U.S. Department of State Fiscal Year 2019 Agency Financial Report

O rganization Congress established the U.S. Department of State (Department of State or Department), the senior Executive Branch department of the United States Government in 1789. The Department advises the President in the formulation and execution of U.S. foreign policy. The head of the Department, the Secretary of State, is the President’s principal advisor on foreign affairs.   1  S ummary of S ignificant A ccounting P olicies A. Reporting Entity and Basis of Consolidation The accompanying principal financial statements present the financial activities and position of the Department of State. The Statements include all General, Special, Revolving, Trust, and Deposit funds established at the Department of the Treasury (Treasury) to account for the resources entrusted to Department management, or for which the Department acts as a fiscal agent or custodian (except fiduciary funds, see Note 18). Included in the Department’s reporting entity as a consolidation entity is the U.S. Section of the International Boundary and Water Commission (IBWC). Treaties in 1848, 1853, and 1970 established the boundary between the United States and Mexico that extends 1,954 miles, beginning at the Gulf of Mexico, following the Rio Grande a distance of 1,255 miles and eventually ending at the Pacific Ocean below California. Established in 1889, the IBWC has responsibility for applying the boundary and water treaties between the United States and Mexico and settling differences that may arise in their application. Additionally, the following organizations are consolidated in these financial statements: International Joint Commission, International Boundary Commission, International Center, and the Special Inspector General for Afghanistan Reconstruction. The Department determined there are no disclosure entities to report. Statement of Federal Financial Accounting Standards (SFFAS) No. 47, Reporting Entity , requires disclosure of significant Related Party relationships. Large international organizations, while not controlled by the United States, are often significantly influenced by the Government as defined in SFFAS No. 47. In many cases, the United States participates in the policy discussion of the organization through the United States’ involvement on boards and counsels. Note 10, International Organizations Liability , discusses the Department’s funding, payments, and open liabilities to these organizations. B. Basis of Presentation and Accounting The statements are prepared as required by the Chief Financial Officers (CFO) Act of 1990, as amended by the Government Management Reform Act of 1994. They are presented in accordance with the form and content requirements of the Office of Management and Budget (OMB) Circular A-136, Financial Reporting Requirements , revised. The statements have been prepared from the Department’s books and records, and are in accordance with the Department’s Accounting Policies (the significant policies are summarized in this Note). The Department’s Accounting Policies follow U.S. generally accepted accounting principles (GAAP) for Federal entities, as prescribed by the Federal Accounting Standards Advisory Board (FASAB). FASAB’s SFFAS No. 34, The Hierarchy of Generally Accepted Accounting Principles, Including the Application of Standards Issued by the Financial Accounting Standards Board , incorporates the GAAP hierarchy into FASAB’s authoritative literature. Throughout the financial statements and notes, certain assets, liabilities, earned revenue, and costs have been classified as intragovernmental, which is defined as transactions made between two reporting entities within the Federal Government. Notes to the Principal Financial Statements 68 | U nited S tates D epartment of S tate 2019 A gency F inancial R eport FINANCIAL SECTION | NOTES TO THE PRINCIPAL FINANCIAL STATEMENTS