Download Federal Appropriations and Expired Accounts: Cancellation and Payment Processes and more Lecture notes Financial Management in PDF only on Docsity!
CHAPTER 10
ACCOUNTING REQUIREMENTS FOR EXPIRED AND CANCELED ACCOUNTS
1001 INTRODUCTION
- Purpose.^ This^ chapter^ implements^ within^ the^ Department^ certain provisions of Title 31, United States Code, relating to expired and canceled accounts. The governmentwide amendments to Title 31 are contained in Title XIV of the National Defense Authorization Act for FY 1991 (Public Law 101-510, dated November 5, 1990).
- Terminology. Terms associated with accounting for expired and closed or canceled accounts are included in the definitions section (Appendix C) to this chapter.
1002 POLICY AND PROCEDURES
- Implementation of Permanent Provisions
A. For 5 years after the time an appropriation expires for incurring new obligations, both the obligated and unobligated balances of that appropriation shall be available for adjusting and liquidating obligations properly chargeable to that account.
B. Certain appropriations are available for obligation for a specific period, i.e., annual and multi-year appropriations. Both the obligated and unobligated balances of such appropriations shall be canceled, and will no longer be available for obligation or expenditure for any purpose, on September 30th of the 5th fiscal year after an appropriation’s period of availability for incurring new obligations expires (31 U.S.C. 1553(a)).
C. Certain appropriations are available for an indefinite period. Obligated and unobligated balances in such appropriations shall be canceled when (1) no disbursements have been made from the indefinite appropriation for a period of 2 years and (2) the President, the Secretary of Defense or his designee determines the purposes for which the appropriation was made have been carried out (31 U.S.C. 1555).
D. Before an account cancels, the affected DoD Component shall identify valid unliquidated obligations subject to cancellation to determine if (1) appropriations are available for future adjustments or payments against such obligations, or (2) other provisions for adequate resources have been made to pay for such obligations that will cancel with an account.
E. Following cancellation of an appropriation, should it become necessary to adjust an obligation which would otherwise have been properly chargeable (both as to purpose and amount) to an appropriation before cancellation, then the obligation shall be charged to an appropriation currently available for the same purpose, subject to certain limitations discussed in paragraph 100201.F., below.
F. When a currently available appropriation is used to pay an obligation,
exceed the lesser of:
which otherwise would have been properly chargeable (both as to purpose and amount) to a canceled appropriation, the total of all such payments by that current appropriation may not
The unexpended balance of the canceled appropriation (the unexpended balance is the sum of the unobligated balance plus the unpaid obligations of an appropriation at the time of cancellation, adjusted for obligations and payments which are incurred or made subsequent to cancellation, and which would otherwise have been properly charged to the appropriation except for the cancellation of the appropriation); or
- The unexpired unobligated balance of the currently available appropriation; or
- One percent of the total original amount appropriated to the current appropriation being charged.
a. For annual accounts, the 1 percent limitation is of the annual appropriation for the applicable account--not total budgetary resources (e.g., reimbursable authority).
b. For multi-year accounts, the 1 percent limitation applies to the total amount of the appropriation. As an example, if a multi-year account enacted for FY 1992 through FY 1994 is $100 million, then the 1 percent limitation in FY 1992 would be $1 million. If, at the end of FY 1992, $650,000 was used for payment of obligations of canceled accounts, then the amount available to be used for such payments in FY 1993 would be $350, ($1,000,000 minus $650,000).
c. For contract changes (as specified in subsection 100202, below), charges made to currently available appropriations will have no impact on the 1 percent limitation rule. That is, the 1 percent (of the currently available appropriation) amount will not be decreased by the charges made to current appropriations for contract changes.
G. In order to prevent overpayments and ensure that applicable limitations are not exceeded, DoD Components shall:
- Identify the unobligated balance and unpaid obligations of all expired appropriations at the time they expire.
- Identify the unobligated balance and unpaid obligations of all canceled appropriations at the time they are canceled.
- Identify to canceled accounts all obligations and payments charged to currently available appropriations, which otherwise would have been properly chargeable
scope of work for ship overhaul, maintenance, and repair beyond the end of the fifth fiscal year following the expiration of such appropriations for other purposes.
- (^) Shipbuilding and Conversion (SCN), Navy Appropriation.
A. The period of availability to incur obligations in the SCN appropriations for all purposes normally is 5 years. However, for limited purposes, SCN finds are available for obligation after the 5-year period has ended. Appropriation language for the SCN appropriation often contains a provision to the effect that additional obligations for engineering services, tests, evaluations, and other such budgeted work that must be performed in the final stage of ship construction may be incurred after the appropriation otherwise would expire for obligation. This additional period allowed for incurring new obligations for such purposes is called “extended availability.”
B. The Department of Defense and the Department of the Treasury employ special procedures to establish extended availability authority for the SCN appropriations because not all work required to induct a ship into the fleet can be completed within the first 5 years of availability of an SCN appropriation. The procedures are summarized as follows:
- The fiscal year of the latest obligation work limiting date (OWLD) for the last vessel financed by a particular SCN appropriation will represent the period of availability for obligation. After such date, the appropriation enters an expired status for 5 years and the balances are available only for obligational adjustments and payments.
- An SCN appropriation is canceled/closed on September 30 of the fifth year following the year of the last OWLD. Before the end of each fiscal year, the Department of Defense notifies the Department of the Treasury of the last OWLD for the SCN appropriation that will be expiring on September 30 of that fiscal year. By the ninth workday of November of each year, the unobligated and obligated balances of that SCN appropriation are transferred by an SF 1151, “Non-Expenditure Transfer Authorization” to the new Treasury fiscal year symbol.
- For example, on September 18, 1995, the Navy notified the Department of the Treasury that the last OWLD for the FY 1991/1995 SCN appropriation was September 30, 2001. Before November 14, 1995, the balances of that SCN appropriation were transferred to the FY 1991/2001 SCN appropriation with a cancellation date 5 years later-- September 30, 2006.
C. The obligated and unobligated balances of the merged SCN account are not available for adjusting and disbursing purposes after September 30, 1993.
- Obligation Adjustments for a Contract Change in Excess of $4 Million. An obligation adjustment for a contract change under which a contractor is required to perform additional work, may be incurred only if the obligation has been approved by the USD(C), as designee of the Secretary of Defense. Approval shall be sought when the amount of the
obligation would cause the total amount of charges in any fiscal year for a single program, project, or activity to exceed $4 million and the account being used to fund the obligations is no longer available for new obligation.
A. Requests for approval, if necessary, shall be submitted by the applicable DoD Component to the ODC(P/B).
B. Requests for approval shall include the following documentation:
- The amount to be obligated,
- The purpose for which the finds are to be obligated, and
- An explanation of the obligation adjustment including the reason for the adjustment and the contingencies or management practices which caused the need for the adjustment.
C. Supporting documentation shall be retained for future reference.
- Obligation Adjustments for a Contract Change of $25 Million or More. Special handling is required to process any obligation adjustment to an expired appropriation for a contract change, under which a contractor is required to perform additional work for amounts in any fiscal year of $25 million or more. Such adjustments may be made only after the USD(C), as designee of the Secretary of Defense, submits a notice of intention to make the obligation-- along with the legal basis and policy reasons for the obligation--to the Armed Services and Appropriation Committees of the Senate and National Security and Appropriations Committees of the House of Representatives.
A. After 30 days have elapsed following submission of the notice, the proposed obligation may be recorded (unless any cognizant congressional committee notifies the USD(C) of its disapproval).
B. Such charges or adjustments shall be supported by a written comprehensive statement concerning the reason for the adjustment. This statement should explain the circumstances, contingencies, or management practices which caused the need for the adjustment.
C. When notification to the Congress is necessary, the applicable DoD Component shall submit the required documentation (including letters to the appropriate congressional committees for the USD(C) signature) to the ODC(P/B).
- Reprocurements. Expired funds also may be used to fund a replacement action--replacement contract--under certain conditions. When a reprocurement action will result in a replacement contract, it may be funded from expired funds if all of the conditions in para-
Department of the Treasury, Requests for subclass accounts must be submitted in writing to the Treasury Department, through the Defense Finance and Accounting Service, and include the purpose for the payment. The address to which requests should be sent is listed in Treasury Bulletin No. 91-03. These subclass accounts will be used to record applicable payments on the books of the Treasury Department. (^) Such payments shall be reported monthly on each Component’s Statement of Transactions.
B. Amounts for obligations that otherwise would have been properly chargeable to a canceled account, but are required to be charged to current accounts, shall be recorded only in the current account when payment is imminent during the current fiscal year. Therefore, amounts for such obligations shall not be reported on the year-end FMS Form 2108 unless payment has been made. However, if at year-end, such amounts for obligations are known to be payable in the coming fiscal year, this information should be footnoted on the year-end FMS Form 2108.
C. Current year obligation adjustments required due to canceled balances shall be entered against specific applicable line items in column k of DD Form 1416, “Report of Programs,” as a negative amount. If these adjustments cause the line item to exceed current year reprogramming thresholds, the amount in column k will be footnoted to indicate that the amount is “applicable to canceled account adjustments.” (^) No reprogramming action will be required. In addition, the total of all canceled account adjustments charged to the applicable appropriation will be entered in column k as a separate line item titled “Reduction to Finance canceled Account Adjustments.” This amount shall be shown as a positive number.
- Use of Current Year Funds When Sufficient Obligational Authority Does Not Exist in a Expired Appropriations. Section 1004 of the National Defense Authorization Act for FY 1993 permits current year funds to be used when sufficient obligational authority does not exist in expired appropriations for Fiscal Years before 1992 whose availability for new
obligations expired at the end of FY 1985 through FY 1992, and which are not canceled. That
authority contains the following restrictions:
A. (^) The amount charged to a current account may not exceed an amount equal to 1 percent of the total amount of the current appropriation being charged, or 1 percent of the total amount of the appropriation of the expired account, whichever is less. (The 1 percent limitation under section 1004 is in addition to the 1 percent limitation under Public Law 101- (see paragraph 100201.F., above) that applies to charges that can be made to a current account when the account that should have been charged has been canceled.)
B. The appropriate expired account shall be charged for obligations that are properly chargeable to an expired account whenever sufficient resources exist to find the obligation in the applicable expired account. (^) There should be no charges against a current account if there is a sufficient balance remaining in an expired account.
C. Obligations that otherwise would be properly chargeable to an expired account, except that insufficient resources exist in the expired account to fund the applicable
obligation, should not be charged against a current account unless all of the following conditions have been met:
- The obligation is charged to an appropriation available for the same purpose as the applicable expired account and is otherwise properly chargeable (except as to amount) to the applicable expired account before cancellation of the expired account.
- The Military Department Assistant Secretary for Financial Management and Comptroller or the Comptroller of a Defense Agency has determined that sufficient obligational authority does not exist in the applicable expired account to fund the applicable obligation.
- The obligation is not otherwise properly chargeable to any Department of Defense current appropriation.
- The USD(C) has approved the charge to the applicable appropriation and notified the Congress of the proposed obligation, and 30 days have elapsed.
D. The Department must notify the Congress 30 days in advance of incurring such obligations. (^) Therefore, DoD Components shall prepare, and submit to the USD(C) for subsequent transmittal to the Congress, notification of any proposed obligations against a current account for obligations that otherwise would be properly chargeable (except as to amount) to an expired account, except that insufficient resources exist to fund the obligation in the applicable expired account. As a minimum, such notifications shall:
- Identify the amount to be charged,
- Identify the purpose for which the funds are to be obligated, and
- Include a summary of all relevant facts justifying the proposed obligation.
E. Within 60 days after the date of a request to charge an obligation is submitted to the Congress, DoD Components shall submit a report to the USD(C), for subsequent transmission to the Congress and the President, providing the status of an investigation of an Antideficiency Act violation when:
- (^) An obligation is charged against a current account when the obligation otherwise would be properly chargeable (except as to amount) to an expired account.
- Insufficient resources exist to fund the obligation in the applicable expired account.
appropriation is available. Receiving a reappropriation will be treated as adding new budget authority.
- Antideficiency Act Violations. DoD^ Components^ are^ required^ to investigate and report violations of the Antideficiency Act when certain limitations are exceeded in Public Law 101-510 and section 1004 of Public Law 102-484 as well as specific provisions in a number of sections of Title 31 of the United States Code. Explicit guidance is provided in Volume 14 of this Regulation.
- Control, Reporting, and Certification Requirements. Title 31, United States Code, sections 1554 and 1556, as amended, contains permanent audit, control and reporting requirements pertaining to the liquidation of obligations.
A. Control Requirements
- Section 1554(a) stipulates that any audit requirement, limitation on obligations, or reporting requirement applicable to an appropriation will continue to apply to that appropriation following expiration of the period of availability for new obligation of that appropriation. Thus, if an appropriation act contains a limitation on the obligation of funds for a program, project or activity, or other purpose, then that limitation will continue to apply during the 5-year period following the period of availability for obligation of that appropriation. Additionally, the limitation will continue after the appropriation has been canceled.
- DoD Components shall establish internal controls to ensure that an adequate review of obligated balances is performed to support the certification.
- Proper general ledger controls shall be maintained for canceled valid unpaid obligations and accounts receivable in canceled accounts. Although balances in unexpired accounts may be used to fired canceled obligations, canceled obligated balances shall not be posted to unexpired accounts solely because the purposes may be related. Canceled obligations shall be posted to unexpired accounts only when a disbursement will be paid during the current year.
B. Reporting and Certification Requirements
- Section 1554. Under the provisions of 31 U.S.C. 1554, the Secretary of Defense, or his designee, is required to submit a report to the President and the Secretary of the Treasury concerning the unliquidated obligations, unobligated balances, canceled balances and adjustments made to appropriation accounts during the preceding fiscal year.
a. Due Date. This report is due not later than 15 days after the
President submits his budget to the Congress. The first report was due in 1992 for FY 1991
balances and transactions.
b. Distribution Requirements. A copy of the report is required to be submitted to the Speaker of the House of Representatives and to the Committee on Appropriations, the Committee on Governmental Affairs, and other appropriate oversight and authorizing committees of the Senate (such as the Armed Services Committee).
c. Contents. Section 1554(b) requires that these reports shall contain:
(1) An itemization of related appropriation accounts, identified by fiscal year and the balances identified in each account. This itemization is reported on the fiscal year-end FMS Form 2108.
(2) A listing of each current and expired appropriation. This list is included in the fiscal year-end FMS Form 2108.
(3) Identification of payments made from each currently applicable appropriation account with respect to those amounts which would have been otherwise properly chargeable to another account, both as to purpose and amount, except that the other account has been canceled (31 U.S.C. 1553). These payments are reported on the DoD Components’ Statement of Transactions.
(4) Separate identification of obligation adjustments made to each currently applicable appropriation account that otherwise would have been properly chargeable to another account, both as to purpose and amount, except that the other account has been canceled. These amounts are reported on the fiscal year-end FMS Form 2108.
(5) (^) Identification of all balances canceled on September 30th of the fifth year following the expiration of an appropriation account’s availability for incurring new obligations (31 U.S.C. 1552(a)). These balances are reported on the fiscal year- end FMS Form 2108.
(6) Identification of those appropriation accounts available for an indefinite period that have been canceled because (a) no disbursements have been made from the account for a period of 2 years and (b) the President or the Secretary of Defense has determined that the purposes for which the appropriation was made have been carried out (31 U.S.C. 1555).
(7) A certification by the DoD Components that the obligated balances in each appropriation account of the Department reflect properly existing obligations and that expenditures made from each account since the time of submission of the prior report were supported by a proper obligation of funds and otherwise were proper.
accounts. However, such write-off would result in a reclassification, to a direct program obligation, of an obligation previously incurred.
H. Closing an Account with a Negative Balance. Existence of a negative balance does not excuse an account from being canceled. Such accounts should be canceled in accordance with applicable valid requirements and a receivable established for the amount of the negative balance.
- Informational accounting reports (i.e., FMS 2108, SF 133, and SF 220-9) shall continue to be submitted for the applicable account until the negative balance is resolved. As appropriate, these informational reports should (a) indicate that the account is canceled, (b) show the amount of the negative balance at the time the account was canceled, and (c) show the current amount of the applicable receivable.
- A negative balance may be liquidated by receiving offsetting collections. Collections of overpayments shall be deposited to Treasury account 3200. An account with a negative balance may indicate that a violation of the Antideficiency Act has occurred. A formal investigation should be initiated immediately. Additional information on Antideficiency Act violations maybe found in Volume 14 of this Regulation.
I. Accounting for Uncollectible Accounts Receivable in Canceled Accounts. Budgetary accounts corresponding to accounts receivable shall be closed when an account is canceled. Total obligations within budgetary accounts should not change when the budgetary accounts are closed. The write-off of an uncollectible reimbursement receivable would result in a reclassification, to a direct program obligation, of an obligation previously incurred under the reimbursable program.
- For refunds receivable, budgetary accounts established to track the status of obligational authority (i.e., undelivered orders, unpaid accrued expenditures and refunds due) shall not be closed since their continued identity is necessary to assure that cumulative payments, even though paid from a current account do not exceed the original appropriation of the closed account.
- Propriety accounts established for accounts receivable and refunds receivable applicable to canceled accounts shall be reclassified as Accounts Receivable-- Canceled Accounts. The subsequent collections of such amounts for this account shall be deposited to the Treasury Miscellaneous Receipts Account.
- If, after compliance with established collection procedures, it is determined that an account is uncollectible, the account should be written off by charging a bad debts account. The write-off of an uncollectible account or refund receivable applicable to the reimbursable program should result in a reclassification, to a direct program obligation, of obligations previously incurred under the reimbursable program.
J. Correction of Reporting Errors in Expired Accounts. Treasury Bulletin 94-04, "Account Closing Provisions of the FY 1991 National Defense Authorization Act" contains procedures for requesting a correction to an expired account that is now closed.
- Corrections may be requested for two categories of errors: (a) clerical errors such as misplaced decimals, transposed digits, or transcribing errors resulting in inadvertent cancellations of budget authority and (b) errors made in classifying a payment made prior to the closing of an account, but not discovered until after the account was closed.
a. For^ clerical^ errors,^ the^ request^ must^ include^ the appropriation account number, the reason for the restoration, and convincing evidence of the clerical error to justify the restoration required to make the correction. At a minimum, this includes the original accounting record from which the incorrect posting was made and a record showing the incorrect amount.
b. For classification errors, the Treasury Department will accept reporting to (1) correctly classify payments previously reported to suspense/clearing accounts or (2) correct classification errors between current and closed accounts, when submitted by the deadline below.
- Requests for the correction of errors must be received by the Treasury Department by March 31 of the year after the account in question was closed. For example, if an expired account was closed in FY 1996, a request for any corrections to that account must be received by the Treasury Department before March 31, 1997.
the following address:
following address:
a.
b.
Requests for correction of a clerical error should be sent to
Finance Management Branch Financial Management Service Department of the Treasury Liberty Center (UCP 723) Washington, DC 20227
Requests for reporting to be allowed against a closed account shall be submitted, along with a hardcopy Statement of Transactions report, to the
Budget Reports Branch Financial Management Semite Department of the Treasury Liberty Center (UCP 749) Washington, DC 20227
DoD Finacial Management Regulation Volume 3, Chapter 10, Appendix A
APPENDIX A
ACCOUNTING ENTRIES FOR CREDITING OF COLLECTIONS
- Public Law 101-510, Section 1405 (31 U.S.C. 1552), “Procedure for appropriation accounts available for definite periods,” stipulates the following:
“a. On September 30th of the 5th fiscal year after the period of availability for obligation of a fixed appropriation account ends, the account shall be closed and any remaining balance (whether obligated or unobligated) in the account shall be canceled and thereafter shall not be available for obligation or expenditure for any purpose.”
“b. Collections authorized or required to be credited to an appropriation account, but not received before closing of the account under subsection (a) or under section 1555 of this title, shall be deposited in the Treasury as miscellaneous receipts.”
- As noted above, P.L. 101-510 requires that all balances are closed and any collections received after closing are deposited to the Treasury Miscellaneous Receipts Account following the end of the 5th year after expiration of an account. Thus, the following procedures are applicable to accounts receivable and refunds receivable. Accounts receivable are amounts due from others for goods furnished and services rendered. Refunds receivable are requested returns of advances or recoveries of erroneous disbursements that are directly related to, and reductions of, previously recorded payments from the accounts.
- Budgetary Accounting Entries
a. (^) Accounts Receivable. Budgetary accounts corresponding to accounts receivable shall be closed as follows:
Dr 4222 Customer Orders Accepted Cr 4252 Reimbursements Earned - Uncollected
Total obligations within budgetary accounts should not change as a result of the above entry. However, the write-off of an uncollectible reimbursement receivable would result in a reclassification, to a direct program obligation, of an obligation previously incurred under the reimbursable program.
b. Refunds Receivable. Refunds receivable applicable to a direct program are recorded in general ledger account 4932, “Accrued Expenditures - Refunds Due - Direct Program.” Refunds receivable applicable to the reimbursable program are recorded in general ledger account 4942, “Accrued Expenditures - Refunds Due - Reimbursable Program.” These accounts represent amounts due to be returned from previously made liquidated obligations (Accrued Expenditures - Paid). Budgetary accounts established to track the status of obligational authority (i.e., undelivered orders, unpaid accrued expenditures and refunds due) shall not be
DoD Financial Management Regulation Volume 3, Chapter 10, Appendix A
closed since their continued identity is necessary to assure that cumulative payments, even though paid from a current account, do not exceed the original appropriation of the closed account.
- Proprietary Accounting Entries
Proprietary accounts established for “Accounts Receivable” and “Refunds Receivable” applicable to canceled accounts shall be reclassified as “Accounts Receivable - Canceled Accounts.” The subsequent collections of such amounts should be deposited to the Treasury Miscellaneous Receipts Account. Until other formal accounting entries are published, the following entries should be used:
a. To reclassify accounts receivable upon cancellation of the account and recognize the liability to deposit collections into the Treasury Miscellaneous Receipts Account.
Dr 1310X Accounts Receivable - Canceled Accounts 1/ Cr 1311-14 Accounts Receivable Cr 1315-16 Refunds Receivable
and
Dr 3610 Uncollected Revenue - General Fund - Miscellaneous Receipts Cr 2411 Deposit Fund Liabilities
1/ The "X" following account number 1310 indicates that a formal account for this purpose does not currently exist in the DoD Uniform Chart of Accounts.
b. To record collection of canceled accounts receivable.
Dr 1011 Funds Collected Cr 1310X Accounts Receivable - Canceled Accounts
c. To record deposit after collection, of accounts receivable - canceled accounts to the Treasury Miscellaneous Receipts Account.
Dr 2411 Deposit Fund Liabilities Cr 1012 Funds Disbursed
and
Dr 3620 Funds Returned to General Fund Miscellaneous Receipts Cr 3610 Uncollected Revenue - General Fund - Miscellaneous Receipts
DoD Financial Management Regulation Volume 3, Chapter 10, Appendix A
(obligated) by the performing activity in fulfilling the accepted order. Fund resources to liquidate reimbursable obligations in the performing activity’s account are obtained through payments from the ordering account. Payments may be in the form of advances, progress payments, or final payment upon completion of the order. In the absence of such a payment fund resources are paid from the direct program authority of the performing account.
- To the extent that (a) obligations, due to the reclassification of reimbursable program obligations, are in excess of direct program obligation authority, or (b) expenditures (liquidation of obligations) are in excess of appropriated funds plus reimbursements expected to be earned and collected, there is a violation of the Antideficiency Act. For additional guidance on violations, see Volume 14 of this Regulation.
- The status of obligated and unobligated balances in direct and reimbursable programs, even in an account which has been closed, must be continuously maintained. If direct program unobligated balances in a closed account are sufficient to absorb the reclassification of reimbursable program obligations, the charging of write-offs of uncollectible receivables to current year accounts does not appear necessary.
a. The presence of a sufficient existing unobligated balance in a closed account in a direct program is determined by deducting from the unobligated balance at the time of cancellation all amounts charged to current appropriations which otherwise would have been chargeable to the closed account, both as to purpose and in amount, except that the account was canceled. Thus, if obligations and/or expenditures are incurred against a reimbursable order, and if that reimbursable order later is declared uncollectible, then a violation would exist to the extent that appropriated (direct program) resources existing in a closed account are not sufficient to absorb those obligations and/or expenditures.
b. Thus, to avoid a violation of the Antideficiency Act, the presence of a sufficient unobligated balance in an existing direct program must exist in a closed account to absorb the reclassification of uncollectible reimbursable program receivables. However, in accordance with closing account legislation, the actual payment of an amount originally obligated in an account that has since closed shall be made from a current account available for the same purpose subject to the 1 percent limitation.
DoD Financial Management Regulation Volume 3, Chapter 10, Appendix B
APPENDIX B
QUESTIONS AND ANSWERS PERTAINING TO PROCESSING INVOICES FROM
CANCELED FISCAL YEAR FUNDS
- Should contract modifications be issued to obligate current year funds?
Answer: Contract modifications citing current year funds for unpaid amounts are not required simply because previous valid obligations were from appropriations subsequently canceled. The document providing the chargeable fund cite to the disbursing officer should be used as the obligation document at the time of payment. Additionally, applicable contracts should be annotated to indicate the appropriation from which the payment was made.
- Are there invoice submission cut-offs for subsequent expiration dates?
Answer: Cut-off dates involving expired account transactions should be no different than for other transactions. However, special efforts should be made to ensure that all valid invoices citing accounts subject to cancellation are processed before the account is canceled. The official cancellation date is September 30. Therefore, all valid invoices dated as of September 30 may be charged against an account before it is canceled.
- Are there any prohibitions against reallocating previous payments to oldest year funds in the contract?
Answer: The Department’s current policy provides for progress payments to be identified to the appropriate contract line/fiscal year. Only when such an identification is not feasible should the amounts be allocated to contract lines or fiscal years. In the absence of contractor or program management identification, current guidance permits such allocations to be made to the oldest fiscal year. For previous allocations, if the benefiting fiscal year is known, the applicable amounts should have been charged to the benefiting fiscal year. However, if the benefiting fiscal year is unknown and amounts already have been allocated, there is little basis for reallocating those funds to the oldest fiscal year.
- What is the definition of payment adjustments as they relate to Public Law 101-510?
Answer: Payment adjustments may result from escalation or economic price adjustments, or from final audit and settlement. Payment adjustments exclude contract changes and changes in scope as well as any other change that results in additional contractor billable costs.
- (^) How should adjustment billings submitted by a contractor as a result of definitization of a contract be handled?
Answer: If the definitization of a contract results in an additional amount due to the contractor, and the additional amount would be chargeable to a canceled appropriation, then
