United States DEPARTMENT of Commerce

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
the amount is reasonably estimable. This revenue is not considered to reduce the cost of the Department’s operations, and, is,
therefore, reported on the Consolidated Statements of Changes in Net Position.
In certain cases, law or regulation sets the prices charged by the Department, and, for program and other reasons, the Department
may not receive full cost (e.g., the processing of patents and registering of trademarks, and the sale of weather data, nautical
charts, and navigation information). Prices set for products and services offered through the Department’s working capital funds
are intended to recover the full costs incurred by these activities.
Imputed Financing Sources From Costs Absorbed by Others (and Related Imputed Costs): In certain cases, operating costs of the
Department are paid for by funds appropriated to other federal entities. For example, pension benefits for most Department
employees are paid for by the U.S. Office of Personnel Management (OPM), and certain legal judgments against the Department
are paid from the Judgment Fund maintained by Treasury. OMB limits Imputed Costs to be recognized by federal entities to the
following: (1) employees’ pension benefits; (2) health insurance, life insurance, and other benefits for retired employees; (3) other
post-employment benefits for retired, terminated, and inactive employees, including severance payments, training and counseling,
continued health care, and unemployment and workers’ compensation under FECA; and (4) losses in litigation proceedings.
The Department includes applicable Imputed Costs on the Consolidated Statements of Net Cost. In addition, an Imputed Financing
Source From Costs Absorbed by Others is recognized on the Consolidated Statements of Changes in Net Position.
Transfers In/(Out): Intragovernmental transfers of budget authority (i.e., appropriated funds) or of assets without reimbursement
are recorded at book value.
Q Employee Retirement Benefits
Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS): Most employees of the Department
participate in either the CSRS or FERS defined-benefit pension plans. FERS went into effect on January 1, 1987. FERS and Social
Security automatically cover most employees hired after December 31, 1983. Employees hired prior to January 1, 1984 could elect
to either join FERS and Social Security, or remain in CSRS.
The Department is not responsible for and does not report CSRS or FERS assets, accumulated plan benefits, or liabilities applicable
to its employees. OPM, which administers the plans, is responsible for and reports these amounts.
For CSRS-covered regular employees, the Department was required to make contributions to the plan equal to 7.0 percent of an
employee’s basic pay. Employees contributed 7.0 percent of basic pay. For each fiscal year, OPM calculates the U.S. government’s
service cost for covered employees, which is an estimate of the amount of funds, that, if accumulated annually and invested over
an employee’s career, would be enough to pay that employee’s future benefits. Since the U.S. government’s estimated service cost
exceeds contributions made by employer agencies and covered employees, this plan is not fully funded by the Department and its
employees. The Department has recognized an Imputed Cost and an Imputed Financing Source From Costs Absorbed by Others for
the difference between the estimated service cost and the contributions made by the Department and its covered employees.
For FERS-covered regular employees, the Department was required to make contributions of 11.2 percent (since FY 2005) of basic
pay. Employees contributed .8 percent of basic pay. Employees participating in FERS are covered under the Federal Insurance
Contributions Act (FICA), for which the Department contributes a matching amount to the Social Security Administration.
For both FY 2007 and FY 2006, this plan was fully funded by the Department and its employees.
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