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Introduction to the Principal Financial Statements


FY 2003 Performance and Accountability Report
Bureau of Resource Management
December 2003
Report
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The Principal Financial Statements (Statements) have been prepared to report the financial position and results of operations of the U.S. Department of State (Department). The Statements have been prepared from the books and records of the Department in accordance with formats prescribed by the Office of Management and Budget (OMB) in OMB Bulletin 01-09, Form and Content of Agency Financial Statements. The Statements are in addition to financial reports prepared by the Department in accordance with OMB and U.S. Department of the Treasury (Treasury) directives to monitor and control the status and use of budgetary resources, which are prepared from the same books and records. The Statements should be read with the understanding that they are for a component of the U.S. Government, a sovereign entity. The Department has no authority to pay liabilities not covered by budgetary resources. Liquidation of such liabilities requires enactment of an appropriation.

For 2003, the Consolidated Statement of Net Cost is significantly different than last year's Statements. Specifically, the Department is reporting net costs by strategic goal, which is consistent with OMB Bulletin 01-09, and explained more fully in Note 18 to the financial statements. The 2002 amounts have been recast consistent with the 2003 presentation.

Comparative financial statements are required for 2003 and beyond. 2003 is the first year for which comparative Statements of Changes in Net Position, Budgetary Resources, and Financing are presented.

The Consolidated Balance Sheet provides information on assets, liabilities, and net position similar to balance sheets reported in the private sector. Comparative data for 2002 are included, and intra-Departmental balances have been eliminated from the amounts presented.

The Consolidated Statement of Net Cost reports the components of the net costs of the Department's operations for the period. The net cost of operations consist of the gross cost incurred by the Department less any exchange (i.e., earned) revenue from our activities. Comparative data for 2002 are included, and intra-Departmental balances have been eliminated from the amounts presented.

The Consolidated Statement of Changes in Net Position reports the beginning net position, the transactions that affect net position for the period, and the ending net position. The components of net position are separately displayed in two columns: Cumulative Results of Operations and Unexpended Appropriations to more clearly identify the components of and changes to Net Position. Comparative data for 2002 are included, and intra-Departmental transactions have been eliminated from the amounts presented.

The Combined Statement of Budgetary Resources provides information on how budgetary resources were made available and their status at the end of the year. Information in this statement is reported on the budgetary basis of accounting. Comparative data for 2002 are included, and intra-Departmental transactions have not been eliminated from the amounts presented.

The Combined Statement of Financing reports the relationship between budgetary transactions and financial transactions. Comparative data for 2002 are included, and intra-departmental transactions have not been eliminated from the amounts presented.

Required Supplementary Stewardship Information provides information on the Department's Heritage Assets. Required Supplementary Information contains a Combining Schedule of Budgetary Resources that provides additional information on amounts presented in the Combined Statement of Budgetary Resources, and information on intra- governmental amounts, deferred maintenance, and the Department's Working Capital Fund.

The Department received an "Unqualified Opinion" on its financial statements for each of the seven years since 1997 from an independent public accounting firm engaged by the Department's Office of Inspector General.



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