NASA Procedural Requirements

NPR 9060.1B Effective Date: April 24, 2023 Expiration Date: April 24, 2028

Subject: Accrual Accounting - Revenues, Expenses, and Program Costs

Responsible Office: Office of the Chief Financial Officer

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 to provide the information needed to develop NASA's budget and financial reports and effectively manage programs and projects. Accrual-based accounting for Federal agencies was mandated as law by the Executive agency accounting and other financial management reports and plans, 31 U.S.C. § 3512(e). Subsequent regulatory and administrative guidance from the Government Accountability Office (GAO) to the United States (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 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.

1.1.3 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.

1.1.3.1 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.

1.1.3.2 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.

1.1.4 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 indirect rates, award fees, or other items that are not finalized until a contract or purchase order has been closed.

1.1.5 Preparing an accrual requires professional judgment and Center Office of the Chief Financial Officer (OCFO) will consider 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.

1.1.6 Accruals should not produce abnormal general ledger account balances. Center OCFO will address all abnormal balances identified during Continuous Monitoring Program (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.

1.1.7 Center OCFO will 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 be maintained as required by NRRS 1441.1, NASA Records Retention Schedules.

1.2 General Requirements

1.2.1 NASA personnel will recognize and report cost in a manner that provides assurance that resources are spent to achieve expected results and outputs, supports the comparison of alternative courses of action and analysis of the efficiency and effectiveness of NASA's business, and recognizes cost in the appropriate period to ensure reported amounts accurately reflect the results of operations.

1.2.2 NASA personnel will recognize and measure revenues in a manner that provides information to enable calculation of the net cost of programs, supports performance evaluation of programs, and exposes underpriced programs.

1.2.3 NASA personnel will use the accrual basis of accounting to record transactions and ensure:

a. Compliance with generally accepted accounting principles provided by Federal Accounting Standards Advisory Board (FASAB) in the Statement of Federal Financial Accounting Standards (SFFAS) 4: Managerial Cost Accounting Standards and Concepts, SFFAS 5: Accounting for Liabilities of the Federal Government, SFFAS 7: Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, and SFFAS 55: Amending Inter-entity Cost Provisions, 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. Specifically:

(1) Revenues are recorded when earned, even though the receipt of cash related to the revenue may take place, in whole or part, in another accounting period.

(2) Expenses and program costs are recorded when incurred, even though the payment of cash related to the expense may take place in another accounting period.

b. 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.

c. Quarterly accruals include but are not limited to: 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, amounts of goods or services received, or work performed by the end of each quarter and paid in the subsequent quarter, and reimbursable activity related expenses incurred and revenue earned between the billing cycle and the end of each quarter.

1.3 Roles and Responsibilities

1.3.1 The Agency Deputy Chief Financial Officer for Finance (DCFO(F)) 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 accounting 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 generally accepted accounting principles (GAAP) and the authorities and policy presented.

1.3.2 The Center DCFO(F) shall:

a. Record and report cost accruals in accordance with regulatory guidance and NASA policy and procedures.

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

c. Review and approve accruals developed by personnel outside the Center OCFO for reliability prior to entry into the core financial accounting 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.

1.3.3 The Center OCFO and/or Resource Analysts closely associated with programs and projects are responsible for coordinating with the cost analysts to:

a. Ensure funding is available for 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.

1.3.4 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 accounting 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) Distribute 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 (CO) 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 GAAP and the authorities and policy presented.

c. Promptly notify the CO or CO'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 GAAP and the authorities and policy presented.

1.3.5 The CO or CO's Representative shall:

a. Promptly notify the Center OCFO and/or Resource Analyst when amounts proposed or recorded are not representative of goods or services received.

b. Perform their functions in compliance with GAAP and the authorities and policy presented.

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

d. Monitor data reported for accuracy and timeliness in accordance with NASA Federal Acquisition Regulation Supplement (NFS), NASA Contractor Financial Management Reporting, 48 CFR subpt.1842.72.

1.3.6 The Logistics Office staff shall:

a. Support the accrual process by promptly notifying the Center OCFO and/or Resource Analyst when work is performed or goods are 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. Perform their functions in compliance with GAAP and the authorities and policy presented.

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

1.3.7 The Facilities Office staff shall support the accrual process by promptly notifying the Center OCFO and/or Resource Analyst when they are made aware that Assets Under Construction are completed or beneficially occupied. This support is typically provided when updating automated systems to record and report real property.

DISTRIBUTION:
NODIS

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