Federal reimbursable work is one of the most common sources of audit findings for civilian and defense agencies. Revenue recorded at billing instead of at performance. Stale unfilled customer order balances. Anticipated reimbursements that never get zeroed out at year end. The mechanics are not complicated once you see them in sequence, but the budget authority, accounting entries, and reporting requirements all collide at the same time.
This guide is the hub. It gives you the high-level picture and points you to the deeper walkthroughs for definitions, no-advance accounting, and (coming soon) advance accounting.
Federal reimbursable work is one federal agency providing goods or services to another federal agency in exchange for payment. The selling agency uses spending authority from offsetting collections (not appropriations) to perform the work. The buying agency uses its own appropriation to pay. Both sides have to record matching budgetary and proprietary entries so the government-wide consolidation eliminates correctly.
Three issues come up over and over in reimbursable accounting:
1. Revenue recognition. Revenue is earned when the service is performed, not when the invoice is sent. Some legacy financial systems were built around billing-based revenue recognition, which forces workarounds and produces audit findings.
2. Buyer-seller mirroring. A payable on one set of books has to match a receivable on the other for intragovernmental elimination to work. Treasury's G-Invoicing platform exists largely to enforce this alignment.
3. Anticipated reimbursable authority. Anticipated amounts are placeholders. They have to be zeroed out at year end, and a new apportionment is required for the next fiscal year.
Everything else in reimbursable accounting flows from getting these three things right.
It helps to think about reimbursable work as four phases. These are not formal designations in OMB or Treasury guidance, but they map cleanly to the entries you have to make.
| Phase |
What happens |
Key entries |
| Authority |
Seller records appropriated funds and anticipates reimbursable authority. OMB apportions both. Agency head allots. |
USSGL 411900, 421000, 451000, 461000 |
| Agreement |
Buyer and seller agree on terms (typically in G-Invoicing). Buyer obligates. Seller records the unfilled customer order. |
USSGL 480100 (buyer), 422100 (seller, no advance) |
| Performance |
Seller delivers. Revenue is recognized. UCO is liquidated to reimbursements earned. |
USSGL 425100, 520000 |
| Closeout |
Buyer pays. Seller collects. Year-end true-up zeros out unused anticipated reimbursements. |
USSGL 425200, 101000 |
The accounting changes depending on whether the buyer pays in advance or after the fact, so the entries split into two separate scenarios at the agreement phase.
Scenario 1: No advance. The seller performs first and bills after. This is the more common scenario for ongoing services.
Read the full walkthrough with USSGL entries →
Scenario 2: With advance. The buyer pays up front. The seller records a liability (advances from others) and earns revenue against it as the service is performed.
(Coming soon: Reimbursable Accounting With an Advance)
Your authority to engage in reimbursable work comes from public law. A common authority is the Economy Act (31 U.S.C. § 1535), but agencies also operate under specific statutory authorities outside the Economy Act. Under the Economy Act, three conditions have to hold for one agency to order from another:
1. The arrangement must be in the best interest of the government.
2. The goods or services cannot be obtained as conveniently or economically by contracting directly.
3. One of:
A. The order is under an existing contract;
B. The servicing agency has the capacity and the requesting agency does not; or
C. The servicing agency is specifically authorized by law to provide the goods or services to other agencies.
The second condition is the one people gloss over. The Economy Act is not an easy button.
More on the Economy Act and other authorities →
Reimbursable activity surfaces in a few places that auditors look at closely:
• SF 132 (apportionment schedule). Direct vs. reimbursable authority by program.
• SF 133 (budget execution). Usage of each type of authority through the period.
• Statement of Budgetary Resources. Reports both direct appropriations and spending authority from offsetting collections.
• Intragovernmental balances reporting. Buyer-side payables matched against seller-side receivables.
• Recording revenue at billing instead of performance
• Stale UCO balances that nobody liquidated when the service was delivered
• Forgetting the year-end zero-out of anticipated reimbursements
• Buyer-seller mismatches that fail intragovernmental elimination
• Treating the Economy Act as automatic instead of making the three-condition determination on each order
Federal reimbursable work is an arrangement where one federal agency provides goods or services to another federal agency in exchange for payment. The selling agency uses spending authority from offsetting collections to perform the work, and the buying agency uses its own appropriation to pay. It is the mechanism that lets agencies leverage each other's specialized capabilities instead of building every function in-house.
A grant is a transfer of funds with no expectation of specific goods or services flowing back. Reimbursable work is an exchange: the selling agency delivers a defined product or service, and the buying agency pays for it. Reimbursable work is also not a standard FAR procurement, because it is an agreement between two federal agencies rather than between an agency and a commercial contractor.
The Economy Act, codified at 31 U.S.C. § 1535, is the most common legal authority for federal reimbursable work. It authorizes one agency to order goods or services from another when three conditions are met: the arrangement is in the best interest of the government, the goods or services cannot be obtained as conveniently or economically by direct contracting, and one of three specific situations applies (existing contract, servicing agency has capacity the requesting agency does not, or specific statutory authorization).
The buyer (also called the ordering agency or requesting agency) needs the service and pays for it using its own appropriation. The seller (also called the provider or servicing agency) performs the work and earns revenue from it. The seller uses spending authority from offsetting collections rather than appropriation to perform the work.
Three issues come up repeatedly. First, revenue gets recorded when the invoice is sent instead of when the service is performed, which violates accrual accounting. Second, unfilled customer order balances go stale because staff do not liquidate them when the service is delivered. Third, anticipated reimbursable authority does not get zeroed out at year end. All three are correctable with the right controls and a clear understanding of the accounting flow.
Revenue is recognized when the service is performed, not when the invoice is sent or when payment is collected. This is straight accrual accounting under FASAB. Some legacy federal financial systems were built around billing-based revenue recognition, which is why many agencies need manual processes to record revenue at the right moment.
Spending authority from offsetting collections is one of the four types of federal budget authority (the others are appropriations, borrowing authority, and contract authority). It is the budget authority the seller uses to perform reimbursable work. Unlike appropriations, which come directly from Congress, this authority depends on the buyer's order coming in and is reported separately on the SF 132 apportionment schedule.
If you are new to reimbursable work, start with the definitions and legal foundation. If you already know the basics and want to see the accounting flow end to end, jump straight to the no-advance walkthrough.
Federal Finance CPE offers a free NASBA-approved
Treasury Account Symbol course as a starting point. Our full library covers reimbursable agreements, USSGL entries, and the federal financial reporting requirements your team works with every day.
