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Financial Accounting Manual for Federal Reserve Banks

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Financial Accounting Manual for Federal Reserve Banks Financial Accounting Manual for Federal Reserve Banks July 2021 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Financial Accounting Manual for Federal Reserve Banks July 2021 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM iii Contents Introduction ........................................................................................................ 1 Abbreviations ...................................................................................................... 3 Summary of Revisions ......................................................................................... 7 1 Balance Sheet ................................................................................................. 9 2 Collateral and Custodies .............................................................................. 69 3 Property and Equipment .............................................................................. 79 4 System Open Market Account ................................................................... 107 5 Federal Reserve Notes ................................................................................ 117 6 Reporting Requirements ............................................................................ 125 7 Funding, Credit, Liquidity, and Loan Facilities .......................................... 139 8 Special Topics ............................................................................................ 147 Appendixes ...................................................................................................... 189 A Currency ................................................................................................... 191 B Dividends .................................................................................................. 195 C FR 34 Accounts ........................................................................................ 205 D Software ................................................................................................... 209 E [Reserved] F Pension ..................................................................................................... 221 1 Introduction This Financial Accounting Manual for Federal Reserve Banks (FAM) contains the accounting standards that should be followed by the Federal Reserve Banks.1 Accounting principles for entities with the unique powers and responsibilities of the nation's central bank have not been formulated by accounting standard-setting bodies. The Board of Governors has developed specialized accounting principles and practices that it considers to be appropriate for the nature and function of a central bank. These accounting principles and practices are documented in this manual. The Board of Governors has delegated, within certain parameters, the authority to the director of the Division of Reserve Bank Operations and Payment Systems (RBOPS) to set accounting policy for the Reserve Banks and to define, amend, and interpret FAM as prescribed by Board policy. Periodic amendments to FAM are made primarily to codify changes in accounting policy that result from new transactions and other accounting developments. Although setting accounting policy and updating FAM are responsibilities of the RBOPS Accounting Policy and Operations Section, Reserve Banks’ accounting staff also play significant consultative roles in the development of accounting policies included in this manual. FAM provides guidance to Reserve Banks that should result in uniform accounting policies conforming to the standards established. In some places, FAM provides examples of subsidiary accounts to facilitate an understanding of the scope of the broader balance sheet items. In these cases, unless otherwise noted, the maintenance of such accounts is discretionary with the Reserve Bank. Although FAM covers the receipt and disbursement of funds and specifies their location on the balance sheet, and is thus the controlling document on capitalization, rates of depreciation, correction of errors in expenses, entries to Profit and Loss, and so on, it does not provide guidance for cost accounting. The Federal Reserve Cost Accounting for Strategic Planning and Reporting (CASPR Manual) sets rules for cost accounting. Federal Reserve Bank staff should consult with the RBOPS Accounting Policy and Operations Section on financial accounting questions or issues that are not specifically covered in this manual. The section’s email group is RBOPS FRB Accounting Policy and Operations. 1 Portions of the FASB Accounting Standards Codification®, are copyrighted by the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, and are reproduced with permission. In June 2009, the Financial Accounting Standards Board issued ASC Topic 105, formerly SFAS No. 168, The FASB Accounting Standards Codification, (“codification”), which has become the single source of U.S. GAAP. References to U.S. GAAP include both the codification as well as the legacy references. 3 Abbreviations ACH Automated clearing house AGVs Automated guided vehicles AICPA American Institute of Certified Public Accountants AMLF ABCP Money Market Liquidity Facility AOCI Accumulated Other Comprehensive Income ASC Accounting Standards Codification ATB Adjusted trial balance AWH Annual work hours BEP Bureau of Engraving and Printing BIS Bank for International Settlements BOG Board of Governors Budget Act Bipartisan Budget Act CARES Act Coronavirus Aid, Relief, and Economic Security Act CASPR Cost Accounting for Strategic Planning and Reporting CBAF Central Business Administration Function CCF Corporate Credit Facility CFPB Bureau of Consumer Financial Protection CMBS Commercial Mortgage Backed Securities CMO Collateralized mortgage obligations CPFF Commercial Paper Funding Facility Consumer Protection Act Economic Growth, Regulatory Relief, and Consumer Protection Act 4 Financial Accounting Manual for Federal Reserve Banks CP Currency processors DCP Deferred Compensation Plan Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act DFMUs Designated Financial Market Utilities EASy Enterprise Accounting System ESF Exchange Stabilization Fund FAM Financial Accounting Manual Fannie Mae Federal National Mortgage Association FASB Financial Accounting Standards Board FAST Act Fixing America’s Surface Transportation Act FDIC Federal Deposit Insurance Corporation FICA Federal Insurance Contributions Act FIN FASB Interpretation Number FOMC Federal Open Market Committee FRB Federal Reserve Bank FRBB Federal Reserve Bank of Boston FRBNY Federal Reserve Bank of New York Freddie Mac Federal Home Loan Mortgage Corporation GAAP Generally accepted accounting principles Ginnie Mae Government National Mortgage Association GSE Government-sponsored enterprise IMF International Monetary Fund ISA Interdistrict Settlement Account JPMC JPMorgan Chase LLC Limited liability company Abbreviations 5 LTD Long-term disability MAC Material adverse change MBS Mortgage-backed securities ML Maiden Lane LLC ML II Maiden Lane II LLC ML III Maiden Lane III LLC MLF Municipal Liquidity Facility MMLF Money Market Fund Liquidity Facility MSELF Main Street Expanded Loan Facility MSNLF Main Street New Loan Facility MSPLF Main Street Priority Loan Facility NAS Network attached storage NOELF Nonprofit Organization Expanded Loan Facility NONLF Nonprofit Organization New Loan Facility OAH Outside agency help OCI Other comprehensive income OEB Office of Employee Benefits PDCF Primary Dealer Credit Facility PDU Power-distribution units PMCCF Primary Market Corporate Credit Facility PPM Program and Project Management PPPLF Paycheck Protection Program Lending Facility RBOPS Reserve Bank Operations & Payment Systems RMBS Residential Mortgage Backed Securities RFARS RBOPS Financial Accounting Reports System ROB Retirement and other benefits 6 Financial Accounting Manual for Federal Reserve Banks RS Reconciling stations SAN Storage area network S&DB Small and disadvantaged business SDRs Special drawing rights SIFMA Securities Industry and Financial Markets Association SFAS Statements of Financial Accounting Standards SMCCF Secondary Market Corporate Credit Facility SOMA System Open Market Account SPE Special-purpose entity SPV Special Purpose Vehicle TALF Term Asset-Backed Securities Loan Facility TBA To-be-announced TCOM Treasury Currency Operations Manual Thrift BEP Thrift Benefits Equalization Plan UPS Uninterrupted power source VIE Variable interest entity 7 Summary of Revisions Effective as of July 1, 2021, the second quarter 2021 Financial Accounting Manual (FAM) revisions are primarily related to the transition to Workday including updates to accounting for prepaids and deferred charges and removing references to the building machinery and equipment asset sub-type. Summary of Revisions Chapter 1 Paragraph 1.00—General: Modified the Balance Sheet to remove accounts that have been closed for more than one year and made edits to account names to ensure consistency. Modified the following paragraphs to update for changes in accounting for prepaids and deferred charges as a result of the transition to Workday. • Paragraph 4.20—Deferred Charges and Prepayments • Paragraph 4.21—Deferred Charges (170-225) • Paragraph 4.24—Prepaid Expenses—Other (170-275) Chapter 3 Modified the following paragraphs to remove references to the building machinery and equipment asset sub-type. • Paragraph 30.46—Examples of Classification of Capitalized Furniture and Equipment Assets • Removed: Paragraph 30.52—Building Machinery and Equipment • Paragraph 30.72—Capitalization
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