1.D. Basis of Accounting
USSOCOM does not have a single accounting system. Therefore, USSOCOM financial statements and
supporting trial balances are compiled from the underlying financial data and trial balances of USSOCOM
components and TSOCs. USSOCOM Service Components’ processes, controls, and systems, including
accounting systems are aligned with their "parent" Service. USSOCOM Headquarters element and Sub-
Unified Commands’ processes and controls are aligned with their CCSA. The underlying data is largely
derived from budgetary transactions (obligations, disbursements, and collections), from nonfinancial feeder
systems, and accruals made for major items such as payroll expenses and accounts payable.
USSOCOM presents the Balance Sheet, Statement of Net Cost, and Statement of Changes in Net Position
on a consolidated basis, less eliminations, with the exception of revenue eliminations due to system
limitations. The financial transactions are recorded on a proprietary accrual and a budgetary basis of
accounting, except for issues noted for the Standard Operation and Maintenance Army Research and
Development System (SOMARDS) and the Standard Financial System (STANFINS). Under the accrual
basis, revenues are recognized when earned and expenses are recognized when incurred, without regard
to the timing of receipt or payment of cash. Whereas under the budgetary basis, generally the legal
commitment or obligation of funds is recognized in advance of the proprietary accruals and in compliance
with legal requirements and controls over the use of Federal funds.
USSOCOM is continuing to evaluate the effects that will result from fully adopting recent accounting
standards and other authoritative guidance issued by FASAB. The guidance listed below has the potential
to affect the financial statements; however, USSOCOM is currently unable to determine the full impact.
1) SFFAS 48: Opening Balances for Inventory, Operating Materials and Supplies, and Stockpile Materials:
Issued on January 27, 2016; Effective for periods beginning after September 30, 2016. USSOCOM
plans to utilize deemed cost to value beginning balances for inventory and related property (I&RP), as
permitted by SFFAS 48. USSOCOM has valued some of its I&RP using deemed cost methodologies,
as described in SFFAS 48. However, systems required to account for historical cost for I&RP in
accordance with SFFAS 3: Accounting for Inventory and Related Property, are not yet fully
implemented. Therefore, USSOCOM is not making an unreserved assertion with respect to this line
item.
2) SFFAS 50: Establishing Opening Balances for General Property, Plant, and Equipment: Amending
SFFAS 6, 10, and 23, and rescinding SFFAS 35: Issued on August 4, 2016. Effective Date: For periods
beginning after September 30, 2016.
USSOCOM plans to utilize deemed cost to value beginning balances for general property, plant, and
equipment (General PP&E), as permitted by SFFAS 50. USSOCOM has valued some of its General
PP&E using deemed cost methodologies as described in SFFAS 50. However, systems required to
account for historical cost for General PP&E in accordance with SFFAS 6: Accounting for Property,
Plant and Equipment, are not yet fully implemented. Therefore, USSOCOM is not making an
unreserved assertion with respect to this line item.
3) SFFAS 53: Budget and Accrual Reconciliation: Amending SFFAS 7 and 24, and Rescinding SFFAS
22: Issued October 27, 2017; Effective for periods beginning after September 30, 2018.
4) SFFAS 54: Leases: An Amendment to SFFAS 5, Accounting for Liabilities of the Federal Government,
and SFFAS 6, Accounting for Property, Plant, and Equipment: Issued Date: April 17, 2018. The
requirements of SFFAS 54 were deferred to reporting periods beginning after September 30, 2023,
under SFFAS 58, Deferral of the Effective Date of SFFAS 54, Leases: Issued June 19, 2020. Early
adoption is not permitted.
The DoD is continuing the actions required to bring its financial and nonfinancial feeder systems and
processes into compliance with GAAP. One such action is the ongoing revision of accounting systems to
record transactions based on the U.S. Standard General Ledger (USSGL). Until all USSOCOM financial