid from the program account to the financing account to make it whole. Permanent indefinite budget authority is available for this purpose under section 504(f) of the FCRA.
3. Downward Re-estimate: indicates that too much subsidy had been paid to the financing account. The excess (plus interest) is disbursed to a downward re-estimate receipt account. If a subsidy re-estimate for a cohort is downward, the agency records the amount of the re-estimate and interest on the re-estimate and pays an amount equal to the downward re-estimate and interest on the re-estimate to a different general fund receipt.

4. Negative Subsidy: mean subsidy costs that are less than zero. They occur if the present value of cash inflows to the Government exceeds the present value of cash outflows. In those cases, appropriations bills must still provide specific authority before direct loans or loan guarantees can be made, generally in the form of a loan limitation.

   When a direct loan obligation or loan guarantee commitment is made that has a negative subsidy, an amount equal to the negative subsidy will be obligated in the financing account. When the loan is disbursed, the financing account will pay the negative subsidy to the negative subsidy receipt account. The collections are recorded as offsetting receipts, and they offset the agency's budget authority and outlays.

   If the estimated subsidy is negative, the agency pays an amount equal to the negative subsidy from the financing account to a general fund receipt TAS for that program when the direct loan is disbursed.

Footnotes:
¹ Directly related: same accounting event; correcting a TAS or BETC on a source transaction that has already been reported to CARS.
² Indirectly related: not the same accounting event; not correcting a source transaction.