Page 7 - Financial Report 2020

PRIVACY AND CIVIL LIBERTIES OVERSIGHT BOARD

KEY TERMS USED IN THIS REPORT

Generally Accepted Accounting Principles - GAAP refers to a common set of accounting
principles, standards, and procedures issued for the United States Government by the
Federal Accounting Standards Advisory Board (“FASAB”), as designated by the American
Institute of Certified Public Accountants (“AICPA”). PCLOB follows the requirements for
GAAP for federal financial reporting.

Government Financial Statements - According to the U. S. Government Accountability
Office (“GAO”), the objectives of federal financial reports are for agencies to demonstrate
their accountability, provide useful information, and help internal users of financial
information to improve the Government's management. Federal Government financial
statement readers should bear in mind that our goal is to demonstrate good financial
stewardship over the assets entrusted to us, whereas private industry financial statement
users may have an interest in investing in a company and want assurances that the
information provided is timely, accurate, and can be relied upon.

Balance Sheet - The balance sheet shows the agency's assets and liabilities at a fixed point
in time – in this case, September 30, 2020 and 2019. Most of the terms on the balance sheet
are familiar to users of financial statements, (e.g. assets — such as accounts receivable,
property, and equipment — and liabilities — such as accounts payable). On a federal
balance sheet, there is one unique term: “fund balance with Treasury.” Like bank accounts,
the fund balances represent the amount of funding in the agency's accounts within the U.S.
Treasury that is available to spend for the purposes for which the funds were approved by
Congress.

Statement of Net Cost - The statement of net cost shows the results of operations for
PCLOB. A commercial company would call this type of document an income statement. As a
reflection that most federal programs generate little to no resources on their own,
expenses are offset by revenues to determine the net cost for the agency.

Statement of Changes in Net Position - The statement of changes in net position is similar
to a statement of changes in equity for a commercial firm. The statement reflects the impact
that changes in assets and liabilities have on the financial position of each fund. During FY
2020, PCLOB received appropriations and used appropriations.

Statement of Budgetary Resources - The statement of budgetary resources is unique to
the Federal Government, displaying the key components of the budgetary control process.
The statement shows the various sources of budgetary authority and resources provided to
fund agency activities. Private industry has no similar statement or set of requirements to
establish and control budgets in this manner.

FY 2020 AGENCY FINANCIAL REPORT iii