FMM_2_12_7_September11thSecurityFees_052710.pdf

TSA Financial Management Manual May 27, 2010

Part 2 - Chapter 12, Section 7 File 5000.10

SEPTEMBER 11th SECURITY FEES

1. PURPOSE

The purpose of this section is to provide instructions on the proper accounting and reporting of fee collections for the Passenger Civil Aviation Security Service Fee, also known as the “September 11th Security Fee” or “Passenger Fee.” Instructions for the Aviation Security Infrastructure fees are addressed in a separate chapter.

2. POLICY REFERENCE

• Aviation and Transportation Security Act (ATSA), Pub. L. No. 107-71, 115 Stat. 597. – Directs Under Secretary of Transportation for Security to impose a uniform Passenger Fee.

• Department of Homeland Security Appropriations Act, 2010, Pub. L. No. 111-83, 123 Stat. 2150. – Makes appropriations available for the Department of Homeland Security for the fiscal year ending September 30, 2010, and for other purposes.

• 49 USC §44940 – Codifies the Passenger Fee general guidelines, rates, and collection timeframe.

• 49 C.F.R. §1510 – Provides guidance for the collecting, remitting, accounting, and reporting of the Passenger Fees.

• OMB Memorandum dated March 30, 2007, “Budgetary and Accounting Treatment of Offsetting Collections in the Aviation Security Account” (See Appendix A).

• OMB Circular A-11 – Provides guidance on the preparation, submission, and execution of the U.S. government’s budget.

3. DEFINITIONS

• Accountable Official

- A U.S. Government employee or agent who is responsible for or has custody of government/public funds. The term includes certifying officers, disbursing officials and others who are responsible for or have custody of government funds (e.g., cashiers, collecting agents, imprest fund cashiers, etc.). An accountable official can be held pecuniarily liable for illegal or improper payments.

Accounts Receivable federal entity establishes a claim to cash or other assets against other entities, either based on legal provisions, or goods or services provided. If the exact amount is unknown, a reasonable estimate should be made. [SFFAS1, ¶41 as amended by SFFAS7, ¶53.]

- An umbrella term for amounts owed the U.S. Government by an individual, organization, or other entity. A receivable should be recognized when a http://www.gpo.gov/fdsys/search/pagedetails.action?browsePath=111%2FPUBLIC%2F%5bmin%3Bmax%5d&granuleId=&packageId=PLAW-111publ83� http://www.gpo.gov/fdsys/search/pagedetails.action?browsePath=111%2FPUBLIC%2F%5bmin%3Bmax%5d&granuleId=&packageId=PLAW-111publ83� http://www4.law.cornell.edu/uscode/� http://www.access.gpo.gov/cgi-bin/cfrassemble.cgi?title=200349� http://www.whitehouse.gov/omb/memoranda_2007/� http://www.whitehouse.gov/omb/circulars_default/�

TSA Financial Management Manual May 27, 2010

1. Receivables with the Public - These are claims by TSA against public and private entities, domestic or foreign individuals, and all organizations outside the U.S.

Government.

2. Intragovernmental Receivables – These are claims by TSA against another federal entity. Intragovernmental receivables are never considered delinquent because the U.S.

Government does not assess interest, penalties, or administrative fees against itself.

• Automated Clearing House (ACH)

– A nationwide electronic funds transfer system governed by the National Automated Clearing House Association (NACHA) operating rules which provide for the interbank clearing of electronic payments for participating depository financial institutions. The ACH system connects banks to one another by way of the Federal Reserve Board or other ACH operators.

CA$HLINK

- An electronic system used to manage the collection of U.S. Government funds and to provide deposit information to Federal agencies. CA$HLINK links Federal agencies, Financial Institutions, the Federal Reserve Banks, and Treasury fund managers through an electronic network.

Core Accounting System (CAS)

– The TSA general ledger accounting system.

Clearing Accounts

1. Budget clearing account __F3875 is used to temporarily credit unclassified transactions from the public until the funds can be reclassified to the correct account.

- These are accounts established by Treasury to temporarily hold unidentified general, special, or trust fund collections that belong to the U.S. Government until the funds are classified to the proper receipt or expenditure account. An “F” preceding the last four digits of the fund account symbol identifies the clearing account.

2. Undistributed intergovernmental payment account __F3885 is used to temporarily credit unclassified transactions between Federal agencies, including IPAC transactions.

• Delinquent Receivables

- These are accounts receivable with the public that are not repaid within 30 days after the remittance is due. Delinquent receivables incur interest, penalty, and administrative fees for non-payment.

Electronic Check Processing (ECP) – a Treasury system used to clears checks using both ACH electronic debits and check truncation (aka Check 21). ECP makes a decision on each check whether to truncate and image the check or create an ACH debit. Most consumer checks will be converted to ACH debits, while most corporate checks will be truncated. Truncation under Check 21 does not convert a check into an ACH debit as conversion does; truncation simply accelerates the settlement process through the use of digital images.

TSA Financial Management Manual May 27, 2010

• FEDWIRE

- A wire transfer collection system where remitters instruct their bank to transfer payment via the Federal Reserve Communications System to the Treasury General Account located at the Federal Reserve Bank-New York.

U.S. Coast Guard Finance Center (FINCEN)

– The TSA accounting service provider.

Intra-Governmental Payment and Collection System (IPAC)

– A Treasury application that facilitates the intra-governmental transfer of funds, with descriptive data from one federal agency to another.

Lockbox

- A collection and processing service offered by financial institutions to accelerate the flow of funds to a Treasury General Account. The offered service includes collecting the mail from a specified post office box; sorting, totaling, and recording the payments; and making the deposits. The financial institution forwards copies of all documentation to FINCEN for posting the collections into CAS.

Non-Delinquent Receivables

- Accounts receivable outstanding for 30 days or less.

Pay.gov

- A portal developed by Treasury. Pay.gov enables individuals and businesses to securely and easily send electronic payments to the U.S. Government by debit/credit card or ACH debit of a saving or checking account.

Treasury

– A general reference to the U.S. Department of Treasury and the various programs and/or systems employed by Treasury.

USSGL

4. RESPONSIBILITIES

– U.S. Government Standard General Ledger; the chart of accounts established by Treasury for use by federal agencies. It incorporates a basic 4-digit USSGL account plus applicable attribute domain values that agencies must capture at the transaction level.

The USSGL consists of both proprietary and budgetary accounts, which are self-balancing (the total debits equal total credits).

A. The Office of Revenue ensures domestic and foreign air carriers remit the collected Passenger Fees on a monthly basis, fees received are timely and accurately posted to CAS, and delinquent receivables are collected or referred to Treasury.

B. The OFM Accounting Branch ages delinquent accounts receivables and coordinates with the Office of Revenue and FINCEN to ensure the accurate posting of any unidentified remittance amounts in TSA’s budget clearing account. The OFM Accounting Branch also prepares the letter to Treasury for the quarterly return of TSA’s appropriations equal to the Passenger Fees collected during each quarter.

C. The OFM Financial Statements and Reports Branch (FSRB) prepares the quarterly accounts receivable accrual for the Passenger Fees to be included in the quarterly financial statements.

TSA Financial Management Manual May 27, 2010

D. The OFM Funds Control and Program Support Branch (FCPSB) is responsible for the accurate posting of budget execution transactions.

E. The Office of Budget and Performance (OBP) performs budget formulation and budget execution, including the timely allocation of budgetary authority to TSA programs when fees are collected, and identifies mandatory appropriation codes to be programmed into

CAS.

F. FINCEN posts the Treasury CA$HLINK air carrier remittance data into CAS and coordinates unresolved issues with the Office of Revenue and the OFM Accounting Branch.

G. Domestic and foreign air carriers have several congressionally mandated responsibilities:

(1) Air carriers must establish an accounting system that accounts for all Passenger Fees imposed, collected, refunded, and remitted.

(2) Monthly, each air carrier must remit to TSA all Passenger Fees collected. Passenger Fees collected are due on the last day of the month following the month in which they are collected (i.e., fees collected in May are due by the last business day of June.)

(3) Quarterly, each air carrier must submit a report providing: the name of the carrier, total amount of Passenger Fees imposed for each month during the previous quarter, and the net amount collected (US dollars) for each month during the previous quarter.

5. PROCEDURES

A. Within TSA, the key processes for managing the Passenger Fees are as follows:

(1) Budget formulation and appropriation of funds

(2) Establishing accounts receivable

(3) Collecting and posting Passenger Fees

(4) Aging, demand, and referral to Treasury of delinquent accounts receivables

(5) Budget execution: allotment, sub-allotment, and allocation of funds

(6) Appropriation reduction and transferring funds to Treasury

(7) Transfer funds from Aviation Security to the Aviation Security Capital Fund

TSA Financial Management Manual May 27, 2010

B. Budget Formulation and Appropriation of Funds

(1) Establishing the Passenger Fee: The Passenger Fee is imposed on passengers of domestic and foreign air carriers for air transportation that originates at airports in the U.S. The fee, which is collected at the time the ticket is bought, is $2.50 per enplanement and is imposed on not more than two enplanements per one-way trip.

Changes to the travel itinerary may result in either additional fees or a refund.

Passengers who believe they are entitled to a refund should contact the airline that sold the ticket. The fees are collected by the direct air carriers, who remit the fees to TSA on a monthly basis. Per 49 USC §44940, the Passenger Fees are credited as offsetting collections to the account that finances the activities and services for which the fee is imposed. Per current year Department of Homeland Security Appropriations Act, the sum appropriated to TSA for Aviation Security is reduced on a dollar for dollar basis upon the receipt of the offsetting collections.

(2) Forecasting the Annual Fee Revenue: The Office of Revenue forecasts the annual revenue from Passenger Fees and provides it to the OBP for inclusion in the annual TSA budget request.

(3) Recording Direct Appropriations: When TSA receives its direct appropriation, OBP notifies the OFM FCPSB to record the appropriations realized, as provided in TSA’s Treasury Warrants. OBP provides all supporting documents necessary to ensure the OFM FCPSB properly records the appropriations in CAS. Once the OFM FCPSB notifies OBP that the entries are made, OBP reviews and verifies the entries were entered correctly.

(4) Budgetary Entry To record appropriations realized

Account Description Debit Credit 41191 Other Appropriations Realized XX 4450 Unapportioned Authority XX

Proprietary Entry To record appropriations realized (upon receipt of Treasury Warrant)

Account Description Debit Credit 1010 Fund Balance with Treasury XX

3101 Unexpended Appropriations - Appropriations Received XX

(5) Recording Anticipated Collections: In addition to its direct appropriation, TSA receives authority for offsetting collections. Anticipated collections are recorded for the anticipated annual revenue from Passenger Fees. The amount recorded is based on the forecast by the Office of Revenue included in the TSA budget request and

1 Only 4-digit USSGL accounts are shown in these illustrative journal entries. CAS employs an 8-digit general ledger account number.

TSA Financial Management Manual May 27, 2010 reported on the SF 132. Because TSA allocates funds based on its direct appropriation, and TSA must return direct appropriations to the extent of actual collections, TSA cannot concurrently allocate both direct appropriations and anticipated collections. Therefore, TSA does not allot, sub-allot, or allocate Passenger or Air Carrier fees, but records anticipated collections as a contra-resource in USSGL 4395. OBP notifies the OFM FCPSB of the amount to record as anticipated collections, and verifies the amounts posted to CAS are correct.

Budgetary Entry To record anticipated collection of Passenger Fees

Account Description Debit Credit 4060 Anticipated Collections From Non-Federal Sources XX

4395 Authority Unavailable for Obligation Pursuant to Public Law - Temporary XX

None2

(6) Recording Apportionment of Funds: Upon notice of the Office of Management and Budget (OMB)’s subsequent apportionment to TSA (via the SF 132), OBP notifies the OFM FCPSB to post the apportionment of directly appropriated funds received by TSA.

To record OMB apportionment of direct appropriations to TSA Account Description Debit Credit

4510 Apportionments XX

None

(7) Reporting Mandatory Appropriations: Congress has designated the Aviation Security Capital Fund and the Checkpoint Screening Security Fund as mandatory spending accounts. OMB and Treasury require agencies to report mandatory appropriations separate from discretionary appropriations, even when reporting under the same Treasury Appropriation Fund Symbols (TAFS). Prior to the beginning of the fiscal year, or upon enactment of a new TSA appropriation law, OBP provides FSRB with the CAS appropriation codes designated to capture mandatory spending for all mandatory appropriations active for the fiscal year.

2 No proprietary entry is recorded for anticipated collections of non-federal revenue (receivables from the public) until actually received.

TSA Financial Management Manual May 27, 2010

C. Establishing Accounts Receivable

(1) Recognition of Accounts Receivable: The Passenger Fee is collected at the time a ticket is bought and is collected by the direct air carriers, who then remit the fees to TSA on a monthly basis. TSA currently does not invoice the airlines for the Passenger Fee. Instead, the Office of Revenue monitors payments submitted and compares the amounts submitted to the amounts due. When collections are received, an account receivable is established in CAS and immediately liquidated.

Air carriers are required to deposit Passenger Fees collected into an escrow account until remitted to TSA. The only time air carriers may take fees out of escrow is to refund passengers. TSA books a bad debt expense and/or allowance for doubtful accounts for Passenger Fees.

(2) Recording Receivables: TSA has contracted with the U.S. Customs and Board

Protection to audit selected air carriers regarding their Passenger Fee submissions to TSA. To the extent these audits identify an underpayments, the Office of Revenue establishes an account receivable and instructs FINCEN to invoice the air carrier.

(3) Financial Statement Accrual: The Office of Revenue maintains an account history for each air carrier and calculates a quarterly accrual based on the forecasted Passenger Fees on the last day of each quarter. The accrual is calculated using a 12 month rolling average of collections. The Office of Revenue provides detailed account information to FSRB for calculation of the quarterly accrual.

(4) The FSRB reviews the quarterly accrual spreadsheet against historical accrual information and performs a variance analysis to compare the current accrual to the prior accrual; resolving any questions and/or discrepancies with the Office of Revenue. The FSRB creates a reversing general ledger entry to record accrued revenue. FSRB forwards the general ledger journal voucher and supporting documentation to FINCEN who posts the transaction in CAS.

To record Passenger Fees accrual Account Description Debit Credit

1310 Accounts Receivable XX 5900 Other Revenue XX

D. Collecting And Posting The Passenger Fees

• Monthly, each air carrier remits Passenger Fees to TSA via FEDWIRE, Pay.gov, or a check to the TSA Lockbox. Upon receipt, FINCEN posts daily deposits of Passenger

TSA Financial Management Manual May 27, 2010

Fees to TSA’s budget clearing account “70F3875”.3

Budgetary Entry

On a daily basis, the Office of Revenue retrieves deposit information from the various Treasury systems (CA$HLINK, Pay.Gov, and ECP) and prepares a spreadsheet identifying the individual customer accounts for deposits received. FINCEN uses the spreadsheet provided by the Office of Revenue to credit payments originally posted to the budget clearing account to the correct customer account.

To record collected fees Account Description Debit Credit

4260 Actual Collections of “governmental-type” Fees XX 4060 Anticipated Collections From Non-Federal Sources XX

To record receipt of fees Account Description Debit Credit

1310 Accounts Receivable XX

1010 Fund Balance with Treasury XX

(5900) Accounts Receivable (or Other Revenue if no receivable was previously established) XX

• If the air carrier does not submit a monthly remittance, the Office of Revenue may establish an account receivable and pursue collection. Interest fees, penalty fees, and an administrative fee may be assessed accordingly. Continued non-response by the air carrier may result in the assessment of a civil penalty. Guidance on the treatment of delinquent accounts receivable can be found in FMM 2.6.4 Vendor Indebtedness and Accounts Receivable.

E. Budget Execution: Allotment, Sub-Allotment, And Allocation Of Funds

The Anti-Deficiency Act prohibits an accountable official from authorizing an expenditure or obligation of funds in excess of amounts available in an appropriation, apportionment, allotment, or other agency subdivision of funds. Allotments and sub-allotments are clearly subject to the provisions of the Anti-Deficiency Act. Although it is possible that agency allocations/allowances may not be subject to the Anti-Deficiency Act, TSA policy prohibits any commitments, obligations, and/or expenditures before budget authority is allocated by OBP.

(1) Direct Appropriations

OBP advises the OFM FCPS of subsequent allotments, sub-allotments, and allocations to report in CAS. TSA receives a direct appropriation for aviation

3 Treasury Financial Management Service (FMS) will be discontinuing the use of the budget clearing account F3875 and the IPAC account F3885 beginning 7/31/08. Agencies will be required to clear out (zero balance) these accounts by 2/28/09.

https://ishare.tsa.dhs.gov/Offices/FinanceAdmin/CFO/Pages/OFM/FMM.aspx https://ishare.tsa.dhs.gov/Offices/FinanceAdmin/CFO/Pages/OFM/FMM.aspx

TSA Financial Management Manual May 27, 2010 security, which OBP allots, sub-allots, and allocates on a quarterly basis, based on the annual operating plans included in TSA’s budget request, not to exceed OMB’s apportionment. Since sub-allotments and allocations are considered agency subdivisions of funds, no specific USSGL accounts have been established by Treasury to report these subdivisions. Within CAS, sub-allotments are identified by the combination of the 8-digit CAS general ledger account plus the following accounting code data elements: Appropriation Code, Budget Year, Program/Project, and Activity.

TSA allocations in CAS are identified by the 8-digit CAS general ledger account plus the following accounting code data elements: Appropriation Code, Budget Year, Program/Project, Activity, Sub-Activity, Funding Organization and Managing Unit.

To record TSA allotment Account Description Debit Credit

45100000 Apportionments XX 46100100 Allotments - Direct TSA XX

To record TSA sub-allotment Account Description Debit Credit

46100100 Allotments - Direct TSA XX 46100200 Sub Allotments - Direct TSA XX

To record TSA allocation/allowance Account Description Debit Credit

46100200 Sub Allotments - Direct TSA XX 46100000 Allotments - Realized Resources XX

F. Appropriation Reduction And Transferring Funds To Treasury

(1) Since the passage of ATSA, TSA has only collected approximately fifty percent of its costs of providing civil aviation security through fees. Congress has provided direct appropriations to cover the entire budgeted cost of TSA’s civil aviation security efforts, with the requirement that each year TSA must return an amount of the direct appropriations equal to the total Passenger and Air Carrier fees collected for the year of the appropriation. (Note that Air Carrier fees are addressed in a separate chapter.)

(2) TSA remits collections for Passenger and Air Carrier fees to Treasury through a quarterly reduction of the appropriation. The quarterly reduction process encompasses the activities associated with the calculation, posting, and communication of the amount to be returned to Treasury.

(3) On a quarterly basis, FSRB produces general ledger reports showing the fees collected and receivables outstanding. These reports are compared with reports on collections and receivables produced by the Office of Revenue and any differences are researched and resolved; FSRB prepares any correcting journal entries that are necessary. Once the general ledger is updated FSRB contacts the Office of Revenue to confirm the

TSA Financial Management Manual May 27, 2010 reconciled collections for Passenger Fees. FSRB then forwards to the OFM Accounting Branch the dollar amount to be returned to Treasury. The OFM Accounting Branch prepares a letter to Treasury informing them of the amount to withdraw from the Aviation Security appropriation and submits the letter with the signature of the TSA Chief Financial Officer. Treasury provides the OFM Accounting Branch with a warrant for the reduction in budgetary resources. The OFM Accounting Branch communicates the amount to the OFM FCPSB for input into CAS, and to the TSA Chief Financial Officer, Office of Revenue, FSRB, and OBP to update their records.

To record appropriations returned to Treasury Account Description Debit Credit

4395 Authority Unavailable for Obligation Pursuant to Public Law - Temporary XX

4119 Other Appropriations Realized XX

To record fund balance (unexpended appropriations) returned to Treasury

Account Description Debit Credit

3101 Unexpended Appropriations - Appropriations Received XX

(4) Because TSA’s revenues from Passenger and Air Carrier Fees are not sufficient to fund its aviation security operations, Congress provides a direct appropriation to cover the entire TSA budget for this function. To ensure program offices are not prohibited from incurring obligations, and consequently from performing their vital role in aviation security, TSA allocates the full amount of TSA’s direct appropriation (subject to OMB’s apportionment) on a quarterly basis. Since all obligations, and therefore all expenditures, for aviation security are recorded in CAS against direct appropriations, TSA is realizing appropriations used for all expenditures. As a result, TSA records some expenditures against direct appropriations that are actually funded by offsetting collections from Passenger and Air Carrier Fees. This understates TSA’s reported unexpended appropriations (USSGL 3100) and overstates its cumulative results of operations (USSGL 3310). To correct this, an entry is posted with the return of funds to Treasury to reverse the expended appropriations in the same amount that was returned to Treasury.

To reverse expended appropriations for costs funded by offsetting collections

Account Description Debit Credit 5700 Expended Appropriations XX 3107 Unexpended Appropriations - Used XX

TSA Financial Management Manual May 27, 2010

G. Transfer Funds From Aviation Security To The Aviation Security Capital Fund and

Checkpoint Screening Security Fund

(1) Two hundred and fifty million dollars must be specifically transferred from the Aviation Security fund (70_0550) to the Aviation Security Capital Fund receipt account (70X5385.001) and the Airport Checkpoint Screening Fund receipt account (70X5545.001)

(2) The journal entries for the losing fund (Aviation Security – 70_0550) are as follows:

Budgetary Entry To record a transfer-out of unobligated unexpired authority to the ASCF & CSSF receipt accounts

Account Description Debit Credit

4395 Authority Unavailable for Obligation Pursuant to Public Law - Temporary XX

4260 Actual Collections of “governmental-type” Fees XX

Proprietary Entry To record transfer-out of fund balance to the ASCF & CSSF receipt accounts

Account Description Debit Credit

(3) The journal entries for the gaining funds (ASCF – 70X5385.001 or CSSF –

70X5545.001) are as follows:

Budgetary Entry To record transfer-in of unobligated unexpired authority to the ASCF & CSSF receipt accounts

Account Description Debit Credit 4114 Appropriated Trust or Special Fund Receipts XX

To record transfer-in of fund balance to the ASCF & CSSF receipt accounts Account Description Debit Credit

(4) Per OMB Circular No. A-11, receipt accounts cannot incur obligations; therefore

Passenger Fees deposited into the receipt accounts must be moved to the corresponding special fund expenditure accounts.

TSA Financial Management Manual May 27, 2010

To move fund balance out of the receipt accounts 70X5385.001 or 70X5545.001

Account Description Debit Credit 5765 Nonexpenditure Financing Sources - Transfers-Out XX 1010 Fund Balance with Treasury XX

To move fund balance into the expenditure accounts 70X5385 or 70X5545 Account Description Debit Credit

5755 Nonexpenditure Financing Sources - Transfers-In XX

To move resource balances out of the receipt accounts 70X5385.001 or 70X5545.001

Account Description Debit Credit 4450 Unapportioned Authority XX 4170 Transfers - Current-Year Authority XX

To move resource balances into the expenditure accounts 70X5385 or 70X5545 Account Description Debit Credit

4170 Transfers - Current-Year Authority XX

TSA Financial Management Manual May 27, 2010

Part 2 - Chapter 12, Section 7 – Appendix A

TSA Financial Management Manual May 27, 2010

Part 2 - Chapter 12, Section 7 – Appendix A