N. Personnel Compensation and Benefits
Annual and Other Leave Annual leave is recognized as an expense and a liability as it is earned. The liability is reduced as leave is taken. The accrued leave liability is principally long-term in nature and is classified as unfunded. Other types of leave are expensed when taken and no future liability is recognized for these amounts (see Note 12).
Federal Employees’ Compensation Act Benefits The Federal Employees’ Compensation Act (FECA) provides income and medical cost protection to covered federal civilian employees injured on the job, employees who have incurred a work-related occupational disease, and beneficiaries of employees whose death is attributable to a job-related injury or occupational disease. The FECA program is administered by the U.S. Department of Labor (DOL), which initially pays valid claims and subsequently seeks reimbursement from the federal agencies employing the claimants. The DOL determines the actuarial liability for claims outstanding at the end of each fiscal year. This liability includes the estimated future costs of death benefits, workers’ compensation, and medical and miscellaneous costs for approved compensation cases (see Note 12).
Pensions Most employees of the AOC participate in one of three defined benefit retirement programs based on their employment start date. Employee and AOC contributions are made to the Civil Service Retirement System (CSRS), the CSRS Offset, or the Federal Employees Retirement System (FERS) — all administered by the Office of Personnel Management (OPM). Employees may also participate in the Thrift Savings Plan (TSP), a defined contribution retirement savings and investment plan, as authorized by the Federal Employees Retirement System Act of 1986. The Federal Retirement Thrift Investment Board administers this plan. The AOC also withholds the necessary payroll deductions for employee contributions.
The AOC is not responsible for and does not report CSRS, FERS assets, accumulated plan benefits, or liabilities applicable to its employees on its financial statements. The OPM is responsible to report these amounts. The AOC recognizes an imputed financing source for the difference between the estimated OPM service cost and the sum of participants’ pension withholdings and Agency contributions (see Note 17).
Health Benefits and Life Insurance The AOC recognizes a current-period expense for the future cost of post-retirement health benefits and life insurance for its employees while they are actively employed. This amount is also considered imputed financing (see Note 17).
O. Statement of Net Cost
The Statement of Net Cost (SNC) is presented by responsibility segment (which are the AOC jurisdictions), in accordance with SFFAS No. 4, Managerial Cost Accounting Concepts and Standards for the Federal Government. The AOC uses a managerial cost accounting system to track and summarize costs by mission activity and business unit. During FY 2018, the Office of the CFO updated and streamlined the agency’s cost accounting codes to allow for more accurate recording of AOC’s financial transactions. At the time of issuance of these Financial Statements, AOC is still developing management reports that will assign or allocate the net cost of operations to strategic goals, objectives and program activities in order to provide management with insight into resource utilization and the full cost of outputs. While these initiatives are in various stages of progress, the AOC believes the responsibility segment approach currently provides information to its stakeholders in a direct, informative, and succinct manner.
The 11 responsibility segments reported on the SNC are identified below.
Capital Construction and Operations Capitol Building Capitol Grounds and Arboretum Capitol Police Buildings, Grounds and Security Capitol Power Plant House Office Buildings Library Buildings and Grounds Senate Office Buildings Supreme Court Building and Grounds U.S. Botanic Garden U.S. Capitol Visitor Center
Revenues reported on the SNC are principally recorded on a direct cost recovery basis.
P. Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets, liabilities (including contingent liabilities), revenues, financing sources, expenses and obligations incurred during the reporting period. These estimates are based on management’s best knowledge of current events, historical experience and other assumptions that are believed to be reasonable under the circumstances. Estimates are subject to a wide range of variables, including assumptions on future economic and financial events. Accordingly, actual results may differ from those estimates.
106 Section III • Financial Information ARCHITECT OF THE CAPITOL
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