The impact of sequestration on the financial statements of government services companies
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The much talked about sequester as mandated by the Budget Control Act of 2011, P.L. 112-25 came into effect on March 1, 2013, triggering automatic cuts totaling $1.2 trillion that would be made to discretionary spending for fiscal year 2013 through 2022. These cuts will impact the budgets of many governmental agencies and have a ripple effect on the revenue prospects of companies serving the government, which, in turn, will have a downward impact on their values. This potential reduction in value is forcing numerous government contractors to re-examine their forecasts and readjust their balance sheets in accordance with complex GAAP stipulations. This white paper examines in detail, with the help of an informative case study, the impact of sequestration on the financial statements of government contractors.