Financial Statements of the United States Government for the Fiscal Years Ended September 30, 2017, and 2016

Statements of Net Cost

These statements present the net cost of the Government operations for fiscal years 2017 and 2016, including the operations related to funds from dedicated collections. Costs and earned revenues are categorized on the Statement of Net Cost by significant entity, providing greater accountability by showing the relationship of the agencies’ net cost to the governmentwide net cost. Costs and earned revenues are presented in this Financial Report on an accrual basis, while the budget presents outlays and receipts, generally on a cash basis. The focus of the budget of the United States is by agency. Budgets are prepared, defended, and monitored by agency. In reporting by agency, we are assisting the external users in assessing the budget integrity, operating performance, stewardship, and systems and controls of the Government.

The Statements of Net Cost contain the following four components:

• Gross cost—is the full cost of all the departments and entities excluding (gain)/loss from changes in assumptions. These costs are assigned on a cause-and-effect basis, or reasonably allocated to the corresponding entities.
• Earned revenue—is exchange revenue resulting from the Government providing goods and services to the public at a price.
• (Gain)/loss from changes in assumptions—is the gain or loss from changes in long-term assumptions used to measure the liabilities reported for federal civilian and military employee pensions, other post-employment benefits, and other retirement benefits, including veterans’ compensation.
• Net cost—is computed by subtracting earned revenue from gross cost, adjusted by the (gain)/loss from changes in assumptions.

Individual agency net cost amounts will differ from the agency’s financial statements primarily because of reallocations completed at the governmentwide level which are listed below.

• Benefit program costs.
• Intragovernmental eliminations, as adjusted for buy/sell costs and related revenues.
• Imputed costs.

Because of its specific function, most of the benefit program costs originally associated with the Office of Personnel Management (OPM) have been reallocated to the user agencies for governmentwide reporting purposes. The remaining costs for OPM on the Statements of Net Cost are the administrative operating costs, the expenses from prior costs from health and pension plan amendments, and the actuarial gains and losses, if applicable.

General Services Administration (GSA) is the primary provider of goods and services to federal agencies. GSA’s net cost is adjusted for its intragovernmental buy/sell costs and related revenues. The remaining costs for GSA on the Statements of Net Cost are administrative operating costs. With regard to intragovernmental buy/sell costs and related revenues, the amounts recognized by each agency are added to, and subtracted from, respectively, the individual agency non-federal net cost amounts. In addition, the intragovernmental imputed costs recognized for the receipt of goods and services, financed in whole or part by the providing agencies, are added to the individual agency non-federal net cost amounts.

The interest on securities issued by the Department of the Treasury (Treasury) and held by the public is reported on Treasury’s financial statements, but, because of its importance and the dollar amounts involved, it is reported separately in these statements.

United States Government
Statement of Net Cost
for the Year Ended September 30, 2017

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United States Government
Statement of Net Cost
for the Year Ended September 30, 2016 (Restated)

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