Financial Statements of the United States Government for the Fiscal Years Ended September 30, 2021, and 2020

Statements of Net Cost

These statements present the net cost of the government operations for FYs 2021 and 2020. Costs and earned revenues are categorized on the Statement of Net Cost by significant entity, providing greater accountability by showing the relationship of the entities’ net cost to the government-wide 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 U.S. is by entity. In reporting the Statement of Net Cost by entity, we are assisting the external users in assessing the operating performance, budget integrity, 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, OPEB, and ORB, including veterans’ compensation.
• Net cost—is computed by subtracting earned revenue from gross cost, adjusted by the (gain)/loss from changes in assumptions.

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

• Employee benefit costs.
• Intra-governmental eliminations, as adjusted for buy/sell costs and related revenues.
• Imputed costs.

Because of its specific function, most of the employee benefit costs originally associated with the OPM have been reallocated to the user entities for government-wide 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.

With regard to intra-governmental buy/sell costs and related revenues, the amounts recognized by each entity are added to, and subtracted from, respectively, the individual entity non-federal net cost amounts in order to allocate the costs to the entities that incurred the costs. GSA is the primary provider of goods and services to federal entities. GSA’s net cost is adjusted for its intra-governmental buy/sell costs and related revenues. The remaining costs for GSA on the Statements of Net Cost are administrative operating costs.

In addition, the intra-governmental imputed costs recognized for the receipt of goods and services, financed in whole or part by the providing entities, are added to the individual entity non-federal net cost amounts. The most significant types of imputed costs that are recorded relate to post-retirement and health benefits, FECA, and Treasury’s Judgment Fund. The consolidated Statements of Net Cost is intended to show the full cost for each entity, therefore, the amount of these imputed costs are added back to the reporting entities’ gross cost line item and subtracted from the applicable administering entities’ gross cost line item. These imputed costs have a net effect of zero on the Statements of Net Cost in the Financial Report.

The interest on securities issued by 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, 2021

United States Government 
Statement of Net Cost 
for the Year Ended September 30, 2020 (Restated)