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Financial Highlights

USAID's financial statements, which appear in the Financial Section of this report, received for the third consecutive year an unqualified audit opinion issued by the USAID Office of the Inspector General (OIG). Preparing these statements is part of the Agency's goal to improve financial management and provide accurate and reliable information useful for assessing performance and allocating resources. Agency management is responsible for the integrity and objectivity of the financial information presented in these financial statements.

USAID prepares consolidated financial statements that include a Balance Sheet, a Statement of Net Cost, a Statement of Changes in Net Position, a Statement of Budgetary Resources, and a Statement of Financing. These statements summarize the financial activity and position of the Agency. Highlights of the financial information presented on the principal statements are provided below.

Overview of Financial Position

ASSETS. The Consolidated Balance Sheet shows the Agency had Total Assets of $24.7 billion at the end of 2005. This represents an 10 percent increase over previous year's Total Assets of $24 billion. This is primarily the result of an increase in appropriations recieved during FY 2005.

Table 1: The Agency's assets reflected in the Consolidated Balance Sheet are summarized in the following table:

Fund Balances with Treasury and Loans Receivable, Net comprise the majority of USAID's assets. Together they account for over 90 percent of total assets for 2005, 2004, and 2003. USAID maintains funds with Treasury to pay its operating and program expenses. These funds increased by $1.6 billion (10 percent).

Loans Receivables, Net of estimated write-offs due to loan defaults, result from the disbursement of funds under the Direct Loan Programs. Loan Receivables experienced a 17 percent decrease from FY 2004.

The largest percentage change in assets line items on the Balance Sheet occurred in Advances and Prepayments, an increase of 34 percent (from $559 million in FY 2004 to $750 million in FY 2005). Nearly all of USAID advances consist of funds disbursed under letter of credit to contractors or grantees, administered by the U.S. Department of Agriculture (USDA).

The pie chart below presents USAID's asset type by percentage for FY 2005.

Chart 1: Percentage of Assets by Type, FY 2005

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LIABILITIES. As presented on the Consolidated Balance Sheet, the Agency had almost $11 billion in Total Liabilities at the end of 2005. This amount represents a $589 million, or six percent increase in Total Liabilities from the prior year. Liabilities are summarized in the following table:

Table 2:

As reflected in Table 2, Credit Program Liabilities, consisting mainly of Credit Program Debt, due to U.S. Treasury and Loan Guaranty Liability account for most of USAID's Total Liabilities for 2005, 2004 and 2003. Debt and Due to Treasury combined represented 52 percent of Total Liabilities for FY 2005. The Loan Guaranty Liability comprised 14 percent of Total Liabilities for FY 2005.

Debt and Due to Treasury combined decreased by seven percent, or $411 million, from FY 2004. Loan Guaranty Liability, which is associated with USAID's guarantees of loans made by private lending institutions, increased by 50 percent or by $522 million from FY 2004.

Accounts Payable increased by 35%, or $831 million from FY 2004. The primary reason is the increase in accrual estimations at the end of 2005. 

The pie chart below presents USAID's percentage of liabilities by type for FY 2005:

Chart 2: Percentage of Liabilities by Type, FY 2005

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ENDING NET POSITION. Net Position is the sum of the Unexpended Appropriations and Cumulative Results of Operations. USAID's Net Position at the end of 2005 on the Consolidated Balance Sheet and the Consolidated Statement of Changes in Net Position was $13.7 billion, a $91.9 million increase from the previous fiscal year. Unexpended Appropriations of $13 billion or 97 percent represent funds appropriated by the Congress for use over multiple years that were not expended by the end of FY 2005.

Results of Operations

The results of operations are reported in the Consolidated Statement of Net Cost and the Consolidated Statement of Changes in Net Position.

The Consolidated Statement of Net Cost presents the Agency's gross and net cost for its strategic goals. The net cost of operations is the gross (i.e., total) cost incurred by the Agency, less any exchange (i.e., earned) revenue. The accompanying notes to the Statement of Net Cost disclose costs by strategic goals and responsibility segments, and by intragovernmental costs and exchange revenues separately from those with the public for each strategic goal and responsibility segment. A responsibility segment is the component that carries out a mission or major line of activity, and whose managers report directly to top management. For the Agency, the technical and geographical bureaus (e.g., Global Health or Latin America/Caribbean (LAC)) are considered a responsibility segment. Information on the bureaus can be found in Note 18.

The presentation of program results by strategic goals is based on the Agency's current Joint State-USAID Strategic Plan established pursuant to the Government Performance and Results Act (GPRA) of 1993.

The Agency's total net cost of operations for 2005, after intra-agency eliminations, was $12.3 billion. The strategic goal, Social and Environmental Issues, represents the largest investment for the Agency at 34.5 percent of the Agency's net cost of operations. The net cost of operations for the remaining goals ranges from 0.1 percent to 32.1 percent. The chart on the adjoining page displays a breakout of net cost by strategic goal.

Chart 3: Net Program Costs by Strategic Goal, FY 2005

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The Consolidated Statement of Changes in Net Position presents the accounting items that caused the net position section of the balance sheet to change since the beginning of the fiscal year. The statement comprises two major components: Unexpended Appropriations and Cumulative Results of Operations.

Cumulative Results of Operations amount to $760 million as of September 30, 2005, an increase of 15 percent from the $660 million balance a year earlier. This balance is the cumulative difference, for all previous fiscal years through 2005, between funds available to USAID from all financing sources and the net cost of USAID.

The Combined Statement of Budgetary Resources provides information on how budgetary resources were made available to the Agency for the year and their status at fiscal year-end. For the year, USAID had total budgetary resources of $14.8 billion, an increase of 21 percent from the 2004 level. Budget authority of $11 billion, consisted of $10.1 billion for appropriations and $590 million in net appropriation transfers. USAID incurred obligations of $10.5 billion for the year, a 14 percent increase from the $9.2 billion of obligations incurred during 2004.

Chart 4 below, reflects Agency budgetary resources for 2005.

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The Combined Statement of Financing reconciles the resources available to the Agency to finance operations with the net costs of operating the Agency's programs. Some operating costs, such as depreciation, do not require direct financing sources.

Limitations to the Financial Statements

The financial statements have been prepared to report the financial position and results of operations of USAID, pursuant to the requirements of 31 U.S.C. 3515(b). While the statements have been prepared from the books and records of USAID, in accordance with generally accepted accounting principles (GAAP) for federal entities and the formats prescribed by the Office of Management and Budget (OMB), the statements are in addition to the financial reports used to monitor and control budgetary resources which are prepared from the same books and records. The statements should be read with the realization that USAID is a component of the U.S. , a sovereign entity.

USAID is providing support to improve the health of mother and children in mountainous districts of Quang Tri Province, Vietnam. Photo: Michael Bisceglie

Community-based integration for children with disabilities in Kon Tum province, Central Highland of Vietnam. Photo: Brett Jones, USAID /Vietnam

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