USPTO Performance and Accountability Report - U.S. Patent and ...

NOTE 1. Summary of Significant Accounting Policies (continued)
created in the U.S. Treasury as a subset of the parent
fund account for tracking and reporting purposes.
All allocation transfers of balances are credited to
this account, and subsequent obligations and
outlays incurred by the child entity are charged to
this allocation account as they execute the
delegated activity on behalf of the parent entity.
Generally, all financial activity related to these allocation
transfers (e.g., budget authority, obligations,
and outlays) is reported in the financial statements
of the parent entity, from which the underlying legislative
authority, appropriations, and budget apportionments
are derived. The USPTO does not receive
any allocation transfers.
Reclassifications
In FY 2012, changes to the presentation of the
Combined Statements of Budgetary Resources were
made, in accordance with guidance provided in
OMB Circular A-136 and as such, activity and
balances reported on the FY 2011 Combined
Statement of Budgetary Resources have been reclassified
to conform to the presentation in the current
year. Certain prior year balances were reclassified to
conform with current year presentation.
Basis of Accounting
Transactions are recorded on the accrual basis of
accounting, as well as on a budgetary basis. Accrual
accounting allows for revenue to be recognized when
earned and expenses to be recognized when goods
or services are received, without regard to the receipt
or payment of cash. Budgetary accounting allows for
compliance with the requirements for and controls
over the use of federal funds. The accompanying
financial statements are presented on the accrual
basis of accounting.
Earmarked Funds
Statement of Federal Financial Accounting
Standard (SFFAS) 27, Identifying and Reporting
Earmarked Funds, requires separate identification
of the earmarked funds on the Consolidated
Balance Sheets (Net Position section), Consolidated
Statements of Changes in Net Position, and further
disclosures in Note 14.
Earmarked funds are financed by specifically identified
revenues, which remain available over time.
These specifically identified revenues are required by
statute to be used for designated activities, benefits,
or purposes, and must be accounted for separately
from the government’s general revenues. At the
USPTO, earmarked funds include the salaries and
expenses fund (13X1006) and the special fund
receipts (135127).
Fiduciary Activities
SFFAS 31, Accounting for Fiduciary Activities, requires
that fiduciary activities not be recognized on the
financial statements, but reported on schedules in the
notes to the financial statements. Additional details
are provided in Note 20.
Fiduciary cash and other assets are not assets of the
federal government. Fiduciary activities are the
collection or receipt, and the management, protection,
accounting, and disposition by the federal
government of cash or other assets in which nonfederal
individuals or entities have an ownership
interest that the federal government must uphold.
At the USPTO, fiduciary activities are recorded in the
Patent Cooperation Treaty fund (13X6538) and the
Madrid Protocol fund (13X6554).
Use of Estimates
The preparation of financial statements in conformity
with GAAP requires management to make estimates
and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent
assets and liabilities as of the date of the
financial statements and the reported amounts of
revenues and expenses during the reporting period.
Actual results could differ from these estimates.
Revenue and Other Financing Sources
FINANCIAL SECTION
Exchange Revenue: The USPTO’s fee rates are established
by law and, consequently, in some instances
may not represent full cost or market
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