Financial Statements

THE STATEMENTS comprising this chapter are "matters relating to the receipt, disbursement, and application of public funds." They bring to the attention of the Congress, as fully as the accounting records of the Government make possible, information regarding the public funds on deposit in the Treasury of the United States and in other depositaries authorized by law, the value of gold and silver holdings of the Government, accounts receivable in isolated cases, investment holdings of the Government, all as reported, but not verified by audit by the General Accounting Office; and miscellaneous loans receivable reported in isolated cases but not verified by audit. In opposition to the assets there are set forth items representing certain ascertained liabilities, commitments in the form of appropriations, special deposit funds and trust funds. Among such items are the Exchange Stabilization Fund which is exempted by law from audit by the General Accounting Office; public debt, the transactions of which have not been audited by the General Accounting Office; special deposit accounts and depositary accounts of Government Corporations and Agencies, many of which have not been audited by the General Accounting Office; and balances to the credit of disbursing officers as to some of which the audit by the General Accounting Office is not current.

Each of the items contained in the statement (exhibit A) is described in some detail in the following paragraphs and is supported by statements on which comments deemed pertinent have been made:

GOLD UNENCUMBERED (SCHEDULE A-1)

This item shows the book value of gold unencumbered as recorded on the records of the Treasurer of the United States and shown to be

in the custody of the Superintendents of the several mints, assay offices, and Fort Knox, Ky. Verification or physical inspection has not been made by the General Accounting Office.

SILVER UNENCUMBERED (SCHEDULE A-2)

This item states the book value of silver on hand as shown by the records of the Treasurer. The quantities held in Washington were verified by the General Accounting Office by actual count during the fiscal year 1938 and were at that time placed under seal in the vaults of the Treasury. The bulk of the silver, however, is in the custody of the Superintendents of the mints and assay offices, and such quantities have not been verified by actual count.

CASH-TREASURY OFFICES (Schedule A-3)

This item reflects the cash (coin, currency, etc.) in Treasury Offices as shown by the books of the Treasurer. No actual verification of this amount has been made by the General Accounting Office.

DEPOSITARIES (SCHEDULE A-4)

This item reflects the amount on deposit with Federal Reserve Banks and approved depositaries as recorded on the books of the Treasurer. The General Accounting Office has made no verification of this account.

ACCOUNTS RECEIVABLE (SCHEDULE A-5)

This item represents the amount of receivable items carried on the books of the Treasurer as being in the process of collection and has not been verified by the General Accounting Office.

INVESTMENTS (SCHEDULE A−6)

No account for investments as such is carried in the general ledger of the Treasurer. There are maintained by the Treasurer memorandum records of securities in his possession, and in the Office of the Commissioner of Accounts and Deposits investment records of a memorandum character are found. Such records, however, are not complete, and for the purpose of this statement computations based on information received from the several Government agencies have been used.

LOANS RECEIVABLE (SCHEDULE A-7)

Loans receivable, as shown by the records of the Treasurer and the Commissioner of Accounts and Deposits, subject to adjustments found to be necessary in order to reflect information furnished by administrative agencies charged with the duty of collecting, are stated in this account. No attempt has been made to evaluate loans except in those cases where the administrative office has seen fit to set up a reserve for losses, in which event the reserves have been reflected. With the exception of loans to foreign governments, most Government lending is accomplished through Government corporations and credit agencies functioning as business enterprises. Such loans are excluded from schedule A-7 and reflected in schedule A-6, "Investments of the United States," for the reason that the evidences of debt resulting from the loans are carried as assets of the lending agencies.

CASH SHORTAGE-PUBLIC DEBT

The cash shortage, public debt, carried in this account represents a deficiency in deposits to the account of the Treasurer of the United States, the larger portion of such shortage $542,011.51-having occurred in connection with the sales of Thrift Stamps and War Savings Stamps by the various postmasters during the war period.

The Sixty-fifth Congress (40 Stat. P. 754, sec. 10) enacted legislation providing for the relief of postmasters whose accounts were short in connection with the sales of such securities in the amount of $423,520.67, thus leaving a balance of $118,490.84 due the United States from such postmasters.

The shortage in the public-debt accounts of the Treasurer of the United States consists of the above-mentioned postmasters' shortage of $542,011.51 together with an additional shortage of $34,232.12 which was caused by the overissue of public-debt securities for various reasons, such as theft, fraud, etc., making a total as of June 30, 1939, of $576,243.63.

On August 10, 1939, the Congress provided for the relief of the Treasurer of the United States in the total amount of this publicdebt shortage (Private, No. 250, 76th Cong.).

FOREIGN GOVERNMENT OBLIGATIONS RECEIVABLE (SCHEDULE A-8)

This item reflects the amount of the foreign government obligations to the United States as shown by the books of the Treasury adjusted by the amount of accrued interest to June 30, 1939.

POST OFFICE DEPARTMENT (SCHEDULE A-9)

This account reflects the amount shown to the credit of the Post Office Department on the books of the Treasurer and represents the amount available to the Post Office Department for expenditure.

FIVE PERCENT REDEMPTION FUND, NATIONAL BANK NOTES (SCHEDULE A-10)

This account shows the amount to the credit of the 5 percent redemption fund, national bank notes, on the books of the Treasurer and reflects moneys due national banks since the abolition of the right of national banks to issue notes.

EXCHANGE STABILIZATION FUND (SCHEDULE A-11)

This account shows the amount to the credit of the exchange stabilization fund on the books of the Treasurer and represents the unexpended balance of the appropriation of $2,000,000,000 made by Congress under the Gold Reserve Act.

SPECIAL-DEPOSIT ACCOUNTS

This account reflects the amounts carried on the books of the Treasurer to the credit of various individuals and agencies under an agreement whereby the Treasurer is acting as a depositary in a relationship similar to that of bank and depositor.

DEPOSITARY ACCOUNTS OF GOVERNMENTAL CORPORATIONS AND AGENCIES

This account shows the amount carried on the books of the Treasurer to the credit of several corporations and Government agencies which operate as independent units of the Government.

TRUST FUNDS, UNADVANCED

This item reflects the balance to the credit of trust funds which has not been advanced to disbursing officers.

PUBLIC DEBT (SCHEDULE A-12)

This item reflects the amount shown for outstanding public-debt obligations on the books of the Treasury Department after adjustment by the General Accounting Office to include accrued interest on adjusted-service bonds and Treasury war savings certificates. Accrued interest on other classes of unmatured indebtedness has not been included. There is also included in this account a further adjustment in the amount of $568,524.60, such amount consisting

principally of a shortage of $542,011.51 in receipts from the sales of Treasury (war) Savings securities by the Post Office Department during the war period. The balance of this adjustment was caused by the overissues and overredemptions of the various classes of public-debt securities.

COMMITMENTS

Commitments consist of three items, namely: "To credit of general fund appropriations, unadvanced," the balance of appropriations made by Congress which on June 30, 1939, had not been made available to disbursing officers; "To credit of special fund appropriations, unadvanced," the balance of appropriations made from special-fund receipts which on June 30, 1939, had not been made available to disbursing officers; and "To credit of disbursing officers, advances," the unexpended balance of advances to disbursing officers.

NATIONAL DEFICIT

This item reflects the difference between the assets and liabilities as shown by this financial statement, and is subject to adjustment on account of several items such as the realizable value of the assets, particularly foreign obligations receivable under schedule A-8; accounts receivable of many types not included in the statement because of the lack of reliable information; tax levies due and uncollected; whatever net worth may be applied to the Tennessee Valley Authority; and for other reasons of similar importance. The amount, therefore, should be considered only as a basis for adjustment by all of the elements when they become known.

GENERAL COMMENT

Financial statements for the various agencies of the Government provide detailed support to the general financial statement. Pertinent notations have been made thereon to show the source of information and whether the transactions reflected have been audited by the General Accounting Office.