NASA Procedures and Guidelines
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NPR 9060.1A Eff. Date: May 02, 2016 Cancellation Date:	Accrual Accounting - Revenues, Expenses, and Program Costs
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Chapter 1. Accounting on an Accrual Basis

1.1 Overview

1.1.1 This NPR directs NASA personnel to present resources, liabilities, cost of operations, and revenue on an accrual basis in order to provide the information needed to develop NASA's budget and financial reports and effectively manage programs and projects. Accrual-based accounting for all Federal Government agencies was mandated as law by 31 U.S.C. § 3512(e). All subsequent regulatory and administrative guidance from the Government Accountability Office (GAO) to the U. S. Department of the Treasury (Treasury) has specifically required the use of accrual basis accounting principles.

1.1.2 Use of accrual accounting enables NASA's management to prepare a cost-based budget and to more accurately measure the Agency's performance and financial position using the financial data available. Although accrual-based financial data is more accurate, a balance should be maintained between the effort (amount of data, labor, or other resources) required to measure accruals precisely and the added value of such precision. The level of detail attained should not exceed what is actively monitored for project management, useful in decision making, or required for billing or reporting.

1.2 Roles and Responsibilities

1.2.1 The Agency Deputy Chief Financial Officer (DCFO) for Finance shall:

a. Establish policy requirements for recording accruals of cost and revenue and preparing accrual-based financial statements.

b. Review monthly consolidated accrual entries and methodology to determine that a reasonable representation of cost incurred and revenues earned is recorded.

c. Oversee the implementation of accrual accounting requirements within the core financial management system.

d. Conduct periodic and systemic reviews of Center accounting and reporting practices to ensure accruals of cost and revenue are recorded and reported in accordance with the authorities and policy presented.

1.2.2 The Center DCFO for Finance shall:

a. Record and report cost accruals in accordance with the authorities and policy presented.

b. Implement Center procedures to ensure accurate and reliable accruals.

c. Review and approve valid accruals developed by personnel outside the Center Office of the Chief Financial Officer (OCFO), such as resources personnel, for reliability prior to entry into the core financial system.

d. Review monthly accrual entries to ensure that a reasonable representation of cost incurred and revenues earned is recorded. The review of contractor financial management reports includes a variance analysis and timeliness of report submission.

e. Respond to questions related to accrual amounts and methodology upon request.

1.2.3 Resource Analysts and OCFO Personnel closely associated with programs and projects shall be responsible for coordinating with the cost analysts to:

a. Provide funding when and where needed to address the planned use of resources, the incurrence of cost, and the payment of invoices.

b. Review accruals in a timely manner to ensure amounts recorded represent a reasonable estimate of the goods and services received or revenue earned for the reporting period.

1.2.4 Center OCFO personnel (e.g., Cost Analysts and Accountants) shall:

a. Coordinate with program and project resource analysts to perform the following:

(1) Review project accruals to ensure amounts recorded in the core financial system represent reasonable estimates of the goods and services received or revenue earned for the reporting period.

(2) Review project accruals reported to external regulatory agencies, or other entities, to ensure they represent goods or services received or revenue earned for the reporting period.

(3) Record receipt of funding when and where needed to address the planned use of resources, incurrence of cost, and the payment of invoices.

(4) Notify the Contracting Officer when actual billing rates are consistently and/or significantly different from provisional indirect cost billings to consider whether provisional billing rates need adjustment.

b. Perform their functions in compliance with Section 1.2.2 above.

c. Promptly notify the Contracting Officer or Contracting Officer's Representative when there is knowledge of cost claimed in the absence of work performed or goods received.

d. Ensure accrued amounts contained in financial reports are recognized and reported in accordance with the authorities and policy presented.

1.2.5 The Contracting Officer and/or the Contracting Officer's Representative shall:

a. Promptly notify the Center OCFO and/or Resource Analyst, when they learn of amounts recorded (or to be recorded) that do not represent a reasonable estimate of goods or services received.

b. Act as point-of-contact for information regarding work performed, services provided, or goods received on contracts, agreements, or orders.

c. Monitor data reported for accuracy and timeliness in accordance with NFS 1842.7201.

1.2.6 The Logistics Office Staff shall:

a. Support the accrual process by promptly notifying the Center OCFO and/or Resource Analyst when aware of work performed or goods received. This support is typically provided when preparing and distributing receiving reports or using automated systems to record and report the receipt of goods on the loading dock.

b. Act as point-of-contact for information regarding goods or shipments received on contracts, agreements, or orders.

1.2.7 The Facilities Office Staff shall:

a. Support the accrual process by promptly notifying the Center OCFO, and/or Resource Analyst, when aware of Assets Under Construction or finalized. This support is typically provided when updating automated systems to record and report real property.

1.3 General Requirements

1.3.1 NASA shall use the accrual basis of accounting to record all transactions and ensure that:

a. Revenues are recorded when earned; expenses and program costs are recorded when incurred even though the receipt of cash related to the revenue or the payment of cash related to the expense may take place, in whole or part, in another accounting period.

b. NASA complies with generally accepted accounting principles provided by FASAB in SFFAS 4, SFFAS 5, SFFAS 7, and SFFAS 30 when developing accruals. Accrual-based accounting recognizes financial transactions or events as they occur. Transactions are recorded in the appropriate accounts as they occur throughout the month or at each month end.

c. Every practicable effort is made to ensure accruals are as accurate as possible, while keeping in mind the balance between the cost of added precision and the added value received. Special efforts are required at the end of the fiscal year to ensure the accounts reflect complete and accurate data.

d. NASA's quarterly accruals include, but are not limited to, NASA's estimates for expenses incurred from the end of the contractor's accounting period to the end of each quarter to account for work performed but not reflected in contractor cost reports, careful analysis of other contracts and purchase orders for amounts of goods or services usually received or work performed by the end of each quarter and paid in the subsequent quarter, and NASA's reimbursable expenses incurred and revenue earned between NASA's billing cycle and the end of each quarter.

1.4 Accruals

1.4.1 Accruals are amounts recorded prior to the payment or collection of cash. Amounts accumulate or accrue when financial events take place. Accruals include amounts incurred or earned for the actual or estimated value of resources used, work performed or expected to be performed, and work-in-process amounts attested to by management through the current fiscal period.

1.4.1.1 Accrual of Actual Amounts. Actual amounts accrued are values given to events that have already occurred within the accounting period and for which the value is known.

1.4.1.2 Accrual of Estimated Amounts. Estimated amounts accrued are values given to events that either: (1) have occurred within the accounting period and for which the value is unknown or (2) have not yet occurred but are expected to occur within the accounting period.

1.4.2 The actual value of events that have taken place in the past or of events that are expected to take place in the future may not be known for various reasons, such as contract reporting that lags by one month, labor hours that have not yet been reported, or until a contract or purchase order has been finalized and closed. This may be due to indirect rates, award fees, or other items finalized via audit, or other methods performed to close a contract, or order.

1.4.3 Preparing an accrual requires professional judgment and Centers shall take into account the nature of the underlying transactions, information collected from the field, data available as of the cutoff date for the accrual, and historical knowledge of the types of transactions for which documentation is not received by the end of the accounting period. Simplified methods for monthly accruals, such as estimates based on previous experience or prior month's reporting may be used when demonstrated to be reasonably reliable. Based on various analyses, the amount of accruals may be determined without sole reliance on the receipt of invoices. These estimated accrual values should be carefully analyzed and compared with subsequently attained actual numbers to ensure that the accrual process is continuously refined to improve accuracy.

1.4.4 Accruals should not produce abnormal general ledger account balances. Centers shall address all abnormal balances identified during CMP activities and ensure that each abnormal balance is corrected or is explained prior to monthly financial statement balance submission to Treasury. Accruals may be adjusted monthly if the value recorded for the work performed within a preceding period changes. This could occur due to estimated values becoming actual values or changes in the amount of work performed among other things. All accruals may be adjusted upon receipt of more accurate information or documentation, at contract closeout, or upon final payment for an order.

1.5 Documentation

Centers shall prepare and retain, for reference and audit, documents reflecting computations and support for accruals as well as the analyses of the accuracy of the accruals. The requirement for documentation is also applicable to any actions that may be necessary to support the development of accrual estimates. Records will ultimately be retained as required by NRRS 1441.1.

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