U.S. Department of State Fiscal Year 2020 Agency Financial Report

S. Contingent Liabilities Contingent liabilities are liabilities where the existence or amount of the liability cannot be determined with certainty pending the outcome of future events. The Department recognizes contingent liabilities when the liability is probable and reasonably estimable. See Notes 8 and 12. T. Funds from Dedicated Collections Funds from Dedicated Collections are financed by specifically identified revenues, often supplemented by other financing sources, which remain available over time. These specifically identified revenues and other financing sources are required by statute to be used for designated activities or purposes and must be accounted for separately from the Government’s general revenues. Additional information is disclosed in Notes 3 and 13. U. Net Position The Department’s net position contains the following components: Unexpended Appropriations: Unexpended appropriations is the sum of undelivered orders and unobligated balances. Undelivered orders represent the amount of obligations incurred for goods or services ordered, but not yet received. An unobligated balance is the amount available after deducting cumulative obligations from total budgetary resources. As obligations for goods or services are incurred, the available balance is reduced. Cumulative Results of Operations: The cumulative results of operations include the accumulated difference between revenues and financing sources less expenses since inception and donations. Net position of funds from dedicated collections is separately disclosed. See Note 13. V. Foreign Currency Accounting records for the Department are maintained in U.S. dollars, while a significant amount of the Department’s overseas expenditures are in foreign currencies. For account- ing purposes, overseas obligations and disbursements are recorded in U.S. dollars based on the rate of exchange as of the date of the transaction. Foreign currency payments are made by the U.S. Disbursing Office. W. Fiduciary Activities Fiduciary activities are the collection or receipt, and the management, protection, accounting, investment, and disposition by the Federal Government of cash or other assets in which non-Federal individuals or entities have an ownership interest that the Federal Government must uphold. The Department’s fiduciary activities are not recognized on the principal financial statements, but are reported on schedules as a note to the financial statements. The Department’s fiduciary activities include receiving contributions from donors for the purpose of providing compensation for certain claims within the scope of an established agreement, investment of contributions into Treasury securities, and disbursement of contributions received within the scope of the established agreement. See Note 18. X. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, and exercise judgment that affects the reported amounts of assets, liabilities, net position, and disclosure of contingent liabilities as of the date of the financial statements, and the reported amounts of revenues, financing sources, expenses, and obligations incurred during the reporting period. These estimates are based on management’s best knowledge of current events, historical experience, actions the Department may take in the future, and various other assumptions that are believed to be reasonable under the circumstances. Due to the size and complexity of many of the Department’s programs, the estimates are subject to a wide range of variables, including assumptions on future economic and financial events. Accordingly, actual results could differ from those estimates. Y. Comparative Data Certain 2019 amounts have been reclassified to conform to the 2020 presentation. The Consolidated Statement of Net Cost presentation has been updated to report by strategic goal for 2020 and 2019. 2020 A gency F inanci al R eport U ni ted S tates D epartment of S tate | 77 NOTES TO THE PRINCIPAL FINANCIAL STATEMENTS | FINANCIAL SECTION